Consolidated Financial Statements
Asanuma Corporation
Years ended March 31, 2010 and 2009
with Report of Independent Auditors

Asanuma Corporation
Consolidated Financial Statements
Years ended March 31, 2010 and 2009

Contents

Consolidated Financial Statements
Report of Independent Auditors .......................................................................................... 1
Consolidated Balance Sheets............................................................................................... 2
Consolidated Statements of Income .................................................................................... 4
Consolidated Statements of Changes in Net Assets ............................................................ 5
Consolidated Statements of Cash Flows ........................................................................... 6
Notes to Consolidated Financial Statements ....................................................................... 8

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, 2010 and 2009, and the related consolidated
statements of income, 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, 2010 and 2009, 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, 2010 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 25, 20101

Asanuma Corporation
Consolidated Balance Sheets
March 31, 2010 and 2009

AssetsCurrent assets:
Cash and cash deposits (Notes 6 and 16)
Receivables:
Notes receivable (Note 16)
Accounts receivable on completed construction
contracts (Note 16)
Other accounts receivable
Allowance for doubtful accounts¥

Millions of yen
2009
2010

Thousands of
U.S. dollars(Note 2)
2010

24,766$¥42,007

266,187

3,532

6,990

37,962

57,4692,669(232)
63,43840,8692,357(460)
49,756617,680
28,687(2,494)
681,835

1,166
16,12855
17,3491,195
32,879161
34,235

12,532
173,345591
186,468

Deferred income taxes (Note 9)
Other current assets
Total current assets

1
1,252
106,806

1
592
126,591

11
13,457
1,147,958

Property, plant and equipment, at cost:
Land (Note 8)
Buildings and structures (Note 8)
Machinery, equipment and vehicles
Tools, furniture and fixtures
Leased assets
Less accumulated depreciation
Property, plant and equipment, net

6,394
14,490
2,209
1,645
57
(13,126)
11,6696,453
14,890
2,354
1,645
25
(13,282)
12,08568,723
155,739
23,742
17,681
613(141,079)
125,419

6,147

5,735

66,068

76
404
539
2,095
(231)
9,030

69
768
566
2,098
(74)
9,162

817
4,342
5,793
22,517(2,482)
97,055¥ 127,505¥ 147,838$ 1,370,432

Inventories:
Real estate held for sale
Cost of uncompleted construction contracts
Raw materials and supplies

Investments and other assets:
Investments in securities (Notes 7, 8 and 16)
Investments in unconsolidated subsidiaries andaffiliates
Long-term loans receivable (Note 8)
Intangible assets
Other assets
Allowance for doubtful accounts
Total investments and other assets

Total assets

2Millions of yen
2009
2010
Liabilities
Current liabilities:
Short-term bank loans (Notes 8 and 16)
Current portion of long-term debt (Note 8)
Payables (Note 16):
Notes payable
Accounts payable on construction contracts
Other accounts payable

Thousands of
U.S. dollars(Note 2)
2010

¥ 24,573
5,353¥ 29,630
1,230$

264,11257,534

3,352
23,53012,381
39,263

5,045
30,642
19,09054,77736,028
252,902
133,072
422,002

Advances received on uncompleted construction
contracts
Deposits received
Accrued expenses
Consumption taxes on advances received
Accrued income taxes (Note 9)
Deferred income taxes (Note 9)
Provision for compensation for completed
construction
Provision for bonuses
Provision for loss on construction contracts
Other current liabilities
Total current liabilities

10,416
3,252
968
1,410
292
14

20,604
3,111
1,417
1,785
324
23

111,952
34,953
10,40415,155
3,138
150

679
328
406
64
87,018

619
275
918
165
114,878

7,298
3,525
4,364
688
935,275

Long-term liabilities:
Long-term debt (Notes 8 and 16)
Accrued retirement benefits for employees (Note 10)
Deferred income taxes (Note 9)
Other long-term liabilities
Total long-term liabilities

10,358
7,687
1,634
985
20,664

3,925
7,165
1,489
1,324
13,903111,329
82,62017,562
10,587222,098

8,419
4,641
6,007
(135)
18,932

8,419
4,641
5,522
(134)
18,44890,48849,88264,564(1,451)
203,483872
872
19
19,823¥ 127,505

609
609
–
19,057¥ 147,838

9,372
9,372
204
213,059$ 1,370,432

Contingent liabilities (Note 11)
Net assets
Shareholders’ equity (Note 12):
Common stock:
Authorized – 293,565,000 shares
Issued– 77,386,293 shares in 2010 and– 2009
Capital surplus
Retained earnings
Less treasury stock, at cost
Total shareholders’ equity
Valuation:
Net unrealized holding gain on securities (Note 7)
Total valuation
Minority interests
Total net assets
Total liabilities and net assets

See accompanying notes to consolidated financial statements.
3

Asanuma Corporation
Consolidated Statements of Income
Years ended March 31, 2010 and 2009

Millions of yen
2010
2009
Net sales:
Completed construction contracts
Other

2010

¥ 152,727
2,161
154,888¥ 180,637
1,237
181,874$ 1,641,520
23,226
1,664,746

144,487
1,688
146,175

172,197804
173,001

1,552,955
18,143
1,571,098

8,240
473
8,713

8,440
433
8,873

88,565
5,083
93,648

7,162
1,551

7,899
974

76,978
16,670

310
(797)
(29)
87
–
91
(133)
(1)
(157)
(110)

298
(673)
(23)
(16)
1,330
333
(339)
(1)
(217)
(1,042)

3,332(8,566)
(312)
935
–
978
(1,429)(11)(1,688)(1,182)

812

624

8,727

316
(20)
296
31
485

358
(7)
351
–
273

3,396
(215)
3,181
333
5,213

Cost of sales (Note 13):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
Prior period adjustment, net
Gain on sales of investments in securities, net
Gain on sales of fixed assets
Loss on repairs of completed construction
Loss on impairment of tangible fixed assets
Provision of allowance for doubtful accounts
Other, net
Income before income taxes and minority
interests
Income taxes (Note 9):
Current
Deferred
Minority interests
Net income

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, 2010 and 2009
Millions of yen

Balance at March 31, 2008
Net income for the year
Sales of treasury stock
Increase in treasury stock
Net change in items other thanshareholders’ equity
Balance at March 31, 2009
Net income for the year
Sales of treasury stock
Increase in treasury stock
Net effect in minority interests
resulting from inclusion ofsubsidiaries in consolidation
Net change in items other thanshareholders’ equity
Balance at March 31, 2010

Net
unrealized
holding
gain onsecurities

Commonstock

CapitalsurplusRetainedearnings

Treasurystock, atcost¥ 8,419–––¥ 4,641–(0)–¥ 5,249273––¥ (133)–
1(2)¥ 3,486––––¥ 8,419––––¥ 4,641–(0)––¥ 5,522485–––¥ (134)
–
0
(1)

–

–

–

–

–
¥ 8,419–¥ 4,641–¥ 6,007–¥ (135)

Minority
interests

Total net
assets¥––––¥ 21,662
273
1(2)(2,877)
¥
609 ¥
–
–
–

–
–
–
–
–

(2,877)¥ 19,057
485
0
(1)

–

(12)

(12)

263
872

31
19

294
¥ 19,823

Minority
interests

Total net
assets$––––$ 204,826
5,213
0
(11)

¥

¥

Thousands of U.S. dollars (Note 2)

Balance at March 31, 2009
Net income for the year
Sales of treasury stock
Increase in treasury stock
Net effect in minority interests
resulting from inclusion ofsubsidiaries in consolidation
Net change in items other thanshareholders’ equity
Balance at March 31, 2010

Commonstock

CapitalsurplusRetainedearnings

Treasurystock, atcostNet
unrealized
holding
gain onsecurities$ 90,488–––$ 49,882–(0)–$ 59,351
5,213––$ (1,440)–
0(11)$ 6,545
–
–
–

–

–

–

–

–

(129)

(129)

–
–
$ 64,564 $ (1,451)

2,827$ 9,372

333
$ 204

3,160
$213,059––$ 90,488 $ 49,882

See accompanying notes to consolidated financial statements.
5

Asanuma Corporation
Consolidated Statements of Cash Flows
Years ended March 31, 2010 and 2009

Millions of yen
2010
2009
Cash flows from operating activities:
Income before income taxes and minority interests
Adjustments for:
Depreciation and amortization
Impairment loss
(Decrease) increase in allowance for doubtful
accounts
Increase (decrease) in provision for bonuses
Increase in accrued retirement benefits
for employees
Interest and dividend income
Interest expense
Foreign exchange losses
Gain on sales of investments in securities, net
Loss on valuation of investments in securities
Gain on sales of property, plant and equipment
Loss on valuation of membership rights
Loss on valuation of inventories(Increase) decrease in receivables
Decrease in inventories
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) provided by operating activities
Cash flows from investing activities:
Net decrease in time deposits
Purchases of property, plant and equipment
Proceeds from sales of property, plant andequipment
Purchases of intangible assets
Purchases of investments in securities
Proceeds from sales of investments in securities
Investments in loans receivableCollection of loans receivable
Other, net
Net cash provided by investing activities

¥

¥

812

¥

624

Thousands
ofU.S. dollars(Note 2)
2010
$

8,727

542
1

543
1

5,825
11

(71)
53

215
(173)

(763)
570

522
(310)
797
16
(4)
4
(91)
1
29
(4,676)
16,857(10,294)

8
(298)
673
10
(1,330)
294
(333)
46
1
25,4202,046(17,164)5,610(3,332)
8,566
172
(43)
43
(978)
11
312
(50,258)
181,180(110,064)(10,187)(8,990)(14,989)
316
(754)
(348)
(15,775)(1,533)
5,609
14,659
283
(701)
(152)
14,089(109,490)(96,626)(161,103)
3,396(8,104)(3,740)(169,551)

49
(50)

53
(69)

527
(537)

225
(120)
(6)
8
(58)
134
15
197

497
(193)
(3)
3,120
(43)
21
15
3,398

2,418
(1,290)
(64)
86
(623)
1,440
160
$ 2,117¥6

Asanuma Corporation
Consolidated Statements of Cash Flows (continued)
Years ended March 31, 2010 and 2009

Millions of yen
2009
2010
Cash flows from financing activities:
Decrease in short-term bank loans, net
Proceeds from long-term debt
Repayment of long-term debt
Repayments of lease obligations
Repayments for deposits received frommembership
Proceeds from stock issuance to minority
shareholders of consolidated subsidiary
Other, net
Net cash used in financing activities
Effect of exchange rate changes on cash and cash
equivalents
Net (decrease) increase in cash and cash
equivalents
Cash and cash equivalents at beginning of year
Increase in cash and cash equivalents resulting
from inclusion of subsidiaries in consolidation
Cash and cash equivalents at end of year (Note 6)

Thousands
ofU.S. dollars(Note 2)2010

¥ (1,216)
1,678(2,534)(10)¥ (3,960)–(1,230)(3)$ (13,070)
18,035(27,236)
(107)

(336)

(263)

(3,611)2
0(2,416)–(1)(5,457)22
0(25,967)

(16)

(10)

(172)

(18,011)
41,95812,02029,938(193,583)
450,967819¥ 24,766–¥ 41,958

8,803$ 266,187

See accompanying notes to consolidated financial statements.
7

Asanuma Corporation
Notes to Consolidated Financial Statements
Years ended March 31, 2010 and 20091.

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.
Certain reclassifications of previously reported amounts have been made to conform theconsolidated financial statements for the year ended March 31, 2009 to the 2010
presentation. Such reclassifications had no effect on consolidated net income or net
assets.

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 ¥93.04 = U.S.$1.00, theexchange rate prevailing on March 31, 2010. This translation should not be construed asa representation that yen can be converted into U.S. dollars at the above or any other rate.

8Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

3.

Principles of Consolidation

At March 31, 2010 and 2009, the Company had 6 and 5 subsidiaries, respectively. The
consolidated financial statements for the year ended March 31, 2010 include the accountsof the Company and its 5 subsidiaries. There were 2 subsidiaries included inconsolidation for the year ended March 31, 2009. The Company decided to include 3
subsidiaries from the Private Finance Initiative (“PFI”) business in consolidation becauseof the increased materiality of the PFI business for the Company in the fiscal year ended
March 31, 2010.
The Company applied the equity method to its investments in 3 affiliates, at March 31,
2010, and 2 unconsolidated subsidiaries and 2 affiliates at March 31, 2009 for the purposeof consolidated financial statements for the years then ended.
The accounts of the remaining subsidiary was not consolidated nor the equity method
applied because its assets, retained earnings, net sales and net income in the aggregate
were not material to the consolidated financial statements.

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.
9

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

4.

Summary of Significant Accounting Policies (continued)(d) Inventories
Real estate held for sale is stated at the lower of cost or net selling value, cost being
determined on an individual project basis. Uncompleted construction contracts arestated at cost determined on an individual project basis. Raw materials and supplies
are stated at the lower of cost or market value, cost being determined by the period
average method.
(e) Property, plant and equipment (Other than leased assets)
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.
Supplementary information
Effective the year ended March 31, 2009, based on the revision of the Corporation
Tax Law of Japan, the Company and its consolidated subsidiaries have changed theuseful life of machinery to reflect more realistic useful lives. The effect of thischange on operating results for the year ended March 31, 2009 was immaterial.
(f) Computer software (Other than leased assets)
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 intangible
assets and amortized by the straight-line method over an estimated useful life of 5
years.

10

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

4.

Summary of Significant Accounting Policies (continued)(g) Leases
Leased assets held under finance leases that transfer ownership are depreciated byusing the economic useful lives of leased assets. For finance leases that do nottransfer ownership, depreciation expense is calculated based on the straight-line
method over the leased period of the lease with a residual value of zero. In addition,
finance lease transactions commencing on or before March 31, 2008 other than thosein which the ownership of the leased assets is transferred to the Company or its
consolidated subsidiaries are accounted for in the same manner 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 asallocated 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.
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.

11Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

4.

Summary of Significant Accounting Policies (continued)(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
likelihood of realization, the Company considers all currently available evidence for
future years, both positive and negative, supplemented by information regarding
historical results for 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
The Company recognizes revenue by applying the percentage-of-completion method
for the construction projects for which the outcome of the construction activity isdeemed certain at the end of the reporting period. To estimate the progress of such
construction projects, the Company measures the percentage of completion bycomparing costs incurred to date with the most recent estimate of total costs required
to complete the project (cost to cost basis). For other construction projects where theoutcome cannot be reliably measured, the completed-contract method is applied.
Net sales related to construction contracts accounted for by thepercentage-of-completion method totaled ¥88,241 million ($948,420 thousand) and¥80,370 million for the years ended March 31, 2010 and 2009, respectively.

12

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

5.

Changes in Method of Accounting(1) Recognizing revenues and cost of construction contracts
Up to the year ended March 31, 2009, revenue and cost of construction contracts weremainly recognized by the completed-contract method, though the specificconstruction projects which took longer than one year and exceeded ¥1,000 million,
applied the percentage-of-completion method for recognition of revenue and cost.
Effective the year ended March 31, 2010, the Company and its consolidated
subsidiaries have adopted “Accounting Standard for Construction Contracts”(Accounting Standards Board of Japan (“ASBJ”) Statement No.15 issued on
December 27, 2007) and “Guidance on Accounting Standard for Construction
Contracts” (ASBJ Guidance No.18 issued on December 27, 2007).
Under the new accounting standard and guidance, revenue from, and related cost of,
construction contracts that commenced on or after April 1, 2009, are mainly
recognized by the percentage-of-completion method.
As a result of the adoption of these standards, net sales of completed construction
contracts increased by ¥9,501 million ($102,117 thousand) and operating income andincome before income taxes and minority interests increased by ¥375 million ($4,031
thousand) for the year ended March 31, 2010 from the corresponding amounts which
would have been recorded under the method applied in the previous year.
(2) Partial amendments to accounting standard for retirement benefits
Effective the year ended March 31, 2010, the Company adopted Partial Amendments
to Accounting Standard for Retirement Benefits (Part3) (ASBJ Statement No.19
issued on July 31, 2008). The effect of the adoption of this amendment on operating
income and income before income taxes and minority interests was nil for the year
ended March 31, 2010.
(3) Changes in method of measuring of inventories
Effective the year ended March 31, 2009, the Company and its consolidated
subsidiaries have adopted “Accounting Standard for Measurement of Inventories”(Accounting Standards Board of Japan (ASBJ) Statement No.9 issued on July 5,2006). The effect of this change on operating results was nil for the year ended
March 31, 2009.

13

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

5.

Changes in Method of Accounting (continued)(4) Accounting for leases
Effective the year ended March 31, 2009, the Company and its consolidated
subsidiaries have adopted “Accounting Standard for Lease Transactions” (ASBJ
Statement No. 13 originally issued by the First Committee of the Business Accounting
Council on June 17, 1993 and revised by the ASBJ on March 30, 2007) and“Guidance on Accounting Standard for Lease Transactions” (ASBJ Guidance No. 16
originally issued by the Accounting System Committee of the Japanese Institute ofCertified Public Accountants on January 18, 1994 and revised by the ASBJ on March
30, 2007). According to the new accounting standard, lease transactions areaccounted for as finance leases if substantially all of the benefits and risks ofownership have been transferred to the lessee. The effect of this change on
operating results was immaterial for the year ended March 31, 2009.

6.

Cash and Cash Equivalents

The balances of cash and cash deposits in the accompanying consolidated balance sheetsat March 31, 2010 and 2009 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
2010
2009
Cash and cash deposits
Time deposits with original
maturities in excess of threemonthsCash and cash equivalents

Thousands of
U.S. dollars
2010¥ 24,766¥ 42,007$ 266,187–¥ 24,766(49)¥ 41,958–$ 266,187

14

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

7.

Investments in Securities

At March 31, 2010 and 2009, marketable securities classified as held-to-maturity debt
securities were as follows:
Millions of yen
2010
2009
Carrying Estimated Unrealized Carrying Estimated Unrealizedvalue
fair value
gain
value
fair value
gain
Held-to-maturity debt
securities whose
estimated fair value
exceeds their carrying
value:
Government andmunicipal bonds

¥ 30
¥ 30

¥ 31
¥ 31

¥1
¥1

¥ 30
¥ 30

¥ 31
¥ 31

¥1
¥1

Thousands of U.S. dollars
2010
Carrying Estimated Unrealizedvalue
fair value
gain
Held-to-maturity debt
securities whose
estimated fair value
exceeds their carrying
value:
Government andmunicipal bonds

$ 322
$ 322

$ 333
$ 333

$11
$11

At March 31, 2010 and 2009, marketable securities classified as other securities were as
follows:
Millions of yen
2010

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

2009

Acquisition
costs

Carrying
value

Unrealized
Unrealized
holding Acquisition Carrying holding
gain (loss)
costs
value
gain (loss)¥ 2,907¥ 4,379¥ 1,472¥ 2,318¥ 3,461¥ 1,143

1,012¥ 3,919919¥ 5,298(93)¥ 1,379

1,600¥ 3,918

1,418¥ 4,879

(182)
¥ 961

15

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

7.

Investments in Securities (continued)
Thousands of U.S. dollars
2010

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

Acquisition
costs

Carrying
value

Unrealized
holding
gain (loss)$ 31,245$ 47,066$ 15,821

10,877$ 42,122

9,877$ 56,943(1,000)$ 14,821

Refer to Note 16 for the redemption schedule at March 31, 2010 of held-to-maturity debt
securities.

8.

Short-Term Bank Loans and Long-Term Debt

Short-term bank loans from banks had average interest rates of 1.8% at March 31, 2010
and 1.7% at March 31, 2009.
Long-term debt at March 31, 2010 and 2009 is summarized as follows:

Millions of yen
2010
2009
Unsecured loans from banks, payable inyen, at rates ranging from 1.34% to
3.56%
Secured loans from insurancecompanies, payable in yen at rates
ranging from 1.59% to 2.56%
Total
Less current portion included in current
liabilities

Thousands of
U.S. dollars
2010¥ 4,007¥ 5,155$ 43,068

11,704
15,711–
5,155

125,795
168,863(5,353)(1,230)(57,534)¥10,358¥ 3,925$ 111,329

16

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

8.

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

The aggregate annual maturities of long-term debt subsequent to March 31, 2010 are
summarized as follows:Year ending March 31,
2011
2012
2013
2014 and thereafter

Millions of yen¥ 5,353
2,547
953
6,858
¥ 15,711

Thousands of
U.S. dollars$ 57,535
27,375
10,24373,710$ 168,863

Assets pledged at March 31, 2010 as collateral for a loan amounted to ¥2,106 million($22,635) of the Company are summarized as follows:Land
Buildings and structures

Millions of yen¥ 1,951911¥ 2,862

Thousands of
U.S. dollars$ 20,969
9,792$ 30,761

All assets of the consolidated subsidiaries engaged in the PFI business were pledged ascollateral for their loans under the project finance agreements. Assets pledged at March
31, 2010 amounted to ¥10,197 million ($109,598 thousand) as collateral for loans of¥9,598 million ($107,160 thousand).
Assets pledged at March 31, 2010 as collateral for loans of affiliates which are engaged in
a PFI business are summarized as follows:

Investments in securities
Long-term loans receivable

Millions of yen
¥ 50
170
¥ 220

Thousands of
U.S. dollars
$

538
1,827
$ 2,365

17

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

9.

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, 2010 and 2009.
A reconciliation of the statutory tax rate and the effective tax rates for the years ended
March 31, 2010 and 2009 as a percentage of income before income taxes is summarized
as follows:

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

2010
40.8 %
12.1
(1.7)
16.7
(1.4)
(27.3)

2009
40.8 %
22.5
(5.8)
23.9
–
(18.2)(2.6)(0.1)
36.5 %(6.6)(0.4)
56.2 %

18

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

9.

Income Taxes (continued)

The significant components of deferred tax assets and liabilities of the Company and its
consolidated subsidiaries at March 31, 2010 and 2009 are summarized as follows:

Millions of yen
2010
2009
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
Additional retirement benefits
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

¥

303
140

¥

699
99

Thousands of
U.S. dollars
2010
$

3,257
1,505

277
170

253
158

2,977
1,827

166

375

1,784

3,071

2,813

33,007

449

382

4,826

1,353
225
–
29

1,367
223
245
42

14,542
2,418
–
312

51
499
6,733
(6,682)
51

52
553
7,261
(7,209)
52

548
5,364
72,367(71,819)548(508)(1,185)(6)(1,699)¥ (1,648)(352)(1,197)(15)(1,564)¥ (1,512)(5,461)(12,736)(64)(18,261)$ (17,713)

19

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

10. Retirement Benefits
The Company and its consolidated subsidiaries have defined benefit pension planscovering 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 ofservice, and the conditions under which termination occurs. In addition to the retirement
benefit plans described above, the Company and its 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, 2010 and 2009
for the Company’s and its consolidated subsidiaries’ defined benefit pension plans:Millions of yen
2010
2009
Retirement benefit obligation
Plan assets at fair value
Unfunded retirement benefit obligation
Unrecognized actuarial loss
Accrued retirement benefits for
employees

Thousands of
U.S. dollars
2010¥ (26,919)
16,529(10,390)
2,703¥ (30,113)
16,677(13,436)
6,271$ (289,327)
177,655(111,672)
29,052¥ (7,687)¥ (7,165)$ (82,620)

As permitted under the accounting standard for retirement benefits, one consolidated
subsidiary calculates its retirement benefit obligation for employees by a simplified
method.
The components of retirement benefit expenses for the years ended March 31, 2010 and2009 are outlined as follows:

Millions of yen
2010
2009
Service cost
Interest cost
Expected return on plan assets
Amortization of unrecognized actuarial
loss
Retirement benefit expenses

Thousands of
U.S. dollars
2010

¥ 650
588
(333)

¥ 694
632
(448)

$ 6,986
6,320(3,579)1,023¥ 1,928610¥ 1,488

10,995$ 20,722

20

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

10. Retirement Benefits (continued)
The assumptions used in accounting for the defined benefit pension plans for the years
ended March 31, 2010 and 2009 were as follows:

Discount rate
Expected rate of return on plan assets

2010

2009

2.0%
2.0%

2.0%
2.0%

11. Contingent Liabilities
At March 31, 2010, the Company was contingently liable for guarantees of deposits forcondominium purchase agreements held by a condominium sales company in the amountof ¥50 million ($734 thousand).

12. 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, 2010 and 2009amounted to ¥2,104 million ($22,614 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.

21

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

12. Shareholders’ Equity (continued)
Movements in shares of common stock in issue and treasury stock during the years ended
March 31, 2010 and 2009 are summarized as follows:

March 31, 2009
Shares ofcommon stockin issue
Treasury stock

77,386,293
1,254,924

March 31, 2008
Shares ofcommon stockin issue
Treasury stock

77,386,293
1,234,310

Number of shares
2010
Increase
Decrease

–
8,024

–
930

Number of shares
2009
Increase
Decrease–
27,850–7,236March 31, 2010

77,386,293
1,262,018

March 31, 2009

77,386,293
1,254,924

13. Provision for Loss on Construction Contracts
Provision for loss on construction contracts included in cost of sales for the year ended
March 31, 2010 amounted to ¥406 million ($4,364 thousand).

14. Research and Development Costs
Research and development costs included in selling, general and administrative expenses
for the years ended March 31, 2010 and 2009 amounted to ¥138 million ($1,483 thousand)and ¥202 million, respectively.

15. Leases
Finance lease transactions commencing on or before March 31, 2008 other than those inwhich the ownership of the leased assets is transferred to the Company and its
consolidated subsidiaries are accounted for in the same manner as operating leases.

22

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

15. Leases (continued)
The following pro forma amounts represent the acquisition costs, accumulated
depreciation and net book value of the leased property as of March 31, 2010 and 2009,
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
2010
2009
Acquisition Accumulated Net book Acquisition Accumulated Net bookcosts
depreciation
value
costs
depreciation
value
Tools, furniture andfixtures

¥ 27

¥ 17

¥ 10

¥ 27

¥ 12

¥ 15

Thousands of U.S. dollars
2010
Acquisition Accumulated Net bookcosts
depreciation
value
Tools, furniture andfixtures

$ 290

$ 183

$ 107

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 income for the years ended March 31, 2010 and 2009, were as follows:

Millions of yen
2009
2010
Lease payments
Depreciation
Interest expense

¥6
5
1

¥7
6
1

Thousands of
U.S. dollars
2010
$ 65
54
11

Future minimum lease payments (including the interest portion thereon) subsequent toMarch 31, 2010 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,
20112012 and thereafter

Millions of yen
¥ 5
5
¥ 10

Thousands of
U.S. dollars
$ 54
54
$ 108
23

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

16. Financial Instruments(1) Policy for financial instruments
The Company and its consolidated subsidiaries manage their funds by investing onlyin short-term deposits, and primarily raise funds by borrowings from banks. The
purpose of entering into derivative transactions is to mitigate fluctuation risk related
to interest rates with respect to loans payable, and derivative transactions are notcarried out for speculative purposes.
(2) Types of financial instruments, related risk and risk management for financial
instruments
Notes and accounts receivable on completed construction contracts are subject to thecredit risk of customers. Regarding this risk, the Company and its consolidated
subsidiaries monitor due dates and outstanding balances by individual customer, andthe credit worthiness of their main customers.
For investment securities, the Company and consolidated subsidiaries review the fairvalues of such financial instruments every quarter.
Notes and accounts payable on construction contracts are operating obligations andmostly are payable within one year.
Long-term debt with variable interest rates is exposed to interest rate fluctuation risk.
However, to reduce such risk and fix interest expense for long-term debt bearing
interest at variable rates, the Company utilizes interest rate swaps as a hedging
instrument. In addition, the Company has established internal policies which include
procedures and authorization processes governing derivatives and complies fully withthese guidelines.
(3) Supplementary explanation of the market value of financial instruments
The market value of financial instruments is based on the market price, and when no
market price exists, a rationally calculated amount is used. These calculations
include variable factors, so the resulting amount may change if different underlying
assumptions are applied.

24

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

16. Financial Instruments (continued)
The carrying value, estimated fair value and resulting differences as of March 31, 2010,
are as follows. Financial instruments for which fair value is deemed extremely difficult
to determine are not included.

Millions of yen
2010

Cash and cash deposits
Notes and accounts receivable oncompleted construction contracts
Investments in securities
Total assets
Notes and accounts payable on
construction contracts
Short-term bank loans
Accounts payable-other
Long-term debt
Total liabilities

Carrying value¥ 24,766

Estimated fairvalue
¥ 24,766

Difference¥–

61,001
5,328¥ 91,095

61,312
5,329¥ 91,407

311
1
¥ 312

¥ 26,883
29,926
12,381
10,358¥ 79,548¥ 26,883
29,926
12,381
10,354¥ 79,544

¥

¥

–
–
–
(4)
(4)

Thousands of U.S. dollars
2010

Cash and cash deposits
Notes and accounts receivable oncompleted construction contracts
Investments in securities
Total assets
Notes and accounts payable on
construction contracts
Short-term bank loans
Accounts payable-other
Long-term debt
Total liabilities

Carrying value$ 266,187

Estimated fairvalue
$ 266,187

Difference$–

655,643
57,265$ 979,095

658,985
57,276$ 982,448

3,342
11$ 3,353$ 288,940
321,647
133,072
111,328$ 854,987$ 288,940
321,647
133,072
111,285$ 854,944

$

–
–
–
(43)
$ (43)

25

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

16. Financial Instruments (continued)
Methods to determine the estimated fair value of financial instruments and other mattersrelated to securities and derivative transactions:
Cash and cash deposits
Since these items are settled in a short period of time, their carrying values approximate
the fair value.
Notes and accounts receivable on completed construction contracts
For the valuation of notes and accounts receivable on completed construction contracts,
the Company and its consolidated subsidiaries use the present value based on assumptions
such as the collection term of each receivable and discount rates reflected in each credit
risk.
Investments in securities
The estimated fair values of equity securities are based on quoted market prices. The
estimated fair value of debt securities are based on the price provided by the financial
institutions making markets in these securities.
Notes and accounts payable on construction contracts, and short-term bank loans
Since these items are settled in a short period of time, their carrying values approximate
the fair value.
Long-term debt
The estimated fair values of long-term debt are based on present value of the total amountincluding principal and interest, discounted by the expected interest rate in the case of new
borrowings of the same loan as in the amount of the balance as of the end of the period.
Floating interest rates for long-term loans were hedged by interest-rate swap agreements
and accounted for as loans with fixed interest rates. The estimated fair value of thoselong-term loans is reasonably based on the present value of the total of principals, interests
and net cash flows of swap agreements discounted by the interest rates, estimatedreasonably, applicable to loans made under similar circumstances.
Derivatives transactions
Refer to the Note 17 for fair value information at March 31, 2010 of derivativetransactions.
Financial instruments for which it is extremely difficult to determine the fair value:
Unlisted equity securities of ¥895 million ($9,620 thousand) reflected in the consolidatedbalance sheet at March 31, 2010 are based neither on market value nor estimated future
cash flow, and it is difficult to determine the estimated fair value. Therefore, they are notincluded in the above table.

26

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

16. Financial Instruments (continued)
The redemption schedule for receivables and marketable securities with maturity dates at
March 31, 2010 is summarized as follows:
Millions of yen
Within 1 year
Cash deposits
Notes and accounts receivable oncompleted construction contracts
Investments in securities
Held-to-maturity debt securities
Total assets¥ 24,759

Over 1 year
within 5 years¥

Over 5 years

–

¥

–

52,225

3,831

4,945

–

30

–

¥ 76,984¥ 3,861¥ 4,945

Thousands of U.S. dollars
Within 1 year
Cash deposits
Notes and accounts receivable oncompleted construction contracts
Investments in securities
Held-to-maturity debt securities
Total assets$ 266,111

Over 1 year
within 5 years$–

Over 5 years$–

561,318

41,17653,149–322–$ 827,429$ 41,498$ 53,149

Refer to Note 8 for the redemption schedule at March 31, 2010 of long-term debt.
Supplementary information
Effective the year ended March 31, 2010, the Company and its consolidated subsidiaries
have adopted “Accounting Standard for Financial Instruments” (ASBJ Statement No. 10
issued on March 10, 2008) and “Guidance on Disclosures about Fair Value of Financial
Instruments” (ASBJ Guidance No.19 issued on March 10, 2008).

27

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

17. 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.
Derivative transaction to which hedge accounting is applied
Interest-rate related transactions

Method of hedge
accounting
Swap rate applied
to underlying
debt

Transaction
Interest rate swap:
Receive / floating
and pay / fixed
Total

Millions of yen
2010(Including portion in
Notional amount excess of one year)¥ 2,915¥ 2,915¥ (850)¥ (850)Estimated
fair value

(*)
(*)

Thousands of U.S. dollars
Method of hedge
accounting
Swap rate applied
to underlying
debt

Transaction
Interest rate swap
Receive / floating
and pay / fixed
Total

2010
(Including portion in
Notional amount excess of one year)$ 31,331$ 31,331$ (9,136)$ (9,136)

Estimated
fair value

(*)
(*)

*Because interest rate swap agreements are accounted for as if the interest rates applied tothe swaps had originally applied to the underlying long-term loans payable, their fairvalues were included in long-term loans payable.

28

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

18. Transaction with Related Party
Transactions and balances with related parties as of and for the year ended March 31, 2009were as follows.
2009
Name of affiliatedcompany

Transactions
Type of
Millions of yen
transaction

JOHOKU SYMPHONIA Construction
Co., Ltd.
order¥ 2,527

Balances
Account nameAccounts
receivable oncompleted
construction
contracts

Millions of yen¥ 2,463

The Company owns 49.0% of voting rights of JOHOKU SYMPHONIA Co., Ltd., which
operates a PFI business.
JOHOKU SYMPHONIA Co., Ltd. is included in consolidation of the Company for theyear ended March 31, 2010. As a result, there is no disclosure to be required as of andfor the year ended March 31, 2010. In addition, there were no other related party
transactions to be disclosed for the year ended March 31, 2010.
Effective the year ended March 31, 2009, the Company has adopted a new accounting
standard, “Accounting Standard for Related Party Disclosures” (ASBJ, Statement No.11)
and “Guidance on Accounting Standard for Related Party Disclosures” (ASBJ, GuidanceNo. 13). The accounting standard requires disclosure of related party transactions.

29Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

19. Amounts per Share
Amounts per share at March 31, 2010 and 2009 and for the years then ended were as
follows:
2010

2009

U.S. dollars
2010¥ 260.16
6.37¥ 250.32
3.59$ 2.800.07

Yen
Net assets
Net income

Information used in the computation of net income per share for the years ended March 31,
2010 and 2009 is presented as follows:
Millions of yen
2009
2010
Net income
Net income not applicable tocommon shareholders
Net income used in the calculationof net income
per share

Thousands of
U.S. dollars
2010

¥ 485

¥ 273

$ 5,213

–

–

–

¥ 485

¥ 273

$ 5,213

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

2010

2009

76,127

76,146

Net assets per share are based on the number of shares of common stock outstanding at theyear end.
Net income per share is computed based on the net income 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, 2010 and 2009 since neither the Company nor any of the consolidated
subsidiaries had any potentially dilutive shares at March 31, 2010 and 2009.

30