THE WILL
Annual Report 2005
Year ended March 31, 2005

Profile
Established in 1919, Yamato Transport Co., Ltd. is today a comprehensive transportation services groupwith 56 subsidiaries and 4 affiliates. Major activities include the Delivery, BIZ-Logistics, Home Convenience, e-Business and Financial businesses. Takkyubin (door-to-door parcel delivery) service, launched
in 1976, is the company’s core business. Covering almost all of Japan, this business handled about 1.1
billion parcels during the past fiscal year. In a drive to secure further growth and realize highly efficientmanagement, Yamato Transport is implementing “Yamato Group Revolution Plan 2007: New Value &Innovation Three-Year Plan,” a new medium-term management plan launched in April 2005. Yamato
Transport will continue to contribute to realize a better society through the refinement of Takkyubin
services as a social infrastructure, the provision of even more convenient services, and the developmentof innovative approaches to logistics.

Contents
Consolidated Financial Highlights .............................

1

Management’s Discussion and Analysis ................... 22

Message from the Management ...............................

2

Consolidated Balance Sheets ................................... 28

THE WILL .................................................................

5

Consolidated Statements of Income ......................... 30

At a Glance ............................................................... 12

Consolidated Statements of Shareholders’ Equity .... 31

Highlights of the Year ................................................ 14

Consolidated Statements of Cash Flows .................. 32

Corporate Governance ............................................. 16

Notes to Consolidated Financial Statements ............ 33

Directors and Auditors .............................................. 17

Independent Auditors’ Report .................................. 40

Environment Preservation and Social Activities ......... 18

Corporate Data ......................................................... 41

Six-year Consolidated Financial Summary ................ 21

Forward-Looking Statements
This annual report contains forward-looking statements concerning Yamato Transport’s future plans, strategies and performance.
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 uncertainties that include, but are not limited to, economic
conditions, customer demand, foreign currency exchange rates, tax laws and other regulations. Yamato Transport therefore cautions
readers that actual results may differ materially from these predictions.

Consolidated Financial Highlights
Years Ended March 31

Thousands ofMillions of Yen

Operating revenues

U.S. Dollars

2005

2004

2003

2005

¥1,071,903¥1,011,344¥972,135$9,981,406

998,786

945,201

896,0239,300,548

21,914

19,484

19,294

204,062

Operating costs
Selling, general andadministrative expenses
Income before income taxes
and minority interests

61,741

87,29391,063574,921

Income taxes

27,95937,51542,538260,352

Net income

33,84849,78348,502

315,190

Yen

U.S. Dollars

Per share of common stock:
Net income

107.51¥ 104.51

Diluted net income

¥

74.02
72.48

¥

105.20101.63

$

0.69
0.67

Cash dividends

18.00

18.00

15.00

0.17
Thousands ofMillions of Yen

Working capital¥

80,843¥

U.S. Dollars

74,803¥ 77,514$ 752,797

Total shareholders’ equity

458,792

443,715406,306

4,272,208

Total assets

676,156

652,792

655,877

6,296,266

Capital expenditures

40,96647,58742,591

381,474

Depreciation and amortization

37,14635,66331,731

345,899

Note: U.S. dollar amounts have been translated, for convenience only, at the rate of ¥107.39 to U.S.$1.

Operating Revenues

Net Income (loss)

Net Income (loss) per Share(¥ Millions)(¥ Millions)1,200,000

50,0001,000,000

40,000800,000

30,000600,000

20,000400,000

10,000

(¥)
120
100
80
60
40
20

200,00000

0–10,000
’00

’01

’02

’03

’04

’05

–20
’00

’01

’02

’03

’04

’05

’00

’01

’02

’03

’04

’05

Annual Report 2005

1

Message from the Management

Under the “Rebirth and Evolution Three-Year Plan,”income posted results fulfilling forecasts—quite an

the Group’s previous medium-term business planachievement given the difficult operating environment. In

inaugurated in April 2002, the Yamato Group took

the Delivery business, although higher costs for structural

steps to set the foundations for further growth. We

reforms led to lower income in fiscal 2004, the new busi-

hope to combine the new network created underness structure has now completely replaced the old one,the plan with the Group’s existing functions andwith no more negative effects on income. In fact, the Deliv-

know-how to speed up the growth of the entire

ery business has entered a phase in which the businessGroup, take bold reform measures in various

framework built through the Group’s financial efforts arebusiness areas and realize efficient management.

now generating earnings.
We believe that Japan Post’s entry into the private

Q: Please tell us about your operating environment and business results in fiscal 2005.

sector creates an unfair and unethical competition, espe-

During the fiscal year ended March 31, 2005, the domestic

the government. We have publicized this position in news-

transportation industry faced tighter environmental laws andpaper editorials and filed suit against Japan Post at theregulations, and greater demand to fulfill its social responsi-

Tokyo District Court on September 28, 2004 to demandbility. The business environment was also harsher amid

fair and ethical business conduct. While taking legal means

escalating price competition among transportation compa-

to realize fair competition, we hope to emerge as a winner

nies, including the aggressive entry of the Japan Post into

in this competition by relying on the relationship we havethe private sector with its revamped Yu-Pack, a low-pricebuilt with our customers and a hard-won reputation for

package delivery service launched in October 2004.

offering quality services in the delivery business sector.

cially since Japan Post receives preferential treatment fromIn this climate, we recorded consolidated operating

lion. On the other hand, net income dropped 32.0% to

Q. How do you view the results of the previous
business plan and what is your approach to
the new medium-term business plan?

¥33,848 million, due to a lower gain on reversal of allow-

The “Rebirth and Evolution Three-Year Plan,” the final year

ance for retirement benefits, as well as an asset impair-of which was fiscal 2005, endeavored to strengthen groupment loss resulting from the early adoption of asset

management and expand business fields. As a result of

impairment accounting. While these decreases resulted inefforts made thus far for the three-year period under thea drop in net income, operating revenues and operating

plan, we have successfully implemented structural reforms

revenues of ¥1,071,903 million, up 6.0% from the previous
fiscal year. Operating income rose 9.7% to ¥51,203 mil-Business Targets
Operating Revenue

March 2005
1,071,903

March 2008 (Target)
1,300,000

Change21%

Ordinary Profit

53,51780,00049%

Ordinary Profit Margin

5.0%

over 6%ROE

7.5%

over 8%ROA

5.1%

approx. 5%(¥ Millions)*ROE is calculated by dividing net income by average total shareholders’ equity.
*ROA is calculated by dividing net income by average total assets.

2

YAMATO TRANSPORT CO., LTD.

in the Delivery business, built a framework for businessness domain, narrows down its target market andformation and bolstered the basis for group management.

achieves top share in its niche.

However, these accomplishments were offset by higher

For the fiscal year ending March 31, 2008, our man-

expenses for structural reforms, leading to a drop in earn-agement goals comprise operating revenues of ¥1,300

ings. We hope to address these issues in the new plan tobillion, ordinary profit of ¥80 billion, an ordinary profit

be inaugurated next fiscal year.

margin of 6% or more, return on equity (ROE) of 8% orWhen we became the first to start a Takkyubin deliv-

more and return on assets (ROA) of around 5%. One key

ery business in 1976, the market was not yet in existence

point to focus on here is the change in the breakdown ofand competition was thus absent. Thirty years later, therevenues by business segment. Although the Delivery

competition today has become fierce. I expect that thebusiness itself has grown and targets an 14% increase indelivery business market will feel the full weight of therevenue relative to fiscal 2005, its share of operating rev-

competition when Japan Post is officially privatized inenues will drop from 80% to 70% due to greater growth of2007 and thereafter.

revenues generated by Group subsidiaries—implying that

The distribution industry is also undergoing changes as

non-delivery businesses will grow substantially. For ex-

the population continues to shrink and inventory-freeample, from fiscal 2005, the BIZ-Logistics and Home Con-

manufacturing methods permeate. To remain the company

venience will increase their revenues by 63% and 47%,of choice amid these changes, we must further exploit therespectively. In addition, we will strive to realize efficientvariety of management resources we possess throughout

management through bold measures to reform our busi-

the Group, maximize their synergies, offer superior ser-ness processes, thereby reducing fixed expenses per

vices that surpass those of our rivals, compete on a higherdelivery unit and improving profitability.

level and introduce a new Takkyubin delivery businessmodel that is tailored to meet future market needs anddistribution structures. These strategic aims are formulated
in the “Yamato Group Revolution Plan 2007: New Value &Innovation Three-Year Plan,” which seeks to realize efficient management and growth for the entire Group.

Q. Please explain the goals and strategies laidout in the new medium-term business plan.
The major goals of the “New Value & Innovation ThreeYear Plan” are to secure further growth and extensively
promote efficient management. By “further growth,” weenvision that each business segment, which in the previous medium-term business plan established its own busi-

Left

Keiji Aritomi
ChairmanRight Atsushi Yamazaki
President

Annual Report 2005

3

Q: Please elaborate on your plans to establish
a pure holding company.

motto, management principles, corporate stance andWe have made organizational reforms such as clarifying theon our company motto adopted in 1931, capture the spirit

boundaries of business segments to bolster the Group’sof our current approach to CSR.

strength. As the final step, in April 2005 we established

Employee Code of Conduct. Of these, three tenets, based

Namely, they are “Taking All Employees on Board,”

provisional organizations in preparation for actual business“Customers First,” and “CSR.” All employees of Yamato

activities that we plan to conduct as a pure holding com-

Transport carry a booklet containing the company motto,pany. By doing so, we hope to speed up management andpolicies and the most recent medium-term business plan atmake assessments of business activities that further em-

all times so that they understand the rules and principles

phasize shareholder interests and generate returns that

underlying our business and act accordingly.

better meet their expectations. This phase will be completed

In addition, one of Yamato Transport’s guiding man-on November 1, 2005, when we will spin off the Delivery

agement principles is “Safety First, Business Second.” Thisbusiness and establish a pure holding company.

reflects the absolute priority we place on human lives overWe are currently focusing on developing new busi-

profit, based on the belief that we exist side by side withnesses. Our previous business framework focused too

people, local communities, and society. We strive to bringheavily on the Delivery business, disproportionately con-people happiness by taking safety measures that put top

centrating investments in this field. The new scheme at-priority on the protection of human life, treasure our rela-tempts to reexamine the ways in which we handled newtionships with all stakeholders and provide a social infra-

businesses as secondary to the Delivery business andstructure that makes life more convenient for everyone.

made decisions accordingly. Going forward, we will instead allow each business segment to conduct their activities more independently. By doing so, we can boost
business efficiency and improve supervision, transparency
and disclosure, ultimately allowing us to provide higher
Keiji Aritomi

returns to shareholders.

Chairman

Q: What is your approach to corporate social
responsibility (CSR)?
Our CSR management is headed by the Division of Corporate Social Responsibility, which is directly supervised by
the president. Actually, the basic principles of the Group’s

Atsushi Yamazaki

approach to CSR were already laid out in our company

President

Sales Targets by Business Segment
Operating Revenues

March 2005
1,071,903

March 2008 (Target)
1,300,000

Change21%

Delivery936,274

1,065,000

14%

BIZ-Logistics

137,801

225,000

63%

Home Convenience

59,32587,00047%

e-Business

43,01263,00046%

Financial

33,72650,00048%(Eliminations)(138,235)(190,000)(¥ Millions)

4

YAMATO TRANSPORT CO., LTD.

THE
WILL
In February 2005, the Yamato Group announced
its “New Value & Innovation Three-Year Plan.”
The goals laid out in this plan are vital to winningthe competition in the delivery industry, which is
expected to intensify. We will make an all-out
effort to reach our targets by creating new value
and taking innovative measures.

Annual Report 2005

5

Realizing an extensive delivery networkers, Yamato has improved its delivery service quality. Spe-

During the past three years, Yamato has been implementingcifically, we have designated a sales driver (SD) to eachthe Area Center System in the Delivery business to improvedelivery area, who communicates directly with customers

service quality and increase delivery volumes. Specifically,using a cell phone. We will differentiate our service quality

the scheme aims to restructure the Takkyubin network so

and become the delivery company of choice by enablingthat it comprises smaller organizational units enabling us topick-ups and deliveries at multiple time periods during theaccess customers in 10 minutes of delivery time.

day and fine-tuning our services to meet the individual

As of March 31, 2005, we increased the number of ser-schedule of each customer.

vice centers by over 400 from 2,600 at fiscal 2004 year-end

The key to improving services is “Driver Direct,” a sys-

to exceed 3,000. Although the increase was slow in fiscal

tem started in November 2004 that enables addressees to2005, we will continue expanding to build a business frame-

directly contact an SD according to the specific requests

work eventually encompassing 5,000 Takkyubin centers.

of the customer. This system has enabled Yamato to pickup frozen and chilled packages, as well as packages that

New services from development of an extensive delivery network

must be picked up within a short period of time. We hope

By developing an extensive delivery network and reducing

greater convenience. In addition, we have added a service

the travel distance between Takkyubin centers and custom-that allows customers to search for SD cell phone num-

to expand the delivery volume by offering customers muchbers on the Internet in a bid to raise awareness of this newservice. Using the Internet also gives us the advantage ofsending e-mail delivery notification and other information in

THE WILL
To Achieve
Steady Growth
Expansion of services, the basis of growth
In the Takkyubin network, we are transitioning from the standard package service to a“flexible” one with a business framework that responds to Takkyubin market needs more
quickly, accurately and efficiently so that we will continue to grow.

6

YAMATO TRANSPORT CO., LTD.

real time in an accurate manner. Without the hassle ofIn Kuroneko Mail, Yamato has improved customer

communicating through call centers, we can respondconvenience by offering the service at all store branches ofimmediately to customer requests by having the nearest

partner Seven-Eleven Japan Co., Ltd., and by launching

SD contact customers directly. Through these efforts, wesales of Eco Mail, a partial wrapping system that reduces

offer quality services, while also realizing higher delivery

waste. Because Kuroneko Mail has grown strongly sincevolume and operational efficiency.

its inception and its delivery volume is expected to increase further, we established a Mail Business Develop-

Boosting customer convenience by improving
and developing merchandise

ment Division in May 2005 to devise measures to

Yamato is constantly developing new merchandise andFinally, we have launched Kuroneko Box Charter for busi-

improving existing merchandise to enhance convenience.

ness customers. Each box has dimensions of 1.1m x 1.1m

In the Takkyubin business, we have added Mail Notification

x 1.7m, an optimal size for high-quality, low-price shipping.

strengthen the business framework for future services.

Service, a new service that notifies registered customers ofdelivery dates and times by e-mail. We have also shortened delivery times. For example, Air Speed Takkyubin has
reduced delivery time to the Kyushu region from two days
to one by using night flights. We are also diversifying collection and settlement methods for Takkyubin, which currently accepts credit cards, debit cards and credit card
settlements over the cell phone.

Takkyubin Delivery Volume

1,063

1,011

984

779

749

647

704

836

899

948

(million parcels)’96 ’97 ’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05
Annual Report 2005

7

packaging. We have also created a package-tracking systemand boast many years of experience in settlement and collection services. During the past three years, we have restructured these businesses into four major segments to enhance
our business base. Each segment will expand sales as anindependent entity and help the entire Group grow.

BIZ-Logistics
In the BIZ-Logistics, which provides inter-company
logistics services, in fiscal 2005 Yamato mergedMarketing our know-how

Yamato Logistics Co., Ltd., Yamato Global Freight Co.,

Backing our Delivery business is our superior know-how.

Ltd. and Yamato Parcel Service Co., Ltd. This merger

Through handling around 1 billion delivery units annually, we

enables Yamato to provide services encompassing all

have attained expertise in distribution, moving services andphases, from packaging to delivery, domestic or

THE WILL
To Achieve
Steady GrowthDiversification of services
Combining new value with long years of expertise in the Takkyubin business,
Yamato Transport offers new services, which are the driving force for the Group’s
growth. A high growth rate will be achieved by developing new business areas
and offering new convenient services to corporate and individual customers.

8

YAMATO TRANSPORT CO., LTD.

Business Composition

Financial
e-Business
Home Convenience
BIZ-Logistics

Financial
e-Business
Home Convenience
BIZ-Logistics

Delivery(71.5%)

Delivery(77.4%)
Note: Business composition includes
company-wide expenses

March 2005

March 2008 (Target)

overseas. We are also building a solutions model by

including information security consulting. Accordingly,

drawing on the resources of overseas subsidiaries, andYamato restructured this segment’s sales framework by

hope to expand our capabilities in offering better solu-

the business type and industry of its customers. In devel-tions to customers.

oping systems for distribution, settlement and collection

Going forward, we will expand our business in com-and security, we boast strong know-how accumulatedpany-to-company, or B2B, transport by exploiting ourthrough building our delivery business from scratch. We

strengths in providing a coherent service ranging fromwill offer solutions that address the needs of many corpo-

identifying customer needs to consulting and actual opera-

rate customers by drawing on this expertise and knowl-tion. Specifically, we will increase order volumes by devel-

edge in developing e-conference support services

oping one-stop services for contract processing in Japan(information solutions), POS systems for restaurants andand overseas, as well as businesses at distribution centers

support systems for gift businesses.

including management of inventories and maintenance

The enforcement of the Personal Information Protec-

tools. These are areas in which the Group’s strong knowl-tion Law in April 2005 has also sparked interest in stronger

edge and experience in package tracking and imports andsecurity systems, creating a new business opportunity. We

exports will attract a higher number of orders.

have already moved quickly to offer services and solutions
that respond to this demand, including the launch of infor-

Home Conveniencemation consulting services.

The Home Convenience will make a transition from its
previous focus on moving services and merchandise mar-Financialketing to lifestyle support services, such as home services

Alongside its mainstay settlement and collection services,more intimately connected with the needs of local markets.

the Financial will diversify its services, strive to develop the

Because of the declining birthrate and a growing propor-

capability to offer comprehensive settlement and collection

tion of senior citizens, single elderly people and single-

services for distribution businesses, and provide a variety

person households are on the rise. We believe this trendof financial services to customers. To offer collection andwill create a higher demand for our Home Convenience

settlement agent business, credit services and other new

services. Therefore, we will strive to grow by increasing ourfinancial services to small and medium-sized enterprises,

lineup of merchandise and services to provide better life-

in April 2005 Yamato made Fine Credit Co., Ltd., a company

style support, in addition to existing services such as deliv-

that purchases installment credit loans, its subsidiary. We

ery of heavy food products and everyday goods, andwill provide new collection and settlement services by

pick-up services for furniture and other items.

integrating Fine Credit’s credit application screening andcredit management capabilities with Yamato’s distribution

e-Business

functions. In addition, we will actively develop leasing busi-

The e-Business changed its on-premise business format

nesses that exploit the Yamato Group’s customer base.

to solution-oriented services and now offers new services
Annual Report 2005

9

THE WILL
To EnsureHighly EfficientManagement
Promoting efficient management
We will strive to realize efficient management through bold measures to reform our business processes,
thereby reducing fixed expenses per delivery unit. We will improve profitability through heightened
productivity and efficiency made possible by our extensive delivery network.

Improving productivity
The Yamato Group has over 140,000 employees. Hence,
we can substantially improve overall productivity andefficiency if we boost the productivity of each employee.
We believe that this is possible by providing a businessframework that facilitates efficient operations, raising
company loyalty among employees and increasing
operational efficiency.
In restructuring the Delivery business, we isolated
sorting and administrative functions from the delivery process and consolidated them so that delivery centers can focus on delivery functions. By
expanding our service network, we have shortened the access time from delivery centers tocustomers, making more time for sales

10

YAMATO TRANSPORT CO., LTD.

Actively Promote Efficient Management
Overall expense for volume handled is declining
1. Reduce fixed cost burden per unit handled through business expansion
2. Boost productivity and efficiency through highly integrated operations
3. Increase margins

Change in Business Revenue

Rising Margins

Change inManagement
Costs

Enhanceemployee skills

Leverage potentialof part-time workers

Ratio of personnel
costs to revenue:
50.6%

Diversify employee
skill set
140th Business
Term

Reduce costs

Boost productivity

Ratio ofpersonnel costs
to revenue:less than 50%

Boost
cost-competitivenessHighly Efficient Management

Business Expansion

143rd Business
Term Plan

Business Expansion

activities and communication with customers. Moreover,proving service quality. The data read by PP will be sentby adopting the Area Center System for the Takkyubinthrough the wireless network of the cell phone and will beservice, we have segmentalized its organizational struc-posted in real time on the Web, realizing more accurate

ture. These smaller units will clarify the division of labor andinformation on the Delivery Inquiry System. In addition, thestrengthen company loyalty among employees.

use of the Pin PAD will enable collection and settlement byMoreover, by adopting advanced information technology (IT), drivers can now complete many tasks on site thatcredit cards and debit cards, offering greater convenience
to customers when they receive packages.

were previously done once they returned to the service
center, enabling an efficient use of work time and substan-

Cutting costs

tially increasing productivity. Currently, approximately 25%

Cost management is vital to improving profitability. Consid-

of information in the Delivery business is digitalized and weering the difficult operating environment, Yamato believes

plan to increase this ratio in the future.

that there is still more room for cost reductions in bothprocurement and indirect costs. In procurement, we will

Development and introduction of nextgeneration information systems

step up our efforts to slash costs by taking creative mea-

Yamato will introduce next-generation information systems

ery vehicles for over 3,000 service locations. This number

as a new strategic tool in bolstering our Takkyubin service

alone indicates the large volume of equipment and fixtures

network, which continues to be restructured. We will fur-that must be procured in bulk, hence the potential to lower

ther improve our delivery services and maximize synergies

costs even further.

among the functions and values of Group companies.

sures to consider how we will provide uniforms and deliv-

In terms of indirect costs, we will concentrate adminis-

Since the late 1960s, Yamato has led the industry bytrative functions of the Group in specialized Group compa-

promoting the use of computers in our operations, postingnies to improve efficiency. For example, administrative andnationwide network information online, offering online

personnel functions for 57 Group companies will beinquiry and account services and monitoring of delivery

handled by Yamato Management Service Co., Ltd., while

progress. In June 2005, we introduced a next-generation

the responsibility of vehicle maintenance and repairs will be

information system that accommodates the expanded ser-undertaken by Yamato Autoworks Co., Ltd. These mea-

vice network in line with Yamato’s service center expansionsures will cut costs, improve operational quality and boost

strategy and the proliferation of mobile communications.

the efficiency of all Group companies. We will also take

The new system allows SDs to carry a four-in-one

measures to cut personnel expenses in the Delivery busi-

system comprising a portable POS (PP), a printer, a mobile

ness and other businesses vulnerable to seasonal changes

phone and a Pin PAD for collection and settlement, im-by actively recruiting part-time employees.
Annual Report 200511

At a Glance
Segment

12

Business Description

Delivery

The Delivery business covers a diverse array of services, including
Takkyubin, Cool Takkyubin, Collect Service, and Kuroneko Mail. Except
certain regions, Takkyubin next-day parcel delivery service is available
throughout Japan. Yamato Transport also operates a secure parcel tracking
system, allowing the Company to manage parcel shipping status and realize
high-quality service.

BIZ-Logistics

The BIZ-Logistics business encompasses an infrastructure that enables
Yamato Transport to offer logistics services fully linking Japan and locations overseas. These services include international marine forwarding, airfreight forwarding, logistics, and packing. Through the BIZ-Logistics
business, Yamato Transport provides customers with optimized logistics
systems according to their needs.

Home
Convenience

The Home Convenience business combines moving services and merchandise marketing, aligning these services to meet diversifying customer needs.
Moving services are aimed at families and individuals, and offers moving
services for handling individual pieces of furniture and a range of other moving-related customer services. Meanwhile, merchandise marketing involves
online sales and other services.

e-Business

Leveraging know-how accumulated over the course of Yamato Transport’s
operations, the e-Business segment is involved in outsourced information
processing, as well as the operation and management of computer systems.

Financial

The Financial business includes financial services targeted at businesscustomers and consumers, such as settlement and collection and leasing business.

YAMATO TRANSPORT CO., LTD.

Performance
In this business, Yamato Transport took steps during the past year to further
improve the convenience of its Takkyubin services and delivery quality bylaunching “Mail Notification” and “Driver Direct” services. As a result, during theyear under review, overall delivery volume climbed 5.1% year on year to 1,063
million units. In Kuroneko Mail, total handling volume climbed substantially by
44.1% year on year to 1,432 million parcels, driven by stronger sales initiatives,
including increasing the number of service counters. Moreover, in November
2004, Yamato Transport commenced delivery of Deutsche Post Global Mailparcels destined for Japan. Aggressive marketing efforts of this kind helped lift
operating revenues in the Delivery business 3.9% to ¥866,752 million.
On April 1, 2004, the logistics operations of Yamato Transport were spun off
and merged with Yamato Logistics Co., Ltd. This was followed on October 1
the same year with a merger between Yamato Logistics, Yamato Global
Freight Co., Ltd. and Yamato Parcel Service Co., Ltd. in a bid to further
boost efficiency and provide an integrated menu of comprehensive domestic
and international logistics services. These efforts resulted in operating revenues of ¥110,691 million, up 22.7% from the previous fiscal year.

Following a review of the product and service lineup, steps were taken toenhance sales initiatives in this business, which included revamping of theentire lineup in December 2004. In the Re-use business, online sales commenced as part of a drive to develop new sales channels, while proactive
marketing measures in merchandise marketing saw Yamato Transport bolster sales of its original “Tokusen Ichiba” (Special Select Market) brand,among other actions. As a result, operating revenues increased 1.8% to¥43,384 million.

In the course of offering an array of services in logistics and settlement,
Yamato Transport enacted initiatives that switched this business from an onpremise business format to one focused on the provision of solutions. New
services were also unveiled, among them information security consulting
services launched in November 2004. The result was an increase in operating revenues of 15.9% year on year to ¥24,432 million.

Since April 2004, this business has marketed a new settlement service,“Collect Split Service”, in parallel with a marketing campaign to boost usageof Collect Service. These and other vigorous marketing efforts drove operating revenues 16.2% higher to ¥26,644 million compared to the previous
fiscal year.

Operating Revenues andOperating Revenues Composition

Operating Revenues (¥ millions)’04

834,495’05

866,752

80.9%

Operating Revenues (¥ millions)’04

90,236’05

110,691

10.3%

Operating Revenues (¥ millions)’04

42,611’05

43,384

4.0%

Operating Revenues (¥ millions)’04 21,082’05

24,432

2.3%

Operating Revenues (¥ millions)’04 22,920’05

26,644

2.5%

Annual Report 200513

Highlights of the Year

Yamato Launches International Mail
Delivery Service

New Credit Card Settlement Service forCollect Service

As the deregulation of postal services gains pace and the

The Yamato Group introduced new payment options forworld becomes increasingly borderless, the quality ofCollect Service that allow customers to use cash, credit

Yamato’s Kuroneko Mail is becoming better known interna-card, or debit card starting April 2005 in selected areas oftionally. Against this backdrop, Yamato developed its rela-

the Kanto region and in all parts of Japan since July 2005.

tionships with international partners, and in November 2004,

This alternative to the usual cash-on-delivery payment

commenced Kuroneko Mail domestic delivery of items

method for Collect Service, is a response to accommodate

originating overseas. Then, in July 2005, Yamato launched

the need for more payment options from both sending and

the Kuroneko International Mail service, delivering mail fromreceiving customers, who have become more accustomed

Japan to overseas destinations.

to using credit cards and debit cards in recent years.

Going forward, the Group will make the most of its

By allowing customers to choose from cash, credit

capabilities in expanding and upgrading its extensive

card, and debit card, the new Collect Service has elimi-

lineup of value-added services, with the ultimate aim ofnated the burden of preparing cash in advance to receive

making Kuroneko Mail and its related services available topackages. The new service also gives senders the flexibil-

still more customers worldwide.

ity of using any one of 12 major credit cards for payment.
This can be done once the sender enters into a CollectService agreement with Yamato and passes the credit
card company’s screening process. Application for thescreening process will be handled by Yamato Financial
Co., Ltd. on the customer’s behalf. We are confident that
this innovation will improve convenience for both package
senders and their customers, boost mail-order businesses, and ultimately expand the scope of the
Takkyubin services.

14

YAMATO TRANSPORT CO., LTD.

Establishment of Yamato International
Logistics Co., Ltd. in Guangzhou, China

Purchase of Fine Credit Co., Ltd. and World
Computer Center Co., Ltd.

As a measure to conduct a global logistics business stra-In April 2005, Yamato purchased the stocks of Fine Credit

tegically focused on services within China, Yamato estab-Co., Ltd. and World Computer Center Co., Ltd. to acquirelished Yamato International Logistics Co., Ltd., a locallythem as subsidiaries. As a measure to bolster the func-

incorporated company located in Guangzhou, China. The

tions and services of the Financial business, the Yamato

company’s operations began in April 2005. As a growing

Group aims to diversify settlement methods for greatercommercial city second only to Shanghai, Guangzhou

customer convenience, especially collection and settle-

offers exciting business prospects for market expansion,

ment agent businesses and advance payment services

as seen in the rapid emergence of high-tech and automo-

tailored to medium and small companies. To this end, thebile companies in the area. Seizing opportunities createdGroup acquired the stocks of Fine Credit and World Com-by this development, Yamato is offering logistics services

puter Center. Going forward, Yamato will combine their

geared to collect products and components manufactured

functions with those of other business formations to devise

in various areas of China for export to Japan and deliverand offer higher value-added services across the Group.

them within Japan using the Takkyubin network. In addition, Yamato delivers components procured within Japan
to Japanese companies located in China.

DalianBeijing
Tianjin

QingdaoHangzhou

China

Guangzhou
Zhuhai

DongguanShenzhenAnnual Report 200515

Corporate Governance

Based on the “Yamato Group Revolution Plan 2007: Newand one part-time, and two outside corporate auditors. In

Value & Innovation Three-Year Plan,” since April 2005, theaddition to attending critical management meetings, these

Yamato Group has implemented top-to-bottom reforms toauditors monitor the appropriateness of the business andsecure new growth potential and realize even more effi-

affairs of the Company and otherwise work to safeguard

cient management. Measures included restructuring Groupthe Company’s financial health and enhance its publicbusinesses to bolster Group management. In particular, on

trust. The Audit Division, in charge of internal auditing,

April 1, 2005, the Group instituted provisional entities inassesses the viability of internal controls and reports its

preparation for the actual business activities that would be

audit results to the directors and auditors.

conducted as a pure holding company. Plans call for theAfter the Ordinary General Meeting of Shareholders

final move to a pure holding company to be established onheld on June 29, 2004, a resolution was passed to intro-

November 1, 2005.

duce an Executive Officer System, which is aimed atclearly delineating corporate decision-making, oversight,

Basic Position on Corporate Governanceand executive functions. Once it is in place, this system will

The Yamato Group is working to enhance its complianceclarify roles and responsibilities in each of these threemanagement, in addition to conducting business activities

areas to boost management efficiency and flexibility. In

that adhere to its Corporate Philosophy and observe laws

addition, the Company terminated retirement benefits forand social norms. As one of its most important tasks on theexecutives in favor of annual compensation, the amount ofeffective use of management resources and maximizing

which is determined by business results and individual

corporate value. The Group strives to strengthen its man-

performance.

agement framework and put into practice measures toenhance corporate governance.

Yamato also believes that compliance is crucial to theCompany’s business management being trusted by all
shareholders. In line with this thinking, Yamato ensures that

The Corporate Governance System

its system of checks and balances at the management level

The Yamato Group has invested decision-making,is fully functional, and has established a compliance man-

executive, and oversight authority in the Board of Direc-

agement system. Central to this framework is the CSR

tors and the Management Advisory committee. In addi-

Promotion Office, which regularly holds Compliance Com-tion to making decisions on vital matters in a timely andmittee meetings and other activities designed to promoteaccurate manner, these bodies delegate responsibilities

observance of laws, regulations, and corporate ethics.

to each branch and business unit for flexible, responsive

Finally, Yamato has been making organizational reforms

management. The appointment term for directors is set

to bolster the Group’s strength.To this end, we will appointat one year so that management responsibilities for

new outside directors and create a committee to consult

each fiscal year are clarified.

and report to the Board of Directors on remuneration forMoreover, the Company has established the Board ofAuditors, comprising two corporate auditors, one full-time

16

YAMATO TRANSPORT CO., LTD.

executives. By doing so, we hope to increase managementtransparency and further boost corporate value.

Directors and Auditors

Representative Director
ChairmanManaging Executive Officers

Keiji Aritomi

Kiyoshi Ikari

Kaoru Seto

Etsuo Ogawa

Representative Director
President

Executive Officers

Atsushi Yamazaki

Nobuyoshi Ito
Koji Honma

Managing Director

Tadao Mikami

Makoto Kigawa

Shinichi Tsukamoto
Masaki Yamauchi

Member of the Board
Delivery Company PresidentManaging Executive Officer

Kenji Shibasaki

Koji Ogura

Toshio Nakatsuka

Tadashi Okamura
Eiji Fujiguchi

Yuji Noguchi

Members of the Board

Yoshikazu Tahara

Yuji Uenuma

Keishiro Sasaki

Nobuyuki Kurihara

Osamu Okada

Hiroshi Kawada
Hideo Suzuki
Hiroshi Ooura
Takeshi Yoshii

Auditors
Michio Abe
Takeshi Morishita
Noriaki Kinoshita
Shigemichi Matsuka(As of June 29, 2005)

Annual Report 2005

17

Environment Preservation and Social Activities
Environment Preservation Activities
It is Yamato’s desire to meaningfully contribute to theenvironment ten years hence while maintaining sustainablecorporate growth. To this end, we set the Yamato Transport Global Warming Prevention Targets in September
2003. They include implementing measures to combat
global warming and, as the means to achieving this,reducing its reliance on delivery trucks while switching tohybrids and other low-emission vehicles. Specifically,
Yamato is taking solid steps each year to reach its target
environmental goals by fiscal 2012. Moreover, in accordance with the Kyoto Protocol that took effect in February
2005, Yamato set for itself the task of reducing CO2 emission levels in fiscal 2012 to 99% of levels in fiscal 2002. To
achieve this, Yamato is striving to cut CO2 emissions perparcel delivered by 30%. The following describes the establishment of satellite centers for deliveries using
handcarts, measures to increase the use of low-emission
vehicles, and introduction of hybrid vehicles, all of which
are central to reaching this goal.

Establishment of Additional Satellite Centers

Changes in the Number of the Satellite Centers
40,000600

30,000450

20,000300

10,000150

Yamato is working to establish additional satellite centers,
which are geared to deliveries using handcarts and minivans
instead of relying on regular trucks, in developing its highly
decentralized service network that currently encompasses
some 5,000 locations nationwide. By doing this, we canboost delivery efficiency in cities and densely populated
residential areas and stop the number of conventional delivery trucks from rising in line with annual increases in delivery
00volume. Satellite centers will also help reduce emission of air’00

pollutants and greenhouse gases, as well as traffic pollution

Number of Vehicles (Left scale)
Number of Satellite Centers (Right scale)created by illegal parking and traffic jams.

18

YAMATO TRANSPORT CO., LTD.

’01

’02

’03

’04

’05

The Yamato Transport Global Warming Prevention

such vehicles in fiscal 2004, bringing the cumulative total toTargets include a plan to double the number of satellite

4,135, a record high for any single company. As a result,centers, which primarily use handcarts in their pickup andlow-emission trucks accounted for 10.35% of 39,952 ve-delivery operations, from today's 500 to 1,000. There were

hicles owned by Yamato as of the end of fiscal 2005.

600 centers nationwide as of the end of March 2005.

In recent years, Yamato has been replacing vehicles in

Going forward, we will continue our efforts to expand thisits mostly diesel fleet with LPG-powered vehicles. Today,

eco-friendly service network.

however, the refueling infrastructure is in place to make thejump to hybrid vehicles a viable option. Hybrids break new

Switching to Low-emission Vehicles

ground in terms of minimizing impact on the environment,

Yamato has consistently led the industry in adopting ve-

and Yamato is assigning these vehicles a more prominent

hicles that have the lowest possible impact on the environ-role in the composition of its fleet.

ment. The Yamato Transport Global Warming Prevention
Targets call for a deployment of 20,000 low-emission trucks

Speeding up the Introduction of Hybrid Trucks

by fiscal 2012. To reach this goal, Yamato introduced 685

Combining electric motors with diesel engines, hybrid cars
can be fueled at existing gasoline stands, are highly fuelefficient, and help to substantially reduce CO2 emissions.

Changes in the Number of Low-emission Vehicles
20,000Because none of Yamato’s two-ton trucks, comprising the
majority of delivery vehicles, are hybrid, Yamato took initiatives to collaborate with automobile manufacturers to de-

5,000velop eco-friendly trucks. The effort came to fruition when
Yamato launched its first hybrid truck for experimental pur-

4,000

poses in December 2002 and began introducing them inJanuary 2003. After numerous trials, they were fully de-

3,000

ployed in August the same year. The CO2 emissions andfuel used by these hybrid trucks are less than 30% of their

2,000

diesel counterparts, with a corresponding saving of over
1,000

30% in fuel costs. Yamato will continue its efforts with theaim of introducing 20,000 low-emission vehicles, with a

0
’96

’97

’98

Hybrid Cars
LPG Cars
CNG Cars
Others
Total

’99

’00

’01

’02

’03

’04

’05

’12
(Plan)

focus on hybrid trucks, by fiscal 2012.

Annual Report 200519

Social Contribution

traffic rules. To date, the program has been held at over

The Yamato Group boasts a nationwide network of offices

9,100 locations for a total of 1 million children. Programs

and agents—the operation of which is made possible

for elementary school children and local communities arethrough the support of customers across the country.

also being offered starting fiscal 2003. These road safety

Based on this understanding, Yamato is working to build aclasses for children offer children first-hand experience of

close relationship with local communities and contribute to asitting in an actual truck and simulating driving to learn the

better society. To this end, Yamato holds activities to inter-

concept of dead angles in driving. This unique safety ses-

act with customers and their children. In keeping with its

sion using sight and touch has drawn great interest andcorporate philosophy, Yamato seeks to share enjoyment

acclaim from children, teachers, and parents alike.

with members of each local community through various
non-business activities. The following is one of our commu-

Changes in the Number of Road Safety Classes
for Children

nity-based activities.

Over 1 Million Children Participate in
Yamato’s Road Safety Classes for Children

10,0001,000,000

8,000

800,000

6,000

600,000

4,000

400,000

2,000

200,000

Safety always comes first in Yamato’s operations. In particular, children’s safety is one of its major concerns.
Alongside calling for the prevention of traffic accidents inthe local communities in which it operates, Yamato holds
nationwide road safety classes for children, thereby raisingawareness of road safety issues among its employees.
Started in 1998, Yamato employees wearing costumes

0

0
’98

bring actual delivery trucks to child daycare centers andkindergartens and put on performances to teach children

20

YAMATO TRANSPORT CO., LTD.

’99

’00

’01

’02

’03

’04

’05

Number of classes held (Left scale)
Number of participants (Right scale)Six-year Consolidated Financial Summary
Thousands of
U.S. Dollars

Millions of Yen

2005
Operating revenues

2004¥1,071,903 ¥1,011,344

2003

2002

2001

2000

2005

¥972,135¥932,120¥906,944¥812,355$9,981,406

998,786

945,201

896,023

861,775

838,219753,674

9,300,548

administrative expenses

21,914

19,484

19,294

17,156

16,69914,431

204,062

Operating income

51,20346,65956,81853,18952,02644,250476,796

Operating costs
Selling, general andIncome (Loss) before income
taxes and minority interests

61,741

87,29391,06349,905(3,554)37,339574,921

Income taxes

27,95937,51542,53822,217484

16,876260,352

Net income (loss)

33,84849,78348,502

27,512(4,181)

20,418315,190

Yen

U.S. Dollars

Per share of common stock:
Net income (loss)

74.02 ¥

107.51¥ 104.51(9.25)¥ 46.11

Diluted net income

¥

72.48

105.20101.63

¥

59.36
57.38

¥

–

43.63

0.67

Cash dividends

18.00

18.00

15.00

14.00

14.00

14.00

0.17

¥

0.69

Thousands of
U.S. Dollars

Millions of Yen

Working capital$

80,843 ¥74,803¥ 77,514¥ 84,630¥ 93,534¥ 75,199$ 752,797

Total shareholders’ equity

458,792

443,715406,306

364,806

344,209338,295

4,272,208

Total assets

676,156

652,792

655,877

678,939670,246

642,477

6,296,266

Capital expenditures

40,96647,58742,59140,37937,14432,761

381,474

Depreciation and amortization

37,14635,66331,731

31,76429,90028,917345,899

operating activities

76,642

41,06486,03569,72455,24960,887

713,683

Number of employees

Net cash provided by

141,602

131,974

112,948

108,700

101,784

93,425–

Operating income margin (%)

4.78

4.61

5.84

5.71

5.74

5.45

–

Return on revenues (%)

3.16

4.92

4.99

2.95

(0.46)

2.51–

Return on assets (%)

5.09

7.61

7.27

4.08

(0.64)

3.26–

Return on equity (%)

7.50

11.71

12.58

7.76

(1.23)

6.33–

Current ratio (%)

142.85142.39145.44147.94154.34150.44–Equity ratio (%)

67.85

67.97

61.95

53.73

51.36

52.65

–

Assets turnover (Times)

1.61

1.55

1.46

1.38

1.38

1.30

–

104.19

65.17

36.68

24.99

20.55

13.55

–

1,019.02

971.84875.08790.58746.21759.46

9.49

Interest coverage ratio(Times)Shareholders’ equity
per share (Yen)

Note: U.S. dollar amounts have been translated, for convenience only, at the rate of ¥107.39 to U.S.$1.

Annual Report 2005

21

Management’s Discussion and Analysis
Scope of Consolidation
Yamato’s consolidated financial statements include 43 major consolidated subsidiaries. The number of subsidiaries included in the statements was 40 at fiscal 2004 year-end. However, in fiscal
2005, 4 new companies, including Yamato Career Service Co., Ltd., were included to reflect theircontribution to the business, while one company was dissolved due to a merger between consolidated subsidiaries. There are no non-consolidated subsidiaries or affiliates accounted for by theequity method during the period under review.

Results of Operations
In the fiscal year ended March 31, 2005, the Japanese economy showed some encouraging signsof recovery, underpinned by increased exports and capital expenditures in the private sector. Thesegains, however, fell short of full recovery in consumer spending and other deflationary trends, andthe economic environment remained difficult.
The domestic transportation industry faced tighter environmental laws and safety regulations
and strove to fulfill its social responsibility. The business environment remained harsh amid escalating competition among transportation companies, including the aggressive entry of Japan Post into
the private sector with its renewed Yu-Pack, a package delivery service launched in October 2004.
In this context, the Group aimed for higher profit by taking proactive steps to expand its business. Entering the final year of the Yamato Group “Rebirth and Evolution Three-Year Plan,” theGroup offered products and services that satisfy customers even more and strengthened its corporate structure.
As a result of the above and other factors, Yamato Transport recorded consolidated operating
revenues of ¥1,071,903 million (U.S.$9,981.4 million), up ¥60,559 million, or 6.0%, from the previous
fiscal year. Operating income also grew ¥4,544 million, or 9.7%, to ¥51,203 million (U.S.$476.8 million). Total operating costs included ¥723 million that reflects a change in the depreciation method
used for all Cool Takkyubin facilities from the straight-line method to the declining-balance method.
The operating income margin rose 0.2 of a percentage point to 4.8%. This is mainly due to thetransfer of the premium and the additional portion of the basic portion of the governmental pension
program to the cash balance plan of the new retirement benefit system on March 31, 2004, as wellas to the reduced provision for retirement funds resulting from the transfer of the retirement allowance plan to the cash balance plan on October 1, 2004.

Review by Operating Segment
The following are summaries from each operating segment:

Delivery
The Delivery business is mainly focused on small parcel delivery services for consumers and corporate clients and includes Takkyubin and Kuroneko Mail services. Both the total delivery volume andrevenue for the Takkyubin service increased strongly, due to introduction of new services and active
measures taken to improve customer convenience. Overall delivery volume in the parcel delivery
business climbed to 1,063.1 million parcels, up 5.1% year on year. Contributing to growth was Cool
Takkyubin, where volume increased 5.3% to 129.2 million units. Moreover, the Collect Service handling volume increased 7.9% to 68.5 million units. Meanwhile, the unit price for the Takkyubin service dropped ¥16 from ¥682 in fiscal 2004 to ¥666, due to acquisition of large accounts andintensifying competition in the parcel delivery business. Consequently, total Takkyubin service revenue increased 2.7% to ¥708,503 million.

22

YAMATO TRANSPORT CO., LTD.

Both total delivery volume and revenue for the Kuroneko Mail service grew substantially, reflecting stronger operations including increased handling services for corporate customers and expansion of service counters. Handling volume increased 44.1% to 1,432.4 million units. Meanwhile, theunit price for the Kuroneko Mail service dropped ¥11 from ¥84 in fiscal 2004 to ¥73, reflecting volume discounts offered by Japan Post starting February 2003. Consequently, revenue for the
Kuroneko Mail service grew 24.3% to ¥103,959 million.
Total operating revenues, including Domestic Air Freight, Yamatobin, moving services and RailFreight Forwarding and Others, were ¥866,752 million (U.S.$8,071.1 million), an increase of ¥32,257
million, or 3.9%. Operating income was ¥36,267 million (U.S.$337.7 million), an increase of ¥719
million, or 2.0%, despite higher personnel expenses for strengthening the quality of delivery services.
Takkyubin Revenues, Delivery Volume, and Unit Price
Years ended March 31
Takkyubin revenues(Millions of Yen)
Delivery volume(1,000 parcels)
Unit price (Yen)

2001

2002

2003

2004

2005

658,156

683,589

698,499

690,088708,503

898,595
732

947,895
721

983,938710

1,011,150
682

1,063,057
666

Unit price declined in the fiscal years ended March 2003 and 2004 due to the merger of Shikoku Yamato Transport Co., Ltd.
and Kyushu Yamato Transport Co., Ltd.

BIZ-Logistics
The BIZ-Logistics provides inter-company logistics services aimed at the B2B supply chain management market and includes air-freight forwarding, logistics business and marine forwarding.
The air-freight forwarding business posted an increase of 17.1% to ¥66,448 million, reflecting
strong growth of the forwarding business in North America. The logistics business recorded revenue of ¥17,513 million, up 76.9%, due to integrated services encompassing both domestic andinternational networks.
Combining other areas such as marine forwarding, packing operations, and other services,
operating revenue rose ¥20,455 million, or 22.7%, to ¥110,691 million (U.S.$1,030.7 million), with
operating income rising by ¥1,063 million, or 34.4%, to ¥4,151 million (U.S.$38.7 million).

Cool Takkyubin Delivery Volume

Collect Service Delivery Volume(1,000 parcels)(1,000 parcels)

150,000

80,00060,000100,000

40,00050,00020,000

0

0
’01

’02

’03

’04

’05

’01

’02

’03

’04

’05

Annual Report 2005

23

Home Convenience
The Home Convenience services include moving services and lifestyle support services, such as home
services intimately connected with the needs of local markets, in addition to merchandise marketing.
Due to intensified competition with rival companies, moving services posted ¥33,090 million inrevenue, down 5.2% from the previous fiscal year, despite measures taken to strengthen moving
service operations, including reassessment of the service lineup. Meanwhile, merchandise marketing recorded ¥21,261 million in revenue, up 9.1%, reflecting favorable sales of gift merchandise.
As a result, operating revenues, including other businesses, increased ¥773 million, or 1.8%, to¥43,384 million (U.S.$404.0 million). However, there was an operating loss of ¥638 million (U.S.$5.9
million), reflecting increased fixed expenses for moving services and other items.

e-Business
The e-Business segment encompasses information services targeting business customers, including ASP services and the development of information systems.
During the year under review, e-Business changed its on-premise business format to solutionoriented services and offered other new services, including information security consulting. As aresult, operating revenues increased ¥3,350 million, or 15.9%, to ¥24,432 million (U.S.$227.5 million). Operating income rose ¥462 million, or 18.9%, to ¥2,909 million (U.S.$27.1 million).

Financial
The Financial business includes financial services targeted at business customers and consumers,such as settlement and collection.
In the fiscal year ended March 31, 2005, Financial services were actively promoted throughcampaigns and other initiatives to increase delivery volumes for our Collect Service and new settlement services. Consequently, operating revenues increased ¥3,724 million, or 16.2%, to ¥26,644
million (U.S.$248.1 million). Operating income rose ¥81 million, or 1.3%, to ¥6,427 million(U.S.$59.8 million).

Financial Review
Operating Costs
In the fiscal year ended March 31, 2005, Yamato Transport recorded consolidated operating costs
and expenses of ¥1,020,700 million (U.S.$9,504.6 million), up ¥56,015 million, or 5.8% from theprevious fiscal year. Significant components of the operating costs were as follows:
Breakdown of operating costs
Years ended March 31
Personnel expenses
Subcontracting expenses
Vehicle expenses
Other expenses
Elimination of internal procurement costs
Total

24

YAMATO TRANSPORT CO., LTD.

Millions of Yen
2004

2005

¥ 526,882 ¥ 542,306
311,349
357,024
23,34627,277217,143
235,163(114,035)(141,070)¥ 964,685 ¥1,020,700

Increase/decrease¥ 15,424
45,675
3,931
18,020(27,035)¥ 56,015

Personnel expenses increased ¥15,424 million, reflecting a decrease of ¥4,654 million in provision for retirement benefits, offset by an increase of ¥18,748 million in salaries to employees toboost service quality and other factors. The number of employees increased by 9,628 to 141,602,
reflecting a higher number of part-time employees in the Delivery business.
Major factors contributing to increased operating costs and expenses are higher subcontracting
expenses for Kuroneko Mail and increased subcontracting expenses resulting from delivering morediverse types of goods. As a result, subcontracting expenses for fiscal 2005 increased ¥45,675 million,or 14.7%.
Vehicle expenses rose ¥3,931 million due to the conversion of the vehicle maintenance division
into a subsidiary in October 2003.
Other expenses increased ¥18,020 million, primarily due to higher expenses to support thelaunch of more Takkyubin centers and the adoption of pro forma standard taxation.

Other Income and Expenses
In fiscal 2005, other income—net decreased ¥30,096 million to ¥10,538 million (U.S.$98.1 million).
The major factor contributing to this decrease was a ¥40,470 million gain on decrease of pension
obligation upon transfer of funded retirement benefits plan to cash balance plan booked last year,
which was absent this fiscal year, while there was a ¥14,383 million gain on decrease of retirement
benefit obligation upon transfer of unfunded retirement benefits plan to cash balance plan in fiscal
2005. Moreover, ¥4,597 million in loss on impairment of long-lived assets was posted due to theapplication of impairment accounting, continued negative growth in operating activities at five asset
groups including major offices in the Saikyo regional branch, and a significant drop in market prices.

Net Income
In fiscal 2005, income before income taxes and minority interests decreased ¥25,552 million, or
29.3%, to ¥61,741 million (U.S.$574.9 million). Income taxes decreased ¥9,556 million to ¥27,959
million (U.S.$260.4 million). The result was a net ¥15,935 million, or 32.0%, decrease in net income
to ¥33,848 million (U.S.$315.2 million). This figure reflects a ¥66 million loss in minority interests.
Return on equity (ROE) declined 4.2 percentage points to 7.5%.
As a result of these factors, diluted net income per share amounted to ¥72.48 (U.S.$0.67), a
decrease of ¥32.72, or 31.1%.
The annual dividend was ¥18.00 (U.S.$0.17), the same level as the previous fiscal year.

Cash Flows
Operating Activities
Net cash provided by operating activities totaled ¥76,642 million (U.S.$713.7 million), an increase of¥35,578 million from the previous fiscal year. The major factors included a decrease in income
before income taxes and minority interests of ¥25,552 million to ¥61,741 million, the amount ofdecrease in liability for employees’ retirement benefits, which fell behind the previous fiscal year by¥24,397 million, and an increase of ¥31,016 million in notes and accounts payable compared tofiscal 2004.

Annual Report 2005

25

Investing Activities
Net cash used in investing activities was ¥39,990 million (U.S.$372.4 million), a decrease of ¥694
million. The principal uses of cash in investing activities were ¥36,443 million in acquiring fixed assets, primarily vehicles, though total expenses in acquiring fixed assets decreased ¥10,503 million
from the previous fiscal year.

Financing Activities
Net cash used in financing activities totaled ¥33,912 million (U.S.$315.8 million), an increase of¥17,472 million from the previous fiscal year. The principal use of cash was ¥17,000 million for redeeming company bonds. This was adequately covered by higher cash flow from operating activities.
As a result of these actions, cash and cash equivalents at the end of the fiscal year totaled¥120,030 million (U.S.$1,117.7 million), up ¥2,999 million from the end of the previous fiscal year.

Financial Position
Total current assets as of March 31, 2005 were ¥269,489 million (U.S.$2,509.4 million), an increaseof ¥18,228 million, or 7.3%, mainly because of a ¥20,816 million, or 21.8 %, increase in notes andaccounts receivable.
Net property, plant and equipment decreased ¥2,454 million, or 0.8%, to ¥324,541 million(U.S.$3,022.1 million). The major contributing factor to this decrease was a net ¥3,458 million dropin buildings and structures, ¥1,777 million of which is included as an asset impairment loss. The
asset impairment loss for land was ¥2,820 million.
Investment and other assets increased ¥7,590 million, or 10.2%, to ¥82,126 million (U.S.$764.7
million). This was due primarily to an increase of ¥5,383 million in investment securities to ¥23,051
million, from the establishment of long-term time deposits and other factors.
As a result of the foregoing, total assets increased ¥23,364 million, or 3.6%, from the end of theprevious fiscal year, to ¥676,156 million (U.S.$6,296.3 million).
Total current liabilities as of March 31, 2005 were ¥188,646 million (U.S.$1,756.6 million), an
increase of ¥12,188 million, or 6.9%, from the end of the previous fiscal year, due primarily to anincrease in notes and accounts payable by ¥24,641 million, or 31.6%. The decrease of ¥17,000
million in the current portion of corporate bonds is due to the redemption of straight corporate
bonds issued by Yamato Transport Co., Ltd. and Yamato Lease Co., Ltd.
Total long-term liabilities fell ¥3,835 million, or 11.8%, to ¥28,620 million (U.S.$266.5 million).
The principal factors contributing to the decline were a decrease of ¥5,233 million in pension obligation with transfer to the new retirement allowance plan and an increase of ¥2,000 million in corporate bonds, reflecting bonds issued by Yamato Lease Co., Ltd. Other factors include a switch to DA
accounting and the introduction of a CMS system to reduce interest-bearing debt, in addition to theestablishment of a credit facility to strengthen the Group’s financial position, all implemented since
fiscal 2003.
Total shareholders’ equity rose ¥15,077 million, or 3.4%, to ¥458,792 million (U.S.$4,272.2
million). The principal factor was the addition of ¥25,274 million in retained earnings from the posting of net income. The decrease of ¥10,315 million in treasury stocks mainly reflects market purchases during the fiscal year under review. Shareholders’ equity per share rose ¥47.18, or 4.9%, to¥1,019.02 (U.S.$9.49). The shareholders’ equity ratio dropped 0.1 of a percentage point to 67.9%.

26

YAMATO TRANSPORT CO., LTD.

Retirement and Pension Plan
The Group’s defined benefits pension plans include a contributory funded defined benefit pension
plan based on a cash balance plan and a lump-sum severance payment plan. However, on October
1, 2004, revisions were made to the Group’s regulations on pension allowance payments, transferring the retirement allowance plan to the cash balance plan. Some consolidated subsidiaries have adefined contribution retirement benefits plan.

Capital Expenditure
Capital expenditure was ¥40,966 million (U.S.$381.5 million), providing the necessary delivery
framework to improve the quality of the core Takkyubin services and offer additional services acrossJapan. The following is a breakdown of capital expenditure.
Breakdown of capital expenditure
Millions of Yen

Thousands of
U.S. Dollars

2004

2005

2005

Delivery
BIZ-Logistics
Home Convenience
e-Business
Financial
Eliminations and Corporate¥35,753
678
1,183
857
8,972
144

¥26,657830
458
906
11,632483$248,225
7,733
4,264
8,433
108,319
4,500

Consolidated¥47,587¥40,966$381,474

In the Delivery business, capital expenditure was ¥26,657 million, including the opening of new
Takkyubin centers, additional purchase and replacement of delivery vehicles, new construction ofbase terminals, purchase of freezers and refrigerators and other items.
Network
Number of vehicles
Number of delivery channels
Number of sub-agents

2004

2005

41,5638,267
306,986

49,046
8,467
296,438

In the Financial business, capital expenditure was ¥11,632 million, which mainly included thepurchase of office equipment such as personal computers and light-duty vehicles for leasing.

Annual Report 200527

Consolidated Balance Sheets
March 31, 2005 and 2004

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

ASSETS

2005

2004

2005

CURRENT ASSETS:
Cash (Note 2.c)

¥ 119,694¥116,913$ 1,114,576

Time deposits (Note 2.c)

342

119

3,186

Marketable securities (Notes 4 and 6)

111

8,078

1,030

116,174

95,3581,081,790

(501)

(509)

(4,661)

Notes and accounts receivable:
Trade
Allowance for doubtful accounts
Inventories

2,464

2,367

22,946

Deferred tax assets (Note 9)15,957

13,766

148,592

Prepaid expenses and other current assets

15,24815,169141,982

269,489

251,2612,509,441

Land (Notes 5 and 6)

152,270

152,876

1,417,912

Buildings and structures (Note 5)

221,403

217,364

2,061,672

Vehicles173,614

154,317

1,616,670

Machinery and equipment

103,942

97,340967,895

Total current assets
PROPERTY, PLANT AND EQUIPMENT—At cost:

Construction in progress
Total
Accumulated depreciation
Net property, plant and equipment

3,714

336

34,586654,943622,233

6,098,735(330,402)(295,238)(3,076,656)

324,541

326,995

3,022,079

23,051

17,668214,649

INVESTMENTS AND OTHER ASSETS:
Investment securities (Notes 4 and 6)
Investments in and advances to non-consolidated
subsidiaries and affiliates, net of valuation allowance
762

823

7,098

Long-term loansof ¥75 million ($698 thousand) in 2005 and ¥150 million in 2004

3,058

4,586

28,477

Lease deposits

27,03927,518

251,779

Deferred tax assets (Note 9)

6,812

7,475

63,433

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

28

YAMATO TRANSPORT CO., LTD.

21,404

16,466

199,310

82,12674,536

764,746¥ 676,156¥652,792$ 6,296,266

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

LIABILITIES AND SHAREHOLDERS’ EQUITY

2005

2004

2005

CURRENT LIABILITIES:
Short-term bank loans (Note 6)¥

37

Current portion of long-term debt (Note 6)

¥

145

$

344

17,000Notes and accounts payable:Trade91,118Construction

68,368

848,478

11,4899,598

106,982

Income taxes payable

20,50816,366

190,969

Employees’ savings deposits

3,309

3,821

30,817

Accrued expenses

49,31044,606459,168

Other current liabilities

12,875

16,554

119,886

188,646

176,458

1,756,644

Long-term debt (Note 6)

15,421

13,425

143,598

Liability for employees’ retirement benefits (Note 7)

13,012

18,245

121,164

187

785

1,745

28,62032,455266,507

98

164

907

issued, 469,478,756 shares in 2005 and 469,475,456 shares in 2004

120,550

120,548

1,122,542

Capital surplus

133,455

133,453

1,242,711

Retained earnings

232,151

206,877

2,161,758

Unrealized gain on available-for-sale securities

4,325

4,183

40,276

Foreign currency translation adjustments

(653)

(625)

(6,080)Total current liabilities
LONG-TERM LIABILITIES:Other long-term liabilities
Total long-term liabilities
MINORITY INTERESTSCONTINGENT LIABILITIES (Note 11)
SHAREHOLDERS’ EQUITY (Notes 6, 8 and 14):
Common stock—authorized, 530,000,000 shares;

Treasury stock—at cost, 19,359,536 shares in 2005 and13,067,113 shares in 2004
Total shareholders’ equity
TOTAL(31,036)(20,721)(288,999)

458,792

443,715

4,272,208¥676,156¥652,792$6,296,266

Annual Report 200529

Consolidated Statements of Income
Years Ended March 31, 2005 and 2004

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

2005

2004

2005

¥1,071,903¥1,011,344$9,981,406

OPERATING COSTS AND EXPENSES:
Operating costs
Selling, general and administrative expenses

998,786
21,914945,201
19,4849,300,548
204,062

Total operating costs and expenses

1,020,700

964,685

9,504,610

51,20346,659476,796

(492)
496
(427)
1,015
4,597
4

(436)
723
(4,093)
1,643(4,585)
4,620(3,975)9,450
42,80737

OPERATING REVENUES

Operating income
OTHER (INCOME) EXPENSES:Interest and dividend income
Interest expense
Gain on sales of marketable and investment securities
Loss on disposal of property, plant and equipment
Loss on impairment of long-lived assets (Note 5)
Bond issuance costs
Equity in earnings of affiliated companies
Gain on decrease of pension obligation upon transfer of funded
retirement benefits plan to cash balance plan (Note 2.i)
Gain on decrease of retirement benefit obligation upon transfer ofunfunded retirement benefits plan to cash balance plan (Note 2.i)
Loss on devaluation of land
Loss on devaluation of telephone subscription rights
Other—net

14(531)(40,470)(14,383)(133,930)(1,348)

897
1,519
100

(12,549)(10,538)(40,634)(98,125)

INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS

61,741

87,293574,921

INCOME TAXES (Note 9):
Current
Deferred

29,485(1,526)29,808
7,707

274,561(14,209)

Total income taxes

27,95937,515

260,352

Other income—net

MINORITY INTERESTS IN NET LOSS OFCONSOLIDATED SUBSIDIARIESNET INCOME(66)¥

33,848

¥

(5)

(621)

49,783$ 315,190

Yen

2005
PER SHARE OF COMMON STOCK (Notes 2.o and 12):
Basic net income
Diluted net income
Cash dividends applicable to the year
See notes to consolidated financial statements.

30

YAMATO TRANSPORT CO., LTD.

¥

74.02
72.48
18.00

U.S. Dollars

2004¥

107.51105.20
18.00

2005
$

0.69
0.67
0.17

Consolidated Statements of Shareholders’ Equity
Years Ended March 31, 2005 and 2004

Thousands
Outstanding
Number of
Shares ofCommonStock

BALANCE, APRIL 1, 2003
464,131
Adjustment of retained earnings
for newly consolidated subsidiaries
Net income
Cash dividends, ¥16 per share
Bonuses to directors andcorporate auditors
Repurchase of treasury stock(7,837)
Disposal of treasury stock114
Net increase in unrealized gain
on available-for-sale securities
Foreign currency translation
adjustments
BALANCE, MARCH 31, 2004
456,408
Take-over of retained earnings formerger of non-consolidated subsidiaries
Adjustment of retained earnings
for newly consolidated subsidiaries
Net income
Cash dividends, ¥19 per share
Bonuses to directors andcorporate auditors
Repurchase of treasury stock(6,323)
Disposal of treasury stock
31
Shares issued on conversionof convertible debt
3
Net increase in unrealized
gain on available-for-sale securities
Foreign currency translation adjustments
BALANCE, MARCH 31, 2005
450,119

Millions of Yen

CommonStockCapitalSurplusRetained
Earnings

Unrealized
Gain onAvailablefor-sale
Securities¥120,548¥133,340¥163,483¥ 248

Foreign
Currency
Translation
Adjustments¥(383)

Treasury
Stock¥(10,930)

1,189
49,783(7,426)(152)(10,022)
231

113
3,935

120,548

133,453

206,877

(242)
(625)

4,183

(20,721)(28)
286
33,848(8,671)(161)(10,364)
49
2

2
142

¥120,550¥133,455¥232,151(28)¥(653)¥4,325¥(31,036)

Thousands of U.S. Dollars (Note 1)

CommonStock

BALANCE, MARCH 31, 2004
Take-over of retained earnings formerger of non-consolidated subsidiaries
Adjustment of retained earnings
for newly consolidated subsidiaries
Net income
Cash dividends, $0.18 per share
Bonuses to directors and corporate auditors
Repurchase of treasury stock
Disposal of treasury stock
Shares issued on conversion of convertible debt
Net increase in unrealized gain on
available-for-sale securities
Foreign currency translation adjustments
BALANCE, MARCH 31, 2005

CapitalSurplusRetained
Earnings

Unrealized
Gain onAvailablefor-sale
Securities

Foreign
Currency
Translation
Adjustments

Treasury
Stock$1,122,523 $1,242,695 $1,926,405 $38,956 $(5,817) $(192,953)
(259)
2,667
315,190(80,744)(1,501)(96,503)
457
19

16
1,320

(263)
$1,122,542 $1,242,711 $2,161,758 $40,276 $(6,080) $(288,999)

See notes to consolidated financial statements.

Annual Report 200531

Consolidated Statements of Cash Flows
Years Ended March 31, 2005 and 2004

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
Loss on disposal of property, plant and equipment
Loss on impairment of long-lived assets
Loss on devaluation of land
Loss on devaluation of telephone subscription rights
Gain on sales of marketable and investment securities
Equity in earnings of affiliated companies
Changes in assets and liabilities, net of effects fromnewly consolidated subsidiaries:
Increase in notes and accounts receivable(Increase) decrease in inventories
Increase (decrease) in notes and accounts payable
Decrease 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(Increase) decrease in investments in and advances tonon-consolidated subsidiaries and affiliates
Cash collected from long-term loans
Cash advanced for long-term loans
Other
Net cash used in investing activities
FINANCING ACTIVITIES:
Proceeds from short-term bank loans
Repayments of short-term bank loans
Proceeds from long-term debt
Repayments of long-term debt
Dividends paid
Treasury stocks
Other
Net cash used in financing activities
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS
ON CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS INCREASED BY MERGERNET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS OF NEWLYCONSOLIDATED SUBSIDIARIES, BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS, END OF YEAR
See notes to consolidated financial statements.

32

YAMATO TRANSPORT CO., LTD.

2005

2004

2005

¥ 61,741¥ 87,293$ 574,921(27,805)
37,146
1,015
4,597(36,320)
35,663
1,643(258,915)
345,899
9,450
42,807

(427)

897
1,519
(4,093)(531)(3,975)(19,719)(88)
22,292(5,255)
3,145
14,901
76,642(9,470)977(8,724)(29,652)
1,862(46,229)
41,064(183,620)(817)
207,577(48,928)
29,284
138,762
713,683

143(36,443)
8,480(5,353)687(46,946)
6,704
(8)

1,326
(339,350)
78,967(49,850)

(194)
2,942
(2,443)(7,122)(39,990)

6,626
2,684
(3,579)(6,852)(40,684)(1,804)27,391(22,750)(66,316)(372,386)

(105)
1,988
(17,000)(8,667)(10,315)
187(33,912)97(240)(7,427)(9,984)
1,114(16,440)
(81)

(975)
18,512(158,302)(80,705)(96,049)
1,739(315,780)

(11)
156
2,885

(16,141)

(104)
1,448
26,861

114
117,031¥120,030

779
132,393¥117,031

1,061
1,089,777$1,117,699

Notes to Consolidated Financial Statements
Years Ended March 31, 2005 and 2004

1. BASIS OF PRESENTING CONSOLIDATED FINANCIAL
STATEMENTS
The accompanying consolidated financial statements have been prepared inaccordance with the provisions set forth in the Japanese Securities andExchange Law and its related accounting regulations, and in conformity withaccounting principles generally accepted in Japan, which are different incertain respects as to 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 ismore familiar to readers outside Japan. In addition, certain reclassifications
and rearrangements have been made in the 2004 financial statements toconform to the classifications and presentations used in 2005.
The consolidated financial statements are stated in Japanese yen, thecurrency of the country in which Yamato Transport Co., Ltd. (the “Company”) is incorporated and operates. The translations of Japanese yenamounts into U.S. dollar amounts are included solely for the convenience ofreaders outside Japan and have been made at the rate of ¥107.39 to $1,
the approximate rate of exchange at March 31, 2005. 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,
2005 include the accounts of the Company and its 43 significant (40 in2004) subsidiaries (together, the “Group”).
Under the control or influence concept, those companies in which theCompany, 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 are accounted for by the equity method.
The remaining non-consolidated subsidiaries, whose combined assets,
net sales, net income and retained earnings in the aggregate are not significant to the consolidated financial statements, have not been consolidatedwith the Company.
There were no affiliates accounted for by the equity method in 2005.
Two affiliates were accounted for by the equity method in 2004.
Investments in the remaining non-consolidated 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 the investments insuch 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 allocated to identifiable assets, and theremaining amount is recognized as goodwill and amortized on a straight-line
basis over a five-year period, with the exception of minor amounts which arecharged or credited to income 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 eliminated.
b. Recognition of Operating Revenues—The Group recognizes freightcharge income as operating revenues at the time when freight has been
received from the shipping customer for transportation.
c. Cash Equivalents—Cash equivalents are short-term investments that arereadily convertible into cash and that are exposed to insignificant risk ofchanges in value. Cash equivalents include time deposits, certificate ofdeposits and mutual funds investing in bonds that represent short-term
investments, all of which mature or become due within three months of thedate of acquisition.

The difference between cash and time deposits in the accompanying
consolidated balance sheets and cash and cash equivalents in the accompanying consolidated statements of cash flows is as follows:

Cash
Time deposits
TotalTime deposits due
beyond three months
Bank overdraft included in cash
Cash and cash equivalents

Millions of Yen

Thousands of
U.S. Dollars

2005
2004
¥119,694 ¥116,913
342
119
120,036
117,032

2005$1,114,576
3,186
1,117,762

(6)

(63)

(1)
¥120,030 ¥117,031$1,117,699

d. Inventories—Inventories which mainly consist of supplies are stated atcost as determined by the first-in, first-out method.
e. 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 are reported at fair value, and the related
unrealized gains and losses are included in the earnings, (2) held-to-maturity
debt securities, which are expected to be held to maturity with 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 theaforementioned securities, are reported at fair value, with unrealized gains
and losses, net of applicable taxes, reported in a separate component ofshareholders’ equity. The Group has no such trading securities.
Non-marketable 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.
f. Property, Plant and Equipment (See Note 3, Accounting Change)—
Property, plant and equipment are stated at cost. Depreciation of property,
plant and equipment of the Company and its consolidated domestic subsidiaries is computed substantially by the declining-balance method at rates
based on the estimated useful lives of the assets, while the straight-line
method is applied to the buildings acquired after April 1, 1998. The depreciation of property, plant and equipment of foreign consolidated subsidiaries
is computed on the straight-line method over the estimated useful lives of
the assets. The range of useful lives is principally as follows:
Buildings and structures
VehiclesMachinery and equipment

7–60 years
2– 7 years
2–20 years

Maintenance and repairs including minor renewals and improvements
are charged to income as incurred.
g. Long-lived Assets — In August 2002, the Business Accounting Council
issued a Statement of Opinion, “Accounting for Impairment of Fixed Assets,” and in October 2003 the Accounting Standards Board of Japan(“ASB”) issued ASB Guidance No.6, “Guidance for Accounting Standard for
Impairment of Fixed Assets.” These new pronouncements are effective forfiscal years beginning on or after April 1, 2005 with early adoption permitted
for fiscal years ending on or after March 31, 2004.
The Group adopted the new accounting standard for impairment of fixed
assets as of April 1, 2004. The Group reviews its long-lived assets for impairment whenever events or changes in circumstance indicate the carrying
amount of an asset or asset group may not be recoverable. An impairment
loss would be recognized if the carrying amount of an asset or asset groupexceeds 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 ofthe discounted cash flows from the continued use and eventual disposition of
the asset or the net selling price at disposition.
The effect of adoption of the new accounting standard for impairment of
fixed assets was to decrease income before income taxes and minority interests for the year ended March 31, 2005 by ¥ 4,597 million ($42,807 thousand).

Annual Report 200533

h. Other Assets—Amortization of intangible assets is computed on thestraight-line method over the period specified by the Japanese Commercial
Code (the “Code”).
Bond issuance costs are deferred as other assets and amortized on
the straight-line method over a three-year period.
i. Retirement and Pension Plan—The Company and certain consolidated
subsidiaries have a contributory trusteed pension plan and an unfunded
retirement benefits plan. The foreign subsidiaries have a defined contribution
retirement plan. Other consolidated subsidiaries have an unfunded retirement benefits plan.
According to first paragraph of Article 112 of the Defined Benefit
Pension Plan Law, the Company obtained an approval by the Ministry of
Health, Labour and Welfare on March 31, 2004, transferred the premium of
the basic portion of the governmental pension program and additional
portion from the contributory funded defined benefit pension plan to the
cash balance plan.
As a result of this transfer, the Company recognized a gain on thedecrease from pension obligation with transfer to cash balance plan in theamount of ¥40,470 million for the year ended March 31, 2004.
The Company and certain consolidated subsidiaries revised theirretirement benefit regulations on October 1, 2004, and transferred theirunfunded retirement benefits plan to the cash balance plan.
As a result of this transfer, the Company recognized a gain on thedecrease of its retirement benefit obligation in the amount of ¥14,383 million($133,930 thousand) for the year ended March 31, 2005.
Directors and corporate auditors are not covered by the retirement andpension plans described above. Benefits paid to such persons are charged
to income as paid. Any amounts payable to directors and corporate auditors upon retirement are subject to approval of the shareholders.
j. Leases—All leases are accounted for as operating leases. Under Japanese accounting standards for leases, finance leases that deem to transfer
ownership of the leased property to the lessee are to be capitalized, whileother finance leases are permitted to be accounted for as operating leasetransactions if certain “as if capitalized” information is disclosed in the notes
to the lessee’s financial statements.
k. Income Taxes—The provision for income taxes is computed based on
the pretax income included in the consolidated statements of income. The
asset and liability approach is used to recognize deferred tax assets andliabilities for the expected future tax consequences of temporary differences
between the carrying amounts and the tax bases of assets and liabilities.
Deferred taxes are measured by applying currently enacted tax laws to thetemporary differences.

o. 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 theoutstanding 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
statements of income are dividends applicable to the respective years
including dividends to be paid after the end of the year.

3. ACCOUNTING CHANGE
Effective April 1, 2004, the Company adopted the declining-balance methodof depreciation for equipment used for refrigerated delivery service, which,previously, had been depreciated by the straight-line method.
The effects of this change were to increase depreciation by ¥723
million ($6,731 thousand) and to decrease income before income taxes andminority interests by ¥723 million ($6,731 thousand) for the year ended
March 31, 2005.

4. MARKETABLE AND INVESTMENT SECURITIESMarketable and investment securities as of March 31, 2005 and 2004
consisted of the following:

Current:
Government andcorporate bonds
Other
Total

2004

¥

10
101
111

¥ 4,5113,567¥ 8,078$¥14,2291,754
7,068¥23,051¥13,986
1,509
2,173¥17,668$132,494
16,33765,818$214,649¥

Non-current:
Marketable equity securities
Non-marketable equity securities
Other
Total

n. Foreign Currency Financial Statements—The balance sheet accountsof the consolidated foreign subsidiaries are translated into Japanese yen at
the current exchange rate as of the balance sheet date except for shareholders’ equity, which is translated at the historical rate. Differences arisingfrom such translation were shown as “Foreign currency translation adjustments” in a separate component of shareholders’ equity.
Revenue and expense accounts of the consolidated foreign subsidiaries are translated into Japanese yen at the current exchange rates as of thebalance sheet date.

2005

$

93
937
1,030

Information regarding each category of the securities classified asavailable-for-sale and held-to-maturity at March 31, 2005 and 2004 was as follows:

l. 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.
m. Foreign Currency Transactions—All short-term and long-term monetary
receivables and payables denominated in foreign currencies are translated
into Japanese yen at the exchange rates at the balance sheet date.

Thousands of
U.S. Dollars

Millions of Yen

2005

Millions of Yen

2005
Cost

Securities classified as:
Available-for-sale:
Equity securities
Other
Held-to-maturity¥7,0195,010
1,004

Unrealized Unrealized
Gains
Losses¥7,253

¥43

4

Fair
Value

¥14,229
5,010
1,008

Millions of Yen

2004

Securities classified as:
Available-for-sale —equity securities
Held-to-maturity

Cost

Unrealized Unrealized
Gains
Losses¥7,013
9,076¥6,987
7

¥14

Fair
Value

¥13,986
9,083

Thousands of U.S. Dollars

2005
Cost

Securities classified as:
Available-for-sale:
Equity securities
Other
Held-to-maturity

34

YAMATO TRANSPORT CO., LTD.

$65,361
46,6499,350

Unrealized Unrealized
Gains
Losses$67,534
37

$401

Fair
Value

$132,494
46,6499,387

The majority of available-for-sale securities whose fair value is not readily
determinable as of March 31, 2005 and 2004 were as follows:Year Ending March 31

Carrying AmountMillions of Yen

Available-for-sale:
Equity securities
Preferred shares

Thousands of
U.S. Dollars

2005

2004

2005

¥1,7541,000¥1,5091,000$16,337
9,312

Proceeds from sales of available-for-sale securities for the years ended
March 31, 2005 and 2004 were ¥440 million ($4,100 thousand) and ¥3 million, respectively. Gross realized gains and losses on these sales, computedon the moving average cost basis, were ¥427 million ($3,975 thousand) and¥0 million ($0 thousand), respectively, for the year ended March 31, 2005 and¥0 million and ¥0 million, respectively, for the year ended March 31, 2004.
The carrying values of debt securities by contractual maturities forsecurities classified as held-to-maturity at March 31, 2005 are as follows:
Millions of Yen
Held to Maturity

Due in one year or lessDue after one year through five years
Total

¥ 111
893
¥1,004

Annual maturities of long-term debt at March 31, 2005 were as follows:

Thousands of
U.S. Dollars
Held to Maturity$1,0308,320$9,3505. LONG-LIVED ASSETSThe Group reviewed its long-lived assets for impairment as of the year
ended March 31, 2005 and, as a result, recognized an impairment loss of¥4,597 million ($42,807 thousand) as other expense for the asset groups of
the Saikyo Regional Branch and other five regional branches due to continuous operating losses of those units. The carrying amounts of the relevant
asset groups were written down to the recoverable amounts. In the casewhere net selling prices were used as recoverable amounts, relevant buildings were evaluated based on assessed value of fixed assets, and relevantlands were evaluated based on posted land price.

Millions of Yen

Thousands of
U.S. Dollars¥ 2,000
13,421¥15,421$ 18,624
124,974$143,598

2007
2009
Total

At March 31, 2005, land with carrying amount of ¥209 million($1,948 thousand) was pledged as collateral for short-term bank loans of¥37 million ($344 thousand). Marketable securities and investment securities
with a carrying amount of ¥10 million ($93 thousand) and ¥16 million ($146
thousand) were deposited as security for dealings at March 31, 2005.
All outstanding convertible debentures of the Company at March 31,
2005, were convertible into 11,075 thousand shares of common stock of
the Company. The conversion prices are subject to adjustments to reflect
stock splits and certain other events.
The Company has entered into loan commitment agreements amounting
to ¥30,000 million ($279,356 thousand) with financial facilities. The loans
receivable outstanding and the unused balances under these credit facilities
as of March 31, 2005 amounted to ¥0 million ($0 thousand) and ¥30,000
million ($279,356 thousand), respectively.

7. RETIREMENT AND PENSION PLANS
The Company and its consolidated subsidiaries have severance payment
plans for employees.
Under most circumstances, employees terminating their employment
are entitled to retirement benefits determined based on the rate of government bond, years of service and certain other factors. Such retirement
benefits are made in the form of a lump-sum severance payment from theCompany or from the consolidated subsidiaries and annuity payments froma trustee. Employees are entitled to larger payments if the termination is
involuntary, by retirement at the mandatory retirement age, by death, or byvoluntary retirement at certain specific ages prior to the mandatory retirement age. The retirement benefits for directors and corporate auditors arepaid subject to the approval of the shareholders.
The liability for employees’ retirement benefits at March 31, 2005 and2004 consisted of the following:

6. BANK LOANS AND LONG-TERM DEBT
Short-term bank loans at March 31, 2005 and 2004 consisted of notes tobanks and bank overdrafts. The annual interest rates applicable to the bankloans were at 1.375% and ranged from 1% to 6% at March 31, 2005 and2004, respectively.
Long-term debt at March 31, 2005 and 2004 consisted of the following:
Millions of Yen

2005
Unsecured 2.6% bonds due
in July 2004
Unsecured 0.8% bonds due
in December 2004
Unsecured 1.05% bonds due
in December 2007
Unsecured 1.2% convertible
debentures, convertible into
common stock at¥1,211.80 per share,due in September 2009
Total
Less current portion
Total

2004

Thousands of
U.S. Dollars

2005

Projected benefit obligation
Fair value of plan assets
Unrecognized actuarial loss
Net liability

Millions of Yen

Thousands of
U.S. Dollars

2005
2004
¥ 80,367 ¥ 87,154(45,643)(40,293)(21,712)(28,616)¥ 13,012 ¥ 18,245

2005$ 748,369(425,026)(202,179)$ 121,164

The components of net periodic benefit costs for the years ended
March 31, 2005 and 2004 are as follows:¥ 15,000¥ 2,000

13,421
15,421¥15,421$ 18,624

13,42530,425(17,000)¥ 13,425

Thousands of
U.S. Dollars

Millions of Yen

2,000

124,974
143,598$143,598

Based on debt assumption agreements with financial institutions, theCompany has transferred the debt repayment obligation for certain bonds tosuch financial institutions and provided such financial institutions with cash
for the payment of principal and interest on these bonds. As a result of
these transactions, the balance of such bonds has derecognized amounted
to ¥25,000 million ($232,796 thousand) as of March 31, 2005 and 2004
(see Note 11).

Service cost
Interest cost
Expected return on plan assets
Recognized actuarial loss
Amortization of prior service cost
Net periodic benefit costs

2005¥ 4,9811,608

2004¥ 8,665
2,541
(490)
7,110
7,763
(14,383)(39,674)¥ (684) ¥(21,195)

2005$ 46,385
14,96866,209(133,930)$ (6,368)

Assumptions used for the years ended March 31, 2005 and 2004 are
set forth as follows:

Discount rate
Expected rate of return on plan assets
Amortization period of prior service cost
Recognition period of actuarial gain/loss:
Company
Consolidated subsidiaries

2005
2.0%
0.0%
1 year

2004
2.0%
2.0%
1 year

7 years
5 years

7 years
5 years

Annual Report 2005

35

8. SHAREHOLDERS’ EQUITY
Japanese companies are subject to the Code.
The Code requires that all shares of common stock are recorded withno par value and at least 50% of the issue price of new shares is required tobe recorded as common stock and the remaining net proceeds as additional paid-in capital, which is included in capital surplus. The Code permits
Japanese companies, upon approval of the Board of Directors, to issue
shares to existing shareholders without consideration as a stock split. Suchissuance of shares generally does not give rise to changes within theshareholders’ accounts.
The Code also provides that an amount at least equal to 10% of theaggregate amount of cash dividends and certain other appropriations ofretained earnings associated with cash outlays applicable to each period
shall be appropriated as a legal reserve (a component of retained earnings)
until such reserve and additional paid-in capital equals 25% of common
stock. The amount of total additional paid-in capital and legal reserve thatexceeds 25% of the common stock may be available for dividends byresolution of the shareholders. In addition, the Code permits the transfer ofa portion of additional paid-in capital and legal reserve to the common stockby resolution of the Board of Directors.
The Code allows Japanese companies to repurchase treasury stockand dispose of such treasury stock by resolution of the Board of Directors.
The repurchased amount of treasury stock cannot exceed the amountavailable for future dividend plus amount of common stock, additional paidin capital or legal reserve to be reduced in the case where such reduction
was resolved at the shareholders meeting.
In addition to the provision that requires an appropriation for a legal
reserve in connection with the cash payment, the Code imposes certain
limitations on the amount of retained earnings available for dividends. The
amount of retained earnings available for dividends under the Code was¥134,525 million ($1,252,681 thousand) as of March 31, 2005, based on
the amount recorded in the parent company’s general books of account.
Dividends are approved by the shareholders at a meeting held subsequent to the fiscal year to which the dividends are applicable. Semiannualinterim dividends may also be paid upon resolution of the Board of Directors, subject to certain limitations imposed by the Code.

9. INCOME TAXESThe Company and its domestic subsidiaries are subject to Japanese national and local income taxes which, in the aggregate, resulted in normal
effective statutory tax rates of approximately 40% and 41% for the years
ended March 31, 2005 and 2004, respectively.
On March 31, 2003, a tax reform law concerning enterprise tax wasenacted in Japan which changed the normal effective statutory tax rate from
41% to 40%, effective for years beginning on or after April 1, 2004. The
deferred tax assets and liabilities which will be realized on or after April 1,
2004 are measured at the effective tax rate of 40% as at March 31, 2004.

36

YAMATO TRANSPORT CO., LTD.

The tax effects of significant temporary differences which resulted indeferred tax assets and liabilities at March 31, 2005 and 2004 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Deferred tax assets:
Current:
Accrued expenses
Enterprise tax
Legal welfare expense
Other
Deferred tax assets—current

2005

2004

2005

¥11,410
1,942
1,454
1,151
¥15,957¥10,109
1,501
1,187
969
¥13,766$106,253
18,082
13,536
10,721$148,592¥ 6,687
2,542$ 45,634
23,603

2,636

26,406

Non-current:
Liability for employees’
retirement benefits¥ 4,901
Investment securities
2,534
Investment in and advances tonon-consolidated subsidiaries
and affiliates
2,836
Loss on impairment oflong-lived assets
1,861
Loss on devaluation of
telephone subscription rights
525
Unrealized profit
607
Unrealized gain on
available-for-sale securities(2,884)
Other
200
Less valuation allowance(3,768)Deferred tax assets—non-current ¥ 6,812

17,329
475
572

4,888
5,657

(2,789)(12)(2,636)¥ 7,475(26,857)
1,861(35,088)$ 63,433

A reconciliation between the normal effective statutory tax rate for theyear ended March 31, 2005 and the actual effective tax rate reflected in theaccompanying consolidated statements of income is as follows:

Normal effective statutory tax rate
Per capita levy of local taxes
Valuation allowance
Other—net
Actual effective tax rate

2005
40.0%
3.4
1.8
0.1
45.3%

The difference between the normal effective statutory tax rate for theyear ended March 31, 2004 and the actual effective tax rate was not exceeding 5% of the normal effective statutory tax rate.

10. LEASES

11. CONTINGENT LIABILITIES

Total lease payments under finance lease arrangements that do not transfer
ownership of the leased property to the lessee were ¥3,259 million($30,350 thousand) and ¥3,252 million for the years ended March 31, 2005
and 2004, respectively.
Pro forma information of leased property such as acquisition cost,
accumulated depreciation and obligations under finance leases that do nottransfer ownership of the leased property to the lessee on an “as if capitalized” basis for the years ended March 31, 2005 and 2004 was as follows:

Contingent liabilities for guarantees and items of a similar nature at March
31, 2005 amounted to ¥214 million ($1,989 thousand) representing guarantees of loans of an unaffiliated company jointly and severally by the Company and 18 other unaffiliated companies and ¥86 million ($797 thousand)as guarantees of loans of a non-consolidated subsidiary.
Based on debt assumption agreements with financial institutions, theCompany has transferred the debt repayment obligation for certain bonds tosuch financial institutions. At March 31, 2005, the Company had contingent
obligations of ¥25,000 million ($232,796 thousand) in respect of these bonds.

Millions of Yen

2005
Buildings
andStructures Vehicles

Acquisition cost
Accumulated depreciation
Net leased property

¥99
22
¥77

¥180
132
¥ 48

12. NET INCOME PER SHARE

MachineryandEquipment

Other
Assets¥16,768
8,821¥ 7,947

¥96
40
¥56

Total

Reconciliation of the differences between basic and diluted net income pershare (“EPS”) for the years ended March 31, 2005 and 2004 is as follows:¥17,143
9,015¥ 8,128
Year Ended March 31, 2005

Thousands of U.S. Dollars

2005
Buildings
andStructures Vehicles

Acquisition cost$919
Accumulated depreciation 203
Net leased property$716

MachineryandEquipment

Other
Assets$1,673 $156,145
1,227
82,141$ 446 $ 74,004

Total$890 $159,627
371
83,942$519 $ 75,685

Basic EPS—Net income
available to commonshareholders
Effect of dilutive
securities—
Convertible bonds
Diluted EPS—Net income
for computation

Millionsof YenNet
IncomeThousandsof Shares
Weighted-average
Shares¥33,735

455,771

101

11,075¥33,836

Millionsof YenNet
IncomeU.S.
Dollars

Yen
EPS¥74.02$0.69

466,846¥72.48$0.67

Thousandsof Shares
Weighted-average
Shares

EPS

461,598¥107.51

Millions of Yen

2004
Buildings
andStructures Vehicles

Acquisition cost
Accumulated depreciation
Net leased property

¥99
11
¥88

¥288
190
¥ 98

MachineryandEquipment

Other
Assets

Total

Year Ended March 31, 2004

¥16,1149,290¥ 6,824

¥106
58
¥ 48

¥16,607
9,549¥ 7,058

Basic EPS—Net income
available to commonshareholders¥49,625
Effect of dilutive securities—
Convertible bonds
101
Diluted EPS—Net income
for computation¥49,726

Obligations under finance leases which included the imputed interest
expense portion, and noncancelable operating leases as of March 31, 2005
and 2004 were as follows:
Millions of Yen

2005

Due within one year
Due after one year
Total

Yen

11,078472,676¥105.20

Thousands of
U.S. Dollars

2005

Finance
Lease

Operating
Lease

Finance
Lease

Operating
Lease¥2,636
5,492¥8,128

¥ 88
124
¥212

$24,548
51,137$75,685

$ 818
1,154
$1,972Millions of Yen

2004

Due within one year
Due after one year
Total

Finance
Lease

OperatingLease¥3,063
3,995¥7,058

¥456
92
¥548

Annual Report 200537

13. SEGMENT INFORMATION
Information about industry segments, geographic segments and operating revenues to foreign customers of the Company and consolidated subsidiaries for theyears ended March 31, 2005 and 2004 is as follows:(1) Industry Segments
Millions of Yen

2005
Delivery

BIZLogistics

Home
Convenience

e-Business

Financial

Eliminations
or Corporate

a. Operating revenues and operating income (loss):
Operating revenues to customers
Intersegment operating revenues
Total operating revenues
Operating costs and expenses
Operating income (loss)¥ 866,752
30,238896,990
860,723¥ 36,267¥ 110,691
10,734
121,425
117,274¥
4,151¥ 43,384
14,97158,35558,993¥(638)¥ 24,432
14,776
39,20836,299¥ 2,909¥ 26,644
6,882
33,52627,099¥ 6,427¥ (77,601)(77,601)(79,688)¥ 2,087

1,071,903
1,020,700¥ 51,203b. Assets, depreciation and capital expenditures:
AssetsDepreciation
Capital expenditures¥ 407,299
28,25026,657¥¥ 16,442
740
458¥ 22,263
891
906¥ 86,163
6,064
11,632¥ 98,307
189
483¥ 676,156
37,14640,966

Consolidated

45,682
1,012
830

Consolidated¥1,071,903

Thousands of U.S. Dollars

2005
Delivery

BIZLogistics

Home
Convenience

e-Business

Financial

Eliminations
or Corporate

a. Operating revenues and operating income (loss):
Operating revenues to customers
Intersegment operating revenues
Total operating revenues
Operating costs and expenses
Operating income (loss)$8,071,067
281,568
8,352,635
8,014,921$ 337,714$1,030,737
99,9571,130,694
1,092,038$ 38,656$403,986
139,411543,397549,337$ (5,940)$227,510
137,589
365,099
338,011$ 27,088$248,106
64,087
312,193
252,345$ 59,848$(722,612)(722,612)(742,042)$ 19,430

9,981,406
9,504,610$ 476,796

b. Assets, depreciation and capital expenditures:
AssetsDepreciation
Capital expenditures$3,792,708
263,060
248,225$ 425,381
9,426
7,733

$153,111
6,891
4,264

$207,313
8,300
8,433

$802,335
56,463
108,319$ 915,418
1,759
4,500

$6,296,266
345,899
381,474

Consolidated$9,981,406

Millions of Yen

2004
BIZLogistics

Deliverya. Operating revenues and operating income:Operating revenues to customers
Intersegment operating revenues
Total operating revenues
Operating costs and expenses
Operating income¥ 834,495
22,600857,095
821,547¥ 35,548

b. Assets, depreciation and capital expenditures:
AssetsDepreciation
Capital expenditures¥ 405,577
27,80635,753

¥

¥

¥

Home
Convenience

e-Business

Financial

Eliminations
or Corporate

90,236
6,400
96,63693,5483,088¥ 42,611
12,94455,55555,545¥10¥ 21,082
13,43734,51932,072¥ 2,447¥ 22,920
7,680
30,60024,254¥ 6,346¥ (63,061)(63,061)(62,281)¥(780)

1,011,344
964,685¥ 46,659

39,056
1,007
678¥ 18,167
687
1,183¥ 19,308
850
857¥ 52,709
5,123
8,972

¥ 117,975
190
144¥ 652,792
35,66347,587¥1,011,344

Notes: Delivery: Small-parcel delivery services such as Takkyubin (door-to-door parcel delivery) and Kuroneko Mail
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 home cleaning 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

38

YAMATO TRANSPORT CO., LTD.

(2) Geographic Segments
The geographic segments of the Company and consolidated subsidiaries for the years ended March 31, 2005 and 2004 are summarized as follows:
Millions of Yen

2005
Eliminations
or Corporate

Japan

U.S.A.

EuropeAsia

Operating revenues:
Outside customers
Interarea
Total operating revenues

Consolidated¥1,048,648
5,128
1,053,776¥ 13,925
2,665
16,590¥ 3,905
1,356
5,261

¥ 5,425
2,256
7,681

¥

(11,405)(11,405)

1,071,903

Operating costs and expenses
Operating income
Assets1,003,398¥ 50,378¥ 554,329¥¥

16,219
371
2,853

5,135
¥ 126
¥ 1,793

7,354
¥ 327
¥ 3,439(11,406)¥1¥ 113,742

1,020,700¥ 51,203¥ 676,156

Consolidated¥1,071,903

Thousands of U.S. Dollars

2005
Japan

U.S.A.

EuropeAsia

Eliminations
or Corporate

Operating revenues:
Outside customers
Interarea
Total operating revenues$9,764,858
47,751
9,812,609$129,669
24,817
154,486$36,363
12,62348,986$50,516
21,00871,524$ (106,199)(106,199)

9,981,406

Operating costs and expenses
Operating income
Assets9,343,498$ 469,111$5,161,834

151,028$ 3,458$ 26,564

47,810$ 1,176$16,693

68,479$ 3,045$32,023(106,205)$
6$1,059,152

9,504,610$ 476,796$6,296,266

Eliminations
or Corporate

Consolidated$9,981,406

Millions of Yen

2004
Japan

U.S.A.

EuropeAsia

Operating revenues:
Outside customers
Interarea
Total operating revenues¥ 991,961
3,998
995,959¥ 11,576
2,459
14,035¥ 3,610
1,143
4,753

¥ 4,197
1,975
6,172

¥

(9,575)(9,575)

1,011,344

Operating costs and expenses
Operating income (loss)
Assets949,648¥ 46,311¥ 515,953¥¥

13,879
156
2,738

4,768
¥
(15)
¥ 1,734

5,932
¥ 240
¥ 2,068(9,542)¥(33)¥ 130,299

964,685¥ 46,659¥ 652,792¥1,011,344

Operating revenues and assets are summarized by geographic area based on the countries where subsidiaries are located.
(3) Operating Revenues to Foreign Customers
Operating revenues to foreign customers for the years ended March 31, 2005 and 2004 amounted to ¥26,201 million ($243,982 thousand) and ¥22,831 million, respectively.

14. SUBSEQUENT EVENTS
a. Shares purchase
In order to offer new settlement service, the Company acquired shares of
new subsidiaries.
(1) On April 1, 2005, the Company acquired 589,400 shares of Fine Credit
Co., Ltd. for ¥5,589 million ($52,047 thousand). As a result, the Company
owns 70.0% of issued shares of Fine Credit Co., Ltd.
Financial information of Fine Credit Co., Ltd. for the year ended March
31, 2004 is as follows:
Operating revenues: ¥13,259 million ($123,464 thousand)Ordinary profit:¥1,125 million ($10,477 thousand)Net income:¥567 million ($5,284 thousand)Common stock:¥500 million ($4,656 thousand)Assets:¥140,822 million ($1,311,310 thousand)(2) On April 1, 2005, the Company acquired 68,000 shares of World Computer Center Co., Ltd. for ¥61 million ($573 thousand). As a result, theCompany owns 85.0% of issued shares of World Computer Center Co., Ltd.
Financial information of World Computer Center Co., Ltd. for the year ended
June 30, 2004 is as follows:
Operating revenues: ¥1,338 million ($12,455 thousand)Ordinary profit:¥1 million ($8 thousand)Net loss:¥22 million ($203 thousand)Common stock:¥40 million ($372 thousand)Assets:¥353 million ($3,290 thousand)b. Appropriations of Retained Earnings
The following appropriations of retained earnings at March 31, 2005 wereapproved at the Company’s shareholders meeting held on June 29, 2005:
Millions of Yen

Year-end cash dividends,¥9.00 ($0.08) per share
Bonuses to directors and corporate auditors¥4,051
58

Thousands of
U.S. Dollars$37,723
540

Annual Report 2005

39

Independent Auditors’ Report

To the Board of Directors of
Yamato Transport Co., Ltd.:We have audited the accompanying consolidated balance sheets of Yamato Transport Co., Ltd. (the “Company”) andconsolidated subsidiaries (together, the “Group”) as of March 31, 2005 and 2004, and the related consolidated statements ofincome, shareholders' equity, and cash flows for the years then ended, all expressed in Japanese yen. These consolidated
financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in Japan. Those standards requirethat we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting principles used and significant estimates madeby management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Yamato Transport Co., Ltd. and consolidated subsidiaries as of March 31, 2005 and 2004, and theconsolidated results of their operations and their cash flows for the years then ended in conformity with accounting principles
generally accepted in Japan.
As discussed in Note 3, the Company changed its method of accounting for depreciation of equipment used for refrigerated delivery service as of April 1, 2004.
As discussed in Note 2.g, the Group adopted the new accounting standard for impairment of fixed assets as of April 1, 2004.
As discussed in Note 14.a, the Company acquired the shares of Fine Credit Co., Ltd. and World Computer Center Co.,
Ltd. on April 1, 2005 to make them subsidiaries.
Our audits also comprehended the translation of Japanese yen amounts into U.S. dollar amounts and, in our opinion,such translation has been made in conformity with the basis stated in Note 1. Such U.S. dollar amounts are presented solely
for the convenience of readers outside Japan.

June 29, 200540

YAMATO TRANSPORT CO., LTD.

Corporate Data

Yamato Transport Spin-off Preparation

Swan Co., Ltd.

Head OfficeCo., Ltd.

Swan Net Co., Ltd.

Yamato Transport Co., Ltd.
16-10, Ginza 2-chome, Chuo-ku, Tokyo
104-8125, Japan
Telephone: (03) 3541-3411
Facsimile: (03) 5565-3427

Domestic Offices
3,279

Major Subsidiaries
and Affiliates
Delivery
Okinawa Yamato Transport Co., Ltd.*
Okinawa Catworks Co., Ltd.*
Yamato Autoworks Co., Ltd.*

Swan Charcoal Distribution Co., Ltd.

BIZ-Logistics
Yamato Logistics Co., Ltd.*
Yamato Packing Service Co., Ltd.*
Konan Industry Co., Ltd.*
Yamato Transport U.S.A., Inc.*
Yamto Transport (U.K.) Ltd.
Yamato Transport Europe B.V.*
Yamato Transport (Hong Kong) Ltd.*
Yamato Transport (S) Pte. Ltd.*
Taiwan Yamato International Logistics Inc.*
Yamato Transport (Canada) Inc.
Yamato Transport (M) Sdn. Bhd.
Yamato (Shanghai) Logistics Co., Ltd.
Yamato International Logistics Co., Ltd.

e-BusinessYamato System Development Co., Ltd.*
Yamato Career Service Co., Ltd.*
Yamato Systems U.S.A., Inc.*
Yamato Contact Service Co., Ltd.
Dream Create Co., Ltd.
Financial
Yamato Financial Co., Ltd.*
Yamato Lease Co., Ltd.**Consolidated subsidiaries

Kyoto Yamato Transport Co., Ltd.*

Home Convenience

Common Stock

Kobe Yamato Transport Co., Ltd.*

Yamato Home Convenience Co., Ltd.*

Authorized: 530,000,000 shares

Miyagi Green Liner Co., Ltd.*

Hokkaido Yamato Home Convenience

Issued: 469,478,756 shares

Iwate Green Liner Co., Ltd.*

Co., Ltd.*

Saitama Green Liner Co., Ltd.*

Tohoku Yamato Home Convenience

Stock Exchange Listing

Kanagawa Green Liner Co., Ltd.*

Co., Ltd.*Tokyo Stock Exchange

Niigata Green Liner Co., Ltd.*

Hokushinetsu Yamato Home

Kanazawa Green Liner Co., Ltd.*

Convenience Co., Ltd.*

Aichi Green Liner Co., Ltd.*

Chubu Yamato Home Convenience

Transfer Agent andRegistrar

Chugoku Green Liner Co., Ltd.*

Co., Ltd.*

Mizuho Trust & Banking Co., Ltd.

Okayama Green Liner Co., Ltd.*

Kansai Yamato Home Convenience

Shikoku Green Liner Co., Ltd.*

Co., Ltd.*

Annual Meeting

Fukuoka Green Liner Co., Ltd.*

Chugoku Yamato Home Convenience

The annual meeting of shareholders is

Kagoshima Green Liner Co., Ltd.*

Co., Ltd.*

normally held in June in Tokyo, Japan.

Yamato · Staff · Supply Co., Ltd.*

Shikoku Yamato Home Convenience

Yamato Management Service Co., Ltd.*

Co., Ltd.*

Auditors

Shizuoka Green Liner Co., Ltd.

Kyushu Yamato Home Convenience

Deloitte Touche Tohmatsu

Kumamoto Green Liner Co., Ltd.

Co., Ltd.*(by Tohmatsu & Co., the Japanese

Yamato Architects & Design Co., Ltd.

Book Service Co., Ltd.*

member of Deloitte Touche Tohmatsu)

Principal Shareholders

Stock Price Range
Percentage of total
shares outstanding

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

8.72%

Japan Trustee Services Bank, Ltd. (Trust Account)

5.03%(Tokyo Stock Exchange)

(Yen)

High

Low

First quarter

1,809

1,469

Second quarter

1,875

1,480

Third quarter

1,577

1,400

Fourth quarter

1,704

1,476

Mizuho Bank, Ltd.

3.67%

Yamato Employees’ Shareholding Association

2.97%

Meiji Life Insurance Co.

2.61%

State Street Bank and Trust Company 505103

2.15%

Yamato Trading-Partner Shareholding Association

2.04%

Sumitomo Life Insurance Co.

1.80%

Financial Institutions

39.3%

1.61%

Securities Companies

1.5%

1.52%

Other Institutions

5.9%

32.13%

Foreign Investors

31.6%

The Chase Manhattan Bank, NA London
JPMCB Omnibus US Pension Treaty JASDEC 380052
Total

Distribution of Shareholders

Individuals and Others

21.7%

Total

100.0%(As of March 31, 2005)

Annual Report 2005

41

YAMATO TRANSPORT CO., LTD.

A n n u a l R e p o r t 2005

Printed in Japan on recycled paper