Internet Disclosure Items
for Notice of Convocation of the 10th Annual Shareholders Meeting
Notes to Consolidated Financial Statements
Notes to Non-consolidated Financial Statements(From March 1, 2016 to February 28, 2017)

J. FRONT RETAILING Co., Ltd.

As for Notes to Consolidated Financial Statements and Notes to Non-consolidated Financial Statements,
the Company provides those to shareholders by means of disclosure through the Internet (on the
Company’s website: http://www.j-front-retailing.com/) in accordance with the laws and regulations and theCompany’s Articles of Incorporation.

Notes to Consolidated Financial Statements
Notes on important matters forming the basis of preparation of consolidated financial statements, etc.
1. Matters concerning the scope of consolidation(1) Consolidated subsidiaries
26 companies (Daimaru Matsuzakaya Department Stores Co. Ltd.,The Hakata Daimaru, Inc., PARCO CO., LTD., Daimaru Kogyo,Ltd., JFR Card Co., Ltd., and others)
Daimaru COM Development Inc., which had been a consolidated subsidiary, was absorbed by
Daimaru Matsuzakaya Department Stores Co. Ltd. through a merger on September 1, 2016. In
addition, JFR Office Support Co., Ltd. and JFR Consulting Co. Ltd., which had also been
consolidated subsidiaries, were absorbed by JFR Service Co. Ltd. on the same date.
(2) Non-consolidated subsidiaries

7 companies (Hakata Daimaru Tomonokai Co., Ltd., Shimonoseki
Daimaru Tomonokai Co., Ltd., and others)
These non-consolidated subsidiaries are excluded from the scope of consolidation as their total
assets, net sales, profit or loss (amount corresponding to the Company’s equity in such subsidiaries),
and retained earnings (amount corresponding to the Company’s equity in such subsidiaries) do nothave significant impact on the consolidated financial statements.

2. Matters concerning the application of the equity method(1) Non-consolidated subsidiaries and associates accounted for by the equity method
Non-consolidated subsidiaries
1 company (JAPAN RETAIL ADVISORS Co., Ltd.)
Associates
8 companies (StylingLife Holdings Inc., Senshukai Co., Ltd., andothers)(2) Non-consolidated subsidiaries and associates not accounted for by the equity method
Non-consolidated subsidiaries
6 companies (Hakata Daimaru Tomonokai Co., Ltd., Shimonoseki
Daimaru Tomonokai Co., Ltd., JET Cleaning Co., Ltd., andothers)
Associates
2 companies (Gokou Ltd., Macros, Inc.)
These non-consolidated subsidiaries and associates not accounted for by the equity method are
excluded from the scope of application of the equity method as they have a minimal effect on profit orloss and retained earnings and they are not material as a whole.
(3) With regard to equity method companies whose balance sheet dates are different from theconsolidated balance sheet date, the Company uses the financial statements of the relevant companies
as of their fiscal year ends.
3. Matters concerning the fiscal year of consolidated subsidiaries
Of the Company’s consolidated subsidiaries, JFR PLAZA Inc., Parco (Singapore) Pte Ltd, Daimaru
Kogyo International Trading (Shanghai) Co., Ltd., Daimaru Kogyo (Thailand) Co., Ltd. and Taiwan
Daimaru Kogyo, Ltd. have a balance sheet date of December 31. In preparing the consolidated financial
statements, the financial statements as of said balance sheet date are used. The Company made theadjustments necessary for consolidation purposes if major transactions were executed between thebalance sheet date and the consolidated balance sheet date.
The balance sheet dates of the other consolidated subsidiaries are the same as the consolidated balance
sheet date.

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4. Matters concerning accounting policies(1) Basis and method of valuation of significant assets(i) Securities
Other securities
Securities with available fair market values
Stated at fair value based on the market prices at the end of thecurrent fiscal year
(Valuation differences are included in net assets; cost of securities
sold is determined by the moving-average method)
Securities without available fair market values
Stated at cost using the moving-average method
The Company records investments in limited liability investment
partnerships or similar partnerships (deemed as “securities” under
the provisions set forth in Paragraph 2, Article 2 of the Financial
Instruments and Exchange Act) using the amount corresponding
to the Company’s equity in such partnerships based on the latest
financial reports accessible depending on the reporting dates
stipulated in the partnership agreement.
(ii) Derivatives
Stated at fair value(iii) Inventories
Mainly stated using the identified cost method (the book value iswritten down based on the decreased profitability)(2) Depreciation method of significant depreciable assets(i) Property, plant and equipment (excluding leased assets)
Straight-line method(ii) Intangible assets (excluding leased assets)
Straight-line method
Internal use software is amortized using the straight-line method
over the internally expected useful life (5 years).
(iii) Leased assets
Leased assets in finance leases that do not transfer ownership
Straight-line method with zero residual value assuming the lease periods as useful lives
Finance leases that do not transfer ownership and that commenced on or before February 28,
2009 are continued to be accounted for using a method that is applicable to ordinary rental
transactions.
(3) Accounting method for significant deferred assets
Bond issuance cost
Amortized using the straight-line method over the period until redemption(4) Accounting policy for significant provisions(i) Allowance for doubtful accounts
To prepare for losses from bad debt, an estimated uncollectible amount is provided either bymaking an estimation using the historical rate of credit loss in the case of general receivables, orbased on individual consideration of collectibility in the case of specific receivables such as highly
doubtful receivables.
(ii) Provision for bonuses
To prepare for the payment of bonuses to employees, the amount expected to be paid is provided.
(iii) Provision for directors’ bonuses
To prepare for the payment of bonuses to corporate officers, the amount expected to be paid isprovided.
(iv) Provision for sales returns
To prepare for losses from sales returns expected to occur on or after the end of the current fiscal-2-year, the amount corresponding to the allowable limit of deductible expenses pursuant to theprovisions of tax law is provided.
(v) Provision for books unsold
To prepare for losses from the occurrence of unsold inventory with respect to books for which a
certain amount of time has passed since publication, the amount corresponding to the allowable
limit of deductible expenses pursuant to the provisions of tax law is provided.
(vi) Provision for sales promotion expenses
To cover the unused amount of points issued under the points system for sales promotion
purposes, the amount expected to be used in the future based on the rate of usage in the past isprovided.
(vii) Reserve for gift certificates
To prepare for losses incurred in cases of gift certificates used after their derecognition fromliabilities, the amount expected to be used in the future based on usage in the past is provided.
(viii) Provision for loss on business liquidation
To prepare for losses from business liquidations or store closures at subsidiaries and associates,
the necessary amount is provided.
(ix) Provision for directors’ retirement benefits
At certain consolidated subsidiaries, to prepare for the payment of retirement benefits tocorporate officers, the amount to be paid at the end of the current fiscal year, based on an internal
rule, is provided.
(x) Provision for loss on stores rebuilding
To prepare for losses incurred from stores rebuilding, the necessary amount is provided.
(5) Criteria for converting significant assets or liabilities denominated in foreign currencies into Japanesecurrency
Monetary claims and liabilities denominated in foreign currencies are converted into Japanese yen
using the spot exchange rate on the consolidated balance sheet date, and any differences generated bythis conversion are included in gains or losses. Monetary claims and liabilities denominated in foreign
currencies to which Furiate-shori (accounting method in which the difference of amount using thecurrent and forward rate is allocated by period length for the calculation at the accounting period) forforward exchange contracts is applied are converted into the Japanese yen amounts of the said
forward exchange contracts.
(6) Accounting method for retirement benefits(i) Method for attributing expected retirement benefits to accounting periods
In the calculation of retirement benefit obligations, expected retirement benefits are attributed toaccounting periods up to the end of the current fiscal year using the benefit formula basis.
(ii) Method for recognizing actuarial gains and losses and prior service costs
Prior service costs are amortized by the straight-line method over a certain number of years(principally 11 years) within the average remaining service period of employees at the time ofoccurrence, starting in the fiscal year in which the prior service costs accrue.
Actuarial gains and losses are amortized by the straight-line method over a certain number ofyears (principally 11 years) within the average remaining service period of employees at the time ofoccurrence, starting in the respective fiscal years following each occurrence.
(iii) Accounting treatment for unrecognized actuarial gains and losses and unrecognized prior service
costs
Unrecognized actuarial gains and losses and unrecognized prior service costs are posted toremeasurements of defined benefit plans under accumulated other comprehensive income in the net
assets section after adjusting for tax effects.

-3-(7) Significant hedge accounting method(i) Hedge accounting method
Hedging activities are accounted for under the deferral hedge method. Furiate-shori is applied tomonetary claims and liabilities denominated in foreign currencies with forward exchange contracts
and exceptional treatment is applied to interest rate swaps that satisfy the requirements for
exceptional treatment.
(ii) Hedging instruments and hedged items
Hedging instruments
Forward exchange contracts, interest rate swaps
Hedged items

Operating receivables and payables denominated in foreign
currencies, forecast transactions in foreign currencies, loans payable
and interest expenses on loans payable(iii) Hedging policy
Based on the Group’s risk management policy, hedging is undertaken to hedge foreign exchange
fluctuation risk and interest rate fluctuation risk.
(iv) Method for assessing the hedge effectivenessAt the end of each fiscal year, hedge effectiveness with respect to the hedged items and hedging
instruments is assessed for each hedging transaction. This annual assessment excludes any
transaction where important terms and conditions such as principal, interest rate, and duration are
identical between the assets or liabilities of hedged items and hedging instruments.
(8) Method and period for amortization of goodwill
Amortization of goodwill is carried out by the straight-line method during the five-year period fromoccurrence. For items for which the amount is immaterial, one-time amortization of the full amount iscarried out in the fiscal year in which they occur.
(9) Accounting treatment for consumption taxes
Consumption tax and local consumption tax are accounted for under the tax exclusion method.
5. Changes in accounting policies
Application of Accounting Standard for Business Combinations, etc.
Effective from the current fiscal year, the Company has adopted the “Accounting Standard forBusiness Combinations” (ASBJ Statement No. 21, September 13, 2013), the “Accounting Standard forConsolidated Financial Statements” (ASBJ Statement No. 22, September 13, 2013), the “AccountingStandard for Business Divestitures” (ASBJ Statement No. 7, September 13, 2013), etc. As a result, themethod of recording the amount of difference caused by changes in the Company’s ownership interestsin subsidiaries in the case of subsidiaries under ongoing control of the Company was changed to one inwhich it is recorded as capital surplus, and the method of recording acquisition-related costs waschanged to one in which they are recognized as expenses for the fiscal year in which they are incurred.
Furthermore, for business combinations carried out on or after the beginning of the current fiscal year,
the accounting method was changed to one in which the reviewed acquisition cost allocation resulting
from the finalization of the provisional accounting treatment is reflected in the consolidated financial
statements for the fiscal year to which the date of business combination belongs. In addition, thepresentation method for “profit” and other related items was changed, and the presentation of “minority
interests” was changed to “non-controlling interests.”
Application of the Accounting Standard for Business Combinations, etc. is in line with the transitional
measures provided for in Paragraph 58-2 (4) of the Accounting Standard for Business Combinations,Paragraph 44-5 (4) of the Accounting Standard for Consolidated Financial Statements and Paragraph 574 (4) of the Accounting Standard for Business Divestitures. The Company is applying the said standard,
etc. prospectively from the beginning of the current fiscal year.
These changes have no impact on profit or loss.

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Changes in the depreciation method of property, plant and equipment
Previously, the Company and its domestic consolidated subsidiaries had mainly used the decliningbalance method for depreciating property, plant and equipment (excluding leased assets) other thanbuildings and structures. From the current fiscal year, however, the Company has changed to using thestraight-line method for depreciating all property, plant and equipment.
The Company made these changes because it judged that the straight-line method, which equally
allocates the acquisition amount over the useful life, more suitably reflects in periodic profit or loss
compared with the declining-balance method, which was previously used. This judgment was based on
the results of performing a review of the Group’s investment strategy, which focuses on seizing theopportunities of the recent large-scale investments and large-scale investment planning relating to
Daimaru Matsuzakaya Department Stores Co. Ltd. and PARCO CO., LTD., and revalidating the revenue
structures of the Group’s property, plant and equipment in line with the active expansion of businessmodels that have comparatively higher stability mainly due to rent fixation at PARCO CO., LTD.
As a result of this change, for the current fiscal year, operating income, ordinary income and profit
before income taxes each increased by ¥1,453 million, compared with their respective figures calculatedusing the former depreciation method.
6. Changes in accounting estimates
Changes in amortization period of prior service costs and actuarial gains and losses for accounting
related to retirement benefits
Previously, some subsidiaries used an amortization period of 12 years for prior service costs andactuarial gains and losses. However, because the average remaining service periods of employees haveshortened, the amortization period has been changed to 11 years as of the current fiscal year.
The effect of this change on profit or loss is immaterial.
7. Additional information
Accounting with respect to redevelopment
The Udagawa-cho 14/15 Category 1 Urban Redevelopment Project is being independently carried out
by consolidated subsidiary PARCO CO., LTD., acting as an independent operator, and accordingly
presentation of the consolidated financial statements includes accounting for such individual operations
involving the urban redevelopment project.
Under such accounting treatment, the consolidated balance sheet items cash and deposits and current
assets – other have been reduced by ¥4,476 million and ¥57 million, respectively, while amounts
recorded to inventories, advances received and current liabilities – other amount to ¥6,406 million,¥1,460 million and ¥413 million, respectively.
Notes on consolidated balance sheet
1. Accumulated depreciation of property, plant and equipment¥283,063 million
2. Assets pledged as collateral and secured liabilities(1) Assets pledged as collateral
Buildings and structures
Land
Investment securities
Other
Total

¥10,458 million¥10,798 million¥455 million¥53 million¥21,766 million-5-(2) Secured liabilities
Short-term loans payable
Long-term loans payable
Other
Total
3. Guarantee obligations¥200 million¥1,425 million¥430 million¥2,055 million

Guarantee of financing for employee housing andothersGuarantee of lease agreement of JET CleaningCo., Ltd. (subsidiary of Forest Co., Ltd.)
Total¥11 million¥63 million¥75million

Notes on consolidated statement of changes in equity
1. Class and total number of shares issued as of the end of the current fiscal year
Common shares
268,119,164 shares
2. Matters concerning dividends(1) Dividends paid
Class of shares

Total amount ofdividends(Millions of yen)

Board of Directors
meeting held on
Common shares
April 7, 2016

3,661

14.00 February 29, 2016

May 6, 2016

Board of Directors
meeting held on
Common shares
October 4, 2016

3,661

14.00 August 31, 2016

November 9, 2016

Resolution

Dividends per
share
(Yen)

Record date

Effective date(2) Dividends with the record date falling within the current fiscal year and with the effective date fallingwithin the following fiscal year
Resolution
Board of Directors
meeting held on
April 10, 2017Class of shares
Commonshares

Source ofdividends

Total amount ofdividends(Millions of yen)

Dividends per
share
(Yen)

Record date

Effective date

3,661

14.00

February 28,
2017

May 8, 2017

Retainedearnings

Notes on financial instruments
1. Matters concerning conditions of financial instruments(1) Policy for handling financial instruments
The Group limits its management of funds to highly stable deposits, bonds and the like. For the
procurement of funds, the Group’s policy is to use bank loans, issuances of commercial papers,
issuances of bonds, securitized receivables and the like. The Group uses derivatives solely to avoid
foreign exchange fluctuation risks on monetary claims and liabilities denominated in foreign
currencies and interest rate fluctuation risks on loans payable and bonds, and does not enter into
derivative transactions for speculative purposes.
(2) Details of financial instruments, their risks and risk management structure
Notes and accounts receivable - trade, which are operating receivables, are exposed to customer
credit risk.
Lease and guarantee deposits are primarily those related to store rents and are exposed to lessor
credit risk. To handle this risk, all Group companies carry out due date management and balance-6-management by customer or lessor and seek early identification and mitigation of collectibility
concerns.
For shares and the like, which are investment securities, although such securities are exposed tomarket price fluctuation risk, the Group mainly holds shares of companies with which it has business
relationships, and not only periodically monitors their market prices but also continuously reviews its
shareholding positions.
The majority of the Group’s notes and accounts payable - trade and income taxes payable, which
are operating debts, are those with payment dates within one year. Although some of these aredenominated in foreign currencies and are exposed to foreign exchange fluctuation risk, the Group
enters into forward exchange contracts for some of the settlement amounts to avoid this risk.
Short-term loans payable, commercial papers, securitized receivables and the like are mainly to
procure funds for operational transactions, while bonds and long-term loans payable are mainly to
procure funds for capital investment. Although loans payable with floating interest rates are exposed
to interest rate fluctuation risk, for some of the long-term loans payable, derivative transactions(interest rate swaps) for each individual contract are used as hedging instruments to avoid fluctuation
risk on interest to be paid and to fix the interest to be paid. As a method for assessing hedge
effectiveness, the Group periodically verifies hedging effects for each individual contract. For
contracts that satisfy the requirements for exceptional treatment of interest rate swaps, assessment ofeffectiveness is omitted in accordance with that judgment.
Execution and management of derivative transactions are carried out in accordance with internal
rules that stipulate contract limits, and the use of derivatives is limited to contracts with financial
institutions that have high ratings in order to reduce credit risk.
In addition, although operating debts, loans payable and the like are exposed to liquidity risk, theGroup manages this risk with methods such as preparing monthly cash flow management plans at allcompanies, and secures sufficient liquidity on hand through commitment line contracts and overdraft
contracts with its main financing banks.
2. Matters concerning fair values of financial instruments
Consolidated balance sheet amounts, fair values as of February 28, 2017, and their differences are as
follows.
The amounts shown in the following table do not include financial instruments whose fair values are
deemed extremely difficult to determine. (see Note 2)(Millions of yen)
Consolidated balance
sheet amount(*1)

Fair value(*1)

Difference(1)

Cash and deposits

36,31836,318–(2)

Notes and accounts receivable - trade

68,997

68,997–(3)

Securities and investment securities(i) Other securities(ii) Shares of associates

16,348
11,816

16,3489,428–(2,388)(4)

Lease and guarantee deposits

36,02835,621(406)(5)

Notes and accounts payable - trade[87,964][87,964]–(6)

Short-term loans payable[8,320][8,320]–(7)

Commercial papers[33,799][33,799]–(8)

Income taxes payable[7,125][7,125]–(9)

Bonds payable[27,000][27,117]

117[118,680][119,264]584(10) Long-term loans payable(11) Derivatives (*2)1111–(*1) The items recorded in liabilities on the consolidated balance sheet are shown in square brackets.
(*2) Assets and liabilities arising from derivative transactions are presented on a net basis. Net liability is indicated insquare brackets.

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(Note 1) Method for measuring fair values of financial instruments and matters concerning securities and derivativetransactions(1) Cash and deposits, and (2) Notes and accounts receivable - trade
The book value is used as the fair value of these assets, given that the fair value is almost the same as thebook value, as they are mostly settled in a short time. Time deposits over one year are included in (1) Cashand deposits.
(3) Securities and investment securities
To measure fair values of these assets, prices at the exchange are used for stocks and prices at the exchange aswell as prices presented by the counterparty financial institutions or the like are used for bonds.
(4) Lease and guarantee deposits
The fair values of lease and guarantee deposits are measured based on the present values obtained bydiscounting the future cash flows by the rate for which credit risk is taken into account. Current portion oflease and guarantee deposits is included.
(5) Notes and accounts payable - trade, (6) Short-term loans payable, (7) Commercial papers, and (8) Income
taxes payable
The book value is used as the fair value of these liabilities, given that the fair value is almost the same as thebook value, as they are settled in a short time.
(9) Bonds payable
The fair values of bonds payable are measured based on the market prices. Current portion of bonds payable
is included.
(10) Long-term loans payable
The book value is used as the fair value of those loans payable with floating interest rate, given that the fairvalue is almost the same as the book value, as their interest rates are reviewed on a short-term interval toreflect market interest rates. In addition, as some of them qualify for exceptional treatment for an interest rateswap, their fair value is measured by discounting the total of principal and interest accounted for together
with the said interest rate swap at the reasonably estimable rate applied when a similar loan is made.
The fair values of loans payable with fixed interest rate are measured by discounting the total of principal andinterest at the rate assumed when a new similar loan is made. Current portion of long-term loans payable isincluded.
(11) Derivatives
The fair values are measured based on prices presented by the counterparty financial institutions or the like.
Items to which exceptional treatment for interest rate swaps or Furiate-shori for forward exchange contracts
is applied are accounted for together with the hedged long-term loans payable and trade accounts receivableand payable. Consequently, the fair values are included in the fair values of the said long-term loans payable
and trade accounts receivable and payable. (Please refer to (10) above).
(Note 2) Financial instruments whose fair values are deemed extremely difficult to determine
Unlisted stocks (whose consolidated balance sheet amount is ¥18,772 million) are excluded from “(3) Securities
and investment securities” because they do not have market prices and it is deemed extremely difficult todetermine the fair values.
Part of lease and guarantee deposits (whose consolidated balance sheet amount is ¥26,154 million) and longterm guarantee deposited (whose consolidated balance sheet amount is ¥28,646 million) are not subject to fairvalue measurement because they do not have market prices and it is deemed extremely difficult to estimate
future cash flows, etc.

Notes on investment and rental property
1. Matters concerning status of investment and rental property
Some of the Company’s subsidiaries own rental buildings (including land) in Tokyo and other regions.
2. Matters concerning fair values of investment and rental property(Millions of yen)
Fair value at the end of the current fiscal year

Consolidated balance sheet amount

231,245
228,060(Note 1) The consolidated balance sheet amount is the acquisition cost less accumulated depreciation.
(Note 2) For major properties, fair value at the end of the current fiscal year is an amount based on the real estateappraisal standards of an external real estate appraiser, etc. For other properties, fair value is an amountestimated by employing the land price index with necessary adjustments applied at the Company.
(Note 3) The South Wing of Matsuzakaya Ueno store, etc. (whose consolidated balance sheet amount is ¥73,635 million)
involve developments of large-scale commercial facilities and are still at the development stage at present. For-8-these reasons, their fair values are extremely difficult to determine and are not included in the above table.

Notes on per share information
1. Net assets per share:
2. Basic earnings per share:¥1,553.60¥103.04

Notes on significant subsequent events
No items to report.

-9-Notes to Non-consolidated Financial Statements
Notes on matters concerning important accounting policies
1. Basis and method of valuation of assets(1) Basis and method of valuation of securities
Shares of subsidiaries and associates
Stated at cost using the moving-average method
Other securities
Securities with available fair market values
Stated at fair value based on the market prices at the
fiscal year-end(Valuation differences are included in net assets; cost of
securities sold is determined by the moving-averagemethod)Securities without available fair market values
Stated at cost using the moving-average method
The Company records investments in limited liability
investment partnerships or similar partnerships (deemed
as “securities” under the provisions set forth inParagraph 2, Article 2 of the Financial Instruments andExchange Act) using the amount corresponding to theCompany’s equity in such partnerships based on thelatest financial reports accessible depending on thereporting dates stipulated in the partnership agreement.
(2) Basis and method of valuation of derivatives
Derivatives
Stated at fair value(3) Basis and method of valuation of inventories
Supplies
Stated at cost using the FIFO method (the book value iswritten down based on the decreased profitability)
2. Depreciation method of non-current assets
Property, plant and equipment (excluding leased assets)
Straight-line method
Intangible assets (excluding leased assets)
Straight-line method
Internal use software is amortized using the straight-line
method over the internally expected useful life (5 years).
Leased assets
Leased assets in finance leases that do not transfer ownership
Straight-line method with zero residual value assuming
the lease periods as useful lives
3. Accounting method for deferred assets
Bond issuance cost
Amortized using the straight-line method over theperiod until redemption
4. Accounting policy for provisions
Allowance for doubtful accounts
To prepare for losses from bad debt, an estimateduncollectible amount is provided.
Provision for bonuses
To prepare for the payment of bonuses to employees, theamount expected to be paid is provided.
Provision for directors’ bonuses
To prepare for the payment of bonuses to corporate
officers, the amount expected to be paid is provided.
Provision for loss on business liquidation
To prepare for losses from business liquidations at- 10 -

subsidiaries and associates, the necessary amount isprovided.
5. Hedge accounting method
Hedge accounting method
Hedging instruments and hedged items
Hedging instruments
Hedged items
Hedging policy

Exceptional treatment is applied to interest rate swaps
that satisfy the requirements for exceptional treatment.
Interest rate swaps
Loans payable and interest expenses on loans payable
Based on the risk management policy, hedging isundertaken to hedge interest rate fluctuation risk.

Method for assessing the hedge effectivenessAt the end of each fiscal year, hedge effectiveness withrespect to the hedged items and hedging instruments is
assessed for each hedging transaction. This annual
assessment excludes any transaction where important
terms and conditions such as principal, interest rate, andduration are identical between the assets or liabilities ofhedged items and hedging instruments.
6. Accounting treatment for consumption taxes
Consumption tax and local consumption tax are
accounted for under the tax exclusion method.
Of consumption tax on assets that are not qualified fortax deductions, deferred consumption taxes stipulated
under tax law are recorded in long-term prepaid
expenses and amortized on a straight-line basis during afive-year period.
7. Changes in accounting policies
Changes in the depreciation method of property, plant and equipment
Previously, the Company had used the decliningbalance method for depreciating property, plant andequipment (excluding leased assets) other than buildings
and structures. However, the Company has changed tousing the straight-line method for depreciating allproperty, plant and equipment.
The Company made these changes because it judgedthat the straight-line method, which equally allocates theacquisition amount over the useful life, more suitablyreflects in periodic profit or loss compared with the
declining-balance method, which was previously used.
This judgment was based on the result of revalidating
the revenue structures of the Group’s property, plant andequipment.
The impact of these changes is immaterial.
Notes on non-consolidated balance sheet
1. Accumulated depreciation of property, plant and equipment¥99 million- 11 -

Notes on non-consolidated statement of income
1. Transaction with subsidiaries and associates
Operating revenue
General and administrative expenses
Non-operating transactions¥13,646 million¥190 million¥943 million

Notes on non-consolidated statement of changes in equity
1. Class and total number of shares issued as of the end of the current fiscal year
Common shares
268,119,164 shares
2. Class and number of treasury shares as of the end of the current fiscal year
Common shares
6,573,594 shares

Notes on tax effect accounting
1. Deferred tax assets by major category of cause
Deferred tax assets
Provision for bonuses
Accrued insurance expenses
Accrued enterprise tax
Allowance for doubtful accounts
Loss on valuation of shares of subsidiaries andassociates
Loss on support to subsidiaries and associates
Provision for loss on business liquidation
Other
Sub total deferred tax assets¥91 million¥318 million¥19 million¥1,467 million

Valuation allowance
Total deferred tax assets¥(1,069) million¥397 million

Deferred tax liabilities
Valuation difference on available-for-salesecurities¥49 million¥7 million¥34 million¥309 million¥636 million¥(13) million

Net deferred tax assets¥383 million

Net deferred tax assets are included in the following items in the non-consolidated balance sheet.
Current assets — Deferred tax assets
Non-current assets — Deferred tax assets¥260 million¥123 million- 12 -

Notes on transactions with related parties
Subsidiaries and associates, etc.

Type

Subsidiary

Company name

Daimaru
Matsuzakaya
Department
Stores Co. Ltd.

Ownership
ratio ofRelationshipvoting rights

Holding
Directly
100%

Interlocking
of officers
Business
advisory

Nature oftransactions

Transaction
amount(Note 4)

Receipt ofconsulting fee
income (Note 1)

2,698

Lending of funds

15,000

Collection offunds

19,265

Receipt ofinterests (Note 2)

Subsidiary

Subsidiary

Holding
JFR Service Co.
DirectlyLtd.
100%

JFR Card Co.,Ltd.

Holding
Directly
100%

Interlocking
of officers
Business
advisory
Interlocking
of officers
Business
advisory

Lending andcollection offunds(Note 3)

(Millions of yen)
Balance atthe end of
Account itemthe fiscal
year—
Short-term
loans
receivable
Long-term
loans
receivable537—

10,156

Short-term
loans
receivable

Receipt ofinterests (Note 2)

26—

Lending of funds—

Long-term
loans
receivable—

34,74030,775—

18,471—
10,000Receipt of
49——
interests (Note 2)
Transaction conditions and policy for deciding transaction conditions(Note 1) Consulting fee income is determined by contract terms.
(Note 2) Interest rates on loans are determined reasonably with reference to market interest rates.
(Note 3) As transactions for lending and collection of funds are carried out repetitively, the amount shown in the transaction
amount column is the average balance during the period.
(Note 4) Transaction amounts do not include consumption taxes.

Notes on per share information
1. Net assets per share:
2. Basic earnings per share:¥1,166.55¥33.27- 13 -