November 14, 2007

Summary of Consolidated Interim Financial Results
for the year ended March 31, 2008
Company name:

SRA Holdings, Inc.
(URL: http://www.sra-hd.co.jp/)

Code number:President:
For inquiries, please contact:
Tel:

3817

Stock listing:Tokyo Stock Exchange

Toru Kashima

Tomotaka Yanase, General Manager, Finance Department, Administrative Headquarters(03)-5979-2666
Scheduled date of submission of interim financial reports: December 21, 2007

1. Consolidated Interim Financial Results for Fiscal 2008 (from April 1, 2007 to September 30, 2007)(1)Consolidated Operating Results
Net Sales

Fiscal 2008 interim period
Fiscal 2007 interim period
Fiscal 2007

(All amounts rounded down, % change YoY)
Interim (Fiscal 2008)
Ordinary Profit
Net Income

Operating Income

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen

19,786
16,67336,765

18.7
－

1,702
1,091
2,848

56.0
－

1,731
1,136
2,923

52.3
－

918
1,210
2,015

Interim (Fiscal 2008)
Net Income per Share

Fiscal 2008 interim period
Fiscal 2007 interim period
Fiscal 2007%

(24.1)－

Interim (Fiscal 2008)

Yen

Net Income per Shareafter Dilution
Yen

66.38
87.44
145.6766.21
87.27
145.35

Reference: Gain (loss) on equity method investments:
Fiscal 2008 Interim period: —Fiscal 2007 Interim period: —Fiscal 2007: —(2) Consolidated Financial Position

Fiscal 2008 interim period
Fiscal 2007 interim period
Fiscal 2007
Reference:

Total Assets

Net Assets

Shareholders’ Equity Ratio

Millions of yen

Millions of yen%

Shareholders’ Equity per ShareYen

25,611
22,102
24,622

12,033
10,824
11,632

46.8
48.3
47.2

866.34771.19838.97

Shareholders’ equity
Fiscal 2008 Interim period: ¥11,989 million
Fiscal 2008 Interim period: ¥10,673 million
Fiscal 2007: ¥11,611 million(3) Consolidated Cash Flows

Fiscal 2008 interim period
Fiscal 2007 interim period
Fiscal 2007

Cash Flows from Operating
Activities

Cash Flows from
Investing Activities

Cash Flows from
Financing Activities

Cash and Cash Equivalents
at the End of Period

Millions of yen

Millions of yen

Millions of yen

Millions of yen

346
583
2,846

(329)
2,070
1,665

(395)
(221)
(219)

9,545
8,053
9,919

－1－

2. Dividends
Dividend per Share
Record date

InterimYear-end

Yen

Yen

Yen

25.00

25.00

Fiscal 2008 (actual)－－

Fiscal 2008 (forecast)

－

30.00

Fiscal 2007

For the year

30.00

3. Consolidated Earnings Forecast for Fiscal 2008 (from April 1, 2007 to March 31, 2008)
Net Sales
Millions of yen

Full Year

41,500Operating Income%

12.9

Ordinary Profit

Millions of yen%

Millions of yen

%

3,850

35.2

3,850

31.7

－2－

（% change YoY is for the fiscal year）
Net Income per
Net Income
Share
Yen
Millions of yen
%

2,060

2.2

148.85

4. Others(1) Changes to significant subsidiaries during the term (changes in specified subsidiaries due to change in scope of
consolidation):
None(2) Changes in accounting principles, methods or reporting procedure (Changes to be announced regarding“Changes in Significant Accounting Policies”）
1. Changes due to change in accounting standards:
Yes
2. Changes other than 1. above:No
Note: See “Changes in Significant Accounting Policies” on page 20 for more information.
(3) Number of outstanding shares (common shares)
1. Shares issued at the end of term (including own shares)
Fiscal 2008 Interim period:
15,240,000 sharesFiscal 2007 Interim period:
15,240,000 sharesFiscal 2007:
15,240,000 shares
2. Own shares at end of term
Fiscal 2008 Interim period:
1,400,198 sharesFiscal 2007 Interim period
1,400,198 sharesFiscal 2007:
1,400,198 shares
Note: For share number which is the base for calculation of interim net income per share (consolidated), see “pershare data” on page 30.
[Reference] Summary of non-consolidated financial results

1. Non-Consolidated Interim Financial Results for Fiscal 2008 (from April 1, 2007 to September 30, 2007)(1)Non-Consolidated Operating Results(% change YoY)

Revenues%

Millions of yen

Fiscal 2008 interim period
Fiscal 2007 interim period
Fiscal 2007

Operating Income

－
－
－

542
－
640

%

Millions of yen

－
－
－

258
(15)
414

Ordinary Profit
Millions of yen

%

－
－
－

249
(9)
417

Interim (Fiscal 2008)
Net Income
Millions of yen

%

227
2
429

－
－
－

Interim (Fiscal 2008)
Net Income per Share

Yen
Fiscal 2008 interim period
Fiscal 2007 interim period
Fiscal 2007

14.94
0.96
49.47

(2) Non-Consolidated Financial Position

Fiscal 2008 interim period
Fiscal 2007 interim period
Fiscal 2007

Net Income

Net Assets

Millions of yen

Millions of yen%

Shareholders’ Equity
per Share
Yen

8,700
8,359
8,806

8,628
8,328
8,762

98.8
99.6
99.4

564.26546.30574.32

Shareholders’ Equity Ratio

Reference: Shareholders’ equity:
Fiscal 2008 Interim period: ¥8,599 million
Fiscal 2007 Interim period: ¥8,325 million
Fiscal 2007: ¥8,752 million* Cautionary notice concerning forward-looking statements
Forecast performance is predicted by the Company based on information currently available at the time of theforecast. Actual financial results may differ due to a number of factors. For further information, please see page 6 of
the attached reference.

－3－

1. Business Results(1) Analysis of Business Results[1] Business results for the interim period
During the interim period (six months ended September 30, 2007), the Japanese economy sustained
a recovery, underpinned by an increase in capital investment, an improved employment situation,
and a pickup in personal consumption against a background of ongoing improvement in corporate
earnings.
In the information services industry, strategic IT investments, mainly by financial institutions,recorded an expansion and were favorable overall amid robust corporate earnings. Nonetheless, thesevere business environment continued, as companies encountered pressure to respond promptly andaccurately to increasingly sophisticated and diverse customer needs, including for security
countermeasures, in addition to meeting demands for high-quality, low prices, and short delivery
times.
Under these circumstances, all companies comprising the SRA Holdings Group worked in unison
to attain the targets set for the current fiscal year, which is the final year of our medium-term
management plan. While recording brisk orders, Software Research Associates (SRA), Inc., the corecompanyof

SRA

Holdings,

implemented

thoroughsystemdevelopment

cycle

management—covering functions ranging from order receiving to production and acceptanceinspection—as a system for managing orders and production based on “Software Engineering.” Indoing so, we promoted the “standardization of processes.” Through these initiatives, we are striving
to equalize our order and sales levels while preventing the emergence of unprofitable projects.
Moreover, to actively take advantage of the favorable business environment, we focused on
expanding business in embedded systems for manufacturing industries. Also, a Singapore-based
subsidiary, which was established as a relay base for offshore development in India, began
operational functions during the interim period. As a result of these developments, we recorded
all-time highs in interim net sales and ordinary profit. Advanced Integration Technology (AIT) Inc.,a principal subsidiary, achieved favorable results, thanks largely to increased sales of devices, whileother subsidiaries posted solid results overall. Consequently, SRA Holding’s interim sales and profits
significantly exceeded initial forecasts and the Company recorded the following results.
SRA Holdings recorded consolidated interim net sales of ¥19,786 million, an increase of 18.7%
from the previous interim period. At the profit level, interim operating income surged 56.0% over theprevious interim period to ¥1,702 million and interim ordinary profit soared 52.3% to ¥1,731 million.
These increases were due to a rise in gross profit accompanying the increase in net sales in addition
to improvements in the gross profit margin and productivity as well as ongoing curbing of SG&A
expenses. On the other hand, although interim net income declined 24.1% to ¥918 million, this-4-

decrease was due to a one-off gain of ¥986 million on the gain on disposal of fixed assets recordedin the previous interim period accompanying the sale of the Technical Center in Yokohama.

Consolidated interim results compared with the previous interim period and initial forecast(Millions of yen)

Net sales

Operating income

Ordinary profit

Interim net income

19,786

1,702

1,731

918

16,673

1,091

1,136

1,210

3,112

611

594

(291)

interim period)(+ 18.7%)(+56.0%)(+52.3%)(-24.1%)

Initial results forecast for the FY2008

18,000

1,300

1,300

720

Amount of change from initial forecast

1,786

402

431

198

(percentage change compared with(+9.9%)(+30.9%)(+33.2%)(+27.5%)

Consolidated results for FY2008 interim
period ended September 30, 2007
Consolidated results for FY2007 interim
period ended September 30, 2006
Amount of change from previous
interim period(percentage change from previous

interim period

initial forecast)

A summary of business results for the interim period by business segment is shown below.

[System Development]
The System Development business recorded brisk sales owing to increased orders, mainly from the
manufacturing, financial, and distribution industries. As a result, net sales for the interim periodamounted to ¥10,797 million, an increase of 11.8% from the previous interim period.

[Network & Systems Services]
The Network & Systems Services business achieved growth in company orders, althoughschool-related orders were the same as those of the previous interim period. Therefore, interim net
sales amounted to ¥2,247 million, an increase of 5.7% from the previous interim period.

[Consulting & Other Services]
In the Consulting & Other Services business, we recorded higher sales of devices. Thus, interim net
sales totaled ¥6,741 million, a jump of 37.8% from the previous interim period.

-5-[2] Outlook for the Full Fiscal Year
Regarding trends in the Japanese economy during the second half of the fiscal year, although theoutlook is clouded by such concerns as the direction of the U.S. economy and fluctuations of crude
oil prices, the information services industry is expected to witness a rise in IT investments, reflecting
continued favorable corporate earnings. On the other hand, the environment for new orders is likely
to remain harsh due to intensifying competition.
Under these circumstances, the SRA Holdings Group will work to achieve the targets set
for the final year of our medium-term management plan and strive to create and strengthensynergies.
For the full fiscal year, we are forecasting consolidated net sales of ¥41,500 million,
consolidated operating income of ¥3,850 million, consolidated ordinary profit of ¥3,850 million,
and consolidated net income of ¥2,060 million. These figures are in accordance with our revised
forecast announced on October 24, 2007.

Comparison of full-year consolidated results with the results from the previous year
(Millions of yen)

Consolidated results for

Net sales

Operating income

Ordinary profit

Net income

Net income per share

41,500

3,850

3,850

2,060

148.8536,765

2,848

2,923

2,015

145.67

4,735

1,002

927

45

3.18

(+12.9%)(+35.2%)(+31.7%)(+ 2.2%)(+2.2%)

FY2008 ending March 31,
2008 (forecast)
Consolidated results for
FY2007 ended March 31,
2007
Amount of change from theprevious fiscal year
(percentage change from theprevious fiscal year)[Reference]
Notices of revised forecasts for fiscal 2008 interim consolidated results and fiscal 2008 full-year
results, as well as revisions to period-end dividend forecasts, can be accessed at(http://www.sra-hd.co.jp/ir/others/20071024.pdf). [Japanese only]-6-(2) Analysis of Financial Position
Cash and cash equivalents on a consolidated basis at the end of the interim period decreased ¥374
million compared with at the end of the fiscal year ended March 31, 2007. As a result, cash and cash
equivalents at the end of the interim period amounted to ¥9,545 million.
The status of cash flows and factors underlying changes in cash flows for the interim
period are shown below.

Cash Flows from Operating Activities
Net cash provided by operating activities amounted to ¥346 million. This consisted of such cash
inflows as interim income before income taxes and minority interests of ¥1,745 million, an increasein accounts and notes payable—trade of ¥796 million, and a decrease in accounts and notes
receivable—trade of ¥620 million, which exceeded such outflows as an increase in inventories of¥1,831 million and income taxes paid and refunded of ¥664 million.

Cash Flows from Investing Activities
Net cash used in investing activities amounted to ¥329 million. This was due to an outflow of ¥136
million for purchases of fixed assets.

Cash Flows from Financing Activities
Net cash used in financing activities amounted to ¥395 million. This was due mainly to ¥345 million
in cash dividends paid.

Trends in cash flows indicators for the SRA Holdings Group (the Company and its consolidated
subsidiaries) are shown below.
FY2008 interim period

FY2007 interim period

FY ended March 31, 2007

ended September 30, 2007

ended September 30, 2006

Shareholders’ equity ratio (%)

46.8

48.3

47.2

Shareholders’ equity ratio at

99.3

110.6

105.4

Debt redemption years (years)

7.9

4.8

1.0

Interest coverage ratio

14.7

32.3

68.5

market value (%)

Notes:
Shareholders’ equity ratio: Shareholders’ equity/total assets
Shareholders’ equity ratio at market value: Total market capitalization/total assets
Debt redemption years: Interest-bearing debt/operating cash flow

-7-

Interest coverage ratio: Operating cash flow/interest expense

1. All indicators were calculated using consolidated financial figures.
2. Market capitalization is calculated by multiplying the closing stock price at the end of the fiscal
period by the total number of shares outstanding at the end of the fiscal period.
3. Operating cash flow represents cash flows from operating activities on the Consolidated
Statements of Cash Flows. Interest-bearing debt includes all debt that pays interest as listed on
the Consolidated Balance Sheets. Interest expense is the amount of interest paid as listed on theConsolidated Statements of Cash Flows.
4. Market capitalization for September 2006 was calculated using the interim period-end closing
price for SRA’s stock on September 25, 2006.

(3) Business and Other Risks
The following principal risks could have an impact on the business results and financial condition of
the Company as the Holdings Company.
“Forward-looking” statements contained in this report represent judgments by the Group based on
information currently available to management as of the end of the interim period.

[1] Risk of fluctuations in business results of Group companies
An abrupt fluctuation in business results of Group companies due to various factors could have an
adverse impact on the Company’s business results.

[2] Maintaining confidentiality of customer information
In addition to being aware that it is an information processing company with numerous opportunities
for handling personal information, the SRA Holdings Group also sufficiently recognizes the criticalnature of protecting personal information, and thus, has established an internal monitoring structure.
Concurrently, the SRA Group provides education for its Group employees and business partners andmakes efforts to protect personal information. However, in the event of unexpected leakage of
information, besides losing the trust of business partners, the SRA Group could become liable forpayment of compensatory damages, which could have an effect on the Group’s business results.
In addition to the above, the Company comprehensively incurs business and other risks of SRA, amain subsidiary.

-8-2. Management Policy(1) The Company’s Basic Management Policy
The SRA Group adheres to a basic management policy of maximizing user satisfaction through IT
based on its management principle of “contributing to the future of humanity through professional
practice that fosters progress in the fields of computer science,” which has been our guiding
principle since the founding of SRA. In accordance with this basic management policy, amid a
rapidly changing business environment, we will strive to meet the expectations of the information
services industry while raising profits for shareholders and increasing corporate value by pursuing
profitability and growth. Regarding the management of the SRA Group, under our holding company
structure centering on SRA Holdings, we will strengthen the Group’s operating structure while
taking concrete measures, such as implementing M&A, and raise the overall capabilities of theGroup with the aim of enhancing corporate value.

(2) Management Indicator
The SRA Holdings Group has adopted “ordinary profit-to-sales ratio” as a representative indicator of
the Company’s overall profitability. The Group established a medium- and long-term numericaltarget of an “ordinary profit-to-sales ratio exceeding 8%.” Also, the SRA Holdings Group has
adopted return on equity (ROE) as an indicator of capital efficiency. The Group has established thenumerical target of “attaining and maintaining ROE of 10% or higher.”

The Group’s consolidated ordinary profit-to-sales ratio and ROE are as shown below.

Consolidated ordinary

Consolidated ROE

profit-to-consolidated sales ratio
FY2006 (actual)

5.2%

10.1%

FY2007 (actual)

8.0%

18.8%

FY2008 (forecast)

9.3%

15.6%

Notes: The results for fiscal 2006 (ended March 31, 2007) are the consolidated results for SRA.

(3) Medium- and Long-term Management Strategy
Although strategic IT investments are likely to trend upward, SRA Holdings recognizes that themedium- and long-term management environment will be marked by unrelenting severe competition,with companies battling for survival amid a conspicuous industry polarization between winners andlosers, which has resulted from mounting competition for new orders, the specialization of systemdevelopment companies between primary contractors and sub-subcontractors, and the increased-9-complexity of technologies.
Against this backdrop, the SRA Holdings Group is progressing with its medium-term management
plan that is being implemented through to the end of the fiscal year ending March 31, 2008. Under
this plan, we are working to further elevate our presence in the IT industry and raise corporate value
to meet the expectations of shareholders.
As key medium-term management tasks, the plan calls for SRA Holdings to continue making
efforts to ensure our growth potential and improve profitability. Regarding specific targets for the
final year of the plan, we aim for growth in sales exceeding 8% and an ordinary profit-to-sales ratio
exceeding 8%. As part of efforts to attain these targets, we will promote the following measuresthroughout the SRA Holdings Group.
To ensure growth potential, we will fortify the structural and operational aspects of Group
operations under a holding company structure while promoting specific initiatives for M&A thatutilize this holding structure. By taking these steps, we intend to achieve continuous and stablebusiness development and expansion for the SRA Holdings Group.
At the same time, we aim to steadily expand our earnings foundation utilizing the SRA Holding
Group’s strengths, namely, our overseas bases, advanced technological capabilities, and stable baseof existing customers.
To improve our profitability, in addition to recording increases in gross profit by implementing theabove measures, we plan to adopt various cost-reduction measures that include improving
productivity, upgrading SG&A expense management to achieve an appropriate ratio of SG&A
expenses to net sales, trimming outsourcing costs by moving ahead with offshore development(global sourcing), and implementing thorough project management.
Together with these measures, in working for the future growth of the Group, we will makeconcerted efforts to launch new businesses and cultivate new markets by transforming cutting-edge
technologies into business models.
The fiscal year ending March 31, 2008 marks the final year of our current medium-term
management plan. We are currently formulating a new medium-term management plan to be
implemented from the fiscal year ending March 31, 2009.

(4) Issues to Be Addressed by the Company
In accordance with its medium- and long-term management strategy, the SRA Holdings Group will
execute the following tasks to improve and strengthen the Group’s business capabilities and bolster
the holding company operating structure, as it strives for further growth and development.

(1) Improve and strengthen the Group’s business capabilities.

- 10 -

[1] Achieve the final-year targets of the medium-term management plan.
[2] Consolidate and implement all measures for achieving our medium-term management plan.
zMarketing

Implement project management and carry out marketing by customer segment.
z

Production

Strengthen our production structure, implement appropriate project operation management, execute abusiness partner strategy, and promote offshore development.
zTechnology

Create new business models and launch new businesses.
z

Costs

Focus on efficiency of SG&A expenses and promote shared services.

[3] Formulate the Group’s new medium-term management plan.

(2) Strengthen holding company operating structure.

[1] Carry out full-fledged operation of the holding company operating structure.
Upgrade and strengthen the functions of SRA Holdings.
Progress with autonomous operations for each Group company.

[2] Advance full-scale initiatives for M&A.

- 11 -

3. Consolidated Interim Financial Statements(1) Consolidated Interim Balance Sheets(Millions of Yen)
FY2007
FY2008 interim period

FY2007 interim period

Summary of consolidatedbalance sheets(as of September 30, 2007)(as of September 30, 2006)(as of March 31, 2007)

Amount%Amount%AmountIncrease(Decrease)%

ASSETS
Current assets:
Cash and bank deposits

7,831

7,438

8,306

(474)

Notes and accounts receivable

7,184

6,567

7,790

(606)

Marketable securities

2,001

999

1,999

1

Inventories

2,677

1,513

846

1,831

Deferred income taxes

417

397

383

34

Other current assets

654

672

689

(35)

Allowance for doubtful accounts

(2)

(11)

(5)

2

Total current assets

20,763

81.1

17,57779.5

20,01081.3

753

Fixed assets:
Tangible assets:
Buildings and structures

99

109

95

3

Machinery and equipment

100

111

106

(6)

Land

0

14

0

－

Other tangible assets

34

35

33

0

Total tangible assets

234

0.9

271

1.2

237

1.0

(2)

Intangible assets:
Software

467

635

568

(101)

Other intangible assets

115

30

31

84

Total intangible assets

583

2.3

666

3.0

600

2.4

(16)

Investments and other assets:
Investment securities

1,659

1,704

1,919

(260)

Deferred income taxes

1,180

1,036

998

182

Guarantee money deposited

553

553

556

(3)

Other assets

695

348

357

337

Allowance for doubtful accounts

(8)

(6)

(8)

(0)

Allowance for loss on investments

(50)

(49)

(50)

－

Total investments and other assets

4,029

15.7

3,587

16.3

3,774

15.3

255

Total fixed assets

4,847

18.9

4,524

20.5

4,611

18.7

236

25,611

100.0

22,102100.0

24,622100.0

989

Total assets-12-

(Millions of Yen)
FY2007
FY2008 interim period

FY2007 interim period(as of September 30, 2007)(as of September 30, 2006)
Amount%Amount%Summary of consolidated balance
sheetsIncrease(as of March 31, 2007)(Decrease)

Amount%LIABILITIESCurrent liabilities:
Accounts payable

3,843

2,656

3,041

801

300

－

－

300

2,411

2,423

2,446

(34)

Income taxes payable

876

210

615

261

Accrued consumption tax

208

208

362

(154)

Accrued expenses

673

714

1,169

(496)

Allowance for bonuses payable

649

660

679

(29)

Allowance for directors' bonuses payable

36

21

54

(17)

Other

882

605

737

145

Debentures due for redemption
within one year

Short-term loans

Total current liabilities

9,881

38.6

7,500

33.9

9,106

37.0

774

Long-term liabilities:
Debentures

－

300

300

(300)

Long-term debt

18

52

32

(14)

3,270

3,062

3,149

121

385

361

375

10

Accrued employees' retirement benefits

Directors' retirement benefits
Negative goodwill

22

25

－

(2)

3,696

14.4

3,776

17.1

3,882

15.8

(186)

13,57853.0

11,27751.0

12,98952.8

588

Common stock

1,000

3.9

1,000

4.5

1,000

4.1

－

Capital susplus

4,519

17.6

4,519

20.4

4,519

18.3

－

Earned surplus

6,723

26.3

5,345

24.2

6,151

25.0

572

Treasury stock, at cost

(894)

(3.5)

(894)

(4.0)

(894)

(3.6)

－

11,348

44.3

9,970

45.1

10,77643.8

572

Valuation and translation adjustments
Net unrealized holding gains on othersecurities

585

2.3

681

3.1

796

3.2

(211)

Translation adjustments

55

0.2

20

0.1

37

0.2

17

640

2.5

702

3.2

834

3.4

(193)

Stock options

29

0.1

2

0.0

9

0.0

19

Minority interests

14

0.1

149

0.7

11

0.0

2

12,03325,61147.0
100.0

10,824
22,10249.0
100.0

11,632
24,622

47.2
100.0

400
989

Total long-term liabilities
Total liabilities
NET ASSETS
Shareholders' equity

Total shareholders' equity

Total valuation and translation
adjustments

Total net assets
Total liabilities and net assets-13-

(2) Consolidated Interim Statements of Income(Millions of Yen)
FY2007
FY2008 interim period

FY2007 interim period(Apr. 1, 2007-Sept. 30, 2007)(Apr. 1, 2006-Sept. 30, 2006)

Summary of consolidated
statements of income

Increase(April 1, 2006-March 31, 2007)(Decrease)
Amount%Amount%Amount%Net sales

19,786100.0

16,673

100.0

3,112

36,765

100.0

Cost of sales

15,751

79.6

13,424

80.5

2,327

29,59280.5

Gross profit

4,034

20.4

3,249

19.5

785

7,173

19.5

2,332

11.8

2,158

13.0

174

4,324

11.8

Operating income

1,702

8.6

1,091

6.5

611

2,848

7.7

Non-operating income

72

0.3

81

0.5

(9)

151

0.5

Interest received

15

6

9

17

Dividends received

9

5

4

8

Others

47

70

(23)

125

6

75

Selling, general and administrative
expensesNon-operating expenses

43

0.2

36

0.2

Interest paid

24

18

5

41

Others

19

18

1

34

Ordinary profit

0.2

1,731

8.7

1,136

6.8

594

2,923

8.0

Extraordinary income

15

0.1

988

5.9

(973)

987

2.6

Extraordinary loss

0

0.0

37

0.2

(36)

295

0.8

1,745

8.8

2,087

12.5

(341)

3,615

9.8

Current income taxes

921

4.7

195

1.2

725

936

2.5

Deferred income taxes

(97)

(0.5)

651

3.9

(749)

630

1.7

Minority interests

2

(0.0)

29

(0.2)

(26)

31

(0.1)

Interim net income

918

4.6

1,210

7.2

(291)

2,015

5.5

Interim income before income taxes
and minority interests-14-(3) Consolidated Interim Statements of Changes in Net Assets
Fiscal 2008 Interim Period (April 1, 2007 - September 30, 2007)(Millions of Yen)
Shareholders' equity

Common stock

Balance as of March 31, 2007

Retainedearnings

Capital surplus

1,000

4,519

6,151

Treasury stock

Total shareholders'equity(894)

10,776

Changes during the interim period
Cash dividends

(345)

(345)

Interim net income

918

918

Net change in the items other thanshareholders' equity during the interim period

Total change during the interim period
Balance as of September 30, 2007

－

－

572

－

572

1,000

4,519

6,723

(894)

11,348

Evaluation or conversion gain
Net unrealized
holding gain on
securities

Balance as of March 31, 2007

Net foreign currency Total evaluationtranslation adjustment or conversion

gain

796

37

834

(211)

17

(193)

Total change during the interim period

(211)

17

(193)

Balance as of September 30, 2007

585

55

640

Stock options

Minority interests

Total net assets

9

11

11,632

Changes during the interim period
Cash dividends
Interim net income
Net change in the items other thanshareholders' equity during the interim period

Balance as of March 31, 2007
Changes during the interim period
Cash dividends(345)Interim net income

2921

Net change in the items other thanshareholders' equity during the interim period

19

(174)

Total change during the interim period

19

2

400

Balance as of September 30, 2007

29

14

12,033-15-

Fiscal 2007 Interim Period (April 1, 2006 - September 30, 2006)(Millions of Yen)
Shareholders' equity

Balance as of March 31, 2006

Common stock

Capital surplus

2,640

2,881

Retainedearnings

4,353

Treasury stock

Total shareholders'equity

(893)

8,981

Changes during the interim period
Cash dividends (note)

(172)

(172)

Directors' bonuses (note)

(45)

(45)

1,210

1,210

Net income
Transfer to equity due to reverse acquisition(1,640)

1,637

(2)

Other

(0)

(0)

Net change in the items other thanshareholders' equity during the interim period

Total change during the interim period(1,640)

1,637

991

(0)

989

Balance as of September 30, 2006

1,000

4,519

5,345

(894)

9,970

Evaluation or conversion gain
Net unrealized Net foreign currency Total evaluation
holding gain on translation adjustment or conversion
securities
gain

Balance as of March 31, 2006

859

21

880

(177)

(0)

(178)

Total change during the interim period

(177)

(0)

(178)

Balance as of September 30, 2006

681

20

702

Stock options

Minority interests

Total net assets

－

130

9,992

Changes during the interim period
Cash dividends (note)
Directors' bonuses (note)
Net income
Transfer to equity due to reverse acquisition

Other
Net change in the items other thanshareholders' equity during the interim period

Balance as of March 31, 2006
Changes during the interim period
Cash dividends (note)(172)

Directors' bonuses (note)(45)

Net income

1,210Transfer to equity due to reverse acquisition

(2)

Other

(0)

Net change in the items other than

2

18

(156)

Total change during the interim period

2

18

832

Balance as of September 30, 2006

2

149

10,824

shareholders' equity during the interim period

Note: Profit appropriation items decided at the Ordinary General Meeting of Shareholders held in June 2006.

-16-

Fiscal 2007 (April 1, 2006-March 31, 2007)(Millions of Yen)
Shareholders' equity
Common stock

Balance as of March 31, 2006

Capital surplus

2,640

Retained earnings

Treasury stock

Total shareholders'equity

4,353

(893)

8,981

2,881

Changes during the period
Cash dividends (note)

(172)

(172)

Directors' bonuses (note)

(45)

(45)

2,015

2,015

Net income
Transfer to equity due to reverse acquisition(1,640)

1,637

(2)

Other

(0)

(0)

Net change in the items other thanshareholders' equity during the period

Total change during the period(1,640)

1,637

1,797

(0)

1,794

Balance as of March 31, 2007

1,000

4,519

6,151

(894)

10,776

Evaluation or conversion gain
Net unrealized
holding gain on
securities

Balance as of March 31, 2006

Net foreign currency Total evaluation ortranslation adjustment

conversion gain

859

21

880

(62)

16

(45)

Total change during the period

(62)

16

(45)

Balance as of March 31, 2007

796

37

834

Stock options

Minority interests

Total net assets

130

9,992

Changes during the period
Cash dividends (note)
Directors' bonuses (note)
Net income
Transfer to equity due to reverse acquisition

Other
Net change in the items other thanshareholders' equity during the period

Balance as of March 31, 2006－

Changes during the period
Cash dividends (note)(172)

Directors' bonuses (note)(45)

Net income

2,015Transfer to equity due to reverse acquisition

(2)

Other

(0)

Net change in the items other than

9

(118)

(154)

Total change during the period

9

(118)

1,640

Balance as of March 31, 2007

9

11

11,632shareholders' equity during the period

Note: Profit appropriation items decided at the Ordinary General Meeting of Shareholders held in June 2006.

-17-

(4) Consolidated Interim Statements of Cash Flows

I.

(Millions of Yen)
FY2008 interim period

FY2007 interim period

FY2007(Apr. 1, 2007-Sept. 30, 2007)(Apr. 1, 2006-Sept. 30, 2006)(April 1, 2006-March 31, 2007)

AmountAmountAmountCash flows from operating activities:
1,745

2,087

3,615

Depreciation and amortization

138

148

298

Gain on disposal of fixed assets

―

(982)

(956)

Increase in employees' retirement benefits, net of payments

121

104

192

Increase (decrease) in directors' retirement benefits

10

(0)

13

Increase(decrease) in accounts and notes receivable－trade

620

886

(318)

(1,831)

(745)

(78)

Increase in accounts and notes payable－trade

796

100

468

Increase (decrease) in accrued consumption taxes payable

(154)

(123)

30

Other, net

(438)

(162)

660

1,009

1,313

3,924

Interest and dividends receivable

25

11

25

Interest paid

(23)

(18)

(41)

Income taxes paid and refunded

(664)

(723)

(1,062)

346

583

2,846

Disbursements for investments in term deposits

(100)

(0)

(0)

Purchases of fixed assets

(136)

(85)

(299)

Proceeds from sale of fixed assets

―

2,168

2,180

Purchases of investment securities

(70)

(12)

(94)

Proceeds from sale of investment securities

―

44

49

Purchases of additional stock of consolidated subsidiary

―

―

(112)

Proceeds from share exchange with parent company

―

2

2

Disbursements for deposits

(3)

(9)

(56)

Collection of deposits

6

7

51

(26)

(44)

(55)

(329)

2,070

1,665

Decrease in short-term loans

(30)

(76)

(54)

Proceeds from long-term debt

―

50

50

Repayments of long-term debt

(19)

(11)

(31)

Other, net

(345)

(183)

(183)

(395)

(221)

(219)

4

3

10

Interim income before income taxes and minority interests

Increase in inventories

Subtotal

Net cash (used in) provided by operating activities
II.

Cash flows from investing activities:

Other, net
Net cash provided by investing activities
III. Cash flows from financing activities:

Net cash used in financing activities
IV.

Effect of exchange rate changes on cash and cash equivalents

V.

Net increase in cash and cash equivalents

(374)

2,435

4,301

VI. Cash and cash equivalents at beginning of period

9,919

5,617

5,617

9,545

8,053

9,919

VIII. Cash and cash equivalents at end of interim period-18-Segment Information(1) Segment Information by Type of Business

Fiscal 2008 Interim Period (from April 1, 2007 to September 30, 2007)(Millions of yen)
SystemNetwork &Consulting

Development

Systems& Other Services

Total

Eliminations/

Consolidated

Corporate

Services
Net Sales andOperating Income
Sales
(1)

Sales to10,797

2,247

6,741

19,786

－

28

157

450

636

(636)

Total sales

10,825

2,404

7,192

20,422(636)

19,786

Operating expenses

9,045

1,866

6,383

17,296787

18,083Operating income

1,779

538

808

3,126

(1,423)

1,702

customers(2)

19,786

Intersegment
sales

Fiscal 2007 Interim Period (from April 1, 2006 to September 30, 2006)(Millions of yen)
SystemNetwork &Consulting

Development

Systems& Other Services

Total

Eliminations/

Consolidated

Corporate

Services
Net Sales andOperating Income
Sales
(1)

Sales to
9,654

2,126

4,892

16,673

－

sales

38

93

450

582

(582)

Total sales

9,693

2,219

5,342

17,255(582)

16,673Operating expenses

8,293

1,805

4,848

14,947634

15,582

Operating income

1,399

414

494

2,308

(1,216)

1,091

customers(2)

16,673

Intersegment- 19 -

Fiscal 2007 (from April 1, 2006 to March 31, 2007)(Millions of yen)
SystemDevelopment

Network &Consulting

Total

Systems& Other Services

Eliminations/

Consolidated

Corporate

Services
Net Sales andOperating Income
Sales
(3)

Sales tocustomers－

36,76521,701

4,392

10,672

36,765

sales

79

208

964

1,252

(1,252)

Total sales

21,7804,600

11,63738,018(1,252)

36,765

Operating expenses

18,398

3,715

10,42632,5401,376

33,916

Operating income

3,382

884

1,210

5,477

(2,629)

2,848

(4)

Intersegment

Notes
1. Businesses are classified into segments according to similarities that include the types andcharacteristics of services.
2. The main scope of business in each segment is as follows.
Business segment
System Development

Main scope of businessz

Integrated system development ranging from defining requirements to development andmaintenance of mainframe-based large systems

Network & Systems Services

Consulting & Other Servicesz

System integration covering system planning, development, and introduction of open systemsz

Solutions business offering business tools that utilize various products and toolszOpen source business that offers technical support for systems through open source softwarez

Operation management of computer systems and network systemszOverall operation that includes data management and facilities managementz

Building of network systemsz

Outsourcing servicesz

Sales of packaged software that includes licensingz

Sales of system devices, centering on servers, in integration serviceszConsulting services related to the introduction of IT

3. Unallocatable operating expenses in Eliminations/Corporate amounted to ¥1,207 million for the interim
period. These consisted mainly of R&D expenses and expenses related to management divisions.
.

(2) Geographical Segments
The amounts of net sales and assets in Japan exceed 90% of total sales and total assets for all
segments and thus geographical segment information is omitted.
(3) Overseas Sales
Overseas net sales account for less than 10% of total consolidated net sales and are thus omitted.

- 20 -