Seino Transportation Co., Ltd.
Annual Report 2003
Year Ended March 31, 2003

Profile
Seino Transportation Co., Ltd. (the “Company”) was founded
as a trucking company in 1930 and incorporated under its
current name in 1946. The Company’s headquarters is locatedin Ogaki in central Japan. Capitalizing on a growing Japanesemarket and the extensive domestic expressway network,
Seino has steadily developed into one of the nation’s leading
trucking companies.
While maintaining customer service as its top priority, theCompany has worked hard to optimize its network. With a
total of 418 truck terminals throughout Japan, 158 of which
are owned by the Company and 260 byits subsidiaries, Seino is able to provide
efficient transportation services
nationwide. Overseas, international
forwarding operations have beentransferred to the joint venturecompany, Schenker-Seino Co. Ltd., andthe Company’s global network andcutting-edge IT system are being
effectively utilized to expand thebusiness. The Company has also spun
off its customs brokerage business, thereby founding Seino
Customs Clearance Service Co., Ltd. As a result, the synergies
between these two companies are enhancing the Company’scompetitiveness.
To further provide customers with satisfying services as aleading company, the Seino Group (together with theCompany, the “Seino Group”) designated Less-than-TruckLoad (LTL) commercial cargo transportation for the domestic
market as its groupwide core business, and will focus
management resources accordingly. Seino is pursuing astrategy of alliances with other distribution companies in orderto maximize the Group’s existing strengths and shore up its
business base. One step ahead of the changing distribution
market, Seino is creating a new model for distribution
services, and will continue to move down the “Road to
Success” to become a highly profitable company.

Contents
Financial Highlights ………………………………………… 1
To Our Shareholders, Customers and Friends……………… 2
Aiming to be Recognized as the Leader in
LTL Commercial Cargo Transportation— Further Development of the Commercial Cargo No.1 Plan — … 4
Review of Operations ……………………………………… 8
Financial Review ……………………………………………10
Six-year Summary ……………………………………………11
Consolidated Balance Sheets ………………………………12
Consolidated Statements of Operations …………………13
Consolidated Statements of Shareholders’ Equity ………14
Consolidated Statements of Cash Flows …………………15
Notes to Consolidated Financial Statements ……………16
Report of Independent Auditors ……………………………23
Board of Directors / Corporate Data ………………………24
Seino Group …………………………………………………25

Forward-Looking Statements:
In this annual report, statements other than historical facts areforward-looking statements that reflect the plans andexpectations of the Company. These forward-looking statements
involve risks, uncertainties and other factors that may cause theCompany’s actual results and achievements to differ materiallyfrom those anticipated in these statements.

Seino Transportation Co., Ltd. and Consolidated Subsidiaries

Financial Highlights
For the Years March 31, 2003, 2002, 2001, 2000 and 1999
Thousands of
U.S. Dollars*Millions of Yen
2003

2002

2001

2000

1999

2003

For the year:
Operating revenues ...................
Operating income .......................

¥ 409,399¥ 418,835 ¥ 352,595 ¥ 354,255 ¥ 314,773 $3,411,658

10,194

Income (loss) before income
taxes and minority interests ...
Net income (loss) .......................

3,543

895

2,146

1,664

84,95021,841

25,036(28,875)

6,286

7,385

182,008

13,622

16,475(18,403)

3,043

2,991

113,517

1999

2000

2001

2002

2003

1999

2000

2001

2003

2003

1999

2000

2001

2003

2003

20
15

Yen
Net income (loss) per share:-Basic......................................
-Diluted ...................................

¥

77.48
63.41

¥

U.S. Dollars*

99.73 ¥ (122.00) ¥20.11 ¥

19.56 $

0.65

77.52

16.63

16.10

0.53

(122.00)

Thousands of
U.S. Dollars*Millions of Yen

10
5
0
-5
-10

At year-end:-15

Cash and cash equivalents,and short-term investments ...

¥ 73,445

Property and equipment, net ofaccumulated depreciation......

242,864

236,051

166,898

172,323

187,135

2,023,866

Total assets ................................

494,583

522,753453,250447,304

454,880

4,121,525

79,094

132,851

115,540

96,839106,229

659,116

238,825

227,104

201,912220,092

220,792

1,990,208¥ 70,002¥ 32,671 ¥ 130,345 ¥ 130,201 $ 612,042-20

Long-term debt andother long-term liabilities ........
Net assets...................................

Yen
Net assets per share(Yen and U.S. dollars) ...........

¥ 1,366.44

U.S. Dollars*¥ 1,299.33 ¥ 1,334.59 ¥ 1,454.49 ¥ 1,443.86 $11.39*Note: U.S. dollar amounts are translated at ¥120 = US$1 solely for the convenience of readers.

1

A Message from the Management

To Our Shareholders, Customers and Friends

A realignment among top management has takenplace, wherein following approval at the annual
shareholders’ general meeting on June 27, 2003
and at the Board of Directors’ meeting held
immediately thereafter, Yoshikazu Taguchi has
been appointed Chairman and CEO andYoshitaka Taguchi has assumed the post of
President and COO.

Operating Environment
While signs of a recovery were evident during the fiscal
year ended March 31, 2003, as reflected by a healthy
upturn in exports to the U.S. and Asia giving a needed
boost to production, these positive developments did notlead to a real recovery in demand in terms of consumer
spending and capital investment. Moreover, with theongoing deterioration in employment conditions andfalling stock prices, the overall perception is that the
protracted stagnant economy remains firmly entrenched.
In the road freight transportation industry, thebusiness environment continued to present various
challenges. The total volume of domestic freighttransportation continued to decline, while customers
seeking to cut their distribution costs demanded lower
transportation charges. At the same time, more stringent
enforcement of measures directed toward environmental
preservation and safety management in vehicle
operations also resulted in cost increases. The
combination of these factors led to a difficult businessenvironment.

Business Results
In light of these conditions, Seino worked to regain
profitability by reducing costs through groupwide
streamlining of operations centered on the reform oftransportation systems. This included the formulation of2

the Commercial Cargo No.1 Plan as a new three-year
medium-term management plan pivotal to expanding ourshare of the highly profitable LTL commercial cargoconsolidation market. Under the plan, we have been
increasingly focusing our sales efforts on domestic LTL
commercial cargo transportation. More specifically, we
have worked to maintain our physical distribution
channels by accepting freight under 100kg for transport
within the same economic zone (transportation distancewithin a radius of 200km) and maintained earnings
through appropriate freight rates. This involved adjusting
freight rates and loads for long-distance freight(transportation distance of more than 700km). We havealso promoted rapid and highly efficient transportation
services by streamlining arterial transportation, which
resulted in reduced operational costs, such as labor andvehicle costs.
In the area of facilities, we built and opened two
new trucking terminals in Numazu, Shizuoka Prefecture
and Tsurumi, Kanagawa Prefecture, both of which serveas complementary joint distribution processing facilities.
This not only enhanced our handling capabilities, but
through the accompanying sale of older premises andconsolidation of smaller facilities, also helped to further
streamline operations.
Through the merger of the Company’s international
forwarding division with German-based Stinnes AG in
April 2002, and the resulting establishment of SchenkerSeino Co., Ltd., we have enhanced our internationaltransportation business and strengthened our strategic
business alliance with Schenker AG, a German
subsidiary of Stinnes AG. In addition, in October 2002,
we spun off our customs brokerage division, thus
forming Seino Customs Clearance Service Co., Ltd. We
are enhancing competitiveness by pursuing functional
synergies between Seino and these two new companies,
which are essential to our presence in the internationaltransportation market.

As a result of the above-mentioned measures,
while consolidated operating revenues fell by 2.3% to¥409,399 million (US$3,412 million), operating income
jumped 187.7% to ¥10,194 million (US$85 million)
from the previous fiscal term. Net income, however,
was down 17.3% to ¥13,622 million (US$114 million).

Management Strategy and Specific Actions
Commercial cargo services have been positioned as thecore of the Seino Group’s business since the Company’s
inception. This focus has made Seino into one ofJapan’s leading transportation companies. Conversely,
the business environment affecting the distribution
market is undergoing rapid changes, necessitating that
we take action to maintain Seino’s solid position andguarantee that we can continue to provide customers
with excellent, reliable services. We have determinedthat LTL commercial cargo transportation services offer
the greatest market potential and the highest
profitability for the Seino Group. Accordingly, we haveselected LTL commercial cargo transportation services
as the core business for the entire Group and areconcentrating management resources in this field.
In the fiscal year under review, we thus
implemented the Commercial Cargo No.1 Plan. As
previously mentioned, the goal of this medium-term
management plan is to increase our share of the LTL
commercial cargo market, wherein we will seek toshorten transport times and improve reliability bystrengthening LTL cargo capabilities and promoting
efficiencies in arterial transportation. This will in turnhelp us acquire new customers as we expand ourcustomer base for short-distance, medium-sized cargo.
Concurrently, we are pursuing strategic alliances inboth Japan and overseas, and are preparing to use thirdparty logistics and supply chain management in tandemwith our cutting-edge information system to expand
bulk consignment orders. In terms of management, we
will track earnings by business segment and reinforce

our organizational structure. We will also strive to raise
the management efficiency of Group companies,
establish a sound profit structure and pursue maximum
shareholder value.
Through above measures, we project a 0.1%
increase in consolidated operating revenues to ¥410,000
million in the current fiscal year, but expect net income
to fall 8.2% to ¥12,500 million.

Dividends
In line with its basic business policy, the Company
strives to enhance shareholder equity and improve
profitability over the long term, while also paying
regular dividends. For the fiscal year under review, theCompany paid an annual dividend of ¥11.00 (US$0.09)
per share, the same as for the previous fiscal year.
I, and all members of the management team,greatly appreciate the support and encouragement we
receive from the Company’s shareholders, customers
and friends as we continue our efforts to respond to
stakeholder expectations by strengthening the entire
Seino Group through the Commercial Cargo No.1 Plan.
July 2003

Yoshikazu Taguchi
Chairman and Chief Executive Officer

3

Aiming to Be Recognized as the Leader
in LTL Commercial Cargo Transportation― Further Development of the Commercial Cargo No.1 Plan ―Warehouse & PortSankyuWarehouse & Port
Shibusawa Warehouse

Value Added Services
Tokyo Nohin Daiko

3PL
Logiwell

Refrigerated Cargo
Japan Post

International
Transport
Schenker

RemovalArt Corporation
Small Parcel
Keika Express

Lower freight transportation volumes in today’s changing distribution structure, easing of regulations in line with theamendment of three laws affecting distribution, increases in the cost of environmental measures and a surge in fuel charges
have made the transportation industry an even more competitive environment. To counter such circumstances, the Seino
Group has designated LTL commercial cargo distribution for the domestic market as its core business on a Groupwide basis.
The Group is targeting growth despite today’s difficult environment, and is continuing to work to ensure that it maintains its
reputation as a leader in the transportation industry. At present, the collective efforts of the Group are focused on executing
the Commercial Cargo No.1 Plan, a new three-year medium-term management plan implemented from the fiscal year ended
March 31, 2003.

4

F ier ce Competition in the Tr anspor ta tion
Industr y
The operational environment facing the transportationindustry is becoming increasingly severe. The transfer of
production to China, decreases in freight transportation
volumes related to ongoing streamlining of distribution
structures and declines in unit rates for freight havecontinued unabated. Moreover, three laws affecting
distribution (Trucking Business Law, Freight Forwarding
Business Law, and Law of Railway Business Enterprise)
were amended in April 2003. The resulting
implementation of an ex post facto notification system,
which has effectively liberalized freight rates, and theabolition of operating zone regulations, now enabling
businesses to operate anywhere in the country, haveprompted transportation companies to expand the reachof their businesses in pursuit of higher earnings.
Moreover, with the likelihood that this will lead to nondistribution companies such as general trading
companies entering the industry, competition within themarket in which the Seino Group operates has
intensified.
Amid such changes and challenges, the Seino Groupis concentrating its management resources on LTL
commercial cargo transportation in the domestic market,
where market potential and profitability are high. Bymaking the most of the Group’s strengths, namely
outstanding employees, a nationwide network and hightransportation quality, Seino is striving to increase
market share. Despite the severe market environment,
the current volume of freight carried by private cargovehicles is estimated to be as much as 2.5 million tons
annually (the majority of which is cargo shipped within
the same economic zone). Seino will therefore
concentrate its efforts on increasing its share of thisintra-regional LTL commercial cargo business.

Implementa tion of the Commer cial Car g o No. 1
Plan
The following five strategic measures are fundamental
to the Commercial Cargo No. 1 Plan:
1) Acquisition of short-distance, medium-sized cargoclients
2) Achievement of highly efficient transportation
service operations3) Development of a profitable freight rate structure4) Execution of structural reorganization
5) Pursuit of strategic alliances
Acquisition of Shor t-Distance , Medium-Siz ed
Car g o Clients
Seino aims to expand its operations by targeting
medium-sized cargo clients that ship freight within a
200km radius in the same economic zone. Morespecifically, given that this is a highly profitable, active
sector in which performance can be maximized byoperating within a 200km radius, it offers hugeadvantages for the Group.
Ac hie v ement of Highl y Ef ficient Tr anspor ta tion
Ser vice Oper a tions
Seino is pursuing efficiencies through its recently
introduced hub-and-spoke system. The inefficientshipping of freight from customer sites directly todestinations has been abandoned, and a new system has
been adopted that sends all
freight (spokes) to forward
relay stations (hubs) locatedin key regions, and thenefficiently ships the freight tothe various branches(satellites). While fully
capitalizing on its forte inmultiple forwarding services,
the Seino Group is cutting
costs and, in turn, expanding
profits by raising the5efficiency of its transport services through the optimaluse of unused truck space, reduced shipping trips and ontime delivery.
De v elopment of a Pr ofita b le F r eight Ra te
Str uctur e
This effort has entailed an overhaul of previously
unprofitable transport operations and an increase in thefreight rate per ton. In particular, Seino has undertaken
efforts to increase rates for both low-margin, longdistance freight, as well as large-lot freight, thereby
achieving higher profitability.
Ex ecution of Str uctur al Reor g aniza tion
The previous regionally organized structure of Seino
Group companies has been reorganized into a functiondriven organization. The domestic network has been
restructured and expanded by the functions of route,collection and delivery, chartered trucks andinternational freight. By pursuing business efficiencies
Groupwide, Seino has established a structure thatprovides uniformly high-quality transportation services
nationwide. The new structure also makes it possible tocentralize transport management information, whichtranslates into a hugeadvantage over thecompetition.
Pur suit of Str a te g ic
Alliances
Seino is separating its
various operations into
independent and specializedbusinesses andsubsequently forming
strategic alliances between
these companies and other leading companies in the
distribution-related sector. In this way, we are building a“distribution platform” that complements the Group’s
strengths by bolstering functions in need of6

reinforcement. The aim is to establish a “one stop
service” system that can address customers’ everytransport service need as well as generate growth in bulk
consignment orders.

Results of the F ir st Year and Refor ms for
the Second Year of the Commer cial Car g o
No. 1 Plan
In the first year of the Commercial Cargo No. 1 Plan,
Seino worked hard to establish the foundation needed to
execute the plan. The Group enhanced its functional
strength by building and opening new truck terminals at
Numazu and Tsurumi and also consolidated somebranches. These measures have resulted in theestablishment of an efficient transport operations
structure. Further progress was made toward building a“distribution platform” by spinning off the international
forwarding business and customs brokerage business,
respectively, into a joint venture and a specialized
subsidiary. In August 2002, Seino gave advance
notification to the Ministry of Land, Infrastructure andTransport of a 6% change in freight rates, which was
subsequently approved. By November 2002, all 125 ofSeino’s major centersobtained ISO 9001
certification, alongwith a total of 45
sites belonging tothree other Group
companies. With thesuccess of thesemeasures, theCommercial Cargo
No. 1 Plan is on
track. As a result,structural
improvements in
profitability were
noticeable in thesettlement ofaccounts at the end of the fiscal year ended March 31,
2003.
In order to stay on course and make further progresswith the plan during the current fiscal year, Seino willrefine the LTL commercial cargo business by
undertaking reforms in three areas: reforms aimed at
improving the business skills of those in management
positions, organizational reforms and reforms thatprovide incentives for sales drivers.
Reforms aimed at improving the business skills of
those in management positions entail formulating andimplementing a series of management steps—goal
setting, forecasting, action plans, endorsement,
validation and improvement—with the aim ofdeveloping sales skills for proposing customer-oriented,
value-added solutions.
Organizational reforms will be implemented tocreate a speedy, lean organization in which managers candemonstrate their leadership, providing clear instruction
and a division of roles for employees. Seino is aiming
for an organization based on separate commercial zones,
each with its own market strategy, in order that theCompany can provide customers in each zone withcustomized solutions. For instance, in the highly
lucrative Tokyo market, the number of sales staff
engaged in acquiring new accounts will be significantly
increased, while the collection and delivery systems inTokyo’s 23 wards will be strengthened in order toincrease Seino’s share of the highly profitable LTL
commercial cargo market.
Reforms that provide incentives for sales drivers
involve the establishment of a straightforward incentive
scheme with clear evaluation criteria. This will create anenvironment that encourages sales drivers to demonstrate
their individual strengths.
All of these reforms will complement Seino’s
existing strengths: excellent employees, a nationwide
network and high quality transportation services.
Applied as a whole, these reforms specifically target a
2% increase in the Company’s share of the highly

profitable market sector of LTL commercial cargo under
100kg delivered within a 200km radius in a single
economic zone.
Other initiatives include expanding sales ofstrategic products such as the “Super 10” service(express delivery before ten in the morning) and the“Kangaroo Super Express” service (same-day delivery
between Tokyo and Osaka using the Shinkansen). Using
the Internet, Seino will also further develop its“Kangaroo Magic II” service, which provides solid
support for the shipping businesses of customers, tocontribute to an increase in overall business.
By devising measures for exhaustive reductions incosts, such as reducing vehicle idling, use of eco-tires
and cutting printing costs for vouchers and slips, Seino
is working to offset cost pressures such as the increasein the unit price of fuel.
Ultimately, a transportation service is created bypeople. Rather than conspicuous large-scale reforms, themain thrust of measures adopted in the second year of
the plan will be to draw out the strengths and skills of
the Seino Group’s workforce. This, in turn, will enhance
the quality of services. While this type of reform may
not be visible at first glance, consistent implementation
will unquestionably strengthen Seino’s management
structure. This is the first step toward achieving
sustained growth. By working deliberately from theground up, we aim to build a rock-solid brandrecognized by all, or in other words, “If it’s the best incommercial cargo, it must be Seino.”7

Review of Operations

Transportation Services(Millions of Yen)

300,000

200,000

100,000

0

1999

2000

2001

2002

2003

In the transportation industry, the decline in total transportation volumes willapparently continue. At the same time, the increasing sophistication of customer
needs has made it difficult to avoid a high-cost, low-profit structure.
Amid the ongoing challenges of this management environment, the Seino
Group has set a key policy of concentration and specialization of management
resources on LTL commercial cargo consolidation services. Toward this end, theGroup is proceeding with its Commercial Cargo No. 1 Plan, a new three-year
medium-term management plan for retaining its predominance in distribution
services. In the fiscal year under review, which was the first year of the plan,
concerted efforts have been made to standardize and improve the quality oftransportation as well as to acquire and increase volumes of highly profitable freight.
Operating revenues in the transportation services segment fell 2.8% to ¥297,514
million (US$2,479 million), due in part to the spin-off of the international
forwarding business and the cessation of business by some Seino subsidiaries.
The success of cost reduction measures produced a recovery from the operating
loss recorded in the previous fiscal year, resulting in operating income of ¥5,693
million (US$47 million).
A look at results by business segment shows that the LTL commercial cargotransportation business recorded a 2.5% increase in freight volume, owing to theinvestment of resources in strengthening sales capabilities, the establishment of asolid infrastructure and further improvements to the quality of transportation.
In the small parcel transportation business, freight volume increased 1.3% as aresult of aggressive efforts made to increase Seino’s share of the small parcel market
for corporate mail marketing campaigns and mail order activities.*
In the removal business, operating revenues declined 4.4% to ¥3,186 million(US$27 million). This occurred despite an increase in orders and was caused byintensification in competition with other companies in the industry, which led to
declining unit prices. Another factor was the increase in low unit price moving
services for businessmen being transferred without their families.*
In air and sea freight forwarding, the Company aggressively promoted
marketing activities through its coalition with allied companies, and pursued
proactive sales strategies in Japan in a bid to create further demand for freight.
However, the effects of a decline in international air and sea freight forwarding
revenues with the spin-off of businesses and other factors were considerable,
resulting in a 50.3% decline in operating revenues to ¥10,940 million (US$91
million).**As consolidated figures are not available, parent company figures are shown
throughout.

8

Merchandise Sales(Millions of Yen)

100,000

Operating revenues in this segment rose 0.7% to ¥93,322 million (US$778 million),and operating income was up 1.5% to ¥2,846 million (US$24 million).
In automobile sales, stable earnings from the three Toyota dealerships anddemand arising from Gifu Hino Motor’s replacement of trucks with vehicles thatmeet gas emission regulations resulted in a ¥168 million (US$1 million) increase inearnings. Furthermore, aggressive marketing activities by Seino Trading Co., Ltd.,targeting increased sales of products shipped directly from their place of origin
using the Seino Group’s transportation network, resulted in a ¥486 million increasein operating revenues to ¥14,813 million (US$123 million).

80,00060,00040,00020,000

0

1999

2000

2001

2002

2003

Information Services(Millions of Yen)

6,000

Operating revenues in this segment increased 13.7% to ¥5,938 million (US$49
million). However, there was an operating loss of ¥150 million (US$1 million).
Amid restraint and a succession of postponements in capital investment bycompanies, the Seino Group’s own network and distribution streamlining expertise
saw sales for systems development and improvements increase by ¥437 million(US$4 million), which was partly due to an increase in outsourcing contracts,
valued at approximately ¥600 million (US$5 million). However, sales of computerrelated equipment declined to ¥303 million (US$3 million).

4,000

2,000

0

1999

2000

2001

2002

2003

Others(Millions of Yen)

20,00015,00010,000

5,000

0

1999

2000

2001

2002

2003

This segment includes leasing operations conducted by Asahi Leasing Co., Ltd.,equipment installation subcontracting operations conducted by Seino Engineering
Co., Ltd. and travel agency operations conducted by Asahi Travel Service Co., Ltd.,as well as a number of other businesses in the fields of real estate, advertising, taxi
services, insurance, security services and medical-waste disposal. In the fiscal year
under review, by providing high value-added services, the Group promoted
operational activities aimed at creating new demand and securing reasonable returns
on the services provided.
Amid advancing deflation and an uncertain economic climate with no signs ofa recovery in capital investment, operating revenues in this segment declined 15.5%
to ¥12,625 million (US$105 million), despite an unfailing commitment to provide
services to ensure the highest level of customer satisfaction. There were signs of theeffectiveness of cost reductions, however, as operating income increased 24.6% to¥2,108 million (US$18 million).
9Financial Review
Operating Results
Consolidated operating revenues for the year ended March 31, 2003
declined 2.3% to ¥409,399 million (US$3,412 million).
Operating costs of revenues fell 3.6% to ¥368,866 million(US$3,074 million), owing to success in cost reduction measures.
The ratio of operating costs of revenues to operating revenues edged
down 1.3 percentage points to 90.1%.
Selling, general and administrative expenses declined 6.9% to¥30,339 million (US$253 million), while operating income jumped
187.7% to ¥10,194 million (US$85 million).
Other income decreased to ¥11,647 million (US$97 million)
chiefly due to a decrease in reversal of employee retirement benefit
liability to ¥1,542 million (US$13 million).
Consequently, income before income taxes and minority
interests declined 12.8% to ¥21,841 million (US$182 million), andnet income fell 17.3% to ¥13,622 million (US$114 million).
Net income to operating revenues was 3.3%; net income pershare fell ¥21.25 to ¥77.48 (US$0.65); and the return on equity ratio
was 5.8%. Cash dividends per share were ¥11.00 (US$0.09).

Total shareholders’ equity climbed 5.2% to ¥238,825 million(US$1,990 million), while the shareholders’ equity ratio increased
4.9 percentage points to 48.3%.

Cash Flows
On the back of higher operating income, net cash provided byoperating activities rose ¥9,457 million to ¥25,592 million (US$213
million).
Net cash provided by investing activities dropped ¥16,406
million to ¥19,751 million (US$165 million), due to a decrease inproperty and long-term investments as well as short-term
investments.
Net cash used in financing activities rose ¥10,680 million to¥40,963 million (US$341 million) from the impact of such factors as
a net increase in short-term borrowings.
Cash and cash equivalents at end of year increased ¥4,324
million to ¥54,542 million (US$455 million).

Financial Position
Total assets declined 5.4% to ¥494,583 million (US$4,122 million).
Total current assets edged down 0.3% to ¥166,861 million(US$1,391 million). Net property and equipment rose 2.9% to¥242,864 million (US$2,024 million). Investments and other assets
fell 28.9% to ¥84,858 million (US$707 million) on account of adecrease in investment securities.
Despite a decline in short-term borrowings, total current
liabilities rose 10.0% to ¥142,085 million (US$1,184 million) as aresult of an increase in the current portion of long-term debt. In
contrast, long-term debt fell drastically by 71.9% to ¥19,033 million(US$159 million).

Operating income to operating revenues
Net income to operating revenues

Net income to total assets
Return on equity ratio

Shareholders’ equity ratio

(%)

(%)

(%)

4

8
7
6
5
4
3
2
1
0
-1
-2
-3
-4
-5
-6
-7
-8
-9

80

3
2
1
0
-1
-2
-3
-4
-5
-6
1998

10

1999

2000

2001

2002

2003

60

40

20

0
1998

1999

2000

2001

Operating income to operating revenues

Net income to total assets

Net income to operating revenues

Return on equity retio

2002

2003

1998

1999

2000

2001

2002

2003

Seino Transportation Co., Ltd. and Consolidated Subsidiaries

Six-year Summary
For the Years Ended March 31, 2003, 2002, 2001, 2000, 1999 and 1998

Millions of Yen
2003
For the year:
Operating revenues:
Transportation
Merchandise sales
Information services
OthersOperating costs of revenues
Selling, general andadministrative expenses
Operating income
Net income (loss)¥

At year-end:
Current assets
Total assets
Current liabilities
Short-term borrowings
Long-term debt, including current maturities
Shareholders’ equity

2002

409,399
297,514
93,322
5,938
12,625368,866¥

2001

418,835
306,003
92,667
5,224
14,941
382,637¥

2000

352,595
292,969
36,796
4,920
17,910334,034¥1999

354,255
293,319
36,326
5,952
18,658336,311¥

1998

314,773289,376
20,934
4,463—
303,199¥

319,500
295,805
18,933
4,762—
306,692

30,33910,194
13,62232,655
3,543
16,475

17,666895(18,403)

15,798
2,146
3,043

9,910
1,664
2,991

9,792
3,016
5,381

166,861494,583
142,085
14,59061,839238,825

167,395
522,753
129,11744,60170,853
227,104

97,645453,250
127,986
60,013
79,487201,912

194,804
447,304
122,397
57,64482,467220,092

190,931454,880
122,998
62,244
94,867220,792

177,833
431,885
117,845
59,79675,817219,188

Yen
Per share data:
Net income (loss):-Basic-Diluted
Cash dividends

¥

77.48
63.41
11.00

¥

98.73
77.52
11.00

¥

(122.00)(122.00)
11.00

¥

20.11
16.63
11.00

¥

19.56
16.10
11.00

¥

35.18
28.43
11.00

Thousands
Number of shares issued

176,820

176,820

152,919

152,919

152,919

152,919

0.6
0.9
0.7
1.4
49.2
159.2
99.6
55.3

0.5
1.0
0.7
1.4
48.5
155.2
103.8
56.2

0.9
1.7
1.2
2.5
50.8
150.9
94.8
31.3

Percent
Ratios:Operating income to operating
revenues
Net income to operating revenues
Net income to total assets
Return on equity ratio
Shareholders’ equity ratio
Current ratio
Debt equity ratio
Payout ratio

2.5
3.3
2.8
5.8
48.3
117.4
92.6
14.2

Current ratio

0.8
3.9
3.2
7.7
43.4
129.6
115.4
10.1

0.3
(5.2)
(4.1)
(8.7)
44.5
76.3
120.6
(9.1)

Debt equity ratio

Payout ratio

(%)

(%)

(%)

160

120

60

50
120

90

80

60

40

30

20

40

10

30

0

0

0
1998

1999

2000

2001

2002

2003

-10
1998

1999

2000

2001

2002

2003

1998

1999

2000

2001

2002

2003

11

Seino Transportation Co., Ltd. and Consolidated Subsidiaries

Consolidated Balance Sheets
March 31, 2003 and 2002

Thousands of
U.S. Dollars

Millions of Yen

AssetsCurrent assets:
Cash and cash equivalents
Short-term investments (Notes 3 and 5)
Trade receivables
Inventories
Deferred tax assets (Note 11)
Other current assets
Allowance for doubtful accounts
Total current assets¥

Property and equipment, at cost
(Notes 4 and 5):Less, accumulated depreciation
Net property and equipment
Investments and other assets:
Investment securities (Notes 3 and 5)
Investments in and long-term loans to affiliates (Note 3)
Deferred tax assets (Note 11)
Deferred tax assets arising on revaluation (Note 4)
Other assets¥
Liabilities, Minority Interests and Shareholders’ Equity
Current liabilities:
Short-term borrowings (Note 5)
Current portion of long-term debt (Note 5)
Trade payables
Accrued expenses
Income taxes payable
Employees’ savings deposits
Other current liabilities
Total current liabilities¥

Long-term debt (Note 5)
Employee retirement benefit liability (Note 6)
Deferred tax liabilities (Note 11)
Consolidating adjustment account (negative goodwill) (Note 2 (a-ii))
Other long-term liabilities
Commitments and contingent liabilities (Notes 7 and 8)
Minority interests in subsidiaries
Shareholders’ equity (Note 10):
Common stock, no par value – Authorized: 400,000,000 shares;
Issued: 176,820,926 shares in 2003 and 2002
Capital surplus
Retained earnings
Land revaluation decrement (Note 4)
Net unrealized gains on available-for-sale securities
Foreign currency translation adjustment
Less, treasury stock, at cost – 2,103,326 shares in 2003 and 2,867,468 shares in 2002
Total shareholders’ equity¥

12

See accompanying Notes to Consolidated Financial Statements.

2003

2002

54,542 ¥18,90374,794
5,655
6,258
8,371
(1,662)
166,861

50,218 $454,517
19,784
157,525
79,348623,283
6,927
47,125
5,517
52,1507,414
69,758(1,813)(13,850)
167,395
1,390,508

408,145(165,281)
242,864

400,378(164,327)
236,051

62,714
6,093
8,057
120
7,874
84,858494,583

92,181
522,617
5,520
50,775
6,869
67,14290
1,000
14,64765,617
119,307707,151
522,753 $ 4,121,525

14,59042,806
51,686
12,162
5,984
3,809
11,048142,085

¥

¥

2003

3,401,208(1,377,342)
2,023,866

44,601 $
121,583
3,114
356,71753,901
430,717
11,409101,350
2,793
49,867
3,941
31,742
9,358
92,066
129,117
1,184,042

19,03336,972
2,167
19,902
1,020

67,73935,263
2,076
26,592
1,181

158,608
308,100
18,058
165,850
8,500

34,57933,681

288,159

32,47154,876
151,797
(413)
1,642
(745)
(803)
238,825494,583 ¥

32,471
270,592
54,875457,300
140,169
1,264,975(425)(3,442)
1,479
13,683(654)(6,208)(811)(6,692)
227,104
1,990,208
522,753 $ 4,121,525

Seino Transportation Co., Ltd. and Consolidated Subsidiaries

Consolidated Statements of Operations
For the Years Ended March 31, 2003, 2002 and 2001

Thousands of
U.S. Dollars

Millions of Yen

2003
Operating revenues (Note 12)¥

Operating costs and expenses (Notes 6 and 12):
Operating costs of revenues
Selling, general and administrative expenses
Operating income
Other income (expenses):
Interest and dividend income
Interest expenses
Gain (loss) on sale or disposal of property and equipment
Equity in net income (loss) of affiliates
Reversal of employee retirement benefit liability (Note 6)
Loss on settlement of qualified retirement benefit pension plan
Transitional provision of adoption of new accounting standard for retirement
benefits
Amortization of consolidating adjustment account (negative goodwill)
Loss on write-down of investment securities
Gain (loss) on sale of investment securities
Loss on investments in and loans to affiliates
Miscellaneous, net
Income (loss) before income taxes and minority interests
Income tax expenses (benefits) (Note 11)Less, minority interests in net income of subsidiaries
Net income (loss)¥

409,399

2002¥

418,835

2001
¥

2003

352,595$ 3,411,658

368,866
30,339399,205
10,194

382,637
32,655415,292
3,543

334,034
17,666
351,700
895

3,073,883
252,825
3,326,708
84,950

2,805
(803)
619
444
1,542
(863)

4,250
(1,257)(2,664)(224)
18,895—

4,021(1,137)
313
(874)
—
—

23,375(6,692)5,158
3,700
12,850(7,192)

—
6,896
(288)
4
(4)
1,295
11,647
21,841—
6,435(3,792)(605)—
455
21,49325,036(30,976)——
1,492(1,495)(1,114)(29,770)(28,875)—
57,467(2,400)33(33)
10,792
97,058
182,008

6,846
1,373
13,622

7,794
767
16,475(10,652)
180(18,403) $57,05011,441
113,517¥¥Yen

Per share:
Net income (loss):-Basic-Diluted
Cash dividends

See accompanying Notes to Consolidated Financial Statements.

¥

77.48
63.41
11.00

¥

98.73
77.52
11.00

U.S. Dollars¥(122.00) $(122.00)
11.00

0.65
0.53
0.09

13

Seino Transportation Co., Ltd. and Consolidated Subsidiaries

Consolidated Statements of Shareholders’ Equity
For the Years Ended March 31, 2003, 2002 and 2001

Number ofcommonshares issued

Commonstock

CapitalsurplusRetainedearnings

Land
revaluation
decrement

Net unrealized
gains onavailable-forsale securities

Foreigncurrencytranslation
adjustment

TreasurystockMillions of Yen

Balance at March 31, 2000
Net loss for the year
Cash dividends
Bonuses to directors andstatutory auditors
Net unrealized gains onavailable-for-sale securities,
net of applicable income taxes
Translation adjustment
Purchases of 1,195,000 sharesof treasury stock under thestock option plan
Fractional shares acquired, net
Balance at March 31, 2001
Net income for the year
Stocks issued under exchange
offerings (Note 2 (a-ii))
Cash dividends
Bonuses to directors andstatutory auditors
Increase in retained earnings
through consolidation of
additional subsidiaries
Adjustments for elimination ofintercompany profits on
consolidation of additional
subsidiaries
Revaluation decrement on land
Net change in unrealized gains
on available-for-sale securities,
net of applicable income taxes
Translation adjustment
Fractional shares acquired, net
Balance at March 31, 2002
Net income for the year
Treasury stock issued upon
exercise of stock option
Cash dividends
Bonuses to directors andstatutory auditors
Net change in unrealized gains
on available-for-sale securities,
net of applicable income taxes
Translation adjustment
Adjustment for applicable
income taxes
Fractional shares acquired andotherBalance at March 31, 2003

152,919,216 ¥——

31,276 ¥——43,321 ¥ 145,571 ¥—(18,403)—(1,682)

— ¥
—
—

— ¥
—
—

— ¥
—
—

(76)
—
—

—

—

—

(50)

—

—

—

—

—
—

—
—

—
—

—
—

—
—

3,385
—

—
(731)

—
—

—
—
152,919,216———
31,276———43,321———
125,436
16,475

—
—
—
—

—
—
3,385
—

—
—
(731)
—

(698)
(1)
(775)
—

23,901,710
—

1,195
—

11,554——(1,669)

—
—

—
—

—
—

—
—

—

—

—

(50)

—

—

—

—

—

—

—

45

—

—

—

—

—
—

—
—

—
—

(68)
—

—
(425)

—
—

—
—

—
—

—
—
—
176,820,926————
32,471————54,875————140,169
13,622

—
—
—
(425)
—

(1,906)
—
—
1,479
—

—
77
—
(654)
—

—
—
(36)
(811)
—

—
—

—
—

1
—

—
(1,932)

—
—

—
—

—
—

43
—

—

—

—

(62)

—

—

—

—

—
—

—
—

—
—

—
—

—
—

124
—

—
(91)

—
—

—

—

—

—

12

39

—

—

—
(413) ¥—
1,642 ¥—
(745) ¥

(35)
(803)

(3,542) $—12,325 $—(5,450) $—(6,758)——
176,820,926 ¥—
32,471 ¥——54,876 ¥ 151,797 ¥Thousands of U.S. Dollars

Balance at March 31, 2002
Net income for the year
Treasury stock issued upon
exercise of stock option
Cash dividends
Bonuses to directors andstatutory auditors
Net change in unrealized gains
on available-for-sale securities,
net of applicable income taxes
Translation adjustment
Adjustment for applicable
income taxes
Fractional shares acquired andotherBalance at March 31, 200314

$ 270,592 $ 457,292 $ 1,168,075 $——
113,517——8——(16,100)

—
—

—
—

—
—

358
—

—

—

(517)

—

—

—

—

—
—

—
—

—
—

—
—

1,033
—

—
(758)

—
—

—

—

—

100

325

—

—

—
(3,442) $—13,683 $—(6,208) $———$ 270,592 $ 457,300 $1,264,975 $See accompanying Notes to Consolidated Financial Statements.

(292)(6,692)

Seino Transportation Co., Ltd. and Consolidated Subsidiaries

Consolidated Statements of Cash Flows
For the Years Ended March 31, 2003, 2002 and 2001

Thousands of
U.S. Dollars

Millions of Yen

2003
Cash flows from operating activities:
Income (loss) before income taxes and minority interests
Adjustments for:
Depreciation
Amortization of consolidating adjustment accountNet provision (reversal) for employee retirement benefit liability(Gain) loss on sale or disposal of property and equipment
Equity in net (income) loss of affiliates
Loss on write-down of investment securities(Gain) loss on sale of investment securities
Loss on investments in and loans to affiliates
Decrease in trade receivables
Decrease in trade payables and accrued expenses
Other, net
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Net cash provided by operating activities¥

Cash flows from investing activities:
Increase in property and equipment
Increase in long-term investments and loans
Decrease in property and long-term investments
Decrease in short-term investments
Net cash provided by (used in) investing activities
Cash flows from financing activities:
Increase in long-term debt
Repayment of long-term debt
Net (decrease) increase in short-term borrowings
Cash dividends paid
Other
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Increase in cash and cash equivalents upon inclusion of additional
subsidiaries on consolidation
Cash and cash equivalents at end of year

See accompanying Notes to Consolidated Financial Statements.

¥

21,841

2002¥

25,036

¥

2001

2003

(28,875) $182,008

11,287(6,896)
1,710
(619)
(444)
288
(4)
4
5,339
(2,762)(818)
28,926
2,978(844)(5,468)25,592

12,365(6,435)(20,345)
2,664
224
3,792
605
—
6,573
(4,529)(1,027)18,923
4,557(1,221)(6,124)
16,135

10,34950
33,734(313)
874—(1,492)
1,495
4,488(4,277)(1,182)
14,8513,940(1,119)(3,630)14,042

94,058(57,467)
14,250(5,158)(3,700)
2,400
(33)
33
44,492(23,016)(6,817)241,050
24,817(7,033)(45,567)
213,267(18,744)(4,964)
31,151
12,30819,751(15,728)(24,243)
56,04320,08536,157(11,659)(53,155)
26,49324,030(14,291)(156,200)(41,367)
259,592
102,567
164,592

569(9,556)(29,927)(2,030)(19)(40,963)(56)
4,324
50,218

8,435(17,908)(18,928)(1,844)(38)(30,283)34
22,043
13,044

1,355(4,363)
2,311(1,696)(698)(3,091)33(3,307)
16,342

4,742(79,633)(249,392)(16,917)(158)(341,358)(467)
36,034418,483—
54,542¥

15,131
50,218¥913,044$—
454,517

15

Seino Transportation Co., Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements
1. Basis of Consolidated Financial Statements(a)Basis of presenting the consolidated financial statements(b) U.S. dollar amounts

The accompanying consolidated financial statements of Seino
Transportation Co., Ltd. (the “Company”) and its subsidiaries (together
with the Company, the “Seino Group”) have been prepared in accordance with the provisions set forth in the Commercial Code of Japanand the Securities and Exchange Law of Japan, and in conformity withaccounting principles generally accepted in Japan. Certain items presented in the original consolidated financial statements in Japanesesubmitted to the Director of Kanto Finance Bureau in Japan have been
reclassified in these accounts for the convenience of readers outside
Japan.

The Company 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 oftranslating Japanese Yen into U.S. dollars at a rate of ¥120 to $1, theapproximate rate of exchange at March 31, 2003. The inclusion ofsuch dollar amounts is solely for the convenience of the readers and is
not intended to imply that Yen and the assets and liabilities originatingin Yen have been or could be readily converted, realized or settled indollars at ¥120 to $1 or at any other rate.

(c)

Reclassification
Certain comparative figures have been reclassified to conform to thecurrent year’s presentations.

2. Summary of Significant Accounting Policies(a-i) Principles of consolidation
The accompanying consolidated financial statements include theaccounts of the Company and all of its subsidiaries. Investment in significant affiliates is accounted for by the equity method. Investment inaffiliates not accounted for by the equity method is stated at cost.
Differences between the acquisition cost of investments in subsidiaries
and the underlying equity in their net assets adjusted based on the fairvalue at the time of acquisition are deferred and amortized over five
years. All intercompany transactions and accounts have been eliminated.
Under the accounting standard for consolidation, a subsidiary isdefined as an enterprise which is controlled by another enterprise, andthat is a majority (more than 50%) owned enterprise or 40% to 50%
owned enterprise that meets certain criteria. In addition, an affiliatedcompany is defined as an enterprise in which the investor has a significant influence, and that is an enterprise, other than a subsidiary, with
20% or more of voting stock as well as 15% to 19% owned enterprisethat meets certain criteria. For the years ended March 31, 2003, 2002
and 2001, the number of the companies with not exceeding 50% votinginterest classified as subsidiaries based on the self-judgment of theCompany in accordance with the accounting standard was sixteen,eighteen, and thirteen, respectively.
The number of subsidiaries and affiliates for the three years ended
March 31, 2003 was as follows:
Subsidiaries:
Domestic
Overseas
Affiliates, accounted for by the equity method
Affiliates, stated at cost

2003

2002

2001

39
8
6
14

39
9
6
14

25
11
12
21

The Company’s overseas subsidiaries close their books at
December 31 every year, three months earlier than the Company andother domestic subsidiaries. The Company consolidated such subsidiaries’ financial statements as of their year-end. Significant transactions for the period between subsidiaries’ year-end and the Company’s
year-end are adjusted on consolidation.
Overseas subsidiaries adopt accounting principles generally
accepted in their respective countries, and no adjustments to conformto accounting principles generally accepted in Japan have been made totheir financial statements on consolidation as allowed under accounting
principles and practices generally accepted in Japan.

(a-ii) Change in consolidation scope

16

On May 29, 2001, the Company entered into the stock-for-stock
exchange agreements with its three public affiliates accounted for by
the equity method in order to make the Company’s respective equity
share in the three affiliates increase to 100%. This transaction was
expected to fully utilize the advantages and strengths of management
resources and maximize the integration of the Seino Group. The agreements were subsequently approved by the shareholders at the annual

general meeting held on June 28, 2001.
In accordance with this agreement, on August 10, 2001 (stock-forstock exchange date), the Company issued 23,901,710 shares of theCompany’s common stock at the exchange rates of a certain number ofshares of the Company’s common stock (see below) for one share ofcommon stock of the three affiliates to their respective shareholders.
As a result of this transaction, the common stock account of theCompany increased by ¥1,195 million and the capital surplus accountincreased by the aggregate amounts of the net assets of the respective
companies as of stock-for-stock exchange date except for the equity
interest in which the Company owned before the stock-for-stock
exchange, net of the increased common stock amount, which were
adjusted on consolidation based on the fair value of net assets acquiredat the time of acquisitions.
The details of information of stock-for-stock exchange transactions
for the three public companies were as follows:

Original
shares heldby theCompany

NOHI SEINO TRANSPORTATION
CO., LTD. (“NOHI”)
TOKAI SEINO TRANSPORTATION
CO., LTD. (“TOKAI”)
KANTO SEINO TRANSPORTATION
CO., LTD. (“KANTO”)

Exchange rateof the number Number ofof shares of the shares of theCompany for Company’scommonone share ofstock issued
affiliates(shares)(shares)

26.2%

2.02

8,928,696

30.8%

0.81

2,184,849

35.6%

3.40

12,788,165

The unaudited financial information of the three companies above
for the three years ended March 31, 2003 was as follows:
Thousands of
U.S. Dollars

Millions of Yen

2003
Operating revenues:
NOHI
TOKAI
KANTO
Net income:
NOHI
TOKAI
KANTO

2002

2001

2003

¥ 23,699 ¥ 23,123 ¥ 23,504 $ 197,492
10,861
10,868
11,49290,50827,07525,994
26,404
225,625
¥

751 ¥
102
571

441 ¥
(201)
26

359 $
(627)
(399)

6,258
850
4,758

In addition, in June 2001, the Company acquired additional sharesof the common stock of two public affiliates accounted for by theequity method by takeover bid for an aggregate amount of ¥1,130 million in order to strengthen the integration of the Seino Group, which
resulted in an increase in equity share of the two affiliates held by theCompany to 40% each after this transaction.

The Company consolidated the five companies above as subsidiaries from the year ended March 31, 2002 as though the exchanges
or acquisitions were made as of the beginning of the period. Therefore,such subsidiaries’ operations for the year ended March 31, 2001 were
included as equity income in the accompanying consolidated statements of operations. The excess of the Company’s equity in the fairvalue of the net assets acquired of such new subsidiaries over the costof the additional investments was recorded as consolidating adjustment
account (negative goodwill).

rent basic rates of pay, length of service and conditions under which
the termination occurs.
Effective April 1, 2000, the Seino Group adopted “Opinion
Concerning Establishment of Accounting Standard for Retirement
Benefits” established by the Business Accounting Deliberation Councilof Japan and related practical guideline issued by the Japanese Instituteof Certified Public Accountants. In accordance with the new accounting standard, the Seino Group has recognized the retirement benefits
including pension cost and related liability based on the accrual amountcalculated from actuarial present value of projected benefit obligation
using actuarial appraisal approach and the pension plan assets available
for benefits at the respective fiscal year-ends. A transitional provisionof adoption of this new accounting standard in the aggregate amount of¥30,976 million was charged to income as other expenses in the year
ended March 31, 2001. Unrecognized actuarial differences as changes
in the projected benefit obligation or pension plan assets resulting fromthe experience different from that assumed and from changes inassumptions are amortized on a straight-line basis principally over ten
years within remaining service lives of employees from the next year inwhich they arise. Unrecognized prior service cost is amortized using
the straight-line method over ten years from the year in which it occurs.

(b) Cash and cash equivalents
The Seino Group considers cash equivalents to be highly liquid debt
instruments purchased with an original maturity of three months or
less.

(c)

Investments and marketable securities
The Seino Group classifies certain investments in debt and equity securities as “held-to-maturity”, “trading” or “available-for-sale”, whoseclassification determines the respective accounting method as stipulated by the accounting standard for financial instruments. Held-tomaturity securities are stated at amortized cost. Marketable securities
with market quotations for available-for-sale securities are stated at fairvalue and net unrealized gains or losses on these securities are reported
as a separate component of shareholders’ equity, net of applicable
income taxes. Gains and losses on disposition of available-for-salesecurities are computed based on the moving-average method.
Nonmarketable securities without available market quotations foravailable-for-sale securities are carried at cost determined by the moving-average method. Adjustments in carrying values of individual
securities are charged to income through write-downs, when a decline
in value is deemed other than temporary.

(j)(d) Accounting for derivatives
Derivatives are valued at fair value, if hedging accounting is not appropriate or where there is no hedging designation, and the gains or losses
on derivatives are recognized in the current earnings. According to thespecial treatment as permitted by the accounting standard for financial
instruments, the hedging interest rate swap is accounted for on an
accrual basis, and recorded net of interest income generated frominvestments, hedged items, if certain conditions are met.

(e)

(f)

The Seino Group recognizes freight charges as revenue when freight isreceived for shipment. In relation to its revenue recognition, the Seino
Group records freight charges from customers and paid to interline carriers as operating revenues and operating costs and expenses, respectively.

Allowance for doubtful accounts(l)Inventories(m) Translation of foreign currency accounts

Property and equipment, and depreciation
Property and equipment, including significant renewals and additions,
are stated at cost. Property and equipment of the Company and its certain subsidiaries have been depreciated by the straight-line method forbuildings and vehicles, and by the declining-balance method for otherproperty.
Property and equipment of the other subsidiaries have been principally depreciated by the declining-balance method, except for thebuildings acquired on and after April 1, 1998 and the property held forleases. The buildings acquired on and after April 1, 1998 by domestic
subsidiaries have been depreciated by the straight-line method.
Expenditure on maintenance and repairs is charged to operating
income as incurred. Upon the disposal of property, the cost and accumulated depreciation are removed from the accounts and any gain orloss is recorded as income or expenses.

(h) Leases
Where financing leases do not transfer ownership of the leased property to the lessee during the term of the lease, the leased property of theCompany and its domestic subsidiaries as lessee is not capitalized andthe relating rental and lease expenses are charged to income as
incurred.
The leased property of a certain subsidiary engaged in the leasing
operations as lessor was recorded at cost as property held for leases,
which was included in property and equipment in the accompanying
consolidated balance sheets, and was depreciated over the lease contract terms by the straight-line method to the amount equal to the estimated disposal value at the lease termination date.

(i)(k) Revenue recognition for freight charges

Allowance for doubtful accounts has been provided for at the aggregate
amount of estimated credit loss based on the individual financial
review approach for doubtful or troubled receivables and a generalreserve for other receivables calculated based on the historical loss
experience for a certain past period.
Inventories for supplies are principally stated at moving-average cost,and inventories for vehicles and work-in-process are principally statedat cost determined by the specific identification method.

(g)

Income taxes
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the carrying amounts ofexisting assets and liabilities and their respective tax bases and operating loss carryforward. Deferred tax assets and liabilities are measured
using the enacted tax rates expected to apply to taxable income in theyears in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of achange in tax rates is recognized in the period that includes the enactment date.

Appropriation of retained earnings
Cash dividends and bonuses to directors and statutory auditors arerecorded in the fiscal year during which a proposed appropriation ofretained earnings is approved by the Board of Directors and/or shareholders.
Receivables, payables and securities, other than stocks of subsidiaries
and certain other securities, are translated into Japanese Yen at theexchange rates at the fiscal year-end. Transactions in foreign currencies are recorded based on the prevailing exchange rates on the transaction dates. Resulting translation gains or losses are included in the current earnings.
In respect of the financial statement items of overseas subsidiaries,
all asset, liability, income and expense accounts are translated into Yen
by applying the exchange rates in effect at the fiscal year-end.
Translation differences, after allocating to minority interests portions
attributable to minority interests, are reported as foreign currency translation adjustment in a separate component of shareholders’ equity on
the accompanying consolidated balance sheets.

(n) Per share data
Basic net income per share is computed by dividing income available
to common shareholders by the weighted-average number of shares ofcommon stock outstanding during the respective years. Diluted net
income per share is computed assuming convertible bonds were converted at the time of issue unless having anti-dilutive effects and as if
warrants were exercised at the beginning of the relevant year or (iflater) on their first exercise date and as if the funds obtained thereby
were used to purchase common stock at the average market price during the respective years under the treasury stock method. The Seino
Group adopted the new accounting standard for earnings per sharefrom the current fiscal year. Prior-period per share data has been
restated to conform to the current computation.
Cash dividends per share shown for each fiscal year in the accompanying consolidated statements of operations represent dividends
declared as applicable to the respective years.

Employee retirement benefits
Employees who terminate their service with the Seino Group are entitled to retirement benefits generally determined by the reference of cur-17

3. Investments
At March 31, 2003 and 2002, short-term investments consisted of thefollowing:
Millions of Yen

Thousands of
U.S. Dollars

2003
2002
2003
Marketable securities:
Bonds¥ 11,571 ¥ 9,678 $ 96,425
Total marketable securities
11,571
9,678
96,425—
1,400—
Other nonmarketable securities
Time deposits with an original maturityof more than three months
7,332
8,706
61,100¥ 18,903 ¥ 19,784 $ 157,525

Cost

At March 31, 2003:
Equity securities
Bonds
Other
At March 31, 2002:
Equity securities
Bonds
Other

At March 31, 2003 and 2002, investment securities consisted of
the following:
Millions of Yen

Thousands of
U.S. Dollars

2003
2002
Marketable securities:¥ 10,112 ¥ 10,376 $Equity securities
33,971
43,574
Bonds
Other
254
1,122
Total marketable securities
44,33755,072
18,377
37,109Other nonmarketable securities¥ 62,714 ¥ 92,181 $2003
84,267
283,092
2,116
369,475
153,142522,617At March 31, 2003 and 2002, fair value of marketable securities
classified as held-to-maturity and related net unrealized gains were as
follows:
Net unrealized
Carrying value Fair value
gainsMillions of Yen

Bonds included in investment securities
At March 31, 2003¥
At March 31, 2002

4,392 ¥
5,471

4,887 ¥
6,042

4,125

Marketable securities classified as available-for-sale are stated atfair value with unrealized gains and losses excluded from the current
earnings and reported as a net amount within the shareholders’ equity
account until realized. At March 31, 2003 and 2002, gross unrealized
gains and losses for marketable securities classified as available-forsale are summarized as follows:

Fair andcarrying
value¥

6,951 ¥
41,075279¥ 48,305 ¥3,463 ¥ (302) ¥ 10,112
769
(695)
41,1490(25)
254
4,232 ¥ (1,022) ¥ 51,515¥

5,008 ¥
(47) ¥ 10,376
410(2,092)47,8648(89)
1,122
5,426 ¥ (2,228) ¥ 59,362

5,415 ¥
49,546
1,203¥ 56,164 ¥Thousands of U.S. Dollars

At March 31, 2003:
Equity securities
Bonds
Other

$ 57,925 $ 28,858 $ (2,516) $ 84,267
342,292
6,408(5,792) 342,908
2,325
0
(209)
2,116
$ 402,542 $ 35,266 $ (8,517) $ 429,291

During the years ended March 31, 2003 and 2002, the Seino Group
recorded a loss on write-down on marketable investment securities due
to a permanent diminution in value in the amount of ¥261 million($2,175 thousand) and ¥652 million, respectively.
During the years ended March 31, 2003 and 2002, the Seino Group
sold available-for-sale securities and recorded a gain of ¥7 million ($58
thousand) and ¥211 million, and a loss of ¥1 million ($8 thousand) and¥900 million on the accompanying consolidated statements of operations, respectively.
Expected maturities of held-to-maturity and available-for-salesecurities at March 31, 2003 were as follows:

495
571

Thousands of U.S. Dollars

Bonds included in investment securities
At March 31, 2003
$ 36,600 $ 40,725 $

Gross
Gross
unrealized unrealized
gains
lossesMillions of Yen

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

Millions of Yen

Thousands of
U.S. Dollars

¥

$

¥

11,80939,00011,882100
62,791$

98,408325,000
99,017833
523,258

At March 31, 2003 and 2002, investments in and long-term loans
to affiliates consisted of the following:
Millions of Yen

Investments, accounted for by theequity method for significant
affiliates and at cost for others
Interest bearing long-term loans¥¥

Thousands of
U.S. Dollars

2003

2002

2003

3,909 ¥
2,184
6,093 ¥

2,835 $
2,685
5,520 $

32,575
18,20050,775

4. Property and Equipment
At March 31, 2003 and 2002, property and equipment consisted of thefollowing:
Millions of Yen

2003
Property held for own use, at cost:
Land
Buildings and structures
VehiclesMachinery and equipment
Construction in progress
Less, accumulated depreciation
Subtotal
Property held for leases, at cost:
Vehicles, equipment and otherLess, accumulated depreciation

2002

Thousands of
U.S. Dollars

2003¥ 134,275 ¥ 133,180 $ 1,118,958
177,189 172,602 1,476,575
72,104
72,161
600,867
20,994
20,682
174,950
2,923
1,107
24,358407,485 399,732 3,395,708(164,843) (163,893) (1,373,692)
242,642 235,839 2,022,016

660
646
5,500
(438)
(434)
(3,650)
222
212
1,850
Total property and equipment ¥ 242,864 ¥ 236,051 $ 2,023,866

18

One of the consolidated subsidiaries elected to carry out a onetime revaluation to restate the cost of land used for the business operations at values rationally reassessed effective on March 31, 2002,
reflecting appropriate adjustments for land shape and other factors,
based on the appraisal values issued by the Japanese National Tax
Agency in accordance with the Law Concerning Revaluation of Land(“Law”). According to the Law, the amount equivalent to the tax
effect on the excess of the original book values over sound reassessedvalues is recorded in the assets as deferred tax assets arising on revaluation account, and the rest of such excess, net of the tax effect andminority interests portion, is recorded in the shareholders’ equity as
land revaluation decrement account in the accompanying consolidatedbalance sheets. Carrying amounts of such land after and before revaluation at March 31, 2002 were ¥6,100 million and ¥6,576 million,
respectively. At March 31, 2003, the differences of the carrying valuesof land used for the business operations after revaluation over the current market value of such land at the fiscal year-end amounted to ¥465
million ($3,875 thousand).

5. Short-term Borrowings and Long-term Debt
At March 31, 2003 and 2002, short-term borrowings consisted of thefollowing:
Millions of Yen

2003

2002

Thousands of
U.S. Dollars

2003

Unsecured bank overdrafts withinterest rates ranging from
0.203% to 10.75% per annum at
March 31, 2003
¥ 6,409 ¥ 8,026 $ 53,408
Short-term bank borrowings
principally represented by notes
with interest rates ranging from
0.55% to 5.5% per annum at
March 31, 2003:
Secured
401
390
3,342
Unsecured
7,780
36,18564,833¥ 14,590 ¥ 44,601 $ 121,583
At March 31, 2003, the Company and certain subsidiaries had
unsecured overdraft agreements with 33 banks. Under such agreements, the Company and such subsidiaries were entitled to withdraw
up to ¥43,693 million ($364,108 thousand). The Company and such
subsidiaries are not obligated to pay commitment fees on the unused
portions of such overdraft facilities.
At March 31, 2003 and 2002, long-term debt consisted of the following:
Millions of Yen

2003

2002

At March 31, 2003 and 2002, the following assets were pledged ascollateral for certain short-term borrowings and long-term debt:

Land
Buildings and structures
VehiclesMarketable securities included ininvestment securities
Time deposits included in shortterm investments

1.0% convertible bonds, due March 2004 ¥ 22,452 ¥ 27,239 $ 187,100
0.125% convertible bonds, due March
20,00020,000166,667
2004
9,017
9,562
75,141
1.1% convertible bonds, due March 2006
Loans from banks, partly secured, due
through 2017 repayable on an
installment basis with interest rates
ranging from 0.224% to 8.3% perannum at March 31, 2003
9,925
13,73982,708Loans from government agencies,
principally mortgage, repayable on
an installment basis with interest
rates ranging from 0.7% to 3.4%
per annum at March 31, 2003
445
313
3,709
61,83970,853515,325Less, current portion(42,806)(3,114) (356,717)¥ 19,033 ¥ 67,739 $ 158,608

¥

2003

2002

2003

653 ¥
1,316
—

1,066 $
1,249
3

5,442
10,967
—

—

501

—

40

214

333

The following is a summary of the conversion price and the termsof optional redemption of the convertible bonds as at March 31, 2003:

1.0% convertible
bonds, due 2004
0.125% convertible
bonds, due 2004
1.1% convertible
bonds, due 2006

Thousands of
U.S. Dollars

2003

Thousands of
U.S. Dollars

Millions of Yen

Conversion
price

Redemption at the optionof the Company¥1,755.60

At 103% to 100% of principal after
April 1, 2000, decreasing 1%
annually¥ 917.00—
At 104% to 100% of principal after¥1,755.60
April 1, 2001, decreasing 1%
annually

The Company reserves the right to redeem the outstanding convertible bonds, in whole or in part, at its call option, at the percentagesof the principal amount listed in the table above. At March 31, 2003,
the number of shares of common stock necessary for conversion of
convertible bonds outstanding was approximately 40 million.
The aggregate annual maturities of long-term debt as at March 31,
2003 were as follows:

Years ending March 31,

2004
2005
2006
2007
2008
Thereafter

Millions of Yen¥

Thousands of
U.S. Dollars

42,806 $450
10,430
7,237
206
710

356,717
3,750
86,91760,3081,716
5,917

6. Employee Retirement Benefits
The Seino Group has defined benefit pension plans, which substantially cover all employees.
On March 15, 2002, the Company received an approval from the
Minister of Health, Labor and Welfare for the liquidation of the welfare pension funds organized by the Company pursuant to the enforcement of the Defined Benefit Enterprise Pension Plan Law. Therefore,
the Seino Group recorded a gain of ¥18,895 million due to the extinguishment of retirement benefit obligation of the welfare pension funds
for the year ended March 31, 2002. In addition, on April 23, 2002, theMinister of Health, Labor and Welfare approved another liquidation of
the group welfare pension funds organized by some of the domestic
subsidiaries and affiliates pursuant to the enforcement of the Defined
Benefit Enterprise Pension Plan Law. As a result, the Seino Group
recorded a gain of ¥1,542 million ($12,850 thousand) due to the extinguishment of retirement benefit obligation of such welfare pension
funds for the year ended March 31, 2003.
During the year ended March 31, 2003, the Company and some ofthe domestic subsidiaries settled the qualified retirement benefit pension plan, and the Seino Group recorded a loss of ¥863 million ($7,192
thousand) in relation to this transaction.
The following table reconciles the benefit liability as at March 31,
2003 and 2002:

Millions of Yen

2003
Reconciliation of benefit liability:
Projected benefit obligationLess, fair value of pension plan
assets at end of year

2002

Thousands of
U.S. Dollars

2003¥ 44,077 ¥ 65,856 $ 367,308(1,208)42,869(18,870)
46,986(10,066)
357,242Less, unrecognized actuarial
differences (loss)(5,188) (11,672)(43,233)
Less, unrecognized prior service cost
(675)—
(5,625)
Other
(34)
(51)
(284)
Net amounts of employee retirement
benefit liability recorded on the
consolidated balance sheets¥ 36,972 ¥ 35,263 $ 308,100
Notes: 1. Projected benefit obligation of subsidiaries was calculatedusing the simplified calculation method as permitted by theaccounting standard for employee retirement benefits.
2. The above table excluded the amounts for the assets not separately allocatable to some of the domestic subsidiaries in certain pension funds organized by others together with the subsidiaries or effectively restricted so that they cannot be usedby the employees for other purpose, which amounted to¥4,327 million ($36,058 thousand) at March 31, 2003.

19

The Component of net periodic retirement benefit expense for thethree years ended March, 2003 was as follows:
Thousands of
U.S. Dollars

Millions of Yen

2003

2002

Major assumptions used in calculation of the above information
for the three ended March 31, 2003 were as follows:

2001

2003

Net periodic retirement
benefit expenses:
Service cost
¥ 2,373 ¥ 5,100 ¥ 4,195 $Interest cost
1,105
4,776
4,135
Expected return on
pension plan assets(158)(2,470)(2,506)
Amortization of priorservice cost——
(53)
Amortization of
actuarial differences
1,221
—
530
Initial transitional
provision
17
17
30,976
Subtotal
3,814
8,644
36,800
Reversal of employee
retirement benefit
liability(1,542)——
Loss on settlement ofqualified retirement
benefit pension plan
863——
Total retirement
benefitexpense¥ 3,135 ¥ 8,644 ¥ 36,800 $

19,7759,208(1,317)(442)

2003
Method attributing the
projected benefits toperiods of services
Discount rate
Expected rate of return on
pension plan assets
Amortization of prior service
cost
Amortization of actuarial
differences

2002

2001

StraightStraightStraightline method line method line method
2.0%

3.5%

2.5%

2.5%
principally
3.5%

10 yearsprincipally
10 years—principally
10 years—principally
10 years

3.5%

4,417
142
31,783(12,850)

7,192

26,125

7. Contingent Liabilities
At March 31, 2003 and 2002, the Seino Group was contingently liable
for trade notes endorsed to affiliates and the third parties, for tradenotes discounted with banks in the normal course of business, and forguarantees, including substantial guarantees, principally of indebtedness of affiliates and the third parties in the aggregate amounts of¥4,579 million ($38,158 thousand) and ¥5,865 million, respectively.
During the year ended March 31, 2002, the Seino Group sold tradenotes receivable of ¥956 million to a certain financial institution. In
relation to this transaction, the Seino Group was obligated under theterms of the recourse provision to repurchase receivables sold up to¥260 million at March 31, 2002. At March 31, 2003, the Seino Group
had no obligation in relation to this transaction due to the change ofcontract terms.

8. Lease Commitments
The Seino Group has entered into various rental and lease agreements
for land and buildings to be used for truck terminals and warehouses
which are generally cancelable with a few months' advance notice andalso non-cancelable lease agreements for computer equipment andradio facilities with three-to-seven year contract terms as lessee. The
aggregate minimum future lease payments for such non-cancelable
lease agreements, including the imputed interest portion, as at March
31, 2003 and 2002 were as follows:

Millions of Yen

Due within one year
Due after one year¥¥

Thousands of
U.S. Dollars

2003

2002

2003

1,818 ¥
2,752
4,570 ¥

1,966 $
2,904
4,870 $

15,15022,93338,083A certain consolidated subsidiary engaged in the leasing operations entered into various lease agreements principally for vehicles
with the third parties as lessor, which were categorized as financing
leases. At March 31, 2003 and 2002, the aggregate future minimum
lease commitments to be received for such non-cancelable lease agreements, excluding the imputed interest, were as follows:

Millions of Yen

2003
Due within one year
Due after one year¥¥

Thousands of
U.S. Dollars

2002

154 ¥
227
381 ¥

157 $
214
371 $

2003
1,283
1,892
3,175

In addition to above, a certain consolidated subsidiary engaged in
the leasing operations leases the property as lessee and also leases thesame property to affiliates and the third parties as lessor. At March 31,
2003 and 2002, the future minimum commitments under such agreements, including the imputed interest portion, were as follows:
Minimum rentals
Minimum rentals
to be paid to be received to be paid to be received
Millions of Yen
Thousands of U.S. Dollars

At March 31, 2003:
Due within one year
Due after one year¥¥

At March 31, 2002:
Due within one year
Due after one year¥¥

2,761 ¥
4,012
6,773 ¥

2,956 $ 23,009 $ 24,634
4,270
33,43335,5837,226 $ 56,442 $ 60,217

3,608 ¥
5,618
9,226 ¥

3,844
6,018
9,862

9. Derivative Instruments
The Seino Group is a party to derivative instruments such as interest
rate swap or currency swap contracts in the normal course of businessto reduce its own exposure to fluctuations in interest rates or foreign
currency exchange rates on investments of the Seino Group for thehedge purposes. The Seino Group is exposed to credit loss in the event20of nonperformance by the other parties. However, the Seino Group
does not expect nonperformance by the counterparties. All derivative
instruments are accounted for by the certain hedge accounting methods
as at March 31, 2003 and 2002.

10. Shareholders’ Equity
(a)

(b)

The authorized number of shares of common stock, without par value,is 400 million at March 31, 2003, unless there may be a reduction due
to a cancellation of treasury stock acquired.
Pursuant to the Commercial Code of Japan and the resolution byshareholders at the annual general meeting on June 27, 2003, theCompany can purchase the treasury stock of the Company up to
8,800,000 shares in maximum consideration for ¥7,600 million(¥63,333 thousand) for the period though the date of its next annual
shareholder’s general meeting.
Capital surplus consisted of additional paid-in capital of ¥54,875
million ($457,292 thousand) and other capital surplus of ¥1 million ($8thousand) at March 31, 2003. At March 31, 2003 and 2002, retained
earnings included legal reserve of the Company in the amount of¥4,262 million ($35,517 thousand), respectively. The Commercial
Code of Japan provides that an amount equivalent to at least 10% of
cash payments as an appropriation of retained earnings shall beappropriated as a legal reserve until a total amount of additional paid-in
capital and such legal reserve equals 25% of common stock. Suchlegal reserve is not available for distribution as dividends, but may be
used to reduce a deficit or may be transferred to common stock byproper actions of the Board of Directors and/or shareholders of theCompany.
Under the terms of the 1.0% and 1.1% convertible bonds, as longas any of the relevant bonds remains outstanding, the Company may
not pay any cash dividends if, upon giving effect thereto, the aggregate
amount of all cash dividends paid after March 31, 1995, less income
before special credits or charges (as defined in the Ministry of Finance

(c)

(d)

Ordinance) net of income taxes since such a date, would exceed ¥15
billion ($125 million).
Under the Commercial Code of Japan, the carrying values of treasury stock purchased for stock option plan and net unrealized gains onavailable-for-sale securities are not available for the distribution as dividends.
On June 29, 2000, shareholders approved to implement the stock
option plan in accordance with the Commercial Code of Japan. The
stock option was granted to 15 members of the Board of Directors and575 executive employees as of June 29, 2000, and each stock option is
exercisable from July 1, 2002 to June 30, 2005. Up to 1,195,000
shares of common stock of the Company would be issuable forexercise of this option at the exercise price of ¥600 per share, which is
subject to adjustment in certain circumstances including stock splits.
Although shareholders also approved to implement another stock
option plan using the new share subscription right method in accordance with the Commercial Code of Japan on June 27, 2002, no newshare subscription rights were issued as the Board of Directors of theCompany resolved to cancel this stock option plan on June 6, 2003.
The shareholders of the Company approved the followings
appropriations of retained earnings at the annual general meeting ofshareholders on June 27, 2003:
Thousands of
U.S. Dollars

Millions of Yen

Cash dividends¥
Bonuses to directors and statutory auditors

1,932
10

$

16,10083

11. Income Taxes
Income tax expenses (benefits) for the three years ended March 31,
2003 consisted of the following:Thousands of
U.S. Dollars

Millions of Yen

2003
Income tax expenses(benefits):
Current
Deferred¥

2002

8,636 ¥
(1,790)¥ 6,846 ¥

2001

2003

5,686 ¥ 4,532 $
2,108(15,184)
7,794 ¥ (10,652) $71,967(14,917)57,050

The tax effects on temporary differences that give rise to a significant portion of deferred tax assets and liabilities at March 31, 2003 and2002 were as follows:
Millions of Yen

2003
Deferred tax assets:
Employee retirement benefit
liability
Enterprise tax accruals
Accrued bonuses
Intercompany capital gain
Loss on assets transferred
Unrealized losses on availablefor-sale securities
Other
Less, valuation allowance
Deferred tax liabilities:
Deferred capital gain
Unrealized gains on available-forsale securities
Consolidating valuation
adjustment
Other
Net deferred tax assets

2002

Thousands of
U.S. Dollars

2003¥ 12,678 ¥ 13,955 $ 105,650
524
260
4,367
3,226
―
26,883
1,091
1,103
9,092
4,098
5,040
34,150397
2,937
24,951(596)
24,355

1,002
2,886
24,246(1,734)22,512

3,308
24,475207,925(4,966)
202,959

5,817

5,793

48,475

1,711

2,330

14,2584,619
4,004
38,49260
75
500
12,207
12,202
101,725¥ 12,148 ¥ 10,310 $ 101,234

At March 31, 2003 and 2002, deferred tax assets and liabilities
were recorded as follows:

Millions of Yen

Deferred tax assets:
Current
Non-current
Deferred tax liabilities:
Non-current¥

Thousands of
U.S. Dollars

2003

2002

2003

6,258 ¥
8,057

5,517 $
6,869

52,15067,142

2,167

2,076

18,058In assessing the realizability of deferred tax assets, management of
the Seino Group considers whether it is more likely than not that some
portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generationof the future taxable income during the periods in which those temporary differences become deductible. At March 31, 2003 and 2002, avaluation allowance was provided to reduce the deferred tax assets tothe extent that the management believes that the amount of the deferred
tax assets is expected not to be realizable.
A reconciliation of the differences between the Japanese statutory
effective tax rate and the actual effective income tax rate on pretax
income reflected in the accompanying consolidated statements of operations for the years ended March 31, 2003 and 2002 was as follows:
Percentage of pretax income

Japanese statutory effective tax rate
Increase (decrease) due to:Permanently nondeductible expenses
Tax exempt income
Adjustment due to a change in tax rates
Local minimum taxes-per capita levy
Amortization of consolidating
adjustment accountEquity in net (income) loss of affiliates
Other
Actual effective income tax rate

2003
41.7%

2002
41.7%

0.6
(0.5)
1.8
2.4

0.6
(0.4)
―
2.0

(13.2)
(0.8)
(0.7)
31.3%

(10.7)
0.4
(2.5)
31.1%

For the year ended March 31, 2001, such reconciliation is not presented because the Seino Group recorded net loss.
With the implementation of the ‘Revision of the Local Tax Law’
on March 31, 2003, the Japanese statutory effective tax rate used in thecalculation of deferred tax assets or liabilities effective from the fiscal
year beginning on April 1, 2004 has been changed from 41.7% to40.4%. As a result, deferred income tax expenses increased by ¥392
million ($3,267 thousand) for the year ended March 31, 2003.

21

12. Segment Information
The Seino Group operates in four business segments: transportation services, merchandise sales, information services, and leasing and other services.
Information by industry segment for the three years ended March 31, 2003 was summarized as follows:
Transportation
services

Merchandise
sales

Information
services

OthersTotal

Elimination

Consolidated

Millions of Yen

For the year 2003:
Operating revenues:
Outside customers
Inter-segment sales
Total operating revenues
Operating costs and expenses
Operating income (loss)
Identifiable assets
Depreciation
Capital expenditures
For the year 2002:
Operating revenues:
Outside customers
Inter-segment sales
Total operating revenues
Operating costs and expenses
Operating income (loss)
Identifiable assets
Depreciation
Capital expenditures
For the year 2001:
Operating revenues:
Outside customers
Inter-segment sales
Total operating revenues
Operating costs and expenses
Operating income (loss)
Identifiable assets
Depreciation
Capital expenditures
For the year 2003:
Operating revenues:
Outside customers
Inter-segment sales
Total operating revenues
Operating costs and expenses
Operating income (loss)
Identifiable assets
Depreciation
Capital expenditures

297,514
1,905
299,419
293,726
5,693¥

93,32228,514
121,836
118,990
2,846

¥

5,938
5,171
11,10911,259(150)¥¥

331,613
9,740
17,301¥

91,184
1,294
2,562

¥

4,954
293
76

¥

306,003
1,593
307,596308,460(864)¥

92,667
24,259116,926
114,123
2,803

¥

5,224
5,619
10,843
11,029(186)¥

328,598
10,642
12,940¥88,237
1,270
2,101

¥

6,362
290
162

¥

292,969
1,485
294,454294,874(420)¥

36,796
20,68457,48056,932
548

¥

4,920
5,317
10,237
10,366(129)

252,831
9,291
8,056

¥

22,866
245
385

¥

6,241
258
304

$ 2,479,283
15,8752,495,158
2,447,717$
47,441$

777,683
237,617
1,015,300
991,583$
23,717$49,48343,092
92,57593,825(1,250)$ 2,763,442
81,167
144,175

$

$

¥

¥

¥

¥
¥

¥

¥

¥

759,867
10,783
21,350¥¥¥$41,283
2,442
633

12,625
13,81826,44324,3352,108¥

409,399
49,408458,807448,310
10,497¥—(49,408)(49,408)(49,105)
(303)

¥

¥

25,471140
51¥453,222
11,467
19,990¥41,361
(180)
(391)

¥

494,583
11,287
19,599¥14,941
12,442
27,38325,691
1,692¥

418,835
43,913
462,748459,303
3,445¥—(43,913)(43,913)(44,011)98¥

418,835—
418,835
415,292
3,543¥

26,953334
190¥

450,150
12,536
15,393¥72,603
(171)
(225)

¥

522,753
12,365
15,168¥17,9108,067
25,97725,053924¥

352,595
35,553
388,148387,225923¥—(35,553)(35,553)(35,525)(28)¥

352,595—
352,595
351,700
895¥

22,588618
53¥304,526
10,412
8,798¥

148,724
(63)
(113)

¥

$

105,209
115,150
220,359
202,792
17,567$ 3,411,658
411,734
3,823,392
3,735,917$
87,475$—(411,734)(411,734)(409,209)(2,525)$ 3,411,658—
3,411,658
3,326,708$
84,950212,258
1,166
425$ 3,776,850
95,558
166,583$

344,675(1,500)(3,258)$ 4,121,525
94,058163,325

¥

¥

¥

$
$

¥

¥

¥

¥

¥

¥

$

¥

¥

¥

409,399—409,399399,205
10,194453,250
10,3498,685

Geographic segment information is not shown as operating revenues and total assets of overseas subsidiaries were not material in the three years ended
March 31, 2003. Information for overseas sales is not disclosed as such sales were not material.
Notes: Identifiable assets in the elimination column represent unallocated general corporate items which were not assigned to a particular industry segment suchas cash, short-term and long-term investment securities, net of inter-segment balances.

22

Report of Independent Auditors
Report of Independent Auditors
To the Board of Directors and Shareholders of
Seino Transportation Co., Ltd.

We have audited the accompanying consolidated balance sheets of Seino Transportation Co., Ltd. and its subsidiaries (the“Seino Group”) as of March 31, 2003 and 2002, and the related consolidated statements of operations, shareholders' equity,and cash flows for each of the three years in the period ended March 31, 2003, 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 require thatwe plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are freeof material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements. An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believethat 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, theconsolidated financial position of the Seino Group as of March 31, 2003 and 2002, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended March 31, 2003 in conformity with accounting
principles and practices generally accepted in Japan.
The amounts expressed in U.S. dollars, which are provided solely for the convenience of the reader, have been translatedon the basis set forth in Note 1 to the accompanying consolidated financial statements.

ChuoAoyama Audit Corporation
Nagoya, Japan
June 27, 2003

Notice to Readers:
The accompanying consolidated financial statements are not intended to present the consolidated financial
positions and results of operations and cash flows in accordance with accounting principles and practices
generally accepted in countries and jurisdictions other than Japan. The standards, procedures and practices toaudit such financial statements are those generally accepted and applied in Japan.

23

Board of Directors(As of June 27, 2003)

Chairman andChief Executive Officer

Senior Managing
Directors

Directors

Statutory Auditors

Hideyuki Abe

Yoshio Matsuoka

Yoshikazu Taguchi

Atsuo Suzuki

Kunihiko Oka

Mitsuo Shimizu

Takao Taguchi

Hidemi Maruta

Yutaka Tanabe

President andChief Operating Officer

Managing Directors

Yoshitaka Taguchi

Shizutoshi Otsuka

Kunitoshi Yamanaka

Masayoshi Ichiyanagi

Yoshitaka Nasuno

Hisao Sakashita

Toshitaka Morita

Masashi Otsuka
Takayoshi Mito

Yoshikazu Taguchi

Yoshitaka Taguchi

Chairman and Chief Executive Officer

President and Chief Operating Officer

Corporate Data
(As of June 27, 2003)

Company Name:
Head Office:Date of Establishment:
Paid-in Capital:
Number of Shares Issued:
Stock Listings:
Transfer Agent:
Independent Auditors:
24

Seino Transportation Co., Ltd.
1, Taguchi-cho, Ogaki, Gifu 503-8501, Japan
Tel: 81-584-81-1111 Fax: 81-584-75-3366
November 1, 1946
¥32,471 million
176,820,926
The First Section of Tokyo Stock Exchange (code 9076)
The First Section of Nagoya Stock Exchange (code 9076)
The Mitsubishi Trust and Banking Corporation
ChuoAoyama Audit Corporation(A member firm of PricewaterhouseCoopers)

Seino Group☆Consolidated subsidiaries★Subsidiaries and affiliates accounted for by the equity method

Transportation Group★ Hokkaido Seino Transportation Co., Ltd.
General cargo haulage☆ Iwate Seino Transportation Co., Ltd.
General cargo haulage☆ Miyagi Seino Transportation Co., Ltd.
General cargo haulage
Fukushima Seino Transportation Co., Ltd.
General cargo haulage☆ Kanto Seino Transportation Co., Ltd.
General cargo haulage★ Saitama Seino Transportation Co., Ltd.
General cargo haulage★ Tokyo Seino Transportation Co., Ltd.
General cargo haulage☆ Kanagawa Seino Transportation Co., Ltd.
General cargo haulage
Enshu Seino Transportation Co., Ltd.
General cargo haulage
Mikawa Seino Transportation Co., Ltd.
General cargo haulage☆ Tokai Seino Transportation Co., Ltd.
General cargo haulage☆ Nohi Seino Transportation Co., Ltd.
General cargo haulage
Tango Seino Transportation, Inc.
General cargo haulage☆ Seino Tsu-un Transportation Co., Ltd.
Transportation and general cargo haulage☆ Seino Express Co., Ltd.
General cargo haulage☆ Mie Seino Transportation Co., Ltd.
General cargo haulage★ Hinomaru Seino Transportation Co., Ltd.
General cargo haulage★ Shikoku Seino Transportation Co., Ltd.
General cargo haulage★ Showa Seino Transportation Co., Ltd.
General cargo haulage
Takuma Seino Transportation Co., Ltd.
General cargo haulage☆ Okinawa Seino Transportation Co., Ltd.
General cargo haulage☆ Seino Logix Co., Ltd.
Intermodal transportation operator and agency☆ Seino America, Inc.
International air and sea cargo forwarder andcustoms broker in the United States☆ Seino Europe GmbHInternational air and sea cargo forwarder inGermany(As of March 31, 2003)☆ Göritz Intransco International
Speditionsgesellschaft m.b.H.
International air cargo forwarder and customs
broker in Germany☆ United-Seino Transportation (Malaysia)
Sdn. Bhd.
General cargo haulage in Malaysia☆ Nantong Seino Transportation Co., Ltd.
General cargo haulage in China☆ Seino Transportation (Thailand) Co., Ltd.
International air and sea cargo forwarder inThailand☆ Seino Merchants Singapore Pte Ltd.
International air and sea cargo forwarder in
Singapore
Schenker-Seino Logistic Co., Ltd.
Third Party Logistics (3PL) provider
Seino Hokkaido Express Co., Ltd.
General cargo haulage☆ Seino Tokyo Express, Inc.
General cargo haulage
Seino Kanagawa Express Co., Ltd.
General cargo haulage and automotive freight
handling☆ Seino Nagoya Express, Inc.
General cargo haulage☆ Seino Osaka Express, Inc.
General cargo haulage☆ Seino Hokuriku Express, Inc.
General cargo haulage☆ Seino ST Services, Inc.
General cargo haulage and security services
Seino Logistic Hokkaido, Inc.
General cargo haulage
Asahi Bangkok Co., Ltd.
Management in Thailand☆ Seino Customs Clearance Service Co., Ltd.
Customs Broker
Schenker-Seino Co., Ltd.
International sea and air cargo forwarder

Information and Sales Group☆ Toyota Corolla Gifu Co., Ltd.
Automobile sales agency[Second section of the Nagoya Stock Exchange]☆ Netz Toyota Gifu Co., Ltd.
Automobile sales agency☆ Toyota Vista Gifu Co., Ltd.
Automobile sales agency☆ Seino Trading Co., Ltd.
General trading house☆ Seino Information Service Co., Ltd.
Advanced information services and information processing☆ Japan Logistics Development Co., Ltd.
Information and materials distribution systems consulting☆ Asahi Leasing Co., Ltd.
Rental and lease of equipment and machines☆ Asahi Travel Service Co., Ltd.
Travel agency☆ Seino Engineering Co., Ltd.
Construction, drafting, and electrical and air
conditioning installation☆ Seino Family Co., Ltd.
Insurance agency services☆ Toyota Home Gifu Co., Ltd.
Housing sales☆ Asahi Agency Co., Ltd.
Comprehensive advertising agency☆ Asahi Create Co., Ltd.
Comprehensive printer☆ Asahi Enterprise Co., Ltd.
Automobile sales and export☆ Seino Do Brasil Armazens Gerais Ltda.
Storage and maintenance in Brazil☆ Seino Security Service Co., Ltd.
Security services☆ Jms Gifu Corporation
Merchandising of automobile components☆ Medical Support Co., Ltd.
Disposal of medical facility wastes☆ Suito Taxi Co., Ltd.
General passenger transportation☆ Seino Finance Co., Ltd.
Financial business☆ Seino Enterprise, Ltd.
Group management and general consultation

NTT Anzen Hokan Center Co., Ltd.
Warehouse management☆ Seino Sangyo Co., Ltd.
Merchandising of automobile components andtransportation-related services

Tokyo Nohin Daiko Co., Ltd.
Value-added distribution services to the apparelindustry☆ Gifu Hino Motor Co., Ltd.
Automobile sales agency[Second section of the Nagoya Stock Exchange]

Logiwell Co., Ltd.
Total logistics service provider

25

Seino Transportation Co.,Ltd.
1, Taguchi-cho, Ogaki, Gifu 503-8501, Japan

Printed in Japan