Consolidated
Financial Statements
Consolidated Balance Sheets (As of March 31, 2011 and 2012)¥ (thousands)

2012

2012

¥ 4,516,648
3,443,641
160,592
33,530,047
323,882(7,256)
41,967,555¥ 7,794,677
3,163,166
416,189
35,293,686
223,493(1,848)46,889,364$ 94,837
38,486
5,063
429,4152,719(22)570,499

Noncurrent Assets
Property and Equipment:
Buildings and structures
Accumulated depreciation
Buildings and structures, net
Tools and furniture
Accumulated depreciation
Tools and furniture, net
Lease assets
Accumulated depreciation
Lease assets, net
Total Property and Equipment

859,474(369,694)
489,779
5,460,708(4,662,828)
797,879
93,323(40,823)
52,4991,340,158

926,465(440,666)
485,798
5,713,609(5,105,378)
608,230
93,323(59,488)
33,834
1,127,863

11,272(5,361)
5,910
69,517(62,116)
7,400
1,135
(723)
411
13,722Intangible Assets:
SoftwareConstruction in progress (Software)
Lease assets
Other intangible assets
Total Intangible Assets

12,218,911
346,479
6,468
17,923
12,589,781

8,365,514
3,796,200
3,771
17,80812,183,294

101,782
46,18845
216
148,233

Investment and Other Assets:
Investment securities (Note 2)Long-term prepaid expenses
Deferred tax assets
Long-term refundable lease deposits
Claims provable in bankruptcy, rehabilitation and other
OthersAllowance for doubtful accounts
Total Investment and Other Assets
Total Noncurrent Assets
Total Assets

414,128
18,265598,833
503,534
31,1141,000(10,181)
1,556,695
15,486,635¥ 57,454,190

429,980
10,970407,456
503,534
30,6201,000(9,934)
1,373,627
14,684,786¥ 61,574,151

5,231
133
4,957
6,126
372
12
(120)
16,712
178,668$ 749,168

ASSETS
Current Assets:
Cash and deposits
Accounts receivable—trade
Deferred tax assets
Designated assets for clearing funds (Note 1)
Other current assets
Allowance for doubtful accounts
Total Current Assets

44$ (thousands)

2011

Annual Report 2012

The accompanying notes are an integral part of these statements.

¥ (thousands)

LIABILITIESCurrent Liabilities:
Accounts payable—trade
Lease obligations
Income taxes payable
Allowance for employees’ bonuses
Allowance for executives’ bonuses
Consumption tax payable
Deposits received for clearing funds (Note 1)
Allowance for loss on changes of system development policy
Other current liabilities
Total Current Liabilities

2012

849,724
23,207744,703
202,087
20,6002,575
35,293,686
700,592
964,159
38,801,335$ 10,338
282
9,060
2,458
250
31
429,415
8,524
11,730472,093

40,363311,333
30,00067,121
448,818
36,317,216

17,156383,304
30,00067,121
497,582
39,298,917

208
4,663
365
816
6,054
478,147

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

4,250,000
4,250,000
12,636,974
21,136,974
21,136,974¥ 57,454,190

4,250,000
4,250,000
13,775,233
22,275,233
22,275,233¥ 61,574,151

51,70951,709167,602271,021271,021$ 749,168¥

769,998
22,789894,525
183,096
20,500117,831
33,530,047—
329,60935,868,397¥

45Annual Report 2012

Noncurrent Liabilities:
Lease obligations
Allowance for employees’ retirement benefits
Allowance for executives’ retirement benefits
Long-term guarantee deposited
Total Noncurrent Liabilities
Total Liabilities$ (thousands)

2012

2011

Consolidated
Financial Statements
Consolidated Statements of Income and Comprehensive Income (For the years ended March 31, 2011 and 2012)¥ (thousands)

46

Annual Report 2012

Operating Revenue
Operating Expenses:
Executives’ compensations
Salaries
Allowance for bonuses
Allowance for executives’ bonuses
Retirement benefit expenses
Maintenance of systems
Outside services
Depreciation and amortization
Rent
Advertising
OthersTotal Operating Expenses
Operating Income
Non-Operating Income:Interest Income
Operational revenue on designated assets for clearing funds
Equity in earnings of affiliates
OthersTotal Non-Operating Income
Non-Operating Expenses:
Interest expenses
Commitment fees
Fees for fund operation of designated assets for clearing fund
OthersTotal Non-Operating Expenses
Ordinary Income$ (thousands)

2011¥ 19,726,909

2012¥ 19,698,237

2012$ 239,667

190,476
1,783,070
183,096
20,500102,322
6,779,277
2,350
5,725,759
551,479
78,4601,651,664
17,068,456
2,658,452

194,378
1,621,253
202,087
20,600121,514
6,130,854
2,702
5,341,802
546,867
46,283
1,759,720
15,988,063
3,710,173

2,364
19,725
2,458
250
1,478
74,59332
64,993
6,653
563
21,410
194,525
45,141

110
18,19062,2498,440
88,991

8
14,91020,151
6,323
41,393

0
181
245
76
503

20,812
42,678
7,790
2,628
73,9092,673,534

713
42,9748,035
182
51,906
3,699,661

8
522
97
2
631
45,013Extraordinary Income:Reversal of allowance for doubtful accounts
Total Extraordinary Income
Extraordinary Loss
Loss on disposal of fixed assets (Note 1)
Loss on changes of system development policy (Note 2)
Total Extraordinary Losses
Income before Income Taxes
Income taxes—current
Income taxes—deferred
Total Income Taxes
Income before Minority Interests
Net Income
Income before Minority Interests
Comprehensive Income

8,126
8,126

—
—

—
—

3,191
—
3,191
2,678,469
966,873
102,684
1,069,557
1,608,911
1,608,911
1,608,911¥ 1,608,911

5,763
1,067,384
1,073,148
2,626,513
1,212,473(64,219)
1,148,253
1,478,259
1,478,259
1,478,259¥ 1,478,259

70
12,986
13,056
31,956
14,752(781)
13,97017,985
17,985
17,985$ 17,985(Comprehensive income attributable to)Comprehensive income attributable to owners of the parent
Comprehensive income attributable to minority interest

1,608,911—

1,478,259—

17,985—The accompanying notes are an integral part of these statements.

Consolidated Statements of Changes in Net Assets (For the years ended March 31, 2011 and 2012)¥ (thousands)

The accompanying notes are an integral part of these statements.

2012

2012

¥ 4,250,000——
4,250,000¥ 4,250,000——
4,250,000$ 51,709——
51,7094,250,000——
4,250,000

4,250,000——
4,250,000

51,709——51,70911,368,062

12,636,974

153,753(340,000)
1,608,911
1,268,911
12,636,974(340,000)
1,478,259
1,138,259
13,775,233(4,136)
17,985
13,849167,602

19,868,062

21,136,974

257,172(340,000)
1,608,911
1,268,911
21,136,974(340,000)
1,478,259
1,138,259
22,275,233(4,136)
17,985
13,849271,021

19,868,062

21,136,974

257,172(340,000)
1,608,911
1,268,911¥ 21,136,974(340,000)
1,478,259
1,138,259¥ 22,275,233(4,136)
17,985
13,849$ 271,021

47

Annual Report 2012

Shareholders’ Equity
Common stock:
Balance at the beginning of current period
Change of items during the period
Total change of items during the period
Balance at the beginning of current period
Capital surplus:
Balance at the beginning of current period
Change of items during the period
Total change of items during the period
Balance at the end of current period
Retained earnings:
Balance at the beginning of current period
Change of items during the period
Cash dividends
Net income
Total change of items during the period
Balance at the end of current period
Total shareholders’ equity:
Balance at the beginning of current period
Change of items during the period
Cash dividends
Net income
Total change of items during the period
Balance at the end of current period
Total net assets:
Balance at the beginning of current period
Change of items during the period
Cash dividends
Net income
Total change of items during the period
Balance at the end of current period$ (thousands)

2011Consolidated
Financial Statements
Consolidated Statements of Cash Flows (For the years ended March 31, 2011 and 2012)¥ (thousands)

48

Annual Report 2012

Cash Flows from Operating Activities:
Income before income taxes
Depreciation and amortization
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in allowance for employees’ bonuses
Increase (decrease) in allowance for executives’ bonuses
Increase (decrease) in allowance for employees’ retirement benefits
Increase (decrease) in allowance for executives’ retirement benefits
Interest income
Interest expenses
Equity in loss (earnings) of affiliates
Foreign exchange loss (earnings)
Loss on disposal of property and equipment
Loss on disposal of intangible assets
Loss on changes of system development policy
Decrease (increase) in accounts receivable—trade
Increase (decrease) in accounts payable—trade
OthersSub-totalInterest and dividends received
Interest paid
Income taxes paid
Income taxes paid for prior years
Income taxes refunded
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 repayment of lease deposits
Payment of lease deposits
Net Cash Used in Investing Activities
Cash Flows from Financing Activities:
Increase (decrease) in short-term borrowings—net
Repayment of lease obligations
Cash dividends paid
Net Cash Used in Financing Activities
Effect of exchange rate changes on cash and cash equivalents
Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of Year
Cash and Cash Equivalents at End of Year (Note 1)
The accompanying notes are an integral part of these statements.

$ (thousands)

2011

2012

2012

¥ 2,678,469
5,725,759(5,664)861(200)
54,610(11,160)(110)
20,812(62,249)
2,607
3,000
190
—
(112,274)(53,305)(372,907)
7,868,440
4,410(22,167)(197,796)(59,016)
233,786
7,827,657¥ 2,626,513
5,341,802(5,655)18,990100
71,970—(8)713(20,151)(1,254)
4,911
852
1,067,384
280,969
79,726
6,104
9,472,968
4,308
(713)
(1,361,122)——
8,115,440$ 31,956
64,993
(68)
231
1
875
—
(0)
8
(245)
(15)
59
10
12,9863,418
970
74
115,25652(8)(16,560)——
98,739(66,637)(1,551,786)
4,128(1,380)(1,615,676)(284,317)(4,191,558)——(4,475,876)(3,459)(50,998)——(54,457)(4,800,000)(21,600)(340,000)(5,161,600)(2,607)
1,047,772
3,468,876¥ 4,516,648—(22,789)(340,000)(362,789)
1,254
3,278,029
4,516,648¥ 7,794,677—(277)(4,136)(4,414)15
39,883
54,953$ 94,837

Note on Going Concern’s Premise
None.

Basis of Preparation of the Consolidated
Financial Statements
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 the
Financial Instruments and Exchange Act in conformity withaccounting principles and practices generally accepted inJapan, which are different in certain respects as to theapplication and disclosure requirements of International
Financial Reporting Standards.

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.
(hereafter, “TSS”)(3)	The Company does not have any other associatedcompanies to which the equity method is not applied.
4. Fiscal Year of the Consolidated Subsidiary
The fiscal year-end of the consolidated subsidiary is the samedate as the consolidated balance sheet date.
5. Significant Accounting Policies(1) Depreciation and amortization of major depreciable assets
q Property and equipment (excluding lease assets)	Depreciation for buildings, excluding improvements, iscalculated using the straight-line method. Depreciationfor other property and equipment is calculated using thedeclining-balance method.
		 The major estimated useful lives are as follows:
			 Buildings and structures 3–50 years
			 Tools and furniture 2–15 years

e Leased assets
	The straight-line method is applied to the depreciation ofassets leased under finance leases without ownershiptransfer, over their respective lease term with zero
residual value.
		 The Company accounts for finance leases withoutownership transfer as operating leases if their transactioncommenced before March 31, 2008.
(2) Provision of major allowancesq Allowance for doubtful accounts
	Allowance for doubtful accounts is provided at an
amount determined based on the Company’s historical
average charge-off ratio for ordinary receivables, andestimates of uncollectible amounts determined byreference to specific doubtful receivables from customers
which are experiencing financial difficulties.
w Allowance for employees’ bonuses	Allowance for employees’ bonuses is provided forbonuses attributable to each fiscal year based on theestimated amount of the respective payments.
e Allowance for executives’ bonuses	Allowance for executives’ bonuses is provided forbonuses attributable to each fiscal year based on theestimated amount of the respective payments.
r	Allowance for loss on changes in system development
policies	The allowance is provided, based on the development
contract amount, for expenditures incurred due tochanges in the development policies of the nextgeneration system which was being developed.
t Allowance for employees’ retirement benefits	Allowance for employees’ retirement benefits is provided
at the amount that would be payable by the Company if
all eligible employees voluntarily terminated theiremployment at the balance sheet dates.

49

Annual Report 2012

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”)

w Intangible assets (excluding lease assets)
	Amortization of intangible assets is calculated using thestraight-line method.
		 Costs of software for internal use are capitalized andamortized over an estimated useful life of 5 years.

Consolidated
Financial Statementsy Allowance for executives’ retirement benefits	Allowance for executives’ retirement benefits is provided
at the amount that would be payable by the Company if
all eligible executives terminated their appointment at thebalance 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 thescheme existed, attributable to the period from their
appointment to the date of abolishment of the scheme.
(3)	Scope of cash and cash equivalents for the consolidated
statements of cash flows
	Cash and cash equivalents include cash on hand, deposits
at demand, and short-term investments with a maturityof three months or less carrying insignificant risk of any
fluctuation in market value.
50(4) Consumption taxes
	Consumption taxes are excluded from income or expenses.

Annual Report 2012

6. U.S. Dollar Amounts
Amounts in U.S. dollars are included solely for theconvenience of readers outside Japan. The rate of ¥82.19=US$1, the rate of exchange as of March 31, 2012 has been usedin translation. The inclusion of such amounts is not intended
to imply that Japanese yen have been or could be readily
converted, realized or settled in U.S. dollars at this or any
other rate.

Accounting Changes
None.

Accounting Standards Applicable after theConsolidated Balance Sheet Date
None.

Changes in Presentation
None.

Changes in Accounting Estimates
None.

Additional Information
For the accounting changes and corrections of prior period
errors that are made on or after April 1, 2011, the Company
has applied the Accounting Standard for Accounting
Changes and Error Corrections (Accounting Standard Boardof Japan Statement No. 24, December 4, 2009) and the
Guidance on Accounting Standard for Accounting Changes
and Error Corrections (Accounting Standard Board of Japan
Guidance No. 24, December 4, 2009).

Notes to the Consolidated Financial Statements[Notes to the Consolidated Balance Sheets]
1. Assets and Liabilities Held forSound Settlement System Operation and Management
In order to secure the Delivery Versus Payment (“DVP”) for
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, Paragraph 7-1, of the Financial
Instruments and Exchange Act (Law 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 fromother assets in accordance with JDCC’s general provisions
and Article 7 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 tocounterparties, the DVP participants involved in thetransactions shall assume the same 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 therespective obligations of DVP participants are covered.

(The aggregate amount of minimum participant funds
required by JDCC’s general provisions as of March 31,
2012 was ¥15,000,000 thousand ($182,503 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 from theparticipant 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 generalprovisions of JDCC.
		 These money trusts are evaluated at cost, as availablefor-sale securities with no market value.
		 Assets and liabilities pertaining to participant funds
are presented as Designated assets for clearing assets andDeposits received for clearing funds, respectively.

The market value of collateral securities entrusted to JDCC
as of March 31, 2011 and 2012 was as follows:¥ (thousands)

2011

2012

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

Investment securities(shares)

2011

2012

Aggregate maximum
amount of overdraft and ¥ 52,000,000 ¥ 52,000,000
commitment line amounts
Amount used——
Unused balance¥ 52,000,000 ¥ 52,000,000$ (thousands)

2012$632,680—$632,680[Notes to the Consolidated Statements of Income andComprehensive Income]1. Loss on Disposal of Noncurrent Assets
The following table shows details of loss on disposal of
noncurrent assets:¥ (thousands)
For the years ended March 31

Buildings and structures
Tools and furniture
Software
Total

2011
¥ 1,633
1,367
190¥ 3,191

2012
¥ 894
4,016
852
¥ 5,763$ (thousands)

2012
$ 10
48
10
$ 70

$ (thousands)

2012
Market value of collateral¥ 84,977,948 ¥ 91,472,213 $ 1,112,936
securities entrusted to JDCC
As of March 31¥ (thousands)
As of March 31$ (thousands)

2011

2012

2012

¥ 414,128¥ 429,980$ 5,231

2. Loss on Changes in System Development Policies
The amount represents the loss incurred due to changes inthe development policies of the next-generation system
which was being developed.

51

Annual Report 2012

(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 that obligations 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.

3. Overdraft Contracts and Commitment Line Agreements
To ensure agile and stable fundraising, the Company has
concluded overdraft contracts with four banks. To prepare
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 unusedbalances of these overdraft contracts and commitment line
agreements were summarized as follows:Consolidated
Financial Statements[Notes to the Consolidated Statements of Changes in Net Assets]
For the year ended March 31, 2011
1. Outstanding SharesClass of Share

Ordinary shares

March 31, 2010

Increase

Decrease

March 31, 2011

8,500

—

—

8,500

Class of Share

Payment Source

Total Amount¥ (thousands)

Dividendper Share ¥OrdinarysharesRetainedearnings¥340,000¥40,000

2. Treasury Stock
Not applicable.
3. Stock Subscription Rights and Other Securities
Not applicable.
4. Dividends(1) Payment of the dividends
Resolution

Ordinary General
Shareholders Meeting (June 21, 2010)

52

Record Date

Effective Date

March 31, 2010 June 22, 2010(2)	Dividends for which the record date is in the year ended March 31, 2011 and for which the effective date is in the year ended
March 31, 2012

Annual Report 2012

Resolution

Ordinary General
Shareholders Meeting (June 20, 2011)

Class of Share

Payment Source

Total Amount¥ (thousands)

Dividendper Share ¥OrdinarysharesRetainedearnings¥340,000¥40,000

March 31, 2011

Increase

Decrease

March 31, 2012

8,500

—

—

8,500

Record Date

Effective Date

March 31, 2011 June 21, 2011

For the year ended March 31, 2012
1. Outstanding SharesClass of Share

Ordinary shares

2. Treasury Stock
Not applicable.
3. Stock Subscription Rights and Other Securities
Not applicable.
4. Dividends(1) Payment of the dividends
Resolution

Ordinary General
Shareholders Meeting (June 20, 2011)

Class of Share

Payment Source

Total Amount¥ (thousands)

Dividendper Share ¥OrdinarysharesRetainedearnings¥340,000($4,136 thousand)¥40,000($486)

Record Date

Effective Date

March 31, 2011 June 21, 2011(2)	Dividends for which the record date is in the year ended March 31, 2012 and for which the effective date is in the year ending
March 31, 2013
Resolution

Ordinary General
Shareholders Meeting (June 18, 2012)

Class of Share

Payment Source

Total Amount¥ (thousands)

Dividendper Share ¥OrdinarysharesRetainedearnings¥340,000($4,136 thousand)¥40,000($486)

Record Date

Effective Date

March 31, 2012 June 19, 2012

[Notes to the Consolidated Statements of Cash Flows](2) Minimum lease payment including interest thereon

1. The Balance of Cash and Cash Equivalents and Its
Reconciliation to the Balance of Cash and Deposits in theConsolidated Balance Sheets

As of March 31

As of March 31

Cash and deposits
Cash and cash equivalents¥ (thousands)$ (thousands)

2011
2012
¥ 4,516,648 ¥ 7,794,677
4,516,648 7,794,677

2012$ 94,837
94,837¥ (thousands)

Due within one year
Due over one year
Total

2011
¥ 423,950
218,847¥ 642,797

2012¥ 218,847—¥ 218,847¥ (thousands)[Lease Transactions]1. Finance Lease Transactions
Finance lease transactions that do not transfer the ownershipof the leased assets to the lesseeq Leased assetsa) P roperty and equipment: Mainly backup system
hardwareb) Intangible assets: Mainly backup system software

Finance lease charges
Depreciation expenses
Interest portions(1)	Acquisition cost, accumulated depreciation and net
book value¥ (thousands)
As of March 31

2011

2012

Tools and furniture:
Acquisition cost
¥ 1,882,666 ¥ 1,882,666
Accumulated depreciation (1,311,729) (1,688,262)
Net book value¥ 570,936 ¥ 194,403
Software:Acquisition cost
¥ 216,774 ¥ 216,774
Accumulated depreciation(151,739) (195,094)
Net book value¥ 65,034 ¥ 21,679
Total:¥ 2,099,440 ¥ 2,099,440
Acquisition cost
Accumulated depreciation (1,463,468) (1,883,356)
Net book value¥ 635,971 ¥ 216,083$ (thousands)

2012$ 22,906(20,540)$ 2,365$ 2,637(2,373)$263$ 25,543(22,914)$ 2,6292011¥ 426,663
419,887
5,359

2012¥ 426,663
419,887
2,713$ (thousands)

2012$ 5,1915,10833(4)	Methods applied in calculating depreciation expenses andinterest portions
	Methods applied in calculating depreciation expenses:
Straight-line method with zero residual value over thelease contract period.
		 Methods applied in calculating interest portions:
Computed as the difference between the lease obligations
and the acquisition cost equivalents, allocated over therespective 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, 2011 and 2012.
2. Operating Lease Transactions
Minimum lease payment on the operating lease transactions
that are not cancellable
None.

53

Annual Report 2012

Finance lease transactions other than those in which theownership of the leased assets is transferred to the lessee thatcommenced before March 31, 2008 continue to be accounted
for as operating lease transactions. The followings are theamounts which would have been recorded as finance leases
as of March 31, 2011 and 2012 and for the years then ended:2012$ 2,662—$ 2,662(3)	Finance lease charges, depreciation expenses andinterest portions
For the years ended March 31

w Depreciation method
	As described in Basis of Preparation of Consolidated
Financial Statements, 5. Significant Accounting
Policies, (1) Depreciation and amortization of major
depreciable assets.

$ (thousands)

Consolidated
Financial Statements[Fair Value Measurements for Financial Instruments]
1. General Information on Financial Instruments(1) Basic policies for financial instruments
	The Company limits financial investment to short-term deposits, and fund raising 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 risks of participants in the book-entry transfer system. The Company
continuously monitors the financial conditions of the participants.
		 Designated assets and deposits received for clearing funds are assets and liabilities that are held to secure the DVP for
NETDs settlement system.
		 Most of the accounts payable—trade are due within 3 months.
2. Estimated Fair Value of Financial Instruments
The following table presents carrying amount on the balance sheet, fair value and difference between carrying amount and fairvalue as of March 31, 2011 and 2012. It does not, however, include those for financial instruments for which the fair value isextremely difficult to estimate (see Note 2).
For the year ended March 31, 2011
¥ (thousands)

54

Carrying amounton the balance sheet

Annual Report 2012

(1) Cash and deposits(2) Accounts receivable—trade
Allowance for doubtful accounts*(3) Designated assets for clearing funds
Assets total(4) Accounts payable—trade(5) Deposits received for clearing funds
Liabilities total¥

4,516,648
3,443,641(7,021)
3,436,620
33,530,047¥ 41,483,315¥(769,998)(33,530,047)¥ (34,300,045)

Fair value¥

Difference

4,516,648—

3,436,620
33,530,047¥ 41,483,315¥(769,998)(33,530,047)¥ (34,300,045)

—
—
—
—
—
—

*Allowance for doubtful accounts is deducted from Accounts receivable-trade.

For the year ended March 31, 2012
¥ (thousand)$ (thousand)¥ (thousand)Carrying amount on the balance sheet(1) Cash and deposits(2) Accounts receivable—trade
Allowance for doubtful accounts *(3) Designated assets for clearing funds
Assets total(4) Accounts payable—trade(5) Deposits received for clearing funds
Liabilities total¥

7,794,677
3,163,166(1,845)
3,161,320
35,293,686¥ 46,249,684¥ (849,724)(35,293,686)¥ (36,143,410)* Allowance for doubtful accounts is deducted from Accounts receivable—trade.

$

94,83738,486(22)
38,463
429,415$ 562,716$ (10,338)(429,415)$ (439,754)$ (thousand)Fair value¥

7,794,677

3,161,320
35,293,686¥ 46,249,684¥ (849,724)(35,293,686)¥ (36,143,410)$

Difference

94,837—38,463
429,415$ 562,716$ (10,338)(429,415)$ (439,754)

—
—
—
—
—
—

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 NETDs settlement system.
2. Financial instruments, the fair value of which is extremely
difficult to estimate(As of March 31)
Category

Affiliated companies’ stocks¥ (thousands)

2011¥ 414,1282012¥ 429,980$ (thousands)

2012$ 5,231

3. Net Periodic Benefit Costs(Years ended March 31)
Category

Service cost
Other *Net periodic benefit costs¥ (thousands)

2011¥ 58,002
44,319¥ 102,322$ (thousands)

2012¥ 74,157
47,356¥ 121,514* “Other” represents the amount of contribution to the defined contribution
pension plan.

4. Actuarial Assumptions
Not applicable.

[Stock Options]Not applicable.

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

3. Estimated redemptions for monetary claims and securities
with maturities after the consolidated balance sheet date
All deposits and accounts receivable—trade in the abovetable have settlement dates within one year.

[Securities]
Not applicable.

[Derivative Transactions]
The Company and its consolidated subsidiary did not engage
in derivative transactions.

[Allowance for Employees’ Retirement Benefits]
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. Retirement Benefit Obligation(As of March 31)
Category

Retirement benefit obligation
Allowance for employees’
retirement benefits¥ (thousands)$ (thousands)

2011¥ 311,333

2012¥ 383,304

2012$ 4,663¥ 311,333¥ 383,304$ 4,663

As of March 31

2011

Deferred tax assets—current:
Accrued business tax¥ 71,133
Allowance for
74,337
employees’ bonuses
Business facility taxes
4,131
Accrued social
10,100insurance premiums$ (thousands)

2012¥ 56,458$

686

76,813

934

3,961

48

10,513

127—

266,295

3,239

888
Other
Subtotal¥ 160,592
Deferred tax assets—
non-current:
Allowance for employees’
126,401
retirement benefits
Allowance for executives’
12,180retirement benefits
Excess depreciation of
470,774
noncurrent assets
Excess amortization ofdeferred charges for
1,657
tax purposes
Other—(12,180)
Valuation allowance
Subtotal¥ 598,833
Total deferred tax assets ¥ 759,425

2,146¥ 416,189

26$ 5,063

136,609

1,662

10,692

130

257,231

3,129

9,839

119

3,776
(10,692)¥ 407,456¥ 823,645

45(130)$ 4,957$ 10,021

Allowance for loss onchanges in systemdevelopment policies

55

2012
Annual Report 2012

These financial instruments are excluded from the abovetable because their market quotes are not available thus theirfair value is deemed to be extremely difficult to estimate.

2012
$ 902
576
$ 1,478

Consolidated
Financial Statements
2. Reconciliation between the nominal statutory income tax
rate and the effective income taxes rate
The effective tax rate for the year ended March 31, 2012
differs from the Company’s statutory tax rate for thefollowing reasons:
For the years ended March 31

Statutory tax rate
(Reconciliation)
Entertainment expenses and otheritems not deductible permanently
Inhabitants’ per capita taxes
Other
Reduction of deferred tax assets due tochanges in statutory tax rate
Effective tax rates

2011
—
—

2012
40.7%

—

0.6

—
—

0.2
(0.3)

—

2.5

—

43.7%

Note: T he reconciliation of the difference between the statutory tax rate and theeffective tax rate for the year ended March 31, 2011 is not presented becausesuch difference did not exceed 5% of the statutory tax rate.

56

Annual Report 2012

3. Adjustment of Deferred Tax Assets Following the Change
in the Statutory Tax Rates
The “Act for Partial Revision of the Income Tax Act, etc. for
the Purpose of Creating Taxation System Responding toChanges in Economic and Social Structures” (Law No. 114,
2011) and the “Act on Special Measures for Securing
Financial Resources Necessary to Implement Measures for
Reconstruction following the Great East Japan Earthquake”(Law No. 117, 2011) were promulgated on December 2,
2011. As a result, the statutory tax rates will be lowered, while
the special corporate tax for reconstruction will be levied,from the consolidated fiscal year beginning on or after April
1, 2012. Accordingly, the statutory tax rate for calculating
deferred tax assets will be changed from 40.7% to 38.0% withregard to temporary differences that are expected to berealized on or after April 1, 2012 and before April 1, 2015. It
will also be changed to 35.6% with regard to temporary
differences that are expected to be eliminated on or after
April 1, 2015.
As result of these changes, net deferred tax assets
recorded in the fiscal year ended March 31, 2012 decreasedby ¥66,060 thousand ($803 thousand), while income taxesdeferred increased by the same amount.

[Business Combinations]
None.

[Asset Retirement Obligations]
None.

[Investment and Rental Property]
None.

[Segment Information]
Segment Information
The Company and its subsidiary have one business segmentof Book-entry Transfer of Securities, therefore omitted thesegment information.
Related Information
For the year ended March 31, 2011
1. Information by Product or Service
The Company omitted information by product or service
because operating revenues from external customers in one
business product or service exceeded 90% of total operating
revenues recorded in consolidated statements 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 in overseas.
(2) Property and equipment
	Disclosure is omitted because the Company had noproperty and equipment in overseas.
3. Information by Major Customers
Name of the customers

Operating revenues¥ (thousands)

Related segment

Japan Securities
Clearing Corporation¥2,195,894

Book-entry Transfer
of Securities

For the year ended March 31, 2012
1. Information by Product or Service
The Company omitted information by product or service
because operating revenues from external customers in one
business product or service exceeded 90% of total operating
revenues recorded in consolidated statements 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 in overseas.
(2) Property and equipment
	Disclosure is omitted because the Company had noproperty and equipment in overseas.

3. Information by Major Customers
Name of the customers

Operating revenues¥ (thousands) $ (thousands)

Japan Securities¥2,163,412
Clearing Corporation$26,322

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.

Related Party Information
1. Transactions with Related Parties(1)	Transactions between the Company and the related partiesa) Unconsolidated subsidiaries and associated companies
For the year ended March 31, 2011
Names ofcompanies

Address

Capital¥ (thousands)

Principal
business

Percentage ofownership withvoting right

Tosho
Design and
Associated System Chuo-ku,¥100,000 development
company Service Tokyoof software
Co. Ltd.

20%
directly
held

BusinessrelationshipTransactions

Amount¥ (thousands)

Descriptions

Balance at
end of period¥ (thousands)

Payment of
Accounts
Purchasing
computer¥1,960,369¥173,220
payable—trade
software and maintenance fee
systemOther current
maintenance Purchase of¥373,488¥26,132
softwareliabilities

For the year ended March 31, 2012Type

Names ofcompanies

Address

Capital¥ (thousands)

Principal
business

Percentage ofownership withvoting right

Tosho¥100,000 Design and
Associated System Chuo-ku,($1,216 development
company Service Tokyo
thousand) of software
Co. Ltd.

20%
directly
held

BusinessrelationshipTransactions

Amount¥ (thousands)

Descriptions

Balance at
end of period¥ (thousands)

Payment of¥1,777,388¥145,541
Accounts
computer($21,625($1,770
Purchasing
payable—trade
thousand)software and maintenance fee thousand)system¥1,376,281¥170,247
Other current
maintenance Purchase of($16,745($2,071
softwareliabilities
thousand)thousand)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, 2011Type

Names ofcompanies

Address

Capital¥ (thousands)

Percentage ofPrincipal
ownership withbusinessvoting right

SubsidiaryJapanof other
Securities Chuo-ku,
Clearing¥2,600,000
affiliatedClearingTokyo
securities
companies Corporation—

BusinessrelationshipTransactions

Amount¥ (thousands)

Descriptions

Balance at
end of period¥ (thousands)

Commission Commission
Accounts¥2,195,894¥304,962
incomeincomereceivable—trade

Annual Report 2012

Type

57

Consolidated
Financial Statements
For the year ended March 31, 2012Type

Names ofcompanies

Address

Capital¥ (thousands)

Percentage ofPrincipal
ownership withbusinessvoting right

SubsidiaryJapan¥4,850,000
of other
Securities Chuo-ku,
Clearing($59,009
affiliatedClearingTokyo
securities
thousand)companies Corporation—

BusinessrelationshipTransactions

Commission Commission
incomeincomeAmount¥ (thousands)

Descriptions¥2,163,412¥255,871
Accounts($26,322($3,113
receivable—trade
thousand)thousand)

Notes: 1. The transaction amounts in a) and b) above exclude consumption taxes. However, end balances include consumption taxes.
2. The terms and conditions of the above transactions are on an arm’s-length basis.

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

[Special Purpose Entities Subject to Disclosure]
None.
58

[Per Share Information]
Annual Report 2012

As of years ended March 31

Net assets per share
Net income per share

¥

$

2011
2012
¥ 2,486,702.88 ¥ 2,620,615.75¥ 189,283.71 ¥ 173,912.87

2012$ 31,884.84$ 2,115.98

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, 2011 and 2012 is as follows:¥ (thousands)
As of years ended March 31

Total net assets as reported in the consolidated balance sheets
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)

2011¥ 21,136,974—¥ 21,136,974

2012¥ 22,275,233—¥ 22,275,233

2012$ 271,021—$ 271,021

8,500

8,500

—

3. The basis for calculating net income per share for the years ended March 31, 2011 and 2012 is as follows:¥ (thousands)
As of years ended March 31

Net income as reported in the consolidated statements of income
Net income not pertaining to common stock shareholders
Net income pertaining to common stock shareholders
Weighted-average number ofcommon stock shares outstanding during the period (in shares)[Subsequent Events]
None.

Balance at
end of period¥ (thousands)$ (thousands)

2011¥ 1,608,911—¥ 1,608,911

2012¥ 1,478,259—¥ 1,478,259

2012$ 17,985—$ 17,985

8,500

8,500

—

Independent
Auditor’s Report59

Annual Report 2012