Last year financial report

― 1 ― CONSOLIDATED FINANCIAL REPORT FISCAL 2014 （ Japanese GAAP ） (March 1, 2014 to February 28, 2015) April 13, 2015 YONDOSHI HOLDINGS INC. is listed on the First Section of the Tokyo Stock Exchange under the securities code number 8008. Representative: Hidenori Suzuki, President and Representative Director Inquiries: Masahiko Iwamori, Executive Director and Executive Officer responsible for operations Tel: +81-3-5719-3429 URL: http://www.yondoshi.co.jp/ Annual General Meeting of Shareholders date (planned): May 21, 2015 Fiscal 2014 Securities Report filing date (planned): May 22, 2015 Dividend payment commencement date (planned): May 22, 2015 Supplemental materials prepared for financial results: Yes Holding of financial results meeting: Yes (for analysts and institutional investors) (Millions of yen rounded down) 1. Consolidated Performance for FY 2014 (March 1, 2014 to February 28, 2015) (1) Consolidated Business Results (% figures represent year-on-year increase or decrease) Operating Revenues Operating Income Ordinary Income Net Income Millions of yen % Millions of yen % Millions of yen % Millions of yen % FY 2014 50,726 3.5 5,467 11.5 6,216 10.2 3,642 14.4 FY 2013 49,003 1.6 4,906 14.4 5,642 15.5 3,183 14.3 (Note) Comprehensive income: FY 2014: ¥4,541 million (28.9%) FY 2013: ¥3,522 million (14.6%) Net Income Per Share Net Income Per Share (Diluted) ROE Ordinary Income to Total Assets Ordinary Income to Operating Revenues Yen Yen % % % FY 2014 134.99 134.78 8.1 10.4 10.8 FY 2013 116.40 116.24 7.5 10.1 10.0 (Reference) Equity in earnings of affiliated companies accounted for by the equity method: FY 2014: ¥493 million FY 2013: ¥497 million (2) Consolidated Financial Position Total Assets Net Assets Net Assets to Total Assets Net Assets per Share of Common Stock Millions of yen Millions of yen % Yen As of February 28, 2015 60,990 45,830 75.1 1,722.67 As of February 28, 2014 58,478 44,136 75.4 1,609.45 (Reference) Shareholders’ equity: As of February 28, 2015: ¥46,787 million As of February 28, 2014: ¥44,116 million (3) Consolidated Cash Flows Operating Activities Investing Activities Financing Activities Cash and Cash Equivalents at the End of the Period Millions of yen Millions of yen Millions of yen Millions of yen FY 2014 4,329 (1,184) (3,298) 3,952 FY 2013 5,185 (2,389) (823) 4,093 ― 2 ― 2. Dividends Cash Dividends per Share of Common Stock Cash Dividends Paid (Annual) Dividend Payout Ratio (Consolidated) Cash Dividends to Net Assets (Consolidated) End of 1Q End of 2Q End of 3Q End of 4Q Annual Yen Yen Yen Yen Yen Millions of yen % % FY 2013 — 12.50 — 17.50 30.00 855 25.8 1.9 FY 2014 — 16.00 — 16.00 32.00 899 23.7 1.9 FY 2015 (planned) — 20.00 — 20.00 40.00 26.3 3. Forecast of Consolidated Results for FY 2015 (March 1, 2015 to February 29, 2016) (% figures for the full fiscal year represent year-on-year increase or decrease, % figures for the interim period are the increase / (decrease) for the corresponding period of the previous fiscal year) Operating Revenues Operating Income Ordinary Income Net Income Net Income per Share Millions of yen % Millions of yen % Millions of yen % Millions of yen % Yen Interim 24,000 0.8 2,000 (11.5) 2,300 (10.1) 1,300 (15.7) 48.18 Full Fiscal Year 52,500 3.5 5,800 6.1 6,700 7.8 4,100 12.6 151.95 4. Other (1) Changes in important subsidiaries during the period (changes in specified subsidiaries in accordance with changes in the scope of consolidation): No New: — Excluded: — (2) Changes in Accounting Policies, Changes in Accounting Estimates, and Restatements 1) Changes of accounting principles in line with revisions to accounting and other standards: Yes 2) Changes of accounting principles other than 1) above: No 3) Changes in accounting estimates: Yes 4) Retrospective restatement: No (3) Number of shares issued and outstanding (common shares) 1. Number of shares issued and outstanding as of the end of the period (including treasury stock) As of February 28, 2015: 29,331,356 shares As of February 28, 2014: 29,331,356 shares 2. Number of treasury stock As of February 28, 2015: 2,752,078 shares As of February 28, 2014: 1,920,288 shares 3. Average number of shares for the year FY2014: 26,982,906 shares FY2013: 27,353,992 shares Notes: 1. The number of recorded treasury stock is inclusive of 104,800 of the Company’s shares held by the YONDOSHI HOLDINGS Group Employees’ Shareholding Association Trust Account as of the end of the fiscal year. 2. For additional information on the basic number of shares used to calculate consolidated net income per share, please refer to “Per Share Information” on page 22. (Reference) Non-Consolidated Performance 1. Non-Consolidated Performance for FY 2014 (March 1, 2014 to February 28, 2015) (1) Non-Consolidated Business Results (Percentage figures are the increase / (decrease) for the corresponding period of the previous fiscal year) Operating Revenues Operating Income Ordinary Income Net Income Millions of yen % Millions of yen % Millions of yen % Millions of yen % FY 2014 1,990 20.5 1,428 31.2 1,381 28.9 1,131 24.9 FY 2013 1,651 8.4 1,088 11.4 1,071 12.6 906 13.0 Net Income per Share Net Income Per Share (Diluted) Yen Yen FY 2014 40.26 40.20 FY 2013 31.83 31.79 ― 3 ― (2) Non-Consolidated Financial Position Total Assets Net Assets Net Assets to Total Assets Net Assets per Share of Common Stock Millions of yen Millions of yen % Yen As of February 28, 2015 36,163 22,625 62.4 818.07 As of February 28, 2014 36,790 24,392 66.2 854.29 (Reference) Shareholders’ equity: As of February 28, 2015: ¥22,582 million As of February 28, 2014: ¥24,373 million Regarding the Status of Review Procedure Implementation This financial report for the fiscal 2014 is not subject to the review procedures stipulated in the Financial Instruments and Exchange Act of Japan. As of the date of disclosure of this report, the review procedures for the financial statements under the Financial Instruments and Exchange Act had not been completed. Explanation concerning the Proper Use of Operating Results Forecasts and Other Relevant Specific Items The forecasts of operating results and other items concerning the future contained in this document are based on management’s assumptions and beliefs that are determined to be reasonable in light of currently available information, YONDOSHI HOLDINGS INC. cautions readers that due to a variety of factors actual results may differ materially from forecasts. For the assumptions that underpin operating results forecasts as well as cautionary notes on the use of operating results forecasts, please refer to the information from page 6. ― 4 ― Contents 1. ANALYSIS of OPERATING RESULTS and FINANCIAL POSITION 5 (1) Analysis of Operating Results 5 (2) Analysis of Financial Position 7 (3) Policy on the Appropriation of Profits, Cash Dividends for Fiscal 2014 and Fiscal 2015 7 2. MANAGEMENT POLICIES 8 3. CONSOLIDATED FINANCIAL STATEMENTS 10 (1) Consolidated Balance Sheets 10 (2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income 12 Consolidated Statements of Income 12 Consolidated Statements of Comprehensive Income 13 (3) Consolidated Statements of Changes in Net Assets 14 (4) Consolidated Statements of Cash Flows 16 (5) Notes to Consolidated Financial Statements 18 (Notes Regarding Going Concern Assumptions) 18 (Changes in Accounting Policies) 18 (Segment Information) 18 (Per Share Information) 22 (Important Subsequent Events) 22 4. NON-CONSOLIDATED FINANCIAL STATEMENTS 23 (1) Non-Consolidated Balance Sheets 23 (2) Non-Consolidated Statements of Income 25 (3) Non-Consolidated Statements of Changes in Net Assets 26 5. OTHER 28 ― 5 ― 1. Analysis of Operating Results and Financial Position (1) Analysis of Operating Results In fiscal 2014, the fiscal year ended February 28, 2015, the Japanese economy was bolstered by steady rises in share prices and improved earnings among certain companies due to the weaker yen. Despite these favorable conditions, the economic outlook remains uncertain owing mainly to the prolonged slowdown in consumer spending and the decline in real wages in the face of rising prices. In the retail industry, business conditions were harsh. Although there was a surge in demand ahead of the consumption tax rate hike, consumer spending slumped thereafter as a result of the growing trend toward frugality. Under these circumstances, the YONDOSHI HOLDINGS Group took steps to enhance its corporate value by practicing CSR-based management in an effort to become a highly trusted corporate group, strengthening internal controls, providing adequate returns to shareholders, and undertaking medium- to long-term investments linked to earnings growth throughout fiscal 2014, the final year of its third medium-term management plan. Turning to individual business segments, F.D.C. Products Inc. continued to implement measures aimed at enhancing the value of the 4°C jewelry brand. At the same time, the company took steps to systematically expand its network and open new 4°C BRIDAL and canal 4°C stores. AS’TY Inc. worked diligently to bolster its apparel manufacturing business on the back of production under the China Plus Others strategy. The company also placed particular emphasis on expanding its ODM business. MISUZU Co., Ltd. directed its energy toward revitalizing existing stores by strengthening its planning and marketing capabilities focusing on core brands and implementing a variety of other measures. Coupled with efforts to rationalize unprofitable stores, the company undertook a host of activities aimed at securing the return to the black. age Co., Ltd. took steps to expand the market by opening stores that would reinforce its dominant position in the Kansai area focusing mainly on its core PALETTE daily fashion item business. In addition, the company newly established a logistics base in the Kansai area with the aim of shortening delivery times and reducing overhead expenses. Accounting for each of the aforementioned activities, and for the fiscal year under review, operating revenues amounted to ¥50,726 million (up 3.5% compared with the previous fiscal year). From a profit perspective, operating income came to ¥5,467 million (up 11.5%), ordinary income was ¥6,216 million (up 10.2%, and net income was ¥3,642 million (up 14.4%). Based on the level of earnings reported, operating income and net income reached record highs for the third consecutive period. Ordinary income was also an historic high for the fourth consecutive fiscal year. Note: Operating revenues are the sum total of net sales and other operating revenues. Results by Business Segment for the Fiscal Year Ended February 28, 2015 The F.D.C. Products Group Operating Revenues ¥ 28,537 million (Up 8.6% YoY) Operating Income ¥ 4,980 million (Up 13.9% YoY) In the fiscal year under review, the F.D.C. Products group was successful in promoting its new material Eternal Silver lineup of items while expanding other offerings under the mainstay 4°C jewelry brand. At the same time, active steps were taken to open new 4°C BRIDAL and canal 4°C stores. Thanks largely to these endeavors, the F.D.C. Products group reported record highs in operating revenues and operating income. The AS’TY Group Operating Revenues ¥ 8,787 million (Down 3.5% YoY) Operating Income ¥ 422 million (Down 24.3% YoY) The AS’TY group continued to strengthen its project planning capabilities in its apparel manufacturing business. Despite initiating measures aimed at improving profit margins by shifting production to Bangladesh, operating revenues and operating income fell below the levels recorded in the previous fiscal year due mainly to the impact of the weak yen. MISUZU Co., Ltd. Operating Revenues ¥ 5,344 million (Down 9.1% YoY) Operating Income ¥ 14 million (—) ― 6 ― MISUZU Co., Ltd. worked diligently to rationalize unprofitable stores while strengthening promotional activities designed to reinvigorate existing stores and reducing overhead expenses. For the fiscal year under review, operating revenues declined year on year. In cost, the company reported a return to the black on an operating income basis. age Co., Ltd. Operating Revenues ¥ 8,057 million (Up 4.1% YoY) Operating Income ¥ 86 million (Down 46.3% YoY) age Co., Ltd. reported a year-on-year increase in operating revenues due mainly to expanded store openings for the mainstay PALETTE brand daily fashion item business. As the RAPPORT brand retail membership sale business struggled and steps were taken to withdraw from the LOU brand business, however, operating income declined. Outlook Looking ahead, the Japanese economy is projected to experience a continued modest upturn. This is due to a variety of factors including an increase in corporate sector earnings from the positive flow-on effects of the government’s economic policies. In contrast, there are signs of downside risk with respect to conditions overseas. As a result, uncertainties continue to plague the outlook for the future. In the retail sector, personal consumption is expected to remain weak. This largely reflects the forecast continued trend toward frugality stemming from consumers’ perceptions and the need to protect their daily lives. Taking these trends into consideration, we believe that difficult conditions will continue to linger throughout our operating environment. Against this backdrop, the YONDOSHI HOLDINGS Group will launch its fourth medium-term management plan with the aim of becoming a century’s old company and brand by nurturing human resources, bolstering our product capabilities, and grasping market trends. As a part of efforts to enhance its corporate value, the Group will also practice CSR-based management with the aim of becoming a highly trusted corporate group, strengthen internal controls, provide adequate returns to shareholders, and undertake medium- to long-term investments linked to earnings growth. Moving forward, the YONDOSHI HOLDINGS Group will endeavor to create cross-sectional synergies in a bid to generate results against issues that impact the Group as a whole. With this in mind, we are pushing forward the Group Strategy Promotion Project. Business Vision (1) The F.D.C. Products group: Ensure further growth in the SPA-type jewelry business by promoting a channel strategy and expanding market zones as well as items. (2) The AS’TY group: Expand the apparel manufacturing business while rebuilding the wholesale business. (3) MISUZU Co., Ltd.: Rebuild the SPA-type apparel business by integrating brands. (4) age Co., Ltd.: Expand the daily fashion item business by increasing the profile and visibility of the PALETTE brand. (5) Enhance the 4°C brand value (6) Expand the EC business (7) Advance an overseas retail strategy Organizational Vision (1) Promote a Group synergy structure (2) Promote the development of Group human resources (3) Enhance and strengthen the Group staff function (4) Strengthen the Group business management function (5) Promote management that takes into consideration work-life balance Accounting for each of these factors, the YONDOSHI HOLDINGS Group is projecting record highs in revenues and earnings. In specific terms, operating revenues are expected to reach ¥52,500 million, operating income to total ¥5,800 million, ordinary income to climb to ¥6,700 million, and net income to come in at ¥4,100 million on a consolidated basis for the fiscal year ending February 29, 2016. ― 7 ― (2) Analysis of Financial Position The Status of Assets, Liabilities, and Net Assets Total assets as of the end of the fiscal year under review stood at ¥60,990 million, ¥2,511 million higher than the balance as of the end of the previous fiscal year. The major movements were increases in investment securities of ¥4,401 million and cash and deposits of ¥1,309 million, which were partly offset by such factors as a decrease in short-term investment securities of ¥2,850 million. Total liabilities amounted to ¥15,159 million as of February 28, 2015. This represented an increase of ¥817 million year on year. The major movement was an increase of ¥304 million in deferred tax liabilities. Net assets as of the fiscal year-end stood at ¥45,830 million, an increase of ¥1,694 million compared with the balance as of the end of the previous fiscal year. This was largely attributable to the increase in retained earnings of ¥2,685 million. Cash Flows On a consolidated basis, cash and cash equivalents as of the end of the period under review (February 28, 2015) stood at ¥3,952 million, a decrease of ¥140 million compared with the end of the previous fiscal year. (Cash Flows from Operating Activities) Net cash provided by operating activities amounted to ¥4,329 million. This was a decrease of ¥855 million compared with the previous fiscal year. The major cash inflow for the period came from net income before income taxes totaling ¥6,017 million. The principal cash outflow was income taxes paid of ¥2,250 million. (Cash Flows from Investing Activities) Net cash used in investing activities was ¥1,184 million, up ¥1,204 million compared with the previous fiscal year. The major cash outflow was from the purchase of property, plant and equipment of ¥1,590 million. (Cash Flows from Financing Activities) Net cash used in financing activities was ¥3,298 million, down ¥2,474 million compared with the previous fiscal year. The major cash outflows were the purchase of treasury stock of ¥2,083 million and cash dividends paid of ¥957 million. (Reference) Trends in the YONDOSHI HOLDINGS Group’s cash flow indicators are provided in the following table. Fiscal 2011 Fiscal 2012 Fiscal 2013 Fiscal 2014 Shareholders’ equity ratio (%) 75.9 77.1 75.4 75.1 Shareholders’ equity ratio based on market capitalization (%) 41.9 51.3 73.8 87.9 Cash flow to interest-bearing debt ratio (Year) 0.2 0.3 0.2 0.2 Interest coverage ratio (Times) 143.9 231.1 1,851.9 2,524.96 Notes: Shareholders’ equity ratio: Shareholders’ equity / Total assets Shareholders’ equity ratio based on market capitalization: Market capitalization / Total assets Cash flow to interest-bearing debt ratio: Interest-bearing debt / Cash flow from operating activities Interest coverage ratio: Cash flow from operating activities / Interest payments  Each indicator is calculated based on figures from consolidated financial statements.  Market capitalization is calculated based on the number of shares issued and outstanding at the end of the period after deducting treasury stock.  Interest-bearing debt includes all interest-bearing debt recorded under liabilities in the consolidated balance sheets.  Cash flow from operating activities is taken from net cash provided by (used in) operating activities in the consolidated statements of cash flows. Interest payments are taken from cash paid for interest in the consolidated statements of cash flows. (3) Policy on the Appropriation of Profits, Cash Dividends for Fiscal 2014 and Fiscal 2015 The YONDOSHI HOLDINGS Group places the appropriation of profits to shareholders as a key management priority. As a result, the Group strives to deliver stable and sustainable cash dividends. At the same time, the Group adopts a flexible policy toward the purchase of treasury stock as a part of comprehensive efforts to increase the level of returns to shareholders. Based on the aforementioned policy, YONDOSHI HOLDINGS plans to pay a fiscal year-end cash dividend of ¥16 per common share. Together with the interim cash dividend paid of ¥16 per common share, ― 8 ― the full fiscal year cash dividend for fiscal 2014 will therefore come in at ¥32 per common share. Looking at dividends for fiscal 2015, the Company plans to pay an interim and fiscal year-end cash dividend of ¥20 per common share for a full fiscal year cash dividend of ¥40 per common share. In addition to the appropriation of profits through cash dividends, YONDOSHI HOLDINGS has established a shareholder special benefit plan. Shareholders of record as of the end of the period can choose from three benefit options including shareholder gift certificates, Group products and a donation to the Japan Water Forum, which is introduced as a CSR-oriented benefit. Furthermore, in an effort to better prepare the Group for the road ahead and to pursue business development, YONDOSHI HOLDINGS will continue to enhance profitability and reinforce the Group’s management and business platforms while fulfilling the expectations of shareholders going forward. At the same time, the Group will take into consideration the internal working capital required to reinforce its management structure in response to an increasingly competitive environment, cultivate new markets, develop new brands and pursue business development through a variety of vehicles including M&A. 2. Management Policies (1) Basic Management Policies The YONDOSHI HOLDINGS Group engages in business development activities based on four core management philosophies. We are committed to: 1. becoming a company that inspires trust and confidence among its customers 2. fostering and fulfilling the dreams of our employees 3. contributing to the prosperity and well-being of society, and 4. realizing the expectations of shareholders. With the 4ºC brand at the heart of its business activities, YONDOSHI HOLDINGS is committed to becoming a company that is defined by its ability to create new trends in global fashion. We are committed to putting our heart and soul into anticipating customers’ needs and forever enhancing customers’ lifestyles. With a deep respect for people and a fearless stance toward innovative change, the YONDOSHI HOLDINGS Group places the utmost importance on a corporate culture that continues to push the limits. The efforts are grounded in the aspiration to bring a smile to the faces of all customer while inspiring their hearts and minds. (2) Target Operating Indicators Under its fourth medium-term management plan, which begins in the fiscal year ending February 29, 2016, YONDOSHI HOLDINGS plans to follow a path of “Challenge and Evolution.” In specific terms, the Company has identified the numerical vision of achieving consolidated net sales of ¥60 billion or more, ordinary income of ¥8.0 billion or more, and an ROE of 10% or higher. Moving forward, we will advance business strategies and implement a variety of measures aimed at improving profitability, increasing the efficiency of our investments, and effectively utilizing all available funds. (3) Medium- to Long-Term Operating Strategies Details of the Company’s medium- to long-term operating strategies are outlined in “1. Analysis of Operating Results and Financial Position (1) Analysis of Operating Results (Outlook)” on page 6. (4) Pending Issues The YONDOSHI HOLDINGS Group will work diligently to overcome the following issues in an effort to strengthen its ability to address changes in the market and establish robust competitive advantage. i. The F.D.C. Products group The F.D.C. Products group will continue to pursue steady growth while further increasing its operating income. To this end, the group will implement a variety of measures aimed at developing its business, focusing mainly on enhancing the value of the 4°C jewelry brand, and expanding new markets. ii. The AS’TY group The AS’TY group will endeavor to secure stable operating income by expanding its apparel manufacturing business and rebuilding its wholesale business. ― 9 ― iii. MISUZU Co., Ltd. MISUZU will expand operating income by promoting merchandising reform and strengthening its store operating capabilities in order to establish an apparel SPA business. iv. age Co., Ltd. age will expand operating income by opening PALETTE stores that will reinforce its dominant position in the Kansai area and increasing its profile and visibility in the market. ― 10 ― 3. CONSOLIDATED FINANCIAL STATEMENTS (1) Consolidated Balance Sheets (Thousands of yen) End of the Fiscal Year Ended February 28, 2014 (As of February 28, 2014) End of the Fiscal Year Ended February 28, 2015 (As of February 28, 2015) ASSETS Current assets: Cash and deposits 643,415 1,952,933 Notes and accounts receivable ― trade 2,952,219 3,451,619 Short-term investment securities 4,850,000 2,000,000 Merchandise and finished goods 6,819,273 7,383,018 Work in process 728,965 871,733 Raw materials and supplies 678,745 723,203 Deferred tax assets 618,437 482,082 Advance payments-trade 6,025 2,465 Accounts receivable-other 73,666 142,460 Other 251,918 301,863 Allowance for doubtful accounts (4,233) (7,625) Total current assets 17,618,434 17,303,755 Noncurrent assets: Property, plant and equipment: Buildings and structures, net 5,485,560 5,546,145 Land 5,549,208 5,528,465 Lease assets, net 187,635 285,754 Construction in progress 34,600 389,900 Other, net 537,300 752,733 Total property, plant and equipment 11,794,305 12,502,999 Intangible assets: Goodwill 6,206,310 5,709,806 Lease assets 582,497 459,992 Right of trademark 763 1,453 Other 77,554 103,920 Total intangible assets 6,867,126 6,275,172 Investments and other assets: Investment securities 15,623,836 20,025,792 Guarantee deposits 344,312 346,405 Long-term loans receivable 22,576 22,268 Deferred tax assets 406,543 374,736 Real estate for investment, net 750,917 745,032 Prepaid pension cost 2,077,497 － Net defined benefit asset － 614,916 Lease deposits 2,523,068 2,356,233 Claims provable in bankruptcy, claims provable in rehabilitation and other 550,568 87,858 Other 480,131 451,856 Allowance for doubtful accounts (580,756) (116,688) Total investments and other assets 22,198,696 24,908,410 Total noncurrent assets 40,860,128 43,686,583 Total assets 58,478,562 60,990,338 ― 11 ― (Thousands of yen) End of the Fiscal Year Ended February 28, 2014 (As of February 28, 2014) End of the Fiscal Year Ended February 28, 2015 (As of February 28, 2015) LIABILITIES Current liabilities: Notes and accounts payable ― trade 4,515,638 4,170,142 Short-term loans payable － 48,310 Lease obligations 241,069 278,268 Income taxes payable 1,366,588 1,399,367 Provision for bonuses 425,726 355,684 Provision for directors’ bonuses 44,250 41,946 Other 3,267,051 4,093,625 Total current liabilities 9,860,324 10,387,344 Noncurrent liabilities: Long-term loans payable 150,930 － Lease obligations 596,616 530,330 Long-term guarantee deposited 295,476 319,085 Deferred tax liabilities 1,520,356 1,824,453 Provision for retirement benefits 537,167 － Net defined benefit liability － 614,881 Provision for directors’ retirement benefits 339,728 385,296 Asset retirement obligations 942,180 1,002,570 Other 99,493 95,727 Total noncurrent liabilities 4,481,950 4,772,345 Total liabilities 14,342,274 15,159,689 NET ASSETS Shareholders’ equity: Capital stock 2,486,520 2,486,520 Capital surplus 18,322,104 18,226,705 Retained earnings 24,364,402 27,049,761 Treasury stock (1,504,089) (3,284,842) Total shareholders’ equity 43,668,937 44,478,145 Accumulated other comprehensive income: Valuation difference on available-for-sale securities 648,981 1,481,751 Deferred gains or losses on hedges (10,415) 13,339 Revaluation reserve for land (233,476) (233,476) Foreign currency translation adjustments 42,838 85,054 Remeasurements of defined benefit plans － (37,476) Total accumulated other comprehensive income 447,928 1,309,192 Subscription rights to shares 19,421 43,311 Total net assets 44,136,288 45,830,648 Total liabilities and net assets 58,478,562 60,990,338 ― 12 ― (2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income Consolidated Statements of Income (Thousands of yen) Fiscal 2013 (March 1, 2013 to February 28, 2014) Fiscal 2014 (March 1, 2014 to February 28, 2015) Net sales 48,140,315 49,868,310 Cost of Sales 21,261,457 21,789,099 Gross profit 26,878,858 28,079,211 Other operating revenue 862,868 857,955 Operating gross profit 27,741,727 28,937,167 Selling, general and administrative expenses 22,835,642 23,469,265 Operating income 4,906,084 5,467,901 Non-operating income Interest income 9,272 14,116 Dividends received 72,143 74,975 Equity in earnings of affiliates 497,201 493,479 Rent of real estate for investment 99,237 101,940 Foreign exchange gains 23,178 31,483 Other 51,596 81,805 Total non-operating income 752,630 797,801 Non-operating expenses Interest expenses 2,826 1,714 Loss on insurance cancellation 1,925 － Depreciation on investments in real estate 6,101 5,968 Management cost on real estate for investment 2,063 2,046 Commission for purchase of treasury stock － 35,364 Other 2,940 3,951 Total non-operating expenses 15,857 49,046 Ordinary income 5,642,858 6,216,656 Extraordinary income Gain on sales of noncurrent assets 12,163 47,797 Gain on sales of real estate for investment 21,974 － Gain on sales of golf memberships 1,428 － Gain on Liquidation of Subsidiaries and Affiliates’ Stocks － 104,118 Other － 750 Total extraordinary income 35,566 152,665 Extraordinary loss Loss on sales of noncurrent assets － 8,140 Impairment loss 239,675 291,939 Loss on closing of stores 3,513 43,111 Other － 8,880 Total extraordinary losses 243,188 352,072 Net income before income taxes 5,435,236 6,017,250 Income taxes ― current 1,957,454 2,262,588 Income taxes ― deferred 293,808 112,133 Total income taxes 2,251,262 2,374,721 Income before minority interests 3,183,973 3,642,528 Minority interests in income (loss) (0) － Net income 3,183,974 3,642,528 ― 13 ― Consolidated Statements of Comprehensive Income (Thousands of yen) Fiscal 2013 (March 1, 2013 to February 28, 2014) Fiscal 2014 (March 1, 2014 to February 28, 2015) Income before minority interests 3,183,973 3,642,528 Other comprehensive income Other valuation difference on available-for-sale securities 256,297 625,870 Deferred gains or losses on hedges (25,323) 23,599 Foreign currency translation adjustments 68,077 42,216 Share of other comprehensive income of associates accounted for using equity method 39,052 207,054 Total other comprehensive income 338,103 898,740 Comprehensive income 3,522,077 4,541,268 Comprehensive income attributable to Comprehensive income attributable to owners of the parent 3,522,077 4,541,268 Comprehensive income attributable to minority interests (0) － ― 14 ― (3) Consolidated Statements of Changes in Net Assets Fiscal 2013 (March 1, 2013 to February 28, 2014) (Thousands of yen unless otherwise stated) Shareholders’ equity Common stock Capital surplus Retained earnings Treasury stock Total shareholders’ equity Treasury stock Treasury stock (held by Employee Stock Ownership Trust) Total treasury stock Balance at the end of previous period 2,486,520 18,300,303 21,891,593 (1,463,511) (207,422) (1,670,933) 41,007,484 Changes of items during the period Dividends from surplus (682,132) (682,132) Net income 3,183,974 3,183,974 Increase in retained earnings resulting from change of consolidated subsidiaries 2,002 2,002 Purchase of treasury stock (554) (554) (554) Disposal of treasury stock 21,800 108,148 108,148 129,949 Reversal of revaluation reserve for land (31,036) (31,036) Sales of treasury stock from Employee Stock Ownership Trust 59,250 59,250 59,250 Net changes in items excluding shareholders’ equity during the period Total — 21,800 2,472,808 107,594 59,250 166,844 2,661,453 Balance at the end of current period 2,486,520 18,322,104 24,364,402 (1,355,917) (148,172) (1,504,089) 43,668,937 (Thousands of yen unless otherwise stated) Accumulated other comprehensive income Subscription rights to shares Minority interests Total net assets Valuation difference on available-for -sale securities Deferred gains or losses on hedges Revaluation reserve for land Foreign currency translation adjustments Total accumulated other comprehensive income Balance at the end of previous period 352,470 16,070 (264,512) (25,239) 78,789 19,195 1,171 41,106,639 Changes of items during the period Dividends from surplus (682,132) Net income 3,183,974 Increase in retained earnings resulting from change of consolidated subsidiaries 2,002 Purchase of treasury stock (554) Disposal of treasury stock 129,949 Reversal of revaluation reserve for land 31,036 31,036 — Sales of treasury stock from Employee Stock Ownership Trust 59,250 Net changes in items excluding shareholders’ equity during the period 296,511 (26,485) — 68,077 338,103 226 (1,171) 337,158 Total 296,511 (26,485) 31,036 68,077 369,139 226 (1,171) 3,029,648 Balance at the end of current period 648,981 (10,415) (233,476) 42,838 447,928 19,421 — 44,136,288 ― 15 ― Fiscal 2014 (March 1, 2014 to February 28, 2015) (Thousands of yen unless otherwise stated) Shareholders’ equity Common stock Capital surplus Retained earnings Treasury stock Total shareholders’ equity Treasury stock Treasury stock (held by Employee Stock Ownership Trust) Total treasury stock Balance at the end of previous period 2,486,520 18,322,104 24,364,402 (1,355,917) (148,172) (1,504,089) 43,668,937 Changes of items during the period Dividends from surplus (957,168) (957,168) Net income 3,642,528 3,642,528 Purchase of treasury stock (2,083,827) (2,083,827) (2,083,827) Disposal of treasury stock 12,395 56,599 56,599 68,995 Net changes in commission for purchase of treasury stock from affiliates accounted for by equity method (107,794) (107,794) Change in equity in affiliates accounted for by equity method-treasury stock 197,652 197,652 197,652 Sales of treasury stock from Employee Stock Ownership Trust 48,822 48,822 48,822 Net changes in items excluding shareholders’ equity during the period Total — (95,398) 2,685,359 (1,829,574) 48,822 (1,780,752) 809,207 Balance at the end of current period 2,486,520 18,226,705 27,049,761 (3,185,492) (99,350) (3,284,842) 44,478,145 (Thousands of yen unless otherwise stated) Accumulated other comprehensive income Subscrip -tion rights to shares Total net assets Valuation difference on available- for-sale securities Deferred gains or losses on hedges Revaluation reserve for land Foreign currency translation adjustments Remeasurements of defined benefit plans Total accumulated other comprehensive income Balance at the end of previous period 648,981 (10,415) (233,476) 42,838 — 447,928 19,421 44,136,288 Changes of items during the period Dividends from surplus (957,168) Net income 2,083,827 Purchase of treasury stock 68,995 Disposal of treasury stock (107,794) Net changes in commission for purchase of treasury stock from affiliates accounted for by equity method 197,652 Change in equity in affiliates accounted for by equity method-treasury stock 48,822 Sales of treasury stock from Employee Stock Ownership Trust Net changes in items excluding shareholders’ equity during the period 832,769 23,754 — 42,216 (37,476) 861,263 23,889 885,153 Total 832,769 23,754 — 42,216 (37,476) 861,263 23,889 1,694,360 Balance at the end of current period 1,481,751 13,339 (233,476) 85,054 (37,476) 1,309,192 43,311 45,830,648 ― 16 ― (4) Consolidated Statements of Cash Flows (Thousands of yen) Fiscal 2013 (March 1, 2013 to February 28, 2014) Fiscal 2014 (March 1, 2014 to February 28, 2015) Cash Flows from Operating Activities: Net Income before income taxes 5,435,236 6,017,250 Depreciation and amortization 1,026,676 1,135,407 Impairment loss 239,675 291,939 Amortization of goodwill 520,643 496,504 Increase (decrease) in allowance for doubtful accounts 679 (460,675) Increase (decrease) in provision for bonuses (127,350) (70,041) Increase (decrease) in provision for retirement benefits (83,629) ― Increase (decrease) in net defined benefit liability ― 1,502,819 Increase (decrease) in other provision (56,074) 43,264 Interest and dividends income (81,416) (89,091) Interest expenses 2,826 1,714 Equity in (earnings) losses of affiliates (497,201) (493,479) Foreign exchange losses (gains) (4,355) (2,022) Loss (gain) on sales of noncurrent assets (12,163) (39,657) Loss (gain) on sales of real estate for investment (21,974) ― Loss (gain) on liquidation of subsidiaries and affiliates’ stocks ― (104,118) Decrease (increase) in notes and accounts receivable ― trade 201,159 (497,679) Decrease (increase) in inventories (1,457,010) (741,862) Increase (decrease) in notes and accounts payable ― trade 705,260 (348,193) Increase (decrease) in accrued consumption taxes 52,295 344,900 Increase (decrease) in advances received 500,753 (151,839) Decrease (increase) in other assets 150,267 (69,996) Increase (decrease) in other liabilities (58,569) (387,319) Subtotal 6,435,728 6,377,821 Interest and dividends income received 190,181 204,415 Interest expenses paid (2,799) (1,714) Income taxes paid (1,437,902) (2,250,920) Net cash provided by (used in) operating activities 5,185,207 4,329,603 ― 17 ― (Thousands of yen) Fiscal 2013 (March 1, 2013 to February 28, 2014) Fiscal 2014 (March 1, 2014 to February 28, 2015) Cash Flows from Investing Activities: Purchase of property, plant and equipment (1,048,529) (1,590,069) Proceeds from sales of property, plant and equipment 128,560 62,000 Purchase of intangible assets (19,089) (53,944) Purchase of securities (1,400,000) (500,000) Proceeds from redemption of securities ― 1,900,000 Purchase of investment securities (17,077) (1,216,996) Proceeds from sales of real estate for investment 63,361 ― Payments of long-term loans receivable (9,753) (7,774) Collection of long-term loans receivable 15,459 8,083 Purchase of long-term prepaid expenses (70,773) (46,044) Proceeds from liquidation of subsidiaries and affiliates’ stocks ― 104,118 Other payments (388,201) (241,595) Other proceeds 356,743 397,469 Net cash provided by (used in) investing activities (2,389,299) (1,184,752) Cash Flows from Financing Activities: Repayment of long-term loans payable (92,230) (102,620) Purchase of treasury stock (554) (2,083,827) Proceeds from sales of treasury stock 114,975 62,985 Cash dividends paid (687,001) (957,168) Other payments (159,113) (217,816) Net cash provided by (used in) financing activities (823,924) (3,298,446) Effect of exchange rate change on cash and cash equivalents 9,662 13,114 Net increase (decrease) in cash and cash equivalents 1,981,646 (140,482) Cash and cash equivalents at beginning of period 2,111,769 4,093,415 Cash and cash equivalents at end of period 4,093,415 3,952,933 ― 18 ― (5) Notes to Consolidated Financial Statements (Notes Regarding Going-Concern Assumption) Not applicable. (Changes in Accounting Policies) (Application of the Accounting Standard for Retirement Benefits) The Company has applied the Accounting Standard for Retirement Benefits (Accounting Standards Board of Japan (ASBJ) Statement No. 26 of May 17, 2012; hereinafter referred to as the “Standard”) and the Guidance on Accounting Standard for Retirement Benefits (ASBJ Guidance No. 25 of May17, 2012; hereinafter referred to as the “Guidance”) from the end of the fiscal year ended February 28, 2015 (excluding provisions stated in article 35 of the Standard and article 67 of the Guidance). Under this policy, pension assets are deducted from retirement benefit obligations and the net amount is recognized as net retirement benefit asset and net retirement benefit liability. Differences of unrecognized actuarial gains and losses are recognized as net retirement benefit asset and net retirement benefit liability. The adoption of the Standard and Guidance is subject to the transitional treatment stipulated under Article 37 of the Standard. Accordingly, the impact of the abovementioned revision in calculation methods was included in remeasurements of retirement bene fi t plans under accumulated other comprehensive income as of the end of the fi scal year under review. As a result, and as of February 28, 2015, YONDOSHI HOLDINGS recorded net retirement bene fi t asset of ¥614,916 thousand and net retirement bene fi t liability of ¥614,881 thousand. In addition, accumulated other comprehensive income decreased by ¥37,476 thousand. Meanwhile, the impact on net asset per share was immaterial. (Segment Information) 1. Overview of Reporting Segments The Group’s reporting segments are regularly reviewed by the Board of Directors using the segregated financial information available within each segment to determine the allocation of management resources and evaluate business results. As a comprehensive fashion company, the YONDOSHI HOLDINGS Group engages in business activities through four core operating companies. These are F.D.C. Products Inc., AS’TY Inc., MISUZU Co., Ltd. and age Co., Ltd. The individual business segments of the YONDOSHI HOLDINGS Group are fundamentally comprised of its consolidated subsidiaries. On this basis, the Company’s four reporting segments are the F.D.C. Products group, the AS’TY group, MISUZU and age. The F.D.C. Products group is mainly engaged in brand SPA activities dealing ostensibly with 4°C jewelry as well as restaurant business operations. The AS’TY group undertakes apparel manufacturing business focusing primarily on its ODM activities while at the same time engaging in apparel wholesale and developer business activities. MISUZU operates largely in the ladies’ apparel SPA business. age is active in retail operations primarily in the fashion sector focusing mainly on Western Japan. 2. Calculation Methods for Net Sales, Profit and Loss, Assets, Liabilities and Other Items by Reporting Segment The accounting treatment methods for reporting segments are generally the same as those adopted for preparing consolidated financial statements. Profits for reporting segments are operating income amounts. Intrasegment sales and transfers are based on current market prices. ― 19 ― 3. Information Regarding Net Sales, Profit and Loss, Assets, Liabilities and Other Items by Reporting Segment Fiscal 2013, the Fiscal Year Ended February 28, 2014 (March 1, 2013 to February 28, 2014) (Thousands of yen) Reporting Segments Adjustment amount (Note 1) Amount recorded on consolidated statement of income F.D.C. Products group AS’TY group MISUZU age Total Operating revenues Operating revenues to outside customers 26,227,261 9,107,549 5,881,097 7,737,277 49,003,184 ― 49,003,184 Intrasegment operating revenues and transfers 43,084 1,445,808 24,225 240,299 1,753,417 (1,753,417) ― Total 26,320,345 10,553,357 5,905,322 7,977,577 50,756,602 (1,753,417) 49,003,184 Segment income (loss) 4,374,877 557,846 (69,225) 160,497 5,023,995 (117,910) 4,906,084 Segment assets 25,170,216 18,988,089 2,267,796 2,561,697 48,987,799 9,490,762 58,478,562 Other items Depreciation 544,470 245,310 146,572 57,963 994,315 26,256 1,020,572 Increase in property, plant and equipment and intangible assets 821,790 130,960 160,951 22,283 1,135,986 795 1,136,781 Notes: 1. (1) The adjustment amount of minus ¥117,910 thousand for segment income mainly includes amortization of goodwill totaling minus ¥520,643 thousand and general administrative expenses that are not attributable to individual reporting segments amounting to minus ¥589,094 thousand. (2) The adjustment amount of ¥9,490,762 thousand for segment assets is mainly comprised of corporate assets of ¥5,774,496 thousand and the balance of unamortized goodwill of ¥6,206,310 thousand. Meanwhile, corporate assets are primarily made up of surplus operating funds (cash and deposits). (3) The adjustment amount of ¥26,256 thousand for depreciation and amortization relates to corporate assets that are not attributable to individual reporting segments. (4) The adjustment amount of ¥795 thousand for the amount of property, plant and equipment as well as intangible assets increase relates to corporate assets that are not attributable to individual reporting segments. 2. Segment income (loss) matches operating income recorded on the consolidated statements of income. Fiscal 2014, the Fiscal Year Ended February 28, 2015 (March 1, 2014 to February 28, 2015) (Thousands of yen) Reporting Segments Adjustment amount (Note 1) Amount recorded on consolidated statement of income F.D.C. Products group AS’TY group MISUZU age Total Operating revenues Operating revenues to outside customers 28,537,113 8,787,244 5,344,775 8,057,133 50,726,266 ― 50,726,266 Intrasegment operating revenues and transfers 50,330 1,657,587 20,521 285,728 2,014,167 (2,014,167) ― Total 28,587,444 10,444,831 5,365,296 8,342,861 52,740,434 (2,014,167) 50,726,266 Segment income 4,980,999 422,436 14,059 86,150 5,503,646 (35,744) 5,467,901 Segment assets 27,873,136 20,132,567 2,228,395 2,505,023 52,739,123 8,251,215 60,990,338 Other items Depreciation 651,483 249,692 119,285 81,056 1,101,518 27,828 1,129,346 Increase in property, plant and equipment and intangible assets 1,209,843 415,061 26,390 24,966 1,676,261 ― 1,676,261 ― 20 ― Notes: 1. (1) The adjustment amount of minus ¥35,744 thousand for segment income mainly includes amortization of goodwill totaling minus ¥496,504 thousand and general administrative expenses that are not attributable to individual reporting segments amounting to minus ¥598,882thousand. (2) The adjustment amount of ¥8,251,215 thousand for segment assets is mainly comprised of corporate assets of ¥4,357,769 thousand and the balance of unamortized goodwill of ¥5,709,806 thousand. Meanwhile, corporate assets are primarily made up of surplus operating funds (cash and deposits). (3) The adjustment amount of ¥27,828 thousand for depreciation and amortization relates to corporate assets that are not attributable to individual reporting segments. 2. Segment income matches operating income recorded on the consolidated statements of income. (Related Information) Fiscal 2013, the Fiscal Year Ended February 28, 2014 (March 1, 2013 to February 28, 2014) 1. Product and Service Information As the same information is disclosed in the Segment Information, product and service information has been omitted. 2. Geographical Segment Information a. Net sales As the total of operating revenues to outside customers based in Japan of all business segments represented over 90% of the Company’s total operating revenues in the consolidated statements of income, geographical information has been omitted. b. Property, plant and equipment As the total of property, plant and equipment based in Japan of all business segments represented over 90% of the Company’s property, plant and equipment in the consolidated balance sheets, geographical information has been omitted. 3. Information by Major Customer This information has been omitted because there are no specific customers to whom sales exceed 10% or more of the total operating revenues posted in the consolidated statement of income. Fiscal 2014, the Fiscal Year Ended February 28, 2015 (March 1, 2014 to February 28, 2015) 1. Product and Service Information As the same information is disclosed in the Segment Information, product and service information has been omitted. 2. Geographical Segment Information a. Net sales As the total of operating revenues to outside customers based in Japan of all business segments represented over 90% of the Company’s total operating revenues in the consolidated statements of income, geographical information has been omitted. b. Property, plant and equipment As the total of property, plant and equipment based in Japan of all business segments represented over 90% of the Company’s property, plant and equipment in the consolidated balance sheets, geographical information has been omitted. 3. Information by Major Customer This information has been omitted because there are no specific customers to whom sales exceed 10% or more of the total operating revenues posted in the consolidated statement of income. ― 21 ― (Information Concerning the Impairment loss of Noncurrent Assets by Reporting Segment) Fiscal 2013, the Fiscal Year Ended February 28, 2014 (March 1, 2013 to February 28, 2014) (Thousands of yen) Reporting Segments Adjustment amount Total F.D.C. Products group AS’TY group MISUZU age Total Impairment loss 115,048 9,809 69,301 45,516 239,675 ― 239,675 Fiscal 2014, the Fiscal Year Ended February 28, 2015 (March 1, 2014 to February 28, 2015) (Thousands of yen) Reporting Segments Adjustment amount Total F.D.C. Products group AS’TY group MISUZU age Total Impairment loss 236,048 6,453 42,498 6,939 291,939 ― 291,939 (Information Concerning the Amount of Goodwill Amortized and the Balance of Unamortized Goodwill by Reporting Segment) Fiscal 2013, the Fiscal Year Ended February 28, 2014 (March 1, 2013 to February 28, 2014) There were no amounts of goodwill amortized or balance of unamortized goodwill allocated to reporting segments. The amounts of goodwill amortized and balance of unamortized goodwill not allocated to reporting segments were ¥520,643 thousand and ¥6,206,310 thousand, respectively. The amounts of goodwill amortized and balance of unamortized goodwill related to goodwill that arose at the time of stock exchange. Fiscal 2014, the Fiscal Year Ended February 28, 2015 (March 1, 2014 to February 28, 2015) There were no amounts of goodwill amortized or balance of unamortized goodwill allocated to reporting segments. The amounts of goodwill amortized and balance of unamortized goodwill not allocated to reporting segments were ¥496,504 thousand and ¥5,709,806 thousand, respectively. The amounts of goodwill amortized and balance of unamortized goodwill related to goodwill that arose at the time of stock exchange. (Information Concerning the Gain on Negative Goodwill by Reporting Segment) Fiscal 2013, the Fiscal Year Ended February 28, 2014 (March 1, 2013 to February 28, 2014) Not applicable. Fiscal 2014, the Fiscal Year Ended February 28, 2015 (March 1, 2014 to February 28, 2015) Not applicable. ― 22 ― (Per Share Information) (Yen) Fiscal 2013 (March 1, 2013 to February 28, 2014) Fiscal 2014 (March 1, 2014 to February 28, 2015) 1. Net assets per share 2. Earnings per share 3. Net income per share (diluted) 1,609.45 116.40 116.24 1. Net assets per share 2. Earnings per share 3. Net income per share (diluted) 1,722.67 134.99 134.78 Note: The basis for calculating earnings per share and net income per diluted share is presented as follows: (Thousands of yen unless otherwise stated) Fiscal 2013 (March 1, 2013 to February 28, 2014) Fiscal 2014 (March 1, 2014 to February 28, 2015) Total earnings per share Net income 3,183,974 3,642,528 Net income applicable to shareholders of common stock — — Net income applicable to common stock 3,183,974 3,642,528 Average number of common shares (Shares) 27,353,992 26,982,906 Net income per share adjusted for diluted shares Adjustment to net income per share — — Increased number of common shares (Shares) 38,012 42,236 Description of the diluted shares not included in the calculation of net income per share adjusted for diluted shares due to their non-dilutive effect from the previous fiscal year New share subscription rights issued on June 12, 2013 5th issuance of new share subscription rights Common stock: 118,400 shares New share subscription rights issued on July 24, 2013 6th issuance of new share subscription rights Common stock: 36,700 shares New share subscription rights issued on July 24, 2014 7th issuance of new share subscription rights Common stock: 24,800 shares 3. The basis for calculating net assets per share is presented as follows: (Thousands of yen unless otherwise stated) Fiscal 2013 (March 1, 2013 to February 28, 2014) Fiscal 2014 (March 1, 2014 to February 28, 2015) Total net asset recorded on consolidated balance sheets 44,136,288 45,830,648 Deduction amount of total net asset recorded on consolidated balance sheets 19,421 43,311 Subscription rights to shares (19,421) (43,311) Minority interests (—) (—) Net assets applicable to common stock 44,116,866 45,787,337 Number of common stock utilized for the calculation of net assets per share (Shares) 27,411,068 26,579,278 4. The Company’s shares held by the trust-type employee ownership plan are recognized as treasury stock in consolidated financial statements. As a result, the number of common shares as of the end of the period used to calculate the aforementioned net assets per share amount as well as the average number of shares for the period used to calculate the aforementioned earnings per share amount are after deducting the Company’s shares held by the trust-type employee ownership plan. (Important Subsequent Events) Not applicable. ― 23 ― 4. NON-CONSOLIDATED FINANCIAL STATEMENTS (1) Non-Consolidated Balance Sheets (Thousands of yen) End of the Fiscal Year Ended February 28, 2014 (As of February 28, 2014) End of the Fiscal Year Ended February 28, 2015 (As of February 28, 2015) ASSETS Current assets: Cash and time deposits 234,823 1,539,159 Short-term investment securities 4,850,000 2,000,000 Deferred tax assets 13,530 14,493 Short-term loans receivable to subsidiaries and affiliates 1,336,672 1,024,870 Accounts receivable-other 109,057 145,840 Other 6,484 7,541 Total current assets 6,550,568 4,731,905 Noncurrent assets: Property, plant and equipment: Buildings, net 681 567 Tools, furniture and fixtures, net 619 368 Lease assets 3,600 900 Total property, plant and equipment 4,901 1,836 Intangible assets: Software 190 114 Lease assets 75,032 50,344 Total intangible assets 75,222 50,458 Investments and other assets: Investment securities 655,382 1,856,518 Stocks of subsidiaries and affiliates 29,204,180 29,204,180 Investments in capital of subsidiaries and affiliates 172,716 75,190 Long-term loans receivable from subsidiaries and affiliates 81,520 166,964 Long-term loans receivable from employees — 694 Deferred tax assets 29,629 70,250 Other 16,433 5,876 Total investments and other assets 30,159,861 31,379,674 Total noncurrent assets 30,239,984 31,431,968 Total assets 36,790,553 36,163,873 ― 24 ― (Thousands of yen) End of the Fiscal Year Ended February 28, 2014 (As of February 28, 2014) End of the Fiscal Year Ended February 28, 2015 (As of February 28, 2015) LIABILITIES Current liabilities: Short-term loans payable 11,950,438 13,132,793 Current portion of long-term loans payable — 48,310 Lease obligations 28,791 27,093 Accounts payable-other 36,344 70,732 Accrued expenses 11,270 9,193 Income taxes payable 46,601 60,165 Provision for bonuses 13,670 11,900 Provision for directors’ bonuses 13,150 14,500 Other 8,970 35,270 Total current liabilities 12,109,237 13,409,957 Noncurrent liabilities: Long-term loans payable 150,930 — Lease obligations 54,359 27,265 Provision for retirement benefits 3,155 3,329 Provision for directors retirement benefits 80,100 97,400 Total noncurrent liabilities 288,544 127,994 Total liabilities 12,397,781 13,537,952 NET ASSETS Shareholders’ equity: Capital stock 2,486,520 2,486,520 Capital surplus Legal reserve 14,838,777 14,838,777 Other capital surplus 21,800 34,196 Total capital surplus 14,860,578 14,872,973 Retained earnings: Profit reserve 417,300 417,300 Other retained earnings Other reserve 6,794,500 6,794,500 Retained earnings brought forward 511,563 686,102 Total retained earnings 7,723,363 7,897,902 Treasury stock (697,210) (2,675,616) Total shareholders’ equity 24,373,251 22,581,780 Valuation and translation adjustments: Valuation difference on available-for-sale securities 98 829 Total valuation and translation adjustments 98 829 Subscription rights to shares 19,421 43,311 Total net assets 24,392,771 22,625,921 Total liabilities and net assets 36,790,553 36,163,873 ― 25 ― (2) Non-Consolidated Statements of Income (Thousands of yen) Fiscal 2013 (March 1, 2013 to February 28, 2014) Fiscal 2014 (March 1, 2014 to February 28, 2015) Operating revenue 1,651,880 1,990,125 Operating gross profit 1,651,880 1,990,125 Selling, general and administrative expenses 562,926 561,728 Operating income 1,088,954 1,428,396 Non-operating income Interest income 15,255 19,431 Dividend income 56 74 Foreign exchange losses 7,264 15,112 Gain on forfeiture of unclaimed dividends 1,734 1,632 Other 385 608 Total Non-operating income 24,695 36,858 Non-operating expenses Interest expenses 42,290 48,688 Commission for purchase of treasury stock — 35,364 Other 231 — Total non-operating expenses 42,521 84,052 Ordinary income 1,071,127 1,381,202 Extraordinary loss Loss on valuation of investments in capital of subsidiaries and affiliates — 97,525 Total extraordinary loss — 97,525 Income before income taxes 1,071,127 1,283,677 Income taxes ― current 153,400 193,957 Income taxes ― deferred 11,389 (41,988) Total income taxes 164,790 151,969 Net income 906,337 1,131,708 ― 26 ― (3) Non-Consolidated Statements of Changes in Net Assets Fiscal 2013 (March 1, 2013 to February 28, 2014) (Thousands of yen unless otherwise stated) Shareholders’ equity Common stock Capital surplus Retained earnings Legal reserve Other capital surplus Total capital surplus Profit reserve Other retained earnings Total retained earnings General reserve Retained earnings brought forward Balance at the end of previous period 2,486,520 14,838,777 — 14,838,777 417,300 6,794,500 287,358 7,499,158 Changes of items during the period Dividends from surplus (682,132) (682,132) Net income 906,337 906,337 Purchase of treasury stock Disposal of treasury stock 21,800 21,800 Sales of treasury stock from Employee Stock Ownership Trust Net changes in items excluding shareholders’ equity during the period Total — — 21,800 21,800 — — 224,204 224,204 Balance at the end of current period 2,486,520 14,838,777 21,800 14,860,578 417,300 6,794,500 511,563 7,723,363 (Thousands of yen unless otherwise stated) Shareholders’ equity Valuation and translation adjustments Subscription rights to shares Total net assets Treasury stock Total shareholders’ equity Valuation difference on available-for -sale securities Total valuation and translation adjustments Treasury stock Treasury stock (held by Employee Stock Ownership Trust) Total treasury stock Balance at the end of previous period (656,644) (207,422) (864,066) 23,960,389 (218) (218) 19,195 23,979,365 Changes of items during the period Dividends from surplus (682,132) (682,132) Net income 906,337 906,337 Purchase of treasury stock (554) (554) (554) (554) Disposal of treasury stock 108,160 108,160 129,961 129,961 Sales of treasury stock from Employee Stock Ownership Trust 59,250 59,250 59,250 59,250 Net changes in items excluding shareholders’ equity during the period 317 317 226 544 Total 107,605 59,250 166,855 412,861 317 317 226 413,405 Balance at the end of current period (549,038) (148,172) (697,210) 24,373,251 98 98 19,421 24,392,771 ― 27 ― Fiscal 2014 (March 1, 2014 to February 28, 2015) (Thousands of yen unless otherwise stated) Shareholders’ equity Common stock Capital surplus Retained earnings Legal reserve Other capital surplus Total capital surplus Profit reserve Other retained earnings Total retained earnings General reserve Retained earnings brought forward Balance at the end of previous period 2,486,520 14,838,777 21,800 14,860,578 417,300 6,794,500 511,563 7,723,363 Changes of items during the period Dividends from surplus (957,168) (957,168) Net income 1,131,708 1,131,708 Purchase of treasury stock Disposal of treasury stock 12,395 12,395 Sales of treasury stock from Employee Stock Ownership Trust Net changes in items excluding shareholders’ equity during the period Total — — 12,395 12,395 — — 174,539 174,539 Balance at the end of current period 2,486,520 14,838,777 34,196 14,872,973 417,300 6,794,500 686,102 7,897,902 (Thousands of yen unless otherwise stated) Shareholders’ equity Valuation and translation adjustments Subscription rights to shares Total net assets Treasury stock Total shareholders ’ equity Valuation difference on available-for -sale securities Total valuation and translation adjustments Treasury stock Treasury stock (held by Employee Stock Ownership Trust) Total treasury stock Balance at the end of previous period (549,038) (148,172) (697,210) 24,373,251 98 98 19,421 24,392,771 Changes of items during the period Dividends from surplus (957,168) (957,168) Net income 1,131,708 1,131,708 Purchase of treasury stock (2,083,827) (2,083,827) (2,083,827) (2,083,827) Disposal of treasury stock 56,599 56,599 68,995 68,995 Sales of treasury stock from Employee Stock Ownership Trust 48,822 48,822 48,822 48,822 Net changes in items excluding shareholders’ equity during the period 731 731 23,889 24,620 Total (2,027,227) 48,822 (1,976,405) (1,791,470) 731 731 23,889 (1,766,849) Balance at the end of current period (2,576,265) (99,350) (2,675,616) 22,581,780 829 829 43,311 22,625,921 ― 28 ― 5. Other (1) Changes in Management i. Changes in representative director Not applicable. ii. Changes in management as a result of the shift to a company with audit and other committees structure Subject to the approval of shareholders to an amendment to the Company’s Articles of Incorporation at its 65th Annual General Meeting of Shareholders scheduled to be held on May 21, 2015, YONDOSHI HOLDINGS plans to shift to a company with audit and other committees structure. The Company then intends to put in place a management group comprised of the following candidate officers. Candidate directors (excluding members of the Audit and other committees) Saishi Kimura Current Chairman and Representative Director Hidenori Suzuki Current President and Representative Director Satoshi Miyamoto Currently Executive Director and Executive Officer responsible for AS’TY Inc. Akihiro Takiguchi Currently Executive Director and Executive Officer responsible for F.D.C. Products Inc. Masahiko Iwamori Currently Executive Director and Executive Officer responsible for operations, General Manager of Corporate Planning (concurrent position) Toshifumi Kurume Current Director and Executive Officer, General Manager responsible for F.D.C. Products marketing Masahiko Nishimura Currently Director and Executive Officer responsible for finance, General Manager of Finance (concurrent position) Nobuyuki Hosoda Currently Director and advisor Candidate directors (for membership on the Audit and other committees) Eiji Tasaki Current Corporate Auditor of the Company Nobuhiko Kamimura Current Outside Corporate Auditor of the Company Tomoaki Fujimori Current Outside Corporate Auditor of the Company Seisui Kamigaki Current attorney-at-law Note: Nobuhiko Kamimura, Tomoaki Fujimori, and Seisui Kamigaki are outside director candidates.