Brief report on the Financial Statements for the period ending March, 2004 (consolidated)
May 19, 2004

Name of listed company:
DAI-DAN Co., Ltd.
Listed Stock Exchanges: Tokyo and Osaka
Code No.:1980
Location of Head Office: Osaka Pref.
(URL http://www.daidan.co.jp)
Representative of Company: Toshikazu ANDO, President
Inquiries to be addressed to: Goh TAJIMA, Director & General Manager of General Administration Division
Tel. (06) 6441 - 8231

Date of Directors’ meeting on closing of accounts: May 19, 2004
Adoption of American Accounting Standards:
None

1. Consolidated performance for the period ending March, 2004 (From April 1, 2003 to March 31, 2004)(1) Consolidated management performance (Note: Amounts are indicated with figures less than 1 million yen discarded.)
Sales amountOperating profit
Ordinary profit
Period ending
March 2004
Period ending
March 2003

Million yen％

Million yen％

Million yen％

154,832

-5.7

1,609

-21.3

1,352

-22.6

164,115

-1.7

2,044

21.7

1,746

-3.1

Current net
earnings per
share

Current net profit

Period ending
March 2004
Period ending
March 2003

Current net earning
Shareholders capital Total capitalper share after
Current net profit Ordinary profit
making potential
rate
rate
share adjustments

Sales amount
Ordinary profit
rate

Million yen％

Yen SenYen Sen

％

％

％

574

- 43.5

12.81

−

1.3

1.0

0.9

1,017

−

22.26

−

2.3

1.2

1.1

Note: 1) Investment profit or loss on equity method
End of March 2004 -66 million yen
End of March 2003 43 million yen
2) Interim average number of shares (consolidated) End of March 2004 44,890,465 shares
End of March 2003 45,730,284 shares
3) Changes in accounting procedures: None
4) Percentage indication of sales amount, operating profit, ordinary profit, and current net profit show increase or decrease
compared with previous period(2) Consolidated financial condition
Total assets

Shareholder's capitalMillion yen
Period ending
March 2004
Period ending
March 2003

Shareholders capital rate Shareholder's capital per share

Million yen%

Yen Sen

129,848

45,64635.2

1,036.29

138,148

43,87431.8

974.56

Note: Issued number of shares at the end of period (consolidated)

End of March 2004 44,048,172 shares
End of March 2003 45,019,424 shares(3) Consolidated cash flow condition
Cash flow on sales
Cash flow on investment Cash flow on financial Period end balance of
cash and equivalent items
activities
activities
activities
Million yen
Period ending
March 2004
Period ending
March 2003

Million yen

Million yen

Million yen-2,347371-2,40026,118

6,688

-1705

-3,12330,653(4) Consolidation scope and items relating to application of equity method
Number of consolidated subsidiaries: 11
Number of non-consolidated subsidiaries with equity method applied: None
Number of affiliated company with equity method applied: 1(5) Consolidation scope and situation on changes in equity method application
Consolidated (new): None

(Excluded): None

Equity method (new): None

(Excluded): None

2. Estimated of consolidated performance for the period ending March 2005 (From April 1, 2004 to March 31, 2005)
Sales amount
Ordinary profit
Current net profit
Million yen

Interim55,000Million yen-2,200Million yen-1,450155,000
2,000
750
Total period(Reference) ①Estimated current net profit per share (for total period) 17.03 yen
2 Estimated amount of work order received (interim)
67,000 million yen
3 Extimated amount of work order received (full year) 156,000 million yen* Since the performance is estimated based on the information available as of theannouncing date, actual results can be different from estimated ones due to various factors.

For the items of the above performance estimate, see the attached material for consolidation at page 4.

1

1. Situation of the Corporate Group
Our corporate group consists of our company, 11 subsidiary companies and 1 affiliated company,
mainly engaged in the business of designing, supervising, and execution of electrical, air conditioning,and plumbing/sanitation work. The position of our group relating to business and the systematic chartof our business are as follows:(1) Position of our group relating to business
Facility construction works
Electrical, air-conditioning, and plumbing/sanitation work
Part of the work of orders received by us is relegated to DAI-DAN Service Kanto Co., Ltd.,DAIDEN Koji Co., Ltd., DAIDEN Koji Corp., DAI-DAN Service Kansai Co., Ltd., Okayama
DAIDEN Setsubi Co., Ltd., Kyushu DAIDEN Setsubi Co., Ltd., Kumamoto DAIDEN Setsubi Co.,
Ltd., and DAI-DAN PHILIPPINES, INC. We sell facilities and equipment to MERINO O.D.D.
SDN BHD. and offer technical assistance to THAI O.D.D. CO., LTD. Furthermore, CAN
ENGINEERS PTE. LTD. takes charge of the manufacture and sale as well as the construction workof facilities and equipment.
Gas piping work
Kyo Gas Co., Ltd. executes the gas piping work for orders placed by Osaka Gas Co., Ltd. andreceives only a few orders from our company.
(2) Systematic chart of business

Customers

Electrical, air-conditioning,plumbing/sanitation work

Subsidiary company
MERINO O.D.D.
SDN.BHD.

Electrical, air-conditioning,plumbing/sanitation work

Subsidiary company
THAI O.D.D.
CO., LTD.

Sales offacilities andequipment

DAI-DAN Co., Ltd.

Works execution,
manufacturing andsales of facilities
and equipment

Electrical, airconditioning facility work

Construction facility work
Technical
assistanceWorks execution

Electrical, air-conditioning,plumbing/sanitation work
Subsidiary companies
DAI-DAN Service Kanto Co., Ltd.
DAI-DAN Service Kansai Co., Ltd.
Okayama DAIDEN Setsubi Co., Ltd.
Kyushu DAIDEN Setsubi Co., Ltd.
Kumamoto DAIDEN Setsubi Co., Ltd.
DAI-DAN PHILIPPINES, INC.

1

Works execution

Affiliated company(with equity method
applied for)CNA ENGINEERS
PTE LTD.

Gas piping work
Electrical facility
Subsidiary companies
DAIDEN Koji Co., Ltd.
DAIDEN Koji Corp.

Subsidiary company
Kyo Gas Co., Ltd.

2. Management Policies(1) Basic policy on management
Our company, as a general facility work company, enforces a basic management policy of“challenging to create a new value and contributing to the achievement of more favorable global
environment and the progress of society at all times” and provides customers with technologies andservices, which are ahead of their needs, thus working toward upgrading the corporate value.
Furthermore, the company has an on-target grasp of changes in the industrial structure and conducts
the speedy and practical management with an eye toward becoming a vigorous company.
(2) Basic policy on distribution of profits
Our basic, consistent policy is to endeavor to build a solid financial constitution and return profits
stably and continuously to our shareholders to live up to their expectations.
(3) Concept and policy on reductions of investment units
Regarding the reductions of investment units, we would like to carry out continued studies on thisissue on the basis of shareholders’ benefits, while assessing the level of stock price, number ofshareholders, liquidity, cost-effectiveness, and others.
(4) Medium- and long-term management strategy
In accordance with the medium-term management plan “CHALLENGE NEW – DAIDAN 77”, which
has been carried out since April 2003, we are making a company-wide concerted effort with an eye
toward securing revenues, by which the company will accomplish the continuous development.
To be more specific, through taking customers’ needs in advance to push ahead with engineeringdevelopment and step up proposal-oriented marketing activities, we are struggling to find newcustomers and further strengthen our ties with existing customers, thus challenging the increase oforders received. Concurrently, we are focusing on order-taking activities for renewal works on thebasis of our strong points, i.e., technologies for integrating electrical, air conditioning, andplumbing/sanitation works into total facilities. In particular, we are aggressively marketing renewal
works with proposals capitalizing on our energy saving technologies. In this connection, we havealready branched out into the ESCO business.
In addition, we have newly established a demonstration experiment building in our TechnicalResearch Institute, in order to verify compatibility between quality ensuring and cost cutting.
Furthermore, we have strengthened our construction management framework and pushed ahead withnew procurement methods, through which we have ensured safety and quality and also accomplishedcost cutting, thus addressing the improvement in our competitiveness.
In April last year, we completed reshaping the company-wise information system and put this system
into full-scale operation. As a result, through enhanced productivity on site and the sharing of
information among sections, we are challenging to the creation of revenues, integration and increase inefficiency of indirect operations, and reduction of expenditures.
As to personnel affairs aspects, in April this year, we made further revision of the pay-for-performance
program for the fair and just pay and benefits for our employees. Through this revision, we will pushahead with invigorating the company organization and making the best possible use of humanresources.
As to environmental issues, we are working toward providing technologies, promoting the recycling,
and reducing the production of waste, with considerations given to environmental conservation such as
resource saving or energy saving.
Furthermore, we are taking operating profit ratio to shareholders’ equity as our management
benchmark.

2

(5) Basic concept regarding corporate governance and implementation status of measures
In order to keep up with cataclysmic changes in the management environment, we are carrying out
extensive studies on critical issues involved in the management, making quick and fair decisions, andimplementing measures as soon as decided.
To be more specific, we are making the following management system effectively functional.
1) Management council
The management council is held twice every month, in principle. The council carries out a wide
variety of studies on the planning of management policy and measures and the check on theirprogress, and further the deliberation about corporate management strategies and issues critical tocompany-wide management, thus bringing them up for the board of directors, as occasion arises.
2) Board of directors
The board of directors is held once every month or extraordinarily as occasion arises. The board of
directors makes decisions regarding critical issues involved in the management including issues
under discussion by the management council and, at the same time, monitors the progress ofoperations.
3) Board of corporate auditors
We make it as an established practice that four auditors (including two outside auditors) hold theboard of corporate auditors before the board of directors is held and carefully examine the issues
discussed by the board of directors, and turn up the board of directors to present their suggestions.
4) Meeting of branch office managers
In order to harmonize the company-wide operations, the meeting of branch office managers is
being held every month, where not only management policies and measures are presented, but also
the progress of operations is checked and a variety of issues in branch offices are discussed, thus
making efforts to make immediate solutions.

33. Management Record and Financial Standing(1) Management record
In the construction industry, public investment remained on the decline. Even though private capital
investment slightly showed an upward trend, due to a prolonged slump in of investment in construction,
the economy continued to be in a severe situation.
The consolidated amount of work orders received of our corporate group increased 0.9% on the previous
term to 145,497 million yen. The amount of work completed declined 5.7% on the previous consolidated
accounting year to 154,832 million yen.
As for the profits, the operating profit declined 21.3% on the previous consolidated accounting year to1,609 million yen and the ordinary profit declined 22.6% on the previous consolidated accounting year
to 1,352 million yen. As a result, the net profit for the current term declined 43.5% on the previous
consolidated accounting year to 574 million yen.
(2) Financial standing
Status of cash flow
Cash and cash equivalent for the current consolidated accounting year (hereinafter referred to as “thefund”) declined 4,534 million yen (14.8%) on the previous consolidated accounting year to 26,118
million yen.
(Cash flow from sales activities)
Cash flow used in sales activities for the current consolidated accounting year declined 2,347 million
yen due to the advance payment of work-related fund, which declined 9,036 million yen on balance,compared with the increase of 6,688 million yen in fund for the previous consolidated accounting year.
(Cash flow from investing activities)
Cash flow used in investing activities for the current consolidated accounting year increased 371 million
yen in the fund thanks to revenues through the sell-off of investment securities and other fixed assets,
which increased 2,076 million yen on balance, compared with the decline of 1,705 million yen in fund
for the previous consolidated accounting year.
(Cash flow from financing activities)
Cash flow used in financing activities for the current consolidated accounting year declined 2,400
million yen in the fund due to paid amount of dividends of 720 million yen, expenditures for the returnof loans having exceeded the earnings by new borrowing by 1,159 million yen and others, which
increased 723 million yen on balance, compared with the decline of 3,123 million yen for the previous
consolidated accounting year.
(3) Outlook for next term
In the construction industry, it is predicted that the economy will continue to be in a severe situation due
to expecting curtailment of public investment, even though private investment sector starts showing asign of economic upturn in part of the industries.
Regarding the outlook for the next term of our corporate group, we expect the consolidated amount ofwork orders received of 156,000 million yen, completed work of 155,000 million yen, ordinary profits of
2,000 million yen, and current net profit of 750 million yen.

4

4. Consolidated Financial Statements, etc.
(1) Consolidated balance sheet(in millions of yen)
By period

Accounts

End of the current consolidated
accounting year
(As of March 31, 2004)

End of the previous consolidated
accounting year
(As of March 31, 2003)

Component
ratio

AmountAmount%(Assets)

Difference

Component
ratio%

Current assets
Cash on hand and in banks
Note receivables, completed work
accounts receivables
Securities

26,15528,621- 2,465

48,13950,282-2,143100

2,179-2,079Beneficial interest in trust

2,655

−

2,655

Incomplete work expenditures

21,30725,255- 3,947

704

1,116

-411

Others

7,088

5,967

1,121

Allowance for bad debts

- 219

- 176

-42

Deferred tax reserves

Total current assets

105,93181.6

113,245

82.0- 7,313

Fixed assets
Tangible fixed assets
Buildings and structures
Machinery and equipment, andtransportation equipment
Tools and facilities

3,249

3,262

-12

56

69

-13

153

164

-11

Land

2,049

2,075

-25

Total tangible fixed assets

5,508

5,571

-62

Intangible fixed assets
Consolidated adjustment
account

1

−

1

1,241

1,583

-341

1,242

1,583

-340

12,184

9,226

2,958

182

234

-52

Deferred tax reserves

1,990

4,230

-2,239Others

4,537

5,061

-524

Allowance for bad debts-1,729-1,004-724

Total investments and otherassets17,165

17,748-583

Total fixed assets

23,91618.4

24,90318.0-986

Total assets

129,848100.0

138,148100.0-8,300

OthersTotal intangible fixed assets

Investments and other assets
Investment securities
Long-term loans receivables5(in millions of yen)
By period
Accounts

End of the current consolidated
accounting year
(As of March 31, 2004)
Component
Amountratio

End of the previous
consolidated accounting year
(As of March 31, 2003)
Component
Amountratio%%(Liabilities)

Difference

Current liabilities
Notes payable, work accounts
payableShort-term loans payable

49,331

54,211-4,879

8,387

8,920

-533

Corporate taxes, etc. payable

395

89

305

Incomplete work accounts received
Completed work compensation
reserves
Others13,99016,776-2,786

76

48

27

5,403

6,347

-944

Total current liabilities

77,584

59.7

86,39462.5-8,809Fixed liabilities
Long-term loans payable

2,768

3,394

-626

Reserves for retirement benefits
Reserves for directors’ retirement
benefits
Reserves for liabilities guarantee
loss
Consolidated adjustment account

3,278

3,728

-450

465

420

45

−

210

-210

−

1

-1

12

69

-57

OthersTotal fixed liabilities

6,525

5.0

7,825

5.7

-1,299Total liabilities

84,11064.7

94,21968.2-10,109

91

0.1

54

0.0

36

Capital stock

4,479

3.4

4,479

3.3

−

Capital surplus

4,716

3.7

4,716

3.4

−

Retained earnings
Evaluation difference of othersecurities
Currency translation adjustment
account
Treasury stock

35,05627.0

35,201

25.5

-144

2,327

1.8

-128

-0.1

2,456

-8

0.0

10

0.0

-19

-925

-0.7

-405

-0.3

-519

Total capital

45,64635.2

43,874

31.8

1,772

Total liabilities, minority interest
equity and shareholders’ equity

129,848100.0

138,148100.0-8,300(Minority interest equity)
Minority interest equity(Shareholders’ equity)6(2) Consolidated profit and loss statement(in millions of yen)
By period
Accounts

Completed work amountCompleted work costCompleted work gross profit
Selling expenses and general administrative expenses

Operating profit
Non-operating revenue
Interests received
Dividends received
Rent of real estate
Insurance claim received
Consolidated adjustment account depreciation

Investment profit by equity method
OthersNon-operating expenses
Interest payable
Payment guarantee charge
Currency translation loss
Investment loss by equity method
OthersOrdinary profits
Special profits
Profit on sales of fixed assets
Profit on sales of investments in securities
Profit gained by returning allowance for bad
debts
Profit gained on withdrawal of substitution
portions of employees’ pension fund coveredby the company on behalf of the government
Profit gained on withdrawal from employees’
pension fundProfit gained by returning provision for loss
on guarantees
Special losses
Loss on sales of fixed assets
Loss on retirement of fixed assets
Loss on sales of investments in securities
Evaluation loss on investments in securities
Evaluation loss on golf club membership rights

Amount transferred from allowance for bad
debts
OthersCurrent net profits before tax adjustments, etc.

Corporate tax, residence tax and business tax
Adjustment amounts such as for corporate taxes
Profit of minority interests
Current net profit

Current consolidated
accounting year
(From April 1, 2003
to March 31, 2004)

Amount154,832
142,096
12,736
11,126
1,609
(280)
28
102
60
60
2
−
25
(537)
223
39
202
66
5
1,352
(1,137)40
1,027Previous consolidated
accounting year
(From April 1, 2002
to March 31, 2003)

Percentage
%
100.0
91.8
8.2
7.2
1.0
0.2

0.3

0.9
0.7

−

164,115150.684
13,43011,386
2,044
(371)
40
65
66
76
2
43
76
(669)
260
52
348
−
6
1,746
(3,035)295
7Percentage
%
100.0
91.8
8.2
6.9
1.3
0.2

0.4

1.1
1.8

-9,282-8,588
-694
-260
-434
(-91)
-12
37
-6
-16
-0
-43
-50
(-131)
-37
-13
-146
66
-1
-394
(-1,897)
-254
1,019

350

-350

2,381

-2,381

28

−

28

41

−

41

(444)
35
19
−
45
24

0.3

−
2,046
466
967
37
574

(1,922)
65
31
12
1,522
54

1.2

−

320

7

AmountDifference

1.3
0.3
0.6
0.0
0.4

236
2,859
203
1,663
-26
1,017

(-1,478)
-30
-12
-12
-1,477
-30
320

1.7
0.1
1.0
-0.0
0.6

-236
-813
262
-696
63
-442

(3) Statement of consolidated surplus(in millions of yen)
By period

Current consolidated accounting year
(From April 1, 2003
to March 31, 2004)

Previous consolidated accounting year
(From April 1, 2002
to March 31, 2003)

AmountAmountAccounts(Capital surplus)
Capital surplus balance at the
beginning of the period
Capital reserves balance atthe beginning of the period

4,716
4,716

Capital surplus balance at theend of the term

4,716

4,716

4,716

(Retained earnings)
Retained earnings balance atthe beginning of the period
Consolidated surplus balanceat the beginning of the period
Retained earnings increased
amountNet profit for the current term

35,201574

574

34,922

34,922

1,017

1,017

Retained earnings decreased
amountShareholders’ dividends
Directors’ bonuses

719

734

−

719
35,056

Retained earnings balance atthe end of the term

8

4

738
35,201

(4) Statement of consolidated cash flow
Accounts
I.

By period(in millions of yen)
Current consolidated accounting year
(From April 1, 2003 to March 31, 2004)
AmountCash flow on sales activities
Current net profit before tax adjustments, etc.
Depreciation expenses
Consolidated adjustment account depreciation amount
Increased or decreased amount of allowance for bad debts
Increased or decreased amount of reserves for retirement
benefits and reserves for directors’ retirement benefits
Earned interest and dividends received
Interest paid
Investment profit or loss by equity method
Profit gained by returning provision for loss on guarantees

Evaluation loss on investments in securities
Profit or loss on sales of investments in securities
Profit or loss on sales of fixed assets
Loss on retirement of fixed assets
Evaluation loss on golf club membership rights
Paid amount of directors’ bonuses
Increased or decreased amount of sales credits
Increased or decreased amount of incomplete work
expenditures
Other increased or decreased amounts of current assets
Increased or decreased amount of procurement credits
Increased or decreased amount of incomplete work
received amount
Other increased or decreased amounts of current liabilities
Sub-total

2,046
431
-2
707

2,859
172
-2
-1,168-404-1,578

-131
223
66
-41
45
-1,027
-5
19
0

-105
260
-43

1,494

1,522
4
-229
31
2
-6
5,215

3,945

5,346

-907
-4,879-47-6,186-2,786

199

-866

853

-2,071

7,099

131
-223
-184
-2,347

106
-247
-270
6,688

10
-0
-1,0981,098-2,655
-153
31
-119
2,249

-27
213
-1,598
1,700
-80
368
-2,828530−

Received amount of interests and dividends
Paid interest amountPaid amount of corporate tax, etc.
Cash flow on sales activities
II. Cash flow on investment activities
Expenditures by depositing of time deposits
Revenue by pay back of time deposits
Expenditures by acquiring of securities
Revenue by sales of securities
Expenditures by acquiring of beneficial interest in trust
Expenditures by acquiring of tangible fixed assets
Revenue by sales of tangible fixed assets
Expenditures by acquiring of investment securities
Revenue by sales of investment securities
Expenditures by acquiring of stocks of subsidiarycompanies
Expenditures by loans
Revenue by recovery of loans
Expenditures by acquiring of other fixed assets
Revenue by sales of other fixed assets
Cash flow on investment activities
III. Cash flow on financial activities
Revenue by short-term loans
Expenditures by return of short-term loans
Revenue by long-term loans
Expenditures by return of long-term loans
Expenditures by acquiring of treasury stock
Paid amount of dividends
Paid dividend to minority interests
Cash flow on financial activities
IV. Translation difference relating to cash and cash
equivalents
V. Increased or decreased amount of cash and cash
equivalents
VI. Balance of cash and cash equivalents at the beginningof period
VII. Balance of cash and cash equivalents at the end of
period9Previous consolidated accounting year
(From April 1, 2002 to March 31, 2003)
Amount

−

-10

-201
273
-275
1,212
371

-102
47
-1,645
1,727-1,70520,005-19,908
3,500-4,756
-519
-720
-0
-2400

19,110-18,604
3,500-6,001-391-734-1-3,123-158-211-4,534

1,648

30,65329,004

26,11830,653

(5) Basic items for producing consolidated financial statements
1. Items relating to scope of consolidation
Eleven (11) subsidiaries are included in the consolidated financial statements.
Names of major consolidated subsidiary companies are described in “Section 1. Situation of the
Corporate Group”
2. Items relating to application of the equity method
Number of affiliated companies with equity method applied: 1 company
Company Name:
CNA ENGINEERS PTE LTD.
The account closing date of the above affiliated company is different from the consolidated accountclosing date, but the financial statements for the accounting year of the company concerned are used.
3. Items relating to the accounting year and others of consolidated subsidiaries
Out of the consolidated subsidiaries, MERINO O.D.D. SDN. BHD, THAI O.D.D. CO., Ltd. and
DAI-DAN PHILIPPINES, INC. close their account for the term on December 31.
In order to produce consolidated financial statements for the term, we use financial statements as ofDecember 31. As for important transactions arising between December 31 and the consolidated
account closing date for the term, we make adjustments required for the consolidated account.
4. Items relating to accounting procedure basis(1) Valuation basis and method applied to important assets
1) Securities
Held-to-maturity bonds:
Depreciable cost method (Straight-line method)
Other securities
With market valueMarket price method based on the market price as of theconsolidated account closing date(Valuation differences are treated according to full capital
direct accounting method, and sale cost is calculated
according to the moving average method.)With no market value
Cost method based on the moving average method
2) Derivative:
Market price method
3) Inventories
Incomplete work expenditures
Cost method based on the specific identification method
Materials and supplies
Cost method based on the moving average method(2) Depreciation and amortization method applied to important depreciable assets
1) Tangible fixed assets
Our company and domestic consolidated subsidiary companies
Buildings (excluding accessory equipment) Straight-line method
OthersDeclining balance method
Overseas consolidated subsidiary companies Straight-line method
Furthermore, the following section shows the depreciation periods of major assets.
Buildings and structures
15 to 50 years
2) Intangible fixed assets
Straight-line method
Furthermore, as to software of the company’s own use, the straight-line method based onin-company applicable period (i.e., five years) is applied.
(3) Recording basis applied to important allowances and reserves
1) Allowance for bad debts
In order to provide against bad debts due to failure in recovery of completed work accounts
due, loans receivable, and others, we review the recoverability of general credits based on
the past actual percentage of credit losses and particular credits such as those having bad
debts risk based on individual cases, thus recording anticipated unrecoverable amount.
2) Allowance for completed work compensation
This is provided for the purpose of defect compensation for completed works. We record anamount for works to be compensated based on past results plus possibility of futurecompensation.
103) Reserves for retirement benefits
In order to prepare for the payment of retirement benefits, we record an amount inaccordance with the estimates of debt obligations for retirement benefits and pension assets
at the end of current consolidated accounting year.
As for differences on the mathematical calculation, we shall treat them using an amountproportioned by the specific identification method with a specified number of years (i.e., 10
years) within the employees’ average remaining length of service at the time of theoccurrence of the differences while in each consolidated accounting year, from the accountsettled for next consolidated accounting year of the occurrence, by contrast, we batchprocess past service obligation within the year of occurrence.
4) Reserves for directors’ retirement benefits
In order to prepare for the payment of directors’ retirement benefits, we reserve and record anamount required to pay at the end of the mid-term period in accordance with the bylaws of thecompany.
5) Reserves for liabilities guarantee loss
In order to prepare for losses incurred by liabilities guarantee, in consideration of financing
standing and others of guarantees, we record an estimated amount of losses.
(4) Important leases treating method
Financing leases other than those by which ownership rights of the leased property can be transferredto the lessee are treated in accordance with a method relating to ordinary leases.
(5) Important hedge accounting method
1) Hedge accounting method:2) Hedging means and targets• Hedging means:• Hedging items:

Deferred hedging treatment has been adopted.
Interest swap transactions
Interest expenses for long-term loans
Dividends receivable of non-listed stocks

3) Hedging policy
In order to hedge risks associated with interest rate fluctuations, we have been using
derivatives to prepare for interest expenses for long-term loans. Furthermore, as for thedividends received from non-listed stocks, since the amount of dividends is determined on
the basis of market interest rates, we have been using derivatives to hedge the fluctuation
risk of the dividends receivable associated with the market interest rate fluctuations.
Furthermore, we do not hold derivatives for speculation purpose.
4) Evaluation method of hedging availability
Hedging availability is evaluated by means of ratio analysis between the cumulative totalof cash flow fluctuations for hedging items and the cumulative total of cash flow
fluctuations for hedging means.
(6) Other important items for the consolidated financial statements
1) Completed works amount recording basis
Work completion basis is adopted. For part of works, however, we adopt deferred payment
standards under Corporation Tax Law, thus counting the amount equivalent to profits
corresponding to uncollected amount in the completed work costs to reschedule the profits.
Furthermore, our overseas consolidated-subsidiaries record the completed works amounton the work progressing basis.
Unearned profit realized amount
12 million yen
Unearned profit deducted amount−million yen
Total
12 million yen
2) Accounting of consumption tax and others
They are treated in accordance with a method exclusive of tax.
5. Items relating to evaluation of assets and liabilities of consolidated subsidiaries
The evaluation method of assets and liabilities of consolidated subsidiaries is in accordance withtotal market price evaluation method.
11

6. Items relating to depreciation of consolidated adjustment account
The consolidated adjustment account is depreciated by straight line method over 5 years.
7. Items relating to treatment of surplus appropriation accounts
The consolidated surplus calculation is made basing on surplus appropriation decided during theconsolidated accounting year.
8. Scope of funds in the consolidated cash flow statement
Funds (cash and cash equivalents) listed in the consolidated cash flow statement include currency on
hand, bank money, time deposits of which maturities come within 3 months after the acquisition date,and short-term investments with no fixed maturity or redemption date, ease of cash-out, and taking aslight risk of price fluctuations.
Notes[Relating to consolidated balance sheet](in millions of yen)

1. Accumulated amount of depreciation of tangible fixed
assets
2. Amount of transfer of endorsed notes receivable
3. Issued number of stocks

Current consolidated
accounting year

Previous consolidated
accounting year

4,962

4,880

37

44

45,963,803 shares

45,963,803 shares（Common stocks）
4. Number of treasury stocks owned by the consolidated
subsidiaries

1,915,631 shares

944,379 shares（Common stocks）
5. Shares of affiliated companies
Investments securities

458

515

27

27

1,858

639

88

136

491

593

197

488

6. Pledged assets and secured liabilities(1) Assets given as security
Time deposit
Investment securities(2) Liabilities for the above
Work payable
Long-term loans expecting to return within 1
year.
Long-term loans

12[Relating to consolidated profit and loss statement]
1. The following section describes important expense items and amount out of the selling and generaladministrative expenses.
(in millions of yen)
Current consolidated
accounting year

Previous consolidated
accounting year

3,549

3,701

227

1,052

85

76

1,389

1,167
1,044

Amount of transferred from allowance for bad debts

1,026
426

Depreciation expenses

415

146

2. Total expenditures for research and development(Breakdown)

488

412

Selling costs and general administrative costs

488

412

3. Amounts transferred from allowance for bad debts,
included in evaluation loss on golf club membershiprights, etc.

23

51

Salaries and allowances to employees
Reserves for retirement benefits
Amount transferred from reserves for directors’
retirement benefits
Amount of computers
Communication and transportation expenses−[Relating to consolidated cash flow statement]
The following table shows the relationship between the balance of cash and cash equivalents at the end offull-year period and the amount of accounts listed in the full-year consolidated balance sheet(in millions of yen)
Current consolidated
accounting year

Cash and deposit accounts
Securities accountTotal
Time deposits with time period more than 3 months
Securities other than add-on type bond investment
trustsCash and cash equivalent objects

13

Previous consolidated
accounting year

26,15528,621100

2,179

26,25530,800

- 37

- 47

- 100

- 100

26,11830,653

[Relating to leases]
The following section describes financing leases other than those by which ownership rights of the leased property
can be transferred to the lessee.
1. Amount equivalent to acquisition cost of the leased property, amount equivalent to accumulated
depreciation amount, and amount equivalent to the balance at the end of the full-year period.
(in millions of yen)Amount equivalent toacquisition cost

Amount equivalent toaccumulated
depreciation amountAmount equivalent the
full-year period to thebalance at the end of
the full-year period

Current consolidated
accounting year

Previous consolidated
accounting year

Tools and equipment

1,164

1,569

Software

1,906

1,659

Total

3,070

3,229

Tools and equipment

713

907

Software

660

199

1,373

1,106

451

662

Software

1,245

1,459

Total

1,697

2,122

Total
Tools and equipment

2. Amount equivalent to the balance of unearned rental revenue at the end of the full-year period.
(in millions of yen)
Current
consolidated
accounting year

Previous
consolidated
accounting year

Within 1 year

718

709

Over 1 year

1,006

1,436

Total

1,724

2,146

3. Rental revenue payable, amount equivalent to depreciation expenses, and amount equivalent to interest
payable(in millions of yen)
Current
consolidated
accounting year

Previous
consolidated
accounting year

Rental revenue payable

820

598

Amount equivalent to depreciation expenses

784

562

Amount equivalent to interest payable

4136

4. Calculation method of amount equivalent to depreciation expenses
This amount is calculated by the straight-line method with lease period taken as the period of depreciationand salvage value set at zero (0).
5. Calculation method of amount equivalent to interest
Amount equivalent to interest is defined as a difference between the sum total of rental revenue and theamount equivalent to acquisition costs of the leased property. This amount is allocated to each accounting
period in accordance with the interest method.

14

5. Securities(Current consolidated accounting year)
1. Held-to-maturity bonds with market value (March 31, 2004)(in millions of yen)Amount in the consolidatedbalance sheet

Market value

Balance

–

–

201

1

–

–

201

1

–

–

–

–

–

–

–

Sub-total

–

–

–

Total

200

201

1

(Those whose market value is above the amount in the
consolidated balance sheet)
Government bonds/local–
government bonds
Corporate bonds
200–

OthersSub-total
200(Those whose market value is not above the amount in
the consolidated balance sheet)
Government bonds/local–
government bonds
Corporate bonds–
Others

2. Other securities with market value (March 31, 2004)

Balance

7,978

4,183

–

–

–

2

3

0

–

–

–

–

–

–

7,981

4,183

854

- 238

–

–

–

–

–

–

–

–

–

–

–

–

1,093

854

- 238

Acquisition cost(Those whose amount in consolidated balance sheet isabove the acquisition cost)
Stocks
3,794
Bonds
Government bonds/local
government bonds
Corporate bonds
OthersOthersSub-total
3,797(Those whose amount in consolidated balance sheet is
not above the acquisition cost)
Stocks
1,093

Bonds
Government bonds/local
government bonds
Corporate bonds
OthersOthersSub-total(in millions of yen)Amount in the
consolidatedbalance sheet

4,890
8,835
3,945
(Note) As for other securities with market value, 6 million yen is treated as shrinkage losses.
Total

15

3. Other securities sold for the current consolidated accounting year (From April 1, 2003 to March 31, 2004)(in millions of yen)
Total of sale profit

Sale value
2,800

Total of sale loss
–

1,027

4. Contents of securities with no valuation at the market value and amount in the consolidated balance sheet(March 31, 2004)(1) Held-to-maturity bonds
Unlisted foreign bonds
0 million yen
Discount bank debentures
99 million yen(2) Other securities
Unlisted stocks (excluding over counter stocks)

2,690 million yen

5. Estimated amount of redemption for other securities with maturity and held-to-maturity (March 31, 2004)(in millions of yen)Over 1 year and Over 5 years andOver 10 years
Within 1 year
within 10 years
within 5 years(Held-to-maturity bonds)
Government bonds/local––––
government bonds
Corporate bonds
100
200
–
–
–

–

–

–

100

200

–

–

–

–

–

–

–

2

–

–

–

–

–

–

–

–

–

–

Sub-total

–

2

–

–

Total

100

202

–

–

OthersSub-total(Other Securities)
Bonds
Government bonds/local
government bonds
Corporate bonds
OthersOthers16

(Previous consolidated accounting year)
1. Held-to-maturity bonds with market value (March 31, 2003)(in millions of yen)Amount in the consolidatedbalance sheet

Market value

Balance(Those whose market value is above the amount in the
consolidated balance sheet)
Government bonds/local–
government bonds
Corporate bonds
700

–

–

703

3

–

–

–

700
(Those whose market value is not above the amount in
the consolidated balance sheet)
Government bonds/local–
government bonds
Corporate bonds
–

703

3

–

–

–

–

–

–

–

Sub-total

–

–

–

Total

700

703

3

OthersSub-total

Others

2. Other securities with market value (March 31, 2003)(in millions of yen)

Acquisition cost(Those whose amount in consolidated balance sheet isabove the acquisition cost)
Stocks1,460

Amount in the
consolidatedbalance sheet

Balance

2,050

589

–

–

–

2

2

0

–

–

–

–

–

–

1,463
(Those whose amount in consolidated balance sheet is
not above the acquisition cost)
Stocks
3,873

2,053

590

3,136

- 736

–

–

–

–

–

–

–

–

–

285

215

- 70

4,159

3,351

- 807

Bonds
Government bonds/local
government bonds
Corporate bonds
OthersOthersSub-total

Bonds
Government bonds/local
government bonds
Corporate bonds
OthersOthersSub-total

5,622
5,405
- 217
(Note) As for other securities with market value, 1,522 million yen is treated as shrinkage losses.
Total

17

3. Other securities sold for the current consolidated accounting year (From April 1, 2002 to March 31, 2003)(in millions of yen)
Total of sale profit

Sale value
35

Total of sale loss

7

12

4. Contents of securities with no valuation at the market value and amount in the consolidated balance sheet(March 31, 2003)(1) Held-to-maturity bonds
Unlisted foreign bonds
0 million yen
Discount bank debentures
99 million yen(2) Other securities
Unlisted stocks (excluding over counter stocks)
Money management funds
Mid-term government bond funds

2,604 million yen
1,182 million yen
896 million yen

5. Estimated amount of redemption for other securities with maturity and held-to-maturity (March 31, 2003)(in millions of yen)Over 1 year and Over 5 years andOver 10 years
Within 1 year
within 10 years
within 5 years(Held-to-maturity bonds)
Government bonds/local––––
government bonds
Corporate bonds
100
200
–
500
–

–

–

–

100

200

–

500

–

–

–

–

–

2

–

–

–

–

–

–

–

–

–

–

Sub-total

–

2

–

–

Total

100

202

–

500

OthersSub-total(Other Securities)
Bonds
Government bonds/local
government bonds
Corporate bonds
OthersOthersNote:

Out of held-to-maturity corporate bonds, those whose maturity is over 10 years, 500 million yen,
are perpetuity subordinated bonds with advanced redemption privilege (call option), and it ispossible that they will be redeemed after June 2003 by executing the advanced redemption
privilege (call option).

18

6. Relating to Derivatives
1. Items relating to transaction conditions(1) Contents and purpose of transactions
As for some interests of long-term borrowings with floating rate, our company is conducting interest
rate swap transactions, in which interest cost is fixed, in order to hedge the interest rate risk. In
addition, as for the dividends received on unlisted stocks to be determined on the basis of market
interest rates, the company is conducting interest rate swap transactions in order to hedge the risk due
to the fluctuation.
Furthermore, we are making use of derivative transactions to conduct the hedge accounting
1) Hedge accounting method
Deferred hedge processing is applied.
2) Means for and subject to hedging• Means for hedging:Interest rate swap transaction• Subject to hedging:Interest costs of long-term borrowings
Dividends received on unlisted stocks
3) Hedging policy
As for the interest costs of long-term borrowings, we are making use of derivative transactions
in order to hedge the risk due to the fluctuations in interest rates. In addition, as for thedividends received on unlisted stocks, since the amount of dividend of the applicable stocks isdetermined on the basis of market interest rates, we are making use of derivative transactions inorder to hedge the fluctuation risk of the dividends received due to the fluctuations in the market
interest rates.
Furthermore, it is our policy to conduct no derivative transactions intended for speculation.
4) Assessment method of hedging effectivenessWe are applying the ratio analysis method between the cumulative total of fluctuations in cash
flow subject to hedging and that of fluctuations in cash flow as means for hedging.
(2) Policy for derivative transactions and contents of risks involved
The company is only adopting a policy of making use of the derivative transactions in order to hedge
the risks due to the fluctuations in dividends received on unlisted stocks, which are determined on thebasis of the interest rate risk of borrowings and the market interest rates and of conducting noderivative transactions intended for speculation and of a high level of leverage effect.
We decide that, since derivative transactions relating to interest rate are interest rate swap transactions,in which floating rate and fixed rate are exchanged, there is little risk due to the fluctuations in themarket interest rates. Furthermore, we decide that there is little credit risk due to the counterpart’s
breach of contract, since the contractants of derivative transactions are domestic financial institutions
with a high level of credit rating.
(3) Risk management system for transactions
In accordance with company rules, interest rate swap transactions are implemented and managed by
the accounting dept. of the head office.
2. Item relating to market value of transactions
Since the company applies hedge accounting, even though the company enters into derivatives such as
interest rate swaps, notes relating to the derivatives are not provided.

19

7. Relating to Retirement Benefits
1. Outline of adopted retirement benefits system
Our company has set up such systems as employees’ pension fund, approved retirement annuity system,and termination allowance plan as defined benefit pension plan. Furthermore, the company revised theoverall retirement benefit scheme during the current consolidated accounting year and enforced therevised scheme as of April 1, 2004. As a pert of the scheme, on the same day, the company shifted fromthe employees’ pension fund and approved retirement annuity system to the new corporate pension plan
(corporate pension fund) that is a defined benefit pension plan.
The domestic consolidated subsidiaries have adopted the retirement benefit scheme including but notlimited to the approved retirement annuity system in addition to the termination allowance plan.
Furthermore, six (6) domestic consolidated subsidiaries had joined the DAI-DAN Pension Fund, but
withdrew from this Fund in the current consolidated accounting year.
2. Items relating to retirement benefits obligation(in millions of yen)
End of the current
consolidated accounting
year

a. Retirement benefits liabilities

End of the previous
consolidated
accounting year

- 15,736- 15,692

b. Pension fund

13,487

9,624

c. Unreserved retirement benefits liabilities (a + b)

- 2,248- 6,067

d. Unrecognized pension assets
e. Unrecognized differences on mathematical
calculation
f. Unrecognized past service liabilities (decreased
liabilities) (Note 1)
g. Net amount in consolidated balance sheet (c +d +e+f)h. Prepaid pension costs- 1,662

–

3,152

3,449

–

–

- 758

- 2,618

2,519

1,110

i. Reverses for retirement benefits (g - h) (Note 2)- 3,278- 3,728

Notes: 1. Due to the revision of the overall retirement benefit scheme made during the current
consolidated accounting year, the past service liabilities (decreased liabilities) were incurred.
However, since the past service liabilities were batch-processed in the year when theseliabilities were incurred, there are no unrecognized balances outstanding at the end of thecurrent consolidated accounting year. Furthermore, the amount batch-processed in thecurrent consolidated accounting year is listed as the “e. Processed amount of past service
liabilities” in the box of “3. Items relating to retirement benefits”.
2. As for the domestic consolidated subsidiaries, in order to calculate retirement benefits
liabilities relating to the termination allowance, the simple method is adopted.

20

3. Items relating to retirement benefits(in millions of yen)
Current consolidated
accounting year

a. Service costs(Note 1,2)

513

700

449

732

- 166

- 360

376

420

- 1,730

- 191

- 557

1 302

–

- 2,381

- 28

–

- 585

- 1,079b. Interest costsc. Expected operational profitsd. Processed amount of differences on mathematical
calculatione. Processed amount of past service liabilities

Previous consolidated
accounting year

f. Retirement benefits (a+b+c+d+e)g. Profit on the withdrawal from substitution portionsof employees’ pension fund covered by us on behalfof the governmenth. Profit on the withdrawal from employees’ pension
fundi. Total

Notes:
1. In the previous consolidated accounting year, our company and part of its domestic consolidated
subsidiaries returned the government the portion of the employees’ pension fund the company
manages and paid on behalf of the government. The service expenses involved from a period oftime until the return of the portion, which the company managed and paid on behalf of thegovernment, were calculation after the deduction of employees’ contribution amount.
2. Retirement benefits of consolidated subsidiaries adopting an easy method are accounted as“ a. Service costs”.
4. Items relating to the basis of calculation of retirement benefits liabilities
Current consolidated
accounting year

Previous consolidated
accounting year

Period fixed amountbasis

Same as in the left

b. Discount rate

2.0％

3.0％

c. Expected operational profit rate

3.0％

Same as in the left

d. The number of years when amount of past
service liabilities is processed

Processed in a lump in
the occurrence year.

Same as in the left

e. The number of years when differences onmathematical calculation are processed.

10 years (Costs to beprocessed from next
consolidated accounting
year of each occurrence
year, in accordance withthe straight-line method
based on the given
number of years withinaverage residual service
years of employees at
the time of theoccurrence.)

a. Method of period allocation for estimatedamount of retirement benefits

21

Same as in the left

8. Those Relating to Tax Effect Accounting
1. Contents of main causes for occurrence of deferred tax assets and deferred tax liabilities(in millions of yen)
End of the current consolidated accounting year
Deferred tax assets
Surplus of transferred reserves for
retirement benefits
Repudiated evaluation loss on realestate3,384

End of the previous consolidated accounting year
Deferred tax assets
Surplus of transferred reserves for
retirement benefits
Repudiated evaluation loss on realestate

1,257

4,065
1,285

Repudiated write-down ofincomplete work expenditures

233

Carry-forward loss

492

Surplus of transferred allowance forbad debt

301

Repudiated write-down ofincomplete work expenditures371

Repudiated reserves for directors’
retirement allowance

190

Surplus of transferred allowance forbad debt

222

Repudiated evaluation loss on golfclub membership rights

116

Repudiated reserves for director’s
retirement allowance

172

Others843

Repudiated evaluation loss on golfclub membership rights

131

Repudiated reserves for liability
guarantee loss

86

Subsidiaries’ loss carry-forward on
taxes

38

Others681

Deferred tax asset sub-total
Amount of valuation reserves
Deferred tax asset total
Deferred tax liability
Profits from retirement benefits in
trust

6,327
- 156
6,170

- 1,661

Entertainment expenses included inincomplete work expenditures
Evaluation difference of securities- 1617

Reserve from fixed asset reduction- 66

Others- 61

Deferred tax liability total
Deferred tax asset net amountDeferred tax asset sub-total
Amount of valuation reserves
Deferred tax asset total
Deferred tax liability
Profits from retirement benefits intrustEntertainment expenses included inincomplete work expenditures
Reserve from fixed asset reduction- 68- 3,475
2,695

OthersDeferred tax liability total
Deferred tax asset net amount

22

7,547
- 315
7,231

-1,661
-114
-68
-41

- 1,8855,346

2. Contents of main items which became causes for critical difference where there is a critical difference
between the statutory effective tax rate and the burden rate of corporate taxes, etc. after application of tax
effect accounting.
Current consolidated accounting year
Statutory effective tax rate
(Adjustment)
Items not included in deductible
expenses permanently, such asentertainment and social expenses, etc.
Items not included in gross revenue
permanently, such as dividends
received, etc.
Taxation per capita basis forinhabitants tax
Amount of adjustment of taxable
income not applicable to tax effect
OthersBurden rate of corporate taxes, etc.
after application of tax effectaccounting

Previous consolidated accounting year
42.0% Statutory effective tax rate
(Adjustment)
Items not included in deductible
expenses permanently, such as
23.3
entertainment and social expenses,
etc.
Items not included in gross revenue- 1.8 permanently, such as dividends
received, etc.
Taxation per capita basis for
3.9
inhabitant tax
Amount of adjustment of taxable
1.2
income not applicable to tax effect
1.5 Adjustment for decrease of
end-of-term deferred tax assets due
to change of tax rate
OthersBurden rate of corporate taxes, etc.
70.1 after application of tax effectaccounting

42.0%

19.6

- 0.8
1.5
- 1.1
3.8
0.3
65.3

9. Segment Information
1. Segment information by type of business
The current consolidated accounting year (April 1, 2003 to March 31, 2004) andthe previous consolidated accounting year (April 1, 2002 to March 31, 2003)
Since our corporate group is engaged in facility construction works, there are no business types otherthan this. Accordingly, segment information by business type is not described.
2. Segment information by location
The current consolidated accounting year (April 1, 2003 to March 31, 2004) andthe previous consolidated accounting year (April 1, 2002 to March 31, 2003)
Since the total sales amount of all segments of "Japan" exceeds 90%, description of segment
information by location is omitted.
3. Overseas sales amountThe current consolidated accounting year (April 1, 2003 to March 31, 2004) andthe previous consolidated accounting year (April 1, 2002 to March 31, 2003)
Since overseas sales amount is less than 10% of the total consolidated sales, description of overseas
sales is omitted.

10. Transactions with Related Parties
Non-applicable23