Aramark Services 10-K 2007 FY Annual report

Exhibit 99.2

INDEPENDENT AUDITORS’ REPORT

To the Board of Directors and Shareholders of

AIM SERVICES Co., Ltd.

Tokyo, Japan:

We have audited the accompanying consolidated balance sheet of AIM SERVICES Co., Ltd. and subsidiaries (the “Company”) as of March 31, 2007, and the related consolidated statements of income, changes in equity, and cash flows for the year then ended (all expressed in Japanese yen). 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 the United States of America. 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 of 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, 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.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of AIM SERVICES Co., Ltd. and subsidiaries as of March 31, 2007, and the results of their operations and their cash flows for the year then ended in conformity with accounting principles generally accepted in Japan (“Japanese GAAP”).

Japanese GAAP varies in certain significant respects from accounting principles generally accepted in the United States of America. Information relating to the nature and effect of such differences is presented in Note 12 to the consolidated financial statements.

Our audit also comprehended the translation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, such translation has been made in conformity with the basis stated in Note 1. Such U.S. dollar amounts are presented solely for the convenience of readers outside Japan.

/s/ DELOITTE TOUCHE TOHMATSU

Tokyo, Japan

December 27, 2007

AIM SERVICES Co., Ltd. and Subsidiaries

Consolidated Balance Sheets

March 31, 2007 and 2006

	Thousands of Yen						Thousands of U.S. Dollars (Note 1)
	2007			2006			2007
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents (Note 2.b)	¥	8,589,549		¥	8,832,288		$	72,793
Marketable securities (Notes 2.d and 3)		99,630			99,950			844
Receivables:
Trade notes		48,972			40,858			415
Trade accounts		12,886,529			12,135,311			109,208
Other		223,905			298,286			1,898
Inventories (Notes 2.c and 4)		1,474,151			1,401,935			12,493
Short-term investments					1,000
Short-term loans		9,357			12,815			79
Deferred tax assets (Notes 2.o and 8)		1,732,792			1,432,604			14,685
Prepaid expenses and other		368,702			238,207			3,125
Allowance for doubtful accounts		(87,181	)		(63,458	)		(739	)
Total current assets	¥	25,346,406		¥	24,429,796		$	214,801
PROPERTY, PLANT AND EQUIPMENT (Notes 2.f and 2.g):
Land		867,322			1,065,241			7,350
Buildings and structures		1,585,367			1,659,374			13,435
Machinery and equipment		1,066,908			1,081,968			9,042
Furniture and fixtures		1,303,375			1,265,164			11,046
Total		4,822,972			5,071,747			40,873
Accumulated depreciation		(2,858,436	)		(2,802,729	)		(24,224	)
Net property, plant and equipment		1,964,536			2,269,018			16,649
INVESTMENTS AND OTHER ASSETS:
Investment securities (Notes 2.d and 3)		1,251,372			1,527,965			10,605
Investment in an associated company (Note 2.e)		378,184			338,891			3,205
Golf membership (Note 2.h)		177,210			257,233			1,502
Operating rights (Note 2.i)		94,810			120,091			803
Goodwill (Note 12)		4,057,129			4,865,110			34,382
Lease deposits (Note 2.j)		951,459			995,069			8,063
Insurance deposits (Note 2.j)		575,626			582,581			4,878
Deferred tax assets (Notes 2.o and 8)		551,528			732,562			4,674
Other assets		501,567			632,459			4,250
Allowance for doubtful accounts		(84,265	)		(157,182	)		(714	)
Total investments and other assets		8,454,620			9,894,779			71,648
TOTAL	¥	35,765,562		¥	36,593,593		$	303,098

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AIM SERVICES Co., Ltd. and Subsidiaries

Consolidated Balance Sheets

March 31, 2007 and 2006

	Thousands of Yen						Thousands of U.S. Dollars (Note 1)
	2007			2006			2007
	(Unaudited)
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Short-term bank loans (Note 5)				¥	650,000
Current portion of long-term loans (Note 5)	¥	898,696			1,115,436		$	7,616
Payables:
Trade notes		851,890			926,256			7,219
Trade accounts		7,172,572			6,532,040			60,785
Associated company		15,331			17,608			130
Other		379,572			429,752			3,217
Income taxes payable		1,507,566			1,263,892			12,776
Consumption tax payable		950,143			820,226			8,052
Accrued bonuses to employees		3,281,882			2,680,032			27,812
Accrued bonuses to directors and corporate auditors (Note 2.n)		61,196						519
Accrued expenses		5,808,826			5,527,821			49,227
Other current liabilities		924,993			1,015,904			7,839
Total current liabilities	¥	21,852,667		¥	20,978,967		$	185,192
LONG-TERM LIABILITIES:
Long-term loans (Note 5)		1,831,976			5,480,272			15,525
Employees’ retirement benefits (Notes 2.k and 6)		1,285,303			1,534,371			10,892
Retirement benefits for directors and corporate auditors (Note 2.k)		242,308			269,517			2,053
Deferred tax liabilities (Notes 2.o and 8)		1,784			2,952			15
Other long-term liabilities		43,756			16,489			371
Total long-term liabilities		3,405,127			7,303,601			28,856
MINORITY INTERESTS					32,306
COMMITMENTS AND CONTINGENT LIABILITIES (Note 9)
EQUITY (Note 7):
Common stock—authorized, 28,000,000 shares; issued, 11,507,826 shares (unaudited for 2006) in 2007 and 2006		1,909,797			1,909,797			16,185
Additional paid-in capital		2,591,398			2,591,398			21,961
Retained earnings		6,320,852			4,004,053			53,567
Unrealized gain on available-for-sale securities		205,481			314,554			1,741
Treasury stock—at cost, 365,181 shares in 2007 and 355,025 shares (unaudited) in 2006		(555,730	)		(541,083	)		(4,709	)
Total		10,471,798			8,278,719			88,745
Minority interests		35,970						305
Total equity		10,507,768			8,278,719			89,050
TOTAL	¥	35,765,562		¥	36,593,593		$	303,098

See notes to consolidated financial statements.

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AIM SERVICES Co., Ltd. and Subsidiaries

Consolidated Statements of Income

Years Ended March 31, 2007, 2006 and 2005

	Thousands of Yen									Thousands of U.S. Dollars (Note 1)
	2007			2006			2005			2007
				(Unaudited)			(Unaudited)
NET SALES	¥	138,726,955		¥	121,887,381		¥	114,646,211		$	1,175,652
COST OF SALES		121,656,834			107,420,850			100,711,688			1,030,990
Gross profit		17,070,121			14,466,531			13,934,523			144,662
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		12,516,683			10,721,378			10,402,254			106,074
Operating income		4,553,438			3,745,153			3,532,269			38,588
OTHER INCOME (EXPENSES):
Interest and dividends income		22,869			15,595			15,364			194
Interest expense		(59,394	)		(64,672	)		(49,917	)		(503	)
Loss on devaluation of property, plant and equipment								(75,745	)
Loss on impairment of long-lived assets		(83,541	)		(214,481	)					(708	)
Loss on devaluation of golf membership								(52,700	)
Other—net		278,824			126,561			(59,674	)		2,363
Other income (expenses)—net		158,758			(136,997	)		(222,672	)		1,346
INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS		4,712,196			3,608,156			3,309,597			39,934
INCOME TAXES (Note 8):
Current		2,373,818			2,095,535			2,047,202			20,117
Deferred		(48,718	)		(185,546	)		(134,870	)		(413	)
Total income taxes		2,325,100			1,909,989			1,912,332			19,704
MINORITY INTERESTS IN NET INCOME		(3,664	)		(102,039	)		(355,034	)		(31	)
NET INCOME	¥	2,383,432		¥	1,596,128		¥	1,042,231		$	20,199
	Yen									U.S. Dollars
	2007			2006			2005			2007
				(Unaudited)			(Unaudited)
PER SHARE OF COMMON STOCK—Net income (Note 2.q)	¥	213.82		¥	137.53		¥	90.18		$	1.8

See notes to consolidated financial statements.

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AIM SERVICES Co., Ltd. and Subsidiaries

Consolidated Statements of Changes in Equity

Years Ended March 31, 2007, 2006 and 2005

			Thousands of Yen
	Outstanding Number of Shares of Common Stock		Common Stock		Additional Paid-in Capital		Retained Earnings			Unrealized Gain on Available- for-sale Securities			Foreign Currency Translation Adjustments			Treasury Stock			Total			Minority Interests	Total Equity
BALANCE, APRIL 1, 2004 (unaudited)	11,340,549		¥	1,909,797	¥	2,591,398	¥	4,996,833		¥	(76,806	)	¥	(10,158	)	¥	(264,560	)	¥	9,146,504			¥	9,146,504
Net income (unaudited)								1,042,231												1,042,231				1,042,231
Bonuses to directors and a corporate auditor (unaudited)								(30,627	)											(30,627	)			(30,627	)
Purchases of treasury stock (unaudited)	(165,634	)															(245,831	)		(245,831	)			(245,831	)
Net increase in unrealized gain on available-for-sale securities (unaudited)											179,816									179,816				179,816
Net change in foreign currency translation adjustments (unaudited)														10,158						10,158				10,158
BALANCE, MARCH 31, 2005 (unaudited)	11,174,915			1,909,797		2,591,398		6,008,437			103,010						(510,391	)		10,102,251				10,102,251
Net income (unaudited)								1,596,128												1,596,128				1,596,128
Bonuses to directors and a corporate auditor (unaudited)								(29,879	)											(29,879	)			(29,879	)
Purchases of treasury stock (unaudited)	(22,114	)															(30,692	)		(30,692	)			(30,692	)
Retirement of treasury stock (unaudited)								(8,421	)											(8,421	)			(8,421	)
Decrease by merger of consolidated subsidiaries (Note 12.a) (unaudited)								(3,562,212	)											(3,562,212	)			(3,562,212	)
Net increase in unrealized gain on available-for-sale securities (unaudited)											211,544									211,544				211,544

(continued)

			Thousands of Yen
	Outstanding Number of Shares of Common Stock		Common Stock		Additional Paid-in Capital		Retained Earnings			Unrealized Gain on Available- for-sale Securities			Foreign Currency Translation Adjustments	Treasury Stock			Total			Minority Interests		Total Equity
BALANCE, MARCH 31, 2006 (unaudited)	11,152,801			1,909,797		2,591,398		4,004,053			314,554				(541,083	)		8,278,719					8,278,719
Reclassified balance as of March 31, 2006 (Note 2.l)																				¥	32,306		32,306
Net income								2,383,432										2,383,432				��	2,383,432
Bonuses to directors and a corporate auditor								(61,142	)									(61,142	)				(61,142	)
Purchases of treasury stock	(10,156	)													(14,647	)		(14,647	)				(14,647	)
Net change in the year											(109,073	)						(109,073	)		3,664		(105,409	)
Other								(5,491	)									(5,491	)				(5,491	)
BALANCE, MARCH 31, 2007	11,142,645		¥	1,909,797	¥	2,591,398	¥	6,320,852		¥	205,481			¥	(555,730	)	¥	10,471,798		¥	35,970	¥	10,507,768
			Thousands of U.S. Dollars (Note 1)
			Common Stock		Additional Paid-in Capital		Retained Earnings			Unrealized Gain on Available- for-sale Securities			Foreign Currency Translation Adjustments	Treasury Stock			Total			Minority Interests		Total Equity
BALANCE, MARCH 31, 2006 (unaudited)			$	16,185	$	21,961	$	33,933		$	2,666			$	(4,585	)	$	70,160				$	70,160
Reclassified balance as of March 31, 2006 (Note 2.l)																				$	274		274
Net income								20,199										20,199					20,199
Bonuses to directors and a corporate auditor								(518	)									(518	)				(518	)
Purchase of treasury stock															(124	)		(124	)				(124	)
Net change in the year											(925	)						(925	)		31		(894	)
Other								(47	)									(47	)				(47	)
BALANCE, MARCH 31, 2007			$	16,185	$	21,961	$	53,567		$	1,741			$	(4,709	)	$	88,745		$	305	$	89,050

See notes to consolidated financial statements

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AIM SERVICES Co., Ltd. and Subsidiaries

Consolidated Statements of Cash Flows

Years Ended March 31, 2007, 2006 and 2005

	Thousands of Yen									Thousands of U.S. Dollars (Note 1)
	2007			2006			2005			2007
				(Unaudited)			(Unaudited)
OPERATING ACTIVITIES:
Income before income taxes and minority interests	¥	4,712,196		¥	3,608,156		¥	3,309,597		$	39,934
Adjustments for:
Income taxes—paid		(2,102,635	)		(2,021,635	)		(2,156,250	)		(17,819	)
Depreciation and amortization		530,677			477,468			533,983			4,497
Amortization of goodwill		507,980			300,264			420,793			4,305
Provision for (reversal of) allowance for doubtful receivables		31,760			(122,756	)		(25,429	)		269
Provision for accrued bonuses to employees		606,136			266,739			138,670			5,137
Provision for accrued bonuses to directors and a corporate auditor		61,196									519
(Reversal of) provision for accrued retirement benefits		(249,068	)		54,475			80,943			(2,111	)
(Reversal of) provision for accrued retirement benefits for directors and a corporate auditor		(27,209	)		37,539			(5,992	)		(231	)
Equity in earnings of an associated company		(44,783	)		(44,725	)		(13,978	)		(380	)
Gain on sale of property, plant and equipment		(49,626	)		(6,430	)		(16	)		(420	)
Loss on disposal and sales of property, plant and equipment		14,733			14,502			30,716			125
Gain on sale of shares of subsidiary		(103,859	)								(880	)
Loss on impairment of long-lived assets		83,541			214,481						708
Loss on devaluation of property, plant and equipment								75,745
Prior period adjustments		88,577									751
Write-off of intangible assets		37,724						42,720			320
Gain on sales of investment securities		(123,748	)		(1,918	)		(4,087	)		(1,049	)
Write-off of investment securities		22,926						20,174			194
Loss on devaluation of golf membership								52,700
Bonuses to directors and a corporate auditor—paid		(61,142	)		(46,022	)		(46,642	)		(518	)
Increase in trade receivables		(856,635	)		(556,594	)		(428,796	)		(7,260	)
Increase in inventories		(85,400	)		(69,853	)		(117,150	)		(724	)
(Increase) decrease in interest receivable		(944	)		158			(175	)		(8	)
Increase in trade payables		567,407			744,355			91,177			4,809
Increase (decrease) in interest payable		2,792			(4,779	)		(31	)		24
Other—net		553,313			569,249			497,323			4,689
Total adjustments		(596,287	)		(195,482	)		(813,602	)		(5,053	)
Net cash provided by operating activities—(Forward)	¥	4,115,909		¥	3,412,674		¥	2,495,995		$	34,881

(continued)

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AIM SERVICES Co., Ltd. and Subsidiaries

Consolidated Statements of Cash Flows

Years Ended March 31, 2007, 2006 and 2005

	Thousands of Yen									Thousands of U.S. Dollars (Note 1)
	2007			2006			2005			2007
				(Unaudited)			(Unaudited)
Net cash provided by operating activities—(Forward)	¥	4,115,909		¥	3,412,674		¥	2,495,995		$	34,881
INVESTING ACTIVITIES:
Proceeds from time deposit maturities								2,200
Increase in time deposits								(1,000	)
Purchases of marketable securities					(25	)		(25	)
Proceeds from sales of marketable securities		320			4			25			3
Purchases of property, plant and equipment		(293,459	)		(334,330	)		(253,257	)		(2,487	)
Proceeds from sales of property, plant and equipment		193,247			79,353			8,835			1,638
Purchases of intangible assets		(112,042	)		(141,335	)		(166,450	)		(950	)
Proceeds from sales of intangible assets		726			50			1,801			6
Purchases of operating rights					(126,000	)
Purchases of investment securities		(24,582	)		(20,428	)		(15,419	)		(208	)
Proceeds from sales of investment securities		219,365			3,000			21,361			1,859
Proceeds from sale of shares of a subsidiary		156,994									1,330
Proceeds from liquidation of an associated company					23,812
Acquisitions of subsidiaries, net of cash acquired					(2,627,948	)
Purchases of subsidiaries’ shares (Note 12.a)					(6,131,375	)		(10,098	)
Disbursements for originating loans		(15,282	)		(9,810	)		(22,345	)		(130	)
Proceeds from collections of loans		17,935			19,279			20,862			152
Other		27,814			48,508			(140,910	)		236
Net cash provided by (used in) investing activities		171,036			(9,217,245	)		(554,420	)		1,449
FINANCING ACTIVITIES:
Decrease in short-term bank loans—net		(650,000	)		(50,000	)		(410,000	)		(5,508	)
Proceeds from long-term debt					5,600,000
Repayments of long-term debt		(3,865,037	)		(2,990,000	)		(208,000	)		(32,755	)
Purchases of treasury stock		(14,647	)		(30,692	)		(245,831	)		(124	)
Dividends paid by a subsidiary to minority shareholders					(95,904	)		(96,789	)
Net cash (used in) provided by financing activities		(4,529,684	)		2,433,404			(960,620	)		(38,387	)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(242,739	)		(3,371,167	)		980,955			(2,057	)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR		8,832,288			12,203,455			11,222,500			74,850
CASH AND CASH EQUIVALENTS, END OF YEAR	¥	8,589,549		¥	8,832,288		¥	12,203,455		$	72,793

(continued)

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AIM SERVICES Co., Ltd. and Subsidiaries

Consolidated Statements of Cash Flows

Years Ended March 31, 2007, 2006 and 2005

Additional Information

Interest payments for the years ended March 31, 2007, 2006 and 2005 were as follows:

	Thousands of Yen								Thousands of U.S. Dollars (Note 1)
	2007			2006			2005		2007
				(Unaudited)			(Unaudited)
Interest payments	¥	56,602		¥	69,451		¥	49,948	$	480
Non-cash investing and financing activities:
Acquisitions of subsidiaries:
Assets acquired				¥	1,671,231
Goodwill					3,282,465
Liabilities assumed					(2,325,748	)
Cash paid, net of cash acquired				¥	2,627,948
Sale of a subsidiary:
Current assets	¥	258,680							$	2,192
Fixed assets		8,056								68
Current liabilities		(108,155	)							(916	)
Gain on sale of shares of a subsidiary		103,859								880
Gross proceeds from sale of shares of a subsidiary		262,440								2,224
Cash and cash equivalents of the sold subsidiary		(105,446	)							(894	)
Net proceeds from sale of shares of a subsidiary	¥	156,994							$	1,330

See notes to consolidated financial statements.

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AIM SERVICES Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements

Years Ended March 31, 2007, 2006 and 2005

Information applicable for the years ended Mar 31, 2006 and 2005 is unaudited.

1. BASIS OF PRESENTING CONSOLIDATED FINANCIAL STATEMENTS

The accompanying consolidated financial statements have been prepared in accordance with the provisions set forth in the Japanese Securities and Exchange Law and its related accounting regulations, and in conformity with accounting principles generally accepted in Japan (“Japanese GAAP”). Japanese GAAP varies in certain significant respects from accounting principles generally accepted in the United States of America (“U.S. GAAP”). Information relating to the nature and effect of such differences is presented in Note 12 to the consolidated financial statements.

In preparing these consolidated financial statements, certain reclassifications and rearrangements have been made to the consolidated financial statements issued domestically in order to present them in a form which is more familiar to readers outside Japan. In addition, certain reclassifications have been made in the 2005 and 2006 consolidated financial statements to conform to the classifications used in 2007.

The consolidated financial statements are stated in Japanese yen, the currency of the country in which AIM SERVICES Co., Ltd. (the “Company”) is incorporated and operates. The translation of Japanese yen amounts into U.S. dollar amounts is included solely for the convenience of readers outside Japan and has been made at the rate of ¥118 to $1, the approximate rate of exchange at March 31, 2007. Such translation should not be construed as representation that the Japanese yen amounts could be converted into U.S. dollars at that or any other rate.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Consolidation—The consolidated financial statements as of March 31, 2007 include the accounts of the Company and all 18 (19 in 2006, unaudited) subsidiaries (together, the “Group”).

Investment in an associated company (a company over which the Group has the ability to exercise significant influence) is accounted for by the equity method. Refer to Note 2.e.

On December 27, 2005, the Accounting Standards Board of Japan (the “ASBJ”) published a new accounting standard for the statement of changes in equity, which is effective for fiscal years ending on or after May 1, 2006. The consolidated statement of shareholders’ equity, which was previously voluntarily prepared in line with international accounting practices is now required under Japanese GAAP and has been renamed “consolidated statement of changes in equity” in the fiscal year ended March 31, 2007.

The excess of the cost of an acquisition over the fair value of the net assets of the acquired subsidiaries at the date of acquisition is represented as “Goodwill” on the consolidated balance sheets and is being amortized on a straight-line basis over a period from 8 to 13 years.

Intercompany balances and transactions have been eliminated in consolidation. Unrealized profit included in assets resulting from transactions within the Group is eliminated.

b. Cash and Cash Equivalents—Cash equivalents are short-term investments that are readily convertible into cash and that are exposed to insignificant risk of changes in value. Cash equivalents include time deposits and benefit bonds of securities investment trusts, all of which mature or become due within three months of the date of acquisition.

c. Inventories—Inventories are mainly stated at the latest purchase price which approximates first-in, first-out cost method.

d. Marketable and Investment Securities—Marketable and investment securities are classified and accounted for, depending on management’s intent, as follows: (1) held-to-maturity debt securities, which are expected to

- 9 -

be held to maturity with the positive intent and ability to hold to maturity, are reported at amortized cost and (2) available-for-sale securities, which are not classified as the aforementioned securities, are reported at fair value with unrealized gains and losses, net of applicable taxes, reported in a separate component of equity.

Non-marketable available-for-sale securities are stated at cost determined by the moving-average method. For other than temporary declines in fair value, non-marketable available-for-sale securities are reduced to net realized value by a charge to income.

e. Investment in Associated Company—The Company uses the equity method of accounting for its investment in and earnings or losses of an associated company that it does not control but over which it does exert significant influence. Significant influence is generally deemed to exist if the Company has an ownership interest in the voting stock of an investee of between 20% and 50%. The Company determines whether the decline of fair values is other than temporary by considering various factors, such as historical financial data, product development activities and the overall health of the affiliate’s industry. If the Company considers any such decline to be other than temporary then a write-down is recorded to estimated fair value.

f. Property, Plant and Equipment—Property, plant and equipment are stated at cost. Depreciation of property, plant and equipment of the Group is computed substantially by the declining-balance method at rates based on the estimated useful lives of the assets, while the straight-line method is applied to the buildings which were acquired after April 1, 1998. The range of useful lives is principally from 6 to 50 years for buildings and structures, from 4 to 7 years for machinery and equipment, and from 5 to 20 years for furniture and fixtures.

g. Impairment of Long-lived Assets—In August 2002, the Business Accounting Council issued a Statement of Opinion, “Accounting for Impairment of Fixed Assets,” and in October 2003 the ASBJ issued ASBJ Guidance No. 6, “Guidance for Accounting Standard for Impairment of Fixed Assets.” These new pronouncements were effective for fiscal years beginning on or after April 1, 2005 with early adoption permitted for fiscal years ending on or after March 31, 2004.

The Group adopted the new accounting standards for impairment of long-lived assets as of April 1, 2005.

The Group reviews its long-lived assets for impairment whenever events or changes in circumstance indicate the carrying amount of an asset or asset group may not be recoverable. An impairment loss would be recognized if the carrying amount of an asset or asset group exceeds the sum of the undiscounted future cash flows expected to result from the continued use and eventual disposition of the asset or asset group. The impairment loss would be measured as the amount by which the carrying amount of the asset exceeds its recoverable amount, which is the higher of the discounted cash flows from the continued use and eventual disposition of the asset or the net selling price at disposition.

h. Golf Membership—Golf membership is stated at cost. For other than temporary declines in fair value, golf membership is reduced to net realizable value by a charge to income.

i. Operating Rights—Operating rights are carried at cost less accumulated amortization, which is calculated by the straight-line method over 5 years.

j. Deposits—Deposits are mainly comprised of lease deposits for the Group’s office spaces and refundable at the termination of each lease contract.

- 10 -

Insurance deposits consist of life insurance and non-life insurance policies for directors, for which the Company is the named beneficiary. Most of the insurance deposits are refundable.

k. Retirement and Pension Plans—The Company and certain subsidiaries have a non-contributory funded pension plan covering substantially all of its regular employees. The Group accounted for the liability for retirement benefits based on projected benefit obligations and plan assets at the balance sheet date.

Retirement benefits to directors and corporate auditors are provided at the amount which would be required if all directors and corporate auditors retired at the balance sheet date.

l. Presentation of Equity—On December 9, 2005, the ASBJ published a new accounting standard for presentation of equity. Under this accounting standard, certain items which were previously presented as liabilities are now presented as components of equity. Such items include stock acquisition rights, minority interests, and any deferred gain or loss on derivatives accounted for under hedge accounting. This standard is effective for fiscal years ending on or after May 1, 2006. The consolidated balance sheet as of March 31, 2007 is presented in line with this new accounting standard.

m. Leases—All leases are accounted for as operating leases. Under Japanese accounting standards for leases, finance leases that deem to transfer ownership of leased property to a lessee are to be capitalized, while other finance leases are permitted to be accounted for as operating lease transactions if certain “as if capitalized” information is disclosed in the notes to the lessee’s financial statements.

n. Bonuses to Directors and a Corporate Auditor—Prior to the fiscal year ended March 31, 2005, bonuses to directors and a corporate auditor were accounted for as a reduction of retained earnings in the fiscal year following approval at the general shareholders meeting. The ASBJ issued ASBJ Practical Issues Task Force (PITF) No. 13, “Accounting Treatment for Bonuses to Directors and Corporate Auditors,” which encouraged companies to record bonuses to directors and corporate auditors on the accrual basis with a related charge to income, but still permitted the direct reduction of such bonuses from retained earnings after approval of the appropriation of retained earnings.

The ASBJ replaced the above accounting pronouncement by issuing a new accounting standard for bonuses to directors and corporate auditors on November 29, 2005. Under the new accounting standard, bonuses to directors and corporate auditors must be expensed and are no longer allowed to be directly charged to retained earnings. This accounting standard is effective for fiscal years ending on or after May 1, 2006. The companies must accrue bonuses to directors and corporate auditors at the year end to which such bonuses are attributable.

The Company adopted the new accounting standard for bonuses to directors and a corporate auditor from the year ended March 31, 2007. The effect of adoption of this accounting standard was to decrease income before income taxes and minority interests for the year ended March 31, 2007 by ¥61,196 thousand ($519 thousand).

o. Income Taxes—The Group adopted the accounting standard for interperiod allocation of income taxes based on the asset and liability method. Deferred income taxes are recorded to reflect the impact of temporary differences between assets and liabilities recognized for financial reporting purposes and such amounts recognized for tax purposes. These deferred taxes are measured by applying currently enacted tax laws to the temporary differences.

p. Appropriations of Retained Earnings—Appropriations of retained earnings at each year end are reflected in the consolidated financial statements for the following year upon shareholders’ approval.

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q. Per Share Information—Basic net income per share is computed by dividing net income available to common shareholders by the weighted-average number of common stock outstanding for the period.

r. Revenue Recognition—Most of operating businesses of the Group have contractual relationships with customers. In these businesses, revenue is recognized in the period in which the services are provided pursuant to the terms of the contracts. Revenue from dining, delivery food and beverage services is recognized upon delivery of food and beverage products.

3. MARKETABLE AND INVESTMENT SECURITIES

Marketable and investment securities at March 31, 2007 and 2006 consisted of the following:

	Thousands of Yen				Thousands of U.S. Dollars
	2007		2006		2007
	(Unaudited)
Current—Debt securities	¥	99,630	¥	99,950	$	844
Total	¥	99,630	¥	99,950	$	844
Non-current:
Marketable equity securities	¥	846,268	¥	1,104,935	$	7,172
Non-marketable equity securities		405,104		423,030		3,433
Total	¥	1,251,372	¥	1,527,965	$	10,605

Information regarding marketable equity securities classified as available-for-sale at March 31, 2007 and 2006 is as follows:

	Thousands of Yen
	Cost		Unrealized Gains		Unrealized Losses		Fair Value
March 31, 2007
Available-for-sale equity securities	¥	334,865	¥	513,888	¥	2,485	¥	846,268
March 31, 2006 (Unaudited)
Available-for-sale equity securities		410,899		694,924		888		1,104,935

	Thousands of U.S. Dollars
	Cost		Unrealized Gains		Unrealized Losses		Fair Value
March 31, 2007
Available-for-sale equity securities	$	2,838	$	4,355	$	21	$	7,172

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Carrying amounts of available-for-sale securities and held-to-maturity securities whose fair value is not readily determinable as of March 31, 2007 and 2006 were as follows:

	Thousands of Yen				Thousands of U.S. Dollars
	2007		2006		2007
	(Unaudited)
Available-for-sale—Non-marketable equity securities	¥	405,104	¥	423,030	$	3,433
Held-to-maturity		99,630		99,950		844
Total	¥	504,734	¥	522,980	$	4,277

The carrying amounts of debt securities by contractual maturities for securities classified as held-to-maturity at March 31, 2007 were as follows:

	Thousands of Yen		Thousands of U.S. Dollars
Due within one year	¥	99,630	$	844

4. INVENTORIES

Inventories at March 31, 2007 and 2006 consisted of the following:

	Thousands of Yen				Thousands of U.S. Dollars
	2007		2006		2007
	(Unaudited)
Merchandise	¥	450,682	¥	500,368	$	3,820
Raw materials		809,025		716,175		6,856
Supplies		214,444		185,392		1,817
Total	¥	1,474,151	¥	1,401,935	$	12,493

5. SHORT-TERM BANK LOANS AND LONG-TERM LOANS

Short-term bank loans at March 31, 2006 consisted of notes to banks. The annual interest rates applicable to the short-term bank loans ranged from 0.60% to 0.89% (unaudited) at March 31, 2006.

As is customary in Japan, the Group maintains substantial deposit balances with banks with which it has borrowings. Such deposit balances are not legally or contractually restricted as to withdrawal.

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Long-term loans at March 31, 2007 and 2006 consisted of the following:

	Thousands of Yen						Thousands of U.S. Dollars
	2007			2006			2007
	(Unaudited)
Loans from banks, 1.23% (0.77% in 2006, unaudited), due serially to 2012—Collateralized	¥	2,730,672		¥	6,595,708		$	23,141
Less current portion		(898,696	)		(1,115,436	)		(7,616	)
Long-term loans, less current portion	¥	1,831,976		¥	5,480,272		$	15,525

Annual maturities of long-term loans at March 31, 2007 were as follows:

Year Ending March 31	Thousands of Yen		Thousands of U.S. Dollars
2008	¥	898,696	$	7,616
2009		661,576		5,606
2010		560,000		4,746
2011		560,000		4,746
2012		50,400		427
Total	¥	2,730,672	$	23,141

6. LIABILITY FOR EMPLOYEES’ RETIREMENT BENEFITS

The Company and certain subsidiaries have severance payment plans for employees.

Under most circumstances, employees terminating their employment are entitled to retirement benefits determined based on the rate of pay at the time of termination, years of service and certain other factors. Such retirement benefits are made in the form of a lump-sum severance payment from the Company or from certain subsidiaries and annuity payments from a trustee. Employees are entitled to larger payments if the termination is involuntary, by retirement at the mandatory retirement age, or by death.

The liability for employees’ retirement benefits at March 31, 2007 and 2006 consisted of the following:

	Thousands of Yen						Thousands of U.S. Dollars
	2007			2006			2007
	(Unaudited)
Projected benefit obligation	¥	7,117,408		¥	6,735,663		$	60,317
Fair value of plan assets		(6,782,826	)		(5,967,286	)		(57,482	)
Unrecognized actuarial gain		950,721			765,994			8,057
Net liability	¥	1,285,303		¥	1,534,371		$	10,892

- 14 -

The components of net periodic benefit costs are as follows:

	Thousands of Yen									Thousands of U.S. Dollars
	2007			2006			2005			2007
				(Unaudited)			(Unaudited)
Service cost	¥	528,933		¥	509,023		¥	523,562		$	4,482
Interest cost		128,002			119,949			117,345			1,085
Expected return on plan assets		(122,884	)		(13,495	)		(12,081	)		(1,041	)
Recognized actuarial (gain) loss		(7,966	)		105,154			97,717			(68	)
Net periodic benefit costs	¥	526,085		¥	720,631		¥	726,543		$	4,458

Assumptions used for the years ended March 31, 2007 and 2006, are set forth as follows:

	2007	2006
		(Unaudited)
Discount rate	2.0%	2.0%
Expected rate of return on plan assets	From 2.0% to 3.6%	From 0.0% to 2.5%
Recognition period of actuarial gain/loss	From 5 to 12 years	From 5 to 14 years

7. EQUITY

On and after May 1, 2006, Japanese companies are subject to a new corporate law of Japan (the “Corporate Law”), which reformed and replaced the Commercial Code of Japan (the “Code”) with various revisions that are, for the most part, applicable to events or transactions which occur on or after May 1, 2006 and for the fiscal years ending on or after May 1, 2006. The significant changes in the Corporate Law that affect financial and accounting matters are summarized below:

a. Dividends

Under the Corporate Law, companies can pay dividends at any time during the fiscal year in addition to the year-end dividend upon resolution at the shareholders meeting, if companies that meet certain criteria such as; (1) having the Board of Directors, (2) having independent auditors, (3) having the Board of Corporate Auditors, and (4) the term of service of the directors is prescribed as one year rather than two years of normal term by its articles of incorporation. The Board of Directors may declare dividends (except for dividends in kind) at any time during the fiscal year if the company has prescribed so in its articles of incorporation. The Company meets all the above criteria.

The Corporate Law permits companies to distribute dividends-in-kind (non-cash assets) to shareholders subject to a certain limitation and additional requirements.

Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if the articles of incorporation of the company so stipulate. The Corporate Law provides certain limitations on the amounts available for dividends or the purchase of treasury stock. The limitation is defined as the amount available for distribution to the shareholders, but the amount of net assets after dividends must be maintained at no less than ¥3 million.

- 15 -

b. Increases/Decreases and Transfer of Common Stock, Reserve and Surplus

The Corporate Law requires that an amount equal to 10% of dividends must be appropriated as a legal reserve (a component of retained earnings) or as additional paid-in capital (a component of capital surplus) depending on the equity account charged upon the payment of such dividends until the total aggregate amount of legal reserve and additional paid-in capital equals 25% of the common stock. Under the Corporate Law, the total amount of additional paid-in capital and legal reserve may be reversed without limitation. The Corporate Law also provides that common stock, legal reserve, additional paid-in capital, other capital surplus and retained earnings can be transferred among the accounts under certain conditions upon resolution of the shareholders.

c. Treasury Stock and Treasury Stock Acquisition Rights

The Corporate Law also provides for companies to purchase treasury stock and dispose of such treasury stock by resolution of the Board of Directors. The amount of treasury stock purchased cannot exceed the amount available for distribution to the shareholders which is determined by specific formula. Under the Corporate Law, stock acquisition rights, which were previously presented as a liability, are now presented as a separate component of equity. The Corporate Law also provides that companies can purchase both treasury stock acquisition rights and treasury stock. Such treasury stock acquisition rights are presented as a separate component of equity or deducted directly from stock acquisition rights.

8. INCOME TAXES

The tax effects of temporary differences and loss carryforwards which resulted in deferred tax assets at March 31, 2007 and 2006 are as follows:

	Thousands of Yen				Thousands of U.S. Dollars
	2007		2006		2007
			(Unaudited)
Current:
Deferred tax assets:
Accrued bonuses to employees	¥	1,346,338	¥	1,082,635	$	11,410
Accrued enterprise taxes		123,059		108,981		1,043
Social insurance contributions by employers		177,985		133,854		1,508
Accrued business office taxes		19,556		18,955		166
Other		69,548		88,179		589
Total		1,736,486		1,432,604		14,716
Deferred tax liabilities—other		3,694				31
Total		3,694				31
Net deferred tax assets	¥	1,732,792	¥	1,432,604	$	14,685

- 16 -

	Thousands of Yen						Thousands of U.S. Dollars
	2007			2006			2007
				(Unaudited)
Non-current:
Deferred tax assets:
Employee’s retirement benefits	¥	472,356		¥	562,668		$	4,003
Loss on devaluation of investment securities		67,492			64,482			572
Loss on devaluation of golf membership		15,501			13,570			131
Retirement benefits for directors and corporate auditors		96,670			108,080			819
Loss on impairment of long-lived assets		83,785			176,281			710
Allowance for doubtful accounts		34,731			63,740			294
Loss carryforwards		56,861			254,949			482
Other		23,908			16,492			203
Less valuation allowance		(96,194	)		(254,949	)		(815	)
Total		755,110			1,005,313			6,399
Deferred tax liabilities—net unrealized gain on available-for-sale securities		205,366			275,703			1,740
Total		205,366			275,703			1,740
Net deferred tax assets	¥	551,528		¥	732,562		$	4,674
Net deferred tax liabilities	¥	1,784		¥	2,952		$	15

A reconciliation between the normal effective statutory tax rate and the actual effective tax rate reflected in the accompanying consolidated statements of income for the years ended March 31, 2007, 2006 and 2005 is as follows:

	2007		2006		2005
			(Unaudited)		(Unaudited)
Normal effective statutory tax rate	40	%	41	%	41	%
Expenses not deductible for income tax purposes	1		4		2
Non-taxable dividend income	(2	)	(3	)
Per capita levy of local taxes	7		8		12
Amortization of goodwill	4		3		5
Other—net	(1	)			(2	)
Actual effective tax rate	49	%	53	%	58	%

At March 31, 2007, certain subsidiaries have tax loss carryforwards aggregating ¥140,779 thousand ($1,193 thousand), which are available to be offset against taxable income of such subsidiaries in future years. These tax loss carryforwards, if not utilized, will expire as follows:

Year Ending March 31	Thousands of Yen		Thousands of U.S. Dollars
2013	¥	140,779	$	1,193

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9. LEASES

The Group leases certain machinery, computer equipment, office space and other assets.

Total rental expenses for the years ended March 31, 2007, 2006 and 2005 were ¥1,135,621 thousand ($9,624 thousand), ¥981,846 thousand (unaudited) and ¥986,864 thousand (unaudited), respectively, including ¥449,073 thousand ($3,806 thousand), ¥152,937 thousand (unaudited) and ¥165,453 thousand (unaudited) of lease payments under finance leases. For the year ended March 31, 2007, the Group recorded an impairment loss of ¥12,304 thousand ($104 thousand) on certain leased property held under finance leases that do not transfer ownership and an allowance for impairment loss on leased property, which is included in long-term liabilities—other.

Pro forma information of leased property such as acquisition cost, accumulated depreciation, accumulated impairment loss, obligations under finance leases, depreciation expense, interest expense and other information of finance leases that do not transfer ownership of the leased property to the lessee on an “as if capitalized” basis for the years ended March 31, 2007 and 2006, was as follows:

	Thousands of Yen								Thousands of U.S. Dollars
	2007								2007
	Machinery and Equipment		Furniture and Fixtures		Software		Total		Machinery and Equipment		Furniture and Fixtures		Software		Total
Acquisition cost	¥	60,489	¥	1,900,986	¥	268,785	¥	2,230,260	$	513	$	16,110	$	2,278	$	18,901
Accumulated depreciation		41,472		757,678		107,620		906,770		352		6,421		912		7,685
Accumulated impairment loss				4,157		8,028		12,185				35		68		103
Net leased property	¥	19,017	¥	1,139,151	¥	153,137	¥	1,311,305	$	161	$	9,654	$	1,298	$	11,113
	Thousands of Yen
	2006
	(Unaudited)
	Machinery and Equipment		Furniture and Fixtures		Software		Total
Acquisition cost	¥	84,382	¥	1,291,495	¥	128,956	¥	1,504,833
Accumulated depreciation		57,122		493,235		24,540		574,897
Net leased property	¥	27,260	¥	798,260	¥	104,416	¥	929,936

Obligations under finance leases:

	Thousands of Yen				Thousands of U.S. Dollars
	2007		2006		2007
			(Unaudited)
Due within one year	¥	448,096	¥	326,215	$	3,798
Due after one year		898,738		621,475		7,616
Total	¥	1,346,834	¥	947,690	$	11,414

Allowance for impairment loss on leased property of ¥12,185 thousand ($103 thousand) as of March 31, 2007 is not included in obligations under finance leases.

- 18 -

Depreciation expense, interest expense and other information under finance leases:

	Thousands of Yen						Thousands of U.S. Dollars
	2007		2006		2005		2007
			(Unaudited)		(Unaudited)
Depreciation expense	¥	429,196	¥	147,709	¥	158,178	$	3,638
Interest expense		25,168		4,237		5,499		213
Total	¥	454,364	¥	151,946	¥	163,677	$	3,851
Reversal of allowance for impairment loss on leased property	¥	119					$	1
Impairment loss		12,304						104

Depreciation expense and interest expense, which are not reflected in the accompanying consolidated statements of income, are computed by the straight-line method and the interest method, respectively.

The minimum rental commitments under noncancelable operating leases as a lessee at March 31, 2007 were as follows:

	Thousands of Yen		Thousands of U.S. Dollars
Due within one year	¥	8,775	$	74
Due after one year		27,934		237
Total	¥	36,709	$	311

10. SEGMENT INFORMATION

Information about industry segments of the Group for the years ended March 31, 2007, 2006 and 2005 is as follows:

Industry Segments

a. Sales and Operating Income

	Thousands of Yen
	2007
	Food Business		Office Coffee and Tea Services		Temporary Staffing Services		Extermination of Harmful Insects and Facility Services		Linen Supply		Other Services			Total		Eliminations/ Corporate			Consolidated
Sales to customers	¥	121,391,191	¥	8,611,205	¥	5,859,573	¥	786,191	¥	1,407,703	¥	671,092		¥	138,726,955				¥	138,726,955
Intersegment sales		1,039		198,892		133,532		72,240		330,382		256,363			992,448	¥	(992,448	)
Total sales		121,392,230		8,810,097		5,993,105		858,431		1,738,085		927,455			139,719,403		(992,448	)		138,726,955
Operating expenses		115,952,849		8,429,934		5,789,512		844,583		1,606,168		933,234			133,556,280		617,237			134,173,517
Operating income (loss)	¥	5,439,381	¥	380,163	¥	203,593	¥	13,848	¥	131,917	¥	(5,779	)	¥	6,163,123	¥	(1,609,685	)	¥	4,553,438

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b.      Assets, Depreciation, Impairment Loss and Capital Expenditures
	Thousands of Yen
	2007
	Food Business		Office Coffee and Tea Services		Temporary Staffing Services		Extermination of Harmful Insects and Facility Services		Linen Supply		Other Services			Total		Eliminations/ Corporate			Consolidated
Assets	¥	29,987,693	¥	5,314,952	¥	1,328,449			¥	1,457,939	¥	54,821		¥	38,143,854	¥	(2,378,292	)	¥	35,765,562
Depreciation		222,913		25,602		11,811	¥	1,300		77,832		817			340,275		165,121			505,396
Impairment loss		83,541													83,541					83,541
Capital expenditures		201,136		36,592		10,132				71,317		164			319,341		113,283			432,624
a.      Sales and Operating Income
	Thousands of U.S. Dollars
	2007
	Food Business		Office Coffee and Tea Services		Temporary Staffing Services		Extermination of Harmful Insects and Facility Services		Linen Supply		Other Services			Total		Eliminations/ Corporate			Consolidated
Sales to customers	$	1,028,739	$	72,976	$	49,657	$	6,663	$	11,930	$	5,687		$	1,175,652				$	1,175,652
Intersegment sales		9		1,685		1,132		612		2,800		2,173			8,411	$	(8,411	)
Total sales		1,028,748		74,661		50,789		7,275		14,730		7,860			1,184,063		(8,411	)		1,175,652
Operating expenses		982,652		71,439		49,064		7,158		13,612		7,909			1,131,834		5,230			1,137,064
Operating income (loss)	$	46,096	$	3,222	$	1,725	$	117	$	1,118	$	(49	)	$	52,229	$	(13,641	)	$	38,588
b.      Assets, Depreciation, Impairment Loss and Capital Expenditures
	Thousands of U.S. Dollars
	2007
	Food Business		Office Coffee and Tea Services		Temporary Staffing Services		Extermination of Harmful Insects and Facility Services		Linen Supply		Other Services			Total		Eliminations/ Corporate			Consolidated
Assets	$	254,133	$	45,042	$	11,258			$	12,355	$	465		$	323,253	$	(20,155	)	$	303,098
Depreciation		1,889		217		100	$	11		660		7			2,884		1,399			4,283
Impairment loss		708													708					708
Capital expenditures		1,705		310		86				604		1			2,706		960			3,666

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a.      Sales and Operating Income
	Thousands of Yen
	2006
	(Unaudited)
	Food Business		Office Coffee and Tea Services		Temporary Staffing Services		Extermination of Harmful Insects and Facility Services		Linen Supply		Other Services		Total		Eliminations/ Corporate			Consolidated
Sales to customers	¥	111,997,410	¥	2,152,070	¥	5,109,697	¥	797,929	¥	1,384,319	¥	445,956	¥	121,887,381				¥	121,887,381
Intersegment sales		99,136		176,779		102,952		334,706		276,841		199,799		1,190,213	¥	(1,190,213	)
Total sales		112,096,546		2,328,849		5,212,649		1,132,635		1,661,160		645,755		123,077,594		(1,190,213	)		121,887,381
Operating expenses		107,060,073		2,210,537		5,065,746		1,123,779		1,539,309		619,321		117,618,765		523,463			118,142,228
Operating income	¥	5,036,473	¥	118,312	¥	146,903	¥	8,856	¥	121,851	¥	26,434	¥	5,458,829	¥	(1,713,676	)	¥	3,745,153
b.      Assets, Depreciation, Impairment Loss and Capital Expenditures
	Thousands of Yen
	2006
	(Unaudited)
	Food Business		Office Coffee and Tea Services		Temporary Staffing Services		Extermination of Harmful Insects and Facility Services		Linen Supply		Other Services		Total		Eliminations/ Corporate			Consolidated
Assets	¥	28,793,260	¥	6,020,042	¥	1,101,553	¥	337,301	¥	1,502,789	¥	87,155	¥	37,842,100	¥	(1,248,507	)	¥	36,593,593
Depreciation		232,142		12,419		11,099		1,482		73,271		457		330,870		146,929			477,799
Impairment loss		214,481												214,481					214,481
Capital expenditures		450,089		20,146		21,365		1,297		62,989				555,886		73,455			629,341
a.      Sales and Operating Income
	Thousands of Yen
	2005
	(Unaudited)
	Food Business		Office Coffee and Tea Services		Temporary Staffing Services		Extermination of Harmful Insects and Facility Services		Linen Supply		Other Services		Total		Eliminations/ Corporate			Consolidated
Sales to customers	¥	105,558,641	¥	2,338,700	¥	4,246,824	¥	663,474	¥	1,358,759	¥	479,813	¥	114,646,211				¥	114,646,211
Intersegment sales		124,198		167,272		100,251		413,897		219,939		207,485		1,233,042	¥	(1,233,042	)
Total sales		105,682,839		2,505,972		4,347,075		1,077,371		1,578,698		687,298		115,879,253		(1,233,042	)		114,646,211
Operating expenses		100,812,584		2,413,035		4,158,854		1,063,253		1,465,313		685,536		110,598,575		515,367			111,113,942
Operating income	¥	4,870,255	¥	92,937	¥	188,221	¥	14,118	¥	113,385	¥	1,762	¥	5,280,678	¥	(1,748,409	)	¥	3,532,269

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b. Assets, Depreciation and Capital Expenditures

	Thousands of Yen
	2005
	(Unaudited)
	Food Business		Office Coffee and Tea Services		Temporary Staffing Services		Extermination of Harmful Insects and Facility Services		Linen Supply		Other Services		Total		Eliminations/ Corporate		Consolidated
Assets	¥	29,542,880	¥	366,289	¥	948,492	¥	320,812	¥	1,558,174	¥	88,860	¥	32,825,507	¥	3,444,217	¥	36,269,724
Depreciation		261,155		12,307		5,730		1,627		86,532		564		367,915		166,067		533,982
Capital expenditures		261,385		12,863		26,888		2,924		11,239		1,280		316,579		142,721		459,300

Notes:	1.    The Office Coffee Services was renamed the Office Coffee and Tea Services for the fiscal year ended March 31, 2007. The information of industry segments for the years ended March 31, 2006 and 2005 was changed to the new segment name.
	2.    The effect of the change in the accounting for bonuses to directors and a corporate auditor in Note 2.l was to decrease operating income of the Food Business and Temporary Staffing Services for the year ended March 31, 2007 by ¥58,546 thousand ($496 thousand) and ¥2,650 thousand ($23 thousand), respectively, from such segments in the prior year.

The Company has no branch offices or subsidiaries in foreign countries, therefore geographic segment information has not been disclosed. Also, sales to foreign customers have not been presented because neither the Company nor its subsidiaries recorded foreign sales for the years ended March 31, 2007, 2006 and 2005.

11. RELATED PARTY TRANSACTIONS

Transactions of the Company with related parties for the years ended March 31, 2007, 2006 and 2005 were as follows:

	Thousands of Yen						Thousands of U.S. Dollars
	2007		2006		2005		2007
			(Unaudited)		(Unaudited)
Short-term loans made to a subsidiary of a shareholder during the year	¥	1,418,356			¥	1,000,000	$	12,020
Tax accountant fee to a corporate auditor		1,800	¥	1,800		1,800		15

Short-term loans to a subsidiary of a shareholder mentioned above in 2007 amounted to ¥1,700,000 thousand ($14,406 thousand) as of March 31, 2007.

- 22 -

12. RECONCILIATION TO U.S. GAAP

The consolidated financial statements of the Company are prepared in accordance with Japanese GAAP, which varies in certain significant respects from U.S. GAAP. The following are reconciliations of equity and net income of the Company applying U.S. GAAP instead of Japanese GAAP.

The Group’s equity as of March 31, 2007 is reconciled as follows:

	Thousands of Yen			Thousands of U.S. Dollars
	2007			2007
Equity in accordance with Japanese GAAP	¥	10,507,768		$	89,050
Differences arising from different accounting for:
a. Goodwill, intangible assets and other business combination related adjustments		6,839,912			57,965
b. Accrued vacation		(1,669,897	)		(14,153	)
c. Employees’ retirement benefits		757,876			6,423
d. Asset retirement obligation		(66,586	)		(564	)
e. Capital leases		(30,524	)		(259	)
f. Minority interests		(35,970	)		(305	)
g. Tax effect of adjustments		(2,249,448	)		(19,063	)
Total		3,545,363			30,044
Shareholders’ equity in accordance with U.S. GAAP	¥	14,053,131		$	119,094

The Group’s net income for the year ended March 31, 2007 is reconciled as follows:

	Thousands of Yen			Thousands of U.S. Dollars
	2007			2007
Net income in accordance with Japanese GAAP	¥	2,383,432		$	20,199
Differences arising from different accounting for:
a. Goodwill, intangible assets and other business combination related adjustments		228,708			1,938
b. Accrued vacation		(174,877	)		(1,482	)
c. Employees’ retirement benefits		(48,173	)		(408	)
d. Asset retirement obligation		(8,385	)		(71	)
e. Capital leases		(6,296	)		(53	)
g. Tax effect of adjustments		219,771			1,862
Total		210,748			1,786
Net income in accordance with U.S. GAAP	¥	2,594,180		$	21,985

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Statement of Financial Accounting Standards (“SFAS”) 130, “Reporting Comprehensive Income,” establishes rules for the reporting of comprehensive income and its components. The following table summarizes the components of comprehensive income under U.S. GAAP for the year ended March 31, 2007.

	Thousands of Yen			Thousands U.S. Dollars
	2007			2007
Net income in accordance with U.S. GAAP	¥	2,594,180		$	21,985
Unrealized loss on available-for-sale securities (net of tax)		(109,073	)		(925	)
Adjustment to pension liability (net of tax)		106,152			900
Total comprehensive income	¥	2,591,259		$	21,960

The analysis of changes in shareholders’ equity under U.S. GAAP is as follows:

	Thousands of Yen			Thousands U.S. Dollars
	2007			2007
Shareholders’ equity as of March 31, 2006 in accordance with U.S. GAAP	¥	11,482,010		$	97,305
Comprehensive income		2,591,259			21,960
Purchases of treasury stock		(14,647	)		(124	)
Other		(5,491	)		(47	)
Shareholders’ equity as of March 31, 2007 in accordance with U.S. GAAP	¥	14,053,131		$	119,094

- 24 -

The following is a summary of the significant adjustments made to equity and net income to reconcile the Japanese GAAP results with U.S. GAAP. The paragraphs below refer to the corresponding items set forth above.

a) Business combinations

Under Japanese GAAP, the Business Accounting Council issued a Statement of Opinion, “Accounting for Business Combinations” in October 2003 which is effective for fiscal years beginning on or after April 1, 2006. Before this statement, there was no specific accounting standard addressing accounting for business combinations; therefore, companies followed common business practices dictated by the Code.

Under the purchase method generally applied by Japanese companies, goodwill is measured as the excess of cost over carrying values of the individual assets acquired and liabilities assumed at the acquisition date. Subsequently, the goodwill is amortized on a straight-line basis over a number of years that may vary, depending on the nature of the acquired business.

Under U.S. GAAP, all business combinations (excluding combinations of entities under common control) are accounted for using the purchase method as defined in SFAS No. 141, “Business Combinations.” SFAS No. 141 requires that the net assets, tangible and identifiable intangible assets less liabilities of the acquired company be recorded at fair value, with the difference between the cost of an acquired company and the fair value of the acquired net assets recorded as goodwill. Also, after the adoption of SFAS No. 142, “Goodwill and Intangible Assets,” goodwill and recognized indefinite-lived intangible assets in a business combination are not amortized, but are tested for impairment at least annually, as well as on an interim basis if events or changes in circumstances indicate that the goodwill and indefinite-lived intangible assets might be impaired. Separate intangible assets that are not deemed to have an indefinite life are amortized over their expected economic life and also tested for impairment.

In 2000, the Company purchased 100% of the outstanding common stock of KK Kizembo (“Kizembo”). In December 2005, the Company purchased 100% of the common stock of Yamato Corporation (“Yamato”). In July 2002, the Company purchased 100% of the common stock of Atlas Co. (“Atlas”) which owned 52.8% of the common stock of Mefos Co. (“Mefos”); subsequently, Atlas acquired in a series of step acquisitions the remaining 47.2% of common stock of Mefos by December 2005.

In March 2006, the Company and Atlas merged, leaving the Company as the surviving entity. As a result of the merger, the Company directly held 100% of the common stock of Mefos. Under Japanese GAAP, and in line with the Code, the Company consolidated the net carrying amount of the assets and liabilities of Mefos and wrote off the unamortized amount of goodwill related to the previous acquisition of Atlas and its subsidiary Mefos. The one-time accelerated goodwill amortization charge of ¥3,562,212 thousand was recognized as a reduction of the Company’s 2006 retained earnings.

Under U.S. GAAP, the March 2006 merger between the Company and Atlas was accounted for as a transfer of net assets or equity interests between the entities under common control. Such transfer is accounted for by the receiving entity at the carrying amounts, including goodwill in the accounts of the transferring entity at the date of the transfer. Consequently, the one-time accelerated goodwill amortization charge of ¥3,562,212 thousand is reversed for U.S. GAAP reporting purposes. The reversal is reflected in U.S. GAAP figures in goodwill below.

- 25 -

Goodwill:

The following table presents the carrying amount of goodwill under Japanese GAAP and U.S. GAAP as of March 31, 2007.

	Thousands of Yen												Thousands of U.S. Dollars
	Japanese GAAP							U.S. GAAP					Japanese GAAP							U.S. GAAP
Acquired Company	Carrying Amount		Accumulated Amortization			Net Carrying Amount		Carrying Amount, net of Impairment		Goodwill Related Reconciliation Item			Carrying Amount		Accumulated Amortization			Net Carrying Amount		Carrying Amount, net of Impairment		Goodwill Related Reconciliation Item
Kizembo	¥	482,935	¥	(452,751	)	¥	30,184	¥	332,018	¥	301,834		$	4,093	$	(3,837	)	$	256	$	2,814	$	2,558
Mefos		6,175,740		(4,803,012	)		1,372,728		1,875,532		502,804			52,336		(40,703	)		11,633		15,894		4,261
Yamato		2,982,465		(328,248	)		2,654,217		2,112,419		(541,798	)		25,275		(2,782	)		22,493		17,902		(4,592	)
Total	¥	9,641,140	¥	(5,584,011	)	¥	4,057,129	¥	4,319,969	¥	262,840		$	81,704	$	(47,322	)	$	34,382	$	36,610	$	2,227

For U.S. GAAP reporting purposes, the goodwill recognized in connection with the Kizembo acquisition was amortized for those periods prior to the adoption of SFAS No.142.

For U.S. GAAP reporting purposes, prior to March 31, 2006, the Company recognized goodwill impairment in connection with the acquisition of Atlas and its subsidiary, Mefos.

For the year ended March 31, 2007, the net income reconciliation item related to goodwill represents the reversal of the goodwill amortization charge amounting to ¥ 507,980 thousand ($ 4,305 thousand) recorded under Japanese GAAP.

Under Japanese GAAP, the estimated aggregate amortization expense for goodwill for the next five years is as follows:

Year Ending March 31	Thousands of Yen		Thousands of U.S. Dollars
2008	¥	477,796	$	4,049
2009		447,613		3,793
2010		447,613		3,793
2011		447,613		3,793
2012		447,613		3,793

- 26 -

Adjustment to intangible assets:

Under Japanese GAAP, the Company did not recognize identifiable intangible assets, other than goodwill, as part of a purchase price allocation in a business combination.

In connection with the above mentioned acquisitions, under U.S. GAAP, the Company recognized identifiable intangible assets and when applicable amortized those over the expected economic life of each intangible asset. The table below presents the gross carrying amount, accumulated amortization and net carrying amount, in total and by major class of intangible assets acquired in the above mentioned business combinations as of March 31, 2007.

	Thousands of Yen							Thousands of U.S. Dollars
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Customer Contracts	¥	7,366,836	¥	(1,093,778	)	¥	6,273,058	$	62,431	$	(9,269	)	$	53,162
Trademarks		361,723					361,723		3,065					3,065
Total	¥	7,728,559	¥	(1,093,778	)	¥	6,634,781	$	65,496	$	(9,269	)	$	56,227

For the year ended March 31, 2007, the net income reconciliation item related to intangible assets represents the intangible assets amortization charge recognized under U.S. GAAP amounting to ¥413,392 thousand ($3,503 thousand).

Customer contracts are being amortized on a straight-line basis over periods of 14 to 20 years. Trademarks are not amortized but are tested for impairment at least annually, as well as on an interim basis if events or changes in the circumstances indicate that the trademarks might be impaired.

Under U.S. GAAP the estimated aggregate amortization expense for intangible assets acquired for the next five years is as follows:

Year Ending March 31	Thousands of Yen		Thousands of U.S. Dollars
2008	¥	413,392	$	3,503
2009		413,392		3,503
2010		413,392		3,503
2011		413,392		3,503
2012		413,392		3,503

- 27 -

Other adjustments in connection with business combinations:

The following table represents a summary of other adjustments in connection with the business combinations as described above as of and for the year ended March 31, 2007.

	Thousands of Yen						Thousands of U.S. Dollars
	As of March 31, 2007			Year ended March 31, 2007			As of March 31, 2007			Year ended March 31, 2007
Reversal of impairment of the value of land of the acquired company recognized under Japanese GAAP for the year ended March 31, 2007, which was considered as part of the purchase price allocation for U.S. GAAP accounting purposes				¥	88,577					$	751
Deferred revenue recognized under U.S. GAAP not recognized under Japanese GAAP, and amortization of deferred revenue (i)	¥	(110,184	)		67,213		$	(934	)		570
Insurance reserve		76,898			(74,102	)					(628	)
Miscellaneous items, net		(24,423	)		52,432			445			443
Total	¥	(57,709	)	¥	134,120		$	(489	)	$	1,136

(i) Under Japanese GAAP, Yamato, the acquired company, had arrangements that required Yamato’s customers to pay a certain amount of revenue at the start of the contract prior to the acquisition date. These up-front payments were characterized as non-refundable and were related to services to be provided in future years. Yamato recognized these payments as revenue on a cash received basis. Under U.S. GAAP, the up-front payments are deferred over the longer of the contractual life of an arrangement or the customer relationship life. In addition, if the balance sheet of an acquired entity immediately before the acquisition date includes deferred revenue, the acquiring entity is required to recognize a liability if such deferred revenue represents a legal obligation assumed by the acquiring entity. The amount assigned to that liability is based on its estimated fair value at the acquisition date.

Business combination adjustment summary:

The following table summarizes the U.S. GAAP adjustments related to the above mentioned business combinations:

	Thousands of Yen						Thousands of U.S. Dollars
	As of March 31, 2007			Year ended March 31, 2007			As of March 31, 2007			Year ended March 31, 2007
Goodwill	¥	262,840		¥	507,980		$	2,227		$	4,305
Intangible assets		6,634,781			(413,392	)		56,227			(3,503	)
Land, deferred revenue, and other fair value adjustments		(57,709	)		134,120			(489	)		1,136
Total	¥	6,839,912		¥	228,708		$	57,965		$	1,938

- 28 -

b) Accrued vacation

Japanese GAAP does not specifically require a company to accrue liabilities for future compensated absences (short-term employee benefits). Under U.S. GAAP, in accordance with SFAS No. 43, “Accounting for Compensated Absences,” absences such as vacations are accrued when earned by employees.

c) Employees’ retirement benefits

Japanese GAAP and U.S. GAAP have the same objective and follow similar principles in accounting for retirement benefit obligations. However, there are several differences in respect to how they are applied.

Under Japanese GAAP, the Group adopted pension accounting effective as of April 1, 2000. Upon adoption, an election to amortize the transition obligation over a 5 to 12 year period was made.

The following represents the most relevant differences in connection with assumptions used to calculate pension liability:

1. Unlike U.S. GAAP, there is no corridor approach under Japanese GAAP but it includes the consideration of materiality with regard to the selection of assumptions to determine past benefit obligations and therefore the resulting recognition of actuarial differences.

2. Under Japanese GAAP, the rate used to discount benefit obligations may be determined by reference to average interest rates of a certain period and need not necessarily be the rate prevailing on the balance sheet date.

The liability for employees’ retirement benefits at March 31, 2007 under U.S. GAAP consisted of the following:

	Thousands of Yen			Thousands of U.S. Dollars
	2007			2007
Projected benefit obligation	¥	(7,310,253	)	$	(61,951	)
Fair value of plan assets		6,782,826			57,482
Net liability under U.S. GAAP		(527,427	)		(4,469	)
Net liability under Japanese GAAP		(1,285,303	)		(10,892	)
Equity reconciliation item	¥	757,876		$	6,423

- 29 -

Under U.S. GAAP, the components of net periodic benefit costs are as follows:

	Thousands of Yen			Thousands of U.S. Dollars
	2007			2007
Service cost	¥	602,955		$	5,110
Interest cost		129,319			1,096
Expected return on plan assets		(122,884	)		(1,041	)
Recognized actuarial loss		(35,132	)		(299	)
Net periodic benefit costs under U.S. GAAP		574,258			4,866
Net periodic benefit costs under Japanese GAAP		526,085			4,458
Net income reconciliation item	¥	(48,173	)	$	(408	)

The U.S. GAAP assumptions used for the year ended March 31, 2007 are set forth as follows:

	2007
Discount rate	2.00%
Expected rate of return on plan assets	2.00%
Recognition period of actuarial gain/loss	From 5 to 12 years

d) Asset retirement obligation

Under Japanese GAAP, the Group does not recognize any liability for future legal obligations of asset retirement associated with the restoration of leased properties to return them to their original condition because there is no specific requirement. SFAS No. 143, “Accounting for Asset Retirement Obligations,” requires a company to record legal obligation associated with the retirement of a tangible long-lived asset that results from the acquisition, construction, or development and, or the normal operation of a long-lived asset, at its fair value. Such obligation generally includes provisions under a lease agreement to remove asset placed in service at the leased premises or improvements made to the leased property during the lease term.

The Group leases several corporate and regional offices, and has installed leasehold improvements, such as partitions, counters and phone systems, in these leased properties. Most lease agreements in Japan require the lessee to restore the leased property to its original condition, including removal of the leasehold improvements the lessee has installed, when the lessee moves out of the leased property. As such, the Group will incur certain future costs for the restoration that are required under the lease agreements.

The following table presents asset retirement costs, accumulated depreciation of asset retirement costs, asset retirement obligations, and related expenses in connection with the Group real estate leases as of and for the year ended March 31, 2007.

	Thousands of Yen			Thousands of U.S. Dollars
Asset retirement costs	¥	124,038		$	1,051
Accumulated depreciation of asset retirement costs		(51,697	)		(438	)
Asset retirement obligations		(138,927	)		(1,177	)
Asset retirement obligations, net	¥	(66,586	)	$	(564	)
Asset retirement costs—depreciation expense	¥	(6,698	)	$	(57	)
Asset retirement obligations—accretion expense		(1,687	)		(14	)
Asset retirement obligation impact on net income before income tax	¥	(8,385	)	$	(71	)

- 30 -

e) Capital leases

In accordance with Japanese GAAP, finance leases that deem to transfer ownership of the leased property to a lessee are to be capitalized, while other finance leases are permitted to be accounted for as operating lease transactions if certain “as if capitalized” information is disclosed in the notes to the lessee’s financial statements. The Group accounts for all leases as operating leases and only provides footnote disclosures on an “as if capitalized” basis for qualifying leases. Refer to Note 2.m. and 9.

U.S. GAAP requires the application of SFAS 13, “Accounting for Leases,” in order to determine whether a lease should be classified as an operating or capital lease. The Group analyzed its leases in accordance with the criteria specified in SFAS No. 13 and determined that certain of its leases should be capitalized.

The Company sells certain vending machines to third-party leasing companies and, at the same time, enters into agreements to lease back the machines. Such transactions have been accounted for as a sale and an operating lease under Japanese GAAP, while, under U.S. GAAP, they have been accounted for as a sale and capital lease as the lease term equals or exceeds 75 percent of remaining estimated economic life of the leased asset.

The following table presents a summary of the differences between Japanese GAAP and U.S. GAAP for lease-related assets and liabilities as well as the income statement related information as of and for the year ended March 31, 2007.

	Thousands of Yen			Thousands of U.S. Dollars
Machinery and equipment	¥	2,583,434		$	21,894
Other assets		525,344			4,451
Accumulated depreciation		(1,345,079	)		(11,399	)
Lease liability		(1,794,223	)		(15,205	)
Net impact on shareholders’ equity	¥	(30,524	)	$	(259	)
Reversal of operating lease expense	¥	654,066		$	5,543
Lease asset depreciation under U.S. GAAP		(626,024	)		(5,305	)
Lease related interest expense under U.S. GAAP		(34,338	)		(291	)
Lease related impact on net income before income tax	¥	(6,296	)	$	(53	)

f) Minority interests

Under Japanese GAAP, the Company classifies its minority interests within equity. U.S. GAAP requires minority interests to be presented as a separate line item between long-term liabilities and shareholders’ equity in the consolidated balance sheet.

- 31 -

g) Tax effect of adjustments

Accounting for income taxes in accordance with Japanese GAAP is substantially similar to accounting for income taxes in accordance with SFAS No. 109, “Accounting for Income Taxes.” Other than the deferred tax impact from the U.S. GAAP reconciliation items, there is no material difference in connection with accounting for income taxes resulting from the application of U.S. GAAP. The following table illustrates the impact from the GAAP reconciliation items on the deferred tax asset and liability line items on the Group’s consolidated balance sheet as of March 31, 2007:

	Thousands of Yen									Thousands of U.S. Dollars
	Japanese GAAP Balances			SFAS No. 109 Applied to U.S. GAAP Adjustments			U.S. GAAP Balances			Japanese GAAP Balances			SFAS No. 109 Applied to U.S. GAAP Adjustments			U.S. GAAP Balances
Balance Sheet:
Current deferred tax asset	¥	1,732,792		¥	34,731		¥	1,767,523		$	14,685		$	294		$	14,979
Non-current deferred tax asset		551,528			702,454			1,253,982			4,674			5,953			10,627
Non-current deferred tax liability		(1,784	)		(2,986,633	)		(2,988,417	)		(15	)		(25,310	)		(25,325	)
Net deferred tax asset (liability)	¥	2,282,536		¥	(2,249,448	)	¥	33,088		$	19,344		$	(19,063	)	$	281

- 32 -

h) Cash and cash equivalents

In accordance with Japanese GAAP, the Group considers that Cash and Cash Equivalents consist of short-term investments that are readily convertible into cash and that are exposed to insignificant risk of changes in value. Cash equivalents include time deposits and benefit bonds of securities investment trusts, all of which mature or become due within three months of the date of acquisition. The Group also considers to be cash equivalents a restricted cash deposit of ¥13,959 thousand ($118 thousand) as of March 31 2007, which is to be used to buy back its own shares.

Under U.S. GAAP, cash equivalents are defined as short-term, highly liquid investments that are both readily convertible to known amounts of cash and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. Additionally, restricted cash should be disclosed separately from cash and cash equivalents on the face of the balance sheet and should not be included in the cash total in the statement of cash flows.

The Group has presented the balance of the restricted cash deposit as an operating activity as of March 31, 2007 and 2006 for U.S. GAAP reporting purposes.

The following table represents the Group’s condensed consolidated information related to the statement of cash flows for the year ended March 31, 2007.

	Thousands of Yen			Thousands of U.S. Dollars
Net cash provided by operating activities	¥	4,124,550		$	34,953
Net cash provided by investing activities		165,047			1,399
Net cash used in financing activities		(4,529,684	)		(38,387	)
Net decrease in cash and cash equivalents		(240,087	)		(2,035	)
Cash and cash equivalents at beginning of year		8,815,677			74,709
Cash and cash equivalents at end of year	¥	8,575,590		$	72,674

i) Recent accounting pronouncements to be adopted in future periods

U.S. GAAP

In July 2006, the Financial Accounting Standards Board (the “FASB”) released FASB Interpretation (“FIN”) No. 48, “Accounting for Uncertainty in Income Taxes—an Interpretation of FASB Statement No. 109.” The Interpretation clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with SFAS No. 109, Accounting for Income Taxes. FIN No. 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. It also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. FIN No. 48 is effective for fiscal years beginning after December 15, 2006. The Company is currently evaluating the potential impact from adopting FIN No. 48 on its consolidated financial position, consolidated results of operations, or liquidity.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” SFAS No. 157 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. SFAS No. 157 clarifies that fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007. The Company is currently evaluating the potential impact from adopting SFAS No. 157 on its consolidated financial position, results of operations, or liquidity.

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In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities— including an amendment of FASB Statement No. 115.” SFAS No. 159 enables entities to choose to measure eligible financial assets and financial liabilities at fair value, with changes in value recognized in earnings. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. The Company is currently evaluating the potential impact from adopting SFAS No. 159 on its consolidated financial position, results of operations or liquidity.

In December 2007, the FASB issued SFAS No. 141(revised 2007), “Business Combinations.” (“SFAS No. 141(R)”) SFAS No. 141(R) establishes principles and requirements for the reporting entity in a business combination, including recognition and measurement in the financial statements of the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree. This statement also establishes disclosure requirements to enable financial statement users to evaluate the nature and financial effects of the business combination. SFAS No. 141(R) applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008, and interim periods within those fiscal years. The Company is currently evaluating the potential impact from adopting SFAS No. 141(R) on its consolidated financial position, results of operations, or liquidity.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements—amendment of Accounting Research Bulletin No. 51.” SFAS No. 160 establishes accounting and reporting standards for ownership interests in subsidiaries held by parties other than the parent, changes in a parent’s ownership of a noncontrolling interest, calculation and disclosure of the consolidated net income attributable to the parent and the noncontrolling interest, changes in a parent’s ownership interest while the parent retains its controlling financial interest and fair value measurement of any retained noncontrolling equity investment. SFAS No. 160 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. Early adoption is prohibited. The Company is currently evaluating the potential impact from adopting SFAS No. 160 on its consolidated financial position, results of operations, or liquidity.

Japanese GAAP

In July 2006, the ASBJ issued an Accounting Standard - ASBJ Statement No. 9, “Accounting Standards for Measurement of Inventories.” The standard requires companies to measure all inventories at the lower of cost or net realizable value (NRV) when and if the profitability of those inventories declines. ASBJ Statement No. 9 replaces the current standard, which allows the use of either the cost method with consideration of impairment, or the lower of cost or NRV method. The new standard is effective for fiscal years beginning on or after April 1, 2008 although earlier application is permitted. The Company believes that the adoption of ASBJ Statement No. 9 will not have a significant impact on its consolidated financial position, results of operations, or liquidity.

In March 2007, the ASBJ issued an Accounting Standard - ASBJ Statement No. 13, “Accounting Standard for Lease Transactions and its Implementation Guidance” and ASBJ Guidance No. 16, “Guidance on Accounting Standard for Lease Transactions.” The new standard and related implementation guidance do not change the definitions for finance and operating leases; however eliminate the application of an exceptional rule where companies were allowed to account for financial leases that do not transfer ownership at the end of the lease term as operating leases; consequently, companies will be required to recognize finance leases on their balance sheet. The new standard also includes real estate leases within its scope. The standard and its implementation guidance are effective for fiscal years beginning on or after April 1, 2008 although earlier application is permitted. The Company is currently evaluating the potential impact from adopting ASBJ Statement No. 13 and ASBJ Guidance No. 16 on its consolidated financial position, results of operations, or liquidity.

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