Creating Satisfaction
Still a Leader,
Still an Innovator

Annual Report 2008
Year ended March 31, 2008

Profile
The Yamato Group consists of Yamato Holdings Co., Ltd. (“the Company”), 38 subsidiaries and five affiliatedcompanies. It is primarily involved in six business segments: Delivery, BIZ-Logistics, Home Convenience,­e-Business, Financial and Other, as well as services incidental to these activities.
The goal of the Yamato Group is to help bring about a better society by further refining the Takkyubin­network, which is a part of the social infrastructure, creating services that facilitate more convenient, comfortable
lifestyles, and developing innovative logistics systems. The Group has managed its businesses in pursuit of thisgoal, toward which it will continue to strive. To this end, the Group is working to enhance corporate value throughimproving quality by constantly putting ourselves in our customers’ position, while also using the capabilities of
the whole Group to develop unique services that further improve convenience for our customers.

Contents
1
Market Data..................................................................... 2
To Our Shareholders........................................................ 4
Message from the Management I................................... 5
Message from the Management II................................... 8
At a Glance...................................................................... 10
Overview of Operations................................................... 12
Corporate Social Responsibility...................................... 18
Corporate Governance.................................................... 20
Organization.................................................................... 22
Directors and Auditors.................................................... 23
Six-Year Consolidated Financial Summary.....................

Management’s Discussion and Analysis......................... 24
Consolidated Balance Sheets......................................... 32
Consolidated Statements of Income............................... 34
Consolidated Statements of Changes in Equity............. 35
Consolidated Statements of Cash Flows........................ 36
Notes to Consolidated Financial Statements.................. 37
Independent Auditors’ Report......................................... 44
Corporate Data................................................................ 45

Forward-Looking Statements
This annual report contains forward-looking statements concerning Yamato Holdings’ future plans, strategies and performance. These statements represent assumptions and beliefs based on information currently available and are not historical facts. Furthermore, forward-looking statements are subject to a number of risks anduncertainties that include, but are not limited to, economic conditions, customer demand, foreign currency exchange rates, tax laws and other regulations.
Yamato Holdings therefore cautions readers that actual results may differ materially from these predictions.

Six-Year Consolidated Financial Summary		Millions of Yen

2008

2007

2006

2005

Thousands of
U.S. Dollars*1

2004

Operating revenues 		¥1,225,974 ¥1,161,568 ¥1,144,961 ¥1,071,903 ¥1,011,344
Delivery 		 981,142
934,607908,228––
Non-Delivery 		 244,832
226,961
236,733––
Operating costs 		 1,129,008 1,064,044 1,043,372
998,786
945,201
Selling, general andadministrative expenses 		
28,78630,36332,86821,914
19,484
Operating income 		
68,18067,161
68,721
51,20346,659Delivery*2 		
40,35043,69847,053––
Non-Delivery*2 		
27,83023,463
21,668––
Income before income taxes andminority interests 		
67,596
66,825
7,712
61,741
87,293
Income taxes 		
31,44732,47031,276
27,95937,515
Net income (loss) 		
35,35333,813(23,968)
33,84849,783

2003

2008¥972,135––
896,023$12,236,489
9,792,810
2,443,679
11,268,663

19,29456,818––287,316
680,510
402,738
277,772

91,06342,53848,502

674,674
313,876
352,856

Yen

U.S. Dollars

Per share of common stock:
Basic net income (loss) 		 ¥79.80 ¥
75.59 ¥
(53.47) ¥74.02 ¥
Diluted net income 		
78.12
74.00		72.48Cash dividends 		
22.00
20.00
20.00
18.00
Net assets per share 		 1,050.99
1,005.63
951.081,019.02

107.51105.2018.00
971.84¥ 104.51
101.6315.00
875.08		Millions of Yen

$

0.80
0.78
0.22
10.49

Thousands of
U.S. Dollars

Working capital 		 ¥Total shareholders’ equity 		Total assets 		
Capital expenditures 		
Depreciation and amortization 		Net cash provided by operating activities 		

125,355 ¥ 140,377 ¥ 123,483 ¥ 80,843 ¥ 74,803
465,801
445,263423,690458,792
443,715874,219829,721793,222676,156
652,792
124,832
48,881
48,86540,96647,58744,77240,15035,00337,14635,663116,896
80,76384,67576,642
41,064¥ 77,514
406,306
655,877
42,591
31,73186,035$ 1,251,166
4,649,179
8,725,616
1,245,955
446,874
1,166,742

Operating margin (%) 		
Return on revenues (%) 		
Return on assets (%) 		
Return on equity (%) 		
Current ratio (%) 		
Equity ratio (%) 		
Assets turnover (Times) 		
Interest coverage ratio (Times) 		

5.56
2.88
4.15
7.76
144.8953.28
1.44
223.00

5.78
2.91
4.17
7.78
149.3053.66
1.43
260.666.00(2.09)(3.26)(5.43)
143.7753.41
1.56
137.92

4.78
3.16
5.09
7.50
142.8567.85
1.61
104.19

4.61
4.92
7.61
11.71
142.39
67.97
1.55
65.17

5.84
4.99
7.27
12.58
145.44
61.95
1.46
36.68

–
–
–
–
–
–
–
–

Number of employees 		
Full-time 		Part-time 		
Takkyubin delivery volume(Millions of parcels) 		
Unit price (Yen) 		
Kuroneko Mail handling volume(Millions of units) 		
Unit price (Yen) 		

169,836
80,843
88,993

157,653
77,17080,483

152,787
75,552
77,235

141,60274,571
67,031

131,974
69,39862,576112,948
67,85845,090

–
–
–

1,236
644

1,174
647

1,128
653

1,063
666

1,011
682

983
710

–
–

2,206
64

1,970
66

1,734
69

1,432
73

994
84

606
103

–
–

Notes: 1. U.S. dollar amounts have been translated, for convenience only, at the rate of ¥100.19 to U.S.$1.
2. In November 2005, the Yamato Group shifted to a pure holding company structure, with Yamato Holdings Co., Ltd. as the parent company. This decision was made inorder to clarify the distinction between decision-making and business execution functions, with a view to optimizing the distribution of management resources andincreasing the speed of operations. Since the year ended March 31, 2006, the Group has reported operating income for the delivery business and non-delivery
businesses with eliminations or corporate allocated by segment. Eliminations or corporate for the current and previous fiscal years are shown with segment­information on p. 42. Eliminations or corporate for the year ended March 31, 2006 were ¥2,602 million.

Annual Report 20081

Market Data

Growth in the Express Home Delivery
Marketweighing less than 30 kg, irrespective of the type of delivery

Trends in Parcel Delivery Volume(C2C, B2C, or B2B).

In the data, “parcels” denotes individual packages

This survey uses company-reported parcel delivery volume

However, lots in which multiple packages are sent

data compiled by the Ministry of Land, Infrastructure, Trans-

together and parcels that do not require a signature on delivery

port and Tourism.

are not counted as “parcels” for the purposes of the survey.

Trends in Delivery Volume(Millions of Parcels)

3,600
3,400

As a result of the privatization of
the postal services in October
2007, Japan Post Service Co.,
Ltd. now falls under the jurisdiction of the Motor-truck Transport
Business Law, and is includedin the survey starting fromfiscal 2007.

Transport Method
Truck
Total Number of Deliveries

3,200
3,000
2,800

3,227

2,843

2,897 2,908

2,803
2,722
2,626

2,600
2,540

2,400

In fiscal 1999, certain firms
switched their existing parcels to
express home delivery, and thedata for the year reflects thisincrease. Excluding this extraordinary factor, year-on-year
growth was 5.9%.

2,200
2,000
1,800

2,326

1,806

1,600
1,591
1,509

1,400

1,419

1,200
1,101

1,000

1,183

1,237

1,029
911

800
762

600
400

1,125

1,318

612
493
385

200
0

1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Note: “Total Number of Deliveries” includes express home delivery services involving transport by truck, air, and other methods.
Source: Statistical survey from the Ministry of Land, Infrastructure, Transport and Tourism.

2

YAMATO HOLDINGS CO., LTD.

Growth of Takkyubin

improvement of delivery quality, including enhanced features

Takkyubin is the Yamato Group’s flagship service offering.

such as Time Period Delivery and Driver Direct services.

Since its launch in 1976, we have pursued a strategy of

As a result of these efforts, the Yamato Group outper-­differentiation based on development of additional strategic

formed the growth in the express home delivery market as aofferings such as Cool Takkyubin and Takkyubin Collect, andwhole, and we are steadily expanding our market share.

Timeline of New Product Development(Millions of Parcels)

1,500
2007 Kuroneko Members service launched

YamatoJapan Post

1,200

2002 Start of Driver Direct service
1998 Start of Time Period Delivery

900

Enhancingdelivery-side
customer service

1996 Start of year-round operations

600

Creating markets
through new services

1988 Cool Takkyubin service launched1986 Takkyubin Collect launched

Improvingsender-side
customer service

300

01976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Source: Japan Post Holdings Co., Ltd.

Market Share(Millions of Parcels)

(%)

3,500

10.0

3,000
2,500
2,000

15.9%
21.0%
5.7%
15.7%

1,500
1,000
500
0

5.8%
15.0%
29.4%

16.2%

16.6%

16.9%

5.7%

6.1%

7.0%

13.3%

12.3%

11.4%

31.0%

30.8%

30.4%

14.3%
7.8%
10.8%

31.5%

12.0%
8.4%
10.4%

9.6%

9.0

8.4%

8.0

10.4%

7.0
6.0

32.4%

33.4%

5.0

n Yamaton Sagawa
n Nippon Express
n Japan Postn Otherl Market (YoY)
l Yamato (YoY)

4.0

24.6%

3.0

33.0%

33.9%

34.0%

33.7%

2001

2002

2003

2004

35.6%

36.8%

38.2%

1.0

34.6%

2005

2006

2.0

2007

2008

0.0

Sources: Ministry of Land, Infrastructure, Transport and Tourism and Japan Post Holdings Co., Ltd.

Annual Report 20083

To Our Shareholders

Fiscal 2008, ended March 31, 2008, was the final year ofahead, Yamato placed a successful public bid for a parcel

our medium-term management plan, entitled “Yamatoof land adjacent to Tokyo International Airport (Haneda

Group Revolution Plan 2007: New Value & Innovation

Airport), which we expect to increase the Group’s interna-

Three-Year Plan.” Consolidated operating revenues for thetional presence in the future. In order to further reinforce

year totaled ¥1,225,974 million, and operating income

our close-knit domestic network, one of our key strengths,amounted to ¥68,180 million.

we have established infrastructure on the site, which will

During the year, we steadily expanded our Delivery
business, which accounts for around 80% of consolidated

play a multifaceted role as a distribution gateway for land,sea, and air.

operating revenues. We also actively advanced our non-For fiscal 2008, the Company has declared a year-end

delivery businesses, including BIZ-Logistics, Home Conve-

dividend of ¥12.00 per share. Combined with the interim

nience, e-Business, and Financial. In these ways, we madedividend, this brings total annual dividends to ¥22.00 per

steady progress in reducing our dependence on theshare, ¥2.00 higher than in the previous year.

­Delivery business.
With the aim of providing more competitive, integrated
domestic and international delivery services in the years

In this year’s annual report, we portray the YamatoGroup’s image as “Still a Leader, Still an Innovator.” Goingforward, we aim to raise our corporate value by pursuingfurther innovations.
We ask for the continued understanding and supportof all shareholders in these endeavors.

Keiji Aritomi
Director and Chairman

Kaoru Seto
Representative Director,
President and Executive Officer

Keiji Aritomi
Right Kaoru Seto
Left

4

YAMATO HOLDINGS CO., LTD.

Message from the Management I

Targeting Steady GrowthIn fiscal 2008, the final year of “Yamato Group Revolution Plan
2007: New Value & Innovation Three-Year Plan,” we achieved
year-on-year growth in both revenue and earnings. Specifically, operating revenues grew 5.5%, and operating income
rose 1.5%. We provide an overview of each business segmentin the section starting on page 12. In this message, we will
look back on the final year of the three-year plan.
The plan featured two major policies, which aimed toensure long-term future growth for the Group. The first was tosteadily expand the Delivery business, centering on Takkyubin.

On May 21, 2007, Yamato reached an agreement to

The second was to expedite growth in non-delivery busi-

form a strategic alliance with the Marui Group. Under thenesses—BIZ-Logistics, Home Convenience, e-Business, andagreement, in September 2007 the door-to-door parcel deliv-

Financial—by deploying Groupwide resources. This entailed

ery business of Moving Co., Ltd., a member of the Maruicombining three functions: logistics technology (LT), central toGroup, merged with Yamato Home Convenience Co., Ltd.

the door-to-door parcel delivery business, information technol-With this move, we established the industry’s most competi-ogy (IT), and financial technology (FT).

tive network for delivery services, including onsite installation

In order to achieve this aim, it was necessary to separateof home electronic appliances and other products.

the decision-making and business execution functions andAs these results attest, the Group made good progress

optimally allocate business resources and raise the speed ofover the three-year period of its medium-term plan, with suc-management. In November 2005, therefore, we established acess in two key areas.

pure holding-company group structure with Yamato Holdings

First, the contribution of non-delivery businesses to ouras the parent company.

performance increased significantly each year. In fiscal 2005,

Business Results
Millions of Yen						
2005

Change

2006

2007

2008

Increase/
DecreaseYoY (%)

Operating Revenues
Delivery		–¥  908,228¥   934,607¥   981,142¥46,535

5.0

Non-Delivery		–

236,733

226,961

244,832

17,871

7.9

Total		¥1,071,903

1,144,961

1,161,568

1,225,974

64,4065.5
1.5

Operating Income		

51,20368,721

67,161

68,1801,019(Margin)		

4.8%

6.0%

5.8%

5.6%

–

–

Net Income (loss)		

33,848(23,968)

33,81335,353

1,540

4.6(Margin)		

3.2%(2.1%)

2.9%

2.9%

–

–

Annual Report 20085

prior to the plan, non-delivery businesses accounted forIndeed, the competitive environment for the delivery

around 30% of total Income. In the past three years, thisbusiness has remained extremely challenging. In light of suchshare has grown to about 40%. Going forward, we will strive

conditions, our ability to post steady growth reflects the cor-to generate dramatic growth in our non-delivery businesses,

rectness of our Total Reliability corporate philosophy, based

surpassing our performance to date. We regard the increasedon long-term perspectives. Guided by this philosophy, we

presence of such businesses in overall Group operations overtook the lead in developing services that match customer

the past three years as a major success story.

needs, particularly package recipients, while building an

Second, we consistently outperformed market growth­effective pick-up and delivery system. As a result, more andwith respect to handling volume of small-lot delivery services,more customers have chosen Yamato. We see this as a

notably Takkyubin and Kuroneko Mail, which are core services

major success.

of our delivery business. Competition in this business has

Note: See also pp. 2-3 Market Data (from the Ministry of Land, Infrastructure,­Transport and Tourism)

intensified, due in part to the impact of a low-price onslaught
by Japan Post, which was privatized in October 2007.
Revenue Composition

2005

2008

20%

20%

Operating Revenues
80%

80%

31%
41%

Operating Income

59%

69%

n Delivery Business

6

YAMATO HOLDINGS CO., LTD.

n Non-Delivery BusinessDelivery Business: Current Market
Status and Future Outlook“3 Rs.” In the past, most companies issuing recalls lacked the

The domestic market for home parcel deliveries grew sharply

physical capability to collect defective product returns. Using

after the launch of Takkyubin in 1976 as a consumer-to-con-the resources of the Yamato Group, however, they can now

sumer (C2C) delivery service. Some, however, believe that in

accept recalls in a seamless manner. In addition to pickup

recent years the market has begun contracting.

and delivery, we provide comprehensive support services toWhat is certain is that the logistics business has changed
considerably in the past several years, and I believe that thismarket remains on a path of growth.

At Yamato, we refer to recalls, repairs, and recycling as theaddress complex back-office tasks, such as accepting telephone orders and account reconciliation after product collection.
With respect to repairs, using Yamato’s services pur-For example, the business-to-consumer (B2C) market,

chasers of electronic goods and other products in need ofcentering on mail order, continues to show solid growth.

repair or upgrade can simply send their items back to the­Japanese consumers are embracing a new lifestyle that allows

manufacturer, and the repaired product can be delivered backthem to conveniently purchase high-quality products at rea-to the customer via Takkyubin within two or three days. Under

sonable prices, without leaving the comfort of their own

this innovative model, Yamato can also act as agent for col-homes. The increasing prevalence of this lifestyle has been thelection of repair fees if required. Recycling works in a similar

key factor in the success of the B2C model, and we believe

fashion, mainly with copier toner cartridges and similar prod-

the trend is poised to continue.

ucts. The consumer sends back an empty cartridge, for

The business-to-business (B2b) market, based on distribution between companies, is also growing, driven by compa-

example, and a refilled one is delivered.
In all cases, customers can take advantage of our diverse

nies in various industries that have adopted cash-flow-driven

network of sales channels. On regular business days, this con-management policies. This model calls for maintenance ofsists of 32,000 sales routes, 3,770 directly managed opera-

minimal inventories with sufficient stock for short-term sales

tions, and roughly 275,000 outlets that handle our services (asonly, or adopting made-to-order production. This trend hasof March 31, 2008). Customers also benefit from our compre-

prompted many companies to use Takkyubin services.

hensive support resources, including guaranteed-quality delivery,

Although using Takkyubin causes delivery costs to increase

tracking information, and payment agency services. This is avis-à-vis total distribution expenses, it significantly alleviates

revolutionary framework that has earned us an excellent

the cost burden of maintaining inventories in distribution ware-

response from customers.

houses. The result is a reduction in total distribution costs,

Note: See also pp. 2-3 Market Data (from the Ministry of Land, Infrastructure,­Transport and Tourism)

achieved in a surprisingly simple way. More and more companies are coming to recognize the advantages of Takkyubin

Takkyubin Growth by Customer Segment (2008)
Growth in Delivery
Volume (%)

services, and more and more company and divisional managers are turning to logistics companies like Yamato.
Moreover, the consumer-to-business (C2B) market isexpanding as major manufacturers in various industries jointly
build platforms enabling customers to easily return products
for recalls, repairs, recycling, and other reasons.

Retail Solutions(incl. small-lot retail and individual customers)

104.7

Individual Customer Market

100.3

Distribution Solutions(Department stores/Distributors)

109.7

Manufacturer Solutions(Manufacturers)

102.4

Annual Report 20087

Message from the Management II

Next Stage of GrowthGroupwide management, which is becoming more important

Basic Strategies of “Create Satisfaction

than ever. Here I will introduce the plan and its objectives.

Three-Year Plan”

As mentioned earlier the Group posted consolidated
operating revenues of ¥1,225,974 million and consolidated

Initiatives for Achieving Our Numerical Targets

operating income of ¥68,180 million in the year under review,

In February 2008 the Yamato Group announced our new

the final year of “Yamato Group Revolution Plan 2007: New

medium-term management plan, entitled “Create Satisfaction

Value & Innovation Three-Year Plan.”

Three-Year Plan.” The main objective of this plan is to lay the

Our new “Create Satisfaction Three-Year Plan” covers

groundwork for expanding the Yamato Group’s businessthe next stage of growth. We have set the following consoli-­territory to cover the Asian region. The plan also emphasizes

dated targets for the year ending March 2011, the final year of
the plan: operating revenues of ¥1,450,000 million, operating

Numerical Targets

income of ¥100,000 million, an operating margin of 6.9%, andROE of 10.0%.

Billions of Yen
2007(Actual)2011(Forecast)

Change¥1,161.5¥1,450.0

24.8%high but stable growth in its core Delivery business. At the

Operating Income

67.1

100.0

49.0%

same time, we will strive to realize uninterrupted expansion of

Operating Margin

5.8%

6.9%

19.0%

ROE

7.8%

10.0%

28.2%

our non-delivery businesses, such as BIZ-Logistics.

Operating Revenues

To achieve these targets, the Yamato Group will pursue

Numerical Targets: Delivery vs Non-Delivery
Delivery Business

Non-Delivery Business

Operating Revenues

Operating Revenues(Millions of Yen)

(Millions of Yen)

1,200,000

400,000

1,000,000

350,000

1,100,000

1,100,000
981,142

1,023,000

300,000
244,832

900,000

267,000

200,000

800,000
700,000

100,000

600,000
500,000

2008(Actual)2009(Forecast)

0

2011

(Forecast)

Operating Income / Operating Margin

2009(Forecast)

2011(Forecast)

Operating Income / Operating Margin(Millions of Yen)(%)

(Millions of Yen)(%)

60,00025.0

60,00025.0

20.0

50,00055,00050,00040,00044,00040,35015.0

30,00010,000040,00030,000

10.0

20,000
4.1

4.3

2008

2009

(Actual)8

2008(Actual)(Forecast)

YAMATO HOLDINGS CO., LTD.

5.0

2011

(Forecast)

20,0005.0

10,0000.0

027,83011.4

30,00045,000

20.0

12.9

15.0
10.0

11.2

5.0

2008

(Actual)2009(Forecast)

2011(Forecast)0.0

In the future, we expect the international distribution
business to gather pace due to the distance between theplaces where goods are made and where they are consumed.
We also expect increased demand for distribution linking
Japan to other countries. Over the next three years, therefore,
we plan to expand the Group’s business area to cover the
Asian region. At the same time, we will build a differentiatedfoundation for business by providing seamless supply chain
logistics services on a global scale. No other company, including importers, offers such comprehensive support services
covering import administration, domestic delivery, payment

increases in net income, we also plan to improve net income

agency, and tracking information.

per share, with the aim of reaching ROE of 10% by the year

To realize this differentiation strategy, we will draw on oursolid domestic pickup and delivery network and on the exper-

ending March 2011.
Business investments will be used to generate growth fortise we have amassed over our years in business. We believe

the overall Yamato Group. They will include capital expendi-

that the initiatives taken during the last three-year plan willtures centering on our network, as well as investments in newcontinue to bear fruit over the next three years.

businesses and new product development and investments toraise corporate value.

Capital Strategy

We are also targeting a dividend payout ratio of 30%

The Yamato Group’s earnings appropriation policy is to main-

based on consolidated net income. At the same time, we willtain a healthy balance between business investments andmake flexible use of treasury stock, including to pursue M&A

shareholder returns, including share buybacks. Throughopportunities that are consistent with our capital strategy.

Annual Report 20089

At a Glance

Business Description

Delivery

The Delivery business is involved in small parcel delivery services for the general public and corporations centering on Takkyubin and Kuroneko Mail.
The business has also quickly introduced to the market high value-added
services developed from the customer’s point of view, such as Cool Takkyubin
and Takkyubin Collect.

BIZLogistics

BIZ-Logistics handles logistics and other B2B distribution operations.

Home
Convenience

Home Convenience is rooted in moving services, lifestyle support services

e-Businesse-Business is involved in a range of information services for corporations,

BIZ-Logistics helps its corporate clients manage their supply chains byproviding innovative logistics services and reducing total costs, and presents
proposals for optimized logistics systems.

and distribution services. It provides lifestyle support services tailored closely
to the needs of particular regions.

including ASP services and information system development.
Based on the three keywords “tracking,” “security,” and “packages,” thee-Business strives to provide unique services making the most of the Group’s
management resources.

Financial

The Financial business includes settlement and other financial services targeted at consumers and business customers, beginning with mail order firms.
The business has five types of settlement methods, including payment ondelivery and payment by credit card. Along with the increasing popularity ofInternet shopping in recent years, we have constructed an environment thatenables customers to conduct transactions with complete peace of mind.

Other

The Other business segment carries out vehicle maintenance primarily by
Yamato Autoworks Co., Ltd., and is chiefly responsible for the JITBOX Charter
service, mainly operated by Box Charter Co., Ltd.
The focus now is on generating profit from these services by providing themto customers outside the Group, using expertise acquired within the Group over
the years and the creation of new businesses as benchmarks for success.

10

YAMATO HOLDINGS CO., LTD.

Operating Revenues(Millions of Yen)

Operating Income

1,000,000

50,000800,000

40,000600,000

30,000400,000

20,000200,000

10,000

0

2006

2007

2008

120,000

0(Millions of Yen)

80.0%

2006

2007

2008

5,000

7.8%

4,000

90,000Share of Net Sales

3,000
60,0002,000
30,000
0

1,000

2006

2007

2008

0

50,0001,500

40,0001,200

30,000900

20,000600

10,000

300

0

2006

2007

2008

0

40,0006,000

30,0004,500

20,0003,000

10,000

1,500

0

2006

2007

2008

50,000

0

2006

2007

2008

4.0%

2006

2007

2008

2.7%

2006

2007

2008

12,00040,000

4.2%

9,000

30,0006,000
20,0003,000

10,000
0

2006

2007

2008

0

16,00040,00012,00030,0008,000

20,0004,000

10,000

0

2006

2007

2008

0

2006

2007

2008

1.3%

2006

2007

2008

Annual Report 200811

Overview of Operations

Delivery

Overview of Fiscal 2008

Kuroneko Mail service to corporate customers, generating

In the Takkyubin business, the Group sought to provide

solid handling volume in the process.

highly convenient services, based on its Total Reliability corporate philosophy.

As a result, total delivery volume in the parcel delivery
business reached 1,236 million parcels in fiscal 2008, up

In November 2007, we launched Kuroneko Members, a

5.2% from the previous year. Handing volume by themembership-based service for individual customers. During

Kuroneko Mail service increased 12.0%, to 2,206 million units.

the year, we also introduced Takkyubin Easy Address Label

Consequently, total operating revenues in the Delivery

Issuance Service, provided via service terminals installed atbusiness segment reached ¥981,142 million, an increase of

Takkyubin centers.

5.0% from the previous year. However, operating income fell

For corporate customers, we promoted solution-based

7.9%, to ¥39,872 million. This was due to increased person-

marketing combining three key functions of the Yamato

nel costs necessary in order to maintain our meticulous ser-Group—logistics technology (LT), information technology (IT),vice approach, as well as various expenses aimed at raisingand financial technology (FT)—as we strove to respond flexibly

the quality of service. Another factor affecting segment

to customers’ diversifying needs.

­earnings was surging prices of crude oil.

In the expanding direct mail market, the Group endeavored to increase transactions by assertively promoting the

Takkyubin Service
Upgrading Information Infrastructure• Parcels Inquiry System• Settlement Service, Such as Payment on Delivery(FY2008)

Small Group

CenterSmall Group

Base

Arterious
Transportation(Outsource)Base(about 70
centersnationwide)

CenterCenterSmall Group

Small Group* Approximate figure.

Acceleration of Multi-store (3,770 Stores)• High-density Network with Our Catch-phrase “No Matter What Time
Serve for Customer, No Matter How Many Times Serve for Customer”• Time-differentiated High Service Quality• Delivery System with In-house Employees• Delivery not Dependent on Trucks Actions for Environment and Safety

12

YAMATO HOLDINGS CO., LTD.

CenterSmall Group

Customers who expected toreceive packages(Corporate or Individual)

Express Agency:
275,000*
Direct Retail Stores: 3,770 Stores
Sales Drivers:
54,000*

Customers who demand delivery(Corporate or Individual)

CenterCenterSmall GroupBIZ-Logistics
Overview of Fiscal 2008
BIZ-Logistics mainly entails provision of logistics services andit combines multiple functions, including weighing and pack-international freight services.

aging, customs clearance, and arrangement for overseas

In October 2007, we launched the Kuroneko Yamatodelivery. In providing this service, we have built a business

Recall Support Service. This is a one-stop service for corpo-

model that realizes reductions in the time and costs associ-rate clients who need to recall or voluntarily collect their prod-

ated with the export business.

ucts, including notification, acceptance of recall requests, andOperating revenues in the BIZ-Logistics business seg-collection on behalf of the client. It is based on a new busi-

ment rose 4.7% year on year, to ¥95,693 million. On theness model that enables customers to minimize both time andexpenses side, we leveraged our alliance with the NYK Linerisk. The new service has been warmly received, generatingGroup to promote joint loading and other initiatives, and wesolid handling volume.

sought to constrict loading fares and otherwise reduce sub-Export Factory is a trade logistics service that supports
customers’ export activities. An integrated outsourced service,contracting expenses. As result, segment operating income
jumped 35.7%, to ¥5,148 million.

Recall Support Service

Service
Operation

RecallMarketNotification/
Information

Delivery of Replacement/
Recovery/Maintenance

Data Preparation, Management and Tracing
Speed
One Stop
Security
Integration of LT, IT and FTDelivery Business
Group
Functions(FY2008)

DeliveryTransportation Modes (Takkyubin, Kuroneko Mail, etc.)

BIZ-Logistics

Responsive Network of Maintenance Operations(One-stop Service for Distribution and Simple Repair, etc.)

Home Convenience

National Home Delivery Network for Large Items(Technical Drivers Capable of Installing Large Items, etc.)

Financial

Variety of Settlement Functions

Nationwide Network
Express Agency:
275,000 Stores*
Direct Retail Stores: 3,770 Stores
Sales Drivers:
54,000*e-Business

Data Preparation, Management and Tracing Functions, etc.

* Approximate figure.

Export Factory Service

Yamato (Port or Airport Facility)
Customer(e.g., Manufacturer)

Packaging/Customs Procedures/Transportation Arrangements

Overseas

Annual Report 200813

Home Convenience
Overview of Fiscal 2008

combines delivery and installation functions. HouseholdHome convenience services consist mainly of various moving­Takkyubin has thoroughly penetrated the market, attracting an

and lifestyle support services.

increase in corporate customers. In J­ anuary 2008, we merged

In September 2007, we reinforced our sales system by

the operations of Yamato Home Convenience and eight

integrating the home convenience businesses of Yamato

regional Home Convenience companies in the Yamato Group,

Home Convenience Co., Ltd. and the delivery business ofthus further enhancing business efficiency.

Moving Co., Ltd., a member of the MARUI Group. The

Operating revenues in this segment rose 8.8%, tointegration aimed to bring together the respective strengths of¥48,938 million. However, operating income fell 51.3%, tothe two companies—nationwide delivery network and home¥657 million, due to an increase in initial costs associated withelectronic product installation know-how. One outcome of

the integration with Moving, as well as higher subcontracting

the integration is Household Takkyubin, a unique service that

expenses for hired vehicles and other items.

Household Takkyubin Handling Volume(Items)2,500,000

2,303,909

2,000,000

1,500,000

1,000,000

512,126

500,000
251,411
0

2006

2007

2008

Household Takkyubin Service

YamatoManufacturer

Consumer
Packaging/Shipment

14

YAMATO HOLDINGS CO., LTD.

Installation/Set-up

e-Business
Overview of Fiscal 2008

needs, achieving solid progress. One of our services is

In the e-Business segment, the Group deployed its expertisee-Logistics Tracing Solution for customers who require trace-in parcel delivery tracking systems to provide logistics infor-

ability of specific items. Through unified management andmation services and develop information systems. The three

sharing of tracking data, this service realizes total optimization

keywords in e-Business are “tracking” (providing tracing databy enabling customers to visualize the movement of products

based on a 24-hour nationwide information management

shipped and thus cut excessive inventories.

system), “security” (giving peace of mind to customers), andOperating revenues in this segment grew 6.8%, to“packages” (allowing increased versatility and multifaceted¥32,795 million, and operating income rose 23.8%, tosales solutions).

¥6,228 million.

In the year under review, we actively promoted solutionsbased marketing tailored to industry and business segment

e-Logistics Tracing Solution

Yamato Group Operations
Using Tracing to Achieve Uniform Information Management
Production
Base

Customer

Information and Tracking Management
Storage, Transport and Delivery

Distribution
Base

Flow of Goods
Sales Base

Flow of Goods
Flow of Information

Yamato Group
Business Partner

Individual Parcel Management

Individual Parcel Management Enables
Faster, More Accurate Response

Business ­Partner’s
Customers

Annual Report 200815

Financial
Overview of Fiscal 2008

payment options provided under our Takkyubin Collect service,

In this segment, we are currently diversifying our offerings

thus further expanding our settlement offerings. Striving tofrom collection of payment upon delivery to provision of inter-enhance customer convenience, in February 2008 we intro-

company logistics settlement services.

duced Kuroneko Mail Collect, which simplifies the payment

In July 2007, we launched Payment Slip Issuance Service,
which provides all-round support for customers engaged in the
mail-order business, from issuance of payment slips to delivery

collection process by issuing an all-in-one payment slip that
includes the address label.
As a result, operating revenues in this segment climbed

and collection of payment. In November 2007, we added an

6.3%, to ¥51,458 million, and operating income rose 20.7%,

electronic money (Edy) settlement service to the various

to ¥10,925 million.

Cash on Delivery Service
1. Purchase Agreement
2. Product Dispatched

Mail-order Company

Hand-over Delivery of ProductConditional upon Payment

Improved Cash-flow to
Mail-order Company
6. Funds Transfer
5. Temporary Holding of Funds

Product Purchase
Price

Delivery BusinessTransport Fee
Flow of Goods
Flow of Money

16

YAMATO HOLDINGS CO., LTD.

Financial BusinessCollection Fee

Purchaser

3. Delivery
4. Money Collection

OtherOverview of Fiscal 2008

In fiscal 2008, we aggressively promoted our JITBOXIn this business segment, Yamato provides vehicle mainte-

Charter service, which is underpinned by a sales structurenance services aimed at enhancing convenience for truck andbased on a group of 15 companies. Here, we provided services

bus transport operators. We offer these services 24 hours ato meet the diversified needs of customers distributing goods

day, 365 days a year, to help these customers keep theirbetween companies, including just-in-time, high-frequency,

vehicles on the road.

right-volume delivery by transport box. In this way, we sought to

In fiscal 2008, we actively promoted solutions to help
reduce overall vehicle operation costs by providing all-inclusive

raise our presence in product-driven markets, and the number
of JITBOX Charter deliveries grew steadily as a result.

agency services that include maintenance, fuel and parts

Operating income in this segment surged 68.0%, toprocurement, and insurance. The number of vehicles handled¥2,656 million, excluding dividends received by Yamato

by this business increased as a result.

Holdings from other companies in the Group.

Operating Income

Track Record of JITBOX Charter(Millions of Yen)

(Units)500,000

40,000460,506

36,52835,00032,140400,000

30,00025,000300,000

3,000

2,000
1,500

223,941

2,656

2,500

200,000
1,581

1,560

100,000

1,000
500
0

2006

2007

n Including Yamato Holdings

2008

0

2007

2008

n Excluding Yamato Holdings

Annual Report 200817

Corporate Social Responsibility

Compliance is one of the top priorities of management at theEnvironment

Group. As such, the Group believes that the company’s

Deployment of Low-emission Delivery Vehicles­sustained growth is largely contingent upon not only business

To reduce overall CO2 emission volume, the Yamato Group is

profitability, but also proper conduct as a business group withtargeting a 1% reduction in its total CO2 emissions compared

operations that require a high degree of social interaction.

to fiscal 2007 by fiscal 2011. The Group is striving to reachWith the interests of all stakeholders in mind, the Group

this goal through a more robust environmental stance, includ-actively conducts social contribution activities to fulfill its

ing reductions in fuel usage through the introduction of low-

­Corporate Social Responsibility (CSR) from the perspectives

emission vehicles.

of safety, the environment and society in line with the Yamato

As a specific measure for achieving this objective,
Yamato Transport is aiming to put 20,000 low-emission delivery

Group Corporate Philosophy.
The extensive promotion of CSR management intandem with business expansion is also an integral part of the“Create Satisfaction Three-Year Plan,” the Yamato Group’s

Changes in the Number of Low-emission Vehicles
20,000new medium-term management plan for guiding management
policy that we launched in April 2008.

10,000

The Group is placing particular emphasis on two elements of the plan—compliance and environmental concerns.

8,000

6,000

Diagram of Yamato Group Corporate Philosophy
4,000

Customers

2,000

Local
residents

Shareholders

0

’04

’05

n Hybrid Carsn Others

Partners

Employees

The
Management
Philosophy

Corporate
StanceEmployee
Code of
Conduct

Yamato Group Corporate Philosophy

Precepts

Founding Spirit

18

YAMATO HOLDINGS CO., LTD.

’06
n CNG Carsn Total’07’08
n LPG Cars

’13

(Plan)

vehicles into operation by fiscal 2013. In fiscal 2008, weespecially important safety issue. We have held safety classes

added 2,503 low-emission vehicles, including 1,015 hybrids,

for children since 1998. Held all over Japan, these classes

to bring the total to 8,096. This number represents 17.6% ofseek to teach children ways to protect themselves from traffic

Yamato Transport’s total fleet of vehicles, which accounts for

accidents. Taught entirely by Yamato Transport employees,

87% of the Group’s total vehicle fleet.

the fun and entertaining classes employ various means toteach children about traffic safety. In fiscal 2008, classes were

Opening of Satellite Centers to Reduce
Vehicle Usage

held at 1,503 locations and a total of 160,977 children
participated.

As of March 2008, Yamato Transport had a nationwide­network of 949 satellite centers for parcel delivery locatedOutside Evaluation

primarily in urban centers. Parcel delivery from these satellite

The FTSE Group confirms

centers is conducted primarily through the use of handcarts

that Yamato Holdings has

and bicycles with attached trailers, rather than motor vehicles.

been independently

The opening of more satellite centers reduces the parcel

assessed according to thedelivery volume per sales driver for a given delivery area. ThisFTSE4Good criteria, andlighter load not only enables drivers to provide more detailed

has satisfied the require-services to each customer, but also helps to curb increases inments to become a con-the number of vehicles required to keep pace with increased

stituent of the FTSE4Good Index Series.

parcel volume. The Group is targeting a network of 1,000
satellite centers across Japan by fiscal 2013.

Created by the global index company FTSE Group,
FTSE4Good is an equity index series that is designed to facilitate investment in companies that meet globally recognizedSociety
Safety Classes for Children

corporate responsibility standards.
Companies in the FTSE4Good Index Series have met

The Yamato Group always puts safety first in its businessstringent social and environmental criteria, and are positioned

activities. Preventing traffic accidents involving children is an

to capitalize on the benefits of responsible business practices.

Annual Report 200819

Corporate Governance(As of March 31, 2008)

Basic Position on
Corporate Governancetors and two outside auditors. Auditors attend meetings of theBased on its corporate philosophy, the Yamato Group carries

Board of Directors and other important meetings to assistout business activities in accordance with the law and social

them in conducting audits on the legality of business execu-

norms and actively promotes compliance management. Striv-

tion, and otherwise endeavor to improve the soundness ofing to maximize corporate value by effectively utilizing themanagement and the trust of the public. A full-time staff

management resources of the Group is one of the top priori-

member has been appointed to assist the auditors to put inties of management, and we work to bolster management

place a framework that enables the auditors to smoothly carrysystems and implement policies to this end.

out their functions. In addition, Group Auditors’ Liaison Meet-

The Board of Auditors is made up of two full-time audi-

ings are held periodically for the full-time auditors of the major

Status of Corporate Governance
Provisions

operating companies to confer on auditing policies and proce-

The Board of Directors, Management Advisory Committee

ration. Meetings with internal auditors are also heldand Executive Committee serve as administrative organs

periodically to exchange information.

involved in decision-making, supervision and execution for theOutside auditors attend Board of Auditors meetings as

Yamato Group. This management structure enables decisions

well as periodic meetings to exchange opinions with the presi-

to be made rapidly and precisely on important matters. The

dent and auditors and to present opinions from their own

number of Board members cannot exceed 12 as stipulated instandpoint as auditors. These meetings also serve to confirm

the Company’s articles of incorporation, and the term of officethe status of directors’ execution of duties, by means includ-of directors has been set at one year in order to clarify man-ing questions regarding management policy.

agement responsibilities for each fiscal year.

Internal audits are performed by a six-member team that

In fiscal 2008, of the Company’s five Board members,

operates independently from any other Group organ. These

two were outside directors. As of June 26, 2008, the Company

internal auditors check whether business and affairs of thehas six Board members, including two outside directors.

Group as a whole are being carried out appropriately and­Outside directors provide necessary comments and advice on

efficiently based on the annual auditing plan. The results are

overall management as appropriate from the perspective ofreported to the Board of Directors and the Board of Auditors.

managers with rich experience.

20

dures, exchange information and otherwise enhance collabo-

YAMATO HOLDINGS CO., LTD.

Also, the Group Internal Auditing Committee meets regularly

performed by two certified public accountants, Yutaka

for the internal auditors of the operating companies to confer

Kawakami and Takeshi Kosaka, assisted by another fouron auditing policies and audit results, exchange information,­certified public accountants, five assistant accountants, andand to otherwise enhance collaboration.

three others.

As the Group’s appointed accounting auditor, Deloitte

The current status of provision for oversight of business

Touche Tohmatsu holds regular meetings with auditors andexecution and management, internal control and related func-

conducts effective accounting audits. Accounting audits aretions at Yamato Holdings is illustrated in the figure below.

Corporate Governance Framework

General Meeting of Shareholders
Elect

Elect

Elect/
Supervise

Board ofAuditors

ReportIndependent
Auditor

Elect

Audit
ReportBoard ofDirectors

Make decisions/Supervise

Execute business

Audit DivisionInternal
audit

Management
Advisory Committee

ReportExecutive
Committee

Accounting
audit

Nomination andCompensation
Committee

Propose/ReportCSR Division

Legal Advisor

Propose/ReportGroup Companies

Annual Report 200821

Organization(As of March 31, 2008)

Yamato Transport Co., Ltd.

Delivery

Okinawa Yamato Transport Co., Ltd.
Yamato Dialog & Media Co., Ltd.
Yamato Express Co., Ltd.
Yamato Logistics Co., Ltd.
Yamato Packing Service Co., Ltd.
Yamato Packing Technology Institute Co., Ltd.
Konan Industry Co., Ltd.
Yamato Transport U.S.A., Inc.

BIZ-Logistics

Yamato Transport Europe B.V.
Yamato Transport (Hong Kong) Ltd.
Yamato Transport (S) Pte. Ltd.
Taiwan Yamato International Logistics Inc.
Yamato International Logistics Co., Ltd.
Yamato Transport (U.K.) Ltd.
Yamato Transport (M) Sdn. Bhd.

Home Convenience

Yamato Holdings
Co., Ltd.

Yamato Home Convenience Co., Ltd.
Yamato System Development Co., Ltd.
Yamato Career Service Co., Ltd.

e-BusinessYamato Systems U.S.A., Inc.
Yamato Contact Service Co., Ltd.
Dream Create Ltd.
Yamato Financial Co., Ltd.

Financial

Yamato Lease Co., Ltd.
Fine Credit Co., Ltd.
Yamato Autoworks Co., Ltd.
Yamato Autoworks Hokushinetsu Co., Ltd.
Yamato Autoworks Okinawa Co., Ltd.
Kyoto Yamato Transport Co., Ltd.
Kobe Yamato Transport Co., Ltd.
Box Charter Co., Ltd.

Other

Yamato Box Charter Co., Ltd.
Yamato•Staff•Supply Co., Ltd.
Yamato Management Service Co., Ltd.
Yamato Architects & Designing Co., Ltd.
Yamato Autoworks Iwate Co., Ltd.

22

Consolidated subsidiaries

Swan Co., Ltd.

Non-consolidated subsidiaries

Swan Net Co., Ltd.

YAMATO HOLDINGS CO., LTD.

Directors and Auditors(As of June 26, 2008)

Director and Chairman

Executive Officers

Keiji Aritomi

Kenji Minaki(Representative Director and President ofRepresentative Director,
President and Executive Officer

Yamato System Development Co., Ltd.)

Kaoru Seto

Kenichi Shibasaki(Representative Director and President ofRepresentative Director,
Managing Executive Officer

Yamato Financial Co., Ltd.)

Haruo Kanda

Toshizo Kurisu(Planning and Administration, Human Resources,(Financing and Accounting, Investor Relations)Public Relations, Legal Affairs, CSR, Audit)

Masaki Yamauchi

Director and Executive Officer(Representative Director and President of

Makoto Kigawa

Yamato Logistics Co., Ltd.)(Representative Director and President of
Yamato Transport Co., Ltd.)

Makoto Hasegawa(Representative Director and President ofMembers of the Board

Yamato Home Convenience Co., Ltd.)

Takeshi Yoshii
Masayoshi Sato

Takahiro Nishio(Planning and Administration, IT Planning)

Auditors
Takeshi Morishita
Hiroshi Kawada
Keiko Kitamura
Koji Okawa

Atsushi Ichino(Planning and Administration)

Annual Report 200823

Management’s Discussion and Analysis— Amid difficult business conditions, the Yamato Group reported a 5.5% year-on-year increasein consolidated operating revenues and a 1.5% rise in operating income.
— Due to increasing costs, operating income in the Delivery business declined 7.9%.
— In the BIZ-Logistics business, efforts to upgrade services and cut costs led to increases inoperating revenues and operating income, which rose 4.7% and 35.7%, respectively.
— The purchase of land for construction of a terminal complex led to an ¥84,194 million, or
29.7%, increase in property, plant, and equipment.
— Cash and cash equivalents rose ¥12,176 million owing to an increase in cash flows fromoperating activities.

Scope of Consolidation
At the end of the fiscal year ended March 31, 2008 (fiscal 2008), the Yamato Group consisted of Yamato
Holdings Co., Ltd. (the Company), 38 subsidiaries, and five affiliated companies. The number of subsidiaries
included in the consolidated statements was 37 at the previous fiscal year-end, but declined to 29 at the endof fiscal 2008, due to reorganization of the Group and other factors. As Yamato Autoworks Hokushinetsu
Co., Ltd. increased in importance, it was included in the scope of consolidation from fiscal 2008. By contrast, Book Service Co., Ltd., included in consolidation until the previous fiscal year, has been excluded infiscal 2008 due to the sale of its shares. There were no non-consolidated subsidiaries or affiliates accounted
for by the equity method at the end of the period under review.

Results of Operations
In the fiscal year ended March 31, 2008, the Yamato Group posted a 5.5% year-on-year increase in consolidated operating revenues. Due largely to rising costs of fuel and personnel, however, growth in operating
income was limited to 1.5%.
During the period, the Japanese economy remained on a growth path, buoyed by firm private-sector
capital expenditures and personal consumption. This was despite concerns of an economic slowdown
arising from various risk factors, such as financial market instability stemming from the subprime loan crisis in
the United States, as well as soaring prices of raw materials. The domestic logistics market (including the
Takkyubin door-to-door parcel delivery market) continued to face a harsh operating environment, impacted
by surging crude oil prices and the enactment of the revised Road Transportation Law, as well as privatization of Japan Post and the intensifying competition.

Operating Revenues

Operating Income /Operating Margin

Net Income (Loss) /Return on Revenues(Millions of Yen)

(Millions of Yen, %)(Millions of Yen, %)1,400,000

80,0008.0

75,0007.5

60,000

6.0

50,0005.0

40,0004.0

25,0002.5

20,0002.0

01,200,000
1,000,000
800,000
600,000
400,0000

200,000
0’04 ’05 ’06 ’07 ’08

0’04 ’05 ’06 ’07 ’08
n Operating Incomel Operating Margin

24

YAMATO HOLDINGS CO., LTD.

0–25,000’04 ’05 ’06 ’07 ’08
n Net Income (Loss)l Return on Revenues–2.5

The year under review was the final year of the Yamato Group’s medium-term management plan, entitled“Yamato Group Revolution Plan 2007: New Value & Innovation Three-Year Plan.” Guided by the plan, theGroup continued targeting steady growth in its Delivery business while advancing initiatives aimed at expediting growth in other businesses.
Under our strategic alliance with MARUI GROUP, in September 2007 we integrated the door-to-door
parcel businesses of Yamato Home Convenience Co., Ltd. and Moving Co., Ltd., a member of the
MARUI Group.
In a future-oriented initiative aimed at providing highly competitive, integrated domestic and overseas
services, we purchased by tender a piece of land next to the Tokyo International Airport (Haneda Airport),
which is slated for further internationalization. In this way, we prepared to build the infrastructure necessary
to function as an air, land, and sea logistics service provider.
As a result, consolidated operating revenues for the year amounted to ¥1,225,974 million, up ¥64,406
million, or 5.5%, from the previous fiscal year. However, operating income rose only ¥1,019 million, or 1.5%,
to ¥68,180 million, due to increased fuel costs in the Delivery business accompanying escalating oil prices,
as well as higher personnel and other expenses. The operating margin edged down 0.2 of a percentage
point, to 5.6%. Net income climbed ¥1,540 million, or 4.6%, to ¥35,353 million, and the return on revenues
remained unchanged, at 2.9%.

Review by Operating Segment
The following are summaries from each operating segment.

DeliveryIn the Delivery business, we reported a 5.0% increase in operating revenues as we upgraded our services
and advanced our integrated solutions sales approach. However, segment operating income declined 7.9%
due to increases in fuel, personnel, and other costs.
The Delivery business focuses mainly on small parcel delivery services for consumers and small to
medium-sized corporate clients and includes Takkyubin and Kuroneko Mail services.
In the Takkyubin business, the Group sought to provide highly convenient services, based on its “Total
Reliability” corporate philosophy. In November 2007, we launched Kuroneko Members, a membershipbased service for individual customers. During the year, we also introduced Takkyubin Easy Address Label
Issuance Service, provided via service terminals installed at Takkyubin centers. In addition, we targeted more

Takkyubin Delivery Volume /Unit Prices

Cool Takkyubin Handling Volume

Takkyubin Collect Handling
Volume(Millions of Parcels, Yen)

(Millions of Parcels)(Millions of Parcels)

1,500

1,500

1,000

1,000

500

0

200

100

150

75

100

50

50

25

500

’04 ’05 ’06 ’07 ’08

0

0’04 ’05 ’06 ’07 ’08

0’04 ’05 ’06 ’07 ’08

n Takkyubin Delivery Volume
l Unit Prices

Annual Report 200825

meticulous services by increasing the number of outlets, and we strove to further differentiate ourselves fromcompetitors in terms of delivery service quality.
For corporate customers, we promoted solution-based marketing combining three key functions of the
Yamato Group—logistics technology (LT), information technology (IT), and financial technology (FT)—as wetargeted flexible responses to customers’ diversified needs.
As a result, total delivery volume in the parcel delivery business reached 1,236 million parcels in fiscal
2008, up 5.2% from the previous year. Within this figure, Cool Takkyubin reported an increase of 10 million
parcels, or 7.2%, to 155 million parcels. In the Takkyubin Collect cash-on-delivery service, handling volume
grew 5 million units, or 6.8%. In the Time Service, which promises to deliver goods quickly within a definite
time period, handling volume edged down 0.6%, to 17 million parcels. Meanwhile, the unit price for the
Takkyubin service slipped ¥3, from ¥647 to ¥644.
In the expanding direct mail market, the Group endeavored to increase transactions through aggressive
sales activities targeting corporate customers. As a result, total handling volume for the Kuroneko Mail service increased 236 million units, or 12.0%, to 2,206 million units. Meanwhile, the unit price for the Kuroneko
Mail service declined ¥2, from ¥66 to ¥64.
As a result, total operating revenues for the Delivery business were ¥981,142 million, an increase of¥46,535 million, or 5.0%. However, operating income fell ¥3,430 million, or 7.9%, to ¥39,872 million. Thiswas due to increased personnel costs associated with our employees’ meticulous service approach, as wellas various expenses aimed at raising our service quality. Surging oil prices also affected earnings inthis segment.
Takkyubin Delivery Volume and Unit Prices
Years ended March 31

2004

2005

2006

2007

2008

Takkyubin delivery volume (Millions of Parcels)

1,011

1,063

1,128

1,174

1,236

Cool Takkyubin

122

129

137

145

155

Takkyubin Collect

63

68

78

83

89

Time Service

16

17

17

18

17

Unit price (Yen)

682

666

653

647

644

Kuroneko Mail Delivery Volume and Unit Price
Years ended March 31

2004

2005

2006

2007

2008

Kuroneko Mail handling volume (Millions of Units)

994

1,432

1,734

1,970

2,206

Unit price (Yen)

84

73

69

66

64

BIZ-Logistics
Operating revenues in this business segment rose 4.7% year-on-year, owing to enhanced responses torecalls and improved trade logistics services. Segment operating income jumped 35.7% thanks to costcutting efforts.
BIZ-Logistics provides inter-company logistics services, including trade logistics services, sales logistics
services, and overseas lifestyle support services.
In October 2007, we launched the Kuroneko Yamato Recall Support Service to provide swift responses
to corporate clients who need to recall or voluntarily collect their products. By offering one-stop services,
including notification, acceptance of recall request, and collection on behalf of the client, we provide aninnovative solution that minimizes both time and risk. Handling volume for this service has been solid.
Export Factory is a trade logistics service to support the export business of customers. This is an integrated outsourced service combining multiple functions, including weighing and packaging, customs clearance, and arrangement of overseas delivery. In providing this service, we have built a business model thatrealizes reductions in the time and cost associated with the export business.

26

YAMATO HOLDINGS CO., LTD.

As a result, operating revenues from the trade logistics services business edged up ¥614 million, or
0.8%, to ¥75,159 million; operating revenues from the sales logistics services business increased ¥1,316
million, or 5.4%, to ¥25,500 million; and operating revenues from the overseas lifestyle support services
business declined ¥295 million, or 3.5%, to ¥8,220 million.
Overall operating revenues in the BIZ-Logistics segment rose ¥4,301 million, or 4.7%, to ¥95,693 million.
Operating income jumped ¥1,353 million, or 35.7%, to ¥5,148 million, as the Group sought to constrictloading fare and otherwise reduce subcontracting expenses.

Home Convenience
During the year, the Group strengthened its sales system through integration with MARUI Group operations.
Accordingly, operating revenues from the Home Convenience segment increased 8.8%. Due to higher initialcosts for business integration and other cost increases, however, segment operating income fell 51.3%.
Home convenience services include moving services, lifestyle support services, and merchandise marketing, mainly targeting general individual consumers.
In September 2007, we reinforced our sales system by integrating the delivery businesses of Yamato
Home Convenience Co., Ltd. and Moving Co., Ltd., a member of the MARUI Group. The purpose of theintegration was to bring together the respective strengths of the two companies—a nationwide delivery
network and know-how in electronic product installation. The unique combination of a delivery function witha technical component has made deep inroads into the market, attracting an increase in corporate customers and resulting in a strong performance for Household Takkyubin. In January 2008, we merged the operations of Yamato Home Convenience and eight regional Home Convenience companies in the Yamato Group,
thus further enhancing efficiency.
Despite a tough market environment due to intensified competition, our moving services business generated an increase in revenue of ¥8,288 million, or 23.3%, to ¥43,819 million. This solid performance
stemmed largely from our success in attracting corporate customers. By contrast, revenue from merchandise marketing decreased ¥2,357 million, or 10.8%, to ¥19,526 million.
As a result, overall operating revenues in the Home Convenience segment rose ¥3,955 million, or 8.8%,
to ¥48,938 million. However, operating income fell 51.3% to ¥657 million, due to an increase in initial costs
related to the integration with Moving, as well as higher subcontracting expenses for hired vehicles andother items.

e-BusinessIn fiscal 2008, the Yamato Group actively promoted its solution-based marketing, centering on ASP services.
Accordingly, the e-Business segment posted a 6.8% increase in operating revenues and a 23.8% rise inoperating income.
This segment encompasses development of ASP and information systems, mainly targeting businesscustomers. The three keywords in e-Business are “tracking,” “security,” and “packages.” In the year underreview, we actively promoted solution-based marketing tailored to the needs of industries and businesssegments. Through unified management and sharing of tracking data with customers who require traceability of specific items, we offer e-Logistics Tracing Solution, which optimizes the overall process for customers
by enabling them to “visualize” the movement of products shipped. These services performed steadily in theyear under review.
As a result, operating revenues in this segment grew ¥2,081 million, or 6.8%, to ¥32,795 million, while
operating income rose ¥1,199 million, or 23.8%, to ¥6,228 million.

Financial
In the year under review, we sought to enhance convenience for customers with the launch of electronicmoney settlement services. Operating revenues in the Financial business increased 6.3%, and operating
income climbed 20.7%.

Annual Report 2008

27

The Financial business covers settlement services and provision of financial products, mainly to businesscustomers and general consumers.
In July 2007, we launched Payment Slip Issuance Service, which provides all-round support for customers engaged in the mail-order business, from issuance of payment slips to delivery and collection of payment. In November 2007, we started an electronic money (Edy) settlement service as a new means ofsettlement for the Takkyubin Collect PC & Cell Phone service in an effort to expand settlement options.
Striving to enhance customer convenience, in February 2008 we introduced Kuroneko Mail Collect, an
all-in-one payment slip that includes the address label and a variety of settlement methods to choose from.
Consequently, operating revenues for this segment increased ¥3,028 million, or 6.3%, to ¥51,458 million.
Operating income rose ¥1,876 million, or 20.7%, to ¥10,925 million.

Other
In the Other business segment, operating revenues jumped 39.4%, and operating income surged 68.0%, to¥2,656 million, excluding dividends received by Yamato Holdings from other companies in the Group. These
results were thanks to solid expansion of the vehicle maintenance business and significant growth in volume
handled by the JITBOX Charter service.
The main activities of the Other business segment are vehicle maintenance, carried out primarily by
Yamato Autoworks Co., Ltd., and the JITBOX Charter service, operated mainly by Box Charter Co., Ltd.
In the vehicle maintenance category, we actively targeted truck and bus transport companies, promoting
solutions that help reduce overall outlays related to vehicle operation, including maintenance, fuel, partsprocurement, and insurance. The number of vehicles handled by this business increased as a result.
The JITBOX Charter service is underpinned by a sales structure based on a group of 15 companies. In
fiscal 2008, we provided services to meet the diversified needs of customers distributing goods between
companies, including just-in-time, high-frequency, right-volume delivery by transport box. In this way, wesought to raise our presence in product-driven markets. As a result, the number of JITBOX Charter deliveries
jumped 236,565, or 105.6%, to 460,506.

Financial Review
Operating Costs
In fiscal 2008, the Company recorded consolidated operating costs and expenses of ¥1,157,794 million, up¥63,387 million, or 5.8%, from the previous fiscal year. Significant components of the operating costs wereas follows.
Breakdown of operating costs

Millions of Yen

			Years ended March 31
2007
2008

Increase/
Decrease¥ 580,188¥ 609,994¥ 29,806

Subcontracting expenses

402,605

430,023

27,418

Vehicle expenses

34,96838,946

3,978

Other expenses

243,424

256,668

13,244

Personnel expenses

Elimination of internal procurement costs
Total(166,778)(177,837)(11,059)¥1,094,407¥1,157,794¥ 63,387

Major factors causing increased operating costs and expenses were higher personnel expenses andsubcontracting expenses.
Personnel expenses rose ¥29,806 million, due mainly to a correction advice received from the Labor
Standards Supervision Office pertaining to the vehicle maintenance business. Subcontracting expenses rose
¥27,418 million, due mainly to an increase in costs for such items as outsourcing and hire vehicles.
The number of employees at fiscal year-end was 169,836, up 12,183 from 157,653 a year earlier, duelargely to a higher number of part-time and full-time employees in the Delivery business.

28

YAMATO HOLDINGS CO., LTD.

Net Income
In fiscal 2008, income before income taxes and minority interests increased ¥771 million, or 1.2%, to¥67,596 million. Income taxes declined ¥1,023 million, to ¥31,447 million. After deducting income taxes and¥796 million in minority interests, net income improved ¥1,540 million, or 4.6%, to ¥35,353 million. As aresult, net income per share was ¥79.80, and return on equity (ROE) was 7.8%. The annual dividend was¥22.00 per share, up ¥2.00 from the previous fiscal year.

Cash Flows
Operating Activities
Net cash provided by operating activities in fiscal 2008 amounted to ¥116,896 million, an increase ofreceivable—trade, due to a decline in installment receivables in the Financial business, as well as an ¥11,288

Operating and Investing
Cash Flows

million increase in notes and accounts payable—trade and a ¥5,389 million decrease in income taxes—paid.

(Millions of Yen)

¥36,133 million from fiscal 2007. Major factors included a ¥13,933 million decrease in notes and accounts

120,000

Investing Activities
Net cash used in investing activities totaled ¥112,039 million, up ¥51,141 million. This mainly reflected a

90,000¥67,661 million year-on-year increase in purchases of property, plant and equipment, including land for

60,000construction of a terminal complex. By contrast, purchases of investment securities declined ¥15,019 million.

30,000Financing Activities

0

Net cash provided by financing activities was ¥7,301 million, compared with ¥15,172 million used in such

-30,000

activities in the previous fiscal year. This was mainly due to a ¥24,056 million increase in proceeds from

-60,000

long-term debt in the form of long-term borrowings from financial institutions associated with the purchaseof land for construction of a terminal complex. By contrast, there was a ¥3,771 million decrease in proceedsfrom short-term bank loans stemming from a decline in installment receivables in the Financial business.

-90,000-120,000’04 ’05 ’06 ’07 ’08
n Operating Cash Flowsn Investing Cash Flows

Financial Position
The equity ratio edged down 0.4 of a percentage point to 53.3%, due to the purchase of land for construction of a terminal complex and other factors.
At March 31, 2008, total current assets amounted to ¥404,594 million, down ¥20,509 million, or 4.8%, fromInterest-bearing Liabilities

a year earlier. This was mainly due to a ¥25,707 million decline in installment receivables in the Financial business.
Property, plant, and equipment increased ¥84,194 million, or 29.7%, to ¥367,336 million. This wasprimarily the result of an ¥85,083 million increase in land following the purchase of land adjacent to Haneda(Millions of Yen)
120,000

Airport for the construction of a terminal complex.
Investments and other assets declined ¥19,187 million, or 15.8%, to ¥102,289 million. This was due
mainly to a ¥14,659 million decrease in investment securities.

90,000As a result of the foregoing, total assets increased ¥44,498 million, or 5.4%, to ¥874,219 million.
Total liabilities rose ¥20,209 million, or 5.3%, to ¥398,235 million. The primary factor was an increase in
short-term bank loans and long-term debt as the Company raised funds from financial institutions to pur-

60,000chase land for construction of a terminal complex. Accordingly, total interest-bearing debt rose ¥15,796
million, or 14.1%, to ¥112,222 million.

30,000Total equity climbed ¥24,289 million, or 5.4%, to ¥475,984 million. This was attributable mainly to¥35,353 million in net income, which outweighed an ¥8,860 million decline in retained earnings due to­payment of cash dividends.

0’04 ’05 ’06 ’07 ’08

As a result of the above, total shareholders’ equity was ¥465,801 million, and the equity ratio was
53.3%, down 0.4 of a percentage point.

Annual Report 200829

Capital Expenditures
Capital expenditures in fiscal 2008 totaled ¥124,832 million, up ¥75,951 million, or 155.4%, from the previous fiscal year. The increase stemmed mainly from purchase of land by the Delivery business for construction of a terminal complex. The following is a breakdown of capital expenditures.
Millions of Yen

2007

2008

¥33,132¥106,991

1,507

1,437

Home Convenience

408

375

e-Business

605

606

Financial

11,773

13,503

Other

1,408

1,912

Delivery
BIZ-Logistics

48

8¥48,881¥124,832

			
2007
2008

Increase/
Decrease
1,561

Eliminations and Corporate
Consolidated
Major changes in the Delivery business network are detailed below.
Network

Number of vehicles

51,38652,947

Number of delivery channels

13,171

13,391220

Number of sub-agents

282,719

274,924(7,795)

Forecasts for Fiscal 2009
In the Delivery business, the Yamato Group will strive to achieve recovery and get the business on a path ofrenewed growth. In non-delivery activities, we will seek to transform our unique business model into amarket-leading model.
We expect domestic operating conditions to become even more challenging in fiscal 2009 as sluggish
growth in the U.S. economy threatens to cause economic slowdown in Japan. Other factors include
rising prices of crude oil and other raw materials, as well as winding down of capital expenditures byJapanese companies.
In the Delivery business, we will strengthen solution-based marketing to better address the needs ofcustomers. At the same time, we will seek to differentiate Yamato from its competitors by providing meticulous, high-quality services. In addition, we will significantly raise productivity by enhancing existing functions
and implementing new mechanisms. In these ways, we will target drastic reforms of our earnings structure,
restore our performance, and shift to a path of renewed growth.
In non-delivery businesses, we will organically combine our three key functions—logistics technology(LT), information technology (IT), and financial technology (FT)—to create a unique business model to satisfy
customers in a compartmentalized market. By also strengthening cooperation across the Group, we willtransform this model into a market-leading business model targeting significant future growth.
For fiscal 2009, the Yamato Group forecasts operating revenues of ¥1,290 billion, operating income of¥74 billion, and net income of ¥38 billion.

30

YAMATO HOLDINGS CO., LTD.

Major Risk Factors
The Yamato Group believes that the following matters related to the implementation of the Group’s business
operations may have a significant impact on the decisions of investors.
It should be noted that forward-looking statements in this document are based on information available
as of the end of fiscal 2008.

Operating Revenues Highly Dependent on Takkyubin BusinessIn fiscal 2008, the Takkyubin business accounted for more than 60% of the Yamato Group’s consolidated
operating revenues. Consequently, earnings in the Takkyubin business have a large impact on theGroup’s earnings.
The Takkyubin business is significantly affected by the impact of domestic economic trends. Moreover,packages handled include agricultural produce, and this is affected by the natural environment, including
inclement weather conditions. Furthermore, transportation volume for midsummer, year-end, and other gifts
tends to change according to customs that are in trend at the time. If the rate of market growth slows
because of these factors, this could have an adverse impact on the Yamato Group’s business performance.
In addition, for customers that send packages, Takkyubin is only one of the options available among
express home delivery services, and is thus not indispensable. The Yamato Group is endeavoring to achievedifferentiation based on service composition and delivery quality rather than on price. However, if unit prices
decline beyond the range expected and the Group’s customers switch to its competitors as a result of fierce
price competition among companies in the industry, this could have an adverse impact on the YamatoGroup’s business performance.

Securing Human Resources
Many of the businesses that the Yamato Group operates are labor intensive. It is important to secure highquality personnel in terms of manpower for these businesses, and in specialized fields such as e-business, it
is also important to secure human resources. Moreover, it is important for the growth of the Yamato Groupto continuously hire competent staff and allocate staff to appropriate positions as well as to endeavor tokeep employees in the Group by developing a good work environment and improving training and education
systems. However, if we are unable to achieve these objectives, the growth of the Yamato Group could slow
in the future, and this could have an adverse impact on the Yamato Group’s business performance.

Leakage of Business Know-how Resulting From Personnel Leaving the GroupThe Yamato Group has accumulated various kinds of know-how, such as ways to develop new products
and methods of building networks, in an effort to differentiate its services from those of its competitors. As it
is difficult to legally protect most of this know-how we have accumulated, the know-how could leak outsidewhen personnel leave their employment in the Group and it may not be possible to effectively prevent athird party from providing similar services. This could have an adverse impact on the Yamato Group’s business performance.

International Factors
The Yamato Group and its main business partners are active in a number of geographical regions. If any
such regions are subject to acts of terrorism, war, or other international conflicts or spread of disease, it may
be necessary to suspend deliveries or evacuate employees, which could have an adverse impact on theGroup’s business performance.
The Group’s delivery business and other businesses center mainly on the transport of cargo using vehicles. In such businesses, the regular, stable, and optimal supply of diesel and other fuel is indispensable.
Addressing this issue, we are taking measures to reduce the amount of fuel used, including by shifting transport modes, introducing low-emission vehicles, and promoting handcart-based collection and delivery. If thestable supply of fuel is restricted due to international events, however, or if fuel prices continue to surge, this
could have an adverse impact on the Group’s business performance.
Annual Report 200831

Consolidated Balance Sheets
March 31, 2008 and 2007

				
Millions of Yen

ASSETS		

Thousands of
U.S. Dollars(Note 1)

2008

2007

2008

¥ 147,569¥ 130,157$ 1,472,894

Marketable securities (Note 4) 			

4,000

CURRENT ASSETS:
Cash (Note 2.c) 		
Notes and accounts receivable:   Trade 		144,275

136,130

1,440,014   Installment (Note 3) 		

77,712

103,419775,642   Allowance for doubtful accounts 		

(5,477)(6,618)(54,666)

Inventories 		

2,298

2,177

22,932

Deferred tax assets (Note 9) 		

17,686

17,452

176,525

Prepaid expenses and other current assets 		

20,53138,386

204,925    Total current assets 		

404,594

425,103

4,038,266

1,765,806

PROPERTY, PLANT AND EQUIPMENT—At cost:
Land (Notes 5 and 6) 		

176,916

91,833

Buildings and structures (Note 5) 		

252,399

237,1422,519,206

Vehicles 		

173,383

169,249

1,730,538

Leasing property 		

34,59827,358345,320

Machinery and equipment 		

91,13586,345

909,628

Construction in progress 		

746

9,836

7,445

    Total 		

729,177

621,763

7,277,943

Accumulated depreciation 		(361,841)(338,621)(3,611,542)    Net property, plant and equipment 		

367,336

283,1423,666,401

41,72656,385416,472

1,309

1,654

13,061INVESTMENTS AND OTHER ASSETS:
Investment securities (Notes 4 and 6) 		
Investments in and advances to non-consolidated subsidiaries and affiliates,   net of valuation allowance of ¥118 million ($1,178 thousand) in 2008 and 2007
Long-term loans 		

2,862

3,155

28,569Lease deposits 		

25,521

25,917

254,724Deferred tax assets (Note 9) 		

13,215

12,870131,903

Other assets 		

17,656

21,495

176,220    Total investments and other assets 		

102,289

121,476

1,020,949

TOTAL 		

¥ 874,219¥ 829,721$ 8,725,616

See notes to consolidated financial statements.

32

YAMATO HOLDINGS CO., LTD.

				Millions of Yen

LIABILITIES AND EQUITY		

Thousands of
U.S. Dollars(Note 1)

2008

2007

2008

Short-term bank loans (Note 6) 		

¥ 18,249¥ 32,519$ 182,143

Current portion of long-term debt (Note 6) 		

22,0083,180

219,663   Trade 		122,791

107,170

1,225,582   Construction 		

7,291

14,906

72,771

Income taxes payable 		

20,571

23,438205,320CURRENT LIABILITIES:

Notes and accounts payable:

Employees’ savings deposits 		

3,359

3,389

33,526

Accrued expenses 		

52,82050,613

527,199

Deferred profit on installment sales (Note 3) 		

16,096

21,233

160,654

Other current liabilities 		

16,05428,278160,242    Total current liabilities 		

279,239284,726

2,787,100

LONG-TERM LIABILITIES:Long-term debt (Note 6) 		

71,96560,727718,285

Long-term accounts payable 		

15,784

191

157,544

Liability for employees’ retirement benefits (Note 7) 		

27,21525,948271,633

Retirement allowances for directors and corporate auditors 		

14

34

136

Deferred tax liabilities (Note 9) 		

2,019

4,553

20,156

Other long-term liabilities 		

1,999

1,847

19,950    Total long-term liabilities 		

118,996

93,3001,187,704

1,204,964

COMMITMENTS AND CONTINGENT LIABILITIES (Notes 10 and 11)
EQUITY (Notes 6, 8 and 14):
Common stock—authorized, 1,787,541,000 shares in 2008 and 2007;   issued, 457,309,400 shares in 2008 and 457,295,372 shares in 2007 		

120,725

120,717

Capital surplus 		

114,847

114,894

1,146,290

Retained earnings 		

250,711224,226

2,502,352

Unrealized gain on available-for-sale securities 		

5,994

12,58359,825

Deferred loss on derivatives under hedge accounting 		(63)		

(624)

Foreign currency translation adjustments 		

(93)

(26)

(930)

   shares in 2007 		(26,320)(27,131)(262,698)    Total 		

465,801

445,2634,649,179

Minority interests 		

10,183

6,432

101,633

Treasury stock—at cost, 14,106,234 shares in 2008 and 14,525,492    Total equity 		

475,984

451,695

4,750,812

TOTAL 		

¥874,219¥829,721$8,725,616

Annual Report 200833

Consolidated Statements of Income
Years Ended March 31, 2008 and 2007

				
Millions of Yen

2008

		

OPERATING REVENUES 		 ¥1,225,974

Thousands of
U.S. Dollars(Note 1)

2007

2008

¥1,161,568$12,236,489

OPERATING COSTS AND EXPENSES:
Operating costs 		

1,129,008

1,064,044

11,268,663

Selling, general and administrative expenses 		

28,78630,363287,316    Total operating costs and expenses 		

1,157,794

1,094,407

11,555,979    Operating income 		

68,18067,161

680,510

(905)

(786)

(9,030)Interest expense 		

307

259

3,066

Gain on sales of marketable and investment securities 		

(1,216)(19)(12,140)

Gain on sales of investments in subsidiaries 		

(1)

(608)

(8)

Loss on disposal of property, plant and equipment 		

399

919

3,980

Loss on impairment of long-lived assets (Note 5) 			

1,127

OTHER (INCOME) EXPENSES:Interest and dividend income 		Bond issuance costs 		

14

9

141

Other—net 		

1,986

(565)

19,827    Other expenses—net 		

584

336

5,836

INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS 		

67,596

66,825

674,674

31,92731,734

318,670

INCOME TAXES (Note 9):
Current 		
Deferred 		

(480)

736

(4,794)    Total income taxes 		

31,44732,470313,876

MINORITY INTERESTS IN NET EARNINGS OF CONSOLIDATED SUBSIDIARIES 		

796

542

7,942

NET INCOME 		 ¥35,353

		

2008

¥

33,813

Yen$

352,856

U.S. Dollars

2008

2007

PER SHARE OF COMMON STOCK (Notes 2.s and 12):
Basic net income 		 ¥79.80Diluted net income		

78.12

74.00

0.78

Cash dividends applicable to the year 		

22.00

20.00

0.22

See notes to consolidated financial statements.

34

YAMATO HOLDINGS CO., LTD.

¥

75.59

$

0.80

Consolidated Statements of Changes in Equity
Years Ended March 31, 2008 and 2007

Thousands

Millions of Yen						
Outstanding 				Unrealized
Number of 				Gain onShares of 				AvailableCommon
CommonCapitalRetainedfor-sale
Stock
Stock
Surplus
Earnings
Securities

Deferred
Loss onDerivatives
under
Hedge
Accounting

Foreign
Currency
Translation
Adjustments

Treasury		
Stock
Total

Minority
Interests

Total
EquityBALANCE, APRIL 1, 2006 		
445,408 ¥120,576 ¥113,474 ¥199,972 ¥11,380		
¥(172)¥(21,540)¥423,690		
Reclassified balance as of March 31, 2006 (Note 2.k)											 ¥ 3,625
Adjustment of retained earnings for newly   consolidated subsidiaries 					53					53		Net income 					33,813					33,813		Cash dividends, ¥21 per share 					(9,380)					(9,380)		
Bonuses to directors and corporate auditors 					(71)					(71)		
Adjustment of retained earnings for exception of   consolidated subsidiaries 					(161)					(161)		Purchase of treasury stock 		
(5,437)							(10,336)(10,336)		
Disposal of treasury stock 		
2,566		1,279					4,7456,024		Shares issued on conversion of convertible debt 		
233
141
141						282		Net change in the year 						1,203		146 		
1,349
2,807

¥423,690
3,625

BALANCE, MARCH 31, 2007 		
442,770
120,717
114,894
224,226
12,583		
(26)(27,131)
Net income 					35,353					Cash dividends, ¥20 per share 					(8,860)					Adjustment of retained earnings for changes in   the scope of consolidation 					(8)					Purchase of treasury stock 		(158)							(267)Disposal of treasury stock 		
577		(56)					1,078Shares issued on conversion of convertible debt 		
14
89						Net change in the year 						(6,589)¥(63)(67)		

445,263
6,432
35,353		
(8,860)		

451,695
35,353(8,860)(8)		
(267)		1,022		17		(6,719)
3,751

(8)
(267)
1,022
17
(2,968)BALANCE, MARCH 31, 2008 		¥465,801

443,203¥120,725¥114,847¥250,711¥ 5,994¥(63)¥ (93)¥(26,320)53
33,813(9,380)(71)(161)(10,336)
6,024
282
4,156

¥10,183¥475,984

Minority
Interests

Total
EquityThousands of U.S. Dollars (Note 1)						
					
Unrealized					
Gain on					
Available		CommonCapitalRetainedfor-sale		
Stock
Surplus
Earnings
Securities

Deferred
Loss onDerivatives
under
Hedge
Accounting

Foreign
Currency
Translation
Adjustments

Treasury		
Stock
Total

BALANCE, MARCH 31, 2007 			 $1,204,879 $1,146,765 $2,238,011 $125,590		
$(262)$(270,797) $4,444,186 $ 64,196 $4,508,382
Net income 					352,856					352,856		
352,856
Cash dividends, $0.20 per share 					(88,435)					(88,435)		
(88,435)
Adjustment of retained earnings for   changes in the scope of consolidation 					(80)					(80)		
(80)
Purchase of treasury stock 									(2,661)(2,661)		
(2,661)
Disposal of treasury stock 				(560)					10,760
10,200		
10,200Shares issued on conversion of convertible debt
		8585						170		170Net change in the year 						 (65,765)$(624)(668)		
(67,057)
37,437(29,620)BALANCE, MARCH 31, 2008 			 $1,204,964 $1,146,290 $2,502,352 $ 59,825$(624)$(930)$(262,698) $4,649,179 $101,633 $4,750,812

See notes to consolidated financial statements.

Annual Report 200835

Consolidated Statements of Cash Flows
Years Ended March 31, 2008 and 2007

				
Millions of Yen

		

2008

2008

2007

OPERATING ACTIVITIES:
Income before income taxes and minority interests 		 ¥ 67,596
Adjustments for:   Income taxes—paid 		(32,396)   Depreciation and amortization 		
44,772   Loss on disposal of property, plant and equipment 		
399   Loss on impairment of long-lived assets 			   Gain on sales of marketable and investment securities 		
(1,222)   Changes in assets and liabilities, net of effects from newly consolidated subsidiaries:    Decrease in notes and accounts receivable 		
17,501    (Increase) decrease in inventories 		
(67)    Increase in notes and accounts payable 		
15,497    Increase in liability for employees’ retirement benefits 		
1,292   Other—net 		
3,524¥ 66,825$

674,674(37,785)
40,150
919
1,127
(628)

(323,346)
446,874
3,980

3,568
582
4,209
3,207
(1,411)

174,681(665)
154,679
12,89635,171(12,202)    Total adjustments 		

49,30013,938492,068    Net cash provided by operating activities 		

116,896

80,763

1,166,742

INVESTING ACTIVITIES:
Proceeds from sale of property, plant and equipment 		
Purchases of property, plant and equipment 		
Proceeds from sales of marketable and investment securities 		
Purchases of marketable and investment securities 		
Payment for acquisition and succeeding the delivery business 		Increase in investments in and advances to non-consolidated subsidiaries and affiliates 		Cash collected from long-term loans 		
Cash advanced for long-term loans 		
Other 		

1,114
1,144
(114,778)(47,117)
9,423
4,435
(1,011)(16,030)(5,570)		
(262)(1,270)1,940
2,159(1,633)(2,332)(1,262)(1,887)

11,116(1,145,605)
94,049(10,094)(55,597)(2,613)19,363(16,294)(12,593)    Net cash used in investing activities 		(112,039)(60,898)(1,118,268)

FINANCING ACTIVITIES:
Proceeds from short-term bank loans 		
Repayments of short-term bank loans 		
Proceeds from long-term debt 		
Repayments of long-term debt 		
Dividends paid 		Repurchase of treasury stocks 		
Other 		33,750(49,442)
34,000(2,737)(9,023)755(2)37,521(48,033)
9,944
(680)
(9,565)(4,312)(47)

336,860(493,482)
339,355(27,318)(90,054)
7,539
(22)

    Net cash provided by (used in) financing activities 		

7,301(15,172)

72,878FOREIGN CURRENCY TRANSLATION ADJUSTMENTS
ON CASH AND CASH EQUIVALENTS 		NET INCREASE IN CASH AND CASH EQUIVALENTS		CASH AND CASH EQUIVALENTS OF NEWLYCONSOLIDATED SUBSIDIARIES, BEGINNING OF YEAR 		
CASH AND CASH EQUIVALENTS DECREASED BY
EXCEPTION OF CONSOLIDATED SUBSIDIARIES 		
CASH AND CASH EQUIVALENTS INCREASED BYCORPORATE DIVISION 		
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 		

(22)

47

(222)

12,136

4,740

121,130

23

84

233

(190)
17
130,1457
125,504168
1,298,984

CASH AND CASH EQUIVALENTS, END OF YEAR (Note 2.c)		 ¥ 142,321¥130,145$ 1,420,515

See notes to consolidated financial statements.

36

Thousands of
U.S. Dollars(Note 1)YAMATO HOLDINGS CO., LTD.

Notes to Consolidated Financial Statements
Years Ended March 31, 2008 and 2007

1. BASIS OF PRESENTING CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements have been prepared in accordance with the provisions set forth in the Japanese Financial Instruments andExchange Law (formerly, the Japanese Securities and Exchange Law) and its related
accounting regulations, and in conformity with accounting principles generally
accepted in Japan (“Japanese GAAP”), which are different in certain respects as toapplication and disclosure requirements of International Financial Reporting Standards.
In preparing these consolidated financial statements, certain reclassifications andrearrangements have been made to the consolidated financial statements issued
domestically in order to present them in a form which is more familiar to readers
outside Japan. In addition, certain reclassifications and rearrangements have been
made in the 2007 financial statements to conform to the classifications and presentations used in 2008.
The consolidated financial statements are stated in Japanese yen, the currencyof the country in which Yamato Holdings Co., Ltd. (the “Company”) is incorporated
and operates. The translations of Japanese yen amounts into U.S. dollar amounts
are included solely for the convenience of readers outside Japan and have been
made at the rate of ¥100.19 to $1, the approximate rate of exchange at March 31,
2008. Such translations should not be construed as representations that theJ­apanese yen amounts could be converted into U.S. dollars at that or any other rate.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa. Consolidation—The consolidated financial statements as of March 31, 2008
include the accounts of the Company and its 29 significant (37 in 2007) subsidiaries(together, the “Group”).
Under the control or influence concept, those companies in which the Company,
directly or indirectly, is able to exercise control over operations are fully consolidated,
and those companies over which the Group has the ability to exercise significant
influence are accounted for by the equity method.
The remaining non-consolidated subsidiaries, whose combined assets, net sales,
net income and retained earnings in the aggregate are not significant to the consolidated financial statements, have not been consolidated with the Company.
There were no affiliates accounted for by the equity method in 2008 or 2007.
Investments in the remaining non-consolidated subsidiaries and affiliates arestated at cost less a valuation allowance representing possible losses on the investments that are deemed to be other than temporary. If the equity method of accounting had been applied to the investments in such companies, the effect on theaccompanying consolidated financial statements would not be material.
The excess of the costs over the underlying net equity of investments in consolidated subsidiaries is recognized as goodwill and amortized on a straight-line basis
over a five-year period, with the exception of minor amounts which are charged or
credited to income in the period of acquisition.
All significant intercompany balances and transactions have been eliminated inconsolidation. All material unrealized profit included in assets resulting from transactions within the Group is eliminated.
b. Recognition of Operating Revenues—The Group recognizes freight charge
income as operating revenues at the time when freight has been received from theshipping customer for transportation.
The Group also records installment sales receivables, which include principal andfees from customers, after the Group has accepted the relevant contracts which arereferred to the Group by participating member stores. Fees from customers andmember stores were generally recognized in equal installment over the lives of each
respective contract.
c. Cash Equivalents—Cash equivalents are short-term investments that are readily
convertible into cash and that are exposed to insignificant risk of changes in value.
Cash equivalents include time deposits, certificate of deposits and mutual funds
investing in bonds that represent short-term investments, all of which mature or
become due within three months of the date of acquisition.
The difference between cash and time deposits in the accompanying consolidated balance sheets and cash and cash equivalents in the accompanying consolidated statements of cash flows is as follows:		Millions of Yen

Thousands of
U.S. Dollars

2008
2007
Cash 		 ¥147,569 ¥130,157
Time deposits due beyond three months 		
(5,000)(6)Bank overdraft included in cash 		
(248)
(6)
Cash and cash equivalents 		 ¥142,321 ¥130,145

2008$1,472,894(49,905)(2,474)$1,420,515

d. Inventories—Inventories which mainly consist of supplies are stated at cost as
determined by the first-in, first-out method.

e. Marketable and Investment Securities—Marketable and investment securities
are classified and accounted for, depending on management’s intent, as follows: (1)trading securities, which are held for the purpose of earning capital gains in near term
are reported at fair value, and the related unrealized gains and losses are included inearnings, (2) held-to-maturity debt securities, which are expected to be held tomaturity with the positive intent and ability to hold to maturity are reported at amortized cost and (3) available-for-sale securities, which are not classified as either of theaforementioned securities, are reported at fair value, with unrealized gains and losses,
net of applicable taxes, reported in a separate component of equity. The Group has
no trading securities at March 31, 2008 and 2007, respectively.
Non-marketable available-for-sale securities are stated at cost determined by themoving-average method.
For other than temporary declines in fair value, investment securities are reduced
to net realizable value by a charge to income.
f. Property, Plant and Equipment—Property, plant and equipment are stated atcost. Depreciation of property, plant and equipment of the Company and its domestic consolidated subsidiaries is computed substantially by the declining-balancemethod, while the straight-line method is applied to the buildings acquired after April
1, 1998. Property, plant and equipment of the Company and its domestic consolidated subsidiaries acquired on and after April 1, 2007 are depreciated by the d­ecliningbalance method in accordance with the revised corporate tax law, which is effective
April 1, 2007. The effect of this treatment was to decrease income before income
taxes and minority interests for the year ended March 31, 2008 by ¥2,996 million($29,908 thousand). Property, plant and equipment had been depreciated up to 95%
of acquisition cost with 5% of residual value carried until previous fiscal years. However, such 5% portion of property, plant and equipment of the Company and its
domestic consolidated subsidiaries is systematically amortized over 5 years startingin the following year in which the carrying value of property, plant and equipment
reaches 5% of the acquisition cost in accordance with the revised corporate tax law,which is effective for fiscal years beginning on and after April 1, 2007. The effect of
this treatment was to decrease income before income taxes and minority interests forthe year ended March 31, 2008 by ¥1,165 million ($11,626 thousand). The depreciation of property, plant and equipment of foreign consolidated subsidiaries is computed on the straight-line method over the estimated useful lives of the assets. The
range of useful lives is principally as follows:
Buildings and structures
VehiclesMachinery and equipment

7–60 years
2– 7 years
2–20 years

Maintenance and repairs including minor renewals and improvements arecharged to income as incurred.
g. Long-lived Assets—The Group reviews its long-lived assets for impairment
whenever events or changes in circumstance indicate the carrying amount of anasset or asset group may not be recoverable. An impairment loss would be recognized if the carrying amount of an asset or asset group exceeds the sum of theundiscounted future cash flows expected to result from the continued use andeventual disposition of the asset or asset group. The impairment loss would bemeasured as the amount by which the carrying amount of the asset exceeds its
recoverable amount, which is the higher of the discounted cash flows from thecontinued use and eventual disposition of the asset or the net selling price at disposition.
h. Other Assets—Amortization of intangible assets is computed on the straightline method.
Bond issuance costs are deferred as other assets and amortized on the straightline method over a repayment method.
i. Retirement and Pension Plan—The Company and substantially most domestic
consolidated subsidiaries have a contributory trusteed pension plan and an unfunded
retirement benefit plan. In addition, a defined contribution retirement plan was
introduced for these defined benefit pension plans. Certain domestic consolidated
subsidiary participates a cooperative welfare pension fund as a substitution for the
aforementioned contributory trusteed pension plan. The foreign subsidiaries haverespective defined contribution retirement plans.
Directors and corporate auditors are not covered by the retirement and pension
plans described above. Benefits paid to such persons are charged to income as
paid. Any amounts payable to directors and corporate auditors upon retirement are
subject to the approval of the shareholders.
j. Retirement Allowances for Directors and Corporate Auditors—Retirement
allowances for directors and corporate auditors for certain subsidiaries are recorded
to state the liability at the amount that would be required if all directors and corporate
auditors retired at each balance sheet date.

Annual Report 200837

k. Presentation of Equity—On December 9, 2005, the Accounting Standards Boardof Japan (“ASBJ”) published a new accounting standard for presentation of equity.
Under this accounting standard, certain items which were previously presented asliabilities or assets, as the case may be, are now presented as components of equity.
Such items include minority interests and any deferred gain or loss on derivatives
accounted for under hedge accounting. This standard was effective for fiscal years
ending on or after May 1, 2006. The balances of these items as of March 31, 2006
were reclassified as separate components of equity as of April 1, 2006 in the consolidated statement of changes in equity.
l. Leases—Under Japanese accounting standards for leases, finance leases thatdeem to transfer ownership of the leased property to the lessee are to be capitalized,
while other finance leases are permitted to be accounted for as operating leasetransactions if certain “as if capitalized” information is disclosed in the notes to thelessee’s financial statements. All leases are accounted for as operating leases.
m. Bonuses to Directors—Bonuses to directors are accrued at the year end towhich such bonuses are attributable.
n. Income Taxes—The provision for income taxes is computed based on the pretax
income included in the consolidated statements of income. The asset and liability
approach is used to recognize deferred tax assets and liabilities for the expected
future tax consequences of temporary differences between the carrying amounts andthe tax bases of assets and liabilities. Deferred taxes are measured by applying
currently enacted tax laws to the temporary differences.
o. Appropriations of Retained Earnings—Appropriations of retained earnings at
each year end are reflected in the consolidated financial statements for the following
year upon shareholders’ approval.
p. Foreign Currency Transactions—All short-term and long-term monetary receivables and payables denominated in foreign currencies are translated into Japanese
yen at the exchange rates at the balance sheet date.
q. Derivative Financial Instruments—The Company and certain consolidated
subsidiaries use derivative financial instruments to manage their exposures to fluctuations in interest rates. Interest rate swaps are utilized by the consolidated subsidiaries toreduce interest rate risks. The Group does not enter into derivatives for trading or
speculative purposes.
Derivative financial instruments and foreign currency transactions are classified
and accounted for as follows: (a) all derivatives are recognized as either assets or
liabilities and measured at fair value, and gains or losses on derivative transactions
are recognized in the statements of income and (b) for derivatives used for hedging
purposes, if derivatives qualify for hedge accounting because of high correlation andeffectiveness between the hedging instruments and the hedged items, gains orlosses on derivatives are deferred until maturity of the hedged transactions.
The interest rate swaps which qualify for hedge accounting and meet specificmatching criteria are not remeasured at market value but the differential paid or
received under the swap agreements are recognized and included in interest
expense or income.
r. Foreign Currency Financial Statements—The balance sheet accounts of theconsolidated foreign subsidiaries are translated into Japanese yen at the current
exchange rate as of the balance sheet date except for equity, which is translated at
the historical rate. Differences arising from such translation were shown as “Foreign
currency translation adjustments” in a separate component of equity.
Revenue and expense accounts of the consolidated foreign subsidiaries are translated into Japanese yen at the current exchange rates as of the balance sheet date.
s. Per Share Information—Basic net income per share is computed by dividing net
income available to common shareholders, by the weighted-average number ofcommon shares outstanding for the period, retroactively adjusted for stock splits.
Diluted net income per share reflects the potential dilution that could occur if
securities were exercised or converted into common stock. Diluted net income pershare of common stock assumes full conversion of the outstanding convertible
notes and bonds at the beginning of the year (or at the time of issuance) with anapplicable adjustment for related interest expense, net of tax, and full exercise ofoutstanding warrants.
Cash dividends per share presented in the accompanying consolidated statements of income are dividends applicable to the respective years including dividends
to be paid after the end of the year.

38

YAMATO HOLDINGS CO., LTD.

t. New Accounting Pronouncements
Measurement of Inventories
Under Japanese GAAP, inventories are currently measured either by the cost
method, or at the lower of cost or market. On July 5, 2006, the ASBJ issued ASBJ
Statement No. 9, “Accounting Standard for Measurement of Inventories”, which iseffective for fiscal years beginning on or after April 1, 2008. This standard requiresthat inventories held for sale in the ordinary course of business be measured at thelower of cost or net selling value, which is defined as the selling price less additional
estimated manufacturing costs and estimated direct selling expenses. The replacement cost may be used in place of the net selling value, if appropriate. The standard
also requires that inventories held for trading purposes be measured at the market price.
Lease Accounting
On March 30, 2007, the ASBJ issued ASBJ Statement No. 13, “Accounting Standard for Lease Transactions”, which revised the existing accounting standard forlease transactions issued on June 17, 1993. The revised accounting standard forlease transactions is effective for fiscal years beginning on or after April 1, 2008.
Under the existing accounting standard, finance leases that deem to transfer ownership of the leased property to the lessee are to be capitalized, however, other financeleases are permitted to be accounted for as operating lease transactions if certain “asif capitalized” information is disclosed in the note to the lessee’s financial statements.
The revised accounting standard requires that all finance lease transactions shall becapitalized recognizing lease assets and lease obligations in the balance sheet.
Unification of Accounting Policies Applied to Foreign Subsidiaries for theConsolidated Financial Statements
Under Japanese GAAP, a company currently can use the financial statements of its
foreign subsidiaries which have been prepared in accordance with generally
accepted accounting principles in their respective jurisdictions for its consolidation
process unless they are clearly unreasonable. On May 17, 2006, the ASBJ issued
ASBJ Practical Issues Task Force (“PITF”) No. 18, “Practical Solution on Unification of
Accounting Policies Applied to Foreign Subsidiaries for the Consolidated Financial
Statements”. The new standard prescribes: (1) the accounting policies and procedures applied to a parent company and its subsidiaries for similar transactions andevents under similar circumstances should in principle be unified for the preparationof the consolidated financial statements, (2) financial statements prepared by foreignsubsidiaries in accordance with either International Financial Reporting Standards or
the generally accepted accounting principles in the United States tentatively may be
used for the consolidation process, (3) however, the following items should be
adjusted in the consolidation process so that net income is accounted for in accordance with Japanese GAAP unless they are not material;(1) Amortization of goodwill(2) Actuarial gains and losses of defined benefit plans recognized outside profit
or loss(3) Capitalization of intangible assets arising from development phases(4) Fair value measurement of investment properties, and the revaluation model
for property, plant and equipment, and intangible assets(5) Retrospective application when accounting policies are changed(6) Accounting for net income attributable to a minority interest
The new task force is effective for fiscal years beginning on or after April 1, 2008.

3. NOTES AND ACCOUNTS RECEIVABLE
Sales recorded on the installment basis were 0.8% and 1.0% of net sales in 2008
and 2007, respectively.
Annual maturities of notes and accounts receivable—installment at March 31,
2008 and related amortization of deferred profit on installment sales are as follows:
Millions of Yen
Thousands of U.S. Dollars
		Deferred 		
Deferred		Profit on 		
Profit on		Installment 		
Installment
Receivables
Sales
Receivables
Sales

2009
2010
2011
2012
2013
2014 and thereafter
Total¥39,051
20,687
10,622
4,952
1,829
571
¥77,712¥ 6,963
4,526
2,620
1,318
501
168
¥16,096$389,769
206,482
106,015
49,427
18,252
5,697$775,642$ 69,494
45,177
26,14913,155
5,001
1,678$160,654

4. MARKETABLE AND INVESTMENT SECURITIES

6. BANK LOANS AND LONG-TERM DEBT

Marketable and investment securities as of March 31, 2008 and 2007 consisted of
the following:

Short-term bank loans at March 31, 2008 and 2007 consisted of notes to banks andbank overdrafts. The annual interest rates applicable to the bank loans ranged from1.020% to 4.750% and 0.940% to 4.750% at March 31, 2008 and 2007, respectively.
Long-term debt at March 31, 2008 and 2007 consisted of the following:		Millions of Yen

2008
Current:
Government and corporate bonds 		
Other   Total 		Non-current:
Marketable equity securities
Non-marketable equity securities
Other   Total¥28,475
3,015
10,236¥41,726

Thousands of
U.S. Dollars

2008

2007

		
Millions of Yen¥ 4,000¥ 4,000¥42,161
3,014
11,210¥56,385$284,215
30,092102,165$416,472

Information regarding each category of the securities classified as available-forsale and held-to-maturity at March 31, 2008 and 2007 was as follows:
Millions of Yen

2008
		
Cost

Securities classified as   available-for-sale:   Equity securities   Other¥20,126
10,025

Unrealized
Gains

Unrealized
Losses¥8,932¥582
95		

Fair Value¥28,476
10,120Millions of Yen

2007
			
		
Cost

Securities classified as:
Available-for-sale:   Equity securities   Other
Held-to-maturity

Unrealized
Gains

Unrealized
Losses¥23,131 ¥19,388¥358
10,02528		
4,000		6

Fair Value¥42,161
10,053
3,994

Thousands of U.S. Dollars

2008
		
Cost

Securities classified as   available-for-sale:   Equity securities   OtherUnrealized
Gains

Unrealized
LossesFair Value

2008
1.230% to 2.095% loans froma Japanese bank due 2008 to 2013
¥ 75,903
Unsecured 1.05% bonds due in
December 2007		
Unsecured 1.59% bonds due inNovember 2010
5,000
Unsecured 1.2% convertible debentures,convertible into common stock at¥1,211.80 per share, due in
September 2009
13,070    Total
93,973
Less current portion(22,008)    Total¥ 71,965

Thousands of
U.S. Dollars

2007

2008

¥43,820$ 757,591

2,000
5,000

49,905

13,08763,907(3,180)¥60,727

130,452
937,948(219,663)$ 718,285

Annual maturities of long-term debt at March 31, 2008 were as follows:		Year Ending March 31
Millions of Yen

2009
2010
2011
2012
2013
2014 and thereafter
Total

Thousands of
U.S. Dollars¥22,008
28,74820,07817,0086,131$219,663
286,935
200,399
169,757
61,194¥93,973$937,948

At March 31, 2008, land with carrying amount of ¥209 million ($2,088 thousand)was pledged as collateral for short-term bank loans of ¥1 million ($10 thousand).
Investment securities with a carrying amount of ¥13 million ($129 thousand) were
deposited as security for dealings at March 31, 2008.
Convertible debentures of the Company at March 31, 2008, were convertible into
10,786 thousand shares of common stock of the Company. The conversion prices
are subject to adjustments to reflect stock splits and certain other events.

7. RETIREMENT AND PENSION PLANS$200,875
100,063$89,149$5,808941		

$284,216
101,004

The majority of available-for-sale securities whose fair value is not readily determinable as of March 31, 2008 and 2007 were as follows:
Carrying Amount		
Millions of Yen

2008
Available-for-sale:
Equity securities¥3,015Preferred shares 		

Thousands of
U.S. Dollars

2007

2008

¥3,0141,000$30,092

The Group has severance payment plans for employees.
Under most circumstances, employees terminating their employment are entitled
to retirement benefits determined based on the rate of government bonds, years ofservice and certain other factors. Such retirement benefits are made in the form of a
lump-sum severance payment from the Company or from the consolidated subsidiaries and annuity payments from a trustee. Employees are entitled to larger payments if
the termination is involuntary, by retirement at the mandatory retirement age, by death,or by voluntary retirement at certain specific ages prior to the mandatory retirementage. The retirement benefits for directors and corporate auditors are not included inaforementioned plans, which are paid subject to the approval of the shareholders.

Proceeds from the sales of available-for-sale securities for the years ended March
31, 2008 and 2007 were ¥4,231 million ($42,229 thousand) and ¥34 million, respectively. Gross realized gains on these sales, computed on the moving average costbasis, were ¥1,216 million ($12,140 thousand) and ¥19 million for the years ended
March 31, 2008 and 2007, respectively.

5. LONG-LIVED ASSETSThe Group reviewed its long-lived assets for impairment as of March 31, 2007 and,as a result, recognized an impairment loss of ¥1,127 million as other expense for theasset groups of the Akita Regional Branch of Yamato Transport Co., Ltd. and anotherthree regional branches for the year ended March 31, 2007 due to continuous
operating losses of those units. The carrying amounts of the relevant asset groups
were written down to the recoverable amounts. In the case where net selling prices
were used as recoverable amounts, relevant buildings were evaluated based on
assessed value of fixed assets, and relevant lands were evaluated based on posted
land price. No impairment loss was recognized for the year ended March 31, 2008.

Annual Report 2008

39

The liability for employees’ retirement benefits at March 31, 2008 and 2007
consisted of the following:		Millions of Yen

Projected benefit obligation
Fair value of plan assets
Unrecognized actuarial gain
Prepaid pension cost
Net liability

2008
2007
¥ 81,422 ¥ 78,942(56,988) (60,775)
2,728
7,751
53
30
¥ 27,215 ¥ 25,948

Thousands of
U.S. Dollars

2008$ 812,673(568,800)
27,229531$ 271,633

The components of net periodic benefit costs for the years ended March 31,
2008 and 2007 are as follows:		Millions of Yen

Service cost
Interest cost
Expected return on plan assets
Recognized actuarial loss
Net periodic benefit costs

2008¥ 4,567
1,562(1,199)
1,691¥ 6,6212007¥ 4,352
1,506(1,114)
3,373¥ 8,117

Thousands of
U.S. Dollars

2008$ 45,582
15,592(11,966)
16,879$ 66,087

Assumptions used for the years ended March 31, 2008 and 2007 are set forth
as follows:

Discount rate
Expected rate of return on plan assets
Amortization period of prior service cost
Recognition period of actuarial gain/loss

2008
2.0%
2.0%
1 year
5 years

2007
2.0%
2.0%
1 year
5 years

8. EQUITY
On and after May 1, 2006, Japanese companies have been subject to the Corporate
Law of Japan (the “Corporate Law”), which reformed and replaced the Commercial
Code of Japan. The significant provisions in the Corporate Law that affect financial
and accounting matters are summarized below:
a. Dividends
Under the Corporate Law, companies can pay dividends at any time during the fiscal
year in addition to the year-end dividend upon resolution at the shareholders meeting.
For companies that meet certain criteria such as; (1) having the Board of Directors,(2) having independent auditors, (3) having the Board of Corporate Auditors, and(4) the term of service of the directors is prescribed as one year rather than two years
of normal term by its articles of incorporation, the Board of Directors may declare
dividends (except for dividends in kind) at any time during the fiscal year if the company has prescribed so in its articles of incorporation. The Company meets all theabove criteria.
The Corporate Law permits companies to distribute dividends-in-kind (non-cash
assets) to shareholders subject to a certain limitation and additional requirements.
Semiannual interim dividends may also be paid once a year upon resolution by
the Board of Directors if the articles of incorporation of the company so stipulate. The
Corporate Law provides certain limitations on the amounts available for dividends or
the purchase of treasury stock. The limitation is defined as the amount available for
distribution to the shareholders, but the amount of net assets after dividends must be
maintained at no less than ¥3 million.
b. Increases/Decreases and Transfer of Common Stock, Reserve and Surplus
The Corporate Law requires that an amount equal to 10% of dividends must be
appropriated as a legal reserve (a component of retained earnings) or as additional
paid-in capital (a component of capital surplus) depending on the equity accountcharged upon the payment of such dividends until the total of aggregate amount oflegal reserve and additional paid-in capital equals 25% of the common stock. Under
the Corporate Law, the total amount of additional paid-in capital and legal reserve
may be reversed without limitation. The Corporate Law also provides that common
stock, legal reserve, additional paid-in capital, other capital surplus and retained
earnings can be transferred among the accounts under certain conditions upon
resolution of the shareholders.
c. Treasury Stock
The Corporate Law also provides for companies to purchase treasury stock anddispose of such treasury stock by resolution of the Board of Directors. The amount oftreasury stock purchased cannot exceed the amount available for distribution to theshareholders which is determined by specific formula. The Corporate Law also
provides that companies can purchase both treasury stock acquisition rights andtreasury stock. Such treasury stock acquisition rights are presented as a separate
component of equity.

40

YAMATO HOLDINGS CO., LTD.

9. INCOME TAXESThe Company and its domestic subsidiaries are subject to Japanese national andlocal income taxes which, in the aggregate, resulted in a normal effective statutory
tax rate of approximately 40% for the years ended March 31, 2008 and 2007.
The tax effects of significant temporary differences which resulted in deferred tax
assets and liabilities at March 31, 2008 and 2007 are as follows:		Millions of Yen

Thousands of
U.S. Dollars

2008
2007
Deferred tax assets:
Current:   Accrued expenses¥ 10,878 ¥ 10,771   Enterprise tax
1,964
2,253
   Allowance for doubtful accounts
1,417
1,472
   Legal welfare expense
1,460
1,452
   Other
2,109
1,551
   Less valuation allowance 			Deferred tax assets—current¥ 17,828 ¥ 17,499

2008$ 108,574
19,602
14,13914,577
21,055(4)$ 177,943

Non-current:   Liability for employees’    retirement benefits¥ 10,833 ¥ 10,290   Investment securities
3,541
2,702
   Investment in and advances to    non-consolidated subsidiaries    and affiliates
265
197   Loss on devaluation of land
27,181
27,182   Loss on impairment of long-lived assets
3,265
3,265
   Loss on devaluation of telephone    subscription rights
600
604   Unrealized profit
760
698   Other
2,167
1,631
   Less valuation allowance(34,079) (32,303)
Deferred tax assets—non-current¥ 14,533 ¥ 14,266

5,989
7,585
21,629(340,145)$ 145,056

Deferred tax liabilities:
Current—other
Deferred tax liabilities—current

¥
¥

$
$

Non-current:   Unrealized gain on available-for-sale    securities   Other
Deferred tax liabilities—non-current
Deferred tax assets—net¥ 2,741596¥ 3,337¥ 28,882

142
142

¥
¥

47
47

¥ 5,421528¥ 5,949¥ 25,769$ 108,121
35,3482,642
271,299
32,588

1,418
1,418

$ 27,358
5,951$ 33,309$ 288,272

A reconciliation between the normal effective statutory tax rates and the actual
effective tax rates reflected in the accompanying consolidated statements of income
for the years ended March 31, 2008 and 2007 is as follows:
2008
Normal effective statutory tax rate
40.0%
Per capita levy of local taxes
3.7
Valuation allowance
2.8
Other—net 		
Actual effective tax rate
46.5%

2007
40.0%
3.5
4.2
0.9
48.6%

10. LEASES(1) Lessee
Total lease payments under finance lease arrangements that do not transfer ownership of the leased property to the lessee were ¥4,392 million ($43,833 thousand) and¥4,413 million for the years ended March 31, 2008 and 2007, respectively.
Pro forma information of leased property such as acquisition cost, accumulated
depreciation, accumulated impairment loss and obligations under finance leases that
do not transfer ownership of the leased property to the lessee on an “as if capitalized” basis for the years ended March 31, 2008 and 2007 was as follows:
Millions of Yen

2008
Buildings 		
and 		
Structures
VehiclesAcquisition cost
Accumulated depreciation
Net leased property

¥102
55
¥ 47

¥647
287
¥360

MachineryandEquipment

Other
AssetsTotal¥20,221
10,083¥10,138

¥471
243
¥228

¥21,441
10,668¥10,773

Thousands of U.S. Dollars

2008
Buildings 		
and 		
Structures
VehiclesAcquisition cost
Accumulated depreciation
Net leased property$1,016545$ 471

MachineryandEquipment

Other
AssetsTotal$6,460 $201,824 $4,707 $214,007
2,870 100,635 2,429 106,479$3,590 $101,189 $2,278 $107,528
Millions of Yen

2007
Buildings 		
and 		
Structures Vehicles

Acquisition cost
Accumulated depreciation
Net leased property

¥99
44
¥55

¥503
146
¥357

MachineryandEquipment

Other
AssetsTotal¥19,501
7,869¥11,632

¥681
207
¥474

¥20,784
8,266¥12,518

Obligations under finance leases which included the imputed interest expense
portion, and noncancelable operating leases as of March 31, 2008 and 2007 wereas follows:

Due within one year
Due after one year
Total

Millions of Yen

Thousands of U.S. Dollars

2008

2008

Finance
Lease

Operating
Lease

Finance
Lease

OperatingLease¥ 4,152
6,621¥10,773

¥485
80
¥565

$ 41,439
66,089$107,528$4,843799$5,642Millions of Yen

2007
Due within one year
Due after one year
Total

Finance
Lease

OperatingLease¥ 4,149
8,369¥12,518¥ 528
586¥1,114(2) Lessor
Acquisition cost, accumulated depreciation, accumulated impairment loss and net
book value of leasing property as of March 31, 2008 and 2007 concerning thefinance leases were as follows:		Millions of Yen

Acquisition cost
Accumulated depreciation
Net leasing property

Thousands of
U.S. Dollars

2008

2007

2008

Leasing
Property

Leasing
Property

Leasing
Property¥34,597
13,796¥20,801¥27,358
10,725¥16,633$345,320
137,700$207,620

Future lease payments to be received on finance leases as of March 31, 2008
and 2007 were as follows:		Millions of Yen

Due within one year
Due after one year
Total

2008
¥ 7,460
15,034¥22,494

Thousands of
U.S. Dollars

2008$ 74,454
150,058$224,5122007¥ 5,891
12,092¥17,983

Lease income, depreciation and interest income as of March 31, 2008 and 2007
were as follows:		Millions of Yen

2008¥7,0386,036
1,297

Lease income
Depreciation
Interest income

Thousands of
U.S. Dollars

2008$70,251
60,246
12,9472007¥5,2044,746
748

11. CONTINGENT LIABILITIESContingent liabilities for guarantees and items of a similar nature at March 31, 2008
amounted to ¥31 million ($314 thousand) representing guarantees of loans of anunaffiliated company jointly and severally by the Company and 18 other unaffiliatedcompanies and ¥98 million ($976 thousand) as guarantees of loans of a non-­consolidated subsidiary.

12. NET INCOME PER SHARE
Reconciliation of the differences between basic and diluted net income per share(“EPS”) for the years ended March 31, 2008 and 2007 is as follows:
Millionsof Yen				Year Ended March 31, 2008
Net Income

Basic EPS—Net income available
to common shareholders
Effect of dilutive securities—
Convertible bonds
Diluted EPS—Net income forcomputation

Thousandsof Shares
Weightedaverage
Shares¥35,353443,02398

10,788

Yen

EPS¥79.80$0.80¥78.12$0.78¥35,451

453,811

Millionsof Yen				Year Ended March 31, 2007
Net Income

Thousandsof Shares
Weightedaverage
Shares

EPS¥33,813447,350¥75.5999

10,909¥33,912458,259

Basic EPS—Net income available
to common shareholders
Effect of dilutive securities—
Convertible bonds
Diluted EPS—Net income forcomputation

U.S. Dollars

Yen¥74.00

Annual Report 200841

13. SEGMENT INFORMATION
Information about industry segments, geographic segments and operating revenues to foreign customers of the Company and consolidated subsidiaries for the years ended March
31, 2008 and 2007 is as follows:(1) Industry Segments

Millions of Yen

2008
			
Delivery
BIZ-Logistics

Home 				Convenience
e-Business
Financial
Other

a. Operating revenues and operating income:Operating revenues to customers
Intersegment operating revenues	   Total operating revenues
Operating costs and expenses
Operating income

Eliminations
or Corporate¥ 981,142
38,2391,019,381
979,509¥ 39,872¥ 95,693
12,530108,223
103,075¥ 5,148¥48,938
15,19964,13763,480¥ 657¥32,795
18,49751,29245,064¥ 6,228¥ 51,458
6,900
58,35847,433¥ 10,925¥15,948		
75,893¥(167,258)
91,841(167,258)
59,701(140,468)¥32,140¥ (26,790)

1,225,974
1,157,794¥ 68,180b. Assets, depreciation and capital expenditures:
AssetsDepreciation
Capital expenditures¥ 525,683
31,149106,991¥ 49,613
1,056
1,437

¥24,940878
375¥25,709969
606¥193,469
9,852
13,503¥22,525838
1,912¥ 32,28030
8¥ 874,219
44,772
124,832

Eliminations
or Corporate

Consolidated

Consolidated¥1,225,974

Thousands of U.S. Dollars

2008
			
Delivery
BIZ-Logistics

Home 				Convenience
e-Business
Financial
Other

a. Operating revenues and operating income:Operating revenues to customers
Intersegment operating revenues	   Total operating revenues
Operating costs and expenses
Operating income$ 9,792,810
381,666
10,174,476
9,776,508$ 397,968$ 955,110
125,067
1,080,177
1,028,794$ 51,383$488,456
151,702640,158
633,603$ 6,555$327,329
184,619
511,948449,787$ 62,161$ 513,605
68,870582,475
473,435$ 109,040$159,179		
757,489 $(1,669,413)
916,668(1,669,413)
595,873(1,402,021)$320,795 $ (267,392)

12,236,489
11,555,979$ 680,510

b. Assets, depreciation and capital expenditures:
AssetsDepreciation
Capital expenditures$ 5,246,863
310,904
1,067,882$ 495,186
10,543
14,339$248,930
8,758
3,746

$256,605
9,667
6,048

$1,931,021
98,335
134,770$224,828
8,368
19,088322,183299
82$ 8,725,616
446,874
1,245,955

Eliminations
or Corporate

Consolidated$$12,236,489

Millions of Yen

2007
				
Delivery
BIZ-Logistics

Home 					Convenience
e-Business
Financial
Other

a. Operating revenues and operating income:Operating revenues to customers
Intersegment operating revenues	   Total operating revenues
Operating costs and expenses
Operating income¥934,607
36,123
970,730
927,428¥ 43,302¥ 91,392
12,644
104,036
100,241¥ 3,795¥44,983
14,02859,011
57,664¥ 1,347¥30,714
17,132
47,84642,817¥ 5,029¥ 48,430
6,666
55,096
46,047¥ 9,049¥11,442		
77,650¥(164,243)
89,092(164,243)
52,564(132,354)¥36,528¥ (31,889)

1,161,568
1,094,407¥ 67,161b. Assets, depreciation and capital expenditures:
AssetsDepreciation
Capital expenditures¥457,672
28,05933,132¥ 46,935
1,025
1,507

¥15,623500
408¥24,5291,150
605¥211,861
8,605
11,773¥19,711777
1,408¥ 829,721
40,15048,881¥ 53,39034
48¥1,161,568

Notes: Delivery:
Small-parcel delivery services such as Takkyubin (door-to-door parcel delivery) and Kuroneko Mail
BIZ-Logistics:
Intercompany logistics services, aimed at the B2B supply-chain management market
Home Convenience: Lifestyle support services intimately connected with the needs of local markets, such as moving and household effects delivery services
e-Business:
Information services targeted at the business market, including ASP services and the development of information systems
Financial:
Financial services targeted at business customers and consumers, such as settlement and collection
Other:
Group support service and shared service centering on vehicle maintenance, mainline transport, and staffing services
On September 1, 2007, Yamato Home Convenience Co., Ltd. succeeded a delivery business, installation of appliance business and moving service business of Moving Co.,
Ltd. The effect of this change was to increase operating revenue of “Home Convenience” by ¥8,776 million ($87,595 thousand) and operating cost of “Home Convenience”
by ¥9,276 million ($92,588 thousand) and decrease operating income of “Home Convenience” by ¥500 million ($4,994 thousand) for the year ended March 31, 2008.
		 As discussed in Note 2.f, effective April 1, 2007, the Company and its domestic subsidiaries changed its method of depreciation for property, plant and equipment. The
effect of this change was to decrease operating income of “Delivery” by ¥2,861 million ($28,546 thousand) for the year ended March 31, 2008. The effect for the otherindustry segments is immaterial.

42

YAMATO HOLDINGS CO., LTD.

(2) Geographic Segments
The geographic segments of the Company and consolidated subsidiaries for the years ended March 31, 2008 and 2007 are summarized as follows:
Millions of Yen

2008
					
Japan
U.S.A.
EuropeAsia

Operating revenues:
Outside customers 		
Interarea 		    Total operating revenues 		
Operating costs and expenses 		
Operating income 		
Assets 		¥1,201,726
5,821
1,207,547
1,139,607¥ 67,940¥ 803,258¥12,205
3,727
15,932
15,482¥ 450¥ 3,085¥4,051
1,930
5,981
5,922
¥ 59
¥1,992Eliminations
or Corporate¥ 7,992		
4,463¥(15,941)
12,455(15,941)
12,094(15,311)¥ 361¥ (630)¥ 5,115¥ 60,769

Consolidated¥1,225,974
1,225,974
1,157,794¥ 68,180¥ 874,219

Thousands of U.S. Dollars

2008
					
Japan
U.S.A.
EuropeAsia

Operating revenues:
Outside customers		
Interarea		    Total operating revenues		
Operating costs and expenses		
Operating income		
Assets 		$11,994,470
58,09812,052,568
11,374,460$ 678,108$ 8,017,354$121,819
37,202
159,021
154,524$ 4,497$ 30,792$40,436
19,26359,69959,115$ 584$19,882

Eliminations
or Corporate$ 79,764		
44,545$(159,108)
124,309(159,108)
120,705(152,825)$ 3,604$ (6,283)$ 51,052$ 606,536

Consolidated$12,236,489
12,236,489
11,555,979$ 680,510$ 8,725,616

Millions of Yen

2007
					
Japan
U.S.A.
EuropeAsia

Operating revenues:
Outside customers 		
Interarea 		    Total operating revenues 		
Operating costs and expenses 		
Operating income (loss) 		
Assets 		¥1,136,854
5,472
1,142,326
1,075,480¥ 66,846¥ 741,225¥13,932
3,458
17,39016,914¥ 476¥ 3,320¥3,373
1,636
5,009
5,164
¥ (155)¥1,523Eliminations
or Corporate¥ 7,409		
4,353¥(14,919)
11,762(14,919)
11,579(14,730)¥ 183¥ (189)¥ 4,930¥ 78,723

Consolidated¥1,161,568
1,161,568
1,094,407¥ 67,161¥ 829,721

Operating revenues and assets are summarized by geographic area based on the countries where subsidiaries are located.
(3) Operating Revenues to Foreign Customers
Operating revenues to foreign customers for the years ended March 31, 2008 and 2007 amounted to ¥26,123 million ($260,730 thousand) and ¥26,243 million, respectively.

14. SUBSEQUENT EVENT
Appropriations of Retained Earnings
The following appropriations of retained earnings at March 31, 2008 were approvedat the Company’s Board of Directors held on May 15, 2008:		Year-end cash dividends, ¥12.00 ($0.12) per share

Thousands ofMillions of Yen

U.S. Dollars¥5,318$53,084

Annual Report 200843

Independent Auditors’ Report

To the Board of Directors of
Yamato Holdings Co., Ltd.:We have audited the accompanying consolidated balance sheets of Yamato Holdings Co., Ltd. (the “Company”) and consolidated subsidiaries as of March 31, 2008 and 2007, and the related consolidated statements of income, changes in equity, and cash flows for the years
then ended, all expressed in Japanese yen. These consolidated financial statements are the responsibility of the Company’s management.
Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in Japan. Those standards require that we plan andperform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial
position of Yamato Holdings Co., Ltd. and consolidated subsidiaries as of March 31, 2008 and 2007, and the consolidated results of theiroperations and their cash flows for the years then ended in conformity with accounting principles generally accepted in Japan.
Our audits also comprehended the translation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, such translation
has been made in conformity with the basis stated in Note 1. Such U.S. dollar amounts are presented solely for the convenience of readers
outside Japan.

June 26, 200844

YAMATO HOLDINGS CO., LTD.

Corporate Data
(As of March 31, 2008)

Principal Shareholders

Head Office

Percentage of total
shares outstanding

Yamato Holdings Co., Ltd.
16-10, Ginza 2-chome, Chuo-ku, Tokyo
104-8125, Japan
Telephone: (03) 3541-4141
Facsimile: (03) 5565-3427

The Master Trust Bank of Japan, Ltd. (Trust Account)

6.55%

Japan Trustee Services Bank, Ltd. (Trust Account)

4.76%

Mizuho Bank, Ltd.

3.77%

State Street Bank and Trust Company

3.53%

Common Stock

Yamato Employees’ Shareholding Association

3.12%

Authorized: 1,787,541,000 shares
Issued: 457,309,400 shares

Nippon Life Insurance Company

2.68%

Meiji Yasuda Life Insurance Company

2.68%

Yamato Trading-Partner Shareholding Association

2.14%

OM04 SSB Client Omnibus

1.99%

Sumitomo Life Insurance Company

1.85%

Total

33.07%

Stock Exchange Listing
Tokyo Stock Exchange

Transfer Agent and Registrar
Mizuho Trust & Banking Co., Ltd.

Annual Meeting
The annual meeting of shareholders is normally held in June inTokyo, Japan.

Auditors
Deloitte Touche Tohmatsu(by Tohmatsu & Co., the Japanese member of Deloitte Touche
Tohmatsu)

Stock Price Range (Tokyo Stock Exchange)
(Yen)

(Yen)

3,000

20,00018,0002,500
16,0002,000

14,00012,0001,500
10,000
1,000

05/4

7

10

06/1

4

n Stock Price Range

710— Average

07/1

4

7

10

08/1

8,000

Nikkei Stock Average

Annual Report 200845

YAMATO HOLDINGS CO., LTD.

Annual Report 2008

Printed in Japan on recycled paper