Japan Transcity Corporation
Consolidated Financial Statements
March 31, 2013 and 2012

KPMG AZSA LLC© 2013 KPMG AZSA LLC, a limited liability audit corporation incorporated under the Japanese Certified Public
Accountants Law and a member firm of the KPMG network of independent member firms affiliated with KPMGInternational Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Independent Auditor’s Report
To the Board of Directors of Japan Transcity Corporation:
We have audited the accompanying consolidated financial statements of Japan Transcity Corporationand its consolidated subsidiaries, which comprise the consolidated balance sheets as at March 31, 2013
and 2012, and the consolidated income statements, statements of comprehensive income, statements ofchanges in net assets and statements of cash flows for the years then ended , and a summary ofsignificant accounting policies and other explanatory information.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial
statements in accordance with accounting principles generally accepted in Japan, and for such internal
control as management determines is necessary to enable the preparation of consolidated financial
statements that are free from material misstatements, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our
audits. We conducted our audits in accordance with auditing standards generally accepted in Japan.
Those standards require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether the consolidated financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the consolidated financial statements.The procedures selected depend on our judgement, including
the assessment of the risks of material misstatement of the consolidated financial statements, whether
due to fraud or error. In making those risk assessments, we consider internal control relevant to theentity’s preparation and fair presentation of the consolidated financial statements in order to design
audit procedures that are appropriate in the circumstances, while the objective of the financial
statement audit is not for the purpose of expressing an opinion on the effectiveness of the entity’s
internal control. An audit also includes evaluating the appropriateness of accounting policies used andthe reasonableness of accounting estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit opinion.
OpinionIn our opinion, the consolidated financial statements present fairly, in all material respects, thefinancial position of Japan Transcity Corporation. and its consolidated subsidiaries as at March 31,
2013 and 2012, and their financial performance and cash flows for the years then ended in accordancewith accounting principles generally accepted in Japan.
Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to theyear ended March 31, 2013 are presented solely for convenience. Our audit also included thetranslation of yen amounts into U.S. dollar amounts and, in our opinion, such translation has been
made on the basis described in Note 1 to the consolidated financial statements.

KPMG AZSA LLC
July 30, 2013
Nagoya, Japan

Japan Transcity Corporation and Consolidated Subsidiaries
Consolidated Balance Sheets
March 31, 2013 and 2012

Millions of yen
2013
2012
Current assets:
Cash and cash equivalents (Note 3)
Short-term investments (Notes 3, 4 and 5)¥

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

Property and equipment (Note 5):Land
Buildings and structures
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, 4 and 5)
Investments in unconsolidated subsidiaries andaffiliates
Deferred tax assets (Note 10)
Lease deposits
Other assets
Allowance for doubtful accounts
Total investments and other assets

Total assets

¥

9,875
136

10,789316$

105,053
1,447

13,832(16)
13,816
123
450
2,042
26,442

14,044(19)
14,025
131
453
2,014
27,728147,149(170)
146,979
1,309
4,787
21,723
281,298

29,65649,155
12,952
6,585
75
98,423(50,897)
47,52630,12147,605
12,392
6,561
396
97,075(49,471)
47,604315,489
522,926
137,787
70,053798
1,047,053(541,457)
505,596

5,936

4,884

63,149

5,338
658
667
4,311
(17)
16,893

4,935
665
1,022
3,409
(15)
14,90056,7877,000
7,096
45,861(181)
179,71290,861

See accompanying Notes to Consolidated Financial Statements.

-2-¥

Thousands of
U.S. dollars
2013¥

90,232$966,606

Millions of yen
2013
2012
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 debt (Notes 3 and 5)
Employee retirement benefit liability (Note 6)
Guarantee deposits received (Note 3)
Deferred tax liabilities for revaluation
Deferred tax liabilities (Note 10)
Accrued severance indemnities for directors
Other 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: 2,805,264 shares in2013 and 2,801,393 shares in 2012
Total shareholders’ equity
Accumulated other comprehensive income:Net unrealized gains on available-for-salesecurities
Land revaluation decrement
Foreign currency translation adjustment
Total accumulated othercomprehensive income
Minority interests
Total net assets
Total liabilities and net assets

¥

-3-

2,741
4,374
7,374
1,602
373
2,019
18,483

¥

2,841
7,721
7,941
1,606
842
1,987
22,938

Thousands of
U.S. dollars
2013$

29,16046,53278,447
17,042
3,968
21,479196,628

17,788
1,470
3,547
4,619
1,410
14
697
48,02815,257
1,564
3,668
4,619
871
23
629
49,569189,234
15,63837,734
49,13815,000149
7,415
510,936

8,428
6,733
28,1608,428
6,733
26,83389,65971,628299,574(1,100)42,221(1,099)40,895(11,702)449,159930(1,367)(95)

270(1,367)
(223)

9,893
(14,542)(1,010)

(532)
1,144
42,833(1,320)1,088
40,663(5,659)12,170455,670

90,861¥

90,232$966,606

Japan Transcity Corporation and Consolidated Subsidiaries
Consolidated Statements of Income
For the Years Ended March 31, 2013 and 2012

Operating revenue (Note 13)¥

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

Millions of yen
2013
2012

Thousands of
U.S. dollars
2013

84,698$¥83,449901,043

81,582
3,116

79,3504,099

867,894
33,149

465
(298)

343
(356)

4,947
(3,170)

510

556

5,426

(17)
(648)
185
197

(25)
(8)
90
600

(181)
(6,894)
1,968
2,096

3,313

4,699

35,245

Income taxes:
Current
Deferred
Total income taxes

1,133
186
1,319

1,498
135
1,633

12,053
1,979
14,032

Income before minority interests

1,994

3,066

21,213

88

65

936

Other income (expenses):
Interest and dividend income
Interest expenses
Equity in net earnings of unconsolidated
subsidiaries and affiliates
Loss on sale or disposal of property andequipment
Impairment loss on fixed assets (Note 2(i))
Others, net
Income before income taxes andminority interests

Less minority interests in net income of
consolidated subsidiaries
Net income

¥

1,906

¥

3,001

$

Yen
Per share:
Net income:-BasicCash dividends

¥

29.63
9.00

See accompanying Notes to Consolidated Financial Statements.

-4-¥

20,277

U.S. dollars

46.50
9.00

$

0.32
0.10

Japan Transcity Corporation and Consolidated Subsidiaries
Consolidated Statements of Comprehensive Income
For the Years Ended March 31, 2013 and 2012
Thousands of
U.S. dollars
2013

Millions of yen
2013
2012
Income before minority interests
Other comprehensive income:Net unrealized gains on available-for-salesecurities
Land revaluation decrement
Foreign currency translation adjustment
Share of other comprehensive income ofassociates accounted for using equity
methodTotal other comprehensive income(Note 11)Comprehensive income

Comprehensive income attributable to:
Owners of the Company
Minority interests

¥

¥

¥

1,994

3,066

$

21,213

668
181

2
658
(99)

7,106
1,925

12

(5)

128

861
2,855

2,694
161

See accompanying Notes to Consolidated Financial Statements.

-5-

¥

¥

¥

556
3,622

3,597
25

$

$

9,159
30,37228,6591,713

Japan Transcity Corporation and Consolidated Subsidiaries
Consolidated Statements of Changes in Net Assets
For the Years Ended March 31, 2013 and 2012
Shareholders' equity
Number ofshares ofcommonstock issued

Balance at April 1, 2011
Net income for the year
Cash dividends
Change of scope of equity method
Purchase of treasury stock and fractional shares, net
Net changes other than shareholders’ equity
Balance at March 31, 2012
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, 2013

67,142,417
67,142,417
67,142,417

Common
stock

¥

¥

8,428
8,428
8,428

Capitalsurplus¥¥Retainedearnings

6,734 ¥
(1)
6,733
6,733 ¥

24,339
3,001
(549)
42
26,833
1,906(579)
28,160

Accumulated other comprehensive income
Total
accumulated
Foreign
Net unrealizedothercurrencyLand
Total
gains ontranslation comprehensive
Treasury shareholders’ available-for- revaluation
incomeadjustment
stock
equitysale securities decrement
Millions of yen¥¥(1,015)(84)(1,099)(1)(1,100)¥¥38,486
3,001
(549)
42
(85)
40,895
1,906
(579)
(1)
42,221

¥

¥

267
3
270
660
930

¥

(2,024)657(1,367)(1,367)¥$ (14,542)$ (14,542)

$

¥

¥

(158)
(65)
(223)
128
(95)

¥

(2,372)
1,362(1,010)$¥Minority
interests(1,915)595(1,320)
788
(532)

¥

(14,042)
8,383(5,659)$¥Total net
assets

1,066
22
1,088
56
1,144

¥

11,574596
12,170$ 432,585
20,277(6,160)(11)8,979$ 455,670¥

37,637
3,001
(549)
42
(85)
617
40,663
1,906
(579)
(1)
844
42,833Thousands of U.S. dollars
Balance at March 31, 2012
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, 2013$$

89,65989,659$$71,62871,628$ 285,457
20,277(6,160)$ 299,574$ (11,691)(11)$ (11,702)

See accompanying Notes to Consolidated Financial Statements.

-6-$ 435,053
20,277(6,160)(11)$ 449,159

$

$

2,872
7,021
9,893

$

$

$

Japan Transcity Corporation and Consolidated Subsidiaries
Consolidated Statements of Cash Flows
For the Years Ended March 31, 2013 and 2012

Millions of yen
2013
2012
Cash flows from operating activities:
Income before income taxes and minority interests
Adjustments for:
Depreciation
Net reversal of employee retirement benefit liability
Loss on sale or disposal of property and equipment
Impairment loss on fixed assets
Decrease (Increase) in trade receivables
Decrease (Increase) in inventories(Decrease) Increase in trade payables
Increase in prepaid pension cost
Others, net
Sub-totalInterest and dividend received
Interest paid
Income taxes paid
Net cash provided by operating activities

¥

3,313

¥

4,699

Thousands of
U.S. dollars
2013$

35,245

2,638
(96)
17
648
274
8
(655)
(624)
(1,342)
4,181
604
(297)
(1,597)
2,891

2,583
(101)
25
8
(1,521)
(35)
448
(520)
(714)
4,872
432
(341)
(1,360)3,603

28,064(1,021)
181
6,894
2,915
85
(6,968)(6,639)(14,277)
44,4796,425(3,160)(16,989)
30,755

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
Others, net
Net cash used in investing activities(2,624)147
185
133(2,159)(1,940)40
116(46)(1,830)(27,915)
1,564
1,968
1,415
(22,968)

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 in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

6,900
(7,722)
(100)
(1)
(579)
(318)
(1,820)174(914)
10,789
9,875

(734)
(910)
(85)
(549)
(138)
(2,416)(25)(668)
11,457
10,78973,405(82,149)(1,064)(11)(6,160)(3,383)(19,362)
1,851(9,724)
114,777
105,053¥

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 accounts of the Company’s overseas subsidiaries are based on their accounting records
maintained in conformity with generally accepted accounting principles prevailing in therespective countries of domicile. The accompanying consolidated financial statements have been
restructured and translated into English from the consolidated financial statements of the Company
prepared in accordance with Japanese GAAP and filed with the appropriate Local Finance Bureauof 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 not required for fair presentation, has not been presented in theaccompanying 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, 2013, which
was approximately ¥94 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, 2013 and 2012 were as follows.
2013
2012
Consolidated subsidiaries:
Domestic
24
24
Overseas33
Unconsolidated subsidiaries and affiliates accounted forusing the equity method
88Unconsolidated subsidiaries stated at cost
14
14
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 (three subsidiaries in 2013 and 2012). These overseas consolidated subsidiaries close
their books at December 31, which is three months earlier than the closing of the books of theCompany or 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 foron 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” (Practical Issues Task Force (“PITF”) No. 18) generally
requires that accounting policies and procedures applied by a parent company and its subsidiaries
to similar transactions and events under similar circumstances, be unified for the preparation of theconsolidated 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 with either 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 so that their impact on net income is accounted for inaccordance with Japanese GAAP, unless such impact 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, plant andequipment 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 are reported as a component of net assets, netof applicable income taxes. Gains or losses on the disposition of available-for-sale securities arecomputed based on the moving-average method. Non-marketable available-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 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 the 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 were ¥100 million ($1,064 thousand) for the year ended March 31,2013 and 2012.
(Change in accounting policies with amendment of respective law or regulation that is notdistinguishable from change in accounting estimates)
From the year ending March 31, 2013, in accordance with the amendment of the Corporate Tax
Law of Japan, the Company and its domestic consolidated subsidiaries have changed its
depreciation method for property and equipment. Assets acquired on or after April 1, 2012 havebeen depreciated using the method prescribed in the amended Corporate Tax Law of Japan. Suchchange did not have a material effect on Operating income or Income before taxes and minority
interests.
(h) Accounting for leases
Prior to April 1, 2008, the Company and its domestic consolidated subsidiaries accounted forfinance leases which do not transfer ownership of the leased property to the lessee as operatingleases, provided they disclosed certain “as if capitalized” information in the notes to theconsolidated financial statements.
On March 31, 2007, the Accounting Standards Board of Japan (“ASBJ”) issued Statement No. 13,
entitled the “Accounting Standard for Lease Transactions”, and Guidance No. 16, entitled the“Guidance on Accounting Standard for Lease Transactions”. The new accounting standard
requires that all finance lease transactions be treated as capital leases. Assets of finance leases are
depreciated over the lease term using the straight-line method with the assumption that the residual
value (or guaranteed residual value when set by agreement) be zero. As permitted, finance leases
which commenced prior to April 1, 2008 and have been accounted for as operating leases continue
to be accounted for as such provided that certain “as if capitalized” information thereof have 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 such
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 and the like. With respect to a certain golf club, the recoverable amount wasmeasured based on the value in use calculated using discounted future cash flows by an interest
rate of 3.67 %. For the year ended March 31, 2013, the Japan Transcity Group recognizedimpairment loss as follows.
Millions of
Yen
Buildings and structures
Land

¥
¥

199
449
648

Thousands of
U.S. Dollars
$
$

2,117
4,777
6,894

The impairment loss for the year ended March 31, 2012 was not disclosed because its amount was
immaterial.
(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 effect and minority interests’ portions, wasrecorded as a component of the net assets under land revaluation decrement account in theaccompanying consolidated balance sheets. At March 31, 2013 and 2012, the differences
between the carrying value of land used for the Company’s business after reassessment and thecurrent market value at the fiscal year-end amounted to ¥8,842 million ($94,064 thousand) and¥8,616 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 projected benefit obligation using the actuarial appraisal
approach and the value of pension plan assets available for benefits at the fiscal year-end.
Unrecognized actuarial differences arising from changes in the projected benefit obligation or
pension plan assets not anticipated under previous assumptions or from changes in the assumptions- 11 -

themselves are amortized on a straight-line basis over ten years, a period within the remaining
service years of the employees, measured from the year after such differences arise.
Unrecognized prior service cost is amortized using the straight-line method over ten years,
measured from the year in which such cost arises.
(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 enactment date.
(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
Basic net income per share is computed by dividing income available to common shareholders by
the weighted-average number of shares of common stock outstanding during the fiscal year.
Unless there exist anti-dilutive effects, diluted net income per share is computed assuming thatconvertible bonds were converted at the time of issue. Cash dividends per share for each fiscal
year in the accompanying consolidated statements of income represent dividends declared by theCompany as applicable to the respective years. Diluted net income per share was not presented
as of March 31, 2013 or 2012 due to the lack of any dilutive shares.

- 12 -

(r) Accounting Standard for Accounting Changes and Error Corrections(Additional information)
The Company and its consolidated domestic subsidiaries adopted the “Accounting Standard for Accounting
Changes and Error Corrections” (ASBJ Statement No.24 issued on December 4, 2009) and “Guidance on
Accounting Standard for Accounting Changes and Error Corrections” (ASBJ Guidance No. 24, issued on
December 4, 2009) for accounting changes and corrections of prior period errors made from the fiscal year
beginning on April 1, 2011.

(s) Yet to be applied accounting standard
The following standard and guidance have been issued but not yet adopted under theaccompanying consolidated financial statements.
ASBJ issued ASBJ statement No.26, entitled the “Accounting Standard for Retirement Benefits”,
and ASBJ Guidance No.25, entitled the “Guidance on Accounting Standard for Retirement
Benefit”, on May 17, 2012, which replaced the previous standard and related practical guidance on
the same matter. The revised standard amends the treatment of unrecognized actuarial
differences and prior service costs and the determination of retirement benefit obligations andcurrent service costs and enhances disclosures from the viewpoint of improvements to financial
reporting and international convergence. The revised standard will become partially effectivefrom the end of the fiscal year beginning April 1, 2014. The Company is currently in the processof assessing the impact of the revised standard on the consolidated financial statements.
3.

Fair values of financial instruments(a) Qualitative information on financial instruments① Policies for using financial instruments
The capital operation of the Company is limited to short-term deposits, and the Company
raises capital 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.
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 capital of the Japan Transcity
Group as a whole.

- 13 -

③ Supplemental information on fair values
The marketable prices of contract amounts of derivative instruments under note 3 (Fair
Values of Financial Instruments) have not been presented.
(b) Fair values of financial instruments
The book values of financial instruments included in the consolidated balance sheet and theirfair values at March 31, 2013 and 2012 were as follows. Some financial instruments were
excluded because it was extremely difficult to identify their fair values.
Consolidatedbalance sheet
amounts
At March 31, 2013:(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, 2012:(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

¥

9,875
136
13,832
5,469
29,3127,374
2,741
22,16232,277¥¥¥¥

10,789316
14,044
4,269
29,418
7,941
2,841
22,97833,760¥¥¥Consolidatedbalance sheet
amounts
At March 31, 2013:(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

$

$
$

$

Fair value
Millions of yen

¥
¥

¥

¥

¥
¥

¥

9,875
136
13,832
5,469
29,3127,374
2,741
22,10332,218

10,789316
14,044
4,269
29,418
7,941
2,841
23,03233,814

¥

（59）
（59）

¥
¥

¥

¥

54
54

¥
¥

¥

Fair value
Thousands of U.S. dollars

105,053
1,447
147,149
58,181
311,830
78,447
29,160235,766
343,373- 14 -¥

Difference

$

$
$

$

105,053
1,447
147,149
58,181
311,830
78,447
29,160235,138
342,745

Difference

$

$
$

$

（628）
（628）

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 the 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 thefair 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 theconsolidated closing date were as follows.

Millions of yen
2013
2012
10,274¥
17,528

Thousands of
U.S. dollars
2013$
109,298

Contract amount¥Contract amount due after one
8,236
10,47887,617year
Fair value
(147)
(201)
(1,564)
Method of hedge accounting applied: exceptional treatment for interest rate swap
Type of derivative transaction: interest rate swap (fixed rate payment, floating rate receipt)
Hedged item: long-term debt
The Company used prices presented by the applicable financial institutions.
Note 2. Financial instruments whose fair values could not be reliably determined
Thousands ofMillions of yen
U.S. dollars
2013
2013
2012
Non-marketable securities
¥
467
¥
615
$
4,968
(*1)
Guarantee deposits received
¥
3,547
¥
3,668
$
37,734(*2)
Derivative relating to
¥
17
¥
17
$
181
earthquakes (*3)(*1) 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..

- 15 -

(*2)

It is extremely difficult to determine the fair values of guarantee deposits received
because their scheduled redemption amounts cannot be estimated.

(*3)

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 ($3,191 thousand) at both March 31, 2013 and 2012.
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 consolidated closing date for monetaryclaims and securities 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
2013
2012
9,875
¥
¥ 10,789¥
136
316
13,832
14,044
23,843¥¥ 25,149¥-

Due in one
Due after
year or lessone yearThousands of U.S. dollars
2013$ 105,053$
1,447
147,149$ 253,649$-

Investments
At March 31, 2013 and 2012, short-term investments consisted of time deposits with an original
maturity of more than three months.
At March 31, 2013 and 2012, investment securities consisted of the following.

Millions of yen
2013
2012
Marketable securities:
Equity securities
Other

¥

Other non-marketable securities
¥

5,460
9
5,469
467
5,936

¥

¥

Thousands of
U.S. dollars
2013

4,262 $
7
4,269
615
4,884 $

58,08596
58,181
4,968
63,149Marketable 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, 2013 and 2012, gross unrealized gains and losses formarketable securities classified as available-for-sale securities were as follows.

- 16 -

Cost

Available-for-sale securities at March 31, 2013:
Equity securities
¥
3,945
Other
9
¥
3,954
Available-for-sale securities at March 31, 2012:
Equity securities
¥
3,776
Other
9
¥
3,785

Cost
Available-for-sale securities at March 31, 2013:
Equity securities$
41,968Other
96$
42,064
5.

Gross
Gross
unrealized
unrealized
lossesgains
Millions of yen

Fair andcarrying
value

¥

(225)
(0)
(225)

¥

(337)
(2)
(339)

¥

¥

¥
¥

1,740
1,740

823
823

¥
¥

¥
¥

¥

¥

5,460
9
5,469

4,262
7
4,269

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

Fair andcarryingvalue$$ 58,085
96$ 58,181$

18,511
18,511$ (2,394)(0)$ (2,394)

Short-term Borrowings and Long-term Debt
At March 31, 2013 and 2012, short-term borrowings consisted of the following.
Millions of yen
2013
2012
Short-term bank loans and bank overdrafts withinterest rates ranging from 0.31% to 0.85%
per annum at March 31, 2013:
Unsecured¥

2,741 ¥

Thousands of
U.S. dollars
2013

2,841 $

29,160At March 31, 2013 and 2012, long-term debt consisted of the following.
Millions of yen
2013
2012
Long-term loans from banks and other financial
institutions due through 2022 with interest rates
ranging from 0.627% to 6.50% per annum at
March 31, 2012:
Collateralized¥
UnsecuredLess portions with current maturities¥- 17 -

287
21,87522,162(4,374)
17,788¥¥318
22,66022,978(7,721)
15,257

Thousands of
U.S. dollars
2013

$

$

3,053
232,713
235,766(46,532)
189,234

The aggregate amounts of long-term debt due annually at March 31, 2013 were as follows.
Millions ofyenYear ending March 31,
2014
2015
2016
2017
2018
2019 and thereafter¥Thousands of
U.S. dollars

4,374 $
1,276
8,113
612
462
7,325
22,162 $¥46,532
13,57486,308
6,511
4,915
77,926
235,766

The aggregate amounts of long-term lease obligations due annually at March 31, 2013 were as
follows.
Millions ofyenYear ending March 31,
2014
2015
2016
2017
2018
2019 and thereafter¥¥Thousands of
U.S. dollars

236 $
184
157
121
46
15
759 $

2,511
1,957
1,670
1,287
489
160
8,074

At March 31, 2013 and 2012, the following assets were pledged as collateral.
Millions of yen
2013
2012
Time deposits included in short-term
investments
Buildings and structures

¥

13
556

¥

Thousands of
U.S. dollars
2013

12 $
603

138
5,915

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 have
similar retirement benefit plans. In addition, two consolidated subsidiaries have a defined
contribution pension plan under certain pension funds organized by third parties.
The following table reconciles the benefit liability and net periodic retirement benefit expense asat and for the years ended March 31, 2013 and 2012.

- 18 -

Reconciliation of benefit liability:
Projected benefit obligation
Less fair values of pension plan assets at
end of year¥

Unrecognized actuarial differences (losses)
Unrecognized prior service cost of
retroactive benefits granted by the pension
plan amendment
Accrued retirement and severance benefits
Prepaid pension cost
Net amount of employee retirement
benefit liability recognized in the
consolidated balance sheets
Note:

¥

Millions of yen
2013
2012

Thousands of
U.S dollars
2013

10,247$¥

10,506109,011(10,029)
218(1,294)(9,251)
1,255(1,673)(106,692)
2,319(13,766)

177
(899)
2,369

237
(181)
1,745

1,883
(9,564)25,202

1,470

¥

1,564

$

15,638

Projected benefit obligations of certain consolidated subsidiaries were calculated using
the simplified calculation method as permitted by the accounting standard for employee
retirement benefits.
Millions of yen
2013
2012

Components of net periodic retirement benefit expense:¥
Service cost
Interest cost
Expected return on pension plan assets
Amortization of actuarial differences
Amortization of prior service cost
Net periodic retirement benefit expense
¥

428 ¥
172
(166)
165
(60)
539 ¥

466
189
(171)
279
(60)
703

Thousands of
U.S dollars
2013

$

$

4,553
1,830
(1,766)
1,755
(638)
5,734

Major assumptions used in the calculation of the above information for the years ended March 31,
2013 and 2012 were as follows.
2013
2012
Method to attribute projected benefits toperiods of service
Straight-line method Straight-line method
Discount rate
1.4%
2.0%
Expected rate of return on pension plan assets
2.0%
2.0%
Amortization of actuarial differences
10 years
10 years
Amortization of prior service cost
10 years
10 years
7.

Net Assets
The Japanese Corporate Law (the “Corporate Law”) became effective on May 1, 2006, replacing
the former Japanese Commercial Code. The Corporate Law is generally applicable to events andtransactions occurring after April 30, 2006 and for fiscal years ending after such date.
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.

- 19 -

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, 2013 and 2012, 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 ($12,766 thousand) at both March 31, 2013 and 2012.
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, 2013, the Company paid interim dividends of ¥4.00 per share.
In addition, at the annual shareholders’ meeting held on June 27, 2013, the shareholders approved
cash dividends of ¥5.00 per share, amounting to ¥322 million ($3,426 thousand). These
appropriations have not yet been accrued in the consolidated financial statements as of March 31,
2013 as such appropriations are recognized in the period in which they are approved by theshareholders.
8.

Contingent Liabilities
At March 31, 2013 and 2012, the Japan Transcity Group was contingently liable for guarantees ofindebtedness of others in the amounts of ¥467 million ($4,968 thousand) and ¥538 million,
respectively. Such amounts included guarantees of indebtedness of 50%-owned affiliates in theamounts of ¥50 million ($532 thousand) and ¥188 million at March 31, 2013 and 2012,
respectively.

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, 2013 and 2012, lease expenses under non-cancelable leaseagreements which were categorized as finance leases entered into before March 31, 2008
amounted to ¥317 million ($3,372 thousand) and ¥370 million, respectively.
The aggregate future minimum payments for non-cancelable operating leases and finance leases,
including imputed interest, at March 31, 2013 and 2012 were as follows.

- 20 -

Thousands of
U.S. dollars
2013

Millions of yen
2013
2012
Operating leases:
Due within one year
Due after one year

¥

1,032
2,797
3,829

¥
Finance leases (entered into before March 31, 2008):
Due within one year¥
Due after one year
¥

271
534
805

¥

1,027
2,696
3,723

¥
¥

322
806
1,128

¥

$

10,97929,75540,734

$
$

2,883
5,681
8,564

$

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, 2013 and 2012 were as follows.
Thousands ofMillions of yen
U.S. dollars
2013
2012
2013
Deferred tax assets:
Enterprise tax accruals
¥
32 ¥
66 $
340
Accrued bonuses to employees
369
370
3,926
Employee retirement benefit liability
564
805
6,000
Accrued severance indemnities for directors
5
953
Long-term accounts payable
40
49
425
Intercompany capital gains
275
279
2,926
Net operating loss carry-forwards
244
175
2,596
Impairment loss on fixed assets
1,288
1,065
13,702Others
373
351
3,968
3,190
3,169
33,936
Less valuation allowance(1,598)(1,367)(17,000)
Deferred tax assets
1,592
1,802
16,936

Deferred tax liabilities:
Deferred capital gain
Unrealized gains on available-for-salesecurities
OthersDeferred tax liabilities
Net deferred tax assets(liabilities)¥- 21 -

952

993

10,128

535
407
1,894
(302)

174
388
1,555
247

5,691
4,330
20,149(3,213)¥$

At March 31, 2013 and 2012, deferred tax assets and liabilities were as follows.

Millions of yen
2013
2012

Thousands of
U.S. dollars
2013

Deferred tax assets:
Current
¥
450 ¥
453 $
4,787
Non-current
658
665
7,000
Deferred tax liabilities:
Non-current
1,410
871
15,000In 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, 2013 and 2012, a
valuation allowance was provided to reduce the deferred tax assets to amounts management
believed would be realizable.
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 years ended March 31, 2013 and 2012 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
Equity in net earnings of unconsolidated
subsidiaries and affiliates
Valuation allowance
OthersActual effective income tax rate

Percentage of pre-tax income
2013
2012
37.5%
40.1%
1.6
(3.9)
1.2

1.1
(2.2)
0.8

(5.8)
7.0
2.2
39.8%

(4.7)
(0.5)
0.1
34.7%

Adjustment of deferred tax assets and liabilities due to change in income tax rate
Following the promulgation on December 2, 2011 of the ”Act for Partial Revision of Income Tax
Act, etc. for the Purpose of Creating Taxation System Responding to Changes in Economic andSocial Structures” and the “Act on Special Measures for Securing Financial Resources Necessary
to Implement Measures for Reconstruction following the Great East Japan Earthquake”, theeffective statutory tax rate used to measure deferred tax assets and liabilities (excepted to be settled
or realized on or after April 1, 2012) in the consolidated fiscal year was changed from the previous
consolidated fiscal year’s rate of 40.1% to 37.5% for temporary differences expected to beresolved during the period from April 1, 2012 to March 31, 2015, and to 35.1% for temporary
differences expected to be resolved on or after April 1, 2015.
As a result of these changes, deferred tax liabilities (net of deferred tax assets) decreased by ¥46
million, income taxes-deferred decreased by ¥22 million and net unrealized gains onavailable-for-sale securities increased by ¥24 million .
Deferred tax liabilities for revaluation decreased, and the land revaluation difference increased,
each by ¥658 million.

- 22 -

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, 2013 and 2012 were as follows.

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 (benefit)
Foreign currency translation adjustment
Increase (Decrease) during the year
Share of other comprehensive income of affiliates
accounted for using equity method
Increase (Decrease) during the year
Total other comprehensive income

Millions of yen
2013
2012

Thousands of
U.S. dollars
2013

¥
¥
¥
¥
¥

1,031
1,031
(363)
668

¥
¥
¥
¥
¥

(37)
(37)
39
2

$
$
$
$
$

10,968
10,968(3,862)
7,106

¥

-

¥

658

$

-

¥

181

¥

(99) $

1,925

¥
¥

12
861

¥
¥

(5) $
556 $

128
9,159

12. Related Party Transaction
ASBJ Statement No. 11, entitled the “Accounting Standard for Related Party Disclosures”, and
ASBJ Guidance No. 13, entitled the “Guidance on Accounting Standard for Related Party
Disclosures” both issued by ASBJ on October 17, 2006, require certain additional related party
disclosures. Pursuant thereto, information on Chubu Coal Center Co., Ltd. has been disclosed
for the years ended March 31, 2013 and 2012.

Millions of yen
2013
2012

Thousands of
U.S. dollars
2013

Total current assets
Total fixed assets

¥
¥

665
10,225¥¥702
10,512$$

7,074
108,777

Total current liabilities
Total fixed liabilities

¥
¥

2,680
1,938

¥
¥

2,705
2,587

$
$

28,511
20,617

Total net assets

¥

6,272

¥

5,922

$

66,723Operating revenue
Income before income taxes
Net income

¥
¥
¥

3,102
850
530

¥
¥
¥

3,409
1,138
678

$
$
$

33,0009,043
5,638- 23 -

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, 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(g) (Property and equipment, and depreciation (except for leases)), the Company and its domestic consolidated
subsidiaries changed the depreciation method for property and equipment acquired on or after April 1, 2012 to the method provided under theamended Corporation Tax Law of Japan. This change did not have a material effect on operating income.

3. Information about reported segment profit, segment assets and other material items
Information by segment for the years ended March 31, 2013 and 2012 is as follows.
Integrated
Logistics Services
For the year ended March 31, 2013:
Operating revenue:
External customers
Intersegment sales
Total operating revenue
Operating income¥¥

Identifiable assets¥
Depreciation
Investments in affiliates accounted for using theequity method
Capital expenditures
Impairment loss on fixed assets
Amortization of negative goodwill
Negative goodwill
For the year ended March 31, 2012:
Operating revenue:
External customers
Intersegment sales
Total operating revenue
Operating income¥¥

Identifiable assets¥
Depreciation
Investments in affiliates accounted for using theequity method
Capital expenditures
Impairment loss on fixed assets
Amortization of negative goodwill
Negative goodwill

83,653
26
83,6793,027
89,922
2,586

Others

¥

¥
¥

4,869
3,126
7
7

82,32425
82,3494,008
88,740
2,519
4,465
2,414
8
19
14

Total
Millions of yen

1,045
1,082
2,127
99
1,730
52

¥

¥
¥

147
648
-

¥

¥
¥

1,125
1,085
2,210
71
2,819
64
94
-

Adjustment

Consolidated

84,6981,10885,806
3,126¥¥

91,652
2,638

¥

¥

4,869
3,273
648
7
7

¥

¥
¥

83,4491,110
84,5594,079
91,559
2,583
4,465
2,508
8
19
14

- 24 -(1,108)(1,108)
(10)
(791)
-

¥
¥

-

¥

¥
¥

(1,110)(1,110)20(1,327)-

84,69884,6983,116
90,861
2,638
4,869
3,273
648
7
7

¥

¥
¥

83,44983,4494,099
90,232
2,583
4,465
2,508
8
19
14

Integrated
Logistics Services
For the year ended March 31, 2013:
Operating revenue:
External customers
Intersegment sales
Total operating revenue
Operating income$$

Identifiable assets$
Depreciation
Investments in affiliates accounted for using theequity method
Capital expenditures
Impairment loss on fixed assets
Amortization of negative goodwill
Negative goodwill

889,926276
890,20232,202
956,617
27,511Others
Total
Thousands of U.S. dollars$

11,117
11,511
22,6281,053$$

18,404
553

$

$
$

1,564
6,894
-

51,79833,25574
74

901,043
11,787
912,830
33,255Adjustment$$

975,02128,064

Consolidated- $(11,787)(11,787)(106) $

901,043
901,043
33,149(8,415) $-966,606
28,064-

51,79834,819
6,894
74
74

$

51,79834,8196,894
74
74

Note: For the year ended March 31, 2013, impairment loss on fixed assets arose with respect to the golf club business.
This amount was included in “Others” in the above table.
(Related information)
1. Information about product and service
Coastalshipping

Warehousing

Trucking
Millions of yen

International
multimodaltransportation

Total

For the year ended March 31, 2013:
Operating revenue to external customers¥

33,958¥21,122¥

16,722¥

11,851¥

83,653For the year ended March 31, 2012
Operating revenue to external customers¥

33,214¥

21,421¥

17,011¥

10,678¥82,324

126,075$

889,926

Thousands of U.S. dollars
For the year ended March 31, 2013
Operating revenue to external customers$

361,255$

224,702$

177,894$

2. Information about geographic areas(1) Operating revenue
The Company has omitted the disclosure of operating revenue because operating revenue to external customers in Japan accounted for morethan 90% of the amounts of operating revenue reported in the consolidated statements of income.
(2) Property, plant and equipment
The Company has omitted the disclosure of property, plant and equipment because property, plant and equipment in Japan accounted formore than 90% of the amounts of property, plant and equipment reported in the consolidated balance sheets.

- 25 -

3. Information about major customers
Information on operating revenue from major customers for the years ended March 31, 2013 and 2012 is as follows.
Customer’s name

Relevant reportable segment

Aeon Global SCM Co., Ltd.

Integrated logistics services

Thousands of
U.S. Dollars
2013

Millions of Yen
2013
2012
¥

9,182

¥

8,583

$

97,681(Gains arising from negative goodwill)
The Company has omitted information by segment on gains arising from negative goodwill due to the negligible importance of suchinformation.

- 26 -

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
2013

Millions of yen
2013
2012
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
Lease deposits
Other assets
Allowance for doubtful accounts
Total investments and other assets
Total assets¥¥- 27 -

8,200

¥

9,225

2

3

87,23421

13,33515
243
1,891
23,68674,911(34,849)
40,062

13,31316
255
1,845
24,65774,035(34,069)
39,966

141,862
159
2,585
20,117
251,978
796,926(370,734)
426,192

5,433

4,494

57,798

5,213
627
4,233
(732)
14,77478,522

4,085
781
3,590
(613)
12,33776,96055,457
6,670
45,032(7,787)
157,170
835,340¥$$

Thousands of
U.S. dollars

Millions of yen
2013
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 debt
Employee retirement benefit liability
Deferred tax liabilities for revaluation
Deferred tax liabilities
Other long-term liabilities
Total liabilities¥

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

2012

6,856
4,192
7,843
764
271
1,571
21,497
16,469
481
4,619
1,325
527
44,918

¥

7,553
5,992
8,278
763
518
1,645
24,74913,761
532
4,619
806
548
45,015

2013$

72,93644,59583,436
8,128
2,883
16,713
228,691
175,203
5,117
49,13814,096
5,606
477,851

8,428
6,733
20,037(1,100)34,098

8,428
6,733
18,977(1,099)33,03989,65971,628213,159(11,702)362,744

873

273

9,287

(1,367)((1,367)(14,542)(494)
33,60478,522(1,094)31,94576,960(5,255)357,489
835,340

Accumulated losses from valuation
adjustment:
Net unrealized gains on available-for-salesecurities
Land revaluation decrement
Total accumulated losses fromvaluation adjustment
Total net assets
Total liabilities and net assets¥- 28 -¥$

Nonconsolidated Statements of Income (Unaudited)Japan Transcity Corporation (Parent)
For the Years Ended March 31, 2013 and 2012¥

Operating revenue
Operating costs and expenses
Operating income
Other income (expenses):
Interest and dividend income
Interest expenses
Miscellaneous, net
Income before income taxes
Income taxes:
Current
Deferred
Total income taxes
Net income¥

Millions of yen
2013
2012

Thousands of
U.S. dollars
2013

79,368$¥78,19977,1192,249

75,453
2,746

820,41423,926

642
(270)
19
391
2,640

474
(305)
(300)
(131)
2,615

6,829
(2,872)
202
4,159
28,085

794
207
1,001

937
148
1,085

8,447
2,202
10,649

1,639

¥

1,530

Yen
Per share:
Net income:-BasicCash dividends¥- 29 -

844,340

25.47
9.00

¥

$

17,436

U.S. dollars

23.70
9.00

$

0.27
0.10

Nonconsolidated Statements of Changes in Net Assets (Unaudited)Japan Transcity Corporation (Parent)
For the Years Ended March 31, 2013 and 2012

Shareholders’ equity

Common stock

Balance at April 1, 2011
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, 2012
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, 2013

¥

¥

¥

8,428
8,428
8,428

¥

¥

¥

6,734
(1)
6,733
6,733

Total
shareholders’
Treasury stock
equityMillions of yen

Retained
Earnings

Capital surplus

¥

¥

¥

17,996
1,530(549)
18,977
1,639(579)
20,037

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

¥

¥

¥

(1,015)(84)(1,099)(1)(1,100)¥¥¥32,143
1,530
(549)
(85)
33,039
1,639
(579)
(1)
34,098

¥

¥

¥

262
11
273
600
873

¥

¥

¥

(2,024)657(1,367)(1,367)¥¥¥(1,762)668(1,094)
600
(494)

Total
net assets

¥

¥

¥

30,381
1,530
(549)
(85)
668
31,945
1,639
(579)
(1)
600
33,604

Thousands of U.S. dollars
Balance at March 31, 2012
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, 2013$$

89,65989,659$$71,62871,628$$201,883
17,436(6,160)213,159$$- 30 -(11,691)(11)(11,702)$$351,479
17,436(6,160)(11)
362,744

$

$

2,904
6,383
9,287

$

(14,542)-$$(14,542)$(11,638)6,383(5,255)$$339,841
17,436(6,160)(11)
6,383
357,489