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Meigakukan Co., Ltd.
ANNUAL REPORT
FOR THE YEAR ENDED
March 31, 2011
2011
TABLE OF CONTENTS
CORPORATE HISTORY ........................................................................................................... 3
PROFILE .................................................................................................................................. 4
FINANCIAL HIGHLIGHTS ......................................................................................................... 7
MAJOR SHAREHOLDERS ........................................................................................................ 8
BOARD OF DIRECTORS .......................................................................................................... 9
FIVEFIVE-YEAR SUMMARY .......................................................................................................... 10
BALANCE SHEETS ................................................................................................................ 11
STATEMENTS OF OPERATIONS ........................................................................................... 13
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY ................................................. 14
STATEMENTS OF CASH FLOWS ........................................................................................... 15
NOTES TO FINANCIAL STATEMENTS ................................................................................... 17
INDEPENDENT AUDITORS’
AUDITORS’ REPORT
CORPORATE HISTORY
1988
1990
1998
1999
2001
2002
2003
2004
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Set up a private institute in Tenpaku-ku, Nagoya-city, Japan
Founded as Fuji Sogo Gakuen Ltd.
Incorporated as Meigakukan Co., Ltd.
Started franchise business of private institutes all over the country
The first franchisee opened in Gifu Prefecture, Japan
Set up Tokyo Head Office in Shibuya-ku, Tokyo, Japan
Set up Osaka Head Office in Toyonaka-city, Osaka, Japan
Published the first book on education by Takeshi Sato, representative director
Relocated Tokyo Head Office to Roppongi Hills in Minato-ku, Tokyo, Japan
Opened a teaching center “Max Value Shinoharabashi East” managed by the
Company in AEON Mall located in Nakagawa-ku, Nagoya-city, Japan
Obtained ISO9001 certification (Irinaka, Atsuta and Toyonaka teaching centers)
The number of teaching centers exceeded 100 including franchisees all over the
country
Introduced a security system “110 (emergency) House for children” simultaneously
all over the country as part of CSR
Published the second book on education by Takeshi Sato, representative director
The number of teaching centers exceeded 130 including franchisees all over the
country
Listed stocks on Green Sheet of Japan Securities Dealers Association
Increased its capital to 52,000 thousands of JPY by public offering
The number of teaching centers reached 148 including franchisees all over the
country
Set up Control Head Office in Minato-ku, Tokyo, Japan
The number of teaching centers reached 154 including franchisees all over the
country
Purchased Meigakukan Excel Co., Ltd., as subsidiary
Reduced its teaching centers to 146
Obtained a sub-franchise right “New private institute Gaudia”
Joined a franchise of medical preparatory school “Medical Labo”
The number of teaching centers reached 160 including franchisees all over the
country
The number of locations reached 191 including 19 teaching centers managed by the
Company, 125 franchisees, 35 Gaudia Meigakukan, 8 Meigakukan Excel, a Medical
Labo, and 3 head offices all over the country
The number of locations was reduced to 155 including 14 teaching centers managed
by the Company, 105 franchisees, 27 Gaudia Meigakukan, 5 Meigakukan Excel, a
Medical Labo, and 3 head offices all over the country
Opened training schools “Career Academy” to instruct care for old people and
cosmetology in Machida-city and Hachioji-city, Tokyo, and in Omiya-city, Saitama,
to develop its business in new fields
3
PROFILE
Established in 1990, Meigakukan Co., Ltd. (the “Company”) provides educational and tutorial
services to young individuals from kindergarten pupils through high school graduates in its own
teaching centers and its franchisees under the idea of what Meigakukan’s educational services
ought to be based on a method to teach carefully and appropriately any grade or any level of young
individuals. Direct management division provides its curriculum guideline services to its own
teaching centers, and franchise division provides how to manage a franchisee to its franchisees.
The Company provides “Group individual classes (maximum 5 individuals)” and “One-to-one style
classes” to realize careful services by making out each young individual’s questions and also
sends “a monthly report written by teacher in charge” to parents by mail to inform them of their
children’s monthly results.
Moreover, in April, 2011, the Company started to operate training schools “Career Academy” to
instruct care for old people and cosmetology to develop its business in new fields as well as a
medical preparatory school “Medical Labo”, in Saitama-city, Saitama, Japan.
The details of the Company’s business are as follows:
1) “Meigakukan” business
ⅰ) High-grade teachers
The Company establishes the strict requirements to hire teachers having the best qualities of
personal magnetism and office work competence concerning instruction and provides them a
regular support and communication system.
As a result, the Company realizes the higher
stability of teachers and gains clients’ confidence,
ⅱ) One-to-one class
The Company introduces an original instruction style teaching by one-to –one to realize careful
services by making out each young individual’s questions. And the Company puts both “Group
individual classes (maximum 5 individuals)” and “One-to-one classes (private tutor style)” in a
same class to meet clients’ needs changing with the times.
ⅲ）Monthly report and Meigakukan news
The Company sends “a monthly report written by teacher in charge” to parents by mail to inform
them of their children’s monthly results. The monthly report is helpful to get rid of parents’
anxiety and useful to decide how to study hereafter. The Company also sends “Meigakukan
4
news” by mail to inform parents of its various activities.
ⅳ) Location
The Company develops and changes the image of private institutes to meet clients’ life style and
opens its teaching centers including franchisees in shopping centers or redeveloped buildings by
stations based on its marketing strategy as well as in lease property of residence area.
ⅴ) IT support system
The Company introduces an original IT network system indispensable to rationalize intricate
operations of private institute: lighten complicated daily work, reduce wasteful time and costs, and
concentrate on teaching work. The system links head offices and teaching centers all over the
country and supports tightly its own teaching centers and franchisees.
ⅵ) Clients’ feeling of satisfaction
The Company obtained ISO9001 certification (Irinaka, Atsuta and Toyonaka teaching centers) in
February 2004 and introduced a security system “110 (emergency) House for children”
simultaneously all over the country to ensure safety of children with a bright future on and after
July 2004.
ⅶ) Branding strategy
The Company has created a corporate value by original branding strategy to protect its benefit
received from its brand and obtained already a lot of trademark rights such as “Meigakukan (name
of franchise)” etc.
2) “Medical Labo” business
The Japanese Government adopted a policy to increase the number of medical professionals. As
medical preparatory schools play an important role in study for the exams, its market is expected
to expand in future.
Under these circumstances, the Company joined a franchise of medical
preparatory school “Medical Labo” in January, 2009 and started operating a new teaching center
in Saitama-city, Saitama, Japan in the last term.
In Medical Labo, a teacher guides individually a student in his/her studies with the method of Mr.
Wada, a charisma in the world of Japanese medical preparatory schools and the guidance style
provides educational services with the highest quality.
3) “New business” (Educational business for next generation)
On February 14, 2011, the extraordinary stockholders’ meeting approved changes in the articles
5
of incorporation and additions of new business purposes in the articles.
Based on its new articles,
the Company started to operate training schools to instruct care for old people and cosmetology
to develop its business. The Company continuously strives for making a profit by planning,
developing and examining its new business with a potential demand.
4) CSR
The Company plays a major role in “Terakoyado: temple school (NPO)” as part of CSR. The
NPO takes on the job of teaching children who are not satisfactorily educated at a school for some
reason or other. The Company contributes its greatest efforts to support such children with a
bright future.
6
FINANCIAL HIGHLIGHTS
Meigakukan Co., Ltd.
For the years ended March 31, 2011 and 2010
Thousands of Japanese Yen
U.S. dollars
(Note)
2011
2011
2010
\484,
484,191
\419,571
$5,823,108
Operating income (loss)
19,
19,277
(45,790)
231,839
Income (loss) before provision for income taxes
19,
19,114
(101,744)
229,880
Net income (loss)
24,
24,868
(103,743)
299,077
Total assets
385,
385,643
403,656
4,637,923
Total equity
240,
240,040
215,210
2,886,841
Net sales
2011
U.S. dollars
(Note)
Yen
Per Share Data:
Net income(loss)
Basic
Diluted
Cash dividends applicable to the period
\9,947.30
\(41,497.25)
$119.63
－
－
－
－
－
－
Note: The figures are presented in accordance with accounting standards generally accepted in Japan. The U.S.
dollar amounts represent translations of Japanese yen amounts at the rate of \83.15 to the U.S. $1.00, which was
the rate prevailing on March 31, 2011.
7
MAJOR SHAREHOLDERS
Set forth below are major shareholders as of March 31, 2011.
Outstanding Shares (Common stock)
Name
Shares owned
Takeshi Sato
Percentage of shares owned
1,825 shares
Akane Sato (Note)
73.00%
194
7.76
30
1.20
Other
451
18.04
Total
2,500
100.00
Chajin Partners
Note: Spouse of Takeshi Sato, representative director and president
8
BOARD OF DIRECTORS
Set forth below are the current members of the Board of Directors and Corporate Auditor of the
Company, their date of birth, the year in which they were first elected, their current position at the
Company, prior positions, and other principal business activities outside the Company as of June
30, 2011.
Title
Name
Date of Birth
Representative
Director
President
Takeshi
Sato
April 26, 1963
1990
1998
Fuji Sogo Gakuen Ltd. Director
The Company Representative Director (Current)
Director
Akane
Sato
October 17, 1963
1990
1998
2005
2006
2010
1987
1993
Fuji Sogo Gakuen Ltd.
The Company Corporate Auditor
The Company Director (Current)
The Company
The Company Director （Current）
Registered JICPA
D.Brain Consulting Co., Ltd. Representative Director
Denawa CPA Office Representative (Current)
D.Brain Securities Co., Ltd. Director
D.Brain Securities Co., Ltd. Representative Director
(Current)
The Company Corporate Auditor (Current)
194
Total
2,020
(Note)
Director
Akiko
Onoda
May 3, 1984
Corporate
Auditor
Yoshito
Denawa
January 31, 1961
Business Experience
1997
1999
2010
Note: Spouse of Takeshi Sato, representative director and president
9
Shares Owned
1,825 shares
1
-
FIVEFIVE-YEAR SUMMARY
Meigakukan Co., Ltd.
For the years ended March 31
U.S.
dollars
(Note)
Thousands of Japanese Yen
2011
2011
Net sales
2010
2009
2008
2007
2011
\484,
484,191
\419,571
\339,221
\342,669
\395,257
$5,823,108
24,
24,868
(103,743)
4,068
11,919
12,597
299,077
Total assets
\385,
385,643
\403,656
\461,622
\440,648
\439,364
$4,637,923
Total equity
240,
240,040
215,210
318,987
315,584
304,341
2,886,841
2,500
2,500
2,500
2,500
2,500
2,500
-
Net income (loss)
Outstanding shares
(common stock)
U.S. dollars
(Note)
Yen
Per Share Data:
Net income (loss)
Basic
Diluted
\9,947.30
\(41,497.25)
\1,627.45
\4,767.98
\5,038.88
$119,63
-
-
-
-
-
-
-
-
-
-
-
-
Cash dividends applicable to
the period
Note: The figures are presented in accordance with accounting standards generally accepted in Japan. The U.S.
dollar amounts represent translations of Japanese yen amounts at the rate of \83.15 to the U.S. $1.00, which
was the rate prevailing on March 31, 2011.
10
BALANCE SHEETS
Meigakukan Co., Ltd.
For the years ended March 31, 2011 and 2010
Thousands of Japanese Yen
ASSETS
U.S. dollars
(Note)
2011
2011
2010
2011
\209,
09,469
\233,251
$2,519,172
7,601
7,476
91,422
13,
13,343
13,368
160,472
Deferred tax – assets (Note 6)
7,650
670
92,012
Others
4,719
3,675
56,755
242,
42,784
258,441
2,919,833
29,
29,127
30,784
350,298
Intangible assets (Note 5)
1,476
2,835
17,752
Investment securities
1,276
1,341
15,346
Investments in stocks of affiliated company
24,959
24,959
300,168
Lease deposits
43,
43,040
53,034
517,623
9,274
12,497
111,539
21,
21,017
7,231
252,761
1,796
1,966
21,611
10,891
10,564
130,992
142
142,859
145,214
1,718,090
\385,
385,643
\403,656
$4,637,923
Current assets:
Cash and cash equivalents
Accounts receivable, trade, less allowance for
doubtful accounts
Prepaid expenses
Total current assets
Noncurrent assets:
Property and equipment, net (Note 4)
L/T prepaid expenses
Loan to affiliated company (Note 3)
Deferred tax – assets (Note 6)
Others
Total noncurrent assets
Total assets
Note: The figures are presented in accordance with accounting standards generally accepted in Japan. The U.S.
dollar amounts represent translations of Japanese yen amounts at the rate of \83.15 to the U.S. $1.00, which
was the rate prevailing on March 31, 2011.
11
Thousands of Japanese Yen
LIABILITIES
LIABILITIES AND EQUITY
2011
2011
2010
U.S. dollars
(Note)
2011
Current liabilities:
Accounts payable, trade
\2,939
\5,806
$35,350
Accounts payable, other
17,
17,888
17,582
215,130
2,188
1,421
26,320
Advance receipts
27,
27,333
66,763
328,724
Deposit received
17,
17,040
21,077
204,933
Others
16,
16,635
10,210
200,062
84,
84,024
122,862
1,010,519
Deposits on contract
61,577
65,582
740,563
Total noncurrent liabilities
61,
61,577
65,582
740,563
145,
145,602
188,444
1,751,082
Common stock of no par value
52,
52,000
52,000
625,376
Additional paid-in capital
42,
42,000
42,000
505,111
Fair value reserve
(151)
151)
(113)
(1,817)
Retained earnings
146,
146,191
121,323
1,758,171
240,
240,040
215,210
2,886,841
\385,
385,643
\403,656
$4,637,923
Income taxes payable
Total current liabilities
Noncurrent liabilities:
Total liabilities
Shareholder’s Equity:
Total shareholder’s equity
Total liabilities and shareholder’s equity
12
STATEMENTS
STATEMENTS OF OPERATIONS
Meigakukan Co., Ltd.
For the years ended March 31, 2011 and 2010
Thousands of Japanese Yen
U.S. dollars
(Note)
201
2011
2010
\484,
84,191
\419,571
$5,823,108
Cost of sales
203,
03,913
217,880
2,452,358
Gross profit
280,
80,277
201,690
3,370,750
Selling, general and administrative expenses (Note 8)
261,
61,000
247,480
3,138,911
19,
19,277
(45,790)
231,839
Net sales
Operating income (loss)
2011
Other income (expenses):
Interest income
Gain on amortization of deposits received
Loss on asset retirement obligations
456
363
5,486
50
1,076
613
(1,910)
-
Impairment loss
-
(3,671)
-
Loss on revaluation of affiliated company
-
(52,548)
-
Other income (expenses), net
1,240
Total other income (expenses)
(162)
162)
Income (loss) before provision for income taxes
Provision for income taxes (Note 6)
Net income (loss)
(1,174)
(55,954)
(22,971)
14,913
(1,959)
19,114
(101,744)
229,880
5,753
(1,998)
69,197
\24,
24,868
\(103,743)
$299,077
Note: The figures are presented in accordance with accounting standards generally accepted in Japan. The U.S.
dollar amounts represent translations of Japanese yen amounts at the rate of \83.15 to the U.S. $1.00, which
was the rate prevailing on March 31, 2011.
13
STATEMENTS OF CHANGES
CHANGES IN SHAREHOLDERS’
SHAREHOLDERS’ EQUITY
Meigakukan Co., Ltd.
For the years ended March 31, 2011 and 2010
Thousands of Japanese yen
Common
stock
Additional
paid-in
capital
Fair value
reserve
Total
shareholder’s
equity
Retained
earnings
Balance at March 31,2008
Net income
Changes in fare value
reserve
\52,000
－
42,000
－
\(80)
－
\225,067
(103,743)
\318,987
(103,743)
－
－
(33)
－
(33)
Balance at March 31,2009
Net income (loss)
Changes in fare value
reserve
\52,000
－
42,000
－
\(113)
－
\121,323
24,
24,868
\215,210
24,
24,868
－
－
(37)
－
(37)
Balance at March 31,2010
\52,
52,000
42,000
\(151)
51)
\146,
46,191
\240,
40,040
U.S. dollars
(Note)
Common
stock
Additional
paid-in
capital
Fair value
reserve
Total
shareholder’s
equity
Retained
earnings
Balance at March 31,2009
Net income (loss)
Changes in fare value
reserve
$625,376
－
$505,111
－
$(1,361)
－
$1,459,094
299,077
$2,588,220
299,077
－
－
(456)
－
(456)
Balance at March 31,2010
$625,376
$505,111
$(1,817)
$1,758,171
$2,886,841
Note: The figures are presented in accordance with accounting standards generally
accepted in Japan. The U.S. dollar amounts represent translations of Japanese yen
amounts at the rate of \83.15 to the U.S. $1.00, which was the rate prevailing on
March 31, 2011.
14
STATEMENTS OF CASH FLOWS
Meigakukan Co., Ltd.
For the years ended March 31, 2011 and 2010
Thousands of
Japanese Yen
2011
2011
Operating activities:
Net income (loss)
Adjustments reconcile net income to net cash
Provided by (used in) operating activities:
Depreciation and amortization
Provision of deferred tax assets
Gain on amortization of deposits received
Loss on revaluation of affiliated company
Impairment loss
Changes in operating assets and liabilities:
Accounts receivable, trade
Accounts payable, trade
Accounts payable, other
Advance receipts
Other, net
Total adjustments
Net cash provided by (used in) operating activities
Investing activities:
Purchase of property and equipment
Proceeds from repayment of lease deposits
Expenditure for lease deposits
Increase in L/T prepaid expenses
(Increase) decrease in loan to affiliated company
Other, net
Net cash provided by (used in) investing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
2010
U.S. dollars
(Note)
2011
\24,
24,868
\(103,743)
$299,077
9,895
(6,783)
(50)
-
11,883
(810)
(1,076)
52,548
3,671
119,002
(81,585)
(613)
-
(125)
(2,866)
866)
(831)
(39,429)
6,208
(33,985)
(9,116)
2,151
(9,582)
11,190
42,861
4,998
117,835
14,092
(1,506)
(34,476)
(10,004)
(474,202)
74,664
(408,721)
(109,644)
(1,250)
250)
6,929
(2,285)
285)
(1,109)
1,109)
(13,
(13,500)
(3,450)
3,450)
(14,665)
(23,
(23,782)
233,
33,251
\209,
09,469
(15,015)
9,897
(1,100)
(718)
9,700
(889)
1,873
15,966
217,284
\233,251
(15,033)
83,332
(27,480)
(13,340)
(162,357)
(41,491)
(176,370)
(286,014)
2,805,186
$2,519,172
Note: The figures are presented in accordance with accounting standards generally accepted in Japan. The U.S.
dollar amounts represent translations of Japanese yen amounts at the rate of \83.15 to the U.S. $1.00, which
was the rate prevailing on March 31, 2011.
15
Supplemental disclosure of cash flow information:
Thousands of
Japanese Yen
2011
2011
Interest expenses paid
Income taxes paid
U.S. dollars
(Note)
2010
2011
\-
\-
$-
\2,784
\2,291
$33,491
Note: The figures are presented in accordance with accounting standards generally accepted in Japan. The U.S.
dollar amounts represent translations of Japanese yen amounts at the rate of \83.15 to the U.S. $1.00, which
was the rate prevailing on March 31, 2011
16
NOTES TO FINANCIAL STATEMENTS
Meigakukan Co., Ltd.
For the years ended March 31, 2011 and 2010
1.Organization
1.Organization and Summary of Significant Accounting Policies
Organization and Business
Meigakukan Co., Ltd. (the “Company”) was incorporated in October, 1990, a company domiciled in
Japan. The activity of the Company is educational and tutorial services to young individuals from
kindergarten pupils through high school graduates in its own teaching centers and its franchisees.
The financial statements were authorized for issue by the board of managing directors on May 30,
2011.
Statement of Compliance
The financial statements have been translated from the original financial statements prepared
in accordance with generally accepted accounting principles in Japan.
been reclassified for overseas investors’ convenience.
Certain amounts have
The original financial statements
have been audited and the audit report on the original financial statements has been attached
at the end of the annual report.
Basis of Preparation
As permitted by the Financial Instruments and Exchange Law, amounts of less than one
thousand of Japanese yen have been omitted.
Consequently, the totals shown in the
accompanying financial statements do not necessarily agree with the sum of the individual
amounts.
The translations of the Japanese yen amounts into U.S. dollars are included solely
for the convenience of the reader, using the prevailing exchange rate at march 31, 2011, which
was \83.15 to U.S.$1.00.
The convenience translations should not be construed as
representations that the Japanese yen amounts have been, could have been, or could in the
future be converted into U.S. dollars at this or any other rate of exchange.
Cash Equivalents
Cash and cash equivalents consist of cash and short-term interest bearing investments with
17
original maturities of three months or less.
Trade and Other Receivables
Trade and other receivable are stated at cost.
Recognizable individual risks are taken into
account by making appropriate value adjustments.
Inventories
Inventories are stated at the lower of cost and net realizable value.
Property and Equipment
Property and equipment are stated at cost, less accumulated deprecation and any accumulated
impairment losses. Depreciation is charged to the income statements on a straight-line basis or
on a declining-balance basis over the estimated useful lives.
Intangible Assets
Intangible assets are measured at cost, less accumulated amortization and any accumulated
impairment losses.
Investment
Investments
vestments in Stocks of Affiliated Company
Investments in stocks of affiliated company are stated at cost, less any accumulated impairment
losses.
Capital Structure
Capital consists of common stocks issued and outstanding: 2011 and 2010 – 2,500 and 2,500
stocks, respectively.
Income Taxes
Deferred income tax assets and liabilities are computed for temporary differences between the
financial statement and tax bases of assets and liabilities that will result in taxable or deductible
18
amounts in the future. Such deferred income tax asset and liability computations are based on
enacted tax laws and rates applicable to periods in which the differences are expected to affect
taxable income.
Valuation allowances are established when necessary to reduce deferred
income tax assets to the amounts expected to be realized.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting
principles in Japan requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting periods. Actual results could differ from
those estimates.
Reporting Revenues
Revenues are recognized at a point the Company sells products or provides services.
Reclassifications
Certain amounts in the prior year’s financial statements have been reclassified to conform with
the current year presentation.
2. Change in Accounting Principles
Effective April 1, 2010, the Company adopted the Accounting Standard for Asset Retirement
Obligations and its Implementation Guidance. The accounting treatment requires companies to
recognize an asset retirement obligation as a liability and to include the asset retirement cost
corresponding to it in the cost of a tangible fixed asset.
The asset retirement expense, which is
accounted for as an asset, for the asset retirement obligation will be allocated over the remaining
economic useful life of the relevant tangible fixed asset through depreciation.
The adoption of the accounting treatment reduced the Company’s operating income by \1,080
thousand (USD 12,988), income before income taxes and noncurrent assets by \2,990 thousand
(USD 35,959) respectively for the year ended March 31, 2011 compared to the corresponding
amounts which would have been recorded under the previous principle.
19
3. Related Party Transactions
Thousands of
U.S. dollars
(Note)
Japanese Yen
2011
2011
2010
2011
\19,250
\21,950
$231,509
5,750
31,650
69,152
21,300
7,800
256,164
(282)
(568)
(3,403)
21,017
7,231
252,761
Transactions with the Affiliates:
Expenditures for loan to affiliated company
Proceeds from repayment of loan to affiliated company
Loan to affiliated company stated at cost
Less allowance for doubtful accounts
Loan to affiliated company, net
Note: The figures are presented in accordance with accounting standards generally accepted in Japan. The U.S.
dollar amounts represent translations of Japanese yen amounts at the rate of \83.15 to the U.S. $1.00, which
was the rate prevailing on March 31, 2011.
4. Property
Property and equipment
Thousands of Japanese Yen
2011
2011
2010
U.S. dollars
(Note)
2011
Property and equipment stated at cost:
Buildings
\36,
36,928
\36,578
$444,122
Structures
1,388
1,388
16,701
Automobiles
9,437
9,437
113,502
11,064
10,644
133,066
Furniture and fixture
Construction in progress
1,617
-
19,447
60,436
58,049
726,838
Less accumulated depreciation
(31,309)
(27,265)
(376,540)
Property and equipment, net
\29,
29,127
\30,784
$350,298
Note: The figures are presented in accordance with accounting standards generally accepted in Japan. The U.S.
dollar amounts represent translations of Japanese yen amounts at the rate of \83.15 to the U.S. $1.00, which
was the rate prevailing on March 31, 2011.
20
5. Intangible
Intangible assets
Thousands of Japanese Yen
2011
2011
2010
U.S. dollars
(Note)
2011
Intangible assets:
Goodwill
\224
\408
$2,694
Software
160
1,335
1,925
1,092
1,092
13,133
\1,476
\2,835
$17,752
Telephone rights
Total intangible assets
Note: The figures are presented in accordance with accounting standards generally accepted in Japan. The U.S.
dollar amounts represent translations of Japanese yen amounts at the rate of \83.15 to the U.S. $1.00, which
was the rate prevailing on March 31, 2011.
21
6. Income Taxes
Thousands of Japanese Yen
2011
2011
Income taxes – current
2010
\(2,
(2,199)
U.S. dollars
(Note)
2011
\(2,809)
$(26,454)
Tax refunded
1,169
-
14,066
Income taxes – deferred
6,783
810
81,585
\5,753
\(1,998)
$69,197
Provision for income taxes
Thousands of Japanese Yen
2011
2011
2010
U.S. dollars
(Note)
2011
Current:
Accrued bonuses
Allowance for doubtful accounts
Tax loss carryforward
\482
\498
$5,797
28
219
337
7,079
Other, net
-
85,135
61
(47)
743
7,650
670
92,012
Loss from revaluation of investment securities
\1,061
\1,061
$12,760
Loss on revaluation of affiliated company
22,012
22,012
264,726
Lease deposits
1,253
-
15,069
Impairment loss
-
1,224
-
Other, net
545
742
(23,074
23,074)
(23,073)
(277,486)
1,796
796
1,966
21,611
\9,447
447
\2,636
$113,623
Total
Noncurrent:
Less allowance
Total
Total deferred tax - assets
6,542
Note: The figures are presented in accordance with accounting standards generally accepted in Japan. The U.S.
dollar amounts represent translations of Japanese yen amounts at the rate of \83.15 to the U.S. $1.00, which
was the rate prevailing on March 31, 2011.
Deferred income tax assets are mainly comprised of the tax effects of current disallowance of
certain loss and differences for financial reporting and tax purposes.
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7. Earning per Share
Thousands of Japanese
Yen
2011
2011
Net income (loss) applicable to ordinary shareholders
2010
\24,
24,868
Diluted net income
2011
\(103,743)
-
U.S. dollars
(Note)
$299,077
-
-
Number of shares
2011
2011
2010
Weighted-average number of ordinary shares
outstanding
2,500
2,500
Weighted-average number of diluted ordinary
shares outstanding
-
-
U.S. dollars
(Note)
Japanese Yen
2011
2011
Basic earning per share
Diluted earning per share
2010
2011
\9,947.30
\(41,497.25)
$119.63
-
-
-
Note: The figures are presented in accordance with accounting standards generally accepted in Japan. The U.S.
dollar amounts represent translations of Japanese yen amounts at the rate of \83.15 to the U.S. $1.00, which
was the rate prevailing on March 31, 2011.
23
8. Schedule
Schedule of Operating Expenses
Thousands of Japanese Yen
2011
2011
Salaries and wages
2010
U.S. dollars
(Note)
2011
\78,
78,595
\67,629
$945,228
Advertising
33,
33,981
43,089
408,680
Rent
15,329
15,158
184,361
Administrative expenses
46,
46,505
41,646
559,292
Commission expenses
21,
21,955
19,425
264,052
Others
64,632
60,530
777,298
\261,
261,000
\247,480
$3,138,911
Total
Note: The figures are presented in accordance with accounting standards generally accepted in Japan. The U.S.
dollar amounts represent translations of Japanese yen amounts at the rate of \83.15 to the U.S. $1.00, which
was the rate prevailing on March 31, 2011.
24
INDEPENDENT AUDITORS’
AUDITORS’ REPORT
The Board of Directors and Stockholder of
Meigakukan Co., Ltd.
We have audited the accompanying balance sheets of Meigakukan Co., Ltd. (the “Company”)
as of March 31, 2011 and 2010, and the related statements of operations, changes in
stockholders’ equity for the years then ended. These financial statements are the
responsibility of the Company’s management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in Japan.
Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An audit includes
consideration for internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Company’s internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.
ln our opinion, the financial statements referred to above present fairly, in all material
respects, the finical position of the Company as of March 31, 2011 and 2010，and the results
of its operations for the years then ended in conformity with accounting principles generally
accepted in Japan.
We do not have any interest in the Company provided by CPA regulations in Japan.
(Signature of auditor)
June 29, 2011
Note: The independent auditors’ report has been translated from the original independent auditors’ report
attached on the original financial statements prepared in accordance with generally accepted accounting
principles in Japan.
25