2014

Year ended March 31, 2014

Profile

HAZAMA ANDO CORPORATION was launched on April 1, 2013, through the merger of
HAZAMA CORPORATION and ANDO Corporation. Amid a difficult business environment forthe construction industry, the new company is seeking to realize an expanded businessscale, a streamlined and more effective management structure, and greater earnings
capacity.
ANDO Corporation was founded in 1873, and HAZAMA CORPORATION in 1889. As
general contractors, each with well over a century of history and possessing industry-leading
technological capabilities built on experience with numerous projects, these two companies
have contributed to the development of Japan and the creation of today’s rich lifestyle.
The merger brings together ANDO Corporation’s strength in building construction,and HAZAMA CORPORATION’s established reputation in civil engineering. In addition to
expanding the business scale and enhancing management efficiency, the integrated
company will draw on the complementarity effect of their respective achievements, and by
generating synergies in terms of technology, marketing, and cost competitiveness, establish
a more solid management foundation, and realize further business development andgrowth.
HAZAMA ANDO CORPORATION aspires to be a “good company” for all of its
stakeholders. With solid technology and passion we will meet expectations, and contributeto the development of society through building and manufacture. Further, by looking
beyond the present, continually seeking to create new value, and enhancing sustainablecorporate development, we will seek to realize a prosperous future, and to build a new
history as HAZAMA ANDO CORPORATION.

CONTENTS

Financial Highlights.................................................................................. 1
Message from the Chairman & the President............................................ 2
Business Conditions and Outlook............................................................. 3
Topics 2014............................................................................................. 4
Review of Operations............................................................................... 6
Corporate Governance............................................................................ 8
Consolidated Financial Review................................................................. 9
Consolidated Balance Sheets.................................................................. 12
Consolidated Statements of Income....................................................... 14
Consolidated Statements of Comprehensive Income............................... 15
Consolidated Statements of Changes in Net Assets................................. 16
Consolidated Statements of Cash Flows................................................. 18
Notes to Consolidated Financial Statements............................................ 19
Independent Auditor‘s Report................................................................ 43
Global Network..................................................................................... 44
Corporate Data / Directors, Officers / Major Subsidiaries and Affiliates....... 45

Financial Highlights
HAZAMA ANDO CORPORATION and Consolidated Subsidiaries
For the years ended March 31, 2014, 2013 and 2012

Millions of yen
		2014¥371,217
12,07816,414
260,646
54,381

Consolidated
Revenues
Operating income
Net income
Total assets
Net assets
		
Net income per share
Net assets per share

Thousands of
U.S. dollars

2013¥197,899
5,613
2,293
141,880
32,8442014$3,606,850
117,353
159,483
2,532,511
528,3812012¥182,050
5,915
1,767
133,177
30,557

Yen

¥

96.47
290.96¥

U.S. dollars

20.69
212.75¥$15.38
194.750.94
2.83

Notes: 1. U.S. dollar amounts in this annual report are translated from yen at the rate of ¥102.92 to US$1.00 for convenience.
2. The main reason for significant changes in the management indicators of 2014 due to the merger with ANDO Corporation.
3. On this page and subsequent pages, figures for the fiscal year ended March 2013 and earlier are for the former HAZAMA CORPORATION.

Non-Consolidated

Consolidated

Consolidated

Revenues

Millions of yen

400,000

371,217

Operating Income

Millions of yen

Orders Received

Millions of yen

400,000

15,000333,760

12,07812,000300,000

300,000
9,000
200,000

182,050

197,899

200,000
6,000

176,725

186,951

5,613
100,000

100,000

0

5,915

3,000

‘12

‘13

‘14

0

‘12

‘13

‘14

0

‘12

‘13

‘14

1

Message from the Chairman & the President

Toshio Ono,
Representative Director andChairman of the Board of Directors

HAZAMA ANDO CORPORATION exceeded its plantargets for order volume, completed construction
contracts, and earnings in the fiscal year ended
March 2014. This was the result of the gradual
recovery in the economy on disaster reconstructionrelated demand and government economic stimulus
measures, as well as the realization of merger
synergies. The first year of the merger has proceededsmoothly, and we would like to express ourappreciation to all stakeholders for the understanding
and support that has made this possible.
For the fiscal year ending March 2015, thesecond year of the merger, the outlook for theconstruction industry remains uncertain. Although
we expect the economy to continue to recover on
the positive effects of government policies andmeasures, concerns have arisen as a result of the2

Toshiaki Nomura,
Representative Director and President

shortage of construction engineers, as well as higher
construction costs due to rising prices for key
materials.
Under such circumstances, we will pursue ourbasic strategies of “Utilize the complementary effectof the achievements from the two former companies
to rebuild our technology, marketing, and costcompetitiveness, and strengthen our business
operations and promote efficiency,” and “Provide theoptimal allocation of management resources andnecessary investments for continued growth,” inorder to establish the “HAZAMA ANDO” brand, andb e a c o m p a n y w i t h a s t ro n g m a n a g e m e n t
foundation, high earnings capacity, and an influential
market presence.

Business Conditions and Outlook

1

Summary of Business Activities

The Japanese economy improved during fiscal 2013 (ended March 2014), supported by reconstruction-related demand,
along with the government’s steady implementation of measures for overcoming deflation and long-term economic
growth, and corrections to the strong yen. Industrial production also began expanding again, with upturns in corporate
earnings and business conditions. Looking ahead, while there are continued risks that a overseas downturn could depress
the Japanese economy, the economic recovery is expected to continue with the positive effects of various government
measures.
In the construction industry, the principal business of the HAZAMA ANDO Group, public sector construction
investment rose steadily as disaster recovery-related projects moved into high gear. However, the business environment
remained harsh as a result of such factors as a shortage of skilled construction workers, and rising prices for materials.
Under such conditions, on April 1, 2013, HAZAMA CORPORATION merged with ANDO Corporation to form
HAZAMA ANDO CORPORATION. The aims of this merger are to expand the business scale, streamline and enhance
management effectiveness, and increase earnings capacity. Through this merger we also aimed to establish the“HAZAMA ANDO” brand based on our respective past achievements, and to be a company with a strong managementfoundation, high earnings capacity, and an influential market presence.
As a result, for the fiscal year ended March 31, 2014, HAZAMA ANDO CORPORATION recorded consolidated
revenues of ¥371.2 billion, due mainly to expansion of its business scale through the merger. Operating income amounted
to ¥12.0 billion, with ordinary income of ¥11.2 billion, and net income of ¥16.4 billion.
The overview of group business segments is as follows.
In Civil Engineering, orders amounted to ¥107.6 billion, comprising 77.6% from the government sector, and 22.4%
from the private sector. Overseas orders accounted for 6.8% of total orders. Among revenues, completed construction
totaled ¥110.9 billion, with operating income of ¥8.1 billion.
In Building Construction, orders amounted to ¥226.0 billion, comprising 9.0% from the government sector, and91.0% from the private sector. Overseas orders accounted for 14.7% of total orders. Among revenues, completed
construction totaled ¥236.0 billion, with an operating income of ¥4.5 billion for the division.
Total orders received for construction, the cumulative total of the Civil Engineering and Building Construction
divisions, amounted to ¥333.7 billion, comprising 31.2% from the government sector, and 68.8% the from private sector,
with 12.2% of total orders from overseas. Completed construction totaled ¥346.9 billion, with operating income of ¥12.7
billion. (Note: Orders received and their breakdowns are stated on a non-consolidated basis.)
Revenue from HAZAMA ANDO Group’s consolidated subsidiaries amounted to ¥20.8 billion, with operating
income of ¥1.4 billion. Revenue was derived mainly from the sale of construction materials and leasing. In the otherbusiness division, revenues amounted to ¥3.3 billion, with operation income of ¥0.8 billion. Revenue was derived mainly
from surveys and research conducted on a consignment basis.

2

Outlook for the Next Fiscal Year (ending March 2015)

In the construction industry, construction demand is expected to increase as a result of firm public sector construction
investment with the execution of the associated budget, along with the economic recovery. However, the outlook is
unclear as a result of such concerns as the shortage of skilled construction workers, and rising construction costs due tohigher labor and materials expenses.
HAZAMA ANDO will pursue its basic strategies of “Utilize the complementary effect of the achievements from thetwo former companies to rebuild our technology, marketing, and cost competitiveness, and strengthen our business
operations and promote efficiency,” and “Provide the optimal allocation of management resources and necessary
investments for continued growth,” in order to establish the “HAZAMA ANDO” brand, and be a company with a strong
management foundation, high earnings capacity, and an influential market presence.

3

Topics 2014

Nagoya Castle Hommaru Palace Restoration
Work – Phase I Completed
The first phase of the Nagoya Castle Hommaru Palace
restoration (Nagoya-shi, Aichi Prefecture), a joint venture project
led by HAZAMA ANDO CORPORATION launched in 2009, wascompleted and opened to the public in May 2013.
The Nagoya Castle Hommaru Palace is considered amasterpiece of Early Modern Japan castle architecture. It was
built in the early Edo period, and in 1930 became the first castle
designated as a national treasure, but was destroyed in air raids
in 1945 along with the tenshukaku (the keep or tower).*Drawing on a wealth of documents including literary records,
surveyed drawings, and old photographs, the palace is being
restored to its original state using traditional materials andconstruction methods, with seismic strengthening and othermodern technologies also incorporated.
Because the buildings will be opened to the public, theproject is being conducted in three phases. The recently completed
Phase I was the restoration of the palace entrance and the omoteshoin (the main hall ), used to meet with visitors. Phase II(reception hall, kitchen, ume-no-ma) began in 2011, and Phase III(Jorakuden hall—for Shogun visitations) is also underway, withthe entire restoration expected to be completed in 2018.
The restoration of Nagoya Castle Hommaru Palace, which
was originally built 400 years ago, is a project with significant
historical and cultural value. HAZAMA ANDO CORPORATION isproud to play a part, and is making a concerted effort for the
project.
* HAZAMA ANDO CORPORATION also led the reconstruction of
the Nagoya Castle Tenshukaku (1959), which received the 2nd
Building Contractors Society (BCS) Award.

Toyoma/Usuiso District Development WorkA joint venture project led by HAZAMA ANDO CORPORATION
won a contract from the Urban Renaissance Agency (Miyagi/
Fukushima Disaster Recovery Support Bureau) for thedevelopment of the Toyoma/Usuiso district in Iwaki-shi,
Fukushima Prefecture, which was severely damaged in thetsunami caused by the Great East Japan Earthquake.
A large portion of the Toyoma/Usuiso district was flooded
by the tsunami. The region, known as a spot for tourism, culture,and recreation, suffered catastrophic damage.
This project involves the development of the elevatedareas and the reconstruction of the flatlands in these two
districts, along with the development of new residential areas
and open spaces for disaster prevention. The highways androads in the area will be replaced in stages, and the developed
areas will have facilities for safety, comfort, and convenience. The
project is expected to be completed in the fiscal year ending
March 2016, and the area will be handed over to residents in thefiscal year ending March 2017.
The joint venture project will utilize a collective
construction management (CM) method for all aspects of thedevelopment project, from design to construction work, to4

Entrance hall/ Carriage Porch

Omote-shoin (the main hall)

shorten the construction period and reduce costs, and willproceed with the cooperation of local residents. The status of thedevelopment of the project will be featured in a monthly
magazine, and a PR office has been established to provide local
residents with additional information.
The joint venture project is making a concerted effort forthis project in order to restore the disaster areas as quickly as
possible, and to provide local residents with safe and secure towns.
Project website: http://tou-fukkou-jv.com/

Conceptual drawing of the completed Usuiso District (aerial view)3D Laser Scanner Tunnel Displacement Measurement
SystemMethod to precisely assess the displacement of tunnel
walls
HAZAMA ANDO CORPORATION has developed 3D-LSTM, asystem that uses a 3D laser scanner (Fig. 1), which is able toprecisely measure the shape of objects, to accurately assess thedisplacement behavior of tunnel walls during excavation.
During construction of tunnels, the surface of the tunnel
walls may be displaced by ground pressure from the surroundingrock. If the displacement is too critical, the tunnel could collapse.
Accordingly, measurements of the displacement of the tunnel
walls are taken, and based on the results of the measurement,
fitted to a reasonable and economical structure suited to actualsite conditions. For construction of tunnels in urban areas withfragile bedrock, or tunnels dug near important buildings inparticular, it is important to ensure the stability of the working
face during excavation, and precisely predict the occurrence ofany displacement that might affect surrounding structures.
The ordinary method of measuring displacement is to takemeasurements every 10-30 meters along the tunnel wall.
However, this method only measures changes at the target
areas. For tunnels where a more precise measurement of thedisplacement is necessary, while it is possible to increase thenumber of target areas, this still does not allow for sufficientunderstanding of the precise locations and volume of thedisplacements.
To resolve these issues, HAZAMA ANDO CORPORATION
focused on using a 3D laser scanner, which enables to measure alarge volume of points in a short period of time, and to precisely“Wise-Beam” Reinforced Concrete Flat Beam
Construction Method
Flat beams allow for more open room spaces
HAZAMA ANDO CORPORATION has developed the Wise-Beamconstruction method, a reinforced concrete flat beam
construction method using a shallower beam than ordinarily

Lighting height

Ordinary construction method

Eccentric beam

Lighting heightLighting height

Wise-Beam construction method(with increased lighted area)

Wise-Beam construction method(with lowered ceiling)

determine the shape of objects. By taking 3D measurements ofthe shape of tunnel walls before and after displacement, andapplying original technologies to compare the results, we are able
to precisely determine the degree of displacement. (Fig. 2)
Going forward, in addition to tunnels where a more
precise measurement of displacement is necessary, such as
tunnels in urban areas with fragile bedrock or near important
structures, this system will be applied for high-speed rail tunnels,
such as the Shinkansen tunnels currently under construction.

(Fig.1) 3D laser scanner(Fig.2) 3D representation of tunnel wall surface displacement

used in construction. This method has received the certification
for the General Building Research Corporation of Japan (GBRC
Performance Verification No. 13-13).
In the Wise Beam construction method, the structure uses
the wider RC concrete beam than the width of column to reduce
the height of beam so that the open space can be expanded
within the restricted height of storey. In the apartment building,the taller windows on the balcony side can be installed in the
open space to increase the lighting area.
In addition, the shallower the height of beam of eachfloor the shorter will be the height of building would become.
This will allow for an additional floor in the area of the buildingheight restriction.
This Wise-Beam construction method also can expand
into the flat intersecting bi-directional beam. This method isapplicable for common type reinforced concrete structure. For
example, in the building where changes for the installation offacilities and equipment will be necessary in the future, such as
medical facilities and production equipment, the shallow beams
provide the benefit of easier access for installation of pipe andwire.
HAZAMA ANDO CORPORATION has previously been
involved in the development of many types of construction
methods. The above value-added structure method, which gives
priority to the open space, offers a living environment that meetsthe needs of customers.

Reversed beam5

Review of Operations

Major Orders Received● LaLaport Fujimi New Construction Work/Mitsui FudosanCo., Ltd. (Japan) ❶● XIV TOBA-BETTEI New Construction Work/Resorttrust, Inc.
(Japan)● 4EM-TM project/Honda de Mexico, S.A. de C.V. (Mexico) ❷❶● Sakuma Road Tunnel No. 2 Construction Work for Year 2013/
Chubu Regional Bureau, Ministry of Land, Infrastructure,
Transport and Tourism (Japan)● The Direct Line of Sotetsu-Tokyu Line and Shin-Tsunashima
Station Construction Work/Japan Railway Construction,
Transport and Technology Agency (Japan)● Thakhek Water Supply Development Project/Department of
Housing and Urban Planning, Ministry of Public Works andTransport (Lao People’s Democratic Republic) ❸❷Major Projects in Progress● Central Circular Shinagawa Route Ohashi Junction Tunnel/
Metropolitan Expressway Co., Ltd. (Japan)● Tsugaru Dam Main Construction Work / Tohoku Regional
Bureau, Ministry of Land, Infrastructure, Transport andTourism (Japan)

Copyright JICA❸

● New Osaka Factory Construction Work / TOPPAN FORMS
CO., LTD. (Japan)● Nagoya Castle Hommaru Palace Restoration Work/City of
Nagoya, Aichi Prefecture (Japan)● Construction of the New Plant of Silao PEC de Mexico/PEC
de Mexico, S.A. de C.V. (Mexico)

6

● The Project for Countermeasure Construction against theLandslides on Sindhuli Road Section II /Department of Roads,
Ministry of Physical Infrastructure and Transport (Nepal) ❹Major Projects Completed● Disaster Waste Management of No. 1-262 of Year 2011((Watari-Natori Block) (Iwanuma Area)) / Miyagi Prefecture(Japan)● Works on Maintenance and Development of Facilities of The
University of Tokyo (Hongo Campus) General Research
Building (New Faculty of Engineering Building 3) / Todai
Interact PFI (Japan) ❺❹● Sagami Jukan Aikawa Tunnel Road Construction Work No. 2/
Kanto Regional Development Bureau, Ministry of Land,
Infrastructure, Transport and Tourism (Japan)● Fukuyama Transpor ting West Kanto Logistics Center
Construction Work / Fukuyama Transporting Co., Ltd. (Japan)● HAL ALUMINUM (THAILAND) CO., LTD. Thai New Factory
project /HAL ALUMINUM (THAILAND) CO., LTD. (Thailand) ❻● Project for Landslide Prevention in Tegucigalpa Metropolitan
Area/Municipal City Hall of the Central District, the Governmentof the Republic of Honduras (Honduras) ❼

❺

❻
❼

7

Corporate Governance● Basic Policy
HAZAMA ANDO CORPORATION recognizes the need for transparency and fairness in management oversight and flexibility in decision-making.
We consider it a management priority to maintain and implement a management system, rooted in the current organizational structure
centered on the Board of Directors and the auditing system, which is able to respond quickly to changes in the business environment.

Matters Regarding Corporate Functions including Business Execution, Auditing/Supervision, Nominating and Determination ofCompensation
To strengthen its corporate governance, HAZAMA ANDO CORPORATION maintains a clear distinction between the decision-making andoperational oversight functions of the directors and Board of Directors, and the business execution function of the Management Meeting,executive officers and the Meeting of Executive Officers. The specific functions are as follows.
1. Revisions related to the directors
T he term for directors is fixed at one year to further clarify the management responsibility of directors, and to establish an optimal
management structure to respond to changes in the business environment. Further, to clarify the roles and responsibilities of board
members, HAZAMA ANDO CORPORATION does not have the position of “executive director,” and only makes a distinction between“representative director” and “director.”
2. Board of Directors
The Board of Directors is comprised of 10 members as of June 30, 2014. The Board meets monthly to promptly render decisions on importantmatters regarding management, and to provide oversight of business execution.
3. Management Meeting
The Management Meeting meets monthly to discuss policies for management strategies and other matters, to confirm the progress ofbusiness plans, and to diversify and strengthen policy-proposing capabilities.
4. Executive officer system
The number of executive officers as of June 30, 2014, totaled 35 (including 10 executive officers who concurrently serve as directors).
HAZAMA ANDO CORPORATION has established the six officer categories of “chairman,” “president,” “vice president,” “senior managing
executive officer,” “managing executive officer” and “executive officer.” We have clarified the responsibilities for the operations executive
officers manage, and limited the term to one year to enhance the mobility and flexibility of the executive officer system. In addition, weclarified through a resolution of the Board of Directors the rights and responsibilities regarding operations managed, and implemented acompensation system that reflects the performance of operations managed.
5. Meeting of Executive Officers
The Meeting of Executive Officers meets monthly in accordance with the executive officer system, to enhance the efficiency of consensual
decision-making and strengthen operational execution, as well as to ensure that management information is conveyed promptly andaccurately along the management line, and to provide for the sharing of information among departments.
6. Board of Auditors System
Auditors (including external auditors), in accordance with auditing standards established by the Board of Auditors, and in line with theauditing policies for each fiscal period, division of duties and other rules, maintains communication with directors, the Internal Auditing
Department and other employees. Auditors attend meetings of the Board of Directors and other important meetings, receive reports andexplanations from directors and employees regarding the status of the execution of their duties, review important documents and otherpapers, and conduct audits at the head office and other major business locations.
7. Various Committees
HAZAMA ANDO CORPORATION has established various committees that contribute to the streamlining of management operations. These
include the Compliance Promotion Committee to discuss and provide advice regarding compliance matters, and the Central Safety and
Health Committee to discuss and provide advice regarding health and safety matters.

●●

Corporate Governance Structure of HAZAMA ANDO CORPORATION
Shareholders’ Meeting

Management

Appoint /Dismiss
Appoint /Dismiss

Appoint /Dismiss
Directors
Board of Directors

Business
Execution

Audit

Auditors
Board of Auditors

ReportReportCoordinate

Accounting Auditor

Audit

Supervise

Audit
Coordinate

Report /Recommend
ReportReportChairmanPresident

Management Meeting
Executive Officer
Meeting of Executive Officers

Coordinate

Committees
Consult
ReportDirectAudit Department
Audit
Business Divisions

8

Audit

DirectCoordinate

DirectCSR Promotion Department
ReportImplement

Compliance Promotion Committee
Safety and Health CommitteeConsolidated Financial Review
HAZAMA ANDO CORPORATION and Consolidated Subsidiaries
For the years ended March 31, 2014, 2013, 2012, 2011 and 2010

Summary
Thousands of
U.S. dollars

Millions of yen
2014

2013

2012

2011

2010

2014

Construction¥357,474¥182,740¥169,256¥184,630¥182,162$3,473,319

Other activities

13,74315,15912,794

12,072

9,715

133,531

Total

371,217

197,899

182,050

196,702

191,877

3,606,850

Cost of sales
Gross profit
Selling, general andadministrative expenses
Operating income

342,810

182,271

166,630

182,692

178,380

3,330,840

28,407

15,62815,42014,01013,497

276,010

16,32910,015

9,505

10,031

11,747

158,657

12,078

5,613

5,915

3,979

1,750

117,353

Net income (loss)

16,414

2,293

1,767

1,560

(1,744)

159,483

Total assets¥260,646¥141,880¥133,177¥141,150¥138,359$2,532,511

Total liabilities

206,265

109,036

102,620

112,085

109,984

2,004,130

Net assets

54,381

32,84430,55729,06528,375528,381

7,464¥ 7,934¥ (3,158)¥ 2,880¥ 6,293

3,593

(723)

562

1,260

239

34,911(54)(4,347)(3,076)

1,636(2,656)(525)

Operating results:
Revenues

Financial position:

Cash flows:
Cash flows from operating
Activities
Cash flows from investing
Activities
Cash flows from financing
Activities

¥

Yen

$

72,522

U.S. dollars

Per share amounts:
Net income (loss)
Basic
Diluted¥96.47¥ 20.69

88.59

14.74

¥

15.38
11.51

¥

$

0.94

13.16

¥ (20.45)

10.50

―

0.86

Dividends
5.00

3.00

1.50

―

―

0.05

Class I preferred stock

―

78.40

78.80

83.28

90.80

―

Class II preferred stock

―

88.40

88.80

93.28

100.80―Class III preferred stock

―

98.40

98.80

103.28110.80―Class IV preferred stock

―

―

93.80

98.28

105.80―290.96212.75194.75179.62172.06

2.83

Common stock

Net assets

Note: 1. U.S. dollar amounts in this annual report are translated from yen at the rate of ¥102.92 to US$1.00 for convenience.
2. The dividend per share for 2014 includes a ¥2 commemorative dividend.
3. The main reason for significant changes in the management indicators of 2014 due to the merger with ANDO
Corporation.

9

Financial Review
Revenues
Revenues in fiscal 2014 totaled ¥371,217 million (US$3,606,850 thousand), of which ¥357,474 million (US$3,473,319
thousand) came from construction projects and ¥13,743 million (US$133,531 thousand) from other activities. These two businesssegments accounted for 96.3% and 3.7%, respectively, of total revenues.
Costs and Expenses
Cost of sales amounted to ¥342,810 million (US$3,330,840 thousand), which is equivalent to 92.3% of revenues. Selling, generaland administrative expenses amounted to ¥16,329 million (US$158,657 thousand), which is equivalent to 4.4% of revenues.
Operating income reached ¥12,078 million (US$117,353 thousand), and the operating margin was 3.3%. Net income amounted to¥16,414 million (US$159,483 thousand). Basic net income per share was ¥96.47 (US$0.94). We made no dividend payments oncommon stock.
Financial Position and Analysis
Total assets amounted to ¥260,646 million (US$2,532,511 thousand), total liabilities amounted to ¥206,265 million(US$2,004,130 thousand), and total net assets amounted to ¥54,381 million (US$528,381 thousand) at the end of fiscal 2014.
Net worth to total assets ratio was 20.6%. Net assets per share amounted to ¥290.96 (US$2.83).
Cash Flows
Cash and cash equivalents at the end of the year increased by ¥37,366 million (US$363,059 thousand) to ¥70,025 million(US$680,383 thousand).
Net cash provided by operating activities amounted to ¥7,464 million (US$72,522 thousand) mainly as the result of income
before income taxes amounting to ¥20,751 million (US$201,623 thousand), decrease in inventories to ¥5,469 million(US$53,138 thousand) and gain on bargain purchase amounting to ¥10,090 million (US$98,037 thousand).
Net cash provided by investing activities amounted to ¥3,593 million (US$34,911 thousand) mainly as a result of proceedsfrom sales of tangible fixed assets.
Net cash used in financing activities amounted to ¥54 million (US$525 thousand) mainly as a result of repayment oflong-term loans payable greater than the borrowing.
In addition, cash and cash equivalents was increased by ¥25,684 million (US$249,553 thousand) due to the merger with
ANDO Corporation and new consolidation.
Construction Business (Non-Consolidated Construction Projects)
As HAZAMA ANDO CORPORATION’s construction business accounts for a large percentage of consolidated group business,
the financial performance of the business is presented below for reference.
Thousands of
U.S. dollars

Millions of yen
Revenues

2014

2013

2012

2011

2010

2014

¥ 80,092¥ 59,343¥ 54,942¥ 60,962¥ 63,122

23,32325,442

19,03815,97623,929226,613

6,695

6,275

7,223

8,188

12,24565,050110,110

91,06081,20385,12699,296

1,069,860

Civil engineering
Domestic
Government sector
Private sector
Overseas
Subtotal$

778,197

Building construction
Domestic
Government sector

21,590

3,613

4,487

8,638

7,544

209,775

Private sector

183,281

62,82868,59576,724

66,9691,780,810

31,14921,881

11,688

9,452

5,386

302,652

Subtotal

236,020

88,322

84,77094,814

79,8992,293,237

Total construction projects¥346,130¥179,382¥165,973¥179,940¥179,195$3,363,097

Overseas10Revenue from the civil engineering category accounted for ¥110,110 million (US$1,069,860 thousand), or 31.8% of total revenue
from construction projects, with domestic projects contributing ¥103,415 million (US$1,004,810 thousand), or 93.9%.
The government sector contributed ¥80,092 million (US$778,197 thousand), or 77.5%, of total domestic civil engineering
revenue, while private-sector civil engineering revenue amounted to ¥23,323 million (US$226,613 thousand), or 22.5% of total
domestic civil engineering revenue. Overseas civil engineering revenue reached ¥6,695 million (US$65,050 thousand),equivalent to 6.1% of total revenue in the civil engineering category.
Revenue from the building construction category totaled ¥236,020 million (US$2,293,237 thousand), or 68.2% of total
construction revenue. Domestic projects accounted for ¥204,871 million (US$1,990,585 thousand), or 86.8%.
The government sector contributed ¥21,590 million (US$209,775 thousand), or 10.5%, of total domestic building
construction revenue, while private-sector building construction revenue amounted to ¥183,281 million (US$1,780,810 thousand),or 89.5%, of total domestic building construction revenue. Overseas building construction revenue reached ¥31,149 million(US$302,652 thousand), equivalent to 13.2% of total revenue in the building construction category.
Total overseas construction revenue reached ¥37,844 million (US$367,702 thousand) and accounted for 10.9% of total
construction revenue. Civil engineering projects accounted for 17.7% of this total, and building construction for 82.3%.
Thousands of
U.S. dollars

Millions of yen
Orders Received
Civil engineering

2014

2013

2012

2011

2010

¥107,666¥ 92,395¥ 87,212¥ 61,521¥ 74,028

2014$1,046,113

Building construction

226,094

94,55689,51380,13380,1942,196,794

Total construction projects¥333,760¥186,951¥176,725¥141,654¥154,222$3,242,907

Orders received for construction projects during fiscal 2014 amounted to ¥333,760 million (US$3,242,907 thousand). Overseas
work contributed 12.2% of orders in the construction category. Civil engineering orders amounted to ¥107,666 million(US$1,046,113 thousand), or 32.3% of total construction orders. Building construction orders amounted to ¥226,094 million(US$2,196,794 thousand), which is equivalent to 67.7% of total construction orders.
Thousands of
U.S. dollars

Millions of yen
Year-end Backlog
Civil engineering

2014

2013

2012

2011

2010

2014

¥121,099¥114,655¥113,278¥107,382¥131,216$1,176,632

Building construction

177,794

69,65263,45458,88773,751

1,727,497

Total construction projects¥298,893¥184,307¥176,732¥166,269¥204,967$2,904,129

Order backlog for construction projects at the end of fiscal 2014 amounted to ¥298,893 million (US$2,904,129 thousand), withcivil engineering work accounting for ¥121,099 million (US$1,176,632 thousand), or 40.5%, and building construction for¥177,794 million (US$1,727,497 thousand), or 59.5%.

11

Consolidated Balance Sheets
HAZAMA ANDO CORPORATION and Consolidated Subsidiaries
March 31, 2014 and 2013

Thousands of
U.S. dollars(Note 1)Millions of yen
2014

2014

2013

AssetsCurrent assets:
Cash and time deposits (Notes 4 and 23)¥ 70,774¥ 32,683

Marketable securities (Notes 7 and 23)

0

0

$

687,660
2

Receivables (Note 23):
6,999

1,078

68,004104,298

54,397

1,013,389

Inventories (Notes 5 and 8)

9,919

8,771

96,376

Advances paid

5,713

3,361

55,509Deferred tax asset (Note 17)

4,095

3,070

39,788

Other

4,226

5,601

41,060

(55)

(338)

(535)

205,969

108,6232,001,253

Land

19,576

13,293

190,206

Buildings and structures

18,156

14,193

176,409

Machinery and equipment

8,306

8,225

80,703

594

226

5,772

46,63235,937453,090

Less accumulated depreciation(17,921)(17,222)(174,126)

Net property and equipment

28,711

18,715278,964

Notes (Note 25)
Accounts

Less allowance for doubtful accounts
Total current assets

Property and equipment (Notes 7 and 13):

Other

Investments and other assets:
15,361

6,020

149,252

Investments in unconsolidated subsidiaries and affiliates

197

221

1,914

Long-term loans receivable

744

50

7,229

Deferred tax asset (Note 17)

3,836

2,275

37,272

Investments in securities (Notes 3, 7 and 23)

―

3,165

―

Other

Prepaid pension cost

6,084

2,859

59,114

Less allowance for doubtful accounts

(256)

(48)

(2,487)

Total investments and other assets
Total assets
See accompanying notes.

12

12

25,966

14,542

252,294¥260,646¥141,880$ 2,532,511

Thousands of
U.S. dollars(Note 1)Millions of yen
2014

2013

2014

¥

17,480¥ 5,600

8,822

4,327

85,717

326

―

3,168

Notes

29,764

24,406289,195

Accounts

72,26431,355702,138

Income taxes payable

2,651

1,283

25,758Advances received (Note 15)

26,527

15,195

257,744

327

435

3,177

3,053

1,643

29,664―697―

17,22910,491

167,401

178,443

95,432

1,733,803

Liabilities and Net Assets
Current liabilities:
Short-term loans payable (Notes 6 and 23)
Current maturities of long-term loans payable (Notes 6 and 23)
Current portion of bonds (Note23)$

169,841

Payables (Note 23):

Accrued expenses
Provision for losses on construction contracts (Note 8)
Provision for merger expenses
Other
Total current liabilities
Long-term liabilities:
Bonds (Notes 23)
Long-term loans payable, less current maturities (Notes 6 and 23)
Retirement and severance benefits (Note 16)

846

―

8,220

11,945

4,579

116,061

―

8,672

―

Net defined benefit liability (Note 16)

13,944―135,484

Provision for environmental spending

322

284

3,129

Deferred tax liability (Note 17)

74

―

719

Other

691

69

6,714

27,822

13,604

270,327

12,0005,000

116,595

Total long-term liabilities

Net assets (Notes 19 and 20 ):Shareholders’ equity:
Common stock

Authorized - 397,250,000 shares

Preferred stock

Authorized - 2,750,000 shares

Issued – 185,209,189 shares
Issued - 0 shares

―

7,000

―

Capital surplus

15,0109,007

145,842

Retained earnings

27,604

11,665268,208

(95)

(98)

(923)

54,51932,574

529,722

954

244

9,269

2

―

19

Foreign currency translation adjustment

130

―

1,263

Remeasurement of defined benefit plans(1,855)―(18,023)

(769)

244

(7,472)

22

26

214

Less treasury stock, at cost
Total shareholders’ equity
Accumulated other comprehensive income:Net unrealized holding gain on available-for-sale securities
Deferred gains or losses on hedges

Total accumulated other comprehensive income
Share subscription rights
Minority interests

609

―

5,917

Total net assets

54,381

32,844

528,381¥260,646¥141,880$ 2,532,511

Total liabilities and net assets

13

13

Consolidated Statements of Income
HAZAMA ANDO CORPORATION and Consolidated Subsidiaries
For the years ended March 31, 2014 and 2013

Thousands of
U.S. dollars(Note 1)Millions of yen
2014

2013

2014

Construction¥357,474¥182,740$3,473,319

Other activities

13,74315,159133,531371,217

197,8993,606,850

Construction

331,365

168,434

3,219,637

Other activities

11,445

13,837111,203342,810

182,271

3,330,840

28,407

15,628276,010

16,32910,015

158,657

12,078

5,613

117,353
3,129

Revenues (Notes 10 and 21):

Cost of sales (Notes 11 and 21):

Gross profit
Selling, general and administrative expenses (Notes 12 and 21):
Operating income
Other income (expenses):
Interest and dividends income

322

93

Foreign exchange gain

429

489

4,168

Interest expense

(980)

(604)

(9,522)(198)―(1,924)

10,090―98,037(2,546)

Commission fee
Gains on bargain purchase
Loss on sales of noncurrent assets (Note 14)

(262)

(8)

Impairment loss (Note 13)

(72)

―

(700)

Merger expenses

(150)

(997)

(1,457)

(506)

(369)

(4,915)

8,673(1,396)

84,27020,751

4,217

201,623

Current

3,440

1,523

33,424

Deferred

852

401

8,279

4,292

1,924

41,703

16,4592,293

159,92045―

16,414¥ 2,293

Other, net
Income before income taxes
Income taxes (Note 17):

Income before minority interest
Minority interests in income of consolidated subsidiaries
Net income

¥

437
$

159,483

U.S. dollars

Yen(Note 1)

2014

2013

2014

¥

96.47

¥ 20.69

88.59

14.74

0.86

Per share amounts (Note 22):
Net income
Basic
Diluted$

0.94

Cash dividends applicable to the year
5.00

3.00

0.05

Class I preferred stock

―

78.40

―

Class II preferred stock

―

88.40

―

Class III preferred stock

―

98.40

―

Common stock

See accompanying notes.

1414

Consolidated Statements of Comprehensive Income
HAZAMA ANDO CORPORATION and Consolidated Subsidiaries
For the years ended March 31, 2014 and 2013

Thousands of
U.S. dollars(Note 1)Millions of yen
2014
Income before minority interest

2014

2013

¥16,459¥2,293$159,920

710

390

6,899

2

―

19

Foreign currency translation adjustment

208

―

2,021

Total other comprehensive income (Note 18)

920

390

8,939

17,3792,683

168,859

Comprehensive income attribute to owners of the parent

17,257

2,683

167,674

Comprehensive income attribute to minority interests

122

―

1,185

Other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges

Comprehensive income
Comprehensive income attribute to:

See accompanying notes.

15

15

Consolidated Statements of Changes in Net Assets
HAZAMA ANDO CORPORATION and Consolidated Subsidiaries
For the years ended March 31, 2014 and 2013

Millions of yen
Shareholders’ equity

Common stockandpreferred stock
Balance at April 1, 2012

Capitalsurplus¥12,000

Retainedearnings¥9,004¥9,767

Net income

2,293

Cash dividends paid

(395)

Disposal of treasury stock

3

Treasurystock¥(112)

15

Acquisition of treasury stock(1)

Redemption of fractional
preferred stock(0)

Net changes in items otherthan shareholders’ equity
Balance at April 1, 2013

¥12,000¥9,007¥11,665¥(98)

16,414

Net income(475)

Cash dividends paid
(3,114)

Disposal of treasury stock

3,125
(2)

Acquisition of treasury stock
Redemption of fractional
preferred stock

0
9,117

Increase by merger(3,120)Net changes in items otherthan shareholders’ equity
Balance at March 31, 2014

¥12,000¥15,010¥27,604¥(95)

Millions of yen
Accumulated other comprehensive income
Valuationdifference on
available-for-salesecurities
Balance at April 1, 2012

¥ (146)

CapitalsurplusRetainedearnings――

Remeasurementsof defined benefit
plans
―

Share
subscription
rightsMinority
interests

¥45

Total

―

Net income

2,293

Cash dividends paid

(395)

Disposal of treasury stock

18

Acquisition of treasury stock(1)

Redemption of fractional
preferred stock(0)

Net changes in items otherthan shareholders’ equity

390

―

―

―

(19)

―

371

Balance at April 1, 2013

¥244

―

―

―

¥26

―

¥32,844
16,414

Net income(475)

Cash dividends paid
Disposal of treasury stock

11

Acquisition of treasury stock(2)

Redemption of fractional
preferred stock

0
5,997

Increase by merger

16¥30,558

Net changes in items otherthan shareholders’ equity

710

2

130

(1,855)

(4)

609

(408)

Balance at March 31, 2014

¥954

¥2

¥130

¥(1,855)

¥22

¥609

¥54,38116

Thousands of U.S. dollars (Note 1)
Shareholders’ equity

Common stockandpreferred stock
Balance at April 1, 2013

$116,595

CapitalsurplusRetainedearnings$87,515$113,340

Net income

159,483

Cash dividends paid

(4,615)(30,257)

Disposal of treasury stock

Treasurystock$(952)

30,363(19)

Acquisition of treasury stock
Redemption of fractional
preferred stock

0
88,584

Increase by merger(30,315)

Net changes in items otherthan shareholders’ equity
Balance at March 31, 2014

$116,595$145,842$268,208$(923)

Thousands of U.S. dollars (Note 1)
Accumulated other comprehensive income
Valuationdifference on
available-for-salesecurities
Balance at April 1, 2013

$2,370CapitalsurplusRetainedearnings――

Remeasurementof defined benefit
plans
―

Share
subscription
rights$253

Minority
interests―

Total$319,121

Net income

159,483

Cash dividends paid

(4,615)

Disposal of treasury stock

106

Acquisition of treasury stock(19)

Redemption of fractional
preferred stock

058,269

Increase by merger
Net changes in items otherthan shareholders’ equity

6,899

19

1,263

(18,023)

(39)

5,917

(3,964)

Balance at March 31, 2014

$9,269$19$1,263$(18,023)$214$5,917$528,381

See accompanying notes.

17

17

Consolidated Statements of Cash Flows
HAZAMA ANDO CORPORATION and Consolidated Subsidiaries
For the years ended March 31, 2014 and 2013

Thousands of
U.S. dollars(Note 1)Millions of yen
2014

2013

2014

¥ 20,751¥ 4,217$ 201,623

1,212
72(10,090)(1,120)(14,477)
13,944
3,165
(322)
980
(219)
70
249

560
―
―
18
600
―
(426)
(93)
604
(493)
56
(8)

11,776700(98,037)(10,882)(140,663)
135,484
30,752(3,129)9,522(2,128)
680
2,419

―
(1,111)
―
2,476
5,469
(2,186)(11,053)
1,729
(213)
2,642
(1,527)
10,441257(949)(2,285)
7,464

697
―
(106)
(5,077)
1,305
1,592
1,167
4,603
3,171
(3,724)
335
8,998
93
(539)
(618)
7,934

―
(10,795)―
24,05853,138(21,240)(107,394)
16,800(2,070)25,670(14,836)
101,4482,497(9,221)(22,202)72,522

(54)
159
(753)
2,478
(38)
104
1,792
(95)
3,593

(68)
53
(368)
13
(2)
18
―
(369)
(723)

(525)
1,545
(7,316)
24,077(369)
1,010
17,412(923)
34,911

1,301
10,901(11,533)
(475)
(248)
(54)
678
11,681
32,65922,441
3,244¥70,025(1,840)4,514(6,589)(395)(37)(4,347)492
3,356
29,303――¥32,659

12,641
105,917(112,058)(4,615)(2,410)(525)
6,588
113,496317,324
218,043
31,520$680,383

Cash flows from operating activities:
Income before income taxes
Adjustment to reconcile income before income taxes to net
cash provided by operating activities:
Depreciation and amortization
Impairment loss

Gain on bargain purchase

Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in retirement and severance benefits
Increase (decrease) in net benefit defined liability
Decrease (increase) in prepaid pension cost
Interest and dividends income
Interest expense
Foreign exchange loss (gain)
Loss (gain) on valuation of investments in securities
Loss (gain) on sale of property, plant and equipment
Changes in assets and liabilities:
Increase (decrease) in provision for business structure improvement
Increase (decrease) in provision for merger expenses
Increase (decrease) in provision for disaster payment
Decrease (increase) in notes and accounts receivable
Decrease (increase) in inventories
Decrease (increase) in advances paid
Increase (decrease) in notes and accounts payable
Increase (decrease) in advances received
Increase (decrease) in deposit received
Increase (decrease) in consumption tax payable
Other, net
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities:
Purchase of marketable securities and investments in securities
Proceeds from sales of marketable securities and investments in securities
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Payments of loans receivableCollection of loans receivable
Proceeds from withdrawal of investments in silent partnership
Other, net
Net cash provided by (used in) investing activities
Cash flows from financing activities:
Net increase (decrease) in short-term loans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Cash dividends paid
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Increase cash and cash equivalents resulting from merger
Increase cash and cash equivalents from newly consolidated subsidiary
Cash and cash equivalents at end of year (Note 4)
See accompanying notes.

18

Notes to Consolidated Financial Statements
HAZAMA ANDO CORPORATION- and Consolidated Subsidiaries
For the years ended March 31, 2014 and 2013

1. Basis of Presenting Consolidated Financial Statements
The accompanying consolidated financial statements of HAZAMA ANDO CORPORATION (the “Company”) and its
consolidated subsidiaries have been prepared in accordance with the provisions set forth in the Japanese Financial Instruments
and Exchange Law and its related accounting regulations, and in conformity with accounting principles generally accepted inJapan (“Japanese GAAP”), which are different in certain respects as to application and disclosure requirements of International
Financial Reporting Standards.
The accompanying consolidated financial statements have been restructured and translated into English with some expanded
descriptions from the consolidated financial statements of the Company prepared in accordance with Japanese GAAP and filedwith the appropriate Local Finance Bureau of the Ministry of Finance as required by the Financial Instruments and Exchange
Law. Some supplementary information included in the statutory Japanese language consolidated financial statements, but notrequired for fair presentation, is not presented in the accompanying consolidated financial statements.
The translations of the Japanese yen amounts into U.S. dollars are included solely for the convenience of readers outside
Japan, using the prevailing exchange rate at March 31, 2014, which was ¥102.92 to U.S. $1.00. The convenience translations
should not be construed as representations that the Japanese yen amounts have been, could have been, or could in the future be,converted into U.S. dollars at this or any other rate of exchange.
2. Summary of Significant Accounting Policies(1) Consolidation
The consolidated financial statements include the accounts of the Company and its significant subsidiaries (the “Companies”).
All significant intercompany transactions and unrealized profits and losses among the Companies have been eliminated inconsolidation.
All companies are required to consolidate all significant investees, which are controlled through substantial ownership ofmajority voting rights or existence of certain conditions. Investments in affiliates over which the Company has the ability to
exercise significant influence over operating and financial policies of the investees, are accounted for by the equity method.
Investments in remaining unconsolidated subsidiaries and affiliates, which have immaterial effect on the consolidated
financial statements, are accounted for at cost. Such investments are adjusted for any non-recoverable diminution in value, andincome from these unconsolidated subsidiaries and affiliates is recognized only when the Companies receive dividends
therefrom.
(2) Revenue and cost recognition
When the outcome of construction contracts can be estimated reliably, the percentage-of-completion method (cost-to-cost method
for the estimated progress) is mainly applied. Otherwise the completed-contract method is applied.
(3) Foreign currency translation
Revenues and expenses are translated at the rates of exchange prevailing when transactions are made. Assets and liabilities
denominated in foreign currencies are generally translated at the rates of foreign exchange prevailing at the balance sheet date
and the resulting translation gains or losses are included in earnings.
(4) Cash and cash equivalents
Cash and cash equivalents include cash on hand, highly liquid investments with maturity of three month or less from the purchasedate. See Note 4 as to a reconciliation of cash and cash equivalents reported in the consolidated statements of cash flows withcash and time deposits reported in the consolidated balance sheets.
(5) Allowance for doubtful accounts
To prepare for credit loss on receivables, collectability of normal receivables is estimated by applying the historical overall credit
loss rates, and collectability of doubtful receivables is analyzed individually and the estimated uncollectible amount is recorded.
(6) Inventories
Inventories are stated at cost as determined on a specific project basis.
(7) Securities
Securities of the Companies are classified into one of the following categories based on the intent of holding, and are accounted
for as follows:(a) Debt securities that are intended to be held to maturity (“held-to-maturity debt securities”) are stated at amortized cost.
19

(b) Securities other than trading securities, held-to-maturity debt securities and shares issued by unconsolidated subsidiaries andaffiliated companies not on the equity method (“available-for-sale securities”) are stated at fair market values, if their fair market
values are readily available. Unrealized gains and losses on these securities are reported, net of applicable income taxes, as aseparate component of net assets. Realized gains and losses on sale of these securities are computed using moving-average costs.
Available-for-sale securities with no available fair market values are stated at moving-average cost.
(8) Derivatives and hedging transactions
Derivative financial instruments are stated at fair value and changes in the fair value are recognized as gains or losses unlessderivative financial instruments are used for hedging purposes.
If derivative financial instruments are used as hedges and meet certain hedging criteria, the Companies defer recognition ofgains or losses resulting from changes in fair value of derivative financial instruments until the related losses or gains on thehedged items are recognized.
If a forward foreign exchange contract is executed to hedge an existing foreign currency receivable or payable,(a) the difference, if any, between the Japanese yen amount of the hedged foreign currency receivable or payable translated using
the spot rate at the inception date of the contract and the book value of the receivable or payables is recognized in the
consolidated statements of operations in the period which includes the inception date, and(b) the discount or premium on the contract (that is the difference between the Japanese yen amount of the contract translatedusing the contracted forward rate and that translated using the spot rate at the inception date of the contract) is recognized over
the term of the contract.
Also, if interest rate swap contracts are used as hedge and meet certain hedging criteria, the net amount to be paid or received
under the interest rate swap contract is added to or deducted from the interest on the assets or liabilities for which the swap
contract was executed.
The Companies use forward foreign currency contracts and interest rate swap contracts as derivative financial instruments
only for the purpose of mitigating future risks of fluctuation of foreign currency exchange rates and interest rate increases.
The Companies evaluate hedge effectiveness by comparing the cumulative changes in cash flows from or the changes in fairvalue of hedged items and the corresponding changes in the hedging derivative instruments.
(9) Property and equipment, depreciation
Property and equipment are carried at cost. Depreciation of building is mainly provided on the straight-line method, anddepreciation of other property and equipment is provided on the declining-balance method over estimated useful lives, exceptthat the declining-balance method is applied to buildings of one consolidated subsidiary.
Expenditures for significant renewals and betterments are capitalized, while expenditures for normal repairs and maintenanceare charged to expense when incurred.
(10) Provision for losses on construction contracts
To prepare for future losses related to construction contracts, the amount of estimated losses is recorded for the construction
when losses are probable to occur and such losses can be reasonably estimated.
(11) Provision for environmental spending
To prepare for the treatment of Polychlorinated Biphenyl waste, which is obligated by the “Act on Special Measures Concerning
Promotion of Proper Treatment of PCB Waste,” the estimated cost for treatment is recorded.
(12) Retirement and severance benefits
To prepare for the payment of retirement and severance benefits to employees, the Companies have recorded the amount
expected to arise at the end of the subject fiscal year based on retirement benefit obligations and pension assets at the end of thesubject fiscal year. Differences arising from changes in accounting standards (¥9,985 million) have been amortized in equalamounts over 15 years. Actuarial differences are recognized in expenses using the straight-line method over period less than the
average of the estimated remaining service lives (9 years) commencing with the succeeding period. Prior service costs arerecognized in expenses using the straight-line method over period less than the average of the estimated remaining service lives(3 years) commencing with present period.
Upon the split-up, the Company succeeded differences arising from changes in accounting standards and actuarial differences,and the above periods of amortization include the periods before split-up.
The Company and its consolidated subsidiaries have calculated net defined benefit liability and retirement benefit costs

under certain lump-sum payment plans using simplified method.

20

(13) Lease transactions(a) Finance leases which transfer ownership of leased assets
Leased assets arising from finance lease transactions which transfer ownership to the lessee are depreciated by the same method
as the depreciation of fixed assets.
(b) Finance leases which do not transfer ownership of leased assets
Leased assets arising from finance lease transactions which do not transfer ownership to the lessee are depreciated to a residual
value of zero by the straight-line method using the contract term as useful life.
(14) Income taxes
The Companies recognize tax effects of temporary differences between the carrying amounts of assets and liabilities for tax andfinancial reporting purposes. The provision for income taxes is computed based on the pretax income included in the
consolidated statements of operations. The asset and liability approach is used to recognize deferred tax assets and liabilities forthe expected future tax consequences of temporary differences.
(15) Appropriations of retained earnings
Appropriations of retained earnings are reflected in the accompanying consolidated financial statements for the following year
upon the shareholders’ meeting approval.
(16) Amounts per share
Basic net income per share is based on the weighted average number of common stock outstanding during the period, and diluted
net income per share reflects the potential dilution that could occur if preferred stock were converted into common stock or sharesubscription rights were exercised.
Cash dividends per share represent amounts applicable for the respective years on accrual basis.
A net asset per share is reported at the amounts of ¥290.96 (US$2.83) and ¥212.75 at March 31, 2014 and 2013, respectively.
(17) Change in accounting policies with amendment of respective law or regulation that are not distinguishable from change inaccounting estimates
Effective from the year ended March 31, 2014, the Company and its consolidated domestic subsidiaries have applied the
Accounting Standard for Retirement Benefits (ASBJ Statement No. 26, May 17, 2012 (hereinafter, the “Statement No.26”)) and
Guidance on Accounting Standard for Retirement Benefits (ASBJ Guidance No. 25, May 17, 2012 (hereinafter, the “Guidance
No.25”)) except the article 35 of the Statement No.26 and the article 67 of the Guidance No.25 and actuarial gains and losses,
past service costs and transition obligations that are yet to be recognized have been recognized and the difference between
retirement benefit obligations and plan assets has been recognized as a liability for retirement benefits.
In accordance with the article 37 of the Statement No.26, the effect of the change in accounting policies arising from initial
application has been recognized in accumulated adjustments for retirement benefit in accumulated other comprehensive income.
As a result of the application, a liability for retirement benefits in the amount of ¥13,944 million (US$135,484 thousand) has
been recognized and accumulated other comprehensive income has decreased by ¥1,855million (US$18,023 thousand), at the endof the current fiscal year.
The effects of this change on earnings per share are described in the related note.
3. Securities(1) The following tables summarize book values and fair values of held-to-maturity debt securities as of March 31, 2014 and2013.
Millions of yen
Book values
Type
Securities with fair values exceeding book values

2014
Fair values

DifferenceBook values

2013
Fair values

Difference

Bonds

¥426

¥461

¥35

―

―

―

Sub total

426

461

35

―

―

―
¥(4)

Securities with fair values not exceeding book values
Bonds

¥7

¥7

¥0

¥135

¥131

Sub total

7

7

0

135

131

(4)

¥433

¥468

¥35

¥135

¥131

¥(4)

Total

21

Thousands of U.S. dollars
Book values
Type
Securities with fair values exceeding book values

2014
Fair values

Difference

Bonds$4,139$4,479$340

Sub total

4,139

4,479

340
$0

Securities with fair values not exceeding book values
Bonds

$68

$68

Sub total

68

68

0

$4,207$4,547

$340

Total

(2) The following tables summarize book values and acquisition costs of available-for-sale securities as of March 31, 2014 and2013:
Millions of yen
Book values

Type
Securities with book values exceeding acquisition costs

2014
Acquisition
costs

DifferenceBook values

2013
Acquisition
costs

Difference

Equity securities¥8,948¥7,064¥ 1,884¥2,718¥2,061¥ 657

Sub total

8,948

7,064

1,884

2,718

2,061

657
¥(260)

Securities with book values not exceeding acquisition costs
Equity securities¥2,184¥2,620¥(436)¥806¥1,066

Sub total

2,184

2,620

(436)

806

1,066

(260)

¥11,132¥9,684¥1,448¥3,524¥3,127

¥ 397

Total

Thousands of U.S. dollars
Book values
Type
Securities with book values exceeding acquisition costs

2014
Acquisition
costs

Difference

Equity securities$86,941$68,636$18,305

Sub total

86,941

68,63618,305$(4,236)

Securities with book values not exceeding acquisition costs
Equity securities$21,221$25,457

Sub total

21,22125,457(4,236)$108,162$94,093$14,069

Total(3) Total sales, related gains and losses of available-for-sale securities are as follows:
Thousands of
U.S. dollars
2014

Millions of yen
Type

2014

2013

Equity securities
¥14

¥50

$136

Related gains

5

0

49

Related losses

0

―

0

Sales

(4) Impairment losses on securities recognized for the years ended March 31, 2014 and 2013 are as follows:
Thousands of
U.S. dollars
2014

Millions of yen
Type

22

2014

2013

Available-for-sale securities

¥70

¥56

$680

Total

¥70

¥56

$680

4. Cash and Cash Equivalents(1) Cash and cash equivalents reported in the consolidated statements of cash flows at March 31, 2014 and 2013 were reconciledwith cash and time deposits reported in consolidated balance sheets as follows:
Thousands of
U.S. dollars
2014

Millions of yen
Cash and time deposits

2014

2013

¥70,774¥32,683$687,660

(749)

(24)

(7,277)¥70,025¥32,659$680,383

Time deposits with maturities of exceeding
3-month from the date of acquisition
Total: Cash and cash equivalents(2) Details of important non-monetary transactions
The main component of assets and liabilities that is assumed as the result of the merger is as follows:
Thousands ofMillions of yen

Current assets
Fixed assets
Total assets
Current liabilities
Long-term liabilities
Total liabilities

U.S. dollars

2014¥ 84,322$ 819,296
31,821
309,182
116,143
1,128,478
83,232808,706
13,579131,937
96,811
940,643

Capital surplus increased ¥9,117 million (US$88,584 thousand) by the merger with ANDO Corporation.
5. Inventories
Inventories at March 31, 2014 and 2013 consisted of the following:
Millions of yen
2014

2013

Thousands of
U.S. dollars
2014¥ 5,191¥ 6,655

Others

4,728

2,116

45,939Total¥ 9,919¥ 8,771$96,376

Accumulated Costs on uncompleted construction contracts$50,437

6. Short-Term Bank Loans and Long-Term Debt
Short-term bank loans are represented mainly by loan on deed. The average interest rates of short-term loans were 1.9% and2.0% at March 31, 2014 and 2013.
Bonds at March 31, 2014 and 2013 are summarized below:
Millions of yen
2014

2013

Thousands of
U.S. dollars
2014Long-term debt from bonds, insurance companies and others due serially through 2020:
Unsecured 0.5%

1,172

―

Less current maturities

(326)

―

11,388(3,168)

Total

¥846

―

$ 8,220

23

Long-term loans payable at March 31, 2014 and 2013 are summarized below:
Thousands of
U.S. dollars
2014

Millions of yen
2014

2013

Long-term debt from banks, insurance companies and others due serially through 2020:
Secured 2.4% to 2.6%

¥4,282¥4,515$ 41,605

Unsecured 1.2% to 2.9%

16,485

4,391

160,173

Less current maturities(8,822)(4,327)(85,717)

Total¥11,945¥4,579$ 116,061

Repayment schedules for bonds are summarized below:

2015

¥ 326

Thousands of
U.S. dollars$ 3,168

2016

276

2,682

2017

276

2,682

2018

216

2,099

2019

78

757

2020~

―

―

Total

¥1,172$11,388

Millions of yen

Years ending March 31,

Repayment schedules for the long-term loans payable are summarized below:

2015¥ 8,822

Thousands of
U.S. dollars$ 85,717

2016

5,742

55,791

2017

2,938

28,546

2018

1,683

16,353

2019

796

7,734

2020~

786

7,637

Total

¥20,767$201,778

Millions of yen

Years ending March 31,

As is customary in Japan, long-term and short-term bank loans are made under general agreements which provide that additional
security and guarantees for present and future indebtedness will be given under certain circumstances at the request of the banks,
and that any collateral furnished will be applicable to all indebtedness due to that bank.
In addition, the agreements provide that the bank has the right to offset cash deposited against any long-term and short-term
debt that become due and in case of default and certain other specified events, against all other debts payable to the bank. Suchrights have never been exercised by the bank.
7. Pledged Assets
The following assets were pledged to secure short-term bank loans, long-term debt and certain other obligation at March 31, 2014
and 2013:
Thousands of
U.S. dollars

Millions of yen
2014¥

Property and equipment

16,737

15,185

162,621

Investments in securities

733

394

7,122

Other assets

158

―

1,536

¥17,628¥15,579$171,281

Total

24

2014

2013

Marketable securities

0

¥

0

$

2

8. Estimated loss on uncompleted construction contracts
Amount of costs on uncompleted construction contracts for which a construction loss is anticipated and reserve for expected
losses on construction contracts in process are presented without being offset.
Thousands of
U.S. dollars

Millions of yen
2014

Amount of costs on uncompleted construction contracts for which aconstruction loss is anticipated, matching with reserve for expected
losses on construction contracts in process

2014

2013
¥167

¥19

$1,623

9. Contingent Liabilities
At March 31, 2014, the Companies had the following contingent liabilities for loan guaranteed:
Thousands of
U.S. dollars
2014

Millions of yen
2014

2013

Guarantees for loan
Pressance Corporation Co.,Ltd.
Loans of employees
Total

¥94

¥―

3

―

$ 913
29

¥97

¥―

$ 942

10. Revenues from construction contracts recognized by the percentage-of-completion method
Revenues from construction contracts recognized by the percentage-of-completion method for the fiscal year ended March 31,
2014 and 2013 were ¥323,156 million (US$3,139,876 thousand) and ¥157,701 million, respectively.
11. Provision for losses on construction contracts included in cost of sales of construction contracts
Provision for losses on construction contracts included in cost of sales of construction contracts for the fiscal year ended March
31, 2014 and 2013 were ¥2,340 million (US$22,736 thousand) and ¥1,438 million, respectively.
12. Research and Development Expenses
Research and development expenses included in manufacturing costs, and selling, general and administrative expenses amounted
to ¥1,345 million (US$13,068 thousand) and ¥1,135 million for the years ended March 31, 2014 and 2013, respectively.
13. Impairment Loss
No impairment loss is recognized for the year ended March 31, 2013.
Impairment loss for the year ended March, 31, 2014 is as follows:
Location

Use

Type of assets

Ibaraki prefecture

Idle asset

Land

Other

Idle asset

Land

Total

Millions of yen¥ 70

Thousands of
U.S. dollars
$ 680

2

20

¥72

$ 700

The Companies generally conduct grouping of its business assets by location and idle assets by each property unit to measure
impairment loss. As the above assets become idle assets in the subject fiscal year, the book value was reduced to recoverable
amount, and such reduction was recorded as an impairment loss in the extraordinary loss caption. The recoverable amounts ofthese assets were measured based on net selling price, and were mainly evaluated based on appraisal value.

2514. Loss on Sales of Noncurrent Assets
Loss on sales of noncurrent assets for the year ended March 31, 2014 and 2013 is as follows:
Thousands of
U.S. dollars

Millions of yen
Type of assets

2014

2014

2013

Land

¥262

¥―

Other

―

8

$2,546
―

Total

¥262

¥8

$2,546

15. Advances Received
As is customary in Japan, the Companies normally receive payments from customers on a progress basis in accordance with theterms of the respective construction contracts.
16. Net Defined Benefit Liability
The Company and its consolidated subsidiaries have adopted the lump-sum payment plan and the retirement benefit pension planas their defined benefit plan.
One of the domestic consolidated subsidiaries has adopted the defined contribution corporate pension plan and the lump-sum
payment plan, and the rest have adopted the lump-sum payment plan only.
The Company has set up a retirement benefit trust fund due to its merger with ANDO Corporation.
The Company and its consolidated subsidiaries have calculated net defined benefit liability and retirement benefit costs undercertain lump-sum payment plans using simplified method.
(a)Defined benefit plans
Millions of yen
2014

Thousands of
U.S. dollars
2014(1) Movement in retirement benefit obligations
Balance at April 1, 2013¥17,599$ 170,997

Increase by merger

13,304

129,265

Service cost

1,391

13,515Interest cost

294

2,857

Actuarial loss (gain)

977

9,493

(1,205)(11,708)

Past service cost
Benefits paid

(1,764)(17,140)

Balance at March 31, 2014

¥30,596$ 297,279

Balance at April 1, 2013

¥9,427$ 91,595

Increase by merger

7,542

73,280

Expected return on plan assets

194

1,885

Actuarial loss (gain)

588

5,713

1,312

12,748(2) Movement in plan assets

Contributions paid by the employer
Benefits paid

(1,071)(10,406)

Balance at March 31, 2014

¥17,992$ 174,815¥1,140$ 11,077(3) Movement in simplified method
Balance at April 1, 2013
Increase from newly consolidated subsidiary

44

428

Retirement benefit costs

284

2,759

Benefits paid

(126)

(1,224)

Other
Balance at March 31, 2014

26

(3)

(30)

¥1,339$ 13,010

(4) Reconciliation from retirement benefit obligations and plan assets to liability (asset) for retirement benefits
Funded retirement benefit obligation¥30,596$ 297,279

Plan assets(17,992)(174,815)

12,604122,464

Unfunded retirement benefit obligation

1,340

13,020Total net liability (asset) for retirement benefits at March 31, 2014

13,944135,484

Liability for retirement benefits

13,944135,484

Total net liability (asset) for retirement benefits at March 31, 2014

¥13,944$135,484(Note) Retirement benefit obligation under the lump-sum payment plan is included in funded retirement benefit obligation because aretirement benefit trust has been established for lump-sum payment plans. In addition, the retirement benefit trust that has been established forthe lump-sum payment plan is included in plan assets.
(5) Retirement benefit costs
Service cost

¥1,391

Interest cost294

$ 13,515
2,857

Expected return on plan assets(194)(1,885)

Transition obligations amortization

334

3,245

Net actuarial loss amortization

436

4,236

Past service costs amortization(665)(6,461)

285

2,769

¥1,881$ 18,276

Transition obligations that are yet to be treated¥336$ 3,264

Actual gains and losses that are yet to be recognized

3,296

32,025

Past service costs that are yet to be recognized(750)(7,287)¥2,882$ 28,002

Retirement benefit expenses by simplified method
Total retirement benefit costs for the fiscal year ended March 31, 2014
(6) Accumulated adjustments for retirement benefit

Total retirement benefit costs for the fiscal year ended March 31, 2014(7) Plan assets
1. Plan assets comprise:
Bonds

38%

Equity securities

35

General account assets

14

Cash and cash equivalents

8

Other

5

Total

100%

(Note) The retirement benefit trust that has been established for the lump-sum payment plan and the corporate pension plan accounts for
24% of the total plan assets.

2. Long-term expected rate of return:Current and target asset allocations, historical and expected returns on various categories of plan assets have been considered indetermining the long-term expected rate of return.
(8) Actuarial assumptions
The principal actuarial assumptions at March 31, 2014 (expressed as weighted averages) follow:
Discount rate

1.0%

Long-term expected rate of return

1.1%(9) The amount of contributions required to be made to the defined contribution plan of consolidated subsidiaries is ¥3
million (US$29 thousand).

27

The liabilities for retirement and severance benefits included in the consolidated balance sheets as of March 31, 2013 are as
follows:
Millions of yen
2013
Projected benefit obligation¥(18,739)

Fair value of pension assets

9,427

Less unrecognized net transition obligation
Less unrecognized actuarial differences

672
3,343

Less unrecognized past service liability
Prepaid pension cost
Retirement and severance benefits(210)(3,165)¥ (8,672)

Included in the consolidated statements of operations for the years ended March 31, 2013 is retirement and severance benefit
expenses as follows:
Millions of yen
2013
Service costs-benefits earned during the year

¥ 881

Interest cost on projected benefit obligation

319

Expected return on pensions assets(129)

Amortization of net transition obligation

336

Amortization of net actuarial differences

390

Amortization of prior service costs(565)

Retirement and severance benefit expense¥1,232The discount rate used by the Company is 1.0% at March 31, 2013.
The rate of expected return on pension assets is 1.5% at March 31, 2013.
The estimated amount of all retirement benefits to be paid at the future retirement date is allocated equally to each service
year using the estimated total service years.
Actuarial differences are recognized in the consolidated statements of operations using the straight-line method over 9 years
commencing with the succeeding period.
Prior service costs are recognized in the consolidated statements of operations using the straight-line method over 3 years
commencing with the present period.
Net transition obligation is recognized using the straight-line method over 15 years.
17. Income Taxes
The Companies were subject to a number of taxes based on income, which, in the aggregate, indicate statutory rate in Japan ofapproximately 38.0% for the years ended March 31, 2014 and 2013.
The following table summarizes the significant differences between the statutory tax rate and the effective tax rate forfinancial statement purposes for the year ended March 31, 2014 and 2013.

Statutory tax rate

28

2014

2013

38.0%

38.0%

Permanent non-deductible expenses

2.2

2.0

Permanent non-taxable income

(0.7)

(0.4)

Gain on bargain purchase(18.5)―Per capita inhabitant taxes

0.8

3.6
(3.5)

Change in valuation allowance(1.1)

Decrease in deferred income tax assets due to tax rate changes

0.9―

Tax rate difference of special corporate tax for reconstruction―

2.8

Others(0.9)

3.1

Effective tax rate

20.7%

45.6%

Significant components of the Companies’ deferred income taxes as of March 31, 2014 and 2013 are as follows:
Millions of yen
2014
Deferred income tax assets:
Non-deductible construction costs under thepercentage-of-completion method
Non-deductible retirement benefits
Net defined benefit liability
OthersGross deferred income tax assets

2013¥1,505¥1,264

Thousands of
U.S. dollars
2014$14,623

―

3,179

―

6,193

―

60,173

6,532

2,835

63,467

14,2307,278

138,263

Less: Valuation allowance(2,965)(620)(28,809)

Total deferred income tax assets

11,265

6,658

109,454―(1,161)

―

(490)

(152)

(4,761)

Deferred income tax liabilities:
Prepaid pension cost
Valuation difference on available-for-sale securities(2,918)―(28,352)

Total deferred income tax liabilities(3,408)(1,313)(33,113)Net deferred income taxes¥7,857¥5,345$76,341

OthersIn Japan, the Bill for Partial Amendment of the Income Tax Act (Article 10, 2014) was issued on March 31, 2014, and the special
corporate tax for reconstruction is not imposed from the fiscal year started April 1, 2014. The statutory effective tax rate used forthe deferred tax assets and liabilities where the timing of the reversal of the related temporary difference is expected during the
fiscal year ending March 31, 2015 is changed from 38.0% to 35.6%. As a result of this change, net amounts of differed tax assets
decrease ¥178 million (US$1,730 thousand) and income taxes-differed increase by the same amount.
18. Comprehensive Income
Amounts reclassified to net income (loss) in the current period that were recognized in other comprehensive income in thecurrent or previous periods and tax effects for each component of other comprehensive income are as follows:
Thousands of
U.S. dollars
2014

Millions of yen
2014

2013

Valuation difference on available-for-sale securities:
¥976

¥494

69

49

670

Sub-total, before tax

1,045

543

10,153Tax (expense) or benefit

(335)

(153)

(3,255)Sub-total, net of tax

710

390

6,898
$39

Increase (decrease) during the year
Reclassification adjustment$9,483

Deferred gains or losses on hedges:
Increase (decrease) during the year

¥4

¥ ―

Reclassification adjustment

0

―

0

Sub-total, before tax

4

―

39

Tax (expense) or benefit

(2)

―

(20)

Sub-total, net of tax

2

―

19

¥208

¥ ―

$2,021―――

Foreign currency translation adjustment:
Increase (decrease) during the year
Reclassification adjustment
Sub-total

208

―

2,021

Total other comprehensive income

¥920

¥390

$8,93829

19. Net Assets
Under the Japanese Corporate Law (“the Law”), the entire amount paid for new shares is required to be designated as common
stock (or preferred stock). However, a company may, by a resolution of the Board of Directors, designate an amount notexceeding one-half of the price of the new shares as additional paid-in capital, which is included in capital surplus in theaccompanying consolidated balance sheets.
Under the Law, in cases where dividend distribution of surplus is made, the smaller of an amount equal to 10% of thedividend or the excess, if any, of 25% of common stock and preferred stock over the total of additional paid-in capital and legal
earnings reserve must be set aside as additional paid-in capital or legal earnings reserve. Legal earnings reserve is included inretained earnings in the accompanying consolidated balance sheets.
Under the Law, legal earnings reserve and additional paid-in capital could be used to eliminate or reduce a deficit or could becapitalized generally by a resolution of the shareholders’ meeting.
Additional paid-in capital and legal earnings reserve may not be distributed as dividends. Under the Law, all additional
paid-in capital and all legal earnings reserve may be transferred to other capital surplus and retained earnings, respectively, which
are potentially available for dividends.
The maximum amount that the Company can distribute as dividends is calculated based on the non-consolidated financial
statements of the Company in accordance with the Law.
20. Consolidated Statements of Changes in Net Assets(1) Common stock and preferred stock issued
Number of sharesClass IIpreferredstock
875,000

Balance at April 1, 2012

100,000,000

Class I
preferredstock
750,000

Increase during the year

16,356,517

0

0

0

Decrease during the year00723,72600Balance at April 1, 2013

116,356,517

750,000

151,224

875,000

250,000

Increase during the year

68,852,672

0

0

0

0

Decrease during the year0

750,000

151,224

875,000

250,000

185,209,189

0

0

0

0

Commonstock

Balance at March 31, 2014

Detail of increase or decrease during the year ended March 31, 2013 and 2014 was as follows:(Common stock)
Number of shares
2014

Increase by exercising the call option ofClass II preferred stock
Increase by merger
Increase by exercising the call option ofpreferred stock
Total

2013
―

16,356,517

43,833,139―

25,019,533―

68,852,672

16,356,517(Class I preferred stock)
Number of shares
2014

2013
―

Decrease by retirement of treasury stock

750,000(Class II preferred stock)
Number of shares
Decrease by retirement of treasury stock

30

2014

2013

723,726

151,224

Class III
preferredstock
875,000

Class IV
preferredstock
250,0000(Class III preferred stock)
Number of shares
2014

2013
―

Decrease by retirement of treasury stock

875,000(Class IV preferred stock)
Number of shares
2014

2013
―

Decrease by retirement of treasury stock

250,000(2) Treasury stock outstanding(Common stock)
Commonstock
Balance at April 1, 2012

1,076,624

Increase during the year

3,215

Class I
preferred
stock

Number of sharesClass IIpreferred
stock
0
0
0

0

Class IV
preferredstockClass III
preferred
stock
0

0

0

0

Decrease during the year

140,600

0

0

0

0

Balance at April 1, 2013

939,239

0

0

0

0

Increase during the year

10,007,432

750,000

151,224

875,000

250,000

Decrease during the year

10,476,790

750,000

151,224

875,000

250,000

Balance at March 31, 2014

469,881

0

0

0

0

(Details of increase or decrease)(Common stock)
Number of shares
2014

2013

Increase by merger
Increase by purchase of shares less than one unit

10,000,000

―

7,432

3,215

Decrease by delivery of treasury stock

10,475,198

140,600

1,592―

Decrease by adding of shares less than one unit

(Class I preferred stock)
Number of shares
2014

2013

Increase by exercising the call option

750,000―

Decrease by retirement of treasury stock

750,000―(Class II preferred stock)
Number of shares
2014

2013

Increase by exercising the call option

151,224

723,726

Decrease by retirement of treasury stock

151,224

723,726(Class III preferred stock)
Number of shares
2014

2013

Increase by exercising the call option

875,000―

Decrease by retirement of treasury stock

875,000―(Class IV preferred stock)
Number of shares
2014

2013

Increase by exercising the call option

250,000―

Decrease by retirement of treasury stock

250,000―31

21. Segment Information
Effective April 1, 2010, the Company adopted the “Accounting Standard for Disclosures about Segments of an Enterprise andRelated Information” (Accounting Standards Board of Japan (“ASBJ”) Statement No. 17 on March 27, 2009) and the “Guidanceon Accounting Standard for Disclosures about Segments of an Enterprise and Related Information” (ASBJ Guidance No. 20,
issued on March 21, 2008).
(1) General information about reportable segments
Each reportable segment of the Companies is the business unit of the Companies, which discrete financial information is able toobtain. Reportable segments are reviewed periodically at the Board of Directors meeting in order to determine distribution ofmanagement resources and evaluate business results by each reportable segment.
The Companies mainly operate the construction and construction-related business. Among them the Company, the general
constructor, operates their businesses that is composed of the civil engineering and building construction, and each headquarter
plans and executes on their business strategy of production systems and sales process in Japan and overseas.
Furthermore, consolidated subsidiaries respectively develop their business by cooperating with the Company.
Accordingly, the Companies classify their business operating segments, identified by product and services, into threereportable segments as “Civil engineering segment”, “Building construction segment” and “Consolidated subsidiaries segment”.
The major products and services of each segment are as follows:
Reportable segments

Major products and services

Civil engineering
Building construction
Consolidated subsidiaries

Civil engineering of the Company in Japan and overseas
Building construction of the Company in Japan and overseas
Constructions and sales of construction materials of consolidated subsidiaries(2) Basis of measurement about reported segment profit or loss, segment assets, segment liabilities and other material items
Accounting methods of reported segment are the same as that set forth in “Summary of Significant Accounting Policies”. The
segment profits or losses for each reportable segment are in conformity to the operating income of consolidated statements ofincome. Intersegment transactions and transfers are based on fair market prices.
Assets are not allocated to Civil engineering segment and Building construction segment, since the chief operating decision
maker have no financial information on assets in these segments. However, corresponding depreciation expenses including
amortization of intangible fixes assets are allocated to Civil engineering segment and Building construction segment according to
the reasonable criterion measured by depending on the degree on benefit.
(3) Information about reported segment profit or loss, segment assets, segment liabilities and other material items(a) Segment information as of and for the fiscal year ended March 31, 2014 is as follows:
Millions of yen
CivilengineeringYear ended March 31, 2014:

Reportable segments
Building
Consolidated
construction subsidiaries

Sub total

Other

Total

Reconciliations Consolidated

Revenues:
Outside customers
Intersegment
Total
Segment profit
AssetsOther material items:
Depreciation
and amortization
Capital expenditures

32¥110,951¥236,027¥20,896¥367,874¥3,343¥371,217――

35,57335,573307

35,880¥(35,880)―¥371,217―

110,951

236,027

56,469403,4473,650

407,097(35,880)

371,217

8,171

4,595

1,412

14,178836

15,014(2,936)

12,078Note 4Note 4

27,625

173,951

10,485

184,436

76,210260,646

197

422

246

865

136

1,001

186

1,187

Note 4Note 4

2,493

6,108

5,943

12,051

3,266

15,317

Thousands of U.S. dollars
Civil
engineeringYear ended March 31, 2014:

Reportable segments
Building
Consolidated
construction subsidiaries

Sub total

Other

Total

Reconciliations Consolidated

Revenues:$1,078,031$2,293,305$203,032$3,574,368$32,482$3,606,850――

345,637

345,637

2,983

348,620(348,620)―

1,078,031

2,293,305

548,669

3,920,005

35,465

3,955,470(348,620)

3,606,850

Segment profit

79,39244,646

13,719137,757

8,123

145,880(28,527)

117,353

Assets

Note 4Note 4

268,412

1,690,157

101,876

1,792,033

740,478

2,532,511

1,914

4,101

2,390

8,405

1,321

9,726

1,807

11,533Note 4Note 424,22359,34757,744

117,091

31,733

148,824

Outside customers
Intersegment
Total

Other material items:
Depreciation
and amortization
Capital expenditures$―$3,606,850

Notes:
1. “Other” consisted of mainly research and other activities, which are not included in reportable segment.
2. Reconciliations amounts were as follows:(i) Reconciliations amount of segment profit was to ¥(2,936) million (US$(28,527) thousand), which included ¥3 million (US$29
thousand) of intersegment eliminations and others, and ¥(2,939) million (US$(28,556) thousand) of corporate expenses. Corporate
expenses were mainly general and administrative expenses, which are not attributed to reportable segments.
(ii) Reconciliations amount of segment assets was to ¥76,211 million (US$740,488 thousand), which included ¥(15,352) million(US$(149,164) thousand) of intersegment eliminations and others, and ¥91,563 million (US$889,652 thousand) of corporate assets.
Corporate assets were mainly cash and time deposits, investments in securities and others, which are not attributed to reportablesegments.
3. Segment profit was adjusted to operating income of consolidated statement of operations.
4. As discussed in Note 21. (2), assets are not allocated to Civil engineering segment and Building construction segment, since the chief
operating decision maker have no financial information on assets in these segments. However, for your information, segment assets of Civil
engineering segment and Building construction segment are amounted to ¥146,326 million (US$1,421,745 thousand), and capital
expenditures of these segments are amounted to ¥3,615 million (US$36,124 thousand).

(b) Segment information as of and for the fiscal year ended March 31, 2013, which is restated in conformity with therequirements of the Standard, is as follows:
Millions of yen
CivilengineeringYear ended March 31, 2013:

Reportable segments
Building
Consolidated
construction subsidiaries

Sub total

Other

Total

Reconciliations Consolidated

Revenues:
Outside customers
Intersegment¥91,060¥88,322¥15,053¥194,435¥3,464¥197,899―¥197,899―

026,722

26,722

1

26,723¥(26,723)―
197,899

Total

91,06088,322

41,775

221,157

3,465

224,622(26,723)

Segment profit

6,456

(593)

811

6,674

276

6,950

(1,337)

5,613

Assets

Note 4Note 423,259115,616

3,167

118,783

23,097

141,880

179

173

155

507

―

507

(4)

503

Note 4Note 4

70

312

―

312

―

312

Other material items:
Depreciation
and amortization
Capital expenditures
Notes:

1. “Other” consisted of mainly research and other activities, which are not included in reportable segment.
2. Reconciliations amounts were as follows:(i) Reconciliations amount of segment profit was to ¥(1,337) million, which included ¥39 million of intersegment eliminations and others,and ¥(1,376) million of corporate expenses. Corporate expenses were mainly general and administrative expenses, which are not
attributed to reportable segments.
(ii) Reconciliations amount of segment assets was to ¥23,097 million, which included ¥(13,137) million of intersegment eliminations andothers, and ¥36,234 million of corporate assets. Corporate assets were mainly cash and time deposits, investments in securities andothers, which are not attributed to reportable segments.

33

3. Segment profit was adjusted to operating income of consolidated statement of operations.
4. As discussed in Note 21. (2), assets are not allocated to Civil engineering segment and Building construction segment, since the chief
operating decision maker have no financial information on assets in these segments. However, for your information, segment assets of Civil
engineering segment and Building construction segment are amounted to ¥92,357 million, and capital expenditures of these segments areamounted to ¥242 million.

(4) Related information(a) Information about products and services
Disclosure of information about products and services is omitted, since reportable segments of the Companies areclassified by their products and services.
(b) Information about geographic areas(Revenues)
Revenues information about geographic areas for the year ended March 31, 2014and 2013 are as follows:

2014

2013

Thousands of
U.S. dollars
2014¥325,964¥169,661$3,167,159

45,253

28,238439,691¥371,217¥197,899$3,606,850

Millions of yen

Geographic Areas
Japan
Other
Total

(Tangible fixed assets)
Disclosure of tangible fixed assets information about geographic areas is omitted, since the proportion of tangible fixed
assets in Japan to total tangible fixed assets is over 90%.
(c) Information about major customers
Disclosure of information about major customers is omitted, since net sales to no single customer represented 10% or moreof total net sales of the Companies’ consolidated statement of income for the year ended March 31, 2014.
Information about major customers for the year ended March 31, 2013 is as follows:
Millions of yen

Customers

Related reportable segments

2013

Ministry of Land, Infrastructure,
Transport and Tourism

Civil engineering¥22,595(d) Information about impairment loss of fixed assets by reported segment
No impairment loss is recognized for the year ended March 31, 2013.
Impairment loss of fixed assets by reported segment of year ended March 31, 2014 is as follow.
Millions of yen

Impairment loss

2014
Reportable segments
Building
Consolidated
Civil engineering
construction
subsidiaries
¥ ―
¥ ―
¥ 70

Other
¥ ―

Eliminations
and others
¥ 2

Total
¥ 72

Thousands of U.S. dollars

Impairment loss

2014
Reportable segments
Building
Consolidated
Civil engineering
construction
subsidiaries
$ ―
$ ―
$ 680

Other
$ ―

Eliminations
and others
$ 20

Total
$ 700

(e) Information about negative goodwill by reported segment
The Company recorded gain on a bargain purchase of ¥10,090 million (US$98,037 thousand) arising from the merger with
ANDO Corporation at April 1, 2013. This gain is not allocated to a specific segment of year ended March 31, 2014.

34

22. Amounts per Share of Common Stock
Basis of calculation of basic and diluted net income per share (the “EPS”) for the year ended March 31, 2014 is as follows:
Net income
Year ended March 31, 2014:
Net income

Millions of yen

Weightedaverage
sharesThousands ofsharesEPS
Yen

U.S. dollars¥96.47$0.94¥88.59$0.86¥16,414

Net income not available to common shareholders
Cash dividends on preferred stock―¥16,414170,142

Cash dividends on preferred stock―

14,838

Shares adjusted by share subscription rights―

297¥16,414

185,277

Basic EPS-Net income available to common shareholders
Effect of dilution

Diluted EPS-Net income for computation(Note) As a result of application of the article 37 of the statement No.26,Net assets per share has decreased by 10.04 yen in this fiscal year.

Basis of calculation of basic net loss per share (the “EPS”) for the year ended March 31, 2013 is as follows:
Net income
Year ended March 31, 2013:
Net income

Millions of yen

Weightedaverage
sharesThousands ofsharesEPS
Yen¥2,293

Net income not available to common shareholders
Cash dividends on preferred stock
Basic EPS-Net income available to common shareholders

158¥2,135103,215

Cash dividends on preferred stock158

51,293

Shares adjusted by share subscription rights

―

1,085

¥2,293

155,593¥20.69Effect of dilution

Diluted EPS-Net income for computation¥14.74

23. Financial Instruments(1) Status of financial instruments(a) Policies for using financial instruments
The Companies raise funds mainly by borrowings from bank, and restrict temporary surplus funds to the lower risk assets such as
deposits. Derivative transactions are employed for hedging of the risk described below, and never use for speculation.
(b) Detail of financial instruments and the related risks
Notes and accounts receivable are exposed to the credits risks in relation to customers. Foreign currency-dominated notes andaccounts receivable are also exposed to foreign exchange risk.
Investment securities which are mainly share held for keep the relationship with business partners are exposed to market pricefluctuation risk.
Notes and accounts payable are mostly settled within one year.
Borrowing is primarily for working funds. With variable interest rates, it is exposed to interest-rates risk.
Borrowing, notes and accounts payable are also exposed to liquidity risk.
Derivative transactions entered into by the Companies are forward currency exchange contracts to hedge foreign exchange
risk involving oversea business and interest rate swap contracts to hedge interest-rates risk involving borrowing.
Refer to Note 2(8) “Derivatives and hedging transactions” for information about the hedging instruments and hedging items,
hedging policy and method of evaluating hedging effectiveness concerning the hedge accounting methods adopted by theCompanies.

35

(c) Policies and processes for risk management
In order to control customer’s credit risk, each business and sales management division within the Companies conduct periodic
monitoring of key transaction partners and attempt to find out deterioration of the financial situation at the initial stage under theinternal credit policies.
For the purpose of hedging foreign exchange risk, the Companies conduct forward exchange contracts. The Companies also
conduct interest rate swap contracts to avert interest-rate risk by each long-term borrowing.
Fair value of investment securities are periodically reported to the Directors and Executive Officers. The possession situationof securities is also continually reviewed, taking into consideration of the Companies’ relationship with respective business
partners.
Derivative transactions are treated by the Finance Department in accordance with the established policies. The Companies
deal with credible banks to reduce the credit risk.
In order to manage the liquidity risk, the Companies update financial plan monthly.
(d) Supplementary explanation on fair value of financial instruments
The fair value of financial instruments is based on market value or reasonable estimate if there is no market value. Since certain
assumptions are used for estimating values, values could be different if different assumptions are applied. In addition, thederivative contract amounts described in Note 24 “Derivative Financial Instruments” are not indicative of actual market risk
involved in derivative transactions.
(2) Fair value of financial instruments
The following tables summarize book values and fair values of financial instruments as of March 31, 2014:
Millions of yen
TypeAssets(a) Cash and time deposits

Thousands of U.S. dollars

Book values

Fair values

DifferenceBook values

Fair values

Difference¥70,774¥70,774¥ ―$687,660$687,660$ ―(b) Receivables:
Notes
Accounts

6,999

6,999

―

68,00468,004―104,298

104,271(27)

1,013,389

1,013,127

(262)

331

(c) Marketable securities andInvestments in securities:
433

467

34

4,207

4,538

11,132

11,132―

108,162

108,162¥193,636¥193,643¥7$1,881,422$1,881,491

Notes¥29,764¥29,764¥ ―$289,195$289,195$ ―Accounts

72,26472,264―702,138

702,141―

17,48017,480―169,841

169,841

―

8,822

8,822

―

85,71785,717

―

326

326

―

3,168

3,168

―

846

845

1

8,220

8,210

10

11,945

11,90342

116,061

115,653408¥141,447¥141,404¥43$1,374,340$1,373,922$ 418

Held-to-maturity debt securities
Available-for-sale securities
Total assets

―
$

69

Liabilities(a) Payables:(b) Short-term bank loans
Current maturities oflong-term debt
Current portion of bonds(c) Bonds(d) Long-term debt,
Less current maturities
Total liabilities

36

The following tables summarize book values and fair values of financial instruments as of March 31, 2013:
Millions of yen
TypeAssets(a) Cash and time deposits

Book values

Fair values

Difference¥32,683¥32,683¥ ―(b) Receivables:
Notes

1,078

1,078

―

Accounts

54,39754,382(15)(c) Investments in securities:
Held-to-maturity debt securities

134

130

(4)

3,524

3,524

―

¥91,816¥91,797

¥(19)

Notes

¥24,406¥24,406¥ ―Accounts

31,35531,355

―

5,600

5,600

―

4,327

4,327

―

8,690

8,690

―

4,579

4,562

17

¥78,957¥78,940¥ 17

Available-for-sale securities
Total assets
Liabilities(a) Payables:(b) Short-term bank loans
Current maturities oflong-term debt(c) Deposit received(d) Long-term debt,
less current maturities
Total liabilities
Notes:

1. Method of measurement of financial instruments and matters concerning securities and derivatives(Assets)(a) Cash and time deposits
The fair values of this account are equivalent to the book value, since this account is settled in a short period of time.
(b) Notes, accounts and unconsolidated subsidiaries and affiliates receivables
The fair values of these accounts are based on the present value of discounted cash flows using the interest rate determined by the factors of
the remaining terms and credit risks, with respect to each receivable categorized by collection terms.
(c) Marketable securities and Investments in securities
The fair values of this account are based on the quoted market value.
(Liabilities)(a) Notes and accounts payables and (b) Short-term bank loans, Current maturities of long-term debt and Current portion of bonds
The fair values of these accounts are equivalent to the book value, since these accounts are settled in a short period of time.
(c) Bonds
The fair value of bonds issued by the Company is based on the price on bond markets or present value of the total principal and interest
discounted by an interest rate determined taking into account the remaining period of bond and current credit risk.
(d)Long-term debt, less current maturities
The fair values of this account are based on the present value of discounted cash flows using the interest rate which may be applicable when
the same kinds of borrowings are made.
(Derivative transactions)
See Note 24 “Derivative Financial Instruments”.
2. Financial instruments which are difficult to estimate the fair value
Non-marketable securities (book values of ¥3,994 million (US$38,807 thousand) and ¥2,362 million as of March 31, 2014 and 2013,
respectively) are not included in the above “Assets (c) Investments in securities”; since it is difficult to estimate the fair values thereof because
neither market quoted value is available nor future cash flows can be estimated.

37

3. Redemption schedules for cash and time deposits, receivables and held-to-maturity debt securities as of March 31, 2014 and 2013 are as
follows:
Millions of yen
2014
Within1 year
¥70,774

Cash and time deposits

2013

Over
1 yearless than
5 years¥ ―Over
5 yearsless than
10 years¥ ―Over
10 yearsWithin1 year¥ ―¥32,683Over
1 yearless than
5 years¥ ―Over
5 yearsless than
10 years¥ ―Over
10 years¥ ―Receivables:
Notes

6,999

―

―

―

1,078

―

―

Accounts

97,554

6,744

―

―

53,113

1,284

―

―

45

5

137

246

―

―

135

―

¥175,372¥ 6,749

¥137

¥246

¥86,873¥ 1,284

¥ 135

¥ ―

Held-to-maturity debt securities
Total

―

Thousands of U.S. dollars
2014
Within1 year$687,660

Cash and time depositsOver
1 yearless than
5 years$ ―Over
5 yearsless than
10 years$―Over
10 years$―

Receivables:
Notes

68,004――

Accounts

947,862

65,527

―

―

438

48

1,331

2,391

$1,703,964$65,575$1,331$ 2,391

Held-to-maturity debt securities
Total

―

24. Derivative Financial Instruments
Derivative transactions accounted for by the hedge accounting as of March 31, 2014 and 2013 are as follows:(Interest-related transactions)
Millions of yen
2014Type ofderivative transactions

Main items
hedgedContract amount
Settled overTotal
1 year

2013
Fair
value

Contract amount
Settled overTotal
1 yearFair
value

Benchmark method:

Interest swap contract:
To pay fixed, to receive variable

Long-term debt

¥293

¥267

Note 1¥―¥―

Note 1Long-term debt

¥5,860¥3,561

Note 1¥1,316¥731

Note 1

Short-cut method:

Interest swap contract:
To pay fixed, to receive variable38

38

Thousands of U.S. dollars
2014Type ofderivative transactions

Main items
hedgedContract amount
Settled overTotal
1 yearFair
value

Long-term debt

$2,847$2,594Note 1Long-term debt

$56,937$34,600

Note 1

Benchmark method:

Interest swap contract:
To pay fixed, to receive variable

Short-cut method:

Interest swap contract:
To pay fixed, to receive variable
Note:

1. The fair values of special case interest swap treatment are included in the fair value of long-term debt since such interest swap is treated
together with long-term debt being hedged.

25. Effect of bank holiday
The year-end of March 31, 2013 fell on a bank holiday. Notes maturing on March 31, 2013 are settled on following business day,April 1, 2013 and accounted for accordingly. The amounts settled on were as follows:
Thousands of
U.S. dollars
2014

Millions of yen
Type

2014

2013

Notes receivable

¥ ―

¥ 31

$―

Total

¥ ―

¥ 31

$―

26. Asset Retirement Obligations
Disclosures about asset retirement obligations are omitted, since the amount of asset retirement obligations is immaterial for theyear ended March 31, 2014 and 2013.
27. Fair Value of Investment and Rental Property
Disclosures about fair value of investment and rental property are omitted, since the total amount of investment and rental
property is immaterial for the years ended March 31, 2014 and 2013.
28. Stock Option Plans(1) Amount of cost and accounts for stock options as of March 31, 2014 and 2013 are as follows:
Thousands of
U.S. dollars
2014

Millions of yen
2014
Cost of sales on construction contracts

2013

¥ ―

¥ ―

―

2

Selling, general and administrative expenses$――(2) Amount of profit and accounts for not exercising of stock options as of March 31, 2014 and 2013 are as follows:
Thousands of
U.S. dollars
2014

Millions of yen
2014
Special profits

2013
¥―

¥3

$―

39

(3) The stock options outstanding as of March 31, 2014 are mainly as follows:(a) Content
The first series
The first series
The second seriesof shareof shareof sharesubscription rights (A)subscription rights (B)subscription rights (A)June 27, 2008
Persons granted

Executive officers: 13

June 27, 2008
Executive employees: 76

June 26, 2009
Directors of the company: 9
Executive officers: 12

June 26, 2009
Executive employees: 9Class and number of

110,400 shares

722,000 shares

115,000 shares

86,400 sharessharesof common stockof common stockof common stockof common stock

July 15, 2008
The person who exercises
stock purchase rights shallbe a director, or executive
officer of the Company,
who has continued towork at the Company
from the fifth
stockholders’ meeting to
the sixth stockholders’meeting.
However, this condition
is invalid in case of deathor loss of position due toCompany circumstances.

July 15, 2008
The person who exercises
stock purchase rights shallbe an employee of theCompany who has
continued to work at theCompany from July 15,
2008 until July 15, 2010.
However, this condition
is invalid in case of death,retirement age or loss of
position due to Company
circumstances.

July 14, 2009
The person who exercises
stock purchase rights shallbe a director, or executive
officer of the Company,
who has continued towork at the Company
from the sixth
stockholders’ meeting to
the seventh stockholders’meeting.
However, this condition
is invalid in case of deathor loss of position due toCompany circumstances.

July 14, 2009
The person who exercises
stock purchase rights shallbe an employee of theCompany who has
continued to work at theCompany from July 14,
2009 until July 14, 2011.
However, this condition
is invalid in case of death,retirement age or loss of
position due to Company
circumstances.

From July 15, 2008

From July 15, 2008

From July 14, 2009

From July 14, 2009

Date of grantCondition of
settlement rights

Length of service
Exercisable period

Persons granted
Class and numberof shares
Date of grantCondition of
settlement rights

Length of service
Exercisable period

40

Directors of the company: 8

The second seriesof sharesubscription rights (B)to July 14, 2009

to July 15, 2010

to July 13, 2010

to July 14, 2011

From July 15, 2009

From July 16, 2010

From July 14, 2010

From July 15, 2011

to July 14, 2019

to July 15, 2015

to July 13, 2020

to July 14, 2016

The third seriesof sharesubscription rights (A)The fourth seriesof sharesubscription rights (A)June 29, 2010

June 29, 2011

Directors of the company: 8

Directors of the company: 9

Executive officers: 8

Executive officers: 13

90,000 shares

85,800 sharesof common stockof common stock

July 16, 2010
The person who exercises
stock purchase rights shallbe a director, or executive
officer of the Company,
who has continued to workat the Company from theseventh stockholders’meeting to the eighth
stockholders’ meeting.
However, this condition
is invalid in case of deathor loss of position due toCompany circumstances.

July 15, 2011
The person who exercises
stock purchase rights shallbe a director, or executive
officer of the Company,
who has continued to workat the Company from theeighth stockholders’meeting to the ninth
stockholders’ meeting.
However, this condition
is invalid in case of deathor loss of position due toCompany circumstances.

From July 16, 2010

From July 15, 2011

to July 15, 2011

to July 14, 2012

From July 16, 2011

From July 15, 2012

to July 15, 2021

to July 14, 2022

(b) Number and price

The first
series of sharesubscription
rights (A)The first
series of sharesubscription
rights (B)The second
series of sharesubscription
rights (A)The second
series of sharesubscription
rights (B)The third
series of sharesubscription
rights (A)The fourth
series of sharesubscription
rights (A)At the beginning of the year

―

―

―

―

―

―

Granted during the year

―

―

―

―

―

―

―

―

―

―

―

―

Vested during the year

―

―

―

―

―

―

At the end of the year

―

―

―

―

―

―

35,300142,500

46,00057,60063,00066,000

―

―

―

―

―

―

17,70038,000

4,600

9,600

―

5,300

―

―

―

―

―

―
60,700Non-vested shares

Forfeited and expired during theyear

Vested shares
At the beginning of the year
Vested during the year
Exercised during the year
Forfeited or expired during theyear

17,600104,500

41,40048,00063,000Exercise priceUnexercised at the end of the year

¥ 1

¥125

¥ 1

¥120

¥ 1

¥ 1

Average stock price at exercise

¥267

¥260

¥360

¥362

―

¥375

Fair value price at the grant date

¥107

¥ 30

¥101

¥ 28

¥ 72

¥111

(4) Method to estimate fair value of stock options
It does not give employees stock options for the current fiscal year.
(5) Method to estimate number of vested stock options
As a rational estimate of the forfeited number of stock options in the future is generally difficult, the company adopts a method whereby only
forfeited numbers are reflected.

29. Business Combinations
On May 24, 2012, the Company has implemented a merger agreement with ANDO Corporation (“ANDO”) which took effect on
April 1, 2013, and the approval of the extraordinary general meetings of shareholders held on July 20, 2012.
(1) Outline of the merger(a) Name and business of acquired company
Name: ANDO Corporation
Business: Construction and real estimate business(b) Main reason of the merger
The merger is expected to expand our business scale, to streamline and enhance management efficiency, and to strengthen
earnings capabilities. This agreement, through a capital tie-up with ANDO from 2003 and based on the track record we have built,
will allow us to take advantage of the complementary effect to generate synergies in technology, sales and cost competitiveness,
as well as to strengthen business fields and promote efficiency. In addition, by establishing a foundation for further overseas
business development and expansion into new business fields, the merger is expected to enhance our earnings capabilities,
financial foundation and corporate value, to establish a more solid management foundation, and to foster business development
and growth.
(c) Date of merger
April 1, 2013(d) Regal form of merger
Absorption-type merger (HAZAMA as the surviving company, ANDO as the extinct company)(e) Name after management integration
HAZAMA ANDO CORPORATION

41

(f) Voting rights acquired
100%(g)Reason for determining acquiring company
It is decided that HAZAMA be the acquiring company and ANDO be the acquired company, due to shareholders of HAZAMA awholly owned subsidiary, will have the largest percentage of voting rights of the integrated company.
(2) Acquisition cost of acquired company
Millions of yen

Consideration for the acquisition
Immediacy acquisition cost
Acquisition cost

Common stocks
Advisory cost, etc.

2014
¥ 9,117125¥ 9,242

Thousands of
U.S. dollars
2014$ 88,583
1,215$ 89,798(3) Share exchange ratio, its basis for determination, number of share delivered
HAZAMA
ANDO(Surviving company)(Extinct company)
Content of allotment inCommon stock 1
Common stock 0.53
relation to the merger
Notes:
1. 0.53 shares of HAZAMA’s common stock are allotted and delivered per share of ANDO common stock.
However, it isn’t allotted to 2,783,963 shares of the Company’s common stock which ANDO owns.
2. HAZAMA and ANDO requested financial advisers to perform financial analyses with respect to the share transfer ratio.
HAZAMA and ANDO referred to the analyses of the share transfer ration rendered by financial advisers.
As a result of discussions concerning the share transfer ratio, HAZAMA and ANDO resolved to apply such share transfer ratio.
3. Number of shares delivered by the merger is 43,833,139 common stock of HAZAMA. (HAZAMA does not apply treasury stock to theallotment of shares by this merger.)(4) Amount of gain on bargain purchase and reason for recognizing negative goodwill(a) Amount of gain on bargain purchase¥10,090 million ($98,036 thousand)(b) Reason for recognizing negative goodwill
ANDO accounted for the difference between the acquisition cost and the net amount of assets and liabilities acquired, as negative
goodwill.
(5) Amount of assets and liabilities acquired on date of merger
Millions of yen

Current assets
Fixed assets
Total assets
Current liabilities
Long-term liabilities
Total liabilities

Thousands of
U.S. dollars

2014¥ 84,322$ 819,296
31,821
309,182
116,143
1,128,478
83,232808,706
13,579131,937
96,811
940,643

30. Subsequent Event
On June 27, 2014, the shareholders of the Company approved the appropriations of retained earnings to pay cash dividends in theamount of ¥924 million (US$8,978 thousand).

42

Independent Auditor’s Report

To the Board of Directors of HAZAMA ANDO CORPORATION:
We have audited the accompanying consolidated financial statements of HAZAMA ANDOCORPORATION and its consolidated subsidiaries, which comprise the consolidated balance sheets as at
March 31, 2014 and 2013, and the consolidated income statements, statements of comprehensive
income, statements of changes in net assets and statements of cash flows for the years then ended, and asummary of significant accounting policies and other explanatory information.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial
statements in accordance with accounting principles generally accepted in Japan, and for such internal
control as management determines is necessary to enable the preparation of consolidated financial
statements that are free from material misstatements, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our
audits. We conducted our audits in accordance with auditing standards generally accepted in Japan.
Those standards require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether the consolidated financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the consolidated financial statements. The procedures selected depend on our judgement, including
the assessment of the risks of material misstatement of the consolidated financial statements, whether
due to fraud or error. In making those risk assessments, we consider internal control relevant to theentity’s preparation and fair presentation of the consolidated financial statements in order to design audit
procedures that are appropriate in the circumstances, while the objective of the financial statement audit
is not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An
audit also includes evaluating the appropriateness of accounting policies used and the reasonableness ofaccounting estimates made by management, as well as evaluating the overall presentation of theconsolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit opinion.
OpinionIn our opinion, the consolidated financial statements present fairly, in all material respects, the financial
position of HAZAMA ANDO CORPORATION and its consolidated subsidiaries as at March 31, 2014 and2013, and their financial performance and cash flows for the years then ended in accordance withaccounting principles generally accepted in Japan.
Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year
ended March 31, 2014 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 to the consolidated financial statements.

August 11, 2014
Tokyo, Japan43

Global Network
Japan
Head Office6-1-20, Akasaka, Minato-ku, Tokyo 107-8658, Japan

Branches

Sapporo, Tohoku, Tohoku Building, Hokuriku, Metropolitan Area Building,Kanto Civil, Shizuoka, Nagoya, Osaka, Shikoku,
Hiroshima, Kyushu

International Division

6-1-20, Akasaka, Minato-ku, Tokyo 107-8658, Japan

Branches

81-3-6234-3600

81-3-6234-3640

Asia, North America

Technical Research Institute515-1, Karima, Tsukuba-shi, Ibaraki 305-0822, Japan

81-29-858-8800

Overseas

TurkeyU.S.A.
Vietnam
Laos

Nepal

Cambodia

MyanmarSingapore

Thailand

MexicoHonduras
Peru

Malaysia
Indonesia

OfficesThailand

AddressPhone

159 Serm-Mit Tower Building, 15th Floor, Sukhumvit Road 21 (Soi Asoke), North Klongtoey,
Wattana, Bangkok 10110, Thailand

66-2-665-7041

Vietnam

18th Floor, Harbour View Tower, 35 Nguyen Hue Street, District 1, Ho Chi Minh City, Vietnam

84-8-38299533

Malaysia

Suite 13.4, Level 13, Menara IMC, Letter Box No.9, No.8, Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia

60-3-2031-4902

Indonesia

Menara Thamrin, 14th Floor, Suite 1405, JL. M.H. Thamrin Kav. 3, Jakarta, 10250, Indonesia

62-21-3140392

Laos

Ban Sibounheung Unit No.3 House No.030 Chanthabouly District Vientiane Capital, LAO.P.D.R

856-21-250-872

MyanmarRoom No.513, YANGON INTERNATIONAL HOTEL, No.330, Ahlone Road, Dagon Township, Yangon, Myanmar

95-1-216002 (Ext.513)

Cambodia

Office NO.19, HOTEL CAMBODIANA 313 Sisowath Quay, Phnom Penh, Cambodia

855-23-992-914

Nepal

P.O.Box No.4137 Ward No.4 Baluwatar, Kathmandu, Nepal

977-1-4438032

TurkeyATATURK MAHALLESI GIRNE CADDESI, NO:27, D:2-3, Atasehir, Istanbul, Turkey

90-216-456-5047

MexicoHamburgo No. 206 Int. 203 Col. Juárez, C.P. 06600 Del. Cuauhtémoc, México, D.F.

52-55-5525-9311

U.S.A.

500 West Wilson Bridge Road, Suite 130 Worthington, Ohio 43085, U.S.A.

1-614-985-4906

Peru

AV. Javier Prado Este 1104, Edificio San Agustin Of.603, San Isidro, Lima, Peru

51-1-225-7553

Honduras

Colonia Lomas de Miraflores Sur 3ra. Calle, Casa No. 4310, Tegucigalpa M.D.C., Honduras, C.A

504-2271-1283

44

Corporate DataName

(As of March 31, 2014)

Authorized Shares

HAZAMA ANDO CORPORATION

Issued Shares

Common stock
397,250,000
Preferred stock
2,750,000

Established
October 1, 2003

Common stock
185,209,189

Number of Shareholders
40,780
Number of Employees
3,385

Capital¥12,000 million

Directors, Officers
Board Directors
Representative Director andChairman of the Board of
Directors
Toshio Ono
Representative Director andPresident
Toshiaki Nomura
Representative Directors andVice Presidents
Mitsuaki Higo
Haruyuki Kaneko
Board Directors / Senior
Managing Executive Officers(As of July 1, 2014)

Board Directors / Managing
Executive Officers
Hisayoshi Kinoshita
Fumio Sugimoto
Kiyoka Fukunishi

Auditors

Executive Officers
Senior Managing Executive
Officers
Toshioki Nishida
Mamoru Iwao
Managing Executive Officers

Auditors
Motonori Kinoshita
Yoshihiko Baba
Auditor (External Auditor)
Junichi Kurosaki
Corporate Auditor (External
Auditor)Takashi Ejiri

Hisanori Ueno
Hikari Yamazaki
Hidekazu Kojima

Toru Kumaki
Hidetoshi Yoichi
Toshihiko Kitano
Masato Fukutomi
Kazuya Ozawa
Executive Officers
Toshimitsu Ueno
Daizo Yoshikawa
Takamitsu Takeuchi
Shinkichi Komatsubara
Katsuhiko Tabuchi

Major Subsidiaries and Affiliates
Name
Stated Capital			

Katsuhiko Kosaka
Akira Yoshimoto
Yoshihiro Nasu
Yasushi Kikuchi
Shozo Tsuji
Tatsumi Asao
Hideo Hosobuchi
Yoichi Matsuura
Saburo Miyazaki
Toshiaki Iimura
Masaaki Tomita
Toru Ikegami
Muneo Gomi

(As of April 1, 2014)

Principal Business

Address / Phone

Hazama Ando Kogyo
152.5 million JPY
Sales of Construction Materials
Co., Ltd.			

1-38-4, Kameido, Koto-ku, Tokyo 136-0071, Japan
81-3-5626-7130

Aoyama Kiko Co., Ltd.
80 million JPY
Construction, Procurement			2-45, Yamanaka, Kitamoto-shi, Saitama 364-0004, Japan
81-48-591-9770

Ryoko Kaihatsu Co., Ltd.
80 million JPY
Real-estate			

1-8-20, Marunouchi, Naka-ku, Nagoya-shi, Aichi 460-0002, Japan
81-52-232-2171

HAZAMA ANDO (THAILAND)
16 million THB
Construction
CO., LTD.			
			

159 Serm-Mit Tower Building, 15th Floor, Sukhumvit Road 21(Soi Asoke), North Klongtoey, Wattana, Bangkok 10110, Thailand
66-2-665-2980

HAZAMA ANDO SINGAPORE
6.5 million SGD
Construction
PTE. LTD.			

168 Jalan Bukit Merah #03-07 D&E, Tower C, Singapore 150168
65-6270-9498

HAZAMA ANDO MALAYSIA
800,000 MYRConstruction
SDN. BHD.			

No. 84B, Jalan Sutera Tanjung 8/4, Taman Sutera Utama, 81300
Skudai, Johor, Malaysia
60-7-557-3833

			

45

Printed in Japan