Annual Report 2010
For the year ended March 31, 2010

DAIKEN CORPORATION
Registered Head Office:1-1, Inami, Nanto City, Toyama 932-0298, Japan
Phone: +81-763-82-5850
Operational Headquarters:
22F, Dojima Avanza
6-20, Dojima 1-chome Kita-ku, Osaka 530-8210, Japan
Phone: +81-6-6452-6000

DAIKEN CORPORATION

Company Profile

Ever since the founding of the company in September 1945, the core focus of our business has
always been the development and provision of materials for residential housing and construction.
Daiken has continued corporate activities that cover a broad and diverse range, including the
manufacturing and sales of materials for residential housing and construction as well as materials forindustrial use, activities that have led Daiken to grow into one of the world’s foremost
comprehensive manufacturers of building materials.
Through its highly motivated research and development, Daiken is continuously working with thelatest materials, concepts and technologies. With a core of technological and material-supply
capabilities for building materials, the very basis for the housing field in which Daiken specializes,
Daiken shall continue to provide its customers with new generations of technologies and products.

Daiken Corporation and Consolidated Subsidiaries
Years ended March 31, 2010, 2009 and 2008

Financial Highlights

Millions of Yen and Thousands of U.S. Dollars

Net sales ................................................
Operating income ..................................
Ordinary income ....................................
Net income ............................................
Net assets ..............................................
Total assets ............................................

2010

2009

2008

2010

¥ 140,936
3,010
2,819
511
36,663
123,862¥ 150,325
1,830
1,331
598
34,562125,080¥ 166,588
2,896
2,613
791
37,053
132,875$ 1,514,626
32,34830,2955,491
394,0131,331,133

Yen and U.S. Dollars

Net income per share ...........................

¥

4.01

¥

4.64

¥

6.07

$

0.04

Note: The translations into U.S. dollars are based on $1= ¥93.05, the approximate exchange rate on March 31, 2010
Note: Net income per share is computed based upon the weighted average number of shares of common stock outstanding
during each fiscal year.

1

Net sales

Total assets

Net income

Net income per share

Contents
Financial Highlights ..................................... 1
A Message from the President ................... 2
Review of Operations .................................. 4
Topics ......................................................... 6
Highlights ................................................... 7
Consolidated Balance Sheets ....................... 8
Consolidated Statements of Income ............ 10
Consolidated Statements of
Changes in Net Assets .......................... 10
Consolidated Statements ofCash Flows ............................................ 11
Notes Related to Consolidated
Financial Statements .............................. 12

2008

2009

2010

2008

2009

2010

2008

2009

2010

2008

Daiken Corporation

2009

2010

Annual Report 2010

Company Profile

Ever since the founding of the company in September 1945, the core focus of our business has
always been the development and provision of materials for residential housing and construction.
Daiken has continued corporate activities that cover a broad and diverse range, including the
manufacturing and sales of materials for residential housing and construction as well as materials forindustrial use, activities that have led Daiken to grow into one of the world’s foremost
comprehensive manufacturers of building materials.
Through its highly motivated research and development, Daiken is continuously working with thelatest materials, concepts and technologies. With a core of technological and material-supply
capabilities for building materials, the very basis for the housing field in which Daiken specializes,
Daiken shall continue to provide its customers with new generations of technologies and products.

Daiken Corporation and Consolidated Subsidiaries
Years ended March 31, 2010, 2009 and 2008

Financial Highlights

Millions of Yen and Thousands of U.S. Dollars

Net sales ................................................
Operating income ..................................
Ordinary income ....................................
Net income ............................................
Net assets ..............................................
Total assets ............................................

2010

2009

2008

2010

¥ 140,936
3,010
2,819
511
36,663
123,862¥ 150,325
1,830
1,331
598
34,562125,080¥ 166,588
2,896
2,613
791
37,053
132,875$ 1,514,626
32,34830,2955,491
394,0131,331,133

Yen and U.S. Dollars

Net income per share ...........................

¥

4.01

¥

4.64

¥

6.07

$

0.04

Note: The translations into U.S. dollars are based on $1= ¥93.05, the approximate exchange rate on March 31, 2010
Note: Net income per share is computed based upon the weighted average number of shares of common stock outstanding
during each fiscal year.

1

Net sales

Total assets

Net income

Net income per share

Contents
Financial Highlights ..................................... 1
A Message from the President ................... 2
Review of Operations .................................. 4
Topics ......................................................... 6
Highlights ................................................... 7
Consolidated Balance Sheets ....................... 8
Consolidated Statements of Income ............ 10
Consolidated Statements of
Changes in Net Assets .......................... 10
Consolidated Statements ofCash Flows ............................................ 11
Notes Related to Consolidated
Financial Statements .............................. 12

2008

2009

2010

2008

2009

2010

2008

2009

2010

2008

Daiken Corporation

2009

2010

Annual Report 2010

A Message from the President

We herein present our shareholders and persons
concerned with a report on the consolidated
business results for the Daiken Corporation in
fiscal year 2009.

2

Business Progress and Results
In regard to the consolidated business results forthe year in review, we achieved net sales totaling¥140,936 million (a decrease of 6.2% comparedwith the previous year), operating income of¥3,010 million (an increase of 64.4% comparedwith the previous year), ordinary income of¥2,819 million (an increase of 111.7% comparedwith the previous year) and a net income of ¥511
million (a decrease of 14.5% compared with theprevious year).
During this fiscal year the Japanese economy
showed some signs of a partial recovery, thanks
to the economic stimulus packages enacted by
the government, but the decline of the global
economy has had a significant effect on Japan,
leading to stagnation of investment in facilities aswell as personal consumption. This, combinedwith the worsening state of the employment
market, means that the future seems unclear andthis is a very difficult economic situation that we
find ourselves in. With regard to the housing
market, regardless of the expansion of the tax
reduction on home loans, preferential conditions
for superior, long-life housing, theimplementation of the housing ecopoint system,
etc. fiscal year 2009 was the first time in 45 years
that new housing starts, at 775,000, failed tobreak the 800,000 unit barrier. This represents a
decrease of 25.4% on the previous term andshows the extent of the difficulties that we facein this business environment.
Under these business conditions, theDaiken Group is developing a businessstructure that does not rely solely on new
housing starts, and further, aims to reform ourbusiness structure that will assure profits andgrowth even in this severe businessenvironment by developing in areas andmarkets where growth has been predicted aswell as changing our corporation into one thatcan grow and turn a profit in even the most
severe economic conditions. By developing

Daiken Corporation

Annual Report 2010

growth markets and areas of growth, based on
our eco-friendly materials that can be used as
plywood substitutes (insulation boards,
Dai-Lotone, MDF, Dailite, and hardboard), we aremoving forward with developing new uses andnew customers, such as the remodeling market,
the non-housing market, the industrial materials
market and markets overseas. By strengthening
our corporate constitution, not only do we plan
to reduce our raw material costs and increase
productivity, we also reduce our fixed costs,
starting with our human resource expenses, acrossthe Daiken Group as a whole. These efforts serveto bring down our break-even point as a business.
As a result of these efforts, our profitability for thesecond half of the fiscal year (October to March)showed a large-scale improvement.

“Our ecology is linked to the materials
we choose to build with”---- developing
our Eco-Materials Business
At present, with environmental issues assuming
serious proportions, such as the draining of forest
resources and the increase in global warming,
there is the demand for corporations to assume
corporate social responsibility to an even greater
extent in regard to programs and policies placing
importance on the environment and resource
conservation.
The history of Daiken and eco-materials is
one and the same and the source of this vision
can be traced back to 1958, when we initiatedthe production of insulation boards, avoiding
unnecessary waste of wood resources throughthe employment of scrap lumber and the like.
Thereafter, the Daiken Group continued to create
new categories of eco-materials that can be
employed as main raw materials throughresource recycling and the use of untappedresources.
The Daiken Group has been involved in the
production of eco-materials for half a century
and in 2010 our evolution continues with
“EcoNext” as we look to the next generation.
Through further refinement of our proprietary
ecological technologies that support our efforts
as a corporation that recycles resources,
eco-materials, has grown into the Group’s corebusiness field. From the customer’s perspective,
eco-materials meets their demands for
comfortable living and pleasant, healthy
resources and we will continue to boldly
challenge the limits of development and demand
creation in the field of eco-materials in the
future.

Issues and Policies for the Future
Looking forward, despite the government’s best
efforts to stimulate demand in the housing
market and our hopes for these initiatives, thefuture of our economy remains unclear and it canbe considered that the number of new housing
starts will continue its transition at a low level.
Under these business conditions, while it canbe expected that this severe businessenvironment will continue with an increase in thefactors causing anxiety, such as an intensificationof corporate competition and further increases in
the costs of raw materials, etc., the Daiken Groupwill conduct specific measures aiming forbusiness and profit structure reforms, as we lookto strengthen our business structure. Furthermore,
our aim is to actively seek growth in new markets
and fields based on our eco-materials business,thereby expanding our sales turnover.
With particular regard to the remodelingmarket, while employing the substantial
favorable taxation system measures to theirfullest extent, we will promote the new conceptof “Green Remodeling” and the realization ofhigh quality residences based on three
viewpoints: “durable residences,” “the reductionof CO2,” and “health considerations,” adopted
by the TOTO, DAIKEN, and YKK AP alliance.
Accordingly, for the consolidated businessresults projected for the fiscal year ending at theend of March 2011, our goal is to achieve net
sales totaling ¥144,000 million, an operating
income of ¥3,800 million, an ordinary income of¥3,600 million, and a net income of ¥1,400
million.
We sincerely hope that we may continue tolook forward to the support and encouragementof all of our shareholders and persons concerned.

3

Ryoji Sawaki,
Representative Director, President
Chief Executive Officer

September 2010

Daiken Corporation

Annual Report 2010

A Message from the President

We herein present our shareholders and persons
concerned with a report on the consolidated
business results for the Daiken Corporation in
fiscal year 2009.

2

Business Progress and Results
In regard to the consolidated business results forthe year in review, we achieved net sales totaling¥140,936 million (a decrease of 6.2% comparedwith the previous year), operating income of¥3,010 million (an increase of 64.4% comparedwith the previous year), ordinary income of¥2,819 million (an increase of 111.7% comparedwith the previous year) and a net income of ¥511
million (a decrease of 14.5% compared with theprevious year).
During this fiscal year the Japanese economy
showed some signs of a partial recovery, thanks
to the economic stimulus packages enacted by
the government, but the decline of the global
economy has had a significant effect on Japan,
leading to stagnation of investment in facilities aswell as personal consumption. This, combinedwith the worsening state of the employment
market, means that the future seems unclear andthis is a very difficult economic situation that we
find ourselves in. With regard to the housing
market, regardless of the expansion of the tax
reduction on home loans, preferential conditions
for superior, long-life housing, theimplementation of the housing ecopoint system,
etc. fiscal year 2009 was the first time in 45 years
that new housing starts, at 775,000, failed tobreak the 800,000 unit barrier. This represents a
decrease of 25.4% on the previous term andshows the extent of the difficulties that we facein this business environment.
Under these business conditions, theDaiken Group is developing a businessstructure that does not rely solely on new
housing starts, and further, aims to reform ourbusiness structure that will assure profits andgrowth even in this severe businessenvironment by developing in areas andmarkets where growth has been predicted aswell as changing our corporation into one thatcan grow and turn a profit in even the most
severe economic conditions. By developing

Daiken Corporation

Annual Report 2010

growth markets and areas of growth, based on
our eco-friendly materials that can be used as
plywood substitutes (insulation boards,
Dai-Lotone, MDF, Dailite, and hardboard), we aremoving forward with developing new uses andnew customers, such as the remodeling market,
the non-housing market, the industrial materials
market and markets overseas. By strengthening
our corporate constitution, not only do we plan
to reduce our raw material costs and increase
productivity, we also reduce our fixed costs,
starting with our human resource expenses, acrossthe Daiken Group as a whole. These efforts serveto bring down our break-even point as a business.
As a result of these efforts, our profitability for thesecond half of the fiscal year (October to March)showed a large-scale improvement.

“Our ecology is linked to the materials
we choose to build with”---- developing
our Eco-Materials Business
At present, with environmental issues assuming
serious proportions, such as the draining of forest
resources and the increase in global warming,
there is the demand for corporations to assume
corporate social responsibility to an even greater
extent in regard to programs and policies placing
importance on the environment and resource
conservation.
The history of Daiken and eco-materials is
one and the same and the source of this vision
can be traced back to 1958, when we initiatedthe production of insulation boards, avoiding
unnecessary waste of wood resources throughthe employment of scrap lumber and the like.
Thereafter, the Daiken Group continued to create
new categories of eco-materials that can be
employed as main raw materials throughresource recycling and the use of untappedresources.
The Daiken Group has been involved in the
production of eco-materials for half a century
and in 2010 our evolution continues with
“EcoNext” as we look to the next generation.
Through further refinement of our proprietary
ecological technologies that support our efforts
as a corporation that recycles resources,
eco-materials, has grown into the Group’s corebusiness field. From the customer’s perspective,
eco-materials meets their demands for
comfortable living and pleasant, healthy
resources and we will continue to boldly
challenge the limits of development and demand
creation in the field of eco-materials in the
future.

Issues and Policies for the Future
Looking forward, despite the government’s best
efforts to stimulate demand in the housing
market and our hopes for these initiatives, thefuture of our economy remains unclear and it canbe considered that the number of new housing
starts will continue its transition at a low level.
Under these business conditions, while it canbe expected that this severe businessenvironment will continue with an increase in thefactors causing anxiety, such as an intensificationof corporate competition and further increases in
the costs of raw materials, etc., the Daiken Groupwill conduct specific measures aiming forbusiness and profit structure reforms, as we lookto strengthen our business structure. Furthermore,
our aim is to actively seek growth in new markets
and fields based on our eco-materials business,thereby expanding our sales turnover.
With particular regard to the remodelingmarket, while employing the substantial
favorable taxation system measures to theirfullest extent, we will promote the new conceptof “Green Remodeling” and the realization ofhigh quality residences based on three
viewpoints: “durable residences,” “the reductionof CO2,” and “health considerations,” adopted
by the TOTO, DAIKEN, and YKK AP alliance.
Accordingly, for the consolidated businessresults projected for the fiscal year ending at theend of March 2011, our goal is to achieve net
sales totaling ¥144,000 million, an operating
income of ¥3,800 million, an ordinary income of¥3,600 million, and a net income of ¥1,400
million.
We sincerely hope that we may continue tolook forward to the support and encouragementof all of our shareholders and persons concerned.

3

Ryoji Sawaki,
Representative Director, President
Chief Executive Officer

September 2010

Daiken Corporation

Annual Report 2010

Review of Operations

Housing and Building
Materials Related
Business

4

In regard to the consolidated
business results in this field for the
fiscal year in review, weachieved net sales totaling¥124,631 million (a decrease of
4.5% compared with theprevious year) and an operating
income of ¥3,073 million (anincrease of 88.1% comparedwith the previous year).
With respect toeco-materials, one of the core
strategies of Daiken Group, net
sales of Dailite were influenced
by the decrease in the numberof new housing starts, but due
to progress in our production
technology we were able to
make significant improvements

in terms of profitability. Sales of
insulation boards maintained
the levels attained for theprevious consolidated fiscal year
thanks to other uses being
developed for this product. Net
sales of Dai-Lotone showed asignificant increase on theprevious consolidated fiscal year
due to improved results for rockwool ceiling materials forbuildings and retail stores andas a result Dai-Lotone hasdeveloped into one of our main
sources of profit. Our threeplants overseas, now including
Daiken New Zealand Inc., havecontributed to the expansion of
our MDF business.

With regard to our interiormaterials business field, which
is focused on flooring materials,
following on from theconsolidation of our production
bases, a new production line
for our WPC flooring material
was opened in June. This has
led to improved productivity as
well as reducing our fixed costs.
On the product side, ourplan was to create a strong
product line-up capable ofmeeting the needs of themarketplace, based on products
such as “FORES HARD”, an
eco-friendly flooring material
combining domestic conifer
plywood with our special MDF
product; “EQUOS ROZZO”, ourhigh performance WPC flooringmaterial with a more elaborate
design, thanks to theimplementation of newtechnology; and ”EQUOSMIRROR”.
With regard to our homefurnishings and equipment

business, a review of ourdomestic production bases, ashortening in delivery times
with regard to order-madeunits and special order units aswell the addition of the Precious
Wood Type to our best-selling
RIII series of interior doors andthanks to our improved ability
to meet the needs of themarketplace we made efforts to
expand sales related to our coreproducts such as doors, storage
cabinets, stairs, and otherinterior materials.
On the sales side, as partof our efforts to allow the end
user to experience and feel our
products, we launched a new
initiative in the metropolitanarea, namely the September
opening of the DAIKEN Tokyo
Showroom (in Akihabara) whilst
at the same time opening the
TOTO and DAIKEN
Collaboration Showroom in
Sapporo as part of our alliancewith TOTO, Inc. We also put
effort into seeking out new
demand for our proposed
environmentally sensitive Green
Remodeling project, athree-way alliance between
Daiken, TOTO Inc. and YKK AP
that seeks to open up the
remodeling market.

Housing andConstruction Works
Related BusinessIn regard to the consolidated
business results in this field forthe fiscal year in review, weachieved net sales totaling¥16,304 million (a decrease of
17.8% compared with theprevious year) and an operating
loss of ¥63 million (comparedwith an operating profit of¥195 million for the previousyear).
In the construction works
related business field, we
increased our operational
efficiency and made progress interms of reducing our costs inaddition to striving to develop
new demand by securing a
number of multiple orders andexpanding our sales area.
However due to the ongoing
long-term slump in the building
and condominium market,
construction sales fell over theperiod in review.
On the other hand, in the
housing construction related
business field, we undertook
some organizational
restructuring in order to expandin the remodeling business. Our
plan is to generate demand for
remodeling but overall there
was a decrease in orders forcustom-built housing, houses indevelopment projects andsingle-unit homes, resulting in adecrease in construction sales.

EQUOS ROZZOFORES HARD

EQUOS MIRROR

Daiken Corporation

Annual Report 2010

An example of how the new RIII
Series Precious Wood Type livingroom doors can be installed

An example of a new build home construction

Daiken Corporation

Annual Report 20105

Review of Operations

Housing and Building
Materials Related
Business

4

In regard to the consolidated
business results in this field for the
fiscal year in review, weachieved net sales totaling¥124,631 million (a decrease of
4.5% compared with theprevious year) and an operating
income of ¥3,073 million (anincrease of 88.1% comparedwith the previous year).
With respect toeco-materials, one of the core
strategies of Daiken Group, net
sales of Dailite were influenced
by the decrease in the numberof new housing starts, but due
to progress in our production
technology we were able to
make significant improvements

in terms of profitability. Sales of
insulation boards maintained
the levels attained for theprevious consolidated fiscal year
thanks to other uses being
developed for this product. Net
sales of Dai-Lotone showed asignificant increase on theprevious consolidated fiscal year
due to improved results for rockwool ceiling materials forbuildings and retail stores andas a result Dai-Lotone hasdeveloped into one of our main
sources of profit. Our threeplants overseas, now including
Daiken New Zealand Inc., havecontributed to the expansion of
our MDF business.

With regard to our interiormaterials business field, which
is focused on flooring materials,
following on from theconsolidation of our production
bases, a new production line
for our WPC flooring material
was opened in June. This has
led to improved productivity as
well as reducing our fixed costs.
On the product side, ourplan was to create a strong
product line-up capable ofmeeting the needs of themarketplace, based on products
such as “FORES HARD”, an
eco-friendly flooring material
combining domestic conifer
plywood with our special MDF
product; “EQUOS ROZZO”, ourhigh performance WPC flooringmaterial with a more elaborate
design, thanks to theimplementation of newtechnology; and ”EQUOSMIRROR”.
With regard to our homefurnishings and equipment

business, a review of ourdomestic production bases, ashortening in delivery times
with regard to order-madeunits and special order units aswell the addition of the Precious
Wood Type to our best-selling
RIII series of interior doors andthanks to our improved ability
to meet the needs of themarketplace we made efforts to
expand sales related to our coreproducts such as doors, storage
cabinets, stairs, and otherinterior materials.
On the sales side, as partof our efforts to allow the end
user to experience and feel our
products, we launched a new
initiative in the metropolitanarea, namely the September
opening of the DAIKEN Tokyo
Showroom (in Akihabara) whilst
at the same time opening the
TOTO and DAIKEN
Collaboration Showroom in
Sapporo as part of our alliancewith TOTO, Inc. We also put
effort into seeking out new
demand for our proposed
environmentally sensitive Green
Remodeling project, athree-way alliance between
Daiken, TOTO Inc. and YKK AP
that seeks to open up the
remodeling market.

Housing andConstruction Works
Related BusinessIn regard to the consolidated
business results in this field forthe fiscal year in review, weachieved net sales totaling¥16,304 million (a decrease of
17.8% compared with theprevious year) and an operating
loss of ¥63 million (comparedwith an operating profit of¥195 million for the previousyear).
In the construction works
related business field, we
increased our operational
efficiency and made progress interms of reducing our costs inaddition to striving to develop
new demand by securing a
number of multiple orders andexpanding our sales area.
However due to the ongoing
long-term slump in the building
and condominium market,
construction sales fell over theperiod in review.
On the other hand, in the
housing construction related
business field, we undertook
some organizational
restructuring in order to expandin the remodeling business. Our
plan is to generate demand for
remodeling but overall there
was a decrease in orders forcustom-built housing, houses indevelopment projects andsingle-unit homes, resulting in adecrease in construction sales.

EQUOS ROZZOFORES HARD

EQUOS MIRROR

Daiken Corporation

Annual Report 2010

An example of how the new RIII
Series Precious Wood Type livingroom doors can be installed

An example of a new build home construction

Daiken Corporation

Annual Report 20105

Topics

Topics1

Highlights

DAIKEN opens its Tokyo
Showroom in Akihabara

In September 2009 Daiken opened
the DAIKEN Tokyo Showroom in
the Akihabara district. The showroom
has two aims - an opportunity forvisitors to experience and touch a
comfortable way of life and also to

Display corner for interior doors

Topicsshowcase our varied productline-up and it is hoped that the
showroom becomes a new locus
of business communication for themetropolitan area, as well as aplace where Daiken can makea collaboration between TOTO,DAIKEN and YKK AP
Located in Umeda, Osaka, thisshowroom is a collaboration
between TOTO, DAIKEN and YKKAP and opened to the public in
July 2010. The showroom makes
the most of the characteristics andunique nature of the threecompanies involved. By coming
together in this way to create ashowroom - a space where people
come to be moved and amazed -The showroom features 10
exhibition corners, including areas
where Daiken can showcase its
product range, soundproof room,
eco-materials, products for pets,
etc. in addition to a 20 tatami-mat
living/dining room and kitchen
suite that has been remodeled inline with our concept of green
remodeling: kind to your life, kindto the earth. Furthermore, theshowroom also features approx.
130 different types of interior
doors, flooring, wall and ceilingmaterials as well as a wide rangeof other products.

Showroom bustling with visitorsof the TDY Osaka
2 Opening
Collaboration Showroom,

6

contact with its customers.

customers can experience first-handour proposals for living space aswell as gaining access to the verylatest information related toremodeling. Collaborative
showrooms such as this havealready been opened in threelocations: Hiroshima, Takamatsu
and Sapporo, but the Osaka
Showroom is the first to open insuch a large urban area.

A number of joint events areplanned, starting with a collaborative
exhibition to promote the newconcept of “Green Remodeling”(remodeling proposals that are kind
to life and kind to the earth, basedon three viewpoints: “durable
residences,” “the reduction of
CO2,” and “health considerations”)
adopted by the TOTO, DAIKEN,
and YKK AP alliance.

Display corner for green remodeling

Topics3

Forest Certification: Daiken
Awarded PEFC-CoC Certification

The organizations related toflooring materials that make up
part of the Daiken Group havebeen awarded Forest PEFC-CoC
Certification. The Forest Certification
system uses standards and indicators
to confirm that sustainable forestry
management practices are in place

Daiken Corporation

Annual Report 2010

and a third party organization
evaluates and verifies the situation.
Daiken promotes “production andmanufacturing from theenvironment” and the award of theForest Certification, which includes
our use of certified materials,
reflects our use of eco-materials asbase plates for wooden flooring aswell as the progress we have madein changing our systems so that weare able to expanding on the ways
we can use our eco-materials.

Japanese forest thinning timber utilized as araw material: Conducting a Business Experimentwith the Forestry Agency Subsidiary Enterprise
Aiming to create a system
whereby timber from forest
thinning activities is turned intowood chips that can be used asa raw material for insulation
boards, one of our mainstay
eco-material products, Daiken isparticipating in a subsidiary
enterprise project under the
auspices of the Forestry
Agency. Known as “A model
for creating a new business forusing timber resources*”, sinceNovember 2009 woodland
owned by Daiken and othercompanies has been used as atesting ground for the project.
Our tests are expected tocontinue with the aim ofestablishing a business model
whereby a stable supply ofmaterials in the form of woodchips can be generated alongsidea renewable forestry resource.
The wood chips used as
raw materials for our insulation
boards are usually made fromold timbers recovered frombuilding demolitions, but inrecent years the number ofbuilding demolitions has fallen
and due to mixing with newmaterials the quality of thesewood chips has deteriorated.

This, coupled with the fact thatchips are being used as fuel forburning, means that not only it
is becoming increasing difficult
to procure wood chips, the unit
cost is also increasing and as aresult we are faced with an urgent
need to consider an alternative
source for this raw material.
There is a system in place to takeold wood from demolitions andto turn these timbers into woodchips, but because no system
exists to convert timber fromforest thinning activities into woodchips, this subsidiary enterprisewith the Forestry Agency is ouropportunity to conduct empiricaltests as to whether this is indeed
a viable approach for wood chipproduction.
Furthermore, due to theexcellent anti-bacterial andanti-odor characteristics of conifer
leaves, once pellets with excellent
anti-odor properties have beenobtained by forest thinning, a
lot of the remaining conifer
timber that has been felled issimply left at the forest location.
We are conducting tests to see
if these timber residues can beused as toilet sawdust for pets.

*With the aim of constructing a businessmodel that brings together the actual process
of forest thinning with practical uses forforest thinning timber, “A model for creatinga new business for using timber resources”,
involved organizations selected by public
applications with some of the expenses
incurred in running these enterprises coveredby the project. The aim of the project was tocreate a new business.

Trying on-site wood chip manufacture

Wood chips made from forest
thinning timber

We will take this opportunity toredouble our efforts to disseminate
environmentally sensitive woodenmaterials and to work on having
these materials meet the needs ofour customers.
Insulation Board

Toilet sawdust for pets

Daiken Corporation

Annual Report 20107

Topics

Topics1

Highlights

DAIKEN opens its Tokyo
Showroom in Akihabara

In September 2009 Daiken opened
the DAIKEN Tokyo Showroom in
the Akihabara district. The showroom
has two aims - an opportunity forvisitors to experience and touch a
comfortable way of life and also to

Display corner for interior doors

Topicsshowcase our varied productline-up and it is hoped that the
showroom becomes a new locus
of business communication for themetropolitan area, as well as aplace where Daiken can makea collaboration between TOTO,DAIKEN and YKK AP
Located in Umeda, Osaka, thisshowroom is a collaboration
between TOTO, DAIKEN and YKKAP and opened to the public in
July 2010. The showroom makes
the most of the characteristics andunique nature of the threecompanies involved. By coming
together in this way to create ashowroom - a space where people
come to be moved and amazed -The showroom features 10
exhibition corners, including areas
where Daiken can showcase its
product range, soundproof room,
eco-materials, products for pets,
etc. in addition to a 20 tatami-mat
living/dining room and kitchen
suite that has been remodeled inline with our concept of green
remodeling: kind to your life, kindto the earth. Furthermore, theshowroom also features approx.
130 different types of interior
doors, flooring, wall and ceilingmaterials as well as a wide rangeof other products.

Showroom bustling with visitorsof the TDY Osaka
2 Opening
Collaboration Showroom,

6

contact with its customers.

customers can experience first-handour proposals for living space aswell as gaining access to the verylatest information related toremodeling. Collaborative
showrooms such as this havealready been opened in threelocations: Hiroshima, Takamatsu
and Sapporo, but the Osaka
Showroom is the first to open insuch a large urban area.

A number of joint events areplanned, starting with a collaborative
exhibition to promote the newconcept of “Green Remodeling”(remodeling proposals that are kind
to life and kind to the earth, basedon three viewpoints: “durable
residences,” “the reduction of
CO2,” and “health considerations”)
adopted by the TOTO, DAIKEN,
and YKK AP alliance.

Display corner for green remodeling

Topics3

Forest Certification: Daiken
Awarded PEFC-CoC Certification

The organizations related toflooring materials that make up
part of the Daiken Group havebeen awarded Forest PEFC-CoC
Certification. The Forest Certification
system uses standards and indicators
to confirm that sustainable forestry
management practices are in place

Daiken Corporation

Annual Report 2010

and a third party organization
evaluates and verifies the situation.
Daiken promotes “production andmanufacturing from theenvironment” and the award of theForest Certification, which includes
our use of certified materials,
reflects our use of eco-materials asbase plates for wooden flooring aswell as the progress we have madein changing our systems so that weare able to expanding on the ways
we can use our eco-materials.

Japanese forest thinning timber utilized as araw material: Conducting a Business Experimentwith the Forestry Agency Subsidiary Enterprise
Aiming to create a system
whereby timber from forest
thinning activities is turned intowood chips that can be used asa raw material for insulation
boards, one of our mainstay
eco-material products, Daiken isparticipating in a subsidiary
enterprise project under the
auspices of the Forestry
Agency. Known as “A model
for creating a new business forusing timber resources*”, sinceNovember 2009 woodland
owned by Daiken and othercompanies has been used as atesting ground for the project.
Our tests are expected tocontinue with the aim ofestablishing a business model
whereby a stable supply ofmaterials in the form of woodchips can be generated alongsidea renewable forestry resource.
The wood chips used as
raw materials for our insulation
boards are usually made fromold timbers recovered frombuilding demolitions, but inrecent years the number ofbuilding demolitions has fallen
and due to mixing with newmaterials the quality of thesewood chips has deteriorated.

This, coupled with the fact thatchips are being used as fuel forburning, means that not only it
is becoming increasing difficult
to procure wood chips, the unit
cost is also increasing and as aresult we are faced with an urgent
need to consider an alternative
source for this raw material.
There is a system in place to takeold wood from demolitions andto turn these timbers into woodchips, but because no system
exists to convert timber fromforest thinning activities into woodchips, this subsidiary enterprisewith the Forestry Agency is ouropportunity to conduct empiricaltests as to whether this is indeed
a viable approach for wood chipproduction.
Furthermore, due to theexcellent anti-bacterial andanti-odor characteristics of conifer
leaves, once pellets with excellent
anti-odor properties have beenobtained by forest thinning, a
lot of the remaining conifer
timber that has been felled issimply left at the forest location.
We are conducting tests to see
if these timber residues can beused as toilet sawdust for pets.

*With the aim of constructing a businessmodel that brings together the actual process
of forest thinning with practical uses forforest thinning timber, “A model for creatinga new business for using timber resources”,
involved organizations selected by public
applications with some of the expenses
incurred in running these enterprises coveredby the project. The aim of the project was tocreate a new business.

Trying on-site wood chip manufacture

Wood chips made from forest
thinning timber

We will take this opportunity toredouble our efforts to disseminate
environmentally sensitive woodenmaterials and to work on having
these materials meet the needs ofour customers.
Insulation Board

Toilet sawdust for pets

Daiken Corporation

Annual Report 20107

Consolidated Balance Sheets

Daiken Corporation and Consolidated Subsidiaries
March 31, 2010 and 2009

Millions of Yen
2010
2009

ASSETS
Current assets:
Cash and deposits .........................................................................
Notes and accounts receivable—trade...........................................
Merchandise and finished goods...................................................
Work in process ............................................................................
Raw materials and supplies ...........................................................
Partly-finished work ......................................................................
Deferred tax assets........................................................................
Other ............................................................................................
Allowance for doubtful accounts ..................................................
Total current assets .......................................................................

8¥

10,98728,025
10,817
1,652
3,323
850
1,024
3,556
(148)
60,090¥9,770 $
24,552
12,410
2,039
3,749
3,422
1,062
4,631
(93)
61,545

Thousands of
U.S. Dollars
2010

118,076
301,182
116,249
17,75335,711
9,134
11,004
38,216(1,590)645,781Noncurrent assets:
Property, plant and equipment
Buildings and structures, net....................................................
Machinery, equipment and vehicles, net ..................................
Land ........................................................................................
Lease assets, net ......................................................................
Construction in progress..........................................................
Other, net ................................................................................
Total property, plant and equipment .......................................

11,665
11,951
15,505
388
700
1,336
41,548

11,416
12,92515,759
–
1,126
1,144
42,372

125,362
128,436
166,630
4,169
7,522
14,357446,512Intangible assets............................................................................
Goodwill ..................................................................................
Software ..................................................................................
Other .......................................................................................
Total intangible assets..............................................................

1,182
466
296
1,945

1,414
410
201
2,027

12,702
5,008
3,181
20,902

Investments and other assets ........................................................
Investment securities................................................................
Long-term loans receivable ......................................................
Prepaid pension cost ................................................................
Deferred tax assets...................................................................
Other .......................................................................................
Allowance for doubtful accounts .............................................
Total investments and other assets ..........................................
Total noncurrent assets .................................................................
Deferred assets...................................................................................
Bond issuance cost ........................................................................
Total assets.........................................................................................

9,698
2
3,229
5,274
2,897
(865)
20,236
63,7304040¥ 123,862

Daiken Corporation

Annual Report 2010

Millions of Yen
2010
2009

8,667
104,223
287
21
3,681
34,701
4,444
56,6792,599
31,133(598)(9,296)
19,080217,474
63,480684,900
55
429
55
429
¥ 125,080 $ 1,331,133

LIABILITIESCurrent liabilities:
Notes and accounts payable—trade ..............................................
Short-term loans payable ..............................................................
Current portion of long-term loans payable ..................................
Lease obligations...........................................................................
Accounts payable—other ..............................................................
Income taxes payable ....................................................................
Accrued consumption taxes ..........................................................
Provision for bonuses ....................................................................
Provision for business structure improvement................................
Provision for loss on office transfer ...............................................
Other ............................................................................................
Total current liabilities ...................................................................

¥

Thousands of
U.S. Dollars
2010

15,187
14,2664,903
32
21,030
794
413
1,552
111
75
2,998
61,366¥ 16,656
13,7193,765–
23,470
880
362
1,290
849
224
4,328
65,547$ 163,213
153,315
52,692343
226,007
8,533
4,438
16,6791,192
806
32,219659,494

Noncurrent liabilities:
Bonds payable...............................................................................
Long-term loans payable ...............................................................
Lease obligations...........................................................................
Deferred tax liabilities....................................................................
Provision for product warranties....................................................
Provision for retirement benefits ...................................................
Provision for environmental measures ...........................................
Negative goodwill .........................................................................
Other ............................................................................................
Total noncurrent liabilities .............................................................
Total liabilities.....................................................................................

5,000
14,842
362
1,510
137
3,163
161
128
527
25,83287,1995,000
14,003
–
1,531
187
3,380
161
139
567
24,97090,51853,734
159,505
3,890
16,227
1,472
33,992
1,730
1,375
5,663
277,614937,119NET ASSETS
Shareholders’ equity:
Capital stock .................................................................................
Capital surplus ..............................................................................
Retained earnings .........................................................................
Treasury stock ...............................................................................
Total shareholders’ equity .............................................................

13,15011,8509,018(730)
33,28813,15011,8509,093(652)
33,441

141,321
127,350
96,915(7,845)
357,743

Valuation and translation adjustments:
Valuation difference on available-for-sale securities................................
Deferred gains or losses on hedges.....................................................
Foreign currency translation adjustment ..............................................
Total valuation and translation adjustments..........................................
Minority interests ............................................................................
Total net assets .....................................................................................
Total liabilities and net assets...................................................................

125
(9)
(191)
(75)
3,449
36,663
123,862(1,254)1(668)(1,921)
3,042
34,562¥ 125,080

1,343
(96)
(2,052)(806)
37,066
394,013$ 1,331,133¥

Daiken Corporation

Annual Report 20109

Consolidated Balance Sheets

Daiken Corporation and Consolidated Subsidiaries
March 31, 2010 and 2009

Millions of Yen
2010
2009

ASSETS
Current assets:
Cash and deposits .........................................................................
Notes and accounts receivable—trade...........................................
Merchandise and finished goods...................................................
Work in process ............................................................................
Raw materials and supplies ...........................................................
Partly-finished work ......................................................................
Deferred tax assets........................................................................
Other ............................................................................................
Allowance for doubtful accounts ..................................................
Total current assets .......................................................................

8¥

10,98728,025
10,817
1,652
3,323
850
1,024
3,556
(148)
60,090¥9,770 $
24,552
12,410
2,039
3,749
3,422
1,062
4,631
(93)
61,545

Thousands of
U.S. Dollars
2010

118,076
301,182
116,249
17,75335,711
9,134
11,004
38,216(1,590)645,781Noncurrent assets:
Property, plant and equipment
Buildings and structures, net....................................................
Machinery, equipment and vehicles, net ..................................
Land ........................................................................................
Lease assets, net ......................................................................
Construction in progress..........................................................
Other, net ................................................................................
Total property, plant and equipment .......................................

11,665
11,951
15,505
388
700
1,336
41,548

11,416
12,92515,759
–
1,126
1,144
42,372

125,362
128,436
166,630
4,169
7,522
14,357446,512Intangible assets............................................................................
Goodwill ..................................................................................
Software ..................................................................................
Other .......................................................................................
Total intangible assets..............................................................

1,182
466
296
1,945

1,414
410
201
2,027

12,702
5,008
3,181
20,902

Investments and other assets ........................................................
Investment securities................................................................
Long-term loans receivable ......................................................
Prepaid pension cost ................................................................
Deferred tax assets...................................................................
Other .......................................................................................
Allowance for doubtful accounts .............................................
Total investments and other assets ..........................................
Total noncurrent assets .................................................................
Deferred assets...................................................................................
Bond issuance cost ........................................................................
Total assets.........................................................................................

9,698
2
3,229
5,274
2,897
(865)
20,236
63,7304040¥ 123,862

Daiken Corporation

Annual Report 2010

Millions of Yen
2010
2009

8,667
104,223
287
21
3,681
34,701
4,444
56,6792,599
31,133(598)(9,296)
19,080217,474
63,480684,900
55
429
55
429
¥ 125,080 $ 1,331,133

LIABILITIESCurrent liabilities:
Notes and accounts payable—trade ..............................................
Short-term loans payable ..............................................................
Current portion of long-term loans payable ..................................
Lease obligations...........................................................................
Accounts payable—other ..............................................................
Income taxes payable ....................................................................
Accrued consumption taxes ..........................................................
Provision for bonuses ....................................................................
Provision for business structure improvement................................
Provision for loss on office transfer ...............................................
Other ............................................................................................
Total current liabilities ...................................................................

¥

Thousands of
U.S. Dollars
2010

15,187
14,2664,903
32
21,030
794
413
1,552
111
75
2,998
61,366¥ 16,656
13,7193,765–
23,470
880
362
1,290
849
224
4,328
65,547$ 163,213
153,315
52,692343
226,007
8,533
4,438
16,6791,192
806
32,219659,494

Noncurrent liabilities:
Bonds payable...............................................................................
Long-term loans payable ...............................................................
Lease obligations...........................................................................
Deferred tax liabilities....................................................................
Provision for product warranties....................................................
Provision for retirement benefits ...................................................
Provision for environmental measures ...........................................
Negative goodwill .........................................................................
Other ............................................................................................
Total noncurrent liabilities .............................................................
Total liabilities.....................................................................................

5,000
14,842
362
1,510
137
3,163
161
128
527
25,83287,1995,000
14,003
–
1,531
187
3,380
161
139
567
24,97090,51853,734
159,505
3,890
16,227
1,472
33,992
1,730
1,375
5,663
277,614937,119NET ASSETS
Shareholders’ equity:
Capital stock .................................................................................
Capital surplus ..............................................................................
Retained earnings .........................................................................
Treasury stock ...............................................................................
Total shareholders’ equity .............................................................

13,15011,8509,018(730)
33,28813,15011,8509,093(652)
33,441

141,321
127,350
96,915(7,845)
357,743

Valuation and translation adjustments:
Valuation difference on available-for-sale securities................................
Deferred gains or losses on hedges.....................................................
Foreign currency translation adjustment ..............................................
Total valuation and translation adjustments..........................................
Minority interests ............................................................................
Total net assets .....................................................................................
Total liabilities and net assets...................................................................

125
(9)
(191)
(75)
3,449
36,663
123,862(1,254)1(668)(1,921)
3,042
34,562¥ 125,080

1,343
(96)
(2,052)(806)
37,066
394,013$ 1,331,133¥

Daiken Corporation

Annual Report 20109

Daiken Corporation and Consolidated Subsidiaries
Years ended March 31, 2010 and 2009

Consolidated Statements of Income

Millions of Yen
2010
2009

10

Net sales.............................................................................................
Cost of sales .......................................................................................
Gross profit ...................................................................................
Selling, general and administrative expenses ......................................
Operating income .........................................................................
Non-operating income........................................................................
Non-operating expenses .....................................................................
Ordinary income.................................................................................

¥ 140,936 ¥Extraordinary income..........................................................................
Extraordinary loss ...............................................................................
Income (loss) before income taxes and minority interests ...................
Income taxes ......................................................................................
Minority interests in income ...............................................................
Net income.........................................................................................

150
2,890
79
(461)
29
511 ¥

104,325
36,61033,600
3,010
871
1,062
2,819

¥

150,325
114,145
36,17934,349
1,830
913
1,411
1,331

$ 1,514,626
1,121,171
393,444
361,096
32,3489,360
11,41330,295

1,863
3,868
(672)
(1,350)
78
598 $

1,612
31,058849(4,954)311
5,491

Retainedearnings

Deferred
Valuation
Total
Treasurydifference on gains orshareholders’ available-for- losses onstockequitysale securities hedges

Total
Foreigncurrency valuation andtranslation translation
adjustment adjustments

Balance at March 31, 2009............. ¥ 13,150 ¥ 11,850
Changes of items during the period
Dividends from surplus......................
Net income .......................................
Purchase of treasury stock.................
Disposal of treasury stock..................
0Change of scope of consolidation .....
Net changes of items otherthan shareholders’ equity ...............
Total changes of items during
the period ......................................
–
0¥ 9,093¥ (652)¥ (668) ¥ (1,921) ¥ 3,042 ¥ 34,562

(75)

(77)

(153)

Balance at March 31, 2010............. ¥ 13,150 ¥ 11,850¥ 9,018¥ (730)¥ 33,288

Capitalsurplus

(638)
511
(77)
0
51

¥ 33,441¥ (1,254)¥ 1

Minority
interests

(638)
511
(77)
0
51

Total net
assets

(638)
511
(77)
0
51

¥

1,380

(11)

477

1,846

407

2,253

1,380

(11)

477

1,846

407

2,100

125

¥ (9)

¥ (191) ¥(75) ¥ 3,449 ¥ 36,663

Thousands of U.S. Dollars
Capitalstock

CapitalsurplusRetainedearnings

Deferred
Valuation
Total
Treasurydifference on gains orshareholders’ available-for- losses onstockequitysale securities hedges

Total
Foreigncurrency valuation andtranslation translation
adjustment adjustments

Minority
interests

Total net
assetsBalance at March 31, 2009........... $ 141,321 $ 127,350 $ 97,721 $ (7,006) $ 359,387 $ (13,476) $ 10 $ (7,178) $ (20,644) $32,692 $371,434
Changes of items during the period
Dividends from surplus....................
(6,856)(6,856)(6,856)
Net income .....................................
5,491
5,491
5,491
Purchase of treasury stock...............
(827)
(827)
(827)
Disposal of treasury stock................
00
00Change of scope of consolidation ...
548
548
548
Net changes of items otherthan shareholders’ equity .............
14,830(118)
5,126
19,838
4,373
24,212
Total changes of items during
the period ....................................
–
0
(806)
(827)
(1,644)
14,830(118)
5,126
19,8384,373
22,568
Balance at March 31, 2010........... $ 141,321 $ 127,350 $ 96,915

Daiken Corporation

Annual Report 2010

$ (7,845) $ 357,743 $

1,343 $

(96) $ (2,052) $(806) $37,066 $394,013

Thousands of
U.S. Dollars

Millions of Yen
2010
2009

2010

Millions of Yen
Capitalstock

Daiken Corporation and Consolidated Subsidiaries
Years ended March 31, 2010 and 2009

Thousands of
U.S. Dollars

Daiken Corporation and Consolidated Subsidiaries
Year ended March 31, 2010

Consolidated Statements of Changes
in Net Assets

Consolidated Statements of Cash FlowsNet cash provided by (used in) operating activities
Income (loss) before income taxes and minority interests....................
Depreciation and amortization............................................................
Impairment loss ..................................................................................
Loss on valuation of land for sale........................................................
Loss on valuation of inventories ..........................................................
Amortization of bond issuance cost ....................................................
Loss on retirement of noncurrent assets..............................................
Loss (gain) on sales of noncurrent assets.............................................
Loss (gain) on sales of investment securities........................................
Loss (gain) on valuation of investment securities .................................
Loss on valuation of golf club membership .........................................
Amortization of goodwill ....................................................................
Increase (decrease) in allowance for doubtful accounts.......................
Increase (decrease) in provision for bonuses........................................
Increase (decrease) in provision for business structure improvement ...
Increase (decrease) in provision for loss on office transfer ...................
Increase (decrease) in provision for environmental measures...............
Increase (decrease) in provision for loss on business liquidation ..........
Increase (decrease) in provision for product warranties .......................
Increase (decrease) in provision for retirement benefits.......................
Interest and dividends income.............................................................
Interest expenses ................................................................................
Foreign exchange losses (gains) ..........................................................
Equity in (earnings) losses of affiliates .................................................
Decrease (increase) in notes and accounts receivable-trade.................
Decrease (increase) in inventories........................................................
Decrease (increase) in consumption taxes refund receivable................
Increase (decrease) in notes and accounts payable-trade ....................
Increase (decrease) in accrued consumption taxes...............................
Other, net ...........................................................................................
Subtotal ........................................................................................
Interest and dividends income received...............................................
Interest expenses paid.........................................................................
Income taxes paid ...............................................................................
Net cash provided by (used in) operating activities ...................................
Net cash provided by (used in) investing activities
Decrease (increase) in time deposits....................................................
Purchase of property, plant and equipment ........................................
Proceeds from sales of property, plant and equipment .......................
Purchase of investment securities........................................................
Proceeds from sales of investment securities.......................................
Purchase of investments in subsidiaries resulting in change in scopeof consolidation ...............................................................................
Payments for sales of investments in subsidiaries
resulting in change in scope of consolidation ...................................
Other, net ...........................................................................................
Net cash provided by (used in) investing activities.....................................
Net cash provided by (used in) financing activities
Net increase (decrease) in short-term loans payable ............................
Proceeds from long-term loans payable ..............................................
Repayment of long-term loans payable...............................................
Repayments of finance lease obligations.............................................
Purchase of treasury stock ..................................................................
Cash dividends paid ............................................................................
Cash dividends paid to minority shareholders .....................................
Other, net ...........................................................................................
Net cash provided by (used in) financing activities ....................................
Effect of exchange rate change on cash and cash equivalents ..................
Net increase (decrease) in cash and cash equivalents ................................
Cash and cash equivalents at beginning of period....................................
Increase in cash and cash equivalents from newly consolidated
subsidiary...............................................................................................
Cash and cash equivalents at end of period .............................................

¥

79
4,197
310

¥

–
14
255
44
642
349
0
220
321
226
(738)
(148)
–
–
(49)
234
(187)
682
(35)
(43)
(3,095)
5,133(33)(3,441)
44
(93)
4,891
190
(662)
(1,277)3,141(672) $
4,054
–
1,111
501
14
131
(1,168)
(478)
564
41
123
73
(192)
849
224
161
(60)
(3)
(121)
(264)
608
260
(43)
4,120
(176)
16
(5,645)48(1,333)
2,744
263
(595)
(607)
1,805

849
45,104
3,331
–
–
150
2,740
472
6,899
3,750
0
2,364
3,449
2,428
(7,931)(1,590)
–
–
(526)
2,514
(2,009)
7,329
(376)
(462)
(33,261)
55,163(354)(36,980)
472(999)
52,563
2,041(7,114)(13,723)
33,756(12)(3,000)
31
(220)
51

2
(3,743)
1,887
(653)
624

(128)
(32,240)333(2,364)
548

–

(962)

–

–
(135)
(3,286)(8)(44)(2,897)–(1,450)(35,314)463
5,600(4,136)
(24)
(77)
(638)
(50)
0
1,135
209
1,199
9,730

54
3,752
(4,185)
–
(365)
(973)
(75)
0
(1,793)(31)(2,916)
12,058

4,975
60,182(44,449)
(257)
(827)
(6,856)(537)
012,1972,246
12,885
104,567

–

¥

2010

4
10,935

¥

589
9,730

Daiken Corporation$

42
117,517

Annual Report 201011

Daiken Corporation and Consolidated Subsidiaries
Years ended March 31, 2010 and 2009

Consolidated Statements of Income

Millions of Yen
2010
2009

10

Net sales.............................................................................................
Cost of sales .......................................................................................
Gross profit ...................................................................................
Selling, general and administrative expenses ......................................
Operating income .........................................................................
Non-operating income........................................................................
Non-operating expenses .....................................................................
Ordinary income.................................................................................

¥ 140,936 ¥Extraordinary income..........................................................................
Extraordinary loss ...............................................................................
Income (loss) before income taxes and minority interests ...................
Income taxes ......................................................................................
Minority interests in income ...............................................................
Net income.........................................................................................

150
2,890
79
(461)
29
511 ¥

104,325
36,61033,600
3,010
871
1,062
2,819

¥

150,325
114,145
36,17934,349
1,830
913
1,411
1,331

$ 1,514,626
1,121,171
393,444
361,096
32,3489,360
11,41330,295

1,863
3,868
(672)
(1,350)
78
598 $

1,612
31,058849(4,954)311
5,491

Retainedearnings

Deferred
Valuation
Total
Treasurydifference on gains orshareholders’ available-for- losses onstockequitysale securities hedges

Total
Foreigncurrency valuation andtranslation translation
adjustment adjustments

Balance at March 31, 2009............. ¥ 13,150 ¥ 11,850
Changes of items during the period
Dividends from surplus......................
Net income .......................................
Purchase of treasury stock.................
Disposal of treasury stock..................
0Change of scope of consolidation .....
Net changes of items otherthan shareholders’ equity ...............
Total changes of items during
the period ......................................
–
0¥ 9,093¥ (652)¥ (668) ¥ (1,921) ¥ 3,042 ¥ 34,562

(75)

(77)

(153)

Balance at March 31, 2010............. ¥ 13,150 ¥ 11,850¥ 9,018¥ (730)¥ 33,288

Capitalsurplus

(638)
511
(77)
0
51

¥ 33,441¥ (1,254)¥ 1

Minority
interests

(638)
511
(77)
0
51

Total net
assets

(638)
511
(77)
0
51

¥

1,380

(11)

477

1,846

407

2,253

1,380

(11)

477

1,846

407

2,100

125

¥ (9)

¥ (191) ¥(75) ¥ 3,449 ¥ 36,663

Thousands of U.S. Dollars
Capitalstock

CapitalsurplusRetainedearnings

Deferred
Valuation
Total
Treasurydifference on gains orshareholders’ available-for- losses onstockequitysale securities hedges

Total
Foreigncurrency valuation andtranslation translation
adjustment adjustments

Minority
interests

Total net
assetsBalance at March 31, 2009........... $ 141,321 $ 127,350 $ 97,721 $ (7,006) $ 359,387 $ (13,476) $ 10 $ (7,178) $ (20,644) $32,692 $371,434
Changes of items during the period
Dividends from surplus....................
(6,856)(6,856)(6,856)
Net income .....................................
5,491
5,491
5,491
Purchase of treasury stock...............
(827)
(827)
(827)
Disposal of treasury stock................
00
00Change of scope of consolidation ...
548
548
548
Net changes of items otherthan shareholders’ equity .............
14,830(118)
5,126
19,838
4,373
24,212
Total changes of items during
the period ....................................
–
0
(806)
(827)
(1,644)
14,830(118)
5,126
19,8384,373
22,568
Balance at March 31, 2010........... $ 141,321 $ 127,350 $ 96,915

Daiken Corporation

Annual Report 2010

$ (7,845) $ 357,743 $

1,343 $

(96) $ (2,052) $(806) $37,066 $394,013

Thousands of
U.S. Dollars

Millions of Yen
2010
2009

2010

Millions of Yen
Capitalstock

Daiken Corporation and Consolidated Subsidiaries
Years ended March 31, 2010 and 2009

Thousands of
U.S. Dollars

Daiken Corporation and Consolidated Subsidiaries
Year ended March 31, 2010

Consolidated Statements of Changes
in Net Assets

Consolidated Statements of Cash FlowsNet cash provided by (used in) operating activities
Income (loss) before income taxes and minority interests....................
Depreciation and amortization............................................................
Impairment loss ..................................................................................
Loss on valuation of land for sale........................................................
Loss on valuation of inventories ..........................................................
Amortization of bond issuance cost ....................................................
Loss on retirement of noncurrent assets..............................................
Loss (gain) on sales of noncurrent assets.............................................
Loss (gain) on sales of investment securities........................................
Loss (gain) on valuation of investment securities .................................
Loss on valuation of golf club membership .........................................
Amortization of goodwill ....................................................................
Increase (decrease) in allowance for doubtful accounts.......................
Increase (decrease) in provision for bonuses........................................
Increase (decrease) in provision for business structure improvement ...
Increase (decrease) in provision for loss on office transfer ...................
Increase (decrease) in provision for environmental measures...............
Increase (decrease) in provision for loss on business liquidation ..........
Increase (decrease) in provision for product warranties .......................
Increase (decrease) in provision for retirement benefits.......................
Interest and dividends income.............................................................
Interest expenses ................................................................................
Foreign exchange losses (gains) ..........................................................
Equity in (earnings) losses of affiliates .................................................
Decrease (increase) in notes and accounts receivable-trade.................
Decrease (increase) in inventories........................................................
Decrease (increase) in consumption taxes refund receivable................
Increase (decrease) in notes and accounts payable-trade ....................
Increase (decrease) in accrued consumption taxes...............................
Other, net ...........................................................................................
Subtotal ........................................................................................
Interest and dividends income received...............................................
Interest expenses paid.........................................................................
Income taxes paid ...............................................................................
Net cash provided by (used in) operating activities ...................................
Net cash provided by (used in) investing activities
Decrease (increase) in time deposits....................................................
Purchase of property, plant and equipment ........................................
Proceeds from sales of property, plant and equipment .......................
Purchase of investment securities........................................................
Proceeds from sales of investment securities.......................................
Purchase of investments in subsidiaries resulting in change in scopeof consolidation ...............................................................................
Payments for sales of investments in subsidiaries
resulting in change in scope of consolidation ...................................
Other, net ...........................................................................................
Net cash provided by (used in) investing activities.....................................
Net cash provided by (used in) financing activities
Net increase (decrease) in short-term loans payable ............................
Proceeds from long-term loans payable ..............................................
Repayment of long-term loans payable...............................................
Repayments of finance lease obligations.............................................
Purchase of treasury stock ..................................................................
Cash dividends paid ............................................................................
Cash dividends paid to minority shareholders .....................................
Other, net ...........................................................................................
Net cash provided by (used in) financing activities ....................................
Effect of exchange rate change on cash and cash equivalents ..................
Net increase (decrease) in cash and cash equivalents ................................
Cash and cash equivalents at beginning of period....................................
Increase in cash and cash equivalents from newly consolidated
subsidiary...............................................................................................
Cash and cash equivalents at end of period .............................................

¥

79
4,197
310

¥

–
14
255
44
642
349
0
220
321
226
(738)
(148)
–
–
(49)
234
(187)
682
(35)
(43)
(3,095)
5,133(33)(3,441)
44
(93)
4,891
190
(662)
(1,277)3,141(672) $
4,054
–
1,111
501
14
131
(1,168)
(478)
564
41
123
73
(192)
849
224
161
(60)
(3)
(121)
(264)
608
260
(43)
4,120
(176)
16
(5,645)48(1,333)
2,744
263
(595)
(607)
1,805

849
45,104
3,331
–
–
150
2,740
472
6,899
3,750
0
2,364
3,449
2,428
(7,931)(1,590)
–
–
(526)
2,514
(2,009)
7,329
(376)
(462)
(33,261)
55,163(354)(36,980)
472(999)
52,563
2,041(7,114)(13,723)
33,756(12)(3,000)
31
(220)
51

2
(3,743)
1,887
(653)
624

(128)
(32,240)333(2,364)
548

–

(962)

–

–
(135)
(3,286)(8)(44)(2,897)–(1,450)(35,314)463
5,600(4,136)
(24)
(77)
(638)
(50)
0
1,135
209
1,199
9,730

54
3,752
(4,185)
–
(365)
(973)
(75)
0
(1,793)(31)(2,916)
12,058

4,975
60,182(44,449)
(257)
(827)
(6,856)(537)
012,1972,246
12,885
104,567

–

¥

2010

4
10,935

¥

589
9,730

Daiken Corporation$

42
117,517

Annual Report 201011

Notes Related to Consolidated
Financial Statements

Summary of significant accounting policies
1.Securities
Held-to-maturity securities are carried and calculated by theamortized cost method (straight-line method).
Marketable securities classified as other securities are carried atfair value, based on market prices on settlement date ofaccounts, with any changes in unrealized holding gain or loss
directly charged to net assets. Cost of securities sold is
calculated principally by the moving average method.
Non-marketable securities classified as other securities arecarried at cost determined principally by the moving averagemethod.
2. Derivatives
Derivatives are carried at fair value.
3.Inventories
In principle, inventories of the Company and its consolidated
subsidiaries are calculated as costs, as determined by themoving average method. (The value in the consolidated balance
sheets is calculated by the method of reduction in book value
based on decline in profitability.) Furthermore, for the realestate for sale, a separate method is applied, calculated as costs.
(The value in the consolidated balance sheets is calculated by
the method of reduction in book value based on decline inprofitability.) For partly finished work, a separate method isapplied, calculated as costs.

12

4.Method of calculating the depreciation of important
assets to be amortized
1) Property, plant and equipment (excluding leased assets)
At Daiken Corporation and its domestic consolidated
subsidiaries, the depreciation is primarily computed by the
declining-balance method, with the exception of buildings(excluding attached fittings and structures) acquired on orafter April 1, 1998, the depreciation of which is computed by
the straight-line method. The foreign consolidated
subsidiaries use the straight-line method to calculate
depreciation.
The principal estimated useful lives are as follows:
Buildings and structures
mainly 3 to 60 years
Machinery, equipment and vehicles mainly 4 to 15 years
2) Intangible assets (excluding leased assets)
At Daiken Corporation and its domestic consolidated
subsidiaries, the depreciation of intangible assets is computedby the straight-line method. The foreign consolidated
subsidiaries use the straight-line method to calculate
depreciation in conformity with the accounting principles
generally accepted in their corresponding countries.
Expenditures related to computer software for internal use
are amortized by the straight-line method over theirestimated useful lives in the company, a 5-year period.
3) Leased assets
The depreciation of leased assets is computed by thestraight-line method, with the lease period as the useful life
period and the remaining value at the end of the lease period
is taken as zero. Finance leases, other than those for which
the ownership of the leased asset will be transferred to thelessee, commenced on or before March 31, 2008, areaccounted for by a method similar to that applicable toordinary operating leases.
4) Deferred assets
The amortization of bond issuance cost is computed using
the straight-line method for the 5-year period until
redemption.
5.Provisions and allowances
1) Allowance for doubtful accounts
In order to prepare irrecoverable accounts such as accounts
and loans receivable, provisions for doubtful accounts are
generally made on the basis of historical default rates.
Claims whose possibility of collection is deemed doubtful are

Daiken Corporation and Consolidated Subsidiaries
March 31, 2010provided for in the expected uncollectible amounts, giving
due consideration to the specific circumstances.
2) Provision for bonuses
In order to prepare primarily for the payment of bonuses to
employees, provisions are based on the expected amounts of
payment.
3) Provision for business structure improvements
In order to prepare for the payment of expenses expected tooccur for business structure improvements, provisions are
made for estimated improvement expenses at the end of theterm under review.
4) Provision for loss on office transfer
In order to prepare for the payment of expenses expected tooccur for office transfer, provisions are made for estimatedtransfer expenses.
5) Provision for product warranties
In order to prepare primarily for the payment of expenses
expected to occur after the delivery of products, provisions
for estimated repairing costs during the term of warranty are
made.
6) Provision for retirement benefits
Provisions for employees’ retirement benefits are made in theamount deemed necessary at the term end, based on
estimated retirement obligations and plan assets. (Regarding
the company pension plan, a prepaid pension expense has
been appropriated, as the value of the pension plan assets
exceeds the amount of the retirement benefit obligation as
adjusted for unrecognized prior service cost and net
unrecognized actuarial gain or loss.)
Net unrecognized actuarial gain or loss is amortizedcommencing the fiscal year following the consolidated fiscal
year in which the gain or loss was recognized by thestraight-line method over the estimated average remaining
years of service of the eligible employees (mainly 10 years).
7) Provision of environmental measures
In order to prepare primarily for the payment of expenses
expected to occur for environmental measures, provisions are
made for estimated expenses.
6. Criteria for appropriating important incomes andexpenses
Criteria for appropriating the amounts and costs of completedwork:1) Work confirmed as certain to be progressed partly by the endof the current fiscal term: The criterion is the progress of said
work. (The rate of progress is estimated using the cost
proportion method.)2) Other work: The criterion is the completion of said work.
7. Criteria of translations into Japanese yen amounts ofimportant assets or liabilities denominated in foreign
currencies
The monetary credits and debts denominated in foreign
currencies are translated into Japanese yen at the current
exchange rate on the consolidated settling date and translationdifference is treated as gain or loss. The assets and liabilities offoreign consolidated subsidiaries are translated into Japanese
yen at the current exchange rate on the settling date of
subsidiaries, and gain or loss is also translated into Japanese yenat the current exchange rate on the subsidiaries' settling date.
Any translation differences are included in the translation
adjustment account and minority interests in the net assets
section.
8. Important methods of hedge accounting
1) Method of hedge accounting
The deferred method of hedge accounting is adopted. As forforeign exchange forward contracts and foreign currency
option contracts, the allotment process is adopted if therequired conditions are satisfied. As for interest rate swap
contracts, the exception process is adopted if the requiredconditions for this process are satisfied.

2) Hedging measures and objectives
Hedging measures are foreign exchange forward contracts
and foreign currency option contracts. The objectives areaccounts receivable and payable and anticipated transactions
denominated in foreign currencies. Interest rate swap
contracts are other measures, the objectives of which areloans and debts.
3) Hedging policy
In accordance with our internal "Risk Management Policy,"
we hedge against foreign exchange rate fluctuation risks.
4) Method of evaluating the efficiency of hedging
Accumulations of cash flow fluctuations of hedging
objectives or exchange rate fluctuations are compared withaccumulations of cash flow fluctuations of hedging measures
or exchange rate fluctuations for every half term. The
efficiency of hedging is evaluated on the basis of both thesefluctuated values. However, for interest rate swap contracts
using the exception process, we omit this evaluation ofefficiency.
9. Transaction of consumption tax
Consumption taxes and local consumption taxes withheld
and/or paid are not included in the accompanying statements ofoperations.

Notes Related to Consolidated Balance Sheets
1. Accumulated depreciation of property, plant andequipment¥ 56,926 million
2. Items for non-consolidated subsidiaries and affiliates
are as follows:
Investment securities (stocks)¥
817 million

Annual Report 2010

Notes Related to Consolidated Statementsof Income
1. Primary selling, general and administrative expenses
Transportation and storage
expenses¥ 10,779 million
Transfer to allowancefor doubtful accounts¥
35 million
Salaries and allowances¥
7,622 million
Transfer to provision for bonuses¥
1,048 million
Expenses for retirement benefits¥
1,627 million
2. Research and development costs
Research and development costs are included in the cost ofgeneral and administrative expenses and the cost of production
for the year ended March 31, 2010, totaling ¥1,471 million.
3. Contents of gain on sales of noncurrent assets
Machinery, equipment and vehicles¥
0 millionLand¥
6 million
Total¥¥ 1,358 million¥ 2,456 million¥ 2,765 million¥
868 million¥
193 million

Total

¥

7,641 million

Loans corresponding to the above
Short-term loans payable¥ 2,188 million
Current portion of long-termloans payable¥
304 million
Long-term loans payable¥ 1,092 million
Besides the above, investment securities amounting to ¥49
million are held as a deposit relating to our housing land andbuilding agency registration.
4. Guarantee obligations
Guarantees are provided for bank loans assumed
by the companies mentioned below, as follows:
For purchasers of houses from ourconsolidated subsidiaries(Bridge loans for housing loans)¥
19 million
5. Contingent liabilities
Liability for redemption following
liquidation of credit¥ 1,533 million

7 million

4. Contents of loss on sales of noncurrent assets
Land¥
52 million
5. Contents of loss on retirement of noncurrent assets
Buildings and structures¥
33 million
Machinery, equipment and vehicles¥
152 million
Other¥
68 million
Total

3. Assets pledged as collateral
Buildings and structures
Machinery, equipment andvehiclesLand
Other current assets
Other noncurrent assets¥

255 million

6. Impairment loss
Our group has reckoned up impairment losses in the following
assets groups for the consolidated fiscal year under review:
Location
Category
Sort
Naruto City, Tokushima Pref.
ForestLand
Our group made grouping business assets, primarily for eachplant, on the basis of managerial accounting classification, andgrouping idle assets individually.
For the consolidated fiscal year under review, the book valueof assets groups among unused idle assets not for businesspurpose, the market values of which decreased significantly,
was decreased to the collectible limit, and the decreased
amount, ¥310 million, was reckoned up as impairment loss, i.e.
a special loss in the Statements of Income.
The abovementioned collectible limit amount was measured
by the net sold amount, and the net sold amount wascalculated on the basis of official estimation for fixed property
by a third party.
7. The depreciation amount of goodwill is of the depreciatedgoodwill related to the Aizu Daiken Corporation, on thebasis of “Practical Guidelines Regarding Capital Consolidation Procedures in Consolidated Financial Statements”(Report of Accounting System Committee No.7), Clause 32.
8. Loss on valuation of golf club memberships includes ¥0million of the transfer to allowance for doubtful accounts.

6. In order to efficiently raise working capital, the Company
concluded overdraft contracts and loan commitment
contracts with four of our financial institutions.
The unexecuted loan balances related to such overdraft
contracts and loan commitment contracts at the term end
are as follows:
Maximum overdraft amount andthe total amount of loan
commitment¥ 13,200 million
Executed loan amounts–
Total

Daiken Corporation

7. Condensed book value deducted from the acquisition cost of
property, plant and equipment by the acceptance ofgovernment subsidy:
Machinery, equipment
and vehicles¥
47 million¥

13,200 million
Daiken Corporation

Annual Report 201013

Notes Related to Consolidated
Financial Statements

Summary of significant accounting policies
1.Securities
Held-to-maturity securities are carried and calculated by theamortized cost method (straight-line method).
Marketable securities classified as other securities are carried atfair value, based on market prices on settlement date ofaccounts, with any changes in unrealized holding gain or loss
directly charged to net assets. Cost of securities sold is
calculated principally by the moving average method.
Non-marketable securities classified as other securities arecarried at cost determined principally by the moving averagemethod.
2. Derivatives
Derivatives are carried at fair value.
3.Inventories
In principle, inventories of the Company and its consolidated
subsidiaries are calculated as costs, as determined by themoving average method. (The value in the consolidated balance
sheets is calculated by the method of reduction in book value
based on decline in profitability.) Furthermore, for the realestate for sale, a separate method is applied, calculated as costs.
(The value in the consolidated balance sheets is calculated by
the method of reduction in book value based on decline inprofitability.) For partly finished work, a separate method isapplied, calculated as costs.

12

4.Method of calculating the depreciation of important
assets to be amortized
1) Property, plant and equipment (excluding leased assets)
At Daiken Corporation and its domestic consolidated
subsidiaries, the depreciation is primarily computed by the
declining-balance method, with the exception of buildings(excluding attached fittings and structures) acquired on orafter April 1, 1998, the depreciation of which is computed by
the straight-line method. The foreign consolidated
subsidiaries use the straight-line method to calculate
depreciation.
The principal estimated useful lives are as follows:
Buildings and structures
mainly 3 to 60 years
Machinery, equipment and vehicles mainly 4 to 15 years
2) Intangible assets (excluding leased assets)
At Daiken Corporation and its domestic consolidated
subsidiaries, the depreciation of intangible assets is computedby the straight-line method. The foreign consolidated
subsidiaries use the straight-line method to calculate
depreciation in conformity with the accounting principles
generally accepted in their corresponding countries.
Expenditures related to computer software for internal use
are amortized by the straight-line method over theirestimated useful lives in the company, a 5-year period.
3) Leased assets
The depreciation of leased assets is computed by thestraight-line method, with the lease period as the useful life
period and the remaining value at the end of the lease period
is taken as zero. Finance leases, other than those for which
the ownership of the leased asset will be transferred to thelessee, commenced on or before March 31, 2008, areaccounted for by a method similar to that applicable toordinary operating leases.
4) Deferred assets
The amortization of bond issuance cost is computed using
the straight-line method for the 5-year period until
redemption.
5.Provisions and allowances
1) Allowance for doubtful accounts
In order to prepare irrecoverable accounts such as accounts
and loans receivable, provisions for doubtful accounts are
generally made on the basis of historical default rates.
Claims whose possibility of collection is deemed doubtful are

Daiken Corporation and Consolidated Subsidiaries
March 31, 2010provided for in the expected uncollectible amounts, giving
due consideration to the specific circumstances.
2) Provision for bonuses
In order to prepare primarily for the payment of bonuses to
employees, provisions are based on the expected amounts of
payment.
3) Provision for business structure improvements
In order to prepare for the payment of expenses expected tooccur for business structure improvements, provisions are
made for estimated improvement expenses at the end of theterm under review.
4) Provision for loss on office transfer
In order to prepare for the payment of expenses expected tooccur for office transfer, provisions are made for estimatedtransfer expenses.
5) Provision for product warranties
In order to prepare primarily for the payment of expenses
expected to occur after the delivery of products, provisions
for estimated repairing costs during the term of warranty are
made.
6) Provision for retirement benefits
Provisions for employees’ retirement benefits are made in theamount deemed necessary at the term end, based on
estimated retirement obligations and plan assets. (Regarding
the company pension plan, a prepaid pension expense has
been appropriated, as the value of the pension plan assets
exceeds the amount of the retirement benefit obligation as
adjusted for unrecognized prior service cost and net
unrecognized actuarial gain or loss.)
Net unrecognized actuarial gain or loss is amortizedcommencing the fiscal year following the consolidated fiscal
year in which the gain or loss was recognized by thestraight-line method over the estimated average remaining
years of service of the eligible employees (mainly 10 years).
7) Provision of environmental measures
In order to prepare primarily for the payment of expenses
expected to occur for environmental measures, provisions are
made for estimated expenses.
6. Criteria for appropriating important incomes andexpenses
Criteria for appropriating the amounts and costs of completedwork:1) Work confirmed as certain to be progressed partly by the endof the current fiscal term: The criterion is the progress of said
work. (The rate of progress is estimated using the cost
proportion method.)2) Other work: The criterion is the completion of said work.
7. Criteria of translations into Japanese yen amounts ofimportant assets or liabilities denominated in foreign
currencies
The monetary credits and debts denominated in foreign
currencies are translated into Japanese yen at the current
exchange rate on the consolidated settling date and translationdifference is treated as gain or loss. The assets and liabilities offoreign consolidated subsidiaries are translated into Japanese
yen at the current exchange rate on the settling date of
subsidiaries, and gain or loss is also translated into Japanese yenat the current exchange rate on the subsidiaries' settling date.
Any translation differences are included in the translation
adjustment account and minority interests in the net assets
section.
8. Important methods of hedge accounting
1) Method of hedge accounting
The deferred method of hedge accounting is adopted. As forforeign exchange forward contracts and foreign currency
option contracts, the allotment process is adopted if therequired conditions are satisfied. As for interest rate swap
contracts, the exception process is adopted if the requiredconditions for this process are satisfied.

2) Hedging measures and objectives
Hedging measures are foreign exchange forward contracts
and foreign currency option contracts. The objectives areaccounts receivable and payable and anticipated transactions
denominated in foreign currencies. Interest rate swap
contracts are other measures, the objectives of which areloans and debts.
3) Hedging policy
In accordance with our internal "Risk Management Policy,"
we hedge against foreign exchange rate fluctuation risks.
4) Method of evaluating the efficiency of hedging
Accumulations of cash flow fluctuations of hedging
objectives or exchange rate fluctuations are compared withaccumulations of cash flow fluctuations of hedging measures
or exchange rate fluctuations for every half term. The
efficiency of hedging is evaluated on the basis of both thesefluctuated values. However, for interest rate swap contracts
using the exception process, we omit this evaluation ofefficiency.
9. Transaction of consumption tax
Consumption taxes and local consumption taxes withheld
and/or paid are not included in the accompanying statements ofoperations.

Notes Related to Consolidated Balance Sheets
1. Accumulated depreciation of property, plant andequipment¥ 56,926 million
2. Items for non-consolidated subsidiaries and affiliates
are as follows:
Investment securities (stocks)¥
817 million

Annual Report 2010

Notes Related to Consolidated Statementsof Income
1. Primary selling, general and administrative expenses
Transportation and storage
expenses¥ 10,779 million
Transfer to allowancefor doubtful accounts¥
35 million
Salaries and allowances¥
7,622 million
Transfer to provision for bonuses¥
1,048 million
Expenses for retirement benefits¥
1,627 million
2. Research and development costs
Research and development costs are included in the cost ofgeneral and administrative expenses and the cost of production
for the year ended March 31, 2010, totaling ¥1,471 million.
3. Contents of gain on sales of noncurrent assets
Machinery, equipment and vehicles¥
0 millionLand¥
6 million
Total¥¥ 1,358 million¥ 2,456 million¥ 2,765 million¥
868 million¥
193 million

Total

¥

7,641 million

Loans corresponding to the above
Short-term loans payable¥ 2,188 million
Current portion of long-termloans payable¥
304 million
Long-term loans payable¥ 1,092 million
Besides the above, investment securities amounting to ¥49
million are held as a deposit relating to our housing land andbuilding agency registration.
4. Guarantee obligations
Guarantees are provided for bank loans assumed
by the companies mentioned below, as follows:
For purchasers of houses from ourconsolidated subsidiaries(Bridge loans for housing loans)¥
19 million
5. Contingent liabilities
Liability for redemption following
liquidation of credit¥ 1,533 million

7 million

4. Contents of loss on sales of noncurrent assets
Land¥
52 million
5. Contents of loss on retirement of noncurrent assets
Buildings and structures¥
33 million
Machinery, equipment and vehicles¥
152 million
Other¥
68 million
Total

3. Assets pledged as collateral
Buildings and structures
Machinery, equipment andvehiclesLand
Other current assets
Other noncurrent assets¥

255 million

6. Impairment loss
Our group has reckoned up impairment losses in the following
assets groups for the consolidated fiscal year under review:
Location
Category
Sort
Naruto City, Tokushima Pref.
ForestLand
Our group made grouping business assets, primarily for eachplant, on the basis of managerial accounting classification, andgrouping idle assets individually.
For the consolidated fiscal year under review, the book valueof assets groups among unused idle assets not for businesspurpose, the market values of which decreased significantly,
was decreased to the collectible limit, and the decreased
amount, ¥310 million, was reckoned up as impairment loss, i.e.
a special loss in the Statements of Income.
The abovementioned collectible limit amount was measured
by the net sold amount, and the net sold amount wascalculated on the basis of official estimation for fixed property
by a third party.
7. The depreciation amount of goodwill is of the depreciatedgoodwill related to the Aizu Daiken Corporation, on thebasis of “Practical Guidelines Regarding Capital Consolidation Procedures in Consolidated Financial Statements”(Report of Accounting System Committee No.7), Clause 32.
8. Loss on valuation of golf club memberships includes ¥0million of the transfer to allowance for doubtful accounts.

6. In order to efficiently raise working capital, the Company
concluded overdraft contracts and loan commitment
contracts with four of our financial institutions.
The unexecuted loan balances related to such overdraft
contracts and loan commitment contracts at the term end
are as follows:
Maximum overdraft amount andthe total amount of loan
commitment¥ 13,200 million
Executed loan amounts–
Total

Daiken Corporation

7. Condensed book value deducted from the acquisition cost of
property, plant and equipment by the acceptance ofgovernment subsidy:
Machinery, equipment
and vehicles¥
47 million¥

13,200 million
Daiken Corporation

Annual Report 201013

Annual Report 2010
For the year ended March 31, 2010

DAIKEN CORPORATION
Registered Head Office:1-1, Inami, Nanto City, Toyama 932-0298, Japan
Phone: +81-763-82-5850
Operational Headquarters:
22F, Dojima Avanza
6-20, Dojima 1-chome Kita-ku, Osaka 530-8210, Japan
Phone: +81-6-6452-6000

DAIKEN CORPORATION