Consolidated Financial Statements
Asanuma Corporation
Years ended March 31, 2008 and 2007
with Report of Independent Auditors

Asanuma Corporation
Consolidated Financial Statements
Years ended March 31, 2008 and 2007

Contents

Consolidated Financial Statements
Report of Independent Auditors .......................................................................................... 1
Consolidated Balance Sheets............................................................................................... 2
Consolidated Statements of Operations............................................................................... 4
Consolidated Statements of Changes in Net Assets ............................................................ 5
Consolidated Statements of Cash Flows ........................................................................... 6
Notes to Consolidated Financial Statements ....................................................................... 7

Report of Independent Auditors
The Board of Directors
Asanuma Corporation

We have audited the accompanying consolidated balance sheets of Asanuma Corporationand consolidated subsidiaries as of March 31, 2008 and 2007, and the related consolidated
statements of operations, changes in net assets and cash flows for the years then ended, allexpressed in yen. These financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with auditing standards generally accepted inJapan. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and disclosuresin the financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material
respects, the consolidated financial position of Asanuma Corporation and consolidated
subsidiaries at March 31, 2008 and 2007, and the consolidated results of their operations
and their cash flows for the years then ended in conformity with accounting principles
generally accepted in Japan.
The U.S. dollar amounts in the accompanying consolidated financial statements withrespect to the year ended March 31, 2008 are presented solely for convenience. Our
audit also included the translation of yen amounts into U.S. dollar amounts and, in our
opinion, such translation has been made on the basis described in Note 2.

Osaka, Japan
June 27, 2008

1

Asanuma Corporation
Consolidated Balance Sheets
March 31, 2008 and 2007

AssetsCurrent assets:
Cash and cash deposits (Note 6)
Receivables:
Notes receivable
Accounts receivable on completed construction
contracts
Other accounts receivable
Allowance for doubtful accounts
Inventories:
Real estate held for sale
Cost of uncompleted construction contracts
Raw materials and supplies
Deferred income taxes (Note 10)
Other current assets
Total current assets
Property, plant and equipment, at cost:
Land (Note 8)
Buildings and structures (Note 8)
Machinery, equipment and vehicles
Tools, furniture and fixtures
Construction in progress
Less accumulated depreciation
Property, plant and equipment, net
Investments and other assets:
Investments in securities (Notes 7 and 9)
Investments in unconsolidated subsidiaries andaffiliates
Long-term loans receivable (Note 9)Long-term prepaid expenses
Membership rights
Intangible assets
Other assets
Allowance for doubtful accounts
Total investments and other assets

Total assets

2

Millions of yen
2007
2008

Thousands of
U.S. dollars(Note 2)
2008

30,041¥ 34,879$

9,392

13,35093,742

63,8875,208(251)

65,372
4,777(151)

637,658
51,981(2,505)

1,257
34,790235
1397
144,957

1,968
34,220
123
1,176
455
156,169

12,546347,240
2,346
10
3,963
1,446,821

6,599
15,047
2,388
1,649
1
(13,094)
12,5906,762
15,175
2,558
1,680
–
(12,989)
13,18665,864150,185
23,835
16,45910(130,692)
125,661

12,61522,979125,911

63
754
15
547
491
1,724
(88)
16,121

68
422
22
628
641
1,758
(37)
26,481

629
7,526
149
5,460
4,901
17,206(878)
160,904¥ 173,668¥ 195,836$ 1,733,386¥

299,840

Millions of yen
2007
2008
Liabilities
Current liabilities:
Short-term bank loans (Note 9)
Current portion of long-term debt (Note 9)
Current portion of a bond (Note 9)
Payables:Notes payable
Accounts payable on construction contracts
Other accounts payable
Deferred income taxes (Note 10)
Advances received on uncompleted construction
contracts
Deposits received
Consumption taxes on advances received
Accrued income taxes (Note 10)
Accrued expenses
Provision for bonuses
Provision for loss on construction contracts
Provision for compensation for completed
construction
Other current liabilities
Total current liabilities
Long-term liabilities:
Long-term debt (Note 9)
Accrued retirement benefits for employees (Note 11)
Deferred income taxes (Note 10)
Other
Total long-term liabilities¥

33,2901,530–¥

33,1701,760
5,000

Thousands of
U.S. dollars(Note 2)
2008$

332,268
15,271–

4,389
48,463
18,40820

4,554
46,461
18,247–43,807483,711
183,731200

22,137
1,689
1,904
279
889
448
573

25,823
3,251
1,753
223
1,260
503
416

220,950
16,85819,004
2,785
8,873
4,472
5,719

581
1
134,601682
1
143,1045,799
91,343,457

5,155
7,158
3,421
1,671
17,405

6,685
7,882
6,475
1,699
22,741

51,452
71,44434,146
16,678
173,720

8,419
4,641
5,249
(133)
18,176

8,419
4,641
7,915
(129)
20,84684,03046,322
52,390(1,327)
181,415

3,486
3,486
21,662¥ 173,668

9,145
9,145
29,991¥ 195,836

34,79434,794
216,209$ 1,733,386

Contingent liabilities (Note 12)
Net assets
Shareholders’ equity (Note 13):
Common stock:
Authorized – 293,565,000 shares
Issued– 77,386,293 shares in 2008 and2007
Capital surplus
Retained earnings
Less treasury stock, at cost
Total shareholders’ equity
Valuation:
Net unrealized holding gain on securities (Note 7)
Total valuation
Total net assets
Total liabilities and net assets

See accompanying notes to consolidated financial statements.
3

Asanuma Corporation
Consolidated Statements of Operations
Years ended March 31, 2008 and 2007

Millions of yen
2008
2007
Net sales:
Completed construction contracts
Other

2008

¥ 194,886
2,297
197,183¥ 229,689
1,190
230,879$1,945,165
22,926
1,968,091

186,348
1,508
187,856

219,486739
220,225

1,859,947
15,051
1,874,998

8,538
789
9,327

10,203451
10,65485,218
7,875
93,093

9,024
303

9,964
690

90,069
3,024

297
(686)
(31)
1,662
(799)

207
(530)
(51)
1
(226)

2,964
(6,847)(309)
16,588(7,975)

(69)
(946)
(269)

(7)
(149)
(65)

(689)
(9,441)(2,685)

174
2,032
2,206
(2,475)

193
5,007
5,200
¥ (5,265)

1,737
20,28122,018$ (24,703)

Cost of sales:
Completed construction contracts
Other
Gross profit:
Completed construction contracts
Other

Selling, general and administrative
expenses (Note 14)
Operating income
Other income (expenses):
Interest and dividend income
Interest expense
Guarantee fees
Gain on sales of investments in securities, net
Loss on repairs of completed construction
Loss on impairment of tangible fixed assets(Note 8)Other, net
Loss before income taxes
Income taxes (Note 10):
Current
Deferred
Net loss

Thousands of
U.S. dollars(Note 2)¥

See accompanying notes to consolidated financial statements.
4

Asanuma Corporation
Consolidated Statements of Changes in Net Assets
Years ended March 31, 2008 and 2007

Millions of yen

Balance at March 31, 2006
Net loss for the year
Cash dividends
Sales of treasury stock
Increase in treasury stock
Net change in item other thanshareholders’ equity
Balance at March 31, 2007
Net loss for the year
Cash dividends
Sales of treasury stock
Increase in treasury stock
Net change in item other thanshareholders’ equity
Balance at March 31, 2008

Balance at March 31, 2007
Net loss for the year
Cash dividends
Sales of treasury stock
Increase in treasury stock
Net change in item other thanshareholders’ equity
Balance at March 31, 2008

Net
unrealized
holding
gain onTotal netsecurities
assets¥ 9,759 ¥ 36,254–(5,265)
–
(380)
–
1
–
(5)

Commonstock¥ 8,419––––

Capitalsurplus¥ 4,641––0–Treasury
Retained stock, atearnings
cost¥ 13,560 ¥ (125)(5,265)
–
(380)
–
–
1
–
(5)

–
¥ 8,419–––––¥ 4,641
–
–
0
–

–
–
¥ 7,915 ¥ (129)(2,475)
–
(191)
–
–
0
–
(4)

(614)
(614)
¥ 9,145 ¥ 29,991–(2,475)
–
(191)
–
0
–
(4)

–
¥ 8,419–¥ 4,641–¥ 5,249(5,659)(5,659)¥ 3,486 ¥ 21,662

Commonstock$ 84,030––––

Thousands of U.S. dollars (Note 2)Netunrealized
holding
Treasurygain onCapital Retained stock, at
Total netsecurities
surplus earnings
cost
assets$46,322 $ 79,000 $ (1,288)$ 91,277 $ 299,341– (24,703)––(24,703)–(1,907)––(1,907)
0
–
0
–
0
–
–
(39)
–
(39)

–
$ 84,030–$46,322–$ 52,390–¥ (133)–$ (1,327)(56,483) (56,483)$ 34,794 $ 216,209

See accompanying notes to consolidated financial statements.
5

Asanuma Corporation
Consolidated Statements of Cash Flows
Years ended March 31, 2008 and 2007

Millions of yen
2007
2008
Cash flows from operating activities:
Loss before income taxes
Adjustments for:
Depreciation and amortization
Loss on impairment of tangible fixed assets
Increase (decrease) in allowance for doubtful accounts(Decrease) increase in provision for bonuses
Decrease in accrued retirement benefits for employees
Interest and dividend income
Interest expense
Gain on sales of investments in securities, net
Loss on devaluation of membership rights and other assets
Decrease (increase) in receivables(Increase) decrease in cost of uncompleted construction
contracts
Decrease in real estate held for sale
Increase (decrease) in payables
Decrease in advances received on uncompleted construction
contracts
Other, net
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Net cash used in operating activities
Cash flows from investing activities:
Purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchases of investments in securities
Proceeds from sales of investments in securities
Increase in loans receivable
Other, net
Net cash provided by (used in) investing activities
Cash flows from financing activities:
Decrease in short-term bank loans, net
Proceeds from long-term debt
Repayment of long-term debt
Repayment of a bondCash dividends paid
Other, net
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year (Note 6)

¥

(269)

¥

Thousands of
U.S. dollars(Note 2)
2008

(65)

$ (2,685)

734
69
190
(55)
(725)
(297)
686
(1,662)
62
5,443

694
7
(43)
270
(916)
(207)
530
(1)
21
(22,050)

7,326
689
1,896
(549)
(7,236)(2,964)
6,847(16,588)619
54,327

(571)
592
1,808

18,64862(3,260)(5,699)5,909
18,046(3,686)(1,830)
489
290
(744)
(203)
(168)

(6,822)
4,770(8,362)
197
(488)
(380)
(9,033)(36,790)(18,267)
4,881
2,895
(7,426)(2,027)(1,677)

(94)
473
(312)
2,503
(310)
(93)
2,167

(300)
20
(23)
3
(114)
(282)
(696)

(938)
4,721
(3,114)24,983(3,094)(929)
21,629(110)–(1,530)(5,000)(190)(5)(6,835)(1,650)3,100(1,840)
–
(380)
(3)
(773)

(1,098)–(15,271)(49,905)(1,896)(50)(68,220)(52)(4,888)34,826¥ 29,938

0(10,502)45,328¥ 34,826(520)(48,788)347,600$ 298,812

See accompanying notes to consolidated financial statements.
6

Asanuma Corporation
Notes to Consolidated Financial Statements
Years ended March, 2008 and 2007

1.

Basis of Preparation of Consolidated Financial Statements

The accompanying consolidated financial statements of Asanuma Corporation (the“Company”) and consolidated subsidiaries are prepared on the basis of accounting
principles generally accepted in Japan, which are different in certain respects as to theapplication and disclosure requirements of International Financial Reporting Standards,
and have been compiled from the consolidated financial statements prepared by theCompany as required by the Financial Instruments and Exchange Act of Japan.
In preparing the accompanying consolidated financial statements, certain reclassifications
and rearrangements have been made to the consolidated financial statements issued
domestically in order to present them in a format which is more familiar to readers outside
Japan.

2.

U.S. Dollar Amounts

The accompanying consolidated financial statements are stated in yen, the currency of thecountry in which the Company and its consolidated subsidiaries are incorporated andoperate. The translation of yen amounts into U.S. dollar amounts is included solely forthe convenience of readers outside Japan and has been made at ¥100.19 = U.S.$1.00, theexchange rate prevailing on March 31, 2008. This translation should not be construed asa representation that yen can be converted into U.S. dollars at the above or any other rate.

3.

Principles of Consolidation

At March 31, 2008, the Company had 4 subsidiaries, as opposed to 3 in 2007. The
consolidated financial statements for the years ended March 31, 2008 and 2007 include
the accounts of the Company and its 2 significant subsidiaries. The accounts of theremaining subsidiaries were not consolidated with those of the Company at March 31,
2008 and 2007 because their assets, retained earnings, net sales and net income (loss) in
the aggregate were not material to the consolidated financial statements.
At March 31, 2008 and 2007, the Company applied the equity method to its investments in
2 unconsolidated subsidiaries and 2 affiliates, and an unconsolidated subsidiary and 2
affiliates, respectively, for the purpose of the consolidated financial statements for theyears then ended.
The assets and liabilities of the consolidated subsidiaries have been revalued at fair value
as of the respective dates of acquisition of control.

7Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

4.

Summary of Significant Accounting Policies(a) Cash and cash equivalents
Cash and cash equivalents consist of cash on hand, deposits with banks withdrawable
on demand, and short-term investments which are readily convertible to cash subject
to an insignificant risk of any changes in their value and which were purchased withan original maturity of three months or less.
(b) Investments in securities
Investments in securities are classified into three categories: trading securities,
held-to-maturity debt securities or other securities. Trading securities are stated atfair value. Gain and loss, both realized and unrealized, are credited and charged toincome. Held-to-maturity debt securities are stated at amortized cost. Marketablesecurities classified as other securities are carried at fair value with any changes in
unrealized holding gain or loss, net of the applicable income taxes, reported as aseparate component of net assets. Non-marketable securities classified as othersecurities are carried at cost determined by the moving average method.
(c) Allowance for doubtful accounts
The Company and its consolidated subsidiaries provide an allowance for doubtful
accounts at an amount calculated based on their historical experience of bad debts on
ordinary receivables plus an additional estimate of probable specific bad debts from
customers experiencing financial difficulties.
(d) Inventories
Real estate held for sale is stated at the lower of cost or market, cost being determinedon an individual project basis. Uncompleted construction contracts are stated at cost
determined on an individual project basis. Raw materials and supplies are stated at
the lower of cost or market, cost being determined by the period average method.
(e) Property, plant and equipment
Property, plant and equipment is stated on the basis of cost. Depreciation is
calculated by the declining-balance method over the estimated useful lives of therespective assets; however, the straight-line method is applied to buildings (except forstructures attached to the buildings) acquired on or after April 1, 1998.

8

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

4.

Summary of Significant Accounting Policies (continued)(f) Computer software
Expenditures related to computer software developed for internal use are charged toincome when incurred, except if they are deemed to contribute to the generation ofincome or to future cost savings. Such expenditures are capitalized as an asset andamortized by the straight-line method over an estimated useful life of 5 years.
(g) Leases
The Company and its consolidated subsidiaries lease certain equipment under
noncancelable leases referred to as finance leases. Finance leases other than thosewhich transfer the ownership of the leased property to the lessee are accounted for as
operating leases.
(h) Provision for compensation for completed construction
A provision for compensation for completed construction is provided for anticipatedfuture costs arising from warranties on completed construction.
(i) Provision for bonuses
A provision for bonuses is provided at the estimated amount of bonuses to be paid
based on the annual bonus agreement which the Company and its consolidated
subsidiaries entered into with their employees as allocated to the current fiscal year.
(j) Provision for loss on construction contracts
A provision for loss on construction contracts is provided for anticipated future losses
on uncompleted construction projects.
(k) Accrued retirement benefits
Accrued retirement benefits for employees are provided at the retirement benefit
obligation less the fair value of the pension plan assets as adjusted for unrecognizedactuarial gain or loss. The retirement benefit obligation is attributed to each periodby the straight-line method over the estimated average remaining years of service ofthe eligible employees.
Prior service cost is credited or charged to income in the year in which the gain or loss
is recognized.

9

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

4.

Summary of Significant Accounting Policies (continued)(k) Accrued retirement benefits (continued)
Actuarial gain or loss is amortized commencing the year following the year in which
the gain or loss is recognized by the straight-line method principally over a ten-year
period, which is shorter than the average remaining years of service of the eligible
employees.
(l) Income taxes
Deferred income taxes are calculated based on taxable income and charged to incomeon an accrual basis. Deferred tax assets and liabilities are computed based on thetemporary differences between financial reporting and the tax bases of the assets andliabilities which will result in taxable or deductible amounts in the future. The
calculation of deferred tax assets and liabilities is based on the enacted tax laws.
Valuation allowances are utilized to reduce deferred tax assets to the amount thatmanagement believes is more likely than not to be realized. In assessing the likelihoodof realization, the Company considers all currently available evidence for future years,
both positive and negative, supplemented by information regarding historical resultsfor each tax jurisdiction.
(m) Hedge accounting
Gain or loss on derivatives positions designated as hedges is deferred until the loss orgain on the respective underlying hedged items is recognized. Interest-rate swaps
which meet certain conditions are accounted for as if the interest rates applied to theswaps had originally applied to the underlying debt.
(n) Revenue recognition
Revenue from, and the related cost of, construction contracts are generally recordedby the completed-contract method. During the construction period, the accumulated
costs of uncompleted construction contracts are represented as inventories, and theadvances received for such contracts are included in current liabilities. If a
construction project takes longer than one year and its contract amount exceeds¥1,000 million ($9,981 thousand), however, the percentage-of-completion method isapplied. Net sales of construction contracts accounted for by thepercentage-of-completion method totaled ¥89,035 million ($888,662 thousand) and¥60,297 million for the years ended March 31, 2008 and 2007, respectively.

10

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

5.

Changes in Method of Accounting(1) Property, Plant and Equipment and Depreciation
Effective the year ended March 31, 2008, the Company and its domestic consolidated
subsidiaries changed their method of accounting for depreciation of property, plantand equipment acquired on or after April 1, 2007. This change was made based on
an amendment to the Corporation Tax Law. The effect of this change on operating
income and loss before income taxes was immaterial for the year ended March 31,
2008.
In addition, effective the year ended March 31, 2008, depreciation expense forproperty, plant and equipment acquired before April 1, 2007 is computed based on thesalvage value of 5% of acquisition cost, and the amount between the salvage value(5% of acquisition cost) and memorandum value is depreciated from the year
following the year in which the book value of an asset reaches 5% of its acquisition
cost by the straight-line method over a period of 5 years. This change was madebased on an amendment to the Corporation Tax Law. The effect of the change wasto decrease operating income by ¥29 million ($289 thousand) and increase loss before
income taxes by the same amount for the year ended March 31, 2008 as compared tothe corresponding amounts which would have been recorded under the previous
method.

6.

Cash and Cash Equivalents

The balances of cash and cash deposits in the accompanying consolidated balance sheetsat March 31, 2008 and 2007 are reconciled to the balances of cash and cash equivalents aspresented in the accompanying consolidated statements of cash flows for the years thenended as follows:

Millions of yen
2008
2007
Cash and cash deposits
Time deposits with original
maturities in excess of threemonthsCash and cash equivalents

Thousands of
U.S. dollars
2008¥ 30,041¥ 34,879$ 299,840(103)¥ 29,938(53)¥ 34,826(1,028)$ 298,812

11

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

7.

Investments in Securities

At March 31, 2008 and 2007, marketable securities classified as held-to-maturity debt
securities were as follows:
Millions of yen
2008
2007
Carrying Estimated Unrealized Carrying Estimated Unrealizedvalue
fair value
gain
value
fair value
gain
Held-to-maturity
debt securities
whose estimatedfair value exceeds
their carrying
value:
Government andmunicipal bonds

¥ 30

¥ 31

¥1

¥ 30

¥ 30

¥0

Thousands of U.S. dollars
2008
Carrying Estimated Unrealizedvalue
fair value
gain
Held-to-maturity
debt securities
whose estimatedfair value exceeds
their carrying
value:
Government andmunicipal bonds

$ 300

$ 309

$ 9

At March 31, 2008 and 2007, marketable securities classified as other securities were as
follows:
Millions of yen
2008

Other securities whosecarrying value exceeds
their acquisition costs:
Equity securities
Other securities whosecarrying value does notexceed their acquisition
costs:
Equity securities

2007

Acquisition
costs

Carrying
value

Unrealized
Unrealized
holding Acquisition Carrying holding
gain (loss)
gain (loss)
costs
value

¥ 5,345¥ 11,127¥ 5,782¥ 6,178¥ 21,548¥ 15,370

639¥ 5,984615¥ 11,742(24)¥ 5,758613¥ 6,791551¥ 22,099(62)¥ 15,308
12

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

7.

Investments in Securities (continued)
Thousands of U.S. dollars
2008
Acquisition
costs

Carrying
value

Unrealized
holding
gain (loss)$ 53,349$ 111,059$ 57,710

6,378$ 59,727

6,138$ 117,197(239)$ 57,471

Other securities whosecarrying value exceeds
their acquisition costs:
Equity securities
Other securities whosecarrying value does notexceed theiracquisition costs:
Equity securities

The proceeds from sales of, and gross realized gain on, other securities for the years ended
March 31, 2008 and 2007 are summarized as follows:

Proceeds from sales
Gross realized gain

Millions of yen
2008
2007
¥ 2,500¥3
1,662
1

Thousands of
U.S. dollars
2008$ 24,953
16,588Non-marketable securities classified as other securities at March 31, 2008 and 2007 wereas follows:
Millions of yen
2008
2007
Other securities:
Unlisted equity securities

¥ 843

¥ 850

Thousands of
U.S. dollars
2008$ 8,414

The redemption schedule at March 31, 2008 for held-to-maturity debt securities was asfollows:

Government and municipal bonds

Millions of yen
Due after five years
through ten years¥ 30

Thousands of
U.S. dollars
Due after five years
through ten years
$ 299

13

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

8.

Loss on Impairment of Tangible Fixed Assets

Aggregate loss on impairment of tangible fixed assets of ¥69 million ($689 thousand) and¥7 million were recorded for the years ended March 31, 2008 and 2007, respectively.
Such loss related to land of ¥43 million ($429 thousand) and buildings of ¥26 million($260 thousand) for the year ended March 31, 2008 and land of ¥7 million for the year
ended March 31, 2007 and is outlined as follows:

Location
Use
Classification
Siga Prefecture and Idle property Buildings, structuresothersand land
Total

Millions of yen
2008
2007
¥ 69
¥ 69

¥ 7
¥ 7

Thousands of
U.S. dollars
2008
$ 689
$ 689

The Company and its consolidated subsidiaries group their fixed assets for operating
purposes at each office but group leased assets and idle assets individually. The affiliates
group their fixed assets at each company. As a result of having idle buildings, structuresand land during the year ended March 31, 2008, the Company and its consolidated
subsidiaries have reduced the carrying value of such assets to their respective estimatedrecoverable amounts and recorded a related loss on impairment of tangible fixed assets of¥69 million ($689 thousand) in the accompanying consolidated statement of operations forthe year then ended.
For the year ended March 31, 2007, as a result of a recent decline in buildings, structuresand land, the Company and its consolidated subsidiaries reduced the carrying value ofsuch land to an estimate of its recoverable amount and recorded a related loss on
impairment of tangible fixed assets of ¥7 million in the accompanying consolidated
statement of operations for the year then ended.
The recoverable amounts of idle assets have been measured at their estimated net selling
prices.

9.

Short-Term Bank Loans, Bonds and Long-Term Debt

Short-term loans from banks had an average interest rate of 1.2% at March 31, 2008 and2007.
There were no bonds outstanding at March 31, 2008.
outstanding at March 31, 2007:

The following bond wasMillions of yen
2007
0.56% bond due October 2007
Less current portion¥ 5,000(5,000)–14

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

9.

Short-Term Bank Loans, Bonds and Long-Term Debt (continued)

Long-term debt at March 31, 2008 and 2007 is summarized as follows:

Millions of yen
2008
2007
Unsecured loans from banks, payable inyen, at rates ranging from 1.34% to
2.45%
Secured loans from insurancecompanies, payable in yen at rates
ranging from 1.24% to 1.34%
Total
Less current portion included in current
liabilities

Thousands of
U.S. dollars
2008¥ 6,685¥ 8,415$ 66,723

–
6,685

30
8,445

–
66,723(1,530)¥ 5,155(1,760)¥ 6,685(15,271)$ 51,452

The aggregate annual maturities of long-term debt subsequent to March 31, 2008 aresummarized as follows:Year ending March 31,
2009
2010
2011
2012

Millions of yen¥ 1,530
1,230
2,305
1,620
¥ 6,685

Thousands of
U.S. dollars$ 15,271
12,27723,006
16,169$ 66,723

Assets pledged at March 31, 2008 as collateral for the loan of an affiliate which was
engaged in a Private Finance Initiative (“PFI”) business are summarized as follows:

Investments in securities
Long-term loans receivable

Millions of yen
¥ 40
447
¥ 487

Thousands of
U.S. dollars
$

399
4,462
$ 4,86115

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

10. Income Taxes
Income taxes applicable to the Company and its consolidated subsidiaries comprise
corporation, inhabitants’ and enterprise taxes which, in the aggregate, resulted in astatutory tax rate of approximately 40.8% for the years ended March 31, 2008 and 2007.
A reconciliation of the statutory tax rate and the effective tax rates for the years ended
March 31, 2008 and 2007 as a percentage of loss before income taxes is summarized asfollows:

Statutory tax rate
Permanently non-tax-deductible expenses
Permanently non-taxable income
Per capita portion of inhabitants’ taxes
Valuation allowance
Unrecognized deferred tax assets relating
to excess of cost over equity in net assetsof subsidiaries and other
Other
Effective tax rates

2008
40.8%
(107.3)19.5(60.6)(718.2)

2007
40.8%(460.7)46.8(216.0)(7,765.8)

6.8
(0.3)
(819.3%)

334.8
(1.8)
(8,021.9%)

16

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

10. Income Taxes (continued)
The significant components of deferred tax assets and liabilities of the Company and its
consolidated subsidiaries at March 31, 2008 and 2007 are summarized as follows:

Millions of yen
2008
2007
Deferred tax assets:
Allowance for doubtful accounts
Provision for bonuses
Provision for compensation forcompleted construction
Inventories
Provision for loss on construction
contracts
Accrued retirement benefits for
employees
Loss on impairment of tangible
fixed assets
Loss on revaluation of fixed assets
and other
Loss on revaluation of investments
Tax loss carryforwards
Unrealized profit on intercompany
transactions
Other
Gross deferred tax assets
Less valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Unrealized holding gain on
securities
Deferred capital gains on property
Other
Total deferred tax liabilities
Net deferred tax liabilities

¥

580
170

¥

474
189

Thousands of
U.S. dollars
2008
$

5,789
1,697

237
159

279
156

2,366
1,587

234

170

2,336

2,833

3,121

28,276

383

359

3,823

1,411
209
560

1,550
170
526

14,083
2,086
5,589

52
559
7,387
(7,334)
53

53
495
7,542
(5,436)
2,106

519
5,578
73,729(73,201)528(2,273)(1,209)(11)(3,493)¥ (3,440)(6,164)(1,221)(20)(7,405)¥ (5,299)(22,687)(12,067)(110)(34,864)$ (34,336)

17

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

11. Retirement Benefits
The Company and its domestic consolidated subsidiaries have defined benefit pension
plans covering substantially all employees who are entitled to lump-sum or annuity
payments, the amounts of which are determined by reference to their basic rates of pay,
length of service, and the conditions under which termination occurs. In addition to theretirement benefit plans described above, the Company and its domestic consolidated
subsidiaries pay additional retirement benefits under certain conditions.
The following table sets forth the funded and accrued status of the plans and the amounts
recognized in the accompanying consolidated balance sheets at March 31, 2008 and 2007
for the Company’s and these subsidiaries’ defined benefit pension plans:Millions of yen
2008
2007
Retirement benefit obligation
Plan assets at fair value
Unfunded retirement benefit obligation
Unrecognized actuarial loss (gain)
Accrued retirement benefits for
employees

Thousands of
U.S. dollars
2008¥ (32,148)
22,404(9,744)2,586¥ (33,442)
25,870(7,572)(310)$ (320,870)
223,615(97,255)
25,811¥ (7,158)¥ (7,882)$ (71,444)

As permitted under the accounting standard for retirement benefits, one domestic
consolidated subsidiary calculates its retirement benefit obligation for employees by asimplified method.
The components of retirement benefit expenses for the years ended March 31, 2008 and2007 are outlined as follows:

Millions of yen
2008
2007
Service cost
Interest cost
Expected return on plan assets
Amortization of unrecognized actuarial
loss
Retirement benefit expenses

Thousands of
U.S. dollars
2008

¥ 774
659
(517)

¥ 814
668
(474)

$ 7,725
6,578(5,160)295¥ 1,211425¥ 1,433

2,944$12,08718

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

11. Retirement Benefits (continued)
The assumptions used in accounting for the defined benefit pension plans for the years
ended March 31, 2008 and 2007 were as follows:

Discount rate
Expected rate of return on plan assets

2008

2007

2.0%
2.0%

2.0%
2.0%

12. Contingent Liabilities
At March 31, 2008, the Company was contingently liable for guarantees of deposits forcondominium purchase agreements held by condominium sales companies in theaggregate amount of ¥498 million ($4,971 thousand) and ¥2,104 million, respectively.

13. Shareholders’ Equity
The Corporation Law of Japan (the “Law”) provides that an amount equal to 10% of theamount to be disbursed as distributions of capital surplus (other than the capital reserve)
and retained earnings (other than the legal reserve) be transferred to the capital reserve andthe legal reserve, respectively, until the sum of the capital reserve and the legal reserve
equals 25% of the capital stock account. Such distributions can be made at any time byresolution of the shareholders, or by the Board of Directors if certain conditions are met.
The Company’s legal reserve included in retained earnings at March 31, 2008 and 2007
amounted to ¥2,104 million ($21,000 thousand).
Under the Law, upon the issuance and sale of new shares of common stock, the entire
amount of the proceeds is required to be accounted for as common stock, although a
company may, by resolution of the Board of Directors, account for an amount notexceeding one-half of the proceeds of the sale of new shares as additional paid-in capital
included in capital surplus.

19

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

13. Shareholders’ Equity (continued)
Movements in shares of common stock in issue and treasury stock during the years ended
March 31, 2008 and 2007 are summarized as follows:

Shares ofcommon stockin issue
Treasury stock

Shares ofcommon stockin issue
Treasury stock

March 31, 2007

Number of shares
2008
Increase
Decrease

March 31, 2008

77,386,293
1,213,134–
24,89577,386,293
1,234,310

March 31, 2006

Number of shares
2007
Increase
Decrease

March 31, 2007

77,386,293
1,199,952–
18,19877,386,293
1,213,134

–
3,719

–
5,016

14. Research and Development Costs
Research and development costs included in selling, general and administrative expenses
for the years ended March 31, 2008 and 2007 amounted to ¥227 million ($2,266 thousand)and ¥272 million, respectively.

15. Leases
The following pro forma amounts represent the acquisition costs, accumulated
depreciation and net book value of the leased property as of March 31, 2008 and 2007,
which would have been reflected in the accompanying consolidated balance sheets if
finance lease accounting had been applied to the finance leases under which the Company
and its consolidated subsidiaries are lessees and which are currently accounted for as
operating leases:
Millions of yen
2008
2007
Acquisition Accumulated Net book Acquisition Accumulated Net bookcosts
depreciation
value
costs
depreciation
value
Tools, furniture andfixtures

¥ 36

¥ 15

¥ 21

¥ 33

¥ 22

¥ 11

20

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

15. Leases (continued)
Thousands of U.S. dollars
2008
Acquisition Accumulated Net bookcosts
depreciation
value
Tools, furniture andfixtures

$ 360

$ 150

$ 210

Lease payments related to finance leases accounted for as operating leases, depreciationand interest expense, which have not been reflected in the accompanying consolidated
statements of operations for the years ended March 31, 2008 and 2007, were as follows:
Thousands of
U.S. dollars
2008

Millions of yen
2007
2008
Lease payments
Depreciation
Interest expense

¥8
8
1

¥ 20
19
1

$80
80
10

Future minimum lease payments (including the interest portion thereon) subsequent toMarch 31, 2008 under finance leases other than those which transfer ownership of theleased property to the Company and its consolidated subsidiaries are summarized asfollows:

Year ending March 31,
20092010 and thereafter

Millions of yen
¥ 6
15
¥ 21

Thousands of
U.S. dollars
$

60
150
$ 210

21

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

16. Derivatives
The Company utilizes interest-rate swaps to hedge the risk of fluctuation in interest rates
on its borrowings. The Company does not enter into derivatives transactions for
speculative or short-term trading purposes.
The Company is exposed to certain market risk arising from interest-rate swap agreements.
It is also exposed to the risk of credit loss in the event of nonperformance by thecounterparties with respect to interest-rate swap agreements; however, the Company does
not anticipate nonperformance by any of the counterparties, all of whom are financial
institutions with high credit ratings. In addition, the Company has established internal
policies which include procedures and authorization processes governing derivatives andcomplies fully with these guidelines.
At March 31, 2008 and 2007, all open derivatives positions held by the Company met thecriteria for deferral hedge accounting; accordingly, disclosure of fair value information
with respect to these positions has been omitted.

17. Amounts per Share
Amounts per share at March 31, 2008 and 2007 and for the years then ended were as
follows:

2008

2007

U.S. dollars
2008¥ 284.46(32.50)–¥ 393.73(69.11)2.50$ 2.84(0.32)–Yen
Net assets
Net loss
Cash dividends

Information used in the computation of net loss per share for the years ended March 31,
2008 and 2007 is presented as follows.
Millions of yen
2007
2008
Net loss
Net loss not applicable to commonshareholders
Net loss used in the calculation of
net loss per share

Thousands of
U.S. dollars
2008¥ 2,475¥ 5,265$ 24,703–––¥ 2,475¥ 5,265$ 24,703

Thousands of shares
Weighted-average number of shares used in
the calculation of net loss per share

2008

2007

76,16076,17722

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

17. Amounts per Share (continued)
Net assets per share are based on the number of shares of common stock outstanding at theyear end.
Net loss per share is computed based on the net loss attributable to shareholders ofcommon stock and the weighted-average number of shares of common stock outstanding
during the year. Diluted amounts per share have not been presented for the years ended
March 31, 2008 and 2007 since neither the Company nor any of the consolidated
subsidiaries had any potentially dilutive shares at March 31, 2008 and 2007.
Cash dividends per share represent the cash dividends proposed by the Board of Directors
as applicable to the respective fiscal years.

23