ESTABLISHED 1933. PAVING & GENERAL ...sales and use by our group. In FY 2009, we sold 1,431,311 tons of asphalt mixture. Revenues from asphalt mixture sales amounted to ¥14,960 million

OBAYASHI ROAD CORPORATIONESTABLISHED 1933. PAVING & GENERAL CONTRACTORS

Printed in Japan

OBAYASHI ROAD CORPORATION

Annual Report 2009

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FINANCIAL HIGHLIGHTS

For the years ended March 31 Millions of yen Thousands of U.S. dollars

2009 2008 2009

Net sales ................................................................................. ¥ 92,533 ¥ 95,048 $ 942,012Net income .............................................................................. 355 551 3,618New orders received ............................................................... 90,974 103,182 926,135Backlog at year end ................................................................ 39,441 41,001 401,525

At year endTotal assets ........................................................................ ¥ 76,168 ¥ 78,495 $ 775,405Total liabilities ..................................................................... 53,071 55,445 540,274Net assets .......................................................................... 23,096 23,049 235,130

Per share dataBasic net income per share ............................................... ¥ 7.63 ¥ 11.82 $ 0.07 Net assets per share ......................................................... 495.72 494.42 5.04

All figures have been translated into U.S. dollar at the rate of ¥98.23/$1.00, solely for the convenience of the reader. For details, see Note 2 to the consolidated financial statements.The fiscal year end of Obayashi Road Corporation and consolidated subsidiaries is March 31.

Net sales (billions of yen)

0

40

80

120

160

2008 2009

2008 2009

Asphalt mixture sales

Completed construction

Net income (billions of yen)

∆1.0

∆0.5

0.0

0.5

1.0

1.5

2.0

New orders received (billions of yen)

0

40

80

120

160

2008 2009

2008 2009



Basic net income per share (yen)

∆20

∆10

0

10

20

30

40

Company Profile:

Obayashi Road Corporation (the “Company”) is one of the major road construction companies in Japan. The Company is one of subsidiaries of Obayashi Corporation, one of the five largest construction and civil engineering companies in Japan. The Company’s main businesses consist of civil engineering and asphalt mixture activities, with civil engineering divided into paving works and non-paving works. Paving works are mainly carried out in connection with the construction of roads, expressways, factories and buildings and airports and harbors. Non-paving works include site formation, road and expressway related works and water and sewage works. In its asphalt mixture activities, the Company manufactures and sells asphalt mixture for use in paving works.

The Company conducts its operations through its head office in Tokyo, and 9 branches, 52 business offices, 45 asphalt mixture plants and 2 SEALOFLEX mixture plants throughout Japan, with 1,107 full-time employees as of March 31, 2009.

The purpose of the Corporation is to engage in the following business: 1. Contracting of road construction, paving, site

formation, water and sewerage works and other civil engineering construction and building works, and planning, research, designing and management relating thereto;

2. Manufacturing and sales of materials to be used for the construction works described in the preceding paragraph;

3. Manufacturing, repair, sales and lease of equipment and implements for construction works and vehicles;

4. Collecting, carrying and processing of waste and industrial waste, and manufacturing and sales of its recycled products.

5. Manageing and lease of tennis courts, play grounds, campsites, other sports leisure facilities, accommodations and eating houses;

6. Land development, and sales, brokerage and caretaking of real estate;

7. Business activities relating to landscaping , gardening and tree planting;

8. Temporary personnel placement agency business;

9. Consulting service related to each item above; and

10. All activities related to any of the preceding items.

Board of Directors

President & Representative Director Tetsuo IshiiRepresentative Director Haruo AonumaDirectors Fumikazu Kawada Michihiro Hamada

Executive Officers

President Tetsuo IshiiSenior Managing Officers Haruo Aonuma Yutaka Shono Masataka Yamada Hisashige ItoManaging Officers Fumikazu Kawada Michihiro Hamada Katsuhiro Suzuki Taro Kaji Takahide Kouchi Minoru Tanaka Takuo TsubouchiExecutive Officers Masaya Hirai Tsutomu Asakura Toshirou Mishima Hiroshi Maeda Satoru Mizutani Kenichi Matuya Yoshihisa Masiko

Auditors

Corporate Auditor Hiroshi KatadaOutside Auditors Akira Kashima Hideki Sugiyama Sigeharu Sugimoto

Network of Companies

Head Office: 19-9,Tsutsumidori 1-chome, Sumida-ku,Tokyo 131-8540 TEL:(03)3618-6500 FAX:(03)3618-6597Branches: Kantoh, Osaka, Hokkaido, Tohoku, Hokushinetsu, Chubu, Chugoku, Kyusyu, ShikokuReseach and Development Institute: Kiyose-shi, TokyoTechnical Center: Kuki-shi, Saitama Pref.Business Offices: 52 offices located throughout JapanAsphalt Mixture Plants: 45 plants located throughout JapanSEALOFLEX Mixture Plants: Kuki-shi,Saitama Pref. Hamamatsu-shi,Shizuoka pref.Subsidiaries: Toyo Pipe Renovate Co., Ltd. Toyo Techno Construction Co., Ltd.Affiliates: TMS Liner Co., Ltd. Japan Snap Lock Co., Ltd. Forest Consultant Co.,Ltd. Minoru Kogyo Co., Ltd.1 34

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TO OUR SHAREHOLDERS

This is to report on the business result of the Company Group for the consolidated fiscal year ended March 31, 2009.

Material prices appreciated substantially at the initial phase of the term under review, backed by the rapid inflation of prices for natural resources such as crude oil. After that, the Japanese real economy deteriorated rapidly in reaction to the global financial turmoil touched off by the U.S. subprime lending crisis last September. Exports declined drastically, oppressed by the sharp contraction of the global economy and the appreciation of the Japanese yen. Unprecedented reductions in production volumes forced manufacturing industries to adjust their employment levels.

In the road construction industry, uncertainty about construction order receipts increased further.

Orders for public construction works remained weak, and sharp deteriorations in the real economy led to suspensions and postponements of corporate capital investment in spite of an anticipated up-tick in private construction work.

Sales of products were generally constrained, as the Company Group was unable to pass on the higher costs of mate-rials (such as asphalt) to sales prices until the second quarter. We were also forced to review our sales strategy after the contraction in the market.

Under these circumstances, we focused on securing construction order receipts and revising the sales price of prod-ucts. As a result, orders received during the term under review decreased by 11.8% from the previous term, to ¥90,974 million, (US$926,135 thousand) and sales decreased by 2.6%, to ¥92,533 million (US$942,012 thousand).

Gross profit decreased by ¥309 million from the previous term, to ¥6,466 million, (US$65,832 thousand) mainly due to lower profit margins for construction and decreasing sales, while gross profit margins for products increased. Net income decreased by ¥195 million, to ¥355 million (US$3,618 thousand), mainly due to an impairment loss on fixed assets of ¥279 million (US$2,846 thousand) recorded as an extraordinary loss as a result of the idle status of land and the dwindling profitability of assets at facilities in the product division.

The Japanese economy is expected to remain sluggish in the future as a result of the global financial crisis, weak consumer spending, and deteriorating corporate income and employment conditions accompanying the rapid contraction of the real economy. In the road construction industry, increases in public construction works are anticipated as part of the government’s economic stimulus measures. Severe conditions are expected to continue further, however, as corporate capital investment is projected to remain weak.

To secure orders received and sales volume in its mainstay paving business, civil engineering business, and plied timber business, the Company Group will further improve its abilities to propose technical solutions and implement con-struction projects in a diversified manner in response to open bidding via the comprehensive evaluation system in its construction division, while strengthening its production base and enhancing quality in its product and marketing divi-sions.

We will also be securing stable profit by strengthening our functions in maintenance and renewal fields for social capital and in environment-related fields. Through these efforts, we will strive to become a sound company which society needs.

We believe that we will continue to merit your valuable and ongoing support.

Tetsuo Ishii , President and Director

2

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GROUP AND BUSINESS OPERATIONS

Our group, consisting of our company, 2 subsidiaries, 4 affiliates and our parent company, is mainly engaged in the general contractor business, providing paving, civil engineering, construction and related works. In addition, our group manufactures and sells asphalt mixture, handles waste disposal. Details of our business lines are explained below.

CONSTRUCTION BUSINESS

Our activities include obtaining orders for construction work, and carrying out actual construction, design and surveys. And in the same, our parent company, Obayashi Corporation Co., Ltd., (the Parent Company), contract for construction and complete products. Therefore we have some orders which the Parent Company have made.

In the same manner, our subsidiaries, Toyo Techno Construction Co., Ltd., and our affiliates, Minoru Kogyo Co., Ltd., Forest Consultant Co., Ltd., are engaged in activities that include obtaining orders for construction work, and carrying out actual construction, design and surveys.

In addition, our subsidiaries, Toyo Pipe Renovate Co., Ltd., and our affiliates, TMS Co., Ltd, Japan Snap Lock Co., Ltd., contract for enterprise which makes over pipes and complete products.

So they, or we have some orders which we, or they have made.

Obayashi Road Corporation’s construction business consists of civil engineering and building construction. Revenues earned from the construction business in FY 2009 amounted to ¥77,215 million (US$786,071 thousand), contributing about 83.8% of total revenue. Business in the civil engineering sector is divided into paving and non-paving works. The Company provides a complete range of such services as design, planning, consultation and construction, as a general contractor or a main sub-contractor in both the public and private sectors.

Paving works are projects involving laying of asphalt mixture or cement on prepared ground and include the construc-tion of roads and expressways, surroundings of factories and other buildings (including car parks), airports and harbors and other facilities such as tennis courts and driveways and car parks at golf courses.

Non-paving works consist of site formation, road and expressway related works, water and sewage works and other types of non-paving civil engineering works.

In FY 2009, revenues derived from paving and non-paving works amounted to ¥51,904 million (US$528,399 thousand) and ¥24,930 million (US$253,800 thousand), respectively, representing 56.3% and 27.1% of the total revenue.

The building construction division undertakes construction of medium-sized commercial, residential and other build-ings such as gas stations, suburban restaurants and shopping malls. In FY 2009, revenues derived from building con-struction amounted to ¥380 million (US$3,871 thousand), representing 0.4% of the total revenue.

MANUFACTURING, SELLING AND OTHER BUSINESS

In addition to the above activities, we and our affiliate Minoru Kogyo Co., Ltd. Manufacture asphalt mixture both for sales and use by our group.

In FY 2009, we sold 1,431,311 tons of asphalt mixture. Revenues from asphalt mixture sales amounted to ¥14,960 million (US$152,300 thousand), contributing to 16.2% of the total revenue.

The Company is also the exclusive licensee and exclusive agent in Japan for Noordhollandse Asphalt Central b.V. in the Netherlands for a binding agent marketed under the name SEALOFLEX, which, when added to asphalt, enables relatively temperature-resistant, long-lasting asphalt mixtures to be produced. SEALOFLEX can also be used to create a porous asphalt mixture for situations where drainage is important.

The Company expects that asphalt mixtures with the additional properties imparted by the use of SEALOFLEX (avail-able only from the Company at present) will become increasingly important in Japan.

3

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VOLUME OF OPERATIONS

The following table shows the Company’s amounts and percentage shares of revenues, order backlog and new orders received, attributable to individual areas for FY 2009 and FY 2008:

Backlog from the previous year

New orders received during the year

Revenues during the year

Carried over to the next year

Millions of yen2009

Civil EngineeringPaving works ......................................................... ¥ 28,014 ¥ 52,421 ¥ 51,904 ¥ 28,531

(68.3%) (57.9%) (56.3%) (72.5%)Non-paving works .................................................. 12,986 22,361 24,930 10,417

(31.7%) (24.7%) (27.1%) (26.5%)Building Construction ................................................ — 782 380 402

(—%) (0.9%) (0.4%) (1.0%)Total construction works ........................................ 41,001 75,565 77,215 39,351

(100.0%) (83.5%) (83.8%) (100.0%)Asphalt Mixture Activities and other ......................... — 14,960 14,960 —

(—%) (16.5%) (16.2%) (—%)Total ....................................................................... ¥ 41,001 ¥ 90,526 ¥ 92,176 ¥ 39,351

(100.0%) (100.0%) (100.0%) (100.0%)

Thousands of U.S. dollars2009

Civil EngineeringPaving works ......................................................... $ 285,196 $ 533,662 $ 528,399 $ 290,459Non-paving works .................................................. 132,205 227,642 253,800 106,047Building Construction ............................................ — 7,969 3,871 4,097Total construction works ........................................ 417,402 769,274 786,071 400,604

Asphalt Mixture Activities and other ......................... — 152,300 152,300 —Total ....................................................................... $ 417,402 $ 921,575 $ 938,372 $ 400,604

Millions of yen2008


(69.3%) (57.2%) (56.5%) (68.3%)Non-paving works .................................................. 10,099 28,817 25,930 12,986

(30.7%) (28.0%) (27.4%) (31.7%)Total construction works ........................................ 32,866 87,650 79,515 41,001


(—%) (14.8%) (16.1%) (—%)Total ....................................................................... ¥ 32,866 ¥ 102,899 ¥ 94,764 ¥ 41,001

(100.0%) (100.0%) (100.0%) (100.0%)

4

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GROUP AND BUSINESS OPERATIONS

Our group, consisting of our company, 2 subsidiaries, 4 affiliates and our parent company, is mainly engaged in the general contractor business, providing paving, civil engineering, construction and related works. In addition, our group manufactures and sells asphalt mixture, handles waste disposal. Details of our business lines are explained below.

CONSTRUCTION BUSINESS

Our activities include obtaining orders for construction work, and carrying out actual construction, design and surveys. And in the same, our parent company, Obayashi Corporation Co., Ltd., (the Parent Company), contract for construction and complete products. Therefore we have some orders which the Parent Company have made.

In the same manner, our subsidiaries, Toyo Techno Construction Co., Ltd., and our affiliates, Minoru Kogyo Co., Ltd., Forest Consultant Co., Ltd., are engaged in activities that include obtaining orders for construction work, and carrying out actual construction, design and surveys.

In addition, our subsidiaries, Toyo Pipe Renovate Co., Ltd., and our affiliates, TMS Co., Ltd, Japan Snap Lock Co., Ltd., contract for enterprise which makes over pipes and complete products.

So they, or we have some orders which we, or they have made.

Obayashi Road Corporation’s construction business consists of civil engineering and building construction. Revenues earned from the construction business in FY 2009 amounted to ¥77,215 million (US$786,071 thousand), contributing about 83.8% of total revenue. Business in the civil engineering sector is divided into paving and non-paving works. The Company provides a complete range of such services as design, planning, consultation and construction, as a general contractor or a main sub-contractor in both the public and private sectors.

Paving works are projects involving laying of asphalt mixture or cement on prepared ground and include the construc-tion of roads and expressways, surroundings of factories and other buildings (including car parks), airports and harbors and other facilities such as tennis courts and driveways and car parks at golf courses.

Non-paving works consist of site formation, road and expressway related works, water and sewage works and other types of non-paving civil engineering works.

In FY 2009, revenues derived from paving and non-paving works amounted to ¥51,904 million (US$528,399 thousand) and ¥24,930 million (US$253,800 thousand), respectively, representing 56.3% and 27.1% of the total revenue.

The building construction division undertakes construction of medium-sized commercial, residential and other build-ings such as gas stations, suburban restaurants and shopping malls. In FY 2009, revenues derived from building con-struction amounted to ¥380 million (US$3,871 thousand), representing 0.4% of the total revenue.

MANUFACTURING, SELLING AND OTHER BUSINESS

In addition to the above activities, we and our affiliate Minoru Kogyo Co., Ltd. Manufacture asphalt mixture both for sales and use by our group.

In FY 2009, we sold 1,431,311 tons of asphalt mixture. Revenues from asphalt mixture sales amounted to ¥14,960 million (US$152,300 thousand), contributing to 16.2% of the total revenue.

The Company is also the exclusive licensee and exclusive agent in Japan for Noordhollandse Asphalt Central b.V. in the Netherlands for a binding agent marketed under the name SEALOFLEX, which, when added to asphalt, enables relatively temperature-resistant, long-lasting asphalt mixtures to be produced. SEALOFLEX can also be used to create a porous asphalt mixture for situations where drainage is important.

The Company expects that asphalt mixtures with the additional properties imparted by the use of SEALOFLEX (avail-able only from the Company at present) will become increasingly important in Japan.

3

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VOLUME OF OPERATIONS

The following table shows the Company’s amounts and percentage shares of revenues, order backlog and new orders received, attributable to individual areas for FY 2009 and FY 2008:





Millions of yen2009


(68.3%) (57.9%) (56.3%) (72.5%)Non-paving works .................................................. 12,986 22,361 24,930 10,417

(31.7%) (24.7%) (27.1%) (26.5%)Building Construction ................................................ — 782 380 402

(—%) (0.9%) (0.4%) (1.0%)Total construction works ........................................ 41,001 75,565 77,215 39,351


(—%) (16.5%) (16.2%) (—%)Total ....................................................................... ¥ 41,001 ¥ 90,526 ¥ 92,176 ¥ 39,351

(100.0%) (100.0%) (100.0%) (100.0%)

Thousands of U.S. dollars2009

Civil EngineeringPaving works ......................................................... $ 285,196 $ 533,662 $ 528,399 $ 290,459Non-paving works .................................................. 132,205 227,642 253,800 106,047Building Construction ............................................ — 7,969 3,871 4,097Total construction works ........................................ 417,402 769,274 786,071 400,604

Asphalt Mixture Activities and other ......................... — 152,300 152,300 —Total ....................................................................... $ 417,402 $ 921,575 $ 938,372 $ 400,604

Millions of yen2008


(69.3%) (57.2%) (56.5%) (68.3%)Non-paving works .................................................. 10,099 28,817 25,930 12,986

(30.7%) (28.0%) (27.4%) (31.7%)Total construction works ........................................ 32,866 87,650 79,515 41,001


(—%) (14.8%) (16.1%) (—%)Total ....................................................................... ¥ 32,866 ¥ 102,899 ¥ 94,764 ¥ 41,001

(100.0%) (100.0%) (100.0%) (100.0%)

4

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The following table shows the Company’s amounts and percentage shares of revenues, order backlog and contracts awarded, divided by sources of contract, attributable to the Company’s construction works for FY 2009 and FY 2008:





Millions of yen 2009 Public Sector ............................................................ ¥ 22,508 ¥ 26,514 ¥ 27,079 ¥ 21,944

(54.9%) (35.1%) (35.1%) (55.8%) Private Sector ........................................................... 18,492 49,051 50,136 17,407

(45.1%) (64.9%) (64.9%) (44.2%) Total ...................................................................... ¥ 41,001 ¥ 75,565 ¥ 77,215 ¥ 39,351

(100.0%) (100.0%) (100.0%) (100.0%)

Thousands of U.S. dollars 2009 Public Sector ............................................................ $ 229,143 $ 269,923 $ 275,671 $ 223,395 Private Sector ........................................................... 188,258 499,351 510,400 177,209 Total ...................................................................... $ 417,402 $ 769,274 $ 786,071 $ 400,604


(41.7%) (34.3%) (26.7%) (54.9%) Private Sector ........................................................... 19,149 57,606 58,263 18,492

(58.3%) (65.7%) (73.3%) (45.1%) Total ...................................................................... ¥ 32,866 ¥ 87,650 ¥ 79,515 ¥ 41,001

(100.0%) (100.0%) (100.0%) (100.0%)

5

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6

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The following table shows the Company’s amounts and percentage shares of revenues, order backlog and contracts awarded, divided by sources of contract, attributable to the Company’s construction works for FY 2009 and FY 2008:






(54.9%) (35.1%) (35.1%) (55.8%) Private Sector ........................................................... 18,492 49,051 50,136 17,407

(45.1%) (64.9%) (64.9%) (44.2%) Total ...................................................................... ¥ 41,001 ¥ 75,565 ¥ 77,215 ¥ 39,351

(100.0%) (100.0%) (100.0%) (100.0%)

Thousands of U.S. dollars 2009 Public Sector ............................................................ $ 229,143 $ 269,923 $ 275,671 $ 223,395 Private Sector ........................................................... 188,258 499,351 510,400 177,209 Total ...................................................................... $ 417,402 $ 769,274 $ 786,071 $ 400,604


(41.7%) (34.3%) (26.7%) (54.9%) Private Sector ........................................................... 19,149 57,606 58,263 18,492

(58.3%) (65.7%) (73.3%) (45.1%) Total ...................................................................... ¥ 32,866 ¥ 87,650 ¥ 79,515 ¥ 41,001

(100.0%) (100.0%) (100.0%) (100.0%)

5

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Millions of yen Thousands of U.S. dollars

(Note 2)

2009 2008 2009

ASSETS

CURRENT ASSETS

Cash and deposits ........................................................... ¥ 9,908 ¥ 6,664 $ 100,868

Notes receivable, accounts receivable from completed

construction contracts and other .................................. 31,865 35,993 324,394

Short-term investment securities (Notes 5-(3) and 10) .... 20 — 203

Real estate for sale (Note 4-(1)) ....................................... 17 29 182

Costs on uncompleted construction contacts .................. 10,905 11,760 111,017

Raw materials and supplies ............................................. 339 438 3,455

Deferred tax assets (Note 13) .......................................... 900 607 9,166

Other ................................................................................. 1,444 1,793 14,704

Allowance for doubtful accounts ...................................... (48) (43) (496)

Total current assets ................................................... 55,352 57,242 563,497

NONCURRENT ASSETS

Property, plant and equipment (Note 4-(3))

Buildings and structures ............................................... 8,314 8,138 84,643

Machinery, equipment and vehicles ............................. 12,925 12,987 131,585

Tools, furniture and fixtures ........................................... 1,500 1,482 15,270

Land (Note 5-(2)) .......................................................... 11,740 11,837 119,520

Leased assets (Note 4-(2)) ........................................... 329 — 3,358

Construction in progress ............................................... 2 65 27

Accumulated depreciation ............................................ (17,767) (17,289) (180,880)

Total property, plant and equipment ......................... 17,045 17,222 173,526

Intangible assets .............................................................. 279 318 2,847

Investments and other assets

Investment securities (Notes 5-(1), (3) and 10) ............ 562 782 5,730

Deferred tax assets (Note 13) ....................................... 1,685 1,546 17,156

Others ........................................................................... 1,867 1,979 19,010

Allowance for doubtful receivables .............................. (625) (596) (6,363)

Total investments and other assets .......................... 3,490 3,711 35,534

Total noncurrent assets ............................................. 20,815 21,252 211,908

TOTAL ASSETS ...................................................................... ¥ 76,168 ¥ 78,495 $ 775,405

The accompanying notes to the consolidated financial statements are an integral part of these statements.

CONSOLIDATED FINANCIAL STATEMENTSConsolidated Balance Sheets

OBAYASHI ROAD CORPORATIONAt March 31, 2009 and 2008

ASSETS

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(Note 2)

2009 2008 2009

LIABILITIES

CURRENT LIABILITIES

Notes payable, accounts payable for construction contacts and other ... ¥ 29,857 ¥ 32,789 $ 303,950

Short-term loans payable (Note 17) ................................. 6,400 6,200 65,153

Income taxes payable ...................................................... 817 752 8,324

Advances received on uncompleted construction contracts ... 6,223 5,385 63,358

Provision for warranties for completed construction ........ 54 55 550

Provision for loss on construction contracts ..................... 900 397 9,168

Other ................................................................................. 2,497 2,353 25,423

Total current liabilities ............................................... 46,750 47,933 475,929

NONCURRENT LIABILITIES

Long-term loans payable (Note 17) ................................. — 1,300 —

Deferred tax liabilities for land revaluation (Notes 5-(2) and 13) ... 2,044 2,062 20,813

Provision for retirement benefits (Note 12) ......................... 4,096 4,065 41,702

Other ................................................................................. 179 83 1,829

Total noncurrent liabilities ......................................... 6,320 7,511 64,345

Total liabilities ........................................................... 53,071 55,445 540,274

NET ASSETS

SHAREHOLDERS’ EqUITy

Capital stock ..................................................................... 6,293 6,293 64,072

Capital surplus ................................................................. 6,095 6,095 62,057

Retained earnings ............................................................ 10,704 10,473 108,969

Treasury stock ................................................................... (47) (43) (482)

Total shareholders’ equity ........................................... 23,046 22,819 234,616

VALUATION AND TRANSLATION ADjUSTMENTS

Valuation difference on other securities .......................... 85 251 870

Deferred gains or losses on hedges ............................... — (1) —

Revaluation reserve for land (Note 5-(2)) ......................... (34) (19) (356)

Total valuation and translation adjustments ................ 50 230 514

Total net assets ......................................................... 23,096 23,049 235,130

TOTAL LIABILITIES AND NET ASSETS................................ ¥ 76,168 ¥ 78,495 $ 775,405


LIABILITIES AND NET ASSETS

8

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(Note 2)

2009 2008 2009

NET SALES ............................................................................ ¥ 92,533 ¥ 95,048 $ 942,012

COST OF SALES.................................................................... 86,067 88,271 876,179

Gross profit........................................................................ 6,466 6,776 65,832

SELLING, GENERAL AND

ADMINISTRATIVE ExPENSES (Notes 6-(1), (2)) .................. 5,051 5,159 51,429

Operating income ............................................................. 1,414 1,616 14,403

OTHER INCOME / (ExPENSES)

Interest and dividend income .............................................. 35 34 360

Interest expenses ................................................................ (129) (134) (1,321)

Equity in earnings of affiliates .............................................. 13 22 137

Gain on sales of noncurrent assets (Note 6) ....................... 10 13 102

Loss on sales of noncurrent assets (Note 6) ....................... (4) (13) (43)

Loss on disposal of noncurrent assets (Note 6) .................. (88) (100) (905)

Impairment loss (Note 6) ..................................................... (279) (81) (2,846)

Other, net ............................................................................. 7 (46) 71

Total other income / (expenses) ............................... (436) (304) (4,445)

INCOME BEFORE INCOME TAxES ...................................... 978 1,311 9,957

INCOME TAxES (Note 13)

Income taxes-current ........................................................... 1,083 764 11,026

Income taxes-refunded ........................................................ (42) — (436)

Income taxes-deferred ........................................................ (417) (3) (4,251)

Total income taxes .................................................... 622 760 6,338

NET INCOME ......................................................................... ¥ 355 ¥ 551 $ 3,618


Consolidated Statements of IncomeOBAYASHI ROAD CORPORATION

For the years ended March 31, 2009 and 2008

9

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(Note 2)

2009 2008 2009

LIABILITIES

CURRENT LIABILITIES

Notes payable, accounts payable for construction contacts and other ... ¥ 29,857 ¥ 32,789 $ 303,950

Short-term loans payable (Note 17) ................................. 6,400 6,200 65,153

Income taxes payable ...................................................... 817 752 8,324

Advances received on uncompleted construction contracts ... 6,223 5,385 63,358

Provision for warranties for completed construction ........ 54 55 550

Provision for loss on construction contracts ..................... 900 397 9,168

Other ................................................................................. 2,497 2,353 25,423


NONCURRENT LIABILITIES

Long-term loans payable (Note 17) ................................. — 1,300 —

Deferred tax liabilities for land revaluation (Notes 5-(2) and 13) ... 2,044 2,062 20,813

Provision for retirement benefits (Note 12) ......................... 4,096 4,065 41,702

Other ................................................................................. 179 83 1,829

Total noncurrent liabilities ......................................... 6,320 7,511 64,345

Total liabilities ........................................................... 53,071 55,445 540,274

NET ASSETS

SHAREHOLDERS’ EqUITy

Capital stock ..................................................................... 6,293 6,293 64,072

Capital surplus ................................................................. 6,095 6,095 62,057

Retained earnings ............................................................ 10,704 10,473 108,969

Treasury stock ................................................................... (47) (43) (482)

Total shareholders’ equity ........................................... 23,046 22,819 234,616

VALUATION AND TRANSLATION ADjUSTMENTS

Valuation difference on other securities .......................... 85 251 870

Deferred gains or losses on hedges ............................... — (1) —

Revaluation reserve for land (Note 5-(2)) ......................... (34) (19) (356)

Total valuation and translation adjustments ................ 50 230 514

Total net assets ......................................................... 23,096 23,049 235,130




8

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(Note 2)

2009 2008 2009

NET SALES ............................................................................ ¥ 92,533 ¥ 95,048 $ 942,012

COST OF SALES.................................................................... 86,067 88,271 876,179

Gross profit........................................................................ 6,466 6,776 65,832


ADMINISTRATIVE ExPENSES (Notes 6-(1), (2)) .................. 5,051 5,159 51,429

Operating income ............................................................. 1,414 1,616 14,403



Interest expenses ................................................................ (129) (134) (1,321)

Equity in earnings of affiliates .............................................. 13 22 137

Gain on sales of noncurrent assets (Note 6) ....................... 10 13 102

Loss on sales of noncurrent assets (Note 6) ....................... (4) (13) (43)

Loss on disposal of noncurrent assets (Note 6) .................. (88) (100) (905)

Impairment loss (Note 6) ..................................................... (279) (81) (2,846)

Other, net ............................................................................. 7 (46) 71



INCOME TAxES (Note 13)





NET INCOME ......................................................................... ¥ 355 ¥ 551 $ 3,618


Consolidated Statements of IncomeOBAYASHI ROAD CORPORATION


9

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9

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(Note 2)

2009 2008 2009

SHAREHOLDERS’ EqUITy:CAPITAL STOCK:

Balance at the end of previous period ............................. ¥ 6,293 ¥ 6,293 $ 64,072 Balance at the end of current period ............................... 6,293 6,293 64,072

CAPITAL SURPLUS:Balance at the end of previous period ............................. 6,095 6,095 62,057 Balance at the end of current period ............................... 6,095 6,095 62,057

RETAINED EARNINGS:Balance at the end of previous period ............................. 10,473 10,198 106,620 Dividends from surplus..................................................... (139) (139) (1,423)Net income ....................................................................... 355 551 3,618 Reversal of reserve for land revaluation ........................... 15 (136) 153 Balance at the end of current period ............................... 10,704 10,473 108,969

TREASURy STOCK:Balance at the end of previous period ............................. (43) (36) (440)Purchase of treasury stock ............................................... (4) (6) (41)Balance at the end of current period ............................... (47) (43) (482)

Total shareholders’ equity ......................................... 23,046 22,819 234,616

VALUATION AND TRANSLATION ADjUSTMENTS:VALUATION DIFFERENCE ON OTHER SECURITIES:

Balance at the end of previous period ............................. 251 398 2,555 Change of items during the period .................................. (165) (147) (1,685)Balance at the end of current period ............................... 85 251 870

DEFERRED GAINS OR LOSSES ON HEDGES:Balance at the end of previous period ............................. (1) — (11)Change of items during the period .................................. 1 (1) 11 Balance at the end of current period ............................... — (1) —

REVALUATION RESERVE FOR LAND:Balance at the end of previous period ............................. (19) (156) (202)Change of items during the period .................................. (15) 136 (153)Balance at the end of current period ............................... (34) (19) (356)

Total valuation and translation adjustments.............. 50 230 514

TOTAL NET ASSETS .............................................................. ¥ 23,096 ¥ 23,049 $ 235,130


Consolidated Statements of Changes in Net AssetsOBAYASHI ROAD CORPORATION


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(Note 2)

2009 2008 2009NET CASH PROVIDED By (USED IN) OPERATING ACTIVITIES:

Income before income taxes ............................................... ¥ 978 ¥ 1,311 $ 9,957 Depreciation and amortization ............................................. 1,338 1,160 13,626 Impairment loss ................................................................... 279 81 2,846 Increase (decrease) in allowance for doubtful accounts .... 32 (47) 334 Increase (decrease) in provision for retirement benefits ..... 30 54 314 Interest and dividend income .............................................. (35) (34) (360)Interest expenses ................................................................ 129 134 1,321 Loss (gain) on valuation of derivatives ................................ (7) 51 (78)Compensation for relocation cost ........................................ — (58) — Expenses for office disposal ................................................ — 77 — Decrease (increase) in notes and accounts receivable-trade ... 4,118 924 41,928 Decrease (increase) in costs on uncompleted construction

contracts ......................................................................... 855 (1,653) 8,706 Increase (decrease) in notes and accounts payable-trade ... (2,932) 426 (29,851)Increase (decrease) in advances received on uncompleted

construction contracts ..................................................... 838 1,135 8,534 Increase (decrease) in accrued consumption taxes ........... 188 36 1,920 Increase (decrease) in deposits received ........................... 80 (2,452) 819 Other, net ............................................................................ 1,015 591 10,337

Subtotal ................................................................... 6,911 1,739 70,356

Interest and dividend income received .............................. 47 40 480 Interest expenses paid ........................................................ (137) (131) (1,398)Proceeds from compensation for relocation cost ................ — 58 — Income taxes paid ............................................................... (1,035) (173) (10,539)Income taxes refunded ........................................................ 42 — 436

Net cash provided by (used in) operating activities ... 5,828 1,533 59,335

NET CASH PROVIDED By (USED IN) INVESTING ACTIVITIES:Purchase of property, plant and equipment ....................... (1,305) (1,817) (13,288)Proceeds from sales of property, plant and equipment ...... 48 44 494 Payments for disposal of property, plant and equipment ... (38) (50) (396)Purchase of investment securities ....................................... — (20) — Proceeds from redemption of investment securities ........... — 20 — Other payments ................................................................... (80) (118) (819)Other proceeds .................................................................... 110 200 1,127

Net cash provided by (used in) investing activities ... (1,265) (1,741) (12,881)

NET CASH PROVIDED By (USED IN) FINANCING ACTIVITIES:Net increase (decrease) in short-term loans payable ........ (1,100) — (11,198)Repayments of lease obligations ........................................ (75) — (767)Purchase of treasury stock .................................................. (4) (6) (41)Cash dividends paid ............................................................ (139) (144) (1,423)

Net cash provided by (used in) financing activities ... (1,319) (151) (13,430)

Effect of exchange rate changes on cash and cash equivalents ... (0) (12) (5)Net increase (decrease) in cash and cash equivalents ...... 3,243 (371) 33,018 Cash and cash equivalents at beginning of period ............. 6,664 7,036 67,850 Cash and cash equivalents at end of period (Note 8) ......... ¥ 9,908 ¥ 6,664 $ 100,868


Consolidated Statements of Cash FlowsOBAYASHI ROAD CORPORATION


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(Note 2)

2009 2008 2009

SHAREHOLDERS’ EqUITy:CAPITAL STOCK:

Balance at the end of previous period ............................. ¥ 6,293 ¥ 6,293 $ 64,072 Balance at the end of current period ............................... 6,293 6,293 64,072

CAPITAL SURPLUS:Balance at the end of previous period ............................. 6,095 6,095 62,057 Balance at the end of current period ............................... 6,095 6,095 62,057

RETAINED EARNINGS:Balance at the end of previous period ............................. 10,473 10,198 106,620 Dividends from surplus..................................................... (139) (139) (1,423)Net income ....................................................................... 355 551 3,618 Reversal of reserve for land revaluation ........................... 15 (136) 153 Balance at the end of current period ............................... 10,704 10,473 108,969



VALUATION AND TRANSLATION ADjUSTMENTS:VALUATION DIFFERENCE ON OTHER SECURITIES:

Balance at the end of previous period ............................. 251 398 2,555 Change of items during the period .................................. (165) (147) (1,685)Balance at the end of current period ............................... 85 251 870

DEFERRED GAINS OR LOSSES ON HEDGES:Balance at the end of previous period ............................. (1) — (11)Change of items during the period .................................. 1 (1) 11 Balance at the end of current period ............................... — (1) —

REVALUATION RESERVE FOR LAND:Balance at the end of previous period ............................. (19) (156) (202)Change of items during the period .................................. (15) 136 (153)Balance at the end of current period ............................... (34) (19) (356)


TOTAL NET ASSETS .............................................................. ¥ 23,096 ¥ 23,049 $ 235,130


Consolidated Statements of Changes in Net AssetsOBAYASHI ROAD CORPORATION


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(Note 2)

2009 2008 2009NET CASH PROVIDED By (USED IN) OPERATING ACTIVITIES:

Income before income taxes ............................................... ¥ 978 ¥ 1,311 $ 9,957 Depreciation and amortization ............................................. 1,338 1,160 13,626 Impairment loss ................................................................... 279 81 2,846 Increase (decrease) in allowance for doubtful accounts .... 32 (47) 334 Increase (decrease) in provision for retirement benefits ..... 30 54 314 Interest and dividend income .............................................. (35) (34) (360)Interest expenses ................................................................ 129 134 1,321 Loss (gain) on valuation of derivatives ................................ (7) 51 (78)Compensation for relocation cost ........................................ — (58) — Expenses for office disposal ................................................ — 77 — Decrease (increase) in notes and accounts receivable-trade ... 4,118 924 41,928 Decrease (increase) in costs on uncompleted construction

contracts ......................................................................... 855 (1,653) 8,706 Increase (decrease) in notes and accounts payable-trade ... (2,932) 426 (29,851)Increase (decrease) in advances received on uncompleted

construction contracts ..................................................... 838 1,135 8,534 Increase (decrease) in accrued consumption taxes ........... 188 36 1,920 Increase (decrease) in deposits received ........................... 80 (2,452) 819 Other, net ............................................................................ 1,015 591 10,337

Subtotal ................................................................... 6,911 1,739 70,356

Interest and dividend income received .............................. 47 40 480 Interest expenses paid ........................................................ (137) (131) (1,398)Proceeds from compensation for relocation cost ................ — 58 — Income taxes paid ............................................................... (1,035) (173) (10,539)Income taxes refunded ........................................................ 42 — 436

Net cash provided by (used in) operating activities ... 5,828 1,533 59,335

NET CASH PROVIDED By (USED IN) INVESTING ACTIVITIES:Purchase of property, plant and equipment ....................... (1,305) (1,817) (13,288)Proceeds from sales of property, plant and equipment ...... 48 44 494 Payments for disposal of property, plant and equipment ... (38) (50) (396)Purchase of investment securities ....................................... — (20) — Proceeds from redemption of investment securities ........... — 20 — Other payments ................................................................... (80) (118) (819)Other proceeds .................................................................... 110 200 1,127

Net cash provided by (used in) investing activities ... (1,265) (1,741) (12,881)

NET CASH PROVIDED By (USED IN) FINANCING ACTIVITIES:Net increase (decrease) in short-term loans payable ........ (1,100) — (11,198)Repayments of lease obligations ........................................ (75) — (767)Purchase of treasury stock .................................................. (4) (6) (41)Cash dividends paid ............................................................ (139) (144) (1,423)

Net cash provided by (used in) financing activities ... (1,319) (151) (13,430)

Effect of exchange rate changes on cash and cash equivalents ... (0) (12) (5)Net increase (decrease) in cash and cash equivalents ...... 3,243 (371) 33,018 Cash and cash equivalents at beginning of period ............. 6,664 7,036 67,850 Cash and cash equivalents at end of period (Note 8) ......... ¥ 9,908 ¥ 6,664 $ 100,868


Consolidated Statements of Cash FlowsOBAYASHI ROAD CORPORATION


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Notes to Consolidated Financial StatementsOBAYASHI ROAD CORPORATION


1. Basis of presenting consolidated financial statements(1) The accompanying consolidated financial statements were prepared based on the accounts maintained by OBAYASHI

ROAD CORPORATION (the “Company”) and its subsidiaries in accordance with accounting principles generally accepted in Japan, which are different in certain respects as to the application and disclosure requirements of International Financial Reporting Standards, and are compiled from the consolidated financial statements prepared by the Company as required by the Financial Instruments and Exchange Law of Japan.

Certain amounts in the prior year’s financial statements were reclassified to conform to the changes made for the latest fiscal year.

(2) The Company had 2 subsidiaries as of March 31, 2009 (2 as of March 31, 2008). The consolidated financial statements as of and for the years ended March 31, 2009 and 2008 included the accounts of the Company and all subsidiaries (together, the “Companies”).

All significant intercompany accounts and transactions have been eliminated. Investments in all affiliates (4 companies for 2009 and for 2008) are accounted for by the equity method.

2. U.S. Dollar Amounts The accounts of the consolidated financial statements presented herein are expressed in japanese yen by rounding down to

the nearest million. The U.S. dollar amounts shown in the accompanying consolidated financial statements and notes thereto were translated

from the original Japanese yen into U.S.dollars on the basis of ¥98.23 to U.S.$1, the rate of exchange prevailing at March 31,2009, and were then rounded down to the nearest thousand.

These U.S. dollar amounts are not intended to imply that the Japanese yen amounts have been or could be converted, realized or settled in U.S.dollars at this or any other rate.

3. Summary of Significant Accounting Policies(1) Short-term investment securities and investment securities Securities other than investments in affiliates are classified into two categories: held-to-maturity and other securities. Held-to-maturity securities are carried at amortized cost. Marketable securities classified as other securities are carried at fair

value with changes in unrealized holding gain or loss, net of the applicable income taxes, included directly in net assets. Non-marketable securities classified as other securities are carried at cost. Cost of securities sold is determined by the

moving average method.(2) Inventories Real estate held for sale, and costs on uncompleted construction contracts are all stated at cost determined by the specific

identification method. Raw materials and supplies are stated at cost determined by the first-in first-out method. The net book value of inventories in the balance sheet is written down if the net realizable value declines.(3) Property, plant and equipment The Company and its domestic consolidated subsidiaries calculate depreciation by the declining-balance method, while

straight-line method is applied to the buildings, excluding building fixtures, acquired on or after April 1, 1998. The useful lives and residual values of depreciable assets are estimated mainly in accordance with the Corporate Tax Law. (4) Intangible assets Intangible fixed assets are amortized by the straight-line method. Computer software for internal use is amortized by the

straight-line method over the estimated useful life of 5 years.(5) Leased assets Depreciation of leased assets under finance leases that do not transfer ownership of the leased assets to the lessee is

calculated by the straight-line method over the lease period with a residual value of zero.(6) Allowance for doubtful accounts The allowance for doubtful accounts is provided based on the historical experience with respect to write-offs and based on

an estimate of the amount of specific uncollectible accounts.(7) Provision for warranties for completed construction The provision for warranties for completed construction is provided to cover expenses for defects claimed concerning

completed work, based on the estimated amount of compensation to be paid in the future for the work completed during the fiscal year.

(8) Provision for loss on construction contracts The provision for loss on construction contracts is provided at the estimated amount for the future losses on contract backlog

at the balance sheet date which will be probably incurred and which can be reasonably estimated. (9) Provision for retirement benefits The provision for retirement benefits for employees is provided mainly at an amount calculated based on the retirement

benefit obligation and the fair value of the pension plan assets, as adjusted for unrecognized actuarial gain or loss. Prior service cost is charged or credited to income as incurred. Actuarial gain or loss is being amortized by the straight-line method over a period of 5 years starting the year of the

occurrence.(10) Derivatives and hedge accounting a) Method of hedge accounting (For the year ended March 31, 2009) The interest rate swaps, which qualify for hedge accounting and meet specific matching criteria, as the exceptional

treatment are not remeasured at market value, but the differential paid or received under the swap agreements is charged to income.

(For the year ended March 31, 2008) Hedging instruments are valued at fair value and accounted for using the deferral method of accounting. The monetary

assets and liabilities denominated in foreign currencies, for which foreign exchange forward contracts are used to hedge the foreign currency fluctuations, are translated at the contracted rate if the foreign exchange forward contracts qualify for hedge accounting.

b) Hedging instruments and hedged items (For the year ended March 31, 2009) To hedge the interest-rate risks related to loans payable, interest rate swaps are employed as hedging instruments. (For the year ended March 31, 2008) To hedge foreign exchange risks related to projected future foreign currency transactions, foreign exchange forward

contracts are employed as hedging instruments. To hedge the interest-rate risks related to loans payable, interest rate swaps are employed as hedging instruments. 12

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c) Hedging policy The Companies utilize derivative financial instruments only for the purpose of hedging future risks of fluctuation of foreign

currency exchange rates or interest rates in accordance with internal rules. d) Assessment of hedge effectiveness (For the year ended March 31, 2009) The evaluation of hedge effectiveness is omitted for interest rate swaps as they meet certain criteria under the exceptional

treatment. (For the year ended March 31, 2008) Hedge effectiveness is not assessed when substantial terms and conditions of the hedging instruments and the hedged

transactions are the same.(11) Recognition of revenues from construction contracts and related costs Revenues from construction contracts and the related costs of the Company and its subsidiaries are recorded under the

completed-contract method. (12) Consumption taxes Consumption taxes and local consumption taxes are accounted for under the tax-exclusive method.(13) Income taxes The Company and its consolidated subsidiaries apply deferred tax accounting for income taxes which requires recognition of

income taxes by the asset/liability method. Under the asset/liability method, deferred tax assets and liabilities are determined based on the difference between financial reporting basis and the tax basis of the assets and liabilities and are measured using the enacted tax rates and laws which will be in effect when the differences are expected to reverse.

(14) Cash equivalents All highly liquid investments, generally with a maturity of three months or less when purchased, which are readily convertible

into known amounts of cash and are so near maturity that they represent only an insignificant risk of any change in value attributable to changes in interest rates, are considered cash equivalents.

4. Changes in Significant Accounting Policies(1) Change in method of measurement of inventories Effective the fiscal year ended March 31, 2009, the Company and its domestic consolidated subsidiaries have adopted, the

“Accounting Standard for Measurement of Inventories” (ASBJ Statement No.9 issued on July 5, 2006). As a result of this change, operating income decreased by ¥0 million (US$ 6 thousand), and income before income taxes

decreased by ¥11 million (US$112 thousand), for the year ended March 31, 2009, compared with the corresponding amounts that would have been recorded under the previous method.

(2) Application of lease accounting Effective the fiscal year ended March 31, 2009, the Companies have adopted the “Accounting Standard for Lease

Transactions” (ASBJ Statement No.13, issued on June 17, 1993 by the First Committee for Business Accounting Standards; revised on March 30, 2007) and the Guidance on Accounting Standard for Lease Transactions” (ASBJ Guidance No. 16, issued on January 18, 1994 by the Accounting Practice Committee of the Japanese Institute of Certified Public Accountants; revised on March 30, 2007). As a result, the accounting treatment for finance leases that do not transfer ownership of the leased assets to the lessee has been changed from the method applicable to operating lease transactions to the method applicable to the ordinary buying and selling transactions. The effect of this change on operating income and income before income taxes was immaterial for the year ended March 31, 2009.

(3) Change in method of depreciation of tangible fixed assets (Change in accounting principle) Due to the amendment of the Corporation Tax Law of Japan in 2007, the Company and its consolidated subsidiaries changed

their method of depreciation of buildings purchased on or after April 1, 2007 to the straight-line method at rates prescribed in the amended Corporation Tax Law and their method of depreciation of other tangible fixed assets purchased on or after April 1, 2007 to the declining-balance method at rates prescribed in the amended Corporation Tax Law.

As a result, operating income and income before income taxes each decreased by ¥37 million, for the year ended March 31, 2008, compared with those would have been reported under the previous accounting policy.

(Additional information) Pursuant to the amendment to the Corporation Tax Law, the Company and its consolidated subsidiaries now depreciate the

difference between 5% of the acquisition cost and the memorandum prince of tangible fixed assets acquired on or before March 31, 2007.

From the year following the year in which a tangible fixed asset is depreciated to the previous allowable 5% limit using a method based on the preamended Corporation Tax Law, this difference is depreciated evenly over a period of 5 years and included in depreciation and amortization.

As a result, compared with the previous method, operating income decreased by ¥84 million, and income before income taxes decreased by ¥85 million, for the year ended March 31, 2008.

5. Notes to Consolidated Balance Sheets(1) Investments in affiliates:

At March 31 Millions of yen Thousands of U.S. dollars2009 2008 2009

Investment in affiliates .......................................................... ¥ 181 ¥ 177 $ 1,844

(2) Revaluation reserve for land Pursuant to the “Law Concerning the Revaluation of Land,” land used for the business operations was revalued on March 31,

2000. The excess of the revalued carrying amount over the book value before revaluation is included in net assets as reserve for land revaluation, net of applicable income taxes.

The revaluation of the land was determined based on the official standard notice prices in accordance with Article 2, paragraph 4 of the “Enforcement Ordinance Concerning Land Revaluation” with certain necessary adjustments.

The excess of the revalued carrying amount over the market value at March 31, 2009 and 2008 were ¥3,114 million (US$31,703 thousand) and ¥3,405 million respectively.

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Notes to Consolidated Financial StatementsOBAYASHI ROAD CORPORATION


1. Basis of presenting consolidated financial statements(1) The accompanying consolidated financial statements were prepared based on the accounts maintained by OBAYASHI

ROAD CORPORATION (the “Company”) and its subsidiaries in accordance with accounting principles generally accepted in Japan, which are different in certain respects as to the application and disclosure requirements of International Financial Reporting Standards, and are compiled from the consolidated financial statements prepared by the Company as required by the Financial Instruments and Exchange Law of Japan.


(2) The Company had 2 subsidiaries as of March 31, 2009 (2 as of March 31, 2008). The consolidated financial statements as of and for the years ended March 31, 2009 and 2008 included the accounts of the Company and all subsidiaries (together, the “Companies”).

All significant intercompany accounts and transactions have been eliminated. Investments in all affiliates (4 companies for 2009 and for 2008) are accounted for by the equity method.

2. U.S. Dollar Amounts The accounts of the consolidated financial statements presented herein are expressed in japanese yen by rounding down to

the nearest million. The U.S. dollar amounts shown in the accompanying consolidated financial statements and notes thereto were translated

from the original Japanese yen into U.S.dollars on the basis of ¥98.23 to U.S.$1, the rate of exchange prevailing at March 31,2009, and were then rounded down to the nearest thousand.


3. Summary of Significant Accounting Policies(1) Short-term investment securities and investment securities Securities other than investments in affiliates are classified into two categories: held-to-maturity and other securities. Held-to-maturity securities are carried at amortized cost. Marketable securities classified as other securities are carried at fair

value with changes in unrealized holding gain or loss, net of the applicable income taxes, included directly in net assets. Non-marketable securities classified as other securities are carried at cost. Cost of securities sold is determined by the


identification method. Raw materials and supplies are stated at cost determined by the first-in first-out method. The net book value of inventories in the balance sheet is written down if the net realizable value declines.(3) Property, plant and equipment The Company and its domestic consolidated subsidiaries calculate depreciation by the declining-balance method, while

straight-line method is applied to the buildings, excluding building fixtures, acquired on or after April 1, 1998. The useful lives and residual values of depreciable assets are estimated mainly in accordance with the Corporate Tax Law. (4) Intangible assets Intangible fixed assets are amortized by the straight-line method. Computer software for internal use is amortized by the




completed work, based on the estimated amount of compensation to be paid in the future for the work completed during the fiscal year.




occurrence.(10) Derivatives and hedge accounting a) Method of hedge accounting (For the year ended March 31, 2009) The interest rate swaps, which qualify for hedge accounting and meet specific matching criteria, as the exceptional





contracts are employed as hedging instruments. To hedge the interest-rate risks related to loans payable, interest rate swaps are employed as hedging instruments. 12

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currency exchange rates or interest rates in accordance with internal rules. d) Assessment of hedge effectiveness (For the year ended March 31, 2009) The evaluation of hedge effectiveness is omitted for interest rate swaps as they meet certain criteria under the exceptional


transactions are the same.(11) Recognition of revenues from construction contracts and related costs Revenues from construction contracts and the related costs of the Company and its subsidiaries are recorded under the

completed-contract method. (12) Consumption taxes Consumption taxes and local consumption taxes are accounted for under the tax-exclusive method.(13) Income taxes The Company and its consolidated subsidiaries apply deferred tax accounting for income taxes which requires recognition of

income taxes by the asset/liability method. Under the asset/liability method, deferred tax assets and liabilities are determined based on the difference between financial reporting basis and the tax basis of the assets and liabilities and are measured using the enacted tax rates and laws which will be in effect when the differences are expected to reverse.

(14) Cash equivalents All highly liquid investments, generally with a maturity of three months or less when purchased, which are readily convertible

into known amounts of cash and are so near maturity that they represent only an insignificant risk of any change in value attributable to changes in interest rates, are considered cash equivalents.

4. Changes in Significant Accounting Policies(1) Change in method of measurement of inventories Effective the fiscal year ended March 31, 2009, the Company and its domestic consolidated subsidiaries have adopted, the

“Accounting Standard for Measurement of Inventories” (ASBJ Statement No.9 issued on July 5, 2006). As a result of this change, operating income decreased by ¥0 million (US$ 6 thousand), and income before income taxes

decreased by ¥11 million (US$112 thousand), for the year ended March 31, 2009, compared with the corresponding amounts that would have been recorded under the previous method.

(2) Application of lease accounting Effective the fiscal year ended March 31, 2009, the Companies have adopted the “Accounting Standard for Lease

Transactions” (ASBJ Statement No.13, issued on June 17, 1993 by the First Committee for Business Accounting Standards; revised on March 30, 2007) and the Guidance on Accounting Standard for Lease Transactions” (ASBJ Guidance No. 16, issued on January 18, 1994 by the Accounting Practice Committee of the Japanese Institute of Certified Public Accountants; revised on March 30, 2007). As a result, the accounting treatment for finance leases that do not transfer ownership of the leased assets to the lessee has been changed from the method applicable to operating lease transactions to the method applicable to the ordinary buying and selling transactions. The effect of this change on operating income and income before income taxes was immaterial for the year ended March 31, 2009.







As a result, compared with the previous method, operating income decreased by ¥84 million, and income before income taxes decreased by ¥85 million, for the year ended March 31, 2008.

5. Notes to Consolidated Balance Sheets(1) Investments in affiliates:


Investment in affiliates .......................................................... ¥ 181 ¥ 177 $ 1,844


2000. The excess of the revalued carrying amount over the book value before revaluation is included in net assets as reserve for land revaluation, net of applicable income taxes.

The revaluation of the land was determined based on the official standard notice prices in accordance with Article 2, paragraph 4 of the “Enforcement Ordinance Concerning Land Revaluation” with certain necessary adjustments.

The excess of the revalued carrying amount over the market value at March 31, 2009 and 2008 were ¥3,114 million (US$31,703 thousand) and ¥3,405 million respectively.

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(3) Pledged Assets The following assets were pledged as collateral in substitution for guarantee money paid.


Short-term investment securities ......................................... ¥ 20 ¥ — $ 203 Investment securities ........................................................... ¥ — ¥ 20 $ —

(4) Contingent liabilities: The Company is contingently liable for the following:

Millions of yen Thousands of U.S. dollars2009 2008 2009

Trade notes receivable discounted ...................................... ¥ 893 ¥ 976 $ 9,094

6. Notes to Consolidated Statements of Income(1) The major components of “Selling, general and administrative expenses” were as follows:

For the years ended March 31 Millions of yen Thousands of U.S. dollars2009 2008 2009

Employees’ salaries and allowances ................................... ¥ 2,381 ¥ 2,509 $ 24,239 Provision of allowance for doubtful accounts ...................... ¥ 235 ¥ 90 $ 2,395 Retirement benefit expenses ............................................... ¥ 202 ¥ 122 $ 2,066

(2) Research and development costs were as follows:


Research and development costs included in selling, general and administrative expenses ............................... ¥ 211 ¥ 269 $ 2,155

(3) Gain on sales of noncurrent assets were as follows:


Buildings and structures ..................................................... ¥ — ¥ 2 $ — Machinery, equipment and vehicles .................................... ¥ 10 ¥ 10 $ 102 Other .................................................................................... ¥ — ¥ 0 $ —

Total ................................................................................... ¥ 10 ¥ 13 $ 102

(4) Loss on sales of noncurrent assets were as follows:


Buildings and structures ..................................................... ¥ 0 ¥ 0 $ 4 Machinery, equipment and vehicles .................................... ¥ 3 ¥ 2 $ 35 Tools, furniture and fixtures .................................................. ¥ 0 ¥ 0 $ 3 Land ..................................................................................... ¥ — ¥ 10 $ — Other .................................................................................... ¥ 0 ¥ 0 $ 0

Total ................................................................................... ¥ 4 ¥ 13 $ 43

(5) Loss on disposal of noncurrent assets were as follows:


Buildings and structures ...................................................... ¥ 55 ¥ 69 $ 568 Machinery, equipment and vehicles .................................... ¥ 29 ¥ 23 $ 295 Tools, furniture and fixtures .................................................. ¥ 3 ¥ 5 $ 37 Other .................................................................................... ¥ 0 ¥ 0 $ 4

Total ................................................................................... ¥ 88 ¥ 100 $ 905

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(6) Impairment loss For the years ended March 31, 2009 and 2008, the Company and its consolidated subsidiaries recognized impairment

losses on the following assets:

At March 31, 2009Use Location Type of assets Millions of yen Thousands of U.S. dollars

Product division Hyogo Pref. Buildings and structures ¥ 65 $ 661Machinery and equipment ¥ 41 $ 421Tools, furniture and fixtures ¥ 1 $ 10Land ¥ 127 $ 1,297

Idle assets Kanagawa Pref. Land ¥ 44 $ 455 Assets are grouped by branch office in the construction division and by business unit in the product division. For idle assets, recoverability is assessed on an individual basis. In the product division, the book value of the asset group is written down to its recoverable value mainly based on any

deterioration in profitability. For idle assets, the book value of land which currently serves no business purpose and whose current value has significantly

decreased is written down to its recoverable value. The resulting decreases in book values are recorded as impairment losses.

With regard to the recoverable value of the above asset groups and assets, in the product division, their book values are calculated by writing them down to memorandum values because the depreciable assets are considered to have no substantive value.

The recoverable value of land is calculated at a net selling price based on the appraisal value of the fixed asset tax. The recoverable value of land as an idle asset is calculated at a net selling price based on the appraisal value of the fixed

assets as determined by the tax authorities.

At March 31, 2008Use Location Type of assets Millions of yen

Idle assets Fukuoka Pref. Land ¥ 81 Assets are grouped by branch office in the construction division and by business unit in the product division. For idle assets, recoverability is assessed on an individual basis. For idle assets, the carrying value of the land, i.e., land which currently serves no business purpose and whose current value

has significantly decreased, has been reduced to its recoverable value. The resulting decrease of ¥81 million in the carrying value is recorded as impairment loss in other expenses.

The recoverable amounts utilized in the calculation were the net selling price based on the appraisal value of the fixed assets as determined by the tax authorities.

7. Notes to Consolidated Statements of Changes in Net Assets(1) Type and number of outstanding shares

For the year ended March 31, 2009 Number of shares (thousand)

Type of sharesBalance at

beginning of yearIncrease in shares

during the yearDecrease in shares

during the yearBalance atend of year

Issued stock:Common stock 46,818 — — 46,818

Treasury stock:Common stock 198 27 — 226

Notes: Treasury stock increased by 27 thousand shares due to the repurchase of shares less than one unit.









(2) Dividends a) Dividends paid to shareholders

For the year ended March 31, 2009 Amount Amount per share

Resolution approved byType ofshares

Millions of yen

Thousands ofU.S. dollars

Yen U.S. dollars Shareholders’cut-off date

Effectivedate

Annual General Meeting ofShareholders (June 24, 2008)

Commonstock ¥ 139 $ 1,423 ¥ 3 $ 0.03

March 31,2008

June 25,2008



Millions of yen

Yen Shareholders’cut-off date

Effectivedate


Commonstock ¥ 139 ¥ 3

March 31,2007

June 27,2007

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(3) Pledged Assets The following assets were pledged as collateral in substitution for guarantee money paid.


Short-term investment securities ......................................... ¥ 20 ¥ — $ 203 Investment securities ........................................................... ¥ — ¥ 20 $ —

(4) Contingent liabilities: The Company is contingently liable for the following:



6. Notes to Consolidated Statements of Income(1) The major components of “Selling, general and administrative expenses” were as follows:


Employees’ salaries and allowances ................................... ¥ 2,381 ¥ 2,509 $ 24,239 Provision of allowance for doubtful accounts ...................... ¥ 235 ¥ 90 $ 2,395 Retirement benefit expenses ............................................... ¥ 202 ¥ 122 $ 2,066

(2) Research and development costs were as follows:





Buildings and structures ..................................................... ¥ — ¥ 2 $ — Machinery, equipment and vehicles .................................... ¥ 10 ¥ 10 $ 102 Other .................................................................................... ¥ — ¥ 0 $ —

Total ................................................................................... ¥ 10 ¥ 13 $ 102



Buildings and structures ..................................................... ¥ 0 ¥ 0 $ 4 Machinery, equipment and vehicles .................................... ¥ 3 ¥ 2 $ 35 Tools, furniture and fixtures .................................................. ¥ 0 ¥ 0 $ 3 Land ..................................................................................... ¥ — ¥ 10 $ — Other .................................................................................... ¥ 0 ¥ 0 $ 0

Total ................................................................................... ¥ 4 ¥ 13 $ 43



Buildings and structures ...................................................... ¥ 55 ¥ 69 $ 568 Machinery, equipment and vehicles .................................... ¥ 29 ¥ 23 $ 295 Tools, furniture and fixtures .................................................. ¥ 3 ¥ 5 $ 37 Other .................................................................................... ¥ 0 ¥ 0 $ 4

Total ................................................................................... ¥ 88 ¥ 100 $ 905

14

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(6) Impairment loss For the years ended March 31, 2009 and 2008, the Company and its consolidated subsidiaries recognized impairment

losses on the following assets:













7. Notes to Consolidated Statements of Changes in Net Assets(1) Type and number of outstanding shares

















(2) Dividends a) Dividends paid to shareholders



Millions of yen


Yen U.S. dollars Shareholders’cut-off date

Effectivedate


Commonstock ¥ 139 $ 1,423 ¥ 3 $ 0.03

March 31,2008

June 25,2008



Millions of yen

Yen Shareholders’cut-off date

Effectivedate


Commonstock ¥ 139 ¥ 3

March 31,2007

June 27,2007

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b) Dividends with a shareholders’ cut-off date during the fiscal year but an effective date subsequent to the fiscal year



Millions of yen


Paid from Yen U.S. dollars Shareholders’cut-off date

Effectivedate


Commonstock ¥ 139 $ 1,422

Retained earnings 3 $ 0.03

March 31,2009

June 24,2009



Millions of yen

Paid from yen Shareholders’cut-off date

Effectivedate


Commonstock ¥ 139

Retained earnings ¥ 3

March 31,2008

June 25,2008

(3) Shareholders’ equity The Corporation Law of Japan provides that an amount equal to 10% of the amount to be disbursed as distributions of capital

surplus (other than the capital reserve) and retained earnings (other than the legal reserve) be transferred to the capital reserve and he legal reserve, respectively, until the sum of the capital reserve and the legal reserve equals 25% of the capital stock account.

Such distributions can be made at any time by resolution of the shareholders, or by the Board of Directors if certain conditions are met.

8. Notes to Consolidated Statements of Cash Flows The reconciliation between cash and cash equivalents reported in the consolidated statements of cash flows and amounts

reported in the consolidated balance sheets is as follows:


Cash and deposits ................................................................ ¥ 9,908 ¥ 6,664 $100,868 Cash and cash equivalents at end of period ....................... ¥ 9,908 ¥ 6,664 $100,868

9. Lease Transaction(1) Finance leases Information on finance leases that do not transfer ownership of the leased assets to the lessee for the year ended March 31,

2008 is summarized as follows: (a) Lessee’s accounting The following pro forma amounts represent the acquisition costs, accumulated depreciation and net book value of leased

assets at March 31, 2008 which would have been reflected in the consolidated balance sheets if finance lease accounting had been applied to the finance leases accounted for as operating leases:

At March 31, 2008 Millions of yenAcquisition

costAccumulateddepreciation

Net bookvalue

Machinery, equipment and vehicles ¥ 622 ¥ 292 ¥ 329 Tools, furniture and fixtures ¥ 3 ¥ 3 ¥ 0 Total ¥ 625 ¥ 296 ¥ 329

Future minimum payments under non-cancelable lease contracts at March 31, 2008 were as follows:

At March 31, 2008 Millions of yenWithin 1 year ¥ 103 Over 1 year 233 Total ¥ 336

Lease payments relating to finance leases accounted for as operating leases in the accompanying consolidated financial statements amounted to ¥117 million for the year ended March 31, 2008.

Depreciation of the leased assets computed by the straight-line method over the respective lease terms with no residual value and the interest portion included in lease payments amounted to ¥109 million and ¥8 million respectively, for the year ended March 31, 2008.

(2) Operating leases (a) Lessee’s accounting Future minimum payments under non-cancelable lease contracts at March 31, 2009 and 2008, were as follows:


Within 1 year ¥ 81 ¥ 69 $ 824 Over 1 year 105 167 1,071 Total ¥ 186 ¥ 237 $ 1,895

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10. Securities(a) Information regarding marketable securities classified as held-to-maturity debt securities and other securities as of March 31,

2009 and 2008 is as follows: Marketable held-to-maturity debt securities

At March 31, 2009 Millions of yen Thousands of U.S. dollarsCarrying

valueEstimated fair value

Unrealizedgain

Carryingvalue

Estimated fair value

Unrealizedgain

Securities whose fair value exceeds their carrying value:Government bonds and municipal bonds ........... ¥ 20 ¥ 20 ¥ 0 $ 203 $ 203 $ 0

Securities whose carrying value exceeds their fair value:Government bonds and municipal bonds ........... ¥ — ¥ — ¥ — $ — $ — $ —

Total ........................................................................ ¥ 20 ¥ 20 ¥ 0 $ 203 $ 203 $ 0

At March 31, 2008 Millions of yenCarrying


Unrealizedloss

Securities whose fair value does not exceed their carrying value:Government bonds and municipal bonds ........... ¥ 20 ¥ 20 ¥ 0

Securities whose carrying value exceeds their fair value:Government bonds and municipal bonds ........... ¥ — ¥ — ¥ —

Total ........................................................................ ¥ 20 ¥ 20 ¥ 0

Marketable other securities

At March 31, 2009 Millions of yen Thousands of U.S. dollarsAcquisition

costCarrying

valueUnrealizedgain (loss)

Acquisitioncost

Carryingvalue

Unrealizedgain (loss)

Securities whose carrying value exceeds their acquisition costs:

Stock .................................................................... ¥ 140 ¥ 231 ¥ 91 $ 1,425 $ 2,360 $ 935 Subtotal ................................................................ 140 231 91 1,425 2,360 935

Securities whose acquisition cost exceeds their carrying value:

Stock .................................................................... 15 14 (1) 160 147 (13)Subtotal ................................................................ 15 14 (1) 160 147 (13)

Total ........................................................................ ¥ 155 ¥ 246 ¥ 90 $ 1,586 $ 2,507 $ 921 The Companies recognized valuation losses due to write-downs of ¥3 million (US$40 thousand) on marketable other securi-

ties for the year ended March 31, 2009. When the fair market value of a security declines by 50% or more from the acquisition cost, the Companies automatically

recognize a valuation loss on the security. When the fair market value of a security declines by 30% or more, but less than 50%, from the acquisition cost, the Compa-

nies recognize a valuation loss on the security based on the estimate of management.


costCarrying



Stock .................................................................... ¥ 159 ¥ 448 ¥ 289 Subtotal ................................................................ 159 448 289


Stock .................................................................... 0 0 (0)Subtotal ................................................................ 0 0 (0)

Total ........................................................................ ¥ 159 ¥ 449 ¥ 289 The Companies recognized valuation losses due to write-downs of ¥0 million on marketable other securities for the year

ended March 31, 2008. When the fair market value of a security declines by 50% or more from the acquisition cost, the Companies automatically



(b) Sales of securities classified as other securitiesMillions of yen Thousands of U.S. dollars

2009 2008 2009Sales amount ...................................................................... ¥ 0 ¥ 1 $ 0 Aggregate gain .................................................................. 0 — 0 Aggregate loss .................................................................. — 0 — 17

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b) Dividends with a shareholders’ cut-off date during the fiscal year but an effective date subsequent to the fiscal year



Millions of yen


Paid from Yen U.S. dollars Shareholders’cut-off date

Effectivedate


Commonstock ¥ 139 $ 1,422

Retained earnings 3 $ 0.03

March 31,2009

June 24,2009



Millions of yen

Paid from yen Shareholders’cut-off date

Effectivedate


Commonstock ¥ 139

Retained earnings ¥ 3

March 31,2008

June 25,2008


surplus (other than the capital reserve) and retained earnings (other than the legal reserve) be transferred to the capital reserve and he legal reserve, respectively, until the sum of the capital reserve and the legal reserve equals 25% of the capital stock account.

Such distributions can be made at any time by resolution of the shareholders, or by the Board of Directors if certain conditions are met.

8. Notes to Consolidated Statements of Cash Flows The reconciliation between cash and cash equivalents reported in the consolidated statements of cash flows and amounts

reported in the consolidated balance sheets is as follows:


Cash and deposits ................................................................ ¥ 9,908 ¥ 6,664 $100,868 Cash and cash equivalents at end of period ....................... ¥ 9,908 ¥ 6,664 $100,868

9. Lease Transaction(1) Finance leases Information on finance leases that do not transfer ownership of the leased assets to the lessee for the year ended March 31,


assets at March 31, 2008 which would have been reflected in the consolidated balance sheets if finance lease accounting had been applied to the finance leases accounted for as operating leases:



Net bookvalue

Machinery, equipment and vehicles ¥ 622 ¥ 292 ¥ 329 Tools, furniture and fixtures ¥ 3 ¥ 3 ¥ 0 Total ¥ 625 ¥ 296 ¥ 329

Future minimum payments under non-cancelable lease contracts at March 31, 2008 were as follows:

At March 31, 2008 Millions of yenWithin 1 year ¥ 103 Over 1 year 233 Total ¥ 336

Lease payments relating to finance leases accounted for as operating leases in the accompanying consolidated financial statements amounted to ¥117 million for the year ended March 31, 2008.

Depreciation of the leased assets computed by the straight-line method over the respective lease terms with no residual value and the interest portion included in lease payments amounted to ¥109 million and ¥8 million respectively, for the year ended March 31, 2008.




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10. Securities(a) Information regarding marketable securities classified as held-to-maturity debt securities and other securities as of March 31,

2009 and 2008 is as follows: Marketable held-to-maturity debt securities

At March 31, 2009 Millions of yen Thousands of U.S. dollarsCarrying


Unrealizedgain

Carryingvalue


Unrealizedgain

Securities whose fair value exceeds their carrying value:Government bonds and municipal bonds ........... ¥ 20 ¥ 20 ¥ 0 $ 203 $ 203 $ 0

Securities whose carrying value exceeds their fair value:Government bonds and municipal bonds ........... ¥ — ¥ — ¥ — $ — $ — $ —

Total ........................................................................ ¥ 20 ¥ 20 ¥ 0 $ 203 $ 203 $ 0

At March 31, 2008 Millions of yenCarrying


Unrealizedloss

Securities whose fair value does not exceed their carrying value:Government bonds and municipal bonds ........... ¥ 20 ¥ 20 ¥ 0

Securities whose carrying value exceeds their fair value:Government bonds and municipal bonds ........... ¥ — ¥ — ¥ —

Total ........................................................................ ¥ 20 ¥ 20 ¥ 0

Marketable other securities

At March 31, 2009 Millions of yen Thousands of U.S. dollarsAcquisition

costCarrying


Acquisitioncost

Carryingvalue

Unrealizedgain (loss)


Stock .................................................................... ¥ 140 ¥ 231 ¥ 91 $ 1,425 $ 2,360 $ 935 Subtotal ................................................................ 140 231 91 1,425 2,360 935


Stock .................................................................... 15 14 (1) 160 147 (13)Subtotal ................................................................ 15 14 (1) 160 147 (13)

Total ........................................................................ ¥ 155 ¥ 246 ¥ 90 $ 1,586 $ 2,507 $ 921 The Companies recognized valuation losses due to write-downs of ¥3 million (US$40 thousand) on marketable other securi-

ties for the year ended March 31, 2009. When the fair market value of a security declines by 50% or more from the acquisition cost, the Companies automatically




costCarrying



Stock .................................................................... ¥ 159 ¥ 448 ¥ 289 Subtotal ................................................................ 159 448 289


Stock .................................................................... 0 0 (0)Subtotal ................................................................ 0 0 (0)

Total ........................................................................ ¥ 159 ¥ 449 ¥ 289 The Companies recognized valuation losses due to write-downs of ¥0 million on marketable other securities for the year

ended March 31, 2008. When the fair market value of a security declines by 50% or more from the acquisition cost, the Companies automatically



(b) Sales of securities classified as other securitiesMillions of yen Thousands of U.S. dollars

2009 2008 2009Sales amount ...................................................................... ¥ 0 ¥ 1 $ 0 Aggregate gain .................................................................. 0 — 0 Aggregate loss .................................................................. — 0 — 17

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(c) In addition to the securities above, the Companies held the following investment securities with no available market value at March 31, 2009 and 2008:

At March 31, 2009 Millions of yen Thousands of U.S. dollarsCarrying value Carrying value

Other securitiesNon-listed stocks ............................................................... ¥ 135 $ 1,378

At March 31, 2008 Millions of yenCarrying value

Other securitiesNon-listed stocks ............................................................... ¥ 135

(d) The redemption schedules for other securities with maturity dates and held-to-maturity debt securities as of March 31, 2009 and 2008 are summarized as follows:

At March 31, 2009 Millions of yen Thousands of U.S. dollarsDue in

one year or less

Due after one year through

five years

Due in one year or less


five yearsBonds

Government and municipal bonds .................................... ¥ 20 ¥ — $ 203 $ —Total ...................................................................................... ¥ 20 ¥ — $ 203 $ —

At March 31, 2008 Millions of yenDue in

one year or less


five yearsBonds

Government and municipal bonds .................................... ¥ — ¥ 20Total ...................................................................................... ¥ — ¥ 20

11. Derivative financial instruments(1) Status of Derivative Transactions As a rule, the Companies only utilize derivative transactions as hedges against risk arising from price or interest rate fluctua-

tions related to certain assets or debt, and not for short-term capital gains or speculation. However, the Companies use low-risk derivative transactions in for long-term management of surplus funds. The Companies use foreign exchange contracts to the hedge against foreign exchange risk relating to foreign-currency-

denominated expenditures related to overseas construction. The Companies use interest rate swaps to hedge against interest rate risk relating to certain assets or debt. The Companies use derivative-embedded deposits whose principals are guaranteed and whose interest rates do not be-

come negative, for the long-term management of surplus funds. Foreign exchange contracts and interest rate swaps are now being used to effectively offset potential risks related to assets

or debts, and their market risk is not considered to be significant. A derivative-embedded deposit is a time deposit with a variable interest rate that may be determined in conjunction with the

foreign exchange market. Accordingly, it is subject to a risk of a fall in the interest rate to below the market interest rate. There is also a risk an additional payment allegation if the Companies cancel the contract before the expiry date. As the counterparties to the derivative transactions are major financial institutions, the Companies do not anticipate any

losses related to credit risk. Derivative transactions are executed in accordance with internal rules with regular reports provided to the Board of Directors.

(2) Market Value of Derivative Transactions The Company utilizes the following complex financial instruments

At March 31, 2009 Millions of yenContractamount

Notional amount (more than 1 year)


Unrealizedloss

Derivative-embedded deposits ................................ ¥ 300 ¥ 300 ¥ (44) ¥ (44)(Cancellation rights / Variable interest rate)Total ........................................................................ ¥ 300 ¥ 300 ¥ (44) ¥ (44)

At March 31, 2009 Thousands of U.S. dollars

Contractamount



Unrealizedloss

Derivative-embedded deposits ................................ $ 3,054 $ 3,054 $ (449) $ (449)(Cancellation rights / Variable interest rate)Total ........................................................................ $ 3,054 $ 3,054 $ (449) $ (449)

18

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Notional amount(more than 1 year)


Unrealizedloss


1. Market prices are calculated based on prices quoted by the financial institutions that are counterparties to the derivative transactions.

2. Market prices of derivative-embedded deposits are derived from built-in derivatives in complex financial instruments. 3. “Contract amounts” means the principal of the derivative-embedded deposit. The amount of contract, etc. itself does not

reflect any quantities of market risk of derivative transactions.

12. Retirement Benefit Plans The Company had a tax-qualified defined benefit pension plan which covered 50% of the total amount of the pension ben-

efits, in addition to a lump-sum payment plan covering the remainder. However, the tax-qualified pension plan was terminated and, as a result of an amendment to related laws, “Regulation-type

corporate pension plan “ based on the “Defined Benefit Corporate Pension Law” was introduced effective April 1, 2005. The following table sets forth the funded and accrued status of the plans, and the amounts recognized in the consolidated

balance sheets as of March 31, 2009and 2008 for the Company’s and consolidated subsidiaries’ defined benefit plans:

At March 31, 2009 Millions of yen Thousands of U.S. dollarsProjected benefit obligation .............................................. ¥ (9,036) $ (91,988)Plan assets at fair value ................................................... 4,228 43,051 Unfunded projected benefit obligations ............................ (4,807) (48,936)Unrecognized actuarial differences .................................. 867 8,834 Amount reported on the consolidated balance sheet ........ (3,939) (40,102)Prepaid pension cost ....................................................... 157 1,600 Provision for retirement benefits........................................ ¥ (4,096) $ (41,702)

At March 31, 2008 Millions of yenProjected benefit obligation .............................................. ¥ (8,973)Plan assets at fair value ................................................... 4,785 Unfunded projected benefit obligations ............................ (4,188)Unrecognized actuarial differences .................................. 458 Amount reported on the consolidated balance sheet ........ (3,729)Prepaid pension cost ....................................................... 336 Provision for retirement benefits........................................ ¥ (4,065)

The components of retirement benefit expenses for the years ended March 31, 2009 and 2008 are outlined as follows:

For the year ended March 31, 2009 Millions of yen Thousands of U.S. dollarsService cost ..................................................................... ¥ 380 $ 3,873 Interest cost ..................................................................... 224 2,283 Expected return on plan assets ........................................ (119) (1,217)Amortization of unrecognized actuarial differences ........... 174 1,777 Total ................................................................................ ¥ 659 $ 6,716

For the year ended March 31, 2008 Millions of yenService cost ..................................................................... ¥ 353 Interest cost ..................................................................... 213 Expected return on plan assets ........................................ (126)Amortization of unrecognized actuarial differences ........... (33)Total ................................................................................ ¥ 407

The assumptions used in accounting for the above plans were as follows:

At March 312009 2008

Methods of attributing the projected benefit obligations to periods of service Straight-line basis Straight-line basisDiscount rates ................................................................. 2.5% 2.5%Expected rates of return on plan assets ............................ 2.5% 2.5%Amortization periods for prior service cost ........................ 1 year 1 yearAmortization periods for actuarial differences ................... 5 years 5 years

(Actuarial differences are amortized commencing in the year after the difference is recognized primarily by the straight-line method over periods (5 years) which are shorter than the average remaining years of service of the employees.)


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(c) In addition to the securities above, the Companies held the following investment securities with no available market value at March 31, 2009 and 2008:

At March 31, 2009 Millions of yen Thousands of U.S. dollarsCarrying value Carrying value

Other securitiesNon-listed stocks ............................................................... ¥ 135 $ 1,378

At March 31, 2008 Millions of yenCarrying value

Other securitiesNon-listed stocks ............................................................... ¥ 135

(d) The redemption schedules for other securities with maturity dates and held-to-maturity debt securities as of March 31, 2009 and 2008 are summarized as follows:

At March 31, 2009 Millions of yen Thousands of U.S. dollarsDue in

one year or less


five years

Due in one year or less


five yearsBonds

Government and municipal bonds .................................... ¥ 20 ¥ — $ 203 $ —Total ...................................................................................... ¥ 20 ¥ — $ 203 $ —

At March 31, 2008 Millions of yenDue in

one year or less


five yearsBonds

Government and municipal bonds .................................... ¥ — ¥ 20Total ...................................................................................... ¥ — ¥ 20

11. Derivative financial instruments(1) Status of Derivative Transactions As a rule, the Companies only utilize derivative transactions as hedges against risk arising from price or interest rate fluctua-

tions related to certain assets or debt, and not for short-term capital gains or speculation. However, the Companies use low-risk derivative transactions in for long-term management of surplus funds. The Companies use foreign exchange contracts to the hedge against foreign exchange risk relating to foreign-currency-

denominated expenditures related to overseas construction. The Companies use interest rate swaps to hedge against interest rate risk relating to certain assets or debt. The Companies use derivative-embedded deposits whose principals are guaranteed and whose interest rates do not be-

come negative, for the long-term management of surplus funds. Foreign exchange contracts and interest rate swaps are now being used to effectively offset potential risks related to assets

or debts, and their market risk is not considered to be significant. A derivative-embedded deposit is a time deposit with a variable interest rate that may be determined in conjunction with the

foreign exchange market. Accordingly, it is subject to a risk of a fall in the interest rate to below the market interest rate. There is also a risk an additional payment allegation if the Companies cancel the contract before the expiry date. As the counterparties to the derivative transactions are major financial institutions, the Companies do not anticipate any

losses related to credit risk. Derivative transactions are executed in accordance with internal rules with regular reports provided to the Board of Directors.

(2) Market Value of Derivative Transactions The Company utilizes the following complex financial instruments




Unrealizedloss


At March 31, 2009 Thousands of U.S. dollars

Contractamount



Unrealizedloss

Derivative-embedded deposits ................................ $ 3,054 $ 3,054 $ (449) $ (449)(Cancellation rights / Variable interest rate)Total ........................................................................ $ 3,054 $ 3,054 $ (449) $ (449)

18

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Notional amount(more than 1 year)


Unrealizedloss


1. Market prices are calculated based on prices quoted by the financial institutions that are counterparties to the derivative transactions.

2. Market prices of derivative-embedded deposits are derived from built-in derivatives in complex financial instruments. 3. “Contract amounts” means the principal of the derivative-embedded deposit. The amount of contract, etc. itself does not

reflect any quantities of market risk of derivative transactions.

12. Retirement Benefit Plans The Company had a tax-qualified defined benefit pension plan which covered 50% of the total amount of the pension ben-

efits, in addition to a lump-sum payment plan covering the remainder. However, the tax-qualified pension plan was terminated and, as a result of an amendment to related laws, “Regulation-type

corporate pension plan “ based on the “Defined Benefit Corporate Pension Law” was introduced effective April 1, 2005. The following table sets forth the funded and accrued status of the plans, and the amounts recognized in the consolidated

balance sheets as of March 31, 2009and 2008 for the Company’s and consolidated subsidiaries’ defined benefit plans:

At March 31, 2009 Millions of yen Thousands of U.S. dollarsProjected benefit obligation .............................................. ¥ (9,036) $ (91,988)Plan assets at fair value ................................................... 4,228 43,051 Unfunded projected benefit obligations ............................ (4,807) (48,936)Unrecognized actuarial differences .................................. 867 8,834 Amount reported on the consolidated balance sheet ........ (3,939) (40,102)Prepaid pension cost ....................................................... 157 1,600 Provision for retirement benefits........................................ ¥ (4,096) $ (41,702)

At March 31, 2008 Millions of yenProjected benefit obligation .............................................. ¥ (8,973)Plan assets at fair value ................................................... 4,785 Unfunded projected benefit obligations ............................ (4,188)Unrecognized actuarial differences .................................. 458 Amount reported on the consolidated balance sheet ........ (3,729)Prepaid pension cost ....................................................... 336 Provision for retirement benefits........................................ ¥ (4,065)

The components of retirement benefit expenses for the years ended March 31, 2009 and 2008 are outlined as follows:

For the year ended March 31, 2009 Millions of yen Thousands of U.S. dollarsService cost ..................................................................... ¥ 380 $ 3,873 Interest cost ..................................................................... 224 2,283 Expected return on plan assets ........................................ (119) (1,217)Amortization of unrecognized actuarial differences ........... 174 1,777 Total ................................................................................ ¥ 659 $ 6,716

For the year ended March 31, 2008 Millions of yenService cost ..................................................................... ¥ 353 Interest cost ..................................................................... 213 Expected return on plan assets ........................................ (126)Amortization of unrecognized actuarial differences ........... (33)Total ................................................................................ ¥ 407

The assumptions used in accounting for the above plans were as follows:

At March 312009 2008

Methods of attributing the projected benefit obligations to periods of service Straight-line basis Straight-line basisDiscount rates ................................................................. 2.5% 2.5%Expected rates of return on plan assets ............................ 2.5% 2.5%Amortization periods for prior service cost ........................ 1 year 1 yearAmortization periods for actuarial differences ................... 5 years 5 years



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13. Deferred Tax Accounting The major components of deferred tax assets and liabilities as of March 31, 2009 and 2008 are summarized as follows:


Deferred tax assets:Provision for bonuses ........................................................ ¥ 419 ¥ 339 $ 4,271 Provision for retirement benefits ........................................ 1,599 1,514 16,281 Allowance for doubtful accounts ....................................... 254 83 2,592 Other .................................................................................. 674 372 6,865 Subtotal ............................................................................. 2,947 2,309 30,011 Valuation allowance ........................................................... (345) (104) (3,515)

Total deferred tax assets ...................................................... 2,602 2,205 26,495 Deferred tax liabilities:

Reserve for advanced depreciation of noncurrent assets ... (7) (8) (79)Valuation difference on other securities ............................ (5) (38) (51)Other .................................................................................. (4) (4) (41)

Total deferred tax liabilities .................................................. (16) (51) (171)Net deferred tax assets ........................................................ ¥ 2,585 ¥ 2,153 $ 26,323

In addition to the above, the Company recognized deferred tax liabilities of ¥2,044 million (US$20,813 thousand) and ¥2,062 million related to reserve for land revaluation at March 31, 2009 and 2008, respectively.

A reconciliation between the statutory tax rates and the effective tax rates for the years ended March 31, 2009 and 2008 is summarized as follows:

For the year ended March 31 2009 2008Statutory tax rates ................................................................ 40.6% 40.6%

Reconciliation:Permanent non-deductible items ...................................... 7.8 7.0 Increase in valuation allowance ........................................ 12.3 4.7 Per-capita inhabitant tax .................................................... 8.5 6.5 Tax credit ........................................................................... (2.1) — Income taxes-refunded ..................................................... (2.1) — Other .................................................................................. (1.3) (0.8)

Effective tax rates ................................................................. 63.7% 58.0%

14. Segment information(a) Business segments

For the year ended March 31, 2009 Millions of yen(A) (B) Total Eliminations or

CorporateConsolidated

Net sales:From outside customers .......... ¥ 77,558 ¥ 14,975 ¥ 92,533 ¥ — ¥ 92,533 Intersegment or transfer ........... 1 8,256 8,257 (8,257) —

Total ...................................... 77,559 23,231 100,791 (8,257) 92,533 Operating expenses .................... 76,115 21,048 97,164 (6,045) 91,119 Operating income ........................ ¥ 1,443 ¥ 2,182 ¥ 3,626 ¥ (2,211) ¥ 1,414

Total assets .................................... ¥ 43,621 ¥ 17,740 ¥ 61,362 ¥ 14,806 ¥ 76,168 Depreciation and amortization ....... 392 811 1,203 135 1,338 Impairment loss ............................. — 234 234 44 279 Capital expenditures ...................... 566 809 1,376 115 1,491

For the year ended March 31, 2009 Thousands of U.S. dollars(A) (B) Total Eliminations or


Net sales:From outside customers .......... $789,559 $152,452 $942,012 $ — $942,012 Intersegment or transfer ........... 10 84,048 84,059 (84,059) —

Total ...................................... 789,570 236,501 1,026,071 (84,059) 942,012 Operating expenses .................... 774,871 214,281 989,153 (61,544) 927,609 Operating income ........................ $ 14,698 $ 22,219 $ 36,918 $ (22,515) $ 14,403

Total assets .................................... $444,072 $180,604 $624,677 $150,728 $775,405 Depreciation and amortization ....... 3,990 8,256 12,247 1,378 13,626 Impairment loss ............................. — 2,391 2,391 455 2,846 Capital expenditures ...................... 5,771 8,236 14,008 1,176 15,184

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Total assets .................................... ¥ 48,910 ¥ 18,265 ¥ 67,175 ¥ 11,319 ¥ 78,495 Depreciation and amortization ....... 282 757 1,040 120 1,160 Impairment loss ............................. — — — 81 81 Capital expenditures ...................... 848 853 1,702 101 1,803

1. The types of business above are based upon the Japan Standard Industrial Classification and net sales categories in the consolidated statements of income.

2. Outline of the businesses: Construction business (A) Building construction, civil engineering, etc. Manufacturing, sales and other business (B) Manufacturing asphalt mixture, etc. 3. The amounts of unallocatable operating costs and expenses included in “Eliminations or Corporate” for the years ended

March 31, 2009 and 2008 were ¥2,211 million (US$22,515 thousand) and ¥2,275 million, respectively. Unallocable operating costs consist of operating costs for the Company’s administrative department.

The amounts of corporate assets included in “Eliminations or Corporate” for the years ended March 31, 2009 and 2008 were ¥14,795 million (US$150,622 thousand) and ¥11,313 million, respectively. Corporate assets consist of surplus operating funds (cash), long-term investments (securities), assets of the administrative department, or other, of the Company.

4. Long-term prepaid expenses are included in Depreciation and amortization, Capital expenditures. 5. Change in accounting principle As described in Note 4-(1), effective the fiscal year ended March 31, 2009, the Company has applied “Accounting

Standard for Measurement of Inventories” (ASBJ Statement No.9 issued on July 5, 2006). As a result, operating income decreased by ¥0 million (US$6 thousand) in (B) for the year ended March 31, 2009, compared with those would have been reported under the previous accounting policy.

As described in Note 4-(3), due to the amendment of the Corporation Tax Law of Japan in 2007, the Company and its consolidated subsidiaries changed their method of depreciation of buildings purchased on or after April 1, 2007 to the straight-line method at rates prescribed in the amended Corporation Tax Law and their method of depreciation of other tangible fixed assets purchased on or after April 1, 2007 to the declining-balance method at rates prescribed in the amended Corporation Tax Law. As a result, depreciation and amortization increased by ¥9 million in (A), ¥25 million in (B) and ¥2 million in Eliminations or Corporate, and operating costs and expenses increased ¥9 million in (A), ¥25 million in (B) and ¥2 million in Eliminations or Corporate and operating income decreased by the same amounts for the year ended March 31, 2008, compared with those would have been reported under the previous accounting policy.

6. Additional information As described in Note 4-(3), pursuant to the amendment to the Corporation Tax Law, the Company and its consolidated

subsidiaries now depreciate the difference between 5% of the acquisition cost and the memorandum prince of tangible fixed assets acquired on or before March 31, 2007.


As a result, depreciation and amortization increased by ¥24 million in (A), ¥56 million in (B) and ¥4 million in Eliminations or Corporate.

Operating costs and expenses increased ¥24 million in (A), ¥56 million in (B) and ¥3 million in Eliminations or Corporate. Operating income decreased by the same amounts for the year ended March 31, 2008, compared with those would have been reported under the previous accounting policy.

(b) Geographic segments Information by geographic segments is not presented as the Company has no overseas subsidiaries and branches for the

years ended March 31, 2009 or 2008.

(c) Overseas net sales Information on overseas net sales is not presented as overseas sales were less than 10% of consolidated sales for the year

ended March 31, 2009, and there were no overseas sales for the year ended March 31, 2008.

15. Related Party Transactions Transactions with related party for the years ended March 31, 2009 and 2008 and the respective balances as of March 31,

2009 and 2008 were as follows:

Related Party: Obayashi Corporation Millions of yen Thousands of U.S. dollarsNature of transaction 2009 2008 2009Order of the construction ....................................................... ¥16,971 ¥22,167 $172,772 Notes receivable, accounts receivable from

completed costruction contacts and other .......................... 5,346 8,327 54,428 Advances received on uncompleted construction contracts ..... 589 434 6,002 Trade notes receivable discounted ........................................ 893 976 9,094

Obayashi Corporation is the parent company of the Company and has 40.66% of the shares of the Company as of March 31, 2009 and 2008.

1. Transactional amounts do not include consumption taxes, but notes receivable, accounts receivable from completed construction contacts and other include consumption taxes.

2. The terms and conditions of the above transactions are on an arm’s-length basis.21

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Deferred tax assets:Provision for bonuses ........................................................ ¥ 419 ¥ 339 $ 4,271 Provision for retirement benefits ........................................ 1,599 1,514 16,281 Allowance for doubtful accounts ....................................... 254 83 2,592 Other .................................................................................. 674 372 6,865 Subtotal ............................................................................. 2,947 2,309 30,011 Valuation allowance ........................................................... (345) (104) (3,515)


Reserve for advanced depreciation of noncurrent assets ... (7) (8) (79)Valuation difference on other securities ............................ (5) (38) (51)Other .................................................................................. (4) (4) (41)



A reconciliation between the statutory tax rates and the effective tax rates for the years ended March 31, 2009 and 2008 is summarized as follows:

For the year ended March 31 2009 2008Statutory tax rates ................................................................ 40.6% 40.6%



14. Segment information(a) Business segments





Total assets .................................... ¥ 43,621 ¥ 17,740 ¥ 61,362 ¥ 14,806 ¥ 76,168 Depreciation and amortization ....... 392 811 1,203 135 1,338 Impairment loss ............................. — 234 234 44 279 Capital expenditures ...................... 566 809 1,376 115 1,491

For the year ended March 31, 2009 Thousands of U.S. dollars(A) (B) Total Eliminations or


Net sales:From outside customers .......... $789,559 $152,452 $942,012 $ — $942,012 Intersegment or transfer ........... 10 84,048 84,059 (84,059) —

Total ...................................... 789,570 236,501 1,026,071 (84,059) 942,012 Operating expenses .................... 774,871 214,281 989,153 (61,544) 927,609 Operating income ........................ $ 14,698 $ 22,219 $ 36,918 $ (22,515) $ 14,403

Total assets .................................... $444,072 $180,604 $624,677 $150,728 $775,405 Depreciation and amortization ....... 3,990 8,256 12,247 1,378 13,626 Impairment loss ............................. — 2,391 2,391 455 2,846 Capital expenditures ...................... 5,771 8,236 14,008 1,176 15,184

20

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Total assets .................................... ¥ 48,910 ¥ 18,265 ¥ 67,175 ¥ 11,319 ¥ 78,495 Depreciation and amortization ....... 282 757 1,040 120 1,160 Impairment loss ............................. — — — 81 81 Capital expenditures ...................... 848 853 1,702 101 1,803

1. The types of business above are based upon the Japan Standard Industrial Classification and net sales categories in the consolidated statements of income.

2. Outline of the businesses: Construction business (A) Building construction, civil engineering, etc. Manufacturing, sales and other business (B) Manufacturing asphalt mixture, etc. 3. The amounts of unallocatable operating costs and expenses included in “Eliminations or Corporate” for the years ended

March 31, 2009 and 2008 were ¥2,211 million (US$22,515 thousand) and ¥2,275 million, respectively. Unallocable operating costs consist of operating costs for the Company’s administrative department.

The amounts of corporate assets included in “Eliminations or Corporate” for the years ended March 31, 2009 and 2008 were ¥14,795 million (US$150,622 thousand) and ¥11,313 million, respectively. Corporate assets consist of surplus operating funds (cash), long-term investments (securities), assets of the administrative department, or other, of the Company.

4. Long-term prepaid expenses are included in Depreciation and amortization, Capital expenditures. 5. Change in accounting principle As described in Note 4-(1), effective the fiscal year ended March 31, 2009, the Company has applied “Accounting

Standard for Measurement of Inventories” (ASBJ Statement No.9 issued on July 5, 2006). As a result, operating income decreased by ¥0 million (US$6 thousand) in (B) for the year ended March 31, 2009, compared with those would have been reported under the previous accounting policy.

As described in Note 4-(3), due to the amendment of the Corporation Tax Law of Japan in 2007, the Company and its consolidated subsidiaries changed their method of depreciation of buildings purchased on or after April 1, 2007 to the straight-line method at rates prescribed in the amended Corporation Tax Law and their method of depreciation of other tangible fixed assets purchased on or after April 1, 2007 to the declining-balance method at rates prescribed in the amended Corporation Tax Law. As a result, depreciation and amortization increased by ¥9 million in (A), ¥25 million in (B) and ¥2 million in Eliminations or Corporate, and operating costs and expenses increased ¥9 million in (A), ¥25 million in (B) and ¥2 million in Eliminations or Corporate and operating income decreased by the same amounts for the year ended March 31, 2008, compared with those would have been reported under the previous accounting policy.

6. Additional information As described in Note 4-(3), pursuant to the amendment to the Corporation Tax Law, the Company and its consolidated

subsidiaries now depreciate the difference between 5% of the acquisition cost and the memorandum prince of tangible fixed assets acquired on or before March 31, 2007.


As a result, depreciation and amortization increased by ¥24 million in (A), ¥56 million in (B) and ¥4 million in Eliminations or Corporate.

Operating costs and expenses increased ¥24 million in (A), ¥56 million in (B) and ¥3 million in Eliminations or Corporate. Operating income decreased by the same amounts for the year ended March 31, 2008, compared with those would have been reported under the previous accounting policy.

(b) Geographic segments Information by geographic segments is not presented as the Company has no overseas subsidiaries and branches for the

years ended March 31, 2009 or 2008.

(c) Overseas net sales Information on overseas net sales is not presented as overseas sales were less than 10% of consolidated sales for the year

ended March 31, 2009, and there were no overseas sales for the year ended March 31, 2008.

15. Related Party Transactions Transactions with related party for the years ended March 31, 2009 and 2008 and the respective balances as of March 31,

2009 and 2008 were as follows:

Related Party: Obayashi Corporation Millions of yen Thousands of U.S. dollarsNature of transaction 2009 2008 2009Order of the construction ....................................................... ¥16,971 ¥22,167 $172,772 Notes receivable, accounts receivable from

completed costruction contacts and other .......................... 5,346 8,327 54,428 Advances received on uncompleted construction contracts ..... 589 434 6,002 Trade notes receivable discounted ........................................ 893 976 9,094

Obayashi Corporation is the parent company of the Company and has 40.66% of the shares of the Company as of March 31, 2009 and 2008.

1. Transactional amounts do not include consumption taxes, but notes receivable, accounts receivable from completed construction contacts and other include consumption taxes.

2. The terms and conditions of the above transactions are on an arm’s-length basis.21

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21

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(Additional information) Effective the fiscal year ended March 31, 2009, the Companies have adopted the “Accounting Standard for Related Party

Disclosures” (ASBJ Statement No.11 issued on October 17, 2006) and “Guidance on Accounting Standard for Related Party Disclosures” (ASBJ Guidance No.13 issued on October 17, 2006).

There were no additional transactions to be disclosed in accordance with the application of this standard.

16. Amounts per Share Basic net income per share was computed based on the weighted average number of shares of common stock outstanding

during the year. Diluted net income per share was not presented for the years ended March 31, 2009 and 2008 because the Company had

no potentially dilutive shares outstanding as of these balance sheet dates. Net assets per share was computed based on the number of shares of common stock outstanding at the balance sheet date. Net income and net assets per share for the years ended March 31, 2009 and 2008 were as follows:

For the years ended March 31 Yen U.S. dollars2009 2008 2009

Basic net income per share ................................................. ¥ 7.63 ¥ 11.82 $ 0.07 Net assets per share ............................................................ ¥ 495.72 ¥ 494.42 $ 5.04

The following table sets forth the computation of net income per share of common stock for the years ended March 31, 2009 and 2008:

For the years ended March 31 (Millions of yen, except share) (Thousands of U.S. dollars, except share)

2009 2008 2009Net income .......................................................................... ¥ 355 ¥ 551 $ 3,618 Net income not attributable to shareholders of common stock .. ¥ — ¥ — $ — Net income attributable to shareholders of common stock ... ¥ 355 ¥ 551 $ 3,618 Average number of shares issued and outstanding during the period (thousands of shares) (46,607) (46,633) (46,607)

The following table sets forth the computation of net assets per share of common stock at March 31, 2009 and 2008:At March 31 (Millions of yen, except share) (Thousands of U.S.

dollars, except share)2009 2008 2009

Net assets ............................................................................ ¥ 23,096 ¥ 23,049 $235,130 Net assets applicable to shareholders of common stock .... ¥ 23,096 ¥ 23,049 $235,130 Number of shares of common stock at the year end (thousands of shares) (46,592) (46,620) (46,592)

17. Loans

At March 31 Millions of yen Thousands of U.S. dollars

Average interest rate (%)

Maturity

2009 2008 2009

Short-term loans payable ............... ¥ 5,100 ¥ 5,200 $ 51,918 1.21 — Current portion of long-term loans payable .... ¥ 1,300 ¥ 1,000 $ 13,234 1.85 — Current portion of lease obligations .......... ¥ 81 ¥ — $ 825 — — Long-term loans payable (excluding current portion) .. ¥ — ¥ 1,300 $ — — — Lease obligations (excluding current portion) ... ¥ 173 ¥ — $ 1,765 — 2010 ~ 2015

Total ............................................. ¥ 6,654 ¥ 7,500 $ 67,744 — — 1. The “average interest rate” is the weighted average interest rate for the average balance of loans during the given fiscal year. 2. The “average interest rate” columns for the “Current portion of lease obligations” and the “Lease obligations (excluding

current portion)” are left blank, as the lease obligations stated on the consolidated balance sheet include the interest portion of the lease payments.

3. The annual repayment schedule of lease obligations subsequent to March 31, 2009 is as follows:Millions of yen Thousands of U.S. dollars

Lease obligationsover 1 year less than 2 years ......... ¥ 70 $ 722 over 2 years less than 3 years ....... ¥ 51 $ 526 over 3 years less than 4 years ....... ¥ 32 $ 335 over 4 years less than 5 years ....... ¥ 14 $ 151

18. Subsequent Event None.

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(Additional information) Effective the fiscal year ended March 31, 2009, the Companies have adopted the “Accounting Standard for Related Party

Disclosures” (ASBJ Statement No.11 issued on October 17, 2006) and “Guidance on Accounting Standard for Related Party Disclosures” (ASBJ Guidance No.13 issued on October 17, 2006).

There were no additional transactions to be disclosed in accordance with the application of this standard.



no potentially dilutive shares outstanding as of these balance sheet dates. Net assets per share was computed based on the number of shares of common stock outstanding at the balance sheet date. Net income and net assets per share for the years ended March 31, 2009 and 2008 were as follows:


Basic net income per share ................................................. ¥ 7.63 ¥ 11.82 $ 0.07 Net assets per share ............................................................ ¥ 495.72 ¥ 494.42 $ 5.04



2009 2008 2009Net income .......................................................................... ¥ 355 ¥ 551 $ 3,618 Net income not attributable to shareholders of common stock .. ¥ — ¥ — $ — Net income attributable to shareholders of common stock ... ¥ 355 ¥ 551 $ 3,618 Average number of shares issued and outstanding during the period (thousands of shares) (46,607) (46,633) (46,607)

The following table sets forth the computation of net assets per share of common stock at March 31, 2009 and 2008:At March 31 (Millions of yen, except share) (Thousands of U.S.

dollars, except share)2009 2008 2009

Net assets ............................................................................ ¥ 23,096 ¥ 23,049 $235,130 Net assets applicable to shareholders of common stock .... ¥ 23,096 ¥ 23,049 $235,130 Number of shares of common stock at the year end (thousands of shares) (46,592) (46,620) (46,592)

17. Loans

At March 31 Millions of yen Thousands of U.S. dollars

Average interest rate (%)

Maturity

2009 2008 2009

Short-term loans payable ............... ¥ 5,100 ¥ 5,200 $ 51,918 1.21 — Current portion of long-term loans payable .... ¥ 1,300 ¥ 1,000 $ 13,234 1.85 — Current portion of lease obligations .......... ¥ 81 ¥ — $ 825 — — Long-term loans payable (excluding current portion) .. ¥ — ¥ 1,300 $ — — — Lease obligations (excluding current portion) ... ¥ 173 ¥ — $ 1,765 — 2010 ~ 2015

Total ............................................. ¥ 6,654 ¥ 7,500 $ 67,744 — — 1. The “average interest rate” is the weighted average interest rate for the average balance of loans during the given fiscal year. 2. The “average interest rate” columns for the “Current portion of lease obligations” and the “Lease obligations (excluding

current portion)” are left blank, as the lease obligations stated on the consolidated balance sheet include the interest portion of the lease payments.

3. The annual repayment schedule of lease obligations subsequent to March 31, 2009 is as follows:Millions of yen Thousands of U.S. dollars

Lease obligationsover 1 year less than 2 years ......... ¥ 70 $ 722 over 2 years less than 3 years ....... ¥ 51 $ 526 over 3 years less than 4 years ....... ¥ 32 $ 335 over 4 years less than 5 years ....... ¥ 14 $ 151


22

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Millions of yen Thousands ofU.S. dollars

(Note 2)

2009 2008 2009ASSETS

CURRENT ASSETSCash and deposits ........................................................... ¥ 9,748 ¥ 6,439 $ 99,243Notes receivable-trade (Note 5-(1)) ................................. 5,201 5,566 52,954Accounts receivable from completed construction contracts (Note 5-(1)) ............................... 23,072 26,634 234,885Accounts receivable-trade (Note 5-(1))............................ 3,527 3,724 35,909Short-term investment securities (Note 5-(3)) .................. 20 — 203Real estate for sale (Note 4-(1)) ....................................... 17 29 182Costs on uncompleted construction contracts ................ 10,845 11,765 110,407Raw materials and supplies ............................................. 339 438 3,455Prepaid expenses ............................................................ 189 362 1,932Deferred tax assets (Note 10) .......................................... 899 605 9,158Accounts receivable-other ............................................... 1,208 1,351 12,302Other ................................................................................. 41 79 422Allowance for doubtful accounts ...................................... (48) (44) (496)

Total current assets ................................................... 55,064 56,953 560,562

NONCURRENT ASSETSProperty, plant and equipment (Note 4-(3))

Buildings ....................................................................... 5,404 5,195 55,017 Accumulated depreciation ......................................... (3,101) (3,070) (31,570) Buildings, net ............................................................. 2,303 2,125 23,447

Structures ...................................................................... 2,910 2,943 29,627 Accumulated depreciation ......................................... (2,073) (1,999) (21,110) Structures, net ............................................................ 836 944 8,516

Machinery and equipment ............................................ 12,843 12,928 130,745 Accumulated depreciation ......................................... (11,165) (10,922) (113,670) Machinery and equipment, net .................................. 1,677 2,006 17,074

Vehicles ......................................................................... 55 58 563 Accumulated depreciation ......................................... (39) (41) (405) Vehicles, net ............................................................... 15 16 158

Tools, furniture and fixtures ........................................... 1,491 1,474 15,184 Accumulated depreciation ......................................... (1,292) (1,252) (13,153) Tools, furniture and fixtures, net ................................. 199 222 2,031

Land (Note 5-(2)) .......................................................... 11,740 11,837 119,520

Leased assets (Note 4-(2)) ........................................... 329 — 3,358 Accumulated depreciation ......................................... (78) — (794) Leased assets, net ..................................................... 251 — 2,563

Construction in progress ............................................... 2 65 27Total property, plant and equipment ......................... 17,027 17,218 173,340

Intangible assetsPatent right .................................................................... 12 18 131Leasehold right ............................................................. 38 41 393Software ........................................................................ 156 186 1,590Other ............................................................................. 70 71 721

Total intangible assets .............................................. 278 317 2,836

Investments and other assetsInvestment securities (Note 5-(3)) ................................. 381 604 3,886Stocks of subsidiaries and affiliates .............................. 171 171 1,749Long-term loans receivable .......................................... 7 7 77Claims provable in bankruptcy, claims provable in rehabilitation and other .............................................. 508 499 5,179Long-term prepaid expenses ....................................... 58 68 594Deferred tax assets (Note 10) ...................................... 1,685 1,546 17,156Lease and guarantee deposits ..................................... 489 577 4,984Other ............................................................................. 802 826 8,171Allowance for doubtful accounts .................................. (625) (596) (6,363)

Total Investments and other assets .......................... 3,480 3,704 35,436Total noncurrent assets ............................................. 20,786 21,241 211,613

TOTAL ASSETS ...................................................................... ¥ 75,850 ¥ 78,194 $ 772,176

The accompanying notes to the non-consolidated financial statements are an integral part of these statements.

NON-CONSOLIDATED FINANCIAL STATEMENTSNon-Consolidated Balance Sheets

OBAYASHI ROAD CORPORATIONAt March 31, 2009 and 2008

ASSETS

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(Note 2)

2009 2008 2009LIABILITIES

CURRENT LIABILITIESNotes payable-trade .......................................................... ¥ 12,727 ¥ 13,541 $ 129,572Accounts payable for construction contracts .................. 13,141 14,917 133,784Accounts payable-trade ................................................... 3,947 4,281 40,187Short-term loans payable ................................................. 6,400 6,200 65,153Lease obligations ............................................................. 81 — 825Accounts payable-other ................................................... 230 490 2,350Accrued expenses ........................................................... 1,255 1,037 12,780Income taxes payable ...................................................... 810 716 8,249Advances received on uncompleted construction contracts ... 6,180 5,385 62,922Deposits received ............................................................ 451 372 4,595Provision for warranties for completed construction ........ 54 55 550Provision for loss on construction contracts ..................... 900 397 9,168Notes payable-facilities .................................................... 112 72 1,142Other ................................................................................. 364 369 3,710


NONCURRENT LIABILITIESLong-term loans payable ................................................. — 1,300 —Lease obligations ............................................................. 173 — 1,765Deferred tax liabilities for land revaluation (Notes 5-(2) and 10) ... 2,044 2,062 20,813Provision for retirement benefits ....................................... 4,096 4,065 41,702Other ................................................................................. 6 83 63

Total noncurrent liabilities ......................................... 6,320 7,511 64,345Total liabilities ........................................................... 52,979 55,351 539,340

NET ASSETSSHAREHOLDERS’ EqUITy

Capital stock ..................................................................... 6,293 6,293 64,072Capital surplus

Legal capital surplus ................................................ 6,095 6,095 62,057Total capital surplus .................................................. 6,095 6,095 62,057

Retained earningsLegal reserve ............................................................ 952 952 9,691Other retained earnings Reserve for advanced depreciation of noncurrent assets ... 11 12 116 General reserve ..................................................... 8,500 8,500 86,531 Retained earnings brought forward ....................... 1,015 803 10,335Total retained earnings ............................................. 10,478 10,267 106,674

Treasury stock .................................................................. (47) (43) (482)Total shareholders’ equity ......................................... 22,820 22,613 232,321

VALUATION AND TRANSLATION ADjUSTMENTSValuation difference on other securities ........................... 85 251 870Deferred gains or losses on hedges ................................ — (1) —Revaluation reserve for land (Note 5-(2)) ......................... (34) (19) (356)

Total valuation and translation adjustments.............. 50 230 514Total net assets ......................................................... 22,871 22,843 232,836




25

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(Note 2)

2009 2008 2009

NET SALES: (Note 6-(2))

Net sales of completed construction contracts ................... ¥ 77,215 ¥ 79,515 $ 786,071

Net sales of asphalt mixture sales ....................................... 14,960 15,248 152,300

Total net sales ........................................................... 92,176 94,764 938,372

COST OF SALES

Cost of sales of completed construction contracts ............. 73,314 74,474 746,355

Cost of sales of asphalt mixture sales ................................. 12,479 13,641 127,041

Total cost of sales ..................................................... 85,793 88,115 873,397

Gross profit

Gross profit on completed construction contracts......... 3,901 5,041 39,715

Gross profit on asphalt mixture sales ............................. 2,481 1,607 25,258

Total gross profit ....................................................... 6,382 6,649 64,974


ADMINISTRATIVE ExPENSES (Note 6-(1))........................ 4,993 5,100 50,830

Operating income ................................................................ 1,389 1,548 14,144



Interest expense .................................................................. (129) (134) (1,321)

Gain on sales of noncurrent assets (Note 6) ...................... 10 10 102

Loss on sales of noncurrent assets (Note 6) ...................... (4) (13) (43)

Loss on disposal of noncurrent assets (Note 6) ................. (88) (100) (905)

Impairment loss (Note 6) .................................................... (279) (81) (2,846)

Other, net (Note 6-(2)) ......................................................... 7 (47) 72



INCOME TAxES (Note 10):





NET INCOME ......................................................................... ¥ 336 ¥ 495 $ 3,420


Non-Consolidated Statements of IncomeOBAYASHI ROAD CORPORATION


26

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(Note 2)

2009 2008 2009LIABILITIES

CURRENT LIABILITIESNotes payable-trade .......................................................... ¥ 12,727 ¥ 13,541 $ 129,572Accounts payable for construction contracts .................. 13,141 14,917 133,784Accounts payable-trade ................................................... 3,947 4,281 40,187Short-term loans payable ................................................. 6,400 6,200 65,153Lease obligations ............................................................. 81 — 825Accounts payable-other ................................................... 230 490 2,350Accrued expenses ........................................................... 1,255 1,037 12,780Income taxes payable ...................................................... 810 716 8,249Advances received on uncompleted construction contracts ... 6,180 5,385 62,922Deposits received ............................................................ 451 372 4,595Provision for warranties for completed construction ........ 54 55 550Provision for loss on construction contracts ..................... 900 397 9,168Notes payable-facilities .................................................... 112 72 1,142Other ................................................................................. 364 369 3,710


NONCURRENT LIABILITIESLong-term loans payable ................................................. — 1,300 —Lease obligations ............................................................. 173 — 1,765Deferred tax liabilities for land revaluation (Notes 5-(2) and 10) ... 2,044 2,062 20,813Provision for retirement benefits ....................................... 4,096 4,065 41,702Other ................................................................................. 6 83 63

Total noncurrent liabilities ......................................... 6,320 7,511 64,345Total liabilities ........................................................... 52,979 55,351 539,340

NET ASSETSSHAREHOLDERS’ EqUITy

Capital stock ..................................................................... 6,293 6,293 64,072Capital surplus

Legal capital surplus ................................................ 6,095 6,095 62,057Total capital surplus .................................................. 6,095 6,095 62,057

Retained earningsLegal reserve ............................................................ 952 952 9,691Other retained earnings Reserve for advanced depreciation of noncurrent assets ... 11 12 116 General reserve ..................................................... 8,500 8,500 86,531 Retained earnings brought forward ....................... 1,015 803 10,335Total retained earnings ............................................. 10,478 10,267 106,674

Treasury stock .................................................................. (47) (43) (482)Total shareholders’ equity ......................................... 22,820 22,613 232,321

VALUATION AND TRANSLATION ADjUSTMENTSValuation difference on other securities ........................... 85 251 870Deferred gains or losses on hedges ................................ — (1) —Revaluation reserve for land (Note 5-(2)) ......................... (34) (19) (356)

Total valuation and translation adjustments.............. 50 230 514Total net assets ......................................................... 22,871 22,843 232,836




25

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(Note 2)

2009 2008 2009

NET SALES: (Note 6-(2))

Net sales of completed construction contracts ................... ¥ 77,215 ¥ 79,515 $ 786,071

Net sales of asphalt mixture sales ....................................... 14,960 15,248 152,300

Total net sales ........................................................... 92,176 94,764 938,372

COST OF SALES

Cost of sales of completed construction contracts ............. 73,314 74,474 746,355

Cost of sales of asphalt mixture sales ................................. 12,479 13,641 127,041

Total cost of sales ..................................................... 85,793 88,115 873,397

Gross profit

Gross profit on completed construction contracts......... 3,901 5,041 39,715

Gross profit on asphalt mixture sales ............................. 2,481 1,607 25,258

Total gross profit ....................................................... 6,382 6,649 64,974


ADMINISTRATIVE ExPENSES (Note 6-(1))........................ 4,993 5,100 50,830

Operating income ................................................................ 1,389 1,548 14,144



Interest expense .................................................................. (129) (134) (1,321)

Gain on sales of noncurrent assets (Note 6) ...................... 10 10 102

Loss on sales of noncurrent assets (Note 6) ...................... (4) (13) (43)

Loss on disposal of noncurrent assets (Note 6) ................. (88) (100) (905)

Impairment loss (Note 6) .................................................... (279) (81) (2,846)

Other, net (Note 6-(2)) ......................................................... 7 (47) 72



INCOME TAxES (Note 10):





NET INCOME ......................................................................... ¥ 336 ¥ 495 $ 3,420


Non-Consolidated Statements of IncomeOBAYASHI ROAD CORPORATION


26

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(Note 2)

2009 2008 2009SHAREHOLDERS’ EqUITy:

Capital stockBalance at the end of previous period ............................. ¥ 6,293 ¥ 6,293 $ 64,072Balance at the end of current period ............................... 6,293 6,293 64,072

Capital surplusLegal capital surplus Balance at the end of previous period .......................... 6,095 6,095 62,057 Balance at the end of current period ............................ 6,095 6,095 62,057

RETAINED EARNINGS:Legal reverse Balance at the end of previous period .......................... 952 952 9,691 Balance at the end of current period ............................ 952 952 9,691 Other retained earningsReserve for advanced depreciation of noncurrent assets Balance at the end of previous period .......................... 12 13 124 Reversal of reverse for advanced depreciation of noncurrent assets .............................. (0) (0) (8) Balance at the end of current period ............................ 11 12 116 General reserve Balance at the end of previous period .......................... 8,500 7,504 86,531 Provision of general reserve .......................................... — 995 — Balance at the end of current period ............................ 8,500 8,500 86,531 Retained earnings brought forward Balance at the end of previous period .......................... 803 1,578 8,175 Reversal of reverse for advanced depreciation of noncurrent assets .............................. 0 0 8 Provision of general reserve .......................................... — (995) — Dividence from surplus ................................................. (139) (139) (1,423) Net income .................................................................... 336 495 3,420 Reversal of revaluation reserve for land ........................ 15 (136) 153 Balance at the end of current period ............................ 1,015 803 10,335

Total retained earnings ............................................. 10,478 10,267 106,674



VALUATION AND TRANSLATION ADjUSTMENTS:Valuation difference on other securities

Balance at the end of previous period ............................. 251 398 2,555 Changes of items during the period ................................. (165) (147) (1,685)Balance at the end of current period ............................... 85 251 870

Deferred gains or losses on hedgesBalance at the end of previous period ............................. (1) — (11)Changes of items during the period ................................. 1 (1) 11 Balance at the end of current period ............................... — (1) —

Revaluation reserve for land Balance at the end of previous period ............................. (19) (156) (202)Changes of items during the period ................................. (15) 136 (153)Balance at the end of current period ............................... (34) (19) (356)


TOTAL NET ASSETS .............................................................. ¥ 22,871 ¥ 22,843 $ 232,836


Non-Consolidated Statements of Changes in Net AssetsOBAYASHI ROAD CORPORATION


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Notes to Non-Consolidated Financial StatementsOBAYASHI ROAD CORPORATION


1. Basis of presenting non-consolidated financial statements The accompanying consolidated financial statements were prepared based on the accounts maintained by OBAYASHI

ROAD CORPORATION consolidated (the “Company”) in accordance with accounting principles generally accepted in Japan, which are different in certain respects as to the application and disclosure requirements of International Financial Reporting Standards, and are compiled from the non-consolidated financial statements prepared by the Company as required by the Financial Instruments and Exchange Law of Japan.


2. U.S. Dollar Amounts The accounts of the non-consolidated financial statements presented herein are expressed in japanese yen by rounding

down to the nearest million. The U.S. dollar amounts shown in the accompanying non-consolidated financial statements and notes thereto were translated

from the original Japanese yen into U.S.dollars on the basis of ¥98.23 to U.S.$1,the rate of exchange prevailing at March 31, 2009, and were then rounded down to the nearest thousand.


3. Summary of Significant Accounting Policies(1) Short-term investment securities and investment securities Securities are classified into three categories: held-to-maturity, stocks of subsidiaries and affiliates, and other securities. Held-to-maturity securities are carried at amortized cost. Stocks of subsidiaries and affiliates are carried at cost. Marketable securities classified as other securities are carried at fair value with changes in unrealized holding gain or loss,

net of the applicable income taxes, included directly in net assets. Non-marketable securities classified as other securities are carried at cost. Cost of securities sold is determined by the


identification method. Raw materials and supplies are stated at cost determined by the first-in first-out method. The net book value of inventories in the balance sheet is written down if the net realizable value declines.(3) Property, plant and equipment The Company calculates depreciation by the declining-balance method, while straight-line method is applied to the

buildings, excluding building fixtures, acquired on or after April 1, 1998. The useful lives and residual values of depreciable assets are estimated mainly in accordance with the Corporate Tax Law. (4) Intangible assets Intangible fixed assets are amortized by the straight-line method. Computer software for internal use is amortized by the




completed work, based on the estimated amount of compensation to be paid in the future for the work completed during the non-consolidated fiscal year.




occurrence. (10) Recognition of revenues and related costs Revenues from construction contracts and the related costs of the Company are recorded under the completed-contract

method. (11) Derivatives and hedge accounting a) Method of hedge accounting (For the year ended March 31, 2009) The interest rate swaps, which qualify for hedge accounting and meet specific matching criteria, as the exceptional





contracts are employed as hedging instruments. To hedge the interest-rate risks related to loans payable, interest rate swaps are employed as hedging instruments.


currency exchange rates or interest rates in accordance with internal rules.28

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(Note 2)

2009 2008 2009SHAREHOLDERS’ EqUITy:

Capital stockBalance at the end of previous period ............................. ¥ 6,293 ¥ 6,293 $ 64,072Balance at the end of current period ............................... 6,293 6,293 64,072

Capital surplusLegal capital surplus Balance at the end of previous period .......................... 6,095 6,095 62,057 Balance at the end of current period ............................ 6,095 6,095 62,057

RETAINED EARNINGS:Legal reverse Balance at the end of previous period .......................... 952 952 9,691 Balance at the end of current period ............................ 952 952 9,691 Other retained earningsReserve for advanced depreciation of noncurrent assets Balance at the end of previous period .......................... 12 13 124 Reversal of reverse for advanced depreciation of noncurrent assets .............................. (0) (0) (8) Balance at the end of current period ............................ 11 12 116 General reserve Balance at the end of previous period .......................... 8,500 7,504 86,531 Provision of general reserve .......................................... — 995 — Balance at the end of current period ............................ 8,500 8,500 86,531 Retained earnings brought forward Balance at the end of previous period .......................... 803 1,578 8,175 Reversal of reverse for advanced depreciation of noncurrent assets .............................. 0 0 8 Provision of general reserve .......................................... — (995) — Dividence from surplus ................................................. (139) (139) (1,423) Net income .................................................................... 336 495 3,420 Reversal of revaluation reserve for land ........................ 15 (136) 153 Balance at the end of current period ............................ 1,015 803 10,335

Total retained earnings ............................................. 10,478 10,267 106,674



VALUATION AND TRANSLATION ADjUSTMENTS:Valuation difference on other securities

Balance at the end of previous period ............................. 251 398 2,555 Changes of items during the period ................................. (165) (147) (1,685)Balance at the end of current period ............................... 85 251 870

Deferred gains or losses on hedgesBalance at the end of previous period ............................. (1) — (11)Changes of items during the period ................................. 1 (1) 11 Balance at the end of current period ............................... — (1) —

Revaluation reserve for land Balance at the end of previous period ............................. (19) (156) (202)Changes of items during the period ................................. (15) 136 (153)Balance at the end of current period ............................... (34) (19) (356)


TOTAL NET ASSETS .............................................................. ¥ 22,871 ¥ 22,843 $ 232,836


Non-Consolidated Statements of Changes in Net AssetsOBAYASHI ROAD CORPORATION


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Notes to Non-Consolidated Financial StatementsOBAYASHI ROAD CORPORATION


1. Basis of presenting non-consolidated financial statements The accompanying consolidated financial statements were prepared based on the accounts maintained by OBAYASHI

ROAD CORPORATION consolidated (the “Company”) in accordance with accounting principles generally accepted in Japan, which are different in certain respects as to the application and disclosure requirements of International Financial Reporting Standards, and are compiled from the non-consolidated financial statements prepared by the Company as required by the Financial Instruments and Exchange Law of Japan.


2. U.S. Dollar Amounts The accounts of the non-consolidated financial statements presented herein are expressed in japanese yen by rounding

down to the nearest million. The U.S. dollar amounts shown in the accompanying non-consolidated financial statements and notes thereto were translated

from the original Japanese yen into U.S.dollars on the basis of ¥98.23 to U.S.$1,the rate of exchange prevailing at March 31, 2009, and were then rounded down to the nearest thousand.


3. Summary of Significant Accounting Policies(1) Short-term investment securities and investment securities Securities are classified into three categories: held-to-maturity, stocks of subsidiaries and affiliates, and other securities. Held-to-maturity securities are carried at amortized cost. Stocks of subsidiaries and affiliates are carried at cost. Marketable securities classified as other securities are carried at fair value with changes in unrealized holding gain or loss,

net of the applicable income taxes, included directly in net assets. Non-marketable securities classified as other securities are carried at cost. Cost of securities sold is determined by the


identification method. Raw materials and supplies are stated at cost determined by the first-in first-out method. The net book value of inventories in the balance sheet is written down if the net realizable value declines.(3) Property, plant and equipment The Company calculates depreciation by the declining-balance method, while straight-line method is applied to the

buildings, excluding building fixtures, acquired on or after April 1, 1998. The useful lives and residual values of depreciable assets are estimated mainly in accordance with the Corporate Tax Law. (4) Intangible assets Intangible fixed assets are amortized by the straight-line method. Computer software for internal use is amortized by the




completed work, based on the estimated amount of compensation to be paid in the future for the work completed during the non-consolidated fiscal year.




occurrence. (10) Recognition of revenues and related costs Revenues from construction contracts and the related costs of the Company are recorded under the completed-contract

method. (11) Derivatives and hedge accounting a) Method of hedge accounting (For the year ended March 31, 2009) The interest rate swaps, which qualify for hedge accounting and meet specific matching criteria, as the exceptional





contracts are employed as hedging instruments. To hedge the interest-rate risks related to loans payable, interest rate swaps are employed as hedging instruments.


currency exchange rates or interest rates in accordance with internal rules.28

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d) Assessment of hedge effectiveness (For the year ended March 31, 2009) The evaluation of hedge effectiveness is omitted for interest rate swaps as they meet certain criteria under the exceptional


transactions are the same.(12) Consumption taxes Consumption taxes and local consumption taxes are accounted for under the tax-exclusive method.(13) Income taxes The Company applies deferred tax accounting for income taxes which requires recognition of income taxes by the asset/

liability method. Under the asset/liability method, deferred tax assets and liabilities are determined based on the difference between financial reporting basis and the tax basis of the assets and liabilities and are measured using the enacted tax rates and laws which will be in effect when the differences are expected to reverse.

4. Changes in Significant Accounting Policies(1) Change in method of measurement of inventories Effective the fiscal year ended March 31, 2009, the Company has adopted, the “Accounting Standard for Measurement of

Inventories” (ASBJ Statement No.9 issued on July 5, 2006). As a result of this change, operating income decreased by ¥0 million (US$6 thousand), and income before income taxes decreased by ¥11 million (US$112 thousand), for the year ended March 31, 2009, compared with the corresponding amounts that would have been recorded under the previous method.

(2) Application of lease accounting Effective the fiscal year ended March 31, 2009, the Company has adopted the “Accounting Standard for Lease Transactions”

(ASBJ Statement No.13, issued on June 17, 1993 by the First Committee for Business Accounting Standards; revised on March 30, 2007) and the Guidance on Accounting Standard for Lease Transactions” (ASBJ Guidance No. 16, issued on January 18, 1994 by the Accounting Practice Committee of the Japanese Institute of Certified Public Accountants; revised on March 30, 2007). As a result, the accounting treatment for finance leases that do not transfer ownership of the leased assets to the lessee has been changed from the method applicable to operating lease transactions to the method applicable to the ordinary buying and selling transactions.

The effect of this change on operating income and income before income taxes was immaterial for the year ended March 31, 2009.







As a result, compared with the previous method, operating income decreased by ¥84 million and income before income taxes decreased by ¥85 million for the year ended March 31, 2008.

5. Notes to Non-Consolidated Balance sheets(1) Payables to subsidiaries and affiliates


Accounts receivable from completed constructioncontracts and accounts receivable-trade ............................ ¥ — ¥ 8,473 $ —Notes receivable-trade, accounts receivable fromcompleted construction contracts and accountsreceivable-trade ................................................................... ¥ 5,373 ¥ — $ 54,699


2000. The excess of the revalued carrying amount over the book value before revaluation is included in net assets as reserve for

land revaluation, net of applicable income taxes. The revaluation of the land was determined based on the official standard notice prices in accordance with Article 2, paragraph 4 of the “Enforcement Ordinance Concerning Land Revaluation” with certain necessary adjustments.

The excess of the revalued carrying amount over the market value at March 31, 2009 and 2008 were ¥3,114 million (US$31,703 thousand), and ¥3,405 million respectively.

(3) Pledged assets The following assets were pledged as collateral in substitution for guarantee money paid.


Short-term investment securities ......................................... ¥ 20 ¥ — $ 203 Investment securities ........................................................... ¥ — ¥ 20 $ — 29

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(4) Contingent liabilities The Company is contingently liable for the following:



6. Notes to Non-Consolidated Statements of Income(1) Research and development costs were as follows:



(2) Transactions with subsidiaries and affiliates


Net sales .............................................................................. ¥ — ¥22,687 $ — Dividend income .................................................................. ¥ 11 ¥ — $ 119 Technical advisory fee ......................................................... ¥ 21 ¥ 24 $ 220



Buildings and structures ...................................................... ¥ — ¥ 2 $ — Machinery, equipment and vehicles .................................... ¥ 10 ¥ 7 $ 102 Tools, furniture and fixtures .................................................. ¥ — ¥ 0 $ —

Total ................................................................................... ¥ 10 ¥ 10 $ 102



Buildings and structures ...................................................... ¥ 0 ¥ — $ 4 Machinery, equipment and vehicles .................................... ¥ 3 ¥ 2 $ 35 Tools, furniture and fixtures .................................................. ¥ 0 ¥ 0 $ 3 Land ..................................................................................... ¥ — ¥ 10 $ — Other .................................................................................... ¥ 0 ¥ 0 $ 0

Total ................................................................................... ¥ 4 ¥ 13 $ 43



Buildings and structures ..................................................... ¥ 55 ¥ 69 $ 568 Machinery, equipment and vehicles .................................... ¥ 29 ¥ 23 $ 295 Tools, furniture and fixtures .................................................. ¥ 3 ¥ 5 $ 37 Other .................................................................................... ¥ 0 ¥ 0 $ 4

Total ................................................................................... ¥ 88 ¥ 100 $ 905

30

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d) Assessment of hedge effectiveness (For the year ended March 31, 2009) The evaluation of hedge effectiveness is omitted for interest rate swaps as they meet certain criteria under the exceptional


transactions are the same.(12) Consumption taxes Consumption taxes and local consumption taxes are accounted for under the tax-exclusive method.(13) Income taxes The Company applies deferred tax accounting for income taxes which requires recognition of income taxes by the asset/

liability method. Under the asset/liability method, deferred tax assets and liabilities are determined based on the difference between financial reporting basis and the tax basis of the assets and liabilities and are measured using the enacted tax rates and laws which will be in effect when the differences are expected to reverse.

4. Changes in Significant Accounting Policies(1) Change in method of measurement of inventories Effective the fiscal year ended March 31, 2009, the Company has adopted, the “Accounting Standard for Measurement of

Inventories” (ASBJ Statement No.9 issued on July 5, 2006). As a result of this change, operating income decreased by ¥0 million (US$6 thousand), and income before income taxes decreased by ¥11 million (US$112 thousand), for the year ended March 31, 2009, compared with the corresponding amounts that would have been recorded under the previous method.

(2) Application of lease accounting Effective the fiscal year ended March 31, 2009, the Company has adopted the “Accounting Standard for Lease Transactions”

(ASBJ Statement No.13, issued on June 17, 1993 by the First Committee for Business Accounting Standards; revised on March 30, 2007) and the Guidance on Accounting Standard for Lease Transactions” (ASBJ Guidance No. 16, issued on January 18, 1994 by the Accounting Practice Committee of the Japanese Institute of Certified Public Accountants; revised on March 30, 2007). As a result, the accounting treatment for finance leases that do not transfer ownership of the leased assets to the lessee has been changed from the method applicable to operating lease transactions to the method applicable to the ordinary buying and selling transactions.

The effect of this change on operating income and income before income taxes was immaterial for the year ended March 31, 2009.







As a result, compared with the previous method, operating income decreased by ¥84 million and income before income taxes decreased by ¥85 million for the year ended March 31, 2008.

5. Notes to Non-Consolidated Balance sheets(1) Payables to subsidiaries and affiliates


Accounts receivable from completed constructioncontracts and accounts receivable-trade ............................ ¥ — ¥ 8,473 $ —Notes receivable-trade, accounts receivable fromcompleted construction contracts and accountsreceivable-trade ................................................................... ¥ 5,373 ¥ — $ 54,699


2000. The excess of the revalued carrying amount over the book value before revaluation is included in net assets as reserve for

land revaluation, net of applicable income taxes. The revaluation of the land was determined based on the official standard notice prices in accordance with Article 2, paragraph 4 of the “Enforcement Ordinance Concerning Land Revaluation” with certain necessary adjustments.

The excess of the revalued carrying amount over the market value at March 31, 2009 and 2008 were ¥3,114 million (US$31,703 thousand), and ¥3,405 million respectively.

(3) Pledged assets The following assets were pledged as collateral in substitution for guarantee money paid.


Short-term investment securities ......................................... ¥ 20 ¥ — $ 203 Investment securities ........................................................... ¥ — ¥ 20 $ — 29

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(4) Contingent liabilities The Company is contingently liable for the following:



6. Notes to Non-Consolidated Statements of Income(1) Research and development costs were as follows:



(2) Transactions with subsidiaries and affiliates


Net sales .............................................................................. ¥ — ¥22,687 $ — Dividend income .................................................................. ¥ 11 ¥ — $ 119 Technical advisory fee ......................................................... ¥ 21 ¥ 24 $ 220



Buildings and structures ...................................................... ¥ — ¥ 2 $ — Machinery, equipment and vehicles .................................... ¥ 10 ¥ 7 $ 102 Tools, furniture and fixtures .................................................. ¥ — ¥ 0 $ —

Total ................................................................................... ¥ 10 ¥ 10 $ 102



Buildings and structures ...................................................... ¥ 0 ¥ — $ 4 Machinery, equipment and vehicles .................................... ¥ 3 ¥ 2 $ 35 Tools, furniture and fixtures .................................................. ¥ 0 ¥ 0 $ 3 Land ..................................................................................... ¥ — ¥ 10 $ — Other .................................................................................... ¥ 0 ¥ 0 $ 0

Total ................................................................................... ¥ 4 ¥ 13 $ 43



Buildings and structures ..................................................... ¥ 55 ¥ 69 $ 568 Machinery, equipment and vehicles .................................... ¥ 29 ¥ 23 $ 295 Tools, furniture and fixtures .................................................. ¥ 3 ¥ 5 $ 37 Other .................................................................................... ¥ 0 ¥ 0 $ 4

Total ................................................................................... ¥ 88 ¥ 100 $ 905

30

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(6) Impairment loss For the years ended March 31, 2009 and 2008, the Company recognized impairment losses on the following assets:













7. Notes to Non-Consolidated Statements of Changes in Net Assets(1) Type and number of outstanding shares of treasury stock
















surplus (other than the capital reserve) and retained earnings (other than the legal reserve) be transferred to the capital reserve and the legal reserve, respectively, until the sum of the capital reserve and the legal reserve equals 25% of the capital stock account. Such distributions can be made at any time by resolution of the shareholders, or by the Board of Directors if certain conditions are met.

The retained earnings account in the accompanying non-consolidated balance sheet at March 31, 2009 included a legal reserve of ¥952 million (US$9,691 thousand).

31

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8. Lease Transactions(1) Finance leases Information on finance leases that do not transfer ownership of the leased assets to the lessee for the year ended March 31,


assets at March 31, 2008 which would have been reflected in the non-consolidated balance sheets if finance lease accounting had been applied to the finance leases accounted for as operating leases:



Net bookvalue

Machinery and equipment ¥ 587 ¥ 279 ¥ 308 Vehicles ¥ 34 ¥ 13 ¥ 21 Tools, furniture and fixtures ¥ 3 ¥ 3 ¥ 0

Total ¥ 625 ¥ 296 ¥ 329 Future minimum payments under non-cancelable lease contracts at March 31, 2008 were as follows:

At March 31, 2008 Millions of yenWithin 1 year ¥ 103 Over 1 year 233

Total ¥ 336 Lease payments relating to finance leases accounted for as operating leases in the accompanying non-consolidated

financial statements amounted to ¥117 million for the year ended March 31, 2008. Depreciation of the leased assets computed by the straight-line method over the respective lease terms with no residual

value and the interest portion included in lease payments amounted to ¥109 million and ¥8 million respectively, for the year ended March 31, 2008.




9. Stocks of Subsidiaries and Affiliates with Fair Value Information regarding marketable securities classified as stocks of subsidiaries and affiliates as of March 31, 2009 and 2008

do not have the fair market price.



Deferred tax assets:Provision for bonuses ........................................................ ¥ 419 ¥ 339 $ 4,271 Provision for retirement benefits ........................................ 1,599 1,514 16,281 Allowance for doubtful accounts ....................................... 254 83 2,592 Other .................................................................................. 673 371 6,856 Subtotal .............................................................................. 2,947 2,307 30,002 Valuation allowance ........................................................... (345) (104) (3,515)


Reserve for advanced depreciation of noncurrent assets ..... (7) (8) (79)Valuation difference on other securities ............................ (5) (38) (51)Other .................................................................................. (4) (4) (41)



32

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(6) Impairment loss For the years ended March 31, 2009 and 2008, the Company recognized impairment losses on the following assets:













7. Notes to Non-Consolidated Statements of Changes in Net Assets(1) Type and number of outstanding shares of treasury stock
















surplus (other than the capital reserve) and retained earnings (other than the legal reserve) be transferred to the capital reserve and the legal reserve, respectively, until the sum of the capital reserve and the legal reserve equals 25% of the capital stock account. Such distributions can be made at any time by resolution of the shareholders, or by the Board of Directors if certain conditions are met.

The retained earnings account in the accompanying non-consolidated balance sheet at March 31, 2009 included a legal reserve of ¥952 million (US$9,691 thousand).

31

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8. Lease Transactions(1) Finance leases Information on finance leases that do not transfer ownership of the leased assets to the lessee for the year ended March 31,


assets at March 31, 2008 which would have been reflected in the non-consolidated balance sheets if finance lease accounting had been applied to the finance leases accounted for as operating leases:



Net bookvalue

Machinery and equipment ¥ 587 ¥ 279 ¥ 308 Vehicles ¥ 34 ¥ 13 ¥ 21 Tools, furniture and fixtures ¥ 3 ¥ 3 ¥ 0

Total ¥ 625 ¥ 296 ¥ 329 Future minimum payments under non-cancelable lease contracts at March 31, 2008 were as follows:

At March 31, 2008 Millions of yenWithin 1 year ¥ 103 Over 1 year 233

Total ¥ 336 Lease payments relating to finance leases accounted for as operating leases in the accompanying non-consolidated

financial statements amounted to ¥117 million for the year ended March 31, 2008. Depreciation of the leased assets computed by the straight-line method over the respective lease terms with no residual

value and the interest portion included in lease payments amounted to ¥109 million and ¥8 million respectively, for the year ended March 31, 2008.




9. Stocks of Subsidiaries and Affiliates with Fair Value Information regarding marketable securities classified as stocks of subsidiaries and affiliates as of March 31, 2009 and 2008

do not have the fair market price.



Deferred tax assets:Provision for bonuses ........................................................ ¥ 419 ¥ 339 $ 4,271 Provision for retirement benefits ........................................ 1,599 1,514 16,281 Allowance for doubtful accounts ....................................... 254 83 2,592 Other .................................................................................. 673 371 6,856 Subtotal .............................................................................. 2,947 2,307 30,002 Valuation allowance ........................................................... (345) (104) (3,515)


Reserve for advanced depreciation of noncurrent assets ..... (7) (8) (79)Valuation difference on other securities ............................ (5) (38) (51)Other .................................................................................. (4) (4) (41)



32

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Reconciliation between the statutory tax rates and the effective tax rates for the years ended March 31, 2009 and 2008 is summarized as follows:

For the years ended March 31 2009 2008Statutory tax rates ................................................................ 40.6% 40.6%





no potentially dilutive shares outstanding as of these balance sheet dates. Net assets per share were computed based on the number of shares of common stock outstanding at the balance sheet

date. Net assets and net income per share for the years ended March 31, 2009 and 2008 were as follows:


Basic net income per share ................................................. ¥ 7.21 ¥ 10.62 $ 0.07 Net assets per share ............................................................ 490.88 490.00 4.99



2009 2008 2009Net income ........................................................................... ¥ 336 ¥ 495 $ 3,420 Net income not attributable to shareholders of common stock ... ¥ — ¥ — $ — Net income attributable to shareholders of common stock ... ¥ 336 ¥ 495 $ 3,420 Average number of shares issued and outstanding during the period (thousands of shares) (46,607) (46,633) (46,607)

The following table sets forth the computation of net assets per share of common stock at the years ended March 31, 2009 and 2008:

At March 31 (Millions of yen, except share) (Thousands of U.S. dollars, except share)

2009 2008 2009

Net assets ............................................................................ ¥ 22,871 ¥ 22,843 $232,836Net assets applicable to shareholders of common stock .... ¥ 22,871 ¥ 22,843 $232,836Number of shares of common stock at the year end (thousands of shares) (46,592) (46,620) (46,592)


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FINANCIAL HIGHLIGHTS

For the years ended March 31 Millions of yen Thousands of U.S. dollars

2009 2008 2009

Net sales ................................................................................. ¥ 92,533 ¥ 95,048 $ 942,012Net income .............................................................................. 355 551 3,618New orders received ............................................................... 90,974 103,182 926,135Backlog at year end ................................................................ 39,441 41,001 401,525

At year endTotal assets ........................................................................ ¥ 76,168 ¥ 78,495 $ 775,405Total liabilities ..................................................................... 53,071 55,445 540,274Net assets .......................................................................... 23,096 23,049 235,130

Per share dataBasic net income per share ............................................... ¥ 7.63 ¥ 11.82 $ 0.07 Net assets per share ......................................................... 495.72 494.42 5.04

All figures have been translated into U.S. dollar at the rate of ¥98.23/$1.00, solely for the convenience of the reader. For details, see Note 2 to the consolidated financial statements.The fiscal year end of Obayashi Road Corporation and consolidated subsidiaries is March 31.

Net sales (billions of yen)

0

40

80

120

160

2008 2009

2008 2009



Net income (billions of yen)

∆1.0

∆0.5

0.0

0.5

1.0

1.5

2.0

New orders received (billions of yen)

0

40

80

120

160

2008 2009

2008 2009



Basic net income per share (yen)

∆20

∆10

0

10

20

30

40

Company Profile:

Obayashi Road Corporation (the “Company”) is one of the major road construction companies in Japan. The Company is one of subsidiaries of Obayashi Corporation, one of the five largest construction and civil engineering companies in Japan. The Company’s main businesses consist of civil engineering and asphalt mixture activities, with civil engineering divided into paving works and non-paving works. Paving works are mainly carried out in connection with the construction of roads, expressways, factories and buildings and airports and harbors. Non-paving works include site formation, road and expressway related works and water and sewage works. In its asphalt mixture activities, the Company manufactures and sells asphalt mixture for use in paving works.

The Company conducts its operations through its head office in Tokyo, and 9 branches, 52 business offices, 45 asphalt mixture plants and 2 SEALOFLEX mixture plants throughout Japan, with 1,107 full-time employees as of March 31, 2009.

The purpose of the Corporation is to engage in the following business: 1. Contracting of road construction, paving, site

formation, water and sewerage works and other civil engineering construction and building works, and planning, research, designing and management relating thereto;

2. Manufacturing and sales of materials to be used for the construction works described in the preceding paragraph;

3. Manufacturing, repair, sales and lease of equipment and implements for construction works and vehicles;

4. Collecting, carrying and processing of waste and industrial waste, and manufacturing and sales of its recycled products.

5. Manageing and lease of tennis courts, play grounds, campsites, other sports leisure facilities, accommodations and eating houses;

6. Land development, and sales, brokerage and caretaking of real estate;

7. Business activities relating to landscaping , gardening and tree planting;

8. Temporary personnel placement agency business;

9. Consulting service related to each item above; and

10. All activities related to any of the preceding items.

Board of Directors

President & Representative Director Tetsuo IshiiRepresentative Director Haruo AonumaDirectors Fumikazu Kawada Michihiro Hamada

Executive Officers

President Tetsuo IshiiSenior Managing Officers Haruo Aonuma Yutaka Shono Masataka Yamada Hisashige ItoManaging Officers Fumikazu Kawada Michihiro Hamada Katsuhiro Suzuki Taro Kaji Takahide Kouchi Minoru Tanaka Takuo TsubouchiExecutive Officers Masaya Hirai Tsutomu Asakura Toshirou Mishima Hiroshi Maeda Satoru Mizutani Kenichi Matuya Yoshihisa Masiko

Auditors

Corporate Auditor Hiroshi KatadaOutside Auditors Akira Kashima Hideki Sugiyama Sigeharu Sugimoto

Network of Companies

Head Office: 19-9,Tsutsumidori 1-chome, Sumida-ku,Tokyo 131-8540 TEL:(03)3618-6500 FAX:(03)3618-6597Branches: Kantoh, Osaka, Hokkaido, Tohoku, Hokushinetsu, Chubu, Chugoku, Kyusyu, ShikokuReseach and Development Institute: Kiyose-shi, TokyoTechnical Center: Kuki-shi, Saitama Pref.Business Offices: 52 offices located throughout JapanAsphalt Mixture Plants: 45 plants located throughout JapanSEALOFLEX Mixture Plants: Kuki-shi,Saitama Pref. Hamamatsu-shi,Shizuoka pref.Subsidiaries: Toyo Pipe Renovate Co., Ltd. Toyo Techno Construction Co., Ltd.Affiliates: TMS Liner Co., Ltd. Japan Snap Lock Co., Ltd. Forest Consultant Co.,Ltd. Minoru Kogyo Co., Ltd.1 34

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OBAYASHI ROAD CORPORATIONESTABLISHED 1933. PAVING & GENERAL CONTRACTORS

Printed in Japan

OBAYASHI ROAD CORPORATION

Annual Report 2009

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Documents

ESTABLISHED 1933. PAVING & GENERAL ...sales and use by our group. In FY 2009, we sold 1,431,311 tons of asphalt mixture. Revenues from asphalt mixture sales amounted to ¥14,960 million