Annual Report - Yusen Logistics

Yusen Logistics Co.,Ltd.Annual Report

An

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11

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2011

FUSION

Fusion of

organizations

Fusion of

employee awareness

Fusion of

governanceINTEGRATION

2

1YAS NYK Logistics

“Fusion” of Operation

Promote “Fusion” of employee awareness, organization and governance, in order to maximize synergies, share corporate values worldwide within the Yusen Logistics (YLK) Group and aim to achieve its goals.

“GO FORWARD, Yusen Logistics”

In October 2010, Yusen Logistics Co., Ltd. was born out of

integration of Yusen Air & Sea Service, a logistics provider of 55

years of experience and with strength in air freight forwarding, with

NYK Logistics (Japan), another logistics provider having 27 years of

experience with its core business in ocean freight forwarding.

We are currently proceeding with gradual integration with NYK

Logistics’ overseas business which has strength in ocean freight

forwarding and contract logistics. Once completed, we will be

able to satisfy diversified customer needs in all services that

seamlessly cover air and ocean freight forwarding, land transport

and contract logistics.

We will accomplish steady “Integration,” promote “Fusion” of

internal values and then make “Dramatic Progress” to be able to

provide high-quality services that satisfy requests from many

customers, with an ultimate goal of becoming a total logistics

provider operating globally with world-class scale and quality.

By accomplishing three steps of “Integration,” “Fusion” and “Dramatic Progress,” we aim to be A Total Logistics Provider operating globally with world-class scale and quality.

Mission

Vision

Maximize enterprise value by contributing to the development of the global economy and earning the confidence of customers through the provision of sophisticated, high-quality logistics services.

A Total Logistics Provider operating globally with world-class scale and quality.

Values

Customer Centric

Quality /Gemba Focused

HR-oriented Management

Environmental Management

IntensityIntegrity Innovation

Completion of “Integration”

Plans to complete business integration with NYK Logistics business by March 2012.

3 DRAMATIC

PROGRESS

Portfolio by

Business segment YLK (YAS) NYK Logistics

(Companies to be Integrated only)

YLK (YAS) NYK Logistics(Companies to be Integrated only)

Yusen Logistics

Yusen Logistics

AirOceanLand transportLogisticsOthers

AmericasEuropeSouth Asia & OceaniaEast AsiaJapan

5%

26%

27%

42%

4%

33%

24%

14%

25%

2%

30%

33%

12%

23%

8%

9%

15%

18%

50%

23%

24%

14%

16%

23% 24%

19%

18%

18%

21%

37%

37%

13%

13%

3%

68%

21%

8%

FY2013FY2010

Portfolio by

Geographical segment

FY2013FY2010

For “Dramatic Progress”

Establish the “3D Management” that positions business, sales and area strategies as three basic strategies, and aim to be A Total Logistics Provider operating globally with world-class scale and quality.

Yusen Logistics

Yusen Logistics

Sales Strategy Area Strategy

Business

StrategyToward World-Top Class Total LogisticsProvider

(forecast)

(forecast)

1Yusen Logistics Annual Report 2011

Millions of Yen Thousands of U.S. Dollars(Note)

2009 2010 2011 2011

Results of Operations Net sales ¥ 167,460 ¥ 123,453 ¥ 160,788 $ 1,933,716

Operating income 4,574 2,310 4,947 59,499

Net income 1,083 1,545 3,621 43,542

Financial Position Total assets ¥ 75,733 ¥ 81,443 ¥ 88,363 $ 1,062,691

Total equity 51,249 53,663 55,360 665,781

Yen U.S. Dollars (Note)

Per Share Data Basic net income ¥ 25.68 ¥ 36.63 ¥ 85.85 $ 1.032

Net assets 1,173.84 1,225.21 1,260.69 15.162

Cash dividends 18.00 16.00 18.00 0.216

Key Ratios Return on equity (ROE) (%) 2.0 3.1 6.9

Net income to total assets (%) 1.2 2.0 4.3

Equity ratio (%) 65.4 63.4 60.2

Number of employees 5,326 5,252 5,623

Note: The U.S. dollar amounts represent translations of Japanese yen amounts at the rate of ¥83.15 = US$1. See Note 1 to the consolidated fi nancial statements on page 23.

20

15

10

5

0

2007 2008 2009 2010

ROE

Net income to total assets

8,000

6,000

4,000

2,000

0

-2,000

2007 2008 2009 2010

100,000

80,000

60,000

40,000

20,000

0

2007 2008 2009 2010

2007 2008 2009 2010

8,000

6,000

4,000

2,000

0

12,000

8,000

4,000

0

2007 2008 2009 2010

Free Cash Flows (Millions of Yen)

ROE / Net income to total assets (%)

200,000

150,000

100,000

50,000

0

2007 2008 2009 2010

Total Assets (Millions of Yen)

Net Sales (Millions of Yen)

Operating Income (Millions of Yen)

Net Income (Millions of Yen)

201120112011

201120112011

2 Yusen Logistics Annual Report 2011

Yusen Logistics Co., Ltd. and Consolidated SubsidiariesYears Ended March 31

Consolidated Financial Highlights

I was appointed to President of Yusen Logistics Co., Ltd. on April 1, 2011.

Yusen Logistics was born in October 2010, out of the integration of Yusen Air & Sea Service and NYK

Logistics (Japan), and is working to realize the business target of being a total logistics provider

operating globally with world-class scale and quality.

In fi scal 2010 (that ended March 31, 2011), we recorded net sales of ¥160.8 billion and ordinary

income of ¥6.1 billion. By implementing our new medium-term business plan that began in fi scal

2011, "GO FOWARD, Yusen Logistics," we aim to achieve net sales of ¥500 billion and ordinary income

of ¥18.5 billion in fi scal 2013 by realizing integration effects and growth. In addition to becoming

bigger in scale, the new company now has a better sales mix by business and region, which enables

us to respond to increasingly sophisticated logistics needs of our customers in all types of services in

air and ocean freight forwarding, land transport and contract logistics. We expect to (1) grow mainly

in ocean freight forwarding and in Asia, (2) realize integration effects, (3) develop global operations

and (4) expand services to our customers.

We plan to complete integration of our overseas businesses by March 2012. In order to make 1+1

into 3 or 4, we need the “Fusion” of our operations. Within the forwarding business, air and ocean

freight forwarding differ in various ways and in their business culture. We will spend a year or two to

build workplaces where people respect each other through sharing of the new company’s policies

and through exchanges among the workforce. As we believe that revitalization of human resources is

most critical in creating value, we will pursue empowerment, promote young workers and invest in

training of our workforce.

With regard to dividends, we recognize that the return of profi ts to shareholders is a matter of high

managerial priority. We are committed to pay stable dividends, as long as we generate suffi cient

profi t. With due consideration to our group’s growth and expansion plans, our basic policy is to

increasingly reward our shareholders. Based on this policy, we expect to pay ¥20 per share dividend

based on our current earnings forecasts for fi scal 2011.

We would like to ask for your continued support and patronage.

Hiromitsu Kuramoto President


To Our Shareholders

New Medium-Term Business Plan “GO FORWARD, Yusen Logistics”

Completion of Integration

Integration

(Consolidation)

Schedule

2010 2011 2012

Oct., 1, 2010

“Yusen Logistics” New system starts

Scope of Consolidation(including equity-method companies) 41

Apr., 1, 2011～ Overseas new system starts

The U.S., UK, Hong Kong, etc.Integration of 22 countries and regions

China, UAE, and othersSchedule for completion of Integration of overseas businesses

Jul., 1, 2011～ By the end of March

From July, integration of Philippines, India, etc.

From Oct., integration of Thailand

Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Jun. Jul. - Dec. Jan. Feb. Mar.

61companies companies

After the Lehman Bankruptcy in 2008, our freight forwarding

volume dropped in 2009 but returned to an uptrend in 2010,

thanks to a global economic recovery. In addition to growth in

Asia, demand has picked up in the developed countries in Europe

and Americas. Demand for international freight forwarding is on

an uptrend in the medium to long term, as manufacturing bases

and retailers’ procurement have become globalized.

However, the Great East Japan Earthquake of March 11,

2011 has further delayed a recovery in Japan-related freight,

growth of which had already been slow due to the appreciation

of the yen and overseas inventory adjustment.

We recorded a decrease in sales and income in fiscal 2009,

mainly due to the worldwide recession triggered by the Lehman

Bankruptcy. In fiscal 2010, however, we achieved growth in

sales and profits. Net sales increased by 30.2% year-on-year

to ¥160.8 billion and ordinary income by 82.5% to ¥6.1 billion,

thanks mainly to global economic recovery and our group-wide

cost reduction efforts. In the fi rst half, our business recovered

substantially thanks to an increase in international freight

forwarding handling volume, particularly in Asian countries

and the effects of our “Project Plus One” an upgraded version

of the “Urgent project to improve balances” that was launched

in fiscal 2009. In the second half of fiscal 2010, overseas

freight forwarding businesses were robust in general but the

appreciation of the yen and overseas inventory adjustment

resulted in a decrease in export and import freight volumes in

Japan. Moreover, the Great East Japan Earthquake of March

11, 2011 affected some businesses. Overall, we had a diffi cult

time in Japan but that was offset by strong achievement

overseas, in particular based on a recovery in East Asia and a

turnaround in profi tability in Americas and Europe.

Q1 Q2

A1 A2

Will you explain the trend in the freight forwarding industry and effects of the Great East Japan Earthquake?

How do you evaluate your fi scal 2010 business results?

The industry is recovering from a drop in business since the Lehman Bankruptcy. Demand for international freight forwarding is on an uptrend in the medium to long term.

We achieved growth in sales and profi ts, led by favorable business in Asia, Americas and Europe.


An Interview with the President

In the previous business plan for fi scal 2008-2010, we initially

aimed to become a total logistics provider and achieve

numerical targets of ¥260 billion in net sales and ¥15 billion

in ordinary income. However, we lowered numerical targets

to ¥140 billion in net sales and ¥6.5 billion in ordinary income

in January 2010 because of the global economic recession

triggered by the Lehman Bankruptcy in 2008. By the end

of the final year, we achieved the net sales target, thanks

to integration with NYK Logistics (Japan) and higher-than

expected overseas freight volumes, but fell short of ordinary

income target because of sluggish growth in Japan’s freight

volume.

In contrast, we made signifi cant progress toward becoming

a total logistics provider by realizing business integration. We

obtained the first JISQ9100 (the Quality Management System

for Aerospace parts) certification in transportation industry,

which proved our quality enhancement, while we promoted

improvement of our human resources by opening the Yusen

Logistics Professional College.

Our theme in the new business plan for fi scal 2011-2013, which

we announced in April 2011, is to become a total logistics


We set our numerical targets at ¥500 billion in net sales and

¥18.5 billion in ordinary income for fi scal 2013. Our net sales

were ¥160.8 billion in fiscal 2010 but are expected to reach

¥338 billion in fi scal 2011 when integration with NYK Logistics’

overseas business is completed. By then, we will become a

large-scale company with approximately 16,600 employees.

A global network that covers most countries and regions in

the world will be instantly established with a service portfolio

seamlessly spanning air, ocean and land transport.

In order to be recognized as a global player, we have to

have the suffi cient levels of freight volume and quality services

that are required for the world top fi ve players. By fi scal 2013,

we aim to achieve ocean freight volume of 1 million TEU and

air freight volume of 500 thousand tons. At the same time, we

target to become a “No. 1 Kaizen (Improvement) Company” in

contract logistics and our sales department aims to establish

the “Yusen Logistics” brand in the global market.

Q3 Q4

A3 A4

Please review your previous medium-term business plan, the “YAS FIVE-STAR PROJECT.”

What are the targets in “GO FORWARD, Yusen Logistics” your new medium-term business plan?

We were forced to lower numerical targets due to the global economic crisis but improved management quality substantially.

We aim to achieve ¥500 billion in net sales and ¥18.5 billion in ordinary income in fi scal 2013.

Fusion of employee awareness Numerical target(Billions of Yen)

Net sales

Ordinary income

Net income

All companies to be integrated, total (note)YLK (consolidated)

All companies to be integrated, total (note)YLK (consolidated)

YLK (consolidated)

(Note) Total of companies to be integrated by March 2012.

FY 2011 FY 2012 FY 2013

338

370427

500

18.515

9.1

3.7 6.7 8.2

12.5

Fusion of organizations

Fusion of governance

Fusion of Operations – Toward Maximization of Synergies – Target Performance for the Final Year of the Project

・Group value sharing (Integrity, Innovation, and Intensity)

・Rebuild awareness toward A Total Logistics Provider operating globally

・Organic unification, streamlining and IT system cooperation of each of integrated companies

・Improvement of organizational management by each regional headquarters

・Establishment of 3D management

・Restructuring of global compliance system

* Ordinary income is calculated by adding to or subtracting from operating income items such interest income or expenses, foreign exchange gains or

losses, dividend income, securities sales gains, losses, or evaluation losses. Ordinary income is the Company’s important income indicator. 5Yusen Logistics Annual Report 2011

ITOrganization

FinanceCSR

Customer Centric Quality/”Gemba” FocusedInnovationIntensity

Environmental Management

HR-oriented Management

Integrity

Business Strategy

Sales Strategy

Area StrategyCustomer 1

Customer 2

Customer 3

Customer 4

Customer 5

Japan

East Asia

South Asia/O

ceania

Europe

Am

ericas

AirOcean

Contract Logistics

Land Transport

3D Management

Basic Management Strategy

Value

The Concept of

3D Management( )

The “3D Management” means to operate business efficiently

from three dimensions, namely, by area, by business and by

customers or their industries, manage them from various

aspects, and ensure to generate balanced profi ts.

As a logistics company in the Nippon Yusen Group, we

will put much value on "Customer Centric," "Quality/Gemba

Focused," "HR-oriented Management" and "Environmental

Management" with integrity, innovation and intensity. We will at

the same time establish the “3D Management.” We will make

best use of our comprehensive capability and respond to more

diversifying customer needs for freight forwarding with an

ultimate goal of becoming a total logistics provider operating

globally with world-class scale and quality.

What I emphasize most is to revitalize human resources.

We strive to build a meaningful and satisfying company for

our employees, meaning workplaces where people respect

each other through sharing of the new company’s policies

and exchanges among the workforce. When highly-motivated

employees with a sense of responsibility make constant efforts

in improving proposals and service quality, customers will

become more satisfi ed and the company’s business will grow.

In order to revitalize employees, we will pursue empowerment,

promote young workers, and invest in development of human

resources. In particular from fiscal 2011 when we enter into

a “Fusion” stage to generate synergies, it will be important

for people to respect each other through sharing of the new

company’s policies and exchanges among the workforce.

Our majority of employees are non-Japanese, with

Japanese accounting for merely about 10% of total workforce.

“Fusion” between Japanese employees and foreign employees

is an important issue. I myself will get involved in this

revitalizing and fusion effort but expect to take a year or two to

achieve the goal.

Q5 Q6

A5 A6

What is the “3D Management”? What do you as a president fi nd most precious?

This is a scheme to effi ciently expand and manage business from three dimensions, namely, by area, by business and by customers or their industries.

I fi nd human resources are most important.


An Interview with the President

In the new medium-term business plan “GO FOWARD, Yusen

Logistics,” we will fi rst focus on integration and fusion. When

we become a lively job-oriented company of employees who

understand the corporate philosophy and with progress in

fusion worldwide, we will become a company that can provide

the world best quality total logistics solutions to our customers

worldwide. This should result in our becoming a total logistics


We aim to achieve ¥500 billion in net sales by fi scal 2013 but,

once the “Dramatic Progress” materializes, we can grow into a

¥1 trillion company in sales. I appreciate your supports to our

endeavor.

We are planning to generate ¥338 billion in net sales and ¥9.1

billion in ordinary income in fi scal 2011, thanks to progress in

integration of major overseas subsidiaries.

By region, we expect a profit improvement in Americas,

Europe, South Asia and Oceania. In Japan we are looking

for negative impacts from the Great East Japan Earthquake

of March 11, 2011 but a recovery in freight forwarded in the

second half of the year when reconstruction works progress at

production bases.

Integration with NYK Logistics’ business, which has a global

network, will help increase sales signifi cantly in Americas and

Europe, where our contract

logistics and land transport

bus inesses wi l l expand.

In As ia , prof i t growth is

expected.

Q7 Q8

A7 A8

Please talk about the “Dramatic Progress” which you target after the “Integration” and the “Fusion.”

What are your earnings forecasts for fi scal 2011?

We will achieve the status of A Total Logistics Provider operating globally with world-class scale and quality.

We will record a growth in sales and earnings, partly due to business integration.

Business Strategy

Strategy_01

Strategy_02

Strategy_03

Ocean Forwarding Business

FY2013: 1 million TEUToward World-Top Class Forwarder

Toward World-Top Class Total LogisticsProvider

Sales Strategy

Product and Quality Strategy

Purchasing Strategy

Handling target

Air Forwarding Business

FY2013: 500 thousand tonsHandling target

Contract Logistics Business

Aim to be No. 1 Kaizen (Improvement) Company

Competitive “Gemba,” front line

●Standard quality creation●Elaboration to meet needs●Thorough cost management●Reliable launch

Eco-friendly handling

Cutting-edge technology IT

Quality standards

Cultivation of human resources

Assistance for launch

Strengthen weakness (SWOT)

Cost management

Strategy_01. 02

Strategy_03

Quantitative expansion by service quality and price competitiveness

Sales expansion through product development enhanced by global network and further quality improvements

By brand enhancement as “No. 1 Kaizen (Improvement) Company,” heighten synergies with forwarding business


Basic Stance and Initiatives on Corporate Governance

YLK (the Company) seeks to maintain its standing as a good corporate

citizen, earning the trust of all stakeholders and their ongoing support.

To this end, the Company upholds a high standard of ethics its business

activities-global logistics services-and strives to engage in fair and

dependable business practices in compliance with prevailing laws and

within accepted social parameters.

Corporate Governance Structure

Outline of Corporate Governance Structure and Reasons for its

Adoption

The Board of Directors, which is the Company’s decision-making body,

consists of seven directors who are engaged in determination of legal

matters, resolving of signifi cant basic policies and surveillance of the

execution of operations. The Company has also adopted the Executive

Officer System with the aim of accelerating decision making in the

execution of operations. At present, the Board of Executive Officers,

comprised of 19 executive offi cers, discusses and resolves signifi cant

matters to execute operations.

In addition, the Board of Corporate Auditors consists of four

auditors, two of which are from outside the Company, and whose

assignment is to audit the execution of duties of the Board of Directors

and the Board of Executive Officers from an objective and neutral

perspective.

The Company has chosen the above system which it believes to

ensure management transparency and efficiency, with prompt and

appropriate decision making and clear identification of duties and

responsibilities in the execution of operations.

Status of the Internal Control System

The Company carries out efficient compliance promotion, risk

management and internal audits to ensure that its internal control

system functions effectively.

Compliance

The Company established a Code of Conduct in May 2005 to ensure

that each YLK Group employee carries out and accomplishes

corporate activities and routine work in accordance with corporate

ethical guidelines and social morals, as well as by observing laws

and regulations. The Company also distributed the Group Compliance

Manual group-wide (domestically in March 2006 and overseas in March

2008). All Group executives and employees have since adhered to its

guidelines in their daily activities.

As an internal compliance system, the Compliance Committee,

chaired by the President, the position of Chief Compliance Officer

(CCO) and the CSR/Risk Management Chamber have been established.

Moreover, 66 employees of the Company and its Group companies have

been assigned as CSR Leaders to promote compliance within their

workplaces.

Risk Management System

The Company has established the CSR/Risk Management Chamber,

which specializes in managing significant risks that might affect the

management of the Company or might have Company-wide effect.

The CSR/Risk Management Chamber always identifi es, analyzes, and

assesses risks and takes appropriate action.

Each division manage risks relating to its operations in accordance

with relevant internal regulations and in cooperation with the CSR/Risk

Management Chamber.

The CSR/Risk Management Chamber reports risks and risk

management to the Compliance Committee, which is chaired by the

President, and to the Disaster Risk Management Meeting.

Internal Audits, Corporate Audits, and Accounting Audits

The Company has established the Internal Audit Chamber, staffed by

four employees, to undertake regular internal audits of the Group. The

corporate audits are conducted by four auditors including two external

auditors, in accordance with the auditing plan established by the

Board of Auditors. Motonobu Kobayashi, a full-time auditor, had held

a position of executive managing director of NYK Logistics (Japan) Co.,

Ltd. while Masaaki Hashimoto, another full-time auditor, had served as

president of Yusen Air & Sea Service (Chugoku) Co., Ltd. and Yusen Air

& Sea Service (Korea) Co., Ltd. Both auditors have long accumulated

experience and knowledge of logistics business management. The two

external auditors have knowledge and understanding of management:

Makoto Satani through his long experience and performance in the oil

industry; and Setsuko Kusumoto through her experience in business

and academic fi elds.

At the beginning of each fiscal year, the Company's corporate

auditors hear from the accounting auditor’s representatives regarding

their auditing plan for the year, and at the year-end, they receive their

reports on the audit results and confi rm the methods used. They also

hear from the Internal Audit Chamber regarding its auditing plan and

receive regular updates on auditing results.

The certified public accountants who execute accounting audits

of the Company are Takashi Nagata, Tomoyasu Maruyama and Kenji

Morita, all from Deloitte Touche Tohmatsu. They are assisted in their

accounting operations by three additional certifi ed public accountants

and seven assistants.

External Directors and External Auditors

Among two external auditors, Makoto Satani is an executive consultant

of JX Nippon Oil & Energy Corporation and a councilor of Nippon Kaiji

Kyokai, while Setsuko Kusumoto is a professor at Musashi University.

The Company has no business transaction with JX Nippon Oil & Energy

Corporation, Nippon Kaiji Kyokai and Musashi University and neither of

our two external auditors has any particular interest in the Company.

External Auditors attend the Board of Directors and the Board of

Corporate Auditors and contribute to the meetings from an independent

perspective and with insights and views accumulated from a great deal

of experience. The Company believes that the Board of Directors is

ensured to make objective and neutral decisions by refl ecting views of

External Auditors in its auditing and using their independent external

perspectives in managing the Company.

While the Company has not appointed an External Director for this

year, the monitoring capability toward the Board of Directors, which is

a management decision-making body and has a function of authority

and direction regarding execution of duties of Directors and Executive

Offi cers, has been enhanced by having two external auditors among the

four auditors. The current structure ensures the function of external

objective and neutral management surveillance, which the Company

believes is an important element of corporate governance.


Corporate Governance

Instructions

General Meeting of Shareholders

Direction, supervision

Appointment, dismissal Appointment, dismissal Appointment, dismissal

Appointment,dismissal

Appointment,dismissal, supervision

ReportsEstablishment, dissolution

Audits

Audits

Audits

Cooperation

Opinionexchange

Reports

ReportsReportsReports

Instructions

Instructions CooperationReports

Instructions Direction, supervisionReports

Board of Directors*Seven directors

(make business decisions)

Board of Corporate AuditorsFour auditors, two of whom are

external auditors

RepresentativeDirectors

AccountingAuditor

Internal Audit Chamber(internal auditing department)

Board of Executive Officers19 executive officers (execute operations)

PersonalInformationProtectionCommittee

ComplianceCommittee

Head Office Organization (departments and chamber) ・Overseas Representative Organization

Branch Organization (sales division, branches)

Audits

(2) Total amount of consolidated remuneration for directors with

remuneration of ¥100 million and more: Not applicable.

(3) Signifi cant employee compensation for employee-directors:

Not applicable

(4) The amount of remuneration, bonuses and any other proprietary

benefi ts to be granted to Directors by the Company in consideration

of their performance of duty (hereinafter referred to as

“remuneration”) shall be determined by a resolution of a General

Meeting of Shareholders, according to the Articles of Incorporation.

The total amount of Directors’ remuneration is limited to ¥300

million per year according to the resolution passed at the 53rd

General Meeting of Shareholders held on June 28, 2007.

The total amount of Auditors’ remuneration is limited to ¥80

million per year according to the resolution passed at the 53rd

General Meeting of Shareholders held on June 28, 2007.

Number of Directors

The number of directors of the Company is stipulated at 20 or less,

according to the Articles of Incorporation.

Requirements for Resolutions Concerning the Election of Directors

Resolutions to appoint directors must be approved by a majority of

the votes represented by shareholders at meetings in which at least

one-third of the shareholders eligible to exercise voting rights are in

attendance. According to the Articles of Incorporation, no cumulative

voting shall be allowed for the election of directors.

Remuneration Paid to Audit Certifi cation Services, etc.

Other Important Details on Remuneration

(Fiscal 2009) Thirteen consolidated subsidiaries of the Company

have paid ¥83 million for audit certifi cation services and

¥17 million for non-audit services to Deloitte Touche

Tohmatsu member firms, which belong to the same

network as the certifi ed public accountants that conduct

audits for the Company.

(Fiscal 2010) Thirteen consolidated subsidiaries of the Company have

paid ¥107 million for audit certification services and

¥33 million for non-audit services to Deloitte Touche

Tohmatsu member firms, which belong to the same

network as the certifi ed public accountants that conduct

audits for the Company.

Non-Audit Services Provided by Certifi ed Public Accountants, etc. to the

Company

(Fiscal 2009) Not applicable.

(Fiscal 2010) Not applicable.

Policy on Determining Audit Remuneration

There is no specific policy. Remuneration is determined according

to the days spent on the audit, the size or the Company and the

characteristics of its activities and other factors.

Category

Fiscal 2009 Fiscal 2010

Payments foraudit certifi cation

services(Millions of Yen)

Payments fornon-auditservices

(Millions of Yen)

Payments foraudit certifi cation

services(Millions of Yen)

Payments fornon-auditservices

(Millions of Yen)

The Company ¥ 56 — ¥65 —

Consolidated subsidiaries 4 — 4 —

Total ¥60 ¥— ¥69 ¥—

CategoryAmount paid

(Millions of Yen)

Types of remuneration (Millions of Yen)Number of recipients

Basic salary BonusRetirement

benefi ts

Directors (excl. external directors)

¥ 225 ¥ 160 ¥21 ¥ 44 10

Auditors (excl. external auditors)

38 31 — 7 3

External directors and auditors

15 10 — 5 3

Total ¥278 ¥201 ¥21 ¥56 16

(1) Details of Remuneration

(As of June 30, 2011)


Board of Directors

Shunichi

Yano

Chairman

Hiromitsu

Kuramoto

President

Masahiko

Fukatsu

Director,

Senior Managing

Executive Offi cer

Masahiro

Omori

Director,

Managing

Executive Offi cer

Hiroyuki

Yasukawa

Director,

Managing

Executive Offi cer

Kazuo

Kato

Director,

Managing

Executive Offi cer

Shoji

Murakami

Director,

Managing

Executive Offi cer

Corporate Auditors

Masaaki

Hashimoto

Auditor

Motonobu

Kobayashi

Auditor

Makoto

Satani

External Auditor

Setsuko

Kusumoto

External Auditor

Executive Offi cers

Takashi

Isobe

Executive Offi cer

Kunio

Fujii

Executive Offi cer

Tatsuhiko

Saeki

Executive Offi cer

Hiroyuki

Okamoto

Executive Offi cer

Shotaro

Omura

Managing

Executive Offi cer

Tatsuo

Aoyagi

Executive Offi cer

Eiichi

Suzuki

Executive Offi cer

Toshio

Maekawa

Executive Offi cer

Taiji

Kitagawa

Executive Offi cer

Kenichi

Kotoku

Executive Offi cer

Akio

Futami

Executive Offi cer

Toshiyuki

Kimura

Executive Offi cer

Kazuo

Ishizuka

Executive Offi cer

*Representative Director *Representative Director


Board of Directors, Corporate Auditors and Executive Offi cers

F I N A N C I A L S E C T I O N

Consolidated Six-Year Summary 12

Management’s Discussion and Analysis 13

Consolidated Balance Sheets 18

Consolidated Statements of Income 20

Consolidated Statement of Comprehensive Income 20

Consolidated Statements of Changes in Equity 21

Consolidated Statements of Cash Flows 22

Notes to Consolidated Financial Statements 23

Independent Auditors’ Report 39

Corporate History 40

Shareholders’ Information 41

Financial Section Contents

Millions of Yen

Results of Operations 2011 2010 2009 2008 2007 2006

Net sales ¥160,788 ¥123,453 ¥167,460 ¥187,518 ¥182,617 ¥168,454

Cost of sales 124,514 92,127 128,663 141,736 138,278 127,321

Gross profi t 36,274 31,326 38,797 45,782 44,339 41,133

Selling, general and administrative expenses 31,327 29,016 34,223 35,566 33,901 30,698

Operating income 4,947 2,310 4,574 10,216 10,438 10,435

Income before income taxes and minority interests 5,887 3,004 2,859 12,178 11,514 11,197

Net income 3,621 1,545 1,083 7,271 6,722 7,006

Sales by Geographical SegmentsJapan ¥ 77,635 ¥ 61,227 ¥ 72,337 ¥ 87,355 ¥ 82,757 ¥ 86,517

Americas 13,471 10,782 16,696 17,758 17,364 16,813

Europe 15,022 11,888 20,564 21,417 19,236 15,674

East Asia 31,705 22,315 33,079 35,185 39,080 34,192

South Asia and Oceania 25,742 19,332 26,958 28,520 26,915 17,786

Inter-segment sales/transfers 2,787 2,091 2,174 2,717 2,735 2,528

Net sales 160,788 123,453 167,460 187,518 182,617 168,454

Consolidated to non-consolidated ratio (times) 2.26 2.21 2.57 2.38 2.46 2.16

Key Ratios %

Gross profi t to net sales 22.6 25.4 23.2 24.4 24.3 24.4

Operating income to net sales 3.1 1.9 2.7 5.4 5.7 6.2

Cost of sales to net sales 77.4 74.6 76.8 75.6 75.7 75.6

Selling, general and administrative expenses to net sales 19.5 23.5 20.4 19.0 18.6 18.2

Net income to net sales 2.3 1.3 0.6 3.9 3.7 4.2

Return on equity (ROE) 6.9 3.1 2.0 13.4 14.1 17.5

Net income to total assets 4.3 2.0 1.2 7.7 7.7 8.7

Asset turnover (times) 1.9 1.6 1.9 2.0 2.1 2.1

Equity ratio (Note 4) 60.2 63.4 65.4 58.7 57.2 51.6

Financial PositionCurrent assets ¥ 60,883 ¥ 52,690 ¥ 47,245 ¥ 66,558 ¥ 58,300 ¥ 54,883

Current liabilities 22,538 21,462 17,193 32,716 29,175 31,243

Equity (Note 1) 53,164 51,668 49,501 57,725 51,191 44,138

Total equity (Note 2) 55,360 53,663 51,249 59,614 52,551 —

Total assets 88,363 81,443 75,733 98,366 89,567 85,613

Net cash provided by operating activities 5,675 840 8,213 8,127 9,048 6,755

Free cash fl ows (Note 3) 6,970 (796) 4,394 5,255 6,139 4,859

Other Year-End DataNumber of shares outstanding (Note 4) 42,220,800 42,220,800 42,220,800 42,220,800 42,220,800 21,110,400

Per Share Data Yen

Basic net income (Note 4) 85.85 36.63 25.68 172.43 159.46 327.48

Cash dividends (full year) (Note 4) 18.00 16.00 18.00 20.00 15.00 30.00

Net assets (Note 4) 1,260.69 1,225.21 1,173.84 1,368.84 1,213.90 2,090.18

Notes: 1. Equity (¥53,164 million at 2011) = total equity - minority interests.

2. From the fi scal year ended March 31, 2007, total equity includes minority interests in accordance with the enforcement of Japan’s Corporate Law.

3. Net cash provided by operating activities + net cash used in investing activities

4. These fi gures do not include any adjustments for the execution of a 2-for-1 stock split in April 2006.

5. The above fi gures included treasury stock of 50,484 shares in 2007, 50,236 shares in 2008, 50,212 shares in 2009, 50,296 shares in 2010 and 50,734 shares in 2011. On April 1, 2006, the Company

executed a 2-for-1 stock split.


Yusen Logistics Co., Ltd. and Consolidated SubsidiariesYears Ended March 31

Consolidated Six-Year Summary

As of March 31, 2011, the Yusen Logistics Group comprised Yusen

Logistics Co., Ltd. (“the Company”), Nippon Yusen Kabushiki Kaisha

(parent company), 35 consolidated subsidiaries and fi ve equity-method

affi liates. The Group’s major business activities are the cargo business

and the travel business. As of April 1, 2011, Yusen Air & Sea Service

(U.S.A.) Inc. changed its name to Yusen Logistics (Americas) Inc., Yusen

Air & Sea Service (Europe) B.V. changed to Yusen Logistics (Europe)

B.V., Yusen Air & Sea Service (H.K.) Ltd. changed to Yusen Logistics

(Hong Kong) Limited and Yusen Air & Sea Service (Singapore) Pte. Ltd.

changed to Yusen Logistics (Singapore) Pte. Ltd.

Overview

During the fiscal year under review, the world economy recovered

gradually, thanks to economic stimulus measures implemented

by many countries, but the growth has slowed down since the third

quarter (October to December, 2010.) The U.S. saw some bright spots

in consumer spending but little improvement in employment or the

housing market, while Europe in aggregate continued to grow slowly

due to austere fiscal policies that were implemented to deal with

fi nancial problems. In contrast, China maintained high economic growth

rates, while Vietnam, India and other Asian countries grew steadily,

supported by robust growth in domestic demand.

Japan’s economy was supported by external demand from Asian

economic growth and turned from a sluggish stage to a recovery stage

by the third quarter. However, the Great East Japan Earthquake of

March 11, 2011 affected Japan’s economic activities signifi cantly.

Against this backdrop, the global air freight market generally

recovered steadily despite some differences between region. In Asia,

particularly in fast-growing China, the freight movements of electronic

and automotive components were favorable and contributed to an

increase in freight volumes handled by the Yusen Logistics Group

(hereafter referred to as “the YLK Group” or “the Group”). On the other

hand, freight movements have been slow in Japan since the third

quarter, partly due to the appreciation of the yen.

In fiscal 2010, net sales increased by 30.2% year-on-year to

¥160,788 million (US$1,934 million). Operating income was 114.1%

higher at ¥4,947 million (US$59 million), while net income increased by

134.4% to ¥3,621 million (US$44 million).

Geographical Segment Information(Figures include inter-segment transactions)

Japan

The Japan segment, including domestic consolidated subsidiaries,

recorded sales of ¥77,635 million (US$934 million; up 26.8% year-on-

year) and segment profi t of ¥333 million (US$4 million; down 64.7% year-

on-year.)

Air freight exports, a growth was seen in handling of office

equipment-related freight to Europe and construction machinery-related

freight to Asia at the beginning of the fiscal year under review, but

freight to Europe and the U.S. slowed down in the second quarter due to

the sharp appreciation of the yen and completion of inventory rebuilding

in overseas markets. In the fourth quarter, handling of automotive

components began to recover but did not make a full-fl edged recovery

as the Great East Japan Earthquake caused a temporary setback in

freight movements in March. As a result, freight volumes handled during

the year under review increased by only 4.3% year-on-year.

Regarding air freight imports, handling of semiconductor-related

products and apparel products from Asia has slowed down since the

third quarter, but handling of medical equipment-related products from

Americas was steady and that of Beaujolais Nouveau from Europe was

robust. As a result, the number of shipments handled during the year

under review increased by 5.8% year-on-year.

The Company's ocean freight forwarding business handled exports

of precision equipment and imports of large medical equipment. In

addition, it completed business integration with NYK Logistics (Japan)

Co., Ltd. and established a new business structure. The volume of ocean

freight exports handled increased from the previous year.

In the travel services segment, demand for corporate business travel

gradually recovered and cruise sales posted a steady performance.

During the fi scal year under review, the Group generated expenses

that were related to a relocation of the head office and integration of

domestic and overseas logistics businesses of Nippon Yusen Kabushiki

Kaisha.

Americas

The Americas segment recorded sales of ¥13,471 million (US$162

million; up 24.9% year-on-year) and segment profi t of ¥749 million (US$9

million; compared to a ¥5 million operating loss in the previous year) .

■■ Net Sales (Left)

Gross Profit Ratio (Right)

Operating Income Ratio (Right)

■■ Cost of Sales (Left)

Cost of Sales Ratio (Right)

■■ Selling, general and

administrative expenses (Left)

Selling, general and

administrative expenses Ratio (Right)

■■ Net Income (Left)

Basic net Income per Share (Right)

2007 2008 2009 2010 2011

200

150

100

50

0

(Billions of Yen)

40

30

20

10

0

(%)

2007 2008 2009 2010

200

150

100

50

0

(Billions of Yen)

100

75

50

25

0

(%)

40

30

20

10

0

(Billions of Yen)

40

30

20

10

0

(%)

2007 2008 2009 2010

8

6

4

2

0

(Billions of Yen)

400

300

200

100

0

(Yen)

2007 2008 2009 20102011 2011 2011


Management’s Discussion and Analysis

While air freight exports were temporarily stagnant because of a

series of airport closures caused by winter storms in North America in

January 2011, air freight exports to Japan were favorable throughout

the year, particularly the handling of automotive components,

semiconductor-related products, spot shipments of wine, and urgent

shipments of medical equipment-related products. As a result, freight

volumes handled during the year increased by 40.3% year-on-year.

Among air freight imports, handling of electronic components,

automotive components, PC-related products as well as fl at-screen TV

sets related has been steady. However, air freight imports showed signs

of sluggishness, similar to air freight exports, and resulted in growth of

14.0% year-on-year in the number of shipments handled.

In the case of ocean freight exports, strong growth was recorded,

thanks to favorable freight volumes of automotive components as well

as steady freight volumes of frozen meat to Japan.

Ocean freight imports were also fi rm for automotive components,

similar to ocean freight exports.

Europe

The Europe segment recorded sales of ¥15,022 million (US$181 million;

up 26.4% year-on-year) and segment profit of ¥527 million (US$6

million; compared to a ¥472 million operating loss in the previous year).

In air freight exports, shipments were steady for automotive

components to Asia and medical equipment and pharmaceuticals,

while handling of solar panels in the environmental and energy area,

the industry in which the YLK Group is making strong sales efforts, was

favorable. In January, we handled chocolate from Belgium to Japan,

thanks to its seasonal demand. As a result, freight volumes handled

during the year increased by 67.3% year-on-year.

In air freight imports, handling of offi ce equipment related products

and electronic components continued to be strong. Although the volume

handled decreased in the fourth quarter, as a reaction following the

December peak season, the number of shipments handled for the year

grew by 27.5% year-on-year.

Ocean freight exports, shipments were far exceeded those of the

previous year, thanks to steady handling of automotive components as

well as favorable handling of apparel products to Asia.

In ocean freight imports, handling of motorcycle-related products

from Asia and electronic equipment was fi rm.

East Asia

The East Asia segment recorded sales of ¥31,705 million (US$381

million; up 42.1% year-on-year) and segment profit of ¥2,001 million

(US$24 million; up 207.6% year-on-year.)

With regard to air freight exports, we did not experience a peak

freight shipment, which we normally do in the third quarter, and the

freight movements in the fourth quarter were sluggish, partly due to an

impact of the Chinese New Year holidays. Handling of major products,

namely, PC-related products or digital home appliances, was subdued,

despite rush demand prior to Chinese New Year holidays and some

urgent spot shipments. As a result, freight volumes handled during the

year under review increased by 27.2% year-on-year.

Air freight imports, thanks to steady handling of digital home

appliances, PC- and semiconductor-related products as well as

electronic and automotive components from the Asian region, the

number of shipments handled during the year increased by 16.9% year-

on-year.

In the ocean freight exports, handling of game equipment bound

for China and motorcycle-related products for Europe and the U.S. was

steady.

Regarding ocean freight imports, handling of game equipment, just

as for exports, and glass substrates for fl at-screen TVs was strong.

Steady profi ts were ensured as we did not see a big swing in freight

rates from airline companies, because of lack of a peak in seasonal

demand which we normally see prior to the Christmas season in the U.S.

and Europe.

South Asia and Oceania

The South Asia and Oceania segment recorded sales of ¥25,742 million

(US$310 million; up 33.2% year-on-year) and segment profi t of ¥1,352

million (US$16 million; up 12.8% year-on-year).

Air freight exports, handling of automotive components to Thailand,

China and Japan, and electronic components within the Asian region

has been steady throughout the year. Despite a setback in freight

movements in the fourth quarter partly due to infl uence of the Chinese

New Year holidays, freight volumes handled during the year increased

by 32.5% year-on-year.

Air freight imports, handling of automotive components was steady

throughout the year, despite a slowdown in shipment movements

Net Sales by Geographic Region (%)

Japan■ Total Sales (Left)

■ Profit (Right)

2007 2008 2009 2010

100

75

50

25

0

8

6

4

2

0

(Billions of Yen)

Americas■ Total Sales (Left)

■ Profit (Loss) (Right)

2007 2008 2009 2010

30

20

10

0

-10

3

2

1

0

-1

(Billions of Yen)

Europe■ Total Sales (Left)

■ Profit (Loss) (Right)

2007 2008 2009 2010

30

20

10

0

-10

3

2

1

0

-1

(Billions of Yen)

■ Japan

■ Americas

■ Europe

■ East Asia

■ South Asia &

Oceania

47.5%

8.2%9.2%

19.4%

15.7%

2011 2011 2011Note: Percentages include inter-segment sales/

transfers.


caused by a decrease in material imports that was in turn triggered by

electronic component production adjustment from the third quarter. As

a result, the number of shipment handled during the year increased by

16.1% year-on-year.

Ocean freight exports, freight volumes were increased, due to

steady handling of automotive components to the U.S. and Japan. The

ocean freight imports, shipments were also favorable, supported by

handling of automotive components, similar to ocean freight exports,

and handling of plant equipment and devices. In Australia, we handled

imports of construction equipment from the U.S. to the areas damaged

by the fl oods in Queensland.

Financial Position

As of March 31, 2011, total assets amounted to ¥88,363 million (US$1,063

million), up ¥6,920 million or 8.5% year-on-year. While total property,

plant and equipment and other current assets decreased by ¥1,050

million and ¥1,736 million respectively from a year ago, cash and time

deposits increased by ¥8,712 million and trade notes and accounts

receivable by ¥1,162 million.

Total liabilities were ¥33,003 million (US$397 million), up ¥5,223

million or 18.8% year-on-year. Major factors include a ¥4,472 million

increase in long-term debts and a ¥807 million increase in trade notes

and accounts payable, which more than offset a decrease of ¥1,028

million in current portion of long-term debt.

Total equity amounted to ¥55,360 million (US$666 million), mainly

due to an increase in retained earnings and a decrease in foreign

currency translation adjustments. The equity ratio was 60.2%.

Cash Flows

Cash and cash equivalents as of March 31, 2011 increased by ¥8,349

million or 49.9% from a year ago, to ¥25,089 million (US$302 million).

Net cash provided by operating, investing and financing activities

amounted to ¥5,675 million, ¥1,295 million and ¥2,566 million

respectively.

Net cash provided by operating activities increased by ¥4,835

million or up 575.6% from the previous year to ¥5,675 million (US$68

million). The main contribution to this was ¥5,887 million of income

80

60

40

20

0

40

30

20

10

0

40

30

20

10

0

4

3

2

1

0

4

3

2

1

0

10

5

0

-5

-10

South Asia and Oceania■ Total Sales (Left)

■ Profit (Right)

2007 2008 2009 2010

(Billions of Yen)

Equity Ratio

2007 2008 2009 2010

(%)

Cash Flows■ Net Cash Provided by Operating Activities

■ Net Cash Used in Investing Activities

● Free Cash Flows*

2007 2008 2009 2010

(Billions of Yen)

2011 2011

East Asia■ Total Sales (Left)

■ Profit (Right)

2007 2008 2009 2010

(Billions of Yen)

2011 2011

* Net cash provided by operating activities +

net cash used in investing activities

before income taxes and minority interests, together with depreciation

and amortization of ¥1,780 million and an increase in trade notes and

accounts payable of ¥1,302 million, while an increase in trade notes and

accounts receivable of ¥1,978 million and income tax payment of ¥1,560

million reduced cash.

Net cash provided by investing activities totaled ¥1,295 million

(US$16 million), up ¥2,931 million from the previous year when net

cash used in investing activities amounted to ¥1,636 million. Proceeds

from withdrawal of time deposits exceeded payments into time deposits

by ¥721 million and the amount of collections of loans receivable was

¥1,761 million more than the amount of lending of loans receivable,

while ¥1,182 million was used to purchase of property, plant and

equipment.

Net cash provided by financing activities totaled ¥2,566 million

(US$31 million), up ¥3,933 million from the previous year when net cash

used in fi nancing activities amounted to ¥1,367 million. This was mainly

attributable to proceeds from long-term loans payable of ¥4,500 million

which far exceeded expenditures of ¥1,000 million for repayment of

long-term debt and an outfl ow of ¥715 million for cash dividends paid.

Dividend Policy

The Company recognizes the return of profi ts to shareholders as one

of its top priorities. The Company’s basic policy is to offer a stable

dividend within the limits set by business results, and to steadily raise

shareholder returns with due consideration to consolidated payout ratio

while accurately gauging the stages of future business expansion and

corporate growth.

The Company pays dividends twice a year-an interim dividend and

a year-end dividend.

The Company treats payments of year-end dividends as a matter at

the General Meeting of Shareholders, while our Articles of Incorporation

stipulate that “interim dividends can be distributed to shareholders of

record as of September 30 each year pursuant to the resolution of the

Board of Directors.”

Based on the above policy, the Company has decided to set the

year-end dividend for fi scal 2010 at ¥9.00 per share. This will bring the

annual dividend to ¥18.00 per share, including the ¥9.00 yen per share

interim dividend paid on December 3, 2010.


Fiscal 2011 is a particular important year for the Company, as being

the year to complete overseas business integration and the fi rst year of

the new medium-term business plan. The Company will make group-

wide efforts for raising its corporate value. The Company sincerely asks

our shareholders for their continued support and understanding.

Business Risk Factors1. General Business Trends

Demand for international transportation services can be infl uenced by

economic conditions of a specifi c country or region and, in particular,

by those of Europe and the U.S., which tend to greatly affect the status

of the world economy. Indeed, air freight forwarding services are used

predominantly for products and components intended for consumers,

such as digital home appliances and IT-related goods. Business

conditions of the importing countries could have an impact on demand

for such services.

The YLK Group seeks to build an operating structure that facilitates

stable growth, and therefore is working to boost transactions for

products, such as medical equipment, pharmaceuticals and automotive

components, which are relatively less susceptible to the changing

economic conditions.

2. Fuel Price Fluctuations

Typically, the fuel surcharge charged by airline companies in line

with short-term fl uctuations in fuel prices is a fee that customers are

required to pay on top of air freight. Consequently, a surcharge in and of

itself should not have a material impact on the operating results or the

fi nancial conditions of the YLK Group. However, the Group’s profi tability

may be temporarily impaired if and when conditions precipitate a

sudden rise in the fuel surcharge.

3. Inherent in Global Business Expansion

The Group’s business activities extend beyond Japan to other areas

of Asia, as well as Oceania, the Middle East, Europe and Americas.

Roughly half of the Group’s sales activities are conducted outside of

Japan. Possible risks that could emerge as the Group works to expand

its presence globally are:

ⅰ. Political and economic factors,

ⅱ. Impacts of offi cial rules and regulations, such as business and

investment permits, taxation, foreign exchange control, and trade

regulations,

ⅲ. Impacts from natural disasters, such as earthquakes, tsunami,

typhoons, and hurricanes,

ⅳ. Social unrest prompted by such events as war, international

disputes, riots, terrorism, and strikes,

ⅴ. Globally pervasive economic disruption caused by sudden fl uctuations

in exchange rates,

ⅵ. An epidemic of a highly infectious disease with a high mortality rate,

such as a new type of infl uenza.

When expanding to a new overseas location, we closely examine

local political and economic conditions as well as its culture, customs

and public health situation, and strive to eliminate as effectively as

possible whatever risks may exist. Nevertheless, unexpected events

do occur and the state of the world does change in ways that cannot

always be fully anticipated. Such developments, which include advanced

information and communications technology, increasingly borderless

economic and cultural environments, the frequency of terrorist activities

and the spread of new infectious diseases, could have a material impact

on the business results and fi nancial conditions of the Group.

4. Computer Viruses, Hackers and Cyber-Terrorism

The Company has established a backup system for its computer lines.

We are also working to enhance backup capabilities to minimize

damage to hardware and data in the event of natural disasters, such as

earthquakes or severe storms and flooding. The Company has taken

all possible measures to prevent unauthorized access to its systems

from outside and to block infection of its systems by computer viruses.

Specifi cally, we have installed fi rewalls and virus-checking software into

our mail servers and all terminals. Despite these defensive measures,

it is possible that unforeseen situations, such as the use of technology

that breaches presumed security protocols and allows a hacker to

gain entry to in-house information systems, could lead to a temporary

shutdown of system functions or facilitate unauthorized disclosure of

information. Such situation could hurt the business results and fi nancial

conditions of the Group.

5. Leaks of Customer Information Leading to Claims for

Damages and Tarnished Credibility

The YLK Group handles a vast amount of customer information and also

undertake customs clearance services. We thus have an obligation to

protect customer information and strive to prevent information from

leaking outside. Despite such precautions, it is possible that unforeseen

circumstance could result in an information leak. The Group’s business

results could be adversely affected if, for example, such leak were to

lead to claims for damages or if the situation tarnished the Group’s

reputation.

6. Exchange Rate Fluctuations

The YLK Group endeavors to minimize the impact of exchange rate

fl uctuations on foreign-currency-denominated receivables and payables

by utilizing forward exchange contracts, and does not take such risk

that would exert a major impact on the Group’s business. However, in

preparing the Group’s consolidated fi nancial statements, the Company

translates the financial results of overseas consolidated subsidiaries

into yen, and changes in exchange rates could affect the consolidated

business results and fi nancial conditions of the Group.

7. Statutory Regulations

The Company is licensed by the Ministry of Land, Infrastructure,

Transport and Tourism as a provider of type 2 freight use forwarding

services, based on Article 20 of the Freight Use Forwarding Business

Law, and conducts air and ocean freight forwarding operations – the

primary business of the YLK Group. While this license has no expiration

date, if and when an event of the Company justifies suspension or

withdrawal of the business as stipulated on Article 33 of the law,

the Company’s business could be partially or completely suspended

for a set period or permission to engage in such business could be

withdrawn. As of preparation of this document, the YLK Group has not

encountered any such event, but if and when such situations, including

withdrawal of permission to conduct business, may occur for whatever

reason, they could have a material impact on the Group’s business

results and fi nancial conditions.

In addition, the YLK Group is subject to various statutory regulations

in different parts of the world. Major ones include social regulations

(such as those ensuring safety) and legal regulations associated with

transportation services. In Japan, the Company has obtained approval

and required licenses, including the aforementioned permission

to provide type 2 freight use forwarding services, from the relevant

authorities. If statutory regulations pertaining to such approval and

licenses are amended or if approval and licensing status currently held

are cancelled, the fiscal performance and financial conditions of the


Group could be adversely affected.

Approval and licenses currently held by the Company are listed

below:

8. Relationship with the NYK Group

(1) Role of the Company within the NYK Group As of March 31, 2011, the NYK Group consisted of Nippon Yusen

Kabushiki Kaisha (NYK), 687 consolidated subsidiaries and 112

companies accounted for by the equity method. These companies

primarily conduct integrated logistics business centered largely on

ocean transportation.

The business of the Company, one of consolidated subsidiaries

of NYK, and its Group companies, centers largely on the use of air

transportation. No other company within the NYK Group conducts

business operations using air transportation in the same manner as

the Company, which is licensed by the Ministry of Land, Infrastructure,

Transport and Tourism as a provider of type 2 freight use forwarding

services.

Moreover, the Company strives to ensure its independence as a

listed company. As such, the Company does not need prior approval

from NYK for its own decision-making.

(2) Business relationship with NYK and its consolidated subsidiaries (excluding the YLK Group)

The Company’s main business relationships with NYK and its

consolidated subsidiaries during this fiscal year are as follows.

Approval and Licensing Designation Issuing Authority Requirements forApproval and Licensing Validity

Type 2 freight use forwarding services Minister for Land, Infrastructure, Transport and Tourism Business license Open

Air service agency business Minister for Land, Infrastructure, Transport and Tourism Application to operate as a business Open

Customs brokerage services Director-General of Customers in each jurisdictional area Business license Open

General cargo transportation services Director of District Transport Bureaus in each jurisdictional area Business registration Open

Warehousing services Director of District Transport Bureaus in each jurisdictional area Business registration Open

Medical devices manufacturing business:

packaging, labeling or storage categoryPrefectural Governors Business license

Sept. 26, 2010 to

Sept. 25, 2015

Retail or rental business of specially

controlled medical devicesPrefectural Governors Business license

June 12, 2007 to

June 11, 2013

Business transactions take place under the same conditions as general

transactions, taking market conditions into consideration.

a) Transactions with NYKThe main business relationships between the Company and NYK are

transactions in which NYK consigns the transportation of ocean cargo

to the Company. Business transactions in this fi scal year amounted

to ¥594 million.

b) Transactions with other consolidated subsidiaries of NYKThe Company’s main business relationships with other companies

in the NYK Group are transactions involving ocean transportation

and related peripheral business, which are consigned to UNI-X

Corporation and 51 other companies. In this fiscal year business

transactions amounted to ¥7,662 million.


Millions of YenThousands of

U.S. Dollars (Note 1)

ASSETS 2011 2010 2011

CURRENT ASSETS:

Cash and cash equivalents (Note 11) ¥25,089 ¥16,740 $ 301,733

Time deposits (Note 11) 1,986 1,623 23,886

Trade notes and accounts receivable (Note 11) 30,169 29,007 362,831

Deferred tax assets-current (Note 9) 841 732 10,116

Other current assets 2,993 4,729 35,996

Allowance for doubtful accounts (195) (141) (2,349)

Total current assets 60,883 52,690 732,213

PROPERTY, PLANT AND EQUIPMENT:

Land (Note 4) 6,716 6,856 80,773

Buildings and structures (Note 4) 17,582 17,851 211,447

Furniture and fi xtures 4,368 4,255 52,530

Machinery, equipment and vehicles 1,015 1,039 12,210

Construction in progress 5 2 54

Total 29,686 30,003 357,014

Accumulated depreciation (12,670) (11,937) (152,376)

Total property, plant and equipment 17,016 18,066 204,638

INVESTMENTS AND OTHER ASSETS:

Investments in securities (Notes 5 and 11) 823 990 9,899

Investments in unconsolidated subsidiaries and affi liate companies 2,028 1,992 24,388

Goodwill 52 12 620

Deposits 1,837 1,725 22,090

Deferred tax assets—non-current (Note 9) 2,254 2,261 27,110

Other assets 3,470 3,707 41,733

Total investments and other assets 10,464 10,687 125,840

TOTAL ¥88,363 ¥81,443 $1,062,691


Consolidated Balance SheetsYusen Logistics Co., Ltd. and Consolidated SubsidiariesMarch 31, 2011 and 2010



LIABILITIES AND EQUITY 2011 2010 2011

CURRENT LIABILITIES:

Trade notes and accounts payable (Note 11) ¥15,328 ¥14,521 $ 184,337

Current portion of long-term debt (Notes 6 and 11) 35 1,063 424

Accrued income taxes (Note 11) 1,046 562 12,585

Accrued bonuses to employees 1,615 1,232 19,427

Deferred tax liabilities-current (Note 9) 2 8 19

Other current liabilities 4,512 4,076 54,266

Total current liabilities 22,538 21,462 271,058

LONG-TERM LIABILITIES:

Long-term debt (Notes 6 and 11) 4,537 65 54,561

Accrued pension and severance costs for:

Employees (Note 7) 3,617 3,923 43,491

Directors and corporate auditors 356 358 4,287

Provision for alleged Anti-Monopoly Act violation 1,728 1,728 20,785

Negative goodwill 2 5 21

Deferred tax liabilities-non-current (Note 9) 75 75 904

Other long-term liabilities 150 164 1,803

Total long-term liabilities 10,465 6,318 125,852

EQUITY (Notes 8 and 17):

Common stock, no par value-

authorized; 160,000,000 shares in 2011 and 2010,

issued; 42,220,800 shares in 2011 and 20104,301 4,301 51,726

Capital surplus 4,812 4,812 57,866

Retained earnings 51,375 47,691 617,855

Treasury stock-at cost; 50,734 shares in 2011 and 50,296 shares in 2010 (69) (68) (828)

Accumulated other comprehensive income

Unrealized gain on available-for-sale securities 142 160 1,707

Foreign currency translation adjustments (7,397) (5,228) (88,957)

Total 53,164 51,668 639,369

Minority interests in consolidated subsidiaries 2,196 1,995 26,412

Total equity 55,360 53,663 665,781

TOTAL ¥88,363 ¥81,443 $1,062,691

See notes to consolidated fi nancial statements.





2011 2010 2011NET SALES ¥160,788 ¥123,453 $1,933,716

COST OF SALES 124,514 92,127 1,497,460Gross profi t 36,274 31,326 436,256

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Note 14) 31,327 29,016 376,757Operating income 4,947 2,310 59,499

OTHER INCOME (EXPENSES):Interest and dividend income 144 164 1,739Interest expense (20) (31) (241)Foreign currency exchange gain-net 570 528 6,845Equity in earnings of unconsolidated subsidiaries and affi liate companies 304 221 3,659Amortization of negative goodwill (Note 16) 3 3 36Loss on impairment of fi xed assets (Note 4) (66) (229) (797)Loss on revaluation of investments in securities (155) (19) (1,868)Loss on adoption of accounting standard for asset retirement obligations (11) - (137)Others-net 171 57 2,066

Other income (expense)-net 940 694 11,303INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS 5,887 3,004 70,802

INCOME TAXES (Note 9):Current 1,968 1,100 23,672Deferred (140) (6) (1,682)

Total income taxes 1,828 1,094 21,990

NET INCOME BEFORE MINORITY INTERESTS 4,059 1,910 48,812

MINORITY INTERESTS IN NET INCOME OF CONSOLIDATED SUBSIDIARIES 438 365 5,270

NET INCOME ¥ 3,621 ¥1,545 $ 43,542

Yen U.S. Dollars

PER SHARE:Basic net income per share (Note 17) ¥85.85 ¥36.63 $1.032Cash dividends 18.00 16.00 0.216



2011 2011NET INCOME BEFORE MINORITY INTERESTS ¥4,059 $ 48,812OTHER COMPREHENSIVE INCOME (Note 15):

Unrealized gain (loss) on available-for-sale securities (18) (217)

Foreign currency translation adjustments (2,233) (26,852)

Share of other comprehensive income in associates (59) (710)

Total other comprehensive income (2,310) (27,779)

COMPREHENSIVE INCOME (Note 15) ¥1,749 $ 21,033

TOTAL COMPREHENSIVE INCOME ATTRITUTABLE TO (Note 15):

Owners of the parent ¥1,437 $ 17,278

Minority interests 312 3,755



Yusen Logistics Co., Ltd. and Consolidated SubsidiariesYears Ended March 31, 2011 and 2010

Consolidated Statements of Income

Consolidated Statement of Comprehensive IncomeYusen Logistics Co., Ltd. and Consolidated SubsidiariesYears Ended March 31, 2011

Thousands Millions of Yen


OutstandingNumber ofShares ofCommon

Stock

CommonStock

CapitalSurplus

RetainedEarnings

TreasuryStock

UnrealizedGain (Loss) on

Available-for-sale

Securities

Foreign Currency

Translation Adjustments

Total

MinorityInterests in

ConsolidatedSubsidiaries

TotalEquity

BALANCE, APRIL 1, 2009 42,171 ¥4,301 ¥4,812 ¥46,668 ¥(68) ¥2 ¥(6,214) ¥49,501 ¥1,748 ¥51,249

Net income for the year ended March 31,

2010- - - 1,545 - - - 1,545 - 1,545

Cash dividends (¥16.0 per share) - - - (675) - - - (675) - (675)

Purchase of treasury stock (0) - - - (0) - - (0) - (0)

Disposal of treasury stock 0 - (0) - 0 - - 0 - 0

Adjustment of retained earnings due to

recognition of unrecognized actuarial

differences by a foreign consolidated

subsidiary

- - - 59 - - - 59 - 59

Adjustment of retained earnings for newly

consolidated subsidiaries- - - 94 - - - 94 - 94

Net change in the year - - - - - 158 986 1,144 247 1,391

BALANCE, MARCH 31, 2010 42,171 4,301 4,812 47,691 (68) 160 (5,228) 51,668 1,995 53,663

Adjustments due to change in the fi scal

period of consolidated subsidiaries- - - 563 - - - 563 - 563

Net income for the year ended March 31,

2011- - - 3,621 - - - 3,621 - 3,621

Cash dividends (¥17.0 per share) - - - (716) - - - (716) - (716)

Purchase of treasury stock (1) - - - (1) - - (1) - (1)

Adjustment of retained earnings due to

recognition of unrecognized actuarial

differences by a foreign consolidated

subsidiary

- - - 216 - - - 216 - 216

Net change in the year - - - - - (18) (2,169) (2,187) 201 (1,986)

BALANCE, MARCH 31, 2011 42,170 ¥4,301 ¥4,812 ¥51,375 ¥(69) ¥142 ¥(7,397) ¥53,164 ¥2,196 ¥55,360

Thousands of U.S. Dollars (Note 1)


CommonStock

CapitalSurplus

RetainedEarnings

TreasuryStock

UnrealizedGain (Loss) on Available-for-

saleSecurities

Foreign Currency

Translation Adjustments

Total

MinorityInterests in

ConsolidatedSubsidiaries

TotalEquity

BALANCE, MARCH 31, 2010 $51,726 $57,866 $573,555 $(821) $1,924 $(62,870) $621,380 $23,998 $645,378

Adjustments due to change in the fi scal period of

consolidated subsidiaries- - 6,774 - - - 6,774 - 6,774

Net income for the year ended March 31, 2011 - - 43,542 - - - 43,542 - 43,542

Cash dividends ($0.204 per share) - - (8,622) - - - (8,622) - (8,622)

Purchase of treasury stock - - - (6) - - (6) - (6)

Adjustment of retained earnings due to recognition

of unrecognized actuarial differences by a foreign

consolidated subsidiary

- - 2,605 - - - 2,605 - 2,605

Net change in the year - - - - (217) (26,087) (26,304) 2,414 (23,890)

BALANCE, MARCH 31, 2011 $51,726 $57,866 $617,855 $(828) $1,707 $(88,957) $639,369 $26,412 $665,781




Consolidated Statements of Changes in Equity



2011 2010 2011

OPERATING ACTIVITIES:Income before income taxes and minority interests ¥ 5,887 ¥ 3,004 $ 70,802Adjustment for:

Depreciation and amortization 1,780 1,743 21,409Amortization of goodwill 16 6 192Increase (decrease) in accrued pension and severance costs 72 81 868Interest and dividend income (145) (164) (1,739)Interest expense 20 31 241Loss (gain) on foreign currency exchange, net (17) (7) (210)Equity in earnings of unconsolidated subsidiaries and affiliate companies (304) (221) (3,659)Decrease (increase) in trade notes and accounts receivable (1,978) (5,260) (23,789)Increase (decrease) in trade notes and accounts payable 1,302 3,258 15,658Loss on sale of property, plant and equipment, net 6 13 68Loss on impairment of fixed assets 66 229 797Loss (gain) on sale of investments in securities (35) 67 (423)Loss on revaluation of investments in securities 155 19 1,868Loss on write-down of golf club membership 3 13 36Loss (gain) on sales of membership (5) - (56)Increase (decrease) in allowance for doubtful accounts (85) 21 (1,020)Loss on adoption of accounting standard for asset retirement obligations 11 - 137Other-net 366 450 4,394

Total 7,115 3,283 85,574Interest and dividend received 149 177 1,788Interest paid (29) (49) (354)Fine for alleged Anti-Monopoly Act violation paid - (1,728) -Income taxes paid (1,560) (843) (18,760)

Net cash provided by operating activities 5,675 840 68,248INVESTING ACTIVITIES:

Payments into time deposits (2,375) (3,018) (28,567)Proceeds from withdrawal of time deposits 3,096 2,130 37,238Purchase of property, plant and equipment (1,182) (986) (14,211)Proceeds from sale of property, plant and equipment 22 399 266Purchase of investments in securities (12) (18) (150)Proceeds from sale of investments in securities 74 42 894Proceeds from sales of membership 6 - 70Increase in investments in unconsolidated subsidiaries and affiliate company - (55) -Lending of loans receivable (6,204) (9,511) (74,616)Collection of loans receivable 7,965 9,241 95,795Payments for transfer of business (143) - (1,719)Other-net 48 140 573

Net cash used in investing activities 1,295 (1,636) 15,573FINANCING ACTIVITIES:

Short-term bank loans, net (45) (3) (540)Proceeds from long-term loans payable 4,500 - 54,119Repayment of long-term debt (1,000) (500) (12,026)Repayment of obligations under finance lease (53) (82) (640)Cash dividends paid (715) (674) (8,603)Cash dividends paid to minority shareholders (120) (108) (1,443)Other-net (1) (0) (7)

Net cash used in financing activities 2,566 (1,367) 30,860FOREIGN CURRENCY TRANSLATION ADJUSTMENTS ON CASH AND CASH EQUIVALENTS (1,123) 565 (13,505)INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 8,413 (1,598) 101,177CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 16,740 18,196 201,326CASH AND CASH EQUIVALENTS OF NEWLY CONSOLIDATED SUBSIDIARIES, BEGINNING OF YEAR

- 142 -

INCREASE (DECREASE) IN BEGINNING BALANCE OF CASH AND CASH EQUIVALENTS DUE TO CHANGES IN FISCAL PERIODS OF CONSOLIDATED SUBSIDIARIES

(64) - (770)

CASH AND CASH EQUIVALENTS, END OF YEAR ¥25,089 ¥16,740 $301,733




Consolidated Statements of Cash Flows

1. BASIS OF PRESENTING CONSOLIDATED FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying consolidated financial statements have been prepared in

accordance with the provisions set forth in the Japanese Companies Act and

Financial Instruments and Exchange Act and their 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.

Under Japanese GAAP, a consolidated statement of comprehensive income

is required from the fiscal year ended March 31, 2011 and has been presented

herein. Accordingly, accumulated other comprehensive income is presented in the

consolidated balance sheets and the consolidated statements of changes in equity.

Information with respect to other comprehensive income for the year ended March

31, 2010 is disclosed in Note 15. In addition, “net income before minority interests”

is disclosed in the consolidated statement of income from the year ended March

31, 2011.

In preparing these consolidated fi nancial statements, certain reclassifi cations

and rearrangements have been made to the consolidated financial statements

issued domestically in order to present them in a form which is more familiar to

readers outside Japan. In addition, certain reclassifi cations have been made in the

2010 fi nancial statements to conform to the classifi cations used in 2011.

The consolidated financial statements are stated in Japanese yen, the

currency of the country in which Yusen Logistics Co., Ltd. (the "Company") is

incorporated and operates. The translations of Japanese yen amounts into U.S.

dollar amounts are included solely for the convenience of readers outside Japan

and have been made at the rate of ¥83.15 to $1, the approximate rate of exchange

at March 31, 2011. Such translations should not be construed as representations

that the Japanese yen amounts could be converted into U.S. dollars at that or any

other rate.

a. Consolidation

The consolidated fi nancial statements as of March 31, 2011 include the accounts of the Company and its 35 signifi cant (35 in 2010) subsidiaries (together, the "Group")

listed below:

Consolidated Subsidiaries

Equity

Ownership

Percentage*1

Capital Stock*1

Yusen Logistics (Americas) Inc.*13 *14 100.00% US$ 14,000 thousand

Yusen Logistics (Hong Kong) Limited*13 *14 100.00 HK$ 55,000 thousand

Yusen Air & Sea Service (China) Ltd. *13 100.00*5 HK$ 11,000 thousand

Yusen Logistics (Singapore) Pte. Ltd.*13 *14 100.00 S$ 16,700 thousand

Yusen Logistics (Benelux) B.V. *13 *14 100.00*2 EUR 700 thousand

Yusen Air & Sea Service (Deutschland) GmbH.*13 100.00*2 EUR 4,000 thousand

Yusen Air & Sea Service (U.K.) Ltd.*13 100.00*2 STG 1,050 thousand

Yusen Logistics (Australia) Pty. Ltd.*13 *14 100.00*3 A$ 1,500 thousand

Yusen Logistics (Canada) Inc. *13 *14 100.00 C$ 5,000 thousand

Yusen Logistics (France) S.A.S.*13 *14 100.00*2 EUR 4,700 thousand

Yusen Logistics (Taiwan) Ltd.*13 *14 100.00*4 NT$ 150,000 thousand

Yusen Air & Sea Service (Beijing) Co., Ltd. 75.00*10 RMB 9,312 thousand

Yusen Logistics (Italy) S.P.A.*13 *14 100.00*2 EUR 774 thousand

PT. Yusen Air & Sea Service Indonesia*13 80.00*6 US$ 177 thousand

Yusen Logistics (Europe) B.V. *13 *14 100.00 EUR 18,518 thousand

Yusen Logistics (Korea) Co., Ltd.*13 *14 100.00 KRW 2,000 million

Yusen Shenda Air & Sea Service (Shanghai) Ltd. 50.00*9 RMB 16,457 thousand

Yusen Air & Sea Service Management (Thailand) Co., Ltd.*13 49.00*7 THB 10 million

Yusen Air & Sea Service (Thailand) Co., Ltd.*13 100.00*8 THB 100 million

Yusen Air & Sea Service (Vietnam) Co., Ltd.*13 49.00*7 US$ 600 thousand

Yusen Air & Sea Service Philippines Inc.*13 51.00 PHP 200,000 thousand

Yusen Air & Sea Service (Guangdong) Ltd. 100.00*5 RMB 8,009 thousand

Yusen Air & Sea Service (India) Pvt.Ltd. 100.00*11 INR 90 million

Yusen Keihin Trans Co., Ltd. 100.00 ¥ 36 million

Yusen Logistics (Kitakanto) Co., Ltd. 100.00 ¥ 50 million

Yusen Logistics (Tsukuba) Co., Ltd. 100.00 ¥ 50 million

Yusen Logistics (Shinshu) Co., Ltd. 90.00 ¥ 50 million

Yusen Logistics (Tohoku) Co., Ltd. 100.00 ¥ 30 million

Yusen Logistics (Kyushu) Co., Ltd. 100.00 ¥ 30 million

Yusen Logistics (Chugoku) Co., Ltd. 80.00 ¥ 30 million

Yusen Logistics (Hokuriku) Co., Ltd. 100.00 ¥ 20 million

Yusen Logitec Co., Ltd. 100.00 ¥ 20 million

Yusen Travel Co., Ltd. 100.00 ¥ 270 million

Ryowa Diamond Air Service Co., Ltd. 99.17*12 ¥ 50 million

Yusen Loginet Co., Ltd. 100.00 ¥ 20 million

*1 as of March 31, 2011

*2 owned 100.00% by Yusen Logistics (Europe) B.V.

*3 owned 80.00% by the Company, 20.00% by Yusen Logistics (Singapore) Pte. Ltd.

*4 owned 60.01% by the Company, 39.99% by Yusen Logistics (Hong Kong) Limited

*5 owned 100.00% by Yusen Logistics (Hong Kong) Limited

*6 owned 10.50% by the Company, 69.50% by Yusen Logistics (Singapore) Pte. Ltd.

*7 owned 49.00% by Yusen Air & Sea Service (Singapore) Pte. Ltd.

*8 owned 51.00% by Yusen Air & Sea Service Management (Thailand) Co., Ltd., 49.00% by Yusen Logistics (Singapore) Pte. Ltd.



*11 owned 100.00% by Yusen Logistics (Singapore) Pte. Ltd.

*12 owned 99.17% by Yusen Travel Co., Ltd.

*13 These subsidiaries changed their fi scal year end from December 31 to March 31 of each year. The Company included operating results of these subsidiaries for the 12-month period ended March 31, 2011 in the consolidated statements of income, and included their operating results for the 3-month period ended March 31, 2010 in the consolidated statements of changes in equity representing the effect of changes in the fi scal year-ends of these consolidated subsidiaries.

*14 These consolidated subsidiaries changed their company names after March 31, 2011.



Notes to Consolidated Financial Statements

Under the control or influence concept, those companies in which the

Company, directly or indirectly, is able to exercise control over operations are

fully consolidated, and those companies over which the Group has the ability to

exercise signifi cant infl uences are accounted for by the equity method.

Investments in three (three in 2010) unconsolidated subsidiaries and

two (two in 2010) affi liate companies are accounted for by the equity method.

Investments in the remaining unconsolidated subsidiaries and affiliate

companies are stated at cost, which is determined by the moving-average

method. If the equity method of accounting had been applied to the investments

in these companies, the effect on the accompanying consolidated financial

statements would not be material.

The excess of the cost of an acquisition over the fair value of the net assets

of the acquired subsidiary at the date of acquisition is being amortized over a

period of fi ve years. The goodwill resulting from the acquisition of the business of

NYK Logistics (Japan) Co., Ltd. is being amortized over a period of three years.

All significant intercompany balances and transactions have been

eliminated in consolidation. All material unrealized profit included in assets

resulting from transactions within the Group is eliminated.

b. Unifi cation for Accounting Policies Applied to Foreign Subsidiaries for the

Consolidated Financial Statements

In May 2006, the Accounting Standards Board of Japan (the “ASBJ”) issued ASBJ

Practical Issues Task Force (PITF) No.18, “Practical Solution on Unification

of Accounting Policies Applied to Foreign Subsidiaries for the Consolidated

Financial Statements”. PITF No.18 prescribes: (1) the accounting policies

and procedures applied to a parent company and its subsidiaries for similar

transactions and events under similar circumstances should in principle

be unified for the preparation of the consolidated financial statements, (2)

financial statements prepared by foreign subsidiaries in accordance with

either International Financial Reporting Standards or the generally accepted

accounting principles in the United States of America tentatively may be used

for the consolidation process, (3) however, the following items should be

adjusted in the consolidation process so that net income is accounted for in

accordance with Japanese GAAP unless they are not material: 1) amortization

of goodwill; 2) scheduled amortization of actuarial gain or loss of pensions that

has been directly recorded in the equity; 3) expensing capitalized development

costs of R&D; 4) cancellation of the fair value model accounting for property,

plant, and equipment and investment properties and incorporation of the cost

model accounting; 5) recording the prior years' effects of changes in accounting

policies in the income statement where retrospective adjustments to fi nancial

statements have been incorporated; and 6) exclusion of minority interests from

net income, if contained.

c. Business Combination

In October 2003, the Business Accounting Council (the “BAC”) issued a Statement

of Opinion, “Accounting for Business Combinations”, and in December 2005,

the ASBJ issued ASBJ Statement No.7, “Accounting Standard for Business

Divestitures” and ASBJ Guidance No.10, “Guidance for Accounting Standard for

Business Combinations and Business Divestitures”. The accounting standard for

business combinations allowed companies to apply the pooling of interests method

of accounting only when certain specifi c criteria are met such that the business

combination is essentially regarded as a uniting-of-interests. For business

combinations that did not meet the uniting-of-interests criteria, the business

combination was considered to be an acquisition and the purchase method

of accounting was required. This standard also prescribed the accounting for

combinations of entities under common control and for joint ventures.

In December 2008, the ASBJ issued a revised accounting standard

for business combinations, ASBJ Statement No.21, “Accounting Standard

for Business Combinations.” Major accounting changes under the revised

accounting standard are as follows: (1) The revised standard requires

accounting for business combinations only by the purchase method. As a result,

the pooling of interests method of accounting is no longer allowed. (2) The

current accounting standard accounts for research and development costs to be

charged to income as incurred. Under the revised standard, in-process research

and development (IPR&D) acquired in the business combination is capitalized as

an intangible asset. (3) The previous accounting standard provided for a bargain

purchase gain (negative goodwill) to be systematically amortized over a period

not exceeding 20 years. Under the revised standard, the acquirer recognizes

the bargain purchase gain in profi t or loss immediately on the acquisition date

after reassessing and confi rming that all of the assets acquired and all of the

liabilities assumed have been identifi ed after a review of the procedures used in

the purchase allocation. This standard was applicable to business combinations

undertaken on or after April 1, 2010. The Company adopted this standard on

April 1, 2010.

d. Cash Equivalents

Cash equivalents are short-term investments that are readily convertible

into cash and that are exposed to insignifi cant risk of changes in value. Cash

equivalents include time deposits of which mature or become due within three

months of the date of acquisition.

e. Investments in Securities

Securities are classified into three categories, depending on management's

intent: trading, available-for-sale or held-to-maturity. The Company classifi es

all investments in securities as available-for-sale securities. Marketable

available-for-sale securities are reported at fair value, with unrealized

gains and losses, net of applicable taxes, reported under accumulated other

comprehensive income in a separate component of equity. Non-marketable

available-for-sale securities are stated at cost determined by the moving-

average method. For other than temporary declines in fair value, non-

marketable investment securities are reduced to net realizable value by a

charge to income.

f. Property, Plant and Equipment

Property, plant and equipment are stated at cost. Depreciation of property,

plant and equipment of the Company and domestic consolidated subsidiaries is

computed substantially by the declining-balance method at rates based on the

estimated useful lives of the assets, except for the buildings and structures at

Toyooka distribution center, Iwata distribution center and Yusen Air Fukumoto

building which are depreciated on the straight-line method. The depreciation of

property, plant and equipment of foreign consolidated subsidiaries is generally

computed by the straight-line method over the estimated useful lives of the

assets. The range of useful lives is principally as follows:

Buildings and structures ............................3-60 years

Furniture and fi xtures ................................2-20 years

Machinery, equipment and vehicles ...........4-6 years

g. Other Assets

Amortization of intangible assets included in other assets is computed by the

straight-line method. Software for internal use is amortized over a five-year

period.

h. Long-lived Assets

The Group reviews its long-lived assets for impairment whenever events or

changes in circumstance indicate the carrying amount of an asset or asset

group may not be recoverable. An impairment loss would be recognized

if the carrying amount of an asset or asset group exceeds the sum of the

undiscounted future cash fl ows expected to result from the continued use and

eventual disposition of the asset or asset group. The impairment loss would be

measured as the amount by which the carrying amount of the asset exceeds its

recoverable amount, which is the higher of the discounted cash fl ows from the

continued use and eventual disposition of the asset or the net selling price at

disposition.

i. Allowance for Doubtful Accounts

The Group provides an allowance for doubtful accounts based on the aggregated

amount of estimated credit losses for doubtful receivables plus an amount for

receivables other than doubtful receivables calculated using historical write off

experience over a certain period.

j. Accrued Bonuses to Employees

Employees are paid bonuses in June of every year. The bonuses include amounts

for services rendered during the previous fiscal year which are recorded as

accrued bonuses on the balance sheet as of the respective fi scal year-end.


k. Accrued Pension and Severance Costs

Employee's retirement and pension plans—The Company and certain domestic

consolidated subsidiaries have a non-contributory funded defined benefit

pension plan and an unfunded retirement benefi t plan. Certain of the Company’s

domestic consolidated subsidiaries have a contributory funded defined

contribution pension plan, while certain foreign consolidated subsidiaries have

either a non-contributory funded defi ned benefi t pension plan or a contributory

funded defi ned contribution pension plan.

The liability for employees' retirement benefi ts is accounted for based on

projected benefi t obligations and plan assets at the balance sheet date.

In July 2008, the ASBJ issued ASBJ Statement No. 19, “Partial Amendments

to Accounting Standard for Retirement Benefits (Part 3)”, which removed the

option of using a discount rate determined by taking into consideration the

fluctuations in yield of bonds over a certain period, as provided in Note 7 of

“Interpretive Note to the Accounting Standard for Retirement Benefits”. The

yield of a long term safe bond on closing date should be used for the calculation

of the discount rate in this accounting standard. The Company applied the

revised accounting standard effective April 1, 2009, however, there was no effect

from this change.

Retirement allowance for directors and corporate auditors—Retirement allowance

for directors and corporate auditors for certain subsidiaries are recorded to

state the liability at the amount that would be required if all directors and

corporate auditors retired at each balance sheet date.

l. Asset Retirement Obligations

In March 2008, the ASBJ published the accounting standard for asset retirement

obligations, ASBJ Statement No.18 “Accounting Standard for Asset Retirement

Obligations” and ASBJ Guidance No.21 “Guidance on Accounting Standard

for Asset Retirement Obligations”. Under this accounting standard, an asset

retirement obligation is defi ned as a legal obligation imposed either by law or

contract that results from the acquisition, construction, development and the

normal operation of a tangible fi xed asset and is associated with the retirement

of such tangible fi xed asset. The asset retirement obligation is recognized as

the sum of the discounted cash fl ows required for the future asset retirement

and is recorded in the period in which the obligation is incurred if a reasonable

estimate can be made. If a reasonable estimate of the asset retirement

obligation cannot be made in the period the asset retirement obligation is

incurred, the liability should be recognized when a reasonable estimate of asset

retirement obligation can be made. Upon initial recognition of a liability for an

asset retirement obligation, an asset retirement cost is capitalized by increasing

the carrying amount of the related fi xed asset by the amount of the liability. The

asset retirement cost is subsequently allocated to expense through depreciation

over the remaining useful life of the asset. Over time, the liability is accreted

to its present value each period. Any subsequent revisions to the timing or the

amount of the original estimate of undiscounted cash fl ows are refl ected as an

increase or a decrease in the carrying amount of the liability and the capitalized

amount of the related asset retirement cost. This standard was effective for

fi scal years beginning on or after April 1, 2010.

The Company applied this accounting standard effective April 1, 2010.

The effect of this change was to decrease operating income by ¥ 1 million ($ 9

thousand) and income before income taxes and minority interests by ¥ 12 million

($ 147 thousand). The asset retirement obligations that the Group recognized

upon applying this standard aggregated ¥14 million ($ 167 thousand).

m. Provision for alleged Anti-Monopoly Act violation

On March 18, 2009 the Company received the notice of a cease-and-desist

order and a surcharge payment order from the Japan Fair Trade Commission

(the "JFTC") for violations of Article 3 of the Anti-Monopoly Act (prohibition

of unreasonable restraint of trade). In the period that followed, the Company

scrutinized, confirmed and carefully examined the JFTC orders. Determining

that it was unable to accept the orders as a result of these steps, the Company

resolved at an Extraordinary Meeting of the Board of Directors held on April 17,

2009 to fi le an application for the commencement of hearings with the JFTC and

received the notices of the acceptance of hearings on July 3, 2009. The hearings

were conducted twice during the current fiscal year and still continue as of

the fi lling date of the consolidated fi nancial statements. The estimated losses

arising from surcharge payment order were recorded as a provision in the

balance sheet as of March 31, 2011 and 2010.

n. Leases

In March 2007, the ASBJ issued ASBJ Statement No. 13, “Accounting Standard

for Lease Transactions”, which revised the previous accounting standard for

lease transactions issued in June 1993. The revised accounting standard for lease

transactions was effective for fi scal years beginning on or after April 1, 2008.

Under the previous accounting standard, fi nance leases that were deemed

to transfer ownership of the leased property to the lessee were capitalized.

However, other fi nance leases were permitted to be accounted for as operating

lease transactions if certain “as if capitalized” information was disclosed in

the note to the lessee’s fi nancial statements. The revised accounting standard

requires that all finance lease transactions be capitalized to recognize lease

assets and lease obligations in the balance sheet. In addition, the accounting

standard permits leases which existed at the transition date and do not transfer

ownership of the leased property to the lessee to continue to be accounted for

as operating lease transactions.

The Company applied the revised accounting standard effective April 1,

2008. In addition, the Company continues to account for leases which existed at

the transition date and do not transfer ownership of the leased property to the

lessee as operating lease transactions.

All other leases are accounted for as operating leases.

o. Income Taxes

The provision for income taxes is computed based on the pretax income included

in the consolidated statement of income. The asset and liability approach is

used to recognize deferred tax assets and liabilities for the expected future tax

consequences of temporary differences between the carrying amounts and the

tax bases of assets and liabilities. Deferred taxes are measured by applying

currently enacted tax laws to the temporary differences.

p. Accounting for the Consumption Tax

In Japan, the consumption tax is imposed at a fl at rate of 5% on all domestic

consumption of goods and services (with certain exemptions). The consumption

tax imposed on the Group's domestic sales to customers is withheld by the

Group at the time of sale and is subsequently paid to the national government.

The consumption tax withheld upon sale and the consumption tax paid by the

Group on the purchases of goods and services are not included in the related

amounts in the accompanying consolidated statements of income.

q. Appropriation of Retained Earnings

Appropriations of retained earnings are refl ected in the fi nancial statements for

the following year upon shareholders' approval.

r. Treasury Stock

Under the Japanese Companies Act, the Company is allowed to acquire its own

shares to the extent that the aggregate cost of treasury stock does not exceed

the maximum amount available for dividends. Treasury stock is stated at cost

in the equity of the accompanying consolidated balance sheets. Net gain on

disposal of treasury stock is presented under "Capital surplus'' in the equity of

the accompanying consolidated balance sheets.

s. Foreign Currency Transactions

All short-term and long-term monetary receivables and payables denominated

in foreign currencies are translated into Japanese yen at the exchange rates at

the balance sheet date. The foreign exchange gains and losses from translation

are recognized in the consolidated statement of income.

t. Foreign Currency Financial Statements

The balance sheet accounts of foreign consolidated subsidiaries, and foreign

subsidiaries accounted for by the equity method are translated into Japanese

yen at the current exchange rate as of the balance sheet date except for equity,

which is translated at historical rate. Differences arising from such translations

are shown as "Foreign currency translation adjustments" under accumulated


other comprehensive income in a separate component of equity.

Revenue and expense accounts of foreign consolidated subsidiaries are

translated into Japanese yen at the average exchange rates.

u. Derivatives

The Group uses derivative fi nancial instruments to manage their exposures to

fl uctuations in foreign exchange and interest rates. Foreign exchange forward

contracts are utilized by the Group. The Group does not enter into derivatives

for trading or speculative purposes.

Derivative financial instruments and foreign currency transactions are

classified and accounted for as follows: (a) all derivatives are recognized as

either assets or liabilities and measured at fair value, and gains or losses on

derivative transactions are recognized in the consolidated statement of income

and (b) for derivatives used for hedging purposes, if derivatives qualify for hedge

accounting because of high correlation and effectiveness between the hedging

instruments and the hedged items, gains or losses on derivatives are deferred

until maturity of the hedged transactions.

The foreign exchange forward contracts employed to hedge foreign

exchange exposures in the Group's operating activities measured at the fair

value and the unrealized gains/losses are recognized in income.

v. Per Share Information

Net assets per share is computed based on the outstanding shares of common

stock at relevant balance sheet dates.

Basic net income per share is computed by dividing net income available

to shareholders by the weighted-average number of shares of common stock

outstanding for the period.

Diluted net income per share for the years ended March 31, 2011 and 2010

is not presented since the Company had no securities with dilutive effect.

Cash dividends per share presented in the accompanying consolidated

statements of income are dividends applicable to the respective years including

dividends to be paid after the end of the year.

w. New Accounting Pronouncements

Accounting Changes and Error Corrections—In December 2009, ASBJ issued

ASBJ Statement No. 24 “Accounting Standard for Accounting Changes and Error

Corrections” and ASBJ Guidance No. 24 “Guidance on Accounting Standard for

Accounting Changes and Error Corrections”. Accounting treatments under this

standard and guidance are as follows:

(1) Changes in Accounting Policies - When a new accounting policy is

applied with revision of accounting standards, the new policy is applied

retrospectively unless the revised accounting standards include specific

transitional provisions. When the revised accounting standards include

specific transitional provisions, an entity shall comply with the specific

transitional provisions.

(2) Changes in Presentations - When the presentation of financial statements

is changed, prior period financial statements are reclassified in accordance

with the new presentation.

(3) Changes in Accounting Estimates - A change in an accounting estimate is

accounted for in the period of the change if the change affects that period

only, and is accounted for prospectively if the change affects both the period

of the change and future periods.

(4) Corrections of Prior Period Errors - When an error in prior period financial

statements is discovered, those statements are restated.

This accounting standard and the guidance are applicable to accounting

changes and corrections of prior period errors which are made from the

beginning of the fiscal year that begins on or after April 1, 2011.

3. BUSINESS COMBINATION

4. LONG-LIVED ASSETS

On October 1, 2010, the Company acquired certain of the net assets of NYK

Logistics (Japan) Co., Ltd. (“NLJ”) as well as NLJ’s operations related to

international ocean freight forwarding, related agency services, container

consolidation, and other services.

The Company and Nippon Yusen Kabushiki Kaisha (NYK LINE) have agreed

to integrate their logistics businesses with the purpose of establishing a firm

position as a world-class logistics service provider through the reorganization and

optimization of their logistics business units. This acquisition was an integration of

their domestic logistics businesses as a part of the overall integration.

The results of operations of NLJ are included in the Group’s consolidated

fi nancial statements of income from the date of acquisition.

In accordance with the ASBJ Statement No.21, “Accounting Standard for

Business Combinations” and ASBJ Guidance No.10, “Guidance on Accounting

Standard for Business Combinations and Accounting Standard for Business

Divestitures”, this acquisition was accounted as an acquisition with cash

consideration of a business under common control.

The aggregate acquisition cost was ¥143 million ($ 1,719 thousand) in cash in

accordance with the Business Transfer Agreement. Goodwill of ¥59 million ($702

thousand) which represents the expected excess earnings power in the future

from the business integration is reported within the Japan segment. The amount

of the goodwill is net of taxes and is subject to amortization using the straight-

line method over a period of three years.

The proforma information giving effect as if the combination had been

completed at the beginning of the current fi scal year is not presented due to minor

effect on the consolidated statements of income.

The Group reviewed its long-lived assets for impairment as of the year ended

March 31, 2011 and 2010. Due to a signifi cant decline in market value of certain

fi xed assets which were planned to be disposed by sale, the Group recognized an

impairment loss of ¥66 million ($797 thousand) and ¥229 million as other expense

for the years ended March 31, 2011 and 2010 respectively. The impairment loss

of ¥66 million for the year ended March 31, 2011 was recorded on idle assets in

Osaka. The impairment loss for the year ended March 31, 2010 consisted of ¥136

million on certain land, building and structure in Aichi and ¥93 million on idle

assets in Osaka. The carrying amounts of the relevant assets were written down to

the recoverable amounts. The recoverable amounts of those assets planned to be

disposed by sale were measured at their net selling price determined by quotation

from a third-party vendor.


5. INVESTMENTS IN SECURITIES

The cost and aggregate fair values of the investments classifi ed as "available-for-sale securities" at March 31, 2011 and 2010 are as follows:

(2) Proceeds from sale of available-for-sale securities and total amounts of gain and loss on sale of available-for-sale securities:

(1) Available-for-sale securities for which market quotations are available:

(3 ) The impairment losses of securities for the year ended March 31, 2011 amounted to ¥ 155 million ($ 1,868 thousand) which consists of ¥ 16 million ($ 188 thousand) for

available-for-sale securities and ¥ 139 million ($ 1,680 thousand) for the securities of non-consolidated subsidiaries.

The impairment losses of securities for the year ended March 31, 2010 was ¥ 19 million, which was for available-for-sale securities.

Millions of Yen Thousands of U.S. Dollars

2011 2010 2011

CostFair Value(Carrying Amount)

Difference CostFair Value(Carrying Amount)

Difference CostFair Value(Carrying Amount)

Difference

Securities for which market value exceeds cost-

Equity securities ¥264 ¥447 ¥183 ¥304 ¥582 ¥278 $3,174 $5,372 $2,198Government bonds 41 42 1 59 60 1 495 503 8

Securities for which market value does not exceed cost-

Equity securities 105 90 (15) 74 70 (4) 1,262 1,089 (173)Total ¥410 ¥579 ¥169 ¥437 ¥712 ¥275 $4,931 $6,964 $2,033


2011 2010 2011Proceeds from sale of available-for-sale securities ¥74 ¥41 $894Total amount of gain on sale of available-for-sale securities 39 14 472Total amount of loss on sale of available-for-sale securities 4 81 49

6. SHORT-TERM BANK LOANS AND LONG-TERM DEBT

There were no short term bank loan at March 31, 2011 and 2010.

Long-term debt at March 31, 2011 and 2010 consisted of the following:

Millions of YenThousands of U.S. Dollars

2011 2010 2011

Unsecured loans from banks and other financial institutions, due serially to 2016 with average interest rates of 0.50% (2011) and 1.08% (2010)

¥4,500 ¥1,000 $54,119

Finance lease obligation 72 128 866Total 4,572 1,128 54,985

Less current portion (35) (1,063) (424)Long-term debt, less current portion ¥4,537 ¥65 $54,561

Year Ending March 31 Millions of YenThousands of U.S. Dollars

2012 ¥ 35 $ 4242013 18 2122014 11 1372015 2,504 30,1182016 and thereafter 2,004 24,094Total ¥4,572 $54,985

Annual maturities of long-term debt including fi nancial lease obligation at March

31, 2011, were as follows:

As is customary in Japan, the Company maintains substantial deposit balances with banks with which it has borrowings. Such deposit balances are not legally or

contractually restricted as to withdrawal.

General agreements with respective banks provide, as is customary in Japan, that additional collateral must be provided under certain circumstances if requested by

such banks and that certain banks have the right to offset cash deposited with them against any long-term or short-term debt or obligation that becomes due and, in case

of default and certain other specifi ed events, against all other debt payable to the banks. The Company has never been requested to provide any additional collateral.


2011 2010 2011Projected benefit obligation ¥10,492 ¥10,601 $126,184Fair value of plan assets (6,101) (5,931) (73,379)Unrecognized actuarial gain (1,037) (1,075) (12,473)Prepaid pension cost 263 328 3,159

Accrued pension and severance costs for employees

¥ 3,617 ¥ 3,923 $ 43,491

7. RETIREMENT AND PENSION PLANS

The Company and certain consolidated subsidiaries have severance payment plans

for employees, directors and corporate auditors. Under most circumstances,

employees terminating their employment are entitled to retirement benefits

determined based on the rate of pay at the time of termination, years of service

and certain other factors. Such retirement benefits are made in the form of a

lump-sum severance payment from the Company or from certain consolidated

subsidiaries and annuity payments from a trustee. Employees are entitled to

larger payments if the termination is involuntary, by retirement at the mandatory

retirement age, by death, or by voluntary retirement at certain specifi c ages prior

to the mandatory retirement age.

Accrued pension and severance costs for employees at March 31, 2011 and 2010

consisted of the following:



2011 2010 2011Service cost ¥593 ¥608 $7,130Interest cost 261 269 3,137Expected return on plan assets (215) (193) (2,577)Amortization of unrecognized

actuarial loss208 259 2,500

Past service cost (30) 0 (366)Total ¥817 ¥943 $9,824

2011 2010Discount rate Principally 2.0% Principally 2.0%Expected rate of return on

plan assetsPrincipally 3.0% Principally 3.0%

Recognition period of actuarial gain/loss

Principally 10 years Principally 10 years

Amortization period of prior service cost

1 year 1 year

The components of net periodic benefi t costs for the years ended March 31, 2011

and 2010 are as follows:

Assumptions used for the years ended March 31, 2011 and 2010 are set forth as

follows:

8. EQUITY

Japanese companies are subject to the Companies Act of Japan (the "Companies

Act"). The significant provisions in the Companies Act that affect financial and

accounting matters are summarized below:

a. Dividends

Under the Companies Act, companies can pay dividends at any time during the

fi scal year in addition to the year-end dividend upon resolution at the shareholders

meeting. For companies that meet certain criteria such as; (1) having the Board

of Directors, (2) having independent auditors, (3) having the Board of Corporate

Auditors, and (4) the term of service of the directors is prescribed as one year

rather than two years of normal term by its articles of incorporation, the Board of

Directors may declare dividends (except for dividends in kind) at any time during

the fi scal year if the company has prescribed so in its articles of incorporation.

The Company meets all the above criteria.

Semiannual interim dividends may also be paid once a year upon resolution

by the Board of Directors if the articles of incorporation of the company so

stipulate. The Companies Act provides certain limitations on the amounts

available for dividends or the purchase of treasury stock. The limitation is defi ned

as the amount available for distribution to the shareholders, but the amount of net

assets after dividends must be maintained at no less than ¥3 million.

b. Increases/Decreases and Transfer of Common Stock, Reserve and Surplus

The Companies Act requires that an amount equal to 10% of dividends must

be appropriated as a legal reserve (a component of retained earnings) or as

additional paid-in capital (a component of capital surplus) depending on the equity

account charged upon the payment of such dividends until the total of aggregate

amount of legal reserve and additional paid-in capital equals 25% of the common

stock. Under the Companies Act, the total amount of additional paid-in capital

and legal reserve may be reversed without limitation. The Companies Act also

provides that common stock, legal reserve, additional paid-in capital, other capital

surplus and retained earnings can be transferred among the accounts under

certain conditions upon resolution of the shareholders.

c. Treasury Stock and Treasury Stock Acquisition Rights

The Companies Act also provides for companies to purchase treasury stock

and dispose of such treasury stock by resolution of the Board of Directors. The

amount of treasury stock purchased cannot exceed the amount available for

distribution to the shareholders which is determined by specifi c formula.

Under the Companies Act, stock acquisition rights are presented as a

separate component of equity.

The Companies Act also provides that companies can purchase both treasury

stock acquisition rights and treasury stock. Such treasury stock acquisition rights

are presented as a separate component of equity or deducted directly from stock

acquisition rights.

9. INCOME TAXES


2011 2010 2011Deferred tax assets:

Accrued pension and severance costs for employees ¥1,348 ¥1,440 $16,213Accrued bonuses to employees 665 526 7,998Accrued enterprise tax 67 51 804Accrued pension and severance costs for directors and corporate auditors 138 144 1,664Allowance for doubtful accounts 159 197 1,916Depreciation 366 339 4,407Tax loss carryforward 30 41 363Loss on impairment of fi xed assets 473 446 5,687Loss on revaluation of investments in securities 126 124 1,518Loss on write-down of golf club membership 131 138 1,571Others 185 240 2,220

Total 3,688 3,686 44,361Less valuation allowance (475) (519) (5,711)

Total deferred tax assets 3,213 3,167 38,650Deferred tax liabilities:

Depreciation 77 79 929Prepaid pension expenses 46 39 549Others 72 139 869

Total deferred tax liabilities 195 257 2,347Net deferred tax assets ¥3,018 ¥2,910 $36,303

The Company and domestic consolidated subsidiaries are subject to Japanese national and local income taxes which, in the aggregate, resulted in a normal effective

statutory rate of approximately 40.4% for the years ended March 31, 2011 and 2010.

The tax effects of signifi cant temporary differences resulted in deferred tax assets and liabilities at March 31, 2011 and 2010 are as follows:


2011 2010Normal effective tax rate 40.4% 40.4%Adjustments:

Entertainment expenses and other non-deductible permanent differences 2.3 2.2Dividend income not taxable (8.1) (1.6)Effective of elimination of intercompany dividends received 8.5 1.8Per capital levy of local tax 1.0 2.0Lower income tax rates applicable to income in certain foreign countries (11.1) (7.1)Valuation allowance on deferred tax 0.1 2.7Foreign tax credits (0.7) (1.4)Equity in earnings of affi liated companies and unconsolidated companies (2.1) (3.0)Other-net 0.7 0.4

Actual effective tax rate 31.0% 36.4%

The reconciliation of the difference between the normal effective tax rate and the actual effective tax rate refl ected in the accompanying consolidated statements of income

for the years ended March 31, 2011 and 2010 is as follows:

The Group has various lease agreements whereby the Group acts as lessee.

Pro forma information of leased property whose lease inception was before March 31, 2008

ASBJ Statement No.13, “Accounting Standard for Lease Transactions” requires

that all finance lease transactions be capitalized to recognize lease assets

and lease obligations in the balance sheet. However, the ASBJ Statement No.

13 permits leases without ownership transfer of the leased property to the

lessee and whose lease inception was before March 31, 2008 to continue to

be accounted for as operating lease transactions if certain “as if capitalized”

information is disclosed in the note to the fi nancial statements. The Company

applied the ASBJ Statement No.13 effective April 1, 2008 and accounted for such

leases as operating lease transactions. Pro forma information of leased property

whose lease inception was before March 31, 2008 was as follows:

10. LEASES


2011 2010 2011Machinery,Equipment

and Vehicles

Furniture and Fixtures

TotalMachinery,Equipment

and Vehicles


TotalMachinery,Equipment

and Vehicles


Total

Acquisition cost ¥55 ¥5 ¥60 ¥61 ¥5 ¥66 $666 $59 $725 Accumulated depreciation (48) (5) (53) (46) (4) (50) (578) (57) (635)Net leased property ¥ 7 ¥0 ¥ 7 ¥15 ¥1 ¥16 $ 88 $ 2 $ 90


2011 2010 2011Due within one year ¥5 ¥13 $63 Due over one year 2 3 28Total ¥7 ¥16 $91


2011 2010 2011Due within one year ¥1,501 ¥1,696 $18,059 Due over one year 3,788 4,902 45,554Total ¥5,289 ¥6,598 $63,613

(1) Acquisition cost, accumulated depreciation:

The amount of obligations under finance leases includes the imputed interest expense portion. Depreciation expense which was not reflected in the

consolidated statements of income, computed by the straight-line method over the lease term was ¥8 million ($93 thousand) and ¥13 million for the years

ended March 31, 2011 and 2010, respectively.

The minimum rental commitments under non-cancelable operating leases at March 31, 2011 and 2010 were as follow:

(2) Obligations under fi nance leases:

11. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES

In March, 2008, the ASBJ revised ASBJ Statement No.10 “Accounting Standard for

Financial Instruments” and issued ASBJ Guidance No.19 “Guidance on Accounting

Standard for Financial Instruments and Related Disclosures”. This accounting standard

and the guidance was applicable to fi nancial instruments and related disclosures at the

end of the fi scal years ending on or after March 31, 2010. The Group applied the revised

accounting standard and the new guidance effective March 31, 2010.

(1) Group policy for fi nancial instruments

The Group limits the use of fi nancial instruments for fund management purposes

to short term bank deposits. The Group also makes it the basic policy to use the

cash management system operated within the Group and bank loans to fund its

ongoing operations. Derivatives are used, not for speculative purposes, but to

manage exposure to fi nancial risks as described in (2) below.

(2) Nature and extent of risks arising from fi nancial instruments

Receivables such as trade notes and trade accounts are exposed to customer credit

risk. Although receivables in foreign currencies are exposed to the market risk of

fl uctuation in foreign currency exchange rates, the position, net of payables in foreign


currencies, is hedged by using forward foreign currency contracts. Investment

securities, mainly equity securities of customers and suppliers of the Group, are

exposed to the risk of market price fl uctuations.

Payment terms of payables, such as trade notes and trade accounts, are less

than one year. Although payables in foreign currencies are exposed to the market risk

of fl uctuation in foreign currency exchange rates, those risks are netted against the

balance of receivables denominated in the same foreign currency as noted above.

Loans, principally from financial institutions, in long-term debt are mainly for

fi nancing related to business integration and investment in property.

Derivatives, which are forward foreign currency contracts, are used to manage

exposure to market risks from changes in foreign currency exchange rates of

receivables and payables. Please see Note 12 for more detail about derivatives.

(3) Risk management for fi nancial instruments

Credit Risk ManagementCredit risk is the risk of economic loss arising from a counterparty's failure to

repay or service debt according to the contractual terms. The Group manages

its credit risk from receivables on the basis of internal guidelines, which include

monitoring of payment term and balances of major customers by each business

administration department to identify the default risk of customers in early stage.

The maximum credit risk exposure of financial assets is limited to their

carrying amounts as of March 31, 2011.

Market risk management (foreign exchange risk and interest rate risk)Foreign currency trade receivables and payables are exposed to market risk

resulting from fluctuations in foreign currency exchange rates. Such foreign

exchange risk is hedged principally by forward foreign currency contracts. In

addition, when foreign currency trade receivables and payables are expected from

forecasted transaction, forward foreign currency contract may be used under the

limited contract term of quarter year.

Investment securities are managed by monitoring market values and fi nancial

position of issuers on a regular basis.

The execution and management of derivative transactions are approved by

CFO or the board of directors according to the internal guidelines which prescribe

the authority and the limit for each transaction. Counterparties to these derivative

transactions are limited to major fi nancial institutions in order to mitigate credit

risks.

Liquidity risk managementLiquidity risk comprises the risk that the Group cannot meet its contractual

obligations in full on maturity dates. The Group manages its liquidity risk by

holding adequate volumes of liquid assets, along with adequate fi nancial planning

by the corporate treasury department.

(4) Fair values of fi nancial instruments

Fair values of fi nancial instruments are based on quoted price in active markets.

If quoted price is not available, other rational valuation techniques are used

instead. As the valuation needs various assumptions, the fair values of fi nancial

instruments are subject to change when different assumptions are used. Also

please see Note 12 for the detail of fair value for derivatives.

(a) Fair value of fi nancial instrumentsMillions of Yen

March 31, 2011 Carrying amount Fair value Unrealized gain/loss

Cash and cash equivalents ¥25,089 ¥25,089 —Time deposits 1,986 1,986 —Trade notes and accounts receivable 30,169 30,169 —Investments in securitiesavailable-for-sale securities

579 579 —

Total ¥57,823 ¥57,823 —Trade notes and accounts payable ¥15,328 ¥15,328 —Current portion of long-term debt 35 35 —Accrued income taxes 1,046 1,046 —Long-term debt 4,537 4,537 —Total ¥20,946 ¥20,946 —

Millions of Yen


Cash and cash equivalents ¥16,740 ¥16,740 —Time deposits 1,623 1,623 —Trade notes and accounts receivable 29,007 29,007 —Investments in securitiesavailable-for-sale securities

712 712 —

Total ¥48,082 ¥48,082 —Trade notes and accounts payable ¥14,521 ¥14,521 —Current portion of long-term debt 1,063 1,063 —Accrued income taxes 562 562 —Long-term debt 65 65 —Total ¥16,211 ¥16,211 —

Thousands of U.S.Dollars


Cash and cash equivalents $301,733 $301,733 —Time deposits 23,886 23,886 —Trade notes and accounts receivable 362,831 362,831 —

Investments in securitiesavailable-for-sale securities

6,964 6,964 —

Total $695,414 $695,414 —Trade notes and accounts payable $184,337 $184,337 —Current portion of long-term debt 424 424 —Accrued income taxes 12,585 12,585 —Long-term debt 54,561 54,561 —Total $251,907 $251,907 —


Current assets and liabilitiesThe fair value of all current assets and liabilities (cash and cash equivalents, time

deposit, trade notes and accounts receivable, trade notes and accounts payable,

current portion of long-term debt, and accrued income taxes) is considered to be

equivalent to their carrying amount due to their short- term maturities.

Investments in securities (available-for-sale securities)The fair values of investments in securities are measured at the quoted market

price of the stock exchange of the equity instruments, and at the quotes obtained

from the fi nancial institution for certain debt instruments.

All investments in securities are classifi ed as available-for-sale securities.

The information of the fair values of investments in securities is included in Note 5.

Long-term debt-Long-term loans payableThe fair value of long-term debt on floating rates approximates carrying

amount due to the fl oating rate determined by the market interest rate in the

short term.

- Lease obligationsThe fair value of lease obligations approximates carrying amount.

DerivativesThe information of the fair value for derivatives is included in Note 12.

Millions of Yen

March 31, 2011 Due in one year or lessDue after one yearthrough fi ve years

Due after fi ve yearsthrough ten years

Due after ten years

Cash and cash equivalents ¥25,089 - - -Time deposits 1,986 - - -Trade notes and accounts receivable 30,169 - - -Investments in securities

Available-for-sale securities with contractual maturities - ¥42 - -Total ¥57,244 ¥42 - -

Thousands of U.S. Dollars

March 31, 2011 Due in one year or lessDue after one yearthrough fi ve years

Due after fi ve yearsthrough ten years

Due after ten years

Cash and cash equivalents $301,733 - - -Time deposits 23,886 - - -Trade notes and accounts receivable 362,831 - - -Investments in securities

Available-for-sale securities with contractual maturities - $503 - -Total $688,450 $503 - -

Carrying Amount


March 31, 2011 2011 2010 2011Investments in equity instruments that do not have a quoted market price in an active market ¥ 244 ¥ 279 $2,934

(5) Maturity analysis for fi nancial assets and securities with contractual maturities

(b) Financial instruments whose fair value cannot be reliably determined

12. DERIVATIVES

The Group enters into foreign exchange forward contracts to reduce the exposure to fl uctuations in interest rates risks and foreign exchange rates associated with certain

assets and liabilities denominated in foreign currencies.

All derivative transactions are entered into to hedge interest and foreign currency exposures incorporated within its business. Accordingly, market risk in these

derivatives is basically offset by opposite movements in the value of hedged assets or liabilities.

Because the counterparties to these derivatives are limited to major international fi nancial institutions, the Group does not anticipate any losses arising from credit risk.

Derivative transactions entered into by the Group have been made in accordance with internal policies which regulate their authorization.

The Group had the following derivatives contracts outstanding at March 31, 2011 and 2010:


2011 2010 2011Contracts OutstandingDue Within One Year

Unrealized Gain (Loss)

Contracts OutstandingDue Within One Year


Contracts OutstandingDue Within One Year


Foreign currency forward contracts:

Selling U.S. dollar ¥ 8 ¥(0) ¥185 ¥(0) $ 98 $ (2)Buying U.S. dollar 319 2 391 7 3,835 28Buying Swiss franc − − 36 1 − −Buying Hong Kong dollar 162 (2) 178 (2) 1,946 (20)Buying Thai baht 69 (0) 19 1 832 (7)Buying euro 657 16 322 (6) 7,907 197Buying Swedish kronor − − 3 (0) − −Buying Canadian dollar 460 12 11 0 5,523 145

Derivative transactions to which hedge accounting is not applied.


The contract or notional amounts of derivatives which are shown in the above table do not represent the amounts exchanged by the parties and do not measure the Group's

exposure to credit or market risk.

Derivative transactions to which hedge accounting is applied.There is no derivative transactions to which hedge accounting was applied for the year ended March 31, 2011 and 2010.

13. COMMITMENTS AND CONTINGENT LIABILITIES

The Group was contingently liable for guarantees of trade payables and bank loans owed by their unconsolidated subsidiaries, affi liate companies and a third party company

in the amount of ¥36 million ($438 thousand) and ¥46 million at March 31, 2011 and 2010, respectively.

14. BREAKDOWN OF SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

15. COMPREHENSIVE INCOME

Selling, general and administrative expenses for the years ended March 31, 2011 and 2010 are summarized as follows:

Total comprehensive income for the year ended March 31, 2010 was the following: Other comprehensive income for the year ended March 31, 2010 consisted of the

following:

For the year ended March 31, 2010


2011 2010 2011Labor and payroll cost ¥14,059 ¥13,406 $169,082 Provision for accrued bonuses to employees 1,319 953 15,866Provision for accrued pension and severance costs for:

Employees 706 806 8,490Directors and corporate auditors 112 101 1,346

Provision for doubtful accounts 79 61 951Depreciation 1,223 1,112 14,712Other 13,829 12,577 166,310Total ¥31,327 ¥29,016 $376,757

Millions of Yen

2010Total comprehensive income attributable to:

Owners of the parent ¥ 2,688Minority interests 411

Total comprehensive income ¥ 3,099

Millions of Yen

2010Other comprehensive income:

Unrealized gain (loss) on available-for-sale securities ¥158Foreign currency translation adjustments 991Share of other comprehensive income in associates 40

Total other comprehensive income ¥1,189

16. SEGMENT INFORMATION

In March 2008, the ASBJ revised ASBJ Statement No.17 “Accounting Standard for Segment Information Disclosures” and issued ASBJ Guidance No.20 “Guidance on

Accounting Standard for Segment Information Disclosures”. Under the standard and guidance, an entity is required to report fi nancial and descriptive information about

its reportable segments. Reportable segments are operating segments or aggregations of operating segments that meet specifi ed criteria. Operating segments are

components of an entity about which separate fi nancial information is available and such information is evaluated regularly by the chief operating decision maker in

deciding how to allocate resources and in assessing performance. Generally, segment information is required to be reported on the same basis as is used internally for

evaluating operating segment performance and deciding how to allocate resources to operating segments. This accounting standard and the guidance are applicable to

segment information disclosures for the fi scal years beginning on or after April 1, 2010.

The segment information for the year ended March 31, 2010 under the revised accounting standard is also disclosed hereunder as required.

For the year ended March 31, 2011 and 2010

1. Description of reportable segments The Group's reportable segments are those for which separate fi nancial information is available and regular evaluation by the Company's management is being performed

in order to decide how resources are allocated among the Group. The Group mainly provides global logistics services. In order to provide its services over large region,

the regional headquarters which are located in Japan, USA, Netherlands, Hong Kong, and Singapore control the group companies in Japan, Americas, Europe, East Asia,

and South Asia and Oceania, respectively. Thus, the Group's reportable operating segments are based on geographical service providing structures, which consist of fi ve

regions: Japan, Americas, Europe, East Asia and South Asia and Oceania.


Millions of Yen

2011Reportable Segment

ReconciliationConsolidated

TotalJapan Americas Europe East AsiaSouth Asia and

OceaniaTotal

Sales

Sales to external customers ¥ 77,424 ¥12,843 ¥14,200 ¥30,768 ¥25,553 ¥160,788 − ¥160,788Inter-segment sales/transfers 211 628 822 937 189 2,787 (2,787) −

Total 77,635 13,471 15,022 31,705 25,742 163,575 (2,787) 160,788Segment profi t ¥ 333 ¥ 749 ¥ 527 ¥ 2,001 ¥ 1,352 ¥ 4,962 ¥ (15) ¥ 4,947Segment assets ¥ 45,589 ¥ 7 ,264 ¥11,178 ¥15,826 ¥12,038 ¥ 91,895 ¥(3,532) ¥ 88,363Other:

Depreciation 1,102 119 152 98 309 1,780 − 1,780Amortizations of goodwill 10 − − − 5 15 4 19Investments in unconsolidated subsidiaries and affi liate companies accounted for by the equity method *1

502 − − − − 502 730 1,232

Increase in property, plant and equipment and intangible assets

869 56 64 104 185 1,278 − 1,278

Millions of Yen




OceaniaTotal

Sales

Sales to external customers ¥61,047 ¥10,198 ¥11,219 ¥21,813 ¥19,176 ¥123,453 − ¥123,453Inter-segment sales/transfers 180 584 669 502 156 2,091 (2,091) −

Total 61,227 10,782 11,888 22,315 19,332 125,544 (2,091) 123,453Segment profi t ¥ 944 ¥ (5) ¥ (472) ¥ 651 ¥ 1,198 ¥ 2,316 ¥ (6) ¥ 2,310Segment assets ¥45,324 ¥ 8,149 ¥ 9,988 ¥15,107 ¥10,779 ¥ 89,347 ¥(7,904) ¥ 81,443Other:

Depreciation 1,019 136 183 108 297 1,743 − 1,743Amortizations of goodwill 0 − − − 5 5 4 9Investments in unconsolidated subsidiaries and affi liate companies accounted for by the equity method *1

502 − − − − 502 494 996


706 29 42 50 143 970 − 970

2. Methods of measurement for the amounts of sales, profi t (loss), assets, liabilities and other items for each reportable segmentThe accounting policies of each reportable segment are consistent with those disclosed in Note 2, “Summary of Signifi cant Accounting Policies”.

Information about sales, profi t (loss), assets, liabilities and other items is as follows.





OceaniaTotal

Sales

Sales to external customers $931,138 $154,460 $170,775 $ 370,028 $307,315 $1,933,716 − $1,933,716Inter-segment sales/transfers 2,538 7,553 9,884 11,274 2,265 33,514 (33,514) −

Total 933,676 162,013 180,659 381,302 309,580 1,967,230 (33,514) 1,933,716Segment profi t $ 4,007 $ 9,007 $ 6,341 $ 24,063 $ 16,257 $ 59,675 $ (176) $ 59,499Segment assets $548,273 $ 87,360 $134,433 $190,329 $144,781 $1,105,176 $(42,485) $1,062,691Other:

Depreciation 13,257 1,435 1,826 1,175 3,716 21,409 − 21,409Amortizations of goodwill 118 − − − 66 184 43 227Investments in unconsolidated subsidiaries and affi liate companies accounted for by the equity method *1

6,031 − − − − 6,031 8,785 14,816


10,457 668 775 1,255 2,220 15,375 − 15,375

NOTES: 1. The breakdown for the reconciliation in each item for the year ended March 31, 2011 and 2010 are as follows:


2011 2010 2011Sales:

Elimination of inter-segment transactions ¥(2,787) ¥(2,091) $(33,514)Total ¥(2,787) ¥(2,091) $(33,514)


Millions of Yen

2010Geographic Segment

Elimination/Corporate

ConsolidatedTotalJapan Americas Europe East Asia

South Asiaand Oceania

Total

a. Net sales and operating incomeNet sales:

Net sales to outside customers ¥61,047 ¥10,198 ¥11,219 ¥21,813 ¥19,176 ¥123,453 - ¥123,453Inter-segment sales/transfers 180 584 669 502 156 2,091 ¥(2,091) -

Total sales 61,227 10,782 11,888 22,315 19,332 125,544 (2,091) 123,453Operating expenses 60,283 10,787 12,360 21,664 18,134 123,228 (2,085) 121,143Operating income ¥ 944 ¥ (5) ¥ (472) ¥ 651 ¥ 1,198 ¥ 2,316 ¥ (6) ¥ 2,310

b. Assets ¥45,324 ¥ 8,149 ¥ 9,988 ¥15,107 ¥10,779 ¥ 89,347 ¥(7,904) ¥ 81,443

*1: The reconciliation column for investments in unconsolidated subsidiaries and affi liate companies accounted for by the equity method contains the investments which are not attributable to

any reportable segments.

*2: The common assets mainly consisted of cash and deposits and investment securities.


2011 2010 2011Segment profi t:

Elimination of inter-segment transactions ¥(11) ¥(2) $ (135)Amortization of goodwill (4) (4) (43)Others 0 0 2

Total ¥(15) ¥(6) $ (176)


2011 2010 2011Segment asset:

Elimination of inter-segment receivables and payables ¥(5,477) ¥(3,772) $ (65,874)Elimination of inter-segment investments and equity accounts (6,693) (6,925) (80,490)Common assets *2 8,726 2,882 104,942Others (88) (89) (1,063)

Total ¥(3,532) ¥(7,904) $ (42,485)

2. Segment profi t is reconciled to operating income in the consolidated statements of income.

(1) Industry Segments

For the year ended March 31, 2010

The Group operates principally in the following three industry segments:

(1) Air and sea cargo

(2) Travel

(3) Other

Notes: The amounts of the common assets included in the column "Elimination or Corporate" were ¥2,882 million for the years ended March 31, 2010, which mainly consisted of surplus funds (cash and securities).

Notes: The amounts of the common assets included in the column "Elimination or Corporate" were ¥2,882 million for the years ended March 31, 2010, which mainly consisted of surplus funds (cash and securities).

(2) Geographical Segments

The segment information of the Group in respect to the years ended March 31, 2010, classifi ed by industry segments is presented below:

Millions of Yen

2010Industry Segment Elimination/

CorporateConsolidated

TotalAir and Sea Cargo Travel Other Total

a. Net sales and operating incomeNet sales:

Net sales to outside customers ¥120,181 ¥3,160 ¥ 112 ¥123,453 - ¥123,453Inter-segment sales/transfers - - 1,355 1,355 ¥(1,355) -

Total sales 120,181 3,160 1,467 124,808 (1,355) 123,453Operating expenses 118,198 3,018 1,281 122,497 (1,354) 121,143Operating income ¥ 1,983 ¥ 142 ¥ 186 ¥ 2,311 ¥ (1) ¥ 2,310

b. Assets, depreciation and capital expendituresAssets ¥ 72,592 ¥5,770 ¥6,538 ¥ 84,900 ¥(3,457) ¥81,443Depreciation 1,577 47 119 1,743 - 1,743Capital expenditures 925 41 4 970 - 970

(3) Net Sales in Foreign Countries

Net sales in foreign countries for the years ended March 31, 2010 amounted to ¥ 63,124 million.


Related information

Millions of Yen

2011 2010Air and

Sea CargoTravel Other Total

Air and Sea Cargo

Travel Other Total

Sales to external customers ¥ 156,945 ¥ 3,732 ¥ 111 ¥ 160,788 ¥ 120,181 ¥ 3,160 ¥ 112 ¥ 123,453


2011Air and

Sea CargoTravel Other Total

Sales to external customers $ 1,887,493 $ 44,877 $ 1,346 $ 1,933,716

1. Information about services

Millions of Yen

2011 2010

Japan Americas Europe East AsiaSouth Asia and

OceaniaOthers Total Japan Americas Europe East Asia


Others Total

¥76,579 ¥12,992 ¥14,424 ¥30,973 ¥25,818 ¥2 ¥160,788 ¥60,329 ¥10,323 ¥11,444 ¥21,972 ¥19,382 ¥3 ¥123,453

Millions of Yen

2011 2010


OceaniaTotal Japan Americas Europe East Asia


Total

¥11,782 ¥1,861 ¥1,421 ¥823 ¥1,129 ¥17,016 ¥12,069 ¥2,097 ¥1,753 ¥930 ¥1,217 ¥18,066

Millions of Yen

2011 2010


OceaniaTotal Japan Americas Europe East Asia


Total

¥66 - - - - ¥66 ¥229 - - - - ¥229


2011


OceaniaOthers Total

$ 920,975 $ 156,245 $ 173,470 $ 372,494 $ 310,498 $ 34 $ 1,933,716


2011


OceaniaTotal

$ 141,695 $ 22,386 $ 17,086 $ 9,894 $ 13,577 $ 204,638


2011


OceaniaTotal

$ 797 - - - - $ 797

2. Information about geographical areas

(1) Sales

(2) Property, plant and equipment

(4) Information about loss on impairment of fi xed assets

(3) Information about major customers

Notes: Sales are classifi ed in countries or regions based on location of customers. The countries and regions classifi ed in the above geographical areas are as follows:

(1) Americas: U.S.A., Canada

(2) Europe: U.K., Germany, France, Italy, Netherlands

(3) East Asia: China, Hong Kong, Taiwan, South Korea

(4) South Asia and Oceania: Singapore, Indonesia, Australia, Thailand, Vietnam, Philippines, India

(5) Others: Other than those above

The Group have omitted information about major customers, as sales to any customers is not over 10% of sales of consolidated.


Millions of Yen

2011


OceaniaElimination / Corporate

Total

Amortization of goodwill ¥10 - - - ¥5 ¥4 ¥19 Goodwill at March 31, 2011 49 - - - 3 - 52 Amortization of negative goodwill 3 - - - - - 3 Negative goodwill at March 31, 2011 2 - - - - - 2


2011



Total

Amortization of goodwill $118 - - - $66 $43 $227 Goodwill at March 31, 2011 587 - - - 33 - 620 Amortization of negative goodwill 36 - - - - - 36 Negative goodwill at March 31, 2011 21 - - - - - 21

Millions of Yen

2010



Total

Amortization of goodwill ¥0 - - - ¥5 ¥4 ¥9 Goodwill at March 31, 2010 0 - - - 8 4 12 Amortization of negative goodwill 3 - - - - - 3 Negative goodwill at March 31, 2010 5 - - - - - 5

(5) Information about amortization of goodwill and negative goodwill

17. PER SHARE INFORMATION

Per share information for the years ended March 31, 2011 and 2010 are summarized as follows:

Diluted net income per share is not presented since there were no securities with dilutive effect for the years ended March 31, 2011 and 2010.

Per share information is computed based on the following:

Yen U.S. Dollars

2011 2010 2011Net assets per share ¥1,260.69 ¥1,225.21 $15.162Basic net income per share ¥85.85 36.63 1.032

Number of Shares of Common Stock

2011 2010Weighted-average shares for the period 42,170,233 42,170,622


2011 2010 2011Net income ¥3,621 ¥1,545 $43,542Net income not subject to distribution to common shareholders - - -Net income subject to current and future distribution to common stock 3,621 1,545 43,542

18. RELATED PARTY TRANSACTIONSMajor transactions and major balances the years ended March 31, 2011 and 2010, respectively, with related parties are as follows:

For the year ended March 31, 2011Transaction for the Year Balance at End of Year

Name AddressAmount of

CapitalNature of Business

Ownership Interest (%)

RelationshipDescription

of the Transactions

Millions of Yen

Thousands of U.S.Dollars

Account NameMillions of Yen

Thousands ofU.S. Dollars

Transaction with subsidiaries of a common parent:

NYK FTC (Singapore) Pte. Ltd.

Singapore $5,000thousand Finance — Financing

Loan 5,767 69,362Other current

assets(Loan receivable)

- -

Interest received 7 82

Other current assets(Accrued interest

receivable)- -


19. SUBSEQUENT EVENT

Ⅰ. The Company made an appropriation of retained earnings, proposed by the board of directors and approved by shareholders at the general meeting on June 29, 2011, as follows:

Ⅱ. As released in "Execution of the Basic Agreement on Integration of Overseas Businesses of NYK and Yusen Logistics" on December 22, 2010, the Company and Nippon Yusen Kabushiki Kaisha (NYK LINE) (head office: Chiyoda-ku, Tokyo, Japan; president: Yasumi Kudo) (hereinafter "NYK") have conducted the reorganization and integration of the logistics businesses in order to gain a position as a world-class logistics service provider by reorganizing and optimizing logistics business units. The outlines of the important transactions are as follows

1. The U.S. logistics businesses have been integrated through an absorption-type merger. Yusen Logistics (Americas)Inc. (formerly, Yusen Air & Sea Service (USA) Inc.),

which is a consolidated subsidiary of the company, became the surviving company and NYK LOGISTICS (AMERICAS) INC., which is a consolidated subsidiary of NYK,

became the extinct company.

After the merger became effective, the company acquired the shares of Yusen Logistics (Americas) Inc. from NYK GROUP AMERICAS INC.,etc. As a result, the

shareholding ratio of the company is 51.0%.

(1) Outline of the business combination (2) Calculation of Acquisition cost

1. Name, business and recent performance of the acquired company

1) Name of the acquired company

NYK LOGISTICS (AMERICAS) INC.

2) Business of the acquired company

International ocean freight-forwarding, contract logistics, domestic

transportation., etc.

3) Performance of the acquired company for period ending 31 March 2011.

1. Type of shares and merger ratio

1 share of common stock of NYK LOGISTICS (AMERICAS) INC.

: 531 shares of common stock of Yusen Logistics (Americas) Inc.

2. Basis for calculation of the merger ratio

In order to ensure the fairness and appropriateness of the merger ratio, the

Company and NYK decided individually to request a third-party appraiser

that is independent from the two companies to calculate the merger ratio.

Yusen Logistics has appointed PricewaterhouseCoopers Co., Ltd.

(hereinafter “PwC”) as its third-party appraiser and NYK has appointed

KPMG FAS Co., Ltd. (hereinafter “KPMG”) as its third-party appraiser.

The company and NYK agreed on the shareholding ratio after careful

consideration by referring to the results calculated by these third-party

appraisers, and by taking into account all factors such as the fi nancial condition,

the state of assets, and the future outlook of each integration subsidiary.

3. Number of shares delivered

569,763 shares2. Date of the business combination

April 1, 2011

3. Legal form of the business combination

Absorption-type merger

4. Name of the company after the business combination:

Yusen Logistics (Americas) Inc.

(Formerly, Yusen Air & Sea Service (U.S.A.) Inc.)

5. Ratio of voting rights acquired

19.7%


Cash dividends (¥9 ($0.11) per share) ¥380 $4,564

Millions of YenThousands ofU.S. Dollars

Sales ¥67,784 $815,205 Operating Loss (17) (198)Ordinary Loss (28) (338)Net Loss (¥683) ($8,215)

Information of parent company

Nippon Yusen Kabushiki Kaisha (NYK LINE) (Listed in Tokyo Stock Exchange, Nagoya Stock Exchange and Osaka Securities Exchange)

Notes: Consumption taxes are excluded from the amount of transactions. Business policy on terms and conditions Interest on loans is decided in consideration of market rate.

For the year ended March 31, 2010Transaction for the Year Balance at End of Year

Name AddressAmount of

CapitalNature of Business

Ownership Interest (%)

RelationshipDescription of

the TransactionsMillions of Yen Account Name Millions of Yen

Transaction with subsidiaries of a common parent:

NYKCruisesCo., Ltd.

Tokyo, Japan ¥2,000 million

Marine transportationTravel business

(Owns the Company's

shares)0.0

Purchasing cruise tours

Operatingcost ¥1,366

Other current assets(Prepaid cost) ¥ 503

Trade notes andaccounts payable 88

NYK FTC (Singapore) Pte. Ltd.

Singapore $5,000thousand Finance — Financing

Loan 6,215 Other current assets(Loan receivable) 2,035

Interest received 15

Other current assets(Accrued interest

receivable)0

(3) Amounts of assets and liabilities acquired on the day of the business combination


Current Assets ¥ 8,912 $107,175 Fixed Assets 8,417 101,228 Total assets ¥17,329 $208,403 Current Liabilities 7,476 89,910 Fixed Liabilities 463 5,569 Total liabilities ¥ 7,939 $ 95,479


(4) Contents of share acquisition

1. Number of acquired Shares and Acquisition cost

Number of acquired Shares: 221,980 shares of common stock

Acquisition cost: ¥ 4,083 million ($ 49,109 thousand)

2. Status of share acquisition after the transfer

Number of Shares

before the Transfer

(shareholding ratio)

Yusen Logistics Co., Ltd.:140,000 shares(19.7%)

NYK Group Americas Inc.: 563,922 sharesNYK Logistics (Japan) Co., Ltd.: 5,841 sharesTotal: 569,763 shares (80.3%)

Number of Shares

after the Transfer

(shareholding ratio)

Yusen Logistics Co., Ltd.:361,980 shares(51.0%)

NYK Group Americas Inc.: 347,783 shares(49.0%)

(1) Outline of the business combination

1. Name, business and recent performance of the acquired company

1) Name of the acquired company

NYK LOGISTICS (EUROPE CONTINENT) B.V.

2) Business of the acquired company

Holding company of European logistics companies of NYK Group

3) Performance for period ending 31 March 2011.

2. The European holding companies related to the logistics businesses of the

two groups have been integrated through an absorption-type merger. Yusen

Logistics (Europe) B.V. (formerly, Yusen Air & Sea Service (Europe) B.V.), which

is a consolidated subsidiary of the company, became the surviving company and

NYK LOGISTICS (EUROPE CONTINENT) B.V., which is a consolidated subsidiary

of NYK, became the extinct company.

2. Date of the business combination

April 1, 2011

3. Legal form of the business combination

Absorption-type merger

4. Name of the company after the business combination:

Yusen Logistics (Europe) B.V.

(Formerly, Yusen Air & Sea Service (Europe) B.V.)

5. Ratio of voting rights acquired

53.7%


Sales ¥38,180 $459,174 Operating Income 143 1,720 Ordinary Loss (3) (34)Net Income ¥ 118 $ 1,419

(2) Calculation of Acquisition cost

1. Type of shares and merger ratio

1 share of common stock of NYK LOGISTICS (EUROPE CONTINENT) B.V.

: 88.75 shares of common stock of Yusen Logistics (Europe) B.V.

2. Basis for calculation of the merger ratio

In order to ensure the fairness and appropriateness of the merger ratio, the

Company and NYK decided individually to request a third-party appraiser

that is independent from the two companies to calculate the merger ratio.

Yusen Logistics has appointed PricewaterhouseCoopers Co., Ltd.

(hereinafter “PwC”) as its third-party appraiser and NYK has appointed

KPMG FAS Co., Ltd. (hereinafter “KPMG”) as its third-party appraiser.

The company and NYK agreed on the shareholding ratio after careful

consideration by referring to the results calculated by these third-party

appraisers, and by taking into account all factors such as the fi nancial condition,

the state of assets, and the future outlook of each integration subsidiary.

3. Number of shares delivered

15,975 shares

(3) Amounts of assets and liabilities acquired on the day of the business combination

3. NYK Group Europe Ltd., which is the holding company of the NYK Group in

U.K., transferred all of the shares of Yusen Logistics (UK) Ltd. (formerly, NYK

LOGISTICS (UK) Ltd.), which is a U.K. logistics business company of the NYK

Group, to Yusen Logistics (Europe) B.V. which is a European holding company of

Yusen Logistics Group.

4 . Yusen Logistics (Hong Kong) Limited (formerly, Yusen Air & Sea Service

(H.K.) Ltd.) purchased a part of the logistics business of NYK LOGISTICS

(HONG KONG) LTD., a consolidated subsidiary of NYK, in the form of a business

transfer to Yusen Logistics (Hong Kong) Limited

(1) Name of the company transferring shares

NYK Group Europe Ltd.

(2) Name, business and recent performance of the acquired company

1. Name of the acquired company

Yusen Logistics (UK) Ltd. (formerly, NYK LOGISTICS (UK) Ltd.)

2. Business of the acquired company

International ocean freight-forwarding, contract logistics, domestic

transportation, etc.

3. Performance for period ending 31 March 2011.

(4) Contents of share acquisition

1. Number of acquired Shares and Acquisition cost

Number of acquired Shares: 40,930,000 shares of common stock

Acquisition cost: ¥ 2,054 million ($ 24,702 thousand)

Number of Shares after the acquisition (shareholding ratio): 40,930,000

shares of common stock (100%)

(1) Corporate Name of the Transferor

NYK LOGISTICS (HONG KONG) LTD.

(2) Business transferred International ocean freight-forwarding, contract logistics, domestic

transportation, etc.

(3) Assets and Liabilities to be Transferred

(4) Cost for the business transferred2,145 Millions of Yen ($ 25,800 thousand)

(5) The date of the business transferred April 1, 2011


Current Assets ¥14,610 $175,711 Fixed Assets 12,510 150,450 Total assets ¥27,120 $326,161 Current Liabilities 12,595 151,472 Fixed Liabilities 3,324 39,972 Total liabilities ¥15,919 $191,444


Current Assets ¥ 107 $ 1,289 Fixed Assets 2,165 26,037 Total assets ¥2,272 $27,326 Current Liabilities 76 909 Total liabilities ¥ 76 $ 909


Sales ¥24,476 $294,359 Operating Income 155 1,868 Ordinary Loss (6) (70)Net Loss (¥315) ($3,788)

(3) Date of share transfer

April 17, 2011



Independent Auditors’ Report

1955Feb. Established ‘‘Kokusai Ryoko Kosha”

for handling of general travel and air

cargo industry.

Mar. Transferred the goodwill from

International Travel Consultants Inc.

(ITC), the member of International Air

Transport Association (IATA).

Jun. Acquired a customs broker license and

started customs clearance.

1959Sep. NYK Line acquired stocks which Osaka

Shosen Kaisha (O.S.K. Line) owned, and

made a subsidiary company by naming it

‘‘Yusen Air Service Co., Ltd.”

1961Nov. Changed English corporate name to “Yusen

Air & Sea Service Co., Ltd.”

1968Oct. Established Yusen Air & Sea Service

(U.S.A.) Inc.

1973Aug. Established Yusen Air & Sea Service

(H.K.) Ltd.

1979Mar. Established Yusen Air & Sea Service

(Singapore) Pte. Ltd.

Dec. Acquired the license of domestic

airfreight forwarder.

1983Dec. Setting up Logistics Department in Harbor

Division of NYK Head Quarter

Establishment of "Japan Intermodal

Transport” (later, JIT Co., Ltd.) in Japan,

mainly handling ocean freight forwarding.

First half of 1980Establishment of subsidiaries in Asian countries,

following precedent one in Thailand

1984Feb. Acquired the license of international

airfreight forwarder.

Second half of 1980Expansion of network in Europe and Americas

through buyouts or establishment of subsidiaries

1986Oct. Established Yusen Air International B.V.

and Yusen Air & Sea Service (Benelux)

B.V. in the Netherlands.


(Deutschland) GmbH.

2000 and afterBuilding up global network and organization by

expanding its business to Eastern Europe and

BRICs

2000Feb. Established Yusen Air & Sea Service

(Chugoku) Co., Ltd. in Kurashiki City,

Okayama.

Sep. Established Yusen Air & Sea Service

(China) Ltd. in Hong Kong.

2001Jul. Established Yusen Air Staff Service Co.,

Ltd. in Chuo-ku, Tokyo.


Logistics (Shanghai) Co., Ltd. in China.

Oct. Established Yusen Air & Sea Service

(Europe) B.V. to succeed Yusen

Air International B.V. to preside

the European business corporation.

2002Jan. Yusen Air & Sea Service (Singapore) Pte.

Ltd. invested in PT. Pusaka Yudhanusa

of Indonesia, and changed name to PT.

Yusen Air & Sea Service Indonesia.

Jun. Established Yusen Air Logistics (Xiamen)

Co., Ltd. in China.


(Czech) s.r.o.

Established Yusen Air & Sea Service

(Thailand) Co., Ltd. and Yusen Air & Sea

Service Management (Thailand) Co., Ltd.

Nov. Established Yusen Air & Sea Service

(Korea) Co., Ltd. in South Korea.

Dec. Established Yusen Shenda Air & Sea

Service (Shanghai) Ltd. in China.

2003Sep. Tosho Unyu Co., Ltd. changed its name

to Yusen Air & Sea Service Keihin Trans

Co., Ltd.


(Beijing) Co., Ltd. in China.

2004Integration of brand name to NYK Logistics

internationally

2004Jun. Established the Istanbul Representative

Offi ce in Turkey.


(Vietnam) Co., Ltd.

Nov. Established the Krakow Representative

Offi ce in Poland.

Apr. Established Yusen Air & Sea Service

(U.K.) Ltd.

Dec. Invested in Tosho Unyu Co., Ltd. in

Naka-ku, Yokohama City, Kanagawa.

1988Jun. Established Yusen Air & Sea Service

(Australia) Pty. Ltd.


(Canada) Inc.

1989Nov. Established Yusen Air & Sea Service

(France) S.a.r.l.

1990Jul. Established Yusen Air & Sea Service

(Taiwan) Ltd.

1991Jul. Established Yusen Air & Sea Service

(Kitakanto) Co., Ltd. in Utsunomiya City,

Tochigi.

1992Apr. Established Yusen Air & Sea Service

Philippines Inc.


(Tsukuba) Co., Ltd. in Ibaraki.

1994Apr. Established Yusen Travel Co., Ltd. in

Chiyoda-ku, Tokyo.

Oct. Transferred the sales section of the travel

department to Yusen Travel Co., Ltd.

1996Jan. Established Yusen Air & Sea Service

(Italia) S.r.l.

Feb. Established Yusen Air & Sea Service

(Shinshu) Co., Ltd. in Okaya City, Nagano.

Nov. Registered as over-the-counter stocks

to Japan Securities Dealers Association.


(Tohoku) Co., Ltd. in Yamagata City,

Yamagata.

Apr. Established Yusen Air Logistics (Nagoya)

Co., Ltd. in Nagoya City, Aichi.

Jun. Invested in Ryowa Diamond Air Service

Co., Ltd. in Chuo-ku, Tokyo.

Nov. Established Yusen Air & Sea Service Do

Brasil Ltda.


(Kyushu) Co., Ltd. in Hakata-ku,

Fukuoka City, Fukuoka.

Established Yusen Air & Sea Service

(Hokuriku) Co., Ltd. in Komatsu city, Ishikawa.

Yusen Air & Sea Service

NYK Logistics

Yusen Logistics


Corporate History


Head Offi ceSumitomo Fudosan Shiba-Koen Tower

2-11-1, Shiba-Koen Minato-ku, Tokyo 105-0011, Japan

Phone: +81-3-6703-8231

Fax: +81-3-3578-3552

URL: http://www.jp.yusen-logistics.com

EstablishedFebruary 28, 1955

Paid-in Capital¥4,301 million

Common SharesNumber of authorized shares: 160,000,000

Number of shares outstanding: 42,220,800

Number of Shareholders4,756

Number of Employees (Consolidated)5,623

General Meeting of ShareholdersThe 57th General Meeting of shareholders

in June 29, 2011 in Tokyo, Japan.

Independent Registered Public Accounting FirmDeloitte Touche Tohmatsu LLC

MS Shibaura Building, 13-23, Shibaura 4-chome, Minato-ku, Tokyo 108-8530, Japan

Transfer AgentThe Mitsubishi UFJ Trust and Banking Corporation

4-5, Marunouchi 1-chome, Chiyoda-ku,Tokyo 100-8212, Japan

Stock ListingFirst Section of the Tokyo Stock Exchange

*Stock prices are based on the Tokyo Stock Exchange trading.

For Contact:Corporate Communications & IR Department,Yusen Logistics Co., Ltd.

E-mail: [email protected]

Stock PriceYears ended March 31 (Yen)

2007 2008 2009 2010 2011

High 3,750 3,210 2,140 1,446 1,522

Low 2,330 1,066 841 932 975

Major Shareholders

Name

Number ofshares held

(Hundred of Shares)

Percentage of Shares Held

Nippon Yusen Kabushiki Kaisha (NYK) 251,321 59.53%

BBH for Fidelity Low-Priced Stock Fund 42,215 10.00%

The Master Trust Bank of Japan, Ltd.

(Trust Account)12,693 3.01%

Japan Trustee Services Bank, Ltd.

(Trust Account)11,610 2.75%

Trust & Custody Service Bank, Ltd. (Pension Trust Account) 6,338 1.50%

Yamato Holdings Co., Ltd. 6,058 1.43%

Morgan Stanley & Co. Inc. 5,884 1.39%

Japan Trustee Services Bank, Ltd.

(Trust Account 9)5,407 1.28%

Bank of Tokyo-Mitsubishi UFJ, Ltd. 5,376 1.27%

Tokio Marine & Nichido Fire Insurance Co., Ltd. 4,064 0.96%

(As of March 31, 2011)

Shareholders’ Information

2005Feb. Listed on the First Section of the Tokyo

Stock Exchange.


Logistics (Shenzhen) Ltd. in China.


(Guangdong) Ltd. in China.

Apr. Established Dubai Representative Offi ce

in United Arab Emirates.

Jun. Yusen Air & Sea Staff Service Co., Ltd.

changed its name to Yusen Air Loginet

Co., Ltd.

2007Oct. Merger of "NYK Logistics (Japan) Co., Ltd."

with "JIT Co., Ltd." in Japan


(India) Pvt. Ltd.

May Established Yusen Air & Service (RUS)

LLC. in Russia.

Jun. Yusen Air Logistics (Nagoya) Co., Ltd.

changed name to Yusen Air Logitec

Co., Ltd.

2008Oct. Established Yusen Air & Sea Service

Logistics (Suzhou) Co., Ltd. in China.


(Mexico) S.A.de C.V.

2009Nov. Commenced discussions for reorganization

and integration of logistics business with

Nippon Yusen.

2010Feb. Basic letter of agreement concerning

integration of businesses of Yusen Air & Sea

Service Co., Ltd. and NYK Logistics (Japan)

Co., Ltd.

May Transfer of business agreement between

Yusen Air & Sea Service Co., Ltd. and NYK

Logistics (Japan) Co., Ltd.

Oct. Inauguration of Yusen Logistics Co., Ltd.

Sumitomo Fudosan Shiba-Koen Tower 2-11-1, Shiba-Koen Minato-ku, Tokyo 105-0011, Japan

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Annual Report - Yusen Logistics

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Transcript of Annual Report - Yusen Logistics