Advancing with “Value Networking ” design
and forge a robust corporate culture

Annual Report 2014
For the year ended March 31, 2014

Profile

The Yamato Group consists of Yamato Holdings Co., Ltd. (“the Company”), 44 subsidiaries, and
3 affiliated ­companies. It is primarily involved in six business segments: Deliver y, BIZ-Logistics,
Home Convenience, e-Business, Financial, and Autoworks*1, as well as ser vices incidental tothese activities.
The goal of the Yamato Group is to help bring about a better society by further refining the
TA-Q-BIN*2 network, which is a part of the social infrastructure, creating services that facilitate moreconvenient, comfortable lifestyles, and developing innovative logistics systems. The Group has
managed its businesses in pursuit of this goal, toward which it will continue to strive. To this end, theGroup is working to maximize corporate value through improving quality by constantly putting ourselvesin our customers’ position, while also using the capabilities of the whole Group to develop uniqueservices that further improve convenience for our customers.
*1 “Autoworks” changed its segment name from “Truck Maintenance” starting from the fiscal year ended March 31, 2014.
*2 TA-Q-BIN is the name in English for “Takkyubin,” the Yamato Group’s core small parcel delivery service.

Forward-Looking Statements
This annual report contains forward-looking statements concerning Yamato Holdings’ future plans, strategies, and p­ erformance.
These statements represent assumptions and beliefs based on information currently available and are not historical facts.
­Furthermore, forward-looking statements are subject to a number of risks and u­ ncertainties that include, but are not limited to,
economic conditions, customer demand, foreign currency exchange rates, tax laws and other regulations.
Yamato Holdings therefore cautions readers that actual results may differ materially from these predictions.

Contents
2

To Our Shareholders

4

Per formance Highlights

5

A Message from the President

14

Market Data

16

At a Glance

18

Over view of Operations

		

18

Deliver y		20

BIZ-Logistics

		

22

Home Convenience		

24e-Business		

26

Financial		

28

Autoworks

		

30

Other

31

Organization

32

Corporate Social Responsibility

35

Corporate Governance

38	Directors, Audit & Super visor y Board Members,
and Executive Officers

40	Analysis of Financial Position andManagement Results

44

Consolidated Balance Sheet

46

Consolidated Statement of Income

47	Consolidated Statement ofComprehensive Income

48

Consolidated Statement of Changes in Equity

49

Consolidated Statement of Cash Flows

50

Notes to Consolidated Financial Statements

72

Independent Auditor’s Repor t

73

Corporate Data

Annual Report 20141

To Our Shareholders

The Yamato Group has developed products and services for further improving customer convenience under a management philosophy that aims to “help enrich our society by enhancing the social infrastructure of TA-Q-BIN networks, creating more convenient services for comfortable lifestyles, and developing an innovative logistics system.”Moreover, our long-term DAN-TOTSU Management Plan 2019 was formulated in Januar y 2011, based on
this philosophy.
Since then, we have developed our businesses along the theme of striving for “more globalization” while remaining “in close touch with the lives of local residents.” In doing so, we have endeavored to become Asia’s No. 1 solution provider in distribution and lifestyle support by fiscal 2020, when we will be celebrating our 100th anniversary.
In the year ended March 2014, the final year of the first DAN-TOTSU Three-Year Plan HOP phase of our longterm plan, our operating climate was underpinned by continued expansion of e-commerce markets, and marked bya recovery in personal consumption, corporate earnings, and the job market in Japan.
Under this operating climate, the Yamato Group responded to ever-evolving customer needs by further enhancing the TA-Q-BIN and other existing businesses, while developing new business lines by comprehensively leveraging
Group management resources.
In particular, we succeeded in growing our solutions business, which the Group pioneered as an organic outcrop of rigorously combining consumer differentiation strategies with non-delivery businesses. As a result, theYamato Group enjoyed a year in which our presence in the growing e-commerce market increased dramatically.
Moreover, in July 2013, we announced a new “Value Networking” design as a pillar for underpinning our growthin the future.
This design describes our attempt to raise logistics to a new evolutionary stage by upgrading our services as a“means for generating new value.” This will be achieved by integrating our “last mile” delivery network, built up in
Japan and Asia as the Group’s core competence, with an array of non-delivery services we are developing.

Kaoru Seto
Representative Director andChairman(left)

Makoto Kigawa
Representative Director,
President and Executive Officer(right)2

To kick start this revolution in logistics networking, our Haneda Chronogate, Atsugi Gateway, and Okinawa
International Logistics Hub began operation in the second half of 2013. The logistics quality, speed, and cost benefit improvements brought about by these strategic bases will be leveraged to push strongly for the realization of
our “Value Networking” design.
Thanks to these endeavors, our consolidated operating revenues increased substantially by 7.2% year on yearto ¥1,374,610 million in the year ended March 2014.
On the other hand, our operating income fell short of target and declined 4.7% year on year to ¥63,096 million,
due to a weighty increase in temporary expenses. These short-lived impacts on income included delivery system
improvements to keep up with the increasing TA-Q-BIN handling volume, system buildups for improving the quality of
Cool TA-Q-BIN refrigerated courier services, and the Group responding to the record snowfall Japan experienced in
February 2014.
Net income decreased 1.0% year on year to ¥34,776 million.
Impacted by the decline in income, ROE stood at 6.4%. Even though this ratio of shareholder returns wasboosted in part by approximately ¥10,000 million in share buybacks we conducted in January 2014.

Millions of Yen

FY10/3Operating revenues
Delivery
Non-Delivery
Total
Operating income(Operating margin)
Net income(Net margin)

FY11/3

FY12/3

FY13/3

FY14/3¥  966,480 ¥  995,651 ¥1,014,564 ¥1,028,219 ¥1,098,693
234,354240,869
246,269
254,155
275,917
1,200,834
1,236,520
1,260,833
1,282,374
1,374,610
61,38964,314
66,651
66,20363,096
5.1%
5.2%
5.3%
5.2%
4.6%
32,282
33,20819,78735,144
34,776
2.7%
2.7%
1.6%
2.7%
2.5%

ChangeIncrease/
DecreaseYoY (%)¥70,474
21,762
92,236(3,107)
–
(368)
–

6.9
8.6
7.2
(4.7)
–
(1.0)
–

The DAN-TOTSU Three-Year Plan STEP, the second phase of our

Return on Equity

long-term plan launched in April 2014, posits promoting the “Value(%)

Networking” design and forging a robust corporate culture as our

8.0

6.53

6.70

6.46

6.41

two management pillars going forward.
Accordingly, we will develop business models with high added

6.0

value to revolutionize the logistics we provide customers as we
endeavor to promote our “Value Networking” design. At the same time,

3.84

4.0

we will deliver greater satisfaction to our shareholders and other investors, customers, the local communities, and societies we serve, and2.0

our employees by forging a robust corporate culture. This will enable0

us to take a balanced approach to management, enhance corporate
2010

2011

2012

2013

2014

governance, and keep the promises we make to our customers.
We ask our shareholders and other investors for their ongoing
encouragement and support as the Yamato Group embarks on ajourney in pursuit of new growth.
September 2014

Annual Report 20143

Performance Highlights
For the year ended March 31, 2014

Thousands of
U.S. Dollars (Note)

Millions of Yen

2014
Operating revenues
Delivery
Non-Delivery
Operating costs
Selling, general and administrative
expenses
Operating income
Income before income taxes andminority interests
Income taxes
Net income

Per share of common stock:
Basic net income
Diluted net income
Cash dividends
Net assets per share

2013

2012

2011

2010

2009

¥1,374,610 ¥1,282,374 ¥1,260,833 ¥1,236,520 ¥1,200,834 ¥1,251,922
1,098,693 1,028,219 1,014,564
995,651
966,480
997,898
275,917254,155
246,269
240,869
234,354254,024
1,274,471 1,181,834 1,163,777 1,143,006 1,110,971 1,167,764$13,356,103
10,675,214
2,680,889
12,383,117

37,04363,09634,337
66,20330,40566,651

29,20064,31428,474
61,38928,43755,721359,923
613,063

65,88231,003
34,77664,28429,56335,14445,817
26,05919,787

61,83628,491
33,20860,43428,09632,282

48,99623,34925,523640,130
301,235
337,895

Yen

U.S. Dollars (Note)¥    82.22 ¥    81.85 ¥    46.00 ¥    73.42 ¥    71.84 ¥    57.60
73.30
71.16
56.45
80.18
79.84
44.87
24.00
23.00
22.00
22.00
22.00
22.00
1,316.12
1,261.35
1,197.26
1,173.60
1,130.33
1,073.86$      0.80
0.78
0.23
12.79

Millions of Yen

Thousands of
U.S. Dollars (Note)

Working capital¥  179,999 ¥  186,868 ¥  182,111 ¥  185,922 ¥  165,890 ¥  159,937
Total shareholders’ equity
551,379
534,451
514,996515,602
512,910475,815
Total assets
1,032,134
950,153919,295
899,363878,641
869,606
Capital expenditures
79,531
48,052
48,61552,47239,70045,856
Depreciation and amortization
42,26637,936
38,68239,58339,88342,697
Net cash provided by operating activities
80,07573,95071,84387,89977,06484,463$ 1,748,926
5,357,360
10,028,509
772,745
410,668
778,035

Operating income margin (%)
Net margin (%)
Return on assets (ROA) (%)
Return on equity (ROE) (%)
Current ratio (%)
Shareholders’ equity ratio (%)
Assets turnover (Times)
Interest coverage ratio (Times)

4.59
2.53
3.51
6.41
151.8253.42
1.39
153.41

5.16
2.74
3.76
6.70
162.3956.25
1.37
108.36

5.29
1.57
2.18
3.84
164.50
56.02
1.39
90.52

5.20
2.69
3.74
6.46
170.34
57.33
1.39
73.71

5.11
2.69
3.69
6.53
159.82
58.38
1.37
88.35

4.45
2.04
2.93
5.42
158.00
54.72
1.44
58.57

–
–
–
–
–
–
–
–

Number of employees
Full-timePart-time
TA-Q-BIN delivery volume(Millions of parcels)
Unit price (Yen)
Kuroneko Mail handling volume(Millions of units)
Unit price (Yen)

193,146
87,279105,867

177,108
84,422
92,686

177,301
84,29393,008

171,642
83,427
88,215167,555
82,39585,160170,662
82,601
88,061

–
–
–

1,665
574

1,487
591

1,423
600

1,348
609

1,262
624

1,232
646

–
–

2,084
61

2,112
61

2,187
62

2,312
64

2,262
65

2,231
65

–
–

Note: U.S. dollar amounts have been translated, for convenience only, at the rate of ¥102.92 to U.S.$1.

4

2014

Yamato Holdings Co., LTD.

A Message from the President
In April 2014, the Yamato Group began working
on ­DAN-TOTSU Three-Year Plan STEP as thesecond phase to our long-term DAN-TOTSU Management Plan 2019, which we aim to completein the year ending March 2020.
In this 2014 annual report, I would like toexplain our medium-term strategies along thelines of the following four themes.
The Four Themes

1. The Yamato Group’s Vision
2. Promoting the “Value Networking”
Design and Forging a Robust­Corporate Culture
3. Our Unique Competitive
Advantages
4. Forecasts and Shareholder Returns
for the Year Ending March 2015

Makoto Kigawa
Representative Director,
President and Executive Officer

1. The Yamato Group’s Vision
The Yamato Group is striving to become Asia’s No. 1 solution provider in
distribution and lifestyle support by fiscal 2020, when we will be celebratingour 100th anniversary.
In relation to this, I think sustainable growth and co-existing with society areinterconnected, and that it is vital for us as a Company that maximization of
our profits and contribution to society are compatible.
The Yamato Group is striving to become Asia’s No. 1 provider in distribution and lifestyle support
solution services by fiscal 2020, when we will be celebrating our 100th anniversary.
To this end, the following three objectives were set forth in our long-term DAN-TOTSU Management Plan 2019, scheduled for completion in the year ending March 2020:(1) Enhance the logistics network in Asia
(2) Raise the product sophistication of TA-Q-BIN(3) Establish lifetime lifestyle support platforms that are in close touch with local communities
These three objectives have served as guideposts in our pursuit of innovation for realizing growthin TA-Q-BIN services, and cost structure reforms for giving rise to high profit margins.

Annual Report 20145

Over the years, the Yamato Group has developed businesses in close touch with the lifestyles ofindividuals in local communities. As a result, I have come to think that sustainable growth and coexisting with society are interconnected, and that it is vital for us as a Company that maximization of
our profits and contribution to society are compatible.
This perspective has led us to refine our concept of CSR into a Creating Shared Value concept on
which we base the revitalization of communities and the lifestyle support we provide as part of thestructural innovations in our logistics business.
In that sense, our vision as a Group also entails delivering sustainable growth to the greater satisfaction of all our stakeholders, including shareholders, customers, the communities we serve, andour employees, by maximizing our profits in combination with social contributions.

Yamato Group Concept Map Ahead of 100th Anniversary
Customer Satisfaction (CS)
Create DAN-TOTSU businesses throughproviding high-quality service and CS
Enhancement of Asian network
Domestic parcel delivery market share: Over 50%
Non-delivery share of operating income: Over 50%
Overseas sales ratio: Over 20%

Business
Business

Business groups
utilizing core competenceSocietal Satisfaction

Core competencies

Safety-Environment-CSR

IT

Become the company most loved
and trusted by society

LT

Business

Employee Satisfaction
Invigorating and fulfilling
workplace

FT“Last mile” network
Asia’s No. 1 solution provider in
distribution and lifestyle support
Business

Business
Business

Shareholder Satisfaction
Raise corporate value and pay
stable high dividends
ROE: Over 11%

6

Yamato Holdings Co., LTD.

Provision of improved labor
environment

2. Promoting the “Value Networking ” Design and Forging a Robust Corporate
CultureUnder DAN-TOTSU Three-Year Plan STEP, the Yamato Group will promote its“Value Networking” design and give rise to business models with high added
value that not only benefit customers but also contribute to the growth of theJapanese economy.
At the same time, we will forge a robust corporate culture by rigorously
educating our employees to instill in them the Yamato Group Corporate
Philosophy and make the trust we earned from customers unshakable.

Achieve Operational Balance
We aim to achieve operational balance through a two-pronged approach of pursuing our “Value Networking ” design while also forging
a robust corporate culture.

eco

isk ssal r
leg usinegyin our b
nsifgInte undin
ro
sur

Ja
ic r panes
e
eco
ver
y

nom

Forge a robust
corporate culture
Createhigh value added
business models

Asian economic
growthAchieve greater
logistical visibility

Develop an operationalframework thatheightens confidence

OperationalbalancePursue network
innovations

rce
me on
om
E-c pansi
x
et e
ark

Promote the“Value Networking”
designm

Ensure systems aredesigned to honor
customer promises

Returning toservice-first origins

Increase employee
satisfactionCorp
soc orate
ial
res
pon
s

ibil

ity

The DAN-TOTSU Three-Year Plan STEP we began implementing in April 2014 is the second phase to
our long-term DAN-TOTSU Management Plan 2019. Our aim in STEP is to give shape to our vision of
becoming Asia’s No. 1 solution provider in distribution and lifestyle support.
This second phase is comprised of two main strategic pillars: the first for promoting our new“Value Networking ” design, and the second for forging a robust corporate culture through enhanced
corporate governance and CSR activities.

Annual Report 20147

Basic Group Strategy 1: Promoting the “Value Networking” Design
The “Value Networking ” design describes our attempt to raise logistics to a new evolutionary stage by
upgrading our services as a “means for generating new value.” This will be achieved by integrating
our “last mile” delivery network, built up in Japan and Asia as the Group’s core competence, with anarray of non-delivery services we are developing. The concept will differentiate the Yamato Group fromconventional third-party logistics (3PL) providers who are dependent on warehousing and delivery of
inventory for revenue.
Our “Value Networking ” design activates the following five engines in giving rise to businessmodels with high added value for improving the speed and quality of our logistics dramatically, andholding down the total distribution cost of our customers.

The Five Engines of the “Value Networking” Design(1) A non-stop logistic network, branching out from the full operation of Haneda Chronogate, Atsugi
Gateway, and Okinawa International Logistics Hub, providing swift value-added services 24 hours
a day, 365 days a year.
(2) A cloud-based network, interfaced with FRAPS*, which is unrestrained by shipping location,­shipping format, and shipping volume* FRAPS is an acronym for the Free Rack Auto Pick System, a cloud-based setup that can use “last mile” networks. This picking system uses
proprietary flow-through racks. As the racks move along, items are sorted and cross-merged on the network, reducing overall inventory byenhancing flow speeds and visualizing inventory volumes and flows.

(3) The world’s first integrated delivery network of international refrigerated packages, initiated byInternational Cool TA-Q-BIN(4) Seamless digital informatization enabling both senders and receivers to visualize logistics fromshipment to arrival(5) Demand-chain-perspective innovation satisfying the needs of both purchasers and suppliers

Finding Insights to Changing Market Conditions
The “Value Networking ” design was an insight that came to us as we observed the business conditions of Japanese companies become increasingly borderless, and also intertwined with the rapidly
growing economies of Asia.
For example, our customers in the retail and distribution industry are facing intensifying competition with major e-commerce companies and are encountering growth of cross-border e-commercemarkets. Accepting smaller orders to stay in business and seeking prompt international delivery had
meant yearly increases in logistics costs for these customers.
Meanwhile, many Japanese manufacturers were having difficulty reining in their total distribution
cost, including inventory control, as they internationalized. This was because, while capable of keeping manufacturing costs under control, they had to resort to outsourcing for shipments from the overseas factories they were opening.
We think that the solutions the Yamato Group is capable of providing can help these customers
reduce their total distribution cost, while improving the speed and quality of their logistics dramatically.

8

Yamato Holdings Co., LTD.

Meanwhile, the Yamato Group has
also had to cope with various changes
in its operating environment, including
an aging and shrinking population in
Japan, labor shortages, and the rapid
expansion of cross-border and domestic
e-commerce markets.
It was around seven years ago that
we began initiating cost structurereforms in earnest. Since then we havebeen working to raise our baseline
profit margins, while maintaining or enhancing our service quality, in anticipation of intensifying costpressure.
As part of cost structure reform, we have invested approximately ¥200.0 billion in new logistics
facilities such as Haneda Chronogate and Atsugi Gateway and in speeding up our conventional
TA-Q-BIN service to revolutionize our logistics network.
These capital investments for revolutionizing our logistics network will reach the final stage in theyear ending March 2015. From then on, the Yamato Group will enter a new phase of reaping benefits
from the reform.
In my analysis, the time-efficiency advantages of being ahead of others gained from the initiatives
we took will become a factor differentiating the Yamato Group substantially from our competitors.
As the objectives to our medium- to long-term strategy, we will continue to:(1) Give rise to business models with high added value based on our “Value Networking” design,(2) Push for cost structure reforms by re-examining our logistics network and package pickup anddelivery system,(3) Apply pricing strategies for receiving fees for added value we provide,(4) Stimulate new demand in Asia centered on TA-Q-BIN, and(5) Build a global demand chain for our services.

Basic Group Strategy 2: Forging a Robust Corporate Culture
As the other strategic pillar to DAN-TOTSU Three-Year Plan STEP, the Yamato Group will concentrate
more than ever on building an open and transparent corporate culture. To this end, we will conduct
employee education programs for the entire group to instill in them the Yamato Group Corporate Philosophy and make the trust we have earned from our customers unshakable.
At the same time, we will bolster corporate governance to make Group management more transparent, realize a sound financial structure, and take a strategic approach to legal affairs to ensurerisk management is functioning as a check against the new business lines we create. The objectives
behind these measures we implement will be to 1) incentivize our employees to seek customer satisfaction and 2) build a system that ensures that the promises we make customers will be kept.

Annual Report 20149

In addition, we are aiming to develop a next-generation information system by the end of March2017 to strengthen our IT platform. The new system will apply tools for making cargo flow handled by
the Group as a whole and each pickup and delivery area visible, so that an appropriate system for
maintaining and enhancing the quality of our services can be honed.
We will also try to fully commercialize the community lifestyle support services we developed withlocal municipalities as part of our Creating Shared Value concept of embracing values important tosociety in our main business activities.

3. Our Unique Competitive Advantages
The Yamato Group’s strength stems from the added value generated by fusing
the “last mile” delivery network, built up in Japan and Asia as the Group’s corecompetence, with an array of high-margin, non-delivery services.
The Yamato Group has numerous unique competitive advantages unequaled by other companies.
But the following two strengths are the most salient as a foundation in realizing sustainablegrowth for the Yamato Group and promoting the “Value Networking” design for driving growth in themedium- to long-term.
1. The Yamato Group’s “last mile” delivery network in Japan and Asia
2. The added value generated by fusing this network with an array of non-delivery businesses

The Yamato Group’s “Last Mile” Delivery Network in Japan and Asia
The TA-Q-BIN business, which started as a home delivery service for consumers, has been operatingfor 38 years since its launch in 1976.
We have run the service steadily from the outset to become as close as possible to our customers by operating from their perspective.
As with electricity and water supplies, our unique

Delivery Volume (Including Taiwan)(Thousand Parcels)“last mile” delivery network has become essential to thelifestyles of end users.

120,000

In the year ended March 2014, we maintained the98,017
81,99080,000No. 1 industry share in terms of delivery volumes as aresult of our high-quality transportation and high value-

66,032

added services.
40,000

0

10

Yamato Holdings Co., LTD.

2012

2013

2014

The brand strength stemming from the Yamato Group’s TA-Q-BIN services and great customer
trust in its quality are tremendous assets of the Group.
We began expanding our TA-Q-BIN business in Asia when we provided our expertise in TA-Q-BIN
nurtured in Japan to Taiwan’s Uni-President Enterprises Corp. in 2000.
In January 2010, we took advantage of the economic growth potential of Asia by launching ourown businesses in the region, starting with Shanghai and Singapore.
As of March 31, 2014, we had developed the TA-Q-BIN delivery business in Hong Kong and
Malaysia, in addition to Shanghai and Singapore. Demand for delivery services is steadily rising inthese locations.
Courier companies with a “last mile” delivery network in Asia are few and far between globally.
We are convinced that this unique delivery network of ours is a strong advantage in capturing themarket for borderless logistics, extending the reach we have with customers in the countries in which
we already operate, and promoting a plan linking the regions and countries we serve with an integrated international transportation service.
To build this integrated international transportation service in Asia, we used our Okinawa International Logistic Hub to launch an overnight delivery service of documents in November 2012 fromJapan to Shanghai, Singapore, Hong Kong, and Malaysia, where we have TA-Q-BIN services available.
In May 2013, we extended next-day deliveries to include small parcels.
In October 2013, we launched International Cool TA-Q-BIN, our service for delivering small refrigerated
packages internationally. The target area of this service between Japan and Hong Kong is scheduled to
expand to Taiwan and Singapore, as well.
Such TA-Q-BIN networks we have developed in Asia will play an important role in addressing our
medium-term objective of building up a global demand chain for the Yamato Group.

The Added Value Generated by Fusing our Network with an Array of Non-delivery Businesses
The Yamato Group adopted a pure holding company structure in November 2005.
We took advantage of that transition to reduce our reliance on TA-Q-BIN and other delivery services by organically linking resources with non-delivery businesses. These non-delivery businesses
are the BIZ-Logistics, Home Convenience, e-Business, Financial, and Autoworks business segments.
In this way, we are developing and deploying new business models and accelerating strategies toincrease the earnings power of the entire Group.
Seamlessly integrating such non-delivery businesses as IT and financial settlement technology(FT) with the “last mile” networks of our Delivery Business will empower us to provide new solutions
that dramatically improve logistics speed, costs, and quality.

Annual Report 201411

4. Year Ending March 2015 Forecasts and Shareholder Returns
Our basic shareholder policy is to try to increase total returns through a
combination of dividends and share buybacks.
In the year ending March 2015, the first year of the DAN-TOTSU Three-Year Plan STEP, we forecast
that consolidated operating revenues will increase 4.5% year on year to ¥1,437.0 billion. Operating
income is projected to rise 10.9% to ¥70.0 billion, while net income is forecast to increase 17.9% to¥41.0 billion. We expect to reduce capital investment 9.6% to ¥80.0 billion, as we look to deliver arecord-setting performance.
Capital investment will peak out from the year ending March 2015. That said, the budget for
the year will include spending to maintain existing businesses and growth investments that
include new business oppor tunities such as e-commerce and procurement and deliver y in thecorporate logistics categor y.

Operating Income

Cash Dividends per Share(Millions of Yen)

(Yen)

80,00060,00030
61,38964,314

66,651

66,20370,00063,096

23.0

22.0

22.0

22.0

2010

2011

2012

24.0

20
40,00010
20,000

0

2010

2011

2012

2013

n Non-delivery n Delivery

2014

0

2015
(forecast)2013

Acquisition of own shares(Billions of Yen)
20

18.1

11.8
10

0

12

Yamato Holdings Co., LTD.

9.9

9.9

10.3

2005

2006

2007

0.2

0.2

0.0

2008

2009

2010

2011

2012

10.0

10.0

2013

2014

2014

Under the DAN-TOTSU Three-Year Plan STEP, ending March 2017, we are aiming for ROE exceeding 9.0%. Meanwhile, we seek to generate an ROE of more than 11.0% under the DAN-TOTSU Management Plan 2019, which runs through the year ending March 2020.
For the year ended March 2014, we paid dividends of ¥24 per share, up ¥1 from a year earlier.
Our basic shareholder return policy is to continue trying to increase the total return through a
combination of dividends and share buybacks.
We will increase our earnings power by steadily executing our business plan, while raising capitalefficiency by implementing flexible capital policies, as and when needed, by taking advantage of oursolid financial base.
We ask our shareholders and other investors to look for ward to the steps the Yamato Grouphas begun taking on a journey in pursuit of new growth, and appreciate their ongoing encouragement and suppor t.
September 2014

Makoto Kigawa
Representative Director,
President and Executive Officer

Annual Report 201413

Market Data

Growth in the Express Home Delivery Market

Growth of TA-Q-BIN

Trends in Parcel Delivery Volume

TA-Q-BIN is the Yamato Group’s flagship ser vice offering.

This sur vey uses company-reported parcel deliver y

Since its launch in 1976, we have pursued a strategy ofvolume data compiled by Japan’s Ministr y of Land, Infra-

differentiation based on development of additional stra-

structure, Transport and Tourism.

tegic offerings, such as Cool TA-Q-BIN and TA-Q-BIN Col-In the data, “parcels” denotes individual packages

lect, and improvement of deliver y quality, including

weighing less than 30 kg, irrespective of the type of deliv-

enhanced features such as Time Period Deliver y ander y (C2C, B2C, or B2B).

Driver Direct ser vices. As a result of these effor ts, the(Millions ofParcels)

4,000

However, lots in which multiple packages are sent

Yamato Group has outper formed the growth in thetogether and parcels that do not require a signature on

express home deliver y market as a whole, and steadily

deliver y are not counted as “parcels” for the purposes of

expanded our market share.

the sur vey.
3,500

3,000

2,500

2,000

Timeline of New Product Development

1,500

1986 TA-Q-BIN Collect launched

1,0001988 Cool TA-Q-BIN service launched

1996 Start of year-round
operations

500

YamatoJapan Post
0

1975
Source: Japan Post Holdings Co., Ltd.
Japan Post Co., Ltd.

14

Yamato Holdings Co., LTD.

1980

1985

1990

Note:	“Total Number of Deliveries” includes express home delivery services involving transport by truck, air, and other methods.
Source:	Statistical survey by the Ministry of Land, Infrastructure, Transport and Tourism

across Asia, and to evolve as the leading provider ofMoreover, the Yamato Group is developing its overseas

distribution and lifestyle support ser vices in the region.

TA-Q-BIN business across Asia.
In addition to operations that have already begun in

In July 2013, Yamato Holdings announced the Value

Shanghai, Singapore, and Hong Kong, in September 2011,

Networking concept as a pillar for growth going for ward.

the Group launched a TA-Q-BIN operation in Malaysia.

By integrating the over whelming speed of our large-scale,Moving for ward, the Yamato Group will expand thevalue-added distribution centers with our proprietar y infor-

TA-Q-BIN business in markets across Asia where rapid

mation technology (IT), logistics technology (LT), financial

economic growth is expected to continue. By penetrating

settlement technology (FT) and last-mile deliver y network

these markets with high-quality door-to-door deliver y ser-throughout Japan and in other parts of Asia, the Yamato(Millions ofParcels)

vices and a business model honed in Japan, the YamatoGroup will pursue growth by developing logistics as a

4,000Group aims to contribute to the prosperity of societies

means for generating value.

3,500

Trends in Delivery Volume

3,000

Total Number of Deliveries
By Truck2,500

2013 “Value Networking” design announced

Enhancingsender-side customer service

Enhancingdelivery-side customer service

2,000

Enhancing
services by proposing solutions

2007 Kuroneko Members
service launched2009 Five Solution Models (Today Shopping
Service, Global Direct, etc.)

1,500

1,000

2010 TA-Q-BIN services
started in Shanghai
and Singapore
2011 TA-Q-BIN services
started in Hong Kongand Malaysia

500

1998 Start of Time
Period Delivery

2002 Start of Driver Direct service

0

1995

2000
1999

2005

2010

2014

2007

In fiscal 1999*1, certain firms switched their existing parcels to express
home delivery, and the data for the year reflects this increase. Excluding
this extraordinary factor, year-on-year growth was 5.9%.

As a result of the privatization of the postal service in October 2007, Japan
Post Co., Ltd. now falls under the jurisdiction of the Motor-Truck Transport
Business Law, and is included in the survey starting from fiscal 2007*2.

*1 The period April 1999 through March 2000 in this graph only

*2 The period April 2007 through March 2008 in this graph only
Annual Report 201415

At a Glance
Operating Revenues (Millions of Yen)

Delivery

1,200,000
900,000
600,000
300,000
0

BIZ-Logistics

2012

2013

2014

2012

2013

2014

2012

2013

2014

2012

2013

2014

2012

2013

2014

2012

2013

2014

2012

2013

2014

100,000
80,00060,00040,00020,0000HomeConvenience

60,00040,00020,0000

Share of Net Sales

e-Business

40,00030,00020,00010,000
0

Financial

40,000n Deliver y. . . . . . . . . . . . . 79.9%

20,000n BIZ-Logistics. . . . . . . . . . . 6.6%0

n Home Convenience. . . . . . 3.5%
n e-Business. . . . . . . . . . . . 3.0%
n Financial . . . . . . . . . . . . . 4.6%

60,000Autoworks

25,00020,00015,000n Autoworks . . . . . . . . . . . . 1.9%

10,0005,000

n Other. . . . . . . . . . . . . . . . 0.5%

0

Other

8,000
6,000
4,000
2,000
0

16

Yamato Holdings Co., LTD.

Operating Income (Loss) (Millions of Yen)
40,000Business Description
The Deliver y Business provides small parcel deliver y ser vices for the general publicand corporations.

30,000

Guided by its basic corporate philosophy of “Total Reliability,” the business provides
mainly TA-Q-BIN and Kuroneko Mail services to improve convenience in customers’ lives.

20,00010,000
0

2012

2013

2014

4,000

The BIZ-Logistics Business is a corporate distribution operation involved in services suchas logistics and medical products distribution. The business provides customers with aninnovative logistics system by combining management resources such as the TA-Q-BIN
network with international transport and warehouse management functions.

3,000
2,000
1,000
0

2012

2013

2014

400

The Home Convenience Business is a community-based lifestyle support operation thatprovides services such as the pickup, delivery, and assembly and installation of homefurnishings and appliances. The business provides lifestyle-related services utilizing the
Yamato Group’s nationwide network, with the aim of supporting the convenient andcomfortable lifestyles of customers.

0

（400）

（800）

2012

2013

2014

8,000

The e-Business comprises operations in contract data processing and information systems
development.
The e-Business is actively engaged in proposing solutions that integrate data, distribution, and settlement functions to raise business process efficiency and solve potential

6,000
4,000
2,000
0

business problems customers face.
2012

2013

2014

12,000The Financial Business provides settlement services and financial products for corporations and the general public.
From payment collection on mail-order product deliveries to B2B logistics settlement,
the Financial Business is striving to respond to every means of settlement to meet theneeds of customers.

9,000
6,000
3,000
0

2012

2013

2014

4,000

The Autoworks Business performs the maintenance and upkeep of trucks and other vehicles for transportation companies under contract.
Utilizing the Yamato Group’s technologies for reliably maintaining and repairing trucks,

3,000
2,000
1,000
0

2012

2013

2014

25,000the Autoworks Business provides customers in the trucking and bus transportation sector
with three forms of value: 1) convenient vehicle maintenance, 2) compliance with statutory
vehicle inspections, and 3) reduced maintenance and repair costs.

The Yamato Group’s Other businesses comprise the B2B logistics business involving the
JITBOX Charter service, personnel placement services, and shared services.

20,00015,00010,000
5,000
0

2012

2013

2014

* Operating income in Other includes dividends from Group companies.

Annual Report 201417

Overview of Operations

Delivery
Review of the Year Ended March 2014

Masaki Yamauchi
Representative Director,
President and Executive Officer of Yamato Transport Co., Ltd.

With the goal of being one of Japan’s most recognized andmost endeared companies, the Delivery Business pursues
development aimed at making the lives of customers moreconvenient. As a form of social infrastructure, we are committed to living up to the trust society places in us while
meeting its expectations.
The environment in which the Delivery Business operates
is undergoing a major transition. In the Japanese market,
volume has been increasing thanks to growth in e-commercemarkets and with more frequent and smaller lots becoming
the norm in B2B logistics. In addition, distribution distances
have shortened due to the population becoming more concentrated in urban areas and companies building distribution facilities in the suburbs. Plus, home delivery services
are beginning to be vertically integrated with outside industries such as mail-order companies, and specialized local
delivery companies are beginning to enter the scene. On theother side of things, consumers have started to demand
flexible services in line with their own lifestyles, coinciding
with an increase in single-person, dual-income, and seniorcitizen households. It is also becoming increasingly difficult
to secure personnel due to Japan’s aging and shrinking
population, so maintaining TA-Q-BIN networks and highquality services is a major management issue.
Operating in this environment, in the Japanese market,
we will bolster solution proposals for commercial distribution, a growth area, further enhance products and services
that respond to the diverse needs of consumers, andaccommodate needs associated with the revitalization of
local communities, another growing area. In conjunction
with this, we will also reinforce systems for maintaining
high-quality services. At the same time, we intend to further
expand the TA-Q-BIN business overseas in anticipation of
economic growth in Asia and the lowering of tariff barriersand continue to build an integrated overseas and domestic
delivery platform. Through these initiatives we will work torealize the “Value Networking” design.

18

Yamato Holdings Co., LTD.

The year under review was the final year of our medium-term
management plan, DAN-TOTSU Three-Year Plan HOP, and inorder to build a foundation for further growth, we opened
Haneda Chronogate, which is based on a new concept in
distribution and stands as one of Japan’s largest general
distribution terminals, as well as Atsugi Gateway while also
launching full-fledged operations at the Okinawa International
Logistics Hub. By linking domestic and overseas distribution
and effecting new logistics innovations through these newfacilities we steadily carried out activities to realize the“Value Networking” design and give concrete form to thefoundation that had been planned.
In the Japanese market, we expanded pickup services
at convenience stores to boost convenience for customers
and worked to support sales growth for mail-order companies in the rapidly growing e-commerce market. For the B2B
market, we proposed solutions drawing on TA-Q-BIN networks and Group functions. And for individual customers,
we steadily increased membership in the Kuroneko Members
online service in order to further raise convenience forpeople receiving deliveries, adding new online functions thatallow members to request changes in pickup dates andtimes using the Kuroneko Yamato Parcel Inquiry System andenhancing pickup services to promote greater use, which
included expanding the scope of convenience store pickup
when deliveries would otherwise be missed. In addition,
there was increased use nationwide of services created inpartnership with local governments, including lifestyle support services, such as a shopping delivery service, andservices provided on behalf of government agencies, suchas a service for confirming the health and well-being ofseniors. In this way we made further progress on establishing lifetime lifestyle support platforms.
In overseas markets, the ongoing integration of the Asian
economic sphere is accelerating the transition to borderlessgoods, money, and information, and with demand for shorter
lead times for international delivery and lower total distribution costs, which includes inventory control, we launched theInternational Cool TA-Q-BIN service for delivery from Japan toHong Kong utilizing the Okinawa International Logistics Hub
in October 2013. The service allows small parcels requiring
refrigeration to be delivered frequently and with a high levelof quality. In addition, with the opening of Haneda Chronogate
and Atsugi Gateway, we have established the foundation fora distribution network to Asia with higher quality, faster
speeds, and greater cost performance.
In terms of earnings, in the rapidly expanding e-­commercemarket, our strength lies in differentiation and delivery­quality via our “last mile” network, and this has led to amajor increase in delivery volume centering on mail-ordercustomers. In the TA-Q-BIN business, we achieved recordhigh transaction volume. On the other hand, Kuroneko Mailtransaction volume declined due to more stringent acceptance requirements, as more emphasis was put on compliance, and to a more intense competitive environment.

In terms of expenditures, we further developed transportand delivery systems in conjunction with the sharp increasein TA-Q-BIN volume, maintained and raised the quality of
Cool TA-Q-BIN, and as a result of these and other initiatives,
expenses related to system construction increased. There
was also a record-setting snowfall in February, so temporary
expenses were incurred as a result.
As a result, operating revenues increased 6.9% year on
year to ¥1,098,693 million, in contrast to operating income
which decreased 14.4% to ¥35,874 million.

for the company and good quality of life for employees
We intend to more rigorously manage income by making
costs of our goods and services transparent and by revising our management accounting system in order to set
rates and collect at appropriate levels. At the same time, inorder to reform the cost structure, we will promote full
digitalization utilizing our Kuroneko Members and Yamato
Business Members services, which have seen membershipincreases, and more actively use IT to simplify internal
clerical administration to both reduce the clerical overhead
and lower costs.

Strategies for the Year Ending March 2015
We began a new three-year plan this year, DAN-TOTSU
Three-Year Plan STEP. Under the plan, we will promote new
growth strategies that build on the foundation laid in ourprevious three-year plan. We have also crafted three management policies, outlined below, for continuing to build arobust management base that will be ready for further
changes in the market environment. Initiatives for realizing
the three management policies will be implemented in theyear ending March 2015.
1. Raise the value of the Yamato brand by resuming fullparticipation of all employees in management, with anemphasis on the frontlines
In order to create a workplace environment in which eachand every employee demonstrates their abilities and finds
meaning in their work, we will enhance the employee training system, reform the personnel evaluation system, andrevise organizational formats. In addition, in order to maintain the TA-Q-BIN network and high-quality delivery services,
we will reinforce systems through utilization of diverse
human resources, revise workflows centering on Cool
­TA-Q-BIN and Kuroneko Mail and further enhance available
pickup options.

3. Pursue “Value Networking” design and meet increasingly­sophisticated customer needs
Under the “Value Networking” design concept, we will further
reinforce our network infrastructure to realize same-day delivery between major Japanese cities and next-day delivery toAsia. In addition, in order to accommodate increased volume
within major metropolitan areas, we will also reorganize oururban area networks. For Asia, we plan to promote sales ofInternational Cool TA-Q-BIN, which is experiencing growing
demand. We will also actively develop B2B solutions in combination with advanced logistics at each distribution facility.
These solutions will put emphasis not only on the sender (thesupplier) but also on the needs of the recipient (the purchaser)from a “demand chain” standpoint.
In order to carry out the initiatives for the year ending
March 2015, primarily those discussed above, and achieve
the goals of the new three-year plan, we will institute a management system using key performance indicators (KPI).
Setting clear targets and making progress transparent, we
will steadily execute the plan while flexibly responding to thechanging environment.

2. Reform the income structure and maintain sustained growth

TA-Q-BIN Services
Acceleration of Multi-Stores (4,000 Stores)

Customers
request delivery(Corporate or Individual)(FY2014)• High-Density Network with Our Catchphrase “No Matter What Time
Serve the Customer, No Matter How Many Times Serve the Customer”• Time-Differentiated High-Quality Service• Delivery System with In-House Employees• Delivery not Dependent on Trucks       Actions for Environment and Safety

Customers
receive packages(Corporate or Individual)

Express Agencies:
240,000*
Direct Retail Stores: 4,000** Approximate figures

CenterCenter Small Group Center
Small Group

Small GroupBase(76 centers
nationwide)

Arterial
Transportation(Outsourced)

CenterBase

CenterSmall Group

Small Group

CenterSmall Group

Greater Sophistication of ICT Infrastructure

Mobile Terminal• Real-Time Parcel Inquiry System via Mobile Terminals• Delivery Schedule and Missed Delivery E-mail System• Settlement System Including Payment on Delivery

Mobile Terminal

IT and Settlement Data

Annual Report 201419

BIZ-Logistics
Firstly, we worked on launching a new logistics service,
combining the Yamato Group’s high-speed network and logistics capabilities, to coincide with the completion of ourHaneda Chronogate and Atsugi Gateway distribution centers.
This contributed to shorter delivery lead times and enhanced
convenience for corporate customers receiving deliveries.
Particularly when the service was coordinated by our proprietary FRAPS (Free Rack Auto Pick System) loading docks for
sorting manufacturing materials and consumer goods into
lots, and then cross-merging them for synchronized just-inHitoshi Kanamori
Representative Director,
President and Executive Officer of Yamato Logistics Co., Ltd.

time delivery to stores and factories. In the meantime, we
also opened the Keihinjima Ryutsu Trinity Center as a newlogistics platform base. This new base will provide the infrastructure that will enable industrial product makers to concentrate on manufacturing, because we will now have the

Guided by our slogan of “LOGINNOVATION,” which encapsu-

capacity for contracting their procurement logistics upstream

lates our goal of achieving logistics innovation, the BIZ-

and sales distribution logistics downstream. Going forward,

Logistics Business will work to pull together the Yamato

BIZ-Logistics will contribute to revitalizing manufacturers inGroup’s management resources in creating innovative logis-

Japan by increasing the added value in the sophisticatedtics solution models. Our efforts will be devoted to satisfy-

business logistics we provide.

ing and inspiring the Yamato Group’s corporate customers,
as well as the consumers they serve.

Secondly, we also worked on expanding the all-in-one support we provide with repair services in our Multi-Maintenancebusiness. Our goal was to establish a one-stop solution that

Review of the Year Ended March 2014

not only warehoused and supplied parts for home applianceIn the year ended March 2014, operating revenues of therepairs, but also came with a network for overseeing all

BIZ-Logistics Business increased 4.0% from a year earlier tofunctions involved in repairs from beginning to end. This

¥90,255 million in contrast to operating income decreasing

covered the call centers for accepting repair requests, pick-

16.9% to ¥3,404 million. Revenue growth was mainly attrib-

ups, repairs, operational checks, and delivery of theutable to an expansion in our logistics business in Japan as

repaired appliances. The all-in-one support we provided

a result of the economy recovering. Profits, on the othershortened repair turnaround, while enabling prompt cus-

hand, were weighed down by waning demand for our logistics

tomer support, and contributed greatly to raising the satis-

in international trade as the global economy stagnated, andfaction of the Yamato Group’s corporate customers.

the expenses we incurred in developing new logistics bases.
The following are two initiatives we carried out in business logistics during the year ended March 2014.

20

Yamato Holdings Co., LTD.

Strategies for the Year Ending March 2015
In the year ending March 2015, the first year of our DANTOTSU Three-Year Plan STEP medium-term plan, BIZ-Logistics
will leverage the Group’s “Value Networking” design to radically reshape the value chain of our corporate customers in
the field of logistics.
Domestically, we will continue to work on businessexpansion that stems from both the creation of logistics
models with high added value and growth in our baseline
operations. One concrete example of this is the Inventoryfree Model we have developed for small and medium-sized
mail-order business operators. Under this model, these

FRAPS

operators can make speedy home deliveries in as little asfour hours, because our logistics capabilities enable themto disperse their inventory near major delivery markets in

Our model will combine customs clearance, warehousing,minimal lots. This model shortens lead times, improves

and transport functions with traceability. And we will apply awork quality and reduces costs with no physical investment.

flexible approach to globalizing this logistics model, including
active pursuit of local business alliances.

Internationally, we plan on providing services matching
the market needs of each region the Yamato Group covers by

In these and other ways, the BIZ-Logistics Business will

globalizing our business logistics models in Japan. One area

help enrich society through borderless logistics and innova-

we are working on is an all-in-one procurement and delivery

tions by organically connecting the management resources

model for the supply of consumables in drugstore chains.

of the Yamato Group.

Inventory-free Model
Mail-Order Company

FRAPS

Purchaser

Only a quantity equivalent toitems sold is replenished
Mail-Order Company:

Atsugi
Gateway

Improved speed, no picking,no logistics investment,
visualization of inventory,
reduced total inventory
volumeMinimumstock

Kansai

Minimum
stock

Minimumstock

Speedily replenishing stock through­frequent trunk-route transportation

Mail-Order User: uicker receipt of item,Q
visualization of delivery

Purchaser

Chubu

Purchaser

FRAPS

FRAPS

FRAPS
Sorting (single picking)bundling of promotional
material, and wrapping

Purchaser

Annual Report 201421

Home Convenience

Atsushi Ichino
Representative Director,
President and Executive Officer of Yamato Home Convenience Co., Ltd.

In the Home Convenience Business, we provide lifestylesupport services that help solve inconveniences at home,along with moving services and home furniture delivery,
assembly, and installation services. In addition, leveraging
our networks, we provide a range of solutions to corporate
customers in both the private and public sectors to support
sales growth and help reduce costs.

Review of the Year Ended March 2014
In fiscal 2014, the final year of our DAN-TOTSU Three-Year
Plan HOP, we established the business model for lifestylesupport services by systematically building out the productlineup, while implementing cost structure reforms and­bolstering backup support for operations to strengthen ourmanagement base.
In services for individual customers, we used sales
promotion activities for the Group’s moving services as afoot in the door to actively pitch our lifestyle support services. This included our Raku Raku Okatazuke Pack forcustomers seeking convenient house cleaning services andMemorial Seiri Service, providing people in mourning thereliable help they need in sorting out the estates of thedeceased. We also reminded customers of our capabilities
for contracting daily chores, the delivery and installation offurniture and household appliances in rural areas far fromshopping districts, and for buying and recycling used furniture and appliances. These services we pitched werefavored by individuals on tight schedules, and those in needof a helping hand.
In addition, we bolstered our weak furniture delivery,
assembly, and installation service. This was done by establishing a centralized nationwide network for dispatching­two-person crews, rearranging rooms, hauling away used

22

Yamato Holdings Co., LTD.

furniture and appliances for recycling, and performing othervalue-added chores upon arrival. The convenience the crews
provided was popular among both retailers and buyers ofmail-order furniture and household appliances, and resulted
in a recovery and increase in work volume in furniture delivery, assembly, and installation.
In services for corporate clients, we marketed our comprehensive logistics support service to businesses involved
with eco-home related equipment such as home power­generators and storage batteries. This service offers end-toend support covering import procedures, parts merging,
advance site checks, delivery, setup, installation, inspection, and repairs. Consequently, we were able to greatly
increase our handling volume. At the same time, we
achieved rapid growth by expanding the scope of this service to include businesses in IT devices, office equipment,
kitchen appliances, and more.
We also launched a service drawing on our capabilities
cultivated for over 20 years in procuring local produce fromall over Japan. This service, used by many customers, waslaunched mainly to help corporate clients improve customer
footfall, or to enhance their employee benefit programs.
As a result, operating revenues for Home Convenience
increased 9.2% year on year to ¥48,723 million. This
steady growth in operating results was underscored by thesolution platforms we provided corporate clients in thehome and commercial furnishing installation business, inaddition to the diverse array of value-added lifestyle support
services we built around the Yamato Group’s moving andfurniture delivery service.
Moreover, the operating income we recorded was ¥217
million, an improvement of ¥744 million over the previous
year. This was attributable to the strategic management of
subcontracting and personnel expenses in rigorous alignment with profit margins, as well as the integration andconsolidation of operational and clerical functions to curtail
fixed overhead.

Strategies for the Year Ending March 2015
The year ending March 2015 is the first year of the DANTOTSU Three-Year Plan STEP, in which we will be aiming tostabilize our operating environment. Under the plan, we
will balance our effort to expand operations by creating
value-added business models against our initiatives toforge a robust corporate culture by strengthening the­management base.
In services for individual customers, our focus in particular will be on lifestyle support services. In this modern
society, it is now easy to conduct various procedures andmake purchases from home owing to advancements in IT
and delivery networks. Consumption in the privacy of one’s
home will continue to increase going forward, and it will notonly be to simply eliminate inconvenience but to establish
lifestyles tailored to individual preferences. There will also
likely be acceleration in demand for services performed bythird parties as customers seek to make more effective useof their own time. The Yamato Group can reach customers
at their homes all over Japan. We also have the capability todeliver packages whether large or heavy, as well as thecapable technicians to conduct electrical installation andother work. Utilizing this network, we intend to provide services that both solve inconveniences within the home andhelp individuals realize their own fulfillment.
At the same time, we will begin to genuinely adapt our
network to the needs of corporate clients. This will entail
launching development of a Technical Network Business inthe year ending March 2015. This new facilities contracting,
maintenance, and after service network under the Kuroneko
Technical Network brand will combine our formidable twoperson delivery and installation crews with the capability of
130 collaborating utility work contractors whom satisfy thebar we set for excellence. Together, our crew and thecontractors will provide a one-stop service for corporateclients, such as home furnishing makers, who want to hire
operational support and enhance end user satisfaction at
the same time.
The above lifestyle support services and corporate­activity support services will have the effect of increasing
our average daily workload. And by smoothing out downtime,they help raise productivity and contribute to structural
improvements in profitability.
Meanwhile, our management base will be strengthened inaccordance with the YHC Code of Conduct we formulated as a
guideline for enhancing the safety, compliance, and customer
relations of Yamato Home Convenience Co., Ltd. In combination with backup support for business operations and cost
structure reforms, this code will be applied to satisfy customers, society, and our employees, and build a sound management base for recording stable profits in return.
Looking ahead, we will strive to raise our corporate
value by developing services favored by customers andneeded by society.

E-commerce Solutions Model
Network strengths
Business-oriented solutions

a Network integrating Yamato’s
delivery and installation services withutility work contractors throughout Japan(1)	Logistics and distribution processinga	Import, warehousing, and shipping
management(1)	Centralized nationwide dispatching for
coordinating delivery, installation, andconstruction from beginning to end(1)	Renewal servicesa	Appliance and furniture renewal	and moving(2)	Use of shipping cages to prevent
cargo from moving(2)	Purchase and haulage of usedappliances and furniturea	For resale and recycling	cost reduction* Inventory management and resale(2) Warehouse and storagea	Inventory storage(3)	Return product purchasea	Yamato purchases returned products
for resale at its recycling shops(3)	EDI (electronic data interchange)system(4)	Various settlements (such as cash on
delivery and online settlement)

Customer-oriented solutions(3)	Home environment support services

Technical Network Business ModelHigh added-value
baseline operations(1)	Overseas procurement

Network strengths
a Network integrating Yamato’s
delivery and installation services withutility work contractors throughout Japan(2)	Domestic procurement(1)	Centralized nationwide dispatching for
coordinating delivery, installation, andconstruction from beginning to end(3)	Merging, kitting, installation,
localization, etc.

(2)	Use of shipping cages to prevent
cargo from moving(3)	EDI (electronic data interchange)system(4)	Various settlements (such as cash on
delivery and online settlement)

High added-value operations(1)	Inspections(2)	Maintenancea	Cleaning and grass cutting to prevent
malfunctions and improve power
generation efficiency(3)	Repairsa	Identification and replacement ofmalfunctioning panels

Annual Report 201423

e-Business
Using ICT, the e-Business works in partnership withcustomers to enhance business process efficiency. Basedon its services, the e-Business seeks to help resolve latentbusiness issues and proactively propose solutions that
result in sales growth and cost reductions for customers.

Review of the Year Ended March 2014
In the e-Business, we spent the year under review actively
proposing solutions that integrate data with distribution andsettlement functions to raise business process efficiency
Yoshihiko Hoshino

and help resolve the hidden business issues of our custom-

Representative Director,
President and Executive Officer of Yamato System Development Co., Ltd.

ers. Furthermore, we also devoted ourselves to developing
and operating ICT systems that were an integral part ofbusiness development for the Yamato Group as a whole.
In collaboration with the Financial Business in e-money

The e-Business is involved in a range of information

services, we have been promoting installation and operation­services for corporate customers, including cloud-basedof the Multi e-money Settlement Terminals, which are capa-(ASP/SaaS) services, and information system development

ble of processing multiple brands of e-money for settlement

and operation.

on a single platform. During the year under review, we saw

e-Logistics Solution
Yamato Group
Business Partner

Individual Product Management Enables Faster, More Accurate Response

Business ­Partner’s
Customers

Yamato Group Operations

Production Base

Customer

Information and Tracking Management
Storage, Transport, and Delivery

Distribution Base

Flow of Goods

Sales BaseUsing Tracing to Achieve Uniform Information Management

24

Yamato Holdings Co., LTD.

Flow of Information

expanded installation and use of the terminals by a wide

also actively involved in bringing the Group’s proprietary

range of corporate customers, including companies develop-

services online in Taiwan and Singapore in coordination

ing chain stores and those in the food and drink, retail, andwith the Group’s business expansion in Asia.

amusement facilities industries.

As a result, operating revenues increased 12.1% year on

In our e-Logistics Solution business, we offer a service

year to ¥41,538 million, supported mainly by growth inthat visualizes delivery flows and the whereabouts of pack-services linking data and logistics functions. Operating

ages by applying the tracking know-how of our TA-Q-BIN

income rose 13.8% to ¥7,954 million due to productivity

business for customers, including telecommunications

enhancements and cost cutting measures, despite upfront

equipment and cable television companies in need of man-investments in e-money services and other factors.

aging and keeping track of the individual terminals they
install. In the year under review, in addition to subscription

Strategies for the Year Ending March 2015

growth in our existing services, we accelerated business

Our first strategy is to strengthen the competitiveness of ourdevelopment by mainly promoting services for managing the

ICT products. Besides refining existing services as a matter

reservations, acceptance and delivery, and inventory ofof course, we will create more services and businesses by

precision instrument and medical device manufacturers

combining the management resources of e-Business andwhen renting products to hospitals and other customers.

other business operations within the Yamato Group.

In e-On Demand Solutions, business expanded in the

Our second strategy is to reinforce our sales capabili-

fiscal year under review thanks to the development of ser-ties. In order to cultivate customer needs as the market forvices, particularly for the pharmaceutical industry, that sup-our ICT services spreads throughout Japan, we will open six

port improved sales efficiency and inventory reductions forbranches and build a sales network for proposing ICT solu-

customers through the management, on-demand printing,tions in tune with local requirements. At the same time, we

and just-in-time delivery of sales promotion materials.

will raise the sophistication of our ICT solutions capability by

Our Web-Based Mail Order Solutions business wasgrown through the development of mail-order and­e-commerce ICT services designed for the expanding mailorder and e-commerce market.
In Chain Store Solutions, we experienced businessgrowth by developing ICT services for supporting the deliv-

working in closer coordination with the Yamato Group’s
other business operations.
Thirdly, we will emphasize quality. We must value ourties with customers, build reliable and good relationships oftrust, and enhance the level of our ICT services from theirperspective, if we are to keep our customers satisfied.

ery of summer and year-end gift packages by retailers, andGoing forward, the e-Business will provide ICT and otherproduct returns and exchanges by mail-order businesses.

optimal solutions, combining the Yamato Group’s management

Overseas, we provide ICT backup support in the YamatoGroup’s steps to advance into the Asian market. We areresources in distribution and settlement functions, in order tocontribute to the business development of our customers.

Annual Report 201425

Financial
These terminals were used to enable vendors to accept
e-money for payment at not only permanent storefronts, butalso in other settings such as at events held for short periods of time throughout Japan. We offered these businesscustomers proposals for total solutions in which we packaged the means for accepting e-money as payment withassistance in sales promotion activities.
In the business-to-business (B2B) market in Japan, we
helped sellers expand sales channels and buyers perform
credit transactions through the Kuroneko Anshin Kessai
Toshizo Kurisu
Representative Director,
President and Executive Officer of Yamato Financial Co., Ltd.

Service. This service also provided the added value of
improving business efficiency, enabling the management oftrade receivables, and reducing the risk of those receivables
going uncollected. Efforts were geared toward improving theservice by enabling buyers to submit applications online andspeeding up the screening for approving their credit.

The Financial Business aims to become a strong partner

In leasing, we bolstered sales by expanding the scope ofthat provides convenience for consumers and helps business

our truck leasing market from the existing customer base ofoperators overhaul their distribution systems by providing

shipping companies to companies who have in-house logis-

settlement and other financial solutions in Japan andtics operations. We also enhanced our product strength byabroad. We are determined to offer diverse settlement

developing new products, such as lease backs and three-methods to fulfill customer requirements, such as collecting

year operating leases, matching customer needs in new

payment on delivery for mail-order companies and handlingmarkets, to promote sales and increase profits.

settlements between companies. Under our DAN-TOTSU

Overseas, in Shanghai, Singapore, Hong Kong, andManagement Plan 2019, we will strengthen strategies in the

Malaysia, where we provide settlement solutions, we worked

e-commerce market in order to command the No. 1 market

to differentiate ourselves from local competitors by propos-

share as a settlement provider for mail-order businesses ining solutions in line with local customs and the unmet needs

particular while enhancing the product lineup of our otherof customers. This included the introduction of a settlement

financial services.

service accepting checks as payment in Singapore and Hong
Kong where writing checks is customary. These efforts

Review of the Year Ended March 2014

resulted in a year-on-year increase in overseas settlement

In addition to providing all sorts of settlement methods fromtransaction volume and operating revenues.

credit cards to payments at convenience stores and with

As a result of the above, operating revenues in thee-money, the Financial Business addressed continued

Financial Business rose 10.6% year on year to ¥62,728

growth of online mail-order businesses in the business-to-

million. This improvement was largely attributable to an

consumer (B2C) market by actively promoting sales ofincrease in the number of TA-Q-BIN Collect and e-money

Kuroneko Web Collect, a service package for mail-order

settlement transactions due to more business with major

businesses that helps integrate their sales processing frommail-order companies. Operating income was ¥9,406 million,

receiving payment to settlement. This was done with the aid

up 10.4% year on year.

of new functions such as Repeat Customer Settlement and26

Advance Sales that we added to enhance the service. We

Strategies for the Year Ending March 2015

also began leasing the Group’s Multi e-money Settlement

In the B2C market, the e-commerce and online mail-order

Terminal to vendors as we adapt to a market for settlingmarket is expected to grow as a result of the establishment

payments with e-money that has been burgeoning in termsof environments with easy Internet access from just aboutof penetration rate, settlement volume and application.

anywhere. In response, we will be enhancing the functions

Yamato Holdings Co., LTD.

available on Kuroneko Web Collect, our strategic service
product in the online mail-order market, while maintaining

The Growing Mail-Order Sales Market and TA-Q-BIN Collect(%)

our core business of settling payment on delivery. In paral-

14.0

lel, we will take the initiative of enhancing the marketability

12.0

of our services by means that include marketing process
reforms and business alliances.

12.9

10.0

9.0

9.1

8.4

6.2

nient settlement services while flexibly adapting to the

6.0

diversifying needs of both buyers and mail-order business

4.0

operators. This will be done by expanding our Kuroneko Pay

4.1

4.1

2.0

0

Group’s Multi e-money Settlement Terminal.
In the meantime, we will hone our product development

6.3

3.2

On Delivery service, as well as our business leasing theand marketing capabilities in striving to deliver added value

8.3

8.0

We will also strive to provide safe, reliable, and conve-

n

2010

2011

YoY growth in mail-order sales  

2012
n

2013

2014

YoY growth in TA-Q-BIN Collect parcel volume

Source: The Japan Direct Marketing Association

to mail-order business operators. These capabilities will be
upgraded to propose total solutions that make the most of

strive to differentiate ourselves from the competition andthe Yamato Group’s collective power in addressing theirgrow our net balance of lease contracts.

diversifying needs.

In overseas markets, we will work to steadily increase

In the B2B market, we will accelerate growth by strength-

our settlement volume amid rapid growth of cross-borderening the marketing structure underpinning our Kuroneko

settlements in the B2C market, mainly by helping retailers

Anshin Kessai Service. To achieve this, we will sort ourfrom Japan expand their sales channels overseas. Mean-target customers by segment, and draw on the Group’s

while, in the overseas B2B market, we will make our Global

marketing acumen to propose optimal solutions for each.

Procurement Support Service and other capabilities for

In leasing, we will designate used car leasing, leasesettling international trade even easier to use.

backs, and three-year operating leases as our three strate-

With these objectives, we will propose solutions based

gic products. At the same time, we will provide solutions toon the Yamato Group’s “Value Networking” design and aim

business issues having to do with safety, environmental

to become the ideal partner for customers by upholding

accountability, quality assurance and customer development

consumer convenience and realizing distribution reform forthrough our value-added services. In these ways, we willbusiness operators.

TA-Q-BIN Collect: Flowchart of Cash-on-Delivery Service
Sales agreement
Product delivery

Seller

Yamato Transport Co., Ltd.

Buyer

Payment•Cash •Credit card

Net deposit•Debit card •Electronic money

Yamato Financial Co., Ltd.

Settlement•Product charge •Collection fee

Product charge collection contract

Annual Report 201427

Autoworks
facilities and equipment, along with auto and property insurance agency services where we offer plans tailored to customer needs.

Review of the Year Ended March 2014

Keishirou Sasaki
Representative Director,
President and Executive Officer of Yamato Autoworks Co., Ltd.

The Autoworks Business is not satisfied with being a one-ofa-kind operation in Japan. Our vision is to transform ourvehicle maintenance services into the No. 1 autoworks forlogistics and distribution business operators. “Transforminconvenience into convenience from the customer’s standpoint” is the corporate DNA of the Yamato Group. Based on
this perspective, the Autoworks Business functions as avehicle maintenance plant chiefly for logistics and distribution companies. We have enhanced our operations in scopewith groundbreaking services in the industry that go beyond
vehicle maintenance to provide around the clock service
365 days a year, vehicle maintenance without downtime,
mandatory inspections around tight time schedules, androad service for vehicles. We offer our customers the valueof compliance with statutory vehicle inspections, convenient
vehicle maintenance, and reduced maintenance costs.
Furthermore, to better provide one-stop service solutions geared toward customer business operations, we haveadded services for maintaining and safeguarding logistics

Superworks vehicle maintenance plants pursue
operating efficiency and environmental accountability

Superworks Nagoya
Completed in April 201328

Yamato Holdings Co., LTD.

We posted increases in both revenues and profit in the year
under review. Our operating revenues were ¥25,650 million,
up 10.4% year on year. Operating income increased 22.7%
to ¥3,272 million.
A new Superworks vehicle maintenance plant was established near the Port of Nagoya, the largest port in Japan interms of total cargo throughput. Superworks plants represent a new paradigm in environmentally accountable maintenance facilities and feature high operating efficiency, as
well as solar power systems, LED lighting, and other energysaving equipment. Of our 71 vehicle maintenance plants,
22 are now Superworks facilities. We also enhanced customer convenience by expanding our road service for basic
vehicle repairs and inspections performed on location atcustomer business sites.
In addition, we launched the sale of a new proprietary
digital tachograph that was simplified to be affordable andeasy to use. This product, which encourages safe and proper
driving to reduce traffic accidents and conserve fuel consumption while supporting enhancements in labor management of drivers, was part of our effort to expand services
contributing to the security and safety of our customers.
As a result of leveraging our network strengths and solutions capabilities in this way, mandatory inspections performed on vehicles outside the Yamato Group, a key
performance indicator, increased by 1,900 over the previous year to 78,500 vehicles.

Strategies for the Year Ending March 2015
In the year ending March 2015, we aim to grow operating
revenues by 9.2% year on year to ¥28.0 billion, andoperating income by 10.0% to ¥3.6 billion. To this end,
we will adhere to the following strategies and basic

EarthDrive DTU-1 simplified digital tachograph

Launched for sale in August 2013

concept to reshape Autoworks as a solutions company
able to make new logistics suppor t proposals while providing management assistance to logistics and distribution business operators.

Basic Strategy 1: Build Closer, Far-reaching Trust to
Create New Value Together
1. Build service networks closer in touch with customers
We will establish Superworks facilities in major Japanese cities and strengthen our road service equippedwith vehicle diagnostics capabilities. This will be done
to provide services closely in touch with our customers
in each local market, and to help maintain delivery
infrastructure from the standpoint of business continuity
planning (BCP).
2. Build far-reaching services providing management support
We will utilize IT to enhance our far-reaching repair andmaintenance capabilities in support of procurement,
management of logistics vehicles, facilities, equipment
and machinery, and risk management. This will be done
to upgrade the customer orientation of our services andcreate an enduring value cycle by eliminating customer
down time.
3. Create new value together
We will strengthen collaboration with business partnercompanies and expand our scope of services in vehicle,
facility and equipment maintenance. This will be done tohelp improve the quality of deliveries by logistics anddistribution business operators so that we can create
new value together.

Basic Strategy 2: Forge a Robust Corporate Culture
We will forge a robust corporate culture in line with the
Yamato Group’s corporate philosophy for the Autoworks
Business. This will be done by nurturing an environment of mutual trust that endorses a culture in which

employees encourage one another in realizing their fullpotential. To this end, we will also enhance corporate
governance while strengthening our legal complianceand financial structure.

Basic Concept—The “Three Cs” and “One C”
The Autoworks Business provides one-stop services basedon observing the three “Cs” underpinning management
support for logistics and distribution business operators.
The first “C” is Compliance, which is the foundation of management. In this regard, our Repairworks road service has
contributed to improving the completion rate for statutory
vehicle inspections by our customers. Next, we have Convenience, where we pursue ever higher levels of conveniencefor our customers. Based on this concept, we aim to establish a framework that enables around the clock operations
365 days a year in order to carry out vehicle inspections
when the vehicles are not in operation. Our third “C” stands
for Cost Reduction based on helping to improve utilization
rates for commercial vehicles while leveraging procurement
capabilities. By promoting measures to limit the need forspare vehicles and increasing the completion rate for statutory vehicle inspections, we have made it possible to implement preventive maintenance, which helps limit occurrencesof unexpected costs. We will harness our nationwide network
to optimally procure parts and fuel so as to provide customers with high-quality products and services at low costs.
The last “C” stands for Clean. In keeping with the times,
we have addressed environmental accountability by deploying solar power systems, energy-efficient LED lighting, andother facilities at Superworks. Also, we have started tobuild a system for being able to handle new technologies inour maintenance operations, with an eye on the increasinguse of electric vehicles. In addition, we are recommending
the use of rebuilt and reused parts, and are actively
involved in recycling discarded batteries, in our efforts to
support the environmental accountability of customers andsociety at large.

Vehicle Maintenance
Vehicle safety

Tire management

Risk Consulting

3C+1C

Fuel procurement

Compliance, Convenience,
Cost Reduction+
Clean

Non-life insurance
agencyLife insurance
agencyLogistics Maintenance
Maintenance oflogistics equipment

Sale of logistics
equipment

Annual Report 201429

Other
The JITBOX Charter service is a service that provides transportation in shipment cages. The service takes advantage
of its Group network consisting of multiple companies andprovides value to customers through timely delivery andfrequent, adequate volume delivery. In the fiscal year ended
March 31, 2014, the Group saw an increase in usage of theservice by manufacturers and other customers and transportation orders related to events, and the handling volume
exceeded that of the previous fiscal year.
Operating income in Other, excluding dividends which

JITBOX Charter

Yamato Holdings Co., Ltd. received from the Group companies,
increased 6.3% from the previous fiscal year to ¥955 million.

Operating Income

Track Record of JITBOX Charter(Millions of Yen)

24,95725,00020,000(Units)500,000

400,000

18,76315,000471,018

380,270403,018

300,000
11,877200,000

2,000
1,500

1,157
898

955

2013

2014

1,000

100,000

500
0

2012

n Including Yamato Holdings

30

Yamato Holdings Co., LTD.

n Excluding Yamato Holdings

0

2012

2013

2014

Organization
As of March 31, 2014

Yamato Transport Co., Ltd.
Okinawa Yamato Transport Co., Ltd.
Yamato Global Express Co., Ltd.
Delivery

Express Network Co., Ltd.
Yamato (China) Transport Co., Ltd.
Yamato Transport (HK) Ltd.
Yamato Dialog & Media Co., Ltd.
Yamato Logistics Co., Ltd.
Yamato Global Logistics Japan Co., Ltd.
Yamato Multi-Maintenance Solutions Co., Ltd.
Yamato Packing Service Co., Ltd.
Yamato Packing Technology Institute Co., Ltd.
Konan Industry Co., Ltd.
Yamato Transport U.S.A., Inc.

BIZ-Logistics

Yamato Transport Europe B.V.
Yamato International Logistics Co., Ltd.
Yamato International Logistics (Hong Kong) Ltd.
Taiwan Yamato International Logistics Inc.
Yamato Transport (S) Pte. Ltd.
Yamato Transport (M) Sdn. Bhd.
Yamato Logistics India Pvt. Ltd.
Shanghai Wai Gao Qiao Bonded Logistics Zone Yamato Warehouse Co., Ltd.
PT. Yamato Indonesia

Yamato Holdings Co., Ltd.

Home Convenience

Yamato Home Convenience Co., Ltd.
Yamato System Development Co., Ltd.

e-BusinessYamato Web Solutions Co., Ltd.*2
Yamato Contact Service Co., Ltd.*3
Yamato Financial Co., Ltd.

Financial

Yamato Credit & Finance Co., Ltd.
Yamato Lease Co., Ltd.
Yamato Payment Service (HK) Ltd.
Yamato Autoworks Co., Ltd.
Yamato Autoworks Iwate Co., Ltd.

Autoworks*1

Yamato Autoworks Hokushinetsu Co., Ltd.
Yamato Autoworks Shikoku Co., Ltd.
Yamato Autoworks Okinawa Co., Ltd.
Yamato Asia Pte Ltd.
BoxCharter Co., Ltd.
Yamato Box Charter Co., Ltd.
Yamato • Staff • Supply Co., Ltd.

Other

Yamato Management Service Co., Ltd.
Yamato Multi Charter Co., Ltd.
Kobe Yamato Transport Co., Ltd.
Swan Co., Ltd.

Consolidated subsidiaries
Unconsolidated subsidiaries*1 “Autoworks” changed its segment name from “Truck Maintenance” starting from the fiscal year ended March 31, 2014.
*2 Yamato Career Service Co., Ltd. in the e-Business was renamed Yamato Web Solutions Co., Ltd. on August 1, 2013.
*3 From the fiscal year ending March 2015, Yamato Contact Service Co., Ltd. will be reclassified for inclusion under the Delivery Business from the e-Business unit.
Annual Report 201431

Corporate Social Responsibility

The Yamato Group believes that its sustained growth is

Review of the Year Ended March 2014

largely contingent upon not only business profitability, but

Deploying See-T Navi in Delivery Vehicles

also fair and proper management as a business group with

See-T Navi is a proprietary telematics navigation system

operations that require a high degree of social interaction.

encouraging safe and environmentally friendly driving that

With the interests of all stakeholders in mind, theYamato Transport developed and deployed in March 2010.

Group actively conducts Corporate Social Responsibility

This system, which records an extensive array of driving(CSR) activities from the perspectives of safety, the envi-

performance data, enables Yamato Transport sales drivers

ronment, and society, in line with the Yamato Group Cor-to self-inspect their driving performance and make improve-

porate Philosophy at the hear t of the Group’s business,ments. The 246 Safety Instructors, safety specialists

with the aim of fur ther becoming a company most loved

posted nationwide, can use data from this system for indi-

and trusted by society.

vidual instruction, and the system has functioned as astrong support for sales drivers and safe driving habits.

SafetyThe Yamato Group, which uses public roads in carrying out

Constructing a Driver’s License Management System using

its business, believes ensuring the safety and security of

IC Card Licenses

people from local communities is of paramount importance.

Yamato Transport always conducts visual inspections ofWith a philosophy of “Safety First, Sales Second,” wedocumentation such as driver’s licenses before drivers

endeavor to drive safely and focus on measures to promote

drive, but has also constructed a system using IT thatsafe transportation, and put respect for human lives as ourmatches drivers with the details on their license and license

greatest priority at all times while undertaking duties.

categories. Thorough compliance is supported by managing
driving duties from the IT aspect.

Diagram of Yamato Group Corporate Philosophy

Changes in the Number of Low-Emission Vehicles

Customers
18,903

Local
Residents

Shareholders

18,00012,000Partners

Employees
6,000Management
Philosophy

Corporate
StanceEmployee Codeof Conduct

Yamato Group Corporate Philosophy

Precepts
Founding Spirit

32

Yamato Holdings Co., LTD.

02009 2010 2011 2012 2013 2014

n Hybrid Carsn CNG Carsn LPG Carsn Electric Vehicles

n Others

Holding Safe Driver Contests

the Future City Initiative and other progressive environ-

Yamato Transport holds Driver Contests to further enhancemental programs, and in districts requiring special envi-

safety awareness and driving skills, not only in Japan, butronmental measures, such as areas around World

also overseas in Malaysia and Singapore with Yamato Trans-

Heritage sites.

port (M) Sdn. Bhd. and Yamato Transport (S) Pte. Ltd.

The opening of more satellite centers reduces the deliver y area assigned to each sales driver. This change not

Maintaining Safety in Vehicles

only enables drivers to provide more detailed ser vices to

Yamato Autoworks operates Superworks vehicle mainte-each customer, but also helps to curb increases in thenance factories open 24 hours a day, 365 days a year at 22

number of vehicles required to keep pace with increased

bases inside Japan, greatly improving work efficiency andparcel volume.

with more than 60% of maintenance operators possessing
vehicle inspection qualifications.

Yamato Transport is promoting the development of thesesatellite centers, which enable the pickup and delivery ofparcels without the use of motor vehicles, apart from theEnvironment

occasional mini-vehicle, mainly in urban districts and

The Yamato Group has adopted the catchphrase of Necology

densely populated residential areas.

for the environmental preservation activities in which it

Yamato Transport is also promoting a modal shift toward

engages as a corporate social responsibility, and to ensure

railway and water-based transport, joint transport with otherindividual employees are aware of the need to protect thecompanies, and other methods of efficient transport.

environment as they go about their daily duties. Packing,carrying, and delivering during transport are a matter ofcourse, but Yamato takes a thoroughly ecological approachto a variety of other initiatives to build an environmentallyfriendly distribution system. Yamato provides these types of
products and services with the aim of working together with
communities to contribute to making a better society.
Review of the Year Ended March 2014
Reducing CO2 Emissions
The Yamato Group uses carts and trolleys to avoid using

Kuroneko Yamato Environmental Classes

vehicles for deliveries to the greatest possible extent and isEnvironmental classes are held to teach children about theshifting toward low-emission vehicles when it does have toimportance of the environment. Yamato Transport held

use them. In the fiscal year ended March 2014, Yamato

241 classes in the year ended March 2014, attended byTransport added approx. 21,000 low-emission vehicles,

20,700 children.

making up 41.5% of the entire fleet.
Yamato Transpor t added 100 light commercial electricvehicles to its fleet between 2011 and 2012 in coordination with local municipalities in districts associated with

Annual Report 201433

Society

The Music TA-Q-BIN Kuroneko Family Concert has been held

The Yamato Group values the dialogue with each stake-

283 times and attended by over 410,000 people.

holder, is aware of the social responsibilities that it must
fulfill, and aims to be a company that achieves sustained‌Recognized by the Ministry of Health, Labor and Welfare as

development together with society. It uses its business anda Company Supporting Child-Raisingsocial contribution activities to solve issues local communi-

Certification was awarded to Yamato System Developmentties are facing.

Co., Ltd. in fiscal 2012 and Yamato Transport and Yamato
Logistics Co., Ltd. in fiscal 2014.

Review of the year ended March 2014
Safety Classes for Children

Actively Employing People with Disabilities

We have held safety classes for children since 1998. HeldThe Yamato Group, primarily through the Yamato Welfare

all over Japan, these classes seek to teach children ways toFoundation, promotes various activities for the realization

protect themselves from traffic accidents. In the fiscal yearof a society in which people with disabilities can enjoy theended March 2014, classes were held on 2,013 occasions

world of work and the act of independently earning a living.

and around 224,000 children participated. Classes were
held overseas as well.

Such support for helping people with disabilities gain
their independence includes active employment at the
Swan Baker y, which produces and sells bread, and ascouriers for our Kuroneko Mail ser vice. In addition, theYamato Welfare Foundation operates a support facility
where people with disabilities can receive training in vocational skills and knowledge.

Promoting CSV Entrenched in Communities
Based on the belief of Creating Shared Value (CSV), whichis the creation of values together with local communities
through business, joining with local governments across thecountry in Project G (Government) the entire Yamato Group
promotes developments including support watching over theelderly, shopping support, and emergency transport attimes of disaster. As of the end of June 2014, we had been
involved in a total number of 550 cases and concluded
agreements with 110 local governments.

34

Yamato Holdings Co., LTD.

Corporate Governance
As of March 31, 2014

Basic Position on Corporate Governance
Based on its corporate philosophy, the Yamato Group car-Outside Directors and Outside Audit & Supervisory
Board Members

ries out business activities in accordance with the law and

The two outside directors and three outside Audit & Supervi-social norms and actively promotes compliance manage-

sory Board members currently appointed by Yamato Hold-

ment. Striving to maximize corporate value by effectively

ings have no conflict of interest in terms of, but not limited

utilizing the management resources of the Group is one ofto, their human, capital, and business relationship with thethe top priorities of management, and we have implemented

Yamato Group. None hold or held positions as an outside

measures and bolstered management systems as part of

director, outside Audit & Supervisory Board member, full-

our corporate governance initiative.

time director, full-time Audit & Supervisory Board member,executive officer, or employee of companies with which the

The current status of provision for oversight of businessYamato Group has or had such relationships.

execution and management, internal control, and related

Both outside directors, Toshitaka Hagiwara andfunctions at the Yamato Group is illustrated as follows.

Masakatsu Mori, have ample experience and extensive

Status of Corporate Governanceknowledge as business people. They comment and advise

The Board of Directors, Management Advisory Committee

as needed on all aspects of business management. Further-and Executive Committee serve as administrative organs

more, their collaboration with the Independent Auditor andinvolved in business decision-making, execution, and super-

the Audit Division enhances governance.

vision of the Yamato Group. This management structure

Similarly, all outside Audit & Supervisory Board members

enables decisions to be made swiftly and precisely on

have ample expertise in finance and accounting. They areimportant business matters. The number of Board members

Koji Okawa, whose experience has included working for acannot exceed 12 as stipulated in the articles of incorpora-financial institution and a tax accounting firm; Motoharu

tion of Yamato Holdings. As of the submission date of thisYokose, a certified public accountant; and Hiroyuki Kanae,

report, the Board comprised seven directors, two of whom

who has professional experience as a lawyer. Outside Audit

are outside directors. The term of office for directors has& Supervisory Board members attend Audit & Supervisory

been set at one year in order to clarify management respon-

Board meetings as well as periodic meetings to exchange

sibilities for each fiscal year.

opinions with the President. These meetings also serve toCorporate Governance Framework
General Meeting of Shareholders
Elect

Elect

Elect

Elect/
Supervise

Audit &
Supervisory
Board

ReportIndependent
Auditor

Audit

Nomination andCompensation
Committee

Board ofDirectors

Management
Advisory Committee

ReportMake decisions/Supervise

ReportExecutive
Committee

Accounting
audit

Execute business

Audit DivisionInternal
audit

Propose/ReportCSR Division

Legal Advisor

Propose/ReportGroup Companies

Annual Report 201435

confirm the status of directors’ execution of duties, bysoundness of management and the trust of the public. A

means of including questions regarding management policy.

full-time staff member has been appointed to assist the Audit

To ensure objective checks of management, two of the& Supervisory Board members to put in place a framework

seven directors are currently outside directors. This configu-

that enables the Audit & Supervisory Board members toration allows the outside directors to adequately fulfill theirsmoothly carry out their functions. In addition, Group Audi-

appointed function. Similarly, three of the four Audit &tors’ Liaison Meetings are held periodically for the full-time

Supervisory Board members are outside Audit & Supervi-

Audit & Supervisory Board members of the major operatingsory Board members to reinforce supervision of businesscompanies to confer on auditing policies and procedures,execution. This configuration, too, enables the outside

exchange information, and otherwise enhance collaboration.

members to adequately fulfill their appointed function.

Meetings with internal auditors are also held periodically to

The Group maintains a policy of satisfying the indepen-

exchange information.

dence criteria of Tokyo Stock Exchange, Inc. when choosing

Internal audits are performed by an 11-member team thatoutside directors and Audit & Supervisory Board members.

operates independently from any other Group organ. Together

The Group has notified the Tokyo Stock Exchange that allwith the 102 employees who conduct internal audits forthe above outside directors and Audit & Supervisory Board

Group companies, the Yamato Group has a total of 113 inter-members are independent, as required.

nal auditors who check whether the business and affairs of

Full-time Audit & Supervisory Board member Hiroshi

the Group as a whole are being carried out appropriately and

Kawada and Audit & Supervisory Board member Koji Okawa

efficiently based on the annual auditing plan. A structure is in

resigned, and Kazuko Takahara was newly appointed as aplace under which results are reported to the Board of Direc-

full-time Audit & Supervisory Board member at the conclusion

tors and the Audit & Supervisory Board. Also, the Groupof the Ordinary General Meeting of Shareholders on June

Internal Auditing Committee meets regularly with the internal

24, 2014. Consequently, the Company’s Audit & Supervisory

auditors of the operating companies to confer on problems

Board became comprised of three members, two of whichand propose improvements based on auditing policies andare outside Audit & Supervisory Board members.

audit results. At the same time, management collaborates
with Group companies’ internal control divisions to improve

Status of Internal Audits, Audits by Audit &Supervisory Board Members, and Accounting Audits

and build systems to validate internal controls.

The Audit & Supervisory Board is made up of one full-time

Touche Tohmatsu LLC holds regular meetings with Audit &Audit & Supervisory Board member and three outside Audit &Supervisory Board members and conducts effective account-

Supervisory Board members. Audit & Supervisory Board

ing audits. Accounting audits are performed by two certified

members attend meetings of the Board of Directors andpublic accountants, Yoshiaki Kitamura and Kazuhide Kobori,other important meetings to audit the execution of duties byassisted by another 9 certified public accountants and 20

the directors, and otherwise endeavor to improve theother staff members.

As the Group’s appointed Independent Auditor, Deloitte

Compensation of Directors and Audit & Supervisory Board Members
Details of Compensation for Directors and Audit & Supervisory Board Members

Director and Audit & Supervisory
Board member category

36

Total compensation andother remuneration(Millions of Yen)

Total by compensation andremuneration category(Millions of Yen)
Basic compensation

Headcount of eligible
directors and Audit &Supervisory Board
members

Directors (excluding outside directors)

218

218

5

Audit & Supervisory Board members (excluding outside
Audit & Supervisory Board members)

20

20

1

Outside directors and Audit & Supervisory Board
members

35

35

6

Yamato Holdings Co., LTD.

To ensure the objectivity and transparency of policies for

Director compensation comprises fixed remuneration that

determining director compensation, deliberations are con-reflects external standards and performance-based

ducted through the Nomination and Compensation Commit-

amounts. The compensation of Audit & Supervisory Board

tee, more than half of whose members are outside

members and outside directors is fixed in keeping with thedirectors, with the Board of Directors making resolutions.

nature of their work.

Compensation of Accounting Auditor
Details of Compensation for Certified Public Accountants and Staff of the Accounting Auditor
Fiscal year ended March 31, 2013

Category

Compensation paid
for audit certification
activities(Millions of Yen)

Fiscal year ended March 31, 2014

Compensation paid
for non-audit activities(Millions of Yen)

Compensation paid
for audit certification
activities(Millions of Yen)

Compensation paid
for non-audit activities(Millions of Yen)
29

Yamato Holdings Co., Ltd.

42

1

45

Consolidated subsidiaries

133

4

134

4

Total

175

5

179

33

Other Important Compensation Details

Details of Non-Audit Activities of Certified PublicFiscal year ended March 31, 2013

Accountants and Staff of the Accounting Auditor

The compensation that 12 overseas subsidiaries, including

Fiscal year ended March 31, 2013

consolidated subsidiary Yamato Transport U.S.A., Inc., paid

Non-audit activities for which Yamato Holdings paid theto Deloitte Touche Tohmatsu Limited, which is part of thecertified public accountants and staff of the accounting

same network as the accounting firm that audits Yamato

auditors entailed advice and guidance relating to the intro-

Holdings, was as follows.

duction of International Financial Reporting Standards.

Compensation paid for audit certification and related
activities: ¥98 million

Fiscal year ended March 31, 2014
Non-audit activities for which Yamato Holdings paid the

Fiscal year ended March 31, 2014

certified public accountants and staff of the accounting

The compensation that 12 overseas subsidiaries, including

auditors entailed advice and guidance on the accounting of

consolidated subsidiary Yamato Transport U.S.A., Inc., paidreorganizations within the Group.

to Deloitte Touche Tohmatsu Limited, which is part of thesame network as the accounting firm that audits Yamato

Policy for Determining Accounting Auditor Compensation

Holdings, was as follows.

We determine audit compensation for the certified publicCompensation paid for audit certification and related

accountants and staff of the accounting auditor based on

activities: ¥129 million

the number of days required for audits, the Company’s size,
and the nature of its operations.

Annual Report 201437

Directors, Audit & Supervisory Board Members,
and Executive Officers
As of June 24, 2014

Directors

Kaoru Seto

Makoto Kigawa

Haruo Kanda

Representative Director andChairman

Representative Director,
President and Executive Officer

Representative Director,
Senior Executive Officer

Outside Directors

Toshitaka Hagiwara

Full-time Audit & Supervisory
Board Member

Masakatsu Mori

Kazuko Takahara

Hitoshi Kanamori

Atsushi Ichino

Executive Officers

Toshizo Kurisu
Executive Officers

Hideo Tanzawa

38

Yamato Holdings Co., LTD.

Richard Chua Khing Seng

Kenji Minaki

Masaki Yamauchi

Director and Managing Executive Officer

Director and Executive Officer

Audit & Supervisory Board Members

Managing Executive Officer

Motoharu Yokose

Hiroyuki Kanae

Kenichi Shibasaki

Keishirou Sasaki

Yoshihiko Hoshino

Tadao Mikami

Annual Report 201439

Analysis of Financial Position and Management Results

continued to expand, while consumer spending, corporate
earnings and employment showed signs of recovery.

Kenichi Shibasaki
Managing Executive Officer
responsible for Financing andAccounting

Operating in this environment, the Yamato Group worked
to establish new networks that will realize a revolution inlogistics, create new services, and achieve greater sophistication of its existing businesses in order to achieve theobjectives of the long-term management plan DAN-TOTSUManagement Plan 2019 and the medium-term management

In this year’s annual report, I would like to look back on theplan DAN-TOTSU Three-Year Plan HOP.
In the Delivery Business, revenues steadily climbed due

year ended March 31, 2014 based on the following themes
and discuss the Yamato Group’s capital policies.

to a significant increase in TA-Q-BIN delivery volumes amid
growth in the internet mail-order market and surging

1. ‌Attainment of Numerical Targets in Fiscal 2014 anddemand ahead of the consumption tax hike.
Never theless, earnings declined as a consequence of

Evaluation
2. ‌The Yamato Group’s Long-term Management Plan andgreatly increased one-time expenses incurred for initiatives that included building a framework to improve Cool

ROE Target
3. Agility and Flexibility of Financial Activities

TA-Q-BIN quality, setting up collection and deliver y mecha-

4. ‌Implementation Status of Capital Policies to Enhance

nisms in line with increasing TA-Q-BIN deliver y volumes,

Financial Quality and Basic Policy on Shareholder Returns

and addressing issues caused by record-level snowfalls
in Februar y.

5. Business Risks

In the non-deliver y businesses, we provided a diverse

1. ‌Attainment of Numerical Targets in Fiscal 2014and Evaluation

range of ser vices drawing on various managerial resources

With respect to the business environment during the fiscal

tlement. At the same time, we aggressively pursued

year ended March 31, 2014, the internet mail-order market­proposal-based sales through alliances with respective

Operating Revenues

Operating Income/Operating Income Margin(Millions of Yen)

(Millions of Yen, %)1,374,610

1,400,000
1,200,000

with respect to information, logistics, and transaction set-

1,200,834

1,236,520 1,260,833

80,0008.0

1,282,374

60,0001,000,000

61,3895.1

800,000

64,314

66,651

66,20363,096
6.0

5.2

5.3

5.2
4.6

40,000

4.0

20,0002.0

600,000
400,000
200,000
0

2010

2011

2012

2013

0

2014
n
n

40

Yamato Holdings Co., LTD.

2010

2011

2012

Operating Income (left scale)Operating Income Margin (right scale)

2013

2014

0

Group companies, with the aim of helping corporate clients

revolutionizing our logistics network and parcel pickup andfind solutions to management challenges.

delivery system will be expanded to include other parts of

As a result, operating revenues increased 7.2% year on
year to ¥1,374,610 million, while operating income

Asia, as we continue to apply strategies for differentiating
the Yamato Group from the competition.

decreased 4.7% to ¥63,096 million.
Net income per share rose 0.5% as a result of theshares we bought back in January 2014.

2. ‌The Yamato Group’s Long-term Management Plan
and ROE Target

ROE was 6.4%, a decline from the previous fiscal year.

The management philosophy of the Yamato Group is to help

We fell short of achieving the targets in our medium-term“enrich our society by enhancing the social infrastructure ofmanagement plan DAN-TOTSU Three-Year Plan HOP. That

TA-Q-BIN networks, creating more convenient services for

said, our cost structure reforms aimed primarily at revolu-

comfortable lifestyles and developing an innovative logistics

tionizing the Yamato Group’s logistics network and parcel

system.” The entire Yamato Group is making a concerted

pickup and delivery system were successful at strategicallyeffort to realize this philosophy.
To this end, in January 2011, we formulated a long-term

capturing changes in the market place. In my analysis, wemanaged in the year under review to build a foundation for

management plan, DAN-TOTSU Management Plan 2019,

keeping our long-term management plan, ending Marchthat’s final year is fiscal 2020. Guided by this plan, we are2020, on track and significantly differentiating the Yamato

making every effort to become a leading provider of distri-Group from our competitors.

bution and lifestyle support solution services in Asia by theGoing forward, we are aiming for a record ¥70.0 billion inconsolidated operating income in the year ending Marchyear ending March 2020, when we will celebrate the 100th
anniversary of our founding.

2015. To this end, we will implement pricing strategies, byThis long-term management plan aims to increase satis-

first effectively raising our unit price by strictly sorting thefaction of shareholders, customers, the public, employees

TA-Q-BIN parcels we accept according to size, to ensure thatand all other stakeholders.
We recognize that the keys for success are to increase

the Group is working together to provide customers highadded value. At the same time, cost structure reforms forthe profitability by steadily executing our business plan,

Net Income/Net Margin

Operating and Investing Cash Flows/Free Cash Flows(Millions of Yen, %)(Millions of Yen)

40,0004.0
35,14432,282

33,208100,000

34,77630,00080,00040,0002.5

73,95080,07536,22030,75023,41020,00019,78720,00042,821

2.7

2.7

71,84360,0003.0
2.7

87,89977,064

15,1392.0
0

1.6(20,000)
10,0001.0(40,000)(34,243)(41,093)(50,540)(51,679)(60,000)(64,936)
0

n
n

2010

2011

2012

2013

2014

0

(80,000)

2010

2011

2012

Net Income (left scale)nCash Flows from Operating Activities

Net Margin (right scale)nCash Flows from Investing Activities

2013

2014

Free Cash Flows* Free Cash Flows = Cash Flows from Operating Activities+ Cash Flows from Investing ActivitiesnAnnual Report 201441

and also to raise capital efficiency by implementing capital

The Yamato Group will strive to remain aware of capital

policies that take advantage of our solid financial base.

costs, while at the same time maintain the existing credit

And we must tie these improvements to a further increase

rating in order to facilitate smooth capital procurement.

in corporate value.

value, which we plan to attain by combining our business4. ‌Implementation Status of Capital Policies toEnhance Financial Quality and Basic Policy on
Shareholder Returns

and financial strategies.

The Yamato Group seeks to provide returns to shareholders

From this perspective, we consider ROE to be a key
benchmark to keep in mind as we seek to raise shareholder

We aim to raise ROE to over 9.0% in the year ending
March 2017, the final year of the medium-term management

based on the return to shareholders ratio, a combination ofboth dividends and share buybacks.

plan DAN-TOTSU Three-Year Plan STEP, and to over 11.0% in

We have a basic policy of paying dividends with a target

the year ending March 2020, the final year of the long-term

consolidated dividend payout ratio of 30% of consolidated

management plan DAN-TOTSU Management Plan 2019.

net income.
During the fiscal year ended March 31, 2014, we bought

3. Agility and Flexibility of Financial Activities

back about ¥10.0 billion in shares, and retired 6.7 million

The Yamato Group consistently and continually generates

shares of treasury stock to allay concerns for the dilution

between ¥70.0 billion and ¥80.0 billion in cash annually toof equity.

maintain the agility and flexibility of financial activities whilesufficiently covering ordinary expenditures.

For the fiscal year ended March 31, 2014, we paid dividends of ¥24 per share, ¥1 higher than in the previous

As of March 2014, Yamato Holdings has received thefiscal year. The return to shareholders ratio, a combination

following credit rating from Rating and Investment Informa-of both dividends and share buybacks, was over 50% for thetion, Inc. (R&I):

fiscal year ended March 31, 2014.
For the fiscal year ending March 31, 2015, we will take

R&I AA–

our earnings performance into consideration as we aim fora consolidated dividend payout ratio of 30%.

Interest-Bearing Liabilities/Equity

ROA/ROE(Millions of Yen)(%)

600,000
523,473524,505

523,784

542,915

560,1728.00

6.5

500,000

6.7

6.5

6.4

6.00
400,000

300,000

4.00

3.7

200,000

0

42

81,598101,373

2010

2011

92,7802012

93,781

3.5

107,843

2013

0

2014

n Interest-Bearing Liabilities

n ROA

n Equityn ROEYamato Holdings Co., LTD.

3.8

2.2

2.00
100,000

3.8

3.7

2010

2011

2012

2013

2014

While increasing our profitability by steadily executing our(7) ‌Loss of Social Trust Due to Major Traffic Accident andbusiness plan, we will work to raise capital efficiency byAdministrative Action

implementing capital policies that take advantage of our

The risk of society’s trust declining as a result of asolid financial base. And we will strive to tie these improve-

major traffic accident, and business suspension as aments to a further increase in corporate value.

result of government sanction(8) ‌Official Regulation Due to Environmental Issues

5. Business Risks

The risk of incurring expenses as a result of complying

The Yamato Group is fully aware of the potential impact ofwith environmental regulations more rigorous than

the following risks on its business performance and finan-

envisioned

cial position, and is accordingly managing these risks.
The following risks are solely within the scope of projec-(9) ‌Natural Disasters or Power Outages
The risk of business being suspended as a result of antions possible from information available at the end of

unexpected major natural disaster or power outage

March 2014, and may not encompass all of the risks(10) ‌Computer Viruses and Criminal Hacking Activity

related to the business of the Yamato Group.

The risk of computer systems or operations being
partly suspended as a result of infection by a com-(1) ‌Legal Regulations
The risk of revenues decreasing as a result of restric-

puter virus or hacking.
(11) ‌International Developments or Terrorism

tions on operations, and expenses increasing as a

The risk of business being suspended in certain

result of compliance with laws and regulations

regions as a result of terrorism, warfare or outbreak of(2) ‌High Reliance on the TA-Q-BIN Business for Operating
Revenues

a new contagious disease.
(12) ‌Credit Management Costs and Interest Rate Fluctua-

The risk of delivery volumes and unit prices declining as

tions

a result of a change in environment surrounding the

The risk of credit management costs increasing as a

TA-Q-Bin Businessresult of economic trends and other impacts, and fund(3) ‌Securing Human Resources
The risk of growth slowing as a result of difficulty recruit-procurement costs increasing as a result of a rise inlong-term interest rates.

ing high-quality human resources(4) ‌Loss of Business Expertise Caused by Personnel Leaving the Company

We ask our shareholders and other investors for their
ongoing encouragement and support.

The risk of competitive advantage declining as a resultof an outflow of business expertise from the Company(5) ‌Decline in Trust in the Company
The risk of society’s trust declining as a result of a deterioration in service quality, or accidents involving
damage or loss of entrusted packages(6) ‌Leak of Customer Information
The risk of society’s trust declining as a result of a leakage of customer information to the outside

Annual Report 201443

Consolidated Balance Sheet
March 31, 2014

Thousands of
U.S. Dollars(Note 1)Millions of Yen

ASSETS

2014

2013

2014

¥  220,148¥ 213,619$ 2,139,017

Trade188,145

163,790

1,828,070

Installment (Note 3)

39,48037,456383,605

Lease (Note 12)35,32922,377343,265

Allowance for doubtful accounts(1,591)(1,654)(15,461)

CURRENT ASSETS:
Cash and cash equivalents (Notes 2.d and 13)
Notes and accounts receivable (Note 13):Inventories (Note 4)

3,237

3,601

31,456

Deferred tax assets (Note 11)

16,548

16,647

160,782

Prepaid expenses and other current assets

26,06330,572

253,241

527,359

486,408

5,123,975

Land

188,344

187,108

1,830,001

Buildings and structures

329,289

281,096

3,199,464

Vehicles187,882

182,679

1,825,512

Total current assets

PROPERTY, PLANT AND EQUIPMENT—At cost:

Leased assets (Note 12)23,94423,549232,649

Machinery and equipment

121,422

108,493

1,179,777

Construction in progress

7,895

35,89276,708Others
Total
Accumulated depreciation
Net property, plant and equipment

11,662

9,432

113,309

870,438

828,249

8,457,420(453,310)(445,092)(4,404,487)

417,128

383,157

4,052,933

INVESTMENTS AND OTHER ASSETS:
25,577

21,787

248,518

Investments in and advances to unconsolidated subsidiaries and affiliates,
net of valuation allowance of ¥222 million in 2013

644

838

6,260

Long-term loans

961

915

9,334

Software12,343

12,389119,925

Lease deposits

18,46819,373

179,445

Deferred tax assets (Note 11)21,687

18,515

210,713

Other assets (Note 8)

7,967

6,771

77,406

87,64780,588851,601¥1,032,134¥ 950,153$10,028,509

Investment securities (Notes 5 and 13)

Total investments and other assets
TOTAL
See notes to consolidated financial statements.

44

Yamato Holdings Co., LTD.

Thousands of
U.S. Dollars(Note 1)Millions of Yen

LIABILITIES AND EQUITY

2014

2013

2014

¥   19,256¥ 15,704$   187,092

21,941

18,825

213,188Trade

172,463138,288

1,675,702

Other21,942

15,283

213,193

Income taxes payable

20,90822,442

203,148

Employees’ savings deposits

4,723

4,453

45,888

Accrued expenses

61,53557,344

597,892

Deferred profit on installment sales (Notes 3 and 13)

5,349

5,006

51,974

Other current liabilities (Note 9)

19,24322,195

186,972

Total current liabilities

347,360

299,540

3,375,049

66,64659,252647,552

CURRENT LIABILITIES:
Short-term bank loans (Notes 7 and 13)
Current portion of long-term debt (Notes 7, 13 and 14)
Notes and accounts payable (Note 13):

LONG-TERM LIABILITIES:Long-term debt (Notes 7, 13 and 14)
Long-term accounts payable

1,243

2,414

12,078

Liability for employees’ retirement benefits (Notes 2.j and 8)

47,224

38,178458,843

Deferred tax liabilities (Note 11)

1,808

459

17,568Other long-term liabilities (Note 9)

7,681

7,395

74,626

Total long-term liabilities

124,602

107,698

1,210,667

Common stock—authorized, 1,787,541,000 shares in 2014 and 2013;
issued, 454,684,992 shares in 2014 and 461,345,492 shares in 2013

127,235

127,235

1,236,249

Capital surplus

100,863

111,291

980,019

Retained earnings

371,965

347,358

3,614,120

Treasury stock—at cost, 35,742,057 shares in 2014 and
37,631,001 shares in 2013

(56,079)(56,496)(544,884)

8,770

6,095

85,211342(1,032)

3,328

534,451

5,357,360

COMMITMENTS LIABILITIES (Note 12)
EQUITY (Notes 10 and 18):

Accumulated other comprehensive income:Unrealized gain on available-for-sale securities
Foreign currency translation adjustments
Remeasurements of defined employees’ retirement benefit plans(Notes 2.j and 8)
Total(1,717)551,379(16,683)

Minority interests

8,793

8,464

85,433

Total equity

560,172

542,915

5,442,793¥1,032,134¥950,153$10,028,509

TOTAL

Annual Report 201445

Consolidated Statement of Income
Year Ended March 31, 2014

Thousands of
U.S. Dollars(Note 1)Millions of Yen

OPERATING REVENUES

2014

2013

2014

¥1,374,610¥1,282,374$13,356,103

1,274,471

1,181,834

12,383,117

OPERATING COSTS AND EXPENSES:
Operating costs

37,04334,337359,923

1,311,514

1,216,171

12,743,040

63,096

66,203613,063

622

661

6,049

Interest expense

(412)

(612)

(4,002)Gain (loss) on sales and disposal of property, plant and equipment—net

1,461

(224)

14,192

Loss on impairment of long-lived assets (Note 6)(2,109)Selling, general and administrative expenses
Total operating costs and expenses
Operating income
OTHER INCOME (EXPENSES):Interest and dividend income(217)(1,769)Gain on sales of marketable and investment securities

1

42

9

Loss on valuation of investment securities (Note 5)(3)(1,176)

(33)

1,334

1,612

12,961

2,786(1,919)27,06765,88264,284640,130

32,60431,269316,794

Loss on valuation of investment in unconsolidated subsidiaries and affiliates
Other—net
Other income (expenses)—net
INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS(453)

INCOME TAXES (Note 11):
Current
Deferred
Total income taxes
NET INCOME BEFORE MINORITY INTERESTSMINORITY INTERESTS IN NET INCOME OF CONSOLIDATED SUBSIDIARIESNET INCOME(1,601)(1,706)(15,559)

31,00329,563

301,235

34,87934,721

338,895

103

(423)

1,000

¥   34,776¥   35,144$   337,895

Yen

U.S. Dollars

2014

2013

2014

¥    82.22¥    81.85$      0.80

PER SHARE OF COMMON STOCK (Notes 2.r and 16):
Basic net income
Diluted net income

80.18

79.84

0.78

Cash dividends applicable to the year

24.00

23.00

0.23

See notes to consolidated financial statements.

46

Yamato Holdings Co., LTD.

Consolidated Statement of Comprehensive Income
Year Ended March 31, 2014

Thousands of
U.S. Dollars(Note 1)Millions of Yen

NET INCOME BEFORE MINORITY INTERESTS

2014

2013

2014

¥34,879¥34,721$338,895

OTHER COMPREHENSIVE INCOME (Note 15):
Unrealized gain on available-for-sale securities

2,938

3,199

28,548Foreign currency translation adjustments

1,408

1,035

13,682

Total other comprehensive income
COMPREHENSIVE INCOME

4,346

4,234

42,230¥39,225¥38,955$381,125¥38,825¥39,210$377,237

400

(255)

3,888

TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO:
Owners of the parent
Minority interests
See notes to consolidated financial statements.

Annual Report 201447

Consolidated Statement of Changes in Equity
Year Ended March 31, 2014

Thousands

Millions of Yen
Accumulated Other
Comprehensive Income

Outstanding
Number of
Shares ofCommonStock

BALANCE, APRIL 1, 2012
Net income
Cash dividends, ¥22 per share
Adjustment of retained earnings forchanges in the scope of consolidation
Purchase of treasury stock
Disposal of treasury stock
Retirement of treasury stock
Net change in the year

430,147

BALANCE, MARCH 31, 2013
Net income
Cash dividends, ¥24 per share
Purchase of treasury stock
Disposal of treasury stock
Retirement of treasury stock
Net change in the year
BALANCE, MARCH 31, 2014

423,714

CommonStockCapitalSurplusRetained
Earnings

Treasury
Stock

Unrealized
Gain onAvailablefor-Sale
Securities¥127,235¥121,314¥321,862
35,144(9,463)¥(56,514)¥2,976

Foreign
Currency
Translation
Adjustments

Remeasurements ofDefinedEmployees’
Retirement
BenefitPlans¥(1,877)¥     –

(185)
(6,433)

127,235

111,291

347,358
34,776(10,169)(4,771)¥127,235¥100,863¥371,965¥(56,079)¥8,788Total
Equity¥523,784
35,144(9,463)(185)(10,006)
1

3,119

845

3,964

(324)

3,640

6,095

(1,032)–534,451
34,776(10,169)(10,012)
1

8,464

542,915
34,776(10,169)(10,012)
1

2,675¥8,7701,374¥   342(1,717)¥(1,717)2,332¥551,379

329¥8,7932,661¥560,172(10,012)1
10,428(10,428)
418,943(56,496)¥514,996
35,144(9,463)

Minority
Interests(185)(10,006)
1(10,006)
1
10,023(10,023)

Total

Thousands of U.S. Dollars (Note 1)
Accumulated Other
Comprehensive Income

CommonStock

BALANCE, MARCH 31, 2013
Net income
Cash dividends, $0.23 per share
Purchase of treasury stock
Disposal of treasury stock
Retirement of treasury stock
Net change in the year
BALANCE, MARCH 31, 2014
See notes to consolidated financial statements.

48

Yamato Holdings Co., LTD.

CapitalSurplusRetained
Earnings

Treasury
Stock

Unrealized
Gain onAvailablefor-Sale
Securities$1,236,249 $1,081,331 $3,375,031 $(548,928) $59,226
337,895(98,806)(97,275)2
5(101,314)
101,314
25,985$1,236,249 $  980,019 $3,614,120 $(544,884) $85,211

Foreign
Currency
Translation
Adjustments

Remeasurements ofDefinedEmployees’
Retirement
Benefit
Plans

Total

Minority
Interests

Total
Equity$(10,028) $      – $5,192,881
337,895(98,806)(97,275)7$82,233 $5,275,114
337,895(98,806)(97,275)
7

13,356$  3,328

3,200
25,858$85,433 $5,442,793(16,683)
22,658$(16,683) $5,357,360

Consolidated Statement of Cash Flows
Year Ended March 31, 2014

Thousands of
U.S. Dollars(Note 1)Millions of Yen

OPERATING ACTIVITIES:
Income before income taxes and minority interests
Adjustments for:
Income taxes—paidDepreciation and amortization(Gain) loss on sales and disposal of property, plant and equipment—net
Loss on impairment of long-lived assets
Gain on sales of marketable and investment securities
Loss on valuation of investment securities
Donations concerning restoration support paid
Changes in assets and liabilities, net of effects from newly consolidated
subsidiaries:
Increase in notes and accounts receivable
Decrease in inventories
Increase in notes and accounts payable
Increase in liability for employees’ retirement benefits
Other—net
Total adjustments
Net cash provided by operating activities
INVESTING ACTIVITIES:
Proceeds from sale of property, plant and equipment
Purchases of property, plant and equipment
Proceeds from sales of marketable and investment securities
Purchases of marketable and investment securities
Decrease in investments in and advances to unconsolidated
subsidiaries and affiliates
Collection of loans
Payment of loans
Other
Net cash used in investing activities
FINANCING ACTIVITIES:
Proceeds from short-term bank loans
Repayments of short-term debt
Proceeds from long-term debt
Repayments of long-term debt
Dividends paid
Purchase of treasury stock—net
Other
Net cash used in financing activities
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS ON CASH AND
CASH EQUIVALENTS
NET INCREASE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS OF NEWLY CONSOLIDATED SUBSIDIARIES,BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS, END OF YEAR (Note 2.d)

2014

2013

2014

¥ 65,882¥ 64,284$  640,130(35,437)
42,284(1,461)217(1)
3(28,078)
37,944
224
1,769
(42)
1,176
(1,148)(344,320)
410,842(14,192)
2,109
(9)
33

(38,786)401
33,411
6,278
7,284
14,19380,075(10,526)
87
8,406
6,442
(6,588)
9,666
73,950(376,860)
3,898
324,630
61,00370,771
137,905
778,035

4,238(65,212)
2
(11)

582
(47,099)52(12)41,176(633,617)
21
(106)

375
1,120
(1,154)(4,294)(64,936)

511
881
(847)
(4,608)(50,540)

3,646
10,878(11,210)(41,724)(630,936)

80,798(82,478)
27,007(14,145)(10,235)(10,013)33(9,033)

68,949(63,955)5,538(12,199)(9,528)(10,008)181(21,022)785,052(801,383)
262,411(137,442)(99,449)(97,285)325(87,771)

648
6,754

457
2,845

6,294
65,622

212,641¥219,395

1,403
208,393¥212,641

2,066,084$2,131,706

See notes to consolidated financial statements.

Annual Report 201449

Notes to Consolidated Financial Statements
Year Ended March 31, 2014

1. BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements have been prepared in accordance with the provisions set forth in theJapanese Financial Instruments and Exchange Act and its related accounting regulations, and in accordance with accounting principles generally accepted in Japan (“Japanese GAAP”), which are different in certain respects as to the application and disclosure
requirements of International Financial Reporting Standards.
In preparing these consolidated financial statements, certain reclassifications 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 reclassifications and rearrangements have been made in the 2013 consolidated financial statements toconform them to the classifications and presentations used in 2014.
The consolidated financial statements are stated in Japanese yen, the currency of the country in which Yamato Holdings 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 ¥102.92 to $1, the approximate rate ofexchange at March 31, 2014. 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.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa. Consolidation—The consolidated financial statements as of March 31, 2014, include the accounts of the Company and its 41
significant (40 in 2013) subsidiaries (together, the “Group”).
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 significant influence areaccounted for by the equity method.
The unconsolidated subsidiaries, whose combined assets, net sales, net income and retained earnings in the aggregate are notsignificant to the consolidated financial statements, have not been consolidated with the Company.
There were no affiliates accounted for by the equity method in 2014 or 2013.
Investments in the unconsolidated subsidiaries and affiliates are stated at cost, less a valuation allowance representing possible
losses on the investments that are deemed to be other than temporary. If the equity method of accounting had been applied to theinvestments in such companies, the effect on the accompanying consolidated financial statements would not be material.
The excess of the costs over the underlying net equity of investments in consolidated subsidiaries is recognized as goodwill andamortized on a straight‑line basis over a five‑year period, with the exception of minor amounts, which are charged or credited toincome in the period of acquisition.
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 also eliminated.
b. Unification of 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 prescribesthat 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. However,financial statements prepared by foreign subsidiaries in accordance with either International Financial Reporting Standards or thegenerally accepted accounting principles in the United States of America tentatively may be used for the consolidation process,except for the following items which should be adjusted in the consolidation process so that net income is accounted for in accordance with Japanese GAAP, unless they are not material: (a) amortization of goodwill; (b) scheduled amortization of actuarial gain orloss of pensions that has been directly recorded in equity; (c) expensing capitalized development costs of R&D; (d) cancellation of50

Yamato Holdings Co., LTD.

the fair value model accounting for property, plant and equipment and investment properties and incorporation of the cost modelaccounting; and (e) exclusion of minority interests from net income, if contained in net income.
c. Recognition of Operating Revenues—The Group recognizes freight charge income as operating revenue at the time when freight
has been received from the shipping customer for transportation.
Fees from customers based on installment sales contracts are recognized by the equal installment method.
d. Cash Equivalents—Cash equivalents in the consolidated statement of cash flows are short‑term investments that are readily
convertible into cash and that are exposed to insignificant risk of changes in value. Cash equivalents in the consolidated statementof cash flows include time deposits, certificates of deposits, and mutual funds investing in bonds that represent short‑term investments, all of which mature or become due within three months of the date of acquisition.
The difference between cash and cash equivalents in the accompanying consolidated balance sheet and cash and cash equivalents in the accompanying consolidated statement of cash flows is as follows:
Thousands of
U.S. Dollars

Millions of Yen

Cash and cash equivalents presented in the consolidated balance sheet
Time deposits due beyond three months
Bank overdraft
Cash and cash equivalents presented in the consolidated statement of cash flows

2014

2013

2014

¥220,148
(445)
(308)
¥219,395¥213,619
(695)
(283)
¥212,641$2,139,017(4,319)(2,992)$2,131,706

e. Inventories—Inventories are stated at the lower of cost determined by the first-in, first-out method or net selling value.
f. Marketable and Investment Securities—Marketable and investment securities are classified and accounted for, depending on
management’s intent, as follows: (1) trading securities, which are held for the purpose of earning capital gains in near term arereported at fair value, and the related unrealized gains and losses are included in earnings, (2) held‑to‑maturity debt securities, forwhich there is the positive intent and ability to hold to maturity are reported at amortized cost, and (3) available‑for‑sale securities,
which are not classified as either of the aforementioned securities, are reported at fair value, with unrealized gains and losses, netof applicable taxes, reported in a separate component of equity. The Group had no trading securities at March 31, 2014 and 2013.
Nonmarketable available‑for‑sale securities are stated at cost determined by the moving‑average method.
For other-than-temporary declines in fair value, investment securities are reduced to net realizable value by a charge to income.
g. Property, Plant and Equipment—Property, plant and equipment are stated at cost. Depreciation of property, plant and equipment
excluding leased assets of the Company and its domestic consolidated subsidiaries is computed substantially by the declining‑balancemethod, while the straight‑line method is applied to buildings acquired after April 1, 1998. Depreciation of leased assets is computedby the straight‑line method over the lease period with no residual value carried.
The depreciation of property, plant and equipment of foreign consolidated subsidiaries is 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

7–60 years

Vehicles

2– 7 years

Machinery and equipment

2–20 years

Maintenance and repairs, including minor renewals and improvements, are charged to income as incurred.

Annual Report 201451

h. Long‑Lived Assets—The Group reviews its long‑lived assets for impairment whenever events or changes in circumstances indicate
the carrying amount of an asset or asset group may not be recoverable. An impairment loss is recognized if the carrying amount ofan asset or asset group exceeds the sum of the undiscounted future cash flows 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 flows from the continued use and eventual
disposition of the asset or the net selling price at disposition.
i. Other Assets—Amortization of intangible assets is computed by the straight‑line method.
Depreciation of leased assets is computed by the straight‑line method over the lease period with no residual value carried.
j. Retirement and Pension Plan—The Company and consolidated subsidiaries mainly have a contributory trusted pension plan andan unfunded retirement benefit plan. In addition, a defined contribution retirement plan was introduced along with these defined
benefit pension plans.
In calculating the retirement benefit obligations, the straight-line basis is used in determining the amount of the expected retirement
benefit obligations attributed to service performed up to the end of the current fiscal year. Past service costs are recognized in profit orloss in full in the fiscal year in which it arises. Actuarial gains and losses are amortized on a straight-line basis over five years within the
average remaining service period of the eligible employees on and after the fiscal year following the fiscal year in which it arises.
In May 2012, the ASBJ issued ASBJ Statement No. 26, “Accounting Standard for Retirement Benefits” and ASBJ Guidance No. 25,“Guidance on Accounting Standard for Retirement Benefits,” which replaced the former standard and the other related practical guidance.
Under the revised accounting standard, actuarial gains and losses shall be recognized within equity on the consolidated balance
sheet after adjusting for tax effects, and funded status shall be recognized as a liability or asset.
The Company applied the revised accounting standard effective from the end of the fiscal year ended March 31, 2014. In applying the accounting standard, and in accordance with transitional accounting as stipulated in the accounting standard, the effect of
the changes in accounting policy described above has been recognized in the item remeasurements of defined employees’ retirement benefit plans under accumulated other comprehensive income as of March 31, 2014.
As a result of this change, as of the fiscal year ended March 31, 2014, liability for employees’ retirement benefits of ¥47,224
million ($458,843 thousand) was recorded, accumulated other comprehensive income decreased by ¥1,717 million ($16,683 thousand), and deferred tax assets increased by ¥1,087 million ($10,557 thousand). Net assets per share decreased by ¥4.10 ($0.04).
k. Asset Retirement Obligations—In March 2008, the ASBJ issued ASBJ Statement No. 18, “Accounting Standard for Asset Retirement Obligations” and ASBJ Guidance No. 21, “Guidance on Accounting Standard for Asset Retirement Obligations.” Under thisaccounting standard, an asset retirement obligation is defined as a legal obligation imposed either by law or contract that resultsfrom the acquisition, construction, development, and normal operation of a tangible fixed asset and is associated with the retirement of such tangible fixed asset.
The asset retirement obligation is recognized as the sum of the discounted cash flows 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 the 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 fixed asset by theamount 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 flows are reflected as reconciliation to the carrying amount of the liability
and the capitalized amount of the related asset retirement cost.

52

Yamato Holdings Co., LTD.

l. Leases—For a lessee, all finance lease transactions are capitalized to recognize lease assets and lease obligations in the balance sheet.
For a lessor, all finance leases that deem to transfer ownership of the leased property to the lessee are recognized as leasereceivables, and all finance leases that deem not to transfer ownership of the leased property to the lessee are recognized as
investments in leases.
m. Income Taxes—The provision for income taxes is computed based on the pretax income included in the consolidated statementof 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 aremeasured by applying currently enacted tax laws to the temporary differences.
n. Appropriations of Retained Earnings—Appropriations of retained earnings at each year-end are reflected in the consolidated
financial statements for the following year upon shareholders’ approval.
o. Foreign Currency Transactions—All short 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.
p. Derivative Financial Instruments—Certain consolidated subsidiaries use derivative financial instruments to manage their exposures to fluctuations in interest rates. Interest rate swaps are utilized by the consolidated subsidiaries to reduce interest rate risks.
The consolidated subsidiaries do not enter into derivatives for trading or speculative purposes.
The interest rate swaps, which qualify for hedge accounting and meet specific matching criteria, are not remeasured at market
value but the differential paid or received under the swap agreements are recognized and included in interest expense or income.
q. Foreign Currency Financial Statements—The balance sheet accounts of the consolidated foreign subsidiaries are translated into
Japanese yen at the current exchange rate as of the balance sheet date except for equity, which is translated at the historical rate.
Differences arising from such translation are shown as “Foreign currency translation adjustments” under accumulated other comprehensive income in a separate component of equity.
Revenue and expense accounts of the consolidated foreign subsidiaries are translated into Japanese yen at the current exchange
rates as of the balance sheet date.
r. Per-Share Information—Basic net income per share is computed by dividing net income available to common shareholders, by theweighted‑average number of common shares outstanding for the period, retroactively adjusted for stock splits.
Diluted net income per share reflects the potential dilution that could occur if securities were exercised or converted into common
stock. Diluted net income per share of common stock assumes full conversion of the outstanding convertible notes and bonds at the
beginning of the year (or at the time of issuance) with an applicable adjustment for related interest expense, net of tax, and full
exercise of outstanding warrants.
Cash dividends per share presented in the accompanying consolidated statement of income are dividends applicable to therespective years, including dividends to be paid after the end of the year.
s. Accounting Changes and Error Corrections—In December 2009, the 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 following revision of an accounting standard, thenew policy is applied retrospectively unless the revised accounting standard includes specific transitional provisions, in which case

Annual Report 201453

the entity shall comply with the specific transitional provisions. (2) Changes in Presentation—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) Correctionsof Prior-Period Errors—When an error in prior-period financial statements is discovered, those statements are restated.
t. New Accounting Pronouncements
Accounting Standard for Retirement Benefits—In May 2012, the ASBJ revised ASBJ Statement No. 26, “Accounting Standard for
Retirement Benefits” and ASBJ Guidance No. 25, “Guidance on Accounting Standard for Retirement Benefits.”
The accounting standard has been revised mainly in terms of accounting methods for unrecognized actuarial gains or losses andunrecognized past service costs, calculation methods for defined benefit obligation and service cost, and enhancement of disclosure
items.
The revision of the calculation methods for defined benefit obligation and service cost will be applied to the Company and its
domestic consolidated subsidiaries from the beginning of the fiscal year that begins on or after April 1, 2014. The accounting standard and the guidance will not be applied retrospectively to the financial statements in the prior years, following the transitional
provisions.
The Company is now in the process of measuring the effect of applying the accounting standard and the guidance.
Accounting Standards for Business Combinations—In September 2013, the ASBJ revised ASBJ Statement No. 21, “AccountingStandard for Business Combinations,” ASBJ Statement No. 7, “Accounting Standard for Business Divestitures,” ASBJ Guidance No.
10, “Guidance on Accounting Standards for Business Combinations and Business Divestitures” and related standards and implementation guidance.
The accounting standards has been revised mainly as follows: (a) accounting treatment of changes in a parent’s ownership interest in a subsidiary, due to purchase of ownership interests in its subsidiary or other transactions, while the parent retains its controlling interest in its subsidiary; (b) accounting treatment of acquisition-related costs; (c) the presentation of net income and thechange in presentation from minority interests to non-controlling interests; and (d) transitional accounting treatment.
(a) and (b) will be applied from the beginning of the fiscal year that begins on or after April 1, 2014, (d) will be applied early for abusiness combination which will occur on or after the beginning of the fiscal year that begins on or after April 1, 2014, and (c) will beapplied early from the beginning of the fiscal year that begins on or after April 1, 2015.

3. NOTES AND ACCOUNTS RECEIVABLE
Sales recorded on the installment basis were 0.3% of operating revenues in 2014 and 2013, respectively.
Annual maturities of notes and accounts receivable—installment at March 31, 2014, and related amortization of deferred profit
on installment sales are as follows:
Millions of Yen

2015
2016
2017
2018
2019
2020 and thereafter
Total

54

Yamato Holdings Co., LTD.

Thousands of U.S. Dollars

Receivables

Deferred Profit
on Installment
Sales

Receivables

Deferred Profit
on Installment
Sales¥19,688
9,818
5,438
2,659
1,239
638
¥39,480¥2,113
1,450
886
485
256
159
¥5,349$191,292
95,392
52,83925,836
12,0426,204$383,605$20,526
14,094
8,610
4,708
2,487
1,549
$51,974

4. INVENTORIESInventories at March 31, 2014 and 2013, consisted of the following:Thousands of
U.S. Dollars

Millions of Yen

MerchandiseWork in process
Raw materials and supplies
Total

2014

2013

2014

¥  780235
2,222¥3,237¥  852161
2,588¥3,601$ 7,584
2,279
21,593$31,456

5. MARKETABLE AND INVESTMENT SECURITIESMarketable and investment securities as of March 31, 2014 and 2013, consisted of the following:Thousands of
U.S. Dollars

Millions of Yen

Noncurrent:
Marketable equity securities
Nonmarketable equity securities
Other
Total

2014

2013

2014

¥24,796685
96¥25,577¥20,516
1,175
96¥21,787$240,922
6,657
939$248,518

Information regarding each category of the securities classified as available‍‑‍for‍‑‍sale at March 31, 2014 and 2013, was as follows:
Millions of Yen
2014

Securities classified as:
Available-for-sale: Equity securities

Cost

Unrealized
Gains

Unrealized
Losses¥12,777¥12,038¥19

Fair Value¥24,796

Millions of Yen
2013

Securities classified as:
Available-for-sale: Equity securities

Cost

Unrealized
Gains

Unrealized
Losses¥12,257¥8,277¥18

Fair Value¥20,516

Thousands of U.S. Dollars
2014

Securities classified as:
Available-for-sale: Equity securities

Cost

Unrealized
Gains

Unrealized
Losses$124,145$116,962$185

Fair Value$ 240,922

Annual Report 201455

Information for available-for-sale securities, which were sold during the years ended March 31, 2014 and 2013, was as follows:
Millions of Yen
March 31, 2014

Realized
Gains

Proceeds

Available-for-sale:
Equity securities
Other
Total

Realized
Losses

¥2

¥1

¥–

¥2

¥1

¥–

¥44
8
¥52

¥42

¥–

¥42

¥–

March 31, 2013

Available-for-sale:
Equity securities
Other
Total

Thousands of U.S. Dollars
March 31, 2014

Realized
Gains

Proceeds

Available-for-sale:
Equity securities
Other
Total

Realized
Losses

$21

$9

$–

$21

$9

$–

Loss on valuation of available-for-sale equity securities for the years ended March 31, 2014 and 2013, were ¥3 million ($33
thousand) and ¥1,176 million, respectively.

6. LONG‑LIVED ASSETSThe Group reviewed its long‑lived assets for impairment as of the years ended March 31, 2014 and 2013. As a result, the Group
recognized an impairment loss of ¥217 million ($2,109 thousand) as other expense for the asset groups of the Tomakomai Maintenance Factory of Yamato Autoworks Co., Ltd. and eleven other asset groups for the year ended March 31, 2014, and ¥1,769 million
as other expense for the asset groups of the Nishi-Kanto Regional Branch of Yamato Home Convenience Co., Ltd. and eight otherasset groups for the year ended March 31, 2013, respectively, due to continuous operating losses of those units or significant
declines in market prices. The carrying amounts of the relevant asset groups were written down to the recoverable amounts. The
recoverable amounts of the relevant asset groups were measured by net selling prices and evaluated mainly based on Real EstateAppraisal Standards, assessed value of fixed assets, and posted land prices.

7. BANK LOANS AND LONG‑TERM DEBT
Short‑term bank loans at March 31, 2014 and 2013, consisted of notes to banks and bank overdrafts. The weighted‑average interest rates applicable to the bank loans as of March 31, 2014 and 2013, were approximately 0.450% and 0.663%, respectively.
Long‑term debt at March 31, 2014 and 2013, consisted of the following:

Millions of Yen
2014

0.150% to 6.900% loans from Japanese banks due 2014 to 2017
0.200% to 6.900% loans from Japanese banks due 2013 to 2017
Lease obligations
Zero coupon convertible bonds due in March 2016
Total
Less current portion
Total

56

Yamato Holdings Co., LTD.

2013

¥ 59,422
9,165
20,00088,587(21,941)¥ 66,646

Thousands of
U.S. Dollars
2014$ 577,366¥ 46,321
11,75620,00078,077(18,825)¥ 59,252

89,048194,326
860,740(213,188)$ 647,552

Annual maturities of long‑term debt at March 31, 2014, were as follows:Year Ending March 31

2015
2016
2017
2018
2019
2020 and thereafter
Total

Millions of Yen

Thousands of
U.S. Dollars¥21,941
32,143
26,8827,294
306
21¥88,587$213,188
312,310261,194
70,8742,974
200$860,740

The conversion price of the convertible bonds due in March 2016 was ¥1,850 per share at March 31, 2014. If all the outstanding convertible bonds had been exercised at March 31, 2014, 10,810,810 shares of common stock would have been issued.
The conversion price of the convertible bonds is subject to adjustments to reflect stock splits and certain other events. Eachstock acquisition right may be exercised at any time during the period from March 22, 2011 to February 22, 2016.

8. RETIREMENT AND PENSION PLANS
The Group has defined benefit pension plans and defined contribution retirement plans for employees.
The defined benefit pension plans provide, under most circumstances, that employees terminating their employment are entitled toretirement benefits determined based on the rate of pay at the time of termination, years of service, and certain other factors. Suchretirement benefits are made in the form of a lump‑sum severance payment from the Company or from the 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 specific ages prior to the mandatory retirement age.
Year Ended March 31, 2014
(1) Defined Benefit Pension Plans
The changes in defined benefit obligation for the year ended March 31, 2014, were as follows:

Millions of Yen

Balance at beginning of year
Service cost
Interest cost
Actuarial loss arising during the year
Retirement benefits paid
Past service cost arising during the year
OthersBalance at end of year

Thousands of
U.S. Dollars

2014

2014

¥112,493
8,910
1,443
744
(4,458)4¥119,136$1,093,014
86,577
14,0197,233(43,318)36(4)$1,157,557

Millions of Yen

Thousands of
U.S. Dollars

The changes in plan assets for the year ended March 31, 2014, were as follows:

2014

Balance at beginning of year
Expected return on plan assets
Actuarial gain arising during the year
Contributions from the employer
Retirement benefits paid
Balance at end of year

¥64,927
649
4,516
3,881
(1,894)¥72,0792014$630,849
6,308
43,88037,702(18,401)$700,338

Annual Report 201457

Reconciliation between the liability recorded in the consolidated balance sheet and the balances of defined benefit obligation andplan assets as of March 31, 2014, were as follows:

Millions of Yen
2014

Defined benefit obligation of funded plan
Plan assets
Defined benefit obligation of unfunded plan
Net liability arising from defined benefit obligation¥ 50,035(72,079)(22,044)
69,101¥ 47,057

Millions of Yen
2014

Liability for employees’ retirement benefits
Asset for employees’ retirement benefits
Net liability arising from defined benefit obligation¥47,224(167)¥47,057

Thousands of
U.S. Dollars
2014$ 486,157(700,338)(214,181)
671,400$ 457,219
Thousands of
U.S. Dollars
2014$458,843(1,624)$457,219

The amount of liability and asset for employees’ retirement benefits that are offset individually by the Company and subsidiaries
are combined.
The components of net periodic benefit costs for the year ended March 31, 2014, were as follows:

Millions of Yen
2014

Service cost
Interest cost
Expected return on plan assets
Recognized actuarial loss
Past service cost
OthersNet periodic benefit costs¥ 8,910
1,443
(649)
3,047
4
(6)
¥12,749

Thousands of
U.S. Dollars
2014$ 86,577
14,019(6,308)29,60736(58)$123,873

Accumulated other comprehensive income before tax effect adjustments on defined employees’ retirement benefit plans as ofMarch 31, 2014, was as follows:

Millions of Yen
2014

Unrecognized actuarial gain and (loss)
Total¥(2,683)¥(2,683)

Thousands of
U.S. Dollars
2014$(26,072)$(26,072)

Plan assets as of March 31, 2014, consisted of the following:
2014

General accounts
Debt investments
Equity investments
Others
Total

58

Yamato Holdings Co., LTD.

34%
26
21
19
100%

Assumptions used for the year ended March 31, 2014, were set forth as follows:
2014

Discount rate
Expected rate of return on plan assets

1.3%
1.0%

The expected rate of return on plan assets is determined on the basis of the distribution of plan assets, past performance ofrespective assets that make up investments of plan assets, and market trends.
(2) Defined Contribution Retirement Plans
The amount contributed to the defined contribution retirement plans of the Group for the year ended March 31, 2014, was ¥2,089
million ($20,301 thousand).
Year Ended March 31, 2013
(1) Defined Benefit Pension Plans
The liability for employees’ retirement benefits at March 31, 2013, consisted of the following:
Millions of Yen
2013

Projected benefit obligation
Fair value of plan assets
Unrecognized actuarial loss
Prepaid pension cost
Net liability¥112,493(64,927)(9,502)114¥ 38,178

The components of net periodic benefit costs for the year ended March 31, 2013, is as follows:
Millions of Yen
2013

Service cost
Interest cost
Recognized actuarial loss
Net periodic benefit costs¥ 7,106
1,946
3,399¥12,451

Assumptions used for the year ended March 31, 2013, is set forth as follows:
2013

Discount rate
Expected rate of return on plan assets
Recognition period of actuarial gain/loss

1.3%
0.0%
5 years(2) Defined Contribution Retirement Plans
The amount contributed to the defined contribution retirement plans of the Group for the year ended March 31, 2013, was ¥2,053
million.

Annual Report 2014

59

9. ASSET RETIREMENT OBLIGATIONS
The changes in asset retirement obligations for the years ended March 31, 2014 and 2013, were as follows:

Millions of Yen

Balance at beginning of year
Additional provisions associated with the acquisition of property, plant and equipment
Reconciliation associated with passage of time
Reconciliation associated with changes in accounting estimates
Reduction associated with settlement of asset retirement obligations
OthersBalance at end of year

Thousands of
U.S. Dollars

2014

2013

2014

¥4,459
355
90
(1)
(110)
(4)
¥4,789¥4,059
197
85
141
(26)
3
¥4,459$43,320
3,452
878
(11)
(1,069)(43)$46,527

Changes in accounting estimates were recorded as it became evident that the estimate of the discounted cash flows required for
future asset retirement would change at the beginning of the year, which resulted from certain events such as obtaining new information. A reconciliation has been prepared for the change, which resulted in a decrease and increase of the asset retirement obligation for the years ended March 31, 2014 and 2013, by ¥1 million ($11 thousand) and ¥141 million, respectively.

10. 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 fiscal 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 Audit & Supervisory Board, and (4) the term of service of the directors is prescribedas 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 fiscal year if the company has prescribed so in its articles of incorporation. The
Company meets all the above criteria.
The Companies Act permits companies to distribute dividends‑in‑kind (noncash assets) to shareholders subject to a certain limitation and additional requirements.
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 defined 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 ofretained earnings) or as additional paid‑in capital (a component of capital surplus) depending on the equity account charged upon thepayment of such dividends until the 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.

60

Yamato Holdings Co., LTD.

c. Treasury Stock
The Companies Act also provides for companies to purchase treasury stock and dispose of such treasury stock by resolution of theBoard of Directors. The amount of treasury stock purchased cannot exceed the amount available for distribution to the shareholders,which is determined by specific formula. 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.

11. INCOME TAXESThe Company and its domestic subsidiaries are subject to Japanese national and local income taxes, which, in the aggregate,
resulted in a normal effective statutory tax rate of 38.0% for the years ended March 31, 2014 and 2013.
The tax effects of significant temporary differences, which resulted in deferred tax assets and liabilities at March 31, 2014 and2013, were as follows:

Millions of Yen

Thousands of
U.S. Dollars

2014

2013

2014

¥ 10,463
1,747
196
1,660
3,067
(273)
¥ 16,860¥ 10,994
2,015
211
1,728
2,456
(392)
¥ 17,012$ 101,668
16,975
1,903
16,131
29,798(2,656)$ 163,819¥ 16,998
2,199
24,163
4,225
546
1,840
10,764(35,505)¥ 25,230¥ 13,720
2,202
24,218
4,150
546
1,660
10,087(34,472)¥ 22,111$ 165,155
21,369234,772
41,0535,307
17,873
104,581(344,973)$ 245,137

Deferred tax liabilities:
Current—other
Deferred tax liabilities—current¥   (312)¥   (312)¥   (365)¥   (365)$   (3,037)$   (3,037)

Noncurrent:
Unrealized gain on available-for-sale securities
Other
Deferred tax liabilities—noncurrent
Deferred tax assets—net¥  (2,871)(2,480)¥  (5,351)¥ 36,427¥ (2,020)(2,035)¥ (4,055)¥ 34,703$  (27,896)(24,096)$  (51,992)$ 353,927

Deferred tax assets:
Current:
Accrued expenses
Enterprise tax
Allowance for doubtful accounts
Legal welfare expense
Other
Less valuation allowance
Deferred tax assets—current
Noncurrent:
Liability for employees’ retirement benefits
Investment securities
Loss on devaluation of land
Loss on impairment of long-lived assets
Loss on devaluation of telephone subscription rights
Unrealized profit
Other
Less valuation allowance
Deferred tax assets—noncurrent

Annual Report 201461

Reconciliation between the normal effective statutory tax rates and the actual effective tax rates reflected in the accompanying
consolidated statement of income for the year ended March 31, 2014, with the corresponding figures for 2013 is as follows:

Normal effective statutory tax rate
Per capita levy of local taxes
Valuation allowance
Downward revision to deferred tax assets as of end of the period due to the change inthe corporate tax rate
Other—net
Actual effective tax rate

2014

2013

38.0%
4.3
1.2

38.0%
4.2
2.2

1.8
1.8
47.1%

1.6
46.0%

On March 31, 2014, a new tax reform law was enacted in Japan, which changed the normal effective statutory tax rate from
38.0% to 35.6%, effective for the fiscal year beginning on or after April 1, 2014.
The effects of the reform were to decrease deferred tax assets (after subtraction of deferred tax liabilities) in the consolidatedbalance sheet as of March 31, 2014, by ¥1,172 million ($11,387 thousand), and to increase income taxes—deferred in the­consolidated statement of income for the year then ended by ¥1,163 million ($11,296 thousand).

12. LEASES(1) Lessee
The Group leases certain machinery, computer equipment and other assets.
Future rental payments under noncancelable operating leases at March 31, 2014 and 2013, was as follows:
Thousands of
U.S. Dollars

Millions of Yen
2014

Due within one year
Due after one year
Total

2013

¥ 76
123
¥199

¥507
44
¥551

2014

$  736
1,201$1,937(2) Lessor
The net investments in lease as of March 31, 2014 and 2013, are summarized as follows:

Millions of Yen

Gross lease receivables
Unguaranteed residual values
Unearned interest income
Investments in leases—current

Thousands of
U.S. Dollars

2014

2013

2014

¥35,645
2,948(3,264)¥35,329¥22,859
1,820(2,302)¥22,377$346,340
28,638(31,713)$343,265

Maturities of lease receivables for finance leases that are deemed not to transfer ownership of the leased property to the lessee
as of March 31, 2014, are as follows:Year Ending March 31

2015
2016
2017
2018
2019
2020 and thereafter
Total

62

Yamato Holdings Co., LTD.

Millions of Yen

Thousands of
U.S. Dollars¥10,861
9,442
7,592
5,246
2,242
262
¥35,645$105,523
91,74373,76750,974
21,7862,547$346,340

The minimum rental commitments under noncancelable operating leases at March 31, 2014 and 2013, are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Due within one year
Due after one year
Total

2014

2013

2014

¥2,0694,385¥6,454¥1,5093,431¥4,940$20,106
42,607$62,713

13. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES(1) Group Policy for Financial Instruments
The Group uses financial instruments, mainly long-term debt including bank loans and bonds, in order to expand its business basedon its investment plan to expand its network. Cash surpluses, if any, are invested in low risk financial assets. Derivatives are used,
not for speculative purposes, but to manage exposure to interest fluctuation risk. Certain consolidated subsidiaries conduct leasing
or installment sales operations.
(2) Nature and Extent of Risks Arising from Financial Instruments and the Risk Management for Financial Instruments
Receivables such as notes and accounts receivable and installment sales receivable are exposed to customer credit risk.
Therefore, the Group maintains customers’ credit risk by monitoring collections and accrued receivables at due dates.
Marketable and investment securities are mainly equity securities of the companies that have business relationships or capitalalliances. Such securities are exposed to the risk of market price fluctuations.
Most payment terms of payables such as notes and accounts payable are less than one year.
Short-term bank loans are related to a financial business, and long-term bank loans are used for expanding its business andnetwork. Although a portion of such bank loans are exposed to market risks from changes in variable interest rates, those risks are
mitigated by using derivatives of interest rate swaps. In addition, such interest rate swaps are contracted in accordance with theinternal rule, which prescribes the authority over derivative transactions.
Accounts payable and bank loans exposed to liquidity risks are managed by each company of the Group, such as fund settlement,
bookkeeping, monitoring of the balances outstanding, and managing cash flows.
(3) Fair Values of Financial Instruments
Fair values of financial instruments are based on quoted prices in active markets. If a quoted price is not available, other rational
valuation techniques are used instead. According to the techniques used, the value could be different.
Fair values of financial instruments at March 31, 2014 and 2013, were as follows:
Millions of Yen
March 31, 2014

Cash and cash equivalents
Trade notes and accounts receivable
Allowance for doubtful accounts
Installment sales receivable
Allowance for doubtful accounts
Deferred profit on installment sales
Investment securities
Trade notes and accounts payable
Short-term loans
Long-term loans
Derivatives

Carrying Amount

Fair Value¥220,148
188,145(131)
188,01439,480(933)(5,349)33,19824,796
172,463
36,41242,266¥220,148

Difference

188,519¥  50538,32024,796
172,463
36,49342,334

5,122

81
68

Annual Report 201463

Millions of Yen
March 31, 2013

Cash and cash equivalents
Trade notes and accounts receivable
Allowance for doubtful accounts
Installment sales receivable
Allowance for doubtful accounts
Deferred profit on installment sales
Investment securities
Trade notes and accounts payable
Short-term loans
Long-term loans
Derivatives

Carrying Amount

Fair Value¥213,619
163,790(143)
163,647
37,456(1,112)(5,006)
31,33820,516138,288
29,81432,210¥213,619

Difference

164,258¥  611

36,11020,516138,288
29,89232,275

4,772

78
65

Thousands of U.S. Dollars
March 31, 2014

Carrying Amount

Fair Value

Cash and cash equivalents
Trade notes and accounts receivable
Allowance for doubtful accounts$2,139,017
1,828,070(1,276)
1,826,794
383,605(9,071)(51,974)
322,560
240,922
1,675,702
353,788
410,670$2,139,017

Installment sales receivable
Allowance for doubtful accounts
Deferred profit on installment sales
Investment securities
Trade notes and accounts payable
Short-term loans
Long-term loans
Derivatives

Difference

1,831,709$4,915372,324240,922
1,675,702
354,575
411,332

49,764787
662

Cash and cash equivalents
The carrying values of cash and cash equivalents approximate fair value because of their short maturities.
Trade notes and accounts receivable
The fair values of receivables are measured at the amount to be received at maturity discounted at the Group’s assumed corporate
discount rate. A portion of these receivables is determined by discounting the cash flows related to the receivables at the rate ofgovernment bonds.
Installment sales receivable
Allowances for doubtful accounts and deferred profit on installment sales are deducted from the fair values of installment sales receivable, which are determined by discounting the cash flows related to the installment sales receivable at the market interest rate.
Marketable and investment securities
The fair values of marketable and investment securities are measured at the quoted market price of the stock exchange for theequity instruments, and at the quoted price obtained from the financial institution for certain debt instruments. Information of thefair value for marketable and investment securities by classification is included in Note 5.

64

Yamato Holdings Co., LTD.

Trade notes and accounts payable
The fair values of payables, all of which are substantially paid within one year, are measured at the amount to be paid.
Short-term and long-term loans
The fair values of short-term bank loans and long-term loans are determined by discounting the cash flows related to the debt at theGroup’s assumed corporate borrowing rate.
The current portion of long-term bank loans is included in short-term loans in the above table in addition to short-term bank loanson the consolidated balance sheet. Lease payments are not included in long-term loans in the above table.
Derivatives
Information of the fair value for derivatives is included in Note 14.
(4) Financial Instruments Whose Fair Value Cannot Be Reliably Determined

Millions of Yen

Investments in equity instruments that do not have a quoted market price in an active
marketThousands of
U.S. Dollars

2014

2013

2014

¥1,324¥2,082$12,865(5) Maturity Analysis for Financial Assets and Securities with Contractual Maturities
Millions of Yen

March 31, 2014

Cash and cash equivalents
Trade notes and accounts receivable
Installment sales receivable
Total

Due in One Yearor Less

Due after
One Year throughFive Years¥220,148
177,095
19,688¥416,931¥10,975
19,154¥30,129

¥ 75
638
¥713

¥213,619
156,108
19,318¥389,045¥ 7,637
17,556¥25,193

¥ 45
582
¥627

Due after
Five Years

March 31, 2013

Cash and cash equivalents
Trade notes and accounts receivable
Installment sales receivable
Total

Thousands of U.S. Dollars

March 31, 2014

Due in One Yearor Less

Due after
One Year throughFive Years

Cash and cash equivalents
Trade notes and accounts receivable
Installment sales receivable
Total$2,139,017
1,720,708
191,292$4,051,017$106,637
186,109$292,746

Due after
Five Years$  7256,204$6,929Annual Report 201465

(6) Maturity Analysis for Long-term loans, Lease obligations and Convertible bonds
Millions of Yen
Year Ending March 31

Long-term loans

Lease obligations¥17,156
10,00725,656
6,603¥4,785
2,136
1,226
691
306
21
¥9,165

2015
2016
2017
2018
2019
2020 and thereafter
Total¥59,422

Zero coupon
convertible bonds¥20,000¥20,000

Thousands of U.S. Dollars
Year Ending March 31

Long-term loans

Lease obligations$166,696
97,225249,285
64,160$46,492
20,75911,909
6,714
2,974
200
$89,048

2015
2016
2017
2018
2019
2020 and thereafter
Total$577,366

Zero coupon
convertible bonds$194,326$194,326

Please see Note 7 for annual maturities of long-term debt.

14. DERIVATIVES
Certain consolidated subsidiaries use derivative financial instruments to manage their exposure to fluctuations in interest rates.
Interest rate swaps are utilized by the consolidated subsidiaries to reduce interest rate risk. The consolidated subsidiaries do notenter into derivatives for trading or speculative purposes.
The interest rate swaps, which qualify for hedge accounting and meet specific matching criteria, are not remeasured at market
value but the differential paid or received under the swap agreements is recognized and included in interest expense or income.
Derivative Transactions to Which Hedge Accounting Is Applied
Millions of Yen
Contract
Amount Dueafter One Year

Fair Value

March 31, 2014

Hedged Item

Contract
AmountInterest rate swaps(fixed rate payment, floating rate receipt)

Long-term bank loans¥44,050¥29,050*

Long-term bank loans¥42,050¥28,050*

March 31, 2013

Interest rate swaps(fixed rate payment, floating rate receipt)

Thousands of U.S. Dollars

March 31, 2014

Hedged Item

Interest rate swaps(fixed rate payment, floating rate receipt)

Long-term bank loans*The information of the fair value of interest rate swaps is included in that of hedged items (see Note 13).

66

Yamato Holdings Co., LTD.

Contract
AmountContract
Amount Dueafter One Year

Fair Value$428,002$282,258*15. COMPREHENSIVE INCOME
Each component of other comprehensive income for the years ended March 31, 2014 and 2013, was as follows:
Thousands of
U.S. Dollars

Millions of Yen

Unrealized gain on available-for-sale securities:
Gains arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effectTotal
Foreign currency translation adjustments:
Adjustments arising during the year
Total other comprehensive income

2014

2013

2014

¥3,784
(1)
3,783
(845)
¥2,938¥ 3,036
1,176
4,212(1,013)¥ 3,199$36,766(9)36,757(8,209)$28,548¥1,408¥4,346¥ 1,035¥ 4,234$13,682$42,230

16. NET INCOME PER SHARE
Reconciliation of the differences between basic and diluted net income per share (“EPS”) for the years ended March 31, 2014 and2013, is as follows:

Millions of Yen

Thousands ofSharesYear Ended March 31, 2014

Net Income

Weightedaverage Shares

Basic EPS—Net income available to common shareholders
Effect of dilutive securities—Convertible bonds
Diluted EPS—Net income for computation¥34,776¥34,776

Yen

U.S. Dollars
EPS

422,941
10,811
433,752¥82.22$0.80¥80.18$0.78

429,377
10,811
440,188¥81.85

Year Ended March 31, 2013

Basic EPS—Net income available to common shareholders
Effect of dilutive securities—Convertible bonds
Diluted EPS—Net income for computation¥35,144¥35,144¥79.84

17. SEGMENT INFORMATION(1) Description of Reportable Segments
The Group identifies operating segments as units of segment reporting for which discrete financial information is available andwhose operating results are regularly reviewed by the Board of Directors, in order to make decisions about resources to be allocatedto the segment and assess its performance.
The Company, as a pure holding company, forms six business formations classified according to each business contents andmanages based on these business formations. The Group categorizes as the six reporting segments, “Delivery,” “BIZ‍‑‍Logistics,”“Home Convenience,” “e‑Business,” “Financial,” and “Autoworks” based on the above policy.
“Autoworks” changed its segment name from “Truck Maintenance” starting from the fiscal year ended March 31, 2014.

Annual Report 2014

67

The Group defines the reporting segments as follows:
Delivery:

Small‑parcel delivery services such as TA-Q-BIN (door‑to‑door parcel delivery) and Kuroneko Mail (posting
service)

BIZ‍‑‍Logistics:

Intercompany logistics services, aimed at the B2B supply‑chain management market

Home Convenience:

Lifestyle support services intimately connected with the needs of local markets, such as moving and household effects delivery services

e-Business:

Information services targeted at the business market, including ASP services and the development of information systems

Financial:

Financial services targeted at business customers and consumers, such as settlement and collection

Autoworks:

Vehicle maintenance services and fuel supply targeted at transport companies(2) ‌Methods of Measurement for the Amounts of Segment Revenues, Segment Income (Loss), Segment Assets, and Other Items
for Each Reportable Segment
The accounting policies of each reportable segment are consistent to those disclosed in Note 2, “Summary of Significant Accounting
Policies.”(3) Information about Segment Revenues, Segment Income (Loss), Segment Assets, and Other Items
Millions of Yen
2014

Segment revenues:
Segment revenues from
customers
Intersegment revenues
Total segment revenues
Segment income
Segment assets
Other:
Depreciation and amortization
Increase of tangible and intangible fixed assets

Delivery

BIZ-Logistics

Home
Convenience¥1,098,693
60,184¥1,158,877¥   35,874
632,617¥ 90,255
12,462¥102,717¥  3,404
54,551¥48,723
14,154¥62,877¥   217
19,017¥41,538
30,179¥71,717¥ 7,954
39,693¥ 62,728
3,568¥ 66,296¥  9,406
233,495¥25,650
28,067¥53,717¥ 3,272
23,412¥ 7,023
60,664¥67,687¥24,957
11,169¥1,374,610
209,278¥1,583,888¥   85,084
1,013,954¥       –(209,278)¥(209,278)¥ (21,988)
18,180¥1,374,610¥   63,096
1,032,134

31,776

1,561

575

3,785

2,721

907

285

41,610656

42,26664,378

4,250

700

3,468

5,493

380

563

79,232299

79,531e-Business

Financial

Autoworks

Other

Total

Reconciliation

Consolidated¥1,374,610

Millions of Yen
2013

Segment revenues:
Segment revenues from
customers
Intersegment revenues
Total segment revenues
Segment income (loss)
Segment assets
Other:
Depreciation and amortization
Increase of tangible and intangible fixed assets

68

Yamato Holdings Co., LTD.

Home
Convenience

Delivery

BIZ-Logistics¥1,028,219
56,439¥1,084,658¥   41,908
575,699¥86,807
11,486¥98,293¥ 4,095
52,52527,7701,542

756

31,7251,655

550

e-Business

Financial

Autoworks

Other

Total

Reconciliation

Consolidated¥ 56,710
3,911¥ 60,621¥  8,516
189,457¥23,229
27,531¥50,760¥ 2,666
21,804¥ 5,746
52,994¥58,740¥18,763
10,845¥1,282,374
194,973¥1,477,347¥   82,408
905,607¥      –
(194,973)¥(194,973)¥ (16,205)
44,546¥1,282,374¥1,282,374¥   66,203
950,153

3,759

2,357

948

253

37,385551

37,936

2,262

4,483

729

233

41,637

6,415

48,052¥44,602 ¥37,061
14,752
27,860¥59,354 ¥64,921¥   (527) ¥ 6,987
18,41536,862

Thousands of U.S. Dollars
2014
DeliverySegment revenues:
Segment revenues from
customers
Intersegment revenues
Total segment revenues
Segment income
Segment assets
Other:
Depreciation and amortization
Increase of tangible and intangible fixed assets

BIZ-Logistics$10,675,214
584,767$11,259,981$   348,559
6,146,692

Home
Convenience

e-Business

Financial

Autoworks

Other

Total

Reconciliation$876,941 $473,408 $403,594 $  609,483 $249,227 $ 68,236 $13,356,103
121,087 137,527 293,227
34,663 272,705 589,432
2,033,408$998,028 $610,935 $696,821 $  644,146 $521,932 $657,668 $15,389,511$ 33,073 $  2,113 $ 77,284 $   91,386 $ 31,795 $242,489 $   826,699
530,029 184,776 385,670 2,268,706 227,474 108,521
9,851,868

Consolidated$         – $13,356,103(2,033,408)$(2,033,408) $13,356,103$  (213,636) $   613,063
176,641 10,028,509

308,745

15,166

5,591

36,77926,434

8,809

2,766

404,290

6,378

410,668

625,510

41,296

6,804

33,69353,369

3,696

5,475

769,843

2,902

772,745

Notes: “Other” includes JITBOX charter services, staffing services, and shared services.
	‌Segment revenues and segment income of “Other” include dividends for the years ended March 31, 2014 and 2013, of ¥24,105 million ($234,208 thousand) and ¥17,553 million, respectively, which the Company received from its subsidiaries as a pure holding company.
Reconciliations are as follows:(1) ‌Reconciliations of segment income for the years ended March 31, 2014 and 2013, of ¥21,988 million ($213,636 thousand) and ¥16,205 million,
respectively, are intersegment eliminations.
(2) ‌Reconciliations of segment assets at March 31, 2014 and 2013, of ¥18,180 million ($176,641 thousand) and ¥44,546 million, respectively, include
intersegment eliminations of ¥143,258 million ($1,391,937 thousand) and ¥118,389 million, and corporate assets which are not allocated to eachreporting segments of ¥161,438 million ($1,568,578 thousand) and ¥162,935 million, respectively.
(3) ‌Reconciliations of increases of tangible and intangible fixed assets at March 31, 2014 and 2013, of ¥299 million ($2,902 thousand) and ¥6,415
million, respectively, are the Company’s capital investment.
Segment income is reconciled with the consolidated statement of income.

[Related Information about Reporting Segments](1) Information about products and services
Operating revenues from customers for the years ended March 31, 2014 and 2013, are as follows:
Millions of Yen
2014

2013

TA-Q-BIN

Kuroneko Mail

Other

Total

TA-Q-BIN

Kuroneko Mail

Other

Total

¥906,057¥120,800¥347,753¥1,374,610¥831,083¥122,277¥329,014¥1,282,374

Thousands of U S. Dollars
2014
TA-Q-BIN

Kuroneko Mail

$8,803,507$1,173,726

Other

Total

$3,378,870 $13,356,103

Annual Report 201469

(2) Information about geographical areas
Operating revenues for the years ended March 31, 2014 and 2013, are as follows:
Millions of Yen
2014
Japan

¥1,349,718

North America

2013
Other

¥10,461¥14,431

Total

Japan

¥1,374,610¥1,259,728

North America

Other¥9,545¥13,101

Total¥1,282,374

Thousands of U.S. Dollars
2014
Japan

North America$13,114,248$101,637

Other

Total

$140,218 $13,356,103

Property, plant and equipment at March 31, 2014 and 2013, are as follows:
Millions of Yen
2014
Japan

¥415,013

North America

2013
Other

¥386

¥1,729

Total

Japan

¥417,128¥380,952

North America

Other

¥300

¥1,905

Total¥383,157

Thousands of U.S. Dollars
2014
Japan

$4,032,386

North America$3,748

Other

Total

$16,799$4,052,933(3) Information about impairment losses of long-lived assets by reporting segments
Impairment losses of long-lived assets by reporting segments for the years ended March 31, 2014 and 2013, are as follows:
Millions of Yen
2014
Delivery

BIZHome
Logistics Convenience e-Business

Financial

Autoworks

Impairment losses oflong-lived assets

Other

¥217

Total

¥217

Eliminations or
Corporate
Consolidated¥217

Millions of Yen
2013
Delivery

Impairment losses oflong-lived assets¥357

BIZHome
Logistics Convenience e-Business¥1,409Financial

Autoworks

Other

¥3

Total

¥1,769Eliminations or
Corporate
Consolidated¥1,769Thousands of U.S. Dollars
2014
Delivery

Impairment losses oflong-lived assets

70

Yamato Holdings Co., LTD.

BIZHome
Logistics Convenience e-Business

Financial

Autoworks$2,109

Other

Total

$2,109Eliminations or
Corporate
Consolidated$2,109(4) Information about amortization and amounts of goodwill by reporting segments
Amortization and balance of goodwill by reporting segments for the year ended March 31, 2014, is not applicable, and for 2013, is
as follows:
Millions of Yen
2013
DeliveryAmortization of goodwill
Amounts of goodwill¥68

BIZHome
Logistics Convenience e-Business¥104

Financial

Autoworks

Other

Eliminations or
Corporate
Consolidated

Total

¥172

¥172

18. SUBSEQUENT EVENT
Appropriations of Retained Earnings
The following appropriation of retained earnings at March 31, 2014, was approved at the Company’s Board of Directors meeting
held on May 16, 2014:

Year-end cash dividends, ¥12.00 ($0.12) per share

Millions of Yen

Thousands of
U.S. Dollars¥5,027$48,847

Annual Report 201471

Independent Auditor’s Report

To the Board of Directors of
Yamato Holdings Co., Ltd.:We have audited the accompanying consolidated balance sheet of Yamato Holdings Co., Ltd. and its consolidated subsidiaries as ofMarch 31, 2014, and the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for theyear then ended, and a summary of significant accounting policies and other explanatory information, all expressed in Japanese yen.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance withaccounting principles generally accepted in Japan, and for such internal control as management determines is necessary to enable
the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit inaccordance with auditing standards generally accepted in Japan. Those standards require that we plan and perform the audit toobtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial
statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order todesign audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated
financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OpinionIn our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Yamato Holdings Co., Ltd. and its consolidated subsidiaries as of March 31, 2014, and the consolidated results of
their operations and their cash flows for the year then ended in accordance with accounting principles generally accepted in Japan.
Convenience Translation
Our audit also comprehended the translation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, such translation
has been made in accordance with the basis stated in Note 1 to the consolidated financial statements. Such U.S. dollar amounts
are presented solely for the convenience of readers outside Japan.

June 6, 201472

Yamato Holdings Co., LTD.

Corporate Data
As of March 31, 2014­
Principal Shareholders

Head Office
Yamato Holdings Co., Ltd.
16-10, Ginza 2-chome, Chuo-ku, Tokyo
104-8125 Japan
Telephone: 81-3-3541-4141
Facsimile: 81-3-5565-3427

Percentage of total
shares outstanding

The Master Trust Bank of Japan, Ltd. (Trust Account)

6.33%

State Street Bank and Trust Company 505223

4.97%

Yamato Employees’ Shareholding Association

4.02%

Japan Trustee Services Bank, Ltd. (Trust Account)

3.61%

Mizuho Bank, Ltd.

3.60%

Nippon Life Insurance Company

3.14%

Meiji Yasuda Life Insurance Company

2.70%

Yamato Trading-Partner Shareholding Association

2.11%

The Bank of New York Mellon SA/NV 10

1.55%

Transfer Agent and Registrar

Sompo Japan Insurance Inc.

1.33%

Mizuho Trust & Banking Co., Ltd.

Total

33.35%

Common Stock
Authorized: 1,787,541,000 shares
Issued: 454,684,992 shares

Stock Exchange Listing
Tokyo Stock Exchange

Annual Meeting
The annual meeting of shareholders isnormally held in June in Tokyo, Japan.

Auditor
Deloitte Touche Tohmatsu LLC

Stock Price Range (Tokyo Stock Exchange)
(Yen)

(Yen)

2,500

20,00018,0002,000
16,0001,500

14,00012,0001,000

10,000
500
8,000

­
­

­

6,000

0

11/4

7

10

12/1

4

n Stock Price Range (left scale)

7

10

13/1

Average (left scale)

4

7

10

14/1

Nikkei Stock Average (right scale)

Annual Report 201473

YAMATO HOLDINGS CO., LTD.
Annual Repor t 2014

Advancing with “Value Networking ” design
and forge a robust corporate culture

Annual Report 2014
For the year ended March 31, 2014
Printed in Japan