Independent Auditor’s Report
The Board of Directors
JALUX Inc.
We have audited the accompanying consolidated financial statements of JALUX Inc. and its consolidated
subsidiaries, which comprise the consolidated balance sheet as at March 31, 2015, and the consolidated
statements of income, comprehensive income, changes in net assets, and cash flows for the year thenended and a summary of significant accounting policies and other explanatory information, all expressedin Japanese yen.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial
statements in accordance with accounting principles generally accepted in Japan, and for designing andoperating such internal control as management determines is necessary to enable the preparation and fairpresentation of the consolidated financial statements that are free from material misstatement, whether
due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including
the assessment of the risks of material misstatement of the consolidated financial statements, whether due
to fraud or error. The purpose of an audit of the consolidated financial statements is not to express an
opinion on the effectiveness of the entity’s internal control, but in making these risk assessments the auditor
considers internal controls relevant to the entity’s preparation and fair presentation of the consolidated
financial statements in order to design audit procedures that are appropriate in the circumstances. An
audit also includes evaluating the appropriateness of accounting policies used and the reasonableness ofaccounting estimates made by management, as well as evaluating the overall presentation of the consolidated
financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit opinion.
OpinionIn our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the consolidated financial position of JALUX Inc. and its consolidated subsidiaries as at March
31, 2015, and their consolidated financial performance and cash flows for the year then ended inconformity with accounting principles generally accepted in Japan.
Convenience Translation
We have reviewed the translation of these consolidated financial statements into U.S. dollars, presented
for the convenience of readers, and, in our opinion, the accompanying consolidated financial statements
have been properly translated on the basis described in Note 3.

June 22, 2015
Tokyo, Japan

JALUX Inc. and Consolidated Subsidiaries
Consolidated Balance Sheet
March 31,2015
2014
(Thousands of yen)

AssetsCurrent assets:
Cash and time deposits (Notes 17 and 21)
Trade notes and accounts receivable (Notes 17 and 23)
Inventories (Note 4)
Deferred income taxes (Note 13)
Other
Allowance for doubtful accounts
Total current assets
Property and equipment (Notes 5, 12, 15 and 20):
Buildings and structures
Machinery and vehicles
Flight equipment
Land
Construction in process
Other
Property and equipment, net
Intangible assets:
Software (Note 12)
Goodwill (Note 22)
Other
Total intangible assets
Investments and other assets:
Investment securities (Notes 6, 17 and 18)
Long-term loans receivable
Deposits for business space (Note 17)
Deferred income taxes (Note 13)
Asset for retirement benefits (Note 8)
Other
Allowance for doubtful accounts
Total investment and other assets
Deferred charges:
Business commencement expenses
Total deferred charges
Total assets

2

2015(Thousands of
U.S. dollars)(Note 3)

¥ 5,459,997
12,650,371
9,498,822
311,1842,668,166(33,029)
30,555,513¥ 6,361,146
7,705,147
6,718,044
320,673
3,071,811(5,688)24,171,135$ 45,500
105,420
79,157
2,593
22,235(275)
254,629

1,755,488
93,11159,755
1,239,209
8,406
309,064
3,465,037

2,342,743
117,832
102,277
1,789,273–
351,236
4,703,362

14,629776
498
10,32770
2,576
28,875309,327
170,690
25,393
505,411

273,312206,543
28,015507,871

2,578
1,422
212
4,212

1,751,076
66,6581,816,519
32,981
184,237
168,389(69,274)
3,950,587

1,537,056
75,001
1,784,109
287,972–
102,616(13,684)
3,773,072

14,592555
15,138
275
1,535
1,403
(577)
32,92232,44532,445¥38,508,995

48,71848,718¥33,204,160

270
270$320,908

March 31,
2015
2014
(Thousands of yen)

Liabilities and net assets
Current liabilities:
Trade notes and accounts payable (Notes 17 and 23):
Short-term borrowings and Current portion of long-term
debt (Notes 7 and 17)
Accrued income taxes (Note 13)
Accrued expenses (Note 17)
Other
Total current liabilities
Long-term liabilities:
Long-term debt (Notes 7 and 17)
Liability for retirement benefits (Note 8)
Deferred income taxes (Note 13)
Other
Total long-term liabilities

2015(Thousands of
U.S. dollars)(Note 3)

¥10,300,483¥ 7,025,906$ 85,837

2,151,493
565,278
2,509,260
1,965,645
17,492,162

1,893,790
556,925
2,047,850
2,521,353
14,045,827

17,9294,711
20,911
16,380145,768

2,676,428
61,516
162,186
510,146
3,410,278

2,082,326
553,275
26,528647,852
3,309,983

22,304
513
1,352
4,251
28,4192,558,550
711,250
13,366,520(139,647)
16,496,673

2,558,550
711,250
12,176,600(143,726)
15,302,673

21,321
5,927
111,388(1,164)137,472

10,614(493)

88

78,096(38,162)
25,34575,89333,404(272,329)(70,279)(309,697)

651
(318)
211
632

4,231

7,724

35

1,029,756
17,606,555¥38,508,995

847,649
15,848,349¥33,204,160

8,581
146,721$320,908

Commitments and contingent liabilities (Note 7)
Net assets (Note 9):
Shareholders’ equity:
Common stock
Capital surplus
Retained earnings
Common stock in treasury
Total shareholders’ equity
Accumulated other comprehensive income:Net unrealized gain (loss) on other securities, net oftaxes (Note 18)
Net unrealized gain on hedging instruments, net oftaxes (Note 19)
Translation adjustments
Retirement benefits liability adjustments (Note 8)
Total accumulated other comprehensive income
Subscription rights to shares (Note 10)
Minority interests
Total net assets
Total liabilities and net assets

The accompanying notes are an integral part of these statements.
3

JALUX Inc. and Consolidated Subsidiaries
Consolidated Statements of Income
Year ended March 31,
2015
2014
2015
(Thousands of yen)(Thousands of
U.S. dollars)(Note 3)Operating revenues (Notes 22 and 23)
Operating expenses (Notes 22 and 23):
Cost of sales
Selling, general and administrative expenses
Operating income
Non-operating income (expenses):
Interest income
Interest expense
Equity in earnings of affiliates
Other, net (Note 11)
Income before income taxes and minority interests
Income taxes (Note 13):
Current
Deferred
Net income before minority interests
Minority gain
Net income¥112,717,516¥99,837,354$939,313

92,421,290
17,870,074
110,291,365
2,426,151

80,297,422
17,832,961
98,130,384
1,706,970

770,177
148,917919,095
20,218

7,821(42,153)
103,480
86,592
155,741
2,581,892

12,811(46,941)
49,29147,44762,608
1,769,579

65
(351)
862
722
1,298
21,516958,363
182,649
1,141,012
1,440,879
292,551¥ 1,148,328

776,810(3,947)
772,862
996,716
29,407967,308

7,986
1,522
9,508
12,0072,438$ 9,569¥

The accompanying notes are an integral part of these statements.

4

JALUX Inc. and Consolidated Subsidiaries
Consolidated Statement of Comprehensive Income
March 31,2015
2014
(Thousands of yen)

Income before minority interests
Other comprehensive income:Net unrealized gain on other securities, net of taxes
Net unrealized gain (loss) on hedging instruments,
net of taxes
Translation adjustments
Retirement benefits liability adjustment, net of tax
Share of other comprehensive income of companies
accounted for by the equity method
Total other comprehensive income (Note 14)
Comprehensive income
Comprehensive income attributable to:
Stockholders of JALUX Inc.
Minority interests

2015(Thousands of
U.S. dollars)(Note 3)

¥1,440,879¥ 996,716$12,007

7,181

3,691

60

44,691215,077
95,625(20,053)424,652
–

372
1,792
797

19,636382,212¥1,823,091

22,239430,530¥1,427,246

164
3,185
$15,192¥1,533,919¥ 289,172¥1,393,184¥ 34,061$12,783$ 2,4105

JALUX Inc. and Consolidated Subsidiaries
Consolidated Statements of Changes in Net Assets

Number ofshares ofcommonstock

Commonstock

CapitalsurplusRetainedearnings

Commonstock intreasury

Net unrealized
gain (loss) on Net unrealized
othergain on hedging
securities,
instruments,
net of taxes
net of taxes
Translation
adjustments(Note 18)
(Note 19)

Retirement
benefits
liability
adjustments(Note 8)Subscription
rights toshares(Note 10)

Minority
interests

Total
net assets¥ 9,882¥ 955,271¥14,822,743(Thousands of yen)
Balance at March 31, 2013
Cash dividends(¥15 per share)
Net income for the year
ended March 31, 2014
Purchases of common
stock in treasury
Disposal of common
stock in treasury
Other

12,775,000

Balance at March 31, 2014
Cumulative effect ofchange in accounting
principle (Note 2)
Restated balance at
March 31, 2014
Cash dividends(¥20 per share)
Net income for the year
ended March 31, 2015
Disposal of common
stock in treasury
Other

12,775,000

Balance at March 31, 2015

¥2,558,550¥711,250¥11,400,172¥(147,089)¥ (1,870)¥ 53,458¥(716,881)¥–(189,591)(189,591)

967,308

967,308(89)(1,290)2,558,550

711,250

12,176,600

(89)

3,451
(143,726)

1,376(20,053)444,552(70,279)(2,158)(107,621)

2,161
245,816(493)

33,404(272,329)(70,279)7,724

847,649

15,848,349

295,028
12,775,000

2,558,550

711,250

12,471,628

Number ofshares ofcommonstock¥2,558,550

Commonstock¥711,250

Capitalsurplus(143,726)(493)

33,404(272,329)(70,279)7,724

847,649

16,143,377(252,852)(252,852)

1,148,328

1,148,328(583)
12,775,000

295,028¥13,366,520

Retainedearnings

4,079¥(139,647)

Commonstock intreasury

11,10844,691

234,166

95,625(3,492)

182,106

3,496
564,205¥10,614¥ 78,096¥ (38,162)¥ 25,345¥ 4,231¥1,029,756¥17,606,555

Net unrealized Net unrealized
gain (loss) on gain on hedging
other securities, instruments,
net of taxes
net of taxes
Translation(Note 18)
(Note 19)
adjustments

Retirement
benefits
liability
adjustments(Note 8)Subscription
rights toshares(Note 10)

Minority
interests

Total
net assets$(586)$ 64$7,064$132,070(Thousands of U.S. dollars) (Note 3)
Balance at March 31, 2014 12,775,000
Cumulative effect of changein accounting principle(Note 2)
Restated balance at
March 31, 2014
12,775,000
Cash dividends($0.17per share)
Net income for the year
ended March 31, 2015
Disposal of common
stock in treasury
Other$21,321

Balance at March 31, 2015

$21,321

12,775,000$5,927$101,472$(1,198)

$ (4)

$ 278

$(2,269)

2,459
21,321

5,927

103,930(1,198)(4)278(2,269)

(586)

64

7,064

134,528(2,107)(2,107)

9,569

9,569

(5)
$5,9272,459$111,388

34$(1,164)

93

372

1,951

797

(29)

1,518

29
4,702

$ 88

$ 651

$(318)$211$ 35$8,581$146,721

The accompanying notes are an integral part of these statements.

6

JALUX Inc. and Consolidated Subsidiaries
Consolidated Statements of Cash Flows
Year ended March 31,
2015
2014
2015
(Thousands of yen)(Thousands of
U.S. dollars)(Note 3)Operating activities
Income before income taxes and minority interests
Adjustments to reconcile income before income taxes and minority
interests to net cash provided by operating activities:
Depreciation and amortization
Increase (decrease) in provision for allowance for doubtful accounts
Increase in asset for retirement benefits
Decrease in liability for retirement benefits
Interest and dividend income
Interest expense
Exchange loss, net
Equity in earnings of affiliates
Loss on sales of, and loss on disposal of property and equipment
Impairment losses on fixed assets
Gain on sales of investment in a subsidiary
Gain on sales of investments in securities
Loss on revaluation of investments in securities(Increase) decrease in notes and accounts receivable
Increase in inventories
Increase in notes and accounts payable
Decrease (increase) in advance payment(Decrease) increase in advance received(Increase) decrease in bad debts on receivables
Other, net
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Income taxes refund
Net cash (used in) provided by operating activities¥ 2,581,892¥ 1,769,579$ 21,516

465,857
82,486(60,650)(34,473)(27,024)
42,153(151,731)(103,480)
17,971
28,043–(18,889)
24,999(4,816,381)(1,115,813)
3,036,153
705,808(773,753)(55,590)563,591
391,168
129,014(42,220)(967,667)–(489,704)

592,219(35,118)–(47,183)(45,792)
46,941(31,765)(49,291)
6,233
40,203(54,215)–5,041
600,175(2,732)
186,499(787,186)
168,833330(28,061)
2,334,709
126,643(48,162)(646,736)
153,072
1,919,526

3,882
687
(505)
(287)
(225)
351
(1,264)
(862)
150
234
–
(157)
208
(40,137)(9,298)25,301
5,882(6,448)
(463)
4,697
3,260
1,075
(352)
(8,064)–(4,081)

Investing activities
Purchases of property and equipment
Proceeds from sales of property and equipment
Purchases of intangible assets
Purchases of investments in securities
Proceeds from sales of investments in securities
Payments for sales of investment in a subsidiary resulting in change inscope of consolidation
Payments for transfer of businessLong-term loans receivable madeCollection of long-term loans
Purchases of time deposits
Increase in deposits for business space
Decrease in deposits for business space
Other, net
Net cash used in investing activities(777,239)
27,252(144,269)(243,602)
56,311(874,390)
13,766(167,670)(47,269)–(6,477)227(1,202)(2,030)469––(2,495)34,074–(206,488)
254,926(9,742)(1,011,273)(22,775)(205,799)(5,730)73,251(16,330)(129,880)
270,795(10,035)(1,122,067)

–
–
(21)
284
–
(1,721)
2,124(81)(8,427)

Financing activities
Increase (decrease) in short-term borrowings, net
Proceeds from long-term loans
Repayment of long-term loans
Dividends paid to stockholders
Dividends paid to minority stockholders
Other, net
Net cash provided by financing activities

37,436
1,528,740(661,516)(253,629)(108,000)(47,139)495,890(129,423)
1,300,000(773,262)(189,259)(36,000)(86,344)
85,710312
12,740(5,513)(2,114)
(900)
(393)
4,132

158,764(846,323)
6,303,451¥ 5,457,127

203,540
1,086,709
5,216,742¥ 6,303,451

1,323(7,053)52,529$ 45,476

Effect of exchange rate changes on cash and cash equivalents
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year (Note 21)

The accompanying notes are an integral part of these statements.
7

JALUX Inc. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2015

1.

Summary of Significant Accounting Policiesa.

Basis of preparation
JALUX Inc. (the “Company”) and its consolidated domestic subsidiaries maintaintheir accounting records and prepare their financial statements in accordance withaccounting principles generally accepted in Japan, which are different in certain
respects as to the application and disclosure requirements of International Financial
Reporting Standards. The accompanying consolidated financial statements have been
compiled from the consolidated financial statements filed with the Financial Services
Agency as required by the Financial Instruments and Exchange Law of Japan, certain
modifications and inclusion of certain additional financial information are made for theconvenience of readers outside Japan.
As permitted by the Financial Instruments and Exchange Law of Japan, amounts ofless than one thousand yen have been omitted. As a result, the totals shown in theaccompanying consolidated financial statements (both in yen and U.S. dollars) do notnecessarily agree with the sum of the individual amounts.

b.

Principles of consolidation and accounting for investments in unconsolidated subsidiaries
and affiliates
The consolidated financial statements include the accounts of the Company andsignificant companies controlled directly or indirectly by the Company. Companies
over which the Company exercises significant influence in terms of their operating andfinancial policies have been included in the consolidated financial statements on an
equity basis.
The balance sheet date of ten of the consolidated subsidiaries is December 31. Any
significant differences in intercompany accounts and transactions arising from intervening
intercompany transactions during the period from January 1 through March 31 havebeen adjusted, if necessary, for the respective years.
All significant intercompany accounts and transactions and unrealized gain or loss onintercompany accounts and transactions have been eliminated.

c.

Securities
Securities except for investments in an unconsolidated subsidiaries and affiliates areclassified as trading securities, held-to-maturity securities or other securities. Trading
securities are carried at fair value. Held-to-maturity securities are carried at amortizedcost. Marketable securities classified as other securities are carried at fair value withany unrealized gain or loss reported as a separate component of net assets, net of taxes.
Non-marketable securities classified as other securities are carried at cost. Cost of
securities sold is determined principally by the average method.
8

1.

Summary of Significant Accounting Policies (continued)d.

Derivatives
Derivatives positions are stated at fair value.
Gain or loss on derivatives designated as hedging instruments is deferred until the loss
or gain on the underlying hedged items is recognized. Foreign receivables and payables
are translated at the applicable forward foreign exchange rates if certain conditions are
met. In addition, the related interest differential paid or received under interest-rate
swaps utilized as hedging instruments is recognized over the terms of the swap agreements
as an adjustment of interest expense on the hedged items if certain conditions are met.

e.

Inventories
Inventories are stated at the lower of cost or net selling value, cost being determined asfollows:f.

Merchandise:
The Company
Subsidiaries––

by the moving average method
principally by the first-in, first-out method

Real estate for sale–by the specific identification method
Leasing real estates for sale are depreciated by applying
the method of tangible fixed assets.

Property and equipment
For the Company and the consolidated domestic subsidiaries, depreciation of the shops
in airports and the buildings for rent is computed principally by the straight-line
method and depreciation of other property and equipment is computed principally by
the declining-balance method. The consolidated foreign subsidiaries principally adopt
the straight-line method. The estimated useful lives of the assets are as follows:
Buildings and structures:
Machinery and vehicles:g.

8 to 47 years
4 to 10 years

Software
Computer software intended for internal use is amortized by the straight-line method
based on their estimated useful life.

h.

Leased assets
Leased assets arising from transactions under finance lease agreements which do nottransfer the ownership to the lessee is depreciated to residual value of zero by thestraight-line method over the terms of the agreements.

i.

Deferred charges
Business commencement expenses are amortized using the straight-line method over 5
years or less.

9

1.

Summary of Significant Accounting Policies (continued)j.

Allowance for doubtful accounts
The allowance for doubtful accounts on specific receivables is provided at the estimateof the unrecoverable amounts. The allowance for doubtful accounts on other receivables
is provided based on the historical rate of losses on receivables.

k.

Retirement benefit
The retirement benefit obligation for employees is attributed to each period by thebenefit formula method over the estimated years of service of the eligible employees.
The adjustment incurred during this fiscal year arising from revisions to the actuarial
assumptions is to be amortized by the straight-line method beginning the following
fiscal year over a period of 5 years.
Certain consolidated subsidiaries have adopted the simplified method in the calculationof their retirement benefit obligation and retirement benefit expense.

l.

Goodwill
Goodwill has been amortized by the straight-line method over 5 years.

m. Cash equivalents
The Company and its consolidated subsidiaries define cash equivalents as highly liquid,
short-term investments with an original maturity of three months or less.
2.

Accounting Changes

The Company and its domestic subsidiaries adopted section 35 of “Accounting Standard
for Retirement Benefits” (ASBJ Statement No. 26 of May 17, 2012) and the main clause of
Section 67 of “Guidance on Accounting Standard for Retirement Benefits” (ASBJ Guidance
No. 25 of March 26, 2015) effective from April 1, 2014. As a result, the methods forcalculating the retirement benefit obligation and service cost have been revised in thefollowing respects: the method for attributing projected benefits to each period has beenchanged from the straight-line method to the benefit formula method, and the method for
determining the discount rate has been changed to use a single weighted-average discountrate reflecting the expected timing and amount of benefit payments.
The cumulative effect of changing the method for calculating the retirement benefit
obligation and service cost was recognized by adjusting retained earnings at April 1, 2014,
in accordance with the transitional treatment provided in Paragraph 37 of AccountingStandard for Retirement Benefits.
As a result, the liability for retirement benefits decreased by ¥458,403 thousand ($3,820
thousand) and retained earnings increased by ¥295,028 thousand ($2,459 thousand) at April
1, 2014. Also, net assets per share at March 31, 2015 increased by ¥23.34 ($0.19). The
impact on consolidated operating income, income before income taxes and minority
interests, net income per share and diluted net income per share for the year ended March
31, 2015 is immaterial.
103.

U.S. Dollar Amounts

Amounts in U.S. dollars are included solely for the convenience of the reader. The rate of¥120.00 = U.S.$1.00, the approximate exchange rate prevailing on March 31, 2015, hasbeen used. The inclusion of such amounts is not intended to imply that yen have been or
could be readily converted, realized or settled in U.S. dollars at that or any other rate.
4.

Inventories

Inventories at March 31, 2015 and 2014 were as follows:
March 31,2015
2014
(Thousands of yen)
Merchandise and finished products
Real estate held for sale
Raw materials and supplies¥9,255,907
181,91161,003¥9,498,822¥5,981,172
676,769
60,102¥6,718,044

2015(Thousands of
U.S. dollars)$77,133
1,516
508$79,157

Land, buildings and structures and other property and equipment of ¥1,586,146 thousand($13,218 thousand) were transferred to real estate held for sale at March 31, 2015 because
the Company changed the purpose of holding those assets.
Revaluation loss included in “Cost of sales” amounted to ¥23,831 thousand ($199 thousand)and ¥47,328 thousand for the years ended March 31, 2015 and 2014.
5.

Property and Equipment

The following table sets forth the acquisition costs and related accumulated depreciation ofcertain property and equipment at March 31, 2015 and 2014:
March 31,2015
2014
(Thousands of yen)
Buildings and structures
Machinery and vehicles
Flight equipment
Other
Accumulated depreciation

6.

¥ 3,490,662
360,712
104,699
1,519,302
5,475,376(3,257,956)¥ 2,217,420¥ 4,063,485
353,931435,028
1,675,929
6,528,375(3,614,285)¥ 2,914,089

2015(Thousands of
U.S. dollars)$ 29,089
3,006
872
12,661
45,628(27,150)$ 18,479

Investments and Other Assets

Investments in unconsolidated subsidiaries and affiliates included in “Investment securities”
as of March 31, 2015 and 2014 amounted to ¥1,430,094 thousand ($11,917 thousand) and¥1,238,255 thousand, respectively.
11

7.

Short-Term Borrowings and Long-Term Debt

Short-term borrowings and long-term debt at March 31, 2015 and 2014 consisted of thefollowing:
March 31,
2015
2014
2015
(Thousands of yen)(Thousands of
U.S. dollars)
Short-term Borrowings:
Short-term Borrowings without collateral,with weighted-average interest rate of
0.62%
Long-term debt:
Loans without collateral, due 2016 to 2020,
with weighted-average interest rate of
0.85%
Lease obligations
Less current portion¥1,210,000¥1,210,000¥1,232,276¥1,232,276$10,083$10,083¥3,617,922
86,8003,704,723(967,599)¥2,737,123¥2,743,840
112,994
2,856,835(706,658)¥2,150,176$30,149723
30,873(8,063)$22,809

The aggregate annual maturities of long-term debt subsequent to March 31, 2015 aresummarized as follows:Year ending March 31,
2016
2017
2018
2019
2020
2021 and thereafter(Thousands ofyen)(Thousands of
U.S. dollars)¥ 941,493
1,076,428
730,000
480,000
260,000
130,000¥3,617,922$ 7,846
8,970
6,083
4,000
2,167
1,083
$30,149

The aggregate annual maturities of lease obligations subsequent to March 31, 2015 aresummarized as follows:Year ending March 31,
2016
2017
2018
2019
2020
2021 and thereafter(Thousands ofyen)(Thousands of
U.S. dollars)¥26,105
19,621
17,826
15,293
5,374
2,579¥86,800

$218
164
149
127
45
21
$723

12

7.

Short-Term Borrowings and Long-Term Debt (continued)

The Company has entered into loan commitment agreements with banks in order to source
funds for its operations smoothly.
The outstanding balance of loan commitment as of March 31, 2015 and 2014 were as
follows:
March 31,2015
2014
(Thousands of yen)
Total commitment available
Less amount utilized
Balance available

8.

¥5,500,000(720,000)¥4,780,000¥6,500,000(450,000)¥6,050,000

2015(Thousands of
U.S. dollars)$45,833(6,000)$39,833

Retirement Benefit Plan

The Company and certain consolidated subsidiaries have either funded or unfunded defined
benefit plans and defined contribution plans. The Company and certain consolidated
subsidiaries have defined benefit plans covering substantially all employees who areentitled to lump-sum or annuity payments, the amounts of which are determined by reference
to their basic rates of pay, length of service, and the conditions under which termination
occur. Certain consolidated subsidiaries have adopted the simplified method in thecalculation of their retirement benefit obligation.
Plan excluding that calculated by simplified method
The changes in the retirement benefit obligation during the years ended March 31, 2015
and 2014 are as follows:
March 31,2015
2014
(Thousands of yen)
Balance at the beginning of the year
Cumulative effect of change inaccounting principle
Restarted Balance at the beginning of
the year
Service cost
Interest cost
Adjustment for actuarial assumptions
Retirement benefit paid
Balance at the end of the year

2015
(Thousands of
U.S. dollars)¥2,787,297¥2,566,249$23,227(458,403)–(3,820)2,328,894
120,831
19,097
4,514(193,555)¥2,279,782

2,566,249
105,478
46,192
227,059(157,682)¥2,787,297

19,407
1,007
159
38(1,613)$18,99813

8.

Retirement Benefit Plan (continued)

Plan excluding that calculated by simplified method (continued)
The changes in plan assets during the year ended March 31, 2015 and 2014 are as follows:
March 31,2015
2014
(Thousands of yen)
Balance at the beginning of the year
Expected return on plan assets
Adjustment for actuarial assumptions
Contributions by the Company
Retirement benefit paid
Balance at the end of the year

¥2,291,209
57,280128,100
180,984(193,555)¥2,464,019¥2,120,711
53,01785,685
189,476(157,682)¥2,291,209

2015(Thousands of
U.S. dollars)$19,093
477
1,068
1,508
(1,613)$20,533

The following table sets forth the funded status of the plans and the amounts recognized in
the consolidated balance sheet as of March 31, 2015 and 2014 for the Company’s defined
benefit plans:
March 31,2015
2014
(Thousands of yen)
Funded retirement benefit obligation
Plan assets at fair value
Unfunded retirement benefit obligation
Net liability (asset) for retirement benefits
in the balance sheet
Liability for retirement benefits
Asset for retirement benefits
Net liability (asset) for retirement benefits
in the balance sheet

2015(Thousands of
U.S. dollars)¥ 2,279,782(2,464,019)(184,237)–¥ 2,787,297(2,291,209)
496,087–$ 18,998(20,533)(1,535)–(184,237)–(184,237)

496,087
496,087–(1,535)–(1,535)496,087$ (1,535)¥ (184,237)¥

The components of retirement benefit expenses for the years ended March 31, 2015 and2014 are as follows:
March 31,2015
2014
(Thousands of yen)
Service cost
Interest cost
Expected return on plan assets
Amortization of adjustment for actuarial
assumptions
Retirement benefit expense

2015(Thousands of
U.S. dollars)¥120,831
19,097(57,280)¥105,478
46,192(53,017)$1,007
159(477)

23,071¥105,720

39,171¥137,824

192
$ 881

14

8.

Retirement Benefit Plan (continued)

The components of retirement benefits liability adjustments included in other comprehensive
income (before tax effect) for the years ended March 31, 2015 and 2014 are as follows:
March 31,2015
2014
(Thousands of yen)
Adjustment for actuarial assumptions
Total¥(146,658)¥(146,658)

¥–
¥–

2015
(Thousands of
U.S. dollars)$(1,222)$(1,222)

The components of retirement benefits liability adjustments included in accumulated othercomprehensive income (before tax effect) for the years ended March 31, 2015 and 2014 are
as follows:
March 31,2014
2015
(Thousands of yen)
Unrecognized adjustment for actuarial
assumptions
Total¥(37,460)¥(37,460)

2015(Thousands of
U.S. dollars)¥109,198¥109,198$(312)$(312)

The fair value of plan assets, by major category, as a percentage of total plan assets as ofMarch 31, 2015 and 2014 are as follows:
March 31,
Bonds
StocksGeneral account assets
Other
Total

2015

2014

17.8%
24.6
55.4
2.2
100.0%

17.9%
20.9
58.8
2.3
100.0%The expected return on assets has been estimated based on the anticipated allocation toeach asset class and the expected long-term returns on assets held in each category.
The assumption used in accounting for the above plans were as follows:
March 31,
Discount rate
Expected rates of return on plan assets

2015

2014

0.8%
2.5%

1.1%
2.5%

15

8.

Retirement Benefit Plan (continued)

Plan calculated by the simplified method
The changes in the retirement benefit obligation for consolidated subsidiaries adopting thesimplified method during the year ended March 31, 2015 and 2014 are as follows:
March 31,2014
2015
(Thousands of yen)
Balance at the beginning of the year
Retirement benefit expense
Retirement benefit paid
Contribution to pension plans
Translation adjustment
Change in scope of consolidation
Balance at the end of the year

¥ 57,187
41,698(13,612)(25,027)
1,270–¥ 61,516

2015(Thousands of
U.S. dollars)¥ 91,242
38,160(3,200)(27,649)392(41,756)¥ 57,187

$ 477
347
(113)
(209)
11
–
$ 513

The following table sets forth the funded status of the plans and the amounts recognized in
the consolidated balance sheet as of March 31, 2015 and 2014 for consolidated subsidiaries
adopting the simplified method:
March 31,2015
2014
(Thousands of yen)
Funded retirement benefit obligation
Plan assets at fair value
Unfunded retirement benefit obligation
Net liability for retirement benefits in thebalance sheet
Liability for retirement benefits
Net liability for retirement benefits in thebalance sheet

2015(Thousands of
U.S. dollars)¥ 265,585(221,252)
44,332
17,184¥ 251,907(208,776)
43,13014,056$ 2,213(1,844)369
143

61,516
61,51657,18757,187513
513¥ 61,516¥ 57,187$

513

Retirement benefit expenses for the simplified method of ¥41,698 thousand ($347 thousand)and ¥38,160 thousand were accounted for the years ended March 31, 2015 and 2014.
Defined contribution plans
Contribution made to defined contribution plans for the years ended March 31, 2015 and2014 were ¥94,924 thousand ($791 thousand) and ¥97,050 thousand, respectively.

16

9.

Net Assets

The Corporation Law of Japan provides that an amount equal to at least 10% of the amountto be disbursed as distributions of capital surplus (except for distributions from additional
paid-in capital) and retained earnings (except for distributions from the legal reserve) be
appropriated to additional paid-in capital and the legal reserve, respectively, until the sumof additional paid-in capital and the legal reserve equals 25% of the capital stock account.
Such distributions can be made at any time by resolution of the stockholders or by the
Board of Directors if certain conditions are met, but neither additional paid-in capital nor
the legal reserve is available for distribution by resolution of the Board of Directors.
The total number and periodic changes in the number of shares of stock in issue and thetotal number and periodic changes in the number of shares of common stock in treasury forthe years ended March 31, 2015 and 2014 were as follows:Year ended March 31, 2015
At
March 31,
2014
Number of shares of stock in issue:
Common stock
Number of shares of common stock
in treasury:
Common stock

Increase
Decrease(Thousands of shares)

At
March 31,2015

12,775––

12,775

140

–

3

136

The decrease in common stock in treasury of 3 thousand shares resulted from exercise ofsubscription rights as stock potions.
Year ended March 31, 2014
At
March 31,
2013
Number of shares of stock in issue:
Common stock
Number of shares of common stock
in treasury:
Common stock

Increase
Decrease(Thousands of shares)

At
March 31,2014

12,775––

12,775

143

0

3

140

The increase in common stock in treasury of 0 thousand shares resulted from theCompany’s purchase of 0 thousand odd-lot shares of less than one unit at the request of thestockholders.
The decrease in common stock in treasury of 3 thousand shares resulted from exercise ofsubscription rights as stock options.

17

9.

Net Assets (continued)

Dividends
Dividends paid
Resolution

Type ofsharesTotal dividends(Thousands of (Thousands ofyen)
U.S. dollars)

General meeting of Common
stock
stockholders heldon June 20, 2014

¥252,852$2,107

Dividends per share(Yen) (U.S. dollars)
¥20.0

$0.17

Cut-off
date

Effective
date

March 31, June 23,
2014
2014

Dividends with the cut-off date in the year ended March 31, 2015 and effective date in theyear ended March 31, 2016
Resolution

Type ofsharesTotal dividends(Thousands of (Thousands ofyen)
U.S. dollars)

General meeting of Common
stock
stockholders heldon June 19, 2015

¥316,163$2,635

Dividends per share(Yen) (U.S. dollars)
¥25.0

$0.21

Cut-off
date

Effective
date

March 31, June 22,
2015
2015

10. Stock Options
The Company adopted the stock option plan under which share subscription rights are
granted to directors and operating officers of the Company in accordance with the
Corporation Law.
The descriptions of stock options for the year ended March 31, 2015 are as follows:

Individuals covered by the plan2010 Stock Option Plan

2009 Stock Option Plan

4 directors of theCompany

7 directors of theCompany
6 operating officers of
the Company

Type and number of shares to be issued
15,000 shares ofupon the exercise of the share subscription common stockrights23,600 shares ofcommon stock

Granted date

September 24, 2010

October 29, 2009

Vesting conditions

No provisions

No provisions

Vesting period

No provisions

No provisions

Exercise period

September 25, 2010 –September 24, 2040

October 30, 2009 –October 29, 2039

18

10. Stock Options (continued)
The changes in the size of stock options for the year ended March 31, 2015 are as follows:2010 Stock Option Plan

2009 Stock Option Plan

Share subscription rights which are not yet
vested (Number of shares)
Outstanding as of March 31, 2014
GrantedForfeited
VestedOutstanding as of March 31, 2015

–
–
–
–
–

–
–
–
–
–

Share subscription rights which havealready been vested (Number of shares)
Outstanding as of March 31, 2014
VestedExercised
Forfeited
Outstanding as of March 31, 2015

5,900
–
2,200
–
3,700

3,200
–
1,700
–
1,500

Exercise price (yen)Weighted average fair value per stock at
the exercising date (yen)Fair value per stock option at the granted
date (yen)¥Exercise price (U.S. dollars)
Weighted average fair value per stock at
the exercising date (U.S. dollars)
Fair value per stock option at the granted
date (U.S. dollars)

11.

1

¥

1

1,183

1,183

654

1,208

$ 0.01$ 0.01

9.86

9.86

5.45

10.07

Other Income (Expenses)

The components of “Other, net” in “Non-operating income (expenses)” in the period ended
March 31, 2015 and 2014 were as follows:Year ended March 31,
2015
2014
2015
(Thousands of yen)(Thousands of
U.S. dollars)
Dividends received
Exchange gain (loss), net
Gain on sales of property and equipment
Gain on sales of investment in a subsidiary
Gain on sales of investments in securities
Commission paid
Amortization of business commencement expenses
Loss on sales and disposal of property and equipment
Impairment losses on fixed assets
Loss on revaluation of investments in securities
Special retirement expenses
Other, net¥ 19,202
149,290
9,456–
18,889(24,978)(16,272)(27,427)(28,043)(24,999)(50,871)
62,347¥ 86,592¥ 32,981
19,122
7,088
54,215–(37,600)(16,598)(13,321)(40,203)(5,041)–46,804¥ 47,447

$ 160
1,244
79
–
157
(208)
(136)
(229)
(234)
(208)
(424)
520
$ 722

19

12.

Impairment of Fixed Assets

For the year ended March 31, 2015, the Company and a consolidated subsidiary recognizedimpairment losses on fixed assets of ¥28,043 thousand ($234 thousand), and for the year
ended March 31, 2014 the Company recognized impairment losses on fixed asset of¥40,203 thousand which consisted of the following:
Location

Use

Komatsu-shi, Ishikawa

Airport shops

Miyazaki-shi, Miyazaki
Aomori-shi, Aomori
Bangkok, Thailand

Classification

Buildings, furnitureand other
Airport shops
Buildings, furnitureand other
Airport shops
Buildings, furnitureand otherBusiness assets Furniture, softwareand otherYear ended March 31,
2015
2014
2015
(Thousands of yen)(Thousands of
U.S. dollars)¥18,630

¥

–

$155

9,413

–

78

–

10,723––29,480–

The Company and its consolidated subsidiaries base its grouping for assessing theimpairment loss on fixed assets on the smallest identifiable groups of assets which generatecash inflows and which are largely independent of the cash inflows from other assets orgroups of assets.
Impairment losses on Business assets including airport shops were recognized due tosignificant decrease in expected future cash flows on the strategy plan for the years ended
March 31, 2015 and 2014.
The recoverable amount of each group of assets was measured by their usage value andfuture cash flows at discount rates of 5.4% and 3.6% for the years ended March 31, 2015
and 2014.

20

13.

Income Taxes

The significant components of deferred tax assets and liabilities at March 31, 2015 and2014 were as follows:
March 31,
2015
2014
2015
(Thousands of yen)(Thousands of
U.S. dollars)
Deferred tax assets:
Accrued bonuses
Allowance for doubtful accounts
Liability for retirement benefits
Impairment losses on fixed assets
Accrued enterprise tax
Elimination of unrecognized gain on
intercompany accounts and transactions
Loss on revaluation of inventories
Loss on revaluation of investments insecurities
Tax loss carryforwards
Other¥ 152,520
30,612
16,30930,28443,924¥ 174,486
6,092
193,447
38,12941,143$ 1,271
255
136
252
366

71,256
12,96669,54029,362594
108

Valuation allowance
Total deferred tax assets

11,471
306,613
141,326
817,285(265,018)
552,267

3,567
327,668
166,108
1,049,547(345,782)
703,765

96
2,555
1,178
6,811
(2,208)
4,602

Deferred tax liabilities:
Accumulated retained earnings ofconsolidated subsidiaries
Asset for retirement benefits
Other
Total deferred tax liabilities
Net deferred tax assets(224,535)(60,697)(85,054)(370,288)¥ 181,979(41,318)–(80,328)(121,647)¥ 582,117(1,871)(506)(709)(3,086)$ 1,516

Reconciliations between the statutory tax rate and the effective tax rates for the years ended
March 31, 2015 and 2014 were presented as follows:Year ended March 31,
2015
2014
Statutory tax rate
Disallowed expenses, including entertainment expenses
Inhabitants’ per capita taxes
Changes in valuation allowance
Equity in earnings of affiliates
Decrease in deferred tax assets due to tax rate change
Amortization of goodwill
Accumulated retained earnings of consolidated
subsidiaries
Other
Effective tax rate

35.64%
1.37
0.68(1.90)(1.43)
1.08
0.39

38.01%
2.40
0.98
0.72
(1.06)
1.34
0.78

7.10
1.26
44.19%(0.30)
0.80
43.67%

21

13.

Income Taxes (continued)

The “Act for Partial Amendment of the Income Tax Act, etc.” (Act No. 9 of 2015) and the“Act for Partial Amendment of the Local Tax Act, etc.” (Act No. 2 of 2015) were
promulgated on March 31, 2015. As a result, the effective statutory tax rate used tomeasure the Company’s deferred tax assets and liabilities was changed from 35.64% to33.10% and 32.34% for the temporary differences expected to be realized or settled in theyear beginning April 1, 2015 and for the temporary differences expected to be realized or
settled in the year beginning April 1, 2016, respectively. The effect of the announced
reduction of the effective statutory tax rate was to decrease deferred tax assets, after
offsetting deferred tax liabilities, by ¥23,595 thousand ($197 thousand) and increasedeferred income taxes by ¥27,763 thousand ($231 thousand), net unrealized gain on othersecurities by ¥251 thousand ($2 thousand), net unrealized gain on hedging instruments by¥2,965 thousand ($25 thousand) and retirement benefits liability adjustments by ¥951
thousand ($8 thousand)as of and for the year ended March 31, 2015.
14.

Other Comprehensive Income

The following table presents reclassifications adjustments and tax effects allocated to eachcomponent of other comprehensive income for the years ended March 31, 2015 and 2014:
March 31,2015
2014
(Thousands of yen)

Net unrealized gain on other securities:
Amount arising during the year
Reclassification adjustments for gains and losses
included in net income
Amount before tax effectTax effectNet unrealized gain (loss) on hedging instruments:
Amount arising during the year
Tax effectTranslation adjustments:
Amount arising during the year
Retirement benefits liability adjustments:
Amount arising during the year
Reclassification adjustments for gains and losses
included in net income
Amount before tax effectTax effect
Share of other comprehensive income ofcompanies accounted for by the equity method:Amount arising during the year
Reclassification adjustments for gains and losses
included in net income
Total other comprehensive income¥ 10,688

¥

7,052

2015
(Thousands of
U.S. dollars)(Note 3)$89–
10,688(3,506)
7,181

(887)
6,165
(2,474)
3,691

–
89
(29)
60

64,832(20,141)
44,691(34,333)
14,280(20,053)

540
(168)
372

215,077

424,652

1,792

123,586–

1,030

23,071
146,658(51,032)
95,625

–
–
–
–

192
1,222
(425)
797

29,167

22,239243(9,530)19,636¥382,212–
22,239¥430,530(79)
164$3,18522

15.

LeasesAs lessee under operating leases
Future rental expenses under operating leases outstanding at March 31, 2015 and 2014 aresummarized as follows:
March 31,
2015
2014
2015
(Thousands of yen)(Thousands of
U.S. dollars)Within 1 year
Over 1 year

¥1,642,025
4,234,204¥5,876,229¥1,508,985
4,632,124¥6,141,109$13,684
35,285$48,969

As lessor under financing leases
The annual collections of lease receivables subsequent to March 31, 2015 are summarized
as follows:Year ending March 31,
2016
2017
2018
2019
2020

(Thousands ofyen)(Thousands of
U.S. dollars)¥10,933
9,488
6,089
4,015
3,282

$91
79
51
33
27

The annual collections of lease receivables subsequent to March 31, 2014 were summarized
as follows:(Thousands ofyen)Year ending March 31,
2015
2016
2017

¥6,9393,143
1,376

As lessor under operating leases
Future rental revenues under operating leases outstanding at March 31, 2015 and 2014 aresummarized as follows:
March 31,
2015
2014
2015
(Thousands of yen)(Thousands of
U.S. dollars)Within 1 year
Over 1 year

¥1,234,111
1,748,918¥2,983,030¥1,314,882
2,941,818¥4,256,701$10,284
14,574$24,859

23

16.

Amounts Per Share

Net income per share is computed based on the weighted average number of shares ofcommon stock outstanding during each year. Diluted net income per share is computed
based on the weighted average number of shares of common stock outstanding during eachyear after giving effect to the potentially dilutive securities to be issued upon the exerciseof subscription rights as stock options.

2015
Net income per share of common stock:
Basic
DilutedYear ended March 31,
2014
2015
(Yen)
(U.S. dollars)¥90.86¥90.82¥76.56¥76.50$0.757$0.757

The following table sets forth the basis of the computation of net income per share anddiluted net income per share of common stock for the years ended March 31, 2015 and2014:
Year ended March 31,
2014
2015
2015
(Thousands of yen)(Thousands of
U.S. dollars)
Net income
Net income available to stockholders ofshares of common stock¥1,148,328¥967,308$9,569¥1,148,328¥967,308$9,569Year ended March 31,
2015
2014
(Thousands of shares)
Weighted-average number of shares ofcommon stock outstanding
Effect of dilutive securities:
Subscription rights to shares

12,637

12,634

6

9

Net assets per share are computed based on the number of shares of common stock
outstanding at each balance sheet date.
March 31,
2014

2015
(Yen)
Net assets per share¥1,311.25¥1,186.64

2015(U.S. dollars)$10.92724

17. Financial Instruments
Policy for financial instruments
The Company and its consolidated subsidiaries (the “Group”) manage temporary cash
surpluses mainly through short-term deposits. Further, the Group raises short-term capitalthrough bank borrowings.
Types of financial instruments and related risk
Notes and accounts receivable are exposed to credit risk in relation to customers. In
addition, the Company is exposed to foreign currency exchange risk arising fromreceivables denominated in foreign currencies. In principle, the foreign currency exchangerisks deriving from the trade receivables denominated in foreign currencies are hedged byforward foreign exchange contracts.
Marketable securities and investment securities are composed of mainly stocks. Those
securities are exposed to market risk.
Deposits for business space are composed of mainly deposits for rental spaces of the airport
buildings. Those deposits are exposed to credit risk in relation to counterparties.
All notes and accounts payable have payment due dates within one year. Although theCompany is exposed to foreign currency exchange risk arising from those payables
denominated in foreign currencies, foreign exchange contracts are arranged to reduce therisk.
Short-term borrowings are raised mainly in connection with business activities, andlong-term debt is taken out principally for the purpose of making capital investments.
Long-term debt with variable interest rates is exposed to interest rate fluctuation risk.
However, to reduce such risk and fix interest expense for long-term debt bearing interest at
variable rates, the Company utilizes interest rate swap transactions as a hedging instrument.
A certain subsidiary has the hybrid financial instrument (bond) with embedded derivative.
Risk management for financial instrumentsa.

Monitoring of credit risk (the risk that customers or counterparties may default)
In accordance with the internal policies of the Group for managing credit risk arisingfrom receivables and deposits for business space, each related division monitors credit
worthiness of their main customers periodically, and monitors due dates andoutstanding balances by individual customer. In addition, the Group is making efforts
to identify and mitigate risks of bad debts from customers who are having financial
difficulties.
The Group believes that the credit risk of derivatives is insignificant as it enters into
derivative transactions only with financial institutions which have the high credit-rating.

25

17. Financial Instruments (continued)
Risk management for financial instruments (continued)b.

Monitoring of market risks (the risks arising from fluctuations in foreign exchange
rates, interest rates and others)
For accounts receivables and payables denominated in foreign currencies, the Company
enters into forward foreign exchange contracts to hedge such risk. In order to mitigate
the interest rate risk for loans payable bearing interest at variable rates, the Company
may also enter into interest rate swap transactions if certain conditions are met.
For marketable securities and investment securities, the Group periodically reviews
the fair values of such financial instruments and the financial position of the issuers. In
addition, the Group continuously evaluates whether securities should be maintained
taking into account their fair values and relationships with the issuers.
In conducting derivative transactions, the division in charge of each derivativetransaction follows the internal policies, which set forth delegation of authority andmaximum upper limit on positions.

c.

Monitoring of liquidity risk (the risk that the Group may not be able to meet its
obligations on scheduled due dates)
Based on the report from each division, the Group prepares and updates its cash flowplans on a timely basis to manage liquidity risk.

Estimated Fair Value of Financial Instruments
Carrying value of financial instruments and estimated fair value on the consolidatedbalance sheet as of March 31, 2015 and 2014 are shown in the following table. The
following table does not include financial instruments for which it is extremely difficult todetermine the fair value.
The fair value of financial instruments is based on their quoted market price, if available.
When there is no quoted market price available, fair value is reasonably estimated. Sincevarious assumptions and factors are reflected in estimating the fair value, different
assumptions and factors could result in different fair value.
March 31, 2015
Carrying
Estimatedvalue
fair value
Difference(Thousands of yen)
AssetsCash and time deposits
Trade notes and accounts receivable
Investment securities
Total assets¥ 5,459,997
12,650,371
123,395¥18,233,764¥ 5,459,997
12,650,371
123,395¥18,233,764¥

Liabilities
Trade notes and accounts payable
Short-term borrowings
Accrued expenses
Long-term debt (*1)
Total liabilities
Derivatives (*2)

¥10,300,483
1,210,000
2,509,260
3,617,922¥17,637,666¥ 116,735¥10,300,483
1,210,000
2,509,260
3,612,622¥17,632,367¥ 116,735

¥

¥

–
–
–
–

–
–
–
(5,299)¥(5,299)
¥
–
26

17.

Financial Instruments (continued)

Estimated Fair Value of Financial Instruments (continued)
March 31, 2015
Carrying
Estimatedvalue
fair value
Difference(Thousands of U.S. dollars)
AssetsCash and time deposits
Trade notes and accounts receivable
Investment securities
Total assets$ 45,500
105,4201,028$151,948$ 45,500
105,4201,028$151,948

$ –
–
–
$ –

Liabilities
Trade notes and accounts payable
Short-term borrowings
Accrued expenses
Long-term debt (*1)
Total liabilities
Derivatives (*2)

$ 85,837
10,083
20,91130,149$146,981$
973$ 85,837
10,083
20,911
30,105$146,936
$
973

$ –
–
–
(44)
$(44)
$ –

March 31, 2014
Carrying
Estimated
value
Difference
fair value(Thousands of yen)
AssetsCash and time deposits
Trade notes and accounts receivable
Investment securities
Total assets¥ 6,361,146
7,705,147
112,827¥14,179,121¥ 6,361,146
7,705,147
112,827¥14,179,121¥

Liabilities
Trade notes and accounts payable
Short-term borrowings
Accrued expenses
Long-term debt (*1)
Total liabilities
Derivatives (*2)

¥ 7,025,906
1,232,276
2,047,850
2,743,840¥13,049,873¥
51,903¥ 7,025,906
1,232,276
2,047,850
2,741,140¥13,047,173¥
51,903

¥

¥

–
–
–
–

–
–
–
(2,699)¥(2,699)¥–*1. Long-term debt includes current portion of long-term debt.
*2. The value of assets and liabilities arising from derivatives is shown at net value, andwith the amount in parentheses representing net liability position.

27

17. Financial Instruments (continued)
Methods to determine the estimated fair value of financial instruments and other mattersrelated to securities and derivative transactionsa.

Cash and time deposits, Trade notes and accounts receivable and Other notes andaccounts receivable
Since these items are settled in a short period of time, their carrying value approximatesfair value.

b.

Investment securities
The fair value of stocks is based on quoted market prices. The fair value of investment
trusts and debt securities is based on either quoted market prices or prices provided by
the financial institutions making markets in these securities.

c.

Trade notes and accounts payable, short-term borrowings and accrued expenses
Since these items are settled in a short period of time, their carrying value approximatesfair value.

d.

Long-term debt
The fair value of long-term debt is based on the present value of the total of principal
and interest discounted by the interest rate to be applied if similar new debt agreements
were entered into.

e.

Derivative transactions
Refer to Note 19 Derivative Transactions of the notes to the consolidated financial
statements. The fair value information of embedded derivative of the hybrid financial
instrument is included in Note 18 Securities.

Financial instruments for which it is extremely difficult to determine the fair value
March 31,2015
2014
(Thousands of yen)
Unlisted stocks
Deposits for business space¥1,627,680
1,816,519¥1,424,229
1,784,109

2015(Thousands of
U.S. dollars)$13,564
15,138Because no quoted market price is available and it is extremely difficult to determine thefair value, the above financial instruments are not included in the above table.

2817. Financial Instruments (continued)
Redemption schedule for receivables and marketable securities with maturities

Due inone yearor less
Cash and time deposits
Trade notes and accounts
receivable
Investment securities withmaturities:
Bonds
Other
Total

¥ –

¥ –

12,650,371

–

–

–

–
–
¥18,072,957

–
–
¥ –

–
–
¥ –

100,000–¥100,000March 31, 2015
Due after
Due after
one yearfive years
throughthroughfive years
ten years(Thousands of U.S. dollars)¥–

Due after
ten years$ 45,188$ –$ –105,420

–

–

–

–
–
$150,608

–
–
$ –

–
–
$ –

833
–
$833

Due inone yearor less
Cash and time deposits
Trade notes and accounts
receivable
Investment securities withmaturities:
Bonds
Other
Total

Due after
ten years¥ 5,422,585

Due inone yearor less
Cash and time deposits
Trade notes and accounts
receivable
Investment securities withmaturities:
Bonds
Other
Total

March 31, 2015
Due after
Due after
one yearfive years
throughthroughfive years
ten years(Thousands of yen)March 31, 2014
Due after
Due after
one yearfive years
throughthroughfive years
ten years(Thousands of yen)$–

Due after
ten years¥ 6,324,009

¥ –

¥ –

¥

–

7,705,147

–

–

–

–
–
¥14,029,157

–
–
¥ –

–
–
¥ –

100,000–¥100,00029

18.

Securities

The components of unrealized gain or loss on marketable securities classified as othersecurities at March 31, 2015 and 2014 are summarized as follows:
March 31, 2015
Carrying
Acquisition
Unrealized
value
costs
gain (loss)(Thousands of yen)
Unrealized gain:
StocksBonds:
Other
Other
Total

¥ 21,145¥ 13,112¥ 8,033

102,250–
123,395¥123,395

100,000–
113,112¥113,112

2,250–
10,283¥10,283

March 31, 2015
Carrying
Acquisition
Unrealized
value
costs
gain (loss)(Thousands of U.S. dollars)
Unrealized gain:
StocksBonds:
Other
Other
Total

$ 176

$109

$67

852
–
1,028
$1,028

833
–
943
$943

19
–
86
$86

March 31, 2014
Carrying
Acquisition
Unrealized
value
costs
gain (loss)(Thousands of yen)
Unrealized gain:
Stocks
Unrealized loss:
StocksBonds:
Other
Other
Total

¥ 19,177
19,177¥ 12,834
12,834¥ 6,342
6,342

–

–

–

93,650–93,650¥112,827

100,000–
100,000¥112,834(6,350)–(6,350)¥(7)Non-marketable securities classified as other securities at March 31, 2015 and 2014
amounted to ¥197,585 thousand ($1,647 thousand) and ¥185,973 thousand, respectively.

30

19.

Derivative Transactions

The Company utilizes forward foreign exchange contracts to reduce the foreign currency
exchange risk arising from the receivables and payables denominated in foreign currencies.
As of March 31, 2015 and 2014, there were no derivative transactions outstanding forwhich hedged accounting has not been applied.
The notional amounts and the estimated fair value of the forward foreign exchange
contracts outstanding at March 31, 2015 and 2014, for which hedged accounting has been
applied, are summarized as follows:

Maturing within one year
Sell:
USD
EUR
Buy:
USD
EUR
Others
Total

Maturing within one year
Sell:
USD
EUR
Buy:
USD
EUR
Others
Total

Maturing within one year
Sell:
USD
EUR
OthersBuy:
USD
EUR
OthersTotal

March 31, 2015
Notional amount
Fair value(Thousands of yen)
¥ 411,055
41,415¥ (2,156)
2,892

2,930,786
152,051
43,799¥3,579,108

117,947(3,402)
1,454¥116,735

March 31, 2015
Notional amount
Fair value(Thousands of U.S. dollars)$ 3,425345$ (18)
24

24,423
1,267
365$29,826

983
(28)
12
$973

March 31, 2014
Notional amount
Fair value(Thousands of yen)¥ 300,044
20,566
3,431

¥

536
(1,498)(107)

2,660,483
253,114457,659¥3,695,299

51,765892
314¥51,90331

19.

Derivative Transactions (continued)

Foreign receivables and payables are translated at the applicable forward foreign exchange
rates if certain conditions are met. The notional amounts of the forward foreign exchange
contracts accounted for as part of accounts receivable or payable outstanding at March 31,
2015 and 2014, are summarized as follows:
March 31,
2014
2015
2015
(Thousands of yen)(Thousands of
U.S. dollars)
Sell:
USD
EUR
Buy:
USD
EUR
OthersTotal¥ 82,422
110,347

¥

2,441
–

$ 687
920

584,904
55,06430,942¥863,682

430,503
19,27939,385¥491,609

4,874
459
258
$7,197The Company also utilizes interest rate swap transactions to reduce fluctuation risk
deriving from interest payable for long-term debt bearing interest at variable rates. The
related interest differential paid or received under interest-rate swaps utilized as hedging
instruments is recognized over the terms of the swap agreements as an adjustment ofinterest expense on the hedged items if certain conditions are met. The notional amounts of
the interest-rate swaps hedging long-term debt outstanding at March 31, 2015 and 2014, aresummarized as follows:
March 31,
2015
2014
2015
(Thousands of yen)(Thousands of
U.S. dollars)
Maturing within one year
Maturing after one year
Total

¥ 60,000
120,000¥180,000¥ 60,000
180,000¥240,000

$ 500
1,000
$1,500The notional amounts of derivatives are not necessarily indicative of the actual market risk
involved in derivative transactions.

32

20.

Investment and Rental Properties

The Company and a certain consolidated subsidiary own buildings and lands for leasemainly in Tokyo and other areas.
The carrying value in the consolidated balance sheet and corresponding fair value of those
properties for the year ended March 31, 2015 are as follows:

March 31, 2015
¥1,809,753

March 31, 2015
$15,081

Carrying ValueNet change
March 31, 2014
(Thousands of yen)¥(1,046,418)¥2,856,171

Carrying ValueNet change
March 31, 2014
(Thousands of U.S. dollars)$(8,720)$23,801

Fair Value
March 31, 2015
¥1,663,000
Fair Value
March 31, 2015
$13,858

The components of net change in carrying value include increases mainly due toacquisitions of real estate in the amount of ¥550,712 thousand ($4,589 thousand) anddecreases mainly due to transfer to real estate held for sale in the amount of ¥1,573,564
thousand ($13,113 thousand).
The carrying value in the consolidated balance sheet and corresponding fair value of those
properties for the year ended March 31, 2014 were as follows:

March 31, 2014
¥2,856,171

Carrying ValueNet change
March 31, 2013
(Thousands of yen)¥(642,877)¥3,499,049

Fair Value
March 31, 2014
¥2,707,870

The components of net change in carrying value include increases mainly due toacquisitions of real estate in the amount of ¥593,070 thousand and decreases mainly due totransfer to real estate held for sale in the amount of ¥1,297,432 thousand.
The carrying value represents the acquisition cost less accumulated depreciation andcumulative impairment loss. The fair value is mainly estimated in accordance withappraisal standards for valuing real estate. However, if no material change has occurred incertain values or indices, the fair values are determined by adjusting such appraised values
and indices.

33

21.

Cash Flow Information

The components of cash and cash equivalents are summarized as follows:
March 31,
2015
2014
2015
(Thousands of yen)(Thousands of
U.S. dollars)
Cash and time deposits
Time deposits with maturities of more than
three months
Bank overdraft

22.

¥5,459,997¥6,361,146$45,500(2,869)–¥5,457,127(11,978)(45,717)¥6,303,451(24)–$45,476

Segment Information

The reportable segments of the Company and its consolidated subsidiaries are components
for which discrete financial information is available and whose operating results are
regularly reviewed by the Board of Directors to make decisions about resource allocationand to assess performance.
Aviation-related business segment includes aircraft components and aviation-related
business. Media & life service business segment includes printing, insurance and real estatebusiness. Retail business segment includes cabin service supply, mail-order sales, airport
shops and gift item business. Food & beverage business segment includes agriculture &marine products, processed foods and wine sales business.
The accounting policies of the segments are substantially the same as those described in thesignificant accounting policies in Note 1. Segment performance is evaluated based on
operating income or loss. Intersegment sales are recorded at the same price used intransactions with third parties.
The reportable segments information of the Company and its consolidated subsidiaries forthe years ended March 31, 2015 and 2014 are summarized as follows:Year ended March 31, 2015
Reportable segments
Media & life
Food &
servicebeverage
Retailbusinessbusinessbusiness
Total(Thousands of yen)

Aviationrelated
business
Sales, profits and assets
by reportable segments:
Sales to outside parties ¥31,736,349
Inter-segment sales
and transfers
217,240
Total
31,953,590
Segment profits¥ 661,248
Segment assets¥ 9,739,465
Other items:
Depreciation andamortization
Amortization of
goodwill
Investment in affiliates
accounted for by theequity method
Capital expenditures

Adjustments
andeliminations

Consolidated¥112,717,516¥12,013,239¥47,997,542¥20,970,384¥112,717,516¥–

36,757
12,049,997¥ 879,170¥ 5,136,778

24,06348,021,605¥ 2,437,858¥10,701,488

676,425
21,646,809¥ 273,597¥11,202,243

954,486
113,672,002¥ 4,251,874¥ 36,779,977(954,486)–(954,486) 112,717,516¥ (1,825,723) ¥ 2,426,151¥ 1,729,018 ¥ 38,508,995

¥

7,314

¥

50,786¥

231,082¥

104,588¥393,772¥

72,084¥

465,857

¥

–

¥

–

¥

–

¥

49,056¥49,056¥–¥49,056¥¥

297,517
17,823¥¥272,972588,591¥¥

447,749
222,848¥¥–
47,439¥ 1,018,239¥
876,703¥¥

378,054
43,752¥¥

1,396,294
920,456

34

22.

Segment Information (continued)
Year ended March 31, 2015
Reportable segments
Media & life
Food &
service
RetailbeveragebusinessbusinessTotalbusiness(Thousands of U.S. dollars)

Aviationrelated
business
Sales, profits and assets
by reportable segments:
Sales to outside parties
Inter-segment sales
and transfers
Total
Segment profits
Segment assets
Other items:
Depreciation andamortization
Amortization of
goodwill
Investment in affiliates
accounted for by theequity method
Capital expenditures

Adjustments
andeliminations

Consolidated$ 264,470$100,110$399,980$174,753$ 939,313$–$ 939,313

1,810
266,280$ 5,510$ 81,162

306
100,417$ 7,326$ 42,806201
400,180$ 20,315$ 89,179

5,637
180,390$ 2,280$ 93,352

7,954
947,267$ 35,432$ 306,500(7,954)(7,954)$ (15,214)$ 14,408–
939,313$ 20,218$ 320,908

$

61

$

423

$

1,926

$

872

$

3,281

$

601

$

3,882

$

–

$

–

$

–

$

409

$

409

$

–

$

409

$
$

2,479
149

$
$

2,275
4,905

$
$

3,731
1,857

$
$

–
395

$
$

8,485
7,306

$ 3,150$365$ 11,636$ 7,670

Adjustments and eliminations for segment profits and losses include ¥5,233 thousand ($44thousand) of elimination of inter-segment profit and minus ¥1,830,956 thousand ($15,258
thousand) of corporate general administration expenses which are not allocable to thereportable segments.
Adjustments and eliminations for segment assets include minus ¥623,277 thousand ($5,194
thousand) of elimination of accounts inter-segment receivable and ¥2,352,295 thousand($19,602 thousand) of corporate assets which are not allocable to the reportable segments.
Corporate assets consist primarily of investments in securities and assets belonging to theadministrative part of the Company.
Adjustments and eliminations for capital expenditures consist primarily of investments in
the head office building.
Segment profits are adjusted with operating income reported in the consolidated statements
of income.
Year ended March 31, 2014
Reportable segments
Media & life
Food &
servicebeverage
Retailbusinessbusinessbusiness
Total(Thousands of yen)

Aviationrelated
business
Sales, profits and assets
by reportable segments:
Sales to outside parties ¥24,667,663
Inter-segment sales
and transfers
167,420
Total
24,835,084
Segment profits¥ 510,687
Segment assets¥ 4,573,859
Other items:
Depreciation andamortization
Amortization of
goodwill
Investment in affiliates
accounted for by theequity method
Capital expenditures

Adjustments
andeliminations

Consolidated¥11,652,246¥46,455,505¥17,061,938¥ 99,837,354¥–¥99,837,354

107,769
11,760,015¥ 893,051¥ 7,087,626

26,09846,481,604¥ 2,156,528¥10,040,774

673,323
17,735,262¥
68,014¥ 9,535,554

974,612
100,811,966¥ 3,628,281¥ 31,237,815(974,612)(974,612)¥ (1,921,310)¥ 1,966,345–
99,837,354¥ 1,706,970¥33,204,160¥

47,684¥63,941¥

286,358¥

101,922¥499,907¥

92,312¥592,219

¥

–

¥

–

¥

–

¥

36,252¥36,252¥–¥36,252¥¥

127,109
6,680¥¥

257,942784,298¥¥

442,519
166,400¥¥–
455,860¥¥

827,571
1,413,240¥¥

371,884
32,64735¥ 1,199,455¥ 1,445,887

22.

Segment Information (continued)

Adjustments and eliminations for segment profits and losses include ¥3,553 thousand ofelimination of inter-segment profit and minus ¥1,924,864 thousand of corporate generaladministration expenses which are not allocable to the reportable segments.
Adjustments and eliminations for segment assets include minus ¥149,854 thousand ofelimination of accounts inter-segment receivable and ¥2,116,199 thousand of corporate
assets which are not allocable to the reportable segments. Corporate assets consist primarilyof investments in securities and assets belonging to the administrative part of the Company.
Adjustments and eliminations for capital expenditures consist primarily of investments in
the head office software.
Segment profits are adjusted with operating income reported in the consolidated statements
of income.
For the years ended March 31, 2015 and 2014, net sales to outside parties in Japan
represent more than 90% of consolidated operating revenues. As a result, net sales tooutside parties by countries or areas grouped according to geographical classification are
not required to be disclosed.
Property, plant and equipment by geographical countries or areas at March 31, 2015 and2014 are summarized as follows:
March 31,
2014
2015
2015
(Thousands of yen)(Thousands of
U.S. dollars)Japan
Foreign countries¥3,031,886
433,150¥3,465,037¥4,251,340
452,022¥4,703,362$25,266
3,610$28,875

Impairment loss on fixed assets by reportable segments for the years ended March 31, 2015
and 2014 are summarized as follows:
March 31,
2015
2014
2015
(Thousands of yen)(Thousands of
U.S. dollars)
Aviation-related businessMedia & life service business
Retail business
Food & beverage business
Reportable segments total
Adjustments and eliminations¥––
28,043–28,043–¥28,043¥––
40,203–40,203–¥40,203

$

–
–
234
–
234
–
$234

36

22.

Segment Information (continued)

The following table presents the amortization and balance of goodwill as of and for theyear ended March 31, 2015 and 2014 by reportable segment:

Aviationrelated
business
Amortization
Balance as ofMarch 31, 2015

¥ –

¥ –

¥ 49,056¥ 49,056¥ –¥ 49,056

¥ –

¥ –

¥ –

¥170,690¥170,690¥ –¥170,690

23.

Year ended March 31, 2015
Reportable segments
Media & life
Food &
servicebeverage
Retailbusinessbusinessbusiness
Total(Thousands of U.S. dollars)

Adjustments
andeliminations Consolidated

$ –

$ –

$ –

$ 409

$ 409

$ –

$ 409

$ –

$ –

$ –

$1,422$1,422$ –$1,422Aviationrelated
business
Amortization
Balance as ofMarch 31, 2014

Adjustments
andeliminations Consolidated¥ –Aviationrelated
business
Amortization
Balance as ofMarch 31, 2015

Year ended March 31, 2015
Reportable segments
Media & life
Food &
service
RetailbeveragebusinessbusinessTotalbusiness(Thousands of yen)

Year ended March 31, 2014
Reportable segments
Media & life
Food &
RetailservicebeveragebusinessTotalbusinessbusiness(Thousands of yen)

Adjustments
andeliminations Consolidated

¥ –

¥ –

¥ –

¥ 36,252¥ 36,252¥ –¥ 36,252

¥ –

¥ –

¥ –

¥206,543¥206,543¥ –¥206,543

Related Party Transactions

The significant transactions between the Company and Japan Airline Co., Ltd., for theyears ended March 31, 2015 and 2014 are summarized as follows:Year ended March 31,
2015
2014
2015
(Thousands of yen)(Thousands of
U.S. dollars)
Sales of flight equipment
Purchases of merchandise¥6,016,835
341,219¥5,701,841
336,140

March 31,2015
2014
(Thousands of yen)Accounts receivable
Accounts payable¥770,632
71,578¥536,344
59,496$50,140
2,843

2015(Thousands of
U.S. dollars)$6,422
596

37

23.

Related Party Transactions (continued)

The significant transactions between certain consolidated subsidiaries of the Company andJapan Airlines Co., Ltd. for the years ended March 31, 2015 and 2014 are summarized asfollows:
Year ended March 31,
2014
2015
2015
(Thousands of yen)(Thousands of
U.S. dollars)
Sales of flight equipment¥368,848¥335,776

March 31,2015
2014
(Thousands of yen)Accounts receivable¥47,333¥27,466$3,074

2015(Thousands of
U.S. dollars)$39438