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

September 30, 2006

Japan Transcity Corporation and Consolidated Subsidiaries
Consolidated Balance Sheets

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

Millions of Yen
September 30,
March 31,
2006
2006
(Unaudited)Thousands of
U.S. Dollars
September 30,
2006(Unaudited)¥$

Inventories
Deferred tax assets
Other current assets
Total current assets

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

Investments and other assets:
Investment securities
Investments in unconsolidated subsidiaries andaffiliates
Deferred tax assets
Lease deposits
Other assets
Allowance for doubtful Accounts
Total investments and other assets
Total assets¥

See accompanying Notes to Consolidated Financial Statements.
-1-

13,447270¥

14,332
275

114,9322,308

950
13,590(19)
14,52180
458
1,652
30,428865
13,192(18)
14,039
106
512
1,567
30,831

8,119116,154(162)
124,111
684
3,914
14,120260,069

27,73741,89018,71088,337(41,714)46,62327,734
41,631
19,38788,752(41,633)
47,119237,068
358,034
159,915755,017(356,530)
398,487

10,59911,73790,590

2,901
526
930
1,505
(50)
16,411

2,814
491
929
1,473
(51)
17,393

24,795
4,496
7,948
12,863(427)
140,265

93,462¥

95,343$

798,821Current liabilities:
Short-term borrowings
Current maturities of long-term debt
Trade payables:
Notes
Accounts
Accrued expenses
Income taxes payable
Other current liabilities
Total current liabilities
Long-term debt
Employee retirement benefit liability
Guarantee deposits received
Deferred tax liabilities for revaluation
Accrued severance indemnities for officers
Other long-term liabilities
Total liabilities
Equity (Notes 1(c) and 4):
Common stock
Capital surplus
Retained earnings
Less, treasury stock, at cost
Total shareholders' equity
Other components of equity
Minority interests
Total equity
Total liabilities and equity

Millions of Yen
September 30,
March 31,
2006
2006
(Unaudited)Thousands of
U.S. Dollars
September 30,
2006(Unaudited)

¥

$

¥

Minority interests
Shareholders’ equity:
Common stock
Capital surplus
Retained earnings
Land revaluation decrement
Net unrealized gains on available-for-sale securities
Foreign currency translation adjustment
Less, treasury stock, at cost
Total shareholders’ equity
Total liabilities, minority interests andshareholders’ equity

-2-

3,182
1,667

¥

3,208
1,357

27,196
14,248

1,498
5,957
1,762
650
1,577
16,29325,687
4,377
4,436
5,281
463
1,577
58,114

1,447
6,645
1,654
1,392
1,550
17,253
26,339
4,814
4,466
5,281
436
1,754
60,34312,80350,915
15,0605,555
13,479139,256
219,547
37,41037,91545,137
3,957
13,479496,701

8,411
6,720
17,279(126)
32,284
1,797
1,267
35,34893,462-

71,88957,436
147,684(1,077)
275,932
15,35910,829302,120
798,821

-

1,201

-

-

8,411
6,720
16,256(2,018)
4,467
(9)
(28)
33,799-95,343--¥$

Japan Transcity Corporation and Consolidated Subsidiaries
Consolidated Statements of Operations (Unaudited)
For the Six Months Ended September 30, 2006 and 2005

Operating revenue (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
Impairment loss on fixed assets
Other, net
Income (loss) before income taxes andminority interests
Income taxes:
Current
Deferred
Total income taxes
Less, minority interests in net income of consolidated
subsidiaries
Net income (loss)¥

Millions of Yen
2006
2005

Thousands of
U.S. Dollars
2006

41,415$¥40,15339,0652,350

38,0282,125

333,889
20,085

88
(198)

69
(189)

752
(1,692)

114
6
10

127
(2,879)118(2,754)

975
51
86

2,360

(629)

20,171

653
240
893

784
165
949

5,581
2,051
7,632

97

55

829

1,370

¥

(1,633)$Yen
Per share:
Net income (loss):-Basic-Diluted
Cash dividends¥

See accompanying Notes to Consolidated Financial Statements.
-3-353,974

20.52
19.42
4.00

¥

11,710U.S. Dollars(24.82)
3.50

$

0.18
0.17
0.03

Japan Transcity Corporation and Consolidated Subsidiaries
Consolidated Statements of Changes in Equity (Unaudited)
For the Six Months Ended September 30, 2006 and 2005
Number ofcommonshares issued

Balance at March 31, 2005
Net loss for the period
Cash dividends
Bonuses to directors and corporate auditors
Adjustment for applicable income taxes
Conversion of convertible bonds
Net change in unrealized gains onavailable-for-sale securities, net of applicable
income taxes
Translation adjustment
Fractional shares acquired, net
Balance at September 30, 2005

64,262,367
2,757,243

67,019,610

Common
stock

¥

¥

7,884
527

8,411

Capitalsurplus¥¥Retainedearnings

6,193
527

6,720

¥

¥

15,731(1,633)
(289)
(42)
-

13,767Land
Net unrealized
revaluation
gains onincrement
available-for(decrement) sale securities
Millions of Yen

Foreigncurrencytranslation
adjustment

¥

¥

¥

2,717
(3,973)-(1,256)

¥

¥

2,188
-

1,193
3,381

¥

(58)
-

12
(46)

¥

¥

Treasury
stock

Total
shareholders’equity(13)-

34,642(1,633)(289)(42)(3,973)
1,054

(6)
(19)

1,193
12
(6)
30,958

Note: The number of authorized common shares at March 31, 2005 and September 30, 2005 was 240,000,000 shares, respectively.
The number of shares of treasury stock at March 31, 2005 and September 30, 2005 was 52,261 shares and 64,207 shares, respectively.
Shareholders' equity
Number ofcommonshares issued

Balance at March 31, 2006
Net income for the period
Cash dividends
Bonuses to directors and corporate auditors
Treasury stock acquired, net
Changes of other items during the current interim
periodBalance at September 30, 2006

67,019,610
67,019,610

Common
stock

¥

¥

8,411
8,411

Capitalsurplus

¥

¥

6,720
6,720

Retainedearnings¥¥

16,256
1,370
(301)
(46)
17,279Other components of equity
Foreign
Net unrealized
Land
Total
currency
gains onTreasuryshareholders' available-for- revaluationtranslation
stock
decrement
equityadjustment
sale securities
Millions of Yen
¥

¥

(28)
(98)
(126)

¥

¥

31,359
1,370
(301)
(46)
(98)
32,284

¥

¥

4,467
-

¥

(2,018)
-

(651)
3,816

¥

(2,018)38,180-$ (17,248)-(5,564)32,616$ (17,248)

¥

¥

(9)
8
(1)

Total othercomponentsof equity

¥

¥

2,440
(643)
1,797

Minority
interests

¥

¥

1,201
-

Total equity¥

35,000
1,370
(301)
(46)
(98)

66
1,267

¥

(577)
35,348

10,265-$ 299,146
11,710(2,573)
(393)
(838)

564
10,829(4,932)$ 302,120

Thousands of U.S. Dollars
Balance at March 31, 2006
Net income for the period
Cash dividends
Bonuses to directors and corporate auditors
Treasury stock acquired, net
Changes of other items during the current interim
periodBalance at September 30, 2006$$

71,88971,889$$57,436-$ 138,940
11,710(2,573)(393)-

57,436$ 147,684

$

$

(239)
(838)

$ 268,026
11,710(2,573)
(393)
(838)

(1,077)$ 275,932

Note: The number of authorized common shares at March 31, 2006 and September 30, 2006 was 240,000,000 shares, respectively.
The number of shares of treasury stock at March 31, 2006 and September 30, 2006 was 80,167 shares and 255,861 shares, respectively.
See accompanying Notes to Consolidated Financial Statements.

-4-

$

$

$

$

(77)
68
(9)

$

$

20,855(5,496)
15,359$$Japan Transcity Corporation and Consolidated Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
For the Six Months Ended September 30, 2006 and 2005

Cash flows from operating activities:
Income (loss) before income taxes and minority interests
Adjustments for:
Depreciation
Net reversal for employee retirement benefit liability
Increase in trade receivables
Decrease (increase) in inventories
Decrease in trade payables
Impairment loss on fixed assets
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
Decrease (increase) 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 in short-term borrowings
Dividends paid
Other, net
Net cash (used in) provided by financing
activities
Effect of exchange rate changes on cash andcash equivalents
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of
periodCash and cash equivalents at end of period

See accompanying Notes to Consolidated Financial Statements.

-5-¥

Millions of Yen
2006
2005

Thousands of
U.S. Dollars
2006

2,360

$

¥

(629)

20,171

1,331
(437)
(489)
26
(626)
229
2,394
129
(191)
(1,394)
938

1,225
(335)
(552)
(154)
(455)
2,879
(377)
1,602
119
(181)
(235)
1,305

11,376(3,735)(4,179)222(5,350)1,957
20,462
1,103(1,633)(11,915)8,017(1,064)6
5(1,053)(1,629)(203)(328)(2,160)(9,094)51
43(9,000)

(359)
(26)
(301)
(99)

8,776
(7,213)
(694)
(289)
(7)

(3,068)(222)(2,573)
(846)

(785)

573

(6,709)

15
(885)

21
(261)

128
(7,564)

14,332
13,447¥

11,21910,958$122,496
114,932

Japan Transcity Corporation and Consolidated Subsidiaries
Notes to Consolidated Financial Statements

Information for the six months ended September 30, 2006 and 2005 was unaudited.
1.

Basis of Presentation(a) Basis of presenting consolidated financial statements
The accompanying consolidated financial statements of Japan Transcity Corporation (the "Company")
and its consolidated subsidiaries (together with the Company, the “Japan Transcity Group”) have been
prepared in accordance with the provisions set forth in the Securities and Exchange Law of Japan, andon the basis of accounting principles generally accepted in Japan for interim reporting, which are
different in certain respects as to the application and disclosure requirements of International Financial
Reporting Standards. These consolidated financial statements are compiled from the original
consolidated financial statements in Japanese prepared by the Company as required by the Securities
and Exchange Law of Japan and submitted to the Director of Kanto Finance Bureau of Japan.
(b) Principles of consolidation
The accompanying consolidated financial statements include the accounts of the Company and its
significant subsidiaries. Investment in significant unconsolidated subsidiaries and affiliates isaccounted for by the equity method. Investment in unconsolidated subsidiaries and affiliates notaccounted for by the equity method is stated at cost. The number of consolidated subsidiaries,
unconsolidated subsidiaries and affiliates for the six months ended September 30, 2006 and 2005 was
as follows:

Consolidated subsidiaries
Unconsolidated subsidiaries and affiliates, accounted
for by the equity method
Unconsolidated subsidiaries, stated at cost
Affiliates, stated at cost
(c)

2006

2005

27

27

5
13
4

5
12
4

Accounting policies
These unaudited semi-annual consolidated financial statements should be read in conjunction with theaudited consolidated financial statements for the year ended March 31, 2006. There were no changes
in accounting policies that were applied in the accompanying consolidated financial statements for thesix months ended September 30, 2006 from those for the year ended March 31, 2006, except for thefollowing paragraph.
(Accounting standard for presentation of net assets in the balance sheet)
The Accounting Standards Board of Japan (“ASBJ”) issued “Accounting Standard for Presentation of
Net Assets in the Balance Sheet (ASBJ Statement No.5)” and its Implementation Guidance “Guidanceon Accounting Standard for Presentation of Net Assets in the Balance Sheet (ASBJ Guidance No. 8)”
on December 9, 2005, which are applied for the period ending on May 1, 2006. The Standard
requires presenting the equity section in the balance sheet as similar to International Financial
Reporting Standards. The Japan Transcity Group has adopted these accounting standards from thecurrent six months ended September 30, 2006. If the previous accounting method had been applied
for the consolidated balance sheet at September 30, 2006, equity would have amounted to ¥34,081
million ($291,291 thousand). This accounting change resulted in no effect on the profit or loss of theJapan Transcity Group for the six months ended September 30, 2006.

-6-

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 ¥117 to $1, theapproximate rate of exchange at September 30, 2006. The inclusion of such dollar amounts is solely
for the convenience of the readers and is not intended to imply that Yen and the assets and liabilities
originating in Yen have been or could be readily converted, realized or settled in dollars at ¥117 to $1
or any other rate.

3.

Contingent Liabilities
At September 30, 2006 and March 31, 2006, the Japan Transcity Group was contingently liable forguarantees of indebtedness principally of affiliates in the amounts of ¥1,497 million ($12,795
thousand) and ¥1,688 million, respectively.

4.

Subsequent Event
On November 14, 2006, the Board of Directors of the Company declared interim cash dividends of ¥4
per share to shareholders of record as of September 30, 2006, which amounted to ¥267 million ($2,282
thousand) 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, 2006 and 2005 was as follows:Integrated logistics
services
For the six months ended September 30, 2006:
Operating revenue:
External customers
Inter-segment sales
Total operating revenue
Operating expenses
Operating income

For the six months ended September 30, 2005:
Operating revenue:
External customers
Inter-segment sales
Total operating revenue
Operating expenses
Operating income

¥

¥

¥

¥

40,582
14
40,59638,404
2,192

39,225
14
39,23937,217
2,022

Others

¥

¥

¥

¥

833
689
1,522
1,382
140

928
1,623
2,551
2,453
98

Total
Millions of Yen

¥

¥

¥

¥

41,415703
42,11839,786
2,332

40,153
1,637
41,79039,6702,120

Elimination

¥

¥

¥

¥

(703)
(703)
(721)
18

(1,637)(1,637)(1,642)5Consolidated

¥

¥

¥

¥

41,41541,41539,0652,350

40,15340,15338,0282,125

Thousands of U.S. Dollars
For the six months ended September 30, 2006:
Operating revenue:
External customers
Inter-segment sales
Total operating revenue
Operating expenses
Operating income$$

346,854120
346,974
328,239
18,735

$

$

7,120
5,889
13,00911,812
1,197$$

353,974
6,009
359,983
340,051
19,932$$

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

-8-(6,009)(6,009)(6,162)
153$$

353,974
353,974
333,889
20,085

6. Condensed Financial Statements of Japan Transcity Corporation (Parent)

Presented below are the non-consolidated balance sheets, non-consolidated statements ofoperations and changes in equity of Japan Transcity Corporation, the parent company.

Non-Consolidated Balance Sheets
Japan Transcity Corporation (Parent)

Millions of Yen
September 30,
2006(unaudited)
Current 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 to
subsidiaries and affiliates
Lease deposits
Other assets
Allowance for doubtful accounts
Total investments and other assets
Total assets¥-9-

10,617336

March 31,2006¥

10,084
2,039

Thousands of
U.S. Dollars
September 30,
2006(unaudited)$

90,744
2,872

13,82519
255
1,573
26,625

13,192
16
307
1,595
27,233

118,162
162
2,180
13,444
227,564

64,587(28,032)
36,55564,300(27,576)
36,724552,026(239,590)
312,436

9,936

10,92984,923

3,949
890
1,407
(50)
16,132
79,312

3,928
890
1,427
(50)
17,12481,08133,752
7,607
12,025(427)
137,880
677,880¥$

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
Deferred tax liabilities
Accrued severance indemnities for officers
Other long-term liabilities
Total liabilities
Equity:Common stock
Capital surplus
Retained earnings
Less, treasury stock, at cost
Total shareholders' equity
Other components of equity
Total equity
Total liabilities and equity

Millions of Yen
September 30,
March 31,2006
2006
(unaudited)Thousands of
U.S. Dollars
September 30,
2006(unaudited)

¥

$

¥

Shareholders’ equity:
Common stock
Capital surplus
Retained earnings
Land revaluation decrement
Net unrealized gains on available-for-salesecurities
Less, treasury stock, at cost
Total shareholders’ equity
Total liabilities and shareholders’ equity- 10 -

4,532
1,268
7,913
852
400
1,314
16,27920,914
3,265
5,281
1,455
412
288
47,894

¥

4,200
1,003
8,289
835
1,180
1,348
16,855
21,375
3,657
5,281
1,673
392
284
49,517

38,735
10,83867,632
7,282
3,419
11,231
139,137
178,752
27,90645,137
12,4363,521
2,461
409,350

8,411
6,720
14,814(126)
29,8191,599
31,41879,312

-

-

8,411
6,720
14,271(2,018)

-

-

4,208
(28)
31,56481,081-¥$

71,88957,436
126,615(1,077)
254,863
13,667
268,530
677,880

Non-Consolidated Statements of Operations (Unaudited)Japan Transcity Corporation (Parent)
For the Six Months Ended September 30, 2006 and 2005¥

Operating revenue
Operating expenses
Operating income
Other income (expenses):
Interest and dividend income
Interest expenses
Miscellaneous, net
Income before income taxes
Income taxes:
Current
Deferred
Total income taxes
Net income¥

Millions of Yen
2006
2005

Thousands of
U.S. Dollars
2006

38,477$¥37,60636,9991,478

36,2701,336

316,231
12,632

159
(143)
12
28
1,506

154
(142)
147
159
1,495

1,359
(1,222)103240
12,872

387
229
616

538
39
577

3,308
1,957
5,265

890

¥

918

Yen
Per share:
Net income :-Basic-Diluted
Cash dividends¥- 11 -

328,863

13.32
12.60
4.00

¥

$

7,607

U.S. Dollars

13.95
11.60
3.50

$

0.11
0.11
0.03

Non-Consolidated Statements of Changes in Equity (Unaudited)Japan Transcity Corporation (Parent)
For the Six Months Ended September 30, 2006 and 2005

Commonstock

Balance at March 31, 2005
Net income for the period
Cash dividends
Bonuses to directors and corporate auditors
Adjustments for applicable income taxes
Conversion of convertible bonds
Net change in unrealized gains onavailable-for-sale securities, net of
applicable income taxes
Fractional shares acquired, net
Balance at September 30, 2005

¥

¥

7,884
527

8,411

Capitalsurplus

¥

¥

6,193
527

6,720

Retainedearnings¥¥

11,332
918
(289)
(42)
-

11,919Landrevaluation
increment(decrement)
Millions of Yen
¥

¥

2,717
(3,973)-(1,256)

Net unrealized
gains onavailable-forsale securities

¥

¥

2,042
-

1,144
3,186

¥

¥

Shareholders' equity

Commonstock

Balance at March 31, 2006
Net income for the period
Cash dividends
Bonuses to directors and corporate auditors
Treasury stock acquired, net
Changes of other items during the current
interim period
Balance at September 30, 2006

¥

¥

8,411
8,411

Capitalsurplus

¥

¥

6,720
6,720

Retainedearnings¥¥

14,271
890
(301)
(46)
14,814

¥

¥

(28)
(98)
(126)

¥

¥

29,374
890
(301)
(46)
(98)
29,819

(13)
-

(6)
(19)

¥

¥

30,155
918
(289)
(42)
(3,973)
1,054

1,144
(6)
28,961Other components of equity
Net unrealized
gains onLand
Total otheravailable-forrevaluation
components ofsale securities
decrement
equityTotal
shareholders'equityTreasurystockMillions of Yen

Total
shareholders’equityTreasury
stock

¥

¥

4,208
(591)
3,617

¥

¥

(2,018)(2,018)

¥

¥

2,190
(591)
1,599

Total equity¥¥

31,564
890
(301)
(46)
(98)
(591)
31,418

Thousands of U.S. Dollars
Balance at March 31, 2006
Net income for the period
Cash dividends
Bonuses to directors and corporate auditors
Treasury stock acquired, net
Changes of other items during the current
interim period
Balance at September 30, 2006$$

71,88971,889$$57,43657,436$$

121,974
7,607(2,573)(393)
126,615

$

$

(239)
(838)
(1,077)- 12 -$$

251,060
7,607(2,573)(393)(838)
254,863$$

35,966(5,051)30,915$$(17,248)(17,248)$$

18,718(5,051)
13,667$$

269,778
7,607(2,573)(393)(838)(5,051)
268,530