RNS Number:3381S
Kajima Corporation
21 November 2003
(NOTES)
1.Summary of Significant Accounting Policies
(a) Cash Equivalents
Cash equivalents are short-term investments that are readily convertible into
cash and that are exposed to insignificant risk of changes in value. Cash
equivalents include time deposits and certificate of deposits, all of which
mature or become due within three months of the date of acquisition.
(b) Inventories
Construction projects in progress are stated at cost as determined on a specific
project basis. Related general and administrative expenses and financial charges
are principally excluded from such costs. Other inventories are primarily stated
at cost determined on a specific project basis or by the moving-average method.
However, in the case of certain overseas subsidiaries, construction projects in
progress and real estate for sale are stated at cost, when not in excess of net
realizable value.
(c) Capitalization of Interest
Interest costs incurred for real estate development projects conducted by
certain overseas subsidiaries have been capitalized as a part of the development
cost of such projects.
(d) Marketable Securities and Investments in Securities
Marketable securities and investments in securities are classified and accounted
for, depending on management's intent, as follows:
i)Trading securities, which are held for the purpose of
earning capital gains in near term, are reported at fair value and the related
unrealized gains and losses are included in the earnings;
ii)Held-to-maturity debt securities, which are expected to
be held to maturity with the positive intent and ability to hold to maturity,
are reported at amortized cost;
iii)Available-for-sale securities, which are not classified
as either of the aforementioned securities, are reported at fair value, with
unrealized gains and losses, net of applicable taxes, reported in a separate
component of stockholders' equity.
All securities held by the Companies are classified as available-for-sale
securities. The cost of securities sold is determined based on the
moving-average method. However, securities held by certain overseas subsidiaries
are stated at the lower of cost or market value. Non-marketable
available-for-sale securities are stated at amortized cost or at cost determined
by the moving-average method according to the nature. For other than temporary
declines in fair value, available-for-sale securities are reduced to net
realizable value by a charge to income.
(e) Property and Equipment
Property and equipment are principally stated at cost. Depreciation has been
principally computed using the declining-balance method while the straight-line
method is applied to buildings acquired after April 1, 1998.
However, in the accounts of certain overseas subsidiaries, depreciation is
principally calculated using the straight-line method over the estimated useful
lives of the respective assets.
(f) Allowance for Doubtful Accounts
Allowance for doubtful accounts provided by the Company and its consolidated
domestic subsidiaries is stated in amounts considered to be appropriate based on
each company's past credit loss experience and an evaluation of potential losses
in the receivables and others outstanding. However, the consolidated overseas
subsidiaries provide for such possible losses using management's estimate.
(g) Retirement Benefits
Under the employees' retirement benefit plans, the Company and its consolidated
domestic subsidiaries have funded and/or unfunded retirement benefit plans
covering all of their employees. Certain overseas subsidiaries have defined
contribution plans.
The employees' retirement benefits at semiannual closing accounts are accounted
for the estimated liability for retirement benefits based on projected benefit
obligations and plan assets at the financial year end in conformity with the
accounting standard for the employees' retirement benefits.
Retirement benefits to directors and corporate auditors are recorded to state
the liability at the amount which would be required if all directors and
corporate auditors retired at the balance sheet date as stipulated in the
retirement regulations. Liability for retirement benefits as of September 30,
2003 and 2002 includes retirement benefits for directors and corporate auditors
of Yen4,997 million ($45,018 thousand) and Yen4,905 million, respectively. The
retirement benefits for directors and corporate auditors are paid subject to the
approval of stockholders.
(h) Allowances for Loss on Development Projects
The Companies provide for foreseeable losses arising from certain real estate
projects.
(i) Recognition of Revenues and Related Costs
In the Company and its consolidated domestic subsidiaries, individual
construction projects, whose contract amounts are not less than Yen100 million
and the contract periods are beyond one year, are recorded using the
percentage-of- completion method without provision for remaining foreseeable
losses, while individual construction projects except the aforementioned are
recorded using the completed-contract method.
In the consolidated overseas subsidiaries, all construction projects are
recorded using the percentage-of-completion method.
The revenues posted by way of the percentage-of-completion method for the first
half of financial years from April 1 to September 30, 2003 and 2002 were
Yen357,312 million ($3,219,027 thousand) and Yen375,228 million, respectively.
(j) Cost of Research and Development
All research and development costs are charged to income as incurred.
(k) Leases
All leases are accounted for as operating leases. Under the Japanese accounting
standards for leases, finance leases that deem to transfer ownership of the
leased property to the lessee are to be capitalized, while other finance leases
are permitted to be accounted for as operating lease transactions.
(l) Income Taxes
The provision for income taxes is computed based on the pretax income included
in the consolidated statements of income. Effective April 1, 2003, the Company
adopted a consolidated taxation system. The asset and liability approach is used
to recognize deferred tax assets and liabilities for the expected future tax
consequences of temporary differences between the carrying amounts and the tax
bases of assets and liabilities. Deferred income taxes are measured by applying
currently enacted tax laws to the temporary differences.
(m) Appropriations of Retained Earnings
Appropriations of retained earnings are reflected in the accompanying
consolidated financial statements for the following year upon stockholders'
approval.
(n) Foreign Currency Transactions
All short-term and long-term monetary receivables and payables denominated in
foreign currencies are translated into Japanese yen at the exchange rates at the
balance sheet date. The foreign exchange gains and losses from translation are
recognized in the consolidated statements of income to the extent that they are
not hedged by forward exchange contracts or currency swaps.
(o) Foreign Currency Financial Statements
The balance sheet accounts and revenue and expense accounts of the consolidated
overseas subsidiaries are translated into Japanese yen at the current exchange
rates as of each balance sheet date except for stockholders' equity, which is
translated at the historical exchange rate.
Differences arising from such translation are shown in "Stockholders' equity"
as foreign currency statements translation adjustments in the accompanying
consolidated balance sheets.
(p) Derivatives and Hedging Activities
The Companies use derivative financial instruments to manage their exposures to
fluctuations in foreign exchange, interest rates and listed equity securities.
Foreign exchange forward contracts, currency swaps, interest rate swaps and
contracts for future delivery of the equity securities are principally utilized
by the Companies to reduce the risks arising from the factors mentioned above.
The Companies do not enter into derivatives for trading or speculative purposes.
Derivative financial instruments and foreign currency transactions are
classified and accounted for as follows:
i)all derivatives be recognized as either assets or liabilities
and measured at fair value, and gains or losses on derivative transactions are
recognized in the consolidated statements of income, and
ii)for derivatives used for hedging purposes, if derivatives
qualify for hedge accounting because of high correlation and effectiveness
between the hedging instruments and the hedged items, gains or losses on
derivatives are deferred until maturity of the hedged transactions, however, the
contracts for future delivery engaged in to hedge fluctuations in listed equity
securities are measured at fair value and the unrealized gains or losses are
charged to income.
The derivative instruments applied for forecasted or committed transactions are
also measured at the fair value, but the unrealized gains/losses are deferred
until the underlying transactions are completed.
The monetary debts and credits denominated in foreign currencies, for which
foreign exchange forward contracts or currency swaps are used to hedge the
foreign currency fluctuations, are translated at the contracted rate if the
forward contracts or currency swaps qualify for hedge accounting.
The interest rate swaps, which qualify for hedge accounting and meet specific
matching criteria, are not remeasured at market value, but the differential paid
or received under the swap agreements are charged to income.
2.Differences Between Japanese Accounting Principles and International Financial
Reporting Standards
The accompanying consolidated financial statements are prepared in conformity
with accounting principles generally accepted in Japan.
The main differences between such accounting principles and IFRSs are as
follows:
(a) Recognition of Revenues and Related Costs
IAS 11 requires revenues and related costs to be recognized by reference to the
stage of completion of contract activity where the outcome of a construction
contract can be estimated reliably. Also, it demands the provision for
foreseeable losses on contract backlog.
The Companies' reporting policy in relation to the recognition of revenues and
related costs, which is in accordance with Japanese accounting principles, is
set out in Note 1.(i).
(b) Impairment Loss
IAS 36 requires impairment loss on assets including property and equipment to be
recognized whenever the recoverable amount is less than its carrying amount.
The Companies' reporting policy in relation to property and equipment, which is
in accordance with Japanese accounting principles, is set out in Note 1.(e).
3.Marketable Securities and Investments in Securities
Marketable securities and investments in securities as of September 30, 2003 and
2002 consisted of the following:
-----------------------------------------------
Thousands of
Millions of Yen U.S. Dollars
---------------------------- -----------
2003 2002 2003
----------- ----------- -----------
Current:
Government and corporate bonds Yen 145 Yen 221 $ 1,306
Fund trusts and other - 583 -
----------- ----------- -----------
Total Yen 145 Yen 804 $ 1,306
=========== =========== ===========
Non-Current:
Equity securities Yen 170,609 Yen 178,895 $ 1,537,018
Government and corporate bonds 90 717 811
Fund trusts and other 9,462 13,842 85,243
----------- ----------- -----------
Total Yen 180,161 Yen 193,454 $ 1,623,072
=========== =========== ===========
Information regarding the category of the securities classified as
available-for-sale as of September 30, 2003 and 2002 were as follows:
As of September 30,2003 Millions of Yen
------------------ ----------- ----------- -----------
Cost Unrealized Fair Value
Gain(Loss) (Carrying Amount)
----------- ----------- -----------
Available-for-sale:
Equity securities Yen 111,338 Yen 44,421 Yen 155,759
Government and corporate bonds 214 1 215
Fund trusts and other 1,773 (317) 1,456
----------- ----------- -----------
Total Yen 113,325 Yen 44,105 Yen 157,430
=========== =========== ===========
As of September 30,2002 Millions of Yen
------------------ ----------- ----------- -----------
Cost Unrealized Fair Value
Gain(Loss) (Carrying Amount)
----------- ----------- -----------
Available-for-sale:
Equity securities Yen 126,470 Yen 41,626 Yen 168,096
Government and corporate bonds 964 (25) 939
Fund trusts and other 7,145 (111) 7,034
----------- ----------- -----------
Total Yen 134,579 Yen 41,490 Yen 176,069
=========== =========== ===========
As of September 30,2003 Thousands of U.S. Dollars
------------------ ----------- ----------- -----------
Cost Unrealized Fair Value
Gain(Loss) (Carrying Amount)
----------- ----------- -----------
Available-for-sale:
Equity securities $ 1,003,045 $ 400,189 $ 1,403,234
Government and corporate bonds 1,928 9 1,937
Fund trusts and other 15,973 (2,856) 13,117
----------- ----------- -----------
Total $ 1,020,946 $ 397,342 $ 1,418,288
=========== =========== ===========
Available-for-sale securities whose fair value is not readily determinable such
as non-listed securities excluding over-the-counter securities as of September
30, 2003 and 2002 were as follows:
-----------------------------------------------
Thousands of
Millions of Yen U.S. Dollars
---------------------------- -----------
2003 2002 2003
----------- ----------- -----------
Available-for-sale:
Equity securities Yen 14,850 Yen 10,798 $ 133,784
Government and corporate bonds 20 - 180
Fund trusts and other 8,006 7,391 72,126
----------- ----------- ----------
Total Yen 22,876 Yen 18,189 $ 206,090
=========== =========== ==========
4.Revaluation of Land
Under the "Law of Land Revaluation?", the Company and a domestic subsidiary
adopted a one-time revaluation of their own-use land in Japan including land
under trust estate to a value based on real estate appraisal information as of
March 31, 2002.
The resulting land revaluation excess represents unrealized appreciation of land
and is stated, net of income taxes and minority interests, as a component of
stockholders' equity. There is no effect on the statements of income. Continuous
readjustment is not permitted unless the land value subsequently declines
significantly such that the amount of the decline in value should be removed
from the land revaluation excess account, related deferred tax liabilities and
minority interests.
5.Contingent Liabilities
As of September 30, 2003, contingent liabilities for trade notes discounted and
loans guaranteed including related items of similar nature amounted to Yen360
million ($3,243 thousand) and Yen29,285 million ($263,829 thousand),
respectively.
6.Subsequent Event
The Board of Directors of the Company, at its meeting held on October 15, 2003,
resolved that the Company issue new shares by public offering pursuant to the
following terms. As of November 1, 2003, the number of issued and outstanding
shares increased to 1,057,312,022 shares and the amount of common stock
increased to Yen 81,447 million ($733,756 thousand) as a result of the capital
increase by public offering.
Number of shares issued: 96,000,000 shares of common stock
Method of offering: Public offering
Offer price for the public Yen 377.00 per share ($ 3.40 per share)
offering:
Aggregate amount of the Yen 36,192 million ($326,054 thousand)
offer price for the public
offering:
Issue price: Yen 361.60 per share ($3.26 per share)
Aggregate amount of the Yen 34,713.6 million ($312,735 thousand)
issue price:
Amount of the issue price Yen 17,376 million ($156,541 thousand)
capitalized:
Dividend accruing date: October 1, 2003
Use of proceeds from the The entire amount of the net proceeds will be used
share offering: for investment in stand-alone projects including
development projects and PFI projects.
No underwriting commission was paid to underwriters. The disparity between the
aggregate amount of the offer price for the public offering and the aggregate
amount of the issue price paid by the underwriters to the Company was for the
account of the underwriters.
7. Segment Information
(1) Business Segments
Millions of Yen
-------------------------------------------
First Half of Financial Year from April 1 to September 30, 2003
-------------------------------------------
-------- -------- -------- -------- -------- --------
Construction Real Other Total Elimination
Estate Consolidated
-------- -------- -------- -------- -------- --------
Revenues:
Customers Yen601,102 Yen126,240 Yen56,030 Yen783,372 Yen - Yen783,372
Inter-segments 171 1,005 10,941 12,11 (12,117) -
-------- ------- -------- -------- -------- --------
Total 601,273 127,245 66,971 795,489 (12,117) 783,372
Operating
expenses 598,810 117,606 67,479 783,895 (17,534) 766,361
-------- -------- -------- -------- -------- --------
Operating
income Yen2,463 Yen9,639 Yen(508) Yen11,594 Yen 5,417 Yen17,011
======== ======== ======== ======== ======== ========
Millions of Yen
-------------------------------------------
First Half of Financial Year from April 1 to September 30, 2002
-------------------------------------------
-------- -------- -------- -------- -------- --------
Construction Real Other Total Elimination
Estate Consolidated
-------- -------- -------- -------- -------- --------
Revenues:
Customers Yen654,136 Yen108,284 Yen60,372 Yen822,792 Yen - Yen 822,792
Inter-segments 3,411 1,033 5,794 10,23 (10,238) -
-------- -------- -------- -------- -------- --------
Total 657,547 109,317 66,166 833,030 (10,238) 822,792
Operating
expe 655,227 98,731 66,511 820,469 (10,182) 810,287
-------- -------- -------- -------- -------- --------
Operating
income Yen 2,320 Yen10,586 Yen (345)Yen 12,561 Yen (56) Yen 12,505
======== ======== ======== ======== ======== ========
Thousands of U.S. Dollars
-------------------------------------------
First Half of Financial Year from April 1 to September 30, 2003
-------------------------------------------
-------- -------- -------- -------- -------- --------
Construction Real Other Total Elimination
Estate Consolidated
-------- -------- -------- -------- -------- --------
Revenues:
Customers $5,415,333 $1,137,297 $504,775 $7,057,405 $ - $7,057,405
Inter-segments 1,541 9,054 98,568 109,163 (109,163) -
-------- -------- -------- ------- -------- --------
Total 5,416,874 1,146,351 603,343 7,166,568 (109,163) 7,057,405
Operating
expenses 5,394,685 1,059,513 607,920 7,062,118 (157,965) 6,904,153
-------- -------- -------- -------- -------- --------
Operating
income $ 22,189 $ 86,838 $ (4,577) $104,450 $ 48,802 $153,252
======== ======== ======== ======== ======== ========
(2) Geographical Segments
Millions of Yen
----------------------------------------------
First Half of Financial Year from April 1 to September 30, 2003
----------------------------------------------
-------- -------- -------- -------- -------- -------- --------
Japan North Asia Elimination
America Europe Total Consolidated
-------- -------- -------- -------- -------- -------- --------
Revenues:
Customers Yen699,335 Yen52,992 Yen12,900 Yen18,145 Yen783,372 Yen - Yen783,372
Inter-segments 188 - - - 188 (188) -
-------- -------- -------- -------- -------- -------- --------
Total 699,523 52,992 12,900 18,145 783,560 (188) 783,372
Operating
expenses 683,729 52,912 13,328 16,580 766,549 (188) 766,361
-------- -------- -------- -------- ------- -------- --------
Operating
income Yen15,794 Yen 80 Yen(428) Yen 1,565 Yen17,011 Yen - Yen17,011
======== ======== ======== ======== ======= ======== ========
Millions of Yen
----------------------------------------------
First Half of Financial Year from April 1 to September 30, 2002
----------------------------------------------
-------- -------- -------- -------- -------- -------- --------
Japan North Asia Elimination
America Europe Total Consolidated
-------- -------- -------- -------- -------- -------- --------
Revenues:
Customers Yen732,927 Yen61,533 Yen8,111 Yen20,221Yen822,792 Yen - Yen822,792
Inter-segments 317 - - - 317 (317) -
-------- -------- -------- -------- -------- -------- --------
Total 733,244 61,533 8,111 20,221 823,109 (317) 822,792
Operating
expenses 724,153 58,309 9,310 18,832 810,604 (317) 810,287
-------- -------- -------- -------- -------- -------- --------
Operating
income Yen 9,091 Yen 3,224 Yen(1,199)Yen 1,389 Yen12,505 Yen - Yen12,505
======== ======== ======== ======== ======== ======== ========
Thousands of U.S. Dollars
----------------------------------------------
First Half of Financial Year from April 1 to September 30, 2003
----------------------------------------------
-------- -------- -------- -------- -------- -------- --------
Japan North Asia Elimination
America Europe Total Consolidated
-------- -------- -------- -------- -------- -------- --------
Revenues:
Customers $6,300,315 $477,405 $116,216 $163,469$7,057,405 $ - $7,057,405
Inter-segments 1,694 - - - 1,694 (1,694) -
-------- -------- -------- -------- -------- -------- --------
Total 6,302,009 477,405 116,216 163,469 7,059,099 (1,694) 7,057,405
Operating
expenses 6,159,721 476,684 120,072 149,370 6,905,847 (1,694) 6,904,153
-------- -------- -------- -------- -------- -------- --------
Operating
income $142,288 $ 721 $ (3,856) $ 14,099 $153,252 $ - $153,252
======== ======== ======== ======== ======== ======== ========
(3)Overseas Revenues
Millions of Yen
---------------------------------------
First Half of Financial Year from April 1 to September 30, 2003
---------------------------------------
---------- ---------- ----------- --------- ---------
North America Europe Asia Other Area Total
---------- ---------- ----------- --------- ---------
Overseas Revenues Yen 52,994 Yen 13,476 Yen 30,654 Yen 1,058 Yen98,182
Consolidated Revenues - - - - 783,372
Overseas/Consolidated
Ratio(%) 6.8 1.7 3.9 0.1 12.5
Millions of Yen
---------------------------------------
First Half of Financial Year from April 1 to September 30, 2002
---------------------------------------
--------- --------- ---------- ------- ---------
North America Europe Asia Other Area Total
--------- --------- ---------- ------- ---------
Overseas Revenues Yen 61,549 Yen 8,690 Yen 25,596 Yen 221 Yen96,056
Consolidated Revenues - - - - 822,792
Overseas/Consolidated
Ratio(%) 7.5 1.1 3.1 0.0 11.7
Thousands of U.S. Dollars
---------------------------------------
First Half of Financial Year from April 1 to September 30, 2003
---------------------------------------
--------- --------- --------- ------- ---------
North America Europe Asia Other Area Total
--------- --------- --------- ------- ---------
Overseas Revenues $ 477,424 $ 121,405 $ 276,162 $ 9,532 $ 884,523
Consolidated Revenues - - - - 7,057,405
III.BREAKDOWN OF ORDER BOOK
(1)Contract Awards of construction projects on a consolidated basis
Contracts award of construction projects on a consolidated basis totaled
Yen644,339 million ($5,804,856 thousand) and Yen601,416 million for the first
half of financial years from April 1 to September 30, 2003 and 2002,
respectively.
(2)Consolidated Revenues
----
First Half of Financial Years from April 1 to September 30
-------------------------------------- -----------
Thousands of
Millions of Yen U.S. Dollars
-------------------------------------- ----------
2003 2002 2003
-------------------------------------- ----------
Construction Yen 601,102 (76.7%) Yen 654,136(79.5%) $ 5,415,333
Real Estate 126,240(16.1%) 108,284(13.2%) 1,137,297
Other 56,030( 7.2%) 60,372( 7.3%) 504,775
---------- ---------- ----------
Total Yen 783,372(100.0%) Yen 822,792(100.0%) $ 7,057,405
============== ============== ===========
(Reference)
Breakdown of Order Book of the Company is as follows:
(1)Contract Awards
First Half of Financial Years from April 1 to September 30
----------------------------------------------
Thousands of
Millions of Yen U.S. Dollars
--------------------------- ----------
2003 2002 2003
---------- ---------- ----------
Civil Engineering
Domestic-Public Yen 69,179 Yen 69,913 $ 623,234
-Private 53,102 42,337 478,397
Overseas 8,323 28,377 74,982
---------- ---------- ----------
Subtotal 130,604 140,627 1,176,613
---------- ---------- ----------
Architectural
Construction
Domestic-Public 41,550 40,605 374,324
-Private 373,141 313,488 3,361,631
Overseas 953 218 8,585
---------- ---------- ----------
Subtotal 415,644 354,311 3,744,540
---------- ---------- ----------
Real Estate and Other 51,587 43,133 464,748
---------- ---------- ----------
Grand Total Yen 597,835 Yen 538,071 $ 5,385,901
========== ========== ==========
(2)Revenues
First Half of Financial Years from April 1 to September 30
----------------------------------------------
Thousands of
Millions of Yen U.S. Dollars
---------------------------- ----------
2003 2002 2003
---------- ---------- ----------
Civil Engineering
Domestic-Public Yen 80,553 Yen 94,651 $ 725,703
-Private 50,397 50,013 454,027
Overseas 12,420 5,422 111,892
---------- ---------- ----------
Subtotal 143,370 150,086 1,291,622
---------- ---------- ----------
Architectural Construction
Domestic-Public 32,994 36,002 297,243
-Private 327,983 376,715 2,954,802
Overseas 258 - 2,324
---------- ---------- ----------
Subtotal 361,235 412,717 3,254,369
---------- ---------- ----------
Real Estate and Other 43,464 56,018 391,568
---------- ---------- ----------
Grand Total Yen 548,069 Yen 618,821 $ 4,937,559
========== ========== ==========
(3)Total Contract Backlog
As of September 30
----------------------------------------------
Thousands of
Millions of Yen U.S. Dollars
---------------------------- ----------
2003 2002 2003
---------- ---------- ----------
Civil Engineering
Domestic-Public Yen 277,433 Yen 349,172 $ 2,499,396
-Private 176,652 189,591 1,591,460
Overseas 85,810 98,636 773,063
---------- ---------- ----------
Subtotal 539,895 637,399 4,863,919
---------- ---------- ----------
Architectural Construction
Domestic-Public 97,114 114,998 874,901
-Private 707,988 821,877 6,378,270
Overseas 2,578 229 23,225
---------- ---------- ----------
Subtotal 807,680 937,104 7,276,396
---------- ---------- ----------
Real Estate and Other 88,023 49,156 793,000
---------- ---------- ----------
Grand Total Yen 1,435,598 Yen 1,623,659 $ 12,933,315
========== ========== ==========
This information is provided by RNS
The company news service from the London Stock Exchange
END
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