2000
ANNUALREPORT

Fiscal Year Ended March 31, 2000

COMSYS—For Excellence in
Telecommunications

Consolidated Financial Highlights

ProfileNippon COMSYS Corporation and Consolidated Subsidiaries
Years ended 31st March, 1999 and 2000

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Millions of yen
1999
2000

Nippon COMSYS Corporation was founded in 1951 to perform the functions of
the Construction Division of Nippon Telegraph and Telephone Corporation (NTT).
From that time forward, COMSYS has been a leader in the building of Japan’s
telecommunications infrastructure, and has played a major role in the developmentof the emerging information-intensive society. Fueled by employee pride, welearned to foster a corporate climate characterized by open communications andthe flow of fresh ideas, where every talent and ability can be fully expressed andbrought to maturity. An engineering firm riding the fusion of communications

Contract backlog at beginning of the year
Contract backlog at beginning of the year
adjusted for newly consolidated subsidiaries
New orders received during the year
Net sales

Change(%)¥ 68,995¥ 78,348$ 739,132

13.6%—
229,875
220,522

1,665
228,518
231,750

15,7082,155,830
2,186,321

—
–0.6%
5.1%

78,34876,781

724,349–2.0%¥ 5,625
171,669
101,721¥ 6,315
188,961
115,834

59,575
1,782,651
1,092,774

12.3%
10.1%
13.9%

Contract backlog at end of the year
Net income
Total assets
Shareholders’ equity

Thousands of
U.S. dollars
2000$

and computer technologies, COMSYS is expanding the range of its operations toencompass every facet of the rapidly unfolding information-technology revolution.
We are striving to make a contribution to the development of the 21st century’shigh-order, information-intensive society. COMSYS is a creative firm, working

Yen

Per share:
Net income
Cash dividends¥ 42.97
10.00

U.S. dollars¥ 46.73
10.00

$

0.44
0.09

Note: Yen figures have been translated into U.S. dollars at the rate of ¥106.00=US$1, rounded, for convenience only, from anapproximate exchange rate of ¥106.15 to the dollar prevailing on 31st March, 2000.

to build a richer future.
Contents
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34

Corporate Information

35

Corporate Directory

36

228.5

Organization Chart

235.9

19

229.9

Financial Section

226.6

18

189.0

Management

6.3

7
8
10
12
16

8.3

Review of Operations
NTT Construction
Domestic Construction and Engineering
International Operations
Information Systems

5.6

6

6.8

Corporate Citizenship

New Orders Received(¥ Billions)

4.2

4

231.8

Toward the 21st Century—Our Vision of the Future

220.5

2

225.3

Letter from the Management

221.6

1

Net Income(¥ Billions)

184.6

Consolidated Financial Highlights

Net Sales(¥ Billions)

96 97 98 99 00

96 97 98 99 00

1

96 97 98 99 00

8.8%
0.0%

Letter from the Management••••

Environment
uring this term, the Japanese government
D engaged in a number of measures intended
to stimulate the economy. As a result of this,
there were some signs of recovery in capital
investment in some sectors. However, theuncertain employment picture and declining
income held consumer spending down, preventing economic recovery.
Conditions in the telecommunicationsindustry, which is this Company’s operating
arena, were affected by the unfavorable
economy. However, the information-technology(IT) revolution is exploding, in turn bringing
an increasing sophistication and rising level oftechnology in society and in economic activities. The telecommunications market, as aresult, continues its expansion. At the sametime, the market was strongly affected by the
restructuring of the NTT Group and by a seriesof alliances and mergers among telecommunications firms, and also by the introduction ofvarious new services and the intensification of
cost competition—developments which involve
foreign-owned firms as well as Japanese.
To build a management structure that candeal efficiently with these significant changes
in the market, and with the diversification ofcustomer needs, Nippon COMSYS Corporation
has established the position of corporate executive off icer, which has streamlined thedecision-making process and strengthened ourcompetitiveness. We also enhanced our projectexecution capabilities and our regional
interoperability through business alliances withother firms in our industry. While thus strengthening our construction capabilities, we also
strove to increase construction orders fromNTT and the NTT Group. Together with this,we conducted full-scale efforts to expand ourbusiness in the areas of business solutions,software development and other IT-related businesses, and overseas construction projects(primarily in Southeast Asia).

Consolidated Performanceew orders received during the year on aconsolidated basis declined 0.6 percent
to ¥228.5 billion (US$2,156 million). Although
the Domestic Construction and Engineering
Sector turned in a solid performance, the NTT
Construction Sector was affected by the contraction of capital investment at NTT, and theNin benefit obligations to deal with. This sum
will be completely amortized in the coming
fiscal year through the establishment of aretirement benefit trust (stock contribution)and other measures.

Outlook and Important Issues
n the coming f iscal year, NTT canbe expected to continue its capital
investments in cellular phones and othermobile-communications technologies. As
the NTT Group accounts for a large percentage of our orders received, this is a significant
factor in the outlook for COMSYS over the
coming term. At the same time, though,the cutbacks in NTT’s capital investments
called for in its medium-term management
reform measures can also be expected to havean effect.
In non-NTT markets, the IT revolution
is predicted to bring rapid expansion of Internet
access services, online marketing, and other IT
services. In response, and taking into accounttrends in strategic businesses such as CC Box
construction, cable television, and businesssolutions, we are striving to expand orders fromthe new common carriers, foreign-owned telecommunications firms, and other companies
outside the NTT Group. We are also conducting a full-scale marketing effort designed toincrease our business in the information industry, as well as to expand our projects inSoutheast Asia and elsewhere overseas. From
this, it can be seen that we regard the further
expansion of orders as the single most important issue facing the COMSYS Group.
In response to the operational environment described above, the Company needs tostrengthen its sector-specific market strategies
and to win new customers. To this end, next
fiscal year Nippon COMSYS Corporation will
establish a Sales and Marketing Headquarters,
which will have responsibility for marketing
operations for the NTT Construction Sector, theDomestic Construction and Engineering Sector, and the Information Systems Sector. The
Sales and Marketing Headquarters will be composed of five divisions, and will be organizedaround account managers who will have responsibility for specific clients. This integration willallow COMSYS to establish companywide marketing strategies, and to achieve rapid andeffective response to customer requirements.

I

Pictured: (left) Chairman Shozo Iwasaki and
President Hironobu Takeuchi

Overseas Construction Sector was hurt by the
economic turmoil in Southeast Asia.
Consolidated net sales benefited fromthe strong performance of the Domestic Construction and Engineering Sector, which
achieved growth of 5.1 percent to ¥231.8 billion (US$2,186 million).
The Company’s profitability has benefited from our long-term improvements in
eff iciency, our establishment of internal systems and organizations, the reductions inconstruction costs that we have achieved, andthe establishment and strengthening of our subcontracting system. In addition, we haveundertaken to improve the prof itability of the
COMSYS Group through the optimal utilization of liquidity and other measures. As a resultof the foregoing, operating income rose 9.1percent to ¥15.6 billion (US$147 million). We
strengthened countermeasures to the increase
in benefit obligations caused by the implementation of new accounting standards. We
amortized prior service costs of ¥7.1 billion(US$70 million) and posted that sum as a special loss, and we applied our reserve forretirement allowances of ¥4.3 billion (US$41
million) to special profits. Despite this, consolidated net income rose 12.3 percent to ¥6.3
billion (US$60 million) as a result of our shift
to deferred tax accounting.
After the above measures, the Company isleft with a further ¥87 billion (US$82 million)2

We have also implemented a project
management system that will allow the organic
integration of the NTT and non-NTT divisions,promoting the efficient utilization of both personnel and technologies. Each branch willthoroughly reevaluate its marketing andproject-execution systems on this basis, andthis will bring companywide improvement in
the optimal utilization of human resources.
This, in turn, will take to a new level our efforts
to expand orders received, reduce project costs,
and improve the quality of our work.
COMSYS treated the millennium bug as
the most important management issue of theperiod of this report. The “Year 2000 Special
Project,” which involved a thorough inspection of
all our key systems, divisional systems, peripheral
equipment, and all our own products (primarily
software), allowed the Company to weather thetransition with no significant problems.

of tools and instruments for purposes of
upgrading technology and improving safety,
and in the improvement of the work environment through enhancement of construction
bases. We also want to make effective investments in the opening up of new fields ofbusiness for the Company.
Dividends will continue to be the primary source of shareholder income. However,from the standpoint of diversifying returns toshareholders, we want to continue to retire treasury stock using a fixed percentage of income
for the purpose. To this end, COMSYS plans toextend this term’s dividend and treasury stock
policies into the coming fiscal year.
Nippon COMSYS Corporation will celebrate its 50th anniversary in December 2001.
The Company plans to declare an additional,
commemorative dividend of ¥2 per share incelebration of that event.

Dividends and Internal Reservess the foundation for the continued expanA sion of a company’s operations, dividend

Capital Investment and Fund
Acquisition

policy is one of the most important issues thatfaces any firm. We are also seeking further
strengthening of our financial structure andimproved return on equity. We also balance thebest possible dividend payout to shareholders
with considerations of the Company’s performanceand its continued ability to generate dividends.
Based on the policy described above, theCompany declared a midterm dividend of ¥5
per share, and a year-end dividend of another¥5 per share, for a total dividend of ¥10 per
share for the term. This represents a payout
ratio of 23.5 percent, for return on equity of 5.8
percent. The ratio of dividends to shareholders’equity is 1.2 percent.
In addition to dividends, as anothersource of income to shareholders, we are retiring treasury stock out of net income. We will
be setting aside a further ¥5 per share for thispurpose through the midpoint of next fiscal year.
During the period of this report we purchased
335,000 shares of treasury stock, and have completed procedures to retire these shares. We used
the reserve for retirement of treasury stock of¥664 million (US$6 million) for this purpose.
Internal reserves accumulated during thisfiscal year we plan to use to reinforce our business base, making capital investments in the
expansion of training facilities, in the replacement

uring this term, the COMSYS Group
increased its capital investments by¥6,930 million (US$65 million). These included
the purchase of the Dai Ni Tanimachi Building
and the land it stands on for the new Kansai
Office. We also invested in the purchase of land
for the construction of the Adachi Technostation(a construction base), and in the constructionof an education and training center in Omiya.
No bonds or other instruments were issued during
this term.

D

the management and technological capabilities needed to mount a nimble response tothese rapidly changing market conditions.
We must also enhance our cost competitiveness in response to today’s exacting
business environment, deploying the capabilities of the entire Group to achieve stronger
and stronger performance.
To develop a corporate climate that willallow us to face the challenges of the 21st century with confidence, we have attached a newmeaning to CI (corporate identity). At our Company, it now stands for “COMSYS Innovation,”and our whole Company is united in furthering
this program. In the interests of protecting theplanetary ecology, we are working to achieve
ISO 14000 certification in next fiscal year.
The end of this fiscal year will usher inthe 21st century. You are aware that we desire
to make a contribution to the development of
the new century’s high-order, information-intensive
society, and to that end are strengthening ourbusiness base as a truly comprehensive engineering enterprise. We request the continued
support of the company’s shareholders, clients,
business partners, and employees as we carry
this effort forward.

Outlook for the Term Aheade forecast that Nippon COMSYS Cor-W poration and its nine consolidated
subsidiaries (including COMSYS Net Corporation, which will become a consolidated
subsidiary in the coming term) will post 2.3
percent growth in net sales during the following term, for a total of ¥237 billion (US$2,236
million). We look for net income to rise 6.1
percent to ¥6.7 billion (US$63 million). As we
mentioned above, we expect that the contraction of capital investments at NTT will have aneffect on our NTT-related orders received. Overall, though, the explosive expansion of the IT
revolution has created an opportunity to expand
our business.
In response to these conditions, theCompany will continue as before to reinforce

3

Shozo Iwasaki
Chairman and Representative Director

Hironobu Takeuchi
President and Representative Director

Toward the 21st Century—Our Vision of the Future
Our Second Corporate Identity Campaign
The year 2001 will be the first of the 21st century, and will also be the 50th anniversaryof this Company’s founding. This fiscal year marks the twelfth since the inauguration of
our first Corporate Identity Campaign, and the tenth since we selected the Company’s
current name.
Following the Company’s establishment in 1951, COMSYS expanded chiefly on thestrength of facilities construction projects for NTT. By the second half of 1970, however, thecountry’s communications infrastructure was virtually completed. COMSYS, which
generated over 90 percent of its revenues through NTT projects, found itself in gravedifficulty. At that juncture, the Company began planning and preparing for the 21st century,
diversifying into the fields of software development, computer sales, and other areas. Thus,
the Company chose to reduce its reliance on NTT.
The realization of this change in direction required a commitment to the new policies on
the part of each employee, and it was to promote the permeation of these ideas throughout
the Company that we launched our first Corporate Identity Campaign. In addition to this CI
campaign, the Company has also undertaken programs to reevaluate business practices andprocedures, bolster the Company’s business base, improve its financial condition, and makethe Company’s stock a more attractive investment.
As a result of this program, despite the persistently adverse economic conditions thatcommenced when the economic bubble collapsed, COMSYS was able to achieve continued
growth in revenues and profits. Since adopting our current company name of Nippon
COMSYS Corporation in the fiscal year ended March 31, 1990, and despite growth of
only 10 percent in the work force, net revenues have more than doubled, operating profits
have quadrupled, net assets have tripled, shareholders’ equity has more than quadrupled,and capital has quintupled. Of course, the rapid expansion of demand in connection withnew technologies such as cellular telephony, fiber optics, and digital communications
played a role in this, but it also reflects the success of our CI campaign and othermanagement-improvement measures. The efforts of each employee of the Company areseen in this performance.
However, our efforts to improve did not end there. The issue of improvement and reform
is continuously before the Company. In April 1999 we commenced our Second Corporate
Identity Campaign, with the objectives of further reinforcing the permeation of the corporate
philosophy and operations policies established in the first CI campaign, and of realizing a
fresh and freer corporate atmosphere, of creating a stronger sense of unity throughout the
COMSYS group. We believe this will allow us to lay the cornerstone of our operations in
the 21st century.

The opening of the 21st century will be characterized by explosive growth in multimedia
computing and communications, as the world sees the evolution of high-order, informationbased societies. The Ministry of Posts and Telecommunications has announced the Information
Communications Infrastructure Program, which projects the development of an optical-fiber
network serving the entire nation by the year 2010. COMSYS expects to be deeply involvedin the execution of this plan.
To clarify its response to these trends, COMSYS drafted a medium-term management
plan. Recently, we reevaluated that plan from the standpoint of our performance through thef iscal year ending March 31, 2005. Goals now include:
Strengthening our NTT construction operations, as well as increasing the earnings ofour domestic and overseas telecommunications construction projects and information
services such as software development. By the fiscal year ending March 31, 2005, on an
unconsolidated basis, we will increase total annual revenues to ¥320 billion (US$3,019
million), while bringing the ratio of NTT contracts down from the current 60 percent toapproximately 40 percent.
Responding to the worsening cost competition in the market with a companywide
efficiency enhancement program, which will encompass not only subsidiaries andaffiliates, but subcontractor firms as well; and achieving recurring profits of ¥18 billion(US$170 million).
Strengthening training programs and developing proprietary technology, primarily in thef ield of construction, in response to today’s rapid pace of technological innovation. Continuing to stress mechanization and advanced facilities on our construction sites, for the
purposes of improving the work environment and ensuring worker safety.
The Ministry of Posts and Telecommunications projects that Japan’s information andcommunications market will grow to ¥125 trillion (US$1,179 billion) by the year 2010,
including a telecommunications market of ¥26.8 trillion (US$253 billion), an ¥8.4 trillion(US$79 billion) broadcasting market, a communications and computer terminal market of¥26.0 trillion (US$245 billion), and a content (databases, images, video games, software,etc.) market of ¥63.4 trillion (US$598 billion). Of this, telecommunications and broadcasting
industry investment in 2010 is forecast at ¥7.2 trillion (US$68 billion).
COMSYS is determined to become the leading firm in the f ield, to make a contribution
to a higher quality of life, and to enhance the business possibilities represented by these newtelecommunications capabilities.

250

125

Ten Years of Growth(¥ Billions)

200

150

33% Non-NTT

ighly
YS is h
COMS
to
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comm ce safety. To
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this en d training in
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and othSources of Construction
Contracts¥125trillion (2010)¥16 trillion (1995)
The Growing
Multimedia Market

Net Sales

50

Shareholders’ Equity
0

Operating Income

90 91 92 93 94 95 96 97 98 99 00

1995

4

100

Total Assets

16

67% NTT

2010

5

Review of Operations

Corporate Citizenship

COMSYS is taking an active role in the communities thathost it, fostering environmental awareness, sponsoring cultural
events, and offering disaster-preparedness training.
Mindful of the environmental effects of paper consumption,
COMSYS has implemented a paperwork reduction program, withthe objective of reducing the Company’s paper use. Paperwork
reduction will also, of course, result in increased administrative
efficiency, as approximately 40 percent of the forms used by theCompany will be abolished.
Demonstrating its commitment to responsible conservation,
COMSYS has published “Global Environmental Protection
Regulations” to govern all phases of the Company’s operations.
In 1995, the Company spearheaded a drive to collect contributions to buy artificial limbs for the disabled victims of
Cambodia’s seemingly interminable wars. This drive, whichbrought in ¥2,750,781, was born of our desire to make even asmall contribution to rebuilding that war-torn land, to bring ameasure of relief to even one person.
COMSYS also undertakes projects in which concern for theenvironment is a factor. During this term we installed a cellular
telephone facility in western Japan’s Setonaikai National Park.
The facility is on the grounds of the Rokkosan Farm, which isoperated within the park by the city of Kobe. To ensure that there
was no degradation of the natural beauty of the site, to blend inwith nature, and to assure compatibility with the park’s natural
atmosphere, we created an artificial Japanese oak tree for theantenna pole. The pole is approximately 12 meters tall, and sports

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1

an artificial Japanese oak pattern, branches and leaves. Everyone
concerned is very pleased with this non-intrusive facility,
which greatly increases convenience with no degradation of
the environment.
COMSYS is also an active participant in the regional community. The Omiya Ardija soccer team debuted in the J2 soccer
league. The team was founded through joint participation by
COMSYS, NTT, and 19 other companies closely associatedwith NTT. The Japan Professional Football League is composedof regional teams, and develop players at all levels, from youth
to professional. Omiya Ardija is intended to support and participate
in player development, as well as being a club that all can enjoy.
We are pleased and happy to have the opportunity to contributeto the public in this way.
Another of the Company’s activities is supporting The
Tokyo Philharmonic Orchestra, of which COMSYS is a
special member.
In 1984 the Tokyo Philharmonic gave performances in fifty
cities in seven European countries, and in 1989 toured twenty
cities in eight European countries. In 1994, the Philharmonic
performed in fifteen cities, mainly in Germany and England.
These concerts have earned the Tokyo Philharmonic a solidinternational reputation.
COMSYS is proud to be able to contribute in this way to theculture and society of our host regions. In this way, we returnsomething to the communities that have made our existence andgrowth possible.

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Sales by Business Category

Information Systems
Overseas Construction

Domestic Construction and Engineering

1% 8%

29%

2

"Outside" Projects

28%"Inside" Projects

34%
ds
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3

4

6

NTT Construction

62%

7

NTT Construction

2

1

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3

144.3

143.7

160.4

151.2

Looking at some of the representative projects in this sector
during the period of this report, we executed the installation ofdigital microwave transmission facilities some 230 meters above
the ground in Yokohama’s Minato Mirai 21 development. The
MM21 development is intended to help Yokohama, one of Japan’s
leading international seaports, to evolve into a city well suited toprosper in the coming century. This facility is necessary infrastructure for digital cellular telephone services in Yokohama and therest of Kanagawa Prefecture. Because NTT DoCoMo’s Kanagawa
branch and four other companies of the NTT Group have offices in
the Yokohama Media Tower, where this facility is located, it isexpected to serve as a telecommunications base for the next
generation of technology. Antennas and wave guides were
installed on a 148-meter microwave transmitter tower. This is
the first time that a steel tower has been erected on the roof of asuper-high-rise anywhere in the world, so, of course, safety was
our primary concern.
One large-scale project begun during this term was a longdistance shield tunneling project in Osaka. On this project, executed
at a depth of 36 meters, we constructed a work shaft on the groundsof the NTT Takatsu Building, and used a pressurized slurry shieldtunneling machine to dig through stiff clay and sand for a distanceof 3,000 meters. The tunnel, 3.15 meters in diameter, was thenlined with segments of steel plate 1.2 meters in width.
All branches in this sector have achieved ISO 9001 certification as of April 1999. In the near future, NTT will require all bidders
on contracts to be ISO certified, but COMSYS will have no problem whatsoever meeting that requirement.
Our participation in these projects and our work to achieve
ISO certification must be understood in light of Nippon COMSYS’sheartfelt desire to employ its wealth of experience and its technological expertise to make a contribution to the emerging high-orderinformation-intensive society.
In the next term, competition among telecommunications
firms—including North American and European firms—will growyet more intense. The market environment, therefore, is expected
to worsen for the NTT Construction Sector. COMSYS will meetthese circumstances by striving toenhance both safety and efficiency, by
expanding and strengthening its subcontracting system in order to increase
orders received, and by fostering the development of experts in various fieldsof technology.
133.6

NTT, which is this Company’s most important client, broke
up into four publicly listed companies in July 1999. NTT East and
NTT West have charge of operations in eastern and western Japan,
respectively, while NTT Communications handles long-distanceservices and international communications. NTT acts as holding
company. NTT, thus, has altered its structure to that of a groupof companies.
With the rapid shift in emphasis in the telecommunications
market from fixed communications systems to mobile communications, and from voice communications to data communications,
there has been pressure on NTT to bring its telephone rates down
still further. In response to this pressure, NTT is changing its corporate structure to that of a “global group of information distribution
firms.” NTT is also implementing measures, beginning with thereallocation of the NTT Group’s human resources, to ensure that itremains an industry leader as we enter the information distribution era of the 21st century.
Nippon COMSYS’s NTT Construction Sector has responded
to these changing circumstances, and in particular to the full-scale
implementation of NTT’s “New Project Management Method,”which gives much wider discretion to the contractor who actually
performs a job, by bringing costs down, enhancing workplacesafety, and improving construction quality. At the same time, witha view to winning more contracts through an effective response to
the measures taken by NTT, we completed construction of an
education and training center in Saitama Prefecture’s Omiya
City in November 1999. This new center will allow the development of versatile technicians, including designers and experts
in digital technology, and will allow further strengthening of
our overall management capabilities in the areas of design, execution,and supervision.
Notwithstanding the growth in demand for mobile communications services, NTT’s cutbacks incapital spending affected the perform a n c e o f t h i s s e c t o r.
Consolidated orders received
were ¥136.1 billion (US$1,284
million), while consolidated construction revenues rose only 0.4
percent, to ¥144.3 billion(US$1,361 million).

•
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•
•
•

62%
of Total Revenue“Inside” Projects

Sales of NTT Construction(¥ Billions)“Outside” Projects

96 97 98 99 00
48

9

Domestic Construction and Engineering

2

3

ons
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52.4

47.5

66.6

communications network, which will be available free of charge
to cable TV companies, Internet access providers, and other communications firms. It offers limitless possibilities in the fields of
medicine, welfare, education, and business. The construction ofhigh-speed data networks is a hot topic in the public sector nationwide, and COMSYS has both a high level of technological expertiseand the track record established in this project to recommend it.
We expect, therefore, to be active in this sector for the foreseeable
future, and will be working to win more contracts in this field.
Also during this term COMSYS installed Information Cable Boxes
along the entire 13.5 kilometer length of the Tateyama Kurobe
Alpen Route, which transverses the 3000-meter peaks of the northern Japan Alps. As this contract was let by the Ministry ofConstruction and executed within a national park, we were required
to pay due care to a profusion of ecological and esthetic considerations. In addition, there are more than a few hazards associatedwith working in a mountain environment. By executing thisproject smoothly under such stringent conditions, COMSYS
further enhanced its reputation as a reliable business partner.
Beginning in the year 2000, the Ministry of Construction will
require ISO 9000 certification as a condition of bidding oncontracts under its purview. The Domestic Construction and Engineering Sector has already cleared this hurdle.
This sector is at the center of the COMSYS Group’s medium
and long-term management strategy, and while retaining our
focus on the IT revolution, we will endeavor to expand the breadthand variety of the Domestic Construction and Engineering Sector’sbusiness operations. We are continuing to strengthen our marketing and project-execution organizations for our strategic
businesses—CC Boxes, cable TV, and network solutions. In
addition, the NCCs (long-distance telephone providers, regional
telephone providers, international telephone providers, andmobile communications providers) will have to rebuild networks
as a result of the recent spate of mergers and alliances, and thiswill require substantial capital investments.
COMSYS is proactively developing proposals to NCCs formeasures they can take to strengthen their technological capabilities and to bring costs down. In addition, now that deregulation
has allowed the entry of foreign-capital firms into the Japanese
telecommunications market, COMSYS
offers consulting on technology-upgrade
and cost-reduction measures that theyneed to succeed.
Within the context of these circumstancesand developments, COMSYS is continuing
to take efficient and rational steps to achieve
further increases in orders received, including optimizing our deployment of humanresources, offering training and guidance toaffiliates and subcontractors, and tailoring
project execution to market requirements.
28.7

37.4

The Domestic Construction and Engineering Sector handles
all domestic telecommunications construction projects other thanthose for the NTT Group, as well as ordinary domestic construction projects. This includes contracts with the public sector, withthe “new common carriers,” and with firms in other industries.
This sector is engaged in a broad spectrum of activities, including
the construction of telecommunications facilities and electric utility
facilities, structural construction, and the installation of “CC Box”
(multi-use underground cable conduit), cable TV equipment, andnetwork solutions.
Although the Domestic Construction and Engineering Sector
has been affected by the prevailing poor economic conditions, as
can be seen from the explosive growth of the Internet, the pace oftechnological advance in data communications networks is accelerating, and the IT revolution is advancing rapidly in both the public
and private sectors. Together with this, the construction of the data
communications infrastructure continues, including CC Boxes,
optical fiber networks, and subscriber-type wireless access network
facilities. Further, with mergers and tie-ups among telecommunications firms bringing the rebuilding of networks, and with therealization of next-generation IMT-2000 cellular telephone technology, capital investment among these telecommunications firms
remained at a high level.
COMSYS’s response to these conditions is centered on its
strategic CC Box, cable TV, and network solutions businesses. In
addition, the division conducted a full-scale sales program designed
to increase its structural construction orders. As a result of thesemeasures, consolidated orders received rose to ¥70.0 billion(US$660 million). Consolidated net revenues jumped 27.0 percent
to ¥66.6 billion (US$628 million), reflecting a substantial improvement in performance.
Among representative projects during the period of thisreport was the installation of the high-speed access lines for the
Okayama Information Highway. This project attracted a great dealof notice from the public sector nationwide, and in particular from
the Ministry of Posts and Telecommunications, as a leap forward in theconstruction of regional data communications infrastr ucture.
COMSYS participated in every
phase of this project, from design
through execution. The Okayama
Information Highway is a highspeed, high-capacity optical fiber

•
•
•
•
•

29%
of Total Revenue
Sales of Domestic Construction
and Engineering (¥ Billions)

96 97 98 99 00
4

10

11

1

International Operations

To gain access to the competitive overseas markets, COMSYS
has continually optimized its wealth of expertise harnessed fromits participation in the domestic telecommunications market andconstruction projects, and which has been developed over the years
since the Company’s founding, as well as its acquired reliable technological expertise. The Company has assisted a number ofcountries, primarily in Asia, Africa, and in Central and SouthAmerica, to develop the infrastructure they need to advance into
the age of the information-intensive societies.
During this fiscal year, we were very vigorous in our attempts
to win contracts overseas, chiefly in Thailand, the Philippines, andthe remainder of Southeast Asia. Although these markets were
adversely affected by the poor economic conditions in Asia,
consolidated orders received were still ¥4.0 billion (US$38 million)
with consolidated net revenues only 61.7 percent lower than in theprevious fiscal year, standing at ¥3.0 billion (US$28 million). In
the coming fiscal term, the economy within the Asian region, this
sector’s primary market, is forecast to show some degree of recovery. However, the business environment is expected to remain
severe. In addition to telecommunications facilities projects, theCompany will bid on public-sector contracts such as wastewater
management and sewerage projects, railroad communications
projects, electrical tunnelling projects, and other projects withmanageable risk levels. Within new fields, epitomized by information technology, we are striving energetically to minimize
associated risks and with a view toward expanding orders received,
the Company is also entering new regions, in addition to the areas,in which we have previously operated.

•
•
•
•
•

Again, ISO certification will in the near future become acondition for bidding on construction projects internationally, andhas already been achieved by our Overseas Division some three
years ago. Furthermore, our overseas subsidiary, COMSYS Philippines, Inc. (CPI) obtained ISO 9001 in the previous fiscal year
and COMSYS, therefore, faces no problem with meeting thisrequirement for future bids internationally.
To help develop multimedia infrastructure that will becompatible throughout the Asian region, COMSYS is participating in the newly organized Asia Multimedia Forum. This group’s
principal activities are the testing and trial of multimedia systems,
the joint development of multimedia systems and equipment, andparticipation in other multimedia-related projects in Asia. The
Asia Multimedia Forum also holds seminars, symposia, exhibitions, and disseminates information on multimedia-related
activities and technology. We consider that our participation inthis group has allowed COMSYS to make a more contribution in
the building of the high-order information-intensive society in Asia.
In Malaysia, a new seat of government and administrative capital
to be known as Putrajaya is being constructed under the aegis of
the Multimedia Super Corridor (MSC) project, as is Cyberjaya,
a new proposed intelligent city. Our overseas subsidiary CMC
Engineering SDN. BHD, is participating in the Information Technology System project within NTT’s MSC Center Building. Thisis a full turnkey project covering everything from the design to theconstruction of a complete information technology system, including PABX, LANs, Internet servers, cable television, computer
systems, and communications networks. The fact that the firstforeign firm to establish operations in Cyberjaya (NTT) has used
COMSYS’s technology will be a strong sales point in winning
future telecommunications-related contracts from other foreign
firms that are expected to locate in Cyberjaya in the near future.

2

1

3

6.7

7.9

8.9

10.5

ound
n d e rg rlling u k.
ta
s
In
o
1.
gk
in BancablesCPerial C
lling a kok
ta
s
In
ng
2.
in a Ba
cables.
suburbaerialtalling
3. Ins ber cables inl fi
optica .
okkgBanlogy intechnor CAD ippines.
u
O
.
4
il
the Phuse in3.0

1%
of Total Revenue
Sales of Overseas
Construction(¥ Billions)

96 97 98 99 00
4

12

13

Construction Revenues for Last Three Years
•
•
•
•
•

showing that our Tunnel Works technology has won a reputation
for reliability worldwide.
Our vigorous efforts to expand orders, not only in the field of
telecommunications construction, but also in the new field of wastewater management/sewer construction and other public works
projects will continue as this market has considerable potential.

The Company has also participated in projects to expand digital
switchboard equipment in Dar es Salaam, Tanzania, as well as
installing state-of-the art digital switchboard equipment in Russia’s
third-largest city, Nizhnii Novgorod.
In Thailand, we have been executing a Wastewater Management Project in Samut Prakan, our first sewerage contract outside
the field of telecommunications construction. This fact is cleary

1

2

3

4

Over ¥18,000 million
Over ¥700 million
Over ¥100 million
Over ¥50 million
Less than ¥50 million

Major Overseas Projects Completedble
ber ca intical fi
1. Op on projects
ati
install
a.
il
n
a
M
ct
nt proje
ide pla pines'tsuo
2. An the Philipdu,velopein Cebo st d e .
m
d
n
o
sec
uzon
after Lislandct
nt proje
ide pla uala
ts
u
o
n
3. A
s of K
suburb sia.
yin thelaaMr,
L um pu
rimeon of c s at
ti
a
ll
ta
abilitie
4. Inson cap nter in
ti
n
e
v
p re
Ce
ckwellthe Ro.
Manilawater
t of the .
n
e
m
e
rov
ines
5. Imp the Philipp
in
ly
p
p
u
s

5

Nigeria
Ibadan new local line project
Iraq
Installation of telephone lines for 17 local exchanges
Egypt
Supply and installation of telecommunication cable network in Ismailia and Suez
Thailand Installation of digital exchange equipment
TaiwanInstallation of highway traffic control system
Sri Lanka Installation of local telephone lines in the Badulla and Anuradhapura regions
Nepal
Installation of microwave telecommunications system (inside and remote)Thailand Fifth local cable network installation for TOT in Bangkok and provinces
KuwaitInstallation of digital loop coil system in Farwaniah Exchange
Tanzania Rehabilitation of telecommunications network in Dar es Salaam
Thailand Seventh local cable network for TelecomAsia in Bangkok
Thailand Seventh local cable network for TT&T in the provinces
Philippines Supply and installation of local cable network for Major Telecom Inc. in Mindanao
Philippines Supply and installation of OSP equipment and optical fiber cable for ICC in Manila
Philippines Installation of trunk lines and local network for GLOBE Telecom PHASE-2 in Manila and the provinces
Thailand The telephone expansion project to overcome short-term line shortage / B.E.1996-1998 for TOT (800K)
Overseas Projects in Progress (As of June 2000)
Philippines Supply and installation of local cable and junction network for GLOBE Telecom PHASE-4 in Manila and the provinces
Philippines Supply contract for OSP & optical fiber cable (BAYANTEL 40K)
Thailand Samut Prakarn Wastewater management project SC-27, 28, 29

14

15

Information Systems

The Information Systems Sector is engaged in softwaredevelopment and sales of office equipment. Office-equipment sales
are benefiting from the explosive expansion of the Internet,
although the market environment in this area is adversely affectedby declining equipment prices, the proliferation of discountoutlets, and the intensification of price competition. Conditionsin the software development market are similarly benefiting fromthe rapid proliferation of Internet connectivity and by the growthof e-commerce. Further, the computer networks needed to increase
collaboration among companies and the data links required for
application services are currently being put in place.
This sector is meeting the challenges it faces in this market
by offering “total solutions” to a broad spectrum of clients in awide range of business activities. As a result, the Information
Systems Sector posted consolidated orders received of ¥18.4 billion (US$173 million). Consolidated net revenues, at ¥17.9 billion(US$169 million), were 8.8 percent higher than in the previous term.
Products in this sector include the Red Brick DataWarehouse,a quick-loading, high-performance, online analytical processing
tool, as well as the Dream Web Server, an all-in-one server thatincorporates the router, terminal adapter, digital service unit,
firewall, and switching hub into a single PCI card. The Information Systems Sector also offers the Smart Care computer telephone
integration (CTI) customer support system, which provides speedy,
efficient, and reliable communications management for small andmedium-sized businesses. Other products include the CTI+WINE
small office CTI system, an economical system which is useful in

•
•
•
•
•

client management and cost reduction efforts, and the new BL-3000
Digital Monitoring System, which adds digital video monitoring
capabilities to existing network systems. In the area of solution
package software, COMSYS has Cable Manager, a resource management system, The PERT, a project-management package forthe construction industry, and CONDUIT-CAD, a full-featured
civil-engineering CAD system.
Another of our products is the COMSYS WINE Dream Kit,
an intranet software suite that offers e-mail, BBS, scheduling,
remote access, and many other features. Our Voice Over Network
uses a router to allow communications between multimedia
networks. Thus, COMSYS offers a complete range of softwarerelated services, ranging from custom programming throughdevelopment of off-the-shelf software packages.
Like the Domestic Construction and Engineering Sector, this
sector is at the center of the Company’s medium and long-term
management strategy. In the future, emphasis will be on systems
and software development, and on developing the technologicalcapabilities needed to respond to demand in the business solutions
field. While moving forward with opening up these areas, wewill also strive to expand sales through proactive marketing toprospective clients.
In the next fiscal year, customer needs will be evolving in
response to the IT revolution. We will be striving to remain in
advance of these developments, and to further strengthen our software development capabilities. Of course, we will persevere in
our efforts to expand revenues.

2

1

zes
io utili
V stud
1. A T ed electionpehigh-s g software
n
YS.
ti
r
o
rep
COMS
ped bydeveloing
evelopwork d2 . A t ware.
ft
new soom
shot frcreen
3. A s .
o
Hi Madtion
pplicar PC a4. Ou , The PERT.
resoftwa

17.9

16.6

16.1

15.6

14.9

3

8%
of Total Revenue
Sales of Information
Systems (¥ Billions)4

96 97 98 99 00

16

17

Management

Financial Section

•
•
•
•

•
•
•
•
•

As of June 29, 2000

BOARD OF DIRECTORS

President and Representative Director
Hironobu Takeuchi

Chairman and Representative Director
Shozo Iwasaki

Senior Managing Director
Kiyoto Kuwabara

Managing Director
Takaaki Okayama

Managing Director
Koji Miyata

Managing Director
Ko TamaiManaging Director
Takuo Sue

Director
Michiaki Ono

CORPORATE AUDITORSCORPORATE EXECUTIVE OFFICERS

Standing Auditors
Takashi Kato
Masaharu Ogawa

Senior Vice Presidents
Masahide Kajiyama
Tatsuya Sato
Masayuki Nose
Kyoichi Suzuki
Syotaro Chikamoto
Yoichi Chiba
Kaoru Noda

Auditors
Takashi Kakimi
Tadashi Kumakura

18

Executive Officers
Tadashi Matsumoto
Kenji Kondo
Mamoru Komiyama
Suguru Sugiyama
Yoshinobu Tanaka
Yasuhiko Kubota
Etsuo Shibata
Yukuo Asakura

Director
Yasunobu Sasaki

Toyohiro Goto
Akira Takasaki
Katsuo Takeda
Masanori Fukuda
Kazuo Takiguchi
Toshimasa Hattori
Takero Mizoguchi
Minoru Sobami

Financial Review

20

Selected Financial and Operating Data

23

Consolidated Balance Sheets

24

Consolidated Statements of Income and Retained Earnings

26

Consolidated Statements of Cash Flows

27

Notes to the Consolidated Financial Statements

28

Report of Independent Certified Public Accountants

32

Supplemental Non-Consolidated Financial Information

33

Financial Review
Nippon COMSYS Corporation and Consolidated Subsidiaries••••
Information Systems
Overseas Construction

1% 8%

Domestic Construction
and Engineering"Outside" Projects

29%

28%

Sales by Business Category
Nippon COMSYS Corporation and Consolidated Subsidiaries"Inside" Projects

2000¥160,432
37,415
8,926¥151,207
47,476
10,545¥143,705
52,412
7,850¥144,296
66,567
3,007$1,361,283
627,991
28,36814,86316,085

16,555

17,880168,679¥221,636¥225,313¥220,522¥231,750$2,186,321

231.8

Note: Yen figures have been translated into U.S. dollars at the rate of ¥106.00=US$1, rounded, for convenience only, from anapproximate exchange rate of ¥106.15 to the dollar prevailing on 31st March, 2000.

• Revenues •The Japanese government again attempted to stimulate theeconomy through public spending during this fiscal year. These
measures produced some transient upticks in capital investment
in directly affected industries, but structural factors prevented
economic recovery. The exploding information-technology (IT)revolution continued to fuel expansion in the telecommunications
market, and despite poor conditions in other sectors of the industry
this allowed COMSYS to achieve 5.1 percent growth in net sales,to ¥231,750 million (US$2,186 million).
Revenues in the NTT Construction Sector edged up 0.4 percent
to ¥144,296 million (US$1,361 million), following two consecutive years of contraction. This is 62.3 percent of COMSYS’s total
revenues, down from 65.2 percent in the previous term and 67.1
percent in the fiscal year before that. This trend is consistent withand shows the effectiveness of COMSYS’s policy of increasing
non-NTT revenues. “Outside” projects accounted for ¥64,217 million(US$606 million) of the sector’s total, while “inside” projects
accounted for the remaining ¥80,079 million (US$755 million).
Revenues in the Domestic Construction and Engineering Sector
show uninterrupted double-digit growth over the last five years.

Proportion of
Revenues fromNTT Market(¥ Billions, %)75.0

Net sales

65.0

Percentage generated by NTT
Construction Projects

Net Income per Share (¥)

46.73

2000

96 97 98 99 00

96 97 98 99 00• Financial Position •Cash and cash equivalents were increased by 20.1 percent to¥41,892 million (US$395 million). Short-term investments increasedby ¥499 million (US$5 million), and notes and accounts receivable
fell 5.0 percent to ¥59,355 million (US$560 million). The accumulated cost of construction in progress rose 15.0 percent to ¥22,488
million (US$212 million). As a result of the implementation ofdeferred tax accounting, deferred income taxes in the amount of¥2,504 million (US$24 million) were posted. Other current assets
declined by 14.8 percent to ¥1,723 million (US$16 million), andallowance for doubtful receivables was increased substantially.
Current assets, as a result of the foregoing, rose 8.0 percent to¥128,481 million (US$1,212 million).
Short-term bank loans in the amount of ¥632 million (US$6
million) were posted, and trade payables, which ballooned by 21.5
percent during the previous term, increased by 6.4 percent to ¥35,119

Total Assets (¥ Billions)

189.0

1999

1.0

Net income

66.55

1998

2.0

42.97

1997

• Results of Operations •COMSYS succeeded in reversing last year’s increase in costof sales as a percentage of sales, reducing this figure from 87.7
percent in the previous term to 86.8 percent in the period of thisreport. This combined with higher net sales to yield 12.7 percent
growth in gross profit, to ¥30,606 million (US$289 million). Selling,
general, and administrative expenses rose by 16.6 percent to ¥15,047
million (US$142 million), and as a percentage of gross profit grewfrom 47.5 percent in the previous term to 49.2 percent in thisperiod. Operating income, then, rose 9.1 percent to ¥15,559 million(US$147 million). However, a decline in interest and dividend
income, together with an increase in other expenses, caused
income before income taxes and other adjustments to net income
to decline 3.5 percent to ¥13,054 million (US$123 million).
The effective income tax rate declined from last year’s 58.2
percent to 47.0 percent, although deferred income taxes rose
substantially as a result of our shift to deferred tax accounting in
the period of this report. This, together with a large increase inminority interests, allowed 12.3 percent growth in net income, to¥6,315 million (US$60 million). The ratio of net income to net
sales rose from 2.55 percent in the previous term to 2.72 percent,and return on equity increased from last term’s 5.7 percent to 5.8
percent in the period of this report. Net income per share rose 8.8
percent to ¥46.73 (US$0.44). Dividends were held steady at ¥10.00(US$0.09), as we allocated ¥5 per share through the midpoint of
the next fiscal year to a fund for the retirement of treasury stock.

171.7¥184,595

220.5

3.0

166.1

1996

Construction Business
NTT Construction¥133,580
Domestic Construction and Engineering
28,706
Overseas Construction
6,697
Other BusinessInformation Systems
15,612

225.3

4.0

59.15

Millions of yen

221.6

5.0

158.8

Thousands of
U.S. dollars(Years ended 31st March, 1996, 1997, 1998, 1999 and 2000)

184.6

6.0

36.54

62%

60.0

7.0

142.8

NTT Construction

70.0

Operating Income and
Net Income as
Percent of Revenues(%)

Operating income

34%

Total

In the period of this report, this figure increased a substantial 27.0
percent to ¥66,567 million (US$628 million). Revenues in the Overseas Construction Sector plunged 61.7 percent, to ¥3,007 million(US$28 million), as the result of the economic, monetary, andpolitical woes plaguing Southeast Asia. This is the second
consecutive year of dramatic declines in this figure, and brings
revenues in this sector to only 28.5 percent of their level two years
previously. Revenue growth in the Information Systems Sector
accelerated from last year’s 2.9 percent to 8.0 percent, as revenues
in this sector grew to ¥17,880 million (US$169 million).

96 97 98 99 00

96 97 98 99 00

20

21

Selected Financial and Operating Data

115.8

101.7

million (US$331 million). In addition, other accounts payable in theamount of ¥4,412 million (US$42 million) were posted. Advances
received on construction in progress increased by 48.1 percent to¥5,989 million (US$57 million), while other current liabilities
declined by 30.5 percent to ¥2,836 million (US$27 million).
Current liabilities, as a result, were reduced by 3.2 percent to ¥51,554
million (US$486 million). The current ratio, as a result, rose to 2.5.
Investments and other assets rose for the fourth consecutive
term, edging up 0.6 percent to ¥21,854 million (US$206 million).
This was chiefly the result of decreases in investment securities
and long-term loans receivable, offset by increases in deferredincome taxes and other assets. Total property and equipment grew
again during the period of this report, by 24.7 percent to ¥38,626
million (US$364 million) after depreciation. As a result, total
assets grew 10.1 percent to ¥188,961 million (US$1,783 million).
Shareholders’ equity also increased again this term, growing by
13.9 percent to ¥115,834 million (US$1,093 million). This waschiefly the result of the growth of retained earnings.
The capital ratio increased from 59.3 percent in the previous
term to 61.3 percent. Based on the number of shares outstanding at
March 31, 2000, shareholders’ equity per share increased to ¥851.01(US$8.03) from the ¥765.74 recorded at the end of the previous
fiscal year.

Shareholders’ Equity
and Return on Equity(¥ Billions, %)

69.0

62.6

94.7

Nippon COMSYS Corporation and Consolidated Subsidiaries
Years ended 31st March, 1996, 1997, 1998, 1999 and 2000

10.0
8.0

Shareholder’ equity
6.0
4.0
2.0

ROE

96 97 98 99 00

10.00

10.00

14.25
11.75
9.75

• Cash Flows •Net cash provided by operating activities was ¥12,564 million(US$119 million). Income before income taxes and other adjustments to net income of ¥13,054 million (US$123 million) was
adjusted upward by an increase in liability for prior service costs of¥4,241 million (US$40 million), and by an increase in trade payablesof ¥3,498 million (US$33 million). Downward adjustments included¥8,793 million (US$83 million) in cash and cash equivalents paid
for income taxes, and a decrease in provision for accrued severance indemnities of ¥4,920 million (US$46 million).
After acquisitions of property and equipment totaling ¥7,018
million (US$66 million) and ¥1,120 million (US$11 million) incollection of long-term loans, net cash used in investing activities
stood at ¥7,826 million (US$74 million).
Proceeds from the exercise of warrants in the amount of ¥6,214
million (US$59 million) were posted, but redemption of notes withwarrants totaled ¥7,373 million (US$70 million). Acquisitions oftreasury stock in the amount of ¥1,348 million (US$13 million),were posted, as well as cash dividends paid in the amount of ¥1,364
million (US$13 million). The figure of ¥3,626 million (US$34
million) in net cash used in financing activities was posted.
Cash and cash equivalents at the beginning of the year were¥34,887 million (US$329 million). After ¥5,893 million (US$56
million) in adjustments for newly consolidated subsidiaries and anincrease of ¥1,112 million (US$10 million) in cash and cash equivalents, cash and cash equivalents at the end of the year stood at¥41,892 million (US$395 million).

Dividends per Share (¥)

96 97 98 99 00

22

Thousands of
U.S. dollars

Millions of yen
1996

1997

1998

1999

2000

2000

¥184,595
8,737¥221,636
13,733¥225,313
14,348¥220,522
14,261¥231,750
15,559$2,186,321
146,783

8,332
4,156

13,675
6,831

14,333
8,309

13,522
5,625

13,054
6,315

123,151
59,575

Financial Position:
Total assets
Property and equipment
Long-term debt
Shareholders’ equity¥142,765
25,031
24,99562,622¥158,839
26,471
25,12868,979¥166,067
27,334
16,791
94,654¥171,669
30,976
9,409
101,721¥188,961
38,626
9,312
115,834$1,782,651
364,396
87,849
1,092,774

Per Share of Common Stock (in yen and U.S. dollars):
Net income
Cash dividends
Shareholders’ equity¥ 36.549.75
543.96¥ 59.15
11.75
595.77¥ 66.55
14.25
725.59¥ 42.9710.00
765.74¥ 46.7310.00
851.01$4.73 %
2.25
43.9
6.8

6.20%
3.08
43.4
10.4

6.37%
3.69
57.0
10.2

6.47%
2.55
59.3
5.7

6.71%
2.72
61.3
5.8

¥188,97853,378¥226,643
58,385¥235,923
68,995¥229,875
78,348¥228,518
76,781¥ 1,450980¥ 1,560
1,190¥ 2,0201,240¥ 1,7101,280¥ 2,700
1,420

Results of Operations:
Net sales
Operating income
Income before income taxes andother adjustments to net income
Net income

Financial Ratios:
Operating income to net sales
Net income to net sales
Capital ratio
Return on equity
Other Statistics:
New orders received during the year
Contract backlog at end of the year
Common stock price range (in yen):
High
Low

0.44
0.09
8.03

$2,155,830
724,349

Note: Yen figures have been translated into U.S. dollars at the rate of ¥106.00=US$1, rounded, for convenience only, from an approximate exchange rate of¥106.15 to the dollar prevailing on 31st March, 2000.

23

Consolidated Balance Sheets
Nippon COMSYS Corporation and Consolidated Subsidiaries
As of 31st March, 1999 and 2000

Millions of yen

ASSETS
Current Assets:
Cash and cash equivalents
Short-term investments (Note 4)
Notes and accounts receivable—trade
Inventories:
Accumulated cost of construction in progress
Other
Deferred income taxes (Note 7)
Other current assets
Less: Allowance for doubtful receivables
Total current assets

Thousands of
U.S. dollars (Note 1)

1999

2000

2000

¥ 34,887—
62,462¥ 41,892
499
59,355$ 395,208
4,707
559,953

19,549
177
—
2,023
(120)

22,488
169
2,504
1,723
(149)

212,151
1,594
23,623
16,255(1,406)

118,978

128,481

1,212,085

LIABILITIES AND SHAREHOLDERS’ EQUITYCurrent Liabilities:
Short-term bank loans (Note 5)
Current portion of notes and notes with warrants (Note 5)
Accounts payable:
Trade
Other
Advances received on construction in progress
Income taxes payable
Warrants
Other current liabilities

1999

¥

Total current liabilities
Long-Term Liabilities:
Convertibles bonds (Note 5)
Accrued severance indemnities
Provision for possible losses arising from overseas investments
Other long-term liabilities

Investments and Other Assets:
Investment securities:
Unconsolidated subsidiaries and affiliates
Other (Note 4)Long-term loans receivable
Deferred income taxes (Note 7)
Other assets
Less: Allowance for doubtful receivables
Total investments and other assets

Property and Equipment:
Land (Note 5)
Buildings and structures (Note 5)
Machinery and equipment
Construction in progress
Less: Accumulated depreciation
Total property and equipment

4,650
7,671
4,935
—
4,512
(53)

1,535
8,136
4,132
2,309
5,875
(133)

14,48176,75538,981
21,78355,425(1,255)21,71521,854

206,170

17,906
13,493
8,484
1,828(10,735)

23,585
17,125
7,596
2,076(11,756)

222,500
161,557
71,66019,585(110,906)

30,976

38,626364,396¥171,669¥188,961$1,782,651

Total long-term liabilities

—
7,373

2000

¥

632
—

2000

$

5,962
—

33,001
—
4,044
3,826
917
4,080

35,119
4,412
5,989
2,566
—
2,836

331,311
41,62356,50024,207—26,75553,241

51,554

486,358

9,409
5,472
1,592
—

9,312
1,883
1,442
1,945

87,84917,764
13,604
18,34916,473

14,582

137,566

234

6,991

65,95327,983—
26,66647,074—
31,14130,73655,477—
293,783
289,962
523,368

101,723(2)

117,354(1,520)1,107,113(14,339)

101,721

115,834

1,092,774¥171,669¥188,961$1,782,651

Contingent Liabilities (Note 6)
Minority Interests in Consolidated Subsidiaries
Shareholders’ Equity (Note 10):
Common stock, par value ¥50 per share:
Authorized— 250,000 thousand shares (31st March, 1999)— 249,665 thousand shares (31st March, 2000)
Issued— 132,841 thousand shares (31st March, 1999)— 137,166 thousand shares (31st March, 2000)
Additional paid-in capital
Retained earnings
Treasury stock, at cost
Total shareholders’ equity

See Notes to the Consolidated Financial Statements.

24

Thousands of
U.S. dollars (Note 1)

Millions of yen

25Consolidated Statements of Income and Retained Earnings

Consolidated Statements of Cash Flows

Nippon COMSYS Corporation and Consolidated Subsidiaries
Years ended 31st March, 1999 and 2000

Nippon COMSYS Corporation and Consolidated Subsidiaries
Year ended 31st March, 2000

Thousands of
U.S. dollars (Note 1)

Millions of yen
1999

Net Sales:
Construction contracts
Other
Cost of Sales:
Construction contracts
Other
Gross profits
Selling, General and Administrative Expenses
Operating income
Other Income (Expenses):
Interest and dividend income
Interest expenses
Equity in earnings of affiliated companies
Other, net (Note 11)
Income before income taxes and other adjustments to net income
Income Taxes (Note 7):
Current
Deferred
Minority Interests
Net Income
Retained Earnings:
Balance at beginning
Increases arising from:
Adoption of interperiod allocation of income taxes, net
Newly consolidated subsidiaries, net
Appropriations:
Cash dividends
Bonuses to directors
Retirement of treasury stocks
Balance at end

2000¥203,967
16,555220,522¥213,870
17,880231,750$2,017,642
168,679
2,186,321

179,50213,853
193,355
27,167

185,932
15,212
201,144
30,606

1,754,076
143,509
1,897,585
288,736

12,906
14,261

15,047
15,559141,953
146,783

636
(14)
362
(1,723)(739)
13,522470(13)—(2,962)(2,505)
13,054

4,434
(123)
—
(27,943)(23,632)
123,151

7,866
—
7,866
31
5,625

7,218
(1,084)
6,134
605
6,315

68,094(10,226)
57,868
5,708
59,575

43,16147,074444,094

—
—
—

3,208
1,050
4,258

30,264
9,906
40,170

1,599
113
—
1,712
¥ 47,074

1,350
155
665
2,170
¥ 55,477

12,7361,462
6,273
20,471$ 523,368

Yen

Per Share:
Net income
Cash dividends
Weighted average number of shares (in thousands)

2000¥ 42.9710.00
130,890

U.S. dollars (Note 1)¥ 46.73
10.00
135,136

$

0.44
0.09

Cash Flows from Operating Activities:
Income before income taxes and other adjustments to net income
Depreciation and amortization
Write-down of investments and other assets
Increase in allowance for doubtful receivables
Decrease in provision for accrued severance indemnities
Increase in liability for prior service cost
Decrease in provision for possible losses arising from overseas investments
Interest and dividends received
Interest expenses
Loss on disposal of property and equipment
Gain on sale of securities
Decrease in receivables, trade
Decrease in inventories
Increase in payables, trade
Directors’ bonuses paid
Other
Cash and cash equivalents received on interest and dividends income
Cash and cash equivalents paid for interest expenses
Cash and cash equivalents paid for income taxes
Net cash provided by operating activities
Cash Flows from Investing Activities:
Increase in short-term investments, net
Acquisitions of property and equipment
Acquisitions of other assets
Proceeds from sale of property
Increase in long-term loans
Collection of long-term loans
Other
Net cash used in investing activities
Cash Flows from Financing Activities:
Increase in short-term borrowings, net
Repayment of long-term debt
Redemption of notes with warrants
Proceeds from exercise of warrants
Acquisitions of treasury stock
Cash dividends paid
Net cash used in financing activities
Net Increase in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of Year
Cash and Cash Equivalents at Beginning of Year Adjusted for Newly Consolidated Subsidiaries
Cash and Cash Equivalents at End of Year
Supplemental Disclosure of Cash Flow Information:
Conversion of convertible bonds to common stock
See Notes to the Consolidated Financial Statements.

See Notes to the Consolidated Financial Statements.

26

27

Millions of yen

Thousands of
U.S. dollars (Note 1)¥13,054
1,665
311
81
(4,920)
4,241
(150)
(470)
57
68
(124)
2,922
458
3,498
(182)
443
20,952462(57)(8,793)
12,564$123,151
15,7082,934
764(46,415)
40,009(1,415)(4,434)538
641(1,170)27,566
4,321
33,000(1,717)
4,179
197,660
4,359(538)(82,953)
118,528(48)(7,018)
(702)
166
(693)
1,120
(651)
(7,826)(453)(66,207)(6,623)
1,566(6,538)
10,566(6,141)(73,830)265(20)(7,373)
6,214(1,348)(1,364)(3,626)
1,112
34,887
5,893¥41,892

2,500
(189)
(69,556)
58,623(12,717)(12,868)(34,207)
10,491
329,123
55,594$395,208

¥

$

97

915

Notes to the Consolidated Financial Statements
Nippon COMSYS Corporation and Consolidated Subsidiaries

1. Basis of Presenting Consolidated Financial Statements
The accompanying consolidated financial statements have been prepared fromaccounts and records maintained in Japanese yen by Nippon COMSYS
Corporation (the “Company”) and its subsidiaries (together, hereinafter referred
to as the “Companies”) in conformity with accounting principles and practices generally accepted in Japan (hereinafter referred to as the “GAAP ofJapan”), which are different in certain respects as to application and disclosure requirements from International Accounting Standards. Also, the accompanying consolidated financial statements have been prepared from theconsolidated financial statements filed with the Ministry of Finance of Japanas required by the Securities and Exchange Laws of Japan. Certain reclassifications of account balances have been made so as to present the financial statements in a form that is more familiar to readers outside Japan.
The accounts and records of the Companies are maintained in Japaneseyen. The accompanying consolidated financial statements have been presented
in Japanese yen and have also been presented in U.S. dollars by translating all
Japanese yen amounts using the rate of ¥106.00 to US$1. The presentation ofsuch dollar amounts is solely for the convenience of the readers and is notintended to imply that yen amounts have been or could be converted, realized
or settled in dollars at that or at any other rate.
Effective from a financial year beginning on and from 1st April, 1999, theregulations under the Securities and Exchange Laws of Japan have required
the preparation of consolidated statements of cash flows, which were notprepared by the Company for the year ended 31st March, 1999.
Certain reclassifications have been made in the 1999 consolidated financial statements to conform to the classifications used in 2000.

2. Summary of Significant Accounting Policies(a) Principle of consolidation
The consolidated financial statements as at, and for the years ended, 31st March,
1999 and 2000, include the accounts of the Company, Okoshi Denken Co.,
Ltd., and Tokyo Denwa Shisetsu Co., Ltd.
Effective from the year ended 31st March, 2000, Tsuken Kiko Co., Ltd.,COMSYS Techno Co., Ltd., COMSYS Tec Co., Ltd., and Taiei Seisakusho
Co., Ltd., have been consolidated, since their aggregate sales, total assets, net
income and retained earnings have become material. Also, effective from theyear ended 31st March, 2000, Tokyo Tsuken Co., Ltd., and Nitto Tsuken Co.,
Ltd., to which the equity method was applied for the year ended 31st March,
1999, have been consolidated, since the GAAP of Japan have required consolidation of substantially controlled companies (including direct and indirectownership less than 50%) whose aggregate sales, total assets, net income andretained earnings are material.
The financial year-end of consolidated subsidiaries is 31st December.
Accounts of those subsidiaries have been adjusted for significant transactions
to properly reflect their financial positions at 31st March, 2000, and the resultsof operations for the year ended 31st March, 2000. Okoshi Denken Co., Ltd.,Tokyo Denwa Shisetsu Co., Ltd., COMSYS Tec Co., Ltd., and Taiei Seisakusho
Co., Ltd., changed their financial year-end from 31st March to 31st December
in 1999. Accordingly, their financial periods ended in 1999 were the nine months
from 1st April to 31st December, 1999.
For the purposes of preparing the consolidated financial statements, allsignificant inter-company transactions, account balances and unrealized profits
among the Companies have been eliminated.

The accounts of other subsidiaries were not consolidated, since theiraggregate sales, total assets, net income and retained earnings have little affectupon the total consolidated results of operations and assets. Investments in
non-consolidated subsidiaries and affiliates are carried at cost due to theirimmateriality.
(b) Point of sales—construction contracts
Construction contracts of the Companies are accounted for by the completedcontract method. The accumulated cost of uncompleted construction is shown
as “accumulated cost of construction in progress” and the related billings(advances received) on uncompleted construction contracts are shown as“advances received on construction in progress” in the accompanying balance
sheets.
(c) Cash and cash equivalents
For purposes of the consolidated statements of cash flows, the Companies consider all highly liquid debt instruments and investment trusts with maturitiesof three months or less to be cash equivalents.
(d) Short-term investments and investment securities
Short-term investments and investment securities listed on stock exchanges(excluding securities trading on over-the-counter markets) are stated at thelower of cost or market, cost being determined by the periodic average method.
In accordance with Japanese accounting practice, the comparison of cost withmarket value is made for each security individually and is not made between
the aggregate cost and the aggregate market value of the securities. Other
securities without market quotations on stock exchanges and investments in
subsidiaries and affiliates are stated at cost, determined by the periodic averagemethod.
(e) Accumulated cost of construction in progress
In connection with (b) above, “accumulated cost of construction in progress”
is stated on an individual project basis.
(f) Inventories
Inventories (excluding (e) above) are stated at cost, by the moving averagemethod.
(g) Property and equipment
Property and equipment are stated at cost. Depreciation is computed primarily
by the declining-balance method, as prescribed by Japanese income tax laws,
using estimated useful lives of assets principally as follows:
Buildings and structures
8 to 50 years
Machinery and equipment 3 to 10 years(h) Intangible assets and deferred charges
Intangible assets including software are amortized by the straight-line method
over the estimated useful lives of assets, primarily as prescribed by Japaneseincome tax laws. Research and development costs are charged to income as
incurred.
(i) Leases
Financial leases that do not transfer ownership of the property to lessee areaccounted for as transactions of rent. Under GAAP of Japan, financial leases
in which ownership of the property is deemed to be transferred to the lessee
are treated as capital leases, while it is permitted to treat others as operatingleases if certain “as if capitalized” information is disclosed in the notes to thelessee’s financial statements.

28(j) Liability for severance indemnities
Employees of the Companies are usually entitled to lump-sum severance
indemnities determined by reference to their current basic rate of pay, lengthof service and conditions under which the termination occurs.
On 1st February, 1997, the Company established a contributory employees’ pension fund with the permission of the Minister of Health and Welfare ofJapan, composed of a portion covering benefits for the severance indemnities
and another portion covering social security benefits, to which the Company
and employees make contributions. The Company’s policy for this fund is tocontribute and charge to income normal costs as accrued on the basis of an
accepted actuarial method. The unrecognized prior service cost is primarily
contributed at half of the amount in each year and amortized as incurred (SeeNote 3).
The assets of this fund as at 31st March, 2000, were ¥29,195 million(US$275,425 thousand).
Before the contributory employees’ pension fund was established, severance indemnities and benefits had been accounted for and reserved as “accrued
severance indemnities” and funded through tax qualified pension plans. On its
establishment, all assets of the tax qualified pension plans were transferred tothe contributory employees’ pension fund, as well as the remaining balance of“accrued severance indemnities” that had been reversed over 10 years until thefinancial year ended 31st March, 1999. In the financial year ended 31st March,
2000, the Company reversed the remaining balance of “accrued severance
indemnities” as of 31st March, 2000, due to an accounting change (See Note 3).
Consolidated subsidiaries provide for severance indemnities based on theliability if all eligible employees were to voluntarily terminate employment on
the balance sheet date. In addition, six of the subsidiaries have funds for tax
qualified pension plans and two of the subsidiaries have funded non-contributory
pension plans.
Most of the Companies provide for lump-sum retirement provisions for
directors and corporate auditors at the amounts that would accrue if all directors and statutory auditors terminated their services on the balance sheet date.
Payments of these allowances are subject to approval at the shareholders’meeting.
(k) Warrants
The warrants are accounted for separately from the notes and treated as a current liability for the purpose of balance sheets, in conformity with the GAAP
of Japan.
(l) Income taxes
Deferred tax assets and liabilities arising from temporary differences between
financial and tax reporting are measured using the enacted tax rates and laws
which will be in effect when the differences are expected to reverse. For the
purpose of preparing consolidated financial statements, deferred tax assets
and liabilities also arose from the elimination of unrealized profits among theCompanies and the adjustment of allowance for doubtful receivables causedby the offsetting of inter-company receivables and payables.
Effective from the financial year beginning on and from 1st April, 1999,
the GAAP of Japan have required the adoption of interperiod allocation ofincome taxes, which was not adopted by the Companies for the year ended
31st March, 1999. The effect of this change was to increase “net income” by¥1,063 million (US$10,028 thousand) and “retained earnings—balance at end”
by ¥4,271 million (US$40,292 thousand) for the year ended 31st March, 2000,
respectively.

29(m) Appropriations of retained earnings
Appropriations of retained earnings of the Company at each year-end arereflected in the consolidated financial statements for the following year uponshareholders’ approval (See Note 12 (a)).
(n) Net income and cash dividends per share
The computations of net income per share shown in the consolidated statements of income and retained earnings are based on the weighted average number of shares outstanding during each year. Cash dividends per Share are basedon the cash dividends applicable to the respective years, including dividends
to be paid after the end of the year.

3. Accounting Change
In November, 1999, the Company changed a contract condition of contributing unrecognized prior service cost from installment payments over 10 years
to payments at primarily one half of the amount in each year. According withthis change, the Company also changed its basis of amortization of unrecognized prior service cost from a cash basis (the amount to be contributed byinstallment payments over 10 years had been amortized in each year) to an
accrual basis (amortized as incurred), with effect from the year ended 31st
March, 2000. These changes were made to strengthen the financial structureof the Company and employees’ pension fund, and to present fairly periodic
pension cost. The cumulative effect on prior years of this accounting changeamounted to ¥7,100 million (US$66,981 thousand) and was charged to “Other
Income (Expenses)—Other, net” (See Note 11).
Due to this accounting change, the Company reversed the remaining balance of “accrued severance indemnities” amounted to ¥4,312 million(US$40,679 thousand) and charged to “Other Income (Expenses)—Other, net”
in conformity with the GAAP of Japan (See Note 11).
As a result of this accounting change, “income before income taxes andother adjustments to net income” decreased by ¥2,788 million (US$26,302
thousand).

4. Market Value Information of Securities
At 31st March, 2000, book and aggregate market values of short-term investments and investment securities, respectively, were as follows:
Millions of yen
BookMarketvalue
value

Short-term investments:
Bonds and others
Investment securities:
Stocks
Bonds
OthersThousands of
U.S. dollars
Book
Market
value
value

¥ 307

¥

284

$ 2,896$ 2,679

3,828
1,954
1,064

12,2492,172
1,023

36,113
18,434
10,038

115,557
20,4909,651¥7,153¥15,728$67,481$148,377

From above table, mainly certain securities were excluded as follows:

Investment securities:
Unlisted common stocks

Millions of yen

Thousands of
U.S. dollars¥1,141$10,764

5. Short-Term Bank Loans and Long-Term Debt:

7. Income Taxes

The weighted average interest rates of short-term bank loans as at the year
ended 31st March, 2000, was approximately 1.128 per cent.
At 31st March, 2000, short-term bank loans of two consolidated subsidiaries amounting to ¥380 million were secured. A summary of assets pledged
as collateral consisted of the following:

The Companies are subject to corporate (national), inhabitant and enterprise(local) taxes based upon taxable income, which resulted in statutory tax rates
of approximately 42%, in aggregate, for both years ended 31st March, 1999
and 2000. The effective tax rate reflected in the accompanying consolidated
statements of income and retained earnings for the year ended 31st March,
1999, differs from the statutory tax rate primarily due to such items as permanently non-deductible expenses and timing differences in recognizing certain
income and expense items for financial and tax reporting purposes.
The differences between the statutory tax rate and effective tax rate reflectedin the consolidated statements of income for the ended 31st March, 2000,
primarily consisted of the following:

Buildings and structures,
net of accumulated depreciation
Land

Millions of yen

Thousands of
U.S. dollars

¥198
33

$1,868311¥231$2,179At 31st March, 1999 and 2000, long-term debt consisted of the following:
Millions of yen
1999
2000

31st March

0.5 per cent. Swiss franc notes due 1999
0.3 per cent. yen unsecured
convertible bonds due 2003
Current portion

Thousands of
U.S. dollars
2000¥ 7,373¥

9,409¥16,782
7,373

9,312
¥9,312—

87,849$87,849—¥ 9,409¥9,312$87,849—$—

Convertible bonds
At 31st March, 2000, unsecured convertible bonds consisted of the following:
The original amount issued at 24th June, 1996
¥10,000 million
Balance as at 31st March, 2000
¥9,312 million
Interest rate
0.3%
Maturity date
31st March, 2003
Conversion period:
On and after
1st August, 1996
Up to and including
28th March, 2003
Conversion price:
At 31st March, 2000
¥1,435(US$13.54)
The number of shares of common stock required for conversion of the above
unsecured convertible bonds outstanding at 31st March, 2000, at the current
conversion price would have been approximately 6,489 thousand. The conversion price is subject to adjustment under certain circumstances, including stock
splits pursuant to the relevant agreement.

6. Contingent Liabilities
At 31st March, 1999 and 2000, contingent liabilities consisted of the following:

31st March

Guarantee of loans borrowed by:Thai Telecommunications Engineering
Co., Ltd.
COMSYS-TTEC J.V.
COMSYS Philippines, Inc.
Other

Millions of yen
1999
2000

Thousands of
U.S. dollars
2000¥3,596
2,748
772
1,102

¥2,008
2,458
680
131

$18,943
23,1896,415
1,236¥8,218¥5,277$49,783

Statutory tax rate of the Company
Effects of:
Expenses permanently not deductible for income tax purpose
Dividend income deductible for income tax purpose
Other, net

42.0%

Effective tax rate

47.0%

3.1
(0.4)
2.3

Deferred tax assets and liabilities of the Companies for the year ended 31st
March, 2000, primarily consisted of the following:

Deferred tax assets:
Accrued bonuses
Accrued enterprise tax
Accrued severance indemnities
Accrued prior service cost
Provision for possible losses arisingfrom overseas investments
Other

Millions of yen

Thousands of
U.S. dollars¥1,204
196
657
1,781

$11,358
1,849
6,198
16,802

606
426

5,717
4,019

4,870

45,943

(57)

(537)

(57)

(537)

¥4,813$45,406

Deferred tax liabilities:
Deferred gain on exchange of lands
Net deferred tax assets

8. Leases as Lessee
The Companies lease mainly machinery and equipment by financial leases.
Pro forma amounts of the acquisition costs (including the interest portion
thereon), accumulated depreciation (depreciation expenses of the leased property were computed by the straight-line method over the respective lease terms)
and net book value of leased property as of 31st March, 1999 and 2000, which
would have been reflected in the consolidated balance sheets if capitalized
were as follows:
Thousands of
U.S. dollars
2000

31st MarchMillions of yen
1999
2000

Acquisition costs
Accumulated depreciation¥1,055613¥1,167684$11,010
6,453

Net book value

¥ 442

¥ 483

$ 4,557

30

Lease payments relating to financial leases accounted for as transactions ofrent amounted to ¥209 million and ¥221 million (US$2,085) for the years ended
31st March, 1999 and 2000, respectively.
Obligation (including the interest portion thereon) under financial leases
at 31st March, 1999 and 2000, were as follows:
Thousands of
U.S. dollars
2000

31st MarchMillions of yen
1999
2000

Due within one year
Due after one year

¥180
262

¥209
274

$1,972
2,585

¥442

¥483

$4,557Total

9. Segment Information
The Companies’ operating results consisted of two business segments. Information by business segment for the years ended 31st March, 1999 and 2000,
were summarized as follows:

31st MarchMillions of yen
1999
2000

Thousands of
U.S. dollars
2000(a) Sales, operating expenses and operating Income
Construction business:
Sales to outside customers¥203,967 ¥213,870 $2,017,642
Operating expenses
191,708 200,315 1,889,764
Operating income
Other business:
Sales to outside customers
Operating expenses
Operating income
Total:
Sales to outside customers
Operating expenses
Operating income¥ 12,259 ¥ 13,555 $ 127,878¥ 16,555 ¥ 17,880 $ 168,679
14,553
15,876
149,774¥ 2,002 ¥ 2,004 $11. Other Income and Expenses“Other, net” in “Other Income (Expenses)” consisted of the following:

31st MarchMillions of yen
1999
2000

Thousands of
U.S. dollars
2000(Provision for)/Reversal from possible
losses arising from overseas investments ¥(1,592) ¥ 150 $ 1,415
Reversal of accrued severance indemnities—
4,312
40,679Amortization of the unrecognizedprior service cost—
(7,100) (66,981)
Amortization of discounts on note premium (298)——Write-down of investments and other assets
(16)
(311)
(2,934)
Other
183
(13)
(122)
¥(1,723) ¥(2,962) $(27,943)

18,905

12. Subsequent Events¥220,522 ¥231,750 $2,186,321
206,261 216,191 2,039,538¥ 14,261 ¥ 15,559 $ 146,783(b) Assets, depreciation and capital expenditures
Construction business:
Assets¥159,647 ¥175,299 $1,653,764
Depreciation
1,508
1,576
14,868
Capital expenditures
5,069
7,188
67,811Other business:
Assets12,022
13,662
128,887
Depreciation
75
88
830
Capital expenditures
391
588
5,547
Total:
AssetsDepreciation
Capital expenditures

10. Shareholders’ Equity
The Commercial Code of Japan (the “Commercial Code”) provides that an
amount of not less than 10 per cent. of the amount of cash dividends and bonuses
to directors paid be appropriated as legal reserve until such reserve equals 25
per cent. of common stock. This reserve is not available for dividends but may,subject to shareholders’ approval, be used to reduce deficits or may be capitalized subject to a resolution of the Board of Directors. The reserve of the Company included in “retained earnings” as at 31st March, 2000, was ¥1,834 million(US$17,302 thousand).
Under the Commercial Code, an amount equivalent to at least one-half ofproceeds from issues of shares shall be accounted for as an addition to thecommon stock account at a minimum of ¥50 per share. The remaining portionof the proceeds is accounted for as an addition to “additional paid-in capital.”¥171,669 ¥188,961 $1,782,651
1,583
1,664
15,6985,460
7,776
73,35831(a) Appropriations of retained earnings
On 29th June, 2000, the shareholders of the Company approved the following
appropriations of retained earnings:

Cash dividends
Transfer to legal reserve
Bonuses to directors

Millions of yen

Thousands of
U.S. dollars

¥684
80
58

$6,453755547(b) Contribution of investment securities to trust fund for employees’
pension plan
On 27th April, 2000, the Board of Directors of the Company approved thecontribution of investment securities (listed stocks) to a trust fund for theemployees’ pension plan of the Company up to 30th September, 2000.
This contribution is to reduce a liability relating to the pension plan at 1st
April, 2000, approximately amounting to ¥8,700 million (US$82,075 thousand), which shall be recognized under the GAAP of Japan with effect fromthe financial year beginning on and from 1st April, 2000.

Report of Independent Certified Public Accountants

Supplemental Non-Consolidated Financial Information

•
•
•
•
•

Nippon COMSYS Corporation
Years ended 31st March, 1999 and 2000

Millions of yen
1999
2000

Net sales
Operating income
Net income
Total assets
Shareholders’ equity¥219,764
13,877
5,075
166,002
96,635

8TH FLOOR NO.10 MORI BUILDING
1-18-1 TORANOMON MINATO-KU
TOKYO 105-0001 JAPANCERTIFIED PUBLIC ACCOUNTANTS

Yen

Per share:
Net income
Cash dividends

公認会計士桜友共同事務所

To the Board of Directors,
Nippon COMSYS Corporation
We have examined the consolidated balance sheets of Nippon COMSYS Corporation and its consolidated
subsidiaries as of 31st March, 1999 and 2000, and the related consolidated statements of income and retained
earnings for each of the two years ended 31st March, 2000 and the related consolidated statements of cash flows for¥226,146
13,626
5,818
171,802110,400¥ 38.78
10.00

Thousands of
U.S. dollars
2000

Change(%)$2,133,453
128,547
54,887
1,620,774
1,041,509

2.9%
–1.8%
14.6%
3.5%
14.2%

U.S. dollars¥ 42.78
10.00

$

0.40
0.09

Note: Yen figures have been translated into U.S. dollars at the rate of ¥106.00=US$1, rounded, for convenience only, from an approximate exchange rate of¥106.15 to the dollar prevailing on 31st March, 2000.

the year ended 31st March, 2000, all expressed in Japanese yen. Our examinations were made in accordance withauditing standards, procedures and practices generally accepted and applied in Japan and, accordingly, included
such tests of the accounting records and such other auditing procedures as we considered necessar y in thecircumstances.
In our opinion, the consolidated f inancial statements referred to above present fairly, the consolidated financial
position of Nippon COMSYS Corporation and its consolidated subsidiaries as of 31st March, 1999 and 2000, and the

8.0

Net Sales(¥ Billions)

Net Income(¥ Billions)250

consolidated results of their operations for each of the two years ended 31st March, 2000 and their cash flows for theyear ended 31st March, 2000, in conformity with accounting principles and practices generally accepted in Japan (seeNote 1) applied on a consistent basis except as follows:

6.0

200

As discussed in “Note 3. Accounting Change”, the Company changed its basis of amortization of unrealizedprior service cost from cash basis (the amount to be contributed by installment payments had been amortized in each

Consolidated

Consolidated

150year) to accrual basis (amortized as incur red), with effect from the year ended 31st March, 2000. This change wasappropriately made for fair presentation of periodic pension cost. The cumulative effect on prior years of this change
decreased “income before income taxes and other adjustments to net income” by ¥7,100 million for the year ended

Non-Consolidated

4.0

Non-Consolidated

31st March, 2000. Due to this change, the remaining balance of “accrued severance indemnities” of the Company

100

2.0

was reversed in conformity with accounting principles and practices generally accepted in Japan, and “income before
income taxes and other adjustments to net income” was increased by ¥4,312 million. Therefore, as a result of thisaccounting change, “income before income taxes and other adjustments to net income” was decreased by ¥2,788
million for the year ended 31st March, 2000.

96 97 98 99 00

96 97 98 99 00

Interperiod allocation of income taxes was adopted with effect from the year ended 31st March, 2000, in
conformity with revision of accounting principles and practices generally accepted in Japan. The effect of this80

change was to increase “net income” for the year ended 31st March, 2000 by ¥1,063 million in the aggregate and“retained earnings” as at 31st March, 2000 by ¥4,271 million.
The U.S. dollar amounts, presented solely for the convenience of the readers, have been translated on the basis
stated in Note 1.

190

Total Assets(¥ Billions)

Net Income per Share
(¥)

60

160

Masatoshi Yoshino

Eiji Miyashita

Hideo Niwa

Consolidated

40

Consolidated

130

Certified Public Accountants of Japan
29th June, 2000

Non-Consolidated

Non-Consolidated

20

100

96 97 98 99 00

96 97 98 99 00

32

10.3%
0.0%

33

Organization Chart

Corporate Information

As of July 1, 2000

As of March 31, 2000

•
•
•
•
•

•
•
•
•
•

Head Office:Transfer Agent:West Japan Headquarters

23-14, Takanawa 3-chome, Minato-ku
Tokyo 108-8610, Japan
Tel: 81 (3) 3448-7031

The Mitsubishi Trust and Banking Corporation
Securities Department
4-5, Marunouchi 1-chome
Chiyoda-ku, Tokyo 100-0005

Corporate Planning Division

Overseas Division:
Number of Employees:

Tel: 81 (3) 3448-7181
Fax: 81 (3) 3440-5941

General Affairs Department

Parent company
3,728
Consolidated subsidiaries 1,022
Total
4,750

Branches:
Senior Management Committee

Public Relations Office

Hokkaido, Tohoku, Akita, Fukushima, Kantominami,
Kantonaka, Tochigi, Shinetsu, Niigata, Tokai,
Hokuriku, Kansai, Chugoku, Shikoku, Takamatsu,
Kyushu, Okinawa

Finance & Accounting Department

Board of Directors

Auditing Department

Main Clients:
Nippon Telegraph and Telephone Corporation (NTT)
Nippon Telegraph and Telephone East Corporation (NTT EAST)
Nippon Telegraph and Telephone West Corporation (NTT WEST)NTT Communications Corporation (NTT COMMUNICATIONS)NTT Data Corporation (NTT DATA)NTT DoCoMo, Inc. (NTT DoCoMo)
KDD Corporation
DDI Corporation
Tokyo Telecommunication Network Co., Inc.
Sharp Corporation
Japan Highway Public Corporation
RECRUIT Co., Ltd.
The Tokyo Electric Power Co., Inc.
Fuji Xerox Co., Ltd.
The Furukawa Electric Co., Ltd.
Sumitomo Electric Industries, Ltd.
Fujikura Ltd.
Hitachi Cable, Ltd.
NEC Corporation
Fujitsu Limited
Mitsubishi Corporation
Mitsui & Co., Ltd.
Sumitomo Corporation
Marubeni Corporation
Lucent Technologies
Telephone Organization of Thailand (Thailand)
Ministry of Communications (Kuwait)
TelecomAsia Corporation Public Co., Ltd. (Thailand)
Thai Telephone & Telecommunication Public Co., Ltd. (Thailand)
Philippine Long Distance Telephone Co. (Philippines)
Bayan Telecommunications, Inc. (Philippines)
Globe Telecom Inc. (Philippines)
Smart Communications, Inc. (Philippines)

Overseas Liaison Office:Bangkok, Thailand Tel: 66 (2) 319-5551

Personnel Department

Establishment:
Chairman of the Board

President

Welfare Department

1951

Human Resources Department

Common Stock:
Authorized: 249,665,000 shares
Issued: 137,166,252 shares

Materials Control & Procurement Department

Number of Shareholders:
Overseas Division

Statutory Auditors

6,445

Paid in Capital:

Sales and Marketing Headquarters¥31,141 million

Stock listings:

Safety & Quality Control Division

Common stock—Tokyo, Osaka
Engineering Division

Hokkaido

Tokyo Metropolitan Division

Solutions Business Division
Akita

Architecture Division

TohokuFukushima
Niigata

Technology Research & Development Center
Shinetsu

Tochigi
Kantonaka
TOKYO
Kantominami

Bank References:
The Bank of Tokyo-Mitsubishi, Ltd.
The Mitsubishi Trust and Banking Corporation
The Dai-Ichi Kangyo Bank, Ltd.
The Fuji Bank, Limited
The Sanwa Bank, Limited
The Sumitomo Bank, Limited
The Industrial Bank of Japan, Limited

Kansai Tokai

Chugoku
KyushuHokuriku

Takamatsu
ShikokuHead Office
BranchOkinawa

34

Bangkok Liaison Office35

Corporate Directory
Nippon COMSYS Corporation
As of March 31, 2000

Paid-in
CapitalPercentage
Owned (%)

Company Name

Location

Principal Business

Consolidated Subsidiaries
Okoshi Denken Co., Ltd.

Tokyo, Japan

Telecommunications engineeringand electrical engineering

Tokyo Denwa Shisetsu Co., Ltd.

Tokyo, Japan

Design of telecommunications¥ 40 million
facilities and civil engineering projects

85.3

Tsuken Kiko Co., Ltd.

Tokyo, Japan

Construction of telecommunications
facilities¥ 30 million

100.0

COMSYS Techno Co., Ltd.

Tokyo, Japan

Planning and consultation with regard ¥ 50 million
to information-processing technology

100.0

COMSYS Tec Co., Ltd.

Tokyo, Japan

Construction of telecommunications
facilities¥ 90 million

79.8

Tokyo Tsuken Co., Ltd.

Tokyo, Japan

Construction of telecommunications
facilities¥ 54 million

39.2

Nitto Tsuken Co., Ltd.

Tokyo, Japan

Construction of telecommunications
facilities¥ 60 million

33.3

Taiei Seisakusho Co., Ltd.

Kanagawa, Japan

Design, manufacturing, and salesof telecommunications equipment¥ 60 million

49.7

Major Non-Consolidated Subsidiaries
COMSYS Tusan Co., Ltd.

Tokyo, Japan

Sales of construction materials¥ 60 million

94.0

Nippo Kensetsu Kogyo Co., Ltd.

Tokyo, Japan

Civil engineering¥ 50 million

54.5

COMSYS Business Service Co., Ltd.

Tokyo, Japan

Construction of telecommunications
facilities¥304 million

100.0

Overseas Affiliates
Thai Telecommunications
Engineering Co., Ltd.

Bangkok, Thailand

Technological consulting
and engineering services

B15,000 thousand

48.0

Thai COMSYS & Jackson Co., Ltd.

Bangkok, Thailand

Technological consulting
and engineering services

B 2,000 thousand

49.0

COMSYS Philippines, Inc.

Manila, Philippines

Technological consulting
and engineering services

P12,500 thousand

30.0

CMC Engineering SDN. BHD.

Kuala Lumpur,
Malaysia

Technological consulting
and engineering services

RM1,053 thousand

30.0

36

¥ 60 million

96.4%*This Company’s financial data is available on the Internet at URL http://www.comsys.co.jp/
Printed on paper certified as recycled by the Eco Mark Officeof the Japan Environment Association.

Nippon COMSYS Corporation
23-14, Takanawa 3-chome, Minato-ku, Tokyo 108-8610, Japan
Telephone: 81(3) 3448-7031

Printed in Japan