Profile

HAZAMA ANDO CORPORATION was launched on April 1, 2013, through the merger of
HAZAMA CORPORATION and ANDO Corporation. Amid a difficult business environment forthe construction industry, the new company is seeking to realize an expanded businessscale, a streamlined and more effective management structure, and greater earnings
capacity.
ANDO Corporation was founded in 1873, and HAZAMA CORPORATION in 1889. As
general contractors, each with well over a century of history and possessing industry-leading
technological capabilities built on experience with numerous projects, these two companies
have contributed to the development of Japan and the creation of today’s rich lifestyle.
The merger brings together ANDO Corporation’s strength in building construction,and HAZAMA CORPORATION’s established reputation in civil engineering. In addition to
expanding the business scale and enhancing management efficiency, the integrated
company will draw on the complementarity effect of their respective achievements, and by
generating synergies in terms of technology, marketing, and cost competitiveness, establish
a more solid management foundation, and realize further business development andgrowth.
HAZAMA ANDO CORPORATION aspires to be a “good company” for all of its
stakeholders. With solid technology and passion we will meet expectations, and contributeto the development of society through building and manufacture. Further, by looking
beyond the present, continually seeking to create new value, and enhancing sustainablecorporate development, we will seek to realize a prosperous future, and to build a new
history as HAZAMA ANDO CORPORATION.

CONTENTS

Philosophy............................................................................................................... 1
Message from the Chairman & the President............................................................ 2
First Medium-Term Management Plan....................................................................... 3
Topics 2013............................................................................................................. 4
Review of Operations............................................................................................... 6
Business Conditions and Outlook............................................................................. 8
Consolidated Financial Review (Former HAZAMA CORPORATION).............................. 9
Consolidated Balance Sheets (HAZAMA)................................................................. 12
Consolidated Statements of Income (HAZAMA)...................................................... 14
Consolidated Statements of Comprehensive Income (HAZAMA).............................. 15
Consolidated Statements of Changes in Net Assets (HAZAMA)................................ 16
Consolidated Statements of Cash Flows (HAZAMA)................................................ 17
Notes to Consolidated Financial Statements (HAZAMA)........................................... 18
Independent Auditors’ Report (HAZAMA)............................................................... 39
Consolidated Balance Sheets (ANDO)..................................................................... 40
Consolidated Statements of Income (ANDO)........................................................... 42
Consolidated Statements of Comprehensive Income (ANDO)................................... 43
Consolidated Statements of Changes in Net Assets (ANDO).................................... 44
Consolidated Statements of Cash Flows (ANDO)..................................................... 46
Notes to Consolidated Financial Statements (ANDO)............................................... 47
Independent Auditors’ Report (ANDO).................................................................... 64
Corporate Governance.......................................................................................... 65
Global Network..................................................................................................... 66
Corporate Data/Directors,Officers /Major Subsidiaries and Affiliates......................... 67

Philosophy

Corporate Philosophy

1

Contribute to advancing society through the sprit of craftsmanship2

Pursue customer satisfaction with reliable technologies and passions

3

Realize a beneficial future by creating new values

Corporate Symbol

HAZAMA ANDO CORPORATION’s corporate symbol features large, swirling currents crossing over asquare form, in a design that simultaneously expresses reliability, energy, and strength.
The square form, suggesting stability, represents a wealth of achievements and trust cultivated overmany years of history, and a genuine “customer first” attitude.
The large swirls are symbols of HAZAMA ANDO CORPORATION’s determination to cherish theindividual values of the merged companies, while creating new value through a bold andunconstrained pursuit of fresh challenges.
And the motion suggested in the design represents how HAZAMA ANDO CORPORATION willcontinuously evolve and grow, without being confined to conventional ideas.

1Message from the Chairman & the President

Toshio Ono,
Representative Director andChairman of the Board of Directors

During fiscal 2012 (the year ended March 2013),
despite signs of economic activity underpinned byreconstruction-related demand and other factors, thebusiness environment was hampered by lingeringcaution regarding the outlook for corporate earnings
and business. Under such conditions, HAZAMACORPORATION recorded year-on-year gains in bothrevenue and ordinary income, while ANDO
Corporation, despite an increase in sales, posted an
operating loss on a rise in labor cost.
In fiscal 2013, the first year for the merged
HAZAMA ANDO CORPORATION, we anticipate anincrease in government construction spending on
acceleration of recovery projects related to the Great
East Japan Earthquake. In the private sector, weforesee a solid recovery in capital expenditures, but
at the same time expect that further rises in laborcosts, materials costs and other expenses will exert

2

Toshiaki Nomura,
Representative Director and President

considerable pressure on earnings in the constructionindustry. Amid such a continued difficult businessenvironment for the construction industry, we willdraw on the complementarity effect of theachievements from the two former companies torebuild our technology, marketing, and costcompetitiveness, and to strengthen our business
operations and promote efficiency. Further, throughthe optimal allocation of management resources andnecessary investments for continued growth, we will
establish the “HAZAMA ANDO” brand, and seek tob e a c o m p a n y w i t h a s t ro n g m a n a g e m e n t
foundation, high earnings capacity, and a strong
presence in the market.

First Medium-Term Management Plan

Ⅰ
Target Figures (for the fiscal year ending March 2016, the final
year of the plan, individual results)
Orders:¥300 billion
Revenues:¥310 billion
Ordinary Income:     ¥6 billion

Ⅱ
Medium-Term Corporate Vision
We will establish the “HAZAMA ANDO” brand, and seek to be a company
with a strong management foundation, high earnings capacity, and strong
presence in the market.

Ⅲ
Basic Management Strategies for Realization of the Medium-Term
Corporate Vision
1. Enhance sales and proposal capabilities through collaboration in civilengineering
2. Lower costs through economies of scale and improvements in production
systems
3. Increase market share and earnings capacity by utilizing accumulated
technologies, expertise, and experience to strengthen technology
development
4. Work to expand business domains

3Topics 2013

Two Technology Prizes Received for “Aqua
Curtain”

Water feed tubing

Water feed hose
Water feed curing sheet

In June 2012, the Aqua Curtain technology developed by
HAZAMA ANDO CORPORATION received the Fiscal 2011
“Technology Development Prize” from the Japan Society of Civil
Engineers, and the Fiscal 2012 “Technology Prize” from theJapan Concrete Institute.
The Japan Society of Civil Engineers Awards are given formarked contributions to civil engineering and construction. The“Technology Development Prize” is awarded for contributions tosociety through the advancement of civil engineering by meansof the development and practical application of original andcreative technologies in planning, design, construction, or
maintenance. The Aqua Curtain was recognized for technology
development based on innovative ideas, and the incorporation ofnumerous creative ideas in practical application.
The Japan Concrete Institute Awards are given for articles
or works that have a marked contribution to the advancementand development of concrete engineering and technology.
HAZAMA ANDO CORPORATION received the “Technology Prize”
in recognition of contributions to technical advancements related
to concrete, including the use of Aqua Curtain to ensure theCuring sheet frame
Suction opening

Aspirator/water feed system
Suction tube

ring

cu
Wet

Application for tunnel construction

lifelong duration of reinforced concrete structures.
Aqua Curtain is a revolutionary construction method thatallows for wet curing of concrete structures as if they were
immersed in water. It is considered an essential process for theconstruction of strong, beautiful, and durable concrete structures.
Use of the Aqua Curtain has spread since its launch in fiscal
2011, and following the receipt of these prizes we will makeefforts to expand the technology further.

Support for Sports in Kesennuma Recognized at
the 6th Kids Design Awards
HAZAMA ANDO CORPORATION received an award at the 6th
Kids Design Award (Reconstruction Support Design Division) for
its “Kesennuma Region – Sports Support Activity,” conducted aspart of the company’s reconstruction and recovery assistance indisaster areas of the Great East Japan Earthquake.
The Kids Design Awards are a system for honoring therealization and spread of the principles of kids designs,
specifically designs that contribute to the safety and security ofchildren, designs that open up the creativity and future ofchildren, and designs that are made for having and raisingchildren easier. HAZAMA ANDO CORPORATION has been asupporting company of the specified nonprofit corporation(Cabinet Office Certified NPO) Kids Design Association, whichsponsors and administers the awards, since fiscal 2006.
The “Kesennuma Region – Sports Support Activity”
honored with this prize was inspired by media reports thatchildren at Shishiori Elementary School could no longer playrugby because their equipment had been washed away in thetsunami. HAZAMA ANDO CORPORATION had long and strong
connections with this community, and launched a voluntary
imitative with the desire to assist in the recovery of disaster areas,
and to provide opportunities for children to play the rugby thatthey so enjoy.
We will continue to conduct activities to support disasterareas, as well as to support the aims of the Kids Design
Association, and contribute to its activities as part of our CSR
program.

4

span

Rugby camp for children in Kesennuma

Kids Design Award

Range of Technologies Developed for Quick andEffective Decontamination
HAZAMA ANDO CORPORATION is conducting technicaldevelopment for decontamination of radioactive material, andstepping up implementation of technologies to allow for moreenergy-efficient and quicker operations, as well as a reduction in
the volume of waste substances generated duringdecontamination work.
For the decontamination of pavement contaminated byradioactive cesium, HAZAMA ANDO CORPORATION has
developed the Araiguma-Radical Method and the Asphalt
Pavement Thin Layer Cutting Method, and applied thesetechnologies in actual decontamination work. The AraigumaRadical Method removes radioactive cesium by washing thepavement surface with a high-pressure washer much stronger
than a standard washer, along with a natural surface-active
agent. By modifying and mechanizing construction equipment
developed to clean the surface of concrete dams (see Image 1), it
has become possible to decontaminate more than 1,000m2 perday (1,500m2 using the latest model).
The Asphalt Pavement Thin Layer Cutting Method utilizes
a cutting machine with several rows of special convex bits (seeImage 2) to remove a thin layer from the surface of asphalt
pavement. Shaving approximately 5mm from the pavement
surface reduces the amount of radioactive cesium by more than
95%. The process also significantly reduces the amount of waste
generated by cutting.
Combustible material collected during decontamination
work is incinerated, and since the ash remaining contains highAn-Thick Construction Method with Thick
Concrete Walls and Floors
Construction method for apartment complexes
without crossbeams
HAZAMA ANDO CORPORATION has developed the An-Thick
construction method for reinforced concrete buildings with thickfloors and walls. This construction technique has been certified
Fig: Comparison of interior space

Conventional rigid-frame structure

An-Thick construction method

concentrations of radioactive cesium, heavy metals and otherhazardous substances, it is placed in an interim storage facility or
final disposal site. However, capacity in these facilities is limited,
so there is a need to reduce the volume of incinerated ash. To
address this problem, HAZAMA ANDO CORPORATION developed
a technology that applies a special method to densely solidify
incinerated ash using external vibration, and create solidified
blocks or sheets. This technique is based on technologies
HAZAMA ANDO CORPORATION developed to recycle the coalash generated as a by-product in thermal power stations, and has
successfully reduced the volume of contaminated ash by around
30%.
These results are part of the Fiscal 2012 Decontamination
Technologies Verification Project (portion held over from Fiscal
2011) adopted by the Ministry of the Environment. HAZAMAANDO CORPORATION will continue with efforts to develop and
put into use various technologies to complete decontamination
work as quickly as possible.

Asphalt pavement scraper

Araiguma-Radical highpressure cleaner

by the General Building Research Corporation of Japan (No.
12-10).
An-Thick is a framework construction method comprising
walls and floors thicker than those found in ordinary reinforced
concrete buildings. It has a rigid-frame structure supported
mainly by the rigidity and bearing force of the out-of-plane
direction, rather than the horizontal force, such as the ridge
direction seismic load. The construction method gives the exteriorof the building the appearance of a stack of boxes, and is suitable
for long-life quality housing and other high-grade apartmentcomplexes.
In a conventional rigid-frame structure, the posts andbeams protrude into the living space, but with a floor and wall
structure there are no posts or beams, creating clean interior
spaces. Also, the lack of crossbeams with the An-Thick method
offers greater freedom in the location of ventilating holes, andwhen combined with a false floor the layout for the kitchen andbath is variable, making the construction technique suitable forso-called “skeleton/infill” apartments intended for long-life
quality housing. Further, since the walls and floors are thicker
than usual, the rooms have better sound insulation.
HAZAMA ANDO CORPORATION has been involved in theconstruction of numerous apartment complexes. By adding thisnew frame construction method to our lineup of construction
techniques, we can better provide living spaces that meetcustomer needs.
5Review of Operations

Major Orders Received● Toppan Printing New Gunma Plant Construction Work /TOPPAN PRINTING CO., LTD. (Japan) ❶● Kitakokubun Area Pipe And Culvert Work Phase 2/Kanto
Regional Development Bureau, Ministry of Land, Infrastructure,
Transport and Tourism (Japan)● Fukuyama Transporting West Kanto Logistics Center
Construction Work/ Fukuyama Transporting Co., Ltd. (Japan)❶● The Trans-Hokkaido Expressway Tenguyama Tunnel
Construction Work/East Nippon Expressway Co., Ltd. (Japan)● DAIDO METAL Mexico Factory Project/DAIDO METAL Mexico
S. A. de C. V. (Mexico) ❷● Water Supply Improvement Project in Concepcion and Pilar /Ministry of Public Works and Communications (Paraguay) ❸❷Major Projects in Progress● Algeria East West Expressway East Work Section/Expressway
Public Corporation, Ministry of Public Works (Algeria)❸● Central Circular Shinagawa Route Ohashi Junction Tunnel /Metropolitan Expressway Co., Ltd. (Japan)● New Osaka Factory Construction Work/ TOPPAN FORMS CO.,LTD. (Japan)● Nagoya Castle Hommaru Palace Restoration Work / City of
Nagoya, Aichi Prefecture (Japan)● Caterpillar CRTT Facilities / Caterpillar (Thailand) Limited(Thailand) ❹❹6

● The Project for Urgent Reconstruction of East Pump Stationof Pluit in Jakarta Ciliwung-Cisadane River Basin Organization,
Directorate General of Water Resources, Ministry of Public
Works (Indonesia) ❺Major Projects Completed● SHIN-YURIGAOKA General Hospital Construction Work /Sanseikai Medical Corporation (Japan)● Shintakeoka Tunnel Work Phase 2/Kyushu Regional Development Bureau, Ministry of Land, Infrastructure, Transport andTourism (Japan)● The Project for Construction of Sindhuli Road (Section Ⅲ ) /Department of Roads, Ministry of Physical Planning & Works(Nepal)● BIVN Factory No. 4 Construction Project / Brother Industries(Vietnam) Ltd. (Vietnam) ❻❺● Expansion of Vientiane International Airpor t / Ministry of
Public Works and Transport (Laos) ❼● Macara International New Bridge/Ministry of Public Works andTransport, Republic of Ecuador & Ministry of Communications,
Republic of Peru (Ecuador and Peru) ❽

❻

❼

❽

7

Business Conditions and Outlook

1

Summary of Business Activities

Difficult conditions continued in the Japanese economy during fiscal 2012, despite signs of business activity supported byreconstruction-related demand. Industrial production declined, and a cautious attitude remained regarding corporate
earnings and the business outlook. Going forward, even with the risk of an economic downturn stemming from theuncertain outlook for the global economy and prolonged energy problems domestically, the government’s emergency
economic stimulus package and the Bank of Japan’s loosening of monetary policy are expected to lead toward economic
recovery.
In the construction industry, the principal business of the HAZAMA ANDO Group, public sector construction
investment rose steadily as restoration and reconstruction projects in the earthquake disaster areas gained momentum.
Construction spending by Japan’s private sector, however, continued to be weak, and the business environment remained
harsh, including an increasingly severe shortage of skilled construction workers.
Under such circumstances, Hazama’s orders increased ¥10.2 billion (5.8%) from the previous fiscal year to ¥186.9
billion. This was due mainly to continued steady orders for civil engineering work from Japanese government andmunicipal offices, along with a rise in overseas civil engineering and construction projects.
Revenues increased ¥15.8 billion year on year overall, due mainly to gains in both civil engineering and building
construction on a steady rise in construction works on hand. In terms of profitability, operating income declined as a resultof profitability revisions for certain large-scale projects. However, ordinary income rose slightly year on year on
improvement in foreign exchange gains, leading to a ¥0.5 billion increase in net income compared to the previous fiscal
year.
As a result, for the fiscal year ended March 31, 2013, HAZAMA CORPORATION recorded consolidated revenues of¥197.8 billion, with operating income of ¥5.6 billion, ordinary income of ¥5.3 billion, and net income of ¥2.2 billion.
The overview of each business division of HAZAMA CORPORATION is as follows.
In Civil Engineering, orders amounted to ¥92.3 billion, comprising 85.8% from the government sector, and 14.2%
from the private sector. Overseas orders accounted for 10.3% of total orders. Among revenues, completed construction
totaled ¥91.0 billion, with operating income of ¥6.4 billion.
In Building Construction, orders amounted to ¥94.5 billion, comprising 6.6% from the government sector, and93.4% from the private sector. Overseas orders accounted for 25.9% of total orders. Among revenues, completed
construction totaled ¥88.3 billion, with an operating loss of ¥0.5 billion for the division.
Total orders received for construction, the cumulative total of the Civil Engineering and Building Construction
divisions, amounted to ¥186.9 billion, comprising 45.7% from the government sector, and 54.3% the from private sector,
with 18.2% of total orders from overseas. Completed construction totaled ¥179.3 billion, with operating income of ¥5.8
billion. (Note: Orders received and their breakdowns are stated on an individual basis.)
Revenue from HAZAMA CORPORATION’s consolidated subsidiaries amounted to ¥15.0 billion, with operating
income of ¥0.8 billion. Revenue was derived mainly from the sale of construction materials and leasing. In the Other
business division, revenues amounted to ¥3.4 billion, with operation income of ¥0.2 billion. Revenue was derived mainly
from surveys and research conducted on a consignment basis.

2

Outlook for the Next Fiscal Year (ending March 2014)

In the construction industry, public-sector construction investment is expected to remain firm with the execution of theassociated budget. Private-sector construction investment, however, is forecast to be sluggish as a result of the delays ineconomic recovery. Overall, the outlook is unclear as a result of concerns over fiercer competition for orders, and a rise inconstruction costs stemming from higher labor and materials expenses.
Under such conditions, on April 1, 2013, HAZAMA CORPORATION merged with ANDO Corporation to form
HAZAMA ANDO CORPORATION. The aim of this merger is to realize an expanded business scale, streamlined and more
effective management, and greater earnings capacity.
For details on the merger and the resulting negative goodwill that the Company plans to record from fiscal 2013,see page 37, “Subsequent Event.”
In consideration of the above, for the fiscal year ending March 31, 2014, the Hazama Ando Group is forecasting
consolidated revenues of ¥355.0 billion, with operating income of ¥7.0 billion, ordinary income of ¥5.4 billion, and net
income of ¥13.1 billion.

8

Consolidated Financial Review (Former HAZAMA CORPORATION)
HAZAMA CORPORATION and Consolidated Subsidiaries
For the years ended March 31, 2013, 2012, 2011, 2010 and 2009

Summary
Thousands of
U.S. dollars

Millions of yen
2013

2012

2011

2010

2009

2013

Construction¥182,740¥169,256¥184,630¥182,162¥212,535$1,944,250

Other activities

15,15912,794

12,072

9,715

11,742

161,283

Total

197,899

182,050

196,702

191,877

224,277

2,105,533

182,271

166,630

182,692

178,380

207,522

1,939,260

15,62815,42014,01013,497

16,755

166,273

10,015

9,505

10,031

11,747

12,308106,554

5,613

5,915

3,979

1,750

4,447

59,719

2,293

1,767

1,560

(1,744)

1,002

24,396

Total assets¥141,880¥133,177¥141,150¥138,359¥157,743$1,509,522

Total liabilities

109,036

102,620

112,085

109,984

127,457

1,160,081

Net assets

32,84430,55729,06528,37530,286

349,441

7,934¥ (3,158)¥ 2,880¥ 6,293

(723)

562

1,260

239

3,158

(7,692)(4,347)(3,076)

1,636(2,656)(2,326)(46,250)

Operating results:
Revenues

Cost of sales
Gross profit
Selling, general andadministrative expenses
Operating income
Net income (loss)
Financial position:

Cash flows:
Cash flows from operating
Activities
Cash flows from investing
Activities
Cash flows from financing
Activities

¥

¥

(335)

Yen

$

84,413

U.S. dollars

Per share amounts:
Net income (loss)
Basic
Diluted¥20.69¥ 15.38¥ 13.16¥ (20.45)

14.74

11.51

10.50

―

¥

7.07
7.00

$

0.22
0.16

Dividends
Common stock

3.00

1.50

―

―

1.50

0.03

Class I preferred stock

78.40

78.80

83.28

90.80

97.72

0.83

Class II preferred stock

88.40

88.80

93.28

100.80107.72

0.94

Class III preferred stock

98.40

98.80

103.28110.80117.72

1.05

Class IV preferred stock
Net assets

―

93.80

98.28

105.80112.72―212.75194.75179.62172.06

191.04

2.26

Note: 1. U.S. dollar amounts in this annual report are translated from yen at the rate of ¥93.99 to US$1.00 for convenience.
2. Basic net income (loss) per share is based on the weighted average number of common stock outstanding during theperiod, and diluted net income per share reflects the potential dilution that could occur if preferred stock wereconverted into common stock or share subscription rights were exercised.

9Financial Review
Revenues
Revenues in fiscal 2013 totaled ¥197,899 million (US$2,105,533 thousand), of which ¥182,740 million (US$1,944,250
thousand) came from construction projects and ¥15,159 million (US$161,283 thousand) from other activities. These two businesssegments accounted for 92.3% and 7.7%, respectively, of total revenues.
Costs and Expenses
Cost of sales amounted to ¥182,271 million (US$1,939,260 thousand), which is equivalent to 92.1% of revenues. Selling, generaland administrative expenses amounted to ¥10,015 million (US$106,554 thousand), which is equivalent to 5.1% of revenues.
Operating income reached ¥5,613 million (US$59,719 thousand), and the operating margin was 2.8%. Net income amounted to¥2,293 million (US$24,396 thousand). Basic net income per share was ¥20.69 (US$0.22). We made no dividend payments oncommon stock.
Financial Position and Analysis
Total assets amounted to ¥141,880 million (US$1,509,522 thousand), total liabilities amounted to ¥109,036 million(US$1,160,081 thousand), and total net assets amounted to ¥32,844 million (US$349,441 thousand) at the end of fiscal 2013.
Net assets to total assets ratio was 23.1%. Net assets per share amounted to ¥212.75 (US$2.26).
Cash Flows
Cash and cash equivalents at the end of the year increased by ¥3,357 million (US$35,717 thousand) to ¥32,659 million(US$347,473 thousand).
Net cash provided by operating activities amounted to ¥7,934 million (US$84,413 thousand) mainly as the result of income
before income taxes amounting to ¥4,217 million (US$44,866 thousand), increase in advances received amounting to ¥4,603
million (US$48,973 thousand) and increase in accounts receivable amounting to ¥5,077 million (US$54,016 thousand).
Net cash used in by investing activities amounted to ¥723 million (US$7,692 thousand) mainly as a result of acquisition of
tangible fixed assets amounting to ¥368 million (US$3,915 thousand).
Net cash used in financing activities amounted to ¥4,347 million (US$46,250 thousand) mainly as a result of repayment oflong-term debt amounting to ¥6,589 million (US$70,103 thousand).
Construction Business (Non-Consolidated Construction Projects)
As HAZAMA COPORATION’s construction business accounts for a large percentage of consolidated group business, thefinancial performance of the business is presented below for reference.
Thousands of
U.S. dollars

Millions of yen
Revenues

2013

2012

2011

2010

2009

¥ 59,343¥ 54,942¥ 60,962¥ 63,122¥ 54,248

25,442

19,03815,97623,92932,6102013

Civil engineering
Domestic
Government sector
Private sector
Overseas
Subtotal$

631,376
270,688

6,275

7,223

8,188

12,24514,012

66,76391,06081,20385,12699,296

100,870

968,827

Building construction
Domestic
Government sector

3,613

4,487

8,638

7,544

5,027

38,440Private sector

62,82868,59576,724

66,96991,243

668,454
232,802

Overseas
Subtotal
Total construction projects

10

21,881

11,688

9,452

5,386

11,00388,322

84,77094,814

79,899107,273

939,696¥179,382¥165,973¥179,940¥179,195¥208,143$1,908,523

Revenue from the civil engineering category accounted for ¥91,060 million (US$968,827 thousand), or50.8% of total revenue
from construction projects, with domestic projects contributing ¥84,785 million (US$902,064 thousand), or 93.1%.
The government sector contributed ¥59,343 million (US$631,376 thousand), or 70.0%, of total domestic civil engineering
revenue, while private-sector civil engineering revenue amounted to ¥25,442 million (US$270,688 thousand), or 30.0% of total
domestic civil engineering revenue. Overseas civil engineering revenue reached ¥6,275 million (US$66,763 thousand),equivalent to 6.9% of total revenue in the civil engineering category.
Revenue from the building construction category totaled ¥88,322 million (US$939,696 thousand), or 49.2% of total
construction revenue. Domestic projects accounted for ¥66,441 million (US$706,894 thousand), or 75.2%.
The government sector contributed ¥3,613 million (US$38,440 thousand), or 5.4%, of total domestic building construction
revenue, while private-sector building construction revenue amounted to ¥62,828 million (US$668,454 thousand), or 94.6%, of
total domestic building construction revenue. Overseas building construction revenue reached ¥21,881 million (US$232,802
thousand), equivalent to 24.8% of total revenue in the building construction category.
Total overseas construction revenue reached ¥28,156 million (US$299,565 thousand) and accounted for 15.7% of total
construction revenue. Civil engineering projects accounted for 22.3% of this total, and building construction for 77.7%.
Thousands of
U.S. dollars

Millions of yen
Orders Received
Civil engineering
Building construction
Total construction projects

2013

2012

2011

2010

2009

¥ 92,395¥ 87,212¥ 61,521¥ 74,028¥108,930

2013

94,55689,51380,13380,194

97,335

1,006,022¥186,951¥176,725¥141,654¥154,222¥206,265$1,989,052$

983,030

Orders received for construction projects during fiscal 2013 amounted to ¥186,951 million (US$1,989,052 thousand). Overseas
work contributed 18.2% of orders in the construction category. Civil engineering orders amounted to ¥92,395 million(US$983,030 thousand), or 49.4% of total construction orders. Building construction orders amounted to ¥94,556 million(US$1,006,022 thousand), which is equivalent to 50.6% of total construction orders.
Thousands of
U.S. dollars

Millions of yen
Year-end Backlog
Civil engineering
Building construction
Total construction projects

2013

2012

2011

2010

2009

2013

¥114,655¥113,278¥107,382¥131,216¥156,810$1,219,864

69,65263,45458,88773,751

73,463741,057¥184,307¥176,732¥166,269¥204,967¥230,273$1,960,921

Order backlog for construction projects at the end of fiscal 2013 amounted to ¥184,307 million (US$1,960,921 thousand), withcivil engineering work accounting for ¥114,655 million (US$1,219,864 thousand), or 62.2%, and building construction for¥69,652 million (US$741,057 thousand), or 37.8%.

11

Consolidated Balance Sheets (HAZAMA)HAZAMA CORPORATION and Consolidated Subsidiaries
March 31, 2013 and 2012

Thousands of
U.S. dollars(Note 1)Millions of yen
2013

2013

2012

AssetsCurrent assets:
Cash and time deposits (Notes 4 and 23 )Marketable securities (Notes 7 and 23)¥ 32,683¥ 29,30300$347,728
3

Receivables (Note 23):
Notes (Note 25)

1,078

684

11,469Accounts

54,39749,714

578,753

Inventories (Notes 5 and 8)

8,771

10,07793,318Advances paid

3,361

4,952

35,759Deferred income taxes (Note 16)

3,070

3,260

32,663

Other

5,601

2,753

59,590Less allowance for doubtful accounts

(338)

(304)

(3,596)108,623

100,439

1,155,687

Land

13,293

13,293

141,430

Buildings and structures

14,193

14,180151,005

Machinery and equipment

8,225

9,484

87,509

226

152

2,405

Total current assets

Property and equipment (Notes 7 and 12):

Other

35,937

37,109382,349

Less accumulated depreciation(17,222)(18,176)(183,232)

Net property and equipment

18,71518,933

199,117

Investments and other assets:
6,020

5,514

64,049Investments in unconsolidated subsidiaries and affiliates

221

221

2,351

Long-term loans receivable

50

66

532

Deferred income taxes (Note 16)

2,275

2,639

24,205Prepaid pension cost

3,165

2,739

33,674

Other

2,859

2,772

30,418

(48)

(146)

(511)

Investments in securities (Notes 3, 7 and 23)

Less allowance for doubtful accounts
Total investments and other assets
Total assets
See accompanying notes.

12

4

14,54213,805

154,718¥141,880¥133,177$ 1,509,522

Thousands of
U.S. dollars(Note 1)Millions of yen
2013

2012

¥

2013

Liabilities and Net Assets
Current liabilities:
Short-term loans payable (Notes 6 and 23)

5,600¥ 7,440

4,327

6,589

46,037

Notes

24,40623,804

259,666

Accounts

31,35530,910333,599

Income taxes payable

1,283

337

13,650

Advances received (Note 14)

15,195

9,963

161,666

Deposit received (Note 23)

8,690

5,502

92,457

435

235

4,628

1,790

Provision for disaster payment

1,643
―

17,481―

Provision for merger expenses

697

―

7,416

1,801

3,101

19,161

95,432

89,777

1,015,342

Long-term loans payable, less current maturities (Notes 6 and 23)

4,579

4,392

48,718Retirement and severance benefits (Note 15)

8,672

8,072

92,265

284

286

3,022

Current maturities of long-term loans payable (Notes 6 and 23)$

59,581

Payables (Note 23):

Accrued expenses
Provision for losses on construction contracts (Note 8)

Other
Total current liabilities

106

Long-term liabilities:

Provision for environmental spending
Other

69

93

734

13,604

12,843

144,739

5,000

5,000

53,197

7,000

7,000

74,476

Capital surplus

9,007

9,004

95,829Retained earnings

11,665

9,766

124,109

(98)

(112)

(1,043)32,57430,658346,568

244

(146)

2,596

244

(146)

2,596

26

45

277

32,84430,557349,441¥141,880¥133,177$1,509,522

Total long-term liabilities

Net assets (Notes 19 and 20 ):Shareholders’ equity:
Common stock

Authorized - 397,250,000 shares
Issued – 116,356,517 shares

Preferred stock

Authorized - 2,750,000 shares
Issued - 2,026,224 shares

Less treasury stock, at cost
Total shareholders’ equity
Accumulated other comprehensive income:Net unrealized losses on securities
Total accumulated other comprehensive income
Share subscription rights
Total net assets
Total liabilities and net assets

513

Consolidated Statements of Income (HAZAMA)HAZAMA CORPORATION and Consolidated Subsidiaries
For the years ended March 31, 2013 and 2012

Thousands of
U.S. dollars(Note 1)Millions of yen
2013

2012

2013

Construction¥182,740¥169,256$1,944,250

Other activities

15,15912,794

161,283

197,899

182,050

2,105,533

Construction

168,434

155,098

1,792,042

Other activities

13,837

11,532

147,218

182,271

166,630

1,939,260

15,62815,420166,273

10,015

9,505

106,554

5,613

5,915

59,719

Revenues (Notes 9 and 21):

Cost of sales (Notes 10 and 21):

Gross profit
Selling, general and administrative expenses (Notes 11 and 21):
Operating income
Other income (expenses):
Interest and dividends income

93

79

989

Foreign exchange gain (loss)

489

(201)

5,203

Interest expense

(604)

(716)

(6,426)

Loss on valuation of investments in securities

(56)

(128)

(596)

Impairment loss (Note 12)

―

(557)

―

Merger expenses (Note 13)

(997)

―

(10,608)

(321)

(330)

(3,415)(1,396)(1,853)(14,853)

4,217

4,062

44,866
16,204

Other, net
Income before income taxes
Income taxes (Note 16):
Current

1,523

425

Deferred

401

1,870

4,266

1,924

2,295

20,470

2,293

1,767

24,396

2,293¥ 1,767

Income before minority interest
Net income¥$

24,396

U.S. dollars

Yen(Note 1)

2013

2012

2013

¥

20.69

¥ 15.38

14.74

11.51

Per share amounts (Note 22):
Net income
Basic
Diluted

$

0.22
0.16

Cash dividends applicable to the year
Common stock

3.00

1.50

0.03

Class I preferred stock

78.40

78.80

0.83

Class II preferred stock

88.40

88.80

0.94

Class III preferred stock

98.40

98.80

1.05

Class IV preferred stock

―

93.80

―

See accompanying notes.

146Consolidated Statements of Comprehensive Income (HAZAMA)HAZAMA CORPORATION and Consolidated Subsidiaries
For the years ended March 31, 2013 and 2012

Thousands of
U.S. dollars(Note 1)Millions of yen
2013
Income before minority interest

2013

2012

¥2,293¥1,767$24,396

390

(20)

4,149

390

(20)

4,149

2,683

1,747

28,545Comprehensive income attribute to owners of the parent

2,683

1,747

28,545Comprehensive income attribute to minority interests

―

―

―

Other comprehensive income
Valuation difference on available-for-sale securities
Total other comprehensive income (Note 18)
Comprehensive income
Comprehensive income attribute to:

See accompanying notes.

715

Consolidated Statements of Changes in Net Assets (HAZAMA)HAZAMA CORPORATION and Consolidated Subsidiaries
For the years ended March 31, 2013 and 2012

Millions of yen
Shareholders’ equity
Common stockandpreferred stock
Balance at April 1, 2011¥12,000

CapitalsurplusRetainedearnings¥9,000Net income¥8,259Treasurystock¥(121)¥ (126)¥54

4

Acquisition of treasury stock

(259)
20

(7)

(7)

than shareholders’ equity¥9,004¥9,767¥29,066

16

Net changes in items other¥12,000

Total

1,767

(259)

Disposal of treasury stock¥(112)

(20)

(9)

(29)

¥ (146)¥45¥30,558

Net income

2,293

2,293

Cash dividends paid

(395)

(395)

3

Disposal of treasury stock
Acquisition of treasury stock
Redemption of fractional

15

18

(1)

(1)

(0)

preferred stock(0)

Net changes in items otherthan shareholders’ equity
Balance at March 31, 2013

¥12,000

Common stockandpreferred stock
Balance at April 1, 2012

$127,673¥9,007¥11,665

¥(98)

390

(19)

371

¥244

¥26

¥32,844

Thousands of U.S. dollars (Note 1)
Accumulated
otherShareholders’ equity
comprehensive
incomeNet
CapitalRetained
Treasury
unrealized
surplusearnings
stock
holding gains on
securities$95,797$103,916$(1,192)$(1,553)

Share
subscription
rights

$479

Total

$325,120

Net income

24,396

24,396

Cash dividends paid

(4,203)(4,203)32

Disposal of treasury stock
Acquisition of treasury stock
Redemption of fractional

160

192

(11)

(11)

(0)

preferred stock(0)

Net changes in items otherthan shareholders’ equity
Balance at March 31, 2013

$127,673$95,829$124,109

See accompanying notes.

16

Share
subscription
rights

1,767

Cash dividends paid

Balance at April 1, 2012

Accumulated
othercomprehensive
incomeNet unrealized
holding gains on
securities

8$(1,043)

4,149

(202)

3,947

$2,596$277$349,441

Consolidated Statements of Cash Flows (HAZAMA)HAZAMA CORPORATION and Consolidated Subsidiaries
For the years ended March 31, 2013 and 2012

Thousands of
U.S. dollars(Note 1)Millions of yen
2013

2012

2013

¥ 4,217¥ 4,062$ 44,866

560
―
18
600
(426)
(93)
604
(493)
―
56
(8)

660
557
19
3,371
(2,739)
(79)
716
48
(2)
128
(73)

5,958
―
192
6,384
(4,532)(989)
6,426(5,245)
―
596
(85)

697
(106)
(5,077)
1,305
1,592
1,167
4,603
3,171
(3,724)
335
8,998
93
(539)
(618)
7,934

―
(190)
3,193
(2,078)1,148(7,446)
911(2,571)(685)(1,049)(2,099)
79
(547)
(591)
(3,158)

7,416(1,128)(54,016)
13,884
16,93812,416
48,97333,738(39,621)
3,563
95,734989(5,735)(6,575)84,413

(68)
53
(368)
13
(2)
18
(369)
(723)

(42)
24
(188)
633
(6)
11
130
562

(723)
564
(3,915)
138
(21)
192
(3,927)(7,692)(1,840)4,514(6,589)(395)(37)(4,347)492
3,356
29,303¥32,659

540
3,154(6,507)(259)(4)(3,076)(47)(5,719)35,022¥29,303(19,577)
48,026(70,103)(4,203)(393)(46,250)
5,235
35,706
311,767$347,473

Cash flows from operating activities:
Income before income taxes
Adjustment to reconcile income before income taxes to net
cash provided by operating activities:
Depreciation and amortization
Impairment loss
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in retirement and severance benefits
Decrease (increase) in prepaid pension expenses
Interest and dividends income
Interest expense
Foreign exchange loss (gain)
Loss (gain) on sale of investments in securities
Loss (gain) on valuation of investments in securities
Loss (gain) on sale of property and equipment
Changes in assets and liabilities:
Increase (decrease) in provision for business structure improvement
Increase (decrease) in provision for disaster payment
Decrease (increase) in notes and accounts receivable
Decrease (increase) in inventories
Decrease (increase) in advances paid
Increase (decrease) in notes and accounts payable
Increase (decrease) in advances received
Increase (decrease) in deposit received
Increase (decrease) in consumption tax payable
Other, net
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities:
Purchase of marketable securities and investments in securities
Sale of marketable securities and investments in securities
Acquisitions of property and equipment
Sale of property and equipment
Increase in loans receivable
Decrease in loans receivable
Other, net
Net cash provided by (used in) investing activities
Cash flows from financing activities:
Net increase (decrease) in short-term loans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Cash dividends paid
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year (Note 4)
See accompanying notes.

917Notes to Consolidated Financial Statements (HAZAMA)HAZAMA CORPORATION and Consolidated Subsidiaries
For the years ended March 31, 2013 and 2012

1. Basis of Presenting Consolidated Financial Statements
The accompanying consolidated financial statements of HAZAMA ANDO CORPORATION (the “Company”) and its
consolidated subsidiaries have been prepared in accordance with the provisions set forth in the Japanese Financial Instruments
and Exchange Law and its related accounting regulations, and in conformity with accounting principles generally accepted inJapan (“Japanese GAAP”), which are different in certain respects as to application and disclosure requirements of International
Financial Reporting Standards.
The accompanying consolidated financial statements have been restructured and translated into English with some expanded
descriptions from the consolidated financial statements of the Company prepared in accordance with Japanese GAAP and filedwith the appropriate Local Finance Bureau of the Ministry of Finance as required by the Financial Instruments and Exchange
Law. Some supplementary information included in the statutory Japanese language consolidated financial statements, but notrequired for fair presentation, is not presented in the accompanying consolidated financial statements.
The translations of the Japanese yen amounts into U.S. dollars are included solely for the convenience of readers outside
Japan, using the prevailing exchange rate at March 31, 2013, which was ¥93.99 to U.S. $1.00. The convenience translations
should not be construed as representations that the Japanese yen amounts have been, could have been, or could in the future be,converted into U.S. dollars at this or any other rate of exchange.
2. Summary of Significant Accounting Policies(1) Consolidation
The consolidated financial statements include the accounts of the Company and its significant subsidiaries (the “Companies”).
All significant intercompany transactions and unrealized profits and losses among the Companies have been eliminated inconsolidation.
All companies are required to consolidate all significant investees, which are controlled through substantial ownership ofmajority voting rights or existence of certain conditions. Investments in affiliates over which the Company has the ability to
exercise significant influence over operating and financial policies of the investees, are accounted for by the equity method.
Investments in remaining unconsolidated subsidiaries and affiliates, which have immaterial effect on the consolidated
financial statements, are accounted for at cost. Such investments are adjusted for any non-recoverable diminution in value, andincome from these unconsolidated subsidiaries and affiliates is recognized only when the Companies receive dividends
therefrom.
(2) Revenue and cost recognition
When the outcome of construction contracts can be estimated reliably, the percentage-of-completion method (cost-to-cost method
for the estimated progress) is applied. Otherwise the completed-contract method is applied.
(3) Foreign currency translation
Revenues and expenses are translated at the rates of exchange prevailing when transactions are made. Assets and liabilities
denominated in foreign currencies are generally translated at the rates of foreign exchange prevailing at the balance sheet date
and the resulting translation gains or losses are included in earnings.
(4) Cash and cash equivalents
Cash and cash equivalents include cash on hand, highly liquid investments with maturity of three month or less from the purchasedate. See Note 4 as to a reconciliation of cash and cash equivalents reported in the consolidated statements of cash flows withcash and time deposits reported in the consolidated balance sheets.
(5) Allowance for doubtful accounts
To prepare for credit loss on receivables, collectability of normal receivables is estimated by applying the historical overall credit
loss rates, and collectability of doubtful receivables is analyzed individually and the estimated uncollectible amount is recorded.
(6) Inventories
Inventories are stated at cost as determined on a specific project basis.

18

(7) Securities
Securities of the Companies are classified into one of the following categories based on the intent of holding, and are accounted
for as follows:(a) Debt securities that are intended to be held to maturity (“held-to-maturity debt securities”) are stated at amortized cost.
(b) Securities other than trading securities, held-to-maturity debt securities and shares issued by unconsolidated subsidiaries andaffiliated companies not on the equity method (“available-for-sale securities”) are stated at fair market values, if their fair market
values are readily available. Unrealized gains and losses on these securities are reported, net of applicable income taxes, as aseparate component of net assets. Realized gains and losses on sale of these securities are computed using moving-average costs.
Available-for-sale securities with no available fair market values are stated at moving-average cost.
(8) Derivatives and hedging transactions
Derivative financial instruments are stated at fair value and changes in the fair value are recognized as gains or losses unlessderivative financial instruments are used for hedging purposes.
If derivative financial instruments are used as hedges and meet certain hedging criteria, the Companies defer recognition ofgains or losses resulting from changes in fair value of derivative financial instruments until the related losses or gains on thehedged items are recognized.
If a forward foreign exchange contract is executed to hedge an existing foreign currency receivable or payable,(a) the difference, if any, between the Japanese yen amount of the hedged foreign currency receivable or payable translated using
the spot rate at the inception date of the contract and the book value of the receivable or payables is recognized in the
consolidated statements of operations in the period which includes the inception date, and(b) the discount or premium on the contract (that is the difference between the Japanese yen amount of the contract translatedusing the contracted forward rate and that translated using the spot rate at the inception date of the contract) is recognized over
the term of the contract.
Also, if interest rate swap contracts are used as hedge and meet certain hedging criteria, the net amount to be paid or received
under the interest rate swap contract is added to or deducted from the interest on the assets or liabilities for which the swap
contract was executed.
The Companies use forward foreign currency contracts and interest rate swap contracts as derivative financial instruments
only for the purpose of mitigating future risks of fluctuation of foreign currency exchange rates and interest rate increases.
The Companies evaluate hedge effectiveness by comparing the cumulative changes in cash flows from or the changes in fairvalue of hedged items and the corresponding changes in the hedging derivative instruments.
(9) Property and equipment, depreciation
Property and equipment are carried at cost. Depreciation of building is provided on the straight-line method, and depreciation ofother property and equipment is provided on the declining-balance method over estimated useful lives, except that the
declining-balance method is applied to buildings of one consolidated subsidiary.
Expenditures for significant renewals and betterments are capitalized, while expenditures for normal repairs and maintenanceare charged to expense when incurred.
(10) Provision for losses on construction contracts
To prepare for future losses related to construction contracts, the amount of estimated losses is recorded for the construction
when losses are probable to occur and such losses can be reasonably estimated.
(11) Provision for environmental spending
To prepare for the treatment of Polychlorinated Biphenyl waste, which is obligated by the “Act on Special Measures Concerning
Promotion of Proper Treatment of PCB Waste,” the estimated cost for treatment is recorded.
(12) Provision for disaster payment
To prepare for expenses or losses for restoration of the property struck by Great East Japan Earthquake, the estimated amount at
the end of subject fiscal year is recorded.
(13) Provision for merger expenses
To prepare for expenses expected to arise in the future due to a merger with ANDO Corporation, the reasonably estimatedamount at the end of the subject fiscal year is recorded.

19

(14) Retirement and severance benefits
To prepare for the payment of retirement and severance benefits to employees, the Companies have recorded the amount
expected to arise at the end of the subject fiscal year based on retirement benefit obligations and pension assets at the end of thesubject fiscal year. Differences arising from changes in accounting standards (¥9,985 million) have been amortized in equalamounts over 15 years. Actuarial differences are recognized in expenses using the straight-line method over period less than the
average of the estimated remaining service lives (9 years) commencing with the succeeding period. Prior service costs arerecognized in expenses using the straight-line method over period less than the average of the estimated remaining service lives(3 years) commencing with present period.
Upon the split-up, the Company succeeded differences arising from changes in accounting standards and actuarial differences,and the above periods of amortization include the periods before split-up.
(15) Lease transactions(a) Finance leases which transfer ownership of leased assets
Leased assets arising from finance lease transactions which transfer ownership to the lessee are depreciated by the same method
as the depreciation of fixed assets.
(b) Finance leases which do not transfer ownership of leased assets
Leased assets arising from finance lease transactions which do not transfer ownership to the lessee are depreciated to a residual
value of zero by the straight-line method using the contract term as useful life.
(16) Income taxes
The Companies recognize tax effects of temporary differences between the carrying amounts of assets and liabilities for tax andfinancial reporting purposes. The provision for income taxes is computed based on the pretax income included in the
consolidated statements of operations. The asset and liability approach is used to recognize deferred tax assets and liabilities forthe expected future tax consequences of temporary differences.
(17) Appropriations of retained earnings
Appropriations of retained earnings are reflected in the accompanying consolidated financial statements for the following year
upon the shareholders’ meeting approval.
(18) Amounts per share
Basic net income per share is based on the weighted average number of common stock outstanding during the period, and diluted
net income per share reflects the potential dilution that could occur if preferred stock were converted into common stock or sharesubscription rights were exercised.
Cash dividends per share represent amounts applicable for the respective years on accrual basis.
A net asset per share is reported at the amounts of ¥212.75 (US$2.26) and ¥194.75 at March 31, 2013 and 2012, respectively.
(19) Change in accounting policies with amendment of respective law or regulation that are not distinguishable from change inaccounting estimates
From the year ending March 31, 2013, in accordance with the amendment in corporate tax law, the Company and its domestic
subsidiaries have changed its depreciation method for property, plant and equipments. Assets acquired on or after April 1, 2012
are depreciated using the method prescribed in amended corporate tax law. Due to this change in depreciation method, operating
income, ordinary income and income before taxes have each increased by ¥8 million (US$85 thousand).
(20) New accounting standards not yet applied
Accounting Standard for Retirement Benefits (ASBJ Statement No. 26, May 17, 2012)
Guidance on Accounting Standard for Retirement Benefits (ASBJ Guidance No. 25, May 17, 2012)(a) Summary
Accounting standard for retirement benefits is revised from the viewpoint of improvements to financial reporting andinternational convergence, mainly focusing on how actuarial gains and losses and past service costs should be accounted for, howretirement benefit obligations and current service costs should be determined and enhancement of disclosures.
(b) Effective dates
Effective for the end of annual periods ending on or after March 31, 2014. Amendments relating to determination of retirement
benefit obligations and current service costs are effective from the beginning of annual periods ending on or after March 31,
2015.
(c) Effect of application of the standard
The Company and its consolidated domestic subsidiaries are currently in the process of determining the effects of these newstandards on the consolidated financial statements.
20

3. Securities(1) The following tables summarize book values and fair values of held-to-maturity debt securities as of March 31, 2013 and2012.
Millions of yen
Book values
Type
Securities with fair values not exceeding book values

2013
Fair values

DifferenceBook values

2012
Fair values

Difference

Bonds

¥135

¥131

¥(4)

¥124

¥114

¥(10)

Total

¥135

¥131

¥(4)

¥124

¥114

¥(10)

Thousands of U.S. dollars
Book values
Type
Securities with fair values not exceeding book values

2013
Fair values

Difference

Bonds$1,437$1,394

$(43)

Total

$1,437$1,394$(43)(2) The following tables summarize book values and acquisition costs of available-for-sale securities as of March 31, 2013 and2012:
Millions of yen
Book values
Type
Securities with book values exceeding acquisition costs

2013
Acquisition
costs

DifferenceBook values

2012
Acquisition
costs

Difference

Equity securities¥2,718¥2,061¥ 657¥1,177

¥923

¥ 254

Sub total

2,718

2,061

657

1,177

923

254
¥(400)

Securities with book values not exceeding acquisition costs
Equity securities¥806¥1,066¥(260)¥1,845¥2,245Sub total

806

1,066

(260)

1,845

2,245

(400)

¥3,524¥3,127¥ 397¥3,022¥3,168¥(146)

Total

Thousands of U.S. dollars
Book values
Type
Securities with book values exceeding acquisition costs

2013
Acquisition
costs

Difference

Equity securities$28,918$21,928$ 6,990

Sub total

28,91821,928

6,990$11,342$(2,766)

Securities with book values not exceeding acquisition costs
Equity securities
Sub total
Total$ 8,576
8,576

11,342(2,766)$37,494$33,270$(4,224)(3) Total sales, related gains and losses of available-for-sale securities are as follows:
Thousands of
U.S. dollars
2013

Millions of yen
Type

2013

2012

Equity securities¥50¥6Related gains

0

2

2

Related losses

―

―

―

Sales

$532

21

(4) Impairment losses on securities recognized for the years ended March 31, 2013 and 2012 are as follows:
Thousands of
U.S. dollars
2013

Millions of yen
Type

2013

2012

Available-for-sale securities

¥56

¥128

$596

Total

¥56

¥128

$596

4. Cash and Cash Equivalents
Cash and cash equivalents reported in the consolidated statements of cash flows at March 31, 2013 and 2012 were reconciledwith cash and time deposits reported in consolidated balance sheets as follows:
Thousands of
U.S. dollars
2013

Millions of yen
Cash and time deposits

2013

2012

¥32,683¥29,303$347,728

(24)

―

(255)

¥32,659¥29,303$347,473

Time deposits with maturities of exceeding
3-month from the date of acquisition
Total: Cash and cash equivalents

5. Inventories
Inventories at March 31, 2013 and 2012 consisted of the following:Thousands of
U.S. dollars
2013

Millions of yen
2013

2012

¥ 6,655¥ 7,112

Others

2,116

2,965

22,513

Total¥ 8,771¥ 10,077$93,318

Accumulated Costs on uncompleted construction contracts$70,805

6. Short-Term Bank Loans and Long-Term Debt
Short-term bank loans are represented mainly by loan on deed. The average interest rates of short-term loans were 2.0% both at
March 31, 2013 and 2012.
Long-term debt at March 31, 2013 and 2012 are summarized below:
Thousands of
U.S. dollars
2013

Millions of yen
2013

2012

Long-term debt from banks, insurance companies and others due serially through 2018:
Secured 2.4%

¥4,515¥1,945

Unsecured 2.4% to 3.1%

4,391

9,036

$48,037
46,718Less current maturities(4,327)(6,589)(46,037)

Total¥4,579¥4,392$48,718

Repayment schedules for the long-term debt are summarized below:

2014¥4,327

Thousands of
U.S. dollars$46,037

2015

1,977

21,034

2016

1,507

16,034

2017

841

8,948

2018

254

2,702

Total

¥8,906$94,755

Years ending March 31,

22

Millions of yen

As is customary in Japan, long-term and short-term bank loans are made under general agreements which provide that additional
security and guarantees for present and future indebtedness will be given under certain circumstances at the request of the banks,
and that any collateral furnished will be applicable to all indebtedness due to that bank.
In addition, the agreements provide that the bank has the right to offset cash deposited against any long-term and short-term
debt that become due and in case of default and certain other specified events, against all other debts payable to the bank. Suchrights have never been exercised by the bank.
7. Pledged Assets
The following assets were pledged to secure short-term bank loans, long-term debt and certain other obligation at March 31, 2013
and 2012:
Thousands of
U.S. dollars

Millions of yen
2013¥

Marketable securities¥

15,185

Property and equipment

0
16,244$

3
161,560

394

339

4,192

¥15,579¥16,583$165,755

Investments in securities
Total

2013

2012
0

8. Estimated loss on uncompleted construction contracts
Amount of costs on uncompleted construction contracts for which a construction loss is anticipated and reserve for expected
losses on construction contracts in process are presented without being offset.
Thousands of
U.S. dollars

Millions of yen
2013
Amount of costs on uncompleted construction contracts for which aconstruction loss is anticipated, matching with reserve for expected losses on
construction contracts in process

2013

2012
¥19

¥

―

$202

9. Revenues from construction contracts recognized by the percentage-of-completion method
Revenues from construction contracts recognized by the percentage-of-completion method for the fiscal year ended March 31,
2013 and 2012 were ¥157,701 million (US$1,677,849 thousand) and ¥137,986 million, respectively.
10. Provision for losses on construction contracts included in cost of sales of construction contracts
Provision for losses on construction contracts included in cost of sales of construction contracts for the fiscal year ended March
31, 2013 and 2012 were ¥1,438 million (US$15,299 thousand) and ¥1,153 million, respectively.
11. Research and Development Expenses
Research and development expenses included in manufacturing costs, and selling, general and administrative expenses amounted
to ¥1,135 million (US$12,076 thousand) and ¥1,121 million for the years ended March 31, 2013 and 2012, respectively.
12. Impairment Loss
No impairment loss is recognized for the year ended March 31, 2013.
Impairment loss for the year ended March, 31, 2012 is as follows:
Location

Use

Type of assets

Kanto region

Idle asset

Land

Kansai region

Idle asset

Land

Total

Millions of yen¥ 557

Thousands of
U.S. dollars$ 6,781

0

0

¥557

$ 6,78123

The Companies generally conduct grouping of its business assets by location and idle assets by each property unit to measure
impairment loss. As the above assets become idle assets in the subject fiscal year, the book value was reduced to recoverable
amount, and such reduction was recorded as an impairment loss in the extraordinary loss caption. The recoverable amounts ofthese assets were measured based on net selling price, and were mainly evaluated based on appraisal value.
13. Merger expenses
Merger expenses for the year ended March 31, 2013 is as follows:
Thousands of
U.S. dollars
2013

Millions of yen
2013
Office relocation-related expenses

¥

―

366

Other merger expenses
Total

2012

¥ 631
¥ 997

¥

$

6,714

―

3,894

―

$ 10,608(Note) Of the above amount, ¥697 million ($7,416 thousand) in expenses expected to arise in the future has been recorded asprovision for merger expenses.
14. Advances Received
As is customary in Japan, the Companies normally receive payments from customers on a progress basis in accordance with theterms of the respective construction contracts.
15. Retirement and Severance Benefits
The liabilities for retirement and severance benefits included in the consolidated balance sheets as of March 31, 2013 and 2012
are as follows:
Thousands of
U.S. dollars
2013

Millions of yen
2013

2012

Projected benefit obligation¥(18,739)¥(17,004)$(199,372)

Fair value of pension assets

9,427

8,572

100,298

672

1,007

7,150

3,343

2,866

35,567Less unrecognized net transition obligation
Less unrecognized actuarial differences
Less unrecognized past service liability
Prepaid pension cost
Retirement and severance benefits

(210)

(774)

(2,234)(3,165)(2,739)(33,674)¥ (8,672)¥ (8,072)$ (92,265)

Included in the consolidated statements of operations for the years ended March 31, 2013 and 2012 are retirement and severance
benefit expenses as follows:
Thousands of
U.S. dollars
2013

Millions of yen
2013
¥ 881

¥ 876

Interest cost on projected benefit obligation

319

384

3,394

Expected return on pensions assets

(129)

(170)

(1,372)$ 9,373

Amortization of net transition obligation

336

336

3,575

Amortization of net actuarial differences

390

807

4,149

Amortization of prior service costs
Retirement and severance benefit expense

24

2012

Service costs-benefits earned during the year

(565)

(540)

(6,011)¥1,232¥1,693$13,108

The discount rate used by the Company is 1.0% and 2.0% at March 31, 2013 and 2012.
The rate of expected return on pension assets is 1.5% and 2.0% at March 31, 2013 and 2012.
The estimated amount of all retirement benefits to be paid at the future retirement date is allocated equally to each service
year using the estimated total service years.
Actuarial differences are recognized in the consolidated statements of operations using the straight-line method over 9 years
commencing with the succeeding period.
Prior service costs are recognized in the consolidated statements of operations using the straight-line method over 3 years
commencing with the present period.
Net transition obligation is recognized using the straight-line method over 15 years.
16. Income Taxes
The Companies were subject to a number of taxes based on income, which, in the aggregate, indicate statutory rate in Japan ofapproximately 38.0% and 40.7% for the years ended March 31, 2013 and 2012.
The following table summarizes the significant differences between the statutory tax rate and the effective tax rate forfinancial statement purposes for the year ended March 31, 2013 and 2012.

Statutory tax rate

2013

2012

38.0%

40.7%

Non-deductible expenses for tax purposes

2.0

3.6

Per capita inhabitant taxes

3.6

3.9

Change in valuation allowance

(3.5)

(3.9)

Decrease in deferred income tax assets due to tax rate changes

―

12.6

Tax rate difference of special corporate tax for reconstruction

2.8―

Others2.7(0.4)

Effective tax rate

45.6%

56.5%

Significant components of the Companies’ deferred income taxes as of March 31, 2013 and 2012 are as follows:
Millions of yen
2013

2012

Thousands of
U.S. dollars
2013

Deferred income tax assets:
Tax loss carry-forwards
Non-deductible retirement benefits
Non-deductible construction costs under thepercentage-of-completion method
Others

¥

$

―

¥ 319

3,179

3,056

33,823

―

1,264

1,194

13,448

2,835

3,074

30,163Gross deferred income tax assets

7,278

7,643

77,434

Less: Valuation allowance

(620)

(703)

(6,596)

Total deferred income tax assets

6,658

6,940

70,838(1,161)(1,041)(12,352)(152)―(1,618)Deferred income tax liabilities:
Prepaid pension cost
OthersTotal deferred income tax liabilities(1,313)(1,041)(13,970)

Net deferred income taxes¥5,345¥5,899$56,86825

17. Certain Lease Information(Lessee)
As permitted, finance leases which commenced prior to April 1, 2008 and have been accounted for as operating leases continue
to be accounted for as operating leases. A summary of assumed amounts (inclusive of interest) of acquisition cost, accumulated
depreciation and net book value of assets under finance leases which do not transfer ownership of leased assets to the lessee atMarch 31, 2013 and 2012 were as follows:
Millions of yen

Vehicles, tools, furniture andfixtures
OthersAcquisition
cost

2013
Accumulated
depreciation

Net bookvalue

Acquisition
cost

2012
Accumulated
depreciation

―

―

―

¥17

¥14

¥3

―

―

―

―

―

―

―

―

―

¥17

¥14

¥3

Total

Net book
value

Thousands of U.S. dollars

Vehicles, tools, furniture andfixtures
Total

Acquisition
cost

2013
Accumulated
depreciation

Net book
value

―

―

―

―

―

―

Depreciation charges are computed using the straight-line method over lease terms assuming no residual value.
Lease payments and assumed depreciation charges under such finance leases for the years ended March 31, 2013 and 2012were ¥2 million (US$32 thousand) and ¥20 million, respectively.
The following is a schedule by year of future lease payments (inclusive of interest) under finance leases as of March 31, 2013:
2013

¥3

Thousands of
U.S. dollars
$32

Total

¥3

$32

Millions of yen

Years ending March 31,

18. Comprehensive Income
Amounts reclassified to net income (loss) in the current period that were recognized in other comprehensive income in thecurrent or previous periods and tax effects for each component of other comprehensive income are as follows:
Thousands of
U.S. dollars
2013

Millions of yen
2013

2012

Unrealized gains (losses) on securities:¥494¥(142)

Reclassification adjustment

49

122

521

Sub-total, before tax

543

(20)

5,777

Tax (expense) or benefit

(153)

―

(1,628)

Increase (decrease) during the year26

$5,256Sub-total, net of tax

390

(20)

4,149

Total other comprehensive income¥390¥ (20)$4,14919. Net Assets
Under the Japanese Corporate Law (“the Law”), the entire amount paid for new shares is required to be designated as common
stock (or preferred stock). However, a company may, by a resolution of the Board of Directors, designate an amount notexceeding one-half of the price of the new shares as additional paid-in capital, which is included in capital surplus in theaccompanying consolidated balance sheets.
Under the Law, in cases where dividend distribution of surplus is made, the smaller of an amount equal to 10% of thedividend or the excess, if any, of 25% of common stock and preferred stock over the total of additional paid-in capital and legal
earnings reserve must be set aside as additional paid-in capital or legal earnings reserve. Legal earnings reserve is included inretained earnings in the accompanying consolidated balance sheets.
Under the Law, legal earnings reserve and additional paid-in capital could be used to eliminate or reduce a deficit or could becapitalized generally by a resolution of the shareholders’ meeting.
Additional paid-in capital and legal earnings reserve may not be distributed as dividends. Under the Law, all additional
paid-in capital and all legal earnings reserve may be transferred to other capital surplus and retained earnings, respectively, which
are potentially available for dividends.
The maximum amount that the Company can distribute as dividends is calculated based on the non-consolidated financial
statements of the Company in accordance with the Law.
20. Consolidated Statements of Changes in Net Assets(1) Common stock and preferred stock issued
Number of sharesClass IIpreferredstock
875,000

Balance at April 1, 2012

100,000,000

Class I
preferredstock
750,000

Increase during the year

16,356,517

0

0

0

Decrease during the year00723,72600116,356,517

750,000

151,224

875,000

250,000

Commonstock

Balance at March 31, 2013

Class III
preferredstock
875,000

Class IV
preferredstock
250,000
0

There were no changes of number of shares issued during the years ended March 31, 2012.
Detail of increase or decrease during the year ended March 31, 2013 was as follows:(Common stock)

Number ofsharesIncrease by exercising the call option of

16,356,517

Class II preferred stock(Class II preferred stock)

Number ofshares723,726

Decrease by retirement of treasury stock

On December 25, 2003, the Company issued 2,750 thousand shares of its preferred stock at ¥4,000 per each share through athird-party allotment of shares. Holders of preferred stock of each class are entitled to receive annual dividends and distributionof residual assets, in priority to holders of common stock. Holders of preferred stock of each class have neither voting right atshareholders’ meeting, nor right to receive allotments of offered shares or share subscription rights.
Class I, II and IV preferred stock are non-cumulative and non-participating, and class III preferred stock is cumulative andparticipating. Exercisable period of each conversion right is as follows:

Exercisable period of right to convert into
common stock

Class I
preferred stock
December 25, 2008
toDecember 24, 2023

Class IIpreferred stock
December 25, 2010
toDecember 24, 2025

Class III
preferred stock
December 25, 2012
toDecember 24, 2027

Class IV
preferred stock
December 25, 2008
toDecember 24, 2023

27

(2) Treasury stock outstanding(Common stock)
Balance at April 1, 2011

Number ofshares1,172,112

Increase during the year

57,612

Decrease during the year

153,100

Balance at April 1, 2012

1,076,624

Increase during the year

3,215

Decrease during the year

140,600

Balance at March 31, 2013

939,239(Class II preferred stock)

Number ofsharesBalance at April 1, 2011

0

Increase during the year

0

Decrease during the year

0

Balance at April 1, 2012

0

Increase during the year

723,726

Decrease during the year

723,726

Balance at March 31, 2013

(Details of increase or decrease)(Common stock)
Increase by purchase of shares less than one unit
Decrease by delivery of treasury stock(Class II preferred stock)
Increase by exercising the call option
Decrease by retirement of treasury stock0

Number ofshares3,215
140,600

Number ofshares723,726
723,726

21. Segment Information
Effective April 1, 2010, the Company adopted the “Accounting Standard for Disclosures about Segments of an Enterprise andRelated Information” (Accounting Standards Board of Japan (“ASBJ”) Statement No. 17 on March 27, 2009) and the “Guidanceon Accounting Standard for Disclosures about Segments of an Enterprise and Related Information” (ASBJ Guidance No. 20,
issued on March 21, 2008).
(1) General information about reportable segments
Each reportable segment of the Companies is the business unit of the Companies, which discrete financial information is able toobtain. Reportable segments are reviewed periodically at the Board of Directors meeting in order to determine distribution ofmanagement resources and evaluate business results by each reportable segment.
The Companies mainly operate the construction and construction-related business. Among them the Company, the general
constructor, operates their businesses that is composed of the civil engineering and building construction, and each headquarter
plans and executes on their business strategy of production systems and sales process in Japan and overseas.
Furthermore, consolidated subsidiaries respectively develop their business by cooperating with the Company.
Accordingly, the Companies classify their business operating segments, identified by product and services, into threereportable segments as “Civil engineering segment”, “Building construction segment” and “Consolidated subsidiaries segment”.

28The major products and services of each segment are as follows:
Reportable segments

Major products and services

Civil engineering

Civil engineering of the Company in Japan and overseas

Building construction

Building construction of the Company in Japan and overseas

Consolidated subsidiaries

Constructions and sales of construction materials of consolidated subsidiaries(2) Basis of measurement about reported segment profit or loss, segment assets, segment liabilities and other material items
Accounting methods of reported segment are the same as that set forth in “Summary of Significant Accounting Policies”. The
segment profits or losses for each reportable segment are in conformity to the operating income of consolidated statements ofincome. Intersegment transactions and transfers are based on fair market prices.
Assets are not allocated to Civil engineering segment and Building construction segment, since the chief operating decision
maker have no financial information on assets in these segments. However, corresponding depreciation expenses including
amortization of intangible fixes assets are allocated to Civil engineering segment and Building construction segment according to
the reasonable criterion measured by depending on the degree on benefit.
(3) Information about reported segment profit or loss, segment assets, segment liabilities and other material items(a) Segment information as of and for the fiscal year ended March 31, 2013 is as follows:
Millions of yen
CivilengineeringYear ended March 31, 2013:

Reportable segments
Building
Consolidated
construction subsidiaries

Sub total

Other

Total

Reconciliations Consolidated

Revenues:
Outside customers
Intersegment
Total
Segment profit (loss)
AssetsOther material items:
Depreciation
and amortization
Capital expenditures¥91,060¥88,322¥15,053¥194,435¥3,464¥197,899―

026,722

26,722

1

26,723¥(26,723)―

91,06088,322

41,775

221,157

3,465

224,622(26,723)

197,899―¥197,899

6,456

(593)

811

6,674

276

6,950

(1,337)

5,613

Note 4Note 423,259115,616

3,167

118,783

23,097

141,880

179

173

155

507

―

507

(4)

503

Note 4Note 4

70

312

―

312

―

312

Thousands of U.S. dollars
Civil
engineeringYear ended March 31, 2013:

Reportable segments
Building
Consolidated
construction subsidiaries

Sub total

Other

Total

Reconciliations Consolidated

Revenues:
Outside customers
Intersegment
Total$968,827$939,696$160,155$2,068,678$36,855$2,105,533―

0284,307284,30711

284,318$(284,318)―

968,827

939,696444,462

2,352,985

36,8662,389,851(284,318)

2,105,533―$2,105,533

Segment profit (loss)

68,688(6,309)8,629

71,0082,936

73,944(14,225)

59,719Assets

Note 4Note 4247,462

1,230,088

33,695

1,263,783

245,739

1,509,522

1,904

1,841

1,649

5,394

―

5,394

(42)

5,352

Note 4Note 4

745

3,320

―

3,320

―

3,320

Other material items:
Depreciation
and amortization
Capital expenditures

29

Notes:1. “Other” consisted of mainly research and other activities, which are not included in reportable segment.
2. Reconciliations amounts were as follows:(i) Reconciliations amount of segment profit was to ¥(1,337) million (US$(14,225) thousand), which included ¥39 million (US$415
thousand) of intersegment eliminations and others, and ¥(1,376) million (US$(14,640) thousand) of corporate expenses. Corporate
expenses were mainly general and administrative expenses, which are not attributed to reportable segments.
(ii) Reconciliations amount of segment assets was to ¥23,097 million (US$245,739 thousand), which included ¥(13,137) million(US$(139,770) thousand) of intersegment eliminations and others, and ¥36,234 million (US$385,509 thousand) of corporate assets.
Corporate assets were mainly cash and time deposits, investments in securities and others, which are not attributed to reportablesegments.
3. Segment profit was adjusted to operating income of consolidated statement of operations.
4. As discussed in Note 21. (2), assets are not allocated to Civil engineering segment and Building construction segment, since the chief
operating decision maker have no financial information on assets in these segments. However, for your information, segment assets of Civil
engineering segment and Building construction segment are amounted to ¥92,357 million (US$982,626 thousand), and capital expendituresof these segments are amounted to ¥242 million (US$2,575 thousand).

(b) Segment information as of and for the fiscal year ended March 31, 2012, which is restated in conformity with therequirements of the Standard, is as follows:
Millions of yen
CivilengineeringYear ended March 31, 2012:

Reportable segments
Building
Consolidated
construction subsidiaries

Sub total

Other

Total

Reconciliations Consolidated

Revenues:
Outside customers¥81,203¥84,762¥14,835¥180,800¥1,250¥182,050―

929,18829,197

13

29,210(29,210)―

81,20384,771

44,023

209,997

1,263

211,260(29,210)

182,050

Intersegment
Total

¥

―

¥182,050

Segment profit

6,777

(171)

691

7,297

120

7,417

(1,502)

5,915

Assets

Note 4Note 4

22,767

111,855467

112,322

20,855133,177

208

214

178

600

―

600

(4)

596

Note 4Note 4

180

356

―

356

(7)

349

Other material items:
Depreciation
and amortization
Capital expenditures
Notes:

1. “Other” consisted of mainly research and other activities, which are not included in reportable segment.
2. Reconciliations amounts were as follows:(i) Reconciliations amount of segment profit was to ¥(1,502) million, which included ¥(6) million of intersegment eliminations and others,and ¥(1,496) million of corporate expenses. Corporate expenses were mainly general and administrative expenses, which are not
attributed to reportable segments.
(ii) Reconciliations amount of segment assets was to ¥20,855 million, which included ¥(13,461) million of intersegment eliminations andothers, and ¥34,316 million of corporate assets. Corporate assets were mainly cash and time deposits, investments in securities andothers, which are not attributed to reportable segments.
3. Segment profit was adjusted to operating income of consolidated statement of operations.
4. As discussed in Note 21. (2), assets are not allocated to Civil engineering segment and Building construction segment, since the chief
operating decision maker have no financial information on assets in these segments. However, for your information, segment assets of Civil
engineering segment and Building construction segment are amounted to ¥89,088 million, and capital expenditures of these segments areamounted to ¥176 million.

(4) Related information(a) Information about products and services
Disclosure of information about products and services is omitted, since reportable segments of the Companies areclassified by their products and services.

30

(b) Information about geographic areas(Revenues)
Revenues information about geographic areas for the year ended March 31, 2013and 2012 are as follows:

Geographic Areas

2013

2012

Thousands of
U.S. dollars
2013

Japan

¥169,661¥163,134$1,805,097

Other

28,23818,916300,436

Total¥197,899¥182,050$2,105,533

Millions of yen(Tangible fixed assets)
Disclosure of tangible fixed assets information about geographic areas is omitted, since the proportion of tangible fixed
assets in Japan to total tangible fixed assets is over 90%.
(c) Information about major customers
Thousands of
U.S. dollars

Millions of yen
Customers

Related reportable segments

Ministry of Land, Infrastructure,
Transport and Tourism

Civil engineering,2013¥22,595

Building construction$240,398

Millions of yen
Customers
Ministry of Land, Infrastructure,
Transport and Tourism

Related reportable segments

2012

Civil engineering¥23,717(d) Impairment loss of fixed assets by reported segment
No impairment loss is recognized for the year ended March 31, 2013.
Impairment loss of fixed assets by reported segment of year ended March 31, 2012 is as follow.
Millions of yen

Impairment loss

2012
Reportable segments
Building
Consolidated
Civil engineering
construction
subsidiaries
¥ ―
¥ ―
¥ ―

Other
¥ ―

Eliminations
and others
¥ 557

Total
¥ 557

22. Amounts per Share of Common Stock
Basis of calculation of basic and diluted net income per share (the “EPS”) for the year ended March 31, 2013 is as follows:
Net income
Year ended March 31, 2013:
Net income

Millions of yen

Weightedaverage
sharesThousands ofsharesEPS
Yen

U.S. dollars¥20.69$0.22¥14.74$0.16¥2,293

Net income not available to common shareholders
Cash dividends on preferred stock158¥2,135103,215

Cash dividends on preferred stock158

51,293

Shares adjusted by share subscription rights

―

1,085

¥2,293

155,593

Basic EPS-Net income available to common shareholders
Effect of dilution

Diluted EPS-Net income for computation31Basis of calculation of basic net loss per share (the “EPS”) for the year ended March 31, 2012 is as follows:
Net lossYear ended March 31, 2012:
Net income

Millions of yen

Weightedaverage
sharesThousands ofsharesEPS
Yen¥1,767

Net income not available to common shareholders
Cash dividends on preferred stock
Basic EPS-Net income available to common shareholders

247¥1,52098,831

Cash dividends on preferred stock

247

51,884

Shares adjusted by share subscription rights

―

2,859

¥1,767

153,574¥15.38

Effect of dilution

Diluted EPS-Net income for computation¥11.51

23. Financial Instruments(1) Status of financial instruments(a) Policies for using financial instruments
The Companies raise funds mainly by borrowings from bank, and restrict temporary surplus funds to the lower risk assets such as
deposits. Derivative transactions are employed for hedging of the risk described below, and never use for speculation.
(b) Detail of financial instruments and the related risks
Notes and accounts receivable are exposed to the credits risks in relation to customers. Foreign currency-dominated notes andaccounts receivable are also exposed to foreign exchange risk.
Investment securities which are mainly share held for keep the relationship with business partners are exposed to market pricefluctuation risk.
Notes and accounts payable are mostly settled within one year.
Borrowing is primarily for working funds. With variable interest rates, it is exposed to interest-rates risk.
Borrowing, notes and accounts payable are also exposed to liquidity risk.
Derivative transactions entered into by the Companies are forward currency exchange contracts to hedge foreign exchange
risk involving oversea business and interest rate swap contracts to hedge interest-rates risk involving borrowing.
Refer to Note 2(8) “Derivatives and hedging transactions” for information about the hedging instruments and hedging items,
hedging policy and method of evaluating hedging effectiveness concerning the hedge accounting methods adopted by theCompanies.
(c) Policies and processes for risk management
In order to control customer’s credit risk, each business and sales management division within the Companies conduct periodic
monitoring of key transaction partners and attempt to find out deterioration of the financial situation at the initial stage under theinternal credit policies.
For the purpose of hedging foreign exchange risk, the Companies conduct forward exchange contracts. The Companies also
conduct interest rate swap contracts to avert interest-rate risk by each long-term borrowing.
Fair value of investment securities are periodically reported to the Directors and Executive Officers. The possession situationof securities is also continually reviewed, taking into consideration of the Companies’ relationship with respective business
partners.
Derivative transactions are treated by the Finance Department in accordance with the established policies. The Companies
deal with credible banks to reduce the credit risk.
In order to manage the liquidity risk, the Companies update financial plan monthly.
(d) Supplementary explanation on fair value of financial instruments
The fair value of financial instruments is based on market value or reasonable estimate if there is no market value. Since certain
assumptions are used for estimating values, values could be different if different assumptions are applied. In addition, thederivative contract amounts described in Note 24 “Derivative Financial Instruments” are not indicative of actual market risk
involved in derivative transactions.

32

(2) Fair value of financial instruments
The following tables summarize book values and fair values of financial instruments as of March 31, 2013:
Millions of yen
TypeAssets(a) Cash and time deposits

Thousands of U.S. dollars

Book values

Fair values

DifferenceBook values

Fair values

Difference¥32,683¥32,683¥ ―$347,728$347,728$―(b) Receivables:
Notes

1,078

1,078

―

11,46911,469―Accounts

54,39754,382(15)

578,753

578,593

(160)

(43)

(c) Marketable securities andInvestments in securities:
134

130

(4)

1,427

1,384

3,524

3,524

―

37,49337,493―¥91,816¥91,797¥(19)$976,870$976,667$ (203)

Notes¥24,406¥24,406¥ ―$259,666$259,666$

Accounts

31,35531,355―333,599

333,599

―

5,600

5,600

―

59,581

59,581

―

4,327

4,327

―

46,03746,037

―

8,690

8,690

―

92,45792,457

―

4,579

4,562

17

48,71848,537

181¥78,957¥78,940¥ 17$840,058$839,877

Held-to-maturity debt securities
Available-for-sale securities
Total assets
Liabilities(a) Payables:(b) Short-term bank loans
Current maturities oflong-term debt(c) Deposit received(d) Long-term debt,
less current maturities
Total liabilities

$

―

181

The following tables summarize book values and fair values of financial instruments as of March 31, 2012:
Millions of yen
TypeAssets(a) Cash and time deposits

Book values

Fair values

Difference¥29,303¥29,303¥ ―(b) Receivables:
Notes
Accounts

684

684

―

49,71449,700(14)(c) Investments in securities:
Held-to-maturity debt securities

123

114

(9)

3,022

3,022

―

¥82,846¥82,823

¥(23)

Notes

¥23,804¥23,804¥ ―Accounts

29,676

29,676

―

7,440

7,440

―

6,589

6,589

―

5,502

5,502

―

4,392

4,399

(7)

¥77,403¥77,410¥ (7)Available-for-sale securities
Total assets
Liabilities(a) Payables:(b) Short-term bank loans
Current maturities oflong-term debt(c) Deposit received(d) Long-term debt,
less current maturities
Total liabilities

33

Notes:1. Method of measurement of financial instruments and matters concerning securities and derivatives(Assets)(a) Cash and time deposits
The fair values of this account are equivalent to the book value, since this account is settled in a short period of time.
(b) Notes, accounts and unconsolidated subsidiaries and affiliates receivables
The fair values of these accounts are based on the present value of discounted cash flows using the interest rate determined by the factors of
the remaining terms and credit risks, with respect to each receivable categorized by collection terms.
(c) Marketable securities and Investments in securities
The fair values of this account are based on the quoted market value.
(Liabilities)(a) Notes and accounts payables, (b) Short-term bank loans and current maturities of long-term debt and (c) Deposit received
The fair values of these accounts are equivalent to the book value, since these accounts are settled in a short period of time.
(d) Long-term debt, less current maturities
The fair values of this account are based on the present value of discounted cash flows using the interest rate which may be applicable when
the same kinds of borrowings are made.
(Derivative transactions)
See Note 24 “Derivative Financial Instruments”.
2. Financial instruments which are difficult to estimate the fair value
Non-marketable securities (book values of ¥2,362 million (US$25,129 thousand) and ¥2,369 million as of March 31, 2013 and 2012,
respectively) are not included in the above “Assets (c) Investments in securities”; since it is difficult to estimate the fair values thereof because
neither market quoted value is available nor future cash flows can be estimated.
3. Redemption schedules for cash and time deposits, receivables and held-to-maturity debt securities as of March 31, 2013 and 2012 are as
follows:
Millions of yen
2013
Within1 yearCash and time deposits¥32,683Over
1 yearless than
5 years
¥
―

2012

Over
5 yearsless than
10 years¥ ―Over
10 yearsWithin1 year¥ ―¥29,303Over
1 yearless than
5 years¥ ―Over
5 yearsless than
10 years¥ ―Over
10 years¥ ―Receivables:
Notes

1,078

―

―

―

684

―

―

―

Accounts

53,113

1,284

―

―

48,411

1,303

―

―

Held-to-maturity debt securities
Total

―

―

135

―

―

―

124

―

¥86,873¥ 1,284¥135¥ ―¥78,398¥ 1,303

¥ 124

¥ ―

Thousands of U.S. dollars
2013
Within1 yearCash and time deposits$347,728

Over
1 yearless than
5 years$―Over
5 yearsless than
10 years$―Over
10 years$―

Receivables:
Notes

11,469―――Accounts

565,081

13,661

―

―

―

―

1,436

―

$924,278$13,661$1,436$―

Held-to-maturity debt securities
Total

34

24. Derivative Financial Instruments
Derivative transactions accounted for by the hedge accounting as of March 31, 2013 and 2012 are as follows:(Special case interest swap treatment)
Millions of yen
2013
Type ofderivative transactions
Interest swap contract:
To pay fixed, to receive variable

2012

Contract amount
Settled over
1 yearMain items
hedgedTotal

Long-term debt

¥1,316¥731

Contract amount
Settled over
1 year

Fair
value

Total

Note 1¥1,716Fairvalue¥1,065Note 1Thousands of U.S. dollars
2013Type ofderivative transactions
Interest swap contract:
To pay fixed, to receive variable

Main items
hedgedContract amount
Settled overTotal
1 yearFair
value

Long-term debt

$14,001

Note 1$7,777Note:
1. The fair values of special case interest swap treatment are included in the fair value of long-term debt since such interest swap is treated
together with long-term debt being hedged.

25. Effect of bank holiday
The year-end of March 31, 2013 and 2012 fell on a bank holiday. Notes maturing on March 31, 2013 and 2012 were settled onfollowing business day, April 1, 2013 and April 2, 2012 and accounted for accordingly. The amounts settled on were as follows:
Thousands of
U.S. dollars
2013

Millions of yen
Type

2013

2012

Notes receivable

¥ 31

¥ 112

$330

Total

¥ 31

¥ 112

$330

26. Asset Retirement Obligations
Disclosures about asset retirement obligations are omitted, since the amount of asset retirement obligations is immaterial for theyear ended March 31, 2013.
27. Fair Value of Investment and Rental Property
Disclosures about fair value of investment and rental property are omitted, since the total amount of investment and rental
property is immaterial for the years ended March 31, 2013 and 2012.
28. Stock Option Plans(1) Amount of cost and accounts for stock options as of March 31, 2013 and 2012 are as follows:
Thousands of
U.S. dollars
2013

Millions of yen
2013
Cost of sales on construction contracts
Selling, general and administrative expenses

2012

¥ ―

¥0

2

9

$

―
21

35

(2) Amount of profit and accounts for not exercising of stock options as of March 31, 2013 and 2012 are as follows:
Thousands of
U.S. dollars
2013

Millions of yen
2013

2012
¥3

Special profits

¥9

$32

(3) The stock options outstanding as of March 31, 2013 are mainly as follows:(a) Content

Persons granted
Class and number ofsharesDate of grantCondition of
settlement rights

Length of service
Exercisable period

Persons granted
Class and numberof shares
Date of grantCondition of
settlement rights

Length of service
Exercisable period36

The first seriesof sharesubscription rights (A)June 27, 2008
Directors of the company: 8
Executive officers: 13
110,400 sharesof common stock
July 15, 2008
The person who exercises
stock purchase rights shallbe a director, or executive
officer of the Company,
who has continued towork at the Company
from the fifth
stockholders’ meeting to
the sixth stockholders’meeting.
However, this condition
is invalid in case of deathor loss of position due toCompany circumstances.
From July 15, 2008
to July 14, 2009
From July 15, 2009

The first seriesof sharesubscription rights (B)June 27, 2008
Executive employees: 76
722,000 sharesof common stock
July 15, 2008
The person who exercises
stock purchase rights shallbe an employee of theCompany who has
continued to work at theCompany from July 15,
2008 until July 15, 2010.
However, this condition
is invalid in case of death,retirement age or loss of
position due to Company
circumstances.

From July 15, 2008
to July 15, 2010
From July 16, 2010

to July 14, 2019

to July 15, 2015

The third seriesof sharesubscription rights (A)June 29, 2010
Directors of the company: 8
Executive officers: 8
90,000 sharesof common stock
July 16, 2010

The fourth seriesof sharesubscription rights (A)June 29, 2011
Directors of the company: 9
Executive officers: 13
85,800 sharesof common stock
July 15, 2011

The person who exercises
stock purchase rights shallbe a director, or executive
officer of the Company,
who has continued to workat the Company from theseventh stockholders’meeting to the eighth
stockholders’ meeting.
However, this condition
is invalid in case of deathor loss of position due toCompany circumstances.

The person who exercises
stock purchase rights shallbe a director, or executive
officer of the Company,
who has continued to workat the Company from theeighth stockholders’meeting to the ninth
stockholders’ meeting.
However, this condition
is invalid in case of deathor loss of position due toCompany circumstances.

From July 16, 2010
to July 15, 2011
From July 16, 2011

From July 15, 2011
to July 14, 2012
From July 15, 2012

to July 15, 2021

to July 14, 2022

The second seriesof sharesubscription rights (A)June 26, 2009
Directors of the company: 9
Executive officers: 12
115,000 sharesof common stock
July 14, 2009
The person who exercises
stock purchase rights shallbe a director, or executive
officer of the Company,
who has continued towork at the Company
from the fifth
stockholders’ meeting to
the sixth stockholders’meeting.
However, this condition
is invalid in case of deathor loss of position due toCompany circumstances.
From July 14, 2009
to July 13, 2010
From July 14, 2010
to July 13, 2020

The second seriesof sharesubscription rights (B)June 26, 2009
Executive employees: 986,400 sharesof common stock
July 14, 2009
The person who exercises
stock purchase rights shallbe an employee of theCompany who has
continued to work at theCompany from July 14,
2009 until July 14, 2011.
However, this condition
is invalid in case of death,retirement age or loss of
position due to Company
circumstances.

From July 14, 2009
to July 14, 2011
From July 15, 2011
to July 14, 2016

(b) Number and price
The first
series of sharesubscription
rights (A)The first
series of sharesubscription
rights (B)The second
series of sharesubscription
rights (A)The second
series of sharesubscription
rights (B)The third
series of sharesubscription
rights (A)The fourth
series of sharesubscription
rights (A)At the beginning of the year

―

―

―

―

―

85,000Granted during the year

―

―

―

―

―

―

―

―

―

―

―

―

Vested during the year

―

―

―

―

―

85,000At the end of the year

―

―

―

―

―

―

48,500304,000

69,00067,20081,000―Non-vested shares

Forfeited and expired during theyear

Vested shares
At the beginning of the year
Vested during the year
Exercised during the year
Forfeited or expired during theyear
Unexercised at the end of the year

―

―

―

―

―

85,00013,20057,00023,0009,600

18,00019,800―104,500

―

―

―

―

35,300142,500

46,00057,60063,00066,000Exercise price

¥ 1

¥125

¥ 1

¥120

¥ 1

¥ 1

Average stock price at exercise

¥145

¥223

¥134

¥265

¥156

¥167

Fair value price at the grant date

¥107

¥ 30

¥101

¥ 28

¥ 72

¥111

(4) Method to estimate fair value of stock options
It does not give employees stock options for the current fiscal year.
(5) Method to estimate number of vested stock options
As a rational estimate of the forfeited number of stock options in the future is generally difficult, the company adopts a method whereby only
forfeited numbers are reflected.

29. Subsequent Event
On May 24, 2012, the Company has implemented a merger agreement with ANDO Corporation (“ANDO”) which took effect on
April 1, 2013, and the approval of the extraordinary general meetings of shareholders held on July 20, 2012.
(1) Outline of the merger(a) Name and business of acquired company
Name: ANDO Corporation
Business: Construction and real estimate business(b) Main reason of the merger
The merger is expected to expand our business scale, to streamline and enhance management efficiency, and to strengthen
earnings capabilities. This agreement, through a capital tie-up with ANDO from 2003 and based on the track record we have built,
will allow us to take advantage of the complementary effect to generate synergies in technology, sales and cost competitiveness,
as well as to strengthen business fields and promote efficiency. In addition, by establishing a foundation for further overseas
business development and expansion into new business fields, the merger is expected to enhance our earnings capabilities,
financial foundation and corporate value, to establish a more solid management foundation, and to foster business development
and growth.
(c) Date of merger
April 1, 2013(d) Regal form of merger
Absorption-type merger (HAZAMA as the surviving company, ANDO as the extinct company)(e) Name after management integration
HAZAMA ANDO CORPORATION
37

(f) Voting rights acquired
100%(g)Reason for determining acquiring company
It is decided that HAZAMA be the acquiring company and ANDO be the acquired company, due to shareholders of HAZAMA awholly owned subsidiary, will have the largest percentage of voting rights of the integrated company.
(2) Acquisition cost of acquired company
Millions of yen
2013
Consideration for the acquisition
Immediacy acquisition cost
Acquisition cost

Common stocks
Advisory cost, etc.

Thousands of
U.S. dollars¥ 9,117125¥ 9,242$ 97,000
1,330$ 98,330(3) Share exchange ratio, its basis for determination, number of share delivered

Content of allotment inrelation to the merger

HAZAMA

ANDO(Surviving company)(Extinct company)

Common stock 1

Common stock 0.53

Notes:
1. 0.53 shares of HAZAMA’s common stock are allotted and delivered per share of ANDO common stock.
However, it isn’t allotted to 2,783,963 shares of the Company’s common stock which ANDO owns.
2. Frontier Management Inc. and ABeam M&A Consulting Ltd. were appointed by HAZAMA and ANDO, respectively, as third party
valuation institutions in determining the share exchange ratio for the merger. HAZAMA and ANDO engaged in negotiation anddiscussions with reference to the share exchange ratio analysis provided by the above third party institutions and with consideration for
HAZAMA’s and ANDO’s financial conditions, asset situation, performance trends and stock price movements. As a result, HAZAMA andANDO reached an agreement in terms of the share exchange ratio set forth above.
3. Number of shares delivered by the merger is 43,833,139 common stock of HAZAMA. (HAZAMA does not apply treasury stock to theallotment of shares by this merger.)(4) Amount of gain on negative goodwill and reason for recognizing negative goodwill(a) Amount of gain on negative goodwill¥10,538 million ($112,118 thousand)(b) Reason for recognizing negative goodwill
ANDO accounted for the difference between the acquisition cost and the net amount of assets and liabilities acquired, as negative
goodwill.
(5) Amount of assets and liabilities acquired on date of merger
Thousands ofMillions of yen

U.S. dollars
2013

Current assets
Fixed assets
Total assets
Current liabilities
Long-term liabilities
Total liabilities38¥ 84,266
32,432
116,698
83,084
13,834
96,918$ 896,542
345,058
1,241,600
883,966
147,186
1,031,152

Independent Auditors’ Report (HAZAMA)

To the Board of Directors of HAZAMA ANDO CORPORATION:
We have audited the accompanying consolidated financial statements of HAZAMA ANDOCORPORATION and its consolidated subsidiaries, which comprise the consolidated balance sheets as at
March 31, 2013 and 2012, and the consolidated income statements, statements of comprehensive
income, statements of changes in net assets and statements of cash flows for the years then ended, and asummary of significant accounting policies and other explanatory information.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial
statements in accordance with accounting principles generally accepted in Japan, and for such internal
control as management determines is necessary to enable the preparation of consolidated financial
statements that are free from material misstatements, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our
audits. We conducted our audits in accordance with auditing standards generally accepted in Japan.
Those standards require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether the consolidated financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the consolidated financial statements. The procedures selected depend on our judgement, including theassessment of the risks of material misstatement of the consolidated financial statements, whether due tofraud or error. In making those risk assessments, we consider internal control relevant to the entity’s
preparation and fair presentation of the consolidated financial statements in order to design audit
procedures that are appropriate in the circumstances, while the objective of the financial statement audit
is not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An
audit also includes evaluating the appropriateness of accounting policies used and the reasonableness ofaccounting estimates made by management, as well as evaluating the overall presentation of theconsolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit opinion.
OpinionIn our opinion, the consolidated financial statements present fairly, in all material respects, the financial
position of HAZAMA ANDO CORPORATION and its consolidated subsidiaries as at March 31, 2013 and2012, and their financial performance and cash flows for the years then ended in accordance withaccounting principles generally accepted in Japan.
Emphasis of Matter
Without qualifying our opinion, we draw attention to Note 29 to the consolidated financial statements,
HAZAMA CORPORATION and ANDO Corporation merged on April 1, 2013.
Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year
ended March 31, 2013 are presented solely for convenience. Our audit also included the translation of yen
amounts into U.S. dollar amounts and, in our opinion, such translation has been made on the basis
described in Note 1 to the consolidated financial statements.

August 27, 2013
Tokyo, Japan

39

Consolidated Balance Sheets (ANDO)
ANDO Corporation and Consolidated Subsidiaries
March 31, 2012 and 2013

Thousands of
U.S. dollars(Note 3)

Millions of yen
2012

2013

2013

¥ 13,991¥ 25,911$ 275,500

57,73657,164

607,809

Allowance for doubtful accounts

(137)

(226)

(2,408)Inventories (Note 8)

6,458

3,923

41,711

646

580

6,173

5,450

2,067

21,976

84,144

89,419950,761

51

49

524

14,443

15,651

166,412

852

760

8,083

15,346

16,460175,019

Land (Notes 9 and 10)

14,785

9,572

101,779

Buildings and structures (Note 9 and 10)

12,760

10,224

108,710

Machinery and equipment (Note 9)

1,886

856

9,102

449

418

4,438

29,88021,070224,029(10,659)(7,791)(82,837)

19,221

13,279141,192

Deferred tax assets (Note 16)

2,424

815

8,659

Others

1,438

3,390

36,048

3,862

4,205

44,707¥ 122,573¥ 123,363$ 1,311,679

ASSETS
Current assets:
Cash and deposits (Notes 4 and 7)
Accounts and notes receivable – Trade (Note 4)

Deferred tax assets (Note 16)
Prepaid expenses and other current assets
Total current assets

Investments and advances:
Investments inunconsolidated subsidiaries and affiliates (Note 5)
Investments in securities (Notes 4 and 5)
Advances
Total investments and advances

Property and equipment, at cost:

Leased assets

Accumulated depreciation
Total property and equipment

Other assets:

Total other assets

Total assets40Thousands of
U.S. dollars(Note 3)

Millions of yen
2012

2013

2013

¥ 14,813¥$ 112,483

LIABILITIES AND NET ASSETS
Current liabilities:
Short-term bank loans (Notes 4 and 10)

10,579Current portion of long-term debt (Notes 4 and 10)

6,093

5,325

56,614

Accounts and notes payable-Trade (Note 4)

51,31055,962595,026

203

397

4,221

Accrued income taxes
Accrued bonuses

194

127

1,354

5,628

7,842

83,381

Allowance for warranty on completed construction contracts

539

560

5,955

Allowance for losses on construction contracts

64

688

7,311

Allowance for contingent losses

365

―

―

Allowance for merger-related cost (Note 14)

―

414

4,409

Advances on construction work in progress (Note 11)

OthersTotal current liabilities

5,940

6,206

65,98685,14988,100936,740

Long-term liabilities:
Long-term debt (Notes 4 and 10)

7,478

8,341

88,686

Accrued retirement benefits (Note 17)

2,613

2,172

23,094

Deferred tax liability on land revaluation (Note 9)

3,864

2,160

22,964

734

771

8,206

14,68913,444142,950

8,986

8,986

95,540

OthersTotal long-term liabilities
Net assets
Shareholders’ equity (Note 18):
Common stock
authorized 250 million shares; issued 85,488,000
shares at March 31, 2012 and 2013
Capital surplus

5,474

5,474

58,206

Retained earnings

3,795

4,947

52,603

Treasury stock, at cost

(459)

(459)

(4,886)

17,796

18,948201,463

1,579

2,244

23,857

(5)

(4)

(45)

(2012 - 2,781,948 shares, 2013 - 2,783,963 shares)
Total shareholders’ equity
Accumulated other comprehensive income:Unrealized gains on securities (Note 5)
Deferred losses on derivative financial instruments used for hedge accounting
Land revaluation difference (Note 9)
Foreign currency translation adjustments
Total accumulated other comprehensive income
Minority interests in consolidated subsidiaries
Total net assets
Total liabilities and net assets

2

3,153

46

491

2

120

1,276

4,729

2,406

25,579

210

465

4,947

22,735

21,819231,989¥ 122,573¥ 123,363$ 1,311,679

41

Consolidated Statements of Income (ANDO)
ANDO Corporation and Consolidated Subsidiaries
Years ended March 31, 2012 and 2013

Thousands of
U.S. dollars(Note 3)

Millions of yen
2012

2013

¥ 159,095¥ 166,694$ 1,772,404

10,284

15,643

166,323

169,379

182,337

1,938,727

150,962

160,646

1,708,094

Cost of real estate

7,970

13,595

144,547

Selling, general and administrative expenses

7,798

7,868

83,661

166,730

182,109

1,936,302

2,649

228

2,425

Interest expense

(883)

(622)

(6,618)Interest and dividends income

200

267

2,840

966

10,2782013

Operating revenues:
Constructions (Note 12)
Real estate

Cost and expenses (Note 13):
Cost of constructions (Note 12)

Operating income
Other income (expense):

Gain on sales of properties―

Gain on sales of securities investments

236

―

―

Loss on impairment of fixed assets (Note 9)

(470)

(75)

(795)

Loss on devaluation of investments in securities

(138)

(102)

(1,088)Retiree premium benefit

―

(587)

(6,246)Merger-related cost (Note 14)

―

(586)

(6,232)

(217)

(513)

(5,452)(1,272)(1,252)(13,313)

1,377(1,024)(10,888)

Current

246

815

8,667

Deferred

278

(522)

(5,553)

Total income taxes

524

293

3,114

853

(1,317)(14,002)

46

263

2,796

807

(1,580)(16,798)

Others, net (Note 15)

Income (loss) before income taxes and minority interests
Income taxes (Note 16):

Income (loss) before minority interests
Minority interests in income (loss)
Net Income (loss)

Yen

Amounts per share:

42

U.S. dollars

Net income (loss) (Note 25)¥ 9.76¥ (19.10)$ (0.20)

Cash dividends paid

¥ 1.50¥ 1.50$ 0.02

3

Consolidated Statements of Comprehensive Income (ANDO)
ANDO Corporation and Consolidated Subsidiaries
Years ended March 31, 2012 and 2013

Thousands of
U.S. dollars(Note 3)

Millions of yen
2012

2013

2013

¥ 853

¥ (1,317)$ (14,002)

803

665

7,069

2

1

6

Land revaluation differences

548

(124)

(1,319)Foreign currency translation adjustments

(62)

159

1,689

1,291

701

7,445

¥ 2,144¥ (616)$ (6,557)¥ 2,115¥ (921)$ (9,794)

29

305

3,237

Income (loss) before minority interests
Other comprehensive income:Unrealized gains on securities
Deferred losses on derivative financial instruments used for hedge
accounting

Total other comprehensive income
Comprehensive income(Comprehensive income attributable to)Comprehensive income attributable to owners of the parent
Comprehensive income attributable to minority interests(Note) Reclassification adjustment and tax effect regarding other comprehensive income
Thousands of
U.S. dollars(Note 3)

Millions of yen
2012

2013

2013

Unrealized gains on securities
Accrued in 2012

¥ 1,236¥ 931¥ 9,897

Reclassification adjustment

(236)

102

1,087

Before tax effect

1,000

1,033

10,984

Tax effect

(197)

(368)

(3,915)

Unrealized gains on securities

803

665

7,069

Accrued in 2012

(3)

(3)

(30)

Reclassification adjustment

7

4

40

Before tax effect

4

1

10

Tax effect

(2)

(0)

(4)

Deferred losses on derivative financial instruments used for hedge
accounting

2

1

6

Tax effect

548

(124)

(1,319)Land revaluation differences

548

(124)

(1,319)

(62)

159

1,689

(62)

159

1,689

¥ 1,291¥ 701¥ 7,445

Deferred losses on derivative financial instruments used for hedge accounting

Land revaluation differences

Foreign currency translation adjustments
Accrued in 2012
Foreign currency translation adjustments
Total other comprehensive income

443Consolidated Statements of Changes in Net Assets (ANDO)
ANDO Corporation and Consolidated Subsidiaries
Years ended March 31, 2012 and 2013

Millions of yen
Shareholders' Equity
Numberof shares
issuedCommonstock

CapitalsurplusRetainedearnings

Treasurystock, at cost

82,707,306¥ 8,986¥ 5,474¥ 2,723¥ (459)Net income

―

―

―

807

―

Cash dividends

―

―

―

(124)

―

(1,254)

―

―

―

(0)

Reversal of revaluation reserve for land

―

―

―

389

―

Other, net

―

―

―

―

―

82,706,052

8,986

5,474

3,795

(459)

Net loss―――(1,580)―Cash dividends

―

―

―

(248)

―

(2,015)

―

―

―

(0)

Reversal of revaluation reserve for land

―

―

―

2,982

―

Decrease of retained earning resulting fromdecrease of consolidated subsidiaries

―

―

―

(2)

―

Other, net

―

―

―

―

―

82,704,037¥ 8,986¥ 5,474¥ 4,947¥ (459)Balance at March 31, 2011

Treasury stock acquired, net

Balance at March 31, 2012

Treasury stock acquired, net

Balance at March 31, 2013

Thousands of U.S. dollars (Note 3)
Balance at March 31, 2012

82,706,052$ 95,540$ 58,206$ 40,356$ (4,883)

Net loss―――(16,798)―

Cash dividends

―

―

―

(2,638)―(2,015)

―

―

―

(3)

Reversal of revaluation reserve for land

―

―

―

31,708―Decrease of retained earning resulting fromdecrease of consolidated subsidiaries

―

―

―

(25)

―

Other, net

―

―

―

―

―

82,704,037$ 95,540$ 58,206$ 52,603$ (4,886)

Treasury stock acquired, net

Balance at March 31, 2013

44

5

Millions of yen
Accumulated other comprehensive income

Unrealized
gain onsecurities

Deferred losses
on derivative
financial
instruments
used for hedge
accountingLandrevaluationdifference

Foreigncurrencytranslation
adjustments

¥ 776

¥ (7)

¥ 2,994

¥ 48

¥ 327

Net income

―

―

―

―

―

Cash dividends

―

―

―

―

―

Treasury stock acquired, net

―

―

―

―

―

Reversal of revaluation reserve for land

―

―

―

―

―

Other, net

803

2

159

(46)

(117)

1,579

(5)

3,153

2

210

Net loss

―

―

―

―

―

Cash dividends

―

―

―

―

―

Treasury stock acquired, net

―

―

―

―

―

Reversal of revaluation reserve for land

―

―

―

―

―

Decrease of retained earning resulting fromdecrease of consolidated subsidiaries

―

―

―

―

―

Other, net

665

1(3,107)118

255¥ 2,244

¥ (4)

¥ 46

¥ 120

¥ 465

Balance at March 31, 2011

Balance at March 31, 2012

Balance at March 31, 2013

Minority
interests
in consolidated
subsidiaries

Thousands of U.S. dollars (Note 3)
Balance at March 31, 2012

$ 16,788$ (51)$ 33,518$ 29$ 2,233

Net loss

―

―

―

―

―

Cash dividends

―

―

―

―

―

Treasury stock acquired, net

―

―

―

―

―

Reversal of revaluation reserve for land

―

―

―

―

―

Decrease of retained earning resulting fromdecrease of consolidated subsidiaries

―

―

―

―

―

7,069

6

(33,027)

1,247

2,714

$ 23,857$ (45)$ 491$ 1,276$ 4,947

Other, net
Balance at March 31, 2013645

Consolidated Statements of Cash Flows (ANDO)
ANDO Corporation and Consolidated Subsidiaries
Years ended March 31, 2012 and 2013

Thousands of
U.S. dollars(Note 3)

Millions of Yen
2012

2013

2013

Operating Activities:
Income (loss) before income taxes and minority interests¥ 1,377¥(1,024)$(10,888)

Adjustments to reconcile income (loss) before income taxes
Income taxes paid

(350)

(437)

(4,652)

Depreciation

966

469

4,983

Amortization of goodwill

52

―

―

Loss on impairment of fixed assets

470

75

795

Allowance for doubtful accounts

125

(894)

(9,507)

Provision for severance indemnities

(738)

(339)

(3,602)

Allowance for losses on construction contracts

(469)

623

6,626

―

414

4,409

Allowance for merger-related cost
Loss on devaluation of investments in securities

138

157

1,665

Gain on sales of property and equipment, and investment securities

(512)

(964)

(10,252)

Gain on accrual of negative goodwill

(147)

―

―
25,114

Changes in assets and liabilities:(13,432)

2,362

Inventories

1,028

2,613

7,782

Trade payables

6,719

4,406

46,851

Advances on construction work in progress(2,449)2,195

23,344

Trade receivables

OthersNet cash provided by (used in) operating activities

2,153

910

9,674

(5,069)10,566112,342

Investing Activities:(Increase)/decrease in time deposits

58

(40)

(425)

Purchases of investment securities

(27)

(263)

(2,796)

Purchases of property and equipment

(116)

(110)

(1,171)

Proceeds from sale of property and equipment

5,084

6,557

69,721

Purchase of intangible assets

(34)

(75)

(795)

Proceeds from sale and redemption of investment securities

592

220

2,339

Payment for loans made

(31)

(25)

(268)

Proceeds from repayment of loans made

172

118

1,251

Others

71

325

3,459

5,769

6,057

64,397

Net cash provided by (used in) investing activities
Financing Activities:(4,512)(4,308)(45,807)

Proceeds from issuance of bonds

―

600

6,380
(10,208)

Increase (decrease) in short-term bank loans
Payment for redemption of bonds(2,525)(960)

Proceeds from issuance of long-term debt

5,300

6,300

66,986

Repayment of long-term debt

(7,055)(5,846)(62,154)

(124)

(124)

(1,319)

―

(49)

(523)

Cash dividends paid
Cash dividends paid to minority interests
OthersNet cash provided by (used in) financing activities
Effect of exchange rate changes(110)(1,167)(4,497)(47,812)

(59)

356

3,791

Net increase (decrease) in cash and cash equivalents(8,388)12,482

132,718

Cash and cash equivalents at beginning of year

22,19313,805

146,778―(603)(6,405)¥ 13,805¥ 25,684$ 273,091

Decrease in cash and cash equivalents by exclusion of subsidiaries from consolidation
Cash and cash equivalents at end of year (Note 7)

46

(113)
(9,029)

Notes to Consolidated Financial Statements (ANDO)
ANDO Corporation and Consolidated Subsidiaries
Years ended March 31, 2012 and 2013

1. Basis of Presentation of Consolidated Financial Statements
ANDO Corporation (“the Company”) maintains its books of accounts in Japanese yen in conformity with the financial
accounting standards of Japan.
The accompanying consolidated financial statements have been prepared in accordance with the provisions set forth in the
Financial Instruments and Exchange Act and its related regulations, and in conformity with accounting principles generally
accepted in Japan. The consolidated financial statements are not intended to present the consolidated financial position, results ofoperations and cash flows in accordance with accounting principles and practices generally accepted in countries andjurisdictions other than Japan.
Certain disclosures contained herein are not required as part of the basic financial statements in Japan but have beenpresented as additional information. In addition, certain reclassifications have been made to the accompanying consolidated
financial statements in order to present them in a form, which is more familiar to readers outside Japan.
2. Summary of Significant Accounting Policies(1) Consolidation
The consolidated financial statements of the Company for the years ended March 31, 2012 and 2013 include the accounts of theCompany and its seven (eight in 2012) significant subsidiaries (three (four in 2012) domestic and four overseas subsidiaries).
For the year ended March 31, 2013, “310-2 Tokutei Mokuteki Kaisha (special purpose company)” was excluded from the scopeof consolidation due to decrease of materiality resulting from sale of major assets.
All unconsolidated subsidiaries and affiliates were not accounted for using the equity method, as these companies were notsignificant in terms of retained earnings or net income of the consolidated financial statements.
All significant intercompany transactions, accounts and unrealized profits or losses have been eliminated in consolidation.
(2) Recognition of revenue and related cost
For construction contracts, of which profitability from completed portion of construction is definitely recognized, thepercentage-of-completion method is applied. For other construction contracts, the completed contract method is applied.
(3) Translation of Foreign Currency
Foreign currency receivables and payables are translated at appropriate year-end current rates and the resulting translation gains
or losses are recognized in the consolidated statements of income.
(4) Foreign Currency Financial Statements
The balance sheet accounts and revenue and expense accounts of the consolidated overseas subsidiary are translated into
Japanese yen at the exchange rate as of each balance sheet date except for shareholders’ equity, which is translated at thehistorical exchange rates.
Differences arising from such translation are shown in net assets as foreign currency translation adjustments in theaccompanying consolidated balance sheets.
(5) Cash and Cash Equivalents
Cash and cash equivalents in the statements of cash flows, consist of cash, deposits which can be withdrawn at any time, andshort-term investments with a maturity date within three months of acquisition which are not exposed to significant valuation
risks. See Note 7 as to a reconciliation of cash and cash equivalents reported in the statements of cash flows with cash anddeposits reported in the balance sheets.
(6) Financial instruments(6) - 1 Marketable Securities and Investments in Securities
The Company classifies and accounts for securities as follows:(a) Trading securities, which are held for the purpose of earning capital gain in near term, are reported at fair value and the related
unrealized gains and losses are included in the earnings.
(b) Held-to-maturity debt securities, which are expected to be held to maturity, are reported at amortized cost.
(c) Available-for-sale securities, which are not classified as either of the aforementioned securities, are reported at fair value, withunrealized gains and losses, net of deferred taxes, reported in component of shareholders’ equity.
The Company did not hold any securities classified as “Trading securities” or “Held-to-maturity debt securities” as of March
31, 2012 and 2013.
47

(6) - 2 Derivatives and Hedging Activities
The Company makes use of derivatives only to reduce financial cost and exposure to market risks resulting from fluctuations ininterest rates and in foreign currency exchange rates. The Company does not use derivatives for trading or speculative purposes
and has a policy of entering into contracts only with high credit rating financial institutions. Management believes that the credit
risk arising from default by counter parties is minimal.
The Company recognizes all derivatives as either assets or liabilities in the balance sheet and measures those instruments atfair value, and gains or losses on derivative transactions are recognized in the statements of income.
The Company adopts hedge accounting for derivatives used for hedging purposes. If derivatives qualify for hedge accounting
because of high correlation and effectiveness between the hedging instruments and hedged items, gains or losses on derivatives
are deferred until maturity of the hedged transactions. And the interest rate swaps, which qualify for hedge accounting and meet
specific matching criteria, are not re-measured at market value but the differential paid or received under the swap agreements arecharged to income.
(7) Allowance for Doubtful Accounts
The allowance for doubtful accounts is provided in an amount sufficient to cover provable losses on collection. It consists of theestimated uncollectible amount with respect to identified doubtful receivables and an amount calculated by applying thepercentage of actual losses on collection experienced in the past to the remaining receivables.
In addition, the allowance for doubtful accounts is provided to an amount which is calculated by applying a specific ratio tothe remaining receivables that passed a certain period of time after completion of construction.
(8) Inventories
Primarily, construction work in progress, real estate under construction and real estate for sale are stated at cost, as determined ona specific project basis. Materials and supplies are stated at cost, as determined based on an average method.
For real estate under construction, real estate for sale, and materials and supplies, the book value is reduced based on theirdecrease in profitability.
(9) Property and Equipment
Property and equipment, including significant renewals and additions, are stated at cost. Depreciation has been principally
computed on the declining balance method at rates based on the estimated useful lives as designated by Japanese income tax laws.
Repairs and maintenance expenses are charged to income as incurred.
(10) Accounting for Leases
The Company leases certain equipment under finance leases. Leased assets related to finance lease transactions that do not
involve transfer of ownership are depreciated on a straight-line basis, with the lease periods used as their useful life and noresidual value. Finance lease transactions which took place before April 1, 2008, are accounted for in accordance with the method
used for ordinary operating lease transactions.
(11) Income Taxes
The Company accounts for income taxes under the asset and liability method of accounting for income taxes. Deferred tax assets
and liabilities are recognized to reflect the estimated future tax consequences of temporary differences, tax loss carryforward andincome tax credits. Temporary differences result primarily from differences between assets and liabilities recognized for financial
reporting purposes and such amounts recognized for tax purposes. Valuation allowances are established to reduce deferred tax
assets to the amounts expected to be realized.
Unrealized gains and losses on available-for-sale securities and land revaluation difference are directly included incomponent of shareholders’ equity at net of deferred tax.
In the accompanying consolidated balance sheets, net amount of deferred tax assets and liabilities arising from unrealized
gains and losses on the revaluated land are reported separately from other deferred tax assets and liabilities.
(12) Allowance for warranty on completed construction contracts
The Company provides an allowance to cover the costs of repairs for damages related to completed construction contracts forwhich the Company is responsible, based on previous warranty experience.
(13) Allowance for losses on construction contracts
The Company provides an allowance for losses on construction contract, which could be reasonably estimated by the time ofcompletion, with respect to total estimated construction cost over construction price among which the Company had constructionin progress.
48

(14) Accrued Retirement Benefits
The Company accounts for the liability for retirement benefits based on the projected benefit obligations and plan assets at theconsolidated balance sheet date. Prior service cost is charged to current period. Actuarial gains and losses are being deferred andamortized over a specific period (10 years) less than the average remaining service period of the employees then working.
The Company has lump-sum retirement payment plan and defined benefit pension plan (a quasi cash-balance plan).
Consolidated subsidiaries don’t have defined benefit pension plan, but lump-sum retirement payment plan.
(15) Allowance for losses on voluntary retirement plan
Carrying a voluntary retirement scheme in effect, the Company provides an allowance for losses of retiree premium benefit andrelevant expenses, which could be estimated based on the scheme.
(16) Allowance for merger-related cost
The Company provides an allowance for merger-related cost, to be incurred in future in association with the merger with
HAZAMA CORPORATION, which could be estimated at end of year.
(17) Per Share Information
Net income per share is computed based on the weighted average number of shares of common stock outstanding during the year.
Dividends per share have been presented on an accrual basis and include, in each fiscal year ended March 31, dividends
approved or to be approved after such March 31 but applicable to the year then ended.
(18) Change in accounting procedures
Following the revision of Japanese income tax law, depreciation has been computed by the method on the basis of the revised
Japanese income tax law over property, plant and equipment acquired on or after April 2012.
Its impact is immaterial on operating income, and loss before income taxes and minority interests.
(19) Accounting for notes which mature at year-end dateNotes which mature at year-end date were accounted as settled at clearing date. As the year-end date was business holiday, notes
receivable as of March 31, 2012 and 2013 included notes of ¥91 million and ¥819 million (US$8,718 thousand), respectively,
which matured at the year-end date.
3. U.S. Dollar Amounts
The Company maintains its accounting records in Japanese yen. The U.S. dollar amounts included in the consolidated financial
statements and notes thereto represent the arithmetic results of translating Japanese yen into U.S. dollars on the basis of ¥94.05 to
U.S.$1.00. The inclusion of such U.S. dollar amounts is solely for convenience and is not intended to imply that Japanese yen
have been or could be converted, realized or settled in U.S. dollars at this or at any other rate.

49

4. Fair Value of Financial Instruments
The fair value and book value of financial instruments as of March 31, 2012 and 2013, other than items of which fair value are
not practically available, were as follows:Book Value

Millions of yen
Fair Value

Difference

2012

Cash and deposits
Accounts and notes receivable-Trade (*1)
Investments in securities (*1)(*2)
Total
Accounts and notes payable-Trade
Short-term bank loans
Current portion of long-term debt
Long-term debt
Total
Derivative transactions (*3)

¥ 13,991
57,736
7,520¥ 79,247¥ 51,310
14,813
6,093
7,478¥ 79,694¥ (8)¥ 13,991
57,732
7,520¥ 79,243¥ 51,310
14,813
6,093
7,476¥ 79,692
¥ (8)

¥―
(4)
―
¥ (4)
¥―
―
―
2
¥2
¥―

2013

Cash and deposits
Accounts and notes receivable-Trade (*1)
Investments in securities (*1)(*2)
Total
Accounts and notes payable-Trade
Short-term bank loans
Current portion of long-term debt
Long-term debt
Total
Derivative transactions (*3)

¥ 25,911
57,164
8,714¥ 91,789¥ 55,962
10,5795,325
8,341¥ 80,207¥ (7)¥ 25,911
57,152
8,714¥ 91,777¥ 55,962
10,5795,325
8,335¥ 80,201
¥ (7)

¥―
(12)
―
¥ (12)
¥―
―
―
6
¥6
¥―

Cash and deposits
Accounts and notes receivable-Trade (*1)
Investments in securities (*1)(*2)
Total
Accounts and notes payable-Trade
Short-term bank loans
Current portion of long-term debt
Long-term debt
Total
Derivative transactions (*3)

Book Value$ 275,500
607,80992,650$ 975,959$ 595,026
112,483
56,614
88,686$ 852,809$ (74)

Thousands of U.S. dollars
Fair Value$ 275,500
607,681
92,650$ 975,831$ 595,026
112,483
56,614
88,627$ 852,750$ (74)

2013

Difference
$―
(128)
―
$ (128)
$―
―
―
59
$ 59
$―

(*1) Accounts and notes receivable-trade included ¥1,235 million and ¥1,624 million (US$17,267 thousand) to be collected by cash over 1
to 5 years as of March 31, 2012 and 2013, respectively. Investments in securities included ¥8 million and ¥8 million (US$90 thousand)to be collected by cash on maturity over 10 years as of March 31, 2012 and 2013, respectively.
(*2) The book value of investments in securities issued by a number of nonpublic companies, which were not included in above, were
¥6,975 million and ¥6,987 million (US$74,286 thousand) as of March 31, 2012 and 2013, respectively.
(*3) Net amount of assets and liabilities arising from derivative transaction was presented as above. Net amount in liability was presented inbracket.

5. Investments in Securities
The amounts shown on the consolidated balance sheets related to investments in securities with market value were as follows:
Millions of Yen
2012
Cost

50

2013

Gross
unrealized
gains

Gross
unrealized
lossesBook value

Cost

Gross
unrealized
gains

Gross
unrealized
lossesBook value

Stocks¥ 5,349¥ 2,461¥ 290¥ 7,520¥ 5,612¥ 3,333¥ 231¥ 8,714

Total¥ 5,349¥ 2,461¥ 290¥ 7,520¥ 5,612¥ 3,333¥ 231¥ 8,714

Thousands of U.S. dollars
2013
Gross
unrealized
gains

Cost

Gross
unrealized
lossesBook value

Stocks$ 59,670$ 35,437$ 2,457$ 92,650

Total$ 59,670$ 35,437$ 2,457$ 92,650

Proceeds from sales of investments in securities were ¥625 million and nil for the years ended March 31, 2012 and 2013,
respectively. On those sales, gross realized gains computed on the average cost basis were ¥236 million and gross realized losses
were nil for the year ended March 31, 2012.
Impairment losses on investments were as follows:

Thousands of
U.S. dollars

Millions of yen
Impairment losses on- Investments in securities

2012

2013

¥ 138

¥ 102
54

$ 1,088

―
¥ 138

¥ 156

$ 1,665- Investments in unconsolidated subsidiaries and affiliates
Total of impairment losses on investments

2013
577

6. Derivative Financial Instrument Risk
The Company uses derivatives, principally interest-rate swaps, to reduce financial cost and exposure to market risks and enteredinto the agreements to receive variable-rate interest payments in exchange for fixed-rate interest payments.
Notional principal amounts are often used to express the volume of these transactions, but the amounts do not show thevolume of market risk or credit risk of the derivative transactions.
All derivative contracts that the Company had as of March 31, 2012 and 2013 are qualified for hedge accounting.
Derivative transactions for which hedge accounting was adopted as of March 31, 2012 and 2013 were as follows:
Millions of Yen
Principal notional amount
2012

2013

Fair value

Adopted hedge accounting

Total amountover 1 year

Principal hedge accounting

¥ 347

¥ 320

¥ (8)

Exceptional hedge accounting for interest rate swap

3,152

1,496

(*)

Principal hedge accounting

¥ 320

¥ 293

¥ (7)

Exceptional hedge accounting for interest rate swap

4,183

2,366

(*)

Thousands of U.S. dollars
Principal notional amount2013

Fair value

Adopted hedge accounting

Total amountover 1 year

Principal hedge accounting$ 3,403$ 3,120$ (74)

Exceptional hedge accounting for interest rate swap

44,47625,157(*)(*) The fair value of interest rate swaps under exceptional hedge accounting was included in the fair value of long-term loans, as those swaps
were accounted for together with hedged item.

51

7. Cash and cash equivalents
Cash and cash equivalents reported in the consolidated statements of cash flows at March 31, 2012 and 2013 were reconciledwith cash and deposits reported in the consolidated balance sheets as follows:
Thousands of
U.S. dollars

Millions of yen
2012

2013

2013

Cash and deposits
Time deposits with maturities of exceeding three months from thedate of acquisition¥ 13,991¥ 25,911$ 275,500

(186)

(227)

(2,409)Cash and cash equivalents¥ 13,805¥ 25,684$ 273,091

8. Inventories
Inventories consisted of the following:Thousands of
U.S. dollars

Millions of yen
2012

2013

2013

¥ 1,235¥ 1,238$ 13,165

Real estate for sale

1,204

1,327

14,103

Real estate under construction

4,019

1,358

14,443¥ 6,458¥ 3,923$ 41,711

Construction work in progress

The balances of real estate for sale and real estate under construction were after devaluation based on decrease in profitability.
Loss on devaluation of inventories of ¥1 million and ¥12 million (US$133 thousand) were stated as cost of real estate for the year
ended March 31, 2012 and 2013, respectively.
9. Long-Lived Assets< Land Revaluation>
Pursuant to the Law Concerning Revaluation of Land, land used for business operations was revalued on March 31, 2000. The
revaluation difference has been recorded in net assets at net of deferred tax assets and liabilities. As of March 31, 2013, thedifference between the total market value and the total book value of revalued land used for business operations was ¥628 million(US$6,677 thousand). The difference included ¥340 million (US$3,612 thousand), which was arising from land used for rent
business.
< Impairment >The Company and its consolidated subsidiaries reviewed their long-lived assets for impairment as of the year ended March 31,
2012 and 2013. As a result, impairment loss was recognized as follows:
Thousands of
U.S. dollars

Millions of yen
2012

2013

Buildings and structures

¥1

¥ 15

$ 156

Machinery and equipment

―

21

226

Land

89

39

413

Goodwill

380

―

―

¥ 470

¥ 75

$ 795

Total

2013

The Company and its consolidated subsidiaries reviewed impairment, on a specific project basis for assets for rent and idle
properties, and on group basis for assets in construction business according to their business classification under the management
accounting system, which continuously monitors income and expenditures. The Company and its consolidated subsidiaries
reduced the carrying value of the assets to the recoverable amount, because decrease in profitability of assets for rent, decrease inmarket value of idle properties, and determined sales of assets in construction business. The recoverable amount of the assets wasmeasured at the higher of its value in use or its net realizable value in sale. Net realizable value in sale was determined, based on
professional appraisal for assets of significant book value, and based on market standard for other assets. Value in use wascomputed by discounting its future cash flows at 2.6%.
52

10. Short-term Borrowings and Long-term Debt
Short-term borrowings are represented by 365-day notes, principally unsecured, bearing interest at average rate of 2.1% and 1.9%
per annum at March 31, 2012 and 2013, respectively.
Long-term debt consisted of the following:Thousands of
U.S. dollars

Millions of yen
2012
Unsecured bonds,
2012: 6 month Yen TIBOR, 0.93% to 1.11%, due
2013-20142013: 6 month Yen TIBOR, 0.47% to 1.08%, due
2013-2017

2013

2013

¥ 990

$ 10,526

12,676

134,774¥ 1,350

Loans from banks and other financial institutions,collateralized, payable principally on a quarterly
installment basis,
2012: average 2.2%, due 2012-2026
2013: average 2.2%, due 2013-2025

12,221

Total

13,571

13,666145,300

Less portion due within one year

(6,093)(5,325)(56,614)

Total¥ 7,478¥ 8,341$ 88,686

At March 31, 2013, the following assets were pledged by the Company as collateral for long-term debt of ¥1,156 million(US$12,291 thousand) and current portion of long-term debt of ¥86 million (US$910 thousand).
Carrying value
Thousands of
U.S. dollars

Millions of yen
Land

¥ 912

$ 9,697

Buildings and structures

1,019

10,838¥ 1,931$ 20,535

As is customary in Japan, additional collateral or letters of guarantee must be given if requested by a lending bank, and such bankhas the right to offset cash deposited with it against any debt or obligation that becomes due and, in case of default and certain
specified events, against all debts payable to the bank.
The annual repayment schedule of long-term debt (including current portion) as of March 31, 2013 was as follows:
Millions of yen

Thousands of
U.S. dollars

Year ending March 31
2014¥ 5,325$ 56,614

2015

4,371

46,471

2016

2,216

23,557

2017

615

6,545

2018 and after

1,139

12,113¥ 13,666$ 145,300

53

11. Advances on Construction Work in Progress
The Company normally receives payments from customers on a progress basis in accordance with the terms of the respective
construction contracts.
12. Revenue and Cost
Revenue recognized using the percentage-of-completion method for the year ended March 31, 2012 and 2013 were ¥137,247
million and ¥148,957 million (US$1,583,805 thousand).
Provision of allowance for losses on construction contracts included in cost of sales for the year ended March 31, 2012 and2013 were ¥64 million and ¥688 million (US$7,311 thousand).
13. Research and Development Expenses
Research and development expenses charged to construction costs and general and administrative expenses for the years ended
March 31, 2012 and 2013 were ¥501 million and ¥495 million (US$5,262 thousand), respectively.
14. Merger-related cost
For the year ended March 31, 2013, merger-related cost were recorded in association with the merger with HAZAMACORPORATION as follows:

Cost related to relocation
OthersMillions ofyen

Thousands of
U.S. dollars

2013

2013

¥ 245
341

$ 2,609
3,623

¥ 586

$ 6,232

Among the cost, ¥414 million (US$4,409 thousand) were provided for an allowance for merger-related cost to the amountestimated to incur in future.

54

15

15. Other Loss - Net
The composition of other loss-net for the year ended March 31, 2012 and 2013 was as follows:
Millions ofyen
2012
Investment earning in anonymous association, net¥ 227

Commitment fee(143)

Gain on sales of properties

297

Gain on accrual of negative goodwill

147

Provision for contingent losses(365)

Losses on disaster(144)

Others(236)¥ (217)
Millions ofyen

Thousands of
U.S. dollars

2013

2013

Investment earning in anonymous association, net

¥ 41

$ 434

Commitment fee(144)(1,533)

Provision for long-term delinquent accounts(388)(4,124)

Exchange gain, net

79

842

Losses on devaluation of investments in subsidiaries and affiliates

(54)

(577)

Losses on sale of notes receivable

(41)

(436)

Others

16

(6)

(58)

¥ (513)$ (5,452)

55

16. Income Taxes
Significant components of the Company’s deferred tax assets and liabilities as of March 31, 2012 and 2013 were as follows:
Thousands of
U.S. dollars

Millions of yen
2012

2013

2013

Deferred tax assets:
Current:
Unrealized loss on real estate for sale, etc.

¥ 118

¥ 115

$ 1,220

Accrued bonuses

70

48

517

Allowance for merger-related cost

―

158

1,676

Allowance for contingent losses

139

―

―

Others

358

666

7,083

Valuation allowance

(39)

(407)

(4,323)

646

580

6,173

586

568

6,044

Non-current:
Unrealized loss on investment securities
Bad debt expense on loans, etc.

74

74

787

Allowance for doubtful accounts

702

320

3,399

Accrued retirement benefits

1,831

1,747

18,578Net operating loss carryforward

1,694

723

7,691

364

377

4,000

(1,971)(1,916)(20,373)

3,280

1,893

20,126

3,926

2,473

26,299Unrealized gain on securities

(592)

(960)

(10,209)

Reserve for renewal of assets

(255)

(114)

(1,216)

(9)

(4)

(42)

(856)

(1,078)(11,467)(856)(1,078)(11,467)¥ 3,070¥ 1,395$ 14,832

OthersValuation allowance
Total deferred tax assets
Deferred tax liabilities:
Non-current :OthersTotal deferred tax liabilities
Net deferred tax assets

A reconciliation of the difference between the statutory tax rate and the effective income tax rate of was as follows:
2012
Statutory tax rate
Increase (reduction) in taxes resulting from:
Items that may not be incorporated in losses permanently

6.5

Items that may not be incorporated in profits permanently(2.8)

Inhabitant equalization tax

7.7

Valuation allowance(53.7)

Adjustment of deferred tax assets by the changes in effective tax rate

31.3

Impairment loss of goodwill

11.2

Gain on accrual of negative goodwill

(4.3)

Other

1.5

Effective income tax rate

There is no reconciliation for 2013, as loss before income taxes was recorded.
56

40.7

38.1

%

%

17. Retirement Benefits
Upon terminating employment, employees of the Company and consolidated subsidiaries in Japan are entitled, under mostcircumstances, to lump-sum retirement payment and/or pension payment as described below.
The Company and the consolidated subsidiaries in Japan have lump-sum retirement payment plans for employees, thebenefits of which are generally determined on the basic rate of pay at the time of termination of employment.
The Company also has defined benefit pension plan (a quasi cash-balance plan) which covers employees who have been in
the Company’s service for more than 20 years. The pension benefits are determined based on years of service and thecompensation amounts, and are payable at the option of the retiring employee in a lump-sum amount or on a monthly pension.
One domestic consolidated subsidiary also has a defined contribution plan. And one overseas consolidated subsidiary has alump-sum retirement payment plan since the year ended March 31, 2012.
In addition, under certain circumstances, employees of the Company and consolidated subsidiaries receive premium benefit
upon terminating employment.
Benefit obligation and plan assets, funded status and composition of amounts recognized in the consolidated balance sheets as ofMarch 31, 2012 and 2013 were as follows:
Thousands of
U.S. dollars

Millions of yen

Benefit obligation

2012

2013

2013

¥ (14,353)¥ (12,747)$ (135,538)

Fair value of plan assets

6,733

7,542

80,194

Benefit obligation in excess of plan assets(7,620)(5,205)(55,344)

Unrecognized actuarial loss

5,170

3,072

32,666

60

39

416

¥ (2,510)¥ (2,172)$ (23,094)

Prepaid pension costAccrued retirement benefit

The components of net pension and severance costs for the years ended March 31, 2012 and 2013 were as follows:
Thousands of
U.S. dollars

Millions of yen
2012

2013

Service cost

¥ 751

¥ 743

$ 7,904

Interest cost

384

215

2,284

Expected return on plan assets

(173)

(115)

(1,227)

Amortization of unrecognized actuarial gain/loss

549

459

4,882

3

3

33

¥ 1,514¥ 1,305$ 13,876

Contribution to defined contribution plan
Total

2013

In addition to above costs, retiree premium benefit of ¥12 million and ¥2 million (US$20 thousand), and retiree premium
benefit accompanying implementation of voluntary retirement scheme of ¥81 million and ¥587 million (US$6,246 thousand),were stated as expense/loss for the years ended March 31, 2012 and 2013, respectively.
Assumptions used as of March 31, 2012 and 2013 were as follows:
2012

2013

1.5%

:

1.5%

Expected return on plan assets

3.5%

:

3.5%

Amortization period of unrecognized actuarial gain/loss

10 years:

10 years

Discount rate

Accrued retirement benefits as of March 31, 2012 included retirement benefits for directors and corporate auditors of ¥59
million.

57

18. Shareholders’ Equity
The Companies act of Japan requires, if total amount of legal reserve and capital surplus is less than 25% of the common stock
amount, legal reserve be appropriated 10% of any cash disbursement made as an appropriation of retained earnings until total
amount of legal reserves and capital surplus equals to 25% of the common stock amount.
19. Leases
Information relating to finance leases, excluding those leases for which the ownership of the leased assets is considered to betransferred to the lessee, as of and for the years ended March 31, 2012 and 2013, were as follows:
Leased assets not recorded in the consolidated balance sheets:
Thousands of
U.S. dollars

Millions of yen
2012
Acquisition cost

2013

2013

¥ 12

¥ ―

$ ―

Accumulated depreciation

11

―

―

Net leased property

¥ 1

¥ ―

$ ―

Future minimum lease payments (Machinery and Equipment):
Thousands of
U.S. dollars

Millions of yen
2012

2013

2013

Due within one year

¥ 1

¥ ―

$ ―

Due over one year

―

―

―

Total

¥ 1

¥ ―

$ ―

Lease debt was recorded for leased assets which took place on and after April 1, 2008. The lease-related interest was includedin the amount of lease debt, and was allocated over the period of lease. The annual repayment schedule of lease debt (including
current portion) as of March 31, 2013 was as follows:
Millions of yen

Thousands of
U.S. dollars

2014

¥ 86

$ 916

2015

78

826

2016

58

621

2017

30

316

Year ending March 31

2018

11

112

¥ 263

$ 2,791

20. Contingent Liabilities and Commitments
At March 31, 2013, the Company had the following contingent liabilities for loans guaranteed:
Millions of yen

Thousands of
U.S. dollars- Takara Leben CO., LTD.

¥ 105

$ 1,114- GOLD CREST Co., Ltd.

112

1,198

¥ 217

$ 2,312

Guarantees of loans of customers and others

Total

The Company has a commitment line provided by co-financing of 10 correspondent financial institutions for the purpose of
efficient financing. At March 31, 2013, the commitment line amount was ¥13,100 million (US$139,288 thousand), and theamount of loan by the correspondent financial institutions was nil.
58

21. Asset Retirement Obligations
The Company accounts for asset retirement obligations (AROs), consisting of costs reflecting the legal obligations associatedwith the retirement, such as dismantlement and or repair, of its own buildings.
The Company estimated AROs based on residual useful life (3 to 40 years) and discount rate of 0.18 to 2.07 percent.
The following table indicates the changes to the before-tax asset retirement obligations:Thousands of
U.S. dollars

Millions of yen
2013

2012

90

$ 954

―

―

―

Accretion expense

1

1

11

Others

(2)

(31)

(332)

¥ 90

¥ 60

$ 633

Balance at April 1¥ 91

Liabilities incurred

Balance at March 31

¥

2013

No significant AROs associated with any legal obligations to retire certain rented properties, which the Company and groupcompanies use under rent contracts, have been recognized, as indeterminate settlement dates for the asset retirements prevent
estimation of the fair value of the associated ARO.
ARO is included as part of other long term liabilities in the consolidated balance sheet.
22. Rent business
The Company and certain consolidated subsidiaries possess certain properties for rent. For the year ended March 31, 2012 and2013, operating income from rent business of ¥741 million and ¥484 million (US$5,146 thousand) were recorded as operating
income of Real estate and other segment, and impairment loss from rent business of ¥59 million and ¥39 million (US$412
thousand) were recorded as other expense, respectively.
The book value and fair value of properties for rent were as follows:
Thousands of
U.S. dollars

Millions of yen

Book value

at beginning of year
increase/(decrease) in year
at end of year

Fair value

2012

2013

2013

¥ 17,228¥ 12,579$ 133,750(4,649)(3,080)(32,754)¥ 12,579¥ 9,499$ 100,996¥ 12,001¥ 9,582$ 101,884

Decrease of the book value of properties for rent in 2012 was principally as a result of offset of increase by the change of theusage of properties from construction business (¥2,418 million), and of decrease by sale of properties for rent (¥7,256 million).
Decrease of the book value of properties for rent in 2013 was principally by sale of idle properties (¥2,406 million (US$25,579
thousand)).

59

23. Segment Information
The Company and its consolidated subsidiaries operate primarily in the following business segments:(a) Construction ................... Building construction, civil engineering, etc.
(b) Real estate ...................... Resale, management and rental of land and building
Business segment information for the years ended March 31, 2012 and 2013 was as follows:Year ended March 31, 2012

Millions of yen
Construction

Real estate

Total

Elimination
and /orCorporate¥

Consolidated

Sales:
Outside customers¥ 159,095¥ 10,284¥ 169,379

Intersegment

12

145

157

(157)

―

Total

159,107

10,429169,536(157)

169,379

Operating income

2,557

1,679

4,236

(1,587)2,649

Total assets

83,954

12,89696,85025,723

122,573

Depreciation

285

620

905

61

966

Capital expenditures

150

71

221

33

254

Loss on impairment of fixed

―

438

438

32

470

Goodwill - Amortization

―

52

52

―

52

―

―

―

―

―

―

¥ 169,379

Other item:- BalanceYear ended March 31, 2013

Millions of yen
Construction

Real estate

Elimination
and /orCorporate

Total

Consolidated

Sales:
Outside customers¥ 166,694¥ 15,643¥ 182,337

Intersegment

1

138

139

(139)

―

Total

166,695

15,781

182,476(139)

182,337

96

1,491

1,587

(1,359)228

87,77914,639102,418

20,945

123,363

Depreciation

229

189

418

51

469

Capital expenditures

223

49

272

58

330

Loss on impairment of fixed

36

1

37

38

75

Operating income
Total assets¥―¥ 182,337

Other item:

60

21

Year ended March 31, 2013

Thousands of U.S. dollars
Construction

Real estate

Elimination
and /orCorporate

Total

Consolidated

Sales:
Outside customers―$ 1,938,727

1,482(1,482)―

167,791

1,940,209(1,482)

1,938,727

1,019

15,86016,879(14,454)

2,425

933,319

155,653

1,088,972

222,707

1,311,679

Depreciation

2,431

2,013

4,444

539

4,983

Capital expenditures

2,372

524

2,896

612

3,508

383

5

388

407

795

Intersegment
Total
Operating income
Total assets$ 1,772,404$ 166,323$ 1,938,727

14

1,468

1,772,418$

Other item:

Loss on impairment of fixed

In the year ended March 31, 2012, the Company additionally invested in B-class preferred stock of a consolidated subsidiary,“310-2 Tokutei Mokuteki Kaisha” (special purpose company). As the result, gain on accrual of negative goodwill of ¥147 million
was recorded in the account of real estate segment.
Sales information by geographic area for the year ended March 31, 2013 was as follows:
Millions of yen

Thousands of
U.S. dollars

Sales:
Japan¥ 162,172$ 1,724,320

20,048213,165

Others

117

1,242

Total

182,337

1,938,727

South-east Asia

Sales information was classified by country or area based on the location of customers.
The following relevant information was omitted pursuant to the related regulations on the consolidated financial statements.
(1) Product and service line information(2) Geographic area information (for 2012), and Overseas sales information(3) Major customer information

2261

24. Related Party Transactions
Related party transactions between the Company and related parties for the year ended March 31, 2013 were as follows:

Category

Subsidiary

Name

Todai-interact-pfi Co., Ltd.

Address

Tokyo, Minato-ku

Capital¥50 million (US$532 thousand)Type of business

Real estate business

Share of voting right

70% held directly

Relationship

Receiving order of construction

Nature of transaction

Sales of construction

Amounts of transaction¥3,203 million (US$34,053 thousand)Account

Accounts receivable-trade

Balance at end of year

¥2,172 million (US$23,092 thousand)(*1) The amounts of transaction do not include consumption tax.

The balance at end of year includes consumption tax.

(*2) Terms and conditions of transaction and policy for determining them
They are determined, based on negotiation, under the same terms as general transactions.

25. Per Share Information
Yen

Basic net income/(loss) per share
Net assets per share

U.S. dollars

2012

2013

2013

¥ 9.76¥ (19.10)$ (0.20)¥ 272.35¥ 258.19$ 2.75The Company has no dilutive common stock outstanding. Therefore, the information of diluted net income per share was notpresented.
The basis for calculation of net income/(loss) per share was as follows:

Thousands of
U.S. dollars

Millions of yen
2012

2013

2013

¥ 807

¥ (1,580)$ (16,798)

Amount not belonging to ordinary shareholders

―

―

―

Net income/(loss) attributable to common stock¥ 807¥ (1,580)$ (16,798)

Weighted average number of ordinary shares (thousand of shares)

82,70682,705

Net income/(loss)

62

23

26. Subsequent Events
Merger with HAZAMA CORPORATION:
The Company and HAZAMA CORPORATION (“HAZAMA”) signed a merger agreement on May 24, 2012, and merged on
April 1, 2013.
(1) Outline of integration[1] Name and business of acquiring company
Name:
HAZAMA CORPORATIONBusiness:
Construction, real estate[2] Principal purpose of integration
The two companies have established cooperative relationship of mutual trust since the conclusion of capital and operational
alliance agreement in 2003. To seek sustainable growth, the two companies have mutually agreed the business integration be
the best solution by expanding businesses, pursuing great efficiency of management, and enhancing profitability.
Through the merger, the integrated company will utilize the combination of resources in technology, sales-force, and costcompetitiveness that each has built up, and will pursue the enhancement and efficiency of business. In addition, the integrated
company will make more effort to strengthen management structure and further growth, through expanding overseas businessand implementing its structure for new business.
[3] Date of integration
April 1, 2013
[4] Legal method of integration
Absorption-type Merger
HAZAMA is the company surviving the absorption-type merger and the Company is the company absorbed in theabsorption-type merger.
[5] Name of the integrated company
Kabushiki Kaisha Ando Hazama (“HAZAMA ANDO CORPORATION” in English)[6] Reason for determining the company surviving the absorption-type merger
The shareholders of HAZAMA shares the most voting rights of the integrated company. Therefore, HAZAMA was determined
as an acquiring company and the Company was determined as an acquired company for merger accounting.
(2) Allotment of shares, method of calculation, and number of issued shares
Ratio of merger
HAZAMA (the company surviving the absorption-type merger)

Common stock 1

The Company (the company absorbed in the absorption-type merger)

Common stock 0.53

[1] Allotment of shares
HAZAMA’s common stock shares are to be delivered by allotment to each of the shareholders of the Company at the ratio of0.53 HAZAMA shares to one the Company share. No HAZAMA shares are to be allotted to the Company’s treasury stocks(2,783,963 shares).
[2] Method of calculation
As for the calculation of ratio of merger, the Company assigned ABeam M&A Consulting Ltd. (present “marvel partners Inc.”),and HAZAMA assigned Frontier Management Inc. Based on the result of calculation, the Company and HAZAMA
deliberately discussed and finally agreed the ratio of merger, after the consideration on financial position, status of assets,
prospect of business, market price and so on.
[3] Number of issued shares
The number of HAZAMA’s common stock to be issued under the merger is 43,833,139 shares.

24

63Independent Auditors’ Report (ANDO)

To the Board of Directors of HAZAMA ANDO CORPORATION:
We have audited the accompanying consolidated financial statements of ANDO Corporation and its
consolidated subsidiaries, which comprise the consolidated balance sheet as at March 31, 2013 and theconsolidated statements of incomes, comprehensive income, changes in net assets, and cash flows for theyear then ended, and a summary of significant accounting policies and other explanatory information, allexpressed in Japanese yen.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial
statements in accordance with accounting principles generally accepted in Japan, and for such internal
control as management determines is necessary to enable the preparation of consolidated financial
statements that are free from material misstatements, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our
audit. We conducted our audit in accordance with auditing standards generally accepted in Japan. Thosestandards require that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the consolidated financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the consolidated financial statements. The procedures selected depend on the auditor’s judgement,
including the assessment of the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error. In making those risk assessments, we consider internal control relevant to
the entity’s preparation and fair presentation of the consolidated financial statements in order to design
audit procedures that are appropriate in the circumstances, while the objective of the financial statement
audit is not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonablenessof accounting estimates made by management, as well as evaluating the overall presentation of theconsolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit opinion.
OpinionIn our opinion, the consolidated financial statements present fairly, in all material respects, theconsolidated financial position of ANDO Corporation and its consolidated subsidiaries as at March 31, 2013,
and their consolidated financial performance and cash flows for the year then ended in accordance withaccounting principles generally accepted in Japan.
Emphasis of Matter
We draw attention to Note 26 to the consolidated financial statements which describe that theCompany merged with HAZAMA CORPORATION on April 1, 2013. Our opinion is not qualified in respect of
this matter.
Convenience Translation
The United States dollar amounts in the accompanying consolidated financial statements with respect tothe year ended March 31, 2013 are presented solely for the convenience. Our audit also included thetranslation of Japanese yen amounts into United States dollar amounts and, in our opinion, such translation
has been made on the basis described in Note 3 to the consolidated financial statements.

June 18, 2013
Tokyo, Japan64

Corporate Governance● Basic Policy
HAZAMA ANDO CORPORATION recognizes the need for transparency and fairness in management oversight and flexibility in decision-making.
We consider it a management priority to maintain and implement a management system, rooted in the current organizational structure
centered on the Board of Directors and the auditing system, which is able to respond quickly to changes in the business environment.

Matters Regarding Corporate Functions including Business Execution, Auditing/Supervision, Nominating and Determination ofCompensation
To strengthen its corporate governance, HAZAMA ANDO CORPORATION maintains a clear distinction between the decision-making andoperational oversight functions of the directors and Board of Directors, and the business execution function of the Management Meeting,executive officers and the Meeting of Executive Officers. The specific functions are as follows.
1. Revisions related to the directors
T he term for directors is fixed at one year to further clarify the management responsibility of directors, and to establish an optimal
management structure to respond to changes in the business environment. Further, to clarify the roles and responsibilities of board
members, HAZAMA ANDO CORPORATION does not have the position of “executive director,” and only makes a distinction between“representative director” and “director.”
2. Board of Directors
The Board of Directors is comprised of 11 members as of July 31, 2013. The Board meets monthly to promptly render decisions on importantmatters regarding management, and to provide oversight of business execution.
3. Management Meeting
The Management Meeting meets monthly to discuss policies for management strategies and other matters, to confirm the progress ofbusiness plans, and to diversify and strengthen policy-proposing capabilities.
4. Executive officer system
The number of executive officers as of July 31, 2013, totaled 39 (including 11 executive officers who concurrently serve as directors). HAZAMAANDO CORPORATION has established the six officer categories of “chairman,” “president,” “vice president,” “senior managing executive
officer,” “managing executive officer” and “executive officer.” We have clarified the responsibilities for the operations executive officers
manage, and limited the term to one year to enhance the mobility and flexibility of the executive officer system. In addition, we clarified
through a resolution of the Board of Directors the rights and responsibilities regarding operations managed, and implemented acompensation system that reflects the performance of operations managed.
5. Meeting of Executive Officers
The Meeting of Executive Officers meets monthly in accordance with the executive officer system, to enhance the efficiency of consensual
decision-making and strengthen operational execution, as well as to ensure that management information is conveyed promptly andaccurately along the management line, and to provide for the sharing of information among departments.
6. Board of Auditors System
Auditors (including external auditors), in accordance with auditing standards established by the Board of Auditors, and in line with theauditing policies for each fiscal period, division of duties and other rules, maintains communication with directors, the Internal Auditing
Department and other employees. Auditors attend meetings of the Board of Directors and other important meetings, receive reports andexplanations from directors and employees regarding the status of the execution of their duties, review important documents and otherpapers, and conduct audits at the head office and other major business locations.
7. Various Committees
HAZAMA ANDO CORPORATION has established various committees that contribute to the streamlining of management operations. These
include the Compliance Promotion Committee to discuss and provide advice regarding compliance matters, and the Central Safety and
Health Committee to discuss and provide advice regarding health and safety matters.

●●

Corporate Governance Structure of HAZAMA ANDO CORPORATION
Shareholders’ Meeting

Management

Appoint /Dismiss
Appoint /Dismiss

Appoint /Dismiss
Directors
Board of Directors

Business
Execution

Audit

Auditors
Board of Auditors

Report

Audit
ReportCoordinate

Accounting Auditor

Audit

Supervise

Audit
Coordinate

Report /Recommend
ReportReportChairmanPresident

Management Meeting
Executive Officer
Meeting of Executive Officers

Coordinate

Committees
Consult
ReportDirectAudit Department
Audit

DirectCoordinate

DirectCompliance Promotion Committee
Safety and Health Committee

CSR Promotion Department
ReportImplement

Business Divisions

65

Global Network
Japan
Head Office6-1-20, Akasaka, Minato-ku, Tokyo 107-8658, Japan

Branches

Sapporo, Tohoku, Tohoku Building, Hokuriku, Metropolitan Area Building No.1,
Metropolitan Area Building No.2, Kanto Civil, Shizuoka, Nagoya, Osaka, Shikoku,
Hiroshima, Kyushu

International Division

6-1-20, Akasaka, Minato-ku, Tokyo 107-8658, Japan

Branches

81-3-6234-3600

81-3-6234-3640

Asia, North America

Technical Research Institute515-1, Karima, Tsukuba-shi, Ibaraki, 305-0822, Japan

81-29-858-8800

Overseas

TurkeyU.S.A.
Vietnam
Laos

Nepal

Cambodia

Myanmar

MexicoHonduras
Peru

Thailand
Malaysia
Indonesia

OfficesThailand

AddressPhone

159 Serm-Mit Tower Building, 15th Floor, Sukhumvit Road 21 (Soi Asoke), North Klongtoey,
Wattana, Bangkok 10110, Thailand

66-2-665-7041

Vietnam

18th Floor, Harbour View Tower, 35 Nguyen Hue Street, District 1, Ho Chi Minh City, Vietnam

84-8-38299533

Malaysia

Suite 13.4, Level 13, Menara IMC, Letter Box No.9, No.8, Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia

60-3-2031-4902

Indonesia

Menara Thamrin, 14th Floor, Suite 1405, JL. M.H. Thamrin Kav. 3, Jakarta, 10250, Indonesia

62-21-3140392

Laos

Ban Sibounheung Unit No.3 House No.030 Chanthabouly District Vientiane Capital, LAO.P.D.R

856-21-250-872

MyanmarRoom No.513, YANGON INTERNATIONAL HOTEL, No.330, Ahlone Road, Dagon Township, Yangon, Myanmar

95-1-216002 (Ext.513)

Cambodia

Office NO.19, HOTEL CAMBODIANA 313 Sisowath Quay, Phnom Penh, Cambodia

855-23-992-914

Nepal

P.O.Box No.4137 Ward No.4 Baluwatar, Kathmandu, Nepal

977-1-4438032

TurkeyATATURK MAHALLESI GIRNE CADDESI, NO:27, D:2-3, Atasehir, Istanbul, Turkey

90-216-456-5047

MexicoHamburgo No. 206 Int. 203 Col. Juárez, C.P. 06600 Del. Cuauhtémoc, México, D.F.

52-55-5525-9311

U.S.A.

500 West Wilson Bridge Road, Suite 130 Worthington, Ohio 43085, U.S.A.

1-614-985-4906

Peru

AV. Javier Prado Este 1104, Edificio San Agustin Of.603, San Isidro, Lima, Peru

51-1-225-7553

Honduras

Colonia Lomas de Miraflores Sur 3ra. Calle, Casa No. 4310, Tegucigalpa M.D.C., Honduras, C.A

504-2271-1283

66

Corporate DataName

(As of April 1, 2013)

Authorized Shares

HAZAMA ANDO CORPORATION

Issued Shares

Common stock
397,250,000
Preferred stock
2,750,000

Established
October 1, 2003

Common stock
160,189,656
Preferred stock
2,026,224

Capital

Number of Shareholders
41,149(Note: This total includes twoshareholders of preferred stock.)Number of Employees
3,458¥12,000 million

Directors, Officers
Board Directors
Representative Director &Chairman of the Board of
Directors
Toshio Ono
Representative Director &President
Toshiaki Nomura
Representative Directors &Vice Presidents
Mitsuaki Higo
Ken AokiHaruyuki Kaneko
Board Directors / Senior
Managing Executive Officers
Hisanori Ueno
Yoshinobu Okabe(As of July 1, 2013)

Hikari Yamazaki
Hidekazu Kojima
Board Director / Managing
Executive Officers
Hisayoshi Kinoshita
Masanori Komiya

Auditors
Auditors
Motonori Kinoshita
Takashi Yamada
Auditor (External Auditor)
Junichi Kurosaki
Corporate Auditor (External
Auditor)Takashi Ejiri

Executive Officers
Senior Managing Executive
Officers
Toshioki Nishida
Shigeki EndoManaging Executive Officers
Fumio Sugimoto
Toru Kumaki
Mamoru Iwao
Kiyoka Fukunishi
Hidetoshi Yoichi
Executive Officers
Yoshikazu Kotegawa
Ryuichi Takai
Toshimitsu Ueno
Daizo Yoshikawa
Hiroyuki Yasuhara

Major Subsidiaries and Affiliates

Takamitsu Takeuchi
Tadashi Chiba
Katsuhiko Tabuchi
Hiromitsu Maehara
Kazuya Ozawa
Katsuhiko Kosaka
Akira Yoshimoto
Yoshihiro Nasu
Toshihiko Kitano
Shinkichi Komatsubara
Masato Fukutomi
Shozo Tsuji
Yasushi Kikuchi
Masaaki Tomita
Yoichi Matsuura
Tatsumi Asao

(As of August 1, 2013)

Name

Stated Capital

Principal Business

Address / Phone

Hazama Ando Kogyo
Co., Ltd.

152.5 million JPY

Sales of Construction Materials

1-38-4, Kameido, Koto-ku, Tokyo 136-0071, Japan
81-3-5626-7130

Aoyama Kiko Co., Ltd.

80 million JPY

Construction, Procurement

2-45, Yamanaka, Kitamoto-shi, Saitama 364-0004, Japan
81-48-591-9770

Addtechno Co., Ltd.

80 million JPY

Construction, Building
Management

1-4-8, Shibadaimon, Minato-ku, Tokyo 105-0012, Japan
81-3-3435-1611

EBIRA Inc.

80 million JPY

Construction, Merchandising

1-4-8, Shibadaimon, Minato-ku, Tokyo 105-0012, Japan
81-3-3435-1001

Ryoko Kaihatsu Co., Ltd.

80 million JPY

Real-estate

1-8-20, Marunouchi, Naka-ku, Nagoya-shi, Aichi 460-0002, Japan
81-52-232-2171

HAZAMA ANDO (THAILAND)
CO., LTD.

16 million THB

Construction

159 Serm-Mit Tower Building, 15th Floor, Sukhumvit Road 21(Soi Asoke), North Klongtoey, Wattana, Bangkok 10110, Thailand
66-2-665-2980

HAZAMA ANDO SINGAPORE
PTE. LTD.

6.5 million SGD

Construction

168 Jalan Bukit Merah #03-07 D&E, Tower C, Singapore 150168
65-6270-9498

HAZAMA ANDO MALAYSIA
SDN. BHD.

800,000 MYRConstruction

No. 84B, Jalan Sutera Tanjung 8/4, Taman Sutera Utama, 81300
Skudai, Johor, Malaysia
60-7-557-3833

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