Okumura Corporation
2-2-2, Matsuzaki-cho, Abeno-ku, Osaka 545-8555, Japan
TEL: +81-6-6621-1101 FAX: +81-6-6627-5295
http://www.okumuragumi.co.jp

Okumura Corporation

Annual Report 2014

Printed in JapanBoard of Directors

Investor Information(As of June 27, 2014)(As of March 31, 2014)
Okumura Corporation Annual Report 2014

Directors and Auditors

Okumura was established in 1907 based on two key
principles enshrined in the corporate mottos “steadfast
management” and “sincere operation.” The steady
growth achieved over the years has been made possible through the unflagging support of our customers.
Okumura’s main business activities include civilengineering projects for railways, roads, power station
facilities, sewage and water works, and others. In thearea of construction are projects such as houses, public
facilities, medical facilities, and office buildings. The
Company has developed technology at the highest
level, with achievements including the seismic isolation
system used to construct Japan’s first earthquakeabsorbing building. In the area of environment-related
technology, Okumura has developed techniques for
100% recycling of demolished concrete, and natural
greening of concrete surfaces on buildings.
Okumura understands what an important mission it is to provide a better environment for the future.
Accordingly, the Company is dedicated to contributing
to meaningful social infrastructure investment and toalways being a corporation regarded highly by society.
It will achieve this by continuing to develop as an allaround construction company based on steadfast business management.

President & Representative Director
Takanori Okumura
Representative Director
Takaiku Hirako
Directors
Makoto Tsuchiya
Kazuo Takami
Seiichi Fujioka
Keiji Yamaguchi
Yuichi Mizuno
Kiyoshi Saito
Kenji Kotera
Atsushi Tanaka
Standing Statutory Auditors
Yuji Takemura
Koichi Yamauchi
Auditors
Yoshihiro Ban
Kazuo Tsuji
Shuji Abe
Notes:1. Kiyoshi Saito is outside director.
2. Yoshihiro Ban, Kazuo Tsuji and Shuji Abe are outside auditors.

Corporate Data
Head Office	OKUMURA CORPORATION
2-2-2, Matsuzaki-cho, Abeno-ku, Osaka 545-8555, Japan
TEL: +81-6-6621-1101 FAX: +81-6-6627-5295
EstablishedFebruary 22, 1907
Capital¥19.8 billion

Stock Information
Stock Exchange Listings
Tokyo
Transfer Agent
Sumitomo Mitsui Trust Bank, Limited
Major Shareholders
Shareholder

Executive Officers
Executive Vice Presidents
Takaiku Hirako*
Makoto Tsuchiya*
Masamichi Shirahase
Senior Managing Officer
Hiroomi Iida

Contents
1 Financial Highlights
2 To Our Shareholders
4 Review of Operations
6 Topics
8 Consolidated Balance Sheet
10 Consolidated Statement of Income
11 Consolidated Statement of Comprehensive Income
12 Consolidated Statement of Changes in Equity
13 Consolidated Statement of Cash Flows
14 Notes to Consolidated Financial Statements
32 Independent Auditor’s Report
33 Breakdown of Orders (Non-Consolidated)
34 Network
35 Board of Directors / Investor Information

Managing Officers
Kazuo Takami*
Seiichi Fujioka*
Keiji Yamaguchi*
Hirokazu Oishi
Yuichi Mizuno*
Toshio Kobayashi
Executive Officers
Takeshi Kurita
Yutaka Maruyama
Takanori Hayashi
Noriyuki MachidaKenji Kotera*
Osamu Harada
Atsushi Tanaka*
Note: Those officers marked with an asterisk (*) work as directors.

35

Group Employees
1,958

Shares held Percentage of(thousands)
total

Okumura Corporation(Treasury stock)

28,667

12.56%

Northern Trust Co. (AVFC) Re
Silchester International Investors
International Value Equity Trust

12,918

5.66

Northern Trust Co. (AVFC) Re
U.S. Tax Exempted Pension Funds

7,633

3.34

Okumura Employees’
Shareholding Association

7,562

3.31

BBH Boston Custodian For Blackrock
Global Allocation Fund, Inc. 620313

6,202

2.72

Resona Bank, Limited.

6,074

2.66

Sumitomo Realty &Development Co., Ltd.

6,050

2.65

Japan Trustee Services Bank,
Ltd. (Trust Account)

5,650

2.47

Sumitomo Mitsui Banking
Corporation

5,568

2.44

The Master Trust Bank ofJapan, Ltd. (Trust Account)

4,489

1.97

Northern Trust Co. (AVFC) Sub
A/C Non Treaty

4,161

1.82

Financial Highlights
Okumura Corporation Annual Report 2014

For the years ended March 31

2012

2014

2013

Consolidated:

2014
Thousands of
U.S. dollars

Millions of yen¥179,285¥196,554¥193,025$1,875,484

Operating income (loss)(3,940)

1,339

2,318

22,520Net income (loss)(2,958)

2,684

3,755

36,485

Total assets

216,856

234,034

239,6632,328,637

Total equity

111,714

121,924

128,792

1,251,382

Net sales

Per Share:

Yen

Basic net income (loss)
Cash dividends applicable to the year

U.S. dollars¥(14.80)¥13.43¥18.80

$0.18

9.00

9.00

9.00

0.09

Note:	The U.S. dollar amounts included herein are presented solely for convenience of the reader. Such dollar amounts have been translated from yenat the approximate exchange rate in Tokyo on March 31, 2014, of ¥102.92=U.S.$1.

Net Sales

Net Income(Millions of Yen)

200,000

Total Equity(Millions of Yen)

4,000
3,000

150,000(Millions of Yen)

150,000

125,000

2,000

100,000

1,000
100,000

75,000050,000-1,00050,00025,000-2,000-3,000

0

2012

2013

2014

0

2012

2013

2014

2012

2013

2014

Disclaimer Regarding Forecasts and Projections
This Annual Report includes forecasts, projections and other predictive statements that represent Okumura’s assumptions and expectations in light of currently available information. These forecasts, etc., are based on industry trends, circumstances involving clients and other factors, and involve risks, variables and uncertainties.
The Okumura Group’s actual performance results may differ from those projected in this Annual Report. Consequently, no guarantee is presented or implied as tothe accuracy of specific forecasts, projections or predictive statements contained herein.

1

To Our Shareholders

2

We would like to thank our shareholders for their continuing support and encouragement, and wish each ofthem the greatest success in their endeavors.
A general overview of business performance for the period to March 2014 (April 1, 2013 to March 31,2014) is provided in the following sections.

Fiscal 2014 Results
During the period under review, the Japanese economy continued on its path toward moderate recovery
back by effects of the government’s economic measures as well as last-minute demand in anticipation of theconsumption tax hike. In the construction industry, the climate for receipt of orders was healthy on the backof steady public investments and a partial recovery in private-sector capital investments. However, in termsof cost, the situation remained unpredictable due to various factors including rising material costs and thechronic shortage in skilled construction workers.
In these circumstances, while the Company’s consolidated net sales fell 1.8% year on year to¥193,025 million, consolidated gross profit increased 7.0% year on year to ¥15,883 million and operating income increased 73.0% year on year to ¥2,318 million, as a result of reporting sales for construction work withrelatively high profitability in the civil engineering segment. Net income surpassed the levels of the previous
period by 39.9% to ¥3,755 million due to the reporting of gain on sales of investment securities, despite adecrease in the reversal of allowance for doubtful accounts.
The Company decided to pay a dividend of ¥9.00 per share for the period ended March 31, 2014
based on its basic policy regarding profit sharing.

Looking Ahead and Key Strategies
The Japanese economy, despite the downward pressure due to the backlash from the last-minute demand, is
expected to return to its recovery trajectory, propped up by the effects of the government’s economic measures, as well as the contributions made by foreign demand. In the construction industry, while investments
in construction are expected to remain more or less on the same level, the situation is expected to remaindifficult for generating stable profit, with the basic trend of rising materials prices and no solution in sight forthe shortage of skilled construction workers.

Okumura Corporation Annual Report 20143

Under these circumstances, the Okumura Group, based on its Three-Year Medium-Term Business
Plan which was formulated to start in fiscal 2013, has been engaged in initiatives that aim at securing stableprofits through reinforcement of the Company’s customer-handling capabilities, technological strengths, andprice-competitiveness, and strengthening the management base that ensures sustainable growth.
Specifically, in building operations, the Company considers the establishment of a business structurethat will generate stable profits even amid rising construction costs as its highest priority, and accordingly,
has been thoroughly enforcing selective receipt of orders based on competitive advantage in profitability andtechnological aspects, organizing and enhancing approaches in dealing with comprehensive evaluation biddings and private sector projects, reinforcing planning and proposal capabilities aimed at increasing special
orders and integrated orders from design to construction, avoiding cutthroat price competition through business cooperation from the upstream stage, and developing technology that will lead to the enhancement ofadded value as well as to energy-saving and cost-cutting.
In real estate operations, the Company is carefully selecting properties which can yield high returns,
and aims to secure a long-term and stable source of income.
For the future, Okumura will apply all of its resources with the aim of responding quickly and flexibly to thechanging operating environment, and thereby secure stable profits in accordance with its corporate philosophy, which has endured through the many years since the Company’s founding. This will enable Okumura to
maintain the trust and confidence of its shareholders.
In all its efforts, the Company looks forward to the continued support of its shareholders.
June 2014

Takanori Okumura
President and Representative Director

Review of Operations
Major Projects Completed
CIVIL ENGINEERING

4
Kakogawa Chuo Junction Ramp Improvement Work

Cable Tunnel Construction in Iikura Shiba ParkWork period: January 2011 to November 2013
Construction length: 1,180m
7 reverse T-shaped abutments
9 overhang piers
6 box culverts

Work period: April 2010 to October 2013
Tunnel length: 440m

2nd Restoration Work in Sakamoto District ofNakahama Site, Southern Sendai Bay Coast

Onohama Pumping Station Construction

Work period: June 2012 to August 2013
Length of embankment: 570m
Tetrapod length: 102m

Work period: August 2011 to August 2013
Construction of pumping station, construction ofdrain pipe system, etc.

BUILDINGS

Nitori Mall Sagamihara
Work period: October 2012 to
September 2013
Structure: Steel
Total floor space: 52,162.35m2

Sanctus Yono Tower Residence,
Sanctus Yono South Residence

Kyushu Welfare Annuity Hospital
Annex and Parking Lot

Meiji Co., Ltd. Kansai Nutritionals
Plant

Work period: December 2011 to
February 2014
Structure: RC
Total floor space: 20,637.52m2

Work period: March 2012 toJuly 2013
Structure: SRC and Steel
Total floor space: 19,466.45m2

Work period: December 2012 toFebruary 2014
Structure: Steel
Total floor space: 13,939.58m2

Okumura Corporation Annual Report 2014

Orders Received
CIVIL ENGINEERING

5
Trans-Chubu Expressway Moriyama Tunnel WorkAi River Dam Construction

Work period: December 2013 to September 2017
Construction length: 2,183m
Tunnel length: 1,734m
5 abutments

Work period: March 2014 to July 2020
Rock-fill dam
Dam height: 76.5m
Dam crest length: 337.5m
Volume of dam: 2,225,000m3
Total reservoir capacity:18,000,000m3

Obayashi Drainage Facility Construction in Ichinoseki
Flood Control Basin

Kitakami Canal Disaster Restoration Work (Part 2)

Work period: October 2013 to February 2017
Floodgate construction, bank protection work, etc.

Work period: October 2013 to March 2016
Length of embankment (restoration): 4,310.9m

BUILDINGS

Geo Senri Chuo

Ikoma Municipal Hospital

Aisai City Hall

Kinokawa City Gymnasium

Work period: February 2013 toApril 2015
Structure: RC
Total floor space: 53,580.86m2

Work period: August 2013 toApril 2015
Structure: Steel
Total floor space: 28,088.24m2

Work period: September 2013 toJanuary 2016
Structure: Steel
Total floor space: 10,479.72m2

Work period: September 2013 toMarch 2015
Structure: RC, Steel and SRC
Total floor space: 7,032.63m2

Topics

Total station with self-leveling mechanism
Tunnel face (Drilling in progress)❶ Vehiclemounted measurement system in operation❷ Development of RC Columns

6❸ Inside the seminar hall

❶ Development and Practical Application of a Mobile Underground Automatic
Displacement Measurement System

To improve the safety and enhance the efficiency of mountaintunnel construction, we developed the “Mobile Underground
Automatic Displacement Measurement System” that monitors thedisplacement of tunnel walls in real time, and applied it to actual
construction work.
This system automatically measures wall displacement
using a measurement device that has been mounted on a
dedicated vehicle, and transmits the measurement data to thesurface using a relay device. While the previous system, which
had a measurement equipment installed directly against thetunnel wall, required at least half a day to move the measurement
equipment as the tunneling progressed, the new vehiclemounted system has shortened the moving process to about
15 minutes, and has thus dramatically increased the frequencyof wall displacement measurement, which, in turn, has madepossible a surveillance system that can immediately recognize
any abnormalities. Furthermore, as the new system minimizes theimpact of moving the equipment on other processes, it enhances
the efficiency of the construction cycle.
❷ Development of RC Columns Using Ultrahigh Strength Concrete

As column members that support super high-rise condominiumof 50 stories or more, we developed reinforced concrete (RC)columns that will further contribute to the habitability of thebuilding.
By surrounding the RC column made of ultrahigh strength
concrete (Fc = 150N/mm2) with steel plates or reinforcing the RCcolumn by mixing steel fiber into the concrete, this technology❸ Panel discussion

ensures high seismic and fire resistant capabilities while making
it possible to reduce the number of columns and streamline thecross-sections, and enables provision of residential structures withhighly flexible designs meeting diversified needs.
❸ Hosting of a Technical Seminar

On December 2, 2013, Okumura hosted the 25th TechnicalSeminar at the Tokyo International Forum in Tokyo’s Chiyoda Ward.
The seminar was attended by approximately 200 participants fromvarious fields, including clients of Okumura.
Okumura began hosting the seminar in 1988 as part of thecollaboration among the industrial, governmental and academic
sectors related to the construction industry. This year’s theme was“To Hand Down a Better Land to the Next Generation: How Social
Infrastructure Should Be Improved, Maintained and Renewed.” Mr.
Hisakazu Oishi, Director of Policy Research Institute for Countryology, the Japan Institute of Country-ology and Engineering,delivered the keynote speech. In addition, a panel discussion washeld on the topic of how to improve, maintain and renew social
infrastructure, which has been drawing increasing attention in
the wake of the tunnel ceiling collapse of the Sasago Tunnel on
the Chuo Expressway in December 2012 and repeated natural
disasters.
❹ Okumura Receives the Japan Society of Seismic Isolation (JSSI) Award forHotel Kintetsu Kyoto Station

Hotel Kintetsu Kyoto Station, which was built by Okumura, wasselected for the 14th JSSI Project Award, and the award waspresented to Okumura during the society’s general meeting on
June 4, 2013.

Okumura Corporation Annual Report 20147

❹ Hotel Kintetsu Kyoto Station❻ West Japan Branch (HARUKAS Office)This award is given to “outstanding buildings that reflect
the qualities of seismic isolation techniques, etc.” and this marked
the third time the Company has won this award following theTechnology Award, which was awarded to Okumura’s seismic
isolation device for lighthouse lenses, and the Project Award (inrecognition of its contribution toward promoting seismic isolation
technologies) for the Okumura Commemorative Museum.
This award was given in recognition of Okumura’s various
structural innovations in constructing hotels on the upper part ofa new platform in a small space (13m x 200m) nestled between
existing railway tracks, and superior workmanship in completing adifficult construction adjacent to operating railway lines.
Hotel Kintetsu Kyoto Station was also given an honorable
mention at the Association of Railway Architects Award on
October 26, 2012.
❺ Recipients of the Okumura Environmental Construction Technology Founda-tion Grant for the Fiscal Year Ended March 31, 2014 Are Announced
In 2007, the Company established a charitable trust fund, theOkumura Environmental Construction Technology Foundation
Grant, whose objective is to further promote the preservationand improvement of Japan’s environment by providing funds
to various research projects on construction technologies that
reduce the environmental load.
The steering committee – comprising experts such asuniversity professors – met on July 11, 2013 to select the recipientsand determine the amount of the grant awarded for the fiscal year
ended March 31, 2014. The foundation has ensured that all thosechosen for the fiscal year have received the grant.

❻ ABENO HARUKAS (Completed March 2014)

Research themes of the recipients are as follows:• Hydraulic model experiments and numerical simulation relating
to breakwaters that take into account the environment of semienclosed bays
• Free-standing and distributed systems based on bio-energy
generated from combined processing facilities of raw sludge andraw garbage• Study of landscaping technology based on integration of
breakwaters and green areas in the areas stricken by the Great
East Japan Earthquake• Establishment of a method of environmental safety assessmentof recycled materials in earthmoving work
❻ West Japan Branch (HARUKAS Office) and Nara Office Are Established

On May 18, 2014, the Kansai Branch of the West Japan Branch andthe Building Design & Planning Department relocated to ABENOHARUKAS (height: 300m), the super high-rise complex which
was built by a consortium including Okumura, and commenced
operations as the West Japan Branch (HARUKAS Office).
The Nara Local Office also changed its name to Nara Office on
the same date.
Okumura will take this opportunity to further enhance its
business and, together with its directors and employees, make aconcerted effort to serve the needs of everyone.

Consolidated Balance Sheet
Okumura Corporation and Consolidated Subsidiaries
March 31, 2014ASSETS

Millions of yen

Thousands of
U.S. dollars(Note 1)

2014

2013

2014

¥ 26,245¥ 28,344$ 255,005

47

105

458

Current assets:
Cash and cash equivalents (Note 12)
Time deposits (Notes 12 and 14)
Receivables:

8

Trade notes (Note 12)

2,462

5,263

23,923

Trade accounts (Notes 12 and 13)

91,585

92,165889,864

Unconsolidated subsidiaries and associated companies (Note 12)

3,209

815

31,177

Other

8,100

6,463

78,699Allowance for doubtful receivables(4,262)(4,393)(41,408)

11,856

12,458115,199

61

44

588

Inventories (Note 4)
Deferred tax assets (Note 9)
Prepaid expenses and other

561

432

5,453

Total current assets

139,864

141,696

1,358,958

Property, plant and equipment (Notes 5 and 6):
Land (Note 14)

27,67026,362

268,846

Buildings and structures

19,966

19,383

193,999

Machinery and equipment

2,700

2,831

26,230Furniture and fixtures

2,017

2,089

19,596

Lease assets (Note 11)

147

126

1,430

Construction in progress

133

210

1,295

Total
Accumulated depreciation
Net property, plant and equipment

52,63351,001

511,396(15,159)(15,161)(147,290)

37,47435,840364,106

60,761

55,396590,373

Investments and other assets:
Investment securities (Notes 3, 6, 12 and 14)
Investments in and advances to unconsolidated subsidiaries and associated companies (Notes 12 and 14)

272

259

2,641

Long-term loans receivable (Note 12)

125

160

1,214

Asset for retirement benefits (Note 7)

435

—

4,233

Deferred tax assets (Note 9)
Other assets
Allowance for doubtful receivables
Total investments and other assets
Total
See notes to consolidated financial statements.

1

—

9

3,499

3,591

33,998(2,768)(2,908)(26,895)

62,32556,498605,573¥239,663¥234,034$2,328,637

Okumura Corporation Annual Report 2014

Millions of yen

Thousands of
U.S. dollars(Note 1)

2014

2013

2014

¥ 7,561¥ 16,448$ 73,462

Trade notes (Note 12)

7,152

5,415

69,490Trade accounts (Note 12)

48,39642,074

470,234

197

182

1,915

10,6109,145

103,090

LIABILITIES AND EQUITYCurrent liabilities:
Short-term bank loans including current portion of long-term debt (Notes 6, 11 and 12)
Payables:

Other
Advances received on construction projects in progress
Income taxes payable

291

227

2,831

Allowance for warranty work on construction projects

796

510

7,731

Allowance for losses on construction contracts

1,877

1,856

18,232Other (Note 14)

16,365

19,567

159,007

93,24595,424905,992

5,276

4,202

51,259Total current liabilities
Long-term liabilities:
Long-term debt (Notes 6, 11, 12 and 13)
Liability for retirement benefits (Note 7)
Deferred tax liabilities (Note 9)

—

2,023

—

12,235

10,334

118,880

115

127

1,124

Total long-term liabilities

17,626

16,686

171,263

Total liabilities

110,871

112,110

1,077,255

19,83919,839

192,761

Other

Commitments and contingent liabilities (Notes 11 and 14)
Equity (Notes 8, 15 and 16):
Common stock
authorized, 480,376,000 shares; issued, 228,326,133 shares
Capital surplus

25,32625,327246,077

Retained earnings

72,094

70,136700,487(12,390)(12,366)(120,388)

Unrealized gain on available-for-sale securities

22,754

18,988221,082

Defined retirement benefit plans

1,169

—

11,363

Treasury stock—at cost
28,667,535 shares in 2014 and 28,609,201 shares in 2013
Accumulated other comprehensive income:Total

23,923

18,988232,445

Total equity

128,792

121,924

1,251,382

Total¥239,663¥234,034$2,328,637

9Consolidated Statement of Income
Okumura Corporation and Consolidated Subsidiaries
Year ended March 31, 2014

Millions of yen

Thousands of
U.S. dollars(Note 1)

2014

2013

2014

¥193,025
177,142
15,883¥196,554
181,714
14,840$1,875,484
1,721,156
154,328

Selling, general and administrative expenses (Note 10)
Operating income

13,5652,318

13,501
1,339

131,808
22,520

Other income (expenses):
Interest and dividend income
Interest expense
Amortization of negative goodwill
Reversal of allowance for doubtful accounts
Gain on sales of investment securities
Loss on construction contracts
Other—net
Other income —net

1,000
(187)
—
233
433
—
218
1,697

1,031
(180)
284
522
2
(407)
245
1,497

9,718
(1,817)
—
2,270
4,204
—
2,118
16,493

Income before income taxes and minority interests

4,015

2,836

39,013

307
(47)
260

164
(12)
152

2,983
(455)
2,528

Net sales
Cost of sales
Gross profit

10

Income taxes (Note 9):
Current
Deferred
Total income taxes
Net income before minority interests
Net income

Per share of common stock (Notes 2.o and 16):
Basic net income
Cash dividends applicable to the year
See notes to consolidated financial statements.

¥

¥

3,755
3,755

18.80
9.00

¥

¥

2,684
2,684

$

36,48536,485

Yen

U.S. dollars(Note 1)

13.43
9.00

$ 0.180.09

Consolidated Statement of Comprehensive Income
Okumura Corporation and Consolidated Subsidiaries
Year ended March 31, 2014

Net income before minority interests
Other comprehensive income (Note 15):
Unrealized gain on available-for-sale securities
Total other comprehensive income
Comprehensive income
Total comprehensive income attributable to:
Owners of the parent
Minority interests
See notes to consolidated financial statements.

Okumura Corporation Annual Report 2014

Millions of yen

Thousands of
U.S. dollars(Note 1)

2014

2013

2014

¥ 3,755¥ 2,684$ 36,485

3,766
3,766
¥ 7,521

9,332
9,332
¥12,016

36,59536,595$ 73,080¥ 7,521—¥12,016—$ 73,080—

11

Consolidated Statement of Changes in Equity
Okumura Corporation and Consolidated Subsidiaries
Year ended March 31, 2014

Thousands

Millions of yen
Accumulated othercomprehensive income

12

BALANCE, APRIL 1, 2012
Net income
Cash dividends, ¥9 per share
Purchase of treasury stock
Disposal of treasury stock
Net change in the year
BALANCE, MARCH 31, 2013
Net income
Cash dividends, ¥9 per share
Purchase of treasury stock
Disposal of treasury stock
Net change in the year
BALANCE, MARCH 31, 2014

Outstanding
number ofshares ofcommonstock

Commonstock

Capitalsurplus199,746
—
—
(29)
0
—
199,717
—
—
(59)
1
—
199,659¥19,839—————
19,839—————¥19,839¥25,327 ¥69,250 ¥(12,358) ¥9,656
—
2,684
—
—
—
(1,798)
—
—
—
—
(9)
—
(0)
—
1
—
—
—
—
9,332
25,327
70,136 (12,366) 18,988
—
3,755
—
—
—
(1,797)
—
—
—
—
(25)
—
(1)
—
1
—
—
—
—
3,766
¥25,326 ¥72,094 ¥(12,390) ¥22,754

Retainedearnings

Unrealized
gain onDefinedavailable- retirement
Treasury
for-salebenefitstock securities
plans

¥

—
—
—
—
—
—
—
—
—
—
—
1,169
¥1,169Total
equity¥111,714
2,684(1,798)(9)
1
9,332
121,924
3,755(1,797)
(25)
0
4,935
¥128,792

Thousands of U.S. dollars (Note 1)
Accumulated othercomprehensive income

Commonstock

BALANCE, MARCH 31, 2013
Net income
Cash dividends, $0.09 per share
Purchase of treasury stock
Disposal of treasury stock
Net change in the year
BALANCE, MARCH 31, 2014
See notes to consolidated financial statements.

CapitalsurplusRetainedearnings

Unrealized
gain onDefinedavailable- retirement
Treasury
for-salebenefitstock securities
plans$192,761 $246,077 $681,467 $(120,147) $184,487——
36,485———— (17,465)
—
—
—
—
—
(247)
—
—
(0)
—
6
—
—
—
—
—
36,595$192,761 $246,077 $700,487 $(120,388) $221,082

$

—
—
—
—
—
11,363$11,363

Total
equity$1,184,645
36,485(17,465)(247)
647,958$1,251,382

Consolidated Statement of Cash Flows
Okumura Corporation and Consolidated Subsidiaries
Year ended March 31, 2014

Okumura Corporation Annual Report 2014

Millions of yen

Thousands of
U.S. dollars(Note 1)

2014

2013

2014

¥ 4,015¥ 2,836$ 39,013

(121)
824
—
(234)
(433)
—

(218)
810
(284)
(522)
(2)
407

(1,180)8,005—(2,270)(4,204)
—

987
766
(23)
7,259
1,465
(1,135)(3,175)
6,180
10,195(9,764)
12,7442,456
880(8,685)(1,265)
3,380
(63)
2,773

9,591
7,443
(226)
70,532
14,230(11,025)(30,851)
60,04599,058Cash flows from investing activities:
Net decrease in time deposits
Payments for purchases of securities
Proceeds from sales of securities
Purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Investment in loans receivableCollection of loans receivable
Other—net
Net cash used in investing activities

59(1,163)
1,336(2,579)
12
(308)
129
(158)
(2,672)

1,000(1,015)2,006(8,503)
5
(39)
126
33
(6,387)573(11,294)
12,978(25,059)
119(2,992)
1,255(1,537)(25,957)

Cash flows from financing activities:
Increase (decrease) in short-term bank loans—net
Proceeds from long-term debt
Repayments of long-term debt
Purchase of treasury stock
Disposal of treasury stock
Dividends paid
Other
Net cash provided by (used in) financing activities(8,889)
1,100
(22)
(25)
0
(1,796)(35)(9,667)

5,241
4,000
(26)
(9)
1
(1,805)(23)
7,379(86,370)
10,688
(217)
(247)
6
(17,451)(334)(93,925)45(2,099)28,344¥26,245

58
3,823
24,521¥ 28,344

433(20,391)
275,396$255,005

Cash flows from operating activities:
Income before income taxes and minority interests
Adjustments for:
Income taxes—paidDepreciation and amortization
Amortization of negative goodwill
Reversal of doubtful receivables
Gain on sales of short-term and long-term investment securities
Loss on construction contracts
Changes in assets and liabilities:
Decrease (increase) in trade notes and accounts receivable
Decrease in accumulated costs of construction projects in progress
Decrease (increase) in other inventories
Increase in trade notes and accounts payable
Increase (decrease) in advances received on construction projects in progress
Decrease in liability for retirement benefits
Other—net
Total adjustments
Net cash provided by operating activities

Foreign currency translation adjustments on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
See notes to consolidated financial statements.

13

Notes to Consolidated Financial Statements
Okumura Corporation and Consolidated Subsidiaries
Year ended March 31, 201414

1. Basis of Presentation of Consolidated Financial
Statements
The accompanying consolidated financial statements havebeen prepared in accordance with the provisions set forth in
the Japanese Financial Instruments and Exchange Act and its
related accounting regulations and in accordance withaccounting principles generally accepted in Japan (“Japanese
GAAP”), which are different in certain respects as to theapplication and disclosure requirements of International
Financial Reporting Standards.
In preparing these consolidated financial statements,
certain reclassifications and rearrangements have been madeto the consolidated financial statements issued domesticallyin order to present them in a form which is more familiar toreaders outside Japan. In addition, certain reclassifications
have been made in the 2013 consolidated financial statements to conform to the classifications used in 2014.
The consolidated financial statements are stated inJapanese yen, the currency of the country in which Okumura
Corporation (the “Company”) is incorporated and operates.
The translations of Japanese yen amounts into U.S. dollar
amounts are included solely for the convenience of readers
outside Japan and have been made at the rate of ¥102.92 to$1, the rate of exchange at March 31, 2014. Such translations should not be construed as representations that theJapanese yen amounts could be converted into U.S. dollars atthat or any other rate.
2. Summary of Significant Accounting Policies
a. Consolidation — The consolidated financial statements
as of March 31, 2014 and 2013 include the accounts of theCompany and its 2 significant subsidiaries (together, the“Group”).
Under the control and influence concepts, those companies in which the Company, directly or indirectly, is able toexercise control over operations are fully consolidated, andthose companies over which the Group has the ability to
exercise significant influence are accounted for by the equity
method.
Investments in 9 (8 in 2013) unconsolidated subsidiaries
and 1 (1 in 2013) associated company are stated at cost. If
the equity method of accounting had been applied to theinvestments in these companies, the effect on the accompanying consolidated financial statements would not bematerial.
All significant intercompany balances and transactions
have been eliminated in consolidation. All material unrealized
profit included in assets resulting from transactions within theGroup is also eliminated.
b. Cash Equivalents — Cash equivalents are short-term
investments that are readily convertible into cash and that are
exposed to insignificant risk of changes in value.
Cash equivalents include time deposits and certificate ofdeposits, all of which mature or become due within 3months of the date of acquisition.

c. Inventories — Construction projects in progress are stated at cost determined by the specific identification method.
Real estate held for sale and development projects inprogress are stated at the lower of cost determined by the
specific identification method or net selling value, which isdefined as the selling price less additional estimated manufacturing costs and estimated direct selling expenses.
d. Marketable and Investment Securities — Marketable
and investment securities are classified and accounted for,depending on management’s intent, as follows:(1) held-to-maturity debt securities, for which there is a positive intent and ability to hold to maturity, are reported atamortized cost and(2) available-for-sale securities, which are not classified as theheld-to-maturity, are reported at fair value, with unrealized
gains and losses, net of applicable taxes, reported in a separate component of equity.
Nonmarketable available-for-sale securities are stated atcost determined by the moving-average method. For otherthan-temporary declines in fair value, investment securities
are reduced to net realizable value by a charge to income.
e. Property, Plant and Equipment — Property, plant andequipment are stated at cost. Depreciation, except for leaseassets, is computed by the declining-balance method basedon the estimated useful lives of the assets, while the straightline method is applied to buildings acquired on or after April
1, 1998, and lease assets. The range of useful lives is principally from 3 to 60 years for buildings and structures, from 4
to 17 years for machinery and equipment, and from 2 to 20
years for furniture and fixtures. Lease assets under financelease arrangements are depreciated using the straight-line
method over the terms of the respective leases without any
salvage value.
f. Long-Lived Assets — The Group reviews its long-lived
assets for impairment whenever events or changes in circumstance indicate the carrying amount of an asset or asset
group may not be recoverable. An impairment loss is recognized if the carrying amount of an asset or asset groupexceeds the sum of the undiscounted future cash flows
expected to result from the continued use and eventual disposition of the asset or asset group. The impairment loss
would be measured as the amount by which the carrying
amount of the asset exceeds its recoverable amount, which is
the higher of the discounted cash flows from the continued
use and eventual disposition of the asset or the net selling
price at disposition.
g. Allowance for Doubtful Receivables — The allowancefor doubtful receivables is stated in amounts considered to beappropriate based on the Group’s past credit loss experienceand an evaluation of estimated losses in the receivables outstanding.

Okumura Corporation Annual Report 2014h. Allowance for Warranty Work on Construction
Projects — The allowance for warranty costs for completed
work is provided at the amount of warranty costs based on
past loss experience.
i. Allowance for Losses on Construction Contracts —Allowance for losses on construction contracts is provided
with respect to construction projects for which eventual losses are reasonably expected and estimated.
j. Employees’ Retirement Benefits — The Company has acontributory funded pension plan covering substantially all of
its employees.
Liability for employees’ retirement benefits is recorded
based on the estimated present value of projected benefit
obligations and the fair value of the plan assets at the end of
the fiscal year.
The unrecognized transition amount, which arose fromadopting the new standard during the year ended March 31,
2001, has been amortized on a straight-line basis over 15
years, and unrecognized actuarial gains and losses are amortized subsequent to the year in which they arise on astraight-line basis over the period of 10 years, which is within
the employees’ average remaining service years.
Unrecognized prior service costs have been amortized on astraight-line basis over the period of 10 years, which is within
the employees’ average remaining service years.
In May 2012, the Accounting Standards Board of Japan(“ASBJ”) issued ASBJ Statement No. 26, “AccountingStandard for Retirement Benefits” and ASBJ Guidance No.
25, “Guidance on Accounting Standard for Retirement
Benefits,” which replaced the accounting standard for retirement benefits that had been issued by the BusinessAccounting Council in 1998 with an effective date of April 1,
2000 and other related practical guidance, and were followed by partial amendments from time to time through2009.
	(a) Under the revised accounting standard, actuarial
gains and losses and past service costs that are yet to berecognized in profit or loss are recognized within equity(accumulated other comprehensive income), after
adjusting for tax effects, and any resulting deficit or surplus is recognized as liability (liability for retirement
benefits) or asset (asset for retirement benefits).
	(b) The revised accounting standard does not change
how to recognize actuarial gains and losses and past
service costs in profit or loss. Those amounts are recognized in profit or loss over a certain period no longer
than the expected average remaining service period of
the employees. However, actuarial gains and losses andpast service costs that arose in the current period andhave not yet been recognized in profit or loss are included in other comprehensive income and actuarial gains
and losses and past service costs that were recognizedin other comprehensive income in prior periods andthen recognized in profit or loss in the current period

shall be treated as reclassification adjustments (see Note2.q).
	(c) The revised accounting standard also made certain
amendments relating to the method of attributing
expected benefit to periods and relating to the discountrate and expected future salary increases.
This accounting standard and the guidance for (a) and(b) above are effective for the end of annual periods beginning on or after April 1, 2013, and for (c) above are effective
for the beginning of annual periods beginning on or after
April 1, 2014, or for the beginning of annual periods beginning on or after April 1, 2015, subject to certain disclosure in
March 2015, both with earlier application being permitted
from the beginning of annual periods beginning on or after
April 1, 2013. However, no retrospective application of thisaccounting standard to consolidated financial statements inprior periods is required.
The Company applied the revised accounting standard
and guidance for retirement benefits for (a) and (b) above,effective March 31, 2014. As a result, asset for retirement
benefits of ¥435 million ($4,233 thousand) was recorded asof March 31, 2014, and accumulated other comprehensive
income for the year ended March 31, 2014 increased by¥1,169 million ($11,363 thousand).
k. Asset Retirement Obligations — In March 2008, the
ASBJ issued ASBJ Statement No. 18, “Accounting Standard
for Asset Retirement Obligations” and ASBJ Guidance No. 21“Guidance on Accounting Standard for Asset Retirement
Obligations.” Under this accounting standard, an asset retirement obligation is defined as a legal obligation imposed
either by law or contract that results from the acquisition,
construction, development and normal operation of a tangible fixed asset and is associated with the retirement of suchtangible fixed asset. The asset retirement obligation is recognized as the sum of the discounted cash flows required forthe future asset retirement and is recorded in the period inwhich the obligation is incurred if a reasonable estimate canbe made. If a reasonable estimate of the asset retirement
obligation cannot be made in the period the asset retirement
obligation is incurred, the liability should be recognized whena reasonable estimate of the asset retirement obligation canbe made. Upon initial recognition of a liability for an asset
retirement obligation, an asset retirement cost is capitalized
by increasing the carrying amount of the related fixed asset
by the amount of the liability. The asset retirement cost is
subsequently allocated to expense through depreciation over
the remaining useful life of the asset. Over time, the liability
is accreted to its present value each period. Any subsequent
revisions to the timing or the amount of the original estimateof undiscounted cash flows are reflected as an adjustment tothe carrying amount of the liability and the capitalized
amount of the related asset retirement cost.
l. Construction Contracts — In December 2007, the ASBJ
issued ASBJ Statement No. 15, “Accounting Standard forConstruction Contracts” and ASBJ Guidance No. 18,

15

16

“Guidance on Accounting Standard for Construction
Contracts.” Under this accounting standard, construction revenue and construction costs should be recognized by thepercentage-of-completion method, if the outcome of a construction contract can be estimated reliably. When total
construction revenue, total construction costs and the stageof completion of the contract at the balance sheet date canbe reliably measured, the outcome of a construction contract
is deemed to be estimated reliably. If the outcome of a construction contract cannot be reliably estimated, thecompleted-contract method should be applied. When it isprobable that the total construction costs will exceed total
construction revenue, an estimated loss on the contract
should be immediately recognized by providing for a loss on
construction contracts.
The revenues recognized by the percentage-of-completion method for the years ended March 31, 2014 and 2013,
were ¥173,010 million ($1,681,016 thousand) and ¥161,602
million, respectively.
m. Income Taxes — The provision for income taxes is computed based on the pretax income included in the
consolidated statements of income. The asset and liability
approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary
differences between the carrying amounts and the tax basesof assets and liabilities. Deferred taxes are measured byapplying currently enacted income tax rates to the temporary
differences.
n. Derivatives and Hedging Activities — The Group uses
derivative financial instruments to manage its exposures tofluctuations in foreign exchange and interest rates. Currency
and interest rate swaps are utilized by the Group to reduce
foreign currency exchange and interest rate risks. The Group
does not enter into derivatives for trading or speculative purposes.
Currency and interest rate swaps that qualify for hedge
accounting and meet specific matching criteria are notremeasured at market value, but the differential paid or
received under the swap agreements is recognized andincluded in interest expense or income, and hedge items
denominated in a foreign currency are translated at the contracted rates.
o. Per Share Information — Basic net income per share iscomputed by dividing net income available to commonshareholders by the weighted-average number of commonshares outstanding for the period, retroactively adjusted forstock splits.
Diluted net income per share is not disclosed because
there are no securities with a dilutive effect upon exercise orconversion into common stock.
Cash dividends per share presented in the accompanying consolidated statement of income are dividends
applicable to the respective fiscal years, including dividends
to be paid after the end of the year.

p. Accounting Changes and Error Corrections — In
December 2009, the ASBJ issued ASBJ Statement No. 24,“Accounting Standard for Accounting Changes and Error
Corrections” and ASBJ Guidance No. 24, “Guidance on
Accounting Standard for Accounting Changes and Error
Corrections.” Accounting treatments under this standard andguidance are as follows:(1) Changes in Accounting Policies:
When a new accounting policy is applied following revisionof an accounting standard, the new policy is applied retrospectively unless the revised accounting standards include
specific transitional provisions, in which case the entity shallcomply with the specific transitional provisions.
(2) Changes in Presentations:
When the presentation of financial statements is changed,
prior-period financial statements are reclassified in accordance with the new presentation.
(3) Changes in Accounting Estimates:
A change in an accounting estimate is accounted for in the
period of the change if the change affects that period only,
and is accounted for prospectively if the change affects boththe period of the change and future periods.
(4) Corrections of Prior-Period Errors:
When an error in prior-period financial statements is discovered, those statements are restated.
q. New Accounting Pronouncements
Accounting Standard for Retirement Benefits — On May
17, 2012, the ASBJ issued ASBJ Statement No. 26,“Accounting Standard for Retirement Benefits” and ASBJ
Guidance No. 25, “Guidance on Accounting Standard for
Retirement Benefits,” which replaced the AccountingStandard for Retirement Benefits that had been issued by theBusiness Accounting Council in 1998 with effective date ofApril 1, 2000, and other related practical guidance, and were
followed by partial amendments from time to time through2009.
Major changes are as follows:(a) Treatment in the consolidated balance sheet
Under the current requirements, actuarial gains and losses
and past service costs that are yet to be recognized in profit
or loss are not recognized in the balance sheet, and the difference between retirement benefit obligations and plan
assets (hereinafter, “deficit or surplus”), adjusted by suchunrecognized amounts, is recognized as a liability or asset.
Under the revised accounting standard, actuarial gains
and losses and past service costs that are yet to be recognized in profit or loss shall be recognized within equity(accumulated other comprehensive income) after adjustingfor tax effects, and any resulting deficit or surplus shall berecognized as liability (liability for retirement benefits) or asset(asset for retirement benefits).
(b) Treatment in the consolidated statement of income andthe consolidated statement of comprehensive income
The revised accounting standard does not change how torecognize actuarial gains and losses and past service costs inOkumura Corporation Annual Report 2014

profit or loss. Those amounts would be recognized in profit
or loss over a certain period no longer than the expected
average remaining service period of the employees. However,actuarial gains and losses and past service costs that arose in
the current period and have not yet been recognized in profit
or loss shall be included in other comprehensive income andactuarial gains and losses and past service costs that wererecognized in other comprehensive income in prior periods
and then recognized in profit or loss in the current period
shall be treated as reclassification adjustments.
(c) Amendments relating to the method of attributing expected benefit to periods and relating to the discount rate andexpected future salary increases
The revised accounting standard also made certain amendments relating to the method of attributing expected benefit
to periods and relating to the discount rate and expected
future salary increases.
This accounting standard and the guidance for (a) and(b) above are effective for the end of annual periods

beginning on or after April 1, 2013, and for (c) above are
effective for the beginning of annual periods beginning on orafter April 1, 2014, or for the beginning of annual periods
beginning on or after April 1, 2015, subject to certain disclosure in March 2015, both with earlier application being
permitted from the beginning of annual periods beginningon or after April 1, 2013. However, no retrospective application of this accounting standard to consolidated financial
statements in prior periods is required.
The Company applied the revised accounting standard
for (a) and (b) above effective March 31, 2014, and expects
to apply (c) above from April 1, 2014, and is in the process ofmeasuring the effects of applying the revised accounting
standard for (c) above in future applicable periods. The
effects of adopting the revised accounting standard will be todecrease retained earnings at April 1, 2014, by ¥1,207 million ($19,382 thousand), but the effects on operating income
and income before income taxes and minority interest for theyear ending March 31, 2015, are expected to be immaterial.

3. Marketable and Investment Securities
Marketable and investment securities as of March 31, 2014 and 2013, consisted of the following:

Non-current:
Marketable equity securities
Government and corporate bonds
Non-marketable equity securities and other
Total

Millions of yen

Thousands of
U.S. dollars

2014

2013

2014

¥58,515117
2,129¥60,761¥53,186
116
2,094¥55,396$568,553
1,136
20,684$590,373

The costs and aggregate fair values of marketable and investment securities at March 31, 2014 and 2013, were as follows:
Millions of yen

March 31, 2014

Securities classified as:
Available-for-sale:
Equity securities
Debt securities
Held-to-maturity:
Debt securities

Cost

Unrealized
Gains

Unrealized
LossesFair
Value¥25,4091,000¥33,334
—

¥228
162

¥58,515
838

117

5

—

122

¥25,595
1,000¥27,803
—

¥212
189

¥53,186
811

116

5

—

121

March 31, 2013

Securities classified as:
Available-for-sale:
Equity securities
Debt securities
Held-to-maturity:
Debt securities

17

Thousands of U.S. dollars

March 31, 2014

Securities classified as:
Available-for-sale:
Equity securities
Debt securities
Held-to-maturity:
Debt securities

18

Cost

Unrealized
Gains

Unrealized
LossesFair
Value$246,885
9,716$323,881—$2,213
1,577$568,553
8,139

1,136

45

—

1,181

The information for available-for-sale securities which were sold during the years ended March 31, 2014 and 2013, is asfollows:
Millions of yen

Proceeds

Realized
Gains

Realized
Losses

¥755

¥433

¥—

Proceeds

Realized
Gains

Realized
Losses¥2¥2¥—

March 31, 2014

Proceeds

Realized
Gains

Realized
LossesAvailable-for-sale:
Equity securities$7,335$4,204$—

March 31, 2014

Available-for-sale:
Equity securities

Millions of yen

March 31, 2013

Available-for-sale:
Equity securities

Thousands of U.S. dollars

No impairment loss was recognized on securities for the year ended March 31, 2014.
The impairment losses on available-for-sale equity securities for the year ended March 31, 2013, were ¥220 million.
4. Inventories
Inventories at March 31, 2014 and 2013, consisted of the following:
Millions of yen

Construction projects in progress
Real estate held for sale
Development projects in progress
Other
Total

Thousands of
U.S. dollars

2014

2013

2014

¥ 7,718
1,035
2,340
763
¥11,856¥ 8,485
679
2,785
509
¥12,458$ 74,996
10,056
22,737
7,410$115,199

Okumura Corporation Annual Report 2014

5. Investment Property
In November 2008, the ASBJ issued ASBJ Statement No. 20, “Accounting Standard for Investment Property and Related
Disclosures” and issued ASBJ Guidance No. 23, “Guidance on Accounting Standard for Investment Property and Related
Disclosures.”
The Group owns certain rental properties such as residential buildings, warehouses, and land in Osaka and other areas.
Some rental warehouses, part of which the Company uses, are classified as rental properties in part.
The net of rental income and operating expenses for those rental properties was ¥2,716 million ($26,390 thousand) and¥2,627 million for the years ended March 31, 2014 and 2013, respectively.
The carrying amounts, changes in such balances and market prices of such properties were as follows:
Millions of yen
Fair Value

Carrying AmountRental properties
Rental properties in part
Total

April 1,
2013

Increase/
Decrease

March 31,2014

March 31,2014

¥27,003
1,193¥28,196¥1,907(81)¥1,826¥28,9101,112¥30,022¥43,974
7,507¥51,481Millions of yen
Fair Value

Carrying AmountRental properties
Rental properties in part
Total

April 1,
2012

Increase/
Decrease

March 31,2013

March 31,2013

¥19,195
1,431¥20,626¥7,808(238)¥7,570¥27,003
1,193¥28,196¥42,095
7,738¥49,833
Thousands of U.S. dollars
Fair Value

Carrying AmountRental properties
Rental properties in part
Total

April 1,
2013

Increase/
Decrease

March 31,2014

March 31,2014

$262,372
11,592$273,964$18,523(788)$17,735$280,895
10,804$291,699$427,263
72,940$500,203

Notes:(1) Carrying amount recognized in the consolidated balance sheets is net of accumulated depreciation and accumulated
impairment losses, if any.
(2) Of the changes in balances and market prices of rental properties for the year ended March 31, 2014, an increase wasrecorded mainly in acquisition of real estate at ¥2,357 million ($22,905 thousand) and decrease in depreciation at ¥311
million ($3,020 thousand).
(3) Fair value of properties as of March 31, 2014 and 2013, is measured in accordance with real-estate appraisal by real-estateappraisers for primary properties, and the amount measured by the Group is in accordance with its Real-Estate Appraisal
Standard for other properties (including those measured using indicators).

19

6. Short-Term Bank Loans and Long-Term Debt
Short-term bank loans at March 31, 2014 and 2013, consisted of notes to banks and bank overdrafts. The annual interest rateapplicable to the short-term bank loans ranged from 0.609% to 1.475% and 1.050% to 1.475% at March 31, 2014 and2013, respectively.
Long-term debt at March 31, 2014 and 2013, consisted of the following:

20

Loans from banks and other financial institutions, due serially to 2031
with interest rates ranging from 0.66% to 5.60%
Collateralized
Unsecured
Obligations under finance leases
Total
Less current portionLong-term debt, less current portion

Millions of yen

Thousands of
U.S. dollars

2014

2013

2014

¥2,014
3,208
104
5,326
(50)
¥5,276¥2,023
2,122
105
4,250
(48)
¥4,202$19,567
31,173
1,004
51,744(485)$51,259

Annual maturities of long-term debt, excluding finance leases (see Note 11), at March 31, 2014, were as follows:Year Ending March 31

Millions of yen

2015
2016
2017
2018
2019
2020 and thereafter
Total

¥

13
13
1,113
4,012
10
61
¥5,222Thousands of
U.S. dollars

$

129
129
10,81538,978101
588$50,740

The carrying amount of assets pledged as collateral for short-term bank loans of ¥2,000 million ($19,433 thousand) and theabove collateralized long-term debt at March 31, 2014, was as follows:
Property, plant and equipment—net of accumulated depreciation
Investment securities
Total

Millions of yen

Thousands of
U.S. dollars

¥ 121
5,177
¥5,298$ 1,171
50,303$51,474

As is customary in Japan, the Company maintains substantial deposit balances with banks with which it has borrowings. Suchdeposit balances are not legally or contractually restricted as to withdrawal.
General agreements with respective banks provide, as is customary in Japan, that additional collateral must be provided
under certain circumstances if requested by such banks and that certain banks have the right to offset cash deposited withthem against any long-term or short-term debt or obligation that becomes due and, in case of default and certain other specified events, against all other debt payable to the banks. The Group has never been requested to provide any additional
collateral.

Okumura Corporation Annual Report 2014

7. Employees’ Retirement Benefits
Most of the employees of the Company are covered by a contributory trusted pension plan.
The Company has a cash balance plan (pension plan linked to the market interest rates) based on the Defined Benefit
Corporate Pension Law.
Year Ended March 31, 2014
(1) The changes in defined benefit obligation for the year ended March 31, 2014, were as follows:
Balance at beginning of year
Current service cost
Interest cost
Actuarial gains
Benefits paid
Balance at end of year

Millions of yen

Thousands of
U.S. Dollars¥25,272
870
505
(332)
(2,397)¥23,918$245,545
8,457
4,909
(3,225)(23,295)$232,391

Millions of yen

Thousands of
U.S. Dollars¥23,830
286
756
1,879
(2,398)¥24,353$231,537
2,778
7,344
18,260(23,295)$236,624(2) The changes in plan assets for the year ended March 31, 2014, were as follows:
Balance at beginning of year
Expected return on plan assets
Actuarial gains
Contributions from the employer
Benefits paid
Balance at end of year(3)Reconciliation between the liability recorded in the consolidated balance sheet and the balances of defined benefit obligationand plan assets as of March 31, 2014
Funded defined benefit obligation
Plan assets
Unfunded defined benefit obligation
Net asset arising from defined benefit obligation

Millions of yen

Thousands of
U.S. Dollars¥23,918(24,353)(435)—¥ (435)$232,391(236,624)(4,233)—$ (4,233)

Millions of yen

Thousands of
U.S. Dollars

Liability for retirement benefits
Asset for retirement benefits
Net asset arising from defined benefit obligation

¥ —
(435)
¥(435)$—(4,233)$(4,233)(4) The components of net periodic benefit costs for the year ended March 31, 2014, were as follows:
Service cost
Interest cost
Expected return on plan assets
Recognized actuarial gains
Amortization of prior service cost
Amortization of transitional obligation
Net periodic benefit costs

Millions of yen

Thousands of
U.S. Dollars

¥870
505
(286)
(268)
(21)
(55)
¥745

$8,457
4,909(2,778)(2,612)(206)(535)$7,235(5) Accumulated other comprehensive income on defined retirement benefit plans as of March 31, 2014
Unrecognized actuarial gains
Unrecognized prior service cost
Unrecognized transitional obligation
Total

Millions of yen

Thousands of
U.S. Dollars¥(1,185)(85)(55)¥ (1,325)$(11,512)
(823)
(535)
$(12,870)

21

(6) Plan assets as of March 31, 2014
a. Components of plan assets
Plan assets consisted of the following:

22

Debt investments
Equity investments
Life insurance general account assets
Others
Total

38%
12
33
17
100%

b. Method of determining the expected rate of return on plan assets
	
The expected rate of return on plan assets is determined considering allocation of plan assets which are expected currently
and in the future and the long-term rates of return which are expected currently and in the future from the various
components of the plan assets.
(7) Assumptions used for the year ended March 31, 2014, were set forth as follows:
Discount rate
Expected rate of return on plan assets

2.0%
1.2%

Year Ended March 31, 2013
The liability for retirement benefits at March 31, 2013, consisted of the following:
Millions of yen

Projected benefit obligation
Fair value of plan assets
Unrecognized transitional obligation
Unrecognized prior service cost
Unrecognized actuarial gains
Net liability¥25,271(23,830)
110
106
366
¥ 2,023

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

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

¥922
547
(335)
(55)
(21)
(401)
¥ 657

Assumptions used for the year ended March 31, 2013, were set forth as follows:
Discount rate
Expected rate of return on plan assets
Amortization period of prior service cost
Recognition period of actuarial gain/loss
Amortization period of transitional obligation

2.0%
1.4%
10years
10years
15years

Okumura Corporation Annual Report 2014

8. Equity
Japanese companies are subject to the Companies Act of Japan (the “Companies Act”). The significant provisions in the
Companies Act that affect financial and accounting matters are summarized below:
a. Dividends
Under the Companies Act, companies can pay dividends at any time during the fiscal year in addition to the year-end dividend upon resolution at the shareholders’ meeting. For companies that meet certain criteria including (1) having a Board of
Directors, (2) having independent auditors, (3) having an Audit & Supervisory Board, and (4) the term of service of the directors is prescribed as one year rather than two years of normal term by its articles of incorporation, the Board of Directors may
declare dividends (except for dividends-in-kind) at any time during the fiscal year if the Company has prescribed so in its articles of incorporation. However, the Company cannot do so because it does not meet all the above criteria.
The Companies Act permits companies to distribute dividends-in-kind (noncash assets) to shareholders subject to a certain limitation and additional requirements.
Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if the articles ofincorporation of the Company so stipulate. The Companies Act provides certain limitations on the amounts available for dividends or the purchase of treasury stock. The limitation is defined as the amount available for distribution to the shareholders,
but the amount of net assets after dividends must be maintained at no less than ¥3 million.

b. Increases / Decreases and Transfer of Common Stock, Reserve and Surplus
The Companies Act requires that an amount equal to 10% of dividends must be appropriated as a legal reserve (a component of retained earnings) or as additional paid-in capital (a component of capital surplus) depending on the equity accountcharged upon the payment of such dividends until the aggregate amount of legal reserve and additional paid-in capitalequals 25% of the common stock. Under the Companies Act, the total amount of additional paid-in capital and legal reserve
may be reversed without limitation. The Companies Act also provides that common stock, legal reserve, additional paid-in
capital, other capital surplus and retained earnings can be transferred among the accounts under certain conditions upon resolution of the shareholders.
c. Treasury Stock and Treasury Stock Acquisition Rights
The Companies Act also provides for companies to purchase treasury stock and dispose of such treasury stock by resolutionof the Board of Directors. The amount of treasury stock purchased cannot exceed the amount available for distribution to theshareholders which is determined by specific formula. Under the Companies Act, stock acquisition rights are presented as aseparate component of equity. The Companies Act also provides that companies can purchase both treasury stock acquisitionrights and treasury stock. Such treasury stock acquisition rights are presented as a separate component of equity or deducted
directly from stock acquisition rights.

23

9. Income Taxes
The Group is subject to Japanese national and local income taxes which, in the aggregate, resulted in a normal effective statutory tax rate of approximately 38.0% for the years ended March 31, 2014 and 2013.
The tax effects of significant temporary differences and tax loss carryforwards which resulted in deferred tax assets and liabilities at March 31, 2014 and 2013, were as follows:

24

Deferred tax assets:
Tax loss carryforwards
Impairment losses on securities
Allowance for doubtful accounts
Write-down of inventories
Allowance for bonuses
Allowance for losses on construction contracts
Accrued expenses
Liability for retirement benefits
Other
Less valuation allowances
Total
Deferred tax liabilities:
Net unrealized gains on available-for-sale securities
Retained earnings appropriated for special allowance
Asset for retirement benefits
Total
Net deferred tax liabilities

Millions of yen

Thousands of
U.S. dollars

2014

2013

2014

¥ 12,033
2,619
2,233
1,525
759
668
621
—
411
(20,807)62¥12,886
2,644
2,334
1,786
717
703
558
720
400
(22,704)44$ 116,913
25,44421,70014,814
7,374
6,491
6,032
—
3,994
(202,165)
597(10,175)(1,905)(155)(12,235)¥(12,173)(8,400)(1,934)—(10,334)¥ (10,290)(98,867)(18,506)(1,507)(118,880)$(118,283)

A reconciliation between the normal effective statutory tax rates and the actual effective tax rates reflected in the accompanying consolidated statement of income for the years ended March 31, 2014 and 2013, was as follows:
Normal effective statutory tax rate
Expenses not deductible for income tax purposes
Non-taxable income
Inhabitant tax per capita
Special income tax credits
Valuation allowance
Other—net
Actual effective tax rate

2014

2013

38.0%
1.8
(3.9)
3.4
(1.3)
(34.1)
2.6
6.5%

38.0%
3.4
(6.7)
5.1
—
(31.4)(3.0)
5.4%

On March 31, 2014, a tax reform law was enacted in Japan which changed the normal effective statutory tax rate fromapproximately 38.0% to 35.6%, effective for years beginning on or after April 1, 2014. The effect of this change is immaterial.

Okumura Corporation Annual Report 2014

10. Research and Development Costs
Research and development costs charged to income were ¥682 million ($6,627 thousand) and ¥690 million for the years ended
March 31, 2014 and 2013, respectively.
11. Leases(1) Finance leases
The Group leases certain machinery and equipment, office space and other assets.
Total rental expenses including lease payments under finance leases for the years ended March 31, 2014 and 2013, were
¥27 million ($264 thousand) and ¥18 million, respectively.
Obligations under finance leases were as follows:
Millions of yen

Due within one year
Due after one year
Total

Thousands of
U.S. dollars

2014

2013

2014

¥ 36
67
¥103

¥31
74
¥105

$ 356
648
$1,004(2) Operating leases
Future minimum lease receivables or payments under noncancelable operating leases at March 31, 2014 and 2013, were as
follows:

As a lessor:
Due within one year
Due after one year
Total
As a lessee:
Due within one year
Due after one year
Total

Millions of yen

Thousands of
U.S. dollars

2014

2013

2014

¥ 1,957
18,335¥20,292¥ 1,729
17,056¥18,785$ 19,017
178,149$197,166

¥

¥

$

101
1,022
¥ 1,123

¥

31
59
90

983
9,927
$ 10,910

12. Financial Instruments and Related Disclosures(1) Group policy for financial instruments
At the Group level, cash surpluses, if any, are invested in low-risk and capital-safe financial assets. Short-term bank loans areused to fund its ongoing operations. Derivatives are used, not for speculative purposes, but to manage its exposure to fluctuations in foreign currency exchange and interest rates.
(2) Nature and extent of risks arising from financial instruments
Receivables, such as trade notes and trade accounts, are exposed to customer credit risk. Marketable and investment securities, mainly held-to-maturity securities and equity instruments of customers and suppliers of the Group, are exposed to therisk of market price fluctuations.
Payment terms of payables, such as trade notes and trade accounts, are mostly less than one year.
(3) Risk management for financial instruments
Credit Risk Management
Credit risk is the risk of economic loss arising from a counterparty’s failure to repay or service debt according to the contractual terms. The Group manages its credit risk from receivables on the basis of internal guidelines, which include continuously
determining customers’ circumstances from the phase of accepting orders to that of collection of the receivables, along with
monitoring of payment term and balances of each transaction.
Market risk management (foreign exchange risk and interest rate risk)
Marketable and investment securities are managed by monitoring market values and financial position of issuers on a regularbasis. Also, the Group continuously reviews its possession of those securities except for held-to-maturity securities.

25

Long-term debt denominated in foreign currencies is exposed to the fluctuations in the market interest rates and foreignexchange rates. The Group utilizes derivative instruments (currency and interest rate swaps contracts) as hedging instruments
to manage these market risks. The hedge accounting method is described in Note 2n.
Please see Note 13 for more details about derivatives.
Liquidity risk management
Liquidity risk comprises the risk that the Group cannot meet its contractual obligations in full on maturity dates. The Groupmanages its liquidity risk by making the appropriate cash schedule on a monthly basis.

26(4) Fair values of financial instruments
Fair values of financial instruments are based on quoted prices in active markets. If quoted price is not available, other rational valuation techniques are used instead.
(a) Fair values of financial instruments
Millions of yen

March 31, 2014

Carrying
AmountFair Value

Unrealized
Gain/Loss

Cash and cash equivalents and time deposits
Receivables—trade notes and accounts
Allowance for doubtful receivables
Net
Investment securities
Long-term loans receivable
Allowance for doubtful long-term loans receivable
Net
Total

¥ 26,292
97,254(3,972)93,28259,47061(0)61¥179,105¥ 26,292¥ —93,25459,475(28)
561¥179,0820¥(23)

Short-term bank loans
Long-term bank loans
Payables—trade notes and accounts
Long-term debt—lease obligation including current portion
Total
Derivatives¥ 7,511
5,100
55,548104¥ 68,263—¥¥ 7,511
5,103
55,54899¥ 68,261
¥
—

¥ —
3
—
(5)
¥ (2)¥—
Millions of yen

March 31, 2013

Carrying
AmountFair Value

Unrealized
Gain/Loss

Cash and cash equivalents and time deposits
Receivables—trade notes and accounts
Allowance for doubtful receivables
Net
Investment securities
Long-term loans receivable
Allowance for doubtful long-term loans receivable
Net
Total

¥ 28,449
98,240(4,034)
94,206
54,11375(1)74¥176,842¥ 28,449¥—94,195
54,118(11)
576¥176,8382¥ (4)

Short-term bank loans
Long-term bank loans
Payables—trade notes and accounts
Long-term debt—lease obligation including current portion
Total
Derivatives¥ 16,400
4,000
47,489106¥ 67,995¥—¥ 16,400
4,010
47,489101¥ 68,000
¥
—

¥—
10
—
(5)
¥ 5
¥—

Okumura Corporation Annual Report 2014

Thousands of U.S. dollars

Carrying
AmountMarch 31, 2014

Fair Value

Unrealized
Gain/Loss

Cash and cash equivalents and time deposits
Receivables—trade notes and accounts
Allowance for doubtful receivables
Net
Investment securities
Long-term loans receivable
Allowance for doubtful long-term loans receivable
Net
Total

$ 255,463
944,940(38,581)906,359
577,829590(4)586$1,740,237$ 255,463$—906,086
577,873

(273)
44

593
$1,740,015

7$(222)

Short-term bank loans
Long-term bank loans
Payables—trade notes and accounts
Long-term debt—lease obligation including current portion
Total
Derivatives$72,97749,579539,724963$ 663,243
$—

$—
26
—
(41)
$ (15)$—72,97749,553539,7241,004$ 663,258$—Amounts due from unconsolidated subsidiaries and associated companies are included in receivables-trade notes and accounts
and long-term loans receivable.
Cash and cash equivalents and time deposits
The carrying values of cash and cash equivalents and time deposits approximate fair value because of their shortmaturities.
Marketable securities and investment securities
The fair values of marketable securities and investment securities are measured at the quoted market price of thestock exchange for the equity instruments and at the quoted price obtained from the financial institution for certain
debt instruments. Fair value information for the marketable securities and the investment securities by classification
is included in Note 3.
Receivables—trade notes and accounts and long-term loans receivable
The fair values of receivables—trade notes and accounts and long-term loans receivable are measured at theamount to be received at maturity, discounted at the Group’s assumed corporate discount rate, such as the rate ofnational bonds to the maturity. Also, the amounts of the allowance for doubtful receivables are deducted from thefair values.
Payables—trade notes and accounts and short-term bank loans
The carrying values of payables—trade notes and accounts and short-term bank loans approximate fair value
because of their short maturities.
Long-term debt—lease obligation
The fair values of long-term debt—lease obligation are determined by discounting the cash flows related to the debt
at the Group’s assumed corporate borrowing rate.
Long-term bank loans
The fair values of long-term bank loans are determined by the present value calculated by discounting the total
amount of the principal and interest expense at the interest rate considering the remaining maturities of the loans
and credit risk of the Company. The carrying values of bank loans with floating interest rates approximate fair value
because they reflect market interest rates and the credit position of the Company does not change significantly after
the execution.
Derivatives
Fair value information for derivatives is included in Note 13.
(b) Financial instruments whose fair value cannot be reliably determined
Carrying Amount

Investments in equity instruments that do not have a quoted market price in an
active market

Millions of yen

Thousands of
U.S. dollars

2014

2013

2014

¥1,502¥1,479$14,595

27

(5) Maturity Analysis for Financial Assets and Securities with Contractual Maturities
Millions of yen

March 31, 201428

Cash and cash equivalents and time deposits
Receivables—trade notes and accounts
Investment securities
Available-for-sale securities with contractual maturities
Long-term loans receivable
Total

Due in 1 Yearor Less

Due after
1 Year through5 Years

Due after
5 Years through10 Years¥26,292
90,556

¥ —
6,698

¥ —
—

¥

—
—
¥116,848

2
9¥6,709

124
14
¥138

1,000
38
¥1,038

Due in 1 Yearor Less

Due after
1 Year through5 Years

Due after
5 Years through10 Years$255,463
879,863$
—65,077$——$1,135,326

19
91$65,187

1,206
128$1,334

Due after
10 Years——Thousands of U.S. dollars

March 31, 2014

Cash and cash equivalents and time deposits
Receivables—trade notes and accounts
Investment securities
Available-for-sale securities with contractual maturities
Long-term loans receivable
Total

—
—

Please see Note 6 for annual maturities of long-term debt and Note 11 for obligations under finance leases.

Due after
10 Years

$

—
—

9,716
371
$10,087

Okumura Corporation Annual Report 2014

13. Derivatives
The Group enters into derivatives, in the normal course of business, to reduce the exposure to fluctuations in foreign exchange
rates and interest rates. The primary classes of derivatives used by the Group are foreign currency forward contracts, currency
and interest rate swaps.
The Group does not hold or issue derivatives for trading purposes.
Because the counterparties to these derivatives are limited to major financial institutions, the Group does not anticipate
any losses arising from credit risk.
Derivative transactions entered into by the Group have been made in accordance with internal policies which regulate theauthorization and credit limit amount.
Derivative transactions to which hedge accounting is not applied:
There were no derivative transactions to which hedge accounting is not applied at March 31, 2014 and 2013.
Derivative transactions to which hedge accounting is applied:
Millions of yen

March 31, 2014

Hedged item

Contract
amountContract
amount due
after one year

Currency and interest rate swaps
Floating-rate receipt, fixed-rate payment
Receipt in U.S. dollars, payment in yen

Long-term
debt¥2,000¥2,000

Contract
amountContract
amount due
after one year

¥384

¥—

Note 1¥2,000¥2,000

Note 2

Fair value

Note 2Millions of yen

March 31, 2013

Foreign currency forward contracts: Selling U.S. dollars

Currency and interest rate swaps
Floating-rate receipt, fixed-rate payment
Receipt in U.S. dollars, payment in yen

Hedged item

Receivables—
trade notes
and accounts
Long-term
debt

Fair value

Thousands of U.S. dollars

March 31, 2014

Hedged item

Contract
amountContract
amount due
after one year

Currency and interest rate swaps
Floating-rate receipt, fixed-rate payment
Receipt in U.S. dollars, payment in yen

Long-term
debt$19,433$19,433

Fair value

Note 2

Notes:
1. Foreign currency forward contracts which qualify for hedge accounting and meet specific matching criteria are notremeasured at market value. The fair value of such foreign currency forward contracts is included in those of the hedged
items (i.e., receivables-trade notes and accounts) in Note 12.
2. Currency and interest rate swaps which qualify for hedge accounting and meet specific matching criteria are not remeasured
at market value but the differential paid or received under the swap agreement is recognized and included in interest
expense or income. The fair value of such currency and interest rate swaps is included in those of the hedged items (i.e.,
long-term debt) in Note 12.

29

14. Commitments and Contingent Liabilities
Land in the amount of ¥21 million ($202 thousand) is pledged for the deposit received from lessee related to the fixed-term
land leasehold at March 31, 2014. Land in the amount of ¥803 million ($7,803 thousand) and buildings in the amount of ¥634
million ($6,156 thousand) are pledged as construction assistance funds pursuant to building lease contracts at March 31, 2014.
Investments in securities in the amounts of ¥115 million ($1,117 thousand), ¥84 million ($820 thousand), and ¥1 million ($10thousand) are pledged as collateral for the guarantee against defect of construction, the loans of an affiliate, and contract performance obligation of PFI business, respectively, at March 31, 2014, and time deposit in the amount of ¥47 million ($458
thousand) is pledged for the guarantee against defect of construction contracts at March 31, 2014.

30

15. Comprehensive Income
The components of other comprehensive income for the years ended March 31, 2014 and 2013, were as follows:

2014

Unrealized gain on available-for-sale securities
Gains arising during the year
Reclassification adjustments to profit or loss
Amount before tax effect
Income tax effectTotal
Total other comprehensive income¥5,974(432)
5,542(1,776)¥3,766¥3,766

Millions of yen

Thousands of
U.S. dollars

2013

2014

¥13,525
16
13,541(4,209)¥ 9,332¥ 9,332$58,045(4,199)53,846(17,251)$36,595$36,595

16. Subsequent EventAppropriation of Retained Earnings
The following appropriation of retained earnings at March 31, 2014, was approved at the Company’s shareholders’ meeting
held on June 27, 2014.
Year-end cash dividends, ¥9 ($0.09) per share

Millions of yen

Thousands of
U.S. dollars¥1,797$17,459

17. Segment Information
1. Description of Reportable Segments
The Group’s reportable segments are those for which separate financial information is available and regular evaluation by
the Company’s management is being performed in order to decide how resources are allocated among the Group.
Therefore, the Group’s reportable segments consist of “Civil engineering,” “Architectural construction,” and “Realestate.”2.	Methods of measurement for the amounts of sales, profit (loss), assets, liabilities and other items for each reportablesegment
The accounting policies of each reportable segment are consistent with those disclosed in Note 2, “Summary of Significant
Accounting Policies.”Okumura Corporation Annual Report 2014

3. Information about sales, profit (loss), assets, liabilities and other items is as follows:
Millions of yen
2014

Reportable segment

Sales
Sales to externalcustomers
Intersegment
sales or transfers
Total
Segment profit (loss)
Other:
Depreciation

Civil
engineering

Architectural
construction

Real estate

Total

Other
(Note 1)¥72,093¥111,604¥4,641¥188,338¥4,687¥193,025¥—¥193,025—
72,0932,617

490
112,094(2,766)

19
4,660
2,422

509
188,847
2,273

630
5,317
35

1,139
194,164
2,308(1,139)(1,139)10—
193,025
2,318

246

¥ 377

831

¥(7)

¥

199

¥

¥

822

¥

Total Reconciliations(Note 2)9¥Consolidated(Note 3)¥824

Millions of yen
2013

Reportable segment

Sales
Sales to externalcustomers
Intersegment
sales or transfers
Total
Segment profit (loss)
Other:
Depreciation

Civil
engineering

Architectural
construction

Real estate

Total

Other
(Note 1)

¥72,927¥111,841¥7,132¥191,900¥4,654¥196,554¥—¥196,554—
72,927599

191
112,032(3,039)

18
7,150
3,696

209
192,109
1,256

780
5,434
47

989
197,543
1,303

(989)
(989)
36

—
196,554
1,339

262

¥ 344

817

¥(7)

¥

206

¥

¥

812

¥

Total Reconciliations(Note 2)5¥Consolidated(Note 3)¥810

Thousands of U.S. dollars
2014

Reportable segment

Sales
Sales to externalcustomers
Intersegment
sales or transfers
Total
Segment profit (loss)
Other:
Depreciation

Civil
engineering

Architectural
construction

Real estate

Total

Other
(Note 1)$700,472$1,084,374$45,096$1,829,942$45,542$1,875,484$—$1,875,484—
700,472
25,424

4,766
1,089,140(26,876)

180
45,27623,5384,946
1,834,888
22,086

6,120
51,662340

11,066
1,886,550
22,426(11,066)(11,066)
94—
1,875,484
22,5202,388$ 3,6628,073$(68)$$ 1,934

$

$

7,984

$

89

Total Reconciliations(Note 2)$

Consolidated(Note 3)

8,005

Notes:
1. Other is a business segment which is not included in any reportable segment and includes business related to manufacturing
and sales of construction machinery and materials.
2. Reconciliations to segment profit (loss) in the amount of ¥10 million ($94 thousand) and ¥36 million for the years ended
March 31, 2014 and 2013, respectively, include eliminations of intersegment transactions.
3. Consolidated amounts of segment profit (loss) above correspond to the amounts of operating income in the consolidated
statements of income.
4. Information concerning amortization of goodwill and unamortized balance of goodwill by reportable segment
There was no matter to be reported at March 31, 2014, and for the year then ended.
The Group recorded negative goodwill not allocated to any reportable segment. Amortization of negative goodwill was ¥284
million for the year ended March 31, 2013, and the unamortized balance was ¥0 million at March 31, 2013. The negative
goodwill was incurred when the Company acquired additional shares in Okumura Machinery Corporation.

31

Independent Auditor‘s Report

Deloitte Touche Tohmatsu LLC
Yodoyabashi Mitsui Building
4-1-1, Imabashi, Chuo-ku
Osaka 541-0042
Japan
Tel: +81 (6) 4560 6000
Fax: +81 (6) 4560 6001
www.deloitte.com/jp

32
INDEPENDENT AUDITOR’S REPORTTo the Board of Directors of Okumura Corporation:

We have audited the accompanying consolidated balance sheet of Okumura Corporation and its consolidated subsidiaries as ofMarch 31, 2014, and the related consolidated statements of income, comprehensive income, changes in equity, and cash flows
for the year then ended, and a summary of significant accounting policies and other explanatory information, all expressed inJapanese yen.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance withaccounting principles generally accepted in Japan, and for such internal control as management determines is necessary to enable
the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our
audit in accordance with auditing standards generally accepted in Japan. Those standards require that we plan and perform theaudit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated
financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, theauditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OpinionIn our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated
financial position of Okumura Corporation and its consolidated subsidiaries as of March 31, 2014, and the consolidated results of
their operations and their cash flows for the year then ended in accordance with accounting principles generally accepted inJapan.
Convenience Translation
Our audit also comprehended the translation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, suchtranslation has been made in accordance with the basis stated in Note 1 to the consolidated financial statements. Such U.S.
dollar amounts are presented solely for the convenience of readers outside Japan.

June 27, 2014
Member of
Deloitte Touche Tohmatsu Limited

Breakdown of Orders (Non-Consolidated)
Okumura Corporation
Year ended March 31, 2014

Okumura Corporation Annual Report 2014

Construction Orders Awarded

2014

Millions ofyen

Civil engineering:
Domestic:
Public sector
Private sector
Overseas
SubtotalArchitectural construction:
Domestic:
Public sector
Private sector
Overseas
Subtotal
Total:
Domestic:
Public sector
Private sector
Overseas
Total

53.4

40,45762,749
1,741
104,947100 %

101,501
70,146
2,375¥174,022

Composition
ratio

Millions of
yen

38.0%

¥ 54,276
15,534
3,117
72,92759.1

19,78891,905339
112,032

97.1
2.9
100 %

74,064
107,4393,456
184,959
7,982¥192,941

Composition
ratio

Millions of
yen

46.9%

¥ 56,766
13,283
3,345
73,39453.1

50,87460,031
1,402
112,307100 %

107,640
73,314
4,747¥185,701

127,91391,700503¥220,116
2014

Millions ofyen¥ 54,512
15,594
1,987
72,093
26,48785,251
356
112,094
80,999100,845
2,343
184,187
5,551¥189,738

Year-end Backlog¥ 89,655
12,523
1,761
103,939
64,89951,647
1,146
117,692
154,554
64,1702,907¥221,631

Composition
ratio

Thousands of
U.S. dollars

39.7%$ 849,208
144,125
3,917
997,25060.3

393,632
746,858971
1,141,461

100 %1,242,840
890,983
4,888$2,138,711

Composition
ratio

Thousands of
U.S. dollars

37.8%$ 529,651
151,511
19,310700,472

58.1

257,355
828,327
3,458
1,089,140

95.9
4.1
100 %

787,006
979,838
22,768
1,789,612
53,933$1,843,545

Composition
ratio

Thousands of
U.S. dollars

39.5%$ 871,114
121,674
17,112
1,009,900

60.5

630,582
501,816
11,132
1,143,530

100 %

1,501,696
623,490
28,244$2,153,430

2014

2013

2014

Millions ofyen

Civil engineering:
Domestic:
Public sector
Private sector
Overseas
SubtotalArchitectural construction:
Domestic:
Public sector
Private sector
Overseas
Subtotal
Total:
Domestic:
Public sector
Private sector
Overseas
Total

46.6%

¥ 61,044
7,397
634
69,07540,512
76,867
100
117,479

Net Sales

Projects completed:
Civil engineering:
Domestic:
Public sector
Private sector
Overseas
SubtotalArchitectural construction:
Domestic:
Public sector
Private sector
Overseas
Subtotal
Subtotal:
Domestic:
Public sector
Private sector
Overseas
Subtotal
Real estate and other
Total

Millions ofyen¥ 87,401
14,833403
102,637

2014

2013

Composition
ratio

2014

2013

33

Network

Head and Branch Offices

34

Consolidated Subsidiaries

Head Office
2-2-2, Matsuzaki-cho, Abeno-ku,
Osaka 545-8555, Japan
TEL: +81-6-6621-1101 FAX: +81-6-6627-5295

Hokuriku Office2-3-26, Higashi Ohdori, Chuo-ku,
Niigata 950-0087, Japan
TEL: +81-25-241-6160 FAX: +81-25-241-6364

Tokyo Head Office
5-6-1, Shiba, Minato-ku,
Tokyo 108-8381, Japan
TEL: +81-3-3454-8111 FAX: +81-3-5427-8103

Nagoya Branch
29-8, Takebashi-cho, Nakamura-ku,
Nagoya 453-8555, Japan
TEL: +81-52-451-1101 FAX: +81-52-452-4331

Technical Research Institute387, Ohsuna, Tsukuba 300-2612, Japan
TEL: +81-29-865-1521 FAX: +81-29-865-1522

Kansai Branch
26F ABENO HARUKAS,1-1-43 Abenosuji,
Abeno-ku, Osaka 545-6026, Japan
TEL: +81-6-6621-1101 FAX: +81-6-6621-1921

East Japan Branch
5-6-1, Shiba, Minato-ku,
Tokyo 108-8381, Japan
TEL: +81-3-3454-8111 FAX: +81-3-5427-8111

Nara Office38-3 Takama-cho, Nara 630-8241, Japan
TEL: +81-742-22-5001 FAX: +81-742-27-0192

West Japan Branch
2-2-2, Matsuzaki-cho, Abeno-ku,
Osaka 545-8555, Japan
TEL: +81-6-6621-1101 FAX: +81-6-6623-7692

Kobe Office2-2-16, Isobe dori, Chuo-ku,
Kobe 651-0084, Japan
TEL: +81-78-221-9355 FAX: +81-78-251-3374

West Japan Branch (HARUKAS Office)
26F ABENO HARUKAS,1-1-43 Abenosuji,
Abeno-ku, Osaka 545-6026, Japan
TEL: +81-6-6621-1101 FAX: +81-6-6621-1921

Hiroshima Branch
1-7-22, Kokutaiji-machi, Naka-ku,
Hiroshima 730-0042, Japan
TEL: +81-82-241-2246 FAX: +81-82-243-1416

Sapporo Branch
2-1-18, Kita Shijo Nishi,
Chuo-ku, Sapporo 060-0004, Japan
TEL: +81-11-261-9261 FAX: +81-11-251-5345

Shikoku Branch
1-8-41, Nishiki-machi,
Takamatsu 760-0020, Japan
TEL: +81-87-851-9008 FAX: +81-87-822-9286

Tohoku Branch
2-25, Tsutsumi dori, Amamiya-machi,
Aoba-ku, Sendai 981-8525, Japan
TEL: +81-22-274-1231 FAX: +81-22-273-9805

Kyushu Branch
2-19-1, Sanno, Yahata Higashi-ku,
Kitakyushu 805-8531, Japan
TEL: +81-93-671-3131 FAX: +81-93-661-1543

Tokyo Branch
5-6-1, Shiba, Minato-ku,
Tokyo 108-8381, Japan
TEL: +81-3-3454-8111 FAX: +81-3-5427-8116

Fukuoka Office
1-13-8, Yakuin, Chuo-ku,
Fukuoka 810-0022, Japan
TEL: +81-92-741-4431 FAX: +81-92-741-4740

Kitakanto Office
4-26-15, Kishi-cho, Urawa-ku,
Saitama 330-0064, Japan
TEL: +81-48-827-0188 FAX: +81-48-827-0268

Taiwan Branch
Rm.702, 7F., No.65, Sec.3, Nanjing E.Rd.,
Zhongshan Dist., Taipei City 104, Taiwan(R.O.C.)TEL: +886-2-2506-1402 FAX: +886-2-2506-1429

Higashikanto Office18-14, Shinmachi, Chuo-ku,
Chiba 260-0028, Japan
TEL: +81-43-241-2255 FAX: +81-43-244-5911
Yokohama Office
60, Nihon Ohdori, Naka-ku,
Yokohama 231-0021, Japan
TEL: +81-45-662-1361 FAX: +81-45-641-3502

Singapore Rep. Office
175A Bencoolen Street, #07-08 Burlington
Square, Singapore 189650
TEL: +65-6884-6830 FAX: +65-6884-6831

Okumura Machinery Corporation
3-5-26, Himejima, Nishiyodogawa-ku,
Osaka 555-0033, Japan
TEL: +81-6-6472-3461 FAX: +81-6-6477-6801
Business line:Design, manufacture, sales, andrepair of construction/industrial machines anddevices
Taihei Real Estate Corporation[Head Office]5-6-1, Shiba, Minato-ku,
Tokyo 108-8381, Japan
TEL: +81-3-5439-5401 FAX: +81-3-5439-5402[Osaka Branch]
2-2-2, Matsuzaki-cho, Abeno-ku,
Osaka 545-8555, Japan
TEL: +81-6-6625-3959 FAX: +81-6-6629-3938
Business line: Real estate, land and building
management

Board of Directors

Investor Information(As of June 27, 2014)(As of March 31, 2014)
Okumura Corporation Annual Report 2014

Directors and Auditors

Okumura was established in 1907 based on two key
principles enshrined in the corporate mottos “steadfast
management” and “sincere operation.” The steady
growth achieved over the years has been made possible through the unflagging support of our customers.
Okumura’s main business activities include civilengineering projects for railways, roads, power station
facilities, sewage and water works, and others. In thearea of construction are projects such as houses, public
facilities, medical facilities, and office buildings. The
Company has developed technology at the highest
level, with achievements including the seismic isolation
system used to construct Japan’s first earthquakeabsorbing building. In the area of environment-related
technology, Okumura has developed techniques for
100% recycling of demolished concrete, and natural
greening of concrete surfaces on buildings.
Okumura understands what an important mission it is to provide a better environment for the future.
Accordingly, the Company is dedicated to contributing
to meaningful social infrastructure investment and toalways being a corporation regarded highly by society.
It will achieve this by continuing to develop as an allaround construction company based on steadfast business management.

President & Representative Director
Takanori Okumura
Representative Director
Takaiku Hirako
Directors
Makoto Tsuchiya
Kazuo Takami
Seiichi Fujioka
Keiji Yamaguchi
Yuichi Mizuno
Kiyoshi Saito
Kenji Kotera
Atsushi Tanaka
Standing Statutory Auditors
Yuji Takemura
Koichi Yamauchi
Auditors
Yoshihiro Ban
Kazuo Tsuji
Shuji Abe
Notes:1. Kiyoshi Saito is outside director.
2. Yoshihiro Ban, Kazuo Tsuji and Shuji Abe are outside auditors.

Corporate Data
Head Office	OKUMURA CORPORATION
2-2-2, Matsuzaki-cho, Abeno-ku, Osaka 545-8555, Japan
TEL: +81-6-6621-1101 FAX: +81-6-6627-5295
EstablishedFebruary 22, 1907
Capital¥19.8 billion

Stock Information
Stock Exchange Listings
Tokyo
Transfer Agent
Sumitomo Mitsui Trust Bank, Limited
Major Shareholders
Shareholder

Executive Officers
Executive Vice Presidents
Takaiku Hirako*
Makoto Tsuchiya*
Masamichi Shirahase
Senior Managing Officer
Hiroomi Iida

Contents
1 Financial Highlights
2 To Our Shareholders
4 Review of Operations
6 Topics
8 Consolidated Balance Sheet
10 Consolidated Statement of Income
11 Consolidated Statement of Comprehensive Income
12 Consolidated Statement of Changes in Equity
13 Consolidated Statement of Cash Flows
14 Notes to Consolidated Financial Statements
32 Independent Auditor’s Report
33 Breakdown of Orders (Non-Consolidated)
34 Network
35 Board of Directors / Investor Information

Managing Officers
Kazuo Takami*
Seiichi Fujioka*
Keiji Yamaguchi*
Hirokazu Oishi
Yuichi Mizuno*
Toshio Kobayashi
Executive Officers
Takeshi Kurita
Yutaka Maruyama
Takanori Hayashi
Noriyuki MachidaKenji Kotera*
Osamu Harada
Atsushi Tanaka*
Note: Those officers marked with an asterisk (*) work as directors.

35

Group Employees
1,958

Shares held Percentage of(thousands)
total

Okumura Corporation(Treasury stock)

28,667

12.56%

Northern Trust Co. (AVFC) Re
Silchester International Investors
International Value Equity Trust

12,918

5.66

Northern Trust Co. (AVFC) Re
U.S. Tax Exempted Pension Funds

7,633

3.34

Okumura Employees’
Shareholding Association

7,562

3.31

BBH Boston Custodian For Blackrock
Global Allocation Fund, Inc. 620313

6,202

2.72

Resona Bank, Limited.

6,074

2.66

Sumitomo Realty &Development Co., Ltd.

6,050

2.65

Japan Trustee Services Bank,
Ltd. (Trust Account)

5,650

2.47

Sumitomo Mitsui Banking
Corporation

5,568

2.44

The Master Trust Bank ofJapan, Ltd. (Trust Account)

4,489

1.97

Northern Trust Co. (AVFC) Sub
A/C Non Treaty

4,161

1.82

Okumura Corporation
2-2-2, Matsuzaki-cho, Abeno-ku, Osaka 545-8555, Japan
TEL: +81-6-6621-1101 FAX: +81-6-6627-5295
http://www.okumuragumi.co.jp

Okumura Corporation

Annual Report 2014

Printed in Japan