Non-consolidated Balance Sheets
Japan Securities Depository Center Inc.
As of March 31, 2002 and 2003
¥ (thousands)

ASSETS
Current Assets:
Cash and cash equivalents
Accounts receivable—trade
Prepaid expenses
Short-term loan receivable
Consumption tax receivable
Deferred income taxes (Note 8)
Other current assets
Total current assets
Property and Equipment
Buildings
Automobiles
Tools and furniture20022003¥

85,661——2,400,000——
3,484
2,489,145

Less: accumulated depreciation
Total property and equipment
Intangible Assets, Net
SoftwareConstruction in progress (software)
Rights for telephone
Rights for usage of telephone facilities
Total intangible assets
Investment and Other Assets
Long-term refundable lease deposits
Long-term prepaid expenses
Deferred income taxes (Note 8)
Total investment and other assets
Total assets
LIABILITIES AND SHAREHOLDERS’ EQUITYCurrent Liabilities:
Short-term debt (Note 6)
Accounts payable—trade
Accounts payable—other
Income tax payable
Returnable deposits
Accrued employees’ bonuses
Other current liabilities
Total current liabilities
Long-term Liabilities
Accrued employees’ retirement benefits (Note 7)
Accrued executives’ retirement benefits
Total long-term liabilities
Total liabilities
Shareholders’ Equity
Common stock
Authorized: 10,000 shares at March 31,
2002 and 2003
Issued, 2,500 shares at 31 March, 2002 and
8,500 shares at 31 March, 2003, respectively
Additional paid-in capital
Retained earnings (accumulated loss)
Total shareholders’ equity
Total liabilities and shareholders’ equity
The accompanying notes are an integral part of these statements.

17¥427,882
3,099,506
98,271—
382,927
95,88050,664
4,155,130$ (thousands)(Note 3)
2003

$

3,560
25,786
818
—
3,186
798
421
34,569—————108,437
1,112
3,523,995
3,633,544(1,000,617)
2,632,927

902
9
29,31830,229(8,324)
21,905—————

4,804,087
2,513,294
2,976
1,892
7,322,249

39,967
20,90925
1660,917————¥2,489,145

426,888
36,277
17,191
480,356¥14,590,662

3,551
302
143
3,996
$121,387

¥——
154
158
—
—
—
312

¥ 3,100,000
1,290,719
215,219
641,0103,370
88,062315
5,338,695$ 25,79010,738
1,790
5,333
28
733
3
44,415———
312

22,572
18,36040,932
5,379,627

188
153
341
44,756

1,250,000
1,250,000(11,167)2,488,833¥2,489,145

4,250,000
4,250,000
711,035
9,211,035¥14,590,662

35,35835,358
5,915
76,631$121,387

Non-consolidated Statements of Income
Japan Securities Depository Center, Inc.
For the period from January 4, 2002 (date of incorporation) to March 31, 2002 and the year ended March 31, 2003
¥ (thousands)(Note 1)
2002
2003

Operating Income¥$ (thousands)(Note 3)
2003—¥11,143,857$92,711

Operating Expense
Executives’ compensations
Salaries
Severance costs for employees
Executives’ retirement benefits
Maintenance for systems
Outside service
Registration fees
Depreciation
Rent
Advertisement
OthersTotal operating expense
Income (loss) from operation

—
—
—
—
—
—
—
—
—
—
11,518
11,518(11,518)

92,310811,465
2,823
18,3602,467,192
2,059,809
1,353,945
2,142,283
151,447
175,150
650,998
9,925,782
1,218,075

768
6,751
23153
20,526
17,137
11,264
17,823
1,260
1,456
5,416
82,577
10,134

Other Income (Expenses):
Interest income
Other income
Interest expense
Loss on disposal of property and equipment
Stock issuance cost
Others, net
Total
Income (loss) before income taxes

583
—
—
—
—
(74)
509
(11,009)

55,047
8,324(1,138)(1,368)(28,800)—
32,065
1,250,140

458
69
(9)
(12)
(240)
—
266
10,400

Income Taxes (Note 8)
Current
Deferred
Net income (loss)

158—¥(11,167)

641,010(113,072)¥ 722,202

5,333(941)$ 6,008
U.S. Dollars(Note 3)Yen

Per Share (Note 10)
Net income (loss)—primaryDividends
Weighted Average Number ofCommon Stock Shares Outstanding (in shares)
The accompanying notes are an integral part of these statements.

18¥(4,466)—¥84,297
25,000

$701
208

2,500

8,417

—

Non-consolidated Statements of Shareholders’ Equity
Japan Securities Depository Center Inc.
For the period from January 4, 2002 (date of incorporation) to March 31, 2002 and the year ended March 31, 2003
¥ (thousands)
Number ofcommon stockshares

Commonstock

Additional
paid-in capital

2,500¥1,250,000¥1,250,000—
2,500
6,000—
1,250,000
3,000,000—
1,250,000
3,000,000(11,167)(11,167)——8,500—¥4,250,000—¥4,250,000

722,202¥711,035

New stock issued for January 4, 2002
Net loss for the year ended
March 31, 2002
Balance as of March 31, 2002
New stock issued
Net income for the year ended
March 31,2003
Balance as of March 31, 2003

Retainedearnings¥—$ (thousands) (Note 3)
Number ofcommon stock
sharesCommonstock

Additional
paid-in capital

2,500
6,000

$10,399
24,958$10,399
24,958

$

—
8,500

—
$35,358—$35,358

6,008$5,915

Balance as of March 31, 2002
New stock issued
Net income for the year ended
March 31, 2003
Balance as of March 31, 2003
The accompanying notes are an integral part of these statements.

19

Retainedearnings(93)—Non-consolidated Statements of Cash Flows
Japan Securities Depository Center, Inc.
For the period from January 4, 2002 (date of incorporation) to March 31, 2002 and the year ended March 31, 2003
¥ (thousands)(Note 1)2002

$ (thousands)(Note 3)

2003

2003

(11,009)
—
—
——
(583)
—
———
—
(3,032)
153—(14,469)130——(14,339)¥ 1,250,140
2,142,283
88,062
166
18,360(55,047)
1,138
28,8001,368(853,265)
555,081(63,374)(65,104)(32,755)
3,015,853
55,499(13,230)
1,534
3,059,656$ 10,400
17,823733
1153(458)
9240
11(7,099)
4,618(527)
(542)
(272)
25,090462(110)1325,455

Cash Flows from Investing Activities:
Payments for purchase of property
and equipment
Payments for purchase of intangible assets
Disbursements for loans
Acquisition of business net of cash acquired
OthersNet cash flows used in investing activities——(2,400,000)——(2,400,000)(1,495,721)(3,867,261)(5,900,000)(474,366)(51,287)(11,788,635)(12,444)(32,174)(49,085)(3,946)(427)(98,076)

Cash Flows from Financing Activities:
Proceeds from short-term debt
New stock issued net of stock issuance costs
Net cash flows provided by financing activities—
2,500,000
2,500,000

3,100,000
5,971,200
9,071,200

25,79149,67775,468Net Increase in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of Period/YearCash and Cash Equivalents at End of Period/Year

85,661—
85,661

342,22185,661
427,882

2,847713
3,560Cash Flows from Operating Activities:
Income (loss) before income taxes¥Depreciation
Increase in accrued bonuses to employees
Increase in accrued employees’ retirement benefits
Increase in accrued executives’ retirement benefits
Interest income
Interest expense
Stock issuance costs
Loss on disposal of property and equipment
Increase accounts receivable, trade
Increase in accounts payable, trade
Increase in other assets
Increase (decrease) in other liabilities
Others, net
Sub-totalInterests and dividends received
Interest paid
Income tax paid
Net cash provided by (used in) operating activities

The accompanying notes are an integral part of these statements.

20¥¥$Notes to the Non-Consolidated Financial Statements
Japan Securities Depository Center, Inc.

1.
Basis of Presenting the Non-Consolidated Financial Statements
The accompanying non-consolidated financial statements have been prepared from the accounts
maintained by Japan Securities Depository Center, Inc. (the “Company”) with the provisions set forthin the Commercial Code of Japan (the “Code”) and the Securities and Exchange Law and in conformity with accounting principles and practices generally accepted in Japan, which are different in certain respects as to application and disclosure requirements of International Accounting Standards.
Certain items presented in the non-consolidated financial statements filed with the Director of theKanto Local Finance Bureau in Japan have been reclassified for the convenience of readers outsideJapan.
Consolidated financial statements have not been prepared by the Company as the Company
has neither subsidiary nor affiliate companies to be consolidated in the fiscal periods ended March 31,
2002 and 2003.
The Company was newly incorporated on January 4, 2002 and, accordingly, the non-consolidated statements of income, shareholders’ equity and cash flows of the Company for the period ended
March 31, 2002 include the results of operations and cash flows of the Company for the period fromJanuary 4, 2002 to March 31, 2002.

2.
Summary of Significant Accounting Principles(1) Cash and cash equivalents
Cash and cash equivalents include all highly liquid investments, with original maturities of threemonths or less, that are readily convertible to known amounts of cash and are so near maturity
that they present only an insignificant risk of changes in value because of changes in interest rates.
(2) Property and equipment
Depreciation for buildings, excluding improvements, is computed on the straight-line method
using the estimated useful lives prescribed by Japanese Corporate Tax Laws. Depreciation forother capital assets is computed on the declining-balance method at the rates based on the estimated useful lives prescribed by such laws.
(3) Software
Software for internal use is amortized on the straight-line method computed over the estimateduseful life of 5 years.
(4) Stock issuance costs
Stock issuance costs are charged to income as incurred.
(5) Accrued bonuses
Accrued employees’ bonuses represent liabilities estimated as of the balance sheet date. Bonuses
to directors, which are subject to approval at the shareholders’ meeting, are accounted for as an
appropriation of retained earnings.
(6) Severance indemnity benefits
The Company has a severance indemnity plan covering all employees who meet eligibility
requirements of the Company’s retirement regulations. The Company records accrued employees’ retirement benefit costs based on the amount that would be payable if all eligible employees
voluntarily terminated their employment with the Company at the balance sheet date.
Retirement benefits payable to directors and statutory auditors are accrued as accrued executives’ retirement benefits at the amount computed on the Company’s internal rules and regulations for the benefits.
21

Notes to the Non-Consolidated Financial Statements(7) Finance leases
In the normal course of business, the Company has entered into lease agreements. Finance leaseagreements, except for those agreements where the ownership of the leased assets is transferred tothe Company, are accounted for as operating leases.
(8) Consumption taxes
The consumption taxes withheld by the Company on sales and the consumption taxes paid by theCompany on its purchases of goods and services are not included in the amounts of relevant
accounts in the accompanying statements of income. The consumption taxes withheld and paid
is recorded as an asset or a liability, as the case may be, and the net balance is shown in the balance sheets.
(9) Appropriation of retained earnings
Under the Japanese Commercial Code and the Articles of Incorporation of the Company, theappropriation of retained earnings (including year-end cash dividend payments proposed by theBoard of Directors must be approved at the shareholders’ meeting, which must be held within
three months after the end of each financial year. The appropriation of retained earnings reflectedin the accompanying non-consolidated financial statements represents the results of appropriations which were applicable to the immediately preceding financial year and approved at theshareholders’ meeting and disposed of during that year. Year-end cash dividends are paid toshareholders on the shareholders’ register at the end of each financial year.
As is customary practice in Japan, the payment of bonuses to directors and statutory auditors ismade out of retained earnings, instead being charged to income for the year, and constitutes apart of the appropriations cited above.
(10)Reclassification
Certain accounts in the non-consolidated financial statements for the period ended March 31,
2002 have been reclassified to conform to the 2003 presentation.

3.
US Dollar Amounts
Amounts in U.S. dollars are included solely for the convenience of readers outside Japan. The rate of¥120.20=U.S. $1, the rate of exchange as of March 31, 2003, has been used in 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 the rate or any other rates.

4.
Business Transfer from Japan Securities Depository Center, Zaidan
On January 28, 2002, the Company reached an agreement with Japan Securities Depository Center,Zaidan (hereinafter referred as “Zaidan”) for a transfer of the business of custody and book-entry
transfer to the Company. Pursuant to the agreement, the Company effectively took over the businessfrom Zaidan with approval at the Company’s shareholders’ meeting held on April 23, 2002 and wasauthorized by competent ministers in accordance with the “Law Concerning Central Securities
Depository and Book-Entry Transfer of Stock Certificates and Other Securities” on June 11, 2002.

22

Notes to the Non-Consolidated Financial Statements

The assets and liabilities increased in the year ended March 31, 2003 as a result of the transferof the business from Zaidan are summarized follow:¥ (thousands)$ (thousands)

Current assets
Non-current assets
Total assets¥2,697,989
6,955,744¥9,653,733$22,446
57,868$80,314

Current liabilities
Long-term liabilities
Total liabilities¥ 856,962
22,406¥ 879,368$ 7,129186$ 7,316

In the settlement of the consideration for the business transferred from Zaidan, the loan receivable from Zaidan amounting to 8,300,000 thousand yen (69,052 thousand U.S. dollars) was netted
against to it.

5.
Lease Transactions
Finance lease transactions, other than those of which the ownership of the leased asset transferred tothe lessee, are accounted for as operating leases. Certain key information (in equivalent data) on suchlease contracts of the Company for the periods ended March 31, 2002 and 2003 is as follows:
2002:
There are no finance lease transactions to be disclosed.
2003:
As of March 31, 2003

Tools and furniture:
Acquisition cost
Accumulated depreciation
Net book value¥ (thousands)$ (thousands)¥90,549(4,527)¥86,022$753(37)$716

The scheduled maturities of future lease payments, which includes the portion of interest thereon, onsuch lease contracts as of March 31, 2003 is as follow:
As of March 31, 2003

Due within one year
Due over one year
Total¥ (thousands)$ (thousands)¥17,590
68,606¥86,196

$146
571
$717

Finance lease charges as well as depreciation and interest amounts (in equivalent data) for the year
ended March 31, 2003 is as follow:
For the year ended March 31, 2003

Finance lease charges
Depreciation (in equivalent data)
Interest (in equivalent data)¥ (thousands)$ (thousands)¥4,719
4,527
367

$39
37
3(Note) Methods applied in computation of the equivalent data are as follow:
Depreciation: Straight-line method with zero residual value over the lease contract period
Interest:Computed as the difference between the lease obligations and the acquisition cost and allocated for theperiod based on the interest rate method.

23

Notes to the Non-Consolidated Financial Statements

6.
Short-Term Debts
Short-term debts at March 31, 2003 comprised loans from banks with weighted average interest rateof 1.675% per annum.

7.
Accrued Severance Indemnities for Employees
Accrued employees’ retirement benefits at March 31, 2003 represented the amount that would bepayable for the Company if all eligible employees voluntarily terminated their employment at the balance sheet date. Severance costs for employees charged to income for the year ended March 31, 2003
amounted to 2,823 thousand yen (23 thousand U.S. dollars).

8.
Income Taxes
The Company is subject to a number of different income taxes which, in the aggregate, indicate anominal statutory tax rate in Japan of approximately 42.0% for the periods ended March 31, 2002
and 2003.
The significant components of deferred tax assets and liabilities at March 31, 2002 and 2003
are as follows:¥ (thousands)

Deferred tax assets:
Accrued bonuses
Enterprise tax payableBusiness facility tax
Accrued retirement benefits to employees
Accrued retirement benefits to executives
Tax loss carried forwards

2002

2003

2003

————
—
4,612
¥ 4,612(4,612)¥—¥ 36,986
58,184
711
9,480
7,711
—
¥113,072—¥113,072

$308
484
679
64
—
$941
—
$941

¥

Less-valuation allowance
Net deferred tax assets

24$ (thousands)

Notes to the Non-Consolidated Financial Statements

9.
Related Party Transactions
Material transactions of the Company with related companies or individuals, for the year ended March
31, 2002 and 2003 are as follows:
2002(in thousand yen)

TitlesNameBusinessTransactions

Director

Yoshinobu
TakeuchiRepresentative
Director
President ofJapan Securities
Depository Center,
ZaidanRepresentative
Director
Managing Directorof Japan Securities
Depository Center,
ZaidanLoans

2,400,000

Short-term loans

2,400,000

Interest

452

Other receivable

452

Hiromi Murai

AmountAccount

Ending Balance

1. Interest on loans is determined based on the market interest rate
2. This transaction is for the sake of third party

2003(in thousand yen)

TitlesNameBusiness

Transactions

Director

Yoshinobu
TakeuchiRepresentative
Director
Liquidator ofJapan Securities
Depository Center,
ZaidanLoans

5,900,000

Short-term loans—

Collections

8,300,000

Short-term loans—

55,004——Hiromi Murai

Director

Tatsunori
Imagawa

Director
Senior Managing
Director of Bank ofTokyo-Mitsubishi,
Ltd.

AmountInterest

Account

Ending Balance

Net payment
for business
transfer
8,774,965
Borrowings 1,330,000—
Short-term debt—
1,330,000

Interest

Prepaid interest

5,187

1. Interest on loans is determined based on the market interest rate.
2. This transaction is for the sake of third party.
3. Interest of borrowings is determined based on the regular rule of the bank.

25488

Notes to the Non-Consolidated Financial Statements

10.
Net Income per Share
Basis for calculating earnings per share for the year ended March 31, 2003 is as follows:¥ (thousands)$ (thousands)
2003

Net income (statements of income)Net income per common stock
Directors bonus by appropriation of retained earnings
Weighted average number of common stock shares
outstanding (in shares)¥722,202
709,60212,600$6,008
5,904
105

8,417

8,417

11.
Subsequent Events(1) Establishment of a subsidiary company:
The Company’s board of directors voted in the affirmative on June 3, 2003 to establish a subsidiary which would deal with clearing for non-exchange transaction deliveries, which is to be settled on a DVP basis. The subsidiary was established on June 6, 2003.
The outline of the subsidiary follows:
Entity’s name:Location of head office:● Business details:●●●Capital:

JASDEC DVP Clearing Corporation
2-1-1 Kayaba-cho Nihombashi Chuo-ku Tokyo
Undertaking obligations concerning securities and incidental or otherrelated business10 million yen* It is expected that additional capital will be paid by May, 2004, when the subsidiary starts its operations.
●●Shareholders:
The number of shares held:

This is a 100% subsidiary of the Company
20 shares acquired for 20 million yen.

(2) Appropriations of retained earnings:
Appropriations of retained earnings are recorded in the accounts only after shareholders’ approvalhas been obtained. The following appropriation of retained earnings of the Company for the year
ended March 31, 2003 were approved at the Ordinary General Shareholders Meeting held on June20, 2003:
Cash dividends
Bonuses to executives¥ (thousands)$ (thousands)¥212,500
12,600$1,767
104(Including bonuses to statutory auditors amounting to 2,700 thousand yen ( 22 thousand U.S. dollars))

26