Annual Report 2004 [PDF/1.1MB]

15. LITIGATION
The "Royal Palm Resort" in Guam, which was developed by Kawasho International (Guam), Inc. (hereinafter referred to as "KIG"),
suffered extensive damage due to an earthquake on August 8, 1993. Since defects in design and construction were found
after a thorough investigation of the cause of the collapse of the building, the Company, KIG and other unit owners initiated a
lawsuit in Guam claiming damages (of more than $135 million) against the general constructors Mitsui Construction Co., Ltd.,
Ssang Yong Engineering and Construction Company (Korea) and other parties concerned.
On December 24, 2002 the Company settled with Mitsui Construction Co., Ltd. and Ssang Yong Engineering and Construction
Company on the condition that they pay compensation of $59 million. Consequently, the Company has reversed the allowance
for doubtful receivables of ¥1,070 million for the year ended March 31, 2003. This reversal has been reflected in the
consolidated statement of operations for the year ended March 31, 2003 as a component of other income - gain on reversal of
allowance for doubtful receivables of ¥1,144 million.
16. SUBSEQUENT EVENTS
(1) Sale of aerospace business
Effective June 1, 2004, the Company sold aerospace business operated by the Company and Kawasho International (U.S.A.)
Inc. to Japan Aerospace Corporation, a wholly-owned subsidiary of ITOCHU Corporation. The Company decided on this sale as
a step in choosing the type of business to be operated and concentrating the Company's resources on the businesses chosen
in preparation for a future management integration and reorganization with NKK Trading Inc. The related assets and liabilities as
of March 31, 2004 and sales for the year then ended were as follows:
Assets
Liabilities
Sales
Millions of yen
¥ 17,858
11,848
21,177
Thousands of
U.S. dollars
$ 168,966
112,101
200,369
The Company anticipates gain on sale of aerospace business of approximately ¥1,600 million ($15,139 thousand) on a consolidated
basis and approximately ¥2,000 million ($18,923 thousand) on a non-consolidated basis as a component of other
income for the year ending March 31, 2005.
(2) Disposition of retained-earnings deficit
The following disposition of retained-earnings deficit of the Company, which has not been reflected in the accompanying consolidated
financial statements for the year ended March 31, 2004, was approved at a general meeting of the Company's shareholders
held on June 18, 2004:
Undisposed retained-earnings deficit
Reversal of additional paid-in capital
Retained-earnings deficit to be carried forward
Millions of yen
¥ 17,905
17,905
¥
Thousands of
U.S. dollars
$ 169,411
169,411
$
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