Japan Transcity Corporation
Consolidated Financial Statements
March 31, 2019 and 2018

Japan Transcity Corporation and Consolidated Subsidiaries
Consolidated Balance Sheets
March 31, 2019 and 2018

Millions of yen
2019
2018
Current assets:
Cash and cash equivalents (Note 3)
Short-term investments (Notes 3 and 4)¥

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

Property and equipment:
Land
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-

12,010
826

¥

9,526
760

Thousands of
U.S. dollars
2019$

109,182
7,509

15,672(30)
15,642
186
1,966
30,63014,970(28)
14,94289
3,288
28,605

142,473(273)
142,200
1,691
17,873
278,455

32,233
73,103
14,575
7,876
1,539
129,326(59,364)
69,96232,42072,967
14,654
7,561
174
127,776(57,386)
70,390293,027
664,573
132,500
71,60013,991
1,175,691(539,673)
636,018

7,893

8,741

71,755

6,846
2,910
862
2,598
(19)
21,090

6,699
3,495
738
2,346
(19)
22,00062,236
26,455
7,836
23,618(173)
191,727¥ 121,682¥ 120,995$

1,106,200

Millions of yen
2019
2018
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 (Note 5)
Total current liabilities
Long-term 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)
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: 3,031,371 shares in2019 and 3,030,650 shares in 2018
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

2,275
7,785
9,053
1,812
884
4,607
26,416

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

20,68270,77382,30016,4738,036
41,882
240,146

24,018
2,044
2,523
3,706
2,224
1,126
35,64162,057

29,403
1,980
2,655
3,773
2,704
1,204
41,71962,403

218,345
18,582
22,936
33,691
20,218
10,237
324,009564,155

8,428
6,765
42,512

8,428
6,764
40,341

76,61861,500386,473(1,190)56,515(1,190)54,343(10,818)
513,773

2,122(1,339)
155
140

2,743
(1,184)235
547

19,291(12,173)
1,409
1,273

1,078
2,032
59,625

2,341
1,908
58,5929,800
18,472542,045¥ 121,682¥ 120,995

See accompanying Notes to Consolidated Financial Statements.

-3-¥

Thousands of
U.S. dollars
2019$

1,106,200

Japan Transcity Corporation and Consolidated Subsidiaries
Consolidated Statements of Income
For the Years Ended March 31, 2019 and 2018

Operating revenue (Note 13)¥

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

Millions of yen
2019
2018

Thousands of
U.S. dollars
2019

100,095$¥

95,609909,954

96,747
3,348

93,264
2,345

879,518
30,436

635
(165)

403
(171)

5,773
(1,500)

470

495

4,273

(100)
(120)
720
4,068

(30)
83
780
3,125

(909)
(1,091)
6,546
36,982

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

1,459
(213)
1,246

1,029
(123)
906

13,263(1,936)
11,327

Net income

2,822

2,219

25,655

165

135

1,500

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

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

¥

2,657

¥

2,084

$

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

¥

41.45
10.00

See accompanying Notes to Consolidated Financial Statements.

-4-¥

24,155

U.S. dollars
32.55
10.00

$

0.38
0.09

Japan Transcity Corporation and Consolidated Subsidiaries
Consolidated Statements of Comprehensive Income
For the Years Ended March 31, 2019 and 2018

Millions of yen
2019
2018
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

¥

¥

¥

2,822

2,219

$

25,655

(632)
(97)
(407)

424
47
473

(5,745)(882)(3,700)(8)(1,144)
1,678

10
954
3,173

(73)
(10,400)
15,255

1,549
129

See accompanying Notes to Consolidated Financial Statements.

-5-¥

Thousands of
U.S. dollars
2019

¥

¥

2,979
194

$

$

14,082
1,173

Japan Transcity Corporation and Consolidated Subsidiaries
Consolidated Statements of Changes in Net Assets
For the Years Ended March 31, 2019 and 2018
Shareholders' equity

Balance at April 1, 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
Net income attributable to owners of theCompany
Cash dividends
Purchase of additional shares of
consolidated subsidiaries
Reversal of land revaluation decrement
Net changes other than changes inshareholders’ equity
Balance at March 31, 2019

Number ofshares ofcommonstock issued

Commonstock

67,142,417¥

Capitalsurplus8,428¥

Retainedearnings

6,753¥

Accumulated other comprehensive income

Treasurystock

38,847¥(1,270)Total
shareholders’equityNet
unrealized
gains onavailable-forsale securities¥¥

52,758Landrevaluation
decrement
Millions of yen

2,325

¥

(1,182)

Total
accumulated
other

Foreigncurrencytranslation
adjustments

Retirement
benefitadjustment

comprehensive

¥

¥

¥

256

74

Minority
interests

income1,473¥

Total net
assets

1,717¥

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

191
1,908

1,059
58,592

-

-

-

2,657
(641)

-

2,657
(641)

-

-

-

-

-

-

2,657
(641)

-

-

1
-

155

-

1
155

-

-

-

-

-

-

1
155

67,142,417

8,428

-

42,512(1,190)56,515

(621)
2,122

(155)
(1,339)

¥

(80)
155

¥

(407)
140

¥

(1,263)
1,078

124
2,032

(1,139)59,625

$

2,136

$

4,973

$ 21,282$ 17,345$ 532,654

¥

¥

6,765

¥

¥

¥

¥

¥

¥

¥

Thousands of U.S. dollars
Balance at March 31, 2018
Net income attributable to owners of theCompany
Cash dividends
Purchase of additional shares of
consolidated subsidiaries
Reversal of land revaluation decrement
Net changes other than changes inshareholders’ equity
Balance at March 31, 2019$$76,61861,491$ 366,736$ (10,818)$ 494,027--

24,155(5,827)

-

-

9
-

1,409

-

$ 386,473

76,618$$61,50024,937$ (10,764)

24,155(5,827)

-

-

-

-

-

-

24,155(5,827)

-

9
1,409

-

-

-

-

-

-

9
1,409

$ (10,818)$ 513,773(5,646)
19,291(1,409)$ (12,173)(11,482)
9,800

1,127
$ 18,472(10,355)$ 542,045

See accompanying Notes to Consolidated Financial Statements.

-6-

$

$

$

(727)
1,409

$

(3,700)1,273$

Japan Transcity Corporation and Consolidated Subsidiaries
Consolidated Statements of Cash Flows
For the Years Ended March 31, 2019 and 2018

Millions of yen
2019
2018
Cash flows from operating activities:
Income before income taxes
Adjustments for:
Depreciation
Net change in employee retirement benefit asset/liability
Loss on sale or disposal of property and equipment, net
Increase in trade receivables(Increase) decrease in inventories
Increase in trade payables
Others, net
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Net cash provided by operating activities

¥

4,068

¥

3,125

Thousands of
U.S. dollars
2019$36,982

3,550
66
100
(741)
(97)
169
913
8,028
949
(170)
(772)
8,035

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

32,273600
909(6,736)
(882)
1,536
8,300
72,982
8,627(1,546)(7,018)73,045

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(2,131)
391
(76)
(450)
(2,266)(11,795)
78
(200)
29
(11,888)(19,373)
3,555
(691)
(4,091)(20,600)

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 increase (decrease) 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

2,400
(4,757)
(83)
(641)
(177)
(3,258)
(27)
2,484
9,526
12,0109,800(1,237)
(34)
(640)
(184)
7,705
(25)
(1,314)
10,746
94
9,526

21,818(43,245)(755)(5,827)(1,609)(29,618)(245)
22,58286,600109,182¥

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, 2019, which
was approximately ¥110 to US$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, 2019 and 2018 were as follows.
2019
2018
Consolidated subsidiaries:
Domestic
25
25
Overseas
98Unconsolidated subsidiaries and affiliates accounted forusing the equity method
99Unconsolidated subsidiaries stated at cost
1010
Affiliates stated at cost
6
6

-8-

All intercompany accounts and transactions have been eliminated on consolidation.
The accompanying consolidated financial statements include the accounts of the overseas
consolidated subsidiaries (nine subsidiaries in 2019 and eight subsidiaries in 2018). These
overseas consolidated subsidiaries close their books at December 31, which is three months earlier
than the closing 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(GAAP). In this case, adjustments for the following four items are required in the consolidation
process so that their impact on net income is accounted for in accordance 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 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 using 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 when 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, 2019and 2018 were as follows.
Thousands ofMillions of yen
U.S. dollars
2019
2018
2019
Building
¥
100 ¥
100 $
909
Land
100
100
909
(h) Accounting for leases
Assets of finance leases that transfer ownership of the leased property to the lessee are depreciatedusing the same method used 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.
(i) Accounting standard for impairment of fixed assets
The Company and its domestic consolidated subsidiaries have 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.

- 10 -

While no impairment loss was recorded for the year ended March 31, 2019, the Japan Transcity
Group recognized impairment loss for the following idle properties, which was included in otherexpenses in the accompanying consolidated statements of income, for the year ended March 31,
2018.

Millions of yen
Buildings and structures
Land

¥
¥

44
7
51

(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 March 31, 2002, reflecting adjustments for land
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, 2019 and 2018, 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 ¥8,843 million ($80,391 thousand) and ¥8,931 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
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.

- 11 -

(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 by the asset-liability method. Deferred tax assets and liabilities
are recognized as future tax consequences attributable to differences between the carrying amountsof 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 totaxable 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.
(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. Cashdividends per share for each fiscal year in the accompanying consolidated statements of income
represent dividends declared by the Company as applicable to the respective years. Diluted net
income per share was not presented as of March 31, 2019 or 2018 due to the lack of any dilutive
shares.

- 12 -

(q) Accounting standards and guidance not yet adopted
The following standard and guidance have been issued but not yet adopted：
ASBJ Statement No. 29 ,“Accounting Standard on Revenue Recognition,” and ASBJ Guidance No.
30, ”Implementation Guidance on Accounting Standard on Revenue Recognition,” both issued by
ASBJ on March 30, 2018.
① Overview:
The International Accounting Standards Board (IASB) and US Financial AccountingStandards Board (FASB) co-developed a new comprehensive revenue recognition standard
and issued “Revenue from Contracts with Customers” in May 2014 (IFRS No. 15 by IASB,
Topic 606 by FASB). Considering IFRS No. 15 application from the fiscal years beginning
January 1, 2018 and Topic 606 from the fiscal years beginning December 15, 2017, ASBJ
developed comprehensive standards on revenue recognition in order to converge with IFRS 15
and published them. Under the standard, to provide for matters that may arise in actual
practice in Japan that require alternative handling, special treatments have been added within arange that ensures financial statement comparability.
② Effective date:
The Company and its domestic consolidated subsidiaries will apply the standards effectivefrom the beginning of the fiscal year ending March 31, 2022.
③ Impact of application on the standards:
The Company and its domestic consolidated subsidiaries are currently in the process ofdetermining the impact of the new standard and implementation guidance 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 used mainly 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.
To manage such risk and pursuant to internal regulations of the Company, the due dates
and balances of the 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 monitors the fair values of the shares of companies with which the Company
has business relationships.
Trade notes and accounts payable are due within one year.
Loans payable and short-term borrowings are used mainly to fund operating activities,
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. The Company enters into
derivative contracts with financial institutions of high creditworthiness to reduce credit
risk.
Guarantee deposits received consist mainly of deposit money for golf club memberships.
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, 2019 and 2018 are set forth in the table below. Somefinancial instruments were excluded because it was extremely difficult to identify their fairvalues.

- 14 -

At March 31, 2019:(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, 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

Carrying value

Fair value
Millions of yen

¥

¥

¥
¥

¥

¥

¥
¥

¥

12,010826
15,672
7,398
35,9069,053
2,275
31,803
43,131

9,526
760
14,9708,244
33,5008,907
2,361
34,16045,428Carrying value
At March 31, 2019:(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

$

$
$

$

109,182
7,509
142,473
67,255
326,419
82,30020,682
289,118
392,100

¥
¥

¥

¥

¥
¥

¥

12,010826
15,672
7,398
35,906
9,053
2,275
31,901
43,2299,526
760
14,9708,244
33,5008,907
2,361
34,13645,404

Difference

¥

$
$

$

109,182
7,509
142,473
67,255
326,419
82,30020,682290,009392,991

98
98

¥
¥

¥

¥

¥
¥

¥

Fair value
Thousands of U.S. dollars
$

-

(24)
(24)
Difference

$

$
$

$

891
891

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.
Derivatives:① Derivative transactions to which hedge accounting was not applied: a derivative
related to earthquakes with an outstanding contract amount of ¥300 million($2,727 thousand) at both March 31, 2019 and 2018. As the fair value for thecontract was not considered determinable, the contract was not accounted for atfair value.
② Derivative transactions to which hedge accounting was applied and for which
the contract amounts or amounts equivalent to the principal set forth in thecontracts 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
2019
2018
2,000
¥
2,000

Thousands of
U.S. dollars
2019$18,182

2,000

2,000

18,182

(18)

(27)

(164)

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

Note 2. Financial instruments whose fair values could not be reliably determined:
Thousands ofMillions of yen
U.S. dollars
2019
2019
2018
Nonmarketable securities (*1) ¥
495
¥
497
$
4,500
Stocks of nonconsolidated
subsidiaries and affiliates (*1)
6,846
6,699
62,236
Guarantee deposits received (*2)
2,523
2,655
22,936
Derivative related toearthquakes (*3)
17
19
155
(*1)

(*2)
(*3)

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.
It is extremely difficult to determine the fair values of guarantee deposits received because
their scheduled redemption amounts cannot be estimated.
During the years ended March 31, 2019 and 2018, the Company entered into a derivative
contract related to earthquakes for hedging purposes. The outstanding contract amountwas ¥300 million ($2,727 thousand) at both March 31, 2019 and 2018. As the fair value
for the contract was not considered determinable, the contract was not accounted for at fairvalue.

- 16 -

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
2019
2018
12,010
¥
¥
9,526
¥
826
760
15,672
14,97028,508¥¥ 25,256¥-

Due in one
Due after
year or lessone yearThousands of U.S. dollars
2019$ 109,182$
7,509
142,473$ 259,164$-

4. Investments
At March 31, 2019 and 2018, short-term investments consisted of time deposits with an original
maturity of more than three months.
At March 31, 2019 and 2018, investment securities consisted of the following.

Millions of yen
2019
2018
Marketable securities:
Equity securities
Other

¥

Other nonmarketable securities¥- 17 -

7,388
10
7,398
495
7,893

¥

¥

Thousands of
U.S. dollars
20198,235 $
98,244
497
8,741 $

67,16491
67,2554,500
71,755

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, 2019 and 2018, 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, 2019:
Equity securities
¥
4,265
Other
9
¥
4,274
Available-for-sale securities at March 31, 2018:
Equity securities
¥
4,197
Other
8
¥
4,205

Cost
Available-for-sale securities at March 31, 2019:
Equity securities$
38,773Other
82$
38,855GrossGrossunrealized
unrealized
gains
lossesMillions of yen

Fair andcarrying
value

¥

(54)
(54)

¥

(144)
(144)

¥

¥

¥
¥

3,177
1
3,178

¥

4,182
1
4,183

¥

¥

¥

¥

¥

7,388
10
7,398

8,235
9
8,244

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

Fair andcarryingvalue$$ 67,16491$ 67,255$

28,882
928,891

$
$

(491)
(491)

Impairment loss on marketable investment securities in the amount of ¥216 million ($1,964
thousand) and none was recorded for the years ended March 31, 2019 and 2018, respectively.
Finding an impairment loss with respect to a marketable investment security depends on decline invalue. If the fair value of an individual marketable investment security declines by more than 50%of the acquisition cost, impairment loss will be recognized and if the fair value declines to between
30% and 50% of the acquisition cost, the recoverability of the security will be determined in orderto recognize impairment loss.

5.

Short-term Borrowings, Long-term Debt and Collateral
At March 31, 2019 and 2018, short-term borrowings consisted of the following.
Millions of yen
2019
2018
Unsecured short-term bank loans and bankoverdrafts with interest rates ranging from
0.13% to 4.4% per annum at March 31, 2019 ¥- 18 -

2,275 ¥

Thousands of
U.S. dollars
2019

2,361 $

20,682

At March 31, 2019 and 2018, long-term debt consisted of the following.
Thousands of
U.S. dollars
2019

Millions of yen
2019
2018
Unsecured long-term loans from banks and otherfinancial institutions due through 2027 withinterest rates ranging from 0.09% to 2.5% perannum at March 31, 2019
Less portions with current maturities¥

31,803(7,785)24,018¥34,160(4,757)
29,403$

289,118(70,773)
218,345

The aggregate amounts of long-term debt due annually at March 31, 2019 were as follows.
Millions ofyenYear ending March 31,
2020
2021
2022
2023
2024
2025 and thereafter¥Thousands of
U.S. dollars

7,785 $
5,677
3,016
7,525
3,950
3,850
31,803 $¥

70,77351,60927,41868,40935,90935,000289,118At March 31, 2019, aggregate amounts of long-term lease obligations included in other current
liabilities and other long-term liabilities due annually were as follows.
Millions ofyenYear ending March 31,
2020
2021
2022
2023
2024

¥

¥

Thousands of
U.S. dollars

78 $
43
25
14
11
171 $

709
391
227
127
100
1,554

At March 31, 2019 and 2018, the following assets were pledged as collateral for current andnoncurrent payables.
Thousands of
U.S. dollars
Millions of yen
2019
2018
2019
Buildings

¥

5,451

¥

5,701 $

49,555

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 or 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 any such request. The general agreements further
provide that the banks have the right, as indebtedness matures or becomes due prematurely byreason of default, to offset any deposits at the banks against any 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 tables reconcile the retirement benefit liability (asset) and retirement benefit costs
as at and for the years ended March 31, 2019 and 2018.
Defined benefit plans except those to which the simplified method has been applied:
Millions of yen
2019
2018
Movement in retirement benefit obligations:
Balance at beginning of year
Service cost
Interest cost
Actuarial differences
Benefits paid
Other
Balance at end of year

¥

¥

8,157
406
12
124
(315)
(3)
8,381

¥

¥

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

Millions of yen
2019
2018
Movement in plan assets:
Balance at beginning of year
Expected return on plan assets
Actuarial differences
Contributions paid by the employer
Benefits paid
Other
Balance at end of year¥¥

- 20 -

10,650
108
(501)
260
(296)
(2)
10,219¥¥Thousands of
U.S. dollars
201974,155
3,691
109
1,127
(2,864)(27)
76,191Thousands of
U.S. dollars
201910,130 $
103
497
253
(332)
(1)
10,650 $96,818982(4,555)2,364(2,691)(18)
92,900Millions of yen
2019
2018
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 year
Employee retirement benefit liability
Employee retirement benefit asset
Total net liability (asset) for retirement
benefits at end of year

¥

7,349
(10,219)(2,870)1,032¥(1,838)

¥

¥

1,046
(2,884)¥(1,838)¥7,200 $
(10,650)(3,450) $957

66,809(92,900)(26,091)
9,382(2,493) $(16,709)975(3,468)9,509(26,218)(2,493) $(16,709)

Millions of yen
2019
2018
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
12
(108)
55
(13)
352

¥

¥

¥
¥

570
13
583

¥
¥

- 21 -

¥

(200)

¥

(200)

3,691
109
(982)
500
(118)
3,200

Thousands of
U.S. dollars
2019(695) $
18(677) $

Millions of yen
2019
2018
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 year

Thousands of
U.S. dollars
2019

406 $
19
(103)
288
(18)
592 $

Millions of yen
2019
2018
Retirement benefit adjustment, before taxes,
included in other comprehensive income:Actuarial differences
Past service costs
Total balance at end of year

Thousands of
U.S. dollars
2019

5,182
118
5,300

Thousands of
U.S. dollars
2019¥(770) $

(1,818)¥(13)(783) $

(1,818)Plan assets:(1) Plan assets:
Bonds
Equity securities
General accountCommingled funds
Other
Total

2019

2018

22%
26%
4%
32%
16%
100%

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

At March 31, 2019 and 2018, assets under the retirement benefit trust set up for corporate
pension plans accounted for 25% and 27% of the total plan assets, respectively.
Commingled funds consisted of bonds (68%) and equity securities (32%) at March 31, 2019and consisted of bonds (66%) and equity securities (34%) at March 31, 2018.
(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, 2019 and 2018 expressed as weighted averages.
2019
2018
Discount rate
0.0%
0.1%
Long-term expected rate of return
1.0%
1.0%
Defined benefit plans to which the simplified method has been applied:
Millions of yen
2019
2018
Movement in liability for retirement benefits:
Balance at beginning of year
Retirement benefit costs
Benefits paid
Contributions paid by the employer
Other
Balance at end of year

¥

¥

978
176
(86)
(96)
972

¥

¥

964 $
175
(71)
(91)
1
978 $

Millions of yen
2019
2018
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 year
Employee retirement benefit liability
Employee retirement benefit asset
Total net liability (asset) for retirement
benefit at end of year

- 22 -¥

2,146(1,375)
771
201

¥

972

¥

¥

998
(26)
¥

972

Thousands of
U.S. dollars
2019

Thousands of
U.S. dollars
2019

2,122 $
(1,349)773 $
205

19,509(12,500)
7,009
1,827

978

8,836

$

1,005
(27)
¥

8,891
1,600
(782)
(873)
8,836

978

9,073
(237)
$

8,836

Total retirement benefit costs for the fiscal years ended March 31, 2019 and 2018 based on thesimplified method were as follows:
Thousands ofMillions of yen
U.S. dollars
2019
2018
2019
¥
176
¥
175 $
1,600
Defined contribution plan:
For the years ended March 31, 2019 and 2018, the required contribution of the consolidated
subsidiaries to the defined contribution plan amounted to ¥43 million ($391 thousand) and ¥42
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 price 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, 2019 and 2018, capital surplus principally consisted of additional paid-in capital.
In addition, retained earnings included the legal earnings reserve of the Company in the amount of¥1,200 million ($10,909 thousand) at both March 31, 2019 and 2018.
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, 2019, the Company paid interim dividends of ¥5.0 per shareamounting to ¥321 million ($2,918 thousand). In addition, at the annual shareholders’ meeting
held on June 27, 2019, the shareholders approved cash dividends of ¥5.0 per share amounting to¥321 million ($2,918 thousand). These appropriations had not been accrued in the consolidated
financial statements as of March 31, 2019 as such appropriations are recognized in the period inwhich they are approved by the shareholders.

8. Contingent Liabilities
At March 31, 2019 and 2018, the Japan Transcity Group was contingently liable for reserved
guarantees of indebtedness of a certain unconsolidated subsidiary in the amount of ¥195 million($1,773 thousand) and ¥172 million, respectively.

- 23 -

9. Lease Commitments
As lessee the Japan Transcity Group leases 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 year ended March 31, 2019 and 2018, lease expenses under noncancelable leaseagreements which were categorized as finance leases entered into before March 31, 2008
amounted to none and ¥82 million, respectively.
The aggregate future minimum payments for noncancelable operating leases at March 31, 2019and 2018 were as follows.

Millions of yen
2019
2018
Operating leases:
Due within one year
Due after one year¥¥

- 24 -

1,578
2,637
4,215

¥
¥

1,175
1,323
2,498

Thousands of
U.S. dollars
2019
$
$

14,34523,97338,318

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, 2019 and 2018 were as follows.
Thousands ofMillions of yen
U.S. dollars
2019
2018
2019
Deferred tax assets:
Enterprise tax accruals
¥
65 ¥
28 $
591
Accrued bonuses to employees
343
334
3,118
Employee retirement benefit liability
453
333
4,118
Intercompany capital gains
242
243
2,200
Tax loss carryforwads (Note 1)
324
290
2,946
Impairment loss on fixed assets
1,191
1,196
10,827
Others
570
469
5,182
Subtotal
3,188
2,893
28,982
Valuation allowance for tax loss carryforwards(Note 1)(280)
(2,546)
Valuation allowance for deductible temporary
differences(1,358)(12,345)
Less valuation allowance(1,638)(1,588)(14,891)
Deferred tax assets
1,550
1,305
14,091
Deferred tax liabilities:
Employee retirement benefit asset
Deferred capital gain
Unrealized gains on available-for-salesecurities
OthersDeferred tax liabilities
Net deferred tax liabilities¥(1,281)(89)(1,291)(11,645)

(953)
(678)
(2,912)(1,362)(1,236)(655)(3,271)(1,966)(8,664)(6,164)(26,473)(12,382)¥$(Note 1) Details of deferred tax assets for tax loss carryforwards by respective expiration
periods at March 31, 2019 were as follows:

Tax loss carryforwards (*1)
Valuation allowance
Net deferred tax assets

2020

2021

¥

¥

53
(53)
-

2022

28
(28)
-

2023
2024
(Millions of yen)
¥ 35
¥ 24
¥ 17
(35)
(24)
(17)
-

2025 and
thereafter

Total

¥

¥

167
(123)
44

324
(280)
44

Thousands of U.S. dollars
Tax loss carryforwards (*1)
$ 482
$ 255
$ 318
$ 218
$ 155
$ 1,518$ 2,946
Valuation allowance
(482)
(255)
(318)
(218)
(155)
(1,118)(2,546)
Net deferred tax assets
400400(*1) Tax loss carryforwards shown in the table above represent the amount of deferred tax assets after
multiplying the statutory tax rate.

- 25 -

At March 31, 2019 and 2018, deferred tax assets and liabilities were as follows.
Thousands of
U.S. dollars
2019

Millions of yen
2019
2018
Deferred tax assets
Deferred tax liabilities:
Net deferred tax liabilities

¥
¥

862 ¥
2,224
(1,362) ¥

738
2,704
(1,966)$

7,836
20,218(12,382)$

Upon the change of the presentation for the deferred tax assets and liabilities effective from thecurrent year, comparative figures from the previous year were reclassified to conform to the current
year’s presentation.
In 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, 2019 and 2018, avaluation reserve 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, 2019 and 2018 were not disclosed because the differences were immaterial.

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, 2019 and 2018 were as follows.

Millions of yen
2019
2018
Net unrealized gains on available-for-sale securities:(Decrease) increase during the year¥
Reclassification adjustments to profit or loss
Subtotal, before tax
Tax benefit or (expense)
Subtotal, net of tax
Foreign currency translation adjustments:(Decrease) increase during the year
Retirement benefit adjustment:(Decrease) increase during the year
Reclassification adjustments to profit or loss
Subtotal, before tax
Tax benefit or (expense)
Subtotal, net of tax
Share of other comprehensive income ofunconsolidated subsidiaries and affiliates
accounted for using equity method:(Decrease) increase during the year
Total other comprehensive income¥- 26 -(1,130)
216
(914)
282
(632)

¥

Thousands of
U.S. dollars
2019

613 $
613
(189)
424

(10,273)
1,964(8,309)2,564(5,745)

(97)

47

(882)

(625)
42
(583)
176
(407)

407
270
677
(204)
473

(5,682)382(5,300)1,600(3,700)(8)(1,144)

10
954

(73)
(10,400)¥$

12. Related Party Transactions
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 tothe statement and guidance, information on a material affiliate, Chubu Coal Center Co., Ltd., hasbeen disclosed for the years ended March 31, 2019 and 2018.

Millions of yen
2019
2018

Thousands of
U.S. dollars
2019

Total current assets
Total fixed assets

¥

718
8,762

¥

844
8,942

$

6,527
79,655

Total current liabilities
Total fixed liabilities
Total net assets

¥

841
60
8,579

¥

1,324
280
8,182

$

7,645
546
77,991

Operating revenue
Income before income taxes
Net income

¥

3,370
1,061
739

¥

3,445
1,120
778

$

30,6369,645
6,718- 27 -

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 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, 2019 and 2018 is as follows.

Integrated
Logistics Services
For the year ended March 31, 2019:
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, 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

99,081
25
99,106
3,254¥

121,737
3,491

¥

¥

6,532
3,707
14
-

¥

¥
¥

1,014
1,443
2,457
119

¥

2,371
59

¥

¥

33
-

94,51326
94,5392,218¥

120,844
3,300

¥

6,386
8,878
51
14
14

Total
Millions of yen¥

Consolidated

100,095
1,468
101,563
3,373¥(1,468)(1,468)(25)¥

124,108
3,550¥(2,426)
-

¥

¥

6,532
3,740
14
-

1,096
2,179
3,275
179

¥

2,516
65

¥

50
-

Adjustment¥-

95,6092,205
97,814
2,397¥

123,360
3,365

¥

6,386
8,928
51
14
14

- 28 -¥¥

121,682
3,550

6,532
3,740
14
-

(2,205)(2,205)(52)¥(2,365)-¥-100,095
100,095
3,348¥

95,60995,6092,345
120,995
3,365

6,386
8,928
51
14
14

Integrated
Logistics Services
For the year ended March 31, 2019:
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

900,736228
900,964
29,582$

1,106,700
31,737$$59,38233,700127-

9,218
13,11822,336
1,082$

21,555
536

$

$

300
-

Adjustment

909,954
13,346923,300
30,664$

1,128,255
32,273$$

Consolidated- $(13,346)(13,346)(228) $

909,954909,954
30,436(22,055) $-1,106,200
32,27359,382
34,000127--

59,382
34,000127-(Related information)
1. Information about products and services of “Integrated Logistic Services”
Coastalshipping

Warehousing
Operating revenue to external customers:
For the year ended March 31, 2019
For the year ended March 31, 2018¥

39,79937,377¥

21,896
20,931

Trucking
Millions of yen¥

19,174
18,396

International
multimodaltransportation

¥

Total

18,212
17,809¥99,081
94,513

165,564$

900,736

Thousands of U.S. dollars
Operating revenue to external customers:
For the year ended March 31, 2019$

361,809$

199,054$

174,309$

2. Information about geographic areas(1) Operating revenue
For the year ended March 31, 2019, the Company omitted the disclosure of operating revenue because operating revenue from external customers in Japan accounted for more than 90% of the amounts of operating
revenue reported in the consolidated statements of income, while for the year ended March 31, 2018 operating revenue of ¥95,609 million consisted of ¥85,702 million from external customers in Japan and ¥9,907
million from external customers in other areas.
(2) Property and equipment
Both at March 31, 2019 and 2018, the Company 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.
3. Information about major customers
For the year ended March 31, 2019, the Company omitted the disclosure of information about major customers because no customer had contributed 10% or more to operating revenue in the consolidated statements ofincome, while for the year ended March 31, 2018, the Japan Transcity Group recorded a revenue from one certain customer, Aeon Global SCM Co., Ltd., of ¥9,634 million, which accounted for more than 10% of
operating revenue in the consolidated statements of income.

- 29 -

14. Condensed Financial Statements of Japan Transcity Corporation (Parent)
Presented below are the condensed Nonconsolidated Balance Sheets, Nonconsolidated Statements ofincome and Changes in Net Assets of Japan Transcity Corporation, the parent company.
Nonconsolidated Balance Sheets (Unaudited)Japan Transcity Corporation (Parent)

Thousands of
U.S. dollars
2019

Millions of yen
2019
2018
Current assets:
Cash and cash equivalents
Short-term investments
Trade receivables, net of allowance for
doubtful accounts
Inventories
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¥¥- 30 -

9,497

¥

6,932

7

7

86,33664

14,48582
1,451
25,522
97,947(42,037)
55,91013,848
21
2,296
23,10496,194(40,483)
55,711

131,682745
13,191
232,018
890,427(382,154)
508,273

7,219

7,880

65,627

5,584
2,539
2,488

5,427
2,505
2,189

(1,559)16,271
97,703(1,334)
16,667
95,48250,76423,082
22,618(14,173)
147,918
888,209¥$$

Thousands of
U.S. dollars

Millions of yen
2019
Current liabilities:
Short-term borrowings
Current maturities of long-term debt
Trade payables
Accrued expenses
Income taxes payable
Other current liabilities
Total current liabilities
Long-term liabilities:
Long-term debt
Employee retirement benefit liability
Deferred tax liabilities for revaluation
Provision for loss on business of subsidiaries
Deferred tax liabilities
Other long-term liabilities
Total long-term liabilities
Total liabilities

¥

¥

2019

28,774

9,003
3,715
6,781
874
50
1,639
22,062

18,643
884
3,706
1,247
1,805
341
26,62655,40023,582
780
3,773
1,469
2,113
319
32,03654,098

169,482
8,036
33,691
11,336
16,4103,100
242,055
503,637

8,428
6,742
27,655(1,190)41,635

8,428
6,742
26,078(1,190)40,05876,61861,291
251,409(10,818)
378,500

Net unrealized gains on available-for-salesecurities

2,007

2,510

18,245Land revaluation decrement(1,339)(1,184)(12,173)668
42,30397,703

1,326
41,384
95,482

6,072
384,572
888,209

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

9,386
7,340
7,018
881
698
3,451

2018

$

85,32766,72763,800
6,346
8,009
31,373
261,582

Accumulated gains (losses) from valuation
adjustment:

Total accumulated gains from valuation
adjustment
Total net assets
Total liabilities and net assets¥- 31 -¥$

Nonconsolidated Statements of Income
Japan Transcity Corporation (Parent)
For the Years Ended March 31, 2019 and 2018¥

Operating revenue
Operating costs and expenses
Operating income
Other income (expenses):
Interest and dividend income
Interest expense(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
2019
2018

Thousands of
U.S. dollars
201987,452$¥

83,45785,056
2,396

81,933
1,524

773,236
21,782

931
(144)

704
(140)

8,463
(1,309)

(127)
(62)
598
2,994

(55)
73
582
2,106

(1,154)(564)
5,436
27,218

1,088
(157)
931

738
(121)
617

9,891
(1,427)
8,464

2,063

¥

1,489

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

795,018

32.19
10.00

¥

$

18,754

U.S. dollars
23.26
10.00

$

0.29
0.09

Nonconsolidated Statements of Changes in Net Assets
Japan Transcity Corporation (Parent)
For the Years Ended March 31, 2019 and 2018

Shareholders’ equity

Common stock

Balance at April 1, 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
Net income for the year
Cash dividends
Reversal of land revaluation decrement
Net changes other than changes in shareholders’ equity
Balance at March 31, 2019

¥

¥

¥

8,428
8,428
8,428

¥

¥

¥

6,733
9
6,742
6,742

Total
shareholders’
Treasury stock
equityMillions of yen

Retainedearnings

Capital surplus

¥

¥

¥

25,227
1,489
(640)
2
26,078
2,063
(641)
155
27,655

Accumulated gains (losses) from valuation adjustment
Total
Net unrealized
accumulatedLand
gains ongains fromrevaluation
available-forvaluation
sale securities
decrement
adjustment

¥

¥

¥

(1,270)80(1,190)(1,190)¥¥¥39,118
1,489
(640)
89
2
40,058
2,063
(641)
155
41,635

¥

¥

¥

2,162
348
2,510
(503)
2,007

¥

¥

¥

(1,182)(2)(1,184)(155)(1,339)

¥

¥

¥

980
346
1,326
(658)
668

Total
net assets

¥

¥

¥

40,098
1,489
(640)
89
2
346
41,384
2,063
(641)
155
(658)
42,303Thousands of U.S. dollars
Balance at March 31, 2018
Net income for the year
Cash dividends
Reversal of land revaluation decrement
Net changes other than changes in shareholders’ equity
Balance at March 31, 2019$$76,61876,618$$61,291
61,291$$

237,073
18,754(5,827)
1,409
251,409$$- 33 -(10,818)(10,818)$$

364,164
18,754(5,827)
1,409
378,500$$

22,818(4,573)
18,245$$(10,764)(1,409)(12,173)$$

12,054(5,982)
6,072

$

$

376,218
18,754(5,827)
1,409(5,982)
384,572