annual report 2015 - mitsubishi logistics · 2015. 9. 24. · annual report 2015 year ended march...
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ANNUAL REPORT 2015Year ended March 31, 2015
Nihonbashi Dia Building 19-1 Nihonbashi, 1-chome Chuo-ku, Tokyo 103-8630, Japanhttp://www.mitsubishi-logistics.co.jp
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Company Profile (As of March 31, 2015)
Headquarters and Branches
Headquarters: Chuo-ku, Tokyo
Branches: Tokyo, Yokohama, Nagoya, Osaka, Kobe and Fukuoka
Date of Establishment April 15, 1887
Capital ¥22,393,986,570
Number of Shares Issued 175,921,478
Authorized Shares 440,000,000
Number of Employees 845 persons (parent only; not including 145 employees temporarily on loan to other companies. There are also 118 temporary employees, as well as 564 persons temporarily loaned or dispatched within the Group and those from outside the Group companies and accepted by the Company.)
4,452 persons (on a consolidated basis; not including 64 employees temporarily on loan to companies outside the Group. There are also 1,375 temporary employees, as well as 992 persons temporarily loaned or dispatched from outside the Group companies and accepted by the Company.)
Stock Exchange Listing First Section of the Tokyo Stock Exchange
Securities Code 9301
Major ShareholdersShareholder’s Name Number of Shares Held (Thousands) Shareholding Ratio (%)The Master Trust Bank of Japan, Ltd. (trust account) 13,715 7.8Japan Trustee Services Bank, Ltd. (trust account) 11,658 6.7Meiji Yasuda Life Insurance Company 9,707 5.5MITSUBISHI ESTATE CO., LTD. 7,331 4.2Kirin Holdings Company, Limited 5,932 3.4Tokio Marine & Nichido Fire Insurance Co., Ltd. 5,831 3.3The Bank of Tokyo-Mitsubishi UFJ, Ltd. 3,728 2.1BNP Paribas Securities (Japan) Limited 3,487 2.0ASAHI GLASS CO., LTD. 3,315 1.9Mitsubishi Corporation 3,205 1.8
Notes:1. The Bank of Tokyo-Mitsubishi UFJ, Ltd. has set 1,500,000 Mitsubishi Logistics’ shares as trust funds for retirement benefits for which voting rights are
reserved, in addition to the shares stated in the table above.2. The “Shareholding ratio” is calculated after excluding treasury stock (628,906 shares).
Notes:1. Directors with an asterisk (*) are representative directors.2. Minoru Makihara, Shigemitsu Miki and Koji Miyahara are Outside Directors as stipulated in the Companies Act, Article 2, Item 15. The Company designated them as
independent directors as required by the rules of the Tokyo Stock Exchange, and reported it to the Exchange.3. Yoshihito Yoshizawa, Yohnosuke Yamada and Kenji Sakurai are Outside Corporate Auditors as stipulated in the Companies Act, Article 2, Item 16. The Company designated
them as independent corporate auditors as required by the rules of the Tokyo Stock Exchange, and reported it to the Exchange.
Directors and Corporate Auditors (As of June 26, 2015)Position Name Responsibilities and/or Primary OccupationChairman of the Board Tetsuro OkamotoPresident* Akio MatsuiManaging Director Yuichi Hashimoto Responsible for Accounting & Financing, Information Systems and Internal Audit, and
General Manager, Information Systems DivisionManaging Director Yoshinori Watabe Responsible for International Transportation BusinessManaging Director* Masato Hoki Responsible for General Affairs, Corporate Communications, Personnel and PlanningManaging Director Kazuhiko Takayama Responsible for Warehousing & Distribution BusinessManaging Director Takanori Miyazaki Responsible for Technical, Harbor Transportation and Real Estate BusinessesDirector Minoru Makihara Senior Corporate Advisor, Mitsubishi CorporationDirector Shigemitsu Miki Senior Advisor, The Bank of Tokyo-Mitsubishi UFJ, Ltd.Director Koji Miyahara Board Counselor, Nippon Yusen Kabushiki KaishaDirector Yoshiji Ohara General Manager, Harbor Transportation DivisionDirector Yoichiro Hara General Manager, Yokohama BranchDirector Noboru Hiraoka General Manager, Warehousing & Distribution Business DivisionDirector Fumihiro Shinohara General Manager, General Affairs Division and Corporate Communications ChamberStanding Corporate Auditor Tohru WatanabeStanding Corporate Auditor Yoshihito YoshizawaCorporate Auditor Yohnosuke Yamada LawyerCorporate Auditor Shunkyo HaradaCorporate Auditor Kenji Sakurai Certified Public Accountant
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To Our Shareholders
Topics
Overview of the Mitsubishi Logistics Group
Independent Auditor’s Report
Consolidated Balance Sheets
Consolidated Statements Of Income
Consolidated Statements Of Comprehensive Income
Consolidated Statements Of Changes In Net Assets
Consolidated Statements Of Cash Flows
Notes To Consolidated Financial Statements
Company Pro�le
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We are obliged to you for your continued support and patronage.I hereby report the business overview of the Mitsubishi
Logistics Group for the 212th fiscal term (from April 1, 2014, to March 31, 2015).
During the year under review, the global economy was characterized by a steady economic recovery in the United States and a continued recovery trend in Europe despite the deceleration of growth in emerging countries such as China. The Japanese economy showed a continued moderate recovery, reflecting solid consumer spending and signs of a recovery in exports and production.
In these economic conditions, the business environment surrounding the Group remained difficult in the business segments of “Logistics” and “Real Estate.” For Logistics, the warehousing and port and harbor operations businesses were adversely affected mainly by the sluggish growth in freight volume and intensifying competition. For Real Estate, the previous decline in the rent level for rental office buildings has not fully recovered, although signs of an improvement in the supply and demand of such buildings were seen.
Under these circumstances, the Mitsubishi Logistics Group promoted aggressive marketing activities. In Logistics, we strove to extend distribution center operations, especially for pharmaceuticals, and expand and reinforce operational bases overseas. In Real Estate, we focused our efforts on securing good tenants, and maintaining and improving rent levels. We also proceeded with construction of the Nihonbashi Dia Building, a disaster-resistant and eco-friendly high-rise office building, in Nihonbashi, Tokyo, and it was completed and started operation in September 2014. Meanwhile, we endeavored to further improve business performance via thorough cost management and efficiency improvement of business operations by implementing a new logistics information system and other measures.
As a result, combined revenue for the year under review amounted to ¥204,362 million, an increase of ¥6.2 billion, or 3.1%, from the previous fiscal year. Although there was a concern about the effect of the reactionary decline to the rush in demand before the consumption tax hike on Logistics, the freight handled increased in each business of warehousing, trucking, port and harbor operations and international transportation. In Real Estate, while mainly the Kobe Harborland commercial facility complex “umie” contributed to revenue, revenue decreased because of a decline in demand for office buildings and a decrease in condominiums sold. Cost of services overall increased ¥6,284 million, or 3.6%, year over year to ¥183,226 million. In Logistics, operational and transportation consignment costs and other costs increased as the freight handled increased. In Real Estate, depreciation accompanying the start of operation of the Nihonbashi Dia Building and temporary expenses including real estate acquisition tax increased cost of services, despite an absence of temporary expenses associated with the opening of the Kobe Harborland commercial facility complex “umie” and other facilities, which had been posted for the previous term, and a decrease in real estate sales costs as sales of condominiums decreased. Selling, general and administrative expenses increased ¥615 million, or 6.8%, year over year to ¥9,686 million due to the posting of temporary expenses for the Company’s headquarters office associated with the start of operation of the Nihonbashi Dia Building.
As a consequence, operating income decreased ¥699 million, or 5.8%, year over year to ¥11,449 million, reflecting the rise in operating income for the Logistics segment and the fall in the Real Estate segment. However, ordinary income increased ¥342 million, or 2.4%, to ¥14,456 million due to an increase in dividend income and equity in earnings of unconsolidated subsidiaries and affiliates. Consolidated net income increased ¥613 million, or 7.2%, to ¥9,133 million from the previous fiscal
year due to a decrease in income taxes payable because the effective statutory tax rate was lowered for the fiscal year under review.
With respect to the prospect of the world economy, a steady economic recovery is predicted to continue in the United States, while European economies gradually head toward recovery, and in emerging countries such as China, moderate economic expansion is expected to continue. Concerning the Japanese economy, a moderate recovery is predicted, supported by continuous improvements in the employment and income environments and the effects of various government policies.
In this economic climate, concerning the business environment surrounding the Group, harsh business conditions will continue with intensifying competition in Logistics, mainly in the warehousing and port and harbor operations industries, although a moderate increase in freight volume is projected. In the Real Estate business segment, although an improvement in supply and demand for rental office buildings is expected, it will take more time to achieve a full-scale recovery of rent levels in the real estate industry.
Under these circumstances, the Mitsubishi Logistics Group will strive for sustainable growth by further expanding its logistics businesses in response to globalization and the real estate business with an emphasis on building leases in line with the Medium-Term Management Plan (2013–2015), which covers three years beginning fiscal 2013.
As for the distribution of profits of Mitsubishi Logistics for the fiscal year ended March 31, 2015, we intend to distribute a year-end dividend of ¥6 per share, the same amount as the interim dividend, taking into account operating results for the year. As a result, the annual dividend per share, including the interim dividend of ¥6 per share, totals ¥12, the same as for the previous fiscal year.
As for dividends for the fiscal year ending March 31, 2016, based on the basic dividend policy of stably distributing dividends with due regard to the profitability level, the interim dividend and the year-end dividend will be ¥6 per share, respectively, and the annual dividend per share therefore will be ¥12, unless any exceptional circumstances take place.
We look forward to your continued support and encouragement.
June 2015
Akio Matsui, President
To Our Shareholders
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Topics
Expansion and Reinforcement of Our Overseas Logistics Business
The Company has a basic strategy to expand and reinforce its domestic/overseas
integrated logistics business under the Medium-Term Management Plan (2013–
2015) and is accelerating its business development focusing on the United States,
China and Southeast Asia, where growth is projected, harnessing the Group’s
strengths.
1. Expansion and Reinforcement of the Warehouse and Distribution
Network in China
In China, where increasing domestic consumption is boosting demand for
distribution centers in major cities, demand is rising mainly from Japanese
manufacturers for Japanese-standard logistic services even in China.
The Mitsubishi Logistics Group is reinforcing its warehouse and
distribution network in China. By utilizing the know-how of high-quality
logistics services nurtured in Japan, it has been developing distribution
centers for household appliances, office equipment, pharmaceuticals, auto
parts, and other products in various locations in China.
Currently, we are operating warehousing & distribution centers at
locations that are the core of logistics such as Beijing, Shanghai,
Guangzhou, Chengdu and Wuhan, the aggregate area of which exceeds
200,000 m2. With these warehousing & distribution centers as our operational bases, we installed a truck distribution network that
connects various locations in China, thereby establishing a system to provide logistics services not simply at each separate “point”
but as a “plane” where all service areas are connected.
In addition, not only to strengthen our logistics business inside China, but also to further expand our international transportation
business that connects various locations in China with those around the world using marine and air freight services, we are
expanding operational bases and strengthening logistics functions. Mitsubishi Logistics China Co., Ltd., the Company’s subsidiary
located in Shanghai that controls the Group’s logistics operations in China, formulates overall strategies for our businesses in China
and promotes strengthening of sales capability under the Company’s brand and improvement of the efficiency of management and
administration.
The Group will strive to expand and reinforce its logistics business, addressing demand for logistics services in China, where
economic growth will continue.
Chengdu
Xi’an
Beijing Dalian
Shandong province
Shanghai
Wuhan
Hong KongGuangzhou
Shenzhen
Fujian province
Zhejiang province
Jiangsu province
The Mitsubishi Logistics network within China (The blue line indicates the core line
transportation network of the Group.)
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2. Acquired a Warehouse in the United States
Mitsubishi Logistics America Corporation (“MLA”), a wholly owned
subsidiary of Mitsubishi Logistics Corporation, acquired a warehouse
near Los Angeles in March 2015 to address an increase in import
freight against the backdrop of a favorable U.S. economy. The acquired
warehouse “Los Angeles Distribution Center of Mitsubishi Logistics
America Corporation (the “Warehouse”)” started operation in April
2015.
Conveniently located midway between the Los Angeles
International Airport and Port of Long Beach, California, with good
access to nearby highway interchanges, the Warehouse is mainly for
the operation of a distribution center for made-in-Japan household
appliance products and MLA’s Los Angeles Branch has moved into its
office area.
Upon acquisition of the Warehouse and the start of operation, MLA, which previously operated mainly the international
transportation business, will further expand and reinforce its logistics service including storage operation. In alliance with
Mitsubishi Warehouse California Corporation, the Company’s wholly owned subsidiary which mainly operates warehousing, MLA
will continue to focus on the Group’s logistics business in the United States.
Los Angeles Distribution Center of Mitsubishi Logistics America Corporation
Outline of the Los Angeles Distribution Center of Mitsubishi Logistics America Corporation …………………………
(1) Location: Torrance, CA, USA(2) Total floor area: approximately 13,200 m² (One-story building including a partial two-story area)(3) Completion: November 2013(4) Purpose: Household appliance products distribution center, storage of chemical fiber products
Participated in Kumano Ryo (Dormitory) for Employees of Kyoto University Development and Management Project
The Company received a work order for an entire project to develop and manage
the Kumano Ryo (dormitory) for employees of Kyoto University as a public-
private partnership (PPP) project by the university. This project is to construct a
dorm for university employees within the premises owned by Kyoto University
located in Sakyo-ku, Kyoto, and manage the dorm.
The construction is scheduled to start in April 2016 and be completed in
February 2017, and dorm management will start in March 2017.
To expand businesses other than building leasing, which is one of the basic
strategies under the Medium-Term Management Plan (2013–2015), the Company
is proactively expanding businesses in the PPP project field.
This is the Company’s third business in the PPP project field following the
development and management project of a dorm for Kanagawa Police employees,
for which dorm management started in 2013, and the development and
management project of the campus of the University of Electro-Communications
commemorating the 100th anniversary of the university, for which the campus
management will start in April 2017.
The Company intends to expand businesses in the PPP project field, drawing on experience and actual business results nurtured
through these projects.
Image of completed dorm
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Overview of the Mitsubishi Logistics Group (As of March 31, 2015)
Mitsubishi Logistics Corporation
Logistics
Consolidated Subsidiaries (50 companies)
Subsidiaries and Af�liates Accounted for by the Equity Method (3 companies)
Real Estate
Tohoku Ryoso Transportation Co., Ltd.Sairyo Service Co., Ltd.Dia Pharmaceutical Network Co., Ltd.Tokyo Dia Service Co., Ltd.Dia Systems CorporationRyoso Transportation Co., Ltd.Unitrans Ltd.Keihin Naigai Forwarding Co., Ltd.Touryo Kigyo Co., Ltd.Fuji Logistics Co., Ltd.Tokyo Juki Transport Co., Ltd.SII Logistics Inc.Fuji Logistics Operations Co., Ltd.Fuji Logistics Support Co., Ltd.Kinko Service Co., Ltd.Chubu Trade Warehousing Co., Ltd.Meiryo Kigyo Co., Ltd.Ryoyo Transportation Co., Ltd.Kyokuryo Warehouse Co., Ltd.Hanryo Kigyo Co., Ltd.Shinryo Koun Co., Ltd.Naigai Forwarding Co., Ltd.Kyushu Ryoso Transportation Co., Ltd.Monryo Transport CorporationHakuryo Koun Co., Ltd.Seiho Kaiun Kaisha., Ltd.Saryo Service Co., Ltd.Mitsubishi Logistics America CorporationMitsubishi Warehouse California CorporationMitsubishi Logistics Europe B.V.Fuji Logistics Europe B.V.Mitsubishi Logistics China Co., Ltd.Shanghai Linghua Logistics Co., Ltd.Shanghai Qingke Warehouse Management Co., Ltd.Fuji Logistics (China) Co., Ltd.Fuji Logistics (Dalian F.T.Z.) Co., Ltd.Fuji Logistics (Shanghai) Co., Ltd.Mitsubishi Logistics Hong Kong Ltd.Fuji Logistics (H.K.) Co., Ltd.Mitsubishi Logistics Thailand Co., Ltd.P.T. Mitsubishi Logistics IndonesiaFuji Logistics Malaysia SDN. BHD.
Dia Buil-Tech Co., Ltd.Yokohama Dia Building Management CorporationChubo Kaihatsu Co., Ltd.Nagoya Dia Buil-Tech Co., Ltd.Osaka Dia Buil-Tech Co., Ltd.Kobe Dia Service Co., Ltd.Kobe Dia Maintenance Co., Ltd.T’ACT Co., Ltd.
Nippon Container Terminals Co., Ltd.Kusatsu Soko Co., Ltd.Jupiter Global Limited
Major BusinessesLogistics:Warehousing and Distribution: Storage of outsourced cargo in warehouses and bringing in/delivery thereof
to/from warehouses by cargo handlingTrucking: Transportation using trucksPort and harbor operations: Coastal and in-vessel cargo handling at ports and harborsInternational transportation: Handling of international freight deliveries (including marine freight
transportation in Japan)
Real Estate: Buying, selling, leasing and management of real estate, as well as contracting of construction work, and design and supervision thereof
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Consolidated Balance Sheets
The accompanying notes are an integral part of these statements.
March 31, March 31,
ASSETS 2015 2014 2015(Millions of yen) (Thousands of U.S. dollars)
(Note 1)
CURRENT ASSETS:
Cash and deposits (Notes 2 and 3) ¥ 38,493 ¥ 35,523 $ 320,321
Marketable securities (Notes 2, 3 and 4) 6,600 7,600 54,922
Notes and accounts receivable (Notes 3 and 5) 35,600 33,477 296,247
Allowance for doubtful accounts (82) (86) (682)
35,518 33,391 295,565
Real estate held for sale 6,040 6,004 50,262
Deferred income taxes (Note 6) 1,906 1,872 15,861
Other (Note 2) 1,963 1,708 16,335
TOTAL CURRENT ASSETS 90,520 86,098 753,266
PROPERTY AND EQUIPMENT (Notes 8, 9, 13 and 15):
Land 73,861 71,349 614,638
Buildings and structures 364,778 346,662 3,035,516
Machinery and equipment 34,738 33,288 289,074
Transportation equipment 8,086 7,927 67,287
Construction in progress 1,334 5,144 11,101
482,797 464,370 4,017,616
Accumulated depreciation (282,192) (274,010) (2,348,273)
NET PROPERTY AND EQUIPMENT 200,605 190,360 1,669,343
INVESTMENTS AND OTHER ASSETS:
Investments in unconsolidated subsidiaries and affiliates 8,485 7,633 70,608
Investments in securities (Notes 3, 4 and 9) 108,955 87,362 906,674
Long-term loans receivable 510 545 4,244
Intangible assets 14,675 14,388 122,119
Goodwill 1,925 2,147 16,019
Deferred income taxes (Note 6) 2,461 2,858 20,479
Other 4,929 4,870 41,017
Allowance for doubtful accounts (23) (22) (191)
TOTAL INVESTMENTS AND OTHER ASSETS 141,917 119,781 1,180,969
¥ 433,042 ¥ 396,239 $ 3,603,578
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The accompanying notes are an integral part of these statements.
LIABILITIES AND NET ASSETS March 31, March 31,
2015 2014 2015(Millions of yen) (Thousands of U.S. dollars)
(Note 1)
CURRENT LIABILITIES:
Short-term bank loans and current maturities of long-term
debt (Notes 3, 9 and 10) ¥ 25,043 ¥ 24,448 $ 208,396
Notes and accounts payable (Notes 3, 5 and 10) 28,065 25,678 233,544
Income taxes payable 2,795 3,122 23,259
Other (Notes 6 and 9) 3,410 3,357 28,377
TOTAL CURRENT LIABILITIES 59,313 56,605 493,576
LONG-TERM LIABILITIES:
Long-term debt, less current maturities (Notes 3, 9 and 10) 51,265 47,715 426,604
Deposits on long-term leases (Notes 3, 5 and 9) 22,972 22,443 191,163
Retirement benefits (Note 11) 13,766 16,125 114,554
Deferred income taxes (Note 6) 22,125 16,079 184,114
Other (Note10) 512 630 4,261
TOTAL LONG-TERM LIABILITIES 110,640 102,992 920,696
TOTAL LIABILITIES 169,953 159,597 1,414,272
CONTINGENT LIABILITIES (Notes 14)
NET ASSETS
SHAREHOLDERS’ EQUITY:
Common stock
authorized – 440,000,000 shares,
issued – 175,921,478 shares, 22,394 22,394 186,353
Capital surplus 19,618 19,618 163,252
Retained earnings 164,905 157,686 1,372,264
Treasury stock (784) (747) (6,524)
TOTAL SHAREHOLDERS’ EQUITY 206,133 198,951 1,715,345
ACCUMULATED OTHER COMPREHENSIVE INCOME
Net unrealized holding gains on securities 51,994 35,044 432,670
Foreign currency translation adjustments 2,300 957 19,140
Remeasurements of defined benefit plans 129 (551) 1,073
TOTAL ACCUMULATED OTHER COMPREHENSIVE INCOME 54,423 35,450 452,883
MINORITY INTERESTS 2,533 2,241 21,078
TOTAL NET ASSETS 263,089 236,642 2,189,306
¥ 433,042 ¥ 396,239 $ 3,603,578
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Consolidated Statements Of Income
The accompanying notes are an integral part of these statements.
Year ended March 31, Year ended March 31,
2015 2014 2013 2015(Millions of yen) (Thousands of U.S. dollars)
(Note 1)
REVENUE ¥ 204,362 ¥ 198,162 ¥ 192,261 $ 1,700,607
COST OF SERVICES 183,227 176,942 170,901 1,524,731
Gross profit 21,135 21,220 21,360 175,876
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 9,686 9,072 9,055 80,603
Operating income 11,449 12,148 12,305 95,273
OTHER INCOME (EXPENSES):
Interest and dividend income 2,517 2,141 2,138 20,945
Interest expense (769) (777) (763) (6,399)
Gain on sale of marketable securities and investments
in securities2,107 1,917 51 17,533
Gain (loss) on revaluation of marketable securities and
investments in securities69 (13) (92) 574
Loss on disposal of property and equipment, net (1,018) (880) (769) (8,471)
Impairment loss (Note13) (727) – – (6,050)
Equity in earnings of unconsolidated subsidiaries and
affiliates487 186 372 4,053
Indemnity income of exiting facilities for lease (Note 12) 35 18 37 291
Other, net (Note 11) 701 (338) 443 5,834
3,402 2,254 1,417 28,310
Income before income taxes and minority interests 14,851 14,402 13,722 123,583
INCOME TAXES (Note 6)
Current 5,078 5,289 4,922 42,257
Deferred 489 430 123 4,069
5,567 5,719 5,045 46,326
Income before minority interests 9,284 8,683 8,677 77,257
MINORITY INTERESTS IN EARNINGS OF
CONSOLIDATED SUBSIDIARIES (150) (162) (86) (1,248)
NET INCOME ¥ 9,134 ¥ 8,521 ¥ 8,591 $ 76,009
AMOUNTS PER SHARE: Yen U.S. dollars (Note 1)
Net income ¥ 52.12 ¥ 48.62 ¥ 49.02 $ 0.43
Cash dividends applicable to the year ¥ 12.00 ¥ 12.00 ¥ 12.00 $ 0.10
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Year ended March 31, Year ended March 31,
2015 2014 2013 2015(Millions of yen) (Thousands of U.S. dollars)
(Note 1)
INCOME BEFORE MINORITY INTERESTS ¥ 9,284 ¥ 8,683 ¥ 8,677 $ 77,257
OTHER COMPREHENSIVE INCOME:
Net unrealized holding gains on securities 16,976 686 8,772 141,267
Foreign currency translation adjustments 1,118 1,803 858 9,303
Remeasurements of defined benefit plans, net of tax 681 – – 5,667
Share of other comprehensive income of affiliates
accounted for using the equity method364 366 179 3,029
Total other comprehensive income (Note 7) 19,139 2,855 9,809 159,266
COMPREHENSIVE INCOME (Note 7) ¥ 28,423 ¥ 11,538 ¥ 18,486 $ 236,523
Comprehensive income attributable to:
Comprehensive income attributable to owners of the parent ¥ 28,107 ¥ 11,273 ¥ 18,334 $ 233,893
Comprehensive income attributable to minority interests 316 265 152 2,630
The accompanying notes are an integral part of these statements.
Consolidated Statements Of Comprehensive Income
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Consolidated Statements Of Changes In Net Assets
The accompanying notes are an integral part of these statements.
Common Stock
Shares AmountCapitalsurplus
Retainedearnings
Treasurystock
Net unrealizedholding gainson securities
Foreign currency
translationadjustments
Remeasurementsof defined
benefit plansMinorityinterests
(Thousands of shares)
(Millions of yen)
Balance at March 31, 2012 175,921 ¥22,394 ¥19,618 ¥144,782 ¥(696) ¥25,634 ¥(2,128) ¥ – ¥1,932
Net income for the year – – – 8,591 – – – – –
Cash dividends – – – (2,104) – – – – –
Purchase of treasury stock – – – – (16) – – – –
Sale of treasury stock – – – – – – – – –
Changes other than to stockholders’
equity, net– – – – – 8,749 993 – 79
Balance at March 31, 2013 175,921 ¥22,394 ¥19,618 ¥151,269 ¥(712) ¥34,383 ¥(1,135) ¥ – ¥2,011
Net income for the year – – – 8,521 – – – – –
Cash dividends – – – (2,104) – – – – –
Purchase of treasury stock – – – – (35) – – – –
Sale of treasury stock – – 0 – 0 – – – –
Changes other than to stockholders’
equity, net– – – – – 661 2,092 (551) 230
Balance at March 31, 2014 175,921 ¥22,394 ¥19,618 ¥157,686 ¥(747) ¥35,044 ¥ 957 ¥(551) ¥2,241
Cumulative effects of changes in
accounting policies– – – 189 – – – – –
Restated balance at March 31, 2014 175,921 ¥22,394 ¥19,618 ¥157,875 ¥(747) ¥35,044 ¥ 957 ¥(551) ¥2,241
Net income for the year – – – 9,134 – – – – –
Cash dividends – – – (2,104) – – – – –
Purchase of treasury stock – – – – (37) – – – –
Sale of treasury stock – – – – – – – – –
Changes other than to stockholders’
equity, net– – – – – 16,950 1,343 680 292
Balance at March 31, 2015 175,921 ¥22,394 ¥19,618 ¥164,905 ¥(784) ¥51,994 ¥ 2,300 ¥ 129 ¥2,533
CommonStock
Capitalsurplus
Retainedearnings
Treasurystock
Net unrealizedholding gainson securities
Foreign currency
translationadjustments
Remeasurementsof defined
benefit plansMinorityinterests
(Thousands of U.S. dollars) (Note 1)
Balance at March 31, 2014 $186,353 $163,252 $1,312,191 $(6,216) $291,620 $ 7,964 $(4,585) $18,649
Cumulative effects of changes in
accounting policies– – 1,573 – – – – –
Restated balance at March 31, 2014 $186,353 $163,252 $1,313,764 $(6,216) $291,620 $ 7,964 $(4,585) $18,649
Net income for the year – – 76,009 – – – – –
Cash dividends – – (17,509) – – – – –
Purchase of treasury stock – – – (308) – – – –
Sale of treasury stock – – – – – – – –
Changes other than to stockholders’
equity, net– – – – 141,050 11,176 5,658 2,429
Balance at March 31, 2015 $186,353 $163,252 $1,372,264 $(6,524) $432,670 $19,140 $ 1,073 $21,078
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Consolidated Statements Of Cash Flows
The accompanying notes are an integral part of these statements.
Year ended March 31, Year ended March 31,
2015 2014 2013 2015(Millions of yen) (Thousands of U.S. dollars)
(Note 1)
CASH FLOWS FROM OPERATING ACTIVITIES:
Income before income taxes and minority interests ¥ 14,851 ¥ 14,402 ¥ 13,722 $ 123,583
Depreciation and amortization 13,389 12,517 12,098 111,417
Impairment loss 727 – – 6,050
Increase (decrease) in retirement benefits (2,309) 57 (558) (19,214)
Loss (gain) on revaluation of marketable
securities and investments in securities(69) 5 96 (574)
Gain on sales of marketable securities and
investments in securities(2,107) (1,914) (51) (17,533)
Loss on disposal of property and equipment 348 244 93 2,896
Equity in earnings of unconsolidated subsidiaries and
affiliates(487) (186) (372) (4,053)
Interest and dividend income (2,517) (2,141) (2,138) (20,945)
Interest expense 769 777 763 6,399
Decrease (increase) in notes and accounts receivable (1,736) 621 10,608 (14,447)
Decrease (increase) in real estate held for sale (36) 320 (3,826) (300)
Increase (decrease) in notes and accounts payable 1,548 (1,158) (1,057) 12,882
Increase (decrease) in deposits payable 590 (36) (5,177) 4,910
Other, net 1,313 (856) (626) 10,926
Subtotal 24,274 22,652 23,575 201,997
Interest and dividend income received in cash 2,605 2,254 2,198 21,678
Interest expense paid in cash (774) (750) (743) (6,441)
Income taxes paid in cash (5,414) (4,455) (5,478) (45,053)
NET CASH PROVIDED BY OPERATING ACTIVITIES 20,691 19,701 19,552 172,181
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash investment in time deposits (1,508) (1,048) (665) (12,549)
Cash return from time deposits 1,628 604 702 13,547
Acquisition of property and equipment (23,765) (25,166) (14,002) (197,762)
Proceeds from sales of property and equipment 95 218 157 791
Acquisition of marketable securities and
investments in securities(366) (844) (780) (3,046)
Proceeds from sales of marketable securities and
investments in securities3,349 3,406 128 27,869
Acquisition of investments in subsidiaries – (322) – –
Acquisition of investments in subsidiaries
resulting in change in scope of consolidation– – (2,599) –
Payments for sales of shares of subsidiaries resulting
in change in scope of consolidation– (7) – –
Other, net 4 14 546 34
NET CASH USED IN INVESTING ACTIVITIES (20,563) (23,145) (16,513) (171,116)
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The accompanying notes are an integral part of these statements.
Year ended March 31, Year ended March 31,
2015 2014 2013 2015(Millions of yen) (Thousands of U.S. dollars)
(Note 1)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term bank loans ¥ 8,048 ¥ 9,972 ¥ 2,170 $ 66,972
Repayments of short-term bank loans (9,255) (1,985) (3,772) (77,016)
Proceeds from long-term debt 11,767 1,294 9,976 97,920
Repayments of long-term debt (1,473) (5,202) (4,193) (12,258)
Issue of bonds – 10,000 – –
Redemption of bonds (5,000) – – (41,608)
Dividends paid (2,104) (2,104) (2,105) (17,509)
Other, net (344) (340) (315) (2,862)
NET CASH PROVIDED BY
FINANCING ACTIVITIES1,639 11,635 1,761 13,639
Effect of exchange rate changes on cash and cash equivalents 273 584 245 2,271
NET INCREASE IN CASH AND CASH EQUIVALENTS 2,040 8,775 5,045 16,975
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR (Note 2)41,237 32,462 27,417 343,156
CASH AND CASH EQUIVALENTS AT END OF YEAR (Note 2) ¥43,277 ¥41,237 ¥32,462 $360,131
Consolidated Statements Of Cash Flows
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BASIS OF PRESENTING CONSOLIDATED FINANCIAL
STATEMENTS
The accompanying consolidated financial statements of Mitsubishi Logistics Corporation (the “Company”) have been prepared in accordance with the provisions set forth in the Japanese Financial Instruments and Exchange Law and its related accounting regulations, and in conformity with accounting principles generally accepted in Japan (“Japanese GAAP”), which are different in certain respects as to application and disclosure requirements of International Financial Reporting Standards.
The accompanying consolidated financial statements have been restructured and translated into English from the consolidated financial statements of the Company prepared in accordance with Japanese GAAP and filed with the appropriate Local Finance Bureau of the Ministry of Finance as required by the Japanese Financial Instruments and Exchange Law. Some supplementary information included in the statutory Japanese language consolidated financial statements, but not required for fair presentation, is not presented in the accompanying consolidated financial statements.
The translations of Japanese yen amounts into U.S. dollars are included solely for the convenience of readers outside Japan, using the prevailing exchange rate at March 31, 2015, which was ¥120.17 to U.S. $1. The convenience translations should not be construed as representations that the Japanese yen amounts have been, could have been, or could in the future be converted into U.S. dollars at this or any other rate of exchange.
CONSOLIDATION
In consolidation, all significant inter-company transactions, account balances and unrealized profits are eliminated. Differences between the acquisition costs and underlying net equities of investments in consolidated subsidiaries are recorded as goodwill in the consolidated balance sheets and amortized over 5 to 10 years on a straight-line basis. Any immaterial amounts are fully recognized as expenses as incurred. The effect on retained earnings and net income of unconsolidated subsidiaries and affiliates not accounted for by the equity method is immaterial to the consolidated financial statements, and investments therein are carried at cost after adjusting for any substantial and non-recoverable decline in value.
The Company holds 51% of voting rights in MLC ITL Logistics Company Limited, however, the other shareholders’ agreement is necessary to decide important policies on finance and trade. Therefore, the Company does not treat MLC ITL Logistics Company Limited as its subsidiary.
The numbers of consolidated subsidiaries and affiliates accounted for by the equity method at March 31, 2015, 2014 and 2013 were as follows:
March 31,
2015 2014 2013
Consolidated subsidiaries 50 50 51
Unconsolidated subsidiaries
and affiliates under the equity
method 3 3 3
CONSOLIDATED STATEMENTS OF CASH FLOWS
In preparing the consolidated statements of cash flows, cash on hand, readily-available deposits and short-term highly liquid investments with negligible risk of changes in value and maturities not exceeding six months at the time of purchase are considered to be cash and cash equivalents.
CONVERSION OF ASSETS AND LIABILITIES
DENOMINATED IN FOREIGN CURRENCIES
Receivables and payables denominated in foreign currencies are translated into Japanese yen at the year-end rates.
Gains or losses resulting from conversion are credited or charged to income as incurred.
DERIVATIVES AND HEDGE ACCOUNTING
The accounting standard for financial instruments requires companies to state derivative financial instruments at fair value and to recognize changes in fair value as gains and losses unless derivative financial instruments are used for hedging purposes.
If derivative financial instruments are used as hedges and meet certain hedging criteria, the Company and its consolidated subsidiaries defer recognition of gains and losses resulting from changes in fair value of derivative financial instruments until related gains and losses on the hedged items are recognized.
However, in cases where forward foreign exchange contracts are used as hedges and meet certain hedging criteria, forward foreign exchange contracts and hedged items are accounted for in the following manner.
(1) If a forward foreign exchange contract is executed to hedge an existing foreign currency receivable and payable,:(i) The difference, if any, between the Japanese yen
amount of the hedged foreign currency receivable or payable translated using the spot rate at the inception date of the contract and the book value of the receivable or payable is recognized in the statements of income in the period which includes the inception date; and
Notes To Consolidated Financial Statements
NOTE 1 – SUMMARY OF ACCOUNTING POLICIES
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(ii) The discount or premium on the contract (that is, the difference between the Japanese yen amount of the contract translated using the contracted forward rate and that translated using the spot rate at the inception date of the contract) is recognized over the term of the contract.
(2) If a forward foreign exchange contract is executed to hedge a future forecasted transaction denominated in foreign currency, the future transaction will be recorded using the contracted forward rate, and no gains or losses on the forward foreign exchange contract are recognized.Also, if interest rate swap contracts are used as hedges and
meet certain hedging criteria, the net amount to be paid or received under the interest rate swap contract is added to or deducted from the interest on the assets or liabilities for which the swap contract was executed.
The following summarizes hedging derivative financial instruments used by the Company and its consolidated subsidiaries and hedged items.
Hedging instruments: Foreign exchange contracts and interest rate swap contracts.
Hedged items: Foreign currency assets and liabilities and interest rates of bank loans.
The hedge effectiveness of foreign exchange contracts accounted for in the above manner and that of interest rate swaps meeting specific hedging criteria are not evaluated at the end of the period.
The Company and its consolidated subsidiaries use foreign exchange contracts and interest rate swap contracts for the purpose of managing the exposure to fluctuations in foreign currency exchange and interest rates of bank loans, respectively.
The Company and its consolidated subsidiaries do not enter into derivatives for speculative purposes.
TRANSLATION OF FOREIGN CURRENCY STATEMENTS
The balance sheets of overseas subsidiaries are translated into Japanese yen at the rate of exchange at the balance sheet date of the subsidiaries, which is December 31, 2014, except for shareholders’ equity accounts, which are translated based on historical rates. The year-end rate of the subsidiaries is also used for translation of income, expenses and net income for the year. The resulting translation adjustments are presented as “foreign currency translation adjustments” in the accompanying consolidated financial statements.
ALLOWANCE FOR DOUBTFUL ACCOUNTS
Allowance for notes and accounts receivable, including loans and other receivables, is determined by applying a percentage based on the actual rate of bad debts incurred in the past plus an amount based on individually estimated uncollectible receivables.
SECURITIES
Available-for-sale securities (see explanation (d) below) with available fair market values are stated at fair market value. Unrealized gains and unrealized losses on these securities are reported, net of applicable income taxes, as a separate component of net assets. Realized gains and losses on sale of such securities are computed using moving-average cost. Available-for-sale securities with no available fair value are stated at moving-average cost. Equity securities issued by unconsolidated subsidiaries and affiliates which are not consolidated or accounted for using the equity method are stated at moving-average cost.
Under the accounting standard for financial instruments, all companies are required to examine their intent for holding each security and classify those securities as (a) securities held for trading purposes (hereinafter, “Trading Securities”), (b) debt securities intended to be held to maturity (hereinafter, “Held-to-maturity Debt Securities”), (c) equity securities issued by subsidiaries and affiliates, and (d) all other securities that are not classified in any of the above categories (“Available-for-sale Securities”).
The Company and its consolidated subsidiaries only hold those securities classified as equity securities issued by subsidiaries and affiliates and Available-for-sale Securities.
If the market value of Available-for-sale Securities declines significantly, such securities are stated at fair market value, and the difference between fair market value and the book value is recognized as loss in the period of decline. For equity securities with no available fair market value, if the net asset value of the investee declines significantly, such securities are required to be written down to the net asset value with the corresponding losses recognized in the period of decline. In these cases, such fair market value or the net asset value will be the book value of the securities at the beginning of the next year.
REAL ESTATE HELD FOR SALE
Real estate held for sale is stated at cost determined using the specific identification cost method. In case the net selling value falls below the acquisition cost at the end of the period, real estate held for sale is carried at the net selling value on the balance sheet.
INCOME TAXES
Income taxes consist of corporation, enterprise and inhabitants taxes. Income taxes for recognition are computed based on the pretax income of the Company and each of its consolidated subsidiaries with certain adjustments required for consolidated and tax purposes. The asset and liability approach is used to recognize deferred tax assets and liabilities for loss carryforwards and expected future tax consequences of temporary differences between the book value and the tax bases of assets and liabilities. Valuation allowances are recorded to reduce deferred tax assets based on the assessment of realizability of tax benefits.
Notes To Consolidated Financial Statements
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DEPRECIATION
(1) Property and equipment
Property and equipment are stated at cost. Depreciation of depreciable assets, except for warehouse facilities (buildings) and leased commercial facilities (buildings), is computed on a declining- balance method over the estimated useful life based on the Corporate Income Tax Law of Japan. Depreciation of warehouse facilities (buildings) is computed on a straight-line method over the estimated useful life based on the Corporate Income Tax Law of Japan. Depreciation of leased commercial facilities (buildings) is computed on a straight-line method over the economic useful life of the assets (a 20-year period is considered to be the standard economic useful life, however, it varies depending on the contract terms, etc.).
The cost and accumulated depreciation applicable to assets retired or otherwise disposed of are eliminated from related accounts, and gains or losses on disposal is credited or charged to income. Expenditures for new facilities and those which substantially increase the useful life of existing property and equipment are capitalized. Maintenance, repair and minor renewal costs are charged to expense as incurred.
(2) Intangible assets
Intangible assets are amortized on a straight-line method.The capitalized computer software costs for internal use
are amortized on a straight-line method over the estimated useful life (over 5 to 10 years).
(3) Finance leases
Property and equipment capitalized under finance leases, except for finance leases which do not transfer ownership of the leased property to the lessee, are depreciated over the estimated useful life or the lease term of the respective assets.
ALLOWANCE FOR BONUSES FOR DIRECTORS
The Company provides allowance for bonuses for directors based on the estimated amounts of payment.
RETIREMENT BENEFITS AND PENSION PLAN
(1) Employees’ severance and retirement benefits
The Company and its consolidated subsidiaries have adopted defined benefit plans which include unfunded lump-sum payment plans and funded contributory defined benefit pension plans. Furthermore, the Company and its consolidated subsidiaries provide a defined contribution pension plan.
The Company and its consolidated subsidiaries provide allowance for employees’ severance and retirement benefits based on the estimated amounts of projected benefit obligation and the fair value of the plan assets at year-end. Some consolidated subsidiaries apply the simplified methods for the calculation of retirement benefit obligations and employees’ severance and retirement benefit expenses.
In calculating retirement benefit obligations, the method of attributing the projected benefit to the accounting period is based on the benefit formula basis. Actuarial gains and losses are recognized in statements of income using the straight-line method over 5 to 16 years, beginning from the fiscal year following the incurred year. Prior service costs are recognized in statements of income using the straight-line method over 5 to 15 years, beginning from the incurred year.
(Change in accounting policies)The Company and its domestic consolidated subsidiaries adopted Article 35 of the “Accounting Standard for Retirement Benefits” (ASBJ Statement No.26, May 17, 2012 (hereinafter, “Statement No.26”)) and Article 67 of the “Guidance on Accounting Standard for Retirement Benefits” (ASBJ Guidance No.25, March 26, 2015 (hereinafter, “Guidance No.25”)) from the current fiscal year, and have changed the determination of retirement benefit obligations and current service costs. In addition, the Company and its consolidated subsidiaries have changed the method of attributing the projected benefit to periods from the point basis and the straight-line basis to the benefit formula basis. Also, the duration of bonds, which is the determination basis of the calculation method used for the discount rate, has been changed from the determination method based on the approximate number of years of an employee’s average remaining service period to the method using the single weighted-average rate of discount that reflects the estimated period and amount of benefit payment in each period.
In accordance with Article 37 of Statement No.26, the effect of changing the determination of retirement benefit obligations and service costs has been recognized in retained earnings at the beginning of the current fiscal year.
As a result of the application, liability for retirement benefits decreased by ¥292 million ($2,430 thousand), and retained earnings increased by ¥189 million ($1,573 thousand).
The impact of these changes on operating income and income before income taxes and minority interests in the year ended March 31, 2015 was minimal. The impact on per share information in the year ended March 31, 2015 was also minimal.
(2) Officers’ severance and retirement benefits
Officers’ (directors and corporate statutory auditors) severing their connection with certain consolidated domestic subsidiaries on retirement are entitled to lump-sum retirement benefit payments based on pay rates, length of services and certain other factors.
Retirement benefits to officers of certain consolidated domestic subsidiaries are provided based on each entity’s rules.
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NET ASSETS
Under the Japanese Corporate Law (the “Law”) and regulations, the entire amount paid for new shares is required to be designated as common stock. However, a company may, by a resolution of the board of directors, designate an amount not exceeding one-half of the price of the new shares as additional paid-in capital, which is included in capital surplus in the accompanying consolidated balance sheets.
Under the Law, in cases where a dividend distribution of surplus is made, the smaller of an amount equal to 10% of the dividend or the excess, if any, of 25% of common stock over the total of additional paid-in capital and legal earnings reserve must be set aside as additional paid-in capital or legal earnings reserve. Legal earnings reserve is included in retained earnings in the accompanying consolidated balance sheets.
Under the Law, legal earnings reserve and additional paid-in capital could be used to eliminate or reduce a deficit or capitalized by a resolution at the shareholders’ meeting.
Additional paid-in capital and legal earnings reserve may not be distributed as dividends. Under the Law, all additional paid-in capital and all legal earnings reserve may be transferred to other capital surplus and retained earnings, respectively, which may potentially become available as dividends.
The maximum amount that the Company can distribute as dividends is calculated based on the non-consolidated financial statements of the Company in accordance with Japanese laws and regulations.
Appropriations are not accrued in the consolidated financial statements for the corresponding period, but are recorded in the subsequent accounting period after shareholders’ approval has been obtained.
Retained earnings at March 31, 2015 included amounts representing year-end cash dividends of ¥1,052 million ($8,754 thousand) at ¥6.0 ($0.05) per share, which were approved at the shareholders’ meeting held on June 26, 2015.
PER SHARE INFORMATION
Net income per share is computed based upon the weighted average number of shares outstanding during each fiscal year.
Cash dividends per share are presented on an accrual basis and include dividends to be approved after the balance sheet date, but applicable to the year then ended.
Information on diluted net income per share is not disclosed as no shares which dilute net income per share were outstanding for the years ended March 31, 2015, 2014 and 2013.
Notes To Consolidated Financial Statements
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1. CONDITIONS OF FINANCIAL INSTRUMENTS(1) Policy for using financial instruments
The Company and its consolidated subsidiaries raise necessary funds in accordance with their performance plans and capital investment plans mainly by bank loans or issuance of bonds. Temporary cash surplus, if any, are invested in highly-secured deposits, public bonds and corporate bonds. Derivatives are used not for speculative purposes but based on actual demand.
(2) Details of financial instruments used, risks and risk managementNotes and accounts receivable are exposed to credit risk of customers. Against such credit risk, the Company and its consolidated subsidiaries perform due date and balance controls for each customer in accordance with internal customer credit management rules and regularly screen customers’ credit status.
Stocks as investments in securities are subject to risk of changes in market price. They are mainly stocks issued by companies with which the Company and/or its consolidated subsidiaries have business relations. The Company and its consolidated subsidiaries ascertain the fair values of stocks at regular intervals, and the fair values are reported at each board of directors meeting.
The account derived from operating expenses, notes and accounts payable, is all settled within a year, and subject to risk of liquidity. The Company and its consolidated subsidiaries hedge such risk by timely reconsideration of monthly financial plans.
Short-term bank loans are obtained mainly for financing related to trade. Otherwise, long-term debts are obtained mainly for financing related to investments in property and equipment. Because long-term debts with floating interest rates are subject to risk of fluctuation of these rates, one consolidated subsidiary utilizes interest rate swap contracts as hedging instrument for each loan contract to attempt to avoid such risk found in long-term debts.
It is prescribed that approval by the manager of each entity’s finance section is necessary for execution and management of such derivative transaction in accordance with the Company’s policy on authorizing transactions, limiting the amount and others.
(3) Supplemental information on fair valuesFair values of financial instruments comprise values determined based on market prices and values determined reasonably when there is no market price available. Since variable factors are considered in computing the relevant fair values, such fair values may vary depending on different factors used.
NOTE 3 – FINANCIAL INSTRUMENTS
Reconciliation of cash and deposits in the consolidated balance sheets and cash and cash equivalents in the consolidated statements of cash flows as of March 31, 2015 and 2014 were as follows:
March 31, March 31,
2015 2014 2015(Millions of yen) (Thousands of U.S. dollars)
Cash and deposits ¥38,493 ¥35,523 $320,321
Time deposits with maturities over six months (1,817) (1,886) (15,120)
Money funds invested in bonds and domestic
certificates of deposits 6,600 7,600 54,922
Current assets other (money deposited) 1 0 8
Cash and cash equivalents ¥43,277 ¥41,237 $360,131
NOTE 2 – CASH AND CASH EQUIVALENTS
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2. FAIR VALUES OF FINANCIAL INSTRUMENTSBook values, on the consolidated balance sheets, fair values and differences between the two on as of March 31, 2015 and 2014 were as follows. Notably, items for which it is extremely difficult to determine the fair value were not included in the following table (see (Note 2)).
March 31, 2015 March 31, 2015
Bookvalue Fair value Difference
Bookvalue Fair value Difference
(Millions of yen) (Thousands of U.S. dollars)Assets
(1) Cash and deposits ¥ 38,493 ¥ 38,493 ¥ – $ 320,321 $ 320,321 $ –
(2) Notes and accounts receivable 32,570 32,570 – 271,033 271,033 –
(3) Marketable securities 6,600 6,600 – 54,922 54,922 –
(4) Investment in securities (available-for-sale securities) 107,785 107,785 – 896,938 896,938 –
¥185,448 ¥185,448 ¥ – $1,543,214 $1,543,214 $ –
Liabilities
(1) Notes and accounts payable ¥ 20,327 ¥ 20,327 ¥ – $ 169,152 $ 169,152 $ –
(2) Short-term bank loans 16,762 16,762 – 139,486 139,486 –
(3) Bonds *1 34,000 34,906 906 282,932 290,471 7,539
(4) Long-term loans payable *2 25,546 25,781 235 212,582 214,538 1,956
(5) Deposits on long-term leases 1,165 1,063 (102) 9,695 8,846 (849)
(6) Derivatives – – – – – –
¥ 97,800 ¥ 98,839 ¥ 1,039 $ 813,847 $ 822,493 $ 8,646
*1: Bonds include bonds due within one year.*2: Long-term loans payable include long-term loans payable due within one year.
March 31, 2014
Bookvalue Fair value Difference
(Millions of yen)Assets
(1) Cash and deposits ¥ 35,523 ¥ 35,523 ¥ –
(2) Notes and accounts receivable 30,748 30,748 –
(3) Marketable securities 7,600 7,600 –
(4) Investment in securities (available-for-sale securities) 86,137 86,137 –
¥160,008 ¥160,008 ¥ –
Liabilities
(1) Notes and accounts payable ¥ 18,916 ¥ 18,916 ¥ –
(2) Short-term bank loans 17,950 17,950 –
(3) Bonds *1 39,000 40,080 1,080
(4) Long-term loans payable *2 15,213 15,316 103
(5) Deposits on long-term leases 1,165 1,061 (104)
(6) Derivatives – – –
¥ 92,244 ¥ 93,323 ¥ 1,079
*1: Bonds include bonds due within one year.*2: Long-term loans payable include long-term loans payable due within one year.
Notes To Consolidated Financial Statements
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(Note 1) Calculation method of fair values of financial instruments and matters concerning securitiesAssets:(1) Cash and deposits (2) Notes and accounts receivable (3) Marketable securities
Relevant book values are used because the settlement term of the above items is short and their fair values approximate their book values.
(4) Investment in securities (Available-for-sale Securities)The fair values of stocks are determined using the quoted price at the stock exchange, and the fair values of bonds are
determined using the market price. Information on securities categorized by holding purpose is described in NOTE 4 (SECURITIES).
Liabilities:(1) Notes and accounts payable (2) Short-term bank loans
Relevant book values are used because the settlement term of the above items is short and their fair values approximate their book values.
(3) BondsThe fair values of bonds issued by the Company are calculated using the market price.
(4) Long-term loans payableLong-term loans payable with floating interest rates require that the interest rates be amended at certain periods of
time. Thus, relevant book values are used because their fair values approximate their book values. Long-term loans payable with fixed interest rates are calculated using the present value of the amount of principal and interest discounted using the current borrowing rate for similar loans of comparable maturity.
A part of the long-term loans payable with floating interest rates is subject to special treatment of interest rate swaps (See NOTE 16). Thus, the fair values of such long-term loans payable are calculated by discounting the total amount of principal and interest that have been recorded together with said interest rate swap by an interest rate that would reasonably be estimated to apply to a similar loan.
(5) Deposits on long-term leasesDeposits on long-term leases are calculated by the present value of future cash flows discounted using a risk free rate.
(6) DerivativesInformation on this item is described in NOTE 16 (DERIVATIVE TRANSACTIONS).
(Note 2) Book value of financial instruments on the consolidated balance sheets for which it is extremely difficult to determine the fair value
March 31, March 31,
2015 2014 2015(Millions of yen) (Thousands of U.S. dollars)
Non-listed stocks and others *1 ¥ 9,147 ¥ 8,447 $ 76,117
Deposits on long-term leases *2 21,807 21,278 181,468
*1 Non-listed stocks are not included in “ investment in securities (available-for-sale securities)” under “assets” because they have no market price and their fair values are extremely difficult to measure. Unconsolidated subsidiary stocks and affiliate stocks are included.*2 Deposits on long-term leases are not included in “deposits on long-term leases” under “liabilities” because their future cash flows cannot be estimated and their fair values are extremely difficult to measure.
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(Note 3) The redemption schedule for monetary claims and securities with contractual maturities
March 31, 2015Millions of yen
One year or less
One to five years
Five to ten years
Over ten years
Cash and deposits ¥38,493 ¥ – ¥ – ¥ –
Notes and accounts receivable 32,569 – – –
Marketable securities (certificate of deposits) 6,600 – – –
Investment in securities
Available-for sale securities with maturities (public bonds) 18 – – –
¥77,680 ¥ – ¥ – ¥ –
March 31, 2014Millions of yen
One year or less
One to five years
Five to ten years
Over ten years
Cash and deposits ¥35,523 ¥ – ¥ – ¥ –
Notes and accounts receivable 30,748 – – –
Marketable securities (certificate of deposits) 7,600 – – –
Investment in securities
Available-for sale securities with maturities (public bonds) 15 18 – –
¥73,886 ¥18 ¥ – ¥ –
March 31, 2015Thousands of U.S. dollars
One year or less
One to five years
Five to ten years
Over ten years
Cash and deposits $320,321 $ – $ – $ –
Notes and accounts receivable 271,033 – – –
Marketable securities (certificate of deposits) 54,922 – – –
Investment in securities
Available-for sale securities with maturities (public bonds) 142 – – –
$646,418 $ – $ – $ –
Notes To Consolidated Financial Statements
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(Note 4) Repayment schedule of short-term loans, bonds, long-term loans and deposits on long-term leases
March 31, 2015Millions of yen
One year or less
One to two years
Two to three years
Three to four years
Four to five years
Over five years
Short-term loans ¥16,762 ¥ – ¥ – ¥ – ¥ – ¥ –
Bonds 7,000 – – 7,000 5,000 15,000
Long-term loans 1,281 5,022 10,197 1,384 5,468 2,194
Deposits on long-term leases – – – – – 1,165
¥25,043 ¥5,022 ¥10,197 ¥8,384 ¥10,468 ¥18,359
March 31, 2014Millions of yen
One year or less
One to two years
Two to three years
Three to four years
Four to five years
Over five years
Short-term loans ¥17,950 ¥ – ¥ – ¥ – ¥ – ¥ –
Bonds 5,000 7,000 – – 7,000 20,000
Long-term loans 1,498 1,143 5,289 4,666 1,269 1,348
Deposits on long-term leases – – – – – 1,165
¥24,448 ¥8,143 ¥5,289 ¥4,666 ¥8,269 ¥22,513
March 31, 2015Thousands of U.S. dollars
One year or less
One to two years
Two to three years
Three to four years
Four to five years
Over five years
Short-term loans $139,486 $ – $ – $ – $ – $ –
Bonds 58,250 – – 58,251 41,608 124,823
Long-term loans 10,660 41,791 84,855 11,517 45,502 18,257
Deposits on long-term leases – – – – – 9,695
$208,396 $41,791 $84,855 $69,768 $87,110 $152,775
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At March 31, 2015, acquisition costs, book values stated at fair values and net unrealized holding gains (losses) of Available-for-sale Securities were as follows:
March 31, 2015 March 31, 2015
Bookvalue
Acquisition cost
Unrealized holdinggains
(losses)Bookvalue
Acquisition cost
Unrealized holdinggains
(losses)(Millions of yen) (Thousands of U.S. dollars)
Securities with book values exceeding
acquisition costs:
Stocks ¥107,588 ¥30,616 ¥76,972 $895,298 $254,772 $640,526
Bonds 18 18 0 150 150 0
Other – – – – – –
107,606 30,634 76,972 895,448 254,922 640,526
Other securities:
Stocks 180 184 (4) 1,498 1,531 (33)
Bonds – – – – – –
Other – – – – – –
180 184 (4) 1,498 1,531 (33)
¥107,786 ¥30,818 ¥76,968 $896,946 $256,453 $640,493
Non-listed stocks and others (book value being ¥1,196 million ($9,953 thousand)) were not included in the above list because their fair values are extremely difficult to estimate (due to lack of market price and inability to estimate their future cash flows).
In the year ended March 31, 2015, the amounts of sale, related gains and related losses of Available-for-sale Securities were as follows:
March 31, 2015 March 31, 2015
Amount of sale
Relatedgains
Related losses
Amount of sale
Relatedgains
Related losses
(Millions of yen) (Thousands of U.S. dollars)
Stocks ¥3,334 ¥2,107 ¥ – $27,744 $17,533 $ –
Bonds 15 – – 125 – –
Other – – – – – –
¥3,349 ¥2,107 ¥ – $27,869 $17,533 $ –
NOTE 4 – SECURITIES
Notes To Consolidated Financial Statements
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At March 31, 2014, acquisition costs, book values stated at fair values and net unrealized holding gains (losses) of Available-for-sale Securities were as follows:
March 31, 2014
Bookvalue
Acquisitioncost
Unrealized holdinggains
(losses)(Millions of yen)
Securities with book values exceeding acquisition costs:
Stocks ¥83,807 ¥28,998 ¥54,809
Bonds 32 32 0
Other – – –
83,839 29,030 54,809
Other securities:
Stocks 2,298 2,587 (289)
Bonds – – –
Other – – –
2,298 2,587 (289)
¥86,137 ¥31,617 ¥54,520
Non-listed stocks and others (book value being ¥1,271 million ($12,349 thousand)) were not included in the above list because their fair values are extremely difficult to estimate (due to lack of market price and inability to estimate their future cash flows).
In the year ended March 31, 2014, the amounts of sale, related gains and related losses of Available-for-sale Securities were as follows:
March 31, 2014
Amount of sale
Relatedgains
Relatedlosses
(Millions of yen)
Stocks ¥3,377 ¥1,917 ¥3
Bonds 29 – –
Other – – –
¥3,406 ¥1,917 ¥3
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NOTE 6 – INCOME TAXES
The Company and its consolidated subsidiaries are subject to a number of different income taxes which, in the aggregate, reflected a statutory tax rate of approximately 36% for 2015 and 38% for 2014 and 2013.
Reconciliations between the statutory tax rate and the effective tax rate for the years ended March 31, 2015, 2014 and 2013 were as follows:
March 31,
2015 2014 2013
Statutory tax rate 35.6% – –
Entertainment expense, etc.
not deductible for Japanese tax purposes1.1 – –
Dividends, etc.
not taxable for Japanese tax purposes(2.8) – –
Inhabitant taxes 0.7 – –
Equity in earnings of unconsolidated
subsidiaries and affiliates(1.2) – –
Write-down of deferred income tax assets at end of period due to
tax rate changes4.3 – –
Other (0.2) – –
Effective tax rate 37.5% – –
Information on reconciliation of tax rates for the years ended March 31, 2014 and 2013 is not disclosed as difference between the statutory tax rate and the effective tax rate was not more than 5% for the years ended March 31, 2014 and 2013.
NOTE 5 – RECEIVABLES FROM AND PAYABLES TO UNCONSOLIDATED SUBSIDIARIES AND AFFILIATES
Significant receivables from and payables to unconsolidated subsidiaries and affiliates at March 31, 2015 and 2014 were as follows:
March 31, March 31,
2015 2014 2015(Millions of yen) (Thousands of U.S. dollars)
Notes and accounts receivable ¥159 ¥153 $1,323
Notes and accounts payable ¥490 ¥635 $4,078
Deposits on long-term leases ¥ 24 ¥ 24 $ 200
Notes To Consolidated Financial Statements
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Significant components of the Company and its consolidated subsidiaries’ deferred income tax assets and liabilities as of March 31, 2015 and 2014 were as follows:
March 31, March 31,
2015 2014 2015(Millions of yen) (Thousands of U.S. dollars)
Deferred income tax assets:
Accrued enterprise tax ¥ 224 ¥ 232 $ 1,864
Allowance for investment loss 30 57 250
Allowance for doubtful accounts 38 39 316
Accrued employees’ bonuses 932 998 7,756
Retirement benefits 4,516 5,530 37,580
Depreciation 5,973 6,383 49,704
Impairment loss 2,800 2,908 23,300
Other 1,908 1,979 15,878
16,421 18,126 136,648
Valuation allowance (1,111) (1,066) (9,245)
Total deferred income tax assets 15,310 17,060 127,403
Deferred income tax liabilities:
Net unrealized holding gains on securities (24,543) (19,166) (204,236)
Reserves deductible for Japanese tax purposes (7,639) (8,467) (63,568)
Other (922) (794) (7,672)
Total deferred income tax liabilities (33,104) (28,427) (275,476)
Net deferred income tax liabilities ¥(17,794) ¥(11,367) $(148,073)
The “Act for Partial Revision of the Income Tax Act, etc.” and “Act for Partial Revision of the Local Tax Act, etc.” were promulgated in Japan on March 31, 2015. Accordingly, the statutory income tax rate utilized for the measurement of deferred tax assets and liabilities expected to be settled or realized between April 1, 2015 and March 31, 2016 and on or after April 1, 2016 were changed from 35.6% to 33.1% and 32.3%, respectively.
As a result of this change, net deferred tax liabilities (after deducting the deferred tax assets) decreased by ¥1,888 million ($15,711 thousand) as of March 31, 2015, deferred income tax expense recognized for the year then ended increased by ¥638 million ($5,309 thousand), net unrealized holding gains on securities increased by ¥2,521 million ($20,979 thousand) and remeasurements of defined benefit plans increased by ¥6 million ($50 thousand).
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NOTE 7 – STATEMENTS OF COMPREHENSIVE INCOME
Amounts reclassified to net income for the years ended March 31, 2015, 2014 and 2013 were recognized in other comprehensive income in the current or previous periods, and tax effects for each component of other comprehensive income were as follows:
Year ended March 31, Year ended March 31,
2015 2014 2013 2015(Millions of yen) (Thousands of U.S. dollars)
Net unrealized holding gains on securities
Increase during the year ¥24,555 ¥ 2,969 ¥13,572 $204,335
Reclassification adjustments (2,107) (1,901) 41 (17,533)
Sub-total, before tax 22,448 1,068 13,613 186,802
Tax expense (5,472) (382) (4,841) (45,535)
Sub-total, net of tax 16,976 686 8,772 141,267
Foreign currency translation adjustments
Increase during the year 1,118 1,803 858 9,303
Remeasurements of defined benefit plans,
net of tax
Increase during the year 1,153 – – 9,594
Reclassification adjustments (104) – – (865)
Sub-total, before tax 1,049 – – 8,729
Tax expense (368) – – (3,062)
Sub-total, net of tax 681 – – 5,667
Share of other comprehensive income of
affiliates accounted for using the equity method
Increase during the year 364 366 179 3,029
Total other comprehensive income ¥19,139 ¥ 2,855 ¥ 9,809 $159,266
Notes To Consolidated Financial Statements
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NOTE 8 – INVESTMENT AND RENTAL PROPERTY
For the year ended March 31, 2015The Company and some of its consolidated subsidiaries have some investments and rental property such as office buildings for rent (including land) in Tokyo and other regions. For the year ended March 31, 2015, profit and loss concerning investment and rental property comprised lease profit of ¥9,222 million ($76,741 thousand), subsidy income of ¥194 million ($1,614 thousand), indemnity income of exiting facilities for lease of ¥30 million ($250 thousand), impairment loss of ¥727 million ($6,050 thousand) and loss on disposal of property and equipment of ¥693 million ($5,767 thousand).
Information on fair value of investment and rental property included in the consolidated financial statements at March 31, 2015 is as follows:
Book value Fair valueApril 1, 2014 Increase March 31, 2015 March 31, 2015
(Millions of yen)¥84,940 ¥6,173 ¥91,113 ¥285,256
Book value Fair valueApril 1, 2014 Increase March 31, 2015 March 31, 2015
(Thousands of U.S. dollars)$706,832 $51,369 $758,201 $2,373,770
Note:1. Book value is the net amount of acquisition cost and accumulated depreciation.2. Concerning net amount of increase and decrease in book value, the main factor for the increase was the costs incurred for
maintenance and renewal of existing facilities amounting to ¥11,744 million ($97,728 thousand), and the main factor for the decrease was the depreciation of ¥6,824 million ($56,786 thousand).
3. Fair value as of March 31, 2015 was the amount mainly based on appraisal by an external real estate appraiser.
For the year ended March 31, 2014The Company and some of its consolidated subsidiaries have some investments and rental property such as office buildings for rent (including land) in Tokyo and other regions. For the year ended March 31, 2014, profit and loss concerning investment and rental property comprised lease profit of ¥9,654 million, subsidy income of ¥194 million, indemnity income of exiting facilities for lease of ¥6 million and loss on disposal of property and equipment of ¥733 million.
Information on fair value of investment and rental property included in the consolidated financial statements at March 31, 2014 is as follows:
Book value Fair valueApril 1, 2013 Increase March 31, 2014 March 31, 2014
(Millions of yen)¥77,216 ¥7,724 ¥84,940 ¥265,008
Note:1. Book value is the net amount of acquisition cost and accumulated depreciation.2. Concerning net amount of increase and decrease in book value, the main factor for the increase was the costs incurred for
maintenance and renewal of existing facilities amounting to ¥11,483 million, and the main factor for the decrease was the depreciation of ¥6,326 million.
3. Fair value as of March 31, 2014 was the amount mainly based on appraisal by an external real estate appraiser.
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The net book values of pledged assets at March 31, 2015 and 2014 were as follows:
March 31, March 31,
2015 2014 2015(Millions of yen) (Thousands of U.S. dollars)
Land ¥1,085 ¥1,085 $ 9,029
Buildings and structures 317 399 2,638
Investments in securities 18 33 150
¥1,420 ¥1,517 $11,817
Liabilities secured by the pledged assets mentioned above at March 31, 2015 and 2014 were as follows:
March 31, March 31,
2015 2014 2015(Millions of yen) (Thousands of U.S. dollars)
Short-term bank loans ¥ 300 ¥ 700 $ 2,497
Other in current liabilities 480 512 3,994
Long-term loans payable 6,879 6,595 57,244
Deposits on long-term leases 1,160 1,319 9,653
¥8,819 ¥9,126 $73,388
NOTE 9 – PLEDGED ASSETS
Notes To Consolidated Financial Statements
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Short-term bank loans outstanding at March 31, 2015 and 2014 were ¥16,762 million ($139,486 thousand) and ¥17,950 million, respectively, and the annual interest rates of short-term bank loans were 0.380% to 10.750% and 0.390% to 2.650%, respectively.
Long-term debt at March 31, 2015 and 2014 consisted of the following:
March 31, March 31,
2015 2014 2015(Millions of yen) (Thousands of U.S. dollars)
Loans from banks, insurance companies and others,
generally secured, between 0.100%-3.870% and
0.100%-3.880% ¥25,546 ¥15,213 $212,582
Balance in lease obligations 747 829 6,216
1.670% yen bonds due 2014, unsecured – 5,000 –
1.750% yen bonds due 2015, unsecured 7,000 7,000 58,250
2.080% yen bonds due 2018, unsecured 7,000 7,000 58,250
0.933% yen bonds due 2019, unsecured 5,000 5,000 41,608
1.230% yen bonds due 2021, unsecured 5,000 5,000 41,608
0.442% yen bonds due 2021, unsecured 5,000 5,000 41,608
0.734% yen bonds due 2024, unsecured 5,000 5,000 41,608
60,293 55,042 501,730
Less current portion (8,613) (6,791) (71,673)
¥51,680 ¥48,251 $430,057
The aggregate annual maturities of long-term loans at March 31, 2015 were as follows:
Year ending March 31, Amount(Millions of yen) (Thousands of U.S. dollars)
2016 ¥ 1,281 $ 10,660
2017 5,022 41,791
2018 10,197 84,855
2019 1,384 11,517
2020 5,468 45,502
2021 and thereafter 2,194 18,257
¥25,546 $212,582
The aggregate annual maturities of lease obligation at March 31, 2015 were as follows:
Year ending March 31, Amount(Millions of yen) (Thousands of U.S. dollars)
2016 ¥332 $2,763
2017 243 2,022
2018 86 715
2019 52 433
2020 27 225
2021 and thereafter 7 58
¥747 $6,216
NOTE 10 – SHORT-TERM BANK LOANS AND LONG-TERM DEBT
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NOTE 11 – RETIREMENT BENEFITS AND PENSION PLAN
1. Defined benefit plan (1) Movement in retirement benefit obligations, except for plans to which the simplified methods have been applied
March 31, March 31,
2015 2014 2015(Millions of yen) (Thousands of U.S. dollars)
Balance at beginning of year ¥22,592 ¥21,120 $188,000
Cumulative effects of changes in
accounting policies(292) – (2,430)
Restated balance ¥22,300 ¥21,120 $185,570
Service cost - benefits earned during the year 1,111 852 9,245
Interest cost on projected benefit obligation 214 488 1,781
Actuarial loss (gain) (191) 1,571 (1,589)
Benefits paid (1,597) (1,439) (13,289)
Balance at end of year ¥21,837 ¥22,592 $181,718
(2) Movements in plan assets, except for plans to which the simplified methods have been applied
March 31, March 31,
2015 2014 2015(Millions of yen) (Thousands of U.S. dollars)
Balance at beginning of year ¥11,357 ¥10,072 $ 94,508
Expected return on plan assets 227 201 1,889
Actuarial gain 962 717 8,005
Contributions from the Group 1,302 1,297 10,835
Benefits paid (1,109) (1,024) (9,229)
Other 96 95 799
Balance at end of year ¥12,835 ¥11,358 $106,807
(3) Defined benefit plans to which the simplified methods have been applied
March 31, March 31,
2015 2014 2015(Millions of yen) (Thousands of U.S. dollars)
Balance at beginning of year ¥4,664 ¥4,743 $38,812
Retirement benefit costs 419 464 3,486
Benefits paid (414) (462) (3,445)
Contributions from the Group (103) (99) (857)
Other 25 18 208
Balance at end of year ¥4,591 ¥4,664 $38,204
Notes To Consolidated Financial Statements
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(4) Reconciliations between retirement benefit obligations and plan assets and liability for retirement benefits, including for plans to which the simplified methods have been applied
March 31, March 31,2015 2014 2015
(Millions of yen) (Thousands of U.S. dollars)
Funded retirement benefit obligations ¥19,564 ¥19,378 $162,803
Plan assets (13,973) (12,431) (116,277)
5,591 6,947 46,526
Unfunded retirement benefit obligations 8,002 8,951 66,589
Total net liability (asset) for retirement benefits
at end of year ¥13,593 ¥15,898 $113,115
Liability for retirement benefits *1 ¥13,593 ¥15,898 $113,115
Total net liability (asset) for retirement benefits
at end of year ¥13,593 ¥15,898 $113,115
*1 Officers’ severance and retirement benefits of ¥173 million ($1,439 thousand) as of March 31, 2015 and ¥227 million as of March 31, 2014 are not included in the above.
(5) Severance and retirement benefit expenses for employees
Year ended March 31, Year ended March 31,2015 2014 2015
(Millions of yen) (Thousands of U.S. dollars)
Service cost - benefits earned during the year *1 ¥1,015 ¥ 756 $ 8,446
Interest cost on projected benefit obligation 214 488 1,781
Expected return on plan assets (227) (201) (1,889)
Amortization of actuarial losses (gains) (19) 75 (158)
Amortization of prior service costs (85) (166) (707)
Severance and retirement benefit expenses based on
simplified methods 419 464 3,486
Severance and retirement benefit expenses for employees ¥1,317 ¥1,416 $10,959
*1 Contributions from employees are not included.
(6) Remeasurements of defined benefit plans, before tax
March 31, March 31,2015 2014 2015
(Millions of yen) (Thousands of U.S. dollars)
Prior service costs ¥ (85) ¥ – $ (707)
Actuarial gains 1,134 – 9,436
Total ¥1,049 ¥ – $8,729
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(7) Remeasurements of defined benefit plans
March 31, March 31,2015 2014 2015
(Millions of yen) (Thousands of U.S. dollars)
Prior service costs that are yet to be recognized ¥ (34) ¥ (119) $ (283)
Actuarial losses (gains) that are yet to be recognized (134) 1,000 (1,115)
Total ¥(168) ¥ 881 $(1,398)
(8) Plan assets (a) Plan assets comprise
March 31,2015 2014
General account 34% 36%
Equity securities 34% 34%
Bonds 29% 28%
Other 3% 2%
Total 100% 100%
(b) Long-term expected rate of returnCurrent and target asset allocations and current and expected returns on various categories of plan assets have been considered in determining the long-term expected rate of return.
(9) Actuarial assumptionsThe principal actuarial assumptions at March 31, 2015 and 2014 were as follows:
Year ended March 31,2015 2014
Discount rate 0.9%-1.2% 1.5%-1.7%
Long-term expected rate of return 2.0% 2.0%
2. Defined contribution planThe required contribution amount of the Company and its consolidated subsidiaries to the defined contribution plan at March 31, 2015 and 2014 were ¥260 million ($2,164 thousand) and ¥236 million, respectively.
Notes To Consolidated Financial Statements
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At March 31, 2015 and 2014, the balances of guarantee for loans amounted to ¥2,187 million ($18,199 thousand) and ¥2,482 million, respectively.
NOTE 14 – CONTINGENT LIABILITIES
Indemnity income of exiting facilities for lease represented mainly income from cancellation of leased commercial facilities in Yokohama and Kobe for the year ended March 31, 2015. For the year ended March 31, 2014, such represented mainly income from cancellation of equipment in leased real estate facilities in Tokyo.
NOTE 12 – INDEMNITY INCOME OF EXITING FACILITIES FOR LEASE
The impairment loss for the year ended March 31, 2015 was as follows:
Year ended March 31, 2015Asset group Location Asset type Millions of yen Thousands of U.S. dollars
Commercial facilities for rent
Takasago City, Hyogo Prefecture
Land, building and others
¥727 $6,050
At March 31, 2015, the Company classified fixed assets by cash generating units which were considered to be independent from cash flows of other groups and recognized impairment loss on certain groups of assets.
For the year ended March 31, 2015, the Company recognized the impairment loss amounting to ¥727 million ($6,050 thousand) as other expense in the consolidated statements of income by devaluating the book value of each fixed asset to its recoverable amount, comprising ¥676 million ($5,626 thousand) for land, ¥50 million ($416 thousand) for building and ¥1 million ($8 thousand) for others.
The recoverable amount of commercial facilities for lease is its net realizable value based on an amount determined by valuations made in accordance with real estate appraisal value.
NOTE 13 – IMPAIRMENT LOSS
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1. FINANCE LEASES(LESSEE LEASES)Non-transferable finance leases (1) Leased assets
Mainly consisted of system equipment relating to the logistics business (accounted for in “machinery and equipment” under property and equipment).
(2) Depreciation method for leased assets As described in (1) Property and equipment under “DEPRECIATION” in NOTE 1 ( SUMMARY OF ACCOUNTING POLICIES)
2. OPERATING LEASES(LESSEE LEASES)Future minimum lease payments under non-cancelable operating lease as of March 31, 2015 and 2014 were as follows:
March 31, March 31,
2015 2014 2015(Millions of yen) (Thousands of U.S. dollars)
Due within one year ¥ 3,245 ¥ 3,196 $ 27,003
Due after one year 10,218 12,288 85,030
¥13,463 ¥15,484 $112,033
(LESSOR LEASES)Future minimum lease receipts under non-cancelable operating lease as of March 31, 2015 and 2014 were as follows:
March 31, March 31,
2015 2014 2015(Millions of yen) (Thousands of U.S. dollars)
Due within one year ¥12,604 ¥12,269 $104,885
Due after one year 15,026 17,340 125,039
¥27,630 ¥29,609 $229,924
NOTE 15 – LEASE TRANSACTIONS
Notes To Consolidated Financial Statements
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3. FINANCE LEASES INITIATED BEFORE APRIL 1, 2008(LESSOR LEASES)Finance lease transactions without transfer of ownership to lessee (1) Purchase price, accumulated depreciation and book value
March 31, March 31,
2015 2014 2015(Millions of yen) (Thousands of U.S. dollars)
Buildings and structures and other
Purchase price ¥3,353 ¥3,353 $27,902
Accumulated depreciation 2,362 2,246 19,655
Book value