The Road to Success
Seino Holdings Co., Ltd.
Annual Report 2006
Year Ended March 31, 2006

Profile
Seino Holdings Co., Ltd. (the “Company”) was founded asa trucking company in 1930, incorporated in 1946 and renamed
Seino Transportation Co., Ltd. in 1955. The Company isheadquartered in Ogaki, Gifu Prefecture, which is situated incentral Japan and convenient for transporting commercial cargo.
Together with the expansion of the Japanese economy and thedevelopment of Japan’s extensive expressway network, Seino has
achieved steady growth over the years to become one of thenation’s leading trucking companies. On October 1, 2005, Seinotransitioned to a pure holding company structure after separating
and reorganizing its transportation business and other businesses.
The new holding company has assumed the name Seino Holdings
while the newly formed transportation company has taken theoriginal name, Seino Transportation.
The Seino Group currently comprises the pure holding
company, Seino Holdings, 43 consolidated subsidiaries and 16
affiliates engaged in such key areas as transportation services,vehicle sales, leasing for real estate services and other services.
Adhering to its “customer first” principle, Seino has worked
solidly to optimize its extensive network. Today, as of March 31,
2006, Seino provides efficient transportation services
throughout Japan via its 400 domestic terminals, a fleet of
21,258 trucks and a sophisticated network that averages 5,300
routes daily. Overseas, Seino is working to further enhance its
competitiveness by exploiting the synergies among its Group
alliances through such measures as transferring international
forwarding operations to joint venture company Schenker-Seino
Co., Ltd. and effectively utilizing the Company’s global
network and leading-edge IT systems to expand thisbusiness.
The Seino Group will proceed down
the “Road to Success” to become a highly
profitable company by providing
customers with fast and highly satisfying
services through a reliable collaborative
network based on its medium-term
management plan, which focuses on
the three main pillars of the Less-thanTruck Load (LTL) commercial cargotransportation business, the logistics
business and the vehicle sales business.

Contents
Financial Highlights

1

To Our Shareholders, Customers and Friends

2

G5 Plan–Aiming for an operating income margin of 4% 4Review of Operations

8

Financial Review

10

Six-year Summary

11

Consolidated Balance Sheets

12

Consolidated Statements of Operations

13

Consolidated Statements of Shareholders’ Equity

14

Consolidated Statements of Cash Flows

15

Notes to Consolidated Financial Statements

16

Report of Independent Auditors

23

Board of Directors/Corporate Data

24

Business Relationship in the Seino Group25

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 materiallyfrom those anticipated in these statements.

Seino Holdings Co., Ltd.

Financial Highlights(Billions of Yen)

For the Years Ended March 31, 2006, 2005 and 2004
Thousands of
U.S. Dollars 2

Millions of Yen
2006

NON-CONSOLIDATED BASIS:
Operating revenue
Operating income(Loss) income before income taxes
Net (loss) income

2005

2004

¥ 129,684 ¥ 265,501 ¥ 259,295
1,112
6,858
6,426
(15,130)
7,911
8,318
(18,793)
4,173
4,562

Net (loss) income per share (in whole yen and U.S. dollars) 1 :-Basic-Diluted(95.79)−2006$ 1,108,410
9,504(129,316)(160,624)(0.82)
−

23.53
20.43

23.07
22.77

2004

2005

2006

Net (loss) income

CONSOLIDATED BASIS:
Operating revenue
Operating income(Loss) income before income taxes and minority interests
Net (loss) income
Net (loss) income per share (in whole yen and U.S. dollars):-Basic-Diluted(Billions of Yen)20

¥ 427,520 ¥ 423,833 ¥ 417,705
10,082
12,665
12,047(1,188)21,221
22,144(8,334)
13,43914,273$ 3,654,017
86,171(10,154)(71,231)

¥

$

15
10
5
0

(43.35) ¥−72.26 ¥
70.67

76.11
63.33

(0.37)
−

-5
-10
2004

Thousands of
U.S. Dollars 2

Millions of Yen
2006

2005

2004

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¥ 27,540 ¥ 32,150 ¥ 54,553
1
165,062
162,278
281,029
321,960
348,879
6,416
39,70147,352
237,549
230,792
229,917

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

1,196.61

1,182.60

2005

2006

2005

2006

(Billions of Yen)2006

$ 235,384
92,401,957
54,8382,030,333
10.23

1,161.85

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¥ 62,582 ¥ 70,441 ¥ 89,020
225,815
248,832
246,925446,933
470,492
494,743
69,68959,33073,870278,916
283,352
272,694$ 534,889
1,930,043
3,819,940
595,633
2,383,897

Net assets per share (in yen and U.S. dollars)¥1,420.60 ¥1,457.82 ¥1,383.88

$

2004

12.14

(Notes) 1.Yen and U.S.dollar amounts have been rounded off to the nearest whole number.
2.U.S. dollar amounts are translated at ¥117 = US$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 Holdings for the fiscal year ended March 31, 2006 (April 1, 2005 - March 31, 2006).

Operating Environment
In the fiscal year under review, despite suchnegative influences as mounting prices for crude oiland other materials, the Japanese economy underwent a
mild recovery amid expanded capital investment,strong consumer sentiment fueled by improved wage
and employment conditions and modest exports.
In the transportation industry, we were faced withsuch pressures as continued requests from customers
for more precision-enhanced logistics technologies andstreamlining as well as substantial outlays as a result ofskyrocketing fuel prices and required safety andenvironmental measures. Other obstacles included adwindling pool of human resources as the baby-boom
generation enters retirement.

Affirmative Measures and Business Results
Against this backdrop, Seino Transportationtransitioned to a pure holding company structure on
October 1, 2005 in order to raise corporate value by
promoting further expansion and cohesiveness within theGroup, improve profitability and further augment andraise management efficiency. The new holding company,
Seino Holdings, oversees respective companies within theGroup and strategic decision-making while the newly
formed Seino Transportation engages in Less-than-Truck
Load (LTL) commercial cargo transportation and otherbusinesses.
With that groundwork now in place, we are focusedon maximizing Group synergies through effective
resource allocation and developing a structure that can
rapidly and flexibly adapt to changes in the environmentsof each business, while concurrently working to clarify
responsibilities and powers.
On October 1, 2005, we conducted a stock swap
with four consolidated subsidiary automobile dealerships
and converted them into wholly owned subsidiaries withthe aim of raising the value of the entire Group.
In order to achieve the goals of our medium-term
management plan, “G5 (Group 5) Plan,” which calls for aGroupwide operating income margin of 4%, we pursued a2

strategy of expanding businesses Groupwide through a reliable
collaborative network managed chiefly by Seino Holdings.
To increase customer satisfaction, Seino has also
worked solidly to boost transportation quality.
Measures geared toward this goal include
improvements to our online track and trace service,
making Seino the first transportation company in Japan tooffer customers estimated delivery time updates every 20
minutes. We also introduced a cash management system(CMS) and reduced costs through such means as curbing
Group loans and commissions paid.
As a result of these measures, consolidated operating
revenue edged up 0.9% to ¥427,520 million (US$3,654
million), while operating income fell 16.3% to ¥10,082
million (US$86 million). A net loss of ¥8,334 million(US$71 million) was recorded from an impairment loss
on fixed assets following application of the“Accounting Standard for Impairment of Fixed Assets.”

Working Steadily to Accomplish
Goals of the G5 Plan
Despite the economic recovery, the transportationindustry, Seino’s core business, shows little hope of
expansion in terms of total volume handled. Competition is
also growing increasingly fierce as a result of high crude oil
prices, which show little sign of abating, an increase inindustry players, investments required to meet safety andenvironmental standards along with other factors
related to corporate social responsibility (CSR), and theeffects of revisions to traffic and energy conservation
legislation.
In the fiscal year ending March 31, 2007, which is thehalfway mark for the G5 Plan, we, as a Group, will makeutmost efforts to further improve transportation technologies
and expand sales for “Designated Time” products in order tofulfill our mission as a true service provider.
In particular, we will start offering “JITBOX Charter
Delivery” as a new “Designated Service” product incooperation with Yamato Holdings Co., Ltd. The service
offers just-in-time (JIT) delivery charged per rolling box
palette within the Seino Group’s main operating areas,

including nationwide route delivery and delivery west of
Shizuoka Prefecture, which is located between
Tokyo and Osaka metropolitan areas.
Looking ahead, projections for fiscal 2007 call for
operating revenue of ¥434,000 million and net incomeof ¥13,000 million.

Corporate GovernanceSeino employs a corporate auditor system. As of
March 31, 2006, the Board of Directors comprises 10
internal and two external directors, each of whom holds
a one-year term. Together with making swift andaccurate decisions regarding such important matters as
business restructuring and strategic investments, theBoard of Directors is taking important steps tostrengthen auditing functions and achieve greater
management transparency taking into account theobjective feedback of external directors.
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 operational businessexecution. We have also established the Internal
Controls Project to guide internal audits in an effort tobuild and maintain an ethical framework for audits ofGroup operations and financial performance.

August 2006

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$0.09) for the fiscal year ended March 31,
2006. Through the G5 Plan, management is fullycommitted to making Seino the preeminent freighttransportation company while concurrently raising
corporate and shareholder value. We would like to takethis opportunity to ask shareholders, customers andfriends for their continued support.
Yoshitaka Taguchi
President and Chief Operating Officer

3

G5 Plan
Working to Achieve the Goals of the New Three-year Medium-term Management Plan
- Aiming for an operating income margin of 4%
The Seino Group established the G5 Plan in 2005 as its new three-year, medium-term management
plan directed toward realizing a targeted operating income margin of 4%. Measures to beundertaken in each of the Group’s business segments to achieve that goal are outlined below.

Seino Holdings
Transition to a Pure Holding
Company Structure
On October 1, 2005, Seino Holdings (previously
Seino Transportation) transitioned to a pure holding
company after separating its transportation and otherbusinesses into separate companies. The newly formed
transportation company, meanwhile, assumed theoriginal name—Seino Transportation.
This transition has accelerated decision-making bydeferring Group oversight and strategic decision-making
to the holding company, and has raised operational
efficiency by enabling the Group companies to more
swiftly adapt to changes in the environments of theirbusiness segments.

Four Automobile Dealerships Converted
into Wholly Owned Subsidiaries
In preparation for the transition to a pure holding
company, Seino converted three transportation
businesses within the Group—Nohi Seino
Transportation Co., Ltd., Kanto Seino Transportation
Co., Ltd. and Tokai Seino Transportation Co.,
Ltd.—into wholly owned subsidiaries through a stock
swap in August 2001. On October 1, 2005, four
consolidated subsidiaries, automobile dealerships
Toyota Corolla Gifu Co., Ltd., Gifu Hino Motor Co.,
Ltd., Netz Toyota Gifu Co., Ltd. and Netz Toyota
Centro Gifu Co., Ltd., which makeup the core of thevehicle sales business segment, also became wholly
owned subsidiaries following a similar stock swap.
The goal of this business reorganization was to enable
more rapid and flexible adaptation to changes in theincreasingly fierce business environment, and expand
business by optimizing the return on investments madewithin the Group.
4

Introduction ofCash Management System (CMS)
Seino has started introducing CMS tocomprehensively manage the capital of Group
companies. In February 2005, Seino began asset
pooling, in which the surplus funds of Seino
Trading Co., Ltd. and nine other Group companies
are collected and then managed in a joint account at
the Head Office. Group companies in need of funds
can then draw from this account, thereby raisingasset efficiency.
Since April 2005, the Head Office has takencare of payments to customers of Group companies
along with transfers of salaries and bonuses to
employees. From November, the accounts receivableand payable between Group companies are comparedand only the balance transferred. The unification ofsuch management operations enables the personnel
resources of Group companies to be allocated tosuch direct divisions as marketing, thereby serving
to increase profitability. As of March 31, 2006, a
total of 30 companies were using the CMS, whileplans call for eventually extending the system tocover 43 consolidated subsidiaries.

Launch of Seino Business Support Co., Ltd.
On January 5, 2006, Seino launched Seino
Business Support Co., Ltd. to unify the accounting
operations of Seino Group companies. Seino BusinessSupport aims to streamline and increase the efficiencyof Group management divisions by managing suchback office operations as accounting, settlements,
and payment and collection of debts and credits.
For the time being, it will be responsible forthe payment operations of Seino Transportation andall of the accounting for Seino Trading Co., Ltd. andSeino Information Service Co., Ltd.

During 2006, 17 Group companies that have theirhead offices in Gifu Prefecture and the surrounding
prefectures are targeted to have part of their operationstransferred to Seino Business Support, while the end
goal will see all Group companies having a portionof their operations handled there.
Raising the efficiency of Group accounting is
expected to contribute to improved management
efficiency and augmented marketing capability within
the entire Group.

with determining whether the stock acquisition rights
should in fact become exercisable in the event a
takeover event arises. The independent committee’s
decision is to be made in accordance with establishedguidelines and reported to Seino’s board of directors,
which has the responsibility of taking corporate action
based on the recommendation of the independent
committee.

〈Overview of Trust-type Rights Plan〉(3) The rights are issued toall shareholders after theacquirer appears (Note 1)

Implementation of a Trust-type Rights PlanAt the Ordinary General Meeting of Shareholders
held on June 24, 2005, Seino’s shareholders approved
the adoption of a trust-type rights plan as an acquisition
defense measure.
Once a rarity in Japan, hostile takeovers are now
being seen more frequently. There are certain types of
takeovers that clearly pose a threat to corporate value inview of the purpose of the takeover and the
management policies that are likely to follow. In orderto safeguard against unsuitable takeovers, Seino has
introduced a trust-type rights plan designed to protect
its corporate value and the common interests of allshareholders.
The plan that has been adopted involves thecreation of a trust pursuant to a trust agreement withThe Sumitomo Trust & Banking Co., Ltd., as trustee.
The trust assets are comprised initially of funds thatwill be used for payment of the fees for the trustee andothers, and, thereafter, stock acquisition rights issued
by Seino without consideration. Upon the occurrence of
certain defined trigger events in connection with apotential acquisition of Seino, the stock acquisitionrights held in trust may be distributed to shareholders(other than the potential acquirer and its related
persons) on a pro rata basis and become exercisable fora nominal price. Such a distribution of stock acquisitionrights is intended to thwart an unwanted takeover by
diluting the shares that are held by the hostile acquirer.
Additionally, the existence of the rights plan is intended
to encourage potential acquirers to initially approach
management with their plans instead of launching apreemptory hostile bid.
In order to ensure the fair and efficientadministration of the rights plan, an independent
committee composed of individuals with no affiliation
with Seino management has been formed and charged

Acquirer(Negotiation)

Shareholder(Beneficiaries)

The Company

Trust Bank
(Trustee)(Trustor)(Note 2)

(1) Trust of Funds(2) Issue of rights〈Possibility ofcanceling stockacquisition rights〉(Note 1) Including the acquirer and excluding the Company as a holder of treasury shares(Note 2) In addition to its position as a trustor, the Company is also in a position of abeneficiary, but has no rights with regard to the rights comprising the trust assets.

For more details, please see:
http://www.seino.co.jp/seino/e/news/pdf/14jun2005_FAQ.pdf

5

Transportation
Services Business
Box Charter Joint Venturewith Yamato Holdings Co., Ltd.
Seino concluded a joint capital investment
agreement with Yamato Holdings Co., Ltd. for theestablishment of Box Charter Co., Ltd. Launched on
March 1, 2006, Box Charter, in which Yamato andSeino hold a respective 85% and 15% stake, began
operations in April with the start of “JITBOX Charter
Delivery.”This service offers shipping for freight up to 600
kg on rolling box palette cargo containers. Rather thancharge fees based on each actual parcel being shipped,“JITBOX Charter Delivery” service“JITBOX Charter Delivery” charges according topalette space used, thereby encouraging maximum useof available space and raising the load efficiency ofeach truck. In addition, the palette structure eliminates
accidents during the reloading process. Target users of
this service are manufacturers shipping products inneed of supply chain management (SCM) andmanufacturers of components and materials that must
be sent just in time (JIT).
As a partner in the expansion of this businessnationwide, the Seino Transportation Group is
responsible for marketing Box Charter, nationwide
route delivery and delivery west of Shizuoka
Prefecture approximately midway between the Tokyo
and Osaka metropolitan areas.
Through this new business, Seino, with its
expertise in route delivery, and Yamato aim to establish
a new standard in the transport business by offering thekind of optimized transport demanded by customers, aswell as promote the entry of other businesses into
the industry by offering franchise opportunities.
6

Participation in “Team Minus 6%”
Seino vigorously promotes activities to prevent
global warming as a participant in the Ministry of theEnvironment’s “Team Minus 6%” project, which aims
to reduce greenhouse gas emissions in Japan to 6%
below 1990 levels, as pledged by the government in
the Kyoto Protocol that came into effect fromFebruary 2005.
Seino’s mission—“Contribute to the nation andsociety by providing preeminent transportation services
esteemed by customers”—not only entails contributions
to the economy through logistics, but also efforts toalleviate environmental concerns and to be vigilant
in traffic safety as a good corporate citizen.
To date, Seino has supplied employees with special
summer uniforms, introduced hybrid vehicles (671 on
the road as of March 31, 2006), installed energy-saving
tires (2,000 units installed on 10-ton route trucks),
implemented “eco-driving” (driving under 2,000 rpm,
idling stops, optimized air pressure) and isencouraging a modality shift (switching from routedelivery for 150 trucks worth of freight to train
container transport).
As a participating company of the national Japanese
government campaign, “Team Minus 6%,” Seino will
work to alleviate global warming through the regulardaily activities of each and every employee.

“Team Minus 6%” activities

G5 Plan― Aiming for an Operating Income Margin of 4% ―Expansion of Bases to Augment
Logistics BusinessSeino has also instituted improvements at a numberof bases in order to augment the logistics business.
Of particular note, the Wako terminal (Saitama
Prefecture) was completed in April 2005, andSakura Logistics Center, which is located between
the Tokyo metropolitan area and Narita
International Airport, was completed in February
2006. Both centers have large-sized terminal andwarehouse functions that address a wide variety oflogistics needs. Moreover, Sakura Logistic Centerhas expansive air conditioning systems andautomated racks that enable storing and controlingof inventories with various and dedicatedrequirements efficiently. These logistics centerstake advantage of a competitive location andequipment tomeet customers’
requests.

Automatic rack at the
Sakura Logistics
CenterToyota Corolla Gifu also established “Value Mart”
for sales of used cars as a new kind of specialty retail
outlet that collects all of the showroom automobiles
from the company’s respective retail outlets andsells them at a reasonable price. Aggressive regional
expansion will be pursued as one of Toyota Corolla
Gifu’s leading sales bases.

Other Businesses
Retail and Housing Sales Businesses
In the Other segment, Seino worked aggressively
to expand sales through Seino Trading which operates
in this segment’s mainstay of merchandise sales, aswell as through the sales of residential properties ofToyota Home Gifu Co., Ltd.
Seino Trading achieved a 10.9% increase inoperating revenue and 10.3% increase in operating
income as a result of increased sales of such products
as office paper and fuels, the latter of which have been
affected by soaring crude oil prices. In addition, thecompany worked to renovate facilities for mobile
phone stores and make them barrier free.
Toyota Home Gifu worked to expand orders among
buyers for single detached homes with attached land
using open house exhibits as well as by developing its
lineup of new concept homes. As a result, operating
revenue rose 30.4%. Nevertheless, net income declined
37.1% owing to am impairment loss on fixed assets
on idle business properties.

Vehicle Sales BusinessToyota Corolla Gifu
−Opening of Lexus Yabuta Branch
In the term under review, Toyota Corolla Gifu
opened two new retail outlets in Gifu City.
The Lexus Yabuta retail outlet for Lexus brandmodels produced by Toyota targets affluent consumers
and buyers of foreign luxury automobiles. With
innovative new Lexus models scheduled to bereleased, efforts will focus on increasing sales in
the luxury automobile segment in combination withfurther penetration of the Volkswagen brand models
sold under an agreement with Toyota.

Efforts to make facilities barrier free7

Review of Operations
Performance by segment is outlined below.
Business segments have been revised from the fiscal year under review, with the addition of the Vehicle Sales segment
and the integration of Merchandise Sales and Information Services into the Other segment. Leasing for Real Estate Services,which was previously included in Others, is now an independent business segment.

Transportation Services
Operating revenue in the Transportation Services
segment held relatively steady from the previous term at¥307,888 million (US$2,632 million). However, rising fuelprices, vehicle expenses and the costs of environmental andsafety measures significantly impacted operations, resulting
in a 25.9% decline in operating income to ¥5,874 million(US$50 million).
During the fiscal year under review, along with
continued requests for more precision-enhanced transporttechnologies and streamlining and the aforementioned
mounting costs associated with escalating fuel prices andenvironmental and safety measures, the Company also
had to contend with difficulties securing the necessary
labor.
Within this segment, much effort was focused on providing
more precise information as a way to boost customer satisfactionlevels. Seino now provides online updates of the status ofparcels every 20 minutes until their delivery. This tool, which
is a first nationwide, is marketed by focusing purely on customer
convenience. Currently, the Transportation Services groupdelivers 90% of its parcels as scheduled on the online updates.
The Group as a whole also worked to trim costs by
reducing the number of two-man driving teams on long-range
route deliveries, streamlining operations by employing asingle driver for multiple short-range deliveries and optimallydispatching personnel. Seino also promoted streamlining byconcentrating on building a finely tailored unit loadsystem structure for greater transport efficiency.
Twenty-two transportation companies within the Groupare currently targeted for consolidation. The main businesses
operated by Seino Transportation, the newly formed subsidiarythat stands at the core of the Transportation Services segment,
are outlined below.
In the fiscal year under review, Seino Transportation
worked actively to expand business by bolstering sales insuch key strategic “Designated Time” product lines as the
Kangaroo Super 9 and Super 10 services, which offerdeliveries by 9 or 10 a.m. the following morning, as well as
the Kangaroo Super Express service, which offers same-day
delivery utilizing Shinkansen bullet trains operating between
Tokyo and Osaka. Cognizant that the logistics business is thestrategic core of the Transportation Services segment, theCompany also expanded facilities and equipment and trained
personnel in the marketing of logistics solutions.
In regard to capital investment, Seino Transportation
focused on offering logistics services, which are relevant tomodern needs, and established the Wacko Terminal(Saitama Prefecture), which features truck terminal andexpanded logistics operations, and the Sakura Logistics
Center (Chiba Prefecture), which features automated racks.

Operating Revenue by Business Segment(Millions of yen)

Fiscal 2006

8

Fiscal 2005

Results

Composition

Results

Composition

Transportation
Services

307,888

72.0%

Vehicle Sales

82,334

Leasing forReal Estate
ServicesYear-on-YearTransportation
Services

307,264

72.5%

0.2%

19.3%

Merchandise
Sales

98,259

23.2%

―

1,004

0.2%

Information
Services

5,268

1.2%

―

Other

36,294

8.5%

Others

13,042

3.1%

―

Total

427,520100.0%

Total

423,833

100.0%

0.9%

Vehicle Sales
Operating revenue was ¥82,334 million (US$704
million), while operating income was ¥2,154 million (US$18
million).
This segment comprises sales of trucks and passenger
vehicles.

Leasing for Real Estate Services
Operating revenue was ¥1,004 million (US$9 million),while operating income was ¥837 million (US$7 million).
In this business segment, when terminals of severaltransportation group companies, including Seino
Transportation, are relocated to other sites due to such

Other
This business segment comprises such merchandise
sales as fuels and residential properties as well as

In truck sales, while sales of mid-sized trucks werepromising, large trucks languished and sales of standard
trucks were roughly equivalent to the previous fiscal year.
Sales of passenger vehicles were up slightly from theprevious term due to increased demand for compact cars, but
sales of used cars were lower than fiscal 2005 due to adelayed recovery.

reasons as urban development projects and lack of available
land, the remaining site is leased out to maximize thebenefits of management resources. There are also companies
outside the transportation group that engage in leasing
to optimally capitalize on assets. Key examples of thishave been the former Yotsuhashi (Osaka City), Shinmachi(Osaka City) and Fukui (Fukui Prefecture) terminals.

information services. Operating revenue was ¥36,294 million(US$310 million) and operating income was ¥1,227 million(US$10 million).

Operating Income by Business Segment(Millions of yen)

Fiscal 2006

Fiscal 2005

Results

Composition

Results

Composition

Year-on-YearTransportation
Services

5,874

58.2%

Transportation
Services

7,931

65.8%

(25.9)%

Vehicle Sales

2,154

21.4%

Merchandise
Sales

2,374

19.7%

―

Leasing forReal Estate
Services

837

8.3%

Information
Services

74

0.6%

―

Other

1,227

12.2%

Others

1,673

13.9%

―

Total

10,092100.1%

Total

12,052100.0%(16.3)%(10)(0.1)%

Elimination(5)(0.0)%―

10,082100.0%

Consolidated

12,047100.0%(16.3)%

Elimination
Consolidated

9

Financial Review
Operating Results
Consolidated operating revenue for the Seino Group for the fiscal
year ended March 31, 2006 increased 0.9% to ¥427,520 million(US$3,654 million). Operating costs increased 1.3% to ¥386,995
million (US$3,308 million). The ratio of operating costs tooperating revenues was 90.5%, up 0.4 percentage point.
Selling, general and administrative expenses rose 2.1% to¥30,443 million (US$260 million), while operating income declined
16.3% to ¥10,082 million (US$86 million).
Other expenses stood at ¥11,270 million (US$96 million).
Amortization of consolidation adjustment account (negative
goodwill) totaled ¥8,518 million (US$73 million), while ¥21,924
million (US$187 million) in commercial assets and idle assets wererecorded as an impairment loss on fixed assets.
As a result, loss before income taxes and minority interests
was ¥1,188 million (US$10 million), compared with income
before income taxes of ¥22,144 million in the previous term. A
net loss of ¥8,334 million (US$71 million) was recorded,compared with net income of ¥14,273 million in the previous
fiscal year.
Net loss per share was ¥43.35 (US$0.37), and return on equity
was a negative 3.0%. Annual cash dividends per share weremaintained at ¥11.00 (US$0.09).

Total current liabilities climbed 1.7% to ¥92,800 million(US$793 million), while long-term liabilities grew 17.5% to¥69,689 million (US$596 million), reflecting the ¥18,250
million (US$156 million) recorded in the consolidating adjustment
account (negative goodwill).
Total shareholders’ equity dipped 1.6% to ¥278,916 million(US$2,384 million). The shareholders’ equity ratio rose 2.2
percentage points to 62.4%.

Cash FlowsNet cash provided by operating activities grew ¥419 million to¥19,742 million (US$169 million) owing to a decrease in income
taxes paid.
Net cash provided by investing activities was ¥6,411 million(US$55 million), compared with net cash used in investing
activities of ¥2,422 million in the previous term, on the back of adecrease in time deposit payments.
Net cash used in financing activities decreased ¥10,083
million to ¥21,534 million (US$184 million) owing to a net
decrease in short-term borrowings.
Consequently, cash and cash equivalents at end of year rose
¥4,620 million to ¥55,226 million (US$472 million).

Financial Position
Total assets at the end of the fiscal year amounted to ¥446,933
million (US$3,820 million), down 5.0% versus the previous year.
Total current assets edged down 1.8% to ¥161,208 million(US$1,378 million). Net property and equipment declined 9.3%
to ¥225,815 million (US$1,930 million). Investment and otherassets increased 4.1% to ¥59,910 million (US$512 million),
mainly due to the effects of increased investment securities anddeferred tax assets.

Operating income to operating revenue
Net income to operating revenue

Net (loss) 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
2001

10

2002

2003

2004

2005 2006

60

40

20

0
2001

2002

2003

2004

Operating income to operating revenues

Net (loss) income to total assets

Net income to operating revenues

Return on equity ratio

2005

2006

2001

2002

2003

2004

2005

2006

Seino Holdings Co., Ltd. and Consolidated Subsidiaries

Six-year Summary
For the Years Ended March 31, 2006, 2005, 2004, 2003, 2002 and 2001

Millions of Yen
2006
For the year:
Operating revenue:
Transportation services
Vehicle sales
Leasing for real estate services
OthersOperating costs
Selling, general andadministrative expenses
Operating income
Net (loss) income¥

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

2005

427,520)
307,888)
82,334)
1,004)
36,294)
386,995)¥

2004

423,833
307,264
98,2595,268
13,042
381,970¥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¥

352,595)
292,969)
36,796)4,920)
17,910)334,034)

30,443)
10,082)(8,334)29,816
12,047
14,273

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

17,666)895)(18,403)

161,208)
446,933)
92,800)4,371)
8,247)
278,916)

164,129
470,492
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

97,645)453,250)
127,986)
60,013)
79,487)201,912)Yen
Per share data:
Net (loss) income:-Basic-Diluted
Cash dividends¥(43.35)−)11.00)

¥

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)

Thousands
Number of shares issued

207,679

198,631

198,631

176,820

176,820

152,919)

2.5
3.3
2.8
5.8
48.3
117.4
92.6
14.2

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)

Percent
Ratios:Operating income to operating
revenue
Net (loss) income to operating revenue
Net (loss) income to total assets
Return on equity ratio
Shareholders’ equity ratio
Current ratio
Debt equity ratio
Payout ratio

2.4)
(1.9)
(1.9)
(3.0)
62.4)
173.7)
58.3)(25.5)

Current ratio

2.8
3.4
3.0
5.1
60.2
179.9
53.1
15.1

3.0
3.2
2.7
5.3
55.1
163.3
68.4
14.2

Debt equity ratio

Payout ratio

(%)

(%)

(%)

200

120

40

30

160
90

20

120

10
60
0

80

-10

30

40
-20

0

0
2001

2002

2003

2004

2005

2006

-30
2001

2002

2003

2004

2005

2006

2001

2002

2003

2004

2005

2006

11

Seino Holdings Co., Ltd. and Subsidiaries

Consolidated Balance Sheets
March 31, 2006 and 2005

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

AssetsCurrent assets:
Cash and cash equivalents
Short-term investments (Notes 3 and 5)
Trade receivables
Inventories
Deferred tax assets (Note 10)
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 10)
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
Other current liabilities (Note 10)
Total current liabilities¥

Long-term debt (Note 5)
Employee retirement benefit liability (Note 6)
Deferred tax liabilities (Note 10)
Consolidating adjustment account (negative goodwill) (Note 2 (a-ii))
Other long-term liabilities
Minority interests in subsidiaries
Shareholders’ equity (Note 9):
Common stock, no par value – Authorized: 794,524,668 shares in 2006 and400,000,000 shares in 2005;
Issued: 207,679,783 shares in 2006 and 198,631,167 shares in 2005
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 - 11,417,339 shares in 2006 and 4,320,118 shares in 2005
Total shareholders’ equity
Commitments and contingent liabilities (Notes 7 and 8)¥

See accompanying Notes to Consolidated Financial Statements.

12

2006

2005

55,226 ¥
7,356
79,414
9,309
4,533
6,165
(795)
161,208

50,606 $ 472,017
19,83562,872
79,120678,752
6,817
79,564
5,014
38,744
4,263
52,692(1,526)(6,795)
164,129
1,377,846

402,785(176,970)
225,815

418,251(169,419)
248,832

3,442,607(1,512,564)
1,930,043

35,891
6,907
9,713
—
7,399
59,910446,933 ¥

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

306,761
59,034
83,017—
63,239512,051$ 3,819,940

4,371 ¥
7,187
54,333
12,446
5,265
9,198
92,8004,815
9,475
50,578
12,771
4,807
8,806
91,252$

1,061
41,842
7,626
18,250
910
5,528

8,499
40,688
2,235
6,555
1,353
36,5589,068
357,624
65,180155,983
7,778
47,24842,48273,353
164,490
(295)
9,860
(402)
(10,572)
278,916

42,48264,895
175,227
(379)
4,916
(577)
(3,212)
283,352

363,094
626,949
1,405,897(2,521)
84,273(3,436)(90,359)
2,383,897

470,492$ 3,819,940

446,933¥

2006

37,35961,427464,385
106,376
45,00078,615
793,162

Seino Holdings Co., Ltd. and Subsidiaries

Consolidated Statements of Operations
For the Years Ended March 31, 2006, 2005 and 2004

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

2006
Operating revenue (Note 11)¥

Operating costs and expenses (Notes 6 and 11):
Operating costs
Selling, general and administrative expenses
Operating income
Other income (expenses):
Interest and dividend income
Interest expenses(Loss) gain on sale or disposal of property and equipment
Equity in net (loss) income of affiliates
Amortization of consolidation adjustment account (negative goodwill)
Impairment loss on fixed assets
Loss on liquidation or sale of subsidiaries and affiliates
Gain (loss) on sale of investment securities
Recoveries of bad debts previously written-off
Miscellaneous, net(Loss) income before income taxes and minority interests
Income tax expenses (Note 10)
Minority interests in net (loss) income of subsidiaries
Net (loss) income

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

427,5202005¥

423,833

2004
¥

2006

417,705$ 3,654,017

386,995
30,443
417,438
10,082

381,970
29,816
411,786
12,047375,403
29,637405,040
12,665

3,307,649
260,197
3,567,846
86,171

2,008
(243)
(458)
(485)
8,518
(21,924)
(136)
16
—
1,434
(11,270)(1,188)

2,306
(353)
154
238
6,521
—
(205)
(107)
211
1,332
10,097
22,144

2,285(648)(1,263)
453
6,897
—
(8)
415
—
425
8,556
21,221

17,162(2,077)(3,915)(4,145)72,803(187,385)(1,162)
137—
12,257(96,325)(10,154)

7,822
(676)
(8,334) ¥

6,643
1,228
14,273

6,819
963
13,43966,855(5,778)(71,231)¥$

U.S. Dollars(Note 1)

Yen¥

(43.35) ¥
—
11.00

72.26
70.67
11.00

¥

76.11
63.33
11.00

$

(0.37)—
0.09

See accompanying Notes to Consolidated Financial Statements.

13

Seino Holdings Co., Ltd. and Subsidiaries

Consolidated Statements of Shareholders’ Equity
For the Years Ended March 31, 2006, 2005 and 2004

Number ofcommonshares issued

Commonstock

CapitalsurplusRetainedearnings

Land
revaluation
decrement

Net unrealized
gains onavailable-forsale securities

Foreigncurrencytranslation
adjustment

TreasurystockMillions of Yen

Balance at March 31, 2003
Net income for the year
Conversion of convertible bonds
Treasury stock reissued 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

176,820,926 ¥—
21,810,241

32,471 ¥—10,01154,876 ¥ 151,797 ¥—
13,4399,989—(413) ¥——

1,642 ¥——

(745) ¥
—
—

(803)
—
—

—
—

—
—

9
—

—
(1,914)

—
—

—
—

—
—

297
—

—

—

—

(80)

—

—

—

—

—
—
—

—
—
—

—
—
—

—
—
—

—
—
—

2,100
—
—

—
69
—

—
—
(51)

Balance at March 31, 2004
198,631,167
Net income for the year—
Treasury stock reissued 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, net—of applicable income taxes—
Translation adjustment
Purchase of treasury stock and—fractional shares, net

42,482—64,874—

163,242
14,273

(413)
—

3,742
—

(676)
—

(557)
—

—
—

21
—

—
(2,158)

—
—

—
—

—
—

179
—

—

—

(97)

—

—

—

—

—

—

(33)

33

—

—

—

—

—

—

1

—

—

—

—
—

—
—

—
—

—
—

1,174
—

—
99

—
—

—

—

—

—

—

—

(2,834)

Balance at March 31, 2005
198,631,167
Net loss for the year—
Stocks issued under stock-for-stock
exchange offerings (Note 2 (a-ii))
9,048,616
Cash dividends—
Bonuses to directors and statutory
auditors—
Reversal of land revaluation
decrement—
Net change in unrealized gains onavailable-for-sale securities, net—of applicable income taxes—
Translation adjustment
Purchase of treasury stock andincrease in treasury stock held—by group companies, net

42,482—64,895—

175,227(8,334)

(379)
—

4,916
—

(577)
—

(3,212)
—

—
—

8,489
—

—
(2,129)

—
—

—
—

—
—

3,143
—

—

—

(75)

—

—

—

—

—

—

(84)

84

—

—

—

—
—

—
—

—
—

—
—

4,944
—

—
175

—
—

—

(31)

(115)

—

—

—

(10,503)

Balance at March 31, 2006

42,482 ¥(295) ¥

9,860 ¥

207,679,783 ¥

73,353 ¥ 164,490 ¥(402) ¥ (10,572)

Thousands of U.S. Dollars (Note 1)

Balance at March 31, 2005
Net loss for the year
Stocks issued under stock-for-stock
exchange offerings (Note 2 (a-ii))
Cash dividends
Bonuses to directors and statutory
auditors
Reversal of land revaluation
decrement
Net change in unrealized gains onavailable-for-sale securities, netof applicable income taxes
Translation adjustment
Purchase of treasury stock andincrease in treasury stock heldby group companies, net$ 363,094 $ 554,658 $1,497,667 $——(71,231)

Balance at March 31, 2006

$ 363,094 $ 626,949 $1,405,897 $

42,017 $—(4,932) $ (27,453)
—
—

—
—

72,556——(18,197)

—
—

—
—

—
—

26,863
—

—

—

(641)

—

—

—

—

—

—

(718)

718

—

—

—

—
—

—
—

—
—

—
—

42,256
—

—
1,496

—
—

—

(265)

(983)

—

—

—

(89,769)(2,521) $84,273 $See accompanying Notes to Consolidated Financial Statements.

14(3,239) $—(3,436) $ (90,359)

Seino Holdings Co., Ltd. and Subsidiaries

Consolidated Statements of Cash Flows
For the Years Ended March 31, 2006, 2005 and 2004

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

2006
Cash flows from operating activities:(Loss) income before income taxes and minority interests
Adjustments for:
Depreciation
Impairment loss on fixed assets
Amortization of consolidating adjustment accountNet provision for employee retirement benefit liability
Loss (gain) on sale or disposal of property and equipment
Equity in net loss (income) of affiliates
Loss on liquidation or sale of subsidiaries and affiliates(Gain) loss on sale of investment securities
Recoveries of bad debts previously written-off(Increase) decrease in trade receivables
Increase in inventories
Increase (decrease) in trade payables and accrued expenses
Repayments of employees’ saving deposits
Other, net
Sub-totalInterest and dividend received
Interest paid
Income taxes paid
Net cash provided by operating activities

¥

2005

2004

(1,188) ¥22,144

14,66021,924(8,518)
1,154
458
485
136
(16)
—
(3,412)(3,308)976—
1,370
24,721
2,083(243)(6,819)19,742

13,744—(6,521)
1,680
(154)
(238)
205
107
(211)
1,534
(756)
(142)
(3,686)(2,987)
24,7192,390(369)(7,417)
19,323

12,941—(6,897)
2,035
1,263
(453)
8
(415)
—
(6,318)(1,474)
2,734
—
(900)
23,7452,439(645)(9,005)
16,534125,299
187,385(72,803)
9,863
3,915
4,145
1,162
(137)
—
(29,162)(28,273)
8,342—
11,709211,291
17,803(2,077)(58,282)
168,735

Cash flows from investing activities:
Increase in property and equipment
Increase in long-term investments and loans
Decrease in property and long-term investments
Decrease in short-term investments
Net cash provided by (used in) investing activities(15,164)
(302)
7,045
14,832
6,411(16,402)(2,558)3,930
12,608(2,422)(21,351)(6,232)
21,3729,100
2,889(129,607)(2,581)60,214
126,769
54,795

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
Purchase of treasury stock and fractional shares, net
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year60
(9,806)(457)(2,232)(9,099)(21,534)
1
4,620
50,60655,226 ¥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 $513(83,812)(3,906)(19,077)(77,769)(184,051)
8
39,487432,530
472,017¥¥

21,221

2006$(10,154)

See accompanying Notes to Consolidated Financial Statements.

15

Seino Holdings Co., Ltd. and Subsidiaries

Notes to Consolidated Financial Statements
1. Basis of Consolidated Financial Statements(a)Basis of presenting the consolidated financial statements
Effective October 1, 2005, Seino Transportation Co., Ltd. (“Seino”)
underwent a corporate separation, in which Seino’s transportation andother businesses were transferred to the newly founded company. Afterthe separation, Seino became a pure holding company and changed its
trade name to “Seino Holdings Co., Ltd.” (the “Company”), and thecompany newly established in the corporate separation assumed all of
Seino’s operations and the trade name of “Seino Transportation Co.,
Ltd.”, based on the resolution of the Board of Directors of Seino on
May 17, 2005, the approval of Seino’s shareholders at the annual general meeting of shareholders on June 24, 2005 and the acquisition of
approval from the relevant regulatory agencies.
The accompanying consolidated financial statements of the Company
and its subsidiaries (together with the Company, the “Seino Group”) havebeen prepared in accordance with the provisions set forth in the Commercial
Code of Japan, the Securities and Exchange Law of Japan, and on the basisof accounting principles generally accepted in Japan, which are different incertain respects as to application and disclosure requirements of International
Financial Reporting Standards. These consolidated financial statements arecompiled from the original consolidated financial statements in Japanese prepared by the Company as required by the Securities and Exchange Law ofJapan and submitted to the Director of the Kanto Finance Bureau of Japan.

(b) U.S. dollar amounts
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 of translating
Japanese Yen into U.S. dollars at a rate of ¥117 to US $1, the approximate
rate of exchange at March 31, 2006. The inclusion of such dollar amounts
is solely for the convenience of readers and is not intended to imply that theassets and liabilities originating in Yen have been or could be readily converted, realized or settled in dollars at ¥117 to US$1 or at any other rate.

(c)

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

2. Summary of Significant Accounting Policies
zation of the Seino Group is expected to strengthen its integration andimprove the optimization and efficiency, and make it possible todynamically and flexibly correspond to the changes in the businessenvironment. The agreements were subsequently approved by theshareholders at the annual general meeting of Seino and the respective
companies held in June 2005.
In accordance with this agreement, on October 1, 2005 (stock-forstock exchange date), the Company newly issued 9,048,616 shares of
the Company’s common stock and reissued 3,234,381 shares of thetreasury stock at the exchange rates of a certain number of shares of theCompany’s common stock (see below) for one share of common stockof the four subsidiaries to their respective minority shareholders.
The details of information of stock-for-stock exchange transactions
for the subsidiaries were 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 as a consolidation adjustment account 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 a 15% to 19% owned enterprisethat meets certain criteria. For the years ended March 31, 2006, 2005
and 2004, the number of the companies with voting interest notexceeding 50% classified as subsidiaries based on the self-judgment of
the Company in accordance with the accounting standard was five, 15,
and 16, respectively.
The number of subsidiaries and affiliates for the three years ended
March 31, 2006 was as follows:

Subsidiaries:
Domestic
Overseas
Affiliates accounted for by the equity method
Affiliates stated at cost

2006

2005

2004

39
4
6
10

39
5
6
11

39
7
6
13

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”)(a-ii) Stock-for-stock exchange agreements with the subsidiaries
On May 17, 2005, Seino entered into stock-for-stock exchange
agreements with its four subsidiaries in order to make Seino’s respective equity share in such subsidiaries increase to 100%. This reorgani-(shares)
1.68
1.11
27.80
5.12

The unaudited financial information of the above subsidiaries as at
or for the six months ended September 30, 2005 was as follows:
CorollaThe 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.

16

Exchange rate of the numberof shares of the Company for
one share of subsidiaries

Hino
Netz
Millions of Yen

Operating revenue¥ 17,172 ¥ 12,663 ¥ 9,383 ¥
Net (loss) income for the period
(540)
(148)
103
Total assets
35,85828,274
11,992
Net assets
28,184
17,069
7,083

Centro

4,990
(421)
7,035
2,680

Thousands of U.S. Dollars

Operating revenue$ 146,769 $ 108,231 $ 80,197 $ 42,650
Net (loss) income for the period(4,615)(1,265)880(3,598)
Total assets
306,479 241,658 102,496
60,128
Net assets
240,889 145,889
60,53822,906(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. Held-to-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 applicable 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.

in the projected benefit obligation or pension plan assets resulting fromthe experience different from that assumed and from changes inassumptions are amortized on a straight-line basis over 10 years as acertain period within the average remaining service lives of employees
from the next year in which they arise. Unrecognized prior service costis amortized using the straight-line method over 10 years as a certain
period within average remaining service lives of employees from theyear in which it occurs.

(j)

The Seino Group may pay severance indemnities to directors andstatutory auditors, which are subject to the approval of the shareholders. Some of the subsidiaries have provided for the full amount of theliabilities of directors’ and statutory auditors’ severance indemnities at
the respective balance sheet dates. At March 31, 2006 and 2005, otherlong-term liabilities in the accompanying consolidated balance sheets
included these accruals for directors and statutory auditors in theamounts of ¥756 million ($6,462 thousand) and ¥803 million, respectively.

(d) Accounting for derivatives
The Seino Group is a party to derivative instruments such as interest rate swaps in the normal course of business to reduce its own exposure to fluctuations in interest rates for hedging purposes. Derivatives
are valued at fair value, if hedging accounting is not appropriate orwhere there is no hedging designation, and the gains or losses on derivatives are recognized in the current earnings. According to the special
treatment as permitted by the accounting standard for financial instruments, the hedging interest rate swap is accounted for on an accrualbasis, and recorded net of interest income generated from the hedged
investments, if certain conditions are met. Derivative instruments outstanding at March 31, 2005 were accounted for by the certain hedge
accounting method. At March 31, 2006, the Seino Group does not holdor has not issued any derivative transactions.

(e)

(f)

(k) 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.

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.

(l)Inventories

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 other subsidiaries have been principally
depreciated by the declining-balance method, except for the buildings
acquired on and after April 1, 1998 and the property held for leases.
The buildings acquired on and after April 1, 1998 by domestic subsidiaries have been depreciated by the straight-line method. Some ofthe subsidiaries capitalize property of the cost of not less than ¥100,000
and below ¥200,000 each and depreciate the property over three years
on a straight-line basis.
Expenditure on maintenance and repairs is charged to operating
income as incurred. Upon the disposal of property, the cost and accumulated depreciation are removed from the accounts and any gain orloss is recorded as income or expenses.

(h) Leases
Where financing leases do not transfer ownership of the leased
property to the lessee during the term of the lease, the leased 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 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.
In accordance with the accounting standard for employee retirement benefits, the Seino Group has recognized the retirement benefits
for employees including pension cost and related liability based on
actuarial present value of projected benefit obligation using the actuarial appraisal approach and the pension plan assets available for benefits
at the fiscal year-ends. Unrecognized actuarial differences as changes

Enterprise taxes
With the implementation of the Revision of the Local Tax Law”
(Legislation No.9, 2003) on March 31, 2005, size-based corporate
taxes for local government enterprise taxes have been levied effectivefrom the fiscal year beginning April 1, 2004. The Company and its
domestic subsidiaries record enterprise taxes calculated based on the“added value” and “capital” amounts as selling, general and administrative expenses in accordance with practical guidance issued by the
Accounting Standards Board of Japan.

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

(g)

Accrued severance indemnities for officers(m) Revenue recognition for freight charges
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 revenue and operating costs andexpenses, respectively.

(n) Appropriation of retained earnings
Cash dividends and bonuses to directors and statutory auditors arerecorded in the fiscal year during which a proposed appropriation ofretained earnings is approved by the Board of Directors and/or shareholders. Bonuses paid to directors and statutory auditors are recorded
as a part of the appropriation of retained earnings, instead of being
charged to income, as permitted by the Japanese accounting standard.

(o)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.

(p) Per share data
Basic net (loss) income per share is computed by dividing (loss)
income applicable to common shareholders by the weighted-average
number of shares 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
the funds 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 accom-

17

panying consolidated statements of operations represent dividends
declared as applicable to the respective years.

(q) Accounting changes(Adoption of new accounting standard for impairment of fixed assets)
On August 9, 2002, the Business Accounting Council of Japanissued “Accounting Standard for Impairment of Fixed Assets”, whichis effective for the fiscal years beginning on and after April 1, 2005,
with earlier adoption permitted. The Accounting Standards Board ofJapan issued related practical guidance on October 31, 2003. The
Company and its domestic subsidiaries have adopted this new accounting standard and related practical guidance effective for the year ended
March 31, 2006. The standard requires that fixed assets be reviewed
for impairment whenever events or changes in circumstances indicatethat the carrying amount of an asset may not be recoverable. An
impairment loss shall be recognized in the income statement by reducing the carrying amount of impaired assets or a group of assets to therecoverable amount to be measured as the higher of the asset’s net selling price and value in use. Fixed assets include land, buildings andother forms of property as well as intangible assets and are to begrouped at the lowest level for which there are identifiable cash flows
from other groups of assets. For the purpose of recognition and mea-

surement of an impairment loss, fixed assets are grouped into cashgenerating units, such as operating business branches, other than idle orunused property. Recoverable amounts of the assets were measured
based on value in use calculated using discounted future cash flows at
interest rate principally of 4.7% or net selling prices primarily using anappraisal valuations. As a result, for the year ended March 31, 2006,
the Seino Group recognized impairment loss for the property of 69
business branches and 14 idle properties as follows.
Thousands of
U.S. Dollars

Millions of Yen

Buildings and structures
Land
Other property

¥

$

2,016
19,653
255
21,924¥

17,231
167,974
2,180
187,385$

Accumulated impairment losses have been directly deducted fromthe applicable assets.

(Accounting change in the composition of reportable business segments)
Effective for the year ended March 31, 2006, the Company changed
the composition of its reportable business segments. (See also Note 11)

3. Investments
At March 31, 2006 and 2005, short-term investments consisted of thefollowing:
Millions of Yen

Marketable securities:¥
Bonds
Total marketable securities
Time deposits with an original maturityof more than three months¥

Thousands of
U.S. Dollars

2006

2005

2006

2,369 ¥
2,369

8,788 $
8,788

20,24820,248

4,987
11,047
7,356 ¥ 19,835 $

42,62462,872At March 31, 2006 and 2005, investment securities consisted of
the following:
Millions of Yen

Thousands of
U.S. Dollars

2006
2005
Marketable securities:¥ 24,343 ¥ 15,800 $Equity securities
7,396
9,145
Bonds
227
187
Other
31,96625,132
Total marketable securities
3,925
9,732
Other nonmarketable securities¥ 35,891 ¥ 34,864 $2006
208,060
63,214
1,940
273,21433,547306,761

At March 31, 2006 and 2005, 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, 2006¥
At March 31, 2005

500 ¥
1,700

497 ¥
1,720

4,274 $

4,248 $At March 31, 2006:
Equity securities
Bonds
Other
At March 31, 2005:
Equity securities
Bonds
Other

¥

Fair andcarrying
value

7,186 ¥ 17,185 ¥
9,326
53
133
100
¥ 16,645 ¥ 17,338 ¥(28) ¥ 24,343
(114)
9,265
(6)
227
(148) ¥ 33,835¥(30) ¥ 15,800(4)16,233(6)187(40) ¥ 32,220

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

Thousands of U.S. Dollars

At March 31, 2006:
Equity securities
Bonds
Other

$ 61,419 $ 146,880 $ (239) $ 208,060
79,709453(974) 179,188
1,137
855
(52)
1,940
$ 142,265 $ 148,188 $ (1,265) $ 289,188

Expected maturities of held-to-maturity and available-for-sale debt
securities at March 31, 2006 were as follows:

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

¥

$

¥

2,347
5,820
947
700
9,814

$

20,06049,743
8,094
5,983
83,880At March 31, 2006 and 2005, investments in and long-term loans
to affiliates consisted of the following:(26)

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, 2006 and 2005, gross unrealized
gains and losses for marketable securities classified as available-forsale are summarized as follows:

18

Cost

(3)
20

Thousands of U.S. Dollars

Bonds included in investment securities
At March 31, 2006
$

Gross
Gross
unrealized unrealized
gains
lossesMillions of Yen

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

2006

2005

2006

3,483 ¥
3,424
6,907 ¥

4,106 $
3,602
7,708 $

29,76929,26559,034

4. Property and Equipment
At March 31, 2006 and 2005, property and equipment consisted of thefollowing:Thousands of
U.S. Dollars

Millions of Yen

2006
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

2005

2006

¥ 119,914 ¥ 139,342 $ 1,024,906
183,678 182,822 1,569,897
74,236
72,868634,496
22,59221,505
193,094
1,674
1,016
14,308402,094 417,553 3,436,701(176,520) (168,979) (1,508,718)
225,574 248,574 1,927,983

691
698
5,906
(450)
(440)
(3,846)
241
258
2,060
Total property and equipment ¥ 225,815 ¥ 248,832 $ 1,930,043

One of the consolidated subsidiaries elected to carry out one-timerevaluation to restate the cost of land used for business operations atvalues rationally reassessed effective on March 31, 2002, reflecting
appropriate adjustments for land shape and other factors, based on theappraisal 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 theexcess of the original book values over sound reassessed values isrecorded in the assets as deferred tax assets arising on revaluationaccount, and the rest of such excess, net of the tax effect and minority
interests portion, is recorded as a component of shareholders’ equity as
land revaluation decrement account in the accompanying consolidatedbalance sheets. At March 31, 2006 and 2005, the differences between
the carrying values of land used for business operations after revaluation over the current market value of such land at the fiscal year-end
amounted to ¥266 million ($2,274 thousand) and ¥1,344 million,
respectively.

5. Short-term Borrowings and Long-term Debt
At March 31, 2006 and 2005 short-term borrowings consisted of thefollowing:Thousands of
U.S. Dollars

Millions of Yen

2006
Unsecured bank overdrafts withinterest rates ranging from 7.3%
to 8.5% per annum at March 31,
2006¥
Short-term bank borrowings,
principally unsecured andrepresented by notes with interest
rates ranging from 0.29% to 5.8%
per annum at March 31, 2006
¥

2005

51 ¥

4,320
4,371 ¥At March 31, 2006 and 2005, the following assets were pledged ascollateral for certain short-term borrowings and long-term debt:

86 $

4,729
4,815 $

2006

436

36,92337,359Land
Buildings and structures
Time deposits included in shortterm investments

Millions of Yen

2006
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 0.63% to 2.85% perannum at March 31, 2006
Loans from government agencies,
principally mortgage, repayable on an
installment basis with interest rates
ranging from 0.224% to 3.0% perannum at March 31, 2006
Less, current portion

— ¥

8,066

¥

2005

2006

104 ¥
692

971 $
1,179

889
5,915

20

127

171

The aggregate annual maturities of long-term debt as at March 31,
2006 were as follows:
Years ending March 31,

2007
2008
2009
2010
2011
Thereafter

At March 31, 2006, the Company and certain subsidiaries had
unsecured overdraft agreements with nine banks. Under such agreements, the Company and such subsidiaries were entitled to withdraw
up to ¥20,276 million ($173,299 thousand). The Company and such
subsidiaries are not obligated to pay commitment fees on the unused
portions of such overdraft facilities.
At March 31, 2006 and 2005, long-term debt consisted of thefollowing:Thousands of
U.S. Dollars

Millions of Yen

2006

Millions of Yen¥¥

Thousands of
U.S. Dollars

7,187 $
172
126
127
105
531
8,248 $

61,427
1,470
1,077
1,086
897
4,538
70,495

Thousands of
U.S. Dollars

2005
9,017 $

8,718

182
239
8,248
17,974(7,187)(9,475)¥ 1,061 ¥ 8,499 $2006—

68,9401,555
70,495(61,427)9,068

19

6. Employee Retirement Benefits
The Company and its domestic subsidiaries have defined benefit
plans. The following table reconciles the benefit liability as at March
31, 2006 and 2005:
Millions of Yen

2006
Reconciliation of benefit liability:
Projected benefit obligationLess, fair value of pension plan
assets at end of year
Less, unrecognized actuarial
differences (loss)
Less, unrecognized prior service cost
Net amounts of employee
retirement benefit liability
recorded on the consolidatedbalance sheets

Thousands of
U.S. Dollars

2005

2006

¥ 47,647 ¥ 47,142 $ 407,239(1,421)
46,226(1,155)45,987(12,145)
395,094(2,437)(1,947)(2,567)(2,732)(20,829)(16,641)¥ 41,842 ¥ 40,688 $ 357,624

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 incertain pension funds organized by others together with thesubsidiaries or effectively restricted so that they cannot be
used by the employees for other purposes, which amounted to¥7,159 million ($61,188 thousand) and ¥5,465 million atMarch 31, 2006 and 2005, respectively.
The component of net periodic retirement benefit expense for thethree years ended March 31, 2006 was as follows:

Thousands of
U.S. Dollars

Millions of Yen

2006

2005

2004

2006

2,492 ¥
925

2,618 ¥
914

2,766 $
866

21,299
7,906

(22)

(21)

(23)

(188)

482

615

618

4,120

295
—

179
17

65
17

2,521
—

4,172 ¥

4,322 ¥

4,309 $

35,658Net periodic retirement
benefit expenses:¥
Service cost
Interest cost
Expected return on
pension plan assets
Amortization of
actuarial differences
Amortization of priorservice cost
Other
Total retirement
benefitexpense¥

Major assumptions used in the calculation of the above information
for the three years ended March 31, 2006 were as follows:
2006
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

2005

2004

StraightStraightStraightline method line method line method
2.0%

2.0%

2.0%

2.0%

2.0%

2.0%

10 years

10 years

10 yearsprincipally
10 yearsprincipally
10 yearsprincipally
10 years

7. Contingent Liabilities
At March 31, 2006 and 2005, the Seino Group was contingently
liable for trade notes endorsed to affiliates and third parties, and forguarantees, including substantial guarantees, principally of indebt-

edness of affiliates and third parties in the aggregate amounts of¥4,488 million ($38,359 thousand) and ¥5,171 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, 2006 and 2005 were as follows:
Millions of Yen

Due within one year
Due after one year¥¥

Thousands of
U.S. Dollars

2006

2005

2006

881 ¥
984
1,865 ¥

1,281 $
1,622
2,903 $

7,530
8,410
15,940A certain consolidated subsidiary engaged in leasing operations
entered into various lease agreements principally for vehicles with third
parties as lessor, which were categorized as financing leases. At March
31, 2006 and 2005, the aggregate future minimum lease commitments
to be received for such non-cancelable lease agreements, including theimputed interest, were as follows:2006¥

Due within one year
Due after one year

¥

2005

162 ¥
261
423 ¥

168 $
268
436 $

2006
1,384
2,231
3,615

In addition to the above, a certain consolidated subsidiary engaged
in leasing operations leases the property as lessee and also leases thesame property to affiliates and third parties as lessor. At March 31,
2006 and 2005, the future minimum commitments under such agreements, including the imputed interest portion, were as follows:
Minimum rentals
Minimum rentals
to be paid to be received to be paid to be received
Millions of Yen
Thousands of U.S. Dollars

At March 31, 2006:
Due within one year
Due after one year¥¥

At March 31, 2005:
Due within one year
Due after one year

¥
¥

20

Thousands of
U.S. Dollars

Millions of Yen

519 ¥
209
728 ¥
1,037 ¥
822
1,859 ¥

553 $
224
777 $
1,101
874
1,975

4,436 $
1,786
6,222 $

4,726
1,915
6,641

9. Shareholders’ Equity
(a)

(b)

Capital surplus principally consisted of additional paid-in capital.
At March 31, 2006 and 2005, respectively, retained earnings included
legal reserve of the Company in the amount of ¥4,262 million($36,427 thousand) and ¥4,262 milion, respectively. The Commercial
Code of Japan provides that an amount equivalent to at least 10% of
cash payments as an appropriation of retained earnings shall beappropriated as a legal reserve until a total amount of additional paid-in
capital and such legal reserve equals 25% of common stock. Suchlegal reserve is not available for distribution as dividends, but may be
used to reduce a deficit or may be transferred to common stock byproper actions of the Board of Directors and/or shareholders of theCompany.
Under the Commercial Code of Japan, the carrying values of treasury stock and net unrealized gains on available-for-sale securities are
not available for distribution as dividends.
On July 1, 2005, Seino implemented a rights plan using stockacquisition rights and a trust mechanism (”trust-type rights plan”) as(c)a means of dealing with the acquisition of the Company’s common
stock resulting in a particular shareholder holding of more than
20% of the Company’s common stock and proposals of acquisition
without the prior approval of the Board of Directors, and issued stockacquisition rights to The Sumitomo Trust & Banking Co., Ltd. at nocharge as part of the plan based on the approval of shareholders at theannual general meeting of shareholders in June 2005. Up to397,262,334 shares of the common stock would be issuable at a
certain price for exercise of these stock acquisition rights for theperiod from July 1, 2005 to June 30, 2008.
The shareholders of the Company approved the following
appropriations of retained earnings at the annual general meetingof shareholders on June 23, 2006:

Cash dividends

Millions of Yen

Thousands of
U.S. Dollars

¥

$

2,184

18,667

10. Income Taxes
Income tax expenses for the three years ended March 31, 2006
consisted of the following:Thousands of
U.S. Dollars

Millions of Yen

Income tax expenses:
Current
Deferred

2006

2005

2004

2006

6,644 ¥
1,178
7,822 ¥

7,483 ¥
(840)
6,643 ¥

6,964 $
(145)
6,819 $

56,786
10,06966,855¥¥The tax effects on temporary differences that give rise to a significant portion of deferred tax assets and liabilities at March 31, 2006 and2005 were as follows:
Millions of Yen

2006
Deferred tax assets:
Employee retirement benefit
liability
Enterprise tax accruals
Accrued bonuses
Intercompany capital gain
Loss on assets transferred
Impairment loss on fixed assets
Unrealized losses on availablefor-sale securities
Other
Less, valuation allowance
Deferred tax liabilities:
Deferred capital gain
Unrealized gains on availablefor-sale securities
Consolidation valuation
adjustment
Net deferred tax assets

2005

Thousands of
U.S. Dollars

2006¥ 17,160 ¥ 15,769 $ 146,667
480
524
4,103
3,596
3,594
30,735
932
1,055
7,966
1,971
1,518
16,846
8,699―
74,350Millions of Yen

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

Thousands of
U.S. Dollars

2006

2005

2006

4,533 ¥
9,713

5,014 $
8,016

38,744
83,017

8
7,626

―
2,235

68
65,180In 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, 2006 and 2005, 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 to be realizable.
A reconciliation of the differences between the Japanese statutory
effective tax rate and the actual effective income tax rate on pretax
income reflected in the accompanying consolidated statements of operations for the years ended March 31, 2005 and 2004 was as follows:
Percentage of pretax income

43
3,588
36,469(12,448)
24,021

11
3,255
25,726(814)
24,912367
30,667311,701(106,393)
205,308

5,956

5,841

50,906

6,839

3,649

58,4534,614
4,627
39,436
17,40914,117
148,795¥ 6,612 ¥ 10,795 $ 56,513

At March 31, 2006 and 2005, deferred tax assets and liabilities
were recorded as follows:

Japanese statutory effective tax rate
Increase (decrease) due to:Permanently nondeductible
expensesTax exempt income
Local minimum taxes per capita
levy
Amortization of consolidation
adjustment accountEquity in net loss of affiliates
Other
Actual effective income tax rate

2005
40.4%

2004
41.7%

0.6
(0.1)

0.6
(0.1)

2.4

2.5

(11.9)
(0.4)
(1.0)
30.0%

(13.6)
(0.9)
1.9
32.1%

The reconciliation for the year ended March 31, 2006 was not disclosed, as the Seino Group recorded a net loss for the year.

2111. Segment Information
During the current year, the Seino Group operates in four business segments: transportation services, vehicle sales, leasing for real estate services and otherservices. Information by industry segment for the three years ended March 31, 2006 was summarized as follows:
Transportation
services

For the year 2006:
Operating revenue:
External customers
Inter-segment sales
Total operating revenue
Operating costs and expenses
Operating income
Identifiable assets
Depreciation
Impairment loss on fixed assets
Capital expenditures

Vehicle sales¥¥¥

307,8881,768
309,656
303,7825,874¥

308,671
12,897
17,794
13,478¥¥$ 2,631,521
15,1112,646,632
2,596,427$
50,205$

Identifiable assets
Depreciation
Impairment loss on fixed assets
Capital expenditures$ 2,638,214
110,231
152,085
115,196$$

Identifiable assets
Depreciation
Capital expenditures

82,334
9,153
91,487
89,333
2,154¥

83,101
1,533
1,991
2,959

¥

¥

703,710
78,230781,940
763,530
18,410710,265
13,102
17,01725,291$$$

Merchandise
sales

Elimination

Consolidated

1,004
—
1,004
167
837

¥

9,015
45
2,129
2

¥

¥

36,29435,71972,01370,786
1,227¥

427,520
46,640474,160
464,068
10,092¥—(46,640)(46,640)(46,630)(10)¥

29,178
413
10
120

¥

429,965
14,88821,924
16,559¥16,968
(228)
—
(276)

¥

310,205
305,291
615,496605,00910,487$ 3,654,017
398,632
4,052,649
3,966,393$
86,256$—(398,632)(398,632)(398,547)(85)$ 3,654,017—
3,654,017
3,567,846$
86,171

249,385
3,530
86
1,026

$ 3,674,915
127,248
187,385
141,530$

145,025(1,949)—(2,359)$ 3,819,940
125,299
187,385
139,171

Elimination

Consolidated

¥

¥

¥

427,520—
427,520
417,438
10,082446,933
14,66021,924
16,283

8,581
—
8,581
1,427
7,154

$

77,051385
18,197
17$$

Information
services

Other

$

Total

Millions of Yen¥¥¥

307,264
1,932
309,196
301,265
7,931¥

340,636
12,045
15,163¥¥

Transportation
services

For the year 2004:
Operating revenue:
External customers
Inter-segment sales
Total operating revenue
Operating costs and expenses
Operating income (loss)

Total

Thousands of U.S. Dollars

Transportation
services

Identifiable assets
Depreciation
Capital expenditures

Other

Millions of Yen

For the year 2006:
Operating revenue:
External customers
Inter-segment sales
Total operating revenue
Operating costs and expenses
Operating income

For the year 2005:
Operating revenue:
External customers
Inter-segment sales
Total operating revenue
Operating costs and expenses
Operating income

Leasing for realestate services

98,25927,916
126,175
123,801
2,374¥

92,639
1,544
2,252

¥

¥

Merchandise
sales

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

¥

5,211
255
111

¥

¥

Information
services

13,042
13,55926,601
24,928
1,673¥

14,794
127
168

¥

¥

Other

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

¥

¥

Total

—
(49,408)(49,408)(49,403)(5)¥

17,212
(227)
(373)

¥

¥

Elimination

423,833—
423,833
411,786
12,047
470,492
13,744
17,321
Consolidated

Millions of Yen¥¥¥

300,645
1,747
302,392
294,653
7,739¥

352,938
11,24815,549¥¥97,155
29,109126,264
123,178
3,086¥

91,672
1,472
3,164

¥

¥

5,483
4,971
10,454
10,556
(102)

¥

5,710
302
320

¥

¥

14,422
11,49925,921
23,8382,083¥

14,191
118
491

¥

¥

417,705
47,326
465,031452,225
12,806¥

464,511
13,14019,524¥¥—(47,326)(47,326)(47,185)(141)¥

30,232
(199)
(612)

¥

¥

417,705—
417,705
405,040
12,665494,743
12,941
18,912

Notes: Identifiable assets in the elimination column represent unallocated general corporate items which are 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 segments)
Effective from the year ended March 31, 2005, the Company changed the measurement method of the assets for rent and related profits or losses, including operating revenue and expenses, to the method allocating operating revenue and expenses relating to the assets for rent incurred by or attributable to each business segment tothe corresponding segment in order to present their actual utilization conditions precisely, while the Company previously reported all of the related profits or losses in the“other” segment. As a result, as compared with the previous accounting method, operating revenue for the “transportation services” segment, “merchandise sales” segment
and “information services” segment increased by ¥408 million, ¥69 million and ¥87 million, respectively, and operating revenue for the “other” segment decreased by ¥755
million for the year ended March 31, 2005. Operating income for “transportation services” segment, “merchandise sales” segment and “information services” segment
increased by ¥552 million, ¥212 million and ¥90 million, respectively, and operating income for the “other” segment decreased by ¥854 million for the year ended March
31, 2005.
(Accounting change in the composition of reportable business segments)
Effective for the year ended March 31, 2006, the Company changed the composition of its reportable business segments from the “transportation services”, “merchandise sales”, “information services” and “other” segments to “transportation services”, “vehicle sales”, “leasing for real estate services” and “other” segments inorder to disclose segment information more properly. For the year ended March 31, 2006, the “vehicle sales” segment, which was the core business of the Seino
Group, was separately shown, and “merchandise sales, except for vehicle sales” and “information services”, which were not material as the Seino Group, were includedin the “other” segment. The “leasing for real estate services” segment was separately shown, as operating income of its business segment became material to be disclosed. If the previous reportable business segment composition was applied, operating results for the year ended March 31, 2006 were reclassified as follows:
Merchandise
sales

Information
services

Merchandise
sales

Other

Millions of Yen
Operating revenue
Operating income¥

100,962
2,778

¥

4,954
18

Information
services

Other

Thousands of U.S. Dollars¥

13,717
1,415$

862,923
23,744$42,342
154$

117,239
12,094

Geographic segment information is not shown, as operating revenue and total assets of overseas subsidiaries were not material in the three years ended March 31,
2006. Information for overseas sales is not disclosed as such sales were not material.

22Report of Independent Auditors

To the Board of Directors and Shareholders of
Seino Holdings Co., Ltd.

We have audited the accompanying consolidated balance sheets of Seino Holdings Co., Ltd. (the “Company”) and its
subsidiaries (together with the Company, the “Seino Group”) as of March 31, 2006 and 2005, and the related consolidated
statements of operations, shareholders’ equity, and cash flows for each of the three years in the period ended March 31,
2006, 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, 2006 and 2005, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended March 31, 2006 in conformity with accounting
principles generally accepted in Japan.
As described in Note 2(q), effective for the year ended March 31, 2006, the Company and its domestic subsidiaries haveadopted a new accounting standard for impairment of fixed assets. As disclosed in Note 11, effective for the year ended
March 31, 2006, the Company changed the composition of its reportable business segments.
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 23, 200623

Board of Directors(As of June 23, 2006)

Chairman andChief Executive Officer

Outside Directors

Yoshikazu Taguchi

Kenjiro Ueno

President andChief Operating Officer

Standing Statutory Auditors

Yoshitaka Taguchi
Directors
Takao Taguchi
Kunitoshi Yamanaka
Mitsuo Mekata

Yuji Tanahashi

Yoshio Matsuoka
Yoshinori Takigawa
Outside Statutory Auditors
Fumio Kato
Eiji Kasamatsu

Shizutoshi Otsuka
Hidemi Maruta
Toshitaka Morita

Corporate Data
(As of March 31, 2006)

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

24

Seino Holdings Co., Ltd.
1, Taguchi-cho, Ogaki, Gifu 503-8501, Japan
Tel: 81-584-82-3881 Fax: 81-584-82-5040
November 1, 1946
¥42,482 million
207,679,783
The First Section of Tokyo Stock Exchange (code 9076)
The First Section of Nagoya Stock Exchange (code 9076)
The Mitsubishi UFJ Trust and Banking Corporation
ChuoAoyama PricewaterhouseCoopers

Business Relationship In the Seino GroupThe Seino Group consists of Seino Transportation Co., Ltd. and 43 consolidated subsidiaries and 16 affiliates. The Seino
Group operates in four business segments, transportation services, vehicle sales, real-estate leasing services and other services.
Business relationship in the Seino Group is as follows.

Clients
Collect andDelivery

VehiclesSales and Repairs

Domestic
Transportation

Vehicle Sales

Seino Transportation Co., Ltd.
*1
Iwate Seino Transportation Co., Ltd.
*1
Miyagi Seino Transportation Co., Ltd.
*1
Kanto Seino Transportation Co., Ltd.
*1
Knagawawa Seino Transportation Co., Ltd. *1
Nohi Seino Transportation Co., Ltd.
*1
Tokai Seino Transportation Co., Ltd.
*1
Mie Seino Transportation Co., Ltd.
*1
Okinawa Seino Transportation Co., Ltd. *1
Seino Tsu-un Transportation Co., Ltd.
*1
Seino Express Co., Ltd.
*1
Seino Hikkoshi Co., Ltd.
*1
Seino Tokyo Express, Inc.
*1
Seino Hokuriku Express, Inc.
*1
Seino Nagoya Express, Inc.
*1
Seino Osaka Express, Inc.
*1
Seino ST Service, Inc.
*1
Hokkaido Seino Transportation Co., Ltd. *2
Saitama Seino Transportation Co., Ltd. *2
Tokyo Seino Transportation Co., Ltd.
*2
Hinomaru Seino Transportation Co., Ltd. *2
Shikoku Seino Transportation Co., Ltd. *2
Showa Seino Transportation Co., Ltd.
*2
Mikawa Seino Transportation Co., Ltd.
Ensyu Seino Transportation Co., Ltd.
Takuma Seino Transportation Co., Ltd.
Seino Kanagawa Express Co., Ltd.
Seino Hokkaido Express Co., Ltd.
Seino Logistics Hokkaido, Inc.
Tango Seino Transportation, Inc.
Box Charter Co., Ltd.

Sales andServices

Real Estate
Leasing

Information Services

Toyota Corolla Gifu Co., Ltd. *1
Gifu Hino Motor Co., Ltd. *1
Netz Toyota Gifu Co., Ltd. *1
Netz Toyota Centro Gifu Co., Ltd. *1
Asahi Enterprise Co., Ltd. *1
Jms Gifu Co., Ltd. *1

Vehic leS ale sSeino Information
Service Co., Ltd.

*1

Japan Logistics
Development Co.,
Ltd.

*1

Real Estate Leasing Services
Seino Transportation Co., Ltd.
Etc.

R e a l e s tat e
Le a s ing

Merchandise
Seino Trading Co., Ltd. *1
Seino Sangyo Co., Ltd. *1

OthersInternational
Transportation
Seino Logix Co., Ltd.

*1

United-Seino Transportation(Malaysia) Sdn. Bhd.

*1

Seino Transportation(Thailand) Co., Ltd.

*1

Seino Merchants Singapore
Pte Ltd.

*1

Seino Customs Clearance
Service Co., Ltd.

*1

*1
Asahi Leasing Co., Ltd. (Rental and lease)*1
Asahi Agency Co., Ltd. (Advertising agency)*1
Seino Do Brasil Armazens Gerais Ltda. (Storage)
Suito Taxi Co., Ltd. (Passenger transportation)*1
Seino Engineering Co., Ltd. (Construction)*1
Seino Family Co., Ltd. (Insurance agency service)*1
Asahi Travel Service Co., Ltd. (Travel agency)*1
Seino Security Service Co., Ltd. (Security service)*1
Toyota Home Gifu Co., Ltd. (Housing sales)*1Asahi Create Co., Ltd. (Comprehensive printer)
Seino Business Support Co., Ltd. (Business support services) *1

Asahi Bangkok Co., Ltd.
Schenker-Seino Co., Ltd.

O the rTra n s p o rtatio n
S e rv ice s

SEINO HOLDINGS Co., Ltd.
Note *1: Consolidated subsidiaries*2: Affiliates (under the equity method)
Companies except those mentioned above are affiliates
under the cost method.

43
6
10

25

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

Printed in Japan