Annual Report

2012

4, Kojimachi 5-chome, Chiyoda-ku, Tokyo 102-8539, Japan
Telephone: +81 3 3238 8027 Facsimile: +81 3 3238 8326
http://www.n-koei.co.jp E-mail: info@n-koei.co.jp

Year Ended March 31, 2012

Printed in JapanC o m p a ny P ro f i l e

Nippon Koei Co., Ltd. established in 1946, specializes in engineering consulting andelectric power engineering. Since its foundation, the Company has adhered to apolicy of contributing to society through technology.
Our engineering consulting services, provided by the Consulting Administration
Group, draws on the technical expertise of specialists in diverse fields. Since ourfirst overseas venture, a hydroelectric power project in Myanmar in 1954, we haveparticipated in a broad variety of sophisticated development projects worldwide.
The Engineering Administration Group spearheads the Company's electric powerengineering business. Here, we provide a complete engineering package, fromsurveys and designs to the installation of a wide range of equipment, including
power stations and substations, transmission lines, and end-user equipment. We are
active both in Japan and overseas.
Committed to responsible corporate citizenship, Nippon Koei Group and its
employees dedicate their efforts to creating comfortable living environments forpeople around the world.

CONTENTS
Financial Highlights ....................................................................................................... 1
Consolidated Business Report for Fiscal 2011 (Fiscal Year Ended March 31, 2012) ....... 2
Consolidated Balance Sheets ....................................................................................... 10
Consolidated Statements of Income ............................................................................ 12
Consolidated Statements of Changes in Equity .......................................................... 13
Consolidated Statements of Cash Flows ...................................................................... 14
Notes to Consolidated Financial Statements .............................................................. 15
Non-consolidated Balance Sheets ................................................................................ 38
Non-consolidated Statements of Income .................................................................... 40
Non-consolidated Statements of Changes in Equity .................................................. 41
Notes to Non-consolidated Financial Statements ....................................................... 42
Corporate Information ................................................................................................. 52
Major Nippon Koei Group Companies ........................................................................ 54

Financial Highlights

Consolidated
Thousands of
U.S. Dollars

Millions of Yen
Years Ended March 31

2012

2011

2012

Net sales ................................................................

¥65,945¥65,807$802,348

Net income ...........................................................

1,420

1,207

17,277

Net income per share (Yen/Dollars) ....................

18.39

15.16

0.22

Total assets ...........................................................

79,37274,741

965,714

Equity ������������������������������������������������������������������

43,505

43,698529,322

As of March 31

Non-Consolidated
Thousands of
U.S. Dollars

Millions of Yen
Years Ended March 31

2012

2011

2012

Net sales ................................................................

¥49,852¥48,426$606,546

Net income ...........................................................

1,203

3,160

14,637

Net income per share (Yen/Dollars) ....................

15.58

39.67

0.19

Total assets ...........................................................

71,601

66,763871,164

Equity ������������������������������������������������������������������

39,92140,335

485,716

As of March 31

Notes: 1. Per share amounts are based on the weighted average number of shares outstanding during each period.
2.	The dollar amounts in this report represent translations of yen, for convenience only, at the rate of ¥82.19=US$1, the rate ofexchange at March 31, 20121

Co n so l i dated B u sine ss R ep o rt fo r Fi s c al Year E n d ed
M a rch 31, 2 01 2
1. Overview of Performance and Cash Flow
(1) Performance
The Japanese economy this fiscal year (April 1, 2011 through March 31, 2012) saw consumer spending andcorporate capital expenditures pick up as production rebounded after the devastating Great East Japan
Earthquake. While the Japanese government granted a supplementary budget for public investment projects, thestrong yen, European economic crisis and Thai floods posed major challenges for larger companies, especially
exporters.
The Nippon Koei Group’s domestic consulting operations remained healthy thanks to an increase in publicprojects fueled by the government’s first and second supplementary budgets as well as the third supplementarybudget designed to get post-quake reconstruction work running full steam. Our overseas consulting operations
also grew steadily as the government increased its Official Development Assistance (ODA) budget to meetincreasing demand for infrastructure projects in developing countries. On the other hand, we saw sales
performance decline for our electric power engineering operations as electric companies cut spending on newcapital investments and repairs due to declining revenue triggered by the shutdown of their nuclear power
plants.
Working against this backdrop, the Group focused on aiding post-quake recovery efforts as its top priority forthe fiscal year. We went to work on reconstruction immediately after the earthquake struck. Leveraging theinfrastructure engineering expertise of our entire Group, we continued to help earthquake-hit areas rise fromthe rubble with safe, disaster-resilient communities.
Positioning our overseas projects as a key to further growth, we also focused on building logistics networks andurban infrastructures such as water supply and sewerage systems in developing countries with an aim to achievesustainable growth.
Greater efforts to ensure regulatory compliance via effective use of our internal controls as well as meticulous
risk, safety, and quality control management have enabled us to build an even stronger management foundation.
We are continually moving ahead with an eye to firmly establishing our place as a leading company that istrusted by the public. On top of everything else, we have also boosted management efficiency throughconcentration and integration of our operations.
Consolidated orders received during the year increased 14.4% year on year to total 69,268 million yen while
year-on-year sales remained virtually flat at 65,945 million yen.
Net income also rose by 17.6% on a year-on-year basis to hit 1,420 million yen.
The performance for each business segment is outlined below.

Domestic Consulting Operations
Orders were fueled by a host of projects involving everything from post-quake recovery and reconstruction tonational disaster preparedness, recovery work related to the sediment disasters caused by Typhoon Talas andTyphoon Roke, extending the life of public facilities, digital public safety radio communication systems, as wellcompetitive bidding projects from the Ministry of Land, Infrastructure, Transport and Tourism based on the best
technology proposals, etc. In the final analysis, orders soared 23.0% year on year to reach 37,581 million yen
while sales climbed 7.8% year on year to total 34,423 million yen. Segment profit totaled 878 million yen, a yearon-year increase of 1,705 million yen (from segment loss of 827 million yen last year).

Overseas Consulting Operations
Orders increased steadily mainly for Japan International Cooperation Agency (JICA) projects for research surveys
although projects financed by the Japanese government’s yen loans decreased since the signing of some contracts
were deferred until the following year. Performance was buoyed by contracts for transportation projects, including
an intelligent transport system (ITS) project in Brazil and railroad projects in India and Egypt. We also received
orders for non-ODA projects, including a project to build a large-scale water-power generation plant in Pakistan(an order from the World Bank). All these projects brought our orders total up 28.3% to reach 19,663 million yen.
Sales remained flat at 16,326 million yen, while segment profit, dropping 25.6% year on year, came to 975 millionyen.

2Power Engineering Operations
Our power equipment manufacturing operations saw an increase in orders for water turbines and power
generators from private-sector companies. Unfortunately, orders were down for computer control systems as
power companies cut back on capital investments. Orders for installation work also dropped sharply for powercompanies, including expansions and upgrades to transformer substations. Overall, orders were down 18.0% year
on year, reaching 11,991 million yen. Sales dropped 17.8% year on year to total 12,932 million yen. Segment profit
totaled 837 million yen, down 47.9% year on year.

Real Estate Leasing Operations
Sales from our real estate leasing operations declined by 5.5% year on year to reach 1,193 million yen, while
segment profit grew 5.5% to total 822 million yen.

(2) Cash Flow
Cash flow totaled 5,923 million yen for cash and cash equivalents at the end of the fiscal year under review,
increasing 766 million yen over the previous year. The factors behind this increase include the following.
Net cash provided by operating activities totaled a negative 1,195 million yen (vs. a net inflow of 5,965 million
yen last year). This was due primarily to an increase of 5,730 million yen in trade accounts receivable althoughincome before income taxes and minority interests totaled 2,990 million yen, an increase of 729 million yen over
the total figure for the end of the previous consolidated fiscal year.
Cash flow from investing activities totaled 1 million yen (vs. a net outflow of 2,137 million yen last year). Thiswas due primarily to purchases, sales and redemption of investment securities.
Cash flow from financing activities amounted to 1,950 million (vs. a net outflow of 4,847 million yen last year).
This was due primarily to purchase of treasury stock as well as proceeds from short-term borrowings.
The table below shows trends in cash flow-related indicators for the Group.
Reference: Trends in Cash Flow-related Indicators

Capital-to-asset ratio (%) .....................
Capital-to-asset ratio
on market value basis (%) ................
Interest-bearing
debt-to-cash flow ratio (annual) ......
Interest coverage ratio .........................

Fiscal Year
Ended March2008

Fiscal Year
Ended March2009

Fiscal Year
Ended March2010

Fiscal Year
Ended March2011

Fiscal Year
Ended March
2012

52.1

52.2

53.8

58.1

54.5

25.4

22.7

27.5

32.0

27.4

17.8
10.2

2.5
28.0

9.5
9.8

1.6
52.3

—
—

Capital-to-asset ratio: stockholders’ equity / total assets
Capital-to-asset ratio on market value basis: market capitalization / total assets
Interest-bearing debt-to-cash flow ratio: interest-bearing debts / cash flow
Interest coverage ratio: cash flow / interest payment
Notes: 1. All figures are calculated on the basis of consolidated financial figures.
2. Market capitalization is computed on the basis of the number of shares issued, excluding treasury stocks.
3. Cash flow here means operating cash flow.
4. Interest-bearing debt here comprises all debts included in the balance sheet on which interest is paid.
5. 	The Interest-bearing debt-to-cash flow and Interest coverage ratios for the fiscal year ended March 2012 were negative as
indicated by “—.”3

2. Production, New Orders and Sales(1) New Orders
This Consolidated
Fiscal YearBusiness Category

Change onPrevious Year(%)

(Millions of yen)

New Orders
Domestic consulting operations ..............................
Overseas consulting operations ..............................
Power engineering operations .................................
Other business operations .......................................
Total new orders ..................................................
Outstanding orders
Domestic consulting operations ..............................
Overseas consulting operations ..............................
Power engineering operations .................................
Other business operations .......................................
Total orders on hand ...........................................

¥37,581
19,663
11,991
33
69,268

23.0
28.3
-18.0
47.1
14.4

12,42033,9486,766
21¥53,155

10.0
6.4
24.4
0.0
9.3

Notes: 1. Figures above do not include consumption tax.
2.	The above figures are related to transactions with non-Group organizations: They do not include internal transactions
between Group segments or the transfer amounts involved.

(2) Sales PerformanceThis Consolidated
Fiscal YearBusiness Category

Change onPrevious Year(%)

(Millions of yen)Domestic consulting operations ..............................
Overseas consulting operations ..............................
Power engineering operations .................................
Real estate leasing operations .................................
Other business operations .......................................
Total sales ..............................................................

¥34,423
16,326
12,932
1,193
1,071¥65,945

7.8
2.3
-17.8
-5.5
18.4
0.2

Notes: 1. Production status is not stated due to difficulties in defining consolidated group production performance.
2. Transactions between business segments are offset and eliminated.
3. Amounts above do not include consumption tax.
4. Sales to major customers as a proportion of total sales are given as follows.

Customer
Ministry of Land, Infrastructure,
Transport and Tourism .....................
Japan International
Cooperation Agency ..........................
Tokyo Electric Power Co., Ltd. ...........

This Consolidated
Fiscal Year
Amount(Millions of yen)Previous Consolidated
Fiscal Year

Proportion(%)

Amount(Millions of yen)

Proportion(%)¥12,976

19.7¥10,659

16.2

6,701

10.2

6,832

10.4

6,092

9.2

8,414

12.8

3. Future Challenges(1) Management Policy
The Nippon Koei Group keeps the management philosophy “contributing to society through technology withsincerity”. With the slogan “Challenging mind, Changing dynamics”, the Group is making best efforts to realize
the management philosophy.

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Looking ahead, under this management philosophy and slogan, we see that the direct impact of the Great East
Japan Earthquake merely temporary and that the growth of emerging markets in Asia and other parts of theworld will be sure to fuel demand for overseas infrastructure construction. Working against this backdrop, we
will continue to make inroads into the global market with an eye to achieving sustainable growth. Therefore, theNK Group shall, while maintaining a secure technical foundation in Japan (consulting and engineeringbusinesses), focus on the expanding infrastructure development market in developing countries to significantly
expand its businesses. On the other hand, in order to attain sustainable growth in the future, the overseas office
and/or group companies should take the initiative of exploring and forming new business domains. Accordingly,
the basic policies of the Medium-Term Management Plan for FY2013 to FY2015, which is positioned as the firststage to realize the above-mentioned target, are the “enhancement of global operations” and “exploration andformulation of new business domains”.
According to the basic policies for the target period, i.e. “enhancement of global operations” and “explorationand formulation of new business domains”, the following three priority issues are addressed:(1)	Development and management of overseas offices and/or group companies (introduction of multi-domestic
management)(2) Enhancement of the existing business sectors and expansion of business domains(3) Exploration of new business models including new initiatives in project management
In following this new Medium-Term Management Plan, we will implement these specific measures during fiscal
year 2013.
1) Development and management of overseas offices and/or group companies (introduction of multidomestic management):
Overseas offices and/or group companies under the new initiative shall be established and/or enhanced in thefour major markets, i.e. Asia, Middle East and North Africa, Latin America and Sub-Saharan Africa, according
to the overseas business expansion strategy required for the “enhancement of global operations” in an effort toaggressively engage the non-ODA market in addition to the current ODA market. This shall be promoted basedon the principle of “introduction of multi-domestic management”. While localization and multinationalization
shall be pursued to promote a region-based marketing and production system which is operated by anautonomous local workforce, the cross-sectional technical functions that connect the Tokyo headquarters andthe overseas offices and/or subsidiaries shall be enhanced in order to ensure a sufficient level of quality for all of
the NK Group’s services.
2) Enhancement of the existing business sectors and expansion of business domains:
Taking into consideration the market trend in and out of Japan, the future direction of social capital
improvement, and the two basic policies, i.e. “enhancement of global operations” and “exploration andformulation of new business domains”, the enhancement and expansion of the urban and regional development
sector (including transportation) with the mechanical and electrical consulting sector shall be pursued as apriority issue for the entire NK Group.
Particularly in Japan , the NK Group shall concentrate its efforts on disaster recovery projects and strive toacquire advanced technologies in order to expand the business domains to upstream and downstream industries
to address significant decrease and qualitative change of the budget for public projects in the next several years.
3) Exploration of new business models including new initiatives in project management:
The NK Group shall utilize its accumulated know-how in order to promote businesses corresponding to theinvestment trends in and out of Japan, and/or to discover potential business investment demands in an effort to
explore and realize new business models.
We will also make ongoing company-wide efforts to enhance cross-departmental marketing functions; employ,train and allocate strategic personnel; maintain advanced technological standards; develop quality assurance
systems; and increase productivity.

(2) Basic Policy Governing Corporate Decision-makers on Financial Affairs andOperations
Our basic policy governing corporate decision-makers on financial affairs and operations (GovernancePrinciples) is as detailed below.

51) Governance Principals
We are proud of our company’s track record as a good corporate citizen. Nippon Koei has been charged withfulfilling a great social mission and public works projects, including construction consulting. The power of ourbrand is backed by a wide range of technological expertise, years of experience, and a rock-solid performancerecord. It would be impossible to manage Nippon Koei, improve its corporate value, or bring profit to its
shareholders without a good understanding of everything the brand stands for or without the relationship ofmutual trust that has been built between Nippon Koei and its customers, employees, suppliers, and otherstakeholders in Japan and abroad.
We believe that, in the event of a takeover bid, any party attempting to acquire a large number of shares (bidder)should provide shareholders with all the information necessary for them to make a sound decision.
2) Special Measures for Effective use of Corporate Assets, Building a Better Group, and Realizing Other
Governance Principles
At Nippon Koei, we implement the following special measures in line with the Governance Principles describedin 1) above.
(i) Medium-term Goals
Our medium-term goals and specific measures under our Medium-Term Management Plan are as described in
the section entitled “(1) Management Policy.”(ii) Enhancing Corporate GovernanceWorking with an eye to increasing the corporate value of Nippon Koei and the Nippon Koei Group as a whole,
we are continually making improvements to corporate governance by strengthening management oversight,
ensuring transparency, and establishing a system that will enable us to quickly perform our operations. We also
focus on compliance as well as risk management to enhance the effectiveness of internal controls and haveadopted a corporate auditor system. The Board of Directors provides oversight of our operations while theBoard of Corporate Auditors audits the directors’ activities.
3) Preventing Undesirable Takeover
In line with the Governance Principles described in 1) above, we maintain an anti-takeover policy (hereinafter“Policy on Substantial Acquisition of Shares”) which is intended to prevent undesirable control over decisions
on our financial and operational policies. The Policy on Substantial Acquisition of Shares generally applies toany bidder attempting to acquire a large number of Nippon Koei shares in a bid to control 20% or more of thevoting rights held by a certain group of shareholders or acquiring enough shares to change the balance of power
in order to ensure that a certain group of shareholders have 20% or more of the voting rights. The Policy
requires the bidder to (a) provide the Board of Directors with all relevant information including written
notification declaring his/her exact intentions in advance, and (b) begin purchasing shares only after the elapseof a tender assessment period to be specified by the Nippon Koei Board of Directors.
The shareholders voted at the 66th general shareholders’ meeting held on June 29, 2011 to revise part of the
Policy on Substantial Acquisition of Shares. The revision, carried out in the common interest of theshareholders, makes the policy more appropriate and better suited to maintaining and enhancing corporate
value. The policy was first introduced in May 2006 after which the Board voted to continue it in June 2007. It
was later partially revised upon approval of shareholders at the 63rd general shareholders’ meeting held on June27, 2008.
The details of the Policy on Substantial Acquisition of Shares were made public on May 10, 2011 and have been
made available on the Nippon Koei Group website (http://www.n-koei.co.jp/).
4) Board Decision Concerning the Measures Described in 2) and 3) Above
The measures described in 2) above are in line with the Governance Principles described in 1) above since they
were implemented for the purpose of enhancing corporate value and carried out in the common interests of ourshareholders. These measures protect the interests of our shareholders over protecting the corporate directors
from being replaced.
The measures described in 3) above (Policy on Substantial Acquisition of Shares) are in line with theGovernance Principles described in 1) above. It protects the interests of our shareholders over protecting thecorporate directors from being replaced in the following ways:a. The Policy on Substantial Acquisition of Shares meets the three basic requirements set forth in the Guidelines
Regarding Takeover Defense for the Purposes of Protection and Enhancement of Corporate Value andShareholders’ Common Interests published by the Ministry of Economy, Trade and Industry (METI) and the6Ministry of Justice on May 27, 2005. It also incorporates a June 30, 2008 report entitled “Proper Role of
Takeover Defense Measures in Light of Changes in Various Environments” published by METI’s Corporate
Value Study Group.
b. The Policy enables our shareholders to make an informed decision on whether a takeover would be beneficial,prevents any apparent infringement on Nippon Koei’s corporate value and is in the best interest of Nippon
Koei and its shareholders.
c. The Rules on Substantial Acquisition of Shares and the necessary conditions for taking countermeasures arereasonable in light of our aim to maintain and enhance Nippon Koei’s corporate value and protect theinterests of its shareholders.
d. The Rules on Substantial Acquisition of Shares and the necessary conditions for taking countermeasures areconcrete and clear enough to make it possible for the shareholders, investors and potential bidders to makefair predictions about the future.
e. The policy was enacted by a vote of the shareholders at a shareholders’ meeting. Nippon Koei’s Board of
Directors can convene a shareholders’ meeting in order to verify the shareholders’ intentions to implement a
countermeasure or not. Decisions about whether to maintain, rescind or alter the policy, made in the form ofa resolution to be voted on at a general meeting of shareholders, will ensure that the wishes of theshareholders are reflected in company policy.
f. The policy establishes objective and clear conditions for taking countermeasures. It also establishes priorconditions needed to implement countermeasures, requiring that the Nippon Koei Board consult its
independently established ad hoc committee in advance concerning the initiation of countermeasures. Only
after carefully considering the recommendations of the committee will the board make its final decision on
implementing counter-takeover measures. The Policy on Substantial Acquisition of Shares ensures that all
decisions of the Board regarding countermeasures are objective and reasonable.
g. The policy empowers the ad hoc committee to seek the advice of independent experts at Nippon Koei’s
expense. The policy goes to such great lengths that it leaves no room for doubt about the fairness andobjectivity of the ad hoc committee’s recommendations.
h. The Policy on Substantial Acquisition of Shares is not intended to be a dead-hand takeover defense and may
be abolished subject to a vote at the company’s general meeting of shareholders or at a Board meeting
comprised of directors elected at a general meeting of shareholders. It is not a slow-hand takeover defense
either since the term of the Nippon Koei Board members is one year.

4. Business Risks
The following are deemed to be risks that could affect Nippon Koei’s future financial status or corporate
performance as of the date this report was submitted. These risks listed here are not intended to be allencompassing or exhaustive.

Uneven Annual Distribution of Performance Results
The primary operations of Nippon Koei include domestic and overseas construction consultancy and powerengineering and equipment manufacturing. The domestic construction consultancy operations entail mainly
government and public agency projects whose orders come in as a cluster towards the end of the fiscal year
(March). As a result, 70-80% of Group sales tend to occur in the second half of the year.

Dependence on Major Customers
Our domestic and overseas construction consultancy operations rely on foreign and national government
contracts for some 90% of its sales. Sales performance on the domestic front tends to be affected by trends ingovernment spending while our international orders are a reflection of the Japanese ODA budget.
Since about 50-70% of our power engineering operations are for the Tokyo Electric Power Company (TEPCO),
our sales performance is largely dictated by capital investments by TEPCO.

5. Operationally Significant Contracts
The Group reports no operationally significant contracts.

6. Research and Development
You can see the Nippon Koei Group’s management philosophy “contributing to society through technology withsincerity” behind everything it does. Nippon Koei is putting technology to work with an eye to creating a betterworld for everyone.

7

Overall Group research and development costs for the consolidated fiscal year under review amounted to 413
million yen.

Domestic and Overseas Consulting and Other Operations
Research and development over a wide range of construction consulting services is conducted at Research &Development Center. We monitor research by means of adjusted return map, which we customized the HewlettPackard Return Map, in order to accelerate the research process and evaluate the results with an eye to practicalapplication. The following R&D projects were conducted during the consolidated fiscal year under review:(1)	Research and development of advanced numerical analysis techniques andgeneral-purpose software applications
R&D work was conducted on the development of automated design software for canal/dock management,
geographical information and NK-GIAS hydrology application software, as well as research relating to practicalapplications of two- and three-dimensional hydraulic analysis.

(2) Research and development relating to national disaster prevention
R&D work also focused on ground surface uplift due to the recovery of groundwater levels, development of arisk assessment technique for tsunamis and storm surges, development of a method for assessing the impact oflandslides on tunnels, research to enhance systems designed to detect slope failure, development of acomprehensive river basin sediment control model as well as the study of earthquake fault and seismic load
design.

(3) Research and development for climate change measures
Research efforts involved developing multi layer flow analysis techniques for CO2 aquifer storage, localized
weather prediction aimed at reducing water damage risk caused by seasonal fluctuations, simulations designed
to help prevent groundwater salinization and groundwater resource management technology, real-time disaster
information IT, development of an ecosystem and water environment management simulator, as well as
techniques for monitoring and preserving biodiversity in the context of global warming.

(4)	Research and development in performance verification and management support
systems
Research was carried out on a dynamic crack propagation analytical model for concrete structures, as well as aproject assessment model for social infrastructure improvements.

(5) Technical exchanges with overseas research institutes
Technical exchange activities were conducted with the Asian Institute of Technology, the United Nations
University, the Korean Electrical Power Research Authority, and National Cheng Kung University in Taiwan.
Research and development costs to support these activities totaled 269 million yen.

Power Engineering Operations
R&D work in this area was mainly carried out at the Fukushima operations site. Main R&D efforts for thisconsolidated fiscal year included:(1) Phase II research on improving water turbine performance
We conducted computational fluid dynamics (CFD) and model tests for a Francis turbine with a specific speedof 200 m/kW. Better turbine performance will enable us to capitalize on the rising demand predicted for thesmall to medium hydropower plant market.
We designed a model turbine and complete a prototype runner during this fiscal year.

(2) Development of water-lubricated bearings for commercialization
An increasing number of water-power generation plants are looking to use products with environmental features
and are expected to employ water-lubricated bearings. In light of this trend, we are working to develop waterlubricated bearings to boost our competitiveness in the hydro power market.
We conducted analysis of water-lubricated bearing characteristics as well as examine and designed a test plant
during this fiscal year.

(3) Development of a transfer-trip relay system for 275/154-kv substations
A transfer-trip relay system is designed to remotely trip a circuit breaker in the event of a substation failure. We
developed a highly reliable digital transfer-trip relay designed for 275/154-kv substations. The system alsofunctions as a system control that transmits trip signals to a remote location.

8

(4) Development of software for enhancing PC-based control system functions
The market for PC-based control systems is expanding as better-performing and more reliable PCs become
available. In order to respond to growing market needs and increase the productivity of PC-based control
systems, we conducted a research project to develop new PC middleware designed to enhance the functions of
PC-based control systems.
Research and development costs to support these activities totaled 144 million yen.

7. Analysis of Financial Status, Management Performance
Here is an analysis of the Nippon Koei Group’s financial status, management performance as well as cash flow
status for the current consolidated fiscal year.

(1) Analysis of Financial Status
Group consolidated assets at the end of the fiscal year under review amounted to 79,372 million yen, up 4,631
million yen over the previous year.
The main causes for this increase were a 5,906 million yen increase in current assets as well as a 328 million yen
decrease in property, plant and equipment, a 947 million yen decrease in investments and other assets.
The increase in current assets was due primarily to a 766 million yen increase in cash and cash equivalents, a
5,730 million yen increase in trade notes and trade accounts receivable.
The decrease in property, plant and equipment was due primarily to a 612 million yen decrease in accumulated
depreciation as well as a 284 increase in property, plant and equipment. The decrease in investments and otherassets was due primarily to a 401 million yen decrease in investment securities, a 310 million yen decrease ingoodwill, and a 297 million yen decrease in differed tax assets.
Consolidated liabilities at the end of the fiscal year under review were up 4,824 million yen compared to theprevious year to reach a figure of 35,867 million yen.
This increase was mainly due to a 5,182 million yen increase in current liabilities and a 358 million yen decreasein long-term liabilities.
The increase in current liabilities was due primarily to a 747 million yen increase in trade notes and tradeaccounts payable, a 4,000 million yen increase in short-term borrowings, and a 517 million yen increase inincome taxes payable.
The decline in long-term liabilities was due primarily to a 147 million yen decrease in long-term debt, a 103
million yen increase in liability for retirement benefits, and a 274 million yen decrease in deposits received.
Equity (net assets) at the end of this fiscal year fell 193 million yen below last year’s total to hit 43,505 million
yen.
The main cause behind this drop was an increase of 625 million yen in retained earnings, an increase of 1,083
million yen in expenditures from acquisition of treasury stock, and an increase of 295 million yen in unrealized
loss on available-for-sale securities.

(2) Performance Analysis
Net sales for the current fiscal year increased 138 million yen (0.2%) over the previous year to reach a total of
65,945 million yen.
Operating income for the current year increased by 326 million yen (12.1%) over the previous year to reach
3,030 million yen. The cost of sales to net sales ratio was 73.6%, down 0.8 points from the previous year, while
the ratio of SG&A expenses to net sales was 21.8%, an increase of 0.4 points over the previous year. These resultsbrought the ratio of operating income to net sales up 0.5 points year on year to 4.6%.
All this added up to income before taxes and minority interests totaling 2,990 million yen, in addition to net
income totaling 1,420 million yen, up 213 million yen (17.6%) from the previous year.
The net income per share came to 18.39 yen, up 3.23 yen year on year from 15.16 yen.

(3) Analysis of Cash Flow Status
An analysis of cash flow status for the current consolidated fiscal year is provided in the section entitled “ (2)Cash flow” under “1. Overview of Performance and Cash Flow” in the Consolidated Business Report.

Noriaki Hirose
President:

9Co n so l i da ted B a lance S h eet
Nippon Koei Co., Ltd. and Consolidated Subsidiaries
March 31, 2012

Thousands of
U.S.Dollars (Note 1)

Millions of Yen

ASSETS

2012

2012

2011

CURRENT ASSETS:¥ 5,923¥ 5,157$ 72,065

Trade notes .........................................................

51

189

621

Trade accounts ...................................................

30,034

24,166

365,422

Allowance for doubtful accounts ......................

(42)

(44)

(511)

Inventories (Note 4) .............................................

6,571

6,863

79,949Deferred tax assets (Note 10) ..............................

1,248

1,309

15,184

Prepaid expenses and other current assets ........

1,302

1,541

15,840Total current assets ............................................

45,08739,181

548,570

Land .....................................................................

13,962

13,986

169,875

Buildings and structures .....................................

20,03320,012

243,740

Machinery and equipment ..................................

2,511

2,375

30,551

Furniture and fixtures .........................................

2,692

2,679

32,753

Lease assets ..........................................................

252

286

3,066

Construction in progress .....................................

178

6

2,166

Total ....................................................................

39,62839,344482,151

Accumulated depreciation ...................................

(16,297)(15,685)(198,284)

Net property, plant and equipment ...................

23,331

23,659283,867

7,122

7,523

86,653and associated companies (Note 14) .................

623

530

7,580

Long-term loans receivable .................................

26

26

316

Goodwill ...............................................................

928

1,238

11,291

Receivables in bankruptcy ...................................

123

121

1,497

Deferred tax assets (Note 10) ..............................

324

621

3,942

Other assets ..........................................................

1,990

2,038

24,212

Allowance for doubtful accounts ........................

(182)

(196)

(2,214)

Total investments and other assets ...................

10,954

11,901

133,277

TOTAL ....................................................................

¥79,372¥74,741$965,714

Cash and cash equivalents (Note 14) ..................
Receivables (Note 14):

PROPERTY, PLANT AND
EQUIPMENT (Notes 5, 6 and 8):

INVESTMENTS AND OTHER ASSETS:
Investment securities (Notes 3 and 14) ..............
Investments in unconsolidated subsidiaries

See notes to consolidated financial statements.

10Thousands of
U.S.Dollars (Note 1)

Millions of Yen

LIABILITIES AND EQUITYCURRENT LIABILITIES:
Short‑term borrowings (Notes 6 and 14) ...........
Current portion of long-term debt (Notes 6) ......
Payables (Note 14):
Trade notes .........................................................
Trade accounts ...................................................
Income taxes payable ...........................................
Advances received ................................................
Accrued bonuses ..................................................
Allowance for anticipated project loss ................
Allowance for loss from a disaster ......................
Other current liabilities .......................................
Total current liabilities ....................................
LONG-TERM LIABILITIES:Long-term debt (Note 6) ......................................
Liability for retirement benefits (Note 7) ...........
Allowance for environmental measures..............
Asset retirement obligations ................................
Deposits received (Note 8) ...................................
Deferred tax liabilities (Note 10) .........................
Negative goodwill .................................................
Total long-term liabilities ................................

2012

2012

2011

¥12,000
157¥ 8,000
168$146,003
1,910

391
5,461
1,034
5,530
1,733
91
12
3,744
30,153

401
4,704
517
5,816
1,717
92
63
3,493
24,971

4,757
66,444
12,581
67,28321,085
1,107
146
45,553366,869

139
3,472
57
52
1,911
68
15
5,714

286
3,369
83
53
2,185
68
28
6,072

1,691
42,244694
633
23,251827
182
69,522

7,393
6,132
33,6307,393
6,132
33,00589,95074,608409,174(3,387)(2,304)(41,209)

(517)

(812)

(6,290)(1)(1)
43,249256
43,50526
43,437261
43,698(12)(13)
526,208
3,115
529,323¥79,372¥74,741$965,714

COMMITMENTS AND CONTINGENT
LIABILITIES (Notes 13, 15 and 16)
EQUITY (Notes 9 and 17):
Common stock,authorized, 189,580,000 shares; issued,
86,656,510 shares in 2012 and 2011 .................
Capital surplus .....................................................
Retained earnings ................................................
Treasury stock—at cost
11,170,244 shares in 2012
and 7,170,987 shares in 2011 ............................
Accumulated other comprehensive loss:
Unrealized loss onavailable-for-sale securities .............................
Deferred loss onderivatives under hedge accounting ...............
Foreign currency translation adjustments .......
Total ....................................................................
Minority interests .................................................
Total equity .......................................................
TOTAL ....................................................................

(3)

11

Consolidated Statement of Income and Comprehensive Income
Nippon Koei Co., Ltd. and Consolidated Subsidiaries
Year Ended March 31, 2012

Thousands of
U.S.Dollars (Note 1)

Millions of Yen

2012

2012

2011

NET SALES ...........................................................

¥65,945¥65,807$802,348

COST OF SALES ...................................................
Gross profit ......................................................

48,56017,38549,016
16,791

590,826
211,522SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES (Note 11) ........
Operating income ............................................

14,3553,030

14,088
2,703

174,656
36,866

319
(56)
(68)

285
(95)
(152)

3,881
(681)
(827)

33
(372)

(9)
19
(577)

401
(4,526)

(20)
124
(40)

(69)
156
(442)

(243)
1,508
(487)

INCOME BEFORE INCOME TAXES AND
MINORITY INTERESTS .....................................

2,990

2,261

36,379INCOME TAXES (Note 10):
Current .................................................................
Deferred ................................................................
Total income taxes ...........................................

1,457
115
1,572

1,183
(150)
1,033

17,727
1,399
19,126NET INCOME BEFOREMINORITY INTERESTS ...................................

1,418

1,228

17,253MINORITY INTERESTS IN NET(LOSS) INCOME ................................................
NET INCOME .......................................................

(2)
1,420

21
1,207

(24)
17,277

(2)

21

(24)

1,418

1,228

17,253OTHER INCOME (EXPENSES):Interest and dividend income ..............................
Interest expense ...................................................
Foreign currency exchange loss ..........................
Loss on disposal of property,
plant and equipment ..........................................
Gain on sales of investment securities ................
Loss on sales of investment securities ................
Loss on valuation of investment securities ........
Loss from a natural disaster (Note 12) ...............
Other-net ...............................................................
Other (expenses) income-net ...........................

MINORITY INTERESTS IN NET(LOSS) INCOME ................................................
NET INCOME BEFORE MINORITY
INTERESTS ........................................................
OTHER COMPREHENSIVE INCOME:
Unrealized gain (loss) on
available-for-sale securities ...............................
Deferred (loss) gain onderivatives under hedge accounting .................
Foreign currency translation adjustment ...........
Total other comprehensive income (loss) ...........

296

(212)

3,601

(27)
2
271

33
(4)
(183)

(329)
25
3,297

COMPREHENSIVE INCOME .............................

¥ 1,689¥ 1,045$ 20,550

TOTAL COMPREHENSIVE INCOME
ATTRIBUTABLE TO:
Owners of the parent ...........................................
Minority interests .................................................

¥1,690¥(1)¥ 1,025¥20$20,562$(12)
U.S.Dollars(Note 1)Yen

PER SHARE OF COMMON STOCK (Note2. t.):Basic net income ..................................................
Cash dividends applicable to the year ................
See notes to consolidated financial statements.

12¥ 18.39
7.50¥ 15.16
7.50

$

0.22
0.09

Co n so l i da ted S t atemen t o f C h an ges i n E q u i t y
Nippon Koei Co., Ltd. and Consolidated Subsidiaries
Year Ended March 31, 2012

Thousands

Millions of Yen
Accumulated Other Comprehensive Income

BALANCE, APRIL 1, 2010 ���������������������������
Net income ����������������������������������������������������Cash dividends, ¥7.50 per share �������������������
Other retained earnings ��������������������������������
Purchase of treasury stock ���������������������������
Net change in the year ����������������������������������
BALANCE, MARCH 31, 2011 ����������������������
Net income ����������������������������������������������������Cash dividends, ¥7.50 per share �������������������
Purchase of treasury stock ���������������������������
Net change in the year ����������������������������������
BALANCE, MARCH 31, 2012 ����������������������

Outstanding
Number of
Shares ofCommon Stock

Common Stock

Capital Surplus

79,733¥7,393¥6,132Retained
Earnings¥32,400¥(2,245)¥(600)

DeferredGain (Loss) on
Derivatives
under Hedge
Accounting

Foreign
Currency
Translation
Adjustments

¥(7)

6,132

1,207

(598)

(598)

(4)

(4)

(4)

33,005(2,304)

(3)
(212)

33

(812)

26

(3)

(62)
(27)

(206)

43,437261

43,6981,420(1,083)¥33,630

(62)

(179)

(795)

¥6,132¥43,361

1,207(4,000)¥7,393¥288

Total Equity

(598)

1,420

75,486

Minority Interests¥43,073

(59)
7,393

Total

1,207

(247)
79,486

Unrealized Gain
(Loss) on
Available-for-Sale
Securities

TreasuryStock¥(3,387)

1,420

(795)

(795)

(1,083)(1,083)

295

(27)

2

270

(5)

265

¥(517)¥(1)¥(1)¥43,249¥256¥43,505

Thousands of U.S. Dollars (Note 1)
Accumulated Other Comprehensive Income

BALANCE, MARCH 31, 2011 ����������������������
Net income ����������������������������������������������������Cash dividends, $0.09 per share �������������������
Purchase of treasury stock ���������������������������
Net change in the year ����������������������������������
BALANCE, MARCH 31, 2012 ����������������������

Common Stock

Capital Surplus$89,950$74,608

Retained
Earnings$401,570

TreasuryStock$(28,033)

Unrealized Gain
(Loss) on
Available-for-Sale
Securities

DeferredGain (Loss) on
Derivatives
under Hedge
Accounting$(9,880)$316

Foreign
Currency
Translation
Adjustments$(36)$74,608$528,495

Minority Interests$3,176

Total Equity$531,671

17,277

17,277

17,277(9,673)(9,673)(9,673)(13,176)$89,950

Total$409,174$(41,209)(13,176)(13,176)

3,590

(328)

23

3,285

(61)

3,224

$(6,290)$ (12)$(13)$526,208$3,115$529,323

See notes to consolidated financial statements.

13

Co n so l i da ted S t atemen t o f C as h Fl ow s
Nippon Koei Co., Ltd. and Consolidated Subsidiaries
Year Ended March 31, 2012

Thousands of
U.S.Dollars (Note 1)

Millions of Yen

OPERATING ACTIVITIES:2012

FINANCING ACTIVITIES:

2012

2011

Income before income taxes andminority interests ....................................................

¥2,990¥ 2,261$36,379

Adjustments for:
Income taxes – paid ..............................................
Depreciation and amortization ............................

(894)
946

(1,550)1,010(10,877)
11,510Loss on disposal of property, plant andequipment ............................................................

37

7

450

Loss on adjustment for changes of accounting
standard for asset retirement obligations .........

36
339

Loss on sales of investment securities .................

4,125

558

Changes in assets and liabilities, net of effects
from a newly consolidated subsidiary:(Increase) decrease in tradeaccounts receivable ...........................................

(5,730)3,927(69,717)

Decrease in inventories .......................................
Increase (decrease) in trade accounts payable ..
Increase in liability for retirement benefits .......
Other—net

292
746
103
(24)

833
(601)
128
(644)

3,553
9,077
1,253
(292)

Net cash (used in) provided byoperating activities .....................................

(1,195)

5,965(14,539)INVESTING ACTIVITIES:
Proceeds from sales of property, plantand equipment ........................................................

24

15

292

Purchases of property, plant and equipment ..........

(514)

(671)

(6,254)

Proceeds from sales and redemption of
investment securities ..............................................

1,749

843

21,280Purchases of investment securities ..........................
Increase in other assets ............................................

(1,161)(97)(2,322)(2)(14,126)(1,180)¥¥(2,137)$

Net cash provided by (used in)investing activities ..........................................
See notes to consolidated financial statements.

14

1

12

Thousands of
U.S.Dollars (Note 1)

Millions of Yen

2012

2012

2011

¥4,000
(118)
(52)
(354)
(789)
(737)

¥(4,118)
(68)
(59)
(598)
(4)

$48,668(1,436)(633)(4,307)(9,600)(8,966)

1,950(4,847)

23,726

FOREIGN CURRENCY
TRANSLATION ADJUSTMENTS
ON CASH AND CASH EQUIVALENTS ................

10

(61)

121

NET INCREASE (DECREASE)IN CASH AND CASH EQUIVALENTS ..................

766(1,080)9,320

CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR ..........................................

5,157

6,237

62,745

CASH AND CASH EQUIVALENTS,
END OF YEAR .........................................................

¥5,923¥ 5,157$72,065

Net increase in short-term borrowings
Repayments of long-term debt
Repayments of lease obligations
Purchase of treasury stock
Dividends paid
Other—net
Net cash provided by (used in) financing
activities

N o te s to C on solid ated Fi n an c i al S t atemen t s
Nippon Koei Co., Ltd. and Consolidated Subsidiaries
Year Ended March 31, 2012

1.	BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL
STATEMENTS
The accompanying consolidated financial statements have been prepared in accordance with the provisions set
forth in the Japanese Financial Instruments and Exchange Act and its related accounting regulations and in
conformity with accounting principles generally accepted in Japan (“Japanese GAAP”), which are different incertain respects as to the application and disclosure requirements of International Financial ReportingStandards.
In preparing these consolidated financial statements, certain reclassifications and rearrangements have been
made to the consolidated financial statements issued domestically in order to present them in a form which ismore familiar to readers outside Japan. In addition, certain reclassifications have been made in the 2011
consolidated financial statements to conform to the classifications used in 2012.
The consolidated financial statements are stated in Japanese yen, the currency of the country in which Nippon
Koei Co., Ltd. (the "Company") is incorporated and operates. The translations of Japanese yen amounts into U.S.
dollar amounts are included solely for the convenience of readers outside Japan and have been made at the rateof ¥ 82.19 to $1, the rate of exchange at March 31, 2012. Such translations should not be construed as
representations that the Japanese yen amounts could be converted into U.S. dollars at that or any other rate.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa.	Consolidation —The consolidated financial statements as of March 31, 2012, include the accounts of
the Company and its ten significant (ten in 2011) subsidiaries (together, the “Group”).
Under the control concept, those companies in which the Company, directly or indirectly, is able to exercise
control over operations are fully consolidated.
Investments in unconsolidated subsidiaries and associated companies are stated at cost. If the equity methodof accounting had been applied to the investments in these companies, the effect on the accompanying
consolidated financial statements would not be material.
Goodwill represents the excess of the cost of an acquisition over the fair value of the net assets of theacquired subsidiaries at the date of acquisition.
Goodwill and negative goodwill which occurred before March 31, 2010 are amortized using the straight-line
method over 5 to 10 years.
All significant intercompany balances and transactions have been eliminated in consolidation. All material
unrealized profit included in assets resulting from transactions within the Group is also eliminated.

b.	Cash Equivalents — Cash equivalents are short-term investments that are readily convertible into
cash and that are exposed to insignificant risk of changes in value.
Cash equivalents include time deposits and investment trusts, all of which mature or become due within
three months of the date of acquisition.

c.	Inventories —Work in process is stated at the lower of cost, mainly determined by the specificidentification cost method, or net selling value. (see Note 4.)d.	Marketable and Investment Securities —Marketable and investment securities are classified andaccounted for, depending on management's intent, as follows:(1) held-to-maturity debt securities, which are expected to be held to maturity with the positive intent andability to hold to maturity are reported at amortized cost and (2) available-for-sale securities, which are notclassified as the aforementioned securities, are reported at fair value, with unrealized gains and losses, net of
applicable taxes, in a separate component of equity.

15

Non-marketable available-for-sale securities are stated at cost determined by the moving-average method.
For other-than-temporary declines in fair value, investment securities are reduced to net realizablevalue by a charge to income.

e.	Property, Plant and Equipment —Property, plant and equipment are stated at cost. Depreciation ofproperty, plant and equipment is computed substantially by the declining-balance method at rates
based on the estimated useful lives of the assets, while the straight-line method is applied to buildings
acquired after April 1, 1998 and lease assets as well as other equipment for rent. The range of useful
lives is principally from 3 to 50 years for buildings and structures, from 2 to 15 years for machineryand equipment, and from 2 to 20 years for furniture and fixtures. The useful lives for lease assets are
the terms of the respective leases.
f.	Long-Lived Assets — The Group reviews its long-lived assets for impairment whenever events orchanges in circumstance indicate the carrying amount of an asset or asset group may not berecoverable. An impairment loss would be recognized if the carrying amount of an asset or asset
group exceeds the sum of the undiscounted future cash flows expected to result from the continued
use and eventual disposition of the asset or asset group. The impairment loss would be measured as
the amount by which the carrying amount of the asset exceeds its recoverable amount, which is thehigher of the discounted cash flows from the continued use and eventual disposition of the asset or
the net selling price at disposition.
g.	Allowance for Doubtful Accounts —The allowance for doubtful accounts is stated in amounts
considered to be appropriate based on the companies' past credit loss experience and an evaluationof potential losses in the receivables outstanding.
h.	Retirement and Pension Plans —The Group has contributory defined benefit pension plans andunfunded retirement benefit plans for the benefit of its employees.
Effective April 1, 2000, the Group adopted a new accounting standard for employees’ retirement
benefits and accounted for the liability for retirement benefits based on the projected benefit
obligations and plan assets at the balance sheet date. The transitional obligation of ¥2,016 million forthe subsidiaries, determined as of April 1, 2000, is being amortized over mainly 15 years.
Unrecognized actuarial gain or loss is recognized by the straight-line method over mainly 13 years.
Unrecognized prior service costs are recognized by the straight-line method over mainly 13 years.
Retirement benefits for directors and corporate auditors are provided at the amount which would be
required if all directors and corporate auditors retired at the balance sheet date.
i.	Allowance for Anticipated Project Loss —The Group has made a provision for anticipated losses on
uncompleted project contracts.
j.	Asset Retirement Obligations — In March 2008, the Accounting Standards Board of Japan (the“ASBJ”) published ASBJ Statement No. 18, “Accounting Standard for Asset Retirement Obligations”
and ASBJ Guidance No. 21, “Guidance on Accounting Standard for Asset Retirement Obligations.”
Under this accounting standard, an asset retirement obligation is defined as a legal obligation
imposed either by law or contract that results from the acquisition, construction, development andthe normal operation of a tangible fixed asset and is associated with the retirement of such tangible
fixed asset. The asset retirement obligation is recognized as the sum of the discounted cash flows
required for the future asset retirement and is recorded in the period in which the obligation isincurred if a reasonable estimate can be made. If a reasonable estimate of the asset retirement
obligation cannot be made in the period the asset retirement obligation is incurred, the liability
should be recognized when a reasonable estimate of asset retirement obligation can be made. Upon
initial recognition of a liability for an asset retirement obligation, an asset retirement cost is
capitalized by increasing the carrying amount of the related fixed asset by the amount of the liability.
The asset retirement cost is subsequently allocated to expense through depreciation over theremaining useful life of the asset. Over time, the liability is accreted to its present value each period.
Any subsequent revisions to the timing or the amount of the original estimate of undiscounted cash
flows are reflected as an increase or a decrease in the carrying amount of the liability and thecapitalized amount of the related asset retirement cost.
16

k.	Research and Development Costs — Research and development costs are charged to income as
incurred.
l.	Leases — In March 2007, the ASBJ issued ASBJ Statement No.13, “Accounting Standard for Lease
Transactions”, which revised the previous accounting standard for lease transactions issued in June
1993. The revised accounting standard for lease transactions was effective for fiscal years beginningon or after April 1, 2008.
Under the previous accounting standard, finance leases that deemed to transfer ownership of theleased property to the lessee were capitalized. However, other finance leases were permitted to beaccounted for as operating lease transactions if certain “as if capitalized” information was disclosed
in the note to the lessee’s financial statements. The revised accounting standard requires that all
finance lease transactions be capitalized by recognizing lease assets and lease obligations in thebalance sheet. In addition, the revised accounting standard permits leases which existed at thetransition date and did not transfer ownership of the leased property to the lessee to be measured at
the obligations under finance leases less interest expense at the transition date and recorded asacquisition cost of lease assets.
The Group applied the revised accounting standard effective April 1, 2008. In addition, the Company
accounted for leases which existed at the transition date and do not transfer ownership of the leased
property to the lessee as acquisition cost of lease assets measured at the obligations under financeleases at the transition date.
All other leases are accounted for as operating leases.
m.	Accrued Bonuses —Bonuses to employees, directors and corporate auditors are accrued at the yearend to which such bonuses are attributable.
n.	Allowance for Environmental Measures —The Group has made a provision for treatment of the
Polychlorinated Biphenyl (PCB) Wastes based on Act on Special Measures concerning Promotion of
Proper Treatment of PCB Wastes.
o.	Allowance for Loss from a Disaster —The Group has made a provision for rehabilitation ofproperty, plant and equipment which were damaged by the Great East Japan Earthquake.
p.	Income Taxes —The provision for income taxes is computed based on the pretax income included in
the consolidated statement of income. The asset and liability approach is used to recognize deferred
tax assets and liabilities for the expected future tax consequences of temporary differences between
the carrying amounts and the tax bases of assets and liabilities. Deferred taxes are measured byapplying currently enacted tax laws to the temporary differences.
q.	Foreign Currency Transactions —All short-term and long-term monetary receivables and payables
denominated in foreign currencies are translated into Japanese yen at the exchange rates at thebalance sheet date. The foreign exchange gains and losses from translation are recognized in the
consolidated statements of income and comprehensive income.
r.	Revenue Recognition —If the outcome of a construction contract can be estimated reliably, thecontract revenue is recognized by the percentage-of-completion method which is measured byreference to the percentage of total cost incurred to date to estimated total cost.
All other construction projects, except the aforementioned, are recorded using the completedcontract method (including the partially completed-contract method).
s.	Derivatives and Hedging Activities —The Group uses derivative financial instruments to manage its
exposures to fluctuations in foreign exchange. Foreign exchange forward contracts are utilized by theGroup to reduce foreign currency exchange. The Group does not enter into derivatives for trading or
speculative purposes.
Derivative financial instruments and foreign currency transactions are classified and accounted for as
follows: (1) all derivatives are recognized as either assets or liabilities and measured at fair value,
17and gains or losses on derivative transactions are recognized in the consolidated statement of incomeand (2) for derivatives used for hedging purposes, if such derivatives qualify for hedge accounting
because of high correlation and effectiveness between the hedging instruments and the hedged items,
gains or losses on derivatives are deferred until maturity of the hedged transactions.
The foreign exchange forward contracts are measured at fair value but the unrealized gains / losses
are deferred until the underlying transactions are completed.
t.	Per Share Information —Basic net income per share is computed by dividing net income available
to shareholders of common stock, by the weighted-average number of shares of common stock
outstanding for the period. The weighted-average numbers of shares of common stock for the years
ended March 31, 2012 and 2011, were 77,190,579 and 79,639,800 respectively.
Diluted net income per share of common stock is not disclosed because the Group has nothing whichmight dilute the per share information for the years ended March 31, 2012 and 2011.
Cash dividends per share presented in the accompanying consolidated statements of income andcomprehensive income are dividends applicable to the respective years including dividends to be paid
after the end of the year.
u.	Accounting Changes and Error Corrections — In December 2009, the ASBJ issued ASBJ Statement
No. 24 “Accounting Standard for Accounting Changes and Error Corrections” and ASBJ Guidance
No. 24 “Guidance on Accounting Standard for Accounting Changes and Error Corrections”.
Accounting treatments under this standard and guidance are as follows;(1) Changes in Accounting Policies:
When a new accounting policy is applied with revision of accounting standards, the new policy isapplied retrospectively unless the revised accounting standards include specific transitional
provisions. When the revised accounting standards include specific transitional provisions, an entity
shall comply with the specific transitional provisions.
(2) Changes in Presentations:
When the presentation of financial statements is changed, prior period financial statements arereclassified in accordance with the new presentation.
(3) Changes in Accounting Estimates:
A change in an accounting estimate is accounted for in the period of the change if the change affects
that period only, and is accounted for prospectively if the change affects both the period of thechange and future periods.
(4) Corrections of Prior Period Errors:
When an error in prior period financial statements is discovered, those statements are restated.
This accounting standard and the guidance are applicable to accounting changes and corrections ofprior period errors which are made from the beginning of the fiscal year that begins on or after April
1, 2011.
v. New Accounting Pronouncements
Accounting Standard for Retirement Benefits — On May 17, 2012, the ASBJ issued ASBJ Statement
No. 26, “Accounting Standard for Retirement Benefits” and ASBJ Guidance No. 25, “Guidance on
Accounting Standard for Retirement Benefits,” which replaced the Accounting Standard for
Retirement Benefits that had been issued by the Business Accounting Council in 1998 with effective
date of April 1, 2000, and the other related practical guidances, being followed by partial
amendments from time to time through 2009.
Major changes are as follows:(a) Treatment in the balance sheet
Under the current requirements, actuarial gains and losses and past service costs that are yet to berecognized in profit or loss are not recognized in the balance sheet, and the difference between
retirement benefit obligations and plan assets (hereinafter, “deficit or surplus”), adjusted by suchunrecognized amounts, are recognized as a liability or asset.

18

Under the revised accounting standard, actuarial gains and losses and past service costs that are
yet to be recognized in profit or loss shall be recognized within equity (accumulated othercomprehensive income), after adjusting for tax effects, and the deficit or surplus shall berecognized as a liability (liability for retirement benefits) or asset (asset for retirement benefits).
(b) Treatment in the statement of income and comprehensive income
The revised accounting standard would not change how to recognize actuarial gains and losses andpast service costs in profit or loss. Those amounts would be recognized in profit or loss over acertain period no longer than the expected average remaining working lives of the employees.
However, actuarial gains and losses and past service costs that arose in the current period and yet
to be recognized in profit or loss shall be included in other comprehensive income, and actuarial
gains and losses and past service costs that were recognized in other comprehensive income inprior periods and then recognized in profit or loss in the current period shall be treated asreclassification adjustments.
This accounting standard and the guidance are effective for the end of annual periods beginning on
or after April 1, 2013, with earlier application being permitted from the beginning of annual periods
beginning on or after April 1, 2013. However, no retrospective application of this accounting standard
to consolidated financial statements in prior periods is required.
The Company expects to apply the revised accounting standard from the end of the annual period
beginning on April 1, 2013, and is in the process of measuring the effects of applying the revised
accounting standard for the year ending March 31, 2014.

3. INVESTMENT SECURITIESInvestment securities as of March 31, 2012 and 2011, consisted of the following:Thousands of
U.S. Dollars

Millions of Yen

2012
Non-current:
Marketable equity securities ...............................
Government and corporate bonds ......................
Other .....................................................................
Total .................................................................

2012

2011

¥5,941745
436¥7,122¥5,967
1,027
529¥7,523$72,284
9,064
5,305$86,653

The carrying amounts and aggregate fair values of marketable and investment securities at March 31, 2012 and2011, were as follows:
Millions of Yen

March 31, 2012
Securities classified as:
Available-for-sale:
Equity securities ...................................
Debt securities ......................................
Other .....................................................
Total ...................................................

Cost¥6,274550
624¥7,448

Unrealized
Gains

¥312
72
¥384

Unrealized
Losses

¥ 963
22
187
¥1,172

Fair
Value¥5,623600
437¥6,66019

Millions of Yen

March 31, 2011

Unrealized
Gains

Cost

Securities classified as:
Available-for-sale:
Equity securities ...................................
Debt securities ......................................
Other .....................................................
Total ...................................................

¥6,731947
744¥8,422

Unrealized

Losses

¥377
26
¥403

¥1,42791
215¥1,733

Fair
Value¥5,681882
529¥7,092Thousands of U.S. Dollars
Unrealized
Gains

March 31, 2012

Cost

Securities classified as:
Available-for-sale:
Equity securities ...................................
Debt securities ......................................
Other .....................................................
Total ...................................................

$76,335
6,692
7,592$90,619

Unrealized

Losses$3,796876$4,672$11,717268
2,275$14,260

Fair
Value

$68,4147,300
5,317$81,031

The proceeds, realized gains and realized losses of the available-for-sale securities which were soldduring the year ended March 31, 2012 and 2011, were as follows:
Millions of Yen

March 31, 2012
Securities classified as:
Available-for-sale:
Equity securities .................................................
Debt securities ....................................................
Other ...................................................................
Total .................................................................

Proceeds¥1,054426
73¥1,553

Realized Gains

¥162
28
¥190

Realized Losses

¥309
61
¥370

Millions of Yen

March 31, 2011
Securities classified as:
Available-for-sale:
Equity securities .................................................
Debt securities ....................................................
Other ...................................................................
Total .................................................................

20

Proceeds

¥ 275
425
335
¥1,035

Realized Gains

¥ 6
8
5
¥19

Realized Losses

¥517
60
¥577

Thousands of U.S. Dollars

March 31, 2012

Proceeds

Securities classified as:
Available-for-sale:
Equity securities .................................................
Debt securities ....................................................
Other ...................................................................
Total .................................................................

Realized Gains$12,824
5,183
888$18,895$1,971341$2,312

Realized Losses$3,760742$4,502The carrying values of debt securities and other by contractual maturities for securities classified as availablefor-sale at March 31, 2012, were as follows:
Millions of Yen

Thousands of
U.S. Dollars

¥550
¥550

Due after ten years .................................................
Total .................................................................

$6,692$6,692

4. INVENTORIESInventories at March 31, 2012 and 2011, consisted of the following:Thousands of
U.S. Dollars

Millions of Yen

Merchandise ...........................................................
Work in process ......................................................
Raw materials and supplies ...................................
Total .................................................................

2012
¥ 42
6,380
149
¥6,571

2011
¥ 43
6,642
178
¥6,8632012$ 511
77,625
1,813$79,949

5. INVESTMENT PROPERTYOn November 2008, the ASBJ issued ASBJ Statement No. 20, “Accounting Standard for Investment Property and
Related Disclosures” and issued ASBJ Guidance No.23, “Guidance on Accounting Standard for Investment
Property and Related Disclosures.”
The Group owns some rental properties such as office buildings and land in the metropolitan area. The net ofrental income and operating expenses for those rental properties was ¥822 million ($10,001 thousand) and ¥779
million for the fiscal year ended March 31, 2012 and 2011, respectively.
In addition, the carrying amounts, changes in such balances and market prices of such properties are as follows:
Millions of Yen
Carrying Amount
April 1, 2011¥8,158Decrease

Fair Value
March 31, 2012¥(874)¥7,284

March 31, 2012¥13,642Millions of Yen
Carrying Amount
April 1, 2010

¥8,253

Decrease¥(95)

Fair Value
March 31, 2011¥8,158March 31, 2011¥15,359

21

Thousands of U.S. Dollars
Carrying amount
April 1, 2011$99,258

Decrease

Fair value
March 31, 2012$(10,634)

March 31, 2012

$88,624$165,981

Notes:
1. Carrying amount recognized in the consolidated balance sheets is net of accumulated depreciation andaccumulated impairment losses, if any.
2. Decrease during the fiscal year ended March 31, 2012, represents the recognition of depreciation of ¥874
million ($10,634 thousand).
3. Fair value of properties was measured by the Group in accordance with its Real-Estate Appraisal Standard.

6. SHORT-TERM BORROWINGS AND LONG-TERM DEBT
Short-term borrowings at March 31, 2012 and 2011, consisted of notes to banks. The annual interest rates
applicable to the short-term borrowings ranged from 0.505% to 0.780% and 0.511% to 0.555% at March 31, 2012
and 2011, respectively.
Long-term debt at March 31, 2012 and 2011, consisted of the following:Thousands of
U.S. Dollars

Millions of Yen

2012
Loan from bank due seriallyto 2013 with interest rate of 1.250% ...................
Obligation under finance leases ............................
Total .................................................................
Less current portion ..............................................
Long-term debt, less current portion ....................

2012

2011
¥197
99
296
(157)
¥139

$2,3971,204
3,601(1,910)$1,691

¥315
139
454
(168)
¥286

Annual maturities of long-term debt at March 31, 2012, for the five years and thereafter were as follows:Year Ending March 31

2013 .........................................................
2014 .........................................................
2015 .........................................................
2016 .........................................................
2017 and thereafter .................................
Total ..................................................

Thousands of
U.S. Dollars

Millions of Yen
Long-Term Debt

Lease Obligations

Long-Term Debt

Lease Obligations

¥118
79

¥39
28
19
11
2
¥99

$1,436
961

$ 475
341
231
134
23
$1,204¥197$2,397

The Group had a commitment-line contract of ¥8,000 million ($97,335 thousand) over three years with financial
institutions in order to secure the stability of long-term funding. The contract included a restrictive financial
covenant. At March 31, 2012, the Group had utilized ¥8,000 million ($97,335 thousand) of the commitment line.
In addition, the Group had overdraft contracts of ¥7,000 million ($85,169 thousand) in total. At March 31, 2012,
the Group had utilized ¥3,000 million ($36,501 thousand) of the overdraft.

22

Financial covenants
Short-term borrowings of ¥8,000 million include financial covenants, with which the Group is in compliance.
The major financial covenants are as follows:
If the Group fails to comply with the following covenants, creditors may require repayment of all debt.
(1) Shareholder’s equity of each fiscal year will not fall below 75% of the higher of the following:a. Shareholder’s equity of fiscal year immediately preceding the fiscal year; orb. Shareholder’s equity of fiscal year ending on March 31, 2012
(2) Ordinary income for each fiscal year will not be negative for two consecutive fiscal years.
At March 31, 2012, land, building and structures of ¥2,027 million ($24,662 thousand) were pledged as collateralfor long-term debt of ¥197 million ($2,397 thousand).

7. RETIREMENT AND PENSION PLANS
The Group has severance payment plans for employees, directors and corporate auditors.
Under most circumstances, employees terminating their employment are entitled to retirement benefits
determined based on the rate of pay at the time of termination, years of service and certain other factors. Suchretirement benefits are made in the form of a lump-sum severance payment from the Company or fromconsolidated subsidiaries and annuity payments from a trustee. Employees are entitled to larger payments if thetermination is involuntary, by retirement at the mandatory retirement age, by death, or by voluntary retirement
at certain specific ages prior to the mandatory retirement age.
In addition, the Group completely transitioned from the approved pension plan to the defined benefit corporate
pension plan in October 2010.
The liabilities for retirement benefits at March 31, 2012 and 2011, for directors and corporate auditors were ¥92
million ($1,120 thousand) and ¥90 million, respectively. The retirement benefits for directors and corporate
auditors are paid subject to the approval of the shareholders.
The liability for employees’ retirement benefits at March 31, 2012 and 2011, consisted of the following:Thousands of
U.S. Dollars

Millions of Yen

Projected benefit obligation ..................................
Fair value of plan assets ........................................
Unrecognized actuarial loss ..................................
Unrecognized transitional obligation ...................
Unrecognized prior service cost ............................
Prepaid pension cost ..............................................
Net liability .........................................................

2012¥(13,984)
8,373
2,087
408
291
(555)
¥ (3,380)

2011¥(13,548)
7,795
2,032
543
331
(432)
¥ (3,279)

2012$(170,142)
101,874
25,392
4,964
3,541(6,753)$ (41,124)

The components of net periodic benefit costs for the years ended March 31, 2012 and 2011, were as follows:23

Thousands of
U.S. Dollars

Millions of Yen

Service cost .............................................................
Interest cost ............................................................
Expected return on plan assets .............................
Amortization of prior service cost ........................
Recognized actuarial loss ......................................
Amortization of transitional obligation ................
Net periodic benefit costs ..................................

2012
¥ 920
302
(195)
40
414
135
¥1,616

2011
¥ 916
301
(185)
(10)
402
135
¥1,5592012$11,194
3,674(2,373)
487
5,037
1,643
$19,662Note:
The net periodic benefit costs above exclude required funding for the multi employer pension plan amounting to¥849 million ($10,330 thousand) and ¥850 million at March 31, 2012 and 2011, respectively, for which plan
assets could not be allocated to each participating employer.
Assumptions used for the years ended March 31, 2012 and 2011, were set forth as follows:

Discount rate ..........................................................
Expected rate of return on plan assets .................
Amortization of prior service cost ........................
Recognition period of actuarial gain / loss ...........
Amortization period of transitional obligation ....

2012
2.00%
2.50%
13 years
13 years
15 years

2011
2.50%
2.50%
13 years
13 years
15 years

Funded status of the multi employer pension plan at March 31, 2011 (available information as of March 31,2012), to which contributions were recorded as net periodic retirement benefit costs, was as follow:
Millions of Yen

Fair value of plan assets ........................................
Pension benefit obligation recordedby pension fund ....................................................
Difference ..........................................................

2011¥ 141,748
173,530¥ (31,782)

The Groups’ contribution percentage for multi employer pension plan.......12.3%
Note:
1. The difference mainly resulted from prior service cost of ¥ (27,162) million, adjustment of asset valuation of¥(6,557) million and surplus of ¥1,937 million.
2. Prior service cost is amortized over 20 years.
3. The Group expensed special contributions of ¥327 million in the consolidated statement of income andcomprehensive income in the fiscal year ended March 31, 2012.
4. The above contribution ratio does not conform to the actual ratio applied to the Group.

8. DEPOSITS RECEIVED
Deposits received from tenants amounted to ¥1,710 million ($20,805 thousand) at March 31, 2012, and ¥1,878
million at March 31, 2011.
At March 31, 2012, land, building and structures for rent of ¥1,430 million ($17,399 thousand) were pledged ascollateral for these deposits.

249. EQUITY
Japanese companies are subject to the Companies Act of Japan (the “Companies Act”). The significant
provisions in the Companies Act that affect financial and accounting matters are summarized below:(a) Dividends
Under the Companies Act, companies can pay dividends at any time during the fiscal year in addition to theyear-end dividend upon resolution at the shareholders’ meeting. For companies that meet certain criteria such as(1) having a Board of Directors, (2) having independent auditors, (3) having a Board of Corporate Auditors, and(4) the term of service of the directors is prescribed as one year rather than two years of normal term by its
articles of incorporation, the Board of Directors may declare dividends (except for dividends in kind) at any time
during the fiscal year if the Company has prescribed so in its articles of incorporation. The Company meets all
the above criteria.
Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if thearticles of incorporation of the Company so stipulate. The Companies Act provides certain limitations on theamounts available for dividends or the purchase of treasury stock. The limitation is defined as the amountavailable for distribution to the shareholders, but the amount of net assets after dividends must be maintained at
no less than ¥3 million.
(b) Increases / Decreases and Transfer of Common Stock, Reserve and Surplus
The Companies Act requires that an amount equal to 10% of dividends must be appropriated as a legal reserve(a component of retained earnings) or as additional paid-in capital (a component of capital surplus) dependingon the equity account charged upon the payment of such dividends until the aggregate amount of legal reserve
and additional paid-in capital equals 25% of the common stock. Under the Companies Act, the total amount ofadditional paid-in capital and legal reserve may be reversed without limitation. The Companies Act also provides
that common stock, legal reserve, additional paid-in capital, other capital surplus and retained earnings can betransferred among the accounts under certain conditions upon resolution of the shareholders.
(c) Treasury Stock and Treasury Stock Acquisition Rights
The Companies Act also provides for companies to purchase treasury stock and dispose of such treasury stockby resolution of the Board of Directors. The amount of treasury stock purchased cannot exceed the amountavailable for distribution to the shareholders which is determined by specific formula.
Under the Companies Act, stock acquisition rights are presented as a separate component of equity.
The Companies Act also provides that companies can purchase both treasury stock acquisition rights andtreasury stock. Such treasury stock acquisition rights are presented as a separate component of equity or
deducted directly from stock acquisition rights.

10. INCOME TAXESThe Company and its domestic subsidiaries are subject to Japanese national and local income taxes which, inthe aggregate, resulted in a statutory tax rate of approximately 39.5% for the years ended March 31, 2012 and2011.
The tax effects of significant temporary differences and tax loss carryforwards which resulted in deferred tax
assets and liabilities at March 31, 2012 and 2011, were as follows:25

Thousands of
U.S. Dollars

Millions of Yen

2012

2012

2011

Deferred tax assets :Unrealized loss on available-for-salesecurities .............................................................
Accrued bonuses ..................................................
Tax loss carryforwards .........................................
Liability for retirement benefits
for directors and corporate auditors .................

¥ 273
811
1,368

¥ 536
844
1,433

$ 3,322
9,867
16,644

34

37

414

Liability for retirement benefits
for employees .....................................................
Allowance for anticipated project loss ................
Loss on impairment of long-lived assets ............
Other .....................................................................
Less valuation allowance .....................................
Total..................................................................

1,265
34
80
809
(2,727)¥1,947

1,333
37
110
681
(2,675)¥2,336

15,391
414
973
9,843
(33,179)$23,689

Deferred tax liabilities:
Reserve for deferred gains on saleof property ..........................................................
Prepaid pension cost ............................................
Other .....................................................................
Total .................................................................

¥ 179
188
76
¥ 443

¥ 209
171
93
¥ 473

$ 2,178
2,287
925$ 5,390

Net deferred tax assets .......................................

¥1,504¥1,863$18,299

A reconciliation between the statutory tax rate and the actual effective tax rate reflected in the accompanying
consolidated statement of income and comprehensive income for the years ended March 31, 2012 and 2011 was
as follows:

Statutory tax rate ...................................................
Per capita levy of local tax .....................................
Expenses not deductible for tax purposes ............
Valuation allowance ...............................................
Other – net ..............................................................
Actual effective tax rate .........................................

2012
39.5%
4.3
1.6
0.9
6.3
52.6%

2011
39.5%
5.5
2.3
(5.9)
4.3
45.7%

On December 2, 2011, new tax reform laws were enacted in Japan, which changed the statutory tax rate fromapproximately 39.5% to 36.8% effective for the fiscal years beginning on or after April 1, 2012, through March
31, 2015, and to 34.4% afterwards. The effect of this change was to decrease deferred taxes by ¥146 million($1,776 thousand) and to increase unrealized loss on available-for-sale securities by ¥41 million ($499 thousand),in the consolidated balance sheet as of March 31, 2012, and to increase income taxes-deferred by ¥105 million($1,278 thousand) in the consolidated statement of income for the year then ended.
As of March 31, 2012, certain subsidiaries had tax loss carryforwards aggregating approximately ¥2,984 million($36,306 thousand) which were available to be offset against taxable income of these companies in future years.
These tax loss carryforwards, if not utilized, will expire as follows:26

Years Ending March 31

Millions of Yen

2013 ........................................................................
2015 ........................................................................
2016 ........................................................................
2017 ........................................................................
2018 ........................................................................
2019 ........................................................................
Total .................................................................

Thousands of
U.S. Dollars¥2,558
133
98
1
38
156
¥2,984$31,123
1,618
1,192
12
462
1,899
$36,306

11. RESEARCH AND DEVELOPMENT COSTS
Research and development costs charged to income were ¥413 million ($5,025 thousand) and ¥326 million forthe years ended March 31, 2012 and 2011, respectively.

12. LOSS FROM A NATURAL DISASTER
Loss from a natural disaster caused by the Great East Japan Earthquake in March, 2012 and 2011, consisted of
the following:Thousands of
U.S. Dollars

Millions of Yen

2012

2011
¥10
10
¥20

Removal cost and repair expenses.........................
Provision of allowance for loss from a disaster .....
Total .................................................................

¥ 6
63
¥69

2012
$122
121
$243

13. LEASES(1) Lessee
The minimum rental commitments under noncancellable operating leases at March 31, 2012 and 2011, were as
follows:
Thousands of
U.S. Dollars

Millions of Yen

2012
Due within one year ...............................................
Due after one year ..................................................
Total .................................................................

2011
¥1
2
¥3

2012
$12

24
$36

(2) Lessor
The minimum rental commitments under noncancellable operating leases at March 31, 2012 and 2011, were as
follows:
Thousands of
U.S. Dollars

Millions of Yen

Due within one year ...............................................
Due after one year ..................................................
Total .................................................................

2012
¥ 695
2,065
¥2,760

2011
¥ 697
2,761
¥3,4582012$ 8,456
25,125$33,58127

14. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES(1) Group Policy for Financial Instruments
The Group uses financial instruments (mainly bank loans) based on its capital financing plan. Cash surpluses, ifany, are invested in low risk financial assets. Derivatives are used, not for speculative purposes, but to manage
exposure to financial risks as described in (2) below. To clarify the accountability for transactions, the Group set
up the investment committee and it examines basic principles of transactions and each financial instrument.
(2) Nature and Extent of Risks Arising from Financial Instruments
Receivables such as trade notes and trade accounts are exposed to customer credit risk. Although receivables inforeign currencies are exposed to the market risk of fluctuation in foreign currency exchange rates, the position,
net of a portion of payables in foreign currencies, is hedged by using forward foreign currency contracts.
Marketable and investment securities, mainly held-to-maturity securities and equity instruments of customers
and suppliers of the Group, are exposed to the risk of market price fluctuations.
Payment terms of payables, such as trade notes and trade accounts, are less than one year.
Derivatives mainly include forward foreign currency contracts, which are used to manage exposure to market
risks from changes in foreign currency exchange rates of receivables and payables and investment securities.
Please see Note 15 for more detail about derivatives.
(3) Risk Management for Financial Instruments
Credit Risk Management
Credit risk is the risk of economic loss arising from a counterparty’s failure to repay or service debt according to
the contractual terms. The Group manages its credit risk from receivables on the basis of internal guidelines,
which include monitoring of payment term and balances of major customers by each business administration
department to identify the default risk of customers at an early stage. With respect to held-to-maturity financial
investments, the Group manages exposure to credit risk by limiting investments to high credit rating bonds inaccordance with its internal guidelines.
The maximum credit risk exposure of financial assets is limited to their carrying amounts as of March 31, 2012.
Market risk management (foreign exchange risk and interest rate risk)
Foreign currency trade receivables and payables are exposed to market risk resulting from fluctuations inforeign currency exchange rates. Such foreign exchange risk is hedged principally by forward foreign currency
contracts.
Marketable and investment securities are managed by monitoring market values and financial position ofissuers on a regular basis.
The basic principles of derivative transactions are approved by the investment committee based on the internal
guidelines which prescribe the authority and the limits for each transaction by the corporate treasury
department. Reconciliation of the transaction and balances with customers is made, and the transaction data isreported to the chief financial officer on a monthly basis.
Liquidity risk management
Liquidity risk comprises the risk that the Group cannot meet its contractual obligations in full on its maturity
dates. The Group manages its liquidity risk by concluding the commitment-line and overdraft contracts, alongwith adequate financial planning by the corporate treasury department.
(4) Concentration of Credit Risk
48.4% of total receivables are from three major customers of the Group as of March 31, 2012.
(5) Fair Values of Financial Instruments
Fair values of financial instruments are based on quoted prices in active markets. If a quoted price is notavailable, another rational valuation technique is used instead.

28

(a) Fair value of financial instruments
Millions of Yen

March 31, 2012

Carrying
AmountFair Value

Investment securities
Total¥ 5,923
30,085(42)
30,043
6,659¥42,625

30,043
6,659¥42,625

Short‑term borrowings
PayablesTotal¥12,000
5,852¥17,852¥12,000
5,852¥17,852

Cash and cash equivalents
Receivables
Allowance for doubtful accounts

Unrealized
Gain/Loss¥ 5,923

Millions of Yen

March 31, 2011
Cash and cash equivalents
Receivables
Allowance for doubtful accounts

Carrying
AmountFair Value

Investment securities
Total¥ 5,157
24,355(44)
24,311
7,092¥36,560

24,311
7,092¥36,560

Short‑term borrowings
PayablesTotal¥ 8,000
5,105¥13,105¥ 8,000
5,105¥13,105

Unrealized
Gain/Loss¥ 5,157

Thousands of U.S. Dollars

March 31, 2012

Carrying
AmountFair Value

Investment securities
Total$ 72,065
366,043(511)
365,531
81,019$518,615

365,531
81,019$518,615

Short‑term borrowings
PayablesTotal$146,003
71,201$217,204$146,003
71,201$217,204

Cash and cash equivalents
Receivables
Allowance for doubtful accounts

Unrealized
Gain/Loss$ 72,065

Cash and cash equivalents, receivables, payables and short-term borrowings
The carrying values of these financial instruments approximate fair values because of their short maturities.
Investment securities
The fair values of investment securities are measured at the quoted market price of the stock exchange for theequity instruments and at the quoted price obtained from the financial institution for certain debt instruments.
The information of the fair value for the investment securities by classification is included in Note 3.

29

Long- term debt
The fair value of long-term debt is determined by discounting the cash flows related to the debt at the Group’s
assumed corporate borrowing rate.
Derivatives
Fair value information for derivatives is included in Note15.
(b) Carrying amount of financial instruments whose fair values cannot be reliably determined
Thousands of
U.S. Dollars

Millions of Yen

March 31, 2012 and 2011
Investments in equity instruments that do nothave a quoted market price in an active market
Investments in debt instruments that do nothave a quoted market price in an active market

2012

2012

2011

¥940

¥816

$11,437

¥145

¥145

$ 1,764(6) Maturity Analysis for Financial Assets and Securities with Contractual Maturities
Millions of Yen

March 31, 2012
Cash and cash equivalents
Receivables
Investment securities
Available-for-sale securities with
contractual maturities
Total

Due in 1
Year or Less

Due after 1 Yearthrough 5 Years

Due after 5 Years
through 10 Years

Due after
10 Years¥ 5,923
30,085¥550¥550¥36,008
Millions of Yen

March 31, 2011
Cash and cash equivalents
Receivables
Investment securities
Available-for-sale securities with
contractual maturities
Total

Due in 1
Year or Less

Due after 1 Yearthrough 5 Years

Due after 5 Years
through 10 Years

Due after
10 Years¥ 5,157
24,354¥1,020¥1,020¥29,511
Thousands of U.S. Dollars

March 31, 2012
Cash and cash equivalents
Receivables
Investment securities
Available-for-sale securities with
contractual maturities
Total

Due in 1
Year or Less

Due after 5 Years
through 10 Years

Due after
10 Years$ 72,065
366,042$438,107

Please see Note 6 for annual maturities of long-term debt.

30

Due after 1 Yearthrough 5 Years$6,692$6,692

15. DERIVATIVESThe Group uses derivative financial instruments to manage its exposures to fluctuations in foreign exchange.
Foreign exchange forward contracts are utilized by the Group to reduce foreign currency exchange.
It is the Group’s policy to use derivatives only for the purpose of reducing risks, not for trading or speculative
purpose.
Because the counterparties to these derivatives are limited to domestic banks having high reputations, theGroup does not anticipate any losses arising from credit risk.
Derivative transactions entered into by the Group have been made in accordance with internal policies which
regulate the authorization and credit limit amount.

Derivative Transactions to Which Hedge Accounting Is Not Applied
Millions of Yen

March 31, 2012
Foreign currency forward contracts:
Selling EURO .....................................

Contract
Amount¥416

Contract
Amount Due after
One Year

Fair
Value

¥416

Unrealized
Gain

¥(7)

¥(7)

Thousands of U.S. Dollars

March 31, 2012
Foreign currency forward contracts:
Selling EURO .....................................

Contract
Amount$5,061

Contract
Amount Due after
One Year

Fair
Value

$5,061

Unrealized
Gain

$(85)

$(85)

Millions of Yen

March 31, 2011
Foreign currency forward contracts:
Selling U.S.$ .......................................

Contract
AmountFair
Value¥1,567

Unrealized
Gain

¥44

¥33

Derivative Transactions to Which Hedge Accounting Is Applied
Millions of Yen

March 31, 2012

HedgedItem

Contract
AmountContract
Amount Due after
One Year

Fair
Value

Foreign currency forward contracts:
Selling U.S.$ .......................................

Investment
securities

¥755

¥755

¥7

Foreign currency forward contracts:
Selling EURO .....................................

Investment
securities

¥521

¥521

¥(8)

Thousands of U.S. Dollars

March 31, 2012

HedgedItem

Contract
AmountContract
Amount Due after
One Year

Fair
Value

Foreign currency forward contracts:
Selling U.S.$........................................

Investment
securities$9,186$9,186$85

Foreign currency forward contracts:
Selling EURO .....................................

Investment
securities$6,339$6,339$(97)

31

The fair value of derivative transactions is measured at the quoted price obtained from the financial institution.
The contract amounts of derivatives which are shown in the above table do not represent the amounts
exchanged by the parties and do not measure the Group’s exposure to credit or market risk.

16. CONTINGENT LIABILITIESThe components of other comprehensive income for the years ended March 31, 2012 were as follows:
Millions of Yen

Thousands of
U.S. Dollars

Guarantees of bank loans related to employees ...................

¥132$1,606

Refundment bonds of an unconsolidated subsidiary ..........

¥ 28

$ 341

17. SUBSEQUENT EVENTSAppropriations of Retained Earnings
On May 18, 2012, the following appropriation of retained earnings at March 31, 2012, was resolved by the Boardof Directors:
Millions of Yen

Year-end cash dividends, ¥7.5 ($0.09) per share ..................

Thousands of
U.S. Dollars¥ 566$ 6,886

18. SEGMENT INFORMATION
Under ASBJ Statement No. 17, “Accounting Standard for Segment Information Disclosures” and ASBJ Guidance
No.20, “Guidance on Accounting Standard for Segment Information Disclosures”, an entity is required to reportfinancial and descriptive information about its reportable segments. Reportable segments are operating
segments or aggregations of operating segments that meet specified criteria. Operating segments arecomponents of an entity about which separate financial information is available and such information isevaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing
performance. Generally, segment information is required to be reported on the same basis as is used internallyfor evaluating operating segment performance and deciding how to allocate resources to operating segments.

(1) Description of Reportable Segments
The Group’s reportable segments are those for which separate financial information is available and regular
evaluation by the Company’s management is being performed in order to decide how resources are allocatedamong the Group. Therefore, the Group’s reportable segments consist of the Domestic, Overseas, PowerEngineering and Real estate leasing segment. Domestic consists of consulting services in public and private
sectors related to mainly infrastructure development. Overseas consists of consulting services related to mainly
ODA-funded development projects. Power Engineering consists of manufacturing of products and appliances
related to electric production and distribution systems and engineering services related to construction andmaintenance of public and private electric power facilities. Real estate leasing consists of sales of our Group’s
real estate leasing operation.

(2)	Methods of Measurement for the Amount of Sales, Profit (Loss), Assets,
Liabilities and Other Items for Each Reportable Segment
The accounting policies of each reportable segment are consistent with those disclosed in Note 2, “Summary of
Significant Accounting Policies.”32

(3) Information about Sales, Profit (Loss), Assets, Liabilities and Other Items
Millions of Yen

2012
Reportable Segment

Sales
Sales to customers ...............
Intersegment sales ...............

Domestic

Overseas¥34,423343¥16,326
2

Power
Real EstateEngineering
Leasing¥12,932
172¥1,193
123

Total¥64,874
640

OthersTotal¥ 1,0714¥ 65,945
644

1,075

Reconciliations

Consolidated¥65,945¥(644)

Total sales ......................

34,766

16,328

13,104

1,316

65,514

66,589(644)

65,945

Segment profit (loss) ............
Segment assets .....................

¥ 878¥28,628¥ 975¥11,248¥ 837¥ 9,726¥ 822¥9,917¥ 3,512¥59,519¥ (183) ¥ 3,329¥41,793 ¥101,312¥(3)¥(21,940)¥ 3,326¥79,372

Other:
Depreciation .........................

¥

¥

¥

¥

¥

240

¥ 160

Interest income ....................

177
21

12

58

2

19

635
54

201

311

¥

255

946

Interest expense ...................

44

54

43

22

163

77

240

Increase in property, plantand intangible assets ..........

64

227

252

3

546

73

619

¥
¥

946

(183)

72

(184)

56
619

Millions of Yen

2011
Reportable Segment

Sales
Sales to customers ...............
Intersegment sales ...............

Domestic

Overseas¥31,938
328¥15,960
9

PowerReal EstateEngineering
Leasing¥15,742161¥ 1,262
128

Total sales ......................

32,266

15,96915,903

Segment profit (loss) ............

¥ (827)¥ 1,311¥ 1,606¥

Segment assets .....................

¥25,653¥ 9,166

Other:
Depreciation .........................

¥

¥

216

68

Total

¥64,902626

Others

¥

Total

905
6

¥ 65,807
632

911

66,439Reconciliations¥65,807¥

1,390

65,528779¥ 2,869¥ (168) ¥ 2,701¥¥ 9,166¥10,590¥54,575¥51,168¥105,743

¥

¥

¥

¥

331

¥ 1,010

Interest income ....................

185

13

219
17

176
23

679
238

419

657

Interest expense ...................

281

51

62

123

517

149

666

Increase in property, plantand intangible assets ..........

60

74

182

116

432

420

852

Consolidated

(632)
(632)

65,807(3)¥ 2,698¥(31,002)¥74,741¥ 1,010

¥

(572)

85

(571)

95
852

Thousands of U.S. Dollars

2012
Reportable Segment

Sales
Sales to customers ...............
Intersegment sales ...............

Domestic

Overseas$418,822
4,173$198,637
25

Power
Real EstateEngineering
Leasing$157,343
2,092$ 14,515
1,497

Total

$789,317
7,787

OthersTotal$ 13,031 $ 802,348
49
7,836

Reconciliations

Consolidated$802,348$ (7,836)

Total sales ......................

422,995

198,662

159,435

16,012

797,104

13,080810,184

Segment profit (loss) ............

$ 10,683$ 11,863$ 10,184$ 10,000$ 42,730$ (2,226) $40,504

Segment assets .....................

$348,315$136,854$118,336$120,659$724,164$508,492 $1,232,656

Other:
Depreciation .........................

$ 2,153$$ 2,920$ 1,947$ 7,726$ 3,784 $

11,510Interest income ....................

256

146

24

231

657

2,446

3,103

$ (2,227)876

Interest expense ...................

535

657

523

268

1,983

937

2,920

(2,239)681

Increase in property, plantand intangible assets ..........

779

2,762

3,066

36

6,643

888

7,531

706

(7,836)802,348(37)$ 40,467$(266,942)$965,714$$ 11,510

7,531

33

Notes:The differences between total amounts for reportable segments and amounts in the consolidated balance sheets
or consolidated statements of income and comprehensive income and the main details of these differences,which are related to difference adjustments at March 31, 2012 and 2011, are as follows:

Net sales
Thousands of
U.S. Dollars

Millions of Yen

Reportable segment total .......................................
Other net sales ........................................................
Elimination of intersegment transactions ............
Net Sales in the consolidated statements
of income and comprehensive income ...........

2012¥65,514
1,075
(644)

2011
¥65,528
911
(632)

2012
$797,104
13,080(7,836)¥65,945¥65,807$802,348

ProfitThousands of
U.S. Dollars

Millions of Yen

Reportable segment total .......................................
Other loss ................................................................
Elimination of intersegment transactions ............
Operating income in the consolidated
statements of income and comprehensive
income ..............................................................

2012¥3,512
(183)
(3)

2011
¥2,869
(168)
(3)

2012
$42,730(2,226)(37)¥3,326¥2,698$40,467

AssetsThousands of
U.S. Dollars

Millions of Yen

Reportable segment total .......................................
Other property ........................................................
Elimination of intersegment transactions ............
Total assets in the consolidated balance
sheet ..................................................................

2012¥59,519
41,793(21,940)

2011¥54,575
51,168(31,002)2012$724,164
508,492(266,942)¥79,372¥74,741$965,714

Other items
Millions of Yen

2012
Reportable
Segment

OthersReconciliations

Depreciation ........................................
Amortization of Goodwill ...................
Amortization of Negative Goodwill ...
Interest income ...................................
Interest expense ..................................

¥635
310
14
54
163

¥311

Increase in property, plant andintangible assets.................................

546

73

34

201
77

¥(183)
(184)

Total

¥946
310
14
72
56
619

Millions of Yen

2011
Reportable
Segment

Depreciation ........................................
Amortization of Goodwill ...................
Amortization of Negative Goodwill ...
Interest income ...................................
Interest expense ..................................
Increase in property, plant andintangible assets.................................

OthersReconciliations

¥679
313
14
238
517

¥331

432

420

¥(572)
(571)

419
149

Total

¥1,010
313
14
85
95
852

Thousands of U.S. Dollars

2012
Reportable
Segment

Others$7,726
3,772

Depreciation ........................................
Amortization of Goodwill ...................
Amortization of Negative Goodwill ...
Interest income ...................................
Interest expense ..................................
Increase in property, plant andintangible assets.................................

Reconciliations$3,784

Total$11,510
3,772

170

170

1,983

2,446
937

6,643

888

657

$(2,227)876(2,239)

681

7,531

Note:
The reconciliatory main items of interest income and expense are eliminations of corporate interest inaccounting for control.
The information about geographical areas at March 31, 2012, was as follows:

Sales
Millions of Yen

2012
Japan

Asia

¥48,239¥10,569

Middle East

¥1,424Africa¥2,470LatainAmerica¥2,769

Other

¥474

Total

¥65,945

Thousands of U.S. Dollars

2012
Japan

Asia

$586,921$128,592

Middle East

$17,326

Africa$30,052

LatainAmerica$33,690

Other$5,767

Total$802,348

35

The information about major customers at March 31, 2012, was as follows:
Millions of Yen

2012
Name of Customers

Sales

Related Segment Name

¥12,976
6,701
6,092

Ministry of Land, Infrastructure, Transport and Tourism ..
Japan International Cooperation Agency .............................
Tokyo Electric Power Co., Ltd. ..............................................

Domestic
Overseas
Power Engineering

Thousands of U.S. Dollars

2012
Name of Customers

Sales

Related Segment Name

$157,878
81,531
74,121

Ministry of Land, Infrastructure, Transport and Tourism ..
Japan International Cooperation Agency .............................
Tokyo Electric Power Co., Ltd. ..............................................

Domestic
Overseas
Power Engineering

The information about goodwill and negative goodwill at March 31, 2012, was as follows:
Millions of Yen

2012
Reportable Segment
Domestic

Overseas

Power
Engineering

Real Estate
Leasing

OthersTotal

Elimination/
Corporate

Consolidated

Amortization of Goodwill ...

¥310

¥310

¥310

Goodwill at March 31, 2012 ...

928

928

928

Amortization of Negative
Goodwill ..........................

14

14

14

Negative Goodwill at
March 31, 2012 .................

15

15

15

Thousands of U.S. Dollars

2012
Reportable Segment
Domestic

Overseas

Power
Engineering

Real Estate
Leasing

Total

OthersElimination/
Corporate

Consolidated

Amortization of Goodwill ...

$3,772$3,772$3,772

Goodwill at March 31, 2012 ...

11,291

11,291

11,291

Amortization of Negative
Goodwill ..........................

170

170

170

Negative Goodwill at
March 31, 2012 .................

182

182

182

36

37

Non-consolidated Balance Sheet
Nippon Koei Co., Ltd.
March 31, 2012

Thousands of
U.S. Dollars (Note 1)

Millions of Yen

ASSETS

2012

2012

2011

CURRENT ASSETS:¥ 4,181¥ 3,590$ 50,870

Trade notes .........................................................

51

189

621

Trade accounts ...................................................

22,747

17,818276,761

Allowance for doubtful accounts ......................

(377)

(2)

(4,587)

Short-term loan receivables.................................

2,064

1,650

25,113Inventories ‑ work in process ..............................

4,809

4,518

58,511

Deferred tax assets (Note 9) ................................

1,021

865

12,422

Prepaid expenses and other current assets ........

1,284

1,620

15,622

Total current assets...........................................

35,78030,248435,333

Land ......................................................................

11,884

11,884

144,592

Buildings and structures .....................................

18,10618,085220,294

Machinery and equipment ..................................

2,170

2,016

26,402

Furniture and fixtures .........................................

2,192

2,143

26,670Cash and cash equivalents ...................................
Receivables:

PROPERTY, PLANT AND
EQUIPMENT (Note 7):

Construction in progress .....................................

6

Lease assets ..........................................................

149

184

1,813

Total ..................................................................

34,501

34,318419,771

Accumulated depreciation ...................................

(14,743)(14,193)(179,377)

Net property, plant and equipment .................

19,75820,125

240,394

INVESTMENTS AND OTHER ASSETS:
Investment securities (Note 3) ............................
Investments in and advances to subsidiaries
and associated companies (Note 4) ..................
Deferred tax assets (Note 9) ................................

6,997

7,395

85,132

6,402
45

6,078
308

77,893548

Other assets ..........................................................

2,625

2,631

31,937

Allowance for doubtful accounts ........................

(6)

(22)

(73)

Total investments and other assets .................

16,063

16,390195,437

TOTAL ....................................................................

¥71,601¥66,763$871,164

See notes to non-consolidated financial statements.

38

Thousands of
U.S. Dollars (Note 1)

Millions of Yen

LIABILITIES AND EQUITYCURRENT LIABILITIES:
Short‑term borrowings (Note 5) .........................
Current portion of long-term debt (Note 5) .......
Payables:Trade notes .........................................................
Trade accounts ...................................................
Income taxes payable ...........................................
Advances received ................................................
Accrued bonuses ..................................................
Allowance for anticipated project loss ................
Allowance for loss from a disaster ......................
Other current liabilities .......................................
Total current liabilities ....................................
LONG-TERM LIABILITIES:Long-term debt (Note 5) ......................................
Liability for retirement benefits (Note 6) ...........
Allowance for environmental measures .............
Asset retirement obligations ................................
Deposits received (Note 7) ...................................
Total long-term liabilities ................................

2012

2012

2011

¥14,730
143¥10,550
154$179,219
1,740

391
4,612
953
3,999
1,459
68
12
2,921
29,288

401
3,814
340
3,902
1,429
53
63
2,862
23,568

4,757
56,114
11,59548,656
17,752827
146
35,539356,345

107
282
49
43
1,911
2,392

240
317
74
44
2,185
2,860

1,302
3,431
596
523
23,251
29,103

7,393

7,393

89,950

6,093
38

6,093
38

74,134462

1,546
28,6791,546
28,271

18,810348,935

(510)

(798)

(6,205)

COMMITMENTS AND CONTINGENT
LIABILITIES (Notes 12 and 13)
EQUITY (Notes 8 and 14):
Common stock,authorized, 189,580,000 shares; issued,
86,656,510 shares in 2012 and 2011 .................
Capital surplus:
Additional paid-in capital ..................................
Other capital surplus .........................................
Retained earnings:
Legal reserve ......................................................
Retained earnings - unappropriated .................
Unrealized loss onavailable-for-sale securities ...............................
Deferred loss onderivatives under hedge accounting .................
Treasury stock—at cost
11,170,244 shares in 2012
and 7,170,987 shares in 2011 ............................
Total equity........................................................

(1)

26

(12)

(3,317)39,921(2,234)40,335(40,358)
485,716TOTAL.....................................................................

¥71,601¥66,763$871,16439

N o n - conso lida ted S ta temen t o f I n c o me
Nippon Koei Co., Ltd.
Year Ended March 31, 2012

Thousands of
U.S. Dollars (Note 1)

Millions of Yen

2012

2012

2011

NET SALES ...........................................................
COST OF SALES ...................................................
Gross profit .............................................................

¥49,852
36,583
13,269¥48,426
36,067
12,359$606,546
445,103
161,443SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES (Note 10) ........
Operating income ..................................................

10,716
2,553

10,342
2,017

130,381
31,062

372
(95)
(78)
29
(372)
(20)
10

335
(133)
(76)
15
(577)
(69)
2,338
20

4,526
(1,156)(949)
353(4,526)(243)
122

OTHER INCOME (EXPENSES):Interest and dividend income ..............................
Interest expense ...................................................
Foreign currency exchange loss ..........................
Gain on sales of investment securities ................
Loss on sales of investment securities ................
Loss from a natural disaster (Note 11) ...............
Gain on extinguishment of tie-in shares.............
Reversal of allowance for doubtful accounts .....
Provision of allowance for doubtful accountsof subsidiaries and associated companies ........
Other-net ...............................................................
Other (expense) income-net ............................

(375)
312
(217)

109
1,962

(4,563)
3,796(2,640)

INCOME BEFORE INCOME TAXES.................

2,336

3,979

28,422

INCOME TAXES (Note 9):
Current .................................................................
Deferred ................................................................
Total income taxes ...........................................

1,264
(131)
1,133

880
(61)
819

15,379(1,594)
13,785NET INCOME .......................................................

¥ 1,203¥ 3,160$ 14,637

U.S. Dollars(Note 1)Yen

PER SHARE OF COMMON STOCK (Note2. t.):Basic net income ..................................................
Cash dividends applicable to the year ................
See notes to non-consolidated financial statements.

40¥ 15.58
7.50¥ 39.67
7.50

$

0.19
0.09

N o n - conso lida ted S ta temen t o f C h an ges i n E q u i t y
Nippon Koei Co., Ltd.
Year Ended March 31, 2012

Thousands

Millions of Yen

Outstanding
Number of
Shares ofCommonStock

BALANCE, MARCH 31, 2010 .......

79,733

Capital Surplus

Retained Earnings

CommonStock

Unrealized
Gain (Loss)

Additional

Other

Paid-in
CapitalCapitalSurplus¥7,393¥6,093

on Available-

¥38

Legal
Reserve

Unappropriated¥1,546¥25,710

for-Sale
Securities¥(592)

DeferredGain (Loss)on

Treasury

Total

Derivatives
under Hedge

Stock

EquityAccounting¥ (7) ¥(2,175) ¥38,006

Net income ................................

3,160

3,160

Cash dividends, ¥7.50 per share .....

(599)

(599)

Purchase of treasury stock ...........

(247)

(59)

Net change in the year ................
BALANCE, MARCH 31, 2011 .......

79,486

7,393

6,093

38

1,546

Net income ................................

(798)

26

(2,234)(795)(1,083)288¥7,393¥6,093¥38¥1,54640,335(795)(4,000)75,486

(59)
(173)
1,203

Net change in the year ................
BALANCE, MARCH 31, 2012 .......

33

1,203

Cash dividends, ¥7.50 per share .....
Purchase of treasury stock ...........

28,271(206)¥28,679¥(510)(27)(1,083)261¥ (1) ¥(3,317) ¥39,921

Thousands of U.S. Dollars (Note 1)
Capital Surplus

Retained Earnings

CommonStock

BALANCE, MARCH 31, 2011 .......

$89,950

Additional
Paid-in
Capital

Other
CapitalSurplus$74,134

$462

Legal
Reserve

Unrealized
Gain (Loss)

DeferredGain (Loss)on
on AvailableDerivatives
for-Sale
Unappropriatedunder Hedge
Securities
Accounting$18,810 $343,971$(9,709)

Treasury
Stock

Total
Equity$316 $(27,181) $490,753

Net income ................................

14,637

14,637

Cash dividends, $0.09 per share .....

(9,673)(9,673)Purchase of treasury stock ...........

(13,177)

Net change in the year ................
BALANCE, MARCH 31, 2012 .......

3,504$89,950$74,134$462$18,810 $348,935$(6,205)(328)(13,177)
3,176$ (12) $(40,358) $485,716

See notes to non-consolidated financial statements.

41

N o te s to No n- con solid ated Fi n an c i al S t atemen t s
Nippon Koei Co., Ltd.
Year Ended March 31, 2012

1. BASIS OF PRESENTING NON-CONSOLIDATED FINANCIAL STATEMENTS
The accompanying non-consolidated financial statements have been prepared from the accounts maintained by
Nippon Koei Co., Ltd. (the “Company”) in accordance with the provisions set forth in the Companies Act ofJapan and in conformity with accounting principles generally accepted in Japan, which are different in certain
respects as to application and disclosure requirements of International Financial Reporting Standards.
As consolidated statements of cash flows and certain disclosures are presented in the consolidated financial
statements of the Company, non-consolidated statements of cash flows and certain disclosures are not presented
herein in accordance with accounting principles generally accepted in Japan.
In preparing these non-consolidated financial statements, certain reclassifications and rearrangements havebeen made to the Company’s non-consolidated financial statements issued domestically in order to present themin a form which is more familiar to readers outside Japan. In addition, certain reclassifications have been madein the 2011 non-consolidated financial statements to conform to the classifications used in 2012.
The non-consolidated financial statements are stated in Japanese yen, the currency of the country in which theCompany is incorporated and operates. The translations of Japanese yen amounts into U.S. dollar amounts areincluded solely for the convenience of readers outside Japan and have been made at the rate of ¥82.19 to $1, theapproximate rate of exchange at March 31, 2012. Such translations should not be construed as representations
that the Japanese yen amounts could be converted into U.S. dollars at that or any other rate.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa. Non-consolidation —The non-consolidated financial statements do not include the accounts of subsidiaries.
Investments in subsidiaries and associated companies are stated at cost.
b. Cash Equivalents —Cash equivalents are short-term investments that are readily convertible into cash andthat are exposed to insignificant risk of changes in value.
Cash equivalents include time deposits and investment trusts, all of which mature or become due within
three months of the date of acquisition.
c. Inventories —Work in process is stated at the lower of cost, mainly determined by the specific identification
cost method, or net selling value. (see Note 4.)d.	Marketable and Investment Securities —Marketable and investment securities are classified and accounted
for, depending on management’s intent, as follows:(1) held-to-maturity debt securities, which are expected to be held to maturity with the positive intent andability to hold to maturity are reported at amortized cost; (2) available-for-sale securities, which are notclassified as the aforementioned securities, are reported at fair value, with unrealized gains and losses, net of
applicable taxes, reported in a separate component of equity and (3) investments in subsidiaries andassociated companies are reported at cost.
Non-marketable available-for-sale securities are stated at cost determined by the moving-average method.
For other-than-temporary declines in fair value, investment securities are reduced to net realizable value by acharge to operations.
e. Property, Plant and Equipment —Property, plant and equipment are stated at cost. Depreciation ofproperty, plant and equipment is computed substantially by the declining-balance method at rates based on
the estimated useful lives of the assets, while the straight-line method is applied to buildings acquired after
April 1, 1998, and lease assets as well as other equipment for rent. The range of useful lives is principallyfrom 3 to 50 years for buildings and structures, from 2 to 15 years for machinery and equipment, and from 2
to 20 years for furniture and fixtures. The useful lives for lease assets are the terms of the respective leases.
f. Long-Lived Assets —The Company reviews its long-lived assets for impairment whenever events or changes
in circumstance indicate the carrying amount of an asset or asset group may not be recoverable. An
impairment loss would be recognized if the carrying amount of an asset or asset group exceeds the sum of
the undiscounted future cash flows expected to result from the continued use and eventual disposition of theasset or asset group. The impairment loss would be measured as the amount by which the carrying amount42

of the asset exceeds its recoverable amount, which is the higher of the discounted cash flows from thecontinued use and eventual disposition of the asset or the net selling price at disposition.
g. Allowance for Doubtful Accounts —The allowance for doubtful accounts is stated in amounts considered tobe appropriate based on the companies’ past credit loss experience and an evaluation of potential losses in
the receivables outstanding.
h. Retirement and Pension Plans — The Company has a contributory defined benefit pension plan andunfunded retirement benefit plan for the benefit of its employees.
Effective April 1, 2000, the Company adopted a new accounting standard for the employees’ retirement
benefits and accounted for the liability for retirement benefits based on projected benefit obligations andplan assets at the balance sheet date.
Unrecognized actuarial gain or loss is recognized by the straight-line method over 13 years.
Unrecognized prior service costs are recognized by the straight-line method over 13 years.
Retirement benefits for directors and corporate auditors are provided at the amount which would be
required if all directors and corporate auditors retired at the balance sheet date.
i. Allowance for Anticipated Project Loss — The Company has made a provision for anticipated losses on
uncompleted project contracts.
j. Asset Retirement Obligations — In March 2008, the ASBJ published ASBJ Statement No. 18, “AccountingStandard for Asset Retirement Obligations” and ASBJ Guidance No. 21, “Guidance on Accounting Standard
for Asset Retirement Obligations.” Under this accounting standard, an asset retirement obligation is defined
as a legal obligation imposed either by law or contract that results from the acquisition, construction,
development and the normal operation of a tangible fixed asset and is associated with the retirement of suchtangible fixed asset. The asset retirement obligation is recognized as the sum of the discounted cash flows
required for the future asset retirement and is recorded in the period in which the obligation is incurred if areasonable estimate can be made. If a reasonable estimate of the asset retirement obligation cannot be madein the period the asset retirement obligation is incurred, the liability should be recognized when a reasonableestimate of asset retirement obligation can be made. Upon initial recognition of a liability for an asset
retirement obligation, an asset retirement cost is capitalized by increasing the carrying amount of the related
fixed asset by the amount of the liability. The asset retirement cost is subsequently allocated to expense
through depreciation over the remaining useful life of the asset. Over time, the liability is accreted to its
present value each period. Any subsequent revisions to the timing or the amount of the original estimate ofundiscounted cash flows are reflected as an increase or a decrease in the carrying amount of the liability andthe capitalized amount of the related asset retirement cost.
k. Research and Development Costs — Research and development costs are charged to income as incurred.
l. Leases — In March 2007, the ASBJ issued ASBJ Statement No.13, “Accounting Standard for Lease
Transactions”, which revised the previous accounting standard for lease transactions issued in June 1993.
The revised accounting standard for lease transactions was effective for fiscal years beginning on or after
April 1, 2008.
Under the previous accounting standard, finance leases that deemed to transfer ownership of the leased
property to the lessee were capitalized. However, other finance leases were permitted to be accounted for as
operating lease transactions if certain “as if capitalized” information was disclosed in the notes to the lessee’s
financial statements. The revised accounting standard requires that all finance lease transactions becapitalized to recognizing lease assets and lease obligations in the balance sheet. In addition, the revised
accounting standard permits leases which existed at the transition date and did not transfer ownership of theleased property to the lessee to be measured at the obligations under finance leases less interest expense at
the transition date and recorded as acquisition cost of lease assets.
The Company applied the revised accounting standard effective April 1, 2008. In addition, the Company
accounted for leases which existed at the transition date and do not transfer ownership of the leased property
to the lessee as acquisition cost of lease assets measured at the obligations under finance leases at thetransition date.
All other leases are accounted for as operating leases.

43m. Accrued Bonuses — Bonuses to employees, directors and corporate auditors are accrued at the year end towhich such bonuses are attributable.
n. Allowance for Environmental Measures — The Company has made a provision for treatment of PCB
Wastes based on Act on Special Measures concerning Promotion of Proper Treatment of PCB Wastes.
o. Allowance for Loss from a Disaster — The Company has made a provision for rehabilitation of property,
plant and equipment which were damaged by the Great East Japan Earthquake.
p. Income Taxes — The provision for income taxes is computed based on the pretax income included in the
non-consolidated statement of operations. The asset and liability approach is used to recognize deferred tax
assets and liabilities for the expected future tax consequences of temporary differences between the carrying
amounts and the tax bases of assets and liabilities. Deferred taxes are measured by applying currently
enacted tax laws to the temporary differences.
q. Foreign Currency Transactions — All short-term and long-term monetary receivables and payables
denominated in foreign currencies are translated into Japanese yen at the exchange rates at the balance sheet
date. The foreign exchange gains and losses from translation are recognized in the non-consolidated
statements of operations.
r. Revenue Recognition — If the outcome of a construction contract can be estimated reliably, the contract
revenue is recognized by the percentage-of-completion method which is measured by reference to thepercentage of total cost incurred to date to estimated total cost.
All other construction projects, except the aforementioned, are recorded using the completed-contract
method (including the partially completed-contract method).
s. Derivatives and Hedging Activities — The Company uses derivative financial instruments to manage its
exposures to fluctuations in foreign exchange. Foreign exchange forward contracts are utilized by theCompany to reduce foreign currency exchange. The Company does not enter into derivatives for trading or
speculative purposes.
Derivative financial instruments and foreign currency transactions are classified and accounted for as
follows: (1) all derivatives are recognized as either assets or liabilities and measured at fair value, and gains
or losses on derivative transactions are recognized in the non-consolidated statement of income and (2) for
derivatives used for hedging purposes, if such derivatives qualify for hedge accounting because of highcorrelation and effectiveness between the hedging instruments and the hedged items, gains or losses onderivatives are deferred until maturity of the hedged transactions.
The foreign exchange forward contracts are measured at fair value but the unrealized gains/losses aredeferred until the underlying transactions are completed.
t. Per Share Information— Basic net operations per share is computed by dividing net operations available toshareholders of common stock, by the weighted-average number of shares of common stock outstanding forthe period. The weighted-average numbers of shares of common stock for the years ended March 31, 2012
and 2011, were 77,190,579 and 79,639,800, respectively.
Diluted net operations per share of common stock are not disclosed because the Company has nothing thatmight dilute the per share information for the years ended March 31, 2012 and 2011.
Cash dividends per share presented in the accompanying non-consolidated statements of operations are
dividends applicable to the respective years including dividends to be paid after the end of the year.
u. Accounting Changes and Error Corrections — In December 2009, the ASBJ issued ASBJ Statement No. 24,“Accounting Standard for Accounting Changes and Error Corrections” and ASBJ Guidance No. 24,“Guidance on Accounting Standard for Accounting Changes and Error Corrections.” Accounting treatments
under this standard and guidance are as follows:(1) Changes in Accounting Policies-When a new accounting policy is applied with revision of accounting
standards, the new policy is applied retrospectively unless the revised accounting standards include specifictransitional provisions. When the revised accounting standards include specific transitional provisions, anentity shall comply with the specific transitional provisions.
(2) Changes in Presentations-When the presentation of financial statements is changed, prior-period financial
statements are reclassified in accordance with the new presentation. (3) Changes in Accounting Estimates-A

44

change in an accounting estimate is accounted for in the period of the change if the change affects that
period only, and is accounted for prospectively if the change affects both the period of the change and future
periods. (4) Corrections of Prior-Period Errors-When an error in prior-period financial statements is
discovered, those statements are restated. This accounting standard and the guidance are applicable toaccounting changes and corrections of prior-period errors which are made from the beginning of the fiscal
year that begins on or after April 1, 2011.
v. New Accounting Pronouncements
Accounting Standard for Retirement Benefits — On May 17, 2012, the ASBJ issued ASBJ Statement No. 26,“Accounting Standard for Retirement Benefits” and ASBJ Guidance No. 25, “Guidance on AccountingStandard for Retirement Benefits,” which replaced the Accounting Standard for Retirement Benefits that had
been issued by the Business Accounting Council in 1998 with effective date of April 1, 2000, and the otherrelated practical guidances, being followed by partial amendments from time to time through 2009.
Major changes are as follows:(a) Treatment in the balance sheet
Under the current requirements, actuarial gains and losses and past service costs that are yet to berecognized in profit or loss are not recognized in the balance sheet, and the difference between retirement
benefit obligations and plan assets (hereinafter, “deficit or surplus”), adjusted by such unrecognizedamounts, is recognized as a liability or asset.
Under the revised accounting standard, actuarial gains and losses and past service costs that are yet to berecognized in profit or loss shall be recognized within equity (accumulated other comprehensive income),
after adjusting for tax effects, and the deficit or surplus shall be recognized as a liability (liability for
retirement benefits) or asset (asset for retirement benefits).
(b) Treatment in the statement of income and the statement of comprehensive income (or the statement ofincome and comprehensive income)The revised accounting standard would not change how to recognize actuarial gains and losses and past
service costs in profit or loss. Those amounts would be recognized in profit or loss over a certain period nolonger than the expected average remaining working lives of the employees. However, actuarial gains andlosses and past service costs that arose in the current period and yet to be recognized in profit or loss shall be
included in other comprehensive income and actuarial gains and losses and past service costs that wererecognized in other comprehensive income in prior periods and then recognized in profit or loss in thecurrent period shall be treated as reclassification adjustments.
(c) Treatment in non-consolidated financial statements
In non-consolidated financial statements, the new requirements in (a) and (b) above would not be applied,with the current requirements remaining applicable.
This accounting standard and the guidance are effective for the end of annual periods beginning on or after
April 1, 2013, with earlier application being permitted from the beginning of annual periods beginning on orafter April 1, 2013. However, no retrospective application of this accounting standard to consolidated
financial statements in prior periods is required.
The Company does not expect to apply the revised accounting standard to the non-condolidated financial
statements for the year ending March 31, 2014, accordingly.

45

3. INVESTMENT SECURITIESInvestment securities as of March 31, 2012 and 2011, consisted of the following:Thousands of
U.S. Dollars

Millions of Yen

2012
Non-current:
Marketable equity securities .................................
Government and corporate bonds ........................
Other .......................................................................
Total .................................................................

2012

2011

¥5,844717
436¥6,997¥5,862
1,004
529¥7,395$71,104
8,724
5,304$85,132

4.	INVESTMENTS IN AND ADVANCES TO SUBSIDIARIES AND
ASSOCIATED COMPANIESInvestments in and advances to subsidiaries and associated companies as of March 31, 2012 and 2011, were as
follows:
Thousands of
U.S. Dollars

Millions of Yen

Investments ............................................................
Advances .................................................................
Total .................................................................

2012¥6,097305¥6,402

2011¥6,01860¥6,078

2012$74,182
3,711$77,893

The value of the investment securities of subsidiaries and associated companies are measured at the originalacquisition costs, for the fair value of them cannot be reliably determined at March 31, 2012, since market value
and estimated future cash flow are not available.

5. SHORT-TERM BORROWINGS AND LONG-TERM DEBT
Short-term borrowings at March 31, 2012 and 2011, consisted of notes to banks and subsidiaries. The annualinterest rates applicable to the short-term borrowings ranged from 0.505% to 1.475% and 0.511% to 1.475% at
March 31, 2012 and 2011, respectively.
Long-term debt at March 31, 2012 and 2011, consisted of the following:Thousands of
U.S. Dollars

Millions of Yen

2012
Loan from bank due seriallyto 2013 with interest rate of 1.250% ...................
Obligation under finance leases ............................
Total .................................................................
Less current portion ..............................................
Long-term debt, less current portion ....................

46

2012

2011
¥197

53
250
(143)
¥107

¥315
79
394
(154)
¥240

$2,397645
3,042(1,740)$1,302

Annual maturities of long-term debt at March 31, 2012, for the five years and thereafter were as follows:Year Ending March 31

2013 .........................................................
2014 .........................................................
2015 .........................................................
2016 .........................................................
2017 and thereafter .................................
Total ..................................................

Thousands of
U.S. Dollars

Millions of Yen
Long-Term Debt

Lease Obligations

Long-Term Debt

Lease Obligations

¥118
53

¥25
15
7
3
3
¥53

$1,436
645

$304
183
85
37
36
$645

¥171

$2,081The Company had a commitment-line contract of ¥8,000 million ($97,335 thousand) over three years withfinancial institutions in order to secure the stability of long-term funding. The contract included a restrictive
financial covenant. At March 31, 2012, the Company had utilized ¥8,000 million ($97,335 thousand) of thecommitment-line. In addition, the Company had overdraft contracts of ¥7,000 million ($85,169 thousand) intotal. At March 31, 2012, the Company had utilized ¥3,000 million ($36,501 thousand) of the overdraft.

Financial covenants

Short-term borrowings of ¥8,000 million includes financial covenants, with which the Company is incompliance.
The major financial covenants are as follows:
If the Company fails to comply with the following covenants, creditors may require repayment of all debt.
(1) Shareholder’s equity of each fiscal year will not fall below 75% of the higher of the following:a. Shareholder’s equity of fiscal year immediately preceding the fiscal year; orb. Shareholder’s equity of fiscal year ending on March 31, 2012
(2) Ordinary income for each fiscal year will not be negative for two consecutive fiscal years.
At March 31, 2012, land and building of ¥2,027 million ($24,662 thousand) were pledged as collateral for longterm debt of ¥197 million ($2,397 thousand).

6. RETIREMENT AND PENSION PLANS
Under most circumstances, employees terminating their employment are entitled to retirement benefits
determined based on the rate of pay at the time of termination, years of service and certain other factors. Suchretirement benefits are made in the form of a lump sum severance payment from the Company and annuity
payments from a trustee. Employees are entitled to larger payments if the termination is involuntary, by
retirement at the mandatory retirement age, by death, or by voluntary retirement at certain specific ages prior tothe mandatory retirement age.
In addition, the group completely transitioned from the approved pension plan to the defined benefit corporate
pension plan in October 2010.
The liabilities for retirement benefits at March 31, 2012 and 2011, for directors and corporate auditors were ¥27
million ($329 thousand) and ¥27 million, respectively. The retirement benefits for directors and corporate
auditors are paid subject to the approval of the shareholders.

7. DEPOSITS RECEIVED
Deposits received from tenants amounted to ¥1,710 million ($20,805 thousand) at March 31, 2012 and ¥1,878
million at March 31, 2011.
At March 31, 2012, land, building and structures for rent of ¥1,430 million ($17,399 thousand) were pledged ascollateral for these deposits.

47

8. EQUITY
Japanese companies are subject to the Companies Act of Japan (the “Companies Act”). The significant
provisions in the Companies Act that affect financial and accounting matters are summarized below:
a. Dividends
Under the Companies Act, companies can pay dividends at any time during the fiscal year in addition to theyear-end dividend upon resolution at the shareholders meeting. For companies that meet certain criteriasuch as; (1) having a Board of Directors, (2) having independent auditors, (3) having a Board of Corporate
Auditors, and (4) the term of service of the directors is prescribed as one year rather than two years ofnormal term by its articles of incorporation, the Board of Directors may declare dividends (except for
dividends in kind) at any time during the fiscal year if the company has prescribed so in its articles ofincorporation. The Company meets all the above criteria.
Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if thearticles of incorporation of the company so stipulate. The Companies Act provides certain limitations on theamounts available for dividends or the purchase of treasury stock. The limitation is defined as the amountavailable for distribution to the shareholders, but the amount of net assets after dividends must be
maintained at no less than ¥3 million.
b. Increases / Decreases and Transfer of Common Stock, Reserve and Surplus
The Companies Act requires that an amount equal to 10% of dividends must be appropriated as a legal
reserve (a component of retained earnings) or as additional paid-in capital (a component of capital surplus)
depending on the equity account charged upon the payment of such dividends until aggregate amount oflegal reserve and additional paid-in capital equals 25% of the common stock. Under the Companies Act, thetotal amount of additional paid-in capital and legal reserve may be reversed without limitation. The
Companies Act also provides that common stock, legal reserve, additional paid-in capital, other capitalsurplus and retained earnings can be transferred among the accounts under certain conditions upon
resolution of the shareholders.
c. Treasury Stock and Treasury Stock Acquisition Rights
The Companies Act also provides for companies to purchase treasury stock and dispose of such treasury
stock by resolution of the Board of Directors. The amount of treasury stock purchased cannot exceed theamount available for distribution to the shareholders which is determined by specific formula.
Under the Companies Act, stock acquisition rights, which were previously presented as a liability, are now
presented as a separate component of equity.
The Companies Act also provides that companies can purchase both treasury stock acquisition rights andtreasury stock. Such treasury stock acquisition rights are presented as a separate component of equity or
deducted directly from stock acquisition rights.

9. INCOME TAXESThe Company is subject to Japanese national and local operations taxes which, in the aggregate, resulted in astatutory tax rate of approximately 39.5% for the years ended March 31, 2012 and 2011.

48

The tax effects of significant temporary differences which resulted in deferred tax assets and liabilities at March
31, 2012 and 2011, were as follows:
Thousands of
U.S. Dollars

Millions of Yen

2012
Deferred tax assets :Unrealized loss on available-for-salesecurities ...............................................................
Accrued bonuses ....................................................
Liability for retirement benefits
for directors and corporate auditors ...................
Liability for retirement benefits
for employees .......................................................
Allowance for anticipated project loss ..................
Allowance for doubtful accounts ..........................
Loss on impairment of long-lived assets ..............
Carry over of foreign tax credit limit ........................
Other .......................................................................
Less valuation allowance .......................................
Total .................................................................
Deferred tax liabilities:
Reserve for deferred gains onsale of property ....................................................
Prepaid pension cost ..............................................
Other .......................................................................
Total .................................................................
Net deferred tax assets .......................................

2012

2011

¥ 267
672

¥ 522
695

$ 3,249
8,176

9

11

110

90

115

1,095

25

361
(405)
¥1,438

21
0
62
105
359
(316)
¥1,574

730
2,689
4,392
(4,928)$17,496

¥ 179

¥ 209

$ 2,178

188
5
¥ 372
¥1,066

171
22
¥ 402
¥1,172

2,287
61$ 4,526$12,970

138

60
221

304
1,679

On December 2, 2011, new tax reform laws were enacted in Japan, which changed the statutory tax rate fromapproximately 39.5% to 36.8% effective for the fiscal years beginning on or after April 1, 2012, through March
31, 2015, and to 34.4% afterwards. The effect of this change was to decrease deferred taxes by ¥77 million ($937
thousand) and to increase unrealized loss on available-for-sale securities by ¥40 million ($487 thousand), in the
non-consolidated balance sheet as of March 31, 2012, and to increase income taxes-deferred by ¥37 million($450 thousand) in the non-consolidated statement of income for the year then ended.
A reconciliation between the statutory tax rate and the actual effective tax rate reflected in the accompanying
non-consolidated statements of income for the years ended March 31, 2012 and 2011, was as follows:

2012
Statutory tax rate ...................................................
Per capita levy of local tax .....................................
Expenses not deductible for tax purposes ............
Valuation allowance ...............................................
Gain on extinguishment of tie-in shares ...............
Other – net ..............................................................
Actual effective tax rate .........................................

2011
39.5%
3.4
1.7
4.4
(0.2)
(0.3)
48.5%

39.5%
1.9
1.1
2.0
(22.8)(1.1)
20.6%

10. RESEARCH AND DEVELOPMENT COSTS
Research and development costs charged to income were ¥406 million ($4,939 thousand) and ¥319 million forthe years ended March 31, 2012 and 2011, respectively.

4911. LOSS FROM A NATURAL DISASTER
Loss from a natural disaster caused by the Great East Japan Earthquake in March, 2012 and 2011, consisted of
the following:Thousands of
U.S. Dollars

Millions of Yen

2012

2011
¥10
10
¥20

Removal cost and repair expenses ........................
Provision of allowance for loss from a disaster .....
Total .................................................................

¥6
63
¥69

2012
$122
121
$243

12. LEASES(1) Lessee

The minimum rental commitments under noncancellable operating leases at March 31, 2012 and 2011, were as
follows:
Thousands of
U.S. Dollars

Millions of Yen

2012
Due within one year ...............................................
Due after one year ..................................................
Total .................................................................

2012

2011
¥1
2
¥3

$12

24
$36

(2) Lessor

The minimum rental commitments under noncancellable operating leases at March 31, 2012 and 2011, were as
follows:
Thousands of
U.S. Dollars

Millions of Yen

Due within one year ...............................................
Due after one year ..................................................
Total .................................................................

2012
¥ 696
2,065
¥2,761

2011
¥ 697
2,761
¥3,4582012$ 8,468
25,125$33,593

13. CONTINGENT LIABILITIESAt March 31, 2012, the Company had the following contingent liabilities:
Millions of Yen

Guarantees of bank loans related to a subsidiaryand employees .....................................................................................
Refundment bonds of a subsidiary ......................................................

¥132
¥ 28

Thousands of
U.S. Dollars$1,606$ 341

14. SUBSEQUENT EVENTSAppropriations of Retained Earnings
On May 18, 2012, the following appropriation of retained earnings at March 31, 2012, was resolved by the Boardof Directors:
Millions of Yen

Year-end cash dividends, ¥7.5 ($0.09) per share .................................
50

¥566

Thousands of
U.S. Dollars$6,886

51

Co rp ora te In form atio n

Board of Directors, Officers and Corporate
Auditors
Chairperson
Yoshihiko Tsunoda*

Stock Information
Shares authorized

189,580,000

Shares issued

86,656,510

Stockholders of minimum tradable stock unit

6,732

As of March 31, 2012

President:
Noriaki Hirose*

Major Stockholders

Director and Executive Vice President:
Seijiro Usuda *Share owned(thousands)

Percentage of
total owned

The Bank of Tokyo-Mitsubishi
UFJ, Ltd.

3,699

4.26

Meiji Yasuda Life Insurance
Company.

3,530

4.07

The Koei Employees’
Stockholders Association

2,830

3.26

Director and Managing Executive Officers:
Tamotsu Yoshida
Yoichi Abe

The Master Trust Bank ofJapan, Ltd. (Trustee)

2,424

2.79

Japan Trustee Services Bank,
Ltd. (Trustee)

2,094

2.41

Director and Executive Officers:
Ryuichi Arimoto
Akira Mizukoshi
Noboru Takano

Mizuho Corporate Bank, Ltd.

1,911

2.20

Tsukishima Kikai Co.,Ltd

1,843

2.12

CREDIT SUISSESECURITIES (EUROPE)
LIMITED PB SEC INT NONTR CLIENT

1,480

1.70

CBNY DFA INTL SMALL CAP
VALUE PORTFOLIO

1,470

1.69

OYO Corporation

1,100

1.26

Director and Senior Managing Executive Officers:
Katsumi Yoshida
Shoji Nishitani
Yutaka Murai

Director:
Masahisa Naito
Corporate Auditors:
Kenichi Sakata
Koichi Kosumi
Mineo Enomoto

As of March 31, 2012Managing Executive Officers:
Yoichi Kobayashi
Yoshiki Tamemitsu
Hiromichi Sekine
Executive Officers:
Kunio Kurokawa
Kiyotaka Mizushima
Masanao Nishimura
Takashi Seki
Yoshikimi Inoue
Hiroyuki Kasahara
Hiroyuki Akiyoshi
Haruyoshi Takura
Naoki Honjo*Representative Directors

52

As of June 28, 2012

Besides the above, the Company owns thousands of shares of treasury stock
1,117 (12.89%)

Major Offices and Facilities

Major Businesses

Head Office
4 Kojimachi 5-chome, Chiyoda-ku,
Tokyo 102-8539, Japan

Consulting Administration

Shin-Kojimachi Office
2 Kojimachi 4-chome, Chiyoda-ku,
Tokyo 102-0083, Japan
Hanzomon Office
5 Kojimachi 2-chome, Chiyoda-ku,
Tokyo 102-0083, Japan
Domestic Branch Offices
Tokyo, Sapporo, Sendai, Fukushima, Niigata,
Nagoya, Osaka, Hiroshima, Shikoku, Fukuoka
Research Facility
Research and Development Center in Tsukuba
Science City, Ibaraki
Overseas Offices (Liaison Office)Jakarta, Manila, Hanoi(Ho Chi Minh), Bangkok(Vientiane, Phnom Penh), Yangon, New Delhi,
Colombo, Middle East(Amman, Baghdad, Tunis,
Rabat), Nairobi, Lima

Field of activity• Water Resources• Energy• Urban & Regional Development• Transportation• Agriculture & Rural Development• Environment• Climate Change• Information & Communication Technology• Geosphere Engineering• Project and Program Management• Public Private Partnership/Private FinanceInitiative
Services• Preliminary investigation, Planning, Feasibility
studies, Assessment, Detailed design,
Construction supervision , Operation andmaintenanceEngineering Administration
Field of activity• Electrical and civil works for electric power
facilities (generation, transmission, substation,
distribution schemes and wiring of buildings)• Electric power utilities (turbines, generators,
transformers, control deices andcommunications equipment)• Electric equipment and devices• Safety equipment• Skin electric thermo-system heaters (SECTheaters)• Factory automation equipment
Services• Surveys, Studies, Planning, Design, Construction,
Installation, Sale

53

M a j o r N i pp on Ko ei Gro u p C o mp an i es

While mainly focused on engineering consulting, electrical power engineering, and power generation,
the Nippon Koei Group is also active in a wide range of related fields. The various businesses
peripheral to the activities of Nippon Koei, the main company in the Group, are taken on bysubsidiaries and affiliates located both at home and abroad.
These related companies, together with the principle corporation, make up the Nippon Koei Group.
The various firms maintain close cooperation based on relationships of interdependence that enhance
the strength and cohesion of the Group as a whole.
As of March 2012, the total number of employees of the Group companies based in Japan came toabout 2780, of which over 1,200 were registered engineers. The Group truly has a wealth of highly
skilled technical experts.
The subsidiary companies that comprise the consolidated Nippon Koei Group are as follows:
Tamano Consultants Co., Ltd.
This company is headquartered in the city of Nagoya and provides engineering consulting services
centered on the Chubu Region. The company boasts the most highly regarded urban and regional
planning group in Japan.
Nippon Civic Consulting Engineers Co., Ltd.
This company provides consulting services centered on planning, design, and construction supervisionof underground structures such as urban tunnels. The company specializes in shield tunnelingtechnology and the development of new underground construction technology.
El Koei Co., Ltd.
This company conducts employment and staff supply for Nippon Koei Group. The company provides
various fields of qualified human resources to support the activity of the Group Companies.
KRI International Corporation
This company has been established to enhance non-engineering consulting works of the Nippon Koei
Group’s activities. KRI provides the consulting services mainly in the fields of economic and industrial
development including finance and management, education and human resources development, andregional and community development.
Nippon Koei U.K. Co., Ltd.
This company provides engineering consulting services to enforce Nippon Koei’s overseas operation in
the primary fields of environment, water supply and wastewater.
Nippon Koei Latin America-Caribbean Co., Ltd.
This company has been established to enhance Nippon Koei’s operation in Latin America andCaribbean and provides consulting engineering and technical services for various development sectors
in the region.
NIPPON KOEI LAC, INC.
This company has been incorporated in Panama in order to promote further localization of Nippon
Koei’s operation in Latin America and Caribbean region.
NIPPON KOEI LAC DO BRASIL LTDA.
This company has been incorporated in Brasil in order to promote further localization of Nippon
Koei’s operation in Latin America.
Nippon Koei India Pvt. Ltd.
This company has been established to enhance Nippon Koei’s operation in India and provides
consulting engineering and technical services for various development sectors focusing on projects in
India and other developing countries.
Nippon Koei Vietnam International LLC Co., Ltd.
This company has been established to enhance Nippon Koei’s operation in Vietnam and surrounding
countries in the Greater Mekong Subregion and provides consulting services for various development
sectors in the region.
PT Indokoei International
This company has been incorporated in Indonesia by Nippon Koei Co., Ltd. and Indonesian partnercompany and provides the services of engineering and management consultancy to clients inIndonesia as well as overseas.
Philkoei International, Inc.
This company has been incorporated in the Philippines by Nippon Koei Co., Ltd. and Filipino
investors and providing consulting engineering and technical services for various development sectors
focusing on projects in the Philippines and other overseas countries.
Thaikoei International Co., Ltd.
This company has been incorporated in Thailand and providing consulting services for various
development sectors focusing on projects in Thailand and other countries in Greater Mekong
Subregion.
Koei System Inc.
This company develops software programs used in computer control applications, dispatches
personnel, and provides support and software development for office automation systems on aconsignment basis.
Nikki Corporation
This company conducts real estate management, leasing, and insurance services for Nippon Koei andother Group companies. It also sells, imports, and exports electrical power equipment and rents andleases various goods.

54Annual Report

2012

4, Kojimachi 5-chome, Chiyoda-ku, Tokyo 102-8539, Japan
Telephone: +81 3 3238 8027 Facsimile: +81 3 3238 8326
http://www.n-koei.co.jp E-mail: info@n-koei.co.jp

Year Ended March 31, 2012

Printed in Japan