NAKANO CORPORATION Annual Report 2010

Annual Report 2010
Fiscal year ended 31st March 2010

NAKANO CORPORATION

4-2-28 Kudan-kita, Chiyoda-ku, Tokyo, 102-0073, Japan
Tel: +81-(0)3-3265-4685 Fax: +81-(0)3-3265-4698
www.wave-nakano.co.jp
USA
111 W Saint John St., #514 San Jose, CA 95113, USA
Tel: +1-408-286-9702
Fax: +1-408-286-9701
3020 Old Ranch Road, Suite 300, Seal Beach, CA 90740, USA
Tel: +1-562-799-5726
Fax: +1-562-799-5727

SINGAPORE
1 Coleman St., #06-02 The Adelphi, 179803, Singapore
Tel: +65-6333-4933
Fax: +65-6338-8568

MALAYSIA
Block B, 15-4-2, Megan Salak Park Jalan 1/125E, Taman Desa Petaling, Kuala Lumpur 57100, Malaysia
Tel: +60-3-9059-6977
Fax: +60-3-905-96277

THAILAND#17-03, 2170 Bangkok Tower, New Petchburi Road, Bangkapi, Huaykwang, Bangkok 10310, Thailand
Tel: +66-2-308-0500
Fax: +66-2-308-0497

INDONESIA
1401 Wisma Tamara 14th Floor Jl. Jend. Sudirman KAV. 24, Jakarta 12920, Indonesia
Tel: +62-21-5203674
Fax: +62-21-5203670
Jalan Laksamana Bintan Komp. Tanah Mas Blok G3A Sei Panas-Batam, Indonesia
Tel: +62-0788-463004
Fax: +62-0788-463006

VIETNAM
No.302 3rd Floor of Thang Long Industrial Park Techno-Center Dong Anh District, Hanoi, Vietnam
Tel: +84-4-3-955-0050
Fax: +84-4-3-955-0053
2nd Floor New Agency Service Center Building 19 Vo Van Tan Street Ward 6 District 3 Ho Chi Minh City, Vietnam
Tel: +84-8-3-930-6501
Fax:+ 84-8-3-930-6499

CHINA
Room 10A3, First World Plaza, Hongli Road West, Shenzhen 518034, China
Tel: +86-755-8296-8491
Fax: +86-755-8296-8493

COMPANY HISTORYCONTENTS

2009 The Metropolitan
Condominium, Singapore

FINANCIAL HIGHLIGHTS

1

BUSINESS OVERVIEW AND RESULTS

2

INTERNATIONAL OPERATIONS NETWORK

4

INTERNATIONAL WORKS PORTFOLIO

6DOMESTIC WORKS PORTFOLIO

10REPORT OF INDEPENDENT AUDITORS

12

CONSOLIDATED BALANCE SHEETS

13

CONSOLIDATED STATEMENTS OF INCOME

15

2008 Ho Chi Minh City Representative Office launched.
2006 Hanoi Representative Office established2002 Second Indonesian office launched in Batam.

2010 St. Thomas
Suites, Singapore

17

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

18

SUPPLEMENTAL INFORMATION33

NONCONSOLIDATED BALANCE SHEETS

33

NONCONSOLIDATED STATEMENTS OF INCOME

35

CORPORATE PROFILE36

COMPANY HISTORY37

INVESTOR INFORMATION37

SHARE PRICE RANGE

37

2001 ISO14001 accreditation.
1998 ISO9001 accreditation.
1991 Company name changed its nameto Nakano Corporation.

1988 Thailand based operations begin in Bangkok.
1985 First Indonesian office is established in Jakarta.
1982 Malaysian Office established in Kuala Lumpur.
1975 Asian expansion begins in Singapore.

1975 Real Estate & International divisions become
International Operations.

1974 International operations begins in Los Angeles, California.

1972 Raised to Tokyo Stock Exchange, First Section.
1958 New corporate headquarters constructed.

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS 16
CONSOLIDATED STATEMENTS OF CASH FLOWS

2004 Took over construction operations of Fudo
Construction Co., Ltd. Nakano Corporation was
renamed Nakano Fudo Construction (Japanese only).

2003 Nakano Consulting is established in China.

1942 Re-organized to corporation (Capitalized at ¥400,000).
1936 National Diet Building masonry construction.
1991 Casa Royal
Cainhill, Singapore

1983 Yokogawa Electric
Factory, Singapore

1934 Company head office relocated to Kudan Kojimachi, Tokyo.
1933 Yoshichika Oshima takes over civil engineering operations.
1911 Nihonbashi Bridge masonry construction.
1885 Nakano-gumi Co. founded by Kisaburo Nakano in Tokyo.

1980 Hewlett Packard Penang
Factory, Malaysia

INVESTOR INFORMATIONSHAREHOLDER COMPOSITION

As of March 31, 2010
Stock Listing
Tokyo Stock Exchange, First Section,
Code Number 1827

Financial
Institutions
10.76% Securities
Companies
0.77%

Financial Institutions
3,713,249
Securities Companies
263,980

Authorized Number of Shares
154,792,300

Other Institutions
14,731,539

Issued Number of Shares
34,498,097
Minimum Trading Unit
500

Foreign Institutions
and Individuals
922,932

Number of Shareholders
4,639

Individuals/ Other
14,866,397

Individuals/
Other43.09%

Other
Institutions
42.70%

Foreign Institutions
and Individuals 2.68%

Stock Transfer Agent
Mitsubishi UFJ Trust and Banking Corporation

SHARE PRICE RANGE(yen) 250

200

150

100

Cautionary remarks regarding forward looking statements
This Annual Report includes forward-looking statements that represent Nakano Corporation’s assumptions and expectations inlight of currently available information. These statements reflect industry trends, client’s situations and other factors, and involverisks and uncertainties which may cause actual performance results to differ from those discussed in the forward looking
statements in accordance with changes in the domestic and international business environment.
For further information contact:
Nakano Corporation International Operations Headquarters
4-2-28 Kudan-kita, Chiyoda-ku, Tokyo 102-0073, Japan
Tel: +81-(0)3-3265-4685 Fax: +81-(0)3-3265-4698
www.wave-nakano.co.jp

50
300,000

Jan ‘09

Apr ‘09855,500

Jul ‘09

Oct ‘09

Jan ‘10Apr ‘10200,000
100,000
0
Share Price

Trading Volume
ANNUAL REPORT 2010

37

FINANCIAL HIGHLIGHTS

NAKANO CORPORATION and its subsidiaries
Years ended March 31, 2006 through 2010
2006

Contract awards

2007

2008

2009

2010

2010

Millionsof yenThousands of
U.S. dollars¥101,168¥127,069¥136,232¥125,333¥107,751$1,158,114

Net sales

88,285

101,702116,360

116,593

120,186

1,291,766

Operating income

1,254

1,543

2,687

2,902

2,956

31,771

Ordinary income

919

1,281

2,536

2,650

2,740

29,449Net income

681

953

1,767

1,768

1,829

19,658

Total net assets

10,386

11,583

11,285

10,14011,941

128,342

Total assets

63,55078,08773,54280,72571,183765,079

972

6,719

(2,344)

(645)

5,468

58,770Net cash provided by (used in) operating activities
Net cash provided by (used in) investing activities

(427)

1,031

5,014

93

73

784

Net cash provided by (used in) financing activities(5,125)(1,447)(5,294)

1,568(4,058)(43,615)

Cash and cash equivalents at end of period

6,556

12,976

10,024

10,702

12,326

132,480

Yen

U.S. dollars

Per share of common stock(in yen and U.S. dollars)
Net assets¥220.36¥243.63¥259.91¥285.30¥336.92$3.62

Net income

19.78

26.75

50.47

51.40

53.19

0.57

Cash dividends applicable to the year

0.00

3.50

6.00

6.00

6.00

0.06

1,150

1,133

1,154

1,122

1,129

Number of employees

Note: The rate of ¥93.04=US$1.00, the foreign exchange rate on March 31, 2010, has been used for translation.
Contract Awards
160,000

160,000

140,000

140,000

120,000

120,000

100,000

100,000

80,00080,00060,00060,00040,00040,00020,00020,0002006 2007 2008 2009 2010
Domestic

2,000

1,500

1,000

500

2006 2007 2008 2009 2010

International

Domestic

Construction Awards
Other
11.9%
Warehouse/
Logistics 4.1%

Retail 24.1%

Office 7.5%

Educational
8.2%

Housing
20.0%
Industrial
15.3%

Educational
4.5%
Warehouse/
Logistics 5.3%

Operating Income
North America¥139mlnOther
8.5%
Housing
28.3%¥118.69bln

Medical Welfare
13.4%

2006 2007 2008 2009 2010

International

Construction Sales

Office8.4%¥107.75bln

Medical Welfare
8.8%

Net Income

Net Sales

Southeast Asia
¥373mln¥2,956mln

Japan¥2,443mln

Industrial
17.2%
Retail14.3%

ANNUAL REPORT 20101

Business Overview & Results
Since
Since thethe foundation
foundation ofof Nakano
Nakano Corporation
Corporation inin 1933,
1933, then
then known
known asas Nakano-gumi,
Nakano-gumi, we
we havehave benefited
benefitedfromtheunwavering
confidence
shown
to
us
by
our
esteemed
customers
over
the
last
seventy
fivefrom the unwavering confidence shown to us by our esteemed customers over the last seventy five years.
years.
We
We greatly
greatly appreciate
appreciate thethe opportunity
opportunity toto havehave developed
developed into
into aa well
well establishedestablished company
company inin thetheconstructionindustry.
Now,
a
new
era
has
begun
in
this
industry
requiringnewbusinessmodelsandnewconstruction industry. Now, a new era has begun in this industry requiring new business models and new
visions.
visions. We
We areare committedcommitted toto adapting
adapting ourselves
ourselves toto thisthis ever-changing
ever-changing new
new environment,
environment, andand totoaccommodatingaccommodating ourour customer’s
customer’s expectations
expectations andand requirements.
requirements. In
In orderorder toto accomplish
accomplish this
this goal,
goal, our
ourbusinessbusiness philosophy
philosophy emphasizes
emphasizes three
three core
core elements,
elements, "Faith,"Faith, Enthusiasm,
Enthusiasm, andand Creativity."
Creativity."

A Message from the President

2010 Business Report

We sincerely thank our shareholders for their loyal supportof Nakano Corporation. We are pleased to provide detailsof the company and its subsidiaries for the fiscal year
spanning 1st April 2009 to 31st March 2010.

Although the Japanese economy began to show
signs of improvement during the above stated period,
it has continued to experience very severe conditions.
Most Japanese companies have been unable tosubstantially improve their profitabilit y due todeflation and the stronger yen. People have became
increasingly concerned about unemployment and lost
income, meaning a sustainable recovery to the real
economy remains unforeseeable.
The business environment surrounding the construction industry has become increasingly
difficult as private companies continue to decrease capital investment, and the government
initiates further cuts to construction spending in line with a policy shift away from publicconstruction jobs to social welfare valuation.
Under such severe business conditions, this fiscal year was the final year in our company’s
mid-term business plan. Along with our subsidiaries, our company has devoted particulareffort towards improved profitability and strengthened financial standing through reinforcing
marketing and improved risk management. Amongst circumstances of decreased
construction demand and intensified competition, our company has recorded the following
results.
Company reported total orders received of ¥107,751mln (¥17,581mln annual decrease). Of
this total, ¥86,062mln was from domestic construction businesses (¥15,680mln annual
decrease).
The major domestic orders received during this period are for the construction of a new
Fujieda factory by Mitsui Nourin Co., Ltd., a new Shin-Chiba NHK broadcast hall by Japan
Broadcasting Corporation, a new Otone factory by Nippo Co., Ltd., and the remodeling andrenovation of Tokyo Metropolitan Oota Sakuradai High School by the Tokyo Metropolitan
Government. Major International orders received include the Optima at Tanah Merah
Condominium ordered by TID Private Ltd., Changi Business Park construction in Singapore
by a joint venture between Ascendas Pte Ltd. and Frasers Centrepoint Limited, a new
Malaysia factory phase three by Konica Minolta Glass Tech (M) Sdn. Bhd., and the
expansion of Le-Lycee French International School in Thailand.
2

NAKANO CORPORATIONOur company reported total net sales of ¥120,186mln (¥3,592mln annual increase)consisting of ¥118,693mln (¥3,543mln annual increase) from construction related activitiesand ¥1,492mln (¥48mlnannual increase) from real estate businesses. Of this total, domestic
business sales were ¥100,421mln (¥11,504mln annual increase) consisting of ¥99,328mln(¥11,371mln annual increase) from construction sales and ¥1,093mln (¥133mln annual
increase) from real estate activities.
Major domestic sales during this period were primarily drawn from a new Mo-oka factory by
Dixie Japan Ltd., the Hirakata Kousai Hospital ordered by the Federation of National PublicService Personnel Mutual Aid Associations, the north and south wings of a housing
condominium at Kamiya Ichome order by Natori Co., Ltd., and a new Chiba distribution
center by Suzuken Co., Ltd. Major international sales mainly comprise the Armenian Street
Historic Building Preservation Project in Singapore ordered by Hong How Investments Pte
Ltd, the new fourth phase of Shimano Components Malaysia’s factory in Malaysia, Villa
Rachatewi Condominium in Thailand ordered by TCC Capital Land Limited, expansion andrenovation of the P.T. Meiji Indonesian Pharmaceutical Industries factory in Indonesia
ordered by Meiji Seika Kaisha, Ltd., and a new Vietnam factory ordered by Plus Vietnam
Industrial Co., Ltd.
As per the above mentioned result, the total construction balance carried forward to the next
period will be ¥134,851mln (¥10,942mln annual decrease). Of this, the domestic
construction balance of the next period will be ¥103,188mln (¥13,266mln annual decrease).
On the income side during this period, operating income was ¥2,956mln (¥53mln annual
increase) ordinary income was ¥2,740mln (¥89mln annual increase), and net income was¥1,829mln (¥60mln annual increase).
Of this, domestic businesses were responsible for operating income of ¥2,302mln (¥532mln
annual increase), ordinary income of ¥2,239mln (¥325mln annual increase), and net incomeof ¥1,617mln (¥317mln annual increase).
In this regards, financial results for this period allowed our company to almost achieve ourinitial targets.

Akira Asai
President, Nakano Corporation

ANNUAL REPORT 2010

3

NAKANO INTERNATIONALOPERATIONS NETWORK
Comprehensive Nationwide and International Design and Construction Coverage
Centering on the diverse economies of Southeast Asia, Nakano Corporation’s international construction
operations have allowed us the opportunity to partner with some of the world’s largest and most prominentinternational and domestic Japanese corporations to produce a wide and varied array of high quality,competitively priced works. In the future, it is our intention to exert every possible effort towards the realization ofeven greater international expansion and development.

Shenzen
Hanoi
Bangkok

Ho Chi Minh City

Kuala Lumpur
Singapore
JakartaSurabaya• Headquarters• Overseas Office
USA
Singapore
Malaysia
ThailandIndonesia
Vietnam
China
4

NAKANO CORPORATION• Project Locations
Algeria
Australia
Bahrain
China
EnglandFranceGermany
Guam
Hungary
Indonesia
Iran
Iraq
Jordan
Libya
Malaysia

Myanmar
New ZealandRussiaSaudi Arabia
Singapore
South Korea
Spain
Syria
TaiwanThailandUSA
Vanuatu
VietnamYemen

GLOBAL WORKS COVERAGE
Translating globalizing client needs into reality

Since the establishment of our first international office in Singapore in 1979, Nakano Corporation has successfullycompleted upwards of 900 international projects in 35 nations around the world. By integrating advanced technicalknow-how with safety and quality based project management techniques has forged a reputation for sound, quality
works completed within time and budgetary constraints.

Consolidated Construction Sales
Domestic
Market82.9%

Vietnam 0.6%
Malaysia 1.0%
Indonesia 2.5%

¥118.69bln

Thailand 3.7%

Singapore 9.3%

San Jose
Los Angeles• Headquarters
Headquarters
Tokyo Main Office
Civil Engineering Office• Regional Office
Tohoku Regional Office, Sendai
Osaka Regional Office, Osaka
Nagoya Regional Office, Nagoya
Kyushu Regional Office, Hakata• Branch OfficeInternational Operations Sales

International Based Group Sales¥27.5bln

30%¥25bln25%¥22.5bln

20%¥20bln¥17.5bln

15%¥15bln10%¥12.5bln

5%¥10blnHokkaido Branch Office, Sapporo
Higashi Kanto Branch Office, Chiba
Kita Kanto Branch Office, Saitama
Yokohama Branch Office, Yokohama
Ibaraki Branch Office, Tsuchiura
Taito Branch Office, Taito
Kita Tohoku Branch Office, Hachinohe
Mie Sales Office, Yokkaichi
Hamamatsu Sales Office, Hamamatsu
Hyogo Sales Office, Amagasaki
Kitakyushu Sales Office, Kitakyushu¥7.5bln
2006

2007

2008

2009

2010

2006

2007

2008

2009

2010

ANNUAL REPORT 20105

INTERNATIONAL WORKSPORTFOLIO 2010

The Metropolitan Condominium | Singapore | 2009
■

■

■

■

■

■

8,106m2 green area
22nd level sky garden
Rainwater harvesting technology
Automatic irrigation systems
Energy efficient lighting systems
Recycled eco friendly materials

The Metropolitan is a luxury leasehold condominium comprising 382 units in twoconnecting 45 level towers. Offering residents panoramic views of the Singapore
skyline and a comprehensive array of onsite recreational leisure facilities such as
50m lap pool, sky terrace, fitness club, and health spa, the development and its
8,106m2 green area is a leading example of Nakano’s ability to combine optimum
standards of construction safety & luxury residential livability in internationallybased large scale tower condominium development projects.

Comprehensive Space Creation
Design, Construction and Real Estate Development Activities
Since initially expanding into the diverse economies of South East Asia, Nakano Corporation’s has continually developed its
technical expertise in order to expand both the scale and nature of international projects. In addition to our design, construction
and technical assistance activities, large scale real estate development projects undertaken by Nakano Corporation in some ofAsia’s most prestigious residential precincts have affirmed our reputation for premium quality project management.

Latitude Condominium
Singapore | 2010

St. Thomas Suites
Singapore | 2010

Optima at Tanah Merah Condominium
Singapore | 2014

Villa Rachatewi Condominium
Bangkok, Thailand | 2009

Armenian Street Historic Building Preservation Project
Singapore | 2009

Lakeside Condominium
Singapore | 2012
ANNUAL REPORT 20107

INTERNATIONAL WORKSPORTFOLIO 2010
Changi Business Park | Singapore | 2011

Konica Minolta Glass Tech Malaysia Factory (Phase 3)
Malaka, Malaysia | 2010

Toda Pipe Thailand Factory
Ayuthaya, Thailand | 2010

8

NAKANO CORPORATION

Nagai Plastic Indonesia Factory
Cikarang Barat, Bekasi, Indonesia | 2010

Kaiyo Seafood Vietnam FactoryLong An, Vietnam | 2010

International Industrial Works Portfolio 2010
Nakano Corporation’s commitment to technically advanced, quality based works, ensures our international projects
incorporate the very latest standards in energy conservation, production efficiency, and work & operational phase safety.
By combining design innovation with a thorough understanding of current and likely future project requirements we areable to tailor works that flexibly respond to both ongoing client growth and future usage alteration.

AIPR New Factory
Eastern Seaboard Industrial Estate, Thailand | 2010

Plus Vietnam No.2 Factory
Bac Ninh, Vietnam | 2009

Le-Lycee French International School in Thailand
Bangkok, Thailand | 2010
Shimano Malaysia Factory
Johor, Malaysia | 2009

CSF CX Data Center
Cyberjaya, Malaysia | 2011
ANNUAL REPORT 2010

9

DOMESTIC WORKSPORTFOLIO 2010

Shin-Chiba NHK Broadcast Hall | Chiba | May, 201110

NAKANO CORPORATION

Century Tateishi SakuradoriTokyo | 2011

Hirakata Kousai Hospital
Osaka | 2010

Kamiya 1-chome Mansion North & South Towers
Tokyo | 2010

Nishinomiya Kyoritsu Neurosurgical Hospital Expansion
Hyogo | 2009

Ota Sakuradai High School
Tokyo | 2011

Nippo New Kanto Factory
Saitama | 2011

Provision of Total Client Satisfaction
Nakano Corporation’s domestic design and construction expertise extends to every aspect and scale of spacecreation including educational, residential, office, commercial, industrial, health, transport, land development,
warehousing, distribution, and welfare facilities. We emphasize a combination of the most advanced construction
technologies, and a cost sensitive pricing structure to produce highly esthetically pleasing works conceived on
precision and superior quality. Our precise but flexible approach to all phases of planning, design andconstruction is geared to ensuring functional, durable structures capable of responding to the changing needs ofglobalizing clients.

(H20) Tegata Sumiyoshicho Housing Tower 2
Akita | 2010

Suzuken Chiba Logistics Center
Chiba | 2010

Nihon Dixie Mo-oka Factory
Tochigi | 2009

Nashinokien Specialty Nursing Home
Chiba | 2010

Fermo Shinkamagaya
Chiba | 2010

Super Hotel Okachimachi
Tokyo | 2010

Mitsui Norin New Fujieda Factory
Shizuoka | 2010
Kitakyushu Medical Penitentiary Facility
Fukuoka | 2010

ANNUAL REPORT 201011

REPORT OF INDEPENDENT AUDITORS

12

NAKANO CORPORATION

Consolidated Balance Sheets
NAKANO CORPORATION and its subsidiaries
As at March 31, 2009 and 2010

Millions of yen

Thousands of
U.S. dollars(Note 2)

2009

2010

2010

¥ 11,432¥ 12,750$ 137,037

Notes receivable, accounts receivable from completed
construction contracts and other (Notes 4 and 7)

27,652

23,444

251,977

Costs on uncompleted construction contracts (Note 4)

18,988

11,211

120,496

470

462

4,965

AssetsCurrent assets:
Cash and deposits (Notes 4, 6 and 7)

Costs on real estate business (Note 4)
Raw materials and supplies

39

23

247

Deferred tax assets (Note 10)

796

937

10,070506

1,740

18,701

1,085

1,158

12,446

Accounts receivable-other
Other
Allowance for doubtful accounts
Total current assets

(632)

(669)

(7,190)60,33951,059548,785

Noncurrent assets:
Property, plant and equipment (Note 4)
Buildings and structures

8,419

8,337

89,606

Machinery, vehicles, tools, furniture and fixtures

1,437

1,446

15,541Land

10,852

11,060118,873000Construction in progress
Accumulated depreciation
Total property, plant and equipment
Intangible assets(4,448)(4,772)(51,289)

16,261

16,072

172,742

144

131

1,407

Investments and other assets
Investment securities (Notes 4, 7 and 8)

2,302

2,555

27,461Long-term loans receivable

507

464

4,987

Claims provable in bankruptcy, claims provable inrehabilitation and other

612

1,000

10,748Deferred tax assets (Note 10)

831

521

5,599

Other

352

352

3,783

Allowance for doubtful accounts

(628)

(973)

(10,457)

Total investments and other assets

3,979

3,920

42,132

Total noncurrent assets

20,386

20,124

216,294¥ 80,725¥ 71,183$ 765,079

Total assets
The accompanying notes are an integral part of these financial statements.

ANNUAL REPORT 201013

Millions of yen

Thousands of
U.S. dollars(Note 2)

2009

2010

2010

¥ 31,983¥ 32,983$ 354,503

Liabilities
Current liabilities:
Notes payable, accounts payable for construction contracts
and other (Note 7)
Current portion of bonds (Note 14)
Short-term loans payable (Notes 7 and 15)
Income taxes payable
Advances received on uncompleted construction contracts

100

700

7,523

7,348

4,108

44,153

143

122

1,311

21,08912,539134,769

Provision for warranties for completed construction

150

158

1,698

Provision for loss on construction contracts (Note 4)

191

557

5,986

Provision for bonuses

790

641

6,889

Other (Note 15)
Total current liabilities

1,062

954

10,25362,85852,764567,110

Noncurrent liabilities:
Bonds payable (Note 14)

800

100

1,074

4,860

4,403

47,323

Deferred tax liabilities (Note 10)

122

156

1,676

Provision for retirement benefits (Note 9)

646

702

7,545

Negative goodwill

228

171

1,837

Other (Note 15)

1,068

945

10,156Long-term loans payable (Notes 7 and 15)

Total noncurrent liabilities
Total liabilities

7,726

6,478

69,62570,584

59,242636,736

5,061$ 54,395

Net assets:
Shareholders' equity:
Capital stock

¥

5,061

¥

Capital surplus

1,400

1,400

15,047Retained earnings

5,136

6,759

72,646

(25)

(26)

(279)

11,572

13,195

141,820

37

193

2,074

(1,795)(1,800)(19,346)(1,758)(1,606)(17,261)

Treasury stock
Total shareholders’ equity

Valuation and translation adjustments:
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Total valuation and translation adjustments

Minority interests: (Note 13)
Total net assets (Note 13)
Total liabilities and net assets
The accompanying notes are an integral part of these financial statements.

14

NAKANO CORPORATION

326

352

3,783

10,14011,941

128,342¥ 80,725¥ 71,183$ 765,079

Consolidated Statements of Income
NAKANO CORPORATION and its subsidiaries
For the years ended March 31, 2009 and 2010

Net sales:
Net sales of completed construction contracts
Sales on real estate business (Note 11)
Sales on other businessTotal net sales
Cost of sales:
Cost of sales of completed construction contracts (Note 5)
Cost of sales on real estate business (Note 11)
Cost of sales on other businessTotal cost of sales
Gross profit:
Gross profit on completed construction contracts
Gross profit-real estate business
Gross profit-other businessTotal gross profit
Selling, general and administrative expenses (Note 5)
Operating income
Non-operating income:Interest income
Dividends income
Amortization of negative goodwill
Other
Total non-operating income
Non-operating expenses:
Interest expenses
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income:Gain on sales of noncurrent assets (Note 5)
Reversal of allowance for doubtful accounts
Gain on bad debts recovered
Other
Total extraordinary income
Extraordinary loss:
Loss on sales of noncurrent assets
Impairment loss
Loss on valuation of investment securities
Provision of allowance for doubtful accounts
Other
Total extraordinary losses
Income before income taxes and minority interests
Income taxes:
Income taxes-current
Refund of income taxes for prior periods
Income taxes-deferred (Note 10)
Total income taxes
Minority interests in income
Net income (Note 13)

Millions of yen

Thousands of
U.S. dollars(Note 2)

2009

2010

2010

¥ 115,150
1,402
41
116,593¥ 118,693
1,450
41
120,186$1,275,720
15,584440
1,291,766

107,521516
24108,062

111,293573
25
111,892

1,196,184
6,158
268
1,202,622

7,629
885
17
8,531
5,628
2,902

7,399
877
16
8,293
5,337
2,956

79,5249,426
171
89,13357,362
31,771

97
40
57
20
215

50
32
57
30
170

537
343
612
322
1,827

312
–
155
467
2,650

265
51
68
386
2,740

2,848
548
730
4,148
29,449

3
–
28
2
33

13
51
–
6
71

139
548
–
64
763

0
31
184
419
24
660
2,023

–
15
–
495
126
637
2,174

–
161
–
5,320
1,354
6,846
23,366

327
(160)
(63)
104
151
1,768

249
–
82
332
12
1,829

2,676
–
881
3,568
128
19,658¥¥$The accompanying notes are an integral part of these financial statements.

ANNUAL REPORT 201015

Consolidated Statements of Changes In Net Assets
NAKANO CORPORATION and its subsidiaries
For the years ended March 31, 2009 and 2010
Millions of yen
Shareholders’ Equity Valuation and Translation Adjustments

Capitalstock

Balance as at March 31, 2008

¥ 5,061

CapitalsurplusRetainedearnings¥ 1,400 ¥ 5,527

Total
Valuation
valuation
Foreigndifferenceandcurrency
Total on available-for-sale translation translation
Treasury shareholders’securities adjustment adjustment
stock
equity¥(23) ¥ 11,966

¥

306

Minority
interests¥ (1,498) ¥ (1,192) ¥

511

Total net
assets¥ 11,285

Dividends from surplus

–

–

(237)

–

(237)

–

–

–

–

(237)

Net income (Note 13)

–

–

1,768

–

1,768

–

–

–

–

1,768

Purchase of treasury stock

–

–

–

(1,924)(1,924)

–

–

–

–

(1,924)Retirement of treasury stock––(1,922)

1,922

–

–

–

–

–

–

Net changes of items otherthan shareholders' equity

–

–

–

–

–

(268)

(297)

(566)

(184)

(751)

(391)

(2)

(393)

(268)

(297)

(566)

(184)

(1,144)326¥ 10,140

Total changes of items
during the period
Balance as at March 31, 2009
(Note 13)–
¥ 5,061–¥ 1,400 ¥ 5,136¥(25) ¥ 11,572¥37¥ (1,795) ¥ (1,758) ¥Dividends from surplus

–

–

(206)

–

(206)

–

–

–

–

(206)

Net income (Note 13)

–

–

1,829

–

1,829

–

–

–

–

1,829

Purchase of treasury stock

–

–

–

(0)

(0)

–

–

–

–

(0)

Net changes of items otherthan shareholders' equity

–

–

–

–

–

156

(4)

151

26

178

–

–

1,623

(0)

1,622

156

(4)

151

26

1,800

¥ 5,061¥ 1,400¥ 6,759352¥ 11,941

Total changes of items
during the period
Balance as at March 31, 2010
(Note 13)¥(26) ¥ 13,195

¥

193

¥ (1,800) ¥ (1,606) ¥Thousands of U.S. dollars (Note 2)
Shareholders’ Equity Valuation and Translation Adjustments

Capitalstock

CapitalsurplusRetainedearnings

Total
Valuation
valuation
Foreigndifferenceandcurrency
Total on available-for-sale translation translation
Treasury shareholders'securities adjustment adjustment
stock
equity$ 55,202–(2,214)–(2,214)

–

–

–

–

(2,214)

Net income (Note 13)––

19,658–19,658––––19,658Purchase of treasury stock

–

–

–

(0)

(0)

–

–

–

–

(0)

Net changes of items otherthan shareholders' equity

–

–

–

–

–

1,676

(42)

1,622

279

1,913

Total changes of items
during the period––

17,444(0)

17,433

1,676

(42)

1,622

279

19,346$ 54,395$ 15,047$ 72,646(279) $141,820$ 2,074$(19,346) $(17,261) $ 3,783$128,342$

16

NAKANO CORPORATION

397$108,985$ 15,047–

The accompanying notes are an integral part of these financial statements.

$$(19,292) $(18,895) $ 3,503$ 54,395

Balance as at March 31, 2010
(Note 13)(268) $124,376

Total net
assetsDividends from surplus

Balance as at March 31, 2009$

Minority
interests

Consolidated Statements of Cash Flows
NAKANO CORPORATION and its subsidiaries
For the years ended March 31, 2009 and 2010

Net cash provided by (used in) operating activities:
Income before income taxes and minority interests
Adjustments for:
Depreciation and amortization
Impairment loss
Amortization of negative goodwill
Increase in allowance for doubtful accounts(Decrease) increase in provision for retirement benefits
Interest and dividends income
Interest expenses
Loss on sales and retirement of noncurrent assets
Loss on sales and valuation of investment securities(Increase) decrease in notes and accounts receivable-trade(Increase) decrease in costs on uncompleted construction
contracts
Decrease in other inventories(Decrease) increase in notes and accounts payable-trade
Increase (decrease) in advances received on uncompleted
construction contracts
Other, net
SubtotalInterest and dividends income received
Interest expenses paid
Income taxes paid
Net cash (used in) provided by operating activities
Net cash provided by (used in) investing activities:
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of intangible assets
Purchase of investment securities
Proceeds from sales of investment securities
Other, net
Net cash provided by investing activities
Net cash provided by (used in) financing activities:
Net increase (decrease) in short-term loans payable
Repayment of long-term loans payable
Redemption of bonds
Purchase of treasury stock
Cash dividends paid
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period (Note 6)

Millions of yen

Thousands of
U.S. dollars(Note 2)

2009

2010

2010

¥ 2,023¥ 2,174$ 23,366

354
31
(57)
433
(22)
(137)
322
1
184
(8,421)

430
15
(57)
378
52
(83)
265
–
–
3,902

4,621
161
(612)
4,062
558
(892)
2,848
–
–
41,938

(715)
11
(17)

7,770
23
731

83,512
247
7,856

5,642
216
(149)
137
(326)
(306)
(645)

(8,588)(1,086)
5,929
83
(271)
(272)
5,468

(92,304)(11,672)
63,725892(2,912)(2,923)58,770

(150)
210
(99)
27
(13)
(9)
1
126
93

(770)
1,077
(409)
105
(0)
(24)
6
89
73

(8,276)
11,575(4,395)
1,128
(0)
(257)
64
956
784

4,293
(433)
(100)
(1,924)
(237)
(29)
1,568
(338)
678
10,024¥ 10,702(3,240)
(457)
(100)
–
(206)
(54)
(4,058)139
1,623
10,702¥ 12,326(34,823)(4,911)(1,074)–(2,214)(580)(43,615)
1,493
17,444
115,025$ 132,480

The accompanying notes are an integral part of these financial statements.

ANNUAL REPORT 201017

Notes to Consolidated Financial Statements
NAKANO CORPORATION and its subsidiaries

1. Basis of Presenting
Consolidated
Financial
Statements

The consolidated financial statements presented herein of Nakano Corporation (the”Company”) and its consolidated subsidiaries (together, the “Companies”) are prepared inaccordance with the provisions set forth in the Corporation Law of Japan and the Financial
Instruments and Exchange Law of Japan, and in conformity with accounting principles generally
accepted in Japan (“Japanese GAAP”), which are different in certain respects as to applicationand disclosure requirements of International Financial Reporting Standards.
In preparing these consolidated financial statements, certain reclassifications andrearrangements have been made to the consolidated financial statements issued domestically inorder to present them in a form which is more familiar to readers outside Japan. In addition,certain reclassifications have been made in the 2009 financial statements to conform to theclassifications used in 2010.

2. U.S. Dollar Amounts The accounts of consolidated financial statements presented herein are expressed in Japanese

yen by rounding down to the nearest million. The U.S. dollar amounts shown in the accompanying
consolidated financial statements and notes thereto have been translated from Japanese yen into
U.S. dollars on the basis of ¥93.04 to U.S.$1, the rate of exchange prevailing at March 31, 2010,and have been then rounded down to the nearest thousand. These U.S. dollar amounts are notintended to imply that the Japanese yen amounts have been or could be converted, realized or
settled in U.S. dollars at this or any other rate.

3. Summary of
Significant
Accounting Policies

a. Consolidation
1) Scope of Consolidation
The Company had 11 subsidiaries as at March 31, 2010 (12 for 2009). The consolidated financial
statements for the years ended March 31, 2009 and 2010 include the accounts of the Company
and all subsidiaries. The Company had 3 affiliates as at March 31, 2010 (3 for 2009). As at March
31, 2009 and 2010, the equity method was not applied to all affiliates, as these companies were
not significant in terms of retained earnings or net income of the consolidated financial statements.
2) Financial Statements of Subsidiaries
The financial year-end of an overseas subsidiary is December 31.
Consolidation of the subsidiary is therefore performed by using the provisional financial
statements prepared as at March 31. Other subsidiaries’ financial year-end is March 31.
3) Valuation of Subsidiaries’ Assets and Liabilities
All assets and liabilities of consolidated subsidiaries are valued at fair value as at the date ofacquisition of the controlling interest in such subsidiaries.
4) Difference between the Cost of Investment and Equity in the Net Assets of a Subsidiary
Any difference (positive or negative) between the cost of investment in a subsidiary and theamount of the underlying equity in the net assets of the subsidiary is principally amortized over a
five-year period on a straight-line basis.
b. Investment Securities
Investment securities are classified and accounted for, depending on management's intent, as
follows:i) held-to-maturity debt securities, which are expected to be held to maturity with the positive intent
and ability to hold to maturity are reported at amortized cost and ii) available-for-sale securities,
which are not classified as the aforementioned securities, are reported at fair value, with unrealized
gains and losses, net of applicable taxes, reported in a separate component of net assets, while
the cost of securities sold is computed using the moving- average method.
Non-marketable available-for-sale securities are stated at cost determined by the movingaverage method. For other than temporary declines in fair value, investment securities are
reduced to net realizable value by a charge to income.
c. Inventories
Costs of uncompleted construction contracts are determined by the specific identification method.
Real estate for sale, costs on real estate business and raw materials and supplies are stated atcost determined by the specific identification method for real estate for sale and costs of realestate business and by the last purchase price method for raw material and supplies, while the net
book value of these inventories in the balance sheet is written down if the net realizable value
declines.

18

NAKANO CORPORATION

d. Property, Plant and Equipment (excluding lease assets)
Property, plant and equipment are stated at cost. Depreciation of property, plant and equipment of
the Company and its domestic consolidated subsidiaries is computed by the declining-balancemethod, while buildings (excluding building fixtures) acquired on or after April 1, 1998 aredepreciated using the straight-line method. The useful lives and residual values of the assets are
determined based on the regulations of the Corporate Income Tax Law.
Foreign consolidated subsidiaries use primarily the straight-line method.
e. Intangible Assets (excluding lease assets)
Intangible fixed assets are amortized by the straight-line method. Useful lives of the assets are
determined based on the regulations of the Corporate Income Tax Law.
Software for internal use is amortized over a period of the internal available years (five years)
using the straight-line method.
f. Lease Assets
Depreciation of lease assets under finance leases that do not transfer ownership of the leaseassets to the lessee is calculated by the straight-line method over the lease term of the leaseassets with no residual value.
Finance leases which existed at March 31, 2008 and do not transfer ownership of the leaseassets to the lessee are accounted for as operating lease transactions, as permitted by theaccounting standard.
g. Allowance for Doubtful Accounts
The allowance for doubtful accounts provided by the Company and its domestic consolidated
subsidiaries is stated in amounts considered to be appropriate based on each company’s pastcredit loss experience and an evaluation of potential losses in the receivables and others
outstanding.
Foreign consolidated subsidiaries provide for such possible losses based on the estimateduncollectible amounts of the specific accounts.
h. Provision for Warranties for Completed Construction
The provision for warranties for completed construction is provided by the Company and its
domestic consolidated subsidiaries to cover expenses for defects claimed concerning completed
work based on the estimated amount of compensation to be paid in the future for the work
completed during the fiscal year.
i. Provision for Loss on Construction Contracts
The provision for loss on construction contracts is provided with respect to construction projects
for which eventual losses are reasonably estimated.
j. Provision for Bonuses
The provision for bonuses provided by the Company and its domestic consolidated subsidiaries is
accrued at the year end to which such bonuses are attributable.
k. Provision for Retirement Benefits
The provision for retirement benefits for employees provided by the Company and its foreign
consolidated subsidiaries is calculated based on estimated amounts of retirement benefit
obligations and pension assets as of the consolidated fiscal year-end.
Actuarial differences are amortized commencing in the following year after the difference isrecognized primarily by the straight-line method over a period (12 years) which is shorter than the
average remaining years of service of the employees.
(Accounting Change)
Effective from the year ended March 31, 2010, the Company adopted ASBJ Statement No. 19“Partial Amendments to Accounting Standard for Retirement Benefits (Part 3)” (ASBJ Statement
No. 19, July 31, 2008). There is no effect of the change on operating income, ordinary income andincome before income taxes and minority interests.

ANNUAL REPORT 201019

l. Revenue and Cost of Construction Contracts
Revenue of construction contracts is recorded by the percentage-of-completion method for thecompleted portion of the contracts at the balance sheet date, if the outcome of the construction
contract can be reliably estimated and the completed-contract method is applied to othercontracts whose outcome cannot be reliably estimated. The percentage of completion is
calculated based on the cost incurred to date as a percentage of the estimated total cost.
Construction revenue recognized based on the percentage-of-completion method for the year
ended March 31, 2010 was ¥55,971 million ($601,579 thousand).
(Accounting Change)
Effective from the year ended March 31, 2010, the Company adopted new accounting standards,“Accounting Standard for Construction Contracts” (ASBJ Statement No. 15, December 27, 2007)
and “Guidance on Accounting Standard for Construction Contracts” (ASBJ Guidance No. 18,
December 27, 2007) and applied for the construction contracts which started during the year
ended March 31, 2010.
With respect to construction contracts which started prior to April 1, 2009, the percentage-ofcompletion method is applied to the long-term (more than 24 months) contracts whose contract
amount is ¥2 billion or more and the completed-contract method is applied to other construction
contracts.
The effect of this change was to increase “Net sales of completed construction contracts” by¥12,121 million ($130,277 thousand), “Operating income” and “Ordinary income” by ¥757 million($8,136 thousand), respectively, and “Income before income taxes and minority interests” by ¥752
million ($8,082 thousand) for the year ended March 31, 2010, compared with those amounts thatwould have been reported under the previous method.
The effect of this change on business segment is described in Note 12 “Segment Information”.
m. Hedge Accounting(1) Method of hedge accounting employed:Special accounting treatment is applied to interest rate swaps. Under the special accounting
treatment, the 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
agreements are recognized and included in interest expenses or income.
(2) Hedging instrument and hedged item:
Hedging instrument: Interest rate swaps
Hedged item: Loans payable(3) Hedging principles:
The Company has a policy of using the above-mentioned hedging instruments only as a means of
reducing the Company’s exposure to interest rate fluctuation risks on loans payable, and not for
speculative purposes.
(4) Assessment method for hedge effectiveness:
Assessment of hedge effectiveness has been omitted with respect to interest rate swap
transactions because they meet the requirements for hedge accounting (special accounting
treatment).
n. Cash and Cash Equivalents in the Consolidated Statements of Cash Flows
In preparing the consolidated statements of cash flows, cash and cash equivalents include cashon hand, readily-available deposits and short-term highly liquid investments with maturities lessthan three months at the time of acquisition that are exposed to insignificant risk of changes invalue.

20

NAKANO CORPORATION4. Notes toConsolidated
Balance Sheets

1) The following assets are pledged as collateral for long-term loans payable of ¥4,860 million and¥4,403 million ($47,323 thousand), short-term loans payable of ¥5,408 million and ¥2,548 million($27,386 thousand) and security deposits as at March 31, 2009 and 2010, respectively:
As of March 31

Cash and deposits

Millions of yen

Thousands of
U.S. dollars

2010

2010

102

$ 1,096

801

8,609

2009

¥

Notes receivable

457

¥

2,292
195

195

2,095

Buildings

Costs on real estate business

2,243

2,132

22,914

Land

9,852

9,791

105,234

835

1,042

11,199¥ 15,877¥ 14,063$151,150

Millions of yen

Thousands of
U.S. dollars

2010

2010

4,260

$ 45,786––

Investment securities
Total2) The Companies are contingently liable for the following:
As of March 31

Guarantees of completion of construction contracts

2009

¥

Guarantee on earnest money

¥

21
10

Guarantee on employees’ housing loan
Total

3,698

¥

3,729

¥

5

53

4,266

$ 45,851

3) Discounted notes receivable amounted to ¥1,571 million and nil as at March 31, 2009 and 2010,
respectively.
4) “Costs on uncompleted construction contracts” which are estimated to recognize losses and“Provision for loss on construction contracts” are recorded on a gross basis without offsetting.
Costs on uncompleted construction contracts which are estimated to recognize losses andcovered by “Provision for loss on construction contracts” amounted to ¥557 million ($5,986
thousand) as at March 31, 2010.

5. Notes toConsolidated
Statements of1) Provision for loss on construction contracts in the amount of ¥476 million ($5,116 thousand) is
included in “Cost of sales of completed construction contracts” for the year ended March 31,
2010.
2) The major components of “Selling, general and administrative expenses” were as follows:

IncomeMillions of yen
For the years ended March 31

Depreciation

2009

¥

132

¥

Thousands of
U.S. dollars

2010

2010

137

$ 1,472

Provision for bonuses

315

258

2,773

Retirement benefit expenses

277

312

3,353

2,623

2,582

27,751

Employees’ salaries and allowances

3) Research and development costs which are included in selling, general and administrative
expenses were ¥36 million and ¥32 million ($343 thousand) for the years ended March 31, 2009
and 2010, respectively.
4) “Gain on sales of noncurrent assets” for the year ended March 31, 2010 consists of thefollowing:
Land: ¥6 million ($64 thousand), Vehicles: ¥5 million ($53 thousand) and Other: ¥1 million ($10thousand)

ANNUAL REPORT 201021

6. Notes toConsolidated
Statements of Cash
Flows

The reconciliation between “Cash and cash equivalents” reported in the consolidated statementsof cash flows and “Cash and deposits” reported in the consolidated balance sheets is as follows:
Millions of yen
As at March 31

Cash and deposits per consolidated balance sheets
Less: Time deposits maturing over three months

Thousands of
U.S. dollars

2009

2010

2010

¥ 11,432¥ 12,750$137,037

(729)

(423)

(4,546)¥ 10,702¥ 12,326$132,480

Cash and cash equivalents per consolidated
statements of cash flows

7. Financial
Instruments

1. Overview
1) Policy for financial instruments
The Companies raise operating funds primarily through bank loans and bond issues. Temporary
fund surpluses are managed principally through short-term deposits with little risk. Under thepolicy of the Companies, the Companies use derivatives only for the purpose of reducing foreignexchange fluctuation risks associated with foreign currency denominated transactions and interest
rate fluctuation risks associated with loans payable, and not for speculative purposes.
2) Types of financial instruments, risk and risk management
The Companies control risks by type of financial instruments in accordance with the risk
management policy.
Regarding credit risk associated with notes receivable and accounts receivable fromcompleted construction contracts, the Companies identify major customers’ credit status bymonitoring the payment terms and credit balances by each customer.
Regarding investment securities principally consisting of equity securities, the Companies
regularly identify the quoted market price of the listed securities to manage the risks arising frommarket value fluctuations.
The Companies manage liquidity risk associated with loans payable by appropriately planningfor fund raising based on monthly cash flow projections.
Regarding derivative transactions, the Companies execute and control the transactions basedon the internal control rules which define the transaction authority and limits and enter into
contracts with only the high credit rating financial institutions to reduce credit risk.
3) Supplementary explanation on fair value of financial instruments
The fair value of financial instruments is determined based on the market price or reasonableestimated amount if there is no market price. Certain assumptions are used for calculation of suchfair value, and accordingly, the result of such calculation may vary, if different assumptions are
used.

22

NAKANO CORPORATION2. Fair value of financial instruments
The carrying amount, fair value and difference of the financial instruments as at March 31, 2010
are as follows:
Note that the financial instruments whose fair value is extremely difficult to determine are notincluded in the following table (See (Notes): 2):
Millions of yen(1) Cash and deposits(2) Notes receivable, accounts receivable fromcompleted construction contracts and other

Carrying amount

Fair value¥ 12,750¥ 12,750

Difference

23,44423,444

–

24

24

(0)

¥

–

(3) Investment securities
Held-to-maturity securities

1,291

1,291

–

Assets total

Available-for-sale securities

37,51037,510(0)(1) Notes payable, accounts payable forconstruction contracts and other

32,98332,983–(2) Short-term loans payable

4,108

4,108

–

(3) Long-term loans payable

4,403

4,403

–

Liabilities total

41,494

41,494––––

Carrying amount

Fair value$137,037$137,037

251,977

251,977–

257
13,875257
13,875(0)–Derivative transactions

Thousands of U.S. dollars(1) Cash and deposits(2) Notes receivable, accounts receivable fromcompleted construction contracts and other(3) Investment securities
Held-to-maturity securities
Available-for-sale securities

Difference$–

Assets total(1) Notes payable, accounts payable forconstruction contracts and other(2) Short-term loans payable(3) Long-term loans payable

403,159

403,159(0)354,503
44,15347,323354,503
44,15347,323–––Liabilities total
Derivative transactions

445,980–445,980–––(Notes): 1. Method used for determining the fair value of the financial instruments and matters regarding securities
and derivative transactions:
Assets:(1) Cash and deposits and (2) Notes receivable, accounts receivable from completed contracts and other
The carrying amount is presented as the fair value, since the fair value approximates the carrying amountbecause they will be settled within a short period of their maturity.
(3) Investment securities
The fair value of equity securities is determined based on the quoted price of the exchanges, the fair valueof investment trust is determined based on the published standard quotation price and the fair value ofdebt securities is determined based on the published price by the Japan Securities Dealers Association.
Notes regarding investment securities classified by the management’s intent of holding are described in
Note 8 “Investment Securities”.
Liabilities:(1) Notes payable, accounts payable for construction contracts and other and (2) Short-term loans payable
The carrying amount is presented as the fair value, since the fair value approximates the carrying amountbecause they will be settled within a short period of their maturity.
(3) Long-term loans payable
The carrying amount is presented as the fair value, since the fair value approximates the carrying amountbecause their interest rates will be reset within a short period of their maturity.
2. Unlisted equity securities in the carrying amount of ¥1,239 million ($13,316 thousand) are not included in “(3)Investment securities” in the above table, since there is no market price and their fair value is extremely
difficult to identify.

ANNUAL REPORT 201023

3. Redemption schedule for monetary assets and investment securities with contractual maturities after
balance sheet dateMillions of yen
Due in one year
or less

As at March 31, 2010

Cash and deposits
Notes receivable, accounts
receivable from completed
construction contracts and other
Investment securities:

Due after one
year throughfive years

Due after five
years throughten years

Due after ten
years

¥

¥

¥

¥ 12,750––

23,444

–

–

–

–

14

9

–

Hel-to-maturity securities(Japanese government bonds)
Available-for-sale securities
with contractual maturities

–

Total

–

3
13

–

¥ 36,194

¥

14

¥

–
¥

–

Thousands of U.S. dollars
Due in one year
or less

As at March 31, 2010

Cash and deposits
Notes receivable, accounts
receivable from completed
construction contracts and other
Investment securities:

Due after one
year throughfive years

Due after five
years throughten years

Due after ten
years

$

$

$

$137,037–––

251,977–––

Hel-to-maturity securities(Japanese government bonds)

–

150

96

–

Available-for-sale securities
with contractual maturities

–

–

32

–

Total

$389,015

$

150

$

139

$

–

4. Regarding repayment schedule of long-term loans payable, please see Note 15 “Loans Payable and Other
Debts”.

(Additional Information)
Effective from the year ended March 31, 2010, the Companies adopted new accounting standards,“Accounting Standard for Financial Instruments” (ASBJ Statement No. 10, March 10, 2008) and“Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No. 19,
March 10, 2008).

8. Investment

Investment securities as at March 31, 2009 and 2010 consisted of the following:

Securities

Millions of yen
As at March 31

2009

Held-to-maturity securities¥

Thousands of
U.S. dollars

2010

29

¥

2010

24

$

257

Available-for-sale securities with market value

1,033

1,291

13,875

Available-for-sale securities without market value

1,239

1,239

13,316¥ 2,302¥ 2,555$ 27,461

Total

The carrying amount and fair value of held-to-maturity debt securities as at March 31, 2009 and2010 are as follows:
Millions of yen
As at March 31, 2009

Japanese government bonds

24

NAKANO CORPORATION

Carrying amount¥

29

Unrealized gain¥0

Unrealized loss

¥

(0)

Fair value¥30Millions of yen
As at March 31, 2010

Japanese government bonds

Carrying amount¥

Unrealized gain24¥

Unrealized loss

0

¥

(0)

Fair value¥

24

Thousands of U.S. dollars
As at March 31, 2010

Japanese government bonds

Carrying amount$

Unrealized gain

257

$

Unrealized loss

0

$

(0)

Fair value

$

257

The carrying amount (fair value) and acquisition cost of available-for-sale securities as at March
31, 2009 and 2010 are as follows:
Millions of yen
As at March 31, 2009

Carrying amount

Equity securities¥ 1,026

Other

7

Total

¥ 1,033

Unrealized gain¥Unrealized loss

173

¥

(110)

–
¥

Acquisition cost

¥

963

(0)

173

¥

(110)

7
¥

970

Note: Impairment loss on marketable equity securities was recognized and recorded as “Loss on valuation of
investment securities” in the amount of ¥184 million.

Millions of yen
As at March 31, 2010

Carrying amount

Equity securities¥ 1,287

Other

3

Total

¥ 1,291

Unrealized gain¥Unrealized loss

391

¥

(67)

1
¥

Acquisition cost

¥

963

–

393

¥

(67)

1
¥

965

Thousands of U.S. dollars
As at March 31, 2010

Carrying amount

Unrealized gain

Equity securities$ 13,832$ 4,202

Other

32

10

Total

$ 13,875$ 4,223

Unrealized loss$$Acquisition cost(720)

$ 10,350

–

10

(720)

$ 10,371

Available-for-sale securities which are carried at cost since the fair value is extremely difficult to
identify are as follows:
Millions of yen

Unlisted equity securities

Thousands of
U.S. dollars

2009

2010

2010

¥ 1,239¥ 1,239$ 13,316

Available-for-sale securities which were sold during the years ended March 31, 2009 and 2010 are
as follows:
Millions of yen
2009

Sales proceeds¥1

Thousands of
U.S. dollars

2010

¥

6

2010

$

64

Gain on sales

–

0

0

Loss on sales

(0)

–

–

ANNUAL REPORT 201025

9. Retirement Benefits

1) Outline of the Company’s retirement benefit plans
The Company has defined benefit plans that consist of a tax qualified pension plan and a lumpsum retirement benefit plan. Certain consolidated subsidiaries have lump-sum benefit plans.
Furthermore, the Company may pay additional retirement benefits upon the retirement of certain
employees.
In addition, the Company participates in Tokyo Construction Pension Fund.
2) Projected benefit obligations
As at March 31

Projected benefit obligations

Millions of yen

Thousands of
U.S. dollars

2009

2010

2010

¥ (4,997)¥ (5,091)$(54,718)

Plan assets

3,033

3,515

37,779Unfunded benefit obligations(1,963)(1,575)(16,928)

Unrecognized actuarial differences

1,317

872

9,372

(702)

$ (7,545)

Millions of yen

Thousands of
U.S. dollars

2010

2010

301

$ 3,235

99

1,064

Provision for retirement benefits

¥

(646)

¥

3) Retirement benefit expenses
For the years ended March 31

Service cost

2009

¥

291

¥

Interest cost

124

Expected return of plan assets

(91)

(60)

(644)

Amortization of actuarial differences

79

138

1,483

Subtotal

403

478

5,137

Contribution to Welfare Pension Fund

257

253

2,719

732

$ 7,867

Retirement benefit expenses

¥

661

¥

4) Assumption and policies used in computing projected benefit obligations
2009

2010

obligations

Straight-line basis

Straight-line basis

Discount rate

2.0%

2.0%

Expected rate of return on plan assets

2.5%

2.0%

Amortization periods for actuarial differences

12 years(amortized by thestraight-line method
over a defined
period within therange of averageremaining service
years of employees
at the time ofoccurrence from thefollowing year ofoccurrence)

12 years(amortized by thestraight-line
method over adefined period
within the range of
average remaining
service years of
employees at thetime of occurrence
from the following
year of occurrence)

Inter-period allocation method of projected benefit

26

NAKANO CORPORATION

10. Deferred Tax
Accounting

The Company and its domestic subsidiaries are subject to Japanese national and local income
taxes which, in the aggregate, resulted in normal effective statutory tax rate of approximately
40.7% for the years ended March 31, 2009 and 2010.
The significant components of deferred tax assets and liabilities as at March 31, 2009 and2010 are as follows:
As at March 31

Millions of yen

Thousands of
U.S. dollars

2010

2010

261

$ 2,805

274

2,944

2009

Deferred tax assets:
Provision for bonuses¥Provision for retirement benefits

321

¥

254

Allowance for doubtful accounts

480

657

7,061

Loss on valuation of real estate for sale

483

487

5,234

77

226

2,429

Impairment loss

Provision for loss on construction contracts

1,552

1,546

16,616

Tax loss carryforwards

2,088

988

10,619

Other

542

606

6,513

Subtotal

5,802

5,047

54,245(4,163)(3,477)(37,371)¥ 1,638¥ 1,569$ 16,863

¥

¥

(130)

$ (1,397)

(105)

(131)

(1,407)

(4)

(5)

(53)

(267)

$ (2,869)¥ 1,302$ 13,993

Less: valuation allowance
Deferred tax assets
Deferred tax liabilities:
Valuation difference on available-for-salesecurities
Undistributed earnings of foreign consolidated
subsidiaries
Other

(23)

Deferred tax liabilities¥

Net deferred tax assets¥ 1,505

(133)

¥

A reconciliation between the normal effective statutory tax rates and the actual effective tax rates
reflected in the consolidated statements of income for the years ended March 31, 2009 and 2010is as follows:
2009

2010

Normal effective statutory tax rate

40.7%

40.7%

Expenses not deductible income tax purposes

2.7

2.2

Dividend income from foreign consolidated subsidiaries

10.2

–

Tax rate differences in foreign consolidated subsidiaries

(5.8)

(0.5)

Undistributed earnings of foreign consolidated subsidiaries

(7.4)

1.2

Inhabitant per capita taxes

1.9

1.7

Refund of income taxes for prior periods

(7.9)

–

Valuation allowance(30.5)(31.5)

Other

1.2

1.5

Actual effective tax rate

5.1

15.3

ANNUAL REPORT 201027

11. Investment andRental Properties

The Company and certain consolidated subsidiaries own office buildings, commercial facilities
and residual units for lease in Tokyo, other domestic areas and overseas countries. Rental income
from these real estate properties for lease for the year ended March 31, 2010 was ¥800 million($8,598 thousand). Rental income and related costs are included in “Sales on real estate business”
and “Cost of sales on real estate business”, respectively in the accompanying consolidated
statement of income for the year ended March 31, 2010.
The carrying amounts, changes in such balances during the year and fair values of suchproperties are as follows:
Millions of yen
April 1, 2009¥Decrease

14,288¥(78)

Carrying amount

Fair value

March 31, 2010

March 31, 2010¥¥

14,20917,990Thousands of U.S. dollars
April 1, 2009

$ 153,568

Carrying amount

Fair value

Decrease

March 31, 2010

March 31, 2010(838)

$ 152,719$ 193,357$(Notes): 1. The carrying amount is presented after deducting accumulated depreciation from the acquisition cost.
2. Increase during the year ended March 31, 2010 primarily represents the acquisition of real estate of ¥346
million ($3,718 thousand) and decrease primarily represents the sales of real estate of ¥88 million ($945
thousand) and depreciation of ¥241 million ($2,590 thousand).
3. Fair values of properties as at March 31, 2010 are measured as follows:(1) The fair values of major domestic properties are determined based on the real estate appraisal value by
independent real estate appraisers and the fair values of other properties are determined based on theinternal appraisal in accordance with “Japanese Real Estate Appraisal Standard”.
(2) The fair values of overseas properties are determined based on the real estate appraisal by local
independent real estate appraisers.

(Additional Information)
Effective from the year ended March 31, 2010, the Companies adopted new accounting standards,“Accounting Standard for Investment Property and Related Disclosures” (ASBJ Statement No. 20,
November 28, 2008) and “Guidance on Accounting Standard for Investment Property and Related
Disclosures” (ASBJ Guidance No. 23, November 28, 2008).

12. Segment
Information

a. Business Segments
Millions of yen
For the year ended
March 31, 2009

Construction

Real estate

Other

Total

Eliminations

Consolidated

Net sales:
Customers¥ 115,150 ¥

Inter-segment
Total
Operating expenses
Operating income
AssetsDepreciation
Impairment loss
Capital expenditures

28

NAKANO CORPORATION

1,402 ¥41 ¥ 116,593 ¥– ¥ 116,593

–

–

–

–

–

–

115,1501,402

41116,593–

116,593

112,961701

28

113,691–

113,691¥

2,188 ¥

701 ¥

12 ¥

2,902 ¥

– ¥

2,902

¥

54,399 ¥

16,185 ¥

62 ¥

70,647 ¥

10,078 ¥

80,725

186

168

–

354

–

354

–

31

–

31

–

31

315

1,640

–

1,956

–

1,956

Millions of yen
For the year ended
March 31, 2010

Construction

Real estate

Other

Total

Eliminations

Consolidated

Net sales:
Customers¥ 118,693 ¥

Inter-segment
Total
Operating expenses
Operating income
Assets41 ¥ 120,186 ¥– ¥ 120,186–

1,450 ¥
–

–

–

–

–

118,6931,450

41120,186–

120,186

116,468730

31

117,230–

117,230¥

2,225 ¥

720 ¥

10 ¥

2,956 ¥

– ¥

2,956

¥

43,984 ¥

15,967 ¥

58 ¥

60,010 ¥

11,173 ¥

71,183

186

244

–

430

–

430

Depreciation
Impairment loss

–

15

–

15

–

15

Capital expenditures

62

347

–

410

–

410

Thousands of U.S. dollars
For the year ended
March 31, 2010

Construction

Real estate

Other

Total

Eliminations

Consolidated

Net sales:
Customers$1,275,720 $

Inter-segment
Total

15,584 $

440 $1,291,766 $

– $1,291,766

–

–

–

–

–

–

1,275,720

15,584440

1,291,766–

1,291,766

Operating expenses

1,251,805

7,846

333

1,259,995–

1,259,995

Operating income$

7,738 $107 $

Assets23,914 $$ 472,742 $ 171,614 $

Depreciation
Impairment loss
Capital expenditures

31,771 $

– $

31,771623 $ 644,991 $ 120,088 $ 765,079

1,999

2,622

–

4,621

–

4,621

–

161

–

161

–

161

666

3,729

–

4,406

–

4,406

Business segments are principally composed of the following:
Construction … Building construction, civil engineering, etc.
Real estate … Resale, rent, etc. of land, buildings, and other real estate
Other business … Insurance agent

As discussed in Note 3 l, effective from the year ended March 31, 2010, the Companies adopted
new accounting standards, “Accounting Standard for Construction Contracts” (ASBJ Statement
No. 15, December 27, 2007) and “Guidance on Accounting Standard for Construction Contracts”(ASBJ Guidance No. 18, December 27, 2007). The effect of this change was to increase “Netsales” and “Operating income” of “Construction” by ¥12,121 million ($130,277 thousand) and¥757 million ($8,136 thousand), respectively, compared with those amounts that would have beenreported under the previous method.
b. Geographical Segments
Millions of yen
For the year ended
March 31, 2009

Japan

Southeast
Asia

North
America

Total

Eliminations

Consolidated

Net sales:
Customers¥Inter-segment
Total
Operating expenses
Operating income
Assets88,325 ¥

27,948 ¥

340

25

319 ¥ 116,593 ¥
–

366

(366)

– ¥ 116,593–

88,66627,974319

116,960(366)

116,593

86,70927,217130

114,057(366)

113,691¥

1,956 ¥757 ¥

188 ¥

2,902 ¥

– ¥

2,902

¥

58,630 ¥

9,689 ¥2,327 ¥70,647 ¥

10,078 ¥

80,725

ANNUAL REPORT 201029

Millions of yen
For the year ended
March 31, 2010

Japan

Southeast
Asia

North
America

Total

Eliminations

Consolidated

Net sales:
Customers¥Inter-segment
Total
Operating expenses
Operating income
Assets99,608 ¥

20,288 ¥

310

19289 ¥ 120,186 ¥
–

330

(330)

– ¥ 120,186–

99,91920,308289

120,516(330)

120,186

97,475

19,935

149

117,560(330)

117,230¥

2,443 ¥373 ¥

139 ¥

2,956 ¥

– ¥

2,956

¥

47,299 ¥

10,609 ¥

2,102 ¥60,010 ¥

11,173 ¥

71,183Thousands of U.S. dollars
For the year ended
March 31, 2010

Japan

Southeast
Asia

North
America

Total

Eliminations

Consolidated

Net sales:
Customers$1,070,593 $ 218,056 $

Inter-segment

3,106 $1,291,766 $

– $1,291,766

3,331

204

–

3,546

1,073,935

218,271

3,106

1,295,313(3,546) 1,291,766

Operating expenses

1,047,667

214,262

1,601

1,263,542(3,546) 1,259,995

Operating income

$

Total

Assets26,257 $

4,009 $$ 508,372 $ 114,026 $

1,493 $

(3,546)

31,771 $

–– $

31,771

22,592 $ 644,991 $ 120,088 $ 765,079

Each area primarily refers to the following countries:
Southeast Asia … Singapore, Malaysia, Indonesia, Thailand, China and Vietnam
North America … U.S.A.

As discussed in Note 3 l, effective from the year ended March 31, 2010, the Companies adopted
new accounting standards, “Accounting Standard for Construction Contracts” (ASBJ Statement
No. 15, December 27, 2007) and “Guidance on Accounting Standard for Construction Contracts”(ASBJ Guidance No. 18, December 27, 2007). The effect of this change was to increase “Netsales” and “Operating income” of “Japan” by ¥11,947 million ($128,407 thousand) and ¥748
million ($8,039 thousand), respectively, and to increase “Net sales” and “Operating income” of“Southeast Asia” by ¥173 million ($1,859 thousand) and ¥9 million ($96 thousand), respectively,
compared with those amounts that would have been reported under the previous method.

13. Per ShareInformation

Basic net income per share is computed based on the weighted average number of shares ofcommon stock outstanding during the year. Diluted net income per share is not presented for theyears ended March 31, 2009 and 2010 since the Company had no potentially dilutive shares
outstanding as at the balance sheet dates.
Net assets per share is computed based on the number of shares of common stock
outstanding as at the balance sheet dates.
Net assets and net income per share for the years ended March 31, 2009 and 2010 were as
follows:
For the years ended March 31

Net assets per share
Basic net income per share

30

NAKANO CORPORATION

Yen

U.S. dollars

2009

2010

2010

¥ 285.30¥ 336.92

51.40

53.19

$

3.62
0.57

(Notes): 1. Net assets per share is calculated based on the following information:
Millions of yen

Thousands of
U.S. dollars

2009

2010

2010

¥ 10,140¥ 11,941$128,342

As at March 31

Total net assets
Deductions from total net assets:

(326)

(352)

(3,783)

Net assets attributable to common stock

9,814

11,588

124,548

Number of shares of common stock usedin computing net assets per share(in thousand shares)

34,39934,394

Minority interests

2. Net income per share is calculated based on the following information:
Thousands of
U.S. dollars

Millions of yen
For the years ended March 31

2009

2010

2010

¥ 1,768¥ 1,829$ 19,658

Amount not attributable to common stock

–

–

–

Net income attributable to common stock

1,768

1,829

19,658Average number of shares of common
stock during the year
(in thousand shares)

34,40334,396

Net income

14. Bonds Payable

Short-term and long-term bonds payable as at March 31, 2009 and 2010 consisted of thefollowing:
Millions of yen

Issuer and Issue type

Thousands of
U.S. dollars

Issue date

2009

2010

2010

Interest
rate(%)

Mar. 31,2008 ¥300 ¥

300$ 3,224(Note) 2

NoneMar. 31,
2011

(300)

(3,224)

300

3,224

(Note) 2

NoneMar. 31,
2011

(300)

(3,224)

300

200

2,149

(Note) 2

NoneMar. 30,
2012

(100)

(100)

(1,074)900 ¥ 800
(100)
(700)

$ 8,598(7,523)Collateral

Maturity(Nakano Corporation)
1st unsecured bondwith early redemption clause
2nd unsecured bondMar. 31,2008

300

with early redemption clause
3rd unsecured bondMar. 31,2008

with early redemption clause
¥

Total

(Notes): 1. ( ) denotes the amount expected to be redeemed within one year.
2. The interest rate of above bonds is 0.99% p.a. for the period from April 1, 2008 through September 30,
2008 and the interest rate for the subsequent interest periods is set to be a rate computed by deducting
1.00% p.a. from the short-term prime rate on the second preceding banking day (“Interest rate base date”)
from the starting date of the interest calculation period. However, if such interest rate is less that the interest
rate which is added by 0.10% p.a. to 6 month TIBOR (p.a.) of Japanese yen (“Minimum interest rate”) at
the interest rate base date, the minimum interest rate will be applied.
3. The following is a summary of maturities of bonds subsequent to March 31, 2010:
Year ending March 31

Millions of yen

Thousands of
U.S. dollars

2011

¥

700

$ 7,523

100

1,074

–

–

800

8,598

2012
2013 and thereafter
Total

¥

ANNUAL REPORT 201031

15. Loans Payable and Short-term loans payable, long-term loans payable and other debts as at March 31, 2009 andOther Debts

2010 are as follows:

Millions of yen

Thousands of
U.S. dollars

2009

2010

2010

Averageinterest rate(%)

Short-term loans payable¥ 7,000¥ 3,760$40,412

2.36

Current portion of
long-term loans payable

348

348

3,740

2.34

Current portion of leaseobligations

53

53

569

–

As at March 31

Long-term loans payable
excluding current portion
Lease obligations
excluding current portion
Total

4,860

4,403

Maturity

47,323Mar. 31, 2012 –2.31 Mar. 31, 2016
May. 31, 2012 –– Dec. 31, 2012

133

79

849

¥12,395¥ 8,644$92,906(Notes):1. “ Average interest rate” represents the weighted average interest rate on loans payable outstanding as at
the balance sheet date. “Average interest rate” of lease obligations is not shown since interest equivalentamounts included in the aggregated lease premiums are allocated to each fiscal year using the straight-line
method.
2. The following is a summary of annual maturities of loans payable and lease obligations subsequent toMarch 31, 2010:
Millions of yen
Years ending March 31

Long-termloans payable

2011

¥

32

NAKANO CORPORATION53$ 3,740

Lease
obligations

$

569

920

53

9,888

569

2013

920

25

9,888

268

2014

920

–

9,888

–

2015

920

–

9,888

–

Total

Events¥

Thousands of U.S. dollars
Long-termloans payable

2012

2016 and thereafter

16. Subsequent

348

Lease
obligations723¥ 4,751

¥

–

7,770

–

133

$ 51,064$ 1,429

At the Annual General Meeting of Shareholders held on June 29, 2010, it was resolved to distributethe year-end cash dividends of ¥6 ($0.06) per share of common stock of the Company.
The aggregate amount of such cash dividends is ¥206 million ($2,214 thousand).

SUPPLEMENTAL INFORMATION

Nonconsolidated Balance Sheets
NAKANO CORPORATIONAs at March 31, 2009 and 2010
Millions of yen

Thousands of
U.S. dollars

2010

2010

6,965
1,822
17,231
11,156
417
23
15
873
1,798
508
(669)
40,143$ 74,860
19,582
185,199
119,905
4,481
247
161
9,383
19,325
5,460(7,190)431,459

6,623(2,891)
3,732
228
(151)
76
179
(166)
13
23
(13)
9
450
(378)
71
10,043205(26)
178
14,126

6,601(3,068)
3,532
228
(164)
64
179
(169)
10
23
(17)
5
428
(377)
50
10,279205(78)
127
14,06970,947(32,975)
37,9622,450(1,762)687
1,923(1,816)
107
247
(182)
53
4,600
(4,052)537
110,479
2,203
(838)
1,365
151,214

138

125

1,343

2,222
2,281
710
603
155
654
631
(863)
6,396
20,660¥ 71,289

2,464
2,274
690
1,000
140
396
607
(1,218)6,356
20,552¥ 60,695

26,48324,441
7,416
10,748
1,504
4,256
6,524
(13,091)
68,314
220,894$ 652,353

2009

AssetsCurrent assets:
Cash and deposits
Notes receivable-trade
Accounts receivable from completed construction contracts
Costs on uncompleted construction contracts
Costs on real estate business
Raw materials and supplies
Short-term loans receivable to subsidiaries and affiliates
Deferred tax assets
Accounts receivable-other
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets:
Property, plant and equipment
Buildings
Accumulated depreciation
Buildings, net
Structures
Accumulated depreciation
Structures, net
Machinery and equipment
Accumulated depreciation
Machinery and equipment, net
VehiclesAccumulated depreciation
Vehicles, net
Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures, net
Land
Lease assets
Accumulated depreciation
Lease assets, net
Total property, plant and equipment
Intangible assets
Total intangible assets
Investments and other assets
Investment securities
Stocks of subsidiaries and affiliates
Long-term loans receivable from subsidiaries and affiliates
Claims provable in bankruptcy, claims provable in rehabilitation
Insurance funds
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets

¥

6,477
4,482
18,89918,971
426
33
50
727
546
648
(634)
50,629¥

ANNUAL REPORT 201033

Millions of yen

Thousands of
U.S. dollars

2009

2010

2010

¥ 15,329¥ 15,555$167,186

10,451

10,617

114,112

Liabilities
Current liabilities:
Notes payable-trade
Accounts payable for construction contracts
Current portion of bonds

100

700

7,523

Short-term loans payable

7,348

4,108

44,153

Income taxes payable
Advances received on uncompleted construction contracts

74

72

773

20,64011,843

127,289

Provision for warranties for completed construction

148

158

1,698

Provision for loss on construction contracts

191

557

5,986

Provision for bonuses

778

637

6,846

Other

826

719

7,727

55,88744,968483,319

800

100

1,074

Total current liabilities

Noncurrent liabilities:
Bonds payable
Long-term loans payable

4,860

4,403

47,323

Provision for retirement benefits

625

673

7,233

Long-term deposits received

722

634

6,814

Other

313

278

2,987

Total noncurrent liabilities
Total liabilities

7,321

6,089

65,444

63,20951,057548,763

5,061$ 54,395

Net assets
Shareholders’ equity:
Capital stock

¥

5,061

¥

Capital surplus
Legal capital surplus

1,400

1,400

15,047

Total capital surpluses

1,400

1,400

15,047

1,628

3,040

32,674

1,628

3,040

32,674

(25)

(26)

(279)

8,064

9,475

101,837

15

162

1,741

Retained earnings
Other retained earnings
Retained earnings brought forward
Total earned surpluses
Treasury stock
Total shareholders’ equity

Valuation and translation adjustments:
Valuation difference on available-for-sale securities
Total valuation and translation adjustments
Total net assets
Total liabilities and net assets

34

NAKANO CORPORATION

15

162

1,741

8,080

9,637

103,579¥ 71,289¥ 60,695$ 652,353

Nonconsolidated Statements of Income
NAKANO CORPORATION
For the years ended March 31, 2009 and 2010

Net sales:
Net sales of completed construction contracts
Sales on real estate businessTotal net sales
Cost of sales:
Cost of sales of completed construction contracts
Cost of sales on real estate businessTotal cost of sales
Gross profit:
Gross profit on completed construction contracts
Gross profit-real estate businessTotal gross profit
Selling, general and administrative expenses
Operating income
Non-operating income:Interest income
Dividends income
Foreign exchange gains
Other
Total non-operating income
Non-operating expenses:
Interest expenses
Other
Total non-operating expenses
Ordinary income
Extraordinary income:Reversal of allowance for doubtful accounts
Gain on bad debts recovered
Other
Total extraordinary income
Extraordinary loss:
Loss on sales of noncurrent assets
Impairment loss
Loss on valuation of investment securities
Provision of allowance for doubtful accounts
Loss on liquidation of an affiliate
Other
Total extraordinary losses
Income before income taxes
Income taxes:
Income taxes-current
Income taxes-deferred
Total income taxes
Net income

Millions of yen

Thousands of
U.S. dollars

2009

2010

2010

¥ 87,957
959
88,917¥ 99,328
1,093
100,421$1,067,583
11,747
1,079,331

81,821
447
82,26992,942506
93,448998,946
5,438
1,004,385

6,135
511
6,647
4,877
1,769

6,385
587
6,972
4,670
2,302

68,626
6,309
74,93550,19324,742

38
552
–
15
606

20
228
2
11
262

214
2,450
21
118
2,815

312
149
461
1,914

265
59
325
2,239

2,848
634
3,493
24,064

–
28
–
28

52
–
12
64

558
–
128
687

0
6
176
429
–
3
616
1,326

–
–
–
495
30
116
642
1,661

–
–
–
5,320
322
1,246
6,900
17,852

40
(15)
25
1,300

32
11
44
1,617

343
118
472
17,379¥¥$

ANNUAL REPORT 201035

CORPORATE PROFILE
As of March 31, 2010

Company Outline
Company Name
Headquarters
Foundation
Established
Paid-in Capital
Employees
Stock Listing
Primary Business

Nakano Corporation
4-2-28 Kudan-kita, Chiyoda-ku, Tokyo 102-0073, Japan
8th February 1933
19th December 1942
¥5,061,678,686
1,129Tokyo Stock Exchange, First Section
Domestic Construction Projects
International Construction Projects

Board of Directors
Honorary Chairman
President
Directors

Yoshikazu Oshima
Akira Asai
Yutaka Sasa
Toshihide Kurokawa
Standing Corporate Auditors Masaru Kono
Corporate Auditors:
Hirotsugu Sugimoto

Munekazu Sako
Makoto Yasuhiro
Tadayoshi Watanabe
Shunichi Sato

Koichiro Nakano

Main Affiliated Financial Institutions
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Mizuho Corporate Bank, Ltd.
The Yamanashi Chuo Bank, Ltd.

Mitsubishi UFJ Trust and Banking Corporation
The Bank of Yokohama, Ltd.
The Fukushima Bank, Ltd.

Major Shareholders
Oshima Scholarship Foundation
Yoshikazu Oshima
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Nakano Investment Fraternity Association

Kanto Kogyo Co., Ltd.
Marine Dream Co., Ltd.
Nakano Employee Shareholder Association
Sompo Japan Insurance Inc.

Domestic Offices
Headquarters
Tokyo Main Office
Civil Engineering Office
Tohoku Regional Office
Nagoya Regional OfficeOsaka Regional Office
Kyushu Regional Office
Hokkaido Branch Office

Higashi Kanto Branch Office
Kita Kanto Branch Office
Yokohama Branch Office
Ibaraki Branch Office
Taito Branch Office
Kita Tohoku Branch Office
Sales Offices (Mie, Hamamatsu, Hyogo, Kitakyushu)

International Offices
Nakano International Corporation (USA)Nakano Singapore (Pte.) Ltd. (Singapore)
Nakano Construction Sdn. Bhd. (Malaysia)
Thai Nakano Co., Ltd. (Thailand)

PT. Indonakano (Indonesia)
PT. Nakano S Batam (Indonesia)
Nakano Consulting Shanghai Co., Ltd. (China)
Hanoi Representative Office (Vietnam)
Representative Office in Ho Chi Minh City (Vietnam)

Industry Affiliations
Japan Federation of Construction Contractors
National General Contractors Association of Japan
Association of Representative General Contractors

36

NAKANO CORPORATION

Building Contractors Society
The Associated General Contractors of TokyoJapan Prefabricated Construction Suppliers &Manufacturers Association

COMPANY HISTORYCONTENTS

2009 The Metropolitan
Condominium, Singapore

FINANCIAL HIGHLIGHTS

1

BUSINESS OVERVIEW AND RESULTS

2

INTERNATIONAL OPERATIONS NETWORK

4

INTERNATIONAL WORKS PORTFOLIO

6DOMESTIC WORKS PORTFOLIO

10REPORT OF INDEPENDENT AUDITORS

12

CONSOLIDATED BALANCE SHEETS

13

CONSOLIDATED STATEMENTS OF INCOME

15

2008 Ho Chi Minh City Representative Office launched.
2006 Hanoi Representative Office established2002 Second Indonesian office launched in Batam.

2010 St. Thomas
Suites, Singapore

17

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

18

SUPPLEMENTAL INFORMATION33

NONCONSOLIDATED BALANCE SHEETS

33

NONCONSOLIDATED STATEMENTS OF INCOME

35

CORPORATE PROFILE36

COMPANY HISTORY37

INVESTOR INFORMATION37

SHARE PRICE RANGE

37

2001 ISO14001 accreditation.
1998 ISO9001 accreditation.
1991 Company name changed its nameto Nakano Corporation.

1988 Thailand based operations begin in Bangkok.
1985 First Indonesian office is established in Jakarta.
1982 Malaysian Office established in Kuala Lumpur.
1975 Asian expansion begins in Singapore.

1975 Real Estate & International divisions become
International Operations.

1974 International operations begins in Los Angeles, California.

1972 Raised to Tokyo Stock Exchange, First Section.
1958 New corporate headquarters constructed.

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS 16
CONSOLIDATED STATEMENTS OF CASH FLOWS

2004 Took over construction operations of Fudo
Construction Co., Ltd. Nakano Corporation was
renamed Nakano Fudo Construction (Japanese only).

2003 Nakano Consulting is established in China.

1942 Re-organized to corporation (Capitalized at ¥400,000).
1936 National Diet Building masonry construction.
1991 Casa Royal
Cainhill, Singapore

1983 Yokogawa Electric
Factory, Singapore

1934 Company head office relocated to Kudan Kojimachi, Tokyo.
1933 Yoshichika Oshima takes over civil engineering operations.
1911 Nihonbashi Bridge masonry construction.
1885 Nakano-gumi Co. founded by Kisaburo Nakano in Tokyo.

1980 Hewlett Packard Penang
Factory, Malaysia

INVESTOR INFORMATIONSHAREHOLDER COMPOSITION

As of March 31, 2010
Stock Listing
Tokyo Stock Exchange, First Section,
Code Number 1827

Financial
Institutions
10.76% Securities
Companies
0.77%

Financial Institutions
3,713,249
Securities Companies
263,980

Authorized Number of Shares
154,792,300

Other Institutions
14,731,539

Issued Number of Shares
34,498,097
Minimum Trading Unit
500

Foreign Institutions
and Individuals
922,932

Number of Shareholders
4,639

Individuals/ Other
14,866,397

Individuals/
Other43.09%

Other
Institutions
42.70%

Foreign Institutions
and Individuals 2.68%

Stock Transfer Agent
Mitsubishi UFJ Trust and Banking Corporation

SHARE PRICE RANGE(yen) 250

200

150

100

Cautionary remarks regarding forward looking statements
This Annual Report includes forward-looking statements that represent Nakano Corporation’s assumptions and expectations inlight of currently available information. These statements reflect industry trends, client’s situations and other factors, and involverisks and uncertainties which may cause actual performance results to differ from those discussed in the forward looking
statements in accordance with changes in the domestic and international business environment.
For further information contact:
Nakano Corporation International Operations Headquarters
4-2-28 Kudan-kita, Chiyoda-ku, Tokyo 102-0073, Japan
Tel: +81-(0)3-3265-4685 Fax: +81-(0)3-3265-4698
www.wave-nakano.co.jp

50
300,000

Jan ‘09

Apr ‘09855,500

Jul ‘09

Oct ‘09

Jan ‘10Apr ‘10200,000
100,000
0
Share Price

Trading Volume
ANNUAL REPORT 201037

NAKANO CORPORATION Annual Report 2010

Annual Report 2010
Fiscal year ended 31st March 2010

NAKANO CORPORATION

4-2-28 Kudan-kita, Chiyoda-ku, Tokyo, 102-0073, Japan
Tel: +81-(0)3-3265-4685 Fax: +81-(0)3-3265-4698
www.wave-nakano.co.jp
USA
111 W Saint John St., #514 San Jose, CA 95113, USA
Tel: +1-408-286-9702
Fax: +1-408-286-9701
3020 Old Ranch Road, Suite 300, Seal Beach, CA 90740, USA
Tel: +1-562-799-5726
Fax: +1-562-799-5727

SINGAPORE
1 Coleman St., #06-02 The Adelphi, 179803, Singapore
Tel: +65-6333-4933
Fax: +65-6338-8568

MALAYSIA
Block B, 15-4-2, Megan Salak Park Jalan 1/125E, Taman Desa Petaling, Kuala Lumpur 57100, Malaysia
Tel: +60-3-9059-6977
Fax: +60-3-905-96277

THAILAND#17-03, 2170 Bangkok Tower, New Petchburi Road, Bangkapi, Huaykwang, Bangkok 10310, Thailand
Tel: +66-2-308-0500
Fax: +66-2-308-0497

INDONESIA
1401 Wisma Tamara 14th Floor Jl. Jend. Sudirman KAV. 24, Jakarta 12920, Indonesia
Tel: +62-21-5203674
Fax: +62-21-5203670
Jalan Laksamana Bintan Komp. Tanah Mas Blok G3A Sei Panas-Batam, Indonesia
Tel: +62-0788-463004
Fax: +62-0788-463006

VIETNAM
No.302 3rd Floor of Thang Long Industrial Park Techno-Center Dong Anh District, Hanoi, Vietnam
Tel: +84-4-3-955-0050
Fax: +84-4-3-955-0053
2nd Floor New Agency Service Center Building 19 Vo Van Tan Street Ward 6 District 3 Ho Chi Minh City, Vietnam
Tel: +84-8-3-930-6501
Fax:+ 84-8-3-930-6499

CHINA
Room 10A3, First World Plaza, Hongli Road West, Shenzhen 518034, China
Tel: +86-755-8296-8491
Fax: +86-755-8296-8493