2012

FINANCIALSTATEMENTS
MARCH 31, 2011-2012

KITANO CONSTRUCTION CORP.

Contents

Financial Statements

Consolidated Balance Sheets................................................................................................. 2

Consolidated Statements of Operations............................................................................... 4

Consolidated Statements of Comprehensive Income......................................................... 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........................... 181

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

Consolidated Balance Sheets
As of March 31, 2011 and 2012
Millions of yen
March 31,
2011

2012

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......................................................................

¥

5,067
12,305
5,449
1,568
1,666
33
1,195
1,017
(42)
28,259¥

5,754
12,525
6,310
2,286
1,421
47
1,200
538
(84)
29,997

Fixed Assets:
Tangible Fixed Assets:
Buildings and structures..............................................................
Machinery and equipment...........................................................
Golf course....................................................................................
Land................................................................................................
Other fixed assets.........................................................................
Less: accumulated depreciation.................................................
Total tangible fixed assets....................................................

8,890
609
1,231
7,695
1,627
(6,558)13,494

8,034
528
1,231
7,432
1,670
(5,921)
12,973

Intangible fixed assets........................................................................

42

53

4,102
2,390
700
1,507
(1,078)
7,622
21,157¥ 49,416

3,946
2,292
501
1,253
(819)
7,173
20,199¥ 50,197

Investments:
Investments in securities.............................................................
Long-term loans............................................................................
Deferred income taxes.................................................................
Other investments........................................................................
Less: allowance for doubtful accounts......................................
Total investments..................................................................
Total fixed assets...................................................................

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.

2

Consolidated Balance Sheets
As of March 31, 2011 and 2012
Millions of yen
March 31,
2011

2012

¥ 13,308
2,500
305
2,621
42
250
35
32
52
627
19,771¥ 15,704
—
71
3,596
—
243
35
38
53
804
20,543

4,000
570
3,174
23
242
8,009

4,000
545
3,048
12
247
7,852

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 liabilities......................................................................
Total current liabilities................................................................
Long-Term Liabilities:
Long-term debt.....................................................................................
Reserve for retirement benefits to employees.................................
Membership deposit............................................................................
Negative goodwill................................................................................
Other long-term debt...........................................................................
Total long-term liabilities............................................................
NET ASSETS
Shareholders’ Equity
Common stock.....................................................................................
Authorized — 200,000,000 shares
Issued — 78,368,532 shares as of March 31, 2011 and 2012
Capital surplus.....................................................................................
Retained earnings................................................................................
Treasury stock.....................................................................................
Total shareholders’ equity...........................................................

9,116

9,116

7,405
6,869
(2,342)
21,0497,405
7,216(2,700)21,038

Accumulated Other Comprehensive Income
Unrealized gain (loss) on other securities.......................................
Unrealized gain (loss) on hedging derivatives.................................
Foreign currency translation adjustments.......................................
Total accumulated other comprehensive income....................

130
(7)
(31)
92

241
—
13
253

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

496

510

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

21,63621,802¥ 49,416¥ 50,197

The accompanying notes are an integral part of these statements.
3

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

Consolidated Statements of Operations
For the years ended March 31, 2011 and 2012
Millions of yen
March 31,
2011

2012

¥ 52,672
4,391
57,063¥ 46,732
5,618
52,351Gross profit..................................................................................

49,5992,911
52,5104,553

43,531
4,064
47,595
4,755

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

3,633
919

3,689
1,066

173
(135)
(123)
57
107
999

151
(127)
77
54
123
1,344

Special Items:
Gain on sales of fixed assets............................................................
Loss on disposal of fixed assets......................................................
Gain on sales of investment securities...........................................
Loss on sales of investment securities...........................................
Loss on valuation of investment securities....................................
Provision of allowance for doubtful accounts...............................
Loss on revision of retirement benefit system..............................
Income before income taxes and minority interests.............

1
(4)
63
(2)
(79)
4
(39)
944

159
(28)
1
—
(349)
—
—
1,128

Income Taxes
Current................................................................................................
Deferred..............................................................................................
Net Income Before Minority Interests.....................................................
Minority Interests in Earnings of Consolidated Subsidiaries...............

285
83
575
(14)

64
147
917
(17)

Net Sales:
Construction contracts.....................................................................
Real estate development and other.................................................
Cost of Sales:
Construction contracts.....................................................................
Real estate development and other.................................................

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

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

¥

561

¥

900

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 Comprehensive Income
For the years ended March 31, 2011 and 2012
Millions of yen
March 31,2011
Income Before Minority Interests............................................................
Other Comprehensive Income:Unrealized gain (loss) on other securities.....................................
Unrealized gain (loss) on hedging derivatives...............................
Foreign currency translation adjustment.......................................
Share of other comprehensive income of associates
accounted for using the equity method........................................
Total other comprehensive income................................................
Comprehensive Income.............................................................................
Comprehensive income attributable to:Shareholders of the Corporation.....................................................
Minority Interests..............................................................................

¥

575

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

¥

917

(258)
(28)
(17)

111
7
11

28
(276)
299

33
161
1,079

285
14

1,062
17

The accompanying notes are an integral part of these statements.
52012Consolidated Statements of Changes in Net Assets
For the years ended March 31, 2011 and 2012
Shareholder’s equity

Millions of yen
Accumulated other comprehensive income
Adjustments
on foreign

Number ofshares of

Unrealized Unrealized gain currency
common Common Capital Retained Treasury gain on other on hedging statements Minority Total net
stock surplus earnings stocks securities derivatives translation interests assets
stock(thousands)
Balance at March 31, 2010......

70,112

9,116

7,405

6,878

(2,161)

388

21

(41)

464

22,070ended March 31, 2011....

—

—

—

561

—

—

—

—

—

561

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

—

—

—

(559)

—

—

—

—

—

(559)

(883)

—

—

—

(212)

—

—

—

—

(212)

—

—

(0)

—

0

—

—

—

—

0

—

—

0

—

30

—

—

—

—

31

equity method.................

—

—

—

(11)

—

—

—

—

—

(11)

Adjustment for the year....

—

—

—

—

—

(258)

(28)

10

32

(244)

Balance at March 31, 2011......

69,228

9,116

7,405

6,869

(2,342)

130

(7)

(31)

496

21,636

ended March 31, 2012....

—

—

—

900

—

—

—

—

—

900

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

—

—

—

(553)

—

—

—

—

—

(553)

(2,005)

—

—

—

(358)

—

—

—

—

(358)

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

—

—

(0)

—

1

—

—

—

—

0

Adjustment for the year....

—

—

—

—

—

111

7

44

15

176

Balance at March 31, 2012......

67,223

9,116

7,405

7,216

(2,700)

241

—

13

510

21,802Net Gain for the year

Increase in treasury
stock................................
Gain on sale of treasury
stock................................
Disposal of stocks of the parent
company owned byconsolidated subsidiaries.......
Change of scope of

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, 2011 and 2012
Millions of yen
2011
Cash flows from operating activities:
Net income before income taxes...............................................................
Adjustments for:
Depreciation.................................................................................................
Equity in (gains) losses of affiliates...........................................................
Interest and dividend income.....................................................................
Interest expenses.........................................................................................
(Gain) loss on sales of fixed assets...........................................................
Foreign exchange (gains) losses................................................................
(Gain) Loss on sales of investment securities..........................................
(Gain) Loss on evaluation of investment securities................................
Increase (Decrease) in reserve for retirement benefits toemployees.....................................................................................................
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 refunded......................................................................................
Income taxes paid..............................................................................................
Net cash provided by (used in) operating activities.........................

¥

944

¥

1,128

276
(57)
(173)
135
(1)
81
(62)
79

254
(54)
(151)
127
(159)
(68)
(1)
349

8
(6)
52
(7)
(16)
1,380

(25)
6
1
(7)
(22)
(219)

1,880
134
(3,685)
(899)
1,489
1,551
194
(135)
72
(20)
1,662

(473)
(873)
2,396
975
646
3,828
151
(127)
7
(306)
3,553

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............................................
Proceeds from repayment of investments in securities................................
Payments for loans.............................................................................................
Proceeds from recovery of loans.....................................................................
Other....................................................................................................................
Net cash provided by (used in) investing activities..........................

(404)
261
(88)
2
(195)
197
—
(50)
40
(9)
(247)

(469)
461
(310)
740
(89)
2
50
(241)
143
181
467

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..........................

(1,500)
(212)
(562)
50
(2,223)(2,500)
(358)
(555)
(2)
(3,415)

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...................................................
Cash and cash equivalents of end of year.............................................................

(90)
(899)
5,761
4,862

(70)
675
4,862
5,537

¥

The accompanying notes are an integral part of these statements.
7

2012

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

¥

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 4 subsidiaries (majority-owned companies) as at March 31, 2012 (4 for 2011). The
consolidated financial statements in fiscal years ended March 31, 2012 include the accounts of the Company and 3(3 for 2011) 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•Asahi Agency Co., Ltd. ..................................................................... 59.52% owned
The above consolidated subsidiaries, except for Solomon Kitano Mendana Hotel Limited, which has a fiscal
year 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.
Kitano Lanka (private) Limited 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.
Goodwill is principally amortized over a five year period on a straight-line basis from the year of acquisition.
(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, which is affiliates of the Company, since the application of this method has significant effect on the net
income and retained earnings of the Companies.
Kitano Lanka (private) Limited is excluded from the scope of the equity method of accounting because it has
little influence and little importance.
(c) Recognizing Revenues and Costs of Construction Contracts
Revenues and costs of construction contracts that commenced on or after April 1, 2009, of which thepercentage of completion can be reliably estimated, are recognized by the percentage-of-completion method. The
percentage of completion is calculated based on the cost incurred to date as a percentage of the estimated total
cost. The completed-contract method is applied to all other construction contracts.
(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.
The net book value of inventories in the balance sheet is written down if the net realizable value declines.
(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 11 years for store fixtures and equipment.
( 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.

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

8

Actuarial gains and losses were recognized using mainly the straight-line method over a period of 10 years.
Prior service costs were amortized using mainly the straight-line method over a period of 10 years, the period
within the estimated average remaining service life of the employees.
(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 ) 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.
(m) 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.
(n) 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.
(o) 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.
(p) Consumption Tax
Consumption Tax payable or receivable is excluded from each account in the consolidated statements ofincome.
(q) Reclassification of Accounts
Certain prior year amounts have been reclassified to conform with the current year’s presentation.
( r ) Change of Presentation Method
We expressed “Gain (Loss) on evaluation of investment securities” on cash flows from operating activities of
consolidated statements of cash flows, because it’s importance increased. And we had expressed “Other”
including “Gain (Loss) on evaluation of investment securities” at the fiscal year ended March 31, 2011. “Gain(Loss) on evaluation of investment securities” was 79 million of yen at the fiscal year ended March 31, 2011.
(Additional Information)
From the current fiscal year, the Company has adopted the “Accounting Statement for Accounting Changes
and Error Corrections” (ASBJ Statement No.24, December 4, 2009) and the “Guidance on Accounting Standard for
Accounting Changes and Error Corrections” (ASBJ Guidance No.24, December 4, 2009).
3.

Notes to the Consolidated Balance Sheets(1) Investments in unconsolidated subsidiaries and affiliates................
(2) Assets pledged as collateral
Buildings..................................................................................................
Land..........................................................................................................
Real estate for sale..................................................................................
(3) The guarantee of housing construction flaw security
Investment in securities.........................................................................
(4) The guarantee of a debt
Morimoto Co, Ltd....................................................................................

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,
2011
2012
12
¥

9

304
1,161
4,683

291
1,161
4,470

99

131

309

299

4.

Notes to Consolidated Statements of Operations
Millions of yen
for the year ended March 31,
2011
2012

(1) Allowance for loss on construction contract
include in cost of sales construction contracts...........................
(2) Write-down of inventories included in cost of
sales on real estate development and other.................................
(3) The major components of “Selling, general andadministrative expenses”
Depreciation............................................................................................
Payroll......................................................................................................
Allowance for accrued bonuses............................................................
5.

¥

52

53

43

264

205
1,339
122

192
1,325
119

Notes to consolidated Statement of comprehensive income
Reclassification adjustments and tax effects related to other comprehensive income were as follows:
Millions of yen
for the year ended March 31,
Net unrealized gain (loss) on other securities, net of taxes
2012
Gains (losses) arising during the year.............................................................
¥
146
Reclassification adjustments.............................................................................
8		Total before tax effect................................................................................
154		Tax effect.....................................................................................................
(44)		Net unrealized gain (loss) on other securities, net of taxes..................
111
Deferred gain (loss) on hedging, net of taxes
Gains (losses) arising during the year.............................................................
		Tax effect.....................................................................................................
		
Deferred gain (loss) on hedging, net of taxes.........................................

6.

¥

¥

11
(5)
7

Foreign currency translation adjustments
Gains (losses) arising during the year.............................................................

¥

11

Share of other comprehensive income of associates accounted forusing equity method
Gains (losses) arising during the year.............................................................

¥

33

		

¥

161

Total other comprehensive income..........................................................

Notes to the Consolidated Statement of Changes in Net Assets(a) Type and number of outstanding shares
March 31, 2011
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 stock
Total

8,256,926
8,256,926

1,015,083
1,015,083

131,844
131,844

Balance at
end of year
78,368,532
78,368,532
9,140,165
9,140,165

The summary of the main change reason
Increase by the repurchase of shares less than one unit..........................................................
15,083 sharesby the acquisition of the treasury stock by the board of directors resolution....... 1,000,000 shares
Decrease by the sale of shares less than one unit......................................................................
900 sharesby the sale of parent company stocks that subsidiary have..................................... 130,944 shares

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

10

Type of shares

Balance at
Beginning of year

March 31, 2012
Number of shares
Increase in shares
during the year

Decrease in shares
during the year

Balance at
end of year

Issued stock
Common stockTotal

78,368,532
78,368,532

—
—

—
—

78,368,532
78,368,532

Treasury stock
Common stock
Total

9,140,165
9,140,165

2,007,067
2,007,067

2,030
2,030

11,145,202
11,145,202

The summary of the main change reason
Increase by the repurchase of shares less than one unit..........................................................
7,067 sharesby the acquisition of the treasury stock by the board of directors resolution....... 2,000,000 shares
Decrease by the sale of shares less than one unit......................................................................
2,030 shares(b) Dividends		(1) Dividends paid to shareholders
Date ofapproval

Resolution
ApprovedbyType ofsharesAmount(Thousandsof Yen)Paid fromAmountPer share Shareholder’s(Yen)
cut-off date

Effective
date

June 24,2010

Annualgeneralmeeting ofshareholders

Commonstock

563,155

Retainedearnings

8

March 31,2010

June 25,
2010

June 24,2011

Annualgeneralmeeting ofshareholders

Commonstock

555,041

Retainedearnings

8

March 31,2011

June 27,2011(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 22,2012

7.

Resolution
ApprovedbyAnnualgeneralmeeting ofshareholders

Type ofsharesCommonstock

Amount(Thousandsof Yen)539,001

Paid from
Retainedearnings

8Notes 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.....................................................................

11

AmountPer share Shareholder’s(Yen)
cut-off date

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

¥¥March 31,2012

Effective
date
June 25,
2012

Millions of yen
March 31,
2011
2012
5,067
¥
5,754
(205)
(217)
4,862
¥
5,537

8.

Fair Value of Financial Instruments(a)	The fair value and book value of financial instruments as of March 31, 2011 and March 31, 2012, otherthan items of which fair value are not practically available, are as follows:
Millions of yen
March 31, 2011
Book value
Fair value
Difference
Cash and deposits..............................................
¥
5,067
¥
5,067
¥
—
Notes and accounts receivable........................
12,30512,305
—
2,718
2,718
—
Investments in securities..................................
Total.............................................................
¥
20,090¥
20,090¥—
Notes and accounts payable.............................
Short-term bank loans.......................................
Long-term debt...................................................
Total.............................................................
Derivative transactions.....................................

Cash and deposits..............................................
Notes and accounts receivable........................
Investments in securities..................................
Total.............................................................

¥

¥
¥

13,3082,500
4,000
19,808(11)

Book value
5,754
12,5252,894¥21,173

¥

¥

¥
¥

13,3082,500
4,000
19,808(11)

Millions of yen
March 31, 2012
Fair value¥
5,754
12,5252,894¥21,173

¥

¥
¥

—
—
—
—
—

Difference
—
—
—
¥
—

¥

Notes and accounts payable.............................
¥
15,704¥
15,704
¥
—
4,000
4,000
—
Long-term debt...................................................
Total.............................................................
¥
19,704¥
19,704¥—(1) Financial instruments for which it is extremely difficult to determine the fair value
Millions of yen
March 31, 2011
March 31, 2012
Book value
Book value
Non-listed shares *......................................................................................... ¥
1,384
¥
1,052
Membership deposit *...................................................................................
3,174
3,048
* It is extremely difficult to determine the fair values thereof because neither market quoted prices areavailable nor future Cash Flows can be estimated.
(2) Redemption schedule for money claims and securities with maturities
Millions of yen
March 31, 2011
Due in 1 year orDue after 1 year
Due after 5 years
lessthrough 5 years
through 10 years
Cash and deposits..............................................
¥
5,045
¥
—
¥
—
Notes and accounts receivable........................
12,27530—
Investments in securities
Government bonds.....................................
——
109
Corporate bonds.........................................
——
100
Millions of yen
March 31, 2012
Due in 1 year orDue after 1 year
lessthrough 5 years
Cash and deposits................. ¥
5,736
¥
—
Notes and accounts
receivable.............................
12,525—Investments in securities
Government bonds........
——
Corporate bonds............
——

Due after 5 years
through 10 years¥—

Due after 10
years
¥
—

—

—

125
100

15
—

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

12

9.

Investments in Securities(a)	The following tables summarize the acquisition cost and book value of available-for-sale securities withmarket value as of March 31, 2011 and 2012:
Millions of yen
March 31, 2011
Book value
Acquisition cost
Difference
Securities with book value exceedingacquisition cost:
Equity securities.......................................................
¥
1,129
¥
715
¥
414
Government bonds...................................................
45
44
1
101
100
1
Corporate bonds.......................................................
Sub-total................................................................
¥
1,275
¥
859
¥
416
Securities with book value not exceedingacquisition cost:
Equity securities.......................................................
Government bonds...................................................
Sub-total................................................................
Total...............................................................................

Securities with book value exceedingacquisition cost:
Equity securities.......................................................
Government bonds...................................................
Corporate bonds.......................................................
Sub-total................................................................
Securities with book value not exceedingacquisition cost:
Equity securities.......................................................
Government bonds...................................................
Corporate bonds.......................................................
Sub-total................................................................
Total...............................................................................

¥
¥
¥

1,389
54
1,443
2,718

¥
¥
¥

1,587
55
1,642
2,501

¥
¥
¥

(198)
(1)
(199)
217

Book value

Millions of yen
March 31, 2012
Acquisition cost

Difference

¥

¥

¥

¥

¥

¥
¥

1,353
118
50
1,521

1,310
13
49
1,373
2,894

¥

¥

¥
¥

886
115
50
1,051

1,408
13
50
1,471
2,522

¥

¥

¥
¥

467
3
0
470

(97)
(0)
(1)
(98)
372

(b)	Impairment losses of ¥8 million were recorded to write down book value of investments in securities forthe year ended March 31, 2012.
10. Derivative transactions(a) Derivative transactions for which hedge accounting is not applied			
Not applicable.
(b) Derivative transactions for which hedge accounting is applied.
			Currency-related transaction

Hedging
methodDeferredhedge
methodTransaction
type
Foreignexchange
forwardcontract
Buy
U.S. dollar

Main hedged
item
Forecasted
foreigncurrencytransactions

Contract
amount¥
460

There is no applicable for the year ended March 31, 2012.

13

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, 2011
Contract
over 1 year¥—Fair value
¥

(11)

11. Reserve for Retirement Benefits to Employees(a)	Employees of the Company is covered by a defined-benefit corporate pension plan and definedcontribution allowance plan. Employees of its domestic subsidiaries are covered by termination
allowance plan or defined-contribution pension plan.
(b)	The reserve for retirement benefits as of March 31, 2011 and 2012 is analyzed as follows:
Millions of yen
March 31,2011
2012
Projected benefit obligations.........................................................
¥(4,038)¥
(3,793)3,035
2,774
Plan assets........................................................................................
Unfunded benefit obligations.........................................................
(1,003)(1,019)Unrecognized actuarial differences...............................................
501
535
(68)
(61)
Unrecognized prior service cost....................................................
Total...................................................................................................
(570)
(545)
—
—
Prepaid pension costs.....................................................................
¥
(570)
¥
(545)
Reserve for retirement benefits to employees.............................
(c) The net periodic expenses related to retirement benefits for the fiscal year 2011 and 2012 are as follows:
Millions of yen
March 31,2011
2012
Service costs.....................................................................................
¥
181
¥
136
Interest costs....................................................................................
99
79
Expected return on plan assets.....................................................
(78)
(60)
Amortization of actuarial differences...........................................
93
60
Amortization of prior service cost.................................................
(8)(8)
Loss on revision of retirement benefit system.............................
39—
Premium amount of payment to a defined by termination—
45
allowance plan or defined-contribution pension plan.........
¥
325
¥
253
Retirement benefits expense..........................................................
(d) Assumptions used in calculation of the above information were as follows:

Method of attributing the projected benefits to periodof services..................................................................................
Discount rate....................................................................................
Expected rate of return on plan assets.........................................
Amortization periods of actuarial differences.............................
Amortization periods of prior service costs.................................

As of March 31,
2011
2012
Straight-line
Straight-line
basis
basis
2.0%
2.0%
2.0%
2.0%
10 years
10 years
10 years
10 years

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

14

12. 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 31,20112012
Deferred tax assets:
Write-down of fixed assets.................................................................
¥
1,790
¥
1,020
Allowance for doubtful accounts......................................................
952
831
Write-down of marketable securities................................................
324
400
Intercompany profits...........................................................................
318
293
Loss on valuation of real estate for sale...........................................
846
866
Operating loss carry forwards...........................................................
3
71
Unrealized gain on hedging derivatives............................................
5
—
866
730
Other.....................................................................................................
Total gross deferred tax assets .................................................
5,103
4,211
(3,049)(2,315)
Valuation allowance.....................................................................
2,054
1,895
Deferred tax liabilities:
Reserve for advanced depreciation...................................................
(72)
(63)
(86)
(132)
Unrealized gain on other securities...................................................
Total gross deferred tax liabilities.............................................
(159)
(195)
Net deferred tax assets................................................................

¥

1,896

¥

1,701

(b)	The reconciliation between the statutory tax rate and the effective tax rate as at March 31, 2011 and 2012is presented below:
As of March 31,
2012
Statutory tax rate.........................................................................................................................
40.4%
Permanent differences on expenses not deductible...........................................................
3.0
Permanent differences on income not taxable....................................................................
(1.2)
Accrued bonuses to directors and statutory auditors not deductible..............................
1.3
Inhabitant taxes per capita.....................................................................................................
2.1
Valuation allowance................................................................................................................
(36.4)
Influence by effective tariff change.......................................................................................
10.5
(1.0)
Other..........................................................................................................................................
18.7%
Effective tax rate......................................................................................................................
	Corresponding differences for the year ended March 31, 2011 were not disclosed as the differences wereimmaterial.
(c) Reversal of the amount of deferred tax assets and liabilities due to the change in the corporate tax rate		The “Act for Partial Revision of the Income Tax Act etc. for the Purpose of Creating Taxation System
Responding to Changes in Economic and Structures” (Act No.114 of 2011) and the “Act on special Measuresfor Securing Financial Resources Necessary to Implement Measures for Reconstruction following the Great
East Japan Earthquake” (Act No.117 of 2011) were promulgated on December 2, 2011. The reduction of thecorporate tax rate and a temporary special reconstruction corporate tax will apply to corporate taxes
effective fiscal years beginning on or after April 1, 2012. Therefore, the effective statutory tax rate used tomeasure the Corporation’s deferred tax assets and liabilities was changed from 40.4% to 37.8% for temporary
differences expected to be utilized from fiscal years beginning April 1, 2012 to April 1, 2014 and from 40.4% to35.4% for temporary differences expected to be utilized from fiscal years beginning April 1, 2015.
		
As a result of these changes in the tax rate, deferred tax assets (net of the amount of deferred tax
liabilities) decreased by ¥100 million, deferred income taxes increased by ¥118 million.

15

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

13. Rental Properties(a)	The Company holds some office buildings and residential units. For the year ended March 31, 2011, net
operating gains from rent business of ¥37 million were recorded as operating gains of Real estatedevelopment and other.
(b)	The book value and fair value of properties for rent were as follows:
Millions of yen
2011Book value
At the end of previous period.................................................................................................
¥
1,971
Increase (decrease) – net........................................................................................................
(52)
At the end of current period....................................................................................................
1,919
Fair value at the end of current period.....................................................................................
¥
1,918
The changes during the year primarily consist of real estate depreciation (decrease: ¥50 million).
Notes are not disclosed as the importance is scarce for the year ended March 31, 2012.
14. Segment Information(1)	The segment information of the Company and its subsidiaries for the year ended March 31, 2011 and2012 is presented below:
		
The Company and its subsidiaries operate principally in the following four industrial segments:		Construction............. Construction, engineering works, development and sale of real estate.
		Golf courses.............. Management of golf courses
Hotels......................... Management of hotels
		Advertising agent..... Management of advertising agent.
(2)	The segment information of the Company and its subsidiaries for the year ended March 31, 2011 and2012 is presented below:
Millions of Yen
March 31, 2011
Construction

Golf
courses

HotelsAdvertising
agent

¥

¥

¥

Reconciliations Consolidated

Total

Ⅰ. Net sales and Operating income
Net sales
Customers
Intersegment ortransfer
Total
Operating income(loss)¥ 55,205

¥

262

399

1,197

¥ 57,063¥—¥ 57,063

4

1

3

91

98

(98)

—

55,209

263

402

1,288

57,161(98)

57,063

910

¥

(55)

¥

40

¥

24

¥

919

¥

—

¥

919

Ⅱ. OtherDepreciation andamortization

208

23

39

6

276

—

276

Millions of Yen
March 31, 2012
Construction

Golf
courses

HotelsAdvertising
agent

¥

¥

¥

Total

Reconciliations Consolidated

Ⅰ. Net sales and Operating income
Net sales
Customers
Intersegment ortransfer
Total
Operating income¥ 50,440
206¥

50,646
1,010

274
1

¥

275
4

399
5

¥

404
15

¥

1,239

¥ 52,351

78

290

1,317
37

¥

52,641
1,066

¥

¥

—

¥ 52,351

(290)

—

(290)
—

¥

52,351
1,066

Ⅱ. OtherDepreciation andamortization

195

20

33

6

254

—

254

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

16

15. Per Share Data
Net assets per share and net income per share as of and for the year ended March 31, 2011 and 2012 are as
follows:
Yen
2011
2012
Net assets per share................................................................................
¥
305.37¥
316.73
Net income per share – primary............................................................
8.07
13.13
1.

Basis of net income per share of common stock

Net income...............................................................................................
Net income pertaining to common stock.............................................
Average outstanding shares of common stock....................................
2.

Basis of net assets per share of common stock

Net assets..................................................................................................
Amounts deducted from net assets.......................................................
Minority interests.....................................................................................
Net assets applicable to common stock...............................................
Number of shares of common stock at end of year............................

Millions of yen
2011
2012
¥
561
¥
900
¥
561
¥
900
69,563 thousand
68,552 thousand
sharessharesMillions of Yen
2011
2012
¥
21,636¥
21,802
496
510
496
510
21,141
21,291
69,228 thousand
67,223 thousand
sharesshares

16. Important subsequent phenomenon
The company resolved effacing treasury stocks by board of directors of holding on June 22, 2012 as follows.
(1) The kind of stocks to efface		The common stock of the company(2) The number of the stocks to efface		10,000,000 stocks
		(The percentage to the all issued stocks (including treasury stocks) before efface is 12.76%.)(3) All issue stocks after efface		68,368,532 stocks (including treasury stocks)(4) The date to efface		June 29, 201217

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

BOARD OF DIRECTORS, STATUTORY AUDITORSAND EXECUTIVE OFFICERS AS OF MARCH 31, 2012
Board of Directors
Chairman and President, Representative Director
		 Takahiro Kitano
Vice President, Representative Director
		 Kimio Shiozawa
Director

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

		 Shinsuke Nishida

		 Shinsuke Nishida *		 Yoshikatsu Yamazaki

		 Yoshikatsu Yamazaki *		 Yoshitada Mikami

		 Yoshitada Mikami *		 Zentaro Ozawa

		 Toshiro Maki

Outside Director
		 Yoshinori Uda

Managing Executive Officer
		 Itsuo Takeuchi
		 Zentaro Ozawa *Statutory Auditors

		 Nagayoshi Matsumoto

Permanent Auditor
		 Noboru Takizawa

Executive Officer
		 Toshiaki Yamagishi

Auditor		 Kiyonori Nakashima

		 Toshiyuki Tsukada

		 Yoshito Iwasaki

		 Yoshichika Owa

		 Masakatsu Kobayashi

		 Kazumichi Hanyu
		 * : Member of Board of Directors

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

18