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 28, 2017

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

2017

2016

AssetsCurrent assets:
Cash and deposits (Notes 15 and 24)
Notes and accounts receivable – trade (Notes 15 and 16)
Securities (Notes 10 and 15)
Inventories (Notes 5 and 8)
Deferred tax assets (Note 25)
Other (Note 15)
Less allowance for doubtful accounts
Total current assets

2017¥33,018
68,9971,500
34,49910,52344,540(249)
192,829¥30,039
68,0491,233
28,205
11,671
41,865(173)
180,890$292,842
611,946
13,303305,977
93,330395,033(2,208)1,710,235

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

420,894
196,598
58,296
8,273
684,063360,297
182,772
120,751
4,829
668,651

3,732,984
1,743,662
517,037
73,374
6,067,077

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

208
41,43841,647568
40,87641,444

1,844
367,521369,374

18,90420,055

167,662

26,533
1,534
60,561
10,7383,695
12,415(2,810)131,569
857,280

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

235,325
13,605537,126
95,237
32,771
110,110(24,922)
1,166,909
7,603,370¥1,050,109¥1,019,146$9,313,605

Investments and other assets:
Investment securities (Notes 8, 10 and 15)
Investments in unconsolidated subsidiaries and affiliates(Note 15)
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: 6,573,594 shares in 2017 and 6,575,238 shares in 2016
Total shareholders' equity
Accumulated other comprehensive loss:
Net unrealized holding gain on securities (Note 10)
Net unrealized deferred gain on hedging instruments (Note 16)
Foreign currency translation adjustments
Retirement benefits adjustments (Note 12)
Total accumulated other comprehensive loss
Stock subscription rights (Note 14)
Non-controlling interests
Total net assets (Note 26)
Total liabilities and net assets

2017

2016

2017

¥87,964
8,320
33,79941,7897,125
24,136
38,596
5,493
206
21
133
445
14,493
1,855–
48,186
312,568¥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$780,168
73,791
299,769
370,634
63,192
214,066
342,31448,718
1,827
186
1,179
3,946
128,541
16,452–
427,370
2,772,221

108,650
85,296
1,100
31,605
5–
1,712
43,332271,701
584,269

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

963,636
756,505
9,756
280,31044–
15,184384,319
2,409,764
5,181,986

30,000209,551
183,598(11,281)
411,868

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

266,075
1,858,545
1,628,363(100,053)
3,652,931

2,053
288
349
(8,223)(5,532)–59,503465,839¥1,050,109

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

18,2082,554
3,095(72,931)(49,064)–
527,742
4,131,609$9,313,605

See accompanying notes to the consolidated financial statements.

03

Consolidated Statement of Income
J. FRONT RETAILING Co., Ltd. and Consolidated Subsidiaries
Year ended February 28, 2017

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
Compensation income
Equity in earnings of unconsolidated subsidiaries and affiliates
Interest expenses
Provision for loss on utilization of gift certificates
Gain on sales of fixed assets
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 impairment of fixed assets (Notes 7, 19 and 27)
Loss on store reconstruction (Notes 20 and 27)
Loss on business liquidation (Notes 7, 21 and 27)
Other, net
Income before income taxes
Income taxes (Note 25)
Current
Deferred
Net income
Net income attributable to:Non-controlling interests
Owners of the parent

See accompanying notes to the consolidated financial statements.

04

2017

2016

2017

¥1,094,964
13,547
1,108,512¥1,151,469
12,094
1,163,564$9,711,432
120,150
9,831,592

866,009
7,718
873,727
234,785
190,205
44,580910,927
7,104
918,031245,532
197,494
48,0387,680,789
68,452
7,749,241
2,082,350
1,686,962
395,388

349
395
2,806
975
308
(1,181)(2,971)
1,998
1,283
–
(2,031)(748)–(4,106)(1,107)40,550

369
365
2,866
–
1,886
(1,419)(3,159)–960
131(3,493)(1,570)(7,492)(1,719)(1,062)
34,6983,095
3,503
24,886
8,647
2,731(10,474)(26,350)
17,72011,379–(18,013)(6,634)–(36,416)(9,818)359,645

13,577(3,413)
10,16430,386

14,626(9,791)
4,834
29,863

120,416(30,270)
90,146
269,498

3,435¥26,950

3,549¥26,31330,465$239,024

Consolidated Statement of Comprehensive Income
J. FRONT RETAILING Co., Ltd. and Consolidated Subsidiaries
Year ended February 28, 2017

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

Net income
Other comprehensive income (loss) (Note 23):
Net unrealized holding loss on securities
Net unrealized deferred income (loss) on hedging instruments
Foreign currency translation adjustments
Retirement benefits adjustments (Note12)
Share of other comprehensive (loss) income of unconsolidated
subsidiaries and affiliates accounted for by equity method
Other comprehensive income (loss), net
Comprehensive income
Total comprehensive income attributable to:
Owners of the parent
Non-controlling interests

2017¥30,386

2016¥29,8632017$269,498

(51)
63
(115)
3,584

(288)
(37)
(147)
(3,654)(452)
558(1,019)31,787(441)
3,039¥33,425318(3,810)¥26,053(3,911)
26,953$296,452¥29,956¥3,469¥22,631¥3,421$265,685$30,767

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 28, 2017

Millions of yen
Shareholders’equity
Number ofCommon stock Capital surplus
shares in issue
Balance at March 1, 2015
Cumulative effects ofchanges in accounting
policies
Restated balance at March 1,
2015
Changes in items during theperiod:Cash dividends
Net income attributable toowners of the parent
Purchase of treasury stock
Disposal of treasury stock
Net changes in items otherthan shareholders’equity
Total changes in items during
the period
Balance at March 1, 2016
Changes in items during
the period:
Cash dividends
Net income attributable toowners of the parent
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 28, 201706

Retainedearnings

Treasury stock,at costTotal
shareholders’equity268,119,164¥30,000¥209,556¥147,555¥(6,369)¥380,742–––(3,065)–(3,065)

268,119,164

30,000209,556

144,490(6,369)377,677–––(6,832)–(6,832)–––

26,313–

26,313

–
–

–
–

–
(4)

–
–

(5,025)108(5,025)
103

–

–

–

–

–

–

–
268,119,164–
30,000(4)
209,551

19,481
163,971(4,917)(11,286)

14,559392,236–––(7,323)–(7,323)–––

26,950–26,950

–
–

–
–

–
(0)

–
–

(10)
15

(10)
14

–

–

–

–

–

–

–
268,119,164–¥30,000(0)¥209,551

19,627¥183,598

4¥(11,281)

19,631¥411,868

Millions of yen
Accumulated other comprehensive income (loss)
Net
unrealized
holding gain
on securities
Balance at March 1, 2015
Cumulative effects ofchanges in accounting
policies
Restated balance at March 1,
2015
Changes in items during
the period:
Cash dividends
Net income attributable toowners of the parent
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 March 1, 2016

Net unrealized
Total
Foreign
NonStock
Retirement accumulated
deferredcurrency
subscription controlling
benefits
gain onothertranslationinterests
rightsadjustments comprehensive
hedging
adjustments
instruments
loss

Total net
assets¥2,352

¥(35)

¥659

¥(7,832)¥(4,855)¥15¥54,357¥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
56,88013,513
440,594

–

–

–

–

–

–

–

(7,323)

–

–

–

–

–

–

–

26,950

–
–

–
–

–
–

–
–

–
–

–
–

–
–

(10)
14

(59)

64

(166)

3,167

3,005

(14)

2,622

5,613

(59)
¥2,053

64
¥288

(166)
¥349

3,167
¥(8,223)

3,005¥(5,532)

(14)
¥–

2,622
¥59,503

25,245¥465,839

Changes in items during
the period:
Cash dividends
Net income attributable toowners of the parent
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 28, 201707

Thousands of U.S. dollars (Note 1)
Shareholders’equity
Treasury stock,at costTotal
shareholders’equity$1,454,288$(100,097)$3,478,811–(64,949)–(64,949)––

239,024–

239,024

–
–

–
(0)

–
–

(88)
133

(88)
124

–
–
$266,075–(0)$1,858,545–
174,075$1,628,363–
35$(100,053)–
174,110$3,652,931

Common stock

Capital surplus$266,075$1,858,545–

Balance at March 1, 2016
Changes in items during the period:
Cash dividends
Net income attributable to ownersof the parent
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 28, 2017

Retainedearnings

Thousands of U.S. dollars (Note 1)
Accumulated other comprehensive income (loss)
Net
unrealized
holding gain
on securities
Balance at March 1, 2016
Changes in items during
the period:
Cash dividends
Net income
attributable to ownersof the parent
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 28, 2017

Net unrealized
Total
Foreign
Stock
Retirement accumulated
deferredcurrency
subscription
benefits
gain onothertranslationrightsadjustments comprehensive
hedging
adjustments
instruments
loss

Total net
assets$18,740$1,977$4,576$(101,028)$(75,716)

$124

–

–

–

–

–

–

–

(64,949)

–

–

–

–

–

–

–

239,024

–
–

–
–

–
–

–
–

–
–

–
–

–
–

(88)
124

(523)

567

(1,472)

28,08826,651(124)

23,25449,782(523)$18,208567$2,554(1,472)$3,09528,088$(72,931)

26,651$(49,064)

(124)
$–

See accompanying notes to the consolidated financial statements.

08

Noncontrollinginterests$504,478 $3,907,707

23,254
223,902$527,742 $4,131,609

Consolidated Statement of Cash FlowsJ. FRONT RETAILING Co., Ltd. and Consolidated Subsidiaries
Year ended February 28, 2017

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

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

2017

2016

2017

¥40,550
17,189
2,657
359
176
(214)
(1,160)(1,131)
(263)
803
579
(723)
(744)
1,181
(308)
(1,997)
2,031(1,259)–(948)(6,293)(2,803)(4,438)292(1,963)
2,836
44,409793(1,296)
7,855(17,323)
1,799¥36,239¥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(499)(5,220)56,682616(1,446)–(20,733)
1,680¥36,799$359,645
152,452
23,565
3,184
1,560(1,898)(10,288)(10,031)(2,332)
7,121
5,135(6,412)(6,598)
10,474(2,731)(17,711)18,013(11,166)–(8,407)(55,813)(24,860)(39,361)
2,589(17,410)
25,152393,871
7,033(11,494)
69,667(153,640)
15,955$321,410

09

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 (increase) decrease 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 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 non-controlling interests
Other, net
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at 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

2017

2016

2017

¥(2,463)
4,462–(41,966)¥(12,470)
4,113
1,632
(37,254)$(21,844)
39,574–(372,203)

10,423
(248)
(156)
93
(499)
(30,353)

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

92,443(2,199)(1,383)824(4,425)(269,206)

(119)
3,001
46,000(42,005)––(21)(7,305)(846)(892)(2,189)2
3,699
28,147¥31,846

(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(1,055)
26,616
407,982(372,549)––(186)(64,789)(7,503)(7,911)(19,414)17
32,807
249,640$282,447

Notes to Consolidated Financial Statements
J. FRONT RETAILING Co., Ltd. and Consolidated Subsidiaries
February 28, 2017

1

Basis of Preparation

The accompanying consolidated financial statements

Certain amounts in prior year’s financial statementsof J. FRONT RETAILING Co., Ltd. (the“Company”) andhave been reclassified to conform to the current year’s

consolidated subsidiaries (collectively, the“Group”) arepresentation.

prepared on the basis of accounting principles generally
accepted in Japan, which are different in certain respects as

The translation of yen amounts into U.S. dollar amounts isto the application and disclosure requirements of International

included solely for the convenience of readers outside Japan

Financial Reporting Standards, and are compiled from theand has been made at ¥112.75 = U.S. $1.00, the exchange

consolidated financial statements prepared by the Company

rate prevailing on February 28, 2017.

as required by the Financial Instruments and Exchange Act

should not be construed as a representation that yen can beof Japan.

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

In preparing the accompanying consolidated financial

As permitted by the Financial Instruments and Exchange Act

statements, certain reclassifications have been made to theof Japan, amounts of less than one million yen have been

consolidated financial statements issued domestically in orderomitted. As a result, the totals shown in the accompanying

to present them in a format which is more familiar to readersconsolidated financial statements (both in yen and inoutside Japan. In addition, certain notes included herein are

U.S. dollars) do not necessarily agree with the sum of the

not required under accounting principles generally acceptedindividual amounts.

This translationin Japan but are presented as additional information.

2

Summary of Significant Accounting Policies(a)Principles of consolidation

year ended February 28, 2017 because PARCO CO.,The accompanying consolidated financial statements

LTD., a consolidated subsidiary of the Company and one

include the accounts of the Company and the significant

other investor jointly established SAN-A PARCO, Inc. oncompanies which it controls directly or indirectly.

December 20, 2016.

Companies over which the Company exercises significant
influence in terms of their operating and financial policies

The fiscal year end of certain consolidated subsidiaries

have been included in the accompanying consolidated

is December 31. Their financial statements as of and forfinancial statements on an equity basis.

the year ended December 31 are used in the preparationof the consolidated financial statements and necessary

On September 1, 2016, Daimaru Com Development Co.,

adjustments are made to their financial statements toLtd., a consolidated subsidiary of the Company, wasreflect any significant transactions from January 1 tomerged into Daimaru Matsuzakaya Department Stores

February 28 or 29. All significant intercompany balances

Co., Ltd., another consolidated subsidiary of the Company.

and transactions have been eliminated in consolidation.

JFR Office Support Co., Ltd. and JFR Consulting Co., Ltd.,The fiscal year end of the other consolidated subsidiaries

consolidated subsidiaries of the Company, were mergedis the same as the fiscal year end of the consolidated

into JFR Service Co., Ltd., another consolidated subsidiaryfinancial statements.

of the Company, on the same day.
The financial statements of certain affiliates accounted for
Certain subsidiaries are excluded from the scope ofby the equity method with a different fiscal year end areconsolidation because the effect of its total assets,

consolidated on the basis of the affiliates’fiscal year end.

sales, net income or loss and retained earnings on theaccompanying consolidated financial statements is

Investments in subsidiaries and affiliates which are notimmaterial. In addition, an unconsolidated subsidiary is

consolidated nor accounted for by the equity method areaccounted for by the equity method.

carried at cost or less. Where there has been a permanent
decline in the value of such investments, the Company has

SAN-A PARCO, Inc. has been newly included within thewritten down the investments.

scope of application of the equity method from the current

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 straight-line method.

Revenue and expenses are translated at the average rates
of exchange for the year. Differences arising from the

The principal estimated useful lives are as follows:translation are reflected in“Foreign currency translation
adjustments”and“Non-controlling interests”in the

Buildings and structures

3 to 50 years

accompanying consolidated balance sheet and statement

Other

2 to 20 yearsof changes in net assets.
(h)Leases(c)Cash and cash equivalents

Leased assets under finance lease transactions that do

Cash and cash equivalents consist of cash on hand,

not transfer ownership to the lessee are depreciated to adeposits with banks withdrawable on demand, and short-

residual value of zero by the straight-line method using theterm investments with a maturity of three months or lesscontract term as the useful life.

when purchased which can easily be converted to cash
and are subject to little risk of change in value.

Finance lease transactions entered into on or before
February 28, 2009 that do not transfer ownership to the(d)Allowance for doubtful accounts

lessee continue to be accounted for in the same manner

Allowance for doubtful accounts is computed based on

as operating lease transactions.

the actual historical experience for normal receivables andan estimate of uncollectible amounts determined after an(i)Goodwill

analysis of specific individual receivables from companies

Goodwill is amortized by the straight-line method over fivein financial difficulty.

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

(e)Securities and investment securities
The accounting standard for financial instruments requires(j)Intangible assets (except for goodwill and leased assets)that securities be classified into three categories: trading,Amortization is calculated by the straight-line method overheld-to-maturity or other securities. Trading securities are

the estimated useful lives of the respective assets.

carried at fair value and held-to-maturity debt securities
are carried at amortized cost.

Marketable securities

Expenditures relating to computer software developed forclassified as other securities are carried at fair value withinternal use are charged to income when incurred, except

any changes in unrealized holding gain or loss, net of theif the software is expected to contribute to the generation

applicable income taxes, included directly in net assets.

of income or to future cost savings. Such expenditures are

Cost of securities sold is determined by the moving

capitalized as intangible assets and are amortized by theaverage method. Non-marketable securities classified asstraight-line method over their respective estimated usefulother securities are carried at cost based on the moving

lives, a period of five years.

average method.
(k)Deferred income taxes

12

Investments in limited partnerships are stated at the net

Deferred income taxes are provided for temporary

value of equities attributable to the Company based on

differences between the balances of assets and liabilities

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

(n)Provisionsi)Provision for bonuses to employees
Provision for bonuses to employees is provided based(l)Derivative financial instruments and hedging activities
All derivatives are stated at fair value with any changes

on the estimated amount to be paid to employees
subsequent to the balance sheet date.

in fair value included in profit or loss in the corresponding
period, except for derivatives meeting the criteria forii)P rovision for bonuses to directors and audit anddeferral hedge accounting under which unrealized gain

supervisory board members

or loss, net of the applicable income taxes, is deferred as

Provision for bonuses to directors and audit anda component of net assets. Receivables and payables

supervisory board members is provided based on thehedged by forward foreign exchange contracts meeting

estimated amount to be paid to directors and audit andcertain conditions are translated at the corresponding

supervisory board members subsequent to the balance

forward foreign exchange contract rates (the“allocation

sheet date.

method”). Interest-rate swap transactions meeting certain
conditions for special treatment are accounted for as ifiii)Provision for sales returns

the interest rates applied to the interest-rate swap had

Provision for sales returns is provided at the amountoriginally applied to the underlying debt (the“specialof estimated loss expected to be incurred subsequent

treatment”).

to the balance sheet date based on the maximum
deductible amount under the Corporation Tax Law of

Hedging instruments are forward foreign exchange

Japan.

contracts and interest rate swaps and hedged items aretrade accounts receivable and payable denominated iniv)Provision for loss on books unsalable

foreign currencies, forecast transactions denominated inProvision for books unsalable after a certain period fromforeign currencies, loans payable and interest expenses on

publication is provided at the amount of estimated loss

loans payable.

expected to be incurred subsequent to the balance sheet
date based on the maximum deductible amount under

The Company and its consolidated subsidiaries hedge

the Corporation Tax Law of Japan.

foreign currency exchange rate risk and interest rate risk
based on its risk management policy of the Group.

v)Provision for sales promotion expense
Provision for sales promotion expense is provided at

The relationship between the hedging instruments andthe estimated amount calculated based on historicalthe underlying hedged items is assessed at each balanceexperience to prepare for the future use of point card

sheet date to confirm the effectiveness of hedging

certificates granted under a point card program that is

activities. However, hedge effectiveness is not assessed

designed for sales promotion.

if the substantial terms and conditions of the hedging
instruments and the hedged items are the same.

vi)Provision for loss on utilization of gift certificates
Gift certificates outstanding are credited to income upon(m)Distribution of retained earnings

derecognition after a certain period has passed from

Under the Corporation Law of Japan and the Company’stheir respective dates of issuance. Provision for loss on

Articles of Incorporation, the distribution of retained

utilization of gift certificates is provided at the estimatedearnings with respect to a given fiscal year is made byamount based on the historical utilization ratio.

resolution of the shareholders at a general meeting held
subsequent to the close of the fiscal year. The distributionvii)Provision for loss on business liquidationof retained earnings with respect to the interim period

Provision for loss on business liquidation is provided foris made by resolution of the Board of Directors. The

losses arising from business liquidation and store closures

accounts for the corresponding periods do not reflect suchof certain consolidated subsidiaries at the estimateddistributions. Please refer to the Note 28“Subsequentamount expected to be incurred subsequent to the balance

Event”of these Notes of Consolidated Financial

sheet date.

Statements.

13

viii)Provision for loss on store reconstruction
Provision for loss on store reconstruction is provided

are provided at an estimated amount based on eachconsolidated subsidiary’s internal rules.

for losses arising from the reconstruction of a store
of a consolidated subsidiary at the estimated amount
expected to be incurred subsequent to the balance(p)Additional Information
Accounting Treatment for Redevelopment Project

sheet date.
Under Article 7-9, Paragraph 1, of the Urban(o)Retirement benefits

Redevelopment Act, PARCO CO., LTD., a consolidated

Asset for retirement benefits and liability for retirement

subsidiary was approved as an individual developer of abenefits have been provided principally at an amount“First-type urban redevelopment project in the 14-15

calculated based on the retirement benefit obligation anddistrict Udagawa-cho”by the Tokyo Metropolitan Urban

the fair value of the pension plan assets. The estimatedDevelopment Bureau on August 3, 2016. PARCO CO.,benefit is attributed to each period by the benefit formulaLTD., started the redevelopment project as the developer

method.

of an urban area redevelopment project, including store
reconstruction of Shibuya PARCO.

Prior service cost is amortized as incurred primarily by thestraight-line method over periods of principally 11 years,

Since PARCO CO., LTD., is the only developer of thiswhich are within the estimated average remaining years of

redevelopment project, the accounting records as theservice of the eligible employees.

developer of the redevelopment project such as thereceipts related to construction costs and contractor

Actuarial gain or loss is amortized commencing in thepayments are included in the accompanying consolidated

year following the year in which the gain or loss was

financial statements as of and for the year ended February

recognized primarily by the straight-line method over28, 2017.

periods of principally 11 years, which are within theestimated average remaining years of service of the

As a result of this accounting treatment, cash andeligible employees.

deposits, and other current assets decreased by ¥4,476
million ($39,698 thousand) and ¥57 million ($505

Unrecognized actuarial gain and loss and prior service costthousand), respectively, and inventories, advances received(after tax effect) are recognized as“Retirement benefits

and other current liabilities increased by ¥6,406 million

adjustments”in accumulated other comprehensive loss($56,815 thousand), ¥1,460 million ($12,949 thousand)as a component of net assets in the consolidated balanceand ¥413 million ($3,662 thousand), respectively. Also,

sheet.

the Company recorded the related cash flows from theIn addition, directors and audit and supervisory board“other, net”of cash flow from operating activities in themembers of certain domestic consolidated subsidiaries areaccompanying consolidated statement of cash flows for thecustomarily entitled to lump-sum payments under unfundedyear ended February 28, 2017, in the amounts of ¥6,406

retirement benefit plans. Accrued retirement benefits formillion ($56,815 thousand) and ¥1,930 million ($17,117

these directors and audit and supervisory board members

thousand), respectively.

operating activities as“increases in inventories”and3

Accounting Changes(a)Application of Accounting Standard for Business14

No. 22, revised on September 13, 2013),“Accounting

Combinations, etc.

Standard for Business Divestitures”(ASBJ Statement No.

Effective March 31, 2016, the Company and its domestic

7, revised on September 13, 2013) and other standards.

consolidated subsidiaries adopted“Accounting Standard

Under these accounting standards, differences resulting

for Business Combinations”(Accounting Standards

from changes in ownership interest in a subsidiary when

Board of Japan “ASBJ”() Statement No. 21, revised

control over the subsidiary is retained by the parent are

on September 13, 2013),“Accounting Standard forrecognized under capital surplus, and acquisition-related

Consolidated Financial Statements”(ASBJ Statement

costs are recorded as expenses for the period in whichthey arise. Effective for business combinations conductedscale investments by Daimaru Matsuzakaya Department

on or after March 1, 2016, any changes in the allocation

Stores Co., Ltd. and PARCO CO., LTD. Also, the Companyof the acquisition price arising from the finalization ofrevalidated the profit structures of the Group’s property

the provisional accounting treatment are reflected in theand equipment in line with the proactive expansion of aconsolidated financial statements for the year in which thestable business model involving the fixing of rent income inbusiness combination occurs.

PARCO CO., LTD. and others.

In addition, the presentation caption of net income

As a result, the Company concluded that the straight-line

attributable to owners of the parent was amended andmethod is more appropriate to reflect depreciation for eachthe reference to“minority interests”was changed to“non-period than the declining-balance method by allocating thecontrolling interests.”

cost to each year equally through the useful life.

Effective March 1, 2016, these revised standards are

As a result of this change, operating income, ordinary

applied prospectively in accordance with the transitional

income and income before income taxes for the year ended

treatment provided in Article 58-2(4) of ASBJ Statement

February 28, 2017 increased by ¥1,453 million ($12,886

No.21, Article 44-5(4) of ASBJ Statement No.22 andthousand) compared with the amounts that would have

Article 57-4(4) of ASBJ Statement No.7.

been recorded under the previous method.

There was no effect on the consolidated financial

The effect of this change on each segment are shownstatements as of and for the year ended February 28,

in Note 27“Segment Information”of these Notes of2017 as a result of the application of these revised

Consolidated Financial Statements.

accounting standards.
(c)Changes in amortization period of prior service costs and(b)Changes in the depreciation method of property andactuarial gain and loss for accounting related to retirement

equipment

benefits

Although the Company and its domestic consolidated

Effective from the year ended February 28, 2017, certain

subsidiaries previously mainly applied the declining-

consolidated subsidiaries changed the amortization periodbalance method for depreciation of property and equipmentof prior service costs and actuarial gain and loss from 12(excluding leased assets) other than buildings andyears to 11 years because the average remaining years ofstructures, effective from the fiscal year ended February

service of the employees has decreased.

28, 2017, the straight-line method has been applied for
depreciation of all items of property and equipment.

The effect of this change on the accompanying
consolidated financial statements for the year ended

The Company reassessed the Group’s investment strategy

February 28, 2017 was immaterial.

in line with the recent execution and planning of large-

4Standards Issued but Not Yet Effective

Implementation Guidance on Recoverability of Deferred Tax

categories and deferred tax assets are calculated based on

Assetseach of these categories. However, the ASBJ conducted a

On March 28, 2016, the ASBJ issued“Implementationnecessary review regarding the partial accounting treatments

Guidance on Recoverability of Deferred Tax Assets”(ASBJ

for the categorizing criteria and recoverability of deferred tax

Guidance No.26), which basically transferred the accounting

assets and established the guidance in applying“Accounting

guidance included in the Japanese Institute of Certified

Standard for Tax Effect Accounting”(Business Accounting

Public Accountants Audit Committee Report No.66“Audit

Council of Japan), regarding the recoverability for deferred

Treatment on Determining the Recoverability of Deferred

tax assets.

Tax Assets”(JICPA Report No.66) to the ASBJ. The ASBJ
basically continues to apply the framework of the JICPA
Report No.66, whereby companies are categorized into five(1)Treatment is clarified for entities that do not meet thecriteria for any of the five categories.

15

(2)Criteria for classifying entities as“Category 2”or“Categorycertain conditions are met.

3”is changed from ordinary income to taxable income in
the absence of infrequent or unusual events.

Under Audit Committee Report No.66, the future estimableperiod is generally limited to five years.

(3)For“Category 2”entities, deferred tax assets attributableto deductible temporary differences for which scheduling(5)For entities classified as“Category 4,”they can be treated

the timing of the reversals is not possible are considered

as“Category 2”or“Category 3”if certain conditions

to be realizable if certain conditions are met.

are met and such entities can use the methods ofmeasurement of deferred tax assets stipulated in“Category

Under Audit Committee Report No.66, deferred tax assets

2”or“Category 3.”

are considered to be realizable to the extent not exceeding
the amount based on a scheduling of future reversals of

The effect of adopting this revised implementation guidance

temporary differences.

on the consolidated financial statements was not evaluatedas the Group will voluntarily adopt International Financial(4)For“Category 3”entities, the future period of estimatedtaxable income can be estimated in excess of five years if

5

Reporting Standards from the fiscal year ending February 28,
2018.

Inventories

Inventories at February 28, 2017 and February 29, 2016 consisted of the following:
Millions of yen
Merchandise and finished goods
Work in process
Real estate for sale in process
Raw materials and supplies

6

2017¥26,814
917
6,406
359
¥34,499

Accumulated Depreciation

Accumulated depreciation (including accumulated impairment

which has been offset against the acquisition costs of thelosses) of property and equipment at February 28, 2017

property and equipment in the accompanying consolidated

and February 29, 2016 amounted to ¥283,063 million

balance sheet.

($2,510,536 thousand) and ¥291,437 million, respectively,

16

2016
¥27,085826–
294¥28,205

Thousands of
U.S. dollars
2017$237,818
8,133
56,815
3,184$305,977

7

Rental Properties

Certain subsidiaries of the Company own buildings (including

impairment of fixed assets of ¥341 million ($3,024 thousand)land) as rental properties in Tokyo and other regions.

and ¥57 million and loss on business liquidation of ¥288
million ($2,554 thousand) and ¥225 million related to rental

Gross profit of ¥5,829 million ($51,698 thousand) andproperties were recognized for the years ended February 28,¥4,990 million (rental revenue is recorded as rent income of2017 and February 29, 2016, respectively. In addition, gain

real estate in net sales and rental expenses as cost of realon sales of fixed assets related to rental properties amounted

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

to ¥1,330 million ($11,796 thousand) for the year endedof ¥328 million ($2,909 thousand) and ¥757 million, loss on

February 28, 2017.

Rental properties

Millions of yen
Carrying value
Fair value
February 28,
February 28,
March 1, 2016
Net change
2017
2017
¥119,556¥111,689¥231,245¥228,060

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

Thousands of U.S. dollars
Carrying value
Fair value
February 28,
February 28,
March 1, 2016
Net change
2017
2017
$1,060,363$990,589$2,050,953$2,022,705

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 ¥110,450 million ($979,600
thousand) due to the urban redevelopment project in the Ginza 6-chome district and ¥3,008 million ($26,678
thousand) due to acquisitions of real estate and the decrease of ¥2,385 million ($21,152 thousand) due todepreciation for the year ended February 28, 2017. The main components of net change in carrying value
include the increases of ¥6,294 million due to acquisitions of real estate and ¥6,182 million due to changes
in the purpose of ownership and the decrease of ¥2,187 million due to depreciation for the year ended
February 29, 2016.
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.Construction of south building of Matsuzakaya Ueno store, whose consolidated balance sheet amountwas ¥73,635 million ($653,082 thousand) as of February 28, 2017, involves the development of largescale commercial facilities and is still in the development 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 notincluded in the above table.
5.The urban redevelopment project in the Ginza 6-chome district, whose consolidated balance sheet amountwas ¥129,754 million as of February 29, 2016, involves the development of large-scale commercial facilities
and was still in the development stage as of February 29, 2016. Since it was extremely difficult to determine
the fair value due to these reasons, the carrying value and the fair value of the project as of February 29,
2016 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 28, 2017
and February 29, 2016 was as follows:
Millions of yen

Thousands of
U.S. dollars
2017

2017

2016

Assets pledged as collateral:
Inventories
Land
Buildings and structures, net
Investment securities
Total

¥53
10,79810,458455¥21,766¥51
10,798
10,779265¥21,894$470
95,76992,753
4,035$193,046

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

¥430
200
1,425
¥2,055

¥524
1,000
1,625
¥3,149$3,813
1,773
12,638$18,226

9

Assets in TrustThe carrying value of assets in trust at February 28, 2017 and February 29, 2016 was as follows:
Millions of yen
Assets in trust:Land
Buildings and structures, net
Other property and equipment, net
Total

18

2017

2016

¥43,956
15,604
171¥59,732¥43,956
16,858208¥61,024

Thousands of
U.S. dollars
2017$389,853
138,394
1,516$529,773

10 Securities
Information regarding marketable securities classified as other securities at February 28, 2017 and February 29, 2016 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

2017
Acquisition
cost

Millions of yen
Unrealized
gain (loss)

Carrying
value

2016
Acquisition
cost

Unrealized
gain (loss)¥8,8703,944
12,814¥5,747
3,926
9,674¥3,12217
3,140¥8,932
4,788
13,720¥5,275
4,758
10,034¥3,656
30
3,686

1,527
2,006
3,534
¥16,348

1,638
2,022
3,660
¥13,335

(111)
(15)
(126)
¥3,013

3,037
193
3,231
¥16,951

3,550
200
3,750
¥13,785

(513)
(6)
(519)
¥3,166

Thousands of U.S. dollars
2017
Carrying
Acquisition
Unrealized
value
cost
gain (loss)$78,669
34,980113,649$50,971
34,82085,800$27,689
150
27,84913,543
17,791
31,343$144,993

14,527
17,93332,461$118,270

(984)
(133)
(1,117)$26,722

Sales of securities classified as other securities and the aggregate gain and loss for the years ended February 28, 2017 andFebruary 29, 2016 are summarized as follows:
Millions of yen
Equity securities:
Sales proceeds
Aggregate gain
Aggregate loss

2017

2016

¥3,232
1,283
23¥2,763960–

Thousands of
U.S. dollars
2017$28,665
11,379203

For marketable securities, the Company and its consolidated

The Company and consolidated subsidiaries did not

subsidiaries recognize loss on devaluation of investment

recognize loss on devaluation of investment securities for the

securities for securities whose fair value has declined by

years ended February 28, 2017 and February 29, 2016.

30% or more compared with their acquisition cost, if thedecline is deemed to be irrecoverable.

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 0.37% and 0.49% at Februarycommercial papers were 0.001% and 0.02% at February 28,

28, 2017 and February 29, 2016, respectively.

2017 and February 29, 2016, respectively.

Long-term debt and lease obligations at February 28, 2017 and February 29, 2016 consisted of the following:
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%
Loans payable, due through January 2027,
with an annual weighted-average interest
rate of 0.63%
Lease obligations due through August 2024
Less current portion

Thousands of
U.S. dollars
2017

2017

2016

¥12,000¥12,000$106,430

10,00010,00088,691

5,000

5,000

44,345

118,680
4,758
150,438(41,789)¥108,649

114,685
2,312
143,997(32,588)¥111,409

1,052,594
42,1991,334,261(370,634)$963,628

The aggregate annual maturities of bonds payable, long-term loans payable and lease obligations subsequent to February 28,
2017 are summarized as follows:

Years ending February 28 or 29,
2018
2019
2020
2021
2022
2023 and thereafterYears ending February 28 or 29,
2018
2019
2020
2021
2022
2023 and thereafter

20

Millions of yen
Long-term loans
Bonds payable
Lease obligations
payable¥12,000¥28,960¥829–
18,060623–
12,700519
10,00019,280406–
11,180240
5,000
28,5002,141¥27,000¥118,680¥4,758
Thousands of U.S. dollars
Long-term loans
Bonds payable
Lease obligations
payable$106,430$256,851$7,352–
160,177
5,525–
112,638
4,603
88,691
170,997
3,600–
99,1572,128
44,345
252,771
18,988$239,467$1,052,594$42,199

12 Retirement Benefits
consolidated subsidiaries also have established an(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 28, 2017 and February 29, 2016
1.The changes in the retirement benefit obligation for the years ended February 28, 2017 and February 29, 2016 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
Prior service cost
Balance at end of the year2017
¥69,128–
69,128
2,275
118
227
(5,842)–¥65,906

2016¥67,737
4,705
72,443
2,339
278
700
(6,644)
10¥69,128

Thousands of
U.S. dollars
2017$613,108–
613,108
20,177
1,046
2,013(51,813)–$584,532*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 28, 2017 and February 29, 2016 are outlined as follows:
Millions of yen
Balance at beginning of the year
Expected return on plan assets
Actuarial gain (loss)
Contributions paid by the Group
Benefits paid
Balance at end of the year2017
¥42,108
746
4,088
1,379
(3,284)¥45,039

2016¥48,087794(5,152)
1,954(3,576)¥42,108

Thousands of
U.S. dollars
2017$373,463
6,616
36,257
12,230(29,126)$399,458

21

3.The balance of retirement benefit obligation and plan assets at fair value and the amounts recognized in the consolidatedbalance sheet at February 28, 2017 and February 29, 2016 are outlined as follows:

2017¥36,538(45,039)(8,501)
29,3682016¥39,218(42,108)(2,889)29,909Thousands of
U.S. dollars
2017$324,062(399,458)(75,396)
260,470

20,86627,020185,064

31,605
10,73832,707
5,687

280,310
95,237¥20,866¥27,020$185,064

Millions of yen
Funded retirement benefit obligations
Plan assets at fair value
Unfunded retirement benefit obligation
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 28, 2017 and February 29, 2016 are outlined
as follows:
Millions of yen
Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial loss
Amortization of prior service cost
Other
Retirement benefit expenses

2017¥2,275
118
(746)
1,701
146
231
¥3,7272016¥2,339
278
(794)
931
134
204
¥3,093Thousands of
U.S. dollars
2017$20,177
1,046(6,616)15,0861,294
2,048$33,055

5.The components of retirement benefits adjustments included in other comprehensive income (before tax effects) for the years
ended February 28, 2017 and February 29, 2016 are outlined as follows:
Millions of yen
Prior service cost
Actuarial gain (loss)
Total

2017
¥146
5,563
¥5,7092016¥123(5,292)¥(5,168)

Thousands of
U.S. dollars
2017$1,29449,339$50,634

6.The components of retirement benefits adjustments included in accumulated other comprehensive income (before tax effect)
at February 28, 2017 and February 29, 2016 are outlined as follows:
Millions of yen
Unrecognized prior service cost
Unrecognized actuarial loss
Total

22

2017
¥(1,729)(9,991)¥(11,721)

2016¥(1,876)(15,554)¥(17,431)

Thousands of
U.S. dollars
2017$(15,334)(88,611)$(103,955)

7.The fair value of plan assets, by major category, as a percentage of total plan assets at February 28, 2017 and February 29,
2016 is as follows:
Debt securities
Equity securities
General accounts at life insurance companies
Cash and deposits
Other
Total

2016
33%
42
13
3
9
100%

2017
32%
46
12
1
8
100%

The total pension plan assets include 30% (23% in equity

The expected long-term rate of return on plan assets issecurities and 7% in cash and deposits) and 26% (24%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 28, 2017 and February 29, 2016,
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
Expected rate of salary increase

2017
2016
0.08% to 0.59% 0.12% to 0.59%
1.0% to 2.0%
1.0% to 2.0%
Primarily 3.8% Primarily 3.8%(3)Defined contribution pension plans for the years ended February 28, 2017 and February 29, 2016
Millions of yen
Contributions to defined contribution pension plans

2017
¥353

2016
¥360

Thousands of
U.S. dollars
2017$3,13023

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 28, 2017 and February 29, 2016, 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
2017
Accumulated Accumulated loss
depreciation
on impairment

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

¥185

¥532

¥486

$1,640

The amounts in the above table include the interest portion.

$1,560¥9

Net bookvalue¥9

Thousands of U.S. dollars
2017
Accumulated Accumulated loss
depreciation
on impairment

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

Millions of yen
2016
Accumulated Accumulated loss
depreciation
on impairment

Acquisition
cost
Leased assets:
Machinery, equipment, tools, furniture and fixtures¥176

Net book
value

–

¥36

Net book
value

$79

lease terms with a nil residual value amounted to ¥17
million ($150 thousand) and ¥40 million for the years ended

Lease payments relating to finance leases accounted for as

February 28, 2017 and February 29, 2016, respectively.

operating leases for the years ended February 28, 2017 andReversal of accumulated loss on impairment of the leased

February 29, 2016 totaled ¥17 million ($150 thousand) andassets for the year ended February 29, 2016 totaled ¥1¥42 million, respectively. Depreciation of the leased assets

million.

computed by the straight-line method over the respective

24

Future minimum lease payments (including the interest portion thereon) subsequent to February 28, 2017 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

¥8
0
¥9

2018
2019 and thereafter
Total

$70
0
$79

2.Operating leases
Future minimum lease payments subsequent to February 28, 2017 for noncancelable operating leases were as follows:
Years ending February 28 or 29,

Millions of yen

Thousands of
U.S. dollars¥4,17922,394¥26,57420182019 and thereafter
Total$37,064
198,616$235,689(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 28, 2017 and February 29, 2016, 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

2017
Accumulated
depreciation¥81

Millions of yen
Net book
value

¥79

Acquisition
cost

¥1

¥270

2016
Accumulated
depreciation¥261

Net bookvalue¥9

Thousands of U.S. dollars
2017
Acquisition Accumulated
Net book
cost
depreciation
value

$718

$700

$8

Lease income relating to finance leases accounted for as

thousand) and ¥25 million for the years ended February 28,

operating leases for the years ended February 28, 20172017 and February 29, 2016, respectively.

and February 29, 2016 totalled ¥7 million ($62 thousand)and ¥25 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 28, 2017 and February 29, 2016.

the respective lease terms amounted to ¥7 million ($6225

Future minimum lease receivables (including the interest portion thereon) subsequent to February 28, 2017 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

¥1
–
¥1

2018
2019 and thereafter
Total

$8
–
$8

2.Operating leases
Future minimum lease receivables subsequent to February 28, 2017 for noncancelable operating leases were as follows:
Years ending February 28 or 29,

Millions of yen¥3,347
9,678¥13,02520182019 and thereafter
Total

Thousands of
U.S. dollars$29,685
85,835$115,521

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 ($66,518 thousand) at February 28, 2017

reserve, respectively, until the sum of the capital reserveand February 29, 2016. 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

28, 2017 and February 29, 2016.

(2)Movements in shares issued and treasury stock during the years ended February 28, 2017 and February 29, 2016 aresummarized as follows:

Shares issued:
Common stock
Treasury stock:
Common stock

March 1, 2016

Number of shares
2017
Increase
Decrease

268,119,164––

268,119,164

6,575,238

7,146

8,790

6,573,594

The increase in treasury stock of 7,146 shares is due to theof shares less than one voting unit by the Company and 8,500

purchase of shares less than one voting unit by the Company

shares resulting from the exercise of stock options for thefor the year ended February 28, 2017. The decrease inyear ended February 28, 2017.

treasury stock consists of 290 shares resulting from the sale

26

February 28, 2017

Shares issued:
Common stock
Treasury stock:
Common stock

March 1, 2015

Number of shares
2016
Increase
Decrease

February 29, 2016

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(3)Stock option plans
Descriptions of each stock option plan at February 28, 2017 are as follows:
Stock option plans
Individuals covered by the plan
Type and numberof shares to be issued
upon the exercise of thestock subscription rights (*3)
Grant date
Vesting conditions
Vesting period
Exercise period

No.5 plan (*1)
Directors: 8
Audit and supervisory board
members: 5
31,500 shares ofcommon stock
May 25, 2006 (*2)
None
None
From September 3, 2007
to July 14, 2026

*1 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.
*2 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.
*3 The number of shares in the above table are adjusted to reflect the consolidation of two shares into one share on September 1, 2014.

27

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

Number of stock options: (*1)
Non-vested
Outstanding at March 1, 2016
GrantedForfeited
VestedOutstanding at February 28, 2017
VestedOutstanding at March 1, 2016
VestedExercised
Forfeited
Outstanding at February 28, 2017

No.5 plan
–
–
–
–
–
8,500
–
8,500
–
–

Exercise price (Yen)
Average stock price at exercise (Yen)Fair value at grant date (Yen)¥1¥1,380¥1,666(*1)

Exercise price (U.S. dollars)
Average stock price at exercise (U.S. dollars)
Fair value at grant date (U.S. dollars)$8$12,239$14,776*1 The amounts are adjusted to reflect the consolidation of two shares into one share on September 1, 2014.

During the year ended February 28, 2017, no stock options

options actually forfeited is reflected.

were granted.
Stock subscription rights as stock options of nil and ¥14
Because it is difficult to reasonably estimate the number

million were recorded as of February 28, 2017 and Februaryof options that will be forfeited in the future, the number of29, 2016.

15 Financial Instruments
Overview

to credit risk of lessors. For these credit risks, the Group(a)Policy for financial instruments

individually manages the due dates and balances for each

The Group manages funds only through low-risk financial

counterparty and tries to identify any incidents that may

assets such as bank deposits and debt securities, incause potential collectability issues at an early stage andaddition, funds are raised through bank borrowings,

to mitigate such risks.

issuance of commercial papers and corporate bonds,
and securitization of receivables. Derivatives are only

Equity securities, such as investment securities, areutilized to hedge foreign currency fluctuation risk arising

exposed to market price fluctuation risk, but mainly

from receivables and payables denominated in foreignconsist of securities of companies with which a businesscurrencies and interest rate fluctuation risk arising from

relationship has been established, and the fair value isloans payable and bonds payable, and are not used formonitored periodically and the portfolio is reviewed on an

speculative purposes.

ongoing basis.

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

28

Trade payables, such as notes and accounts payable –management

trade and income taxes payable are mostly due within one

Notes and accounts receivable-trade are exposed toyear. Trade payables denominated in foreign currencies

credit risk of customers. Deposits and guarantees areare exposed to foreign currency fluctuation risk and foreign

mainly associated with leases of stores and are exposed

exchange forward contracts are utilized for a portion of

these trade payables to hedge foreign currency fluctuation

authorization for such transactions. In addition, derivativerisk.

transactions are entered into only with financial institutions
with high credit ratings to mitigate credit risk.

Short-term loans payable, commercial papers andsecuritized receivables are mainly used for financing ofTrade payables and loans payable are exposed to liquidity

operating activities, and bonds payable and long-term loansrisk. The Group individually manages the risk by preparing

payable are mainly used for capital investments. Loansa cash management schedule on a monthly basis andpayable with variable interest rates are exposed to interest

maintains necessary liquidity by entering into commitment

rate fluctuation risk, but derivative transactions (interest-lines and overdraft contracts with its main financial

rate swaps) are utilized as hedging instruments for certain

institutions.

of long-term loans payable on an individual loan basis to
mitigate the interest rate fluctuation risk and fix interest

Fair Value of Financial Instruments

payments. Hedge effectiveness of each transaction is

The carrying value of financial instruments on theassessed periodically. For interest-rate swap transactions

consolidated balance sheet, fair value and the difference

that meet the criteria for the special treatment, an

as of February 28, 2017 and February 29, 2016, areassessment of hedge effectiveness is omitted.

shown in the following table. The table does not include
financial instruments for which it is extremely difficult to

The execution and management of derivative transactions

determine the fair value. (Please refer to Note 2 below).

are based on the internal rules which determine the(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¥36,318

2017
Fair value¥36,318

Difference¥–

Carrying value¥32,439

2016
Fair value¥32,439

Difference¥–

68,997

68,997–68,04968,049–16,348
11,81636,028¥169,509

16,3489,428
35,621¥166,714–(2,388)(406)¥(2,794)

16,951
11,98036,679¥166,099

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

87,9648,320
33,7997,125
27,000118,680¥282,889¥11

87,9648,320
33,7997,125
27,117
119,264¥283,592
¥11

–
–
–
–
117
584
¥702
¥–

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¥–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
2017
Carrying value
Fair value
Difference$322,110$322,110$–

611,946

611,946–

144,993
104,798
319,538$1,503,405

144,993
83,618315,929$1,478,616–(21,179)(3,600)$(24,780)

780,168
73,791
299,769
63,192
239,467
1,052,594$2,508,993$97780,168
73,791
299,769
63,192
240,505
1,057,773$2,515,228
$97

–
–
–
–
1,037
5,179
$6,226$–*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

2017

2016

¥18,772¥26,154¥28,646¥19,286¥26,303¥31,820

Thousands of
U.S. dollars
2017$166,492$231,964$254,066

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 28, 2017 and February 29, 2016.

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 28, 2017 and February 29, 2016 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
2017
More thanMore than
five years
one year andWithinand within
within five
one yearten years
years¥33,018¥3,300¥–68,997
–
–

–
1,301
200
1,504
¥105,021

–
4,248
200
3,430
¥11,178

–
–
–
7,063
¥7,063

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

Thousands of U.S. dollars
2017
More thanMore than
five years
one year andWithinand within
within five
one yearten years
years$292,842$29,268$–
611,946–––
11,538
1,773
13,339$931,450–
37,676
1,773
30,421$99,139–––
62,643$62,643

More thanten years

¥–
–
–
–
–
6,863
¥6,863More thanten years
¥–
–

–
–
–
8,263
¥8,263More thanten years

$–
–
–
–
–
60,869$60,869

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 28, 2017 and February 29, 2016, 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
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
Sweden Krona
Total

Major hedged item

Millions of yen
2017
Contract value
Maturing
Notional
Fair value
afteramountone yearAccounts receivable, trade

¥513
–
¥513

¥–
–
¥–

(*)
(*)
(*)

Long-term loans payable

¥300
¥300

¥–
¥–

(*)
(*)

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

¥408
343
462
6
¥1,220

¥–
–
–
–
¥–

¥(0)
(3)
15
0
¥11

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)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
Total

Major hedged item

Thousands of U.S. dollars
2017
Contract value
Maturing
Notional
Fair value
afteramountone yearAccounts receivable, trade$4,549–$4,549

$–
–
$–

(*)
(*)
(*)

Long-term loans payable$2,660$2,660

–
$–

(*)
(*)

Forecasted transactions
denominated in foreign
currencies (Accounts
payable, trade)$3,618
3,042
4,097
53
$10,820

$–
–
–
–
$–

$(0)
(26)
133
0
$97

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 as if the exchange rates applied to the forward foreign exchange contracts had originally applied
to notes and accounts receivable – trade or as if the currency applied to the currency swap contracts had originally applied to long-term loans payable, the fair value ofthese transactions is included in that of notes and accounts receivable – 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
2017
Contract value
Maturing
Notional
Fair value
afteramountone year¥22,820

Major hedged item

¥10,260(*)

Millions of yen
2016
Contract value
Maturing
Notional
Fair value
afteramountone yearLong-term loans payable¥29,280¥22,820(*)

33

Method of hedge
accounting
Specialtreatment ofinterest-rate
swap

Transaction
Interest-rate swaps:

Thousands of U.S. dollars
2017
Contract value
Maturing
Notional
Fair value
afteramountone year

Major hedged item
Long-term loans payable

Receive / variable and pay /
fixed$202,394$90,997(*)(*)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 28, 2017, 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 for JET CLEANING Co., Ltd.,an unconsolidated subsidiary

¥11

$97

63
¥75

558
$665

18 Selling, General and Administrative Expenses
The components of selling, general and administrative expenses for the years ended February 28, 2017 and February 29, 2016
were as follows:

2017¥26,544539

2016¥27,733
459

Thousands of
U.S. dollars
2017$235,423
4,780

48,201
5,284

49,8285,511

427,50346,864

206
3,935

204
3,285

1,827
34,9002
10,24914,843
28,637
15,621359
35,780¥190,2058
10,632
16,194
28,682
16,338499
38,115¥197,494

17
90,900131,645
253,986
138,5453,184
317,339$1,686,962

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 ¥748
million ($6,634 thousand) and ¥1,570 million in the accompanying consolidated statement of income for the years ended
February 28, 2017 and February 29, 2016, respectively:
Millions of yen
Company (Location)

Usage

PARCO CO., LTD(Chuo-ku, Kobe-shi, Utsunomiya-shi,
Tochigi, and others)

Stores, etc.

NEUVE・A CO., LTD.
(Omiya-ku, Saitama-shi,
Higashikurume-shi, Tokyo,
and others)

Stores, etc.

PARCO SPACE SYSTEMS Co., Ltd.
(Naka-ku, Nagoya-shi, and others)

Offices, etc.

PARCO-CITY Co., Ltd.
(Shibuya-ku,Tokyo)–

JFR Online Co., Ltd.
(Chuo-ku, Osaka-shi, Suminoe-ku,
Osaka-shi, and others)

Offices, etc.

J. Front Foods Co., Ltd.
(Tokoname-shi, Aichi, Hirakata-shi,
Osaka, and others)

Stores, etc.

JFR PLAZA Inc.
(Taiwan)Stores, etc.

J. FRONT RETAILING Co., Ltd.
(Chuo-ku, Tokyo)–

Classification
Land
Building and structures, net
Other property andequipment, net
Total
Building and structures, net
Other property andequipment, net
Other intangible assets
Total
Other property andequipment, net
Total
Other intangible assets
Total
Building and structures, net
Other property andequipment, net
Other intangible assets
Total
Building and structures, net
Other property andequipment, net
Total
Building and structures, net
Other property andequipment, net
Other intangible assets
Total
Goodwill
Total

2017

¥5
435

2016

Thousands of
U.S. dollars
2017
$44
¥–
3,858
5

8
450
146

0
5
45

70
3,991
1,294

35
–
181

87
26
160

310
–
1,605

12
12
14
14
–

–
–
–
–
47

106
106
124
124
–

–
15
15
3

8
216
273
95

–
133
133
26

3
7
55

12
107
23

26
62
487

2

6

17

10
68
–
–
¥748

1
31
990
990
¥1,57088
603––$6,634The Group mainly group stores into minimum units which generate identifiable cash flows.
Regarding buildings and structures and others in the above table, the Company reduced the carrying value of the assets to
the recoverable value, and recognized the difference as loss on impairment of fixed assets amounting to ¥748 million ($6,634
thousand) and ¥579 million for the years ended February 28, 2017 and February 29, 2016, respectively.
Regarding goodwill in the above table, the full amount of the carrying value was recognized as loss on impairment amounting
to ¥990 million for the year ended February 29, 2016 because the originally assumed profitabity from the consolidated
subsidiaries is no longer expected.
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.

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:
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:
Building and structures, net
Other property and equipment, net
Total
Total

2016
¥3,8253,666
13667¥7,492The Group mainly group stores into minimum units which generate identifiable cash flows.
The Company reduced the carrying value of the assets to the recoverable value, and recognized the difference as loss on store
reconstruction.
The recoverable value of assets is measured mainly based on value in use and written down to nil if no future cash inflows are
expected.

36

21 Loss on Business Liquidation
Loss on business liquidation recognized by certain consolidated subsidiaries for the years ended February 28, 2017 andFebruary 29, 2016 consisted of the following:Thousands of
U.S. dollars
2017

Millions of yen
Store closures:
Daimaru Matsuzakaya Department StoresCo., Ltd. (Daimaru Urawa PARCO)
Provision for loss on business liquidation
Loss on impairment of fixed assets:
Buildings and structures, net
Other property and equipment, net
Total

¥50

$443

262
8
270

2,323
70
2,394

1,092

9,685

973
644
19
1,638

8,629
5,711
168
14,527

JFR Online Co. Ltd.
Provision for loss on business liquidation

750

6,651

JFR PLAZA Inc.
Provision for loss on business liquidation
Total

305
¥4,106

2,705$36,416

PARCO CO., LTD. (Otsu PARCO)
Provision for loss on business liquidation
Loss on impairment of fixed asset:
Land
Buildings and structures, net
Other property and equipment, net
Total

37

Store closures:
PARCO CO., LTD. (Chiba PARCO)
Provision for loss on business liquidation
Loss on impairment of fixed assets:
Buildings and structures, net
Other property and equipment, net
Total

Millions of yen
2016¥1,052649
6656

PARCO SPACE SYSTEMS CO., LTD.
Loss on impairment of fixed assets:
Buildings and structures, net
Other property and equipment, net
Total

2
7
10

NEUVE・A CO., LTD.
Loss on impairment of fixed assets:
Buildings and structures, net
Total

0¥1,719The Group mainly group stores into minimum units which generate identifiable cash flows.
The Company reduced the carrying value of the assets to the recoverable value, and recognized the difference as loss on
business liquidation.
The recoverable value of assets is measured at the value in use or the estimated net selling value, which is based on the selling
price in the contract for sale, and written down to nil if no future cash inflows are expected.

22 Loss on Devaluation of Inventories
Loss on devaluation of inventories included in cost of goods sold of ¥485 million ($4,301 thousand) and ¥233 million wasrecognized for the years ended February 28, 2017 and February 29, 2016, respectively.

38

23 Other Comprehensive Income
The following table presents reclassification adjustments and tax effects allocated to each component of other comprehensive
income (loss) for the years ended February 28, 2017 and February 29, 2016.
Millions of yen
Net unrealized holding loss on securities:
Amount arising during the year
Reclassification adjustments for gain
included in net income
Before tax effectTax effectTotal
Net unrealized deferred income (loss) on
hedging instruments:
Amount arising during the year
Before tax effectTax effectTotal
Foreign currency translation adjustments:
Amount arising during the year
Total
Retirement benefits adjustments:
Amount arising during the year
Reclassification adjustments for loss
included in net income
Before tax effectTax effect
Total
Share of other comprehensive (loss)
income of unconsolidated subsidiaries andaffiliates accounted for by equity method:Amount arising during the year
Reclassification adjustments for loss
(gain) included in net income
Amount of acquisition cost adjustment
Total
Total other comprehensive income (loss)

Thousands of
U.S. dollars
2017

2017

2016

¥1,130¥321$10,022(1,283)
(153)
101
(51)

(899)
(578)
289
(288)

(11,379)(1,356)
895
(452)

94
94
(30)
63

(55)
(55)
17
(37)

833
833
(266)
558

(115)
(115)

(147)
(147)

(1,019)(1,019)3,861(5,864)34,243

1,848
5,709(2,125)
3,584

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

16,39050,634(18,847)
31,787(395)

785(3,503)

26
(72)
(441)
¥3,039

(188)
(277)
318
¥(3,810)230(638)(3,911)$26,953

24 Supplemental Information on the Consolidated Statement of Cash Flows
Reconciliations of cash and deposits in the accompanying consolidated balance sheet at February 28, 2017 and February 29,
2016 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

2017¥33,018(1,171)¥31,8462016¥30,039(1,891)¥28,147

Thousands of
U.S. dollars
2017$292,842(10,385)$282,44739

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 33.1% and 35.6% for the years ended February 28,
2017 and February 29, 2016, 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 28, 2017 and February
29, 2016 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

40

2017
33.1%

2016
35.6%

0.8
0.1
0.5
0.9

0.9
(0.1)
0.6
1.3

(10.9)(24.9)

(0.3)
–
0.9
25.1%

(1.9)
1.0
1.4
13.9%

The significant components of deferred tax assets and liabilities at February 28, 2017 and February 29, 2016 are as follows:
Millions of yen
Deferred tax assets:
Liability for retirement benefits
Accrued loss on utilization of gift certificates
Loss on devaluation of assets resulting from mergerof consolidated subsidiaries
Securities for retirement benefit trust
Deferred revenue
Provision for bonuses to employees
Accrued point card certificates
Allowance for doubtful accounts
Asset retirement obligations
Loss on impairment of fixed assets
Unrealized profit on fixed assets
Tax loss carryforwards
Provision for loss on business liquidation
Accrued enterprise taxes, etc.
Provision for loss on store reconstruction
Loss on devaluation of inventories
Provision for sales promotion expenses
OthersGross deferred tax assets
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
2017

2017

2016

¥6,394
4,418¥8,854
4,499$56,70939,184

3,504
3,479
2,116
1,698
1,692
1,119
1,103
962
850
709
696
602
525
138
137
3,345
33,497(6,675)26,821

3,699
3,798
–
1,879
1,827
753
996
1,501
1,487
506
458
653
1,136
76
232
3,723
36,085(6,570)29,51531,07730,85518,767
15,05915,006
9,924
9,782
8,532
7,538
6,288
6,172
5,339
4,656
1,223
1,215
29,667
297,090(59,201)
237,880(86,248)(6,269)(407)(342)(4,631)(97,899)¥(71,077)(91,541)(6,764)(464)(305)(2,813)(101,889)¥(72,374)(764,949)(55,600)(3,609)(3,033)(41,073)(868,283)$(630,394)

The“Act for Partial Revision of the Income Tax Act etc.”

February 28, 2017, deferred tax assets in current assets,(Act. No. 15 of 2016) and the“Act for Partial Revision of thedeferred tax assets in investments and other assets, deferred

Local Tax Act etc.”(Act. No.13 of 2016) were enacted in

tax liabilities in non-current liabilities, deferred tax liabilities

the Japanese Diet session on March 29, 2016. Accordingly,

for land revaluation and retirement benefits adjustments

the statutory tax rates used for calculating deferred tax(credit) have decreased by ¥355 million ($3,148 thousand),

assets and liabilities were reduced from 32.3% to 30.9%¥173 million ($1,534 thousand), ¥4,749 million ($42,119

for temporary differences that are expected to be realized

thousand), ¥61 million ($541 thousand) and ¥199 million

or settled during the year from March 1, 2018 to February($1,764 thousand), respectively, and net unrealized holding

28, 2019 and to 30.6% for temporary differences that are

gain on securities, non-controlling interests and income

expected to be realized or settled on or after March 1, 2019.

taxes-deferred (credit) have increased by ¥46 million ($407
thousand), ¥305 million ($2,705 thousand) and ¥4,437

As a result of applying these revised statutory tax rates at

million ($39,352 thousand), respectively.

41

26 Amounts per Share
Amounts per share at February 28, 2017 and February 29, 2016 and for the years then ended are as follows:

Net assets
Basic net income
Diluted net income
Cash dividends

Yen
2017
¥1,553.60
103.04103.0428.00

2016¥1,467.05
100.42100.41
27.00

U.S. dollars
2017$13.77
0.91
0.91
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 28, 2017
and February 29, 2016 is summarized as follows:
Millions of yen
Net income attributable owners of theparentWeighted-average number of sharesof common stock outstanding
Increase in shares of common stock
resulting from the exercise of stock
subscription rights

2017

2016

¥26,950¥26,313

Thousands of shares
2017

Thousands of
U.S. dollars
2017$239,0242016

261,547

262,038

2

18

The financial data used in the computation of net assets per share as of February 28, 2017 and February 29, 2016 issummarized as follows:

2017¥465,839

2016¥440,594

Thousands of
U.S. dollars
2017$4,131,609–(59,503)(59,503)(14)(56,880)(56,895)–(527,742)(527,742)¥406,336¥383,699$3,603,866

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

Thousands of shares
2017
Number of shares of common stock
used in the calculation of net assets
per share42

261,5452016
261,543

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“PARCO Business”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 retailingof 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.
(Changes in the depreciation method of property and equipment)
As described in Note 3“Accounting Changes,”although the Company and its domestic consolidated subsidiaries previously
mainly used the declining-balance method for depreciation of property and equipment (excluding leased assets) other thanbuildings and structures, effective from the year ended February 28, 2017, the straight-line method has been applied for
depreciation of all items of property and equipment.
As a result of this change, segment income in“Department Store Business”,“PARCO Business”,“Wholesale Business”,“Credit Business”and“Other Businesses”increased by ¥83 million ($736 thousand), ¥1,294 million ($11,476 thousand),¥60 million ($532 thousand), ¥0 million ($0 thousand) and ¥15 million ($133 thousand), respectively, compared with theamounts that would have been recorded under the previous method.

43

(3)Net sales, income, assets, and other items by reportable segments
Reportable segment information for the years ended February 28, 2017 and February 29, 2016 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
2017
Reportable segments

Department
Store
Business

PARCO
Business¥727,028¥272,981¥38,764¥6,501¥63,236 ¥1,108,512¥– ¥1,108,512

966¥727,994¥24,592¥630,882

395¥273,377¥12,520¥279,573

8,527¥47,291¥1,529¥22,923

4,399¥10,900¥2,844¥48,441

34,33948,628¥97,575 ¥1,157,140¥2,881¥44,368¥114,470 ¥1,096,291(48,628)–¥ (48,628) ¥1,108,512¥211¥44,580¥(46,181) ¥1,050,109¥11,010¥5,353

¥196

¥5

¥803

¥17,370¥(181)¥17,189¥2,625

¥87

¥–

¥–

¥165

¥2,878¥23,405¥26,284¥22,741¥20,985

¥178

¥2

¥627

¥44,535¥(107)¥44,427

Wholesale
Business

CreditBusiness

Other
Businesses

Total

Adjustments Consolidated

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

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
2017
Reportable segments

Department
Store
Business

PARCO
Business

Wholesale
Business$6,448,141$2,421,117$343,804$57,658

8,567$6,456,709$218,110$5,595,405

3,503$2,424,629$111,042$2,479,583

75,627$419,432$13,560$203,308

39,015$96,674$25,223$429,631$97,649$47,476$1,738$44$7,121$154,057$(1,605)$152,452$23,281

$771

$–

$–

$1,463$25,525$207,583$233,117$201,694$186,119$1,578$17$5,560$394,988$ (949)$394,031

CreditBusiness

Other
Businesses

Total$560,851$9,831,592

304,558
431,290$865,410 $10,262,882$25,552$393,507$1,015,254 $9,723,201

Adjustments Consolidated$–$9,831,592(431,290)–$(431,290) $9,831,592$1,871$395,388$(409,587) $9,313,605

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 ¥211 million ($1,871 thousand) and ¥156 million include
eliminations of inter-segment transactions of ¥3,424 million ($30,368 thousand) and ¥2,862 million and corporate expenses
mainly recorded by the Company not attributable to any reportable segments of ¥3,213 million ($28,496 thousand) and¥3,018 million for the years ended February 28, 2017 and February 29, 2016, respectively.
The adjustments for segment assets in the amounts of ¥46,181 million ($409,587 thousand) and ¥37,461 million include
eliminations of inter-segment receivables of ¥85,829 million ($761,232 thousand) and ¥74,807 million, unrealized profit on
fixed assets of ¥1,457 million ($12,922 thousand) and ¥1,502 million, and assets of the Company, which are not attributable
to any reportable segments, of ¥40,399 million ($358,305 thousand) and ¥38,246 million as of February 28, 2017 andFebruary 29, 2016, respectively.
The adjustments for depreciation and amortization in the amounts of ¥181 million ($1,605 thousand) and ¥183 million forthe years ended February 28, 2017 and February 29, 2016, respectively, consist of inter-segment transfers.
The adjustments for investments in unconsolidated subsidiaries and affiliates accounted for by the equity method in theamounts of ¥23,405 million ($207,583 thousand) and ¥23,543 million as of February 28, 2017 and February 29, 2016,
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 ¥107 million ($949
thousand) and ¥273 million for the years ended February 28, 2017 and February 29, 2016, 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 28, 2017 and February 29, 2016 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 28, 2017 and February
29, 2016 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 28, 2017 and February 29, 2016.
(5)Loss on impairment of fixed assets
Loss on impairment of fixed assets by reportable segments for the years ended February 28, 2017 and February 29, 2016 issummarized as follows:

Department
Store Business¥270

Department
Store Business¥3,773

Department
Store Business$2,394

PARCO
Business¥2,296

Millions of yen
2017
Reportable segments
Wholesale
CreditOther
Business
Business
Businesses
¥–
¥–
¥90

PARCO
Business¥833

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

PARCO
Business$20,363

Thousands of U.S. dollars
2017
Reportable segments
Wholesale
CreditOther
Business
Business
Businesses
$–
$–
$798

Corporate andelimination¥2,657¥–

Total

Consolidated¥2,657

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

Total

Corporate andConsolidated
elimination$23,565$–$23,565

Total

Loss on impairment of fixed assets of ¥270 million ($2,394 thousand) recognized in the“Department Store Business”forthe year ended February 28, 2017 was due to the store closure of Daimaru Urawa PARCO store in Daimaru Matsuzakaya
Department Store Co., Ltd. and was included in loss on business liquidation in the consolidated statement of income.
Loss on impairment of fixed assets of ¥1,638 million ($14,527 thousand) recognized in the“PARCO Business”for the year
ended February 28, 2017 was due to the transfer of fixed assets and the store closure of Otsu PARCO in PARCO CO., LTD.
and was included in loss on business liquidation in the consolidated statement of income.
Loss on impairment of fixed assets of ¥3,773 million recognized in the“Department Store Business”for the year ended
February 29, 2016 was due to the reconstruction of main building of Shinsaibashi store in Daimaru Mastuzakaya
Deparetment Store Co., Ltd. and included in loss on store reconstruction in the consolidated statement of income.
The amounts in“Other Businesses”in the above table for the year ended February 29, 2016 included loss on impairment of
goodwill of ¥990 million.

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 28, 2017 and February 29, 2016 is as follows:

Amortizationof goodwill
Remainingbalance

Amortizationof goodwill
Remainingbalance

Amortizationof goodwill
Remainingbalance

Department
Store
Business

Millions of yen
2017
Reportable segments
PARCO
Business

Wholesale
Business

CreditBusiness

Other
Businesses

Total

Corporate andConsolidated
elimination

¥–

¥359

¥–

¥–

¥–

¥359

¥–

¥359

¥–

¥208

¥–

¥–

¥–

¥208

¥–

¥208

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

Thousands of U.S. dollars
2017
Reportable segments
PARCO
Business

Wholesale
Business

CreditBusiness

Other
Businesses

Total

Corporate andConsolidated
elimination$–$3,184$–$–$–$3,184$–$3,184$–$1,844$–$–$–$1,844$–$1,844

Goodwill 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 28, 2017, was approved at the meeting of the Board of Directors held on April
10, 2017:

Cash dividends(¥14.00 = $0.12 per share)(Millions of yen)(Thousands of
U.S. dollars)¥3,661$32,47047

48