Consolidated Financial Statements of
JALUX Inc. and Consolidated Subsidiaries
JALUX Inc.
Year ended March 31, 2020
with Independent Auditor’s ReportIndependent Auditor’s Report
To the Board of Directors of JALUX Inc.:

OpinionWe have audited the accompanying consolidated financial statements of JALUX Inc. (“the Company”) andits consolidated subsidiaries (collectively referred to as “the Group"), which comprise the consolidated balance
sheets as at March 31, 2020 and 2019, the consolidated statements of income, comprehensive income, changes
in net assets and cash flows for the years then ended, and notes, comprising a summary of significant accounting
policies, other explanatory information.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, theconsolidated financial position of the Group as at March 31, 2020 and 2019, and its consolidated financial
performance and cash flows for the years then ended in accordance with accounting principles generally
accepted in Japan.

Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated
Financial Statements section of our report. We are independent of the Group in accordance with the ethicalrequirements that are relevant to our audit of the consolidated financial statements in Japan, and we have fulfilled
our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence wehave obtained is sufficient and appropriate to provide a basis for our opinion.

Responsibilities of Management and Corporate auditors and the board of corporate auditors for theConsolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements inaccordance 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
misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability
to continue as a going concern, disclosing, as applicable, matters related to going concern in accordance withaccounting principles generally accepted in Japan and using the going concern basis of accounting unlessmanagement either intends to liquidate the Group or to cease operations, or has no realistic alternative but to doso.
Corporate auditors and the board of corporate auditors are responsible for overseeing the directors’ performanceof their duties including the design, implementation and maintenance of the Group’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted inaccordance with auditing standards generally accepted in Japan will always detect a material misstatement when
it exists. Misstatements can arise from fraud or error and are considered material if, individually or in theaggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis ofthese consolidated financial statements.
As part of our audit in accordance with auditing standards generally accepted in Japan, we exercise professional
judgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the consolidated financial
statements, whether due to fraud or error, design and perform audit procedures responsive
to those risks, and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, while the objective of the audit is not
to express an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis ofaccounting and based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the Group’s ability
to continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the
consolidated financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor’s report. However, future events or conditions may cause the Group to cease tocontinue as a going concern.
Evaluate whether the presentation and disclosures in the consolidated financial statements
are in accordance with accounting standards generally accepted in Japan, the overall
presentation, structure and content of the consolidated financial statements, including thedisclosures, and whether the consolidated financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of theentities or business activities within the Group to express an opinion on the consolidated
financial statements. We are responsible for the direction, supervision and performance ofthe group audit. We remain solely responsible for our audit opinion.
We communicate with corporate auditors and the board of corporate auditors regarding, among other matters,
the planned scope and timing of the audit, significant audit findings, including any significant deficiencies ininternal control that we identify during our audit.
We also provide corporate auditors and the board of corporate auditors with a statement that we have compliedwith relevant ethical requirements regarding independence, and communicate with them all relationships andother matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.

Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year ended
March 31, 2020 are presented solely for convenience. Our audit also included the translation of yen amounts
into U.S. dollar amounts and, in our opinion, such translation has been made on the basis described in Note 4 tothe consolidated financial statements.

Interest required to be disclosed by the Certified Public Accountants Act of Japan
We do not have any interest in the Group which is required to be disclosed pursuant to the provisions of theCertified Public Accountants Act of Japan.

Mitsutake Mamiya
Designated Engagement Partner
Certified Public Accountant
Daisuke Yamada
Designated Engagement Partner
Certified Public Accountant
KPMG AZSA LLC
Tokyo Office, Japan
September 18, 2020

JALUX Inc. and Consolidated Subsidiaries
Consolidated Balance Sheets
March 31,
2020
2019
(Thousands of yen)

AssetsCurrent assets:
Cash and time deposits (Notes 17 and 21)
Trade notes and accounts receivable (Notes 17and 23)
Inventories (Note 5)
Accounts receivable - other (Note 17)
OthersAllowance for doubtful accounts
Total current assets
Property and equipment (Notes 6, 12, 15 and 20):
Buildings and structures
Machinery and vehicles
Land
Construction in process
OthersProperty and equipment, net

2020(Thousands of
U.S. dollars)(Note 4)

¥ 6,175,441
22,106,818
15,921,436
2,733,013
1,832,571(3,813)
48,765,467¥ 6,050,750
21,328,708
14,371,088
2,994,748
1,674,454(20,916)
46,398,833$ 56,655
202,815
146,068
25,074
16,813(35)
447,3902,098,428
1,372,708
861,962
53,703880,033
5,266,836

1,977,380
1,601,841
407,227
36,784484,977
4,508,210

19,252
12,594
7,908
493
8,074
48,320643,650
30,158673,808458,20232,716490,919

5,905
277
6,182

3,152,371
19,1552,334,474
471,658
1,730
170,395(11,157)
6,138,628¥ 60,844,741

2,701,645
29,494
1,979,203
582,190
75,903
136,156(15,556)
5,489,037¥ 56,887,000

28,921
176
21,417
4,327
16
1,563
(102)
56,318$ 558,209

Intangible assets:
Software (Note 12)
OthersTotal intangible assets
Investments and other assets:
Investment securities (Notes 7, 17 and 18)
Long-term loans receivable
Long-term guarantee deposit (Note 17)
Deferred tax assets (Note 13)
Asset for retirement benefits (Note 9)
OthersAllowance for doubtful accounts
Total investment and other assets
Total assets

2March 31,
2020
2019
(Thousands of yen)

Liabilities and net assets
Current liabilities:
Trade notes and accounts payable (Notes 17 and 23)
Short-term borrowings and Current portion of long-term
debt (Notes 8 and 17)
Commercial papers (Notes 8 and 17)
Accrued income taxes
Accrued expenses (Note 17)
Others (Note 8)
Total current liabilities

2020(Thousands of
U.S. dollars)(Note 4)

¥ 10,668,290¥ 8,687,138$ 97,874

7,796,865
5,999,788
167,263
4,670,758
2,401,342
31,704,308

7,741,919
2,999,997
1,001,952
5,767,120
3,130,047
29,328,176

71,53155,044
1,535
42,851
22,031
290,865

Long-term liabilities:
Long-term debt (Notes 8 and 17)
Liability for retirement benefits (Note 9)
Deferred tax liabilities (Note 13)
OthersTotal long-term liabilities
Total liabilities

502,806
28,724
7,767
554,523
1,093,822
32,798,130

940,569
43,9289,577
513,446
1,507,521
30,835,698

4,613
264
71
5,087
10,035300,900

Net assets (Note 10):
Shareholders’ equity:
Common stock
Capital surplus
Retained earnings
Common stock in treasury
Total shareholders’ equity

2,558,550
688,723
23,717,113(135,373)
26,829,013

2,558,550
688,723
21,458,367(135,155)
24,570,484

23,473
6,319
217,588(1,242)
246,138780(10,630)(369,650)(111,618)(491,119)

19,295(17,932)(392,253)(50,884)(441,774)

7(98)(3,391)(1,024)(4,506)

1,708,717
28,046,611¥ 60,844,741

1,922,592
26,051,302¥ 56,887,000

15,676257,308$ 558,209

Accumulated other comprehensive income:Net unrealized gain (loss) on other securities, net oftaxes (Note 18)
Deferred gain or loss on hedges, net of taxes (Note 19)
Translation adjustments
Retirement benefits liability adjustments (Note 9)
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets

The accompanying notes are an integral part of these statements.

3

JALUX Inc. and Consolidated Subsidiaries
Consolidated Statements of Income
Years ended March 31,
2020
2019
2020
(Thousands of yen)(Thousands of
U.S. dollars)(Note 4)
Operating revenues (Notes 22 and 23)
Operating expenses (Notes 22 and 23):
Cost of sales
Selling, general and administrative expenses
Operating income
Non-operating income (expenses):
Interest income (Notes 22)
Interest expense (Notes 22)
Equity in earnings of affiliates (Notes 22)
Others, net (Note 11)
Net Profit before income taxes
Income taxes (Note 13):
Current
Deferred
Net Profit¥144,688,049 ¥ 185,726,096$ 1,327,413

118,847,293
21,870,919
140,718,213
3,969,836

159,136,030
21,961,971
181,098,001
4,628,094

1,090,342
200,651
1,290,993
36,421

3,085(98,223)
687,274(6,958)585,177
4,555,014

8,205(155,353)
568,691(53,535)
368,008
4,996,103

28
(901)
6,305
（64）

983,705
150,836
1,134,542
3,420,471

1,760,665(227,371)
1,533,293
3,462,809

9,025
1,384
10,40931,380339,386¥ 3,081,085

499,908¥ 2,962,900

3,114$28,267

5,369
41,789Net Profit attributable to:Non-controlling interests
Owners of the company

The accompanying notes are an integral part of these statements.

4

JALUX Inc. and Consolidated Subsidiaries
Consolidated Statements of Comprehensive Income
Years ended March 31,
2020
2019
2020
(Thousands of yen)(Thousands of
U.S. dollars)(Note 4)
Net Profit
Other comprehensive income:Net unrealized holding gain (loss) on other securities,
net of taxes
Deferred gain or loss on hedges, net of taxes
Translation adjustments
Retirement benefits liability adjustment, net of tax
Share of other comprehensive income of companies
accounted for by the equity method
Total other comprehensive income (Note 14)
Comprehensive income¥ 3,420,471¥

3,462,809$ 31,380(13,737)
7,301(53,771)(60,734)(793)
49,389(86,133)(21,667)

(126)
67
(493)
（557）

72,996(47,944)¥ 3,372,526(55,088)(114,293)¥ 3,348,516

670
（440)
$ 30,941

Comprehensive income attributable to:
Owners of the company
Non-controlling interests¥ 3,031,740¥ 340,786¥ 2,856,689¥ 491,826$ 27,814$ 3,126

The accompanying notes are an integral part of these statements.

5

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

Balance at March 31, 2018
Cash dividends(Note 10)(¥55 per share)
Net income for the year
ended March 31, 2019
Purchase of common
stock in treasury

Number ofshares ofcommonstock

Commonstock

CapitalsurplusRetainedearnings

Commonstock intreasury

12,775,000¥ 2,558,550¥ 688,723¥ 19,191,298¥ (134,809)

12,775,000¥ 2,558,550¥ 688,723¥ (260,703)¥ (29,217)¥ 1,666,337¥ 23,634,536

2,962,900

2,962,900¥ 21,458,367¥ (135,155)(346)(2,383)49,389(131,549)(21,667)

256,255

150,043¥ 19,295¥ (17,932)¥ (392,253)¥ (50,884)¥ 1,922,592¥ 26,051,302(822,339)(822,339)

3,081,085

3,081,085(217)

12,775,000

12,775,000¥2,558,550

Commonstock$ 23,473¥688,723

Capitalsurplus$ 6,319

Cash dividends($0.60 per share)
Net income for the year
ended March 31, 2020
Purchase of common
stock in treasury¥23,717,113

Retainedearnings$ 196,866¥(135,373)

Commonstock intreasury$ (1,240)(217)(18,515)

7,301

22,603(60,734)(213,875)(263,220)¥ 780¥ (10,630)¥ (369,650)¥ (111,618)¥ 1,708,717¥ 28,046,611

Translation
adjustments

Retirement
benefits
liability
adjustments(Note 9)Noncontrollinginterests

Total
net assets$ (3,599)$ (467)$ 17,638

Net unrealized
holding
gain (loss) on Deferred gainotheror loss
securities,
on hedges,
net of taxes
net of taxes(Note 18)
(Note 19)

$ 177

$ (165)(7,544)28,26728,267(2)

12,775,000$ 23,473$ 6,319$ 239,003(7,544)

OthersBalance at March 31, 2020

Total
net assets(346)

Number ofshares ofcommonstock

Balance at March 31, 2019

¥ (67,321)

Noncontrollinginterests(695,831)

OthersBalance at March 31, 2020

¥ 21,679

Translation
adjustments

Retirement
benefits
liability
adjustments(Note 9)(695,831)

OthersBalance at March 31, 2019
Cash dividends (Note 10)(¥65 per share)
Net income for the year
ended March 31, 2020
Purchase of common
stock in treasury

Net unrealized
holding
gain (loss) on Deferred gainotheror loss
securities,
on hedges,
net of taxes
net of taxes(Note 18)
(Note 19)

$ 217,588$ (1,242)

(2)
(170)

67

207

(557)

(1,962)(2,415)$ 7$( 98)$ (3,391)$ (1,024)$ 15,676$ 257,308

The accompanying notes are an integral part of these statements.

6

JALUX Inc. and Consolidated Subsidiaries
Consolidated Statements of Cash Flows
Years ended March 31,
2020
2019
2020
(Thousands of yen)(Thousands of
U.S. dollars)(Note 4)
Operating activities
Net Profit before income taxes
Depreciation and amortization
Increase (decrease) in provision for allowance for doubtful accounts
Decrease (increase) in asset for retirement benefits
Increase (decrease) in liability for retirement benefits
Interest and dividend income
Interest expense
Exchange loss (gain), net
Equity in earnings of affiliates
Loss (gain) on sales of, and loss on disposal of property and equipment
Impairment losses on fixed assets
Loss (gain) on sales of subsidiary securities (Note 21)
Loss(gain) on sales of affiliates securities
Loss(gain) on sales of investments in securities
Decrease (increase) in notes and accounts receivable
Decrease (increase) in inventories
Increase (decrease) in notes and accounts payable
Decrease (increase) in advance payment
Increase(decrease) in advance received
Increase(decrease) in accrued expense
Decrease(increase) in bad debts on receivables¥ 4,555,014
1,006,851(21,274)(26,434)
9,749(30,093)
98,223
21,333(687,274)
26,29380,82232,191
48,601(3,360)(259,272)(1,863,574)
2,159,747(398,928)(79,327)(1,079,097)
3,513(567,720)¥ 4,996,103
867,994(12,383)(25,691)
5,043(30,484)
155,353(16,397)(568,691)
53,165
4,472
37,518––(5,894,235)(1,261,245)(2,642,048)(392,905)
59,5581,876,366
12,144
107,033$ 41,789
9,237
(195)
(243)
89
(276)
901
196
(6,305)
241
741
295
446
(31)
(2,379)(17,097)
19,814(3,660)(728)(9,900)32(5,208)3,025,982
408,885(99,284)(1,847,106)(2,669,327)
183,779(156,059)(1,821,796)

27,761
3,751(911)(16,946)

Net cash provided by (used in) operating activities
Investing activities

1,488,476(4,463,404)

13,656

Purchases of property and equipment
Proceeds from sales of property and equipment
Purchases of intangible assets
Proceeds from sales of intangible assets
Purchases of investments in securities
Proceeds from sales of investments in securities
Purchases of affiliates securities
Proceeds from sales of affiliates securities
Payments from changes in ownership interests in subsidiaries that result inchange in scope of consolidation(Note 21)
Long-term loans receivable madeCollection of long-term loans
Increase in long-term guarantee deposit
Decrease in long-term guarantee deposit(1,956,365)(509,435)

6,450(321,119)580(216,673)
17,437(33,000)
462,081

2,522(248,565)
–
(333)
–
–
–

(17,948)
59(2,946)
5(1,988)
160
(303)
4,239

(229,414)–
13,612(437,053)
52,270(103,163)(15,131)(1,910)136,403(140,429)
110,581(39,871)(2,105)–125(4,010)480(946)(2,744,356)(706,170)(25,178)

Others, net
SubtotalInterest and dividends received
Interest paid
Income taxes paid

Others, net
Net cash provided by (used in) investing activities

7

Financing activities
Increase (decrease) in short-term borrowings, net
Increase (decrease) in commercial papers, net
Repayment of long-term loans
Proceeds from share issuance to non-controlling shareholders
Dividends paid to stockholders
Dividends paid to minority stockholders

428,230
2,999,791(876,537)
54,106(821,984)(340,000)(25,067)4,672,826
2,999,997(1,454,249)–(695,453)(274,359)(37,553)

3,929
27,521(8,042)496(7,541)(3,119)(230)

1,418,538(34,279)
128,378
6,043,301¥ 6,171,679

5,211,207(19,903)
21,7296,021,572¥ 6,043,301

13,014(314)
1,178
55,443$ 56,621

Others, net
Net cash provided by (used in) 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 the year
Cash and cash equivalents at end of the year (Note 21)

The accompanying notes are an integral part of these statements.

8

JALUX Inc. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2020

1.

Summary of Significant Accounting Policiesa.

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

b.

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

c.

Securities
Securities except for investments in an unconsolidated subsidiaries and affiliates areclassified as trading securities, held-to-maturity securities or other securities. Trading
securities are carried at fair value. Held-to-maturity securities are carried at amortizedcost. Marketable securities classified as other securities are carried at fair value with any
unrealized gain or loss reported as a separate component of net assets, net of taxes. Nonmarketable securities classified as other securities are carried at cost. Cost of securities
sold is determined principally by the average method.
9

1.

Summary of Significant Accounting Policies (continued)d.

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

e.

Inventories
Inventories are stated at the lower of cost or net selling value, cost being determined asfollows:
Merchandise:
The Company
Subsidiaries––

Real estate held for salef.

by the moving average method
principally by the weighted average method– by the specific identification method
Leasing real estates for sale are depreciated by applying
the method of tangible fixed assets.

Property and equipment
For the Company and the consolidated domestic subsidiaries, depreciation of the shops
in airports and the buildings for rent is computed principally by the straight-line methodand depreciation of other property and equipment is computed principally by the
declining-balance method. The consolidated foreign subsidiaries principally adopt thestraight-line method. The estimated useful lives of the assets are as follows:
Buildings and structures: 8 to 47 years
Machinery and vehicles: 4 to 10 yearsg.

Software
Computer software intended for internal use is amortized over 5 years by the straightline method based on their estimated useful life.

h.

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

10

1.

Summary of Significant Accounting Policies (continued)i.

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

j.

Retirement benefit
The retirement benefit obligation for employees is attributed to each period by thebenefit formula method over the estimated years of service of the eligible employees.
Actuarial gains and losses are amortized by the straight-line method beginning thefollowing fiscal year over a period of 5 years.
Certain consolidated subsidiaries have adopted the simplified method in the calculationof their retirement benefit obligation and retirement benefit expense.

k.

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

l.

Income tax
The provision for income taxes is based on income for financial statement purposes.
Income taxes comprise corporation tax, enterprise tax and prefectural and municipal
inhabitants’ taxes. The assets and liabilities approach is used to recognize deferred tax
assets and liabilities for the expected future tax consequences of temporary differences
between the carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for income tax purposes.

2.

Unapplied Accounting Standards(Standards and guidance not yet adopted)
The following standard and guidance were issued but not yet adopted.
- “Accounting Standard for Revenue Recognition” (ASBJ Statement No.29, March 31,
2020)- “Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ
Guidance No.30, March 31, 2020)(1) Overview
The above standard and guidance provide comprehensive principles for revenue
recognition.
(2) Effective date
Effective from the beginning of the fiscal year ending March 31, 2022.
(3) Effects of the application of the standards
The Company and its consolidated domestic subsidiaries are currently in the process ofdetermining the effects of these new standards on the consolidated financial statements.
11

3.

Additional information

Due to spreading of COVID-19, the Company and its consolidated subsidiaries have been
temporarily closing 35 airport-stores out of 75 stores and all the 9 duty-free stores since April
2020. We have been also taking measures by temporarily suspending the business andpartially reducing the business even in other stores, day care facilities for the elderly andbusiness sites including overseas.
Although the impact of COVID-19 pandemic cannot be accurately predicted as it is highly
uncertain, our accounting estimates such as impairment of fixed assets and recoverability ofdeferred tax assets are based on the condition that the current impact will last for the firsthalf year and will be halved for the second half year. We expect Retail business and Foods
Beverage business sales volumes to be affected.
4.

U.S. Dollar Amounts

Amounts in U.S. dollars are included solely for the convenience of the reader. The rate of¥109.00 = U.S.$1.00, the approximate exchange rate prevailing on March 31, 2020, has beenused. The inclusion of such amounts is not intended to imply that yen have been or could bereadily converted, realized or settled in U.S. dollars at that or any other rate.
5.

Inventories

Inventories at March 31, 2020 and 2019 were as follows:
March 31,2019
2020
(Thousands of yen)
Merchandise and finished products
Real estate held for sale
Raw materials and supplies¥ 15,590,646 ¥ 14,227,793
268,468
73,29762,321
69,997¥ 15,921,436 ¥ 14,371,088

2020(Thousands of
U.S. dollars)$ 143,033
2,463
572$ 146,068

Revaluation loss included in “Cost of sales” amounted to ¥46,644 thousand ($428thousand)and ¥1,076,767 thousand for the years ended March 31, 2020 and 2019.
6.

Property and Equipment

The following table sets forth the acquisition costs and related accumulated depreciation ofcertain property and equipment at March 31, 2020 and 2019:
March 31,
2020
2019
(Thousands of yen)
Buildings and structures
Machinery and vehicles
Others
Accumulated depreciation¥ 3,489,430
2,177,701
1,896,565
7,563,698(3,212,528)¥ 4,351,170¥ 3,839,752
2,325,443
1,783,139
7,948,334(3,884,136)¥ 4,064,198

2020(Thousands of
U.S. dollars)$ 32,013
19,97917,40069,392(29,473)$ 39,91912

7.

Investments and Other Assets

Investments in unconsolidated subsidiaries and affiliates included in “Investment securities”
as of March 31, 2020 and 2019 amounted to ¥2,486,974 thousand ($22,816 thousand) and¥2,219,650 thousand, respectively.
8.

Short-Term Borrowings and Long-Term Debt

Short-term borrowings and Long-term debt at March 31, 2020 and 2019 consisted of thefollowing:
March 31,
2020
2019
2020
(Thousands of yen)(Thousands of
U.S. dollars)
Short-term borrowings:
Short-term borrowings without collateral,with weighted-average interest rate of
1.24%
Commercial papers
Long-term debt:
Long-term debt without collateral, due2020 to 2024, with weighted-averageinterest rate of 2.12%
Lease obligations
Less current portion¥7,367,908 ¥5,498,360
5,999,788
2,999,997¥ 13,367,697 ¥ 8,498,357¥931,763
30,333962,096(443,486)¥ 518,610¥3,184,128
67,9493,252,078(2,269,949)¥ 982,129$67,595
55,044$ 122,639$8,548278
8,827(4,069)$ 4,758

13

8.

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

The aggregate annual maturities of long-term debt subsequent to March 31, 2020 are
summarized as follows:Year ending March 31,
2021
2022
2023
2024

(Thousands ofyen)(Thousands of
U.S. dollars)¥ 428,956
228,956
68,462
205,387¥ 931,763$ 3,935
2,101
628
1,884
$ 8,548

The aggregate annual maturities of lease obligations subsequent to March 31, 2020 are
summarized as follows:Year ending March 31,
2021
2022
2023
2024
2025

(Thousands ofyen)(Thousands of
U.S. dollars)¥ 14,530
9,164
5,339
1,093
205
¥ 30,333

$ 133
84
49
10
2
$ 278

The Company has entered into loan commitment agreements with banks in order to source
funds for its operations smoothly.
The outstanding balance of loan commitment as of March 31, 2020 and 2019 were as follows:
March 31,
2020
2019
(Thousands of yen)
Total commitment available
Less amount utilized
Balance available¥6,000,000–¥6,000,000¥4,100,000–¥4,100,000

2020(Thousands of
U.S. dollars)$55,046–$55,04614

9.

Retirement Benefit Plan

The Company and certain consolidated subsidiaries have either funded or unfunded defined
benefit plans and defined contribution plans. The Company and certain consolidated
subsidiaries have defined benefit plans covering substantially all employees who are entitledto lump-sum or annuity payments, the amounts of which are determined by reference to theirbasic rates of pay, length of service, and the conditions under which termination occur.
Certain consolidated subsidiaries have adopted the simplified method in the calculation of
their retirement benefit obligation.
Plan excluding that calculated by simplified method
The changes in the retirement benefit obligation during the years ended March 31, 2020 and2019 were as follows:
March 31,
2020
2019
(Thousands of yen)
Balance at the beginning of the year
Service cost
Interest cost
Adjustment for actuarial assumptions
Retirement benefit paid
Balance at the end of the year

¥ 2,484,034
123,333
20,36916,018(111,663)¥ 2,532,092¥ 2,467,371
122,245
20,232
34,732(160,547)¥ 2,484,034

2020(Thousands of
U.S. dollars)$ 22,789
1,131
187
147
(1,024)$ 23,230

The changes in plan assets during the year ended March 31, 2020 and 2019 were as follows:
March 31,
2020
2019
(Thousands of yen)
Balance at the beginning of the year
Expected return on plan assets
Adjustment for actuarial assumptions
Contributions by the Company
Retirement benefit paid
Balance at the end of the year

¥2,559,937
63,998(84,588)
106,138(111,663)¥2,533,822¥2,578,061
64,451(25,745)
103,717(160,547)¥2,559,937

2020(Thousands of
U.S. dollars)$23,486
587
(776)
974
(1,024)$23,24615

9.

Retirement Benefit Plan (continued)

The following table sets forth the funded status of the plans and the amounts recognized in
the consolidated balance sheet as of March 31, 2020 and 2019 for the Company’s defined
benefit plans:
March 31,
2020
2019
(Thousands of yen)
Funded retirement benefit obligation
Plan assets at fair value
Unfunded retirement benefit obligation
Net asset for retirement benefits in thebalance sheet
Liability for retirement benefits
Asset for retirement benefits
Net asset for retirement benefits in thebalance sheet

2020(Thousands of
U.S. dollars)¥ 2,532,092(2,533,822)(1,730)–¥ 2,484,034(2,559,937)(75,903)–$ 23,230(23,246)(16)–(1,730)–(1,730)(75,903)–(75,903)

(16)
–
(16)

¥ (1,730)¥ (75,903)$ (16)

The components of retirement benefit expenses for the years ended March 31, 2020 and 2019were as follows:
March 31,
2020
2019
(Thousands of yen)
Service cost
Interest cost
Expected return on plan assets
Amortization of adjustment for actuarial
assumptions
Retirement benefit expense

2020(Thousands of
U.S. dollars)¥ 123,333
20,369(63,998)¥ 122,245
20,232(64,451)$ 1,131187(587)

13,068¥ 92,773

29,248¥ 107,274

120
$ 851

The components of retirement benefits liability adjustments included in other comprehensive
income (before tax effect) for the years ended March 31, 2020 and 2019 were as follows:
March 31,
2020
2019
(Thousands of yen)
Adjustment for actuarial assumptions
Total¥ 87,538¥ 87,538¥ 31,229¥ 31,229

2020(Thousands of
U.S. dollars)
$ 803
$ 803

16

9.

Retirement Benefit Plan (continued)

The components of retirement benefits liability adjustments included in accumulated othercomprehensive income (before tax effect) for the years ended March 31, 2020 and 2019 wereas follows:
March 31,
2020
2019
(Thousands of yen)
Unrecognized adjustment for actuarial
assumptions
Total¥ 160,880¥ 160,880¥ 73,341¥ 73,341

2020(Thousands of
U.S. dollars)$ 1,476$ 1,476

The fair value of plan assets, by major category, as a percentage of total plan assets as ofMarch 31, 2020 and 2019 were as follows:
March 31,

Bonds
StocksGeneral account assets
Others
Total

2020

2019

21.2%
19.8
57.0
2.0
100.0%

19.0%
23.5
55.2
2.3
100.0%The expected return on assets has been estimated based on the anticipated allocation to each
asset class and the expected long-term returns on assets held in each category.
The assumption used in accounting for the above plans were as follows:
March 31,

Discount rate
Expected rates of return on plan assets
Salary increase rate

2020

2019

0.8%
2.5%
1.0%～4.7%

0.8%
2.5%
1.0%～4.7%

17

9.

Retirement Benefit Plan (continued)

Plan calculated by the simplified method
The changes in the retirement benefit obligation for consolidated subsidiaries adopting thesimplified method during the year ended March 31, 2020 and 2019 were as follows:
March 31,2019
2020
(Thousands of yen)
Balance at the beginning of the year
Retirement benefit expense
Retirement benefit paid
Contribution to pension plans
Translation adjustment
Decrease from change in scope of
consolidation
Balance at the end of the year

2020
(Thousands of
U.S. dollars)¥ 43,928
26,133(4,402)(12,140)
2,193¥ 39,177
22,658(6,117)(11,210)
(580)

$ 403
240
(40)
(111)
20

(26,988)－(248)¥ 28,724¥ 43,928$ 264

The following table sets forth the funded status of the plans and the amounts recognized in
the consolidated balance sheet as of March 31, 2020 and 2019 for consolidated subsidiaries
adopting the simplified method:
March 31,
2020
2019
(Thousands of yen)
Funded retirement benefit obligation
Plan assets at fair value
Unfunded retirement benefit obligation
Net liability for retirement benefits in thebalance sheet
Liability for retirement benefits
Net liability for retirement benefits in thebalance sheet

2020(Thousands of
U.S. dollars)¥ 131,922(125,065)
6,856
21,867¥ 127,572(117,973)
9,598
34,329$ 1,210(1,147)63
201

28,72428,72443,92843,928264
264¥ 28,724¥ 43,928$ 264

Retirement benefit expenses for the simplified method of ¥26,133 thousand ($240 thousand)and ¥22,658 thousand were accounted for the years ended March 31, 2020 and 2019.
Defined contribution plans
Contribution made to defined contribution plans for the years ended March 31, 2020 and2019 were ¥145,711 thousand ($1,337 thousand) and ¥137,754 thousand, respectively.

18

10.

Net Assets

Under Japanese laws and regulations, the entire amount of the issue price of shares is required
to be accounted for as common stock, although a company may, by resolution of its Boardof Directors, account for an amount not exceeding one-half of the issue price of the newshares as additional paid-in capital.
Under the Japanese Corporate Law, in cases where dividend distribution of surplus is made,the smaller of an amount equal to 10% of the dividend and 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. Additional paid-in capital is included
in capital surplus and legal earnings reserve is included in retained earnings in theaccompanying consolidated balance sheets.
Legal earnings reserve and additional paid-in capital may be used to eliminate or reduce a
deficit or may be capitalized by a resolution of the shareholders’ meeting. All additional
paid-in capital and all legal earnings reserve may be transferred to other capital surplus andretained earnings, respectively, which are potentially available for dividends. The maximum
amount that the Company can distribute as dividends is calculated based on theunconsolidated financial statements of the Company in accordance with Japanese laws andregulations.
The total number and periodic changes in the number of shares of stock in issue and the total
number and periodic changes in the number of shares of common stock in treasury for theyears ended March 31, 2020 and 2019 were as follows:Year ended March 31, 2020
At
March 31,
2019
Number of shares of stock in issue:
Common stock
Number of shares of common stock
in treasury:
Common stock

Increase
Decrease(Thousands of shares)

At
March 31,2020

12,775––

12,775

131

0

–

131

The increase in common stock in treasury of 0 thousand shares resulted from the Company’spurchase of 0 thousand odd-lot shares of less than one unit at the request of the stockholders.

19

10.

Net Assets (continued)
Year ended March 31, 2019At
March 31,2018

Number of shares of stock in issue:
Common stock
Number of shares of common stock
in treasury:
Common stock

Increase
Decrease(Thousands of shares)

At
March 31,2019

12,775––

12,775

131

0

–

131

The increase in common stock in treasury of 0 thousand shares resulted from the Company’spurchase of 0 thousand odd-lot shares of less than one unit at the request of the stockholders.
Dividends
Dividends with the cut-off date in the year ended March 31, 2020 and effective date in theyear ended March 31, 2021.
Resolution

Type ofsharesGeneral meeting of Common
stockholders held stockon June 16, 2020

Total dividends(Thousands of (Thousands ofyen)
U.S. dollars)¥632,564$5,803

Dividends per share(Yen) (U.S. dollars)
¥50.0

$0.46

Cut-off
date

Effective
date

March 31, June 17,
2020
2020

Dividends paid

Resolution

Type ofsharesGeneral meeting of Common
stockholders held stockon June 14, 2019

Total dividends(Thousands of (Thousands ofyen)
U.S. dollars)¥822,339$7,544

Dividends per share(Yen) (U.S. dollars)
¥65.0

$0.60

Cut-off
date

Effective
date

March 31, June 17,
2019
2019

20

11.

Other Income (Expenses)

The components of “Others, net” in “Non-operating income (expenses)” in the period ended
March 31, 2020 and 2019 were as follows:
Years ended March 31,
2020
2019
2020
(Thousands of yen)(Thousands of
U.S. dollars)
Dividends received
Exchange gain (loss), net
Gain on sales of property and equipment
Gain on sales of subsidiary securities
Loss on sales of subsidiary securities
Loss on sales of affiliates securities
Gain on sales of investments in securities
Commission paid
Loss on sales and disposal of property and equipment
Impairment losses on fixed assets
Others, net

12.

¥ 27,007
64,000807
9,630(41,822)(48,601)
3,360(12,559)(27,100)(80,822)
99,141¥ (6,958)¥ 22,278(62,030)
1,505–(37,518)––(8,088)(54,670)(4,472)
89,462¥ (53,535)

$ 248
587
7
88
(384)
(446)
31
(115)
(249)
(741)
910
$ (64)

Impairment of Fixed Assets

For the year ended March 31, 2020, the Company and a consolidated subsidiary recognizedimpairment losses on fixed assets of ¥80,822 thousand ($741 thousand), and for the year
ended March 31, 2019 the Company recognized impairment losses on fixed asset of ¥4,472
thousand which consisted of the following:
Location

Use

Classification

Kunisaki-shi, Oita
Obihiro-shi, Hokkaido
Kushiro-shi, Hokkaido
Hakodate-shi, Hokkaido
Matsuyama-shi, Ehime
Omura-shi, Nagasaki
Chiyoda-ku, Tokyo

Airport shops
Airport shops
Airport shops
Airport shops
Airport shops
Airport shops
Souvenir
sweets shops

Furniture and otherFurniture and otherFurniture and other
Buildings and other
Buildings and other
Buildings and otherFurniture and otherYears ended March 31,
2020
2019
2020
(Thousands of yen)(Thousands of
U.S. dollars)–¥4,472–¥21,156–$194
19,305–
177
14,319–131
13,446
–
123
80
8,754
–
3,838

–

35

The Company and its consolidated subsidiaries base its grouping for assessing theimpairment losses on fixed assets on the smallest identifiable groups of assets which generatecash inflows and which are largely independent of the cash inflows from other assets orgroups of assets.

21

12.

Impairment of Fixed Assets (continued)

Impairment losses on business assets including airport shops and souvenir sweets shops wererecognized due to significant decrease in expected future cash flows on the strategy plan forthe years ended March 31, 2020 and 2019.
The recoverable amount of each group of assets was measured by their usage value andestimated at non-recoverable by the minus of future cash flows for the years ended March
31, 2020 and 2019.
13.

Income Taxes

The significant components of deferred tax assets and liabilities at March 31, 2020 and 2019were as follows:
March 31,
2020
2019
2020
(Thousands of yen)(Thousands of
U.S. dollars)
Deferred tax assets:
Accrued bonuses
Allowance for doubtful accounts
Liability for retirement benefits
Impairment losses on fixed assets
Accrued enterprise tax
Elimination of unrecognized gain on
intercompany accounts and transactions
Loss on revaluation of inventories
Loss on revaluation of investments insecurities
Carryforward tax loss(*)
Deferred gain or loss on hedges

Asset retirement obligation
OthersValuation allowance for carryforward tax
loss(*)
Valuation allowance for deductible
temporary differences
Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Accumulated retained earnings ofconsolidated subsidiaries
Asset for retirement benefits
Cost of asset retirement obligation
OthersTotal deferred tax liabilities
Net deferred tax assets¥ 224,127
4,204
53,57430,84619,156¥ 188,615
3,587
27,241
9,536
65,551$ 2,056
39
492
283
176

86,08914,82888,690374,696

790
136

1,637
355,976
4,691
38,110153,606
986,849

8,807
182,857
7,914
47,535
134,342
1,139,375

15
3,266
43
350
1,409
9,054

(160,820)(170,913)(1,475)(24,244)(185,064)
801,784(25,827)(196,741)
942,634(222)(1,698)7,356(201,396)(49,791)(20,363)(66,342)(337,893)¥ 463,890(264,313)(45,698)(29,863)(30,144)(370,020)¥ 572,613(1,848)
(457)
(187)
(609)
(3,100)$ 4,256

22

13.

Income Taxes (continued)(*)Carryforward tax loss and its deferred tax assets by expiration periods(March 31 2020)(Thousands of yen)
2021
2022
2023
2024
2025
2026 andTotal
beyondCarryforward
tax loss (a)839
15,22529,17538,241
24,429 248,064
355,976
Valuation
allowance(839) (15,225) (29,175) (38,241) (24,429) (52,909) (160,820)
Net deferred
tax assets––––– 195,155 (b)195,155(March 31 2020)
2021
Carryforward
tax loss (a)Valuation
allowance
Net deferred
tax assets

2022

2023

(Thousands of U.S. dollars)
2025
2026 andTotal
beyond

2024

8

140

268

351

224

2,276

3,266

(8)

(140)

(268)

(351)

(224)

(485)

(1,475)

–

–

–

–

–

1,790

(b)1,790(a) Carryforward tax loss shown in the above table is after multiplying the statutory tax rate.
(b) Deferred tax assets of ¥195,155 thousand ($1,790 thousand) was recognized forcarryforward tax loss of ¥355,976 thousand ($3,266 thousand) (amount multiplied by thestatutory tax rate). The deferred tax assets of ¥195,155 thousand ($1,790 thousand) was
recognized for carryforward tax loss of ¥144,074 thousand ($1,322thousand) by the
consolidated subsidiary JALUX Airport Inc. and ¥51,080 thousand ($469 thousand) by the
consolidated subsidiary JALUX SINGAPORE PTE. LTD. The carryforward tax loss by
JALUX Airport Inc. for which the deferred tax asset was recognized arose in relation to loss
before income taxes of ¥410,060 thousand ($3,762 thousand) having been recorded for theyear ended March 31, 2020. No valuation allowance is recognized for the carryforward tax
loss since the amount was determined to be recoverable based on expected future taxable
income. The carryforward tax loss by JALUX SINGAPORE PTE. LTD. for which thedeferred tax asset was recognized arose in relation to depreciation based on local corporation
tax law having been recorded for the year ended December 31, 2019 and 2018. No valuation
allowance is recognized for the carryforward tax loss since the amount was determined to be
recoverable based on expected future taxable income.

23

13.

Income Taxes (continued)(March 31 2019)

Carryforward
tax loss (c)Valuation
allowance
Net deferred
tax assets(Thousands of yen)2025 andTotal
beyond

2020

2021

2022

2023

2024

25,064

6,966

14,70029,17261,45545,498

182,857(25,064)(6,966)(14,700)(29,172)(49,511)(45,498)(170,913)

–

–

–

–

11,943–(d)11,943(c) Carryforward tax loss shown in the above table is after multiplying the statutory tax rate.
(d) Deferred tax assets of ¥11,943 thousand was recognized for carryforward tax loss of¥182,857 thousand (amount multiplied by the statutory tax rate). The deferred tax assets of¥11,943 thousand was recognized for carryforward tax loss of ¥11,943 thousand by the
consolidated subsidiary JALUX Trust Inc. The carryforward tax loss for which the deferred
tax asset was recognized arose in relation to loss before income taxes of ¥77,273 thousand
having been recorded for the year ended March 31, 2015. No valuation allowance isrecognized for the carryforward tax loss since the amount was determined to be recoverable
based on expected future taxable income.

The difference between the statutory tax rate and the effective tax rate for the years ended
March 31, 2020 and 2019 were as follows:
Years ended March 31,
2020
2019
Effective statutory tax rate
(Reconciliations)
Disallowed expenses, including entertainment
expenses
Inhabitants’ per capita taxes
Equity in earnings of affiliates
Different tax rates applied to consolidated
subsidiaries
Changes in valuation allowance
OthersActual tax rate

30.62%

0.92
0.42(4.62)(1.31)(0.26)(0.86)
24.91%

This note has been
omitted, as thedifference between theeffective statutory tax
rate and the effective
income tax rate after
applying tax effectaccounting is 5% orless of the effective
statutory tax rate.

24

14.

Other Comprehensive Income

The following table presents reclassifications adjustments and tax effects allocated to eachcomponent of other comprehensive income for the years ended March 31, 2020 and 2019:
March 31,
2020
2019
(Thousands of yen)
Net unrealized holding gain (loss) on othersecurities:
Amount arising during the year
Reclassification adjustments for gains and losses
included in profit attributable to owners of thecompany
Amount before tax effectTax effectNet unrealized holding gain (loss) on othersecurities, net of taxes
Deferred gain or loss on hedges:
Amount arising during the year
Amount before tax effectTax effect
Deferred gain or loss on hedges, net of taxes
Translation adjustments:
Amount arising during the year
Reclassification adjustments for gains and losses
included in profit attributable to owners of thecompany
Translation adjustments
Retirement benefits liability adjustments:
Amount arising during the year
Reclassification adjustments for gains and losses
included in profit attributable to owners of thecompany
Amount before tax effectTax effect
Retirement benefits liability adjustments, net oftaxes
Share of other comprehensive income ofcompanies accounted for by the equity method:Amount arising during the year
Total other comprehensive income

2020(Thousands of
U.S. dollars)¥ (15,826)¥ (1,755)$ (145)(3,360)–(31)(19,186)
5,448(13,737)(1,755)
961
(793)

(176)
50
(126)

10,524
10,524(3,222)
7,301

71,186
71,186(21,797)
49,389

97
97
(30)
67

(41,547)(82,173)(381)(12,224)(3,959)(112)(53,771)(86,133)(493)(100,607)(60,477)(923)

13,06829,248120(87,538)
26,804(60,734)(31,229)
9,562(21,667)

(803)
246
(557)

72,996¥ (47,944)(55,088)¥ (114,293)

670$ (440)25

15.

LeasesAs lessee under financing leases
As the impact of financing leases is immaterial, the note is not required to be disclosed.
As lessee under operating leases
Future rental expenses under operating leases outstanding at March 31, 2020 and 2019 aresummarized as follows:
March 31,
2020
2019
2020
(Thousands of yen)(Thousands of
U.S. dollars)Within 1 year
Over 1 year

¥ 1,878,958
4,128,164¥ 6,007,123¥ 1,495,241
3,460,296¥ 4,955,538$ 17,238
37,873$ 55,111

As lessor under financing leases
As the impact of financing leases is immaterial, the note is not required to be disclosed.
As lessor under operating leases
Future rental revenues under operating leases outstanding at March 31, 2020 and 2019 aresummarized as follows:
March 31,
2020
2019
2020
(Thousands of yen)(Thousands of
U.S. dollars)Within 1 year
Over 1 year

¥ 1,345,643
3,046,739¥ 4,392,383¥ 1,063,586
2,607,128¥ 3,670,714$ 12,345
27,952$ 40,297

26

16.

Amounts Per Share

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

2020
Net income per share of common stock:
Basic

Year ended March 31,
2019
2020
(Yen)
(U.S. dollars)¥ 243.69¥ 234.34$ 2.236

Diluted net income per share is not stated in 2019 and 2020 because there are no potential
shares.
The following table sets forth the basis of the computation of net income per share ofcommon stock for the years ended March 31, 2020 and 2019:Year ended March 31,
2020
2019
2020
(Thousands of yen)(Thousands of
U.S. dollars)
Net income
Net income available to stockholders ofshares of common stock¥ 3,081,085¥ 2,962,900$ 28,267¥ 3,081,085¥ 2,962,900$ 28,267

Year ended March 31,
2020
2019
(Thousands of shares)
Weighted-average number of shares ofcommon stock outstanding

12,643

12,643

Diluted net income per share is not stated in 2019 and 2020 because there are no potential
shares.
Net assets per share are computed based on the number of shares of common stock
outstanding at each balance sheet date.
March 31,
2019

2020
(Yen)
Net assets per share¥ 2,083.12¥ 1,908.38

2020(U.S. dollars)$ 19.111

27

17.

Financial Instruments

Policy for financial instruments
The Company and its consolidated subsidiaries (the “Group”) manage temporary cash
surpluses mainly through short-term deposits. Further, the Group raises short-term capitalthrough bank borrowings and the issuance of commercial papers.
Types of financial instruments and related risk
Notes and accounts receivable are exposed to credit risk in relation to customers. In addition,
the Company is exposed to foreign currency exchange risk arising from receivables
denominated in foreign currencies. In principle, the foreign currency exchange risks derivingfrom the trade receivables denominated in foreign currencies are hedged by forward foreignexchange contracts.
Marketable securities and investment securities are composed of mainly stocks. Those
securities are exposed to market risk.
Long-term guarantee deposit are composed of mainly deposits for rental spaces of the airport
buildings. Those deposits are exposed to credit risk in relation to counterparties.
All notes and accounts payable have payment due dates within one year. Although theCompany is exposed to foreign currency exchange risk arising from those payables
denominated in foreign currencies, foreign exchange contracts are arranged to reduce therisk.
Short-term borrowings and commercial papers are raised mainly in connection with businessactivities, and long-term debt is taken out principally for the purpose of making capital
investments.Long-term debt with certain variable interest rates is exposed to interest rate
fluctuation risk.
Risk management for financial instrumentsa.

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

28

17.
b.

Financial Instruments (continued)
Monitoring of market risks (the risks arising from fluctuations in foreign exchange rates,interest rates and others)
For accounts receivables and payables denominated in foreign currencies, the Company
enters into forward foreign exchange contracts to hedge such risk.
For marketable securities and investment securities, the Group periodically reviews thefair values of such financial instruments and the financial position of the issuers. In
addition, the Group continuously evaluates whether securities should be maintained
taking into account their fair values and relationships with the issuers.
In conducting derivative transactions, the division in charge of each derivativetransaction follows the internal policies, which set forth delegation of authority andmaximum upper limit on positions.

c.

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

29

17.

Financial Instruments (continued)

Estimated Fair Value of Financial Instruments
Carrying value of financial instruments and estimated fair value on the consolidated balance
sheet as of March 31, 2020 and 2019 are shown in the following table. The following table
does not include financial instruments for which it is extremely difficult to determine the fairvalue.
The fair value of financial instruments is based on their quoted market price, if available.
When there is no quoted market price available, fair value is reasonably estimated. Sincevarious assumptions and factors are reflected in estimating the fair value, different
assumptions and factors could result in different fair value.

Carrying
value

March 31, 2020
Estimated
fair value
Difference(Thousands of yen)

AssetsCash and time deposits
Trade notes and accounts receivable
Accounts receivable - other
Investment securities
Total assets¥ 6,175,441
22,106,818
2,733,013
262,364¥ 31,277,637¥ 6,175,441
22,106,818
2,733,013
262,364¥ 31,277,637¥

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

¥10,668,290 ¥10,668,290
7,367,908
7,367,908
5,999,788
5,999,788
4,670,758
4,670,758
931,763936,108¥ 29,638,509 ¥ 29,642,854¥ (13,097)¥ (13,097)

¥

–
–
–
–
–

¥

–
–
–
–
4,345
¥ 4,345¥–

March 31, 2020
Estimated
Carrying
value
fair value
Difference(Thousands of U.S. dollars)
AssetsCash and time deposits
Trade notes and accounts receivable
Accounts receivable- other
Investment securities
Total assets$ 56,655
202,815
25,0742,407$ 286,951$ 56,655
202,815
25,0742,407$ 286,951

$ –
–
–
–
$ –

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

$ 97,874
67,59555,04442,851
8,548$ 271,913$ (120)$ 97,874
67,59555,04442,851
8,588$ 271,953$ (120)

$ –
–
–
–
40
$ 40
$ –
30

17.

Financial Instruments (continued)
March 31, 2019
Carrying
Estimatedvalue
fair value
Difference(Thousands of yen)

AssetsCash and time deposits
Trade notes and accounts receivable
Accounts receivable - other
Investment securities
Total assets¥ 6,050,750
21,328,708
2,994,748
279,877¥ 30,654,084¥ 6,050,750
21,328,708
2,994,748
279,877¥ 30,654,084¥

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

¥8,687,138¥8,687,138
5,498,360
5,498,360
2,999,997
2,999,997
5,767,120
5,767,120
3,184,128
3,175,044¥ 26,136,745 ¥ 26,127,661¥ (51,071)¥ (51,071)

¥

¥

–
–
–
–
–

–
–
–
–
(9,084)¥ (9,084)¥–*1. Long-term debt includes current portion of long-term debt.
*2. The value of assets and liabilities arising from derivatives is shown at net value, andwith the amount in parentheses representing net liability position.
Methods to determine the estimated fair value of financial instruments and other mattersrelated to securities and derivative transactionsa.

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

b.

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

c.

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

d.

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

31

17.
e.

Financial Instruments (continued)
Derivative transactions
Refer to Note 19 Derivative Transactions of the notes to the consolidated financial
statements.

Financial instruments for which it is extremely difficult to determine the fair value
March 31,
2020
2019
(Thousands of yen)
Unlisted stocks¥ 2,890,007
2,334,474

Long-term guarantee deposit¥ 2,421,768
1,979,203

2020(Thousands of
U.S. dollars)$ 26,514
21,417

Because no quoted market price is available and it is extremely difficult to determine the fairvalue, the above financial instruments are not included in the above table.
Redemption schedule for receivables and marketable securities with maturities
March 31, 2020
Due after
Due after
Due inone yearfive years
one yearthroughthroughDue afteror less
five years
ten yearsten years(Thousands of yen)
Cash and time deposits
Trade notes and accounts
receivable
Accounts receivable-other
Investment securities withmaturities:
Bonds
OthersTotal¥ 6,175,441

¥ –

¥ –

¥

22,106,818
2,733,013

–
–

–
–

–
–

–
–
¥ 31,015,273

–
–
¥ –

–
–
¥ –

–
–
–

¥

–

32

17.

Financial Instruments (continued)

Due inone yearor less
Cash and time deposits
Trade notes and accounts
receivable
Accounts receivable-other
Investment securities withmaturities:
Bonds
OthersTotal

Due after
ten years$ 56,655$ –$ –202,815
25,074

–
–

–
–

–
–

–
–
$ 284,544

–
–
$ –

–
–
$ –

–
–
–

Due inone yearor less
Cash and time deposits
Trade notes and accounts
receivable
Accounts receivable-other
Investment securities withmaturities:
Bonds
OthersTotal

March 31, 2020
Due after
Due after
one yearfive years
throughthroughfive years
ten years(Thousands of U.S. dollars)

March 31, 2019
Due after
Due after
one yearfive years
throughthroughfive years
ten years(Thousands of yen)

$

$

–

Due after
ten years¥ 6,050,750

¥ –

¥ –

¥

21,328,708
2,994,748

–
–

–
–

–
–

–
–
¥ 30,374,207

–
–
¥ –

–
–
¥ –

–
–
–

¥

–

33

18.

Securities

The components of unrealized gain or loss on marketable securities classified as othersecurities at March 31, 2020 and 2019 are summarized as follows:
March 31, 2020
Carrying
Acquisition
Unrealized
value
costs
gain (loss)(Thousands of yen)
Unrealized gain:
StocksBonds:
OthersOthers
Unrealized loss:
StocksBonds:
OthersOthersTotal¥ 258,688¥ 251,307¥ 7,380––
258,688––
251,307––
7,380¥ 3,676¥ 4,433¥ (756)––3,676¥ 262,364

–
–
4,433
¥ 255,740

–
–
(756)
¥ 6,623

March 31, 2020
Carrying
Acquisition
Unrealized
value
costs
gain (loss)(Thousands of U.S. dollars)
Unrealized gain:
StocksBonds:
OthersOthers
Unrealized loss:
StocksBonds:
OthersOthersTotal$ 2,373$ 2,306$ 68––$ 2,373––$ 2,306

–
–
$ 68

$ 34

$ 41

$ (7)

–
–
34
$ 2,407––41$ 2,346

–
–
(7)
$ 61

34

18.

Securities (continued)

Carrying
value
Unrealized gain:
StocksBonds:
OthersOthersTotal

March 31, 2019
Acquisition
Unrealized
costs
gain (loss)(Thousands of yen)

¥ 279,877¥ 255,413¥ 24,463––¥ 279,877––¥ 255,413––¥ 24,463

Non-marketable securities classified as other securities at March 31, 2020 and 2019
amounted to ¥403,032 thousand ($3,698thousand) and ¥202,117 thousand, respectively.

Proceeds from sales of securities classified as other securities and the aggregate gain and loss
for the year ended March 31, 2020 and 2019 were as follows.
March 31,
2020
2019
(Thousands of yen)
Sales proceeds:
StocksOther¥

17,510–17,510¥Aggregate gain:
StocksOther
Aggregate loss:
Stocks
Other

¥

¥
¥

3,360
–
¥ 3,360

¥

¥

¥

¥

–
–
–

¥

¥

–
–
–
–
–
–
–
–
–

2020
(Thousands of
U.S. dollars)
$
$
$
$
$
$

161
–
161
31
–
31
–
–
–

35

19.

Derivative Transactions

The Company utilizes forward foreign exchange contracts to reduce the foreign currency
exchange risk arising from the receivables and payables denominated in foreign currencies.
The notional amounts and the estimated fair value of the forward foreign exchange contracts
outstanding at March 31, 2020 and 2019 for which hedged accounting has not been applied,
are summarized as follows:

Maturing within one year
Sell:
THB
Total

Maturing within one year
Sell:
THB
Total

Maturing within one year
Sell:
USD
THB
Total

March 31, 2020
Notional amount
Fair value(Thousands of yen)
¥ 51,603¥ 51,603¥ 2,225¥ 2,225

March 31, 2020
Notional amount
Fair value(Thousands of U.S. dollars)
$
$

473
473

$
$

20
20

March 31, 2019
Notional amount
Fair value(Thousands of yen)
¥ 1,235,889
40,345¥ 1,276,234¥ (24,166)(947)¥ (25,114)

The notional amounts and the estimated fair value of the forward foreign exchange contracts
outstanding at March 31, 2020 and 2019, for which hedged accounting has been applied, aresummarized as follows:

Maturing within one year
Sell:
USD
EUR
Buy:
USD
EUR
THB
GBP
Total

March 31, 2020
Notional amount
Fair value(Thousands of yen)
¥ 270,058
41,899¥ (4,480)(629)

4,503,845
1,078,324
181,310
134,134¥ 6,209,572

409(13,165)8,476(5,932)¥ (15,322)

36

19.

Derivative Transactions (continued)

Maturing within one year
Sell:
USD
EUR
Buy:
USD
EUR
THB
GBP
Total

Maturing within one year
Sell:
USD
EUR
Others
Buy:
USD
EUR
THB
GBP
OthersTotal

March 31, 2020
Notional amount
Fair value(Thousands of U.S. dollars)$ 2,478384$ (41)(6)

41,320
9,893
1,663
1,231
$ 56,969

4
(121)
78
(54)
$ (141)March 31, 2019
Notional amount
Fair value(Thousands of yen)
¥ 552,015
72,356
1,774¥ (3,389)
2,226
(5)

4,502,695
823,667
26,525369,389
193,641¥ 6,542,066(8,016)(18,534)
(857)
654
1,965
¥ (25,957)

37

19.

Derivative Transactions (continued)

Foreign receivables and payables are translated at the applicable forward foreign exchange
rates if certain conditions are met. The notional amounts of the forward foreign exchange
contracts accounted for as part of accounts receivable or payable outstanding at March 31,
2020 and 2019 are summarized as follows:
March 31,
2020
2019
2020
(Thousands of yen)(Thousands of
U.S. dollars)
Sell:
USD
Buy:
USD
EUR
THB
OthersTotal¥ 101,824¥ 87,165$ 934

3,403,238
171,360
42,276
3,357¥ 3,722,058

2,040,324
39,032
44,8286,755¥ 2,218,104

31,222
1,572
388
31$ 34,147

The notional amounts of derivatives are not necessarily indicative of the actual market risk
involved in derivative transactions.
20.

Investment and Rental Properties

The Company and a certain consolidated subsidiary own buildings and lands for lease mainlyin Thai land and other areas.
The carrying value in the consolidated balance sheet and corresponding fair value of those
properties for the year ended March 31, 2020 are as follows:

March 31, 2020
¥ 1,587,728

March 31, 2020
$ 14,566

Carrying ValueNet change
March 31, 2019
(Thousands of yen)
¥ 624,398¥ 963,329

Carrying ValueNet change
March 31, 2019
(Thousands of U.S. dollars)$ 5,728$ 8,838

Fair Value
March 31, 2020
¥ 1,606,988
Fair Value
March 31, 2020
$ 14,743

The components of net change in carrying value include decreases mainly due to depreciationof Buildings and structures in the amount of ¥43,671 thousand ($401thousand) and increases
mainly due to acquisitions of real estate in the amount of ¥608,570 thousand ($5,583
thousand).

38

20.

Investment and Rental Properties (continued)

The carrying value in the consolidated balance sheet and corresponding fair value of those
properties for the year ended March 31, 2019 were as follows:

March 31, 2019

Carrying ValueNet change
March 31, 2018
(Thousands of yen)

¥ 963,329¥ (42,846)¥ 1,006,175

Fair Value
March 31, 2019
¥ 982,035

The components of net change in carrying value include decreases mainly due to depreciationof Buildings and structures in the amount of ¥34,666 thousand and increases mainly due toacquisitions of real estate in the amount of ¥3,039 thousand.
The carrying value represents the acquisition cost less accumulated depreciation andcumulative impairment loss. The fair value is mainly estimated in accordance with appraisal
standards for valuing real estate. However, if no material change has occurred in certain
values or indices, the fair values are determined by adjusting such appraised values andindices.
21.

Cash Flow Information

The components of cash and cash equivalents are summarized as follows:
March 31,
2020
2019
2020
(Thousands of yen)(Thousands of
U.S. dollars)
Cash and time deposits
Time deposits with maturities of more than
three months¥ 6,175,441¥ 6,050,750$ 56,655(3,761)(7,448)¥ 6,171,679 ¥ 6,043,301(35)$ 56,621

39

21.

Cash Flow Information (continued)

The following is the summary of assets and liabilities lost through the sales of shares of
JALUX TASECO DUTY FREE CO.,LTD. and Taniyama Siam Co.,Ltd. that result inchange in scope of consolidation for the year ended March 31, 2020, related selling price andnet payments due to the sales:(Thousands of (Thousands ofyen)
U.S. dollars)
Current assets
Fixed assets
Current liabilities
Long-term liabilities
Non-controlling interests
Translation adjustments
Investment account after sales of subsidiary securities
Loss on sales of subsidiary securities

Selling priceCash and cash equivalents
Net payments due to the sales¥552,444
219,276(156,457)(46,032)(268,768)(18,257)(230,956)(32,191)
19,057(248,471)¥(229,414)$ 5,068
2,012(1,435)(422)(2,466)(167)(2,119)(295)
175(2,280)$(2,105)

The following is the summary of assets and liabilities lost through the sales of shares ofAdvance Agriculture Co., Ltd. and Thierry Marx Japan Inc. that result in change in scope of
consolidation for the year ended March 31, 2019, related selling price and net payments dueto the sales:(Thousands ofyen)
Current assets
Fixed assets
Current liabilities
Long-term liabilities
Non-controlling interests
Loss on sales of subsidiary securities

Selling priceCash and cash equivalents
Net payments due to the sales¥78,885
44,143(43,267)(66,046)
38,788(37,518)
14,985(30,116)¥(15,131)

40

22.

Segment Information

The reportable segments of the Company and its consolidated subsidiaries are components
for which discrete financial information is available and whose operating results are regularly
reviewed by the Board of Directors to make decisions about resource allocation and to assess
performance.
Aviation & airport business segment includes aircraft components and aviation-related
business. Life service business segment includes insurance, real estate business and printing.
Retail business segment includes cabin service supply, mail-order sales, airport shops andgift item business. Food & beverage business segment includes agriculture & marine
products, processed foods and wine sales business.
In addition, Aviation & airport-related business segment have been renamed as Aviation &airport business segment.
The accounting policies of the segments are substantially the same as those described in thesignificant accounting policies in Note 1. Segment performance is evaluated based on
ordinary income or loss after allocation of corporate expenses. Intersegment sales arerecorded at the same price used in transactions with third parties.
The Company and its consolidated subsidiaries have reviewed both operating income andordinary income as important management indicators. However, as Equity in earnings ofaffiliates has increased, we have determined that the need to use ordinary income as amanagement indicators has increased. Therefore, segment profit has been changed fromoperating income before allocation of corporate expenses to ordinary income after allocationof corporate expenses from the current consolidated fiscal year. With the above change, thefigures for each reporting item in the previous consolidated fiscal year have been restated toconform to the presentation for the current consolidated fiscal year.
Ordinary income is calculated by nonoperating items from operating income.

41

22.

Segment Information (continued)

The reportable segments information of the Company and its consolidated subsidiaries forthe years ended March 31, 2020 and 2019 were summarized as follows:

Aviation &airportbusiness
Sales, profits and assets
by reportable segments:
Sales to outside parties ¥48,818,157
Inter-segment sales
and transfers
1,578
Total
48,819,735
Segment profits¥ 1,437,022
Segment assets¥28,665,834
Other items:
Depreciation andamortization
Interest income
Interest expense
Equity in earnings ofaffiliates
Investment in affiliates
accounted for by theequity method
Capital expenditures
Operating income
previously disclosed
as Segment profits

Other items:
Depreciation andamortization
Interest income
Interest expense
Equity in earnings ofaffiliates
Investment in affiliates
accounted for by theequity method
Capital expenditures
Operating income
previously disclosed
as Segment profits

Adjustments
andeliminations

Consolidated¥144,688,049¥12,972,856¥57,619,780¥25,277,255¥144,688,049¥–

122,396
13,095,252¥ 759,392¥ 6,439,690

5,904
57,625,685¥ 1,900,979¥13,485,527

1,296,821
26,574,077¥ 347,858¥ 9,772,564

1,426,701
146,114,751¥ 4,445,254¥ 58,363,617(1,426,701)–(1,426,701) 144,688,049¥ 292,754 ¥ 4,738,009¥ 2,481,124 ¥ 60,844,741¥¥¥

232,43372
106,641¥¥¥

115,833
1,506
45,505¥¥¥

501,4392,130
11,108¥¥¥81,786
82
40,784¥¥¥

931,494
3,791
204,038¥
75,357 ¥¥(706) ¥¥ (105,815) ¥¥679,133¥

25,628¥68,279¥–¥773,041¥(85,767) ¥¥ 1,449,089¥ 386,654¥¥

389,918
636,963¥ 254,872¥ 1,060,237¥¥–
38,314¥ 2,093,881¥ 2,122,170¥¥

331,031102,750¥¥

2,424,912
2,224,921¥ 1,449,865¥ 1,283,000¥ 2,308,205¥

846,603¥ 5,887,674¥ (1,917,838) ¥3,969,836

Aviation &airportbusiness
Sales, profits and assets
by reportable segments:
Sales to outside parties
Inter-segment sales
and transfers
Total
Segment profits
Segment assets

Year ended March 31, 2020
Reportable segments
Food &
Life service
RetailbeveragebusinessTotalbusinessbusiness(Thousands of yen)

Year ended March 31, 2020
Reportable segments
Food &
Life service
RetailbeveragebusinessbusinessTotalbusiness(Thousands of U.S. dollars)$447,873$ 119,017$528,622$231,901$ 1,327,413

14
447,887$ 13,184$262,989

1,123
120,140$ 6,967$ 59,080

54528,676$ 17,440$ 123,720

11,897
243,799$ 3,191$ 89,657

$
$
$

2,132
1
978

$
$
$

1,063
14
417

$
$
$

4,600
20
102

$
$
$

$

6,231

$

235

$

626

$ 13,294$ 3,547

$
$

3,577
5,844

$
$

$ 13,302$ 11,771

Adjustments
andeliminations$

1,006,851
3,085
98,223
687,274

Consolidated–$1,327,413

13,0891,340,502$ 40,782$ 535,446(13,089)(13,089)$ 2,686$ 22,763–
1,327,413$ 43,468$ 558,209

750
1
374

$
$
$

8,546
35
1,872

$
$
$

691
(6)
(971)

$
$
$

9,237
28
901

$

–

$

7,092

$

(787)

$

6,305

2,338
9,727

$
$

–
352

$ 19,210$ 19,469$ 3,037$943$ 22,247$ 20,412$ 21,176$

7,767$ 54,015$ (17,595)$ 36,421

4222.

Segment Information (continued)

Adjustments and eliminations for segment profits and losses include ¥ 3,755 thousand ($34
thousand) of elimination of inter-segment profit and ¥288,999 thousand ($2,651 thousand)of difference between the allocated amount of corporate expenses and actual amount, andcorporate profit or loss which are not allocable to the reportable segments.
Adjustments and eliminations for segment assets include minus ¥85,950 thousand ($789
thousand) of elimination of accounts inter-segment receivable and ¥2,567,074 thousand($23,551 thousand) of corporate assets which are not allocable to the reportable segments.
Corporate assets consist primarily of investments in securities and assets belonging to theadministrative part of the Company.
Adjustments and eliminations for capital expenditures consist primarily of investments in thehead office software.
Segment profit is reconciled to ordinary income. Nonoperating item amount is ¥768,172
thousand ($7,047 thousand) result in adjusting ordinary income to operating income reported
in the consolidated statements of income.

Aviation &airportbusiness
Sales, profits and assets
by reportable segments:
Sales to outside parties ¥84,443,519
Inter-segment sales
and transfers
1,409
Total
84,444,929
Segment profits¥ 418,912
Segment assets¥21,722,503
Other items:
Depreciation andamortization
Interest income
Interest expense
Equity in earnings ofaffiliates
Investment in affiliates
accounted for by theequity method
Capital expenditures
Operating income
previously disclosed
as Segment profits

Year ended March 31, 2019
Reportable segments
Food &
beverage
Life service
Retailbusinessbusinessbusiness
Total(Thousands of yen)

Adjustments
andeliminations

Consolidated¥185,726,096¥13,517,035¥63,230,925¥24,534,615¥185,726,096¥–

137,911
13,654,946¥ 655,158¥ 5,860,889

40,837
63,271,763¥ 3,437,457¥15,796,706

1,135,742
25,670,357¥ 420,505¥11,113,912

1,315,900
187,041,996¥ 4,932,033¥ 54,494,012(1,315,900)–(1,315,900) 185,726,096¥ 162,796 ¥ 5,094,829¥ 2,392,988 ¥ 56,887,000¥¥¥

251,976
65
149,854¥¥¥

110,2111,330
48,052¥¥¥

361,494
6,577
8,959

¥
¥
¥

72,62447
33,885¥¥¥796,306
8,021
240,752¥¥¥

71,688 ¥184 ¥(85,398) ¥867,994
8,205
155,353¥494,906¥

39,878¥30,473¥–¥565,258

¥

3,433

¥

568,691¥¥

857,281
29,544¥¥

372,844
18,451¥¥

506,221529,995¥¥–
137,075¥ 1,736,347¥
715,066¥¥

422,224
69,696¥¥

2,158,571
784,762¥

558,420¥ 1,133,470¥ 3,912,643¥

911,186¥ 6,515,720¥ (1,887,625) ¥4,628,094

43

22.

Segment Information (continued)

Adjustments and eliminations for segment profits and losses include minus ¥ 809 thousandof elimination of inter-segment profit and ¥163,605 thousand of difference between the
allocated amount of corporate expenses and actual amount, and corporate profit or loss which
are not allocable to the reportable segments.
Adjustments and eliminations for segment assets include minus ¥175,647 thousand ofelimination of accounts inter-segment receivable and ¥2,568,636 thousand of corporate
assets which are not allocable to the reportable segments. Corporate assets consist primarilyof investments in securities and assets belonging to the administrative part of the Company.
Adjustments and eliminations for capital expenditures consist primarily of investments in thehead office software.
Segment profit is reconciled to ordinary income. Nonoperating item amount is 466,734
thousand result in adjusting ordinary income to operating income reported in the consolidated
statements of income.
For the years ended March 31, 2020 and 2019, net sales to outside parties in Japan represent
more than 90% of consolidated operating revenues. As a result, net sales to outside parties
by countries or areas grouped according to geographical classification are not required to bedisclosed.
Property, plant and equipment by geographical countries or areas at March 31, 2020 and2019 were summarized as follows:
March 31,
2020
2019
2020
(Thousands of yen)(Thousands of
U.S. dollars)Japan¥ 2,430,983¥ 1,552,485$ 22,303

Thailand

1,312,092

1,446,421

12,038Singapore

1,080,466

1,269,670

9,913

443,293¥ 5,266,836

239,633¥ 4,508,210

4,067$ 48,320

Other foreign countries

Net sales to major customers for the fiscal year ended March 31, 2020 and 2019 were as
follows:
March 31,
2020
2019
2020
(Thousands of yen)(Thousands of
U.S. dollars)
IHI Corporation¥–¥ 43,245,346$–(Aviation & airport business)

44

Mitsubishi Heavy Industries Aero Engines,
Ltd.

19,429,560

20,102,843

178,253

16,508,279¥

151,452(Aviation & airport business)
Kawasaki Heavy Industries, Ltd.
–

(Aviation & airport business)

45

22.

Segment Information (continued)

Impairment losses on fixed assets by reportable segments for the years ended March 31, 2020
and 2019 were summarized as follows:
March 31,
2020
2019
2020
(Thousands of yen)(Thousands of
U.S. dollars)
Aviation & airport businessLife service business
Retail business
Food & beverage business
Reportable segments total
Adjustments and eliminations

23.

¥

–
–
80,822–80,822–¥ 80,822

¥

–
–
4,472
–
4,472
–
¥ 4,472

$

–
–
741
–
741
–
$ 741

Related Party Transactions

The significant transactions between the Company and Japan Airline Co., Ltd., for the years
ended March 31, 2020 and 2019 were summarized as follows:Year ended March 31,
2020
2019
2020
(Thousands of yen)(Thousands of
U.S. dollars)
Sales of flight equipment
Purchases of merchandise¥ 5,037,635
491,224¥ 5,608,588
512,011

March 31,
2020
2019
(Thousands of yen)Accounts receivable
Accounts payable¥ 544,048
90,167¥ 650,829
95,125$ 46,217
4,507

2020
(Thousands of
U.S. dollars)$ 4,991
827

46

23.

Related Party Transactions (continued)

The significant transactions between certain consolidated subsidiaries of the Company andJapan Airlines Co., Ltd. for the years ended March 31, 2020 and 2019 were summarized asfollows:
Year ended March 31,
2020
2019
2020
(Thousands of yen)(Thousands of
U.S. dollars)
Sales of flight equipment¥ 360,739¥ 390,008

March 31,
2020
2019
(Thousands of yen)Accounts receivable¥ 8,353¥ 34,798$ 3,310

2020(Thousands of
U.S. dollars)$ 77

A significant affiliates is MC-Jalux Airport Services Co.,Ltd.,and its condensed financial
statements are as follows:Year ended March 31,
2019
2020
2020
(Thousands of yen)(Thousands of
U.S. dollars)
Current assets
Fixed assets¥ 2,545,064
1,334,084¥ 1,513,675
1,240,822$ 23,349
12,239363,091
508,359

254,570792,672

3,331
4,664

Net assets

3,007,697

1,707,254

27,594

Sales

2,449,133
1,211,266
1,211,266

1,648,955
782,099
782,099

22,46911,113
11,113Current liabilities
Long-term liabilities

Net Profit before income taxes
Net Profit

47

24.

Contingent liabilities

As guarantors of indebtedness to unconsolidated subsidiaries and affiliates, for the years
ended March 31, 2020 and 2019 were summarized as follows:Year ended March 31,
2020
2019
2020
(Thousands of yen)(Thousands of
U.S. dollars)
MC-Jalux Airport Services Co.,Ltd.

¥ 111,530¥ 227,550$ 1,02348