ANNUAL REPORT 2002 TAISEI CORPORATION

TAISEI CORPORATION ANNUAL REPORT 2002 0 2 1 0・4 0 0 0・S・N PRINTED IN PRINTED ON RECYCLED PAPER http://www.taisei.co.jp 163-0606, Japan 163-0606, Tokyo 1-25-1, Nishi-, Shinjuku-ku, Phone: +81-3-3348-1111 Fax: +81-3-3345-0481 Profile Financial Highlights TAISEI CORPORATION and Consolidated Subsidiaries Years ended March 31, 2001 and 2002

Supporting Modern Society and Environmental Protection Through Leading-Edge Technologies Thousands of Millions of Yen U.S. Dollars* (except per share figures) (except per share figures) Over the past 128 years since its establishment, Taisei Corporation has undertaken many notable projects in Japan and 2001 2002 2002 Change (%) overseas. Our corporate roots coincided with Japan’s development as a modern nation and we have continuously met the Contract backlog at beginning of the year ¥1,976,256 ¥1,830,912 $13,766,256 (7.4)% demands of a changing era and people’s aspirations for the future through sound operations. New orders received during the year 1,605,048 1,659,277 12,475,767 3.4 As the enters the second century of modern urban construction, there is a strong need to preserve historic Net sales 1,750,392 1,673,834 12,585,218 (4.4) scenery, protect the environment and create attractive public and private spaces. Taisei Corporation is responding with even Contract backlog at end of the year ¥1,830,912 ¥1,816,355 $13,656,805 (0.8)% more advanced technologies through research and development. With a capital position among the strongest in the industry, Net income (loss) ¥ 8,382 ¥ (30,997) $ (233,060) ー % we are redoubling efforts to produce world-class, leading-edge technologies. Operations extend internationally, including the Per share (in yen and dollars) 8.69 (32.13) (0.242) ー construction of dams and other environmental and infrastructure projects in developing nations. Cash dividends applicable to the year 4,825 4,824 36,271 0.0 Per share (in yen and dollars) 5.00 5.00 0.038 0.0 Shareholders’ equity 230,265 177,931 1,337,826 (22.7) Per share (in yen and dollars) 238.67 184.43 1.387 (22.7) Total assets 2,189,350 1,966,084 14,782,586 (10.2)

* U.S. dollar amounts above and elsewhere in this Annual Report are translated from yen, for convenience only, at the rate of US$1 = ¥133, the approximate exchange rate at March 31, 2002. �

Sales Composition

Construction Real Estate Other

Contents

Message from the President 2 Financial Section Year in Review 4 Six-Year Summary 38 Business Review Financial Review 39 88.9% 5.7% 5.4% Building Construction 6 Consolidated Balance Sheets 42 Civil Engineering 8 Consolidated Statements of Operations 44 International Operations 10 Consolidated Statements of Shareholders’ Equity 45 Real Estate Development 12 Consolidated Statements of Cash Flows 46 Engineering 14 Notes to Consolidated Financial Statements 47 Ecology 16 Report of Independent Public Accountants 60 Housing 18 Director and Corporate Auditors/Executive Officers 61 Technological Strengths 20 Organization 62 Environmental Activities 25 Corporate Data 63 Our Accomplishments 26 Corporate Citizenship 34 Corporate History 36

TAISEI CORPORATION ANNUAL REPORT 2002 01 Message from the President

Management Philosophy We reported an extraordinary loss arising from a revision of We will start to expand orders by strengthening our asset holdings, as we reduced the scope or withdrew from marketing activities in high-growth fields. In the field of urban Taisei Corporation upholds its management philosophy of some of our businesses as part of a reorganization of Group revitalization, we will utilize our human resources, expertise “creating a vibrant environment for citizens,” and seeks to operations, which resulted in a net loss of ¥31 billion. and track record to increase orders for large-scale cultivate a harmonious relationship between humankind and development projects and urban infrastructure. In the building nature as it contributes to the formulation of important social Outlook renewal field, our marketing division and construction division capital, including public and social infrastructures. will combine forces to make an organized effort at winning Guided by a corporate vision which identifies “Customer Business conditions for the construction industry in fiscal orders, and in the field of environment and engineering, we Satisfaction as the starting point for creating new values 2003 are expected to remain severe, lacking any signs of a will actively offer proposals that utilize our technology. through technology and expertise,” the Taisei Corporation recovery in private-sector capital investment and public Second, we will work towards improving profit levels by Group will fulfill its social mission through its construction and works spending by the government. further strengthening combined purchasing, centralized construction-related businesses. These businesses offer In the face of immense competition and a firm information and rationalization of construction work, and by

exceptional quality and services at reasonable costs and commitment to achieve a healthier and sounder promoting a reduction of fixed costs. Our� third task lies in providing total solutions in response to customer needs. management structure, the Taisei Corporation Group has reinforcing our financial structure by raising the liquidity of been pursuing its New Management Plan since fiscal asset holdings to reduce interest-bearing debt. Finally, we will

Results 2002. (started April 1, 2001) Under this Plan, the Company enhance our group management to continue implementing a is aiming to attain its target of ¥1.7 trillion in new orders reorganization of our group businesses with the aim of In fiscal 2002, the construction industry faced even harsher received, ¥1.64 trillion in sales and ¥50 billion in recurring improving the efficiency of group management. conditions in winning orders, as declines in corporate capital income, and to reduce interest-bearing debt to ¥590 billion The Taisei Corporation Group is committed to mobilizing investment caused a sharp drop in private-sector non-housing by the end of fiscal 2004, the final year of the plan. During the entire resources of the group in its effort to further investment and government investment in public works fiscal 2002, the first year of the plan, the Group restructured reform its management structure and improve profit levels. projects continued to wane due to strict budgetary restraints. redundant businesses, liquidated inefficient assets and We look forward to the continuous support and Under these circumstances, consolidated volume of orders (for reorganized unprofitable businesses, and significantly cooperation of our shareholders. the fisical year, ended March 31, 2002) rose 3.4% from the reduced interest-bearing debt. previous year to ¥1.6592 trillion, while consolidated group sales fell In fiscal 2003, half way through the New Management 4.4% to ¥1.6738 trillion. The construction segment accounted for Plan, we are targeting ¥1.65 trillion in orders, ¥1.64 trillion in 89% of total sales, with real estate development and other sales, ¥42 billion in recurring income and ¥18 billion in net businesses representing 11%. Operating income decreased 16.8% income. To this end, the Company will place priority on the Hayama Kanji to ¥55.5 billion and recurring income fell 15.6% to ¥46.9 billion. following measures. President and Chief Executive Officer

02 TAISEI CORPORATION ANNUAL REPORT 2002 TAISEI CORPORATION ANNUAL REPORT 2002 03 Year in Review

Taisei Corporation’s operations are broadly divided into two segments: construction and real estate. Major Projects Completed During FY2002 including the Omiya Kanezuka Area-A Redevelopment Project The construction segment comprises of building construction and civil engineering. The Company is also actively (construction began in March 2001) and the Nihonbashi Hama-Cho Project Client engaged in international operations. 3-Chome West Area Redevelopment Project. In recent years, the Construction of Pre-Processing Plant Japan Nuclear Fuel Limited During fiscal year 2002, ended March 31, performance in the construction segment suffered severely, mainly due to Company has been awarded two local government contracts, and its Building Construction of Sapporo City a large decline in private sector investment and intensifying price competition. Similarly, the real estate segment Dome construction works are currently underway for 2004 opening. Those saw sales decrease compared with the previous year due to the effects of the economic recession. contracts are Sunport Takamatsu Symbol Center (tentative name) Building Construction of Toyota City Stadium and Akita Civic Plaza Center (tentative name). In both projects the New Construction of TAYIH LANDIS Cathay Life Insurance Co., Ltd. Company is recognized for its integrated capabilities in real estate Major new orders received during the term included the Purulia TAINAN HOTEL in development, and is playing a leading role in all aspects of the projects. Construction Pumped Storage Power Plant in in the civil engineering Second Phase of Ground Kansai International Airport Land Legislation was enacted in July 1999 regarding Private Financing Improvement Work for Airport Development Co., Ltd. segment and the building of Shinnyo-en new social education Island Landfill (Part II) Initiative (PFI) projects, a new financing method for public sector facility in Taiwan in the construction segment. projects that target the private sector. The Company, together with Domestic Market With regard to the future, Southeast Asian economies are now Major New Orders Received During FY2002 the NTT Group, submitted the winning proposal on the Disaster on a path toward recovery, following the stagnation that resulted Prevention Center Project, funded by Fujisawa City in Kanagawa In fiscal 2002, new orders were sought under increasingly harsh from the currency crisis of 1997. As a result, the Company expects Project Client Prefecture, southwest of Tokyo, for which construction work began conditions, as declines in corporate capital investment led to a to be awarded further projects in this region. Taiwan, in particular, Sunport Takamatsu Symbol Center SYMBOL TOWER DEVELOPMENT in December 2000. Other successful PFI project proposals include CO., LTD. considerable decrease in private sector non-housing investment, has shown steady economic progress despite some uncertainty the Yakumo Village School Lunch Center and the Tabaru Town and as public works spending continued to fall due to strict caused by the slump in exports in IT industries, and the Company Construction of Purulia Pumped West Bengal State Electricity Board Recycling Center. In 2002, the Company had taken a leading role and Storage Project in India budgetary limitations. Under these conditions, Taisei Corporation expects the country to remain a promising market. is won among heavy competition for the Minami-Aoyama 1-Chome New Construction of Serenavita City Produce, Inc. fully mobilized its resources to secure orders and to strengthen opening up to the world as it continues to advance from a closed Shin-Urayasu Yuraku Real Estate Co., Ltd. Condominium Refurbishment Project, which is an effort to utilize the profitability. economy to a market economy, and therefore represents a highly Corporation private sector for redeveloping housing provided by the Tokyo As a result, in fiscal 2002 the volume of orders for the attractive market with enormous potential. While the U.S. Tunnel Construction for SJ11-SJ31 Metropolitan Expressway Public Metropolitan government. In the future, various local governments Construction Area for the Chuo Corporation construction segment exceeded the previous year’s levels, although economy is being weakened by a stagnant IT industry, its Freeway Shinjuku Line are expected to actively apply PFI to finance their construction sales fell 3.6% to ¥1.5087 trillion, and operating income plunged construction market has remained relatively buoyant, and the Construction of New Passenger Central Japan International Airport Co., projects. The Company intends to aggressively meet the challenges 20.0% to ¥43.5 billion as the decrease in sales was accompanied by Company intends to maintain business activities there, chiefly Terminal Building (1) for the Central Ltd. of such projects by fully utilizing the integrated capabilities cultivated Japan International Airport a decrease in construction income. through local subsidiaries. In the other regions of Europe, the through its experience in real estate development. Meanwhile, in the civil engineering segment, the Company Middle East, Africa and Latin America, the Company will continue The Company is also engaged in new fields, which combine real maintained stable sales and profits by making full use of exclusive to actively pursue projects that estate and financial services, such as Real Estate Securitization and technologies to expand operations and cut costs throughout its effectively use its advanced Real Estate Investment Trusts, as potential new lines of business. operations. technologies. In response to the increasing diversification of real estate ownership Major projects completed and management, the Company is currently strengthening its Property

during the term included the pre- New Construction of TAYIH LANDIS Management (PM) business to help clients efficiently manage and processing plant for Japan Nuclear TAINAN HOTEL in Taiwan administrate real estate, by maximizing the profitability and value of real Fuel Limited, the , Building Construction of Toyota Stadium estate in terms of both economic and physical aspects. The Company and the Toyota Stadium. will develop this business by taking full advantage of its expertise and Sales of Construction (Consolidated) systems for real estate management and administration based on its Real Estate Development Building Construction of Sapporo Dome 1998 well-established construction technology and proven track record.

1999 International Operations Sales of Real Estate Development (Consolidated) 2000 The construction industry has been relatively stagnant as a result of 1998 The Company maintains approximately 20 overseas marketing and 2001 Japan’s prolonged economic downturn. Therefore, responding to 1999 liaison offices and around 18 local subsidiaries and affiliates, pursuing 2002 clients’ needs and making effective proposals to create real estate business activities in North America, Europe, the Middle East, development projects are extremely important and imperative for the 2000 Africa, Latin America and Asia, centered on Southeast Asia. 0 500 1000 1500 2000 increase order volumes in construction work. The Company 2001 Large-scale projects completed during the term included (Billions of Yen) possesses outstanding skills in developing strategic projects, as construction work on the Mekong River Bridge in Cambodia in the demonstrated in redevelopment projects in established old city areas. 2002

civil engineering segment and a new building for the Tainan Linden In the area of urban redevelopment, in which the Company 0 50 100 150 200 Hotel in the construction segment. considers it is dominant, we have been engaged in many projects, (Billions of Yen)

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Taisei is making continuous efforts to reduce costs and maintain business, renewal projects, responding to the needs of an aging the highest quality service to support an operating structure able society and IT-related fields, the Company aims to increase to generate sustainable earnings despite the harsh operating orders through technological strengths that differentiate it from environment for the construction industry. the competition. Marketing activities emphasize the To further raise long-term profit potential, the Company is comprehensive and systematic technologies that have resulted in reinforcing cost management capabilities, rationalizing material a substantial track record of advanced and diverse building 1 Sapporo Dome in Sapporo, Hokkaido, Japan procurement and streamlining administrative functions, while at construction. 2 The Kumamoto Technology Center, Corporation the same time raising customer satisfaction with specialized Taisei is also committed to using the latest information 3 Future University- expertise and expanded services. The underlying goal is to technology. Efforts include the establishment of the G-Net 4 Shinagawa Prince Hotel Executive Tower provide customers with quality service at a reasonable price. electronic commerce site to link specialist contractors and the 5 Aquamarine Fukushima In areas with growth potential, including environmental promotion of paperless operations. 2

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3 6 The new century has opened with an extremely challenging economic environment, in which civil engineering must undergo a dramatic transformation to meet the changing needs of the times. Taisei’s Civil Engineering Division will continue to give top priority to site considerations thereby providing high quality and safety, and will maintain solid profit performance through enhanced productivity. By developing new technologies and effectively utilizing group resources, the Company will increase orders and improve profitability towards establishing a stable management foundation for the next 100 years. Recognizing that steady progress will be required to build social capital under increasingly severe fiscal conditions, the Company will improve its technological strengths, enhance its 4 competitiveness in design, introduce distinct technological competencies, and expand its renewal business and environmental business. Of these areas, technological strength represents the foundation for attracting new orders and strengthening production as the keystone for competing in the construction industry. Even greater results will be expected from technological development efforts, with particular attention to concrete outcomes in increased orders, cost-competitiveness, and new businesses. In addition, Taisei will actively pursue technological alliances, in 1 Japan and overseas, where such technology will provide advantages in order-receiving and production capabilities. As the network era progresses into full stride, the Company will fully apply IT to enhance productivity and labor-saving performance in both on-site and office operations. 5

1 Ibigawa Bridge on DainiMeishin Expressway 2 combining Honshu and Hokkaido underwater in Japan 3 Akashi-Ohashi Bridge 4 Ohkouzu Bunsui flood control Dam in Nishi-Kanbara-gun Pref., Japan 5 Kansai International Airport in , Japan 6 South side revetment—new sea-based type landfill site (C block) 2

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Taisei’s advanced technologies are supported by world-class ranging from project planning to financing, site procurement and research centers on a scale rarely found among contractors or design. Moreover, by using its global network, Taisei is able to engineering companies. This is in addition to a design division, that procure human resources, equipment, materials and funds ranks as one of the best and largest architectural offices in Japan, effectively throughout the world. plus an engineering division. Furthermore, the Company has put Consequently, this means that when Taisei is commissioned to this construction technology to full use in its overseas operations. undertake a project, it makes use of all the resources of the In the civil engineering field, Taisei has successfully applied such Company head office, plus its research centers, architectural advanced technology in the Cirata Hydroelectric Power Station in division and engineering division, as well as the strength of its and the Toyota Proving Ground in Arizona. In the global network and comprehensive capabilities. building construction field, noteworthy examples include the new Legal and tax systems, business practices and national character International Airport, IT-related production facilities differ from country to country, and so Taisei can provide the 1 such as several semiconductor plants, and biotechnology-related comprehensive strengths which are needed to overcome these facilities including pharmaceutical facilities. barriers. For this reason, Taisei is able to assist clients that are Taisei has strong capabilities and a track record of entering overseas markets. achievements not only in terms of construction, but also various In the future, Taisei intends to further focus its efforts on software services such as those used in real estate development. business fields where it can make good use of its earthquake- In the cases of such projects as the development of the Bukit resistance technologies and environmental technologies. In various Indah City Industrial Park in West Java Province, Indonesia, as well countries of the world, earthquakes and environmental disasters as office buildings and hotels in the United States and the United are causing human casualties and property destruction. However, Kingdom, Taisei not only carried out the construction work, but by employing its technologies in Japan and internationally, Taisei also executed total project services by integrating activities aims to contribute to the well-being of mankind worldwide.

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1 Coal-fired thermal power plant in Ilo, Peru 2 Express way 2, Taiwan 3, 4 New Kuala Lumpur International Airport in 5 Subaru Telescope in Hawaii, U.S.A. 2 4 5

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Taisei has made significant strides in large-scale real estate development. Beyond building design and construction, the Company offers a wide range of services, including project master planning, the assembly of project teams, obtaining necessary development permits, fund procurement, and management services as well as maintenance and tenant leasing. Taisei relies on its professional in-house staff to provide the capability to offer support at every stage of real estate development. From this advantageous position, the Company receives orders by proposing the best possible real estate development to clients at the optimum level of investment for construction. In January 2001, Taisei established an 3 1 Urban Development Division to effectively concentrate its 1 Oval Court Ohsaki functions and human resources toward strengthening its structure 2 Landmark Tower and Queen’s Square to pursue effective operations in urban development. of the MM21 project, Yokohama, Japan In real estate development, urban redevelopment is showing 3 Yamagata New Metropolis Building significant promise, which will increase in importance as the focus of 4 Gate City Ohsaki government policy. Taisei is the leader among general contractors 5 Nishi-Shinjuku 6-chome South District Redevelopment in this field and enjoys the best track record. Since 1979, the Company has been involved in roughly 20% of all urban redevelopment projects in Japan, completing operations in more than 100 regions. Furthermore, with over 70 certified redevelopment planners capable of taking the lead in redevelopment projects, Taisei has ample human resources at its command. Public sector-led regional development projects are often awarded through a competitive process, where Taisei has frequently come out on top. A broad range of expertise is required to effectively engage in competitive bidding, and the Company’s ability to demonstrate its integrated strengths has been a driving force behind this success. 4 5

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1 COMPUTER Co., Ltd., Japan 2 Kamogawa Sea World, Pref., Japan 3 Jinnai Farm 21, Hokkaidou., Japan 4 Tonen Chemical Corporation Kawasaki Refinery Ethylene Storage, Kanagawa Pref., Japan 5 Daiichi Pharmaceutical Co., Ltd., Osaka, Japan 6 Daiichi Pharmaceutical (Beijing) Co., Ltd., China 3

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In 1968, Taisei became Japan’s first comprehensive construction technology that meets the requirements of Hazard Analysis company to establish an engineering division. Since then, the Critical Control Point (HACCP) systems. In September 2000, the Company has continued to provide dependable engineering in Company launched “e-HACCP,” the industry’s first Internet- step with the changing times across a wide range of areas, fully based system for supporting HACCP implementation, and in June exploiting proven achievements in manufacturing facilities, 2002 completed a support system for HACCP management that distribution systems and facilities for environmental protection utilizes PDA. and energy. In distribution, the Company offers consulting based on SCM, The Engineering Division has upheld its motto of “consulting is and builds various types of distribution facilities catered to 4 the essence of engineering,” to pursue customer satisfaction by customer needs. offering a full range of services, from consulting based on Taisei’s involvement in engineering services related to energy numerous achievements and expertise to the planning and design facilities and infrastructure for oil, liquefied natural gas (LNG) and of facilities and post-construction services. liquefied petroleum gas (LPG) extends well beyond national In manufacturing facilities, the Company has been mainly borders into overseas markets, where it offers wide-ranging involved with pharmaceutical facilities, electronic-device facilities services. The Company also handles facilities for nuclear energy and food facilities. Taisei holds the top market share and best and new energy sources. track record in pharmaceutical facilities. In electronic device Taisei is expanding the scope of its operations from its facilities, the Company offers high-efficiency, energy-conserving traditional stronghold of manufacturing to the non-manufacturing facilities that incorporate advanced machinery. In food facilities, field, and is taking on new businesses such as facilities attached to Taisei applies proprietary expertise in preventing contamination, buildings and amusement facilities. and has earned a solid reputation for actively developing 5 6

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1 Medical Waste Treatment System, the JIKEI University Hospital, Tokyo, Japan 2 Betsukai Experimental Bio-plant and Related Facilities, Hokkaidou, Japan 6 3 TWinds-Wind simulation and evaluation system 4 Heating and Separating System 5 Clean Park KINU (Landfill disposal site), Ibalaki Pref., Japan 6 SUPER ARENA Green Wall 1

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5 The dawning of the 21st century, popularly thought of as the with natural and social environments as well as consensus-building Century of the Environment, has given rise to calls for stronger among local residents; and Environmental Consulting and environmental preservation on a global scale. Taisei strengthened Enterprise Planning which maximize client resources based on the and expanded the Environment Department it originally set up in Company’s understanding of client needs. its Engineering Division in 2000 by establishing an Ecology Work undertaken by the Facility Engineering Division includes Division in January 2001 in order to serve a wide range of environmental preservation and restoration, comprising soil and customer needs related to environmental issues. underground water purification, preservation of water quality in In the ecology business, the Company is combining closed water ecosystems, factory and household waste water technological and management capabilities gained over the years treatment and preservation and restoration of ecosystems; through construction, civil engineering and engineering operations Material Recycling, such as turning organic waste into compost to contribute to the creation of a sustainable society. and fodder and using plastic and styrofoam wastes as renewable To that end, the Company plans to offer total solutions for resources; Thermal Recycling, including biomass power generation environmental needs through a collaboration between its Soft and utilizing heat, RDF and RPF power generation; Engineering for Engineering and Facility Engineering Divisions. Waste Treatment and Disposal Facilities, such as intermediate Services provided by the Soft Engineering Division include treatment facilities and final disposal facilities; and efficient energy Environmental Planning, to support planning and design facilitating use, to utilize new and renewable energy sources toward building coexistence with the environment and ecological preservation; alliances both inside and outside the Company. Environmental Assessment Support that encourages coexistence 2

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Housing The housing business is a third major pillar of Taisei’s operations after construction and engineering. The Company’s extensive history in this field began in 1970, with the introduction of Palcon, a pre-cast concrete housing that corresponds to Japanese weather and climate conditions. In 1978, Taisei began selling Palwood, the forerunner of the Two-by-Four Framing Method in Japan. The Company has consistently met the challenge of innovative home building, as in the introduction in 1995 of the Imported House, which incorporated European and American 1 Kahei Model House (Palcon) architectural design, and the development in 1997 of Kukan-O 2 Nanba Model House (Palcon) 3 Chigasaki Model House (Imported House) (Majestic Space), which realized comfortable living conditions, 4 Tanashi Model House (Imported House) based on Japan’s first Triple Monocoque Structure. 5, 6 Ikebukuro Model House (Kukan-O) Palcon in particular has been applauded as a timeless masterpiece of concrete housing. The distinctive excellence of its materials and imaginative construction method affords superior resistance against earthquakes and fire, along with outstanding durability. The Company developed pre-cast concrete panels with a texture of exposed concrete surfaces in 2000, which is being utilized in urban-style design. Furthermore, in 2002 a new method of foundation work was developed to facilitate the maintenance and replacement of a facility’s plumbing and cables, adding the finishing touches to Palcon as a highly durable housing system. This is an environmentally-sound method of reducing the amount of residual soil generated by construction work. Taisei’s objective with its Imported House is not simply to import European and American homes and Western-style mansions, but to pursue an original brand of imported housing 5 that matches the Japanese climate. The Company offers comfortable, fashionable homes that incorporate the advantages of Western housing, such as exterior and interior design, and facilities, while at the same time reflecting the Japanese lifestyle. Kukan-O was Japan’s first Triple Monocoque Structure, in 1 2 which new heat-resistant structures were applied not only on the exterior wall as “Triple-Wall,” but also on the roof as “Triple Roof.” Along with the development of a 24-hour circular air- conditioning system, the approach creates a living space of unprecedented structural design, safety, health and comfort, and has gained recognition for surpassing the conventional Two-by- Four Method. As for service, Taisei is committed to providing a complete system of after-service and continuous improvement, as demonstrated by its 20-year quality guarantee, in compliance with the Housing Quality Assurance Act. Taisei’s first and foremost principle of home building is to 6 safeguard the life, health and assets of customers who take up residence, followed by the provision of housing that satisfies customer demands. Another important mission is to respond to social priorities, such as durability, energy savings and measures for the elderly. In its housing business, the Company strives to express the hopes and dreams of families, and to fulfill the ultimate goal of complete customer satisfaction. Never content with the existing condition, Taisei will continue to achieve the highest ideals of home building. 3 4

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Rising to the Challenge of Cutting-Edge Technology continuously boring perpendicular and horizontal tunnels using a seismic force in the form of friction energy in a sliding motion. It with Abundant Expertise and Bold Ideas single machine. This is a landmark construction method allowing has also attracted attention as an effective, comparatively low-cost directional changes in tunnel excavation at will by incorporating a antiseismic system for existing buildings. The history of construction and civil engineering is the evolution of engineering methods, requiring a steadfast resolve to spherical unit into the shield machine. Spherical Shield Production meet the challenges of new technology. Throughout its own long journey, Taisei has accumulated a diverse range of consists of three main processes: the Horn industrial method for expertise, building upon an impressive track record of achievement. The Company has also introduced many innovative continuous boring in either perpendicular-to-horizontal or engineering methods, resulting from a willingness to move well beyond conventional approaches. By combining abundant horizontal-to-horizontal directions; the Derun industrial method expertise with bold ideas, the Company advances technological innovation across a broad range of fields, from the Laminated Laminated for boring from a horizontal underground tunnel toward the rubber rubber creation of comfortable living environments to improved safety and reduced environmental impact. ground surface; and the Crane industrial method, which enables Sliding long-distance boring by reversing the spherical unit to facilitate surface replacement of worn out cutter bits. The process can be applied Laminated rubber Damping sliding Sliding plate and then lowered overnight, requiring only three to ten months for to a wide range of underground construction work in ways that mechanism mechanism Contributing to the Creation of the entire process with minimal traffic delays. Expectations are high go beyond conventional shield production process. Furthermore, High-Quality Social Infrastructure for these two methods as innovative technologies that may serve as since perpendicular tunnels can be smaller than before, the the ultimate solution in reducing traffic congestion in urban areas. method has gained an excellent reputation for the various Ensuring Smooth Implementation of Underground Construction advantages it offers, such as the capacity for boring down from Work in Urban Areas the surface in crowded residential areas, significantly shorter Underground Obstacle Avoidance System for construction periods and reduced impact on the environment. Diaphragm Wall Construction (SATT Method) The Spherical Shield Production Process has received the Japan Society of Civil Engineers Award for 1994 and the Imperial During an earthquake Building subsurface structures in the past Invention Award for 1997. often involved dealing with major TQB-B Method TQB-R Method obstacles to the construction of diaphragm walls, such as subterranean electricity, gas or waterworks pipes. The SATT (Swing Realizing smoother excavation construction in complicated Arm Taisei Twincutter) method, which mountainous land formations incorporates an originally developed TBM Equipped with Rotating Shield excavator, offers an innovative method for openwork excavation immediately below Tunnel Boring Machines (TBMs) are an excellent method of rapidly the subterranean pipes, enabling the excavating tunnels through hard rock without blasting. However, building of diaphragm walls without having to remove the pipework. unstable geological conditions can cause problems, and Japan’s complex The method was applied in the construction of the Yokohama- ground composition offers technological challenges. In response, Taisei Isesakicho underground parking lot as well as the Nishi-Shinjuku Shield has added a rotating shield to its TBMs, enablie them to change Yugawara Training Club: Eighth-floor Pillar where an antiseismic device was Tunnel, reducing construction periods by a third compared with directions to avoid unfavorable land formations. This advanced installed during the antiseismic retrofit construction work. conventional methods. The SATT method received the top award in technology has earned Taisei a strong track record in this field. Taisei was responsible for the the First Construction Technology Development Award in 1999 antiseismic retrofit construction presented by the Japan Institute of Construction Engineering. work for the Chiba Folk Museum, popularly known as “Chiba Castle.” While maintaining its unique five-story, castellated exterior on SRC, we Realizing Ultra-Short Construction Periods for Three-Dimensional installed antiseismic structures, Crossings to Reduce Traffic Congestion in the Center of the Supporting Safe and Comfortable Living equipped with expansion joints, Metropolitan Area inside the subsurface pillars within the stone walls. The laminated rubber and sliding Total Quick Bridge (TQB) Method mechanism of the Hybrid TASS Reducing Vibrations Caused by Earthquakes and Strong Winds method was adopted for the project to lengthen the seismic The Total Quick Bridge (TQB) Method is an ultra-quick Hybrid TASS Method wavelength. Stable anti-damping construction method for building three-dimensional crossings at functions were achieved by combining steel dampers. urban intersections and railroad crossings relieving traffic congestion. Revolutionary directional-change features responding flexibly to The Hybrid Taisei Shake Suspension System (TASS) combines In the TQB-B method, a prefabricated box-shaped concrete casting urban underground construction the Company’s proprietary laminated rubber and sliding is installed using a specialized crane, reducing the construction Spherical Shield mechanism to significantly reduce seismic force. Laminated rubber period to as short as ten to fifteen months, compared with the is a powerful defense against pitching motions caused by three to five years required by conventional methods. In the TQB-R Taisei is the first company in the world to have developed the earthquakes, and has the effect of lengthening seismic waves Natural rubber-based Sliding mechanism Steel dampers laminated rubber method, the floorboard is constructed in mid-air, above the road, Spherical Shield Production Process, which is capable of through buildings. The sliding mechanism absorbs horizontal mechanism

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Effectively Detoxifying Widespread Blower for Microbial Blower for Flow Control Agent Air-Seasoning Leading to Optimum Solutions Ground Water Contamination Tank Tank

Extracting and Permeable Reactive Barrier System Sludge Deposit Tank Disposal of Sludge

Automatic Making Extensive Use of Advanced Technology for Ecological In recent years, ground water contamination caused by industrial Screening Agriculture facilities such as factories and plants has emerged as a new

environmental problem. The Permeable Reactive Barrier System Kitchen Public Inter-Seasonal Ice Storage Air-Conditioning Sewage Sludge Flow Measuring System Measuring Tank developed by Taisei sets up purification walls in the path of Tank System (Jinnai Farm 21) contaminated underground water that react with and detoxify the The “Jinnai Farm 21 Plant Factory” built by Taisei is a futuristic pollutants, thereby creating clean underground water. The agricultural plant utilizing cutting-edge biotechnology. process does not require any construction work for soil Management of temperature, humidity, exposure to sunshine and replacement, and furthermore is effective for treating polluted

application of fertilizers is completely computerized. Regular underground reserves over a wide area. Adsorbent materials such Precipitate Flow Control Tank Air-Seasoning Tank Separator Tank Sewage for Decomposing Separates fat-decomposing Discharge planting and harvesting by robots has as sand and activated charcoal comprise the main components of and Digesting bacteria and Tank processing water also been realized. The plant is an the purification walls, enabling the application of reactants which environment-conscious building that correspond to the specific nature of the pollutant. The Permeable new kitchen wastewater system that uses microbes to incorporates outstanding ecological The Ultra-Clean Room inside the Taisei Technology Center Reactive Barrier System received the Japan Society of Civil decompose the fat content. Due to its higher level of purification features inclucing an Inter-Seasonal Ice Engineers Environment Award for 1999. capacity compared with conventional methods, where coagulants Storage Air-Conditioning System, are injected to remove fat content, less extra mud waste is which uses ice created during winter as required for treatment, making it possible to reuse the waste a source of coolant in the summer, the Passing On A Rich Natural Environment to water for non-potable purposes, such as flushing toilets, by use of rain water and melted snow, the Next Generation applying a light after-treatment. Biore received the Technology and a charcoal purification system. Award of the Society of Heating, Air-Conditioning and Sanitary Reviving the Beauty of the Ocean Through Accurate Analysis and Engineers of Japan for 1996 as well as the Award for the Purification Environment for 1997.

Purification Technology for the Coastal Region Treated Cut-off wall groundwater Ago Bay in Mie Prefecture, famous for pearl cultivation, had been Reactive barrier suffering from deteriorating water quality from the many years of Seeking Coexistence With the Environment cultivation. Taisei has artificially revived the reclaimed land using dredged soil from the bottom of Ago Bay, and is conducting experiments for recovering the self-purifying capacity of the Producing Attractive Urban Spaces to Raise Energy Efficiency ocean. In addition, the Company is undertaking thorough research Green Building on tides and water quality inside Ago Bay, and has developed the Revolutionary Kitchen Wastewater System Aquatic Environment Simulation System. This is a highly-accurate Utilizing Biotechnology Green building is becoming a popular technology for controlling Realizing the World’s Highest Levels of Cleanliness prediction system designed to monitor changes in sea water and Biore the urban heat island phenomenon. Taisei undertook the Controlling Outgases the ecosystem. Through this venture and others, Taisei is working greening of the walls of the SAITAMA SUPER ARENA. A smooth towards the recovery and improvement of the aquatic Kitchen wastewater generated by restaurants and hotels contains process of greening was achieved by utilizing compact units Next-generation deep-submicron semiconductor plants employ environment from both the purification technology and analysis significant fat content and, by law, must be treated for purification comprising planting grounds with high water retention capacity the highest precision in manufacturing processes, which method approaches. inside the facility generating the wastewater. Biore is a completely and an automatic water service mechanism. The method provides necessitate the removal of not only dust, but also outgases lower costs and easier maintenance compared with conventional (molecular pollutants) generated by the facilities and interior greening methods for walls. materials of the plant itself. At the Company’s Ultra-Clean Rooms, which have achieved the world’s highest levels of cleanliness, research is progressing on various facilities and interior materials, reflecting the collaborative development of new products, which generate significantly lower levels of outgases. In recognition of the Company’s excellence, Taisei received the 38th Technology Award from the Society of Heating, Air-Conditioning Simulation system developed using the Natural purification experiment on dry and Sanitary Engineers of Japan with Ltd., for the oceanic region of Ago Bay as a model beach recovery at Ago Bay. Local elementary school children technology and products installed at Tokyo Electron’s new participated by releasing short-necked process technology center. clam fry.

22 TAISEI CORPORATION ANNUAL REPORT 2002 TAISEI CORPORATION ANNUAL REPORT 2002 23 Technological Strengths Environmental Activities

Designing Suitable Spaces Reflecting Left untreated, livestock excrement pollutes the soil and The Healthcare and Specialty Products a Responsible Ecological Approach underground water reserves, and is therefore subject to strict Taisei’s Environmental Technology Biotope Planning Technology regulation. Taisei has developed an electricity generation system using methane gas from decomposing excrement of livestock such Environmental Surveys and Simulation In order to responsibly maximize the use of a given piece of land, as cows, pigs and poultry. A ton of cow excrement yields 50 KW While contributing to the protection Technology: Taisei must first protect the existing plants and animals, then of gas-generated electricity as well as hot water through the of the Earth’s environment through Environmental assessment technology; simulation implement improvements through restoration and reconstruction, recovery of waste heat. A power plant with capacity its main construction and technology for thermal, wind, noise and other and finally determine development principles according to the corresponding to 1,000 cows will be constructed in Betsukai development businesses, Taisei, as a phenomena; other technologies. priorities for establishing a new ecological balance. The Company Town, Hokkaido. The system is winning recognition as a next- leading Japanese enterprise, also uses numerical data obtained from satellite observations and from generation energy source and as a resource recycling system. intends to encourage progress in Environmental Planning and Design Technology: its own field surveys to ascertain existing plant and animal environmental technology related to Strategic environmental consulting; ecological planning populations in a given region, as well as those that could be construction and civil engineering to and other methods. Energy conservation planning present in the future, as a natural network is formed with Opening a Path Towards Co-Existence with the Environment establish new urban environments. measures; Life Cycle Assessment. the surrounding environment. Deep Sea Water Intake System In developing environmental Taisei plans concrete development methods for shorelines and technologies under our commitment Environment-Conscious Building Technology: plant formation in accordance with a variety of plants and animals. Deep sea water has attracted interest from a wide range of areas, to “rejuvenating the city and Zero-emission projects; low noise and vibration technology. The Company is building a including health food and pharmaceuticals, because its environment,” Taisei has vigorously track record in providing temperature remains stable at low levels year round, it is not pursued research and development ranging from residential and Global Environmental Infrastructure such services to schools significantly affected by bacterial pollution, and it represents a living environments to global environmental problems toward Technology: and corporate residences. nutrient-rich resource containing minerals such as calcium and establishing a better mutual relationship between the ecosystem Field experiments for anti-desertification in progress in magnesium. Taisei’s deep sea water intake system offers a and humankind by observing and learning from nature. Burkina Faso; unused energy technology such as Biogas hygienic method for collecting water without changing its quality. Taisei has also acquired ISO 14001 certification at all 12 of its generation; research and development of salt-resistant Furthermore, as the method does not require underground domestic branches, as well as in its Engineering Division and vegetation; environmental purification technology; others. Biotope (at an elementary school) structures like water intake pits, there is no damage to the natural Design Division, while adopting an environmental management environment, such as shorelines. Taisei plans and designs water system that conforms to ISO 14001 standards at its international Environment Restoration Technology: intake facilities as well as consulting and coordinating business branches and Headquarters divisions, including the Housing Restoration technology for final waste disposal plants; Gas Electricity Generation Using Livestock plans for deep sea water-related products. Division. renewal technology with additional Antiseismic and other Excrement as the Energy Source features. Deep sea water usage Every April, Taisei announces the Water tank Taisei Agenda, which identifies Livestock Excrement Environment Creation Technology: environmental targets and action Water Creation of Biotope and mitigation. intake tank WaterWater plans for the entire company, to Livestock channel WaterWater actively promote environmental ta in intake ter tank wa protection. The Company also a se p e makes public the results of these e D plans each year in the form of Environmental Accounts and by Electricity calculating reductions in Gas generation environmental impact. Untreated refuse Liquefied Water fertilizer Fertilizing of field Taisei is one of four companies, including Keihin Electric Express Railway Co. Alkaline Ltd., that jointly established a new company for the industrial sales of deep sea barnyard water, representing the first private enterprise to develop this area into a viable fertilizer CaO business. Taisei will collect sea water from a depth of approximately 300 meters Solid waste by laying a pipeline along the seabed from Keikyu Aburatsubo Marine Park in Miura City, Kanagawa Prefecture, stretching roughly 5 kilometers offshore in Consumer Crops Sagami Bay.

24 TAISEI CORPORATION ANNUAL REPORT 2002 TAISEI CORPORATION ANNUAL REPORT 2002 25 Our Accomplishments Building Construction

1 Tokyo International Forum Hall 2 Shirogane Office, Sony Music Entertainment, Inc. 3 Landmark Tower and Queen’s Square Yokohama of the MM21 project, Yokohama, Japan 4 JR Central Towers in , Aichi Pref., Japan 5 SAITAMA SUPER ARENA, Omiya, Saitama Pref., Japan 6 Jiyugakuen Myonichikan (Restoration) 1

5

2

3 6

4

26 TAISEI CORPORATION ANNUAL REPORT 2002 TAISEI CORPORATION ANNUAL REPORT 2002 27 Our Accomplishments 1 Saitama Shin-Toshin station, Saitama Pref., Japan 2 Takatoriyama Section Tunnel (To North) 3 Shiokawa Dam, Yamanashi Pref., Japan 4 Trans-Tokyo Bay Expressway, Kawasaki Artificial Island “Kaze-no-To”, Kanagawa Pref., Japan 5 Ube 72 Country Club, Yoshiki-gun, Yamaguchi Pref., Japan Civil Engineering 6 2nd Section Tunnel-Outer Discharge Channel 7 Betsukai Resource Recycling Experiment Institute 8 Nishi-Shinjuku Tunnel 7 9 Major engineering work for section 2 of the Maizuru Electric Power Station new building 10 Kamakura underground parking lot on the Route 134 11 Otaiyama multipurpose underground conduit

8

1 2 3

5 9

10 11

6

4

28 TAISEI CORPORATION ANNUAL REPORT 2002 TAISEI CORPORATION ANNUAL REPORT 2002 29 Our Accomplishments

International Operations

6

4 7

2

5

1 1 River Plate House, London, the United Kingdom 2 Legend Hotel Saigon, Saigon Riverside Office Center 3 Shoreline Square, Long Beach 4 Johor Bahru City Square, Malaysia 5 Cement plant, Chin Fon, Hai Phong, 6 WESTIN HOTEL, Taiwan 7 Toyota Proving Ground, Arizona, U.S.A.

3

30 TAISEI CORPORATION ANNUAL REPORT 2002 TAISEI CORPORATION ANNUAL REPORT 2002 31 Our Accomplishments

International Operations

1 Qurayyah Power Plant, Kingdom of Saudi Arabia 2 Cirata Hydroelectric Power Station, Indonesia 3 Revement construction on Male Island, Maldives 4 ’s Plant 3 5 Oil refinery, Kaduna, Nigeria 6 Beijing Shangri-la International Hotel, China 7 Metropolitan Water Supply Project (Khanpur-1), 1

4

7

5

2 6

32 TAISEI CORPORATION ANNUAL REPORT 2002 TAISEI CORPORATION ANNUAL REPORT 2002 33 Corporate Citizenship

For Society, For the Earth Sharing the Joy of Art Supporting Environmental Activities that Contribute to Society A Rich Variety of Pathways for Demonstrating Corporate Citizenship Gallerie Taisei Taisei Corporation Natural and Historical Taisei contributes to the creation of an affluent, forward-thinking society, not only through its business operations Environment Fund but also through various activities that express its commitment to create a vibrant living environment for all members As a company involved in construction, an activity deeply of society. The Company recognizes that attaining widespread, enduring trust as a good corporate citizen is connected to the global environment, Taisei is engaged in only possible through a variety of efforts, including support of the arts, such as the planning and management of galleries, activities that aid society in preserving and enhancing the and activities that contribute to society as well as the preservation of the global environment. environment. In 1993, Taisei placed ¥1 billion in trust to establish the Charitable Trust Taisei Natural and Historical Environment Fund, to commemorate its 120th anniversary. The Company Carrying John Lennon’s Spirit into Tomorrow State-of-the-art Computer Graphics Technology funds organizations involved in conducting research and The John Lennon Museum Bringing Lost Ancient Cities Back to Life preserving natural environments and historical architecture that are among mankind’s common treasures. Taisei has produced many computer graphic images of lost ancient cities and large-scale architecture using technology developed for simulating scenery. In “The World’s Four Great Civilizations,” an NHK special program broadcast in the summer, Taisei utilized state-of-the- art technology to provide realistic reproductions of a variety of sites, including Ur, the ancient Sumerian city state of the Mesopotamian Le Corbusier was a Civilization, and the Dholavira ruins located in the Indian state of master of twentieth Gujarat, which is thought to hold the key to unraveling the mysteries century architecture. In of the Indus Civilization. These images offer lively depictions of ancient 1992, Taisei opened civilizations, and have received acclaim for the high value they Gallerie Taisei in the represent for both academic and reference purposes. Taisei is also distributing video productions of ancient city civilizations free of charge to make its collection of to schools and educational institutions nationwide. paintings by Le Corbusier available to the general public. The Gallerie presents his painting exhibition free of charge to the public, and under a variety of The exhibition space is divided into nine time zones, recreating through personal themes. Since 1995, Taisei has collected a nominal fee of ¥100 memorabilia and displays places where John lived or performed. Each zone is per pamphlet, which is donated to support creative activities and accompanied by background music symbolic of each period of John’s life. The Support Committee for Restoring the Tongkonan, an organization based in exhibitions by handicapped artists. The Company also supports a Iwate Prefecture which received money from the fund, aims to support the John Lennon was a well-loved artist whose life and work continues to variety of other artistic activities, such as collecting the paintings of restoration of the Tongkonan, the traditional style of housing of Indonesia’s minority Toraja People, which is threatened by collapse or depletion. The photo influence people around the world today. This museum was set up to Shunichi Kadowaki, dubbed the “Ukiyo-E Master of Our Times,” shows a restored Alang, elevated rice barns which—like the Tongkonan—are pass on his 40-year life story and message to future generations. With and organizing exhibitions to introduce paintings reflecting his becoming increasingly rare. formal approval from John’s wife, Yoko Ono, Taisei became the originality. principal organizer for the first permanent museum dedicated to the Organizations Subsidized artist in Japan, inside the Saitama Super Arena in the Saitama New by the Natural Environment Fund Urban Center. The museum portrays John’s life with approximately Le Corbusier (1887~1965) FY1996: Park Volunteer Group for the Aso Region, and 15 other organizations 130 exhibits, including photographs and many personal items made An artist who embodied the ideals of modernism through his paintings, FY1997: Park Volunteer Group for Yakushima, and 17 other organizations The City of Ur of the Mesopotamian sculpture, city planning and architecture. Hoping to introduce Le FY1998: Support Committee for Restoring the Tongkonan, and 17 other available to the public for the first time, depicting his boyhood days in Civilization, top; and the City of Corbusier’s achievements to as wide an audience as possible, Taisei organizations Liverpool, UK, through the forming of The Beatles, to his solo Dholavira of the Indus Civilization, below. conducts research and studies of his paintings, sculpture and craftwork FY1999: Friends of the Abunze, Park Volunteer Group for the Goto Region of Buildings have been realistically which form the basis of his design activities, and collects his artwork for Saikai National Park, and 21 other organizations performances following the breakup of the band. The museum has reproduced, including the original color public exhibition while at the same time preserving and maintaining them. FY2000: The Ecosystem Conservation Society—Japan, and 23 other organizations welcomed many visitors since opening on October 9, 2000, the tones and texture of their walls. sixtieth anniversary of John’s birth.

34 TAISEI CORPORATION ANNUAL REPORT 2002 TAISEI CORPORATION ANNUAL REPORT 2002 35 Corporate History

1837 Birth of founder Okura Kihachiro 1957 Listed on the 1976 Stock listed on the Frankfurt Stock Exchange (Yokohama) and Tokyo International Airport West 1873 Established Okuragumi Shokai 1958 Completed 1979 Completed construction of our new headquarters, the Passenger Terminal Building construction of the Shinjuku Center Building 1874 Opened Okuragumi Shokai branch office in London National Athletic Transfered to new headquarters Stadium 1879 Completed construction of Shujikan (Prison) 1982 Opened U.S. office in New York

1882 Arc lighting lit in front of Okuragumi Shokai in 1983 Established an Engineering Division 1960 Established a technical research center, Toyosu 1994 Completed construction of the Yebisu Garden Place, 1883 Completed Research Institute 1985 Established Taisei Holland B.V. the Mitsubishi Heavy Industries Building in Yokohama, construction of Passed through the main tunnel of the Seikan Tunnel, and the Nomura Building in Otemachi Rokumeikan 1962 Completed construction of Hotel Indonesia (the first the world’s longest underground tunnel overseas construction since WW II) Completed construction of the UBN Complex in Malaysia 1995 Launched our Internet homepage Completed construction of Hotel Okura Completed construction of the JT 1986 Entered the hotel business Headquarters and the NTT 1963 Completed construction of Kurobe River Power Plant Completed construction of the ANA Hotel Tokyo and Shinjuku Building No.4 of Kansai Electric Power Co., Inc. the Shangri-la Hotel, Beijing 1887 Established Nippon Doboku Co., Ltd. (Japan’s first construction company) 1964 Completed 1987 Opened the Grand Seto Bridge, which links Honshu construction of the with 1889 Completed construction of Kabukiza Theatre main building of Hotel New Otani 1988 Opened the Sheraton Grande Tokyo Bay Hotel and 1996 ISO 9000 certification 1900 Opened Okura Commercial School (currently Tokyo Towers acquired Keizai University) Completed construction of Shoreline Square in Long Completed construction Beach (U.S.) of Tokyo International 1917 Established Okura Doboku Gumi Corporation (first Completed construction of Cirata Hydro-electric Power Forum Hall construction corporation in Japan) 1965 Completed construction of the NHK Broadcasting Center Station in Indonesia

1920 Changed name to Nippon Doboku Corporation 1966 Completed construction of the SONY Building 1989 Completed construction of Yokohama Bay Bridge Completed construction of Fuji Bank’s headquarters 1997 Developed the Concrete Thermal Storage Air- 1927 Completed construction of Japan’s first subway, 1990 Established a new management philosophy and a Conditioning System which ran between and Ueno 1967 Taisei Truss awarded the Imperial Invention Award corporate symbol Taisei’s spherical shield production process won the Completed construction of the Japanese pavilion at the Imperial Invention Award Tokyo Bay Aqualine completed 1936 Completed Montreal Exposition 1991 Initiated the advertising construction of the campaign series, Recorded the Company’s first loss since being listed, as Kawana Golf 1968 Completed construction of the new Imperial Palace “Filling the Map with 1998 a result of due to an extraordinary loss incurred in Links and Memories” capital restructuring the Kawana Hotel 1969 Entered the housing construction business Completed construction Completed construction of Akashi-Kaikyo Bridge of Tokyo Metropolitan 1939 Completed construction of the special Japanese pavilion 1970 Initiated sale of Palcon concrete housing Government Main 1999 Announced measures to reform financial structure at the San Francisco Exposition Building No.1 1972 Tie-up with Bechtel Corporation of the U.S. 2000 Completed construction 1946 Changed name to Taisei Corporation Completed construction of the Mt. Fuji Meteorological 1992 Established the Environmental Preservation Committee of Sapporo Dome Observatory 1955 Completed construction of the terminal building at 1993 Celebrated 120th Anniversary since establishment Tokyo International Airport (Haneda) 1973 Celebrated 100th Anniversary since establishment Established the charitable trust, Charitable Trust Taisei Corporation Natural and Historical Environment Fund 1956 Initial public offering on the Tokyo over-the-counter market 1974 Completed construction of the towers for Hotel New Otani Completed construction of the Landmark Tower

36 TAISEI CORPORATION ANNUAL REPORT 2002 TAISEI CORPORATION ANNUAL REPORT 2002 37 Financial Section Financial Section Six-Year Summary Financial Review TAISEI CORPORATION and Consolidated Subsidiaries TAISEI CORPORATION and Consolidated Subsidiaries Years Ended March 31 Years Ended March 31, 2001 and 2002

Thousands of Millions of Yen U.S. Dollars* Overview Revenues (except per share figures) (except per share figures) 1997 1998 1999 2000 2001 2002 2002 During the fiscal year ended March 31, 2002, business conditions In performance by business segment, construction sales fell 3.4% in the Japanese economy continuously deteriorated. The decline from the previous year to 1.4883 trillion, as a result of a Revenue: ¥ in corporate performance was significantly influenced by a drop in significant decrease in private-sector non-housing investment and Net sales: private-sector capital investment, asset deflation, and stagnated a prolonged decline in public works spending by the government, Construction ¥1,714,461 ¥1,612,588 ¥1,531,586 ¥1,424,314 ¥1,541,306 ¥1,488,297 $11,190,203 consumer spending amid uncertainty about employment and which presented a harsher business climate in which to operate. future outlook. Sales in development operations, mainly in real estate sales, fell Real estate (including other) 267,704 218,011 241,385 256,993 209,086 185,537 1,395,015 Under these circumstances, Taisei Corporation (the 19.5% to ¥94.5 billion. While the overall market for real estate Total 1,982,165 1,830,599 1,772,971 1,681,307 1,750,392 1,673,834 12,585,218 “Company”) and its subsidiaries made an all-out effort to secure sales proved to be generally favorable, supported by reduction in % change from previous year 3.9% -7.6% -3.1% -5.2% 4.1% -4.4% orders and strengthen profitability, which resulted in raising the housing tax and low interest rates provided by the Housing Loan volume of orders to 1.659 trillion, up 3.4% compared with the Corporation and other lenders, the real estate leasing market ¥ previous year. Meanwhile, sales fell 4.4% to ¥1.674 trillion, and continued to struggle under severe business conditions, with a Cost and expenses operating income dropped 16.8% to ¥55.5 billion as construction succession of retreats following in the wake of recession-induced Cost of sales 1,812,811 1,643,673 1,592,758 1,480,357 1,547,466 1,486,537 11,176,970 income decreased in line with the decline in sales. corporate restructuring, as vacancy rates grew and rents fell in Selling, general and administrative 149,185 145,774 138,800 157,311 136,179 131,771 990,759 In addition, the reporting of extraordinary losses stemming urban areas. from a write-down of real estate holdings and others resulted in a Other business sales, including activities related to finance and Total 1,961,996 1,789,447 1,731,558 1,637,668 1,683,645 1,618,308 12,167,729 consolidated net loss of ¥31 billion. However, under its basic leisure, decreased by 0.7% on the year to ¥91 billion, as Operating income 20,169 41,152 41,413 43,639 66,747 55,526 417,489 policy of providing stable dividends, the Company and its consumer spending showed no signs of recovery and declining Income (loss) before income subsidiaries used their retained earnings to pay a dividend per prices continued, leaving a difficult business environment. share of ¥5.00, unchanged from fiscal 2001. Total new construction orders rose 2.5% to ¥1.4427 trillion. taxes and other items 22,399 (98,726) 23,481 (85,505) 20,228 (52,383) (393,857) Orders in development operations grew 18.7% to ¥125.6 billion, Income taxes 20,849 (29,614) 32,043 (28,950) 12,094 (13,115) (98,609) Net income (loss) ¥ 5,784 ¥ (66,963) ¥ (5,670) ¥ (52,802) ¥ 8,382 ¥ (30,997) $ (233,060)

Per 100 shares of common stock (in yen and dollars): Shareholders’ equity ¥ 38,382 ¥ 30,606 ¥ 29,317 ¥ 19,252 ¥ 23,867 ¥ 18,443 $ 139 Net Sales New Orders Received During the Year Net income (loss) 567 (6,725) (588) (5,473) 869 (3,213) (24) Cash dividends 700 700 700 500 500 500 4

Financial ratios: 1998 1,831 1998 1,725 Net income (loss) as a percentage 1999 1,773 1999 1,635 of total revenue 0.3% (3.7)% (0.3)% (3.1)% 0.5% (1.9)% 2000 1,681 2000 1,700 Total costs and expenses as a 2001 1,750 2001 1,605 percentage of total revenue 99.0% 97.8% 97.7% 97.4% 96.2% 96.7% Dividends paid as a percentage 2002 1,674 2002 1,659 of net income 123.4% ー ー ー 57.6% ー 0 500 1,000 1,500 2,000 0 500 1,000 1,500 2,000 Financial position data: (Billions of Yen) (Billions of Yen) Current assets ¥1,999,532 ¥1,828,797 ¥1,719,364 ¥1,403,912 ¥1,286,330 ¥1,197,769 $90,005,782 Current liabilities 1,954,627 1,980,995 1,899,790 1,577,480 1,424,921 1,309,900 9,848,872 Net property and equipment 595,916 612,833 610,677 506,468 465,119 391,612 2,944,451 Long-term debt 539,555 494,704 433,329 333,452 361,851 317,026 2,383,654 Shareholders’ equity 391,416 295,289 282,852 185,748 230,265 177,931 1,337,826 Other data: New orders received during the year ¥1,988,310 ¥1,725,284 ¥1,634,592 ¥1,699,684 ¥1,605,048 ¥1,659,277 $12,475,767 Contract backlog at end of the year 2,201,573 2,096,258 1,957,879 1,976,256 1,830,912 1,816,355 13,656,805 Shares issued (thousands) 1,019,803 964,803 964,803 964,803 964,803 964,803

*U.S. dollar amounts are translated from yen, for convenience only, at the rate of US$1 = ¥133.

38 TAISEI CORPORATION ANNUAL REPORT 2002 TAISEI CORPORATION ANNUAL REPORT 2002 39 while other orders decreased 0.6% to ¥91 billion. In total, new the previous year. The increase was due to having reported billion. Investment and other assets decreased by 14% to ¥376.7 items, ¥12.6 billion in depreciation and amortization expenses, orders received on a consolidated basis rose by 3.4% to ¥1.6593 losses of ¥61.7 billion on a write-down of real estate for sale billion, caused by the sale of investment securities and a decline in ¥22.5 billion in loss on the sale of property and equipment and trillion in fiscal 2002. and ¥22.5 billion on the sale of property and equipment, which the value of stock holdings which resulted from the slump in the ¥57.6 billion in reduced inventories. The decline in inventories The total balance of contract backlog fell 0.8% to ¥1.8164 were undertaken to liquidate unprofitable assets toward stock market. includes losses due to write-down. Other cash flow included a trillion, as the number of completed contracts increased in fiscal establishing a healthier and stronger management position. Total current liabilities fell by 8.1% to ¥1.3099 trillion. While decrease of ¥52.5 billion in trade receivables (notes and 2002. The portion of contract backlog orders represented by As a result, net loss before income taxes and other items for long-term debt due within one year increased by ¥34.7 billion, accounts). The above figure was enough to offset the ¥30.4 development operations and other orders rose from ¥2.5 billion fiscal 2002 was ¥52.4 billion. This amounted to a net loss per short-term debt including commercial paper was reduced by billion increase in trade payables (trade and accounts) as well as to ¥33.5 billion. share of ¥32.1 and a net loss of ¥31 billion. ¥102.4 billion. Long-term debt fell by ¥44.8 billion to ¥317 the ¥43.9 billion decrease in advances received and progress billion. Shareholders’ equity decreased by ¥52.3 billion to billings on uncompleted contracts. ¥177.9 billion. Cash flow from investing activities provided ¥36.3 billion. Net Income Financial Position The ratio of total shareholders’ equity to total assets was 9.1%, Continuing their stance from the previous year, the Company and down 1.4 percentage points from the previous year. While this its subsidiaries refrained from making major capital investments, Cost of sales fell 3.9% on the year to ¥1.4865 trillion, in line As of March 31, 2002, consolidated total assets were ¥1.9661 figure may seem low from a conventional standpoint, it reflects focusing on selling assets to improve its financial structure. As a with the decline in net sales, and the ratio of cost of sales to net trillion. This marked a decline of 10.2% from the previous year, the practice in the construction industry of receiving advances and result, they gained ¥32.2 billion from the sale of property and sales was 88.8%, up 0.4 percentage point from the previous due to a continued effort by the Company and its subsidiaries to progress billings on uncompleted contracts. As of March 31, 2002, equipment and ¥45.3 billion from the sale of marketable and year. Meanwhile, selling, general and administrative (SGA) write off or liquidate assets to streamline the balance sheet. this account stands at ¥343.2 billion, and serves as an important investment securities. expenses decreased 3.2% on the year to ¥131.8 billion, raising Total current assets fell by ¥88.6 billion to ¥1.1978 trillion. source of capital for the Company and its subsidiaries. Cash flow from financial activities used ¥121.2 billion, as slightly the ratio of SGA expenses to net sales to 7.9%. The main factors behind the decline were a decrease of ¥52.2 resources were utilized to reduce interest-bearing debt, including Operating income followed the decline in sales, dropping 16.8% billion in trade receivables (notes and accounts), as well as a ¥102.2 billion in short-term borrowings and ¥109.9 billion in to ¥55.5 billion. Operating income margin fell 0.5 percentage ¥31.6 billion drop in inventories (real estate development) to Statement of Cash Flows long-term debt. Management of the above cash flow was partially point to 3.3%. ¥173.7 billion. Property and equipment fell by 15.8% to ¥391.6 offset by ¥95.8 billion received as long-term debt. Cash The Company and its subsidiaries also reported other billion, primarily as the result of a ¥44.3 billion decrease in land to Total cash flow from operating activities provided ¥50.3 billion, dividends, including those paid out to minority interests, totaled expenses totaling ¥107.9 billion, compared with ¥46.5 billion in ¥237 billion and a decline in buildings and structures to ¥216.6 comprising ¥52.4 billion in loss before income taxes and other ¥5.1 billion.

Net Income (Loss) Interest Coverage Total Interest-Bearing Debt to Total Capitalization Cash Flows (times) (%) 012345 020406080 100

(67) 41 6 1,646 75 1998 1998 1998 82 1998 22 2.14 1,351 295 33 27 15

1999 (6) 41 6 1,540 81 70 14 5 1999 21 2.24 1999 1,257 283 1999 89 44 4 1,152 2000 (53) 2000 2000 83 2000 117 190 38 16 3.00 966 186 343 67 5 1,007 125 55 15 2001 8 2001 2001 77 2001 17 4.24 777 230 196 2002 56 5 2002 842 78 2002 50 36 33 2002 (31) 12 5.08 2002 664 178 121

(75) (50) (25) 0 25 0 20 40 60 80 0 500 1,000 1,500 2,000 0 100 200 300 400 (Billions of Yen) Operating income (Billions of Yen) Total capitalization (Billions of Yen) (Billions of Yen) Interest and dividend income Shareholders’ equity Net cash provided by (used in) operating activities Interest expense Total interest-bearing debt Net cash provided by (used in) investing activities Interest coverage Total interest-bearing debt to total capitalization Net cash provided by (used in) financing activities Net increase (decrease) in cash Notes: 1. Cash flow figures for FY 2000, FY 2001 and FY 2002 were prepared under new accounting standards and are not directly comparable to prior periods. 2. The net decrease in cash in FY 2000, FY 2001 and FY 2002 includes the effect of exchange rate changes, respectively.

40 TAISEI CORPORATION ANNUAL REPORT 2002 TAISEI CORPORATION ANNUAL REPORT 2002 41 Financial Section Consolidated Balance Sheets TAISEI CORPORATION and Consolidated Subsidiaries March 31, 2001 and 2002

Thousands of Thousands of U.S. Dollars U.S. Dollars Millions of Yen (Note 1) Millions of Yen (Note 1) Assets 2001 2002 2002 Liabilities and Shareholders’ Equity 2001 2002 2002 Current assets: Current liabilities: Cash (Note 3) ¥ 59,563 ¥ 114,434 $ 860,406 Short-term borrowings (Notes 5 and 6) ¥ 316,129 ¥ 213,712 $ 1,606,857 Time deposits (Notes 3 and 5) 94,178 6,030 45,338 Long-term debt due within one year (Notes 5 and 6) 99,020 133,710 1,005,338 Trade receivables (Note 5): Trade payables: Notes 85,939 54,720 411,429 Notes 196,083 165,363 1,243,331 Accounts 312,766 291,772 2,193,775 Accounts 314,640 315,447 2,371,782 Loans 163 155 1,165 Advances received and progress billings on uncompleted contracts 386,444 343,186 2,580,346 Allowance for doubtful accounts (2,760) (2,238) (16,827) Income taxes payable 3,855 1,393 10,474 Inventories: Other current liabilities 108,750 137,089 1,030,744 Real estate development (Note 5) 205,341 173,747 1,306,368 Total current liabilities 1,424,921 1,309,900 9,848,872 Raw materials and supplies 73,386 79,211 595,571 Cost of uncompleted contracts 333,285 323,285 2,430,714 Deferred income taxes (Note 7) 44,798 75,553 568,068 Long-term debt (Notes 5 and 6) 361,851 317,026 2,383,654 Prepaid expenses and other current assets 79,671 81,100 609,775 Employees’ severance and retirement benefits (Note 8) 63,581 67,104 504,541 Total current assets 1,286,330 1,197,769 9,005,782 Allowance for accrued severance indemnities to directors and corporate auditors 2,908 2,461 18,504 Deferred income taxes for revaluation of land (Notes 7 and 14) ー 1,684 12,662 Allowance for losses on restructuring 20,078 15,152 113,925 Other non-current liabilities 52,242 51,615 388,083 Property and equipment, at cost: Land (Note 5) 281,249 236,993 1,781,902 Buildings and structures (Note 5) 245,063 216,575 1,628,383 Minority interest in consolidated subsidiaries 33,504 23,211 174,519 Machinery and equipment 77,540 76,220 573,083 Construction in progress 4,571 854 6,421 608,423 530,642 3,989,789 Contingent liabilities (Note 13) Accumulated depreciation (143,304) (139,030) (1,045,338) Net property and equipment 465,119 391,612 2,944,451 Shareholders’ equity (Note 9): Common stock Authorized: 1,145,000,000 shares Issued: 964,802,821 shares 94,348 94,348 709,383 Investments and other assets: Additional paid-in capital 61,274 61,274 460,706 Investments in unconsolidated subsidiaries and affiliated companies 2,674 2,929 22,023 Revaluation reserve for land (Note 14) ー (1,668) (12,541) Investment securities (Notes 4 and 5) 244,516 192,928 1,450,586 Retained earnings (Note 16) 33,652 4,811 36,173 Deferred income taxes (Note 7) 71,394 67,643 508,594 Net unrealized holding gains on securities 43,221 20,627 155,090 Deferred income taxes for revaluation of land (Notes 7 and 14) ー 2,153 16,188 Foreign currency translation adjustments (2,230) (1,455) (10,940) Other assets 129,300 122,701 922,564 230,265 177,937 1,337,871 Allowance for doubtful accounts (9,983) (11,651) (87,602) Less : Treasury stock at cost ー (6) (45) 437,901 376,703 2,832,353 Total shareholders’ equity 230,265 177,931 1,337,826 ¥2,189,350 ¥1,966,084 $14,782,586 ¥2,189,350 ¥1,966,084 $14,782,586

See accompanying notes.

42 TAISEI CORPORATION ANNUAL REPORT 2002 TAISEI CORPORATION ANNUAL REPORT 2002 43 Financial Section Financial Section Consolidated Statements of Operations Consolidated Statements of Shareholders’ Equity TAISEI CORPORATION and Consolidated Subsidiaries TAISEI CORPORATION and Consolidated Subsidiaries Years Ended March 31, 2001 and 2002 Years Ended March 31, 2001 and 2002

Thousands of Millions of Yen U.S. Dollars Millions of Yen (Note 1) Net unrealized Foreign Number of shares Additional Revaluation holding currency 2001 2002 2002 of common stock Common paid-in reserve Retained gains on translation Treasury (thousands) stock capital for land earnings securities adjustment stock Revenue: Net sales (Note 12): Balance at March 31, 2000 964,803 ¥94,348 ¥61,274 ¥ ー ¥30,126 ¥ ー� ¥ ー� ¥ー Construction ¥1,541,306 ¥1,488,297 $11,190,203 Net income ー ー� ー� ー 8,382 ー� ー ー� Real estate (including other) 209,086 185,537 1,395,015 Adjustment from translation of foreign � � � � � � � 1,750,392 1,673,834 12,585,218 currency financial statements ー ー� ー� ー ー� ー (2,230) ー� Adoption of new accounting standard for financial � � � � � � � Costs and expenses (Note 12): instruments ー ー� ー� ー ー� 43,221 ー� ー� Cost of sales (Note 15) 1,547,466 1,486,537 11,176,970 Cash dividends (¥5.00 per share) ー ー� ー� ー (4,825) ー� ー� ー� Selling, general and administrative (Note 15) 136,179 131,771 990,759 Bonuses to directors and corporate auditors ー ー� ー� ー (31) ー ー� ー� 1,683,645 1,618,308 12,167,729 Balance at March 31, 2001 964,803 94,348 61,274 ー� 33,652 43,221 (2,230) ー� Operating income 66,747 55,526 417,489 Net loss ー� ー� ー� ー� (30,997) ー� ー� ー� Adjustments of retained earnings for exclusion � � � � � � � Other income (expense): of consolidated subsidiaries and equity method � � � � � � � Interest and dividend income 5,017 4,588 34,496 affiliated companies ー� ー� ー� ー� 398 ー� ー� ー� Interest expense (16,773) (11,860) (89,173) Increase due to merger of consolidated subsidiaries ー� ー� ー� ー� 224 ー� ー� ー� Gain on sale of marketable and investment securities 10,417 5,358 40,286 Increase due to revaluation of land ー� ー� ー� (1,668) 6,311 ー� ー� ー� Loss on sale of property and equipment (787) (22,526) (169,368) Increase due to revaluation of assets of � � � � � � � Write-down of marketable and investment securities (3,527) (4,621) (34,744) consolidated overseas subsidiary ー� ー� ー� ー� 79 ー� ー� ー� Write-down of real estate for sale (5,535) (61,704) (463,941) Net unrealized holding gains on securities ー� ー� ー� ー� ー� (22,594) ー� ー� Loss on investments in related companies (3,423) (1,253) (9,421) Foreign currency translation adjustment ー� ー� ー� ー� ー� ー� 775 ー� Amortization of net transition obligation from adoption of the new accounting standard (Note 8) (41,683) ー� ー� Treasury stock � ー� ー� � ー� ー� ー� (6) Gain on securities contribution to employee retirement benefit trust (Note 8) 32,998 ー� ー� Cash dividends paid (¥ 5.00 per share) ー� ー� ー� ー� (4,824) ー� ー� ー� Other, net (23,223) (15,891) (119,481) Bonuses to directors and corporate auditors ー� ー� ー� ー� (32) ー� ー� ー� (46,519) (107,909) (811,346) Balance at March 31, 2002 964,803 ¥94,348 ¥61,274 ¥(1,668) ¥ 4,811 ¥20,627 ¥(1,455) ¥ (6) Income (Loss) before income taxes and other items 20,228 (52,383) (393,857)

Thousands of U.S. Dollars (Note 1) Income taxes (Note 7): Net unrealized Foreign Additional Revaluation holding currency Current 4,258 2,425 18,233 Common paid-in reserve Retained gains on translation Treasury Deferred 7,836 (15,540) (116,842) stock capital for land earnings securities adjustment stock 12,094 (13,115) (98,609) Balance at March 31, 2001 $709,383 $460,706 $ ー� $253,023 $324,970 $(16,767) $ ー 8,134 (39,268) (295,248) Net loss ー� ー� ー� (233,060) ー� ー� ー� Minority interest in net income (loss) of consolidated subsidiaries 248 8,271 62,188 Adjustments of retained earnings for exclusion of consolidated � � � � � � Net income (loss) ¥ 8,382 ¥ (30,997) $ (233,060) subsidiaries and equity method affiliated companies ー� ー� ー� 2,993 ー� ー� ー� Increase due to merger of consolidated subsidiaries ー� ー� ー� 1,684 ー� ー� ー� U.S. Dollars Increase due to revaluation of land ー� ー� (12,541) 47,451 ー� ー� ー� Amounts per share of common stock: Yen (Note 1) Increase due to revaluation of assets of consolidated � � � � � Net income (loss) ¥ 8.69 ¥ (32.13) $ (0.242) overseas subsidiary ー� ー� ー� 594 ー� ー� ー� Cash dividends applicable to the year 5.00 5.00 0.038 Net unrealized holding gains on securities ー� ー� ー� ー� (169,880) ー� ー� See accompanying notes. Foreign currency translation adjustment ー� ー� ー� ー� ー� 5,827 ー� Treasury stock ー� ー� ー� ー� ー� ー� (45) Cash dividends paid ($0.038 per share) ー� ー� ー� (36,271) ー� ー� ー� Bonuses to directors and corporate auditors ー� ー� ー� (241) ー� ー� ー� Balance at March 31, 2002 $709,383 $460,706 $(12,541) $ 36,173 $155,090 $(10,940) $(45)

See accompanying notes.

44 TAISEI CORPORATION ANNUAL REPORT 2002 TAISEI CORPORATION ANNUAL REPORT 2002 45 Financial Section Financial Section Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements TAISEI CORPORATION and Consolidated Subsidiaries TAISEI CORPORATION and Consolidated Subsidiaries Years Ended March 31, 2001 and 2002 March 31, 2001 and 2002

Thousands of U.S. Dollars 1. Basis of Presenting Consolidated Financial Statements Millions of Yen (Note 1) Taisei Corporation (the “Company”) and its consolidated domestic descriptions and the inclusion of statements of shareholders’ 2001 2002 2002 subsidiaries maintain their official accounting records in Japanese equity) from the consolidated financial statements of the Company Cash flows from operating activities: yen and in accordance with the provisions set forth in the Japanese prepared in accordance with Japanese GAAP and filed with the Income (loss) before income taxes and other items ¥ 20,228 ¥ (52,383) $ (393,857) Commercial Code and accounting principles and practices generally appropriate Local Finance Bureau of the Ministry of Finance as Adjustments to reconcile income (loss) before income taxes and other items to accepted in Japan (“Japanese GAAP”). The accounts of overseas required by the Securities and Exchange Law. Some supplementary net cash provided by operating activities: subsidiaries are based on their accounting records maintained in information included in the statutory Japanese language Depreciation and amortization 13,809 12,627 94,940 conformity with generally accepted accounting principles and consolidated financial statements, but not required for fair practices prevailing in the respective countries of domicile. Certain Decrease (increase) in allowance for doubtful accounts (26,626) 1,124 8,451 presentation is not presented in the accompanying financial accounting principles and practices generally accepted in Japan are statements. Increase (decrease) in retirement benefits (7,945) 3,541 26,624 different from International Accounting Standards and standards in The translation of the Japanese yen amounts into U.S. dollars are Increase in allowance for loss on restructuring (7,302) (4,926) (37,038) other countries in certain respects as to application and disclosure included solely for the convenience of readers, using the prevailing Interest and dividend income (5,017) (4,588) (34,496) requirements. Accordingly, the accompanying consolidated financial approximate exchange rate at March 31, 2002, which was ￥133 to Interest expense 16,773 11,860 89,173 statements are intended for use by those who are informed about U.S. $1.00. The convenience translations should not be construed Write-down of marketable and investment securities 3,527 4,621 34,744 Japanese accounting principles and practices. as representations that the Japanese yen amounts have been, could Gain on sale of marketable and investment securities (10,508) (5,362) (40,316) The accompanying consolidated financial statements have been have been, or could in the future be, converted into U.S. dollars at Loss on sale of property and equipment 787 22,526 169,368 restructured and translated into English (with some expanded this or any other rate of exchange. Gain on securities contribution to employee retirement benefit trust (32,998) ー� ー� Amortization of net transition obligation from adoption of new accounting standard 41,683 ー� ー� Changes in assets and liabilities: 2. Summary of Significant Accounting Policies Decrease (increase) in trade receivables (50,111) 52,482 394,602 (a) Consolidation and Equity Method (d) Foreign Currency Translation Decrease in cost of uncompleted contracts 43,451 4,893 36,789 The consolidated financial statements include the accounts of the Receivables and payables denominated in foreign currencies are Decrease in inventories 26,951 57,577 432,910 Company and 54 of its subsidiaries in the year ended March 31, translated into Japanese yen at the year-end exchange rates. Increase (decrease) in trade payables 115,330 (30,366) (228,316) 2001 and 48 of its subsidiaries in the year ended March 31, 2002. The assets and liabilities in foreign currencies hedged by forward Decrease in advances received and progress billings on uncompleted contracts (54,046) (43,925) (330,263) All significant intercompany transactions and account balances are exchange contracts are translated at the contracted forward rate. Other, net 55,523 34,155 256,805 eliminated in consolidation. Realized exchange gains and losses are reflected in the 143,509 63,856 480,120 Investments in significant affiliates, which were 12 companies for 2001 consolidated statements of operations. All revenues and expenses Cash received (paid) during the year for: and 8 companies for 2002, were accounted for by the equity method. associated with foreign currencies are translated at the rates of The consolidated financial statements are required to include the Interest and dividends received 3,734 4,329 32,549 exchange prevailing when such transactions are made. The accounts of the Company and significant companies which are resulting exchange losses and gains are charged or credited Interest paid (16,898) (13,000) (97,744) controlled by the Company through substantial ownership of more to income. Income taxes paid (5,312) (4,905) (36,880) than 50% of the voting rights or through ownership of high The financial statements of consolidated foreign subsidiaries and Net cash provided by operating activities 125,033 50,280 378,045 percentage of the voting rights, even if it is equal to or less than affiliated companies on equity method are translated into Japanese 50%, and existence of certain conditions evidencing controls by the yen at the exchange rates prevailing at the respective year-end Cash flows from investing activities: Company of decision-making body of such companies. dates except for shareholders’ equity, which is translated at Decrease (increase) in time deposits 2,223 (84) (632) Investments in significant affiliated companies, of which the historical rates. The resulting foreign currency translation Decrease (increase) in short-term loans receivable (3,143) 617 4,639 Company has ownership of 20% or more but less than or equal to adjustments are presented in the shareholders’ equity of the Purchase of marketable and investment securities (23,851) (29,433) (221,301) 50%, and of 15% or more and less than 20% and can exercise consolidated balance sheets. Proceeds from sale of marketable and investment securities 61,845 45,262 340,316 significant influences over operating financial policies of investees, Effective April 1, 2000, the Company and its consolidated Purchase of property and equipment (15,955) (9,315) (70,038) have been accounted for by the equity method. domestic subsidiaries adopted the revised accounting standard for Proceeds from sale of property and equipment 36,198 32,211 242,188 All consolidated subsidiaries have the same balance sheet date, foreign currency translation, “Opinion Concerning Revision of Other, net (2,507) (2,987) (22,458) March 31, corresponding with that of the Company, except for 12 Accounting Standard for Foreign Currency Translation,” issued by Net cash provided by investing activities 54,810 36,271 272,714 consolidated overseas subsidiaries for 2001 and 11 consolidated the Business Accounting Deliberation Council on October 22, overseas subsidiaries for 2002, whose fiscal year end on December 1999. Under the revised accounting standard, long-term receivables Cash flows from financing activities: 31. Significant transactions, if any, in the three months ended March and payables denominated in foreign currencies, which were Decrease in short-term borrowings (132,838) (102,177) (768,248) 31, 2001 and 2002 are adjusted in the respective consolidated translated at historical rates except for the assets and liabilities Proceeds from long-term debt 170,205 95,835 720,564 financial statements. having forward exchange contracts prior to April 1, 2000, were also Repayment of long-term debt (227,889) (109,926) (826,511) translated into Japanese yen at the year-end exchange rate. Cash dividends paid, including those to minority interest (5,089) (5,086) (38,241) (b) Valuation of Assets and Liabilities of Subsidiaries The effect on the consolidated statement of operations of In the elimination of the investments in subsidiaries, the assets and Other, net 63 172 1,293 adopting the revised accounting standard was immaterial to the liabilities of the subsidiaries, including the portion attributable to consolidated financial statements for the year ended Net cash used in financing activities (195,548) (121,182) (911,143) minority shareholders, are recorded based on their fair value at the March 31, 2001. time the Company acquired control of the respective subsidiaries. Effect of exchange rate changes on cash and cash equivalents 327 1,235 9,286 (e) Cash and Cash Equivalents in the Consolidated Statements of Net decrease in cash and cash equivalents (15,378) (33,396) (251,098) (c) Consolidation Adjustments Account Cash Flows Cash and cash equivalents at beginning of year 168,313 152,935 1,149,887 The significant excess of the cost over the underlying net equity of In preparing the consolidated statements of cash flows, cash on Cash and cash equivalents at end of year (Note 3) ¥152,935 ¥119,539 $ 898,789 investments in consolidated subsidiaries and affiliated companies hand, readily-available deposits and short-term highly liquid See accompanying notes. accounted for on an equity basis is recognized as Consolidation investments with maturities of not exceeding three months at the Adjustments Account and principally amortized over a period of time of purchase and with insignificant risks of change in value are five years on a straight-line basis. considered to be cash and cash equivalents.

46 TAISEI CORPORATION ANNUAL REPORT 2002 TAISEI CORPORATION ANNUAL REPORT 2002 47 (f) Marketable and Investment Securities (h) Real Estate Business (k) Lease Transactions costs are recognized in expenses in equal amounts over certain Held-to-maturity debt securities are stated at amortized cost. The Company and certain of its subsidiaries develop real estate Finance lease transactions which do not transfer ownership of the years within the average of the estimated remaining service lives of Equity securities issued by subsidiaries and affiliated companies, projects on their own account. Real estate inventories, including leased assets to the lessee are accounted for in the same manner the employees, and actuarial gains and losses are recognized in which are not consolidated or accounted for using the equity work in process of development, are stated at cost. For this as operating leases. expenses using the declining-balance method over certain years method are stated at moving-average cost. Available-for-sale purpose, the cost includes the purchase cost of land, purchase within the average of the estimated remaining service lives securities with available fair market values are stated at fair market overhead, direct development costs and (in relation to certain (l) Allowance for Doubtful Accounts commencing with the following period. value. Unrealized gains and unrealized losses on these securities are developments by one of the subsidiaries) interest expense. The allowance for doubtful accounts is provided in an amount As a result of the adoption of the new accounting standard, in reported, net of applicable income taxes, as a separate component Revenues from sales are recognized when the titles of properties sufficient to cover probable losses on collection. It consists of the the year ended March 31, 2001, retirement benefit expenses of shareholders’ equity. Realized gains and losses on sale of such sold are transferred to customers. estimated uncollectible amount with respect to identified doubtful increased by ￥38,658 million, operating income increased by securities are computed using moving-average cost. receivables and an amount calculated by applying the percentage of ￥2,561 million and income before income taxes and other items Debt securities with no available fair market value are stated at (i) Property and Equipment actual losses on collection experienced in the past to the remaining decreased by ￥39,122 million compared with what would have amortized cost, net of the amount considered not collectible. Property and equipment except for buildings are recorded at cost receivables. been recorded under the previous accounting standard. Other securities with no available fair market value are stated at and depreciated principally by the declining-balance method using The net transition obligation of the consolidated domestic moving-average cost. standard useful lives prescribed in the Corporation Tax Law. (m) Income Taxes subsidiary referred above, which would be amortized evenly over Effective April 1, 2000, the Company and its consolidated Buildings are principally depreciated using the straight- The Company computes the provision for income taxes based on the 10 years commencing with the year ended March 31, 2001, domestic subsidiaries adopted the new Japanese accounting line method. the pretax income included in the consolidated statement of was changed to be amortized in full in the year ended March 31, standard for financial instruments (“Opinion Concerning operations and recognizes deferred tax assets and liabilities for the 2002. The amortized amount of the net transition obligation was Establishment of Accounting Standard for Financial Instruments” (j) Derivatives and Hedge Accounting expected future tax consequences of temporary differences ￥3,228 million ($24,271 thousand). As a result, operating income issued by the Business Accounting Deliberation Council on The new accounting standard for financial instruments, effective between the financial statement basis and the tax basis of assets increased by ￥324 million ($2,436 thousand) and loss before January 22, 1999). from the year ended March 31, 2001, requires companies to state and liabilities in accordance with the accounting standard for income taxes and other items increased by ￥2,904 million Upon applying this accounting standard, it has been required to derivative financial instruments at fair value and to recognize income taxes effective April 1, 1999. ($21,835 thousand), compared with what would have been examine the intent of holding each security and classify those changes in the fair value as gains or losses unless derivative financial recorded under the previously adopted method. securities as (a) securities held for trading purposes (hereafter, instruments are used for hedging purposes. (n) Severance and Retirement Benefits Allowances for accrued severance indemnities to directors and “trading securities”), (b) debt securities intended to be held to If derivative financial instruments are used as hedges and meet The Company and some of subsidiaries provide two types of post- corporate auditors of the Company and some of the consolidated maturity (hereafter, “held-to-maturity debt securities”), (c) equity certain hedging criteria, the Company and its consolidated employment benefit plans, unfunded lump-sum payment plans and subsidiaries have been set up in accordance with each company’s securities issued by subsidiaries and affiliated companies, and (d) all domestic subsidiaries defer recognition of gains or losses resulting funded non-contributory pension plans, under which all eligible regulations. other securities that are not classified in any of the above from changes in fair value of derivative financial instruments until employees are entitled to benefits based on the level of wages and categories (hereafter, “available-for-sale securities”). the related losses or gains on the hedged items are recognized. salaries at the time of retirement or termination, length of service (o) Allowance for Losses on Restructuring Prior to April 1, 2000, both marketable and investment However, in cases where forward foreign exchange contracts and certain other factors. The Company provided for the estimated amount of losses that securities, which are quoted in stock exchanges, other than are used as hedges and meet certain hedging criteria, forward Effective April 1, 1999, the Company and some consolidated the Company may incur with respect to future restructuring of investments in affiliated companies, are stated at the lower of foreign exchange contracts and hedged items are accounted for in subsidiaries provided 100% instead of 40% of the remaining portion consolidated subsidiaries in the case where such subsidiaries are moving-average cost or quoted market price. Investments in the following manner: of the liability for employees’ retirement benefits, which is not dissolved. affiliated companies are stated using the equity method. Investment covered by the funded pension plans, and other consolidated securities that have no market quotation are carried at moving- (1) If a forward foreign exchange contract is executed to hedge an subsidiaries provided for allowance for employees’ retirement (p) Net Income (Loss) and Cash Dividends per Share average cost, with appropriate write-down if considered necessary. existing foreign currency receivable or payable, benefits at the present value of the estimated future retirement The computation of net income (loss) per share is based on the As a result of adopting the new accounting standard for financial a) the difference, if any, between the Japanese yen amount of the payments less the fair value of the assets of the funded pension plan. weighted-average number of shares of common stock outstanding instruments, income before income taxes and other items hedged foreign currency receivable or payable translated using Effective April 1, 2000, the Company and its consolidated during each year. increased by ¥868 million in the year ended March 31, 2001. Also, the spot rate at the inception date of the contract and the domestic subsidiaries adopted the new accounting standard, The diluted net income per share for the years ended March 31, based on the examination of the intent of holding each security book value of the receivable or payable is recognized in the “Opinion on Setting Accounting Standard for Employees’ 2001 and 2002 was not shown, since the Company had no upon application of the new accounting standard for financial income statement in the period which includes the inception Severance and Pension Benefits,” issued by the Business Accounting securities with dilutive effect to net income per share, such as instruments on April 1, 2000, held-to-maturity debt securities and date, and Deliberation Council on June 16, 1998. Under the new accounting bonds with warrants and convertible bonds. available-for-sale securities maturing within one year from the b) the discount or premium on the contract (that is, the difference standard, the liabilities and expenses for severance and retirement Cash dividends per share shown for each year represent balance sheet date were included in current assets, and other between the Japanese yen amount of the contract translated benefits are determined based on the amounts actuarially dividends declared as applicable to the respective years. securities which amounted to ¥55,270 million were reclassified using the contracted forward rate and that translated using the calculated using certain assumptions. from current assets to investments and other assets. spot rate at the inception date of the contract) is recognized The Company and its consolidated subsidiaries provided (q) Recognizing Appropriations of Retained Earnings over the term of the contract. allowance for employees’ severance and retirement benefits at Consolidated financial statements have not included appropriations (g) Construction Contracts (2) If a forward foreign exchange contract is executed to hedge a year-end based on the estimated amounts of projected benefit of retained earnings approved by the shareholders’ meeting The great majority of short- and long-term construction contracts future transaction denominated in a foreign currency, the future obligation and the fair value of the plan assets at that date. subsequent to the fiscal year but included those approved during are accounted for by the completed-contract method. No profits transaction will be recorded using the contracted forward rate, The excess of the projected benefit obligation over the total of the fiscal year only. or losses, therefore, are recognized before the completion of work. and no gains or losses on the forward foreign exchange the fair value of pension assets as of April 1, 2000 and the liabilities However, certain long-term and large-scale construction contracts contract are recognized. for severance and retirement benefits recorded as of April 1, 2000 (r) Reclassifications are accounted for by the percentage-of-completion method. (the “net transition obligation”) amounted to ￥45,269 million, of Certain reclassifications of the consolidated financial statements in The percentage-of-completion method is applied to Also, if interest rate swap contracts are used as hedge and meet which ￥40,949 million was recognized as an expense as a result of the year ended March 31, 2001 have been made to conform to the with the construction period exceeding 24 months certain hedging criteria, the net amount to be paid or received the contribution of investment securities worth ￥47,871 million to presentation in the year ended March 31, 2002. and the contract amount in excess of ￥5,000 million ($37,594 under the interest rate swap contract is added to or deducted the employee retirement benefit trust in April 2000. The total thousand). from the interest on the assets or liabilities for which the swap remaining net transition obligation excluding net transition Expenditures in connection with uncompleted contracts to be contract was executed. obligation of one of consolidated subsidiaries, amounted to ￥734 charged to the cost of contracts at the time of completion are The effect on the consolidated statement of operations of million and was charged to income in the year ended March 31, included in current assets. These expenditures are not offset adopting the new accounting standard for financial instruments is 2001. The net transition obligation of the consolidated subsidiary against advances received and progress billings on uncompleted shown in Note 2(f ). amounting to ￥3,587 million will be amortized over 10 years contracts, which are instead included in current liabilities. commencing with the year ended March 31, 2001. Prior service

48 TAISEI CORPORATION ANNUAL REPORT 2002 TAISEI CORPORATION ANNUAL REPORT 2002 49 3. Cash and Cash Equivalents (b) Available-for-sale securities: Thousands of Cash and cash equivalents at March 31, 2001 and 2002 consisted of the following: Millions of Yen U.S. Dollars Thousands of Type 2001 2002 2002 Millions of Yen U.S. Dollars Non-listed foreign bonds ¥30,085 ¥13,806 $103,804 2001 2002 2002 Non-listed equity securities Cash ¥ 59,563 ¥114,434 $860,406 (exclusive of OTC registered stocks) 16,623 13,735 103,271 Time deposits 94,178 6,030 45,338 Non-listed preferred equity securities 2,000 7,010 52,707 Less: Time deposits over three months (806) (925) (6,955) Non-listed domestic bonds 905 787 5,917 Total ¥152,935 ¥119,539 $898,789 Money market funds 555 ー� ー� Total ¥50,168 ¥35,338 $265,699 4. Securities (3) Redemption schedule of available-for-sale securities with maturities and held-to-maturity debt securities were as follows: (1) Following tables summarized acquisition costs, book values and fair value of securities with available fair values as of March 31, 2001 and 2002: Millions of Yen (a) Held-to-maturity debt securities: 2001 Thousands of Over one Over five Millions of Yen U.S. Dollars year but years but Within within five within ten Over ten 2001 2002 2002 Type one year years years years Total Securities with available fair values exceeding book values Debt securities: Book value ¥159 ¥118 $887 Government bonds ¥ 566 ¥ 222 ¥56 ¥ー� ¥ 844 Fair value 162 119 895 Corporate bonds 20 64 10,020 ー� 10,104 Difference ¥3 ¥1 $ 8 Others 4,696 11,685 3,501 ー� 19,882 Other securities Other securities ー 173 74 ー 247 Book value ¥7 ¥51 $384 Total ¥5,282 ¥12,144 ¥13,651 ¥ー� ¥31,077 Fair value 7 51 384 Difference ¥ (0) ¥ (0) $ (0) Millions of Yen (b) Available-for-sale securities: 2002 Securities with book values exceeding acquisition costs Over one Over five year but years but Millions of Yen Thousands of U.S. Dollars Within within five within ten Over ten 2001 2002 2002 Type one year years years years Total Acquisition Book Acquisition Book Acquisition Book Debt securities: Type cost value Difference cost value Difference cost value Difference Government bonds ¥ 178 ¥81 ¥56 ¥ー ¥ 315 Equity securities ¥95,109 ¥172,450 ¥77,341 ¥93,028 ¥134,726 ¥41,698 $699,458 $1,012,977 $313,519 Corporate bonds 20 40 10,015 3 10,078 Bonds 741 762 21 108 120 12 812 902 90 Others 7,725 5,058 1,785 ー� 14,568 Others 400 404 4 1,015 1,085 70 7,632 8,159 527 Other securities ー� 321 ー� 22 343 Total ¥96,250 ¥173,616 ¥77,366 ¥94,151 ¥135,931 ¥41,780 $707,902 $1,022,038 $314,136 Total ¥7,923 ¥5,500 ¥11,856 ¥25 ¥25,304

Other securities

Millions of Yen Thousands of U.S. Dollars Thousands of U.S. Dollars 2001 2002 2002 2002 Over one Over five Acquisition Book Acquisition Book Acquisition Book year but years but Type cost value Difference cost value Differencecost value Difference Within within five within ten Over ten Type one year years years years Total Equity securities ¥19,778 ¥15,799 ¥(3,979) ¥25,300 ¥18,387 ¥(6,913) $190,225 $138,248 $(51,977) Bonds 20 20 (0) 121 104 (17) 910 782 (128) Debt securities: Others 855 741 (113) 1,104 1,022 (82) 8,301 7,684 (617) Government bonds $ 1,338 $ 608 $ 421 $ ー $ 2,367 Total ¥20,653 ¥16,560 ¥(4,092) ¥26,525 ¥19,513 ¥(7,012) $199,436 $146,714 $(52,722) Corporate bonds 150 301 75,301 23 75,775 Others 58,083 38,030 13,421 ー� 109,534 Other securities ー� 2,414 ー� 165 2,579 (2) Following tables summarized book values of securities with no available fair values as of March 31, 2001 and 2002: Total $59,571 $41,353 $89,143 $188 $190,255 (a) Held-to-maturity debt securities: Thousands of Millions of Yen U.S. Dollars Type 2001 2002 2002 Non-listed domestic corporate bonds ¥10,000 ¥10,000 $75,188

50 TAISEI CORPORATION ANNUAL REPORT 2002 TAISEI CORPORATION ANNUAL REPORT 2002 51 (4) Total sales of available-for-sale securities sold and the related (5) In April 2000, the Company contributed, receiving no cash, Long-term debt at March 31, 2001 and 2002 were as follows: gains and losses for the years ended March 31, 2001 and 2002 certain investment securities to its employee retirement benefit Thousands of were as follows: trust as explained in Note 2(n) and 8. The market value of the Millions of Yen U.S. Dollars contributed securities at the time of contribution was ￥47,871 2001 2002 2002 Thousands of million. Upon contribution of these securities, a “gain on securities Millions of Yen U.S. Dollars Bonds and notes: contributed to employee retirement benefit trust” amounting to 2001 2002 2002 Issues by the Company: ￥32,998 million was recognized. 3.15% yen bonds due 2004 ¥ 10,000 ¥ 10,000 $ 75,188 Total sales of available-for- Floating rate yen notes due 2002 5,000 5,000 37,594 sale securities sold ¥33,650 ¥24,937 $187,496 Fixed rate step-up yen notes due 2006 (with a call option exercisable in 2002) 4,000 ー� ー� Gain on sale of available- 3.05% yen bonds due 2003 10,000 10,000 75,188 for-sale securities 10,724 6,594 49,579 2.7% yen bonds due 2001 10,000 ー� ー� Loss on sale of available-for- 2.0% yen bonds due 2002 10,000 10,000 75,188 sale securities 421 1,332 10,015 2.04% yen bonds due 2003 5,000 5,000 37,594 1.8% yen bonds due 2002 5,000 5,000 37,594 2.55% yen bonds due 2009 10,000 10,000 75,188 5. Pledged Assets 2.0% yen bonds due 2002 10,000 10,000 75,188 The following assets were pledged principally as collateral for short-term borrowings, long-term debt, guarantee deposits received or 2.52% yen bonds due 2001 5,000 ー� ー� guarantees (such as guarantees for the completion of construction contracts) at March 31, 2001 and 2002: 3.0% yen bonds due 2002 5,000 ー� ー� 30,000 225,563 Thousands of 2.3% yen bonds due 2002 30,000 Millions of Yen U.S. Dollars 2.2% yen bonds due 2004 10,000 10,000 75,188 2001 2002 2002 2.0% yen bonds due 2004 20,000 20,000 150,376 10,000 75,188 Time deposits ¥ 108 ¥67 $ 504 1.2% yen bonds due 2004 ー Trade receivables 601 ー� ー� Issues by subsidiaries: 5,450 Inventories: Real estate development 2,302 2,068 15,549 1.7% convertible bonds due 2002 ー� ー� 1,000 7,519 Other current assets 245 173 1,301 1.3% yen bonds due 2007 ー 19,902 11,873 89,271 Land 50,977 30,177 226,894 Other fixed and floating rate bonds due 2001–2006 Buildings and structures (net of accumulated depreciation) 22,753 18,520 139,248 Loans, principally from banks and insurance companies: 7,872 11,795 88,684 Investment securities 595 233 1,752 Secured loans 278,647 291,068 2,188,481 Total ¥77,581 ¥51,238 $385,248 Unsecured loans 460,871 450,736 3,388,992 Amount due within one year (99,020) (133,710) (1,005,338) 6. Short-term Borrowings and Long-term Debt Total long-term debt (due after one year) ¥ 361,851 ¥ 317,026 $ 2,383,654 Short-term borrowings at March 31, 2001 and 2002 mainly Short-term borrowings at March 31, 2001 and 2002 included Although the fixed rate step-up yen notes due 2006 were Long-term loans at March 31, 2001 and 2002 were principally consisted of short-term notes and overdrafts from banks. The commercial paper in the amounts of ￥20,000 million and ￥21,100 redeemable only in whole at par, the Company has exercised the weighted average interest rates of short-term borrowings at March million ($158,647 thousand), respectively. The weighted average from banks and insurance companies. The weighted average right of redemption of repayment on March 20, 2002 by giving 31, 2001 and 2002 were 1.3% and 0.9% per annum, respectively. interest rates of commercial paper at March 31, 2001 and 2002 interest of loans at March 31, 2001 and 2002 were 2.1% and 1.7% notice to the holders. The Company and its consolidated subsidiaries have had no were 0.7% and 1.0% per annum, respectively. per annum, respectively. difficulty in renewing such notes and overdraft facility agreements, The 1.7% convertible bonds due March 29, 2002 were when they considered such renewal advisable. redeemable in whole or in part at the option of one of the The aggregate annual maturities of long-term debt (including subsidiaries at prices ranging from 103% to 100% of the principal current portion) at March 31, 2002 were summarized as follows: amount after April 1, 1998, or were convertible into shares of Thousands of common stock of that subsidiary at the option of the holders at Year ending March 31, Millions of Yen U.S. Dollars prices provided in the indenture under which the bonds were ¥133,710 $1,005,338 issued. The bonds outstanding at March 31, 2001 were convertible 2003 into 4,874,776 shares of common stock of that subsidiary at the 2004 119,620 899,398 conversion price of ￥1,118 per share. 2005 94,574 711,083 The overseas subsidiaries issued bonds due 2001–2006, partly at 2006 55,358 416,226 fixed interest rates and partly at interest rates linked to the 2007 25,835 194,248 actual LIBOR. 2008 and thereafter 21,639 162,699 Total ¥450,736 $3,388,992

52 TAISEI CORPORATION ANNUAL REPORT 2002 TAISEI CORPORATION ANNUAL REPORT 2002 53 7. Income Taxes 8. Employees’ Severance and Retirement Benefits Taxes on income consist of corporation, enterprise and inhabitants The following table summarized the significant differences between As explained in Note 2(n), effective April 1, 2000, the Company Included in the consolidated statement of operations for the years taxes. The statutory tax rates to calculate tax effect were 40.9% for the statutory tax rate and the Company’s effective tax rate for and its consolidated domestic subsidiaries adopted the new ended March 31, 2001 and 2002, severance and retirement benefit the year ended March 31, 2001 and 2002. Differences between financial statement purposes for the year ended March 31, 2001: accounting standard for employees’ severance and retirement expenses comprised of the following: the actual effective tax rate and the statutory tax rate are 2001 benefits, under which the liabilities and expenses for severance and Thousands of attributable primarily to (1) intercompany dividends eliminated in Statutory tax rate 40.9% retirement benefits are determined based on the amounts Millions of Yen U.S. Dollars consolidation, (2) operating losses of certain subsidiaries for which Permanent differences: obtained by actuarial calculations. 2001 2002 2002 deferred tax benefits have not been recognized and (3) expenses Non-deductible expenses 16.8 not deductible for tax purposes. The liabilities for severance and retirement benefits included in the Service costs—benefits earned Non-taxable income (3.5) liability section of the consolidated balance sheets as of March 31, during the year ¥ 8,037 ¥ 7,273 $ 54,684 Per capita inhabitant tax 3.0 2001 and 2002 consisted of the following: Interest cost on projected Net operating loss carryforwards of subsidiaries 1.0 Thousands of benefit obligation 6,058 5,984 44,992 Unrecognized tax effect against unrealized gains 2.4 Millions of Yen U.S. Dollars Expected return on plan assets (2,509) (2,350) (17,669) Others (0.8) 2001 2002 2002 Amortization of actuarial differences (15) 5,380 40,451 Effective tax rate 59.8% Amortization of net transition Projected benefit obligation ¥(201,177) ¥(201,149) $(1,512,398) obligation 42,042 3,228 24,271 The information of significant differences between the statutory tax Unrecognized actuarial differences 22,819 33,750 253,759 Special retirement benefits and rate and the Company’s effective tax rate for the year ended Less: Fair value of pension assets 111,549 100,299 754,128 others 5,644 4,369 32,850 March 31, 2002 was not shown due to loss before income taxes Unrecognized net transition � � and other items. Severance and retirement obligation 3,228 ー� ー� benefit expenses ¥59,257 ¥23,884 $179,579 Prepaid pension expense ー (4) (30) Significant components of deferred income taxes at March 31, 2001 and 2002 were as follows: Employees’ severance and The discount rate and the rate of expected return on plan assets Thousands of retirement benefits ¥ (63,581) ¥ (67,104) $ (504,541) Millions of Yen U.S. Dollars used by the Company and its consolidated domestic subsidiaries 2001 2002 2002 were 3.0% and 0.0% to 4.5%, respectively for the years ended March 31, 2001 and 2002. The estimated amount of all retirement Deferred income tax assets: benefits to be paid at the future retirement date was allocated Disallowed portion of expenses and losses: equally to each service year using the estimated number of total Inventories ¥ 43,810 ¥061,547 $0,462,759 service years. Actuarial gains and losses were recognized using Bad debt expenses and allowance for doubtful accounts 27,876 19,225 144,549 mainly the declining-balance method over 1 to 10 years. Retirement benefits 37,440 39,652 298,135 As explained in notes 2(n), the net transition obligation of a Allowance for loss on restructuring 8,212 6,198 46,602 consolidated domestic subsidiary, which would be amortized Investment securities ー 2,733 20,549 evenly over the 10 years commencing with the year ended March Accrued bonus 3,584 4,153 31,226 31, 2001, was changed to be amortized in full in the year ended Other 7,033 9,510 71,504 March 31, 2002. Tax loss carryforward 39,738 35,298 265,398 Unrealized profits 26,841 22,339 167,962 9. Shareholders’ Equity Sub-total 194,534 200,655 1,508,684 Effective October 1, 2001, the Commercial Code of Japan (the Legal reserve and additional paid-in capital may be used to Valuation allowance (32,564) (27,444) (206,346) “Code”) was revised significantly and stock with stated value was eliminate or reduce a deficit by resolution of the shareholders’ Total 161,970 173,211 1,302,338 abolished. Under the Code, certain amounts of retained earnings meeting or may be capitalized by resolution of the Board of Deferred income tax liabilities: equal to at least 10% of cash dividends and bonuses to directors Directors. On condition that the total amount of legal reserve and Net unrealized holding gains on securities (30,069) (14,223) (106,940) and corporate auditors should be set aside as a legal reserve until additional paid-in capital remains being equal to or exceeding 25% Gains on securities contribution to employee retirement benefit trust (13,496) (13,496) (101,474) the total of legal reserve and paid-in capital equals to 25% of of common stock, they are available for distribution by the Reserve for tax deferment on replacement of assets (2,624) (2,345) (17,631) common stock. Before the revision, bonuses to directors and resolution of shareholders’ meeting. Special depreciation reserve (45) (203) (1,526) corporate auditors had to be set aside until a legal reserve reaches The maximum amount that the company can distribute as Other ー (2) (15) 25% of common stock. dividends is calculated based on the unconsolidated financial Total (46,234) (30,269) (227,586) statements of the Company in accordance with the Code. Net total ¥115,736 ¥142,942 $1,074,752

Deferred tax liabilities amounting to ￥456 million and ￥254 million ($1,910 thousand) were included in other non-current liabilities in the consolidated balance sheets at March 31, 2001 and 2002, respectively. In addition to the deferred income taxes shown above, deferred tax assets and deferred tax liabilities concerning to the revaluation of land, which were amounted to ￥2,153 million ($16,188 thousand) and ￥1,684 million ($12,662 thousand), respectively, were stated in the consolidated balance sheets as of March 31, 2002.

54 TAISEI CORPORATION ANNUAL REPORT 2002 TAISEI CORPORATION ANNUAL REPORT 2002 55 10. Lease Transactions (2) Market Value of Derivative Transactions (1) Lessee Interest Rate-Related Derivatives: Assumed data concerning to the acquisition cost, accumulated depreciation and book value of the leased assets under the finance leases which were accounted for in the same manner as operating leases at March 31, 2001 and 2002, inclusive of interest, were summarized as follows: 2001 Millions of Yen Millions of Yen 2001 2002 Contract amount Acquisition Accumulated Acquisition Accumulated cost depreciation Book value cost depreciation Book value Due after Market Unrealized Unlisted transactions Total one year value gain (loss) Buildings ¥ 3,789 ¥2,242 ¥1,547 ¥04,892 ¥2,229 ¥2,663 Interest rate options: Machinery and equipment 6,336 3,290 3,046 5,723 2,647 3,076 Rate caps: Other assets 42 28 14 42 37 5 Contracts to buy ¥ 82,700 ¥ 30,000 ¥1 ¥ (473) Total ¥10,167 ¥5,560 ¥4,607 ¥10,657 ¥4,913 ¥5,744 Contracts to sell 3,139 3,139 (124) 122

Thousands of U.S. Dollars Interest rate swaps: 2002 Receive fix/Pay float 69,000 49,000 3,318 3,346 Purchase price Accumulated Book value Receive float/Pay fix 96,300 46,300 (2,691) (2,627) equivalent depreciation equivalent equivalent Receive float/Pay float 10,000 10,000 84 84 Buildings $36,782 $16,760 $20,022 Total ¥261,139 ¥138,439 ¥ 588 ¥ 452 Machinery and equipment 43,030 19,902 23,128 Other assets 316 278 38 2002 Total $80,128 $36,940 $43,188 Millions of Yen Future lease payments at March 31, 2001 and 2002, inclusive of Lease expenses (assumed data as to depreciation of the leased assets) interest, under such leases were as follows: for the years ended March 31, 2001 and 2002 were as follows: Contract amount Due after Market Unrealized Thousands of Thousands of Unlisted transactions Total one year value gain (loss) Millions of Yen U.S. Dollars Millions of Yen U.S. Dollars Interest rate options: 2001 2002 2002 2001 2002 2002 Rate caps: Due within one year ¥1,720 ¥1,867 $14,038 Lease payments Contracts to buy ¥030,000 ¥ ー ¥ ー ¥0,(196) Due after one year 2,887 3,877 29,150 (assumed depreciation) ¥2,267 ¥2,219 $16,684 Contracts to sell 3,342 ー� (54) (54) Total ¥4,607 ¥5,744 $43,188 Assumed depreciation was calculated by the straight-line method Interest rate swaps: over the lease period, assuming estimated residual value to be zero. Receive fix/Pay float 45,000 35,000 2,759 2,788 (2) Lessor Receive float/Pay fix 38,000 25,000 (2,096) (2,032) Lease revenues and depreciation for the years ended March 31, 2001 and 2002 were as follows: Receive float/Pay float 10,000 5,000 39 39 Total ¥126,342 ¥65,000 ¥(0,648 ¥(0,545 Thousands of Millions of Yen U.S. Dollars 2001 2002 2002 2002 Lease revenues ¥52 ¥ー $ー Thousands of U.S. Dollars Depreciation ¥43 ¥ー� $ー� Contract amount Due after Market Unrealized Unlisted transactions Total one year value gain (loss) 11. Derivative Transactions Interest rate options: Rate caps: Derivative transactions of the Company and its consolidated subsidiaries at March 31, 2001 and 2002 were as follows: Contracts to buy $225,564 $ ー $ ー $0(1,474) (1) Status of Derivative Transactions of fluctuation of foreign currency exchange rates with respect to Contracts to sell 25,128 ー� (406) (406) The Company and its consolidated subsidiaries utilize interest rate foreign currency receivables from the sale of their products and swaps and interest rate options to mitigate fluctuation risk in interest rate increases with respect to borrowings, within the Interest rate swaps: interest rates or to reduce financing costs. They also enter into amounts of foreign currency borrowings or receivables. Receive fix/Pay float 338,346 263,158 20,744 20,962 forward foreign exchange contracts to hedge foreign exchange risk. The derivative transactions are executed and managed by their Receive float/Pay fix 285,714 187,970 (15,759) (15,278) Their derivative positions related to interest rate swaps, interest Finance Department in accordance with the established policies Receive float/Pay float 75,188 37,594 293 294 rate options and forward foreign exchange contracts are exposed and within the specified limits on the amounts of derivative Total $949,940 $488,722 $(04,872 $(04,098 to the fluctuation of market interest rates and foreign exchange transactions allowed. The Manager of the Finance Department rates. They trade derivative transactions solely with internationally reports information on derivative transactions to the Board of Notes 1: Market value is estimated based on actual cost and other terms in connection with each derivative transaction, or marked to recognized, highly rated financial institutions and therefore Directors on certain periodic basis. market by the originating dealer. consider there is little risk of default by counterparties. The Company and its consolidated subsidiaries evaluate hedge 2: Derivative transactions which were accounted for by hedge accounting were excluded. The Company and its consolidated subsidiaries use forward effectiveness semi-annually by comparing the cumulative changes in 3: Set forth below indicates a notional amount of interest rate swaps, for which complete offsetting positions have been created in foreign currency contracts and interest rate swaps as derivative cash flows from or the changes in fair value of hedged items and order for relevant positions to be effectively immunized from market risks related to interest rate fluctuation: financial instruments only for the purpose of mitigating future risks the corresponding changes in the hedging derivative instruments. As at March 31, 2001 ￥90,000 million As at March 31, 2002 ￥50,000 million ($375,940 thousand)

56 TAISEI CORPORATION ANNUAL REPORT 2002 TAISEI CORPORATION ANNUAL REPORT 2002 57 12. Segment Information Notes 1. The types of business above are based upon the Standard The effect of these changes to the consolidated financial The Company and its consolidated subsidiaries are primarily engaged in the following three major industry segments: Industrial Classification in Japan and net sales categories in the statements for the year ended March 31, 2001, was decreases in Construction Building construction, civil engineering and housing construction, etc. consolidated statements of operations. costs and expenses of construction and real estate by ￥2,276 Real estate Resale and rental of land, houses and buildings, etc. 2. Through the years ended March 31, 2000, such assets consisted million and ￥42 million, respectively, increase in those of other Other business Financing and leasing, etc. mainly of investments by the Company in liquid financial assets by ￥2 million, increase in operating income of construction and (e.g., cash, time deposits and marketable securities) and real estate by ￥2,276 million and ￥42 million, respectively, and Information by industry segment for the years ended March 31, 2001 and 2002 were summarized as follows: translation adjustment were not allocated to the business decrease in those of other by ￥2 million. 2001 segments. 4. As explained in note 2(n), the net transition obligation of a certain Millions of Yen Effective in the year ended March 31, 2001, such assets were subsidiary, which would be amortized evenly over 10 years Elimination also allocated to each of the business segments. This change was commencing with the year ended March 31, 2001, was changed and/or Construction Real estate Other corporate Consolidated made in order to disclose segment information more accurately, to be amortized in full in the year ended March 31, 2002. I. Sales and operating income based on the review of various changes in accounting treatments The effect of this change was decreases in the costs and Net sales: of such assets caused by adoption of the new accounting expenses of construction and real estate by ￥321 million Customers ¥1,541,306 ¥117,397 ¥ 91,689 ¥ ー ¥1,750,392 standard for financial instruments and revised accounting ($2,414 thousand) and ￥3 million ($23 thousand), respectively, Intersegment 24,404 1,966 7,086 (33,456) ー standards for foreign currency translation. and increases in operating income of construction and real Total 1,565,710 119,363 98,775 (33,456) 1,750,392 The effect of this change to the consolidated financial estate by ￥321 million ($2,414 thousand) and ￥3 million ($23 statements for the year ended March 31, 2001 was increases in thousand), respectively. Costs and expenses 1,511,290 107,880 98,231 (33,756) 1,683,645 the assets of construction segment, real estate segment and 5. Information by geographic area for the years ended March 31, Operating income ¥ 54,420 ¥ 11,483 ¥ 544 ¥ 300 ¥ 66,747 other segment by ￥79,096 million, ￥1,709 million and ￥570 2001 and 2002, was not shown since aggregate sales of overseas II. Identifiable assets, depreciation expense million, respectively. subsidiaries were less than 10% of total net sales of all segments and capital expenditures 3. Also, as explained in Notes 2(d), 2(f), 2(j) and 2(n), effective from and aggregate assets of overseas subsidiaries were less than 10% Identifiable assets ¥1,567,826 ¥509,034 ¥133,984 ¥(21,494) ¥2,189,350 the year ended March 31, 2001, the Company and its of total assets of all segments. Depreciation expense 8,420 3,022 2,367 ー 13,809 consolidated domestic subsidiaries adopted new Japanese 6. Overseas sales for the years ended March 31, 2001 and 2002, Capital expenditures 10,668 7,879 961 (11) 19,497 accounting standards for foreign currency translation, financial were not shown since overseas sales were less than 10% of the instruments and employees’ severance and retirement benefits. Company’s consolidated net sales. 2002 Millions of Yen 13. Contingent Liabilities Elimination At March 31, 2002, the Company and its consolidated subsidiaries for endorsed trade notes receivable amounted to 249 million and/or ￥ Construction Real estate Other corporate Consolidated were contingently liable as guarantors for loans of affiliated ($1,872 thousand). In case there are other guarantors beside the I. Sales and operating income companies, employees and others in the amount of ￥14,181 million Company and its consolidated subsidiaries, the amount of their share Net sales: ($106,624 thousand). Also, Contingent liability at March 31, 2002 of the contingent liabilities resulting from the guarantees is stated. Customers ¥1,488,297 ¥094,519 ¥091,018 ¥ ー ¥1,673,834 Intersegment 20,499 1,370 6,112 (27,981) ー� 14. Revaluation Reserve for Land Total 1,508,796 95,889 97,130 (27,981) 1,673,834 In the year ended March 31, 2002, certain consolidated domestic Also, the revaluation was executed in accordance with the method Costs and expenses 1,465,272 86,379 95,548 (28,891) 1,618,308 subsidiaries executed revaluation of their land owned for business prescribed in the Article 2, Items 3, 4 and 5 of the Law on Operating income ¥0,043,524 ¥009,510 ¥001,582 ¥(00,910 ¥0,055,526 in accordance with the Law Concerning Revaluation of Land November 30, 2001 and March 31, 2002. II. Identifiable assets, depreciation expense (the “Law”). and capital expenditures As a result of this revaluation, deferred income taxes concerning The book values before and after revaluation were as follows: Identifiable assets ¥1,427,603 ¥440,107 ¥108,429 ¥(10,055) ¥1,966,084 to the differences between the amounts after revaluation and the Millions of Yen Thousands of U.S. Dollars Depreciation expense 7,927 2,465 2,235 ー� 12,627 book values before revaluation were stated in the assets and Book value Book value Book value Book value liabilities in the consolidated balance sheets. And the differences Executed date of before after before after Capital expenditures 9,583 1,491 1,086 ー� 12,160 revaluation revaluation revaluation revaluation between these amounts, net of taxes, were stated as “Revaluation Revaluation reserve for land” in the shareholders’ equity. November 30, 2001 ¥45,259 ¥39,360 $340,293 $295,940 2002 March 31, 2002 49,753 54,648 374,083 410,887 Thousands of U.S. Dollars One of consolidated subsidiaries, which was merged with another Elimination and/or consolidated subsidiary on December 1, 2001, executed the Construction Real estate Other corporate Consolidated revaluation on November 30, 2001. I. Sales and operating income Net sales: Customers $11,190,203 $0,710,669 $684,346 $ ー $12,585,218 15. Research and Development Expenses Intersegment 154,128 10,301 45,955 (210,384) ー� Research and development expenses, which were included in thousand) for the years ended March 31, 2001 and 2002, Total 11,344,331 720,970 730,301 (210,384) 12,585,218 selling, general and administrative expenses and costs of sales, respectively. Costs and expenses 11,017,083 649,466 718,406 (217,226) 12,167,729 amounted to ￥10,012 million and ￥9,912 million ($74,526 Operating income $00,327,248 $0,071,504 $011,895 $(006,842 $00,417,489 II. Identifiable assets, depreciation expense 16. Subsequent Event and capital expenditures The following appropriations of retained earnings at March 31, Thousands of Identifiable assets $10,733,857 $3,309,075 $815,256 $0(75,602) $14,782,586 2002 were approved at the annual meeting of the Company’s Millions of Yen U.S. Dollars Depreciation expense 59,602 18,534 16,804 ー� 94,940 shareholders held on June 27, 2002. Cash dividends, ¥2.5 ($0.02) Capital expenditures 72,053 11,211 8,165 ー� 91,429 per share ¥2,412 $18,135

58 TAISEI CORPORATION ANNUAL REPORT 2002 TAISEI CORPORATION ANNUAL REPORT 2002 59 Financial Section Directors and Executive Officers Report of Independent Public Accountants Corporate Auditors

To the Board of Directors of Taisei Corporation: Chairman President and Chief Executive Officer Yukio Kobayashi Kanji Hayama General Manager, Marketing & Sales (Building Osamu Hirashima Construction) Division III We have audited the accompanying consolidated balance sheets of Taisei Corporation (a Japanese corporation) and consolidated Senior Executive Vice Presidents Keiichiro Jozaki subsidiaries as of March 31, 2001 and 2002 and the related consolidated statements of operations, shareholders’ equity and cash flows for Deputy General Manager, Business Administration Division President and Representative Director Masaichi Hayakawa and Deputy General Manager, Corporate Planning Office the years then ended, expressed in Japanese yen. Our audits were made in accordance with generally accepted auditing standards in Japan In charge of Marketing & Sales Kanji Hayama Fumio Ikawa and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the Hiroshi Ushioda Deputy General Manager, Architecture & Engineering circumstances. General Manager, Corporate Planning Office Division and Deputy General Manager, Corporate Planning In our opinion, the consolidated financial statements referred to above present fairly the consolidated financial position of Taisei Director Hiromitsu Office Corporation and consolidated subsidiaries as of March 31, 2001 and 2002 and the consolidated results of their operations and their cash General Manager, Marketing & Sales (Building Koutarou Okazaki Masaichi Hayakawa Construction) Division (Integrated) General Manager, Nagoya Branch flows for the years then ended in conformity with accounting principles generally accepted in Japan (Note 1) applied on a consistent basis, Masami Ichikawa Takashi Yamauchi except as noted in the following paragraph. General Manager, Civil Engineering Division General Manager, Architecture & Engineering Division As explained in Notes 2(d), 2(f), 2(j) and 2(n) in the year ended March 31, 2001, the Company and consolidated subsidiaries adopted Representative Directors Executive Vice Presidents Vice Presidents new Japanese accounting standards for foreign currency translation, financial instruments and employees’ retirement benefits. Also in the Hiroshi Ushioda Yasuyuki Hirota Kunio Funatsu year ended March 31, 2001, the Company and consolidated subsidiaries changed the method for allocating assets to segments as referred Hiromitsu Honda In charge of Marketing & Sales Deputy General Manager, Marketing & Sales (Building to in Note 12, and in the year ended March 31, 2002, one of consolidated domestic subsidiaries changed its accounting method for Yuji Ohbayashi Construction) Division amortization of the net transition obligation as referred to in Notes 2(n) and 12, with which we concur. In charge of Marketing & Sales Shizuo Hayashi Directors Tadao Ikeda Deputy General Manager, Marketing & Sales (Civil Also, in our opinion, the U.S. dollar amounts in the accompanying consolidated financial statements have been translated from Japanese Engineering) Division yen on the basis set forth in Note 1. Masami Ichikawa Resident in Nagoya Makoto Nakagawa Katsuhiko Ogura General Manager, Hokushinetsu Branch Hiroshi Tamaru In charge of Marketing & Sales Nobuhiko Tsuruta Hiroshi Tamaru Shigenori Kawanishi Incharge of International Division General Manager, Tokyo Branch and In charge of Kunihiko Nambu Marketing & Sales Hitoshi Terashita Seiki Koda Nobuhiko Tsuruta General Manager, Shikoku Branch General Manager, Architecture & Engineering Masaru Kamata Kouji Okumura Division (Integrated), and In charge of Marketing & Sales General Manager, Chiba Branch Hiromichi Hagiwara Kunihiko Nambu Yasuyuki Nakayama General Manager, International Division In charge of Marketing & Sales Seiki Koda Masaya Segawa Senior Corporate Auditors General Manager, Business Administration Division In charge of Marketing & Sales Yoshishige Ito Mikio Ito Mitsuo Nakatsumi Deputy General Manager, Marketing & Sales (Building General Manager, Secretarial Department Toshio Akahori Construction) Division (Integrated) Tadakatsu Kyuma Kunio Yokozawa General Manager, Kyushu Branch General Manager, Design & Proposal Division Corporate Auditors Hiroaki Hibino Mitsuo Masuda Deputy General Manager, Marketing & Sales (Building Takeshi Kuwahara Deputy General Manager, Marketing & Sales (Civil Construction) Division Engineering) Division Morimasa Taniguchi Isao Komai Senior Vice Presidents Deputy General Manager, Marketing & Sales (Building Hideaki Saeki Construction) Division Shigeo Takeoka Hiroshi Mitsuoka General Manager, Safety Administration & Environmental General Manager, Yokohama Branch Division Kouji Okumura Saisuke Kani Deputy General Manager, Design & Proposal Division and Tokyo, Japan General Manager, Housing Division June 27, 2002 General Manager, Operation Planning Department Toru Kobayashi Masashi Kobayashi General Manager, Tohoku Branch General Manager, Sapporo Branch Tsuyoshi Tsujii Atsushi Okamoto General Manager, Taisei Technology Center Deputy General Manager, Business Administration Division Hiroshi Yamada and General Manager, Personnel Department General Manager, Marketing & Sales (Building Tadatoshi Fujisaki Construction) Division II Deputy General Manager, Kansai Branch Hiroyasu Takuma Yoshihiro Fujiwara General Manager, Urban Development Division and In Deputy General Manager, Urban Development Division and charge of Property Administration General Manager, Asset Management Department Yasuto Kikuoka Hiroshi Kubo In charge of Marketing & Sales General Manager, Branch Kenji Miyake Hiroyuki Kimura General Manager, Mechanical & Electrical Division Deputy General Manager, Marketing & Sales (Civil Kuniyuki Sonoda Engineering) Division and Deputy General Manager, Civil General Manager, Marketing & Sales (Building Engineering Division ( in charge of Design) and Deputy Construction) Division I General Manager, Corporate Planning Office Hiromichi Ujihara General Manager, Kansai Branch Hiromichi Hagiwara General Manager, Engineering Division and General Manager, Ecology Division

(As of July 1, 2002)

60 TAISEI CORPORATION ANNUAL REPORT 2002 TAISEI CORPORATION ANNUAL REPORT 2002 61 Organization Corporate Data

continued from the left

Secretarial Dept. Name: Taisei Corporation Head Office: 1-25-1, Nishi-Shinjuku, Shinjuku-ku, Environment Dept. Established: 1873 Tokyo 163-0606 Engineering Div. Engineering Planning Dept. Corporate Planning Dept. Paid-in Capital: ¥94,348 million Phone: +81-3-3348-1111 Nuclear Facilities Dept. Public Relations Dept. Corporate Planning Office Group Authorized Shares: 1,145,000,000 shares Fax: +81-3-3345-0481 Information Planning Dept. Ecology Div. Group Shares Issued: 964,802,821 shares Domestic Offices: Tokyo, Kansai, Nagoya, Kyushu, Sapporo, Auditing Dept. Tohoku, Hiroshima, Yokohama, Hokushin-etsu, Number of Shareholders: 121,222 Technology Management Dept. Shikoku, Chiba, Kanto, , , Kawasaki Personnel Dept. Building Construction Dept. Number of Employees: 10,404 General Affairs Dept. Procurement Dept. General Meeting of The General Meeting of Shareholders Overseas Offices: Taipei, U.S.A., Hawaii, London, Hong Kong, Property Administration Dept. Building Construction Div. Partnership Dept. Shareholders: is held within three months of the Singapore, Kuala Lumpur, , Baghdad, Business Administration Div. Legal Dept. Technology Promotion Dept. day immediately following the day on Seoul, Shanghai, The Philippines, , which the accounts are closed. Vietnam, , Phnom Penh, Beijing, Accounting Dept. Engineering Planning & Proposal Dept. , Finance Dept. Project Planning & Cost Control Dept. Transfer Agent: Mizuho Trust & Banking Co., Ltd. (Condominium Project) Subsidiaries & Affiliates Dept. Estimate Dept. (As of March 31, 2002) Safety Administration Dept. Building Renovation Safety Administration & Building Renovation Technology Dept. Environment Div. Technology Div . Division (Integrated) Seismic Technology Environmental Management Dept. Promotion Dept.

Architecture & Engineering Principal Subsidiaries and Affiliates Mechanical & Electrical Div. Mechanical & Electrical Dept. Technology Planning Dept. Taisei Technology Center Intellectual Property Dept. Operations Planning Dept. COMPANY LOCATION PAID-IN CAPITAL MAJOR BUSINESSES EQUITY OWNERSHIP President Building Engineering Research Design & Proposal Div. Administration Dept. Subsidiaries Institute Group Civil Engineering Research Institute Yuraku Real Estate Co., Ltd. Tokyo, Japan ¥12,264 million Real estate sales and insurance 57.0%*1 Civil Engineering Dept. Civil Engineering Technology Taisei Rotec Corporation Tokyo, Japan ¥11,305 million Road construction and 55.1% Development Dept. Construction Engineering Dept. construction material sales Civil Engineering Div. Machinery Dept. Administration Dept. Taisei U-Lec Co., Ltd. Tokyo, Japan ¥ 7,280 million Housing construction and 61.8% Design Dept. real estate sales Planning & Business Information Dept. International Dept. Customer Satisfaction Dept. Seiwa Kiko Co., Ltd. Tokyo, Japan ¥ 300 million Construction 100% Administration Dept. Taisei Setsubi Co., Ltd. Tokyo, Japan ¥ 625 million Servicing of air-conditioning, plumbing 95.8% Marketing & Sales Marketing & Sales Dept. Marketing & Sales and electric installations (Building Construction) Div. I Housing Div. Promotion Dept. Shirakawa Kogen Development Fukushima, Japan ¥ 50 million Golf course management 100% Product Development Dept. Co., Ltd. Marketing & Sales Marketing & Sales Dept. (Building Construction) Div. II Construction Dept. Taisei Tourist Agency Ltd. Tokyo, Japan ¥ 80 million Tour agent and insurance 100%*1 Quality Assurance & Control Dept. (Integrated) Marketing & Sales Marketing & Sales Dept. Taisei Service Co., Ltd. Tokyo, Japan ¥ 100 million Real estate management and security 100%

Marketing & Sales (Building Construction) Div. III Administration Dept. Keiyo Resort Development Co., Ltd. Chiba, Japan ¥ 3,000 million Hotel management 78.0% Planning & Management Dept. Safety Administration & *1 Project Development Dept. Machinery Dept. Yuraku Real Estate Sales Co., Ltd. Tokyo, Japan ¥ 1,800 million Real estate brokerage and sales 100% (Building Construction) Division Urban Redevelopment Dept. Branch Marketing & Sales Dept. Taisei Kensetsu Housing Co., Ltd. Tokyo, Japan ¥ 450 million Housing construction 100% Urban Development Div. Facility Management Promotion Dept. Building Construction Dept. Taisei Europe Ltd. London, STG£ 2 million Construction 100% Asset Management Dept. Design & Proposal Dept. United Kingdom Tenant Leasing Dept. Civil Engineering Dept. Taisei Properties (Hong Kong) Ltd. Hong Kong, China HK$ 18 million Real estate sales 100%

Development Consulting Dept. Administration Dept. Marketing & Business Affiliates International Div. Development Dept. Planning Dept. Building Construction & Taisei Philippine Construction, Inc. Makati City, P 12.5 million Construction 40.0% Marketing & Sales Philippines (Civil Engineering) Div. Administration Dept. Engineering Dept. Marketing & Sales Dept. Civil Engineering Dept. P.T. Indotaisei Indah Development Jawa Barat, Rp 70,840 million Real estate development 49.0% Indonesia continued on the right *1 Figures include indirect ownership.

Corporate Auditor —Auditor’s Secretarial Dept.

(As of 0ctober 1, 2002)

62 TAISEI CORPORATION ANNUAL REPORT 2002 TAISEI CORPORATION ANNUAL REPORT 2002 63 ANNUAL REPORT 2002 TAISEI CORPORATION

TAISEI CORPORATION ANNUAL REPORT 2002 0 2 1 0・4 0 0 0・S・N PRINTED IN JAPAN PRINTED ON RECYCLED PAPER http://www.taisei.co.jp Tokyo 163-0606, Japan 163-0606, Tokyo 1-25-1, Nishi-Shinjuku, Shinjuku-ku, Phone: +81-3-3348-1111 Fax: +81-3-3345-0481