November 12, 2009

Summary of Consolidated Financial Results for the Second Quarter of the Year Ending March 31, 2010
SRA Holdings, Inc.
(URL: http://www.sra-hd.co.jp/)
Stock listing:Tokyo Stock Exchange
Code number:
3817
President:
Toru Kashima
For inquiries, please contact:
Shigeru Yoshimura, General Manager, Finance Department, Administrative HeadquartersTel:(03)-5979-2666
Scheduled date of submission of quarterly securities report:
November 13, 2009―
Scheduled commencement of dividend payment:
Company name:

1. Consolidated results for the second quarter of the fiscal year ending March 2010 (from April 1, 2009 to September
30, 2009)(1) Consolidated Operating Results (cumulative total)
Net Sales

Second quarter of fiscal
2010
Second quarter of fiscal
2009(All amounts rounded down, % change YoY)
Ordinary Profit

Operating Income

Millions of yen%

Millions of yen%

15,967(17.8)

687(52.3)

19,430

―

1,440

―

%

Millions of yen%

709(51.3)

355(50.1)

1,455

―

711

―

Net Income

Net Income

per Shareper Share after Dilution

Yen

Yen

51.41

51.36

25.66

Second quarter of fiscal
2010
Second quarter of fiscal
2009

Millions of yen

Net Income―(2) Consolidated Financial Position

Second quarter of fiscal
2010
Fiscal 2009

Shareholders’ Equity Ratio

Shareholders’ Equity per ShareTotal Assets

Net Assets

Millions of yen

Millions of yen%

Yen

25,717

14,37755.4

1,029.86

26,51914,16453.0

1,014.91

Reference: Shareholders’ equity
Second quarter of fiscal 2010: ¥14,252 million
Fiscal 2009: ¥14,046 million

2. Dividends
Dividend per Share

Fiscal 2009
Fiscal 2010

End of First QuarterEnd of Second QuarterEnd of Third Quarter

Year-end

Yen

Yen

Yen

Yen

Yen

―
―

―
―

―

40.00

40.00

―

40.00

40.00

Fiscal 2010 (forecast)
Note: Revision of dividend forecast in this quarter:No
1

For the Year

3. Consolidated Earnings Forecast for Fiscal 2010 (from April 1, 2009 to March 31, 2010)（% change YoY is for the fiscal year or for interim period）
Net Income
Net Sales

Operating Income

Ordinary Profit

Net Income
per Share

Full Year

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

Yen

32,600(22.0)

2,740(28.3)

2,740(29.6)

1,450(29.0)

104.77

Note: Revision of consolidated results forecast in this quarter:No

4. Others(1) Changes to significant subsidiaries during the term (changes in specified subsidiaries due to change in scope of
consolidation):No
Newly consolidated― (Company names)
Removed from consolidation― (Company names)(2) Simplified accounting procedures and accounting procedures specific to the preparation of quarterly consolidated
financial statements:
No(3) Changes in accounting principles, methods or reporting procedures
1. Changes due to change in accounting standards:
Yes
2. Changes other than 1. above:No
Note: See “Qualitative Information and Financial Statements, 4. Others” on page 5 for more information.
(4) Number of outstanding shares (common shares)
1. Shares issued at the end of term (including own shares)
Second quarter of fiscal 2010:
15,240,000 sharesFiscal 2009:15,240,000 shares
2. Own shares at the end of term
Second quarter of fiscal 2010:
1,400,227 sharesFiscal 2009:
1,400,198 shares
3. Average number of shares during the period (For the entire consolidated quarter)
Second quarter of fiscal 2010:
13,839,798 shares
Second quarter of fiscal 2009:
13,839,802 shares* Note:Forecast performance is predicted by the Company based on information currently available at the time of the forecast. Actual
financial results may differ due to a number of factors. For further information, please see “Qualitative Information and
Financial Statements, 3. Qualitative Information Concerning Consolidated Results Forecast” on page 5.

2

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Second Quarter of the Year Ending March 31, 2010

Qualitative Information and Financial Statements
1. Qualitative Information Concerning Consolidated Business Results
During the second quarter of the fiscal year (April 1, 2009 to September 30, 2009), the Japanese economy moved
toward a recovery due to the end of inventory adjustments and signs of resurgence in personal spending coupled withthe positive effects of the government’s economic stimulus package. Despite this, corporate earnings were down
significantly, while capital investment decreased and the employment situation deteriorated, and as a result, theoutlook remains uncertain. The harsh business environment is persisting in the information services industry on
account of ongoing restraint in IT investment forced by the decline in corporate earnings.
Under these conditions, the SRA Holdings Group made efforts to establish a structure for stable orders throughthe creation of new sales procedures, raise productivity, increase the gross profit margin through offshoredevelopment, and reduce selling, general and administrative (SG&A) expenses. At the same time, as part of theinitiative to “expand overseas business earnings opportunities,” which is a priority issue under the medium-term
management plan, SRA OSS, Inc., a subsidiary, formed a business and capital alliance with Proxim Wireless
Corporation, which has proven results in the wireless communications field, in order to expand business by adding
the building of networks for wireless communication to system integration services, including systems development,
for this field. This subsequent move follows the business and capital alliance established between SRA Holdings (the“Company”) and SJI Inc. in February of this year.
Consolidated business results for the second quarter were as follows.
Advanced Integration Technology (AIT), Inc., a core subsidiary, recorded a slight improvement in resultscompared with the same period of the previous fiscal year due to vigorous sales and marketing activities amid a toughbusiness environment. Orders from key customers in securities, manufacturing and telecommunications industries
declined significantly at Software Research Associates (SRA), Inc., a core company, despite efforts to increase orders
in its mainstay Systems Development business. Orders were down at Software Science, Inc. due to a continued shiftby customers towards internal development. Orders also decreased substantially at certain overseas subsidiaries dueto the economic downturn in the United States. As a result, consolidated net sales amounted to ¥15,967 million, adecline of 17.8% from the same period of the previous fiscal year.
At the profit level, efforts were made to secure gross profit by promoting offshore development, shifting towards
internal development and raising productivity, as well as to cut SG&A expenses. However, gross profit decreased dueto the decline in sales and a higher-than-expected decrease in order unit price in the securities industry. Also,
expenses were recorded as provision for loss on construction contracts, in which potential additional major expenses
have been estimated corresponding to customer demands in ongoing projects in which inspection and final delivery
will occur in the second half of the fiscal period. As a result, operating income decreased 52.3% from the same periodof the previous fiscal year to ¥687 million, ordinary profit decreased 51.3% to ¥709 million, and net income
decreased 50.1% to ¥355 million.

A summary of business results for the second quarter by business segment is shown below.

1. Systems Development
The environment surrounding the Systems Development business remained severe, driving a significant decline inorders from securities, manufacturing and telecommunications industries. As a result, net sales for the second quarter
3

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Second Quarter of the Year Ending March 31, 2010

amounted to ¥8,368 million, a decrease of 21.6% from the same period of the previous fiscal year.
2. System Operations and Infrastructure Development
School-related orders and orders from the corporate sector declined in the System Operations and Infrastructure
Development business, and as a result, net sales for this segment amounted to ¥2,091 million, a decrease of 15.3%
from the same period of the previous fiscal year.

3. Product Sales
In Product Sales, despite large orders for devices at AIT, notably servers, sales of devices and packages were weak at
SRA, and as a result, net sales in this segment amounted to ¥5,506 million, a decrease of 12.3% compared with thesame period of the previous fiscal year.

2. Qualitative Information Concerning Consolidated Financial Condition
Regarding financial condition for the second quarter, current assets declined ¥2,028 million from the end of theprevious fiscal year to ¥19,570 million. Although there was a ¥677 million increase in work in progress and a ¥519
million increase in short-term loans from the end of the previous fiscal year, notes and accounts receivable—tradedecreased ¥2,578 million owing to the collection of sales receivables, and cash and deposits decreased ¥818 million
due to payments of notes and accounts payable—trade. Fixed assets increased ¥1,226 million to ¥6,146 million due
primarily to the acquisition and mark-to-market valuation of investment securities. As a result, total assets decreased¥801 million to ¥25,717 million.
On the liabilities side, total liabilities decreased ¥1,015 million to ¥11,339 million due to a ¥644 million decline
in accounts payable—trade and a ¥410 million decline in income taxes payable accompanying the payment of income
taxes. Net assets increased ¥213 million to ¥14,377 million due mainly to an increase in valuation difference on
available-for-sales securities.

Analysis of Consolidated Cash Flows
Cash and cash equivalents, up ¥587 million year on year, decreased by ¥869 million to ¥10,883 million from the endof the previous fiscal year.
The status of cash flows and factors underlying changes in cash flows for the second quarter are shown below.

Cash Flows from Operating Activities
Net cash provided by operating activities amounted to ¥1,177 million. This consisted mainly of such cash inflows as
a decrease in notes and accounts receivable—trade of ¥2,589 million and income before income taxes and minority
interests amounting to ¥665 million. Cash-reducing factors included income taxes paid totaling ¥789 million, adecrease in notes and accounts payable—trade of ¥640 million and an increase in inventories of ¥534 million.

Cash Flows from Investing Activities
Net cash used in investing activities amounted to ¥1,466 million. This was due mainly to ¥846 million for purchasesof investment securities and ¥506 million in payments for loans receivable.

Cash Flows from Financial Activities
4

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Second Quarter of the Year Ending March 31, 2010

Net cash used in financing activities amounted to ¥584 million. This was due mainly to such outflows as ¥553 million
in cash dividends paid.

3. Qualitative Information Concerning Consolidated Results Forecast
The Company recorded provision for loss on construction contracts in the second quarter in line with a projected
continuation of the tough business environment based on an understanding of market value trends pursuant tointernational accounting standards and the need to swiftly disclose downside risk. The Company also recognizes that
there is still adequate potential to reduce cost generation by negotiating with customers. Additionally, in the second
half of the fiscal period, the SRA Holdings Group as a whole is promoting a plan to recover the portion of gross profit
targets not achieved by respective group companies in the second quarter. Accordingly, no revision has been made to
the consolidated results forecast for the year ending March 31, 2010 announced on May 14, 2009.

4. Others(1) Significant changes involving subsidiaries during the period (changes involving specific subsidiaries
accompanying changes in the scope of consolidation): None

(2) Application of simplified accounting methods and accounting methods specific to the preparation of the quarterly
consolidated financial statements: None

(3) Changes of accounting principles, procedures and presentation methods related to the preparation of the quarterly
consolidated financial statements.

Changes in Items Pertaining to Accounting Standards
Although the Company previously used the completed contract method in accounting standards for income fromcontract construction, the Company adopted Accounting Standard for Construction Contracts (ASBJ Statement No.
15, December 27, 2007) and Guidance on Accounting Standard for Construction Contracts (ASBJ Guidance No. 18,
December 27, 2007) in the first quarter of the fiscal year ending March 31, 2010. For construction contracts enteredinto in the first quarter, the percentage-of-completion method shall be applied if the outcome of construction activity
up until the second quarter is deemed certain (In this method, the outcome of the construction contract is divided into
work processes with costs allocated to each process. The percentage of completion is based on the proportion of costs
incurred before the close of the tax year for a process relative to the total cost of all processes). The Company adopts
the completed contract method for all other construction.
The effect of these changes on net sales, operating income, ordinary profit and income before income taxes isminimal.

5

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Second Quarter of the Year Ending March 31, 2010

5. Quarterly Consolidated Financial Statements(1) Quarterly Consolidated Balance Sheets(Millions of Yen)
End of the second quarter ofConsolidated balance sheets at

fiscal 2010

the end of fiscal 2009 (summary)(as of September 30, 2009)(as of March 31, 2009)ASSETS
Current assets:
Cash and deposits

9,516

10,335

Notes and accounts receivable—trade

5,022

7,613

Short-term investment securities

1,502

1,503

Merchandise and finished goods

418

558

Work in process

1,249

571

Deferred tax assets

520

461

1,346

591

(4)

(37)

19,57021,599Buildings

254

254

Accumulated depreciation

(165)

(157)

Buildings, net

89

97

Machinery, equipment and vehicles

728

717

Accumulated depreciation

(659)

(646)

Machinery, equipment and vehicles, net

69

71

Land

0

0

Other

101

100

Accumulated depreciation

(68)

(66)

Other, net

33

33

Total property, plant and equipment

192

202

Other

451

429

Total intangible assets

451

429

Investment securities

2,641

1,314

Deferred tax assets

1,595

1,677

Other

1,443

1,413

Allowance for doubtful accounts

(40)

(10)

Allowance for investment loss

(136)

(107)

Total investments and other assets

5,502

4,287

Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets:
Property, plant and equipment

Intangible assets

Investments and other assets

6

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Second Quarter of the Year Ending March 31, 2010

Total noncurrent assets
Total assets

7

6,146

4,920

25,717

26,519

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Second Quarter of the Year Ending March 31, 2010

(Millions of Yen)
End of the second quarter ofConsolidated balance sheetsfiscal 2010at the end of fiscal 2009(as of September 30, 2009)(summary) (as of March 31,
2009)

LIABILITIESCurrent liabilities:
Accounts payable—trade

2,058

2,702

Short-term loans payable

2,337

2,368

Income taxes payable

332

743

Accrued consumption taxes

161

414

Accrued expenses

550

658

Provision for bonuses

603

568

5

0

Provision for loss on construction contracts

245

－

Other

659

542

6,954

7,999

300

300

3,639

3,620

Provision for directors’ retirement benefits

434

422

Negative goodwill

11

13

4,385

4,356

11,33912,355

Capital stock

1,000

1,000

Capital surplus

4,483

4,483

Retained earnings

9,319

9,518

Treasury stock

(894)

(894)

Total shareholders’ equity

13,90914,107

Valuation difference on available-for-sales securities

470

60

Foreign currency translation adjustments

(127)

(121)

Total valuation and translation adjustments

343

(61)

Subscription rights to shares

89

83

Minority interests

35

34

Total net assets

14,377

14,164

Total liabilities and net assets

25,717

26,519Provision for directors’ bonuses

Total current liabilities
Noncurrent liabilities:
Bonds payable
Provision for retirement benefits

Total noncurrent liabilities
Total liabilities
NET ASSETS
Shareholders’ equity

Valuation and translation adjustments

8

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Second Quarter of the Year Ending March 31, 2010(2) Quarterly Consolidated Statements of Income(Millions of Yen)
Consolidated cumulative

Consolidated cumulative

total for second quarter of

total for second quarter offiscal 2009 (April 1,

fiscal 2010 (April 1,

2008-September 30, 2008)2009-September 30, 2009)

Net sales

19,43015,967

Cost of sales

15,585

13,409Gross profit

3,844

2,557

Selling, general and administrative expenses

2,404

1,869

Operating income

1,440

687

Interest received

20

9

Dividends received

8

19

Gain on sales of securities

5

－

Other

29

26

Total non-operating income

6355

Interest expenses

27

19

Other

20

14

Total non-operating expenses

48

33

1,455

709

Gain on sales of noncurrent assets－

0

Total extraordinary income－

0

Provision of allowance for investment loss－

29

Loss on valuation of investment securities－

10

Loss on valuation of stocks of subsidiaries and affiliates

10－

Loss on valuation of memberships

22

－

Other

1

3

Total extraordinary loss

34

43

1,420

665

Income taxes-current

775

383

Income taxes-deferred

(75)

(73)

Total income taxes

700

310

8

0

711

355

Non-operating income

Non-operating expenses

Ordinary profit
Extraordinary income

Extraordinary loss

Income before income taxes and minority interests

Minority interests in income
Net income

9SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Second Quarter of the Year Ending March 31, 2010(3) Quarterly Consolidated Statements of Cash Flows(Millions of Yen)
Consolidated cumulative

Consolidated cumulative

total for second quarter of

total for second quarter offiscal 2009 (April 1,

fiscal 2010 (April 1,

2008-September 30,

2009-September 30,

2008)

2009)

Net cash provided by (used in) operating activities:
Income before income taxes and minority interests

1,420

665

Depreciation and amortization

121

113

Loss on valuation of memberships

220

Increase (decrease) in provision for retirement benefits

83

17

Increase (decrease) in provision

6

12

5

34

Increase (decrease) in provision for directors’ bonuses

(33)

4

Increase (decrease) in allowance for doubtful accounts

11

(1)

Increase (decrease) in allowance for investment loss－

29

Interest and dividend income

(28)

(28)

Interest expense

27

19

Loss (gain) on valuation of investment securities－

10

Loss (gain) on sales of noncurrent assets－(0)Loss on retirement of noncurrent assets

10Loss on valuation of stocks of subsidiaries and affiliates

10－

Decrease (increase) in notes and accounts receivable—trade

1,552

2,589

Decrease (increase) in inventories

(756)

(534)

Increase (decrease) in notes and accounts payable—trade

(492)

(640)

Increase (decrease) in other liabilities

(494)

208

Increase (decrease) in accrued consumption taxes

(173)

(253)

Other, net

26

(290)

Subtotal

1,309

1,957

Interest and dividends income received

28

28

Interest expenses paid

(28)

(18)

(1,715)

(789)

(405)

1,177

Purchases of property, plant and equipment

(37)

(18)

Proceeds from sale of property, plant and equipment－

1

Purchases of intangible assets

(53)

(59)

Purchases of investment securities

(65)

(846)

for directors’ retirement benefits
Increase (decrease) in provision for bonuses

Income taxes paid
Net cash provided by (used in) operating activities
Net cash provided by (used in) investing activities:

10

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Second Quarter of the Year Ending March 31, 2010

Proceeds from sales of investment securities－

19

Payments of loans receivable

(21)

(506)

Collection of loans receivable

7

12

Payments into time deposits

－

(70)

Proceeds from withdrawal of time deposits－

20

Other, net

(30)

(18)

Net cash used in investing activities(200)(1,466)

Net increase (decrease) in short-term loans payable

227

(21)

Repayments of long-term loans payable

(14)

(10)

Proceeds from issuance of bonds

300－

Redemption of bonds

(300)

－

－

(0)

Cash dividends paid

(553)

(553)

Net cash provided by (used in) financing activities

(341)

(584)

Effect of exchange rate change on cash and cash equivalents

(22)

3

Net increase (decrease) in cash and cash equivalents

(969)

(869)

Cash and cash equivalents at beginning of period

11,265

11,753

Cash and cash equivalents at end of period

10,296

10,883

Net cash provided by (used in) financing activities:

Purchase of treasury stock

11

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Second Quarter of the Year Ending March 31, 2010

(4) Notes Concerning Premise of Going Concern
None(5) Segment Information
Segment Information by Type of Business
Consolidated cumulative total for second quarter (from April 1, 2008 to September 30, 2008)(Millions of yen)
Systems
Development

SystemOperations
andInfrastructure
Development

10,679

2,471

6,279

19,430－19,430

14

125

262

402

(402)

－

Total sales

10,693

2,596

6,542

19,832(402)

19,430Operating income

1,634

557

543

2,736

(1,295)

1,440

Net Sales(1) Sales tocustomers(2) Intersegment
sales ortransfers

Product
Sales

Total

Eliminations/
Corporate

Consolidated

Consolidated cumulative total for second quarter (from April 1, 2009 to September 30, 2009)(Millions of yen)
Systems
Development

SystemOperations
andInfrastructure
Development

8,368

2,091

5,506

15,967－

15,967

13

132

225

370

(370)

－

Total sales

8,381

2,224

5,731

16,337(370)

15,967

Operating income

764

470

317

1,553

(866)

687

Net Sales(1) Sales tocustomers(2) Intersegment
sales ortransfers

Product
Sales

Total

Eliminations/
Corporate

Consolidated

Notes:
1. Businesses are classified into segments according to similarities that include the types and characteristics of services.
2. The Company adopted Accounting Standard for Construction Contracts (ASBJ Statement No. 15, December 27, 2007)
and Guidance on Accounting Standard for Construction Contracts (ASBJ Guidance No. 18, December 27, 2007) in thefirst quarter of the fiscal year ending March 31, 2010. The effect of these changes on respective business segments is
minimal.

12

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Second Quarter of the Year Ending March 31, 2010

Geographical Segments
Consolidated cumulative total for second quarter (from April 1, 2008 to September 30, 2008)(Millions of yen)Japan
Net Sales(1) Sales tocustomers(2) Intersegment
sales ortransfers

Other
Regions

Total

Eliminations/
Corporate

Consolidated

17,4082,021

19,430－19,430

13

18

31

(31)

－

Total sales

17,421

2,039

19,461(31)

19,430Operating income

1,564

167

1,732

(291)

1,440

Consolidated cumulative total for second quarter (from April 1, 2009 to September 30, 2009)(Millions of yen)Japan
Net Sales(1) Sales tocustomers(2) Intersegment
sales ortransfers

Other
Regions

Total

Eliminations/
Corporate

Consolidated

14,3991,568

15,967－

15,967

167

13

180

(180)

－

Total sales

14,566

1,581

16,147(180)

15,967

Operating income

707

162

869

(182)

687

Notes:
1. Countries and regions are categorized based on geographic proximity.
2. Because only small amounts of net sales were recorded in each country and region outside Japan, these countries andregions are aggregated under Other Regions.
Principal countries included in Other Regions are the United States and the Netherlands.
3. The Company adopted Accounting Standard for Construction Contracts (ASBJ Statement No. 15, December 27, 2007)
and Guidance on Accounting Standard for Construction Contracts (ASBJ Guidance No. 18, December 27, 2007) in thefirst quarter of the fiscal year ending March 31, 2010. The effect of these changes on each business segment is minimal.

13

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Second Quarter of the Year Ending March 31, 2010

Overseas Sales
Consolidated cumulative total for second quarter (from April 1, 2008 to September 30, 2008)(Millions of yen)
Other Regions
I

Overseas Sales

II

Total

2,024

2,024

Consolidated net sales－

19,430

III Overseas sales as apercentage of consolidated
net sales (%)

10.4

10.4

Consolidated cumulative total for second quarter (from April 1, 2009 to September 30, 2009)(Millions of yen)
Other Regions
I

Overseas Sales

II

Total

1,568

1,568

Consolidated net sales－

15,967

III Overseas sales as apercentage of consolidated
net sales (%)

9.8

9.8

Notes:
1. Countries and regions are categorized based on geographic proximity.
2. Because only small amounts of net sales were recorded in each country and region outside Japan, these countries andregions are aggregated under Other Regions.
Principal countries included in Other regions are the United States and the Netherlands.
3. Overseas sales are those recorded by the Company and its consolidated subsidiaries in countries and regions outside
Japan.

14

SRA Holdings, Inc. (3817) Summary of Consolidated Financial Results for the Second Quarter of the Year Ending March 31, 2010

6. Other Information
Status of Production, Orders and Sales
Consolidated cumulative total for second quarter (from April 1, 2009 to September 30, 2009)(1) Production amounts
Segment information by type of businessMillions of yen% change YoY

Systems Development

8,937

75.3

System Operations and Infrastructure
Development
Total

2,110

84.3

11,04876.8(2) Purchase amounts
Segment information by type of businessMillions of yen% change YoY

Product Sales

3,238

96.4

Total

3,238

96.4

(3) Status of orders
Segment information by type of business

Ordersreceived(Millionsof yen)9,257(% change
YoY)
71.0

Order
backlog(Millionsof yen)4,323(% change
YoY)
57.7

System Operations and Infrastructure
Development

1,639

62.5

1,335

68.6

Product Sales

5,894

98.5

3,010

114.9

Total

16,791

77.6

8,669

71.9

Systems Development(4) Sales amounts
Segment information by type of businessMillions of yen% change YoY

Systems Development

8,368

78.4

System Operations and Infrastructure
Development
Product Sales

2,091

84.7

5,506

87.7

Total

15,96782.2

15