Seino Transportation Co., Ltd.
Annual Report 2005
Year Ended March 31, 2005

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 is headquartered in
Ogaki, Gifu Prefecture, in central Japan. Together with the
expansion of the Japanese economy and the development ofJapan s extensive expressway network, Seino has achieved steady
growth over the years to become one of Japan s leading trucking
companies. Currently, the Seino Group comprises 44 consolidated
subsidiaries and 17 affiliates engaged in such key areas astransportation services, merchandise sales and information services
businesses.
Adhering to its customer first principle, Seino has worked
to optimize its network. Today, as of March 31, 2005, Seino
provides efficient transportation services throughout Japan via its
402 terminals, including 151 owned by the Company and 251 bysubsidiaries, a fleet of 10,391 trucks and its network that averages
6,000 routes daily. Overseas, international forwarding operations
have been transferred to the joint venture company Schenker-Seino
Co., Ltd., and the Company s global network and leading-edge IT
systems are being effectively utilized to expand this business.
Seino is aiming to further enhance its competitiveness by
exploiting the synergies among its Group alliances.
Seino aims to be in the leader in Less-than-Truck Load (LTL)commercial cargo transportation for the domestic market by
designating this field as its core business and concentrating
management resources accordingly. The Company will provide
customers with competitive and highly satisfying services andcreate new models for distribution services within the evolving
transportation market in order to proceed down the Road to
Success toward becoming a highly
profitable company.

Contents
Financial Highlights

1

To Our Shareholders, Customers and Friends

2

New G5 Plan

4

— Aiming to Achieve an Operating Income Margin of 5%Centering on LTL Commercial Cargo Transportation —Review of Operations

8

Financial Review

10

Six-year Summary

11

Consolidated Balance Sheets

12

Consolidated Statements of Income

13

Consolidated Statements of Shareholders’ Equity

14

Consolidated Statements of Cash Flows

15

Notes to Consolidated Financial Statements

16

Report of Independent Auditors

24

Board of Directors/Corporate Data

25

Seino Group26

Forward-looking Statements:
In this annual report, statements other than historicalfacts are forward-looking statements that reflect theplans and expectations of the Company.
These forward-looking statements involve risks, uncertainties and other factors that may cause the Company’s actual results and achievements to differ materially from those anticipated in these statements.

Seino Transportation Co., Ltd. and Subsidiaries

Financial Highlights(Billions of Yen)

For the Years March 31, 2005, 2004 and 2003
Thousands of
U.S. Dollars*Millions of Yen
2005

NON-CONSOLIDATED BASIS:
Operating revenues
Operating income
Income before income taxes
Net income
Net income per share (in yen and U.S. dollars):-Basic-Diluted
CONSOLIDATED BASIS:
Operating revenues
Operating income
Income before income taxes
Net income
Net income per share (in yen and U.S. dollars):-Basic-Diluted

2004

2003

¥ 265,501 ¥ 259,295 ¥ 261,590
6,426
6,858
5,170
8,318
7,911
7,073
4,562
4,173
3,502
23.07
22.77

23.53
20.43

2005

$2,481,318
60,056
77,73842,636

19.87
17.04

0.22
0.21

¥ 423,833 ¥ 417,705 ¥ 409,399
12,047
12,665
10,194
22,144
21,221
21,841
14,273
13,43913,622$3,961,056
112,589
206,953
133,393

2003

2004

2005

2004

2005

2004

2005

(Billions of Yen)

20
15
10
5

72.26
70.67

76.11
63.33

77.47
63.41

0.68
0.66

0
2003

(Billions of Yen)

Thousands of
U.S. Dollars*Millions of Yen
2005

NON-CONSOLIDATED BASIS:
Cash and cash equivalents, and short-term investments
Property and equipment, net of accumulated depreciation
Total assets
Long-term debt and other long-term liabilities
Net assets
Net assets per share (in yen and U.S. dollars)¥ 32,150
165,062
321,960
39,701
230,792
1,182.60

2004

2003

2005

¥ 54,553
162,278
348,879
47,352229,917
1,161.85¥ 36,933
160,409344,165
46,621
205,654
1,171.04$300,467
1,542,636
3,008,972
371,037
2,156,935
11.05
2003

CONSOLIDATED BASIS:
Cash and cash equivalents, and short-term investments
Property and equipment, net of accumulated depreciation
Total assets
Long-term debt and other long-term liabilities
Net assets¥ 70,441
248,832
470,429
59,330283,352¥ 89,020
246,925494,743
73,870272,694¥ 73,445
242,864494,583
79,094
238,825$658,327
2,325,533
4,397,121554,4862,648,150

Net assets per share (in yen and U.S. dollars)

1,457.82

1,383.88

1,366.43

13.62(Note) U.S. Dollars amounts are translated at ¥107 = U.S.$1 solely for the convenience of readers.

1

A Message from the Management

To Our Shareholders, Customers and Friends
We are pleased to have this opportunity to report to shareholders,investors and other stakeholders on the consolidated business results of
Seino Transportation Co., Ltd. for the fiscal year ended March 31, 2005 (April 1, 2004 - March 31, 2005).

Operating Environment
In the fiscal year under review, a steady, albeit
gentle recovery in the Japanese economy was fueled byfavorable exports and capital investments. In the second
half of the term, however, the economy entered a severe
correction phase due to the effects of soaring crude oil
prices and natural disasters.
In the transportation industry, despite improved
signs in freight transportation volume, the operating
environment grew even more competitive on account ofsuch cost-reduction pressures as strong demands bycustomers for reduced freight transportation charges,
the ongoing entry of new participants into the market
and rising fuel costs, as well as increased costs
associated with implementation of environmental andsafety countermeasures.

Business Results and Launch of
New Medium-term Management Plan
Amid this challenging environment, the Seino
Group undertook business development efforts toachieve its targets in the final year of the three-year
medium-term plan (April 2002 - March 2005) based on
expanding the share of the highly profitable LTL
commercial cargo consolidation market. Specifically,
we worked to secure stable transportation volume andprofits by focusing on reducing transportation times
and raising precision through measures geared toward
small-and medium-sized bussiness - to - business(BtoB) cargo shipment clients as well as improving
efficiency in arterial transportation. In particular, a highgrowth margin has been achieved for KangarooBusiness Delivery, a guaranteed next-morning delivery
service for an additional fee, launched in fiscal 2004
targeting the LTL business, with future growth in thisbusiness appearing very promising. On the cost side,
we also continued streamlining arterial transportationby promoting speedy and highly efficient transportation
services, allowing us to reduce and curb operationalcosts such as personnel and expressway toll expenses.
The merchandise sales business remained brisk on

2

the back of continued demand for replacement trucks
following implementation of stricter exhaust emission
regulations. Moreover, as an aid to strengthening Groupmanagement, management resolved to convert four
automobile dealers into wholly-owned subsidiaries in
October 2005 through stock swaps. This move wasaimed at reinforcing the base for the merchandise sales
business and establishing a structure to enable more
fluid adaptation to changes in the operating
environment.
As a result of these measures, on a consolidated
basis operating revenues edged up 1.5% to · 423,833
million (US$3,961 million), operating income declined
4.9% to · 12,047 million (US$113 million) and net
income increased 6.2% to · 14,273 million (US$133
million).

Formulation of New Three-year
Medium-term Management Plan
From this fiscal year, the G5 (Group 5) Plan
will be initiated as a new three-year medium-term
management plan seeking to achieve an operating
income margin of 5% by continuing to strengthen welldeveloped business foundations as a stronger platform
for the Group as a whole, while concurrently
developing the LTL commercial cargo transportation,
logistics business and the information services andautomobile sales business as the three main pillars. The
G5 Plan has been positioned and is a first step of a midto-long-term strategy that will aid the Company in its
aim to establish an advanced business model that will
be become the next standard in the transportation
business by enabling speedy and highly satisfying
transportation services.
Beginning in the fiscal year ending March 31,
2006, which is the first year of the new plan,management forecasts operating revenues of · 428,000
million and a net loss of · 7,000 million arising fromthe introduction of asset impairment accounting.

Transition to a Pure Holding
Company Structure
As mentioned previously, Seino has decided toconvert four automobile dealerships to wholly-owned
subsidiaries in October 2005. The conversion is geared
toward reinforcing the Transportation, Merchandise
Sales and Information Services business segments.
Concurrently, management resolved to separate
the transportation business from Seino Transportation
Co., Ltd. and transition to a pure holding company
structure. The holding company that emerges after thecompany separation, whose name will be changed to
Seino Holdings Co., Ltd., will specialize in overseeing
the Group and strategic decision making, while the
newly formed company, to be named Seino
Transportation Co., Ltd., and Seino Group companies
will conduct business operations in respective
segments.

July 2005

Corporate GovernanceSeino employs a corporate auditor system.
Together with making swift and accurate decisions
regarding such important matters as businessrestructuring and strategic investments, the Board of
Directors is taking important steps to strengthen
auditing functions along with achieving greater
management transparency.
All four corporate auditors, including two outside
auditors, attend the Meeting of the Board of Directors
and other relevant meetings. Auditors also make efforts
to enhance compliance and increase societal trust
through such activities as auditing of operational
performance.

Yoshikazu Taguchi
Chairman and Chief Executive Officer

To Our Shareholders
In keeping with its basic business policy, Seino
strives to enhance shareholders equity and improve
profitability from a long-term perspective, while
maintaining stable dividends. Accordingly, Seino
maintained regular annual cash dividends per share at· 11.00 (US$0.10) for the fiscal year ended March 31,
2005. Through the G5 Plan, management is dedicatedtoward making Seino the preeminent freighttransportation company while raising corporate andshareholder value. We ask shareholders, customers
and friends for their continued support.

Yoshitaka Taguchi
President and Chief Operating Officer3

New G5 Plan
― Aiming to Achieve an Operating Income Margin of 5% Centering on LTL
Commercial Cargo Transportation ―A speedy and efficient transportation business foundation was established through execution of
the Commercial Cargo No. 1 Plan, Seino’s previous medium-term management plan.
The G5 Plan was established as the new three-year medium-term plan seeking to achieve
an operating income margin of 5% by continuing to strengthen well-developed businessfoundations while realizing further growth focusing on the three main pillars of the LTL
commercial cargo transportation business, logistics business and the automobile sales business.

Results of the Commercial Cargo No. 1 PlanThrough the previous medium-term
management plan, which targeted an expanded
share of the highly profitable LTL commercial
cargo consolidation market, Seino augmented
medium-sized cargo transportation capabilities,
reduced collection and delivery and transportation
times and raised precision by promoting increased
efficiency in arterial transportation as well as
acquired and expanded short-distance, mediumsized cargo clients. The Company also worked topromote strategic alliances with other companies
and expand bulk consignment orders for handling
distribution for companies. As a result, Seino s
efficient transportation business foundation wasenhanced by the expansion of its network andstreamlining of information systems, which in turnled to bolstering customer satisfaction.

As the figures show, Seino has achieved
results that exceeded initial targets.

New Three-year Medium-termManagement Plan-G5 Plan
The G5 Plan targets an operating income
margin of 5% by the fiscal year ending March 2008
in the three pillars of the LTL commercial cargotransportation business, logistics business and theautomobile sales business. To this end, Seino willraise revenues and income by increasing efficiency
of operations as well as seek to improve customer

Operating Income Margin
MarginFinal Fiscal Yearear

5%

Results of Commercial Cargo No. 1 Plan

InitialTargets

FY2005 Achievement
Ratio

418,500

423,833

101.3%

Transportation services 302,500

307,264101.6%

Merchandise sales

96,30098,259102.0%

Operatingrevenues

OperatingincomeInformation services/Others

19,70018,31092.9%

465,000

23,500Operating income

11,50012,047104.7%

Operating revenues

4satisfaction. Are specific measures to be pursued
for the three businesses.

LTL Commercial Cargo
Transportation BusinessIn continuation with the previous mediumterm management plan, the main target of the Seino
Group continues to be medium-sized and BtoB
cargo shipment clients. The following measures will
be pursued to further expand sales for LTL cargo.

Expand Sales of “Designated Time” ProductLine-Fast, Highly Precise Delivery
Our Kangaroo Business Delivery service,launched in fiscal 2004, is a designated time service
that promises next-morning delivery for BtoB cargo
and is displaying strong growth in orders due to its
popularity. Seino intends to gradually expand theareas where this service is offered. In addition, theCompany will develop and expand sales for
products that offer time savings and precision for a
premium fee, including the Kangaroo Super
Express service that offers same-day delivery
utilizing the Shinkansen (bullet trains) operating
between Tokyo and Osaka and Tokyo and Nagoya.

Raise Transportation Quality – Offering
Real-time Delivery Estimates
Seino is the first transportation company inJapan to offer customers the ability to obtaindelivery estimates updated every 20 minutes by
having its drivers carry mobile phones to provide
updates on parcel delivery progress that thenbecome viewable online via Seino s website or bymobile phone (patent pending). This service ishighly popular among customers, and iscontributing to such improvements as a reduced
volume of inquiries regarding estimated delivery
times from customers to branches.
Seino aims to pursue further introduction
within branches of its own Inter-Seino Standard
Operation (ISSO), which is more stringent than ISO
9001 international quality assurance certification
already obtained at 210 locations within the Seino
Group. Plans also call for raising transportation
quality by improving express delivery and lead-time
reduction and adherence to delivery schedule ratios
as well as reducing the rate of parcel accidents.

Enlarge Network – Expand Tokyo
Metropolitan Bases
The hub of the Japanese economy lies inTokyo. To speed up delivery and raise customer
service especially in the Tokyo area, Seino aims toramp up the number of drivers in the three
metropolitan areas of Tokyo, Osaka and Nagoya by
500 over the next three years, and increase thenumber of bases by 10.

Collection and delivery vehicle
loaded with the world’s most
pioneering functions

5

Logistics Business

Automobile Sales BusinessAmong small- and medium-sized companies,
which the Seino Group has cultivated in its
transportation business, many have begun
concentrating limited management resources on
their core operations and outsourcing their logistics
operations.
Capitalizing on speed and precision
accumulated in the transportation business as well
as already existing nationwide transportation
networks and facilities, Seino is aggressively
expanding businesses through the provision ofunified services in consolidation, storage,
processing, handling and transportation, while also
remaining watchful for M&A opportunities.

In the automobile sales business, which is thethird pillar of the G5 Plan, Seino aims to expand
business by developing flexible sales capabilities
tailored to customers and by expanding after-market
share.
Seino will also work to raise profitability byincreasing the handling of both environmentalfriendly and high-end luxury automobiles as well as
expanding sales for used automobiles. The
Company will also develop a business structure thatcan flexibly adapt to possible future reorganizationof dealerships by converting four dealerships towholly-owned subsidiaries in October 2005. This
move is expected to improve efficiency in indirect
operations.
Seino will work to expand aftermarket shareby pursuing aggressive marketing via collaboration
with the Sales Department and Information Services
Department. Further, SIS has branches in Gifu
Prefecture where areas have been designated toconcentrate IT infrastructure development.
Accordingly, the Company therefore plays a pivotal
role in broadening such activities as seminars andefforts to improve recognition for Seino locallyalong with improving technologies.

Osaka West Terminal possesses
such diverse functions as storage,
logistics and processing operations.

Specifically, Seino aims to strengthen thealliance between the Distribution Center
Department and logistics sections (currently
integrated as the Logistics Department) and theGroup company Seino Information Service Co.,
Ltd. (SIS), as well as integrate SIS Lead Logistics
Provider (LLP) logistical analysis and operating
management service with Seino s Strategic
Logistics Information Management Systems(SLIM) software. In addition, based on its 60
delivery centers totaling 148,500 m2 in area, Seino
will capitalize on an integrated terminal system thatoffers a countrywide network of routes and that canperform storage, logistics, processing and a wide
variety of other functions.

6

New Wako Branch

Reforming Cost Structure
Seino will reduce costs by raising efficiency
in route delivery service and in indirect operations.
To raise efficiency in route delivery, we willcontinue to employ unit load carriers developed by
Seino. By employing these unit load carriers tomaximize volumetric capacity for route delivery

New G5 Plan
― Aiming to Achieve an Operating Income Margin of 5% Centering on LTL
Commercial Cargo Transportation ―service, Seino is increasing operating efficiency,
reducing personnel expenses and increasing route
efficiency through more efficient truck loading andshorter unloading times. As of March 2005, Seino
introduced unit load carriers over an expanse of 200
km of its route delivery service, with plans callingfor extending the range of use in the coming fiscal
term. The Company is working to streamline
arterial transportation through such measures as
reducing two-man driving teams to a single driverand using liner transportation, while striving to
reduce and curb such transportation costs as
maintenance fees, personnel expenses and toll
expenses.
To raise efficiency in indirect operations,Seino will work to reduce costs by standardizing
Group operations and unifying duplicated services,in tandem with improving customer satisfaction byshifting personnel in indirect operations to direct
operations. Indirect operations common to theGroup will be carried out by specialized
departments such as the Hotline Center, which is incharge of contact with and handling of customers
and responds to all inquiries regarding requests forshipping and the status of deliveries that werepreviously handled directly by branches; theAdministrative Center, which conducts payment
operations for such expenses as utility and rental
expenses; and the Group Management Department,
which engages in work to integrate systems andconsolidate the operations of the Accounting
Department.
In the freight vehicle industry, despite an
expected recovery in freight transportation volume
in Japan, forecasts call for a continued fierce
operating environment on account of challenging
demands by customers, investment in improved
safety and environmental measures as well as risingfuel costs stemming from rising crude oil prices.
Although the annual volume of freight in Japan is
expected to top 5,600 million tons, Seino s annual
volume of handled freight does not exceed 11.2
million tons. In order to tap into this freight
volume, raise operating efficiency and establish asolid earnings structure, Seino will steadily pursue
the G5 management plan in the current term
together with improving corporate and shareholder
value.

Okinawa Hotline Center

7

Review of Operations

Operating Revenues of Transportation Services(Millions of Yen)

Transportation Services

300,000

200,000

100,000

0

8

2003

2004

2005

During the fiscal year under review, severe conditions continued in thetransportation industry, the Seino Group’s main area of business. Despite signs ofimprovement in freight transportation volume, the transportation industry witnessedstrong customer demands for reducing freight transportation charges and an ongoingentry of new participants into the market. These conditions were further aggravatedby several cost-related factors that included a tightening of environmental
countermeasures, implementation of safety management for truck operations andrising fuel costs.
In fiscal 2005, the final year of the Commercial Cargo No. 1 Plan, our threeyear management plan, we continued to emphasize the concentration andspecialization of management resources on LTL commercial cargo services andaimed to standardize and raise the quality of our transportation services. At the sametime, we focused on securing new business for and increasing volumes of highly
profitable freight.
Thanks to these efforts, Seino achieved a 3.8% rise in the volume of freight
handled compared with the previous fiscal year. Operating revenues in theTransportation Services segment rose 2.2% to ¥307,264 million (US$2,872 million),
1.6% above the target of our three-year management plan. Operating revenues in theTransportation Services business thus accounted for 72.5% of total consolidated
operating revenues. Seino recorded a 2.5% increase in operating income inTransportation Services to ¥7,931 million (US$74 million), owing to a rise in thevolume of LTL freight handled and to the implementation of cost-curbing measures
such as pursuing speedy and highly efficient driving operations.
By business sector, the LTL commercial freight transportation businessrecorded a 2.4% increase in operating revenues to ¥183,120 million (US$1,711
million)*. This gain mirrored efforts to achieve increases in customers, freight
volumes and revenues, with an emphasis on commercial freight for small- andmedium-sized companies, freight suitable for LTL commercial cargo transportationroutes and medium-sized customers that ship 10 to 100 packages per shipment. Also
contributing to the rise in operating income were efforts to raise levels of customer
satisfaction by offering an online inquiry service for estimated delivery times.
In the small parcel transportation business, operating revenues increased 1.1%
to ¥49,728 million (US$465 million)*. This rise was due particularly to increased
sales of and expanded response capabilities for our “Kangaroo Business Delivery,” adesignated time service for BtoB shipping that guarantees next-morning delivery, as
well as to the provision of an inquiry service for estimated delivery times as part ofefforts to raise the quality of transportation.
In the moving business, operating revenues declined 21.0% to ¥2,555 million(US$24 million)*, due to such factors as a decrease in large-scale orders for the
relocation of companies.
In air and sea freight forwarding, Seino recorded a 16.3% rise in freight volume
and a 9.1% increase in operating revenues to ¥7,237 million (US$68 million)*,reflecting increased demand for domestic air freight transportation.
*As consolidated figures are not available, parent company figures are shown
throughout.

Operating Revenues of Merchandise Sales(Millions of Yen)

Merchandise Sales

100,000

Operating revenues in this segment edged up 1.1% to ¥98,259 million(US$918 million), accounting for 23.2% of consolidated operating revenues.
Operating income declined 23.1% to ¥2,374 million (US$22 million). In automobile
sales, although the sales volume of new-model vehicles declined, robust truck sales
were underpinned by firm replacement demand for trucks that meet exhaustemission regulations and by ongoing demand for environment-friendly trucks. In
merchandise sales, revenues from fuel sales also rose due in part to soaring crude oil
prices. However, a decline in unit sales prices for vehicles due to escalatingcompetition, coupled with narrowing profit margins in fuel sales, caused the decline
in operating income.

80,00060,00040,00020,000

0

2003

2004

2005

Operating Revenues of Information Services(Millions of Yen)

Information Services

6,000

Operating revenues in this segment decreased 3.9% to ¥5,268 million (US$49
million). However, we recorded operating income of ¥74 million (US$0.7 million),
an improvement compared with an operating loss recorded in the previous fiscal
year. Operating revenues accounted for 1.2% of consolidated operating revenues.
Despite sluggish sales of computer-related equipment, operating income improved
due mainly to a reduction in costs and increases in sales of systems operations
services and sales for systems development and upgrades.

4,000

2,000

0

2003

2004

2005

Operating Revenues of Others(Millions of Yen)

Others

20,00015,00010,000

5,000

0

2003

2004

2005

This segment consists of leasing operations carried out by Asahi Leasing Co.,
Ltd., equipment installation subcontracting operations undertaken by Seino
Engineering Co., Ltd. and travel agency operations performed by Asahi Travel
Service Co., Ltd. This segment also includes a variety of other businesses such asreal estate operations, advertising, taxi services, insurance agency business,
temporary personnel services business and medical waste disposal. During the fiscal
year under review, the Group carried out business activities aimed at creating new
demand and securing appropriate earnings by providing value-added services.
During the fiscal year, operating revenues in this segment decreased 9.6% to¥13,042 million (US$122 million) and accounted for 3.1% of consolidated
operating revenues. Operating income declined 19.7% to ¥1,673 million (US$16
million). Although each company in this segment performed favorably, this segment
recorded decreases due to a change in the method of segmentation for income andexpenses related to rental fees.
9Financial Review
Operating Results
Consolidated operating revenues for the Seino Group for the
fiscal year ended March 31, 2005 rose 1.5% to ¥423,833 million(US$3,961 million). Operating costs of revenues increased 1.7% to¥381,970 million (US$3,570 million). The ratio of operating costs ofrevenues to operating revenues was 90.1%, virtually the same as in
the previous fiscal year.
Selling, general and administrative (SG&A) expenses were¥29,816 million (US$279 million), approximately the same amountas in the previous fiscal year. Operating income declined 4.9% to¥12,047 million (US$113 million).
Other income increased ¥1,541 million, or 18.0%, to ¥10,097
million (US$94 million). Although Seino posted a ¥205 million(US$2 million) loss on liquidation of subsidiaries and affiliates, theCompany recorded a ¥829 million increase in miscellaneous, net to¥1,349 million (US$13 million).
As a result, income before income taxes and minority interests
rose 4.3% to ¥22,144 million (US$207 million), and net income
increased 3.4% to ¥14,273 million (US$133 million).
Net income to operating revenues was 6.2%; net income pershare declined ¥3.85 to ¥72.26 (US$0.68), and the return on equity
ratio was 5.1%. Annual cash dividends per share were maintained at¥11.00 (US$0.10).

mainly to a decrease in investment securities.
On the liabilities side, total current liabilities decreased 19.0%
to ¥91,252 million (US$853 million) owing to a decline in shortterm borrowings.
Long-term liabilities decreased 19.7% to ¥59,330 million(US$554 million). Total shareholders’ equity increased 3.9% to¥283,352 million (US$2,648 million). The shareholders’ equity ratiorose 5.1 percentage points to 60.2%.

Cash FlowsNet cash provided by operating activities increased ¥2,789
million to ¥19,323 million (US$181 million), due to a decrease intrade receivables.
Net cash used in investing activities amounted to ¥2,422 million(US$23 million), compared with ¥2,889 million in net cash provided
by investing activities in the previous year, due to a decrease inproceeds from the sale of investment securities.
Net cash used in financing activities amounted to ¥31,617
million (US$295 million) due to a net decrease in short-termborrowings.
As a result of the previous activities, cash and cash equivalents
at end of year decreased ¥14,714 million to ¥50,606 million(US$473 million).

Financial Position
Total assets at the end of the fiscal year amounted to ¥470,492
million (US$4,397 million), down 4.9% from the end of the previous
fiscal year. Total current assets were down 10.8% to ¥164,129
million (US$1,534 million). Net property and equipment amounted
to ¥248,832 million (US$2,326 million), approximately the sameamount as at the previous fiscal year-end. Investments and otherassets declined 9.9% to ¥57,531 million (US$538 million) due

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
2000

10

2001

2002

2003

2004 2005

60

40

20

0
2000

2001

2002

2003

Operating income to operating revenues

Net income to total assets

Net income to operating revenues

Return on equity ratio

2004

2005

2000

2001

2002

2003

2004

2005

Seino Transportation Co., Ltd. and Consolidated Subsidiaries

Six-year Summary
For the Years Ended March 31, 2005, 2004, 2003, 2002, 2001 and 2000

Millions of Yen
2005
For the year:
Operating revenues:
Transportation services
Merchandise sales
Information services
OthersOperating costs of revenues
Selling, general andadministrative expenses
Operating income
Net income (loss)

2004

423,533
307,264
98,2595,268
13,042
381,970

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

¥

2003

417,705
300,645
97,155
5,483
14,422375,403¥

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¥

354,255
293,319
36,326
5,952
18,658336,31129,816
12,047
14,273

29,637
12,665
13,43930,33910,194
13,62232,655
3,543
16,475

17,666895(18,403)

15,7982,146
3,043

164,129
490,492
91,252
4,815
17,974283,352

183,933
494,743
112,668
31,17018,341
272,694

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

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

72.26
70.67
11.00

¥

76.11
63.33
11.00

¥

77.47
63.41
11.00

¥

98.73
77.52
11.00

¥

(122.00)(122.00)
11.00

¥

20.11
16.63
11.00

Thousands
Number of shares issued

198,631

198,631

176,820

176,820

152,919

152,919

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)

0.6
0.9
0.7
1.4
49.2
159.2
99.6
55.3

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

2.8
3.4
3.0
5.1
60.3
179.9
53.1
15.1

Current ratio

3.0
3.2
2.7
5.3
55.1
163.3
68.4
14.2

2.5
3.3
2.8
5.8
48.3
117.4
92.6
14.2

Debt equity ratio

Payout ratio

(%)

(%)

(%)

200

120

60

50

160
90

40

120

30
60
20

80

10

30

40
0

0

0
2000

2001

2002

2003

2004

2005

-10
2000

2001

2002

2003

2004

2005

2000

2001

2002

2003

2004

2005

11

Seino Transportation Co., Ltd. and Subsidiaries

Consolidated Balance Sheets
March 31, 2005 and 2004

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 (Note 3)
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: 198,631,167 shares in 2005 and 2004
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 - 4,320,118 shares in 2005 and 1,656,113 shares in 2004
Total shareholders’ equity¥
See accompanying Notes to Consolidated Financial Statements.

12

2005

2004

50,606 ¥19,835
79,120
6,817
5,014
4,263
(1,526)
164,129

65,320 $472,953
23,700185,374
80,401
739,439
6,997
63,711
5,218
46,8603,770
39,841(1,473)(14,262)
183,933
1,533,916

418,257(169,419)
248,832

412,397(165,472)
246,925

34,864
7,708
8,016
120
6,823
57,531
470,492

40,329325,832
8,021
72,037
7,945
74,916
120
1,121
7,470
63,76663,885
537,672
494,743 $ 4,397,121

¥

2005

3,908,888(1,583,355)
2,325,533

31,170 $291
51,375
13,555
3,942
3,871
8,464
112,668

45,00088,551
472,692
119,355
44,925—82,299852,822

8,499
40,688
2,235
6,555
1,353

18,05039,007
2,398
13,051
1,364

79,430380,261
20,88861,262
12,64536,55835,511

341,663

42,48264,895
175,227
(379)
4,916
(577)
(3,212)
283,352
470,492 ¥42,482
397,028
64,874606,495
163,242
1,637,636(413)(3,542)
3,742
45,944(676)(5,392)(557)(30,019)272,6942,648,150
494,743 $ 4,397,121

4,815
9,475
50,578
12,771
4,807
—
8,806
91,252¥

Seino Transportation Co., Ltd. and Subsidiaries

Consolidated Statements of Income
For the Years Ended March 31, 2005, 2004 and 2003

Thousands of
U.S. Dollars

Millions of Yen

2005
Operating revenues (Note 12)¥

Operating costs and expenses (Notes 6 and 12):
Operating costs of revenues
Selling, general and administrative expenses

423,833

2004¥

417,705

2003
¥

2005

409,399$ 3,961,056

381,970
29,816
411,786
12,047375,403
29,637405,040
12,665368,866
30,339399,205
10,1943,569,813
278,654
3,848,467
112,589

Income before income taxes and minority interests

2,306
(353)
154
238
—
—
6,521
211
(4)
(107)
(13)
(205)
1,349
10,097
22,144

2,285(648)(1,263)
453
—
—
6,897
—
(21)
415
(74)
(8)
520
8,556
21,221

2,805
(803)
619
444
1,542
(863)
6,896
—
(288)
4
(4)
—
1,295
11,647
21,841

21,551(3,299)
1,439
2,224
—
—
60,9441,972(37)(1,000)(121)(1,916)
12,607
94,364
206,953

Income tax expenses (Note 11)Less, minority interests in net income of subsidiaries
Net income

6,643
1,228
14,273

6,819
963
13,439 ¥

6,846
1,373
13,62262,084
11,476
133,393

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 of affiliates
Reversal of employee retirement benefit liability (Note 6)
Loss on settlement of qualified retirement benefit pension plan
Amortization of consolidating adjustment account (negative goodwill)
Recoveries from bad debts previously written-off
Loss on write-down of investment securities(Loss) gain on sale of investment securities
Loss on investments in and loans to affiliates
Loss on liquidation of subsidiaries and affiliates
Miscellaneous, net

Per share:
Net income:-Basic-Diluted
Cash dividends

¥

¥

$

Yen

¥

72.26
70.67
11.00

¥

76.11
63.33
11.00

U.S. Dollars

¥

77.47
63.41
11.00

$

0.68
0.66
0.10

See accompanying Notes to Consolidated Financial Statements.

13

Seino Transportation Co., Ltd. and Subsidiaries

Consolidated Statements of Shareholders’ Equity
For the Years Ended March 31, 2005, 2004 and 2003

Number ofcommonshares issued

Commonstock

CapitalsurplusRetainedearnings

Land
revaluation
decrement

Net unrealized
gains onavailable-forsale securities

Foreigncurrencytranslation
adjustment

TreasurystockMillions of Yen

Balance at March 31, 2002
Net income for the year
Treasury stock issued upon
exercise of stock option
Cash dividends
Bonuses to directors and statutory
auditors
Net change in unrealized gains onavailable-for-sale securities, netof applicable income taxes
Translation adjustment
Adjustment for applicable income
taxes
Fractional shares acquired andotherBalance at March 31, 2003
Net income for the year
Conversion of convertible bonds
Treasury stock issued upon
exercise of stock option
Cash dividends
Bonuses to directors and statutory
auditors
Net change in unrealized gains onavailable-for-sale securities, netof applicable income taxes
Translation adjustment
Fractional shares acquired, net
Balance at March 31, 2004
Net income for the year
Treasury stock issued upon
exercise of stock option
Cash dividends
Bonuses to directors and statutory
auditors
Reversal of land revaluation
decrement
Decrease due to a change of votinginterest on a subsidiary
Net change in unrealized gains onavailable-for-sale securities, netof applicable income taxes
Translation adjustment
Purchase of treasury stock andfractional shares acquired, net
Balance at March 31, 2005

176,820,926 ¥—

32,471 ¥—54,875 ¥ 140,169 ¥—
13,622(425) ¥—

1,479 ¥—

(654) ¥
—

(811)
—

—
—

—
—

1
—

—
(1,932)

—
—

—
—

—
—

43
—

—

—

—

(62)

—

—

—

—

—
—

—
—

—
—

—
—

—
—

124
—

—
(91)

—
—

—

—

—

—

12

39

—

—

—
176,820,926—
21,810,241—
32,471—
10,011—54,876—
9,989—
151,797
13,439
—

—
(413)
—
—

—
1,642
—
—

—
(745)
—
—

(35)
(803)
—
—

—
—

—
—

9
—

—
(1,914)

—
—

—
—

—
—

297
—

—

—

—

(80)

—

—

—

—

—
—
—
198,631,167————
42,482————64,874————
163,242
14,273

—
—
—
(413)
—

2,100
—
—
3,742
—

—
69
—
(676)
—

—
—
(51)
(557)
—

—
—

—
—

21
—

—
(2,158)

—
—

—
—

—
—

179
—

—

—

—

(97)

—

—

—

—

—

—

—

(33)

33

—

—

—

—

—

—

—

1

—

—

—

—
—

—
—

—
—

—
—

—
—

1,174
—

—
99

—
—

—
(379) ¥—
4,916 ¥—
(577) ¥

(2,834)(3,212)(3,859) $—34,972 $—(6,318) $—(5,206)——
198,631,167 ¥—
42,482 ¥——64,895 ¥ 175,227 ¥Thousands of U.S. Dollars

Balance at March 31, 2004
Net income for the year
Treasury stock issued upon
exercise of stock option
Cash dividends
Bonuses to directors and statutory
auditors
Reversal of land revaluation
decrement
Decrease due to a change of votinginterest on a subsidiary
Net change in unrealized gains onavailable-for-sale securities, netof applicable income taxes
Translation adjustment
Purchase of treasury stock andfractional shares acquired, net
Balance at March 31, 2005

$ 397,028 $ 606,299 $1,525,626 $——
133,393
—
—

196
—

—
(20,168)

—
—

—
—

—
—

1,673
—

—

—

(907)

—

—

—

—

—

—

(308)

308

—

—

—

—

—

—

9

—

—

—

—
—

—
—

—
—

—
—

10,972
—

—
926

—
—

—
(3,542) $—45,944 $———$ 397,028 $ 606,495 $1,637,636 $See accompanying Notes to Consolidated Financial Statements.

14—(26,486)(5,392) $ (30,019)

Seino Transportation Co., Ltd. and Subsidiaries

Consolidated Statements of Cash Flows
For the Years Ended March 31, 2005, 2004 and 2003

Thousands of
U.S. Dollars

Millions of Yen

2005
Cash flows from operating activities:
Income before income taxes and minority interests
Adjustments for:
Depreciation
Amortization of consolidating adjustment accountNet provision for employee retirement benefit liability(Gain) loss on sale or disposal of property and equipment
Equity in net income of affiliates
Recoveries from bad debts previously written-off
Loss on write-down of investment securities
Loss (gain) on sale of investment securities
Loss on investments in and loans to affiliates
Loss on liquidation of subsidiaries and affiliates
Decrease (increase) in trade receivables(Increase) decrease in inventories(Decrease) increase in trade payables and accrued expenses
Repayments of employees’ saving deposits
Other, net
Sub-totalInterest and dividends received
Interest paid
Income taxes paid
Net cash provided by operating activities¥

22,144

2004¥

21,221

2003¥

21,841

2005$

206,953

13,744(6,521)
1,680
(154)
(238)
(211)
4
107
13
205
1,534
(756)
(142)
(3,686)(3,004)
24,7192,390(369)(7,417)
19,323

12,941(6,897)
2,035
1,263
(453)
—
21
(415)
74
8
(6,318)(1,474)
2,734
—
(995)
23,7452,439(645)(9,005)
16,534

11,287(6,896)
1,710
(619)
(444)
—
288
(4)
4
—
5,340
1,436
(2,762)—(2,255)28,926
2,978(844)(5,468)25,592

128,449(60,944)
15,701(1,439)(2,224)(1,972)
37
1,000
121
1,916
14,336(7,065)(1,327)(34,448)(28,075)
231,019
22,337(3,449)(69,318)
180,589

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 (used in) provided by investing activities(16,402)(2,558)3,930
12,608(2,422)(21,351)(6,232)
21,3729,100
2,889(18,744)(4,964)
31,151
12,30819,751(153,290)(23,907)36,729117,832(22,636)

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 (decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

72
(438)
(26,351)(2,269)(2,631)(31,617)2(14,714)65,32050,606 ¥410(23,881)
16,586(2,014)254(8,645)—
10,77854,54265,320 ¥569(9,556)(29,927)(2,030)(19)(40,963)(56)
4,324
50,21854,542 $673(4,093)(246,271)(21,206)(24,589)(295,486)
19(137,514)
610,467
472,953¥

See accompanying Notes to Consolidated Financial Statements.

15

Seino Transportation Co., Ltd. and 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 Japan,
the Securities and Exchange Law of Japan, and on the basis of accounting principles generally accepted in Japan, which are different in certain respects as to application and disclosure requirements ofInternational Financial Reporting Standards. These consolidated financial statements are compiled from the original consolidated financial
statements in Japanese prepared by the Company as required by the
Securities and Exchange Law of Japan and submitted to the Director of
Kanto Finance Bureau of Japan.

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 ¥107 to $1, theapproximate rate of exchange at March 31, 2005. 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 ¥107 to $1 or at any other rate.

(c)

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

2. Summary of Significant Accounting Policies
flexible manner. The agreements were subsequently approved by theshareholders at the annual general meeting held on June 24, 2005. The
transaction is planned to complete effective on October 1, 2005.
The details of stock-for-stock exchange between the Company andthe companies are as follows:(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, 2005, 2004
and 2003, 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 15, 16, and16, respectively.
The number of subsidiaries and affiliates for the three years ended
March 31, 2005 was as follows:
Subsidiaries:
Domestic
Overseas
Affiliates, accounted for by the equity method
Affiliates, stated at cost

2005

2004

2003

39
5
6
11

39
7
6
13

39
8
6
14

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) Stock-for-stock exchange agreements with the Company’s
certain subsidiaries

16

On May 17, 2005, the Company entered into the stock-for-stock
exchange agreements with its certain subsidiaries in order to make theCompany’s respective equity share in such subsidiaries increase to100%. This reorganization of the Seino Group is expected to strengthen
its integration and improve the optimization and the efficiency, andcorrespond to the change in the business environment in a mobile andCurrent
Exchangeequity share rate of one
directly held share of theby theCompany
Company
for(shares)
TOYOTA COROLLA GIFU CO., LTD.
(“COROLLA”)
GIFU HINO MOTOR CO., LTD. (“HINO”)
NETZ TOYOTA GIFU CO., LTD. (“NETZ”)
NETZ TOYOTA CENTRO-GIFU CO., LTD.
(“CENTRO”)

41.29 %
41.26 %
71.50 %

1.68
1.11
27.80

97.46 %

5.12

The unaudited financial information of the subsidiaries as at or for
the fiscal year ended March 31, 2005 (recent fiscal year-end) was asfollows:
COROLLAHINO
NETZMillions of Yen

CENTROOperating revenues
Net income for the year
Total assets
Net assets¥ 38,014 ¥ 24,653 ¥ 19,359 ¥ 10,152
663
475
482
178
37,56926,116
11,7407,604
28,631
17,2506,920
3,113

Operating revenues
Net income for the year
Total assets
Net assets$ 355,271 $ 230,402 $ 180,925 $ 94,879
6,196
4,439
4,505
1,664
351,112 244,075 109,720
71,065267,579 161,215
64,67329,093Thousands of U.S. Dollars(b) Cash and cash equivalents
The Seino Group considers cash equivalents to be highly liquiddebt 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”,
whose classification determines the respective accounting method as
stipulated by the accounting standard for financial instruments. Heldto-maturity securities are stated at amortized cost. Marketable securities with market quotations for available-for-sale securities are stated atfair value and net unrealized gains or losses on these securities arereported as a separate component of shareholders’ equity, net of appli
cable income taxes. Gains and losses on disposition of available-forsale securities are computed based on the moving-average method.

Nonmarketable securities without available market quotations foravailable-for-sale securities are carried at cost determined by themoving-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.

taxes based on “added value amount” and “capital amount” amounted
to ¥788 million ($7,364 thousand) and were included in selling, generaland administrative expenses for the year ended March 31, 2005, pursuant to “Practical Treatment for Presentation of Sized BasedCorporate Enterprise Taxes in the Statement of Income” (AccountingStandards Board, Report of Practical Issues No.12). As a result, for theyear ended March 31, 2005, operating income and income before
income taxes and minority interests decreased by ¥788 million ($7,364
thousand), respectively.

(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 orlosses on derivatives are recognized in the current earnings. According
to the special treatment as permitted by the accounting standard forfinancial instruments, the hedging interest rate swap is accounted foron an accrual basis, and recorded net of interest income generated frominvestments, hedged items, if certain conditions are met.

(e)

(l)

(m) Translation of foreign currency accounts
Receivables, payables and securities, other than stocks of subsidiaries and certain other securities, are translated into Japanese yen at
the exchange rates at the fiscal year-end. Transactions in foreign currencies are recorded based on the prevailing exchange rates on thetransaction 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.

Property and equipment, and depreciation
Property and equipment, including significant renewals and additions, are stated at cost. Property and equipment of the Company andits certain subsidiaries have been depreciated by the straight-line
method for buildings and vehicles, and by the declining-balancemethod for other property.
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.

(n) Per share data
Basic net income per share is computed by dividing income available to common shareholders by the weighted-average number ofshares of common 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 or stock options were exercised at the beginning of
the relevant year or (if later) on their first exercise date and as if thefunds obtained thereby were used to purchase common stock at the
average market price during the respective years under the treasury
stock method.
Cash dividends per share shown for each fiscal year in the accompanying consolidated statements of income represent dividends
declared as applicable to the respective years.

(h) Leases
Where financing leases do not transfer ownership of the leased
property to the lessee during the term of the lease, the leased propertyof the Company and its domestic subsidiaries as lessee is not capitalized and the 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)

Employee retirement benefits
Employees who terminate their service with the Seino Group areentitled to retirement benefits generally determined by the reference of
current basic rates of pay, length of service and conditions under which
the termination occurs.
Unrecognized actuarial differences as changes in the projected
benefit obligation or pension plan assets resulting from the experience
different from that assumed and from changes in assumptions areamortized on a straight-line basis principally over 10 years withinremaining service lives of employees from the next year in which theyarise. Unrecognized prior service cost is amortized using the straightline method over 10 years from the year in which it occurs.

(j)Appropriation of retained earnings
Cash dividends and bonuses to directors and statutory auditors
are recorded in the fiscal year during which a proposed appropriationof retained earnings is approved by the Board of Directors and/or
shareholders.

Inventories
Inventories for supplies are principally stated at moving-average
cost, and inventories for vehicles and work-in-process are principallystated at cost determined by the specific identification method.

(g)

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

Allowance for doubtful accounts
Allowance for doubtful accounts has been provided for at theaggregate amount of estimated credit loss based on the individual
financial review approach for doubtful or troubled receivables and ageneral reserve for other receivables calculated based on the historicalloss experience for a certain past period.

(f)(k) Revenue recognition for freight charges(o)Adoption of new accounting standards
On August 9, 2002, the Business Accounting Council of Japanissued “Accounting Standard for Impairment of Fixed Assets”. The
standard requires that fixed assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. An impairment loss shallbe recognized in the income statement by reducing the carrying amountof impaired assets or a group of assets to the recoverable amount to bemeasured as the higher of the asset's net selling price and value in use.
The standard shall be effective for the fiscal years beginning on April
1, 2005, with earlier adoption permitted. The Seino Group has not
adopted this new standard nor has determined the effect of applying it
on its consolidated financial statements.

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 of existing assets and liabilities and their respective tax bases
and operating loss carryforward. Deferred tax assets and liabilities aremeasured using the enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected
to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes theenactment date.
With the implementation of the “Revision of the Local Tax Law”
issued on March 31, 2003, a local corporate enterprise tax base such as“added value amount” and “capital amount” was newly introduced
from the fiscal year beginning on and after April 1, 2004. Enterprise17

3. Investments
Gross
Gross
unrealized unrealized
gains
lossesMillions of Yen

At March 31, 2005 and 2004, short-term investments consisted of thefollowing:
Millions of Yen

Thousands of
U.S. Dollars

2005
2004
2005
Marketable securities:
Bonds¥ 8,788 ¥ 13,853 $ 82,131
Total marketable securities
8,788
13,85382,131Time deposits with an original maturityof more than three months
11,047
9,847
103,243¥ 19,835 ¥ 23,700 $ 185,374
At March 31, 2005 and 2004, investment securities consisted of
the following:
Millions of Yen

Thousands of
U.S. Dollars

2005
2004
Marketable securities:
Equity securities¥ 15,800 ¥ 13,561 $
Bonds
9,145
10,259
Other
187
193
Total marketable securities
25,13224,013
Other nonmarketable securities
9,732
16,316¥ 34,864 ¥ 40,329 $2005
147,664
85,467
1,748
234,879
90,953
325,832

At March 31, 2005 and 2004, 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, 2005¥
At March 31, 2004

1,700 ¥
4,493

1,720 ¥
4,959

20
466

Cost

At March 31, 2005:
Equity securities
Bonds
Other
At March 31, 2004:
Equity securities
Bonds
Other

¥

7,134 ¥
15,903155¥ 23,192 ¥8,696 ¥
334
38
9,068 ¥

(30) ¥ 15,800(4)16,233(6)187(40) ¥ 32,220¥

6,658 ¥
433
41
7,132 ¥

(35) ¥ 13,561(72)
19,619(6)193(113) ¥ 33,373

6,938 ¥
19,258158¥ 26,354 ¥Thousands of U.S. Dollars

At March 31, 2005:
Equity securities
Bonds
Other

$ 66,673 $ 81,271 $
148,626
3,122
1,449
355
$ 216,748 $ 84,748 $187

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, 2005 and 2004, gross unrealized
gains and losses for marketable securities classified as available-forsale are summarized as follows:(280) $ 147,664(38) 151,710
(56)
1,748
(374) $ 301,122

During the year ended March 31, 2005 and 2003, the Seino Group
recorded a loss on write-down of marketable investment securities due
to a permanent diminution in value in the amount of ¥0 million and¥261 million, respectively. During the year ended March 31, 2004, theSeino Group recorded no loss on write-down of marketable investment
securities.
During the years ended March 31, 2005, 2004 and 2003, the Seino
Group sold available-for-sale securities and recorded a gain of ¥86 million ($804 thousand), ¥585 million and ¥7 million, and a loss of ¥175
million ($1,636 thousand), ¥170 million and ¥1 million on the accompanying consolidated statements of income, respectively.
Expected maturities of held-to-maturity and available-for-salesecurities at March 31, 2005 were as follows:

Thousands of U.S. Dollars

Bonds included in investment securities
At March 31, 2005
$ 15,888 $ 16,075 $Fair andcarryingvalue

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

¥

$

¥

8,773
8,267
7,647
900
25,587$

81,991
77,262
71,467
8,411
239,131

At March 31, 2005 and 2004, 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

2005

2004

2005

4,106 ¥
3,602
7,708 ¥

4,029 $
3,992
8,021 $

38,37433,66372,037

4. Property and Equipment
At March 31, 2005 and 2004, property and equipment consisted of thefollowing:
Millions of Yen

2005
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

2004

Thousands of
U.S. Dollars

2005¥ 139,342 ¥ 137,288 $ 1,302,262
182,822 179,437 1,708,617
72,86872,644
681,00921,50521,034200,981
1,016
1,309
9,495
417,553 411,712 3,902,364(168,979) (165,040) (1,579,243)
248,574 246,672 2,323,121

698
685
6,524
(440)
(432)
(4,112)
258
253
2,412
Total property and equipment ¥ 248,832 ¥ 246,925 $ 2,325,533

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, 2005 and 2004, the differences between the
carrying values of land used for the business operations after revaluation over the current market value of such land at the fiscal year-end
amounted to ¥1,344 million ($12,561 thousand) and ¥858 million,
respectively.

5. Short-term Borrowings and Long-term Debt
At March 31, 2005 and 2004, short-term borrowings consisted of thefollowing:
Millions of Yen

2005
Unsecured bank overdrafts withinterest rates ranging from 0.5%
to 8.5% per annum at March 31,
2005¥
Short-term bank borrowings
principally represented by notes
with interest rates ranging from
0.29% to 5.6% per annum at
March 31, 2005:
SecuredUnsecured¥86 ¥Thousands of
U.S. Dollars

2004

2005

679 $

804

323
616
4,406
29,875
4,815 ¥ 31,170 $Millions of Yen

Less, current portion

Thousands of
U.S. Dollars

Millions of Yen

Land
Buildings and structures
Time deposits included in shortterm investments

¥

2005

2004

2005

971 ¥
1,179

888 $
1,064

9,075
11,019

127

147

1,187

The following is a summary of the conversion price and the termsof optional redemption of the convertible bonds as at March 31, 2005:
3,019
41,17745,000At March 31, 2005, the Company and certain subsidiaries had
unsecured overdraft agreements with 12 banks. Under such agreements, the Company and such subsidiaries were entitled to withdraw
up to ¥21,268 million ($198,766 thousand). The Company and such
subsidiaries are not obligated to pay commitment fees on the unused
portions of such overdraft facilities.
At March 31, 2005 and 2004, long-term debt consisted of thefollowing:Thousands of

1.1% convertible bonds, due March 2006 ¥Loans from banks, partly secured, due
through 2020 repayable on an
installment basis with interest rates
ranging from 0.59% to 7.50% perannum at March 31, 2005
Loans from government agencies,
principally mortgage, repayable on
an installment basis with interest
rates ranging from 0.07% to 3.2%
per annum at March 31, 2005

At March 31, 2005 and 2004, the following assets were pledged ascollateral for certain short-term borrowings and long-term debt:

U.S. Dollars

2005

2004

2005

9,017 ¥

9,017 $

84,271

Conversion
price

1.1% convertible
bonds, due 2006

¥1,755.60 At 104% to 100% of principal after
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, 2005,
the number of shares of common stock necessary for conversion of
convertible bonds outstanding was approximately 5 million.
The aggregate annual maturities of long-term debt as at March 31,
2005 were as follows:
Years ending March 31,

8,718

9,003

81,477

Redemption at the optionof the Company

2006
2007
2008
2009
2010
Thereafter

Millions of Yen¥

Thousands of
U.S. Dollars

9,475 $
7,182
158
123
125
911

88,551
67,121
1,477
1,150
1,168
8,514

239
321
2,233
17,974
18,341
167,981(9,475)(291)(88,551)¥ 8,499 ¥ 18,050 $ 79,430

6. Employee Retirement Benefits
The Seino Group has defined benefit pension plans, which substantially cover all employees.
On April 23, 2002, the Minister of Health, Labour 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 due tothe 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 of the domestic subsidiaries settled the qualified retirement benefit pension plan, and the
Seino Group recorded a loss of ¥863 million in relation to this transaction.
The following table reconciles the benefit liability as at March 31,
2005 and 2004:

Millions of Yen

2005
Reconciliation of benefit liability:
Projected benefit obligationLess, fair value of pension plan
assets at end of year

2004

Thousands of
U.S. Dollars

2005¥ 47,142 ¥ 45,584 $ 440,579(1,155)45,987(1,322)44,262(10,794)
429,785

Less, unrecognized actuarial
differences (loss)(2,567)(4,627)(23,991)Less, unrecognized prior service cost (2,732)(611)(25,533)
Other
−
(17)
−
Net amounts of employee retirement
benefit liability recorded on the
consolidated balance sheets¥ 40,688 ¥ 39,007 $ 380,261
Notes: 1. Projected benefit obligation of certain subsidiaries was calculated using the simplified calculation method as permitted
by the accounting 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 purposes, which amounted to¥5,465 million ($51,075 thousand) and ¥5,127 million atMarch 31, 2005 and 2004, respectively.

19

The component of net periodic retirement benefit expense for thethree years ended March, 2005 was as follows:
Thousands of
U.S. Dollars

Millions of Yen

Net periodic retirement
benefit expenses:
Service cost¥
Interest cost
Expected return on
pension plan assets
Amortization of
actuarial differences
Amortization of priorservice cost
Other
Sub-total
Reversal of employee
retirement benefit
liability
Loss on settlement ofqualified retirement
benefit pension plan
Total retirement
benefitexpense¥

Major assumptions used in calculation of the above information
for the three ended March 31, 2005 were as follows:

2005

2004

2003

2005

2,618 ¥
914

2,766 ¥
866

2,373 $
1,105

24,467
8,542

(21)

(23)

(158)

(196)

615

618

530

5,748

179
17
4,322

65
17
4,309

(53)
17
3,814

1,673
159
40,393——(1,542)

—

—

—

863

—

4,332 ¥

4,309 ¥

3,135 $

2005
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

2004

2003

StraightStraightStraightline method line method line method
2.0%

2.0%

2.0%

2.0%

2.0%

2.5%

10 yearsprincipally
10 years

10 yearsprincipally
10 years

10 yearsprincipally
10 years

40,393

7. Contingent Liabilities
At March 31, 2005 and 2004, the Seino Group was contingently
liable for trade notes endorsed to affiliates and the third parties, fortrade notes discounted with banks in the normal course of business, andfor guarantees, including substantial guarantees, principally of indebtedness of affiliates and the third parties in the aggregate amounts of¥5,171 million ($48,327 thousand) and ¥4,009 million, respectively.

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’ advancenotice and also non-cancelable lease agreements for computer equipment and radio facilities with three-to-seven year contract terms as
lessee. The aggregate minimum future lease payments for such noncancelable lease agreements, including the imputed interest portion, as
at March 31, 2005 and 2004 were as follows:

Millions of Yen

Due within one year
Due after one year¥¥

Thousands of
U.S. Dollars

2005

2004

2005

1,281 ¥
1,622
2,903 ¥

1,553 $
2,370
3,923 $

11,97215,15927,131

A 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, 2005 and 2004, 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

2005¥

Due within one year
Due after one year¥

Thousands of
U.S. Dollars

2004

168 ¥
268
436 ¥

167 $
253
420 $

2005
1,570
2,410
4,075

In addition to the above, a certain consolidated subsidiary engaged
in the leasing operations leases the property as lessee and also leases
the same property to affiliates and the third parties as lessor. At March
31, 2005 and 2004, the future minimum commitments under suchagreements, 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, 2005:
Due within one year
Due after one year¥¥

At March 31, 2004:
Due within one year
Due after one year¥¥

1,037 ¥
822
1,859 ¥

1,101 $ 9,692 $ 10,290
874
7,682
8,168
1,975 $ 17,374 $ 18,458

1,808 ¥
2,025
3,833 ¥

1,926
2,153
4,079

9. Derivative Instruments
The Seino Group is a party to derivative instruments such as interest rate swap in the normal course of business to reduce its own exposure to fluctuations in interest rates for the hedge purposes. The Seino
Group is exposed to credit loss in the event of nonperformance by theother parties. However, the Seino Group does not expect nonperfor-

20

mance by the counterparties. All derivative instruments are accounted
for by the certain hedge accounting methods as at March 31, 2005 and2004.

10. Shareholders’ Equity
(a)

(b)

The authorized number of shares of common stock, without parvalue, is 400 million at March 31, 2005, unless there may be a
reduction due to a cancellation of treasury stock acquired.
Pursuant to the Commercial Code of Japan and the Company’s
amended articles of incorporation approved by shareholders at theannual general meeting on June 25, 2004, the Company can purchasethe treasury stock subject to the resolution of the Board of Directors
from that date.
Capital surplus principally consisted of additional paid-in capital.
At March 31, 2005 and 2004, retained earnings included legal reserveof the Company in the amount of ¥4,262 million ($39,832 thousand)and ¥4,262 million, 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 be appropriated as a legal
reserve until a total amount of additional paid-in capital and such legal
reserve equals 25% of common stock. Such legal reserve is notavailable for distribution as dividends, but may be used to reduce a
deficit or may be transferred to common stock by proper actions of theBoard of Directors and/or shareholders of the Company.
Under the terms of the 1.1% convertible bonds, as long as 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 FinanceOrdinance) net of income taxes, since such a date would exceed ¥15

(c)

(d)

billion ($140 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 for exercise of this option at the exercise price of ¥600 per share, which is subject to adjustment in certain circumstances including stock split.
The shareholders of the Company approved the followings
appropriations of retained earnings at the annual general meeting ofshareholders on June 24, 2005:
Thousands of
U.S. Dollars

Millions of Yen

Cash dividends¥
Bonuses to directors and statutory auditors

2,147
10

$

20,06593

11. Income Taxes
Income tax expenses for the three years ended March 31, 2005,
2004 and 2003 consisted of the following:Thousands of
U.S. Dollars

Millions of Yen

Income tax expenses:
Current
Deferred

2005

2004

7,483 ¥
(840)
6,643 ¥

6,964 ¥ 8,636 $(145)(1,790)6,819 ¥ 6,846 $

¥
¥

2003

2005
69,935(7,851)
62,084

The tax effects on temporary differences that give rise to a significant portion of deferred tax assets and liabilities at March 31, 2005 and2004 were as follows:
Millions of Yen

2005
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
Net deferred tax assets

2004

Thousands of
U.S. Dollars

2005¥ 15,769 ¥ 14,436 $ 147,374
524
344
4,897
3,594
3,889
33,589
1,055
1,081
9,860
1,518
1,582
14,187
11
3,255
25,726(814)
24,91241
3,380
24,753(726)
24,027103
30,420240,430(7,607)
232,823

5,841

5,766

54,589

3,649

2,877

34,103

4,627
4,619
43,243
14,117
13,262
131,935¥ 10,795 ¥ 10,765 $ 100,888

At March 31, 2005 and 2004, 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

2005

2004

2005

5,014 ¥
8,016

5,218 $
7,945

46,86074,916

2,235

2,398

20,888In 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, 2005 and 2004, a
valuation 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 ofincome for the years ended March 31, 2005 and 2004 was as follows:
Percentage of pretax income

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

2005
40.4%

2004
41.7%

2005
41.7%

0.6
(0.1)

0.6
(0.1)

0.6
(0.5)

―

―

1.8

2.4

2.5

2.4

(11.9)(13.6)(13.2)

(0.4)
(1.0)
30.0%

(0.9)
1.9
32.1%

(0.8)
(0.7)
31.1%

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 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, 2005, 2004 and 2003 was summarized as follows:
Transportation
services

For the year 2005:
Operating revenues:
Outside customers
Inter-segment sales
Total operating revenues
Operating costs and expenses
Operating income
Identifiable assets
Depreciation
Capital expenditures
For the year 2004:
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¥

Merchandisesales

307,264
1,932
309,196
301,265
7,931

¥

¥

340,636
12,045
15,163¥

Information
services

98,25927,916
126,175
123,801
2,374

¥

¥

92,6391,544
2,252

300,645
1,747
302,392
294,653
7,739

¥

¥

352,938
11,24815,549

¥

¥

¥

¥
¥

OthersMillions of Yen

5,268
6,001
11,269
11,195
74

¥

¥

5,211
255
111

97,155
29,109126,264
123,178
3,086

¥

5,483
4,971
10,454
10,556(102)¥

91,672
1,472
3,164

¥

5,710
302
320

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

Total

13,042
13,55926,601
24,928
1,673¥¥

14,794
127
168¥

Elimination

423,833
49,408473,241
461,189
12,052¥¥453,280
13,971
17,694

14,422
11,49925,921
23,8382,083¥¥

14,191
118
491

¥

¥

¥

¥
¥

Consolidated—(49,408)(49,408)(49,403)(5)¥¥

17,212
(227)
(373)

¥

470,492
13,744
17,321

417,705
47,326
465,031452,225
12,806¥—(47,326)(47,326)(47,185)(141)¥417,705—
417,705
405,040
12,665¥464,511
13,14019,524¥30,232
(199)
(612)

¥

494,743
12,941
18,912

12,625
13,81826,44324,3352,108¥

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

409,399—409,399399,205
10,19425,471140
51¥453,222
11,467
19,990¥41,361
(180)
(391)

¥

121,888
126,720
248,608
232,972
15,636$ 3,961,056
461,757
4,422,813
4,310,177$
112,636$—(461,757)(461,757)(461,710)(47)$ 3,961,056—
3,961,056
3,848,467$
112,589

138,262
1,187
1,570

$ 4,236,262
130,570
165,364$

160,859(2,121)(3,486)$ 4,397,121
128,449
161,878

¥

¥

¥

¥

¥

¥

¥

¥

¥

423,833—
423,833
411,786
12,047494,583
11,287
19,599Thousands of U.S. Dollars
For the year 2005:
Operating revenues:
Outside customers
Inter-segment sales
Total operating revenues
Operating costs and expenses
Operating income
Identifiable assets
Depreciation
Capital expenditures$ 2,871,626
18,0562,889,682
2,815,561$
74,121$

918,308
260,897
1,179,205
1,157,018$
22,187$$ 3,183,514
112,570
141,710$$865,785
14,43021,047$49,23456,084105,318
104,626692
48,701
2,383
1,037

$

$
$

$

Notes: Identifiable assets in the elimination column represent unallocated general corporate items which were not assigned to a particular industry segment such as cash,
short-term and long-term investment securities, net of inter-segment balances.
(Accounting change in measurement method of reportable segment)
With effect from the year ended March 31, 2005, the Company changed the measurement method of the assets for rent and related profits or losses, including revenues
and expenses, to the method allocating revenues and expenses relating to the assets for rent incurred by or attributable to each business segment to the corresponding
segment in order to present their actual utilization conditions precisely, while the Company previously reported all of such profits or losses as “others” segment. As aresult, as compared with the previous accounting method, operating revenues for the “transportation services” segment, “merchandise sales” segment and “information
services” segment increased by ¥408 million ($3,813 thousand), ¥69 million ($645 thousand) and ¥87 million ($813 thousand), respectively, and operating revenues forthe “others” segment decreased by ¥755 million ($7,056 thousand) for the year ended March 31, 2005. Operating income for the “transportation services” segment,“merchandise sales” segment and “information services” segment increased by ¥552 million ($5,159 thousand), ¥212 million ($1,981 thousand) and ¥90 million ($841
thousand), respectively, and operating income for the “others” segment decreased by ¥854 million ($7,981 thousand) for the year ended March 31, 2005.
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,
2005, 2004 and 2003. Information for overseas sales is not disclosed as such sales were not material.

13. Subsequent Events(a)22

The Company made the decision, which its Board of Directors came toat its meeting held on May 17, 2005, to implement a rights plan using stockacquisition rights and trust mechanism as a means of dealing with theacquisition of the Company’s stock resulting in a particular shareholder
holding more than 20% of the Company’s stock and proposals ofacquisition without the prior approval of the Board of Directors, and toissue stock acquisition rights which would allocate to Sumitomo Trust &Banking Co., Ltd. at especially advantageous terms, and that was approvedat the annual general meeting of shareholders held on June 24, 2005.
The trust contract between the Company and Sumitomo Trust &Banking Co., Ltd. is scheduled on July 1, 2005.

(b)

On May 30, 2005, the Board of Directors of the Company resolved therepurchase of treasury stock pursuant to the provision of the Commercial
Code of Japan. Details of the transaction are as follows:
Purpose of repurchase:
The purpose of the repurchase is in orderto implement the flexible capital
strategies according to thebusiness environment.
Type of shares:
Common stock
Total number of shares to be
repurchased:
Up to 9 million shares
Total value of shares to be
repurchased:
Up to ¥9,000 million ($84,112 thousand)Term of repurchase:
From May 31, 2005 to March 27, 2006

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, 2005 and 2004, and the related consolidated statements of income, shareholders’ equity,and cash flows for each of the three years in the period ended March 31, 2005, 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, 2005 and 2004, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended March 31, 2005 in conformity with accounting
principles generally accepted in Japan.
As described in Note 13, the issuance of stock acquisition rights for a trust-type plan, which was decided at Board of
Directors’ meeting held on May 17, 2005, was approved at the annual general meeting of shareholders held on June 24,
2005.
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 PricewaterhouseCoopers
Nagoya, Japan
June 24, 200523

Board of Directors(As of June 24, 2005)

Chairman andChief Executive Officer

Directors

Yoshikazu Taguchi

Kunihiko Oka

Hideyuki Abe
Shizutoshi Otsuka

President andChief Operating Officer
Yoshitaka Taguchi
Senior Managing Director
Takao Taguchi
Managing Directors
Kunitoshi Yamanaka
Yoshitaka Nasuno
Masashi Otsuka
Takayoshi Mito
Adviser
Atsuo Suzuki

Masayoshi Ichiyanagi
Hidemi Maruta
Toshitaka Morita
Hisao Sakashita
Hitoshi Sonobe
Masanori Sobajima
Outside Directors
Yuji Tanahashi
Kenjiro Ueno
Standing Statutory Auditors
Yoshio Matsuoka
Yoshinori Takigawa
Outside Statutory Auditors
Fumio Kato
Eiji Kasamatsu

Corporate Data
(As of March 31, 2005)

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
¥42,482 million
198,631,167
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 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(As of March 31, 2005)☆ United-Seino Transportation (Malaysia)
Sdn. Bhd.
General cargo haulage in Malaysia☆ Seino Information Service Co., Ltd.
Advanced information services andinformation processing☆ Seino Transportation (Thailand) Co., Ltd.
International air and sea cargo forwarder inThailand☆ Japan Logistics Development Co., Ltd.
Information and materials distribution
systems consulting☆ Seino Merchants Singapore Pte Ltd.
International air and sea cargo forwarder in
Singapore☆ Asahi Leasing Co., Ltd.
Rental and lease of equipment and machines

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☆ Kanagawa Seino Transportation Co., Ltd.
General cargo haulage☆ Seino Nagoya Express, Inc.
General cargo haulage

Enshu Seino Transportation Co., Ltd.
General cargo haulage☆ Seino Osaka Express, Inc.
General cargo haulage

Mikawa Seino Transportation Co., Ltd.
General cargo haulage☆ Seino Hokuriku Express, Inc.
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 ST Services, Inc.
General cargo haulage and security services
Asahi Bangkok Co., Ltd.
Management in Thailand☆ Seino Customs Clearance Service Co., Ltd.
Customs broker☆ Seino Tsu-un Transportation Co., Ltd.
Transportation and general cargo haulage

Schenker-Seino Co., Ltd.
International sea and air cargo forwarder☆ Seino Express Co., Ltd.
General cargo haulage

Seino Logistic Hokkaido Inc.
Generd cargo haulage☆ Mie Seino Transportation Co., Ltd.
General cargo haulage

Information and Sales Group★ Hinomaru Seino Transportation Co., Ltd.
General cargo haulage☆ Seino Enterprise Co., Ltd.
Group management and general consultation★ Shikoku Seino Transportation Co., Ltd.
General cargo haulage☆ Seino Sangyo Co., Ltd.
Merchandising of automobile components andtransportation-related services★ 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 Europe GmbHInternational air and sea cargo forwarder inGermany☆ Seino Hikkoshi Co., Ltd.
Moving service☆ 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
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]☆ Toyota Corolla Gifu Co., Ltd.
Automobile sales agency[Second section of the Nagoya Stock Exchange]☆ Netz Toyota Centro Gifu Co., Ltd.
Automobile sales agency☆ Netz Toyota Gifu Co., Ltd.
Automobile sales agency☆ Seino Trading Co., Ltd.
General trading house25

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

Printed in Japan

Seino Transportation Co., Ltd.
Annual Report 2005
Year Ended March 31, 2005