Minatomirai Grand Central Tower
4-6-2, Minatomirai, Nishi-ku,
Yokohama 220-8765, Japan
Tel: (81)45-225-7777 (voice guidance)
http://www.chiyoda-corp.com/en/
CORPORATE PHILOSOPHY
Enhance our business in aiming for harmony
between energy and the environment,
and contribute to the sustainable development of
a society as an integrated engineering company
through the use of our collective wisdom and
painstakingly developed technology.
ANNUAL REPORT FY2011
For the year ended March 31, 2012
Profile
Since its establishment in 1948, Chiyoda Corporation has engaged
in engineering and construction work and services at innumerable
industrial plants both in Japan and overseas in the fields of oil,
natural gas and other energy sources; petrochemicals and chemicals;
pharmaceuticals; and general industrial machinery.
Forty years ago in 1972, Chiyoda’s founder was already
emphasizing in a booklet entitled Legacy for the Twenty-first Century
that sustainable social development should progress by harmonizing
nature and industrial development.
We were one of the first companies to state our intention to
contribute to sustainable social development through our engineering
and technology by providing appropriate solutions to the various
energy and environmental issues we currently face, and have been
putting those words into action ever since. This booklet is available on
our website.
With over 60 years of technological experience, Chiyoda is working
to build on its position as the “Reliability No. 1” project company
with a high level of customer and investor trust, not only in terms of
technology but also in terms of our people and management. At the
same time, we will continue to improve our financial strength and to
raise our corporate value.
Financial Highlights
Years Ended March 31, 2012, 2011, 2010, 2009 and 2008
For the Year (Millions of Yen)
Revenues
Cost of revenue
Operating income
Income before income taxes
and minority interests
Net income
At Year-End (Millions of Yen)
Total assets
Total equity
Current ratio (%)
Per Common Share (Yen )
Earnings per share (EPS)
Book value per share (BPS)
Dividends per share
Ratios (%)
Return on assets (ROA)
Return on equity (ROE)
2012
2011
2010
2009
2008
¥254,675
¥247,082
¥312,985
¥446,438
¥603,559
215,783
24,197
23,543
14,364
215,563
17,544
11,476
7,979
298,766
427,461
1,702
4,714
2,953
7,227
9,651
6,498
583,035
8,839
18,991
9,640
¥365,795
¥353,392
¥328,174
¥357,816
¥378,819
168,737
165.5
155,758
173.8
¥55.44
648.95
17.0
6.6
8.9
¥30.79
599.15
11.0
4.6
5.3
149,253
175.2
¥11.39
573.61
3.5
1.4
2.0
145,917
161.1
¥25.58
561.12
7.5
3.1
5.7
81,637
115.0
¥50.15
422.24
10.0
4.7
12.2
Note: Yen amounts are rounded down to the nearest million. U.S. dollar amounts and percentages are rounded to the nearest unit.
Revenues
Billions of yen
Billions of yen
Billions of yen
Operating Income
Billions of yen
Billions of yen
Billions of yen
Contents
01 Financial Highlights
02 At a Glance
03 To Our Stakeholders
04 Management’s Discussion and Analysis
06 Topics
08 Corporate Governance
10 Corporate Information
800
800
800
700
700
700
600
600
600
500
500
500
400
400
400
300
300
300
200
200
200
100
100
100
0
0
0
603.6
603.6
603.6
446.4
446.4
446.4
313.0
313.0
313.0
247.1
247.1
247.1
254.7
254.7
254.7
30
30
30
25
25
25
20
20
20
15
15
15
10
10
10
8.8
8.8
8.8
7.2
7.2
7.2
2008
2008
2008
2009
2009
2009
2010
2010
2010
2011
2011
2011
2012
2012
2012
5
5
5
0
0
0
Net Income
Billions of yen
Billions of yen
Billions of yen
30
30
30
20
20
20
24.2
24.2
24.2
17.5
17.5
17.5
14.4
14.4
14.4
9.6
9.6
9.6
10
10
10
6.5
6.5
6.5
8.0
8.0
8.0
3.0
3.0
3.0
1.7
1.7
1.7
2008
2008
2008
2009
2009
2009
2010
2010
2010
2011
2011
2011
2012
2012
2012
0
0
0
2008
2008
2008
2009
2009
2009
2010
2010
2010
2011
2011
2011
2012
2012
2012
12 Board of Directors, Corporate Auditors and Executive Officers
13 Stock Information
Courtesy of Mizushima LNG Co., Ltd.
Forward-Looking Statements: This annual report contains forward-looking statements about Chiyoda Corporation’s outlooks, plans, forecasts, results and other items that may take
place in the future. Such statements are based on data available as of July 1, 2012. Unknown risks and other uncertainties that happen in the future may cause our actual results to be
different from the forward-looking statements contained in this report. The risks and uncertainties include business and economic conditions, competitive pressure, changes in laws and
regulations, addition or elimination of products, and exchange rate fluctuation, among others.
CHIYODA CORPORATION ANNUAL REPORT FY2011
1
At a Glance
To Our Stakeholders
Revenues
New Orders
Backlog of Contracts
(Billions of yen)
16
21
36
19
254.7
Billion yen
LNG
8
14
8
68
5
13
14
65
612.5
Billion yen
840.9
Billion yen
91.9 (36%)
417.7 (68%)
548.6 (65%)
Gas Processing*1
48.3 (19%)
46.3 (8%)
117.8 (14%)
Fine Industries*2
53.6 (21%)
86.6 (14%)
108.8 (13%)
Petroleum and Petrochemicals
40.7 (16%)
47.8 (8%)
45.1 (5%)
Others
20.1 (8%)
14.1 (2%)
20.7 (2%)
EPC* / EPCm** Execution
FEED*** / Feasibility Study
Overseas Projects under Execution
Yamal
Russia / LNG
Al Jubail Export Refinery
Saudi Arabia / Oil Refinery
Industrial Wastewater Treatment
Saudi Arabia / Water Recycling
Map Ta Phut Industrial Complex
Thailand / Energy Saving
Nickel Refining Plant
Philippines / Material
Arzew
Algeria/LNG
*3
*4
*5
*6
*7
Plateau Maintenance Project
Qatar / LNG
Long Term Service Agreement
( RasGas / Qatargas )
Qatar / LNG
Stolthaven
Singapore/ Tank terminal
Shell Bukom
Singapore/Refinery
Infenium
Singapore/Chemical
Tokuyama Phase-1/2
Malaysia / Renewable Energy Material
Bintulu Tr.9
Malaysia / LNG
Puerto La Cruz
Venezuela / Oil Refinery
PNG LNG
Papua New Guinea / LNG
Ichthys LNG
Australia / LNG
Browse LNG
Australia /LNG
Arrow LNG
Australia / LNG
: Engineering, Procurement and Construction
EPC*
EPCm** : Engineering, Procurement and Construction management
FEED*** : Front-end Engineering and Design
Takashi Kubota
President & CEO
Chiyoda Corporation
Thank you for your continued support over
term business plan entitled “Engineering
this past fiscal year.
Excellence, Value Creation 2012,” and one year
I would like to present the Chiyoda
has passed since we implemented the plan’s
Group’s annual report for the fiscal year ended
various measures that form the foundation
March 31, 2012.
for future growth. In the years ahead, we
In the fiscal year under review, the
will bring these measures to a successful
Chiyoda Group leveraged its long experience
conclusion and the entire Chiyoda Group
in large-scale LNG plant projects and put it to
management team and staff will work eagerly
use in ongoing projects in Papua New Guinea
to further raise corporate value.
and Australia. In this way, the Group was able
We paid a dividend of ¥17 per share, in
to exceed its initial earnings target thanks to
line with our earnings for fiscal 2011. I ask
the steady execution of construction projects
all of our shareholders for their continued
and strong efforts made to win new orders.
support in our ongoing efforts.
Despite continuing uncertainties
such as the impact of the Great East Japan
Earthquake and the appreciating Japanese
yen, demand for energy and resources has
been firm and large investments are moving
forward. Against this backdrop, we received
our largest ever LNG plant order and a new
energy-related plant order for Southeast Asia.
We are now in the third year of our medium-
Takashi Kubota
President & CEO
Chiyoda Corporation
*1: Classified as “Gas and power utilities” in “Consolidated Financial Results” *2: Classified as “Industrial machinery” and “General chemicals” in “Consolidated Financial Results”
*3: Courtesy of Qatargas Operating Company Limited *4: Courtesy of Shell *5: Courtesy of Solar Frontier K.K. *6: Courtesy of Kashima Aromatics Co., Ltd. *7: Water Treatment Plant
2
CHIYODA CORPORATION ANNUAL REPORT FY2011
CHIYODA CORPORATION ANNUAL REPORT FY2011
3
Management’s Discussion and Analysis
Results of Operations
Analysis of Results
During the fiscal year under review, although energy demand remained solid in some parts of the world, notably
in emerging economies, the impact of the European debt crisis became more widespread toward the second
half of the year. In Japan, recovery and reconstruction of production and supply systems following the Great East
Japan Earthquake got underway, but the pace of economic recovery remained modest.
Growing demand stemming from the shift away from oil to gas resulted in a surge in planned investment,
and the strong yen encouraged Japanese manufacturing companies to expand their operations overseas.
Faced with these conditions, we placed particular focus on bidding activities, making the most of our
technological superiority in the market. We concluded contracts for Engineering, Procurement, and Construction
(EPC) work for an LNG plant in Australia, and for the second-stage of polycrystalline silicon EPC work in Malaysia.
At the same time, we made sure to execute the projects under construction steadily, including the LNG plant
project in Papua New Guinea, and we also sought to improve operating income primarily by reviewing the cost
for completed works during the warranty period.
As a result, consolidated new contracts for the fiscal year under review amounted to 612,530 million yen
(160.4% increase year on year). The consolidated contract backlog was 840,943 million yen (69.0% increase).
Consolidated revenues amounted to 254,675 million yen (3.1% increase), while operating income amounted to
24,197 million yen (37.9% increase), ordinary income amounted to 23,793 million yen (51.2% increase), and net
income for the period amounted to 14,364 million yen (80.0% increase).
LNG Plants/Gas and Power Utilities
Results by Business Segment
The Group is currently executing 3 Front End Engineering and Design (FEED) works for projects in Australia and
we have been awarded the EPC work for one of them, the value of which is one of the largest in the company's
history. We were also awarded a contract for the basic design works for an LNG plant in Malaysia jointly with
Saipem S.p.A., the company we concluded a cooperation agreement with to develop onshore LNG and upstream
projects. While the Group completed EPC work for feed gas preparation in Qatar, the Group’s subsidiary in
Qatar also won a new long-term service contract, undertaking renovation and repair work for the LNG and
gas processing plants that were originally constructed by the Chiyoda Group, and providing Engineering,
Procurement, and Construction management (EPCm) services for helium extraction facilities.
In Japan, the Group undertook marketing activities to receive new orders for LNG receiving terminals, and
was awarded a new contract for the construction of an LNG receiving terminal. We also proceeded steadily with
backlog projects, including the construction of several LNG receiving terminals.
Petroleum, Petrochemicals and Gas Chemicals
Overseas, the Group brought resources to bear on planned investment projects in petroleum refineries and other
ventures in the Middle East and Southeast Asia. We steadily executed EPC work for heavy oil cracking unit in Saudi
Arabia and EPCm works for petroleum refineries in Singapore. The Group also received orders for the delivery of
furnaces for a petroleum refinery in Iraq and Engineering, Procurement support, and Construction management
(EPsCm) services for heavy crude oil upgrading facilities for a petroleum refinery in Venezuela. Also in the
petrochemical field, we met the needs of the growing Asian market, receiving orders for EPCm services in Thailand
and EPC services in Singapore.
In Japan, the Group successfully completed the partial replacement of an atmospheric distillation tower
by applying a unique construction method patented by the Group, as well as construction work at benzene
extraction facilities. We also made a concerted effort to quickly restore facilities that had been damaged by
the Great East Japan Earthquake. In addition, we were awarded several contracts aimed at improving the
competitiveness and energy saving of petroleum refineries.
Industrial Machinery/Environment/General Chemicals and Other Fields
In new business fields, the Group steadily executed works such as EPC work for polycrystalline silicon plant in
Malaysia, the product of which is used for photovoltaic cell, and a nickel refinery in the Philippines. We were also
awarded a contract for EPC work for the second-stage of the polycrystalline silicon plant to follow the first stage
EPC work under execution by our Group in Malaysia. In Japan, we completed and delivered the expansion work
for a nonferrous metals plant and manufacturing plants for highly-functional batteries. Since more and more
Japanese companies are entering the Southeast Asian markets to benefit from the strong yen and the economic
growth in Asia, the Group has been reinforcing efforts to meet the needs of those companies. We entered into a
cooperation agreement for concentrated solar power (CSP) generation with leading Italian manufacturer of solar
receiver tubes, a key component for next-generation CSP generation (solar thermodynamic plants using molten
salt parabolic trough technology) and have subsequently started to construct a pilot plant in Italy.
In the pharmaceutical field, the Group steadily executed EPC work for the manufacturing facilities of highly
bioactive pharmaceuticals, such as anti-cancer drugs. We were also awarded a contract for EPC work for a bulk
vaccine plant and pharmaceutical formulation plant.
For infrastructure projects overseas, the Group started a project to investigate energy savings in a large
industrial complex in Thailand, in addition to a feasibility study of an integrated wastewater treatment project for
a large industrial complex in Saudi Arabia. In relation to the social infrastructure business, the Group participated
in the Study on a Masterplan for Establishing a Metropolitan Priority Area for Investment and Industry in the
Jabodetabek Area in Indonesia. In addition, we plan to start looking into similar study projects in other ASEAN
member countries.
Major contracts included in the consolidated results for the period
Overseas
▲ LNG plant in Papua New Guinea
▲ First-stage of polycrystalline silicon plant in Malaysia
▲ Feed gas preparation work for Qatar Pearl GTL*
▲ Heavy crude oil cracking unit in Saudi Arabia
Domestic
▲ Naoetsu LNG receiving terminal for INPEX Corporation
▲ Liquefied petroleum gas underground storage terminal for Japan Oil, Gas and Metals National Corporation
▲ Joetsu LNG receiving terminal for Chubu Electric Power Co. Inc
▲ CIS Solar Cell Factory No. 3 for Solar Frontier K.K.*
▲ Reconstruction of ground facilities damaged by Great East Japan Earthquake at Kuji National Oil Storage Base for Japan
Underground Oil Storage Co., Ltd.
* : Projects completed during the period.
Outlook for the Next Fiscal Year
Chiyoda will continue to promote its sales activities and win contracts in the areas where Chiyoda can best leverage its
technological advantages. We will also continue to work diligently on the execution of existing projects including the large
project in Papua New Guinea and other projects overseas and domestic.
In consideration of these circumstances, and assuming an exchange rate of ¥80/dollar, our forecasts for the fiscal year
ending March 31, 2013 include 350.0 billion yen in new consolidated contracts and 430.0 billion yen in revenues. Our
forecast for the consolidated operating income is 22.5 billion yen, consolidated ordinary income is 23.0 billion yen,
and the consolidated net income is 15.0 billion yen.
4
CHIYODA CORPORATION ANNUAL REPORT FY2011
CHIYODA CORPORATION ANNUAL REPORT FY2011
5
Topics
JKC Joint Venture Awarded Contract for Ichthys LNG Project
Chiyoda Collaborates with Three Overseas Companies
in Non Hydrocarbon and Other Fields
A contract signing ceremony was held on February
9, 2012 for the Engineering, Procurement and
Construction (EPC) of the Ichthys LNG Project. The
project involves the liquefaction of natural gas
produced from the Ichthys gas-condensate field,
located in offshore Western Australia, which will
then be transferred to the onshore LNG plant with
storage, shipping, and other related facilities to be
built in Darwin in the Northern Territory of Australia.
The LNG plant will produce and ship 8.4 million
tonnes of LNG and 1.6 million tonnes of LPG per
annum. The EPC contract was awarded to a joint venture (JKC JV) formed by JGC Corporation, KBR
Inc. of the United States, and Chiyoda Corporation. The total value of the EPC contract is the largest
ever in Chiyoda Corporation’s history.
To diversify and further develop its business, Chiyoda Corporation entered into
collaboration agreements with Saipem S.p.A. and Archimede Solar Energy (ASE)
in June 2011 and with CTCI Corporation in August 2011.
Chiyoda and Saipem will collaborate as an integrated joint venture on
onshore LNG and upstream projects and expand business in strategic markets by
combining the expertise and technologies developed by both companies.
Chiyoda and ASE will collaborate on developing the business of next-
generation concentrated solar power (CSP) generation. By combining the
technology for producing solar receiver tubes that only ASE can provide, with the
Contract signing ceremony
project management experience in the Middle East of Chiyoda, we will create
Pilot plant light-gathering equipment (Sicily, Italy)
(Photo courtesy of ASE and ENEL SpA)
business opportunities using a technology and business solutions-based approach in the Middle East, North Africa, and
Italy, areas suitable for CSP generation due to their large amounts of solar radiation.
Chiyoda and CTCI will cooperate in various fields throughout the world including infrastructure, new energy,
environmental technology, and industrial facilities by sharing each other’s technological expertise and human resources
A unique and challenging aspect of the Ichthys LNG Project is the fully modularised
in the field of non hydrocarbon projects. In addition, on August 17, 2011, Chiyoda acquired approximately 10% of the
construction strategy, which serves to minimize onshore construction activities at the construction
total issued shares of CTCI to help solidify this partnership and will work to raise the corporate value of two companies.
site in Darwin. This will require the high-level engineering, schedule control and project
management skills of the JKC JV. This is a long-term five-year project and we are fully committed to
its on-time completion.
*Saipem S.p.A. (Italy) is a global engineering company that provides engineering, procurement, construction (EPC), and project management services for onshore and offshore projects.
*ASE (Italy) is the only worldwide producer of commercially-available solar receiver tubes for the key components of solar thermodynamic plants run with parabolic trough technology,
which uses sodium and potassium nitrate (molten salts) as their heat transfer fluid.
*CTCI (Taiwan) is the largest engineering company in Taiwan and provides EPC services for various industrial facilities throughout the world.
Chiyoda Awarded EPC Contract for the Second-Stage of
Polycrystalline Silicon Plant by Tokuyama Group
Relocation and Integration of
Headquarters at Yokohama Minato Mirai
Chiyoda Corporation and Chiyoda Group company, Chiyoda
Sarawak Sdn. Bhd.1, have been jointly awarded a contract
to provide the Engineering, Procurement, and Construction
work for the second-stage of a polycrystalline silicon plant
for Tokuyama Malaysia Sdn. Bhd. 2
The project involves the construction of a plant (annual
production: 13,800 tons) for producing polycrystalline silicon,
the raw material for photovoltaic cells. Chiyoda Corporation
and Chiyoda Sarawak will work concurrently with the EPC for
the first-stage of the polycrystalline silicon plant, awarded in
2010.
Tokuyama Corporation’s president Kogo and Chiyoda Corporation’s president
Kubota painting in the eye of a daruma doll
To improve work efficiency, our head office functions, which had been
dispersed between the Tsurumi, Koyasu, and Kawasaki offices, were integrated
in June 2012 as our new global headquarters at Minato Mirai Grand Central
Tower. The R&D Center and Group companies will continue to use the Koyasu
Office and Research Park. All executives and employees will strive to raise
work efficiency and will carry out their duties at the new consolidated office.
1. Chiyoda Sarawak Sdn. Bhd. (located in Sarawak, Malaysia) is a wholly owned subsidiary of Chiyoda Corporation.
2. Tokuyama Malaysia Sdn. Bhd. (located in Sarawak, Malaysia) is a wholly owned subsidiary of Tokuyama Corporation.
Chiyoda Global Headguarters
Minato Mirai Grand Central Tower
6
CHIYODA CORPORATION ANNUAL REPORT FY2011
CHIYODA CORPORATION ANNUAL REPORT FY2011
7
Corporate Governance
The Chiyoda Group recognizes that management focuses on corporate social responsibility (CSR) that inspires the
support and trust of shareholders, customers, employees, and other stakeholders. We believe that this is a foundation of
our corporate activities. As such, we work toward sustainable long-term qualitative growth, continuing to improve our
management basics, and ensuring management soundness and transparency. We have identified improved corporate
governance and stronger internal controls structure as important issues for our company. We are working to make real
progress in these areas.
The following paragraphs describe the current status of corporate governance at the Chiyoda Group:
Corporate Governance System
Overview and Rationale for Adoption of Corporate Governance System
The Chiyoda Group’s corporate governance system includes a board of directors, corporate auditors/corporate
audit committee, external auditors, and a system of internal controls. We adopted a system of executive officers
who are responsible for the execution of business operations. Executive officers are functionally separate from
Corporate Governance and Internal Controls
Election
Submit/Report
Report
Election
Report
General Shareholders’ Meeting
Directors
Board of Directors
Election
Supervision
Election
Submit/Report
Executive Officers
Executive Officer Meeting
4 Representative Directors
Executive Committee
Scheduled Reports
(deliverables, etc.)
Organization Staffing
Submit/Report
Audit
Audit Referral
(advice)
Report
Department Internal Controls
Group
Companies
Business Execution Departments
(Risk Manager)
Self-Assessment
Global Operation Unit
Corporate Planning Unit
Corporate Services Unit, HRM* Unit
Finance & Project Audit Unit
*HRM: Human Resource Management
Corporate Auditors
Audit Committee
Survey, Report Request
Internal Controls Management Committee
Operational Auditing Unit
SQE Risk Management Unit
CSR Unit
Crisis Manager
Election
Accounting
Auditor
Report
c
o
n
t
r
o
l
f
u
n
c
t
i
o
n
s
)
(
d
e
p
a
r
t
m
e
n
t
s
w
i
t
h
i
n
t
e
r
n
a
l
Financial
Audit
External Directors and Outside Corporate Auditors
Status of Internal Auditing and Auditing by Corporate Auditors
directors, who are responsible for management supervisory functions. Executive officers regularly report the
The Company employs three outside corporate auditors, and does not elect external directors.
status of business operation execution in a (monthly) executive committee meeting that is also attended by the
The names of outside corporate auditors and the Company’s rationale for selecting them (including the
directors.
rationale for designation as independent directors of Hiroshi Ida and Yukihiro Imadegawa, both on file with the
The Board of Directors (meeting monthly) is made up of nine directors, four of whom are representative
directors. The Board of Directors oversees executive officers in their execution of business operations, ensuring
that decisions related to important matters to the Company are rationally and efficiently carried out. The Board
delegates a portion of its authority to the Executive Committee to ensure that decisions related to the execution
of business operations are implemented quickly in order to respond appropriately to rapidly changing social and
economic conditions.
The Executive Committee is made up of four representative directors who make decisions delegated to
them with respect to the execution of business operations. In addition, the Executive Committee also performs
preliminary deliberations regarding matters to be brought before the Board of Directors for resolution.
The Chiyoda Group employs three corporate auditors, all of whom are outside corporate auditors, and two of
whom serve on a full-time basis. Corporate auditors are responsible for auditing the state of execution of director
duties. Of the outside corporate auditors, two are independent auditors, and one corporate auditor is extensively
versed in finance and accounting.
Status of Internal Controls System
The Company has structured and is operating the following system of internal controls for the purpose of
operational effectiveness/efficiency, financial reporting reliability, legal compliance, and asset preservation,
according to the unique nature and characteristics of our business.
Internal Controls Management Committee
The Company has established an Internal Controls Management Committee to improve our systems of internal controls.
The director over the Operational Auditing Unit serves as the committee chair, and heads of departments related to internal
controls serve as committee members.
The Internal Controls Management Committee receives referrals from the Executive Committee to exchange
information and coordinate with each department to determine whether operations are appropriately and efficiently carried
out under an adequate system of internal controls. At the end of the fiscal period (or as deemed necessary), the Internal
Controls Management Committee offers advice regarding internal controls improvement to the Executive Committee.
The Executive Committee takes advice from the Internal Controls Management Committee under consideration,
submitting proposed internal controls improvements to the Board of Directors for decision.
8
CHIYODA CORPORATION ANNUAL REPORT FY2011
Tokyo Stock Exchange as independent directors) are as follows.
Name
Hiroshi Ida
Munehiko Nakano
Yukihiro Imadegawa
Rationale for Election as Outside Corporate Auditor
The individual is able to contribute to the sound management of the Company through neutral and objective audits based on his
experience as a former executive officer with Mitsubishi UFJ Trust and Banking Corporation.
The individual is not involved in any matters that conflict with the interests of general Company shareholders, and is recognized as
an outside corporate auditor having no conflict of interest with general Company shareholders.
The individual is able to contribute to the sound management of the Company through neutral and objective audits based on his
experience as a former corporate auditor with Lawson, Inc. and a finance and accounting executive with Mitsubishi Corporation.
The individual is able to contribute to the sound management of the Company through neutral and objective audits based on his
expertise in corporate law as an attorney.
The individual is not involved in any matters that conflict with the interests of general Company shareholders, and is recognized as
an outside corporate auditor having no conflict of interest with general Company shareholders.
There are no particular relationships of interest between Company and outside corporate auditors.
Rationale for Adoption of Current System
The Board of Directors supervises the performance of executive officers and determines important matters
concerning the Company. The Company employs three corporate auditors, all of whom are outside corporate
auditors. This leads to a stronger monitoring function over management. The Company employs dedicated
staff to assist corporate auditors in their duties, and has set in place a system for coordination between external
auditors and corporate auditors and between corporate auditors and the Operational Auditing Unit. This system
of coordination ensures the viability of audits. Having three outside corporate auditors participating in audits as in
the current system ensures that management oversight functions in a fully objective and neutral fashion.
Director Compensation, Etc.
Total Compensation for Each Director Category; Total Compensation by Director
Type, and Number of Directors in Question
Incentive
Compensation
Stock-Based
Compensation
Base
Compensation
Number
Directors
Corporate Auditors
9
4
¥184 million
¥64 million
¥51 million
¥ 77 million
-
-
Notes:
1. Total director compensation is ¥300 million. Total corporate
auditor compensation is ¥77 million. Total outside corporate
auditor (three individuals) compensation is ¥55 million.
2. The number of directors above discloses the number of
directors and corporate auditors receiving compensation
during the fiscal period, including one director who retired
as of the 83rd General Shareholders’ Meeting held June 23,
2011.
CHIYODA CORPORATION ANNUAL REPORT FY2011
9
Corporate Information (As of March 31, 2012)
Corporate Data
Chiyoda Global Headquarters
Minatomirai Grand Central Tower
4-6-2, Minatomirai, Nishi-ku, Yokohama 220-8765, Japan
Tel: (81)45-225-7777 (voice guidance)
Number of Employees
1,361 (Non-Consolidated)
4,530 (Consolidated)
Annual Fiscal Close
March 31
Shareholders’ Meeting
June
Established
January 20, 1948
Paid-in Capital
¥ 43,396 million
Organization Chart
(As of July 1, 2012)
Corporate Planning, Management &
Finance Division
Corporate Planning Unit
IR & Public Relations Sec.
Corporate Services Unit
HRM*2 Unit
Finance & Project Audit Unit
Legal Sec.
Executive Office Unit
Board of Directors
Corporate Auditors Committee
Executive Committee
President
CSR Unit
BPM*1 Team
SQE Risk Management Unit
Operational Auditing Unit
Work Process Innovation Task Team
Global Project Management Division
Gas & LNG Project Operations
Project Administration Unit
Project Management Unit
IT Management Unit
Global Operation Unit
International Gas & LNG Project Unit
Strategic Project Development Unit
Project Team
Business Development Division
Technology & Engineering Division
Strategic Business Planning &
Administration Unit
Corporate Relations Sec.
Business Development Unit 1
Business Development Unit 2
Business Development Unit 3
*1 BPM: Business Process Management
*2 HRM: Human Resource Management
*3 GPM-A: Global Project Management-Asia
10
CHIYODA CORPORATION ANNUAL REPORT FY2011
Technology Planning &
Administration Unit
Research Institute of Technology
Innovation & Strategy
Engineering Operation Unit
Gas & LNG Process Engineering Unit
Refinery, Petrochemical & New Energy
Process Engineering Unit
P&ID and Utility Engineering Unit
Integrity Management Unit
Mechanical Engineering Unit
Control System Engineering Unit
Electrical System &
Smart Grid Engineering Unit
Piping Engineering Unit
Civil Engineering Unit
Project Logistics & Construction Division
PLC Planning & Administration Unit
Procurement &
Logistics Management Unit
Construction Unit
Commissioning Unit
Downstream & Non Hydrocarbon
Project Operations
Oil & Petrochemical Project Unit
Gas & Storage Project Unit
International Downstream &
Non-Hydrocarbon Project Unit
Project Team
GPM-A*3
Infrastructure Project Operations
IP Planning & Administration Unit
Strategic Business &
Investment Management Unit
Technology Development Unit
Research & Development Center
Green Infrastructure Project Unit
Pharmaceutical &
Environmental Project Unit
ChAS Project Operations
Global Network
Chiyoda’s global network enables Project Lifecycle Engineering to be offered all over the world. Chiyoda has expanded
its network in order to provide prompt support for customers’ business activities on a global scale. Our services cover the
entire life cycles of projects – from project planning, engineering, procurement and construction through to operation
and maintenance. With a view to meeting the ever-changing needs of our customers, we offer services by utilizing local
offices and group companies with thorough knowledge of the latest local and global circumstances in countries around
the world.
Chiyoda's Global Network
Sales Base
Engineering Center
Procurement Center
Project Execution Base
Milan Representative Office
The Hague Representative Office
Chiyoda & Public Works Co., Ltd.
Beijing Office
Chiyoda International Corporation
Chiyoda Corporation (Shanghai)
Korea Representative Office
The Netherlands
Italy
Saudi Arabia
Qatar
UAE
India
China
Myanmar
Thailand
Malaysia
Korea
Japan
USA
Philippines
Chiyoda Philippines Corporation
Singapore
Indonesia
Australia
Chiyoda Oceania Pty Limited
Brazil
Jakarta Office
PT. Chiyoda International Indonesia
Singapore Human Resources Office
Chiyoda Singapore (Pte) Limited
Chiyoda Malaysia Sdn. Bhd.
Chiyoda Sarawak Sdn. Bhd.
Chiyoda (Thailand) Limited
Chiyoda do Brasil Representações Ltda.
L&T-Chiyoda Limited
Abu Dhabi Office
Middle East Headquarters Doha Office
Chiyoda Almana Engineering LLC
Chiyoda Petrostar Ltd.
CHIYODA CORPORATION ANNUAL REPORT FY2011
11
Board of Directors, Corporate Auditors
and Executive Officers (As of July 1, 2012)
Board of Directors
Representative Directors / Members of Executive Committee
Directors
President & CEO
Takashi Kubota
Senior Vice President
Kazuo Obokata
Senior Executive Vice
President
Executive Vice
President & CFO
Executive Vice
President
Yoichi Kanno
Senior Vice President
Shogo Shibuya
Masahito Kawashima
Senior Vice President
Ryosuke Shimizu*1
Hiroshi Ogawa
Senior Vice President
Katsuo Nagasaka*1
Director
Kazushi Okawa
Corporate Auditors
Hiroshi Ida*2
Munehiko Nakano*1/*2
Yukihiro Imadegawa*2
Executive Officers
Executive Vice
President
Satoru Yokoi
Vice President
Kenji Hotta
Senior Vice President
Masahiko Kojima
Vice President
Eisaku Yamashita
Senior Vice President
Kenjiro Miura
Vice President
Nobuyuki Uchida
Senior Vice President
Takao Kamiji
Vice President
Mamoru Nakano
Senior Vice President
Hiromi Koshizuka
Vice President
Mitsuya Ogawa
Senior Vice President
Katsutoshi Kimura
Vice President
Noriyuki Kasuya
Senior Vice President
Tadashi Izawa*1
Vice President
Seiichiro Ikeda
Senior Vice President
Sumio Nakashima
Senior Vice President
Koichi Shirakawa
*1 : New Assignments
*2 : Outside Corporate Auditor
Stock Information
Authorized Shares
650,000,000
Number of Shareholders
12,668
Capital Stock Issued
260,324,529
Number of Share per Unit
1,000
Major Shareholders
Mitsubishi Corporation
The Master Trust Bank of Japan, Ltd. (Trust Account)
Japan Trustee Services Bank, Ltd. (Trust Account)
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
The Mitsubishi UFJ Trust and Banking Corporation
Morgan Stanley & Co. LLC
JP Morgan Securities Japan Co., Ltd.
Tokio Marine & Nichido Fire Insurance Co., Ltd.
The Bank of New York, Treaty Jasdec Account
State Street Bank and Trust Company 505225
Breakdown by shareholder
Stock Code
ISIN:
SEDOL1: 6191704 JP
TSE:
6366
JP3528600004
Transfer Agent of Common Stock
Mitsubishi UFJ Trust and Banking Corporation
1-4-5 Marunouchi, Chiyoda-ku, Tokyo
Number
of Shares Owned
(Thousands of Shares)
86,931
15,184
9,236
9,033
8,032
4,908
2,878
2,759
2,735
2,663
Ratio
Shares Owned
(%)
33.39
5.83
3.54
3.47
3.08
1.88
1.10
1.06
1.05
1.02
Total Number of
Shares Issued:
260,325
thousand
10.25
24.37
23.42
3.64
38.30
Financial Institutions
Securities Companies
Other Corporations
Foreign Investors and Others
Individuals and Others
Monthly Stock Price Range on the Tokyo Stock Exchange
(Yen)
3,600
2,400
1,200
0
Share Price (left)
Volume (right)
Nikkei Stock Average (right)
(Yen)
24,000
16,000
8,000
(Thousands
of shares)
160,000
80,000
12
CHIYODA CORPORATION ANNUAL REPORT FY2011
CHIYODA CORPORATION ANNUAL REPORT FY2011
13
4 5 6 7 8 9 101112
2007
1 2 3
4 5 6 7 8 9 101112
1 2 3
4 5 6 7 8 9 101112
1 2 3
4 5 6 7 8 9 101112
1 2 3
4
5 6 7 8 9 101112
2008
2009
2010
2011
0
1 2 3
4
2012
Minatomirai Grand Central Tower
4-6-2, Minatomirai, Nishi-ku,
Yokohama 220-8765, Japan
Tel: (81)45-225-7777 (voice guidance)
http://www.chiyoda-corp.com/en/
CORPORATE PHILOSOPHY
Enhance our business in aiming for harmony
between energy and the environment,
and contribute to the sustainable development of
a society as an integrated engineering company
through the use of our collective wisdom and
painstakingly developed technology.
ANNUAL REPORT FY2011
For the year ended March 31, 2012
Minatomirai Grand Central Tower
4-6-2, Minatomirai, Nishi-ku,
Yokohama 220-8765, Japan
Tel: (81)45-225-7777 (voice guidance)
http://www.chiyoda-corp.com/en/
CORPORATE PHILOSOPHY
Enhance our business in aiming for harmony
between energy and the environment,
and contribute to the sustainable development of
a society as an integrated engineering company
through the use of our collective wisdom and
painstakingly developed technology.
Consolidated Financial Statements
For the Year Ended March 31, 2012, and Independent Auditor's Report
Chiyoda Corporation and Consolidated Subsidiaries
Consolidated Balance Sheet
Chiyoda Corporation and Consolidated Subsidiaries
Consolidated Balance Sheet
March 31, 2012
Consolidated Balance Sheet
March 31, 2012
ASSETS
ASSETS
Millions of Yen
2012
2011
Thousands of
U.S. Dollars
Millions of Yen
(Note 1)
2012
2011
2012
Thousands of
U.S. Dollars
(Note 1)
2012
LIABILITIES AND EQUITY
LIABILITIES AND EQUITY
Millions of Yen
2012
2011
Thousands of
U.S. Dollars
(Note 1)
Millions of Yen
2012
2011
2012
(March 31, 2012)
Thousands of
U.S. Dollars
(Note 1)
2012
122,027
$
1,051,362
933,330
14,174
75,354
3,525
6,929
2,012
153,328
2,362,044
¥ 10,006
86,211
76,533
1,162
6,179
289
568
165
12,572
193,687
¥
13
97,417
62,571
5,986
4,541
1,190
1,057
¥
¥ 10,006
122,027
$
86,211
1,051,362
76,533
933,330
1,162
14,174
6,179
75,354
289
3,525
568
6,929
165
2,012
12,572
153,328
13
97,417
62,571
5,986
4,541
1,190
1,057
9,109
9,109
181,887
193,687
2,362,044
181,887
204
2,486
123
59
496
10,220
2,809
131
224
2,361
204
2,486
123
59
496
2,492
30,321
1,501
725
6,052
10,220
2,809
131
224
2,361
2,492
30,321
1,501
725
6,052
CURRENT ASSETS:
Cash and cash equivalents (Note 13)
Short-term investments (Note 13)
Notes and accounts receivable—trade (Note 13)
Allowance for doubtful accounts
Costs and estimated earnings on long-term construction
CURRENT ASSETS:
Cash and cash equivalents (Note 13)
Short-term investments (Note 13)
Notes and accounts receivable—trade (Note 13)
Allowance for doubtful accounts
Costs and estimated earnings on long-term construction
contracts (Notes 3 and 13)
contracts (Notes 3 and 13)
Costs of construction contracts in process
Accounts receivable—other
Jointly controlled assets of joint venture (Note 13)
Deferred tax assets (Note 9)
Prepaid expenses and other
Costs of construction contracts in process
Accounts receivable—other
Jointly controlled assets of joint venture (Note 13)
Deferred tax assets (Note 9)
Prepaid expenses and other
¥ 173,769
307
30,051
(6 )
¥ 130,618
¥ 173,769
79
307
41,539
30,051
(3)
(6 )
$ 2,119,137
¥ 130,618
3,753
79
366,485
41,539
(77)
(3)
13,788
13,419
7,282
65,794
12,987
3,083
14,493
12,648
7,284
88,662
18,644
2,229
13,788
13,419
7,282
65,794
12,987
3,083
168,151
163,646
88,812
802,367
158,388
37,604
14,493
12,648
7,284
88,662
18,644
2,229
Total current assets
Total current assets
320,478
316,196
320,478
3,908,268
316,196
PROPERTY, PLANT, AND EQUIPMENT:
Land
Buildings and structures
Machinery and equipment
Tools, furniture, and fixtures
Construction in progress
PROPERTY, PLANT, AND EQUIPMENT:
Land
Buildings and structures
Machinery and equipment
Tools, furniture, and fixtures
Construction in progress
Total
Total
Accumulated depreciation
Accumulated depreciation
12,736
16,072
1,220
5,201
109
35,340
(16,339 )
11,938
12,736
15,926
16,072
1,270
1,220
5,358
5,201
5
109
34,500
35,340
(15,479)
(16,339 )
155,325
196,005
14,889
63,429
1,334
430,985
(199,264)
11,938
15,926
1,270
5,358
5
34,500
(15,479)
168,151
163,646
88,812
802,367
158,388
37,604
3,908,268
155,325
196,005
14,889
63,429
1,334
430,985
(199,264)
CURRENT LIABILITIES:
Current portion of long-term debt (Notes 6, 12 and 13)
Notes and accounts payable—trade (Note 13)
Advance receipts on construction contracts
CURRENT LIABILITIES:
Current portion of long-term debt (Notes 6, 12 and 13)
$ 2,119,137
Notes and accounts payable—trade (Note 13)
3,753
Advance receipts on construction contracts
366,485
(77)
Deposits received
Allowance for warranty costs for completed works
Allowance for losses on construction contracts
Asset retirement obligations
Accrued expenses and other
Deposits received
Allowance for warranty costs for completed works
Allowance for losses on construction contracts
Asset retirement obligations
Accrued expenses and other
Income taxes payable (Note 13)
Income taxes payable (Note 13)
Total current liabilities
Total current liabilities
NONCURRENT LIABILITIES:
Long-term debt (Notes 6, 12 and 13)
Liability for retirement benefits (Note 7)
Provision for treatment of PCB waste
Asset retirement obligations
Other liabilities (Note 9)
NONCURRENT LIABILITIES:
Long-term debt (Notes 6, 12 and 13)
Liability for retirement benefits (Note 7)
Provision for treatment of PCB waste
Asset retirement obligations
Other liabilities (Note 9)
Total noncurrent liabilities
Total noncurrent liabilities
3,369
15,746
3,369
41,094
15,746
41,094
COMMITMENTS AND CONTINGENT LIABILITIES
COMMITMENTS AND CONTINGENT LIABILITIES
Net property, plant, and equipment
Net property, plant, and equipment
19,001
19,021
19,001
231,720
19,021
231,720
(Notes 6, 11, 14 and 15)
(Notes 6, 11, 14 and 15)
INVESTMENTS AND OTHER ASSETS:
Investment securities (Notes 4 and 13)
Investments in and advances to unconsolidated
subsidiaries and associated companies (Note 5)
INVESTMENTS AND OTHER ASSETS:
Investment securities (Notes 4 and 13)
Investments in and advances to unconsolidated
subsidiaries and associated companies (Note 5)
Software
Software
Deferred tax assets (Note 9)
Deferred tax assets (Note 9)
Other assets
Other assets
Allowance for doubtful accounts
Allowance for doubtful accounts
15,527
5,813
15,527
189,363
5,813
2,668
3,215
2,204
2,789
(88 )
2,704
2,831
3,948
2,964
(87)
2,668
3,215
2,204
2,789
(88 )
32,543
39,208
26,882
34,015
(1,085)
2,704
2,831
3,948
2,964
(87)
Total investments and other assets
Total investments and other assets
26,316
18,174
26,316
320,928
18,174
TOTAL
TOTAL
¥ 365,795
See notes to consolidated financial statements.
See notes to consolidated financial statements.
¥ 353,392
¥ 365,795
$ 4,460,917
¥ 353,392
EQUITY (Notes 8 and 18):
Common stock—authorized, 570,000 thousand shares;
issued, 260,324 thousand shares in 2012 and 2011
EQUITY (Notes 8 and 18):
Common stock—authorized, 570,000 thousand shares;
issued, 260,324 thousand shares in 2012 and 2011
189,363
43,396
43,396
43,396
529,224
43,396
529,224
Preferred stock—authorized, 80,000 thousand shares in 2012 and 2011
Preferred stock—authorized, 80,000 thousand shares in 2012 and 2011
Capital surplus
Capital surplus
Retained earnings
Retained earnings
Treasury stock—at cost, 1,260 thousand shares in 2012 and
Treasury stock—at cost, 1,260 thousand shares in 2012 and
37,112
89,346
1,223 thousand shares in 2011
1,223 thousand shares in 2011
Accumulated other comprehensive income (loss):
Accumulated other comprehensive income (loss):
32,543
39,208
26,882
34,015
(1,085)
37,112
77,832
37,112
89,346
452,593
1,089,597
37,112
77,832
452,593
1,089,597
(1,328)
(1,295)
(1,328)
(16,199)
(1,295)
(16,199)
320,928
Unrealized gain (loss) on available-for-sale securities
Deferred gain on derivatives under hedge accounting
Foreign currency translation adjustments
Unrealized gain (loss) on available-for-sale securities
Deferred gain on derivatives under hedge accounting
Foreign currency translation adjustments
Total
Minority interests
Total
Minority interests
Total equity
Total equity
$ 4,460,917
TOTAL
TOTAL
- 2 -
- 2 -
1,509
442
(2,358)
168,120
617
168,737
¥ 365,795
(229)
345
(1,919)
155,242
516
1,509
442
(2,358)
168,120
617
(229)
18,402
345
5,391
(1,919)
(28,763)
155,242
2,050,247
516
7,531
155,758
168,737
2,057,778
155,758
¥ 353,392
¥ 365,795
$ 4,460,917
¥ 353,392
18,402
5,391
(28,763)
2,050,247
7,531
2,057,778
$ 4,460,917
1
Consolidated Financial Statements
Consolidated Financial Statements
2
Consolidated Statement of Income
Chiyoda Corporation and Consolidated Subsidiaries
Consolidated Statement of Comprehensive Income
Chiyoda Corporation and Consolidated Subsidiaries
Consolidated Statement of Income
Year Ended March 31, 2012
(Year Ended March 31, 2012)
Millions of Yen
2012
2011
Thousands of
U.S. Dollars
(Note 1)
2012
Consolidated Statement of Comprehensive Income
Year Ended March 31, 2012
(Year Ended March 31, 2012)
Millions of Yen
2012
2011
Thousands of
U.S. Dollars
(Note 1)
2012
REVENUE (Note 3)
¥ 254,675
¥ 247,082
$ 3,105,798
NET INCOME BEFORE MINORITY INTERESTS
¥ 14,515
¥ 7,947
$ 177,022
COST OF REVENUE (Note 3)
215,783
215,563
2,631,512
Gross profit
38,891
31,519
474,286
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES
(Note 10)
14,693
13,974
179,191
OTHER COMPREHENSIVE INCOME (Note 16):
Unrealized gain (loss) on available-for-sale securities
Deferred gain on derivatives under hedge accounting
Foreign currency translation adjustments
Share of other comprehensive loss of associates
accounted for using equity method
1,738
97
(361)
(332 )
501
(511 )
21,198
1,183
(4,407)
(105)
(103 )
(1,285)
Operating income
24,197
17,544
295,095
Total other comprehensive income
1,368
(445 )
16,689
COMPREHENSIVE INCOME (Note 16)
¥ 15,884
¥ 7,502
$ 193,711
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO
(Note 16):
Owners of the parent
Minority interests
¥ 15,761
123
¥ 7,545
(42 )
$ 192,210
1,501
See notes to consolidated financial statements.
OTHER INCOME (EXPENSES):
Interest and dividend income
Interest expense
Equity in earnings of associated companies
Foreign exchange loss
Loss on valuation of investment securities
Insurance premiums refunded cancellation
Office integration costs (Note 11)
Loss on adjustment for changes of accounting standard
for asset retirement obligations
Other—net
Other expenses—net
1,230
(207)
72
(1,243)
(250)
(255)
(654)
1,078
(256 )
104
(2,882 )
109
(4,218 )
(146 )
142
(6,068 )
15,000
(2,531)
887
(15,167)
(3,049)
(3,119)
(7,978)
INCOME BEFORE INCOME TAXES AND MINORITY
INTERESTS
23,543
11,476
287,116
INCOME TAXES (Note 9):
Current
Deferred
Total income taxes
NET INCOME BEFORE MINORITY INTERESTS
MINORITY INTERESTS IN NET INCOME
2,310
6,717
9,027
14,515
151
9,194
(5,665 )
3,529
7,947
28,173
81,920
110,094
177,022
(32 )
1,845
NET INCOME
Chiyoda Corporation and Consolidated Subsidiaries
¥ 14,364
¥
7,979
$
175,176
Consolidated Statement of Income
Year Ended March 31, 2012
Yen
U.S. Dollars
2012
2011
2012
PER SHARE OF COMMON STOCK (Notes 2.u and 17):
Basic net income
Cash dividends applicable to the year
- 3 -
¥ 55.44
17.00
¥ 30.79
11.00
(Continued)
$ 0.68
0.21
- 5 -
See notes to consolidated financial statements.
3
Consolidated Financial Statements
Consolidated Financial Statements
4
- 4 -
(Concluded)
Chiyoda Corporation and Consolidated Subsidiaries
Consolidated Statement of Changes in Equity
Chiyoda Corporation and Consolidated Subsidiaries
Consolidated Statement of Changes in Equity
Year Ended March 31, 2012
Consolidated Statement of Changes in Equity
Year Ended March 31, 2012
Thousands
Outstanding
Number of
Shares of
Common
Stock
Thousands
Outstanding
Number of
Shares of
Common
Stock
Capital
Surplus
Common
Stock
Common
Stock
Retained
Earnings
Capital
Surplus
Treasury
Stock
Millions of Yen
Millions of Yen
Accumulated Other Comprehensive Income
Unrealized
Deferred
Foreign
(Loss) Gain
Gain (Loss)
Currency
on Available-
on Derivatives
Treasury
for-Sale
under Hedge
Translation
Stock
Adjustments
Securities
Accounting
Accumulated Other Comprehensive Income
Deferred
Gain (Loss)
on Derivatives
under Hedge
Total
Accounting
Unrealized
(Loss) Gain
on Available-
for-Sale
Securities
Foreign
Currency
Translation
Adjustments
Retained
Earnings
Minority
Interests
(Year Ended March 31, 2012)
Total
Equity
Total
Minority
Interests
Total
Equity
BALANCE, APRIL 1, 2010
BALANCE, APRIL 1, 2010
259,207
¥ 43,396
259,207
¥ 37,112
¥ 43,396
¥ 70,759
¥ 37,112
¥ (1,215)
¥ 70,759
¥ 102
¥ (1,215)
¥ (156)
¥ 102
¥ (1,315 )
¥ (156)
¥ 148,683
¥ (1,315 )
¥ 569
¥ 148,683
¥ 149,253
¥ 569
¥ 149,253
Net income
Cash dividends, ¥3.50 per share
Purchase of treasury stock
Net change in the year
Net income
Cash dividends, ¥3.50 per share
Purchase of treasury stock
Net change in the year
(105 )
7,979
(907)
(105 )
(79)
7,979
(907)
(332)
(79)
501
(332)
(604 )
501
7,979
(907)
(79)
(434)
(604 )
(52)
7,979
(907)
(79)
(434)
7,979
(907)
(79)
(486)
(52)
7,979
(907)
(79)
(486)
BALANCE, MARCH 31, 2011
BALANCE, MARCH 31, 2011
259,102
43,396
259,102
37,112
43,396
77,832
37,112
(1,295)
77,832
(229)
(1,295)
345
(229)
(1,919 )
345
155,242
(1,919 )
516
155,242
155,758
516
155,758
Net income
Cash dividends, ¥11.00 per share
Purchase of treasury stock
Net change in the year
Net income
Cash dividends, ¥11.00 per share
Purchase of treasury stock
Net change in the year
(37 )
14,364
(2,850)
(37 )
(32)
14,364
(2,850)
1,738
(32)
97
1,738
(438 )
14,364
(2,850)
(32)
1,396
97
(438 )
100
14,364
14,364
(2,850)
(2,850)
(32)
(32)
1,396
1,497
100
14,364
(2,850)
(32)
1,497
BALANCE, MARCH 31, 2012
BALANCE, MARCH 31, 2012
259,065
¥ 43,396
259,065
¥ 37,112
¥ 43,396
¥ 89,346
¥ 37,112
¥ (1,328)
¥ 89,346
¥ 1,509
¥ (1,328)
¥ 442
¥ 1,509
¥ (2,358 )
¥ 442
¥ 168,120
¥ (2,358 )
¥ 617
¥ 168,120
¥ 168,737
¥ 617
¥ 168,737
Thousands of U.S. Dollars (Note 1)
Thousands of U.S. Dollars (Note 1)
Common
Stock
Capital
Surplus
Common
Stock
Retained
Earnings
Capital
Surplus
Treasury
Stock
Accumulated Other Comprehensive Income
Unrealized
Deferred
(Loss) Gain on
Gain (Loss)
Foreign
Currency
Available-
on Derivatives
Treasury
Translation
for-Sale
under Hedge
Stock
Securities
Accounting
Adjustments
Accumulated Other Comprehensive Income
Deferred
Gain (Loss)
on Derivatives
under Hedge
Accounting
Total
Unrealized
(Loss) Gain on
Available-
for-Sale
Securities
Foreign
Currency
Translation
Adjustments
Retained
Earnings
Minority
Interests
Total
Equity
Total
Minority
Interests
Total
Equity
BALANCE, MARCH 31, 2011
BALANCE, MARCH 31, 2011
$ 529,224
$ 452,593
$ 529,224
$
949,177
$ 452,593
$ (15,797)
$
949,177
$ (2,796)
$ (15,797)
$ 4,208
$ (2,796)
$ (23,414 )
$ 4,208
$ 1,893,196
$ (23,414 )
$ 6,302
$ 1,893,196
$ 1,899,498
$ 6,302
$ 1,899,498
Net income
Cash dividends, $0.13 per share
Purchase of treasury stock
Net change in the year
Net income
Cash dividends, $0.13 per share
Purchase of treasury stock
Net change in the year
175,176
(34,757)
(401)
175,176
(34,757)
21,198
(401)
1,183
21,198
(5,348 )
175,176
(34,757)
(401)
17,033
1,183
(5,348 )
1,228
175,176
(34,757)
(401)
17,033
175,176
(34,757)
(401)
18,261
1,228
175,176
(34,757)
(401)
18,261
BALANCE, MARCH 31, 2012
BALANCE, MARCH 31, 2012
$ 529,224
$ 452,593
$ 529,224
$ 1,089,597
$ 452,593
$ (16,199)
$ 1,089,597
$ 18,402
$ (16,199)
$ 5,391
$ 18,402
$ (28,763 )
$ 5,391
$ 2,050,247
$ (28,763 )
$ 7,531
$ 2,050,247
$ 2,057,778
$ 7,531
$ 2,057,778
See notes to consolidated financial statements.
See notes to consolidated financial statements.
- 6 -
- 6 -
5
Consolidated Financial Statements
Consolidated Financial Statements
6
Chiyoda Corporation and Consolidated Subsidiaries
Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows
Year Ended March 31, 2012
Chiyoda Corporation and Consolidated Subsidiaries
Consolidated Statement of Cash Flows
Year Ended March 31, 2012
Millions of Yen
2012
2011
Thousands of
U.S. Dollars
(Note 1)
2012
(Year Ended March 31, 2012)
Millions of Yen
2012
2011
Thousands of
U.S. Dollars
(Note 1)
2012
OPERATING ACTIVITIES:
Income before income taxes and minority interests
¥ 23,543
¥ 11,476
$ 287,116
Net cash provided by (used in) operating activities—(Forward)
¥ 55,615
¥
(5,229 ) $
678,235
Adjustments for:
Income taxes paid
Depreciation and amortization
Allowance for (reversal of) doubtful accounts—net
Reversal of warranty costs for completed works
Reversal of loss on construction contracts
Liability for retirement benefits—net
Foreign exchange loss—net
Equity in earnings of associated companies
Office integration costs
Changes in operating assets and liabilities:
Decrease (increase) in trade notes and accounts receivable,
and costs and estimated earnings on long-term
construction contracts
Increase in costs of construction contracts in process
(Decrease) increase in trade notes and accounts payable
Increase in advance receipts on construction contracts
Decrease (increase) in accounts receivable—other
Decrease (increase) in jointly controlled assets of joint
venture
Increase in deposits received
Increase in interest and dividend receivable
Other—net
Total adjustments
(10,820 )
2,637
4
(894 )
(489 )
(320 )
22
(72 )
(7,887 )
2,566
(245 )
(3,271 )
(3,367 )
505
169
(104 )
4,218
(131,959)
32,162
57
(10,904)
(5,965)
(3,911)
270
(887)
11,946
(796 )
(11,102 )
14,236
3,678
(4,821 )
(5,330 )
8,035
14,225
(2,231 )
145,691
(9,710)
(135,391)
173,618
44,863
22,776
1,640
(544 )
169
32,071
(18,744 )
45
(562 )
94
(16,706 )
277,760
20,000
(6,637)
2,062
391,118
Net cash provided by (used in) operating activities—
(Forward)
¥ 55,615
¥ (5,229 ) $ 678,235
INVESTING ACTIVITIES:
Net increase in time deposits
Purchases of property, plant, and equipment
Proceeds from sales of property, plant, and equipment
Purchases of intangible assets
Payments for purchases of investment securities
Purchases of investments in subsidiaries
Payments of short-term loans receivable
Payments of long-term loans receivable
Proceeds from collections of long-term loans
Other—net
(234)
(1,618)
1,725
(1,380)
(7,561)
(57)
(85)
71
(26 )
(930 )
4
(713 )
(974 )
(24 )
81
7
(2,862)
(19,735)
21,036
(16,831)
(92,209)
(704)
(1,040)
873
Net cash used in investing activities
(9,140)
(2,577 )
(111,473)
FINANCING ACTIVITIES:
Proceeds from long-term debt
Repayments of long-term debt
Payments of cash dividends
Payments of cash dividends to minority shareholders
Other—net
10,208
(10,004 )
(906 )
(9 )
(93 )
(2,844)
(7)
(47)
(34,684)
(93)
(576)
Net cash used in financing activities
(2,899)
(805 )
(35,353)
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS ON
CASH AND CASH EQUIVALENTS
(424)
(647 )
(5,173)
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS
43,151
(9,260 )
526,234
INCREASE IN CASH AND CASH EQUIVALENTS FROM
NEWLY CONSOLIDATED SUBSIDIARY
87
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
130,618
139,790
1,592,903
CASH AND CASH EQUIVALENTS, END OF YEAR
¥ 173,769
¥ 130,618
$ 2,119,137
See notes to consolidated financial statements.
- 7 -
(Continued)
- 8 -
(Concluded)
7
Consolidated Financial Statements
Consolidated Financial Statements
8
Chiyoda Corporation and Consolidated Subsidiaries
Notes to Consolidated Financial Statements
Notes to Consolidated Financial Statements
Year Ended March 31, 2012
1. BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements have been prepared in accordance with the provisions set forth
in the Japanese Financial Instruments and Exchange Act and its related accounting regulations and in conformity
with accounting principles generally accepted in Japan ("Japanese GAAP"), which are different in certain respects
as to the application and disclosure requirements of International Financial Reporting Standards.
In preparing these consolidated financial statements, certain reclassifications and rearrangements have been made to
the consolidated financial statements issued domestically in order to present them in a form which is more familiar
to readers outside Japan. In addition, certain reclassifications and rearrangements have been made in the 2011
consolidated financial statements to conform to the classifications used in 2012.
The consolidated financial statements are stated in Japanese yen, the currency of the country in which Chiyoda
Corporation (the "Company") is incorporated and principally operates. The translations of Japanese yen amounts
into U.S. dollar amounts are included solely for the convenience of readers outside Japan and have been made at the
rate of ¥82 to $1, the approximate rate of exchange at March 31, 2012. Such translations should not be construed as
representations that the Japanese yen amounts could be converted into U.S. dollars at that or any other rate.
Japanese yen figures less than a million yen are rounded down to the nearest million yen, except for per-share data.
U.S. dollar figures less than a thousand U.S. dollars are rounded down to the nearest thousand U.S. dollars, except
for per-share data.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Consolidation—The consolidated financial statements for the year ended March 31, 2012 include the accounts
of the Company and its 21 significant (20 in 2011) subsidiaries (together, the "Group").
Under the control or influence concept, those companies in which the Company, directly or indirectly, is able
to exercise control over operations are fully consolidated and those companies over which the Group has the
ability to exercise significant influence are accounted for by the equity method.
Investments in two associated companies are accounted for by the equity method in 2012 and 2011.
Investments in the remaining unconsolidated subsidiaries and associated companies are stated at cost. If the
equity method of accounting had been applied to the investments in these companies, the effect on the
accompanying consolidated financial statements would not be material.
The excess of the cost of the Company's investments in consolidated subsidiaries and associated companies
over the fair value of the net assets of an acquired subsidiary at the date of acquisition is being amortized over
a period of 20 years.
- 9 -
(Year Ended March 31, 2012)
All significant intercompany balances and transactions have been eliminated in consolidation. All material
unrealized profit included in assets resulting from transactions within the Group is eliminated.
b. Construction Contracts—In December 2007, the Accounting Standards Board of Japan (the "ASBJ") issued
ASBJ Statement No. 15, "Accounting Standard for Construction Contracts" and ASBJ Guidance No. 18,
"Guidance on Accounting Standard for Construction Contracts." Under this accounting standard, the
construction revenue and construction costs should be recognized by the percentage-of-completion method if
the outcome of a construction contract can be estimated reliably. When total construction revenue, total
construction costs, and the stage of completion of the contract at the balance sheet date can be reliably
measured, the outcome of a construction contract can be estimated reliably. If the outcome of a construction
contract cannot be reliably estimated, the completed-contract method should be applied. When it is probable
that the total construction costs will exceed total construction revenue, an estimated loss on the contract should
be immediately recognized by providing for a loss on construction contracts.
Concerning the construction contracts, the Group applies the accounting methods below:
Unbilled costs on contracts which are accounted for by the completed-contract method are stated as costs of
construction contracts in process.
Payments received in excess of costs and estimated earnings on contracts which are accounted for by the
percentage-of-completion method and payments received on the other contracts are presented as current
liabilities.
Costs of preparation work for unsuccessful proposals and other projects which are not realized are charged
to income, as incurred, and are included in costs of revenue.
c. Cash Equivalents—Cash equivalents are short-investments that are readily convertible into cash and that are
exposed to insignificant risk of changes in value. Cash equivalents include time deposits, certificate of
deposits, and commercial paper, all of which mature or become due within three months of the date of
acquisition.
d.
e.
Short-Investments—Short-investments are time deposits which will mature three months after the date of
acquisition. Short-investments are exposed to insignificant risk of changes in value.
Investment Securities—All marketable securities are classified as available--securities and are reported at fair
value, with unrealized gains and losses, net of applicable taxes, reported in a separate component of equity.
The cost of securities sold is determined based on the moving-method.
Non-available--securities are stated at cost determined by the moving-method. For other-than-temporary
declines in fair value, non-securities are reduced to net realizable value by a charge to income.
f. Allowance for Doubtful Accounts—The allowance for doubtful accounts is stated in amounts considered to be
appropriate based on the Group's past credit loss experience and an evaluation of potential losses in the
receivables outstanding.
9
Consolidated Financial Statements
Consolidated Financial Statements
10
- 10 -
Notes to Consolidated Financial Statements
g. Property, Plant, and Equipment—Property, plant, and equipment are stated at cost. Depreciation is computed
by the declining-balance method, except for buildings owned by the Company which are depreciated using the
straight-line method, at rates based on the estimated useful lives of the assets. The range of useful lives is from
3 to 57 years for buildings and structures, from 4 to 17 years for machinery and equipment, and from 2 to 15
years for tools, furniture, and fixtures. Equipment held for lease is depreciated by the straight-line method over
the respective lease periods.
h. Long-ed Assets—The Group reviews its long-assets for impairment whenever events or changes in
circumstances indicate the carrying amount of an asset or asset group may not be recoverable.
An impairment loss would be recognized if the carrying amount of an asset or asset group exceeds the sum of
the undiscounted future cash flows expected to result from the continued use and eventual disposition of the
asset or asset group. The impairment loss would be measured as the amount by which the carrying amount of
the asset exceeds its recoverable amount, which is the higher of the discounted cash flows from the continued
use and eventual disposition of the asset or the net selling price at disposition.
i. Other Assets—Intangible assets are carried at cost less accumulated amortization, which is calculated by the
straight-method over their estimated useful lives. Software for internal use is amortized on a straight-basis over
its estimated useful life (five years at the maximum).
j. Allowance for Warranty Costs for Completed Work—The allowance for warranty costs for completed work is
provided based on past rate experience.
k. Allowance for Losses on Construction Contracts—The allowance for losses on construction contracts is
provided for an estimated amount of probable losses to be incurred in future years in respect of construction
projects in progress. When there are losses on completed-method applied contracts, the allowance for losses on
construction contracts is offset against the costs of construction contracts in process on the balance sheet.
l. Provision for Treatment of PCB Waste—Provision for treatment of PCB (Poly Chlorinated Biphenyl) waste is
provided based on estimated costs of the treatment for PCB products and equipment as well as their collection
and transportation fees.
m. Retirement and Pension Plans—Employees of the Company are, under most circumstances, entitled to
payments from the defined contribution pension plan and the defined benefit corporate pension plan.
Employees of certain of the Company's consolidated subsidiaries are, under most circumstances, entitled to
certain lump-severance payments and pension payments.
Effective April 1, 2000, the Company and its domestic consolidated subsidiaries adopted a new accounting
standard for employees' retirement benefits and accounted for the liability for retirement benefits based on the
projected benefit obligations and plan assets at the balance sheet date.
The transitional obligation of ¥5,696 million ($69,467 thousand) is being amortized and charged to income
over 15 years using the straight-line amortization method and presented as an operating expense in the
consolidated statements of income for the years ended March 31, 2012 and 2011.
Certain of the Company's consolidated subsidiaries terminated their unfunded retirement benefit allowance for
all directors and officers under the resolution of shareholders' meeting and board meeting during the year
ended March 31, 2011. The outstanding balance was reclassified to noncurrent liabilities—other liabilities in
the years ended March 31, 2012 and 2011.
n. Asset Retirement Obligations—In March 2008, the ASBJ published ASBJ Statement No. 18, "Accounting
Standard for Asset Retirement Obligations" and ASBJ Guidance No. 21, "Guidance on Accounting Standard
for Asset Retirement Obligations." Under this accounting standard, an asset retirement obligation is defined as
a legal obligation imposed either by law or contract that results from the acquisition, construction,
development, and normal operation of a tangible fixed asset and is associated with the retirement of such
tangible fixed asset. The asset retirement obligation is recognized as the sum of the discounted cash flows
required for the future asset retirement and is recorded in the period in which the obligation is incurred if a
reasonable estimate can be made. If a reasonable estimate of the asset retirement obligation cannot be made in
the period the asset retirement obligation is incurred, the liability should be recognized when a reasonable
estimate of asset retirement obligation can be made. Upon initial recognition of a liability for an asset
retirement obligation, an asset retirement cost is capitalized by increasing the carrying amount of the related
fixed asset by the amount of the liability. The asset retirement cost is subsequently allocated to expense
through depreciation over the remaining useful life of the asset. Over time, the liability is accreted to its
present value each period. Any subsequent revisions to the timing or the amount of the original estimate of
undiscounted cash flows are reflected as an increase or a decrease in the carrying amount of the liability and
the capitalized amount of the related asset retirement cost.
o. Research and Development Costs—Research and development costs are charged to income as incurred.
p. Leases—In March 2007, the ASBJ issued ASBJ Statement No. 13, "Accounting Standard for Lease
Transactions," which revised the previous accounting standard for lease transactions issued in June 1993. The
revised accounting standard for lease transactions was effective for fiscal years beginning on or after April 1,
2008.
Under the previous accounting standard, finance leases that were deemed to transfer ownership of the leased
property to the lessee were capitalized. However, other finance leases were permitted to be accounted for as
operating lease transactions if certain "as if capitalized" information was disclosed in the note to the lessee's
financial statements. The revised accounting standard requires that all finance lease transactions be capitalized
by recognizing lease assets and lease obligations in the balance sheet.
The Group applied the revised accounting standard effective April 1, 2008. In addition, the Group accounted
for leases which existed at the transition date and do not transfer ownership of the leased property to the lessee
as operating lease transactions.
All other leases are accounted for as operating leases.
q.
Income Taxes—The provision for income taxes is computed based on the pretax income included in the
consolidated statement of income. The asset and liability approach is used to recognize deferred tax assets and
liabilities for the expected future tax consequences of temporary differences between the carrying amounts and
the tax bases of assets and liabilities. Deferred taxes are measured by applying currently enacted tax laws to
the temporary differences.
11
Consolidated Financial Statements
Consolidated Financial Statements
12
- 11 -
- 12 -
Notes to Consolidated Financial Statements
The Company files a tax return under the consolidated corporate-tax system which allows companies to base
tax payments on the combined profits or losses of the parent company and its wholly owned domestic
subsidiaries.
r. Foreign Currency Transactions—All short-and long-monetary receivables and payables denominated in
foreign currencies are translated into Japanese yen at the exchange rates at the balance sheet date.
The foreign exchange gains and losses from translation are recognized in the consolidated statement of income
to the extent that they are not hedged by foreign currency forward contracts.
s. Foreign Currency Financial Statements—The balance sheet accounts of the consolidated foreign subsidiaries
are translated into Japanese yen at the current exchange rate as of the balance sheet date except for equity,
which is translated at the historical rate. Differences arising from such translation are shown as "Foreign
currency translation adjustments" under accumulated other comprehensive income in a separate component of
equity.
Revenue and expense accounts of consolidated foreign subsidiaries are translated into Japanese yen at the
current exchange rate as of the balance sheet date.
t. Derivatives and Hedging Activities—The Company uses derivative financial instruments, including foreign
currency forward contracts and interest swap contracts, as a means of hedging exposure to foreign currency
risks and interest rate risks. The Company does not enter into derivatives for trading or speculative purposes.
Derivative financial instruments and foreign currency transactions are classified and accounted for as follows:
Diluted net income per share reflects the potential dilution that could occur if securities were exercised or
converted into common stock. Diluted net income per share of common stock assumes full conversion of the
outstanding convertible notes and bonds at the beginning of the year (or at the time of issuance) with an
applicable adjustment for related interest expense, net of tax, and full exercise of outstanding warrants.
Cash dividends per share presented in the accompanying consolidated statement of income are dividends
applicable to the respective years including dividends to be paid after the end of the year.
v. Accounting Changes and Error Corrections—In December 2009, the ASBJ issued ASBJ Statement No. 24,
"Accounting Standard for Accounting Changes and Error Corrections" and ASBJ Guidance No. 24, "Guidance
on Accounting Standard for Accounting Changes and Error Corrections." Accounting treatments under this
standard and guidance are as follows:
(1) Changes in accounting policies
When a new accounting policy is applied with revision of accounting standards, the new policy is applied
retrospectively unless the revised accounting standards include specific transitional provisions. When the
revised accounting standards include specific transitional provisions, an entity shall comply with the
specific transitional provisions.
(2) Changes in presentations
When the presentation of financial statements is changed, prior-financial statements are reclassified in
accordance with the new presentation.
(1) All derivatives are recognized as either assets or liabilities and measured at fair value, with gains or losses
(3) Changes in accounting estimates
recognized in the consolidated statement of income.
(2) For derivatives used for hedging purposes, if such derivatives qualify for hedge accounting because of
high correlation and effectiveness between the hedging instruments and the hedged items, gains or losses
on derivatives are deferred until maturity of the hedged transactions.
The foreign currency forward contracts are utilized to hedge foreign exchange risks. Certain assets and
liabilities on construction contracts denominated in foreign currencies are translated at the contracted rates if
the forward contracts qualify for hedge accounting.
Foreign currency deposits are held to hedge foreign exchange risks derived from forecasted purchases of fixed
assets denominated in foreign currency.
Interest rate swaps which qualify for hedge accounting and meet specific matching criteria are not remeasured
at market value but the differential paid or received under the swap agreements is recognized and included in
interest expense.
u. Per-Share Information—Basic net income per share is computed by dividing net income available to common
shareholders by the weighted-average number of common shares outstanding for the period, retroactively
adjusted for stock splits.
A change in an accounting estimate is accounted for in the period of the change if the change affects that
period only, and is accounted for prospectively if the change affects both the period of the change and
future periods.
(4) Corrections of prior-period errors
When an error in prior-period financial statements is discovered, those statements are restated.
This accounting standard and the guidance are applicable to accounting changes and corrections of
prior-period errors which are made from the beginning of the fiscal year that begins on or after April 1,
2011.
w. New Accounting Pronouncements
Accounting Standard for Retirement Benefits—On May 17, 2012, the ASBJ issued ASBJ Statement No. 26,
"Accounting Standard for Retirement Benefits" and ASBJ Guidance No. 25, "Guidance on Accounting
Standard for Retirement Benefits," which replaced the Accounting Standard for Retirement Benefits that had
been issued by the Business Accounting Council in 1998 with effective date of April 1, 2000 and the other
related practical guidances being followed by partial amendments from time to time through 2009.
13
Consolidated Financial Statements
Consolidated Financial Statements
14
- 13 -
- 14 -
Notes to Consolidated Financial Statements
Major changes are as follows:
(a) Treatment in the balance sheet
Under the current requirements, actuarial gains and losses and past service costs that are yet to be
recognized in profit or loss are not recognized in the balance sheet, and the difference between retirement
benefit obligations and plan assets (hereinafter, "deficit or surplus"), adjusted by such unrecognized
amounts, are recognized as a liability or asset.
Under the revised accounting standard, actuarial gains and losses and past service costs that are yet to be
recognized in profit or loss shall be recognized within equity (accumulated other comprehensive income),
after adjusting for tax effects, and the deficit or surplus shall be recognized as a liability (liability for
retirement benefits) or asset (asset for retirement benefits).
(b) Treatment in the statement of income and the statement of comprehensive income (or the statement of
income and comprehensive income)
The revised accounting standard would not change how to recognize actuarial gains and losses and past
service costs in profit or loss. Those amounts would be recognized in profit or loss over a certain period
no longer than the expected average remaining working lives of the employees. However, actuarial gains
and losses and past service costs that arose in the current period and yet to be recognized in profit or loss
shall be included in other comprehensive income and actuarial gains and losses and past service costs that
were recognized in other comprehensive income in prior periods and then recognized in profit or loss in
the current period shall be treated as reclassification adjustments.
This accounting standard and the guidance are effective for the end of annual periods beginning on or after
April 1, 2013 with earlier application being permitted from the beginning of annual periods beginning on or
after April 1, 2013. However, no retrospective application of this accounting standard to consolidated financial
statements in prior periods is required.
The Company expects to apply the revised accounting standard from the end of the annual period beginning on
April 1, 2013 and is in the process of measuring the effects of applying the revised accounting standard for the
year ending March 31, 2014.
3. CONSTRUCTION CONTRACTS
Costs and estimated earnings recognized with respect to construction contracts which are accounted for by the
percentage--method at March 31, 2012 and 2011, were as follows:
Millions of Yen
2012
2011
Thousands of
U.S. Dollars
2012
4.
INVESTMENT SECURITIES
Investment securities at March 31, 2012 and 2011, consisted of the following:
Millions of Yen
2012
2011
Thousands of
U.S. Dollars
2012
Non-current—Equity securities
¥ 15,527
¥ 5,813
$ 189,363
The costs and aggregate fair values of investment securities at March 31, 2012 and 2011, were as follows:
March 31, 2012
Securities classified as
available-for-sale—Equity securities
March 31, 2011
Securities classified as
available-for-sale—Equity securities
March 31, 2012
Millions of Yen
Cost
Unrealized
Gains
Unrealized
Losses
Fair
Value
¥11,682
¥2,570
¥ 367
¥13,885
Millions of Yen
Cost
Unrealized
Gains
Unrealized
Losses
Fair
Value
¥ 4,371
¥ 480
¥ 683
¥ 4,168
Thousands of U.S. Dollars
Unrealized
Unrealized
Losses
Gains
Fair
Value
Cost
Securities classified as
available-for-sale—Equity securities
$ 142,469
$ 31,350
$ 4,480
$ 169,338
Available--securities whose fair value was not readily determinable at March 31, 2011, were as follows. The similar
information for 2012 is disclosed in Note 15.
Costs and estimated earnings
Amounts billed
¥ 282,492
(268,703)
¥ 286,840
(272,346 )
$ 3,445,027
(3,276,876)
Net
¥ 13,788
¥ 14,493
$
168,151
March 31, 2011
Available-for-sale—Equity securities
Carrying Amount
Millions of Yen
¥ 1,644
15
Consolidated Financial Statements
Consolidated Financial Statements
16
- 15 -
- 16 -
Notes to Consolidated Financial Statements
5.
INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED SUBSIDIARIES AND ASSOCIATED
COMPANIES
7. RETIREMENT AND PENSION PLANS
Investments in and advances to unconsolidated subsidiaries and associated companies at March 31, 2012 and 2011,
were as follows:
Investments
Long-term receivables
Total
6. LONG-DEBT
Long-debt at March 31, 2012 and 2011, consisted of the following:
Long-term loans principally from banks, due serially
through 2014, with interest rates ranging from
1.9% to 2.0% at 2012 and 2011—Unsecured
Obligations under finance lease
Total
Less current portion
Millions of Yen
2012
2011
Thousands of
U.S. Dollars
2012
¥ 2,662
5
¥ 2,692
11
$ 32,473
70
¥ 2,668
¥ 2,704
$ 32,543
Millions of Yen
2012
2011
Thousands of
U.S. Dollars
2012
¥ 10,198
12
10,210
(10,006)
¥ 10,208
26
10,234
(13 )
$ 124,373
146
124,520
(122,027)
Long-term debt, less current portion
¥
204
¥ 10,220
$
2,492
Annual maturities of long-debt, excluding finance leases (see Note 14), at March 31, 2012, were as follows:
Year Ending
March 31
2014
Total
Commitment-contracts at March 31, 2012, were as follows:
Commitment-line contracts
Unused commitments
Millions of Yen
¥198
¥198
Millions of Yen
¥ 15,000
¥ 15,000
Thousands of
U.S. Dollars
$ 2,422
$ 2,422
Thousands of
U.S. Dollars
$ 182,926
$ 182,926
Employees of the Company are, under most circumstances, entitled to payments from the defined contribution
pension plan and the defined benefit corporate pension plan upon retirement or termination.
Employees of certain of the Company's consolidated subsidiaries are, under most circumstances, entitled to certain
lump-severance payments and pension payments upon retirement or termination.
The liability for employees' retirement benefits at March 31, 2012 and 2011, consisted of the following:
Projected benefit obligation
Fair value of plan assets
Unrecognized transitional obligation
Unrecognized actuarial loss
Unrecognized prior service cost
Net amount booked in the consolidated balance sheet
Prepaid pension expenses
Millions of Yen
2012
2011
¥ 24,492
(18,429)
(1,826)
(2,432)
675
2,479
(6)
¥ 25,241
(17,818 )
(2,435 )
(3,030 )
851
2,809
Thousands of
U.S. Dollars
2012
$ 298,686
(224,745)
(22,274)
(29,666)
8,239
30,239
(82)
Net liability for employees' retirement benefits
¥ 2,486
¥ 2,809
$ 30,321
The components of net periodic benefit costs for the years ended March 31, 2012 and 2011, were as follows:
Service cost
Interest cost
Expected return on plan assets
Amortization of transitional obligation
Recognized actuarial loss
Amortization of prior service cost
Subtotal
Payment to defined contribution pension trust
Millions of Yen
2012
2011
Thousands of
U.S. Dollars
2012
¥ 829
341
(264)
608
748
(176)
2,086
294
¥ 846
364
(288 )
608
739
(176 )
2,094
291
$ 10,110
4,166
(3,226)
7,424
9,124
(2,149)
25,449
3,590
Net periodic benefit costs
¥ 2,381
¥ 2,385
$ 29,039
Assumptions used for the years ended March 31, 2012 and 2011, are set forth as follows:
Discount rate
Expected rate of return on plan assets
Recognition period of actuarial gain/loss
Amortization period of transitional obligation
Amortization period of prior service cost
2012
1.5%
1.6%
10 years
15 years
10 years
2011
1.5%
1.6%
10 years
15 years
10 years
17
Consolidated Financial Statements
Consolidated Financial Statements
18
- 17 -
- 18 -
Notes to Consolidated Financial Statements
8. EQUITY
9.
INCOME TAXES
Japanese companies are subject to the Companies Act of Japan (the "Companies Act"). The significant provisions in
the Companies Act that affect financial and accounting matters are summarized below:
a. Dividends
Under the Companies Act, companies can pay dividends at any time during the fiscal year in addition to the
year-dividend upon resolution at the shareholders' meeting. For companies that meet certain criteria, the Board
of Directors may declare dividends (except for dividends in kind) at any time during the fiscal year if the
company has prescribed so in its articles of incorporation. However, the Company cannot do so because it does
not meet all the above criteria. The Company is organized as a company with board committees.
The Companies Act permits companies to distribute dividends in kind (non-assets) to shareholders subject to a
certain limitation and additional requirements.
Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if the
articles of incorporation of the company so stipulate. The Companies Act provides certain limitations on the
amounts available for dividends or the purchase of treasury stock. The limitation is defined as the amount
available for distribution to the shareholders, but the amount of net assets after dividends must be maintained
at no less than ¥3 million.
b.
Increases/Decreases and Transfer of Common Stock, Reserve, and Surplus
The Companies Act requires that an amount equal to 10% of dividends must be appropriated as a legal reserve
(a component of retained earnings) or as additional paid-capital (a component of capital surplus) depending on
the equity account charged upon the payment of such dividends until the aggregate amount of legal reserve and
additional paid-capital equals 25% of the common stock. Under the Companies Act, the total amount of
additional paid-capital and legal reserve may be reversed without limitation. The Companies Act also provides
that common stock, legal reserve, additional paid-capital, other capital surplus, and retained earnings can be
transferred among the accounts under certain conditions upon resolution of the shareholders.
c. Treasury Stock and Treasury Stock Acquisition Rights
The Companies Act also provides for companies to purchase treasury stock and dispose of such treasury stock
by resolution of the Board of Directors. The amount of treasury stock purchased cannot exceed the amount
available for distribution to the shareholders which is determined by specific formula.
Under the Companies Act, stock acquisition rights are presented as a separate component of equity.
The Companies Act also provides that companies can purchase both treasury stock acquisition rights and
treasury stock. Such treasury stock acquisition rights are presented as a separate component of equity or
deducted directly from stock acquisition rights.
The Company and its domestic subsidiaries are subject to Japanese national and local income taxes which, in the
aggregate, resulted in a normal effective statutory tax rate of approximately 41% for the years ended March 31,
2012 and 2011.
The tax effects of significant temporary differences which resulted in deferred tax assets and liabilities at March 31,
2012 and 2011, were as follows:
Deferred tax assets:
Cost of revenue
Future deductible depreciation
Allowance for employees' bonus
Retirement benefits
Loss on valuation of investment securities
Enterprise tax
Other
Less valuation allowance
Millions of Yen
2012
2011
Thousands of
U.S. Dollars
2012
¥ 10,712
1,876
1,475
859
342
160
2,695
(594)
¥ 16,896
1,906
1,527
1,117
289
759
3,184
(744 )
$ 130,634
22,885
17,995
10,477
4,180
1,960
32,870
(7,249)
Total
17,527
24,937
213,755
Deferred tax liabilities:
Profit/loss in joint venture
Unrealized gain on available-for-sale securities
Other
797
695
867
1,917
431
9,720
8,480
10,574
Total
2,359
2,348
28,775
Net deferred tax assets
¥ 15,168
¥ 22,589
$ 184,979
Net deferred tax assets as of March 31, 2012 and 2011 were recorded in the accompanying consolidated balance
sheet as follows:
Millions of Yen
2012
2011
Thousands of
U.S. Dollars
2012
Deferred tax assets—current assets
Deferred tax assets—investments and other assets
Other liabilities—non-current liabilities
¥ 12,987
2,204
(23)
¥ 18,644
3,948
(3 )
$ 158,388
26,882
(291)
19
Consolidated Financial Statements
Consolidated Financial Statements
20
- 19 -
- 20 -
Notes to Consolidated Financial Statements
A reconciliation between the normal effective statutory tax rate and the actual effective tax rate reflected in the
accompanying consolidated statements of income for the years ended March 31, 2012 and 2011, is as follows:
Obligations under finance leases and future minimum payments under noncancelable operating leases for the years
ended March 31, 2012 and 2011 were as follows:
Normal effective statutory tax rate
Expenses not deductible for income tax purposes
Non-taxable dividend income
Profit/loss in joint venture
Tax credit
Lower income tax rates applicable to subsidiaries
Tax rate changes due to tax reform
Actual effective tax rate
2012
41 %
1
(1)
(6)
(1)
(2)
5
38 %
2011
41 %
1
(1)
(6)
(5)
31 %
Year Ended March 31, 2012
Millions of Yen
Thousands of U.S. Dollars
Finance Leases
Off
On
Balance
Balance
Operating
Leases
Finance Leases
Off
On
Balance
Balance
Operating
Leases
Due within one year
Due after one year
¥ 6
5
¥ 47
16
¥ 688
526
$ 76
70
$ 574
199
$ 8,391
6,425
Total
¥ 12
¥ 63
¥ 1,214
$ 146
$ 774
$ 14,816
On December 2, 2011, new tax reform laws were enacted in Japan, which changed the normal effective statutory
tax rate from approximately 41% to 38% effective for the fiscal years beginning on or after April 1, 2012 through
March 31, 2015, and to 36% thereafter. The effect of this change was to decrease deferred taxes in the consolidated
balance sheet as of March 31, 2012 by ¥1,136 million ($13,858 thousand) and to increase income taxes—deferred
in the consolidated statement of income for the year then ended by ¥1,253 million ($15,291 thousand).
10. RESEARCH AND DEVELOPMENT COSTS
Research and development costs charged to income were ¥1,886 million ($23,007 thousand) and ¥1,848 million for
the years ended March 31, 2012 and 2011, respectively.
11. OFFICE INTEGRATION COSTS
Following the Company's decision to integrate its offices which have been located separately, the office integration
costs of ¥4,218 million have been expensed in the consolidated statement of income for the year ended March 31,
2011 consistent with the office integration plan.
It consists of the following:
Non-recurring depreciation on non-current assets
and related expenses
Provision for cancellation of leases
12. LEASES
The Group leases certain machinery, computer equipment, and other assets.
Millions of Yen
2011
¥ 3,673
545
Year Ended March 31, 2011
Due within one year
Due after one year
Total
Millions of Yen
Finance Leases
On
Balance
Off
Balance
Operating
Leases
¥ 13
12
¥ 26
¥ 53
63
¥ 123
1,298
¥ 117
¥ 1,421
Pro forma Information of Leased Property Whose Lease Inception Was before March 31, 2008
ASBJ Statement No. 13, "Accounting Standard for Lease Transactions" requires that all finance lease transactions
be capitalized to recognize lease assets and lease obligations in the balance sheet. However, ASBJ Statement No. 13
permits leases that do not transfer ownership of the leased property to the lessee and whose lease inception was
before March 31, 2008 to continue to be accounted for as operating lease transactions if certain "as if capitalized"
information is disclosed in the note to the financial statements. The Company applied ASBJ Statement No. 13
effective April 1, 2008 and continued to account for such leases as operating lease transactions.
Pro forma information of leased property whose lease inception was before March 31, 2008 on an "as if capitalized"
basis was as follows:
Year Ended March 31, 2012
Acquisition cost
Accumulated depreciation
Net leased property
Millions of Yen
Buildings
and
Structures
Tools,
Furniture,
and Fixtures
¥ 67
32
¥ 34
¥ 79
61
¥ 17
Other
¥ 26
15
¥ 10
Total
¥ 173
109
¥ 63
21
Consolidated Financial Statements
Consolidated Financial Statements
22
- 21 -
- 22 -
Notes to Consolidated Financial Statements
Year Ended March 31, 2011
(2) Nature and Extent of Risks Arising from Financial Instruments
Acquisition cost
Accumulated depreciation
Net leased property
Year Ended March 31, 2012
Acquisition cost
Accumulated depreciation
Net leased property
Millions of Yen
Buildings
and
Structures
Tools,
Furniture,
and Fixtures
¥ 67
25
¥ 41
¥ 279
221
¥ 58
Other
¥ 72
55
¥ 17
Total
¥ 419
302
¥ 117
Thousands of U.S. Dollars
Buildings
and
Structures
Tools,
Furniture,
and Fixtures
Other
Total
$ 823
398
$ 425
$ 969
750
$ 219
$ 317
187
$ 129
$ 2,110
1,335
$ 774
Obligations under finance leases for the years ended March 31, 2012 and 2011 were as follows:
Millions of Yen
Due within one year
Due after one year
Total
2012
¥ 47
16
¥ 63
Thousands of
U.S. Dollars
2012
$ 574
199
2011
¥ 53
63
Receivables such as trade notes and trade accounts are exposed to customer credit risk. Although receivables
in foreign currencies are exposed to the market risk of fluctuation in foreign currency exchange rates, the
position, net of payables in foreign currencies, is hedged by using foreign currency forward contracts.
Cash equivalents include certificates of deposit which mature shortly and are used for cash surpluses.
Short-investments include deposits at call which will mature three months after the date of acquisition. Both
certificates of deposit and deposits at call are exposed to default risk of the issuing financial institution.
Investment securities are equity securities related to the business which the Group operates. Marketable
securities are exposed to the risk of fluctuations in stock prices.
Payment terms of payables, such as trade notes and trade accounts, are generally less than one year. Although
payables in foreign currencies are exposed to the market risk of fluctuation in foreign currency exchange rates,
those risks are netted against the balance of receivables denominated in the same foreign currency as noted
above.
Bank loans are used for operating capital. Although they are exposed to the market risks from changes in
interest rates, the risk is hedged by using interest rate swap contracts.
Derivatives are foreign currency forward contracts and interest rate swap contracts, which are used to manage
exposure to market risks from changes in foreign currency exchange rates of receivables and payables, and
from changes in interest rates, respectively. Please see Notes 2.t and 16 for more detail about derivatives.
(3) Risk Management for Financial Instruments
Credit risk management
Credit risk is the risk of economic loss arising from a counterparty's failure to repay or service debt according
to the contractual terms. The Group manages its credit risk from receivables on the basis of internal guidelines,
which include monitoring of payment terms and balances of major customers to identify the default risk of
customers at an early stage.
¥ 117
$ 774
Certificates of deposit and deposits at call are exposed to insignificant default risk because transactions are
limited to major financial institutions.
Depreciation expense as lessee, which is not reflected in the accompanying consolidated statement of income,
computed by the straight-line method was ¥53 million ($655 thousand) and ¥90 million for the years ended March
31, 2012 and 2011, respectively.
The amounts of obligations, acquisition cost and depreciation under finance leases include the imputed interest
income portion and interest expense portion.
13. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES
(1) Group Policy for Financial Instruments
The Group uses financial instruments for cash surpluses, if any, invested in low-risk financial assets such as
certificate of deposits and deposits at call. For operating capital, the Group uses bank loans. Derivatives are
used, not for speculative purposes, but to manage exposure to the market risk of fluctuation in foreign currency
exchange rates and interest rates.
With respect to foreign currency forward contracts, the Group limits the counterparty to those derivatives to
major financial institutions that can bear losses arising from credit risk.
Market risk management (risk of foreign exchange and interest rates)
Foreign currency trade receivables and payables are exposed to market risk resulting from fluctuations in
foreign currency exchange rates. Such foreign exchange risk is hedged principally with foreign currency
forward contracts.
Interest expense associated with long-term debts is exposed to market risk resulting from changes in interest
rates. Such risk is hedged by interest rate swap contracts.
23
Consolidated Financial Statements
Consolidated Financial Statements
24
- 23 -
- 24 -
Notes to Consolidated Financial Statements
Foreign currency forward contracts are controlled under internal guidelines. The position related to particular
construction contracts is identified and is reviewed monthly. Reconciliation of the transaction and balances
with customers' confirmation reply is made, and the transactions related to foreign currency forward contracts
are executed and accounted for under internal guidelines.
Marketable investment securities are managed by monitoring the market values and financial position of
issuers on a regular basis. The Group assesses the stock price risk quantitatively so as to account for significant
declines in market value as impairment losses.
Liquidity risk management
Liquidity risk comprises the risk that the Group cannot meet its contractual obligations in full on their maturity
dates. The Group manages its liquidity risk by holding adequate volumes of liquid assets along with timely
adequate financial planning.
(4) Fair Values of Financial Instruments
Fair values of financial instruments are based on quoted prices in active markets. If a quoted price is not
available, another rational valuation technique is used instead. Also, please see Note 16 for the detail of fair
value for derivatives.
(a) Fair values of financial instruments
March 31, 2012
Cash and cash equivalents
Short-term investments
Notes and accounts receivable
Costs and estimated earnings on
long-term construction contracts
Jointly controlled assets of joint venture
Investment securities
Total
Current portion of long-term debt
Notes and accounts payable—trade
Income taxes payable
Long-term debt
Total
Unrealized
Gain (Loss)
Carrying
Amount
¥ 173,769
307
30,051
13,788
65,794
13,885
Millions of Yen
Fair Value
¥ 173,769
307
30,051
13,788
65,794
13,885
¥ 297,597
¥ 297,597
¥ 10,000
86,211
1,162
198
¥ 10,000
86,211
1,162
198
¥ 97,572
¥ 97,572
March 31, 2011
Cash and cash equivalents
Short-term investments
Notes and accounts receivable
Costs and estimated earnings on
long-term construction contracts
Jointly controlled assets of joint venture
Investment securities
Total
Notes and accounts payable—trade
Income taxes payable
Long-term debt
Total
March 31, 2012
Cash and cash equivalents
Short-term investments
Notes and accounts receivable
Costs and estimated earnings on
long-term construction contracts
Jointly controlled assets of joint venture
Investment securities
Unrealized
Gain (Loss)
Carrying
Amount
¥ 130,618
79
41,539
14,493
88,662
4,168
Millions of Yen
Fair Value
¥ 130,618
79
41,539
14,493
88,662
4,168
¥ 279,561
¥ 279,561
¥ 97,417
5,986
10,208
¥ 97,417
5,986
10,208
¥ 113,611
¥ 113,612
Thousands of U.S. Dollars
Unrealized
Gain (Loss)
Carrying
Amount
$ 2,119,137
3,753
366,485
168,151
802,367
169,338
Fair Value
$ 2,119,137
3,753
366,485
168,151
802,367
169,338
Total
$ 3,629,233
$ 3,629,233
Current portion of long-term debt
Notes and accounts payable—trade
Income taxes payable
Long-term debt
$
121,951
1,051,362
14,174
2,422
$
121,951
1,051,362
14,174
2,417
Total
$ 1,189,910
$ 1,189,905
$ (5)
$ (5)
Cash and Cash Equivalents, Short-Term Investments, Notes and Accounts Receivable, and Costs and
Estimated Earnings on Long-Term Construction Contracts
The carrying values of accounts mentioned above approximate fair value because of their short
maturities.
25
Consolidated Financial Statements
Consolidated Financial Statements
26
- 25 -
- 26 -
Notes to Consolidated Financial Statements
Jointly Controlled Assets of Joint Venture
(c) Maturity analysis for financial assets and securities with contractual maturities
The jointly controlled assets of joint venture are jointly controlled cash recognized based on the
Company's share of the venture. The carrying values of jointly controlled assets of joint venture
approximate fair value because of their short maturities.
Investment Securities
The fair values of investment securities are measured at the quoted market price of the stock exchange for
the equity instruments. The information of the fair value for investment securities by classification is
included in Note 5.
The above schedules do not include investment securities whose fair value cannot be reliably determined.
Notes and Accounts Payable—Trade and Income Taxes Payable
The carrying values of accounts mentioned above approximate fair value because of their short
maturities.
Current Portion of Long-Term Debt (Bank Loans)/Long-Debt (Bank Loans)
The fair value of fixed-rate loans is calculated by discounting total principal and interest payments to
present value using a discount rate equal to the rate that would be charged if the loan was newly
borrowed. The fair value of floating rate loans which are subject to specific method for interest rate swaps
is calculated by discounting total principal and interest payments which are handled together with interest
rate swaps to present value using a discount rate equal to the rate that would be charged if the loan was
newly borrowed.
Derivatives
The information of the fair value for derivatives is included in Note 16.
(b) Financial instruments whose fair values cannot be reliably determined
Investment securities that do not have a quoted
market price in an active market
Investments in equity instruments that do not
have a quoted market price in an active market
Investments in unconsolidated subsidiaries and
associated companies that do not have a quoted
market price in an active market
Carrying Amount
Millions of Yen
2011
2012
Thousands of
U.S. Dollars
2012
¥ 1,639
¥ 1,641
$ 19,988
2
2
36
2,662
2,692
32,473
March 31, 2012
Cash and cash equivalents
Short-term investments
Notes and accounts receivable, and
costs and estimated earnings on
long-term construction contacts
Jointly controlled assets of joint
venture
Millions of Yen
Due after
1 Year
through
5 Years
Due after
5 Years
through
10 Years
Due after
10 Years
Due in
1 Year
or Less
¥ 173,684
307
43,731
¥ 109
65,794
Total
¥ 283,517
¥ 109
March 31, 2011
Millions of Yen
Due after
1 Year
through
5 Years
Due after
5 Years
through
10 Years
Due after
10 Years
Due in
1 Year
or Less
¥ 130,618
79
53,072
¥ 2,941
¥ 19
88,662
Cash and cash equivalents
Short-term investments
Notes and accounts receivable, and
costs and estimated earnings on
long-term construction contacts
Jointly controlled assets of joint
venture
Total
¥ 272,432
¥ 2,941
¥ 19
March 31, 2012
Thousands of U.S. Dollars
Due after
5 Years
through
10 Years
Due after
1 Year
through
5 Years
Due after
10 Years
Due in
1 Year
or Less
$ 2,118,109
3,753
533,305
$ 1,331
802,367
Cash and cash equivalents
Short-term investments
Notes and accounts receivable, and
costs and estimated earnings on
long-term construction contacts
Jointly controlled assets of joint
venture
Total
$ 3,457,534
$ 1,331
Please see Note 7 for annual maturities of long-debt and Note 14 for obligations under finance leases.
27
Consolidated Financial Statements
Derivative Transactions to Which Hedge Accounting Is Not Applied at March 31, 2012 and 2011
Consolidated Financial Statements
28
March 31, 2012
- 27 -
14. DERIVATIVES
- 28 -
Foreign currency forward contracts:
Selling U.S.$/buying yen
Selling Euro/buying yen
Selling GBP/buying yen
Selling AUD/buying yen
Buying U.S.$/selling yen
Buying Euro/selling yen
Buying SGD/selling yen
Buying Euro/selling U.S.$
Total
March 31, 2011
Foreign currency forward contracts:
Selling U.S.$/buying yen
Selling Euro/buying yen
Selling GBP/buying yen
Buying U.S.$/selling yen
Buying Euro/selling yen
Buying Euro/selling U.S.$
Millions of Yen
Contract
Amount
Due after
One Year
Fair
Value
Unrealized
(Loss)
Gain (Loss)
¥ (34 )
¥ (34)
7
3
7
3
(5 )
(5)
¥ 23,781
¥ (34 )
¥ (34)
Millions of Yen
Contract
Amount
Due after
One Year
Fair
Value
Unrealized
(Loss)
Gain (Loss)
¥ 26,202
¥ 2,163
¥ (35 )
11
¥ (35)
11
4
62
1
(9 )
1
(9)
Contract
Amount
¥ 18,468
4,492
182
81
119
42
3
391
Contract
Amount
3,472
264
43
21
1,238
Total
¥ 31,243
¥ 2,230
¥ (32 )
¥ (32)
- 29 -
Notes to Consolidated Financial Statements
Please see Note 7 for annual maturities of long-debt and Note 14 for obligations under finance leases.
14. DERIVATIVES
March 31, 2012
Derivative Transactions to Which Hedge Accounting Is Not Applied at March 31, 2012 and 2011
March 31, 2012
Foreign currency forward contracts:
Selling U.S.$/buying yen
Selling Euro/buying yen
Selling GBP/buying yen
Selling AUD/buying yen
Buying U.S.$/selling yen
Buying Euro/selling yen
Buying SGD/selling yen
Buying Euro/selling U.S.$
Total
March 31, 2011
Foreign currency forward contracts:
Selling U.S.$/buying yen
Selling Euro/buying yen
Selling GBP/buying yen
Buying U.S.$/selling yen
Buying Euro/selling yen
Buying Euro/selling U.S.$
Millions of Yen
Contract
Amount
Due after
One Year
Fair
Value
(Loss)
Unrealized
Gain (Loss)
¥ (34 )
7
¥ (34)
7
3
3
(5 )
(5)
¥ (34 )
¥ (34)
Millions of Yen
Contract
Amount
Due after
One Year
Fair
Value
(Loss)
Unrealized
Gain (Loss)
¥ 2,163
¥ (35 )
11
¥ (35)
11
4
62
1
(9 )
1
(9)
Contract
Amount
¥ 18,468
4,492
182
81
119
42
3
391
¥ 23,781
Contract
Amount
¥ 26,202
3,472
264
43
21
1,238
Total
¥ 31,243
¥ 2,230
¥ (32 )
¥ (32)
Foreign currency forward contracts:
Selling U.S.$/buying yen
Selling Euro/buying yen
Selling GBP/buying yen
Selling AUD/buying yen
Buying U.S.$/selling yen
Buying Euro/selling yen
Buying SGD/selling yen
Buying Euro/selling U.S.$
Total
Thousands of U.S. Dollars
Contract
Amount
Due after
One Year
Fair
Value
(Loss)
Unrealized
Gain (Loss)
$ (418 )
94
(1 )
(83 )
48
(2 )
2
(61 )
$ (418)
94
(1)
(83)
48
(2)
2
(61)
$ (421 )
$ (421)
Contract
Amount
$ 225,221
54,783
2,222
999
1,462
516
47
4,769
$ 290,020
Derivative Transactions to Which Hedge Accounting Is Applied at March 31, 2012 and 2011
March 31, 2012
Millions of Yen
Hedged Item
Contract
Amount
Contract
Amount
Due after
One Year
Fair
Value
(Loss)
Foreign currency forward contracts—
Accounted for under deferred hedge
accounting method:
Selling U.S.$/buying yen
Selling GBP/buying yen
Buying U.S.$/selling yen
Buying Euro/selling yen
Buying SGD/selling yen
Total
Other*1:
Selling U.S.$/buying yen
Buying U.S.$/selling yen
Buying Euro/selling yen
Total
Foreign currency
forecasted
transaction
Receivables
Payables
Interest rate swaps*2 (fixed rate payment,
floating rate receipt)
Current portion of
long-term debt
Total
¥ 1,785
25
6,492
1,041
46
¥
581
2,995
100
¥ (39)
(1)
242
14
2
¥ 9,391
¥ 3,677
¥ 218
¥
43
267
6
¥
60
¥
317
¥
60
¥ 10,000
¥ 10,000
¥ 10,000
¥ 10,000
- 29 -
- 30 -
29
Consolidated Financial Statements
Consolidated Financial Statements
30
Notes to Consolidated Financial Statements
March 31, 2011
March 31, 2012
Foreign currency forward contracts—
Accounted for under deferred hedge
accounting method:
Selling U.S.$/buying yen
Buying U.S.$/selling yen
Buying Euro/selling yen
Buying GBP/selling yen
Buying SGD/selling yen
Buying Euro/selling U.S.$
Total
Other*1:
Selling U.S.$/buying yen
Selling Euro/buying yen
Buying U.S.$/selling yen
Buying Euro/selling yen
Buying GBP/selling yen
Total
Millions of Yen
Hedged Item
Contract
Amount
Contract
Amount
Due after
One Year
Fair
Value
(Loss)
Foreign currency
forecasted
transaction
¥ 2,968
3,914
1,943
17
200
2,858
¥
959
66
143
¥ 130
(25)
21
(2)
9
(21)
¥ 11,902
¥ 1,169
¥ 112
Receivables
Payables
¥
43
¥ 2,692
337
151
288
1
¥ 3,470
¥
43
Thousands of U.S. Dollars
Hedged Item
Contract
Amount
Contract
Amount
Due after
One Year
Fair
Value
(Loss)
Foreign currency forward contracts—
Accounted for under deferred hedge
accounting method:
Selling U.S.$/buying yen
Selling GBP/buying yen
Buying U.S.$/selling yen
Buying Euro/selling yen
Buying SGD/selling yen
Total
Other*1:
Selling U.S.$/buying yen
Buying U.S.$/selling yen
Buying Euro/selling yen
Total
Foreign currency
forecasted
transaction
Receivables
Payables
Interest rate swaps*2 (fixed rate payment,
floating rate receipt)
Current portion of
long-term debt
$ 21,774
315
79,176
12,697
562
$
7,097
36,524
1,223
$ (487)
(17)
2,961
182
25
$ 114,526
$ 44,845
$ 2,664
$
534
3,262
77
$
735
7
$
3,873
$
742
$ 121,951
$ 121,951
$ 121,951
$ 121,951
Interest rate swaps*2 (fixed rate payment,
Long-term debt
¥ 10,000
¥ 10,000
Total
floating rate receipt)
Total
¥ 10,000
¥ 10,000
*1 Foreign currency forward contracts, which are applied to the foreign currency translation at the contract rate of
the assets and liabilities on construction contracts denominated in foreign currencies
*2 Interest rate swap contracts accounted under specific method, are treated as part of the hedged long-debt, thus
their fair values are integrally computed with those of hedged long-debt. See Note 15 for the fair value of
long-debt.
15. CONTINGENT LIABILITIES
At March 31, 2012, the Group had the following contingent liabilities:
Guarantees on employees' housing loans
Performance bond for an unconsolidated subsidiary
¥ 172
1,767
$ 2,102
21,560
Millions of Yen
Thousands of
U.S. Dollars
31
Consolidated Financial Statements
Consolidated Financial Statements
32
- 31 -
- 32 -
Notes to Consolidated Financial Statements
16. COMPREHENSIVE INCOME
There is no dilutive effect for the year ended March 31, 2012.
The components of other comprehensive income for the year ended March 31, 2012 were as follows:
Year Ended March 31, 2011
Unrealized gain (loss) on available-for-sale securities:
Gains arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effect
Total
Deferred gain (loss) on derivatives under hedge accounting:
Gains arising during the year
Adjustment to acquisition cost of assets
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effect
Total
Foreign currency translation adjustments—
Adjustments arising during the year
Total
Share of other comprehensive income in associates—
Gains arising during the year
Total
Millions of Yen
2012
¥ 2,156
250
2,406
(668 )
Thousands of
U.S. Dollars
2012
$ 26,296
3,049
29,346
(8,147)
¥ 1,738
$ 21,198
¥ (424 )
549
6
131
(34 )
$ (5,179)
6,700
80
1,602
(418)
¥
97
$ 1,183
¥ (361 )
$ (4,407)
¥ (361 )
$ (4,407)
¥ (105 )
$ (1,285)
¥ (105 )
$ (1,285)
Millions
of Yen
Net Income
Thousands
of Shares
Weighted-Average
Shares
Yen
EPS
Basic EPS—Net income available
to common shareholders
¥ 7,979
259,165
¥ 30.79
There is no dilutive effect for the year ended March 31, 2011.
18. SUBSEQUENT EVENT
The following appropriation of retained earnings at March 31, 2012, was approved at the Company's shareholders'
meeting on June 26, 2012:
Millions of Yen
Thousands of
U.S. Dollars
Year-end cash dividends, ¥17.00 ($0.20) per share
¥ 4,404
$ 53,708
19. SEGMENT INFORMATION
Under ASBJ Statement No. 17, "Accounting Standard for Segment Information Disclosures" and ASBJ Guidance
No. 20, "Guidance on Accounting Standard for Segment Information Disclosures," an entity is required to report
financial and descriptive information about its reportable segments. Reportable segments are operating segments or
aggregations of operating segments that meet specified criteria. Operating segments are components of an entity
about which separate financial information is available and such information is evaluated regularly by the chief
operating decision maker in deciding how to allocate resources and in assessing performance. Generally, segment
information is required to be reported on the same basis as is used internally for evaluating operating segment
performance and deciding how to allocate resources to operating segments.
Total other comprehensive income
¥ 1,368
$ 16,689
(1) Description of Reportable Segments
The corresponding information for the year ended March 31, 2011 was not required under the accounting standard
for presentation of comprehensive income as an exemption for the first year of adopting that standard and not
disclosed herein.
17. NET INCOME PER SHARE
Reconciliation of the differences between basic and diluted net income per share ("EPS") for the years ended March
31, 2012 and 2011 is as follows:
Year Ended March 31, 2012
Millions
of Yen
Net
Income
Thousands
of Shares
Weighted-Average
Shares
Yen
U.S. Dollars
EPS
Basic EPS—Net income available
to common shareholders
¥ 14,364
259,086
¥ 55.44
$ 0.67
The Group's reportable segments are those for which separate financial information is available and regular
evaluation by the Company's management is being performed in order to decide how resources are allocated
within the Group. The Group globally provides "Engineering services," including planning, engineering,
construction, procurement, commissioning, and maintenance, adapting the most appropriate functions of each
related company.
(2) Methods of Measurement for the Amounts of Sales, Profit (Loss), Assets, Liabilities, and Other Items for
Each Reportable Segment
The accounting policies of each reportable segment are consistent to those disclosed in Note 2, "Summary of
Significant Accounting Policies."
The profit in reporting segments are based on the operating income. Intersegment income and transfer are
measured at the quoted market price.
33
Consolidated Financial Statements
Consolidated Financial Statements
34
- 33 -
- 34 -
Notes to Consolidated Financial Statements
(3)
Information about Sales, Profit (Loss), Assets, Liabilities, and Other Items
Year Ended March 31, 2012
Year Ended March 31, 2012
Millions of Yen
Reportable
Segment
Engineering
Other*1
Total
Reconcil-
iations*2
Consol-
idated*3
Sales:
Sales to external customers
Intersegment sales or transfers
¥ 247,849
2
¥ 6,826
8,508
¥ 254,675
8,510
¥ (8,510 )
¥ 254,675
Total
¥ 247,851
¥ 15,334
¥ 263,186
¥ (8,510 )
¥ 254,675
Segment profit
Segment assets
Segment liabilities
Other:
Depreciation
Amortization of goodwill
Investment in associated
companies
Increase in property, plant, and
equipment and intangible
assets
Year Ended March 31, 2011
¥ 23,755
358,155
185,832
¥
531
8,165
3,671
¥ 24,287
366,321
189,503
¥
(89 )
(525 )
7,553
¥ 24,197
365,795
197,057
2,664
945
21
84
2,685
84
945
(48 )
2,637
84
945
3,631
4
3,635
(180 )
3,455
Millions of Yen
Reportable
Segment
Engineering
Other*1
Total
Reconcil-
iations*2
Consol-
idated*3
Sales:
Sales to external customers
Intersegment sales or transfers
¥ 241,395
4
¥ 5,687
8,506
¥ 247,082
8,510
¥ (8,510 )
¥ 247,082
Total
¥ 241,399
¥ 14,193
¥ 255,593
¥ (8,510 )
¥ 247,082
Segment profit
Segment assets
Segment liabilities
Other:
Depreciation
Amortization of goodwill
Investment in associated
companies
Increase in property, plant, and
equipment and intangible
assets
¥ 17,175
346,512
187,019
¥
499
7,372
3,009
¥ 17,674
353,885
190,029
¥
(129 )
(492 )
7,604
¥ 17,544
353,392
197,633
2,562
977
23
41
2,586
41
977
(19 )
2,566
41
977
2,905
20
2,925
(164 )
2,760
Thousands of U.S. Dollars
Reportable
Segment
Engineering
Other*1
Total
Reconcil-
iations*2
Consol-
idated*3
Sales:
Sales to external customers
Intersegment sales or
transfers
$ 3,022,554 $ 83,244 $ 3,105,798
$ 3,105,798
29
103,758
103,787 $ (103,787 )
Total
$ 3,022,583 $ 187,002 $ 3,209,586 $ (103,787 ) $ 3,105,798
Segment profit
Segment assets
Segment liabilities
Other:
Depreciation
Amortization of goodwill
Investment in associated
companies
Increase in property, plant,
and equipment and
intangible assets
289,705 $
$
4,367,752
2,266,244
6,479 $
99,576
44,773
4,467,329
2,311,017
296,185 $
256
1,027
32,492
11,528
32,748
1,027
11,528
295,095
(1,089 ) $
(6,412 ) 4,460,917
2,403,138
92,121
(586 )
32,162
1,027
11,528
44,285
51
44,337
(2,202 )
42,135
Notes for the year ended March 31, 2012:
*1 "Other" represents industry segments which are not included in the reportable segment, consisting of
temporary staffing services, IT services, and travel services.
*2 The detail of reconciliations is as follows:
(1) The reconciliation in segment profit ¥(89) million ($(1,090) thousand) is the elimination of
intersegment trades.
(2) The reconciliation in segment assets ¥(525) million ($(6,413) thousand) is the result of elimination of
intersegment trades ¥(2,740) million ($(33,416) thousand) and the Group's assets of ¥2,214 million
($27,004 thousand) which are not included in the reportable segment.
(3) The reconciliation in segment liabilities ¥7,553 million ($92,121 thousand) is the result of elimination
of intersegment trades ¥(2,446) million ($(29,830) thousand) and the Group's liabilities of
¥10,000 million ($121,951 thousand) which are not included in the reportable segment.
(4) The reconciliation in depreciation of ¥(48) million ($(586) thousand) is the elimination of
intersegment trades.
(5) The reconciliation in increase in property, plant, and equipment and intangible assets of
¥(180) million ($(2,202) thousand) is the elimination of intersegment trades.
35
Consolidated Financial Statements
Consolidated Financial Statements
36
- 35 -
- 36 -
Notes to Consolidated Financial Statements
*3 The calculation of the segment profit is based on the operating income on the consolidated statements of
Revenue by region for the year ended March 31, 2011 was as follows:
income.
Notes for the year ended March 31, 2011:
*1 "Other" represents industry segments which are not included in the reportable segment, consisting of
temporary staffing services, IT services, and travel services.
*2 The detail of reconciliations is as follows:
(1) The reconciliation in segment profit ¥(129) million is the elimination of intersegment trades.
(2) The reconciliation in segment assets ¥(492) million is the result of elimination of intersegment trades
¥(2,628) million and the Group's assets of ¥2,135 million which are not included in the reportable
segment.
(3) The reconciliation in segment liabilities ¥7,604 million is the result of elimination of intersegment
trades ¥(2,395) million and the Group's liabilities of ¥10,000 million which are not included in the
reportable segment.
Japan
Qatar
Papua New Guinea
Asia
Others
Total
Millions of Yen
2011
¥ 120,990
64,232
29,479
19,506
12,872
¥ 247,082
Note: Revenue is classified in countries or regions based on location of construction site.
The proportion of fixed assets placed in Japan is more than 90% in the total fixed assets of the Group. Accordingly, the
presentation of the information about fixed assets is not required under Japanese accounting standards.
(c)
Information about Major Customers
(4) The reconciliation in depreciation of ¥(19) million is the elimination of intersegment trades.
Year Ended March 31, 2012
(5) The reconciliation in increase in property, plant, and equipment and intangible assets of
¥(164) million is the elimination of intersegment trades.
Name
Related Segment
Millions of Yen
Thousands of
U.S. Dollars
*3 The calculation of the segment profit is based on the operating income on the consolidated statements of
income.
Related Information
(a)
Information about Products and Services
Esso Highlands Ltd.
Tokuyama Malaysia Sdn. Bhd
Year Ended March 31, 2011
Engineering
Engineering
¥ 69,856
28,815
$ 851,902
351,411
Name
Related Segment
Millions of Yen
The proportion of engineering business is more than 90% of the total sales of the Group. Accordingly, the
presentation of the information about each service is not required under Japanese accounting standards.
Qatar Liquefied Gas Company Ltd. III, IV
Esso Highlands Ltd.
Engineering
Engineering
¥ 48,060
29,405
(b)
Information about Geographical Areas
Revenue by region for the year ended March 31, 2012 was as follows:
(d)
Information about Goodwill by Segments
Ending balance of goodwill as of March 31, 2012 and 2011, was as follows:
Japan
Papua New Guinea
Malaysia
Middle East
Others
Total
Millions of Yen
2012
¥ 94,925
70,508
30,575
30,398
28,267
Thousands of
U.S. Dollars
2012
$ 1,157,626
859,855
372,872
370,716
344,727
¥ 254,675
$ 3,105,798
Millions of Yen
2012
2011
Thousands of
U.S. Dollars
2012
¥ 716
¥ 716
¥ 757
¥ 757
$ 8,736
$ 8,736
Engineering
Other*
Total
* Other involves temporary staffing services and IT services.
* * * * * *
37
Consolidated Financial Statements
Consolidated Financial Statements
38
- 37 -
INDEPENDENT AUDITOR’S REPORT
39
Consolidated Financial Statements
Minatomirai Grand Central Tower
4-6-2, Minatomirai, Nishi-ku,
Yokohama 220-8765, Japan
Tel: (81)45-225-7777 (voice guidance)
http://www.chiyoda-corp.com/en/
CORPORATE PHILOSOPHY
Enhance our business in aiming for harmony
between energy and the environment,
and contribute to the sustainable development of
a society as an integrated engineering company
through the use of our collective wisdom and
painstakingly developed technology.
Consolidated Financial Statements
For the Year Ended March 31, 2012, and Independent Auditor's Report
Continue reading text version or see original annual report in PDF
format above