TABLE OF CONTENTS

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Contents
ProfileFinancial Highlights
To Our Shareholders and Investors
Medium-term Management Plan
Management’s Discussion and Analysis of Financial Condition and Results ofOperations
Principal Shareholders
Board of Directors, Corporate Auditors and Executive Officers
Organization Chart
Independent Auditors’ Report
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Changes in Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Global Network
Corporate History
Investor Information
Stock Information

Forward-Looking Statements:
This annual report contains forward-looking statements about Chiyoda Corporation’s outlooks, plans, forecasts, results and other items that may takeplace in the future. Such statements are based on data available as of June 24, 2008. Unknown risks and other uncertainties that happen in the future
may cause our actual results to be different from the forward-looking statements contained in this report. The risks and uncertainties include businessand economic conditions, competitive pressure, changes in laws and regulations, addition or elimination of products, and exchange rate fluctuation,
among others.

PROFILE

Since its establishment in 1948, Chiyoda Corporation has engaged in engineering and construction work andservices at numerous industrial plants both in Japan and overseas in the fields of oil, natural gas and other energy
sources; petrochemicals and chemicals; pharmaceuticals; and general industrial machinery.
Thirty-six years ago in 1972, Chiyoda’s founder was already emphasizing that sustainable social development
should progress by harmonizing nature and industrial development in a booklet entitled “Legacy for the Twenty-first
Century.” We are one of the first companies to state our intention to contribute to sustainable social development
through our engineering and technology by providing appropriate solutions to the various energy and environmental
issues we currently face, and have been putting those words into action ever since. This booklet is available on our
website.
With 60 years of technological experience, Chiyoda is working to build on its position as the “Reliability No. 1”
project company with a high level of customer and investor trust, not only in terms of technology but also in terms ofour people and management. At the same time, we will continue to improve our financial strength and raise ourcorporate value.

Corporate Philosophy
Enhance our business and contribute to the development of a sustainable society as an integrated engineering
company through the use of our collective wisdom and painstakingly developed technology.

The Chiyoda Group’s Strengths
Superior technologies, including project execution capabilities, and the people that support them
1. Technological Superiority
Chiyoda’s core elemental technologies encompass environmentally responsible technologies, catalysts andenergy-saving technologies, while execution technologies focus on managing the costs and schedules of projects inprogress and ensuring reliable quality. Our execution technologies are supported by the most advanced information
technology, which currently applies to our project execution at every stage from design and procurement toconstruction of ultra-large-scale liquefied natural gas (LNG)* plants and other facilities. This technology isembodied in our integrated project engineering software, “i-Plant 21,” which Chiyoda developed and continues toenhance.
* LNG is manufactured by liquefying natural gas. Demand for this clean energy is increasing.
2. Chiyoda Group
Human Resources
Chiyoda is working to create an environment in which our people can make their dreams a reality through ourengineering. We cultivate professionals through on-the-job training and career development programs according toindividual competencies. This supports our ability to successfully execute projects.

-1-

FINANCIAL HIGHLIGHTS(As of and for the years ended March 31, 2007 and 2008)
1. Consolidated Performance
2008

2007

(millions of yen)
(1) Consolidated financial results:
Revenue
Gross profit
Operating income
Income before income taxes and minority
interests
Net income
Net income, basic per share (yen, U.S. dollars)
Net income, diluted per share (yen, U.S. dollars)
Return on equity (ROE)
Return on assets (ROA)
Operating income to revenues(2) Consolidated financial position:
Total assets
Total equity
Shareholders' equity ratio
Net assets per share (yen, U.S. dollars)(3) Consolidated cash flows:
Operating activities
Investing activities
Financing activities
Cash and cash equivalents, end of year

2008 / 2007
(percentagechange)2008(thousands of
U.S. dollars)¥603,560
20,5258,840¥484,895
39,73628,70024.5%-48.3%-69.2%$6,035,600
205,250
88,40018,9929,641¥50.15
50.12
12.2%
4.7%
1.5%

37,93523,532¥122.41
122.28
35.5%
10.2%
5.9%

-49.9%-59.0%-59.0%-59.0%

189,920
96,410$0.50
0.50¥378,820
81,63821.4%¥422.44¥442,953
77,41517.4%¥400.56-14.5%
5.5%$3,788,200
816,380

5.5%

$4.22

¥14,274(3,917)(17,220)70,089¥35,532(3,458)(2,191)
77,052

Dividends per Share
Year-end
Annual(yen)¥15.00¥15.00
10.00
10.00
11.00
11.00

Payment of
Cash
Dividends(Annual)(millions of yen)
¥2,884
1,923-$142,740(39,170)(172,200)
700,890

2. Dividends

2007
2008
2009 (Forecast)

3. Consolidated Results Forecast for Year Ending March 31, 2009

Revenue
Operating income
Net income
Net income, basic per share (yen)PayoutRatio(Consolidated)
(%)
12.3%
19.9%
30.0%

Dividend on
Equity Ratio(Consolidated)
(%)
4.4%
2.4%
-

2009
InterimFull Year(millions of yen)
¥230,000¥460,000
5,000
12,5004,000
9,500¥16.08¥37.40Notes:
1. U.S. dollar amounts are converted, for convenience only, at the rate of ¥100 = U.S.$1, the approximate exchange rate
in March 31, 2008.
2. Yen amounts are rounded to the nearest million. U.S. dollar amounts and percentages are rounded to the nearest unit.
3. Return on equity (ROE) = Net income / Average shareholders' equity
4. Return on assets (ROA) = Ordinary income / Average total assets
5. Forecasts stated above disclosed on May 14, 2008 in the Consolidated Financial Results.

-2-

TO OUR SHAREHOLDERS AND INVESTORS

Career Summary
1969: Joined Chiyoda Corporation
1995: Project General Manager, Second Overseas Project Division
1998: Director, General Manager, Asia & Australia Project Division
2001: Managing Director, International Project Operation
2004: Director, Deputy General Manager, Domestic Project Operation
2005: Managing Director, Technology & Engineering
2007: President & CEO

Takashi Kubota
President & CEO

Reliability No. 1: Your Partner for Success
Aiming for Growth in Corporate Earnings
May this announcement find all of our shareholders in good health and prosperity.
I would like to express my sincere gratitude for your exceptional support.
Chiyoda Corporation celebrated the 60th anniversary since its establishment as a corporation on January 17, 2008.
Looking back over our history since being founded, I truly feel that we have carried the torch of the ideals of “Human
Resources,” “Technology and Reliability,” and “Contributing to International Society” that were adopted at the timeof our inception.
I would now like to report on our corporate status for fiscal year 2007 (ended March 31, 2008) and our management
policy for fiscal year 2008 (ending March 31, 2009).
- Fiscal Year 2007 Performance: Increased Revenue and Decreased Earnings
Demand for capital investments both domestic and overseas is as active as ever due to the increase in demand forenergy at a global level. Although we have carried out thorough risk management and put all our energy into
conclusively following through with existing orders, construction costs have increased due to special circumstances,including a shortage of skilled construction workers caused by an unparalleled construction boom in Qatar.
Regretfully, as a result, earnings have declined due to an unavoidable decrease in operating income. Train 4 of the
Qatargas liquefied natural gas (LNG) plant, which is claimed to be one of the biggest LNG trains in the world, willsoon be completed as the first among the 6 trains under construction.
- Our Slogan for Fiscal Year 2008: “New Horizons, Infinite Experience”―Inheriting the Accomplishments of Our Forefathers Clears Our Path to the Future―
In fiscal year 2008, we will adopt even more comprehensive measures in consideration of cost management andsafety, while continuing to work hard at restoring earnings by effectively following through with existing orders both
domestic and overseas. As we plan on passing our legacy on to the next generation by strengthening the foundationof our engineering business, we will continue with three important goals implemented as of fiscal year 2007: 1)
Proof of Reliability No.1 through effective follow through, 2) Establishment of safety oriented operation as a part ofcorporate culture, and 3) Execution of business strategies for the next term.

-3-

- Capital/Business Alliance with Mitsubishi Corporation
On March 31, 2008, we concluded capital contribution and business alliance agreements with Mitsubishi
Corporation. Through these agreements, we plan to achieve synergy with Mitsubishi Corporation, which shares our
direction in terms of expansion of business in the field of plant engineering. Furthermore, in order to finance our goalof an increased business scale along with the increase in our business region, and to strengthen our relationship with
Mitsubishi Corporation, we have issued stock through third-party allocation, with a payment of approximately ¥60.8
billion already completed.
- New Medium-Term Management Vision
With the recent conclusion of our capital/business alliance with Mitsubishi Corporation, we expect to secure new
earnings streams within five years in addition to LNG and gas processing plants, which represent our main earnings
streams at present. Aiming at becoming a comprehensive engineering firm with diverse business content in various
regions and business fields, we will draw up a new medium-term management plan to be implemented from fiscal
year 2009 (ending March 31, 2010) after the current medium-term management plan, Double Step-Up Plan 2008
(DSP 2008), comes to an end on March 31, 2009.
- Strengthening Integrated Group Operations
All employees in our group engage in business activities based on the Corporate Philosophy i.e. “Enhance ourbusiness and contribute to the development of a sustainable society as an integrated engineering company throughthe use of our collective wisdom and painstakingly developed technology.” We have come up with a Chiyoda Group
logo to celebrate our 60th anniversary, endeavoring to unite all group companies being trusted by all stakeholders,
including shareholders, customers, business partners, employees, and regional companies. Having reconfirmed thecorporate management principle as a group, we continue to promote integrated group operations.
- To Our Shareholders
Although we have worked hard to strengthen our financial position by promoting the medium-term management
plan, DSP 2008, settlements have fallen far below our plans at the start of fiscal year 2007, resulting in a distribution
for this period of ¥10 per share. Aiming at a dividend payout of 30%, plans call for a distribution of ¥11 per share forfiscal year 2008. Since we are dedicated to working harder than ever to increase corporate value, I would humbly ask
our shareholders for their continued cooperation and support.

July 2008

Takashi Kubota
President & CEO-4-

MEDIUM-TERM MANAGEMENT PLAN

Medium-Term Management Plan, Double Step-Up Plan 2008 (DSP 2008)
Current Status and New Medium-Term Management Vision- Aiming to be the “Reliability No. 1” Project Company
and a Company par excellence Able to Sustain Earnings Growth Aiming for the double step-up of “Reliability No. 1 Project Company” and “a Company par excellence Able to
Sustain Earnings Growth,” the Chiyoda Group implemented the medium-term management plan “Double Step-Up
Plan 2008 (DSP 2008)” with initiatives commencing in fiscal year 2005 which are to be completed at the end of fiscal
year 2008.
In fiscal year 2007, the third year of the DSP, the aim was for early achievement of various measures which resulted
generally in accelerated progress of the medium-term plan.
In fiscal year 2008, the final year of the DSP, the aim is to continue the reliable execution of ongoing projects and,in addition, advancing business plans by means of a further upgrade of the Reliability Program and a further upgradeof risk management skills.
1. Current Status of Management Objectives (Financial Objectives):
Increased Shareholders’ Equity and Equity Ratio
Shareholders’ equity has steadily increased over the last several years and at the end of March 2008 had grown to¥81.2 billion, a ¥4.2 billion increase compared to the previous year. Further, the equity ratio had grown to 21.4%, a
4% increase compared to the previous year.
It is forecast that both shareholders’ equity and the equity ratio will have increased come the end of March 2009as a result of progress on ongoing projects.
2. Current Status of Management Plan:
Decreased Profit on Increased Revenue
In consideration of the large backlog of ongoing projects, discrimination was exercised and new contracts were
controlled to the amount of ¥258.7 billion to give a total value of backlog of contracts of ¥670.0 billion at the endof March 2008.
With the steady progress of overseas and domestic projects, optimization of indirect costs and execution of DSP
2008 measures, the revenue exceeded the DSP 2008 planned figure to reach ¥603.5 billion, a ¥118.6 billion
increase compared to the previous year. However, construction costs have increased due to unique circumstances
caused by a rising demand for skilled construction workers as a result of the construction rush in Qatar. While thisis extremely regrettable, operating income was ¥8.8 billion, a reduction of ¥19.8 billion compared to the previous
year and net income was also down by ¥13.8 billion for the period to reach ¥9.6 billion.
3. Financial Outlook for Fiscal Year 2008
In a firming market environment accompanying medium to long term growth in energy demand, new contracts infiscal year 2008 is forecasted to reach ¥450.0 billion, an increase of 74% compared to the previous year.
Operating income reached ¥12.5 billion, an increase of 41% compared to the previous year, due to morethorough cost management. Further, net income for this period is forecast to reach ¥9.5 billion, a decrease of 1%
compared to the previous year. This is a result of reduced interest income which is due to a decline in the jointly
controlled asset of joint venture in parallel of progress on overseas projects.

-5-4. New Medium-Term Management Vision
Since fiscal year 2005, the aim has been growth by means of the DSP 2008, but in order to achieve continuous
growth into the future, a stronger financial structure and stable management base have become essential.
Accordingly, along with conclusion of our capital/business alliance with Mitsubishi Corporation, a growth strategy
will be implemented with the new medium-term management vision:
1) Become a world-class comprehensive engineering company providing an end-to-end range of upstream anddownstream facilities in the fields of energy, resources and the environment.
2) Strengthen the Chiyoda Group’s brand image as the “Reliability No. 1” Comprehensive Engineering Company
that delivers outstanding technical capability with an established safety oriented operation.
The objective is to accomplish business in a diversity of regions and industries, aiming for target figures in thescope of ¥700-¥800 billion for consolidated annual revenue after 5 years and an ordinary income ratio of 7%.
5. Distribution of Profits
While planning to enrich capital stock by preparing to create business for the next generation by way oftechnology investment and the development of our business foundation, a management target has been hoisted to
distribute profits amongst all shareholders, with the aim of payout ratio of 30%.

-6-

MANAGEMENT’S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS
1. Operations Outlook
Looking at the market environment surrounding the Chiyoda Group in the current consolidated fiscal year, theoverseas plant market saw planning for plant construction in response to global level growth in energy demand andin Japan there was also vigorous capital investment by oil and petrochemical companies. However, the environment
for executing construction work in Qatar is still difficult due the shortage of skilled construction workers caused by
the continuing plant construction rush.
Under this kind of environment, the Chiyoda Group has strived with all its energy to continue more thorough risk
management, starting with countermeasures for increasing costs, to ensure reliable execution of work for ongoingprojects with an emphasis on ultra-large-scale LNG plant projects in Qatar. However, with the projects in Qatar, it
was not possible to avoid a deterioration of earnings. This situation was caused by increased construction costs that
accompanied the rise in labor costs and falling productivity due to a shortage of skilled construction workers, thescale of which exceeded initial forecasts.
The cause of the decline in earnings is a phenomenon unique to Qatar, where the scope for limiting the contractor
risk management has been far and away eclipsed by the shortage of skilled workers and the steep price rise in raw
materials. Other construction work overseas and in Japan, including the performance of group companies, isproceeding according to plan. Overseas, progress is generally favorable at Russia’s first LNG plant Sakhalin II
LNG Project, including completion of Train 1. Further, domestically as well, the Chiyoda Group secured manyorders, mainly in the oil and energy sectors, and managed to accumulate a high level of revenues with the steady
execution of contracted projects.
The result of orders for RFCC (residue fluid catalytic cracking) unit for Taiyo Oil Co., Ltd. and expansion of athermal cracking unit for Fuji Oil Co., Ltd. saw new contracts in the current consolidated fiscal year reach ¥258,755
million (a 53.6% decrease compared to the previous consolidated fiscal year).
Consolidated revenues reached ¥603,560 million (a 24.5% increase on the previous year) due to the progress ofmajor construction work on hand, which exceeded the forecast.
On the profit aspect, despite the increased revenues, the gross margin declined due to increased construction
costs on Qatari projects. Income before income taxes and minority interests was ¥18,992 million (a 49.9% decreaseon the previous year) and net income for the current period reached ¥9,641 million (a 59.0% decrease on theprevious year).
Major Completed Construction (*) Completed portion- Aromatics complex for Kashima Aromatics Co., Ltd- Hikone Plant, No. 4 unit for Maruho Co., Ltd. (Chiyoda TechnoAce Co., Ltd.)- MXDA facility for Mitsubishi Gas Chemical Company, Inc.
- CCR unit for Seibu Oil Co., Ltd. (*)
Domestic- Utsunomiya No. 2 Plant for Hisamitsu Pharmaceutical Co., Inc.
- 2007 shut-down maintenance (SDM) of Hokkaido refinery for Idemitsu Kosan Co., Ltd.
(Chiyoda Kosho Co., Ltd.)- Expansion of No. 7 naphtha hydrosulfurization plant for Fuji Oil Co., Ltd.
- LNG plant Trains 6 & 7 for Ras Laffan Liquefied Natural Gas Co., Ltd. (3) in Qatar (*)- LNG plant Trains 6 & 7 for Qatar Liquefied Gas Company Limited (3) & (4) in Qatar (*)
Overseas- LNG plant Trains 4 & 5 for Qatar Liquefied Gas Company Limited (2) in Qatar (*)- LNG plant Trains 1 & 2 for Sakhalin Energy Investment Co., Ltd. in Russia (*)-7-

2. Status of Orders Received and Completion(1) Field of Natural Gas and Electric PowerInternationally, with the growth in global demand for natural gas, investment planning is being carried out invarious locations for investment in the gas value chain. Gas producing nations and all major energy companies
are developing gas fields, constructing LNG plants, arranging LNG carriers and constructing LNG receiving
terminals. In such a situation, in order to acquire large scale contracts the Chiyoda Group continues to devote its
energy in focusing on receiving orders for technical studies and basic design, along with reliably executing
ongoing projects with an emphasis on Qatar.
In the domestic electric power and gas industry, there have been ambitious attempts to invest in new projects
in order to cope with the shift in primary fuel to LNG and the trend to diversify outside the core business within
the energy industry, such as the gas marketing business of oil and electric power companies, whichaccompanied the sudden jump in crude oil prices. Firm orders have been achieved including new and/or
expansion planning for large-scale LNG-receiving terminals.
(2) Field of Petroleum, Petrochemicals and Gas Chemicals
In the field of petroleum and petrochemicals, starting with the completion of aromatic manufacturing
facilities for Kashima Aromatics Co., Ltd, execution of construction work on hand is progressing smoothly. On
the orders received front, there is also a firm trend with an emphasis on facilities for heavy oil upgrading.
Further, a satisfactory acceptance of orders has been achieved, including group companies, due to continued
high level initiatives including investment to support production facilities conforming to structural changes inthe demand for petroleum products, environmental support and facility surveys and the optimization ofmaintenance.
(3) Field of General Chemicals and Industrial Machinery
In the field of general chemicals and industrial machinery, Chiyoda received an order for an acrylic sheet
plant for Thai MMA Co., Ltd. This is the result of focusing on domestic and Asian expansion and is based on
the continuing customer trend for intensive investment in strategic product fields such as high value addedfunctional chemicals and electronic materials. Further, in the pharmaceuticals field, there is a heightened desire
for capital investment, starting with new and/or expansion of plants and laboratories, in order to cope withchanges in the industrial environment in recent years.
(4) Environment and Other Fields
In the environmental field, accompanying the trend of strengthening environmental regulations, it has beenpossible to acquire new contracts by continuing domestic and overseas business activities for the in-housedeveloped Chiyoda Thoroughbred-121 (CT-121) flue gas desulfurization technology, as well as expanding
business activities in other fields.
3. Business Risks and Other Risks
Primary issues that could affect investor decisions regarding investment risk, such as material issues related to
the Chiyoda Group’s financial position, performance and cash flow and the Chiyoda Group’s response to such
issues, include but are not limited to the issues outlined below. The Chiyoda Group recognizes the potential
occurrence of these risks and works to avoid them to the maximum extent possible. The Chiyoda Group also moves
to respond as quickly as possible to minimize the impact of issues that present risks when they occur.
As of June 24, 2008, Chiyoda Group management acknowledges the issues that may present risks in the future
outlined below and has made them the focus of risk management.

-8-

(1) Changes in Exchange Rates
In overseas construction projects, construction payments are often in different currencies than payments forvendors and/or subcontractors. Foreign currency exchange rates may therefore affect the financial results of the
projects. The Chiyoda Group works to avoid and minimize such foreign currency fluctuation risks by using
forward foreign exchange contracts and matching planned outlays in multiple currencies with construction
payments and receivables.
(2) Rising Equipment and Resource Prices and Material Shortages
Plant construction entails a time lag between estimates and bids and orders for equipment, resources,materials and subcontracted construction. Consequently, actual prices for equipment and materials may exceed
those projected in estimates and bids. Moreover, restricted supplies of metals such as copper, nickel, aluminumand zinc may cause problems including delays in the delivery and mobilization of equipment and materials.
Resulting delays in the progress of construction projects could affect the Chiyoda Group’s results.
The Chiyoda Group works to avoid and minimize these risks to the best of its ability by diversifying
procurement in ways such as using multiple suppliers in various regions worldwide, considering bundledpurchases, ordering equipment and materials at an early stage, and structuring cooperative relationships with
suppliers.
(3) Shortages of Construction Workers and Increased Subcontractor Expenses
Plant construction entails a time lag between estimates and bids and orders for subcontracting. Large-scaleconstruction projects can magnify the impact of such time lag, which may result in labor costs that exceed thoseprojected in estimates and bids. In particular, lack of qualified, skilled workers may require countermeasuresthat increase costs.
The Chiyoda Group works to minimize the impact of these issues by structuring cooperative relationships
with qualified construction companies, deploying personnel skilled in various professions from various regions
around the world, and improving the skills of construction workers at each job site.
(4) Terrorism, Conflicts in Neighboring Countries, Strikes, Anarchy and Natural Disasters
Terrorism or conflicts anywhere in the world may cause direct losses, delays in procuring or delivering
materials and equipment, threats to the safety of workers on site, cessation of construction work, and otherproblems at construction sites in Japan and overseas. Such incidents could result in losses and expenses that the
Chiyoda Group could not pass on to clients, which could affect the Chiyoda Group’s performance.
The Chiyoda Group has structured a threat management system that includes cooperation with clients andother related parties to support rapid initial response should such issues occur.
(5) Plant Accidents
Serious accidents including explosions or fire may occur due to various causes at plants that the Chiyoda
Group is constructing or has completed. The Chiyoda Group could be judged responsible for such accidents,
which could impact the Chiyoda Group’s performance.
The Chiyoda Group works to avoid or minimize this risk in ways such as taking all possible measures topreclude the occurrence of accidents, including quality control and safety management. Other countermeasures
include maintaining appropriate insurance coverage and negotiating contracts that rationally allocate client
responsibility for damages.

-9-PRINCIPAL SHAREHOLDERS(As of March 31, 2008)
Number of Shares
Owned(thousands of shares)

Full Name or Title
Mitsubishi Corporation
State Street Bank and Trust Company(Standing Proxy: Mizuho Corporate Bank, Ltd.)JP Morgan Chase Bank 380055(Standing Proxy: Mizuho Corporate Bank, Ltd.)The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Mitsubishi UFJ Trust and Banking Corporation(Standing Proxy: The Master Trust Bank of Japan, Ltd.)The Master Trust Bank of Japan, Ltd. (Trust Account)
Japan Trustee Services Bank, Ltd. (Trust Account)
The Bank of New York, Treaty JASDEC Account(Standing Proxy: The Bank of Tokyo-Mitsubishi UFJ, Ltd.)
Deutsche Securities Inc.
BNP PARIBAS Securities (Japan) Limited.
Total* Increased to 86,931 thousand (33.4%) on April 30, 2008.

- 10 -

19,851*

Ratio of Number of
Shares Owned toAggregate Numberof Shares Issued (%)
10.27*

12,107

6.26

10,408

5.38

9,033

4.67

8,034

4.15

7,415
6,368

3.83
3.29

5,386

2.78

4,393
3,902
86,899

2.27
2.01
44.98

BOARD OF DIRECTORS, CORPORATE AUDITORS AND EXECUTIVE OFFICIERS(As of July 1, 2008)
Board of Directors

Corporate Auditors

Chairman of the Board
Nobuo Seki

Hiroshi Ida**
Wataru Shimono

President & CEO
Takashi Kubota*
Executive Vice President
Corporate Strategy & Planning
Yoichi Kanno*

Masanori Ito**
Yukihiro Imadegawa**** Outside Corporate Auditor

Executive Vice President
Corporate Management & Finance and CFO
Hiroshi Shibata*
Executive Vice President
CSR, Operational Auditing OfficeNobuyasu Kamei
Senior Managing Director
International Project Operation
Madoka Koda*
Managing Director
Projects Logistics
Atsuo Minamoto
Managing Director
Technology & Engineering
Sumio Nakashima
Managing Director
Domestic Project Operation
Satoru Yokoi
Managing Director
International Project Operation
Hiroshi Ogawa
Director
Seiji Shiraki
Note: All members of the Board of Directors serve concurrently as Executive Officers* Representative Directors/Members of Executive Committee- 11 -

Executive Officers
Senior Executive Officer
Corporate Strategy & Planning
Takaharu Saegusa
Senior Executive Officer
General Manager,
Russia Project Division,
Project Director
Hideo Kobayashi
Executive Officer
Executive Assistant to President
Fumio Nagata
Executive Officer
Executive Assistant to International Business
Development Operation
Hidehiro Shinohara
Executive Officer
Technology & Engineering
Takeo Kawase
Executive Officer
General Manager,
Petroleum & Chemical Project Division
Tsuyoshi Kakizaki
Executive Officer
General Manager,
Qatar Project Division 2,
International Project Operation
Osamu Imahara

Executive Officer
General Manager,
Gas Value Chain Project Division,
International Project Operation
Hiroshi Shimada
Executive Officer
General Manager,
Domestic Business Development Operation,
Domestic Project Operation
Eisaku Yamashita
Executive Officer
General Manager,
Administration & Personnel Division,
Corporate Management & FinanceToshiyuki Ohnuma
Executive Officer
Deputy General Manager,
Russia Project Division,
Deputy Project Director
Koichi Shirakawa
Executive Officer
International Business Development Operation
Takao Kamiji
Executive Officer
General Manager,
Finance Division
Katsutoshi Kimura
Executive Officer
Projects Logistics
Manabu Mitani- 12 -ORGANIZATION CHART(As of July 1, 2008)
Shareholders Meeting

Corporate Auditors Committee

Board of Directors
Executive Committee
SQE Division

CSR Division
Operational Auditing Office

Corporate Strategy & Planning

Corporate Management & FinanceCorporate Planning Division

Administration & Personnel
Division

Technology & Engineering
Research Institute ofTechnology
Innovation & Strategy

Finance Division

Management of Technology
Division

Project Management
Administration Division

Technology Development
Division

Projects Logistics

Procurement Division

Process Technology Division

Engineering DivisionInternational Business
Development Operation

International Project Operation

International Business
Development Division 1

Gas Value Chain Project Division

Project Service DivisionInternational Business
Development Division 2

Petroleum & Chemical Project
Division

Construction Division

Domestic Project Operation
Domestic Business Development
Operation
Domestic Projects- Oil & Petrochemical

Domestic Projects

Qatar Project Division 1- Pharmaceutical/Fine/Energy Industries

Domestic Projects

Qatar Project Division 2- Liquefied Gas Terminal

Russia Project Division- 13 -

Chiyoda Corporation andConsolidated Subsidiaries
Consolidated Financial Statements for theYears Ended March 31, 2008 and 2007,
and Independent Auditors' Report- 14 -

- 15 -

Chiyoda Corporation and Consolidated Subsidiaries
Consolidated Balance Sheets
March 31, 2008 and 2007

Millions of Yen
2008
2007

ASSETS
CURRENT ASSETS:
Cash and cash equivalents
Short-term investments
Notes and accounts receivable—trade (Note 4)
Allowance for doubtful accounts
Costs and estimated earnings on long-term construction
contracts (Note 5)
Costs of construction contracts in process
Accounts receivable—other (Note 4)
Jointly controlled assets of joint venture
Deferred tax assets (Note 13)
Prepaid expenses and other¥

70,089895
27,230(5)¥

77,052
125
23,816(41)

Thousands of
U.S. Dollars(Note 1)
2008$

700,8908,950
272,300(50)

9,139
16,802
10,441
192,684
5,337
5,596

14,84327,656
9,199
256,061
5,884
3,442

91,390168,020
104,410
1,926,840
53,37055,960Total current assets

338,208

418,037

3,382,080

PROPERTY, PLANT AND EQUIPMENT (Note 9):Land
Buildings and structures
Machinery and equipment
Tools, furniture and fixtures
Total
Accumulated depreciation

11,936
14,894
1,261
5,467
33,558(10,485)

1,835
6,616
1,163
5,544
15,158(7,693)

119,360
148,940
12,61054,670335,580(104,850)

23,073

7,465

230,730

5,583

5,345

55,830

3,734
3,566
1,650
3,496
(490)

3,411
3,286
2,057
3,892
(540)

37,34035,66016,50034,960(4,900)17,53917,451

175,390

Net property, plant and equipment
INVESTMENTS AND OTHER ASSETS:
Investment securities (Note 6)
Investments in and advances to unconsolidated
subsidiaries and associated companies (Note 8)
SoftwareDeferred tax assets (Note 13)
Other assets (Note 10)
Allowance for doubtful accounts
Total investments and other assets

TOTAL

¥

See notes to consolidated financial statements.

- 16 -

378,820¥442,953$

3,788,200

Millions of Yen
2008
2007

LIABILITIES AND EQUITYCURRENT LIABILITIES:Current portion of long-term debt (Note 9)
Notes and accounts payable—trade (Note 4)
Advance receipts on construction contracts
Income taxes payable
Deposits received
Allowance for warranty costs for completed works
Allowance for losses on construction contracts
Accrued expenses and other (Note 4)¥

Total current liabilities
NON-CURRENT LIABILITIES:Long-term debt (Note 9)
Liability for retirement benefits (Note 10)
Other liabilities (Note 13)
Total non-current liabilities

10,03974,038185,023
1,408
4,970
2,099
4,045
12,364¥

97
86,813
231,818
13,071
4,783
1,582
10
13,271Thousands of
U.S. Dollars(Note 1)
2008$

100,390
740,380
1,850,230
14,08049,70020,99040,450123,640

293,986

351,4452,939,860

22
2,226
948

10,067
2,277
1,749

220
22,260
9,480

3,196

14,09331,96012,935

12,928129,350

6,718
65,155(847)(1,668)(6)

6,712
58,398
248
(408)
50

67,180651,550(8,470)(16,680)(60)(1,059)81,228410(905)
77,023392(10,590)812,280
4,100

81,63877,415

816,380

COMMITMENTS AND CONTINGENT LIABILITIES(Notes 4, 15, 16 and 17)
EQUITY (Notes 11, 16 and 19):
Common stock—authorized, 570,000 thousand shares;
issued, 193,183 thousand shares in 2008 and
193,126 thousand shares in 2007
Preferred stock—authorized, 80,000 thousand shares
Capital surplus
Retained earnings
Unrealized (loss) gain on available-for-sale securities
Deferred loss on derivatives under hedge accounting
Foreign currency translation adjustments
Treasury stock—at cost, 904 thousand shares in 2008
and 837 thousand shares in 2007
Total
Minority interests
Total equity
TOTAL

¥

- 17 -

378,820¥442,953$

3,788,200

Chiyoda Corporation and Consolidated Subsidiaries
Consolidated Statements of Income
Years Ended March 31, 2008 and 2007
Thousands of
U.S. Dollars(Note 1)
2008

Millions of Yen
2008
2007
REVENUE (Notes 4 and 5)¥

603,560¥

484,895$

6,035,600

COST OF REVENUE (Notes 4 and 5)

583,035

445,159

5,830,350

Gross profit

20,52539,736205,250

11,685

11,036

116,850

8,840

28,70088,40010,901
(405)
435
(979)

8,511
(310)
375
(629)

109,010(4,050)4,350(9,790)SELLING, GENERAL AND ADMINISTRATIVE EXPENSES(Notes 4 and 14)
Operating income
OTHER INCOME (EXPENSES):Interest and dividend income
Interest expense
Equity in earnings of associated companies
Foreign exchange loss
Loss on a partial termination of a defined benefit
pension plan (Note 10)
Reversal of allowance for doubtful accounts
Reversal of allowance for investment loss
Gain on sales of investment securities
Reversal of impairment loss (Note 7)
Loss on valuation of investment securities
Other—net

(485)
72

(4,850)
720

742
263
17

644
268
(617)
318

266

6,440
2,680
(6,170)3,180

10,152

9,235

101,520

INCOME BEFORE INCOME TAXES AND MINORITY
INTERESTS

18,99237,935

189,920

INCOME TAXES (Note 13):
Current
Deferred

7,355
1,968

16,209(1,866)73,55019,680Total income taxes

9,323

14,343

93,230MINORITY INTERESTS IN NET INCOME

28

60

280

Other income—net

NET INCOME¥

See notes to consolidated financial statements.

- 18 -

9,641¥

23,532$

96,410Yen
PER SHARE OF COMMON STOCK (Notes 2.t and 18):
Basic net income
Diluted net income
Cash dividends applicable to the year

- 19 -

2008

2007

U.S. Dollars
2008¥ 50.15
50.12
10.00

¥ 122.41
122.2815.00$ 0.500.50
0.10Chiyoda Corporation and Consolidated Subsidiaries
Consolidated Statements of Changes in Equity
Years Ended March 31, 2008 and 2007
Thousands
Outstanding
Number of
Shares ofCommonStock
BALANCE, APRIL 1, 2006
Reclassified balance as ofMarch 31, 2006 (Note 2.m)
Net income
Issuance of common stock by stock
option plan (Notes 11 and 12)
Cash dividends, ¥10.00 per share
Repurchase of treasury stock
Decrease in retained earnings due
to exclusion from consolidationof consolidated subsidiaries
Net change in the year
BALANCE, MARCH 31, 2007

CommonStock192,152 ¥CapitalSurplus12,901 ¥Retained
Earnings

6,685 ¥

36,877 ¥Unrealized(Loss) Gain on
Available-forsale
Securities

Deferred
Loss onDerivatives
under Hedge
Accounting

45

23,532232

27

27(1,922)(95)(89)
192,289

Net income
Issuance of common stock by stock
option plan (Notes 11 and 12)
Cash dividends, ¥15.00 per share
Repurchase of treasury stock
Net change in the year
BALANCE, MARCH 31, 2008

Millions of Yen

12,9286,712

58,398

203 ¥

(408)

248

(408)

(1,095)(1,260)

9,641
57

7

6
(2,884)(67)
192,279 ¥

12,935 ¥CommonStock
BALANCE, MARCH 31, 2007$

Net income
Issuance of common stock by stock
option plan (Notes 11 and 12)
Cash dividends, $0.15 per share
Repurchase of treasury stock
Net change in the year
BALANCE, MARCH 31, 2008

129,280 $6,718 ¥

65,155 ¥(847) ¥

Thousands of U.S. Dollars (Note 1)
Unrealized(Loss) Gain on
Available-forCapital
Retained
sale
Surplus
Earnings
Securities
67,120 $583,980 $2,480 $

(1,668)Deferred
Loss onDerivatives
under Hedge
Accounting(4,080)96,41070

60(28,840)$

129,350 $See notes to consolidated financial statements.

- 20 -

67,180 $651,550 $(10,950)(12,600)(8,470) $(16,680)

Millions of Yen
Foreign
Currency
Translation
Adjustments¥(323) ¥

TreasuryStock(676) ¥

Minority
Interests

Total
55,509

¥
¥

(229)

(905)

(154)
(56)
¥

(6) ¥

(1,059) ¥322

55,50923,532322
23,53254(1,922)(229)

54(1,922)
(229)

(89)
168

70

(89)
238

77,023392

77,415

373
50

Total
Equity

9,641

9,641

13
(2,884)(154)(2,411)18

13(2,884)(154)(2,393)

81,228 ¥410 ¥81,638

Thousands of U.S. Dollars (Note 1)
Foreign
Currency
Translation
Adjustments
$

500 $

TreasuryStock(9,050) $(1,540)(560)$(60) $(10,590) $Total
770,230 $Minority
Interests

Total
Equity3,920 $

774,150

96,41096,410130(28,840)(1,540)(24,110)180

130(28,840)(1,540)(23,930)

812,280 $

4,100 $

816,380- 21 -

Chiyoda Corporation and Consolidated Subsidiaries
Consolidated Statements of Cash Flows
Years Ended March 31, 2008 and 2007
Thousands of
U.S. Dollars(Note 1)
2008

Millions of Yen
2008
2007
OPERATING ACTIVITIES:
Income before income taxes and minority interests
Adjustments for:
Income taxes paid
Payments of project settlement money
Depreciation and amortization
Reversal of allowance for doubtful accounts—net
Provision for (reversal of) warranty costs for completed
works
Provision for (reversal of) loss on construction contracts
Reversal of retirement benefits—net
Reversal of impairment loss
Gain on sales of investment securities—net
Loss on valuation of investment securities
Foreign exchange loss (gain)—net
Equity in earnings of associated companies
Loss on a partial termination of a defined benefit
pension plan
Changes in operating assets and liabilities:
Decrease in trade notes and accounts receivable,
and costs and estimated earnings onlong-term construction contracts
Decrease (increase) in costs of construction contracts
in process
Decrease (increase) in jointly controlled asset of joint
ventureIncrease in interest and dividend receivable(Decrease) increase in trade notes and accounts payable(Decrease) increase in advance receipts on construction
contracts
Increase in deposits received(Decrease) increase in accrued liability of a defined
contribution pension plan
Other—net
Total adjustments
Net cash provided by operating activities—(Forward)¥- 22 -¥(20,913)
1,594
(77)
522
4,035
(473)
(268)
(644)
617
81
(435)

37,935$

189,920(6,492)(469)
1,507(1,057)(209,130)

(305)
(136)
(6,116)

5,220
40,350(4,730)(2,680)(6,440)6,170
810(4,350)15,940
(770)

(17)
(74)
(375)

485

¥

See notes to consolidated financial statements.

18,992

4,850

2,216

8,485

22,16010,855(9,729)108,550

63,377(9,874)(12,740)(124,724)(8,175)
947

633,770(98,740)(127,400)(46,788)183

129,7423,919(467,880)
1,830

(833)
4,362
(4,718)

2,445
8,221
(2,403)(8,330)43,620(47,180)

14,274¥35,532$

142,740

Thousands of
U.S. Dollars(Note 1)
2008

Millions of Yen
2008
2007
Net cash provided by operating activities—(Forward)¥

INVESTING ACTIVITIES:Payments for time deposits
Proceeds from refunds of time deposits
Payments for purchases of investment securities
Proceeds from sales of investment securities
Purchases of property, plant and equipment
Purchases of intangible assets
Disbursements for originating long-term loans
Proceeds from collections of long-term loans
Payments for acquisition of shares in subsidiary affecting
scope of consolidation, net of cash acquired (Note 3)
Other—net

14,274¥(827)
68(2,306)839(360)(1,257)

Net cash used in investing activities
FINANCING ACTIVITIES:
Repayments of long-term debt
Proceeds from issuance of common stock
Payments of cash dividends
Payments of cash dividends to minority shareholders
Other—net
Net cash used in financing activities
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS
ON CASH AND CASH EQUIVALENTS
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS

142,740(8,270)680(23,060)
8,390(3,600)(12,570)

35
(116)
7

83

(1,160)70(3,917)(3,458)(39,170)(14,186)
13(2,880)
(12)
(155)

(47)
54
(1,915)(54)(229)(141,860)
130(28,800)(120)(1,550)(17,220)(2,191)(172,200)

(100)

357

(1,000)(6,963)30,240(69,630)

350

(67)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR

77,052¥- 23 -$

31(2,419)32(460)(1,320)(15)610

CASH AND CASH EQUIVALENTS OF EXCLUSION OF
CONSOLIDATED SUBSIDIARIES, BEGINNING OF YEAR

CASH AND CASH EQUIVALENTS, END OF YEAR

35,53270,08946,879¥77,052

770,520$

700,890

Chiyoda Corporation and Consolidated Subsidiaries
Notes to Consolidated Financial Statements
Years Ended March 31, 2008 and 2007
1.

BASIS OF PRESENTING CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements have been prepared in accordance with the provisions set forthin the Japanese Financial Instruments and Exchange Law (formerly, the Japanese Securities and Exchange Law) and
its related accounting regulations and in conformity with accounting principles generally accepted in Japan ("Japanese
GAAP"), which are different in certain respects as to application and disclosure requirements of International
Financial Reporting Standards.
In preparing these consolidated financial statements, certain reclassifications and rearrangements have been made to
the consolidated financial statements issued domestically in order to present them in a form which is more familiar toreaders outside Japan. In addition, certain reclassifications and rearrangements have been made in the 2007 financial
statements in order for them to conform to classifications and presentations used in 2008.
The consolidated financial statements are stated in Japanese yen, the currency of the country in which Chiyoda
Corporation (the "Company") is incorporated and principally operates. The translations of Japanese yen amounts into
U.S. dollar amounts are included solely for the convenience of readers outside Japan and have been made at the rateof ¥100 to $1, the approximate rate of exchange at March 31, 2008. Such translations should not be construed as
representations that the Japanese yen amounts could be converted into U.S. dollars at that or any other rate.

2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa.

Consolidation—The consolidated financial statements for the year ended March 31, 2008 include the accountsof the Company and its 16 significant (17 in 2007) subsidiaries (together, the "Group").
Under the control or influence concept, those companies in which the Company, directly or indirectly, is able toexercise control over operations are fully consolidated and those companies over which the Group has asignificant influence are accounted for by the equity method.
Investments in 5 associated companies are accounted for by the equity method. Investments in the remaining
unconsolidated subsidiaries and associated companies are stated at cost. If the equity method of accounting had
been applied to the investments in these companies, the effect on the accompanying consolidated financial
statements would not be material.
The excess of the cost of the Company's investments in consolidated subsidiaries and associated companies
accounted for by the equity method over its equity in the fair value of the net assets at the respective dates ofacquisition, was charged to income at the time of acquisition as the amount involved was not material.

- 24 -

All significant intercompany balances and transactions have been eliminated in consolidation. All material
unrealized profit included in assets resulting from transactions within the Group is eliminated.
b.

Business Combination—In October 2003, the Business Accounting Council issued a Statement of Opinion,"Accounting for Business Combinations," and on December 27, 2005, the Accounting Standards Board of Japan(the "ASBJ") issued ASBJ Statement No. 7, "Accounting Standard for Business Divestitures" and ASBJ
Guidance No. 10, "Guidance for Accounting Standard for Business Combinations and Business Divestitures."
These new accounting pronouncements were effective for fiscal years beginning on or after April 1, 2006.
The accounting standard for business combinations allows companies to apply the pooling of interests method of
accounting only when certain specific criteria are met such that the business combination is essentially regarded
as a uniting-of-interests. For business combinations that do not meet the uniting-of-interests criteria, thebusiness combination is considered to be an acquisition and the purchase method of accounting is required. This
standard also prescribes the accounting for combinations of entities under common control and for joint
ventures.
On November 28, 2007, the Company acquired 85.1% of the shares of Sunrise Real Estate Co., Ltd. ("Sunrise"),which trades and leases land and buildings, and merged with Sunrise on January 1, 2008. The Company
accounted for the acquisition by the purchase method of accounting. The negative goodwill arising in thetransaction was charged to income.

c.

Revenue—Revenues on construction contracts greater than ¥100 million and having a construction duration of
exceeding one year are recognized on the percentage-of-completion method based on the ratio of costs incurred
to total estimated costs. Under this method, related costs and estimated earnings in excess of progress billings
are presented as a current asset.
Unbilled costs on the other contracts, which are accounted for by the completed-contract method, are stated ascost of construction contracts in process.
Payments received in excess of costs and estimated earnings on the contracts, which are accounted for by thepercentage-of-completion method, and payments received on the other contracts are presented as current
liabilities.
Costs of preparation work for unsuccessful proposals and other projects which are not realized are charged toincome and are included in costs of revenue.

d.

Cash Equivalents—Cash equivalents are short-term investments that are readily convertible into cash and thatare exposed to insignificant risk of changes in value. Cash equivalents include time deposits and certificates ofdeposit both of which mature or become due within three months of the date of acquisition.

e.

Investment Securities—All marketable securities are classified as available-for-sale securities and are reported
at fair value, with unrealized gains and losses, net of applicable taxes, reported in a separate component ofequity. The cost of securities sold is determined based on the moving-average method.

- 25 -

Non-marketable securities are stated at cost determined by the moving-average method. For other than
temporary declines in fair value, non-marketable securities are reduced to net realizable value by a charge toincome.
f.

Allowance for Doubtful Accounts—The allowance for doubtful accounts is stated in amounts considered to beappropriate based on the Group's past credit loss experience and an evaluation of estimated losses on thereceivables outstanding.

g.

Property, Plant and Equipment—Property, plant and equipment are stated at cost. Depreciation is computed by
the declining-balance method, except for buildings owned by the Company which are depreciated using thestraight-line method, at rates based on the estimated useful lives of the assets. The range of useful lives is from11 to 57 years for buildings and structures, from 4 to 13 years for machinery and equipment, and from 2 to
15 years for tools, furniture and fixtures.

h.

Long-lived Assets—The Group reviews its long-lived assets for impairment whenever events or changes incircumstances indicate the carrying amount of an asset or asset group may not be recoverable. An impairment
loss would be recognized if the carrying amount of an asset or asset group exceeds the sum of the undiscounted
future cash flows expected to result from the continued use and eventual disposition of the asset or asset group.
The impairment loss would be measured as the amount by which the carrying amount of the asset exceeds its
recoverable amount, which is the higher of the discounted cash flows from the continued use and eventual
disposition of the asset or the net selling price at disposition.

i.

Other Assets—Intangible assets are carried at cost less accumulated amortization, which is calculated by thestraight-line method over their estimated useful lives. Software for internal use is amortized on a straight-line
basis over its estimated useful life (5 years at the maximum).

j.

Allowance for Warranty Costs for Completed Work—The allowance for warranty costs for completed work isprovided based on past rate experience.

k.

Allowance for Losses on Construction Contracts—The allowance for losses on construction contracts isprovided for an estimated amount of probable losses to be incurred in future years in respect of construction
projects in progress.

l.

Retirement Benefits—Employees of the Company are, under most circumstances, entitled to payments from thedefined contribution pension plan and the qualified defined benefit pension plan. Employees of certain of theCompany's consolidated subsidiaries are, under most circumstances, entitled to certain lump-sum severance
payments and pension payments.
Effective April 1, 2000, the Company and its domestic consolidated subsidiaries adopted a new accounting
standard for employees' retirement benefits and accounted for the liability for retirement benefits based on the
projected benefit obligations and plan assets at the balance sheet date.
The transitional obligation of ¥5,696 million ($56,960 thousand) is being amortized and charged to income over
15 years using the straight-line amortization method and presented as an operating expense in the consolidated
statements of income for the years ended March 31, 2008 and 2007.

- 26 -

Retirement benefits to directors, officers and corporate auditors are provided at the amount which would be
required if all directors, officers and corporate auditors terminated at the end of each period.
m. Presentation of Equity—On December 9, 2005, the ASBJ published a new accounting standard for thepresentation of equity. Under this accounting standard, certain items which were previously presented asliabilities are now presented as components of equity. Such items include stock acquisition rights, minority
interests, and any deferred gain or loss on derivatives accounted for under hedge accounting. This standard iseffective for fiscal years ending on or after May 1, 2006. The balances of such items as of March 31, 2006 werereclassified as separate components of equity as of April 1, 2006 in the consolidated statement of changes inequity.
n.

Research and Development Costs—Research and development costs are charged to income when incurred.

o.

Leases—All leases are accounted for as operating leases. Under Japanese accounting standards for leases,
finance leases that are deemed to transfer ownership of the leased property to the lessee are to be capitalized,
while other finance leases are permitted to be accounted for as operating lease transactions if certain "as if
capitalized" information is disclosed in the notes to the lessee's consolidated financial statements.

p.

Income Taxes—The provision for income taxes is computed based on the pretax income included in the
consolidated statements of income. The asset and liability approach is used to recognize deferred tax assets andliabilities for the expected future tax consequences of temporary differences between the carrying amounts andthe tax bases of assets and liabilities. Deferred taxes are measured by applying currently enacted tax laws to thetemporary differences.
The Group has filed a tax return under the consolidated corporate-tax system from the fiscal year ended March
31, 2003, which allows companies to base tax payments on the combined profits or losses of the parent company
and its wholly owned domestic subsidiaries.

q.

Foreign Currency Transactions—Both short-term and long-term receivables and payables denominated inforeign currencies are translated into Japanese yen at exchange rates in effect at the balance sheet date.
Any differences between the foreign exchange contract rates and historical rates resulting from the translation ofreceivables and payables are recognized as income or expense over the lives of the related contracts.

r.

Foreign Currency Financial Statements—The balance sheet accounts of the consolidated foreign subsidiaries
are translated into Japanese yen at the current exchange rate as of the balance sheet date except for equity, which
is translated at the historical rate. Differences arising from such translation were shown as "Foreign currencytranslation adjustments" in a separate component of equity.

- 27 -

Revenue and expense accounts of consolidated foreign subsidiaries are translated into Japanese yen at the current
exchange rate as of balance sheet date.
s.

Derivative Financial Instruments—The Company uses a variety of derivative financial instruments, including
foreign currency forward exchange contracts as a means of hedging exposure to foreign currency risks. The
Company does not enter into derivatives for trading or speculative purposes.
Derivative financial instruments and foreign currency transactions are classified and accounted for as follows:(a) all derivatives are recognized as either assets or liabilities and measured at fair value, with gains or losses
recognized in the income statement and (b) for derivatives used for hedging purposes, if derivatives qualify forhedge accounting, because of high correlation and effectiveness between the hedging instruments and the hedged
items, gains or losses on derivatives are deferred until maturity of the hedged transactions.
The foreign currency forward exchange contracts are utilized to hedge foreign exchange risks. Certain assets
and liabilities on construction contracts denominated in foreign currencies are translated at the contracted rates if
the forward contracts qualify for hedge accounting.

t.

Per Share Information—Basic net income per share is computed by dividing net income available to commonshareholders by the weighted-average number of common shares outstanding for the period, retroactively
adjusted for stock splits.
Diluted net income per share reflects the potential dilution that could occur if securities were exercised orconverted into common stock. Diluted net income per share of common stock assumes full conversion of theoutstanding convertible notes and bonds at the beginning of the year (or at the time of issuance) with anapplicable adjustment for related interest expense, net of tax, and full exercise of outstanding warrants.
Cash dividends per share presented in the accompanying consolidated statements of income are dividends
applicable to the respective years including dividends to be paid after the end of the year.

u.

New Accounting Pronouncements
Lease Accounting—On March 30, 2007, the ASBJ issued ASBJ Statement No. 13, "Accounting Standard forLease Transactions," which revised the existing accounting standard for lease transactions issued on June 17,
1993. The revised accounting standard for lease transactions is effective for fiscal years beginning on or after
April 1, 2008 with early adoption permitted for fiscal years beginning on or after April 1, 2007.
Under the existing accounting standard, finance leases that deem to transfer ownership of the leased property to
the lessee are to be capitalized, however, other finance leases are permitted to be accounted for as operating leasetransactions if certain "as if capitalized" information is disclosed in the note to the lessee's financial statements.
The revised accounting standard requires that all finance lease transactions shall be capitalized recognizing leaseassets and lease obligations in the balance sheet.

- 28 -

Unification of Accounting Policies Applied to Foreign Subsidiaries for the Consolidated Financial
Statements—Under Japanese GAAP, a company currently can use the financial statements of foreignsubsidiaries which are prepared in accordance with generally accepted accounting principles in their respective
jurisdictions for its consolidation process unless they are clearly unreasonable. On May 17, 2006, the ASBJ
issued ASBJ Practical Issues Task Force (PITF) No. 18, "Practical Solution on Unification of Accounting
Policies Applied to Foreign Subsidiaries for the Consolidated Financial Statements." The new task forceprescribes: (1) the accounting policies and procedures applied to a parent company and its subsidiaries for
similar transactions and events under similar circumstances should in principle be unified for the preparation of
the consolidated financial statements, (2) financial statements prepared by foreign subsidiaries in accordancewith either International Financial Reporting Standards or the generally accepted accounting principles in the
United States tentatively may be used for the consolidation process, (3) however, the following items should be
adjusted in the consolidation process so that net income is accounted for in accordance with Japanese GAAP
unless they are not material;
(1)
(2)
(3)
(4)

Amortization of goodwill
Actuarial gains and losses of defined benefit plans recognized outside profit or loss
Capitalization of intangible assets arising from development phases
Fair value measurement of investment properties, and the revaluation model for property, plant andequipment, and intangible assets(5) Retrospective application when accounting policies are changed(6) Accounting for net income attributable to a minority interest
The new task force is effective for fiscal years beginning on or after April 1, 2008 with early adoption permitted.
Construction Contracts—Under current Japanese GAAP, either the completed-contract method or thepercentage-of-completion method is permitted to account for construction contracts. On December 27, 2007, the
ASBJ published a new accounting standard for construction contracts. Under this accounting standard, theconstruction revenue and construction costs should be recognized by the percentage-of-completion method, if
the outcome of a construction contract can be estimated reliably. When total construction revenue, total
construction costs and the stage of completion of the contract at the balance sheet date can be reliably measured,
the outcome of a construction contract can be estimated reliably. If the outcome of a construction contract
cannot be reliably estimated, the completed-contract method shall be applied. When it is probable that total
construction costs will exceed total construction revenue, an estimated loss on the contract should be
immediately recognized by providing for loss on construction contracts. This standard is applicable toconstruction contracts and software development contracts and effective for fiscal years beginning on or after
April 1, 2009 with early adoption permitted for fiscal years beginning on or before March 31, 2009 but after
December 27, 2007.
3.

BUSINESS COMBINATIONOn November 28, 2007, the Company acquired 85.1% of the shares of Sunrise. As a result, Sunrise became a wholly
owned subsidiary of the Company and the Company merged with Sunrise on January 1, 2008. The business ofSunrise was to trade and lease real estate and the Company was leasing real estate from Sunrise. This acquisition wasmade to own and manage the real estate which the Company was previously leasing from Sunrise. The results ofoperations of Sunrise are included in the Company's consolidated statements of income from November 28, 2007.

- 29 -

The Company accounted for this business combination by the purchase method of accounting. The acquisition cost,¥284 million ($2,840 thousand), was determined based on the net assets of Sunrise.
The total cost of acquisition has been allocated to the assets acquired and the liabilities assumed based on theirrespective fair values. Negative goodwill recorded in connection with the acquisition totaled ¥297 million($2,970 thousand). The negative goodwill was charged to income due to immateriality.
The estimated fair values of the assets acquired and the liabilities assumed at the acquisition date are as follows:
Millions of Yen

Thousands of
U.S. Dollars

Current assets
Investments and other assets
Total assets acquired
Current liabilities
Long-term liabilities
Total liabilities assumed
Net assets acquired
Negative goodwill
Pre-acquisition carrying amount of investment in Sunrise
Cash acquired¥

287
16,51816,805(902 )(15,306 )(16,208 )597(297 )(15 )(169 )$

2,870
165,180
168,050(9,020)(153,060)(162,080)
5,970(2,970)(150)(1,690)Net of cash acquired

¥

116

$

1,160

Pro forma results of operations for the above business combination have not been presented because the effects were
not material to the consolidated financial statements.
4.

TRANSACTIONS WITH UNCONSOLIDATED SUBSIDIARIES AND ASSOCIATED COMPANIES
Significant transactions with and balances due from/(to) unconsolidated subsidiaries and associated companies are
summarized as follows:
Millions of Yen
2008
2007

Transactions for the Year Ended March 31
Revenue
Cost of revenue
Selling, general and administrative expenses¥

31(7,158)(1,652)¥

8(4,919 )(1,690 )Thousands of
U.S. Dollars
2008
$

310
(71,580)(16,520)

Balances at March 31
Notes and accounts receivable—trade
Accounts receivable—otherNotes and accounts payable—trade
Accrued expenses and other

31
59
(472)
(318)

2
(470 )

310
590(4,720)(3,180)

The Company guaranteed the indebtedness of certain unconsolidated subsidiaries and associated companies in theamount of ¥370 million at March 31, 2007.

- 30 -

5.

REVENUE
Costs and estimated earnings recognized with respect to revenue which is accounted for by thepercentage-of-completion method at March 31, 2008 and 2007, were as follows:
Thousands of
U.S. Dollars
2008

Millions of Yen
2008
2007

6.

Costs and estimated earnings
Amounts billed¥ 1,115,404(1,106,265)¥ 727,700(712,857 )$ 11,154,040(11,062,650)

Net

¥

¥

$

9,139

14,84391,390INVESTMENT SECURITIESInvestment securities at March 31, 2008 and 2007, consisted of the following:Thousands of
U.S. Dollars
2008

Millions of Yen
2008
2007
Equity securities¥ 5,583¥ 5,345$ 55,830

The carrying amounts and aggregate fair values of investment securities with readily determinable fair values at
March 31, 2008 and 2007, were as follows:
Millions of Yen
Unrealized
Unrealized
Gains
LossesFair
Value

March 31, 2008

Cost

Available-for-sale—Equity securities¥ 5,259

¥ 170

¥ 982

¥4,447

3,557

778

361

3,974

March 31, 2007
Available-for-sale—Equity securities

March 31, 2008
Available-for-sale—Equity securities

Cost$ 52,590

Thousands of U.S. Dollars
Unrealized
Unrealized
Gains
Losses$ 1,700$ 9,820

Fair
Value$ 44,470

Available-for-sale securities whose fair value was not readily determinable at March 31, 2008 and 2007, were as
follows:
Carrying AmountThousands ofMillions of Yen
U.S. Dollars
2008
2007
2008
Equity securities¥ 1,136- 31 -¥ 1,371$ 11,360

Proceeds from sales of available-for-sale securities for the year ended March 31, 2008, were ¥839 million($8,390 thousand). Gross realized gains on these sales, computed on the moving average cost basis, were¥644 million ($6,440 thousand) for the year ended March 31, 2008.
Proceeds from sales of available-for-sale securities for the year ended March 31, 2007, were ¥32 million and grossrealized gains on these sales, computed on the moving average cost basis, were ¥17 million for the year ended March
31, 2007.
7.

REVERSAL OF IMPAIRMENT LOSS
Reversal of impairment loss of ¥268 million ($2,680 thousand) represents that impairment loss recognized in priorperiods for buildings and structures of a foreign subsidiary which was reversed under the generally accepted
accounting principles applied to the foreign subsidiary.

8.

INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED SUBSIDIARIES AND ASSOCIATEDCOMPANIES
Investments in and advances to unconsolidated subsidiaries and associated companies at March 31, 2008 and 2007,
were as follows:
Millions of Yen
2008
2007

9.

Thousands of
U.S. Dollars
2008

Investments
Long-term receivables¥ 3,720
14¥ 3,395
16$ 37,200
140

Total

¥ 3,734¥ 3,411$ 37,340

LONG-TERM DEBT
Long-term debt at March 31, 2008 and 2007, consisted of the following:
Millions of Yen
2008
2007
Long-term loans from banks, maturing seriallythrough 2011, with interest rates ranging
from 3.4% to 5.8% at 2008 and 2007:
Collateralized
Uncollateralized
Total
Less current portion¥

61
10,00010,061(10,039)

Long-term debt, less current portion¥22- 32 -¥

Thousands of
U.S. Dollars
2008

164
10,00010,164
(97 )

$

610
100,000
100,610(100,390)¥ 10,067$

220

Subordinated loans in the amount of ¥10,000 million ($100,000 thousand) from The Bank of Tokyo-Mitsubishi UFJ,
Ltd. were included in 'Uncollateralized' at March 31, 2008 and 2007.
Annual maturities of long-term debt at March 31, 2008, were as follows:Year Ending
March 31

Millions of Yen

Thousands of
U.S. Dollars

2009
2010
2011

¥ 10,03918
4$ 100,390
180
40

Total

¥ 10,061$ 100,610

Millions of Yen

Thousands of
U.S. Dollars

Commitment-line contracts¥ 15,000$ 150,000

Unused commitments¥ 15,000$ 150,000

Commitment-line contracts at March 31, 2008, were as follows:

The following assets were pledged as collateral for long-term debt at March 31, 2008:10.

Millions of Yen

Thousands of
U.S. Dollars

Land
Buildings and structures—net of accumulated
depreciation¥ 381$ 3,810

496

4,960

Total

¥ 877

$ 8,770

RETIREMENT BENEFITS
Employees of the Company are, under most circumstances, entitled to payments from the defined contribution
pension plan and the qualified defined benefit pension plan upon retirement or termination.
Employees of certain of the Company's domestic consolidated subsidiaries are, under most circumstances, entitled tocertain lump-sum severance payments and pension payments upon retirement or termination.
Two of the Company's domestic consolidated subsidiaries, Chiyoda Keiso and Chiyoda Kosho, transferred theirretirement benefit plan to a defined contribution pension plan and the reformed qualified defined pension plan as ofApril 1, 2008. As a result of this transfer, "loss on a partial termination of a defined benefit pension plan" of¥485 million ($4,850 thousand) was recorded in other expenses for the year ended March 31, 2008.

- 33 -

Liability for retirement benefits includes retirement benefits to directors, officers and corporate auditors in the amountof ¥536 million ($5,360 thousand) and ¥487 million for the years ended March 31, 2008 and 2007, respectively. The
retirement benefits to directors and corporate auditors are paid subject to the approval of the shareholders.
The liability for employees' retirement benefits at March 31, 2008 and 2007, consisted of the following:
Millions of Yen
2008
2007
Projected benefit obligation
Fair value of plan assets
Unrecognized transitional obligation
Unrecognized actuarial loss
Unrecognized prior service cost
Net accrued pension liabilities
Prepaid pension cost
Loss on a partial termination of defined
benefit pension plan

¥ 27,455(20,338)(4,307)(3,634)
1,381
557
648

Liability for employees' retirement benefits¥¥ 27,812(21,454 )(4,922 )(1,299 )
1,557
1,694
96

Thousands of
U.S. Dollars
2008$ 274,550(203,380)(43,070)(36,340)
13,810
5,570
6,480

485
1,690

4,850
¥

1,790

$

16,900The components of net periodic benefit costs for the years ended March 31, 2008 and 2007, were as follows:
Millions of Yen
2008
2007
Service cost
Interest cost
Expected return on plan assets
Amortization of transitional obligation
Recognized actuarial loss
Amortization of prior service cost
Subtotal
Loss on a partial termination of defined
benefit pension plan
Payment to defined contribution pension trust

¥

485
176

168

4,850
1,760

Net periodic benefit costs¥ 2,177¥ 1,670$ 21,770- 34 -

903
371
(532)
615
335
(176)
1,516

¥

702
375
(356 )
615
342(176 )
1,502

Thousands of
U.S. Dollars
2008
$

9,030
3,710
(5,320)6,150
3,350(1,760)15,160Assumptions used for the years ended March 31, 2008 and 2007, are set forth as follows:

Discount rate
Expected rate of return on plan assets
Recognition period of actuarial gain/loss
Amortization period of transitional obligation
Amortization period of prior service cost
11.

2008

2007

1.5%
2.7%
10 years
15 years
10 years

1.5%
2.2%
10 years
15 years
10 years

EQUITY
Since May 1, 2006, Japanese companies have been subject to the Corporate Law of Japan (the "Corporate Law"),
which reformed and replaced the Commercial Code of Japan. The significant provisions in the Corporate Law that
affect financial and accounting matters are summarized below:a.

Dividends
Under the Corporate Law, companies can pay dividends at any time during the fiscal year in addition to theyear-end dividend upon resolution at the shareholders meeting. For companies that meet certain criteria such as;(1) having the Board of Directors, (2) having independent auditors, (3) having the Board of Corporate Auditors,and (4) the term of service of the directors is prescribed as one year rather than two years of normal term by its
articles of incorporation, the Board of Directors may declare dividends (except for dividends in kind) at any time
during the fiscal year if the company has prescribed so in its articles of incorporation. However, the Company
cannot do so because it does not meet all the above criteria.
Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if thearticles of incorporation of the company so stipulate. The Corporate Law provides certain limitations on theamounts available for dividends or the purchase of treasury stock. The limitation is defined as the amountavailable for distribution to the shareholders, but the amount of net assets after dividends must be maintained at
no less than ¥3 million.

b.

Increases/Decreases and Transfer of Common Stock, Reserve and Surplus
The Corporate Law requires that an amount equal to 10% of dividends must be appropriated as a legal reserve (acomponent of retained earnings) or as additional paid-in capital (a component of capital surplus) depending on
the equity account charged upon the payment of such dividends until the total of aggregate amount of legal
reserve and additional paid-in capital equals 25% of the common stock. Under the Corporate Law, the total
amount of additional paid-in capital and legal reserve may be reversed without limitation. The Corporate Law
also provides that common stock, legal reserve, additional paid-in capital, other capital surplus and retained
earnings can be transferred among the accounts under certain conditions upon resolution of the shareholders.

- 35 -

c.

Treasury Stock and Treasury Stock Acquisition Rights
The Corporate Law also provides for companies to purchase treasury stock and dispose of such treasury stock byresolution of the Board of Directors. The amount of treasury stock purchased cannot exceed the amountavailable for distribution to the shareholders which is determined by specific formula. Under the Corporate Law,
stock acquisition rights, which were previously presented as a liability, are now presented as a separate
component of equity. The Corporate Law also provides that companies can purchase both treasury stockacquisition rights and treasury stock. Such treasury stock acquisition rights are presented as a separate
component of equity or deducted directly from stock acquisition rights.

12.

STOCK OPTION
The stock option outstanding as of March 31, 2008 was as follows:
Stock Option
2002 Stock
OptionPersons
GrantedNumber of
Options Granted

Date of
Grant

Exercise
Price

Exercise Period

8 directors
8 officers
623 employees

7,896,000 shares

June 27,
2002

¥ 233
($ 2.33)

From July 1, 2004
to June 30, 2009

The stock option activity was as follows:
2002 Stock Option(Shares)
For the Year Ended March 31, 2007
Vested:March 31, 2006—outstanding
Exercised
March 31, 2007—outstanding

355,000(232,000 )123,000

For the Year Ended March 31, 2008
Vested:March 31, 2007—outstanding
Exercised
March 31, 2008—outstanding
13.

123,000(57,000 )66,000

INCOME TAXESThe Company and its domestic subsidiaries are subject to Japanese national and local income taxes which, in theaggregate, resulted in a normal effective statutory tax rate of approximately 41% for the years ended March 31, 2008
and 2007.

- 36 -

The tax effects of significant temporary differences and tax loss carryforwards which resulted in deferred tax assets
and liabilities at March 31, 2008 and 2007, are as follows:

Deferred tax assets:
Cost of revenue
Retirement benefits
Allowance for employees' bonus
Allowance for warranty costs for completed works
Allowance for losses on construction contracts
Allowance for doubtful accounts
Loss on write-down of property, plant and equipment
Deferred loss on derivatives under hedge accounting
Other
Less valuation allowance¥Thousands of
U.S. Dollars
2008

4,182

$

¥

1,610
731
1,644

4,261
718
1,995

41,820
16,1007,310
16,440

192
578

Total
Deferred tax liabilities
Net deferred tax assets

Millions of Yen
2008
2007

¥

1,368
4,046
(766)

3,658
(439 )

13,68040,460(7,660)12,815

10,963

128,150

5,828

3,035

58,280

6,987

¥

7,928

$

69,870Net deferred tax assets as of March 31, 2008 and 2007 were recorded in the accompanying consolidated balance
sheets as follows:
Millions of Yen
2008
2007
Deferred tax assets—current assets
Deferred tax assets—investments and other assets
Other liabilities (deferred tax liabilities—
non-current liabilities)¥ 5,337
1,650¥ 5,884
2,057

Thousands of
U.S. Dollars
2008$ 53,370
16,500(13 )A reconciliation between the normal effective statutory tax rates and the actual effective tax rates reflected in theaccompanying consolidated statements of income for the years ended March 31, 2008 and 2007, is as follows:
2008

2007

Normal effective statutory tax rate
Expenses not deductible for income tax purposes
Non-taxable dividend income
Tax credit
Decrease in valuation allowance for deferred tax assets
Lower income tax rates applicable to subsidiaries
Lower tax basis of enterprise tax
Corporate income tax for previous years
Earnings retained by tax haven company
Other—net

41 %
1
(1)
(2)

41 %
1

(3)
1
1
10
1

(1)

Actual effective tax rate

49 %

38 %

- 37 -

(1)
(2)

14.

RESEARCH AND DEVELOPMENT COSTS
Research and development costs charged to income were ¥1,659 million ($16,590 thousand) and ¥1,204 million forthe years ended March 31, 2008 and 2007, respectively.

15.

LEASES
The Company and a subsidiary lease certain machinery, computer equipment, office space and other assets. Totallease payments under finance leases were ¥128 million ($1,280 thousand) and ¥182 million for the years ended
March 31, 2008 and 2007, respectively.
Pro forma information for leased property under finance leases that do not transfer ownership of the leased property
to the lessee on an "as if capitalized" basis for the years ended March 31, 2008 and 2007, was as follows:Year Ended March 31, 2008
Buildings
andStructures

Millions of Yen
Tools,
Furniture
Otherand Fixtures

Total

Acquisition cost
Accumulated depreciation

¥

68 ¥
6

450 ¥
219

76 ¥
34

594
259

Net leased property

¥

62 ¥

231 ¥

42 ¥

335

Buildings
andStructures

Thousands of U.S. Dollars
Tools,
Furniture
Otherand Fixtures

Total

Acquisition cost
Accumulated depreciation

$

680 $
60

4,500 $
2,190

760 $
340

5,940
2,590

Net leased property

$

620 $

2,310 $

420 $

3,350
Thousands of U.S.
Dollars
Obligations under
Finance Lease

Millions of Yen
Obligations under
Finance Lease
Due within one year
Due after one year

¥

109
226

$

1,090
2,260

Total

¥

335

$

3,350

Year Ended March 31, 2007
Millions of Yen
Tools, Furnitureand Fixtures
Other

Total

Acquisition cost¥
Accumulated depreciation

638
317

¥

161
84

¥

799
401

Net leased property

321

¥

77

¥

398

- 38 -¥

Millions of Yen
Obligations under
Finance Lease
Due within one year
Due after one year

¥

157
241

Total

¥

398

Depreciation expense as lessee, which is not reflected in the accompanying consolidated statements of income,computed by the straight-line method was ¥128 million ($1,280 thousand) and ¥182 million for the years ended
March 31, 2008 and 2007, respectively.
The amounts of obligations, acquisition cost and depreciation under finance leases include the imputed interest
income portion and interest expense portion, respectively.
16.

DERIVATIVESThe Company enters into foreign currency forward exchange contracts to hedge foreign exchange risk associated withcertain assets and liabilities on construction contracts denominated in foreign currencies. It is the Company's policy
to use derivatives only for the purpose of reducing foreign exchange risks associated with such assets or liabilities.
The Company does not hold or issue derivatives for trading purposes.
Because the counterparties to these derivatives are limited to major international financial institutions, the Company
does not anticipate any losses arising from credit risk.
The basic policies for the use of derivatives are approved by the executive committee and the execution and control ofderivatives are controlled by the financing department. The hedging effectiveness in reducing foreign exchange risks
is periodically assessed and reported to the accounting department and executive officers.
The Company had the following foreign currency forward exchange contracts outstanding at March 31, 2008 and2007.

Contract
AmountBuying:U.S.$
EuroSelling:
U.S.$
Euro

¥

9
14
20,621
2

Millions of Yen
2008
Fair
Unrealized
Value
Gain
¥

9
15

Thousands of U.S. Dollars
2008
Contract
Fair
Unrealized
Amount
Value
Gain
$

¥ 1

20,522
2

99- 39 -

90140
206,210
20

$

90
150
205,220
20

$ 10
990

Contract
AmountBuying:U.S.$
EuroSelling U.S.$¥

Millions of Yen
2007
Fair
Unrealized
Value
Gain

213
13
12,315¥221
1412,313¥812Foreign currency forward exchange contracts which qualify for hedge accounting for the years ended March 31, 2008
and 2007, are excluded from the disclosure of market value information.
The contract or notional amounts of derivatives which are shown in the above table do not represent the amounts
exchanged by the parties and do not measure the Company's exposure to credit or market risk.
17.

CONTINGENT LIABILITIESAt March 31, 2008, the Group had the following contingent liabilities:
Millions of Yen

Thousands of
U.S. Dollars¥ 567$ 5,670

Employees (housing loan)
18.

NET INCOME PER SHARE
Reconciliation of the differences between basic and diluted net income per share ("EPS") for the years ended March
31, 2008 and 2007 is as follows:Year Ended March 31, 2008
Basic EPS—Net income available
to common shareholders
Effect of dilutive securities—
Stock option
Diluted EPS—Net income
for computation

Millionsof YenNet
Income¥9,641

Thousandsof Shares
Weighted-average
Shares192,256

Yen

EPS¥ 50.15$ 0.50$ 0.50

95
¥

9,641

192,351¥ 50.12¥ 23,532

192,234¥ 122.41

Year Ended March 31, 2007
Basic EPS—Net income available
to common shareholders
Effect of dilutive securities—
Stock option
Diluted EPS—Net income
for computation

U.S. Dollars

202¥ 23,532- 40 -

192,436¥ 122.28

19.

SUBSEQUENT EVENTSa.

Appropriation of Retained Earnings
The following appropriation of retained earnings at March 31, 2008, was approved at the Company's
shareholders meeting held on June 24, 2008:
Millions of
Yen
Year-end cash dividends, ¥10.00 ($0.10) per shareb.

¥

Thousands of
U.S. Dollars

1,923

$

19,230Issuance of New Ordinary Shares to a Third PartyAt the Company's Board of Directors meeting held on March 31, 2008, the Company resolved the issuance of
new ordinary shares to an allocated third party and has accepted as a result of allocating new ordinary shares to
Mitsubishi Corporation on April 30, 2008. Details are as follows:
(1)
(2)
(3)
(4)

20.

Number of shares issued:
Issue price:
Aggregate issue amount:
Allocated third party:

Ordinary shares, 67,080 thousand shares¥907 per share¥60,841 million ($608,410 thousand)
Mitsubishi Corporation

SEGMENT INFORMATION
Information about geographical segments and sales to foreign customers of the Company and consolidated
subsidiaries for the years ended March 31, 2008 and 2007, was as follows:(1) Geographical Segments
Millions of Yen
Year Ended March 31, 2008
Revenue:
Outside customers
Intersegment

Japan

North
America

Asia

Other

Subtotal

Eliminations(Corporate)

Consolidated¥ 588,606 ¥ 14,954
1,638 ¥

37 ¥26

¥ 603,560
1,701 ¥

(1,701)

588,606

16,59237

26605,261(1,701)

603,560

581,030

15,32334

43596,430(1,710)594,720(17) ¥

Total
Operating expenses
Operating income (loss)¥

7,576 ¥

1,269 ¥

3 ¥Assets¥ 369,452 ¥9,620 ¥

693 ¥- 41 -¥

603,560

8,831 ¥

9 ¥

8,840

122 ¥ 379,887 ¥(1,067) ¥378,820

Year Ended March 31, 2008
Revenue:
Outside customers
Intersegment

Japan

Asia

Thousands of U.S. Dollars
North
America
Other
Subtotal$ 5,886,060 $ 149,540
16,380 $Total
Operating expenses

Eliminations(Corporate)

370 $

260

$ 6,035,600
17,010 $(17,010)

Consolidated$

6,035,600

5,886,060

165,920370

260

6,052,610(17,010)

6,035,600

5,810,300

153,230340

430

5,964,300(17,100)

5,947,200(170) $

Operating income (loss)$

75,760 $12,690 $30 $Assets$ 3,694,520 $

96,200 $6,930 $

88,310 $90 $88,4001,220 $ 3,798,870 $(10,670) $3,788,200

Millions of Yen
Year Ended March 31, 2007
Revenue:
Outside customers
IntersegmentJapan¥ 476,813 ¥Total
Operating expenses

Asia

North
America

Subtotal

Eliminations(Corporate)

Consolidated

8,082
1,708 ¥

38 ¥27

¥ 484,895
1,773 ¥

(1,773)476,813

9,790

38

27

486,668(1,773)484,895

448,622

9,283

36

27

457,968(1,773)456,195

Operating income¥

28,191 ¥507 ¥2Assets¥ 436,171 ¥7,095 ¥

689 ¥

Notes: 1.

Other

¥

28,700148 ¥ 444,103 ¥¥

484,895¥

28,700(1,150) ¥442,953

The Company and consolidated subsidiaries operate within four geographic segments based on the
countries where the companies are located.
The segments consisted of the following countries in 2008 and 2007:
Asia:
North America:
Other:

2.

Indonesia, Singapore, Philippines, Myanmar, Malaysia and Thailand
United States of America
Nigeria

Corporate assets mainly consist of long-term loans and investment securities of the Company.
Corporate assets as of March 31, 2008 and 2007 were ¥2,153 million ($21,530 thousand) and¥2,130 million, respectively.

- 42 -

(2) Sales to Foreign Customers
Millions of Yen
Year Ended March 31, 2008
Overseas sales (A)Consolidated sales (B)(A)/(B)

Year Ended March 31, 2008
Overseas sales (A)Consolidated sales (B)(A)/(B)Asia

The Middle
andNear East

Russia andCentral Asia

Other

Total

¥ 17,093¥ 425,970¥ 49,408¥ 1,015

2.83%

70.58%

8.19%

0.16%

¥ 493,486
603,560
81.76%

Thousands of U.S. Dollars
The Middle
Russia and
and
Other
Near East
Central Asia

Asia

Total

$ 170,930$ 4,259,700$ 494,080$ 10,150

2.83%

70.58%

8.19%

0.16%

$ 4,934,860
6,035,600
81.76%Asia

The Middle
andNear East

Russia andCentral Asia

Other

Total

¥ 11,187¥ 316,649¥ 49,275¥ 1,2342.31%

65.30%

10.16%

0.26%¥ 378,345
484,895
78.03%

Millions of Yen
Year Ended March 31, 2007
Overseas sales (A)Consolidated sales (B)(A)/(B)

Note: The Company and consolidated subsidiaries are summarized into four segments by geographic area basedon the countries where the companies are located.
The segments consisted of the following countries in 2008 and 2007:
Asia:
The Middle and Near East:
Russia and Central Asia:
Other:

Singapore, Malaysia, Indonesia and others
Qatar, Iran and others
RussiaNigeria and others

The Company and its consolidated subsidiaries operate predominantly in the engineering business, while certain
subsidiaries operate in leasing and software producing businesses which are minor in relation to the total business.
Accordingly, the presentation of industry segment information is not required under Japanese accounting standards.

******- 43 -

Global Network(As of July 1, 2008)
Head Office
Yokohama Head Office

The Hague Representative OfficeJeddah Head Office

Parkstraat 83, 2514 JG

P.O. Box 6188, Jeddah 21442

12-1, Tsurumichuo 2-chome, Tsurumi-ku

The Hague, The Netherlands

The Kingdom of Saudi Arabia

Yokohama 230-8601, Japan

Tel: (31) 70-385-9453

Tel:(966) 2-647-0558

Tel:

Fax: (31) 70-346-3779

Fax:(966) 2-647-1908(81) 45-521-1231

Chiyoda Philippines Corporation

Fax: (81) 45-503-0200

Koyasu Office & Research Park
13, Moriya-cho 3-chome, Kanagawa-ku
Yokohama 221-0022, Japan
Tel:(81) 45-441-1268

Fax: (81) 45-441-1297
Research & Development CenterTel:(81) 45-441-9132

Fax: (81) 45-441-9728

Osaka Office14-10, Nishinakajima 5-chome,
Yodogawa-ku Osaka 532-001, Japan
Tel:(81) 6-6390-3411

Fax: (81) 6-6889-5101

Overseas Offices
Abu Dhabi Office
Clock Tower Bldg. Al Najda Street,
P.O. Box 43928, Abu Dhabi, U.A.E.
Tel:(971) 2-671-7161

Fax: (971) 2-671-7162

Beijing Office

Major Subsidiaries & Affiliated Companies
Overseas
Engineering BusinessChiyoda Almana Engineering LLC
Services: Design and construction ofindustrial facilities
Almana Tower, 5th floor, Airport RD,
P.O. Box 22961, Doha, Qatar
Tel: (974) 462-2926

Services: Design
Chiyoda Bldg. Meralco Avenue Corner,
General Araneta Street, San Antonio,
Pasig City, Metro Manila, Philippines
Tel:(63) 2-636-1001～1008

Fax:(63) 2-636-1013/1023

URL: http://www.chiyodaphil.com.ph

Chiyoda & Public Works Co., Ltd.
Services: Design and construction of

Fax: (974) 462-6404

Chiyoda Corporation (Shanghai)industrial facilities
SEDONA HOTEL Room 307 ~ 309 No. 1,

Services: Project consulting

Kaba Aye Pagoda Road, Yankin Township,

29F-Room E, Pufa Tower, No. 588,

Yangon, Myanmar

Pudong Rd. (S), Pudong New Area,

Tel:(95) 1-545605

Shanghai 200120, China

Fax:(95) 1-545227

Tel: (86) 21-5877-6266

Chiyoda Singapore (Pte) Limited

Fax: (86) 21-5877-6366

Services: Design and construction of

Chiyoda International Corporationindustrial facilities

Services: Business activities in the U.S.A.

14 International Business Park Jurong

1177 West Loop South, Suite 680

East, Singapore 609922

Houston, TX 77027, U.S.A.

Tel:(65) 6563-3488

Room No. 1028, China World Tower 1,

Tel: (1) 713-965-9005

Fax:(65) 6567-5231

Jianguomenwai Street, Chaoyang District,

Fax: (1) 713-965-0075

URL: http://www.chiyoda.com.sg/

Beijing, 100004, China
Tel:(86) 10-6505-2678

Fax: (86) 10-6505-1118

Jakarta Office

Chiyoda Malaysia Sdn. Bhd.
Services: Design and construction of

Chiyoda (Thailand) Limited
Services: Design and construction ofindustrial facilities

industrial facilities

15th Floor, Menara Maxisegar Jalan Pandan

140/42 ITF Tower II, Suite H 20th Floor,

9th Floor, Mid-Plaza Bldg. Jalan Jenderal

Indah, 4/2 Pandan Indah, 55100

Silom Road, Kwaeng Suriyawong,

Sudirman Kav. 10-11 Jakarta, 10220, Indonesia

Kuala Lumpur, Malaysia

Khet Bangrak, Bangkok 10500, Thailand

Tel:(62) 21-570-7579

Tel: (60) 3-4297-0988

Tel:(66) 2-231-6441/6442

Fax: (62) 21-570-6276

Fax: (60) 3-4297-0800

Fax:(66) 2-231-6443

Korea Representative Office1358-8, Tal-dong Nam-ku, Ulsan, Korea
Tel:(82) 52-256-5721/5722

Fax: (82) 52-256-5723

Middle East Headquarters Doha Office

URL:http://www.chiyoda.com.my/

Chiyoda Oceania Pty Limited
Services: Design and construction ofindustrial facilities

L&T-Chiyoda Limited
Services: Design
B.P. Estate, National Highway No. 8,
Chhani Baroda-391740, Gujarat State, India

Level 28, AMP Tower 140 St Georges Terrace,Tel:(91) 265-2771003/2772855

Al Mana Tower Airport Road,

Perth WA 6000, Australia

Fax:(91) 265-2774985

P.O. Box 20243, Doha Qatar

Tel: (61) 8-9278-2599

URL: http://www.lntchiyoda.com/

Fax: (61) 8-9278-2727

PT. Chiyoda International Indonesia

Chiyoda Petrostar Ltd.

Services: Design and construction ofTel:(974) 4622-875/876

Fax: (974) 4622-716

Milan Representative Office
Viale Della Liberazione 18, 20124 Milan, Italy
Tel:(39) 02-303517-111

Fax: (39) 02-303517-35

Singapore Human Resources OfficeServices: Design and construction ofindustrial facilities

Al-Khobar Office

Haryono Kav. 33 Jakarta Selatan 12770, Indonesia

P.O. Box 31707, Al-Khobar 31952

Tel:(62) 21-798-4680

The Kingdom of Saudi Arabia

Fax:(62) 21-798-6174

10 Anson Road, #03-02, International Plaza,

Tel: (966) 3-864-0839

Singapore 079903

Fax: (966) 3-864-0986

Tel:

industrial facilities
MENARA HIJAU, 10th Floor Suite 1001 J1. Mt.

(65) 6324-0080

Fax: (65) 6324-0090- 44 -

Project Companies
Oman, Qatar, Russia

Domestic
Major Subsidiaries & Affiliated Companies

Chiyoda TechnoAce Co., Ltd.
Services: Design and construction for

DomesticEngineering BusinessChiyoda Advanced Solutions Corporation

pharmaceutical facilities
13, Moriya-cho 3-chome, Kanagawa-ku

Arrowhead International Corporation
Services: Travel services and supply of spare parts
7-8, Shibakoen 1-chome, Minato-ku
Tokyo 105-0011, Japan

Yokohama 221-0022, Japan

Tel:(81) 3-5470-0880

Services: Advanced engineering consulting

Tel: (81) 45-441-9600

Fax:(81) 3-5470-0890

1-25, Shinurashima-cho 1-chome

Fax: (81) 45-450-5236

Kanagawa-ku, Yokohama 221-0031, Japan

URL: http://www.cta.chiyoda.co.jp/

Tel:(81) 45-441-1260

Fax:(81) 45-441-1264

URL: http://www.chiyoda-as.co.jp/

Chiyoda Keiso Co., Ltd.

Chiyoda U-Tech Co., Ltd.

URL: http://www.arrowhead.co.jp/

Arrow Mates Co., Ltd.
Services: Placement of technicians andServices: Consulting and human resources
placement

office staff and reemployment support
43, Hon-cho 4-chome, Naka-ku

15-19, Tsurumichuo 2-chome, Tsurumi-ku

Yokohama 231-0005, Japan

Yokohama 230-0051, Japan

Tel:(81) 45-662-1126

for electrical and instrumentation

Tel: (81) 45-502-7618

Fax:(81) 45-662-1173

facilities

Fax: (81) 45-503-5399

Services: Design, procurement and construction

13, Moriya-cho 3-chome, Kanagawa-ku
Yokohama 221-0022, Japan
Tel:(81) 45-441-1433

Fax:(81) 45-441-1434

URL: http://www.ckc.chiyoda.co.jp/

Chiyoda Kosho Co., Ltd.
Services: Design, construction and maintenancefor domestic projects

URL: http://www.utc-yokohama.com/

Other Businesses
Arrow Business Consulting Corporation(81) 45-506-7662(81) 45-506-7667

1-25, Shinurashima-cho 1-chome,
Kanagawa-ku, Yokohama 221-0031, Japan

32-1, Tsurumichuo 4-chome, Tsurumi-ku

Tel:(81) 45-441-9123

Yokohama 230-0051, JapanFax:(81) 45-441-1466

Tel: (81) 45-502-5774

URL: http://www.ite.co.jp/

Fax: (81) 45-502-5753

Yokohama 230-0051, Japan
Fax:

Services: IT consulting and solution provider

Services: Consulting for finance and accounting

34-26, Tsurumichuo 4-chome, Tsurumi-ku
Tel:

URL: http://www.arrowmates.co.jp/

IT Engineering Limited

URL: http://www.cks-ykh.co.jp/- 45 -

CORPORATE HISTORY(From January 1948 to April 2008)
Chiyoda Corporation was established on January 20, 1948 with one million yen of capital stock when theconstruction division of Mitsubishi Oil Co., Ltd. became independent and set up its head office in Minato-ku, Tokyo.
The subsequent changes in the Chiyoda Corporate Group are shown below.
Month/Year
January 1950
August 1954
October 1956
October 1961
September 1968
February 1971
August 1973
December 1973
April 1974
June 1974
June 1975
January 1981
June 1983
February 1986
October 1986
April 1989
March 1990
May 1990
November 1994
February 1995
September 1997
March 1999
November 2000
February 2001
March 2001
April 2002
March 2003
February 2005
January 2008
March 2008
April 2008

Major Events
Registration as a Civil Engineering and Construction Contractor, Ministry of Construction
Registration Number (i)1431
Purchase of Tsurumi Plant in Tsurumi-ku, Yokohama and Commencement of Manufacturing
Chemical Machinery
Establishment of Chiyoda Keiso Co., Ltd.
Listed on the First Section of the Tokyo, Osaka and Nagoya Stock Exchanges
Head Office Address Transferred to Tsurumi-ku, Yokohama
Establishment of Chiyoda Singapore (Pte) Limited
Establishment of Chiyoda International Corporation
Acquisition of Authorization for a Specialized Construction Business License, Ministry ofConstruction Authorization Number (Special-48) 2371.
Establishment of Chiyoda Kosho Co., Ltd.
Establishment of Chiyoda Malaysia Sdn. Bhd.
Establishment of Chiyoda Petrostar Ltd. (Saudi Arabia)
Establishment of Arrowhead International Corporation
Establishment of Chiyoda Nigeria Limited
Establishment of Arrow Human Resources Inc. (currently Arrow Mates Co., Ltd.)
Establishment of Chiyoda TechnoAce Co., Ltd., U-Tech Consulting Company Limited(currently Chiyoda U-Tech Co., Ltd.), Chiyoda Information Service Company Limited(currently IT Engineering Limited.)
Establishment of Arrow Business Consulting Limited.
Establishment of Chiyoda (Thailand) Limited
Establishment of PT Chiyoda International Indonesia
Establishment of L&T Chiyoda Limited
Establishment of C&E Corporation (currently Chiyoda Philippines Corporation)
Establishment of Chiyoda & Public Works Co., Ltd. (Myanmar)
Third-Party Allocation of Shares
Formulation of New Restructuring Plan
Reduction of Capital Without Compensation
Third-Party Allocation of Shares
Establishment of Chiyoda Advanced Solutions Corporation
Abolition of Listing on the Osaka Securities Exchange
Formulation of Medium-Term Management Plan
Merger Acquisition of Sun Rise Real Estate Company Limited
Contract Concluded with Mitsubishi Corporation in Relation to a Capital/Business Alliance
Third-Party Allocation of Shares to Mitsubishi Corporation- 46 -

INVESTOR INFORMATION(As of March 31, 2008)
Item
Trade Name:
Head Office Address:
Date of Incorporation:
Paid-in Capital:
Fiscal Year:
Number of Employees:
Number of Consolidated Subsidiaries:
Number of Affiliated Companies
Accounted for Using the Equity Method:
Accounting Auditor:
Listed Stock Exchange:
Stock Code:Total Number of Authorized Shares:
Aggregate Number of Shares Issued:
Number of Shares Per Unit:
Number of Shareholders:
Transfer Agent of Common Stock:
Enquiries in Relation to IR:- Telephone:- Fax:- E-mail- URL：

Details
Chiyoda Corporation
12-1, Tsurumi-Chuo 2-chome, Tsurumi-ku, 230-8601 Yokohama, Japan
January 20, 1948
12,935 million yen (43,389 million yen as of April 30, 2008)
Ends March 31
3,067 people
16 companies
5 companies
Deloitte Touche Tohmatsu
First Section of the Tokyo Stock Exchange
6366
650,000,000 shares
193,182,529 shares (260,262,529 shares as of April 30, 2008)
1,000 shares
9,250 people
Mitsubishi UFJ Trust and Banking Corporation
045-506-7538
045-506-7085
CHYOD@ykh.chiyoda.co.jp
http://www.chiyoda-corp.com/en/

Recognized by SRI (Socially Responsible Investment) Evaluation Bodies- FTSE4Good Index Series

In March 2005, Chiyoda was first certified to
be a member of the “FTSE4Good” Index Seriesof FTSE Group, UK.
This means that Chiyoda is acknowledged asa Japanese corporation fulfilling a series ofinternationally recognized CSR standards.

- Morningstar Socially Responsible Investment Index

In September 2007, Morningstar Japan K.K. selected Chiyoda for inclusion in
the SRI Index that they compile and monitor. This was a first for a Japaneseengineering company.

- 47 -

STOCK INFORMATION(From April 1, 2003 to March 31, 2008)
Stock Price Index Compared with Main Indices
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ChiyodaTOPIX- 48 -

Nikkei 225

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