summary of financial results for the fiscal year …summary of financial results for the fiscal year...

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Summary of Financial Results for the Fiscal Year ended March 31, 2009

May 13, 2009

(Figures less than one million yen are omitted)

1. Consolidated Business Results for the Fiscal Year ended March 31, 2009 (April 1, 2008 – March 31, 2009) (1) Consolidated operating results (Percentages shown for net sales, operating income, ordinary income, and net income represent year-on-year changes)

Net sales Operating income Ordinary income Net income Millions of yen % Millions of yen % Millions of yen % Millions of yen %

Year ended 3/09 165,081 -3,3 7,312 -2.7 6,596 -15.0 883 -59.3Year ended 3/08 170,739 0.7 7,517 -19.8 7,761 -21.2 2,172 199.2

Net income per share

Net income per share/diluted Return on equity Ordinary income

to total assets Operating income

to net sales Yen Yen % % %

Year ended 3/09 27.07 27.06 1.3 3.7 4.4Year ended 3/08 61.89 61.81 2.9 4.4 4.4

Reference: Equity in earnings of affiliates (millions of yen): Year ended 3/09: -784 Year ended 3/08: -15 (2) Consolidated financial position

Total assets Net assets Equity ratio Net assets per share Millions of yen Millions of yen % Yen

Year ended 3/09 177,795 78,236 38.3 2,137.03Year ended 3/08 177,461 82,296 41.0 2,148.90

Reference: Shareholders’ equity (millions of yen): Year ended 3/09: 68,141 Year ended 3/08: 72,740 (3) Consolidated cash flow position

Cash flow from operating activities

Cash flow from investing activities

Cash flow from financing activities

Ending balance of cash and cash equivalents

Millions of yen Millions of yen Millions of yen Millions of yenYear ended 3/09 12,204 -11,443 3,037 25,465Year ended 3/08 17,416 -11,695 -2,301 21,667

2. Dividends

Dividend per share (Yen)

(Record date) End of first quarter

End of interim period

End of third

quarter Year end Annual

Total dividends(annual)

Payout ratio (consolidated)

Dividends/net assets

(consolidated)

Yen Yen Yen Yen Yen Millions of yen % %

Year ended 3/08 ‒ 10.00 ‒ 15.00 25.00 858 40.4 1.2Year ended 3/09 ‒ 15.00 ‒ 15.00 30.00 959 110.8 1.4Year ending 3/10

(forecast) ‒ 15.00 ‒ 15.00 30.00 35.4

3. Forecast for Consolidated Business Results for the Fiscal Year Ending March 31, 2010 (Apr. 1, 2009 – Mar. 31, 2010)

(Percentages represent changes from the same period of previous fiscal year)

Net sales Operating income Ordinary income Net income Net incomeper share

Millions of yen % Millions of yen % Millions of yen % Millions of yen % YenSecond consolidated quarter (cumulative) 80,000 -3.9 2,800 -28.4 2,400 -32.1 850 -25.2 26.66

Full year 161,000 -2.5 6,600 -9.7 6,000 -9.0 2,700 205.6 84.68

Listed Company Name:

Listing Exchanges: Tokyo Stock Exchange

Securities Code: 9749 URL: http://www.fsi.co.jp Representative: Haruhisa Shiraishi, President & Chief Operating Officer

Contact: Tatsuya Naito, Manager of Finance & Accounting Division, Corporate Planning Department

Phone: +81-45-650-8811 (main)

Scheduled date of Annual General Meeting of Shareholders: June 22, 2009 Scheduled date of dividend payment: June 23, 2009 Scheduled date of filing of Annual Security Report: June 24, 2009

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4. Others (1) Changes in consolidated subsidiaries during the period (changes in scope of consolidation): None (2) Changes in accounting principles, procedures and presentation methods for preparation of consolidated financial

statements 1) Changes caused by revision of accounting standards: Yes 2) Other changes: None Note: Please refer to “Change in Basis of Presenting Consolidated Financial Statements” on page 23 for details. (3) Number of outstanding shares (common shares) 1) Number of shares outstanding at the end of period (including treasury stock): Year ended 3/09: 35,746,329 shares Year ended 3/08: 37,546,329 shares 2) Number of treasury stock at the end of period Year ended 3/09: 3,860,219 shares Year ended 3/08: 3,696,026 shares Note: Please refer to “Per-share Information” on page 42 for the number of shares used in calculating consolidated net income

per share. (Reference) Summary of Non-consolidated Financial Results 1. Non-consolidated Business Results for the Fiscal Year ended March 31, 2009 (April 1, 2008 – March 31, 2009) (1) Non-consolidated operating results (Percentages shown for net sales, operating income, ordinary income, and net income represent year-on-year changes)

Net sales Operating income Ordinary income Net income Millions of yen % Millions of yen % Millions of yen % Millions of yen %

Year ended 3/09 82,153 -8.0 1,522 -12.4 3,061 -0.9 140 -89.3Year ended 3/08 89,297 -3.7 1,737 -65.8 3,090 -47.0 1,322 162.3

Net income per share

Net income per share/diluted

Yen YenYear ended 3/09 4.32 –Year ended 3/08 37.66 –

(2) Non-consolidated financial position

Total assets Net assets Equity ratio Net assets per share Millions of yen Millions of yen % Yen

Year ended 3/09 143,643 62,668 43.6 1,963.87Year ended 3/08 137,183 67,468 49.2 1,993.08

Reference: Shareholders’ equity (millions of yen): Year ended 3/09: 62,621 Year ended 3/08: 67,468 2. Forecast for Non-consolidated Business Results for the Fiscal Year Ending March 31, 2010

(Apr. 1, 2009 – Mar. 31, 2010) (Percentages represent changes from the same period of previous fiscal year)

Net sales Operating income Ordinary income Net income Net income per share

Millions of yen % Millions of yen % Millions of yen % Millions of yen % YenSecond quarter (cumulative) 40,000 -4.8 170 -77.1 800 -51.2 480 -53.9 15.05

Full year 82,500 0.4 1,800 18.2 3,100 1.3 1,800 ‒ 56.45* The above forecast has been prepared based on data as of the announcement date. Since various uncertainties subsist in forecasts,

actual results may differ from forecasted figures.

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1. Operating Results

(1) Analysis of operating results

1) Overview of the consolidated fiscal year under review During the consolidated accounting period under review, the Japanese economy experienced a severe slowdown. Hit by the worldwide financial crisis and the global recession triggered by the U.S. subprime issue, corporate earnings fell sharply. The stock market slowed, throwing the economy into turmoil, and employment conditions worsened. In our industry, individual companies saw their earnings decline under harsh economic circumstances to the point where they were strongly opposed to making IT-related investments. Faced with pressure from business partners to cut service prices, the entire industry is beginning to show signs of slowing. In response, the Group established a basic policy of “Aim to become the leading company in the IT industry! - Pursuit of growth and high added value -” to move from a business framework centered on commissioned development projects to a corporate structure from which it can provide products and services that directly meets users’ needs. To achieve this, we have taken steps to develop unique products and seek high value-added business in an effort to transform ourselves into an IT solutions vendor. In addition, the Group determined five strategic pillars for accomplishing the basic policy. To address these pillars, the Company launched the Corporate Planning Department under the direct control of the president in a bid to upgrade its business planning functions. Among other business activities, the Company focused its energy on the software-as-a-service (SaaS) business. In June 2008, Google Apps Premier Edition was released for corporate users. In October 2008, the Cloud Computing Center was established to bolster the SaaS business. The Company also organized a comprehensive IT solution seminar on the subject of cloud computing entitled “FUJISOFT Solution Seminar 2008 in AKIBA.” Apart from the SaaS business, in October 2008 the Company developed Japan’s first system that uses sounds or keywords to detect bank transfers resulting from scams at bank and other ATMs as part of its efforts to prevent damage caused by scams. In January 2009, a software title for video distribution on Nintendo’s Wii game console, Minna-no Theater Wii, was released. With these initiatives, we have endeavored to broaden our business horizons to serve new markets. As part of its sales activities, the Company participated in CEATEC JAPAN 2008, one of Asia’s largest international trade fairs on video, information and telecommunications, as well as in the 2009 International Consumer Electronic Show (CES), the world’s largest home electronics trade fair held in Las Vegas, Nevada in the United States, as it did in the preceding fiscal year. This gave us a positive presence, not only in the Japanese market, but in overseas markets as well. In addition, the industry’s first SaaS distribution BMS service was displayed at the RETAILTECH JAPAN trade fair. In terms of research and development, the Company established the FUJISOFT Cell Processing Center in December 2008 to conduct research into the practical application of regenerated cartilage. Joined by the Company, the development project for the early widespread use of three-dimensional regenerated composite tissue products as advanced surgical implants was designated by the Cabinet Office to be included in the special zone program for advanced medical development. This designation has paved the way for the integrated and efficient management of the research fund. The All-Japan Robot-Sumo Tournament reached a milestone with its 20th event. It motivates participants to engage in research, enabling them to display their creativity. In addition, it contributes to enhancing the standard of the industry as a whole by encouraging engineers through robot making. For the consolidated fiscal year under review, the business performance in the Group’s embedded software development was generally sluggish after the slowdown of the domestic economy led by the global recession. In operation software development, sales to the distribution sector increased while those to the financial sector failed to take off. Consequently, for the fiscal year under review, net sales stood at 165,081 million yen, down 3.3% from the preceding period. Operating income was down 2.7% from a year earlier, to 7,312 million yen. Despite the operational sophistication achieved by increasing the sales cost ratio and using mission-critical systems, personnel costs increased as a result of hiring top-level personnel and strengthening the administrative division. Ordinary income was also down 15.0% year on year, to 6,596 million yen, partly attributable to a loss being posted on equity-method investment. Net income stood at 883 million yen, a drop of 59.3% from the preceding year’s level, as a result of posting extraordinary losses. These included the loss on valuation of investment securities suffered after a drop in the market prices of shares owned and the loss on equity-method investment resulting from the lump-sum amortization of affiliated companies’ goodwill.

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Segment results by business were as follows: The Fujisoft Group changed its business classifications in the consolidated accounting period under review. Details of the changes are outlined in “(Note) 7 Change of business segment” in “1. Segment information by business type” in (Segment Information).

(Software development related business) With respect to embedded software, sales declined in both telecommunication control systems and machine control systems as a result of the global recession. As for operation software, orders for large-scale projects were obtained, supporting brisk sales in the distribution sector, whereas sales for the financial sector tumbled as projects diminished throughout the industry. As a result, this segment achieved sales of 134,533 million yen and operating income of 6,604 million yen.

(Outsourcing business) Office services, where the Company undertakes the planning, design and operation of business processing outsourced from customers, attained brisk sales, while sales of system maintenance and operation services were weak after a reduction in major clients. Consequently, this segment’s sales stood at 28,210 million yen, with operating income at 700 million yen.

(Other businesses)

Sales of job placement and temporary staffing agency services, etc. were 2,338 million yen, and operating income from the

services reached 600 million yen. Large enterprises saw weaker performance, leading to reductions in temporary staff and

employment. This trend had a negative impact on the performance of this segment.

2) Forecast for the next consolidated fiscal year Going forward, we anticipate a further weakening of the Japanese economy on the back of the worldwide economic downturn. Shrinking consumer spending is expected to result in weak domestic demand. In the information services industry, it will be very difficult to win orders with intensifying competition and slumping investment from corporate clients. However, IT investment is forecast to continue its steady growth in the future, as it is indispensable for companies.

In this situation, the Group will make progress as an IT solution vendor seeking high value-added business in a bid to gain increased confidence from clients. For the next fiscal year, we forecast that net sales will increase 2.5% year on year to 161 billion yen , ordinary income will fall 9.0% to 6 billion yen and net income will jump 205.6% to 2.7 billion yen. We plan to pay a dividend of 30 yen per share in the next fiscal year.

* The above forecast has been prepared based on data as of the announcement date. Since various uncertainties subsist in forecasts, actual results may differ from the forecasted figures.

(2) Analysis of financial condition 1) Asset, liabilities and net assets

(Total assets) Total assets stood at 177,795 million yen at the end of the consolidated financial year under review, up 334 million yen from the end of preceding consolidated accounting period. In the assets section, current assets fell 1,116 million yen from a year earlier, to 68,149 million yen, largely from an increase of 3,797 million yen in cash and time deposits and a decrease of 5,042 million yen in notes and accounts receivable after the sales decline. Fixed assets grew 1,451 million yen from a year earlier, to 109,646 million yen, mainly because of a rise in land and investment securities and a fall in goodwill. (Liabilities) At the end of the consolidated financial year under review, total liabilities amounted to 99,559 million yen, up 4,394 million yen from the end of the preceding consolidated fiscal year. This was mainly due to an increase of 7,231 million yen in long-term loans and a decrease of 3,353 million yen in trade accounts payable. (Net assets) Net assets fell 4,060 million yen from the end of the preceding consolidated fiscal year, to 78,236 million yen at the end of the consolidated accounting term under review. The principal reason behind this was the acquisition of treasury stock worth 3,704 million yen. As a result, the equity ratio dropped to 38.3% from 41.0% at the end of the previous consolidated fiscal year.

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2) Cash flows The balance of cash and cash equivalents (“funds”) in the consolidated fiscal year under review on the consolidated basis increased 3,798 million yen from the end of the previous consolidated fiscal year, to 25,465 million yen. (Cash flows from operating activities) In the consolidated fiscal year under review, net cash provided by operating activities stood at 12,204 million yen, a decrease of 5,212 million yen compared with the previous fiscal year. The main components were income before income taxes and minority interests (for the consolidated fiscal year under review) of 4,523 million yen (a decrease of 2,638 million yen compared with the previous consolidated fiscal year), depreciation expense of 7,273 million yen (a decrease of 2,649 million yen), accounts receivable of 4,870 million yen (an increase of 3,411 million yen) and trades payable of 3,353 yen (an increase of 4,822 million yen), among other factors. (Cash flows from investing activities) Net cash used in investing activities in the consolidated fiscal year under review was 11,443 million yen (a decrease of 252 million yen compared with the previous year). The main factors were 3,627 million yen in outlays for the acquisition of tangible fixed assets (an increase of 918 million yen), 3,265 million yen in outlays for the acquisition of intangible fixed assets (a decrease of 2,090 million yen), and 5,631 million yen in outlays for the acquisition of investment securities (an increase of 727 million yen), among others. (Cash flows from financing activities) Net cash provided by financing activities in the consolidated fiscal year under review was 3,037 million yen (an increase of 5,339 million yen compared with the previous consolidated fiscal year). The main components included the acquisition of long-term loans of 8,951 million yen (an increase of 8,451 million yen), dividends paid amounting to 977 million yen (an increase of 265 million yen) and the acquisition of treasury stock worth 374 million yen (a decrease of 837 million yen).

(Reference) Cash flow-related indicators

FY2004 FY2005 FY2006 FY2007 FY2008

Equity ratio (%) 46.9 47.3 43.3 41.0 38.3

Equity ratio based on market value (%) 71.8 75.5 71.2 35.5 28.6The ratio of interest-bearing debt to operating cash flow (years) 4.1 2.0 5.5 3.2 5.3

Interest coverage ratio (times) 23.3 44.6 18.2 21.7 15.2

Equity ratio: Shareholders’ equity / Total assets Equity ratio based on market value: Market capitalization / Total assets

* Total market value for stocks is calculated on the basis of the number of outstanding shares, excluding treasury stock. The ratio of interest-bearing debt to operating cash flow: Interest-bearing debt / Cash flows from operating activities Interest coverage ratio: Cash flows from operating activities / Interest payments

* All the amounts are consolidated bases. * Cash flows are cash flows from operating activities. * Interest-bearing debt is all the debt with interest on the consolidated balance sheet.

(3) Basic profit allocation policy, and dividends for the current and new fiscal year

Our industry is facing changes in market structure and rapid technological innovation, and we need to conduct research and development aggressively, and invest in equipment for the rationalization of operations, in order to further improve our market competitiveness and profitability. Our policy is to pay dividends based on a variety of factors – financial position, profit level, payout ratio, and other factors – while also ensuring we have sufficient retained earnings to carry out the aforementioned investments. Under this policy, we have decided to pay a year-end dividend of 15.00 yen per share for the consolidated fiscal year under review, bringing dividend payments on an annual basis to 30.00 yen per share. For the consolidated fiscal year ending March 31, 2010, we plan to pay a dividend of 30.00 yen per share on an annual basis.

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(4) Business risks Below we discuss risks we believe could have an important influence on the investment decisions of investors. Forward-looking statements are based on the judgment of management as of the release of this fiscal report (May 13, 2009). 1) Contracted software development Our group designs, develops, manufactures, and maintains software on contracted from clients and in line with their needs. We are thorough in controlling the quality of our products, we guarantee the quality of our products, and we constantly work to improve customer satisfaction. We acquired ISO 9001 certification in June 1995, and have established a quality manual and targets to ensure thorough quality control. Regarding systems development, we are thorough in managing projects from the inquiry, estimate, and order-receipt stages, and we continue to work to strengthen our project management ability in order to prevent the occurrence of unprofitable projects. However, there is no guarantee that quality problems will not arise in the services that our group provides. We would face additional costs, and perhaps a damages suit, if quality problems did arise, and this could affect our result of operations and financial position. 2) Outsourcing operations It is essential in the outsourcing business to take appropriate precautions and responses to system instability and trouble. This is why our group has adopted an earthquake-resistant design for data center facilities, and this is why we continue to work to develop an organizational framework that is responsive to sudden system trouble. However, the occurrence of a major and unexpected natural disaster, and the inability to smoothly carry out operations due to system trouble, could impact our group’s result of operations and financial position. 3) Management of classified information We understand that our group, which handles corporate client information and personal information, has the social responsibility to appropriately manage this classified information and ensure its safety. Our group has implemented a variety of measures to prevent information leaks, including formulating and observing internal information protection standards such as computer virus countermeasures and network management, introducing building access security systems, ensuring thorough training of employees regarding information management, and concluding nondisclosure agreements with vendors. The occurrence of an information leak, despite these preventative measures, could lead to damages suits and disrupt our ability to continue commissioned software development activities, thereby impacting our group’s result of operations and financial position. 4) Risks related to the application of impairment accounting for fixed assets Our group owns fixed assets including land and buildings for business purposes. We adopted accounting standards for the impairment of fixed assets starting in the fiscal year ended March 31, 2006, and the necessity to recognize impairment losses due to changes in the market value of assets, and changes in future profit forecasts, could impact our group’s result of operations and financial position.

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2. Outline of the Corporate Group Our corporate Group, which consists of FUJISOFT INCORPORATED (“the Company”), 14 consolidated subsidiaries, three non-consolidated subsidiaries, and six affiliates, is principally engaged in software development, and outsourcing services. Each company in the group is responsible for its own sales strategy, but they also cooperate with one another. The positioning of each company in the group is shown in the diagram below. As for the positioning of group companies in the software development business, the Company handles all systems development, while group companies handle mostly software development. The Fujisoft Group changed its business classifications in the consolidated accounting period under review. Details of the changes are outlined in “(Note) 7 Change of business segment” in “1. Segment information by business type” in (Segment Information).

Category Business description

Software development related business

Contract software development of telecommunication control systems, machine control systems, operating systems and operation applications used in different industries, quality evaluation and control support, consulting, product development and sales, and design, manufacture, sales and other activities of personal computer related devices

Outsourcing business System maintenance and operation services, data entry and helpdesk services and other services Other businesses Temporary staff dispatch services

The operational diagram is as follows:

: Consolidated subsidiaries (14 companies) / : Equity-method non-consolidated subsidiaries (3 companies) / : Equity-method affiliates (6 companies)

Customers

Outsourcing businessSoftware development- related business

The Company

Mercury Staffing, Inc. FUJISOFT MEDICAL, Inc.

Temporary staffing and other businesses Cybernet Systems Co., Ltd.

KGT Inc. PLAMEDIA CORPORATION

Products

Cyber Com Co., Ltd. V&V Incorporated

Telecommunication system

FUJISOFT SERVICE BUREAU INC.

Office services

OA Laboratory Co., Ltd.

Hardware development

BLOCKLINE Inc. Solution services

FUJISOFT KCS Co., Ltd. Tosho Computer Systems Co., Ltd.

FUJISOFT SSS, INC.

Financial system

FUJI SOFT Kikaku., Ltd. (Special subsidiary)

Real estate lease etc.

Diamond Fuji Soft Co., Ltd. Nihon Bu siness Soft Inc.

Operation system

FUJISOFT DIS Co., Ltd. Vinculum Japan Corporation 4U Applications, Inc. Vinculum China Co., Ltd.

Distribution system

Ace Secur ities Co., Ltd.

Securities system

Pulse-ImmunoTech Corporation

Medical system

Other businesses FINE HOLDINGS Inc.

Note: The information in this diagram is correct as of March 31, 2009.

FUJISOFT DIS Co., Ltd. changed its company name to VIXUS Incorporated. on April 1, 2009.

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3. Management Policies

(1) Basic management policies Our group’s basic management policy is to be “a software maker that contributes to society through technology and reliability,” and we aim to contribute more broadly to society, to better satisfy customer needs, and to be more eco-friendly. In addition, as “a software maker to which customers can feel secure entrusting work,” we aim to be a best partner trusted by our customers by providing them with the service basics of “quality, fast turnaround, and confidentiality.” Also, we will work strenuously to “challenge & creation” as a total system vendor that strives to always be ahead of the curve, in order to contribute to the further development of the industry and society.

(2) Management target We consider consistent and overall improvements in profits to be an important management target. A dividend payout ratio of 30 % is the Company’s management target.

(3) Medium and long-term management strategies We aim to expand group sales and profits to achieve our medium to long-term business targets by finding new customers in different industries and businesses, promoting co-existence and co-prosperity with client companies, and strengthening direct marketing to end-users. Also, we will introduce a project management framework for different fields – securities, distribution, financial, insurance, public works and welfare work – and thoroughly review unprofitable projects, to improve service quality and win new customers. In the new business, we will focus on expanding oursourcing business to provide all kind of services ranging from consulting service, such as operation and management improvements, to system development and maintenance, while continuing to focus on our priority solutions business. We also aim to create a high value-added business by strengthening services for end-uses. On the technological side of things, we will continue to actively invest in research and development to create original software products and solutions, improve the sophistication of our technologies, and provide leading-edge technologies. We are also active in development, shorten development periods, improve quality and reduce costs, by making parts from already-developed assets and reusing those parts.

(4) Future challenges Looking ahead, the Japanese economy will experience a drop in spending prompted by the slowdown of the U.S. economy arising from the subprime mortgage issues and flagging global finances. The domestic economic outlook will remain uncertain. In these circumstances, although some demand remains for information security and internal control solutions, the information services industry faces such a challenging situation in which it must adapt and respond to manufacturers’ investment cuts, to demands for delivery time and quality, and to increasingly sophisticated and diversifying customers’ needs. In this environment, our Group has established a basic policy of “Aim to become the leading company in the IT industry!” By carrying out the management policy, we will be strengthening our foundations for stable earnings and working to secure growth engines. In addition, the Group will be working on the five pillars listed below in an effort to accomplish the management policy. 1) Strengthening the foundations of the contract business We will gain an accurate understanding of customers’ needs and implement project management and risk management to

improve operational quality and productivity and increase our profit earning ability. 2) Becoming a prime vendor We will not restrict ourselves to direct transactions with users but will aim to be a prime contractor that controls multiple IT

firms. We will also work to obtain advanced professional engineers as project managers that lead the IT industry and step up our efforts to develop these human resources.

3) Accelerating productization We will develop and introduce to the market packages and services that serve a wide variety of customers, rather than systems

that are only suitable for individual companies.

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4) Accelerating globalization By not only serving the domestic market, we will actively utilize offshore resources, developing closer ties with overseas

businesses and taking part in overseas trade fairs. By doing so, we will increase our brand power to build a framework ready for expansion in overseas markets.

5) Reinforcing Group capabilities Although Group members conducted their activities independently in the past, we will establish a structure for collaboration

by sharing market strategies across the whole Group and conducting sales activities in a more collaborative and efficient manner to increase our market share by utilizing the entire Group’s collective capabilities.

By focusing on these five pillars, we will be aiming to become the leading company in the IT industry as stipulated in the basic policy.

(5) Internal administrative structure and management Please see the corporate governance report “Basic policy and structure of internal control,” disclosed separately. The corporate governance report, last updated on November 28, 2008, is available at the following URLs. (The Company’s website) http://www.fsi.co.jp/company/img/7/corporate_governance.pdf (The website of the Tokyo Stock Exchange) http://www.tse.or.jp/disc/97490/140120081126026083.pdf

(6) Other important management matters Not applicable.

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4. Consolidated Financial Statements (1) Consolidated Balance Sheet

(Thousands of yen)

FY2007 (As of March 31, 2008)

FY2008 (As of March 31, 2009)

(Assets)

Current assets

Cash and time deposits 21,556,770 25,354,026

Notes and accounts receivable-trade 35,304,074 30,261,853

Securities 1,896,454 398,275

Inventories 3,876,643 –

Merchandise – 661,644

Work in process – 3,027,621

Raw materials and supplies – 45,239

Deferred tax assets 4,559,723 4,760,967

Other 2,403,195 3,975,869

Allowance for bad debt -331,146 -336,317

Total current assets 69,265,715 68,149,181

Fixed assets

Tangible fixed assets

Building and structures 56,515,839 57,464,568

Accumulate depreciation -12,149,940 -14,541,722

Building and structures (net) 44,365,899 42,922,846

Land *2 29,301,982 *2 30,576,982

Construction in progress 63,200 134,439

Other 9,878,650 12,343,371


Other (net) 4,174,475 5,504,172

Total tangible fixed assets 77,905,556 79,138,441

Intangible fixed assets

Goodwill 3,477,350 2,343,126

Software 6,641,523 6,938,991

Other 805,935 817,930

Total intangible fixed assets 10,924,810 10,100,049

Investments and other assets

Investment securities *1 13,122,552 *1, 4 13,819,395


Other 4,189,555 4,800,501


Total investments and other assets 19,365,204 20,408,146

Total fixed assets 108,195,571 109,646,637

Total assets 177,461,287 177,795,818

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(Thousands of yen)

FY2007 (As of March 31, 2008)

FY2008 (As of March 31, 2009)

(Liabilities)

Current liabilities

Accounts payable-trade 13,300,072 9,946,231

Short-term loans 55,737,461 55,315,100

Long-term loans payable within one year – 1,686,892

Accrued expenses 10,701,039 9,827,012

Income taxes payable 1,954,260 1,250,069Allowance for bonuses to directors and corporate auditors 219,126 160,019

Other 6,854,135 5,564,414

Total current liabilities 88,766,094 83,749,740

Long-term liabilities

Long-term loans 608,800 7,839,908

Liabilities for retirement benefits to employees 4,281,942 4,619,259Liabilities for retirement benefits to directors and corporate auditors 383,542 379,982

Other 1,123,928 2,970,122

Long-term liabilities 6,398,213 15,809,272

Total liabilities 95,164,308 99,559,013

(Net assets)

Owners’ equity

Common stock 26,200,289 26,200,289

Capital surplus 28,438,965 28,438,965

Retained earnings 35,802,405 31,525,608

Treasury stock -8,566,839 -8,099,900

Total owners’ equity 81,874,820 78,064,962

Valuation and translation adjustment Valuation difference of available-for-sale securities -17,377 -890,801

Deferred hedge gain (loss) -65,240 18,533

Land revaluation difference *2 -9,051,263 *2 -9,051,263

Total faluation and translation adjustments -9,133,881 -9,923,531

Stock acquisition rights – 46,566

Minority interest 9,556,039 10,048,808

Total net assets 82,296,979 78,236,805

Total liabilities and net assets 177,461,287 177,795,818

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(2) Consolidated Income Statement (Thousands of yen)

FY2007

(From April 1, 2007 to March 31, 2008)

FY2008 (From April 1, 2008 to March 31, 2009)

Net sales 170,739,820 165,081,666

Cost of sales 131,037,486 125,728,602

Gross of profit 39,702,333 39,353,063

Selling, general and administrative expenses

Advertising expense 1,005,067 808,311

Executive compensation 697,134 954,045

Salaries to employees 13,154,214 13,814,689

Retirement allowance expense 620,687 600,548

Legal welfare expense 1,564,327 1,758,353Provision for liabilities for retirement benefits to directors and corporate auditors 68,958 72,802

Provision for allowance for bonuses to directors and corporate auditors 226,074 172,117

Welfare expense 664,414 732,053

Employing and training expenses 1,450,986 940,717

Traveling expense 816,619 837,436

Office supplies expense 796,656 377,364

Rents 220,253 224,908

Land rents 1,094,004 1,119,943

Tax and public charges 576,652 763,661

Provision for allowance for bad debt 12,020 6,498

Depreciation expense 1,538,312 1,668,389

Research and study 648,341 777,025

Office work outsourcing fee 1,986,323 2,240,820

Amortization of goodwill 1,174,971 1,130,764

Other 3,869,201 3,040,343

Total selling, general and administrative expenses 32,185,226 32,040,796

Operating income 7,517,107 7,312,267

Non-operating income

Interest income 57,455 53,647

Dividend income 86,189 89,624

Gain on sales of securities 28,113 57,120

Exchange gain 30,835 –

Rent income 864,316 1,498,235

Cancellation income for system services 178,451 272,373

Other 572,712 259,780

Total non-operating income 1,818,074 2,230,782

― 13 ―

(Thousands of yen)

FY2007



Non-operating expenses

Interest expense 802,398 802,019

Losses from equity-method investment 15,490 784,070

Cost of rents 537,798 791,653

Cancellation loss for system services 30,831 139,101

Loss on desposal of fixed assets 70,381 94,216

Exchange loss – 130,052

Other 116,946 205,175

Total non-operating expenses 1,573,846 2,946,288

Ordinary income 7,761,334 6,596,761

Extraordinary gains

Gain on sales of investment securities 228,569 –

Gain on change in equity ownership percentage 174,360 –

Return premium for cancellation of life insurance 724,679 –

Total extraordinary gains 1,127,609 –

Extraordinary losses

Loss on valuation of investment securities 1,356,672 1,539,693

Loss onf the impairment of fixed assets *2 86,645 *2 2,414

Loss on retirement of software 144,563 –

Amortization of goodwill 138,714 –

Loss on equity method investment – *3 527,916

Loss on changes in equity – 3,263

Total extraordinary losses 1,726,595 2,073,288

Income before income taxes and minority interests 7,162,348 4,523,472

Income taxes – current 3,567,861 2,266,235

Income taxes – deferred 84,509 411,143

Total income taxes 3,652,370 2,677,378

Minority interests 1,337,695 962,623

Net income 2,172,282 883,470

― 14 ―

(3) Consolidated Statement of Changes in Owners’ Equity (Thousands of yen)

FY2007



Owners’ equity

Common stock

Balance at end of previous fiscal year 26,200,289 26,200,289

Balance at end of the fiscal year 26,200,289 26,200,289

Capital surplus



Retained earnings


Change during the fiscal year

Dividents from surplus -711,657 -988,519

Increase due to newly consolidated subsidiaries 29,457 –

Net income 2,172,282 883,470

Retirement of treasury shares – -4,171,748

Total change during the fiscal year 1,490,082 -4,276,797


Treasury stock

Balance at end of previous fiscal year -4,024,106 -8,566,839


Purchase of treasury stock -4,542,732 -3,704,809

Retirement of treasury shares – 4,171,748

Total change during the fiscal year -4,542,732 466,939

Balance at end of the fiscal year -8,566,839 -8,099,900

Total owners’ equity



Dividents from surplus -711,657 -988,519

Increase due to newly consolidated subsidiaries 29,457 –

Net income 2,172,282 883,470

Purchase of treasury stock -4,542,732 -3,704,809

Total change during the fiscal year -3,052,650 -3,809,857


― 15 ―

(Thousands of yen)

FY2007



Valuation and translation adjustments Valuation difference of available-forsale securities

Balance at end of previous fiscal year 1,144,071 -17,377Change during the fiscal year

Net changes in non-shareholders’ equity items during the fiscal year -1,161,448 -873,424

Total change during the fiscal year -1,161,448 -873,424Balance at end of the fiscal year -17,377 -890,801

Deferred hedge gain (loss) Balance at end of previous fiscal year -8,461 -65,240Change during the fiscal year

Net changes in non-shareholders’ equity items during the fiscal year -56,779 83,773

Total change during the fiscal year -56,779 83,773Balance at end of the fiscal year -65,240 18,533

Land revaluation difference Balance at end of previous fiscal year -9,051,263 -9,051,263Balance at end of the fiscal year -9,051,263 -9,051,263

Total valuation and translation adjustments Balance at end of previous fiscal year -7,915,653 -9,133,881Change during the fiscal year

Net changes in non-shareholders’ equity items during the fiscal year -1,218,227 -789,650

Total change during the fiscal year -1,218,227 -789,650Balance at end of the fiscal year -9,133,881 -9,923,531

Stock acquisition rights Change during the fiscal year

Net changes in non-shareholders’ equity items during the fiscal year – 46,566

Total change during the fiscal year – 46,566Balance at end of the fiscal year – 46,566

Minority interests Balance at end of previous fiscal year 8,422,095 9,556,039Change during the fiscal year

Net changes in non-shareholders’ equity items during the fiscal year 1,133,943 492,768

Total change during the fiscal year 1,133,943 492,768Balance at end of the fiscal year 9,556,039 10,048,808

Total net assets Balance at end of previous fiscal year 85,433,913 82,296,979Change during the fiscal year

Dividents from surplus -711,657 -988,519Increase due to newly consolidated subsidiaries 29,457 –Net income 2,172,282 883,470Purchase of treasury stock -4,542,732 -3,704,809Net changes in non-shareholders’ equity items during the fiscal year -84,283 -250,316

Total change during the fiscal year -3,136,934 -4,060,174Balance at end of the fiscal year 82,296,979 78,236,805

― 16 ―

(4) Consolidated Cash Flow Statement (Thousands of yen)

FY2007



Cash flows from operating activities Income before income taxes and minority interests 7,162,348 4,523,472Depreciation 9,922,793 7,273,367Loss on the impairment of fixed assets 86,645 2,414Amortization of goodwill 1,313,685 1,130,764Increase (decrease) in liabilities for retirement benefits to employees 254,868 337,317

Interest expense 802,398 802,019Loss on equity method investment 15,490 1,311,986Loss on valuation of investment securities 1,356,672 1,539,693Decrease in accounts receivable 1,458,481 4,870,064Decrease (increase) in inventories -81,257 579,043Decrease (increase) in trades payable 1,468,399 -3,353,840Increase (decrease) in accrued personnel expenses 1,069,161 -789,682Increase (decrease) in consumption tax payable 1,654,814 -845,727Increase (decrease) in accounts payable -2,366,602 -414,782Payments for purchase of long-term prepaid expenses -1,063,167 -1,151,382Bonuses paid to directors and corporate auditors -79,040 -59,106Other -387,325 309,099Subtotal 22,588,367 16,064,722Interest and dividends received 261,965 231,235Interest paid -825,026 -781,992Income taxes paid -4,608,379 -3,309,117Net cash provided by operating activities 17,416,927 12,204,848

Cash flows from investing activities Payments for purchases of tangible fixed assets -2,708,983 -3,627,520Payments for purchases of intangible fixed assets -5,355,829 -3,265,466Payments for purchases of securities -6,389,147 -2,296,722Proceeds from sales of securities 7,105,288 2,994,079Payments for purchases of investment securities -4,903,520 -5,631,038Proceeds from sales of investment securities 352,587 358,789Payments for purchases of shares of subsidiaries -207,464 –Proceeds from sales of shares of subsidiaries 187,572 –Other 223,767 24,512Net cash used in investing activities -11,695,730 -11,443,366

Cash flows from financing activities Acquisition of short-term loans 104,855,000 112,140,000Repayment of short-term loans -100,906,100 -112,434,391Acquisition of long-term loans 500,000 8,951,500Repayment of long-term loans -1,763,480 -161,470Payments for purchases of treasury stock -4,542,732 -3,704,809Dividends paid -712,463 -977,958Dividends paid to minority shareholders -330,356 -415,614Proceeds from payments by minority shareholders 598,913 –Repayment of lease obligations – -359,281Net cash provided by (used in) financing activities -2,301,219 3,037,975

Translation difference of cash and cash equivalents – -1,399

― 17 ―

(Thousands of yen)

FY2007



Increase (decrease) in cash and cash equivalents 3,419,977 3,798,058Cash and cash equivalents at beginning of period 18,378,792 21,667,287Increase in cash and cash equivalents due to inclusion of subsidiaries in consolidation 176,344 –

Decrease in cash and cash equivalents due to exclusion of subsidiaries from consolidation -307,827 –

Cash and cash equivalents at end of period *1 21,667,287 *1 25,465,345

― 18 ―

(5) Note on going concern assumptions Not applicable.

(6) Basis of Presenting Consolidated Financial Statements Item FY2007

(From April 1, 2007 to March 31, 2008) FY2008

(From April 1, 2008 to March 31, 2009) 1.Scope of consolidation 13 consolidated subsidiaries:

Vinculum Japan Corporation 4U Applications, Inc. OA LABORATORY CO, LTD. Cyber Com Co., Ltd. CYBERNET SYSTEMS CO., LTD. PLAMEDIA CORPORATION KGT Inc. Tosho Computer Systems Co., Ltd. FUJISOFT KCS Co., Ltd. FUJI SOFT SERVICE BUREAU INCORPORATED FUJISOFT DIS Co., Ltd. Mercury Staffing Co., Ltd. V&V Incorporated

V&V, Inc. became a consolidated subsidiary with the Company’s spin-off of V&V in the consolidated fiscal year under review, and for that reason is included in the scope of consolidation. The importance of Mercury Staffing Co., Ltd, which had been a non-consolidated subsidiary, has grown in the consolidated fiscal year under review, and for that reason is included in the scope of consolidation. Meanwhile, the importance of Fujisoft Kikaku, Ltd. and FUJISOFT SSS, Inc., which had been consolidated subsidiaries, has decreased in the consolidated fiscal year under review, and for that reason is excluded from the scope of consolidation, and the former consolidated subsidiaries were reclassified as affiliates accounted for using the equity method. Six non-consolidated subsidiaries:

Japan Internet News Co., Ltd. Fujisoft Kikaku, LTD. FUJISOFT SSS, INC. FUJISOFT MEDICAL, Inc. CCA Engineering Simulation Software (Shanghai) Co., Ltd. Cybernet CAE Systems (Shanghai) Co., Ltd.

The reason for exclusion from consolidation is: Fujisoft Kikaku, LTD., FUJISOFT SSS, INC., FUJISOFT MEDICAL, Inc., Japan Internet News Co., Ltd., and CCA Engineering Simulation Software (Shanghai) Co., Ltd., Cybernet CAE Systems (Shanghai) Co., Ltd. are small in size, and their total assets, sales, net income or loss (amounts equivalent to the equity holding), and retained earnings (amounts equivalent to the equity holding) for the current fiscal year do not have any material effect on the consolidated financial statements.

14 consolidated subsidiaries: Vinculum Japan Corporation 4U Applications, Inc. Vinculum China Co., Ltd. OA LABORATORY CO, LTD. Cyber Com Co., Ltd. CYBERNET SYSTEMS CO., LTD. PLAMEDIA CORPORATION KGT Inc. Tosho Computer Systems Co., Ltd. FUJISOFT KCS Co., Ltd. FUJI SOFT SERVICE BUREAU INCORPORATED FUJISOFT DIS Co., Ltd. Mercury Staffing Co., Ltd. V&V Incorporated

Vinculum China Co., Ltd. is included in the scope of consolidation, given that it was established byVinculum Japan Corporation, a consolidated subsidiary of the Company. FUJISOFT DIS Co., Ltd. changed its company name to VIXUS Incorporated on April 1, 2009. Six non-consolidated subsidiaries:

Japan Internet News Co., Ltd. Fujisoft Kikaku, LTD. FUJISOFT SSS, INC. FUJISOFT MEDICAL, Inc. CCA Engineering Simulation Software (Shanghai) Co., Ltd. Cybernet CAE Systems (Shanghai) Co., Ltd.

The reason for exclusion from consolidation is: Fujisoft Kikaku, LTD., FUJISOFT SSS, INC., FUJISOFT MEDICAL, Inc., Japan Internet News Co., Ltd., and CCA Engineering Simulation Software (Shanghai) Co., Ltd., Cybernet CAE Systems (Shanghai) Co., Ltd. are small in size, and their total assets, sales, net income or loss (amounts equivalent to the equity holding), and retained earnings (amounts equivalent to the equity holding) for the current fiscal year do not have any material effect on the consolidated financial statements.

― 19 ―

Item FY2007 (From April 1, 2007 to March 31, 2008)


2. Application of equity method Companies to which the equity method is applicable: Three non-consolidated subsidiaries

Fujisoft Kikaku, Ltd. FUJISOFT SSS, Inc. FUJISOFT MEDICAL, Inc.

The importance of Fujisoft Kikaku, Ltd. and FUJISOFT SSS, Inc., which had been consolidated subsidiaries, has decreased in the consolidated fiscal year under review, and for that reason is excluded from the scope of consolidation, and the former consolidated subsidiaries were reclassified as non-consolidated subsidiaries accounted for under equity method. FUJISOFT MEDICAL, Inc. has become a non-consolidated subsidiary accounted for using the equity method because the Company has made an additional investment in FUJISOFT MEDICAL in the form of an acquisition of shares. The equity method is applied to the Company’s investment in the following five affiliates:

Diamond Fuji Soft Co., Ltd. Nihon Business Soft, Inc. BLOCKLINE, Inc. Ace Securities Co., Ltd. Pulse-Immuno Tech Corp.

Companies to which the equity method is applicable: Three non-consolidated subsidiaries

Fujisoft Kikaku, Ltd. FUJISOFT SSS, Inc. FUJISOFT MEDICAL, Inc.

The equity method is applied to the Company’s investment in the following six affiliates:

Diamond Fuji Soft Co., Ltd. Nihon Business Soft, Inc. BLOCKLINE, Inc. Ace Securities Co., Ltd. Pulse-Immuno Tech Corp. FINE HOLDINGS Inc.

FINE HOLDINGS Inc. is included in the scope of application of equity method because its stock has been recently acquired.

Companies to which the equity method was not applicable: The equity method was not applied to nonconsolidated subsidiaries Nippon Internet Newspaper Co., Ltd., CCA Engineering Simulation Software (Shanghai) Co., Ltd., and Cybernet CAE Systems (Shanghai) Co., Ltd. and an affiliate KOUSOKUYA Inc., because these companies have little effects on net income or loss (amounts equivalent to the equity holding), retained earnings (amounts equivalent to the equity holding) of the consolidated financial statements.

Companies to which the equity method was not applicable: The equity method was not applied to nonconsolidated subsidiaries Nippon Internet Newspaper Co., Ltd., CCA Engineering Simulation Software (Shanghai) Co., Ltd., and Cybernet CAE Systems (Shanghai) Co., Ltd. and an affiliate KOUSOKUYA Inc., because these companies have little effects on net income or loss (amounts equivalent to the equity holding), retained earnings (amounts equivalent to the equity holding) of the consolidated financial statements.

3. Fiscal year of consolidated subsidiaries

The fiscal year end of PLAMEDIA CORPORATION is December 31. When preparing the consolidated financial statements, the Company uses the financial statements of PLAMEDIA CORPORATION, as of this date and makes necessary adjustments for important transactions between December 31 and the consolidated book-closing date.

The fiscal year end of PLAMEDIA CORPORATION and Vinculum China Co., Ltd. is December 31. When preparing the consolidated financial statements, the Company uses the financial statements of PLAMEDIA CORPORATION and Vinculum China Co., Ltd., as of this date and makes necessary adjustments for important transactions between December 31 and the consolidated book-closing date.

― 20 ―



4. Significant accounting policies (1) Valuation of major assets

Securities Bonds held to maturity

Stated at amortized cost. (Straight-line method)

Available-for-sale securities For those with market value: Stated at market value based on market prices, etc., as of the period-end (Unrealized valuation gains or losses are reported in the shareholders’ equity, and sales costs are determined by the moving average method.) For those without market value: Stated at cost as determined by the moving average method.

Securities Bonds held to maturity

Same as on the left

Available-for-sale securities For those with market value:

Same as on the left

For those without market value: Same as on the left

Inventories

Products: Stated at cost as determined with the moving average method.

Raw materials: Stated at cost as determined with the moving average method.

Work in process: Stated at cost on a specific identification method.

Inventories Valuation standards are based on the cost method (the method of writing down the book value based on a fall in profitability).

Products: Stated at cost as determined with the moving average method.

Work in process: Stated at cost on a specific identification method.

Raw materials: Stated at cost as determined with the moving average method.

Supplies: Stated at cost on a specific identification method.

(Change in accounting method) From the consolidated fiscal year under review, the Accounting Standard for Measurement of Inventories (ASB Statement No. 9, July 5, 2006) is applied. This change has no impact on the Company’s earnings.

Tangible fixed assets Computed with the declining balance method. However, buildings (excluding building attachments) acquired after April 1, 1998, are depreciated on a straight-line method.

Major useful lives: Building and structures: 3 to 50 years Machinery, equipment and vehicles: 2 to 17 years Tools, furniture and fixtures: 2 to 20 years

Tangible fixed assets (except leased assets)Same as on the left

(2) Depreciation of major fixed assets

Intangible fixed assets Software for sale:

Stated at the larger amount of either an amortizable amount based on the estimated sales volume during the valid sales period (less than 3 years) or an amortizable amount based on a straight-line method over the remaining valid sales period.

Intangible fixed assets (except leased assets)Software for sale:

Same as on the left

― 21 ―



Software for the Company’s own use: Amortized on a straight-line method over an estimated useful life (5 years) in the Company.

Other: Amortized on a straight-line method.

Investments and other assets:

Computed with the declining balance method.

Software for the Company’s own use: Same as on the left

Other:

Same as on the left Leased assets

Amortized using the straight line method, with the lease period being the useful life and the residual value being zero. For finance leases other than those for which the ownership rights of the leased property are deemed to transfer to the lessee whose date of commencing the lease transaction is March 31, 2008 or earlier, accounting treatment similar to that for ordinary rental transactions is applied.

Investments and other assets: Same as on the left

(3) Standards for recording allowances

Allowance for bad debt To provide for possible bad debt losses at the end of the fiscal year, the Company records an allowance based on historical percentage for ordinary receivables and an estimated amount for specific uncollectible receivables.

Allowance for bad debt Same as on the left

Allowance for bonuses to directors and corporate auditors To provide for payments of bonuses to directors and corporate auditors, an allowance is recorded in the amount recognized to have accrued at the end of the current fiscal year based on estimated amounts of payment at the end of the fiscal year.

Allowance for bonuses to directors and corporate auditors

Same as on the left

Liability for retirement benefits to employees To provide for payments of retirement benefits to employees, the Company records an amount recognized to have accrued at the end of fiscal year based on estimated amounts of retirement benefit obligations and pension assets at the end of the fiscal year.

Liability for retirement benefits to employees

Same as on the left

― 22 ―



As the estimated amount of pension assets exceeded the estimated amount of retirement benefit obligations after deduction of unsettled difference at change of accounting principle, unrecognized actuarial differences, and unrecognized prior service cost. Consequently, the exceeded amount is booked as prepaid pension expenses and classified as “Other” under “Investments and other assets” of the consolidated balance sheet. In addition, a difference arisen as a result of the change of accounting standards (5,034,915 thousand yen) is expensed equally, mainly over 15 years. Also, an actuarial difference is expensed equally from the fiscal year following its accrual over an average remaining service period (10 to 13 years) of employees at the time of the accrual. And prior service costs are accounted for based on an average remaining service period (10 to 13 years) of employees at the time of the accrual using the straight-line method.

Liability for retirement benefits to directors and corporate auditors The Company and some of its consolidated subsidiaries record amounts that they are required to pay upon retirement of directors and corporate auditors at the end of the fiscal year, based on internal policies.

Liability for retirement benefits to directors and corporate auditors

Same as on the left

(4) Accounting for lease transactions

Finance leases other than those which are deemed to transfer ownership of leased assets to lessees are accounted for as ordinary operating leases.

–—————

(5) Other important matters for the preparation of consolidated financial statements

Consumption tax Amounts reflected are stated exclusive of consumption tax.

Consumption tax Same as on the left

5. Valuation of assets and liabilities of consolidated subsidiaries

All assets and liabilities of consolidated subsidiaries are valuated with the mark-to-market method.

Same as on the left

6. Amortization of goodwill and negative goodwill

Goodwill is amortized evenly over a valid period reasonably estimated, except minor goodwill which is expensed as incurred. FUJISOFT DIS Co., Ltd.: 10 years Others: 5 years

Same as on the left

7. Cash and cash equivalents In preparing the consolidated cash flow statements, cash on hand, readily available deposits, and short-term liquid investments with maturities not exceeding three months at the time of purchase and little risk of changing values are considered to be cash and cash equivalents.

Same as on the left

― 23 ―

(7) Change in Basis of Presenting Consolidated Financial Statements



–––––––

(Accounting standards for lease transactions, etc.) For finance leases other than those for which the ownership rights of the leased property are deemed to transfer to the lessee, the accounting method similar to that used for that used for ordinary rental transactions was traditionally employed. From the consolidated fiscal year under review, a method similar to that used for ordinary trading transactions is used by applying the Accounting Standard for Lease Transactions (ASB Standard No. 13, June 17, 1993: the First Subcommittee of the Business Accounting Council); revised on March 30, 2007) and the Guidance on Accounting Standard for Lease Transactions (ASB Guidance No. 16 (January 18, 1994; Accounting System Committee of the Japanese Institute of Certified Public Accountants); revised on March 30, 2007). For finance leases other than those for which the ownership rights of the leased property are deemed to transfer to the lessee whose date of commencing the lease transaction is before the first fiscal year of application, an accounting method similar to that used for ordinary rental transactions continues to be used. This increases operating income by 21,155,000 yen and decreases ordinary income by 17,485,000 yen for the consolidated fiscal year under review. The impacts on segment information are stated in the relevant places.

― 24 ―

Changes to Basis of Presenting Consolidated Financial Statements FY2007


(From April 1, 2008 to March 31, 2009) (Cash Flow Statement) “Increase/Decrease in Accounts Payable” and “Payments for Purchase of Long-Term Prepaid Expenses,” which had been presented as components of “Others” in “Cash Flow from Operating Activities” in the previous consolidated fiscal year, are reclassified and presented as separate items since they have increased the materiality of impact in the context of consolidated financial statements. “Increase/Decrease in Accounts Payable,” presented as components of “Others” in “Cash Flow from Operating Activities” in the previous consolidated fiscal year is 1,783,820 thousand yen, and “Payments for Purchase of Long-Term Prepaid Expenses” is a negative factor of 800,801 thousand yen.

(Consolidated Balance Sheet) 1. As the Partial Amendment of Regulations for Terminology,

Forms and Preparation Methods of Financial Statements (Cabinet Office Ordinance No. 50 on August 7, 2008) begins to apply, “merchandise,” “work in process” and “raw materials and supplies” are reclassified and presented as separate items in the consolidated fiscal year under review, although they were presented as “inventories” in the preceding consolidated fiscal year. Included in inventories in the previous consolidated fiscal year, “merchandise,” “work in process” and “raw materials and supplies” amounted to 607,666 thousand yen, 3,233,305 thousand yen and 35,671 thousand yen respectively.

2. “Long-term loans payable within a year” was included in “short-term loans” up until the preceding consolidated fiscal year, but is reclassified and presented separately from “short-term loans” in the consolidated fiscal year under review. Included in short-term loans in the previous consolidated fiscal year, “long-term loans payable within a year” were 127,970 thousand yen.

― 25 ―

(8) Notes to Consolidated Financial Statements (Consolidated Balance Sheet) (Thousands of yen)

FY2007 (As of March 31, 2008)

FY2008 (As of March 31, 2009)

*1. Shares of non-consolidated subsidiaries and affiliates Investment securities (stocks) 6,064,730

*1. Shares of non-consolidated subsidiaries and affiliates Investment securities (stocks) 5,136,787 *2. In accordance with the Law Concerning Revaluation of

Land (Law No. 34 enacted on March 31, 1998, and revised on March 31, 2001), the Company revaluated its business-use land on March 31, 2002.

In accordance with the Law Partially Revising the Law Concerning Revaluation of Land (Law No. 24 enacted on March 31, 1999), the Company booked the amount equivalent to the tax on the revaluation difference in Net assets as “Land revaluation difference.” Method of revaluation:

The Company computed by making reasonable adjustments to the obtained with the method decided and announced by the Commissioner of the National Tax Administration Agency for calculation of the land price as the basis of the taxable price for the land tax specified by Article 16 of the Land Tax Law (Law No. 69, 1991) defined by Article 2-4 of the Enforcement Order (Ordinance No. 119 issued on March 31, 1998) of the Law Concerning Revaluation of Land.

Date of revaluation: March 31, 2002Difference between the market price of the land at the end of the current fiscal year when revaluation is made, and the book value after revaluation

- 1,126,723

*2. In accordance with the Law Concerning Revaluation of Land (Law No. 34 enacted on March 31, 1998, and revised on March 31, 2001), the Company revaluated its business-use land on March 31, 2002.

In accordance with the Law Partially Revising the Law Concerning Revaluation of Land (Law No. 24 enacted on March 31, 1999), the Company booked the amount equivalent to the tax on the revaluation difference in Net assets as “Land revaluation difference.” Method of revaluation:

The Company computed by making reasonable adjustments to the obtained with the method decided and announced by the Commissioner of the National Tax Administration Agency for calculation of the land price as the basis of the taxable price for the land tax specified by Article 16 of the Land Tax Law (Law No. 69, 1991) defined by Article 2-4 of the Enforcement Order (Ordinance No. 119 issued on March 31, 1998) of the Law Concerning Revaluation of Land.

Date of revaluation: March 31, 2002Difference between the market price of the land at the end of the current fiscal year when revaluation is made, and the book value after revaluation

413,1853. Contingent liabilities

We guarantee loans from financial institution for other than consolidated subsidiaries as follows:

3. Contingent liabilities We guarantee loans from financial institution for other than consolidated subsidiaries as follows:

KOUSOKUYA INC. 78,125 KOUSOKUYA INC. 40,625 *4. Investment securities include 60 million yen worth of

advances on subscriptions to goomo, inc., a new company established on April 1, 2009.

― 26 ―

(Consolidated Income Statement) (Thousands of yen)



1. R&D expenses R&D expenses included in general administrative expenses and manufacturing cost 1,524,014

1. R&D expenses R&D expenses included in general administrative expenses and manufacturing cost 1,682,714

*2. Loss on impairment of fixed assets We recognized impairment loss of the following assets in this fiscal year.

Location Intended purpose Category Impairment

loss Chiyoda Ward, Tokyo, Other

Idle facilities

Intangible fixed assets (Telephone subscription right, other)

70,436

Osaka City, Osaka, Other

Idle facilities

Intangible fixed assets (Telephone subscription right, software)

16,208

We group the assets mainly based on the division on management accounting in which revenue and expenditure are grasped. However, idle facilities not directly used in the business are not grouped. Facilities whose profitability remarkably decreased and whose use is not expected in the future are reduced to the recoverable amount, and the Company booked 86,645 thousand yen as extraordinary losses.

*2. Loss on impairment of fixed assets We recognized impairment loss of the following assets in this fiscal year.

Location Intended purpose Category Impairment

loss

Yokohama-shi, Kanagawa

Idle facilities

Intangible fixed assets (Telephone subscription right)

2,414

We group the assets mainly based on the division on management accounting in which revenue and expenditure are grasped. However, idle facilities not directly used in the business are not grouped. Facilities whose profitability remarkably decreased and whose use is not expected in the future are reduced to the recoverable amount, and the Company booked 2,414 thousand yen as extraordinary losses.

*3. The loss on equity method investment posted as an extraordinary loss results from amortization of the amount equivalent to goodwill of affiliated companies in accordance with the provision in Paragraph 9 of the Practical Guidelines on Equity Method Accounting in the Accounting Systems Committee Report No. 9 and the provision in Paragraph 32-(1) in the Practical Guidelines on Capital Consolidation Procedures in Consolidated Financial Statements in the Accounting Systems Committee Report No. 7.

― 27 ―

(Consolidated Statements of Changes in Owners’ Equity) FY2007 (From April 1, 2007 to March 31, 2008)

1. Outstanding shares Category As of March 31, 2007 Increase Decrease As of March 31, 2008

Common stock (shares) 37,546,329 – – 37,546,329

2. Treasury stock Category As of March 31, 2007 Increase Decrease As of March 31, 2008

Common stock (shares) 1,494,274 2,201,752 – 3,696,026

Note: Main component of increase is as follows: Purchase of treasury stock: 2,200,000 shares Purchase of odd-lot shares: 1,752 shares

3. Dividends (1) Dividend payments

Resolution Category Total amount of

dividend (Thousands of yen)

Dividend per share (Yen) Dividend record date Effective date

Board of directors meeting held on May 15, 2007

Common stock 360,528 10.00 March 31, 2007 June 26, 2007

Board of directors meeting held on November 8, 2007

Common stock 351,128 10.00 September 30, 2007 December 10, 2007

(2) Dividends with a record date in the current fiscal year but an effective date in the following fiscal year



Funds for dividendDividendper share

(Yen) Dividend record date Effective date


Common stock 507,766 Retained earnings 15 March 31, 2008 June 24, 2008

― 28 ―

FY2008 (From April 1, 2008 to March 31, 2009) 1. Outstanding shares

Category As of March 31, 2008 Increase Decrease As of March 31, 2009

Common stock (shares) 37,546,329 – 1,800,000 35,746,329

2. Treasury stock Category As of March 31, 2008 Increase Decrease As of March 31, 2009

Common stock (shares) 3,696,026 1,964,193 1,800,000 3,860,219

Note: Main component of increase or decrease is as follows: Purchase of treasury stock: 1,962,500 shares Purchase of odd-lot shares: 1,693 shares Retirement of treasury shares: 1,800,000 shares

3. Dividends

Number of shares to be issued upon exercise Company

name Item

Category of shares to be issued upon

exercise As of March

31, 2008 Increase Decrease As of March 31, 2009

Balance at the end of the consolidated fiscal year under

review (Thousands of yen)

The Company (parent

company)

Stock acquisition

rights – – – – – 46,566

Total – – – – – 46,566

4. Dividends (1) Dividend payments



Dividend per share (Yen) Dividend record date Effective date


Common stock 507,766 15 March 31, 2008 June 24, 2008

Board of directors meeting held on November 10, 2008

Common stock 480,752 15 September 30, 2008 December 10, 2008

(2) Dividends with a record date in the current fiscal year but an effective date in the following fiscal year

Resolution Category Funds for dividendTotal amount of


Dividend per share

(Yen) Dividend record date Effective date


Common stock Retained earnings 478,303 15 March 31, 2009 June 23, 2009

― 29 ―

(Consolidated Cash Flow Statement) (Thousands of yen)



*1. Relation between the ending balance of cash and cash equivalents and the accounts and their amounts on the Consolidated Balance Sheet

(As of March 31, 2008)

*1. Relation between the ending balance of cash and cash equivalents and the accounts and their amounts on the Consolidated Balance Sheet

(As of March 31, 2009)Cash and time deposits 21,556,770Securities 1,896,454Subtotal 23,453,225Time deposits with maturity of more than 3 months -5,000

Securities other than MMF -1,780,937Cash and cash equivalents 21,667,287

Cash and time deposits 25,354,026Securities 398,275Subtotal 25,752,302Time deposits with maturity of more than 3 months -5,000

Securities other than MMF -281,956Cash and cash equivalents 25,465,345

― 30 ―

(Segment Information) 1. Segment information by business type

FY2007 (From April 1, 2007 to March 31, 2008) (Thousands of yen)

Classification Software

development related business

Outsourcing business

Solution services business

Other businesses Total Eliminations

or corporate Consolidation

I Net sales and operating income/loss

Net sales (1) Sales to outside

customers 120,086,782 31,330,108 16,849,467 2,473,461 170,739,820 – 170,739,820

(2) Inter-segment sales or transfers 59,333 14,815 111,456 10,058 195,664 (195,664) –

Total 120,146,116 31,344,923 16,960,924 2,483,519 170,935,484 (195,664) 170,739,820

Operating expenses 110,732,827 30,751,173 19,524,510 2,410,264 163,418,775 (196,063) 163,222,712

Operating income 9,413,289 593,750 -2,563,585 73,254 7,516,708 399 7,517,107II Assets, depreciation,

impairment loss and capital expenditure

Assets 118,668,391 22,787,896 15,409,557 705,702 157,571,547 19,889,739 177,461,287

Depreciation 7,633,908 1,868,996 403,776 16,112 9,922,793 – 9,922,793

Impairment loss 43,041 36,519 7,083 – 86,645 – 86,645

Capital expenditure 6,820,694 1,788,452 297,780 57,642 8,964,570 – 8,964,570Notes: 1. Business is classified based on the classification adopted for internal management.

2. Description of each business (1) Software development related business

A. Control systems: Contracted software development of telecommunication control systems, operating systems, machine control systems, processing system in Japanese, measuring control systems, etc.

B. Operation systems: Contracted software development of operational applications used in various industries C. Others: Development and sales of products, and design and manufacturing of personal computerrelated

equipment (2) Outsourcing business

System maintenance and operations, consulting, technological support, data entry and helpdesk services, quality evaluation, control support, etc.

(3) Solution services business Hardware and software sales, network services, data center services, education, contents making, etc.

(4) Other businesses Temporary staff dispatch business, real estate property management, and other related businesses

3. Of operating expenses, the major part of the unallocated operating expenses (196,063 thousand yen), which were included in “Eliminations or corporate,” is the expenses used by the administrative division.

4. Among assets, major group assets included in “Eliminations or corporate” are parent company’s funds for idle money under management (cash and securities), funds for long-term investments (investment securities) and assets related to administrative departments.

Previous fiscal year: 17,100,435 thousand yen Current fiscal year: 19,889,739 thousand yen

5. Depreciation and capital expenditures included long-term prepaid expenses and intangible fixed assets, and their amortization/depreciation expenses.

― 31 ―

FY2008 (From April 1, 2008 to March 31, 2009) (Thousands of yen)



Outsourcing business Other businesses Total Eliminations or

corporate Consolidation

I Net sales and operating income/loss

Net sales (1) Sales to outside

customers 134,533,012 28,210,104 2,338,549 165,081,666 – 165,081,666

(2) Inter-segment sales or transfers 12,187 52,600 18,822 83,610 (83,610) –

Total 134,545,199 28,262,704 2,357,371 165,165,276 (83,610) 165,081,666

Operating expenses 127,940,204 27,561,761 2,351,138 157,853,103 (83,704) 157,769,398

Operating income 6,604,995 700,943 6,233 7,312,172 94 7,312,267II Assets, depreciation,


Assets 131,316,073 18,553,947 596,526 150,466,547 27,329,271 177,795,818

Depreciation 5,757,073 1,510,715 5,578 7,273,367 – 7,273,367

Impairment loss 2,414 – – 2,414 – 2,414

Capital expenditure 7,745,261 1,576,973 13,164 9,335,399 – 9,335,399Notes: 1. Business is classified based on the classification adopted for internal management.

2. Description of each business (1) Software development related business

Contract software development of telecommunication control systems, machine control systems, operating systems and operation applications used in different industries, quality evaluation and control support, consulting, product development and sales, and design, manufacture, sales and other activities of personal computer related devices

(2) Outsourcing business System maintenance and operations, data entry and helpdesk services, etc.

(3) Other businesses Temporary staff dispatch business, etc.

3. Change in accounting policies As explained in 4.(7) “Change to Basis of Presenting Consolidated Financial Statements” on page 25, the Accounting Standard for Lease Transactions (ASB Standard No. 13, June 17, 1993: the First Subcommittee of the Business Accounting Council); revised on March 30, 2007) and the Guidance on Accounting Standard for Lease Transactions (ASB Guidance No. 16, January 18, 1994; Accounting System Committee of the Japanese Institute of Certified Public Accountants); revised on March 30, 2007) began to be applied for the consolidated fiscal year under review. Because of this change, operating income in the software development related business is 21,155 thousand yen greater than in the conventional policy. This has no impact on the figures in the outsourcing business or the other businesses.

4. Operating expenses do not include any non-apportionable operating expenses included in “Eliminations or corporate.” 5. Among assets, major group assets included in “Eliminations or corporate” are parent company’s funds for idle money

under management (cash and securities), funds for long-term investments (investment securities) and assets related to administrative departments.

Previous fiscal year: 19,889,739 thousand yen Current fiscal year: 27,329,271 thousand yen

6. Depreciation and capital expenditures included long-term prepaid expenses and intangible fixed assets, and their amortization/depreciation expenses.

7. Change in business classification Business was conventionally classified into four segments: software development related business, outsourcing business, solution services business and other businesses. For the consolidated fiscal year under review, this business classification has been revised into three segments: software development related business, outsourcing business and other businesses. The integration of the solution services business into the other segments will lead to segment information that matches the current organizational structure of the Group, since operations in the solution services business are increasingly linked with sales in other segments, and the proportion of goods sales in this segment is decreasing and is expected to continue this trend. The following shows segment information by business type according to the old business classification.

― 32 ―

(Segment information by business type according to the old business classification) FY2008 (From April 1, 2008 to March 31, 2009) (Thousands of yen)



Outsourcing business

Solution services business

Other businesses Total Eliminations

or corporate Consolidation

I Net sales (1) Sales to outside

customers 117,042,828 28,231,969 17,468,319 2,338,549 165,081,666 – 165,081,666

(2) Inter-segment sales or transfers 1,394 52,600 7,415 18,822 80,233 (80,233) –

Total 117,044,222 28,284,569 17,475,734 2,357,371 165,161,899 (80,233) 165,081,666

Operating expenses 109,876,271 27,373,961 18,248,355 2,351,138 157,849,726 (80,327) 157,769,398

Operating income 7,167,950 910,608 -772,620 6,233 7,312,172 94 7,312,267II Assets, depreciation,


Assets 114,973,605 18,448,140 16,448,274 596,526 150,466,547 27,329,271 177,795,818

Depreciation 5,363,093 1,463,772 440,923 5,578 7,273,367 – 7,273,367

Impairment loss 2,414 – – – 2,414 – 2,414

Capital expenditure 7,349,926 1,565,255 407,053 13,164 9,335,399 – 9,335,399Notes: Description of each business

(1) Software development related business Contract software development of telecommunication control systems, machine control systems, operating systems and operation applications used in different industries, product development and sales, and design, manufacture, sales and other activities of personal computer related devices

(2) Outsourcing business System maintenance and operations, consulting, technological support, data entry and helpdesk services, quality evaluation, control support, etc.

(3) Solution services business Hardware and software sales, network services, data center services, education, contents making, etc.

(4) Other businesses Temporary staff dispatch business, etc.

2. Geographical segment information

FY2007 (From April 1, 2007 to March 31, 2008) Not applicable because the Company has no overseas subsidiaries or important overseas branches.

FY2008 (From April 1, 2008 to March 31, 2009) Not applicable because Japan contributes more than 90% of total sales in all segments and holds more than 90% of the total value of assets in all segments.

3. Overseas sales

FY2007 (From April 1, 2007 to March 31, 2008) Not applicable because overseas sales are less than 10% of consolidated net sales.

FY2008 (From April 1, 2008 to March 31, 2009) Not applicable because overseas sales are less than 10% of consolidated net sales.

― 33 ―

(Lease Transactions) (Thousands of yen)



1. Finance lease transaction (Lessee) Finance leases other than those deemed to transfer ownership of leased assets to lessees (1) Leased assets

The leased assets consist chiefly of servers and other items (tools, furtniture and fixtures) for the software development related business.

(2) Depreciation of leased assets Based on the straight line method with the lease period being the useful life and the residual value being zero.

For finance leases other than those for which the ownership rights of the leased property are deemed to transfer to the lessee whose date of commencing the lease transaction is March 31, 2008 or earlier, accounting treatment similar to that for ordinary rental transactions is implemented. Details are as follows.

1. Finance lease transactions not involving the transfer of title to lessee

1) Acquisition cost, accumulated depreciation, impairment loss and year-end balance equivalents of the leased property Tools, furniture and fixtures

Acquisition cost 9,156,272Accumulate depreciation 6,191,342Impairment loss 513,800Year-end balance 2,451,128

Machinery and equipment Acquisition cost 22,491Accumulate depreciation 18,367Impairment loss –Year-end balance 4,123

Software Acquisition cost 1,969,129Accumulate depreciation 842,282Impairment loss 534,801Year-end balance 592,045

Others Acquisition cost 1,164,002Accumulate depreciation 843,585Impairment loss –Year-end balance 320,417

Total Acquisition cost 12,311,895Accumulate depreciation 7,895,578Impairment loss 1,048,601Year-end balance 3,367,715

1) Acquisition cost, accumulated depreciation, impairment loss and year-end balance equivalents of the leased property Tools, furniture and fixtures

Acquisition cost 3,802,479Accumulate depreciation 2,715,669Impairment loss –Year-end balance 1,086,810

Software Acquisition cost 1,133,466Accumulate depreciation 834,340Impairment loss –Year-end balance 299,125

Others Acquisition cost 201,315Accumulate depreciation 154,977Impairment loss –Year-end balance 46,337

Total Acquisition cost 5,137,261Accumulate depreciation 3,704,987Impairment loss –Year-end balance 1,432,273

2) Outstanding lease commitments and the year-end balance equivalents Due within one year 2,005,267Due over one year 1,579,417Total 3,584,684

2) Outstanding lease commitments and the year-end balance equivalents Due within one year 681,205Due over one year 659,507Total 1,340,713

Balance at leased asset-impairment account 381,062


3) Lease payments, leased asset-impairment account, depreciation equivalents, interest equivalents and impairment loss Lease payments 2,737,449Leased asset-impairment account 453,346Depreciation equivalents 2,521,291Interest equivalents 127,218

3) Lease payments, leased asset-impairment account, depreciation equivalents, interest equivalents and impairment loss Lease payments 1,780,891Leased asset-impairment account 375,586Depreciation equivalents 1,624,930Interest equivalents 60,340

― 34 ―



4) Calculation of depreciation equivalents Depreciation is based on the straight-line method, assuming the lease period to be the useful life and no residual value.

4) Calculation of depreciation equivalents Depreciation is based on the straight-line method, assuming the lease period to be the useful life and no residual value.

5) Calculation of interest equivalents Interest equivalents are defined as the difference between the total lease payments and acquisition cost equivalents and is allocated for each period using the simple-interest method.

5) Calculation of interest equivalents Interest equivalents are defined as the difference between the total lease payments and acquisition cost equivalents and is allocated for each period using the simple-interest method.

[Information on Related Parties]

FY2007 (From April 1, 2007 to March 31, 2008) Not applicable.

FY2008 (From April 1, 2008 to March 31, 2009) Not applicable.

(Additional Information) The Accounting Standards for Related Party Disclosures (ASBJ Statement No. 11: Accounting Standards Board of Japan, October 17, 2006) and the Guidance on Accounting Standards for Related Party Disclosures (ASBJ Guidance No. 13: Accounting Standards Board of Japan, October 17, 2006) are applied for the consolidated fiscal year under review.

― 35 ―

(Tax Effect Accounting) (Thousands of yen)

FY2007 (As of March 31, 2008)

FY2008 (As of March 31, 2009)

1. Major components of deferred tax assets and liabilities

Deferred tax assets Loss carried forward 2,904,973Reserve for bonuses 3,108,167Reserve for retirement benefits 1,082,880Reserve for director retirement benefits 147,775

Accrued legal welfare expenses 306,931Accrued business tax and unpaid business office tax 288,951

Losses on valuation of securities and memberships, etc. 1,503,482

Depreciation 1,181,741Bad debts losses and allowance for doubtful receivables 160,615

Impairment losses 237,188Others 269,370Subtotal of deferred tax assets 11,192,078Valuation-type allowances -3,939,522

Total deferred tax assets 7,252,555Deferred tax liabilities

Valuation differences of other securities -5,830

Reserve for programs -17,601Valuation difference of land and surface right -189,319

Others -371,068Total deferred tax liabilities -583,819

Net deferred tax assets 6,668,736

1. Major components of deferred tax assets and liabilities

Deferred tax assets Loss carried forward 3,801,247Reserve for bonuses 3,014,814Reserve for retirement benefits 1,913,839Reserve for director retirement benefits 169,913

Accrued legal welfare expenses 279,919Accrued business tax and unpaid business office tax 206,932

Losses on valuation of securities and memberships, etc. 2,353,917

Depreciation 792,010Bad debts losses and allowance for doubtful receivables 187,094

Impairment losses 87,417Others 422,941Subtotal of deferred tax assets 13,230,049Valuation-type allowances -5,816,143

Total deferred tax assets 7,413,905Deferred tax liabilities

Valuation differences of other securities -1,118

Reserve for programs -6,208Valuation difference of land and surface right -189,319

Others -596,193Total deferred tax liabilities -792,839

Net deferred tax assets 6,621,066

2. Breakdown of major factors in the significant difference between the effective statutory tax rate and corporate tax burden rate after the application of the tax effect accounting

(%)

2. Breakdown of major factors in the significant difference between the effective statutory tax rate and corporate tax burden rate after the application of the tax effect accounting

(%)Statutory tax rate 40.6

(Adjusted) Amortization of goodwill 7.4Entertainment expenses and other items not to be included in expenses indefinitely

2.1

Gain on dividend income not permitted for inclusion in expenses -0.5

Increase/Decrease of Valuation Reserve -2.0

Change of equity interest 1.0Others 2.4

Effective tax rate 51.0

Statutory tax rate 40.6(Adjusted) Amortization of goodwill 14.4Unrecognized tax benefits of consolidated subsidiaries 0.7

Entertainment expenses and other items not to be included in expenses indefinitely

1.1


Unrecognized impairment loss on securities 5.0

Reversal of temporary differences not able to be scheduled 2.1

Per-capita taxes and delinquency taxes 4.0

Others -2.1Effective tax rate 59.2

― 36 ―

(Securities) 1. Bonds held to maturity with market quotations (Thousands of yen)

FY2007 (As of March 31, 2008)

FY2008 (As of March 31, 2009)

Classification Carrying amount

Market quotation at

year-endDifference Carrying

amount

Market quotation at

year-end Difference

(1) Commercial paper 998,387 998,235 -152 – – –(2) Corporate bond 500,000 500,000 – 100,000 98,619 -1,380

Bonds for which market quotations do not exceed the carrying amounts Subtotal 1,498,387 1,498,235 -152 100,000 98,619 -1,380

Total 1,498,387 1,498,235 -152 100,000 98,619 -1,380

2. Available-for-sale securities with market quotations (Thousands of yen) FY2007

(As of March 31, 2008) FY2008

(As of March 31, 2009) Classification Acquisition cost

Carrying amount Difference Acquisition

cost Carrying amount Difference

(1) Stocks 513,097 764,932 251,834 1,714,822 1,901,669 186,846Those for which carrying amounts exceed the acquisition costs Subtotal 513,097 764,932 251,834 1,714,822 1,901,669 186,846

(1) Stocks 1,726,814 1,610,320 -116,493 2,955,194 2,097,386 -857,808(2) Fund 3,890,603 3,684,540 -206,063 4,265,885 3,396,210 -869,675

Those for which carrying amounts do not exceed the acquisition costs Subtotal 5,617,417 5,294,860 -322,557 7,221,079 5,493,596 -1,727,483

Total 6,130,514 6,059,792 -70,722 8,935,901 7,395,265 -1,540,636Note: The Company made an impairment of 1,356,672 thousand yen (256,672 thousand yen for stocks with market quotations,

and 1,099,999 thousand yen for stocks without market quotations) for other securities in the previous fiscal year. In the current fiscal year, the Company made an impairment of 1,539,693 thousand yen (1,457,094 thousand yen for stocks with market quotations, and 82,599 thousand yen for stocks without market quotations). In the case of securities whose market price as of the end of the fiscal year is 50% or more lower than their acquisition costs, the whole difference is impaired, and in the case of securities whose market price as of the end of the fiscal year is 30 - 50% lower than their acquisition costs, the amount regarded as necessary is impaired, considering the significance of the amount and the possibility of recovery.

3. Other securities sold during the current fiscal year (Thousands of yen)



Amount of sale 352,587 358,789

Total profit on sale 228,569 57,120

Total loss on sale 4,144 5,553

― 37 ―

4. Securities not marked to market (Thousands of yen) FY2007

(As of March 31, 2008) FY2008

(As of March 31, 2009)

Carrying amount Carrying amount

Other securities

(1) Unlisted stocks 898,030 1,094,067

(2) MMF, etc. 398,067 398,275

(3) Discounted bank debenture 0 –

(4) Subscription certificate 100,000 93,275

Total 1,396,097 1,585,618

5. Expected amount of redemption of other securities with maturity and bonds held to maturity (Thousands of yen)

FY2007 (As of March 31, 2008)

FY2008 (As of March 31, 2009)

Due within one year

Due after one year through

five years

Due after five years throughten years

Due afterten years

Due within one year

Due after one year through

five years

Due after five years through ten years

Due afterten years

Bonds held to maturity

Corporate bond – – – – – – 100,000 –

Other securities

Bonds

Commercial paper 1,000,000 – – – – – – –

Euro-yen bond 500,000 – – – – – – –

Total 1,500,000 – – – – – 100,000 –

― 38 ―

(Derivative Transactions) 1. Financial derivative transactions (Thousands of yen)



(1) Types of transaction The derivative transactions used by the certain consolidated subsidiaries are the forward foreign exchange contracts and the currency option transactions.

(1) Types of transaction Same as on the left

(2) Transaction policy Certain consolidated subsidiaries use forward foreign exchange contracts and currency option transactions to hedge risks on foreign currency-denominated transactions. Certain consolidated subsidiaries do not hold or issue financial derivative instruments for trading purposes.

(2) Transaction policy Same as on the left

(3) Purpose of derivative transactions Certain consolidated subsidiaries use financial derivative transactions, which comprise forward foreign exchange contracts and currency option, to reduce its exposure to market risks from fluctuations in foreign currency exchange rates on the foreign currency-denominated transactions. Derivative transactions are accounted for by the hedge accounting method.

Hedge accounting method: Accounting for deferred hedge is adopted.

Hedging instrument and risk hedged: Hedging instrument:

Forward foreign exchange contracts, currency optionRisk hedged:

Liabilities for scheduled foreign currency- denominated transactions

Hedging policy: The Company enters into forward foreign exchange contracts to reduce market risks from fluctuations in interest rate based on exchange risk management measure.

Assessing the effectiveness of a hedge: Effectiveness is assessed by rate analysis of the sum total of price fluctuation involving hedge transactions or cash flows.

(3) Purpose of derivative transactions Same as on the left

(4) Transaction risks Forward foreign exchange contracts and currency option carry risks arising from fluctuations in foreign currency exchange rates. The Company considers that there is no significant credit risk from counterparty’s default. Certain consolidated subsidiaries’ counterparties are reliable domestic financial institutions with high credit ratings.

(4) Transaction risks Same as on the left

(5) Risk management Consolidated subsidiaries using derivative transactions carry out transactions, which was deliberated at the top management meeting and approved by the Board of Directors in accordance with Rules for the Delegation of Authority. Matters related transactions including transaction balance and profit and loss would be reported to top management meeting.

(5) Risk management Same as on the left

― 39 ―

2. Information on market values Notional amount, fair value and unrealized gain (loss) on derivatives

(1) Currency related (Thousands of yen) FY2007

(As of March 31, 2008) FY2008

(As of March 31, 2009) Type of transaction Derivatives

Notional amount

Due after one year Fair value Unrealized

gain (loss)Notional amount

Due after one year Fair value Unrealized

gain (loss)Foreign exchange contracts

Long

OTC transactions

US$ 1,750,196 – 1,642,096 -108,100 1,132,172 – 1,117,133 -15,039Total 1,750,196 – 1,642,096 -108,100 1,132,172 – 1,117,133 -15,039

FY2007 FY2008 Notes: 1. Valuation method Notes: 1. Valuation method Market prices are caluculated on the basis

of the prices presented by partner financial institutions.

Same as on the left

2. Derivative transactions for which hedge accounting is applied are excluded.

2. Same as on the left

(Matters Related to Retirement Benefit) FY2007 (From April 1, 2007 to March 31, 2008) 1. Overview of the adopted retirement benefits plan

The Company and its consolidated subsidiaries are operating defined benefit pension plans such as the Employees’ Pension Fund System, the Tax-Qualified Pension Plan, and the Retirement Lump-Sum system. The Company and its consolidated subsidiaries may sometimes pay additional retirement benefits to employees. Some of the consolidated subsidiaries terminated a part of the tax-qualified pension plans, and transferred the relevant plans on February 1, 2007 to defined contribution pension plans for active participants, and closed tax-qualified pension plans for retired participants. This transfer arrangement is accounted for in accordance with “Accounting for Transfers between Retirement Benefit Plans” (ASBJ Guidance No.1).

2. Matters related to the retirement benefit obligations (as of March 31, 2008)

(Thousands of yen) Account Amount

1) Retirement benefit obligations -13,764,859

2) Pension assets 10,659,952

3) Unfunded retirement benefit obligations (1+2) -3,104,907

4) Unsettled difference at change of accounting principle 1,357,488

5) Unrecognized actuarial differences -1,453,853

6) Unrecognized prior service cost (Notes: 1) -166,707 7) Net amount posted in the consolidated balance sheet

(3+4+5+6) -3,367,980

8) Prepaid pension expenses 913,962

9) Liabilities for retirement benefits to employees (7-8) -4,281,942 Notes: 1. Following the revision of the Welfare Pension Insurance Law made in March 2000, the parent company adopted

a policy to revise the term in the fiscal year ended March 31, 2002 in order to raise the pensionable age for the substituted portion, so the prior service cost have occurred.

2. Some consolidated subsidiaries calculated the retirement benefit obligations using the simplification method.

― 40 ―

3. Matters related to retirement benefit expenses (Thousands of yen)

Account Amount

1) Service expenses (Notes: 1) 1,470,852

2) Interest expenses 230,065

3) Expected return -211,795 4) Differences at change of accounting principle charged

to the expense 188,729

5) Actuarial differences charged to the expenses -25,263

6) Prior service cost charged to the expenses (Notes: 2) 78,062 7) Retirement benefit expenses

(1 + 2 + 3 + 4 + 5 + 6) 1,730,652

Notes: 1. Employees’ contributions to the Employees’ Pension fund are excluded. 2. This is the amount of prior service cost charged to the expense in the current fiscal year as indicated in Note 1 to

“2. Matters related to the retirement benefit obligations” above. 3. The retirement benefit expense borne by consolidated subsidiaries employing the simplification method is

included in “1) Service expenses.” 4. Matters related to the basis for computation of the retirement benefit expense and other figures

1) Periodic allocation of expected retirement benefits Fixed amount for each period

2) Discount rate 2.0% in general

3) Rate of expected return 2.0% in general

4) Years for amortization of prior service cost With the straight-line method over the average remaining service years (10-13 years) of employees on payroll at occurrence.

5) Years for amortization of actuarial differences

With the straight-line method over the average remaining service years (10-13 years) of employees on payroll at occurrence from the fiscal year following occurrence.

6) Years for amortization of differences at change of accounting principles 15 years in general

― 41 ―

FY2008 (From April 1, 2008 to March 31, 2009) 1. Overview of the adopted retirement benefits plan

The Company and its consolidated subsidiaries are operating defined benefit pension plans such as the Employees’ Pension Fund System, the Tax-Qualified Pension Plan, and the Retirement Lump-Sum system.

2. Matters related to the retirement benefit obligations (as of March 31, 2009)


1) Retirement benefit obligations -14,983,401

2) Pension assets 12,202,855

3) Unfunded retirement benefit obligations (1+2) -2,780,545

4) Unsettled difference at change of accounting principle 1,168,758

5) Unrecognized actuarial differences -1,405,942

6) Unrecognized prior service cost (Notes: 1) -133,073 7) Net amount posted in the consolidated balance sheet

(3+4+5+6) -3,150,802

8) Prepaid pension expenses 1,468,457

9) Liabilities for retirement benefits to employees (7-8) -4,619,259 Notes: 1. Following the revision of the Welfare Pension Insurance Law made in March 2000, the parent company adopted

a policy to revise the term in the fiscal year ended March 31, 2002 in order to raise the pensionable age for the substituted portion, so the prior service cost have occurred.

2. Some consolidated subsidiaries calculated the retirement benefit obligations using the simplification method. 3. Matters related to retirement benefit expenses


1) Service expenses (Notes: 1) 1,471,402

2) Interest expenses 231,442

3) Expected return -210,946 4) Differences at change of accounting principle charged

to the expense 188,729

5) Actuarial differences charged to the expenses -48,364

6) Prior service cost charged to the expenses (Notes: 2) -33,634 7) Retirement benefit expenses

(1 + 2 + 3 + 4 + 5 + 6) 1,598,629

Notes: 1. Employees’ contributions to the Employees’ Pension fund are excluded. 2. This is the amount of prior service cost charged to the expense in the current fiscal year as indicated in Note 1 to

“2. Matters related to the retirement benefit obligations” above. 3. The retirement benefit expense borne by consolidated subsidiaries employing the simplification method is

included in “1) Service expenses.”

― 42 ―

4. Matters related to the basis for computation of the retirement benefit expense and other figures

1) Periodic allocation of expected retirement benefits Fixed amount for each period

2) Discount rate 2.0% in general

3) Rate of expected return 2.0% in general

4) Years for amortization of prior service cost With the straight-line method over the average remaining service years (10-13 years) of employees on payroll at occurrence.

5) Years for amortization of actuarial differences

With the straight-line method over the average remaining service years (10-13 years) of employees on payroll at occurrence from the fiscal year following occurrence.

6) Years for amortization of differences at change of accounting principles 15 years in general

(Stock Options) The disclosure of stock option information has been omitted because disclosing such information in this Summary of Consolidated Financial Results is considered immaterial. (Per-share Information)

(Yen) FY2007


(From April 1, 2008 to March 31, 2009) Net assets per share 2,148.90Net income per share 61.89Fully diluted net income per share 61.81

Net assets per share 2,173.03Net income per share 27.07Fully diluted net income per share 27.06

Note: Basis for calculation 1. Net asset per share (Thousands of yen)

Item FY2007 (As of March 31, 2008)

FY2008 (As of March 31, 2009)

Total net assets on the consolidated balance sheets 82,296,979 78,236,805Net assets on common shares 72,740,939 68,141,431Breakdown of differences

Stock acquisition rights – 46,566Minority interests 9,556,039 10,048,808

Number of shares outstanding (thousand shares) 37,546 35,746Number of treasury stock (thousand shares) 3,696 3,860Number of common shares used in calculation of net assets per share (thousand shares) 33,850 31,886

― 43 ―

2. Net income per share and diluted net income per share (Thousands of yen)

Item FY2007



Net income on the income statement 2,172,282 883,470Net income on common shares 2,172,282 883,470Amounts which do not belong to ordinary shareholders – –Average number of common shares during the fiscal year (thousand shares) 35,098 32,637

Fully diluted net income per share Adjusted net income -2,852 -212(Of the amount, the impact of residual securities issued by the Company’s subsidiaries) (-2,852) (-212)

(The Company) Type of stock Stock subscription rights under Article 280-19 of the former Commercial Law Number of potential shares:

809,100 sharesIssue price:

6,680 yen

(The Company) Type of stock Stock subscription rights under Article 280-19 of the former Commercial Law Number of potential shares:


6,680 yen

Stock option resolved at the annual general meeting of shareholders on June 23, 2008 Number of shares associated with stock acquisition rights

340,000 sharesIssue price

1,993 yen

(Consolidated subsidiaries)Mercury Staffing Co., Ltd. Number of potential shares:


8,700 yen

(Consolidated subsidiaries)Mercury Staffing Co., Ltd. Number of potential shares:


8,700 yen

Outlines of potential shares not included in the computation of fully diluted net income per share because of the absence of diluting effect

Cybernet Systems Co., Ltd. Number of potential shares:

679 sharesIssue price:

140,333 yen

(Post-balance Sheet Events) Not applicable.

― 44 ―

5. Non-consolidated Financial Statements (1) Non-consolidated Balance Sheet (Thousands of yen)

FY2007 (As of March 31, 2008)

FY2008 (As of March 31, 2009)

(Assets)

Current assets

Cash and time deposits 7,573,799 14,231,712

Notes receivable 353,743 296,979

Accounts receivable *1 20,036,367 *1 18,052,131

Merchandise 315,931 149,514

Work in process 1,488,429 1,323,434

Prepaid expenses 436,084 715,279


Other 1,560,245 1,318,598


Total current assets 34,302,993 38,762,419

Fixed assets

Tangible fixed assets

Buildings 52,662,198 53,631,186


Buildings (net) 42,768,005 41,362,158

Structures 410,332 410,332

Accumulate depreciation -155,370 -183,907

Structures (net) 254,962 226,425

Vehicles and transportation 56,171 50,195

Accumulate depreciation -37,870 -32,292

Vehicles and transportation (net) 18,300 17,903

Tool, furniture and fixtures 6,395,882 6,597,052


Tool, furniture and fixtures (net) 3,030,102 2,486,104

Land *3 28,696,969 *3 29,971,969

Construction in progress – 71,239

Total tangible fixed assets 74,768,340 74,135,800

Intangible fixed assets

Software 1,727,367 2,642,291

Telephone rights 142,371 142,371

Other 1,585 1,299

Total intangible fixed assets 1,871,324 2,785,961

― 45 ―

(Thousands of yen)

FY2007 (As of March 31, 2008)

FY2008 (As of March 31, 2009)

Investments and other assets

Investment securities 2,575,100 4,530,839

Shares of affiliates 12,671,935 *4 12,370,364

Long-term loans to employees 6,044 5,234

Long-term loans to affiliates 8,374,000 8,500,000

Long-term accounts receivable 48,700 61,390

Long-term prepaid expenses 365,993 224,454

Deferred tax assets 749,802 270,238

Leasehold deposits 521,819 530,684

Other 980,203 1,527,973


Total investments and other assets 26,241,228 27,959,789

Total fixed assets 102,880,893 104,881,552

Total assets 137,183,887 143,643,972

(Liabilities)

Current liabilities

Accounts payable -trade *1 4,304,673 *1 3,462,952

Short-term loans *1 52,466,200 *1 57,137,600

Long-term loans payable within a year 95,000 1,642,492

Accounts payable -other 1,043,999 742,555

Accrued expenses 7,040,488 6,431,747

Income taxes payable 720,000 110,000

Consumption tax payable 1,926,724 1,420,769

Advances received 178,751 138,377

Money entrusted 238,109 224,131

Advanced income 175,783 250,490

Allowance for bonuses to directors and corporate auditors 76,880 89,960

Other 12,140 13,856

Total current liabilities 68,278,750 71,664,932

Long-term liabilities

Long-term loans 500,000 7,749,008Liabilities for retirement benefits to directors and corporate auditors 125,999 133,127

Other 811,038 1,428,460

Long-term liabilities 1,437,037 9,310,595

Total liabilities 69,715,788 80,975,528

― 46 ―

(Thousands of yen)

FY2007 (As of March 31, 2008)

FY2008 (As of March 31, 2009)

(Net assets)

Owners’ equity

Common stock 26,200,289 26,200,289

Capital surplus

Additional paid-in capital 28,438,965 28,438,965

Total capital surplus 28,438,965 28,438,965

Retained earnings

Legal reserve 451,673 451,673

Other retained earnings

Reserve for programs 25,751 25,751

General reserve 27,750,000 17,750,000

Retained earnings brought forward 2,208,399 7,189,117

Total retained earnings 30,435,823 25,416,542

Treasury stock -8,564,231 -8,097,292

Total owners’ equity 76,510,846 71,958,504

Valuation and translation adjustment

Valuation difference of available-for-sale securities 8,515 -285,363

Land revaluation difference *3 -9,051,263 *3 -9,051,263

Total faluation and translation adjustments -9,042,747 -9,336,626


Total net assets 67,468,098 62,668,443

Total liabilities and net assets 137,183,887 143,643,972

― 47 ―

(2) Non-consolidated Income Statement (Thousands of yen)

FY2007



Net sales 89,297,398 82,153,670Cost of sales 68,035,923 62,235,923Gross profit 21,261,474 19,917,746Selling, general and administrative expenses

Advertising expense 746,194 317,251Executive compensation 198,175 293,423Salaries and bonuses to employees 8,186,980 8,369,917Retirement allowance expense 455,722 388,369Legal welfare expense 989,260 1,071,455Provision for liabilities for retirement benefits to directors and corporate auditors 13,726 20,158

Provision for allowance for bonuses to directors and corporate auditors 76,880 89,960

Welfare expense 489,894 535,142Employing and training expenses 987,082 561,101Traveling expense 315,302 350,062Office supplies expense 478,196 181,597Rents 8,441 –Land rents 570,143 534,882Commissions paid 91,166 100,182Tax and public charges 372,441 587,939Provision for allowance for bad debt 15,871 –Depreciation expense 1,257,074 1,355,218Research and study expenses 434,758 513,043Office work outsourcing fee 1,621,993 1,779,659Other 2,214,243 1,345,461Total selling, general and administrative expenses 19,523,551 18,394,827

Operating income 1,737,923 1,522,919Non-operating income

Interest income *2 128,961 *2 139,298Dividend income *2 581,322 *2 734,442Rent income *2 1,911,642 *2 2,717,477Other *2 533,701 *2 300,885Total non-operating income 3,155,627 3,892,103

Non-operating expenses Interest expense *2 592,012 *2 693,115Cost of rent income *2 1,176,326 *2 1,494,647Provision for allowance for bad debt – 43,551Loss on disposal of fixed assets 17,317 48,473Other 17,546 73,953Total non-operating expenses 1,803,202 2,353,741

Ordinary income 3,090,347 3,061,281Extraordinary gains

Gain on valuation of shares of affiliates 170,160 –Return premium for cancellation for life insurance 724,679 –Total extraordinary gains 894,839 –

― 48 ―

(Thousands of yen)

FY2007



Extraordinary losses

Losses on valuation of investment securities 1,129,801 2,346,943Total extraordinary losses 1,129,801 2,346,943

Income before income taxes 2,855,385 714,337Income taxes -current 1,360,445 63,829Income taxes -deferred 172,936 509,520Total income taxes 1,533,381 573,350Net income 1,322,003 140,986

― 49 ―

(3) Non-consolidated Statement of Changes in Owners’ Equity (Thousands of yen)

FY2007



Owners’ equity Common stock

Balance at end of previous fiscal year 26,200,289 26,200,289Balance at end of the fiscal year 26,200,289 26,200,289

Capital surplus Additional paid-in capital

Balance at end of previous fiscal year 28,438,965 28,438,965Balance at end of the fiscal year 28,438,965 28,438,965

Total capital surplus Balance at end of previous fiscal year 28,438,965 28,438,965Balance at end of the fiscal year 28,438,965 28,438,965

Retained earnings Legal reserve

Balance at end of previous fiscal year 451,673 451,673Balance at end of the fiscal year 451,673 451,673

Other retained earnings Reserve for programs

Balance at end of previous fiscal year 47,401 25,751Change during the fiscal year

Reversal of reserve for programs -21,649 －

Total change during the fiscal year -21,649 －

Balance at end of the fiscal year 25,751 25,751General reserve

Balance at end of previous fiscal year 27,750,000 27,750,000Change during the fiscal year

Reversal of general reserve － -10,000,000Total change during the fiscal year － -10,000,000

Balance at end of the fiscal year 27,750,000 17,750,000Reserve for special depreciation

Balance at end of previous fiscal year 15,013 －

Change during the fiscal year Reversal of reserve for special depreciation -15,013 －

Total change during the fiscal year -15,013 －

Balance at end of the fiscal year －－

Retained earnings brought forward Balance at end of previous fiscal year 1,561,389 2,208,399Change during the fiscal year

Dividents from surplus -711,657 -988,519Net income 1,322,003 140,986Reversal of reserve for programs 21,649 －

Reversal of reserve for special depreciation 15,013 －

Reversal of general reserve － 10,000,000Retirement of treasury shares － -4,171,748Total change during the fiscal year 647,009 4,980,718


― 50 ―

(Thousands of yen)

FY2007



Total retained earnings Balance at end of previous fiscal year 29,825,477 30,435,823Change during the fiscal year

Dividents from surplus -711,657 -988,519Net income 1,322,003 140,986Retirement of treasury shares － -4,171,748Total change during the fiscal year 610,346 -5,019,281

Balance at end of the fiscal year 30,435,823 25,416,542Treasury stock

Balance at end of previous fiscal year -4,021,498 -8,564,231Change during the fiscal year

Purchase of treasury stock -4,542,732 -3,704,809Retirement of treasury shares － 4,171,748Total change during the fiscal year -4,542,732 466,939

Balance at end of the fiscal year -8,564,231 -8,097,292Total owners’ equity

Balance at end of previous fiscal year 80,443,233 76,510,846Change during the fiscal year

Dividents from surplus -711,657 -988,519Net income 1,322,003 140,986Purchase of treasury stock -4,542,732 -3,704,809Total change during the fiscal year -3,932,386 -4,552,342

Balance at end of the fiscal year 76,510,846 71,958,504Valuation and translation adjustments

Valuation difference of available-for-sale securities Balance at end of previous fiscal year 130,968 8,515Change during the fiscal year

Net changes in non-shareholders’ equity items during the fiscal year -122,453 -293,879

Total change during the fiscal year -122,453 -293,879Balance at end of the fiscal year 8,515 -285,363

Land revaluation difference Balance at end of previous fiscal year -9,051,263 -9,051,263Balance at end of the fiscal year -9,051,263 -9,051,263

Total valuation and translation adjustments Balance at end of previous fiscal year -8,920,294 -9,042,747Change during the fiscal year

Net changes in non-shareholders’ equity items during the fiscal year -122,453 -293,879

Total change during the fiscal year -122,453 -293,879Balance at end of the fiscal year -9,042,747 -9,336,626

Stock acquisition rights Balance at end of previous fiscal year －－

Change during the fiscal year Net changes in non-shareholders’ equity items during the fiscal year － 46,566

Total change during the fiscal year － 46,566Balance at end of the fiscal year － 46,566

― 51 ―

(Thousands of yen)

FY2007



Total net assets Balance at end of previous fiscal year 71,522,939 67,468,098Change during the fiscal year

Dividents from surplus -711,657 -988,519Net income 1,322,003 140,986Purchase of treasury stock -4,542,732 -3,704,809Net changes in non-shareholders’ equity items during the fiscal year -122,453 -247,313

Total change during the fiscal year -4,054,840 -4,799,655Balance at end of the fiscal year 67,468,098 62,668,443

― 52 ―

(4) Note on going concern assumptions Not applicable.

(5) Basis of Significant Accounting Policies (Thousands of yen)



(1) Shares of subsidiaries ad affiliates Stated at cost as determined by the moving average method.

(1) Shares of subsidiaries ad affiliates Same as on the left

(2) Other securities For those with market value: Stated at market value based on market prices, etc., as the end of the fiscal year (Unrealized valuation gains or losses are reported in the shareholders’ equity, and sales costs are determined by the moving average method.)

(2) Other securities For those with market value:

Same as on the left

1.Valuation of securities

For those without market value: Stated at cost as determined by the moving average method.

For those without market value: Same as on the left

2. Valuation of inventories (1) Products Stated at cost as determined with the moving average method.

(2) Work in process Stated at cost on a specific identification method.

Inventories Valuation standards are based on the cost method (the method of writing down the book value based on a fall in profitability).

(1) Products Stated at cost as determined with the moving average method.

(2) Work in process Stated at cost on a specific identification method.

(Change in accounting method) From the fiscal year under review, the Accounting Standard for Measurement of Inventories (ASB Statement No. 9, July 5, 2006) is applied. This change has no impact on the Company’s earnings.

3. Depreciation of fixed assets (1) Tangible fixed assets Computed with the declining balance method. However, buildings (excluding building attachments) acquired after April 1, 1998, are depreciated on a straight-line method. Major useful lives:

Building and structures: 3 to 50 years Machinery, equipment and vehicles: 5 to 6 year Tools, furniture and fixtures: 2 to 20 years

(1) Tangible fixed assets (except leased assets)

Same as on the left

― 53 ―

(Thousands of yen)



(2) Intangible fixed assets Software for sale: Stated at the larger amount of either an amortizable amount based on the estimated sales volume during the valid sales period (less than 3 years) or an amortizable amount based on a straight-line method over the remaining valid sales period.

(2) Intangible fixed assets (except leased assets)

Software for sale: Same as on the left

Software for the Company’s own use: Amortized on a straight-line method over an estimated useful life (5 years) in the Company.

Software for the Company’s own use: Same as on the left

Other: Amortized on a straight-line method.

Other: Same as on the left

(3) Leased assets Amortized using the straight line method, with the lease period being the useful life and the residual value being zero. For finance leases other than those for which the ownership rights of the leased property are deemed to transfer to the lessee whose date of commencing the lease transaction is March 31, 2008 or earlier, accounting treatment similar to that for ordinary rental transactions is applied.

(3) Investments and other assets (Long-term prepaid expenses):

Computed with the declining balance method.

(4) Investments and other assets (Long-term prepaid expenses):

Same as on the left

4. Standards for Recording Allowances

(1) Allowance for bad debt To provide for possible bad debt losses at the end of the fiscal year, the Company records an allowance based on historical percentage for ordinary receivables and an estimated amount for specific uncollectible receivables.

(1) Allowance for bad debt Same as on the left

(2) Allowance for bonuses to directors and corporate auditors

To provide for payments of bonuses to directors and corporate auditors, an allowance is recorded in the amount recognized to have accrued at the end of the current fiscal year based on estimated amounts of payment at the end of the fiscal year.

(2) Allowance for bonuses to directors and corporate auditors

Same as on the left

― 54 ―

(Thousands of yen)



(3) Liability for retirement benefits to employees

To provide for payments of retirement benefits to employees, the Company records an amount recognized to have accrued at the end of fiscal year based on estimated amounts of retirement benefit obligations and pension assets at the end of the fiscal year. As the estimated amount of pension assets exceeded the estimated amount of retirement benefit obligations after deduction of unsettled difference at change of accounting principle, unrecognized actuarial differences, and unrecognized prior service cost. Consequently, the exceeded amount is booked as prepaid pension expenses and classified as “Other” in the “Investments and other assets” of the consolidated balance sheet. In addition, a difference arisen as a result of the change of accounting standards (3,915,026 thousand yen) is expensed equally, mainly over 15 years. Also, an actuarial difference is expensed equally from the fiscal year following its accrual over an average remaining service period (11 to 13 years) of employees at the time of the accrual. And prior service costs are accounted for based on an average remaining service period (13 years) of employees at the time of the accrual using the straight-line method.

(3) Liability for retirement benefits to employees

Same as on the left

(4) Liability for retirement benefits to directors and corporate auditors

The Company records amounts required to pay upon retirement of directors and corporate auditors at the end of the fiscal year, based on internal policies.

(4) Liability for retirement benefits to directors and corporate auditors

Same as on the left

5. Accounting for lease transactions

Finance leases other than those which are deemed to transfer ownership of leased assets to lessees are accounted for as ordinary operating leases.

–—————

6. Other important matters for the preparation of non-consolidated financial statements

Consumption Tax Amounts reflected are stated exclusive of consumption tax.

Consumption Tax Same as on the left

― 55 ―

(6) Change in Significant Accounting Policies (Change in Accounting Policies)



–—————

(Accounting standards for lease transactions, etc.) For finance leases other than those for which the ownership rights of the leased property are deemed to transfer to the lessee, the accounting method similar to that used for that used for ordinary rental transactions was traditionally employed. From the fiscal year under review, a method similar to that used for ordinary trading transactions is used by applying the Accounting Standard for Lease Transactions (ASB Standard No. 13, June 17, 1993: the First Subcommittee of the Business Accounting Council); revised on March 30, 2007) and the Guidance on Accounting Standard for Lease Transactions (ASB Guidance No. 16 (January 18, 1994; Accounting System Committee of the Japanese Institute of Certified Public Accountants); revised on March 30, 2007). For finance leases other than those for which the ownership rights of the leased property are deemed to transfer to the lessee whose date of commencing the lease transaction is before the first fiscal year of application, an accounting method similar to that used for ordinary rental transactions continues to be used. There is no effect of adoption of the new accounting standard to profit and loss.

(Changes in Presentation)



–—————

(Income Statement) Presented independently in the preceding fiscal year, rents are included and presented as part of “Other” in selling, general and administrative expenses for the fiscal year under review, given that the amount was minor at 2,437 thousand yen.

― 56 ―

(7) Notes to Non-consolidated Financial Statements (Non-consolidated Balance Sheet)

(Thousands of yen) FY2007

(As of March 31, 2008) FY2008

(As of March 31, 2009) *1. Assets and liabilities associated with affiliates

Accounts receivable – trade 442,728Accounts payable – trade 457,106Short-term loans 1,500,000

*1. Assets and liabilities associated with affiliates Accounts receivable – trade 305,103Accounts payable – trade 341,466Short-term loans 2,500,000

2. The Company has offered a guaranty of liabilities to the following companies over their borrowings from financial institutions.

2. The Company has offered a guaranty of liabilities to the following companies over their borrowings from financial institutions.

KOUSOKUYA INC. 78,125OA Laboratory Co., Ltd. 43,200Total 121,325

KOUSOKUYA INC. 40,625OA Laboratory Co., Ltd. 28,800Total 69,425

*3. In accordance with the Law Concerning Revaluation of

Land (Law No. 34 enacted on March 31, 1998, and revised on March 31, 2001), the Company revaluated its business-use land on March 31, 2002. In accordance with the Law Partially Revising the Law Concerning Revaluation of Land (Law No. 24 enacted on March 31, 1999), the Company booked the amount equivalent to the tax on the revaluation difference in Net assets as “Land revaluation difference.

Method of revaluation: The Company computed by making reasonable adjustments to the obtained with the method decided and announced by the Commissioner of the National Tax Administration Agency for calculation of the land price as the basis of the taxable price for the land tax specified by Article 16 of the Land Tax Law (Law No. 69, 1991) defined by Article 2-4 of the Enforcement Order (Ordinance No. 119 issued on March 31, 1998) of the Law Concerning Revaluation of Land.

Date of revaluation: March 31, 2002 Difference between the market price of the land at the end of the current fiscal year when revaluation is made, and the book value after revaluation

- 1,126,723

*3. In accordance with the Law Concerning Revaluation of Land (Law No. 34 enacted on March 31, 1998, and revised on March 31, 2001), the Company revaluated its business-use land on March 31, 2002. In accordance with the Law Partially Revising the Law Concerning Revaluation of Land (Law No. 24 enacted on March 31, 1999), the Company booked the amount equivalent to the tax on the revaluation difference in Net assets as “Land revaluation difference.

Method of revaluation: The Company computed by making reasonable adjustments to the obtained with the method decided and announced by the Commissioner of the National Tax Administration Agency for calculation of the land price as the basis of the taxable price for the land tax specified by Article 16 of the Land Tax Law (Law No. 69, 1991) defined by Article 2-4 of the Enforcement Order (Ordinance No. 119 issued on March 31, 1998) of the Law Concerning Revaluation of Land.

Date of revaluation: March 31, 2002 Difference between the market price of the land at the end of the current fiscal year when revaluation is made, and the book value after revaluation

413,185 *4. Shares of affiliates include 60 million yen worth of

advances on subscriptions to goomo, inc., a new company established on April 1, 2009.

― 57 ―

(Non-consolidated Income Statement) (Thousands of yen)



1. R&D expenses R&D expenses include general and administrative expenses and manufacturing costs for this term, and are shown below:

R&D expenses 1,310,431

1. R&D expenses R&D expenses include general and administrative expenses and manufacturing costs for this term, and are shown below:

R&D expenses 1,418,731 *2 Matters regarding transactions with affiliates are included

as follows: Interest income 104,311Dividend income 577,314Rent income 1,187,825Other non-operating income 47,700Interest expenses 16,065Cost of rent income 550,872

*2 Matters regarding transactions with affiliates are included as follows:

Interest income 124,577Dividend income 661,271Rent income 1,333,156Other non-operating income 19,814Interest expenses 28,420Cost of rent income 294,665

(Non-consolidated Statements of Changes in Owners’ Equity) FY2007 (From April 1, 2007 to March 31, 2008) 1. Treasury stock


Common stock (Shares) 1,493,474 2,201,752 – 3,695,226

Note: Main component of increase is as follows: Purchase of treasury stock: 2,200,000 shares Purchase of odd-lot shares: 1,752 shares

FY2008 (From April 1, 2008 to March 31, 2009) 1. Treasury stock


Common stock (Shares) 3,695,226 1,964,193 1,800,000 3,859,419

Note: Main component of increase/decrease is as follows: Purchase of treasury stock: 1,962,500 shares Purchase of odd-lot shares: 1,693 shares Retirement of treasury shares: 1,800,000 shares

― 58 ―

(Lease Transactions) (Thousands of yen)



1. Finance lease transactions not involving the transfer of title to lessee (Lessee)

(1) Acquisition cost, accumulated depreciation, impairment loss and year-end balance equivalents of the leased property

Tools, furniture and fixtures Acquisition cost 1,712,418Accumulate depreciation 938,611Impairment loss 513,800Year-end balance 260,006

Software Acquisition cost 546,676Accumulate depreciation 382,982Impairment loss 63,503Year-end balance 100,190

Total Acquisition cost 2,259,094Accumulate depreciation 1,321,593Impairment loss 577,304Year-end balance 360,196

1. Finance lease transaction (Lessee) For finance leases other than those for which the ownership rights of the leased property are deemed to transfer to the lessee, an accounting method similar to that used for ordinary trading transactions is used. As of the end of the fiscal year under review, there is no corresponding lease contract. For finance leases other than those for which the ownership rights of the leased property are deemed to transfer to the lessee whose date of commencing the lease transaction is March 31, 2008 or earlier, accounting treatment similar to that for ordinary rental transactions is implemented. Details are as follows. (1) Acquisition cost, accumulated depreciation, impairment

loss and year-end balance equivalents of the leased property

Tools, furniture and fixtures Acquisition cost 96,387Accumulate depreciation 89,219Impairment loss –Year-end balance 7,167

Software Acquisition cost 171,396Accumulate depreciation 161,487Impairment loss –Year-end balance 9,908

Total Acquisition cost 267,783Accumulate depreciation 250,707Impairment loss –Year-end balance 17,076

(2) Outstanding lease commitments and the year-end balance equivalents

Due within one year 364,356Due over one year 6,476Total 370,833


(2) Outstanding lease commitments and the year-end balance equivalents

Due within one year 6,476Total 6,476


(3) Lease payments, leased asset-impairment account, depreciation equivalents, interest equivalents and impairment loss

Lease payments 494,678Leased asset-impairment account 262,996Depreciation equivalents 460,849Interest equivalents 13,344

(3) Lease payments, leased asset-impairment account, depreciation equivalents, interest equivalents and impairment loss

Lease payments 367,769Leased asset-impairment account 223,182Depreciation equivalents 343,120Interest equivalents 3,560

(4) Calculation of depreciation equivalents Depreciation is based on the straight-line method, assuming the lease period to be the useful life and no residual value.

(4) Calculation of depreciation equivalents Same as on the left

(5) Calculation of interest equivalents Interest equivalents are defined as the difference between the total lease payments and acquisition cost equivalents and is allocated for each period using the simple-interest method.

(5) Calculation of interest equivalents Same as on the left

― 59 ―

(Tax Effect Accounting) (Thousands of yen)

FY2007 (As of March 31, 2008)

FY2008 (As of March 31, 2009)

1. Major components of deferred tax assets and liabilities Deferred tax assets Reserve for bonuses 2,282,403 Reserve for director retirement

benefits 51,155

Accrued legal welfare expenses 268,707 Accrued business tax and unpaid

business office tax 161,321

Bad debts losses and allowance for doubtful receivables 238,159

Impairment losses 126,899 Losses on valuation of securities

and memberships, etc. 1,398,630

Depreciation 884,703 Others 5,991 Subtotal of deferred tax assets 5,417,972 Valuation-type allowances -1,416,801 Total deferred tax assets 4,001,171Deferred tax liabilities Valuation differences of other

securities -5,820

Prepaid pension cost -371,068 Reserve for programs -17,601 Total deferred tax liabilities -394,490Net deferred tax assets 3,606,681

1. Major components of deferred tax assets and liabilities Deferred tax assets Reserve for bonuses 2,060,530 Accrued real-estate acquisition tax 11,206 Reserve for director retirement

benefits 54,049

Accrued legal welfare expenses 238,912 Accrued business tax and unpaid

business office tax 91,350

Bad debts losses and allowance for doubtful receivables 263,536

Impairment losses 3,735 Losses on valuation of securities

and memberships, etc. 1,789,284

Depreciation 552,182 Loss carried forward 345,577 Others 331,904 Subtotal of deferred tax assets 5,742,270 Valuation-type allowances -1,841,841 Total deferred tax assets 3,900,429Deferred tax liabilities Prepaid pension cost -596,193 Reserve for programs -6,208 Total deferred tax liabilities -602,402Net deferred tax assets 3,298,027

2. Significant components of difference between statutory and effective tax rates

(%)Statutory tax rate 40.6Entertainment expenses and other items not to be included in expenses indefinitely

2.2


Increase/Decrease of Valuation Reserve 14.3

Residence tax on per-capita basis, etc. 2.9

Others 1.9Effective tax rate 53.7

2. Significant components of difference between statutory and effective tax rates

(%)Statutory tax rate 40.6Entertainment expenses and other items not to be included in expenses indefinitely

9.0


Increase/Decrease of Valuation Reserve 59.4

Residence tax on per-capita basis, etc. 9.3

Others 3.7Effective tax rate 80.3

― 60 ―

(Securities) FY2007 (As of March 31, 2008) 1. Shares of subsidiaries and affiliates with market value (Thousands of yen)

Category Carrying amount Market quotation Difference (1) Shares of subsidiaries 3,533,201 9,151,272 5,618,071 (2) Shares of affiliates – – –

Total 3,533,201 9,151,272 5,618,071 FY2008 (As of March 31, 2009) 1. Shares of subsidiaries and affiliates with market value (Thousands of yen)

Category Carrying amount Market quotation Difference (1) Shares of subsidiaries 3,533,201 6,853,173 3,319,972 (2) Shares of affiliates – – –

Total 3,533,201 6,853,173 3,319,972

― 61 ―

(Per-share Information) (Yen)



Net assets per share 1,993.08 1,983.84 Net income per share 37.66 13.69

Net assets per share 1,963.87 Net income per share 4.32

Although the Company has a stock option program, fully diluted net income per share is not stated because net income per share does not decrease as a result of dilution.

Same as on the left

Note: Basis for calculation 1. Net asset per share (Thousands of yen)

FY2007 (As of March 31, 2008)

FY2008 (As of March 31, 2009)

Total net assets on the non-consolidated balance sheets 67,468,098 62,668,443

Net assets on common shares 67,468,098 62,621,877

Breakdown of differences


Number of shares outstanding (thousand shares) 37,546 35,746

Number of treasury stock (thousand shares) 3,695 3,859Number of common shares used in calculation of net assets per share (thousand shares) 33,851 31,886

2. Net income per share and diluted net income per share (Thousands of yen)

FY2007



Net income on the income statement 1,322,003 140,986

Net income on common shares 1,322,003 140,986Amounts which do not belong to ordinary shareholders – –Average number of common shares during the fiscal year (thousand shares) 35,099 32,638

Outlines of potential shares not included in the computation of fully diluted net income per share because of the absence of diluting effect

Type of stock Stock subscription rights under Article 280-19 of the former Commercial Law Number of potential shares:


6,680 yen

Type of stock Stock subscription rights under Article 280-19 of the former Commercial Law Number of potential shares:


6,680 yen Stock option resolved at the annual general meeting of shareholders on June 23, 2008 Number of shares associated with stock acquisition rights

340,000 sharesIssue price

1,993 yen (Post-balande Sheet Events)

Not applicable.

― 62 ―

6. Others (1) Management turnover (effective June 22, 2009)

For changes of directors, please refer to the Notice Concerning Changes of Representative Directors and Directors and Introduction of the Executive Officer System announced today.

(2) Production, Orders, and Sales Situations (Consolidated) 1) Production performance (Thousands of yen)


FY2008 (From April 1, 2008 to March 31, 2009)Segment by business type

Amount % Amount % Software development related business 87,286,319 66.6 99,439,780 79.1

Notes: 1. The figures are for the software development business. 2. Amounts are not inclusive of the consumption tax. 3. No comparison with the figures in the preceding consolidated fiscal year has been made since the new business

classification was introduced for the consolidated fiscal year under review. For information purposes, production performance in the software development related business was 84,894,649 thousand yen, according to the old business classification.

2) Orders (Thousands of yen)



Amount of orders Outstanding balance of orders Amount of orders Outstanding

balance of ordersSoftware development related business 118,854,786 24,322,174 131,769,888 24,649,126

Notes: 1. The figures are for the software development business. 2. Amounts are not inclusive of the consumption tax. 3. No comparison with the figures in the preceding consolidated fiscal year has been made since the new business

classification was introduced for the consolidated fiscal year under review. For information purposes, the amount of orders stood at 116,197,739 thousand yen and the outstanding balance of orders was 23,477,085 thousand yen in the software development related business, according to the old business classification.

3) Sales performance (Thousands of yen)



Amount % Amount % Software development related business 120,086,782 70.3 134,533,012 81.5Solution services business 16,849,467 9.9 – –Outsourcing business 31,330,108 18.4 28,210,104 17.1Other businesses 2,473,461 1.4 2,338,549 1.4

Total 170,739,820 100.0 165,081,666 100.0Notes: 1. Amounts are not inclusive of the consumption tax.

2. No comparison with the figures in the preceding consolidated fiscal year has been made since the new business classification was introduced for the consolidated fiscal year under review. For information purposes, sales performance stood at 117,042,828 thousand yen in the software development related business, at 17,468,319 yen in the solution services business, at 28,231,969 thousand yen in the outsourcing business and at 2,338,549 thousand yen in other businesses, according to the old business classification.

summary of financial results for the fiscal year …summary of financial results for the fiscal year...

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