Japan Transcity Corporation
Semi-Annual
Consolidated Financial Statements(Unaudited)

September 30, 2004

ChuoAoyama PricewaterhouseCoopersJapan Transcity Corporation and Consolidated Subsidiaries
Consolidated Balance Sheets

AssetsCurrent assets:
Cash and cash equivalents
Short-term investments
Trade receivables:
Notes
Accounts
Allowance for doubtful accounts

Millions of Yen
September 30,
March 31,2004
2004(Unaudited)Thousands ofU.S. Dollars
September 30,
2004(Unaudited)¥$Inventories
Deferred tax assets
Other current assets
Total current assets

Property and equipment, at cost:
Land
Buildings and structures
OtherLess, accumulated depreciation
Net property and equipment

Investments and other assets:
Investment securities
Investments in and long-term loans tounconsolidated subsidiaries and affiliates
Deferred tax assets
Lease deposits
Other assets
Allowance for doubtful Accounts
Total investments and other assets¥

See accompanying Notes to Consolidated Financial Statements.

-1-

13,590270¥

11,752
119

122,432
2,432

936
12,127(21)
13,042
1,985
448
1,543
30,878935
12,341(18)
13,258
2,063
454
1,108
28,754

8,433
109,252(189)117,496
17,883
4,036
13,901
278,180

31,33340,494
18,78190,608(41,136)
49,472

31,34340,19318,74390,279(40,570)
49,709282,279
364,811
169,198
816,288(370,594)
445,694

6,760

7,327

60,901

2,497
3,244
889
1,341
(111)
14,62094,970

2,492
2,972
882
1,351
(124)
14,90093,36322,49629,225
8,009
12,081(1,000)131,712855,586¥$

Millions of Yen
September 30,
March 31,2004
2004(Unaudited)
Liabilities, Minority Interests and Shareholders' Equity
Current liabilities:
Short-term borrowings¥
Current maturities of long-term debt
Trade payables:Notes
Accounts

8,045
8,459

¥

8,300
2,057

Thousands ofU.S. Dollars
September 30,2004(Unaudited)$72,477
76,207

Accrued expenses
Income taxes payable
Other current liabilities
Total current liabilities

1,473
5,640
7,113
1,646
621
1,510
27,394

1,377
5,418
6,795
1,639
615
1,424
20,83013,27050,81164,081
14,8295,595
13,604
246,793Long-term debt
Employee retirement benefit liability
Guarantee deposits receivedDeferred tax liabilities for revaluation
Accrued severance indemnities for officers
Other long-term liabilities

19,618
9,043
4,433
1,910
376
280

25,206
9,114
4,501
1,903
397
218

176,739
81,46839,937
17,207
3,387
2,523

985

832

8,874

7,792
5,959
13,032
2,852
1,793
(45)
(452)
30,931
94,9707,792
5,908
12,292
2,842
2,164
(35)
(601)
30,36293,36370,19853,685
117,405
25,694
16,153(405)(4,072)
278,658
855,586

Contingent liabilities (Note 3)
Minority interests in consolidated subsidiaries

Shareholders' equity (Note 4):
Common stock
Capital surplus
Retained earnings
Land revaluation increment
Net unrealized gains on available-for-sale securities
Foreign currency translation adjustment
Less, treasury stock, at cost
Total shareholders' equity
¥-2-¥

$

Japan Transcity Corporation and Consolidated Subsidiaries
Consolidated Statements of Income (Unaudited)
For the Six Months Ended September 30, 2004 and 2003

Operating revenues (Note 5)¥Operating expenses (Note 5)
Operating income
Other income (expenses):
Interest and dividend income
Interest expenses
Equity in net earnings of unconsolidated
subsidiaries and affiliates
Other, net
Income before income taxes and minority
interests
Income tax expenses :Current
Deferred
Total income tax expenses
Less, minority interests in net income of consolidated
subsidiaries
Net income¥

Millions of Yen
2004
2003

Thousands ofU.S. Dollars
2004

38,551$¥35,89836,927
1,624

34,824
1,074

332,675
14,631

60
(214)

49
(232)

541
(1,928)

105
60
11

133
(13)
(63)

945
541
99

1,635

1,011

14,730

619
21
640

611
(173)
438

5,577
189
5,766

24

19

216

971

¥

554$YenPer share:
Net income:-Basic-Diluted
Cash dividends¥See accompanying Notes to Consolidated Financial Statements.

-3-347,306

15.93
12.34
3.00

¥

8,748

U.S. Dollars

9.07
8.42
3.00

$

0.14
0.11
0.03

Japan Transcity Corporation and Consolidated Subsidiaries
Consolidated Statements of Shareholders' Equity (Unaudited)
For the Six Months Ended September 30, 2004 and 2003
Number ofcommonshares issued

Balance at March 31, 2003
Net income for the period
Cash dividends
Bonuses to directors and statutory auditors
Reversal of land revaluation incrementNet change in unrealized gains on available-for-salesecurities, net of applicable income taxes
Translation adjustment
Purchase of treasury stock and fractional shares
Balance at September 30, 2003

63,613,246-Balance at March 31, 2004
Net income for the period
Cash dividends
Bonuses to directors and statutory auditors
Increase in retained earnings for the change in scopeof consolidation
Reversal of land revaluation increment
Net change in unrealized gains on available-for-salesecurities, net of applicable income taxes
Translation adjustment
Conversion of convertible bonds
Fractional shares acquired, net
Balance at September 30, 2004

63,613,246-

63,613,246

Common stock

Capital surplus¥

¥

¥
¥

7,792
7,792
7,792-

¥
¥

5,908
5,908
5,908
-

Land
Net unrealized gains
revaluation
on available-for-saleincrement
securities
Millions of Yen

Retainedearnings¥¥¥

11,514
554
(251)
(37)
20
11,80012,292
971
(244)
(39)

¥

¥
¥

2,885
(20)
2,865
2,842-

¥

¥
¥

522
776
1,298
2,164
-

Foreign currencytranslation
adjustment

¥

¥
¥

(11)
18
7(35)
-Treasurystock

¥

¥¥

(174)
(424)
(598)
(601)----

62
(10)

10-

--

63,613,246

7,792

51
5,959

-

2,852

(371)
1,793

(10)
(45)

155(6)
(452)

¥¥

¥

13,032¥¥¥¥Thousands of U.S. Dollars
Balance at March 31, 2004
Net income for the period
Cash dividends
Bonuses to directors and statutory auditors
Increase in retained earnings for the change in scopeof consolidation
Reversal of land revaluation increment
Net change in unrealized gains on available-for-salesecurities, net of applicable income taxes
Translation adjustment
Conversion of convertible bonds
Fractional shares acquired, net
Balance at September 30, 2004$$

70,198-$53,225-$

110,7398,748(2,198)(352)$

25,604-$

19,495-$(315)-$(5,414)
---

558
(90)

90-

-

-

70,198460
53,685

117,405

25,694(3,342)
16,153

(90)
(405)

1,396
(54)
(4,072)$$$

Note: The number of authorized common shares at March 31, 2004 and September 30, 2004 was 240,000,000 shares, respectively.
The number of shares of treasury stock at March 31, 2004 and September 30, 2004 was 2,807,251 shares and 2,101,814 shares, respectively.

See accompanying Notes to Consolidated Financial Statements.

-4-$$$

Japan Transcity Corporation and Consolidated Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
For the Six Months Ended September 30, 2004 and 2003

Cash flows from operating activities:
Income before income taxes and minority interests
Adjustments for:
Depreciation
Net (reversal) provision for employee retirement
benefit liability
Decrease in trade receivables
Decrease in inventories
Increase (decrease) in trade payables
Other, net
Sub-totalInterest and dividend received
Interest paid
Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities:
Increase in property and equipment and intangibles(Increase) decrease in short-term investments
Other, net
Net cash used in investing activities
Cash flows from financing activities:
Increase in long-term debt
Repayment of long-term debt(Decrease) increase in short-term borrowings
Increase in treasury stock
Dividends paid
Net cash provided by (used in) financing
activities
Effect of exchange rate changes on cash andcash equivalents
Net increase (decrease) in cash and cashequivalents
Cash and cash equivalents at beginning ofperiod
Increase in cash and cash equivalents upon
inclusion of additional subsidiary onconsolidation
Cash and cash equivalents at end of period

See accompanying Notes to Consolidated Financial Statements.

-5-¥

¥

Millions of Yen
2004
2003

Thousands ofU.S. Dollars
2004

1,635

$

¥

1,011

14,730

1,214

1,295

10,937

(75)
390
78
228
(276)
3,194
94(210)
(677)
2,401

182
383
88(402)(909)
1,648
84(238)
(765)
729

(676)
3,514
703
2,054
(2,487)
28,775847(1,892)(6,099)21,631

(978)
(66)
(176)
(1,220)(1,088)
819
183
(86)

(8,811)(595)(1,585)(10,991)

2,504(1,385)
(356)
(6)
(247)

1,211
(1,698)
263
(424)
(253)

22,559(12,478)(3,207)(54)(2,225)

510

(901)

4,595

(2)

(2)

(19)

1,689

(260)

15,216

11,752

10,408105,874

149
13,590¥28
10,176$

1,342
122,432

Japan Transcity Corporation and Consolidated Subsidiaries
Notes to Consolidated Financial Statements
Information for the six months ended September 30, 2004 and 2003 was unaudited.
1.

Significant Accounting Policies

The accompanying consolidated financial statements of Japan Transcity Corporation (the "Company") andits consolidated subsidiaries (together with the Company, the “Japan Transcity Group”) have been preparedin accordance with the provisions set forth in the Securities and Exchange Law of Japan, and in conformity
with accounting principles and practices generally accepted in Japan for interim reporting, which aredifferent in certain respects from the application and disclosure requirements of International AccountingStandards. Certain items presented in the original consolidated financial statements in Japanese submittedto the Director of Kanto Finance Bureau in Japan have been reclassified in these financial statements forthe convenience of readers outside Japan.
The consolidated financial statements are not intended to present the consolidated financial position, resultsof operations and cash flows in accordance with accounting principles and practices generally accepted incountries and jurisdictions other than Japan.
The accompanying consolidated financial statements include the accounts of the Japan Transcity Group.
Investment in significant unconsolidated subsidiaries and affiliates is accounted for by the equity method.
Investment in unconsolidated subsidiaries and affiliates not accounted for by the equity method is stated atcost. The number of consolidated subsidiaries, unconsolidated subsidiaries and affiliates for the six
months ended September 30, 2004 and 2003 was as follows:

Consolidated subsidiaries
Unconsolidated subsidiaries and affiliates, accounted forby the equity method
Unconsolidated subsidiaries, stated at cost
Affiliates, stated at cost

2004

2003

27246123

7103

There were no changes in accounting principles or practices that were applied in the accompanying
consolidated financial statements for the six months ended September 30, 2004 from those for the year
ended March 31, 2004.
Certain comparative figures have been reclassified to conform with the current period's presentation.

2.

U.S. Dollar Amounts

The Japan Transcity Group maintains its accounting records in Japanese Yen. The U.S. dollar amounts
included in the accompanying consolidated financial statements and notes thereto represent the arithmetic
results of translating Japanese Yen into U.S. dollars at a rate of ¥111 to $1, the approximate rate ofexchange at September 30, 2004. The inclusion of such dollar amounts is solely for the convenience ofthe readers and is not intended to imply that Yen and the assets and liabilities originating in Yen have beenor could be readily converted, realized or settled in dollars at ¥111 to $1 or any other rate.

3.

Contingent Liabilities

At September 30, 2004 and March 31, 2004, the Japan Transcity Group was contingently liable forguarantees of indebtedness principally of affiliates in the amounts of ¥2,277 million ($20,514 thousand)and ¥2,416 million, respectively.

-6-4.

Subsequent Event

On November 16, 2004, the Board of Directors of the Company declared interim cash dividends of ¥3 pershare to shareholders of record as of September 30, 2004, which amounted to ¥185 million ($1,667thousand) in aggregate.

-7-5. Segment Information
The Japan Transcity Group’s operations are classified into two major segments: Integrated logistics services and other services.
Information by industry segment for the six months ended September 30, 2004 and 2003 were as follows:Integrated logistics
services
For the six months ended September 30, 2004:
Operating revenues:
Outside customers
Inter-segment sales
Total operating revenues
Operating expenses
Operating income

For the six months ended September 30, 2003:
Operating revenues:
Outside customers
Inter-segment sales
Total operating revenues
Operating expenses
Operating income¥

¥

¥

¥

37,071
14
37,08535,564
1,521

34,716
1
34,71733,734983

Others

¥

¥

¥

¥

1,480
896
2,376
2,293
83

1,182
1,437
2,619
2,511
108

TotalMillions of Yen¥

¥

¥

¥

38,551910
39,46137,857
1,604

35,898
1,438
37,33636,245
1,091

Elimination¥

¥

¥

¥

(910)
(910)
(930)
20

(1,438)(1,438)(1,421)(17)

Consolidated¥

¥

¥

¥

38,551
38,551
36,9271,624

35,89835,89834,824
1,074

Thousands of U.S. Dollars
For the six months ended September 30, 2004:
Operating revenues:
Outside customers
Inter-segment sales
Total operating revenues
Operating expenses
Operating income$$

333,973126
334,099
320,396
13,703$$

13,333
8,073
21,406
20,658748$$

347,306
8,199
355,505
341,054
14,451$$

Geographic segment information is not shown, as operating revenues of overseas consolidated subsidiaries was not material.
Information for overseas sales is not disclosed, as such sales were not material.

-8-(8,199)(8,199)(8,379)180$$

347,306
347,306
332,675
14,631

6. Condensed Financial Statements of Japan Transcity Corporation (Parent)
Presented below are the condensed non-consolidated balance sheets, non-consolidated statements ofincome and shareholders’ equity of Japan Transcity Corporation, the parent company.
Non-Consolidated Balance Sheets
Japan Transcity Corporation (Parent)

AssetsCurrent assets:
Cash and cash equivalents
Short-term investments
Trade receivables, net of allowance for
doubtful accounts
Inventories
Deferred tax assets
Other current assets
Total current assets
Property and equipment, at costLess, accumulated depreciation
Net property and equipment
Investments and other assets:
Investment securities
Investments in and long-term loans tosubsidiaries and affiliates
Deferred tax assets
Lease deposits
Other assets
Allowance for doubtful accounts
Total investments and other assets

Millions of Yen
September 30,
March 31,2004
2004
(unaudited)Thousands ofU.S. Dollars
September 30,
2004(unaudited)¥$¥Liabilities and Shareholders' Equity
Current liabilities:
Short-term borrowings
Current maturities of long-term debt
Trade payables
Accrued expenses
Income taxes payable
Other current liabilities
Total current liabilities
Long-term debt
Employee retirement benefit liability
Deferred tax liabilities for revaluation
Accrued severance indemnities for officers
Other long-term liabilities
Shareholders' equity:
Common stock
Capital surplus
Retained earnings
Land revaluation increment
Net unrealized gains on available-for-salesecurities
Less, treasury stock, at cost
Total shareholders' equity

¥

¥

-9-

11,513
38

¥

8,224
38

103,721342

12,22617
230
1,336
25,36064,487(27,566)
36,921

12,57418
260
1,073
22,18764,372(27,129)
37,243

110,144153
2,072
12,036228,468
580,964(248,342)
332,622

6,271

6,823

56,495

3,074
2,530
851
1,281
(109)
13,89876,179

3,008
2,257
849
1,331
(122)
14,14673,576

27,694
22,793
7,667
11,540(982)
125,207686,297

5,681
7,812
7,446
809
404
1,147
23,29914,813
7,854
1,910
343
225

¥¥4,196
1,353
7,153
851
428
1,194
15,175
20,354
7,950
1,903
350
175

$

$

51,18070,37967,081
7,288
3,640
10,333
209,901
133,450
70,757
17,207
3,090
2,027

7,792
5,959
9,921
2,852

7,792
5,908
9,699
2,842

70,19853,68589,37825,694

1,663(452)
27,73576,1792,029(601)
27,66973,576

14,982(4,072)249,865
686,297¥$

Non-Consolidated Statements of Income (Unaudited)Japan Transcity Corporation (Parent)
For the Six Months Ended September 30, 2004 and 2003¥

Operating revenues

Millions of Yen20042003Thousands of
U.S. Dollars
2004

35,639$¥33,281

321,072

34,695944

32,752529

312,567
8,505

Income before income taxes

119(143)
(27)
(51)
893

93
(150)
(18)
(75)
454

1,072
(1,289)
(243)
(460)
8,045

Income tax expenses:
Current
Deferred
Total income tax expenses
Net income

370
8378
515

419
(199)
220
234

3,333
72
3,405
4,640

Operating expenses
Operating income
Other income (expenses):
Interest and dividend income
Interest expenses
Miscellaneous, net¥¥$Yen
Per share:
Net income :-Basic-Diluted
Cash dividends¥- 10 -

8.44
6.65
3.00

¥

U.S. Dollars

3.83
3.38
3.00

$0.08
0.06
0.03

Non-Consolidated Statements of Shareholders' Equity (Unaudited)Japan Transcity Corporation (Parent)
For the Six Months Ended September 30, 2004 and 2003
Commonstock

Balance at March 31, 2003
Net income for the period
Cash dividends
Bonuses to directors and statutory auditors
Reversal of land revaluation increment
Net change in unrealized gains on available-for-salesecurities, net of applicable income taxes
Purchase of treasury stock and fractional shares
Balance at September 30, 2003
Balance at March 31, 2004
Net income for the period
Cash dividends
Bonuses to directors and statutory auditors
Reversal of land revaluation increment
Net change in unrealized gains on available-for-salesecurities, net of applicable income taxes
Conversion of convertible bonds
Fanctional shares acquired, net
Balance at September 30, 2004

¥

¥
¥

¥

7,792
7,792
7,792
7,792

Capital surplus

¥

¥
¥

¥

5,908
5,908
5,908
51
5,959

Net unrealized gains onLandavailable-for- salerevaluation
securities
increment
Millions of Yen

Retainedearnings¥

¥
¥

¥

9,531
234(251)
(37)
20
9,497
9,699
515(244)
(39)
(10)
9,921

¥

¥¥¥

2,885
(20)
2,865
2,842
10
2,852

¥

¥
¥

¥

452
744
1,196
2,029(366)1,663Treasurystock¥

¥¥

¥

(174)
(424)
(598)
(601)
155
(6)
(452)

Thousands of U.S. Dollars
Balance at March 31, 2004
Net income for the period
Cash dividends
Bonuses to directors and statutory auditors
Reversal of land revaluation increment
Net change in unrealized gains on available-for-salesecurities, net of applicable income taxes
Conversion of convertible bonds
Fanctional shares acquired, net
Balance at September 30, 2004$$

70,19870,198$$53,225460
53,685$$87,3784,640(2,198)(352)(90)
89,378- 11 -$$

25,60490
25,694$$

18,279(3,297)
14,982$$(5,414)
1,396(54)(4,072)