Japan Transcity Corporation
Consolidated Financial Statements
March 31, 2015 and 2014

Japan Transcity Corporation and Consolidated Subsidiaries
Consolidated Balance Sheets
March 31, 2015 and 2014

Millions of yen
2015
2014
Current assets:
Cash and cash equivalents (Note 3)
Short-term investments (Notes 3 and 4)¥

Trade receivables (Note 3)
Allowance for doubtful accounts
Inventories
Deferred tax assets (Note 10)
Other current assets
Total current assets

Property and equipment:
Land (Note 5)
Buildings and structures (Note 5)
Machinery and equipment
Vehicles and vessels
Construction in progress
Total property and equipment
Less accumulated depreciation
Net property and equipment

Investments and other assets:
Investment securities (Notes 3 and 4)
Investments in unconsolidated subsidiaries andaffiliates
Employee retirement benefit asset (Note 6)
Deferred tax assets (Note 10)
Lease deposits
Other assets
Allowance for doubtful accounts
Total investments and other assets

Total assets

11,65340

12,648
48$

97,108334

13,767(15)
13,75290
411
2,109
28,055

13,404(17)
13,38799
374
1,974
28,530114,725(125)
114,600
750
3,425
17,575
233,792

31,23452,862
12,8896,694
270
103,949(52,865)
51,08430,06547,60911,882
6,685
2,353
98,594(49,263)
49,331

260,283
440,517
107,408
55,7842,250
866,242(440,542)
425,700

7,930

6,268

66,083

6,236
4,254
602
551
1,507
(16)
21,064

5,804
2,961
653
505
1,512
(16)
17,68751,96735,4505,017
4,591
12,558(133)
175,533¥ 100,203-2-¥

Thousands of
U.S. dollars
2015¥

95,548$835,025

See accompanying Notes to Consolidated Financial Statements.

Millions of yen
2015
2014
Current liabilities:
Short-term borrowings (Notes 3 and 5)¥
Current maturities of long-term debt (Notes 3 and 5)
Trade payables (Note 3)
Accrued expenses
Income taxes payable
Other current liabilities
Total current liabilities
Long-term liabilities:
Long-term debt (Notes 3 and 5)
Employee retirement benefit liability (Note 6)
Guarantee deposits received (Notes 3 and 5)
Deferred tax liabilities for revaluation
Deferred tax liabilities (Note 10)
Accrued severance indemnities for directors
Other long-term liabilities
Total long-term liabilities
Total liabilities
Commitments and contingent liabilities (Notes 8 and 9)
Net assets (Note 7):
Shareholders’ equity:
Common stock: 240,000,000 shares authorized
and 67,142,417 shares issued
Capital surplus
Retained earnings
Less treasury stock, at cost: 2,824,885 shares in2015 and 2,817,101 shares in 2014
Total shareholders’ equity
Accumulated other comprehensive income:Net unrealized gains on available-for-salesecurities
Land revaluation decrement
Foreign currency translation adjustment
Retirement benefit adjustment (Note 6)
Total accumulated othercomprehensive income
Minority interests
Total net assets
Total liabilities and net assets

2,467
8,242
8,234
1,649
311
2,382
23,285

2,594
1,278
7,728
1,594
734
3,277
17,205$20,55868,683
68,617
13,742
2,592
19,850
194,042

14,440
1,811
3,148
4,118
2,615
14
696
26,84250,12721,062
1,839
3,401
4,545
1,607
19
764
33,23750,442

120,333
15,092
26,23334,317
21,792116
5,800
223,683
417,725

8,428
6,733
32,771

8,428
6,733
30,50970,233
56,109273,091(1,107)
46,825(1,104)44,566(9,225)
390,208

2,335(1,075)
434
73

1,198
(1,503)134(362)

19,458(8,958)
3,617
608

1,767
1,484
50,076(533)
1,073
45,106

14,725
12,367417,300¥ 100,203-3-¥

Thousands of
U.S. dollars
2015¥

95,548$835,025

Japan Transcity Corporation and Consolidated Subsidiaries
Consolidated Statements of Income
For the Years Ended March 31, 2015 and 2014

Operating revenue (Note 12)¥

Operating costs and expenses(Notes 6 and 9)
Operating income

Millions of yen
2015
2014

Thousands of
U.S. dollars
2015

92,497$¥88,607

770,808

89,3903,107

84,9693,638

744,916
25,892

401
(241)

353
(257)

3,341
(2,008)

543

493

4,525

(3)
243
943

17
157
763

(25)
2,025
7,858

4,050

4,401

33,750

Income taxes:
Current
Deferred
Total income taxes

1,044
98
1,142

1,371
256
1,627

8,700
817
9,517

Income before minority interests

2,908

2,774

24,233

118

88

983

Other income (expenses):
Interest and dividend income
Interest expenses
Equity in net earnings of unconsolidated
subsidiaries and affiliates(Loss) gain on sale or disposal of property
and equipment
Others, net
Income before income taxes andminority interests

Less minority interests in net income of
consolidated subsidiaries
Net income

¥

2,790

¥

2,686

$

Yen
Per share:
Net income
Cash dividends (Note 7)

¥

43.37
9.50

See accompanying Notes to Consolidated Financial Statements.

-4-¥

23,250U.S. dollars
41.75
9.00

$

0.36
0.08

Japan Transcity Corporation and Consolidated Subsidiaries
Consolidated Statements of Comprehensive Income
For the Years Ended March 31, 2015 and 2014

Millions of yen
2015
2014
Income before minority interests
Other comprehensive income (Note 11):
Net unrealized gains on available-for-salesecurities
Land revaluation decrement
Foreign currency translation adjustment
Retirement benefit adjustment
Share of other comprehensive income ofassociates accounted for using equity
methodTotal other comprehensive income
Comprehensive income

Comprehensive income attributable to:
Owners of the Company
Minority interests

¥

¥

¥

2,908

2,774

$

24,233

1,142
427
395
435

270
302
-

9,517
3,558
3,292
3,625

12
2,411
5,319

13
585
3,359

100
20,092
44,325

5,090
229

See accompanying Notes to Consolidated Financial Statements.

-5-¥

Thousands of
U.S. dollars
2015

¥

¥

3,200
159

$

$

42,4171,908

Japan Transcity Corporation and Consolidated Subsidiaries
Consolidated Statements of Changes in Net Assets
For the Years Ended March 31, 2015 and 2014
Shareholders' equity
Number ofshares ofcommonstock issued

Balance at April 1, 2013
Net income for the year
Cash dividends
Change of scope of
consolidation
Purchase of treasury stockand fractional shares, net
Reversal of land revaluation
decrement
Net changes other thanshareholders’ equity
Balance at March 31, 2014
Cumulative effects ofchanges in accounting
policies (Note 2(k))
Restated balance
Net income for the year
Cash dividends
Purchase of treasury stockand fractional shares, net
Net changes other thanshareholders’ equity
Balance at March 31, 2015

67,142,417-

Commonstock¥

Capitalsurplus

8,428
-

¥

Retainedearnings

6,733
-

¥

Accumulated other comprehensive income

Treasurystock

28,160
2,686
(579)

¥

(1,100)-Total
shareholders’equityNet
unrealized
gains onavailable-forsale securities¥¥

42,221
2,686
(579)

Land
revaluation
decrement
Millions of yen
930
-

¥

(1,367)-

Total
accumulated
other

Foreigncurrencytranslation
adjustment

Retirement
benefitadjustment

comprehensive

¥

¥

¥

(95)
-

-

Minority
interests

income(532)-¥

Total net
assets

1,144-¥

42,833
2,686
(579)

-

-

-

106

-

106

-

-

-

-

-

-

106

-

-

-

-

(4)

(4)

-

-

-

-

-

-

(4)

-

-

-

136

-

136

-

-

-

-

-

-

136

67,142,417

8,428

6,733

30,509(1,104)44,566

268
1,198

(136)
(1,503)

229
134

(362)
(362)

(1)
(533)

(71)
1,073

(72)
45,106

-

8,428
-

6,733
-

51
30,5602,790(579)(1,104)-51
44,617
2,790
(579)

1,198
-

(1,503)
-

134
-

(362)
-

(533)
-

1,073
-

51
45,157
2,790
(579)

-

-

-

-

(3)

(3)

-

-

-

-

-

-

(3)

67,142,417

¥

8,428

¥

6,733

¥

32,771¥(1,107)¥

46,825

¥

1,137
2,335

¥

428
(1,075)

¥

300
434

¥

435
73

¥

2,300
1,767

¥

411
1,484

¥

2,711
50,076

$

1,117

$

(3,017)$(4,442)$

8,942$ 375,883

Thousands of U.S. dollars
Balance at March 31, 2014
Cumulative effects ofchanges in accounting
policies (Note 2(k))
Restated balance
Net income for the year
Cash dividends
Purchase of treasury stockand fractional shares, net
Net changes other thanshareholders’ equity
Balance at March 31, 2015$$

70,233

56,109$ 254,241

70,233-

56,109-70,233$$$(9,200)$ 371,383

425
254,666
23,250(4,825)(9,200)---56,109$ 273,091

$

9,983

$ (12,525)

425
371,808
23,250(4,825)

9,983-(12,525)
-

1,117
-

(3,017)-(4,442)
-

8,942
-

425
376,308
23,250(4,825)

(25)

(25)

-

-

-

-

-

-

(25)

(9,225)$ 390,208

9,475
19,4583,567$ (8,958)

3,625
608

19,167$ 14,725

3,425$ 12,367

22,592$ 417,300

See accompanying Notes to Consolidated Financial Statements.
-6-

$

$

$

2,500
3,617

$

Japan Transcity Corporation and Consolidated Subsidiaries
Consolidated Statements of Cash Flows
For the Years Ended March 31, 2015 and 2014

Millions of yen
2015
2014
Cash flows from operating activities:
Income before income taxes and minority interests
Adjustments for:
Depreciation
Net change in employee retirement benefit asset/liability
Loss (gain) on sale or disposal of property and equipment
Decrease in trade receivables
Decrease (increase) in inventories(Decrease) increase in trade payables
Others, net
Sub-totalInterest and dividend received
Interest paid
Income taxes paid
Net cash provided by operating activities

¥

4,050

¥

4,401

Thousands of
U.S. dollars
2015$

33,750

2,834
(595)
3
431
10
(308)
(1,094)
5,331
607
(241)
(1,528)
4,169

2,661
(779)
(17)
694
(11)
171
(472)
6,648
532
(275)
(1,012)
5,893

23,617(4,958)25
3,592
83(2,567)(9,117)44,4255,058(2,008)(12,733)
34,742

Cash flows from investing activities:
Increase in property and equipment and intangible assets
Decrease in property and equipment and intangible assets
Decrease in short-term investments
Payments for sales of investments in subsidiaries resulting in change in scope of consolidation
Others, net
Net cash used in investing activities(3,979)32
12(195)(4,130)(3,412)
301
278
(96)
241
(2,688)(33,159)
267
100(1,625)(34,417)

Cash flows from financing activities:
Increase in long-term debt
Repayment of long-term debt
Decrease in short-term borrowings
Purchase of treasury stock and fractional shares, net
Dividends paid
Others, net
Net cash used in financing activities
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 year
Increase in cash and cash equivalents upon inclusion of additional subsidiaries on consolidation
Cash and cash equivalents at end of year

1,100
(1,409)
(147)
(3)
(579)
(268)
(1,306)272(995)
12,648
11,6534,550(4,376)
(223)
(4)
(579)
(246)
(878)
267
2,594
9,875
179
12,648

9,167(11,742)(1,225)(25)(4,825)(2,233)(10,883)
2,266(8,292)
105,400
97,108¥See accompanying Notes to Consolidated Financial Statements.

-7-

¥

$

Japan Transcity Corporation and Consolidated Subsidiaries
Notes to Consolidated Financial Statements

1. Basis of Consolidated Financial Statements
The accompanying consolidated financial statements of Japan Transcity Corporation (the“Company”) and its consolidated subsidiaries (together with the Company, the “Japan Transcity
Group”) have been prepared in accordance with the provisions set forth in the Financial Instrumentand Exchange Law of Japan and its related accounting regulations and in conformity withaccounting principles generally accepted in Japan (“Japanese GAAP”), which are different incertain respects as to application and disclosure requirements from International Financial
Reporting Standards.
The accompanying consolidated financial statements have been restructured and translated into
English from the consolidated financial statements of the Company prepared in accordance withJapanese GAAP and filed with the appropriate Local Finance Bureau of the Ministry of Finance as
required by the Financial Instrument and Exchange Law of Japan. Certain supplementary
information included in the statutory Japanese language consolidated financial statements, but notrequired for fair presentation, has not been presented in the accompanying consolidated financial
statements.
Comparative figures have been reclassified to conform to the current year’s presentation.
The translation of the Japanese yen amounts into U.S. dollar amounts is included solely for theconvenience of readers outside Japan, using the prevailing exchange rate at March 31, 2015, which
was approximately ¥120 to U.S. $1.00. Such translation should not be construed as arepresentation that the Japanese yen amounts have been, could have been or could in the future beconverted into U.S. dollars at this or any other rate of exchange.
2. Summary of Significant Accounting Policies(a) Principles of consolidation
The accompanying consolidated financial statements include the accounts of the Company and its
significant subsidiaries. Investments in certain unconsolidated subsidiaries and significant
affiliates are accounted for using the equity method. Investments in unconsolidated subsidiaries
and affiliates not accounted for using the equity method are stated at cost. Differences between
the acquisition cost of investments in subsidiaries and the underlying equity in their net assets,adjusted based on the fair value at the time of acquisition, are principally deferred as goodwill andamortized over five years or recognized as gain on negative goodwill.
The numbers of consolidated subsidiaries, unconsolidated subsidiaries and affiliates for the years
ended March 31, 2015 and 2014 were as follows.
2015
2014
Consolidated subsidiaries:
Domestic
24
23
Overseas55Unconsolidated subsidiaries and affiliates accounted forusing the equity method
99Unconsolidated subsidiaries stated at cost
13
12
Affiliates stated at cost
4
4

-8-

All intercompany accounts and transactions have been eliminated on consolidation.
The accompanying consolidated financial statements include the accounts of overseas consolidated
subsidiaries (five subsidiaries in 2015 and 2014, respectively). These overseas consolidated
subsidiaries close their books at December 31, which is three months earlier than the closing of thebooks of the Company or its domestic consolidated subsidiaries. The Company consolidated its
overseas subsidiaries’ financial statements as of their year-end date. Significant transactions forthe period between the subsidiaries’ year-end date and the Company’s year-end date have beenadjusted on consolidation.
(Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial
Statements)
The “Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for
Consolidated Financial Statements” issued by the Accounting Standards Board of Japan (“ASBJ”)(Practical Issues Task Force (“PITF”) No. 18) generally requires that accounting policies andprocedures applied by a parent company and its subsidiaries to similar transactions and events
under similar circumstances be unified for the preparation of the consolidated financial statements.
As a tentative measure, however, PITF No. 18 allows a parent company to prepare consolidated
financial statements using foreign subsidiaries’ financial statements prepared in accordance witheither International Financial Reporting Standards or U.S. generally accepted accounting principles.
In this case, adjustments for the following five items are required in the consolidation process sothat their impact on net income is accounted for in accordance with Japanese GAAP, unless suchimpact is immaterial.
(a) Goodwill not subject to amortization(b) Actuarial gains and losses of defined-benefit retirement plans recognized outside profit or loss(c) Capitalized expenditures for research and development activities(d) Fair value measurement of investment properties and revaluation of property and equipment,
and intangible assets(e) Accounting for net income attributable to minority interests
The accounts of the Company’s overseas consolidated subsidiaries were prepared in accordancewith either International Financial Reporting Standards or U.S. generally accepted accounting
principles, with adjustments having been made for the five items specified above as needed.

(b) Cash equivalents
The Japan Transcity Group considers cash equivalents to be highly liquid debt instrumentspurchased with an original maturity of three months or less.

(c) Investments and marketable securities
The Japan Transcity Group classifies certain investments in debt and equity securities as“held-to-maturity,” “trading” or “available-for-sale” securities for the purpose of determining theapplicable accounting method as stipulated by the accounting standard for financial instruments.
Marketable available-for-sale securities with available market quotations are stated at fair value,
and net unrealized gains or losses on these securities, net of applicable income taxes, are reported
as accumulated other comprehensive income.
Gains or losses on the disposition ofavailable-for-sale securities are computed based on the moving-average method. Non-marketableavailable-for-sale securities without available market quotations are carried at cost determined by
the moving-average method. Adjustments in carrying values of individual securities are charged toincome through write-downs when a decline in value is deemed other than temporary.

-9-(d) Accounting for derivatives
Derivatives are valued at fair value if hedge accounting is not appropriate or where there is no
hedging designation, and gains or losses on the derivatives are recognized in current earnings.
Under the special treatment permitted by the accounting standard for financial instruments,
hedging interest rate swaps are accounted for on an accrual basis and recorded net of interest
expenses generated from the hedged borrowings if certain conditions are met.
(e) Inventories
Inventories consist of supplies and others.
method.

Supplies are stated at cost using the moving-average(f) Allowance for doubtful accounts
An allowance for doubtful accounts is provided for certain doubtful or troubled receivables at theaggregate amount of estimated credit losses based on individual financial reviews. For otherreceivables, a general reserve calculated based on historical loss experience for a certain past
period is provided.
(g) Property and equipment, and depreciation (except for leases)
Property and equipment, including significant renewals and additions, are stated at cost, and are
depreciated principally using the declining-balance method at rates based on the estimated usefullife of the asset. Buildings acquired on or after April 1, 1998 are depreciated using thestraight-line method.
Expenditures on maintenance and repairs are charged to operating income as incurred.
The capital gains directly offset against the acquisition costs of tangible fixed assets to obtain tax
benefits amounted to ¥100 million ($833 thousand) at March 31, 2015 and 2014.
(h) Accounting for leases
Assets of finance leases that transfer ownership of the leased property to the lessee are depreciatedusing the same method for property.
Assets of finance leases that do not transfer ownership of the leased property to lessee aredepreciated over the lease term using the straight-line method with the assumption that the residual
value (or guaranteed residual value when set by agreement) is zero.
Prior to April 1, 2008, the Company's domestic consolidated subsidiary accounted for financeleases which do not transfer ownership of the leased property to the lessee as operating leases,
provided they disclosed certain “as if capitalized” information in the notes to the consolidated
financial statements.
The Company and its domestic consolidated subsidiaries have adopted ASBJ Statement No. 13,
entitled the “Accounting Standard for Lease Transactions,” and ASBJ Guidance No. 16, entitledthe “Guidance on Accounting Standard for Lease Transactions.” The accounting standard requiresthat all finance lease transactions be treated as capital leases. As permitted, finance leases which
do not transfer ownership of leased property to the lessee that commenced prior to April 1, 2008
and have been accounted for as operating leases continue to be accounted for as such provided thatcertain “as if capitalized” information thereof have been disclosed.
(i) Accounting standard for impairment of fixed assets
The Company and its domestic consolidated subsidiaries adopted the “Accounting Standard for
Impairment of Fixed Assets” issued by the Business Accounting Council of Japan and related
practical guidance issued by ASBJ. The standard requires that a fixed asset be reviewed for
impairment whenever events or changes in circumstances indicate that the carrying amount of such

- 10 -

asset may not be recoverable. Impairment loss is to be recognized in the income statement by
reducing the carrying amount of an impaired asset or group of assets to the recoverable amount,measured at the higher of the net selling price or value in use. Fixed assets include land,buildings and other forms of property as well as intangible assets, and are to be grouped at thelowest level for which there are identifiable cash flows separate from those of other groups ofassets. For the purpose of recognition and measurement of impairment loss, fixed assets otherthan idle or unused property are principally grouped into cash-generating units such as regional
business divisions.
(j) Revaluation of land
In accordance with the Law Concerning Revaluation of Land (the “Revaluation Law”), theCompany elected a one-time revaluation to restate the cost of land used for the Company’sbusiness at values rationally reassessed effective on March 31, 2002, reflecting adjustments forland shape and other factors and based on municipal property tax bases. In accordance with the
Revaluation Law, an amount equivalent to the tax effect on the difference between the original
book value and the reassessed value was recorded as deferred tax liability under the revaluationaccount. The remaining difference, net of the tax effects, was recorded as land revaluation
decrement account included in accumulated other comprehensive income in the accompanying
consolidated balance sheets. At March 31, 2015 and 2014, the differences between the carrying
value of land used for the Company’s business after reassessment and the current market value atthe fiscal year-end amounted to ¥8,868 million ($73,900 thousand) and ¥8,898 million,
respectively.
(k) Employee retirement benefits
Employees who terminate their service with the Japan Transcity Group are entitled to retirement
benefits generally determined by current basic rates of pay, length of service and conditions underwhich the termination has occurred.
In accordance with the accounting standard for employee retirement benefits, the Japan Transcity
Group recognizes retirement benefits for employees, including pension costs and related liabilities,
based on the actuarial present value of retirement benefit obligation using the actuarial appraisal
approach and the value of pension plan assets available for benefits at the fiscal year-end.
Actuarial differences arising from changes in the retirement benefit obligation or pension plan
assets not anticipated under previous assumptions or from changes in the assumptions themselves
are amortized on a straight-line basis over 10 years, a period within the remaining service years of
the employees, measured from the year after such differences arise. Past service cost is amortizedusing the straight-line method over 10 years, measured from the year in which such cost arises.
Some consolidated subsidiaries provide accrued retirement benefits for their employees mainly at
the amounts of the projected benefit obligations calculated by the simplified method.
Effective from the year ended March 31, 2014, the Company and its domestic consolidated
subsidiaries have applied the “Accounting Standard for Retirement Benefits” (ASBJ Statement No.
26, revised on May 17, 2012 (“Statement No. 26”)) and the “Guidance on Accounting Standard for
Retirement Benefits” (ASBJ Guidance No. 25, revised on May 17, 2012 (“Guidance No. 25”)),
with the exceptions of Article 35 of Statement No. 26 and Article 67 of Guidance No. 25, and,accordingly, actuarial differences and past service costs that are yet to be recognized have beenrecognized and the difference between retirement benefit obligations and plan assets has beenrecognized as employee retirement benefit liability. In accordance with Article 37 of Statement
No. 26, this accounting change has not been retrospectively applied to the consolidated financial
statements in prior years, and the effect of the change in accounting policies arising from initial
application has been recognized as retirement benefit adjustment in accumulated othercomprehensive income. As a result of the application, employee retirement benefit asset in theamount of ¥2,961 million and employee retirement benefit liability in the amount of ¥1,839- 11 -

million have been recognized and a credit balance of accumulated other comprehensive income of¥362 million was recorded at March 31, 2014.
Effective from the year ended March 31, 2015, the Company and its domestic consolidated
subsidiaries adopted Article 35 of Statement No. 26 and Article 67 of Guidance No. 25 and havechanged the determination of retirement benefit obligations and current service costs. In addition,
the Company and its domestic consolidated subsidiaries have changed the method of attributing
expected retirement benefits to periods from the straight-line basis to the benefit formula basis andthe method of determining the discount rate from a method determined based on the period
approximate to the expected average remaining service years of the eligible employees to a method
determined using a single weighted average discount rate reflecting the estimated timing andamount of benefit payment. In accordance with Article 37 of Statement No. 26, this accountingchange has not been retrospectively applied to the consolidated financial statements in prior years,
and the effect of the change in accounting policies arising from initial application has beenrecognized as an adjustment to the beginning balance of retained earnings as of April 1, 2014.
As a result of the application, employee retirement benefit asset was ¥32 million ($267 thousand)less and employee retirement benefit liability ¥110 million ($917 thousand) less, and retained
earnings were ¥51 million ($425 thousand) more than the amounts that would have been reported
without the change at the beginning of the current fiscal year. In addition, operating income andincome before income taxes and minority interests were ¥51 million ($425 thousand) less,respectively, for the year ended March 31, 2015 than the amounts that would have been reported
without the change.
(l) Accrued severance indemnities for directors
Some domestic consolidated subsidiaries may pay severance indemnities to directors, which are
subject to the approval of the shareholders. Some domestic consolidated subsidiaries haveprovided for the full amounts of liabilities for directors’ severance indemnities at the respectivebalance sheet dates.
(m) Translation of foreign currency accounts
Receivables, payables and securities other than stocks of subsidiaries and certain other securities
are translated into Japanese yen at year-end exchange rates. Transactions in foreign currencies
are recorded at the prevailing exchange rates on the transaction dates. Resulting translation gains
or losses are included in current earnings.
For financial statement items of overseas consolidated subsidiaries, all assets and liabilities
accounts are translated into Japanese yen by applying the exchange rates in effect at the fiscal
year-end. All income and expense accounts are translated at the average rates of exchange
prevailing during the fiscal year. Translation differences have been reported as foreign currencytranslation adjustments under a component of net assets in the accompanying consolidated balance
sheets.
(n) Income taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets andliabilities are recognized as future tax consequences attributable to differences between the
carrying amounts of existing assets and liabilities and their respective tax bases and operating loss
carry-forwards. Deferred tax assets and liabilities are measured using the enacted tax rates
expected to apply to taxable income in the years in which those temporary differences are expected
to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates
is recognized in the period that includes the promulgation date.

- 12 -

(o) Enterprise taxes
The Japan Transcity Group records enterprise taxes based on the “added value” and “capital”
amounts when levied as size-based corporate taxes for local government enterprise taxes, and suchtaxes are included in operating costs and expenses.
(p) Appropriation of retained earnings
Cash dividends are recorded in the fiscal year when a proposed appropriation of retained earnings
is approved by the board of directors and/or shareholders.
(q) Per share data
Net income per share is computed by dividing income available to common shareholders by theweighted-average number of shares of common stock outstanding during the fiscal year. Cashdividends per share for each fiscal year in the accompanying consolidated statements of income
represent dividends declared by the Company as applicable to the respective years. Diluted net
income per share was not presented as of March 31, 2015 or 2014 due to the lack of any dilutive
shares.
(ｒ) Yet to be applied accounting standard
The following standards and guidance have been issued but not yet adopted under theaccompanying consolidated financial statements.
(Accounting standard for business combination)
ASBJ issued revised ASBJ Statement No. 21, entitled the “Accounting Standard for Business
Combinations,” revised ASBJ Guidance No. 10, entitled the “Guidance on Accounting Standard
for Business Combinations and Business Divestitures,” and revised ASBJ Statement No. 22,
entitled the “Accounting Standard for Consolidated Financial Statements,” on September 13, 2013.
Under these revised accounting standards, the accounting treatment for changes in a parent's
ownership interest in a subsidiary when the parent retains control over the subsidiary throughadditional acquisition of shares therein and for acquisition-related costs were amended. In addition,
the presentation method of net income was amended, “minority interests” was amended to“non-controlling interest,” and transitional provisions for accounting treatments were defined.
The Company expects to apply these revised accounting standards and guidance from the
beginning of the fiscal year ending March 31, 2016. However, the transitional provisions foraccounting treatments will be applied for business combination performed on or after the
beginning of the fiscal year ending March 31, 2016. The Company is currently in the process ofassessing the impact of these standards on the consolidated financial statements.

3.

Fair values of financial instruments(a) Qualitative information on financial instruments:① Policies for using financial instruments
The fund operation of the Company is limited to short-term deposits, and the Company
raises fund through bank loans and bond issuances. Derivative instruments are mainly
used to hedge against variable interest rate risk and to compensate a loss when an
earthquake occurs, and are not used for speculative purpose.
② Details of financial instruments, risks and risk management system
Trade receivables (notes and accounts) carry a credit risk of trading partners. In
response to such risk, pursuant to internal regulations of the Company, the due dates andbalances of such receivables are managed appropriately for each counterparty and thecredit risks of main trading partners are identified every half year.

- 13 -

Although investments in securities are exposed to market price fluctuation risk, theCompany stays abreast of the fair values of shares of companies with which the Company
has business relationships on a regular basis.
Trade payables (notes and accounts) are due within one year.
With regard to loans payable, short-term borrowings are mainly used to raise capital for
operational dealings and long-term debt fund capital investment.
Loans with variable interest rates involve the risk of interest rate fluctuation. For
hedging purposes, the Japan Transcity Group is a party to derivative instruments, such as
interest rate swap contracts and the like, in the normal course of business to reduce its
own exposure to fluctuations in interest rates. Evaluating the effectiveness of the hedge
has not been required because of the exceptional treatment of interest rate swaps.
Guarantee deposits received consist mainly of deposit money for golf club memberships.
The Company enters into derivative contracts with financial institutions of highcreditworthiness to reduce credit risk.
The Japan Transcity Group controls liquidity risk associated with operating payables andloans by cash management systems which control the fund of the Japan Transcity Group
as a whole.
③ Supplemental information on fair values:
The contract amounts of derivative instruments under Note 3 (Fair Values of Financial
Instruments) do not necessarily represent the market risk in themselves.
(b) Fair values of financial instruments:
The carrying values of financial instruments included in the consolidated balance sheet andtheir fair values at March 31, 2015 and 2014 were as follows. Some financial instruments
were excluded because it was extremely difficult to identify their fair values.

At March 31, 2015:(1) Cash and cash equivalents(2) Short-term investments(3) Trade receivables(4) Investment securities
Marketable securities
Total assets(1) Trade payables(2) Short-term borrowings(3) Long-term debt
Total liabilities
At March 31, 2014:(1) Cash and cash equivalents(2) Short-term investments(3) Trade receivables(4) Investment securities
Marketable securities
Total assets(1) Trade payables(2) Short-term borrowings(3) Long-term debt
Total liabilities

Carrying value

Fair value
Millions of yen¥¥

11,65340
13,767
7,517
32,977
8,234
2,467
22,68233,383¥¥¥¥

12,64848
13,404
5,894
31,994
7,728
2,594
22,34032,662¥¥¥- 14 -

¥
¥

¥

¥

¥
¥

¥

11,65340
13,767
7,517
32,977
8,234
2,467
22,69833,39912,64848
13,404
5,894
31,994
7,728
2,594
22,15632,478Difference

¥

¥
¥

¥

¥

¥
¥

¥

16
16

(184)
(184)

Carrying value
At March 31, 2015:(1) Cash and cash equivalents(2) Short-term investments(3) Trade receivables(4) Investment securities
Marketable securities
Total assets(1) Trade payables(2) Short-term borrowings(3) Long-term debt
Total liabilities

$

$
$

$

97,108334
114,725
62,642274,80968,617
20,558
189,016
278,191

Fair value
Thousands of U.S. dollars
$

$
$

$

97,108334
114,725
62,642274,80968,617
20,558189,150
278,325

Difference

$

$
$

$

134
134

Note 1. Method of calculating the fair values of financial instruments and other mattersconcerning securities and derivatives
Assets(1) Cash and cash equivalents, (2) Short-term investments and (3) Trade receivables
The carrying values of cash and cash equivalents, short-term investments and tradereceivable approximate their fair values because of their short maturities.
(4) Investment securities
The fair values of listed equity shares in investment securities are based on quoted
market prices. For matters concerning securities according to the purpose forwhich they are held, see Note 4.
Liabilities(1) Trade payables and (2) Short-term borrowings
The carrying values of trade payables and short-term borrowings approximate theirfair values because of their short maturities.
(3) Long-term debt
The fair value of long-term debt is computed based on the total amount of principal
and interest discounted at an interest rate applicable to new loans under the same
conditions.
Derivatives① Derivative transactions to which hedge accounting was not applied: notapplicable.
② Derivative transactions to which hedge accounting was applied: the contract
amounts or amounts equivalent to the principal set forth in the contracts as of the
fiscal year-end date were as follows.

Millions of yen
2015
2014
9,500
¥
10,066

Thousands of
U.S. dollars
2015$
79,167

Contract amount ( *1)¥
Contract amount due after one
2,000
9,500
16,667
year included in (*1)
Fair value
(60)
(97)
(500)
(Note) Method of hedge accounting applied: exceptional treatment for interest rate swap
Type of derivative transaction: interest rate swap (fixed rate payment, floating ratereceipt)- 15 -

Hedged item: long-term debt
The fair value is measured in reference to the price obtained from the applicablefinancial institutions.

Note 2. Financial instruments whose fair values could not be reliably determined:
Thousands ofMillions of yen
U.S. dollars
2015
2015
2014
Non-marketable securities (*1) ¥
413
¥
374
$
3,441
Guarantee deposits received (*2)
3,148
3,401
26,233
Derivative relating to
17
17
142
earthquakes (*3)
(*1)

(*2)
(*3)

It is extremely difficult to determine the fair values of non-marketable securities
because they do not have quoted market prices and their future cash flows cannot
be estimated. Therefore, they were excluded from item (4) (Investment securities)
above.
It is extremely difficult to determine the fair values of guarantee deposits received
because their scheduled redemption amounts cannot be estimated.
During the year ended March 31, 2007, the Company entered into a derivative
contract relating to earthquakes for hedging purposes. The outstanding contract
amount was ¥300 million ($2,500 thousand) at both March 31, 2015 and 2014.
As the fair value for such a contract was not considered determinable, such contract
has not been accounted for at fair value.

Note 3. Scheduled redemption amounts after the fiscal year-end date for monetary claims andsecurities with maturity periods:
Due in one
year or less

Cash and cash equivalents
Short-term investments
Trade receivables
Total

4.

¥

¥

Due after
Due in one
Due after
one yearyear or lessone year
Millions of yen
2015
2014
11,653¥¥ 12,648¥40
48
13,767
13,40425,460¥¥ 26,100¥-Due in one
Due after
year or lessone yearThousands of U.S. dollars
2015$ 97,108$334
114,725$ 212,167$-

Investments
At March 31, 2015 and 2014, short-term investments consisted of time deposits with an original
maturity of more than three months.
At March 31, 2015 and 2014, investment securities consisted of the following.

Millions of yen
2015
2014
Marketable securities:
Equity securities
Other

¥

Other non-marketable securities¥- 16 -

7,507
10
7,517
413
7,930

¥

¥

Thousands of
U.S. dollars
2015

5,885 $
9
5,894
374
6,268 $

62,55983
62,642
3,441
66,083

Marketable investment securities classified as available-for-sale securities are stated at fair value
with unrealized gains and losses excluded from current earnings and reported as net amount within
net assets until realized. At March 31, 2015 and 2014, gross unrealized gains and losses formarketable securities classified as available-for-sale securities were as follows.

Cost

Available-for-sale securities at March 31, 2015:
Equity securities
¥
3,992
Other
9
¥
4,001
Available-for-sale securities at March 31, 2014:
Equity securities
¥
3,957
Other
9
¥
3,966

Cost
Available-for-sale securities at March 31, 2015:
Equity securities$
33,267
Other
75$
33,342
5.

Gross
Gross
unrealized
unrealized
gains
lossesMillions of yen

Fair andcarrying
value

¥

(92)
(92)

¥

(167)
(167)

¥

¥

¥
¥

3,607
1
3,608

¥

2,095
2,095

¥

¥

¥

¥

¥

7,507
10
7,517

5,885
9
5,894

Gross
Gross
unrealized
unrealized
gains
lossesThousands of U.S. dollars

Fair andcarryingvalue$$ 62,559
83$ 62,642$

30,058830,066

$
$

(766)
(766)

Short-term Borrowings, Long-term Debt and Collateral
At March 31, 2015 and 2014, short-term borrowings consisted of the following.
Millions of yen
2015
2014
Short-term bank loans and bank overdrafts withinterest rates ranging from 0.28% to 5.60%
per annum at March 31, 2015:
Unsecured¥- 17 -

2,467 ¥

Thousands of
U.S. dollars
2015

2,594 $

20,558At March 31, 2015 and 2014, long-term debt consisted of the following.
Thousands of
U.S. dollars
2015

Millions of yen
2015
2014
Long-term loans from banks and other financial
institutions due through 2022 with interest rates
ranging from 0.443% to 2.0% per annum at
March 31, 2015:
Collateralized¥
UnsecuredLess portions with current maturities¥

22,682
22,682(8,242)
14,440¥¥257
22,083
22,340(1,278)21,062$$

189,016
189,016(68,683)
120,333

The aggregate amounts of long-term debt due annually at March 31, 2015 were as follows.
Millions ofyenYear ending March 31,
2016
2017
2018
2019
2020
2021 and thereafter¥¥Thousands of
U.S. dollars

8,242 $
1,743
560
1,742
6,070
4,325
22,682 $68,683
14,525
4,666
14,51750,58336,042
189,016

The aggregate amounts of long-term lease obligations, which were other current liabilities andother long-term liabilities, due annually at March 31 were as follows.
Millions ofyenYear ending March 31,
2016
2017
2018
2019
2020
2021 and thereafterThousands of
U.S. dollars

286 $
253
167
79
26
4
815 $

¥

¥

2,384
2,108
1,392
658
217
33
6,792

At March 31, 2015 and 2014, the following assets were pledged as collateral.
Millions of yen
2015
2014
Buildings and structures¥- ¥Thousands of
U.S. dollars
2015
509 $

-

In addition to the above, at March 31, 2015 and 2014, land of ¥795 million ($6,625 thousand) was
ready for the pledges subject to the security of the guarantee deposits received of ¥100 million($833 thousand).

- 18 -

As is customary in Japan, substantially all loans from banks (including short-term loans) are madeunder general agreements which provide that, at the request of the relevant bank, the Japan
Transcity Group is required to provide collateral or guarantees (and additional collateral or
guarantees, as appropriate) with respect to loans and that all assets pledged as collateral under suchagreements will be used as collateral for all present and future indebtedness to the bank concerned.
The Japan Transcity Group has not yet received such requests. The general agreements further
provide that the banks have the right, as indebtedness matures or becomes due prematurely byreason of default thereon, to offset deposits at such banks against indebtedness due to such banks.

6.

Employee Retirement Benefits
The Company has defined benefit retirement plans. Some of the consolidated subsidiaries havedefined benefit plans to which the simplified method is applied. In addition, some consolidated
subsidiaries have a defined contribution pension plan under certain pension funds organized bythird parties.
The following table reconciles the benefit liability (asset) and net periodic retirement benefit
expense as at and for the year ended March 31, 2015 and 2014.
Defined benefit plans excepting those to which the simplified method has been applied:Thousands ofMillions of yen
U.S. dollars
2015
2014
2015
Movement in retirement benefit obligations:
Balance at beginning of the year
¥
7,861
¥
8,277 $
65,508Cumulative effects of changes inaccounting policies
(78)
(650)
Restated balance
7,783
64,858Service cost
346
305
2,884
Interest cost
65
117
542
Actuarial differences
220
39
1,833
Benefits paid
(458)
(876)
(3,817)
Other
3
(1)
25
Balance at end of the year
¥
7,959
¥
7,861 $
66,325

Millions of yen
2015
2014
Movement in plan assets:
Balance at beginning of the year
Expected return on plan assets
Actuarial differences
Contributions paid by the employer
Benefits paid
Other
Balance at end of the year¥¥

- 19 -

9,951
80
845
927
(447)
1
11,357¥¥

Thousands of
U.S. dollars
2015

9,009 $
127
679
920
(783)
(1)
9,951 $

82,925
667
7,042
7,725
(3,725)
8
94,642

Thousands of
U.S. dollars
2015

Millions of yen
2015
2014
Reconciliation from retirement benefit
obligations and plan assets to liability (asset)
for retirement benefits:
Funded retirement benefit obligations
Plan assets¥¥

Unfunded retirement benefit obligations
Total net liability (asset) for employee
retirement benefit at end of the year
Employee retirement benefit liability
Employee retirement benefit asset
Total net liability (asset) for retirement
benefits at end of the year

¥

7,140
(11,357)(4,217)819(3,398)

¥
¥

¥

832
(4,230)¥(3,398)¥7,022 $
(9,951)(2,929) $839

59,500(94,642)(35,142)
6,825(2,090) $(28,317)849(2,939)6,933(35,250)(2,090) $(28,317)

Thousands of
U.S. dollars
2015

Millions of yen
2015
2014
Retirement benefit costs:
Service cost
Interest cost
Expected return on plan assets
Actuarial differences amortization
Past service costs amortization
Total retirement benefit costs for the year

¥

¥

346
65
(80)
90
(49)
372

¥

¥

305 $
117
(127)
(20)
(60)
215 $

Thousands of
U.S. dollars
2015

Millions of yen
2015
2014
Retirement benefit adjustment, before taxes,
included in other comprehensive income:Actuarial differences
Past service costs
Total balance at end of the year

¥
¥

(715)
50
(665)

¥

-

¥

Millions of yen
2015
2014
Retirement benefit adjustment, before taxes,
included in accumulated other comprehensive
income:Actuarial differences that are yet to berecognized
Past service costs that are yet to berecognized
Total balance at end of the year

- 20 -

2,884
542
(667)
750
(409)
3,100

$
$

(5,959)417(5,542)Thousands of
U.S. dollars
2015

¥

(43)

¥

672

$

(358)

¥

(68)
(111)

¥

(118)
554 $

(567)
(925)

Plan assets(1) Plan assets:
Bonds
Equity securities
General accountCommingled funds
Other
Total

2015

2014

13%
35%
9%
30%
13%
100%

9%
35%
15%
29%
12%
100%

At March 31, 2015 and 2014, assets under the retirement benefit trust set up for corporate
pension plans accounted for 34% and 35% of the total plan assets, respectively.
Both at March 31, 2015 and 2014, commingled funds consisted of bonds (65%) and equity
securities (35%).
(2) Long-term expected rate of return:Current and target asset allocations and historical and expected returns on various categories ofplan assets have been considered in determining the long-term expected rate of return.
Principal actuarial assumptions at March 31, 2015 and 2014 (expressed as weighed averages)
2015
2014
Discount rate
0.6%
1.4%
Long-term expected rate of return
0.8%
1.4%
Defined benefit plans to which the simplified method has been applied:
Millions of yen
2015
2014
Movement in liability for retirement benefits:
Balance at beginning of the year
Retirement benefit costs
Benefits paid
Contributions paid by employer
Other
Balance at end of the year

¥

¥

967
158
(91)
(96)
17
955

¥

¥

947 $
157
(42)
(96)
1
967 $

Millions of yen
2015
2014
Reconciliation from retirement benefit
obligations and plan assets to liability (asset) for
retirement benefits:
Funded retirement benefit obligations¥
Plan assets¥
Unfunded retirement benefit obligations
Total net liability (asset) for employee
retirement benefit at end of the year¥
Employee retirement benefit liability
Employee retirement benefit asset
Total net liability (asset) for retirement
benefit at end of the year

- 21 -

1,934(1,182)
752
203
955

¥
¥

¥

979
(24)
¥

955

Thousands of
U.S. dollars
2015

Thousands of
U.S. dollars
2015

1,884 $
(1,104)780 $
187

16,117(9,850)
6,267
1,692

967

7,959

$

990
(23)
¥

8,058
1,317
(758)
(800)
142
7,959

967

8,159
(200)
$

7,959

Total retirement benefit costs for the fiscal year ended March 31, 2015 and 2014 based on thesimplified method
Thousands ofMillions of yen
U.S. dollars
2015
2014
2015
¥
158
¥
157 $
1,317
Defined contribution plan:
For the years ended March 31, 2015 and 2014, the required contribution amount of theconsolidated subsidiaries to the defined contribution plan was ¥49 million ($408 thousand) and¥46 million, respectively.

7.

Net Assets
Under Japanese laws and regulations, the entire amount paid for new shares is required to be
designated as common stock. However, a company may, by a resolution of the board of directors,
designate an amount not exceeding one-half of the prices of the new shares as additional paid-in
capital, which is included in capital surplus.
Under the Corporate Law, in cases where a dividend distribution of surplus is made, the smaller of
the amount equal to 10% of the dividend or the excess, if any, of 25% of common stock over the
total of additional paid-in capital and legal earnings reserve must be set aside as additional paid-in
capital or legal earnings reserve. The legal earnings reserve has been included in retained
earnings in the accompanying consolidated balance sheets.
Under the Corporate Law, the legal earnings reserve and additional paid-in capital can be used toeliminate or reduce a deficit by a resolution at the shareholders’ meeting. The additional paid-in
capital or legal earnings reserve may not be distributed as dividends. All additional
paid-in-capital and legal earnings reserve may be transferred to other capital surplus and retained
earnings, respectively, which may become available for distribution as dividends.
At both March 31, 2015 and 2014, capital surplus principally consisted of additional paid-in capital.
In addition, retained earnings included the legal earnings reserve of the Company in the amount of¥1,200 million ($10,000 thousand) at both March 31, 2015 and 2014.
The maximum amount that the Company can distribute as dividends is calculated based on the
non-consolidated financial statements of the Company in accordance with Japanese laws andregulations.
During the year ended March 31, 2015, the Company paid interim dividends of ¥4.00 per share.
In addition, at the annual shareholders’ meeting held on June 26, 2015, the shareholders approved
cash dividends of ¥5.50 per share amounting to ¥354 million ($2,950 thousand). These
appropriations have not yet been accrued in the consolidated financial statements as of March 31,
2015 as such appropriations are recognized in the period in which they are approved by theshareholders.

8.

Contingent Liabilities
At March 31, 2015 and 2014, the Japan Transcity Group was contingently liable for guarantees ofindebtedness of others in the amounts of ¥253 million ($2,108 thousand) and ¥306 million,
respectively. Such amounts included reserved guarantees of unconsolidated subsidiaries in theamounts of ¥253 million ($2,108 thousand) and ¥279 million at March 31, 2015 and 2014,
respectively.

- 22 -

9.

Lease Commitments
The Japan Transcity Group leases, as lessee, land and buildings to be used for office spaces andwarehouses principally under long-term cancelable or non-cancelable operating lease agreements.
The Japan Transcity Group also leases computer equipment, other equipment and vehicles underleases which are not generally cancelable.
For the years ended March 31, 2015 and 2014, lease expenses under non-cancelable leaseagreements which were categorized as finance leases entered into before March 31, 2008
amounted to ¥219 million ($1,825 thousand) and ¥271 million, respectively.
The aggregate future minimum payments for non-cancelable operating leases and finance leases,
including imputed interest, at March 31, 2015 and 2014 were as follows.

Millions of yen
2015
2014
Operating leases:
Due within one year
Due after one year

¥

$

8,800
16,58325,383Finance leases which were entered into before March 31, 2008 and not capitalized:
Due within one year
¥
117 ¥
218 $
Due after one year
199
316
¥
316 ¥
534 $

975
1,658
2,633

¥

- 23 -

1,056
1,990
3,046

¥
¥

1,016
1,840
2,856

Thousands of
U.S. dollars
2015$10. Income Taxes
The tax effects of temporary differences that gave rise to a significant portion of deferred tax
assets and liabilities at March 31, 2015 and 2014 were as follows.
Thousands ofMillions of yen
U.S. dollars
2015
2014
2015
Deferred tax assets:
Enterprise tax accruals
¥
30 ¥
54 $
250
Accrued bonuses to employees
343
353
2,859
Employee retirement benefit liability
332
479
2,767
Accrued severance indemnities for directors
5
7
42
Long-term accounts payable
25
27
208
Intercompany capital gains
259
265
2,158
Net operating loss carry-forwards
250
262
2,083
Impairment loss on fixed assets
1,224
1,286
10,200
Others
423
432
3,525
2,891
3,165
24,092Less valuation allowance(1,565)(1,651)(13,042)
Deferred tax assets
1,326
1,514
11,050
Deferred tax liabilities:
Employee retirement benefit asset
Deferred capital gain
Unrealized gains on available-for-salesecurities
OthersDeferred tax liabilities
Net deferred tax liabilities

¥

307
845

910

2,558
7,042

1,126
650
2,928
(1,602)

679
505
2,094
(580)

9,383
5,417
24,400(13,350)¥$

At March 31, 2015 and 2014, deferred tax assets and liabilities were as follows.

Millions of yen
2015
2014
Deferred tax assets:
Current
Non-current
Deferred tax liabilities:
Non-current

¥

411
602
2,615

¥

374
653
1,607

Thousands of
U.S. dollars
2015
$

3,425
5,017
21,792In assessing the realizability of deferred tax assets, management of the Japan Transcity Groupconsiders whether part or all of the deferred tax assets will be realized. The ultimate realizationof deferred tax assets is dependent upon the generation of future taxable income during the periods
in which those temporary differences become deductible. At March 31, 2015 and 2014, avaluation allowance was provided to reduce the deferred tax assets to amounts management
believed would be realizable.

- 24 -

Reconciliations for the differences between the Japanese statutory effective tax rate and the actual
effective income tax rate on pre-tax income reflected in the accompanying consolidated statements
of income for the year ended March 31, 2015 were as follows.

Japanese statutory effective tax rate
Increase (decrease) due to:Permanently non-deductible expenses
Tax exempt income
Local minimum taxes per capita levy
Effect of elimination of dividend income fromsubsidiaries for consolidation purpose
Equity in net earnings of unconsolidated
subsidiaries and affiliates
Valuation allowance
OthersActual effective income tax rate

Percentage ofpre-tax income
35.1%
1.0
(4.6)
1.0
3.1

(4.7)
(2.1)
(0.6)
28.2%

Reconciliation for the year ended March 31, 2014 was not disclosed because the difference was
immaterial.
Adjustment of deferred tax assets and liabilities due to change in income tax rate:
Following the promulgation on March 31, 2015 of the "Act for Partial Revision of Income Tax
Act" and "Act for Partial Revision of Local Tax Act", the effective statutory tax rate used tomeasure deferred tax assets and liabilities (excepted to be settled or realized on or after April 1,
2015) in the consolidated fiscal year was changed from the previous consolidated fiscal year’s rateof 35.1% to 32.6% for temporary differences expected to be resolved during the period from April
1, 2015 to March 31, 2016, and to 31.8% for temporary differences expected to be resolved on orafter April 1, 2016. As a result of the change, deferred tax liabilities, net of deferred tax assets,
were ¥213 million ($1,775 thousand) less, net unrealized gains on available-for-sale securities¥112 million ($933 thousand) more, and retirement benefit adjustment ¥3 million ($25 thousand)more at March 31, 2015 than the amounts that would have been reported without the change.
Deferred income taxes for the year ended March 31, 2015 were ¥98 million ($817 thousand) lessthan the amounts that would have been reported without the change. Deferred tax liabilities forrevaluation were ¥427 million ($3,558 thousand) less and land revaluation decrement was the sameamount more at March 31, 2015 than the amounts that would have been reported without thechange.

- 25 -

11. Comprehensive income
The amounts reclassified to net income (loss) in the current period that were recognized in othercomprehensive income in the current or previous periods and the tax effects for each component ofother comprehensive income for the years ended March 31, 2015 and 2014 were as follows.
Thousands of
U.S. dollars
2015

Millions of yen
2015
2014
Net unrealized gains on available-for-sale securities
Increase (decrease) during the year
Reclassification adjustments to profit or loss
Sub-total, before tax
Tax (expense) or benefit
Sub-total, net of tax
Land revaluation decrement
Tax (expense) or benefit
Foreign currency translation adjustment
Increase (decrease) during the year
Retirement benefit adjustment
Increase (decrease) during the year
Reclassification adjustments to profit or loss
Sub-total, before tax
Tax (expense) or benefit
Sub-total, net of tax
Share of other comprehensive income of affiliates
accounted for using equity method
Increase (decrease) during the year
Total other comprehensive income- 26 -

¥

¥

1,588
1,588
(446)
1,142

417 $
417
(147)
270

13,233
13,233(3,716)
9,517

427

-

3,558

395

302

3,292

624
41
665
(230)
435

-

5,200
342
5,542
(1,917)
3,625

12
2,411

¥

¥

13
585

$

100
20,092

12.

Segment Information
1. General information about reportable segments
The reportable segments are constituent business units of the Japan Transcity Group for which separate financial information is obtained, andwhich are examined regularly by the board of directors to evaluate their business performance. The Japan Transcity Group provides mainly
integrated logistics services that consist of warehousing, coastal shipping, trucking and international multimodal transportation. Therefore, theJapan Transcity Group’s reported segment is of “Integrated Logistics Services.”
2. Basis of measurement about reported segment profit, segment assets and other material items
The principle of accounting for the segment is presented on an operating income basis. Intersegment operating revenues or transfer amounts are
based on the market price.
As disclosed under Note 2(k) (Employee retirement benefits), the Company and its domestic consolidated subsidiaries have changed the method
for calculating retirement benefit obligation and service cost.
As a result, operating income for the "Integrated Logistics services" segment decreased by ¥51 million ($425 thousand).
3. Information about reported segment profit, segment assets and other material items
Information by segment for the years ended March 31, 2015 and 2014 are as follows.
Integrated
Logistics Services
For the year ended March 31, 2015:
Operating revenue:
External customers
Intersegment sales
Total operating revenue
Operating income¥¥

Identifiable assets¥
Depreciation
Investments in affiliates accounted for using theequity method
Capital expenditures
Amortization of goodwill
Goodwill
Amortization of negative goodwill
For the year ended March 31, 2014:
Operating revenue:
External customers
Intersegment sales
Total operating revenue
Operating income¥¥

Identifiable assets¥
Depreciation
Investments in affiliates accounted for using theequity method
Capital expenditures
Amortization of goodwill
Goodwill
Amortization of negative goodwill

91,452
26
91,4782,936
99,596
2,754

Others

¥

¥
¥

5,827
2,934
14
56
-

87,57927
87,6063,512
94,783
2,611
5,480
4,761
7

Total
Millions of yen

1,045
1,134
2,179
127
1,799
80

¥

¥
¥

29
-

¥

¥
¥

1,028
1,047
2,075
93
1,747
50
33
-

92,497
1,160
93,657
3,063
101,395
2,834

Adjustment

Consolidated

¥

¥

¥
¥

5,827
2,963
14
56
-

¥

¥
¥

88,607
1,074
89,681
3,605
96,530
2,661
5,480
4,794
7

- 27 -(1,160)(1,160)44(1,192)
-

¥
¥

-

¥

¥
¥

(1,074)(1,074)33(981)-

92,49792,4973,107
100,203
2,834
5,827
2,963
14
56
-

¥

¥
¥

88,60788,607
3,638
95,549
2,661
5,480
4,794
7

Integrated
Logistics Services
For the year ended March 31, 2015:
Operating revenue:
External customers
Intersegment sales
Total operating revenue
Operating income$

762,100
217
762,317
24,467$

Identifiable assets$
Depreciation
Investments in affiliates accounted for using theequity method
Capital expenditures
Amortization of goodwill
Goodwill
Amortization of negative goodwill

829,967
22,950

Others
Total
Thousands of U.S. dollars

$

8,708
9,450
18,158
1,058

$
$

$

770,808
9,667
780,475
25,525$

14,991
667

$

$

$

844,958
23,617242-

48,55824,450117
467-

Adjustment$

Consolidated- $(9,667)(9,667)367 $

770,808
770,808
25,892(9,933) $-835,025
23,617-48,55824,692
117
467-

48,55824,692
117
467-(Related information)
1. Information about product and service
Coastalshipping

Warehousing

International
multimodaltransportation

Trucking
Millions of yen

Total

For the year ended March 31, 2015:
Operating revenue to external customers¥

34,594¥

20,362¥

18,033¥

18,463¥91,452For the year ended March 31, 2014
Operating revenue to external customers¥

34,597¥

21,103¥

17,164¥

14,715¥87,579

153,859$

762,100

Thousands of U.S. dollars
For the year ended March 31, 2015
Operating revenue to external customers$

288,283$

169,683$

150,275$

2. Information about geographic areas(1) Operating revenue
For the year ended March 31, 2014, the Company has omitted the disclosure of operating revenue because operating revenue from externalcustomers in Japan accounted for more than 90% of the amounts of operating revenue reported in the consolidated statements of income.
For the year ended March 31, 2015, operating revenue by geographic area is as follows.
Japan
For the year ended March 31, 2015:
Operating revenue¥

82,810

Other
Millions of yen
¥

9,687

Total

¥

92,497$

770,808

Thousands of U.S. dollars
For the year ended March 31, 2015:
Operating revenue$

690,083$

80,725(2) Property and equipment
The Company has omitted the disclosure of property and equipment because property and equipment in Japan accounted for more than 90%of the amounts of property and equipment reported in the consolidated balance sheets.

- 28 -

3. Information about major customers
Information on operating revenue from major customers for the years ended March 31, 2015 and 2014 are as follows.
Customer’s name

Relevant reportable segment

Aeon Global SCM Co., Ltd.

Integrated logistics services

Thousands of
U.S. Dollars
2015

Millions of Yen
2015
2014
¥

9,256

¥

10,015$

77,133(Gains arising from negative goodwill)
For the year ended March 31, 2014, the Company has omitted information by segment on gains arising from negative goodwill due to thenegligible importance of such information.
For the year ended March 31, 2015, the Company has not presented information by segment on gains from negative goodwill due to no
occurrence.

- 29 -

14. Condensed Financial Statements of Japan Transcity Corporation (Parent)
Presented below are the condensed nonconsolidated balance sheets, nonconsolidated statements ofincome and changes in net assets of Japan Transcity Corporation, the parent company.
Nonconsolidated Balance Sheets (Unaudited)Japan Transcity Corporation (Parent)

Thousands of
U.S. dollars
2015

Millions of yen
2015
2014
Current assets:
Cash and cash equivalents
Short-term investments
Trade receivables, net of allowance for
doubtful accounts
Inventories
Deferred tax assets
Other current assets
Total current assets
Property and equipment, at costLess accumulated depreciation
Net property and equipment
Investments and other assets:
Investment securities
Investments in and long-term loans to
subsidiaries and affiliates
Prepaid pension cost
Lease deposits
Other assets
Allowance for doubtful accounts
Total investments and other assets
Total assets¥¥- 30 -

9,407¥

10,5955

478,391
42

12,54017
221
1,845
24,03579,905(37,322)42,583

12,66917
184
1,806
25,275
77,972(35,922)42,050104,500
142
1,842
15,375200,292
665,875(311,017)
354,858

7,317

5,738

60,975

4,867
3,805
418
1,386

4,489
3,162
421
1,538

(1,092)
16,701
83,319(932)
14,416
81,741

40,55931,7083,483
11,550(9,100)139,175
694,325¥$$

Thousands of
U.S. dollars

Millions of yen
2015
Current liabilities:
Short-term borrowings
Current maturities of long-term debt
Trade payables
Accrued expenses
Income taxes payable
Other current liabilities
Total current liabilities
Long-term liabilities:
Long-term debt
Employee retirement benefit liability
Deferred tax liabilities for revaluation
Provision for loss on business of subsidiaries
and associates
Deferred tax liabilities
Other long-term liabilities
Total long-term liabilities
Total liabilities

¥

8,423
7,950
6,428
799
182
1,302
25,084

2014

¥

8,317
1,094
6,158
759
565
2,585
19,478

2015$

70,191
66,25053,567
6,658
1,517
10,850209,033

13,075503
2,235

19,925507
1,683

108,958
4,192
18,625

1,717
4,118
473
22,121
47,205

1,877
4,545
557
29,094
48,572

14,30834,317
3,942
184,342
393,375

8,428
6,733
20,925(1,107)
34,9798,428
6,733
19,492(1,104)33,54970,233
56,109174,375(9,225)
291,492

Net unrealized gains on available-for-salesecurities

2,210

1,123

18,416

Land revaluation decrement(1,075)(1,503)(8,958)1,135
36,114
83,319(380)
33,16981,7419,458
300,950
694,325

Net assets:
Shareholder’s equity:
Common stock
Capital surplus
Retained earnings
Less treasury stock, at cost
Total shareholders' equity
Accumulated losses from valuation
adjustment:

Total accumulated losses fromvaluation adjustment
Total net assets
Total liabilities and net assets¥- 31 -¥$

Nonconsolidated Statements of Income (Unaudited)Japan Transcity Corporation (Parent)
For the Years Ended March 31, 2015 and 2014¥

Operating revenue
Operating costs and expenses
Operating income
Other income (expenses):
Interest and dividend income
Interest expenses
Provision for loss on business of subsidiaries
and associates
Miscellaneous, net
Income before income taxes
Income taxes:
Current
Deferred
Total income taxes
Net income¥

Millions of yen
2015
2014

Thousands of
U.S. dollars
2015

81,363$¥

81,336

79,472
1,891

78,713
2,623

662,267
15,758

756
(221)

592
(241)

6,300
(1,842)

238
773
2,664

(1,877)(52)(1,578)
1,045

1,984
6,442
22,200

639
64
703

940
207
1,147

5,325
533
5,858

1,961

¥

(102)

Yen
Per share:
Net income:-BasicCash dividends¥- 32 -

678,025

30.48
9.50

¥

$

16,342

U.S. dollars(1.58)
9.00$(0.25)
0.08

Nonconsolidated Statements of Changes in Net Assets (Unaudited)Japan Transcity Corporation (Parent)
For the Years Ended March 31, 2015 and 2014

Shareholders’ equity

Common stock

Balance at April 1, 2013
Net income for the year
Cash dividends
Purchase of treasury stock and fractional shares, net
Reversal of land revaluation decrement
Net changes other than shareholders’ equity
Balance at March 31, 2014
Cumulative effects of changes in accounting policies
Restated balance
Net income for the year
Cash dividends
Purchase of treasury stock and fractional shares, net
Net changes other than shareholders’ equity
Balance at March 31, 2015

¥

¥

8,428
8,428

¥

8,428
8,428

¥

¥

6,733
6,733

¥

6,733
6,733

Total
shareholders’
Treasury stock
equityMillions of yen

Retained
Earnings

Capital surplus

¥

¥

¥

20,037
(102)
(579)
136
19,49251
19,543
1,961(579)
20,925

Accumulated (losses) gains from valuation adjustment
Total
Net unrealized
accumulated
gains onLand
losses fromavailable-forrevaluation
valuation
sale securities
decrement
adjustment¥¥(1,100)(4)(1,104)¥(1,104)(3)(1,107)¥¥¥34,098
(102)
(579)
(4)
136
33,54951
33,600
1,961
(579)
(3)
34,979

¥

¥

873
250
1,123

¥

¥

(1,367)(136)(1,503)

¥

1,123
1,087
2,210

$

9,358

¥

Total
net assets

¥

(494)
114
(380)

¥

¥

(1,503)428(1,075)

¥

(380)
1,515
1,135

¥

$

(12,525)$(3,167)$$(12,525)
3,567(8,958)$(3,167)
12,6259,458$¥

33,604
(102)
(579)
(4)
136
114
33,16951
33,220
1,961
(579)
(3)
1,515
36,114

Thousands of U.S. dollars
Balance at March 31, 2014
Cumulative effects of changes in accounting policies
Restated balance
Net income for the year
Cash dividends
Purchase of treasury stock and fractional shares, net
Net changes other than shareholders’ equity
Balance at March 31, 2015$

70,233$70,23370,233$

56,109$56,10956,109$$162,433
425
162,858
16,342(4,825)
174,375$(9,200)$(9,200)(25)(9,225)- 33 -$$

279,575425
280,000
16,342(4,825)(25)
291,492

9,358
-

$

9,058
18,416

276,408
425
276,833
16,342(4,825)(25)
12,625300,950