Consolidated Financial Statements
The accompanying consolidated financial statements expressed in Japanese yen are the translation of those issued domestically.
The amounts expressed in U.S. dollars are not included in the original audited consolidated financial statements. Such U.S. dollar
amounts are translated in accordance with the basis stated in Note 1 to the consolidated financial statements, are additionallypresented herein solely for the convenience of readers outside Japan, and are not subject to audit.

Consolidated Balance Sheet (As of March 31, 2014)¥ (thousands)44$ (thousands)

Annual Report 2014

2013

2014

2014

ASSETS
Current Assets:
Cash and deposits
Accounts receivable—trade
Prepaid expenses
Consumption taxes receivable
Deferred tax assets
Designated assets for clearing funds (Note 1)
OthersAllowance for doubtful accounts
Total Current Assets¥ 5,433,419
3,146,777
180,864
240,051
134,935
28,935,881
30,745(6,767)38,095,907¥ 6,262,876
3,160,922
126,624
166,976
169,855
30,819,217
7,867(6,765)40,707,573$ 60,851
30,712
1,230
1,622
1,650
299,44876(65)
395,526

Non-current Assets:
Property and Equipment:
Buildings and accompanying facilities
Accumulated depreciation
Buildings and accompanying facilities, net
Tools and furniture
Accumulated depreciation
Tools and furniture, net
Lease assets
Accumulated depreciation
Lease assets, net
Total Property and Equipment

957,512(498,484)
459,028
7,717,751(5,460,153)
2,257,598
93,323(82,145)
11,1772,727,803

832,971(442,192)
390,779
5,159,436(3,433,798)
1,725,638———
2,116,417

8,093(4,296)
3,796
50,130(33,363)
16,766———
20,563

Intangible Assets:
Software
Software in progress
Lease assets
OthersTotal Intangible Assets

3,632,949
11,438,204
902
17,692
15,089,748

23,203,230
418,564—
17,577
23,639,373

225,449
4,066—
170
229,686

428,237
79,589519,615
503,534
32,1381,000(26,318)
1,537,797
19,355,349¥ 57,451,257

427,474
129,805
257,824
497,970
27,7471,000(22,021)
1,319,801
27,075,591¥ 67,783,165

4,153
1,261
2,505
4,838
269
9
(213)
12,823
263,074$ 658,600

Investment and Other Assets:
Investment securities (Note 2)Long-term prepaid expenses
Deferred tax assets
Long-term refundable lease deposits
Claims probable in bankruptcy, rehabilitation and other
OthersAllowance for doubtful accounts
Total Investment and Other Assets
Total Non-current Assets
Total Assets
The accompanying notes are an integral part of these statements.

¥ (thousands)

LIABILITIESCurrent Liabilities:
Accounts payable—trade
Lease obligations
Accounts payable—other
Income taxes payable
Allowance for employees’ bonuses
Allowance for executives’ bonuses
Consumption taxes payable
Deposits received for clearing funds (Note 1)
Allowance for asset removal
OthersTotal Current Liabilities¥$ (thousands)

2013

2014

865,312
10,462
976,411
209,735
219,297
21,800—28,935,881—
83,90731,322,808¥ 1,011,031
5,880
72,360572,372
209,106
23,0009,856
30,819,217
84,08370,18632,877,095

2014

$

9,823
57
703
5,561
2,031
223
95
299,448816
681
319,44345

NET ASSETS
Shareholders’ Equity:
Common stock
Capital surplus
Retained earnings
Total Shareholders’ Equity
Total Net Assets
Total Liabilities and Net Assets

2,000,000
6,693
442,447
30,000124,585—
67,1212,670,846
33,993,655

9,400,000
812—
30,000—510,867
62,69410,004,375
42,881,470

91,333
7
—
291
—
4,963
609
97,205
416,648

4,250,000
4,250,000
14,957,602
23,457,602
23,457,602¥ 57,451,257

4,250,000
4,250,000
16,401,694
24,901,694
24,901,694¥ 67,783,165

41,294
41,294
159,363
241,951
241,951$ 658,600

Annual Report 2014

Non-current Liabilities:
Long-term loans payable (Note 3)
Lease obligations
Allowance for employees’ retirement benefits
Allowance for executives’ retirement benefits
Allowance for asset removal
Liability for retirement benefits
Long-term guarantee deposits received
Total Non-current Liabilities
Total Liabilities

Consolidated Financial Statements

Consolidated Statement of Income and Comprehensive Income (For the year ended March 31, 2014)¥ (thousands)46$ (thousands)

Annual Report 20142013
¥ 17,316,021

2014¥ 17,998,860

2014$ 174,882

196,847
1,608,082
219,297
21,800126,242
5,273,956
5,085,062
547,025
124,585
1,719,815
14,922,715
2,393,305

196,952
1,657,727
209,106
21,800127,053
5,440,639
4,877,326
552,123
30,666
1,866,049
14,979,445
3,019,414

1,913
16,106
2,031
211
1,234
52,86247,3895,364
297
18,131
145,544
29,337

6
11,878
537
2,150
3,874
18,447

5
9,294
2,036
11,92011,17834,435

0
90
19
115
108
334

349
42,936
21,5007,443
1272,242
2,339,510

57,872
48,205—7,580
530
114,1892,939,660

562
468
—
73
5
1,109
28,562

Operating Revenue
Operating Expenses:
Executives’ compensations
Salaries
Allowance for employees’ bonuses
Allowance for executives’ bonuses
Retirement benefit expenses
Maintenance of systems
Depreciation and amortization
Rent
Allowance for asset removal
OthersTotal Operating Expenses
Operating Income
Non-operating Income:Interest income
Operational revenue on designated assets for clearing funds
Equity in earnings of an affiliate
Registered members’ information disclosure claim charges
OthersTotal Non-operating Income
Non-operating Expenses:
Interest expenses
Commitment fees
Commission fees
Fees for fund operation of designated assets for clearing fund
OthersTotal Non-operating Expenses
Ordinary Income
Extraordinary Gain:
Reversal of allowance for loss on changes of system development policy
Total Extraordinary Gain
Extraordinary Losses:
Loss on disposal of non-current assets (Note 1)
Total Extraordinary Losses
Income before Income Taxes and Minority Interests
Income taxes—current
Income taxes—deferred
Total Income Taxes
Income before Minority Interests
Net Income
Income before Minority Interests
Comprehensive Income

216,433
216,433————

62,66962,6692,493,274
801,811
169,094970,906
1,522,368
1,522,368
1,522,368¥ 1,522,368

2,350
2,350
2,937,310
926,346
226,871
1,153,217
1,784,092
1,784,092
1,784,092¥ 1,784,092

22
22
28,5399,000
2,204
11,204
17,334
17,334
17,334$ 17,334(Details of Comprehensive Income)Comprehensive income attributable to shareholders of the parent company
Comprehensive income attributable to minority interests¥ 1,522,368—¥ 1,784,092—$ 17,334—

The accompanying notes are an integral part of these statements.

Consolidated Statement of Changes in Net Assets (For the year ended March 31, 2014)
For the year ended March 31, 2013¥ (thousands)
Shareholders’ Equity

Balance at the beginning of period
Change during the period:
Dividends from surplus
Net income
Total change during the period
Balance at the end of period

CommonStockCapitalSurplusRetained
Earnings

Total Shareholders’EquityTotal Net Assets¥ 4,250,000¥ 4,250,000¥ 13,775,233¥ 22,275,233¥ 22,275,233———¥ 4,250,000———¥ 4,250,000(340,000)
1,522,368
1,182,368¥ 14,957,602(340,000)
1,522,368
1,182,368¥ 23,457,602(340,000)
1,522,368
1,182,368¥ 23,457,602

For the year ended March 31, 2014¥ (thousands)
Shareholders’ Equity

Balance at the beginning of period
Change during the period:
Dividends from surplus
Net income
Total change during the period
Balance at the end of period

CommonStockCapitalSurplusRetained
Earnings

Total Shareholders’EquityTotal Net Assets¥ 4,250,000¥ 4,250,000¥ 14,957,602¥ 23,457,602¥ 23,457,602———¥ 4,250,000———¥ 4,250,000(340,000)
1,784,092
1,444,092¥ 16,401,694(340,000)
1,784,092
1,444,092¥ 24,901,694(340,000)
1,784,092
1,444,092¥ 24,901,694$ (thousands)

Shareholders’ Equity
Total Shareholders’EquityTotal Net Assets$ 145,332$ 227,920$ 227,920(3,303)
17,334
14,031$ 159,363(3,303)
17,334
14,031$ 241,951(3,303)
17,334
14,031$ 241,951

CommonStockCapitalSurplusRetained
Earnings$ 41,294$ 41,294———$ 41,294———$ 41,294

Balance at the beginning of period
Change during the period:
Dividends from surplus
Net income
Total change during the period
Balance at the end of period
The accompanying notes are an integral part of these statements.

Annual Report 2014

47

Consolidated Financial Statements

Consolidated Statement of Cash Flows (For the year ended March 31, 2014)¥ (thousands)

48
Annual Report 2014

Cash Flows from Operating Activities:
Income before income taxes and minority interests
Depreciation and amortization(Decrease) increase in allowance for doubtful accounts(Decrease) increase in allowance for employees’ bonuses
Increase (decrease) in allowance for executives’ bonuses(Decrease) increase in allowance for employees’ retirement benefits(Decrease) increase in allowance for asset removal
Increase (decrease) in liability for retirement benefits
Interest income
Interest expenses
Equity in (earnings) loss of affiliates
Foreign exchange (gains) losses
Reversal of allowance for loss on changes of system development policy
Loss on disposal of property and equipment
Loss on disposal of intangible assets(Increase) decrease in accounts receivable—trade
Increase (decrease) in accounts payable—trade
OthersSub-totalInterest and dividends received
Interest paid
Settlement money paid
Income taxes paid
Net Cash Provided by Operating Activities
Cash Flows from Investing Activities:
Payments for purchase of property and equipment
Payments for purchase of intangible assets
Proceeds from refund of refundable lease deposits
Payments for refund of guarantee deposits received
Net Cash Used in Investing Activities
Cash Flows from Financing Activities:
Proceeds from long-term loans payable
Repayment of lease obligations
Cash dividends paid
Net Cash Provided by Financing Activities
Effect of exchange rate changes on cash and cash equivalents
Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents, Beginning of Year
Cash and Cash Equivalents, End of Year (Note 1)
The accompanying notes are an integral part of these statements.

$ (thousands)

2013

2014

2014

¥ 2,493,274
5,085,062
21,303
17,2101,200
59,142
124,585
—
(6)
349
(537)
(582)
(216,433)
12,53650,132
14,86915,587(301,878)
7,375,817
2,286
(349)
(484,159)(1,331,530)
5,562,065¥ 2,937,310
4,877,326(4,298)(10,191)
1,200(442,447)(40,501)
510,867(5)
57,872(2,036)(1,588)—2,156
193(9,753)
145,719
87,616
8,109,440
2,805(57,872)—(567,912)
7,486,460(2,270,330)(7,290,367)——(9,560,698)(191,579)(13,512,223)
100(4,426)(13,708,129)(1,861)(131,288)0(43)(133,192)

2,000,000(23,207)(340,000)
1,636,792
582(2,361,257)
7,794,677¥ 5,433,419

7,400,000(10,462)(340,000)
7,049,537
1,588
829,457
5,433,419¥ 6,262,876

71,900(101)(3,303)68,49515
8,059
52,79260,851$$

28,53947,389(41)(99)
11(4,298)
(393)
4,963
0
562
(19)
(15)
—
20
1
(94)
1,415
851
78,79327(562)—(5,517)72,740NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note on Going Concern’s Premise
None.

Basis of Preparation of the Consolidated
Financial Statements

2. Consolidation
The accounts of all subsidiaries are included in the
consolidated financial statements.
(1) Number of consolidated subsidiaries: One(2)	Name of the consolidated subsidiary:
JASDEC DVP Clearing Corporation (“JDCC”)
3. Application of the Equity Method(1)	Number of associated companies accounted for by theequity method: One(2)	Name of the associated company accounted for by theequity method: Tosho System Services Co., Ltd. (“TSS”)(3)	The Company does not have any other associatedcompanies to which the equity method is applied.

5. Significant Accounting Policies(1) Depreciation and amortization of major depreciable assets
q Property and equipment (excluding lease assets)
Depreciation of property and equipment excluding leaseassets is calculated using the straight-line method.
The major estimated useful lives are as follows:		 Buildings and accompanying facilities: 3—50 years
		 Tools and furniture: 2—15 years
w Intangible assets (excluding lease assets)
Amortization of intangible assets is calculated using thestraight-line method.
Software for internal use is amortized over an estimateduseful life of 5 years.
e Lease assets
The straight-line method is applied to the depreciation ofassets leased under finance leases without ownership transfer,over their respective lease term with zero residual value.
The Company accounts for finance leases withoutownership transfer as operating leases if their transactioncommenced before April 1, 2008.
(2) Provision of major allowancesq Allowance for doubtful accounts
Allowance for doubtful accounts is provided at an amountdetermined based on the Company’s historical averagecharge-off ratio for ordinary receivables, and estimates of
uncollectible amounts determined by reference to specificdoubtful receivables from customers which are experiencing
financial difficulties.
w Allowance for employees’ bonuses
Allowance for employees’ bonuses is provided for bonuses
attributable to each fiscal year based on the estimated amountof the respective payments.
e Allowance for executives’ bonuses
Allowance for executives’ bonuses is provided for bonuses
attributable to each fiscal year based on the estimated amountof the respective payments.

49
Annual Report 2014

1. Basis of Presentation
The accompanying consolidated financial statements havebeen compiled from the accounts maintained by Japan
Securities Depository Center, Inc. (“the Company”) and its
subsidiary in accordance with the provisions set forth in theJapanese Financial Instruments and Exchange Act and its
related accounting regulations, and in accordance withaccounting principles generally accepted in Japan, which are
different in certain respects as to the application anddisclosure requirements of International Financial ReportingStandards.
The consolidated financial statements are stated inJapanese yen, the currency of the country in which theCompany is incorporated and operates. The translations ofJapanese yen amounts into U.S. dollar amounts are included
solely for the convenience of readers outside Japan and havebeen made at the rate of ¥102.92 to $1, the approximate rateof exchange at March 31, 2014. Such translations should not
be construed as representations that the Japanese yenamounts could be converted into U.S. dollars at that or any
other rate.

4. Fiscal Year of the Consolidated Subsidiary
The fiscal year-end of the consolidated subsidiary is the samedate as the consolidated balance sheet date.

Notes to the Consolidated Financial Statementsr Allowance for asset removal
Allowance for asset removal is provided at the amountestimated to be incurred for the anticipated asset
dismantlement.
t Allowance for executives’ retirement benefits
Allowance for executives’ retirement benefits is provided at
the amount that would be payable by the Company if alleligible executives terminated their appointment at the balance
sheet dates.
As of June 20, 2006, the executives’ retirement benefit
scheme has been abolished. Thus the balance of allowancefor executives’ retirement benefits represents the payableamount for executives who were appointed when the scheme
existed, attributable to the period from their appointment to
the date of abolishment of the scheme.

50
Annual Report 2014(3)	Scope of cash and cash equivalents for the consolidated
statement of cash flows
Cash and cash equivalents include cash on hand, deposits at
demand, and short—term investments with a maturity of threemonths or less carrying insignificant risk of any fluctuation inmarket value.
(4) Accounting policy for retirement benefits
Liability for retirement benefits is provided at the amountthat would be payable by the Company if all eligible
employees voluntarily terminated their employment at thebalance sheet dates.
(5)	Other significant accounting policies for preparation of
consolidated financial statements
Consumption taxes
Consumption taxes are excluded from income or expenses.

Notes to the Consolidated Balance Sheets
1. ‌Assets and Liabilities Held for Sound Settlement System
Operation and Management
In order to secure the Delivery Versus Payment (“DVP”) for the
Non-Exchange Transaction Deliveries (“NETDs”) settlement
system, JDCC, a consolidated subsidiary of the Company,
receives cash or securities as collateral from the DVP
participants whom JDCC officially acknowledge as parties
who undertake securities obligations in accordance with theprovisions set forth in JDCC’s general provisions inaccordance with Article 156-7, Paragraph 1 of the Financial
Instruments and Exchange Act (Act No. 25, 1948).
JDCC manages cash and securities entrusted by the DVP
participants as clearing funds defined in Article 156-11 of the
Financial Instruments and Exchange Act separately from otherassets in accordance with JDCC’s general provisions andArticle 18 of the Cabinet Office Ordinance on Financial
Instruments Clearing Organization (Cabinet Office Ordinance
No. 76, 2002).
(1)	Participant fund specified assets and participant funds
under management
Under the DVP for NETDs settlement system, when JDCC
accepts DVP participants’ obligations to counterparties, the
DVP participants involved in the transactions shall assume thesame obligations to JDCC.
JDCC requires each DVP participant to establish aparticipant fund in excess of the minimum amount set forth in
JDCC’s general provisions to ensure that the respective
obligations of DVP participants are covered (the aggregate
amount of minimum participant funds required by JDCC’s
general provisions as of March 31, 2014 was ¥15,000,000
thousand ($145,744 thousand)). In the event a DVP participant
defaults on the required payment obligations of the DVP for
the NETDs settlement system, JDCC shall take deposits fromthe participant fund of this DVP participant to fulfill its
obligations to other DVP participants.
The participant funds entrusted to JDCC will be managed as
money trusts, in line with the stated general provisions of JDCC.
These money trusts are evaluated at cost, as available-forsale securities with no market value.
Assets and liabilities pertaining to participant funds arepresented as designated assets for clearing funds anddeposits received for clearing funds, respectively.

(2) Collateral securities
Under the DVP for NETDs settlement system, DVP participants
are able to entrust marketable securities listed in JDCC’s
general provisions (“collateral securities”) to ensure thatobligations to JDCC are met.
When a DVP participant fails to meet its obligations to
JDCC, JDCC is authorized to dispose of the entrusted
collateral securities by selling them in securities markets or
through other methods deemed appropriate by JDCC.

(2) Commitment line agreements
q The Company¥ (thousands)

2013

As of March 31

Aggregate amountof credit limit$ (thousands)

2014¥ 3,500,000

2014
—

—

Amount used

2,000,000——

Unused balance¥ 1,500,000——

w JDCC¥ (thousands)

The market value of collateral securities entrusted to JDCC asof March 31, 2013 and 2014 was as follows:¥ (thousands)
As of March 31

Market value of collateral
securities entrusted
to JDCC2013$ (thousands)

2014

2014

¥ 92,917,708 ¥ 85,979,672$ 835,402

2. Accounts Relating to the Associated Company
Accounts and their amounts relating to the associatedcompany were as follows:¥ (thousands)
As of March 31

2013

2014

2014

¥ 428,237¥ 427,474$ 4,153(1) Overdraft contracts¥ (thousands)

Aggregate maximum
amount of overdraft
amounts
Amount used
Unused balance¥ 45,000,000 ¥ 45,000,000

Amount used
Unused balance

2014

—

$ (thousands)

2013

2014

2014

¥ 7,000,000¥ 7,000,000$ 68,013———¥ 7,000,000¥ 7,000,000$ 68,013$ 437,232——¥ 45,000,000 ¥ 45,000,000$ 437,232

Notes to the Consolidated Statement of
Income and Comprehensive Income

51

1. Loss on Disposal of Non-current Assets
The following table shows details of loss on disposal of
non-current assets:¥ (thousands)

3. Overdraft Contracts and Commitment Line Agreements
To ensure prompt and stable fundraising, the Company has
concluded overdraft contracts with four banks. In addition, toprepare for a possible deficiency of funds due to a default by
DVP participants, JDCC has concluded commitment line
agreements with three banks as part of a liquid fund forcompleting fund settlement on the required day.
The unused balances of these overdraft contracts andcommitment line agreements were summarized as follows:

As of March 31

Aggregate amountof commitment line
agreements$ (thousands)

2014

2013

For the years ended March 31

Buildings andaccompanying facilities¥784$ (thousands)

2014

2014

¥

264

$ 2

Tools and furniture

11,752

1,892

18

Software36,652——

Software in progress

13,480193

1¥ 62,669¥ 2,350

$ 22

Total

Annual Report 2014

Investment securities(equity securities)$ (thousands)

2013

As of March 31

Notes to the Consolidated Financial Statements

Notes to the Consolidated Statement of Changes in Net Assets
For the year ended March 31, 2013
1. Outstanding SharesClass of share

Ordinary shares

April 1, 2012

Increase

Decrease

March 31, 2013

8,500

—

—

8,500

Class ofshare

Total amount¥ (thousands)

Dividend
per share ¥Record date

Effective dateOrdinaryshares¥ 340,000¥ 40,000March 31, 2012

June 19, 2012

2. Treasury Stock
None.
3. Stock Subscription Rights and Other Securities
None.
4. Dividends(1) Payment of the dividends
Resolution

Ordinary General
Shareholders’ Meeting (June 18, 2012)52(2)	Dividends for which the record date is in the year ended March 31, 2013 and for which the effective date is in the following
fiscal year

Annual Report 2014

Resolution

Ordinary General
Shareholders’ Meeting (June 17, 2013)

Class ofshare

Payment source

Total amount¥ (thousands)

Dividend
per share ¥Record date

Effective dateOrdinarysharesRetainedearnings¥ 340,000¥ 40,000March 31, 2013

June 18, 2013

For the year ended March 31, 2014
1. Outstanding SharesClass of share

Ordinary shares

April 1, 2013

Increase

Decrease

March 31, 2014

8,500

—

—

8,500

2. Treasury Stock
None.
3. Stock Subscription Rights and Other Securities
None.
4. Dividends(1) Payment of the dividends
Resolution

Ordinary General
Shareholders’ Meeting (June 17, 2013)

Class ofshare

Total amount¥ (thousands)

Dividend
per share ¥Record date

Effective dateOrdinaryshares¥ 340,000($ 3,303 thousand)¥ 40,000($ 388)March 31, 2013

June 18, 2013(2)	Dividends for which the record date is in the year ended March 31, 2014 and for which the effective date is in the following
fiscal year
Resolution

Ordinary General
Shareholders’ Meeting (June 16, 2014)

Class ofshare

Payment source

Total amount¥ (thousands)

Dividend
per share ¥Record date

Effective dateOrdinarysharesRetainedearnings¥ 510,000($ 4,955 thousand)¥ 60,000($ 582)

March 31, 2014

June 17, 2014

Notes to the Consolidated Statementsof Cash Flows(1) ‌Acquisition cost, accumulated depreciation andnet book value

1. ‌The Balance of Cash and Cash Equivalents and its
Reconciliation to the Balance of Cash and Deposits in theConsolidated Balance Sheet¥ (thousands)

2013

2014

2014

¥ 5,433,419¥ 6,262,876$ 60,851

5,433,419

6,262,876

60,851For the years ended March 31

Cash and deposits$ (thousands)

Cash and cash equivalents¥ (thousands)
As of March 31

Acquisition cost

¥—

¥—

$—

—

—

—

Net book value

¥—

¥—

$—

¥—

¥—

$—

—

—

—

¥—

¥—

$—

Software:

Net book valueq Leased assetsa) Property‌and equipment: Mainly backup system hardwareb) Intangible assets: Mainly backup system software

Finance lease transactions other than those in which theownership of the leased assets is transferred to the lessee thatcommenced before April 1, 2008, continue to be accounted
for as operating lease transactions. The following are theamounts which would have been recorded as if capitalized as
finance leases as of March 31, 2013 and 2014, and for theyears then ended:

Total:
Acquisition cost

¥—

¥—

$—

Accumulated
depreciation

—

—

—

Net book value

¥—

¥—

$—

(2) Minimum lease payment including interest thereon¥ (thousands)$ (thousands)

As of March 31

2013

2014

2014

Due within one year

¥—

¥—

$—

Due over one year
Total

—

—

—

¥—

¥—

$—

(3)	Finance lease charges, depreciation expenses andinterest portions¥ (thousands)$ (thousands)

For the years ended March 31

2013

2014

2014

Finance lease charges¥ 219,193¥—$—

Depreciation expenses

216,083

—

—

346

—

—

Interest portions(4) ‌Methods applied in calculating depreciation expenses
and interest portions
Methods applied in calculating depreciation expenses:
Straight—line method with zero residual value over the lease
contract period
Methods applied in calculating interest portions: Computed
as the difference between the lease obligations and theacquisition cost equivalents, allocated over the respective
lease term based on the interest rate method
Loss on impairment of leased assets
There was no impairment loss allocated to leased assets forthe years ended March 31, 2013 and 2014.
2. Operating Lease Transactions
Minimum lease payment on the operating lease transactions
that are not cancellable
None.

53
Annual Report 2014

w Depreciation method
The depreciation method is described in Basis of Preparationof the Consolidated Financial Statements, 5. Significant
Accounting Policies, (1) Depreciation and amortization of major
depreciable assets.

2014

Accumulated
depreciation

Acquisition cost

1. Finance Lease Transactions
Finance lease transactions that do not transfer the ownershipof the leased assets to the lessee

2014

Tools and furniture:

Accumulated depreciation

Lease Transactions$ (thousands)

2013Notes to the Consolidated Financial Statements

Financial Instruments

Designated assets and deposits received for clearing funds
are assets and liabilities that are held to secure the DVP for the
NETDs settlement system.
Most of the accounts payable—trade are due within
three months.
Long-term loans payable aim mainly at capital investment,
and mature on or before March 31, 2018. As they carryvariable interest rates, they are subject to interest volatility risk.

1. General Information on Financial Instruments(1) Basic policies for financial instruments
The Company limits financial investments to short-term
deposits, and fundraising to borrowings from banks and others.
(2)	Details and risks of financial instruments and the risk
control system
Accounts receivable—trade are subject to credit risk ofparticipants in the book-entry transfer system. The Company
continuously monitors the financial conditions of theparticipants in accordance with internal policies.

2. Estimated Fair Value of Financial Instruments
The following table presents carrying amount on the consolidated balance sheet, fair value, and difference between the carrying
amount and the fair value as of March 31, 2013 and 2014. It does not, however, include those for financial instruments for which
the fair value is extremely difficult to estimate (see Note 2).

54

As of March 31, 2013
¥ (thousands)
Carrying amount on
the balance sheet

Annual Report 2014

(1) Cash and deposits¥—

3,140,015

3,140,015—

28,935,881

28,935,881—¥ 37,509,316¥ 37,509,316

—

¥

¥

3,146,777(6,762)

Allowance for doubtful accounts*(3) Designated assets for clearing funds
Assets total(4) Accounts payable—trade(5) Deposits received for clearing funds¥

Difference

5,433,419(2) Accounts receivable—trade

5,433,419

Fair value(865,312)(28,935,881)(865,312)—(28,935,881)—(6) Long-term loans payable(2,000,000)(2,000,000)—

Liabilities total¥ (31,801,193)¥ (31,801,193)—* Allowance for doubtful accounts is deducted from Accounts receivable—trade.

As of March 31, 2014
¥ (thousands)$ (thousands)¥ (thousands)

Carrying amount on the balance sheet(1) Cash and deposits(2) Accounts receivable—trade¥6,262,876
3,160,922

Assets total(4) Accounts payable—trade60,851¥

6,262,876$

Difference

60,851——30,712(6,752)(65)

3,154,170

30,646

3,154,170

30,64630,819,217

299,448

30,819,217

299,448—¥ 40,236,263$ 390,946¥ 40,236,263$ 390,946—¥ (1,011,031)$$

Allowance for doubtful accounts*(3) Designated assets for clearing funds$$ (thousands)

Fair value(9,823)¥ (1,011,031)(9,823)—(5) Deposits received for clearing funds(30,819,217)(299,448)(30,819,217)(299,448)—(6) Long-term loans payable(9,400,000)(91,333)(9,400,000)(91,333)

Liabilities total¥ (41,230,248)$ (400,604)¥ (41,230,248)$ (400,604)* Allowance for doubtful accounts is deducted from Accounts receivable—trade.

—Notes:
1. Calculation methods for fair value of financial instruments(1) Cash and deposits, (2) Accounts receivable—trade, and(4) Accounts payable—trade:
The book value was deemed to be fair value for these
items since the book value approximates fair value
because of the short settlement period.
(3) Designated assets for clearing funds, and (5) Deposits
received for clearing funds:
The book value was deemed to be fair value since these
items represent assets and liabilities reflecting their roles
in maintaining a stable securities trading environment for
the DVP for the NETDs settlement system.
(6) Long-term loans payable:
The book value was deemed to be fair value since they
carry contracted variable interest rates which reflectmarket interest rates, thus the book value approximatesfair value.

2013

2014

¥ 428,237 ¥ 427,474

2. Retirement Benefit Obligation¥ (thousands)

As of March 31, 2013

Category

Retirement benefit obligation¥ 442,447

Allowance for employees’ retirement benefits¥ 442,447

3. Net Periodic Benefit Costs¥ (thousands)
Category

Year ended
March 31, 2013

Service cost

¥ 77,839
48,403

Other*Net periodic benefit costs¥ 126,242$ (thousands)

2014

55

4. Actuarial Assumptions
Not applicable.

$ 4,153

These financial instruments are excluded from the abovetable because their market quotes are not available, thus
their fair value is deemed to be extremely difficult toestimate.
3. ‌Estimated redemptions for monetary claims andsecurities with maturities after the consolidated balance
sheet date
All deposits and accounts receivable—trade in the abovetable have settlement dates within one year.
4. ‌Maturity analysis for long-term loans payable and leaseobligations as of March 31, 2014
Please refer to “Details of Borrowings” in the Consolidated
Supplementary Schedules.

For the year ended March 31, 2014
1. Outline of Retirement Benefit Schemes Adopted
The Company and its subsidiary adopt a lump-sum retirement
allowance scheme and a defined contribution pension plan.
2. Defined Benefit Plan(1)	Reconciliation of liability for retirement benefits at the
beginning and end of the period accounted for by thesimplified method¥ (thousands)$ (thousands)

2014

2014

Liability for retirement benefits
at the beginning of the period¥ 442,447$ 4,298

Net periodic benefit costs

78,037

758

Payments of retirement benefits(9,616)(93)¥ 510,867$ 4,963

Liability for retirement benefits
at the end of the period(2)	Reconciliation of retirement benefit obligation at the endof the period with liability for retirement benefits reflectedon the balance sheet¥ (thousands)$ (thousands)

2014

2014

Retirement benefit obligation¥ 510,867$ 4,963

Liability for retirement benefits¥ 510,867$ 4,963

Annual Report 2014

Category

Affiliated companies’ stocks¥ (thousands)

For the year ended March 31, 2013
1. Outline of Retirement Benefit Schemes Adopted
The Company and its subsidiary adopt a lump-sum retirement
allowance scheme and a defined contribution pension plan.

* ‌“Other” represents the amount of contribution to the defined contribution
pension plan.

2. ‌Financial instruments for which the fair value isextremely difficult to estimate(As of March 31)

Retirement BenefitsNotes to the Consolidated Financial Statements(3) Net periodic benefit costs

Net periodic benefit costs accounted
for by the simplified method¥ (thousands)$ (thousands)

2014

2014

¥ 78,037$ 758

3. Defined Contribution Plan
The amount contributed by the Company and its subsidiary to
the defined contribution pension plan was ¥49,016 thousand($476 thousand), provided as net periodic benefit costs.

Income Taxes
1. Breakdown of Deferred Tax Assets¥ (thousands)$ (thousands)

2013

2014

Accrued business tax¥ 23,356¥ 42,901

Allowance for
employees’ bonuses

83,35474,525

724

Business facility taxes

4,056

3,899

37

Accrued social
insurance premiums

11,614

10,341

100—

29,967291

As of March 31

2014

Deferred tax assets—
current:

56
Annual Report 2014

Allowance forasset removal$

416

12,5538,220

79

134,935

169,855

1,650

157,688———

182,073

1,769

Allowance for executives’retirement benefits

10,692

10,692

103

Excess depreciation of
non-current assets

293,455

57,245

556

Excess amortizationof deferred charges
for tax purposes

7,502

5,265

51

Allowance forasset removal

47,354——

Other
Subtotal
Deferred tax assets—
non-current:
Allowance for
employees’ retirement
benefits
Liability for
retirement benefits

Other

13,614

13,240128

Valuation allowance(10,692)(10,692)(103)

Subtotal

519,615

257,824

2,505

Total deferred
tax assets¥ 654,551¥ 427,679$ 4,155

2. ‌Reconciliation between the Nominal Statutory Income Tax
Rate and the Effective Income Tax Rate
The note on the reconciliation between the nominal statutory
income tax rate and the effective income tax rate for the years
ended March 31, 2013 and 2014 was omitted since thedifference of those two was no more than 5% of the statutory
income tax rate.
3. ‌Revisions in the Amounts of Deferred Tax Assets as a
Result of a Change in the Corporate Tax Rate
On March 31, 2014, the Act to Partially Revise the Income Tax
Act (Act No. 10 of 2014) was promulgated, according to which
the Special Reconstruction Corporation Tax will no longer be
imposed starting with the fiscal year beginning April 1, 2014.
Accordingly, the statutory income tax rate used for calculating
deferred tax assets reversing after April 1, 2014 has been
reduced from the previous fiscal year’s rate of 38.0% to35.6%.
As a result, the amount of deferred tax assets decreasedby ¥12,125 thousand ($117 thousand), and the amount of
Income taxes—deferred increased by the same amount.

Segment Information

3. Information by Major Customer

Segment Information
The Company and its subsidiary have one business segment,
Book-entry Transfer of Securities, therefore segment
information has been omitted.
Related Information
For the year ended March 31, 2013
1. Information by Product or Service
Information by product or service has been omitted because
operating revenues from external customers in one businessproduct or service exceeded 90% of total operating revenues
recorded in the consolidated statement of income andcomprehensive income.
2. Information on Geographic Areas(1) Operating revenues
Disclosure is omitted because the Company had no operating
revenues from external customers overseas.

3. Information by Major Customer
Name of customer

Japan Securities
Clearing Corporation

Operating revenues¥ (thousands)

Related segment¥ 1,755,569

Book-entry Transfer
of Securities

For the year ended March 31, 2014
1. Information by Product or Service
Information by product or service has been omitted because
operating revenues from external customers in one businessproduct or service exceeded 90% of total operating revenues
recorded in the consolidated statement of income andcomprehensive income.
2. Information on Geographic Areas(1) Operating revenues
Disclosure is omitted because the Company had no operating
revenues from external customers overseas.
(2) Property and equipment
Disclosure is omitted because the Company had no property
and equipment overseas.

Operating revenues¥ (thousands) $ (thousands)

Japan Securities¥ 2,734,325
Clearing Corporation$ 26,567

Related segment

Book-entry Transfer
of Securities

Disclosure of Information on Impairment Loss on Noncurrent
Assets by Reportable Segment
None.
Disclosure of Information on Amortization and Year-End
Balance of Goodwill by Reportable Segment
None.
Disclosure of Information on Gain on Negative Goodwill by
Reportable Segment
None.

57
Annual Report 2014

(2) Property and equipment
Disclosure is omitted because the Company had no property
and equipment overseas.

Name of customer

Notes to the Consolidated Financial Statements

Related Party Information
1. Transactions with Related Parties(1) Transactions between the Company and related partiesa) Unconsolidated subsidiaries and associated companies
For the year ended March 31, 2013
Type

Name ofcompany

Address

Tosho
Associated System Chuo-ku,
company
ServiceTokyoCo., Ltd.

Capital¥ (thousands)¥100,000

Principal
business

Design anddevelopmentof software

Percentage ofvoting rightowning/owned

20%
owningdirectly

BusinessrelationshipTransactions

Amount¥ (thousands)

Descriptions

Balance at
end of period¥ (thousands)

Payment ofcomputer
Accounts¥1,600,293
maintenancepayable—tradefee¥154,676¥1,144,764

Accounts
payable—other¥101,150¥484,159——

Amount¥ (thousands)

Descriptions

Balance at
end of period¥ (thousands)

Purchasing
software and Purchase of
systemsoftwaremaintenance
Payment ofsettlementmoney (*3)

For the year ended March 31, 2014
Type

Name ofcompany

Address

Capital¥ (thousands)

Principal
business

58
Annual Report 2014

Tosho
¥100,000 Design and
Associated System Chuo-ku,($971
development
company
ServiceTokyo
thousand) of softwareCo., Ltd.

Percentage ofvoting rightowning/owned

20%
owningdirectly

BusinessrelationshipTransactions

Payment of¥1,817,213
computer
Accounts
Purchasing maintenance ($17,656
payable—trade
thousand)software andfeesystemmaintenance Purchase of ¥4,186,294
Accounts($40,675
softwarepayable—otherthousand)¥200,209($1,945thousand)¥1,045($10
thousand)

Notes:
1. The transaction amounts above exclude consumption taxes, while year-end balances include consumption taxes.
2. The terms and conditions of the above transactions are on an arm’s-length basis.
3. Settlement money was paid upon settlement of arbitration.

b) ‌Corporations that share the same parent company with the Company, subsidiaries of other affiliated companies of theCompany, and others
For the year ended March 31, 2013
Type

Name ofcompany

Address

Capital¥ (thousands)

Principal
business

Financial
SubsidiaryJapan
instrumentof other
Securities Chuo-ku,¥7,350,000 obligation
affiliatedClearingTokyoassumption
companies Corporation
service

Percentage ofvoting rightowning/owned—

BusinessrelationshipTransactions

Amount¥ (thousands)

Descriptions

Balance at
end of period¥ (thousands)

Commission Commission
Accounts¥1,755,569
incomeincomereceivable—trade¥249,107

Businessrelationship

Balance at
end of period¥ (thousands)

For the year ended March 31, 2014
Type

Name ofcompany

Address

Capital¥ (thousands)

Principal
business

Financial
SubsidiaryJapan¥8,950,000 instrumentof other
Securities Chuo-ku,($86,960
obligation
affiliatedClearingTokyo
thousand) assumption
companies Corporation
service

Percentage ofvoting rightowning/owned—

Transactions

Commission Commission
incomeincomeNotes:
1. The transaction amounts above exclude consumption taxes, while end balances include consumption taxes.
2. The terms and conditions of the above transactions are on an arm’s-length basis.

Amount¥ (thousands)

Descriptions¥2,734,325¥221,761
Accounts($26,567($2,154
receivable—trade
thousand)thousand)c) Executives, major shareholders and others of the Company (individuals only)
For the year ended March 31, 2013
Type

Name ofcompany

Address

Capital¥ (thousands)

Principal
business

The Bank
Corporationof Tokyo- Chiyoda-ku,¥1,711,958,104 Banking
where
MitsubishiTokyo
executives
UFJ, Ltd.
of theCompany hold Mitsubishi
representative UFJ Trust Chiyoda-ku,¥324,279,038 Banking
and Banking
Tokyo
posts
Corporation

Percentage ofvoting rightowning/owned

BusinessrelationshipAmount¥ (thousands)

Descriptions

Balance at
end of period¥ (thousands)¥600,000

Long-termloans payable¥600,000

¥15

—

—

¥300,000

Long-termloans payable¥300,000¥7——Transactions

Amount¥ (thousands)

Descriptions

Balance at
end of period¥ (thousands)

Borrowingof funds¥2,200,000¥2,820,000
Long-term($21,375($27,399
loans payable
thousand)thousand)

Payment
of interest¥17($0
thousand)Borrowingof funds¥1,100,000¥1,410,000
Long-term($10,687($13,699
loans payable
thousand)thousand)

Payment
of interest¥8($0
thousand)Transactions

Commission Borrowing
5% owned income and of funds
directly
borrowing
Paymentof fundsof interest
Commission Borrowing
5% owned income and of funds
directly
borrowing
Paymentof fundsof interest

For the year ended March 31, 2014
Type

Address

Capital¥ (thousands)

Principal
business

Percentage ofvoting rightowning/owned

Businessrelationship

The Bank¥1,711,958,104
of Tokyo- Chiyoda-ku,($16,633,871 Banking
Mitsubishi
Tokyo
thousand)UFJ, Ltd.

Commission
5% owned income anddirectly
borrowingof funds

Mitsubishi¥324,279,038
UFJ Trust Chiyoda-ku,($3,150,787
and Banking
Tokyo
thousand)Corporation

Commission
5% owned income anddirectly
borrowingof funds

Banking

Note: The terms and conditions of the above transactions are on an arm’s-length basis.

(2) Transactions between the consolidated subsidiary of the Company and the related parties
None.
2. Notes on the Parent Company and Important Affiliated Companies
None.

—

—

—

—

59
Annual Report 2014

Corporation
where
executivesof theCompany holdrepresentative
posts

Name ofcompanyNotes to the Consolidated Financial Statements

Per Share Information
¥

$

2013

2014

2014

Net assets per share¥ 2,759,717.91¥ 2,929,611.14$ 28,464.93

Net income per share¥¥$ 2,039.38

As of / for the years ended March 31

179,102.15

209,893.23

Notes:
1. Diluted net income per share is not presented because no shares with potential dilutive effect were outstanding.
2. The basis for calculating net assets per share as of March 31, 2013 and 2014 is as follows:¥ (thousands)
As of March 31

Total net assets as reported in the consolidated balance sheets

2014

2014

¥ 23,457,602¥ 24,901,694$ 241,951

Amount to be deducted from total net assets
Net assets pertaining to common stock shareholders
Number of common stock shares outstanding as of the consolidatedbalance sheet dates used to calculate net assets per share (in shares)$ (thousands)

2013
—

—

—

¥ 23,457,602¥ 24,901,694$ 241,951

8,500

8,500

—

3. The basis for calculating net income per share for the years ended March 31, 2013 and 2014 is as follows:¥ (thousands)

60

For the years ended March 31

Net income as reported in the consolidated statement of income
Net income not pertaining to common stock shareholders

Annual Report 2014

Net income pertaining to common stock shareholders
Weighted-average number of common stock shares outstanding
during the period (in shares)

Subsequent EventsNone.

$ (thousands)

2013

2014

2014

¥ 1,522,368¥ 1,784,092$ 17,334———¥ 1,522,368¥ 1,784,092$ 17,334

8,500

8,500

—

[Consolidated Supplementary Schedules]
Details of Bonds
None.

Details of Borrowings
Category¥ (thousands)¥ (thousands)

Balance as ofApril 1, 2013

$ (thousands)

Balance as of March 31, 2014

Averageinterest rate (%)

Maturity

Short-term borrowings

—

—

—

—

—

Long-term loans payable due within one year

—

—

—

—

—

57

0.4%

—

91,333

1.1%

April 3, 2017

Lease obligations due within one year¥

Long-term loans payable due over one year

¥

5,880

$

2,000,000

9,400,000

6,693

812

7

0.4%

April 1, 2015 – July 31, 2015

—

—

—

—

—

¥ 2,017,156¥ 9,406,693$ 91,398——

Lease obligations due over one year
Other interest-bearing debts

Total

10,462

Notes:
1. ‌Average interest rate above represents the weighted-average of the interest rates applicable to the balances as of March 31,
2014.
2. ‌Aggregate annual maturities of long-term loans payable and lease obligations due over one year for five years subsequent toMarch 31, 2014 are as follows:

Long-term loans payable
Lease obligations

April 1, 2015–
March 31, 2016

Other Informations
None.

April 1, 2017–
March 31, 2018

April 1, 2018–
March 31, 2019

¥ (thousands)——¥ 9,400,000—$ (thousands)——$ 91,333—¥ (thousands)

¥ 812

—

—

—

$ (thousands)

$7

—

—

—

Details of Asset Retirement Obligations
None.

April 1, 2016–
March 31, 2017

Annual Report 2014

Due
Category61

Independent Auditor’s Report62
Annual Report 2014

63
Annual Report 2014