Japan Transcity Corporation
Consolidated Financial Statements
March 31, 2018 and 2017

Japan Transcity Corporation and Consolidated Subsidiaries
Consolidated Balance Sheets
March 31, 2018 and 2017

Millions of yen
2018
2017
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 (Note 3)
Employee retirement benefit asset (Note 6)
Deferred tax assets (Note 10)
Other assets
Allowance for doubtful accounts
Total investments and other assets

Total assets

-2-

9,526
760

¥

10,746
521

Thousands of
U.S. dollars
2018$

89,868
7,170

14,970(28)
14,94289
369
3,288
28,97413,014(17)
12,997
102
184
2,487
27,037141,226(264)
140,962840
3,481
31,019273,340

32,42072,967
14,654
7,561
174
127,776(57,386)
70,39032,52854,766
13,068
7,123
12,661
120,146(55,270)
64,876

305,849
688,368
138,245
71,3301,642
1,205,434(541,377)
664,057

8,741

8,103

82,462

6,699
3,495
591
2,346
(19)
21,853

6,452
3,090
578
2,724
(22)
20,92563,19832,972
5,575
22,132(179)
206,160¥ 121,217¥ 112,838$

1,143,557

Millions of yen
2018
2017
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
Deferred tax liabilities (Note 10)
Other current liabilities (Note 5)
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)
Other long-term liabilities (Note 5)
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: 3,030,650 shares in2018 and 3,235,740 shares in 2017
Total shareholders’ equity
Accumulated other comprehensive income:Net unrealized gains on available-for-salesecurities
Land revaluation decrement
Foreign currency translation adjustments
Retirement benefit adjustment (Note 6)
Total accumulated othercomprehensive income
Noncontrolling interests
Total net assets
Total liabilities and net assets

2,361
4,757
8,907
1,810
217
2,632
20,684

2,390
800
8,407
1,681
1,212
182
6,260
20,932$

22,27444,87784,02817,076
2,047
24,830
195,132

29,403
1,980
2,655
3,773
2,926
1,204
41,94162,625

24,798
1,910
2,824
3,775
2,277
374
35,95856,890277,387
18,67925,04735,59427,604
11,359395,670
590,802

8,428
6,764
40,341

8,428
6,753
38,84779,50963,812
380,575(1,190)54,343(1,270)52,758(11,226)
512,670

2,743(1,184)
235
547

2,325
(1,182)
25674

25,878(11,170)
2,217
5,160

2,341
1,908
58,592

1,473
1,717
55,94822,08518,000552,755¥ 121,217¥ 112,838

See accompanying Notes to Consolidated Financial Statements.

-3-¥

Thousands of
U.S. dollars
2018$

1,143,557

Japan Transcity Corporation and Consolidated Subsidiaries
Consolidated Statements of Income
For the Years Ended March 31, 2018 and 2017

Operating revenue (Note 13)¥

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

Millions of yen
2018
2017

Thousands of
U.S. dollars
2018

95,609$¥91,332

901,972

93,264
2,345

88,3522,980

879,849
22,123

403
(171)

400
(155)

3,802
(1,613)

495

397

4,669

(30)
83
780
3,125

2,000
336
2,978
5,958

(283)
783
7,358
29,481

Income taxes (Note 10):
Current
Deferred
Total income taxes

1,029
(123)
906

1,837
(64)
1,773

9,707
(1,160)8,547

Net income

2,219

4,185

20,934

135

163

1,274

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

Net income attributable to noncontrollinginterests
Net income attributable to owners of theCompany

¥

2,084

¥

4,022

$

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

¥

32.55
10.00

See accompanying Notes to Consolidated Financial Statements.

-4-¥

19,660U.S. dollars
62.85
10.00

$

0.31
0.09

Japan Transcity Corporation and Consolidated Subsidiaries
Consolidated Statements of Comprehensive Income
For the Years Ended March 31, 2018 and 2017

Millions of yen
2018
2017
Net income
Other comprehensive income (Note 11):
Net unrealized gains on available-for-salesecurities
Foreign currency translation adjustments
Retirement benefit adjustment
Share of other comprehensive income ofunconsolidated subsidiaries and affiliates
accounted for using equity method
Total other comprehensive income
Comprehensive income

Comprehensive income attributable to:
Owners of the Company
Noncontrolling interests

¥

¥

¥

2,219

4,185

$

20,934

424
47
473

924
(91)
694

4,000
444
4,462

10
954
3,173

(8)
1,519
5,704

94
9,000
29,934

2,979
194

See accompanying Notes to Consolidated Financial Statements.

-5-¥

Thousands of
U.S. dollars
2018

¥

¥

5,552
152

$

$

28,104
1,830

Japan Transcity Corporation and Consolidated Subsidiaries
Consolidated Statements of Changes in Net Assets
For the Years Ended March 31, 2018 and 2017
Shareholders' equity

Balance at April 1, 2016
Net income attributable to owners of theCompany
Cash dividends
Purchase of treasury stockand fractional shares, net
Purchase of additional shares of
consolidated subsidiaries
Reversal of land revaluation decrement
Net changes other than changes inshareholders’ equity
Balance at March 31, 2017
Net income attributable to owners of theCompany
Cash dividends
Change in scope of consolidation
Disposal of treasury stockand fractional shares, net of purchase
Purchase of additional shares of
consolidated subsidiaries
Reversal of land revaluation decrement
Net changes other than changes inshareholders’ equity
Balance at March 31, 2018

Number ofshares ofcommonstock issued

Commonstock

67,142,417¥

Capitalsurplus8,428¥

Retainedearnings

6,751¥

Accumulated other comprehensive income

Treasurystock

35,324¥(1,198)

Total
shareholders’equityNet
unrealized
gains onavailable-forsale securities¥¥

49,305Landrevaluation
decrement
Millions of yen

1,410

¥

(1,009)

Total
accumulated
other

Foreigncurrencytranslation
adjustments

Retirement
benefitadjustment

comprehensive

¥

¥

¥

332

(620)

Minority
interests

income113¥

Total net
assets

1,574¥

50,992

-

-

-

4,022
(672)

-

4,022
(672)

-

-

-

-

-

-

4,022
(672)

-

-

-

-

(72)

(72)

-

-

-

-

-

-

(72)

-

-

2
-

173

-

2
173

-

-

-

-

-

-

2
173

67,142,417

8,428

6,753

38,847(1,270)52,758

915
2,325

(173)
(1,182)

(76)
256

694
74

1,360
1,473

143
1,717

1,503
55,948

-

-

-

2,084
(640)
48

-

2,084
(640)
48

-

-

-

-

-

-

2,084
(640)
48

-

-

9

-

80

89

-

-

-

-

-

-

89

-

-

2
-

2

-

2
2

-

-

-

-

-

-

2
2

67,142,417

¥

8,428

¥

6,764

¥

40,341¥(1,190)¥54,343

¥

418
2,743

¥

(2)
(1,184)

¥

(21)
235

¥

473
547

¥

868
2,341

$

2,415

$

698

$ 13,896$ 16,198$ 527,811

¥

191
1,908

¥

1,059
58,592Thousands of U.S. dollars
Balance at March 31, 2017
Net income attributable to owners of theCompany
Cash dividends
Change in scope of consolidation
Disposal of treasury stockand fractional shares, net of purchase
Purchase of additional shares of
consolidated subsidiaries
Reversal of land revaluation decrement
Net changes other than changes inshareholders’ equity
Balance at March 31, 2018$$

79,50963,708$ 366,481$ (11,981)$ 497,717--

19,660(6,038)
453

-

-

85

-

-

19
-

79,509$$63,812

21,934$ (11,151)

19,660(6,038)
453

-

-

-

-

-

-

19,660(6,038)
453

755

840

-

-

-

-

-

-

840

19

-

19
19

-

-

-

-

-

-

19
19

$ 380,575$ (11,226)$ 512,670

3,944
25,878(19)$ (11,170)

4,462
5,160

8,189
$ 22,085

1,802$ 18,000

9,991$ 552,755

See accompanying Notes to Consolidated Financial Statements.
-6-

$

$

$

(198)
2,217

$

Japan Transcity Corporation and Consolidated Subsidiaries
Consolidated Statements of Cash Flows
For the Years Ended March 31, 2018 and 2017

Millions of yen
2018
2017
Cash flows from operating activities:
Income before income taxes
Adjustments for:
Depreciation
Net change in employee retirement benefit asset/liability
Loss (gain) on sale or disposal of property and equipment, net(Increase) decrease in trade receivables
Decrease (increase) in inventories
Increase in trade payables
Others, net
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Net cash provided by operating activities

¥

3,125

¥

5,958

Thousands of
U.S. dollars
2018$29,481

3,365
342
30
(2,045)
13
618
(970)
4,478
655
(164)
(2,075)
2,894

2,639
395
(2,000)
369
(14)
305
(1,200)
6,452
629
(155)
(1,389)5,537

31,7453,226
283(19,292)
123
5,830(9,151)
42,245
6,179(1,547)(19,575)
27,302

Cash flows from investing activities:
Increase in property and equipment and intangible assets
Decrease in property and equipment and intangible assets
Increase in short-term investments
Others, net
Net cash used in investing activities(11,795)
78
(200)
29
(11,888)(14,282)
2,362
(156)
1,511
(10,565)(111,274)
736(1,887)274(112,151)

Cash flows from financing activities:
Increase in long-term debt
Repayment of long-term debt
Decrease in short-term borrowings
Dividends paid
Others, net
Net cash (used in) provided by 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

9,800
(1,237)
(34)
(640)
(184)
7,705
(25)
(1,314)
10,746
94
9,526

8,000
(1,842)
(52)
(672)
(340)
5,094
20
86
10,66010,74692,453(11,670)(321)(6,038)(1,735)72,689(236)(12,396)
101,377887
89,868¥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 (“IFRS”).
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, 2018, which
was approximately ¥106 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, 2018 and 2017 were as follows.
2018
2017
Consolidated subsidiaries:
Domestic
25
25
Overseas87
Unconsolidated subsidiaries and affiliates accounted forusing the equity method
99Unconsolidated subsidiaries stated at cost
1010
Affiliates stated at cost
6
4

-8-

All intercompany accounts and transactions have been eliminated on consolidation.
The accompanying consolidated financial statements include the accounts of overseas consolidated
subsidiaries (eight subsidiaries in 2018 and seven subsidiaries in 2017). These overseas
consolidated subsidiaries close their books at December 31, which is three months earlier than theclosing of the books of the Company and its domestic consolidated subsidiaries. The Company
consolidated its overseas subsidiaries’ financial statements as of their year-end date. Significant
transactions for the period between the subsidiaries’ year-end date and the Company’s year-end
date have been adjusted 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 four 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
For the consolidation purposes of the Company, the accounts of the Company’s overseas
consolidated subsidiaries have been prepared in accordance with either International Financial
Reporting Standards or U.S. generally accepted accounting principles, with adjustments having
been made for the four items specified above as needed.

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

(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 and losses on these securities, net of applicable income taxes, are reported
as accumulated other comprehensive income. Gains and losses on the disposition ofavailable-for-sale securities are computed based on the moving average method. Nonmarketableavailable-for-sale securities without available market quotations are carried at cost determined by
the moving average method. Adjustments in the carrying values of individual securities arecharged to income 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 and 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. Inventories are stated at the lower of cost, determinedby the moving average method, or net realizable value.
(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 anddepreciated using straight-line method over the estimated useful life of the asset. Expenditures onmaintenance 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 at March 31, 2018and 2017 were as follows.
Thousands ofMillions of yen
U.S. dollars
2018
2017
2018
Building
¥
100 ¥
100 $
943
Land
100
943
(h) Accounting for leases
Assets of finance leases that transfer ownership of the leased property to the lessee are depreciatedusing the same method for nonlease property. Assets of finance leases that do not transfer
ownership of the leased property to the lessee are capitalized and depreciated over the lease termusing 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, entitled the “Guidance on Accounting Standard for Lease Transactions.” Theaccounting standard requires that all finance lease transactions be treated as capital leases. As
permitted, finance leases which do not transfer ownership of leased property to the lessee thatcommenced prior to April 1, 2008 and have been accounted for as operating leases continue to beaccounted for as such provided that certain “as if capitalized” information has been disclosed.

- 10 -

(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 theasset may not be recoverable. Impairment loss is to be recognized in the income statement by
reducing the carrying amount of the impaired asset or group of assets to the recoverable amount,measured at the higher of net selling price or value in use. Fixed assets include intangible assets
as well as land, buildings and other forms of property and are to be grouped at the lowest level forwhich there are identifiable cash flows separate from those of other groups of assets. For the
purpose of recognition and measurement of impairment loss, fixed assets other than idle or unused
property are grouped principally into cash generating units such as regional business divisions.
While no impairment loss was recorded for the year ended March 2017, the Japan Transcity Group
recognized impairment loss for the following idle properties for the year ended March 31, 2018.

Millions of yen
Buildings and structures
Land

¥
¥

44
7
51

Thousands of
U.S. dollars
$
$

415
66
481

(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 a land revaluation
decrement account included in accumulated other comprehensive income in the accompanying
consolidated balance sheets. At March 31, 2018 and 2017, the differences in the carrying valueof land used for the Company’s business after reassessment over the current market value at the
fiscal year-end amounted to ¥8,931 million ($84,255 thousand) and ¥9,033 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. In
calculating retirement benefit obligations, the Company has adopted the benefit formula basis as
the method for attributing the expected retirement benefits to accounting periods. Someconsolidated subsidiaries provide accrued retirement benefits for their employees mainly at theamounts of the projected benefit obligations calculated using the simplified method as permitted
by the accounting standard for retirement benefits.
Actuarial differences arising from changes in the retirement benefit obligation or pension plan

- 11 -

assets not anticipated under previous assumptions or from changes in the assumptions themselvesthat are yet to be recognized are amortized on a straight-line basis over ten years, a period notexceeding the average remaining service period of employees, from the year following the year inwhich they arise. Past service costs that are yet to be recognized are amortized on a straight-line
basis over ten years, a period not exceeding the average remaining service period of the employees,
from the year in which such costs arise. Actuarial differences and past service costs that are yet tobe recognized in profit or loss have been recognized as retirement benefit adjustment under acomponent of accumulated other comprehensive income within the net assets section, after
adjusting for tax effects, and the difference between retirement benefit obligations and plan assets
has been recognized as employee retirement benefit liability or asset, without any adjustments, inthe accompanying consolidated balance sheets.
(l) 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
and losses are included in current earnings.
For financial statement items of overseas consolidated subsidiaries, all asset and liability 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 currency translation
adjustments under a component of accumulated other comprehensive income and noncontrollinginterests in the accompanying consolidated balance sheets.
(m) Income taxes
Income taxes are accounted for under the asset-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
carryforwards. 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 enactment date.
The Company and its domestic consolidated subsidiaries adopted “Revised Implementation
Guidance on Recoverability of Deferred Tax Assets” (ASBJ Guidance No. 26, March 28, 2016)
from the year ended March 31, 2017.
(n) 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 andincludes such taxes in operating costs and expenses.
(o) 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.
(p) 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. Cash

- 12 -

dividends 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, 2018 or 2017 due to the lack of any dilutive
shares.
(q) Accounting standards and guidance not yet adopted
The following standard and guidance have been issued but not yet adopted.
・Accounting Standard on Revenue Recognition (Corporate Accounting Standards No. 29, March
30, 2018 Accounting Standards Board of Japan)
・ Implementation Guidelines on Accounting Standard on Revenue Recognition (Corporate
Accounting Standards Application Guideline No.30, March 30, 2018 Accounting Standards
Board of Japan)① Overview
The International Accounting Standards Board (IASB) and US Financial AccountingStandards Board (FASB) co-developed a new comprehensive revenue recognition standard
and published “Revenue from Contracts with Customers” in May 2014 (IFRS No. 15 in IASB,
Topic 606 in FASB). Considering IFRS No. 15 will be applied from the fiscal year starting
January 1, 2018 and Topic 606 from the fiscal year starting December 15, 2017, the
Accounting Standards Board of Japan developed comprehensive Accounting Standards on
Revenue Recognition and published them together with implementation guidelines.
In developing the Accounting Standards on Revenue Recognition, the Accounting Standards
Board of Japan decided to incorporate the fundamental policy of IFRS No. 15 as the starting
point from the perspective of comparability of financial statements, achieving consistency
with IFRS No. 15. If matters arise in actual practice in Japan that require alternative handling,treatment will be added within a range that will not impair financial statement comparability.
② Planned date of application
We are planning to apply the Accounting Standards on Revenue Recognition from the
beginning of the fiscal year ending in March 2022.
③ Impact of application on these accounting standards, etc.
We are currently assessing the impact the Accounting Standards on Revenue Recognition will
have on the consolidated financial statements.

- 13 -

3. Fair Values of Financial Instruments(a) Qualitative information on financial instruments:① Policies for using financial instruments
The Company limits the use of excess funds to short-term deposits and raises funds
through bank loans and bond issuances. Derivative instruments are mainly used tohedge against variable interest rate risk and to compensate loss when an earthquake
occurs and are not used for speculative purposes.
② Details of financial instruments, risks and risk management system
Trade notes and accounts receivable carry credit risk of the company’s trading partners.
In response to such risk and pursuant to internal regulations of the Company, the due
dates and balances of such receivables are managed for each counterparty, and the credit
risks of the Company’s main trading partners are identified every half year.
Although investments in securities are exposed to market price fluctuation risk, theCompany stays abreast of the fair values of the shares of companies with which theCompany has business relationships on a regular basis.
Trade notes and accounts payable are due within one year.
Loans payable and short-term borrowings are mainly used to raise capital for operational
dealings, and long-term debt is used to 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 in the normal course of business to reduce its exposure tofluctuations in interest rates. Evaluating hedge effectiveness 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 its cash management systems, which control the funds 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 of the derivatives themselves.
(b) Fair values of financial instruments:
The carrying values of financial instruments included in the consolidated balance sheets andtheir fair values at March 31, 2018 and 2017 are set forth in the table below. Somefinancial instruments were excluded because it was extremely difficult to identify their fairvalues.

- 14 -

At March 31, 2018:(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, 2017:(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

¥

¥

¥
¥

¥

¥

¥
¥

¥

9,526
760
14,9708,244
33,5008,907
2,361
34,16045,428

10,746521
13,014
7,609
31,8908,407
2,390
25,59836,395Carrying value
At March 31, 2018:(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

$

$
$

$

89,8687,170
141,226
77,774
316,038
84,02822,274322,264
428,566

¥
¥

¥

¥

¥
¥

¥

9,526
760
14,9708,244
33,5008,907
2,361
34,13645,404

10,746521
13,014
7,609
31,8908,407
2,390
25,64936,446

Difference

¥

¥
¥

¥

$
$

$

89,8687,170
141,226
77,774
316,038
84,02822,274
322,038
428,340

(24)
(24)

¥

¥
¥

¥

Fair value
Thousands of U.S. dollars
$

-

51
51
Difference

$

$
$

$

(226)
(226)

Note 1. Methods used to calculate 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 tradereceivables 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 classified by the purpose forwhich they are held, see Note 4, Investments.

- 15 -

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: a derivative
relating to earthquakes, whose outstanding contract amount was ¥300 million($2,830 thousand) at both March 31, 2018 and 2017. As the fair value for thecontract was not considered determinable, the contract has not been accounted
for at fair value.
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.

Contract amount ( *1)¥
Contract amount due after one
year included in (*1)
Fair value(*1)

Millions of yen
2018
2017
2,000
¥
2,000

Thousands of
U.S. dollars
2018$18,868

2,000

2,000

18,868

(27)

(39)

(255)

Method of hedge accounting applied: exceptional treatment for interest rate swaps
Type of derivative transaction: interest rate swap (fixed rate payment, floating
rate receipt)
Hedged item: long-term debt
The fair value is measured in reference to the price obtained from the applicablefinancial institution.

Note 2. Financial instruments whose fair values could not be reliably determined:
Thousands ofMillions of yen
U.S. dollars
2018
2018
2017
Nonmarketable securities (*1) ¥
497
¥
494
$
4,688
Stocks of nonconsolidated
subsidiaries and affiliates (*1)
6,699
6,452
63,198
Guarantee deposits received (*2)
2,655
2,824
25,047
Derivative relating toearthquakes (*3)
19
17
179
(*1) It is extremely difficult to determine the fair values of nonmarketable 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,”in the table above.
(*2) It is extremely difficult to determine the fair values of guarantee deposits received
because their scheduled redemption amounts cannot be estimated.

- 16 -

(*3) During the years ended March 31, 2018 and 2017, the Company entered into a
derivative contract relating to earthquakes for hedging purposes. The outstanding
contract amount was ¥300 million ($2,830 thousand) at both March 31, 2018 and2017. As the fair value for the contract was not considered determinable, thecontract has not been accounted for at fair value.
Note 3. Scheduled redemption amounts after the fiscal year-end date for monetary claims
and securities with maturity periods:
Due in one
year or less

Cash and cash equivalents
Short-term investments
Trade receivables
Total

¥

¥

Due after
Due in one
Due after
one yearyear or lessone year
Millions of yen
2018
2017
9,526
¥
¥ 10,746¥
760
521
14,97013,01425,256¥¥ 24,281¥-

Due in one
Due after
year or lessone yearThousands of U.S. dollars
2018$ 89,868$
7,170
141,226$ 238,264$-

4. Investments
At March 31, 2018 and 2017, short-term investments consisted of time deposits with an original
maturity of more than three months.
At March 31, 2018 and 2017, investment securities consisted of the following.

Millions of yen
2018
2017
Marketable securities:
Equity securities
Other

¥

Other nonmarketable securities¥- 17 -

8,235
9
8,244
497
8,741

¥

¥

Thousands of
U.S. dollars
20187,600 $
97,609
494
8,103 $

77,68985
77,774
4,688
82,462

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 a net amountwithin net assets until realized. At March 31, 2018 and 2017, gross unrealized gains and losses
for marketable securities classified as available-for-sale securities were as follows.

Cost

Available-for-sale securities at March 31, 2018:
Equity securities
¥
4,197
Other
8
¥
4,205
Available-for-sale securities at March 31, 2017:
Equity securities
¥
4,175
Other
9
¥
4,184

Cost
Available-for-sale securities at March 31, 2018:
Equity securities$
39,594
Other
76$
39,670Gross
Gross
unrealized
unrealized
gains
lossesMillions of yen

Fair andcarrying
value

¥

(144)
(144)

¥

(149)
(149)

¥

¥

¥
¥

4,182
1
4,183

¥

3,574
3,574

¥

¥

¥

¥

¥

8,235
9
8,244

7,600
9
7,609

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

Fair andcarryingvalue$$ 77,689
85$ 77,774$

39,453
939,462$ (1,358)$ (1,358)

5. Short-term Borrowings, Long-term Debt and Collateral
At March 31, 2018 and 2017, short-term borrowings consisted of the following.
Millions of yen
2018
2017
Unsecured short-term bank loans and bankoverdrafts with interest rates ranging from
0.13% to 4.35% per annum at March 31,
2018¥2,361 ¥

Thousands of
U.S. dollars
2018

2,390 $

22,274At March 31, 2018 and 2017, long-term debt consisted of the following.
Millions of yen
2018
2017
Unsecured long-term loans from banks and otherfinancial institutions due through 2027 withinterest rates ranging from 0.09% to 2.0% perannum at March 31, 2018
Less portions with current maturities¥- 18 -

34,160(4,757)
29,403¥25,598(800)
24,798

Thousands of
U.S. dollars
2018$322,264(44,877)
277,387

The aggregate amounts of long-term debt due annually at March 31, 2018 were as follows.
Millions ofyenYear ending March 31,
2019
2020
2021
2022
2023
2024 and thereafter¥Thousands of
U.S. dollars

4,757 $
7,585
5,477
2,716
6,325
7,300
34,160 $¥44,87771,556
51,67025,62359,67068,868322,264

The aggregate amounts of long-term lease obligations, which were included in other current
liabilities and other long-term liabilities, due annually at March 31, 2018 were as follows.
Millions ofyenYear ending March 31,
2019
2020
2021
2022
2023
2024 and thereafter¥¥Thousands of
U.S. dollars

134 $
75
40
22
11
8
290 $

1,264
708
377
208
104
75
2,736

At March 31, 2018 and 2017, the following assets were pledged as collateral for current andnoncurrent payables.
Thousands of
U.S. dollars
2018

Millions of yen
2018
2017
Buildings

¥

5,701

¥

-

$

53,783

Land of ¥795 million was available for pledges subject to the security of guarantee deposits
received of ¥40 million at March 31, 2017.
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 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 any deposits at the banks against indebtedness due.

- 19 -

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 defined contribution pension plans under certain pension funds organized bythird parties.
The following table reconciles the retirement benefit liability (asset) and retirement benefit costs
as at and for the years ended March 31, 2018 and 2017.
Defined benefit plans except those to which the simplified method has been applied:
Millions of yen
2018
2017
Movement in retirement benefit obligations:
Balance at beginning of the year
Service cost
Interest cost
Actuarial differences
Benefits paid
Other
Balance at end of the year

¥

¥

7,986
406
19
90
(343)
(1)
8,157

¥

¥

8,228 $
409
11
(165)
(497)
7,986 $

Millions of yen
2018
2017
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¥¥

- 20 -

10,130
103
497
253
(332)
(1)
10,650¥¥Thousands of
U.S. dollars
201875,340
3,830
179
849
(3,236)(9)76,953Thousands of
U.S. dollars
2018

9,751 $
98
492
251
(462)
10,130 $95,566
971
4,689
2,387
(3,132)(9)
100,472

Millions of yen
2018
2017
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

¥

7,200
(10,650)(3,450)957¥(2,493)¥¥975(3,468)¥(2,493)¥

7,083 $
(10,130)(3,047) $903

67,925(100,472)(32,547)
9,028(2,144) $(23,519)919(3,063)

9,198(32,717)(2,144) $(23,519)

Thousands of
U.S. dollars
2018

Millions of yen
2018
2017
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

¥

¥

406
19
(103)
288
(18)
592

¥

¥

409 $
11
(98)
355
(18)
659 $

¥
¥

(695)
18
(677)

¥
¥

(1,013) $18(995) $

Millions of yen
2018
2017
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

- 21 -

¥

(770)

¥

(13)
(783)

3,830
179
(971)
2,717
(170)
5,585

Thousands of
U.S. dollars
2018

Millions of yen
2018
2017
Retirement benefit adjustment, before taxes,
included in other comprehensive income:Actuarial differences
Past service costs
Total balance at end of the year

Thousands of
U.S. dollars
2018(6,557)170(6,387)

Thousands of
U.S. dollars
2018¥(75) $(7,264)¥(31)(106) $

(123)
(7,387)

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

2018

2017

20%
29%
5%
31%
15%
100%

16%
27%
8%
32%
17%
100%

At March 31, 2018 and 2017, assets under the retirement benefit trust set up for corporate
pension plans accounted for 27% and 26% of the total plan assets, respectively.
Both at March 31, 2018 and 2017, commingled funds consisted of bonds (66%) and equity
securities (34%).
(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, 2018 and 2017 expressed as weighted averages
2018
2017
Discount rate
0.1%
0.2%
Long-term expected rate of return
1.0%
1.0%
Defined benefit plans to which the simplified method has been applied:
Millions of yen
2018
2017
Movement in liability for retirement benefits:
Balance at beginning of the year
Retirement benefit costs
Benefits paid
Contributions paid by the employer
Other
Balance at end of the year

¥

¥

964
175
(71)
(91)
1
978

¥

¥

943 $
166
(51)
(94)
964 $

Millions of yen
2018
2017
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 benefits 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

- 22 -

2,122(1,349)
773
205

¥

978

¥

¥

1,005
(27)
¥

978

Thousands of
U.S. dollars
2018

Thousands of
U.S. dollars
2018

2,021 $
(1,265)756 $
208

20,019(12,727)
7,292
1,934

964

9,226

$

991
(27)
¥

9,094
1,651
(670)
(858)
9
9,226

964

9,481
(255)
$

9,226

Total retirement benefit costs for the fiscal years ended March 31, 2018 and 2017 based on thesimplified method were as follows:
Thousands ofMillions of yen
U.S. dollars
2018
2017
2018
¥
175
¥
166 $
1,651
Defined contribution plan:
For the years ended March 31, 2018 and 2017, the required contribution of the consolidated
subsidiaries to the defined contribution plan amounted to ¥42 million ($396 thousand) and ¥44
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 in which a dividend distribution of surplus is made, the smallerof 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, 2018 and 2017, 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 ($11,321 thousand) at both March 31, 2018 and 2017.
The maximum amount that the Company can distribute as dividends is calculated based on thenonconsolidated financial statements of the Company in accordance with Japanese laws andregulations.
During the year ended March 31, 2018, the Company paid interim dividends of ¥5.0 per shareamounting to ¥321 million ($3,028 thousand). In addition, at the annual shareholders’ meeting
held on June 28, 2018, the shareholders approved cash dividends of ¥5.0 per share amounting to¥321 million ($3,028 thousand). These appropriations have not yet been accrued in the
consolidated financial statements as of March 31, 2018 as such appropriations are recognized in
the period in which they are approved by the shareholders.

8. Contingent Liabilities
At March 31, 2018 and 2017, the Japan Transcity Group was contingently liable for reserved
guarantees of indebtedness of a certain unconsolidated subsidiary in the amounts of ¥172 million($1,623 thousand) and ¥199 million, respectively.

- 23 -

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 and noncancelable operating lease agreements.
The Japan Transcity Group also leases computer equipment, other equipment and vehicles underleases which are generally noncancelable.
For the years ended March 31, 2018 and 2017, lease expenses under noncancelable leaseagreements which were categorized as finance leases entered into before March 31, 2008
amounted to ¥82 million ($774 thousand) and ¥117 million, respectively .
The aggregate future minimum payments for noncancelable operating leases and finance leases,
including imputed interest, at March 31, 2018 and 2017 were as follows.

Millions of yen
2018
2017
Operating leases:
Due within one year
Due after one year¥$

11,085
12,481
23,566

Finance leases which were entered into before March 31, 2008 and not capitalized:
Due within one year
¥
- ¥
82 $
Due after one year
¥
- ¥
82 $

-

¥

- 24 -

1,175
1,323
2,498

¥
¥

1,121
1,168
2,289

Thousands of
U.S. dollars
2018$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, 2018 and 2017 were as follows.
Thousands ofMillions of yen
U.S. dollars
2018
2017
2018
Deferred tax assets:
Enterprise tax accruals
¥
28 ¥
77 $
264
Accrued bonuses to employees
334
330
3,151
Employee retirement benefit liability
333
333
3,141
Intercompany capital gains
243
240
2,292
Net operating loss carryforwards
290
301
2,736
Impairment loss on fixed assets
1,196
1,184
11,283
Others
469
433
4,425
2,893
2,898
27,292Less valuation allowance(1,588)(1,584)(14,981)Deferred tax assets
1,305
1,314
12,311
Deferred tax liabilities:
Employee retirement benefit asset
Deferred capital gain
Unrealized gains on available-for-salesecurities
OthersDeferred tax liabilities
Net deferred tax liabilities¥(89)(1,291)(1,331)(840)(12,179)(1,236)(655)(3,271)(1,966)(1,046)(634)(3,011)(1,697)(11,661)(6,179)(30,859)(18,548)¥$

At March 31, 2018 and 2017, deferred tax assets and liabilities were as follows.

Millions of yen
2018
2017
Deferred tax assets:
Current
Noncurrent
Deferred tax liabilities:
Current
Noncurrent

Thousands of
U.S. dollars
2018

¥

369
591

¥

184
578

$

3,481
5,575

¥

2,926

¥

182
2,277

$

27,604In 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, 2018 and 2017, avaluation allowance was provided to reduce the deferred tax assets to amounts management
believed would be realizable.
Reconciliation of the difference between the Japanese statutory tax rate and the effective income
tax rate on pretax income reflected in the accompanying consolidated statements of income for theyears ended March 31, 2018 and 2017 were not disclosed because the differences were immaterial.

- 25 -

11. Comprehensive Income
The amounts reclassified to profit (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, 2018 and 2017 were as follows.

Millions of yen
2018
2017
Net unrealized gains on available-for-sale securities:
Increase during the year¥
Reclassification adjustments to profit or loss
Subtotal, before tax
Tax (expense)
Subtotal, net of tax
Foreign currency translation adjustments:
Increase (decrease) during the year
Retirement benefit adjustment:
Increase during the year
Reclassification adjustments to profit or loss
Subtotal, before tax
Tax (expense)
Subtotal, net of tax
Share of other comprehensive income ofunconsolidated subsidiaries and affiliates
accounted for using equity method:
Increase (decrease) during the year
Total other comprehensive income¥- 26 -

613
613
(189)
424

1,420 $
(86)
1,334
(410)
924

5,783
5,783
(1,783)
4,000

47

(91)

444

407
270
677
(204)
473

658
337
995
(301)
694

3,840
2,547
6,387
(1,925)4,462(8)1,519 $

94
9,000

10
954

¥

Thousands of
U.S. dollars
2018¥12. Related Party Transaction
ASBJ Statement No. 11, “Accounting Standard for Related Party Disclosures”, and ASBJ
Guidance No. 13, “Guidance on Accounting Standard for Related Party Disclosures”, both issued
by ASBJ on October 17, 2006, require certain additional related party disclosures. Pursuant to
the Statement and Guidance, information on a material affiliate, Chubu Coal Center Co., Ltd., hasbeen disclosed for the year ended March 31, 2018 as follows:
Millions ofyen
Total current assets
Total fixed assets¥

Total current liabilities
Total fixed liabilities
Total net assets

844
8,942

Thousands of
U.S. dollars
$

1,324
280
8,182

Operating revenue
Income before income taxes
Net income¥- 27 -

3,445
1,120
778

7,962
84,35912,491
2,641
77,189$32,50010,5667,340

13. 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 and examined regularly by the Board of Directors to evaluate business performance. The
Japan Transcity Group provides mainly integrated logistics services that consist of warehousing, coastal shipping, trucking and international multimodal transportation. Therefore, the Japan Transcity Group’s reported segment
is “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 market price.
3. Information about reportable segment profit, segment assets and other material items
Information by segment as at or for the years ended March 31, 2018 and 2017 is as follows.

Integrated
Logistics Services
For the year ended March 31, 2018:
Operating revenue:
External customers
Intersegment sales
Total operating revenue
Operating income
Identifiable assets
Depreciation
Investments in unconsolidated subsidiaries andaffiliates accounted for using the equity
methodCapital expenditures
Impairment loss on fixed assets
Amortization of goodwill
Balance of goodwill
For the year ended March 31, 2017:
Operating revenue:
External customers
Intersegment sales
Total operating revenue
Operating income
Identifiable assets
Depreciation
Investments in unconsolidated subsidiaries andaffiliates accounted for using the equity
methodCapital expenditures
Impairment loss on fixed assets
Amortization of goodwill
Balance of goodwill¥¥¥

Others

94,51326
94,5392,218¥

121,066
3,300

¥

¥

6,386
8,878
51
14
14

¥

¥
¥

1,096
2,179
3,275
179

¥

2,516
65

¥

¥

50
-

90,187
28
90,2152,853¥

112,290
2,569

¥

6,136
16,977
14
28

Total
Millions of yen¥

Consolidated

95,6092,205
97,814
2,397¥(2,205)(2,205)(52)¥

123,5823,365¥(2,365)
-

¥

¥

6,386
8,928
51
14
14

1,145
1,662
2,807
198

¥

2,077
70

¥

94
-

Adjustment¥-

91,332
1,690
93,022
3,051¥

114,367
2,639

¥

6,136
17,0711428- 28 -¥¥

121,217
3,365

6,386
8,928
51
14
14

(1,690)(1,690)(71)¥(1,529)-¥-95,60995,6092,345¥

91,332
91,332
2,980
112,838
2,639

6,136
17,07114
28

Integrated
Logistics Services
For the year ended March 31, 2018:
Operating revenue:
External customers
Intersegment sales
Total operating revenue
Operating income$$

Identifiable assets
Depreciation
Investments in unconsolidated subsidiaries andaffiliates accounted for using the equity
methodCapital expenditures
Impairment loss on fixed assets
Amortization of goodwill
Balance of goodwill$

Others
Total
Thousands of U.S. dollars

891,632
246
891,878
20,925$

1,142,132
31,132$$60,24583,755481
132
132

10,34020,55630,896
1,688$

23,736
613

$

$

471
-

Adjustment

901,972
20,802922,774
22,613$

1,165,868
31,745$$

Consolidated- $(20,802)(20,802)(490) $

901,972
901,972
22,123(22,311) $-1,143,557
31,74560,24584,226
481
132
132

-

60,24584,226481
132
132(Related information)
1. Information about products and services
Coastalshipping

Warehousing
Operating revenue to external customers:
For the year ended March 31, 2018
For the year ended March 31, 2017¥

37,377
34,790¥

Trucking
Millions of yen

20,931
19,813¥

18,396
17,814

International
multimodaltransportation

¥

Total

17,80917,770¥94,51390,187

168,010$

891,632

Thousands of U.S. dollars
Operating revenue to external customers:
For the year ended March 31, 2018$352,613$

197,462$

173,547$

2. Information about geographic areas(1) Operating revenue
The information about geographic areas for the years ended March 31, 2018 and 2017 is as follows.
Thousands of
U.S. Dollars
2018

Millions of Yen
2018
2017
Operating revenue:
Japan
Other

¥
¥

85,702
9,907
95,609¥¥81,219
10,113
91,332$$808,51093,462
901,972(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.

- 29 -

3. Information about major customers
Information on operating revenue from major customers for the year ended March 31, 2018 is as follows.
Customer’s name

Relevant reportable segment

Aeon Global SCM Co., Ltd.

Integrated logistics services

Thousands of
U.S. Dollars

Millions of Yen
¥

9,634

$

90,887For the year ended March 31, 2017, the Company has omitted the disclosure of information about major customers because no customer had contributed 10% or more to operating revenue in the consolidated statements ofincome.

- 30 -

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)

Millions of yen
2018
2017
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
Other assets
Allowance for doubtful accounts
Total investments and other assets
Total assets

¥

6,932
200
7
13,84821
194
2,296
23,29896,194(40,483)
55,711
7,880
5,427
2,505
2,189

¥

- 31 -(1,334)
16,667
95,676

¥

7,667
200
6

3
11,927
12,048
17
16
1921,464
1,556
21,836200
21,17391,615
5(39,060)
12,54017
52,555
221
1,845
7,366
24,03579,905
5,106(37,322)
2,712
42,58310,59
2,266
5
200
(1,239)16,211¥89,939Thousands of
U.S. dollars
2018$65,39666
130,642198
1,830
21,660219,792
907,491(381,915)
525,576
74,340$51,19823,632
20,651(12,585)
157,236
902,604

Thousands of
U.S. dollars

Millions of yen
2018
Current liabilities:
Short-term borrowings
Current maturities of long-term debt
Trade payables
Accrued expenses
Income taxes payable
Other current liabilities
Deferred tax 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
Deferred tax liabilities
Other long-term liabilities
Total long-term liabilities
Total liabilities¥

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

9,003
3,715
6,781
874
50
1,639

2017

22,062

8,121
540
6,541
822
1,052
1,918
182
19,176

23,582
780
3,773
1,469
2,307
319
32,23054,292

22,485
660
3,775
1,567
1,899
279
30,66549,841

222,472
7,359
35,594
13,85921,764
3,009
304,057
512,189

8,428
6,742
26,078(1,190)40,058

8,428
6,733
25,227( (1,270)
39,11879,50963,604
246,019(11,226)
377,906

Accumulated gains (losses) from valuation
adjustment:

¥

2018

9
4
1
)

$

84,93435,047
63,972
8,245
472
15,462
208,132

Net unrealized gains on available-for-salesecurities

2,510

2,162

23,679Land revaluation decrement(1,184)(1,182)(11,170)

1,326
41,384
95,676980
40,09889,93912,509390,415902,604

Total accumulated gains from valuation
adjustment
Total net assets
Total liabilities and net assets¥- 32 -¥$

Nonconsolidated Statements of Income
Japan Transcity Corporation (Parent)
For the Years Ended March 31, 2018 and 2017¥

Operating revenue
Operating costs and expenses
Operating income
Other income (expenses):
Interest and dividend income
Interest expenses(Loss) gain on sale or disposal of property andequipment, net
Miscellaneous, net
Income before income taxes
Income taxes:
Current
Deferred
Total income taxes
Net income¥

Millions of yen
2018
2017

Thousands of
U.S. dollars
2018

83,457$¥

79,073

81,933
1,524

77,278
1,795

772,953
14,377

704
(140)

687
(132)

6,642
(1,321)

(55)
73
582
2,106

1,938
362
2,855
4,650

(519)
689
5,491
19,868

738
(121)
617

1,392
(41)
1,351

6,963
(1,142)
5,821

1,489

¥

3,299

Yen
Per share:
Net income
Cash dividends¥- 33 -

787,330

23.26
10.00

¥

$

14,047

U.S. dollars
51.56
10.00

$

0.22
0.09

Nonconsolidated Statements of Changes in Net Assets
Japan Transcity Corporation (Parent)
For the Years Ended March 31, 2018 and 2017

Shareholders’ equity

Common stock

Balance at April 1, 2016
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, 2017
Net income for the year
Cash dividends
Disposal of treasury stock and fractional shares, net ofpurchase
Reversal of land revaluation decrement
Net changes other than shareholders’ equity
Balance at March 31, 2018

¥

¥

¥

8,428
8,428
8,428

¥

¥

¥

6,733
6,733
9
6,742

Total
shareholders’
Treasury stock
equityMillions of yen

Retainedearnings

Capital surplus

¥

¥

¥

22,427
3,299
(672)
173
25,227
1,489
(640)
2
26,078

Accumulated gains (losses) from valuation adjustment
Total
Net unrealized
accumulated
gains onLand
gains fromavailable-forrevaluation
valuation
sale securities
decrement
adjustment

¥

¥

¥

(1,198)(72)(1,270)80(1,190)¥¥¥36,390
3,299
(672)
(72)
173
39,118
1,489
(640)
89
2
40,058

¥

¥

¥

1,368
794
2,162
348
2,510

¥

¥

¥

(1,009)(173)(1,182)(2)(1,184)

¥

¥

¥

359
621
980
346
1,326

Total
net assets

¥

¥

¥

36,749
3,299
(672)
(72)
173
621
40,098
1,489
(640)
89
2
346
41,384

Thousands of U.S. dollars
Balance at March 31, 2017
Net income for the year
Cash dividends
Disposal of treasury stock and fractional shares, net ofpurchase
Reversal of land revaluation decrement
Net changes other than shareholders’ equity
Balance at March 31, 2018$$

79,50979,509$$63,51985
63,604$$

237,991
14,047(6,038)19
246,019$$- 34 -(11,981)755(11,226)$$

369,038
14,047(6,038)840
19377,906$$

20,396
3,283
23,679$$(11,151)(19)(11,170)

$

$

9,245
3,264
12,509$$378,283
14,047(6,038)
840
19
3,264
390,415