25

Financial Section
ProfileCorporate GovernanceBusiness Risks

The U.S. dollar amounts in the accompanying consolidated financial statements withrespect to the year ended March 31, 2009 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.

Research andDevelopment

In our opinion, the financial statements referred to above present fairly, in all material
respects, the consolidated financial position of IT Holdings Corporation and consolidated
subsidiaries at March 31, 2009, and the consolidated results of their operations and their
cash flows for the year then ended in conformity with accounting principles generally
accepted in Japan.

Business Strategy

We conducted our audits in accordance with auditing standards generally accepted in Japan.
Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and disclosures in thefinancial statements. An audit also includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our
opinion.

First Medium-termManagement Plan

We have audited the accompanying consolidated balance sheets of IT Holdings Corporationand consolidated subsidiaries as of March 31, 2009, and the related consolidated statements
of income, changes in net assets, and cash flows for the year then ended, all expressed inyen. These financial statements are the responsibility of the Company’s management.
Our responsibility is to express an opinion on these financial statements based on our
audits.

To Our Stakeholders

The Board of Directors
IT Holdings Corporation.

Consolidated Financial
Highlights

Report of Independent Auditors

Business Report (Consolidated)
for Fiscal 2009
Financial Section

June 22, 2009

IT Holdings Group
Corporate Data

26

Financial Section
ProfileIT Holdings Corporation
and Consolidated Subsidiaries

Consolidated Financial
Highlights

Consolidated Balance Sheet
As of March 31, 2009

¥

4,839
10,162
15,00149,265
103,453
152,718

26,904
6,762
19,489(2,678)273,889
68,839198,403(27,264)

50,477

513,867

295,327$ 3,006,485

Business Report (Consolidated)
for Fiscal 2009

542,390
59,03912,577223,203
69,324
906,533

Business Risks¥

53,2795,799
1,236
21,925
6,810
89,049Corporate GovernanceTotal assets

382,002639,949
74,056
15,288(2,599)148,765
112,755
63,151(2,599)1,433,367

Research andDevelopment

Goodwill (Note 4)
OthersTotal intangible assets
Investments and other assets:
Investments in securities (Note 3)
Deferred tax assets (Note 8)
OthersAllowance for doubtful accounts
Total investments and other assets$

Business Strategy

Property and equipment:
Buildings and structures (Note 6)
Machinery and equipment (Note 6)
Leased assets (Note 20)
Land (Notes 5 and 6)
OthersTotal property and equipment
Intangible assets

37,52462,862
7,275
1,502
(255)
14,613
11,076
6,203(255)
140,800

First Medium-termManagement Plan

AssetsCurrent assets:
Cash and deposits (Note 22)
Notes and accounts receivable (Note 6)
Investments in finance leases (Note 20)
Marketable securities (Notes 3 and 22)
Allowance for doubtful accounts
Inventories
Deferred tax assets (Note 8)
Prepaid expenses and other current assets
Allowance for doubtful accounts
Total current assets

To Our Stakeholders

March 31,2009
2009
(Millions of yen)(Thousands of U.S.
dollars) (Note 2)

Financial Section
IT Holdings Group
Corporate Data

27

Financial Section
ProfileMarch 31,¥$78,735
154,592
51,919189,622
34,521
100,079729
225,107835,304

First Medium-termManagement Plan

7,734
15,186
5,100
18,627
3,391
9,831
71
22,112
82,052

To Our Stakeholders

Liabilities and net assets
Current liabilities:
Short-term bank loans (Note 6)
Current portion of long-term bank loans (Note 6)
Current portion of bonds (Note 7)
Notes and accounts payable
Income taxes payable
Accrued bonuses to employees
Other allowances
Others (Note 8)
Total current liabilities

2009(Thousands of U.S.
dollars) (Note 2)

Consolidated Financial
Highlights

2009(Millions of yen)

Non-current liabilities:(1,118)(11,383)(1,842)(139)(3,099)8(18,749)(1,416)(31,548)
83

15,154
146,216¥ 295,327

154,273
1,488,511$3,006,485

Revaluation and translation adjustments:
Net unrealized losses on available-for-salesecurities
Revaluation of land (Note 5)
Foreign currency translation adjustments
Total revaluation and translation adjustments
Subscription rights
Minority interests
Total net assets
Total liabilities and net assets

IT Holdings Group
Corporate Data

See accompanying notes to the consolidated financial statements.

Financial Section

101,802878,766
409,102(23,967)
1,365,703

Business Report (Consolidated)
for Fiscal 2009

10,00086,32140,186(2,354)
134,153

Business Risks

Net assets:
Shareholders’ equity (Notes 18 and 19):
Common stock, without par value:
Additional paid-in capital
Retained earnings (Note 16)
Less treasury stock, at cost
Total shareholders’ equity

Corporate Governance

117,072
417,528
25,952
6,946
10,11082,5982,531
19,933
682,670
1,517,974

Research andDevelopment

11,50041,014
2,549
682
993
8,114
249
1,958
67,059149,111

Business Strategy

Bonds (Note 7)Long-term bank loans (Note 6)
Lease obligations
Deferred tax liabilities (Note 8)
Deferred tax liabilities for land revaluation (Note 5)
Accrued retirement benefits to employees (Note 9)
Accrued retirement benefits to directors
OthersTotal non-current liabilities
Total liabilities

28

Financial Section
ProfileIT Holdings Corporation
and Consolidated Subsidiaries

Consolidated Financial
Highlights

Consolidated Statement of Income
For the year ended March 31, 2009

6,189
(11,513)
9,754
3,026
(8,704)(9,128)(22,385)(13,081)(45,842)

19,284

196,317

4,911
3,380
8,291
10,99350,00034,41084,410111,907

Other income (expenses):
Interest and dividends income
Interest expenses
Amortization of negative goodwill
Real estate rental income
Loss on disposal and sales of fixed assets
Impairment loss
Valuation loss investments in securities
Others, net

Income before income taxes and minority interests
Income taxes (Note 8):
Current
DeferredIncome before minority interests
Minority interests in earnings of consolidated
subsidiaries
Net income¥(1,586)
9,407(16,146)
95,761

Financial Section

See accompanying notes to the consolidated financial statements.

$

Business Report (Consolidated)
for Fiscal 2009

608
(1,131)
958
297
(855)
(897)
(2,199)(1,284)(4,503)Operating income

Business Risks

423,189
242,159

Corporate Governance

41,57023,787

Selling, general and administrative expenses (Note 14)

Research andDevelopment$ 3,443,979
2,778,631
665,348

Business Strategy¥ 338,302
272,945
65,357First Medium-termManagement Plan

Net sales
Cost of sales (Note 14)
Gross profit

2009(Thousands of U.S.
dollars) (Note 2)

To Our Stakeholders

Year ended March 31,
2009(Millions of yen)

IT Holdings Group
Corporate Data

29

Financial Section
ProfileIT Holdings Corporation
and Consolidated Subsidiaries
Consolidated Financial
Highlights

Consolidated Statement of Changes in Net Assets
For the year ended March 31, 2009

Commonstock

Additional
paid-in
capitalRetainedearnings¥10,000¥86,332¥33,082

Revaluation and translation adjustments

Treasury
stock

Total
shareholders’equityNet
unrealized
gains onothersecurities¥(2,827)¥126,587¥1,151

Revaluationof land

Foreigncurrencytranslation
adjustments

Total
revaluationandtranslation
adjustments

Subscription
rightsMinority
interests

Total
net assets¥(19)¥(1,791)¥0¥14,165¥138,961

To Our Stakeholders

Shareholders’ equity(Millions of yen)

Total change for the year
Balance as of March 31,
2009(1,220)9,407(1,220)9,407(1,220)
9,407

(20)
482

(20)
483

(2)

(2)

(2)

(1,081)(1,081)

(20)
493

(11)

(1,081)(2,269)

1,081

(120)

(1,308)

8

989

(311)

0

（11）

7,104

473

7,566

(2,269)

1,081

(120)

(1,308)

8

989

7,255

¥10,000¥86,321¥40,186¥(2,354)¥134,153¥ (1,118)¥(1,842)¥ (139)¥(3,099)¥8¥15,154¥146,216

Business Strategy

Dividends from surplus
Net income
Acquisition of treasury
stock
Sales of treasury stock
Exclusion from equity
method application
Reversal of revaluation ofland
Items other than changes
in shareholders’ equity¥(2,923)First Medium-termManagement Plan

Balance as of March 31,
2008

Research andDevelopment
Corporate GovernanceBusiness Risks
Business Report (Consolidated)
for Fiscal 2009
Financial Section
IT Holdings Group
Corporate Data

30

Financial Section
ProfileConsolidated Financial
Highlights

Commonstock

Additional
paid-in
capitalRetainedearnings

Revaluation and translation adjustments

Treasury
stock

Total
shareholders’equityNet
unrealized
gains onothersecurities

Revaluationof land

Foreigncurrencytranslation
adjustments

Total
revaluationandtranslation
adjustments

Subscription
rightsMinority
interests

Total
net assets$(18,227)$2$144,202$1,414,652(Thousands of dollars))(Note 1)
Balance as of March 31,
2008$101,802$878,873(12,418)
95,761

Sales of treasury stock(107)

Balance as of March 31,
2009$1,288,675$ 11,714$(29,753)$(188)(12,418)
95,761(12,418)
95,761

(204)

(204)

(204)

5,019

4,912

4,912

(20)

(20)

(20)

(11,003)(11,003)(11,003)(23,097)

11,004(1,228)(13,321)81

10,071(3,169)0（107）

72,3204,815

77,028(23,097)

11,004(1,228)(13,321)81

10,07173,859$101,802$878,766$409,102$(23,967)$1,365,703$(11,383)$(18,749)$(1,416)$(31,548)$83$154,273$1,488,511

Research andDevelopment

See accompanying notes to the consolidated financial statements.

Business Strategy

Exclusion from equity
method application
Reversal of revaluation ofland
Items other than changes
in shareholders’ equity
Total change for the year$(28,782)

First Medium-termManagement Plan

Dividends from surplus
Net income
Acquisition of treasurystock$336,782

To Our Stakeholders

Shareholders’ equity

Corporate GovernanceBusiness Risks
Business Report (Consolidated)
for Fiscal 2009
Financial Section
IT Holdings Group
Corporate Data

31

Financial Section
ProfileIT Holdings Corporation
and Consolidated Subsidiaries

Consolidated Financial
Highlights

Consolidated Statement of Cash Flows
For the year ended March 31, 2009

Business Risks
Business Report (Consolidated)
for Fiscal 2009

(24,767)(101,540)(35,519)(12,152)
12,127(32,037)
4,667(15,196)(204,417)

Corporate Governance(2,433)(9,974)(3,489)(1,193)
1,191(3,147)458(1,493)(20,080)

Research andDevelopment$ 196,317
111,942
9,128
4,414
22,69011,69926,902
4,566
6,477(6,189)11,51323,356
12,437(31,254)
24,120428,118
6,268(11,523)(73,567)
349,296

Business Strategy

Cash flows from investing activities:
Deposit of time deposits
Acquisitions of property and equipment
Acquisition of intangible assets
Acquisitions of investments in securities
Proceeds from sale of investments in securities
Payments on newly consolidated subsidiary
Proceeds from newly consolidated subsidiary
Other, net
Net cash used in investing activities¥ 19,284
10,996
897
433
2,229
1,149
2,643
449
636
(608)
1,131
2,294
1,222
(3,070)2,369
42,054616(1,132)(7,227)34,311First Medium-termManagement Plan

Cash flows from operating activities:
Income before income taxes and minority interests
Depreciation
Impairment loss
Loss on disposal of fixed assets
Valuation loss on investments in securities
Amortization of goodwill
Increase in accrued bonuses to employees
Increase in allowance for doubtful accounts
Increase in accrued retirement benefits to employees
Interest and dividends income
Interest expenses
Decrease in notes and accounts receivable
Decrease in inventories
Decrease in notes and accounts payable
Others, net
SubtotalInterest and dividends income received
Interest expenses paid
Income taxes paid
Net cash provided by operating activities

To Our Stakeholders

Year ended March 31,
2009
2009
(Millions of yen)Thousands of U.S.
dollars) (Note 2)

Financial Section
IT Holdings Group
Corporate Data

32

Financial Section
ProfileIT Holdings Corporation
and Consolidated Subsidiaries

Consolidated Financial
Highlights

Consolidated Statement of Cash Flows (continued)(3,990)21,788(17,018)(7,050)(20)
483(1,220)(335)
484(6,878)$(40,614)
221,806(173,246)(71,771)
(204)
4,917
(12,420)(3,415)4,930(70,017)(2,480)7,110
27,995¥ 35,105

72,382284,991$ 357,373

Corporate GovernanceSee accompanying notes to the consolidated financial statements.

Research andDevelopment(243)

Business Strategy

Effect of exchange rate changes on cash and cash
equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year (Note 22)¥

First Medium-termManagement Plan

Cash flows from financing activities:
Decrease in short-term bank loans, net
Proceeds from long-term bank loans
Repayments of long-term bank loans
Redemptions of bonds
Acquisitions of treasury stock
Sales of treasury stock
Dividends paid
Dividends paid to minority interests
Other, net
Net cash used in financing activities

To Our Stakeholders

Year ended March 31,
2009
2009
(Millions of yen)(Thousands of U.S.
dollars) (Note 2)

Business Risks
Business Report (Consolidated)
for Fiscal 2009
Financial Section
IT Holdings Group
Corporate Data

33

Financial Section（a） Basis of Presenting the Consolidated Financial Statements“Group”) maintain their books of account in conformity with the financial accounting
standards of Japan, and its foreign subsidiaries maintain their books of account inconformity with those of their countries of domicile.

consolidated financial statements prepared by the Company as required under the
Financial Instruments and Exchange Act of Japan and, have been prepared in accordanceBusiness Strategy

The accompanying consolidated financial statements have been compiled from theFirst Medium-termManagement Plan

IT Holdings Corporation (the “Company”) and its domestic subsidiaries (together, theTo Our Stakeholders

1. Summary of Significant Accounting Policies

Consolidated Financial
Highlights

Notes to Consolidated Financial Statements

ProfileIT Holdings Corporation
and Consolidated Subsidiaries

with accounting principles generally accepted in Japan, which are different in certain
Reporting Standards.

The Company has 43 subsidiaries (controlled or majority-owned companies) as of March 31,
2009. The consolidated financial statements include the accounts of the Company and all of
The accounts of overseas subsidiaries whose fiscal year-end is December 31 are included in
the consolidated financial statements after making appropriate adjustments for any

Business Risks

its subsidiaries (together referred to as the “Group”).

Corporate Governance（b） Principles of consolidation

Research andDevelopment

respects as to the application and disclosure requirements of International Financial

material transactions during the period between January 1 and March 31.

transactions, account balances and unrealized profits among the Group have been
eliminated.

the date of establishment of control.

Financial Section

All assets and liabilities of consolidated subsidiaries are stated at fair market value as ofBusiness Report (Consolidated)
for Fiscal 2009

For the purposes of preparing the consolidated financial statements, all intercompany

Investments in two non-consolidated subsidiaries and six affiliated companies are
IT Holdings Group
Corporate Dataaccounted for using the equity method.

34

Financial Section
ProfileForeign currency translation

Monetary assets and liabilities denominated in foreign currencies are translated into yen
hedged by forward foreign exchange contracts.
All revenues and expenses associated with foreign currencies are translated at the rates oflosses are credited or charged to income.

First Medium-termManagement Planexchange prevailing when such transactions were made. The resulting exchange gains and

To Our Stakeholders

at the exchange rates prevailing at the balance sheet dates, except for assets and liabilities

Consolidated Financial
Highlights(c)

Assets and liabilities in foreign currencies of the foreign consolidated subsidiaries aretranslation differences are included in foreign currency translation adjustments or inminority interests of net assets.
Cash equivalents

The Group considers all highly liquid investments with a maturity of three months or less,Research andDevelopment(d)Business Strategy

translated into yen at the rates of exchange in effect on the balance sheet date. Resulting

when purchased, to be cash equivalents on the consolidated statements of cash flows.
Securities

Securities held by the Group are classified as either held-to-maturity or available-for-salesecurities with a determinable market value are stated at fair value with any changes in
unrealized holding gain or loss, net of the applicable income taxes, are included directly
at cost. Cost of securities sold is determined by the moving-average method.

Business Report (Consolidated)
for Fiscal 2009in net assets. Available-for-sale securities without a determinable market value are stated

Business Risks

securities. Held-to-maturity securities are carried at amortized cost. Available-for-saleCorporate Governance(e)Financial Section
IT Holdings Group
Corporate Data

35

Financial Section
ProfileInventories

Merchandise and finished goods are stated at cost, determined mainly by the first-in,
first-out method. Work in process is stated at cost, determined by the specific-cost method.

Consolidated Financial
Highlights(f)

Raw materials and supplies are stated at cost, mainly determined by last purchase cost
However, the amounts of inventories stated in the balance sheet were computed by using
the method that book values are reduced to reflect declines in profitability.
Property and equipment

Buildings and structures are depreciated using mainly the straight-line method andFirst Medium-termManagement Plan(g)

To Our Stakeholders

method.

machinery and equipment are depreciated using mainly the declining-balance method, at(h)Intangible assets

lives, except for computer software.
Expenses related to development activities of computer software, which are included ini)Computer software for sale
Capitalized costs are amortized at the higher of the amount based on the ratio of the

Corporate Governanceintangible assets, are amortized as follows:

Research andDevelopment

Intangible assets are amortized using the straight-line method over their estimated usefulBusiness Strategy

rates based on the estimated useful lives of the assets.

current year sales quantity divided by total estimated sales quantity over the estimatedremaining sellable period.

Capitalized costs are amortized using the straight-line method over the estimateduseful life of the software, which is in the range of three to five years.

Business Report (Consolidated)
for Fiscal 2009ii） Computer software for internal use

Business Risks

sales period (three years) or the amount calculated by the straight-line method over the(i) Leased assets (as lessee)over the useful life of assets, which equals the lease term, by the straight-line method.
operating leases.

IT Holdings Group
Corporate Data

Finance lease transactions which were contracted before April 1, 2008, are accounted for as

Financial Section

Leased assets on finance lease transactions that do not transfer ownership are depreciated36

Financial Section
ProfileAccounting for leases (as lessee and lessor)

Finance lease transactions other than those in which ownership is fully transferred to the(k)Impairment losses of long-lived assets

impairment loss, in case of decrease in profitability for development, expected decrease insales volume, or no future plans to use the assets.

descriptions. Real estate for lease and assets for specified projects are grouped separately.
(l)Allowance for doubtful accounts

in the accounts receivable balance.

other currently available evidence.
(m)

Accrued bonuses to employees

end of the fiscal year.
Accrued retirement benefits to employees

Accrued retirement benefits to employees represent the estimated present value of
projected benefit obligations in excess of the fair value of the plan assets. Actuarial
average remaining service period of the employees from the next year in which they arise.
Prior service costs are mainly charged to income when incurred.

Financial Section

differences are amortized by the straight-line method over 10 to 18 years within theBusiness Report (Consolidated)
for Fiscal 2009(n)Business Risks

Accrued bonuses to employees are recognized at the estimated amount to be paid at the

Corporate Governance

The allowance is determined based on known troubled accounts, historical experience, andResearch andDevelopment

The allowance for doubtful accounts reflects the best estimate of probable losses inherent

Business Strategy

Long-lived assets of the Group are categorized by business segment, areas or service

First Medium-termManagement Plan

A decrease in the book value of long-lived assets is presented under other expenses as an

To Our Stakeholders

lessee are accounted for in a similar manner to ordinary sales and purchase transactions.

Consolidated Financial
Highlights(j)

IT Holdings Group
Corporate Data

37

Financial Section
Profile(o)

Accrued retirement benefits to directors

directors’ retirement benefits and therefore, record the estimated amount to be paid if all
directors had retired at the balance sheet date, based on internal regulations.
Income taxes

Deferred income taxes reflect the tax effect of temporary differences between asset andTo Our Stakeholders(p)Consolidated Financial
Highlights

Certain domestic consolidated subsidiaries set aside a reserve to cover payment ofliability amounts that are recognized for financial purposes and the amounts that areenacted tax rates and laws, which will be in effect when the differences are expected toreverse.
Distribution of retained earnings

Dividends and other distributions of retained earnings are resolved by the General

Business Strategy(q)First Medium-termManagement Plan

recognized for income tax purposes. These deferred taxes are measured by applying theShareholders’ Meeting held subsequent to the end of the fiscal year. Distributions are(r)

Hedge accounting

are not re-measured at market value, but the differential to be paid or received under theswap agreements are accrued and included in interest expense or income. In addition, theCorporate GovernanceInterest rate swaps that qualify for hedge accounting and meet specific matching criteria

Research andDevelopment

reflected in the consolidated financial statements for the following fiscal year.

Group uses exceptional treatments permitted for interest rate swaps.

cash flows of debts to be hedged and those of the swaps as hedging instruments, except for(s)

Amortization of goodwill and negative goodwill

Business Report (Consolidated)
for Fiscal 2009

the interest rate swaps accounted for by exceptional treatment.

Business Risks

The Group assesses the effectiveness of interest rate swaps by comparison between total

Goodwill and negative goodwill are amortized on a straight-line basis over an appropriate
20 years), from the next year in which they arise. If the amount is not significant, goodwill
or negative goodwill is charged or credited to income when incurred.
(t)

Financial Section

period, whose length is determined by examining the conditions of each subsidiary (within

Accounting for consumption taxes
IT Holdings Group
Corporate Data

Consumption taxes are not included in revenues and expenses.

38

Financial Section
ProfileAmounts in U.S. dollars are included solely for the convenience of readers outside Japan. A
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 that or at anyother rate.

First Medium-termManagement Plan

3. Marketable Securities and Investments in Securities(a)

To Our Stakeholders

rate of ¥98.23 = US$1, the rate of exchange on March 31, 2009, has been used in

Consolidated Financial
Highlights

2. U.S. Dollar Amounts

The amount on the consolidated balance sheet, fair market value and difference for

Type

Amount on
consolidatedbalance
sheet

Fair market
value

Difference

Government
bonds

300

¥

300

¥

0

1,001
¥1,301

1,001¥1,301(0)¥ (0)Amount on
consolidatedbalance
sheet

Fair market
value

Difference(Thousands of U.S. dollars)
Government
bonds
Governmentbonds$ 3,055$ 3,055$ 0

10,187$13,242

10,186$13,241(1)$(1)

Business Report (Consolidated)
for Fiscal 2009

With fair market value
exceeding the amount on
consolidated balance sheet
With fair market value notexceeding the amount on
consolidated balance sheet
Total

Business Risks

Type

¥

Corporate Governance

Government
bonds

Research andDevelopment(Millions of yen)With fair market value
exceeding the amount on
consolidated balance sheet
With fair market value notexceeding the amount on
consolidated balance sheet
Total

Business Strategy

held-to-maturity debt securities with fair value as of March 31, 2009, were as follows:

Financial Section
IT Holdings Group
Corporate Data

39

Financial Section
ProfileMarket exceeding cost:
SharesCorporate bonds

5,748
305
401
6,454
¥8,095

4,664
304
306
5,274
¥8,492(1,084)(1)(95)(1,180)¥ 397

Acquisition cost

March 31, 2009
Book value(Fair market
value)

Unrealized
gains (losses)(Thousands of U.S. dollars)

Total$16,056
16,05658,517
3,103
4,088
65,708$82,40947,486
3,089
3,121
53,696$86,453(11,031)(14)(967)(12,012)$ 4,044

Available-for-sale securities sold during this fiscal year

(Millions of(Thousands ofyen)

U.S. dollars)¥2,401$24,441

Realized gain

8

82

Realized loss

(46)

(465)

Proceeds from sales ofavailable-for-sale securities

IT Holdings Group
Corporate Data

2009

Financial Section

2009

Business Report (Consolidated)
for Fiscal 2009(c)

$32,757
32,757

Business Risks

Market not exceeding cost:
SharesBonds
Other$16,701
16,701

Corporate GovernanceMarket exceeding cost:
SharesCorporate bonds

Research andDevelopment

Description¥1,577
1,577

Business Strategy

Total¥3,2183,218

First Medium-termManagement Plan

Market not exceeding cost:
SharesBonds
Other¥1,641
1,641

To Our Stakeholders

securities with fair value as of March 31, 2009, were as follows:
March 31, 2009
Book value
Unrealized(Fair market
gains (losses)
value)
Description
Acquisition cost
(Millions of yen)

Consolidated Financial
Highlights(b) Acquisition cost, book value and unrealized gains or losses of available-for-sale40

Financial Section
ProfileBook values of major securities which were not subject to revaluation as of March 31,
2009, were as follows:

2009

2009

(Millions of(Thousands ofyen)

U.S. dollars)$164,758

Corporate bonds

250

2,545

Investment in partnerships

950

9,668

MMF and other

131

1,335

¥17,515$178,306

Business Strategy¥16,184First Medium-termManagement Plan

Unlisted stocks

To Our Stakeholders

March 31,

Consolidated Financial
Highlights(d)(e) Schedule for redemption of available-for-sale securities with maturity andWithin a year

One to five

Five to 10

years

years

Government bonds
Corporate bonds¥1,301

¥

–

¥

–
250

¥1,401

¥200

¥ 250

One to five

Five to 10

years

years

Within a year

(Thousands of U.S. dollars)$13,242$–$

Corporate bonds

1,018

2,036

2,545

$14,260$2,036$ 2,545–

Financial Section

Government bonds

Business Report (Consolidated)
for Fiscal 2009

200

Business Risks

100

Corporate Governance(Millions of yen)

Research andDevelopment

held-to-maturity debt securities as of March 31, 2009

IT Holdings Group
Corporate Data

41

Financial Section
ProfileGoodwill in intangible assets indicates net amounts, which offset goodwill and negative

To Our Stakeholders

goodwill. The gross amounts as of March 31, 2009, were as follows:

March 31,
2009

(Thousands of U.S.
dollars)$51,447(2,182)$49,265

5. Revaluation of Land

Business Strategy¥5,054(215)¥4,839First Medium-termManagement Plan

2009

(Millions of yen)
Goodwill
Negative goodwill
Net amount

Consolidated Financial
Highlights

4. Goodwill and Negative Goodwill

Pursuant to the “Law Concerning the Revaluation of Land” (the “Law”), land used for thethe difference between the book value and the revalued amount has been presented under

Research andDevelopment

Company’s business operations was revalued on March 31, 2002. The income tax effect ofliabilities as “deferred tax liabilities for land revaluation” and the remaining balancebalance sheet.
Revaluation of land was determined based on the official prices published by thethe “Enforcement Ordinance Concerning Land Revaluation,” with certain necessary
adjustments.

($5,168 thousand) as of March 31, 2009.

Business Report (Consolidated)
for Fiscal 2009

The carrying value of the land after revaluation exceeded its fair value by ¥508 million

Business Risks

Commissioner of the National Tax Authorities in accordance with Paragraph 4, Article 2 ofCorporate Governancepresented under net assets as “revaluation of land” in the accompanying consolidated

Financial Section
IT Holdings Group
Corporate Data

42

Financial Section
ProfileShort-term bank loans and long-term banks loans as of March 31, 2009, consisted of the

March 31,2009

(Millions of yen)(Thousands of U.S.
dollars)

Short-term bank loans:First Medium-termManagement Plan2009

To Our Stakeholders

following:

Consolidated Financial
Highlights

6. Short-term Bank Loans and Long-Term Bank Loans

Short-term bank loans, with an average¥ 7,734$ 78,735

Business Strategy¥56,200$572,120(15,186)(154,592)

Research andDevelopment

interest rate of 1.06%¥41,014$417,528

Long-term bank loans:
Loans principally from banks and otherfinancial institutions, with an averageinterest rate of 1.53%
Less: current portion of long-term debt

31, 2009, were as follows:Year ending March 31,

yen)

U.S. dollars)

2010¥15,186$154,592

2011

12,157

123,764

2012

8,851

90,1082013

10,102

102,841

2014

8,502

86,554

Business Report (Consolidated)
for Fiscal 2009

(Thousands ofBusiness Risks(Millions ofCorporate Governance

The aggregate annual maturities of long-term bank loans due within five years as of March

Financial Section
IT Holdings Group
Corporate Data

43

Financial Section
Profileamounting to ¥70 million ($713 thousand) and ¥2,252 million ($22,927 thousand),
respectively, as of March 31, 2009, were as follows:

2009

2009

(Millions of yen)(Thousands of U.S.

Accounts receivable

¥

15

$

153

15,920162,074

47

477

3,339

33,990¥19,321$196,694

First Medium-termManagement Plandollars)

To Our Stakeholders

March 31,

Consolidated Financial
Highlights

The assets pledged as collateral for short-term bank loans and long-term bank loans,

Buildings and structures
Land

Research andDevelopment

7. Bonds

Business Strategy

Machinery and equipment

Bonds as of March 31, 2009, consisted of the following:

2009

2009

(Millions of yen)(Thousands of U.S.

Corporate GovernanceMarch 31,

dollars)
1.17% Unsecured bonds, due 2009

1,000

10,180

1.50% Unsecured bonds, due 2010

4,000

40,721

1.26% Unsecured bonds, due 2010

4,000

40,721

0.79% Unsecured bonds, due 2009

100

1,018

16,600168,991(5,100)(51,919)¥11,500$117,072

Less: current portion of long-term debt

Financial Section$ 76,351

Business Report (Consolidated)
for Fiscal 2009

¥ 7,500

Business Risks

0.97% Unsecured bonds, due 2012

IT Holdings Group
Corporate Data

44

Financial Section
ProfileConsolidated Financial
Highlights

The aggregate future maturities of bonds for the next five years, as of March 31, 2009,were as follows:

U.S. dollars)

2010¥5,100$51,919

2011

4,000

40,721

2012

7,500

76,351

2013

-

-

2014

-

-

First Medium-termManagement Plan

(Millions of yen)

Year ending March 31,

To Our Stakeholders(Thousands ofBusiness Strategy

8. Income Taxes
Income taxes applicable to the Group comprised corporation tax, inhabitants’ taxes, and2009. Income taxes of the foreign subsidiaries are based generally on the tax rates

Research andDevelopment

enterprise tax which, in the aggregate, resulted in a statutory tax rate of 40.7 percent for
applicable in their countries.
The reconciliation between the statutory tax rate and the Group’s effective tax rate asof March 31, 2009, were as follows:

Statutory tax rate

40.7%

(such as entertainment expenses)

1.3

Non-taxable income (such as dividend
Inhabitants’ taxes per capita

0.8

Unrealized gains and losses

0.4

Amortization of goodwill (negative goodwill)

0.4

Others, net(0.0)

Effective tax rates

43.0%

IT Holdings Group
Corporate Data

(0.6)

Financial Section

income)Business Report (Consolidated)
for Fiscal 2009

Non-deductible expenses

Business Risks

2009

Corporate Governance

(a)

45

Financial Section
Profile(b) The significant components of deferred tax assets and liabilities as of March 31, 2009,
March 31,

¥

373

$

3,795
7,192

4,027
545
572
7,049
3,573
1,995
2,934
1,392
2,974
26,140(6,129)20,011

40,992
5,548
5,826
71,76536,38020,307
29,865
14,16730,275
266,112(62,397)
203,715

306
1,419

3,115
14,448

1,125
30
2,880
¥17,131

11,457305
29,325$174,390

under the following line items:
March 31,

(Thousands of U.S.

yen)dollars)¥11,076$112,755

6,762

68,839Current liabilities – Other

(26)

(259)

Non-current liabilities – Deferred tax liabilities(682)(6,945)¥17,130$174,390

Current assets – Deferred tax assets
Investments and other assets – Deferred tax
assetsNet deferred tax assets

IT Holdings Group
Corporate Data

(Millions ofFinancial Section

2009
Business Report (Consolidated)
for Fiscal 2009

2009

Business Risks

Deferred income taxes as of March 31, 2009, are reflected in the consolidated balance sheet

Corporate Governance706

Research andDevelopment

Net deferred tax assets(Thousands of U.S.
dollars)

Business Strategy

Deferred tax liabilities:
Gain on contribution of securities to pension
fund
Prepaid pension expenses
Unrealized gain on available-for-salesecurities
Others, net(Millions of yen)First Medium-termManagement Plan

Less – Valuation allowance2009

To Our Stakeholders

Deferred tax assets:
Accrued enterprise tax
Non-deductible portion of allowance for
doubtful accounts
Non-deductible portion of accrued bonuses to
employees
Non-deductible portion of depreciation
Impairment losses
Tax loss carried forward
Accrued retirement benefits to employees
Write down of investments in shares
Write down of inventories
Unrealized gains
Others, net

2009

Consolidated Financial
Highlights

were as follows:46

Financial Section
ProfileConsolidated Financial
Highlights

9. Retirement Benefits(a)Outline of retirement benefit plans

corporation pension plan based on the defined benefit pension law, a defined contribution
pension plan, a tax-qualified pension plan, and an unfunded defined benefit plan with

To Our Stakeholders

The Company and certain of its consolidated subsidiaries have pension plans, including a

lump-sum payment.

subsidiaries have joined, is excluded from the calculation of the projected benefit

First Medium-termManagement Plan

Enterprise retirement allowance mutual aid scheme, which certain small consolidated
obligation.

involving other companies. As it is extremely difficult to make a reasonable estimate ofBusiness Strategy

In addition, certain consolidated subsidiaries joined a welfare pension fund plan
the amount of pension assets in the welfare pension fund attributable to contributions,obligation.
(b)

Research andDevelopment

the welfare pension fund is excluded from the calculation of the projected benefit

The following tables set forth the funded and accrued status of the plans, and theCompany’s and the subsidiaries’ retirement benefit plans:
March 31,2009

(Millions of yen)(Thousands of U.S.
dollars)$(356,459)

Plan assets

18,642

189,783

Unfunded retirement benefits(16,373)(166,676)

Unrecognized net actuarial differences

11,987122,028

Unrecognized net prior service costs(909)(9,257)

Net amount(5,295)(53,905)

Prepaid pension costs(2,819)(28,693)¥ (8,114)$ (82,598)

Financial Section¥(35,015)

Business Report (Consolidated)
for Fiscal 2009

Projected benefit obligation

Business Risks

2009

Corporate Governanceamounts recognized in the consolidated balance sheet as of March 31, 2009, for the

Accrued retirement benefits to
IT Holdings Group
Corporate Data

employees

47

Financial Section
Profilewere as follows:

2009(Millions of yen)(Thousands of U.S.
dollars)$ 21,320

Interest costs

765

7,783

Expected investment return(575)(5,858)

805

8,193

(170)

(1,729)

723

7,365

366

3,728

5

50

¥ 4,013$ 40,852

Recognition of actuarial
differences
Recognition of prior service
costs

Business Strategy¥ 2,094First Medium-termManagement Plan

Service costs

To Our Stakeholders

2009

Consolidated Financial
Highlights(c) The components of retirement benefit expenses for the year ended March 31, 2009,

Contribution to definedContribution to welfare
pension fund plan

Research andDevelopment

contribution pension plan

Contribution to smaller
allowance mutual aid
Net periodic pension expense

Discount rates

1.8 % to 2.5%

Rate of expected return on plan
assets

2.5% to 3.5 %benefits to periods of service

Straight-line basis

Financial Section

Method of attributing the projected

Business Report (Consolidated)
for Fiscal 2009

2009

Business Risks(d) Major assumptions used in calculating retirement benefits

Corporate Governanceenterprise retirement

IT Holdings Group
Corporate Data

48

Financial Section
ProfileAmounts related to unconsolidated subsidiaries and affiliates for the year ended March 31,

To Our Stakeholders

2009, were as follows:

March 31,2009

(Millions of yen)(Thousands of U.S.

¥1,097$11,167

Investments in securities - other

178

1,812

Investments

172

1,750

Business Strategy

Investments in securities - stocks

First Medium-termManagement Plan

2009

dollars)

Research andDevelopment

11. Depreciation of Property and Equipment

thousand) for the year ended March 31, 2009.
12. Contingent liability for guarantee

than consolidated subsidiaries.

2009

2009

(Millions of yen)(Thousands of U.S.
dollars)
$896

¥88

$896

Financial Section¥88

Business Report (Consolidated)
for Fiscal 2009

March 31,

Business Risks

The Company guarantees the following borrowing money from other financial institutions

Corporate GovernanceAccumulated depreciation of property and equipment totaled ¥63,432 million ($645,753

Imizu Cable Network, Co., Ltd.

Consolidated Financial
Highlights

10. Items related to Unconsolidated Subsidiaries and Affiliates

IT Holdings Group
Corporate Data

49

Financial Section
ProfileAccumulated advanced depreciation including national subsidy deducted from acquired
structures for the year ended March 31, 2009.

Main component of sales and selling, general and administrative expenses for the year
ended March 31, 2009 was as follows:Business Strategy

March 31,
2009

2009

(Millions of yen)(Thousands of U.S.

Accrual of bonuses to employees

1,114

11,340Accrual of allowance for doubtful

547

5,568

354

3,603

67

682

accounts
Retirement benefits to employees
Accrual of retirement benefits todirectors

Research and development costs, which are included in cost of sales and selling, general
March 31, 2009.

Business Report (Consolidated)
for Fiscal 2009

and administrative expenses, totaled ¥947 million ($9,636 thousand) for the year ended

Business Risks$135,508

Corporate Governance¥13,311

Research andDevelopment

dollars)
Employees’ salaryFirst Medium-termManagement Plan

14. Selling, General and Administrative Expenses

To Our Stakeholders

amount of property and equipment totaled ¥76 million ($773 thousand) of buildings andConsolidated Financial
Highlights

13. Advanced Depreciation

Financial Section
IT Holdings Group
Corporate Data

50

Financial Section
ProfileThe composition of loss on sales of fixed assets for the year ended March 31, 2009 was as

To Our Stakeholders

follows:

Consolidated Financial
Highlights

15. Loss on sales of fixed assets

March 31,2009

(Millions of yen)(Thousands of U.S.
dollars)

¥ 25

$

258

Machinery and equipment

31

310

Land

351

3,569

Other

15

153

¥422

$4,291Business Strategy

Buildings and structures

First Medium-termManagement Plan

2009

Research andDevelopment

16. Loss on disposal of fixed assets

as follows:

Corporate GovernanceThe composition of loss on disposal of fixed assets for the year ended March 31, 2009 wasMarch 31,2009

(Millions of yen)(Thousands of U.S.
dollars)$2,034

Machinery and equipment

66

668

Software49

501

Long-term prepaid expenses

80

816

Other

39

394

¥434

$4,413Financial Section¥200

Business Report (Consolidated)
for Fiscal 2009

Buildings and structures

Business Risks

2009

IT Holdings Group
Corporate Data

51

Financial Section
ProfileImpairment loss of long-lived assets for the year ended March 31, 2009 was as follows:

Category

Company

TIS condominium

Land, buildings, andcondominium(Yachiyo-shi, Chiba)

equipment

TIS dormitory

Land, buildings, and(Chiba-shi, Chiba)

equipment

Dormitory

TIS dormitory(Yokohama-shi,
Kanagawa)

Buildings, andproperty(Minato-ku, Tokyo)

and equipment

Business

TIS Osaka Head Officeproperty(Suita-shi, Osaka)

Business

Qualica Head Officeproperty(Koto-ku, Tokyo)

Medical systempropertyAJS Head Office(Sumida-ku, Tokyo)
TIS Solution Business
Head Office(Koto-ku, Tokyo)

Unutilized line

Leased assets

33

Software43

Leased assets

4

Telephone subscription
rightTelephone subscription(Sumida-ku, Tokyo)

rightUfit Head OfficeTelephone subscription(Naka-ku, Nagoya-shi)

rightLaboratory Head OfficeTelephone subscription
right
Total

2

6
6

2
¥896

IT Holdings Group
Corporate Data

(Koto-ku, Tokyo)

239

and equipment

AJS Head Office

Systems Engineering
Unutilized line

structures, machinery,

Financial Section

Unutilized line

Buildings andBusiness Report (Consolidated)
for Fiscal 2009

Unutilized line

34

Business Risks

Business

182

Corporate Governance

Machinery, software,(Minato-ku, Tokyo)

224

Research andDevelopment

TIS Tokyo Head Office

TIS Tokyo Head Office¥121

equipment

Business

In-house system(Millions of yen)

Business Strategy

Dormitory

Amounts

First Medium-termManagement Plan

Location

To Our Stakeholders

Purpose

Consolidated Financial
Highlights

17. Impairment Loss

52

Financial Section
ProfileDistributions can be made at any time by resolution of the shareholders or by the Board ofreserve is available for distributions.

(a) Types of Stock and Number of Shares
Increase in

Decrease in

Number of

Shares at March

Number of

Number of

Shares at March

31, 2008

Shares during

Shares during31, 2009

the Fiscal Yearthe Fiscal Year86,372,339－－

86,372,339

86,372,339－－

86,372,339

1,608,662

10,456282,105

1,337,013

1,608,662

10,456282,105

1,337,013

Business Strategy

Number of

Number of sharesissuedCommon stock
Treasury stock
Common stock(Note 1, 2)

Subscription warrants to new shares totaled ¥8 million ($81 thousand) at March 31,

Business Report (Consolidated)
for Fiscal 2009

2009.

Business Risks

Note 1: The increase in number of shares comes from 10,456 shares added through thebuyback of shares less than one tangen unit.
2. The decrease in number of shares (total 282,105 shares) comes from 280,836 shares
dropped through sale of shares held by a consolidated subsidiary, and 1,269 shares
dropped through requests to add onto shares less than one tangen unit.

Corporate Governance

Total

Research andDevelopment

Total

First Medium-termManagement Plan

（Number of shares）

To Our Stakeholders

Directors when certain conditions are met, but neither the capital reserve nor the legal

Consolidated Financial
Highlights

18. Shareholders’ Equity

Financial Section
IT Holdings Group
Corporate Data

53

Financial Section
ProfileConsolidated Financial
Highlights(b) Dividends(1) Dividend paid
Dividendper Share

RecordDate

Effective
Date

Generalshareholders’meeting on
June 20, 2008

Commonstock¥ 770
million¥ 17

March 31,2008

June 23,
2008

Director’s
meeting on
June 25, 2008

Commonstock¥ 449
million¥9

March 31,2008

June 26,
2008(2) The effective date for dividends with a record date of March 31, 2009, shall be a dateafter the close of books for said consolidated period.
Total

Source ofDividend

RecordEffective

Stock

Dividends

Dividends

per share

Date

Date

Common¥ 2,763

EarnedMarch 31,

June 26,

stock

millionsurplus

2009

2009

¥ 32

Business Risks
Business Report (Consolidated)
for Fiscal 2009

Generalshareholders’meeting
at June 25,
2009Type ofCorporate Governance

Resolution

Research andDevelopment

Note: The Company was established on April 1, 2008, as a joint holding company throughtransfer of shares. Total dividends indicate figures based on the resolution at thegeneral shareholders meeting of TIS Inc. on June 20, 2008, and at the generalshareholders meeting of INTEC Holdings, Ltd. on June 25, 2008.

Business Strategy

Total
Dividends

First Medium-termManagement Plan

Type ofstock

To Our Stakeholders

Resolution

Financial Section
IT Holdings Group
Corporate Data

54

Financial Section
ProfileYear Ended March 31,

2009

(Yen)

(U.S. dollars)

Net income:¥110.74$1.13

Diluted110.72

1.13

Net assets

1,541.17

15.69

32.00

0.33

Cash dividends applicable to the year

First Medium-termManagement PlanBasic

To Our Stakeholders

2009

Consolidated Financial
Highlights

19. Amounts per Share

Basic net income per share is computed based on the net income available for distribution
stock outstanding during each year. Diluted net income per share is computed based on the
net income available for distribution to shareholders and the weighted-average number ofBusiness Strategy

to shareholders of common stock and the weighted-average number of shares of commonshares of common stock outstanding during each year after giving effect to the dilutive
and the exercise of stock options.

number of shares of common stock outstanding at the year end.
Cash dividends per share represent the cash dividends resolved by the general

Corporate GovernanceAmounts per share of net assets are computed based on shareholders’ equity and the

Research andDevelopment

potential of shares of common stock to be issued upon the conversion of convertible bonds

shareholders’ meeting as applicable to that year, together with the interim cash dividends(a) As Lessee

Business Report (Consolidated)
for Fiscal 2009

20. Leases

Business Risks

paid.

As described in Note 3(h) finance lease transactions that were contracted before April 1,
concerning such finance leases if capitalized:

Financial Section

2008, were accounted for as operating leases. The following summarizes information

IT Holdings Group
Corporate Data

55

Financial Section
Profile(i) Equivalents of acquisition cost, accumulated depreciation and net balance as ofConsolidated Financial
Highlights

March 31, 2009
March 31, 2009
Accumulated
Accumulated

impairment

cost

depreciation

loss

Balance(Millions of yen)

To Our Stakeholders

Acquisition

Machinery and¥ 3,897¥2,505¥ –¥1,392Equipment

5,905

3,286

36

2,583

Other

1,865

1,121

–

744

¥11,667¥6,912¥36¥4,719Business Strategy

March 31, 2009
Accumulated
impairment

cost

depreciation

loss

Balance–$14,174

Corporate GovernanceAccumulated

Research andDevelopment

Acquisition

First Medium-termManagement Plan

vehicles(Thousands of U.S. dollars)
Machinery andvehicles$ 39,670$25,496$

Equipment

60,11833,459362

26,297

Other

18,987

11,413–

7,574$118,775$70,368$362$48,045

interest portion, categorized by contractual maturity
2009

2009

(Millions of yen)(Thousands of U.S.
dollars)$40,314Over one year

5,242

53,362¥9,202$93,676

¥

$

Total
Account balance of impairment
loss on leased assets

29

294

IT Holdings Group
Corporate Data

¥3,960Financial Section

Within one year

Business Report (Consolidated)
for Fiscal 2009

(iii)

Business Risks(ii) Amount of future lease payments outstanding as of March 31, 2009, including the

56

Financial Section
Profileexpenses and impairment loss for the year ended March 31, 2009

2009

2009

(Millions of yen)(Thousands of U.S.

To Our Stakeholders

March 31,

Consolidated Financial
Highlights(iii) Lease expenses, reversal of impairment loss on lease assets, depreciation, interest

dollars)¥3,815$38,833

7

75

3,513

35,765Interest expenses

251

2,554

Impairment loss

33

337

First Medium-termManagement Plan

Lease expense
Reversal of impairment
loss on lease assets

Business Strategy

Depreciationlease term and the residual value is zero.

Research andDevelopment

Depreciation is calculated using the straight-line method, the useful life is equal to the(iv) The amounts of future lease payments outstanding on operating leases as of March
Corporate Governance

31, 2009, are summarized as follows:
March 31,2009

(Millions of yen)(Thousands of U.S.
dollars)¥ 83

Over one year

89

912

¥172

$1,752

Total

$

840
Business Report (Consolidated)
for Fiscal 2009

Within one year

Business Risks

2009

Financial Section
IT Holdings Group
Corporate Data

57

Financial Section
ProfileAs Lessor(i)

Investments in finance leases as of March 31, 2009, consisted of the following:
March 31,2009

(Millions of yen)
Lease receivables(Thousands of
U.S.dollars)$82,266(806)(8,210)¥7,275$74,056

Estimated residual value
Interest portion
Investments in finance leases

March 31,
2009

2009

dollars)$28,032

One to two years

1,999

20,354

Two to three years

1,528

15,553Three to four years

1,080

10,991

Four to five years

413

4,210

Over five years

163

1,662

¥7,937$80,802

March 31, 2009, are categorized by contractual maturity.
March 31,2009

(Millions of yen)(Thousands of U.S.
dollars)

¥32

$332

Over one year

13

130

¥45

$462

Total

IT Holdings Group
Corporate Data

Within one year

Financial Section

2009

Business Report (Consolidated)
for Fiscal 2009(iii) The amount of future lease payments receivable on operating leases outstanding as ofBusiness Risks¥2,754

Corporate GovernanceWithin one year

Research andDevelopment(Thousands of U.S.

(Millions of yen)

Total

Business Strategy(ii) Expected collections of lease receivables as of March 31, 2009, are as follows:First Medium-termManagement Plan

¥8,081

To Our Stakeholders

2009

Consolidated Financial
Highlights

(b)

58

Financial Section
ProfileCosts related to stock option, which are included in selling, general and administrative

The following table summarizes activity regarding option that the Company had granted
to its directors, officers, and employees as of March 31, 2009.

Title andnumber ofrecipients

The Company:

The Company:

The Company:

Directors 2

Directors 2

Officer 1

Subsidiaries:

Directors 7
Officers 16
Employees 535

Directors 2
Officers 3
Employees 67

355,200 shares

351,800 shares

151,680 shares¥4,750¥4,014¥1,489April 1, 2008
In principle, theperiod beginning
April 1, 2008,
through
December 31, 2009
April 1, 2008
through
December 31, 2009

April 1, 2008
In principle, theperiod beginning
April 1, 2008,
through
December 31, 2010
April 1, 2008
through
December 31, 2010

April 1, 2008
In principle, theperiod beginning
April 1, 2008,
through
March 31, 2011
April 1, 2008
through
March 31, 2011

Business Risks

Subsidiaries:

Directors 7
Officers 16
Employees 492

Corporate Governance

Subsidiaries:

Research andDevelopment

Exercise period

4thBusiness Strategy

Number ofstock options(common stock)
Stock issue
price
Date of receipt
Requisite
service period

3rdFirst Medium-termManagement Plan

2nd

To Our Stakeholders

expenses, totaled ¥7 million ($71 thousand) for the year ended March 31, 2009.

Consolidated Financial
Highlights

21. Stock Options

Business Report (Consolidated)
for Fiscal 2009
Financial Section
IT Holdings Group
Corporate Data

59

Financial Section
Profile22. Statement of Cash FlowsThe components of cash and cash equivalents at March 31, 2009, were as follows:

2009

2009

(Millions of yen)(Thousands of U.S.

To Our Stakeholders

March 31,

Consolidated Financial
Highlights(a) Cash and cash equivalents

dollars)$382,002

Marketable securities

1,502

15,288

Total

39,026397,290(2,520)(25,658)(1,401)(14,259)¥35,105$357,373

Time deposits with original maturity
over three months

Business Strategy¥37,524First Medium-termManagement Plan

Cash and deposits

Securities with original maturity over
Cash and cash equivalents

Research andDevelopment

three months(b)Assets and liabilities of new consolidated subsidiaries
to the acquisition of newly consolidated companies for the year ended March 31, 2009,were as follows:(Millions of yen)(Thousands of
U.S. dollars)

Fixed assets

3,376

34,372

Goodwill

2,896

29,481

Current liabilities(4,525)(46,064)

Fixed liabilities(214)(2,178)Acquisition cost of NEXWAY shares

3,206

32,637

Cash and cash equivalents of NEXWAY

(59)

(600)

Acquisition cost of NEXWAY shares net¥3,147$32,037

IT Holdings Group
Corporate Data

$17,021

Financial Section¥1,673Business Report (Consolidated)
for Fiscal 2009

Current assets

Business Risks

NEXWAY Co., Ltd. (As of June 30, 2008)

Corporate GovernanceThe composition of assets and liabilities, acquisition cost, and net profits and losses due

60

Financial Section
Profile(Millions of yen)(Thousands of U.S.
dollars)

182

1,852

Goodwill

99

1,005

Current liabilities(521)(5,302)

Fixed liabilities

(34)

(342)

Minority interests(305)(3,111)

Acquired shares before consolidation(206)(2,099)Acquisition cost of CRONOVA shares

289

2,937

Cash and cash equivalents of CRONOVA(747)(7,604)¥ (458)$(4,667)

Acquisition cost of CRONOVA shares- net

The Group acquired assets and obligations on finance lease transactions, both

Corporate Governance(c) Significant non-cash activities

Research andDevelopment

Fixed assets

Business Strategy$10,926First Medium-termManagement Plan

¥1,073

To Our Stakeholders

Current assets

Consolidated Financial
Highlights

CRONOVA Co., Ltd. (As of September 30, 2008)

amounting to ¥1,528 million ($15,555 thousand) during the year ended March 31, 2009.

The Group responds to customer needs through the supply of a comprehensive range ofBusiness Report (Consolidated)
for Fiscal 2009(a) Industry segment information

Business Risks

23. Segment Information

information services ranging from information system planning through software
policies do not separate these operations into industry segment classifications, industry
segment information is not disclosed.

Financial Section

development, hardware selection, and system operations. As the Group’s marketing

IT Holdings Group
Corporate Data

61

Financial Section
ProfileSince both the domestic share of net income and total assets for all segments exceed(c) Overseas sales

information is not disclosed separately.

(a) Business Combination through Establishment of Joint Holding Company

of a better IT society, while improving group corporate value as leading companies in
the information services industry, TIS Inc.(TIS) and INTEC Holdings, Ltd.,(INTEC)

Research andDevelopment

Seeking to fulfill corporate social responsibility issues and contribute to the realization

Business Strategy

24. Business Combination

First Medium-termManagement Plan

Since the overseas share of consolidated net sales was less than 10%, overseas sales

To Our Stakeholders

90%, geographic segment information is not disclosed separately.

Consolidated Financial
Highlights(b) Geographic segment information

established the joint holding company, IT Holdings Corporation, on April 1, 2008,
owned subsidiaries of IT Holdings Corporation.
(i) Outline of holding company
IT Holdings Corporationii

Location of Head Office:Toyama Prefectureiii

Representatives of company:

Tetsuo Nakao, Chairman
Susumu Okamoto, President

Capital stock:¥10 billionv

Business activities:

Administrative control over its subsidiaries
and the affiliated groups and execution ofrelated business activities.

Financial Section

iv

Business Report (Consolidated)
for Fiscal 2009

Company name:Business Risksi

Corporate Governancethrough stock transfer. Consequently, TIS Inc. and INTEC Holdings became wholly

IT Holdings Group
Corporate Data

62

Financial Section
Profile(ii) Transfer ratio for stock with voting rights and ratio determination

One share of common stock in the holding company was allotted and delivered foreach share of common stock in TIS Inc., while 0.79 share of common stock in theConsolidated Financial
Highlights

i) Transfer ratio for stock with voting rights

holding company was allotted and delivered for each share of common stock in
To Our Stakeholders

INTEC Holdings, Ltd.
ii) Ratio determination
In the interest of each company’s shareholders, a third-party opinion was requested
Securities Co., Ltd., as its financial advisor, and INTEC Holdings, Ltd. named
Mitsubishi UFJ Securities Co., Ltd., as its financial advisor. The two companies

First Medium-termManagement Plan

to ascertain the fairness of the stock transfer ratio. TIS Inc. named Nomura

deliberated the respective third-party opinions and agreed that the ratio wasBusiness Strategy

appropriate.
iii) Voting rights after business combination
53.8%

INTEC Holdings, Ltd.

46.2%

The ratios represent the equities in IT Holdings Corporation held by shareholders ofeach company.

Judging from considerations given to shareholders, voting rights ratio andnonexistence of controlling relationship other than voting rights, the businessCorporate Governanceiv) Accounting for business combination

Research andDevelopment

TIS Inc.

combination was accounted for as a pooling of interests not as an acquisition, in
Business Risks

conformity with Japanese Accounting Standards for Business Combinations.
v) Assets and liabilities succeeded from both companies
INTEC(Millions of yen)
Current assets

TIS

INTEC

(Thousands of U.S. dollars)$ 492,079$ 23,938

75,76862,320771,334

634,424

Total assets¥124,105¥64,671$1,263,413$658,362

Current liabilities¥ 27,165¥ 8,585$ 276,547$ 87,395

21,807

10

222,002

106

Total liabilities¥ 48,972¥ 8,595$ 498,549$ 87,501

Net assets¥ 75,133¥56,076$ 764,865$570,861

Non-current assets

Non-current liabilities

IT Holdings Group
Corporate Data

¥ 2,351

Financial Section¥ 48,337

Business Report (Consolidated)
for Fiscal 2009

TIS

63

Financial Section
ProfileAcquisition of stock in NEXWAY Co., Ltd.
Name and business line of acquired entity, main reason for business combination,

date of combination, legal form of combination, and acquired ratio of voting rights①

Name and business line of acquired entity
Name: Nexway Co., Ltd. (same after combination)②

Main reason for business combination
To expand scale and reinforce services in the outsourcing and network segment.

③

Date of combination
Legal form of combination
Stock acquisition⑤

Acquired ratio of voting rights

Term of business performance, included in consolidated financial statements, for the

Research andDevelopment

100%
ii)

Business Strategy

July 11, 2008④

First Medium-termManagement Plan

Business: Services to distribute information

To Our Stakeholdersi )Consolidated Financial
Highlights(b) Application of Purchase Method

acquired entityiii) Cost of acquisition and components thereof
Stock acquisition expense¥3,120 million

directly related to stock acquisition
Cost of acquisition¥3,206 million

Business Risks

Expenses, including advisory services, ¥86 million

Corporate GovernanceJuly 1, 2008 to March 31, 2009

ll expenses were paid in cash.
Conversion rate by type of stock and calculation method used as well as number ofallotted shares and assessed value
Not applicable.

Business Report (Consolidated)
for Fiscal 2009iv)

Financial Section
IT Holdings Group
Corporate Data

64

Financial Section
ProfileAmount of goodwill incurred, cause, amortization method and period of amortization①Amount of goodwill incurred¥2,896 million
Active return expected, primarily through effective application of funds, as Nexway
expands its information distribution services.
③Amortization method and period of amortizationVi) Amount of assets and liabilities assumed on the date of combination and key

First Medium-termManagement Plan

Average amortization over five years.

To Our Stakeholders②CauseConsolidated Financial
Highlightsv)

components thereof
Current assets¥1,672 million

Fixed assets¥3,376 million

Total¥5,049 million

Current liabilities¥4,524 million

Fixed liabilities¥ 214 million

Total¥4,738 million

year under review if the business combination had been completed at the beginning of
the consolidated fiscal year.
Operating income¥ 471 million

Recurring profit¥ 378 million

Net income¥ 390 million(Calculation method for estimates)
The estimated impact would be the difference between sales and profit information
calculated as if the business combination had been completed at the beginning of thestatement of income of the acquired entity.
This note is unaudited.

Financial Section

consolidated year and sales and profit information recorded on the consolidated

Business Report (Consolidated)
for Fiscal 2009

¥2,304 million

Business Risks

Net sales

Corporate Governancevii) Estimated impact on the consolidated statement of income for the consolidated fiscal

Research andDevelopment② (Liabilities)

Business Strategy① (Assets)

IT Holdings Group
Corporate Data

65

Financial Section
ProfileAbsorption-type split with TISi) Name and business line of the spinoff combining entity, legal form of combination, andConsolidated Financial
Highlights(c) Transaction under Joint Control

summary of transaction, including purpose
Name and business line of the spinoff combining entity

Name: TIS, a consolidated subsidiary of IT Holdings
Business that was split from TIS and absorbed by IT Holdings: Subsidiary

To Our Stakeholders①

management operations
Legal form of combination
Absorption-type split, wherein TIS is the splitting company and IT Holdings is the
successor company.
③

First Medium-termManagement Plan②

Summary of transaction, including purpose

efficient, management redefined the Group structure and decided to shift control ofnine subsidiaries in the TIS Group under the direct control of IT Holdings.

Business Strategy

Seeking to make business practices within the IT Holdings Group stronger and moreIn this transaction, an absorption-type split was agreed upon between TIS and IT
transferred to IT Holdings.

IT Holdings treated the spinoff event as a transaction under joint control, in accordancewith “Accounting Standards for Business Combinations,” issued by the BusinessAccounting Council on October 31, 2003, and ASBJ Guidance No. 10 “Guidance on

Corporate Governanceii) Summary of applied accounting treatment

Research andDevelopment

Holdings, wherein all shares in the nine subsidiaries held by TIS would be

Accounting Standards for Business Combinations and Accounting Standards for
November 11, 2007.

The following appropriations of retained earnings of the Company, which have not been

Business Report (Consolidated)
for Fiscal 200925. Subsequent Event

Business Risks

Business Divestitures,” issued by the Accounting Standards Board of Japan onreflected in the consolidated financial statements for the year ended March 31, 2009, were(Thousands ofyen)

U.S. dollars)¥2,764$28,134

IT Holdings Group
Corporate Data

Cash dividends (¥32.00 = $0.33 per share)(Millions ofFinancial Section

approved at a shareholders’ meeting held on June 25, 2009.