J. FRONT RETAILING NOWContents
Consolidated Financial Statements
02

Consolidated Balance Sheet

04

Consolidated Statement of Income

05

Consolidated Statement ofComprehensive Income

06

Consolidated Statement of Changes
in Net Assets

09

Consolidated Statement of Cash Flows11

Notes to Consolidated Financial Statements

48

Independent Auditor s ReportConsolidated Balance Sheet
J. FRONT RETAILING Co., Ltd. and Consolidated Subsidiaries
February 29, 2016

Thousands of
U.S. dollars(Note 1)Millions of yen

2016

2015

AssetsCurrent assets:
Cash and deposits (Notes 15 and 24)
Notes and accounts receivable – trade (Notes 15 and 16)
Securities (Notes 10 and 15)
Inventories (Note 5)
Deferred tax assets (Note 25)
Other (Note 15)
Less allowance for doubtful accounts
Total current assets

2016¥30,039
68,0491,233
28,205
11,671
41,865(173)
180,890¥34,106
75,556
1,353
30,886
12,29538,058(151)
192,105$264,381
598,917
10,852
248,240
102,720
368,465(1,523)
1,592,061

Non-current assets:
Property and equipment (Notes 6, 7, 8, 9, 13 and 19):Land
Buildings and structures, net
Construction in progress
Other, net
Total property and equipment

360,297
182,772
120,751
4,829
668,651

349,578
187,935
114,097
5,192
656,804

3,171,070
1,608,625
1,062,762
42,5015,884,976

Intangible assets:
Goodwill (Notes 19 and 27)
Other
Total intangible assets

568
40,87641,4442,005
41,001
43,007

4,999
359,761
364,760

20,055

21,817

176,509

26,9301,503
61,5155,687
5,112
10,065(2,710)128,160
838,255

15,6991,506
61,985
11,864
4,159
12,110(2,564)
126,578
826,389

237,018
13,228541,41050,05344,992
88,585(23,851)
1,127,970
7,377,706¥1,019,146¥1,018,495$8,969,776

Investments and other assets:
Investment securities (Notes 8, 10 and 15)
Investments in unconsolidated subsidiaries and affiliates(Note15)
Long-term loans receivable
Deposits and guarantees (Note 15)
Asset for retirement benefits (Note 12)
Deferred tax assets (Note 25)
Other (Note 15)
Less allowance for doubtful accounts
Total investments and other assets
Total non-current assets

Total assets (Note 27)

02

Thousands of
U.S. dollars(Note 1)Millions of yen

Liabilities and net assets
Current liabilities:
Notes and accounts payable – trade (Notes 8, 15 and 16)
Short-term loans payable (Notes 8, 11 and 15)
Commercial papers (Notes 11 and 15)
Current portion of long-term debt (Notes 8, 11, 15 and 16)
Income taxes payable (Notes 15 and 25)
Advances received
Gift certificates outstanding
Provision for bonuses to employees
Provision for bonuses to directors and audit and supervisory board members
Provision for sales returns
Provision for loss on books unsalable
Provision for sales promotion expenses
Provision for loss on utilization of gift certificates
Provision for loss on business liquidation
Provision for loss on store reconstruction
Other
Total current liabilities
Non-current liabilities:
Long-term debt (Notes 8, 11, 15 and 16)
Deferred tax liabilities (Note 25)
Deferred tax liabilities for land revaluation (Note 25)
Liability for retirement benefits (Note 12)
Accrued retirement benefits for directors and audit and supervisory board members
Provision for loss on business liquidation
Provision for loss on store reconstruction
Other (Note 15)
Total non-current liabilities
Total liabilities
Contingent liabilities (Note 17)
Net assets:
Shareholders’equity (Note 14):
Common stock:
Authorized – 1,000,000,000 shares
Issued – 268,119,164 shares
Capital surplus
Retained earnings
Treasury stock, at cost: 6,575,238 shares in 2016 and 4,205,258 shares in 2015
Total shareholders’equity
Accumulated other comprehensive loss:
Net unrealized holding gain on securities (Note 10)
Net unrealized deferred gain (loss) on hedging instruments (Note 16)
Foreign currency translation adjustments
Retirement benefits adjustments (Note 12)
Total accumulated other comprehensive loss
Stock subscription rights (Note 14)
Minority interests
Total net assets (Note 26)
Total liabilities and net assets

2016

2015

2016

¥90,768
8,439
30,79832,588
8,322
19,31838,599
5,709
204
21
121
709
13,913487
1,245
51,696302,944¥95,020
9,268
28,691
25,867
12,702
18,65637,973
5,630
194
22
113
722
13,241
121
760
56,477
305,463$798,873
74,274
271,061
286,816
73,244
170,023
339,720
50,246
1,795
185
1,065
6,240
122,452
4,286
10,958454,9902,666,291

111,409
89,1581,161
32,70737
564
1,191
39,378275,607
578,552

107,355
101,486
1,279
31,51439––
41,096
282,771588,235

980,540
784,703
10,218287,863326
4,964
10,482
346,576
2,425,691
5,091,991

30,000209,551
163,971(11,286)
392,236

30,000209,556
147,555(6,369)380,742

264,038
1,844,314
1,443,153(99,331)3,452,174

2,113
223
516
(11,391)(8,537)14
56,880440,594¥1,019,146

2,352
(35)
659
(7,832)(4,855)15
54,357430,260¥1,018,495

18,5971,963
4,541(100,255)(75,136)
123
500,616
3,877,786$8,969,776

See accompanying notes to the consolidated financial statements.
03

Consolidated Statement of Income
J. FRONT RETAILING Co., Ltd. and Consolidated Subsidiaries
Year ended February 29, 2016

Thousands of
U.S. dollars(Note 1)Millions of yen

Net sales (Notes 13 and 27):
Net sales of goods
Rent income of real estate (Note 7)
Cost of sales (Note 22):
Cost of goods soldCost of real estate rent (Note 7)
Gross profit
Selling, general and administrative expenses(Note 18)
Operating income (Note 27)
Other income (expenses):
Interest income
Dividend income
Gain on derecognition of unutilized gift certificates
Equity in earnings of unconsolidated subsidiaries and affiliates
Interest expenses
Provision for loss on utilization of gift certificates
Gain on sales of fixed assets (Note 7)
Gain on sales of investment securities (Note 10)
Gain on sales of shares of an affiliate
Loss on disposal of fixed assets (Note 7)
Loss on devaluation of investment securities (Note 10)
Loss on impairment of fixed assets (Notes 7, 19 and 27)
Loss on store reconstruction (Notes 20 and 27)
Construction indemnification expenses
Loss on business liquidation (Notes 7, 21 and 27)
Other, net
Income before income taxes and minority interests
Income taxes (Note 25)
Current
DeferredIncome before minority interests
Minority interests in income
Net income (Note 26)

See accompanying notes to the consolidated financial statements.

04

2016

2015

2016

¥1,151,469
12,094
1,163,564¥1,138,801
10,727
1,149,529$10,134,387
106,443
10,240,838

910,927
7,104
918,031245,532
197,494
48,038899,303
6,486
905,789
243,739
201,572
42,167

8,017,312
62,524
8,079,836
2,160,993
1,738,198
422,795

369
365
2,866
1,886
(1,419)(3,159)–960
131(3,493)–(1,570)(7,492)–(1,719)(1,062)
34,698

372
434
3,084
735
(1,481)(3,550)84
2,811–(2,679)
(36)
(965)
–
(650)
(654)
(706)
38,965

3,248
3,212
25,224
16,599(12,489)(27,803)
–
8,449
1,153
(30,743)–(13,818)(65,939)–(15,129)(9,347)305,386

14,626(9,791)
4,834
29,863
3,549¥26,313

16,396(472)
15,92323,041
3,073¥19,967

128,727(86,173)
42,545
262,832
31,236$231,588

Consolidated Statement of Comprehensive Income
J. FRONT RETAILING Co., Ltd. and Consolidated Subsidiaries
Year ended February 29, 2016

Thousands of
U.S. dollars(Note 1)Millions of yen

Income before minority interests
Other comprehensive (loss) income (Note 23):
Net unrealized holding (loss) gain on securities
Net unrealized deferred loss on hedging instruments
Foreign currency translation adjustments
Retirement benefits adjustments
Share of other comprehensive income (loss) of unconsolidated
subsidiaries and affiliates accounted for by equity method
Other comprehensive (loss) income, net
Comprehensive income
Total comprehensive income attributable to:
Owners of parent
Minority interests

2016¥29,863

2015¥23,0412016$262,832

(288)
(37)
(147)
(3,654)

2
(5)
242
–

(2,535)(326)(1,294)(32,160)318(3,810)¥26,053(52)
186¥23,228

2,799(33,533)$229,299¥22,631¥3,421¥20,163¥3,064$199,181$30,109

See accompanying notes to the consolidated financial statements.

05

Consolidated Statement of Changes in Net Assets
J. FRONT RETAILING Co., Ltd. and Consolidated Subsidiaries
Year ended February 29, 2016

Millions of yen
Shareholders’equity
Number ofCommon stock Capital surplus
shares in issue
Balance at March 1, 2014
536,238,328
Cumulative effects ofchanges in accounting–
policies (Note 3)
Restated balance at March 1,
536,238,328
2014
Changes in items during theperiod:Cash dividends–
Net income–
Purchase of treasury stock–
Disposal of treasury stock–
Consolidation of shares(268,119,164)
Net changes in items other–than shareholders’equity
Total changes in items during(268,119,164)
the period
Balance at March 1, 2015
268,119,164
Cumulative effects ofchanges in accounting–
policies (Note 3)
Restated balance at March 1,
268,119,164
2015
Changes in items during theperiod:Cash dividends–
Net income–
Purchase of treasury stock–
Disposal of treasury stock–
Net changes in items other–than shareholders’equity
Total changes in items during–
the period
Balance at February 29, 2016 268,119,164

06

Retainedearnings

Treasury stock,at costTotal
shareholders’equity¥30,000¥209,557¥134,178¥(6,343)¥367,392

–

–

(254)

–

(254)

30,000209,557

133,924(6,343)367,138

–
–
–
–
–

–
–
–
(1)
–

(6,336)
19,967
–
–
–

–
–
(39)
14
–

(6,336)
19,967
(39)
12
–

–

–

–

–

–

–
30,000(1)
209,556

13,631
147,555(25)(6,369)13,604
380,742––(3,065)–(3,065)30,000209,556

144,490(6,369)377,677

–
–
–
–

–
–
–
(4)

(6,832)
26,313––––(5,025)108(6,832)
26,313(5,025)
103

–

–

–

–

–

–
¥30,000(4)¥209,551

19,481¥163,971(4,917)¥(11,286)

14,559¥392,236

Millions of yen
Accumulated other comprehensive income (loss)
Net unrealized
Total
Net
Foreign
Stock
Retirement accumulated
deferred
unrealized
currency
subscription
benefits
gain (loss)otherholding gaintranslationrightsadjustments comprehensive
on hedging
on securities
adjustments
instruments
income (loss)
Balance at March 1, 2014
Cumulative effects ofchanges in accounting
policies (Note 3)
Restated balance at March 1,
2014
Changes in items during
the period:
Cash dividends
Net income
Purchase of treasury stock
Disposal of treasury stock
Consolidation of shares
Net changes in items
other than shareholders’equity
Total changes in items
during the period
Balance at March 1, 2015
Cumulative effects ofchanges in accounting
policies (Note 3)
Restated balance at March 1,
2015
Changes in items during
the period:
Cash dividends
Net income
Purchase of treasury stock
Disposal of treasury stock
Net changes in items
other than shareholders’equity
Total changes in items
during the period
Balance at February 29, 2016

Minority
interests

Total net
assets¥2,357

¥(25)

¥449

¥–

¥2,780¥15¥52,025¥422,215

–

–

–

–

–

–

–

(254)

2,357

(25)

449

–

2,780

15

52,025421,960

–
–
–
–
–

–
–
–
–
–

–
–
–
–
–

–
–
–
–
–

–
–
–
–
–

–
–
–
–
–

–
–
–
–
–

(6,336)
19,967
(39)
12
–

(4)

(9)

210

(7,832)(7,636)–2,331(5,304)

(4)
2,352

(9)
(35)

210
659

(7,832)(7,832)(7,636)(4,855)

–
15

2,331
54,357

8,299
430,260

–

–

–

–

–

–

(114)

(3,179)

2,352

(35)

659

(7,832)(4,855)15

54,243427,080

–
–
–
–

–
–
–
–

–
–
–
–

–
–
–
–

–
–
–
–

–
–
–
–

–
–
–
–

(6,832)
26,313(5,025)
103

(238)

258

(143)

(3,558)(3,681)

(1)

2,637

(1,045)(238)¥2,113

258
¥223

(143)
¥516

(3,558)¥(11,391)(3,681)¥(8,537)

(1)
¥14

2,637
¥56,880

13,513¥440,594

07Thousands of U.S. dollars (Note 1)
Shareholders’equity
Treasury stock,at costTotal
shareholders’equity$1,298,671$(56,055)$3,351,012–
1,844,358(26,976)
1,271,695–(56,055)(26,976)
3,324,036

–
–
–
–

–
–
–
(35)

(60,130)
231,588––––(44,226)951(60,130)
231,588(44,226)
907––$264,038–(35)$1,844,314–
171,457$1,443,153–(43,276)$(99,331)–
128,138$3,452,174

Common stock

Capital surplus$264,038$1,844,358–
264,038

Balance at March 1, 2015
Cumulative effects ofchanges in accounting
policies (Note 3)
Restated balance at March 1, 2015
Changes in items during the period:
Cash dividends
Net income
Purchase of treasury stock
Disposal of treasury stock
Net changes in items otherthan shareholders’equity
Total changes in items during the period
Balance at February 29, 2016

Retainedearnings

Thousands of U.S. dollars (Note 1)
Accumulated other comprehensive income (loss)
Net unrealized
Total
Net
Foreign
Stock
Retirement accumulated
deferred
unrealized
currency
subscription
benefits
gain (loss)otherholding gaintranslationrightsadjustments comprehensive
on hedging
on securities
adjustments
instruments
income (loss)
Balance at March 1, 2015
Cumulative effects ofchanges in accounting
policies (Note 3)
Restated balance at March 1,
2015
Changes in items during
the period:
Cash dividends
Net income
Purchase of treasury stock
Disposal of treasury stock
Net changes in items otherthan shareholders’equity
Total changes in items
during the period
Balance at February 29, 2016

Total net
assets$20,701$(308)$5,800$(68,932)$(42,730)

$132

–

–

–

–

–

–

(1,003)(27,979)

20,701

(308)

5,800

(68,932)(42,730)132

477,4073,758,845

–
–
–
–

–
–
–
–

–
–
–
–

–
–
–
–

–
–
–
–

–
–
–
–

–
–
–
–

(60,130)
231,588(44,226)907(2,095)2,271(1,259)(31,315)(32,397)(9)23,209(9,197)(2,095)$18,597

2,271$1,963(1,259)(31,315)$4,541 $(100,255)(32,397)$(75,136)

(9)
$123

See accompanying notes to the consolidated financial statements.

08

Minority
interests$478,410 $3,786,833

23,209118,932$500,616 $3,877,786

Consolidated Statement of Cash FlowsJ. FRONT RETAILING Co., Ltd. and Consolidated Subsidiaries
Year ended February 29, 2016

Thousands of
U.S. dollars(Note 1)Millions of yen

Cash flows from operating activities:
Income before income taxes and minority interests
Depreciation and amortization
Loss on impairment of fixed assets
Amortization of goodwill
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for bonuses to employees(Decrease) increase in liability for retirement benefits
Increase in asset for retirement benefits
Decrease in provision for sales promotion expenses
Increase in provision for loss on business liquidation
Increase in provision for loss on utilization of gift certificates
Increase (decrease) in provision for loss on store reconstruction
Interest and dividend income
Interest expenses
Equity in earnings of unconsolidated subsidiaries and affiliates
Loss (gain) on sales of fixed assets, net
Loss on disposal of fixed assets
Gain on sales of investment securities
Loss on devaluation of investment securities
Gain on sales of shares of an affiliate
Decrease (increase) in notes and accounts receivable – trade
Decrease (increase) in inventories(Decrease) increase in notes and accounts payable – trade
Increase in accounts receivable – other
Decrease in long-term prepaid expenses
Other, net
SubtotalInterest and dividend income received
Interest expenses paid
Income taxes paid
Income taxes refunded
Net cash provided by operating activities

2016

2015

2016

¥34,698
18,345
5,905
499
167
88
(1,832)(1,367)
(13)
930
672
1,676
(734)
1,419
(1,886)
30
3,493
(960)
–
(131)
7,507
2,680
(4,251)(5,092)553(5,719)56,682616(1,446)(20,733)
1,680¥36,799¥38,965
17,963
985
632
(156)
(86)
2,399
(535)
(13)
26
909
(560)
(806)
1,481
(735)
(64)
2,679
(2,811)
36–(9,288)(1,590)8,519(4,170)416
926
55,120677(1,530)(10,405)788¥44,650$305,386
161,459
51,971
4,392
1,470
775
(16,124)(12,031)
(114)
8,185
5,914
14,751(6,460)12,489(16,599)
264
30,743(8,449)–(1,153)66,071
23,587(37,414)(44,816)
4,867(50,334)
498,873
5,422(12,727)(182,477)
14,786$323,87809Thousands of
U.S. dollars(Note 1)Millions of yen

Cash flows from investing activities:
Purchases of securities and investment securities
Proceeds from sales of securities and investment securities
Proceeds from sales of shares of an affiliate
Purchases of property and equipment and intangible assets
Proceeds from sales of property andequipment and intangible assets
Net decrease (increase) in short-term loans receivable
Increase in long-term loans receivableCollection of long-term loans receivable
Other, net
Net cash used in investing activities
Cash flows from financing activities:
Net decrease in short-term loans payable
Net increase (decrease) in commercial papers
Proceeds from long-term loans payable
Repayments of long-term loans payable
Proceeds from issuance of bonds
Redemption of bonds payable
Purchase of treasury stock
Cash dividends paid
Cash dividends paid to minority interests
Other, net
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year (Note 24)
See accompanying notes to the consolidated financial statements.

10

2016

2015

2016

¥(12,470)
4,113
1,632
(37,254)¥(1,056)
6,020–(23,606)$(109,752)
36,20014,364(327,882)

40
6
(43)
59
4,174
(39,741)

133
(33)
(47)
51
2,266
(16,272)

352
53
(378)
519
36,736(349,771)

(829)
2,107
21,200(13,008)
15,000(12,000)(5,031)(6,814)(789)(876)(1,041)(0)(3,985)32,132¥28,147(4,962)(3,500)6,000(17,034)––(64)(6,312)(734)(979)(27,587)65
856
31,276¥32,132(7,296)
18,544
186,587(114,487)
132,019(105,615)(44,279)(59,972)(6,944)(7,710)(9,162)(0)(35,073)282,802$247,729

Notes to Consolidated Financial Statements
J. FRONT RETAILING Co., Ltd. and Consolidated Subsidiaries
February 29, 2016

1

Basis of Preparation

The accompanying consolidated financial statements

not required under accounting principles generally acceptedof J. FRONT RETAILING Co., Ltd. (the“Company”) andin Japan but are presented as additional information.

consolidated subsidiaries (collectively, the“Group”) areprepared on the basis of accounting principles generally

The translation of yen amounts into U.S. dollar amounts is

accepted in Japan, which are different in certain respects as

included solely for the convenience of readers outside Japanto the application and disclosure requirements of Internationaland has been made at ¥113.62 = U.S. $1.00, the exchange

Financial Reporting Standards, and are compiled from therate prevailing on February 29, 2016.

consolidated financial statements prepared by the Company

should not be construed as a representation that yen can beas required by the Financial Instruments and Exchange Act

converted into U.S. dollars at the above or any other rate.

This translationof Japan.
As permitted by the Financial Instruments and Exchange Act
In preparing the accompanying consolidated financialof Japan, amounts of less than one million yen have beenstatements, certain reclassifications have been made to theomitted. As a result, the totals shown in the accompanying

consolidated financial statements issued domestically in orderconsolidated financial statements (both in yen and in

to present them in a format which is more familiar to readers

U.S. dollars) do not necessarily agree with the sum of theoutside Japan. In addition, certain notes included herein are

individual amounts.

2

Summary of Significant Accounting Policies(a)Principles of consolidation

removed from the scope of application of the equity

The accompanying consolidated financial statements

method from the current fiscal year.

include the accounts of the Company and the significant

Company sold all shares of Hakuseisha Co., Ltd. and, as acompanies which it controls directly or indirectly.

result, Hakuseisha Co., Ltd. was removed from the scope

Companies over which the Company exercises significantof the application of the equity method from the current

influence in terms of their operating and financial policies

fiscal year.

In addition, thehave been included in the accompanying consolidated
financial statements on an equity basis.

The fiscal year end of certain consolidated subsidiaries
is December 31. Their financial statements as of and for

Certain subsidiaries are excluded from the scope ofthe year ended December 31 are used in the preparation

consolidation because the effect of its total assets,of the consolidated financial statements and necessary

sales, net income or loss and retained earnings on theadjustments are made to their financial statements toaccompanying consolidated financial statements isreflect any significant transactions from January 1 toimmaterial. In addition, an unconsolidated subsidiary is

February 28 or 29. All significant intercompany balances

accounted for by the equity method.

and transactions have been eliminated in consolidation.
However, the fiscal year end of the other consolidated

Senshukai Co., Ltd. has been included within the scopesubsidiaries is the same as the fiscal year end of theof application of the equity method from the current fiscal

consolidated financial statements.

year ended February 29, 2016 due to the acquisition ofits shares by the Company on April 22, 2015 and May 7,

The financial statements of certain affiliates accounted for2015. In addition, Apparel-Web, Inc. has been includedby the equity method with a different fiscal year end arewithin the scope of application of the equity method fromconsolidated on the basis of the affiliates’fiscal year end.

the current fiscal year due to the subscription of newly
issued shares through a third-party allotment by Parco Co.,

Investments in subsidiaries and affiliates which are notLtd. on August 3, 2015.

consolidated nor accounted for by the equity method are
carried at cost or less. Where there has been a permanent

STRAITS PARCO RETAIL MANAGEMENT PTE LTD.

decline in the value of such investments, the Company has

was liquidated on November 11, 2015 and was therefore

written down the investments.
11

(b)Foreign currency translation

the most recent financial statements available prepared

Monetary assets and liabilities denominated in foreign

according to the financial reporting dates specified in thecurrencies are translated into yen at the rates of exchange

respective partnership agreements.

in effect at the balance sheet date. Foreign exchange gainor loss on translation is recognized in the consolidated
statement of income.

(f)Inventories
Inventories are principally stated at cost, determined by the
specific identification method, or net selling value.

Assets and liabilities of overseas consolidated subsidiaries
are translated into yen at the exchange rates in effect(g)Property and equipment (except for leased assets)

at the respective balance sheet dates, except for theProperty and equipment are stated at cost. Depreciation

components of net assets excluding minority interests

is computed based on the estimated useful lives of thewhich are translated at the respective historical rates.

respective assets by the declining-balance method,

Revenue and expenses are translated at the average rates

except for buildings and structures, which are principallyof exchange for the year. Differences arising from thedepreciated by the straight-line method.

translation are reflected in“Foreign currency translation
adjustments”and“Minority interests”in the accompanying

The principal estimated useful lives are as follows:

consolidated balance sheet and statement of changes in
net assets.

Buildings and structures

3 to 50 years

Other

2 to 20 years(c)Cash and cash equivalents
Cash and cash equivalents consist of cash on hand,(h)Leases

deposits with banks withdrawable on demand, and short-

Leased assets under finance lease transactions that doterm investments with a maturity of three months or lessnot transfer ownership to the lessee are depreciated to awhen purchased which can easily be converted to cash

residual value of zero by the straight-line method using theand are subject to little risk of change in value.

contract term as the useful life.

(d)Allowance for doubtful accounts

Finance lease transactions entered into on or before

Allowance for doubtful accounts is computed based on

February 28, 2009 that do not transfer ownership to thethe actual historical experience for normal receivables andlessee continue to be accounted for in the same manner

an estimate of uncollectible amounts determined after an

as operating lease transactions.

analysis of specific individual receivables from companies
in financial difficulty.

(i)Goodwill
Goodwill is amortized by the straight-line method over five(e)Securities and investment securities
The accounting standard for financial instruments requires

years, with the exception of immaterial amounts, which arecharged to income when incurred.

that securities be classified into three categories: trading,held-to-maturity or other securities. Trading securities are(j)Intangible assets (except for goodwill and leased assets)

carried at fair value and held-to-maturity debt securities

Amortization is calculated by the straight-line method overare carried at amortized cost.

the estimated useful lives of the respective assets.

Marketable securities

classified as other securities are carried at fair value withany changes in unrealized holding gain or loss, net of the

Expenditures relating to computer software developed for

applicable income taxes, included directly in net assets.

internal use are charged to income when incurred, except

Cost of securities sold is determined by the moving

if the software is expected to contribute to the generation

average method. Non-marketable securities classified asof income or to future cost savings. Such expenditures areother securities are carried at cost based on the moving

capitalized as intangible assets and are amortized by theaverage method.

straight-line method over their respective estimated useful
lives, a period of five years.

Investments in limited partnerships are stated at the net
value of equities attributable to the Company based on

12

(k)Deferred income taxes

distributions. Please refer to the Note 28“Subsequent

Deferred income taxes are provided for temporary

Event”of these Notes of Consolidated Financial

differences between the balances of assets and liabilities

Statements.

reported for financial reporting purposes and thecorresponding balances for tax reporting purposes.

(n)Provisionsi)Provision for bonuses to employees(l)Derivative financial instruments and hedging activities

Provision for bonuses to employees is provided based

All derivatives are stated at fair value with any changes

on the estimated amount to be paid to employees

in fair value included in profit or loss in the corresponding

subsequent to the balance sheet date.

period, except for derivatives meeting the criteria fordeferral hedge accounting under which unrealized gainii)P rovision for bonuses to directors and audit andor loss, net of the applicable income taxes, is deferred assupervisory board members

a component of net assets. Receivables and payables

Provision for bonuses to directors and audit andhedged by forward foreign exchange contracts meetingsupervisory board members is provided based on thecertain conditions are translated at the corresponding

estimated amount to be paid to directors and audit andforward foreign exchange contract rates (the“allocation

supervisory board members subsequent to the balancemethod”). Interest-rate swap transactions meeting certain

sheet date.

conditions for special treatment are accounted for as if
the interest rates applied to the interest-rate swap hadiii)Provision for sales returns

originally applied to the underlying debt (the“special

Provision for sales returns is provided at the amounttreatment”).

of estimated loss expected to be incurred subsequent
to the balance sheet date based on the maximum

Hedging instruments are forward foreign exchange

deductible amount under the Corporation Tax Law ofcontracts and interest rate swaps and hedged items are

Japan.

trade accounts receivable and payable denominated inforeign currencies, forecast transactions denominated iniv)Provision for loss on books unsalable

foreign currencies, loans payable and interest expenses on

Provision for books unsalable after a certain period fromloans payable.

publication is provided at the amount of estimated loss
expected to be incurred subsequent to the balance sheet

The Company and its consolidated subsidiaries hedge

date based on the maximum deductible amount under

foreign currency exchange rate risk and interest rate risk

the Corporation Tax Law of Japan.

based on its risk management policy of the Group.
v)Provision for sales promotion expense
The relationship between the hedging instruments andProvision for sales promotion expense is provided at

the underlying hedged items is assessed at each balance

the estimated amount calculated based on historical

sheet date to confirm the effectiveness of hedging

experience to prepare for the future use of point card

activities. However, hedge effectiveness is not assessedcertificates granted under a point card program that is

if the substantial terms and conditions of the hedging

designed for sales promotion.

instruments and the hedged items are the same.
vi)Provision for loss on utilization of gift certificates(m)Distribution of retained earnings

Gift certificates outstanding are credited to income upon

Under the Corporation Law of Japan and the Company’sderecognition after a certain period has passed from

Articles of Incorporation, the distribution of retained

their respective dates of issuance. Provision for loss on

earnings with respect to a given fiscal year is made byutilization of gift certificates is provided at the estimatedresolution of the shareholders at a general meeting heldamount based on the historical utilization ratio.

subsequent to the close of the fiscal year. The distributionof retained earnings with respect to the interim periodvii)Provision for loss on business liquidation

is made by resolution of the Board of Directors. The

Provision for loss on business liquidation is provided foraccounts for the corresponding periods do not reflect suchlosses arising from business liquidation and store closures13

of certain consolidated subsidiaries at the estimatedyears of service of the eligible employees.

amount expected to be incurred subsequent to the balance
sheet date.

Actuarial gain or loss is amortized commencing in theyear following the year in which the gain or loss wasviii)Provision for loss on store reconstruction

recognized primarily by the straight-line method over

Provision for loss on store reconstruction is provided

periods of principally 10 to 12 years, which are withinfor losses arising from the reconstruction of a store

the estimated average remaining years of service of theof a consolidated subsidiary at the estimated amounteligible employees.

expected to be incurred subsequent to the balance
sheet date.

Unrecognized actuarial gain and loss and prior service
cost (after tax effect) are recognized as“Retirement benefit(o)Retirement benefits

adjustments”in accumulated other comprehensive loss

Asset for retirement benefits and liability for retirement

as a component of net assets in the consolidated balance

benefits have been provided principally at an amountsheet.

calculated based on the retirement benefit obligation andthe fair value of the pension plan assets. The estimatedIn addition, directors and audit and supervisory board

benefit is attributed to each period by the benefit formulamembers of certain domestic consolidated subsidiaries are

method.

customarily entitled to lump-sum payments under unfunded
retirement benefit plans. Accrued retirement benefits for

Past service cost is amortized as incurred primarily by thethese directors and audit and supervisory board members

straight-line method over periods of principally 10 to 12

are provided at an estimated amount based on eachyears, which are within the estimated average remaining

consolidated subsidiary’s internal rules.

3

Accounting Changes(a)Accounting Method for Inventory Valuation

The effects on per share information are described in Note

Effective the year ended February 29, 2016, certain main

26“Amounts per share”of these Notes of Consolidated

consolidated subsidiaries, such as Daimaru Matsuzakaya

Financial Statements.

Department Stores Co., Ltd. changed their inventory
valuation method from the retail inventory method to the(b)Accounting Standards for Retirement Benefits

specific identification method because a new inventory

The Company and its domestic consolidated subsidiaries

control system to provide information on the specificadopted“Accounting Standard for Retirement Benefits”

identified cost by each item commenced in full operations,(Accounting Standards Board of Japan “ASBJ”() Statement

and the new system thus enabled more accurate cost

No.26 issued on May 17, 2012) and“Guidance on

control.

Accounting Standard for Retirement Benefits”(ASBJ
Guidance No.25 revised on March 26, 2015) in line with

The accounting change was retrospectively applied, andcertain provisions described in the main clause of Section

the consolidated financial statements as of and for the

35 of the standard and in the main clause of Section 67 ofyear ended February 28, 2015 were restated.

the guidance, effective from March 1, 2015. As a result,the method of calculating the retirement benefit obligation

14

As a result, operating income and income before income

and service cost has been revised in the following

taxes and minority interests for the year ended February

respects: the method of attributing estimated benefits

28, 2015 increased by ¥76 million ($669 thousand),to each period has been changed from the straight-line

respectively, compared with the amounts before themethod to the benefit formula method, and the method ofretrospective application.

In addition, the balance ofdetermining the discount rate has been changed from theretained earnings as of March 1, 2014 decreased byuse of a discount rate based on the estimated average¥254 million ($2,236 thousand) as a result of reflecting

remaining years of service of the eligible employees to thethe cumulative effects of the change in accounting policy.

use of a single weighted average discount rate reflecting

the expected timing and amount of benefit payment.

thousand), and the asset for retirement benefits, retained
earnings and minority interests as of March 1, 2015

The cumulative effect of changing the method for

decreased by ¥2,640 million ($23,235 thousand), ¥3,065

calculating the retirement benefit obligation and service

million ($26,976 thousand) and ¥114 million ($1,003

cost was recognized by adjusting retained earnings

thousand), respectively. The effects of this change on

at March 1, 2015, in accordance with the transitional

operating income and income before income taxes andtreatment provided in Section 37 of Accounting Standard

minority interests for the year ended February 29, 2016

for Retirement Benefits.

were immaterial. The effects on per share information are
described in Note 26“Amounts per share”of these Notes

As a result, the liability for retirement benefits as ofof Consolidated Financial Statements.

March 1, 2015 increased by ¥2,065 million ($18,175

4Standards Issued but Not Yet Effective

Accounting Standards for Business Combinations(3)Under these revised accounting standards, if provisional

On September 13, 2013, the ASBJ issued“Revised

accounting for a business combination is finalized during

Accounting Standard for Business Combinations”(ASBJ

the next year in which the business combination occurs,

Statement No.21),“Revised Accounting Standard forthe adjustments of the allocation of acquisition costs on

Business Divestitures”(ASBJ Statement No.7),“Revised

the finalization of provisional accounting treatments are

Accounting Standard for Earnings Per Share”(ASBJ

reflected in the consolidated financial statements for theStatement No.2),“Revised Accounting Standard foryear in which it occurs.

Consolidated Financial Statements”(ASBJ Statement No.22),“Revised Guidance on Accounting Standard for Business(4)“Income before minority interests”in the current year’s

Combinations and Accounting Standard for Businessconsolidated statement of income is changed toDivestitures”(ASBJ Guidance No.10) and“Revised Guidance“net income”and“net income”in the current year’son Accounting Standard for Earnings Per Share”(ASBJ

consolidated statement of income is changed to“netGuidance No.4).

income attributable to owners of parent.”

Under these revised accounting standards, the major

The Company and its domestic consolidated subsidiaries

accounting changes are as follows:

expect to adopt these revised accounting standards fromthe beginning of the fiscal year ending February 28, 2017.

(1)Any differences resulting from changes in a parent’sownership interest in a subsidiary when control over the

The Company and its domestic consolidated subsidiaries

subsidiary is retained are recognized under capital surplus.

are currently evaluating the impact on the consolidated

In addition,“Minority interests”in the current year’sfinancial statements from the adoption of the revised

consolidated balance sheet are changed to“non-controllingstandards.

interests.”(2)Acquisition-related costs are recorded as expenses for theperiod in which they arise.

15

5

Inventories

Inventories at February 29, 2016 and February 28, 2015 consisted of the following:
Millions of yen
Merchandise and finished goods
Work in process
Raw materials and supplies

6

2016¥27,085826
294¥28,205

Accumulated Depreciation

Accumulated depreciation (including accumulated impairment

which has been offset against the acquisition costs of thelosses) of property and equipment at February 29, 2016

property and equipment in the accompanying consolidated

and February 28, 2015 amounted to ¥291,437 million

balance sheet.

($2,565,015 thousand) and ¥298,382 million, respectively,

16

2015
¥30,108
833
262¥31,203

Thousands of
U.S. dollars
2016$238,382
7,270
2,588
$248,240

7

Rental Properties

Certain subsidiaries of the Company own buildings (including

on impairment of fixed assets of ¥57 million ($502 thousand)land) as rental properties in Tokyo and other regions.

and ¥229 million related to rental properties were recognized
for the years ended February 29, 2016 and February 28,

Gross profit of ¥4,990 million ($43,918 thousand) and2015, respectively. In addition, loss on business liquidation¥4,241 million (rental revenue is recorded as rent income ofrelated to rental properties amounted to ¥225 million ($1,980

real estate in net sales and rental expenses as cost of real

thousand) for the year ended February 29, 2016 and gain on

estate rent in costs of sales), loss on disposal of fixed assets

sales of fixed assets related to rental properties amounted toof ¥757 million ($6,663 thousand) and ¥187 million and loss

¥84 million for the year ended February 28, 2015.

Rental properties

Millions of yen
Carrying value
Fair value
February 29,
February 29,
March 1, 2015
Net change
2016
2016
¥109,530¥10,026¥119,556¥116,951

Rental properties

Millions of yen
Carrying value
Fair value
February 28,
February 28,
March 1, 2014
Net change
2015
2015
¥104,162¥5,368¥109,530¥104,985

Rental properties

Thousands of U.S. dollars
Carrying value
Fair value
February 29,
February 29,
March 1, 2015
Net change
2016
2016
$964,003$88,242$1,052,244$1,029,317

Notes:1.The carrying value represents the acquisition cost less accumulated depreciation and loss on impairment.
2.The main components of net change in carrying value include the increases of ¥6,294 million ($55,395
thousand) and ¥4,784 million due to acquisitions of real estate and ¥6,182 million ($54,409 thousand) and¥2,834 million due to changes in the purpose of ownership and the decrease of ¥2,187 million ($19,248
thousand) and ¥1,901 million due to depreciation for the years ended February 29, 2016 and February 28,
2015.
3.For major properties, fair value is determined based on the real estate appraisal standards of independent realestate appraisers, etc. For other properties, fair value is estimated by considering the land price index withnecessary adjustments applied by the Company and its consolidated subsidiaries.
4.The urban redevelopment project in the Ginza 6-chome district, whose consolidated balance sheet amounts
are ¥129,754 million ($1,142,000 thousand) and ¥124,365 million as of February 29, 2016 and February
28, 2015 respectively, involves the development of large-scale commercial facilities and is still in thedevelopment stage at present. Since it is extremely difficult to determine the fair value due to these reasons,the carrying value and the fair value of the project are not included in the above table.

178

Pledged Assets and Secured Liabilities

The carrying value of assets pledged as collateral and the corresponding liabilities secured by collateral at February 29, 2016
and February 28, 2015 was as follows:
Millions of yen

Thousands of
U.S. dollars
2016

2016

2015

Assets pledged as collateral:
Land
Buildings and structures, net
Investment securities
Other property and equipment
Total¥10,798
10,799265
51¥21,913¥18,093
22,942
241
60¥41,338$95,036
95,0452,332
449$192,862

Liabilities secured by collateral:
Notes and accounts payable – trade
Short-term loans payable
Long-term loans payable
Total

¥524
1,000
1,625
¥3,149¥432
1,620
10,125¥12,177$4,612
8,801
14,302$27,715

9

Assets in TrustThe carrying value of assets in trust at February 29, 2016 and February 28, 2015 was as follows:
Millions of yen
Assets in trust:Land
Buildings and structures, net
Other property and equipment
Total

18

2016

2015

¥43,956
16,858208¥61,024¥40,921
17,582245¥58,749

Thousands of
U.S. dollars
2016$386,869
148,372
1,831$537,089

10 Securities
Information regarding marketable securities classified as other securities at February 29, 2016 and February 28, 2015 issummarized as follows:

Securities whose carrying value
exceeds their acquisition cost:
Equity securities
Debt securities
Subtotal
Securities whose carrying value
does not exceed theiracquisition cost:
Equity securities
Debt securities
Subtotal
Total

Securities whose carrying value
exceeds their acquisition cost:
Equity securities
Debt securities
Subtotal
Securities whose carrying value
does not exceed theiracquisition cost:
Equity securities
Debt securities
Subtotal
Total

Carrying
value

2016
Acquisition
cost

Millions of yen
Unrealized
gain (loss)

Carrying
value

2015
Acquisition
cost

Unrealized
gain (loss)¥8,932
4,788
13,720¥5,275
4,758
10,034¥3,65630
3,686¥12,833
4,386
17,220¥8,972
4,355
13,327¥3,861
31
3,892

3,037
193
3,231
¥16,951

3,550
200
3,750
¥13,785

(513)
(6)
(519)
¥3,166

1,343
430
1,773
¥18,994

1,490
431
1,922
¥15,250

(147)
(1)
(148)
¥3,744

Thousands of U.S. dollars
2016
Carrying
Acquisition
Unrealized
value
cost
gain (loss)$78,613
42,140120,753$46,427
41,87688,312$32,177
264
32,441

26,7291,699
28,437$149,190

31,2441,760
33,005$121,325(4,515)(53)(4,568)$27,865

Sales of securities classified as other securities and the aggregate gain for the years ended February 29, 2016 and February
28, 2015 are summarized as follows:
Millions of yen
Equity securities:
Sales proceeds
Aggregate gain

2016

2015

¥2,763960¥5,6202,811

Thousands of
U.S. dollars
2016$24,318
8,449

For marketable securities, the Company and its consolidated

recognize loss on devaluation of investment securities for thesubsidiaries recognize loss on devaluation of investment

year ended February 29, 2016.

securities for securities whose fair value has declined by
30% or more compared with their acquisition cost, if the

The Company and consolidated subsidiaries recognized loss

decline is deemed to be irrecoverable.

on devaluation of investment securities classified as equity
securities included in other securities of ¥36 million for the

The Company and consolidated subsidiaries did notyear ended February 28, 2015.

19

11 Short-Term Loans Payable, Commercial Papers, Long-Term Debt and Lease Obligations
The annual weighted-average interest rates applicable to

The annual weighted-average interest rates applicable toshort-term loans payable were 0.49% and 0.52% at Februarycommercial papers were 0.02% and 0.11% at February 29,

29, 2016 and February 28, 2015, respectively.

2016 and February 28, 2015, respectively.

Long-term debt and lease obligations at February 29, 2016 and February 28, 2015 consisted of the following:Thousands of
U.S. dollars
2016

Millions of yen
Bonds payable without collateral due throughNovember 2017, with an annual interest rateof 0.49%
Bonds payable without collateral due throughAugust 2020, with an annual interest rateof 0.30%
Bonds payable without collateral due throughAugust 2022, with an annual interest rateof 0.46%
Bonds payable without collateral due throughNovember 2015, with an annual interest rateof 0.33%
Loans payable, due through November 2021,
with an annual weighted-average interest
rate of 0.85%
Lease obligations due through August 2024
Less current portion

2016

2015

¥12,000¥12,000$105,615

10,000–88,0135,000–

44,006–

12,000–114,685
2,312
143,997(32,588)¥111,409

106,498
2,725
133,223(25,867)¥107,355

1,009,373
20,3491,267,356(286,816)$980,540

The aggregate annual maturities of bonds payable, long-term loans payable and lease obligations subsequent to February 29,
2016 are summarized as follows:

Years ending February 28 or 29,
2017
2018
2019
2020
2021
2022 and thereafterYears ending February 28 or 29,
2017
2018
2019
2020
2021
2022 and thereafter

20

Millions of yen
Long-term loans
Bonds payable
Lease obligations
payable¥–¥31,780¥808
12,00036,880507–
16,480313–
11,120210
10,00017,200
106
5,000
1,225
368
¥27,000¥114,685¥2,312Thousands of U.S. dollars
Long-term loans
Bonds payable
Lease obligations
payable$–$279,704$7,111
105,615
324,591
4,462–
145,045
2,755–
97,8701,848
88,013
151,382933
44,006
10,782
3,239$237,634$1,009,373$20,349

12 Retirement Benefits
consolidated subsidiaries also have established a(1)Outline of retirement benefits for employees
The Company and its main consolidated subsidiaries have

employees’benefit trust.

defined benefit pension plans (i.e., corporate pension fundplans and lump-sum payment plans). Certain consolidated

Certain domestic subsidiaries have calculated theirsubsidiaries have defined contribution pension plans.

retirement benefit obligation and retirement benefit
expenses based on the amount which would be payable

Additional retirement allowances not included in theat the year end if all eligible employees terminated theiractuarial calculation as per retirement benefit accounting

services voluntarily (the“simplified method”).

may also be paid when an employee retires.

Certain(2)Defined benefit pension plans for the years ended February 29, 2016 and February 28, 2015
1.The changes in the retirement benefit obligation for the years ended February 29, 2016 and February 28, 2015 are outlined
as follows:
Millions of yen
Balance at beginning of the year
Cumulative effect of change in accounting policy
Restated balance at beginning of the year
Service cost
Interest cost
Actuarial loss
Benefits paid
Past service cost
Balance at end of the year2016
¥67,737
4,705
72,443
2,339
278
700
(6,644)
10¥69,1282015¥62,259–
62,259
2,245
662
4,515
(5,658)
3,714¥67,737

Thousands of
U.S. dollars
2016$596,171
41,410637,590
20,5862,447
6,161(58,476)88$608,414*The retirement benefit obligation based on the simplified method is included in the table above due to its immateriality.

2.The changes in plan assets for the years ended February 29, 2016 and February 28, 2015 are outlined as follows:
Millions of yen
Balance at beginning of the year
Expected return on plan assets
Actuarial (loss) gainContributions paid by the Group
Benefits paid
Balance at end of the year2016
¥48,087794(5,152)
1,954(3,576)¥42,1082015¥44,076
740
4,996
1,925
(3,650)¥48,087

Thousands of
U.S. dollars
2016$423,227
6,988(45,344)
17,198(31,473)$370,604

21

3.The balance of retirement benefit obligation and plan assets at fair value and the amounts recognized in the consolidatedbalance sheet at February 29, 2016 and February 28, 2015 are outlined as follows:

2016¥39,218(42,108)(2,889)29,9092015¥38,901(48,087)(9,186)
28,836

Thousands of
U.S. dollars
2016$345,168(370,604)(25,427)
263,237

27,02019,649237,81032,707
5,687

31,514
11,864

287,863
50,053¥27,020¥19,649$237,810

Millions of yen
Funded retirement benefit obligation
Plan assets at fair value
Unfunded retirement benefit obligationn
Net liability for retirement benefits
recognized in consolidated balance sheet
Liability for retirement benefits
Asset for retirement benefits
Net liability for retirement benefits
recognized in consolidated balance sheet

4.The components of retirement benefit expenses for the years ended February 29, 2016 and February 28, 2015 are outlined
as follows:
Millions of yen
Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial loss
Amortization of past service cost
Other
Retirement benefit expenses

2016¥2,339
278
(794)
931
134
204
¥3,0932015¥2,245
662
(740)
1,648
133
227
¥4,176

Thousands of
U.S. dollars
2016$20,586
2,447(6,988)
8,194
1,179
1,795
$27,222

5.The components of retirement benefits adjustments included in other comprehensive income (before tax effects) for the years
ended February 29, 2016 and February 28, 2015 are outlined as follows:
Millions of yen
Past service cost
Actuarial gain
Total

2016
¥123
(5,292)¥(5,168)

2015
¥–
–
¥–

Thousands of
U.S. dollars
2016$1,083(46,576)$(45,485)

6.The components of retirement benefits adjustments included in accumulated other comprehensive income (before tax effect)
at February 29, 2016 and February 28, 2015 are outlined as follows:
Millions of yen
Unrecognized past service cost
Unrecognized actuarial gain
Total

22

2016
¥(1,876)(15,554)¥(17,431)

2015¥(2,000)(10,632)¥(12,632)

Thousands of
U.S. dollars
2016$(16,511)(136,895)$(153,415)

7.The fair value of plan assets, by major category, as a percentage of total plan assets at February 29, 2016 and February 28,
2015 is as follows:
Debt securities
Equity securities
General accounts at life insurance companies
Cash and deposits
Other
Total

2015
27%
49
11
2
11
100%

2016
33%
42
13
3
9
100%

The total pension plan assets include 26% (24% in equity

The expected long-term rate of return on plan assets issecurities and 1% in cash and deposits) and 30% (29%determined as a result of consideration of both the present

in equity securities and 1% in cash and deposits) of theand anticipated portfolio allocation and the expected long-retirement benefits trust for the corporate pension fundterm rates of return from multiple plan assets.

plans as of February 29, 2016 and February 28, 2015,
respectively.
8.The assumptions used in accounting for the defined benefit pension plans are as follows:

Discount rates
Expected long-term rates of return on plan assets

2016
2015
0.12% to 0.59% 0.9% to 1.1%
1.0% to 2.0%
1.0% to 2.0%

(3)Defined contribution pension plans for the years ended February 29, 2016 and February 28, 2015
Millions of yen
Contributions to defined contribution pension plans

2016
¥360

2015
¥365

Thousands of
U.S. dollars
2016$3,16823

13 Leases(1)Lessee’s accounting
Regarding the depreciation method of the leased assets,

1.Finance lease transactions that do not transfer ownershipplease refer to Note 2“Summary of Significant Accounting

to the lessee

Policies”of these Notes to Consolidated Financial
Statements.

For finance lease transactions that do not transfer
ownership to the Company or its consolidated subsidiaries,
the corresponding leased assets mainly consist of system

Finance lease transactions commencing on or before

facilities（tools, furniture and fixtures）in the information

February 28, 2009, other than those in which theservices business, which included in“Other, net”ofownership of the leased assets is transferred to certain

property and equipment.

consolidated subsidiaries, are accounted for in the samemanner as operating leases.

The following amounts represent the acquisition cost, accumulated depreciation, accumulated loss on impairment, and net bookvalue of the leased assets at February 29, 2016 and February 28, 2015, which would have been reflected in the accompanying
consolidated balance sheet if finance lease accounting had been applied to the finance lease transactions entered into by the
consolidated subsidiaries as lessees on or before February 28, 2009, which are accounted for as operating leases：
Millions of yen
2016
Accumulated Accumulated loss
depreciation
on impairment

Acquisition
cost
Leased assets:
Machinery, equipment, tools, furniture and fixtures¥532¥1,480$4,682

The amounts the above table include the interest portion.

¥1,389$4,277¥36

Net bookvalue¥9

Thousands of U.S. dollars
2016
Accumulated Accumulated loss
depreciation
on impairment

Acquisition
cost
Leased assets:
Machinery, equipment, tools, furniture and fixtures¥9

Millions of yen
2015
Accumulated Accumulated loss
depreciation
on impairment

Acquisition
cost
Leased assets:
Machinery, equipment, tools, furniture and fixtures¥486

Net book
value

$79

¥80

Net book
value

$317

lease terms with a nil residual value amounted to ¥40 million($352 thousand) and ¥136 million for the years ended

24

Lease payments relating to finance leases accounted for as

February 29, 2016 and February 28, 2015, respectively.

operating leases for the years ended February 29, 2016 andReversal of accumulated loss on impairment of the leased

February 28, 2015 totaled ¥42 million ($370 thousand) andassets for the years ended February 29, 2016 and February¥138 million, respectively. Depreciation of the leased assets

28, 2015 totaled ¥1 million ($9 thousand) and ¥1 million,

computed by the straight-line method over the respective

respectively.

Future minimum lease payments (including the interest portion thereon) subsequent to February 29, 2016 for finance leases
accounted for as operating leases are summarized as follows:
Years ending February 28 or 29,

Thousands of
U.S. dollars

Millions of yen

¥23
13
¥36

2017
2018 and thereafter
Total

$202
114
$317

2.Operating leases
Future minimum lease payments subsequent to February 29, 2016 for noncancelable operating leases were as follows:
Years ending February 28 or 29,

Millions of yen

Thousands of
U.S. dollars¥3,51821,677¥25,19520172018 and thereafter
Total$30,963
190,785$221,748(2)Lessor’s accounting
1.Finance lease transactions that do not transfer ownershipof the leased assets is transferred from the Company or its

to the lessee

consolidated subsidiaries to the lessees are accounted forin the same manner as operating leases.

Finance lease transactions commencing on or before
February 28, 2009 other than those in which the ownership
The following amounts represent the acquisition cost, accumulated depreciation and net book value of the leased assets at
February 29, 2016 and February 28, 2015, which would have been transferred to the lessees if finance lease accounting had
been applied to the finance lease transactions entered into by the consolidated subsidiaries as lessors on or February 28, 2009,
which are accounted for as operating leases:

Leased assets:
Machinery, equipment, tools, furnitureand fixtures included in“Other, net”
in property and equipment

Leased assets:
Machinery, equipment, tools, furnitureand fixtures included in“Other, net”
in property and equipment

Acquisition
cost

2016
Accumulated
depreciation¥270

Millions of yen
Net book
value

¥261

Acquisition
cost

¥9

¥296

2015
Accumulated
depreciation¥261

Net book
value

¥34

Thousands of U.S. dollars
2016
Acquisition Accumulated
Net book
cost
depreciation
value$2,376$2,297$79

Lease income relating to finance leases accounted for as

thousand) and ¥34 million for the years ended February 29,

operating leases for the years ended February 29, 20162016 and February 28, 2015, respectively.

and February 28, 2015 were ¥25 million ($220 thousand)and ¥34 million, respectively. Depreciation expense of the

No loss on impairment was allocated to any leased assets forleased assets computed by the straight-line method over

the years ended February 29, 2016 and February 28, 2015.

the respective lease terms amounted to ¥25 million ($22025

Future minimum lease receivables (including the interest portion thereon) subsequent to February 29, 2016 for finance leases
accounted for as operating leases are summarized as follows:
Years ending February 28 or 29,

Millions of yen

Thousands of
U.S. dollars

¥7
1
¥9

2017
2018 and thereafter
Total

$62
9
$79

2.Operating leases
Future minimum lease receivables subsequent to February 29, 2016 for noncancelable operating leases were as follows:
Years ending February 28 or 29,

Millions of yen¥3,056
12,677¥15,73420172018 and thereafter
Total

Thousands of
U.S. dollars$26,897
111,574$138,479

14 Shareholders’Equity
resolution of the shareholders or by the Board of Directors(1)The Corporation Law of Japan (the“Law”) provides that

if certain conditions are met.

an amount equal to 10% of the amount to be disbursed
as distributions of capital surplus (other than the capitalreserve) and retained earnings (other than the legal

The capital reserve included in capital surplus amounted toreserve) be transferred to the capital reserve and the legal¥7,500 million ($66,010 thousand) at February 29, 2016

reserve, respectively, until the sum of the capital reserveand February 28, 2015. In addition, the legal reserveand the legal reserve equals 25% of the capital stockincluded in retained earnings amounted to nil at February

account. Such distributions can be made at any time by

29, 2016 and February 28, 2015.

(2)Movements in shares issued and treasury stock during the years ended February 29, 2016 and February 28, 2015 aresummarized as follows:

Shares issued:
Common stock
Treasury stock:
Common stock

March 1, 2015

Number of shares
2016
Increase
Decrease

268,119,164––

268,119,164

4,205,258

2,496,640

126,660

6,575,238

The increase in treasury stock consists of 11,970 shares

decrease in treasury stock consists of 497 shares resulting

resulting from the purchase of shares less than one

from the sale of shares less than one voting unit by thevoting unit by the Company, 770 shares of treasury stock

Company, 23,400 shares resulting from the exercise of stock

attributable to the Company resulting from the purchase by

options and 102,763 shares resulting from the exclusion of

an affiliate accounted for by the equity method and 2,483,900

an affiliate accounted for by the equity method for the year

shares resulting from the purchase based on resolution of theended February 29, 2016.

board of directors for the year ended February 29, 2016. The

26

February 29, 2016

Shares issued:
Common stock
Treasury stock:
Common stock

March 1, 2014

Number of shares
2015
Increase
Decrease

February 28, 2015

536,238,328–

268,119,164

268,119,164

8,372,594

44,0314,211,367

4,205,258

Two shares of common stock were consolidated into one

an affiliate accounted for by the equity method for the year

share on September 1, 2014. As a result, the number ofended February 28, 2015. The decrease in treasury stock

shares issued decreased by 268,119,164.

consists of 4,087 shares resulting from the sale of sharesless than one voting unit by the Company, 7,000 shares

The increase in treasury stock consists of 41,564 shares

resulting from the exercise of stock options and 4,200,280

resulting from the purchase of shares less than one voting

shares resulting from consolidation of shares for the year

unit by the Company, and 2,467 shares of treasury stock

ended February 28, 2015.

attributable to the Company resulting from the purchase by(3)Stock option plans
Descriptions of each stock option plan at February 29, 2016 are as follows:
Stock option plans

No.4 plan (*1)

No.5 plan (*2)

Individuals covered by the plan

Directors: 7
Audit and supervisory board
members: 4
Executive officers: 12
Administration officer: 1

Directors: 8
Audit and supervisory board
members: 5

Type and number ofshares to be issued
upon the exercise of thestock subscription rights (*5)

168,000 shares ofcommon stock

31,500 shares ofcommon stock

May 26, 2005 (*3)
None
None
From September 3, 2007
to May 26, 2015

May 25, 2006 (*4)
None
None
From September 3, 2007
to July 14, 2026

Grant date
Vesting conditions
Vesting period
Exercise period*1 The Company granted these stock options which were originally granted by the Daimaru, Inc. through the stock transfer contract entered into on September 3, 2007.
*2 The Company granted these stock options which were originally granted by Matsuzakaya Co., Ltd. through the stock transfer contract entered into on September 3,
2007.
*3 Grant date was the date of resolution of shareholder’s meeting of the Daimaru, Inc., currently Daimaru Matsuzakaya Department Store Co., Ltd. and individuals coveredby the plan and their title were those as of the grant date.
*4 Grant date was the date of resolution of shareholder’s meeting of Matsuzakaya Co., Ltd., currently Daimaru Matsuzakaya Department Store Co., Ltd. and individuals
covered by the plan and their title were those as of the grant date.
*5 The number of shares in the above table are adjusted to reflect the consolidation of shares executed on September 1, 2014.

27

Information regarding the Company’s stock option plans is summarized as follows:

No.4 plan

No.5 plan

–
–
–
–
–

–
–
–
–
–

143,500–
22,400121,100
–

9,500
–
1,000
–
8,500

Exercise price (Yen)
Average stock price at exercise (Yen)Fair value at grant date (Yen)¥1,382(*1)¥1,881¥–(*2)¥1¥2,054¥1,666(*1)

Exercise price (U.S. dollars)
Average stock price at exercise (U.S. dollars)
Fair value at grant date (U.S. dollars)$12,163$16,555$–$9$18,078$14,663

Number of stock options: (*1)
Non-vested
Outstanding at March 1, 2015
GrantedForfeited
VestedOutstanding at February 29, 2016
VestedOutstanding at March 1, 2015
VestedExercised
Forfeited
Outstanding at February 29, 2016

*1 The amounts are adjusted to reflect the consolidation of shares executed on September 1, 2014.
*2 The fair value of stock options is omitted since they had been issued before the date of enactment of the Law.

During the year ended February 29, 2016, no stock options

options actually forfeited is reflected.

were granted.
Stock subscription rights as stock options of ¥14 million
Because it is difficult to reasonably estimate the number($123 thousand) and ¥15 million were recorded as ofof options that will be forfeited in the future, the number ofFebruary 29, 2016 and February 28, 2015.

15 Financial Instruments
Overview

mainly associated with leases of stores and are exposed(a)Policy for financial instruments

to credit risk of lessors. For these credit risks, the GroupThe Group manages funds only through low-risk financial

individually manages the due dates and balances for each

assets such as bank deposits and debt securities, incounterparty and tries to identify any incidents that may

addition, funds are raised through bank borrowings,

cause potential collectability issues at an early stage andissuance of commercial papers and corporate bonds,

to mitigate such risks.

and securitization of receivables. Derivatives are only
utilized to hedge foreign currency fluctuation risk arising

Equity securities, such as investment securities, arefrom receivables and payables denominated in foreign

exposed to market price fluctuation risk, but mainly

currencies and interest rate fluctuation risk arising fromconsist of securities of companies with which a businessloans payable and bonds payable, and are not used for

relationship has been established, and the fair value is

speculative purposes.

monitored periodically and the portfolio is reviewed on an
ongoing basis.

(b)T ypes of financial instruments, related risks and risk

28

management

Trade payables, such as notes and accounts payable –Notes and accounts receivable-trade are exposed to

trade and income taxes payable are mostly due within one

credit risk of customers. Deposits and guarantees are

year. Trade payables denominated in foreign currencies

are exposed to foreign currency fluctuation risk and foreign

are based on the internal rules which determine theexchange forward contracts are utilized for a portion of

authorization for such transactions. In addition, derivativethese trade payables to hedge foreign currency fluctuationtransactions are entered into only with financial institutions

risk.

with high credit ratings to mitigate credit risk.

Short-term loans payable, commercial papers andTrade payables and loans payable are exposed to liquidity

securitized receivables are mainly used for financing of

risk. The Group individually manages the risk by preparing

operating activities, and bonds payable and long-term loansa cash management schedule on a monthly basis andpayable are mainly used for capital investments. Loans

maintains necessary liquidity by entering into commitment

payable with variable interest rates are exposed to interest

lines and overdraft contracts with its main financial

rate fluctuation risk, but derivative transactions (interest-

institutions.

rate swaps) are utilized as hedging instruments for certainof long-term loans payable on an individual loan basis toFair Value of Financial Instruments

mitigate the interest rate fluctuation risk and fix interest

The carrying value of financial instruments on thepayments. Hedge effectiveness of each transaction is

consolidated balance sheet, fair value and the difference

assessed periodically. For interest-rate swap transactions

as of February 29, 2016 and February 28, 2015, arethat meet the criteria for the special treatment, an

shown in the following table. The table does not include

assessment of hedge effectiveness is omitted.

financial instruments for which it is extremely difficult todetermine the fair value. (Please refer to Note 2 below).

The execution and management of derivative transactions(1)Cash and deposits(2)Notes and accounts
receivable – trade(3)Securities and investment
securities:
Other securities
Investments in affiliates(4)Deposits and guarantees
Total assets(5)Notes and accounts
payable – trade(6)Short-term loans payable(7)Commercial papers(8)Income taxes payable(9)Bonds payable(10)Long-term loans payable
Total liabilities
Derivative transactions (*)

Millions of yen

Carrying value¥32,439

2016
Fair value¥32,439

Difference¥–

Carrying value¥36,8062015
Fair value¥36,806

Difference¥–

68,04968,049–75,55675,556–

16,951
11,98036,679¥166,099

16,951
8,128
36,304¥161,873–(3,851)(374)¥(4,225)

18,994
1,448
40,650¥173,456

18,994730
39,435¥171,523–(718)(1,214)¥(1,933)

90,7688,439
30,798
8,322
27,000114,685¥280,013¥(83)

90,7688,439
30,798
8,322
27,260115,951¥281,540
¥(83)

–
–
–
–
260
1,266
¥1,527¥–95,0209,268
28,691
12,702
24,000106,498¥276,180¥(27)

95,0209,268
28,691
12,70224,094
107,400¥277,177
¥(27)

–
–
–
–
94
901
¥996
¥–

29

(1)Cash and deposits(2)Notes and accounts
receivable – trade(3)Securities and investment
securities:
Other securities
Investments in affiliates(4)Deposits and guarantees
Total assets(5)Notes and accounts
payable – trade(6)Short-term loans payable(7)Commercial papers(8)Income taxes payable(9)Bonds payable(10)Long-term loans payable
Total liabilities
Derivative transactions (*)

Thousands of U.S. dollars
2016
Carrying value
Fair value
Difference$285,504$285,504$–

598,917598,917–

149,190
105,439
322,822$1,461,882

149,190
71,537
319,521$1,424,688–(33,894)(3,292)$(37,185)

798,873
74,274
271,061
73,244
237,634
1,009,373$2,464,469$(731)

798,873
74,274
271,061
73,244
239,923
1,020,516$2,477,909$(731)

–
–
–
–
2,288
11,142$13,440$–*Assets and liabilities arising from derivative transactions are shown at net value with the amount in parentheses representing net liability position.
Note 1:Methods to determine the fair value of financial instruments and other matters related to securities and derivative transactions(1) Cash and deposits and (2) Notes and accounts receivable – trade
Since these items are settled in a short time period, their fair value approximates carrying value. Time deposits with their maturity dates over one year are includedin (1) Cash and deposits in the above table.
(3) Securities and investment securities
The fair value of equity securities is based on quoted market prices. The fair value of debt securities is based on quoted market prices or prices provided by thecounterparty financial institutions.
(4) Deposits and guarantees
The fair value of deposits and guarantees is based on the present value of future cash flows discounted by the interest rates reflecting credit risk. Deposits andguarantees due within one year are included in (4) Deposits and guarantees in the above table.
(5) Notes and accounts payable – trade, (6) Short-term loans payable, (7) Commercial papers and (8) Income taxes payable
Since these items are settled in a short time period, their fair value approximates carrying value.
(9) Bonds payable
The fair value of bonds payable is stated at the market value. The current portion of bonds payable is included in (9) Bonds payable in the above table.
(10) Long-term loans payable
The fair value of long-term loans payable with variable interest rates approximates the carrying the value because the interest rate reflects the market rate in a shortperiod of time. Certain long-term loans payable with variable interest rates are hedged by the special treatment of interest-rate swap agreements and accounted
for as loans with fixed interest rates. The fair value of those long-term loans payable is based on the present value of the total of principal, interest payments andnet cash flows of the swap agreements discounted by the interest rates to be applied reasonably assuming new loans under similar conditions are made. The fairvalue of long-term loans payable with fixed interest rates is based on the present value of the total of principal and interest payments discounted by the interest
rates to be applied assuming new loans under similar conditions are made. The current portion of long-term loans payable is included in (10) Long-term loans
payable in the above table.
Derivative Transactions
Please refer to Note 16“Derivative Financial Instruments and Hedging Activities”of these Notes to Consolidated Financial Statements.
Note 2:Financial instruments for which it is extremely difficult to determine the fair value are as follows:

Millions of yen

Unlisted stocks
Deposits and guarantees
Long-term guarantee deposits received

30

2016

2015

¥19,286¥26,303¥31,820¥18,427¥26,304¥32,700

Thousands of
U.S. dollars
2016$169,741$231,500$280,056

Long-term guarantee deposits received are included in“Other”

unlisted stocks are not included in the preceding table.

in non-current liabilities in the consolidated balance sheet asof February 29, 2016 and February 28, 2015.

Because no quoted market price is available and it isextremely difficult to estimate the future cash flows, the above

Because no quoted market price is available and it isdeposits and guarantees and long-term guarantee deposits

extremely difficult to determine the fair value, the above

received are not included in the preceding table.

Note 3:Redemption schedules for cash and deposits, receivables and marketable securities with maturities at February 29, 2016 and February 28, 2015 are as follows:

Cash and deposits
Notes and accounts receivable – trade
Securities and investment securities:
Other securities with maturities:(1)Government and municipal bonds(2)Corporate bonds(3)Other
Deposits and guarantees
Total

Cash and deposits
Notes and accounts receivable – trade
Securities and investment securities:
Other securities with maturities:(1)Government and municipal bonds(2)Corporate bonds(3)Other
Deposits and guarantees
Total

Cash and deposits
Notes and accounts receivable – trade
Securities and investment securities:
Other securities with maturities:(1)Government and municipal bonds(2)Corporate bonds(3)Other
Deposits and guarantees
Total

Millions of yen
2016
More thanMore than
five years
one year andWithinand within
within five
one yearten years
years¥30,039¥2,400¥–68,049
–
–

30
1,000
200
1,109
¥100,427

–
3,300
400
3,200
¥9,300–––6,814¥6,814

Millions of yen
2015
More thanMore than
five years
one year andWithinand within
within five
one yearten years
years¥30,060¥2,700¥–75,556
–
–

250
900
200
4,401
¥111,369

30
2,800
600
3,474
¥9,604–––
6,038¥6,038

Thousands of U.S. dollars
2016
More thanMore than
five years
one year andWithinand within
within five
one yearten years
years$264,381$21,123$–598,917
–
–

264
8,801
1,760
9,761
$883,885–
29,044
3,521
28,164$81,852–––
59,972$59,972More thanten years

¥–
–
–
–
–
8,263
¥8,263More thanten years
¥–
–

–
–
–
9,627
¥9,627More thanten years

$–
–
–
–
–
72,725$72,725

Note 4:The redemption schedule for long-term loans payable is disclosed in Note 11“Short-Term Loans Payable, Commercial Papers, Long-Term Debt and Lease
Obligations”of these Notes to Consolidated Financial Statements.

31

16 Derivative Financial Instruments and Hedging Activities
Derivative transactions which qualify for hedge accounting
The estimated fair value of the derivatives positions outstanding as of February 29, 2016 and February 28, 2015, which qualify
for hedge accounting are summarized as follows:
Currency-related transactions

Method of hedge
accounting
Allocation method

Deferral hedge
accounting

Method of hedge
accounting
Allocation method

Deferral hedge
accounting

32

Transaction
Forward foreign currency
exchange contracts:
Sell:
U.S. dollars
Chinese yuan
Total
Currency swap contracts:
Receive / U.S. dollars
and pay / Japanese yen
Total
Forward foreign currency
exchange contracts:
Buy:
U.S. dollars
Euro
Chinese yuan
Thai baht
Sweden Krona
Total

Transaction
Forward foreign currency
exchange contracts:
Sell:
U.S. dollars
Chinese yuan
Total
Currency swap contracts:
Receive / U.S. dollars
and pay / Japanese yen
Total
Forward foreign currency
exchange contracts:
Buy:
U.S. dollars
Euro
Chinese yuan
Thai baht
British pounds
Total

Major hedged item

Millions of yen
2016
Contract value
Maturing
Notional
Fair value
afteramountone yearAccounts receivable, trade

¥126
0
¥127

¥–
–
¥–

(*)
(*)
(*)

Long-term loans payable

¥300
¥300

¥300
¥300

(*)
(*)

¥958
460
359
4
2
¥1,784

¥–
–
–
–
–
¥–

¥(37)
(25)
(19)
(0)
(0)
¥(83)

Forecasted transactions
denominated in foreign
currencies (Accounts
payable, trade)

Major hedged item

Millions of yen
2015
Contract value
Maturing
Notional
Fair value
afteramountone yearAccounts receivable, trade

¥213
1
¥215

¥–
–
¥–

(*)
(*)
(*)

Long-term loans payable

¥300
¥300

¥300
¥300

(*)
(*)

¥1,847
706
176
162
0
¥2,893

¥–
–
–
–
–
¥–

¥28
(56)
0
0
0
¥(27)

Forecasted transactions
denominated in foreign
currencies (Accounts
payable, trade)Method of hedge
accounting
Allocation method

Deferral hedge
accounting

Transaction
Forward foreign currency
exchange contracts:
Sell:
U.S. dollars
Chinese yuan
Total
Currency swap contracts:
Receive / U.S. dollars
and pay / Japanese yen
Total
Forward foreign currency
exchange contracts:
Buy:
U.S. dollars
Euro
Chinese yuan
Thai baht
Sweden Krona
Total

Major hedged item

Thousands of U.S. dollars
2016
Contract value
Maturing
Notional
Fair value
afteramountone yearAccounts receivable, trade$1,1090$1,118

$–
–
$–

(*)
(*)
(*)

Long-term loans payable$2,640$2,640$2,640$2,640(*)(*)$8,432
4,049
3,160
35
18
$15,701

$–
–
–
–
–
$–

$(326)
(220)
(167)
0
0
$(731)

Forecasted transactions
denominated in foreign
currencies (Accounts
payable, trade)

The fair value of forward foreign currency exchange contracts under deferral hedge accounting is computed using prices
provided by the counterparty financial institutions.
(*)Because transactions under the allocation method are accounted for in combination with accounts receivable, trade, accounts payable, trade and long-term loans
payable, the fair value of these transactions is included in that of notes and accounts receivable – trade, notes and accounts payable – trade and long-term loans
payable disclosed in Note 15“Financial Instruments”of these Notes to Consolidated Financial Statements.

Interest-related transactions

Method of hedge
accounting
Specialtreatment ofinterest-rate
swap

Method of hedge
accounting
Specialtreatment ofinterest-rate
swap

Transaction
Interest-rate swaps:

Major hedged item
Long-term loans payable

Receive / variable and pay /fixedTransaction
Interest-rate swaps:
Receive / variable and pay /fixedMillions of yen
2016
Contract value
Maturing
Notional
Fair value
afteramountone year¥29,280

Major hedged item

¥22,820(*)

Millions of yen
2015
Contract value
Maturing
Notional
Fair value
afteramountone yearLong-term loans payable¥38,040¥29,280(*)

33

Method of hedge
accounting
Specialtreatment ofinterest-rate
swap

Transaction
Interest-rate swaps:

Thousands of U.S. dollars
2016
Contract value
Maturing
Notional
Fair value
afteramountone year

Major hedged item
Long-term loans payable

Receive / variable and pay /
fixed$257,701 $200,845(*)(*)Because interest-rate swap agreements are accounted for by applying the swap rates to the underlying long-term loans payable, their fair value is included in that of thelong-term loans payable disclosed in Note 15“Financial Instruments”of these Notes to Consolidated Financial Statements.

17 Contingent Liabilities
At February 29, 2016, the Company and its consolidated subsidiaries had the following contingent liabilities:
Thousands of
U.S. dollars

Millions of yen
Guarantees of financing for employee housing
Guarantees of lease agreement of JET CLEANING Co., Ltd.,an unconsolidated subsidiary

¥12

$106

81
¥94

713
$827

18 Selling, General and Administrative Expenses
The components of selling, general and administrative expenses for the years ended February 29, 2016 and February 28, 2015
were as follows:

2016¥27,733459

2015¥30,319
280

Thousands of
U.S. dollars
2016$244,086
4,040

49,8285,511

50,413
5,402

438,550
48,504

204
3,285

194
4,355

1,795
28,912

8
10,632
16,194
28,682
16,338499
38,115¥197,494

6
10,687
16,02328,366
16,567632
38,323¥201,572

70
93,575
142,528
252,438
143,795
4,392
335,460$1,738,198

Millions of yen
Advertising expenses
Provision of allowance for doubtful accounts
Compensation and bonuses for directors and audit
and supervisory board members and salaries andbonuses for employees
Provision for bonuses to employees
Provision for bonuses to directors and audit andsupervisory board members
Retirement benefit expenses
Provision of accrued retirement benefits for directors
and audit and supervisory board members
Welfare expenses
Depreciation and amortization
Rent expenses
Operational costs
Amortization of goodwill
Other
Total

34

19 Impairment of Fixed Assets
The Company and its consolidated subsidiaries wrote down the following assets to their respective net recoverable value.
Consequently, the Company and its consolidated subsidiaries recorded related loss on impairment of fixed assets of ¥1,570
million ($13,818 thousand) and ¥965 million in the accompanying consolidated statement of income for the years ended
February 29, 2016 and February 28, 2015, respectively:
Thousands of
U.S. dollars
2016

Millions of yen
Location
J. FRONT RETAILING Co., Ltd.
(Chuo-ku, Tokyo)
Parco Co., Ltd.
(Utsunomiya-shi, Tochigi)
Neuve A Co., Ltd.
(Higashikurume-shi, Tokyo, etc.)
JFR Online Co., Ltd.
(Suminoe-ku, Osaka-shi)
J. Front Foods Co., Ltd.
(Hirakata-shi, Osaka, etc.)
JFR PLAZA Inc.
(Taiwan)
Daimaru Matsuzakaya
Department Stores Co., Ltd.
(Urawa-ku, Saitama-shi, etc.)
Parco Co., Ltd.
(Chuo-ku, Chiba-shi)
Neuve A Co., Ltd.
(Aoi-ku, Shizuoka-shi, etc.)

Usage
–

Classification
Goodwill

2016

2015

¥990

¥–

$8,713

Stores, etc.

Buildings and others

5

–

44

Stores, etc.

Buildings and others

160

–

1,408

Offices, etc.

Buildings and others

273

–

2,403

Stores, etc.

Buildings and others

107

–

942

Stores, etc.

Buildings and others

31

–

273

Stores, etc.

Buildings and others

–

11

–

Stores, etc.

Buildings and others

–

607

–

Stores, etc.

Buildings and others

–

74

–

Buildings and others

–

47

–

Land

–

165

–

Buildings and others

–

58

–

¥1,570¥965$13,818

Daimaru Kogyo, Ltd.
(Kita-ku, Osaka-shi)

Stores, etc.

J. Front Foods Co., Ltd.
(Kawasaki-ku, Kawasaki-shi)

Stores, etc.

The Company and its consolidated subsidiaries mainly group stores into minimum units which generate identifiable cash flows.
Regarding goodwill in the above table, the full amount of the carrying value was recognized as loss on impairment amounting
to ¥990 million ($8,713 thousand) for the year ended February 29, 2016 because the originally assumed profitabity from theconsolidated subsidiaries is no longer expected.
Regarding buildings, others and land in the above table, the Company reduced the carrying value of the assets to therecoverable value, and recognized the difference as loss on impairment of fixed assets amounting to ¥579 million ($5,096
thousand) and ¥965 million for the years ended February 29, 2016 and February 28, 2015, respectively.
The recoverable value of buildings and others is measured mainly based on value in use and written down to nil if no future
cash inflows are expected.
The recoverable value of land is measured at the estimated net selling value, which is based on the appraisal value by realestate appraisers.

35

20 Loss on Store Reconstruction
Loss on store reconstruction recognized by a consolidated subsidiary for the year ended February 29, 2016 consisted of thefollowing:Thousands of
U.S. dollars
2016

Millions of yen
Reconstruction of main building of Shinsaibashi store in
Daimaru Matsuzakaya Department Stores Co., Ltd.:
Provision for loss on store reconstruction
Loss on impairment of fixed assets
Total¥3,825
3,667¥7,492$33,665
32,274$65,939

21 Loss on Business Liquidation
Loss on business liquidation recognized by certain consolidated subsidiaries for the years ended February 29, 2016 andFebruary 28, 2015 consisted of the following:Thousands of
U.S. dollars
2016

Millions of yen
Store closures:Parco Co., Ltd. (Chiba Parco)
Provision for loss on businessliquidation
Loss on impairment of fixed assets
Parco Space Systems Co., Ltd.
Loss on impairment of fixed assets
Neuve A Co., Ltd.
Loss on impairment of fixed assets
Total

Liquidation of fishing business in
Daimaru Kogyo, Ltd.:
Loss on business liquidation
Loss on impairment of fixed assets
Total¥1,052656$9,259
5,774

10

88

0
¥1,7190$15,129

Millions of yen
2015
¥634
19
¥654

22 Loss on Devaluation of Inventories
Loss on devaluation of inventories included in cost of goods sold of ¥233 million ($2,051 thousand) and ¥250 million wasrecognized for the years ended February 29, 2016 and February 28, 2015, respectively.

36

23 Other Comprehensive Income
The following table presents reclassification adjustments and tax effects allocated to each component of other comprehensive(loss) income for the years ended February 29, 2016 and February 28, 2015.
Thousands of
U.S. dollars
2016

Millions of yen
Net unrealized holding (loss) gain on securities:
Amount arising during the year
Reclassification adjustments for gain
included in net income
Before tax effectt
Tax effectTotal
Net unrealized deferred loss on hedging
instruments:
Amount arising during the year
Before tax effectTax effectTotal
Foreign currency translation adjustments:
Amount arising during the year
Total
Retirement benefit liability adjustments:
Amount arising during the year
Reclassification adjustments for loss
included in net income
Before tax effectTax effect
Total
Share of other comprehensive income (loss)of unconsolidated subsidiaries andaffiliates accounted for by equity method:Amount arising during the year
Reclassification adjustments for gain
included in net income
Amount of acquisition cost adjustment
Total
Total other comprehensive (loss) income

2016

2015

¥321

¥2,692$2,825

(899)
(578)
289
(288)

(2,698)(6)
82(7,912)(5,087)2,544(2,535)

(55)
(55)
17
(37)

(7)
(7)
2
(5)

(484)
(484)
150
(326)

(147)
(147)

242
242

(1,294)(1,294)(5,864)–(51,611)

1,066(4,798)1,144(3,654)

–
–
–
–

9,382
(42,228)
10,069(32,160)

785

(46)

6,909

(188)
(277)
318
¥(3,810)

(6)
–
(52)
¥186

(1,655)(2,438)2,799$¥(33,533)

24 Supplemental Information on the Consolidated Statement of Cash Flows
Reconciliations of cash and deposits in the accompanying consolidated balance sheet at February 29, 2016 and February 28,
2015 and cash and cash equivalents in the accompanying consolidated statement of cash flows for the years then ended are
as follows:
Millions of yen
Cash and deposits
Time deposits over three months
Cash and cash equivalents

2016¥30,039(1,891)¥28,147

2015¥34,106(1,973)¥32,132

Thousands of
U.S. dollars
2016$264,381(16,643)$247,729

37

25 Income Taxes
Income taxes in Japan applicable to the Company and its domestic subsidiaries comprise corporate tax, inhabitants’taxes andenterprise tax, which, in the aggregate, resulted in a statutory tax rates of 35.6% and 38.0% for the years ended February 29,
2016 and February 28, 2015, respectively. Overseas subsidiaries are subject to the income tax regulations of the respective
countries in which they operate.
The effective tax rates reflected in the consolidated statement of income for the years ended February 29, 2016 and February
28, 2015 differ from the statutory tax rates for the following reasons:Statutory tax rates
Effect of:Permanent non-deductible expenses
Permanent non-taxable income
Per capita portion of inhabitants’taxes
Change in valuation allowance
Remeasurement of deferred tax assets and deferred
tax liabilities due to the change in statutory tax rates
Equity in earnings of unconsolidated subsidiaries
and affiliates
Loss on impairment of goodwill
Other, net
Effective tax rates

38

2016
35.6%

2015
38.0%

0.9
(0.1)
0.6
1.3

0.8
(0.2)
0.5
0.3

(24.9)

1.5

(1.9)
1.0
1.4
13.9%

(0.7)
–
0.7
40.9%

The significant components of deferred tax assets and liabilities at February 29, 2016 and February 28, 2015 are as follows:
Millions of yen
Deferred tax assets:
Liability for retirement benefits
Accrued loss on utilization of gift certificates
Securities for retirement benefit trust
Loss on devaluation of assets resulting from mergerof consolidated subsidiaries
Provision for bonuses to employees
Accrued point card certificates
Loss on impairment of fixed assets
Unrealized profit on fixed assets
Provision for loss on store reconstruction
Asset retirement obligations
Allowance for doubtful accounts
Accrued enterprise taxes, etc.
Tax loss carryforwards
Provision for loss on business liquidation
Provision for sales promotion expenses
Loss on devaluation of inventories
OthersDeferred tax assets (subtotal)
Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Revaluation of assets and liabilities
Reserve for depreciation for tax purposes
Securities returned from retirement benefit trust
Assets related to asset retirement obligations
OthersTotal deferred tax liabilities
Net deferred tax liabilities

Thousands of
U.S. dollars
2016

2016

2015

¥8,854
4,499
3,798¥6,947
4,687
4,123$77,926
39,59733,427

3,699
1,879
1,827
1,501
1,487
1,136
996
753
653
506
458
232
76
3,723
36,085(6,570)29,515

4,077
1,983
2,391
1,231
1,511
270
1,121
711
968
346
176
257
129
4,130
35,066(6,932)
28,13332,556
16,53816,08013,211
13,087
9,998
8,766
6,627
5,747
4,453
4,031
2,042
669
32,767
317,594(57,824)
259,769(91,541)(6,764)(464)(305)(2,813)(101,889)¥(72,374)(100,970)(7,989)(582)(361)(3,374)(113,278)¥(85,144)(805,677)(59,532)(4,084)(2,684)(24,758)(896,752)$(636,983)

39

On March 31, 2016, the“Act for Partial Revision of the

On March 31, 2015, the“Act for Partial Revision of the

Income Tax Act etc.”(Act. No. 15 of 2016) and the“Act

Income Tax Act etc.”(Act. No. 9 of 2015) and the“Act forfor Partial Revision of the Local Tax Act etc.”(Act. No.13

Partial Revision of the Local Tax Act etc.”(Act. No.2 ofof 2016) were officially issued and the Company and its2015) were officially issued and the Company and domestic

domestic consolidated subsidiaries are subject to theconsolidated subsidiary are subject to the amended statutory

amended statutory tax rate effective for fiscal years beginning

tax rate effective for fiscal years beginning on or after Aprilon or after April 1, 2016. Accordingly, the statutory tax rates

1, 2015.

used for calculating deferred tax assets and liabilities will becalculating deferred tax assets and liabilities will be reduced

reduced from 32.3% to 30.9% for temporary differences thatfrom 35.6% to 33.1% for temporary differences that areare expected to be realized or settled during the fiscal years

expected to be realized or settled during the fiscal year

from March 1, 2017 to February 28, 2019 and to 30.6%

from March 1, 2016 to February 28, 2017 and to 32.3%

for temporary differences that are expected to be realized orfor temporary differences that are expected to be realized or

settled on or after March 1, 2019.

settled on or after March 1, 2017.

As a result of applying these revised statutory tax rates at

As a result of applying these revised statutory tax rates atFebruary 29, 2016, deferred tax assets in current assets,

February 28, 2015, deferred tax assets in current assets,deferred tax assets in investments and other assets, deferreddeferred tax assets in investments and other assets,

tax liabilities in non-current liabilities, deferred tax liabilities

deferred tax liabilities in non-current liabilities and deferred

for land revaluation and retirement benefits adjustments

tax liabilities for land revaluation have decreased by ¥316

(credit) have decreased by ¥169 million ($1,487 thousand),million, ¥206 million, ¥9,907 million and ¥118 million,¥173 million ($1,523 thousand), ¥4,762 million ($41,912

respectively, and net unrealized holding gain on securities

thousand), ¥61 million ($537 thousand) and ¥223 million

and income taxes-deferred (credit) have increased by ¥120($1,963 thousand), respectively, and net unrealized holding

million and ¥9,383 million, respectively.

gain on securities, minority interests (credit) and income
taxes-deferred (credit) have increased by ¥53 million ($466
thousand), ¥316 million ($2,781 thousand) and ¥4,345
million ($38,242 thousand), respectively.

40

Accordingly, the statutory tax rates used for26 Amounts per Share
Amounts per share at February 29, 2016 and February 28, 2015 and for the years then ended are as follows:

Net assets
Basic net income
Diluted net income
Cash dividends

Yen
2016
¥1,467.05
100.42100.4127.00

2015¥1,424.28
75.66
75.66
19.00

U.S. dollars
2016$12.91
0.88
0.88
0.24

Net assets per share are computed based on the net assets

net income available for distribution to shareholders andavailable for distribution to the shareholders and the number

the weighted-average number of shares of common stockof shares of common stock outstanding at the year end.

outstanding during each year after giving effect to the dilutive
potential of shares of common stock to be issued upon the

Basic net income per share is computed based on the net

exercise of stock subscription rights.

income attributable to shareholders of common stock andthe weighted-average number of shares of common stock

Cash dividends per share of the Company represent the cash

outstanding during the year.

dividends declared as applicable to the respective years
together with the interim cash dividends paid.

Diluted net income per share is computed based on the
The financial data used in the computation of basic and diluted net income per share for the years ended February 29, 2016
and February 28, 2015 is summarized as follows:
Millions of yen
Net income attributable to common
stockholders

Weighted-average number of sharesof common stock outstanding
Increase in shares of common stock
resulting from the exercise of stock
subscription rights

2016

2015

¥26,313¥19,967

Thousands of shares
2016

Thousands of
U.S. dollars
2016$231,588
2015

262,038

263,920

18

12

41

The financial data used in the computation of net assets per share as of February 29, 2016 and February 28, 2015 issummarized as follows:

2016¥440,5942015¥430,260

Thousands of
U.S. dollars
2016$3,877,786(14)(56,880)(56,895)(15)(54,357)(54,373)(123)(500,616)(500,748)¥383,699¥375,886$3,377,037

Millions of yen
Total net assets
Deduction from total net assets:
Stock subscription rights
Minority interests
Total net assets attributable
to common stockholders

Thousands of shares
2016
Number of shares of common stock
used in the calculation of net assets
per share

261,5432015
263,913

Note 1:Two shares of common stock were consolidated into one share on September 1, 2014. Basic net income per share, diluted net income per share and net assets
per share have been calculated as if the consolidation of shares was executed on March 1, 2014.
Note 2:As described in Note 3“Accounting Change,”effective from the year ended February 29, 2016, certain main consolidated subsidiaries changed their inventory
valuation method. As a result, the figures as of and for the year ended February 28, 2015 in the above table have been adjusted to reflect the restatement due tothe accounting change. Also, the effects of this change on net income per share and diluted net income per share for the year ended February 28, 2015 and net
assets per share as of February 28, 2015 were immaterial.
Note 3:As described in Note 3“Accounting Change,”effective from the year ended February 29, 2016, revised accounting standards for retirement benefits were adopted
and the cumulative effect of changing the method for calculating the retirement benefit obligation and service cost was recognized by adjusting retained earnings at
March 1, 2015, in accordance with the transitional treatment provided in Paragraph 37 of Accounting Standard for Retirement Benefits. As a result, net assets per
share at February 29, 2016 decreased by ¥11.72 ($0.10) from the corresponding amounts that would have been recorded under the previous method. Also, theeffects of this change on net income per share and diluted net income per share for the year ended February 29, 2016 were immaterial.

42

27 Segment Information(1)Outline of reportable segments
The Group’s reporting segments are divisions of the Group for which separate financial information is available, and whose
operating results are reviewed regularly by the Board of Directors of the Company in order to allocate management resources
and assess performance of operations.
The Group operates its main businesses such as the department store business, under a holding company structure, andthe reportable segments of the Group consist of the“Department Store Business,”the“Parco Business,”the“Wholesale
Business,”the“Credit Business”and“Other Businesses.”
The“Department Store Business”consists of sales of clothing, general goods, household goods, food products, etc. the“ParcoBusiness”mainly consists of development, management, supervision and operation of shopping centers. The“Wholesale
Business”consists of wholesaling of food products, chemical products and materials, etc. the“Credit Business”mainly
consists of issuance and administration of credit cards. “Other Businesses”mainly consist of mail-order marketing, rentals of
real estate, parking, leasing, design and construction contracting, manufacturing and sales of furniture, and retailing of general
goods.
(2)Calculation of net sales, income, assets, and other items by reportable segments
The accounting policies of the reportable segments are substantially the same as those described in Note 2“Summary of
Significant Accounting Policies”of these Notes to Consolidated Financial Statements. Inter-segment sales and transfers arerecorded at the same prices used in transactions with third parties.
(Change in accounting method for inventory valuation)
As described in Note 3“Accounting Change,”effective from the year ended February 29, 2016, certain consolidated
subsidiaries changed their inventory valuation method from the retail inventory method to the specific identification method.
The accounting change was retrospectively applied, and the segment information as of and for the year ended February 28,
2015 was restated. As a result, the segment income in the Department Store Business for the year ended February 28,
2015 increased by ¥76 million ($669 thousand) compared with the amounts before the retrospective application.
(Change in accounting standards for retirement benefits)
As described in Note 3“Accounting Change,”effective from the year ended February 29, 2016, revised accounting standards
for retirement benefits were adopted and the method of calculating the retirement benefit obligation and service cost waschanged. Accordingly, the method for calculating the retirement benefit obligation and service cost by reportable segment
was also changed effective from for the year ended February 29, 2016. The effect of the change on segment income for theyear ended February 29, 2016 was immaterial.

43

(3)Net sales, income, assets, and other items by reportable segments
Reportable segment information for the years ended February 29, 2016 and February 28, 2015 is summarized as follows:

Net sales:
Sales to third parties
Inter-segment sales ortransfers
Total
Segment income
Segment assets
Other items:
Depreciation andamortization
Investments inunconsolidated
subsidiaries andaffiliates accounted
for by the equity
methodIncrease in property
and equipment andintangible assets

Net sales:
Sales to third parties
Inter-segment sales ortransfers
Total
Segment income
Segment assets
Other items:
Depreciation andamortization
Investments inunconsolidated
subsidiaries andaffiliates accounted
for by the equity
methodIncrease in property
and equipment andintangible assets

44

Millions of yen
2016
Reportable segments

Department
Store
Business

Parco
Business¥762,280¥280,696¥48,744¥5,901¥65,940 ¥1,163,564¥– ¥1,163,564

941¥763,222¥28,786¥617,046

354¥281,050¥12,582¥266,743

9,104¥57,849¥1,315¥21,796

4,553¥10,455¥2,703¥44,655

38,79853,752¥104,739 ¥1,217,316¥2,807¥48,194¥106,365 ¥1,056,607(53,752)–¥ (53,752) ¥1,163,564¥(156)¥48,038¥(37,461) ¥1,019,146¥10,960¥6,281¥154¥8¥1,123¥18,528¥(183)¥18,345¥2,554

¥427

¥–

¥–

¥164

¥3,146¥23,543¥26,689¥14,002¥21,435

¥197

¥6

¥887

¥36,528¥(273)¥36,255

Wholesale
Business

CreditBusiness

Other
Businesses

Total

Adjustments Consolidated

Millions of yen
2015
Reportable segments

Department
Store
Business

Parco
Business¥758,964¥273,914¥50,954¥5,362¥60,333 ¥1,149,529¥– ¥1,149,529

901¥759,866¥23,192¥629,767

297¥274,212¥12,255¥256,531

8,416¥59,371¥1,067¥24,296

5,018¥10,381¥3,424¥38,593

36,96451,600¥97,298 ¥1,201,129¥2,418¥42,357¥111,970 ¥1,061,158(51,600)–¥ (51,600) ¥1,149,529¥(190)¥42,167¥(42,662) ¥1,018,495¥10,747¥5,938¥172¥9¥1,248¥18,116¥(152)¥17,963¥3,861

¥105

¥–

¥–

¥163

¥4,130¥11,308¥15,438¥10,359¥11,624¥145¥5¥1,217¥23,353¥(133)¥23,219

Wholesale
Business

CreditBusiness

Other
Businesses

Total

Adjustments Consolidated

Net sales:
Sales to third
partiesInter-segment
sales ortransfers
Total
Segment income
Segment assets
Other items:
Depreciation
andamortization
Investments inunconsolidated
subsidiaries
and affiliates
accounted forby the equity
methodIncrease inproperty andequipment andintangible
assetsThousands of U.S. dollars
2016
Reportable segments

Department
Store
Business

Parco
Business

Wholesale
Business$6,709,030$2,470,481$429,009$51,936$580,356 $10,240,838$– $10,240,838

8,282$6,717,321$253,353$5,430,787

3,116$2,473,596$110,738$2,347,676

80,127$509,145$11,574$191,832

40,072$92,017$23,790$393,021

341,472
473,086$921,836 $10,713,924$24,705$424,168$936,147 $9,299,481(473,086)–$(473,086) $10,240,838$(1,373)$422,795$(329,704) $8,969,776$96,462$55,281$1,355$70$9,884$163,070$(1,611)$161,459$22,478$3,758$–$–$1,443$27,689$207,208$234,897$123,235$188,655$1,734$53$7,807$321,493$(2,403)$319,090

CreditBusiness

Other
Businesses

Total

Adjustments Consolidated

The total amount of segment income is adjusted to operating income on the consolidated statement of income.
The adjustments for segment income in the amounts of ¥156 million ($1,373 thousand) and ¥190 million include eliminationsof inter-segment transactions of ¥2,862 million ($25,189 thousand) and ¥2,565 million and corporate expenses mainly
recorded by the Company not attributable to any reportable segments of ¥3,018 million ($26,562 thousand) and ¥2,755 million
for the years ended February 29, 2016 and February 28, 2015, respectively.
The adjustments for segment assets in the amounts of ¥37,461 million ($329,704 thousand) and ¥42,662 million include
eliminations of inter-segment receivables of ¥74,807 million ($658,396 thousand) and ¥73,068 million, unrealized profit on
fixed assets of ¥1,502 million ($13,220 thousand) and ¥1,527 million, and assets of the Company, which are not attributable
to any reportable segments, of ¥38,246 million ($336,613 thousand) and ¥30,307 million as of February 29, 2016 andFebruary 28, 2015, respectively.
The adjustments for depreciation and amortization in the amounts of ¥183 million ($1,611 thousand) and ¥152 million for theyears ended February 29, 2016 and February 28, 2015, respectively, consist of inter-segment transfers.
The adjustments for investments in unconsolidated subsidiaries and affiliates accounted for by the equity method in the amountsof ¥23,543 million ($207,208 thousand) and ¥11,308 million as of February 29, 2016 and February 28, 2015, respectively,
consist of investments made by the Company, which are not attributable to any reportable segments.
The adjustments for increase in property and equipment and intangible assets in the amounts of ¥273 million ($2,403
thousand) and ¥133 million for the years ended February 29, 2016 and February 28, 2015, respectively, consist of intersegment unrealized profit on fixed assets.

45

(4)Related information
As more than 90% of consolidated net sales for the years ended February 29, 2016 and February 28, 2015 were made inJapan, the disclosure of geographical segment information of net sales has been omitted.
As more than 90% of the property and equipment in the consolidated balance sheet as of February 29, 2016 and February
28, 2015 were located in Japan, the disclosure of geographical segment information of property and equipment has been
omitted.
The information about major customers has been omitted, as there is no major external customer that accounts for 10% ormore of consolidated net sales for the years ended February 29, 2016 and February 28, 2015.
(5)Loss on impairment of fixed assets
Loss on impairment of fixed assets by reportable segments for the years ended February 29, 2016 and February 28, 2015 issummarized as follows:

Department
Store Business¥3,773

Department
Store Business¥11

Department
Store Business$33,207

Parco
Business¥833

Millions of yen
2016
Reportable segments
Wholesale
CreditOther
Business
Business
Businesses¥–¥–¥1,404Parco
Business¥ 682

Millions of yen
2015
Reportable segments
Wholesale
CreditOther
Business
Business
Businesses
¥232
¥–
¥58

Parco
Business$7,331Thousands of U.S. dollars
2016
Reportable segments
Wholesale
Other
Credit BusinessBusiness
Businesses$–$–$12,357

Corporate andConsolidated
elimination¥ 6,011¥(105)¥5,905

Total

Total

Corporate andConsolidated
elimination
¥985
¥–
¥985

Corporate andConsolidated
elimination$52,904$(924)$51,971

Total

The amounts in“Other Business”in the above table for the year ended February 29, 2016 included loss on impairment of
goodwill amounting to ¥990 million ($8,713 thousand).

46

(6)Amortization of goodwill and remaining balance
Information on amortization of goodwill and the remaining balance by reportable segments as of and for the years ended
February 29, 2016 and February 28, 2015 is as follows:

Amortizationof goodwill
Remainingbalance

Amortizationof goodwill
Remainingbalance

Amortizationof goodwill
Remainingbalance

Department
Store
Business

Millions of yen
2016
Reportable segments
Parco
Business

Wholesale
Business

CreditBusiness

Other
Businesses

Total

Corporate andConsolidated
elimination

¥–

¥358

¥–

¥–

¥141

¥499

¥–

¥499

¥–

¥568

¥–

¥–

¥–

¥568

¥–

¥568

Department
Store
Business

Millions of yen
2015
Reportable segments
Parco
Business

Wholesale
Business

CreditBusiness

Other
Businesses

Total

Corporate andConsolidated
elimination

¥–

¥349

¥–

¥–

¥283

¥632

¥–

¥632

¥–

¥873

¥–

¥–

¥1,132¥2,005¥–¥2,005

Department
Store
Business

Thousands of U.S. dollars
2016
Reportable segments
Parco
Business

Wholesale
Business

CreditBusiness

Other
Businesses

Total

Corporate andConsolidated
elimination$–$3,151$–$–$1,241$4,392$–$4,392$–$4,999$–$–$–$4,999$–$4,999Goodwill is recognized as a result of business combinations (acquisition of shares of Parco Co., Ltd. and Forest Co., Ltd.).

28 Subsequent Event
The following distribution of retained earnings of the Company, which has not been reflected in the accompanying consolidated
financial statements for the year ended February 29, 2016, was approved at the meeting of the Board of Directors held on April 7,
2016:

Cash dividends(¥14.00 = $0.12 per share)(Millions of yen)(Thousands of
U.S. dollars)¥3,661$ 32,22147

48

J. FRONT RETAILING NOW