Financial Report
Year ended June 30, 2013

Company Profile

Nippon Koei Co., Ltd. established in 1946, specializes in engineering
consulting and electric power engineering. Since its foundation, the Company
has adhered to a policy of contributing to society through technology.
Our engineering consulting services, provided by the Consulting
Administration Group, draws on the technical expertise of specialists in diverse
fields. Since our first overseas venture, a hydroelectric power project inMyanmar in 1954, we have participated in a broad variety of sophisticateddevelopment projects worldwide.
The Engineering Administration Group spearheads the Company’s electric
power engineering business. Here, we provide a complete engineering package,from surveys and designs to the installation of a wide range of equipment,
including power stations and substations, transmission lines, and end-user
equipment. We are active both in Japan and overseas.
Committed to responsible corporate citizenship, Nippon Koei and its
employees dedicate their efforts to creating comfortable living environmentsfor people around the world.

CONTENTS
Financial Highlights .................................................................................................................. 1
Consolidated Business Report for Fiscal Period from April 1 to June 30, 2013 .......................... 2
Consolidated Balance Sheet .................................................................................................... 10
Consolidated Statement of Operations and Comprehensive Income ................................... 12
Consolidated Statement of Changes in Equity ....................................................................... 13
Consolidated Statement of Cash Flows .................................................................................. 14
Notes to Consolidated Financial Statements ......................................................................... 15
Nonconsolidated Balance Sheet .............................................................................................. 42
Nonconsolidated Statement of Operations ............................................................................ 44
Nonconsolidated Statement of Changes in Equity ................................................................ 45
Notes to Nonconsolidated Financial Statements ................................................................... 46
Corporate Information ............................................................................................................ 56
Major Nippon Koei Group Companies ................................................................................... 58

Financial Highlights

Consolidated
Thousands of
U.S. Dollars

Millions of Yen

3-month12-month3-monthJune 30, 2013

March 31, 2013

June 30, 2013

Net sales ................................................................

¥6,897¥72,412$69,956

Net (loss) income .................................................

(1,914)2,850(19,414)

Net (loss) income per share (yen/dollars) ...........

(25.35)37.76(0.26)

Total assets ...........................................................

71,451

84,795

724,729

Equity ������������������������������������������������������������������

43,671

46,929442,956

As of June 30 and March 31, 2013

Nonconsolidated
Thousands of
U.S. Dollars

Millions of Yen

3-month12-month3-monthJune 30, 2013

March 31, 2013

June 30, 2013

Net sales ................................................................

¥5,326¥55,507$54,022

Net (loss) income .................................................

(1,233)

2,154(12,506)

Net (loss) income per share (yen/dollars) ...........

(16.33)28.54(0.17)

Total assets ...........................................................

66,34075,510672,888

Equity ������������������������������������������������������������������

40,93342,495415,184

As of June 30 and March 31, 2013

Notes: 1. Per share amounts are based on the weighted average number of shares outstanding during each period.
2.	The dollar amounts in this report represent translations of yen, for convenience only, at the rate of ¥98.59 = US$1, the rateof exchange at June 30, 2013.
3.	The Company, in accordance with the resolution of the 68th general shareholders’ meeting held on June 27, 2013, changed
its fiscal year-end from the previous March 31 to June 30. Consequently, the current fiscal year under review represents anirregular 3-month accounting period from April 1, 2013 to June 30, 2013.

1

Consolidated Business Report for Fiscal Period from April 1 to June30, 2013
1. Overview of Performance and Cash FlowsDue to the change of the fiscal year-end, the consolidated fiscal period under review is an irregular 3-monthaccounting period, and thus no comparative information with the previous fiscal year has been stated.

(1) Performance
The Company, in accordance with the resolution of the 68th general shareholders’ meeting held on June 27,
2013, changed its fiscal year-end from the previous March 31 to June 30. Consequently, the current consolidated
fiscal period under review represents an irregular 3-month (consolidated) accounting period from April 1, 2013
to June 30, 2013.
In conjunction with this change, increases (decreases) in business results have been stated in comparison withthe first quarter (the 3-month period from April 1, 2012 to June 30, 2012) of the previous fiscal year rather thanwith the full fiscal year (from April 1, 2012 to March 31, 2013).
During the 3-month consolidated fiscal period under review, the Japanese economy exhibited obvious signs ofrecovery, thanks to strong public investment projects buoyed by demand related to reconstruction efforts fromthe Great East Japan Earthquake, the implementation of extensive monetary easing policies and growing
personal consumption and exports in the wake of rising stock prices and yen depreciation.
The Nippon Koei Group’s domestic consulting operations remained healthy, following the execution of the large
supplementary budget (fiscal year ended March 31, 2013) consisting chiefly of reconstruction projects anddisaster prevention measures, as well as the passing of the budget for the fiscal year ending June 30, 2014, whichassigned the highest priority to economic recovery. Our overseas operations also benefited from an increase in
the Official Development Assistance (ODA) budget and growing demand for infrastructure projects in Asia andother developping countries. In our electric power engineering operations, business conditions continued to beharsh as business conditions of electric power companies remained under pressure and reductions were made inbudgets for new capital expenditure and repair works due to through management rationalization.
Against this backdrop, the Group, under the Medium-term Management Plan (From April 2012 to June 2015),
which sets as its basic policies (1) enhancement of global operations, and (2) exploration and formulation of
new business domains, continued to maintain the current scale of its existing operations while assuredly
engaging in new initiatives including “the development and management of oversea bases and the introductionof multi-domestic operations,” “the enhancement of the existing business sectors and expansion of businessdomains,” and “the exploration of new business models including new initiatives in business operations,” in
addition to steadily putting new and necessary measures into practice in order to bridge the gap between planand reality. Additionally, in order to achieve our initiative of “assurance of work-life balance,” we have steadily
been making efforts to raise productivity by such means as changing the fiscal year-end.
As a result, for the 3-month period ended June 30, 2013, consolidated orders received increased 10.8% to¥21,948 million, while consolidated sales grew 9.8% to ¥6,897 million.
In terms of profit, ordinary loss increased by ¥491 million to ¥3,157 million, and net loss increased by ¥103
million to ¥1,914 million for the 3-month period ended June 30, 2013.
As the Company’s consolidated sales are concentrated in March of each year and are thus subject to seasonal
fluctuations, the consolidated sales for the current irregular 3-month accounting period have also been subject
to such seasonal influences. Additionally, as expenses including selling, general and administrative expenses are
incurred more or less equally throughout the year, losses were recorded in both ordinary income (loss) and net
income (loss) for the 3-month fiscal period under review.
The performance for each segment is outlined below.

Domestic Consulting Operations
While orders remained firm, as stated above, we proactively engaged in post-quake reconstruction efforts, inaddition to receiving constant orders in the disaster prevention field including research and examination of
deep-seated landslide areas (research for formulating countermeasures against earthquakes and landslides) andthe transportation related field including roads and bridges. As a result, for the 3-month period ended June 30,
2013, orders received rose 19.8% to ¥13,374 million, while sales fell 0.8% to ¥1,354 million. Ordinary loss totaled¥2,450 million, up ¥95 million.

2

Overseas Consulting Operations
The Company continued to pursue global expansion and while successfully bidding for various overseas projects
including the railway project in Mongolia, orders received in the 3-month fiscal period under review failed toreach the levels of the first quarter of the previous fiscal year, which was characterized by steep growth backed
by orders of large projects recieved, and as a result, orders received in the 3-month fiscal period under review
decreased 13.6% to ¥5,461 million while sales increased 44.4% to ¥2,864 million. Ordinary loss came to ¥748
million, up ¥334 million.

Power Engineering Operations
While harsh conditions prevailed among the electric power companies, as stated above, the Company stepped up
its sales efforts in the rapidly growing hydraulic power generation market both in Japan and overseas, resulting
in the receipt of orders such as a full scale renewal of an hydraulic power plant complying to the fixed-pricepurchasing system from a new domestic customer, and a technical support project relating to hydraulic power
generation from South Korea. Orders received rose 34.6% to ¥3,108 million while sales fell 10.3% to ¥2,353
million for the 3-month period ended June 30, 2013. Ordinary loss was up ¥79 million to ¥103 million.

Real Estate Leasing Operations
Sales from our real estate leasing operations increased 0.9% to reach ¥283 million, while ordinary profit fell ¥9million to ¥210 million for the 3-month period ended June 30, 2013.

(2) Cash Flows
The Company, in accordance with the resolution of the 68th general shareholders’ meeting held on June 27, 2013,changed its fiscal year-end from the previous March 31 to June 30. Consequently, the consolidated fiscal period underreview represents an irregular 3-month (consolidated) accounting period from April 1, 2013 to June 30, 2013.
In conjunction with this change, increases (decreases) in cash flows have been stated in comparison with the first quarter(the 3-month period from April 1, 2012 to June 30, 2012) of the previous fiscal year rather than with the full fiscal year
(from April 1, 2012 to March 31, 2013).
Cash and cash equivalents at the end of the fiscal period under review totaled ¥11,614 million, increasing ¥3,249 million
over the first quarter of the previous fiscal year. The factors behind this increase included the following.
Net cash provided by operating activities totaled ¥14,357 million (compared to a net inflow of ¥15,223 million during thefirst quarter of the previous fiscal year). This was due to factors that increase cash outweighing factors that decrease cash,
namely the increase of ¥24,658 through the collection of trade accounts receivable, despite the reporting of ¥3,157 million
in loss before income taxes and minority interests.
Net cash used in investing activities totaled ¥772 million (compared to a net outflow of ¥327 million during the firstquarter of the previous fiscal year). This was due primarily to payments of loans receivable and the purchase of fixed
assets.
Net cash used in financing activities amounted to ¥8,539 million (compared to a net outflow of ¥12,421 million during thefirst quarter of the previous fiscal year). This was due primarily to repayments of short-term borrowings.
The table below shows trends in cash flow-related indicators for the Group.
Reference: Trends in Cash Flow-related Indicators

Capital-to-asset ratio (%) .....................
Capital-to-asset ratio
on market value basis (%) ................
Interest-bearing
debt-to-cash flow ratio (annual) ......
Interest coverage ratio (times) ............

Fiscal Year
Ended March2010

Fiscal Year
Ended March2011

Fiscal Year
Ended March2012

Fiscal Year
Ended March2013

Fiscal Period
Ended June
2013

53.8

58.1

54.5

55.0

60.8

27.5

32.0

27.4

34.5

39.2

9.5
9.8

1.6
52.3

—
—

3.1
73.7

0.2
1,519.03

Capital-to-asset ratio: shareholders’ equity / total assets
Capital-to-asset ratio on market value basis: market capitalization / total assets
Interest-bearing debt-to-cash flow ratio: interest-bearing debts / cash flow
Interest coverage ratio: cash flow / interest payment
Notes: 1. All figures are calculated on the basis of consolidated financial figures.
2. Market capitalization is computed on the basis of the number of shares issued, excluding treasury stocks.
3. Cash flow here means operating cash flow.
4. Interest-bearing debt here comprises all debts included in the balance sheet on which interest is paid.
5.	The interest-bearing debt-to-cash flow and interest coverage ratios for the fiscal year ended March 31, 2012, were negative
as indicated by “—.”
6.	Due to the change to the fiscal year-end, the consolidated fiscal period under review is an irregular 3-month accounting
period. Accordingly, the interest-bearing debt-to-cash flow ratio and interest coverage ratio are based on cash flows andinterest payments for the 3-month period.

2. Production, New Orders and Sales
The Company, in accordance with the resolution of the 68th general shareholders’ meeting held on June 27,
2013, changed its fiscal year-end from the previous March 31 to June 30. Consequently, the consolidated fiscal
period under review represents an irregular 3-month (consolidated) accounting period from April 1, 2013 toJune 30, 2013.
Accordingly, increases (decreases) have been stated in comparison with the first quarter (the 3-month period
from April 1, 2012 to June 30, 2012) of the previous fiscal year.

(1) New Orders
Business Segment
New Orders
Domestic consulting operations ..............................
Overseas consulting operations ..............................
Power engineering operations .................................
Other business operations .......................................
Total new orders ..................................................
Outstanding orders
Domestic consulting operations ..............................
Overseas consulting operations ..............................
Power engineering operations .................................
Other business operations .......................................
Total orders on hand ...........................................

This 3-month
Consolidated Fiscal Period(Millions of yen)

Change on First Quarterof Previous Year(%)

¥13,374
5,461
3,108
5
21,94819.8(13.6)
34.6(52.1)
10.8

25,24836,7586,332
5¥68,343

13.8
(3.9)
(2.6)
85.8
2.1

Notes: 1.	Figures above do not include consumption tax.
2.	The above figures are related to transactions with non-Group organizations; they do not include internal transactions
between Group segments or the transfer amounts involved.

(2) Sales Performance
Business Segment
Domestic consulting operations ..............................
Overseas consulting operations ..............................
Power engineering operations .................................
Real estate leasing operations .................................
Other business operations .......................................
Total sales ..............................................................
4

This 3-month
Consolidated Fiscal Period(Millions of yen)

¥1,354
2,863
2,353
283
44
¥6,897

Change on First Quarterof Previous Year
(%)

(0.8)
44.4
(10.3)
0.9
31.5
9.8

Notes: 1. Production status is not stated due to difficulties in defining consolidated group production performance.
2. Transactions between business segments are offset and eliminated.
3. Amounts above do not include consumption tax.
4. Sales to major customers as a proportion of total sales are given as follows.

CustomerTokyo Electric Power
Company,Incorporated .....................
Japan International
Cooperation Agency ..........................
Government of Vietnam ......................

This 3-month
Consolidated Fiscal Period
Amount(Millions of yen)

Proportion(%)

Previous Consolidated
Fiscal Year
Amount(Millions of yen)

Proportion
(%)

¥873

12.7

¥8,470

11.7

508

7.4

8,474

11.7

386

5.6

1,614

2.2

3. Future Challenges(1) Management Policy
The Nippon Koei Group takes the management philosophy “Act with integrity & Contribute to society throughtechnology and engineering.” Guided by the slogan “Challenging mind, Changing dynamics,” the Group isaiming to realize its management philosophy.
Looking ahead, under this management philosophy and slogan, we see that reconstruction demand related to
the Great East Japan Earthquake is merely temporary and that the growth of emerging markets in Asia andother parts of the world is expected to fuel demand for overseas infrastructure construction. Working against
this backdrop, we will continue to make further inroads into the global market. Accordingly, while maintaining asecure technical foundation in Japan (construction consulting and engineering businesses), the Group will focus
on the expanding infrastructure development market in emerging markets to significantly expand its businesses.
On the other hand, to attain sustainable growth, the overseas bases should take the initiative of exploring andforming new business domains. In line with this long-term goal, the NK Group has been addressing the key
challenges listed below, based on the three-year Medium-Term Management Plan (from April 2012 to June2015).
(1)	Development and management of overseas bases (introduction of multi-domestic management)(2) Enhancement of the existing business sectors and expansion of business domains(3) Exploration of new business models including new initiatives in project management(4) Enhancement of the work-life balance
In view of the Medium-Term Management Plan, we will address the key challenges in the next fiscal year (fromJuly 2013 to June 2014).
1) Development and management of overseas offices and/or group companies (introduction of multidomestic management)
Overseas offices and/or group companies will be established and/or enhanced in the four major markets (Asia,
the Middle East and North Africa, Latin America, and Sub-Saharan Africa). The sales structure will be built
around region-based marketing with appropriate levels of responsibility and authority granted to local bases, inan effort to aggressively engage the non-ODA market in addition to the current ODA market.
2) Enhancement of the existing business sectors and expansion of business domains
In response to drastic changes occurring in the existing business sectors where the Group operates, we intend to
identify business domains to expand each business operation, develop technologies, and employ, train andstrengthen human resources, in a bid to steadily expand our businesses. Specifically, our domestic consulting
operations will focus on disaster recovery projects and infrastructure management operations, while overseas

5consulting operations will concentrate on urban development projects in emerging countries and powerengineering operations will direct efforts to expanding the mechanical and electrical consulting operation.
3) Exploration of new business models including new initiatives in project management
We have designated water power generation as our key new business model and will promote this businessthrough increased cross-departmental cooperation.
4) Enhancement of the work-life balance
We will review the current working environment through company-wide initiatives led by the Work-Life Balance
Promotion Committee to improve the balance between work and other aspects of employees’ lives.
Based on the above policies, the Group will proactively engage in business operations and address these issues
in an effort to improve our performance further.

(2) Basic Policy Governing Corporate Decision-Makers on Financial Affairs and Operations
Our basic policy governing corporate decision-makers on financial affairs and operations (GovernancePrinciples) is as detailed below.
1) Governance Principles
As a publicly listed company allowing its shares to be traded freely, we believe that whether or not we will sell sharesin response to a particular person’s attempt to acquire a large number of shares (an attempt to acquire a large
number of shares) should be determined ultimately by our shareholders.
However, we are proud of our company’s track record as a good corporate citizen. The Company has been charged
with fulfilling a social mission and public works projects, including construction consulting. The power of our brandis backed by a wide range of technological expertise, years of experience, and a rock-solid performance record. It
would be impossible to manage the Company, improve its corporate value, or bring profit to its shareholders without
a good understanding of everything the brand stands for or without the relationship of mutual trust that has been
built between the Company and its customers, employees, suppliers, and other stakeholders in Japan and abroad.
We believe that, in the event of a takeover bid, any party attempting to acquire a large number of shares (the bidder)should provide shareholders with all the information necessary for them to make a sound decision.
2) Special measures for realization of the Basic Policy
At the Company, we implement the following special measures in line with the Governance Principles describedin 1) above.
(i) Medium-term goals
Our medium-term goals and specific measures under our Medium-Term Management Plan are as described in
the section entitled “(1) Management Policy.”(ii) Enhancing corporate governanceWorking to boost the corporate value of the Company and the Group as a whole, we are continually improving
corporate governance by strengthening management oversight, ensuring transparency, and establishing a systemthat will enable us to quickly perform our operations. We also focus on compliance as well as risk management
to enhance the effectiveness of internal controls and have adopted a corporate auditor system. The Board of
Directors provides oversight of our operations, while the Board of Corporate Auditors audits the directors’
activities.
3) Preventing an undesirable takeover in accordance with the Basic Policy
In line with the Governance Principles described in 1) above, we maintain an anti-takeover policy (hereinafter
the “Policy on Substantial Acquisition of Shares”) that is intended to prevent undesirable control over decisions
on our financial and operational policies. The Policy on Substantial Acquisition of Shares generally applies toany bidder attempting to acquire a large number of Nippon Koei shares in a bid to control 20% or more of thevoting rights held by a certain group of shareholders or acquiring enough shares to change the balance of power
to ensure that a certain group of shareholders has 20% or more of the voting rights. The Policy requires thebidder to (1) provide the Board of Directors with all relevant information including written notification

6

declaring his/her exact intentions in advance, and (2) begin purchasing shares only after the elapse of a tenderassessment period to be specified by the Company’s Board of Directors.
The Policy on Substantial Acquisition of Shares was first introduced upon resolution by the Board of Directors
in May 2006, after which the Board voted to partially revise and continue it in June 2007. The Policy was laterpartially revised upon approval of shareholders at the 63rd general shareholders’ meeting held in June 2008, andwas again partially revised upon approval of shareholders at the 66th general shareholders’ meeting held in June
2011 and at the 69th general shareholders’ meeting held in June 2014.
The details of the Policy on Substantial Acquisition of Shares have been made available on the Company website(http://www.n-koei.co.jp/).
4) Board of Directors’ decision concerning the measures described in 2) and 3) above and the reason
The measures described in 2) above are in line with the Governance Principles described in 1) above, since they
were implemented for the purpose of enhancing corporate value and carried out in the common interests of ourshareholders. These measures emphasize protecting the interests of our shareholders over protecting thecorporate directors from being replaced.
The measures described in 3) above (the Policy on Substantial Acquisition of Shares) are in line with theGovernance Principles described in 1) above. It protects the interests of our shareholders over protecting thecorporate directors from being replaced in the following ways:a. The Policy on Substantial Acquisition of Shares meets the three basic requirements set forth in the Guidelines
Regarding Takeover Defense for the Purposes of Protection and Enhancement of Corporate Value andShareholders’ Common Interests published by the Ministry of Economy, Trade and Industry (METI) and theMinistry of Justice on May 27, 2005. It also incorporates a June 30, 2008, report entitled “Proper Role of
Takeover Defense Measures in Light of Changes in Various Environments” published by METI’s Corporate
Value Study Group.
b. The Policy enables our shareholders to make an informed decision on whether a takeover would be beneficial,prevents any apparent infringement on the Company’s corporate value and is in the best interest of Nippon
Koei and its shareholders.
c. The Rules on Substantial Acquisition of Shares and the necessary conditions for taking countermeasures arereasonable in light of our aim to maintain and enhance the Company’s corporate value and protect theinterests of its shareholders.
d. The Rules on Substantial Acquisition of Shares and the necessary conditions for taking countermeasures areconcrete and clear enough to make it possible for the shareholders, investors and potential bidders to makefair predictions about the future.
e. The policy was enacted by a vote of the shareholders at a shareholders’ meeting. The Company’s Board of
Directors can convene a shareholders’ meeting to verify the shareholders’ intentions to implement a
countermeasure or not. Decisions about whether to maintain, rescind or alter the policy, made in the form ofa resolution to be voted on at a general shareholders’ meeting, will ensure that the wishes of the shareholders
are reflected in company policy.
f. The policy establishes objective and clear conditions for taking countermeasures. It also establishes priorconditions needed to implement countermeasures, requiring that the Company’s Board of Directors consult
its independently established ad hoc committee in advance concerning the initiation of countermeasures.
Only after carefully considering the recommendations of the committee will the Board make its final decision
on implementing counter-takeover measures. The Policy on Substantial Acquisition of Shares ensures that all
decisions of the Board regarding countermeasures are objective and reasonable.
g. The policy empowers the ad hoc committee to seek the advice of independent experts at the Company’s
expense. The policy goes to such great lengths that it leaves no room for doubt about the fairness andobjectivity of the ad hoc committee’s recommendations.
h. The Policy on Substantial Acquisition of Shares is not intended to be a dead-hand takeover defense and may
be abolished subject to a vote at the Company’s shareholders’ meeting or at a Board of Directors’ meeting
comprised of directors elected at a shareholders’ meeting. It is not a slow-hand takeover defense either, since
the term of the Company’s Board members is one year.

74. Business Risks
The following are deemed to be risks that could affect Nippon Koei’s future financial status or corporate
performance as of the date this report was submitted. These risks listed here are not intended to be allencompassing or exhaustive.

Uneven Annual Distribution of Performance Results
The primary operations of the Group include domestic and overseas construction consultancy and powerengineering and equipment manufacturing. In particular, the domestic construction consultancy operations
entail national and local government projects whose orders come in as a cluster toward the end of the fiscal year
(March). As a result, approximately 70% of Group sales tend to occur during the period from January throughMarch.

Dependence on Major Customers
Our domestic and overseas construction consultancy operations rely on national and local government contracts
and projects based on the Japanese ODA budget for some 90% of sales. Sales performance on the domestic front
tends to be affected by trends in government spending, while our international orders are a reflection of theJapanese ODA budget.
Since about 50% of our power engineering operations are for the Tokyo Electric Power Company, Incorporated(TEPCO), our sales performance is largely dictated by capital investments by TEPCO.

5. Operationally Significant Contracts
The Group reports no operationally significant contracts.

6. Analysis of Financial Status, Management Performance and Cash Flow Status
Below is an analysis of the Group’s financial status and management performance as well as its cash flow status
for the consolidated fiscal period under review.
The Company, in accordance with the resolution of the 68th general shareholders’ meeting held on June 27,
2013, changed its fiscal year-end from the previous March 31 to June 30. Consequently, the consolidated fiscal
period under review represents an irregular 3-month (consolidated) accounting period from April 1, 2013 toJune 30, 2013.
In conjunction with this change, increases (decreases) with respect to (2) Performance Analysis have been statedin comparison with the first quarter (the 3-month period from April 1, 2012 to June 30, 2012) of the previous
fiscal year rather than with the full fiscal year (from April 1, 2012 to March 31, 2013).

(1) Analysis of Financial Status
Consolidated total assets at the end of the 3-month consolidated fiscal period under review amounted to ¥71,451
million, down ¥13,344 million over the previous year.
The main causes for this decrease were a decline of ¥13,945 million in current assets, despite a ¥600 million
increase in fixed assets.
The decrease in current assets was due primarily to a ¥5,095 million increase in cash and cash equivalents, a¥24,651 million decrease in trade notes and trade accounts receivable as well as a ¥4,534 million increase inwork in progress and a ¥1,123 increase in deferred tax assets.
The increase in fixed assets was due primarily to a ¥477 million increase in investment securities and a ¥476
million increase in long-term loans receivable, despite a ¥183 million decrease in property, plant and equipment
and intangible assets.
Consolidated liabilities at the end of the 3-month consolidated fiscal period under review amounted to ¥27,780
million, down ¥10,086 million over the previous year.
The main causes for this decrease were a decline of ¥11,936 million in current liabilities, despite a ¥1,850
million increase in long-term liabilities.
The decrease in current liabilities was due primarily to a ¥4,539 million decrease in trade notes and tradeaccounts payable, a ¥8,990 million decrease in short-term borrowings, a ¥1,722 million rise in accrued expenses,
a ¥1,785 decrease in income taxes payable, a ¥3,137 increase in advances received, and a ¥785 million decrease8

in accrued bonuses.
The increase in long-term liabilities was due primarily to a ¥1,000 million increase in long-term debt, a ¥3,518
million decrease in liability for retirement benefits and a ¥4,306 million increase in net defined benefit liability.
Equity (net assets) at the end of the 3-month fiscal period declined ¥3,258 million from the total of previous yearto ¥43,671 million.
The main causes behind this decline were a decrease of ¥2,495 million in retained earnings, a ¥275 increase inunrealized gain on available-for-sale securities and a ¥963 million decrease in remeasurements of defined benefit
plans.

(2) Performance Analysis
Net sales for the 3-month fiscal period under review increased ¥614 million (increase of 9.8%) over the firstquarter of the previous fiscal year to ¥6,897 million.
Operating loss increased by ¥571 million (21.6%) over the first quarter of the previous fiscal year ¥3,214 million.
The cost of sales ratio was 89.0%, up 4.4 percentage points from the first quarter of the previous fiscal year
while the ratio of selling, general and administrative expenses to net sales was 57.6%, an increase of 0.1
percentage point over the first quarter of the previous fiscal year. These results brought the ratio of operating
loss to net sales up 4.5 percentage points to -46.6% for the 3-month period ended June 30, 2013.
Other income—net amounted to ¥58 million, due mainly to income primarily from dividend income and gain on
sales of investment securities exceeding expenses including interest expense and foreign currency exchange loss.
As a result, ordinary loss amounted to ¥3,157 million, up ¥491 million or 18.4% from the first quarter of theprevious fiscal year.
Extraordinary gains (losses) were not reported in the 3-month fiscal period under review.
As a result, loss before taxes and minority interests totaled ¥3,157 million, and net loss after deducting income
taxes-current, income taxes for prior periods, income taxes-deferred, and minority interests, reached ¥1,914
million, representing a ¥103 million increase in losses (increase of 5.7%) from the first quarter of the previous
fiscal year.
Net loss per share came to ¥25.35, representing a increase in losses of ¥1.36 from the ¥23.99 from the firstquarter of the previous fiscal year.

(3) Analysis of Cash Flow Status
An analysis of cash flow status for the consolidated fiscal period from April 1 to June 30, 2013 under review isprovided in the section entitled “(2) Cash flows” under “1. Overview of Performance and Cash Flows” in theConsolidated Business Report.

Noriaki Hirose
President:

9Co n s ol i d ated B a lanc e S h eet
Nippon Koei Co., Ltd. and Consolidated Subsidiaries
June 30, 2013

Thousands of
U.S. Dollars (Note 1)

Millions of Yen

ASSETS

June 30, 2013

March 31, 2013

June 30, 2013¥11,614¥ 6,579$117,801

Trade notes .........................................................

75

43

761

Trade accounts ...................................................

8,520

33,20386,419Allowance for doubtful accounts ......................

(181)

(38)

(1,836)Inventories (Note 4) .............................................

12,017

7,465

121,889

Deferred tax assets (Note 10) ..............................

2,546

1,423

25,824

Prepaid expenses and other current assets ........

1,896

1,757

19,230Total current assets ............................................

36,48750,432370,088

Land.......................................................................

13,956

13,956

141,556

Buildings and structures......................................

20,393

20,393

206,847

Machinery and equipment...................................

2,607

2,613

26,443

Furniture and fixtures..........................................

2,695

2,688

27,335

Lease assets...........................................................

227

246

2,302

Construction in progress......................................

13

3

132

Total.....................................................................

39,891

39,899404,615

Accumulated depreciation....................................

(16,762)(16,651)(170,017)

Net property, plant and equipment....................

23,12923,248234,598

7,784

7,423

78,953and associated companies (Note 13(5)(b)).........

801

684

8,125

Long-term loans receivable..................................

498

22

5,051

Goodwill................................................................

542

619

5,498

Receivables in bankruptcy....................................

123

123

1,248

Deferred tax assets (Note 10)...............................

752

282

7,628

Other assets...........................................................

1,512

2,142

15,335

Allowance for doubtful accounts.........................

(177)

(180)

(1,795)

Total investments and other assets....................

11,835

11,115120,043

TOTAL ....................................................................

¥71,451¥84,795$724,729

CURRENT ASSETS:
Cash and cash equivalents (Note 13) ..................
Receivables (Note 13):PROPERTY, PLANT AND
EQUIPMENT (Notes 5, 6 and 8):

INVESTMENTS AND OTHER ASSETS:
Investment securities (Notes 3 and 13)...............
Investments in unconsolidated subsidiaries

See notes to consolidated financial statements.

10Thousands of
U.S. Dollars (Note 1)

Millions of Yen

LIABILITIES AND EQUITYCURRENT LIABILITIES:
Short‑term borrowings (Notes 6 and 13) ...........
Current portion of long-term debt (Note 6) .......
Payables (Note 13):
Trade notes .........................................................
Trade accounts ...................................................
Accrued expenses .................................................
Income taxes payable ...........................................
Advances received ................................................
Accrued bonuses ..................................................
Allowance for anticipated project loss ................
Allowance for loss from a disaster ......................
Other current liabilities .......................................
Total current liabilities ....................................
LONG-TERM LIABILITIES:Long-term debt (Note 6) ......................................
Liability for retirement benefits (Note 7) ...........
Provision for directors’ retirement benefits .......
Allowance for environmental measures .............
Net defined benefit liability .................................
Asset retirement obligations ................................
Deposits received (Note 8) ...................................
Deferred tax liabilities (Note 10) .........................
Total long-term liabilities ................................

June 30, 2013

March 31, 2013

June 30, 2013

¥10
211

¥9,000
244

$101
2,140

490
2,023
3,134
162
9,317
895
105
2
3,028
19,377

695
6,357
1,412
1,947
6,180
1,749
61
2
3,666
31,313

4,970
20,51931,788
1,643
94,502
9,078
1,065
20
30,715
196,541

1,561

567
3,519
65
34

15,833

59
34
4,306
55
1,699
689
8,403

54
1,741
573
6,553

598
345
43,676558
17,233
6,989
85,232

7,393
6,209
33,5237,393
6,209
36,01874,98762,978340,024(3,435)(3,468)(34,841)

COMMITMENTS AND CONTINGENT
LIABILITIES (Notes 12, 14 and 15)
EQUITY (Notes 9 and 17):
Common stock,authorized, 189,580,000 shares; issued,
86,656,510 shares on June 30 and March 31, 2013 ...
Capital surplus .....................................................
Retained earnings ................................................
Treasury stock—at cost
11,085,421 shares on June 30, 2013
and 11,185,920 shares on March 31, 2013 .......
Accumulated other comprehensive income:Unrealized gain on
available-for-sale securities .............................
Deferred loss onderivatives under hedge accounting ...............
Foreign currency translation adjustments .......
Remeasurements of defined benefit plans .......
Total ....................................................................
Minority interests .................................................
Total equity .......................................................

890

615

9,027

(186)
(21)
(963)
43,410261
43,671(132)
3
46,638291
46,929(1,887)(212)(9,768)440,308
2,648
442,956

TOTAL ....................................................................

¥71,451¥84,795$724,72911

Consolidated Statement of Operations and Comprehensive Income
Nippon Koei Co., Ltd. and Consolidated Subsidiaries
Fiscal Period from April 1 to June 30, 2013

Thousands of
U.S. Dollars (Note 1)

Millions of Yen

NET SALES ...........................................................
COST OF SALES ...................................................
Gross profit ......................................................
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES (Note 11) .....
Operating (loss) income ..................................
OTHER INCOME (EXPENSES):Interest and dividend income .............................
Interest expense ...................................................
Foreign currency exchange (loss) gain ...............
Gain on sales of investment securities ...............
Loss on sales of investment securities ................
Other-net ...............................................................
Other income-net .............................................
(LOSS) INCOME BEFORE INCOME TAXESAND MINORITY INTERESTS .........................
INCOME TAXES (Note 10):
Current .................................................................
Income taxes for prior periods ............................
Deferred ................................................................
Total income taxes ...........................................
NET (LOSS) INCOME BEFOREMINORITY INTERESTS ...................................
MINORITY INTERESTS IN NET(LOSS) INCOME ................................................
NET (LOSS) INCOME .........................................
MINORITY INTERESTS IN NET(LOSS) INCOME ................................................
NET (LOSS) INCOME BEFOREMINORITY INTERESTS ...................................
OTHER COMPREHENSIVE INCOME (Note 16):
Unrealized gain on
available-for-sale securities ...............................
Deferred loss onderivatives under hedge accounting .................
Foreign currency translation adjustment ...........
Total other comprehensive income .....................
COMPREHENSIVE INCOME .............................
TOTAL COMPREHENSIVE INCOME
ATTRIBUTABLE TO:
Owners of the parent ...........................................
Minority interests .................................................

3-month12-month3-monthJune 30, 2013

March 31, 2013

June 30, 2013

¥6,897
6,138
759¥72,41252,742
19,670$69,956
62,257
7,699

3,973(3,214)15,028
4,642

40,299(32,600)

89
(10)
(59)
16
(5)
26
57

359
(44)
111
53
(128)
93
444

903
(101)
(598)
162
(51)
263
578

(3,157)

5,086(32,022)129(230)(1,119)(1,220)

2,294
58
(151)
2,201

1,308
(2,333)(11,350)(12,375)(1,937)

2,885(19,647)(23)(1,914)

35
2,850

(233)
(19,414)

(23)

35

(233)

(1,937)

2,885(19,647)

275

1,132

2,789

(54)
(28)
193
¥(1,744)

(131)
6
1,007
¥3,892

(548)
(283)
1,958
$(17,689)¥(1,719)¥(25)¥3,855¥37$(17,435)$(254)
U.S.Dollars(Note 1)Yen

PER SHARE OF COMMON STOCK (Note2.t.):
Basic net (loss) income ........................................
Cash dividends applicable to the year ................
See notes to consolidated financial statements.

12¥(25.35)
2.00¥ 37.767.50$(0.26)
0.02

Co n s ol i d ated S t atemen t o f C h an ges i n E q u i t y
Nippon Koei Co., Ltd. and Consolidated Subsidiaries
Fiscal Period from April 1 to June 30, 2013

Thousands

Millions of Yen
Accumulated Other Comprehensive Income

BALANCE, APRIL 1, 2012 �����������������������������
Net income ������������������������������������������������������Cash dividends, ¥7.50 per share ���������������������
Change of scope of consolidation ������������������
Purchase of treasury stock �����������������������������
Disposal of treasury stock ������������������������������
Net change in the year ������������������������������������
BALANCE, MARCH 31, 2013 ������������������������
Net loss ������������������������������������������������������������Cash dividends, ¥7.50 per share ���������������������
Purchase of treasury stock ���������������������������������
Disposal of treasury stock ������������������������������
Net change in the fiscal period (3 months) ���BALANCE, JUNE 30, 2013 �����������������������������

Outstanding
Number of
Shares ofCommon Stock

Common Stock

Capital Surplus

75,486¥7,393¥6,132Retained
Earnings¥33,630

75,471¥(3,387)

6,209¥ (517)¥

Foreign
Currency
Translation
Adjustments(1)

Remeasurementsof defined
benefit plans¥ (1)¥43,249¥43,505

(566)

(566)

104

104

104

(87)

(87)

(87)

6

83

83

36,018(3,468)

1,132

(131)

4

1,005

35

1,040

615

(132)

3

46,638291

46,929

(581)
(3)

108

36
¥6,209

¥256

(566)

(8)

¥7,393

Total Equity

2,850(1,914)75,571

Minority
Interests

Total

2,850

77
7,393

Deferred Loss on
Derivatives
under Hedge
Accounting

2,850

(32)
17

Unrealized(Loss) Gain on
Available-forSale Securities

TreasuryStock¥33,523¥(3,435)(1,914)(1,914)

(581)

(581)

(3)

(3)

36

36

275

(54)

(24)

¥(963)

(766)

(30)

(796)

¥ 890

¥(186)¥(21)¥(963)¥43,410¥261¥43,671

Thousands of U.S. Dollars (Note 1)
Accumulated Other Comprehensive Income

BALANCE, MARCH 31, 2013 ������������������������
Net loss ������������������������������������������������������������Cash dividends, $0.08 per share ���������������������
Purchase of treasury stock �����������������������������
Disposal of treasury stock ����������������������������������
Net change in the fiscal period (3 months) ��������
BALANCE, JUNE 30, 2013 �����������������������������

Common Stock

Capital Surplus$74,987$62,978

Retained
Earnings$365,331

TreasuryStock$(35,176)

Unrealized
Gain onAvailable-forSale Securities

Deferred Loss on
Derivatives
under Hedge
Accounting$6,238$(1,339)

Foreign
Currency
Translation
Adjustments$

Remeasurementsof defined
benefit plans

31$473,050(19,414)(5,893)(30)
365$74,987$62,978$340,024$(34,841)

Minority
Interests

Total$2,952

Total Equity$476,002(19,414)(19,414)(5,893)(5,893)

(30)

(30)

365

365

2,789

(548)

(243)

$(9,768)(7,770)(304)(8,074)$9,027$(1,889)$(212)$(9,768)$440,308$2,648$442,956

See notes to consolidated financial statements.

13

Co n s ol i d ated S t atemen t o f C as h Fl ow s
Nippon Koei Co., Ltd. and Consolidated Subsidiaries
Fiscal Period from April 1 to June 30, 2013

Thousands of
U.S.Dollars (Note 1)

Millions of Yen

OPERATING ACTIVITIES:

3-month12-month3-monthJune 30,2013

March 31, 2013

June 30,2013(Loss) income before income taxes andminority interests ....................................................

¥ (3,157)¥5,086$(32,022)

Adjustments for:
Income taxes – paid ..............................................
Depreciation and amortization ............................
Gain on sales of property, plant and equipment .......
(Loss) gain on sales of investment securities ......

(1,608)
221
(2)
(16)

(1,535)906(1)
49(16,310)
2,242
(20)
(162)

Decrease (increase) in tradeaccounts receivable ...........................................

24,658(3,033)

250,107

Increase in inventories .......................................

(4,551)(895)(46,161)(Decrease) increase in tradeaccounts payable ...............................................

(4,546)

1,190(46,110)(Decrease) increase in liability
for retirement benefits ......................................

(6)

111

(61)

618
877
3,373

(193)
31,8292,484
145,623

(19)
3,138
245
14,357

Decrease in net defined benefit liability .................

Increase in advanced received ...........................
Other—net .............................................................
Net cash provided by operating activities ...
INVESTING ACTIVITIES:
Proceeds from sales of property,
plant and equipment ...............................................

3

10

30

Purchases of property, plant and equipment ..........

(228)

(592)

(2,313)

Proceeds from sales and redemption of
investment securities ..............................................

200

1,842

2,029

(117)
(630)

(737)
(286)

(1,187)(6,389)

(772)

¥ 237

$ (7,830)

Purchases of investment securities ..........................
Increase in other assets ............................................
Net cash (used in) provided
by investing activities .....................................
See notes to consolidated financial statements.

14¥

Thousands of
U.S.Dollars (Note 1)

Millions of Yen

3-month12-month3-monthJune 30,2013

March 31, 2013

June 30,2013

Net decrease in short-term borrowings ......................
Proceeds from long-term debt ..................................
Repayments of long-term debt .................................
Repayments of lease obligations ..............................
Purchase of treasury stock .......................................
Dividends paid ..........................................................
Other—net .................................................................
Net cash used in financing activities ...............

¥ (8,990)
1,000
(30)
(10)
(3)
(539)
33
(8,539)¥(3,000)
650
(118)
(43)
(10)
(565)
2
(3,084)$ (91,186)
10,143
(304)
(101)
(30)
(5,467)
334(86,611)

FOREIGN CURRENCY
TRANSLATION ADJUSTMENTS
ON CASH AND CASH EQUIVALENTS ................

(11)

93

(112)

NET INCREASE IN CASH AND
CASH EQUIVALENTS ............................................

5,035

619

51,070FINANCING ACTIVITIES:CASH AND CASH EQUIVALENTS OF
A NEWLY CONSOLIDATED SUBSIDIARY,
BEGINNING OF PERIOD ......................................

37

CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD ......................................

6,579

5,923

66,731

CASH AND CASH EQUIVALENTS,
END OF PERIOD ....................................................

¥11,614¥ 6,579$117,801

N o tes to C on solid ated Fi n an c i al S t atemen t s
Nippon Koei Co., Ltd. and Consolidated Subsidiaries
Fiscal Period from April 1 to June 30, 2013

1.	B A S I S O F P R E S E N TAT I O N O F C O N S O L I D AT E D F I N A N C I A L
STATEMENTS
The accompanying consolidated financial statements have been prepared in accordance with the provisions set
forth in the Japanese Financial Instruments and Exchange Act and its related accounting regulations and inaccordance with accounting principles generally accepted in Japan (“Japanese GAAP”), which are different incertain respects as to the application and disclosure requirements of International Financial Reporting Standards.
In preparing these consolidated financial statements, certain reclassifications and rearrangements have been madeto the consolidated financial statements issued domestically in order to present them in a form which is morefamiliar to readers outside Japan. In addition, certain reclassifications have been made in the consolidated
financial statements for the year ended March 31, 2013 to conform to the classifications used in the consolidated
financial statements for the 3-month fiscal period ended June 30, 2013.
The consolidated financial statements are stated in Japanese yen, the currency of the country in which Nippon
Koei Co., Ltd. (the “Company”) is incorporated and operates. The translations of Japanese yen amounts into U.S.
dollar amounts are included solely for the convenience of readers outside Japan and have been made at the rate of¥ 98.59 to $1, the rate of exchange at June 30, 2013. Such translations should not be construed as representations
that the Japanese yen amounts could be converted into U.S. dollars at that or any other rate.
Change in fiscal year-end
The Company and its subsidiaries (together, the “Group”) changed their fiscal year-end from March 31 to June 30
by the resolution of the 68th Annual General Shareholders’ Meeting held on June 27, 2013, in order to make
operations more efficient and decrease the work load which becomes heavy in March with the cluster of projects
requiring completion. Due to this change, the fiscal period ended June 30, 2013 is the 3-month period from April 1
to June 30, 2013.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa.	Consolidation — The consolidated financial statements as of June 30, 2013, include the accounts of theCompany and its 11 significant (11 in March 31, 2013) subsidiaries.
Under the control concept, those companies in which the Company, directly or indirectly, is able to exercise
control over operations are fully consolidated.
Investments in unconsolidated subsidiaries and associated companies are stated at cost. If the equity methodof accounting had been applied to the investments in these companies, the effect on the accompanying
consolidated financial statements would not be material.
Goodwill represents the excess of the cost of an acquisition over the fair value of the net assets of theacquired subsidiaries at the date of acquisition.
Goodwill which occurred before March 31, 2010, is amortized using the straight-line method over 5 to 10
years.
All significant intercompany balances and transactions have been eliminated in consolidation. All material
unrealized profit included in assets resulting from transactions within the Group is also eliminated.

b.	Cash Equivalents — Cash equivalents are short-term investments that are readily convertible into cash andthat are exposed to insignificant risk of changes in value.
Cash equivalents include time deposits and investment trusts, all of which mature or become due within
three months of the date of acquisition.

c.	Inventories — Work in process is stated at the lower of cost, mainly determined by the specificidentification cost method or net selling value.

d.	M arketable and Investment Securities — Marketable and investment securities are classified andaccounted for, depending on management’s intent, as follows:15

(1) held-to-maturity debt securities, which are expected to be held to maturity with the positive intent andability to hold to maturity are reported at amortized cost and (2) available-for-sale securities, which are notclassified as the aforementioned securities, are reported at fair value, with unrealized gains and losses, net of
applicable taxes, in a separate component of equity.
Nonmarketable available-for-sale securities are stated at cost determined by the moving-average method. For
other-than-temporary declines in fair value, investment securities are reduced to net realizable value by acharge to income.

e.	Property, Plant and Equipment — Property, plant and equipment are stated at cost. Depreciation ofproperty, plant and equipment is computed substantially by the declining-balance method at rates based on
the estimated useful lives of the assets, while the straight-line method is applied to buildings acquired after
April 1, 1998, and lease assets as well as other equipment for rent. The range of useful lives is principallyfrom 3 to 50 years for buildings and structures, from 2 to 15 years for machinery and equipment and from 2
to 20 years for furniture and fixtures. The useful lives for lease assets are the terms of the respective leases.

f.	Long-Lived Assets — The Group reviews its long-lived assets for impairment whenever events or changes incircumstance indicate the carrying amount of an asset or asset group may not be recoverable. An impairment
loss would be recognized if the carrying amount of an asset or asset group exceeds the sum of theundiscounted future cash flows expected to result from the continued use and eventual disposition of theasset or asset group. The impairment loss would be measured as the amount by which the carrying amountof the asset exceeds its recoverable amount, which is the higher of the discounted cash flows from thecontinued use and eventual disposition of the asset or the net selling price at disposition.

g.	A llowance for Doubtful Accounts — The allowance for doubtful accounts is stated in amounts
considered to be appropriate based on the Group’s past credit loss experience and an evaluation of potential
losses in the receivables outstanding.

h.	R etirement and Pension Plans — The Group has contributory defined benefit pension plans andunfunded retirement benefit plans for the benefit of its employees.
Effective April 1, 2000, the Group adopted a new accounting standard for employees’ retirement benefits andaccounted for the liability for retirement benefits based on the projected benefit obligations and plan assets
at the balance sheet date.
Unrecognized actuarial gain or loss is recognized by the straight-line method over mainly 13 years.
Unrecognized prior service costs are recognized by the straight-line method over mainly 13 years.
The transitional obligation of ¥2,016 million for the subsidiaries, determined as of April 1, 2000, is being
amortized over mainly 15 years.
Hitherto, retirement benefits for directors and Audit & Supervisory Board members were provided at theamount which would be required if all directors and Audit & Supervisory Board members retired at thebalance sheet date, but currently, the Group abolished benefit pension plans for directors and Audit &Supervisory Board members. The balance in the consolidated balance sheet is the estimated amount for
directors and Audit & Supervisory Board members who have belonged to the Group since when the plans
were effective.

i.	Allowance for Anticipated Project Loss — The Group has made a provision for anticipated losses on
uncompleted project contracts.

j.	Asset Retirement Obligations — In March 2008, the Accounting Standards Board of Japan (the “ASBJ”)
published ASBJ Statement No. 18, “Accounting Standard for Asset Retirement Obligations” and ASBJ
Guidance No. 21, “Guidance on Accounting Standard for Asset Retirement Obligations.” Under thisaccounting standard, an asset retirement obligation is defined as a legal obligation imposed either by law orcontract that results from the acquisition, construction, development and the normal operation of a tangible
fixed asset and is associated with the retirement of such tangible fixed asset. The asset retirement obligationis recognized as the sum of the discounted cash flows required for the future asset retirement and is recorded16

in the period in which the obligation is incurred if a reasonable estimate can be made. If a reasonableestimate of the asset retirement obligation cannot be made in the period the asset retirement obligation isincurred, the liability should be recognized when a reasonable estimate of asset retirement obligation can be
made. Upon initial recognition of a liability for an asset retirement obligation, an asset retirement cost is
capitalized by increasing the carrying amount of the related fixed asset by the amount of the liability. The
asset retirement cost is subsequently allocated to expense through depreciation over the remaining useful lifeof the asset. Over time, the liability is accreted to its present value each period. Any subsequent revisions to
the timing or the amount of the original estimate of undiscounted cash flows are reflected as an adjustment
to the carrying amount of the liability and the capitalized amount of the related asset retirement cost.

k. Research and Development Costs — Research and development costs are charged to income as incurred.
l.	Leases — In March 2007, the ASBJ issued ASBJ Statement No. 13, “Accounting Standard for Lease
Transactions,” which revised the previous accounting standard for lease transactions. The revised accounting
standard for lease transactions was effective for fiscal years beginning on or after April 1, 2008.
Under the previous accounting standard, finance leases that were deemed to transfer ownership of the leased
property to the lessee were capitalized. However, other finance leases were permitted to be accounted for as
operating lease transactions if certain “as if capitalized” information was disclosed in the note to the lessee’s
financial statements. The revised accounting standard requires that all finance lease transactions becapitalized by recognizing lease assets and lease obligations in the balance sheet. In addition, the revised
accounting standard permits leases which existed at the transition date and do not transfer ownership of theleased property to the lessee to be measured at the amount of obligation under finance leases less interest
expense at the transition date and recorded as acquisition cost of lease assets.
The Group applied the revised accounting standard effective April 1, 2008. In addition, the Group accounted
for leases which existed at the transition date and do not transfer ownership of the leased property to thelessee as acquisition cost of lease assets measured at the amount of obligation under finance leases at thetransition date.
All other leases are accounted for as operating leases.

m.	Accrued Bonuses — Bonuses to employees, directors and Audit & Supervisory Board members are accruedat the end of the year to which such bonuses are attributable.

n.	A llowance for Environmental Measures — The Group has made a provision for the treatment of
Polychlorinated Biphenyl (PCB) Wastes based on the Act on Special Measures concerning Promotion of
Proper Treatment of PCB Wastes.

o.	Allowance for Loss from a Disaster — The Group has made a provision for the rehabilitation of property,
plant and equipment which were damaged by the Great East Japan Earthquake.

p.	Income Taxes — The provision for income taxes is computed based on the pretax income included in the
consolidated statement of operations and comprehensive income. The asset and liability approach is used torecognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences
between the carrying amounts and the tax bases of assets and liabilities. Deferred taxes are measured byapplying currently enacted tax laws to the temporary differences.

q.	Foreign Currency Transactions — All short-term and long-term monetary receivables and payables
denominated in foreign currencies are translated into Japanese yen at the exchange rates at the balance sheet
date. The foreign exchange gains and losses from translation are recognized in the consolidated statement ofoperations and comprehensive income.

r.	Revenue Recognition — If the outcome of a construction contract can be estimated reliably, the contract
revenue is recognized by the percentage-of-completion method which is measured by reference to thepercentage of total cost incurred to date to estimated total cost.
All other construction projects, except the aforementioned, are recorded using the completed-contract
method (including the partially completed-contract method).

17

s.	Derivatives and Hedging Activities — The Group uses derivative financial instruments to manage its
exposures to fluctuations in foreign exchange. Foreign exchange forward contracts are utilized by the Groupto reduce its exposures to fluctuations in foreign currency exchange rates. The Group does not enter into
derivatives for trading or speculative purposes.
Derivative financial instruments are classified and accounted for as follows: (1) all derivatives are recognized
as either assets or liabilities and measured at fair value, and gains or losses on derivative transactions arerecognized in the consolidated statement of operations and comprehensive income and (2) for derivatives
used for hedging purposes, if such derivatives qualify for hedge accounting because of high correlation andeffectiveness between the hedging instruments and the hedged items, gains or losses on derivatives aredeferred until maturity of the hedged transactions.
Foreign exchange forward contracts are measured at fair value but the unrealized gains/losses are deferred
until the underlying transactions are completed.

t.	Per Share Information — Basic net income per share is computed by dividing net income available toshareholders of common stock by the weighted-average number of shares of common stock outstanding forthe period. The weighted-average numbers of shares of common stock for the 3-month fiscal period ended
June 30, 2013 and the year ended March 31, 2013, were 75,517,610 and 75,469,721, respectively.
Diluted net income per share of common stock is not disclosed because the Group had no securities
outstanding which might dilute the per share information for the 3-month fiscal period ended June 30, 2013,
and the year ended March 31, 2013.
Cash dividends per share presented in the accompanying consolidated statement of operations andcomprehensive income are dividends applicable to the respective years including dividends to be paid after
the end of the fiscal period.

u.	Accounting Changes and Error Corrections —In December 2009, the ASBJ issued ASBJ Statement No.
24 “Accounting Standard for Accounting Changes and Error Corrections” and ASBJ Guidance No. 24“Guidance on Accounting Standard for Accounting Changes and Error Corrections.” Accounting treatments
under this standard and guidance are as follows:(1) Changes in Accounting Policies:
When a new accounting policy is applied following revision of an accounting standard, the new policy isapplied retrospectively unless the revised accounting standard includes specific transitional provisions, inwhich case the entity shall comply with the specific transitional provisions.
(2) Changes in Presentation:
When the presentation of financial statements is changed, prior-period financial statements are reclassified
in accordance with the new presentation.
(3) Changes in Accounting Estimates:
A change in an accounting estimate is accounted for in the period of the change if the change affects that period
only and is accounted for prospectively if the change affects both the period of the change and future periods.
(4) Corrections of Prior-Period Errors:
When an error in prior-period financial statements is discovered, those statements are restated.

v. New Accounting Pronouncements and accounting change
Accounting Standard for Retirement Benefits — On May 17, 2012, the ASBJ issued ASBJ Statement No.
26, “Accounting Standard for Retirement Benefits” and ASBJ Guidance No. 25, “Guidance on AccountingStandard for Retirement Benefits,” which replaced the Accounting Standard for Retirement Benefits that had
been issued by the Business Accounting Council in 1998 with an effective date of April 1, 2000, and the otherrelated practical guidance, and followed by partial amendments from time to time through 2009.

18

Major changes are as follows:(a) Treatment in the balance sheet
Under the current requirements, actuarial gains and losses, past service costs and transitional obligationthat are yet to be recognized in profit or loss are not recognized in the balance sheet, and the difference
between retirement benefit obligations and plan assets (hereinafter, “deficit or surplus”), adjusted by suchunrecognized amounts, is recognized as a liability or asset.
Under the revised accounting standard, actuarial gains and losses, past service costs and transitional
obligation that are yet to be recognized in profit or loss shall be recognized within equity (accumulated
other comprehensive income), after adjusting for tax effects, and the deficit or surplus shall be recognized
as a liability (liability for retirement benefits) or asset (asset for retirement benefits).
(b) Treatment in the statement of operations and comprehensive income
The revised accounting standard does not change how to recognize actuarial gains and losses, past service
costs and transitional obligation in profit or loss. Those amounts would be recognized in profit or loss
over a certain period. However, actuarial gains and losses, past service costs and transitional obligationthat arose in the current period and have not yet been recognized in profit or loss shall be included inother comprehensive income, and actuarial gains and losses, past service costs and transitional obligationthat were recognized in other comprehensive income in prior periods and then recognized in profit or loss
in the current period shall be treated as reclassification adjustments.
(c) Amendments relating to the method of attributing expected benefit to periods and relating to the discountrate and expected future salary increases
The revised accounting standard also made certain amendments relating to the method of attributing
expected benefit to periods and relating to the discount rate and expected future salary increases.
This accounting standard and the guidance for (a) and (b) above are effective for the end of annual periods
beginning on or after April 1, 2013, and for (c) above are effective for the beginning of annual periods
beginning on or after April 1, 2014, or for the beginning of annual periods beginning on or after April 1,
2015, subject to certain disclosure in March 2015, both with earlier application being permitted from the
beginning of annual periods beginning on or after April 1, 2013. However, no retrospective application of thisaccounting standard to consolidated financial statements in prior periods is required.
The Group has applied the revised accounting standard for (a) and (b) above from the end of the annual
period beginning on April 1, 2013, and the effects of applying the standard was appropriated in accumulated
other comprehensive income as remeasurement of defined benefit plans. As a result, accumulated othercomprehensive income decreased ¥ 963 million for the 3-month fiscal period ended June 30, 2013.
The Group expects to apply the revised accounting standard for (c) above from the beginning of the annual
period beginning on July 1, 2014, and is in the process of measuring the effects of applying the revised
accounting standard in future applicable periods.

w. Additional Information
Employee Stock Ownership Plan Trust (“ESOP”) — The Group has introduced an employee incentive
plan, ESOP. Acquisition and sales of the Group’s shares are accounted for under the assumption that theGroup and ESOP are the same entity, and its liabilities are guaranteed by the Group. Accordingly, assets,
including the Group’s shares owned by ESOP, and liabilities, and profits and losses of ESOP are included in
the Group’s consolidated balance sheet, consolidated statement of operations and comprehensive income andconsolidated statement of changes in equity.

19

3. INVESTMENT SECURITIESInvestment securities as of June 30 and March 31, 2013, consisted of the following:Thousands of
U.S. Dollars

Millions of Yen

June 30, 2013

March 31, 2013

June 30, 2013

¥6,457779
548¥7,784¥6,115780
528¥7,423$65,493
7,901
5,559$78,953

Non-current:
Marketable equity securities ...............................
Government and corporate bonds ......................
Other .....................................................................
Total .................................................................

The carrying amounts and aggregate fair values of investment securities at June 30 and March 31, 2013, were as
follows:
Millions of Yen

June 30, 2013
Securities classified as:
Available-for-sale:
Equity securities ..................................
Debt securities ......................................
Other .....................................................
Total ...................................................

Cost¥4,822550
624¥5,996

Unrealized
Gains

Unrealized
Losses¥1,38296
12¥1,490

¥ 35
12
88
¥135

Fair
Value

¥6,169634
548¥7,351Millions of Yen

March 31, 2013
Securities classified as:
Available-for-sale:
Equity securities ..................................
Debt securities ......................................
Other .....................................................
Total ...................................................

Cost¥4,875550624¥6,049Unrealized
Gains

Unrealized

Losses¥1,06396
9¥1,168

¥116
12
104
¥232

Fair
Value

¥5,822634
529¥6,985

Thousands of U.S. Dollars

June 30, 2013

Cost

Securities classified as:
Available-for-sale:
Equity securities ..................................
Debt securities ......................................
Other .....................................................
Total ...................................................

$48,910
5,579
6,329$60,818

20

Unrealized
Gains$14,017974
122$15,113

Unrealized

Losses$ 355122893$1,370

Fair
Value$62,5726,431
5,558$74,561

The proceeds, realized gains and realized losses of the available-for-sale securities which were soldduring the 3-month fiscal period ended June 30, 2013, and the year ended March 31, 2013, were as
follows:
Millions of Yen

June 30, 2013

Proceeds

Securities classified as:
Available-for-sale:
Equity securities ................................................
Debt securities ....................................................
Other ...................................................................
Total .................................................................

Realized Gains

¥69

¥15

¥69

¥15

Realized Losses

Millions of Yen

March 31, 2013
Securities classified as:
Available-for-sale:
Equity securities ................................................
Debt securities ....................................................
Other ...................................................................
Total .................................................................

Proceeds

Realized Gains

Realized Losses¥1,970¥49¥100¥1,970¥49¥100

Thousands of U.S. Dollars

June 30, 2013
Securities classified as:
Available-for-sale:
Equity securities ................................................
Debt securities ....................................................
Other ...................................................................
Total .................................................................

Proceeds

Realized Gains

$700

$152

$700

$152

Realized Losses

The carrying values of debt securities and other by contractual maturities for securities classified as availablefor-sale at June 30, 2013, were as follows:
Millions of Yen

Due after 10 years ..................................................
Total .................................................................

¥550
¥550

Thousands of
U.S.Dollars$5,579$5,57921

4. INVENTORIESInventories at June 30 and March 31, 2013, consisted of the following:Thousands of
U.S. Dollars

Millions of Yen

Merchandise ...........................................................
Work in process ......................................................
Raw materials and supplies ...................................
Total .................................................................

June 30, 2013
¥42
11,805170¥12,017

March 31, 2013
¥42
7,271
152
¥7,465June 30, 2013
$426
119,739
1,724$121,889

5. INVESTMENT PROPERTYOn November 2008, the ASBJ issued ASBJ Statement No. 20, “Accounting Standard for Investment Property and
Related Disclosures” and issued ASBJ Guidance No. 23, “Guidance on Accounting Standard for Investment
Property and Related Disclosures.”
The Group owns some rental properties such as office buildings and land in the metropolitan area. The net ofrental income and operating expenses for those rental properties was ¥210 million ($2,130 thousand) and ¥848
million for the 3-month fiscal period ended June 30, 2013, and the year ended March 31, 2013, respectively.
In addition, the carrying amounts, changes in such balances and market prices of such properties are as follows:
Millions of Yen
Carrying Amount
April 1, 2013

¥7,133

Decrease

Fair Value
June 30, 2013¥(37)

¥7,096

June 30, 2013¥13,235

Millions of Yen
Carrying Amount
April 1, 2012

¥7,284

Decrease¥(151)

Fair Value
March 31, 2013

¥7,133

March 31, 2013¥13,586

Thousands of U.S. Dollars
Carrying Amount
April 1, 2013

$72,350

Decrease$(375)

Fair Value
June 30, 2013

$71,975

June 30, 2013

$134,243

Notes:
1. Carrying amount recognized in the consolidated balance sheets is net of accumulated depreciation andaccumulated impairment losses, if any.
2. Decrease during the 3-month fiscal period ended June 30, 2013, represents net amount of the recognition ofdepreciation and the acquisition of investment property.
3. Fair value of properties was measured by the Group in accordance with its Real-Estate Appraisal Standard.

6. SHORT-TERM BORROWINGS AND LONG-TERM DEBT
Short-term borrowings at June 30 and March 31, 2013 consisted of notes to banks. The annual interest rates
applicable to the short-term borrowings were 0.640% at June 30, 2013, and ranged from 0.485% to 0.770% at
March 31, 2013.

22

Long-term debt at June 30 and March 31, 2013, consisted of the following:Thousands of
U.S. Dollars

Millions of Yen

June 30, 2013

March 31, 2013

June 30, 2013

¥1,650¥650$16,736

50
72
1,772
(211)
¥1,561

79
82
811
(244)
¥567

507
730
17,973(2,140)$15,833

Unsecured loan from bank due seriallyto 2023 with interest rates ranging from
0.860% to 0.870% .................................................
Loan from bank due seriallyto 2013 with interest rate of 1.250% ...................

Obligation under finance leases ............................
Total .................................................................
Less current portion ..............................................
Long-term debt, less current portion ....................

Annual maturities of long-term debt at June 30 and March 31, 2013, for the five years and thereafter were as
follows:
Period Ending June 30

2014 .........................................................
2015 .........................................................
2016 .........................................................
2017 .........................................................
2018 .........................................................
2019 and thereafter .................................
Total ..................................................

Thousands of
U.S. Dollars

Millions of Yen
Long-Term Debt

Lease Obligations

Long-Term Debt

Lease Obligations

¥180
130

¥31
26
11
3
1
0
¥72

$1,826
1,319
1,663
2,698
2,698
7,039
$17,243

$314
276
112
30
10
0
$730

164
266
266
694

¥1,700

The Group had a commitment-line contract of ¥8,000 million ($81,144 thousand) over three years with financial
institutions in order to secure the stability of long-term funding. The contract included a restrictive financial
covenant. At June 30, 2013, the Group had not utilized the commitment line. In addition, the Group had
overdraft contracts of ¥10,200 million ($103,459 thousand) in total. At June 30, 2013, the Group had not utilized
the overdraft.
At June 30, 2013, land and building of ¥1,981 million ($20,093 thousand) were pledged as collateral for longterm debt of ¥50 million ($507 thousand).

7. RETIREMENT AND PENSION PLANS
The Group has severance payment plans for employees, directors and Audit & Supervisory Board members.
Under most circumstances, employees terminating their employment are entitled to retirement benefits
determined based on the rate of pay at the time of termination, years of service and certain other factors. Suchretirement benefits are made in the form of a lump-sum severance payment from the Company or from its
consolidated subsidiaries and annuity payments from a trustee. Employees are entitled to larger payments if thetermination is involuntary, by retirement at the mandatory retirement age, by death or by voluntary retirement
at certain specific ages prior to the mandatory retirement age.
In addition, the Group completely transitioned from the approved pension plan to the defined benefit corporate
pension plan in October 2010.
The liabilities for retirement benefits at June 30 and March 31, 2013, for directors and Audit & Supervisory

23

Board members were ¥59 million ($598 thousand) and ¥65 million, respectively. The retirement benefits for
directors and Audit & Supervisory Board members are paid subject to the approval of the shareholders.
The detailed notes relating to retirement benefit plan for the year ended March 31, 2013, were as follows:
The liability for employees’ retirement benefits at March 31, 2013, consisted of the following:
Millions of Yen

Projected benefit obligation ..................................
Fair value of plan assets ........................................
Unrecognized actuarial loss ..................................
Unrecognized transitional obligation ...................
Unrecognized prior service cost ............................
Prepaid pension cost ..............................................
Net liability .........................................................

March 31, 2013¥(14,506)
9,795
1,282
270
270
(630)
¥(3,519)

The components of net periodic benefit costs for the year ended March 31, 2013, were as follows:
Millions of Yen

Service cost .............................................................
Interest cost ............................................................
Expected return on plan assets .............................
Amortization of prior service cost ........................
Recognized actuarial loss ......................................
Amortization of transitional obligation ................
Net periodic benefit costs ..................................

12-month
March 31, 2013
¥960
262
(167)
21
428
138
¥1,642Note:
The net periodic benefit costs above exclude required funding for the multiemployer pension plan amounting to¥857 million ($9,112 thousand) at March 31, 2013, for which plan assets could not be allocated to eachparticipating employer.
The assumptions used for the year ended March 31, 2013, were set forth as follows:

Discount rate ..........................................................
Expected rate of return on plan assets .................
Amortization of prior service cost ........................
Recognition period of actuarial gain / loss ...........
Amortization period of transitional obligation ....

24

March 31, 2013
1.50%
2.00%
13 years
13 years
15 years

The funded status of the multiemployer pension plan at March 31, 2012 (available information as of March 31,2013), to which contributions were recorded as net periodic retirement benefit costs, was as follows:
Millions of Yen

Fair value of plan assets ........................................
Pension benefit obligation recordedby pension fund ....................................................
Difference ...............................................................

March 31, 2012
¥145,345
176,729¥(31,384)

The Groups’ contribution percentage for multiemployer pension plan at March 31, 2012 was 12.5%.
Note:
1. The difference mainly resulted from prior service cost of ¥ (24,984) million, adjustment of asset valuation of¥ (8,337) million and surplus of ¥1,937 million.
2. Prior service cost is amortized over 15 years.
3. The Group expensed special contributions of ¥329 million in the consolidated statement of operations andcomprehensive income in the year ended March 31, 2013.
4. The above contribution ratio does not conform to the actual ratio applied to the Group.

The detailed notes relating to retirement benefit plan for the 3-month fiscal period ended June 30, 2013,
were as follows:
The schedule of the defined benefit obligation at June 30, 2013, was as follows:
Millions of Yen

As of April 1, 2013 ..................................................
Current service cost ...............................................
Interest cost ............................................................
Actuarial losses .......................................................
Benefit paid ............................................................
As of June 30, 2013 ................................................

Thousands of
U.S. Dollars

3-month3-monthJune 30, 2013 June 30, 2013
$140,471¥13,849
238
2,414
55
558
(6)
(62)
(414)
(4,199)$139,182¥13,722

The schedule of the pension assets at June 30, 2013, was as follows:
Millions of Yen

As of April 1, 2013 ..................................................
Expected return on pension assets .......................
Actuarial losses .......................................................
Contributions by the employer .............................
Benefit paid ............................................................
As of June 30, 2013 ................................................

Thousands of
U.S. Dollars

3-month3-monthJune 30, 2013 June 30, 2013
$ 99,351¥ 9,795
49
497
237
2,404
359
3,641
(376)
(3,814)$102,079¥10,06425

The schedule of the net defined benefit liability for simplified method was as follows:
Millions of Yen

As of April 1, 2013 ..................................................
Periodic benefit cost ..............................................
Benefit paid ............................................................
As of June 30, 2013 ................................................

Thousands of
U.S. Dollars

3-month3-monthJune 30, 2013 June 30, 2013
$6,664
¥657
14
142
(23)
(233)
¥648
$6,573

The reconciliation of the defined benefit obligations and pension assets to the liabilities and assets on
retirement benefits recognized in the consolidated balance sheet as of June 30, 2013, was as follows:
Millions of Yen

Funded defined benefit obligations ......................
Pension assets ........................................................
Unfunded defined benefit obligations ..................
Net amount of liabilities and assets recognizedin consolidated balance sheet .............................
Retirement benefit liabilities .................................
Net amount of liabilities and assets recognizedin consolidated balance sheet .............................

Thousands of
U.S. Dollars

June 30, 2013 June 30, 2013¥10,760$109,139(102,079)(10,064)
696
7,060
3,610
36,616
4,306
4,306

43,676
43,676¥4,306$43,676

The profits and losses related to retirement benefits for the 3-month fiscal period ended June 30, 2013,
were as follows:
Millions of Yen

Current service cost ...............................................
Interest cost ............................................................
Expected return on pension assets .......................
Actuarial loss recognized in the year ....................
Prior service cost recognized in the year ..............
Transilation obligation recognized in the year .....
Periodic benefit cost in simplified method ..........
Other .......................................................................
Periodic benefit costsof retirement benefit plan ....................................

26

Thousands of
U.S. Dollars

3-month3-monthJune 30, 2013 June 30, 2013
$2,414
¥238
55
558
(49)
(497)
104
1,055
5
51
34
345
14
142
3
30
¥404

$4,098

The breakdown of items in other comprehensive income was as follows:

Unrecognized prior service cost ............................
Unrecognized actuarial loss ..................................
Unrecognized transilation obligation ...................
Total ........................................................................

Millions of Yen

Thousands of
U.S. Dollars

3-monthJune 30, 2013
¥265
936
236
¥1,4373-monthJune 30, 2013
$2,6889,494
2,394$14,576

The breakdown of pension assets by major category as of June 30, 2013, was as follows:

Bonds ......................................................................
Equities ...................................................................
General account .....................................................
Other .......................................................................
Total ........................................................................

June 30, 2013
36%
43%
18%
3%
100%

The items of actuarial assumptions as of the 3-month fiscal period ended June 30, 2013, were as follows:

Discount rate ..........................................................
Expected long-term return on plan assets ............
Lump-sum election rate .......................................

June 30, 2013
1.5%
2.0%
80.0%

The funded status of the multiemployer pension plan at March 31, 2013 (available information as ofJune 30, 2013), to which contributions were recorded as net periodic retirement benefit costs, was asfollows:
Millions of Yen

Fair value of plan assets ........................................
Pension benefit obligation recordedby pension fund ....................................................
Difference ...............................................................

March 31, 2012
¥145,345
176,729¥ (31,384)

The Groups’ contribution percentage for multiemployer pension plan at March 31, 2012 was 12.5%.
Note:
1. The difference mainly resulted from prior service cost of ¥ (24,984) million, adjustment of asset valuation of¥ (8,337) million and surplus of ¥1,937 million.
2. Prior service cost is amortized over 15 years.
3. The Group expensed special contributions of ¥81 million in the consolidated statement of operations andcomprehensive income in the 3-month fiscal period ended June 30, 2013.
4. The above contribution ratio does not conform to the actual ratio applied to the Group.

27

8. DEPOSITS RECEIVED
Deposits received from tenants amounted to ¥1,501 million ($15,225 thousand) at June 30, 2013, and ¥1,543
million at March 31, 2013.
At June 30, 2013, land, building and structures for rent of ¥1,345 million ($13,642 thousand) were pledged ascollateral for these deposits.

9. EQUITY
Japanese companies are subject to the Companies Act of Japan (the “Companies Act”). The significant
provisions in the Companies Act that affect financial and accounting matters are summarized below:(a) Dividends
Under the Companies Act, companies can pay dividends at any time during the fiscal year in addition to theyear-end dividend upon resolution at the shareholders’ meeting. For companies that meet certain criteria such as(1) having a Board of Directors, (2) having independent auditors, (3) having a Board of Audit & Supervisory
Board members, and (4) the term of service of the directors is prescribed as one year rather than two years ofnormal term by its articles of incorporation, the Board of Directors may declare dividends (except for dividends
in kind) at any time during the fiscal year if the Company has prescribed so in its articles of incorporation. The
Company meets all the above criteria.
Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if thearticles of incorporation of the Company so stipulate. The Companies Act provides certain limitations on theamounts available for dividends or the purchase of treasury stock. The limitation is defined as the amountavailable for distribution to the shareholders, but the amount of net assets after dividends must be maintained at
no less than ¥3 million.
(b) Increases/Decreases and Transfer of Common Stock, Reserve and Surplus
The Companies Act requires that an amount equal to 10% of dividends must be appropriated as a legal reserve(a component of retained earnings) or as additional paid-in capital (a component of capital surplus) dependingon the equity account charged upon the payment of such dividends until the aggregate amount of legal reserve
and additional paid-in capital equals 25% of the common stock. Under the Companies Act, the total amount ofadditional paid-in capital and legal reserve may be reversed without limitation. The Companies Act also provides
that common stock, legal reserve, additional paid-in capital, other capital surplus and retained earnings can betransferred among the accounts under certain conditions upon resolution of the shareholders.
(c) Treasury Stock and Treasury Stock Acquisition Rights
The Companies Act also provides for companies to purchase treasury stock and dispose of such treasury stockby resolution of the Board of Directors. The amount of treasury stock purchased cannot exceed the amountavailable for distribution to the shareholders which is determined by a specific formula. Under the Companies
Act, stock acquisition rights are presented as a separate component of equity. The Companies Act also provides
that companies can purchase both treasury stock acquisition rights and treasury stock. Such treasury stockacquisition rights are presented as a separate component of equity or deducted directly from stock acquisitionrights.

10. INCOME TAXESThe Company and its domestic subsidiaries are subject to Japanese national and local income taxes which, inthe aggregate, resulted in statutory tax rate of approximately 36.8% for the 3-month fiscal period ended June 30,
2013, and the year ended March 31, 2013.

28

The tax effects of significant temporary differences and tax loss carryforwards which resulted in deferred tax
assets and liabilities at June 30 and March 31, 2013, were as follows:
Thousands of
U.S. Dollars

Millions of Yen

Deferred tax assets :Accrued bonuses .................................................
Tax loss carryforwards .........................................
Liability for retirement benefits for directors
and Audit & Supervisory Board members ......
Liability for retirement benefits
for employees .....................................................
Net defined benefit liability .................................
Allowance for anticipated project loss ................
Loss on impairment of long-lived assets ............
Other .....................................................................
Less valuation allowance .....................................
Total .................................................................

June 30, 2013

March 31, 2013

June 30, 2013

¥1,431966¥1,103
111$14,515
9,798

21

24

213

1,317
1,738
39
73
757
(1,476)¥3,54923
73
1,176(1,913)¥1,914

Thousands of
U.S. Dollars

Millions of Yen

Deferred tax liabilities:
Reserve for deferred gains on saleof property ..........................................................
Unrealized gain on available-for-salesecurities .............................................................
Prepaid pension cost ............................................
Other .....................................................................
Total .................................................................
Net deferred tax assets .......................................

17,629
396
740
7,678
(14,971)$35,998

June 30, 2013

March 31, 2013

June 30, 2013

¥174

¥ 175

$1,765

463

319
214
75
¥ 783
¥1,131

4,696
2,323
751
$9,535$26,463

229
74
¥940
¥2,609A reconciliation between the statutory tax rate and the actual effective tax rate reflected in the accompanying
consolidated statement of operations and comprehensive income for the 3-month fiscal period ended June 30,
2013, and the year ended March 31, 2013, is as follows:

Statutory tax rate ...................................................
Per capita levy of local tax .....................................
Expenses not deductible for tax purposes ............
Valuation allowance ...............................................
Income taxes for prior periods ..............................
Other – net ..............................................................
Actual effective tax rate .........................................

June 30, 2013
36.8%
(1.0)
(0.5)
(1.3)
7.3
(2.6)
38.7%

March 31, 2013
36.8%
2.6
0.9
(13.5)
1.1
15.4
43.3%

29

As of June 30, 2013, certain subsidiaries had tax loss carryforwards aggregating approximately ¥2,631 million($26,686 thousand) which were available to be offset against taxable income of these companies in future years.
These tax loss carryforwards, if not utilized, will expire as follows:
Millions of Yen

March 31, 2015 .......................................................
March 31, 2016 .......................................................
March 31, 2018 .......................................................
March 31, 2019 .......................................................
June 30, 2020 ..........................................................
Total .................................................................

Thousands of
U.S. Dollars

¥92
99
35
80
2,325
¥2,631

$933
1,004
355
811
23,583$26,686

11. RESEARCH AND DEVELOPMENT COSTS
Research and development costs charged to income were ¥92 million ($933 thousand) and ¥422 million for the
3-month fiscal period ended June 30, 2013, and the year ended March 31, 2013, respectively.

12. LEASES(1) Lessee
The minimum rental commitments under noncancelable operating leases at June 30 and March 31, 2013, wereas follows:
Millions of Yen

Due within one year ...............................................
Due after one year ..................................................
Total .................................................................

June 30, 2013¥2
5
¥7

March 31, 2013
¥2
5
¥7

Thousands of
U.S. Dollars

June 30, 2013
$20

51
$71

(2) Lessor
The minimum rental commitments under noncancelable operating leases at June 30 and March 31, 2013, wereas follows:
Millions of Yen

Due within one year ...............................................
Due after one year ..................................................
Total .................................................................

June 30, 2013
¥604
1,288
¥1,892

March 31, 2013
¥ 693
1,372
¥2,065

Thousands of
U.S. Dollars

June 30, 2013
$ 6,127
13,064$19,191

13. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES(1) Group Policy for Financial Instruments
The Group uses financial instruments (mainly bank loans) based on its capital financing plan. Cash surpluses, ifany, are invested in low-risk financial assets. Derivatives are used, not for speculative purposes, but to manage
exposure to financial risks as described in (2) below. To clarify the accountability for transactions, the Group set
up the investment committee and it examines basic principles of transactions and each financial instrument.

30

(2) Nature and Extent of Risks Arising from Financial Instruments
Receivables such as trade notes and trade accounts are exposed to customer credit risk. Although receivables inforeign currencies are exposed to the market risk of fluctuation in foreign currency exchange rates, the position,
net of a portion of payables in foreign currencies, is hedged by using forward foreign currency contracts.
Marketable and investment securities, mainly held-to-maturity securities and equity instruments of customers
and suppliers of the Group, are exposed to the risk of market price fluctuations.
Payment terms of payables, such as trade notes and trade accounts, are less than one year.
Derivatives mainly include forward foreign currency contracts, which are used to manage exposure to market
risks from changes in foreign currency exchange rates of receivables and payables and investment securities.
Please see Note 14 for more detail about derivatives.
(3) Risk Management for Financial Instruments
Credit Risk Management
Credit risk is the risk of economic loss arising from counterparty’s failure to repay or service debt according to
the contractual terms. The Group manages its credit risk from receivables on the basis of internal guidelines,
which include monitoring of payment term and balances of major customers by each business administration
department to identify the default risk of customers at an early stage. With respect to held-to-maturity financial
investments, the Group manages exposure to credit risk by limiting investments to high credit rating bonds inaccordance with its internal guidelines.
The maximum credit risk exposure of financial assets is limited to their carrying amounts as of June 30, 2013.
Market risk management (foreign exchange risk and interest rate risk)
Foreign currency trade receivables and payables are exposed to market risk resulting from fluctuations inforeign currency exchange rates. Such foreign exchange risk is hedged principally by forward foreign currency
contracts.
Marketable and investment securities are managed by monitoring market values and the financial position ofissuers on a regular basis.
The basic principles of derivative transactions are approved by the investment committee based on the internal
guidelines which prescribe the authority and the limits for each transaction by the corporate treasury
department. Reconciliation of the transaction and balances with customers is made, and the transaction data isreported to the chief financial officer on a monthly basis.
Liquidity risk management
Liquidity risk comprises the risk that the Group cannot meet its contractual obligations in full on its maturity
dates. The Group manages its liquidity risk by concluding the commitment-line and overdraft contracts, alongwith adequate financial planning by the corporate treasury department.
(4) Concentration of Credit Risk
30.2% of total receivables are from two major customers of the Group as of June 30, 2013.
(5) Fair Values of Financial Instruments
Fair values of financial instruments are based on quoted prices in active markets. If a quoted price is notavailable, another rational valuation technique is used instead.

31

(a) Fair value of financial instruments
Millions of Yen

June 30, 2013

Carrying
AmountFair Value¥11,614
8,595
(181)
8,414
7,350
¥27,378

Cash and cash equivalents
Receivables
Allowance for doubtful accounts
Investment securities
Total

Unrealized
Gain/Loss¥11,614

8,414
7,350
¥27,378
Millions of Yen

March 31, 2013

Carrying
AmountCash and cash equivalents
Receivables
Allowance for doubtful accounts

Fair Value¥6,579
33,246(39)
33,207
6,985¥46,771

Investment securities
Total

Unrealized
Gain/Loss¥6,579

33,207
6,985¥46,771

Thousands of U.S. Dollars

June 30, 2013
Cash and cash equivalents
Receivables
Allowance for doubtful accounts
Investment securities
Total

Carrying
Amount$117,801
87,180(1,836)85,34474,551$277,696

Fair Value

Unrealized
Gain/Loss$117,801

85,34474,551$277,696

Cash and cash equivalents, receivables, payables and short-term borrowings
The carrying values of these financial instruments approximate fair values because of their short maturities.
Investment securities
The fair values of investment securities are measured at the quoted market price of the stock exchange for theequity instruments and at the quoted price obtained from the financial institution for certain debt instruments.
The information of the fair value for the investment securities by classification is included in Note 3.
Derivatives
Fair value information for derivatives is included in Note 14.

32

(b) Carrying amount of financial instruments whose fair values cannot be reliably determined
Thousands of
U.S. Dollars

Millions of Yen

June 30 and March 31, 2013
Investments in equity instruments that do nothave a quoted market price in an active market
Investments in debt instruments that do nothave a quoted market price in an active market

June 30, 2013

March 31, 2013

June 30, 2013

¥1,089¥977$11,046

¥ 145

¥145

$1,471(6) Maturity Analysis for Financial Assets and Securities with Contractual Maturities
Millions of Yen

June 30, 2013
Cash and cash equivalents
Receivables
Investment securities
Available-for-sale securities with
contractual maturities
Total

Due in 1
Year or Less

Due after 1 Yearthrough 5 Years

Due after 5 Years
through 10 Years

Due after
10 Years¥11,614
8,595

¥550
¥550

¥20,209
Millions of Yen

March 31, 2013
Cash and cash equivalents
Receivables
Investment securities
Available-for-sale securities with
contractual maturities
Total

Due in 1
Year or Less

Due after 1 Yearthrough 5 Years

Due after 5 Years
through 10 Years

Due after
10 Years¥ 6,579
33,246¥550¥550¥39,825
Thousands of U.S. Dollars

June 30, 2013
Cash and cash equivalents
Receivables
Investment securities
Available-for-sale securities with
contractual maturities
Total

Due in 1
Year or Less

Due after 1 Yearthrough 5 Years

Due after 5 Years
through 10 Years

Due after
10 Years$117,801
87,179$204,980$5,579$5,579Please see Note 6 for annual maturities of long-term debt.

14. DERIVATIVESThe Group uses derivative financial instruments to manage its exposures to fluctuations in foreign exchange.
Foreign exchange forward contracts are utilized by the Group to reduce foreign currency exchange risk.
It is the Group’s policy to use derivatives only for the purpose of reducing risks, not for trading or speculative
purposes.

33

Because the counterparties to these derivatives are limited to highly reputable domestic banks, the Group does
not anticipate any losses arising from credit risk.
Derivative transactions entered into by the Group have been made in accordance with internal policies which
regulate authorization and credit limit amount.

Derivative Transactions to Which Hedge Accounting Is Not Applied
Millions of Yen

June 30, 2013
Foreign currency forward contracts:
Selling EURO .....................................

Contract
Amount¥416

Contract
Amount Due after
One Year

Fair
Value

¥416

Unrealized
Gain

¥(96)

¥(33)

Thousands of U.S. Dollars

June 30, 2013
Foreign currency forward contracts:
Selling EURO .....................................

Contract
Amount$4,219Contract
Amount Due after
One Year

Fair
Value

$4,219Unrealized
Gain$(974)$(335)

Millions of Yen

March 31, 2013
Foreign currency forward contracts:
Selling EURO .....................................

Contract
Amount

Fair
Value

¥416

Unrealized
Gain

¥(63)

¥(56)

Derivative Transactions to Which Hedge Accounting Is Applied
Millions of Yen

June 30, 2013

HedgedItem

Contract
AmountContract
Amount Due after
One Year

Fair
Value

Foreign currency forward contracts:
Selling U.S.$ .......................................

Investment
securities

¥755

¥755

¥(166)

Foreign currency forward contracts:
Selling EURO .....................................

Investment
securities

¥521

¥521

¥(118)

Thousands of U.S. Dollars

June 30, 2013

HedgedItem

Contract
AmountContract
Amount Due after
One Year

Fair
Value

Foreign currency forward contracts:
Selling U.S.$ .......................................

Investment
securities$7,658$7,658$(1,684)

Foreign currency forward contracts:
Selling EURO .....................................

Investment
securities$5,285$5,285$(1,197)

The fair value of derivative transactions is measured at the quoted price obtained from the financial institution.
The contract amounts of derivatives which are shown in the above table do not represent the amounts
exchanged by the parties and do not measure the Group’s exposure to credit or market risk.

34

15. CONTINGENT LIABILITIESAt June 30, 2013, the Group had the following contingent liabilities:
Thousands of
U.S. Dollars

Millions of Yen

Guarantees of bank loans related to employees ...................

¥105$1,065

16. COMPREHENSIVE INCOME
The components of other comprehensive income for the 3-month fiscal period ended June 30, 2013, and the year
ended March 31, 2013, were as follows:
Thousands of
U.S. Dollars

Millions of Yen

June 30, 201312-month
March 31, 2013

June 30, 2013

¥434
(15)
419
(144)
¥275

¥1,673
51
1,724
(592)
¥1,132$4,402(152)
4,250(1,461)$2,789¥(82)¥(200)$ (832)(82)
28¥(54)(200)69¥(131)(832)
284$ (548)¥(28)¥

6$(283)6(283)

3-month3-monthUnrealized gain on available-for-salesecurities:

Gains arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effect
Total
Deferred loss on derivatives under hedge
accounting:

Gains arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effectTotal
Foreign currency translation adjustments:
Adjustments arising during the year

Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effectTotal¥(28)¥

6$(283)

Total other comprehensive income¥193¥1,007$1,958(28)

35

17. SUBSEQUENT EVENTSAppropriations of Retained Earnings
On August 20, 2013, the following appropriation of retained earnings at June 30, 2013, was resolved by the
Board of Directors:
Millions of Yen

Fiscal period-end (3-month) cash dividends,¥2.0 ($0.02) per share ..........................................................

Thousands of
U.S. Dollars¥151$1,532The total amount of the dividends above does not include ¥4 million ($41 thousand) dividends to the ESOP
because the Group’s shares owned by the ESOP are included in the Group’s treasury stock.

18. SEGMENT INFORMATION
Under ASBJ Statement No. 17, “Accounting Standard for Segment Information Disclosures” and ASBJ Guidance
No. 20, “Guidance on Accounting Standard for Segment Information Disclosures,” an entity is required to reportfinancial and descriptive information about its reportable segments. Reportable segments are operating
segments or aggregations of operating segments that meet specified criteria. Operating segments arecomponents of an entity about which separate financial information is available, and such information isevaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing
performance. Generally, segment information is required to be reported on the same basis as is used internallyfor evaluating operating segment performance and deciding how to allocate resources to operating segments.

(1) Description of Reportable Segments
The Group’s reportable segments are those for which separate financial information is available and regular
evaluation by the Company’s management is being performed in order to decide how resources are allocatedamong the Group. Therefore, the Group’s reportable segments consist of the Domestic, Overseas, PowerEngineering and Real estate leasing segments. Domestic consists of consulting services in public and private
sectors related mainly to infrastructure development. Overseas consists of consulting services related mainly todevelopment projects funded by Official Development Assistance (“ODA”). Power Engineering consists ofmanufacturing of products and appliances related to electric production and distribution systems andengineering services related to construction and maintenance of public and private electric power facilities. Realestate leasing consists of sales of our Group’s real estate leasing operation.

(2)	Methods of Measurement for the Amount of Sales, Profit (Loss), Assets,
Liabilities and Other Items for Each Reportable Segment
The accounting policies of each reportable segment are consistent with those disclosed in Note 2, “Summary of
Significant Accounting Policies.”36

(3) Information about Sales, Profit (Loss), Assets, Liabilities and Other Items
Millions of Yen

3-monthJune 30, 2013
Reportable Segment¥6,853143¥44¥6,897
143

314

6,996

44

7,040

(143)

6,897

¥(103)¥210¥(3,092)¥(73)¥(3,165)¥8¥(3,157)¥14,200¥8,014¥9,803¥49,523¥31,590¥81,113¥(9,662)¥71,451

¥13

¥68

¥37

¥155
77

¥66

¥221
77

14

5

3

4

26

32

58

¥(48)

10

8

23

8

4

43

15

58

(48)

10

54

14

23

12

103

15

118

¥2,863Intersegment sales ...............

¥1,35468¥2,353
44

¥283
31

Total sales ......................

1,422

2,863

2,397

Segment profit (loss) ............
Segment assets .....................

¥(2,451)¥(748)¥17,506

Amortization of goodwill .....

¥37
77

Interest income ....................
Interest expense ...................
Increase in property, plantand intangible assets .........

Other:
Depreciation .........................

Consolidated

Total

Overseas

Sales
Sales to customers ...............

Reconciliations

OthersPower
Real EstateEngineering
Leasing

Domestic

Total¥6,897¥(143)

¥221
77

118

Millions of Yen

12-month
March 31, 2013
Reportable Segment
Other

Total

Reconciliations¥71,246694¥1,1665¥72,412699¥ (699)

1,256

71,9401,171

73,111(699)

72,412¥1,925¥848¥5,408¥ (323)¥5,085¥

1¥5,086¥10,536¥9,827¥63,901¥34,152¥98,053¥(13,258)¥84,795

¥251

¥208

¥677

¥229

¥906

¥906

309

309

Power
Real EstateEngineering
Leasing

Domestic

Overseas

Intersegment sales ...............

¥35,547393¥18,638
3¥15,930173¥1,131125

Total sales ......................

35,94018,641

16,103

Segment profit (loss) ............

¥1,195¥1,440

Segment assets .....................

¥29,563¥13,975

Other:
Depreciation .........................

¥166

¥52

Sales
Sales to customers ...............

Total

309

Consolidated¥72,412

Amortization of goodwill .....
Amortization of negative
goodwill ..............................
Interest income ....................

309
14
35

15

5

18

14
73

197

14
270

¥ (191)14
79

Interest expense ..................

42

62

46

18

168

67

235

(191)

44

Increase in property, plantand intangible assets ..........

144

205

403

74

826

161

987

987

37

Thousands of U.S. Dollars

3-monthJune 30, 2013
Reportable Segment

Sales
Sales to customers ...............
Intersegment sales ...............

Domestic

Overseas$13,734
690$29,039

14,424

Power
Real EstateEngineering
Leasing$23,867446$2,870315

Others

Total

Reconciliations$69,510
1,451

$446

$69,956
1,451$(1,451)

70,961446

Total

Consolidated$69,956

29,03924,313

3,185

71,407(1,451)

69,956$(24,860) $ (7,587)$ (1,045)$2,130$(31,362) $(741) $ (32,103)$81$(32,022)$177,564$144,031$81,286$99,432$502,313$320,418$822,731$(98,002) $724,729

$375
781

$132

$690

$375

$1,572
781$670

Amortization of goodwill .....

$2,242781$2,242781

Interest income ....................

142

51

30

41

264

324

588

$(487)

101

Interest expense ...................

81

233

81

41

436

152

588

(487)

101

Increase in property, plantand intangible assets ..........

548

142

233

122

1,045

152

1,197

Total sales ......................
Segment profit (loss) ............
Segment assets .....................
Other:
Depreciation .........................

1,197

Notes:The differences between total amounts for reportable segments and amounts in the consolidated balance sheets
or consolidated statement of operations and comprehensive income and the main details of these differences,which are related to difference adjustments at June 30 and March 31, 2013, were as follows:

Net sales
Thousands of
U.S. Dollars

Millions of Yen

Reportable segment total .......................................
Other net sales ........................................................
Elimination of intersegment transactions ............
Net sales in the consolidated statementof operations and comprehensive income ....

3-monthJune 30, 2013
¥6,99644(143)

12-month
March 31, 2013
¥71,940
1,171
(699)

3-monthJune 30, 2013
$70,961446(1,451)¥6,897¥72,412$69,956

ProfitThousands of
U.S. Dollars

Millions of Yen

Reportable segment total .......................................
Other loss ................................................................
Elimination of intersegment transactions ............
Non-operating items ..............................................
Operating income in the consolidated
statement of operations and comprehensive
income ............................................................

38

3-monthJune 30, 2013¥(3,092)(73)
812-month
March 31, 2013
¥5,408(323)
13-monthJune 30, 2013$(31,362)
(741)
81

(57)

(444)

(578)

¥(3,214)¥4,642$(32,600)

Assets
Thousands of
U.S. Dollars

Millions of Yen

Reportable segment total .......................................
Other property ........................................................
Elimination of intersegment transactions ............
Total assets in the consolidated balance
sheet ................................................................

June 30, 2013¥49,523
31,590(9,662)

March 31, 2013
¥63,901
34,152(13,258)

June 30, 2013
$502,313
320,418(98,002)¥71,451¥84,795$724,729

Other items
Millions of Yen

June 30, 2013
Reportable
Segment

Depreciation ........................................
Amortization of goodwill ....................
Interest income ...................................
Interest expense ..................................
Increase in property, plant andintangible assets ................................

OthersReconciliations

¥155
77
26
43

¥66

103

15

32
15

¥(48)
(48)

Total

¥221
77
10
10
118

Millions of Yen

March 31, 2013
Reportable
Segment

Depreciation ........................................
Amortization of goodwill ....................
Amortization of negative goodwill .....
Interest income ...................................
Interest expense ..................................
Increase in property, plant andintangible assets ................................

OthersReconciliations

¥677
309
14
73
168

¥229

826

161

¥(191)
(191)

197
67

Total

¥906
309
14
79
44
987

Thousands of U.S. Dollars

June 30, 2013
Reportable
Segment

Depreciation ........................................
Amortization of goodwill ....................
Interest income ...................................
Interest expense ..................................
Increase in property, plant andintangible assets ................................

Others$1,572
781
264
436

$670

1,045

152

324
152

Reconciliations$(487)
(487)

Total

$2,242
781
101
101
1,197

Note:
The main reconciling items of interest income and expense are eliminations of corporate interest in accounting
for control.

39

The information about geographical areas for the 3-month fiscal period ended June 30, 2013, was as follows:

Sales
Millions of Yen

3-monthJune 30, 2013
Japan

¥3,890Asia

Middle East

¥1,691¥181

Latin
America

Africa

¥475

Other

¥536

Total

¥124

¥6,897

Thousands of U.S. Dollars

3-monthJune 30, 2013
Japan

Asia

Middle East

$39,456$17,152$1,836

Latin
America

Africa$4,818Other$5,437

Total$1,257$69,956

The information about major customers for the 3-month fiscal period ended June 30, 2013, was as follows:
Millions of Yen

3-monthJune 30, 2013
Name of Customers

Sales

Related Segment Name

¥873
508
386

Tokyo Electric Power Company, Incorporated .....................
Japan International Cooperation Agency .............................
Government of Vietnam ........................................................

Power Engineering
Overseas
Overseas

Thousands of U.S. Dollars

3-monthJune 30, 2013
Name of Customers

Sales

Related Segment Name

$8,855
5,153
3,915

Tokyo Electric Power Company, Incorporated .....................
Japan International Cooperation Agency .............................
Government of Vietnam ........................................................

Power Engineering
Overseas
Overseas

The information about goodwill for the 3-month fiscal period ended June 30, 2013, was as follows:
Millions of Yen

3-monthJune 30, 2013
Reportable Segment
Domestic

Amortization of goodwill .....
Goodwill at June 30, 2013 .......

Overseas

Power
Engineering

Real Estate
Leasing

¥ 77
542

Total

OthersElimination/
Corporate

¥ 77
542

Consolidated

¥ 77
542

Thousands of U.S. Dollars

3-monthJune 30, 2013
Reportable Segment
Domestic

Amortization of goodwill ....
Goodwill at June 30, 2013 .....

40

$ 781
5,498

Overseas

Power
Engineering

Real Estate
Leasing

Total

$ 781
5,498

OthersElimination/
Corporate

Consolidated

$ 781
5,498

41

Nonconsolidated Balance Sheet
Nippon Koei Co., Ltd.
June 30, 2013

Thousands of
U.S. Dollars (Note 1)

Millions of Yen

ASSETS

June 30, 2013

March 31, 2013

June 30, 2013

¥9,189¥ 4,758$93,204

Trade notes .........................................................

75

40

761

Trade accounts ...................................................

6,731

24,65968,273

Allowance for doubtful accounts ......................

(154)

(2)

(1,562)

Short-term loan receivables ................................

1,217

1,807

12,344Inventories ‑ work in process ..............................

8,662

5,413

87,859Deferred tax assets (Note 9) ................................

2,063

1,143

20,925Prepaid expenses and other current assets ........

1,640

1,625

16,634

Total current assets ..........................................

29,42339,443

298,438

Land ......................................................................

11,884

11,884

120,540

Buildings and structures .....................................

18,125

18,129183,842

Machinery and equipment ..................................

2,285

2,290

23,177

Furniture and fixtures .........................................

2,193

2,182

22,244

Construction in progress .....................................

12

3

121

Lease assets ..........................................................

124

143

1,258

Total ..................................................................

34,623

34,631

351,182

Accumulated depreciation ...................................

(15,149)(15,049)(153,657)

Net property, plant and equipment .................

19,474

19,582

197,525

Investment securities (Note 3) ............................

7,639

7,282

77,483

Investments in and long-term loans to
subsidiaries and associated companies (Note 4) ......

7,053

6,474

71,539Other assets ..........................................................

2,753

2,734

27,923

Allowance for doubtful accounts ........................

(2)

(5)

(20)

Total investments and other assets .................

17,443

16,485

176,925

TOTAL ....................................................................

¥66,340¥75,510$672,888

CURRENT ASSETS:
Cash and cash equivalents ...................................
Receivables:

PROPERTY, PLANT AND
EQUIPMENT (Notes 5 and 7):

INVESTMENTS AND OTHER ASSETS:

Deferred tax assets (Note 9) ................................

See notes to nonconsolidated financial statements.

42

Thousands of
U.S. Dollars (Note 1)

Millions of Yen

LIABILITIES AND EQUITYCURRENT LIABILITIES:
Short-term borrowings (Note 5) .........................
Current portion of long-term debt (Note 5) .......
Payables:Trade notes .........................................................
Trade accounts ...................................................
Accrued expenses .................................................
Income taxes payable ...........................................
Advances received ................................................
Accrued bonuses ..................................................
Allowance for anticipated project loss ................
Allowance for loss from a disaster ......................
Other current liabilities .......................................
Total current liabilities ....................................
LONG-TERM LIABILITIES:Long-term debt (Note 5) ......................................
Liability for retirement benefits (Note 6) ...........
Allowance for environmental measures .............
Asset retirement obligations ................................
Deposits received (Note 7) ...................................
Deferred tax liabilities (Note 9) ...........................
Total long-term liabilities ................................

June 30, 2013

March 31, 2013

June 30, 2013

¥ 7,090
198¥11,980231$ 71,914
2,008

490
1,588
2,543
29
5,965
757
60
2
2,509
21,231

695
5,153
1,120
1,595
4,609
1,474
39
2
3,002
29,9004,970
16,107
25,794294
60,5037,678
609
20
25,449215,346

1,544
238
25
48
1,699
4,176

548
248
25
48
1,741
505
3,115

15,661
2,414
254
487
17,233
6,309
42,358

7,393

7,393

74,987

6,093
115

6,093
115

61,801
1,166

1,546
28,453

1,546
30,266

15,681
288,600

884

612

8,967

622

COMMITMENTS AND CONTINGENT
LIABILITIES (Notes 11 and 12)
EQUITY (Notes 8 and 13):
Common stock,authorized, 189,580,000 shares; issued,
86,656,510 shares on June 30
and March 31, 2013 ...........................................
Capital surplus:
Additional paid-in capital ..................................
Other capital surplus .........................................
Retained earnings:
Legal reserve ......................................................
Retained earnings - unappropriated .................
Unrealized gain on
available-for-sale securities ...............................
Deferred loss onderivatives under hedge accounting .................
Treasury stock—at cost
11,085,421 shares on June 30, 2013
and 11,185,920 shares on March 31, 2013 .......
Total equity .......................................................

(186)

(132)

(1,887)(3,365)40,933(3,398)42,495(34,131)
415,184

TOTAL ....................................................................

¥66,340¥75,510$672,888
43N o n conso lida ted S t atemen t o f Op erat i o n s
Nippon Koei Co., Ltd.
Fiscal Period from April 1 to June 30, 2013

Thousands of
U.S. Dollars (Note 1)

Millions of Yen

3-month12-month3-monthJune 30, 2013

March 31, 2013

June 30, 2013

NET SALES ...........................................................
COST OF SALES ...................................................
Gross profit ..........................................................

¥5,326
4,770
556¥55,507
40,543
14,964$54,022
48,382
5,640

SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES (Note 10) ........
Operating (loss) income ......................................

2,889(2,333)

11,3403,624

29,304(23,664)

211
(20)
(60)
16

440
(82)
(51)
49
(102)

2,140
(203)
(609)
162

OTHER INCOME (EXPENSES):Interest and dividend income ..............................
Interest expense ...................................................
Foreign currency exchange loss ..........................
Gain on sales of investment securities ................
Loss on sales of investment securities ................
Provision of allowance for doubtful accountsof subsidiaries and associated companies ........
Other-net ...............................................................
Other income-net .............................................

(152)
44
39

152
406

(1,542)
448
396(LOSS) INCOME BEFORE INCOME TAXES ...

(2,294)

4,030(23,268)

INCOME TAXES (Note 9):
Current .................................................................
Income taxes for prior periods ............................
Deferred ................................................................
Total income taxes ...........................................

88
(230)
(919)
(1,061)

1,910
57
(91)
1,876

893
(2,333)(9,322)(10,762)

NET (LOSS) INCOME ........................................

¥(1,233)¥ 2,154$(12,506)

U.S. Dollars(Note 1)Yen

PER SHARE OF COMMON STOCK (Note 2. t.):Basic net (loss) income ........................................
Cash dividends applicable to the year ................
See notes to nonconsolidated financial statements.

44¥(16.33)
2.00¥ 28.54
7.50$(0.17)0.02

N o n conso lida ted S t atemen t o f C h an ges i n E q u i t y
Nippon Koei Co., Ltd.
Fiscal Period from April 1 to June 30, 2013

Thousands

Millions of Yen

Outstanding
Number of
Shares ofCommonStock

BALANCE, APRIL 1, 2012 .............

75,486

Capital Surplus

Retained Earnings

CommonStock¥7,393

Additional

Other

Paid-in
CapitalCapitalSurplus¥6,093

Unrealized
Gain (Loss)on Available-

¥38

Legal
Reserve

Unappropriated¥1,546¥28,679

for-Sale
Securities¥(510)

DeferredGain (Loss)on

Treasury

Total

Derivatives

Stock

Equityunder Hedge
Accounting¥(1) ¥(3,317) ¥39,921

Net income ......................................

2,154

2,154

Cash dividends, ¥7.50 per share ......

(567)

(567)

Purchase of treasury stock .............

(32)

Disposal of treasury stock ..............

17

(87)
77

6

Net change in the year ....................
BALANCE, MARCH 31, 2013 .........

75,471

7,393

6,093

115

1,546

Net loss ............................................

30,266

1,122

(131)

612

(132)

83
991

(3,398)(1,233)

Cash dividends, ¥7.50 per share ........

(87)

42,495(1,233)

(580)

(580)

Purchase of treasury stock ...............

(8)

(3)

(3)

Disposal of treasury stock ..............

108

36

36

Net change in the fiscal period272(3 months) .......................................
BALANCE, JUNE 30, 2013 .............

75,571¥7,393¥6,093¥115¥1,546¥28,453

¥884

(54)

218

¥(186) ¥(3,365) ¥40,933

Thousands of U.S. Dollars (Note 1)
Capital Surplus

Retained Earnings

CommonStock

BALANCE, MARCH 31, 2013 .........

$74,987

Additional
Paid-in
Capital

Other
CapitalSurplus$61,801$1,166

Legal
Reserve

Unrealized
Gain (Loss)

DeferredGain (Loss)on
on AvailableDerivatives
for-Sale
Unappropriatedunder Hedge
Securities
Accounting$15,681 $306,989$6,208Treasury
Stock

Total
Equity$(1,339) $(34,466) $431,027

Net loss ............................................

(12,506)(12,506)

Cash dividends, $0.08 per share ......

(5,883)(5,883)Purchase of treasury stock .............

(30)

(30)

Disposal of treasury stock ..............

365

365

Net change in the fiscal period
2,759(3 months) .......................................
BALANCE, JUNE 30, 2013 .............

$74,987$61,801$1,166$15,681 $288,600$8,967

(548)

2,211

$(1,887) $(34,131) $415,184

See notes to nonconsolidated financial statements.

45

N o tes to No nco nso lid ated Fi n an c i al S t atemen t s
Nippon Koei Co., Ltd.
Fiscal Period from April 1 to June 30, 2013

1.	B ASIS OF PRESENTATION OF NONCONSOLIDATED FINANCIAL
STATEMENTS
The accompanying nonconsolidated financial statements have been prepared from the accounts maintained by
Nippon Koei Co., Ltd. (the “Company”) in accordance with the provisions set forth in the Companies Act ofJapan (the “Companies Act”) and in accordance with accounting principles generally accepted in Japan, which
are different in certain respects as to the application and disclosure requirements of International Financial
Reporting Standards.
As consolidated statements of cash flows and certain disclosures are presented in the consolidated financial
statements of the Company, nonconsolidated statements of cash flows and certain disclosures are not presented
herein in accordance with accounting principles generally accepted in Japan.
In preparing these nonconsolidated financial statements, certain reclassifications and rearrangements have been
made to the Company’s nonconsolidated financial statements issued domestically in order to present them in aform which is more familiar to readers outside Japan. In addition, certain reclassifications have been made in
the nonconsolidated financial statements for the year ended March 31, 2013 to conform to the classifications
used in nonconsolidated financial statements for the 3-month fiscal period ended June 30, 2013.
The nonconsolidated financial statements are stated in Japanese yen, the currency of the country in which theCompany is incorporated and operates. The translations of Japanese yen amounts into U.S. dollar amounts areincluded solely for the convenience of readers outside Japan and have been made at the rate of ¥98.59 to $1, theapproximate rate of exchange at June 30, 2013. Such translations should not be construed as representations
that the Japanese yen amounts could be converted into U.S. dollars at that or any other rate.
Change in fiscal year-end
The Company changed its fiscal year-end from March 31 to June 30 by the resolution of the 68th Annual General
Shareholders’ Meeting held on June 27, 2013, in order to make operations more efficient and decrease the work
load which becomes heavy in March with the cluster of projects requiring completion. Due to this change, thefiscal period ended June 30, 2013, is the 3-month fiscal period from April 1 to June 30, 2013.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa. Nonconsolidation — The nonconsolidated financial statements do not include the accounts of subsidiaries.
Investments in subsidiaries and associated companies are stated at cost.

b. Cash Equivalents — Cash equivalents are short-term investments that are readily convertible into cash andthat are exposed to insignificant risk of changes in value.

Cash equivalents include time deposits and investment trusts, all of which mature or become due within
three months of the date of acquisition.

c. Inventories — Work in process is stated at the lower of cost, mainly determined by the specificidentification cost method or net selling value.

d. Marketable and Investment Securities — Marketable and investment securities are classified andaccounted for, depending on management’s intent, as follows:(1) held-to-maturity debt securities, which are expected to be held to maturity with the positive intent andability to hold to maturity are reported at amortized cost; (2) available-for-sale securities, which are notclassified as the aforementioned securities, are reported at fair value, with unrealized gains and losses, net of
applicable taxes, reported in a separate component of equity and (3) investments in subsidiaries andassociated companies are reported at cost.
Nonmarketable available-for-sale securities are stated at cost determined by the moving-average method.
For other-than-temporary declines in fair value, investment securities are reduced to net realizable value by acharge to operations.

46

e. Property, Plant and Equipment — Property, plant and equipment are stated at cost. Depreciation ofproperty, plant and equipment is computed substantially by the declining-balance method at rates based on
the estimated useful lives of the assets, while the straight-line method is applied to buildings acquired after
April 1, 1998, and lease assets as well as other equipment for rent. The range of useful lives is principallyfrom 3 to 50 years for buildings and structures, from 2 to 15 years for machinery and equipment and from 2
to 20 years for furniture and fixtures. The useful lives for lease assets are the terms of the respective leases.

f. Long-Lived Assets — The Company reviews its long-lived assets for impairment whenever events orchanges in circumstance indicate the carrying amount of an asset or asset group may not be recoverable. An
impairment loss is recognized if the carrying amount of an asset or asset group exceeds the sum of theundiscounted future cash flows expected to result from the continued use and eventual disposition of theasset or asset group. The impairment loss would be measured as the amount by which the carrying amountof the asset exceeds its recoverable amount, which is the higher of the discounted cash flows from thecontinued use and eventual disposition of the asset or the net selling price at disposition.

g. Allowance for Doubtful Accounts — The allowance for doubtful accounts is stated in amounts

considered to be appropriate based on the Group’s past credit loss experience and an evaluation of potential
losses in the receivables outstanding.

h. Retirement and Pension Plans — The Company has a contributory defined benefit pension plan andunfunded retirement benefit plan for the benefit of its employees.

Effective April 1, 2000, the Company adopted a new accounting standard for employees’ retirement benefits
and accounted for the liability for retirement benefits based on the projected benefit obligations and plan
assets at the balance sheet date.
Unrecognized actuarial gain or loss is recognized by the straight-line method over 13 years.
Unrecognized prior service costs are recognized by the straight-line method over 13 years.
Hitherto, retirement benefits for directors and Audit & Supervisory Board members were provided at theamount which would be required if all directors and Audit & Supervisory Board members retired at thebalance sheet date, but currently, the Company abolished benefit pension plans for directors and Audit &Supervisory Board members. The balance in the nonconsolidated balance sheet is the estimated amount for
directors and Audit & Supervisory Board members who have belonged to the Company since when the plans
were effective.
In the nonconsolidated statements, treatment of unrecognized actuarial gains and losses and unrecognizedprior service cost differ from it in the consolidated statements. In the nonconsolidated balance sheet, prepaid
pension cost is calculated by the defined benefit obligations, adding or deducting unrecognized actuarial
gains and losses and unrecognized prior service cost, and deducting the pension assets.

i. Allowance for Anticipated Project Loss — The Company has made a provision for anticipated losses on
uncompleted project contracts.

j. Asset Retirement Obligations — In March 2008, the ASBJ published ASBJ Statement No. 18, “AccountingStandard for Asset Retirement Obligations” and ASBJ Guidance No. 21, “Guidance on Accounting Standard
for Asset Retirement Obligations.” Under this accounting standard, an asset retirement obligation is defined
as a legal obligation imposed either by law or contract that results from the acquisition, construction,
development and normal operation of a tangible fixed asset and is associated with the retirement of suchtangible fixed asset. The asset retirement obligation is recognized as the sum of the discounted cash flows
required for the future asset retirement and is recorded in the period in which the obligation is incurred if areasonable estimate can be made. If a reasonable estimate of the asset retirement obligation cannot be madein the period the asset retirement obligation is incurred, the liability should be recognized when a reasonableestimate of the asset retirement obligation can be made. Upon initial recognition of a liability for an asset
retirement obligation, an asset retirement cost is capitalized by increasing the carrying amount of the related
fixed asset by the amount of the liability. The asset retirement cost is subsequently allocated to expense
through depreciation over the remaining useful life of the asset. Over time, the liability is accreted to its
present value each period. Any subsequent revisions to the timing or the amount of the original estimate ofundiscounted cash flows are reflected as an adjustment to the carrying amount of the liability and thecapitalized amount of the related asset retirement cost.

47

k. Research and Development Costs — Research and development costs are charged to income as incurred.
l. Leases — In March 2007, the ASBJ issued ASBJ Statement No. 13, “Accounting Standard for Lease
Transactions,” which revised the previous accounting standard for lease transactions. The revised accounting
standard for lease transactions was effective for fiscal years beginning on or after April 1, 2008.

Under the previous accounting standard, finance leases that deemed to transfer ownership of the leased
property to the lessee were capitalized. However, other finance leases were permitted to be accounted for as
operating lease transactions if certain “as if capitalized” information was disclosed in the notes to the lessee’s
financial statements. The revised accounting standard requires that all finance lease transactions becapitalized to recognizing lease assets and lease obligations in the balance sheet. In addition, the revised
accounting standard permits leases which existed at the transition date and do not transfer ownership of theleased property to the lessee to be measured at the amount of obligation under finance leases less interest
expense at the transition date and recorded as acquisition cost of lease assets.
The Company applied the revised accounting standard effective April 1, 2008. In addition, the Company
accounted for leases which existed at the transition date and do not transfer ownership of the leased property
to the lessee as acquisition cost of lease assets measured at the amount of obligation under finance leases at
the transition date.
All other leases are accounted for as operating leases.

m. Accrued Bonuses — Bonuses to employees, directors and Audit & Supervisory Board members are accruedat the end of the year to which such bonuses are attributable.

n. Allowance for Environmental Measures — The Company has made a provision for the treatment of PCB
Wastes based on the Act on Special Measures concerning Promotion of Proper Treatment of PCB Wastes.

o. Allowance for Loss from a Disaster — The Company has made a provision for the rehabilitation ofproperty, plant and equipment which were damaged by the Great East Japan Earthquake.

p. Income Taxes — The provision for income taxes is computed based on the pretax income included in thenonconsolidated statement of operations. The asset and liability approach is used to recognize deferred tax
assets and liabilities for the expected future tax consequences of temporary differences between the carrying
amounts and the tax bases of assets and liabilities. Deferred taxes are measured by applying currently
enacted tax laws to the temporary differences.

q. Foreign Currency Transactions — All short-term and long-term monetary receivables and payables
denominated in foreign currencies are translated into Japanese yen at the exchange rates at the balance sheet
date. The foreign exchange gains and losses from translation are recognized in the nonconsolidated
statement of operations.

r. Revenue Recognition — If the outcome of a construction contract can be estimated reliably, the contract

revenue is recognized by the percentage-of-completion method which is measured by reference to thepercentage of total cost incurred to date to estimated total cost.
All other construction projects, except the aforementioned, are recorded using the completed-contract
method (including the partially completed-contract method).

s. Derivatives and Hedging Activities — The Company uses derivative financial instruments to manage its
exposures to fluctuations in foreign exchange. Foreign exchange forward contracts are utilized by theCompany to reduce its exposures to fluctuations in foreign currency exchange rates. The Company does notenter into derivatives for trading or speculative purposes.

Derivative financial instruments are classified and accounted for as follows: (1) all derivatives are recognized
as either assets or liabilities and measured at fair value, and gains or losses on derivative transactions arerecognized in the nonconsolidated statement of operations and (2) for derivatives used for hedging purposes,
if such derivatives qualify for hedge accounting because of high correlation and effectiveness between thehedging instruments and the hedged items, gains or losses on derivatives are deferred until maturity of thehedged transactions.

48

Foreign exchange forward contracts are measured at fair value but the unrealized gains/losses are deferred
until the underlying transactions are completed.

t. Per Share Information — Basic net operations per share is computed by dividing net operations available

to shareholders of common stock by the weighted-average number of shares of common stock outstanding
for the period. The weighted-average numbers of shares of common stock for the 3-month fiscal period
ended June 30, 2013, and the year ended March 31, 2013, were 75,517,610 and 75,469,721, respectively.

Diluted net operations per share of common stock are not disclosed because the Company has nothing thatmight dilute the per share information for the 3-month fiscal period ended June 30, 2013, and the year ended
March 31, 2013.
Cash dividends per share presented in the accompanying nonconsolidated statement of operations are
dividends applicable to the respective years including dividends to be paid after the end of the fiscal period.

u. Accounting Changes and Error Corrections — In December 2009, the ASBJ issued ASBJ Statement No.
24, “Accounting Standard for Accounting Changes and Error Corrections” and ASBJ Guidance No. 24,“Guidance on Accounting Standard for Accounting Changes and Error Corrections.” Accounting treatments
under this standard and guidance are as follows:(1) Changes in Accounting Policies-When a new accounting policy is applied following revision of an
accounting standard, the new policy is applied retrospectively unless the revised accounting standard
includes specific transitional provisions, in which case the entity shall comply with the specific transitional
provisions.
(2) Changes in Presentation-When the presentation of financial statements is changed, prior-period financial
statements are reclassified in accordance with the new presentation.
(3) Changes in Accounting Estimates-A change in an accounting estimate is accounted for in the period of
the change if the change affects that period only and is accounted for prospectively if the change affects boththe period of the change and future periods.
(4) Corrections of Prior-Period Errors-When an error in prior-period financial statements is discovered, thosestatements are restated.

v. Additional Information
Employee Stock Ownership Plan Trust (“ESOP”) — The Company has introduced an employee

incentive plan, ESOP. Acquisition and sales of the Company’s shares are accounted for under the assumptionthat the Company and ESOP are the same entity. Accordingly, assets, including the Company’s shares owned
by ESOP, and liabilities, and profits and loss of ESOP are included in the Company’s nonconsolidatedbalance sheet, nonconsolidated statement of operations and nonconsolidated statement of changes in equity.

3. INVESTMENT SECURITIESInvestment securities as of June 30 and March 31, 2013, consisted of the following:Thousands of
U.S. Dollars

Millions of Yen

Non-current:
Marketable equity securities ...............................
Government and corporate bonds ......................
Other .....................................................................
Total .................................................................

June 30, 2013

March 31, 2013

June 30, 2013

¥6,350741
548¥7,639¥6,013742
527¥7,282$64,408
7,516
5,559$77,48349

4.	INVESTMENTS IN AND LONG-TERM LOANS TO SUBSIDIARIES AND
ASSOCIATED COMPANIESInvestments in and advances to subsidiaries and associated companies as of June 30 and March 31, 2013, wereas follows:
Thousands of
U.S. Dollars

Millions of Yen

Investments ............................................................
Long-term loans .....................................................
Total .................................................................

June 30, 2013
¥6,320733¥7,053

March 31, 2013
¥6,208266¥6,474

June 30, 2013
$64,104
7,435$71,539

The value of the investment securities of subsidiaries and associated companies are measured at the originalacquisition costs, as their fair value cannot be reliably determined at June 30, 2013, since market value andestimated future cash flows are not available.

5. SHORT-TERM BORROWINGS AND LONG-TERM DEBT
Short-term borrowings at June 30, 2013 and March 31, 2013 consisted of notes to banks and subsidiaries. The
annual interest rates applicable to the short-term borrowings ranged from 0.640% to 0.850% and 0.485% to0.860% at June 30, 2013 and March 31, 2013, respectively.
Long-term debt at June 30 and March 31, 2013, consisted of the following:Thousands of
U.S. Dollars

Millions of Yen

June 30, 2013

March 31, 2013

June 30, 2013

¥1,650¥650$16,736

50
42
1,742
(198)
¥1,544

79
50
779
(231)
¥548

507
426
17,669(2,008)$15,661

Unsecured loan from bank due seriallyto 2023 with interest rates ranging from
0.860% to 0.870% .................................................
Loan from bank due seriallyto 2013 with interest rate of 1.250% ...................
Obligation under finance leases ............................
Total .................................................................
Less current portion ..............................................
Long-term debt, less current portion ....................

Annual maturities of long-term debt at June 30, 2013, for the five years and thereafter were as follows:
Period Ending June 30

2014 .........................................................
2015 .........................................................
2016 .........................................................
2017 .........................................................
2018 .........................................................
2019 and thereafter .................................
Total ..................................................

50

Thousands of
U.S. Dollars

Millions of Yen
Long-Term Debt

Lease Obligations

Long-Term Debt

Lease Obligations

¥180
130
164
266
266
694
¥1,700

¥19
13
6
3
1
0
¥42

$1,826
1,319
1,663
2,698
2,698
7,039
$17,243

$193
132
61
30
10
0
$426

The Company had a commitment-line contract of ¥8,000 million ($81,144 thousand) over three years withfinancial institutions in order to secure the stability of long-term funding. The contract included a restrictive
financial covenant. At June 30, 2013, the Company had not utilized the commitment line. In addition, theCompany had overdraft contracts of ¥10,200 million ($103,459 thousand) in total. At June 30, 2013, theCompany had not utilized the overdraft.
At June 30, 2013, land and building of ¥1,981 million ($20,093 thousand) were pledged as collateral for longterm debt of ¥50 million ($507 thousand).

6. RETIREMENT AND PENSION PLANS
Under most circumstances, employees terminating their employment are entitled to retirement benefits
determined based on the rate of pay at the time of termination, years of service and certain other factors. Suchretirement benefits are made in the form of a lump-sum severance payment from the Company and annuity
payments from a trustee. Employees are entitled to larger payments if the termination is involuntary, by
retirement at the mandatory retirement age, by death, or by voluntary retirement at certain specific ages prior tothe mandatory retirement age.
In addition, the Company completely transitioned from the approved pension plan to the defined benefit
corporate pension plan in October 2010.
The liabilities for retirement benefits at June 30 and March 31, 2013, for directors and Audit & Supervisory
Board members were ¥27 million ($274 thousand) and ¥27 million, respectively. The retirement benefits for
directors and Audit & Supervisory Board members are paid subject to the approval of the shareholders.

7. DEPOSITS RECEIVED
Deposits received from tenants amounted to ¥1,501 million ($15,225 thousand) at June 30, 2013, and ¥1,543
million at March 31, 2013.
At June 30, 2013, land, building and structures for rent of ¥1,345 million ($13,642 thousand) were pledged ascollateral for these deposits.

8. EQUITY
Japanese companies are subject to the Companies Act. The significant provisions in the Companies Act that
affect financial and accounting matters are summarized below:
a. Dividends
Under the Companies Act, companies can pay dividends at any time during the fiscal year in addition to theyear-end dividend upon resolution at the shareholders’ meeting. For companies that meet certain criteria, suchas (1) having a Board of Directors, (2) having independent auditors, (3) having an Audit & Supervisory Board,and (4) the term of service of the directors is prescribed as one year rather than two years of normal term by its
articles of incorporation, the Board of Directors may declare dividends (except for dividends in kind) at any time
during the fiscal year if the company has prescribed so in its articles of incorporation. The Company meets all
the above criteria.
Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if thearticles of incorporation of the company so stipulate. The Companies Act provides certain limitations on theamounts available for dividends or the purchase of treasury stock. The limitation is defined as the amountavailable for distribution to the shareholders, but the amount of net assets after dividends must be maintained at
no less than ¥ 3 million.
b. Increases/Decreases and Transfer of Common Stock, Reserve and Surplus
The Companies Act requires that an amount equal to 10% of dividends must be appropriated as a legal reserve(a component of retained earnings) or as additional paid-in capital (a component of capital surplus) dependingon the equity account charged upon the payment of such dividends until aggregate amount of legal reserve andadditional paid-in capital equals 25% of the common stock. Under the Companies Act, the total amount of51

additional paid-in capital and legal reserve may be reversed without limitation. The Companies Act also provides
that common stock, legal reserve, additional paid-in capital, other capital surplus and retained earnings can betransferred among the accounts under certain conditions upon resolution of the shareholders.
c. Treasury Stock and Treasury Stock Acquisition Rights
The Companies Act also provides for companies to purchase treasury stock and dispose of such treasury stockby resolution of the Board of Directors. The amount of treasury stock purchased cannot exceed the amountavailable for distribution to the shareholders which is determined by specific formula. Under the Companies
Act, stock acquisition rights, which were previously presented as a liability, are now presented as a separate
component of equity. The Companies Act also provides that companies can purchase both treasury stockacquisition rights and treasury stock. Such treasury stock acquisition rights are presented as a separate
component of equity or deducted directly from stock acquisition rights.

9. INCOME TAXESThe Company is subject to Japanese national and local operations taxes which, in the aggregate, resulted instatutory tax rates of approximately 36.8% for the 3-month fiscal period ended June 30, 2013, and the year
ended March 31, 2013.
The tax effects of significant temporary differences which resulted in deferred tax assets and liabilities at June
30 and March 31, 2013, were as follows:
Thousands of
U.S. Dollars

Millions of Yen

June 30, 2013

March 31, 2013

June 30, 2013

¥1,175626¥ 892$11,918
6,350

9

9

91

74
22
57
54

751
223
578
548
5,517
(2,515)$23,461

Deferred tax assets :Accrued bonuses ..................................................
Tax loss carryforwards .........................................
Liability for retirement benefits for
directors and Audit & Supervisory Board
members .............................................................
Liability for retirement benefits
for employees .....................................................
Allowance for anticipated project loss ................
Allowance for doubtful accounts ........................
Loss on impairment of long-lived assets ............
Carryover of foreign tax credit limit ...................
Other .....................................................................
Less valuation allowance .....................................
Total .................................................................

544
(248)
¥2,313

78
14
1
54
406
562
(663)
¥1,353

Deferred tax liabilities:
Reserve for deferred gains onsale of property ..................................................

¥ 174

¥ 175

$ 1,765

463

321

4,696

229
5
¥ 871
¥1,442

214
5
¥ 715
¥ 638

2,323
51
$ 8,835$14,626

Unrealized gain on available-for-salesecurities .............................................................
Prepaid pension cost ............................................
Other .....................................................................
Total .................................................................
Net deferred tax assets .......................................

52

A reconciliation between the statutory tax rate and the actual effective tax rate reflected in the accompanying
nonconsolidated statement of operations for the 3-month fiscal period ended June 30, 2013, and the year ended
March 31, 2013, were as follows:

Statutory tax rate ...................................................
Per capita levy of local tax .....................................
Expenses not deductible for tax purposes ............
Valuation allowance ...............................................
Income taxes for prior periods ..............................
Other – net ..............................................................
Actual effective tax rate .........................................

June 30, 2013
36.8%
(0.9)
(0.5)
0.5
10.0
0.3
46.2%

March 31, 2013
36.8%
2.1
1.0
1.9
1.4
3.4
46.6%

As of June 30, 2013, the Company had tax loss carryforwards aggregating approximately ¥1,700 million ($17,243
thousand) which were available to be offset against taxable income of the Company in future years. These tax
loss carryforwards, if not utilized, will expire in 2020.

10. RESEARCH AND DEVELOPMENT COSTS
Research and development costs charged to income were ¥91 million ($923 thousand) and ¥410 million for the
3-month fiscal period ended June 30, 2013, and the year ended March 31, 2013, respectively.

11. LEASES(1) Lessee

The minimum rental commitments under noncancelable operating leases at June 30 and March 31, 2013, wereas follows:
Millions of Yen

Due within one year ...............................................
Due after one year ..................................................
Total .................................................................

June 30, 2013¥2
5
¥7

March 31, 2013
¥2
5
¥7

Thousands of
U.S. Dollars

June 30, 2013
$20
51
$71

(2) Lessor

The minimum rental commitments under noncancelable operating leases at June 30 and March 31, 2013, wereas follows:
Millions of Yen

Due within one year ...............................................
Due after one year ..................................................
Total .................................................................

June 30, 2013
¥604
1,288
¥1,892

March 31, 2013¥ 693
1,372¥2,065

Thousands of
U.S. Dollars

June 30, 2013
$6,127
13,064$19,19153

12. CONTINGENT LIABILITIESAt June 30, 2013, the Company had the following contingent liabilities:
Millions of Yen

Guarantees of bank loans related to employees ..................................
Refundment bonds of subsidiaries ......................................................

¥105
¥15

Thousands of
U.S. Dollars$1,065$152

13. SUBSEQUENT EVENTSAppropriations of Retained Earnings
On August 20, 2013, the following appropriation of retained earnings at June 30, 2013, was resolved by the
Board of Directors:
Millions of Yen

Fiscal period-end (3-month) cash dividends,¥2.0 ($0.02) per share .........................................................................

¥151

Thousands of
U.S. Dollars$1,532The total amount of the dividends above does not include ¥4 million ($41 thousand) dividends to the ESOP
because the Company’s shares owned by the ESOP are included in the Company’s treasury stock.

54

55

Co rp orate In form atio n
Board of Directors, Officers and Corporate
Auditors
Chairperson
Yoshihiko Tsunoda*

Stock Information
Shares authorized

189,580,000

Shares issued

86,656,510

Stockholders of minimum tradable stock unit

President:
Noriaki Hirose*

As of June 30, 2013

Director and Executive Vice Presidents:
Shoji Nishitani*
Katsumi Yoshida
Asao Yamakawa
Director and Senior Managing Executive Officer:
Tamotsu Yoshida
Director and Managing Executive Officers:
Ryuichi Arimoto
Akira Mizukoshi
Noboru Takano
Yoshikimi Inoue
Director and Executive Officer:
Hiroyuki Akiyoshi
Director:
Masahisa Naito
Corporate Auditors:
Toshiaki Shimizu
Izumi Arai
Mineo Enomoto
Senior Managing Executive Officer:
Takashi Karasaki
Managing Executive Officer:
Hiromichi Sekine
Executive Officers:
Masanao Nishimura
Takashi Seki
Hiroyuki Kasahara
Haruyoshi Takura
Naoki Honjo
Yoshikatsu Inada
Shingo Ono
Hiroshi Tanaka
Masanobu Sakamoto
Takayasu Tsuyusaki
Syuichi Ueda
Yasushi Sugo
Akichika Ishibashi*Representative Directors

56

6,292

As of September 27, 2013

Major Shareholders
Share owned

Percentage of
total owned

The Bank of Tokyo-Mitsubishi
UFJ, Ltd.

3,699,263

4.3

Meiji Yasuda Life Insurance
Company.

3,529,522

4.1

The Koei Employees’
Stockholders Association

2,873,078

3.3

Japan Trustee Services Bank,
Ltd. (Trustee)

2,769,000

3.2

The Master Trust Bank ofJapan, Ltd. (trust a/c)

2,225,000

2.6Mizuho Corporate Bank, Ltd.

1,910,634

2.2

Tsukishima Kikai Co.,Ltd

1,843,000

2.1Japan Trustee Services Bank,
Ltd. (ESOP trust a/c)

1,803,000

2.1

CBNY DFA INTL SMALL CAP
VALUE PORTFOLIO

1,481,000

1.7

CREDIT SUISSESECURITIES (EUROPE)
LIMITED PB SEC INT NONTR CLIENT

1,280,000

1.5

As of June 30, 2013
Besides the above, the Company owns 9,282,421 shares of treasury stock(10.7%)

Major Offices and Facilities

Major Businesses

Head Office
4 Kojimachi 5-chome, Chiyoda-ku,
Tokyo 102-8539, Japan

Consulting Administration

Shin-Kojimachi Office
2 Kojimachi 4-chome, Chiyoda-ku,
Tokyo 102-0083, Japan
Hanzomon Office
5 Kojimachi 2-chome, Chiyoda-ku,
Tokyo 102-0083, Japan
Domestic Branch Offices
Tokyo, Sapporo, Sendai, Fukushima, Niigata,
Nagoya, Osaka, Hiroshima, Shikoku, Fukuoka
Research Facility
Research and Development Center in Tsukuba
Science City, Ibaraki
Overseas Offices (Liaison Office)Jakarta, Manila, Hanoi(Ho Chi Minh), Bangkok(Vientiane, Phnom Penh), Yangon, New Delhi,
Colombo, Middle East(Amman, Baghdad, Tunis,
Rabat, Doha), Nairobi, Lima

Field of activity• Water Resources• Energy• Urban & Regional Development• Transportation• Agriculture & Rural Development• Environment• Climate Change• Information & Communication Technology• Geosphere Engineering• Project and Program Management•	Public Private Partnership/Private FinanceInitiative
Services•	Preliminary investigation, Planning, Feasibility
studies, Assessment, Detailed design,
Construction supervision , Operation andmaintenanceEngineering Administration
Field of activity•	Electrical and civil works for electric power
facilities (generation, transmission, substation,
distribution schemes and wiring of buildings)•	Electric power utilities (turbines, generators,
transformers, control deices andcommunications equipment)• Electric equipment and devices• Safety equipment•	Skin electric thermo-system heaters (SECTheaters)• Factory automation equipment
Services•	Surveys, Studies, Planning, Design, Construction,
Installation, Sale

57

M a j o r Nip po n Koe i Gro u p C o mp an i es
While mainly focused on engineering consulting, electrical power engineering, and power generation, the Nippon Koei
Group is also active in a wide range of related fields. The various businesses peripheral to the activities of Nippon Koei, themain company in the Group, are taken on by subsidiaries and affiliates located both at home and abroad.
These related companies, together with the principle corporation, make up the Nippon Koei Group.
The various firms maintain close cooperation based on relationships of interdependence that enhance the strength andcohesion of the Group as a whole.
As of June 2013, the total number of employees of the Group companies based in Japan came to about 2,919, of which over
1,200 were registered engineers. The Group truly has a wealth of highly skilled technical experts.
The subsidiary companies that comprise the major Nippon Koei Group are as follows:
Tamano Consultants Co., Ltd.
This company is headquartered in the city of Nagoya and provides engineering consulting services centered on the Chubu
Region. The company boasts the most highly regarded urban and regional planning group in Japan.
Nippon Civic Consulting Engineers Co., Ltd.
This company provides consulting services centered on planning, design, and construction supervision of undergroundstructures such as urban tunnels. The company specializes in shield tunneling technology and the development of newunderground construction technology.
El Koei Co., Ltd.
This company conducts employment and staff supply for Nippon Koei Group. The company provides various fields ofqualified human resources to support the activity of the Group Companies.
KRI International Corporation
This company has been established to enhance non-engineering consulting works of the Nippon Koei Group’s activities.
KRI provides the consulting services mainly in the fields of economic and industrial development including finance andmanagement, education and human resources development, and regional and community development.
Nippon Koei U.K. Co., Ltd.
This company provides engineering consulting services to enforce Nippon Koei’s overseas operation in the primary fields ofenvironment, water supply and wastewater.
Nippon Koei Latin America-Caribbean Co., Ltd.
This company has been established to enhance Nippon Koei’s operation in Latin America and Caribbean and provides
consulting engineering and technical services for various development sectors in the region.
NIPPON KOEI LAC, INC..
This company has been incorporated in Panama in order to promote further localization of Nippon Koei’s operation in
Latin America and Caribbean region.
NIPPON KOEI LAC DO BRASIL LTDA.
This company has been incorporated in Brasil in order to promote further localization of Nippon Koei’s operation in Latin
America.
Nippon Koei India Pvt. Ltd.
This company has been established to enhance Nippon Koei’s operation in India and provides consulting engineering andtechnical services for various development sectors focusing on projects in India and other developing countries.
Nippon Koei Vietnam International LLC Co., Ltd.
This company has been established to enhance Nippon Koei’s operation in Vietnam and surrounding countries in the
Greater Mekong Subregion and provides consulting services for various development sectors in the region.
PT Indokoei International
This company has been incorporated in Indonesia by Nippon Koei Co., Ltd. and Indonesian partner company and provides
the services of engineering and management consultancy to clients in Indonesia as well as overseas.
Philkoei International, Inc.
This company has been incorporated in the Philippines by Nippon Koei Co., Ltd. and Filipino investors and providing
consulting engineering and technical services for various development sectors focusing on projects in the Philippines andother overseas countries.
Thaikoei International Co., Ltd.
This company has been incorporated in Thailand and providing consulting services for various development sectors focusing
on projects in Thailand and other countries in Greater Mekong Subregion.
Nippon Koei Africa Pty. Ltd. / Nippon Koei Mozambique, Ltda.
This company has been established to enhance Nippon Koei’s operation in Sub-Saharan Africa and provides consulting
engineering and technical services for various development sectors in the region.
Koei System Inc.
This company develops software programs used in computer control applications, dispatches personnel, and provides
support and software development for office automation systems on a consignment basis.
Nikki Corporation
This company conducts real estate management, leasing, and insurance services for Nippon Koei and other Group
companies. It also sells, imports, and exports electrical power equipment and rents and leases various goods.

58

4, Kojimachi 5-chome, Chiyoda-ku, Tokyo 102-8539, Japan
Telephone: +81 3 3238 8027 Facsimile: +81 3 3238 8326
http://www.n-koei.co.jp E-mail: info@n-koei.co.jp

Printed in Japan