1-2

Profile3

Consolidated Financial
Highlights

4

To Our Stakeholders

5 - 10First Medium-termManagement Plan

11-12

Business Strategy

13-15

Research andDevelopment

16 -21

Corporate Governance22

Business Risks

23-24

Business Report (Consolidated)
for Fiscal 2009

25-65

Financial Section

66-68

IT Holdings Group
Corporate Data

ANNUAL R EPORT 2 0 0 9

CONTENTS

IT Holdings Corporation

Year Ended March 31, 2009

Profile
Profilecompany by TIS Inc. and INTEC Holdings, Ltd., through management integration.
Shared access to the management resources and technological expertise of the two
corporate groups now under the holding company umbrella will underpin higher

To Our Stakeholders

IT Holdings Corporation was established on April 1, 2008, as a joint holding

Consolidated Financial
Highlights

Great Leap Forward
corporate value for both groups, promote synergies built on reciprocal strengths, andinformation technology (IT) requirements of clients.

Through the development of the IT services industry, we will contribute to a better

First Medium-termManagement Plan

enhance the accuracy of responses to the increasingly complex, high-level

information society.
Business Strategy
Research andDevelopment
Corporate Governance

IT Holdings Corporation

INTEC Holdings, Ltd.

Business Risks

TIS Inc.

Business Report (Consolidated)
for Fiscal 2009+1

Financial Section

Performance estimates and other forward-looking statements in these materials are based on information available to management and certain reasonableassumptions at the time of publication. Various factors may cause actual figures to differ considerably from estimates.

IT Holdings Group
Corporate Data

Cautionary note regarding forward-looking statements

2ProfileProfileConsolidated Financial
Highlights

The IT Holdings Group seeks to be a corporate citizen whose activities, which hinge on the provision ofFirst Medium-termManagement Plan

Management Philosophy

To Our Stakeholders

IT Holdings Groupvarious services utilizing IT, match its status as a leading corporate group. Moreover, the Group will strive toshareholders as well as employees and their families.

Business Strategy

raise corporate value, supported in this effort by the high regard of all its stakeholders, including clients andWe will cultivate a vibrant corporate culture that encourages companies andchallenges, and thereby ensure corporate growth.

Research andDevelopment

individuals under the Group umbrella to work toward higher goals and embrace new

We will always provide the very best to clients, through excellent quality andWe will uphold high corporate morals and fulfill our social obligations.

Corporate Governancetechnology built on the composite strengths of the Group.

Business Risks
Business Report (Consolidated)
for Fiscal 2009
Financial Section
IT Holdings Group
Corporate Data

3

Consolidated Financial Highlights (Year ended March 31, 2009)
Profile2009
Millions of yen

295,327

3,006,485

146,216
34,311
35,105

1,488,511
349,296357,373¥110.74
110.72
1,541.17
32.00

$1.13
1.13
15.69
0.33

Net cash provided by operating activities
Cash and cash equivalents at end of year
Per share of common stock (¥):
Net income, basic
Net income, diluted
Net assets
Cash dividends
Key ratios (%):
Return on equity
Equity ratio

7.4%
44.4%

Outsourcing services¥125 billion (37.1%)

Corporate Governance

Other ¥7 billion (2.2%)

Net Sales by Client Sector (Year ended March 31, 2009)
Others 2.7%
Public institutions 8.6%

Business Risks

Solution services¥29 billion (8.7%)

Credit card
21.2%
Services 16.3%
Banking 7.9%

Distribution 7.9%

Insurance 6.5%

Processing-based
manufacturing 9.7%

Other finance 5.9%

Financial Section

Assembly-based
manufacturing 13.3%

Business Report (Consolidated)
for Fiscal 2009

Net sales¥338 billion(100.0%)Software development¥176 billion (52.0%)

Research andDevelopment

Notes: 1. U.S. dollar amounts in this annual report are translated from Japanese yen, for convenience only, at the rate of ¥98.23 = US$1, the approximate rate prevailing on
March 31, 2009.
2. Return on equity = [Net income/Equity] x 100
3. Equity ratio= [Equity/Total assets] x 100
4. Equity = Net assets – [Subscription rights + Minority interests] = ¥131,054 million for the year ended March 31, 2009.

Net Sales by Business Segment (Year ended March 31, 2009)

Business Strategy$3,443,979
242,159
95,761First Medium-termManagement Plan

¥338,302
23,787
9,407

To Our Stakeholders

For year ended March 31:
Net sales
Operating income
Net income
At year-end:
Total assets
Total net assets

2009
Thousands of U.S. dollars

Consolidated Financial
Highlights

IT Holdings Corporation and Consolidated Subsidiaries

IT Holdings Group
Corporate Data

4

To Our Stakeholders
Profilewould like to take this opportunity to extend our sincere appreciation to you, our stake­holders, for your invaluable support.
The Group has closed its books on business activities for fiscal 2009, the year ended
March 31, 2009, and it is time to tell you the results.

deepening financial crisis spread rapidly around the world. This was the backdrop for the
first year of business at IT Holdings following management integration on April 1, 2008.

First Medium-termManagement Plan

The economic climate remained challenging in fiscal 2009, as the repercussions of a

To Our Stakeholders

Seeking further progress on the IT frontier, weembarked on IT Evolution 2011, our first
medium-term management plan.

Consolidated Financial
Highlights

On behalf of senior management and employees throughout the IT Holdings Group, we

As a group, our goal was to accurately pinpoint client needs and provide total systemsystem planning and configuration. These efforts earned us high marks for reliability.
In April 2009, we embarked on our first medium-term management plan—IT
Evolution 2011—designed to secure a position at the forefront of the IT services industry

Business Strategy

integration services, from outsourcing and system operation from our data centers to IT

and, as the title implies, promote improvement in the technologies we utilize and theseven goals under five priority topics—business activities, management resources, financial
position, personnel and corporate culture. The associated goals are described on pages

Research andDevelopment

services we offer. The process will be guided by a management direction that highlights

6–10.

process will be underpinned by a all-for-one, one-for-all attitude that unites everyone
under the Group umbrella in spirit and actions.
We ask shareholders and investors to support us on this journey. Your encouragement

Corporate Governance

Steadily, we will achieve these goals and our business activities will expand. Theof our efforts will be instrumental to our success.
Business Risks

June 2009

Business Report (Consolidated)
for Fiscal 2009
Financial Section

Tetsuo Nakao
Chairman

Susumu Okamoto
President
IT Holdings Group
Corporate Data

5First Medium-term Management Plan (April 1, 2009 - March 31, 2012)
ProfileIT Evolution 2011

Performance Targets by March 31, 2012

Operating Income

Business Strategy¥400 billion¥35 billion

Net SalesFirst Medium-termManagement Plan

IT Evolution 2011 describes the corporate image that will define the Group by March 2012, lays out
a management direction charting across seven goals in five priority topics, and sets the tone for a unitedeffort among all Group companies to develop business activities in line with stated objectives.

To Our Stakeholders

The “IT” in IT Evolution 2011 represents many concepts:
Innovative Technology
Promoting original techniques.
Increasing Trust
Deepening bonds of trust with clients.
IT Holdings Group
Developing the unique capabilities of companies under the Groupumbrella while demonstrating the composite strength of a groupstructure.

Consolidated Financial
Highlights

In April 2009, the IT Holdings Group embarked on IT Evolution 2011, its first medium-term management
plan. This three-year plan will guide the Group to a solid position at the forefront of the IT services
industry.

Pursue business activities underpinned byclient trust.

Actively reform the production
platform and capitalize on new
business opportunities.

Business
activities

Management
resources

Corporate
cultureIT Holdings Group
Corporate Data

Promote measures that will fuelcorporate growth and motivate
employees.

Strengthen financial positionof the Group.

Financial Section

Personnel

Financial
position

Business Report (Consolidated)
for Fiscal 2009

Cultivate a corporate culturethat unites the whole group.

We seek to be a constantly evolving IT
business group that promotes the uniquequalities of each company under its
umbrella while demonstrating thecomposite strength that a group structure
provides to maintain a sharply
competitive edge in terms of quality,
reliability, technologies and pricing.

Business Risks

Desired Group Image

Corporate GovernanceEncourage greater
management efficiency as aGroup.

Research andDevelopment

Foster individuality of Group companies while
demonstrating the comprehensive strengths
afforded by a group structure, and expand thescope of business activities.

6

First Medium-term Management Plan (April 1, 2009 - March 31, 2012)
ProfilePursue business activities underpinned by client trust.

Research andDevelopment
Corporate GovernanceBusiness Risks

We will share production and outsourcing platforms and standardize the development methodologies
applied within the Group. We will continue to embrace innovation, incorporating into our operations newtechnologies, especially those that automate, virtualize, and reduce consumption of electricity. We will also
form solid alliances with prominent system development providers regardless of location, be it at home orabroad, to ensure continuous progress on development projects and cut costs from a global perspective.
On the research and development front, activities will be linked to business pursuits, transforming newtechniques into promising businesses and carving out new markets.

Business Strategy

Actively reform the production platform and capitalize on
new business opportunities.

First Medium-termManagement Plan

We will thoroughly enhance Group capabilities to secure top-of-the-industry status in our fields of expertise.
In the outsourcing and network business, we will quickly develop next-generation data center formats,
encapsulated by such words as green, global, cloud, virtualized, automated and BCP (business continuity
plans). This emphasis will make us the top IT services group in Japan.
Meanwhile, in the software development business, we will sharpen our competitive edge in industries
and service segments where we have accumulated particular expertise.

To Our Stakeholders

Foster individuality of Group companies while demonstrating
the comprehensive strengths afforded by a group structure,and expand the scope of business activities.

Consolidated Financial
Highlights

We seek to be a value-creating partner, contributing directly to the business success of each clientcompany. We will accomplish this by participating closely in the design of management and operating
strategies and by supporting the implementation of associated measures, as they relate to IT. Moreover,
we will strive to maintain the relationship of trust that we have built over the typically long duration ofa project, so that clients readily look to IT Holdings and the Group not only for system development but
for all their IT needs, including system operation and maintenance as well as wider system planning.

Business Report (Consolidated)
for Fiscal 2009

Business
activities

Financial Section

DesiredGroup Image

IT Holdings Group
Corporate Data

Financial
position

7First Medium-term Management Plan (April 1, 2009 - March 31, 2012)
ProfileDesired Group Image

Business Strategy
Research andDevelopment

We will make personnel structures consistent within the Group, whiledeveloping skills and motivating employees to work toward higher goals.
Our personnel strategy encompasses six points: 1) enhance the personnel
structure; 2) define the image of a talented employee and what is required
to realize this status; 3) cultivate a competent workforce; 4) recruit skilledindividuals and assign them to positions that make the most of their abilities;5) enable employees to maintain a good work–life balance; and 6) reinforce
awareness of compliance and corporate social responsibility.

First Medium-termManagement Plan

Promote measures that will fuel corporate
growth and motivate employees.

Strategic investment in facilities, particularly data centers,
as well as R&D is integral to the success of IT Evolution
2011. Merger and acquisition (M&A) opportunities arealso important, and we will prudently consider candidates
and select those that will best augment existing Groupcapabilities.
To ensure a stable source of funds for the necessary
investments, we will establish financial indicators thateach member of the Group must work toward. This will
strengthen the overall financial position of the Group andfacilitate business growth.

To Our Stakeholders

Personnel

Strengthen financial positionof the Group.

Consolidated Financial
Highlights

Financial
position

Corporate GovernanceBusiness Risks
Business Report (Consolidated)
for Fiscal 2009
Financial Section
IT Holdings Group
Corporate Data

8First Medium-term Management Plan (April 1, 2009 - March 31, 2012)
ProfileConsolidated Financial
Highlights
To Our Stakeholders
First Medium-termManagement Plan
Business Strategy

Encourage greater management efficiency as a Group.

DesiredGroup
Image
Corporate
cultureBusiness Report (Consolidated)
for Fiscal 2009

In our business pursuits, we will always consider the client’s perspective and strive to be a corporationin which all the companies under the Group umbrella work together to meet clients’ requirements andsolve IT-related matters of concern to them.
Each Group company is characterized by its own corporate culture, based on respective businesstraditions and corporate history. We will preserve these qualities, while cultivating a Group-definedcorporate culture that encourages every employee and every company within the Group to work
together in providing the very best to all clients.

Business Risks

Cultivate a corporate culture that unites the whole group.

Corporate GovernanceManagement
resources

Research andDevelopment

We will optimize administrative processes throughout the Group and promote centralized purchasing, sharedservices for back-office operations, effective use of Group assets through shared use, and standardized
information systems. These measures will lead to lower indirect operating costs on a groupwide basis.

Financial Section
IT Holdings Group
Corporate Data

9First Medium-term Management Plan (April 1, 2009 - March 31, 2012)
ProfileThe Drivers of IT Evolution 2011 Business Expansion
Consolidated Financial
Highlights

Business Portfolio Targets

New, promising andNew,overseas
promising
pursuits
and overseas pursuits

Outsourcing

Outsourcing

Solutions

Solutions

Other new businessesOther new businesses

Softwaredevelopment

Softwaredevelopment

Solutions

SolutionsOperating income ratio
Operating income ratio

Operating income ratio
Operating income ratio
Fiscal 2009

Fiscal 2016

Fiscal 2016

Entrenching Core Business and Creating New Services

Next-Generation Data Centers

Expanding IT Platform Services

Financial Section

To address IT platform issues, we will apply various solutions,
including virtualization technology, server integration and thinclients. We will help clients control information system costs with
one-stop access to reliable, high-availability IT platforms as well as
services covering everything from platform configuration tooperation.

Business Report (Consolidated)
for Fiscal 2009

Gotenyama gDC alone will give IT Holdings the distinction of having the largest data center in Japan. We will
utilize this data center as a hub from which to expand our business activities.

Business Risks

Data centers, particularly those that support disaster recovery and global outsourcing, will be attracting greater
corporate attention. Environmental considerations, such as heat generation and rising electricity consumption at
facilities, will also be of growing concern to companies as the integration density of servers increases.
The IT Holdings Group is developing sophisticated next-generation data centers that will ameliorate suchconcerns. At these facilities, we will apply environmentally conscious green IT initiatives and introduce leadingedge technologies to automate and standardize operations.
By March 2012, when IT Evolution 2011 draws to a close, floor space at our next-generation data centers,
including the Gotenyama gDC (green Data Center), will have increased by more than 20,000 m2, to 126,000m2.

Corporate GovernanceOutsourcing Services — High-Tech Responses to Social Demands

Research andDevelopment• Quantitatively expand outsourcing, software development and solution services and boost profitability.
• Anticipate market changes and respond with improved service content and a higher value-added quality.
• Develop business activities globally, paralleling the movement of clients, and pursue business opportunities in overseas
markets.
• Pursue new businesses, with a focus on business platform services.
• Offer an extensive range of consulting services, including advice to assist clients achieve business reforms utilizing IT.
• Create new services that utilize IT to support positive social change, and turn these services into operating pillars.

Business Strategy

Fiscal 2009

Businessplatform
services
New businesses
New businesses

First Medium-termManagement Plan

Softwaredevelopment

Businessplatform
services
Outsourcing

Core businesses Core businesses
Softwaredevelopment

Consulting

To Our Stakeholders

Outsourcing

Growth rate

Growth rate

Growth rate

Growth rate

Core businesses Core businesses

Consulting
Overseasbusinesses

Overseasbusinesses

IT Holdings Group
Corporate Data

Concept drawing of Gotenyama gDC

10First Medium-term Management Plan (April 1, 2009 - March 31, 2012)
ProfileWe will apply internal and external resources, including groupwide client bases and alliances, to the developmentof new services that will support positive social change through IT over the medium to long term.

The business platform services under consideration should be comprehensive, from network-facilitatedsystem resources, such as hardware, storage and operating systems, to shared functions, such asadministrative applications and recognition/security capabilities. Through these services, clients can use,
at a reasonable cost, whatever functions they require for their respective information systems.
We expect these functions to integrate seamlessly into an existing information system.

Business Report (Consolidated)
for Fiscal 2009

The companies under the Group umbrella have consultants who provide guidance on system planning,systemization requirements and other IT topics that might arise during the planning of an information
system or the introduction of packaged software.
Information systems are indispensable to any corporate operating strategy. Therefore, under IT
Evolution 2011, we will emphasize training for employees and expand the scope of available consulting
services to underscore our position as a strategic partner—a value-creating partner—that helps clientsachieve their business goals.

Business Risks

Consulting businessCorporate GovernanceBusiness platform services

Research andDevelopment

New Businesses — Addressing Social Change from a Medium- to Long-term Perspective

Business Strategy

Alliances with international companies engaged in IT outsourcing enables the IT Holdings Group to address the IT
service needs of Japanese companies developing a presence abroad.
Also, in association with the newly constructed Tianjin Data Center and local companies under the Groupumbrella, we will expand data center and IT system configuration services to support the business pursuits ofcompanies in China, both Chinese-owned operations and those established through Japanese, European and
U.S. investment.

First Medium-termManagement Plan

Overseas Business — Responding to Globalization of ClientsTo Our Stakeholders

The IT Holdings Group boasts the largest software development capacity of any IT services group in
Japan. We will draw on this strength, sharing accumulated know-how and development benchmarks
within the Group, standardizing this information, and extending our offshore capabilities to improve
software development quality and productivity.
We aim to establish proprietary solutions, particularly F3 (”F-Cube”), an information solution for
financial institutions, CreditCube, a next-generation system for credit card companies, and Yuito and
Sokuto, identity management products, as de facto industry standards. We will also promote Group
products to a wider corporate audience to raise our profile and foster corporate growth.

Consolidated Financial
Highlights

Software Development Services — Shared Know-How and Offshore Capabilities

Joint product development with alliance partners
Financial Section

Medium- to long-term strategic alliances with prominent companies will grant us access to the expertisefor which our respective partners are known. Jointly, we will combine our partners’ know-how with ourown industry- and service-specific competence and extensive background in system development andoperations to plan and develop products that we can promote under the IT Holdings brand.

IT Holdings Group
Corporate Data

11

Business Strategy
ProfileIntegrating Subsidiaries to Maximize Group Synergies

Offer high-value-added solutions
Expand client baseTo Our Stakeholders

Neoaxis Co., Ltd.

TIS Solution
Business Co., Ltd.

Business Strategy

Systems Engineering
Laboratory Co., Ltd.

First Medium-termManagement Plan

In accordance with the Group’s medium- to long-term
strategies, IT Holdings integrated two subsidiaries, Systems
Engineering Laboratory Co., Ltd. (SEL), and TIS Solution
Business Co., Ltd (TSB), on July 1, 2009, to form Neoaxis Co.,Ltd.
The forte fields of both companies are very similar. SEL
concentrated on sales and system development activities, witha focus on LANSA, a packaged software for IBM Japan’s iSeriesbusiness server for midsized growth companies. Meanwhile,business activities at TSB hinged on access to groupware,particularly Lotus Notes/Domino, as well as softwaredevelopment and sales of system products. Management
integration will maximize respective strengths and raise thehigh-value-added quality of solutions from Neoaxis.
Neoaxis will also demonstrate synergy derived throughcomplementary client groups. SEL addressed the needs ofgrowth companies and TSB catered to major corporations, andtogether, they bring to Neoaxis an expanded client base withno duplication.

Consolidated Financial
Highlights

Debut of Neoaxis

Research andDevelopment

Name:
Head office:Representatives:

Business Risks
Business Report (Consolidated)
for Fiscal 2009

Neoaxis Co., Ltd.
17-12, Kiba 2-chome, Koto-ku, Tokyo
Masayuki Takahashi, President
Kazunori Kawasaki, Vice President
Date of establishment: July 1, 2009
Paid-in capital:¥616.8 million
Shareholder:
IT Holdings (100%)
Number of employees: Approximately 270 (at time of management integration)
Business content:
Computer software development, sales and maintenanceSale of computers and peripheral equipment

Corporate Governance

Company Profile

Financial Section
IT Holdings Group
Corporate Data

12

Business Strategy
ProfilePromoting Shared Back-Office Operations

Accounting
Accounts andsettlement

A priority for IT Holdings in its first year of business was to promoteshared back-office operations. This effort culminated in theestablishment of IT Service Force Inc. (ITSF), on April 1, 2009.

Labor Services

General Affairs

Salaries, benefits

Payments, shipping

To Our Stakeholders

ITSF will be the driving force of enhanced efficiency in common
back-office operations throughout the Group, and will contribute tolower costs and higher service quality. The move to shared services
for various administrative tasks should lead to a ¥1 billion decreasein groupwide costs.
Procurement/
Purchasing

Order management

Receiving, invoicing

Corporate GovernanceTo Achieve Further Business Expansion

Acquired Shares in Nexway
Company Profile

Business Report (Consolidated)
for Fiscal 2009

Name:
Nexway Co., Ltd.
Head office:13-1, Katsudoki 1-chome, Chuo-ku, Tokyo
Representative:
Jun Fukami, President
Date of establishment: October 1, 2004
Paid-in capital:¥300 million
Shareholder:
INTEC Inc. (100%)
Number of employees: 96 (as of April 1, 2009)
Business content:	Services to distribute information

Business Risks
Financial Section

INTEC Inc., a Group company, acquired all shares in
Nexway Co., Ltd., effective July 11, 2008.
Nexway started out in July 1988 as the fax
broadcasting service division of Recruit Co., Ltd. In
October 2004, the division was split off into anincorporated company and has grown through thedevelopment of such services as simultaneous fax
distribution.
Through the equity connection, INTEC and
Nexway can integrate their technological andoperational capabilities to further the provision ofhigh-quality, highly reliable fax-related services.
Together, they can also target a wider client base forbusiness platform services, which distribute not only
facsimiles but also documents and other information.

Research andDevelopment

Business content:	Entrusted with administrative tasks related to generalaffairs, labor services, accounting and procurement/purchasing

Business Strategy

IT Service Force Inc.
11-38, Toyo 4-chome, Koto-ku, Tokyo
Kiyoshi Nakagawa, President
April 1, 2009
¥8 million
IT Holdings (100%)
85* (at time of establishment) *includes temporary staff

First Medium-termManagement Plan

Order Management

Company Profile
Name:
Head office:Representative:
Date of establishment:
Paid-in capital:
Shareholder:
Number of employees:

Consolidated Financial
Highlights

Established IT Service Force

IT Holdings Group
Corporate Data

13

Research and Development
ProfileTIS, INTEC, Intec Systems Institute and Intec NetCore form the core of the Group’s leading-edge R&D pursuits in thedomains described below. In some domains, where members of the TIS Group and the INTEC Group are working(1) Software development technology

Business Strategy
Research andDevelopment
Corporate GovernancePlatform technology R&D enables the Group to anticipate the market changes that accompany technologicalinnovation and underpins the development of new products and new services.
Recent activities in this area have emphasized R&D on real-time, high-quality distribution systems compatible
with networks, especially next-generation networks, as well as verification tests on platforms to support the
anticipated programming creation needs of cable television providers.
Of note, Intec Systems Institute and Intec NetCore teamed up with NTT Corporation to write two solutions that
address problems in the basic specifications of IPv6 (Internet Protocol version six). The Internet Engineering Task Force
officially issued a request for comments on the proposed requirements for address-selection mechanisms in July2008.
In addition to the development of demo solutions for data centers using the IPv6 platform, engineers involvedin platform technology R&D have delved into local WiMAX (worldwide interoperability for microwave access)technology, which offers the portability of Wi-Fi (wireless fidelity) but with broader coverage, to support the WiMAX
project set up jointly by INTEC and the Keio Research Institute at the Shonan-Fujisawa Campus of Keio University.
They also studied various WiMAX techniques and considered related business models.

First Medium-termManagement Plan

(2) Service platform technology

To Our Stakeholders

Production technology R&D is approached from two angles: high quality and high productivity. The results areindispensable components of a corporate structure resilient to business downturns. Therefore, production technology
is an R&D theme that the entire Group actively addresses.
In fiscal 2009, INTEC, Intec Systems Institute and TIS were jointly involved in the design and configuration of avirtual project room—a type of Platform as a Service, or PaaS—for software developers.
On its own, INTEC reviewed modeling techniques for service-oriented architecture, or SOA, ran verification tests
on Business Process Execution Language—more commonly, BPEL—engines for workflow processing, considered
possible improvements to enhance global software development practices, and investigated trends in agile softwaredevelopment techniques.
Meanwhile, TIS tackled the creation of better development methodologies for upstream processes, such as
requirement definitions and process modeling, and better performance prediction and verification environments,
implemented operations frameworks, and developed and further augmented static testing tools. In addition, thecompany launched full-scale in-house configuration management support and maintained conditions conducive to
reduced project load and higher quality of delivered product.

Consolidated Financial
Highlights

together, the benefits of management integration are already evident.

Business Risks
Business Report (Consolidated)
for Fiscal 2009
Financial Section
IT Holdings Group
Corporate Data

14

Research and Development
Profile(3) Next-generation IT constituent technology (industry-specific emphasis)

First Medium-termManagement Plan
Business Strategy
Research andDevelopment
Corporate GovernanceBusiness Risks
Business Report (Consolidated)
for Fiscal 2009Engineers also conduct R&D on next-generation IT constituent technology at the industry’s leading edge.
Intec Systems Institute pursued the development of a website security information analysis function with blog
analysis technology for LogRevi, an INTEC product, as well as a system to link posted information. The company also
marketed the telepathology system it developed in fiscal 2008 for remote diagnosis as well as a newly developed
prototype for an automated asbestos measurement system.
Meanwhile, Intec NetCore turned several years of R&D into a multiprotocol label switching network
management system and has already delivered the system to three major communication carriers in Japan. In July
2008, the company created a business entity to market the system and plans to promote the system overseas. In
addition, with the pool of unallocated IPv4 addresses drying up and the issue finally prompting real action, Intec
NetCore will bolster its consulting and transfer support businesses to help clients in their transition from IPv4 to IPv6
technology.
Multihoming is a technique essential to the realization of highly reliable communication networks, whereby
several IP addresses are used to connect a host to the Internet. This imparts resilience against malfunction of links,
hardware and protocols within the system. Intec NetCore developed a measurement technique that pinpoints thequality of each Internet connection in the IP network and began analyzing and storing Internet measurement quality
data from Japan and overseas. The company is now working to commercialize services featuring multihoming andconnectivity quality measurement techniques and fine-tuning methods to optimize network resources.
TIS verified deployment of jBPM—a platform for executable process languages, from business process
management (BPM) over workflow to service orchestration—as a process-oriented development technique. The
company also verified a virtualization technique using open-source software to achieve stable operation at high load.

To Our Stakeholders(4) Next-generation IT constituent technology (advanced constituent technology)

Consolidated Financial
Highlights

In the area of next-generation IT constituent technology, engineers take an industry-specific approach, narrowing
their research focus to technology specifically of use to client sectors and pursuing related R&D.
A recent success was the creation of an SOA-based reference model that enables business platforms connecting
the manufacturing, wholesaling and retailing operations of multiple companies to be provided as a Software as aService, or SaaS, solution. This model was applied to the development and evaluation of a prototype featuring opensource products, including an enterprise service bus, BPEL engine and portal server.
Efforts were also directed toward pinpointing trends among members of the distribution sector regarding theiruse of supply chain management.
The Group operates an netizen site—an e-learning environment for ordinary citizens to promote lifelong study—
and is pursuing other activities, including a joint effort with the University of Toyama to explore overseas examples of
e-portfolios—web-based information management systems utilizing electronic media and services to build acollection of learning materials and completed work—and design a trial system for use in Japan. WHO is also
involved in the local information platform verification project promoted by the Ministry of Internal Affairs andCommunications.
Another area of interest is the emergence of new health care service segments. To reinforce the Group’s ability
to meet evolving demand associated with these new segments, assigned personnel carefully track the national policy
on online access to medical information, the status of verification tests on an application platform for healthinformation, and health care guidelines.

Financial Section
IT Holdings Group
Corporate Data

15

Research and Development
Profile(5) Bioinformatics-related systems
Consolidated Financial
Highlights
To Our Stakeholders
First Medium-termManagement Plan
Business Strategy

Intec Systems Institute redrafted its bio-business vision to further clarify its direction and objectives in the area of
bioinformatics technology. In the new vision, the ultimate goal is to be a bio/health industry innovator, going beyond
simple IT-based business support for biotechnology and health and medical services sectors to play a pivotal role intransforming the industry itself.
Toward this goal, the IT Holdings Group, as a whole, is emphasizing system R&D that maximizes years ofexperience developing medical information systems and utilizes in-house knowledge of bioinformatics technology tomeet evolving demand for new health and medical services. This trend has emerged not only because of the heavier
cost burden that the nation now bears but also because people, in general, are increasingly keen to do whatever
they can to maintain and promote good health and prevent lifestyle-induced diseases, typified by metabolic
syndrome.
In research with non-Group partners, the results of a collaborative effort between Intec Web and Genome
Informatics Corporation and Japan's Institute of Physical and Chemical Research, known as RIKEN, on abioinformation analyzer, analysis method and analysis program were patented. The challenge was to determine thegenetic switch responsible for life phenomena, and the structural principle that controls the circadian clock inmammals was successfully identified. The next challenge will be to create a technique that cracks the biomechanismsof diseases and drug side effects at the genetic level for application in innovative drug development.
Intec Web and Genome Informatics is also participating in the Functional RNA Project—a five-year, strategic R&D
effort launched by the Ministry of Economy, Trade and Industry in 2005—as a member of the Japan Biological
Informatics Consortium. The company is responsible for bioinformatic R&D aimed at finding and analyzing functional
RNA. A highlight of the results achieved to date is the expanded scope of a patent for a microRNA analyzer, analysis
method and analysis program overseas. The company will now focus on research to get practical results out of thetechnique, such as discovering new biomarkers.

(6) Other R&D pursuits
Research andDevelopment
Corporate GovernanceBusiness Risks

Intec Systems Institute applied for four new patents in fiscal 2009. For R&D in progress, the company provides
updates through scientific papers, outside lectures and articles in the INTEC Technical Journal.
The company also takes an active position in cultivating the skills of tomorrow’s software and system engineers.
Efforts include support for training programs, such as the one at the University of Toyama that emphasizes practicalconcepts in product development, and special lectures at Toyama Prefectural University.
In the Internet realm, industry experts reckon the pool of unallocated IPv4 addresses in Japan will dry up
sometime between 2010 and 2011. Intec NetCore has assumed a leadership role, substantiated by a seat on theboard of Task Force on IPv4 Address Exhaustion, Japan, to ensure the industry responds seamlessly to IPv6 transition
issues and to encourage a wider embrace of IPv6.
TIS is tackling the challenge of raising the skill set of IT architects. The company tested out a new process infiscal 2009.
Total R&D expenses in fiscal 2009 reached ¥946 million.

Business Report (Consolidated)
for Fiscal 2009
Financial Section
IT Holdings Group
Corporate Data

16

Corporate Governance
ProfileTo maintain the trust of all stakeholders, including clients and shareholders, and to be a corporate citizen that meetsthe expectations of society, the Company will strive to reinforce corporate governance, not only by raising thetransparency and soundness of management practices but also by paying constant attention to the actions taken in the
pursuit of business. These efforts will ensure suitable levels of corporate ethics and legal compliance.

(1) Basic Outline of Corporate Bodies

Research andDevelopment

	The Company maintains a corporate auditor system. The Board of Corporate Auditors comprises four auditors,
three of whom are outside auditors. Corporate auditors attend Board of Directors’ meetings, examine important
documents, perform audits of subsidiaries and, when necessary, seek the opinion of others, including theCompany’s accounting firm, the Group Compliance Office and other units involved in internal audits. They also
keep close watch over the execution of duties by directors regarding business and operating activities.
		
The Group Internal Audit Office, comprising two members, is an internal auditing unit under theCompliance Division. This office exchanges information, as necessary, with units involved in internal audits at
Group companies and strives to ensure effective, high-caliber internal audits on a groupwide basis.

Business Strategy(2)	Cooperation between Corporate Auditors and the Accounting Firm, Group
Compliance Office and Other Units Involved in Internal AuditsFirst Medium-termManagement Plan	The Company’s Board of Directors shall comprise no more than 15 members, as set forth in the Articles ofIncorporation. The Board meets monthly, but will also convene whenever necessary to discuss and finalize
decisions regarding important business activities and legal matters pertaining to the execution of operations.
		
A groupwide executive officer system and an executive committee support and expedite decision-making
efforts relating to the execution of duties by representative directors.

To Our Stakeholders

1. Organizational Structure and Status of Internal Control System

Consolidated Financial
Highlights

I. Basic Policy

Corporate GovernanceBusiness Risks
Business Report (Consolidated)
for Fiscal 2009
Financial Section
IT Holdings Group
Corporate Data

17

Corporate Governance
Profile(3) Status of Internal Audits and Auditors’ Audits

Appointment, Dismissal

Board of Directors
Reports

Business Strategy

AdviceRisk Management
Council

Appointment

First Medium-termManagement Plan

Appointment, Dismissal

To Our Stakeholders

General Meeting of Shareholders

Consolidated Financial
Highlights

	To reinforce the stewardship function of the Board of Directors, two of the eight directors have come fromoutside the Company. The responsibilities of individual directors are clearly defined and the term of office islimited to one year to create a flexible structure primed for responses geared to changes in the operating
environment.
		The Executive Committee meets as situations require to monitor progress of the business and affairs of theGroup. This committee also discusses important issues related to the execution of operations, shares informationand generally underpins enhanced governance of the Group.
		Compliance Regulations have been prepared to ensure a standard level of compliance throughout theGroup. Internal audits are conducted on all activities, including compliance efforts, and compliance workshops
are held to raise awareness of pertinent issues.

Reports

Board of Discussion
Corporate Auditors
Discussion

Research andDevelopment

Appointment,
Administration

Group ComplianceCouncilGroup
Compliance
OfficeAuditsReports

Direction

Units involved ininternal audits

Accounting
AuditorReports

Business Risks

Group Risk
Management
Committee

Executive
Committee

Business Report (Consolidated)
for Fiscal 2009

Group Compliance
Committee

Group Security
Committee

Corporate GovernancePresidentGroup companies

Financial Section

IT Holdings

IT Holdings Group
Corporate Data

18

Corporate Governance
Profile(4) Accounting Audits

Osamu Oyama (one year of auditing IT Holdings)

Certified public accountant 		Yoshiyuki Matsumoto (one year of auditing IT Holdings)

Certified public accountant 		

Masato Saito (one year of auditing IT Holdings)
Certified public accountants 5
Other assistants
11(5) Approval Criteria for Election of Directors

Business Strategy	In its Articles of Incorporation, the Company sets forth a clause stating that the appointment of a candidate to
the Board of Directors must be approved by a majority vote of shareholders in attendance whose combined
shareholdings represent more than one-third of total voting rights held by shareholders with the ability to
exercise such rights. The Articles of Incorporation include a clause preventing cumulative voting in obtaining
approval of appointment for director candidates.

First Medium-termManagement Plan

Number of assistants involved in accounting operations
					

To Our Stakeholders

Certified public accountant 		

Consolidated Financial
Highlights

	The Company has engaged Ernst & Young ShinNihon LLC as independent auditor responsible for accounting
audits.
		
The certified public accountants who conduct audits of the Company’s books are as follows.

(6) Approval Criteria for Special Resolutions at the General Meeting of Shareholders

	In accordance with Article 427, Paragraph 1 of the Company Law, the Company enters into agreements with its
outside directors and outside corporate auditors that limit their liability for compensation under Article 423,
Paragraph 1 of the Company Law. The amount of liability pursuant to such agreements shall be limited to theminimum stated in Article 425, Paragraph 1 of the Company Law.

	The Company has two outside directors and three outside corporate auditors, none of whom maintains any
business relationships with the Company.

Financial Section(9)	Relationship with Outside Directors and Outside Corporate Auditors

Business Report (Consolidated)
for Fiscal 2009(8)	Limited Liability Agreements with Outside Directors and Outside Corporate
Auditors

Business Risks(i) Seeking to achieve a flexible capital policy geared to the operating environment, the Company provides in its
Articles of Incorporation a clause allowing the Board of Directors to approve the purchase of treasury stockfrom the market, in accordance with Article 165, Paragraph 2 of the Company Law.
(ii) The Company’s Articles of Incorporation include a clause that grants the Board of Directors the authority toapprove the distribution of retained earnings to registered shareholders as of September 30 each year, as
described in Article 454, Paragraph 5 of the Company Law, to promote the flexible return of profits toshareholders.

Corporate Governance(7)	General Meeting of Shareholders’ Agenda Items that Can Be Resolved by the
Board of Directors

Research andDevelopment	Special resolutions described under Article 309, Paragraph 2 of the Company Law that are put before thegeneral meeting of shareholders must, in accordance with a clause provided by the Company in its Articles ofIncorporation, be passed with a number of votes corresponding to more than two-thirds of voting rights held byshareholders in attendance whose combined shareholdings represent no less than one-third of total voting
rights held by shareholders with the power to exercise such rights. Management believes that this reduced
quorum for special resolutions facilitates the execution of the general meeting of shareholders.

IT Holdings Group
Corporate Data

19

Corporate Governance
Profile2. Compliance and Risk Management

	The Company established the Group Compliance Department to maintain a companywide compliance structure
and actively strives to pinpoint problem areas. These efforts are supported by the Group Compliance Committee,
chaired by the president, where important issues related to compliance are discussed. The results of suchdiscussions are presented to the Board of Directors in a report format.

Research andDevelopment(3) Executive Compensation

Business Strategy	In the execution of its business activities, the Company is always aware of the various risks that accompany suchactivities. The risks of greatest weight for the Company, as an organization that handles information, are natural
disasters, such as earthquakes, which could damage data centers, and information leaks, particularly
unauthorized disclosure of personal information.
		
Risk management is practiced at all Group companies, and the Risk Management Committee plays a keyrole in overseeing risk management activities throughout the Group. In addition, the Company is ready to act
quickly with various response teams, if a vulnerability is discovered. This is part of an internal structure tominimize the impact of a risk situation on operations by ensuring sufficient communication within the Group.
		
The Company created the Group Compliance Committee as a component of its risk management strategy
to reinforce compliance practices and thereby enhance risk management.
		
These groupwide structures will be reviewed as necessary to keep responses current to the changing risks
that mirror the evolution of the Group’s business activities and market conditions.

First Medium-termManagement Plan(2)	Status of Risk Management System

To Our Stakeholders(1) Group Compliance Department and Group Compliance Committee

Consolidated Financial
Highlights

The Company created a corporate social responsibility code of conduct, and the president continually reinforces thespirit of this code to executives to ensure that the corporate activities overseen by executives are undertaken incompliance with the law and underpinned by respect for social principles. To reinforce compliance and risk
management practices, the Company has established the following structures.

Total annual compensation for directors:¥202 million, including ¥12 million for outside directors.

	As set forth in the Company’s Articles of Incorporation, the number of directors of the Company shall be 15 or
less.

Business Report (Consolidated)
for Fiscal 2009(4)	Fixed Number of Directors

Business Risks

Notes: 1. The employee salary portion of employees concurrently holding positions as directors is not included in the total of directors’ salaries.
2. Total compensation paid to directors and corporate auditors in the fiscal year under review—the year ended March 31, 2009—was within¥25 million per month for directors and within ¥7 million for corporate auditors, in accordance with Article 3 of supplementary provisions
in the Company’s Articles of Incorporation.
3. As of March 31, 2009, the Company had eight directors, two of whom were outside directors, and four corporate auditors, three of whomwere outside corporate auditors. The number of directors differs from that presented above, because two directors did not receive
compensation.
4. The Company has not introduced a retirement benefits system nor does it pay out bonuses.

Corporate GovernanceTotal annual compensation for corporate auditors:¥51 million, including ¥30 million for outside corporate auditors

Financial Section
IT Holdings Group
Corporate Data

20

Corporate Governance
ProfileConsolidated Financial
Highlights

II. 	Auditors’ Compensation
1. Compensation to Certified Public Accountants(Millions of yen)Compensation foraudit certification

The filing company

Compensation otherthan for audit
certification

Year ended March 31, 2009
Compensation foraudit certification

Compensation otherthan for audit
certification

¥—

¥ 35

¥ 14

Consolidated subsidiaries

—

—

223

88

Total

—

—

258

103

2. Other Major Compensation

First Medium-termManagement Plan¥—

To Our Stakeholders

Year ended March 31, 2008

None.

4. Policy regarding Compensation for Audits

Corporate Governance	The Company has not established a policy regarding compensation for audits executed by certified public
accountants. The Company maintains an appropriate amount in line with the audit plan formed by certified
public accountants and determines compensation for audits with the approval of the Board of Corporate
Directors.

Research andDevelopment

	The Company pays the accounting audit company to provide the following services, in addition to the services
covered in Article 2, Paragraph 1 of the Certified Public Accountants Law.
		To verify the implementation and utilization status of the internal control system, based on AuditingStandards Committee Report No. 18 issued by the Japanese Institute of Certified Public Accountants.

Business Strategy

3. N on-Auditing Services Provided by the Accounting Audit Company to theCompany

Business Risks
Business Report (Consolidated)
for Fiscal 2009
Financial Section
IT Holdings Group
Corporate Data

21

Corporate Governance
ProfileBasic Direction on CSR
The management philosophy that permeates the IT Holdings Group stresses theConsolidated Financial
Highlights

IT Holdings Group

Group’s development into a corporate citizen whose activities, hinging on thegroup. This philosophy also underpins the Group’s efforts to raise corporate value,
supported in this effort by the high regard of all its stakeholders, including clientsand shareholders as well as employees and their families.

To Our Stakeholders

provision of various services utilizing IT, match its status as a leading corporate

The Group’s stand on corporate social responsibility is evident in its commitment tounder the Group umbrella to work toward higher goals and embrace newchallenges, to be honest and fair in business pursuits based on respect of the law, ofcourse, as well as high moral standards, and to fulfill social obligations.

First Medium-termManagement Plan

cultivate a vibrant corporate culture that encourages the companies and individualsThis is the Group’s basic direction on CSR.

Maintain high corporate morals, obey the law and upholdparameters of socially acceptable conduct.
Have absolutely nothing to do with antisocial forces.

Maintain fair business practices

Ensure an appropriate perspective on business transactions,based on fair and open competition.

Protect the environment

Recognize that environmental problems warrant universal
attention and promote efforts to save resources and energy inthe execution of corporate activities. Also, through IT services,support clients’ efforts to enhance operating efficiency andreduce energy consumption, thereby contributing to lower
environmental impact.

Contribute to society

Actively participate in community events as a corporate citizen
whose social standing matches its leading industry status.

Be a part of theinternational community

Naturally, obey internationally recognized rules and local laws in
the execution of cross-border projects, but also contribute tosocial and economic development in the countries where theGroup maintains a presence by recognizing local culture andcustoms.

Financial Section

Respect the law

Business Report (Consolidated)
for Fiscal 2009

Develop talent

Cultivate an environment in which employees always look ahead,
striving to achieve higher goals and embracing new challenges.
Provide opportunities to grow and realize personal goals, create asafe and productive work environment, and give everyone thefreedom to reach their potential.

Business Risks

Always provide the very best to clients and strive to raisecustomer satisfaction levels through excellent quality andtechnology built on the composite strengths of the Group.

Corporate Governance

Provide optimum services

Research andDevelopment

Acknowledge responsibilities as a leading corporate group in the
IT services industry and undertake sound corporate activities
with integrity and clarity of purpose. In addition, be sincere andfair in dealings with all stakeholders.

Business Strategy

Ensure sound, transparent
management practices

IT Holdings Group
Corporate Data

22

Business Risks
ProfileAs the Group pursues the strategies outlined in the medium-term management plan, risks specific to each businesssegment may arise. In software development, for example, projects could turn unprofitable, while in outsourcing,such risks.
Management recognizes that natural disasters or major changes in the operating environment having a similarly
destructive force could also adversely effect the Group and its activities. Measures have been drawn up as athat operations will not be critically disrupted.
Two scenarios that could significantly influence the decisions of investors are presented below. Please note thatthese scenarios are possible—not certain—events that may take place in the future and are based on management’s

To Our Stakeholders

precaution to minimize damage to or loss of business assets in the event a serious situation develops and to ensure

Consolidated Financial
Highlights

system malfunctions could interrupt services. The Group applies various measures to prevent the manifestation ofassumptions as of June 26, 2009.

the event of a pandemic, and will draft measures, such as enhanced hygiene standards at all business locations,
including data centers, and self-imposed restrictions on the transfer of business to infected regions, geared to the
spread and severity of the sickness.

Corporate GovernancePeople—that is, employees—form the cornerstone of the services provided by the Group. The business activities of
the Group could be significantly disrupted if a pandemic, such as H1N1—the new influenza strain that appeared inspring 2009—were to strike in areas where the Group or its alliance partners operate, preventing employees fromworking and partner companies from maintaining production schedules.
Management will carefully track the actions of the Japanese government and the World Health Organization in

Research andDevelopment(2) Pandemics

Business Strategy

Outsourcing services continue around the clock every day of the year at data centers in metropolitan Tokyo andOsaka as well as locations in Tochigi Prefecture, Toyama Prefecture and Aichi Prefecture. Every conceivable safeguard
has been taken to establish a secure environment. The structures were designed to withstand earthquakes andfeature on-site generators that kick in to run equipment in the event of a power failure as well as systems that thwart
unauthorized entry.
However, if situations, particularly large-scale natural disasters, international disputes, terrorism and serious
criminal activity, manifest with repercussions more pervasive than expected, the operating efficiency of data centers
might deteriorate. The inability to provide uninterrupted services could influence the fiscal performance and financial
standing of Group companies involved in outsourcing services and by extension the Company as well.

First Medium-termManagement Plan

(1) Large-scale natural disasters

Business Risks
Business Report (Consolidated)
for Fiscal 2009
Financial Section
IT Holdings Group
Corporate Data

23

Business Report (Consolidated) for Fiscal 2009 (Year ended March 31, 2009)
ProfileSummary
deepening financial crisis—triggered by the U.S. subprime mortgage problem in the summer of 2007—caused
economic conditions to deteriorate rapidly on a global scale and prompted dramatic swings in stock prices andexchange rates. These factors, in turn, led to significant declines in corporate earnings in Japan and exacerbated analready worrisome unemployment situation. How the situation will play out is still an open question, since prevailing
The IT services industry also encountered challenges, characterized by an obvious trend toward reduced
investment by companies hurt by shrinking profits and the economic downturn. In its December 2008 tankan (Shortterm Economic Survey of Enterprises in Japan), the Bank of Japan predicted a year-on-year decline in software
investment for the fiscal year ending March 31, 2009. The March 2009 tankan revealed an even bleaker situation.

the system development phase of large-scale projects that had stretched over several fiscal years and welcomed
successful system startups beginning in November 2008.

First Medium-termManagement Plan

Against this backdrop, the IT Holdings Group performed well overall, buoyed by subsidiaries that were favorably
rewarded for being able to accurately identify the IT investment needs of major clients. Of note, TIS Inc. completed

To Our Stakeholders

circumstances remain too uncertain to permit even a best-guess scenario.

Consolidated Financial
Highlights

During the period under review, the domestic economy entered a steep recession, as repercussions from the

All told, on a consolidated basis, net sales reached ¥338,302 million, operating income came to ¥23,787 million,
and recurring profit settled at ¥23,604 million. Net income was held to ¥9,407 million, owing to the booking of

A breakdown of performance according to business segment is provided below.

Business Strategy¥2,199 million in valuation loss investments in securities.

Outsourcing and Network
The outsourcing and network segment utilizes data centers to provide outsourcing and various services inherent
in system operation and network configuration. In fiscal 2009, outsourcing and network services generated
consolidated net sales of ¥125,721 million, supported by favorable sales to major clients and the inclusion of
results by Nexway, which became a subsidiary in July 2008.

Research andDevelopment

Software Development

Corporate Governance

The software development segment offers comprehensive system integration services, from the planning of
information systems through configuration. In fiscal 2009, software development services delivered consolidated
net sales of ¥175,847 million, largely due to the booking of sales on large-scale projects as well as new projects.

Solution Services
The solution services segment focuses on the sale of software and hardware. In fiscal 2009, solution services
faced an uphill battle for sales, reflecting a lull in replacement demand among high-volume clients as well as
retreating interest in hardware due to deteriorating economic conditions. Consolidated net sales amounted to¥29,409 million.

Business Risks

Other BusinessBusiness Report (Consolidated)
for Fiscal 2009

The other business segment covers leasing operations and ancillary services associated with the provision of
information systems.

Financial Section
IT Holdings Group
Corporate Data

24

Business Report (Consolidated) for Fiscal 2009 (Year ended March 31, 2009)
Profile(Millions of yen)
Principal Group Companies
Fiscal 2009
actualConsolidated

338,30237.2%

Softwaredevelopment

52.0%

Solution
services

8.7%

Other
business

2.2%

Operatingincome7.0%

Recurring profit

111,74130.4%

125,72133,966

175,847

23,787

6,001
6.3%

23,604
2.8%

7,010
1.9%

9,407

6,171
5.8%

5,604
3.2%

2,174

−

5,993

−

1,728

1,023

715
6.7%

1,746
5.0%

344

−
6.8%

9.0%

1.3%

2,720

4,674

−

1,041

5,050

8,021

8.9%

3.8%

6.0%

3,134

22

4,960

5,890
44.2%

31.0%

3.9%

11.2%

5,348

11,372−
11.0%

10,565
55.8%

41.4%

0.1%

2,486

−
6.4%

15,352

18,126

AJS

19,363
27.6%

42.5%

5.5%

8,545

−
5.4%

24,62857,288

Qualica

26,748
57.4%

40.1%

8.8%

11,765

7,325

45,24030,78566,00929,409Agrex
Consolidated

54.4%

59.3%

10.5%

UFIT
Consolidated

96,618
31.9%

59.1%

7.0%

INTEC

706
5.9%

971

619

seeks to maintain stable dividends while taking into account performance trends, financial status, and the need toBusiness Risks

IT Holdings has made the long-term, comprehensive return of profits to shareholders a management priority, andCorporate Governance

Dividends

Research andDevelopment

IT Holdings was established on April 1, 2008, as a joint holding company by TIS and INTEC Holdings
through management integration. Fiscal 2009, the Company’s first business year, was designated as a time tolay a solid foundation for growth, and management diligently addressed several priorities, including drafting theGroup’s first medium-term management plan, which outlines measures to spur growth over the medium andlong term. Concerted efforts were also directed toward deriving synergies among Group companies, promoting
shared back-office operations, and redefining the Group structure.
A system for enhancing communication among Group companies went smoothly into place and is alreadyshowing positive results, namely, joint projects, realized through more opportunities to discuss businessprospects that benefit from the participation of more than one Group company.

Business Strategy

Net income(loss)

Nonconsolidated

First Medium-termManagement Plan

Outsourcing
and network

TIS

To Our Stakeholders

Net sales

IT Holdings

Consolidated Financial
Highlights

Fiscal 2009 Performance Summary:
Breakdown of Net Sales by Principal Group Companies

enrich retained earnings to support business growth.

¥27, as planned, and a ¥5 bonus to commemorate the management integration that created IT Holdings.
For fiscal 2010, management is prepared to pay an annual dividend of ¥32 per share, as the ¥5 bonus in thefiscal 2009 dividend becomes part of the regular dividend. The interim dividend is set for ¥12 per share.

Business Report (Consolidated)
for Fiscal 2009

In fiscal 2009, no interim dividend was paid, because the books for the Company’s first fiscal year had not beenclosed. However, management intends to pay a year-end dividend of ¥32 per share, comprising a regular dividend of

Financial Section
IT Holdings Group
Corporate Data

25

Financial Section
ProfileCorporate GovernanceBusiness Risks

The U.S. dollar amounts in the accompanying consolidated financial statements withrespect to the year ended March 31, 2009 are presented solely for convenience. Our audit
also included the translation of yen amounts into U.S. dollar amounts and, in our opinion,such translation has been made on the basis described in Note 1.

Research andDevelopment

In our opinion, the financial statements referred to above present fairly, in all material
respects, the consolidated financial position of IT Holdings Corporation and consolidated
subsidiaries at March 31, 2009, and the consolidated results of their operations and their
cash flows for the year then ended in conformity with accounting principles generally
accepted in Japan.

Business Strategy

We conducted our audits in accordance with auditing standards generally accepted in Japan.
Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and disclosures in thefinancial statements. An audit also includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our
opinion.

First Medium-termManagement Plan

We have audited the accompanying consolidated balance sheets of IT Holdings Corporationand consolidated subsidiaries as of March 31, 2009, and the related consolidated statements
of income, changes in net assets, and cash flows for the year then ended, all expressed inyen. These financial statements are the responsibility of the Company’s management.
Our responsibility is to express an opinion on these financial statements based on our
audits.

To Our Stakeholders

The Board of Directors
IT Holdings Corporation.

Consolidated Financial
Highlights

Report of Independent Auditors

Business Report (Consolidated)
for Fiscal 2009
Financial Section

June 22, 2009

IT Holdings Group
Corporate Data

26

Financial Section
ProfileIT Holdings Corporation
and Consolidated Subsidiaries

Consolidated Financial
Highlights

Consolidated Balance Sheet
As of March 31, 2009

¥

4,839
10,162
15,00149,265
103,453
152,718

26,904
6,762
19,489(2,678)273,889
68,839198,403(27,264)

50,477

513,867

295,327$ 3,006,485

Business Report (Consolidated)
for Fiscal 2009

542,390
59,03912,577223,203
69,324
906,533

Business Risks¥

53,2795,799
1,236
21,925
6,810
89,049Corporate GovernanceTotal assets

382,002639,949
74,056
15,288(2,599)148,765
112,755
63,151(2,599)1,433,367

Research andDevelopment

Goodwill (Note 4)
OthersTotal intangible assets
Investments and other assets:
Investments in securities (Note 3)
Deferred tax assets (Note 8)
OthersAllowance for doubtful accounts
Total investments and other assets$

Business Strategy

Property and equipment:
Buildings and structures (Note 6)
Machinery and equipment (Note 6)
Leased assets (Note 20)
Land (Notes 5 and 6)
OthersTotal property and equipment
Intangible assets

37,52462,862
7,275
1,502
(255)
14,613
11,076
6,203(255)
140,800

First Medium-termManagement Plan

AssetsCurrent assets:
Cash and deposits (Note 22)
Notes and accounts receivable (Note 6)
Investments in finance leases (Note 20)
Marketable securities (Notes 3 and 22)
Allowance for doubtful accounts
Inventories
Deferred tax assets (Note 8)
Prepaid expenses and other current assets
Allowance for doubtful accounts
Total current assets

To Our Stakeholders

March 31,2009
2009
(Millions of yen)(Thousands of U.S.
dollars) (Note 2)

Financial Section
IT Holdings Group
Corporate Data

27

Financial Section
ProfileMarch 31,¥$78,735
154,592
51,919189,622
34,521
100,079729
225,107835,304

First Medium-termManagement Plan

7,734
15,186
5,100
18,627
3,391
9,831
71
22,112
82,052

To Our Stakeholders

Liabilities and net assets
Current liabilities:
Short-term bank loans (Note 6)
Current portion of long-term bank loans (Note 6)
Current portion of bonds (Note 7)
Notes and accounts payable
Income taxes payable
Accrued bonuses to employees
Other allowances
Others (Note 8)
Total current liabilities

2009(Thousands of U.S.
dollars) (Note 2)

Consolidated Financial
Highlights

2009(Millions of yen)

Non-current liabilities:(1,118)(11,383)(1,842)(139)(3,099)8(18,749)(1,416)(31,548)
83

15,154
146,216¥ 295,327

154,273
1,488,511$3,006,485

Revaluation and translation adjustments:
Net unrealized losses on available-for-salesecurities
Revaluation of land (Note 5)
Foreign currency translation adjustments
Total revaluation and translation adjustments
Subscription rights
Minority interests
Total net assets
Total liabilities and net assets

IT Holdings Group
Corporate Data

See accompanying notes to the consolidated financial statements.

Financial Section

101,802878,766
409,102(23,967)
1,365,703

Business Report (Consolidated)
for Fiscal 2009

10,00086,32140,186(2,354)
134,153

Business Risks

Net assets:
Shareholders’ equity (Notes 18 and 19):
Common stock, without par value:
Additional paid-in capital
Retained earnings (Note 16)
Less treasury stock, at cost
Total shareholders’ equity

Corporate Governance

117,072
417,528
25,952
6,946
10,11082,5982,531
19,933
682,670
1,517,974

Research andDevelopment

11,50041,014
2,549
682
993
8,114
249
1,958
67,059149,111

Business Strategy

Bonds (Note 7)Long-term bank loans (Note 6)
Lease obligations
Deferred tax liabilities (Note 8)
Deferred tax liabilities for land revaluation (Note 5)
Accrued retirement benefits to employees (Note 9)
Accrued retirement benefits to directors
OthersTotal non-current liabilities
Total liabilities

28

Financial Section
ProfileIT Holdings Corporation
and Consolidated Subsidiaries

Consolidated Financial
Highlights

Consolidated Statement of Income
For the year ended March 31, 2009

6,189
(11,513)
9,754
3,026
(8,704)(9,128)(22,385)(13,081)(45,842)

19,284

196,317

4,911
3,380
8,291
10,99350,00034,41084,410111,907

Other income (expenses):
Interest and dividends income
Interest expenses
Amortization of negative goodwill
Real estate rental income
Loss on disposal and sales of fixed assets
Impairment loss
Valuation loss investments in securities
Others, net

Income before income taxes and minority interests
Income taxes (Note 8):
Current
DeferredIncome before minority interests
Minority interests in earnings of consolidated
subsidiaries
Net income¥(1,586)
9,407(16,146)
95,761

Financial Section

See accompanying notes to the consolidated financial statements.

$

Business Report (Consolidated)
for Fiscal 2009

608
(1,131)
958
297
(855)
(897)
(2,199)(1,284)(4,503)Operating income

Business Risks

423,189
242,159

Corporate Governance

41,57023,787

Selling, general and administrative expenses (Note 14)

Research andDevelopment$ 3,443,979
2,778,631
665,348

Business Strategy¥ 338,302
272,945
65,357First Medium-termManagement Plan

Net sales
Cost of sales (Note 14)
Gross profit

2009(Thousands of U.S.
dollars) (Note 2)

To Our Stakeholders

Year ended March 31,
2009(Millions of yen)

IT Holdings Group
Corporate Data

29

Financial Section
ProfileIT Holdings Corporation
and Consolidated Subsidiaries
Consolidated Financial
Highlights

Consolidated Statement of Changes in Net Assets
For the year ended March 31, 2009

Commonstock

Additional
paid-in
capitalRetainedearnings¥10,000¥86,332¥33,082

Revaluation and translation adjustments

Treasury
stock

Total
shareholders’equityNet
unrealized
gains onothersecurities¥(2,827)¥126,587¥1,151

Revaluationof land

Foreigncurrencytranslation
adjustments

Total
revaluationandtranslation
adjustments

Subscription
rightsMinority
interests

Total
net assets¥(19)¥(1,791)¥0¥14,165¥138,961

To Our Stakeholders

Shareholders’ equity(Millions of yen)

Total change for the year
Balance as of March 31,
2009(1,220)9,407(1,220)9,407(1,220)
9,407

(20)
482

(20)
483

(2)

(2)

(2)

(1,081)(1,081)

(20)
493

(11)

(1,081)(2,269)

1,081

(120)

(1,308)

8

989

(311)

0

（11）

7,104

473

7,566

(2,269)

1,081

(120)

(1,308)

8

989

7,255

¥10,000¥86,321¥40,186¥(2,354)¥134,153¥ (1,118)¥(1,842)¥ (139)¥(3,099)¥8¥15,154¥146,216

Business Strategy

Dividends from surplus
Net income
Acquisition of treasury
stock
Sales of treasury stock
Exclusion from equity
method application
Reversal of revaluation ofland
Items other than changes
in shareholders’ equity¥(2,923)First Medium-termManagement Plan

Balance as of March 31,
2008

Research andDevelopment
Corporate GovernanceBusiness Risks
Business Report (Consolidated)
for Fiscal 2009
Financial Section
IT Holdings Group
Corporate Data

30

Financial Section
ProfileConsolidated Financial
Highlights

Commonstock

Additional
paid-in
capitalRetainedearnings

Revaluation and translation adjustments

Treasury
stock

Total
shareholders’equityNet
unrealized
gains onothersecurities

Revaluationof land

Foreigncurrencytranslation
adjustments

Total
revaluationandtranslation
adjustments

Subscription
rightsMinority
interests

Total
net assets$(18,227)$2$144,202$1,414,652(Thousands of dollars))(Note 1)
Balance as of March 31,
2008$101,802$878,873(12,418)
95,761

Sales of treasury stock(107)

Balance as of March 31,
2009$1,288,675$ 11,714$(29,753)$(188)(12,418)
95,761(12,418)
95,761

(204)

(204)

(204)

5,019

4,912

4,912

(20)

(20)

(20)

(11,003)(11,003)(11,003)(23,097)

11,004(1,228)(13,321)81

10,071(3,169)0（107）

72,3204,815

77,028(23,097)

11,004(1,228)(13,321)81

10,07173,859$101,802$878,766$409,102$(23,967)$1,365,703$(11,383)$(18,749)$(1,416)$(31,548)$83$154,273$1,488,511

Research andDevelopment

See accompanying notes to the consolidated financial statements.

Business Strategy

Exclusion from equity
method application
Reversal of revaluation ofland
Items other than changes
in shareholders’ equity
Total change for the year$(28,782)

First Medium-termManagement Plan

Dividends from surplus
Net income
Acquisition of treasurystock$336,782

To Our Stakeholders

Shareholders’ equity

Corporate GovernanceBusiness Risks
Business Report (Consolidated)
for Fiscal 2009
Financial Section
IT Holdings Group
Corporate Data

31

Financial Section
ProfileIT Holdings Corporation
and Consolidated Subsidiaries

Consolidated Financial
Highlights

Consolidated Statement of Cash Flows
For the year ended March 31, 2009

Business Risks
Business Report (Consolidated)
for Fiscal 2009

(24,767)(101,540)(35,519)(12,152)
12,127(32,037)
4,667(15,196)(204,417)

Corporate Governance(2,433)(9,974)(3,489)(1,193)
1,191(3,147)458(1,493)(20,080)

Research andDevelopment$ 196,317
111,942
9,128
4,414
22,69011,69926,902
4,566
6,477(6,189)11,51323,356
12,437(31,254)
24,120428,118
6,268(11,523)(73,567)
349,296

Business Strategy

Cash flows from investing activities:
Deposit of time deposits
Acquisitions of property and equipment
Acquisition of intangible assets
Acquisitions of investments in securities
Proceeds from sale of investments in securities
Payments on newly consolidated subsidiary
Proceeds from newly consolidated subsidiary
Other, net
Net cash used in investing activities¥ 19,284
10,996
897
433
2,229
1,149
2,643
449
636
(608)
1,131
2,294
1,222
(3,070)2,369
42,054616(1,132)(7,227)34,311First Medium-termManagement Plan

Cash flows from operating activities:
Income before income taxes and minority interests
Depreciation
Impairment loss
Loss on disposal of fixed assets
Valuation loss on investments in securities
Amortization of goodwill
Increase in accrued bonuses to employees
Increase in allowance for doubtful accounts
Increase in accrued retirement benefits to employees
Interest and dividends income
Interest expenses
Decrease in notes and accounts receivable
Decrease in inventories
Decrease in notes and accounts payable
Others, net
SubtotalInterest and dividends income received
Interest expenses paid
Income taxes paid
Net cash provided by operating activities

To Our Stakeholders

Year ended March 31,
2009
2009
(Millions of yen)Thousands of U.S.
dollars) (Note 2)

Financial Section
IT Holdings Group
Corporate Data

32

Financial Section
ProfileIT Holdings Corporation
and Consolidated Subsidiaries

Consolidated Financial
Highlights

Consolidated Statement of Cash Flows (continued)(3,990)21,788(17,018)(7,050)(20)
483(1,220)(335)
484(6,878)$(40,614)
221,806(173,246)(71,771)
(204)
4,917
(12,420)(3,415)4,930(70,017)(2,480)7,110
27,995¥ 35,105

72,382284,991$ 357,373

Corporate GovernanceSee accompanying notes to the consolidated financial statements.

Research andDevelopment(243)

Business Strategy

Effect of exchange rate changes on cash and cash
equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year (Note 22)¥

First Medium-termManagement Plan

Cash flows from financing activities:
Decrease in short-term bank loans, net
Proceeds from long-term bank loans
Repayments of long-term bank loans
Redemptions of bonds
Acquisitions of treasury stock
Sales of treasury stock
Dividends paid
Dividends paid to minority interests
Other, net
Net cash used in financing activities

To Our Stakeholders

Year ended March 31,
2009
2009
(Millions of yen)(Thousands of U.S.
dollars) (Note 2)

Business Risks
Business Report (Consolidated)
for Fiscal 2009
Financial Section
IT Holdings Group
Corporate Data

33

Financial Section（a） Basis of Presenting the Consolidated Financial Statements“Group”) maintain their books of account in conformity with the financial accounting
standards of Japan, and its foreign subsidiaries maintain their books of account inconformity with those of their countries of domicile.

consolidated financial statements prepared by the Company as required under the
Financial Instruments and Exchange Act of Japan and, have been prepared in accordanceBusiness Strategy

The accompanying consolidated financial statements have been compiled from theFirst Medium-termManagement Plan

IT Holdings Corporation (the “Company”) and its domestic subsidiaries (together, theTo Our Stakeholders

1. Summary of Significant Accounting Policies

Consolidated Financial
Highlights

Notes to Consolidated Financial Statements

ProfileIT Holdings Corporation
and Consolidated Subsidiaries

with accounting principles generally accepted in Japan, which are different in certain
Reporting Standards.

The Company has 43 subsidiaries (controlled or majority-owned companies) as of March 31,
2009. The consolidated financial statements include the accounts of the Company and all of
The accounts of overseas subsidiaries whose fiscal year-end is December 31 are included in
the consolidated financial statements after making appropriate adjustments for any

Business Risks

its subsidiaries (together referred to as the “Group”).

Corporate Governance（b） Principles of consolidation

Research andDevelopment

respects as to the application and disclosure requirements of International Financial

material transactions during the period between January 1 and March 31.

transactions, account balances and unrealized profits among the Group have been
eliminated.

the date of establishment of control.

Financial Section

All assets and liabilities of consolidated subsidiaries are stated at fair market value as ofBusiness Report (Consolidated)
for Fiscal 2009

For the purposes of preparing the consolidated financial statements, all intercompany

Investments in two non-consolidated subsidiaries and six affiliated companies are
IT Holdings Group
Corporate Dataaccounted for using the equity method.

34

Financial Section
ProfileForeign currency translation

Monetary assets and liabilities denominated in foreign currencies are translated into yen
hedged by forward foreign exchange contracts.
All revenues and expenses associated with foreign currencies are translated at the rates oflosses are credited or charged to income.

First Medium-termManagement Planexchange prevailing when such transactions were made. The resulting exchange gains and

To Our Stakeholders

at the exchange rates prevailing at the balance sheet dates, except for assets and liabilities

Consolidated Financial
Highlights(c)

Assets and liabilities in foreign currencies of the foreign consolidated subsidiaries aretranslation differences are included in foreign currency translation adjustments or inminority interests of net assets.
Cash equivalents

The Group considers all highly liquid investments with a maturity of three months or less,Research andDevelopment(d)Business Strategy

translated into yen at the rates of exchange in effect on the balance sheet date. Resulting

when purchased, to be cash equivalents on the consolidated statements of cash flows.
Securities

Securities held by the Group are classified as either held-to-maturity or available-for-salesecurities with a determinable market value are stated at fair value with any changes in
unrealized holding gain or loss, net of the applicable income taxes, are included directly
at cost. Cost of securities sold is determined by the moving-average method.

Business Report (Consolidated)
for Fiscal 2009in net assets. Available-for-sale securities without a determinable market value are stated

Business Risks

securities. Held-to-maturity securities are carried at amortized cost. Available-for-saleCorporate Governance(e)Financial Section
IT Holdings Group
Corporate Data

35

Financial Section
ProfileInventories

Merchandise and finished goods are stated at cost, determined mainly by the first-in,
first-out method. Work in process is stated at cost, determined by the specific-cost method.

Consolidated Financial
Highlights(f)

Raw materials and supplies are stated at cost, mainly determined by last purchase cost
However, the amounts of inventories stated in the balance sheet were computed by using
the method that book values are reduced to reflect declines in profitability.
Property and equipment

Buildings and structures are depreciated using mainly the straight-line method andFirst Medium-termManagement Plan(g)

To Our Stakeholders

method.

machinery and equipment are depreciated using mainly the declining-balance method, at(h)Intangible assets

lives, except for computer software.
Expenses related to development activities of computer software, which are included ini)Computer software for sale
Capitalized costs are amortized at the higher of the amount based on the ratio of the

Corporate Governanceintangible assets, are amortized as follows:

Research andDevelopment

Intangible assets are amortized using the straight-line method over their estimated usefulBusiness Strategy

rates based on the estimated useful lives of the assets.

current year sales quantity divided by total estimated sales quantity over the estimatedremaining sellable period.

Capitalized costs are amortized using the straight-line method over the estimateduseful life of the software, which is in the range of three to five years.

Business Report (Consolidated)
for Fiscal 2009ii） Computer software for internal use

Business Risks

sales period (three years) or the amount calculated by the straight-line method over the(i) Leased assets (as lessee)over the useful life of assets, which equals the lease term, by the straight-line method.
operating leases.

IT Holdings Group
Corporate Data

Finance lease transactions which were contracted before April 1, 2008, are accounted for as

Financial Section

Leased assets on finance lease transactions that do not transfer ownership are depreciated36

Financial Section
ProfileAccounting for leases (as lessee and lessor)

Finance lease transactions other than those in which ownership is fully transferred to the(k)Impairment losses of long-lived assets

impairment loss, in case of decrease in profitability for development, expected decrease insales volume, or no future plans to use the assets.

descriptions. Real estate for lease and assets for specified projects are grouped separately.
(l)Allowance for doubtful accounts

in the accounts receivable balance.

other currently available evidence.
(m)

Accrued bonuses to employees

end of the fiscal year.
Accrued retirement benefits to employees

Accrued retirement benefits to employees represent the estimated present value of
projected benefit obligations in excess of the fair value of the plan assets. Actuarial
average remaining service period of the employees from the next year in which they arise.
Prior service costs are mainly charged to income when incurred.

Financial Section

differences are amortized by the straight-line method over 10 to 18 years within theBusiness Report (Consolidated)
for Fiscal 2009(n)Business Risks

Accrued bonuses to employees are recognized at the estimated amount to be paid at the

Corporate Governance

The allowance is determined based on known troubled accounts, historical experience, andResearch andDevelopment

The allowance for doubtful accounts reflects the best estimate of probable losses inherent

Business Strategy

Long-lived assets of the Group are categorized by business segment, areas or service

First Medium-termManagement Plan

A decrease in the book value of long-lived assets is presented under other expenses as an

To Our Stakeholders

lessee are accounted for in a similar manner to ordinary sales and purchase transactions.

Consolidated Financial
Highlights(j)

IT Holdings Group
Corporate Data

37

Financial Section
Profile(o)

Accrued retirement benefits to directors

directors’ retirement benefits and therefore, record the estimated amount to be paid if all
directors had retired at the balance sheet date, based on internal regulations.
Income taxes

Deferred income taxes reflect the tax effect of temporary differences between asset andTo Our Stakeholders(p)Consolidated Financial
Highlights

Certain domestic consolidated subsidiaries set aside a reserve to cover payment ofliability amounts that are recognized for financial purposes and the amounts that areenacted tax rates and laws, which will be in effect when the differences are expected toreverse.
Distribution of retained earnings

Dividends and other distributions of retained earnings are resolved by the General

Business Strategy(q)First Medium-termManagement Plan

recognized for income tax purposes. These deferred taxes are measured by applying theShareholders’ Meeting held subsequent to the end of the fiscal year. Distributions are(r)

Hedge accounting

are not re-measured at market value, but the differential to be paid or received under theswap agreements are accrued and included in interest expense or income. In addition, theCorporate GovernanceInterest rate swaps that qualify for hedge accounting and meet specific matching criteria

Research andDevelopment

reflected in the consolidated financial statements for the following fiscal year.

Group uses exceptional treatments permitted for interest rate swaps.

cash flows of debts to be hedged and those of the swaps as hedging instruments, except for(s)

Amortization of goodwill and negative goodwill

Business Report (Consolidated)
for Fiscal 2009

the interest rate swaps accounted for by exceptional treatment.

Business Risks

The Group assesses the effectiveness of interest rate swaps by comparison between total

Goodwill and negative goodwill are amortized on a straight-line basis over an appropriate
20 years), from the next year in which they arise. If the amount is not significant, goodwill
or negative goodwill is charged or credited to income when incurred.
(t)

Financial Section

period, whose length is determined by examining the conditions of each subsidiary (within

Accounting for consumption taxes
IT Holdings Group
Corporate Data

Consumption taxes are not included in revenues and expenses.

38

Financial Section
ProfileAmounts in U.S. dollars are included solely for the convenience of readers outside Japan. A
translation. The inclusion of such amounts is not intended to imply that Japanese yen
have been or could be readily converted, realized or settled in U.S. dollars at that or at anyother rate.

First Medium-termManagement Plan

3. Marketable Securities and Investments in Securities(a)

To Our Stakeholders

rate of ¥98.23 = US$1, the rate of exchange on March 31, 2009, has been used in

Consolidated Financial
Highlights

2. U.S. Dollar Amounts

The amount on the consolidated balance sheet, fair market value and difference for

Type

Amount on
consolidatedbalance
sheet

Fair market
value

Difference

Government
bonds

300

¥

300

¥

0

1,001
¥1,301

1,001¥1,301(0)¥ (0)Amount on
consolidatedbalance
sheet

Fair market
value

Difference(Thousands of U.S. dollars)
Government
bonds
Governmentbonds$ 3,055$ 3,055$ 0

10,187$13,242

10,186$13,241(1)$(1)

Business Report (Consolidated)
for Fiscal 2009

With fair market value
exceeding the amount on
consolidated balance sheet
With fair market value notexceeding the amount on
consolidated balance sheet
Total

Business Risks

Type

¥

Corporate Governance

Government
bonds

Research andDevelopment(Millions of yen)With fair market value
exceeding the amount on
consolidated balance sheet
With fair market value notexceeding the amount on
consolidated balance sheet
Total

Business Strategy

held-to-maturity debt securities with fair value as of March 31, 2009, were as follows:

Financial Section
IT Holdings Group
Corporate Data

39

Financial Section
ProfileMarket exceeding cost:
SharesCorporate bonds

5,748
305
401
6,454
¥8,095

4,664
304
306
5,274
¥8,492(1,084)(1)(95)(1,180)¥ 397

Acquisition cost

March 31, 2009
Book value(Fair market
value)

Unrealized
gains (losses)(Thousands of U.S. dollars)

Total$16,056
16,05658,517
3,103
4,088
65,708$82,40947,486
3,089
3,121
53,696$86,453(11,031)(14)(967)(12,012)$ 4,044

Available-for-sale securities sold during this fiscal year

(Millions of(Thousands ofyen)

U.S. dollars)¥2,401$24,441

Realized gain

8

82

Realized loss

(46)

(465)

Proceeds from sales ofavailable-for-sale securities

IT Holdings Group
Corporate Data

2009

Financial Section

2009

Business Report (Consolidated)
for Fiscal 2009(c)

$32,757
32,757

Business Risks

Market not exceeding cost:
SharesBonds
Other$16,701
16,701

Corporate GovernanceMarket exceeding cost:
SharesCorporate bonds

Research andDevelopment

Description¥1,577
1,577

Business Strategy

Total¥3,2183,218

First Medium-termManagement Plan

Market not exceeding cost:
SharesBonds
Other¥1,641
1,641

To Our Stakeholders

securities with fair value as of March 31, 2009, were as follows:
March 31, 2009
Book value
Unrealized(Fair market
gains (losses)
value)
Description
Acquisition cost
(Millions of yen)

Consolidated Financial
Highlights(b) Acquisition cost, book value and unrealized gains or losses of available-for-sale40

Financial Section
ProfileBook values of major securities which were not subject to revaluation as of March 31,
2009, were as follows:

2009

2009

(Millions of(Thousands ofyen)

U.S. dollars)$164,758

Corporate bonds

250

2,545

Investment in partnerships

950

9,668

MMF and other

131

1,335

¥17,515$178,306

Business Strategy¥16,184First Medium-termManagement Plan

Unlisted stocks

To Our Stakeholders

March 31,

Consolidated Financial
Highlights(d)(e) Schedule for redemption of available-for-sale securities with maturity andWithin a year

One to five

Five to 10

years

years

Government bonds
Corporate bonds¥1,301

¥

–

¥

–
250

¥1,401

¥200

¥ 250

One to five

Five to 10

years

years

Within a year

(Thousands of U.S. dollars)$13,242$–$

Corporate bonds

1,018

2,036

2,545

$14,260$2,036$ 2,545–

Financial Section

Government bonds

Business Report (Consolidated)
for Fiscal 2009

200

Business Risks

100

Corporate Governance(Millions of yen)

Research andDevelopment

held-to-maturity debt securities as of March 31, 2009

IT Holdings Group
Corporate Data

41

Financial Section
ProfileGoodwill in intangible assets indicates net amounts, which offset goodwill and negative

To Our Stakeholders

goodwill. The gross amounts as of March 31, 2009, were as follows:

March 31,
2009

(Thousands of U.S.
dollars)$51,447(2,182)$49,265

5. Revaluation of Land

Business Strategy¥5,054(215)¥4,839First Medium-termManagement Plan

2009

(Millions of yen)
Goodwill
Negative goodwill
Net amount

Consolidated Financial
Highlights

4. Goodwill and Negative Goodwill

Pursuant to the “Law Concerning the Revaluation of Land” (the “Law”), land used for thethe difference between the book value and the revalued amount has been presented under

Research andDevelopment

Company’s business operations was revalued on March 31, 2002. The income tax effect ofliabilities as “deferred tax liabilities for land revaluation” and the remaining balancebalance sheet.
Revaluation of land was determined based on the official prices published by thethe “Enforcement Ordinance Concerning Land Revaluation,” with certain necessary
adjustments.

($5,168 thousand) as of March 31, 2009.

Business Report (Consolidated)
for Fiscal 2009

The carrying value of the land after revaluation exceeded its fair value by ¥508 million

Business Risks

Commissioner of the National Tax Authorities in accordance with Paragraph 4, Article 2 ofCorporate Governancepresented under net assets as “revaluation of land” in the accompanying consolidated

Financial Section
IT Holdings Group
Corporate Data

42

Financial Section
ProfileShort-term bank loans and long-term banks loans as of March 31, 2009, consisted of the

March 31,2009

(Millions of yen)(Thousands of U.S.
dollars)

Short-term bank loans:First Medium-termManagement Plan2009

To Our Stakeholders

following:

Consolidated Financial
Highlights

6. Short-term Bank Loans and Long-Term Bank Loans

Short-term bank loans, with an average¥ 7,734$ 78,735

Business Strategy¥56,200$572,120(15,186)(154,592)

Research andDevelopment

interest rate of 1.06%¥41,014$417,528

Long-term bank loans:
Loans principally from banks and otherfinancial institutions, with an averageinterest rate of 1.53%
Less: current portion of long-term debt

31, 2009, were as follows:Year ending March 31,

yen)

U.S. dollars)

2010¥15,186$154,592

2011

12,157

123,764

2012

8,851

90,1082013

10,102

102,841

2014

8,502

86,554

Business Report (Consolidated)
for Fiscal 2009

(Thousands ofBusiness Risks(Millions ofCorporate Governance

The aggregate annual maturities of long-term bank loans due within five years as of March

Financial Section
IT Holdings Group
Corporate Data

43

Financial Section
Profileamounting to ¥70 million ($713 thousand) and ¥2,252 million ($22,927 thousand),
respectively, as of March 31, 2009, were as follows:

2009

2009

(Millions of yen)(Thousands of U.S.

Accounts receivable

¥

15

$

153

15,920162,074

47

477

3,339

33,990¥19,321$196,694

First Medium-termManagement Plandollars)

To Our Stakeholders

March 31,

Consolidated Financial
Highlights

The assets pledged as collateral for short-term bank loans and long-term bank loans,

Buildings and structures
Land

Research andDevelopment

7. Bonds

Business Strategy

Machinery and equipment

Bonds as of March 31, 2009, consisted of the following:

2009

2009

(Millions of yen)(Thousands of U.S.

Corporate GovernanceMarch 31,

dollars)
1.17% Unsecured bonds, due 2009

1,000

10,180

1.50% Unsecured bonds, due 2010

4,000

40,721

1.26% Unsecured bonds, due 2010

4,000

40,721

0.79% Unsecured bonds, due 2009

100

1,018

16,600168,991(5,100)(51,919)¥11,500$117,072

Less: current portion of long-term debt

Financial Section$ 76,351

Business Report (Consolidated)
for Fiscal 2009

¥ 7,500

Business Risks

0.97% Unsecured bonds, due 2012

IT Holdings Group
Corporate Data

44

Financial Section
ProfileConsolidated Financial
Highlights

The aggregate future maturities of bonds for the next five years, as of March 31, 2009,were as follows:

U.S. dollars)

2010¥5,100$51,919

2011

4,000

40,721

2012

7,500

76,351

2013

-

-

2014

-

-

First Medium-termManagement Plan

(Millions of yen)

Year ending March 31,

To Our Stakeholders(Thousands ofBusiness Strategy

8. Income Taxes
Income taxes applicable to the Group comprised corporation tax, inhabitants’ taxes, and2009. Income taxes of the foreign subsidiaries are based generally on the tax rates

Research andDevelopment

enterprise tax which, in the aggregate, resulted in a statutory tax rate of 40.7 percent for
applicable in their countries.
The reconciliation between the statutory tax rate and the Group’s effective tax rate asof March 31, 2009, were as follows:

Statutory tax rate

40.7%

(such as entertainment expenses)

1.3

Non-taxable income (such as dividend
Inhabitants’ taxes per capita

0.8

Unrealized gains and losses

0.4

Amortization of goodwill (negative goodwill)

0.4

Others, net(0.0)

Effective tax rates

43.0%

IT Holdings Group
Corporate Data

(0.6)

Financial Section

income)Business Report (Consolidated)
for Fiscal 2009

Non-deductible expenses

Business Risks

2009

Corporate Governance

(a)

45

Financial Section
Profile(b) The significant components of deferred tax assets and liabilities as of March 31, 2009,
March 31,

¥

373

$

3,795
7,192

4,027
545
572
7,049
3,573
1,995
2,934
1,392
2,974
26,140(6,129)20,011

40,992
5,548
5,826
71,76536,38020,307
29,865
14,16730,275
266,112(62,397)
203,715

306
1,419

3,115
14,448

1,125
30
2,880
¥17,131

11,457305
29,325$174,390

under the following line items:
March 31,

(Thousands of U.S.

yen)dollars)¥11,076$112,755

6,762

68,839Current liabilities – Other

(26)

(259)

Non-current liabilities – Deferred tax liabilities(682)(6,945)¥17,130$174,390

Current assets – Deferred tax assets
Investments and other assets – Deferred tax
assetsNet deferred tax assets

IT Holdings Group
Corporate Data

(Millions ofFinancial Section

2009
Business Report (Consolidated)
for Fiscal 2009

2009

Business Risks

Deferred income taxes as of March 31, 2009, are reflected in the consolidated balance sheet

Corporate Governance706

Research andDevelopment

Net deferred tax assets(Thousands of U.S.
dollars)

Business Strategy

Deferred tax liabilities:
Gain on contribution of securities to pension
fund
Prepaid pension expenses
Unrealized gain on available-for-salesecurities
Others, net(Millions of yen)First Medium-termManagement Plan

Less – Valuation allowance2009

To Our Stakeholders

Deferred tax assets:
Accrued enterprise tax
Non-deductible portion of allowance for
doubtful accounts
Non-deductible portion of accrued bonuses to
employees
Non-deductible portion of depreciation
Impairment losses
Tax loss carried forward
Accrued retirement benefits to employees
Write down of investments in shares
Write down of inventories
Unrealized gains
Others, net

2009

Consolidated Financial
Highlights

were as follows:46

Financial Section
ProfileConsolidated Financial
Highlights

9. Retirement Benefits(a)Outline of retirement benefit plans

corporation pension plan based on the defined benefit pension law, a defined contribution
pension plan, a tax-qualified pension plan, and an unfunded defined benefit plan with

To Our Stakeholders

The Company and certain of its consolidated subsidiaries have pension plans, including a

lump-sum payment.

subsidiaries have joined, is excluded from the calculation of the projected benefit

First Medium-termManagement Plan

Enterprise retirement allowance mutual aid scheme, which certain small consolidated
obligation.

involving other companies. As it is extremely difficult to make a reasonable estimate ofBusiness Strategy

In addition, certain consolidated subsidiaries joined a welfare pension fund plan
the amount of pension assets in the welfare pension fund attributable to contributions,obligation.
(b)

Research andDevelopment

the welfare pension fund is excluded from the calculation of the projected benefit

The following tables set forth the funded and accrued status of the plans, and theCompany’s and the subsidiaries’ retirement benefit plans:
March 31,2009

(Millions of yen)(Thousands of U.S.
dollars)$(356,459)

Plan assets

18,642

189,783

Unfunded retirement benefits(16,373)(166,676)

Unrecognized net actuarial differences

11,987122,028

Unrecognized net prior service costs(909)(9,257)

Net amount(5,295)(53,905)

Prepaid pension costs(2,819)(28,693)¥ (8,114)$ (82,598)

Financial Section¥(35,015)

Business Report (Consolidated)
for Fiscal 2009

Projected benefit obligation

Business Risks

2009

Corporate Governanceamounts recognized in the consolidated balance sheet as of March 31, 2009, for the

Accrued retirement benefits to
IT Holdings Group
Corporate Data

employees

47

Financial Section
Profilewere as follows:

2009(Millions of yen)(Thousands of U.S.
dollars)$ 21,320

Interest costs

765

7,783

Expected investment return(575)(5,858)

805

8,193

(170)

(1,729)

723

7,365

366

3,728

5

50

¥ 4,013$ 40,852

Recognition of actuarial
differences
Recognition of prior service
costs

Business Strategy¥ 2,094First Medium-termManagement Plan

Service costs

To Our Stakeholders

2009

Consolidated Financial
Highlights(c) The components of retirement benefit expenses for the year ended March 31, 2009,

Contribution to definedContribution to welfare
pension fund plan

Research andDevelopment

contribution pension plan

Contribution to smaller
allowance mutual aid
Net periodic pension expense

Discount rates

1.8 % to 2.5%

Rate of expected return on plan
assets

2.5% to 3.5 %benefits to periods of service

Straight-line basis

Financial Section

Method of attributing the projected

Business Report (Consolidated)
for Fiscal 2009

2009

Business Risks(d) Major assumptions used in calculating retirement benefits

Corporate Governanceenterprise retirement

IT Holdings Group
Corporate Data

48

Financial Section
ProfileAmounts related to unconsolidated subsidiaries and affiliates for the year ended March 31,

To Our Stakeholders

2009, were as follows:

March 31,2009

(Millions of yen)(Thousands of U.S.

¥1,097$11,167

Investments in securities - other

178

1,812

Investments

172

1,750

Business Strategy

Investments in securities - stocks

First Medium-termManagement Plan

2009

dollars)

Research andDevelopment

11. Depreciation of Property and Equipment

thousand) for the year ended March 31, 2009.
12. Contingent liability for guarantee

than consolidated subsidiaries.

2009

2009

(Millions of yen)(Thousands of U.S.
dollars)
$896

¥88

$896

Financial Section¥88

Business Report (Consolidated)
for Fiscal 2009

March 31,

Business Risks

The Company guarantees the following borrowing money from other financial institutions

Corporate GovernanceAccumulated depreciation of property and equipment totaled ¥63,432 million ($645,753

Imizu Cable Network, Co., Ltd.

Consolidated Financial
Highlights

10. Items related to Unconsolidated Subsidiaries and Affiliates

IT Holdings Group
Corporate Data

49

Financial Section
ProfileAccumulated advanced depreciation including national subsidy deducted from acquired
structures for the year ended March 31, 2009.

Main component of sales and selling, general and administrative expenses for the year
ended March 31, 2009 was as follows:Business Strategy

March 31,
2009

2009

(Millions of yen)(Thousands of U.S.

Accrual of bonuses to employees

1,114

11,340Accrual of allowance for doubtful

547

5,568

354

3,603

67

682

accounts
Retirement benefits to employees
Accrual of retirement benefits todirectors

Research and development costs, which are included in cost of sales and selling, general
March 31, 2009.

Business Report (Consolidated)
for Fiscal 2009

and administrative expenses, totaled ¥947 million ($9,636 thousand) for the year ended

Business Risks$135,508

Corporate Governance¥13,311

Research andDevelopment

dollars)
Employees’ salaryFirst Medium-termManagement Plan

14. Selling, General and Administrative Expenses

To Our Stakeholders

amount of property and equipment totaled ¥76 million ($773 thousand) of buildings andConsolidated Financial
Highlights

13. Advanced Depreciation

Financial Section
IT Holdings Group
Corporate Data

50

Financial Section
ProfileThe composition of loss on sales of fixed assets for the year ended March 31, 2009 was as

To Our Stakeholders

follows:

Consolidated Financial
Highlights

15. Loss on sales of fixed assets

March 31,2009

(Millions of yen)(Thousands of U.S.
dollars)

¥ 25

$

258

Machinery and equipment

31

310

Land

351

3,569

Other

15

153

¥422

$4,291Business Strategy

Buildings and structures

First Medium-termManagement Plan

2009

Research andDevelopment

16. Loss on disposal of fixed assets

as follows:

Corporate GovernanceThe composition of loss on disposal of fixed assets for the year ended March 31, 2009 wasMarch 31,2009

(Millions of yen)(Thousands of U.S.
dollars)$2,034

Machinery and equipment

66

668

Software49

501

Long-term prepaid expenses

80

816

Other

39

394

¥434

$4,413Financial Section¥200

Business Report (Consolidated)
for Fiscal 2009

Buildings and structures

Business Risks

2009

IT Holdings Group
Corporate Data

51

Financial Section
ProfileImpairment loss of long-lived assets for the year ended March 31, 2009 was as follows:

Category

Company

TIS condominium

Land, buildings, andcondominium(Yachiyo-shi, Chiba)

equipment

TIS dormitory

Land, buildings, and(Chiba-shi, Chiba)

equipment

Dormitory

TIS dormitory(Yokohama-shi,
Kanagawa)

Buildings, andproperty(Minato-ku, Tokyo)

and equipment

Business

TIS Osaka Head Officeproperty(Suita-shi, Osaka)

Business

Qualica Head Officeproperty(Koto-ku, Tokyo)

Medical systempropertyAJS Head Office(Sumida-ku, Tokyo)
TIS Solution Business
Head Office(Koto-ku, Tokyo)

Unutilized line

Leased assets

33

Software43

Leased assets

4

Telephone subscription
rightTelephone subscription(Sumida-ku, Tokyo)

rightUfit Head OfficeTelephone subscription(Naka-ku, Nagoya-shi)

rightLaboratory Head OfficeTelephone subscription
right
Total

2

6
6

2
¥896

IT Holdings Group
Corporate Data

(Koto-ku, Tokyo)

239

and equipment

AJS Head Office

Systems Engineering
Unutilized line

structures, machinery,

Financial Section

Unutilized line

Buildings andBusiness Report (Consolidated)
for Fiscal 2009

Unutilized line

34

Business Risks

Business

182

Corporate Governance

Machinery, software,(Minato-ku, Tokyo)

224

Research andDevelopment

TIS Tokyo Head Office

TIS Tokyo Head Office¥121

equipment

Business

In-house system(Millions of yen)

Business Strategy

Dormitory

Amounts

First Medium-termManagement Plan

Location

To Our Stakeholders

Purpose

Consolidated Financial
Highlights

17. Impairment Loss

52

Financial Section
ProfileDistributions can be made at any time by resolution of the shareholders or by the Board ofreserve is available for distributions.

(a) Types of Stock and Number of Shares
Increase in

Decrease in

Number of

Shares at March

Number of

Number of

Shares at March

31, 2008

Shares during

Shares during31, 2009

the Fiscal Yearthe Fiscal Year86,372,339－－

86,372,339

86,372,339－－

86,372,339

1,608,662

10,456282,105

1,337,013

1,608,662

10,456282,105

1,337,013

Business Strategy

Number of

Number of sharesissuedCommon stock
Treasury stock
Common stock(Note 1, 2)

Subscription warrants to new shares totaled ¥8 million ($81 thousand) at March 31,

Business Report (Consolidated)
for Fiscal 2009

2009.

Business Risks

Note 1: The increase in number of shares comes from 10,456 shares added through thebuyback of shares less than one tangen unit.
2. The decrease in number of shares (total 282,105 shares) comes from 280,836 shares
dropped through sale of shares held by a consolidated subsidiary, and 1,269 shares
dropped through requests to add onto shares less than one tangen unit.

Corporate Governance

Total

Research andDevelopment

Total

First Medium-termManagement Plan

（Number of shares）

To Our Stakeholders

Directors when certain conditions are met, but neither the capital reserve nor the legal

Consolidated Financial
Highlights

18. Shareholders’ Equity

Financial Section
IT Holdings Group
Corporate Data

53

Financial Section
ProfileConsolidated Financial
Highlights(b) Dividends(1) Dividend paid
Dividendper Share

RecordDate

Effective
Date

Generalshareholders’meeting on
June 20, 2008

Commonstock¥ 770
million¥ 17

March 31,2008

June 23,
2008

Director’s
meeting on
June 25, 2008

Commonstock¥ 449
million¥9

March 31,2008

June 26,
2008(2) The effective date for dividends with a record date of March 31, 2009, shall be a dateafter the close of books for said consolidated period.
Total

Source ofDividend

RecordEffective

Stock

Dividends

Dividends

per share

Date

Date

Common¥ 2,763

EarnedMarch 31,

June 26,

stock

millionsurplus

2009

2009

¥ 32

Business Risks
Business Report (Consolidated)
for Fiscal 2009

Generalshareholders’meeting
at June 25,
2009Type ofCorporate Governance

Resolution

Research andDevelopment

Note: The Company was established on April 1, 2008, as a joint holding company throughtransfer of shares. Total dividends indicate figures based on the resolution at thegeneral shareholders meeting of TIS Inc. on June 20, 2008, and at the generalshareholders meeting of INTEC Holdings, Ltd. on June 25, 2008.

Business Strategy

Total
Dividends

First Medium-termManagement Plan

Type ofstock

To Our Stakeholders

Resolution

Financial Section
IT Holdings Group
Corporate Data

54

Financial Section
ProfileYear Ended March 31,

2009

(Yen)

(U.S. dollars)

Net income:¥110.74$1.13

Diluted110.72

1.13

Net assets

1,541.17

15.69

32.00

0.33

Cash dividends applicable to the year

First Medium-termManagement PlanBasic

To Our Stakeholders

2009

Consolidated Financial
Highlights

19. Amounts per Share

Basic net income per share is computed based on the net income available for distribution
stock outstanding during each year. Diluted net income per share is computed based on the
net income available for distribution to shareholders and the weighted-average number ofBusiness Strategy

to shareholders of common stock and the weighted-average number of shares of commonshares of common stock outstanding during each year after giving effect to the dilutive
and the exercise of stock options.

number of shares of common stock outstanding at the year end.
Cash dividends per share represent the cash dividends resolved by the general

Corporate GovernanceAmounts per share of net assets are computed based on shareholders’ equity and the

Research andDevelopment

potential of shares of common stock to be issued upon the conversion of convertible bonds

shareholders’ meeting as applicable to that year, together with the interim cash dividends(a) As Lessee

Business Report (Consolidated)
for Fiscal 2009

20. Leases

Business Risks

paid.

As described in Note 3(h) finance lease transactions that were contracted before April 1,
concerning such finance leases if capitalized:

Financial Section

2008, were accounted for as operating leases. The following summarizes information

IT Holdings Group
Corporate Data

55

Financial Section
Profile(i) Equivalents of acquisition cost, accumulated depreciation and net balance as ofConsolidated Financial
Highlights

March 31, 2009
March 31, 2009
Accumulated
Accumulated

impairment

cost

depreciation

loss

Balance(Millions of yen)

To Our Stakeholders

Acquisition

Machinery and¥ 3,897¥2,505¥ –¥1,392Equipment

5,905

3,286

36

2,583

Other

1,865

1,121

–

744

¥11,667¥6,912¥36¥4,719Business Strategy

March 31, 2009
Accumulated
impairment

cost

depreciation

loss

Balance–$14,174

Corporate GovernanceAccumulated

Research andDevelopment

Acquisition

First Medium-termManagement Plan

vehicles(Thousands of U.S. dollars)
Machinery andvehicles$ 39,670$25,496$

Equipment

60,11833,459362

26,297

Other

18,987

11,413–

7,574$118,775$70,368$362$48,045

interest portion, categorized by contractual maturity
2009

2009

(Millions of yen)(Thousands of U.S.
dollars)$40,314Over one year

5,242

53,362¥9,202$93,676

¥

$

Total
Account balance of impairment
loss on leased assets

29

294

IT Holdings Group
Corporate Data

¥3,960Financial Section

Within one year

Business Report (Consolidated)
for Fiscal 2009

(iii)

Business Risks(ii) Amount of future lease payments outstanding as of March 31, 2009, including the

56

Financial Section
Profileexpenses and impairment loss for the year ended March 31, 2009

2009

2009

(Millions of yen)(Thousands of U.S.

To Our Stakeholders

March 31,

Consolidated Financial
Highlights(iii) Lease expenses, reversal of impairment loss on lease assets, depreciation, interest

dollars)¥3,815$38,833

7

75

3,513

35,765Interest expenses

251

2,554

Impairment loss

33

337

First Medium-termManagement Plan

Lease expense
Reversal of impairment
loss on lease assets

Business Strategy

Depreciationlease term and the residual value is zero.

Research andDevelopment

Depreciation is calculated using the straight-line method, the useful life is equal to the(iv) The amounts of future lease payments outstanding on operating leases as of March
Corporate Governance

31, 2009, are summarized as follows:
March 31,2009

(Millions of yen)(Thousands of U.S.
dollars)¥ 83

Over one year

89

912

¥172

$1,752

Total

$

840
Business Report (Consolidated)
for Fiscal 2009

Within one year

Business Risks

2009

Financial Section
IT Holdings Group
Corporate Data

57

Financial Section
ProfileAs Lessor(i)

Investments in finance leases as of March 31, 2009, consisted of the following:
March 31,2009

(Millions of yen)
Lease receivables(Thousands of
U.S.dollars)$82,266(806)(8,210)¥7,275$74,056

Estimated residual value
Interest portion
Investments in finance leases

March 31,
2009

2009

dollars)$28,032

One to two years

1,999

20,354

Two to three years

1,528

15,553Three to four years

1,080

10,991

Four to five years

413

4,210

Over five years

163

1,662

¥7,937$80,802

March 31, 2009, are categorized by contractual maturity.
March 31,2009

(Millions of yen)(Thousands of U.S.
dollars)

¥32

$332

Over one year

13

130

¥45

$462

Total

IT Holdings Group
Corporate Data

Within one year

Financial Section

2009

Business Report (Consolidated)
for Fiscal 2009(iii) The amount of future lease payments receivable on operating leases outstanding as ofBusiness Risks¥2,754

Corporate GovernanceWithin one year

Research andDevelopment(Thousands of U.S.

(Millions of yen)

Total

Business Strategy(ii) Expected collections of lease receivables as of March 31, 2009, are as follows:First Medium-termManagement Plan

¥8,081

To Our Stakeholders

2009

Consolidated Financial
Highlights

(b)

58

Financial Section
ProfileCosts related to stock option, which are included in selling, general and administrative

The following table summarizes activity regarding option that the Company had granted
to its directors, officers, and employees as of March 31, 2009.

Title andnumber ofrecipients

The Company:

The Company:

The Company:

Directors 2

Directors 2

Officer 1

Subsidiaries:

Directors 7
Officers 16
Employees 535

Directors 2
Officers 3
Employees 67

355,200 shares

351,800 shares

151,680 shares¥4,750¥4,014¥1,489April 1, 2008
In principle, theperiod beginning
April 1, 2008,
through
December 31, 2009
April 1, 2008
through
December 31, 2009

April 1, 2008
In principle, theperiod beginning
April 1, 2008,
through
December 31, 2010
April 1, 2008
through
December 31, 2010

April 1, 2008
In principle, theperiod beginning
April 1, 2008,
through
March 31, 2011
April 1, 2008
through
March 31, 2011

Business Risks

Subsidiaries:

Directors 7
Officers 16
Employees 492

Corporate Governance

Subsidiaries:

Research andDevelopment

Exercise period

4thBusiness Strategy

Number ofstock options(common stock)
Stock issue
price
Date of receipt
Requisite
service period

3rdFirst Medium-termManagement Plan

2nd

To Our Stakeholders

expenses, totaled ¥7 million ($71 thousand) for the year ended March 31, 2009.

Consolidated Financial
Highlights

21. Stock Options

Business Report (Consolidated)
for Fiscal 2009
Financial Section
IT Holdings Group
Corporate Data

59

Financial Section
Profile22. Statement of Cash FlowsThe components of cash and cash equivalents at March 31, 2009, were as follows:

2009

2009

(Millions of yen)(Thousands of U.S.

To Our Stakeholders

March 31,

Consolidated Financial
Highlights(a) Cash and cash equivalents

dollars)$382,002

Marketable securities

1,502

15,288

Total

39,026397,290(2,520)(25,658)(1,401)(14,259)¥35,105$357,373

Time deposits with original maturity
over three months

Business Strategy¥37,524First Medium-termManagement Plan

Cash and deposits

Securities with original maturity over
Cash and cash equivalents

Research andDevelopment

three months(b)Assets and liabilities of new consolidated subsidiaries
to the acquisition of newly consolidated companies for the year ended March 31, 2009,were as follows:(Millions of yen)(Thousands of
U.S. dollars)

Fixed assets

3,376

34,372

Goodwill

2,896

29,481

Current liabilities(4,525)(46,064)

Fixed liabilities(214)(2,178)Acquisition cost of NEXWAY shares

3,206

32,637

Cash and cash equivalents of NEXWAY

(59)

(600)

Acquisition cost of NEXWAY shares net¥3,147$32,037

IT Holdings Group
Corporate Data

$17,021

Financial Section¥1,673Business Report (Consolidated)
for Fiscal 2009

Current assets

Business Risks

NEXWAY Co., Ltd. (As of June 30, 2008)

Corporate GovernanceThe composition of assets and liabilities, acquisition cost, and net profits and losses due

60

Financial Section
Profile(Millions of yen)(Thousands of U.S.
dollars)

182

1,852

Goodwill

99

1,005

Current liabilities(521)(5,302)

Fixed liabilities

(34)

(342)

Minority interests(305)(3,111)

Acquired shares before consolidation(206)(2,099)Acquisition cost of CRONOVA shares

289

2,937

Cash and cash equivalents of CRONOVA(747)(7,604)¥ (458)$(4,667)

Acquisition cost of CRONOVA shares- net

The Group acquired assets and obligations on finance lease transactions, both

Corporate Governance(c) Significant non-cash activities

Research andDevelopment

Fixed assets

Business Strategy$10,926First Medium-termManagement Plan

¥1,073

To Our Stakeholders

Current assets

Consolidated Financial
Highlights

CRONOVA Co., Ltd. (As of September 30, 2008)

amounting to ¥1,528 million ($15,555 thousand) during the year ended March 31, 2009.

The Group responds to customer needs through the supply of a comprehensive range ofBusiness Report (Consolidated)
for Fiscal 2009(a) Industry segment information

Business Risks

23. Segment Information

information services ranging from information system planning through software
policies do not separate these operations into industry segment classifications, industry
segment information is not disclosed.

Financial Section

development, hardware selection, and system operations. As the Group’s marketing

IT Holdings Group
Corporate Data

61

Financial Section
ProfileSince both the domestic share of net income and total assets for all segments exceed(c) Overseas sales

information is not disclosed separately.

(a) Business Combination through Establishment of Joint Holding Company

of a better IT society, while improving group corporate value as leading companies in
the information services industry, TIS Inc.(TIS) and INTEC Holdings, Ltd.,(INTEC)

Research andDevelopment

Seeking to fulfill corporate social responsibility issues and contribute to the realization

Business Strategy

24. Business Combination

First Medium-termManagement Plan

Since the overseas share of consolidated net sales was less than 10%, overseas sales

To Our Stakeholders

90%, geographic segment information is not disclosed separately.

Consolidated Financial
Highlights(b) Geographic segment information

established the joint holding company, IT Holdings Corporation, on April 1, 2008,
owned subsidiaries of IT Holdings Corporation.
(i) Outline of holding company
IT Holdings Corporationii

Location of Head Office:Toyama Prefectureiii

Representatives of company:

Tetsuo Nakao, Chairman
Susumu Okamoto, President

Capital stock:¥10 billionv

Business activities:

Administrative control over its subsidiaries
and the affiliated groups and execution ofrelated business activities.

Financial Section

iv

Business Report (Consolidated)
for Fiscal 2009

Company name:Business Risksi

Corporate Governancethrough stock transfer. Consequently, TIS Inc. and INTEC Holdings became wholly

IT Holdings Group
Corporate Data

62

Financial Section
Profile(ii) Transfer ratio for stock with voting rights and ratio determination

One share of common stock in the holding company was allotted and delivered foreach share of common stock in TIS Inc., while 0.79 share of common stock in theConsolidated Financial
Highlights

i) Transfer ratio for stock with voting rights

holding company was allotted and delivered for each share of common stock in
To Our Stakeholders

INTEC Holdings, Ltd.
ii) Ratio determination
In the interest of each company’s shareholders, a third-party opinion was requested
Securities Co., Ltd., as its financial advisor, and INTEC Holdings, Ltd. named
Mitsubishi UFJ Securities Co., Ltd., as its financial advisor. The two companies

First Medium-termManagement Plan

to ascertain the fairness of the stock transfer ratio. TIS Inc. named Nomura

deliberated the respective third-party opinions and agreed that the ratio wasBusiness Strategy

appropriate.
iii) Voting rights after business combination
53.8%

INTEC Holdings, Ltd.

46.2%

The ratios represent the equities in IT Holdings Corporation held by shareholders ofeach company.

Judging from considerations given to shareholders, voting rights ratio andnonexistence of controlling relationship other than voting rights, the businessCorporate Governanceiv) Accounting for business combination

Research andDevelopment

TIS Inc.

combination was accounted for as a pooling of interests not as an acquisition, in
Business Risks

conformity with Japanese Accounting Standards for Business Combinations.
v) Assets and liabilities succeeded from both companies
INTEC(Millions of yen)
Current assets

TIS

INTEC

(Thousands of U.S. dollars)$ 492,079$ 23,938

75,76862,320771,334

634,424

Total assets¥124,105¥64,671$1,263,413$658,362

Current liabilities¥ 27,165¥ 8,585$ 276,547$ 87,395

21,807

10

222,002

106

Total liabilities¥ 48,972¥ 8,595$ 498,549$ 87,501

Net assets¥ 75,133¥56,076$ 764,865$570,861

Non-current assets

Non-current liabilities

IT Holdings Group
Corporate Data

¥ 2,351

Financial Section¥ 48,337

Business Report (Consolidated)
for Fiscal 2009

TIS

63

Financial Section
ProfileAcquisition of stock in NEXWAY Co., Ltd.
Name and business line of acquired entity, main reason for business combination,

date of combination, legal form of combination, and acquired ratio of voting rights①

Name and business line of acquired entity
Name: Nexway Co., Ltd. (same after combination)②

Main reason for business combination
To expand scale and reinforce services in the outsourcing and network segment.

③

Date of combination
Legal form of combination
Stock acquisition⑤

Acquired ratio of voting rights

Term of business performance, included in consolidated financial statements, for the

Research andDevelopment

100%
ii)

Business Strategy

July 11, 2008④

First Medium-termManagement Plan

Business: Services to distribute information

To Our Stakeholdersi )Consolidated Financial
Highlights(b) Application of Purchase Method

acquired entityiii) Cost of acquisition and components thereof
Stock acquisition expense¥3,120 million

directly related to stock acquisition
Cost of acquisition¥3,206 million

Business Risks

Expenses, including advisory services, ¥86 million

Corporate GovernanceJuly 1, 2008 to March 31, 2009

ll expenses were paid in cash.
Conversion rate by type of stock and calculation method used as well as number ofallotted shares and assessed value
Not applicable.

Business Report (Consolidated)
for Fiscal 2009iv)

Financial Section
IT Holdings Group
Corporate Data

64

Financial Section
ProfileAmount of goodwill incurred, cause, amortization method and period of amortization①Amount of goodwill incurred¥2,896 million
Active return expected, primarily through effective application of funds, as Nexway
expands its information distribution services.
③Amortization method and period of amortizationVi) Amount of assets and liabilities assumed on the date of combination and key

First Medium-termManagement Plan

Average amortization over five years.

To Our Stakeholders②CauseConsolidated Financial
Highlightsv)

components thereof
Current assets¥1,672 million

Fixed assets¥3,376 million

Total¥5,049 million

Current liabilities¥4,524 million

Fixed liabilities¥ 214 million

Total¥4,738 million

year under review if the business combination had been completed at the beginning of
the consolidated fiscal year.
Operating income¥ 471 million

Recurring profit¥ 378 million

Net income¥ 390 million(Calculation method for estimates)
The estimated impact would be the difference between sales and profit information
calculated as if the business combination had been completed at the beginning of thestatement of income of the acquired entity.
This note is unaudited.

Financial Section

consolidated year and sales and profit information recorded on the consolidated

Business Report (Consolidated)
for Fiscal 2009

¥2,304 million

Business Risks

Net sales

Corporate Governancevii) Estimated impact on the consolidated statement of income for the consolidated fiscal

Research andDevelopment② (Liabilities)

Business Strategy① (Assets)

IT Holdings Group
Corporate Data

65

Financial Section
ProfileAbsorption-type split with TISi) Name and business line of the spinoff combining entity, legal form of combination, andConsolidated Financial
Highlights(c) Transaction under Joint Control

summary of transaction, including purpose
Name and business line of the spinoff combining entity

Name: TIS, a consolidated subsidiary of IT Holdings
Business that was split from TIS and absorbed by IT Holdings: Subsidiary

To Our Stakeholders①

management operations
Legal form of combination
Absorption-type split, wherein TIS is the splitting company and IT Holdings is the
successor company.
③

First Medium-termManagement Plan②

Summary of transaction, including purpose

efficient, management redefined the Group structure and decided to shift control ofnine subsidiaries in the TIS Group under the direct control of IT Holdings.

Business Strategy

Seeking to make business practices within the IT Holdings Group stronger and moreIn this transaction, an absorption-type split was agreed upon between TIS and IT
transferred to IT Holdings.

IT Holdings treated the spinoff event as a transaction under joint control, in accordancewith “Accounting Standards for Business Combinations,” issued by the BusinessAccounting Council on October 31, 2003, and ASBJ Guidance No. 10 “Guidance on

Corporate Governanceii) Summary of applied accounting treatment

Research andDevelopment

Holdings, wherein all shares in the nine subsidiaries held by TIS would be

Accounting Standards for Business Combinations and Accounting Standards for
November 11, 2007.

The following appropriations of retained earnings of the Company, which have not been

Business Report (Consolidated)
for Fiscal 200925. Subsequent Event

Business Risks

Business Divestitures,” issued by the Accounting Standards Board of Japan onreflected in the consolidated financial statements for the year ended March 31, 2009, were(Thousands ofyen)

U.S. dollars)¥2,764$28,134

IT Holdings Group
Corporate Data

Cash dividends (¥32.00 = $0.33 per share)(Millions ofFinancial Section

approved at a shareholders’ meeting held on June 25, 2009.

66

IT Holdings Group (As of April 1, 2009)
ProfileIT Holdings Corporation
Domestic Business

UFIT Co., Ltd.

Qualica Inc.

(Note 1)

INTEC Inc.

Agrex Inc.

AJS Inc.

(Note 1)IT Service Force Inc.

Intec NetCore, Inc.

CST Co., Ltd.

BM Consultants Inc.

aidec Corporation

WITH INTEC Inc.

System Support Co., Ltd.

Bit Cruise, Inc.

IUK Inc.

AJS Software Co., Ltd.

SKY INTEC Inc.

Huma(n) Corporation

Agrex Fine Techno Inc.

Systems Engineering
Laboratory Co., Ltd.

Chuo System Corporation

FLEX Inc.

UPSHE Co., Ltd.

es Crew, Inc.

(Note 3)

FLEX R&D Center

TIS System Service Inc.

INTEC IT Capital, Inc.

Keyport Solutions, Inc.

TIS Total Service Co., Ltd.

MITEC Inc.

INTEC Amenity Inc.

Cloud Scope Technologies, Inc.

TIS Leasing Co., Ltd.

Medical Toukei Co., Ltd.

INTEC Systems Institute, Inc.

CRONOVA Co., Ltd.

Registration Network, Ltd.

LANSA Japan Ltd.

(Note 3)

Hokkoku INTEC Service Inc.

Notes: 1. INTEC Holdings, Ltd. was merged with INTEC Inc. on October 1, 2009.
2. FLEX R&D Center was liquidated on August 31, 2009.
3. TIS Solution Business Co., Ltd. and Systems Engineering laboratory Co., Ltd. were integrated as NEOAXIS Co., Ltd. on July 1, 2009.

Overseas Business

TIS R&D Center, Inc.

TISI (Shanghai) Co., Ltd.

TKSOFT SINGAPORE PTE. Ltd.

TianJin TIS Xiang Tai Information System
Service Co., Ltd.

The IT Holdings Group comprises 63 companies, that is IT Holdings Corporation and the subsidiaries and affiliates listed above.

IT Holdings Group
Corporate Data

Qualica (Shanghai) Inc.

Financial Section

INTEC Information Technology(Wuhan) Co., Ltd

Business Report (Consolidated)
for Fiscal 2009

Oartech, Inc.

Business Risks

ALMEC Co., Ltd.

Corporate Governance

TIS Solution BusinessCo., Ltd.

(Note 2)

Research andDevelopment

NEXWAY Co., Ltd.

Business Strategy

KOUSHI INTEC Inc.

First Medium-termManagement Plan

INTEC Solution Power Inc.

To Our Stakeholders

IN3 Inc.

Consolidated Financial
Highlights

INTEC Holdings, Ltd.

TIS Inc.

67

Corporate Data
ProfileBoard of Directors and Auditors (As of June 25, 2009)
Susumu Okamoto

Vice Presidents

Yukio Urata
Koju Takizawa

Directors

Hiroaki Fujimiya
Katsuki Kanaoka
Shingo Oda
Jiro Kokuryo

Corporate Auditors

Tamaki Tsuchiya (standing auditor)
Tadamasa Hayashi (standing auditor)
Jun ItoShigekazu Takeuchi

Notes: 1. Shingo Oda and Jirou Kokuryou serve as external directors.
2. Tamaki Tsuchiya, Jun Itou and Shigekazu Takeuchi serve as external auditors.

April 1, 2008

Toyama Headquarters

5-5 Ushijima-shinmachi, Toyama 930-0856 Japan
Tel. +81-76-444-8011
Fax. +81-76-444-8012

Tokyo Headquarters

Hibiya Daibiru, 1-2-2 Uchisaiwai-cho,
Chiyoda-ku, Tokyo 100-0011 Japan
Tel. +81-3-6738-8100
Fax. +81-3-3503-2551

Main business

Management and business execution of group companies
which carry on information and communication business

Paid-in capital¥ 10 billion

Authorized

280,000,000 shares

Paid-in capital

86,372,339 shares

Number of shareholders

15,298Stock listing

Tokyo Stock Exchange, First Section (Securities code: 3626)

Business Report (Consolidated)
for Fiscal 2009

Number of sharesBusiness Risks

Established

Corporate Governance

IT Holdings Corporation

Research andDevelopment

Corporate data

Business Strategy

Corporate Data (As of March 31, 2009)First Medium-termManagement Plan

President

To Our Stakeholders

Tetsuo Nakao

Consolidated Financial
Highlights

ChairmanFinancial Section
IT Holdings Group
Corporate Data

68

Corporate Data
ProfileConsolidated Financial
Highlights
To Our Stakeholders

Name

9,628

11.1

The Master Trust Bank of Japan, Ltd. (Trust Account)

7,903

9.2

Japan Trustee Service Bank, Ltd. (Trust Account 4G)

4,365

5.1

Nippon Life Insurance Company

2,591

3.0

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

2,068

2.4

The Master Trust Bank of Japan, Ltd. (Retirement
Benefit Trust Account, Mitsubishi Electric Corporation
Account )

1,598

1.9

Japan Trustee Service Bank, Ltd. (Trust Account 4)

1,521

1.8

Employee‘s shareholding associationof IT Holding Corporation

1,355

1.6

INTEC Holdings Ltd.

1,316

1.5

Obayashi Corporation

1,161

1.3

JCB Co., Ltd.

1,161

1.3

Corporate GovernanceJapan Trustee Service Bank, Ltd. (Trust Account)

Research andDevelopment%

Business Strategy

Shares held(Thousands)

First Medium-termManagement Plan

Major shareholders (As of March 31, 2009)

Business Risks

Public Relations Department, Management Headquarters Group

Financial Section

TEL: +81-3-6738-7557
FAX: +81-3-3503-2551
E-mail: info@itholdings.co.jp
http://www.itholdings.co.jp/e/Business Report (Consolidated)
for Fiscal 2009

For further information contact:

IT Holdings Group
Corporate Data