Moving Ahead

Kajima Corporation

Annual Report 2004 For the year ended March 31, 2004

Profile

Twenty years after its founding in 1840, Kajima Corporation constructed Japan’s first Western-style building—the Eiichiban kan—in Yokohama. Since then, Kajima has rapidly developed its operations by anticipating future trends in all types of construction-related needs. The Company’s activities have encompassed the railway construction and electric power development that propelled Japan’s initial modernization as well as the coastal industrial developments, high-rise structures, nuclear power plants, and maritime-related projects that helped the nation rise quickly to economic superpower status. Today, as one of Japan’s leading construction companies Kajima maintains subsidiaries in North America, Europe, and Asia and is active in construction and real estate development business around the world. With an eye to the dynamic changes under way in the operating and social environments, Kajima will continue to evolve, supported by superior technological expertise, rich human resources, and a pioneer spirit. By working in close cooperation with our stockholders, customers, and local communities, we are confident we can contribute to a brighter future for all.

Contents Trust Is the Key to Moving Ahead Message from the Management Domestic Operations Building Construction and Architectural Design Domestic Operations Civil Engineering Domestic Operations Real Estate Development Overseas Operations

1 2

6 10 12 14

Research & Development Environmental Initiatives Selected Financial Data Summary of Business Performance for the Financial Year Ended March 31, 2004 Financial Section Network in Japan Overseas Network Board of Directors and Auditors Corporate Data

18 20 22 24 26 50 52 54 54

Forward-Looking Statements This Annual Report includes forward-looking statements that represent Kajima’s assumptions and expectations in light of currently available information. These statements reflect industry trends, clients’ situations and other factors, and involve risks and uncertainties which may cause actual performance results to differ from those discussed in the forward-looking statements in accordance with changes in the domestic and overseas business environment.

Trust Is the Key to Moving Ahead

For more than a century and a half, Kajima has built its business by building trust—the strongest foundation for pursuing mutually beneficial relationships with a wide variety of stakeholders. Clients, employees, society, and investors all depend on Kajima, and for many good reasons. Of course, the Company’s bedrock commitment to safety, quality, ethics, and the environment are important to all of these vital partners. But Kajima also offers unique value in each of its relationships. Clients rely on the Company for its superior technologies and dedication to finding creative solutions for their needs, no matter how sophisticated or complex. Employees thrive in an atmosphere of innovation and success. Society looks to Kajima to continue to improve the quality of human life. Investors appreciate the Company for its resolve to turn challenges into opportunities, as it did in the financial year covered in this annual report. For Kajima, trust is the key to moving ahead.

1

Message from the Management

Stepping Up to the Challenge One year into a bold, new business plan designed to address the challenges of the changing construction and real estate markets, the Kajima Group is turning in a solid performance and laying the foundations for an even more successful future.

Japanese Economy Improving We are pleased to be able to report several encouraging trends in the Japanese economy during the financial year ended March 31, 2004. Exports were up amid signs of recovery in the global economy, and business confidence grew with improvements in private-sector capital investment, corporate performance, and stock prices. Further, these positive developments appear to be taking hold, with research institutes forecasting GDP growth of more than 2% for the coming financial year.

Solid Performance and a Stronger Financial Position for the Kajima Group Rokuro Ishikawa Chairman

The first year of our medium-term business plan (for April 1, 2003 to March 31, 2006) yielded solid performance for the Kajima Group. Consolidated recurring profit, at ¥37.7 billion, was above target for the term, and we expect to reach ¥40.0 billion in the coming year. The target for the plan’s final year is ¥42.0 billion, and we are confident that our group-wide effort to meet it will be successful. Consolidated revenues for the financial year ended March 31, 2004 were down 13.5% to ¥1,621.7 billion. However, our gross profit margin improved to 9.0%, bringing gross profit up 1.9% year on year to ¥146.2 billion. As a result, operating income reached ¥46.4 billion, up 27.9%. A consolidated net loss of ¥4.4 billion was posted due to an extraordinary loss of ¥43.3 billion recorded mainly on dissolution of the Kajima Pension Fund, which is projected to reduce the Company’s retirement benefit obligations by more than ¥20 billion.

Sadao Umeda

2

President

We took other bold steps to improve Kajima’s financial position in the term under review. In October 2003, we raised ¥34.4 billion through a public offering, in line with our strategy to reduce interest-bearing debt by shifting to equity financing of investments in long-term development and private finance initiative (PFI) projects. Working to enhance the efficiency of assets, we are closing in on the goal of improving Kajima’s debt-equity ratio to no more than 2.0 on a consolidated basis (¥480 billion in interest-bearing debt) and nearly 1.0 on a non-consolidated basis (¥300 billion in interest-bearing debt) by March 31, 2006. As noted above, we dissolved the Kajima Pension Fund at the end of the term to convert to a more efficient defined contribution pension system.

Kajima Group Medium-Term Business Plan

April 2003 Business Targets

March 2006

Fully capitalize on our technical capabilities and provide superior quality

Increase market share as well as profitability in our construction business

1

Principal Tactics

Augment profitability of the construction business

Strengthen involvement in overseas business

Diversify and expand sources of profits

Focused research and development

Cut fixed costs and selling, general and administrative expenses

Realign the head office and branches

Reinforce group management systems (enhance revenue generating capacity and increase consolidated profits)

Improve risk management and return on assets

Strengthen the Kajima brand

Consolidated Revenues

Consolidated Recurring Profit

Consolidated Interest-Bearing Debt

¥1,600 billion

¥42 billion or more

¥480 billion or less

Non-Consolidated Revenues

Non-Consolidated Recurring Profit

Non-Consolidated Interest-Bearing Debt

¥1,100 billion

¥32 billion or more

¥300 billion or less

1 4 7

Performance Targets

2

1 4

2 5 8 2 5

3 6 9 3 6

3

Revenues

(billion ¥)

Financial Highlights (Consolidated and Non-Consolidated) KAJIMA Corporation (and Consolidated Subsidiaries) For the years ended March 31

2,500

2004

2003

2004

2,000

Consolidated: 1,500

Revenues Net Income (Loss) Total Assets Total Stockholders’ Equity

1,000

500

(Thousands of U.S. Dollars)

(Millions of Yen)

¥1,621,760 (4,474) 1,870,279 216,509

Per Share:

¥1,874,802 10,111 2,024,226 159,017 (Yen)

$15,299,623 (42,208) 17,644,142 2,042,538 (U.S. Dollars)

0 2000

2001

2002

2003

Basic Net Income (Loss)

2004

¥(4.61)

¥10.44

$(0.043)

Consolidated Revenues Non-Consolidated Revenues

Non-Consolidated:

Gross Profit Margin

(%)

10

Revenues Net Income (Loss) Total Assets Total Stockholders’ Equity Contract Awards Total Contract Backlog

¥1,172,432 (14,492) 1,586,815 236,473 1,178,155 1,391,555

Per Share: Basic Net Income (Loss) Cash Dividends

8

6 2000

2001

2002

2003

2004

Consolidated Gross Profit Margin Non-Consolidated Gross Profit Margin

Operating Income

(Thousands of U.S. Dollars)

(Millions of Yen)

¥1,458,086 8,515 1,680,439 184,011 1,139,509 1,385,832 (Yen)

¥(14.49) 5.00

$11,060,679 (136,717) 14,969,953 2,230,877 11,114,670 13,127,877 (U.S. Dollars)

¥8.86 5.00

$(0.137) 0.047

Notes: 1. The U.S. dollar amounts included herein are presented solely for convenience of the reader. Such dollar amounts have been translated from yen at the approximate exchange rate in Tokyo on March 31, 2004, of ¥106=U.S.$1. The translations should not be construed as representations that Japanese yen have been, could have been or could in the future be converted into U.S. dollars at that or any other rate. 2. Basic net income (loss) per share is computed by dividing net income (loss) attributable to common stockholders by the weighted-average number of common shares outstanding for the years ended March 31, 2004 and 2003, respectively. 3. Diluted net income (loss) per share is not disclosed because of the net loss of the Companies for the year ended March 31, 2004 in the consolidated and non-consolidated results and because the Companies have nothing which might dilute the per share information for the year ended March 31, 2003.

(billion ¥)

Medium-Term Business Plan and Core Strategies 60

4

In addition to the financial objectives already mentioned, our medium-term business plan aims to enhance Kajima’s technological capabilities, cost-competitiveness, and organizational flexibility. Under the plan, we will build a robust corporate structure that positions the Kajima Group for sustainable growth and profitability for years to come. The strategies we discuss below are central to this effort.

50

40

30

20

10

0 2000

2001

2002

2003

2004

Consolidated Operating Income Non-Consolidated Operating Income

In our core construction business, we are enhancing Kajima’s competitiveness in Tokyo and the other major markets by developing innovative proposals to win new business and offering cutting-edge value engineering and other technical solutions to clients. As the Group continues to amass technological expertise, we are leveraging our leadership position by building a stronger and more focused sales organization. At the same time, we are enhancing the efficiency of the Company’s construction systems,

Interest-Bearing Debt

(billion ¥)

800

600

400

200

0 2000

2001

2002

2003

2004

Consolidated Interest-Bearing Debt Non-Consolidated Interest-Bearing Debt

Contract Awards

(billion ¥)

1,500

1,200

and expect visible payoffs in terms of more attractive pricing for clients. We are also stepping up efforts in the high-growth renovation and life-cycle management (LCM) sectors. In the real estate development business, Kajima is pursuing strategically selected, large-scale projects in the heart of Tokyo and other commuter hubs. We continue to target the landmark development projects that Kajima is best known for, while striving to minimize and quickly recover our investment through the use of real estate securitization and special purpose companies (SPCs). We have flagship projects underway in Akihabara, Toranomon, Higashi Shinagawa, and Yaesu, and more in the pipeline. Further, plans are in place to strengthen our organizational capacity in the rapidly growing PFI sector. We are also aggressively developing businesses in other growing fields in order to diversify sources of earnings. We have high expectations of Kajima’s engineering business in key sectors such as the pharmaceuticals industry and expect growth in our environmental businesses such as recycling of construction waste, soil remediation, and water treatment. In addition, we are entering promising new business fields such as conversion of non-combustible organic waste into biogas (METAKLES) and wind power generation. In the area of technological strategy, we have established the Kajima Technology Development Council to maximize the value of the technological advantages Kajima has over other firms. The Council is ensuring that all R&D projects are driven by business strategy and focused on themes directly linked to future profitability.

900

600

300

0 2000

2001

2002

2003

2004

At our consolidated subsidiaries in Japan and overseas, we are increasing investment in businesses with the highest potential, while simultaneously scaling back or withdrawing from unprofitable operations. Our goal is to reach total recurring profit of ¥10 billion at consolidated subsidiaries in the financial year ending March 31, 2006.

Consolidated Construction Contract Awards Non-Consolidated Construction Contract Awards

Earning Trust With intensive implementation of the business plan and strategies outlined above, we expect the financial year ending March 31, 2005 to be a good one for the Kajima Group. As always, the key to this will be our commitment to ensuring that all of our businesses contribute to the overall quality of human life, thus fulfilling our unique vision of corporate social responsibility. Whether delivering premium quality to clients, caring for the global environment, or pursuing rigorous safety management and quality control that exceed legal and regulatory standards, the Kajima Group will do its utmost to earn the continued trust of all its stakeholders. In all these efforts, your continued support is essential and appreciated.

Rokuro Ishikawa

Sadao Umeda

Chairman

President

5

Domestic Operations—Building Construction and Architectural Design

Building Construction

Japan’s Leading Firm

Shiodome Media Tower

Kajima is the leader of the Japanese construction industry, known for its high-quality services and superior levels of client satisfaction. This reputation is based on Kajima’s unequaled capacity to manage single or complex projects such as high-rise office buildings, commercial structures, production and distribution facilities, housing, educational facilities, and medical and welfare centers. The Company provides the full range of construction-related services, including general contracting, design-build, and construction management, depending on a client’s needs. Kajima is also known for the revolutionary solutions it provides for clients and society, including energy-saving and environmentally friendly buildings, long-life, flexible-design high-rise condominiums that can be used for over 100 years, and the latest seismic control technologies.

Marunouchi Trust Tower North

6 The Yokohama Towers

Market Conditions and Business Performance Although overall demand for construction in Japan remained on a downward trend in the term under review, the private-sector construction market grew stronger in both the manufacturing and non-manufacturing sectors due to an increase in corporate investment in plant and equipment. Kajima capitalized on this positive trend to increase the value of building construction contracts awarded by 10.4% year on year to ¥801.7 billion. Future Outlook and Priorities As the construction market continues to shrink and client requirements become ever more sophisticated, Kajima is focused on growing its market share and enhancing profitability by leveraging the Company’s superior quality and proprietary technologies. Kajima will promote the diversification of its earnings sources in the construction business by strengthening its efforts in life-cycle management (LCM) related fields and private finance initiative (PFI) projects for public works. The Company is also taking bold steps to win new business in high-potential markets (such as engineering, environment, and renovation) and in the urban redevelopment field, where the synergies among its innovative technologies, industry-leading expertise, and real estate development capabilities can be most effective. Kajima is also implementing a companywide cost reduction program to enhance cost-competitiveness and improve the profitability of its building construction business.

Nippon Express Co., Ltd., New Headquarters Bldg.

Architectural Design

Experience, Creativity, and Performance

Jiji Press Building

Kajima’s dynamic global marketing and design activities are spearheaded from Japan, with strong contributions from the Company’s design offices in the United States, Europe and Asia—Kajima Associates, Inc. (KAI), Kajima Design Europe Ltd. (KDE), and Kajima Design Asia Pte. Ltd. (KDA). Close cooperation between the Japanese team and the other three regions enables Kajima to provide true design-build services around the world. Kajima undertakes both design and construction, and continuously applies the expertise and experience it gains through construction projects in its design processes. This approach results in longer building life and ever-increasing levels of quality. The Company also makes every effort to reduce environmental impact, from the design stage to the construction phase. Kajima is also known for its expertise in the area of structural engineering. Kajima pioneered the seismic resistance and control technologies that made it possible to realize the construction of

Plaza Tower-Kachidoki

7

Domestic Operations

high-rise buildings in earthquake-prone Japan. Last year, the Architectural Institute of Japan requested Kajima to apply its advanced analytical technology to determine the mechanisms involved in the tragic collapse of the World Trade Center buildings in New York following the aircraft impact. When reported at the Japan-US Structural Design Workshop in June 2003, Kajima’s findings were highly praised for their potential to contribute to safer buildings.

United Colors of Benetton Shinsaibashi

NTT DoCoMo Kyushu Kashii Building

Business Performance In the financial year ended March 31, 2004, Kajima was awarded 525 design commissions for a total construction value of ¥465.1 billion, and performed consultancy services for 1,392 projects. Future Outlook and Priorities Kajima will capitalize on new demand for two innovative types of development: (1) Renovation projects that add value to existing buildings by providing dynamic space transformation, enhancing disaster protection, and updating utility and HVAC systems. (2) Environmental design featuring technologies to minimize lifecycle energy cost, such as hybrid air-conditioning systems that utilize cool outside air to save energy. Kajima is dedicated to contributing to society by ensuring safer buildings, reducing environmental impact, and creating betterquality space.

Consultancies Life-cycle engineering (LCE), renewal projects, conversion projects, seismic risk assessments, deterioration assessments, market competitiveness assessments, energy conservation assessments, environmental site assessments, and engineering due diligence studies. Apple Store Ginza

8

Technological Development • Development of design methods to minimize environmental impact • Development of a collapse mechanism evaluation system for high-rise buildings under aircraft impact External Awards (total of 34) • Ecological and Energy Efficient Buildings Award, for the Sekisui House Kudan-minami Building • Good Design Award, for the Makuhari Park Tower and four other projects • Society of Heating, Air-Conditioning and Sanitary Engineers Special Award for operation and improved administration of Tokyo East 21

Hotel Monterey La Soeur Fukuoka

Keisen Junior and Senior High School

Major Building Construction and Architectural Design Projects Awarded in the Term under Review Project: Location: Project outline:

UDX Bldg. 1 & 4, Soto-Kanda, Chiyoda-ku, Tokyo Office space 22 floors above ground, 3 underground floors, 1 penthouse floor Total floor space: 161,676 m2 Building area: 8,559 m2

Project: Location: Project outline:

Benten-cho Project 1-3-1&2, Benten-cho, Minato-ku, Osaka-shi, Osaka Housing complex 54 floors above ground, 2 underground floors, 1 penthouse floor Total floor space: 81,056 m2 Building area: 3,789 m2

Project: Location: Project outline:

Tokyo Bldg. 2-7-3, Marunouchi, Chiyoda-ku, Tokyo Office space 33 floors above ground, 4 underground floors, 1 penthouse floor Total floor space: 150,685 m2 Building area: 5,514 m2

Project: Location: Project outline:

Kudankita Project 1-12-2, Kudankita, Chiyoda-ku, Tokyo Office space and housing 26 floors above ground, 2 underground floors, 1 penthouse floor Total floor space: 58,911 m2 Building area: 2,290 m2

Project: Location: Project outline:

Shibaura 4-chome Minami Gaiku Condominium Project 4-31-6, Shibaura, Minato-ku, Tokyo Housing complex 48 floors above ground, 1 underground floor, 2 penthouse floors Total floor space: 141,459 m2 Building area: 8,037 m2

Project: Location: Project outline:

Canon Inc. Yako Project 3-451, Tsukagoshi, Saiwai-ku, Kawasaki, Kanagawa Production manufacturing 6 floors above ground, 1 underground floor, 1 penthouse floor Total floor space: 48,050 m2 Building area: 9,211 m2

Project:

Japanese Red Cross Nagoya First Hospital Renovation Project Michishita-cho, Nakamura-ku, Nagoya, Aichi Hospital 9 floors above ground, 1 underground floor Total floor space: 70,903 m2 Building area: 11,316 m2

Project: Location: Project outline:

Takeda Pharmaceutical Company Limited, Hikari Plant 147 4720, Aza-Takeda, Mitsui, Hikari-shi, Yamaguchi Medical supplies and pharmaceuticals plant 2 floors above ground Total floor space: 11,926 m2 Building area: 5,759 m2

Location: Project outline:

9

Domestic Operations

Civil Engineering

For a Safe and Prosperous Future Reclamation and Sea-wall Construction Works, Tomari Nuclear Power Station No. 3 Project

Kajima is Japan’s leading firm in the field of civil engineering. The mission of the Company’s civil engineering business is to facilitate economic growth and secure safe and comfortable living spaces for all citizens through maintenance and improvement of social capital such as railways, roads, ports, airports, power plants, and liquefied petroleum gas storage facilities. Through constant development and application of new construction methods, the Company has reduced environmental impact, shortened construction time, and lowered costs through seamless integration of design and construction operations. Today, Kajima holds 2,731 patents, more than any other company in the Japanese construction industry.

Kyoto Subway Tozai Line Rokujizokita Construction Section Kyoto Municipal Transportation Bureau

Connection Bridges for the Central Japan International Airport

Market Conditions and Business Performance In recent years, investment in civil engineering construction in Japan, especially in public works, has declined sharply, and it is not expected to exceed 60% of its 1995 peak. Impacted by this trend, the total value of Kajima’s civil engineering contracts in Japan had been on the decline since 1996, but in the term under review, Kajima’s intense efforts resulted in a 4.8% increase to ¥278 billion. Future Outlook and Priorities Securing new sources of earnings is one of Kajima’s key strategies to counter the effects of the contracting civil engineering market. The Company is increasing organizational capacity in priority fields such as the environment, renovation, and PFI, and expects to win more contracts in these areas. In its environmental business, Kajima is developing new technologies for recycling of construction waste, soil remediation, and water treatment, aiming to increase orders in these rapidly growing fields. The market for renovation work already accounts for more than 20% of the overall construction market. In this market, the Company aims to win a wide range of contracts, ranging from preliminary assessment service to repair work, by working with its subsidiaries and affiliated companies. Kajima is also making a company-wide effort to win more bids on PFI civil engineering projects.

10

Tunneling Project for the 4th Segment of the Outer Metropolitan Discharge

Kunimi Ohashi

Major Civil Engineering Projects Awarded in the Term under Review Project: Location: Project outline:

Project:

Location:

Project outline:

Project: Location: Project outline:

Construction Work for Discharging Facilities for Condenser Cooling Water in Tomari Nuclear Power Station No. 3 Project Oaza Horikappu-mura, Tomari-mura, Furuu-gun, Hokkaido Construction work for a drainage canal tunnel 5.4 m in inner diameter and 609 m in length using the earth pressure balanced shield technique (mud pressure type) Construction Work for the Shizuoka Line (Natural Gas Pipeline) (Civil Work of Section A, Civil Work of Section B, Civil Work of Section C) From Showa-cho to Misaka-cho, Yamanashi (Section A) From Fujikawaguchiko-machi to Yamanakako-mura, Yamanashi (Section B) From Yamanakako-mura, Yamanashi to Gotenba, Shizuoka (Section C) Section A: Length of construction = 33,835 m (open cut method: 30,230 m, jacking method: 74 locations) Section B: Length of construction = 31,398 m (open cut method: 24,720 m, jacking method: 27 locations, TBM tunnel method: 2,340 m) Section C: Length of construction = 17,440 m (open cut method: 15,980 m, jacking method: 9 locations, TBM tunnel method: 1,090 m) Civil engineering portions in sections A through C designed by Kajima Corporation. Tokyo Gas Chuo Line Construction Project 23-km segment from Rinkai-cho, Edogawa-ku, Tokyo to Sezaki-cho, Soka, Saitama Construction work for gas pipeline using shield tunnel method. Period of construction: From October 20, 2004 to September 30, 2009. Tunnel length: 23.1 km, inner diameter of shield: 2.0 m, 5 earth pressure balanced shield machines (mud pressure type), including 4 parent-child (multistage) shield machines, pit: 4 locations, underground joint: 2 locations, total weight of steel segments: 15,000 tons. Design/Build by Kajima Corporation.

Project: Location: Project outline:

Project: Location: Project outline:

Project: Location: Project outline:

Project: Location: Project outline:

Construction Work for Shinsugita Common Duct From Shinisogo-cho to Shinsugita-cho, Isogo-ku, Yokohama, Kanagawa Shield tunnel method, length: 2,291 m, outer diameter: 6.2 m Design: Special construction work consortium by Kajima Corporation, Obayashi Corporation and Okumura Corporation Civil Portion (the 4th Building Construction Area) of Construction Work for the Nishi-Osaka Extension Railway From Saiwai-cho 3-chome to Saiwai-cho 1-chome, Naniwa-ku, Osaka Segment of Shiomibashi Station: Open cut method, length: 361 m, width: from 15 m to 30 m, depth: from 15 m to 18 m. Segment of underground tunnel: shield method, length: 576 m x 2 (U-turn), outer diameter of the segment: 6.8 m Construction Work for Miyazu Nodagawa Road, No. 12 Tunnel Miyazu, Kyoto Road tunnel: NATM, main tunnel: 2-lane, length = 3,660 m. Evacuation pit: diameter 5 m, length = 3,692 m, TBM Kurashiki Underground Storage Caverns Construction for National LP Gas Storage Project 2203-1, Aza-nagashima Shinden, Kojima, Kurashiki, Okayama Underground bedrock storage tank with 400,000 tons of total LPG storage capacity (shape of storage tank: eggshape by cross-section, height: 22 m, width: 18 m, length: 640 m x 4 tanks, drilling method: NATM method)

Major Civil Engineering Projects Completed in the Term under Review • Reclamation and Sea-wall Construction Works, Tomari Nuclear Power Station No.3 Project • Tunneling Project for the 4th Segment of the Outer Metropolitan Discharge

• Matsumoto-Kofu (Gas Pipe) Line Project • Suzuka Tunnel for the New Meishin Expressway • Shika Nuclear Power Plant No. 2 Intake and Intake Tunnel Project

11

Domestic Operations

Real Estate Development

A Distinctive Approach Kajima’s real estate development strategy has twin goals: to diversify the Company’s earnings sources and to leverage synergies with its construction business.

Akihabara UDX (Akihabara Crossfield)

Shiodome Tower

Toranomon 4-Chome Project

12

Hamarikyu Parkside Place

Unlike many other companies, Kajima did not temporarily withdraw from the development business after the collapse of Japan’s speculative “bubble” economy. Despite the difficult market, the Company maintained its presence and its relationships, and as a result, now holds a very favorable position. Kajima also has a strong advantage over companies specialized only in real estate development, because its project planning teams have full access to the latest construction technologies. For instance, condominiums built for sale by Kajima feature advanced earthquake safety technologies, as well as designs that make it easy for buyers to select their own floor plans. Kajima technologies are not only at the forefront of the construction industry; they also enjoy an excellent reputation in the real estate market. No other company can match the broad range of capabilities and track record that Kajima brings to new, large-scale development projects. The Company is well known for its office complexes, commercial facilities and housing developments in central Tokyo locations such as Akihabara, Shinagawa, Yaesu and other commuter hubs. Kajima’s access to sales leads, expertise in urban infrastructure, and knowledge of building management gives the Company a clear advantage in large projects like these. Kajima provides a wide variety of real estate products: offices, housing developments, government and commercial buildings, resorts, medical and welfare centers, production and distribution facilities, IT-related installations, and more. In all these different fields, Kajima takes special care to ensure that its developments complement their surroundings. The benefits to society are many: more attractive urban environments, new added-value building features, and increased property values. Market Conditions and Business Performance Although land values in Japan declined for the 13th consecutive year in 2004, the rate of decline in major cities was lower than at any time in the last six years. In select locations in Tokyo, Nagoya, Sapporo and Fukuoka, values actually rose. In smaller cities, however, the decline was even faster than in 2003. Demand and competition for condominiums and office space in

Tokyo’s central business districts is increasing, but both demand and supply in smaller regional cities remain low. Despite the challenging environment, Kajima’s development projects turned in a strong performance in the term under review, due to the full occupancy of large office buildings, the sale of the Kajima Shiodome Tower, and brisk condominium sales. On a non-consolidated basis, new contract awards reached ¥85.5 billion, revenue was ¥74.0 billion, and gross profit was ¥8.7 billion— all of which exceeded targets by more than 5%. Italian Cultural Institute Redevelopment Project

Future Outlook and Priorities With development projects performing well, Kajima’s goal is to improve its position now to lock in even better performance in the future. The Company is taking steps to streamline the balance sheet and promptly recover invested capital through securitization of real estate assets. One example is Kajima’s recent successful bid for Japan’s first project involving a real estate securitization scheme for national land. In the current financial year, Kajima will establish a fund for certain of its property holdings in order to accelerate the recovery of invested funds, while still securing stable cash flows thereafter. With an increasingly sound financial position for its real estate business, the Company is prepared for a future of steady growth and increasing profits. Yokohama Dear Tower

Three Major Development Projects Launched in the Term under Review

Three Major Development Projects Completed in the Term under Review

Akihabara UDX (Akihabara Crossfield) Location: Soto-Kanda 4-chome, Chiyoda-ku, Tokyo Purpose: Offices and commercial space Size: 22 floors above ground, 3 underground floors (total floor area: 161,676 m2)

Shiodome Tower Location: Purpose: Size:

Toranomon 4-Chome Project Location: Toranomon 4-chome, Minato-ku, Tokyo Purpose: Offices and housing Size: Office tower: 23 floors above ground, 3 underground floors (total floor area: 59,741 m2) Housing complex: 41 floors above ground, 2 underground floors (total floor area: 38,942 m2; 267 units)

Hamarikyu Parkside Place Location: Tsukiji 5-chome, Chuo-ku, Tokyo Purpose: Offices and commercial space Size: 17 floors above ground, 2 underground floors (total floor area, 38,984 m2)

Italian Cultural Institute Redevelopment Project Location: Kudan-minami 2-chome, Chiyoda-ku, Tokyo Purpose: Italian Cultural Institute (auditorium, language classrooms, library, etc.), offices Size: 12 floors above ground, 2 underground floors (total floor area, 14,787 m2)

Higashi-Shimbashi 1-chome, Minato-ku, Tokyo Offices and hotel 38 floors above ground, 4 underground floors (total floor area, 79,819 m2)

Yokohama Dear Tower Location: Yamashita-cho, Naka-ku, Yokohama, Kanagawa Purpose: Housing and commercial space Size: 25 floors above ground, 1 underground floor (total floor area, 30,927 m2; 262 units)

13

Overseas Operations

Overseas Activities

Premium Global Reach With experience in over 50 countries, Kajima has a permanent presence in 21 nations, and currently has 13 project offices which are directly managed from Japan.

JUT Housing Development Group “Karuizawa Residential Building” in Taiwan

Bubba Gump Shrimp Restaurant at Times Square in New York City

Kajima conducts most of its overseas operations through three primary regional subsidiaries—in the United States, Europe, and Southeast Asia. Each of these subsidiaries has independent division companies engaged in construction, development, and design, forming a far-reaching network that maximizes Kajima’s global capacity to meet the particular needs of each market. The remaining overseas work—large-scale civil engineering, and Japanese government official development assistance (ODA)—is managed directly from Japan. Market Conditions and Business Performance Kajima is working to achieve a consistent scale for its overseas operations by pursuing contracts from a wide range of local clients, avoiding undue concentration on certain companies or industries. In the term under review, the value of overseas construction contracts reached ¥111 billion, with approximately 80% of these from local clients. In the real estate development business, Kajima is working to improve profitability in each region, while striving to reduce interestbearing debt. The Company is very selective about the projects it undertakes, maintaining a sharp focus on risk management and profitability. Total revenues including construction operations, real estate development and other businesses at Kajima’s overseas operations, combining subsidiaries and directly managed operations, were ¥191.3 billion.

Long Beach Cruise Terminal in U.S.A.

14

Kajima U.S.A. Inc. (KUSA) With the Hawaiian Dredging Construction Company joining the group, Kajima’s construction business in the U.S. reached ¥62.6 billion in new contracts. In real estate development, Industrial Developments International, Inc. (IDI), which develops distribution warehouse facilities, continued to post favorable earnings through property portfolio sales and property management. Consolidated revenues at KUSA were ¥89.2 billion.

High-End Private Condominium “Robertson 100” in Singapore

Kajima Kona Holdings, Inc. (KKH) The Hualalai Resort, developed and operated by Kajima on the big island of Hawaii, has earned a reputation as one of Hawaii’s premier resorts. KKH posted consolidated revenues of ¥14.7 billion.

“74 St. James’s Street” in London, U.K.

Kajima Overseas Asia Pte. Ltd. (KOA) Although the construction business in Southeast Asia is facing intense competition, Kajima sees the potential for steady growth in the region. In real estate, business in the management, leasing, and operation of offices, hotels, and shopping malls performed well. KOA posted consolidated revenues of ¥22.7 billion and secured a sound profit overall. Chung-Lu Sino-Kajima Construction Co., Ltd. (Sino-Kajima) Sino-Kajima, in Taiwan, achieved ¥15.9 billion in new contracts (up ¥9.6 billion year on year) and ¥12.1 billion in revenues by winning large-scale construction contracts from local Taiwanese companies, including the Taiwan High Speed Rail Depot. This progress brought Sino-Kajima record profits for the second year in a row.

15

Kajima Europe B.V. (KE) Since the construction market has matured in Europe, Kajima Europe is improving business performance by focusing on the U.K. and the promising Central European markets, which are expected to benefit from the EU expansion. In real estate development, KE is aggressively pursuing the private finance initiative (PFI) projects of the national and local governments in the United Kingdom. Consolidated revenues at KE were ¥21.8 billion.

Project for Reconstruction of Bridges in the Mekong Delta Area, Vietnam

Kukure Ganga Hydropower Project, Civil Works for Diversion Facilities, Lot 2.1 in Sri Lanka

Overseas Operations Managed Directly from Japan Kajima expects to continue winning large-scale civil engineering contracts in Vietnam, Thailand, the Philippines, and elsewhere. Meanwhile, to offset anticipated cutbacks in ODA projects, the Company plans to heighten its effort in infrastructure construction markets funded by local capital. Future Outlook and Priorities One of the key elements of Kajima’s Medium-Term Business Plan is to achieve the target of ¥235 billion in revenues from overseas operations. Along with this, Kajima aims to establish an overseas business framework capable of securing sound and stable recurring profit. In the area of individual projects, the Company is pursuing a profit-oriented strategy of selective business development, focusing on regions and fields where the Company already has significant experience and expertise, while closely monitoring changes in the market environment of each country and region.

Hitachi Construction Machinery New Factory in the Netherlands

16

Toyota Peugeot Citroën Automobile New Factory in the Czech Republic

The Hualalai Resort in Hawaii

Major Building Construction Contracts in the Term under Review Project: Location: Project outline:

Alteration & Addition to Existing Marina Square Shopping Complex Singapore Major renovation works to an existing shopping center, consisting of structural alteration, 32 months of works under operating shopping center, renovation, 127,814 m2

Project: Location: Project outline:

Yuanta Construction Development Co., Ltd. “Green Field” Taiwan 3 condominium blocks with a total of 66 units Total floor space: 27,759 m2

Project:

Taiwan High Speed Rail Project Depot Works Contract D290 Main Workshop Taiwan Car servicing facility: 54,200 m2, Paint shop: 3,650 m2, Office space: 22,000 m2, Total floor space: 90,000 m2

Location: Project outline:

Project: Location: Project outline:

Project: Location: Project outline:

Taiwan High Speed Rail Project Depot Works Contract D250 Wujih Depot Wujih, Taichung, Taiwan Car servicing facility: 14,400 m2, Office space: 6,200 m2, Other use: 26 buildings, Total floor space: 33,000 m2 North Tyneside School Project (PFI) Newcastle Upon Tyne, U.K. Educational facility, Total floor space: 23,550 m2

Project: Location: Project outline:

Ealing School Project (PFI) London, U.K. Educational facility, Total floor space: 18,905 m2

Project: Location: Project outline:

Northampton School Project (PFI) Northampton, U.K. Educational facility, Total floor space: 5,500 m2

Project: Location: Project outline:

HSE (Health & Safety Executive) HQ Office Project (PFI) Liverpool, U.K. Office space and underground parking, 5 floors, Total floor space: 29,945 m2

Project: Location: Project outline:

Haverstock School Project (PFI) London, U.K. School, Total floor space: 11,800 m2

Project: Location: Project outline:

Kew Gardens Estates New York, U.S.A. Residential building (rental) 2 blocks, 14 floors with a total of 388 units, Total floor space: 20,000 m2

Project: Location: Project outline:

Bella Mare Condominiums Florida, U.S.A. Luxury condominium, 31 floors with a total of 210 units

Project: Location: Project outline:

Ocean Palm Condominiums Florida, U.S.A. Housing complex (sale), 42 floors, Total floor space: 68,000 m2

Major Civil Engineering Contracts in the Term under Review Project: Location: Project outline:

Dai Ninh Hydropower Project, Contract CW1 Civil Works for Waterways and Powerhouse 260 km northeast of Ho Chi Minh City Hydroelectric power station Headrace tunnel: 4.65 m diameter, 11.2 km including 7.1 km TBM section Surge tank: 10 m diameter, 120 m depth Tailrace tunnel: 5.5 m diameter, 682 m

Project: Location: Project outline:

Sakhalin II, LNG Plant Civil Work Korsakov, Sakhalin Province, Russia Civil Work for LNG Plant, Sakhalin II Project Concrete: 55,000 m3 Excavation: 387,000 m3

17

Research & Development

R&D Topics

Visionary Solutions Kajima’s long-term commitment to innovative research and development is a strong indicator of the Company’s future potential. Kajima was the first Japanese construction company to establish a dedicated R&D organization. Since then, the work of the Kajima Technical Research Institute, the Kobori Research Complex, and other R&D centers have won Kajima a sterling worldwide reputation for technological expertise. As a result of the significant resources Kajima has devoted to R&D over the years, the Company is now better prepared than its competitors to meet the rapidly diversifying needs of clients and society. Today, Kajima still has one of the top R&D organizations in the industry in terms of number of researchers, facilities, and level of investment, and is the acknowledged leader in a variety of fields.

Water Screen Fire Disaster Prevention System

Kajima’s construction and civil engineering technologies, including earthquake safety technologies, are among the most advanced in the world, and the Company is rapidly emerging as an innovator in the field of environmental technology. Its staff and facilities for biomass, forestry, and marine research are second to none in Japan. Kajima researchers have also done much to improve the productivity and quality of the Company’s construction operations. The Company also partners with universities, public institutions, and other private firms on research in the fields of renovation, life-cycle engineering (LCE), and the environment. In the term under review, Kajima linked its R&D programs more directly to business strategy, allocating more resources to the development of innovative proposals for both public and private sector projects. The Company also retooled its R&D management system to ensure that R&D outcomes lead more quickly to specific business results. R&D investment (non-consolidated) for the term was ¥10.9 billion, or 0.93% the amount of net sales.

18

Most recently, Kajima has achieved strong R&D results in the fields of urban renewal, environmental technology, renovation, LCE, and earthquake prevention. A few examples are featured at right.

Hollow centrifugal precast concrete columns Steel beam

Steel beam

Outer diaphragm Column-beam connecting steel pipe

Circular Column Cross-Section

Column-beam connecting steel pipe

Square Column Cross-Section

NEO Column Construction Method

Gas suction equipment Compressor

Pipe drum

VOCs Gas suction well

Compressed air

VOC contamination

Horizontal well drill

Aquifer

Horizontal well

Air Sparging Using Directionally Drilled Horizontal Wells

Plasterboard Plasterboard

Plasterboard Copper foil

Wallpaper Wallpaper shield (electrically conductive thin film lining)

Electromagnetic Shield Wallpaper

Conventional Electromagnetic Shield Method

Electromagnetic Shield Wallpaper: Comparison of Shield Installation Methods

NEO Column Construction Method This new construction method for low-rise buildings takes less time and money than conventional steel-frame construction, while also improving quality, strength, and building life. It utilizes a composite structure consisting of steel-frame beams and hollow centrifugal precast concrete columns made of prestressed high-strength concrete.

Air Sparging Using Directionally Drilled Horizontal Wells Kajima joined forces with Tokyo Gas Co., Ltd., and Tokyo Gas Engineering Co., Ltd., to develop this new air sparging method. The technology enables the removal of VOCs and other contamination even beneath existing buildings, which has been almost impossible to date. Further, with the large zone of influence of each horizontal well, remediation can be accomplished at a lower cost, not only beneath buildings, but also in conventional locations.

Water Screen Fire Disaster Prevention System This innovative technology is designed to save as many lives as possible in the event of a fire in a closed underground space or tunnel. A screen of water, sprayed in 200µ-size droplets, partitions the fire zone, isolating about 80% of the heat and smoke and washing out harmful floating particles—all without interfering with fire fighting or rescue activities. The system, designed based on evacuation simulations and 3D analyses of heat behavior, can be installed in new and existing structures.

Total Construction System for Traffic Infrastructure Shield Tunnels With the increasing demand for urban renewal in densely populated Japan, infrastructure must often be constructed deep underground— even under existing urban areas. Kajima’s new system, which works seamlessly with conventional techniques for large-diameter shield tunnels, enables the construction of special structures in underground tunnels such as emergency parking bays and ramp tunnels.

Electromagnetic Shield Wallpaper People working in contemporary offices rely heavily on wireless LAN and mobile phones. Wireless devices, however, require a controlled electromagnetic environment to function properly. Kajima’s Electromagnetic Shield Wallpaper, which is easy to install in new or existing buildings, converts normal walls into shields, creating the controlled spaces needed for wireless communications.

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Environmental Initiatives

Environmental Commitment

Leading Technologies, Global Concern Creating Biotope to Preserve Nature

Promoting Recycles at Job Sites

20

As a company with more than a century of business experience, Kajima realizes that short-term gains never justify long-term losses, especially of the Earth’s precious environmental resources. The Company continues to reduce environmental impact throughout the building life cycle—from planning and design, to construction, operation, maintenance, and even dismantling. Kajima’s commitment to the environment is evidenced in every area of its operations. In the real estate development business, Kajima emphasizes environmental considerations from the outset. The Company has won acclaim for designs that save energy and extend building life and for landscapes that preserve the local ecosystem. Its designs have consistently surpassed Japanese energy saving standards by an average of more than 20%. In the construction business, Kajima targets “zero emissions” of construction waste and strictly manages all toxic substances—in particular those that may be present during dismantling or soil removal. The Company has achieved an average recycling rate of 89% at all of its construction sites. In the area of operation and maintenance, Kajima is saving energy by introducing efficient building management systems. Kajima also contributes to environmental conservation by developing new technologies for soil remediation, water purification, and the use of renewable energy sources. All of Kajima’s administrative divisions and construction departments in Japan, as well as the Company’s overseas subsidiaries, Kajima Europe (KE) and Kajima Overseas Asia (KOA), have obtained ISO 14001 certification. Kajima is a member of Global Environmental Action (GEA), a Japanese NGO active worldwide in the fields of the environment and sustainable development, and of the World Business Council for Sustainable Development (WBCSD). Awards Kajima is often recognized for its environmental efforts. The Company has received the 3R (Reduce Reuse Recycle) Award from the Government of Japan, and has won the Environmental Award of the Japan Society of Civil Engineers in a wide variety of fields.

Future Outlook and Priorities Kajima will continue to protect the global environment and maintain excellent relationships with all its stakeholders. Its efforts will include developing new technologies for management of toxic substances, longer building life, reduction of CO 2 emissions throughout the building life cycle, and conservation of biodiversity. Kajima will also continue to combat global warming by developing new energy technologies and designing and building facilities that use natural energy sources. Factory Dismantling Project for Nippon Paper Industries Co., Ltd.

Kajima’s Environmental Technologies at Work Zero Emissions— Factory Dismantling Project for Nippon Paper Industries Co., Ltd. Waste products from the factory dismantling project were sorted in 21 categories, appropriate recycling methods identified for each category, and 99.88% of the waste products recycled, thereby achieving essentially “zero emissions.”

Higashiura Plant, Toyota Industries Corporation

Reduced CO2 Emissions— Higashiura Plant, Toyota Industries Corporation This project targeted a 25% reduction in CO2 emissions compared to the same type of factory through installation of a solar electric generation system, use of natural light, and introduction of highly efficient ice thermal storage air conditioning. Preserving the Natural Environment— CI Town Rifu Hayama Gardens Port This project achieved harmony with the natural environment by including a beautiful natural setting within a residential site and then integrating the site with the surrounding environment by providing animal trails and a biotope reservoir, and transplanting rare plant species.

CI Town Rifu Hayama Gardens Port

Soil Remediation—EnviroJet Method Kajima’s EnviroJet Method is a pollution cleanup technique that eliminates underground contamination using a variety of unique technologies, including the Jet Replace Method, the Jet Rinse Method, and the Jet Blend Method. Preventing Dioxin Contamination— Incinerator Dismantling Technique This technique covers the entire dismantling site with an airtight sheet and uses high-pressure water to cut and dismantle the facilities to ensure that no dioxins escape. Air is purified before being discharged and wastewater is cleaned and reused onsite.

EnviroJet Method

21

Selected Financial Data KAJIMA Corporation (and Consolidated Subsidiaries) For the years ended March 31

2004

2003

Consolidated: Revenues Net Income (Loss) Total Assets Total Stockholders’ Equity

2002

2001

2000

2004 (Thousands of U.S. Dollars)

(Millions of Yen)

¥1,621,760

¥1,874,802

¥2,060,353

¥1,909,948

¥1,727,871

$15,299,623

(4,474)

10,111

(41,153)

9,275

9,018

(42,208)

1,870,279

2,024,226

2,226,712

2,438,041

2,423,542

17,644,142

216,509

159,017

180,220

235,192

176,058

2,042,538

543,263

594,592

674,153

718,760

771,982

5,125,123

Short-Term Borrowings, Commercial Paper and Long-Term Debt

Non-Consolidated: Revenues Contract Awards Net Income (Loss) Total Assets Total Stockholders’ Equity

(Thousands of U.S. Dollars)

(Millions of Yen)

¥1,172,432

¥1,458,086

¥1,550,317

¥1,330,729

¥1,174,910

$11,060,679

1,178,155

1,139,509

1,200,432

1,245,516

1,287,623

11,114,670

(14,492)

8,515

(47,794)

7,127

7,633

(136,717)

1,586,815

1,680,439

1,826,910

1,998,802

2,017,756

14,969,953

236,473

184,011

206,013

271,464

215,020

2,230,877

383,884

399,800

452,889

508,615

568,808

3,621,547

Short-Term Borrowings, Commercial Paper and Long-Term Debt Per Share: Cash Dividends

(Yen)

¥5.00

¥5.00

¥7.00

(U.S. Dollars)

¥7.00

¥7.00

961,312

961,312

(Thousand Shares)

Number of Shares Issued

22

1,057,312

961,312

961,312

$0.0472

Total Assets

(billion ¥)

Total Stockholders’ Equity

(billion ¥)

300

2,500

2,000 200 1,500

1,000 100 500

0

0 2000

2001

2002

Consolidated

2003

2004

2000

Non-Consolidated

Equity Ratio

(%)

2001

2002

Consolidated

2003

2004

Non-Consolidated

Net Cash Provided by Operating Activities

(billion ¥)

100

15

80 10 60

40 5 20

0

0 2000

2001

2002

Consolidated

2003

2004

2000

Non-Consolidated

2001

Consolidated

2002

2003

2004

Non-Consolidated

Equity ratio = Total stockholders’ equity divided by total assets

Operating Margin

(%)

5

23

4

3

2

1

0 2000

2001

Consolidated

2002

2003

2004

Non-Consolidated

Operating margin = Operating income divided by total revenues

Summary of Business Performance for the Financial Year Ended March 31, 2004

OVERVIEW Amid persisting mild deflationary pressures, signs of recovery became evident in our economy during the second half of the financial year. Buoyed by overseas demand growth, exports and capital expenditures surged, with corporate earnings improving and stock prices rebounding. In the domestic construction market, private-sector construction demand was strong both in manufacturing and non-manufacturing sectors as companies increased their capital spending, while public-sector demand declined both at national and local government levels due to stringent budget constraints. This resulted in lower total contract values and lower construction spending overall for the private and public construction markets combined. The overseas markets provided causes for optimism as growth momentum has spread from the United States and China to the European Union and beyond. Against such economic backdrop, the Companies performed during the financial year as follows. Consolidated revenues for the financial year totaled ¥1,621.7 billion, down 13.5% from last year, reflecting the setbacks in total construction revenues of the Company.

24

Group revenues for the period stood at ¥1,192.5 billion, a 17.7% slide from the previous year, mostly attributable to the declines in revenue to the Company and its consolidated domestic subsidiaries. The Company registered total revenues of ¥1,069.0 billion (down 20.4% from last year), with ¥306.1 billion in civil engineering contracts (down 18.0% from last year) and ¥762.9 billion in architectural construction contracts (down 21.4% from last year). The percentage-of-completion method, adopted in April 2000, had tended to inflate reported period revenues, but such impact mostly ceased during the financial year under review. (2) Overseas Operations New orders received amounted to ¥111 billion (down 21.0% from last year), which breaks down to ¥98.9 billion awarded to overseas subsidiaries and ¥12.1 billion secured by the Company and its consolidated domestic subsidiaries. This was due to a decrease in overseas construction contracts awarded to the Company. Total revenues reached ¥124.8 billion (up 18.0% from last year), consisting of ¥94.2 billion posted by overseas subsidiaries and ¥30.5 billion by the Company and its consolidated domestic subsidiaries.

An improved gross profit margin in spite of lower consolidated revenue resulted in a 1.9% rise in consolidated gross profit, compared with the previous year. Furthermore, the reduction in selling, general and administrative (SG&A) expenses of the Company and its consolidated subsidiaries helped consolidated operating income to advance to ¥46.4 billion, up 27.9% from last year. A consolidated net loss of ¥4.4 billion was recorded mainly due to posting of an extraordinary loss of ¥43.3 billion incurred primarily in connection with the dissolution of the Company’s Welfare Pension Fund (compared with consolidated net income of ¥10.1 billion reported the prior year).

(3) Profit Margins The Group finished this year with a gross profit of ¥105.7 billion, up ¥3.8 billion from last year, despite decline in revenues of 15.3% from last year. The Group companies’ gross profit margin on completed construction jobs improved from 6.6% last year to 8.0% this year. The Company enjoyed a year-on-year improvement in the same margin from 6.9% to 8.2%.

SEGMENT PERFORMANCE Construction Operations

(4) Principal Work Awarded during the Financial Year Ended March 31, 2004

(1) Domestic Operations New construction orders for the Group companies for this year totaled ¥1,201.6 billion, up 6.1% from last year. The Company itself accounted for ¥278.0 billion in civil engineering contracts (up 4.9% from last year) and ¥801.7 billion in architectural construction contracts (up 10.4% from last year), for a total of ¥1,079.8 billion (up 8.9% from last year). The civil engineering business advanced mainly due to an increase in public orders, while the architectural construction business increased in contracts both from manufacturing and non-manufacturing clients.

Client

The Group’s construction business generated consolidated operating income of ¥24.1 billion, up 2.9% from last year, as a result of the reduction of SG&A expenses.

Work

• Mitsubishi Estate Co., Ltd. • Japanese Red Cross Nagoya First Hospital

Tokyo Building Japanese Red Cross Nagoya First Hospital Renovation Project • UDX Special Purpose Company Akihabara UDX (Akihabara Crossfield) • Sekisui House, Ltd. Akasaka 4-chome Yagen-zaka North Area Redevelopment Project • Canon Inc. Canon Yako Project • Teikoku Oil Co., Ltd. Shizuoka Pipeline Note: All of the above contracts were awarded to the Company.

(5) Principal Work Completed during the Financial Year Ended March 31, 2004 Client

Work

• Kyodo News • Mori Trust Co., Ltd.

Shiodome Media Tower Marunouchi Trust Tower North • Teikoku Oil Co., Ltd. Matsumoto-Kofu Pipeline • Inui Tatemono Co., Ltd. Plaza Tower-Kachidoki • Hokkaido Electric Power Co., Inc. Tomari Nuclear Power Plant Unit No. 3 Civil Works • Nippon Express Co., Ltd. New Headquarters Building Note: All of the above projects were completed by the Company.

The Company and its consolidated companies have been and will continue to be thoroughly proactive in anticipating and removing these risks both at home and abroad for better performance of the Group as a whole. The Company projects its consolidated financial performance as follows: Revenues are projected at ¥1,580 billion, down 2.6% from the financial year under review. Net income is projected at ¥12 billion for the year. This reflects an extraordinary loss of ¥15 billion to be posted in conjunction with the earlier adoption of an accounting standard for impairment of fixed assets.

Real Estate Operations Consolidated revenues from real estate operations advanced to ¥186.1 billion, up 0.7% from last year, with ¥120.7 billion from domestic operations and ¥65.4 billion from overseas operations. Consolidated operating income from real estate operations overall was ¥16.0 billion, up 13.7% from last year.

Other Other segments, consisting mainly of processed construction materials and design/engineering and property management services, reported consolidated revenues of ¥118.1 billion (down 12.6% from last year) and consolidated operating income of ¥0.9 billion (down 65.0% from last year).

DECLARATION OF DIVIDENDS We plan on declaring an ordinary annual payout of ¥5.00 per share for the year, with a semiannual payout of ¥2.50 per share.

BUSINESS PERFORMANCE FORECAST FOR THE NEXT FINANCIAL YEAR While recognizing that it is likely to take some time before we see the end of deflation or to confirm the advent of self-sustained economic growth, we expect exports and capital expenditures to continue to drive the economy onward over the short term. With public works spending projected to decline further in domestic markets, however, overall construction demand is bound to shrink over the long term, which indicates tougher competition ahead. Still, we see growth potential in such markets as reurbanization and PFI, where new projects are being launched in increasing numbers. Overseas, we expect positive spillovers from an expanding U.S. economy and the Chinese boom. Risks include excessive foreign exchange volatility and the rising interest rates.

Shown below are contract award and revenue targets for the financial year respectively of the Group and the Company itself broken down by segment. The Group aims to win construction contract awards worth ¥1,220 billion from domestic works and ¥180 billion from overseas works. The Company itself expects to secure construction contracts worth ¥1,095 billion from the domestic market and ¥35 billion from overseas.

CAUTIONARY STATEMENT The above projections/forecasts are based on information available as of the release of this document and are subject to risks and uncertainties that may cause the actual results to vary. We have every intention to minimize the negative impact on corporate performance of any sudden changes in economic environment or financial markets, changes or abolition of existing laws and enactment of new laws by removing, hedging or diversifying away various risks inherent in our businesses environment. Nonetheless, should conditions change beyond what we currently assume, the Group’s business performance and financial conditions may turn out to be materially different from our projections and forecasts.

25

Consolidated Balance Sheets KAJIMA Corporation and Consolidated Subsidiaries March 31, 2004 and 2003

26

27

Consolidated Statements of Operations KAJIMA Corporation and Consolidated Subsidiaries Years ended March 31, 2004 and 2003

28

Consolidated Statements of Stockholders’ Equity KAJIMA Corporation and Consolidated Subsidiaries Years ended March 31, 2004 and 2003

29

Consolidated Statements of Cash Flows KAJIMA Corporation and Consolidated Subsidiaries Years ended March 31, 2004 and 2003

30

Notes to Consolidated Financial Statements KAJIMA Corporation and Consolidated Subsidiaries Years ended March 31, 2004 and 2003

31

32

33

34

35

36

37

38

39

40

41

42

43

44

45

46

47

48

49

Network in Japan

HEAD OFFICES AND BRANCHES

BRANCH OFFICES

Head Office 2-7, Motoakasaka 1-chome, Minato-ku, Tokyo 107-8388, Japan Tel: 81-3-3404-3311 Fax: 81-3-3470-1444, 1445

Sapporo Branch Sapporo Kitasanjo Building, 1-4, Kitasanjonishi 3-chome, Chuo-ku, Sapporo 060-0003, Japan Tel: 81-11-231-5181 Fax: 81-11-231-3782

Architectural Design Division Civil Engineering Design Division Nuclear Power Department Kobori Research Complex 5-30, Akasaka 6-chome, Minato-ku, Tokyo 107-8502, Japan Tel: 81-3-5561-2111 Fax: 81-3-5561-2209 (Arch. Design) 81-3-5561-2151 (Civil Eng. Design) 81-3-5561-2418 (Nuclear Power) 81-3-5561-2431 (Kobori Research) Real Estate Development Division 8-1, Kasumigaseki 3-chome, Toranomon Mitsui Building, Chiyoda-ku, Tokyo 100-0013, Japan Tel: 81-3-5125-8011 Fax: 81-3-5125-8013 International Division 28th Floor, Shinjuku Park Tower Building, 7-1, Nishishinjuku 3-chome, Shinjuku-ku, Tokyo 163-1028, Japan Tel: 81-3-5324-5880 Fax: 81-3-5324-5827 Engineering Division 29th Floor, Shinjuku Park Tower Building, 7-1, Nishishinjuku 3-chome, Shinjuku-ku, Tokyo 163-1029, Japan Tel: 81-3-5321-7300 Fax: 81-3-5321-7312 Environmental Engineering Division 29th Floor, Shinjuku Park Tower Building, 7-1, Nishishinjuku 3-chome, Shinjuku-ku, Tokyo 163-1029, Japan Tel: 81-3-5321-7320 Fax: 81-3-5321-7329

50

Kansai Sales and Marketing Division Nishihonmachi Mitsui Building 3-15, Awaza 1-chome, Nishi-ku, Osaka 550-0011, Japan Tel: 81-6-6536-3311 Fax: 81-6-6536-7708 Kajima Technical Research Institute 19-1, Tobitakyu 2-chome, Chofu-shi, Tokyo 182-0036, Japan Tel: 81-424-85-1111 Fax: 81-424-88-3394

Tohoku Branch 1-27, Futsukamachi, Aoba-ku, Sendai 980-8621, Japan Tel: 81-22-261-7111 Fax: 81-22-261-9513 Kanto Branch 30th Floor, L.A. Tower 11-2, Shintoshin,Chuo-ku, Saitama 330-6030, Japan Tel: 81-48-601-5100 Fax: 81-48-601-5109 Tokyo Branch 3-8, Motoakasaka 1-chome, Minato-ku, Tokyo 107-8477, Japan Tel: 81-3-3404-5411 Fax: 81-3-3746-7400 Yokohama Branch 4-51, Ohta-cho, Naka-ku, Yokohama 231-0011, Japan Tel: 81-45-651-1751 Fax: 81-45-641-8968 Hokuriku Branch 3-4, Bandai 1-chome, Niigata 950-8550, Japan Tel: 81-25-243-3761 Fax: 81-25-243-1272

Nagoya Branch 2-14, Shinsakaemachi, Naka-ku, Nagoya 460-0004, Japan Tel: 81-52-961-6121 Fax: 81-52-961-0405 Kansai Branch Nishihonmachi Mitsui Building 3-15, Awaza 1-chome, Nishi-ku, Osaka 550-0011, Japan Tel: 81-6-6536-3311 Fax: 81-6-6536-7800 Shikoku Branch 1-3, Kamei-cho, Takamatsu 760-0050, Japan Tel: 81-87-839-3111 Fax: 81-87-839-3170 Hiroshima Branch 6-13, Nakamachi, Naka-ku, Hiroshima 730-0037, Japan Tel: 81-82-247-1611 Fax: 81-82-247-9911 Kyushu Branch 12-10, Hakataekimae 3-chome, Hakata-ku, Fukuoka 812-8513, Japan Tel: 81-92-441-0211 Fax: 81-92-481-8019

DISTRICT OFFICES

PRINCIPAL SUBSIDIARIES AND AFFILIATES

Donan District Office

Fukui District Office

Muroran District Office

Tobu District Office

Tomakomai District Office

Aichi Minami District Office

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Aichi Kita District Office

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Mie District Office

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Gifu District Office

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Obihiro District Office

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Sendai District Office

Kobe District Office

Akita District Office

Himeji District Office

Yamagata District Office

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Fukushima District Office

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Kooriyama District Office

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Ibaraki District Office

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Saitama Doboku District Office

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Yamanashi District Office

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Chiba District Office

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Kitakyushu District Office

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Oita District Office

Niigata Chuo District Office

Miyazaki District Office

Jochuetsu District Office

Kagoshima District Office

Toyama District Office

Okinawa District Office

Kanazawa District Office

Act Engineering Inc. Act Technical Support Inc. Armo Architects & Engineers ARTES Corporation Atema Kogen Resort Inc. Azuma Kanko Kaihatsu Co., Ltd. Chemical Grouting Co., Ltd. Chuo Industries Co., Ltd. Clima-Teq Co., Ltd. Creative Life Corporation East Real Estate Co., Ltd. Engineer & Risk Services Corporation Environment Management Corporation Green Materials Recycle Corporation Grout Trading Co., Ltd. Hotel Kajima no Mori Human Life Services Co., Ltd. Ilya Corporation Japan Sea Works Co., Ltd. Kajima Aquatech Corporation Kajima Institute Publishing Co., Ltd. Kajima Karuizawa Resort Inc. Kajima Leasing Corporation Kajima Mechatro Engineering Co., Ltd. Kajima Regional Engineering Support & Services East Kajima Regional Engineering Support & Services West Kajima Resort Corporation Kajima Road Co., Ltd. Kajima Services Co., Ltd. Kajima Shiodome Kaihatsu Co., Ltd. Kajima Tohoku Kosan Co., Ltd. Kajima Tokyo Kaihatsu Corporation Kajimavision Productions Co., Ltd. Kajima Yaesu Kaihatsu Co., Ltd. Kasen Development Inc. Katabami Kogyo Co., Ltd. Kobori Research Complex Inc. KOCAMB Co., Ltd. KRC Co., Ltd. Nasu Resort Corporation Niigata Bandaijima Building Co., Ltd. Nippon Foundation Engineering Co., Ltd. Plus Alpha, Ltd. Public Relations Officer Corporation SEEDER Co., Ltd. Shinrinkohen Golf Club Taiko Trading Co., Ltd. Techno-Wave Corporation Touasangyo Co., Ltd. Today And Tomorrow Co., Ltd. Toshi Kankyo Engineering Co., Ltd. Toyama Green Food Recycle Co., Ltd. Yaesu Book Center Co., Ltd.

51

Overseas Network

U.S.A. KAJIMA U.S.A. INC. 1251 Avenue of the Americas, 9th Floor, New York, NY 10020-1104, U.S.A. Tel: 1-212-355-4571 Fax: 1-212-355-4576

KAJIMA ENGINEERING AND CONSTRUCTION, INC. 901 Corporate Center Drive, Suite 212, Monterey Park, CA 91754-7630, U.S.A. Tel: 1-323-475-2200 Fax: 1-323-475-2201

NETHERLANDS KAJIMA EUROPE B.V. Biesbosch 225, 1181 JC, Amstelveen, The Netherlands Tel: 31-20-347-3250 Fax: 31-20-347-3260

KAJIMA INTERNATIONAL INC. KAJIMA CONSTRUCTION SERVICES, INC. KAJIMA ASSOCIATES, INC. KAJIMA REAL ESTATE DEVELOPMENT INC. 395 West Passaic Street, 3rd Floor, Rochelle Park, NJ 07662, U.S.A. Tel: 1-201-518-2100 Fax: 1-201-518-1539

EAST WEST DEVELOPMENT CORPORATION 123 Astronaut Ellison S. Onizuka Street, Suite 313, Los Angeles, CA 90012, U.S.A. Tel: 1-213-485-1177 Fax: 1-213-687-4324

POLAND KAJIMA CORPORATION Poland District Office KAJIMA EUROPE B.V. Poland Branch, Warsaw Office LIM Center 12th Floor, Al. Jerozolimskie 65/79 00-697, Warsaw, Poland Tel: 48-22-630-7520 Fax: 48-22-630-7519

HAWAIIAN DREDGING CONSTRUCTION COMPANY 614 Kapahulu Avenue, Honolulu, HI 96815, U.S.A. Tel: 1-808-735-3211 Fax: 1-808-735-7413 INDUSTRIAL DEVELOPMENTS INTERNATIONAL, INC. 3424 Peachtree Road, NE, Suite 1500, Atlanta, GA 30326, U.S.A. Tel: 1-404-479-4000 Fax: 1-404-479-4001 COMMERCIAL DEVELOPMENTS INTERNATIONAL EAST, INC. 1251 Avenue of the Americas, 9th Floor, New York, NY 10020-1104, U.S.A. Tel: 1-212-899-4570 Fax: 1-212-899-4569 COMMERCIAL DEVELOPMENTS INTERNATIONAL WEST, INC. 901 Corporate Center Drive, Suite 104, Monterey Park, CA 91754, U.S.A. Tel: 1-323-260-4661 Fax: 1-323-262-8893

52

KAJIMA DEVELOPMENT CORPORATION 901 Corporate Center Drive, Suite 104, Monterey Park, CA 91754, U.S.A. Tel: 1-323-262-8484 Fax: 1-323-262-8893 KUD INTERNATIONAL LLC 100 Wilshire Boulevard, Suite 950, Santa Monica, CA 90401, U.S.A. Tel: 1-310-260-6080 Fax: 1-310-260-6079

KAJIMA KONA COMPANY 100 Ka’upulehu Drive, Ka'upulehu-Kona, HI 96740, U.S.A. Tel: 1-808-325-8550 Fax: 1-808-325-8551 BELGIUM KAJIMA EUROPE B.V. Belgium Branch Leuvensesteenweg, 318, 1932 Sint-Stevens-Woluwe, Belgium CZECH REPUBLIC KAJIMA EUROPE B.V. Czech Branch Palác Flóra Building C 9th Floor, Vinohradská 151/2828, 130 00, Praha 3, Czech Republic Tel: 420-255-742-455 Fax: 420-255-742-499 EGYPT KAJIMA CORPORATION Egypt District Office 3 El Mansour Mohamed St., 4th Floor, Apt. No. 401, Zamalek, Cairo, Egypt Tel: 20-2-7360935 Fax: 20-2-7360948 FRANCE KAJIMA EUROPE S.A. KAJIMA FRANCE ENGINEERING S.A.R.L. KAJIMA FRANCE DEVELOPMENT S.A.R.L. 10 Rue de la Paix 75002, Paris, France Tel: 33-1-42-61-20-53 Fax: 33-1-42-60-37-64 GERMANY Kajima GmbH Niedenau 61-63, 60325, Frankfurt/Main, Germany Tel: 49-69-740372, 740373, 740374 Fax: 49-69-742514

TANZANIA KAJIMA CORPORATION Tanzania District Office P.O. Box 9763 Dar Es Salaam, Tanzania Tel: 255-22-2170510, 2170438 Fax: 255-22-2170438, 2170510 TURKEY KAJIMA CORPORATION Turkey District Office Balmumcu, Sakir Kesebir Sok, No. 32/10, 80700 Besiktas, Istanbul, Turkey Tel: 90-212-275-4620 Fax: 90-212-275-4626 UNITED KINGDOM KAJIMA EUROPE UK HOLDING LTD. KAJIMA PROPERTY HOLDINGS LTD. KAJIMA CONSTRUCTION EUROPE (U.K.) LTD. KAJIMA DESIGN EUROPE LTD. KAJIMA PARTNERSHIPS LTD. Grove House, 248A Marylebone Road, London NW1 6JZ, U.K. Tel: 44-20-7465-0007 Fax: 44-20-7465-8788 CHINA KAJIMA CORPORATION China District Office Tower A-605, Pacific Century Place No. 2 A Gong Ti North Road, Chaoyang District, Beijing 100027, People’s Republic of China Tel: 86-10-6539-2171, 2172 Fax: 86-10-6539-1716 KAJIMA CORPORATION Shanghai District Office KAJIMA (SHANGHAI) CONSTRUCTION CO., LTD. 6th Floor, Ansheng Bldg., No. 77 Fenyang-Road, Shanghai 200031, People’s Republic of China Tel: 86-21-5465-7058 FAX: 86-21-5465-7026,7027

HONG KONG KAJIMA OVERSEAS ASIA PTE. LTD. Hong Kong District Office Room 1905, 19th Floor, Allied Kajima Building, 138 Gloucester Road, Wan Chai, Hong Kong, S.A.R., People’s Republic of China Tel: 852-2598-6767 Fax: 852-2598-0696 INDIA KAJIMA CORPORATION New Delhi Liaison Office S-71, Greater Kailash Part-0, New Delhi - 110048, India Tel: 91-11-2647-8505 Fax: 91-11-2647-5806 INDONESIA KAJIMA CORPORATION Indonesia District Office Sentral Senayan 1, 17th Floor, Unit #117C, JL. Asia Afrika No. 8, Jakarta 10270, Indonesia Tel: 62-21-572-4480 Fax: 62-21-572-4485 P.T. KAJIMA INDONESIA Sentral Senayan 1, 17th Floor, Unit #117A JL. Asia Afrika No. 8, Jakarta 10270, Indonesia Tel: 62-21-572-4477 Fax: 62-21-572-4473 P.T. SENAYAN TRIKARYA SEMPANA Sentral Senayan 1, 8th Floor, Gelora Bung Karno-Senayan, Jakarta Pusat, 10270, Indonesia MALAYSIA KAJIMA CORPORATION Malaysia District Office Unit 11.08, 11th Floor, Menara Promet, Jalan Sultan Ismail 50250, Kuala Lumpur, Malaysia Tel: 60-3-2145-2526 Fax: 60-3-2145-2786 KAJIMA (MALAYSIA) SDN. BHD. 16th Floor, Menara Promet, Jalan Sultan Ismail 50250, Kuala Lumpur, Malaysia Tel: 60-3-2141-4391 Fax: 60-3-2142-0322

MYANMAR KAJIMA CORPORATION Myanmar District Office 55-A, University Avenue, Bahan Township, Yangon, Myanmar Tel: 95-1-503237, 503238 Fax: 95-1-503308

CHUNG-LU SINO-KAJIMA CONSTRUCTION CO., LTD. 2nd Floor, No. 9, Lane 65, Chung Shan North Road Section 2, Taipei, Taiwan, R.O.C. Tel: 886-2-2541-0812 Fax: 886-2-2522-3092

PHILIPPINES KAJIMA CORPORATION Philippines District Office KAJIMA PHILIPPINES INC. 12F Sky Plaza, 6788 Ayala Avenue, Makati City, Manila, Philippines Tel: 63-2-886-6818 Fax: 63-2-886-6817

THAILAND KAJIMA CORPORATION Thai District Office Ramaland Building 17th Floor, 952 Rama IV Road, Suriyawongse, Bangrak, Bangkok 10500, Thailand Tel: 66-2-632-8600 Fax: 66-2-632-8603

SINGAPORE KAJIMA CORPORATION Singapore District Office 80 Marine Parade Road, #14-07 Parkway Parade, Singapore 449269, Singapore Tel: 65-6344-9722 Fax: 65-6342-2272

THAI KAJIMA CO., LTD. RAMALAND DEVELOPMENT CO., LTD. Ramaland Building 19th Floor, 952 Rama IV Road, Suriyawongse, Bangrak, Bangkok 10500, Thailand Tel: 66-2-632-9300 Fax: 66-2-632-9312

KAJIMA OVERSEAS ASIA PTE. LTD. 80 Marine Parade Road, #14-01/03 Parkway Parade, Singapore 449269, Singapore Tel: 65-6344-0066 Fax: 65-6344-3777 KAJIMA DESIGN ASIA PTE. LTD. 80 Marine Parade Road, #06-02/05 Parkway Parade, Singapore 449269, Singapore Tel: 65-6334-1383 Fax: 65-6334-1318 SRI LANKA KAJIMA CORPORATION Sri Lanka District Office No. 77A, Ward Place, Colombo 7, Sri Lanka Tel: 94-1-678415, 678416, 678417 Fax: 94-1-678414 TAIWAN KAJIMA CORPORATION Taiwan District Office 2nd Floor, No. 9, Lane 65, Chung Shan North Road Section 2, Taipei, Taiwan, R.O.C. Tel: 886-2-2541-0812 Fax: 886-2-2523-5637

VIETNAM KAJIMA CORPORATION Vietnam District Office Thanglong Bldg. Unit No. 203A, 2nd Floor, No. 105, Lang Ha Street, Hanoi, Vietnam Tel: 84-4562-2748 Fax: 84-4562-2738 KAJIMA OVERSEAS ASIA PTE. LTD. Vietnam District Office 7th. Floor, Me Linh Point Tower, 2 Ngo Duc Ke, District 1, Ho Chi Minh City, Vietnam Tel: 84-8823-4510 Fax: 84-8823-4512

53

Board of Directors and Auditors

CHAIRMAN

SENIOR MANAGING DIRECTORS

DIRECTOR AND SENIOR ADVISER

Rokuro Ishikawa

Ryosuke Hirota

Shoichi Kajima

Kazuhito Amikura PRESIDENT

Suguru Akiyama

DIRECTORS

Sadao Umeda

Seiichiro Tomioka

Kenichi Kotani

Mitsuyoshi Nakamura

Atsushi Hattori

EXECUTIVE VICE PRESIDENTS

Kinji Ohashi

Teruaki Yamaguchi

Yoshihiko Iwamatsu

Yukihiro Omika

Motomichi Ishikawa

Masaru Kawai

Tasaburo Shimizu

Susumu Tsuchiya

Mikio Shoji

Hiroshi Kaneko

Takashi Hinago

Naoki Atsumi

Yoshihiro Nakahora

Toshio Yamamoto

Osamu Minamitani

Akira Okamoto

Takashi Momma

Kiyoshi Ogami

Hiroshi Ishikawa

Seigo Akanuma Kimitsugu Kudo

MANAGING DIRECTORS

Toru Kido

Takahiko Nishio

Yoshiomi Ichihashi

Keiichiro Namai

Masanobu Sumiyoshi

Seisuke Nakano Mitsuhiro Hirata

CORPORATE AUDITORS

Yoshitoshi Tamura

Kozo Takahara

Takashi Tokuda

Tatsuo Hatanaka

Hisaya Igarashi

Akira Aoki

Komao Yasuda

Hiroshi Araki

Noboru Ikebata

Shigeru Kobori

Hiroaki Hoshino Hirohisa Takita Kaoru Someya Yasuo Morimitsu Takaji Mineo Kunio Yanagisawa Teruaki Murata

(As of June 29, 2004)

HEAD OFFICE

NUMBER OF EMPLOYEES

TRANSFER AGENT

2-7, Motoakasaka 1-chome, Minato-ku,

9,910

The Chuo Mitsui Trust & Banking Co., Ltd.

Tel: 81-3-3404-3311

PAID-IN CAPITAL

INDEPENDENT AUDITORS

Fax: 81-3-3470-1444, 1445

¥81,447 million

Deloitte Touche Tohmatsu

Corporate Data

54

Tokyo 107-8388, Japan

URL: http://www.kajima.co.jp/welcome.html COMMON STOCK

LISTINGS

ESTABLISHED

Authorized: 1,920,000,000 shares

Common stock is listed on the Tokyo, Osaka,

1840

Issued: 1,057,312,022 shares

Nagoya, and London stock exchanges.

INCORPORATED

NUMBER OF STOCKHOLDERS

1930

78,455

(As of March 31, 2004)

2-7, Motoakasaka 1-chome, Minato-ku, Tokyo 107-8388, Japan TEL: 81-3-3404-3311 FAX: 81-3-3470-1444, 1445 URL: http://www.kajima.co.jp/welcome.html

Printed in Japan