AVEX GROUP HOLDINGS INC. and Subsidiaries

Consolidated Financial Statements for the Year Ended March 31, 2017, and Independent Auditor's Report

INDEPENDENT AUDITOR'S REPORT

To the Board of Directors of AVEX GROUP HOLDINGS INC.:

We have audited the accompanying consolidated balance sheet of AVEX GROUP HOLDINGS INC. and its subsidiaries as of March 31, 2017, and the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information, all expressed in Japanese yen.

Management's Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in Japan, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of AVEX GROUP HOLDINGS INC. and its subsidiaries as of March 31, 2017, and the consolidated results of their operations and their cash flows for the year then ended in accordance with accounting principles generally accepted in Japan.

Convenience Translation

Our audit also comprehended the translation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, such translation has been made in accordance with the basis stated in Note 1 to the consolidated financial statements. Such U.S. dollar amounts are presented solely for the convenience of readers outside Japan.

June 26, 2017

Millions of Yen

Thousands of

U.S. Dollars

(Note 1)

ASSETS

2017

2016

2017

CURRENT ASSETS:

Cash and cash in banks (Notes 14 and 17)

¥ 24,298

¥ 21,107

$ 216,579

Marketable securities (Notes 3 and 14)

1,003

Notes and accounts receivable-trade (Note 14)

20,122

21,271

179,356

Inventories:

Merchandise and finished products

1,333

1,300

11,881

Programs and work in process

3,736

6,616

33,300

Raw materials and supplies

381

610

3,396

Deferred tax assets (Note 10)

4,732

3,742

42,178

Advance payments-trade

1,616

1,226

14,404

Prepaid expenses

1,169

1,280

10,419

Prepaid royalties

3,889

2,002

34,664

Other

2,618

3,711

23,335

Allowance for doubtful accounts

(204

(252

(1,818

Total current assets

63,693

63,620

567,724

PROPERTY, PLANT AND EQUIPMENT (Note 4):

Land

29,770

29,770

265,353

Buildings and structures-net

1,001

1,492

8,922

Construction in progress

8,179

90

72,903

Other property-net

658

801

5,865

Total property, plant and equipment

39,609

32,154

353,052

INVESTMENTS AND OTHER ASSETS:

Investment securities (Notes 3 and 14)

5,819

5,310

51,867

Long-term prepaid expenses

42

147

374

Intangible assets

4,599

5,457

40,992

Deferred tax assets (Note 10)

2,016

1,943

17,969

Other assets

2,940

2,839

26,205

Allowance for doubtful accounts

(323

(263

(2,879

Total investments and other assets

15,095

15,434

134,548

TOTAL

¥ 118,399

¥ 111,208

$ 1,055,343

) ) )

) ) )

Millions of Yen

Thousands of

U.S. Dollars

(Note 1)

LIABILITIES AND EQUITY

2017

2016

2017

CURRENT LIABILITIES:

Notes and accounts payable-trade (Note 14)

¥ 2,198

¥ 2,020

$ 19,591

Short-term bank loans (Notes 5 and 14)

10,500

8,500

93,591

Current portion of long-term loans (Notes 5 and 14)

800

7,130

Current portion of long-term bonds (Notes 5 and 14)

720

Accounts payables-other (Note 14)

19,926

24,356

177,609

Accrued royalties (Note 14)

8,139

8,748

72,546

Income taxes payable (Note 14)

2,231

865

19,885

Provision for bonuses

725

1,066

6,462

Provision for sales returns

4,328

4,163

38,577

Valuation reserve for inventory purchase commitments

763

6,800

Provision for loss on business liquidation

126

1,123

Provision for point card certificates

45

401

Other

7,243

5,038

64,560

Total current liabilities-(Forward)

¥ 57,029

¥ 55,478

$ 508,325

Avex Group Holdings Inc. published this content on 19 September 2017 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 19 September 2017 05:33:02 UTC.

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