ABC-MART, INC.
Annual Report 2013
For the year ended February 28, 2013

Contents
1

Consolidated Balance Sheets3

Consolidated Statements of Income

5

Consolidated Statements of Comprehensive Income

6

Consolidated Statements of Changes in Net Assets

7

Consolidated Statements of Cash Flows9

Notes to Consolidated Financial Statements
Independent Auditors' ReportConsolidated Balance Sheets
ABC-MART, INC. and consolidated subsidiaries
As of February 28, 2013 and February 29, 2012
Thousands of yen
ASSETS

2013

2012

Current Assets:
Cash and deposits (Notes 3, 4 and 12)¥

68,852,158¥

42,167,745

Notes and accounts receivable – trade (Note 4)

5,064,083

2,563,312

Less － allowance for doubtful accounts (Note 4)(23,645)(6,337)

Net trade receivables

5,040,438

2,556,974

Merchandise and finished goods

32,682,063

23,243,775

44,833－Work in process
Raw materials and supplies

485,939

25,747

Currency Option (Notes 4 and 7)

1,314,421

1,200,314

Deferred tax assets (Note 10)

1,166,442

1,004,547

Other

3,480,723

2,504,923

113,067,021

72,704,028

Buildings and structures

20,886,196

17,984,882

Tools, furniture and fixtures

6,266,116

3,139,826

Land

Total current assets

Noncurrent assets:
Property, plant and equipment (Notes 6 and 16):

17,483,893

17,176,451

Construction in progress

60,071

427,108

Other

468,848457,156

45,165,126

39,185,424(13,576,767)(9,958,924)

31,588,359

29,226,500

Total
Less accumulated depreciation
Net property, plant and equipment

Intangible assets:
Trademark (Note 8)

2,465,569

11,264

Goodwill (Note 8)

6,821,704

964,553

Other

1,506,138

1,036,555

10,793,412

2,012,373

Investment in securities (Notes 4 and 5)

109,651

94,891

Investment in non-consolidated subsidiaries (Notes 4 and 5)

84,17584,175

Lease and guarantee deposits (Notes 4, 12 and 18)

16,494,299

14,331,988

Other

2,022,501

1,759,984－(10,000)

Total investments and other assets

18,710,627

16,261,039

Total noncurrent assets

61,092,399

47,499,913

Total intangible assets

Investments and other assets:

Less-allowance for doubtful accounts

Total assets¥

See accompanying notes to consolidated financial statements.

－ 1 －174,159,421¥

120,203,941

Consolidated Balance Sheets
ABC-MART, INC. and consolidated subsidiaries
As of February 28, 2013 and February 29, 2012
Thousands of yen
LIABILITIES

2013

2012

Current Liabilities:
Notes and accounts payable:
Trade (Notes 4 and 12)¥

Facilities (Note 4)

7,477,486¥

7,147,386

936,279

960,493

Short-term loans payable (Notes 4, 9 and 12)

4,135,826

2,509,305

Current portion of long-term loans payable (Notes 4, 9 and 12)

1,002,800

2,252,800

Income taxes payable (Note 4)

7,455,270

6,513,447

Provision for bonuses

642,716

577,247

Provision

178,038

17,070Asset retirement obligations (Note 11)

17,861

14,3084,114,601

3,690,118

25,960,880

23,682,176

Convertible bonds (Notes 4 and 9)

33,000,000－

Long-term loans payable (Notes 4, 9 and 12)

2,502,800

3,505,600

Other
Total current liabilities

Noncurrent liabilities:

Provision

798,867－

Asset retirement obligations (Note 11)

218,207

133,454

Currency option (Notes 4 and 7)

265,084

257,731

1,648,895

388,830

Total noncurrent liabilities

38,433,856

4,285,616

Total liabilities

64,394,736

27,967,792

3,482,930

3,482,930

Capital surplus

7,488,686

7,488,686

Retained earnings

96,311,831

82,402,496

(522)

(522)

107,282,926

93,373,591

13,432(5,746)

2,177,708(1,432,324)

2,191,141(1,438,071)

290,616

300,628

109,764,684

92,236,148

Other

Commitments and contingent liabilities (Note 12)
NET ASSETS (Note 13)
Shareholders’ equity:
Common stock, authorized 334,500,000 shares, issued 75,294,429 sharesin 2013 and 2012

Treasury stock, at cost, 164 shares in 2013 and 2012
Total shareholders’ equity

Accumulated other comprehensive income (Note 14):
Net unrealized gains (losses) on available-for-sale securities
Foreign currency translation adjustments
Total accumulated other comprehensive income
Minority interests in consolidated subsidiaries
Total net assets
Total liabilities and net assets¥

See accompanying notes to consolidated financial statements.

－ 2 －174,159,421¥

120,203,941

Consolidated Statements of Income
ABC-MART, INC. and consolidated subsidiaries
For the years ended February 28, 2013 and February 29, 2012

Thousands of yen
2013
Net sales¥

Cost of sales

159,418,140

2012¥

140,761,016

68,109,105

59,658,395

91,309,034

81,102,620

Packing and transportation expenses

2,210,771

1,950,419

Advertising expenses

6,931,745

6,476,402

Gross profit

Selling, general and administrative expenses:

Warehousing expenses

1,293,183

1,257,626

Directors' compensations, salaries and allowances

16,431,626

14,948,840

Bonuses

1,083,784

1,047,361

Provision for bonuses

640,700

578,027

Legal and employee benefits expenses

2,113,560

1,879,820

Rents

15,326,723

13,644,869

Depreciation and amortization

3,250,878

2,648,130

Utilities expenses

1,793,573

1,457,090

Commission fee

2,677,576

2,298,221

Taxes and dues

668,623566,845

1,820

11,971

Allowance for doubtful accounts
Amortization of goodwill
Other
Total
Operating income¥(Continued)－ 3 －549,441

264,0035,959,908

4,851,762

60,933,917

53,881,392

30,375,117¥

27,221,227

Thousands of yen
2013

2012

Other income (expenses):
Interest income¥

Interest expenses

46,729¥(74,012)40,751(132,524)

Foreign exchange gains (losses), net

80,501(86,052)

Gain on valuation of derivatives

106,753

942,582

Rent income

481,790419,285

Rent expenses（271,275）(203,523)

57,45060,757

Gain on sales of noncurrent assets (Notes 15)

545

6,435

Loss on sales of noncurrent assets (Notes 15)

(343)

－

Loss on retirement of noncurrent assets (Note 15)(114,733)(116,881)

Loss on liquidation of business(65,595)－

Loss on valuation of golf club membership(7,075)(19,220)

Impairment loss (Note 16)(408,046)(549,577)

Loss on disposal of goods－(28,450)

Advertising income

Loss on adjustment for changes of accounting standards for asset－(549,530)

Loss on disaster

retirement obligations (Note 11)－(53,518)

Donations－(52,957)

Other, net(55,781)

137,125

Total(223,093)(185,297)

30,152,024

27,035,930

Current

13,126,285

11,767,273

Deferred(220,612)(429,211)

12,905,672

11,338,061

17,246,351

15,697,869(51,225)

21,408

Income before income taxes and minority interests

Income taxes (Note 10):

Total
Income before minority interests
Minority interests
Net income¥

See accompanying notes to consolidated financial statements.

－ 4 －17,297,577¥

15,676,460

Consolidated Statements of Comprehensive Income
ABC-MART, INC. and consolidated subsidiaries
For the years ended February 28, 2013 and February 29, 2012

Thousands of yen
2013
Income before minority interests¥

17,246,351

2012¥

15,697,869

Other comprehensive income:Net unrealized gains (losses) on available-for-sale securities

19,178(1,563)Foreign currency translation adjustments

3,651,247(556,430)

Total other comprehensive income

3,670,426(557,993)

Comprehensive Income¥

20,916,777¥

15,139,875¥

20,926,789¥

15,136,509

Comprehensive income attributable to:Shareholders of ABC-MART, INC.
Minority interests(10,012)

See accompanying notes to consolidated financial statements.

－ 5 －

3,365

Consolidated Statements of Changes in Net Assets
ABC-MART, INC. and consolidated subsidiaries
For the years ended February 28, 2013 and February 29, 2012
Thousands of yen
Accumulated other comprehensive
Shareholders’ equity

Balance at February 28, 2011¥

incomeNet unrealized

Foreign

Minority

gains (losses) on

currencyinterests in

CommonCapitalRetained

Treasury

available-for-saletranslation

consolidated

stock

surplusearnings

stock, at cost

securities

adjustments

subsidiaries

3,482,930¥

7,488,686¥ 70,340,159

¥

(522)

¥

(4,182)¥(893,937)¥

3,015,060

Total net assets¥

83,428,195

Net income－－

15,676,460

－

－

－

－

15,676,460

Dividends from surplus－－(3,614,124)

－

－

－

－

(3,614,124)

Net change during the year

－

－

－

－

(1,563)(538,387)(2,714,431)(3,254,382)

3,482,930

7,488,686

82,402,496(522)(5,746)(1,432,324)

300,628

92,236,148

Net income－－

17,297,577

－

－

－

－

17,297,577

Dividends from surplus－－(3,388,241)

－

－

－

－

(3,388,241)

Net change during the year

－

－

－

－

19,1783,610,033(10,012)3,619,200

7,488,686¥ 96,311,831

Balance at February 29, 2012

Balance at February 28, 2013¥

3,482,930

¥

¥

(522)

See accompanying notes to consolidated financial statements.

－ 6 －

¥

13,432¥

2,177,708¥

290,616¥

109,764,684

Consolidated Statements of Cash Flows
ABC-MART, INC. and consolidated subsidiaries
For the years ended February 28, 2013 and February 29, 2012

Thousands of yen
2013

2012

Net cash provided by (used in) operating activities:
Net income before income taxes and minority interests¥

30,152,024¥

27,035,930

Depreciation and amortization

3,250,878

2,648,130

Increase in provision for bonuses

62,672

96,244

Increase (decrease) in allowance for doubtful accounts(12,264)

11,447

Interests and dividends income(47,453)(41,475)

Interest expenses

74,012

132,524(104,166)

2,732

16,582－(106,753)(942,582)

Foreign exchange (gains) losses, net
Loss on valuation of investment in securities
Gain on valuation of derivatives
Loss on sales and retirement of noncurrent assets

114,531

110,445

Impairment loss

408,046549,577－

549,530

Loss on adjustment for changes in accounting standards for asset retirement obligations
Increase in notes and accounts receivable － trade(620,481)(298,790)(5,362,064)(860,055)

Decrease in notes and accounts payable － trade(915,849)(191,642)

Other

723,693

1,044,345

27,633,408

29,846,360

Increase in inventories

SubtotalInterest and dividends received

32,92033,842

Interest expenses paid

(76,415)(138,066)

Payment for loss on disaster－(37,552)

Payment for donations－(52,957)(12,193,959)(10,652,922)

Income taxes paid
Net cash provided by operating activities¥(Continued)－ 7 －15,395,953¥

18,998,704

Thousands of yen
2013

2012

Net cash provided by (used in) investing activities:
Payment for time deposits¥

Proceeds from withdrawal of time deposits(5,400)¥(5,400)120,526

5,400(4,093,447)(5,615,864)

5,137

17,799Payment for purchase of intangible assets(419,560)(207,396)

Payment for removal of stores(55,935)(78,681)

Increase in loans receivable(185,000)(315,500)

83,062

57,696－(3,435,971)(10,999,115)－

Payment for lease and guarantee deposits(2,562,575)(1,527,365)

Proceeds from collection of lease and guarantee deposits

1,011,240

669,580

Other, net(102,608)(79,719)(17,203,674)(10,515,422)

864,471(2,108,047)

Proceeds from long-term loans payable－

10,000,000

Repayment of long-term loans payable(2,259,060)(9,252,800)

Cash dividends paid

(3,384,043)(3,609,464)

Proceeds from issuance of convertible bonds

33,000,000－(11,371)(2,499)Net cash provided by (used in) financing activities

28,209,995(4,972,811)

Effect of exchange rate changes on cash and cash equivalents

378,867(88,091)

Net increase in cash and cash equivalents

26,781,142

3,422,379

Cash and cash equivalents at beginning of period

41,990,939

38,568,560

Payment for purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment

Proceeds from collection of loans receivable
Payment for purchase of investment in a subsidiary
Payment for purchase of investment in a subsidiary resulting in change in scope of
consolidation

Net cash used in investing activities
Net cash provided by (used in) financing activities:
Net increase (decrease) in short-term loans payable

Other, net

Cash and cash equivalents at end of period (Note 3)¥

See accompanying notes to consolidated financial statements.

－ 8 －68,772,082¥

41,990,939

Notes to Consolidated Financial Statements
ABC-MART, INC. and consolidated subsidiaries

1. Basis of Presentation and Financial Statement Translation
The accompanying consolidated financial statements of ABC-MART, INC. and consolidated subsidiaries (“the Group”) are prepared on thebasis of accounting principles generally accepted in Japan, which are different in certain respects as to the application and disclosure
requirements of International Financial Reporting Standards (“IFRS”), and are compiled from the consolidated financial statements preparedby

ABC-MART, INC. (“the Company”) as required by the Financial Instruments and Exchange Act of Japan. Effective March 1, 2009, theCompany adopted the “Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial
Statements” (PITF No. 18). In accordance with PITF No. 18, the accompanying consolidated financial statements for the years ended
February 28, 2013 and February 29, 2012 have been prepared by using the accounts of foreign consolidated subsidiaries prepared inaccordance with either IFRS or accounting principles generally accepted in the United States as adjusted for certain items.
In addition, for the convenience of readers outside Japan, the accompanying consolidated financial statements, including the notes thereof,
have been reclassified and contain additional information which is not required under accounting principles generally accepted in Japan.
As permitted under the Financial Instruments and Exchange Law of Japan, amounts of less than one thousand yen have been omitted. As
a result, the totals shown in the accompanying Consolidated Financial Statements do not necessarily agree with the sums of the individual
amounts. Certain reclassifications have been made to prior year balances in order to conform to the current year presentation.

2. Summary of Significant Accounting Policies(1)

Basis of Consolidation

The accompanying Consolidated Financial Statements include the accounts of the Company and 12 subsidiaries (5 subsidiaries as of February
29, 2012) with an exception of a non-consolidated subsidiary due to immaterial impact on the consolidated financial statements. The
investment in the non-consolidated subsidiary is not accounted for by the equity-method because of the immaterial effect on the consolidated
financial statements in aggregated amount of net income and retained earnings, and therefore carried at cost (¥84,175 thousand as ofFebruary 28, 2013 and February 29, 2012).
During the year ended February 28, 2013, the Company acquired 100% of shares of LaCrosse Footwear, Inc. Therefore, LaCrosse
Footwear, Inc. and its 6 subsidiaries have been included in scope of consolidation.
The year end at ABC-MART KOREA, INC., ABC-MART TAIWAN, INC., LaCrosse Footwear, Inc. and its 6 subsidiaries is December 31.
The financial statements as of December 31 are used in preparing the consolidated financial statements for the subsidiaries. All materialtransactions during the period from January 1 to February 28 or 29 are adjusted for in the consolidation process.
(2)

Securities

Available-for-sale securities are classified into two categories, where (a) the fair value is available and (b) the fair value is not available.
(a)Securities whose fair value is available are valued at the quoted market price prevailing at the end of the year. Net unrealized gains orlosses on these securities are reported as a separate component of net assets at a net-of-tax amount. Cost of sales is determined using themoving-average method.

(b)

Securities whose fair value is not available are valued at cost and the cost is determined using the moving-average method.

(3)

Inventories

Inventories held for sale in the ordinary course of business are stated at cost. The book value of inventories is reduced on the basis of declines
in profitability and is determined principally by the average method for merchandise, the FIFO method for finished goods, work in process andraw materials and supplies in overseas subsidiaries, and the specific identification method for raw materials and supplies in the Company andits domestic subsidiaries.
(4)

Property, Plant and Equipment(a)

The Company and its domestic subsidiaries

Property, plant and equipment are stated at cost. Depreciation is mainly calculated using the declining-balance method at rates based on theestimated useful lives and residual values as prescribed by Japanese tax laws, except for the buildings (excluding building facilities) acquiredon or after April 1, 1998, which are depreciated based on the straight-line method.
(b)Foreign subsidiaries:

Depreciation is calculated using the straight-line method.

－ 9 －

(5)

Intangible Assets

Intangible assets, excluding software for internal use and goodwill, are amortized using the straight-line method over the estimated useful
lives as prescribed by Japanese tax laws. Software for internal use is amortized using the straight-line method over an estimated useful life of
five years. The useful life of goodwill is individually estimated. Goodwill is amortized using the straight-line method over the estimated useful
life.
(6)

Leased assets

Depreciation of leased assets from finance lease transactions that are deemed to transfer ownership of the leased property is calculated using
the same method applied to noncurrent assets of which the Company has ownership. Depreciation of leased assets from finance leasetransactions that are not deemed to transfer ownership of the leased property is calculated using the straight-line method with no residual
value except for the finance lease transactions executed prior to March 1, 2009 which are accounted for by the same method as that applied toordinary operating leases.
(7)

Allowances for Doubtful Accounts

Allowances for doubtful accounts are provided in amounts management considers sufficient to cover possible losses on collection. With respect
to normal trade accounts receivable, it is stated at an amount based on the actual rate of historical bad debts, and for certain doubtfulreceivables, the uncollectible amount is individually estimated.
(8)

Provision for Bonuses

As a provision for the payment of bonuses to employees, an appropriate portion of the estimated total bonus payment requirement has beenaccounted for in the year under review.
(9)

Foreign Currency Translation

All assets and liabilities of the Company and its domestic consolidated subsidiaries denominated in foreign currencies are translated into
Japanese yen at the exchange rate in effect at the respective balance sheet dates. Translation gains or losses are included in the accompanying
Consolidated Statements of Income.
All balance sheet accounts of foreign subsidiaries are translated into Japanese yen at the exchange rate in effect at the respective balance
sheet dates except for shareholders’ equity, which is translated at the historical rates. All income and expense accounts are translated at the
average exchange rate for the period. The resulting translation adjustments are included in the accompanying Consolidated Balance Sheets
under “Foreign currency translation adjustments” and “Minority interests in consolidated subsidiaries.”(10) Derivative Transactions and Hedge Accounting
Derivative financial instruments are valued at fair value.
(a)Hedge accounting

If derivative financial instruments are used as hedges and meet certain hedge criteria, recognition of gains or losses resulting from changes intheir fair value is deferred until the related losses or gains on the hedged items are recognized. Forward foreign exchange contracts whichmeet specific matching criteria are translated at the foreign exchange rate stipulated in the contracts.
(b)

Hedging instruments and hedged items


Hedging instruments – Derivative transactions (forward foreign exchange contracts)Hedged items – Hedged items are primary trade payables denominated in foreign currencies which have risks associated withadverse fluctuations in foreign currency.

(c)Hedge policy

Hedging transactions are being performed to mitigate future losses on the hedged items.
(d)Assessment of hedge effectiveness

Effectiveness of hedge is assessed by verifying if the foreign currency risks on the hedged items are mitigated.
(11) Cash and Cash Equivalents
Cash and cash equivalents in the accompanying Consolidated Statements of Cash Flows are comprised of cash on hand, demand deposits, andshort term investments with maturities of three months or less from the date of acquisition, that are liquid, readily convertible into cash, andare subject to minimum risk of price fluctuation.

－ 10 －

(12) Accounting for Consumption Taxes
The Japanese consumption taxes withheld and consumption taxes paid are not included in the accompanying Consolidated Statements ofIncome.
(13) Application of New Accounting Standards
Effective from the accounting changes and corrections of prior period errors made at and after the beginning of the year ended February 28,
2013, the Company applied the “Accounting Standard for Accounting Changes and Error Corrections” (ASBJ Statement No. 24 issued on
December 4, 2009) and the “Guidance on Accounting Standard for Accounting Changes and Error Corrections” (ASBJ Guidance No. 24 issued
on December 4, 2009).

－ 11 －

3. Cash and Cash Equivalents
Cash and Cash equivalents as of February 28, 2013 and February 29, 2012 consist of the following:Thousands of yen

Cash and deposits

2013

2012

¥ 68,852,158¥ 42,167,745(80,075)(176,805)¥ 68,772,082¥ 41,990,939

Time deposits with maturities over three months
Cash and cash equivalents at end of period

4. Financial Instruments(1)

Qualitative information on financial instruments(a)Policies relating to financial instruments

The Group invests its funds mainly in short-term deposits and raises funds by loans from financial institutions and issuance of bonds.
Derivative transactions are foreign exchange forward contracts which are only used to avoid the risks described below. The Group does notengage in derivative transactions for speculative purposes.
(b)

Details of financial instruments and associated risk

Trade notes and accounts receivable, which are mostly related to tenant sales and credit card sales of commercial facilities, are exposed tocredit risk of customers.
Investment securities, which are mostly related to foreign debt securities and stocks of financial institutions, are exposed to market pricevolatility risk and credit risk of issuers.
Investment in non-consolidated subsidiary does not have market price and is exposed to impairment risk due to financial result of thesubsidiary.
Lease and guarantee deposits, which are mostly related to leasehold contracts of stores, are exposed to credit risk of lessors.
All notes and accounts payable and income taxes payable are due in one year.
Short-term loans payable are mostly related to funds used as payment of imported goods and Long-term loans payable are mostly related
to capital expenditures. Loans are generally borrowed with fixed rate and therefore, there is no interest rate risk.
Convertible bonds are related to funds used as mid-term capital investment and the term of redemption of the convertible bonds are 4
years and 11 months at the longest.
Derivative transactions are foreign exchange forward contracts which are used to mitigate the risk of currency exchange rates
fluctuations for receivables and payables denominated in foreign currencies. The Company also uses derivatives as hedging instruments,
which is described in Note 2. “Summary of Significant Accounting Policies”.
(c)Risk management systems relating to financial instruments(i)Management of credit risk (risk relating to non-performance of a contract obligation by a counterparty, etc.)
With respect to trade receivables related to credit card sales, credit risk is fairly low because counterparties are group of financial
institutions. With respect to trade receivables related to tenant sales, as same as lease and guarantee deposits, Store Development
Department monitors each counterparty to reduce credit risk by early identification of a possible default caused by financial trouble ofthe counterparty.
The Company believes that the credit risk under derivative transactions is fairly low because counterparties of derivativetransactions are limited to financial institutions with a high credit rating.

(ii)

Management of market risks (risks associated with fluctuations in foreign currency exchange as well as interest rates, etc.)
With respect to investment securities and investment in non-consolidated subsidiary, the Group quarterly monitors fair values as well as
the financial status of issuers (counterparties).
Basic policy of derivative transactions are decided by the Board of Directors and Import Team in Accounting Department performs
and manages transactions. Balance of derivative transactions and status of gain and losses are periodically reported to the Board of
Directors.

－ 12 －

(iii)

Management of liquidity risks associated with the procurement of funds (the risk of being unable to make payments on due dates)
The Group manages its liquidity risk by adequate preparation and update of financial planning depending on the status of funds.

(d)Supplementary explanation for fair values, etc. of financial instruments

Fair values of financial instruments are determined by market prices. If no market price is available, the fair value is based on the value thatis calculated in a reasonable manner. The determination of such value contains variable factors, and the adoption of wide ranging anddiffering assumptions may cause values to change.
(2)

Fair Value of financial instruments

Book values and fair values of the financial instruments on the Consolidated Balance Sheets on February 28, 2013 and February 29, 2012 are
as follows. Financial instruments whose fair value is deemed highly difficult to measure are excluded from the table.
Thousands of yen
2013

Cash and deposits

Book value

Fair value

Difference

¥

¥

¥

68,852,158

Notes and accounts receivable – trade

5,064,083

Less － allowance for doubtful accounts(23,645)

Net trade receivables

68,852,158－

5,040,438

5,040,438－

89,21689,216－

12,725,554

13,014,689

289,135

Total assets

86,707,367

86,996,503

289,135

Notes and accounts payable – trade

Investment securities
Lease and guarantee deposits

7,477,486

7,477,486－

Notes payable – facilities

936,279

936,279－

Short-term loans payable

4,135,826

4,135,826－

Income taxes payable

7,455,270

7,455,270－

Convertible bonds

33,000,000

34,270,500

1,270,500

Long-term loans payable (including current portion)

3,505,600

3,529,476

23,87656,510,462

57,804,838

1,294,376

Total liabilities
Derivative transactions *¥1,049,336¥

1,049,336¥－

Thousands of yen
2012

Cash and deposits

Book value

Fair value

Difference

¥

¥

¥

Notes and accounts receivable – trade42,167,745

42,167,745－

2,563,312

Less － allowance for doubtful accounts(6,337)

Net trade receivables

2,556,974

Investment securities

2,556,974－

74,45674,456－

10,250,216

10,458,683

208,466

Total assets

55,049,393

55,257,859

208,466

Notes and accounts payable – trade7,147,386

7,147,386－

960,493

960,493－

Lease and guarantee deposits

Notes payable – facilities
Short-term loans payable

2,509,305

2,509,305－

Income taxes payable

6,513,447

6,513,447－

Long-term loans payable (including current portion)

5,758,400

5,779,857

21,45722,889,032

22,910,489

21,457

Total liabilities
Derivative transactions *¥942,582¥

942,582¥－* The value of assets and liabilities arising from derivative transactions are shown by net value. Net liabilities are shown in parentheses.

－ 13 －

Note 1: Items relating to the calculation of the fair value of financial instruments and derivative instruments(Assets)(1)

Cash and deposits and notes and accounts receivable, trade
Given that those items are of short duration, their current value approximates their book value, and therefore the fair value is deemed tobe that book value.

(2)

Investment securities
Fair value of equity securities is based on quoted market prices, and fair value of debt securities is based on quoted market prices orquotes obtained from financial institutions. Additional information on securities classified by holding purpose is presented in Note 2.
“Summary of Significant Accounting Policies”.

(3)

Lease and guarantee deposits
Given that lease and guarantee deposits are considered redeemable after a fixed period, their market value is calculated at a present
value discounted across the period to maturity at the government bonds interest rates closest to the maturity date.

(Liabilities)(1)

Notes and accounts payable – trade, notes payable – facilities, short-term loans payable and income taxes payable
Given that those items are of short duration, their current value approximates their book value, and therefore the fair value is deemed tobe that book value.

(2)

Convertible bonds
The fair value of convertible bonds is based on market price.

(3)Long-term loans payable (including current portion)
The fair value of long-term loans payable is based on the present value, which is obtained by discounting the total of principal andinterest by the interest rate that would be applied if similar new borrowings were entered into.

(Derivative transactions)
Fair value of derivative transactions is based on quotes obtained from financial institutions.
Note 2: Items for which fair value is deemed highly difficult to measure

Thousands of yen
2013

2012

Investment securities:
Non-listed securities (*1)¥

20,435¥20,435Investment in non-consolidated subsidiary:
Non-listed securities (*1)
Lease and guarantee deposits (*2)

84,17584,175

3,768,744

4,081,771(*1) These are not included in the above tables since determining their estimated fair values was deemed to be highly difficult, due to the factthat these do not have market prices.
(*2) These are not included in “Lease and guarantee deposits” in the above tables since determining their fair values was deemed to behighly difficult, due to the fact that the amount to be refunded cannot be reasonably estimated.

－ 14 －

Note 3: Redemption schedule for receivables and marketable securities with maturities
Thousands of yen
2013

Within one year
Cash and deposits¥ 68,574,899

Notes and accounts receivable – trade

After one year

After five years

within five years

within ten years

¥

¥

－

－

After ten years¥－

5,064,083

－

－

－

－

56,848－－3,073,462

9,369,110

829,487

378,073

Investment securities:
Available-for-sale securities with maturities:
Debt securities
Lease and guarantee deposits (*)
Total¥ 76,712,445¥

9,425,959¥

829,487¥

378,073

Thousands of yen
2012

Within one year
Cash and deposits¥ 41,909,765

Notes and accounts receivable – trade

After one year

After five years

within five years

within ten years¥

2,563,312

－

¥

－

－

After ten years
¥

－

－
－

Investment securities:
Available-for-sale securities with maturities:
Debt securities
Lease and guarantee deposits (*)
Total
(*)

－

44,723－－2,532,781

6,985,805

1,096,464

292,645¥ 47,005,859¥

7,030,528¥

1,096,464¥

292,645

Items for which fair values is deemed to be highly difficult, due to the fact that the amount to be refunded cannot be reasonably
estimated, are not included in “Lease and guarantee deposits”.

－ 15 －

5. Securities
Book value and acquisition cost of available-for-sale securities as of February 28, 2013 and February 29, 2012 are as follows:
Thousands of yen
2013
Book value

Acquisition cost

Difference

Securities with book value exceeding acquisition cost:
Equity securities¥

Debt securities

25,627

17,788¥

7,839

63,58949,75913,830－－－89,21667,547

21,669

－

－

－

Other
Sub-total¥

Securities with book value not exceeding acquisition cost:
Equity securities
Debt securities

－

－

－

Other

20,43520,435－Sub-total

20,43520,435

－

Total

¥

109,651¥

87,982¥

21,669Thousands of yen
2012Book value

Acquisition cost

Difference

Securities with book value exceeding acquisition cost:
Equity securities¥

Debt securities

－

¥

－

¥

－

50,99949,759

1,240

－

－

－

50,99949,7591,240

23,45634,371(10,914)

－

－

－

Other

20,43520,435－Sub-total

43,89154,806(10,914)

Other
Sub-total
Securities with book value not exceeding acquisition cost:
Equity securities
Debt securities

Total

¥

94,891－ 16 －¥

104,565¥(9,673)

6. Leases(1)

Finance leases

Leased properties are store facilities (tools, furniture and fixtures) for retail business and leased intangible assets are software.
Finance lease transactions that are not deemed to transfer ownership of the leased property to the lessee and that were concluded prior
to March 1, 2009 are accounted for by the same method as that applied to ordinary operating leases.
A summary of assumed amounts of acquisition cost, accumulated depreciation, and net book value, including the interest portion, as ofFebruary 28, 2013 and February 29, 2012 are as follows:

Thousands of yen
2013

2012

Tools, furniture and fixtures:
Acquisition costs

¥

5,429

Accumulated depreciation¥

23,718

4,072

21,126

1,357

2,592

Acquisition costs

－

4,397

Accumulated depreciation

－

4,090

Net book value
Other:Net book value
Lease payments

¥

－

¥

306

¥

1,347

¥

46,278Depreciation expense (*)

1,347

46,278(*) Depreciation expense is computed using the straight-line method over the lease term assuming no residual value.
The future lease payments of the Company’s finance leases, including the interest portion, as of February 28, 2013 and February 29, 2012 are
as follows:

Thousands of yen
2013

Due within one year¥775

Due after one year
Total

(2)

2012
¥

1,541

581
¥

1,357

1,357
¥

2,898

Operating leases

The amounts of outstanding future lease payments under lease agreements other than finance leases, which are non-cancelable, including theinterest portion, as of February 28, 2013 and February 29, 2012 are as follows:

Thousands of yen
2013

Due within one year¥

Due after one year
Total

1,430,535

2012¥

2,717,412¥

4,147,947

897,721
1,402,935¥

2,300,657－ 17 －

7. Derivatives
Derivatives transactions not applicable under hedge accounting criteria as of February 28, 2013 and February 29, 2012 are summarized asfollows:
Thousands of yen
2013
Contract value
Total

After one year

Fair value

¥

¥

Gains

Currency option contracts:
Sell, put – US dollar¥ 103,140,600

Buy, call – US dollar

35,045,500

25,457,800¥ 138,186,100¥ 101,831,200

Total

76,373,400

－

¥

－

1,049,336¥

1,049,336

1,049,336¥

1,049,336

Thousands of yen
2012
Contract value
Total

After one year

Fair value

70,526,400

¥

¥

Gains

Currency option contracts:
Sell, put – US dollar¥

Buy, call – US dollar
Total

17,631,600

24,174,100¥

94,700,500

52,894,800¥

70,526,400－¥

942,583¥

942,583－
942,583¥

942,583

Note 1:

Currency option contracts are zero-cost option contracts and no option premiums are paid and received. With respect to the zero-cost

Note 2:

Fair value of derivative transactions is based on quotes obtained from financial institutions.

option contracts, fair value and gains of sell, put and buy, call contracts are shown in net amounts.

－ 18 －

8. Business Combination
Business combination on acquisition of shares is summarized as follows:(1)

Overview of the transaction(a)Name and business of the acquired company:
LaCrosse Footwear, Inc.

(b)

(Production and sales of shoes for business use and outdoor)

Primary reasons for the acquisition:
1.

The Group will be able to add two well-known brands such as Danner ® and LaCrosse ® into its portfolio and becomes available
to use production base with high technology by the acquisition.

2.

By the acquisition, it will be able to offer new added value to customers of ABC-MART by strengthening technical cooperation
with factories in Europe and Asia which the Group already has relation.

3.

Upon the acquisition, the Group will be able to have base in both North America and Europe and it is expected to contributeglobal marketing of the group including opening new stores of ABC-MART.

(c)

Date of the business combination:
August 17, 2012(d)

Legal form of the business combination:
Acquisition of shares for cash(e)Company’s name after the business combination:
No change in the name of the company(f)Percentage of voting rights acquired:
Voting rights held before the acquisition: 0%
Voting rights acquired at the date of the acquisition: 100%(g)

Basis of determination of acquiring company
Acquisition of the shares was made by the Company in cash payment.

(2)

Period during which financial result of the acquired company is included in the consolidated financial statements
Financial result from July 1, 2012 to December 31, 2012 is included in the consolidated statement of income because June 30, 2012 istreated as deemed acquisition date and the year end of the acquired company is December 31.

(3)

Acquisition cost of the acquired company and its breakdown
Thousands of yen
Consideration for the acquisition¥

Direct expense related to the acquisition

309,656¥(4)

10,770,825

11,080,481

Amount of goodwill recognized, reason for recognizing goodwill and amortization method and period(a)Amount of goodwill recognized:¥5,153,275 thousand(b)

Reason for recognizing goodwill:
Goodwill arose in connection with the expected future earning of the business run by the acquired company.

(c)

Amortization method and period:
Straight-line method over 10 years－ 19 －

(5)Assets acquired and liabilities assumed at the date of business combination
Thousands of yen
Current assets¥

Noncurrent assets
Total assets

Current liabilities

4,161,637¥

9,375,460¥

1,821,716

Noncurrent liabilities
Total liabilities(6)

1,626,538¥

3,448,254

Amounts allocated to intangible assets other than goodwill and amortized method and period
Trademark:(7)

5,213,823¥ 2,367,482 thousand (Straight-line method over 10 years)

Pro forma information on consolidated statement of income for the year ended February 28, 2013 if the business combination had been
completed on March 1, 2012 is omitted since the estimated impact is immaterial.

9. Short-Term Loans Payable and Long-Term Debt
Short-term loans payable and long-term debt as of February 28, 2013 and February 29, 2012 consist of the following:Thousands of yen
2013
Short-term loans payable¥

Current portion of long-term loans payable2012

4,135,826¥

2,509,305

1,002,800

2,252,800

Long-term loans payable (excluding current portion)

2,502,800

3,505,600

Convertible bonds

33,000,000－

Total short-term loans payable and long-term debt¥

40,641,426¥

8,267,705

Weighted-average rate of interest:
Short-term loans payable

0.96%

1.08%

Current portion of long-term loans payable

0.89%

1.15%

Long-term loans payable (excluding current portion)

0.89%

1.14%

－

－

Convertible bonds－ 20 －

On February 5, 2013, the Company issued ¥ 33,000,000 thousand of Euro-yen convertible bonds with stock acquisition rights due in 2018.
A summary of the convertible bonds with stock acquisition rights is as follows:
Type of stock to be issued upon conversion

Common stock of ABC-MART, INC.

Issue price of stock acquisition rights－

Conversion price (yen)¥ 4,588

Number of shares of common stock (Note 1)

7,192,676

Issue price of bonds (thousands of yen)

¥ 33,000,000

Common stock issued upon conversion－

Percentage of stock acquisition rights granted

100%

Exercise period of conversion

February 19, 2013 to January 22, 2018

PledgeUnsecured

Redemption dateFebruary 5, 2018

Balance of stock acquisition rights as of February 28, 2013－

Note 1: Number of shares of common stock are calculated on the assumption that all convertible bonds with stock acquisition rights areconverted as of February 28, 2013.
Note 2: Exercise of a stock acquisition right causes the corresponding bond to be cancelled in lieu of a cash payment of purchase of shares, andthe amount of the convertible bonds with stock acquisition right is the same as the amount of issuance.
The aggregate annual maturities of long-term debt including convertible bonds as of February 28, 2013 are summarized as follows:Year ending February 28 or 29,
2015

Thousands of yen¥

2016

1,002,800
1,000,000

2017

500,000

2018

33,000,000

Total long-term debt¥

35,502,800－ 21 －

10. Income Taxes(1)

The significant components of deferred tax assets and liabilities as of February 28, 2013 and February 29, 2012 are as follows:

Thousands of yen
2013

2012

Deferred tax assets:
Accrued enterprise tax¥

489,207¥433,568

Provision for bonuses

221,417228,101

Depreciation and amortization

87,511

91,235

Allowance for doubtful accounts

3,682

4,086

Loss on valuation of inventories

229,991

170,599

Impairment loss

80,697

66,278Tax laws adopted foreign subsidiaries

126,847

12,967

Accrued social insurance

31,402

32,163

Accrued business office tax

32,997

31,845

Asset retirement obligation

367,838

275,061

Allowance for accrued pension and severance costs

302,083－

Other

254,676

54,949Total deferred tax assets before net of valuation allowances

2,228,354

1,400,858

Valuation allowances(110,735)－

Total deferred tax assets

2,117,618

1,400,858

Property, plant and equipment(127,342)－

Intangible assets(363,080)

－

Other

(24,958)(530)(515,381)(530)

Deferred tax liabilities:

Total deferred tax liabilities
Net deferred tax assets(2)¥

1,602,237¥

1,400,328

The reconciliation of the difference between the statutory tax rate and the effective tax rate for the years ended February 28, 2013 andFebruary 28, 2012 are as follows:
2012

2013
Statutory tax rate

40.6%

40.6%

Income taxes on retained earnings of family company

2.1%

2.2%

Tax rate difference in subsidiaries(0.9%)(1.6%)

Amortization of goodwill

0.7%

0.4%

Other

0.3%

0.3%

42.8%

41.9%

Adjustments:

Effective tax rate

－ 22 －

11. Asset Retirement Obligations(1)(a)

Asset retirement obligations recorded in the Consolidated Financial Statements
Summary of asset retirement obligations
The Company recorded asset retirement obligations mainly related to the obligation to return stores to their original condition upon
termination of their lease contracts.

(b)

Calculation method of the asset retirement obligations
In the calculation process of asset retirement obligations, the Company estimates terms of use between 3 and 6 years and use
government bond interest rates as discount rates.

(c)

Changes in the total amounts of applicable asset retirement obligations in the years ended February 28, 2013 and February 29,2012
Thousands of yen

As of March 1

2013

2012

¥ 147,762¥ 120,608

72,61027,350

Increase due to acquisition of property, plant and equipment
Adjustment due to passage of time

5,541

2,817

Decrease due to settlement of asset retirement obligations(5,567)(3,014)

Others

15,7230¥ 236,069¥ 147,762

As of February 28 or 29

Effective from the year ended February 29, 2012, the Company and domestic subsidiaries have applied the “Accounting Standard for
Asset Retirement Obligations” (ASBJ Statement No. 18, March 31, 2008) and the “Guidance on Accounting Standard for Asset
Retirement Obligations” (ASBJ Guidance No. 21, March 31, 2008). The balance as of March 1, 2011, above represents the asset
retirement obligations at the beginning of the year ended February 29, 2012 as a result of application of these standards.
(2)

Asset retirement obligations not included in the consolidated balance sheets
Asset retirement obligations for leasehold contracts of certain offices and stores, for which the related amount could not be reasonably
estimated because the period of use of the properties is uncertain and there is no current plan to vacate the properties, are not included in
the consolidated balance sheets.
For certain lease and guarantee deposits, instead of recording asset retirement obligations as liability, a reasonable estimate of theamount of deposits for rental properties, that cannot be recovered at the end of the leasehold contracts, is made, and the portion for thecorresponding year is recorded as expenses. Lease and guarantee deposits that are expected not to be recovered at the end of theleasehold contracts are ¥1,018,497 thousand and ¥659,450 thousand as of February 28, 2013 and February 29, 2012, respectively.

－ 23 －

12. Commitment and Contingencies
The amount of assets pledged as collateral by the Company and corresponding liabilities as of February 28, 2013 and February 29, 2012 are as
follows:
2013
Assets pledged:

Thousands of yen

Corresponding liabilities:

Lease and guarantee deposits¥

810

Cash and deposits¥

140,317

Thousands of yen

Bank loans¥

580,484

Accounts payable¥

42,058Bank loans

280,009

Note: Total assets of LaCrosse Footwear, Inc. (¥7,871,203 thousand) are pledged for a commitment line agreement.
2012
Assets pledged:
Cash and deposits

Thousands of yen¥

Lease and guarantee deposits
Cash and deposits

Corresponding liabilities:

20,494

Thousands of yen

Bank loans¥

496,836

Accounts payable¥

46,072

675¥

211,297

Bank loans

159,397

13. Net Assets
Net assets comprise three subsections, which are shareholders’ equity, accumulated other comprehensive income, and minority interests inconsolidated subsidiaries.
The Japanese Corporate Law (the “Law”) became effective on May 1, 2006, replacing the Japanese Commercial Code (the “Code”). The
Law is generally applicable to events and transactions occurring after April 30, 2006, and for the years ending after that date.
Under Japanese laws and regulations, the entire amount paid for new shares is required to be designated as common stock. However, acompany may, by a resolution of its 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 Law, in cases where dividend distribution of surplus is made, the smaller of an amount equal to 10% of the dividend or theexcess, 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. Legal earnings reserve is included in retained earnings in the accompanying Consolidated Balance
Sheets.
Under the Code, a company is required to set aside an amount equal to at least 10% of the aggregate amount of cash dividends and othercash appropriations as legal earnings reserve until the total of legal earnings reserve and additional paid-in capital equaled 25% of common
stock.
Under the Code, legal earnings reserve and additional paid-in capital could be used to eliminate or reduce a deficit by a resolution of theshareholders’ meeting or could be capitalized by a resolution of the board of directors. Under the Law, both of these appropriations generally
require a resolution of the shareholders’ meeting.
Additional paid-in capital and legal earnings reserve may not be distributed as dividends. Under the Code, however, on condition thatthe total amount of legal earnings reserve and additional paid-in capital remained equal to or exceeded 25% of common stock, they wereavailable for distribution by a resolution of the shareholders’ meeting. Under the Law, all additional paid-in capital and all legal earnings
reserve may be transferred to other capital surplus and retained earnings, respectively, which are potentially available for dividends.
The maximum amount that the Company can distribute as dividends is calculated based on the Non-Consolidated Financial Statements of theCompany in accordance with the Law.
At the annual shareholders’ meeting, held on May 29, 2013, the shareholders approved cash dividends amounting to ¥2,108,239
thousand. Such appropriations have not been accrued in the Consolidated Financial Statements as of February 29, 2013. Such appropriations
are recognized in the period in which they are approved by the shareholders.

－ 24 －

14. Other comprehensive income
The following table presents reclassification adjustments and tax effects allocated to each component of other comprehensive income for theyear ended February 28, 2013:

Thousands of yen
Net unrealized gains on available-for-sale securities:
Amount arising during the year¥

Reclassification adjustments for gains and losses included in net income

14,76016,582Net unrealized gains on available-for-sale securities before tax

31,342

Tax effects(12,163)

Net unrealized gains on available-for-sale securities

19,178Foreign currency translation adjustments:
Amount arising during the year

3,651,247

Total other comprehensive income¥ 3,670,426－ 25 －

15. Supplementary profit and loss information(1)

Components of gain on sales of noncurrent assets for the years ended February 28, 2013 and February 29, 2012 are as follows:

Thousands of yen
2013
Tools, furniture and fixtures

2012

¥

Vehicles
Total

(2)

¥

－

6,337

545
¥

98

545

¥

6,435

Components of loss on sales of noncurrent assets for the years ended February 28, 2013 and February 29, 2012 are as follows:

Thousands of yen
2013

2012

Vehicles

¥

343

¥

－

Total

¥

343

¥

－

(3)

Components of loss on retirement of noncurrent assets for the years ended February 28, 2013 and February 29, 2012 are as follows:

Thousands of yen
2013
Buildings and structures
Tools, furniture and fixtures

¥

2012
9,943

¥

7,781

49,31345,273

Vehicles－

1,100

Software76－

55,39962,726¥ 114,733¥ 116,881

Store removal expenses
Total－ 26 －

16. Impairment loss on property, plant and equipment
For the years ended February 28, 2013 and February 29, 2012, the Company recognized ¥408,046 thousand and ¥549,577 thousand of
impairment loss, respectively, on the following groups of assets:
Thousands of yen
Description

Location

Classification

2013

StoresIsezaki city, Gunma and other 74 stores (Close,

Buildings¥ 372,672

20 stores and renewals, 54 stores).

35,374Tools, furniture and fixtures
Total impairment loss

¥ 408,046

Thousands of yen
Description

Location

Classification

2012

StoresHiroshima city, Hiroshima and other 54 stores

Buildings¥ 524,884(Close, 9 stores and renewals, 45 stores).

Tools, furniture and fixtures
Total impairment loss

24,693¥ 549,577

Note: No impairment loss was allocated to leased properties for the years ended February 28, 2013 and February 28, 2012.
The Company groups its fixed assets by store, which is the minimum cash-generating unit. The book values of stores which are expected to beclosed or renewed, or which incurred consecutive operating losses were reduced to recoverable amounts, and such deducted amounts wererecorded as an impairment loss. Values in use were used as recoverable amounts and relevant assets were evaluated by discounting estimatedfuture cash flows to which the 5% discount rates was applied.

－ 27 －

17. Per Share Information
Net income and cash dividends per share for the years ended February 28, 2013 and February 29, 2012, and net assets per share as ofFebruary 28, 2013 and February 29, 2012 are as follows:
Yen
2013

2012

¥

¥

Net income per share:Basic

229.73

Diluted (*)

208.20228.30－Net assets per share:
Basic
Cash dividends per share¥

1,453.95¥

1,221.02

¥

50.00

¥

42.00

(*) No diluted net income for the year ended February 29, 2012 has been presented because there was no item with dilutive effect.
Bases for the calculation of basic and diluted net income per share for the years ended February 28, 2013 and February 29, 2012 are as
follows:

Thousands of yen
2013

2012

Basic:Net income
Net income pertaining to common shareholders¥

17,297,577¥

15,676,460

17,297,577

15,676,460

75,294,265

75,294,265－－

7,192,676－

Weighted-average number of shares of common stock
outstanding (shares)
Diluted:Adjustments of net income
Effect of dilutive securities – convertible bonds (shares)

Note: There is no item which had not been included in the calculation of diluted net income per share due to no dilutive effect.

－ 28 －

18. Related Party Transaction
Information of the related parties is as follows:
Capital and
Related party

Classification

Voting rights

Addressinvestments

Business

Masahiro Miki

Major shareholder

－

－

－

Michiko Miki

Major shareholder

－

－

－

E.M Planning, LLC.

Company inwhich major

shareholders

andrelatives

majority

own

their
of

voting rights

Hamanishi Building Co.

Company inwhich major

shareholders

andrelatives

majorityownvoting rights

their
of

Shibuyaward,¥ 10,000 thousand

Real estate¥ 43,440 thousand

Real estateTokyo(held)
Directly
32.51%
Directly
16.71%
Directly
19.16%Nishi
ward,
Yokohama－ 29 －－

Transactions between the Company and the related parties for the years ended February 28, 2013 and February 29, 2012 are as follows:

Thousands of yen
2013

2012

Balance of the transactions:
Masahiro Miki:
Prepaid expense
Lease and guarantee deposits¥

16,747¥

16,747

147,500

147,500

Prepaid expense

14,437

14,437

Lease and guarantee deposits

97,50097,500Michiko Miki:

E.M Planning, LLC.:
Prepaid expense

24,72524,725

Lease and guarantee deposits

247,000

247,000

Hamanishi Building Co.:
Prepaid expense

16,80016,800

Lease and guarantee deposits

160,000

160,000¥ 191,400¥ 191,400

165,000

165,000

282,571282,571

192,000

192,000

Transaction amounts:
Masahiro Miki:
Leasing of buildings
Michiko Miki:
Leasing of buildings
E.M Planning, LLC.:
Leasing of buildings
Hamanishi Building Co.:
Leasing of buildings
Note 1:Monthly rent and lease deposit in lease contracts are determined based on prevailing market prices.

Note 2:The transaction amount is exclusive of consumption taxes.

－ 30 －

19. Segment Information(1)

Overview of reportable segments

With respect to its reportable segments, the Company is able to obtain delineated financial data from its structural units. Its segments are
subject to periodical review for the purpose of making decisions on allocation of managerial resources and evaluating business performance by
the Board of Directors.
The Group operates shoes retail stores, “ABC-MART” all over the world and sells retail products mainly shoes. In Japan, The Company,
ABC-MART, INC., operates its business, and in overseas, ABC-MART, KOREA, ABC-MART, TAIWAN and LaCrosse Footwear, Inc. (U.S.A)
operate their business independently as management units. Therefore, the Group consists of geographical reportable segments such as“Domestic” and “Overseas”. Each reportable segment sells shoes and other shoes related clothing and accessories.
During the year ended February 28, 2013, LaCrosse Footwear, Inc. which operates business in North America, Europe and Asia became
a consolidated subsidiary. Therefore the Company changed the names of the reportable segments from “Japan” and “Asia” to “Domestic” and“Overseas”, respectively.

As a result, the segment information for the year ended February 29, 2012 has been prepared and disclosed basedon the revised names of the reportable segments.
(2)

Calculation methodology for revenues from operations, income or losses, assets and liabilities, and other items for each reportablesegment

The accounting treatment of each reportable segment is in line with Note 2. “Summary of Significant Accounting Policies”. Segment income asreported in this section is based on operating income. Intersegment revenues and transfers are calculated at prevailing market prices.

－ 31 －

(3)Information on sales, income, assets and other monetary items for each reportable segment
Thousands of yen
2013
Reportable segments

Consolidated

Domestic

Overseas

Total¥ 131,773,827¥ 27,644,313¥ 159,418,140

358,218

86,252444,470¥ 132,132,045¥ 27,730,565¥ 159,862,610

Segment income¥ 28,759,548¥

1,611,556¥ 30,371,104

Segment assets

135,687,435

39,097,224

2,308,166－

3,385,938

11,734,330

Adjustments

total

Sales:
Customers
Intersegment
Total revenue¥－¥ 159,418,140(444,470)－¥(447,470)¥ 159,418,140

¥

4,012

¥ 30,375,117

174,784,659(625,238)

174,159,421

942,7113,250,878－

3,250,878

549,441

549,441－

549,441

15,120,269－

15,120,269

Other items:
Depreciation and amortization
Amortization of goodwill
Net increase in property, plantand equipment and intangible
assetsThousands of yen
2012
Reportable segments

Consolidated

Domestic

Overseas

Total¥ 121,856,243¥ 18,904,773¥ 140,761,016

429,326

18,160447,486¥ 122,285,569¥ 18,922,933¥ 141,208,503

Segment income¥ 24,617,520¥

2,612,929¥ 27,230,450

Segment assets

101,607,412

18,655,296

2,128,907

Adjustments

total

Sales:
Customers
Intersegment
Total revenue¥－¥ 140,761,016(447,486)－¥(447,486)¥ 140,761,016¥(9,222)¥ 27,221,227

120,262,709(58,767)

120,203,941

519,2222,648,130－

2,648,130－

264,003

264,003－

264,0033,547,959

3,350,024

6,897,984－

6,897,984

Other items:
Depreciation and amortization
Amortization of goodwill
Net increase in property, plantand equipment and intangible
assets
Note 1:

The adjustments of ¥4,012 thousand and ¥(9,222) thousand for segment income and ¥(625,238) thousand and ¥(58,767) thousandfor segment assets are eliminations of intersegment transactions for the years ended February 28, 2013 and February 29, 2012,
respectively.

Note 2:

Segment income and segment assets are reconciled with the operating income in the Consolidated Statements of Income and total
assets in Consolidated Balance Sheets, respectively.

Note 3:

Effective from the year ended February 29, 2012, the Company has changed its rates of translation of income and expense
accounts of foreign subsidiaries from the rates in respective balance sheet dates to the average exchange rate for the period.
As a result of this change, sales to customers and segment income in Overseas for the year ended February 29, 2012 increasedby ¥1,108,315 thousand and ¥188,459 thousand, respectively.

－ 32 －

(Related information)(1)

Information by products and services

Information is omitted since sales to customers of single category of products and services exceed 90% of consolidated net sales.
(2)

Information by region

Information is omitted since it is described in the segment information.
(3)

Information by major customers

Information is omitted since there is no customer accounting for 10% or more of consolidated net sales.
(4)

Information regarding impairment loss on fixed assets by reportable segment for the years ended February 28, 2013 and February 29,
2012 is as follows:
Thousands of yen
2013
Consolidated

Impairment loss

Domestic

Overseas¥¥395,001

13,045

Total¥

408,046

total

Adjustments¥－¥

408,046

Thousands of yen
2012
Consolidated

Impairment loss

(5)

Domestic

Overseas¥¥539,213

10,363

Total¥

549,577

total

Adjustments¥－¥

549,577

Information on amortization and outstanding balance of goodwill by reportable segment for the years ended February 28, 2013 andFebruary 29, 2012 is as follows:
Thousands of yen
2013
Consolidated
Domestic

Overseas

Amortization

¥

－

¥

Balance at the end of year¥－

¥ 6,821,704

549,441

Total

total

Adjustments

549,441¥－¥¥ 6,821,704¥－¥ 6,821,704¥

549,441

Thousands of yen
2012
Consolidated
Domestic

Overseas

Total

total

Adjustments

Amortization

¥

－

¥

264,003¥

264,003¥－¥

264,003

Balance at the end of year

¥

－

¥

964,553¥964,553¥－¥964,553(6)

Information regarding gain on negative goodwill by reportable segment

None

20. Subsequent Event
Subsequent to February 28, 2013, the Company’s Board of Directors declared a year-end cash dividend of ¥2,108,239 thousand to be payable
on May 30, 2013 to shareholders on record on February 28, 2013. The dividend declared was approved by the shareholders at the meeting heldon May 29, 2013.

－ 33 －

ABC-MART, INC.
Registered office:Head office:Telephone:URL:

11-5, Jinnan 1-chome, Shibuya-ku, Tokyo 150-0041, Japan
19th Floor, Shibuya Mark City West,12-1, Dogenzaka 1- chome, Shibuya-ku, Tokyo 150-0043, Japan+81-3-3476-5452
http://www.abc-mart.co.jp/ir/