2013

FINANCIALSTATEMENTS
MARCH 31, 2012-2013

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, 2012 and 2013
Millions of yen
March 31,
2012

2013

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

¥

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

6,625
13,619
6,126
1,746
3,192
55
1,278
697
(78)
33,259Non-current Assets:
Tangible Fixed Assets:
Buildings and structures..............................................................
Machinery and equipment...........................................................
Golf course....................................................................................
Land................................................................................................
Construction in progress.............................................................
Other non-current assets.............................................................
Less: accumulated depreciation.................................................
Total tangible fixed assets....................................................

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

7,931
529
771
7,305
1
1,752
(5,953)
12,336

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

53

54

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

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

4,799
2,533
456
1,318
(1,051)
8,055
20,445¥ 53,704

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, 2012 and 2013
Millions of yen
March 31,
2012

2013

¥ 15,704
71
3,596
243
35
38
53
804
20,543¥ 19,598
483
3,019
240
30
47
256
942
24,615

4,000
545
3,048
—
12
247
7,852
28,395

4,000
501
2,897
68
2
225
7,694
32,309LIABILITIESCurrent Liabilities:
Notes and accounts payable..............................................................
Income taxes payable.........................................................................
Advances received on construction in progress.............................
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............................................................................
Deferred income taxes........................................................................
Negative goodwill................................................................................
Other long-term debt...........................................................................
Total long-term liabilities............................................................
Total liabilities..............................................................................
NET ASSETS
Shareholders’ Equity
Common stock.....................................................................................
Authorized — 200,000,000 shares
Issued — 68,368,532 shares as of March 31, 2012 and 2013
Capital surplus.....................................................................................
Retained earnings................................................................................
Treasury stock.....................................................................................
Total shareholders’ equity...........................................................

9,116

9,116

7,405
7,216
(2,700)21,0385,066
7,255(1,264)
20,174

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

241
—
13
253

784
8
6
797

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

510

424

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

21,802

21,396

Debt net assets sum total.............................................................................

¥ 50,197¥ 53,704

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

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Consolidated Statements of Operations
For the years ended March 31, 2012 and 2013
Millions of yen
March 31,
2012

2013

¥ 46,732
5,618
52,351¥ 58,245
3,514
61,759Gross profit..................................................................................

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

54,954
2,153
57,107
4,652

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

3,689
1,066

3,636
1,015

151
(127)
77
54
123
1,344

160
(117)
93
50
124
1,326

Special Items:
Gain on sales of fixed assets............................................................
Loss on disposal of fixed assets......................................................
Gain on sales of investment securities...........................................
Loss on valuation of investment securities....................................
Impairment loss.................................................................................
Income before income taxes and minority interests.............

159
(28)
1
(349)
—
1,128

1
(7)
—
(5)
(607)
708

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

64
147
917
(17)

484
(267)
491
84

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

¥

900

¥

576

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, 2012 and 2013
Millions of yen
March 31,2012
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..............................................................................

¥

917

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

¥

491

111
7
11

544
8
24

33
161
1,079

(31)
544
1,036

1,062
17

1,120
(84)

The accompanying notes are an integral part of these statements.
52013

Consolidated Statements of Changes in Net Assets
For the years ended March 31, 2012 and 2013
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 stock securities derivatives translation interests assets
stock(thousands)
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)

Net Gain for the year

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

21,802

ended March 31, 2013....

—

—

—

576

—

—

—

—

—

576

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

—

—

—

(537)

—

—

—

—

—

(537)

(4,984)

—

—

—

(903)

—

—

—

—

(903)

—

—

(0)

—

0

—

—

—

—

0

Net Gain for the year

Purchase of treasury
stock................................
Disposal of treasury
stock................................
Retirement of treasury
stock................................

——(2,339)

—

2,339

—

—

—

—

—

Adjustment for the year....

——(2,339)

39

1,436

543

8

(7)

(87)

458

Balance at March 31, 2013......

62,240

9,116

5,066

7,255

(1,264)

784

8

6

424

21,396

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, 2012 and 2013
Millions of yen
2012
Cash flows from operating activities:
Income before income taxes......................................................................
Adjustments for:
Depreciation.................................................................................................
Impairment loss............................................................................................
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.........................

¥

1,128

¥

708

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

246
607
(50)
(160)
117
(1)
(50)
—
5

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

(43)
9
203
(2)
(6)
(1,090)

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

(1,231)
179
3,894
(577)
(372)
2,384
171
(117)
—
(73)
2,365

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

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

(420)
418
(139)
1
(56)
—
50
(84)
200
(72)
(102)

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

(2,500)
(358)
(555)
(2)
(3,415)

—
(903)
(539)
(8)
(1,450)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.............................................................

(70)
675
4,862
5,537

55
868
5,537
6,404

¥

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

2013

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 Act 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 2 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.
Changes in accounting policies(Changes in depreciation method for tangible fixed assets)
In accordance with the amendments of the Corporation Tax Act, effective from fiscal year ended March 31,
2013, the Company and its domestic subsidiaries have changed their depreciation method for tangible fixed assets
acquired on or after April 1, 2012.
The impact of this change on operating income and income before income taxes and minority interests forthe fiscal year ended March 31, 2013 is immaterial.
(Unapplied accounting standards, etc.)“Accounting Standard for Retirement Benefits” (Accounting Standard Board of Japan (ASBJ) Statement No.
26 of May 17, 2012) and “Guidance on Accounting Standard for Retirement Benefits” (ASBJ Guidance No. 25 of
May 17, 2012)(1) Outline
Under the amended rule, actuarial gains and losses and past service costs would be recognized within the net
asset section, after adjusting for tax effects, the deficit or surplus would be recognized as a liability or asset
without any adjustments. For determining method of attributing expected benefit to periods, the standard now
allows to choose benefit formula basis, as well as straight-line basis. Method for determination of discount rate
has also been amended.
(2) Effective date
Effective for the end of fiscal year ending on or after March 31, 2014. Amendments relating to determining
method of attributing expected benefit to periods are effective from the beginning of fiscal year ending on March
31, 2015. No retrospective application to financial statements in prior periods will be made as transitional
provisions are stipulated regarding the application of these accounting standards.
(3) Impact of application of the new accounting standard
Application of “Accounting Standard for Retirement Benefits” is expected to result in material impacts on
the consolidated financial statements of the Group. As for the consolidated balance sheets, the amount of net
assets will be significantly affected due mainly to the recognition of actuarial gains and losses as incurred,however, its effects are currently under evaluation.

9

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

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....................................................................................
4.

Millions of yen
March 31,
2012
2013
¥9
¥19
291
1,161
4,470

314
1,161
4,410

131

141

299

—

Notes to Consolidated Statements of Operations
Millions of yen
for the year ended March 31,
2012
2013

(1) Allowance for loss on construction contract
included in cost of sales of 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............................................................
(4) Impairment loss.......................................................................................
5.

¥53

¥256

264

72

192
1,325
119
—

208
1,313
112
607

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
2013
Gains (losses) arising during the year..............................................
¥146
¥839
Reclassification adjustments..............................................................
82
		 Total before tax effect.................................................................
154
841
		 Tax effect......................................................................................
(44)
(298)
111
544
		 Net unrealized gain (loss) on other securities, net of taxes...
Deferred gain (loss) on hedging, net of taxes
Gains (losses) arising during the year..............................................
		 Tax effect......................................................................................
		 Deferred gain (loss) on hedging, net of taxes..........................

¥11
(5)
7

¥13
(5)
8

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

¥11

¥24

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

¥33¥(31)

		

¥161

¥544

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

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

10

6.

Notes to the Consolidated Statement of Changes in Net Assets(a) Type and number of outstanding shares
March 31, 2012
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

9,140,165
9,140,165

2,007,067
2,007,067

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

2,030
2,030

11,145,202
11,145,202

The summary of the main change reason
7,067 shares
Increase by the repurchase of shares less than one unit..........................................................
by the acquisition of the treasury stock by the board of directors resolution....... 2,000,000 shares
2,030 shares
Decrease by the sale of shares less than one unit......................................................................

Type of shares

Balance at
Beginning of year

March 31, 2013
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——

10,000,000
10,000,000

68,368,532
68,368,532

Treasury stock
Common stockTotal

11,145,202
11,145,202

4,984,639
4,984,639

10,000,962
10,000,962

6,128,879
6,128,879

The summary of the main change reason
12,639 shares
Increase by the repurchase of shares less than one unit........................................................
by the acquisition of the treasury stock by the board of directors resolution..... 4,972,000 shares
962 shares
Decrease by the sale of shares less than one unit....................................................................
by retirement of treasury stock.................................................................................. 10,000,000 shares(b) Dividends		(1) Dividends paid to shareholders
Date ofapproval
June 24,2011

June 22,2012		Annualgeneralmeeting ofshareholders
Annualgeneralmeeting ofshareholders

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

Effective
date

Commonstock

555,041

Retainedearnings

8

March 31,2011

June 27,
2011

Commonstock

539,001

Retainedearnings

8

March 31,2012

June 25,2012(2)	‌D ividends with a shareholders’ cut-off date during the current fiscal year but an effective date
subsequent to the current fiscal year
Date ofapproval
June 21,2013

11

Resolution
Approvedby

Resolution
ApprovedbyAnnualgeneralmeeting ofshareholders

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

Type ofsharesCommonstock

Amount(Thousandsof Yen)499,131

Paid from
Retainedearnings

AmountPer share Shareholder’s(Yen)
cut-off date8

March 31,2013

Effective
date
June 24,2013

7.

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.....................................................................
8.

Millions of yen
March 31,20122013
¥5,754¥6,625(217)(220)¥5,537¥6,404

Fair Value of Financial Instruments(a)	‌The fair value and book value of financial instruments as of March 31, 2012 and March 31, 2013, otherthan items of which fair value are not practically available, are as follows:
Millions of yen
March 31, 2012
Book value
Fair value
Difference
Cash and deposits..............................................
5,754
¥
5,754
¥—
¥
Notes and accounts receivable........................
12,525
12,525
—
2,894
2,894
—
Investments in securities..................................
Total.............................................................
¥21,173¥
21,173¥—Notes and accounts payable.............................
Long-term debt...................................................
Total.............................................................

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

¥¥

15,7044,000
19,704

Book value
6,625
13,6193,740¥
23,984¥¥

15,7044,000
19,704¥——¥—Millions of yen
March 31, 2013
Fair value¥
6,625
13,6193,740¥
23,984

Difference
¥—
—
—
¥—

¥

Notes and accounts payable.............................
¥
19,598¥
19,598
¥—
4,000
4,000
—
Long-term debt...................................................
23,598¥
23,598¥—Total.............................................................
¥
13
¥
13
¥—
Derivative transactions.....................................
¥(1) Financial instruments for which it is extremely difficult to determine the fair value
Millions of yen
March 31, 2012
March 31, 2013
Book value
Book value
Non-listed shares *......................................................................................... ¥
1,052
¥
1,059
Membership deposit *...................................................................................
3,048
2,897
* ‌It is extremely difficult to determine the fair values thereof because neither market quoted prices areavailable nor future Cash Flows can be estimated.

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

12

(2) Redemption schedule for money claims and securities with maturities
Millions of yen
March 31, 2012
Due in 1 year orDue after 1 year
Due after 5 years
lessthrough 5 years
through 10 years
5,736
¥—
Cash and deposits................. ¥¥—Notes and accounts
receivable.............................
12,525——Investments in securities
Government bonds........
——
125
Corporate bonds............
——
100
Millions of yen
March 31, 2013
Due in 1 year orDue after 1 year
lessthrough 5 years
6,591
¥
1
Cash and deposits................. ¥
Notes and accounts
receivable.............................
13,619—Investments in securities
Government bonds........
——
Corporate bonds............
——
9.

Due after 10
years
¥—
—
15
—

Due after 5 years
through 10 years¥—

Due after 10
years
¥—

—

—

130
100

15
—

Repayment schedule for long-term debt after the closing date of accounting period.
Millions of yen
March 31, 2012
Due in 1 year or
lessLong-term debt... ¥—Due after 1 year Due after 2 years Due after 3 years Due after 4 years
through 2 years through 3 years through 4 years through 5 years
¥—

4,000

¥

¥—

¥—

Millions of yen
March 31, 2013
Due in 1 year or
lessLong-term debt... ¥—Due after 1 year Due after 2 years Due after 3 years Due after 4 years
through 2 years through 3 years through 4 years through 5 years
¥

4,000

¥—

¥—

¥—

10. 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, 2012 and 2013:
Millions of yen
March 31, 2012
Book value
Acquisition cost
Difference
Securities with book value exceedingacquisition cost:
1,353
¥
886
¥
467
Equity securities.......................................................
¥
Government bonds...................................................
118
115
3
50
50
0
Corporate bonds.......................................................
¥Sub-total................................................................
1,521
¥
1,051
¥
470
Securities with book value not exceedingacquisition cost:
Equity securities.......................................................
Government bonds...................................................
Corporate bonds.......................................................
Sub-total................................................................
Total...............................................................................

13

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

¥

¥
¥

1,310
13
49
1,373
2,894

¥

¥
¥

1,408
13
50
1,471
2,522

¥

¥
¥

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

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

¥

3,385
141
101
3,627

¥
¥
¥

113
113
3,740

¥

Millions of yen
March 31, 2013
Acquisition cost

Difference

¥

¥

¥

2,170
134
100
2,404

¥

1,215
7
1
1,223

¥
¥
¥

123
123
2,527

¥
¥
¥

(10)
(10)
1,213

(b)	‌Impairment losses of ¥8 million and ¥2 million were recorded to write down book value of investments insecurities for the years ended March 31, 2012 and 2013, respectively.
11. 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¥72

Millions of yen
March 31, 2013
Contract
over 1 year¥—Fair value¥

13

There were no applicable matters for the year ended March 31, 2012.
12. Reserve for Retirement Benefits to Employees(a)	‌E mployees 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, 2012 and 2013 is analyzed as follows:
Millions of yen
March 31,2012
2013
Projected benefit obligations.........................................................
(3,793)¥(3,671)
¥
2,774
2,598
Plan assets........................................................................................
Unfunded benefit obligations.........................................................
(1,019)(1,072)
Unrecognized actuarial differences...............................................
535
624
(61)
(53)
Unrecognized prior service cost....................................................
Total...................................................................................................
(545)
(501)
—
—
Prepaid pension costs.....................................................................
(545)
¥
(501)
¥
Reserve for retirement benefits to employees.............................

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

14

(c) The net periodic expenses related to retirement benefits for the fiscal year 2012 and 2013 are as follows:
Millions of yen
March 31,2012
2013
Service costs.....................................................................................
136
¥
127
¥
Interest costs....................................................................................
79
74
Expected return on plan assets.....................................................
(60)
(55)
Amortization of actuarial differences...........................................
60
36
Amortization of prior service cost.................................................
(8)(8)
Premium amount of payment to a defined by termination
45
46
allowance plan or defined-contribution pension plan.........
253
¥
221
¥
Retirement benefits expense..........................................................
(d) Assumptions used in calculation of the above information were as follows:
As of March 31,
2012
2013
Straight-line
Straight-line
basis
basis
2.0%
1.1%
2.0%
2.0%
10 years
10 years
10 years
10 years

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

13. 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 31,2012
2013
Deferred tax assets:
1,020
¥
1,014
Write-down of fixed assets.................................................................
¥
Allowance for doubtful accounts......................................................
831
829
Write-down of marketable securities................................................
400
401
Intercompany profits...........................................................................
293
269
Loss on valuation of real estate for sale...........................................
866
857
Operating loss carry forwards...........................................................
71
168
730
851
Other.....................................................................................................
Total gross deferred tax assets .................................................
4,211
4,389
(2,315)(2,227)
Valuation allowance.....................................................................
1,895
2,163
Deferred tax liabilities:
Reserve for advanced depreciation...................................................
(63)
(63)
(132)
(429)
Unrealized gain on other securities...................................................
—(5)
Deferred gains or losses on hedges...................................................
Total gross deferred tax liabilities.............................................
(195)
(497)
Net deferred tax assets................................................................

¥

1,701

¥

1,666

(b)	‌The reconciliation between the statutory tax rate and the effective tax rate as at March 31, 2012 and 2013is presented below:
As of March 31,
2012
2013
Statutory tax rate.....................................................................................
40.4%
37.8%
Permanent differences on expenses not deductible.......................
3.0
5.1
Permanent differences on income not taxable................................
(1.2)
(1.9)
Accrued bonuses to directors and statutory
auditors not deductible.....................................................................
1.3
1.9
Inhabitant taxes per capita.................................................................
2.1
3.4
Valuation allowance............................................................................
(36.4)(13.5)
Influence by effective tariff change...................................................
10.5—
Influence of future tax rate.................................................................
—
(1.6)
(1.0)
(0.6)
Other......................................................................................................
18.7%
30.6%
Effective tax rate..................................................................................
15

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

14. Segment Information(1)	‌The segment information of the Company and its subsidiaries for the year ended March 31, 2012 and2013 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, 2012 and2013 is presented below:
Millions of Yen
March 31, 2012
Golf
courses

HotelsAdvertising
agent

Total

¥50,440

¥274

¥399

¥1,239¥52,351¥—¥52,351

206

1

5

78

290

(290)

—

50,646¥1,010

275
¥4

404
¥15

1,317
¥37

52,641¥1,066(290)¥—52,351¥1,066

195

20

33

6

254

—

254

Construction

Reconciliations Consolidated

Ⅰ. Net sales and Operating income
Net sales
Customers
Intersegment ortransfer
Total
Operating income
Ⅱ. OtherDepreciation andamortization

Millions of Yen
March 31, 2013
Golf
courses

HotelsAdvertising
agent

Total

¥59,566

¥276

¥515

¥1,401¥61,759¥—¥61,759

0

2

4

90

96

(96)

—

59,567

278

519

1,491

61,855(96)

61,759

¥861

¥34

¥56

¥65

¥1,015¥—¥1,015

176

16

48

6

246

—

246

Construction

Reconciliations Consolidated

Ⅰ. Net sales and Operating income
Net sales
Customers
Intersegment ortransfer
Total
Operating income(loss)
Ⅱ. OtherDepreciation andamortization

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

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15. Per Share Data
Net assets per share and net income per share as of and for the year ended March 31, 2012 and 2013 are as
follows:
Yen
2012
2013
Net assets per share................................................................................
316.73¥
336.95¥Net income per share – primary............................................................
13.13
9.00
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............................

17

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

Millions of yen
2012
2013
900
¥
576
¥
900
¥
576
¥
68,552 thousand
63,947 thousand
sharessharesMillions of Yen
2012
2013
21,802¥
21,396
¥
510
424
510
424
21,291
20,972
67,223 thousand
62,240 thousand
sharessharesBOARD OF DIRECTORS, STATUTORY AUDITORSAND EXECUTIVE OFFICERS AS OF MARCH 31, 2013
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

		Yoshikatsu Yamazaki		Yoshikatsu Yamazaki *		Zentaro Ozawa

		Toshiro Maki

Outside Director		Yoshinori Uda

Managing Executive Officers
		Itsuo Takeuchi
		Zentaro Ozawa *Statutory Auditors

		Toshiaki Yamagishi

Permanent Auditor
		Noboru Takizawa

Executive Officers
		Kiyonori Nakashima

Outside Auditors

		Yoshito Iwasaki

		Toshiyuki Tsukada

		Masakatsu Kobayashi

		Yoshichika Owa

		Hirokuni Matsushita

		Kazumichi Hanyu

		Tsuneaki Yamada
		* : 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