Annual Report 20142014

Financial Highlights
Report of independent Auditors
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Changes In Net Assets
Consolidated Statements of C0ash Flows
Notes to Consolidated Financial Statements
Nonconsolidated Balance Sheets
Nonconsolidated Statements of Income

2014

1
2
3
5
6
7
8
9
28
30

FINANCIAL HIGHLIGHTS
NAKANO CORPORATION and its subsidiaries
Years ended March 31, 2010 through 2014
2010

Contract awards
Net sales
Operating income
Ordinary income
Net income (loss)
Comprehensive income
Total net assets
Total assets
Net cash provided by (used in) operating
activities
Net cash provided by (used in) investing
activities
Net cash provided by (used in) financing
activities
Cash and cash equivalents at end of period

Per share of common stock( in yen and U.S. dollars )Net assets
Net income (loss)
Cash dividends applicable to the year¥¥

Number of employees

107,751
120,186
2,956
2,740
1,829
2,007
11,941
71,183

2011¥

99,321
120,283
1,404
1,362
639
180
11,914
65,231

2012¥

101,198
110,344229
275(2,024)(1,997)9,710
65,8382013¥

112,967
117,254
1,522
1,755
653
1,958
11,56571,9272014

2014

Millions of yen

Thousands of
U.S. dollars¥

120,386
129,177
2,250
2,522
1,543
2,267
12,971
76,478

$

5,468

9,617

(2,462)

2,167

2,339

22,72673(464)(1,371)

2,502

128

1,243

(4,058)(1,692)

(603)

274

(258)

(2,506)

12,326

19,552

15,02622,15325,239245,229

Yen

U.S. dollars

336.92
53.19
6.00

¥

337.52
18.58
6.00

1,129

1,145

¥

271.14(58.88)
3.00

¥

1,169

319.60
19.01
3.00
1,293

¥

354.05
44.89
3.00
1,333

Note: The rate of ¥102.92=US$1.00, the foreign exchange rate on March 31, 2014, has been used for translation.

Net Income (Loss)

Millions Yen

Net Sales

Millions Yen

Millions Yen

Contract Awards

1,169,704
1,255,120
21,861
24,504
14,992
22,026
126,029
743,082

1

2012

$

3.44
0.43
0.02

2

CONSOLIDATED BALANCE SHEETSNAKANO CORPORATION and its subsidiaries
As of March 31, 2013 and 2014

Millions of yen
2013
2014

Thousands of
U.S. dollars(Note 2)
2014

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

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

24,203¥

27,205$

264,331

27,896

27,830270,404

―

14

136

1,083

1,205

11,708

Costs on real estate business

229

216

2,098

Raw materials and supplies

24

29

281

Accounts receivable-other

1,239

1,378

13,389436

1,396

13,563

Securities (Notes 4, 7 and 8)
Costs on uncompleted construction contracts (Note 4)

Other
Allowance for doubtful accounts

(232)

(112)

(1,088)54,881

59,164574,854

Buildings and structures

7,212

7,227

70,219Machinery, vehicles, tools, furniture and fixtures

1,296

1,475

14,331Land

10,04810,056

97,706

Accumulated depreciation(4,989)(5,215)(50,670)

13,567

13,544

131,597

140

330

3,206

2,669

2,868

27,866Long-term loans receivable

323

282

2,739

Claims provable in bankruptcy, claims provable in rehabilitation and
other

32

32

310

Other

373

326

3,167

Total current assets
Non-current assets:
Property, plant and equipment (Note 4)

Total property, plant and equipment
Intangible assets
Investments and other assets
Investment securities (Notes 4, 7 and 8)

Allowance for doubtful accounts

(61)

(70)

(680)

Total investments and other assets

3,337

3,439

33,414

Total non-current assets

17,045

17,314

168,227

Total assets¥

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

3

71,927¥76,478$743,082Millions of yen
2013
2014

Thousands of
U.S. dollars(Note 2)
2014

Liabilities
Current liabilities:
Notes payable, accounts payable for construction contracts and other(Notes 4 and 7)
Short-term loans payable (Notes 4, 7 and 15)¥

43,390¥43,919$426,729

6,450

3,586

34,842Current portion of bonds (Note 14)

―

80

777

Income taxes payable

772

182

1,768

Advances received on uncompleted construction contracts

4,337

6,459

62,757

Provision for warranties for completed construction

92

106

1,029

Provision for loss on construction contracts (Note 4)

266

81

787

Provision for bonuses

167

365

3,546

Other (Note 15)

1,201

1,114

10,823

Total current liabilities

56,67755,895543,091

―

280

2,720

Non-current liabilities:
Bonds payable (Notes 14)
Long-term loans payable (Notes 4, 7 and 15)

1,525

3,939

38,272

Deferred tax liabilities (Note 10)

390

565

5,489

Provision for retirement benefits

1,012

―

―

Net defined benefit liability (Note 9)

―

1,876

18,227

Other (Note 15)

756

949

9,220

Total non-current liabilities

3,684

7,610

73,940Total liabilities

60,36263,506

617,042

Net assets
Shareholders' equity:
Common stock
Authorized:154,792,300 shares
Issued:34,498,097 shares

¥

5,061

¥

5,061

$

49,174

Capital surplus

1,400

1,400

13,602Retained earnings

5,511

6,952

67,547

(28)

(29)

(281)

11,944

13,384130,042

Less-Treasury stock, at cost
116,435 shares in 2013 and 119,489 shares in 2014
Total shareholders' equity

Accumulated other comprehensive income:
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Minority interests:
Total net assets

336

474

4,605

(1,292)(930)(9,036)―(756)(7,345)(956)(1,212)(11,776)

576

799

7,763

11,565

Total liabilities and net assets¥

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

4

71,927

12,971¥

76,478126,029$

743,082

CONSOLIDATED STATEMENTS OF INCOME
NAKANO CORPORATION and its subsidiaries
For the years ended March 31, 2013 and 20142013
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
Foreign exchange gains
Amortization of negative goodwill
Other
Total non-operating income
Non-operating expenses:
Interest expenses
Other
Total non-operating expenses
Ordinary income
Extraordinary income:Gain on sales of non-current assets (Note 5)
Gain on sales of investment securities
Total extraordinary income
Extraordinary losses:
Provision of allowance for doubtful accounts
Loss on litigation
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
Income before minority interests
Minority interests in income
Net income
The accompanying notes are an integral part of these financial statements.

5

¥

¥

115,3631,861
29
117,254

Thousands of
U.S. dollars(Note 2)
2014

Millions of yen
2014¥

128,1131,033
31129,177$

1,244,782
10,036301
1,255,120

110,1881,050
23
111,262

121,923417
24122,365

1,184,638
4,051
233
1,188,933

5,175
810
5
5,992
4,470
1,522

6,189
616
6
6,812
4,561
2,250

60,134
5,985
58
66,18744,315
21,861

119
59
112
57
69
418

215
33
237
―
43
529

2,089
320
2,302
―
417
5,139

172
12
185
1,755

222
35
257
2,522

2,157
340
2,497
24,504

1,400
―
1,400

2
37
40

19
359
388

―
19
891
911
2,245

19
83
14
116
2,446

184
806
136
1,127
23,766

1,373
―
141
1,514
731
77
653

685
(78)
65
672
1,773
230
1,543

6,655
(757)
631
6,529
17,2262,234
14,992¥$

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
NAKANO CORPORATION and its subsidiaries
For the years ended March 31, 2013 and 2014

Millions of yen
2013
Income before minority interests¥

731

Thousands of
U.S. dollars(Note 2)

2014
¥

1,773

2014
$

17,226

Other comprehensive income:
Valuation difference on available-for-sale securities

196

138

1,340

Foreign currency translation adjustment

1,030

354

3,439

Total other comprehensive income

1,227

493

4,790

1,958

2,267

22,026

1,768

2,043

19,850

189

223

2,166

Comprehensive income

Comprehensive income attributable to:Comprehensive income attributable to owners of the parent
Comprehensive income attributable to minority interests
The accompanying notes are an integral part of these financial statements.

6

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSNAKANO CORPORATION and its subsidiaries
For the years ended March 31, 2013 and 2014
Millions of yen
Shareholders' Equity

Accumulated other comprehensive income

Valuationdifference

Balance as at March 31, 2012¥

CommonCapitalRetained

Treasurystock

surplusearnings

stock

5,061 ¥

1,400 ¥

4,961 ¥

(27) ¥

Total
shareholders'equity11,395¥

Total
Foreign

on available

currency-for-saletranslation

securities

adjustment

140 ¥(2,211) ¥accumulated
Remeasurements

otherof defined comprehensive
benefit plans- ¥income(2,071) ¥Minority

Total net

interests

assets

386 ¥

9,710

Dividends from surplus

(103)

(103)

(103)

Net income

653

653

653

(0)

(0)

Purchase of treasury stock(0)

Net changes of items other thanshareholders' equity
Total changes of items during theperiodBalance as at March 31, 2013

¥

-

-

550

(0)

5,061 ¥

1,400 ¥

5,511 ¥

(28) ¥

549
11,944

¥

196

919

196

919

336 ¥

(1,292) ¥

1,115

189

1,304

-

1,115

189

1,854

- ¥

(956) ¥

576 ¥

11,565

Dividends from surplus

(103)

(103)

(103)

Net income

1,543

1,543

1,543

(0)

(0)

Purchase of treasury stock(0)

Net changes of items other thanshareholders' equity
Total changes of items during theperiodBalance as at March 31, 2014

¥

-

-

1,440

(0)

1,439

5,061 ¥

1,400 ¥

6,952 ¥

(29) ¥

13,384

¥

138

361

(756)

(256)

223

(33)

138

361

(756)

(256)

223

1,406

474 ¥

(930) ¥

(756) ¥

(1,212) ¥799 ¥12,971Thousands of U.S. dollars (Note 2)
Shareholders' Equity

Accumulated other comprehensive income

Valuationdifference

Balance as at March 31, 2013

CommonCapitalRetained

Treasurystock

surplusearnings

stock

Total
shareholders'equity53,546 $(272) $

116,051$ 49,174 $ 13,602 $Dividends from surplus(1,000)Net income

14,992

Purchase of treasury stock(0)

on available$

Balance as at March 31, 2014--

currency Remeasurements-for-saletranslationof defined

securities

adjustment

benefit plans

3,264 $

(12,553) $

- $

other
comprehensiveincome(9,288) $Minority

Total net

interests

assets5,596 $ 112,368(1,000)14,992

14,992

(0)

(0)
1,340

$ 49,174 $ 13,602 $accumulated(1,000)Net changes of items other thanshareholders' equity
Total changes of items during theperiodTotal
Foreign

13,991(0)

13,981

67,547 $(281) $

130,042$

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

7

3,507

(7,345)(2,487)

2,166

(320)

1,340

3,507

4,605 $

(9,036) $(7,345)(2,487)

2,166

13,661(7,345) $(11,776) $7,763 $ 126,029

CONSOLIDATED STATEMENTS OF CASH FLOWSNAKANO CORPORATION and its subsidiaries
For the years ended March 31, 2013 and 2014

Net cash provided by (used in) operating activities:
Income before income taxes and minority interests
Adjustments for:
Depreciation and amortization
Amortization of negative goodwill
Increase (decrease) in allowance for doubtful accounts
Increase in provision for retirement benefits
Increase in net defined benefit liability
Decrease in provision for loss on construction contracts
Interest and dividends income
Interest expenses
Decrease in notes and accounts receivable-trade
Decrease (increase) in costs on uncompleted construction contracts
Decrease in other inventories
Increase (decrease) in notes and accounts payable-trade
Increase (decrease) in advances received on uncompleted
construction contracts
Other, net¥

Millions of yen
2013
2014

Thousands of
U.S. dollars(Note 2)
2014

2,245

$

¥

2,446

23,766

317
(57)
8
82
―
(684)
(179)
172
23
559
562
2,207

293
―
(110)
―
112
(184)
(249)
222
77
(131)
8
(287)

2,846
―
(1,068)―
1,088(1,787)(2,419)2,157
748(1,272)77(2,788)(1,142)

2,143

20,821(1,316)(871)(8,462)

SubtotalInterest and dividends income received
Interest expenses paid
Income taxes paid

2,800
179
(172)
(639)

3,470
249
(221)
(1,159)33,7152,419(2,147)(11,261)

Net cash provided by operating activities

2,167

2,339

22,726

Net cash provided by (used in) investing activities:
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment
Other, net(3,503)
3,760
(426)
2,672

(3,161)
3,370
(108)
28

(30,713)32,743(1,049)
272

2,502

128

1,243

Net cash provided by (used in) financing activities:
Net increase (decrease) in short-term loans payable
Proceeds from long-term loans payable
Repayment of long-term loans payable
Proceeds from issuance of bonds
Redemption of bonds
Cash dividends paid
Other, net

1,320
150
(500)
―
(560)
(103)
(32)

(3,000)
3,200
(650)
391
(40)
(103)
(57)

(29,148)
31,092(6,315)
3,799(388)(1,000)(553)

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

274
2,182
7,126
15,026

(258)
876
3,085
22,153(2,506)
8,511
29,974215,244

Net cash provided by investing activities

Cash and cash equivalents at end of period (Note 6)¥

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

8

22,153¥25,239$245,229

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 in accordance with the provisions set forth in the Corporation Law ofJapan 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 application and disclosure requirements ofInternational Financial Reporting Standards.
In preparing these consolidated financial statements, certain reclassifications and rearrangements have been made to theconsolidated financial statements issued domestically in order to present them in a form which is more familiar to readers
outside Japan. In addition, certain reclassifications have been made in the 2013 financial statements to conform to theclassifications used in 2014.

2. U.S. Dollar Amounts
The accounts of consolidated financial statements presented herein are expressed in Japanese yen by rounding down to thenearest million. The U.S. dollar amounts shown in the accompanying consolidated financial statements and notes thereto havebeen translated from Japanese yen into U.S. dollars on the basis of ¥102.92 to U.S.$1, the rate of exchange prevailing at
March 31, 2014, and have been then rounded down to the nearest thousand. These U.S. dollar amounts are not intended to
imply that the Japanese yen amounts have been or could be converted, realized or settled in U.S. dollars at this or any otherrate.

3. Summary of Significant Accounting Policies
a. Consolidation
1) Scope of Consolidation
The Company had 12 subsidiaries as of March 31, 2014. The consolidated financial statements for the year ended March 31,
2014 include the accounts of the Company and all subsidiaries. The Company had 2 affiliates as of March 31, 2014. As of
March 31, 2014, 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 of March 31.
Other subsidiaries’ financial year-end is March 31.

b. Securities
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 tomaturity 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 moving-average method. For other than
temporary declines in fair value, 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.
Costs on real estate business and raw materials and supplies are stated at cost determined by the specific identification
method for costs on real estate 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.

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-balance method, while buildings (excluding building fixtures)acquired on or after April 1, 1998 are depreciated using the straight-line method. The useful lives and residual values of theassets are determined based on the regulations of the Corporate Income Tax Law.
Foreign consolidated subsidiaries use primarily the straight-line method.

9

e. Intangible Assets (excluding lease assets)
Intangible assets are amortized by the straight-line method. Useful lives of the assets are determined based on the regulationsof the Corporate Income Tax Law.
Software for internal use is amortized over a period of the internal available years (5 years) using the straight-line method.

f. Lease Assets
Depreciation of lease assets under finance leases that do not transfer ownership of the lease assets to the lessee is calculatedby the straight-line method over the lease term of the lease assets with no residual value.

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 past credit loss experience and an evaluation of potential losses in thereceivables and others outstanding.
Foreign consolidated subsidiaries provide for such possible losses based on the estimated uncollectible amounts of thespecific accounts.

h. Provision for Warranties for Completed Construction
The provision for warranties for completed construction is provided by the Company 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 by the Company and its consolidated subsidiaries with respect toconstruction 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 towhich such bonuses are attributable.

k. Accounting for Retirement Benefits
In computing projected benefit obligations, the estimated amounts of retirement benefit obligations are attributed to periods ona straight-line basis.
Actuarial differences are amortized commencing in the following year after the differences are incurred by the straight-line
method over a period (12 years) which is shorter than the average remaining years of service of the employees when incurred.
In determining net defined benefit liability and retirement benefit expenses, certain consolidated subsidiaries adopt a
short-cut method where the amount required for voluntary termination of employees at the fiscal year end is regarded as
projected benefit obligations.

l. Revenue and Cost of Construction Contracts
Revenue of construction contracts is recorded by the percentage-of-completion method for the completed portion of thecontracts at the balance sheet date, if the outcome of the construction contract can be reliably estimated and thecompleted-contract method is applied to other contracts whose outcome cannot be reliably estimated. The percentage ofcompletion 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, 2014 was¥118,300 million ($1,149,436 thousand).

m. Cash and Cash Equivalents in the Consolidated Statements of Cash Flows
In preparing the consolidated statements of cash flows, cash and cash equivalents include cash on hand, readily-available
deposits and short-term highly liquid investments with maturities less than three months at the time of acquisition that are
exposed to insignificant risk of changes in value.

10

n. Accounting change(Change in accounting treatment for retirement benefits)
Effective March 31, 2014, the Company applied Accounting Standard for Retirement Benefits (ASBJ Statement No. 26, revisedon May 17, 2012) and Guidance on Accounting Standard for Retirement Benefits (ASBJ Guidance No. 25, revised on May 17,2012) , except for the provisions stated in Paragraph 35 of ASBJ Statement No. 26 and Paragraph 67 of ASBJ Guidance No.
25, and recorded projected benefit obligations, net of plan assets, as net defined benefit liability, recognizing unrecognizedactuarial differences as net defined benefit liability.
Pursuant to the transitional treatments prescribed in Paragraph 37 of ASBJ Statement No. 26, the Company adjusted theeffects from the changes to remeasurements of defined benefit plans under accumulated other comprehensive income.
As a result, the Company recorded net defined benefit liability of ¥1,876 million ($18,227 thousand). Accumulated othercomprehensive income decreased by ¥756 million ($7,345 thousand).
The effects on per share information are described in Note 13.

o. Accounting Standards Issued but not yet Adopted“Accounting Standard for Retirement Benefits” (ASBJ Statement No. 26, revised on May 17, 2012)“Guidance on Accounting Standard for Retirement Benefits” (ASBJ Guidance No. 25, revised on May 17, 2012)
1) Overview
The Standard provides guidance for the accounting for unrecognized actuarial differences and unrecognized prior service cost,
the calculation methods for projected benefit obligations and service cost, and enhancement of disclosures taking into
consideration improvements to financial reporting and international trends.
2) Scheduled date of adoption
Revisions to the calculation methods for projected benefit obligations and service cost are scheduled to be adopted from the
beginning of the year ending March 31, 2015.
3) Effects of adopting revised accounting standard and guidance
As a result of this adoption, net defined benefit liability are expected to decrease by ¥616 million ($5,985 thousand) andretained earnings are expected to increase by ¥616 million ($5,985 thousand) at the beginning of the fiscal year ending March
31, 2015. The effect on the profit and loss for the year ending March 31, 2015 is expected to be immaterial.

4. Notes to Consolidated Balance Sheets1)

The assets pledged as collateral and collateralized liabilities are as follows:

As of March 31
Cash and deposits

¥

2013

Millions of yen
2014

Thousands of
U.S. dollars
2014

202

¥

$

202

1,962

Notes receivable

801

950

9,230

Securities

―

14

136

Buildings

1,792

1,760

17,100

Land

8,365

8,350

81,130Investment securities

1,070

1,506

14,632

Total¥

12,233¥

12,784$

124,212

Short-term loans payable

¥

4,750

¥

2,220

$

21,570Long-term loans payable

1,325

Total

¥

34,541

3,555
5,775

$

56,111

6,075

¥

2013

Millions of yen
2014

Thousands of
U.S. dollars
2014

¥

$

The following assets included in the above are deposited as security for dealing:

As of March 31
Securities¥

Investment securities

―
24

Total

¥

11

24

14

87

9
¥

24

136

$

233

2)

The Companies are contingently liable for the following:

As of March 31
Guarantees to financial institutions, etc. to ensure the completion of
construction contracts of Nakano Singapore (Pte.) Ltd. and its
subsidiaries

¥

2013

Millions of yen
2014

Thousands of
U.S. dollars
2014

5,411

¥

$

4,547

44,179

Guarantees of deposits

―

559

5,431

Guarantee on employees’ housing loan

0

0

0

Total

¥

5,411

¥

5,107

$

49,621

3)“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.
4) The following notes receivable and payable matured on March 31, 2013 are included in the respective accounts, since
March 31, 2013 fall on a bank holiday:
Thousands ofMillions of Yen
U.S. dollars
As of March 31
2013
2014
2014
¥

Notes receivable
Notes payable

31

¥

2,766

―

$

―
―

―

5. Notes to Consolidated Statements of Income
1)

Provision for loss on construction contracts included in “Cost of sales of completed construction contracts” was as follows:

For the year ended March 31

2013

Provision for loss on construction contracts
2)

¥

16

Millions of yen
2014

Thousands of
U.S. dollars
2014

¥

$

0

0

The major components of “Selling, general and administrative expenses” were as follows:

For the years ended March 31
Depreciation

¥

2013

Millions of yen
2014

Thousands of
U.S. dollars
2014

107

¥

$

135

1,311

Provision for bonuses

68

147

1,428

Retirement benefit expenses

296

305

2,963

2,185

2,269

22,046

Employees’ salaries and allowances
3)

Research and development costs included in selling, general and administrative expenses were as follows:

For the year ended March 31

2013

Research and development costs

¥

12

23

Millions of yen
2014

Thousands of
U.S. dollars
2014

¥

$

13

126

4)

“Gain on sales of non-current assets” consisted of the following:

For the years ended March 31
Land

¥

2013

Millions of yen
2014

Thousands of
U.S. dollars
2014

460

¥

$

―

―

Buildings

939

―

―

Vehicles

0

2

19

Other

0

―

―

Total

¥

1,400

¥

2

$

19

6. Notes to Consolidated Statements of Cash FlowsThe reconciliation between “Cash and cash equivalents” reported in the consolidated statements of cash flows and “Cash anddeposits” reported in the consolidated balance sheets is as follows:
Thousands ofMillions of yen
U.S. dollars
As of March 31
2013
2014
2014
¥

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

24,203¥(2,049)Cash and cash equivalents per consolidated statements of cash flows¥

22,153

27,205$(19,102)(1,966)¥25,239264,331$245,229

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 aremanaged principally through short-term deposits with little risk. Under the policy of the Companies, the Companies use
derivatives only for the purpose of reducing foreign exchange 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 from completed construction contracts,
the Companies identify major customers’ credit status by monitoring the payment terms and credit balances by eachcustomer.
Regarding securities and investment securities, principally consisting of equity securities, the Companies regularly
identify the quoted market price of the listed securities to manage the risks arising from market value fluctuations.
The Companies manage liquidity risk associated with loans payable by appropriately planning for fund raising basedon monthly cash flow projections.
Regarding derivative transactions, the Companies execute and control the transactions based on 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 reasonable estimated amount if there isno market price. Certain assumptions are used for calculation of such fair value, and accordingly, the result of suchcalculation may vary, if different assumptions are used.

13

2.

Fair value of financial instruments
The carrying amount, fair value and difference of the financial instruments as of March 31, 2013 and 2014 are as follows:
Note that the financial instruments whose fair value is extremely difficult to determine are not included in the following table(See (Notes): 2):
Millions of yen
March 31, 2013
Carrying amount
Fair value
Difference(1) Cash and deposits¥
24,203 ¥24,203 ¥—(2) Notes receivable, accounts receivable from completed
construction contracts and other
27,89627,896—(3) Investment securities
Held-to-maturity securities
24
25
0
Available-for-sale securities
1,434
1,434
—
Assets total
53,55753,5580(1) Notes payable, accounts payable for construction contracts andother43,39043,390—(2) Short-term loans payable
6,450
6,450
—
(3) Long-term loans payable
1,525
1,525
—
Liabilities total
51,36551,365—Derivative transactions———

Fair value
27,205

Millions of yen
Difference¥—

27,83027,830—24
1,647
56,70925
1,647
56,7090—043,9193,586
3,939
51,444—43,9193,586
3,939
51,444
—

—
—
—
—
—

March 31, 2014
(1) Cash and deposits(2) Notes receivable, accounts receivable from completed
construction contracts and other(3) Securities and Investment securities
Held-to-maturity securities
Available-for-sale securities
Assets total(1) Notes payable, accounts payable for construction contracts andother(2) Short-term loans payable(3) Long-term loans payable
Liabilities total
Derivative transactions

Carrying amount¥
27,205

March 31, 2014
(1) Cash and deposits(2) Notes receivable, accounts receivable from completed
construction contracts and other(3) Securities and Investment securities
Held-to-maturity securities
Available-for-sale securities
Assets total(1) Notes payable, accounts payable for construction contracts andother(2) Short-term loans payable(3) Long-term loans payable
Liabilities total
Derivative transactions

Carrying amount$
264,331

14¥$

Thousands of U.S. dollars
Fair value
Difference
264,331 $—

270,404

270,404—233
16,002550,971242
16,002550,9819—
9426,729
34,842
38,272499,844—426,729
34,842
38,272499,844
—

—
—
—
—
—

(Notes):
1. Method used for determining the fair value of the financial instruments and matters regarding securities and derivativetransactions:
Assets:(1) Cash and deposits and (2) Notes receivable, accounts receivable from completed construction contracts and other
The carrying amount is presented as the fair value, since the fair value approximates the carrying amount because they will
be settled within a short period of their maturity.
(3) Securities and Investment securities
The fair value of equity securities is determined based on the quoted price of the exchanges, the fair value of investment trust
is determined based on the published standard quotation price and the fair value of debt securities is determined based on
the published price by the Japan Securities Dealers Association. Notes regarding securities and investment securities
classified by the management’s intent of holding are described in Note 8 “Securities and 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 amount because 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 amount because theirinterest rates will be reset within a short period of their maturity.
2. Carrying amounts of financial instruments for which it is extremely difficult to identify the fair value were as follows:

As of March 31

2013

Unlisted equity securities¥

Thousands of
U.S. dollars
2014

Millions of yen
2014

1,210

¥

$

1,210

11,756

Above financial instruments are not included in “(3) Investment securities” and “(3)Securities and Investment securities” in theabove table, since there is no market price and their fair value is extremely difficult to identify.
3. Redemption schedule for monetary assets and securities with contractual maturities after balance sheet dateMillions of yen
Due after one
Due after fiveDue in one
year throughyears throughDue after
As of March 31, 2013
year or lessfive years
ten yearsten years
Cash and deposits¥
24,203 ¥— ¥— ¥—Notes receivable, accounts receivable from completed
construction contracts and other
27,896———
Investment securities:
Held-to-maturity securities ( Japanese government bonds)—
14
9—
Available-for-sale securities with contractual maturities
—
2
—
—
Total
¥
52,099 ¥17 ¥9 ¥—Millions of yen

As of March 31, 2014
Cash and deposits
Notes receivable, accounts receivable from completed
construction contracts and other
Securities and Investment securities:
Held-to-maturity securities ( Japanese government bonds)
Available-for-sale securities with contractual maturities
Total

Due in one
year or less¥
27,205Due after one
year throughfive years¥—

Due after five
years throughten years¥—

Due after
ten years¥—

27,830

—

—

—

14
—
55,051

—
2
2

9
—
9

—
—
—

¥

15

¥

¥

¥

As of March 31, 2014
Cash and deposits
Notes receivable, accounts receivable from completed
construction contracts and other
Securities and Investment securities:
Held-to-maturity securities ( Japanese government bonds)
Available-for-sale securities with contractual maturities
Total

Thousands of U.S. dollars
Due after five
years throughDue after
ten yearsten years$— $—Due in one
year or less$
264,331

Due after one
year throughfive years$—

270,404

—

—

—

136
—
534,891

—
19
19

87
—
87

—
—
—

$

$

$

$

4. Repayment schedule of short-term loans payable and long-term loans payable after balance sheet dateMillions of yen

As of March 31, 2013
Short-term loans payable
Long-term loans payable

Due in one
year or less
¥
6,450
—

Due after one
year throughtwo years¥—
500

Due after two
years throughthree years
¥
—
1,025

Due after
three years
through four
years
¥
—
—

Due after
four years
through five
years
¥
—
—

Due after two
years throughthree years
¥
—
2,628

Due after
three years
through four
years
¥
—
—

Due after
four years
through five
years
¥
—
—

Due after two
years throughthree years$—
25,534Due after
three years
through four
years
$
—
—

Thousands of U.S. dollars
Due after
four years
through fiveDue after
years
five years
$
— $
—
—
—

Due after
five years¥——
Millions of yen

As of March 31, 2014
Short-term loans payable
Long-term loans payable

As of March 31, 2014
Short-term loans payable
Long-term loans payable

Due in one
year or less
¥
3,586
—

Due in one
year or less$
34,842—

Due after one
year throughtwo years
¥
—
1,311

Due after one
year throughtwo years$—
12,73816

Due after
five years¥——

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

As of March 31

2013

Held-to-maturity securities¥

24

Available-for-sale securities with market value

¥

24

1,434

Total

¥

1,458

Thousands of
U.S. dollars
2014

Millions of yen
2014
$

233
16,002

1,647
¥

1,672

$

16,245The carrying amount and fair value of held-to-maturity debt securities as of March 31, 2013 and 2014 are as follows:
Millions of yen
As of March 31, 2013
Japanese government bonds¥

Carrying
amount24¥

Carrying
amount24$

Carrying
amount233¥

Unrealized
gain
0

¥

Unrealized
gain
0

$

Unrealized
gain
9

¥

Unrealized
loss
—

¥

Unrealized
loss
—

$

Thousands of U.S. dollars
Unrealized
loss
Fair value
— $
242

¥

Fair value
25
Millions of yen

As of March 31, 2014
Japanese government bonds

As of March 31, 2014
Japanese government bonds¥

Fair value
25

The carrying amount (fair value) and acquisition cost of available-for-sale securities as of March 31, 2013 and 2014 are as
follows:
Millions of yen
Carrying
Unrealized
Unrealized
As of March 31, 2013
amountgain
loss Acquisition cost
Equity securities¥
1,431 ¥
594 ¥(72) ¥
909
Other
2
0
—
1
Total
¥
1,434 ¥
595 ¥(72) ¥
911

As of March 31, 2014
Equity securities
Other
Total

As of March 31, 2014
Equity securities
Other
Total

¥
¥

$
$

17

Carrying
amount
1,645
2
1,647

Carrying
amount15,98319
16,002¥¥$$

Unrealized
gain
794
0
795

Unrealized
gain
7,714
9
7,724

¥
¥

$
$

Millions of yen
Unrealized
loss Acquisition cost(57) ¥
907—
1(57) ¥
909
Thousands of U.S. dollars
Unrealized
loss Acquisition cost(553) $
8,812—
9(553) $
8,832

Available-for-sale securities which were sold during the years ended March 31, 2013 and 2014 are as follows:

Sales proceeds
Gain on sales
Loss on sales

¥

2013
22
—
3

Millions of yen
2014
¥
39
37
—

Thousands of
U.S. dollars
2014
$
378
359
—

9. Retirement Benefits
For the year ended March 31 2013:
1) Outline of the Company’s retirement benefit plans
The Company has defined benefit plans that consist of a defined benefit corporate pension plan and a lump-sum retirement
benefit plan and also defined contribution pension plans. 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 Welfare Pension Fund.
2)

Projected benefit obligations

As of March 31

Millions of yen
2013

Projected benefit obligations

¥

2,988

Unfunded benefit obligations(2,193)

Unrecognized actuarial differences

1,181

Provision for retirement benefits
3)(5,182)

Plan assets¥(1,012)Retirement benefit expenses

For the year ended March 31

Millions of yen
2013

Service cost (Note)¥

308

Interest cost

47

Expected return of plan assets—

Amortization of actuarial differences

108

Subtotal

465

Contribution to Welfare Pension Fund

213

Contribution to the defined contribution pension plan

57

Total

¥

735

Note: Retirement benefit expenses of consolidated subsidiaries which adopt a short-cut method are included in “Service cost”.

4)

Assumption and policies used in computing projected benefit obligations
2013
Inter-period allocation method of projected benefit
Straight-line basis
obligations
Discount rate
1.0%
Expected rate of return on plan assets
0.0%
Amortization periods for actuarial differences
12 years(amortized by the straight-line method over adefined period within the range of averageremaining service years of employees at thetime of occurrence from the following year ofoccurrence)18

For the year ended March 31 2014:
1) Outline of the Company’s retirement benefit plans
The Company has defined benefit plans that consist of a defined benefit corporate pension plan and a lump-sum retirement
benefit plan and also defined contribution pension plans. Certain consolidated subsidiaries have lump-sum benefit plans.
Furthermore, the Company may pay additional retirement benefits upon the retirement of certain employees.
The Company participates in Tokyo Construction Welfare Pension Fund as a multi-employer plan. If the plan assets
corresponding to the Company’s contribution cannot be reasonably determined, such plan is accounted for in the samemanner as the defined contribution plans.
With respect to lump-sum benefit plans adopted by certain consolidated subsidiaries, net defined benefit liability andretirement benefit expenses are calculated by the short-cut method.
2) Defined Benefit Plans
1. The changes in projected benefit obligations for the year ended March 31, 2014 are as follows (excluding the plans towhich a sort-cut method is applied):Thousands ofMillions of yen
U.S. dollars
2014
2014
Beginning balance of projected benefit obligations

¥

5,057

$

49,135Service cost

257

2,497

Interest cost

50

485

Actuarial differences(131)(1,272)Retirement benefits paid

(242)

(2,351)Ending balance of projected benefit obligations

¥

4,991

$

48,493

2. The changes in plan assets for the year ended March 31, 2014 are as follows (excluding the plans to which ashort-cut method is applied):Thousands ofMillions of yen
U.S. dollars
2014
2014
Beginning balance of plan assets

¥

2,988

$

29,032

Expected return of plan assets——

Actuarial differences

180

1,748

Contribution from the employer

342

3,322

Retirement benefits paid

(242)

(2,351)Ending balance of plan assets

¥

3,268

$

31,752

3. The changes in net defined benefit liability of the plans to which the short-cut method is applied for the year ended
March 31, 2014 are as follows:
Thousands ofMillions of yen
U.S. dollars
2014
2014
Beginning balance of net defined benefit liability

¥

125

$

1,214

Retirement benefit expenses

36

349

Retirement benefits paid

(6)

(58)

Ending balance of net defined benefit liability

¥

19

154

$

1,496

4. Reconciliation between the ending balances of projected benefit obligations and plan assets and net defined benefit
liability recorded in the consolidated balance sheet
Thousands ofMillions of yen
U.S. dollars
2014
2014
Funded projected benefit obligations¥

Plan assets

4,991

$

(31,752)(3,268)¥

Unfunded projected benefit obligations

1,722

48,493$

16,731
1,496

154

Net liability recorded in the consolidated balance sheet

¥

1,876

$

18,227

Net defined benefit liability

¥

1,876

$

18,227Net liability recorded in the consolidated balance sheet

¥

1,876

$

18,227(Note) Above amounts include plans to which the short-cut method is applied.
5. The components of retirement benefit expenses for the year ended March 31, 2014 are as follows:
Thousands of
U.S. dollars
2014

Millions of yen
2014
Service cost

¥

257

$

2,497

Interest cost

50

485

Expected return of plan assets——

Amortization of actuarial differences

112

1,088

Retirement benefit expenses computed by theshort-cut method

36

349

Retirement benefit expenses on defined benefit plans

¥

456

$

4,430

6. Remeasurements of defined benefit plans
The component of remeasurements of defined benefit plans (before adjusting for tax effects) is as follows:
Thousands ofMillions of yen
U.S. dollars
2014
2014
Unrecognized actuarial differences

¥

756

$

7,345

7. Plan assets
a. Components of plan assets
Plan assets consisted of the following:
2014
61%
26
11
2
100

Bonds
Equity securities
Insurance assets (general account)
Other
Total

b. Method of determining the long-term expected rate of return on plan assets
The long-term 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.
8. Actuarial assumptions used for the year ended March 31, 2014 are set forth as follows:
Discount rateLong-term expected rate of return on plan assets

20

2014
1.0%
0.0

3) Defined Contribution Plans
The amount of the required contribution to the defined contribution plans of the Company is ¥55 million ($534 thousand).
4) Multi-employer Plans
The amount of the required contribution to the Welfare Pension Fund Plans of multi-employer plans which are accounted forin the same manner as defined contribution plans is ¥216 million ($2,098 thousand).

10. Deferred Tax Accounting
1)

The significant components of deferred tax assets and liabilities as of March 31, 2013 and 2014 are as follows:
Thousands ofMillions of yen
U.S. dollars
As of March 31
2013
2014
2014
Deferred tax assets:
Provision for bonuses

¥

63

¥

130

$

1,263

Provision for retirement benefits

323

—

—

Net defined benefit liability

―

631

6,130

Allowance for doubtful accounts

67

63

612

Loss on valuation of real estate for sale

310

288

2,798

Provision for loss on construction contracts

101

29

281

Impairment loss

1,648

1,658

16,109Tax loss carryforwards

2,551

2,399

23,309

Other

228

255

2,477

Subtotal

5,294

5,457

53,021

Less: valuation allowance(5,294)(5,422)(52,681)

¥

0

¥

34

$

330

¥

(184) ¥

(261)$

(2,535)

Undistributed earnings of foreign consolidated subsidiaries

(194)

(290)

(2,817)

Other

(12)

(15)

(145)

Deferred tax assets
Deferred tax liabilities:
Valuation difference on available-for-sale securities

Deferred tax liabilities¥(390) ¥

(568)$

(5,518)Net deferred tax liabilities¥(390) ¥

(533)$

(5,178)2) A reconciliation between the normal effective statutory tax rates and the actual effective tax rates reflected in the
consolidated statements of income for the year ended March 31, 2013 and 2014 are as follows:
2013
2014
Normal effective statutory tax rate
38.0%
38.0%
Expenses not deductible income tax purposes
3.9
2.1
Tax rate differences in foreign consolidated subsidiaries(5.9)(13.1)
Undistributed earnings of foreign consolidated subsidiaries
2.6
4.0
Inhabitant per capita taxes
1.6
1.5
Refund of income taxes for prior periods―(3.2)
Valuation allowance
17.0
(4.2)
Other
10.2
2.4
Actual effective tax rate
67.4
27.5
3)

Adjustments of deferred tax assets and liabilities due to a change in the corporate income tax rate:
The New Tax Reform Act proclaimed on March 31, 2014 repealed the Special Recovery Tax from the fiscal year
beginning on or after April 1, 2014. As a result, the normal effective statutory tax rate to be used in computing deferred tax
assets and liabilities has been reduced from 38.0% to 35.6% for the temporary differences estimated to be settled in thefiscal year beginning on April 1, 2014. As a result, deferred tax assets, net of deferred tax liabilities, decreased by ¥0
million ($ 0 thousand) and income taxes – deferred increased by the same amount.

2111. Investment and Rental Properties
The Company and certain consolidated subsidiaries own office buildings, commercial facilities and residual units for lease inTokyo and other areas. Rental income from these real estate properties for lease for the years ended March 31, 2013 and2014 were ¥695 million and ¥552 million ($5,363 thousand), respectively. Rental income and related costs are included in“Sales on real estate business” and “Cost of sales on real estate business”, respectively, in the accompanying consolidated
statements of income for the years ended March 31, 2013 and 2014.
The carrying amounts, changes in such balances during the year and fair values of such properties are as follows:
Thousands ofMillions of yen
U.S. dollars
As of March 31
2013
2014
2014
Carrying amounts
Beginning balance¥
12,997 ¥
10,825$
105,178(Note 1):
Increase (decrease) (Note 2)(2,171)Ending balance
Fair value (Note 3)(1,195)(123)¥

10,825¥

10,701$103,973¥

12,929¥13,026$

126,564(Notes):1. The carrying amount is presented after deducting accumulated depreciation from the acquisition cost.
2. Increase during the year ended March 31, 2013 primarily represents the acquisition of real estate of ¥135 million anddecrease is primarily due to sale of real estate of ¥1,368 million, and the change in holding purpose from investment tointernal use of ¥873 million.
Increase during the year ended March 31, 2014 primarily represents the acquisition of real estate of ¥37 million ($359
thousand) and decrease is primarily due to the change in holding purpose from investment to internal use of ¥20 million($194 thousand) and depreciation of ¥132 million ($1,282 thousand).
3. Fair values of properties as of March 31, 2013 and 2014 are measured as follows:
The fair values of major properties are determined based on the real estate appraisal value by independent real estateappraisers and the fair values of other properties are determined based on the value in accordance with “Japanese Real
Estate Appraisal Standard” as well as internal appraisal.

2212. Segment Information
a. Description of reportable segments
The Companies’ reportable segments are those for which separate financial information is available and regular evaluation by
the Board of Directors is being performed in order to decide how resources are allocated among the Companies. The
Companies are active in the construction business and the real estate business in Japan and foreign countries. Therefore, theCompanies consist of regional segments which are based on each business. Reportable segments of the construction
business are “Japan” and “Southeast Asia (Singapore, Malaysia, Indonesia, Thailand and Vietnam etc.)”, and those of the realestate business are “Japan” and “North America (USA)”.
b. Methods of measurement for the amounts of sales, profit (loss), assets and other items for each reportable segment
The accounting policies of each reportable segment are consistent to those disclosed in Note 3, “Summary of Significant
Accounting Policies”.
c. Information about sales, profit (loss), assets and other items is as follows:
Millions of yen
Reportable segments
Construction
For the year ended
March 31, 2013

Southeast
Asia

Japan

Other

Real estate

Total

Japan

(Note 1)

North
America

Adjustments

Consolidated(Note 2)

(Note 3)

Total

Total

Net sales:
Customers¥

Inter-segment
Total
Segment income (loss)
Segment assets

64,752

115,363¥ 1,61329¥ 117,254-¥

50,611
18

¥

18

16

¥

248
-

¥

1,861
16

¥

-

35

¥

(35)

-

¥

117,254-

64,752

50,629115,382

1,629

248

1,878

29

117,290(35)

117,254

(669)

1,532

862

563

97

661

(1)

1,522

-

1,522

20,70627,967

48,674

11,515

2,246

13,76253

62,4899,437

71,927

Other items:
Depreciation
Impairment loss

¥

79

¥

50

¥

130

¥

150

¥

36

¥

187

¥

0

¥

317

¥

-

¥

317

855

-

855

21

-

21

-

877

-

877

281

82

364

36

95

131

0

496

-

496

Increase in property,
plant, and equipment
and intangible assets(Notes):1. “Other” is a business segment not included in the reportable segments and it is insurance agent business.
2. An adjustment of “Segment assets” in an amount of ¥9,437 million is corporate assets which are not allocated to each reportablesegment and consists of surplus fund (cash and deposits) and long-term investment fund (investment securities and insurance funds) of
the Company.
3. Segment income (loss) is reconciled with operating income in the accompanying consolidated statements of income.

23

Millions of yen
Reportable segments
Construction
For the year ended
March 31, 2014

Southeast
Asia

Japan

Other

Real estate

Total

Japan

(Note 1)

North
America

Adjustments

Consolidated(Note 2)

(Note 3)

Total

Total

Net sales:
Customers¥

Inter-segment
Total
Segment income (loss)
Segment assets

75,443

128,113¥ 1,03331¥ 129,177-¥

52,670
18

¥

18

21

¥

-

¥

1,033
21

¥

-

39

¥

(39)

-

¥

129,177-

75,443

52,688128,131

1,054

-

1,054

31

129,217(39)

129,177

193

1,606

1,800

527

(77)

449

0

2,250

-

2,250

23,12328,37751,50011,364

1,654

13,01950

64,57011,90776,478Other items:
Depreciation¥

Impairment loss

91

¥

64

¥

156

¥

136

¥

0

¥

137

¥

0

¥

293

¥

-

¥

293

-

-

-

8

-

8

-

8

-

8

352

81

434

39

0

39

1

475

-

475

Increase in property,
plant, and equipment
and intangible assets

Thousands of U.S. dollars
Reportable segments
Construction
For the year ended
Japan

Southeast
Asia

Total

Japan

$ 733,025$ 511,756$ 1,244,782$ 10,036

-

174

174

204

733,025

511,9311,244,957

1,875

15,604

224,669

275,719

March 31, 2014

Other

Real estate(Note 1)

Adjustments

Consolidated(Note 2)

(Note 3)

Total

North
America

Total-$ 10,036301$ 1,255,120-$ 1,255,120

-

204

-

378

(378)

-

10,240-

10,240301

1,255,509(378)

1,255,120

17,489

5,120

(748)

4,362

0

21,861-

21,861

500,388

110,415

16,070126,496485

627,380

115,691

743,082

Net sales:
Customers
Inter-segment
Total
Segment income (loss)
Segment assets

$

$

$

Other items:
Depreciation
Impairment loss

$

884

1,515

$ 1,321

-

$

621
-

$

-

77

$

0
-

$

1,331
77

$

0
-

$

2,846
77

$

-

$

2,846
77

3,420

787

4,216

378

0

378

9

4,615

-

4,615

Increase in property,
plant, and equipment
and intangible assets(Notes):1. “Other” is a business segment not included in the reportable segments and it is insurance agent business.
2. An adjustment of “Segment assets” in an amount of ¥11,907 million ($115,691 thousand) is corporate assets which are not allocated toeach reportable segment and consists of surplus fund (cash and deposits) and long-term investment fund (investment securities andinsurance funds) of the Company.
3. Segment income (loss) is reconciled with operating income in the accompanying consolidated statements of income.

24

13. Per Share Information
Basic net income per share is computed based on the weighted average number of shares of common stock outstanding
during the year. Diluted net income per share is not presented for the years ended March 31, 2013 and 2014 since theCompany had no potentially dilutive shares outstanding as of the balance sheet dates.
Net assets per share is computed based on the number of shares of common stock outstanding as of the balance sheet dates.
Net assets and net income per share for the years ended March 31, 2013 and 2014 were as follows:
Yen
U.S. dollars
For the years ended March 31
2013
2014
2014
Net assets per share¥
319.60 ¥354.05$
3.44
Basic net income per share
19.01
44.89
0.43
(Notes):1. Net assets per share is calculated based on the following information:

As of March 31
Total net assets
Deductions from total net assets:¥

Minority interests
Net assets attributable to common stock
Number of shares of common stock used in computing net assets
per share (in thousand shares)¥

2013
11,565

Millions of yen
2014¥
12,971Thousands of
U.S. dollars
2014$
126,029

(576)

(799)

(7,763)

10,988¥

12,171

34,381

34,378

2013
653—

Millions of yen
2014
¥
1,543
—

653

¥

$

118,256
34,3782. Net income per share is calculated based on the following information:

For the years ended March 31
Net income
Amount not attributable to common stock shareholders¥

Net income attributable to common stock
Average number of shares of common stock during the year (inthousand shares)¥

34,383

1,543
34,380Thousands of
U.S. dollars
2014$
14,992—$

14,992
34,3803. As noted in “Accounting change”, in Note 3 “Summary of Significant Accounting Policies” the Company applied the revised
accounting standard for retirement benefits and its guidance and follows the transitional treatments prescribed in Paragraph
37 of ASBJ Statement No. 26.
As a result, net assets per share decreased by ¥22.01 ($0.21) at March 31, 2014.

25

14. Bonds Payable
Short-term and long-term bonds payable as of March 31, 2013 and 2014 consisted of the following:Thousandsof U.S. Interest
Millions of yen
dollars
rate
Issuer and Issue type
Issue date
2013
2014
2014
(%) Collateral(Nakano Corporation)th
7 unsecured bond
—
360
3,497
0.64
None
Sep.30, 2013
(—)
(80)
(777)
¥
— ¥
360
$ 3,497
Total
(—)
(80)
(777)
(Notes):1. ( ) denotes the amount expected to be redeemed within one year.
2. The following is a summary of maturities of bonds subsequent to March 31, 2014:

Maturity
Sep. 28, 2018

Years ending March 31

Millions of yen

Thousands of
U.S. dollars

2015

¥

$

80

777

2016

80

777

2017

80

777

2018

80

777

2019

40

388

2020 and thereafter

—

—

Total

¥

26

360

$

3,497

15. Loans Payable and Other Debts
Short-term loans payable, long-term loans payable and other debts as of March 31, 2013 and 2014 are as follows:

As of March 31
Short-term loans payable
Current portion of long-term loans
payableCurrent portion of lease obligations
Long-term loans payable excluding
current portion
Lease obligations excluding current
portionMillions of yen

Thousands of
U.S. dollars

2014

2014

Average interest
rate (%)

Maturity

27,205

1.89

—
—
—

2013
¥

5,800

¥

2,800

$

650
15

786
85

7,636
825

1.82

1,525

3,939

38,272

2.00

2,458

—
—

54

253

—

Apr. 30, 2015 Dec. 27, 2016
Oct. 31, 2015 Feb. 26, 2021—
(Notes):1. “Average interest rate” represents the weighted average interest rate on loans payable outstanding as of the balance sheet
date. “Average interest rate” of lease obligations is not shown since interest equivalent amounts included in the aggregatedlease 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 to March 31, 2014:
Millions of yen
Thousands of U.S. dollars
Long-term
LeaseLong-term
Lease
Years ending March 31
loans payable
obligationsloans payable
obligations
Total

¥

8,044

¥

2015

7,864

¥

786

$

76,408

¥

85

$

7,636

$

825

2016

1,311

85

12,738

825

2017

2,628

83

25,534

806

2018

—

64

—

621

2019

—

18

—

174

2020 and thereafter

—

1

—

9

Total

¥

4,725

¥

339

$

45,909$3,293

16. Subsequent Events
At the Annual General Meeting of Shareholders held on June 27, 2014, it was resolved to distribute the year-end cash
dividends of ¥3 ($0.02) per share of common stock of the Company.
The aggregate amount of such cash dividends is ¥103 million ($1,000 thousand).

17. Other Information
The Company has been sued from a Japanese company for the existence of defects in the buildings for which the Company
has warranty for defects in Japan. A Japanese company has requested the Company to pay approximately ¥1.7 billion($16,517 thousand) as claim for liability for damages which replaces the repair for damages, and the case is now under
dispute.
The Company believes that such defects do not exist as a Japanese company insists and intends to proceed with the lawsuitappropriately.

27

SUPPLEMENTAL INFORMATIONNONCONSOLIDATED BALANCE SHEETSNAKANO CORPORATIONAs of March 31, 2013 and 2014
Thousands
ofU.S. dollars
2014

Millions of yen
2013
2014
AssetsCurrent assets:
Cash and deposits
Notes receivable-trade
Accounts receivable from completed construction contracts
Securities
Costs on uncompleted construction contracts
Costs on real estate business
Raw materials and supplies
Short-term loans receivable from subsidiaries and affiliates
Accounts receivable-other
Other
Allowance for doubtful accounts
Total current assets¥

Non-current 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 and
other
Insurance funds
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets¥

28

6,595 ¥
1,401
15,713
－
906
191
24
10
530
439
(232)
25,581

8,999
2,018
15,792
14
1,203
182
29
10
597
1,116
(112)
29,8506,665(3,532)
3,133
230
(189)
41
175
(171)
3
23
(22)
0
433
(406)
27
9,707
52
(6)
46
12,961

6,670(3,686)
2,984
231
(196)
35
175
(172)
2
23
(23)
0
451
(407)
43
9,707
202
(37)
164
12,93764,807(35,814)28,993
2,244(1,904)340
1,700(1,671)
19
223
(223)
0
4,382
(3,954)417
94,315
1,962
(359)
1,593
125,699

130

318

3,089

2,597
2,670
653

2,767
2,670
642

26,88425,942
6,237

32

32

310

152
437
(343)
6,199
19,291

104
398
(352)
6,263
19,5191,010
3,867(3,420)60,853
189,652

44,872¥

49,370$$87,436
19,607
153,439
136
11,688
1,768
281
97
5,800
10,843(1,088)290,031479,692

ThousandsofU.S. dollars
2014

Millions of yen
2013
2014
Liabilities
Current liabilities:
Notes payable-trade
Accounts payable for construction contracts
Short-term loans payable
Current portion of bonds
Income taxes payable
Advances received on uncompleted construction contracts
Provision for warranties for completed construction
Provision for loss on construction contracts
Provision for bonuses
Other
Total current liabilities¥

Non-current liabilities:
Bonds payable
Long-term loans payable
Deferred tax liabilities
Provision for retirement benefits
Long-term deposits received
Other
Total non-current liabilities
Total liabilities

14,027
8,970
6,450
－
50
3,449
92
266
166
892
34,363¥¥

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

¥

29

5,061

$

280
3,939
242
991
505
406
6,364
41,593

－
1,525
175
907
495
223
3,328
37,691

Net assets
Shareholders' equity:
Common stock
Authorized:154,792,300 shares
Issued:34,498,097 shares
Capital surplus
Legal capital surplus
Total capital surpluses
Retained earnings
Other retained earnings
Retained earnings brought forward
Total retained earnings
Less-Treasury stock, at cost
116,435 shares in 2013 and 119,489 shares in 2014
Total shareholders' equity

13,013
11,178
3,586
80
96
5,814
106
81
362
909
35,228¥

5,061

126,438
108,608
34,842
777
932
56,490
1,029
787
3,517
8,832
342,2852,720
38,272
2,351
9,628
4,906
3,944
61,834404,129$

49,174

1,400
1,400

1,400
1,400

13,602
13,602

435
435

912
912

8,861
8,861

(28)
6,868

(29)
7,345

(281)
71,366

312
312
7,180

432
432
7,777

4,197
4,197
75,56344,872¥

49,370$479,692

NONCONSOLIDATED STATEMENTS OF INCOME
NAKANO CORPORATION
For the years ended March 31, 2013 and 2014
Thousands ofMillions of yen
2013
2014

U.S. dollars
2014

Net sales:
Net sales of completed construction contracts¥

65,807¥75,991$

738,350

Sales on real estate business

1,577

985

9,570

Total net sales

67,38576,977

747,930

63,00072,394703,400

989

442

4,294

63,99072,837

707,705

2,807

3,596

34,939

588

542

5,266

3,395

4,139

40,215

Selling, general and administrative expenses

3,802

3,739

36,329Operating income (loss)

(407)

399

3,876

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

Non-operating income:Interest income

21

21

204

1,505

339

3,293

Foreign exchange gains

89

172

1,671

Other

50

33

320

1,667

567

5,509

172

222

2,157

Dividends income

Total non-operating income
Non-operating expenses:
Interest expenses
Other

7

20

194

179

242

2,351

1,080

724

7,034

Gain on sales of investment securities

－

37

359

Total extraordinary income

－

37

359

Impairment loss

855

－

－

Provision of allowance for doubtful accounts

21

19

184

Loss on litigation

19

83

806

Other

13

0

0

Total extraordinary losses

909

103

1,000

Income before income taxes

171

658

6,393

Income taxes-current

37

78

757

Income taxes-deferred

0

(0)

(0)

Total non-operating expenses
Ordinary income
Extraordinary income:Extraordinary losses:

Income taxes:

Total income taxes

37

Net income

¥

30

133

78
¥

580

757
$

5,635

1411-1412,14th Floor, Daeha Business Center, 360 Kim Ma Street, Ngoc Khanh Commune, Ba Dinh District, Hanoi, Vietnam
Tel ： +84-4-3-724-7552/58 Fax ：+84-4-3-724-7553