CHIYODA CORPORATION
Financial Resultsfor Fiscal 2006 Third Quarter Ended December 31, 2006

This document has been prepared as a guide to non-Japanese investors and contains forwardlooking statements that are based on managements’ estimates, assumptions and projections at
the time of publication. A number of factors could cause actual results to differ materially fromexpectations. This document is a translation of excerpts taken from the Japanese language
original. All numbers are rounded down to the nearest unit in accordance with standard Japanesepractice. Please be advised that the Company cannot accept responsibility for investment
decisions made based on the information contained in this report.
1Summary of Financial Statements (Consolidated)
for Fiscal 2006 Third Quarter

Listed Exchanges
Head Office
Stock CodePresident & CEO
Inquiries
TelephoneTokyo
Kanagawa, Japan
6366
Nobuo Seki
Shinji Kusunoki, General Manager, Accounting Department+81-45-506-9410

1. Notes on presentation of nine-month operating results(1) Application of simple method: Yes(See Page 10)(2) Changes in accounting treatment from the most recent consolidated fiscal year: No(3) Changes in the scope of the consolidation and the application of the equity method: Yes(See Page 10)

2. Results of operations for the nine-month period ended December 2006
(April 1, 2006–December 31, 2006)
1) Consolidated Business Results
Millions of Yen
Apr. 1, 2006—
Dec. 31, 2006

Apr. 1, 2005 —Dec. 31, 2005

Change(%)

Revenues ..........................................
Operating Income .............................
Ordinary Income ..............................
Net Income .......................................
Net Income per Share (¥) .................
Fully Diluted Net Income per Share (¥) ...

334,417
21,03826,485
16,80287.41
87.31(Reference)
Apr. 1, 2005 —Mar. 31, 2006

Change
(%)

29.2
49.7
69.2
(0.4)

258,834
14,052
15,65016,877
88.18
87.70

41.8
99.5
108.8
124.5

390,875
20,72923,161
19,400101.27100.80Note: Percentage change figures are comparisons with the same period of the previous fiscal year.

2) Changes in Consolidated Financial Position
Millions of Yen
As ofDec. 31, 2006

As of
Dec. 31, 2005

(Reference)
As ofMar. 31, 2006

Total Assets ......................................................
Net Assets.........................................................
Net Worth Ratio ................................................

419,536
70,68916.8%

261,238
52,823
20.2%

279,72155,508
19.8%

Net Assets per Share(¥)....................................

365.70275.23288.882

3) Consolidated Cash FlowMillions of Yen(Reference)
Apr. 1, 2005 —Mar. 31, 2006

Apr. 1, 2006 —Dec. 31, 2006

Apr. 1, 2005 —Dec. 31, 2005

Net cash provided by operating activities..................

26,856

3,485

5,237

Net cash provided by(used in) investing activities ....

(2,429)

562

1,051

Net cash used in financing activities..........................
Cash and cash equivalents at end of period...............

(2,069)69,332(1,226)44,655(1,338)46,878

3. Consolidated Performance Forecast for the Year Ending March 31, 2007
Millions of Yen
Apr. 1, 2006 – Mar. 31, 2007
Revenues.............................................. ..........................................

460,000

Ordinary Income ...........................................................................

34,000Net Income ...................................................................................

21,000(Note) Projected net income per share for the year ending March 31, 2007

109.21yen

3Results of Operations and Financial Condition for FY2006 Third Quarter
1.

Consolidated Results of Operations

In the market environment for the Chiyoda Group during the nine months ended
December 31, 2006, in the overseas market for plants, natural gas producing countries andEnergy Majors continued to invest on a worldwide scale, including in the upstream sector,
reflecting growing demand for gas. In the domestic market, oil companies invested in
expansion of light oil production, and are also investing aggressively in petrochemical
facilities to maximize the added value of crude oil. The Chiyoda Group received a number ofcontracts related to these investments.
Currently, Chiyoda is executing three large-scale LNG projects and two gas processing
plant projects in Qatar. In November 2006, Chiyoda successfully completed the RasGas (II)LNG Plant (Train 5) in Qatar just 28 months after signing the contract.
Under these conditions, new contracts for the nine-month period on a consolidated basis
were 485,246 million yen, a 35.4% decrease compared to the same period of the previous
year, bringing the backlog of contracts to 1,129,744 million yen, an 8.8% increase over thesame period in the previous year. Revenues increased 29.2% to 334,417 million yen,ordinary income increased 69.2% percent to 26,485 million yen, and net income decreased
0.4% to 16,802 million yen.
2.

Financial Condition

Retained earnings increased 14,792 million yen compared to the end of the previous fiscal
year due to factors including net income for the nine-month period. As a result, net assets
totaled 70,689 million yen. However, the net worth ratio was down 3.0 points from the endof the previous fiscal year to 16.8%, mainly because total assets rose 139,815 million yen
due to increases in advance receipts on construction contracts, cash and time deposits andChiyoda’s share of jointly controlled assets of joint ventures, reflecting an increase in newcontracts.
Cash flow provided by operating activities was 26,856 million yen.
3.

Outlook for the Year Ending March 31, 2007

In view of recent performance trends and other factors, Chiyoda has revised its
performance forecast for the year ending March 31, 2007, replacing the forecast announced
on November 13, 2006, as follows.
(Millions of Yen)
Outlook for year
endingMarch 31, 2007
New contracts
Revenues
Operating income
Ordinary income
Net income

Revised forecast
530,000
460,000
27,00034,00021,000Consolidated
Previous forecast
announced on
November 13, 2006
400,000
420,000
25,00028,00016,500Difference
32.5 %
9.5 %8.0 %21.4 %
27.3 %

The forecast for new contracts has been revised upward against the backdrop of a strong
environment for orders.
The revenue forecast has been increased because Chiyoda adjusted its exchange rate
assumption to US$1=120 yen, as the yen has weakened from the rate of US$1=110 yen
assumed at the time of the previous announcement, and because of a higher-than-projected
increase in new contracts. Chiyoda also expects an increase in operating income due togrowth in revenues reflecting strong orders, and increases in ordinary income and net
income due to the increase in revenues as well as higher interest income reflecting an
increase in jointly controlled assets of joint venture.
4

In view of the upward revision of the performance forecast, Chiyoda plans to pay a yearend dividend of 15 yen per share, 1 yen higher than the previously announced forecast of 14
yen per share.
For reference:
Outlook for year
endingMarch 31, 2007
New contracts
Revenues
Operating income
Ordinary income
Net income(Millions of Yen)

Revised forecast
470,000
400,000
23,00030,00019,000Non-consolidated
Previous forecast
announced on
November 13, 2006
350,000
370,000
22,00025,00015,000Difference(%)
34.3 %
8.1 %
4.5 %20.0 %
26.7 %

Forward Looking Statements

The Chiyoda Group expects to smoothly implement ongoing projects. However, projectcompletions may be pushed back by delays in the delivery of equipment and materials
caused by shortages of supplies or shortages of construction workers. Regarding future
projects, any substantial increases in equipment and material prices and foreign exchange
rate movements may significantly affect the Group’s operating results.

5

[Appendix]

1. Summary Consolidated Balance Sheets
3Q FY2006
As of
Dec. 31, 2006%

Millions of Yen
3Q FY2005
As of
Dec. 31, 2005%

As ofMar. 31, 2006%

AssetsCurrent Assets
Cash and time deposits...............................
Notes and accounts receivable-trade ............
Costs of construction contracts in process .....
Deferred tax assets ....................................
Jointly controlled asset of joint venture.........
Other .......................................................
Allowance for doubtful accounts ...................
Total Current Assets ...............................
Fixed Assets
Property, plant and equipment
Intangible fixed assets................................
Investments and other assets
Investment securities .............................
Deferred tax assets ................................
Other ...................................................
Reserves ..............................................
Total investments and other assets ..............
Total Fixed Assets ...................................
Total Assets ............................................
Liabilities and Shareholders’ Equity
Current Liabilities
Notes and accounts payable-trade ...............
Current portion of long-term debt ...............
Income taxes payable.................................
Advance receipts on construction contracts ...
Reserves...................................................
Other ......................................................
Total Current Liabilities...........................

69,48744,80447,03339,45444,84946,97632,975
1,499
239,528

26,7004,079
111,084

17,923
1,750
131,336

12,492
(67)

9,978
(396)

11,769(167)

395,36994.2

241,101

92.3

256,623

7,403
3,195

7,151
2,909

7,085
3,168

7,569
2,814
3,734
(550)

4,971
746
6,134
(1,776)

5,701
4,157
4,718
(1,732)

13,567

10,076

91.7

12,844

24,166

5.8

20,137

7.7

23,097

8.3

419,536100.0

261,238100.0

279,721100.0

84,03571
7,161
226,824
4,557
10,316332,967

85,901
46
3,989
101,979
5,873
7,402

82,583
10,079405
95,202
4,270
8,822
79.4

201,36377.1

205,192

73.4

Non-Current Liabilities
Long-term debt .........................................
Liability for retirement benefits ....................
Other liabilities ..........................................
Total Non-Current Liabilities ...................

15,879

3.8

6,757

2.6

18,698

6.7

Total Liabilities .......................................

348,84683.2

208,12179.7

223,890

80.1

Minority Interests ...................................

—

—

294

0.1

322

0.1

—
—
—

—
—
—

12,8696,653
34,355

4.9
2.5
13.2

12,901
6,684
36,877

4.6
2.4
13.2

—
—
—

—
—
—

41
(539)
(557)

0.0
(0.2)
(0.2)

44
(323)
(676)

0.0
(0.1)
(0.3)

—

—

52,82320.2

55,50819.8——

261,238100.0

279,721100.0

Shareholders’ Equity
Common stock ..........................................
Additional paid-in capital.............................
Retained earnings ......................................
Net unrealized loss on available-for-salesecurities.................................................
Foreign currency translation adjustments......
Treasury stock...........................................
Total Shareholders’ Equity ......................
Liabilities, Minority Interests andShareholders’ Equity ............................

10,102
4,051
1,724

10,168
8,392
136

173
6,490
93

6

Summary of Consolidated Balance Sheets（continued）
3Q FY2006
As of
Dec. 31, 2006%

Millions of Yen
3Q FY2005
As of
Dec. 31, 2005%

As ofMar. 31, 2006%

Net Assets
Shareholders’ Equity
Common stock ..............................................
Additional paid-in capital ................................
Retained earnings..........................................
Treasury stock ..............................................
Total Shareholders’ Equity..........................
Valuation and Exchange Rate
Adjustments
Net unrealized loss on available-for-salesecurities ..................................................
Deferred hedging losses .................................
Foreign currency translation adjustments
Total valuation and exchange rateadjustments
Minority interests ..........................................
Total Net Assets .........................................
Total Liabilities and Net Assets...................

12,924

—

—

6,707

—
—

—
—

51,669(836)
70,464

—
16.8

62

—

—
—

—

(91)

—
—

—
—

(117)

—

—

(147)
371

—

(0.1)
0.1

—
—

—
—

—
—

—
—

70,689

16.8

—

—

—

—

419,536

100.0

—

—

—

—

7

2. Summary of Consolidated Statements of Income

Construction Contracts ...........................
Cost of Construction Contracts ...............
Gross profit ..............................................
Selling, General and
Administrative Expenses .....................
Operating income ......................................
Other Income
Interest .............................................
Dividend income .................................
Equity in earnings of associatedcompanies .......................................
Other ................................................
Total Other Income ................................

3Q FY2006
Apr. 1, 2006–
Dec. 31, 2006%

Millions of Yen
3Q FY2005
Apr. 1, 2005–
Dec. 31, 2005%

334,417305,173

100.0
91.3

258,834
237,682

100.0
91.8

390,875
360,322

100.0
92.2

29,243

8.7

21,151

8.2

30,552

7.8

8,204

2.4

7,098

2.8

9,823

2.5

21,038

6.3

14,052

5.4

20,7295.3

Apr. 1, 2005–
Mar. 31, 2006
%

5,755
36

1,660
18

2,638
29

243
379

101
293

193
420

6,415

1.9

2,074

0.8

3,280

0.8

Other Expenses
Interest expense .................................
Other.................................................
Total Other Expenses .............................

968

0.3

476

0.2

848

0.2

Ordinary income........................................

26,485

7.9

15,6506.0

23,161

5.9

Extraordinary Gain
Reversal of allowance for doubtful
accounts .........................................
Reversal of allowance for investment
loss ................................................
Other.................................................
Total Extraordinary Gain ........................
Extraordinary Loss
Loss on devaluation of investment
securities .....................................
Loss on termination of certain
retirement benefit plans.................
Settlement of construction contract
Other.................................................
Total Extraordinary Loss ........................
Profit before income
taxes and minority interests.....................
Total tax ..................................................
Minority interests in net income (loss)..........
Net income .............................................

237
730

302
546

224
251

716

1,105

1,367

263
124

—
47

—
223

1,104

0.3

1,153

0.4

1,590

14

95

—

—

—

—
3

—
14

1,995
469
381

0.4

18

0.0

109

0.0

2,845

0.7

27,571
10,722
47

8.2
3.2
(0.0)

16,693
(212)
28

6.4
(0.1)
(0.0)

21,906
2,467
39

5.6
0.6
(0.0)

16,8025.0

16,877

6.5

19,4005.0

8

3. Summary of Consolidated Statements of Cash Flow
3Q FY2006
Apr. 1, 2006–
Dec. 31, 2006
Cash Flow from Operating Activities
Profit before income
taxes and minority interests....................................
Depreciation and amortization ...................................
Decrease (increase) in trade notes and accounts
receivable.............................................................
Decrease (increase) in costs of construction contracts
in process.............................................................
Increase in trade notes and accounts payable ..............
Increase in advance receipts on construction contracts .
Increase in jonitly controlled assets of joint ventures ....
Other......................................................................
Subtotal ........................................................................
Interest and dividend income.....................................
Interest paid............................................................
Settlement of construction contract paid......................
Income taxes paid ....................................................
Net Cash Provided by Operating Activities...................
Cash Flow from Investing Activities
Proceeds from refunds of time deposits withmaturities.............................................................
Purchase of fixed assets ............................................
Payment for purchase of investment securties..............
Payment for purchase of consolidated subsisdiarystock....................................................................
Long-term loans .......................................................
Proceeds from collections of long-term loans ...............
Other......................................................................
Net Cash (Used in) Provided by Investing Activities....
Cash Flow from Financing Activities
Proceeds from long-term debt........... ................... ....
Repayments of long-term debt ..................................
Proceeds from new stock issue...................................
Cash dividends paid..................................................
Cash dividends paid to minority shareholders...............
Other .....................................................................
Net Cash Used in Financing Activities . ................... ....
Foreign Currency Translation Adjustments on Cashand Cash Equivalents ................................................
Net Increase in Cash and Cash Equivalents .................
Cash and Cash Equivalents at Beginning of Period ......
Decrease in Cash and Cash Equivalents due to
Elimination From Consolidation ...............................
Cash and Cash Equivalents at End of Period ................

Millions of Yen
3Q FY2005
Apr. 1, 2005–
Dec. 31, 2005

Apr. 1, 2005–
Mar. 31, 2006

27,571

16,693

21,906

1,154

1,076

1,468

7,534

(7,101)(9,100)(15,054)(1,696)

7,095(1,674)
124,831(108,191)(3,437)8,134
50,751(61,130)(2,081)

11,12257,479(81,382)(2,424)32,734
231
(239)

4,646
270
(223)

(469)
(5,401)—(1,207)

6,163
321
(303)
―

26,856

3,485

5,237

—
(1,388)(1,682)674(1,320)(623)

703(1,854)(1,272)

—
(15)
596
59

(121)
(33)
1,934
51

(121)
(33)
3,340
289

(2,429)

562

1,051

—
(41)
45
(1,914)
—
(160)

—
(63)
294
(1,139)(19)(298)

10,000(10,101)357(1,139)(36)(2,069)(1,226)(1,338)

(944)

(417)

163

240

333

22,52046,8783,061
41,594

5,284
41,594(66)—―

69,33244,65546,8789

4. Basis of Presenting the Consolidated Financial Statements for the

Nine-month Period Ended December 2006 (April 1, 2006–December 31, 2006)(1) Matters concerning significant accounting policies
The Company applies the simple method for the calculation of certain items while assuring compliance with theStandards for Preparation of Quarterly Financial Statements and avoiding material misrepresentation of informationthat would affect the judgment of interested parties, including investors.
Scope of application of the simple method
The Company calculates its tax liabilities on the basis of the estimated annual tax rate, calculated by the simple
method using the effective tax rate. The Company also uses the simple method for calculating certain expense
items.
(2) Recognition of significant reserves
The following reserves are included in the summary (consolidated nine-month) balance sheets:
3Q FY 2006
As of Dec. 31, 2006

3Q FY 2005
As of Dec. 31, 2005
Millionsof YenFixed assets
Allowance for doubtful
accounts

Current liabilities
Indemnity allowancefor completed
construction
Accrued bonuses
Allowance forinvestment loss
Long-term liabilities
Liability for retirement
benefits
Liability for retirement
benefits to directors

(550)

1,496
3,050
10

3,599
451

As of Mar.31,2006
Millionsof YenFixed assets
Allowance for doubtful
accounts
Allowance for capital
loss on investments
Current liabilities
Indemnity allowancefor completed
construction
Accrued bonuses
Allowance forinvestment loss
Long-term liabilities
Liability for retirement
benefits
Liability for retirement
benefits to directors(1,513)
(263)

2,065
2,068
135

6,093
396

Millionsof YenFixed assets
Allowance for doubtful
accounts
Allowance for capital
loss on investments
Current liabilities
Indemnity allowancefor completed
construction
Accrued bonuses
Allowance forinvestment loss
Long-term liabilities
Liability for retirement
benefits
Liability for retirement
benefits to directors(1,469)
(263)

1,870
3,856
146

7,962
430

(3) Change in the scope of consolidation
Beginning with the third quarter of the current fiscal year, PT Asian Engineering Contractors Indonesia is no longer
included in the scope of consolidation because this company does not have a material impact on the consolidated
financial statements.
(4) Other significant accounting policies
The Company has engaged Deloitte Touche Tohmatsu as its advisor on matters concerning the disclosure ofquarterly financial information.

10

5. Production, Orders and Sales Situation (Consolidated)

New contracts%

Millions of Yen
3Q FY2006
Apr. 1, 2006 —Dec. 31, 2006
Revenues%

71,960296,950
482

14.8
61.2
0.1

244,309
17,156
1,251

73.1
5.1
0.4

692,852
311,868
1,840

61.3
27.6
0.2

70,721
17,715
13,1898,898
479,918

14.6
3.7
2.7
1.8
98.9

46,452
11,6574,808
3,453
329,089

13.9
3.5
1.4
1.0
98.4

80,20025,37010,084
7,527
1,129,744

7.1
2.2
0.9
0.7
100.0

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

5,328

1.1

5,328

1.6

—

—

Domestic ...........................
Overseas ...........................
Total ................................

133,937
351,308
485,246

27.6
72.4
100.0

65,648
268,769
334,417

19.6
80.4
100.0

165,139
964,604
1,129,744

14.6
85.4
100.0

Business Segment
Engineering
LNG plant ..........................
Gas and power utilities ........
Gas chemicals ....................
Petroleum andpetrochemicals ................
General chemicals ...............
Industrial machinery............
Environment and other........
Total Engineering

New contracts%

Millions of Yen
3Q FY2005
Apr. 1, 2005 —Dec. 31, 2005
Revenues%

Backlog%

Backlog%Business Segment
Engineering
LNG plant ..........................
Gas and power utilities ........
Gas chemicals ....................
Petroleum andpetrochemicals ................
General chemicals ...............
Industrial machinery............
Environment and other........
Total Engineering

647,525
13,357
459

86.2
1.8
0.0

143,965
37,308
7,069

55.6
14.4
2.7

905,065
45,702
3,422

87.1
4.4
0.3

62,224
13,583
5,018
5,445
747,614

8.3
1.8
0.7
0.7
99.5

40,344
18,973
2,662
5,001
255,326

15.6
7.3
1.0
2.0
98.6

57,482
18,407
5,214
3,465
1,038,760

5.6
1.8
0.5
0.3
100.0

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

3,507

0.5

3,507

1.4

—

—

Domestic ...........................
Overseas ...........................
Total ................................

89,312661,809751,122

11.9
88.1
100.0

69,100189,733
258,834

26.7
73.3
100.0

110,301
928,459
1,038,760

10.6
89.4
100.0

11

New contracts%

Millions of Yen
FY2005
Apr. 1, 2005 —Mar. 31, 2006
Revenues%

Backlog%Business Segment
Engineering
LNG plant ..........................
Gas and power utilities ........
Gas chemicals ....................
Petroleum andpetrochemicals ................
General chemicals ...............
Industrial machinery............
Environment and other........
Total Engineering ............

675,208
16,848
515

83.9
2.1
0.1

230,227
54,278
7,952

58.9
13.9
2.0

846,92232,070
2,606

88.2
3.3
0.3

73,32819,9906,483
7,134
799,509

9.1
2.5
0.8
0.9
99.4

53,73324,2987,602
8,061
386,153

13.8
6.2
1.9
2.1
98.8

55,624
19,477
1,738
2,098
960,538

5.8
2.0
0.2
0.2
100.0

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

4,721

0.6

4,721

1.2

―

―

Domestic ...........................
Overseas ...........................
Total ................................

112,720
691,510804,231

14.0
86.0
100.0

105,329
285,545
390,875

26.9
73.1
100.0

97,484
863,054
960,538

10.1
89.9
100.0

(Note) The amount of the backlog as of the end of the nine-month period is adjusted for any decreases in contract
amounts due to changes in contracts and increases due to adjustments in contracts booked before theprevious fiscal year and the effect of foreign currency translation adjustments on foreign currencydenominated contracts.

12