2009
FINANCIALSTATEMENTS
MARCH 31, 2008-2009

KITANO CONSTRUCTION CORP.

Contents

Financial Statements

Consolidated Balance Sheets ............................................................................................... 3

Consolidated Statements of Operations ............................................................................. 5

Consolidated Statements of Changes in Net Assets .......................................................... 6

Consolidated Statements of Cash Flows ............................................................................ 7

Notes to Consolidated Financial Statements ..................................................................... 8

Board of Directors, Statutory Auditors and Executive Officers ......................... 17

K I TA N O C O N S T R U C T I O N C O R P.

2

Consolidated Balance Sheets
As of March 31, 2008 and 2009
Millions of yen
March 31,
2008

2009

ASSETS
Current Assets:
Cash in hand and in banks ................................................................
Notes and accounts receivable .........................................................
Real estate for sale .............................................................................
Cost of construction in progress ......................................................
Cost of uncompleted development projects ...................................
Inventories - materials and supplies ................................................
Deferred income taxes.......................................................................
Other current assets ...........................................................................
Less: allowance for doubtful accounts ............................................
Total current assets .....................................................................

¥

Fixed Assets:
Tangible Fixed Assets:
Buildings and structures .............................................................
Machinery and equipment ..........................................................
Golf course ...................................................................................
Land ...............................................................................................
Construction in progress ............................................................
Other..............................................................................................
Less: accumulated depreciation ................................................
Total tangible fixed assets ...................................................
Cost in excess of net assets of subsidiaries ....................................
Other intangible fixed assets.............................................................
Investments:
Investments in securities ............................................................
Long-term loans ...........................................................................
Deferred income taxes ................................................................
Other investments .......................................................................
Less: allowance for doubtful accounts .....................................
Total investments ..................................................................
Total fixed assets ..................................................................
¥

5,634
7,985
698
13,312
5,300
63
593
1,230
(73)
34,741K I TA N O C O N S T R U C T I O N C O R P.

6,363
11,476
5,217
14,028
1,281
49
1,197
2,904
(638)
41,876

14,760
1,444
1,977
8,216
9
1,930
(9,558)18,777

8,645
771
1,231
7,666
2
1,792
(6,926)
13,181

19
615
634

—
40
40

5,133
3,103
853
1,361
(1,619)8,831
28,24362,984

4,207
2,399
707
1,548
(1,197)
7,663
20,88462,761

The accompanying notes are an integral part of these statements.
3¥¥Millions of yen
March 31,
2008

2009

LIABILITIESCurrent Liabilities:
Notes and accounts payable .............................................................
Short-term bank loans .......................................................................
Income taxes payable ........................................................................
Advances received on construction in progress ............................
Advances received on uncompleted development projects .........
Accrued bonuses to employees ........................................................
Accrued bonuses to directors and statutory auditors ...................
Accrued warranty ...............................................................................
Allowance for losses on construction contracts ............................
Other current assets ...........................................................................
Total current liabilities ................................................................

¥

14,8934,043
52
10,615
4
336
35
29
660
832
31,499¥17,0257,000
664
11,029
40
301
53
32
120
829
37,093Long-Term Debt:
Reserve for retirement benefits to employees................................
Reserve for retirement benefits to officers .....................................
Membership deposit ...........................................................................
Other long-term debt ..........................................................................
Total long-term debt ....................................................................

548
986
6,170
206
7,910

510
—
3,464
461
4,435

NET ASSETS
Shareholders’ equity
Common stock ....................................................................................
Authorized — 200,000,000 shares
Issued — 78,368,532 shares as of March 31, 2008 and 2009
Capital surplus ....................................................................................
Retained earnings ...............................................................................
Treasury stock.....................................................................................
Total shareholders’ equity .................................................................

9,116

9,116

7,426
6,235
(1,841)
20,9377,426
6,430(2,156)
20,816

Valuation and translation adjustments
Unrealized gain on other securities .................................................
Unrealized gain on hedging derivatives ...........................................
Foreign currency translation adjustments ......................................
Total valuation and translation adjustments ...................................

1,096
(17)
(48)
1,032

241
17
(276)
(18)

Minority interests.........................................................................................

1,608

434

Total net assets.............................................................................................

¥

23,576¥

21,232¥

62,984¥62,761

The accompanying notes are an integral part of these statements.
K I TA N O C O N S T R U C T I O N C O R P.

4

Consolidated Statements of Operations
For the years ended March 31, 2008 and 2009
Millions of yen
March 31,
2008

2009

¥ 58,109
12,32970,439¥ 63,081
2,770
65,851Gross profit.................................................................................

54,993
8,717
63,711
6,728

58,066
1,933
59,9995,852

Selling, General and Administrative Expenses ......................................
Operating income ......................................................................

5,265
1,463

4,291
1,561

102
(195)
(247)
(72)
163
1,215

274
(175)
(157)
(329)
110
1,285

Special Items:
Gain on sales of fixed assets ...........................................................
Loss on disposal of fixed assets......................................................
Impairment loss on fixed assets .....................................................
Gain on sales of subsidiaries stocks ..............................................
Loss from compensation for damage.............................................
Gain/(Loss) on sales of investment securities ..............................
Gain on bad debts recovered ..........................................................
Loss on valuation of real estate for sale ........................................
Provision of allowance for doubtful accounts..............................
Other, net ...........................................................................................
Income before income taxes and minority interests ............

9
(16)
(2)
332
(424)
(15)
—
—
—
(33)
1,065

1
(15)
(218)
520
—
434
367
(221)
(553)
(59)
1,541

Income taxes
Current ...............................................................................................
Deferred .............................................................................................
Minority Interests in Earnings of Consolidated Subsidiaries ..............

68
33
(62)

655
99
(21)

Net Sales:
Completed construction contracts.................................................
Real estate development and engineering.....................................
Cost of Sales:
Completed construction contracts.................................................
Real estate development and engineering.....................................

Non-Operating Income/(Losses):
Interest and dividend income .........................................................
Interest expenses..............................................................................
Foreign exchange losses..................................................................
Equity in losses of affiliates ............................................................
Other, net ...........................................................................................

Net income .................................................................................

¥

902

The accompanying notes are an integral part of these statements.
5

K I TA N O C O N S T R U C T I O N C O R P.

¥

766

Consolidated Statements of Changes in Net Assets
For the years ended March 31, 2008 and 2009
Millions of yen
Adjustments
on foreign

Number ofshares of

Unrealized
Unrealized gain currency
common Common Capital Retained gain on other Treasury on hedging statements Minority Total net
stock surplus earnings securities stocks derivatives translation interests assets
stock(thousands)
Balance at March 31, 2007 .....

71,564

9,116

7,426

5,760

2,189

(1,828)

6

16

1,553

24,240ended March 31, 2008 ...

—

—

—

902

—

—

—

—

—

902

Cash dividends ................

—

—

—

(428)

—

—

—

—

—

(428)

(40)

—

—

—

—

(15)

—

—

—

(15)

stock ...............................

—

—

(0)

—

—

3

—

—

—

3

Other .................................

—

—

—

—

—

—

—

—

—

—

Adjustment for the year ...

—

—

—

—

(1,093)

—

(23)

(64)

(54)

(1,126)

Balance at March 31, 2008 .....

71,524

9,116

7,426

6,235

1,096

(1,841)

(17)

(48)

1,608

23,576

ended March 31, 2009 ...

—

—

—

766

—

—

—

—

—

766

Cash dividends ................

—

—

—

(571)

—

—

—

—

—

(571)

(1,391)

—

—

—

—

(320)

—

—

—

(320)

stock ..............................

—

—

(0)

—

—

2

—

—

—

2

Other .................................

—

—

—

—

—

2

—

—

—

2

Adjustment for the year ...

—

—

—

—

(855)

—

33

(229)

(1,173)(2,223)

Balance at March 31, 2009 .....

70,133

9,116

7,426

6,430

241

(2,156)

17

(276)

434

21,232Net Gain for the year

Increase in treasury
stock ...............................
Gain on sale of treasury

Net Gain for the year

Increase in treasury
stock ..............................
Gain on sale of treasury

The accompanying notes are an integral part of these statements.
K I TA N O C O N S T R U C T I O N C O R P.

6

Consolidated Statements of Cash Flows
For the year ended March 31, 2008 and 2009
Millions of yen
2008
Cash flows from operating activities:
Net income before income taxes ..............................................................
Adjustments for:
Depreciation ................................................................................................
Impairment loss on fixed assets................................................................
Equity in (gains)/losses of affiliates..........................................................
Interest and dividend income ....................................................................
Interest expenses ........................................................................................
(Gain)/loss on sales of fixed assets ..........................................................
Foreign exchange (gains)/losses ...............................................................
Gain on bad debts recovered .....................................................................
Gain/(Loss) on sales of investment securities.........................................
Gain/(Loss) on sales of subsidiaries stocks.............................................
Increase/(Decrease) in reserve for retirement benefits toemployees and officers ..............................................................................
Increase/(Decrease) in accrued warranty ......................................................
Increase/(Decrease) in allowance for losses on construction contracts ...
Increase/(Decrease) in accrued bonuses .......................................................
Increase/(Decrease) in allowance for doubtful accounts ............................
(Increase)/Decrease in notes and accounts receivable ................................
(Increase)/Decrease in cost of construction in progress and cost of
uncompleted development projects .........................................................
(Increase)/Decrease in real estate for sale and inventories ........................
Increase/(Decrease) in notes and accounts payable ....................................
Increase/(Decrease) in advances received on construction in progress ...
Other ...................................................................................................................
Sub-total .................................................................................................
Interest and dividend income received ..........................................................
Interest expenses paid ......................................................................................
Income taxes paid .............................................................................................
Net cash provided by/(used in) operating activities ........................

¥

1,065

¥

1,541

506
2
72
(102)
195
(9)
138
—
15
(332)

308
218
329
(274)
175
(1)
53
(367)
(434)
(520)

4
(14)
555
37
(5)
4,427

(983)
2
(540)
(32)
575
(3,562)2,598
43(2,140)
(686)
(219)
6,151
102
(195)
(100)
5,957

3,304
(4,686)2,278
415(1,871)(4,073)
641
(175)
(52)
(3,659)Cash flows from investing activities:
Payment for making time deposit ...................................................................
Proceeds from withdraw of time deposit .......................................................
Payments for purchase of fixed assets ...........................................................
Proceeds from sale of fixed assets..................................................................
Payments for purchase of investments in securities ....................................
Proceeds from sale of investments in securities ...........................................
Payments for loans ............................................................................................
Collections of loans...........................................................................................
Proceeds from sale of shares of a consolidated subsidiary .........................
Other ...................................................................................................................
Net cash provided by/(used in) investing activities .........................

(252)
231
(624)
53
(601)
498
(390)
691
510
33
149

(116)
250
(609)
6
(894)
801
—
2,266
0
(66)
1,638

Cash flows from financing activities:
Increase/(decrease) in short-term bank loans, net .......................................
Purchase of treasury stock ..............................................................................
Cash dividends paid ..........................................................................................
Other ...................................................................................................................
Net cash provided by/(used in) financing activities .........................

(3,232)
(13)
(430)
—
(3,675)

4,000
(317)
(574)
(1)
3,108

(109)
2,322
3,059

(67)
1,021
5,381

Effect of exchange rate changes on cash and cash equivalents ........................
Net increase/(decrease) in cash and cash equivalents .......................................
Cash and cash equivalents of beginning of year ..................................................
Increase/(Decrease) in cash and cash equivalents due tothe change in consolidation scope of subsidiaries .......................................
Cash and cash equivalents of end of year.............................................................

¥

—
5,381

The accompanying notes are an integral part of these statements.
72009

K I TA N O C O N S T R U C T I O N C O R P.

¥

(151)
6,251

Notes to Consolidated
Financial Statements
1. Basis of Presenting Consolidated Financial Statements(a) Accounting Principles
The accompanying consolidated financial statements have been prepared based on the accounts maintainedby Kitano Construction Corp. (the “Company”) and its subsidiaries prepared in accordance with accounting
principles generally accepted in Japan, which are different in certain respects as to the application and disclosure
requirements of International Financial Reporting Standards, and are compiled from the consolidated financial
statements prepared by the Company as required by the Financial Instruments and Exchange Law of Japan.
(b) Scope of Consolidation
The Company had 5 subsidiaries (majority-owned companies) as at March 31, 2009 (8 for 2008). The
consolidated financial statements in fiscal years ended March 31, 2009 include the accounts of the Company and 4(7 for 2008) of its subsidiaries “the Companies”, which are listed below:•Kawanakajima Tochi Kaihatsu Co., Ltd. ....................................... 69.23% owned•Solomon Kitano Mendana Hotel Limited. ..................................... 100.00% owned•Western samoa Kitano Limited. ..................................................... 99.00% owned•Asahi Agency Co., Ltd. ..................................................................... 59.52% owned
The above consolidated subsidiaries, except for Solomon Kitano Mendana Hotel Limited and Western Samoa
Kitano Limited, which have fiscal years ending at December 31 of each year, have a fiscal year ending at March 31
of each year, which is the same as the fiscal year of the Company.
The Company excluded 3 subsidiaries (Kisokougen Kaihatsu Co., Ltd., Kitano ArmsCorp. and Hakubai Inc.),
which were consolidated subsidiaries at March 31, 2008, from the scope of consolidation because the company
lost a control for those subsidiaries in fiscal years ended March 31, 2009.
The remaining 1 unconsolidated subsidiary is not consolidated, as it is not significant in terms of total assets,
net sales, net income or retained earnings.
2. Summary of Significant Accounting Policies(a) Principles of Consolidation
All significant intercompany balances, intercompany transactions and unrealized profits among theCompanies have been eliminated in consolidation and the portion thereof attributable to minority interests is
charged to minority interests.
In eliminating investments in shares of consolidated subsidiaries, with the underlying equity in net assets,
any difference between the cost of an investment in a subsidiary and the amount of underlying equity in net assetsof the subsidiary is treated as an asset or a liability, as the case may be, and amortized over a period of five years
on a straight-line basis.
The assets and liabilities of the consolidated subsidiaries are recorded at market value on theirconsolidation. Cost in excess of the net assets of the subsidiaries is amortized over 5 years.
(b) Investment in Unconsolidated Subsidiaries and Affiliates
Investments in unconsolidated subsidiaries and affiliates are stated at cost.
The equity method of accounting for such investments is applied to Sakura Hanoi Plaza Investment Company
Limited, Kawajima Nakayama Kaihatsu Co., Ltd, Kitano Arms Corp, and Hakubai Inc., which are affiliates of theCompany, since the application of this method has significant effect on the net income and retained earnings of
the Companies.
The Company applied the equity method for Kitano Arms Corp. and Hakubai Inc., which were consolidated
subsidiaries at March 31, 2008 because the Company lost a dominator for those subsidiaries in fiscal years ended
March 31, 2009.
(c) Revenue Recognition from Construction Contracts
Revenue from and related costs of construction contracts, whose construction periods are more than two
years and contract amounts are more than one billion yen, are recorded under the percentage-of-completion
method. Revenue from and related costs of construction contracts except the above are recorded using thecomplete-contract method.
(d) Inventory Valuation
The cost of construction in progress, real estate for sale and the cost of uncompleted development projects
are stated at cost, as determined on a specific project basis. Materials and supplies are stated at cost, as
determined based on an average method.
Effective April 1, 2008, the Company and its domestic consolidated subsidiaries have applied the“Accounting Standard for Measurement of Inventories” (ASBJ Statement NO.9). For real estate for sale and thecost of uncompleted development projects, the evaluation method has been changed from the cost method to thecost method where the book value is reduced based on their decrease in profitability.
As the result of applying ASBJ Statement No.9, operating income decreased by ¥48 million, and income
before income taxes and minority interests decreased by ¥270 million for the year ended March 31, 2009.
(e) Depreciation
Depreciation is computed by the straight-line method for buildings (excluding leasehold improvements andauxiliary facilities attached to buildings) and by the declining-balance method for other assets, at rates based on
the estimated useful lives of the assets, as prescribed by Japanese income tax laws. Depreciation for real estate
for leasing is computed by the straight-line method. The range of useful lives is principally from 3 to 50 years forbuildings and structures and from 2 to 20 years for store fixtures and equipment.
K I TA N O C O N S T R U C T I O N C O R P.

8

( f ) Allowance for Doubtful Accounts
The balance of allowance for doubtful accounts represents the amount deemed necessary to cover possible
losses estimated on an individual doubtful account basis. The amount is calculated using a certain percentage
based on past experience for other accounts.
(g) Accrued Warranty
Accrued warranty is provided for against the future costs of warranty from completed construction.
(h) Accrued Bonuses to Employees
Accrued bonuses are computed by estimating the payment required in order to provide for the payment ofbonuses to employees.
( i ) Accrued Bonuses to Directors and Statutory Auditors
Accrued bonuses are computed by estimating the payment required in order to provide for the payment ofbonuses to directors and statutory auditors.
( j ) Reserve for Retirement Benefits to Employees
The Company recognize accrued pension and severance costs to employees based on the actual valuation ofprojected benefit obligation and plan assets at fair value.
Actuarial gains and losses are amortized based on the straight-line method over a period of 10 years startingfrom the beginning of the subsequent year.
(k) Allowance for losses on construction contracts
The Company prepares reasonable estimated amount for future losses from construction works outstanding
at fiscal year-end.
( l ) Leases
The Company leases certain equipment under finance leases. Finance lease transactions that did not involve
transfer of ownership were previously accounted for in accordance with the method used for ordinary operatinglease transactions.
Effective April 1, 2008, the “Accounting Standard for Lease Transactions” (ASBJ Statement No.13) and“Guidance on Accounting Standard for Lease Transactions” (ASBJ Guidance No.16) were applied. Leased assets
related to finance lease transactions that do not involve transfer of ownership are depreciated on a straight-line
basis, with the lease periods used as their useful lived and no residual value.
For finance lease transactions which took place before April 1, 2008, the accounting method remains same,
as for ordinary operating lease transactions.
The impact of this change on income and loss was immaterial.
(m) Cash and Cash Equivalents
Cash and cash equivalents in the consolidated statements of cash flows are composed of cash in hand, bankdeposits able to be withdrawn on demand and short-term investments with an original maturity of three months
or less and which represent a minor risk of fluctuations in value.
(n) Income Taxes
The income taxes of the Company and its domestic subsidiaries consist of corporate income taxes, local
inhabitants’ taxes and enterprise taxes.
The Company and its subsidiaries account for deferred taxes in accordance with the regulations for
preparation of consolidated financial statements in Japan. Deferred income taxes are determined using the asset
and liability approach, whereby deferred tax assets and liabilities are recognized in respect of temporary
differences between the tax basis of assets and liabilities and those as reported in the financial statements.
(o) Securities Valuation
Held-to-maturity debt securities are carried at amortized cost.
Available-for-sale securities are classified into two categories where: (a) the fair value is available and (b) the
fair value is not available.
(a) Securities whose fair value is available are valued at the quoted market price prevailing at the fiscal yearend. Net unrealized gains or losses on these securities are reported as a separate component of net
assets at a net-of-tax amount. Cost of sales is determined by the moving-average method.
(b) Securities whose fair value is not available are valued at cost, determined by the moving-average method.
(p) Hedge Accounting
Gains or losses arising from changes in the fair value of the derivatives designated as “hedging instruments”
are deferred as an asset or liability and included in net profit or loss in the same period during which the gains
and losses on the hedged items or transactions are recognized.
The derivatives designated as hedging instruments by the Company are principally forward exchange
contracts. The related hedged items are finance for the overseas construction business. The Company is able tofix future cash flows and mitigate the deterioration of income from the construction business due to yen
depreciation. The Company obtains management approval before making forward exchange contracts, andsubsequently the accounting department executes and controls the contract.
(q) Reclassification of Accounts
Certain prior year amounts have been reclassified to conform with the current year’s presentation.
3.

Notes to the Consolidated Balance Sheets(1) Investments in unconsolidated subsidiaries and affiliates ...............
(2) Assets pledged as collateral
Buildings .................................................................................................
Land .........................................................................................................

9

K I TA N O C O N S T R U C T I O N C O R P.

¥

Millions of yen
March 31,
2008
2009
7
¥
282
334
1,161

331
1,161

4. Notes to Consolidated Statements of Operations(1) Charges to income for warranty which is included in “Cost of Sales-completed construction contracts” was¥29 million for the year ended March 31, 2008, and ¥32 million for the year ended March 31, 2009. Allowance
for accrued bonuses included in “Cost of Sales-completed construction contracts” was ¥224 million for theyear ended March 31, 2008, and ¥199 million for the year ended March 31, 2009. Allowance for loss on
construction contract included in “Cost of Sales-completed construction contracts” was ¥660 million for theyear ended March 31, 2008, and ¥120 million for the year ended March 31, 2009.
(2) ¥48 million write-down of inventory book value for impairment loss to reflect reduced profitability was
included in cost of sales for the year ended March 31, 2009.
(3) Selling, general and administrative expenses included the following:
Millions of yen
for the year ended March 31,
2008
2009
Depreciation ...........................................................................................
¥
440
¥
237
Payroll .....................................................................................................
1,812
1,484
Allowance for accrued bonuses ...........................................................
136
147(4) Impairment loss on fixed assets
The Company recognized an impairment loss on fixed assets as follows:
Millions of yen
March 31, 2008
Description
Location
Classification
AmountIdle property
Nara
Land
¥
2

Description
Hotel
Idle property

Location
Samoa
NaganoMillions of yen
March 31, 2009
Amount¥201¥
17Classification
Building
Land lease

The book values of the above asset was reduced to their recoverable amounts and an impairment loss wasrecognized.
5.

Notes to the Consolidated Statement of Changes in Net Assets(a) Type and number of outstanding shares
March 31, 2008
Number of shares
Type of shares
Balance atIncrease in shares Decrease in shares
Beginning of year
during the year
during the year
Issued stock
Common stock
78,368,532
—
—
Total
78,368,532——
Treasury stock
Common stockTotal

6,804,233
6,804,233

57,57457,574

17,525
17,525

Balance at
end of year
78,368,532
78,368,532

6,844,282
6,844,282

Treasury stock increased by 57,574 shares due to the repurchase of shares less than one unit and decreasedby 10,863 shares due to the sale of shares less than one unit.
Treasury stock decreased by 6,662 shares due to the decrease in the ratio of possession of subsidiaries.
March 31, 2009
Number of shares
Type of shares
Balance atIncrease in shares Decrease in shares
Balance at
Beginning of year
during the year
during the year
end of year
Issued stock
Common stock
78,368,532——
78,368,532
Total
78,368,532——
78,368,532
Treasury stock
Common stockTotal

6,844,282
6,844,282

1,452,154
1,452,154

61,36961,3698,235,067
8,235,067

The summary of the main change reason
Increase by the acquisition of the treasury stock by the board of directors resolution ...... 1,331,000 sharesby the repurchase of shares less than one unit..........................................................
87,239 sharesby the increase in the ratio of possession of subsidiaries ........................................
33,915 shares
Decrease by the sale of shares less than one unit .....................................................................
10,517 sharesby having excluded subsidiaries from scope of consolidation ..............................
50,852 shares

K I TA N O C O N S T R U C T I O N C O R P.

10

(b) Dividends(1) Dividends paid to shareholders
Date ofapproval

Resolution
ApprovedbyType ofsharesAmount(Thousandsof Yen)Paid fromAmountPer share(Yen)

Shareholders’
cut-off date

Effective
date

June 28,
2007

Annualgeneralmeeting ofshareholders

Commonstock

431,224

Retainedearnings

6

March 31,2007

June 29,
2007

June 27,
2008

Annualgeneralmeeting ofshareholders

Commonstock

574,591

Retainedearnings

8

March 31,2008

June 30,
2008(2) Dividends with a shareholders’ cut-off date during the current fiscal year but an effective date
subsequent to the current fiscal year
Date ofapproval
June 26,2009

6.

Resolution
ApprovedbyAnnualgeneralmeeting ofshareholders

Type ofsharesCommonstock

Amount(Thousandsof Yen)563,329

Paid fromAmountPer share(Yen)

Retainedearnings

8

Shareholders’
cut-off date

Effective
date

March 31,2009

June 29,2009

Notes to the Consolidated Statements of Cash Flows

Cash in hand and in banks ....................................................................
Time deposits with a deposit term of over 3 months ........................
Cash and cash equivalents ....................................................................

¥¥

Millions of yen
March 31,
2008
2009
5,634
¥
6,363
(253)
(113)
5,381
¥
6,251

7.

Lease Transactions
Information on finance lease transactions, other than those in which the ownership of the leased equipment
was recognized as transferred to lessees, is as follows:
Millions of yen
March 31,
2008
2009
Machinery, equipment and otherAcquisition cost ..............................................................................
¥
160
¥
104
(95)
(78)
Accumulated depreciation ............................................................
¥
65
¥
26
Net book value ................................................................................
The future lease rental payment on such lease contracts
Due within one year .......................................................................
Due over one year...........................................................................
Total ..................................................................................................
Lease rental expenses for the year .......................................................
Including an amount equivalent to depreciation ................................

11

K I TA N O C O N S T R U C T I O N C O R P.

¥
¥
¥
¥

35
30
65
34
34

¥
¥
¥
¥

18
8
26
26
26

8.

Investments in Securities(a) As of March 31, 2009, “Other securities” are valued at fair value, with unrealized gains and losses, net of
applicable taxes, reported in a separate component of shareholders’ equity.
(b) The following tables summarize the book value and fair value of held-to-maturity debt securities as ofMarch 31, 2008 and 2009:
Millions of yen
March 31, 2008
Book value
Fair value
Difference
Securities with fair value
exceeding book value:
¥
—
¥
—
¥
—
Debt securities .........................................................
Sub-total ...............................................................
¥
—
¥
—
¥
—
Securities with fair value
not exceeding book value:
Debt securities .........................................................
Sub-total ...............................................................
Total ...............................................................................

¥
¥
¥

5
5
5

¥
¥
¥

5
5
5

¥
¥
¥

Millions of yen
March 31, 2009
Fair value

Book value

(0)
(0)
(0)

Difference

Securities with fair value
exceeding book value:
Debt securities .........................................................
Sub-total ...............................................................

¥
¥

5
5

¥
¥

5
5

¥
¥

0
0

Securities with fair value
not exceeding book value:
Debt securities .........................................................
Sub-total ...............................................................
Total ...............................................................................

¥
¥
¥

—
—
5

¥
¥
¥

—
—
5

¥
¥
¥

—
—
0

(c) The following tables summarize the acquisition cost and book value of available-for-sale securities as ofMarch 31, 2008 and 2009:
Millions of yen
March 31, 2008
Acquisition cost
Book value
Difference
Securities with book value exceedingacquisition cost:
¥
1,805
¥
3,714
¥
1,909
Equity securities ......................................................
Sub-total ...............................................................
¥
1,805
¥
3,714
¥
1,909
Securities with book value notexceeding acquisition cost:
Equity securities ......................................................
Sub-total ...............................................................
Total ...............................................................................

¥
¥
¥

358
358
2,163

¥
¥
¥

288
288
4,002

¥
¥
¥

Millions of yen
March 31, 2009
Acquisition cost
Book value

(70)
(70)
1,839

Difference

Securities with book value exceedingacquisition cost:
Equity securities ......................................................
Sub-total ...............................................................

¥
¥

1,679
1,679

¥
¥

2,260
2,260

¥
¥

581
581

Securities with book value notexceeding acquisition cost:
Equity securities ......................................................
Corporate bonds ......................................................
Sub-total ...............................................................
Total ...............................................................................

¥
¥
¥
¥

873
100
973
2,651

¥
¥
¥
¥

697
99
796
3,056

¥
¥
¥
¥

(176)
(1)
(176)
405

K I TA N O C O N S T R U C T I O N C O R P.

12

(d) Available-for-sale securities sold during the year ended March 31, 2008 and 2009, are as follows:
Millions of yen
2008
2009
Proceeds from sale of securities...................................................
¥
498
¥
801
Gross realized gain on sale of available-for-sale securities .......
¥
5
¥
440
Gross realized loss on sale of available-for-sale securities .......
¥20¥6(e) The following tables summarize the book value of securities with no available fair value as of March 31,
2008 and 2009:
March 31,
2008
2009
Available-for-sale securities
Unlisted equity securities(excluding over-the-counter securities)...................................
¥
1,119
¥
869
(f) Schedule for redemption of held-to-maturity debt securities with maturities:

Withinone year
Held-to-maturity
debt securities ..............................
Total .................................................

¥
¥

—
—

Withinone year
Held-to-maturity
debt securities ................................ ¥Corporate bonds ............................ ¥Total ................................................... ¥
9.

13

5
—
5

Millions of yen
March 31, 2008
Over one year Over five years
within five
but within ten
years
years

Over ten years

¥
¥

¥
¥

5
5

¥
¥

—
—

—
—

Millions of yen
March 31, 2009
Over one year Over five years
within five
but within ten
years
years

Over ten years

¥
¥
¥

¥
¥
¥

—
—
—

¥
¥
¥

—
100
100

—
—
—

Reserve for Retirement Benefits to Employees(a) Employees of the Company and its domestic subsidiaries are covered by a qualified pension plan and aseverance payment plan. Some foreign subsidiaries have a defined contribution pension plan.
(b) The reserve for retirement benefits as of March 31, 2008 and 2009 is analyzed as follows:
Millions of yen
March 31,
2008
2009
Projected benefit obligations ........................................................
¥(5,083)¥(5,191)
Plan assets .......................................................................................
4,573
3,885
Unfunded benefit obligations ........................................................
(510)(1,306)
Unrecognized actuarial differences..............................................
(37)
(796)
Unrecognized prior service cost ...................................................
——
Total ............................................................................................
(548)
(510)
Prepaid pension costs ...........................................................................
——
Reserve for retirement benefits to employees ...................................
¥
(548)
¥
(510)

K I TA N O C O N S T R U C T I O N C O R P.

(c) The net periodic expenses related to retirement benefits for the fiscal year 2008 and 2009 are as follows:
Millions of yen
March 31,2008
2009
Service costs ....................................................................................
¥
191
¥
178
Interest costs ...................................................................................
126
124
Expected return on plan assets.....................................................
(104)
(91)
Recognition of actuarial differences ............................................
(36)
24
Amortization of prior service cost ................................................
—
—
¥
178
¥
234
(d) Assumptions used in calculation of the above information were as follows:
As of March 31,
2008
2009
2.5%
2.0%
2.0%
2.0%
Straight-line
Straight-line
basis
basis
10 years
10 years

Discount rate ...................................................................................
Expected rate of return on plan assets ........................................
Method of attributing the projected benefits ..............................
To period of services ......................................................................
Amortization of actuarial differences ..........................................

10. Income Taxes(a) The tax effects of temporary differences that give rise to significant portions of the deferred tax assets
are presented below:
Millions of yen
March 31,2008
2009
Deferred tax assets: ...............................................................................
Write-down of fixed assets ................................................................
¥
1,689
¥
1,684
Allowance for doubtful accounts .....................................................
943
1,204
Reserve for retirement benefits to officers .....................................
398—
Write-down of marketable securities ...............................................
314
300
Intercompany profits .........................................................................
406
373
Loss on valuation of real estate for sale ..........................................
—
740
Operating loss carryforwards ...........................................................
523
205
Unrealized loss on hedging derivatives ..........................................
11
—
1,284
857
Other ....................................................................................................
Total gross deferred tax assets .................................................
5,570
5,363
(3,310)(3,213)
Valuation allowance ....................................................................
2,260
2,150
Deferred tax liabilities: .........................................................................
Reserve for advanced depreciation .................................................
(72)
(72)
Unrealized gain on other securities..................................................
(741)
(163)
—
(11)
Unrealized gain on hedging derivatives ..........................................
Total gross deferred tax assets liabilities .................................
(814)
(246)
Net deferred tax assets ...............................................................

¥

1,446

¥

1,904

(b) The reconciliation between the statutory tax rate and the effective tax rate as at March 31, 2008 and 2009is presented below:

Statutory tax rate ...................................................................................
Permanent differences on expenses not deductible .....................
Permanent differences on income not taxable ..............................
Accrued bonuses to directors and statutory auditors not deductible ..........
Inhabitant taxes per capita ...............................................................
Valuation allowance...........................................................................
Other ....................................................................................................
Effective tax rate................................................................................

As of March 31,
2008
2009
40.4%
40.4%
5.0
3.3
(1.4)
(3.0)
2.6
1.3
2.6
1.6
(31.1)
12.7
(8.6)
(7.4)
9.5%
48.9%

K I TA N O C O N S T R U C T I O N C O R P.

14

11. Segment Information
Industry Segment Information
The Company and its subsidiaries operate principally in the following five industrial segments:
Construction .................................................................................... Construction and engineering works
Development.................................................................................... Development and sale of real estate
Golf ................................................................................................... Management of golf courses
Hotel ................................................................................................. Management of hotels
Advertising Agency ......................................................................... Advertising agent
The segment information of the Company and its subsidiaries for the year ended March 31, 2008 and 2009 ispresented below:
Millions of yen
2008
2009
Net sales:
Construction............................................................................................
¥
58,406¥63,082Development ...........................................................................................
7,137
484
Golf ...........................................................................................................
640
313
Hotel .........................................................................................................
2,998
543
1,681
1,530
Advertising agency .................................................................................
70,862
65,952(424)(100)
Less: intersegment transaction .............................................................
70,43965,851
Operating expenses:
Construction............................................................................................
Development ...........................................................................................
Golf ...........................................................................................................
Hotel .........................................................................................................
Advertising agency .................................................................................

58,301
6,012
667
2,669
1,673
69,321(346)
68,975

Less: intersegment transaction .............................................................

Operating income ...........................................................................................
Assets:Construction............................................................................................
Development ...........................................................................................
Golf ...........................................................................................................
Hotel .........................................................................................................
Advertising agency .................................................................................

¥

1,463

¥

1,561

¥

31,967
7,798
7,011
6,026
1,052
53,8549,130
62,984¥38,759
8,336
4,091
680
998
52,864
9,897
62,761

153
44
47
261
7
513

¥

2
—
—
—
—
2

¥

214
4
31
401
3
654

¥

Other assets .............................................................................................
¥
Depreciation:
Construction............................................................................................
Development ...........................................................................................
Golf ...........................................................................................................
Hotel .........................................................................................................
Advertising agency .................................................................................

¥¥
Impairment loss on fixed assets:
Construction............................................................................................
Development ...........................................................................................
Golf ...........................................................................................................
Hotel .........................................................................................................
Advertising agency .................................................................................

¥¥
Capital expenditure:
Construction............................................................................................
Development ...........................................................................................
Golf ...........................................................................................................
Hotel .........................................................................................................
Advertising agency .................................................................................

¥

¥

15

K I TA N O C O N S T R U C T I O N C O R P.

61,480
495
333
567
1,514
64,390(100)
64,290

¥

¥

¥

¥

177
40
28
54
8
308

17
—
—
201
—
218
440
3
10
155
—
609

12. Per Share Data
Net assets per share and net income per share as of and for the year ended March 31, 2008 and 2009 are as
follows:
Yen
2008
2009
Net assets per share ...............................................................................
¥
307.15¥296.55
Net income per share – primary ...........................................................
12.61
10.78

Net income ..............................................................................................
Net income pertaining to common stock ............................................
Average outstanding shares of common stock ...................................

Millions of yen
2008
2009
¥
902
¥
766
¥
902
¥
766
71,536 thousand
71,055 thousand
sharessharesK I TA N O C O N S T R U C T I O N C O R P.

16

BOARD OF DIRECTORS, STATUTORY AUDITORSAND EXECUTIVE OFFICERS AS OF MARCH 31, 2009
Board of Directors
Chairman and President, Representative Director
Takahiro Kitano

Vice President, Representative Director
Kimio Shiozawa

Directors

Executive Officers
President and Executive Officer
Takahiro Kitano *Vice President and Executive Officer
Kimio Shiozawa *Senior Executive Officers

Shinsuke Nishida

Tetsuji Hashimoto

Yoshitada Mikami

Shinsuke Nishida *Yoshikatsu Yamazaki
Zentaro Ozawa

Managing Executive Officer
Yoshitada Mikami *Outside Director
Yoshinori Uda

Toshiro Maki
Itsuo Takeuchi
Nagayoshi Matsumoto

Statutory Auditors
Permanent Auditor

Yoshikatsu Yamazaki *Zentaro Ozawa *Tadaaki Takamisawa
Executive Officer
AuditorToshiaki Yamagishi

Toshiyuki Tsukada

Kazuyasu Hirata

Akira Koike

Noriaki Yaguchi

Yoshichika Owa

Norimitsu Akanuma
Kiyonori Nakashima
Yoneo Obinata* : Member of Board of Directors

17

K I TA N O C O N S T R U C T I O N C O R P.