Profile

Seino
(“the
Company”)
began
SeinoHoldings
HoldingsCo.,
Co.,Ltd.
Ltd.
(“theCompany”)
beganbusiness
1930
and
was
businessasasa atrucking
truckingcompany
companyinin
1930
and
was
incorporated
ofof
Ogaki,
Gifu
incorporatedinin1946.
1946.Based
Basedininthe
thecitycity
Ogaki,
Gifu
Prefecture,
expandinginPrefecture,we
weare
area aleading
leadingtrucking
truckingcompany,
company,
expandingstep
withwiththe thegrowthof theeconomyand thein step
growthof Japanese
the Japanese
economyand thedevelopment
network.
developmentofofthe
thenation’s
nation’sextensive
extensiveexpressway
expressway
network.
On
OnOctober
October1,1,2005,
2005,thetheCompany
Companytransferredtransferreditsits
transportationtransportationbusinessbusinessand
andotherotheroperations
operationstotoa new
a newcompany—which
company—whichhas
hastakentakenthetheoriginal
originalname
nameSeino
Seino
Transportation
TransportationCo.,
Co.,Ltd.—andLtd.—andwas
wasrenamed
renamedSeino
SeinoHoldings
Co.,Ltd., adopting
Holdings
Co., Ltd.aa pure
pureholding
holdingcompany
companystructure.
structure.
The Seino Group currently consists of the pure holding
company Seino
consolidated
subsidiaries
and and18 14
company
SeinoHoldings,
Holdings,7158
consolidated
subsidiaries
affiliates engaged
services,
vehiclesales,
affiliates
engagedinintransportationtransportation
services,
vehiclesales,
merchandise sales,
estateservicesandandotherservices.
merchandise
sales,leasingleasingforforreal
realestateservicesother
In its mainstay Transportation Services business, theservices.
Company
has taken
steps to build Services
even moreconvenient
In its mainstay
Transportation
business,the logistics
systems, allhas
thetakenwhilesteps
adhering
to itseven“customer-first”
principle.
Company
to build
more convenient
As of systems,
March 31,
Seinoadheringoffers efficienttransportation
logistics
all2016,
the while
to its “customer-first”
services throughoutJapan
its 651
domestic
terminals, a fleet
principle.
As of March
31,via2011,
Seino
offers efficientof 24,789 trucksservices
and a trucking
network
4,000
transportation
throughout
Japanthat
via averages
its 634 domestic
routes daily.
terminals,
a fleet of 24,321 trucks and a trucking network that
Overseas,Seino
hasdaily.
transferred
its international
forwarding
averages
5,000
routesOverseas,
Seino has transferredits
operations to forwarding
Schenker-Seino
Co., Ltd.,a joint venture Co.,
international
operations
to Schenker-Seino
established
Schenker
AG inwithGermany.
Ltd.,a jointwith
ventureestablished
Schenker AG in
Through this alliance, the Company aims to bolster its
competitiveness byCompany
optimizing
the tosynergies
aims
bolster of
its Seino’s domestictransportation network
and Schenker’s
global network
andcompetitivenessby optimizing
the synergies
cutting-edge IT systems.
of Seino’s domestic transportation network
Seino
Groupandis committed
and Schenker’sTheglobalnetwork
toIT
providingcutting-edge
systems.rapid services thatdeliver total customer satisfaction
and will
proceedthetotal“Road
providing rapid
services
thatdown
deliverto Success”andto becomea highlycustomer satisfaction
will proceed
down
profitablethroughthe “Road to
Success”company
to becomea highly
initiativesthroughto develop
a progressive
profitable company
initiatives
to
ダミーです。
business model
thatmodel
will become
develop a progressive
businessthatwill becomethe
thestandard
standardforfornext-generationtransportation
business.
next-generationtransportation
business.

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.

Contents
Contents
Financial Highlights
Financial
Highlights

11

To OurTo
Our Shareholders,Shareholders,Customers
CustomersandandFriends
Friends

22

Special FeatureSpecialFeature44

Review ofReviewof Operations
Operations

66

Financial Review
Financial
Review

88

Six-year Summary
Six-year
Summary

99

Consolidated Balance
Consolidated
BalanceSheets
Sheets1010Consolidated Statements
Consolidated
StatementsofofIncome
Income111112Consolidated Statementsof Comprehensive
Income(Loss) 12
Consolidated
Statementsof Comprehensive
Income12Consolidated Statements
Consolidated
Statements ofofChanges
ChangesininNet
NetAssets
Assets 12
Consolidated Statements
Consolidated
StatementsofofCash
CashFlows
Flows

13
13

Notes toNotes
to Consolidated
ConsolidatedFinancial
FinancialStatements
Statements

14
14

Report ofReportof Independent
IndependentAuditors
Auditors

24
24

Seino Group
Seino
Group

25
25

Board of Directors(As of June 26, 2016)
President

Yoshitaka Taguchi

Representative Director

Takao Taguchi

Directors

Shizutoshi Otsuka
Masahiro Kamiya
Hidemi Maruta
Harumi Furuhashi

Outside Directors

Yuji Tanahashi
Kenjiro Ueno

Standing Statutory Auditors

Takahiko Kumamoto
Shingo Terada

Outside Statutory Auditors

Fumio Kato
Eiji Kasamatsu

Seino Holdings Co., Ltd.

Financial Highlights

For the Years Ended March 31, 2016, 2015 and 2014

Thousands of
U.S. Dollars (Note)

Millions of Yen
CONSOLIDATED BASIS:
Operating revenue
Operating income
Income before income taxes
Net income
Net income per share (yen)

2016

2015

2014

2016

¥ 555,457 ¥ 542,452 ¥ 543,407
21,38620,18926,18623,26225,03827,957
14,456
15,49018,864
72.67
77.85
94.87

$ 4,915,549
231,735
247,407
166,938
0.84

Millions of Yen

Thousands of
U.S. Dollars (Note)2016

CONSOLIDATED BASIS:
Cash and cash equivalents, and short-term investments ¥ 91,444
Property and equipment, net of accumulated depreciation
290,151
Total assets
579,565
Long-term debt and other long-term liabilities
104,351
Net assets
371,007
Net assets per share (yen)1,835.78

2015

2014

2016

¥ 91,998
275,034
548,525
83,382
363,314
1,778.29¥ 97,729
270,888542,41183,676346,339
1,696.37$ 809,239
2,567,708
5,128,894
923,460
3,283,248
15.30

2014

2015

2016

2015

2016

2015

2016

Net income(Billions of Yen)

20
15
10
5
0

(Note) U.S. dollar amounts are translated at ¥113 = U.S. $1, only for the convenience of readers.

2014(Billions of Yen)

400
350
300
250
200

Corporate Data

150
100
50

(As of March 31, 2016)

0Company Name
Head Office
Date of Establishment
Paid-in Capital
Number of Shares Issued
Stock Listings
Transfer Agent
Independent Auditors

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)
Mitsubishi UFJ Trust and Banking Corporation
KPMG AZSA LLC

2014

1

Message from the Management

To Our Shareholders, Customers and Friends
We would like to take this opportunity to express our appreciation to our stakeholders, including shareholders
and other investors, for the consistent support you have shown us over the years. The results for the fiscal year
ending March, 2016 (April 1, 2015 to March 31, 2016) are presented herein.

NEW Medium-term Management
Plan “JUMP UP 70” 2014/4-2017/3
The following is a brief report on the performance of Seino
Holdings Co., Ltd. for the fiscal year ended March 31, 2016, our 95th
term (from April 1, 2015 to March 31, 2016).
In the fiscal year under review, Japan’s economic prospects
remained unclear despite signs of improvement in corporate earnings,
improvement in employment and income conditions, and thecontinued moderate tone of economic recovery. In relation to personal
consumption, there was no sign of momentum in the recovery of
consumer sentiment. On the other hand, the effect of economic
slowdown in emerging countries in Asia, such as the Chinese
economy, and resource-rich countries, became a cause for concern.
In the transportation industry, the Seino Group’s mainstay
business, there was an ongoing trend of decline in freight volume.
Amid this trend, rising outsourcing costs and increases in personnel
expenses, both reflecting a shortage of labor, put pressure on
businesses.

Initiatives and Results for the Fiscal
Year under Review
In this environment, pushing forward together, we steadily
implemented the various measures in our medium-term management
plan “JUMP UP 70: Change for the Future,” which is now in its
second year, working toward its successful completion. By putting
effort into strengthening business and expanding business fields, we
worked to improve the Company’s corporate value.
As a result, operating revenue for the fiscal year ended March 31,
2016 was ¥555,457 million (up 2.4% year on year), operating income
was ¥26,186 million (up 22.4% year on year), ordinary income was¥28,275 million (up 20.3% year on year), and profit attributable toowners of parent was ¥18,864 million (up 30.5% year on year).

2

Future Outlook
In our outlook for the Japanese economy, we expect that themoderate tone of recovery will continue amid ongoing improvement in
employment and income conditions, and on the back of various policy
measures. Nevertheless, there are lingering uncertainties reflecting
concerns such as downswings in overseas economies, the effect of yen
appreciation and weakness in stock markets.
In the transportation industry, the primary industry of the Seino
Group, we don’t expect freight volume to increase. Given thissituation, we forecast that the operating environment will continue tobe unpredictable because we expect an increase in personnel expenses
and rising outsourcing costs, both reflecting a shortage of labor.
Against this background, we will aim to achieve the targets in our
medium-term management plan, which will be in its final year, bysteadily implementing the various measures in the plan. We are also
putting effort into new business and will make all-out efforts to realize
the expansion and development of our businesses.
In the Transportation Services Business, we will not only work toacquire new customers and expand our logistics business, but also
actively promote the receipt of reasonable transport fees and charges.
We will also work to properly manage our costs. In these ways we will
endeavor to secure revenue and profit. Also, we will relocate and newly
establish truck terminals to further strengthen our network, and work
to further improve customer satisfaction with the virtuous
transportation cycle.
In the Vehicle Sales Business, we will continue working to firmly
maintain our profit structure not only with respect to sales of newvehicles but also with a stronger focus on sales of used vehicles, vehicle
inspections, vehicle maintenance and garage services, and otheroperations, by accurately grasping changing consumer needs.
Furthermore, we made Toyota Home Gifu Co., Ltd., one of ourconsolidated subsidiaries, a wholly-owned subsidiary on April 1, 2016.
We believe that this move will further strengthen the capital
relationships across the whole Group and allow us to respond nimbly
and flexibly to changes in the increasingly difficult businessenvironment.
Amid the changing operating environment surrounding the Seino
Group, we have chosen “Progress” to be this year’s slogan. In
accordance with this slogan, we are aiming to be a corporate groupthat can better contribute to society through the combined efforts of
the Seino Group’s 71 companies, and through self-regulation to adapt
to the changing times.
To all shareholders, we sincerely ask for your ongoing
encouragement and support into the future.

Corporate GovernanceSeino employs a corporate auditor system. As of March 31, 2016,
the Board of Directors consisted of 9 directors, including 2outside
directors. In addition to making swift and appropriate decisions onsuch important matters as business restructuring and strategic
investments, the Board of Directors is strengthening auditing
functions and achieving greater management transparency.
The Company also has 4 corporate auditors, including 2 outside
auditors. Auditors are committed to improving compliance andenhancing the trust that society has in the company through suchactivities as attending meetings of the Board of Directors, conferencesof directors and other important gatherings, and auditing businessexecution.

To Our Shareholders
Our company considers its shareholders’ profits as one of its coremanagement policies.
Regarding profit allocation, while trying to enhance shareholders’equity and to improve the profitability from mid- and long-term
perspectives, we endeavor to implement interim dividends and, inprinciple, set an annual cash dividend with a lower limit of ¥11 pershare, and also aim for a consolidated dividend payout ratio of 30%.
We will continue to further mold the Seino Group to provide thebest quality with its logistics services, and aim to become the top
domestic commercial distributor by making solid management as abasic policy that “improves our company, and lives up to the trust andexpectations of its customers, shareholders, business partners, andemployees,” together with enhancing the lives of Japanese citizens. In
addition to working to exercise the “industry’s most efficient groupmanagement,” we will also work to improve corporate value andshareholder value.
June 2016

Yoshitaka Taguchi,
President

3

Special Feature

Expanding Our Operations Scope and Creating New ValueThe Seino Group established “Change for the Future”,
a medium-term management plan beginning in the fiscal year of
2015, and vigorously promoted the forming of new systems whichmatch group company functions and customers to provide alogistics service which “connects to the needs” of all customers.
In addition, the Seino Group has strove to become a corporation
where each of its individual companies is the one chosen bycustomers in their respective industries, thereby building an
unshakeable business foundation.
The following outlines initiatives implemented by respective
business groups in the fiscal year of 2016.

Business Group Initiatives
Transportation Services/Business Group

Cooperative Logistics Operations
with Salim Group in Indonesia

Seino Holdings has agreed to work together with Salim
Group in Indonesia in regard to logistics operations in Indonesia
and other ASEAN countries.
The volume of cargo in Indonesia has heightened its status as a
production base for major manufacturers around the world, andthe amount of cargo aimed toward domestic retailers inIndonesia is likely to grow together with the development ofIndonesia’s major metropolitan areas.
Therefore, the unification of Salim Group’s logistics platform
and Seino Holdings’ logistics know-how and technology willallow the provision of high quality services at low costs.
From now on, we will be establishing logistics and businesssupport joint ventures in Indonesia, and then begin our logistics
operations.

Commemoration of the Achievementof Zero Accidents Throughout theCompany

Seino Transportation commemorated the achievement of an
October in 2016 without any accidents involving any of its
company vehicles, and held a tree planting ceremony in the
courtyard of its headquarters on December 4th. President
4

Taguchi, President Otsuka, and Worker’s Union President
Kondo, along with board directors from 14 areas and board
members thrust their shovels into the ground. The absence ofaccidents among company vehicles during the 49th KangarooCampaign in October marked the second accident-free year,
starting last year.

Second Busan Logistics Center
Completed

Construction of Seino Logix’s (headquarters in Yokohama
City) Second Busan Logistics Center, operated by its Korean
partner MS Distripark, has been completed in the Busan
Sinhang’s Ung-dong area.
This center is equipped with the first freezer and refrigerated
warehouse in the Busan Sinhang area, and there are expectations
regarding a new demand for the foods, medical supplies, andprecision machines previously handled by the Pusan Platform
Project.

Adoption of Kanto Transportation as a
Subsidiary

With the acquisitionof Kanto Unyu’s(headquarters in
Maebashi City) stocks,
Seino Holdings has
adopted the company as
one of its subsidiaries.
Kanto Unyu has anaffluence of technology and know-how in regard to refrigerated
transport, and holds the area’s top distribution network withrefrigerated transportation in the northern Kanto area of Japan.
It also has a network capable of handling refrigerated
distribution around Japan, and will now become an asset to
expanding the Seino Group’s full transportation network and thethree room temperature, refrigerated, and frozen transporttemperatures it handles, as well as strengthening its logistics
services.

The Complete Adoption of 6
Subsidiary Companies

In an effort to optimize its capital, Seino Holdings is further
strengthening the unification of its group and improving its profit
ability, as well as further solidifying its capital relations
throughout the group, and has completely adopted 6 consolidated
subsidiaries through share exchanges.
The 6 companies adopted are the transportation companies,
Seino Super Express and Seino Tuuun; automotive parts supplier,Seino Sangyo; insurance agency, Seino Family; taxi company/
travel agency, Suito Travel; and construction contractor company,
Seino Engineering.

Opening of Seino Logi Trans Shinkiba

Seino Logi Trans Shinkiba gained the Tokyo branch platform
on the 1st floor, the Tokyo branch office on the 2nd floor, and the
Fukagawa branch office and platform on the 3rd floor as its new
residents. The size of the platforms is 153 m × 50 m for the Tokyo
branch, and 142 m × 39 m for the Fukagawa branch. The Tokyo
branch’s platform is readily viewable from its office located justabove.
On each platform is a rising/lowering ramp possible forforklifts to run on. The 1st floor Tokyo branch’s platform also has
an elevator making the raising and lowering of carts and units
simpler and even contributes to more effective work to be done.
In addition, the four-story terminal building has been granted
better circulation with the installment of 3 cargo elevators.

Seino Logi Trans Shinkiba
Tokyo Distribution Center

The Tokyo Distribution Center has been situated on the Seino
Logi Trans’s 5th and 6th floors. This distribution center was
established in consideration of the TPP as a point of contact fordomestic logistics (known as “domestics”) and overseas logistics(known as “global”), and to provide 24-hour integrated service fortransfer center and distribution center functions in Tokyo Bay.

Vehicle Sales & Other Businesses
Used Vehicle Auctions Thriving“The 40th Hino Central Auction” for used vehicles was held
at Gifu Hino Motor (headquarters in Anpachi County, Gifu
Prefecture).
This auction was held by 7 of Hino Motor’s distributors inJapan’s Chubu region, and 289 compact to large-sized trucks andminibuses were put up for auction. Over 100 automobile
companies from all over Japan convened at the auction, making
146 successful bids. We will be working to steadily provide used,
quality vehicles for the demands of construction and export ofolder vehicles for things like the Tokyo Olympics.

Reception of an IBM Award

Seino Information Service (headquarters in Ogaki City) was
bestowed the award of “Top Business Partner” at the IBM
Choice Awards, a ceremony in which the U.S. IBM
Headquarters awards its business partners active in 7 different
locations around the world.

5

Expanding Our Operations Scope and Creating New Value
Transportation Services BusinessIn the Transportation Services Business, based on our
medium-term management plan, we sought to expand revenue
and secure profit by steadily implementing primary policies
such as the achievement of stability in the transportation
network, expansion of the logistics business and promotion of
the receipt of reasonable transport fees.
With respect to office expansion efforts, Seino
Transportation Co., Ltd. carried out the relocation of theTokyo branch to a brand new building (Koto Ward), and the
new establishment of the Tokyo Logistics Center, and newly
began operation of Seino Logi-Trans Shinkiba. Seino LogiTrans Shinkiba is Seino Group’s largest facility. It combines
the logistics functions of TC (transfer center) and DC(distribution center) and serving as the connecting point fordomestic and international logistics on a 24 hour basis, it willcontribute to further improving customer satisfaction.
Seino Super Express Co., Ltd. is working to strengthen its

sales capabilities and enhance efficiency with efforts such as
relocating the Oita Hiji sales office, which began operation as
the North Oita sales office (Usa City, Oita Prefecture), as well
as reorganizing multiple moving centers.
At Seino Transportation Co., Ltd., the core company of
the Transportation Services Business group, we continued topromote proactive negotiations for receiving reasonabletransport fees and charges, which are the sources of stable
freight. In parallel with this, we worked to properly manage
operation capabilities and costs, improve load efficiency inconsolidated deliveries, etc., and strove to ensure revenue andprofit. Also, we earned our customers’ trust by working tofurther improve the virtuous transportation cycle.
As a result of the above, operating revenue for this segment
was ¥416,113 million, up 4.3% year on year, and operating
income was ¥19,113 million, up 30.0% year on year.

Vehicle Sales BusinessIn the passenger vehicle sales, we carried out sales activities
centered on green vehicles, for which there are high customer
needs, and sales operations taking advantage of the effects of
new vehicle model launches. Despite these efforts, whileorders were focused on new models and some popular models,there was slow growth for sales of volume retail models, andthe number of new vehicles sold was down year on year.
The number of used vehicles sold also decreased year on
year, reflecting a decrease in the number of wholesale vehicles
due to a shortage of trade-in vehicles, despite an increase in
the number of retail vehicles from carrying out campaigns andholding business conventions.
Furthermore, we worked to secure service revenue by
promoting vehicle inspections focused on improving customer
satisfaction, and vehicle maintenance and garage services, aswell as the sale of tires, etc.
In truck sales, the number of new vehicles sold increased
year on year due partly to demand for construction-use trucks
and demand for trading in cargo trucks. Furthermore,
operating income was up year on year as a result of efforts tocapture demand for vehicle inspections and other forms ofvehicle maintenance, and make sales of used vehicles andparts.
Our office expansion efforts consisted of the complete
refurbishment of the Seki-higashi branch (Seki City, Gifu
Prefecture) by Netz Toyota Gifu Co., Ltd.
As a result of the above, operating revenue for this segment
was ¥94,441 million, down 1.0% year on year, but operating
income was ¥4,926 million, up 0.7% year on year.

Merchandise Sales Business
The Merchandise Sales Business engages in the sale of fuel,paper and paper products and the direct delivery of locallymade products.
Operating revenue for this segment was ¥28,029 million,
6

down 14.3% year on year, due partly to the effect of a fall insales unit prices for fuel sales. However, operating income was¥772 million, up 2.3% year on year because sales for the direct
delivery of locally made products, etc. were firm.

Leasing for Real Estate Services BusinessIn the Leasing for Real Estate Services Business, we strove
to effectively utilize business resources by leasing the former
truck terminals and the sites where there used to be stores,
which had been replaced mainly due to the impact of urban
development and current operating space becoming

increasingly cramped.
Operating revenue for this segment was ¥1,472 million, up
5.1% year on year, and operating income was ¥1,228 million,
up 2.4% year on year.

Other Business
Our Other Business segment includes the information
services business, the housing sales business, the construction
contract business, the passenger transportation business, andthe personnel services business.
The number of sales for new construction and sales of land

subdivisions increased in the housing sales business. Partly
reflecting these factors, operating revenue for this segment
was ¥15,402 million, up 9.8% year on year, and operating
income was ¥1,107 million, up 102.7% year on year.

Operating Revenue by Business Segment(Millions of yen)
FY3/16
Results

FY3/15Composition

Results

Composition

Year-on-YearTransportation Services

416,11374.9%

398,972

73.5%

4.3%

Vehicle Sales

94,441

17.0%

95,35117.6%(1.0%)

Merchandise Sales

28,0295.0%

32,6996.0%(14.3%)

Leasing for Real Estate Services

1,472

0.3%

1,401

0.3%

5.1%

Other

15,4022.8%

14,029

2.6%

9.8%

Total

555,457

100.0%

542,452

100.0%

2.4%

Composition

Year-on-Year

Operating Income by Business Segment(Millions of yen)
FY3/16
Results

FY3/15Composition

Results

Transportation Services

19,11373.0%

14,699

68.7%

30.0%

Vehicle Sales

4,926

18.8%

4,890

22.9%

0.7%

772

3.0%

755

3.5%

2.3%

Leasing for Real Estate Services

1,228

4.7%

1,199

5.6%

2.4%

Other

1,107

4.2%

546

2.6%

102.7%

Total

27,146103.7%

22,089103.3%

22.9%

Elimination(960)(3.7%)(703)(3.3%)—

Consolidated

26,186100.0%

21,386100.0%

22.4%

Merchandise Sales

7

Financial Review
Operating Results

year. The main factor in this was things like an increase ingoodwill and tangible fixed assets. Liabilities totaled¥208,558 million (US$1,845,646 thousand), which was a¥23,347 million (US$206,611 thousand) increase from theend of the previous consolidated fiscal year. The primaryreason for this was long-term loans, etc. Lastly, net assets
grew ¥7,692 million (US$68,071 thousand) from the end of
the previous consolidated fiscal year, amounting to ¥371,006
million (US$3,283,239 thousand). Retained earnings, etc.
were the main factor in the increase.

The consolidated operating revenue of Seino Holdings forthe fiscal year ending March, 2016 was ¥555,457 million (a2.4% increase from the previous fiscal year). This was due toreceipt of appropriate shipping charges in our transportation
operations and an increase in revenues from rentals in realestate leasing operations. The operating revenue’s operating
costs amounted to ¥492,802 million (US$4,361,080
thousand), which was a 1.5% increase from the previous fiscal
year. The operating cost rate to the operating revenue was
88.7%, which was 1.1 points lower than the previous fiscal
year’s.
Selling expenses and general administrative expenses
came to ¥36,469 million (a 9.1% increase from the same
period of the previous year), and operating revenue came to¥26,186 million (US$231,735 thousand).
Other revenues (expenses) amounted to ¥1,771 million(US$15,673 thousand).
As a result, this term’s net income before income taxes andminority interests was 20.2% more than the previous fiscal
year, coming to ¥27,957 million (US$247,407 thousand). The
net income for this term came to 30.5% more than theprevious fiscal year at ¥18,864 million (US$166,938
thousand).
Net income per share was ¥94.87 (US$0.84), and returnon equity was 5.3%. The annual cash dividend per share grew
to a dividend increase of ¥28.00 (US$0.25), which was a
33.3% increase from the previous fiscal year.

Cash Flows

Cash flow from operating activities amounted to ¥30,644
million (US$271,186 thousand), ¥12,148 million(US$107,504 thousand) up from the previous consolidated
fiscal year, due to an increase in this term’s net income before
taxes and minority interests and a decrease in things like
corporate taxes.
Cash flow from investment activities came to ¥40,899
million (US$361,938 thousand), which was a ¥40,898 million(US$361,929 thousand) increase from the previous
consolidated fiscal year, resulting from a decrease in income
from negotiable certificates of deposit cashed, but an increasein the purchase of investments in subsidiaries resulting inchange in scope of consolidation.
Cash flow from financial activities grew ¥14,643 million(US$129,584 thousand) from the previous consolidated fiscal
year, reaching ¥7,358 million (US$65,115 thousand) because
of income from things like long-term loans.
As a result, cash and cash equivalents in the current
consolidated fiscal year decreased ¥2,939 million (US$26,009
thousand) from the previous consolidated fiscal year, totaling¥63,838 million (US$564,938 thousand).

Financial Position

Total assets at the end of the current consolidated fiscal
year totaled ¥579,564 million (US$5,128,885 thousand),
which was an increase of ¥31,039 million (US$274,681
thousand) from the end of the previous consolidated fiscal

Operating income to operating revenue
Net income (loss) to operating revenue

Shareholders’ equity ratio

(%)

(%)

(%)

5

5

80

4

4

3

3

2

2

1

1

0

0

-1

-1

-2

-2

-3

-3

-4

-4

-5

8

Net income (loss) to total assets
Return on equity ratio

2011

2012

2013

2014

2015

2016

-5

60

40

20

2011

2012

2013

2014

Operating income to operating revenue

Net income (loss) to total assets

Net income (loss) to operating revenue

Return on equity ratio

2015

2016

0

2011

2012

2013

2014

2015

2016

SEINO HOLDINGS CO., LTD. and Consolidated Subsidiaries

Six-year Summary

For the Years Ended March 31, 2016, 2015, 2014, 2013, 2012 and 2011
Millions of Yen
2016
For the year:
Operating revenue:
Transportation services
Vehicle sales
Merchandise sales
Leasing for real estate services
Other
Operating costs
Selling, general andadministrative expenses
Operating income
Net income (loss)
At year-end:
Current assets
Total assets
Current liabilities
Short-term borrowings
Long-term debt, including current maturities
Net assets

¥

2015

555,457
416,113
94,441
28,0291,472
15,402492,802¥2014

542,452
398,972
95,351
32,6991,401
14,029487,664¥2013

543,407393,320
100,569
33,306
1,421
14,791490,002¥2012

516,185
371,546
96,14832,457
1,438
14,596
467,596¥2011

504,277
370,592
87,75530,144
1,416
14,370457,512¥497,612368,771
87,075
27,104
1,429
13,233452,263

36,46926,186
18,86433,402
21,386
14,45633,21820,18915,49034,243
14,346
12,15132,89813,867
12,542

33,023
12,3268,449

221,278
579,565
104,207
2,768
25,293371,007

221,338
548,525
101,829
2,519
10,125363,314

221,873
542,411112,396
2,465
10,214346,339

196,803
510,467
107,1712,473
314
331,702

186,255
500,963108,2192,475
565
318,650

166,726
487,701
97,614
2,515
648
307,806

Yen
Per share data:
Net (loss) income:-BasicCash dividends¥

Number of shares issued

94.87
28.00

¥

207,679

72.67
21.00

¥

77.85
11.00

¥

61.05
11.00

¥

Thousands
207,679
207,679

207,679

63.02
11.00

¥

42.44
11.00

207,679

207,679

2.7
2.5
2.5
4.0
62.0
172.1
58.7
17.5

2.5
1.7
1.7
2.8
61.6
170.8
59.9
26.2

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

4.7
3.3
3.2
5.3
63.0
212.3
57.2
29.5

Current ratio
(%)

240

3.9
2.7
2.6
4.2
64.5
217.4
52.4
28.9

3.7
2.9
2.9
4.7
62.2
197.4
58.3
14.1

2.8
2.4
2.4
3.8
63.4
183.6
55.3
18.0

Debt equity ratio

Payout ratio

(%)

(%)

120

70
60

200

50

90

40

160

30

120

20

60

10

80

0

30

-10

40

-20
0

2011

2012

2013

2014

2015

2016

0

2011

2012

2013

2014

2015

2016

-30

2011

2012

2013

2014

2015

2016

9

SEINO HOLDINGS CO., LTD. and Subsidiaries

Consolidated Balance Sheets
March 31, 2016 and 2015

Millions of yen
2016
Assets:Current assets:
Cash and cash equivalents (Note 3)
Short-term investments (Notes 3 and 5)
Trade receivables (Note 3)Inventories (Note 4)
Deferred tax assets (Note 17)
Other current assets
Allowance for doubtful accounts
Total current assets¥

Property and equipment (Notes 6, 7 and 9):
At costAccumulated depreciation
Net property and equipment
Investments and other assets:
Investment securities (Notes 3 and 5)
Investments in and long-term loans to affiliates (Note 5)
Goodwill
Deferred tax assets (Note 17)
Employee retirement benefit asset (Note 12)
Other assets
Total investments and other assets
Total assets
Current liabilities:
Short-term borrowings (Notes 3, 9, 10 and 11)
Current portion of long-term debt (Notes 3, 9 and 11)
Trade payables (Note 3)
Accrued expenses
Income taxes payable
Other current liabilities
Total current liabilities

63,83927,605109,269
10,758
5,697
4,325
(215)
221,278

2015
66,77825,220105,257
9,965
4,951
9,379
(212)
221,338$

581,804(291,653)
290,151549,691(274,657)
275,034

5,148,708(2,581,000)
2,567,708

28,3494,071
15,8049,370
1,899

30,335
3,419
5
5,761
4,386

250,876
36,027
139,859
82,92016,805

68,136
579,565¥

52,153
548,525

602,974$ 5,128,894

2,768

¥

2,519
34
44,082
13,6243,300
38,270101,829

$

¥

8,643

¥
¥

Long-term debt (Notes 3, 9 and 11)
Employee retirement benefit liability (Note 12)
Asset retirement obligations (Note 8)
Accrued severance indemnities for directors and corporate auditors
Deferred tax liabilities (Note 17)
Other long-term liabilities
Total liabilities

Thousands of
U.S. dollars
2016

1,226
43,14814,997
6,171
35,897104,2078,247

564,947
244,292
966,982
95,20450,41638,274(1,903)
1,958,212

76,487

24,496
10,850381,841
132,71754,610317,672
922,186

24,067
72,279
2,581
1,635
2,985
804
208,558

10,09164,453
2,548
1,543
4,364
383
185,211

212,982
639,637
22,841
14,46926,416
7,115
1,845,646

42,48280,585
247,617(9,667)361,017

42,482
74,261
235,133(8,704)
343,172

713,142
2,191,301(85,549)
3,194,841
2,859,767

10,618(114)(6,423)
(230)
3,851
6,139
371,007579,565

11,949(131)

93,965(1,009)Commitments and contingent liabilities (Notes 13 and 14)
Net assets:
Shareholders’ equity (Note 15):
Common stock: 794,524,668 shares authorized and 207,679,783 shares issued
Capital surplus
Retained earnings
Less treasury stock at cost: 8,926,862 shares in 2016 and 8,755,890 shares in 2015
Total shareholders’ equity
Accumulated other comprehensive income
Net unrealized gains on available-for-sale securities
Land revaluation decrement
Retirement benefit adjustment
Foreign currency translation adjustments
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets
See accompanying Notes to Consolidated Financial Statements.
10¥(1,143)¥(102)
10,573
9,569
363,314548,525(56,841)(2,035)34,08054,327
3,283,248$ 5,128,894

SEINO HOLDINGS CO., LTD. and Subsidiaries

Consolidated Statements of Income
For the Years Ended March 31, 2016, 2015 and 2014

2014

Thousands of
U.S. dollars
2016543,407$ 4,915,549

Millions of yen
2016
Operating revenue (Note 21)¥

Operating costs and expenses (Note 12):
Operating costs
Selling, general and administrative expenses
Operating income
Other income (expenses):
Interest and dividend income
Interest expense
Commission for syndicate loan
Gain (loss) on sale or disposal of property and equipment(Loss) gain on sale of investment securities
Share of profit of entities accounted for using equity method
Amortization of negative goodwill (Note 21)
Impairment loss on fixed assets (Notes 2(i) and 21)
Loss on write-down of investment securities
Compensation received for the exercise of eminent domain
Expenses related to change of business nameBond issuance cost
Gain on negative goodwill (Note 21)
Miscellaneous, net

555,4572015¥

542,452¥

492,80236,469529,271
26,186487,664
33,402521,066
21,386490,00233,216523,218
20,1894,361,080
322,734
4,683,814
231,735

647
(199)
(121)
210
(106)
606
—
(446)

596
(26)
—
(41)
2
401
3
(127)
(3)
236
(255)
—

5,726
(1,761)(1,071)
1,858
(938)
5,363
—
(3,947)————221
10,221
15,672
247,407

—
—
—
25
1,155
1,771
27,957

1,090
1,876
23,262

538
(24)
—
104
7
435
3,042
(440)
(20)
—
—
(48)
—
1,255
4,849
25,038

Income taxes (Note 17):
Current
Deferred
Total income taxes

11,336(2,049)
9,287

8,526
(241)
8,285

10,188(1,095)
9,093

100,319(18,133)
82,186

Profit18,67014,977

15,490165,221

Profit before income taxes(Loss) profit attributable to non-controlling interests
Profit attributable to owners of parent

¥

(194)
18,864¥521
14,456¥455
12,151$

U.S. dollars

Yen
Per share:
Profit attributable to owners of parent-Basic-Diluted
Cash dividends

¥

94.87
91.77
28.00

¥

72.67
70.30
21.00

(1,717)
166,938

¥

77.85
76.56
11.00

$

0.84
0.81
0.25

See accompanying Notes to Consolidated Financial Statements.
11

SEINO HOLDINGS CO., LTD. and Subsidiaries

Consolidated Statements of Comprehensive Income
For the Years Ended March 31, 2016, 2015 and 2014

2014

Thousands of
U.S. dollars
2016¥

15,945$

165,221

¥

1,767
—
101
4
1,872
17,817$(11,717)(46,708)(1,230)(159)(59,814)
105,407

Millions of yen
2016
Profit¥Other comprehensive income (Note 18):
Net unrealized gains on available-for-sale securities
Remeasurements of defined benefit plans, net of tax
Foreign currency translation adjustments
Share of other comprehensive income of affiliates accounted for using equity method
Total other comprehensive income¥
Comprehensive income
Comprehensive income attributable to:
Owners of the parent¥
Non-controlling interests

2015

18,670(1,324)(5,278)(139)(18)(6,759)11,911
12,126(215)¥

14,977

¥

4,030
82
61
43
4,216
19,193¥

18,469724¥$

17,340477

107,310(1,903)

SEINO HOLDINGS CO., LTD. and Subsidiaries

Consolidated Statements of Changes in Net Assets
For the Years Ended March 31, 2016, 2015 and 2014

Shareholders’ equity
Accumulated other comprehensive income
Total
Number of
Net unrealized
Foreignshares of
Total
gains onLand
Retirement currency accumulated
Nonothercommon Common Capital Retained Treasury shareholders’ available-for- revaluation benefit translation comprehensive controlling Total net
stock issued stock
surplus earnings
stock
equity sale securities decrement adjustment adjustments income
interests
assetsMillions of yen
Balance at March 31, 2013 207,679,783 ¥ 42,482 ¥ 74,261 ¥ 209,561 ¥ (8,612) ¥ 317,692 ¥ 6,172 ¥ (133) ¥— ¥(264) ¥ 5,775 ¥ 8,235 ¥ 331,702
Profit attributable to owners of parent———
15,490—15,490——————15,490Cash dividends———(2,189)—(2,189)——————(2,189)
Reversal of land revaluation decrement
—
—
—
(1)
—
(1)
—
—
—
—
—
—
(1)
Purchases of treasury stock andfractional shares, net
—
—
—
—
(75)
(75)
—
—
—
—
—
—
(75)
Net changes in items other thanshareholders’ equity
—
—
—
—
—
—
—
—
(1,068)
101
783
629
1,412
Balance at March 31, 2014 207,679,783
42,482
74,261
222,861(8,687) 330,917
7,922
(133)
(1,068)
(163)
6,558
8,864
346,339
Profit attributable to owners of parent———
14,456—
14,456——————
14,456
Cash dividends———(2,188)—(2,188)——————(2,188)
Reversal of land revaluation decrement
—
—
—
4
—
4
—
—
—
—
—
—
4
Purchases of treasury stock andfractional shares, net
—
—
—
—
(17)
(17)
—
—
—
—
—
—
(17)
Net changes in items other thanshareholders’ equity
—
—
—
—
—
—
4,027
2
(75)
61
4,015
705
4,720
Balance at March 31, 2015 207,679,783
42,482
74,261
235,133(8,704) 343,172
11,949(131)(1,143)(102) 10,573
9,569
363,314
Profit attributable to owners of parent———
18,864—
18,864——————
18,864
Cash dividends———(6,364)—(6,364)——————(6,364)
Reversal of land revaluation decrement
—
—
—
(16)
—
(16)
—
—
—
—
—
—
(16)
Purchases of treasury stock andfractional shares, net
—
—
816
—
(963)
(147)
—
—
—
—
—
—
(147)
Change in treasury shares of parent arising fromtransactions with non-controlling shareholders
—
—
5,508
—
—
5,508
—
—
—
—
—
—
5,508
Net changes in items other thanshareholders’ equity
—
—
—
—
—
—
(1,331)
17(5,280)(128)(6,722)(3,430)(10,152)
Balance at March 31, 2016 207,679,783 ¥ 42,482 ¥ 80,585 ¥ 247,617 ¥ (9,667) ¥ 361,017 ¥ 10,618 ¥ (114) ¥ (6,423) ¥(230) ¥ 3,851 ¥ 6,139 ¥ 371,007
Balance at March 31, 2015
Profit attributable to owners of parent
Cash dividends
Reversal of land revaluation decrement
Purchases of treasury stock andfractional shares, net
Change in treasury shares of parent arising fromtransactions with non-controlling shareholders
Net changes in items other thanshareholders’ equity
Balance at March 31, 2016

Thousands of U.S. dollars$ 375,947 $ 657,177 $ 2,080,823 $ (77,027) $ 3,036,920 $ 105,743 $ (1,159) $ (10,115) $—— 166,938—
166,938—————(56,319)—(56,319)
—
—
—
—
—
(141)
—
(141)
—
—
—
—

7,221

—

(8,522)(1,301)

—

—

—

—

—

—

(1,301)—

48,744——

48,744

—

—

—

—

—

—

48,744————— (11,778)
150 (46,726)(1,133) (59,487) (30,354)(89,841)$ 375,947 $ 713,142 $ 2,191,301 $ (85,549) $ 3,194,841 $ 93,965 $ (1,009) $ (56,841) $ (2,035) $ 34,080 $ 54,327 $ 3,283,248

See accompanying Notes to Consolidated Financial Statements.
12(902) $ 93,567 $ 84,681 $ 3,215,168———
166,938———(56,319)
—
—
—
(141)

SEINO HOLDINGS CO., LTD. and Subsidiaries

Consolidated Statements of Cash Flows
For the Years Ended March 31, 2016, 2015 and 2014

2014

Thousands of
U.S. dollars
2016

25,038$Millions of yen
2016
Cash flows from operating activities:
Profit before income taxes
Adjustments for:
Depreciation
Impairment loss on fixed assets
Amortization of negative goodwill
Amortization of goodwill
Gain on negative goodwill
Bond issuance cost
Net increase in employee retirement benefit liability(Gain) loss on sale or disposal of property and equipment
Share of profit of entities accounted for using equity method
Loss on write-down of investment securities
Loss (gain) on sale of investment securities
Net provision for accrued severance indemnities for directors andcorporate auditors(Increase) decrease in trade receivables
Increase in inventories
Decrease in trade payables
Other, net
SubtotalInterest and dividend received
Interest paid
Income taxes paid
Net cash provided by operating activities¥

27,957¥

16,039
446
—
837
(25)
—
1,577
(210)
(606)
—
106

Cash flows from investing activities:
Increase in property and equipment
Increase in long-term investments and loans
Decrease in property and long-term investments(Increase) decrease in short-term investments
Purchase of shares of subsidiaries resulting in change in scope of consolidation(Note 16)
Net cash used in investing activities
Cash flows from financing activities:
Increase in long-term debt
Repayment of long-term debt
Net increase (decrease) in short-term borrowings
Proceeds from share issuance to non-controlling shareholders
Dividends paid to shareholders
Dividends paid to non-controlling interests
Purchases of treasury stock, net of disposals
Proceeds from maturity of trust account for acquisition of treasury stock
Payments made to trust account for acquisition of treasury stock
Other, net
Net cash provided (used in) by financing activities
Effect of exchange rate changes on cash and cash equivalents
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

2015

¥

23,262¥

14,841
127
(3)
6
—
—
1,157
41
(401)
3
(2)

247,407
141,938
3,947
—
7,407
(221)
—
13,956(1,858)(5,363)—938

14,317440(3,042)
67
—
48
1,148
(104)
(435)
20
(7)

92

50

3

814

(1,752)(769)(3,046)(2,150)38,496938(199)(8,591)30,644

1,516(2,078)(13,507)
4,487
29,499933(26)(11,910)
18,496(4,265)
(205)
(184)
(56)
32,783660(24)(5,919)27,500(15,504)(6,805)(26,956)(19,027)
340,673
8,301(1,761)(76,027)
271,186(23,878)(484)
755(2,387)(17,808)
(493)
1,048
17,252(14,835)(1,162)
1,722(19,292)(211,310)(4,283)
6,681(21,124)(14,905)——(131,902)(40,899)(1)(33,567)(361,938)

11,900(5,382)
156
4,917(6,364)
(66)
(2)
2,011
—
189
7,359
(43)
(2,939)66,77863,839—(76)54
5(2,188)(60)(17)—(5,000)(2)(7,284)
10
11,22155,557
66,77810,002(120)(8)—(2,189)
(37)
(76)
—
—
(20)
7,552
17
1,502
54,05555,557

105,310(47,628)
1,381
43,513(56,319)(584)(18)
17,796—
1,673
65,124(381)(26,009)590,956
564,947¥¥$

See accompanying Notes to Consolidated Financial Statements.
13

SEINO HOLDINGS CO., LTD. and Subsidiaries

Notes to Consolidated Financial Statements
1. Basis of Consolidated Financial Statements
The accompanying consolidated financial statements of SEINO HOLDINGS
CO., LTD. (the “Company”) and its subsidiaries (together with the Company, the“Seino Group”) have been prepared in accordance with the provisions set forth in
the Financial Instrument and Exchange Law of Japan and its related accounting
regulations and in conformity with accounting principles generally accepted in Japan(“Japanese GAAP”), which are different in certain respects as to application anddisclosure requirements from International Financial Reporting Standards (“IFRS”).
The accompanying consolidated financial statements have been restructured
and translated into English from the consolidated financial statements of theCompany prepared in accordance with Japanese GAAP and filed with theappropriate Local Finance Bureau of the Ministry of Finance as required by
the Financial Instrument and Exchange Law of Japan. Certain supplementary
information included in the statutory Japanese language consolidated financial
statements, but not required for fair presentation, is not presented in theaccompanying consolidated financial statements.
Certain comparative figures have been reclassified to conform to the current
year’s presentation.
The translation of the Japanese yen amounts into U.S. dollar amounts
is included solely for the convenience of readers outside Japan, using theapproximate exchange rate prevailing at March 31, 2016, which was ¥113 to
U.S. $1.00. The translation should not be construed as a representation that
the Japanese yen amounts have been, could have been or could in the future beconverted into U.S. dollars at this or any other rate of exchange.

2. Summary of Significant Accounting Policies(a)Principles of consolidation

The accompanying consolidated financial statements include the accounts of
the Company and all of its subsidiaries. Investments in significant affiliates areaccounted for by the equity method. Investments in affiliates not accounted for by
the equity method are stated at cost. Differences between the acquisition cost ofinvestments in subsidiaries and the underlying equity in their net assets, adjusted
based on the fair value at the time of the acquisition, are deferred as goodwill andamortized over the estimated useful life, 5-15 years, on a straight-line basis. From
April 1, 2010, negative goodwill resulting from business combinations, measured
by the excess of the underlying equity in the net assets over the acquisition cost, iscredited to income. Negative goodwill resulting from acquisitions incurred prior
to April 1, 2010, however, is amortized over five years on a straight-line basis. Allintercompany transactions and accounts have been eliminated on consolidation.
Under accounting standards for consolidation, a subsidiary is defined as anenterprise which is controlled by another enterprise and is a majority (more than50%) owned enterprise or a 40% to 50% owned enterprise that meets certain
criteria. An affiliated company is defined as an enterprise in which the investor
has significant influence and is an enterprise other than a subsidiary that is a 20%
or more owned enterprise or a 15% to less than 20% owned enterprise that meets
certain criteria. For the years ended March 31, 2016, 2015 and 2014, there was
one company that was not a more than 50% owned enterprise but was neverthelessclassified as a subsidiary based on the judgment of the Company in accordancewith the accounting standards.
The number of subsidiaries and affiliates for the years ended March 31, 2016,2015 and 2014 was as follows:
Subsidiaries:
Domestic
Overseas
Affiliates accounted for by the equity method
Affiliates stated at cost

(b)
(c)
14

2016

2015

2014

65
6
5
13

59
2
4
10

58
1
4
10

The Company and most of its subsidiaries have a fiscal year that ends on March
31. The overseas subsidiary closes its books on December 31. The Company has
consolidated the overseas subsidiary’s financial statements as of its year-end because
the difference between its fiscal year-end and that of the Company was not morethan three months. Significant transactions for the period between the subsidiary’s
year-end and the Company’s year-end were adjusted for on consolidation.
The consolidated financial statements include the accounts of the overseas
subsidiary prepared under IFRS in accordance with Practical Issues Task Force(“PITF”) No. 18, “Practical Solution on Unification of Accounting Policies
Applied to Foreign Subsidiaries for Consolidated Financial Statements,” issued
by the Accounting Standards Board of Japan (“ASBJ”).

Cash and cash equivalents

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

Investments and marketable securities

The Seino Group classifies certain investments in debt and equity securities as“held-to-maturity,” “trading” or “available-for-sale.” The classification determines

(d)
(e)

(f)

(g)

(h)

(i)

the respective accounting method as stipulated by the accounting standard forfinancial instruments. Held-to-maturity securities are stated at amortized cost.
Marketable securities with market quotations for available-for-sale securities
are stated at fair value, and net unrealized gains and losses on these securities
are reported as accumulated other comprehensive income in net assets, net of
applicable income taxes. Gains and losses on the disposition of available-for-salesecurities are computed based on the moving average method. Nonmarketablesecurities without available market quotations for available-for-sale securities
are carried at cost determined by the moving average method. Adjustments incarrying values of individual securities are charged to income through writedowns when a decline in value is deemed other than temporary.

Accounting for derivatives

As of March 31, 2016 and 2015, the Seino Group did not hold nor had it
issued any derivative instruments.

Allowance for doubtful accounts

Allowance for doubtful accounts is provided for at the aggregate amount of
estimated credit loss based on an individual financial review of certain doubtfulor troubled receivables and a general reserve for other receivables based on thehistorical loss experience for a certain past period.

Inventories

Inventories for merchandise, products, raw materials and supplies are statedprincipally at the lower of moving average cost or net realizable value, andinventories for vehicles and work-in-process are stated principally at the lower of
specific identification cost or net realizable value.

Property and equipment and depreciation

Property and equipment, including significant renewals and additions, arestated at cost. Property and equipment of the Company and certain subsidiaries
are depreciated by the straight-line method for buildings and vehicles and by the
declining balance method for other property.
Property and equipment of other subsidiaries have been depreciated principallyby the declining balance method, except for buildings acquired on and after April
1, 1998 and property held for lease. Buildings acquired on and after April 1, 1998
by the domestic subsidiaries are depreciated by the straight-line method. Some ofthe subsidiaries capitalize property for which the cost was not less than ¥100,000
but below ¥200,000 and depreciate it over three years on a straight-line basis.
The Seino Group, as lessee, capitalize assets used under finance leases, except for
certain immaterial or short-term finance leases accounted for as operating leases.
Depreciation of leased assets capitalized in finance lease transactions as lessee iscomputed by the straight-line method over the lease term as the useful life with theassumption of no residual value. The leased property of a certain subsidiary engaged
in leasing operations as lessor is recorded at cost in property and equipment in theaccompanying consolidated balance sheets under operating lease accounting and isdepreciated over the term of the lease contracts by the straight-line method to theamount equal to the estimated disposal value at the lease termination date.
Expenditures on maintenance and repairs are charged to operating income as
incurred. Upon the disposal of the property, the cost and accumulated depreciation
are removed from the accounts and any gain or loss is recorded as income or expense.

Intangible assets

Intangible assets are amortized on a straight-line basis. Software, which isincluded in intangible assets, is amortized using the straight-line method over theestimated useful life of five years.

Accounting standard for impairment of fixed assets

The Company and its domestic subsidiaries have adopted the "AccountingStandard for Impairment of Fixed Assets" issued by the Business Accounting
Council of Japan and the related practical guidance issued by ASBJ. The standard
requires that fixed assets be reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not berecoverable. An impairment loss shall be recognized in the income statement
by reducing the carrying amount of the impaired asset or group of assets to therecoverable amount to be measured as the higher of the asset’s net selling priceor value in use. Fixed assets include intangible assets as well as land, buildings
and other forms of property and are to be grouped at the lowest level for which
there are identifiable cash flows distinguishable from other groups of assets. For
the purpose of recognition and measurement of impairment loss, fixed assets aregrouped into cash-generating units such as operating business branches other thanidle or unused property. From the year ended March 31, 2015, the Seino Grouphas changed the method used to group assets to measure impairment of fixed
assets in the transportation services segment from a method that grouped assets byeach operating business branch to a method that groups assets by entire segment.
At March 31, 2016, 2015 and 2014, recoverable amounts of assets were measured
based on value in use using discounted future cash flows at interest rates principallyof 6.8%, 7.8% and 1.7%, respectively, or net selling prices using primarily appraisal
valuations. As a result, the Seino Group recognized impairment loss as follows:Millions of yen

Property subject toimpairment:
Impairment loss recorded:

2016

2015

2014

6 businessbranchesand 5 idle
properties

2 businessbranchesand 8 idle
properties

20 businessbranchesand 4 idle
properties

for land¥buildings and structuresother property
¥

(j)

380 ¥
65
1
446 ¥

69 ¥
58
—
127 ¥

Thousandsof U.S.
dollars
2016

396 $ 3,363
44
575
—
9
440 $ 3,947

Accumulated impairment losses have been directly deducted from theapplicable assets.
Employee retirement benefits

Employees who terminate their service with the Seino Group are entitled
to retirement benefits determined generally by reference to basic rates of pay
at the time of termination, length of service and conditions under which thetermination occurs.
The Seino Group has recognized retirement benefits for employees, including
pension cost and related liability, based on the actuarial present value of
retirement benefit obligation using the actuarial appraisal approach and the fairvalue of pension plan assets available for benefits at the fiscal year-end. In thecalculation of the retirement benefit obligation, the expected retirement benefits
are attributed to the period up to the end of the respective fiscal year basedon the straight-line method. Actuarial differences arising from changes in theretirement benefit obligation or the value of pension plan assets resulting from
actual outcomes different from that which were assumed and from changes in theassumptions themselves are amortized on a straight-line basis over principally ten
years, a period within the average remaining service years of employees, from theyear following the year in which they arise. Past service cost is amortized using
the straight-line method over principally ten years, a period within the averageremaining service years of employees from the year in which it occurs.

(Changes in accounting policies)

(k)

(l)

Effective from the year ended March 31, 2015, the Company and its
consolidated domestic subsidiaries adopted Article 35 of the “AccountingStandard for Retirement Benefits” (ASBJ Statement No. 26, May 17, 2012
(hereinafter, “Statement No. 26”)) and Article 67 of the “Guidance on
Accounting Standard for Retirement Benefits” (ASBJ Guidance No. 25, March
26, 2015 (hereinafter, “Guidance No. 25”)) from the current fiscal year andhave changed the method used to determine retirement benefit obligation andcurrent service cost. In addition, the Company and its consolidated domestic
subsidiaries have changed the method used to determine the discount rate froma method based on the expected average remaining years of service of the eligible
employees to a method using a single weighted average discount rate reflecting
the estimated timing and amount of benefit payment. The effects of thesechanges in the retained earnings at the beginning of the current fiscal year andprofit or loss for the current fiscal year were not material.
Effective from the year ended March 31, 2014, the Company and its domestic
subsidiaries have applied the Accounting Standard for Retirement Benefits (ASBJ
Statement No. 26, revised on May 17, 2012 (hereinafter, “Statement No. 26”)) and
Guidance on Accounting Standard for Retirement Benefits (ASBJ Guidance No.
25, revised on May 17, 2012 (hereinafter, “Guidance No. 25”)), except Article 35
of Statement No. 26 and Article 67 of Guidance No. 25. Accordingly, actuarial
differences and past service cost that had yet to be recognized in profit or loss
have been recognized as retirement benefit adjustment of accumulated othercomprehensive income within net assets after adjusting for tax effects, and thedifference between retirement benefit obligation and plan assets has been recognized
as employee retirement benefit asset or liability in the balance sheet. In accordancewith Article 37 of Statement No. 26, this accounting change has not been
retrospectively applied to the financial statements of prior years, and the effect of thechange in accounting policies arising from the initial application has been recognized
in retirement benefit adjustment in accumulated other comprehensive income.
As a result of the application, at March 31, 2014, the Seino Group recognizedemployee retirement benefit asset in the amount of ¥1,569 million and employee
retirement benefit liability in the amount of ¥60,707 million. Also, accumulated othercomprehensive income was ¥1,068 million less and minority interests ¥188 million moreat March 31, 2014 than the amounts that would have been reported without the change.

Severance indemnities for directors and corporate auditors

The Seino Group pays severance indemnities to directors and corporate
auditors subject to the approval of the shareholders. The Company and certain
subsidiaries provide for accrued severance indemnities for directors and corporate
auditors at the amount that would have been payable if the directors and corporate
auditors had retired at the end of the fiscal year based on internal rules, inaccordance with the Japanese Institute of Certified Public Accountants (“JICPA”)
Audit and Assurance Committee Report No. 42, “Treatment for Auditing ofReserve Under Special Taxation Measures Law, Reserve Under Special Laws andReserve for Retirement Benefits to Directors and Corporate Auditors.”

Revenue recognition for freight charges

The Seino Group recognizes freight charges as revenue when freight isreceived for shipment. In relation to its revenue recognition, the Seino Group

records freight charges from customers and paid to interline carriers as operating
revenue and operating costs and expenses, respectively.

(m) Income taxes

(n)

(o)

(p)

(q)

(r)
(s)

Income taxes are accounted for by the asset-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 andtheir respective tax bases and operating loss carryforwards. Deferred tax assets
and liabilities are measured using the enacted tax rates expected to apply totaxable income in the years in which those temporary differences are expected tobe recovered or settled. The effect on deferred tax assets and liabilities of a change
in tax rates is recognized in the period that includes the enactment date and thepromulgation date for the fiscal year ended March 31, 2016 and 2015, respectively.

Enterprise taxes

The Seino Group records local corporate enterprise taxes based on the“added value” and “capital” amounts when levied as size-based corporate taxes
for local government enterprise taxes, which are included in selling, general andadministrative expenses.

Appropriation of retained earnings

Cash dividends are recorded in the fiscal year during which a proposed
appropriation of retained earnings is approved by the Board of Directors and/or
shareholders.

Translation of foreign currency accounts

Receivables, payables and securities, other than stocks of subsidiaries, aretranslated into Japanese yen at the exchange rates prevailing at the fiscal year-end.
Transactions in foreign currencies are recorded based on the prevailing exchange
rates on the transaction dates. Resulting translation gains and losses are includedin current earnings.
In respect to 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 allocations of portions attributable to minority interests, are reported as
foreign currency translation adjustments in a component of net assets on theaccompanying consolidated balance sheets.

Per share data

Basic net income per share is computed by dividing income available to commonshareholders by the weighted average number of shares of common stock outstanding
during the respective year, retroactively adjusted for stock splits. Unless there is ananti-dilutive effect, diluted net income per share is calculated to reflect the potential
dilution assuming that all convertible bonds are converted at the time of issue.
Cash dividends per share shown for each fiscal year in the accompanying
consolidated statements of income represent dividends declared as applicable to
the respective years.

Adoption of consolidated taxation system

The Company and some of its subsidiaries have adopted the consolidated
taxation system, with the Company as the taxable parent company.

Changes in accounting policies for business combinations

The Company and its domestic subsidiaries adopted “Revised AccountingStandard for Business Combinations” (ASBJ Statement No. 21, September 13, 2013
(hereinafter, “Statement No. 21”)), “Revised Accounting Standard for Consolidated
Financial Statements” (ASBJ Statement No. 22, September 13, 2013 (hereinafter,“Statement No. 22”)) and “Revised Accounting Standard for Business Divestitures”(ASBJ Statement No. 7, September 13, 2013 (hereinafter, “Statement No. 7”)) (together,
the “Business Combination Accounting Standards”) from the current fiscal year. As aresult, the Company changed its accounting policies to recognize in capital surplus thedifferences arising from changes in the Company’s ownership interest of subsidiaries
over which the Company continues to maintain control and to record acquisition
related costs as expenses in the fiscal year in which the costs were incurred. In addition,
the Company changed its accounting policy for the reallocation of acquisition costs
due to completion following provisional accounting to reflect such reallocation in the
consolidated financial statements for the fiscal year in which the business combination
took place. The Company also changed the presentation of net income, and the term
“non-controlling interests” is used instead of “minority interests.” Certain amounts
comparative information for the prior year were reclassified to conform to suchchanges in the current year presentation.
With regard to the application of the Business Combination Accounting Standards,
the Company followed the provisional treatments in Article 58-2 (4) of Statement
No. 21, Article 44-5 (4) of Statement No. 22 and Article 57-4 (4) of Statement No. 7,
with application from the beginning of the current fiscal year prospectively. As a result,operating income decreased by ¥133 million ($1,177 thousand), profit before income
taxes for the current fiscal year decreased by ¥5,605 million ($49,602 thousand), goodwill
and capital surplus as of the end of the current fiscal year decreased and increased by ¥97
million ($858 thousand) and ¥5,508 million ($48,743 thousand), respectively.
In the consolidated statement of cash flows, cash flows from acquisition or disposalof shares of subsidiaries with no changes in the scope of consolidation are included in“Cash flows from financing activities,” and cash flows from acquisition related costs
for shares of subsidiaries with changes in the scope of consolidation or costs related
to acquisition or disposal of shares of subsidiaries with no changes in the scope of
consolidation are included in “Cash flows from operating activities.”
Capital surplus as of the end of the current fiscal year in the consolidated statementof changes in net assets increased by ¥5,508 million ($48,743 thousand). Net assets
per share, earnings per share and diluted earnings per share for the current fiscal year
decreased by ¥0.48 ($0.004), ¥28.19 ($0.249) and ¥27.28 ($0.241), respectively.

15

(t)

Accounting standards issued but not yet adopted“Revised Implementation Guidance on Recoverability of Deferred Tax Assets”(ASBJ Guidance No. 26, March 28, 2016 (hereinafter, “Guidance No. 26”)
(1) Overview
Following the framework in Auditing Committee Report No. 66, “Audit
Treatment regarding the Judgment of Recoverability of Deferred Tax
Assets,” which prescribes estimation of deferred tax assets according to theclassification of the entity by one of five types, the following treatments
were changed as necessary:
1. Treatment for an entity that does not meet any of the criteria in types 1
to 5;
2. Criteria for types 2 and 3;
3. Treatment for deductible temporary differences which an entity classified
as type 2 is unable to schedule;
4. Treatment for the period which an entity classified as type 3 is able
to reasonably estimate with respect to future taxable income before
consideration of taxable or deductible temporary differences that exist at
the end of the current fiscal year; and5. Treatment when an entity classified as type 4 also meets the criteria fortypes 2 or 3.
(2) Effective date
Effective from the beginning of the fiscal year ending March 31, 2017(3) Effects of application of the Guidance
The effects on the consolidated financial statements of the application ofthe“Revised Implementation Guidance on Recoverability of Deferred Tax
Assets” is now being evaluated.

3. Financial Instruments
Information on financial instruments for the years ended March 31, 2016 and2015 is set forth below.
(1) Qualitative information on financial instruments(a) Policies on Financial Instruments
The Seino Group implements its Cash Management System for effective
investments and funding. The Company invests in short-term, low-risk
instruments in accordance with its internal fund management rules. The
Company raises funds mainly through indirect financing such as bank loans forinvestments in facilities, taking immediate liquidity into consideration.
(b) Details of Financial Instruments and Risks
Trade receivables are exposed to the credit risk of customers. Some of thesubsidiaries have receivables in foreign currency and are exposed to foreign
currency fluctuation risk.
Marketable and investment securities, which consist of held-to-maturity
securities and equity securities of business entities with which the Seino Grouphas business relationships, are exposed to stock market fluctuation risk.
Trade payables have general terms and conditions and are mostly due within
one year. However, some of the subsidiaries have them denominated in foreign
currency, which exposes them to foreign currency fluctuation risk.
Some bank loans and convertible bonds are used principally for capital
investments and are partially exposed to interest rate fluctuation risk.
(c)
Risk Management for Financial Instruments(1) Monitoring of credit risk
In accordance with internal policies for credit risk management, eachsubsidiary monitors the creditworthiness of its customers and manages
the terms and conditions of payment, due dates and remaining balances
to reduce such risk. Regarding held-to-maturity securities, the Company
invests in high credit-rating bonds in accordance with its internal fundmanagement rules. As a result, the risk is insignificant.
(2) Monitoring market risk
The Board of the Directors regularly monitors market risk using
management methods which comply with internal market risk management
rules. For marketable securities, the Seino Group monitors market prices
every quarter and reviews the market conditions and the financial positionof and business relationship with the issuers.
(3) Monitoring liquidity risk
The Company has a Cash Management System with its subsidiaries
and becomes the paying agent for the subsidiaries under the system.
The subsidiaries report their cash flow projections to the Company. The
Company has sufficient bank credit lines, including credit lines withoverdrafts, enabling the Seino Group to manage liquidity risk.
(d) Supplemental information on fair values
The fair values of financial instruments are based on their market prices.
The fair values of financial instruments with no available market prices are
determined by using prices calculated in a reasonable manner. However, sincecertain assumptions are used in the computation of the reasonable estimates, theresult may be different if alternative assumptions are used.
(2) Fair values of financial instruments
The fair and carrying values of the financial instruments included in the
consolidated balance sheets at March 31, 2016 and 2015, other than those for which
the fair value was extremely difficult to determine, are set forth in the table below.

16

Carrying value

At March 31, 2016:
Cash and cash equivalents ¥Short-term investments
Trade receivables
Investment securities¥
Total assets
Short-term borrowings ¥Trade payables
Convertible bonds
Current portion of
long-term bank loans
Long-term bank loans¥
Total liabilities

Short-term borrowings ¥Trade payables
Convertible bonds
Current portion of
long-term bank loans
Long-term bank loans¥
Total liabilities

Difference

63,839 ¥27,605109,269
26,448227,161 ¥

63,839 ¥27,605109,269
26,448227,161 ¥

—
—
—
—
—

2,768 ¥
43,14810,0252,768 ¥
43,148
10,615

—
—
590

483
11,321
67,745 ¥483
11,213
68,227 ¥

—
(108)
482

Carrying value

At March 31, 2015:
Cash and cash equivalents ¥Short-term investments
Trade receivables
Investment securities¥
Total assets

Fair value
Millions of yen

Fair value
Millions of yen

Difference

66,778 ¥25,220105,257
28,290225,545 ¥

66,778 ¥25,220105,257
28,290225,545 ¥

—
—
—
—
—

2,519 ¥
44,082
10,0352,519 ¥
44,082
11,070

—
—
1,035

32
55
56,723 ¥32
55
57,758 ¥

—
—
1,035

Carrying value
Fair value
Difference
Thousands of U.S. dollars

At March 31, 2016:
Cash and cash equivalents $ 564,947 $ 564,947 $Short-term investments
244,292
244,292
Trade receivables
966,982
966,982
Investment securities
234,053
234,053$ 2,010,274 $ 2,010,274 $Total assets
Short-term borrowings$
Trade payables
Convertible bonds
Current portion of
long-term bank loans
Long-term bank loans$
Total liabilities

—
—
—
—
—

24,496 $381,841
88,717

24,496 $381,841
93,938

—
—
5,221

4,274
100,186
599,514 $

4,274
99,230603,779 $

—
(956)
4,265

Notes:
i)Methods of measuring the fair value of financial instruments are as follows:
Assets:(1) Cash and cash equivalents
As these instruments are settled within a short term, their fair value andcarrying value are nearly identical, and their carrying values are assumed as
their fair values.
(2) Trade receivables
The fair value of installment sales receivables is measured by the carrying
amount, which is based on the present value of future cash flows throughmaturity discounted using an estimated credit risk adjusted interest rate. The
carrying amounts of trade receivables other than installment sales receivables
approximate fair value because of the short maturity of these instruments.
(3) Short-term investments and investment securities
The fair value of marketable securities equals the quoted market price, if
available. The fair value of debt securities equals the quoted market priceor the price provided by financial institutions. Marketable and investment
securities classified according to the purpose for which they are held aredescribed in Note 5.
Liabilities:(1) Trade payables
As these instruments are settled within a short term, their fair values andcarrying values are nearly identical, and, their carrying values are assumed as
their fair values.
(2) Short-term borrowings, Current portion of long-term bank loans
As these instruments are settled within a short term, their fair values andcarrying values are nearly identical, and their carrying values are assumed as
their fair values.

(3) Convertible bonds
The fair value of convertible bonds is based on the price quoted by thecorrespondent financial institution.
(4) Long-term bank loans
The fair value of long-term debt is based on the present value of future
cash flows discounted using the current borrowing rate for similar debt ofcomparable maturity.
ii)The following were not included in the table above because the fair value wasextremely difficult to determine:
Thousands of
U.S. dollars

Millions of yen

2016
Carrying value:
Unlisted equity securities,
other than those of affiliates ¥ 1,401500
Preferred equity securities¥ 1,901

2015

¥
¥

2016

1,545
500
2,045

$ 12,398
4,425$ 16,823

2016
Marketable securities:
Equity securities¥ 26,232
Bonds
111
105
Other
Total marketable securities
26,448
1,901
Other non-marketable securities¥ 28,349

Due within
1 year

At March 31, 2016:
Cash and cash equivalents ¥ 63,839 ¥— ¥Short-term investments
27,605—Trade receivables
82,81225,550Investment securities –—118bonds and other¥ 174,256 ¥ 25,668 ¥

— ¥
—
907

—
—
—

—
907 ¥

—
—

Due after Due after
1 years
5 years
Due within
throughthrough
1 year
5 years
10 yearsThousands of U.S. dollars

Due
after
10 years

At March 31, 2016:
Cash and cash equivalents $ 564,947 $— $— $Short-term investments
244,292——
Trade receivables
732,849
226,106
8,027
Investment securities –
—
1,044
—
bonds and other$1,542,088 $ 227,150 $ 8,027 $

—
—
—
—
—

iv) For the repayment schedule for convertible bonds and long-term bank loans at
March 31, 2016, see Note 9, “Short-term Borrowings and Long-term Debt.”

4. Inventories

2016
Merchandise and finished products ¥ 9,140
Work in process
971
647
Raw materials and supplies¥ 10,758

2015
8,333
937
695
¥ 9,965¥

Thousands of
U.S. dollars

2016$ 80,885
8,593
5,726
$ 95,204

5. Investments
At March 31, 2016 and 2015, short-term investments consisted of thefollowing:
Millions of yen

2016
Marketable securities:¥ 14,300
Bonds and otherTotal marketable securities
14,300Time deposits with an original
maturity of more than three months 13,305¥ 27,605

2015¥ 28,171 $ 232,142
—
982
119
929
28,290234,053
2,045
16,823¥ 30,335 $ 250,876

At March 31, 2016:
Equity securities
Bonds
Other
At March 31, 2015:
Equity securities
Bonds
Other
At March 31, 2016:
Equity securities
Bonds
Other

9,911 ¥ 16,436 ¥118—
14,35452¥ 24,383 ¥ 16,488 ¥Fair andcarrying
value¥(115) ¥ 26,232
(7)
111
(1)
14,405(123) ¥ 40,748¥(2) ¥ 28,170
—
301
(1)
12,119(3) ¥ 40,590

9,861 ¥ 18,311 ¥
300
1
12,05466¥ 22,215 ¥ 18,378 ¥Thousands of U.S. dollars$ 87,708 $ 145,451 $ (1,017) $232,142
1,044
—
(62)
982
127,027460(9) 127,478$215,779 $ 145,911 $ (1,088) $360,602

At March 31, 2016 and 2015 investments in and long-term loans to affiliates
consisted of the following:

Investments accounted for by theequity method for significant
affiliates and at cost for others ¥Millions of yen

Thousands of
U.S. dollars

4,071$ 36,027

2016

2015

¥

3,419

2016

6. Property and Equipment
At March 31, 2016 and 2015, property and equipment consisted of thefollowing:

Inventories at March 31, 2016 and 2015 were as follows.
Millions of yen

2016

Gross
Gross
unrealized unrealized
gains
lossesMillions of yen

Cost

Due
after
10 years

2015

Marketable securities classified as available-for-sale are stated at fair value
with unrealized gains and losses excluded from current earnings and reported asa net amount within the net assets account until realized. At March 31, 2016
and 2015, gross unrealized gains and losses for marketable securities classified asavailable-for-sale were as follows:iii) The redemption schedule for financial assets with maturities at March 31,
2016 was as follows:
Due after Due after
1 years
5 years
throughthrough
5 years
10 yearsMillions of yen

Thousands of
U.S. dollars

Millions of yen

Thousands of
U.S. dollars

2016¥ 12,301
12,301$ 126,549
126,549

12,919¥ 25,220117,743$ 244,292

At March 31, 2016 and 2015, investment securities consisted of the following:

Millions of yen

Thousands of
U.S. dollars

2016
2015
2016
Property and equipment, at cost:Land¥ 171,455 ¥ 169,156 $ 1,517,301
Buildings and structures
261,283
239,071
2,312,239
Vehicles
104,524
100,770924,991
Machinery and equipment
37,44334,604331,354
Construction in progress
914
5,812
8,088
6,185
278
54,735
Other581,804
549,691
5,148,708
Less accumulated depreciation (291,653) (274,657) (2,581,000)
Total property and equipment ¥ 290,151 ¥ 275,034 $ 2,567,708
One of the consolidated subsidiaries elected to carry out a one-timerevaluation to restate the cost of land used for business operations at values
reassessed on March 31, 2002, reflecting adjustments for land shape and otherfactors based on appraisal values issued by the Japanese National Tax Agency
in accordance with the Law Concerning Revaluation of Land. According to
the law, the excess of the original book value over reassessed value, net of the tax
effect and minority interests portions, is recorded in net assets as land revaluation
decrement account in the accompanying consolidated balance sheets. At March
31, 2016 and 2015, the difference between the carrying values of land used forbusiness operations after revaluation over the current market values of the land at
the fiscal year-end amounted to ¥1,779 million ($15,743 thousand) and ¥1,771
million, respectively.

17

7. Real Estate for Rent
Some of the Company’s subsidiaries own land and facilities for rent at
locations where the business branches were closed or redeployed branches
used to be. The carrying values in the consolidated balance sheets, changes
during the years ended March 31, 2016 and 2015 and the fair values of therental properties were as follows:
Thousands of
U.S. dollars

Millions of yen

2016
Carrying value at the beginning of year ¥ 13,388
643
Net changes during the year
Carrying value at the end of year ¥ 14,031
Fair value at the end of year *¥ 18,107

2015
2016¥ 13,654 $ 118,478
(266)
5,690
¥ 13,388 $124,168¥ 17,857 $160,239

Note: *
Fair value was measured at the reasonable estimated value based principally on a realestate appraisal or property tax bases.
Profit and loss recorded for rental properties for the fiscal years ended March
31, 2016 and 2015 were as follows:
Millions of yen

Operating revenue¥
Operating costs
Income from rental operations
Loss on disposal of rental property
and other
¥

2015
1,472
265
1,207

¥

2014
1,401
226
1,175

(394) ¥

Thousands of
U.S. dollars

2015$ 13,027
2,345
10,682(53) $ (3,487)

8. Asset Retirement Obligations
Asset retirement obligations are based upon estimated future restoration
obligations pursuant to office rental agreements. The asset retirement obligations
are calculated based upon the useful life designated by law or the estimated officerental period and are discounted by the yield rate of government bonds.
Asset retirement obligations for the years ended March 31, 2016 and 2015
were as follows:
Millions of yen

At the beginning of year
New consolidations
New obligations
Changes in estimatedobligations and accretion
Settlement payments
Other
At the end of year2016
¥ 2,54825—

2015¥ 2,537
—
20

46
(37)
4
¥ 2,586 ¥Thousands of
U.S. dollars

2016$ 22,549
221
—

44
407
(53)
(327)
—
35
2,548 $ 22,885

9. Short-term Borrowings and Long-term Debt
At March 31, 2016 and 2015, short-term borrowings consisted of thefollowing:
Millions of yen

Thousands of
U.S. dollars

2016
2015
2016
Unsecured bank overdrafts withinterest rates ranging from 1.3%
to 1.475% per annum at March¥
135 ¥79 $ 1,195
31, 2016
Short-term bank loans, secured
with interest rates ranging from0.774% to 0.957% per annum at
200
1,770
March 31, 2016—
Short-term bank loans, unsecured withinterest rates ranging from 0.174% to
2,433
2,440
21,531
3.0% per annum at March 31, 2016
¥ 2,768 ¥ 2,519 $ 24,496
At March 31, 2016, the Company and certain subsidiaries had unsecured
overdraft agreements with 13 banks. Under such agreements, the Company
and these subsidiaries were entitled to withdraw up to ¥43,910 million($388,584 thousand). The Company and the subsidiaries were notobligated to pay commitment fees on the unused portions of such overdraft
facilities.
At March 31, 2016 and 2015, long-term debt consisted of the following:

18

Thousands of
U.S. dollars

Millions of yen

2016
2015
2016
Zero coupon convertible bonds
due October 2018, including
unamortized premium ( ¥25 million($221 thousand) at March 31, 2016) ¥ 10,025 ¥ 10,035 $ 88,717
Loans from government agencies andbanks, repayable due through 2017,with interest rates ranging from 2.5%
to 3.1% per annum at March 31, 2016:
Secured
11,756
34
104,035
Unsecured
49
53
434
3,463
3
30,646
Capitalized lease obligations
25,293
10,125
223,832(1,226)(34)(10,850)
Less current portion¥ 24,067 ¥ 10,091 $ 212,982
At March 31, 2016, the current conversion price of zero coupon
convertible bonds due in 2018 were ¥1,482 ($13) per share and were subject
to adjustment in certain circumstances, including in the event of a stock split.
At March 31, 2016, the number of shares of common stock necessary forconversion of all convertible bonds outstanding was approximately 7 million.
At March 31, 2016 and 2015, respectively, the following assets were
pledged as collateral for certain long-term debt:
Millions of yen

Thousands of
U.S. dollars

4,875
1,692
1,063
1,133

$

2016
Land
¥
Buildings and structures
Cash and deposits
Shares of subsidiaries and associates
Long-term loans receivable fromsubsidiaries and associates

2015

¥

2,959
920
—
—

10

2016

43,142
14,973
9,407
10,02788—

The aggregate annual maturities of long-term debt as of March 31, 2016 wereas follows:Year ending March 31,
2017
2018
2019
2020
2021
ThereafterThousands ofMillions of yen
U.S. dollars
¥
1,226
$
10,8501,353
11,973
11,359100,522
1,354
11,982
1,245
11,018
8,730
77,257¥25,267$ 223,602

10. Commitment line Agreement
Consolidated subsidiary “Kanto Transportation Co., Ltd.“ had a commitmentline agreement of ¥ 1,000 million ($ 8,850 thousand) as March 31, 2016 toensure its access to financing. The outstanding balance of borrowings under thisagreement is ¥ 200 million ($ 1,770 thousand).

11. Financial Covenants
Consolidated subsidiary “Kanto Transportation Co., Ltd.“ entered into a syndicatedloan agreement. It includes the following financial covenants.
1.Operating loss on a consolidated basis of “Kanto Transportation Co., Ltd.”
before amortization of goodwill is allowed on the profit and loss statement for the twoconsecutive years as of the previous fiscal year at March 31, 2017 or later.
2.The amount of equity (except Subscription rights to shares, Non-controllinginterests and Deferred gains or losses on hedges) on the balance sheets on a consolidated
basis of “Kanto Transportation Co., Ltd.” is required to be equal to or greater than 80%
of equity on the balance sheet as of the previous fiscal year at March 31, 2017 or later.
Remaining balances of debt were as follows:
Millions of yen

2016
Short-term borrowings¥
200
Current portion of long-term debt
475
11,275Long-term debt
¥ 11,950

2015
—
—
—
¥
—

¥

Thousands of
U.S. dollars

2016
1,770
4,203
99,779$ 105,752$

12. Employee Retirement Benefits
The Company and its domestic subsidiaries had mainly unfunded defined
benefit plans with rules and regulations determined by each subsidiary. In addition,some domestic subsidiaries had Smaller Enterprise Retirement Allowance MutualAid or Specific Retirement Allowance Mutual Aid.
Other subsidiaries had funded defined benefit plans. One company belonged to
a comprehensive employees’ pension fund for the defined benefit corporate pension
plan. One company had established a retirement benefit payment trust. Some of
the consolidated subsidiaries have joined a multi-employer welfare pension fundplan. Those for which it is impossible to calculate in a rational manner the amountof the pension assets which corresponds to the amount of the contributions areaccounted for in the same way as the defined contribution pension plan.
The retirement benefit obligation of certain subsidiaries was calculated using
the simplified calculation method as permitted by the accounting standard for
employee retirement benefits.
As of and for the year ended March 31, 2016 and 2015, defined benefit plans,
including plans applying the simplified method were as follows:i) Movement in retirement benefit obligation:
Millions of yen

At the beginning of year
Service cost
Interest cost
Actuarial differences
Benefits paid
Past service cost
New consolidations
At the end of year

Thousands of
U.S. dollars

2016
2015
2016
¥ 70,354 ¥ 65,254 $ 622,602
3,822
3,631
33,823
627
583
5,549
6,105
4,015
54,027(3,265)(3,407)(28,894)
84
278
743
698
—
6,177
¥ 78,425 ¥ 70,354 $ 694,027ii) Movements in plan assets:
Millions of yen

Thousands of
U.S. dollars

2016
2015
2016
At the beginning of year
¥ 10,287 ¥ 6,116 $ 91,035
Actuarial differences(2,247)
4,166(19,884)
Contributions paid by the employer
5
6
44
(1)
(1)
(9)
Benefits paid
¥ 8,044 ¥ 10,287 $ 71,186
At the end of yeariii)Reconciliation from retirement benefit obligation and plan assets to employee
retirement benefit asset or liability:
Millions of yen

Thousands of
U.S. dollars

2016
2015
2016
Funded retirement benefit obligation ¥ 6,373 ¥ 6,113 $ 56,398(8,044) (10,287)(71,186)
Plan assets(1,671)(4,174)(14,788)
72,05164,241
637,620
Unfunded retirement benefit obligation
Net employee retirement¥ 70,380 ¥ 60,067 $ 622,832
benefit liability
Employee retirement benefit liability
72,27964,453
639,637(1,899)(4,386)(16,805)
Employee retirement benefit asset
Net employee retirement benefit liability ¥ 70,380 ¥ 60,067 $ 622,832
iv)Net periodic retirement benefit expenses, including plans applying thesimplified method:
Millions of yen

2016
Service cost
¥ 3,822
Interest cost
627
Amortization of actuarial differences
344
31
Amortization of past service cost
Net periodic retirement benefit expenses ¥ 4,824

2015
3,631
583
248
113
¥ 4,575¥

Thousands of
U.S. dollars

2016$ 33,823
5,549
3,044
274
$ 42,690v)Retirement benefit adjustment included in other comprehensive income, before
tax effects:
Millions of yen

Past service cost
Actual differences
Total balance

2016
¥
53
8,007
¥ 8,060

Thousands of
U.S. dollars

2015
2016
165 $
469
(392)
70,858¥(227) $ 71,327¥vi)Retirement benefit adjustment in accumulated other comprehensive income,before tax effects:

Thousands of
U.S. dollars

Millions of yen

Past service cost that yet to berecognized
Actuarial differences yet to berecognized
Total balance

2016
¥
¥

2015

(14) ¥

9,246

9,232

¥

2016

(67) $

1,239

1,172

(124)

81,823$ 81,699

vii) Plan assets
1. Plan assets comprise:
2016
1%
1%
98%
100%

Cash and cash equivalents
Bonds
Equity securities
Total*

Percent

2015
1%
—
99%
100%

**99% of total plan assets consisted of a retirement benefit payment trust.
2. Long-term expected rate of return
Current and target asset allocations, historical and expected returns on
various categories of plan assets have been considered in determining thelong-term expected rate of return.
viii) Actuarial assumptions
The principal actuarial assumptions (expressed as weighted averages):2016
mainly 1.0%
0.0%

Discount rateLong-term expected rate of return2015
mainly 1.0%
0.0%ix) Multi-employer pension plans
Required contributions of multi-employer pension, which are accounted forby the same method as defined contribution pension plans, to welfare pension
fund plans to welfare pension fund plan were ¥ 47 million ($ 416 thousand).
The funded status of multi-employer pension as of March 31, 2015
Millions of yen

Plan assets
Projected benefit obligation in
pension financing
Difference¥

22,153$¥

21,799354$

Thousands of
U.S. dollars

196,044
192,911
3,133

The ratio of contributions of the Company and its consolidated subsidiaries tototal contributions of multi-employer pension plan as of March 2016 was 16.2%.

13. Contingent Liabilities
At March 31, 2016 and 2015, the Seino Group was contingently liable fortrade notes endorsed to affiliates and third parties and for guarantees, including
substantial guarantees, principally of indebtedness of third parties in the aggregate
amount of ¥1,233 million ($10,912 thousand) and ¥1,604 million, respectively.

14. Lease Commitments
As lessee, the Seino Group has entered into various rental and leaseagreements for land and buildings to be used for truck terminals and warehouses
that are generally cancelable with a few months advance notice, except for certain
operating lease agreements. The aggregate minimum future lease payments forsuch non-cancelable operating lease agreements, including the imputed interest
portion, as lessee at March 31, 2016 and 2015 were as follows:

Operating leases:
Due within one year
Due after one year

Millions of yen

Thousands of
U.S. dollars

528
864
1,392

$

2016
¥
¥

2015

¥
¥

323
982
1,305

2016

4,673
7,646
$ 12,319

A certain subsidiary engaged in leasing operations as lessor enters into
various lease agreements with third parties principally for vehicles. The leases
are categorized as operating leases. At March 31, 2016 and 2015, the aggregate
future minimum lease commitments to be received for such non-cancelable leaseagreements, including the imputed interest, were as follows:

Operating leases:
Due within one year
Due after one year

Millions of yen

Thousands of
U.S. dollars

236
427
663

$ 2,088
3,779$ 5,867

2016
¥
¥

2015

¥
¥

263
427
690

2016

19

15. Net Assets
(a)

(b)

Under the Japanese Corporate Law (the “Law”) and regulations, the entire amount paid
for new shares is required to be designated as common stock. However, a company may,by a resolution of the Board of Directors, designate an amount not exceeding one halfof the price of the new shares as additional paid-in capital, which is included in capitalsurplus.
Under the Law, in cases in which a dividend distribution of surplus is made,the smaller of an amount equal to 10% of the dividend or the excess, if any, of 25% ofcommon stock over the total of additional paid-in capital and legal earnings reserve must
be set aside as additional paid-in capital or legal earnings reserve. Legal earnings reserve
is included in retained earnings in the accompanying consolidated balance sheets.
Under the Law, legal earnings reserve and additional paid-in capital could be used
to eliminate or reduce a deficit by a resolution of the shareholders' meeting. Additional
paid-in capital and legal earnings reserve may not be distributed as dividends. All
additional paid-in capital and all legal earnings reserve may be transferred to other capitalsurplus and retained earnings, respectively, which are potentially available for dividends.
At March 31, 2016 and 2015, capital surplus consisted principally of additional
paid-in capital. In addition, retained earnings included legal earnings reserve of theCompany in the amount of ¥4,262 million ($37,717 thousand) at March 31, 2016 and2015.
The maximum amount that the Company can distribute as dividends is calculated
based on the non-consolidated financial statements of the Company in accordance withJapanese laws and regulations.
At the annual shareholders’ meeting held on June 28, 2016, the shareholders approved
cash dividends of ¥17 per share, amounting to ¥3,379 million ($29,903 thousand). The
appropriation had not been accrued in the consolidated financial statements as of March
31, 2016 as such appropriations are recognized in the period in which they are approvedby the shareholders.

16 Consolidated Statements of Cash Flows
Assets and liabilities of newly consolidated subsidiaries by acquisition
The following is the summary of assets acquired and liabilities assured
through the acquisition of shares Kanto Transportation Co., Ltd. and its fivesubsidiaries for the year ended March 31, 2016, related costs and net payment:
Millions of yen

Thousands of
U.S. dollars(2,962)(26,213)

Current assets¥
Noncurrent assets
Goodwill
Current liabilities
Noncurrent liabilities
Acquisition cost¥
Cash and cash equivalents of newly
consolidated subsidiaries
Purchase of shares of subsidiaries resulting
in change in scope of consolidation ¥5,648 $
8,524
16,636(4,652)(8,289)17,867 $

14,905$49,98275,434
147,221(41,168)(73,354)
158,115

131,902

17. Income Taxes
The tax effects of temporary differences that give rise to a significant portionof deferred tax assets and liabilities at March 31, 2016 and 2015 were as follows:
Millions of yen

Thousands of
U.S. dollars

2016
2015
2016
Deferred tax assets:
Employee retirement benefit liability ¥ 25,076 ¥ 22,898 $ 221,911
Enterprise tax accruals
632
459
5,593
Accrued bonuses
3,820
3,593
33,805Intercompany capital gains
1,171
1,114
10,363Operating loss carryforwards
501
356
4,434
Loss on assets transferred
1,585
1,561
14,027
Impairment loss on fixed assets
13,993
14,282
123,832
Allowance for doubtful accounts
196
115
1,735
3,068
4,053
27,150Other
50,042
48,431
442,850(15,611)(17,672)(138,151)
Less valuation allowance
34,43130,759304,699
Deferred tax liabilities:
Deferred capital gains
5,276
5,445
46,691
Unrealized gains on available4,677
5,372
41,389for-sale securities
Valuation adjustments for consolidation 11,184
11,536
98,973
Employee retirement benefit asset
657
1,551
5,814
555
507
4,912
Other
22,34924,411
197,779¥ 12,082 ¥ 6,348 $ 106,920
Net deferred tax assets

20

At March 31, 2016 and 2015, deferred tax assets and liabilities were recorded as follows:
Deferred tax assets:
Current
Noncurrent
Deferred tax liabilities:
Noncurrent

Millions of yen

Thousands of
U.S. dollars

5,697
9,370

4,951
5,761

$ 50,416
82,9204,364

26,416

2016
¥

2015

¥

2,985

2016

In assessing the realizability of deferred tax assets, management of the Seino Groupconsiders whether some portion or all of the deferred tax assets will not be realized.
The ultimate realization of deferred tax assets is dependent upon the generation of the
future taxable income during the periods in which those temporary differences become
deductible. At March 31, 2016 and 2015, a valuation allowance was provided to reducedeferred tax assets to the extent that the management believed that the amount of thedeferred tax assets was not realizable.
A reconciliation of the differences between the Japanese statutory tax rate and theeffective income tax rate on pretax income reflected in the accompanying consolidated
statements of income for the years ended March 31, 2016, 2015 and 2014 was notdisclosed because the difference was not material.
On March 29, 2016, amendments to the Japanese tax regulations were enacted intolaw. Based on the amendments, the effective statutory tax rate used to measure deferred
tax assets and liabilities (expected to be settled or realized on after April 1, 2016) inthe fiscal year was changed from the previous rate of 31.5% to 30.2% for temporary
differences excepted to be resolved during the period from April 1, 2016 to March 31,2018 and to 30.2% for temporary differences excepted to be resolved on or after April
1, 2018. Due to these changes in statutory income tax rates, net deferred tax assets (after
deducting the deferred tax liabilities) decreased by ¥137 million ($1,212 thousand) as
of March 31, 2016, deferred income tax expense recognized for the fiscal year ended
March 31, 2016 increased by ¥276 million ($2,442 thousand), evaluation differencesof other securities increased by ¥211 million ($1,867 thousand) and accumulated
adjustments for employee retirement benefits decreased by ¥72 million ($637 thousand).
On March 31, 2015, amendments to the Japanese tax regulations were enacted
into law. Based on the amendments, the statutory income tax rates utilized for themeasurement of deferred tax assets and liabilities expected to be settled or realized from
April 1, 2015 to March 31, 2016 and on or after April 1, 2016 were changed for the
fiscal year ended March 31, 2015 from 34.8% to 32.3% and 31.5%, respectively, as ofMarch 31, 2015. Due to these changes in statutory income tax rates, net deferred tax
assets (after deducting the deferred tax liabilities) decreased by ¥97 million as of March
31, 2015, deferred income tax expense recognized for the fiscal year ended March 31,
2015 increased by ¥476 million, evaluation differences of other securities increased by¥461 million and accumulated adjustments for employee retirement benefits decreasedby ¥82 million.

18. Comprehensive Income
Amounts reclassified to net income (loss) in the current period thatwere recognized in other comprehensive income in the current or previous
periods and the tax effects for each component of other comprehensive
income for the years ended March 31, 2016, 2015 and 2014 were as follows:

Thousands of
U.S. dollars

Millions of yen

2016
2015
2014
2016
Net unrealized gains onavailable-for-sale securities:
Increase during the year¥(2,032) ¥ 5,162 ¥ 2,649 $ (17,982)
(1)
(1)
(4)
(9)
Reclassification adjustments
Subtotal, before tax(2,033) 5,161
2,645(17,991)709 (1,131)
(878)
6,274
Tax effectSubtotal, net of tax(1,324) 4,030
1,767(11,717)
Foreign currency translation adjustments:
Increase during the year
Reclassification adjustments
Subtotal, before tax
Tax effectSubtotal, net of tax

(139)
(139)
(139)

61
61
61

101
101
101

(1,230)(1,230)(1,230)Retirement benefit adjustment:(Decrease) during the year
(8,425)365
Reclassification adjustments
Subtotal, before tax(8,060)2,782
Tax effectSubtotal, net of tax(5,278)

(131)
358
227
(145)
82

—
—
—
—
—

(74,557)
3,230(71,327)
24,619(46,708)

Shares of other comprehensive
income of affiliates accounted forusing equity method:(Decrease) increase during the year
(13)
45
4
(5)
(2)
Reclassification adjustments
Subtotal(18)
43
4
Total other comprehensive income ¥(6,759) ¥ 4,216 ¥ 1,872

(115)
(44)
(159)
$ (59,814)

19. Business Combinations
Stock-for-stock exchange agreements with the subsidiaries
On February 17, 2015, the Company entered into stock-for-stock exchange
agreements with six subsidiaries, “Seino Super Express Co., Ltd.,” “Seino Sangyo Co.,
Ltd.,” “Seino Family Co., Ltd.,” “Seino Tsu-un Transportation Co., Ltd.,” “Suito TravelCo., Ltd.” and “Seino Engineering Co., Ltd.,” in order to make the Company’s equity
share in such subsidiaries increase to 100%. In accordance with these agreements, on
April 1, 2015 (the stock-for-stock exchange date), the Company reissued 2,457,806
shares of treasury stock at various exchange rates representing a certain number ofshares of the Company’s common stock (see below) for one share of common stock
to the respective minority shareholders of each of the six subsidiaries. The acquisition
cost of the acquired companies was ¥3,190 million ($28,230 thousand).
(1) Details of the stock-for-stock exchange transactions with thesubsidiaries were as follows:
Exchange rate representing thenumber of shares of common
stock of the Company for one
share of common stock of thesubsidiaries

Seino Super Express Co., Ltd.
Seino Sangyo Co., Ltd.
Seino Family Co., Ltd.
Seino Tsu-un Transportation Co., Ltd.
Suito Travel Co., Ltd.
Seino Engineering Co., Ltd.

0.054
2.020
2,662.580
56.97029.94017.350(shares)(2) Changes in the portion held by the Company in connection with thetransactions with non-controlling interests① Main reasons for changes in capital surplus
Additional acquisition of subsidiary’s shares② Increase in capital surplus due to transactions with non-controllinginterests¥5,508 million ($48,744 thousand)
The Company applied ASBJ Statement No. 21, “Accounting Standard forBusiness Combinations,” revised on September 13, 2013 and ASBJ GuidanceNo. 10, “Guidance on Accounting Standard for Business Combinations andAccounting Standard for Business Divestitures,” revised on September 13, 2013,
and treated them as business transactions under common control.
Acquisition for the shares of Kanto Transportation Co., Ltd.
On May 13, 2015, the Board of Directors determined that the Company
purchase all of the shares of Kanto Transportation Co., Ltd. from a fundmanaged by Polaris Capital Group Co., Ltd. through a fifty-fifty joint venture forinvestment by the Company and a limited partnership for investment managed
by Karita and Company, Inc. etc., of which Development Bank of Japan Inc. was
the single limited partner, and with regard to which the Company signed a Share
Purchase Agreement on the same date.
(1) General description of business combination① Name of the absorbed business and its description
Name of business: KSK Holdings Co., Ltd.
Business description: Joint venture for purchasing shares of Kanto
Transportation Co., Ltd.
② Name of the absorbed business and its description
Name of business: Kanto Transportation Co., Ltd. and its fivesubsidiaries.
Business description: Transportation services(2) Main reason for business combination
To improve our company performance and increase enterprise valueby acquiring a second general transportation business concern. The
Company has added a cold chain for which the expansion rate is highand obtained a transportation network that utilizes ordinary, chillingand freezing temperatures, creating new value and advancing ourtransportation services.
(3) Date of business combination
June 30, 2015(4) Legal form of business combination
Share acquisition(5) Acquired voting rights① KSK Holdings Co., Ltd.: 50%② Kanto Transportation Co., Ltd. and its five subsidiaries: 50%(6) Additional acquisition of shares in acquired company
Acquisition cost and consideration paid
① KSK Holdings Co., Ltd.
Consideration paid for acquisition: Cash ¥ 4,911million ($43,460
thousand)② Kanto Transportation Co., Ltd. and its five subsidiaries
Consideration paid for acquisition: Cash ¥ 17,867 million ($158,115
thousand)(7) Main acquisition related costs
Fee paid : 47 million ($416 thousand)(8) Amount of goodwill and amortization method and period① Amount of goodwill: 16,636 million ($147,221 thousand)② Amortization method and period: Straight-line amortization over
15 years(9) Asset acquired and liabilities assumed as of the date of the businesscombination
Millions of yen

Current assets
Noncurrent assets
Total assets¥

Current liabilities
Noncurrent liabilities
Total liabilities

¥

¥

¥

5,649
8,525
14,174

$

4,652
8,289
12,941$Thousands of
U.S. dollars$$

49,99175,443
125,434
41,16873,354
114,522

Common control transaction
On January 1, 2016, two consolidated subsidiaries “KSK Holdings Co., Ltd.”and “Kanto Transportation Co., Ltd.” merged.
(1) General description of business combination① Combined Business
Name of business: KSK Holdings Co., Ltd.
Business description: Joint venture for purchasing shares of Kanto
Transportation Co., Ltd.
② The Combined Business
Name of business: Kanto Transportation Co., Ltd. and its fivesubsidiaries.
Business description: Transportation services(2) Date of business combination
January 1, 2016
(3) Legal form of business combination
Absorption-type merger
Surviving company: KSK Holdings Co., Ltd.
Merged company: Kanto Transportation Co., Ltd.
(4) Name after business combination
Kanto Transportation Co., Ltd. ( January 1, 2016, change of trade namefrom“KSK Holdings Co., Ltd.”)
The Company applied ASBJ Statement No. 21, “Accounting Standard forBusiness Combinations,” revised on September 13, 2013, and ASBJ GuidanceNo. 10, “Guidance on Accounting Standard for Business Combinations andAccounting Standard for Business Divestitures,” revised on September 13, 2013,
and treated them as business transactions under common control.

20. Subsequent Events(1) Stock-for-stock exchange agreements with the subsidiaries
On March 4, 2016, the Company entered into stock-for-stock exchange
agreements with a subsidiary, “Toyota Home Gifu Co., Ltd.,” in order to make theCompany’s equity share in such a subsidiary increase to 100%. In accordance withthis agreement, on April 1, 2016 (the stock-for-stock exchange date), the Company
reissued 35,925 shares of treasury stock at various exchange rates representing acertain number of shares of the Company’s common stock (see below) for one
share of common stock to the respective minority shareholders of the subsidiary.
The acquisition cost of the acquired companies was ¥41 million ($363 thousand).
Details of the stock-for-stock exchange transactions with the subsidiaries
were as follows:
Exchange rate representing thenumber of shares of common
stock of the Company for one
share of common stock of thesubsidiary

Toyota Home Gifu Co., Ltd.

359.25(shares)

The Company applied ASBJ Statement No. 21, “Accounting Standard forBusiness Combinations,” revised on September 13, 2013, and ASBJ GuidanceNo. 10, “Guidance on Accounting Standard for Business Combinations andAccounting Standard for Business Divestitures,” revised on September 13, 2013,
and treated them as business transactions under common control.
(2) Share Repurchase
The Board of Directors of the Company resolved at its meeting held on July 1,2016 matters concerning the Company’s repurchase of its common stock pursuant
to the provisions of the Articles of Incorporation as applied pursuant to Article
459, Paragraph 1, Item 1 of the Business Corporation Law, as detailed below.
(1) Reason for share repurchase
To improve capital efficiency and implement flexible capital policies in
response to changes in the business environment(2) Class of shares to be repurchased
Common stock(3) Total number of shares that may be repurchased:
3,125,000 shares (maximum) (1.57% of issued shares (excluding treasury
stock))(4) Aggregate repurchase price¥ 2,500 million ($ 22,124 thousand) (maximum)(5) Period of repurchase
From July 7, 2016 to September 23, 201621

21. Segment Information
1.

2.
3.

General information about reportable segments

The reportable segments are constituent business units of the Seino Group for which separate financial information is obtained and examined regularly
by the Board of Directors to evaluate business performance. The Seino Group has established the “Business Promotion Department” as a holding company.
Each subsidiary plans and operates each business under its control. In addition, some of the subsidiaries engage in real estate leasing services to make good useof their facilities. Therefore, the Seino Group consists of business segments that are based on the business conducted by each subsidiary. The Seino Group’sreportable segments are “transportation services,” “vehicle sales,” “merchandise sales” and “real estate leasing services.”

Basis of measurement about reportable segment profit or loss, segment assets and other material items

The principles of segment accounting are basically the same as those described in Note 2, “Summary of Significant Accounting Policies.” Intersegment sales
and transfer amounts are based on market prices.

Information about reportable segment profit or loss, segment assets and other material items

Information about reportable segment for the years ended March 31, 2016, 2015 and 2014 is summarized as follows:

For the year 2016:
Operating revenue:
External customers
Intersegment sales or transfer
Total operating revenue
Segment income (*2)

Transportation
services¥¥

Segment assets (*3)¥
Depreciation
Amortization of goodwill
Investments in affiliates accounted
for using the equity method
Increase in tangible and intangible
fixed assets
For the year 2015:
Operating revenue:
External customers¥
Intersegment sales or transfer
Total operating revenue¥
Segment income (*2)
Segment assets (*3)¥
Depreciation
Amortization of goodwill
Investments in affiliates accounted
for using the equity method
Increase in tangible and intangible
fixed assets
For the year 2014:
Operating revenue:
External customers¥
Intersegment sales or transfer
Total operating revenue¥
Segment income (*2)
Segment assets (*3)¥
Depreciation
Amortization of goodwill
Investments in affiliates accounted
for using the equity method
Increase in tangible and intangible
fixed assets
For the year 2016:
Operating revenue:
External customers
Intersegment sales or transfer
Total operating revenue
Segment income (*2)

Vehicle sales

Merchandise
sales

Real estateleasing services

Other (*4)

416,113 ¥
1,730
417,843
19,113 ¥94,441 ¥
8,436
102,877
4,926 ¥

28,029 ¥20,60948,638772 ¥Millions of yen
1,472 ¥
15,402 ¥24,317—
1,472
39,7191,228 ¥
1,107 ¥

441,635 ¥
14,121
837

107,391 ¥
1,830—

13,401 ¥38—

13,402 ¥
38
—

3,675

—

—

46,224

2,605

398,972 ¥1,494
400,466
14,699 ¥405,415 ¥
13,062
6

Total

Adjustments(*1)

Consolidated

555,457 ¥
55,092
610,549
27,146 ¥— ¥(55,092)(55,092)(960) ¥

555,457—
555,457
26,18642,561 ¥335—

618,390 ¥
16,362837(38,825) ¥(323)—

579,565
16,039
837

297

—

3,972

(3)

3,969

67

360

384

49,640(387)

49,253

95,351 ¥
7,868
103,219
4,890 ¥
104,153 ¥
1,710—

32,699 ¥24,77657,475755 ¥
13,840 ¥45—

1,401 ¥—
1,401
1,199 ¥
12,477 ¥32—

14,029 ¥13,691
27,720546 ¥
39,916 ¥296—

542,452 ¥
47,829590,281
22,089 ¥575,801 ¥15,1456— ¥(47,829)(47,829)(703) ¥
(27,276) ¥(304)—

542,452—
542,452
21,386
548,525
14,841
6

3,096

—

—

231

—

3,327

(4)

3,323

17,244

2,536

9

189

595

20,573(479)

20,094393,320 ¥1,548
394,868
12,779 ¥393,469 ¥
12,5696

100,569 ¥8,110
108,679
5,352 ¥
100,313 ¥1,680
59

33,306 ¥26,87560,181731 ¥
15,067 ¥
51
—

1,421
—
1,421
1,222 ¥
12,707 ¥33—

14,791
9,735
24,526544 ¥
22,510 ¥253
2

543,407 ¥46,268589,675
20,628 ¥544,066 ¥
14,58667— ¥(46,268)(46,268)(439) ¥
(1,655) ¥(269)—

543,407—543,407
20,189542,411
14,317
67

3,036

—

—

168

—

3,204

13,448

2,852

4

270

16,604

Transportation
services

Vehicle sales

30

Merchandise
sales

Real estateleasing services

Other (*4)

Total

Thousands of U.S. dollars$
13,027 $ 136,301 $ 4,915,549 $—
215,195
487,540
13,027351,496
5,403,089$
10,867 $
9,797 $ 240,230 $$ 3,682,416 $
15,3093,697,725$
169,141 $

835,761 $
74,655910,416
43,593 $248,044
182,381430,425
6,832

Segment assets (*3)
$ 3,908,274 $Depreciation
124,965
Amortization of goodwill
7,407
Investments in affiliates accounted
for using the equity method
32,522
Increase in tangible and intangible
409,062
fixed assets

950,363 $16,195—

118,593 $
336
—

—

—

23,053

593

118,602 $
336
—
2,628
3,186

(3)

3,201

(461)

16,143Adjustments(*1)

Consolidated— $ 4,915,549(487,540)—(487,540)
4,915,549(8,495) $ 231,735

376,646 $ 5,472,478 $ (343,584) $ 5,128,894
2,964
144,796(2,858)141,938
—
7,407
—
7,407
—
3,398

35,150(27)

35,123439,292(3,425)435,867

Note: *1) Adjustments column in the table above represents principally the elimination of intersegment transactions and balances, except for (*2) and (*3).
*2) Segment income is reconciled to operating income in the accompanying consolidated statements of income. Segment income in the adjustments column represents
unallocated general corporate expenses which were not assigned to specific reportable segments, net of intersegment transactions.
*3) Segment assets in the adjustments column represent unallocated general corporate items which were not assigned to specific reportable segments such as cash, shortterm and long-term investments in securities, net of intersegment balances.
*4) Other segment represents the business segment not included in the reportable segments and includes the information services business, the housing sales business,the passenger transportation business and other business.
22

(Related information)
1. Information about products and services
The Company has not disclosed information about products and services because the Company has disclosed the same information above.
2. Information about geographic areas(1) Operating revenue
The Company has omitted the disclosure of operating revenue by geographic area because operating revenue to external customers in Japan accounts
for more than 90% of the amount of operating revenue reported in the consolidated statements of income.
(2) Property and equipment
The Company has omitted the disclosure of property and equipment by geographic area because property and equipment in Japan account for morethan 90% of the amount of property and equipment reported in the consolidated balance sheets.
3. Information about major customers
The Company has not disclosed information about major customers because no customer had contributed 10% or more to operating revenue in the
consolidated statements of income.
4. Information on impairment loss by reportable segments:
Impairment loss:
For the year 2016
For the year 2015
For the year 2014
Impairment loss:
For the year 2016
5.

Transportation
services

Merchandise
sales

Real estateleasing services

¥

39 ¥
39
154

35 ¥
61
69

Millions of yen
— ¥
372 ¥
—
27
—
217

$

345 $

310 $

Thousands of U.S. dollars— $3,292 $

Other

Total

— ¥
—
—

446
127
440

— $

3,947

Information on goodwill and negative goodwill incurred due to business combinations before April, 2010 by reportable segments:
Transportation
services

For the year 2016:
Amortization of goodwill¥
Amortization of negative goodwill
As of March 31, 2016:
Balance of goodwill
Balance of negative goodwill

Vehicle sales

837 ¥
—

Merchandise
sales

— ¥
—

15,804—

Real estateleasing services

Millions of yen
— ¥
—

Other

Total

— ¥
—

— ¥
—

—
—

—
—

—
—

—
—

837
—
15,804—

For the year 2015:
Amortization of goodwill¥
Amortization of negative goodwill

6 ¥
3

— ¥
—

— ¥
—

— ¥
—

— ¥
—

6
3

As of March 31, 2015:
Balance of goodwill
Balance of negative goodwill

5
—

—
—

—
—

—
—

—
—

5
—

6 ¥
2,972

59 ¥
—

— ¥
9

— ¥
—

2 ¥
61

11
3

—
—

—
—

—
—

—
—

Transportation
services

Vehicle sales

Merchandise
sales

Real estateleasing services

For the year 2014:
Amortization of goodwill¥
Amortization of negative goodwill
As of March 31, 2014:
Balance of goodwill
Balance of negative goodwill
For the year 2016:
Amortization of goodwill$
Amortization of negative goodwill
As of March 31, 2016:
Balance of goodwill
Balance of negative goodwill
6.

Vehicle sales

Thousands of U.S. dollars
— $
— $
— $
—
—
—

7,407 $—
139,859
—

—
—

—
—

—
—

Vehicle sales

Merchandise
sales

Real estateleasing services

Information on gain on negative goodwill by reportable segments:
Gain on negative goodwill:
For the year 2016
For the year 2015
For the year 2014
Gain on negative goodwill:
For the year 2016

Transportation
services

¥

1 ¥
—
—

Transportation
services

$

9 $

24 ¥
—
—
Vehicle sales

Millions of yen— ¥——Merchandise
sales

Other

Real estateleasing services

Thousands of U.S. dollars
212 $
— $
— $

11
3
Total

— $
—

7,407
—

—
—

139,859
—

Other

— ¥
—
—

67
3,042

Total

— ¥
—
—
Other

25
—
—
Total

— $

221

23

Report of Independent Auditors
Independent Auditor’s Report
To the Board of Directors of
SEINO HOLDINGS CO., LTD.:
We have audited the accompanying consolidated financial statements of SEINO HOLDINGS CO., LTD. (the “Company”) and its
subsidiaries, which comprise the consolidated balance sheets as at March 31, 2016 and 2015, and the consolidated statements of income,statements of comprehensive income, statements of changes in net assets and statements of cash flows for each of the years in the three-year
period ended March 31, 2016, and a summary of significant accounting policies and other explanatory information.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting
principles generally accepted in Japan, and for such internal control as management determines is necessary to enable the preparation of
consolidated financial statements that are free from material misstatements, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits inaccordance with auditing standards generally accepted in Japan. Those standards require that we comply with ethical requirements and plan andperform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements.
The procedures selected depend on our judgement, including the assessment of the risks of material misstatement of the consolidated financial
statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation andfair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, while
the objective of the financial statement audit is not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made bymanagement, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OpinionIn our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company and its
subsidiaries as at March 31, 2016 and 2015, and their financial performance and cash flows for each of the years in the three-year period ended
March 31, 2016, in conformity with accounting principles generally accepted in Japan.
Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year ended March 31, 2016 are presented
solely for convenience. Our audit also included the translation of yen amounts into U.S. dollar amounts and, in our opinion, such translation has
been made on the basis described in Note 1 of the Notes to Consolidated Financial Statements.

August 31, 2016
Nagoya, Japan

24

Seino GroupThe Seino Group consists of Seino Holdings Co., Ltd. and 71 consolidated subsidiaries and 18 affiliates. The Seino
Group operates in five business segments: transportation services, vehicle sales, merchandise sales, leasing for realestate services and other services. The business relationship in the Seino Group is as follows.

Clients
Collection and
Delivery

VehiclesSales and Repairs

Sales

Services

Real Estate
Leasing

Domestic Transportation

Vehicle Sales

Merchandise Sales

Leasing for Real Estate

Seino Transportation Co., Ltd.
*1
Hokkaido Seino Transportation Co., Ltd. *1
Tohoku Seino Transportation Co., Ltd. *1
Kanto Seino Transportation Co., Ltd.
*1
Seino Super Express Co., Ltd.
*1
Kanagawa Seino Transportation Co., Ltd. *1
Izu Seino Transportation Co., Ltd.
*1
Nohi Seino Transportation Co., Ltd.
*1
Tokai Seino Transportation Co., Ltd.
*1
Mie Seino Transportation Co., Ltd.
*1
Hinomaru Seino Transportation Co., Ltd. *1
Shikoku Seino Transportation Co., Ltd. *1
Kyushu 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 Hokkaido Express Co., Ltd.
*1
Seino Tokyo Express Co., Ltd.
*1
Seino Kanagawa Express Co., Ltd.
*1
Seino Hokuriku Express Co., Ltd.
*1
Seino Nagoya Express Co., Ltd.
*1
Seino Osaka Express Co., Ltd.
*1
Seino ST Service Co., Ltd.
*1
S&N Logistics Co., Ltd.
*1
Toyo Co., Ltd.
*1
Katsunuma Transportation Co., Ltd.
*1
Darumaya Transportation Co., Ltd.
*1
Central Logistics Co., Ltd.
*1
Eco Alliance Co., Ltd.
*1
COCONET CO., LTD.
*1
ASAHI CONPOU CO., LTD.
*1
KANTO UNYU Co., Ltd.
*1
Osaka Kosoku Nyuhai Corporation*1
KCS Co., Ltd.
*1
Izumikawa Transportation Co., Ltd.
*1TMR Kita Kanto,Inc.
*1
Miki Food,Inc.
*1
Saitama Seino Transportation Co., Ltd. *2
Tokyo Seino Transportation Co., Ltd.
*2
Mikawa Seino Transportation Co., Ltd.
Ensyu Seino Transportation Co., Ltd.
Kumamoto Seino Transportation Co., Ltd.
Tango Seino Transportation Co., Ltd.

Toyota Corolla Gifu Co., Ltd. *1
Gifu Hino Motor Co., Ltd. *1
Netz Toyota Gifu Co., Ltd. *1
Asahi Enterprise Co., Ltd. *1*1
Jms Gifu Co., Ltd.
Shiga Hino Motor Co., Ltd. *1
Seino Auto Service Kanto *1
Co., Ltd.
Seino Auto Lease Co., Ltd. *1*1
Tokyo Sharyou Co., Ltd.
Subic GS Auto, Inc.
Toyota Gifu Parts Dsitributor
Co., Ltd.

Seino Trading Co., Ltd. *1
Seino Sangyo Co., Ltd. *1*1
Seino Commercial(Shanghai) Co., Ltd.

Seino Transportation Co., Ltd.
*2
Arts Co., Ltd.

Marchandise
sales

Information Services

VehicleSales

Seino Information
Service Co., Ltd.

*1

Japan Logistics
Development Co.,
Ltd.

*1

International Transportation
Seino Logix Co., Ltd.

Others*1

United-Seino Transportation(Malaysia) Sdn. Bhd.
*1
Seino Customs Clearance Service Co., Ltd. *1
SP Express

Seino(Thailand) Co., Ltd.

*1

*1

Seino Saha Logistics Co., Ltd. *1

PT Seino Indomobil Logistics Services *1
Schenker-Seino Co., Ltd.

Leasing forReal Estate Services*2

PT Seino Indomobil Logistics SIRACHA
TRANSPORT CO., LTD.
*2

Asahi Agency Co., Ltd. (Advertising agency)*1
Suito Travel Co., Ltd. (Passenger transportation, Travel agency) *1*1Seino Engineering Co., Ltd. (Construction)*1
Seino Family Co., Ltd. (Insurance agency service)*1
Seino Staff Service Co., Ltd. (Personnel service)*1
Toyota Home Gifu Co., Ltd. (Housing sales)*1Asahi Create Co., Ltd. (Comprehensive printer)
Seino Business Support Co., Ltd. (Business support services) *1*1
Seino Ecotrading Inc. (Wholesale of recycled resources)
Nihon Oroshiuri Shiire Network Co., Ltd. (Collection agency) *1
Seino Financial Co., Ltd. (Settlement service representative) *1
Toyota Rent-A-Lease Gifu Co., Ltd. (Rental and lease)
Gifu Automotive Dealer Plaza Co., Ltd. (Rental office)

OthersBox Charter Co., Ltd.
Cosmo Hokuriku Haiso Center Co., Ltd.
Gifu Truck Kogyo Co., Ltd.
Soshin Sangyo Co., Ltd.
Ogaki School Lunch Support Co., Ltd.

Transportation
Services

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.

71
5
13

25