REVITALIZINGAnnual Report 2004
Year ended March 31, 2004

Profile
Established in 1919, Yamato Transport Co., Ltd. is today a comprehensive transportation
services group with 54 subsidiaries and 4 affiliates. Major activities include Delivery, BIZLogistics, Home Convenience, e-Business and Financial. Takkyubin (door-to-door parcel delivery)
service, which was launched in 1976, is the company’s core business. Covering every part ofJapan, this business handled about 1 billion parcels during the past fiscal year. With a steadfast focus on creating services that meet specific customer needs, Yamato Transport has
introduced such innovations as Cool Takkyubin, Kuroneko Mail, Takkyubin Time Service and amoving service. Yamato Transport will continue to contribute to economic and social progress
through the refinement of Takkyubin services as a social infrastructure, the provision of evenmore convenient services and the development of revolutionary approaches to logistics.

Contents
Consolidated Financial Highlights ................................................... 1

Management’s Discussion and Analysis ..................................... 22

Message From the Management ...................................................... 2

Consolidated Balance Sheets .......................................................... 28

Discussion With the President .......................................................... 4

Consolidated Statements of Income ........................................... 30

Revitalizing ................................................................................................ 8

Consolidated Statements of

At a Glance ............................................................................................ 14

Shareholders’ Equity ......................................................................... 31

Highlights of the Year ........................................................................ 16

Consolidated Statements of Cash Flows ................................... 32

Environment Preservation Activities ............................................ 18

Notes to Consolidated Financial Statements .......................... 33

Directors and Auditors ....................................................................... 20

Independent Auditors’ Report ........................................................ 40

Six-Year Consolidated Financial Summary ................................ 21

Corporate Data ..................................................................................... 41

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

REVITALIZINGConsolidated Financial Highlights
Years Ended March 31

Thousands of
U.S. Dollars

Millions of Yen

Operating revenues
Operating costs
Selling, general andadministrative expenses
Income before income taxes
and minority interests
Income taxes
Net income

2004

2003

2002

2004

¥1,011,344
945,201¥972,135
896,023¥932,120
861,775$9,568,965
8,943,145

19,484

19,294

17,156

184,354

87,29337,51549,78391,06342,53848,502

49,90522,21727,512825,933
354,956
471,033

Yen
Per share of common stock:
Net income
Diluted net income
Cash dividends¥

107.51105.2018.00¥ 104.51
101.63
15.00

U.S. Dollars
¥

59.36
57.38
14.00

$

Thousands of
U.S. Dollars

Millions of Yen

Working capital

¥

1.02
1.00
0.17

74,803¥ 77,514¥ 84,630$ 707,753

Total shareholders’ equity

443,715406,306

364,806

4,198,269

Total assets

652,792

655,877

678,939

6,176,482

Capital expenditures

47,58742,59140,379450,252

Depreciation and amortization

35,66331,731

31,764

337,427

Note: U.S. dollar amounts have been translated, for convenience only, at the rate of ¥105.69 to U.S.$1.

Operating Revenues

Net Income (loss)

Net Income (loss) per Share(¥ Millions)(¥ Millions)1,200,000

50,0001,000,000

40,000800,000

30,000600,000

20,000400,000

10,000

(¥)
120
100
80
60
40
20

200,000

0

0

99

00

01

02

03

04

–10,000

0

99

00

01

02

03

04

–20

99

00

01

02

YAMATO TRANSPORT CO., LTD.

03

04

Annual Report 2004

1

REVITALIZING

Message From the Management

The Yamato Group is dedicated to refining its
Takkyubin (door-to-door parcel delivery)
service, developing revolutionary approaches
to logistics, and providing ever-moreconvenient services.

the first time in the Group’s history. Reflecting expenses

stand-alone units, and pursued greater administrative

related to restructuring of Takkyubin operations and invest-

efficiency, all with the aim of creating a system capable ofment to strengthen Kuroneko Mail, operating income de-generating sustainable growth. And although costs

clined 17.9% to ¥46,659 million (U.S.$441 million).

associated with structural reforms and renewing our

However, this was offset by write-backs from the reserve

Kuroneko Mail service put pressure on earnings, wefor retirement benefits associated with the switch to a newremained true to the corporate philosophy that has guided

Yamato Transport Co., Ltd. again faced an extremely

corporate pension system. Consequently, net income rose

operations for three decades: “Service First.” Ultimately, we

competitive operating environment in fiscal 2004, ended

2.6% to ¥49,783 million (U.S.$471 million).

chose to give priority to maintaining the quality of ourservices, even if that meant higher costs on the year.

March 31, 2004, as personal consumption remained weakdespite signs of economic recovery in Japan, and fees in thetruck transport industry showed no prospects for recovery.
Under these conditions, we refined our core delivery

Progress in Achieving
Medium-Term Plan Targets

We look forward to your continued support inthese endeavors.

In fiscal 2004, the Yamato Group continued to refine its

business under a plan to “reengineer our Takkyubin

Takkyubin business and strengthen Group management as

network” and further segment it to provide more detailed

called for in its current medium-term business plan,and satisfactory service to our customers. We also demar-

inaugurated in April 2002. As part of this effort, wecated lines of responsibility more clearly in each of ourincreased the number of our Takkyubin delivery centers to

Keiji Aritomi

deepen the roots of our service network in local

Chairmanbusinesses and spun off some business units to increase
the speed and accuracy of management

communities and to ensure that our services are always

decision-making. These activities resulted in aclose at hand for our customers. We also shifted toward a

4.0% rise in consolidated operating rev-

personnel structure based on small groups to better allow

enues to ¥1,011,344 million (U.S.$9,569

our employees to demonstrate their full abilities, sought toAtsushi Yamazaki

million), breaking the ¥1 trillion mark forensure that all of our businesses are capable of operating as

President

Atsushi Yamazaki
President

Keiji Aritomi
Chairman

2

YAMATO TRANSPORT CO., LTD.

Annual Report 2004

YAMATO TRANSPORT CO., LTD.

Annual Report 2004

3

REVITALIZING

Message From the Management

The Yamato Group is dedicated to refining its
Takkyubin (door-to-door parcel delivery)
service, developing revolutionary approaches
to logistics, and providing ever-moreconvenient services.

the first time in the Group’s history. Reflecting expenses

stand-alone units, and pursued greater administrative

related to restructuring of Takkyubin operations and invest-

efficiency, all with the aim of creating a system capable ofment to strengthen Kuroneko Mail, operating income de-generating sustainable growth. And although costs

clined 17.9% to ¥46,659 million (U.S.$441 million).

associated with structural reforms and renewing our

However, this was offset by write-backs from the reserve

Kuroneko Mail service put pressure on earnings, wefor retirement benefits associated with the switch to a newremained true to the corporate philosophy that has guided

Yamato Transport Co., Ltd. again faced an extremely

corporate pension system. Consequently, net income rose

operations for three decades: “Service First.” Ultimately, we

competitive operating environment in fiscal 2004, ended

2.6% to ¥49,783 million (U.S.$471 million).

chose to give priority to maintaining the quality of ourservices, even if that meant higher costs on the year.

March 31, 2004, as personal consumption remained weakdespite signs of economic recovery in Japan, and fees in thetruck transport industry showed no prospects for recovery.
Under these conditions, we refined our core delivery

Progress in Achieving
Medium-Term Plan Targets

We look forward to your continued support inthese endeavors.

In fiscal 2004, the Yamato Group continued to refine its

business under a plan to “reengineer our Takkyubin

Takkyubin business and strengthen Group management as

network” and further segment it to provide more detailed

called for in its current medium-term business plan,and satisfactory service to our customers. We also demar-

inaugurated in April 2002. As part of this effort, wecated lines of responsibility more clearly in each of ourincreased the number of our Takkyubin delivery centers to

Keiji Aritomi

deepen the roots of our service network in local

Chairmanbusinesses and spun off some business units to increase
the speed and accuracy of management

communities and to ensure that our services are always

decision-making. These activities resulted in aclose at hand for our customers. We also shifted toward a

4.0% rise in consolidated operating rev-

personnel structure based on small groups to better allow

enues to ¥1,011,344 million (U.S.$9,569

our employees to demonstrate their full abilities, sought toAtsushi Yamazaki

million), breaking the ¥1 trillion mark forensure that all of our businesses are capable of operating as

President

Atsushi Yamazaki
President

Keiji Aritomi
Chairman

2

YAMATO TRANSPORT CO., LTD.

Annual Report 2004

YAMATO TRANSPORT CO., LTD.

Annual Report 2004

3

REVITALIZINGDiscussion With the President

In fiscal 2004, the second year of our current
three-year-plan, we executed various plans
aimed at reengineering our Takkyubin
network, rejuvenating Kuroneko Mail, andrefining Group operations. The term also
marked several milestones in the Group’s
history, including the handling of more than
1 billion packages in a single year and theachievement of consolidated operating
revenues in excess of ¥1 trillion.

Q uestion

revamping our organization, personnel structure, andto transform our administrative procedures and the nature

Takkyubin network without any decline in service qualityof our services in conjunction with an overhaul of ourbased on a long-term strategy of rolling out higher-quality,business structure, all with the goal of providing ourservices. We decided to place priority on these efforts out ofcustomers with higher value-added solutions.

Q uestioncustomer satisfaction with a service lineup and level ofbe privatized and not merely become a public corporation

How will the service lineup bedifferent following construction of
the new system?

quality previously unachievable will be reflected in earnings.

as a threat to our market dominance. We therefore

The reengineering of our Takkyubin network involves the

We believe that this emphasis on quality while retoolingembarked on a plan to reengineer our organization,

expansion of delivery centers and the consolidation of indi-

operations was instrumental in preventing service frompersonnel structure, and logistics network to bring us closer

rect operations. Simultaneously, we aim to grow earnings

deteriorating during the year-end gift-giving season in

to our customers and make Yamato the clear best choice

by increasing handling volume and improve margins by

December, resulting in delivery volume exceeding the level infor consumers in parcel delivery. Starting in April 2003, weheightening operating efficiency.

the previous year.

shifted to an organizational structure based on small

confidence that, when our new network is completed,

Moreover, we recognized the potential for Japan Post to

Our goal in expanding the number of delivery centers

We view the decline in operating income in fiscal 2004

groups, that is, “Takkyubin area centers”. We have madewas to design our new network so that the average accessas the result of growth-oriented “creative destruction.” Inprogress in reforms in other areas as well, including thetime from the delivery center to the customer is 10 minutes.

What is your assessment of theoperating environment and the Group’sbusiness results for fiscal 2004?

other words, this decline in operating income is in no way

introduction of a new personnel system in May 2002.

Underpinning this concept is a shift toward a larger

in a period where earnings are growing and we have reserve

down our reengineering efforts. Because incremental

are confident that a high density service network will

The establishment of Japan Post on April 1, 2003, further

capacity as a company, meaning that this decrease reflects

modifications strain local operations, we think it isenhance service quality and translate into higher market

intensified competition within the parcel delivery industry,

nothing more than proactive structural enhancements andpreferable to carry out changes all at once on a nationwide

share over the longer term. As for new services, we haveinvestment aimed at future expansion.

basis. Also, we think it is crucial to construct our new

extended the operating hours of our service departments

ment. Still, our determined efforts to expand business trans-

infrastructure at a pace that is faster than the speed of

to provide more detailed customer support and satisfy

lated into higher handling volume and operating revenues.

change in the operating environment. Furthermore, given

immediate household needs. We believe that this will

indications that the economy is improving, we believe it isenable us to better address demand for quick transport,

important to focus on profit growth amid currently

whether it be business-to-business or business-to-individual.

favorable conditions, including rising handling volume for

We see one untapped market as the delivery of in-house

Kuroneko Mail. Although we could achieve earnings in line

articles that companies currently transport on their own.

revenues, was a reflection of investment to reengineer our

How much progress has been madetoward reengineering the Takkyubin
network?

with our plan by ignoring the pace of reform and focusing

By tailoring solutions according to the type of article and

Takkyubin network. To prevent deterioration in service

The factors that prompted us to reengineer the Company’s

exclusively on profitability, more critical in our view is torequired pickup times, we think it is possible to convince

quality, the migration to the new system required the

Takkyubin network were slowing year-on-year growth intake care not to fall behind the curve in terms ofcompanies to outsource the inter-office delivery of documents

deployment of personnel and other corporate resources tohandling volume and the ongoing decline in average unit

improvement in the operating environment. As such, weand other such items.

support both the old and new systems, and this causeddelivery fees. Although our handling volume has exhibited

have expedited the concentration of corporate resources to

expenses to be higher than we had expected. This

stable growth to now, the parcel delivery business as ahasten the timing of the next business upswing.

reengineering is the first major overhaul of our Takkyubin

whole is maturing, prompting us to reengineer our network,

We aim to have 5,000 delivery centers when our

strategy of controlling the market for downstream logistics

system since its inception and is aimed at securing future

tap latent markets, and help rejuvenate the overall sector toreengineering activities are completed at the end of March(i.e., delivery to the final recipient) and securing an evengrowth. Basically, we are building necessary infrastructure.

head off a decline phase. We also recognized that we2008. After that we plan to continue expanding ourmore solid industry position.

We think many will find it laudable that we are totallyneeded to become more competitive. We therefore decided

network at a pace of 600 locations per year for the

resulting in the continuation of a harsh operating environ-

We attribute this success largely to revenue growth associated with the modification of Kuroneko Mail into a moreuser-friendly service in April 2003.
The decline in operating income, despite higher

an indication of diminished earnings power. Actually, we are

Q uestion

In fiscal 2004, we did not allow rising costs to slow

network comprising a greater number of smaller hubs. We

We view increasing the density of our network coverageand broadening our service menu as an integral part of our

subsequent four years.

4

YAMATO TRANSPORT CO., LTD.

Annual Report 2004

YAMATO TRANSPORT CO., LTD.

Annual Report 2004

5

REVITALIZINGDiscussion With the President

In fiscal 2004, the second year of our current
three-year-plan, we executed various plans
aimed at reengineering our Takkyubin
network, rejuvenating Kuroneko Mail, andrefining Group operations. The term also
marked several milestones in the Group’s
history, including the handling of more than
1 billion packages in a single year and theachievement of consolidated operating
revenues in excess of ¥1 trillion.

Q uestion

revamping our organization, personnel structure, andto transform our administrative procedures and the nature

Takkyubin network without any decline in service qualityof our services in conjunction with an overhaul of ourbased on a long-term strategy of rolling out higher-quality,business structure, all with the goal of providing ourservices. We decided to place priority on these efforts out ofcustomers with higher value-added solutions.

Q uestioncustomer satisfaction with a service lineup and level ofbe privatized and not merely become a public corporation

How will the service lineup bedifferent following construction of
the new system?

quality previously unachievable will be reflected in earnings.

as a threat to our market dominance. We therefore

The reengineering of our Takkyubin network involves the

We believe that this emphasis on quality while retoolingembarked on a plan to reengineer our organization,

expansion of delivery centers and the consolidation of indi-

operations was instrumental in preventing service frompersonnel structure, and logistics network to bring us closer

rect operations. Simultaneously, we aim to grow earnings

deteriorating during the year-end gift-giving season in

to our customers and make Yamato the clear best choice

by increasing handling volume and improve margins by

December, resulting in delivery volume exceeding the level infor consumers in parcel delivery. Starting in April 2003, weheightening operating efficiency.

the previous year.

shifted to an organizational structure based on small

confidence that, when our new network is completed,

Moreover, we recognized the potential for Japan Post to

Our goal in expanding the number of delivery centers

We view the decline in operating income in fiscal 2004

groups, that is, “Takkyubin area centers”. We have madewas to design our new network so that the average accessas the result of growth-oriented “creative destruction.” Inprogress in reforms in other areas as well, including thetime from the delivery center to the customer is 10 minutes.

What is your assessment of theoperating environment and the Group’sbusiness results for fiscal 2004?

other words, this decline in operating income is in no way

introduction of a new personnel system in May 2002.

Underpinning this concept is a shift toward a larger

in a period where earnings are growing and we have reserve

down our reengineering efforts. Because incremental

are confident that a high density service network will

The establishment of Japan Post on April 1, 2003, further

capacity as a company, meaning that this decrease reflects

modifications strain local operations, we think it isenhance service quality and translate into higher market

intensified competition within the parcel delivery industry,

nothing more than proactive structural enhancements andpreferable to carry out changes all at once on a nationwide

share over the longer term. As for new services, we haveinvestment aimed at future expansion.

basis. Also, we think it is crucial to construct our new

extended the operating hours of our service departments

ment. Still, our determined efforts to expand business trans-

infrastructure at a pace that is faster than the speed of

to provide more detailed customer support and satisfy

lated into higher handling volume and operating revenues.

change in the operating environment. Furthermore, given

immediate household needs. We believe that this will

indications that the economy is improving, we believe it isenable us to better address demand for quick transport,

important to focus on profit growth amid currently

whether it be business-to-business or business-to-individual.

favorable conditions, including rising handling volume for

We see one untapped market as the delivery of in-house

Kuroneko Mail. Although we could achieve earnings in line

articles that companies currently transport on their own.

revenues, was a reflection of investment to reengineer our

How much progress has been madetoward reengineering the Takkyubin
network?

with our plan by ignoring the pace of reform and focusing

By tailoring solutions according to the type of article and

Takkyubin network. To prevent deterioration in service

The factors that prompted us to reengineer the Company’s

exclusively on profitability, more critical in our view is torequired pickup times, we think it is possible to convince

quality, the migration to the new system required the

Takkyubin network were slowing year-on-year growth intake care not to fall behind the curve in terms ofcompanies to outsource the inter-office delivery of documents

deployment of personnel and other corporate resources tohandling volume and the ongoing decline in average unit

improvement in the operating environment. As such, weand other such items.

support both the old and new systems, and this causeddelivery fees. Although our handling volume has exhibited

have expedited the concentration of corporate resources to

expenses to be higher than we had expected. This

stable growth to now, the parcel delivery business as ahasten the timing of the next business upswing.

reengineering is the first major overhaul of our Takkyubin

whole is maturing, prompting us to reengineer our network,

We aim to have 5,000 delivery centers when our

strategy of controlling the market for downstream logistics

system since its inception and is aimed at securing future

tap latent markets, and help rejuvenate the overall sector toreengineering activities are completed at the end of March(i.e., delivery to the final recipient) and securing an evengrowth. Basically, we are building necessary infrastructure.

head off a decline phase. We also recognized that we2008. After that we plan to continue expanding ourmore solid industry position.

We think many will find it laudable that we are totallyneeded to become more competitive. We therefore decided

network at a pace of 600 locations per year for the

resulting in the continuation of a harsh operating environ-

We attribute this success largely to revenue growth associated with the modification of Kuroneko Mail into a moreuser-friendly service in April 2003.
The decline in operating income, despite higher

an indication of diminished earnings power. Actually, we are

Q uestion

In fiscal 2004, we did not allow rising costs to slow

network comprising a greater number of smaller hubs. We

We view increasing the density of our network coverageand broadening our service menu as an integral part of our

subsequent four years.

4

YAMATO TRANSPORT CO., LTD.

Annual Report 2004

YAMATO TRANSPORT CO., LTD.

Annual Report 2004

5

REVITALIZING

passed at the June 2004 General Meeting of Shareholders.

In the BIZ-Logistics business, we upgraded our systems

Q uestion

for responding to diverse customer needs, including export/
import services encompassing the order stage throughHow much progress has been made inachieving the targets laid out in the
Company’s current three-yearbusiness plan?

inventory management. The thrust of our efforts here

Our current three-year-plan represents the first medium-Q uestion

One such resolution was the introduction of an Executive
Officer System, which is aimed at clearly delineating corporate
decision-making, oversight, and executive functions. Others

to offer improved business-to-business logistics solutions. In

In fiscal 2004, what did Yamato do tofulfill its obligations in terms ofenvironmental issues, corporate
governance, and corporate social
responsibility?

term plan for the Yamato Group as a whole. It calls for a

the home convenience business, we worked to provide vari-

Due to our societal role as a transport company, Yamato

performance. We are confident that these measures will enable

review of the Company’s corporate resources andous services, tailored to regional needs, that make life more

maintains a large fleet of delivery vehicles, and we have always

the Company to act more speedily and effectively with regard

accumulated know-how, the construction of a new businessconvenient for individuals and families, with the goal of being

been proactive in reducing their environmental impact. In

to shifts in the operating environment as well as increase themodel that skillfully combines these factors in fields where

viewed by customers as a close partner in eliminating every-

recent years, we have been shifting our fleet to low-transparency of management and the financial health of thethe Group excels, and an increased focus on Group

day hassles around the home.

environmental-impact hybrid vehicles. In fiscal 2005, we plan

Group as a whole.

management. Under the plan, which is aimed at wholesale

involved leveraging our warehouse operations, which we havefine tuned over many years by responding to the needs ofcorporate cargo owners, and utilizing our nationwide network

In our e-Business, we used systems built on the know-

to introduce another 516 of these vehicles. On the employee

included a reduction in the number of Board members, theabolition of the system for recognition of past service, and thestandardization of a system whereby annual compensation isbased on the Company’s earnings and individual employee

We also believe that compliance is crucial to therealignment of our operations, we have refined the roles of

how of Yamato System Development Co., Ltd., whichside, we have introduced a company-wide driver-training

Company’s business management being trusted by all

the various Group companies that operate our nationwide

single-handedly designs, develops, and operates the

program called “Eco-Drive.” Aimed at boosting fuel efficiency

stakeholders. In January 2003, we established at the Head

network and logistics infrastructure. We have also

Company’s transportation-related IT systems, as a platform

and increasing vehicle operating safety, this program features

Office a Compliance Committee chaired by the president. In

segmented our business domains for better management

to develop various outsourcing and business software andactivities to improve driving techniques and stresses theJanuary 2004, we conducted activities at all offices,within the Group.

to market software packages. Our financial business

importance of maintaining constant operating speeds, utilizing

business headquarters, and affiliated companies to reinforce

We have five profit units: the Delivery business, the BIZ-

encompasses a wide variety of services, ranging fromlow gears before stopping, and turning off engines when

the importance of compliance with all laws and regulations

Logistics business, the Home Convenience business, e-Business,collection to funding. In fiscal 2004, we leveraged ourvehicles are not moving (i.e., eliminating idling).

in sustaining the Yamato brand.

and the Financial business. The operations that support theseaccumulated strengths in lending to make further inroads

profit centers are broadly categorized as Group support busi-

into the settlement and collection agency businesses.

In the area of corporate governance, the Company has

The Yamato Group’s business activities center on theinvested decision-making, executive, and oversightprovision of social infrastructure in the form of a

At this point, we see no obstacles to the reengineering

authority in the Board of Directors, Executive Board, andcomprehensive logistics network. On a more personal level,such as servicing rolling stock and conducting trainingof our Takkyubin network as our delivery business moves

Group Joint Management Council. In addition to making

the Company offers services that help people lead moreprograms, they also operate as independent business units andforward as planned. As such, not only do we expect thedecisions on vital matters, these bodies delegate

convenient and abundant lives. As such, we believe that ourdo business with external customers. Our objective is toincrease in the number of Yamato Takkyubin delivery

responsibilities to each branch and business unit for flexible,

business, by its very nature, contributes to society in a very

convert these cost centers to profit centers and thereby benefit

centers to generate certain synergies, we aim to roll out

responsive management. Also, the Company has an auditing

significant way. We, at the Yamato Group, are steadfastly

society by creating new corporate value. Another component

new services in our non-delivery businesses.

system comprising two full-time in-house auditors and two

committed to contributing to making the world a moreto this strategy is to maximize Group synergies. To accomplish

outside auditors. In addition to attending criticalconvenient and better place to live for everyone.

this, in fiscal 2004, we pursued reorganization and integration

management meetings, these auditors monitor the appro-as part of a move to establish each operation as an indepen-

priateness of the business and affairs of the Company anddent business and took steps to ensure that each business isotherwise work to safeguard the Company’s financial healthcapable of surviving on a stand-alone basis. Within thisand enhance its public trust. In conjunction with

context, we gave more authority to divisional managers andreengineering of the Company’s Takkyubin network and in

set up a new management system that facilitates speedier andline with management forms, several key resolutions were

nesses. These businesses not only perform in-house functions,

August 2004
Atsushi Yamazaki
President

more accurate decision-making.

6

YAMATO TRANSPORT CO., LTD.

Annual Report 2004

YAMATO TRANSPORT CO., LTD.

Annual Report 2004

7

REVITALIZING

passed at the June 2004 General Meeting of Shareholders.

In the BIZ-Logistics business, we upgraded our systems

Q uestion

for responding to diverse customer needs, including export/
import services encompassing the order stage throughHow much progress has been made inachieving the targets laid out in the
Company’s current three-yearbusiness plan?

inventory management. The thrust of our efforts here

Our current three-year-plan represents the first medium-Q uestion

One such resolution was the introduction of an Executive
Officer System, which is aimed at clearly delineating corporate
decision-making, oversight, and executive functions. Others

to offer improved business-to-business logistics solutions. In

In fiscal 2004, what did Yamato do tofulfill its obligations in terms ofenvironmental issues, corporate
governance, and corporate social
responsibility?

term plan for the Yamato Group as a whole. It calls for a

the home convenience business, we worked to provide vari-

Due to our societal role as a transport company, Yamato

performance. We are confident that these measures will enable

review of the Company’s corporate resources andous services, tailored to regional needs, that make life more

maintains a large fleet of delivery vehicles, and we have always

the Company to act more speedily and effectively with regard

accumulated know-how, the construction of a new businessconvenient for individuals and families, with the goal of being

been proactive in reducing their environmental impact. In

to shifts in the operating environment as well as increase themodel that skillfully combines these factors in fields where

viewed by customers as a close partner in eliminating every-

recent years, we have been shifting our fleet to low-transparency of management and the financial health of thethe Group excels, and an increased focus on Group

day hassles around the home.

environmental-impact hybrid vehicles. In fiscal 2005, we plan

Group as a whole.

management. Under the plan, which is aimed at wholesale

involved leveraging our warehouse operations, which we havefine tuned over many years by responding to the needs ofcorporate cargo owners, and utilizing our nationwide network

In our e-Business, we used systems built on the know-

to introduce another 516 of these vehicles. On the employee

included a reduction in the number of Board members, theabolition of the system for recognition of past service, and thestandardization of a system whereby annual compensation isbased on the Company’s earnings and individual employee

We also believe that compliance is crucial to therealignment of our operations, we have refined the roles of

how of Yamato System Development Co., Ltd., whichside, we have introduced a company-wide driver-training

Company’s business management being trusted by all

the various Group companies that operate our nationwide

single-handedly designs, develops, and operates the

program called “Eco-Drive.” Aimed at boosting fuel efficiency

stakeholders. In January 2003, we established at the Head

network and logistics infrastructure. We have also

Company’s transportation-related IT systems, as a platform

and increasing vehicle operating safety, this program features

Office a Compliance Committee chaired by the president. In

segmented our business domains for better management

to develop various outsourcing and business software andactivities to improve driving techniques and stresses theJanuary 2004, we conducted activities at all offices,within the Group.

to market software packages. Our financial business

importance of maintaining constant operating speeds, utilizing

business headquarters, and affiliated companies to reinforce

We have five profit units: the Delivery business, the BIZ-

encompasses a wide variety of services, ranging fromlow gears before stopping, and turning off engines when

the importance of compliance with all laws and regulations

Logistics business, the Home Convenience business, e-Business,collection to funding. In fiscal 2004, we leveraged ourvehicles are not moving (i.e., eliminating idling).

in sustaining the Yamato brand.

and the Financial business. The operations that support theseaccumulated strengths in lending to make further inroads

profit centers are broadly categorized as Group support busi-

into the settlement and collection agency businesses.

In the area of corporate governance, the Company has

The Yamato Group’s business activities center on theinvested decision-making, executive, and oversightprovision of social infrastructure in the form of a

At this point, we see no obstacles to the reengineering

authority in the Board of Directors, Executive Board, andcomprehensive logistics network. On a more personal level,such as servicing rolling stock and conducting trainingof our Takkyubin network as our delivery business moves

Group Joint Management Council. In addition to making

the Company offers services that help people lead moreprograms, they also operate as independent business units andforward as planned. As such, not only do we expect thedecisions on vital matters, these bodies delegate

convenient and abundant lives. As such, we believe that ourdo business with external customers. Our objective is toincrease in the number of Yamato Takkyubin delivery

responsibilities to each branch and business unit for flexible,

business, by its very nature, contributes to society in a very

convert these cost centers to profit centers and thereby benefit

centers to generate certain synergies, we aim to roll out

responsive management. Also, the Company has an auditing

significant way. We, at the Yamato Group, are steadfastly

society by creating new corporate value. Another component

new services in our non-delivery businesses.

system comprising two full-time in-house auditors and two

committed to contributing to making the world a moreto this strategy is to maximize Group synergies. To accomplish

outside auditors. In addition to attending criticalconvenient and better place to live for everyone.

this, in fiscal 2004, we pursued reorganization and integration

management meetings, these auditors monitor the appro-as part of a move to establish each operation as an indepen-

priateness of the business and affairs of the Company anddent business and took steps to ensure that each business isotherwise work to safeguard the Company’s financial healthcapable of surviving on a stand-alone basis. Within thisand enhance its public trust. In conjunction with

context, we gave more authority to divisional managers andreengineering of the Company’s Takkyubin network and in

set up a new management system that facilitates speedier andline with management forms, several key resolutions were

nesses. These businesses not only perform in-house functions,

August 2004
Atsushi Yamazaki
President

more accurate decision-making.

6

YAMATO TRANSPORT CO., LTD.

Annual Report 2004

YAMATO TRANSPORT CO., LTD.

Annual Report 2004

7

Sales Offices (shops) / Parcel Handling Agents (1,000 shops)

7,759
309.6

2,311
2000

312.5

316.3

317.6

2,775

3,003

3,279

2001

2002

2003

307.0

2004

▼
▼

▼
▼

▼
▼

Increasing the Number of Delivery
Centers

the new system, however, administrative and sorting

one-half to one-third the scale of existing locations, with aand logistics terminals while conducting a complete review

operations will be carried out separately from delivery

supervisor assigned to each business area. As fiscal 2004

of internal operations. This situation has resulted in varia-

In April 2003, Yamato Transport embarked on a plan tocenters, which will focus exclusively on customer service

marked the beginning of our transition to the new system,

tions in proficiency among staff members. Moreover, wesegment its Takkyubin service areas and service centers. The

and thus be converted into strategic business bases. To

not only did we incur costs associated with the opening of

have made reinforcements in light of the risk that service

related organizational reforms include a shift to smaller

increase efficiency, administrative and sorting operations

new delivery centers, we invested considerable amounts in IT

quality might suffer under a new system that is untested byoperating units, centered on our service departments, towill be consolidated and shifted to our top 71 logistics

and call centers necessary to consolidate administrative

the heavy shipment volumes of the summer/winter gift-sustain a high level of employee motivation. Anotherterminals around Japan. As of March 31, 2004, we had

operations. Although the build-out of our network to 5,000

giving seasons. Consequently, operating expenses, mainlycomponent of this plan is the solidification of our businesscompleted selection of the top 71 terminals and had 2,675

delivery centers will require additional investment costs,

personnel costs, have risen. However, we conducted abase by increasing the number of delivery centers. Goingdelivery centers, an increase of 363 such centers on thecentered on expenditures related to the ongoing opening ofreview of the system at the end of fiscal 2004 and as aforward, we plan to grant more autonomy within thisyear. Our plan is to have 3,300 delivery centers by the end

delivery centers, we expect overall investment to stabilize as

result reduced the number of full-time administrative

segmented organization and expand the number of deliveryof March 2005 and expand the number by approximately

factors causing sharp cost increases drop out of the picture.

supervisors. We expect to take another step toward a newcenters from 2,600 to 5,000 by fiscal 2008 (ending March

600 or more locations each year through fiscal 2008.

growth phase in fiscal 2005, when we expect administrative

Increasing Administrative Efficiency

2008). Simultaneously we are revamping the internal

8

▼
▼

▼
▼

REVITALIZING For Our Network

structures that support our delivery business to gain greater

Investment Plan

We are shifting administrative and sorting functions to ourefficiencies. Previously, each delivery center had its own

Under the new system, each organizational segment will be

top logistics terminals to consolidate indirect operations. As

administrative, sorting, delivery, and sales functions. Under

comprised of smaller delivery centers ranging in size froman interim measure, we are staffing both business centers

YAMATO TRANSPORT CO., LTD.

Annual Report 2004

efficiencies to start emerging.

YAMATO TRANSPORT CO., LTD.

Annual Report 2004

9

Sales Offices (shops) / Parcel Handling Agents (1,000 shops)

7,759
309.6

2,311
2000

312.5

316.3

317.6

2,775

3,003

3,279

2001

2002

2003

307.0

2004

▼
▼

▼
▼

▼
▼

Increasing the Number of Delivery
Centers

the new system, however, administrative and sorting

one-half to one-third the scale of existing locations, with aand logistics terminals while conducting a complete review

operations will be carried out separately from delivery

supervisor assigned to each business area. As fiscal 2004

of internal operations. This situation has resulted in varia-

In April 2003, Yamato Transport embarked on a plan tocenters, which will focus exclusively on customer service

marked the beginning of our transition to the new system,

tions in proficiency among staff members. Moreover, wesegment its Takkyubin service areas and service centers. The

and thus be converted into strategic business bases. To

not only did we incur costs associated with the opening of

have made reinforcements in light of the risk that service

related organizational reforms include a shift to smaller

increase efficiency, administrative and sorting operations

new delivery centers, we invested considerable amounts in IT

quality might suffer under a new system that is untested byoperating units, centered on our service departments, towill be consolidated and shifted to our top 71 logistics

and call centers necessary to consolidate administrative

the heavy shipment volumes of the summer/winter gift-sustain a high level of employee motivation. Anotherterminals around Japan. As of March 31, 2004, we had

operations. Although the build-out of our network to 5,000

giving seasons. Consequently, operating expenses, mainlycomponent of this plan is the solidification of our businesscompleted selection of the top 71 terminals and had 2,675

delivery centers will require additional investment costs,

personnel costs, have risen. However, we conducted abase by increasing the number of delivery centers. Goingdelivery centers, an increase of 363 such centers on thecentered on expenditures related to the ongoing opening ofreview of the system at the end of fiscal 2004 and as aforward, we plan to grant more autonomy within thisyear. Our plan is to have 3,300 delivery centers by the end

delivery centers, we expect overall investment to stabilize as

result reduced the number of full-time administrative

segmented organization and expand the number of deliveryof March 2005 and expand the number by approximately

factors causing sharp cost increases drop out of the picture.

supervisors. We expect to take another step toward a newcenters from 2,600 to 5,000 by fiscal 2008 (ending March

600 or more locations each year through fiscal 2008.

growth phase in fiscal 2005, when we expect administrative

Increasing Administrative Efficiency

2008). Simultaneously we are revamping the internal

8

▼
▼

▼
▼

REVITALIZING For Our Network

structures that support our delivery business to gain greater

Investment Plan

We are shifting administrative and sorting functions to ourefficiencies. Previously, each delivery center had its own

Under the new system, each organizational segment will be

top logistics terminals to consolidate indirect operations. As

administrative, sorting, delivery, and sales functions. Under

comprised of smaller delivery centers ranging in size froman interim measure, we are staffing both business centers

YAMATO TRANSPORT CO., LTD.

Annual Report 2004

efficiencies to start emerging.

YAMATO TRANSPORT CO., LTD.

Annual Report 20049

Kuroneko Mail Service (10 thousand parcels)
99,43660,643

2003/3

2004/3

▼
▼

▼
▼

▼
▼

▼
▼

▼
▼

REVITALIZING For Our Service
Overview of Kuroneko Mail Service
and Development of New Demand

elimination of the need to insert contents into fixed-size

Evolution of Delivery Services

By ferrying parcels on planes traveling at 700km/hour, weenvelops if address labels are affixed. As a result, handling

Historically, makers stocked inventories of manufactured

are able to offer next-day service to Hokkaido.

In March 2003, the Ministry of Public Management, Home

volume has increased dramatically.

goods based on projected demand, with retailers displaying

We have also designed our new network so that the

Affairs, Posts and Telecommunications updated its policy

The elimination of the need for a receipt stamp,

the goods until sold, forcing them to also hold inventories.

average access time from delivery center to customer is 10

regarding the treatment of certain materials as correspon-traditionally required for matter delivered by Takkyubin,

The emergence of revolutionary Takkyubin services paved

minutes. Shorter access times mean shorter drive times, anddence, ruling that direct mail distributed in unspecified

satisfied market needs for company-to-household delivery

the way for mail order sales that required neither stores nor

with this saved time, drivers can provide more value-added

numbers does not fall under the category of correspon-of direct mail. As the number of people in Japan that receive

inventories, which substantially boosted corporate

services. We believe that this, combined with the enhance-

dence, clearing the way for private firms to handle this typedirect mail is one-seventh of that in the United States andoperating efficiency.

ment of our core transport system into a high-densityof mail. Yamato seized this opportunity to renew its

one-half of that in Europe, we fully expect the domestic

Today, although next-day Takkyubin delivery is taken

Kuroneko Mail service, revising it to make customer conve-

direct mail market to expand going forward. We think thefor granted, the Yamato Group is pushing forward with thehave ordinarily transported articles themselves, and wenience the top priority. For example, in the market for the

potential market for Kuroneko Mail is very substantial, taking

next revolution in delivery services to make them eventhink the potential in this end of the market is fairly

delivery of magazines and catalogs to mailboxes, we began

into account latent corporate demand and the prospects forfaster and more convenient. As part of this effort, we insti-

substantial. As with conventional Takkyubin services, weoffering delivery for ¥80 per A4-size item, next-day delivery

acquiring existing demand. Following service modifications,tuted the industry’s first late-night flight between Hokkaido

think that infrastructure upgrades will provide previously(excluding some regions), and delivery notification. The

Kuroneko Mail handling volume showed remarkable growthand Tokyo to launch an ultra-fast Takkyubin service cover-unimagined methods of utilization and the opportunity toservice received high marks from the market for its conve-

in fiscal 2004, rising 64.0% from the previous fiscal year.

ing Tokyo and seven other prefectures in the Kanto region.

create high-growth markets.

network, will generate demand from individuals who would

nience, such as its more refined volume and price bands and

10

YAMATO TRANSPORT CO., LTD.

Annual Report 2004

YAMATO TRANSPORT CO., LTD.

Annual Report 200411

Kuroneko Mail Service (10 thousand parcels)
99,43660,643

2003/3

2004/3

▼
▼

▼
▼

▼
▼

▼
▼

▼
▼

REVITALIZING For Our Service
Overview of Kuroneko Mail Service
and Development of New Demand

elimination of the need to insert contents into fixed-size

Evolution of Delivery Services

By ferrying parcels on planes traveling at 700km/hour, weenvelops if address labels are affixed. As a result, handling

Historically, makers stocked inventories of manufactured

are able to offer next-day service to Hokkaido.

In March 2003, the Ministry of Public Management, Home

volume has increased dramatically.

goods based on projected demand, with retailers displaying

We have also designed our new network so that the

Affairs, Posts and Telecommunications updated its policy

The elimination of the need for a receipt stamp,

the goods until sold, forcing them to also hold inventories.

average access time from delivery center to customer is 10

regarding the treatment of certain materials as correspon-traditionally required for matter delivered by Takkyubin,

The emergence of revolutionary Takkyubin services paved

minutes. Shorter access times mean shorter drive times, anddence, ruling that direct mail distributed in unspecified

satisfied market needs for company-to-household delivery

the way for mail order sales that required neither stores nor

with this saved time, drivers can provide more value-added

numbers does not fall under the category of correspon-of direct mail. As the number of people in Japan that receive

inventories, which substantially boosted corporate

services. We believe that this, combined with the enhance-

dence, clearing the way for private firms to handle this typedirect mail is one-seventh of that in the United States andoperating efficiency.

ment of our core transport system into a high-densityof mail. Yamato seized this opportunity to renew its

one-half of that in Europe, we fully expect the domestic

Today, although next-day Takkyubin delivery is taken

Kuroneko Mail service, revising it to make customer conve-

direct mail market to expand going forward. We think thefor granted, the Yamato Group is pushing forward with thehave ordinarily transported articles themselves, and wenience the top priority. For example, in the market for the

potential market for Kuroneko Mail is very substantial, taking

next revolution in delivery services to make them eventhink the potential in this end of the market is fairly

delivery of magazines and catalogs to mailboxes, we began

into account latent corporate demand and the prospects forfaster and more convenient. As part of this effort, we insti-

substantial. As with conventional Takkyubin services, weoffering delivery for ¥80 per A4-size item, next-day delivery

acquiring existing demand. Following service modifications,tuted the industry’s first late-night flight between Hokkaido

think that infrastructure upgrades will provide previously(excluding some regions), and delivery notification. The

Kuroneko Mail handling volume showed remarkable growthand Tokyo to launch an ultra-fast Takkyubin service cover-unimagined methods of utilization and the opportunity toservice received high marks from the market for its conve-

in fiscal 2004, rising 64.0% from the previous fiscal year.

ing Tokyo and seven other prefectures in the Kanto region.

create high-growth markets.

network, will generate demand from individuals who would

nience, such as its more refined volume and price bands and

10

YAMATO TRANSPORT CO., LTD.

Annual Report 2004

YAMATO TRANSPORT CO., LTD.

Annual Report 2004

11

Group Business Formation

DeliveryBusiness

BIZLogistics
Business

Home
Convenience
Business

e-Business

FinancialBusiness

▼
▼

▼
▼

▼
▼

Enhancing Corporate Strength
Through Business Formation

system, requiring advanced information technologies. As aoutsourcing services), and Yamato System Development

the Yamato Group as a whole to provide its customers withresult, we have very sophisticated system development/

Co., Ltd. (IT system construction).

winning solutions.

The Yamato Group is cultivating business opportunities inoperation capabilities. By normalizing this know-how, thatNow unfettered by the existing Takkyubin business,

its five core business domains and offering innovativeis, strong technical and competitive capabilities, within thethese companies have the flexibility to develop products

domain and develop innovative services like thoseservices that combine its corporate resources with its

Group and combining them in novel ways, we aim to add

and services in new areas. For example, in the BIZ-Logistics

highlighted above. Just as the concept of transporting items

accumulated expertise. The aim is to achieve further

more value to the solutions we provide to outsidebusiness, which addresses needs in the area of company-that people often take with them on trips gave rise to ski

earnings growth by managing the overall Group in a way

customers and thereby strengthen the Company as a whole.

to-company transport, more than just supporting logistics,

Takkyubin and golf Takkyubin services, we are confident that

we provide solutions that meet customers’ needs forthe increased density of our logistics network will providethat generates even greater synergies. By using these

12

▼
▼

▼
▼

REVITALIZING For Your Satisfaction

Every Group company is working to expand its businessbusinesses as a platform to offer new services centered on

Developing Diversified Services

efficiency and low-cost operations. By outsourcing

opportunities to uncover and meet demand at theour capabilities in logistics, information, and settlement, we

The Yamato Group started realigning its corporate

inventory management of promotional merchandise tocommunity level. The Yamato Group has already launched aintend to more fully leverage our competitive advantages as

resources in April 2003 based on a spin-off format in its five

Yamato Logistics, one manufacturer reduced its inventory

delivery service for heavy and bulky consumer goods toa Group. Yamato Transport possesses a logistics infrastruc-core business domains. In the process, we clearly delineatedlevels and reduced stock-out rates. Moreover, by having

encourage the outsourcing of household work. Still, we planture that dates back 85 years and has accumulated special-

operating areas for Yamato Logistics Corporation (business-orders for promotional merchandise delivered to the nearest

to introduce even more diversified services going forward,

ized know-how in settlement and information systems

to-business transport), Yamato Global Freight Co., Ltd.

Yamato Group logistics center, the manufacturer improved

including personal shopper services, the delivery of nursingthat support rapid and accurate transport. Today, more than(overseas cargo transport), the companies that make up thethe productivity of its sales force. This case illustrates how

care-related supplies, and dry cleaning pickup and delivery.

1 billion items pass through our logistics mechanisms, fromhome convenience business (highly region-specific lifestyle

the BIZ-Logistics business was able to leverage the assets ofour parcel tracking system to our customer management

support solutions, including moving and housework

YAMATO TRANSPORT CO., LTD.

Annual Report 2004

YAMATO TRANSPORT CO., LTD.

Annual Report 200413

Group Business Formation

DeliveryBusiness

BIZLogistics
Business

Home
Convenience
Business

e-Business

FinancialBusiness

▼
▼

▼
▼

▼
▼

Enhancing Corporate Strength
Through Business Formation

system, requiring advanced information technologies. As aoutsourcing services), and Yamato System Development

the Yamato Group as a whole to provide its customers withresult, we have very sophisticated system development/

Co., Ltd. (IT system construction).

winning solutions.

The Yamato Group is cultivating business opportunities inoperation capabilities. By normalizing this know-how, thatNow unfettered by the existing Takkyubin business,

its five core business domains and offering innovativeis, strong technical and competitive capabilities, within thethese companies have the flexibility to develop products

domain and develop innovative services like thoseservices that combine its corporate resources with its

Group and combining them in novel ways, we aim to add

and services in new areas. For example, in the BIZ-Logistics

highlighted above. Just as the concept of transporting items

accumulated expertise. The aim is to achieve further

more value to the solutions we provide to outsidebusiness, which addresses needs in the area of company-that people often take with them on trips gave rise to ski

earnings growth by managing the overall Group in a way

customers and thereby strengthen the Company as a whole.

to-company transport, more than just supporting logistics,

Takkyubin and golf Takkyubin services, we are confident that

we provide solutions that meet customers’ needs forthe increased density of our logistics network will providethat generates even greater synergies. By using these

12

▼
▼

▼
▼

REVITALIZING For Your Satisfaction

Every Group company is working to expand its businessbusinesses as a platform to offer new services centered on

Developing Diversified Services

efficiency and low-cost operations. By outsourcing

opportunities to uncover and meet demand at theour capabilities in logistics, information, and settlement, we

The Yamato Group started realigning its corporate

inventory management of promotional merchandise tocommunity level. The Yamato Group has already launched aintend to more fully leverage our competitive advantages as

resources in April 2003 based on a spin-off format in its five

Yamato Logistics, one manufacturer reduced its inventory

delivery service for heavy and bulky consumer goods toa Group. Yamato Transport possesses a logistics infrastruc-core business domains. In the process, we clearly delineatedlevels and reduced stock-out rates. Moreover, by having

encourage the outsourcing of household work. Still, we planture that dates back 85 years and has accumulated special-

operating areas for Yamato Logistics Corporation (business-orders for promotional merchandise delivered to the nearest

to introduce even more diversified services going forward,

ized know-how in settlement and information systems

to-business transport), Yamato Global Freight Co., Ltd.

Yamato Group logistics center, the manufacturer improved

including personal shopper services, the delivery of nursingthat support rapid and accurate transport. Today, more than(overseas cargo transport), the companies that make up thethe productivity of its sales force. This case illustrates how

care-related supplies, and dry cleaning pickup and delivery.

1 billion items pass through our logistics mechanisms, fromhome convenience business (highly region-specific lifestyle

the BIZ-Logistics business was able to leverage the assets ofour parcel tracking system to our customer management

support solutions, including moving and housework

YAMATO TRANSPORT CO., LTD.

Annual Report 2004

YAMATO TRANSPORT CO., LTD.

Annual Report 2004

13

REVITALIZINGAt a Glance

Segment

DeliveryBusiness Description

Performance

Sales and Sales Composition

The Delivery business covers a diverse array of services, among them
Takkyubin, Cool Takkyubin, Collect Service, and Kuroneko Mail. With the
exception of certain regions, Takkyubin next-day parcel delivery service isavailable throughout Japan. Yamato Transport also operates a secure parcel
tracking system, allowing the Company to manage parcel shipping status andrealize high-quality service. During the year under review, overall delivery
volume climbed to 1,011 million units.

Amid strong Takkyubin performance during the year, Cool
Takkyubin volume was a brisk 122 million units. This, in conjunction with a sharp increase in Kuroneko Mail volume following revisions made to this service, led to favorable resultsin the Delivery business. Total operating revenue, including
rail-freight forwarding, domestic air freight and others, was¥834,495 million, a year-on-year increase of 4.3%.

Sales (¥ millions)

The BIZ-Logistics business encompasses an infrastructure that enables
Yamato Transport to offer logistics services fully linking Japan and locations
overseas. These services include international marine forwarding, customs
clearance services, the transportation of works of art, and international moving
operations. Through the BIZ-Logistics business, Yamato Transport can provide
customers with the optimized logistics systems they demand.

On April 1, 2003, part of the Logistics Business was spun off
to Yamato Logistics Corporation, while marine forwarding,customs clearance, transportation of works of art andinternational moving operations were transferred to Yamato
Global Freight Co., Ltd. As a result of this aggressive
reorganization of services, operating revenue rose 3.6% to¥90,236 million.

Sales (¥ millions)

The Home Convenience business combines moving services and merchandise
marketing, aligning these services to meet diversifying customer needs.
Moving services are aimed at families and individuals, and cover a range ofrelated customer services, like the rearranging of furniture. Merchandise
marketing, meanwhile, involves online sales and other services.

In this business segment, moving service operations at each of
the Company’s bases were separated and merged by region
with Yamato Home Service Co., Ltd., a home service
subsidiary, which was renamed Yamato Home Convenience
Co., Ltd. and started actively marketing these services. Despite
this, operating revenues declined 2.4% to ¥42,611 million.

Sales (¥ millions)

Leveraging know-how accumulated over the course of Yamato Transport’s
operations, the e-Business segment is involved in outsourced information
processing, as well as the operation and management of computer systems.

A new data center, designed to provide safe, reliable andcompetitively priced services, was completed in Koto-ku,
Tokyo in April 2003, helping Yamato Transport to actively
promote e-Business. As a result, operating revenues increased
6.9% to ¥21,082 million.

Sales (¥ millions)

Financial services were actively promoted through campaigns
and other initiatives to increase delivery volumes for thissegment’s core Collect Service. As a result, operating
revenues, including Collect Service fees and leasing income,increased 8.1% to ¥22,920 million.

Sales (¥ millions)

BIZ-Logistics’03

800,463’04

834,495’03

87,102’04

90,236’03

43,642’04

42,611

82.5%

8.9%

4.2%

Home Convenience’03

19,728’04

21,0822.1%

e-Business
The Financial segment includes financial services targeted at businesscustomers and consumers, such as settlement and collection.

’03

21,200’04

22,920

2.3%

Financial

14

YAMATO TRANSPORT CO., LTD.

Annual Report 2004

YAMATO TRANSPORT CO., LTD.

Annual Report 2004

15

REVITALIZINGAt a Glance

Segment

DeliveryBusiness Description

Performance

Sales and Sales Composition

The Delivery business covers a diverse array of services, among them
Takkyubin, Cool Takkyubin, Collect Service, and Kuroneko Mail. With the
exception of certain regions, Takkyubin next-day parcel delivery service isavailable throughout Japan. Yamato Transport also operates a secure parcel
tracking system, allowing the Company to manage parcel shipping status andrealize high-quality service. During the year under review, overall delivery
volume climbed to 1,011 million units.

Amid strong Takkyubin performance during the year, Cool
Takkyubin volume was a brisk 122 million units. This, in conjunction with a sharp increase in Kuroneko Mail volume following revisions made to this service, led to favorable resultsin the Delivery business. Total operating revenue, including
rail-freight forwarding, domestic air freight and others, was¥834,495 million, a year-on-year increase of 4.3%.

Sales (¥ millions)

The BIZ-Logistics business encompasses an infrastructure that enables
Yamato Transport to offer logistics services fully linking Japan and locations
overseas. These services include international marine forwarding, customs
clearance services, the transportation of works of art, and international moving
operations. Through the BIZ-Logistics business, Yamato Transport can provide
customers with the optimized logistics systems they demand.

On April 1, 2003, part of the Logistics Business was spun off
to Yamato Logistics Corporation, while marine forwarding,customs clearance, transportation of works of art andinternational moving operations were transferred to Yamato
Global Freight Co., Ltd. As a result of this aggressive
reorganization of services, operating revenue rose 3.6% to¥90,236 million.

Sales (¥ millions)

The Home Convenience business combines moving services and merchandise
marketing, aligning these services to meet diversifying customer needs.
Moving services are aimed at families and individuals, and cover a range ofrelated customer services, like the rearranging of furniture. Merchandise
marketing, meanwhile, involves online sales and other services.

In this business segment, moving service operations at each of
the Company’s bases were separated and merged by region
with Yamato Home Service Co., Ltd., a home service
subsidiary, which was renamed Yamato Home Convenience
Co., Ltd. and started actively marketing these services. Despite
this, operating revenues declined 2.4% to ¥42,611 million.

Sales (¥ millions)

Leveraging know-how accumulated over the course of Yamato Transport’s
operations, the e-Business segment is involved in outsourced information
processing, as well as the operation and management of computer systems.

A new data center, designed to provide safe, reliable andcompetitively priced services, was completed in Koto-ku,
Tokyo in April 2003, helping Yamato Transport to actively
promote e-Business. As a result, operating revenues increased
6.9% to ¥21,082 million.

Sales (¥ millions)

Financial services were actively promoted through campaigns
and other initiatives to increase delivery volumes for thissegment’s core Collect Service. As a result, operating
revenues, including Collect Service fees and leasing income,increased 8.1% to ¥22,920 million.

Sales (¥ millions)

BIZ-Logistics’03

800,463’04

834,495’03

87,102’04

90,236’03

43,642’04

42,611

82.5%

8.9%

4.2%

Home Convenience’03

19,728’04

21,0822.1%

e-Business
The Financial segment includes financial services targeted at businesscustomers and consumers, such as settlement and collection.

’03

21,200’04

22,920

2.3%

Financial

14

YAMATO TRANSPORT CO., LTD.

Annual Report 2004

YAMATO TRANSPORT CO., LTD.

Annual Report 2004

15

REVITALIZINGHighlights of the Year

Yamato Turns Late-Night Flights Into
Industry’s First Air Speed Takkyubin
Service

Yamato Launches e-Mail Delivery
Notification Service

cash settlement for this service to customers without anindividual service contract. At the same time, Yamato revised

Strategically Strengthening Business
Ties with UPS

Since July 2004, Yamato has made it possible for regis-

procedures that required Kuroneko Mail to be collected bySince creating a jointly operated company in 1990, theLate-night flights between Japan’s Kanto region andtered customers to receive notification of parcel delivery

sales-drivers or brought directly to its handling centers. As a

Yamato Group and United Parcel Service of America, Inc.

Hokkaido, operating since November 2003, have enabled

times and dates via e-mail. This Mail Notification Service

result, certain convenience stores began handling Kuroneko(UPS) have extended their network for the shipment of

Yamato to launch Air Speed Takkyubin, a new next-day

also allows customers to change target delivery dates andMail from May 2004. And from July 2004, Seven-Elevensmall-lot freight to and from Japan worldwide—a step thatdelivery service. From July 2004, the service also began

times to fit their schedule. Previously, Yamato had

Japan Co., Ltd. has been offering Kuroneko Mail at its

has been yielding tangible results. The market environment,utilizing flights between the Kanto region and Kyushu. Until

launched a service in February 2002 that enabled parcel

10,000-store nationwide network, expanding this service

however, has changed in the 18 years since the companies

now, distance had proven a significant hurdle, making 2-day

senders requesting such to notify the recipient of impend-and making it readily available to customers across Japan.

first established ties, prompting Yamato and UPS to reas-

service the only viable option for deliveries to Hokkaido,

ing delivery via e-mail. In response to strong demand to

Kyushu and surrounding regions. The long-awaited arrival of

make this kind of service available for all parcels, Yamato

late-night flights has finally allowed Yamato to extend its

enhanced its existing service by creating a systemservice area for next-day deliveries. Reducing delivery dates

sess their business arrangement. To make Yamato’s
Takkyubin, Kuroneko Mail and the logistics service network

whereby recipients registered as users can receive e-mailYamato Establishes Yamato (Shanghai) Logistics Co., Ltd. as a Local Subsidiary in China

by a full day is solidifying Air Speed Takkyubin’s reputation

notification. In commercial-use parcels, this service is

In response to thetwo companies moved from a joint business contract to aas the delivery service to choose when time is of the es-

allowing customers, particularly mail-order companies, torising demand formore strategic business configuration.

sence. New delivery possibilities include official documents

raise the level of their own services and improve businesslogistics services

and other time-sensitive materials for business use, theefficiency, two points that have led to its widespread use.

as Japanese enter-

rated into three surviving entities, UPS Yamato Co., Ltd.

prises expand their(Yamato 50%, UPS 50%), UPS Yamato Express Co., Ltd.

business opera-(UPS 51%, Yamato 49%), and Yamato UPS International Air

tions in China,

Cargo Co., Ltd. (UPS 49%, Yamato 51%; name changed todelivery of food products native to Hokkaido and Kyushu tothe Kanto region, and the shipment of components and raw
materials from the Kanto region to factories in Hokkaido,
Kyushu and outlying areas.

Better Services via Kuroneko Mail andExpanded Cash Settlement and Service Countersavailable to a greater number of customers around theworld and to enhance the quality of services provided, theIn April 2000, the jointly operated company was sepa-

Yamato Global Freight Co., Ltd. upon becoming a wholly

Yamato estabYamato (Shanghai) Logistics Co., Ltd.

owned subsidiary in 2002). Of the three, UPS Yamato Ex-

Payment options for Kuroneko Mail were initially limited tolished a local

the conclusion of a prior contract and credit sales. To in-

subsidiary in Shanghai called Yamato (Shanghai) Logistics

press Co., Ltd. became a wholly owned subsidiary of UPS

crease customer convenience, Yamato received approvalCo., Ltd. that opened its doors in October 2003. The com-following the transfer of Yamato’s 49% share in the com-from Japan’s Ministry of Land, Infrastructure and Transportpany acts as a hub for collecting goods and parts suppliedpany at the close of March 2003.

to alter the contract terms for Kuroneko Mail, making

from all over China, utilizing the Takkyubin network to offer

Yamato, from March 2004, the first in the industry to offer

logistics services for shipping to locations across Japan.

Just as under their previous tie-up, this new businessarrangement will permit Yamato to sell UPS services inJapan and to conduct domestic shipping operations utilizing
its finely tuned network.

Air Speed Takkyubin

16

YAMATO TRANSPORT CO., LTD.

Annual Report 2004

YAMATO TRANSPORT CO., LTD.

Annual Report 200417

REVITALIZINGHighlights of the Year

Yamato Turns Late-Night Flights Into
Industry’s First Air Speed Takkyubin
Service

Yamato Launches e-Mail Delivery
Notification Service

cash settlement for this service to customers without anindividual service contract. At the same time, Yamato revised

Strategically Strengthening Business
Ties with UPS

Since July 2004, Yamato has made it possible for regis-

procedures that required Kuroneko Mail to be collected bySince creating a jointly operated company in 1990, theLate-night flights between Japan’s Kanto region andtered customers to receive notification of parcel delivery

sales-drivers or brought directly to its handling centers. As a

Yamato Group and United Parcel Service of America, Inc.

Hokkaido, operating since November 2003, have enabled

times and dates via e-mail. This Mail Notification Service

result, certain convenience stores began handling Kuroneko(UPS) have extended their network for the shipment of

Yamato to launch Air Speed Takkyubin, a new next-day

also allows customers to change target delivery dates andMail from May 2004. And from July 2004, Seven-Elevensmall-lot freight to and from Japan worldwide—a step thatdelivery service. From July 2004, the service also began

times to fit their schedule. Previously, Yamato had

Japan Co., Ltd. has been offering Kuroneko Mail at its

has been yielding tangible results. The market environment,utilizing flights between the Kanto region and Kyushu. Until

launched a service in February 2002 that enabled parcel

10,000-store nationwide network, expanding this service

however, has changed in the 18 years since the companies

now, distance had proven a significant hurdle, making 2-day

senders requesting such to notify the recipient of impend-and making it readily available to customers across Japan.

first established ties, prompting Yamato and UPS to reas-

service the only viable option for deliveries to Hokkaido,

ing delivery via e-mail. In response to strong demand to

Kyushu and surrounding regions. The long-awaited arrival of

make this kind of service available for all parcels, Yamato

late-night flights has finally allowed Yamato to extend its

enhanced its existing service by creating a systemservice area for next-day deliveries. Reducing delivery dates

sess their business arrangement. To make Yamato’s
Takkyubin, Kuroneko Mail and the logistics service network

whereby recipients registered as users can receive e-mailYamato Establishes Yamato (Shanghai) Logistics Co., Ltd. as a Local Subsidiary in China

by a full day is solidifying Air Speed Takkyubin’s reputation

notification. In commercial-use parcels, this service is

In response to thetwo companies moved from a joint business contract to aas the delivery service to choose when time is of the es-

allowing customers, particularly mail-order companies, torising demand formore strategic business configuration.

sence. New delivery possibilities include official documents

raise the level of their own services and improve businesslogistics services

and other time-sensitive materials for business use, theefficiency, two points that have led to its widespread use.

as Japanese enter-

rated into three surviving entities, UPS Yamato Co., Ltd.

prises expand their(Yamato 50%, UPS 50%), UPS Yamato Express Co., Ltd.

business opera-(UPS 51%, Yamato 49%), and Yamato UPS International Air

tions in China,

Cargo Co., Ltd. (UPS 49%, Yamato 51%; name changed todelivery of food products native to Hokkaido and Kyushu tothe Kanto region, and the shipment of components and raw
materials from the Kanto region to factories in Hokkaido,
Kyushu and outlying areas.

Better Services via Kuroneko Mail andExpanded Cash Settlement and Service Countersavailable to a greater number of customers around theworld and to enhance the quality of services provided, theIn April 2000, the jointly operated company was sepa-

Yamato Global Freight Co., Ltd. upon becoming a wholly

Yamato estabYamato (Shanghai) Logistics Co., Ltd.

owned subsidiary in 2002). Of the three, UPS Yamato Ex-

Payment options for Kuroneko Mail were initially limited tolished a local

the conclusion of a prior contract and credit sales. To in-

subsidiary in Shanghai called Yamato (Shanghai) Logistics

press Co., Ltd. became a wholly owned subsidiary of UPS

crease customer convenience, Yamato received approvalCo., Ltd. that opened its doors in October 2003. The com-following the transfer of Yamato’s 49% share in the com-from Japan’s Ministry of Land, Infrastructure and Transportpany acts as a hub for collecting goods and parts suppliedpany at the close of March 2003.

to alter the contract terms for Kuroneko Mail, making

from all over China, utilizing the Takkyubin network to offer

Yamato, from March 2004, the first in the industry to offer

logistics services for shipping to locations across Japan.

Just as under their previous tie-up, this new businessarrangement will permit Yamato to sell UPS services inJapan and to conduct domestic shipping operations utilizing
its finely tuned network.

Air Speed Takkyubin

16

YAMATO TRANSPORT CO., LTD.

Annual Report 2004

YAMATO TRANSPORT CO., LTD.

Annual Report 200417

REVITALIZING

Environment Preservation Activities

Driven by a desire to meaningfully contributeto the natural environment ten years hence
and to attain sustainable corporate growth,
the Yamato Group has enacted a variety of
initiatives over the years aimed at twopriority management concerns: lessening its
impact on the natural environment andsupporting environment preservation
activities. A few of Yamato’s actions in thisregard are found below.

A smaller vehicle fleet

20,000 hybrid vehicles by 2012. At the same time, Yamato

Zero emissions recycling of alkaline batteries

Yamato conducts operations over a segmented network of

is looking to take advantage of fuel-efficient, light-class

On a company-

business sites spanning 5,000 locations across Japan. In-

vehicles by adding 5,000 of these to the fleet. In fiscal 2004,

wide basis, thecreasing the size of this vast network allows Yamato to

Yamato introduced 690 low-emission vehicles, boosting thebattery-powered,

reduce the designated service area for each site. It also

fleet-wide percentage to 9.24%. In fiscal 2005, plans callportable POS andmakes delivery possible without the use of motor vehicles,

for taking on approximately 800 more of these vehicles.

pen-scanner ter-particularly in urban settings. As for specific strategies,
Yamato plans to:•Double the number of distribution centers capable ofdelivering only by dolly and hand-truck from 500
locations to 1,000, andMeasures to Combat Global Warming•Establish set criteria for lowering the environmental

Greenhouse gases, identified as a causal factor in global

impact of delivery for each service area.

warming, are released during the course of industrial activPursuing these two objectives should forestall an increase of

impact on the environment, making measures to reduce theapproximately 3,000 delivery vehicles.

and Kuroneko Mail

Switching to low-emission vehicles

per year, that is, about 2 million batteries. Previously, dis400,000

posal of these batteries was outsourced to industrial waste
professionals in each business area and they were buried inlandfills. But since February 2004, Yamato has been operat-

200,000

ing a recycling framework for achieving zero emission recy-0

cling, defined as complete elimination of all industrial
waste. Alkaline batteries are now collected and sent to
02

04

06

08

10

12

Yamato has consistently led the industry in adopting ve-

achieve this, Yamato is striving to cut CO2 emissions per

hicles that have the lowest possible impact on the environ-parcel delivered by 30%. The plan formulated for reaching

ment. In recent years, Yamato has been replacing vehicles inthis goal includes:

its mostly diesel fleet with LPG-powered vehicles. Today,

Measures for Reducing Waste

however, the refueling infrastructure is in place to make the

The Yamato Group is committed to reducing waste

jump to hybrid vehicles a viable option. Hybrids break new

through recycling and reuse, particularly of shipping andground in terms of minimizing impact on the environment,

packing materials, as part of actions to preserve theSimulations of CO2 emissions indicate that implementing

and Yamato is assigning these vehicles a more prominent

natural environment.

these measures should indeed allow Yamato to attain this goal.

role in the composition of its fleet. The target is to introduce

YAMATO TRANSPORT CO., LTD.

Annual Report 2004

Alkaline batteries used in portable POS terminals

operations consume more than 50 tons of alkaline batteries

500,000

levels by fiscal 2012 to 99% of levels in fiscal 2002. To•Limiting the number of vehicles in the fleet, and•Switching to hybrids and other low-emission vehicles.

18

ees in Takkyubin
600,000

100,000

total volume of CO2 emissions of major concern. The

minals used by
Yamato employ-(Units: 1 ton CO2)

300,000

ity. Of these gases, carbon dioxide (CO2) has the greatest

Yamato Group set itself the task of holding CO2 emission

Yamato Transport Objectives for Preventing Global Warming

Trajectory at present
Trajectory with vehicle restriction + LEVs

(year)

recycling professionals, where they are rendered into iron,zinc, manganese and other useable resources.

YAMATO TRANSPORT CO., LTD.

Annual Report 2004

19

REVITALIZING

Environment Preservation Activities

Driven by a desire to meaningfully contributeto the natural environment ten years hence
and to attain sustainable corporate growth,
the Yamato Group has enacted a variety of
initiatives over the years aimed at twopriority management concerns: lessening its
impact on the natural environment andsupporting environment preservation
activities. A few of Yamato’s actions in thisregard are found below.

A smaller vehicle fleet

20,000 hybrid vehicles by 2012. At the same time, Yamato

Zero emissions recycling of alkaline batteries

Yamato conducts operations over a segmented network of

is looking to take advantage of fuel-efficient, light-class

On a company-

business sites spanning 5,000 locations across Japan. In-

vehicles by adding 5,000 of these to the fleet. In fiscal 2004,

wide basis, thecreasing the size of this vast network allows Yamato to

Yamato introduced 690 low-emission vehicles, boosting thebattery-powered,

reduce the designated service area for each site. It also

fleet-wide percentage to 9.24%. In fiscal 2005, plans callportable POS andmakes delivery possible without the use of motor vehicles,

for taking on approximately 800 more of these vehicles.

pen-scanner ter-particularly in urban settings. As for specific strategies,
Yamato plans to:•Double the number of distribution centers capable ofdelivering only by dolly and hand-truck from 500
locations to 1,000, andMeasures to Combat Global Warming•Establish set criteria for lowering the environmental

Greenhouse gases, identified as a causal factor in global

impact of delivery for each service area.

warming, are released during the course of industrial activPursuing these two objectives should forestall an increase of

impact on the environment, making measures to reduce theapproximately 3,000 delivery vehicles.

and Kuroneko Mail

Switching to low-emission vehicles

per year, that is, about 2 million batteries. Previously, dis400,000

posal of these batteries was outsourced to industrial waste
professionals in each business area and they were buried inlandfills. But since February 2004, Yamato has been operat-

200,000

ing a recycling framework for achieving zero emission recy-0

cling, defined as complete elimination of all industrial
waste. Alkaline batteries are now collected and sent to
02

04

06

08

10

12

Yamato has consistently led the industry in adopting ve-

achieve this, Yamato is striving to cut CO2 emissions per

hicles that have the lowest possible impact on the environ-parcel delivered by 30%. The plan formulated for reaching

ment. In recent years, Yamato has been replacing vehicles inthis goal includes:

its mostly diesel fleet with LPG-powered vehicles. Today,

Measures for Reducing Waste

however, the refueling infrastructure is in place to make the

The Yamato Group is committed to reducing waste

jump to hybrid vehicles a viable option. Hybrids break new

through recycling and reuse, particularly of shipping andground in terms of minimizing impact on the environment,

packing materials, as part of actions to preserve theSimulations of CO2 emissions indicate that implementing

and Yamato is assigning these vehicles a more prominent

natural environment.

these measures should indeed allow Yamato to attain this goal.

role in the composition of its fleet. The target is to introduce

YAMATO TRANSPORT CO., LTD.

Annual Report 2004

Alkaline batteries used in portable POS terminals

operations consume more than 50 tons of alkaline batteries

500,000

levels by fiscal 2012 to 99% of levels in fiscal 2002. To•Limiting the number of vehicles in the fleet, and•Switching to hybrids and other low-emission vehicles.

18

ees in Takkyubin
600,000

100,000

total volume of CO2 emissions of major concern. The

minals used by
Yamato employ-(Units: 1 ton CO2)

300,000

ity. Of these gases, carbon dioxide (CO2) has the greatest

Yamato Group set itself the task of holding CO2 emission

Yamato Transport Objectives for Preventing Global Warming

Trajectory at present
Trajectory with vehicle restriction + LEVs

(year)

recycling professionals, where they are rendered into iron,zinc, manganese and other useable resources.

YAMATO TRANSPORT CO., LTD.

Annual Report 2004

19

REVITALIZING

Directors and Auditors

Representative Director
Chairman
Keiji Aritomi

Representative Director
President and Chief Executive Officer
Atsushi Yamazaki

Representative Directors
Senior Managing Executive Officers
Seiichi Jimbo
Michio Abe

Members of the Board
Managing Executive Officers
Kaoru Seto
Koji Ogura
Yuji Uenuma

Etsuo Ogawa
Kiyoshi Ikari

Managing Executive Officers
Hiroshi Kawada
Nobuyuki Yamauchi

Kenji Shibasaki

Executive Officers
Shinichi Tsukamoto
Shigeo Mamiya
Osamu Okada

Yuji Noguchi
Keishiro Sasaki
Tadashi Okamura

Auditors
Hideo Endo
Takeshi Morishita

Noriaki Kinoshita
Shigemichi Matsuka(As of June 29, 2004)

20

YAMATO TRANSPORT CO., LTD.

Annual Report 2004

Six-year Consolidated Financial Summary

Thousands of
U.S. Dollars

Millions of Yen

Operating revenues
Operating costs
Selling, general andadministrative expenses
Operating income
Income (Loss) before income
taxes and minority interests
Income taxes
Net income (loss)

2004

2003

2002

2001

2000

1999

2004

¥1,011,344
945,201¥972,135
896,023¥932,120
861,775¥906,944
838,219¥812,355
753,674¥767,656
713,789$9,568,965
8,943,145

19,48446,65919,29456,81817,15653,18916,69952,026

14,431
44,25013,99039,877

184,354441,466

87,29337,51549,78391,06342,53848,502

49,90522,21727,512(3,554)484(4,181)37,33916,876
20,41836,783
19,49017,275825,933
354,956
471,033

Yen

Per share of common stock:
Net income (loss)
Diluted net income
Cash dividends¥

107.51105.2018.00¥ 104.51
101.63
15.00

¥

59.36
57.38
14.00

U.S. Dollars¥ (9.25) ¥
–
14.00

46.11
43.63
14.00

¥

41.13
37.49
14.00

Number of employees
Operating income margin (%)
Return on revenues (%)
Return on assets (%)
Return on equity (%)
Current ratio (%)
Equity ratio (%)
Assets turnover (Times)
Interest coverage ratio(Times)Shareholders’ equity
per share (Yen)

¥

1.02
1.00
0.17

Thousands of
U.S. Dollars

Millions of Yen

Working capital
Total shareholders’ equity
Total assets
Capital expenditures
Depreciation and amortization
Net cash provided byoperating activities$

74,803443,715652,792
47,58735,663¥ 77,514
406,306
655,877
42,591
31,731¥ 84,630
364,806
678,939
40,37931,764¥ 93,534
344,209670,246
37,14429,900¥ 75,199
338,295
642,477
32,761
28,917¥ 92,940
306,372
610,21744,33329,935$ 707,753
4,198,269
6,176,482
450,252
337,427

41,06486,03569,72455,24960,887–

388,536

131,974
4.61
4.92
7.61
11.71
142.3967.97
1.55

112,948
5.84
4.99
7.27
12.58
145.4461.95
1.46

108,700
5.71
2.95
4.08
7.76
147.9453.73
1.38

101,784
5.74(0.46)(0.64)(1.23)
154.3451.36
1.38

93,425
5.45
2.51
3.26
6.33
150.4452.65
1.30

83,577
5.19
2.25
2.91
6.01
167.96
50.21
1.29

–
–
–
–
–
–
–
–

65.17

36.68

24.99

20.55

13.55

11.19

–

971.84875.08790.58746.21759.46707.989.20

Note: U.S. dollar amounts have been translated, for convenience only, at the rate of ¥105.69 to U.S.$1.

YAMATO TRANSPORT CO., LTD.

Annual Report 200421

Management’s Discussion and Analysis

Scope of Consolidation
Yamato’s consolidated financial statements include 40 consolidated subsidiaries and 2 affiliates
accounted for by the equity method.

Results of Operations
In the fiscal year ended March 31, 2004, the Japanese economy showed some encouraging signs ofrecovery, underpinned by capital expenditures and exports. These gains, however, fell short ofarresting weak consumer spending and other deflationary trends, and the economic environment
remained difficult.
In the domestic transportation industry handling volume increased but average unit prices failed
to recover. The business environment remained harsh amid escalating competition amongtransportation companies, including from the package delivery service of Japan Post following its
launch on April 1, 2003.
In these circumstances, the Group restructured its operations into five operating segments—
Delivery, BIZ-Logistics, Home Convenience, e-Business and Financial—to facilitate growth and raise
the Group’s corporate value.
In the core Delivery business, we focused on strengthening marketing power and rebuilding the
Takkyubin network to reform the structure of our earnings, in readiness for competition from theprivatized Postal Services Agency (now Japan Post). We switched from a network of delivery bases toa larger network of delivery centers, each staffed by fewer employees. The move brings us closer toour customers and enables us to provide meticulous service that will lead to higher customer
satisfaction, while at the same time raising the awareness among employees of the need to bebusiness oriented. We also consolidated our administrative and service center functions in order toraise the efficiency of back-office operations, while taking measures to make it easier for customers
to use our service, differentiating us from competitors.
As a result of the above and other factors, Yamato Transport recorded consolidated operating
revenues of ¥1,011,344 million (U.S.$9,569.0 million), up ¥39,209 million, or 4.0% from the previous
fiscal year. Operating income fell ¥10,159 million, or 17.9%, to ¥46,659 million (U.S.$441.5 million).
The principal factor affecting operating income was a sharp ¥49,368 million or 5.4%, increase in total
operating costs and expenses to ¥964,685 million, mainly due to capital expenditures related to rebuilding the Takkyubin network as a part of planning for the future and strengthening the Kuroneko
Mail network. The operating income margin declined 1.2 percentage points to 4.6%.

Review by Operating Segment
From the fiscal year under review, Yamato Transport’s business is divided into five operating segments:

Delivery
The Delivery business is mainly focused on small parcel delivery services for consumers and corporateclients and includes the Takkyubin and Kuroneko Mail services. Demand for the Takkyubin service
remained strong. Also contributing to growth was Cool Takkyubin, where volume increased 5.8% to122.6 million units. The Collect Service handling volume increased 9.4% to 63.5 million units.
Consequently, overall delivery volume in the parcel delivery business climbed to 1,011.2 million
parcels, up 2.8% and topping the 1 billion unit mark for the first time. Handling volume in the
Kuroneko Mail service increased significantly as we revised our rate structure and upgraded service
with the introduction of more packet sizes and worked to expand our corporate client base.

22

YAMATO TRANSPORT CO., LTD.

Annual Report 2004

Total operating revenues, including Rail-Freight Forwarding, Domestic Air Freight and Others, was¥834,495 million (U.S.$7,895.7 million), an increase of ¥34,032 million, or 4.3%. However, operating
income fell ¥10,494 million, or 22.8%, to ¥35,548 million (U.S.$336.3 million) owing to an increase inoperating costs, mainly due to the cost related to consolidating back-office operations and strengthening the organization to rebuild the Takkyubin network.
Takkyubin Revenues and Unit Prices
Years ended March 31
Takkyubin revenues(millions of Yen)
Delivery volume(1,000 parcels)
Unit price (Yen)

2000

2001

2002

2003

2004

¥622,666¥658,156¥683,589¥698,499¥ 690,088

836,206¥
744

898,595¥
732

947,895¥
721

983,938¥710

1,011,150¥
682

Unit price for calculation purposes declined in the fiscal years ended March 2003 and 2004 due to the merger of Shikoku
Yamato Transport Co., Ltd. and Kyushu Yamato Transport Co., Ltd.

BIZ-Logistics
The BIZ-Logistics provides inter-company logistics services aimed at the B2B supply chain management
market and includes international marine forwarding, international air-freight forwarding and thetransportation of works of art.
On April 1, 2003, a part of the Logistics business was spun off to Yamato Logistics Corporation. At
the same time, marine forwarding, customs clearance, transportation of works of art and international
moving operations were transferred to Yamato Global Freight Co., Ltd. As a result of this active
reorganization of our domestic and international logistics services, operating revenue rose ¥3,134
million, or 3.6%, to ¥90,236 million (U.S.$853.8 million), with operating income rising sharply by¥390 million, or 14.5%, to ¥3,088 million (U.S.$29.2 million).

Cool Takkyubin Delivery Volume

Collect Service Delivery Volume(1,000 parcels)(1,000 parcels)

150,000

80,000120,000
60,00090,00040,00060,00020,00030,000

0

00

01

02

03

04

0

00

01

02

03

04

YAMATO TRANSPORT CO., LTD.

Annual Report 2004

23

Home Convenience
Home Convenience services include moving services and lifestyle support services, such as home
services intimately connected with the needs of local markets, in addition to merchandise marketing.
In the fiscal year ended March 31, 2004, the moving service operations of each base wereseparated and merged with Yamato Home Service Co., Ltd., Yamato Transport’s home service
subsidiary, which was renamed Yamato Home Convenience Co., Ltd. and started actively marketingthese services. Despite this, operating revenues, including moving services and merchandise
marketing, declined ¥1,031 million, or 2.4%, to ¥42,611 million (U.S.$403.2 million). Operating
income fell ¥1,498 million to ¥10 million (U.S.$0.1 million).

e-Business
The e-Business segment includes information services targeted at the business market, including ASP
services and the development of information systems.
A new data center, designed to provide safe, reliable and competitively priced services, wascompleted in Koto-ku, Tokyo in April 2003, helping us actively promote our e-Business. As a result,operating revenues increased ¥1,354 million, or 6.9%, to ¥21,082 million (U.S.$199.5 million).
Operating income rose ¥703 million, or 40.3%, to ¥2,447 million (U.S.$23.2 million).

Financial
The Financial segment includes financial services targeted at business customers and consumers, suchas settlement and collection.
In the fiscal year ended March 31, 2004, Financial services were actively promoted throughcampaigns and other initiatives to increase delivery volumes for our core Collect Service. As a result of
these and other factors, operating revenues, including collection service fees and leasing income,increased ¥1,720 million, or 8.1%, to ¥22,920 million (U.S.$216.9 million) and operating income rose¥548 million, or 9.5%, to ¥6,346 million (U.S.$60.0 million).

Financial Review
Operating costs
In the fiscal year ended March 31, 2004, Yamato Transport recorded consolidated operating costs andexpenses of ¥964,685 million (U.S.$9,127.5 million), up ¥49,368 million, or 5.4% from the previous
fiscal year. Significant components of the increased operating costs are as follows:
Breakdown of operating costs
Years ended March 31

24

YAMATO TRANSPORT CO., LTD.

Personnel expenses
Subcontracting expenses
Vehicle expenses
Other expenses
Elimination of internal procurement costs¥ 503,828
318,80918,442
198,925(124,687)

Millions of Yen
Increase/decrease¥ 526,882¥23,054311,349(7,460)23,346
4,904
217,143
18,218(114,035)
10,652

Total¥ 915,317¥ 964,685

Annual Report 2004

2003

2004

¥49,368

Personnel expenses increased ¥23,054 million, an increase largely attributed to reallocation of
employees as a result of consolidation of back-office operations in support of restructuring the
Takkyubin network and an increase in the ranks of delivery personnel. The number of employees increased by 19,026 to 131,974. The number of full-time employees went up by 1,540 to 69,398 andthe number of part-time employees rose by 17,486 to 62,576. As a result, the share of part-time
employees in Yamato Transport’s workforce increased 7.5 percentage points to 47.4%. Provision for
retirement benefits decreased ¥14,609 million to ¥18,424 million due to exemption from future
pension obligation of the governmental program.
Subcontracting expenses declined by ¥7,460 million, due to a ¥17,820 million decline incommission expenses following the merger of Shikoku Yamato Transport Co., Ltd. and Kyushu
Yamato Transport Co., Ltd., which reduced delivery expenses.
Vehicle expenses rose ¥4,904 million as our vehicle maintenance facilities were spun off to a subsidiary.

Other Income and Expenses
Other income—net increased ¥6,389 million to ¥40,634 million (U.S.$384.5 million).
The principal component of other income was a ¥40,470 million gain on decrease of pension
obligation with transfer to cash balance plan. Loss on devaluation of land (¥8,697 million in the fiscal
year ended March 31, 2003) and unrealized loss on devaluation of investment securities (¥2,002
million in the fiscal year ended March 31, 2003), which significantly affected income in the previous
fiscal year, narrowed in the fiscal year ended March 31, 2004.

Net Income
Income before income taxes and minority interests declined ¥3,770 million, or 4.1%, to ¥87,293
million (U.S.$825.9 million). Income taxes declined ¥5,023 million to ¥37,515 million (U.S.$355.0
million). The result was a net ¥1,281 million, or 2.6%, increase in net income to ¥49,783 million(U.S.$471.0 million). Return on equity declined 0.9 of a percentage point to 11.7%.
As a result of these factors, diluted net income per share amounted to ¥105.20 (U.S.$1.00), an
increase of ¥3.57, or 3.5%. As a part of the program to strengthen group management, profit sharing
with shareholders will be linked to consolidated profit. Furthermore, the payout ratio target has been
set at a minimum of 30% of the consolidated net income. In line with this policy, the annual dividend
was raised by ¥3 per common share to ¥18.00 (U.S.$0.17).

Cash Flows(Operating Activities)
Net cash provided by operating activities totaled ¥41,064 million (U.S.$388.5 million), a decrease of ¥44,971 million from the previous fiscal year. The principal uses of cash in operating
activities were capital expenditures for reengineering the Takkyubin network and an increase innotes and accounts receivable.

YAMATO TRANSPORT CO., LTD.

Annual Report 2004

25

(Investing Activities)
Net cash used in investing activities was ¥40,684 million (U.S.$384.9 million), an increase of ¥1,309
million. The principal use of cash in investing activities was an increase of ¥14,007 million for thepurchase of property, plant and equipment. This included continuing introduction of low-emission
vehicles, and the purchase of a complete set of receipt-filing-system equipment for the reengineeringof the Takkyubin network. Purchases of marketable and investment securities declined ¥10,734
million from the previous fiscal year.

(Financing Activities)
Net cash used in financing activities totaled ¥16,440 million (U.S.$155.6 million), a decrease of¥57,155 million, from the previous fiscal year. The principal uses of cash were ¥9,984 million for thebuyback of 7.7 million shares (based on a resolution approved by shareholders) and cash dividend
payments of ¥7,427 million.
As a result of these actions, cash and cash equivalents at the end of the fiscal year totaled¥117,031 million (U.S.$1,107.3 million), down ¥15,362 million from the end of the previous fiscal year.

Financial Position
Total current assets as of March 31, 2004 were ¥251,261 million (U.S.$2,377.3 million), an increase of¥3,153 million, or 1.3%, mainly because of a ¥10,188 million, or 12.0%, increase in notes andaccounts receivable.
Net property, plant and equipment increased ¥8,201 million, or 2.6%, to ¥326,995 million(U.S.$3,093.9 million), reflecting continuing investment in the Delivery service and other facilities.
There was a net ¥8,498 million increase in buildings and structures, including a ¥3,872 million
investment in a new YSD data center and a ¥6,693 million increase in vehicles and transport
equipment. In the fiscal year ended March 31, 2004, the Group purchased 6,979 vehicles, including
replacements. The Group’s network as of March 31, 2004 was as follows:
Network
Years ended March 31
Vehicles (unit)
Delivery channels
Sub-agents

2003

2004

37,741
3,583
317,595

41,5638,267
306,986

Investments and Other Assets declined ¥14,439 million or 16.2%, to ¥74,536 million (U.S.$705.2
million). Investment securities declined ¥1,735 million, reflecting the streamlining of the portfolio.
Deferred tax assets fell ¥13,302 million as temporary differences upon transfer to a new retirement
benefit system were amortized.
As a result of the foregoing, total assets declined ¥3,085 million, or 0.5%, from the end of theprevious fiscal year, to ¥652,792 million (U.S.$6,176.5 million).
Total current liabilities as of March 31, 2004 were ¥176,458 million (U.S.$1,669.6 million), an
increase of ¥5,864 million, or 3.4%, from the previous fiscal year-end. The current portion of
corporate bonds was ¥17,000 million.

26

YAMATO TRANSPORT CO., LTD.

Annual Report 2004

Total long-term liabilities fell ¥46,073 million, or 58.7%, to ¥32,455 million (U.S.$307.1 million).
The principal factors contributing to the decline were a switch to DA accounting and the introductionof a CMS system to reduce interest-bearing debt, in addition to the establishment of a credit facility
to strengthen the Group’s financial position. Corporate bonds coming due this year totaled ¥17,000
million and were therefore reclassified as current assets. Liabilities for employees’ retirement benefits
declined ¥29,479 million as a portion of reserve for employees’ retirement benefit was liquidated
following the transfer to a new employee retirement benefit system.
Total shareholders’ equity rose ¥37,409 million, or 9.2%, to ¥443,715 million (U.S.$4,198.3 million). The principal factors were the addition of ¥43,394 million in retained earnings from the postingof net income. Another factor was the rebound in stock prices that led to a ¥3,935 million increase inunrealized gain on available-for-sale securities. Continuing purchases of treasury stock led to anincrease of ¥9,791 million in treasury stock. Shareholders’ equity per share rose ¥96.76, or 11.1%, to¥971.84 (U.S.$9.20). The shareholders’ equity ratio rose 6.1 percentage points to 68.0%.

YAMATO TRANSPORT CO., LTD.

Annual Report 200427

Consolidated Balance Sheets
March 31, 2004 and 2003

Millions of Yen

ASSETS
CURRENT ASSETS:
Cash (Note 2.c)Time deposits (Note 2.c)Marketable securities (Notes 3 and 4)
Notes and accounts receivable:
Trade
Allowance for doubtful accounts
Inventories
Deferred tax assets (Note 7)
Prepaid expenses and other current assets
Total current assets

PROPERTY, PLANT AND EQUIPMENT—At cost:
Land (Note 4)
Buildings and structures
VehiclesMachinery and equipment
Construction in progress
Total
Accumulated depreciation
Net property, plant and equipment

INVESTMENTS AND OTHER ASSETS:
Investment securities (Notes 3 and 4)
Investments in and advances to non-consolidated
subsidiaries and affiliates, net of valuation allowanceof ¥150 million ($1,419 thousand) in 2004 and 2003
Long-term loans
Lease deposits
Deferred tax assets (Note 7)
Other assets
Total investments and other assets
TOTAL
See notes to consolidated financial statements.

28

YAMATO TRANSPORT CO., LTD.

Annual Report 2004

Thousands of
U.S. Dollars(Note 1)

2004

2003

2004

¥ 116,913
119
8,078

¥ 132,320
241
6,512

$ 1,106,190
1,122
76,431

95,358(509)
2,367
13,76615,16985,170(438)
3,287
10,771
10,245902,242(4,811)
22,394130,252
143,519

251,261

248,108

2,377,339

152,876
217,364
154,317
97,340336

150,101
208,866
147,624
89,875
6,087

1,446,460
2,056,620
1,460,092
920,992
3,176

622,233(295,238)

602,553(283,759)

5,887,340(2,793,427)

326,995

318,794

3,093,913

17,66819,403

167,170823
4,586
27,518
7,475
16,466

3,689
3,771
28,667
20,777
12,668

7,782
43,392
260,367
70,725
155,794

74,536

88,975705,230¥ 652,792¥ 655,877$ 6,176,482

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

LIABILITIES AND SHAREHOLDERS’ EQUITYCURRENT LIABILITIES:
Short-term bank loans (Note 4)
Current portion of long-term debt (Note 4)
Notes and accounts payable:
Trade
Construction
Income taxes payable
Employees’ savings deposits
Accrued expenses
Other current liabilities
Total current liabilities
LONG-TERM LIABILITIES:Long-term debt (Note 4)
Liability for employees’ retirement benefits (Note 5)
Deferred tax liabilities (Note 7)
Other long-term liabilities
Total long-term liabilities
MINORITY INTERESTS

2004
¥

145
17,000

2003
¥

414

2004
$

1,374
160,848

68,368
9,598
16,366
3,821
44,606
16,55476,427
12,006
22,664
3,897
39,692
15,494

646,874
90,814
154,851
36,147422,048
156,630

176,458

170,594

1,669,586

13,425
18,245127,023
172,629785

30,42547,72465
314

32,45578,528307,074

164

449

1,553

120,548
133,453
206,877
4,183
(625)

120,548
133,340
163,483248(383)

1,140,579
1,262,683
1,957,391
39,583(5,910)(20,721)(10,930)(196,057)

7,422

CONTINGENT LIABILITIES (Note 9)
SHAREHOLDERS’ EQUITY (Notes 4, 6 and 12):
Common stock—authorized, 530,000,000 shares;
issued, 469,475,456 shares in 2004 and 2003
Capital surplus
Retained earnings
Unrealized gain on available-for-sale securities
Foreign currency translation adjustments
Treasury stock—at cost, 13,067,113 shares in 2004 and
5,344,579 shares in 2003
Total shareholders’ equity
TOTAL

443,715406,306

4,198,269¥652,792¥655,877$6,176,482

YAMATO TRANSPORT CO., LTD.

Annual Report 200429

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

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

2004

2003

2004

¥1,011,344¥972,135$9,568,965

945,201
19,484

896,023
19,294

8,943,145
184,354

Total operating costs and expenses

964,685

915,317

9,127,499

Operating income

46,65956,818441,466(436)
723(4,093)
1,643
14
(531)

(548)
1,564
(1)
1,650
8
(722)

(4,124)
6,838(38,726)
15,546135(5,020)OPERATING REVENUESOPERATING COSTS AND EXPENSES:
Operating costs
Selling, general and administrative expenses

OTHER (INCOME) EXPENSES:Interest and dividend income
Interest expense
Gain on sales of marketable and investment securities
Loss on disposal of property, plant and equipment
Bond issuance costs
Equity in earnings of affiliated companies
Gain on exemption from future pension obligation of thegovernmental program
Gain on decrease of pension obligation
with transfer to cash balance plan (Note 2.h)Loss on devaluation of land
Loss on devaluation of telephone subscription rights
Other—net(45,703)(40,470)
897
1,519
100

810

(382,911)
8,486
14,367
942(40,634)(34,245)(384,467)

INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS

87,29391,063825,933

INCOME TAXES (Note 7):
Current
Deferred

29,808
7,707

36,904
5,634

282,034
72,922

Total income taxes

37,51542,538354,956

Other income—net

MINORITY INTERESTS IN EARNINGS OFCONSOLIDATED SUBSIDIARIESNET INCOME

¥

8,697

(5)

23

(56)

49,783¥ 48,502$ 471,033

Yen

PER SHARE OF COMMON STOCK (Notes 2.n and 10):
Basic net income
Diluted net income
Cash dividends applicable to the year
See notes to consolidated financial statements.

30

YAMATO TRANSPORT CO., LTD.

Annual Report 2004¥

U.S. Dollars

2004

2003

107.51105.2018.00¥ 104.51
101.63
15.00

2004
$

1.02
1.00
0.17

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

Thousands
Outstanding
Number of
Shares ofCommon StockMillions of Yen

CommonStockCapitalSurplusRetained
Earnings

Unrealized
Gain onAvailablefor-sale
Securities

Foreign
Currency
Translation
Adjustments

896 ¥ (132) ¥Treasury
Stock

BALANCE, APRIL 1, 2002
Adjustment of retained earnings
for newly consolidated subsidiaries
Net income
Cash dividends, ¥14 per share
Bonuses to directors andcorporate auditors
Repurchase of treasury stock
Shares issued on conversion of
convertible debt
Net decrease in unrealized gain
on available-for-sale securities
Foreign currency translation
adjustments

461,443 ¥ 116,300 ¥ 129,092 ¥ 118,895 ¥(245)

BALANCE, MARCH 31, 2003
Adjustment of retained earnings
for newly consolidated subsidiaries
Net income
Cash dividends, ¥16 per share
Bonuses to directors andcorporate auditors
Repurchase of treasury stock
Disposal of treasury stock
Net increase in unrealized gain
on available-for-sale securities
Foreign currency translation
adjustments

464,131

BALANCE, MARCH 31, 2004

456,408 ¥ 120,548 ¥ 133,453 ¥ 206,877 ¥ 4,183 ¥ (625) ¥ (20,721)

2,713
48,502(6,483)(144)(5,238)
7,926(10,685)
4,248

4,248
(648)
(251)

120,548

133,340

163,483

248

(383)

(10,930)

1,189
49,783(7,426)(152)(7,837)114(10,022)
231

113
3,935
(242)

CommonStockCapitalSurplusThousands of U.S. Dollars (Note 1)
Unrealized
Gain onAvailableRetained
for-sale
Earnings
Securities

Foreign
Currency
Translation
Adjustments

Treasury
Stock

BALANCE, MARCH 31, 2003
Adjustment of retained earnings
for newly consolidated subsidiaries
Net income
Cash dividends, $0.15 per share
Bonuses to directors and corporate auditors
Repurchase of treasury stock
Disposal of treasury stock
Net increase in unrealized gain
on available-for-sale securities
Foreign currency translation adjustments$ 1,140,579 $ 1,261,617 $ 1,546,818 $ 2,343 $ (3,624) $ (103,414)

BALANCE, MARCH 31, 2004

$1,140,579 $1,262,683 $1,957,391 $39,583 $(5,910) $(196,057)

11,251
471,033(70,266)(1,445)(94,830)
2,187

1,066
37,240(2,286)

See notes to consolidated financial statements.

YAMATO TRANSPORT CO., LTD.

Annual Report 200431

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

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

2004

2003

2004

¥ 87,293¥ 91,063$ 825,933(36,320)
35,663
1,643
897
1,519
(4,093)(531)(31,064)
31,731
1,650
8,697
(1)
(722)

(343,644)
337,427
15,546
8,486
14,367(38,726)(5,020)(9,470)977(8,724)(29,652)
1,862(1,668)513
7,150(25,605)
4,291(89,599)
9,242(82,540)(280,551)
17,615

Total adjustments(46,229)(5,028)(437,397)

Net cash provided by operating activities

41,06486,035388,536687(46,946)
6,704
(8)

759
(32,939)6,399(10,742)6,497(444,185)
63,427
(72)

6,626
2,684
(3,579)(6,852)(1,128)3,033(2,582)(2,175)62,691
25,397(33,866)(64,832)(40,684)(39,375)(384,943)

97
(240)

915
(2,270)(7,427)(9,984)
1,114

77(5,821)
5(51,644)(6,694)(10,685)
1,167(70,268)(94,466)
10,537(16,440)(73,595)(155,552)

OPERATING ACTIVITIES:
Income before income taxes and minority interests
Adjustments for:
Income taxes—paidDepreciation and amortization
Loss on disposal of property, plant and equipment
Loss on devaluation of land
Loss on devaluation of telephone subscription rights
Gain on sales of marketable and investment securities
Equity in earnings of affiliated companies
Changes in assets and liabilities, net of effects fromnewly consolidated subsidiaries:
Increase in notes and accounts receivable
Decrease in inventories(Decrease) increase in notes and accounts payable
Decrease in liability for employees' retirement benefits
Other—net

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
Decrease (increase) in investments in and advances tonon-consolidated subsidiaries and affiliates
Cash collected from long-term loans
Cash advanced for long-term loans
Other
Net cash used in investing activities
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
Treasury stocks
Other
Net cash used in financing activities
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS
ON CASH AND CASH EQUIVALENTS

(81)

(93)

(766)

NET DECREASE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS OF NEWLYCONSOLIDATED SUBSIDIARIES, BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR

(16,141)(27,028)(152,725)

779
132,393

4,118
155,303

7,374
1,252,656

CASH AND CASH EQUIVALENTS, END OF YEAR

¥117,031¥132,393$1,107,305

NONCASH FINANCING ACTIVITIES:
Proceeds from issuance of common stock upon
conversion of convertible debt
See notes to consolidated financial statements.

32

YAMATO TRANSPORT CO., LTD.

Annual Report 2004

¥

8,496

Notes to Consolidated Financial Statements
Years Ended March 31, 2004 and 2003

1. BASIS OF PRESENTING CONSOLIDATED FINANCIAL
STATEMENTS
The accompanying consolidated financial statements have been prepared inaccordance with the provisions set forth in the Japanese Securities andExchange Law and its related accounting regulations, and in conformity withaccounting principles generally accepted in Japan, which are different incertain respects as to application and disclosure requirements ofInternational Financial Reporting Standards.
In preparing these consolidated financial statements, certain
reclassifications and rearrangements 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.
The consolidated financial statements are stated in Japanese yen, thecurrency of the country in which Yamato Transport Co., Ltd. (the“Company”) is incorporated and operates. The translations of Japanese yenamounts into U.S. dollar amounts are included solely for the convenience ofreaders outside Japan and have been made at the rate of ¥105.69 to $1, theapproximate rate of exchange at March 31, 2004. Such translations should
not be construed as representations that the Japanese yen amounts could
be converted into U.S. dollars at that or any other rate.
Certain reclassifications and rearrangements have been made in the2003 financial statements to conform to the classifications andpresentations used in 2004.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa. Consolidation—The consolidated financial statements as of March 31,
2004 include the accounts of the Company and its 40 significant (27 in2003) subsidiaries (together, the “Group”).
Under the control or influence concept, those companies in which theCompany, 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 notsignificant to the consolidated financial statements, have not been
consolidated with the Company.
Investments in 2 (3 in 2003) affiliates are accounted for by theequity method.
Investments in the remaining non-consolidated subsidiaries andaffiliates are stated at cost less a valuation allowance representing possible
losses on the investments that is deemed to be other than temporary. If theequity method of accounting had been applied to the investments in suchcompanies, the effect on the accompanying consolidated financial
statements would not be material.
The excess of the costs over the underlying net equity of investments inconsolidated subsidiaries is allocated to identifiable assets, and the remaining
amount 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 in consolidation. All material unrealized profit included in assets
resulting from transactions within the Group is eliminated.
b. Recognition of Operating Revenues—The Group recognizes freightcharge income as operating revenues at the time when freight has been
received from the shipping customer for transportation.
c. Cash Equivalents—Cash equivalents are short-term investments that arereadily convertible into cash and that are exposed to insignificant risk ofchanges in value. Cash equivalents include time deposits, certificate ofdeposits and mutual funds investing in bonds that represent short-term
investments, all of which mature or become due within three months of thedate of acquisition.

The difference between cash and time deposits in the accompanying
consolidated balance sheets and cash and cash equivalents in theaccompanying consolidated statements of cash flows is as follows:

Cash
Time deposits
Total
Bank overdraft included in cash
Cash and cash equivalents

Millions of Yen

Thousands of
U.S. Dollars

2004
2003
¥116,913 ¥132,320
119
241
117,032 132,561
(1)
(168)
¥117,031 ¥132,393

2004$1,106,190
1,122
1,107,312(7)$1,107,305

d. Inventories—Inventories which mainly consist of supplies are stated atcost 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 in the earnings, (2) held-to-maturity
debt securities, which are expected to be held to maturity 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 ofshareholders' equity. The Group has no such trading securities.
Non-marketable available-for-sale securities are stated at cost
determined by the moving-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 arestated at cost. Depreciation of property, plant and equipment of theCompany and its consolidated domestic subsidiaries is computed
substantially by the declining-balance method at rates based on theestimated useful lives of the assets, while the straight-line method is applied
to the buildings acquired after April 1, 1998, and to the equipment used forrefrigerated delivery service. The depreciation of property, plant andequipment of foreign consolidated subsidiaries is computed on the straightline method over the estimated useful lives of the assets. The range ofuseful 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
are charged to income as incurred.
g. Other Assets—Amortization of intangible assets is computed on thestraight-line method over the period specified by the Japanese Commercial
Code (the “Code”).
Bond issuance costs are deferred as other assets and amortized on thestraight-line method over a three-year period.
h. Retirement and Pension Plan—The Company and certain consolidated
subsidiaries have a contributory trusteed pension plan and an unfunded
retirement benefits plan. The foreign subsidiaries have a defined contribution retirement plan. Other consolidated subsidiaries have an unfunded
retirement benefits plan.
According to first paragraph of Article 112 of the Defined Benefit
Pension Plan Law, the Company obtained an approval by the Ministry of
Health, Labour and Welfare on March 31, 2004, transferred the premium of
the basic portion of the governmental pension program and additional
portion from the contributory funded defined benefit pension plan to the
cash balance plan.
As a result of this transfer, the Company and certain subsidiaries
recognized a gain on decrease from pension obligation with transfer to cash
balance plan in the amount of ¥40,470 million ($382,911 thousand) for theyear ended March 31, 2004.

YAMATO TRANSPORT CO., LTD.

Annual Report 200433

Directors and corporate auditors are not covered by the retirement andpension plans described above. Benefits paid to such persons are charged toincome as paid. Any amounts payable to directors and corporate auditors
upon retirement are subject to approval of the shareholders.
i. Leases—All leases are accounted for as operating leases. Under Japanese
accounting standards for leases, finance leases that deem to transfer
ownership of the leased property to the lessee are to be capitalized, whileother finance leases are permitted to be accounted for as operating leasetransactions if certain “as if capitalized” information is disclosed in the notes
to the lessee’s financial statements.
j. Income Taxes—The provision for income taxes is computed based on thepretax 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 and the tax bases of assets and liabilities. Deferredtaxes are measured by applying currently enacted tax laws to the temporary
differences.
k. 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.
l. 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.

3. MARKETABLE AND INVESTMENT SECURITIESMarketable and investment securities as of March 31, 2004 and 2003
consisted of the following:Thousands of
U.S. Dollars

Millions of Yen

Current:
Government andcorporate bonds
Other
Total

2004

2003

2004

¥ 4,5113,567¥ 8,078¥ 6,011501¥ 6,512$ 42,681
33,750$ 76,431¥ 7,409
1,560$132,332
14,273

4,704
5,730¥19,403

20,565$167,170

Non-current:
Marketable equity securities¥13,986
Non-marketable equity securities
1,509
Government andcorporate bonds
Other
2,173
Total
¥17,668

Information regarding each category of the securities classified asavailable-for-sale and held-to-maturity at March 31, 2004 and 2003 was
as follows:
Millions of Yen

2004
m. Foreign Currency Financial Statements—The balance sheet accounts ofthe consolidated foreign subsidiaries are translated into Japanese yen at thecurrent exchange rate as of the balance sheet date except for shareholders’equity, which is translated at the historical rate. Differences arising fromsuch translation were shown as “Foreign currency translation adjustments”
in a separate component of shareholders’ equity.
Revenue and expense accounts of the consolidated foreign subsidiaries
are translated into Japanese yen at the current exchange rates as of thebalance sheet date.
n. Per Share Information—Basic net income per share is computed by
dividing net income available to common shareholders, by the weightedaverage number of common 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 per share of common stock assumes full conversion of theoutstanding convertible notes and bonds at the beginning of the year (or at
the time of issuance) with an applicable adjustment for related interest
expense, net of tax, and full exercise of outstanding 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.
o. New Accounting Pronouncements—In August 2002, the BusinessAccounting Council issued a Statement of Opinion, “Accounting for
Impairment of Fixed Assets”, and in October 2003 the Accounting Standards
Board of Japan (“ASB”) issued ASB Guidance No.6, “Guidance for AccountingStandard for Impairment of Fixed Assets”. These new pronouncements are
effective for fiscal years beginning on or after April 1, 2005 with early
adoption permitted for fiscal years ending on or after March 31, 2004.
The new accounting standard requires an entity to review its long-lived
assets for impairment whenever events or changes in circumstances indicatethat the carrying amount of an asset 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 the undiscounted future cash flows
expected to result from the continued use and eventual disposition of theasset or asset group. The impairment loss would be measured as the amountby which the carrying amount of the asset exceeds its recoverable amount,which is the higher of the discounted cash flows from the continued use andeventual disposition of the asset or the net selling price at disposition.
The Company is currently in the process of assessing the effect of
adoption of these pronouncements.

34

YAMATO TRANSPORT CO., LTD.

Annual Report 2004

Securities classified as:
Available-for-sale—equity securities
Held-to-maturity

Cost

Unrealized
Gains

Unrealized
LossesFair
Value¥ 7,013
9,076¥ 6,9877¥ 14¥ 13,986
9,083

Millions of Yen

2003
Unrealized
Gains

Cost

Securities classified as:
Available-for-sale—equity securities
Held-to-maturity¥ 6,988
15,819¥824
3

Unrealized
Losses

¥403
5

Fair
Value

¥

7,409
15,817

Thousands of U.S. Dollars

2004
Securities classified as:
Available-for-sale—equity securities
Held-to-maturity

Cost

Unrealized
Gains

Unrealized
LossesFair
Value$66,358
85,874$66,10569$130$132,333
85,943The majority of available-for-sale securities whose fair value is notreadily determinable as of March 31, 2004 and 2003 were as follows:
Carrying AmountMillions of Yen

Available-for-sale:
Equity securities
Preferred shares

Thousands of
U.S. Dollars

2004

2003

2004

¥1,5081,000¥1,5601,000$14,273
9,462

Proceeds from sales of available-for-sale securities for the years ended
March 31, 2004 and 2003 were ¥3 million ($31 thousand) and ¥9 million,
respectively. Gross realized gains and losses on these sales, computed on themoving average cost basis, were ¥0 million ($0 thousand) and ¥0 million ($2thousand), respectively, for the year ended March 31, 2004 and ¥1 millionand ¥0 million, respectively, for the year ended March 31, 2003.

The carrying values of debt securities by contractual maturities forsecurities classified as held-to-maturity at March 31, 2004 are as follows:
Millions of Yen
Held to Maturity

Thousands of
U.S. Dollars
Held to Maturity¥8,078998¥9,076$76,4319,443$85,874

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

4. BANK LOANS AND LONG-TERM DEBT
Short-term bank loans at March 31, 2004 and 2003 consisted of notes tobanks and bank overdrafts. The annual interest rates applicable to the bankloans ranged from 1% to 6% and 0.05% to 6% at March 31, 2004 and2003, respectively.
Long-term debt at March 31, 2004 and 2003 consisted of the following:
Millions of Yen

2004
Unsecured 2.6% bonds due
in July 2004
¥ 15,000
Unsecured 0.8% bonds due
in December 2004
2,000
Unsecured 1.2% convertible
debentures, convertible into
common stock at ¥1,211.80
per share, due in September 2009
13,425
Total
30,425Less current portion(17,000)
Total¥ 13,425

5. RETIREMENT AND PENSION PLANS
The Company and its consolidated subsidiaries have severance payment
plans for employees.
Under most circumstances, employees terminating their employment
are entitled to retirement benefits determined based on the rate of government bond, years of service and certain other factors. Such retirement
benefits are made in the form of a lump-sum severance payment from theCompany or from the consolidated subsidiaries and annuity payments froma trustee. Employees are entitled to larger payments if the termination is
involuntary, by retirement at the mandatory retirement age, by death, or byvoluntary retirement at certain specific ages prior to the mandatory retirement age. The retirement benefits for directors and corporate auditors arepaid subject to the approval of the shareholders.
The liability for employees' retirement benefits at March 31, 2004 and2003 consisted of the following:Thousands of
U.S. Dollars

2003

2004

¥15,000$ 141,925

2,000

18,923

Projected benefit obligation
Fair value of plan assets
Unrecognized actuarial loss
Net liability

Millions of Yen

Thousands of
U.S. Dollars

2004
2003
¥ 87,154 ¥126,763(40,293) (28,457)(28,616) (50,582)¥ 18,245 ¥ 47,724

2004$ 824,618(381,238)(270,751)$ 172,629

The components of net periodic benefit costs for the years ended
March 31, 2004 and 2003 are as follows:
13,42530,425¥30,425

127,023
287,871(160,848)$ 127,023

Based on debt assumption agreements with financial institutions, theCompany has transferred the debt repayment obligation for certain bonds
to such financial institutions and provided such financial institutions withcash for the payment of principal and interest on these bonds. As a resultof such transactions, the balance of such bonds has derecognizedamounted to ¥25,000 million ($236,541 thousand) as of March 31, 2004
and 2003 (see Note 9).
Annual maturities of long-term debt at March 31, 2004 were as follows:Year Ending March 31

Millions of Yen

Thousands of
U.S. Dollars

2005
2010
Total

¥17,000
13,425¥30,425$160,848
127,023$287,871

At March 31, 2004, land with carrying amount of ¥209 million ($1,980
thousand) was pledged as collateral for short-term bank loans of ¥48 million($454 thousand). Marketable securities and investment securities with acarrying amount of ¥10 million ($95 thousand) and ¥18 million ($167
thousand) were deposited as security for dealings at March 31, 2004.
All outstanding convertible debentures of the Company at March 31,
2004, were convertible into 11,078 thousand shares of common stock of theCompany. The conversion prices are subject to adjustments to reflect stock
splits and certain other events.
The Company has entered into loan commitment agreements
amounting to ¥30,000 million ($283,849 thousand) with financial facilities.
The loans receivable outstanding and the unused balances under these
credit facilities as of March 31, 2004 amounted to ¥0 million ($0 thousand)and ¥30,000 million ($283,849 thousand), respectively.

Thousands of
U.S. Dollars

Millions of Yen

Service cost
Interest cost
Expected return on plan assets
Recognized actuarial loss
Amortization of prior service cost
Net periodic benefit costs
Gain on exemption from future
pension obligation of thegovernmental program
Total benefit costs—net

2004
2003
¥ 8,665 ¥ 11,336
2,541
6,316
(490)
7,763
15,337(39,674)(21,195)
32,989(45,703)¥(21,195) ¥(12,714)$

2004
81,98924,044(4,636)73,455(375,381)(200,529)$(200,529)

Assumptions used for the years ended March 31, 2004 and 2003 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:
Company
Consolidated subsidiaries

2004
2.0%
2.0%
1 year

2003
2.0%
0.0%
1 year

7 years
5 years

7 years
5 years

YAMATO TRANSPORT CO., LTD.

Annual Report 2004

35

6. SHAREHOLDERS’ EQUITY
Japanese companies are subject to the Code to which certain amendments
became effective from October 1, 2001.
The Code was revised whereby common stock par value was eliminatedresulting in all shares being recorded with no par value and at least 50% of
the issue price of new shares is required to be recorded as common stockand the remaining net proceeds as additional paid-in capital, which isincluded in capital surplus. The Code permits Japanese companies, upon
approval of the Board of Directors, to issue shares to existing shareholders
without consideration as a stock split. Such issuance of shares generally
does not give rise to changes within the shareholders’ accounts.
The revised Code also provides that an amount at least equal to 10%of the aggregate amount of cash dividends and certain other appropriationsof retained earnings associated with cash outlays applicable to each period
shall be appropriated as a legal reserve (a component of retained earnings)
until such reserve and additional paid-in capital equals 25% of common
stock. The amount of total additional paid-in capital and legal reserve thatexceeds 25% of the common stock may be available for dividends byresolution of the shareholders. In addition, the Code permits the transfer ofa portion of additional paid-in capital and legal reserve to the common
stock by resolution of the Board of Directors.
The revised Code eliminated restrictions on the repurchase and use oftreasury stock allowing Japanese companies to repurchase treasury stock by
a resolution of the shareholders at the general shareholders meeting anddispose of such treasury stock by resolution of the Board of Directors. The
repurchased amount of treasury stock cannot exceed the amount available
for future dividend plus amount of common stock, additional paid-in capitalor legal reserve to be reduced in the case where such reduction was resolved
at the general shareholders meeting.
The amount of retained earnings available for dividends under the Codewas ¥126,460 million ($1,196,514 thousand) as of March 31, 2004, basedon the amount recorded in the parent company’s general books of account.
In addition to the provision that requires an appropriation for a legal reservein connection with the cash payment, the Code imposes certain limitations
on the amount of retained earnings available for dividends.
Dividends are approved by the shareholders at a meeting held
subsequent to the fiscal year to which the dividends are applicable.
Semiannual interim dividends may also be paid upon resolution of the Boardof Directors, subject to certain limitations imposed by the Code.

7. INCOME TAXESThe Company and its domestic subsidiaries are subject to Japanese national
and local income taxes which, in the aggregate, resulted in a normal effective statutory tax rate of approximately 41% for the years ended March 31,
2004 and 2003.
On March 31, 2003, a tax reform law concerning enterprise tax wasenacted in Japan which changed the normal effective statutory tax ratefrom 41% to 40%, effective for years beginning on or after April 1, 2004.
The deferred tax assets and liabilities which will be realized on or after April
1, 2004 are measured at the effective tax rate of 40% as at March 31, 2004
and 2003.

36

YAMATO TRANSPORT CO., LTD.

Annual Report 2004

The tax effects of significant temporary differences which resulted indeferred tax assets and liabilities at March 31, 2004 and 2003 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Deferred tax assets:
Current:
Accrued expenses
Enterprise tax
Legal welfare expense
Other
Deferred tax assets—current

2004

2003

2004

¥10,109
1,501
1,187
969
¥13,766¥ 7,875
2,086
810¥10,771$ 95,648
14,197
11,2359,172$130,252¥18,105
2,536$ 63,271
24,049Non-current:
Liability for employees’
retirement benefits¥ 6,687
Investment securities
2,542
Investment in and advances tonon-consolidated
Subsidiaries and affiliates
2,636
Loss on devaluation of telephone
subscription rights
475
Loss on devaluation of land
Unrealized profit
572
Unrealized gain on availablefor-sale securities(2,789)Other(12)Less valuation allowance(2,636)
Deferred tax assets—non-current ¥ 7,475
Deferred tax liabilities:
Revaluation of fixed assets
in accordance with special
tax measures
Other
Deferred tax liabilities

24,943
4,495
2,722
460

5,412

(324)
(2,722)¥20,777(26,393)(109)(24,943)$ 70,725

¥
¥

414
(349)
65

A reconciliation between the normal effective statutory tax rate for theyear ended March 31, 2003 and the actual effective tax rate reflected in theaccompanying consolidated statements of income is as follows:

Normal effective statutory tax rate
Per capita levy of local taxes
Differences from tax rates of foreign consolidated subsidiaries
Valuation allowance
Other—net
Actual effective tax rate

2003
41.0%
1.8
0.1
3.0
0.8
46.7%

The difference between the normal effective statutory tax rate for theyear ended March 31, 2004 and the actual effective tax rate is not exceeding 5% of the normal effective statutory tax rate.

8. LEASES

9. CONTINGENT LIABILITIES

Total lease payments under finance lease arrangements that do not transfer
ownership of the leased property to the lessee were ¥3,252 million ($30,768
thousand) and ¥3,035 million for the years ended March 31, 2004 and 2003,
respectively.
Pro forma information of leased property such as acquisition cost,
accumulated depreciation and obligations under finance leases that do nottransfer ownership of the leased property to the lessee on an “as if capitalized”
basis for the years ended March 31, 2004 and 2003 was as follows:

Contingent liabilities for guarantees and items of a similar nature at March
31, 2004 amounted to ¥274 million ($2,596 thousand) representing
guarantees of loans of an unaffiliated company jointly and severally by theCompany and 18 other unaffiliated companies and ¥68 million ($648
thousand) as guarantees of loans of non-consolidated subsidiaries.
Based on debt assumption agreements with financial institutions, theCompany has transferred the debt repayment obligation for certain bonds
to such financial institutions. At March 31, 2004, the Company had
contingent obligations of ¥25,000 million ($236,541 thousand) in respectof these bonds.

Millions of Yen

2004

Acquisition cost
Accumulated depreciation
Net leased property

10. NET INCOME PER SHARE

Buildings
andStructures

MachineryandEquipment

Vehicles

¥ 99
11
¥ 88

¥ 288 ¥ 16,114 ¥ 106 ¥ 16,607
190
9,290
58
9,549
¥ 98 ¥ 6,824 ¥ 48 ¥ 7,058

Other
Assets

Total

Year Ended March 31, 2004

Thousands of U.S. Dollars

2004

Acquisition cost
Accumulated depreciation
Net leased property

MachineryandEquipment

Reconciliation of the differences between basic and diluted net income pershare (“EPS”) for the years ended March 31, 2004 and 2003 is as follows:

Buildings
andStructures

Vehicles

$934
103
$831

$2,726 $152,463 $1,008 $157,131
1,796
87,894554
90,347$ 930 $ 64,569 $ 454 $ 66,784

Other
Assets

Total

Basic EPS—Net income
available to commonshareholders
Effect of dilutive
securities—
Convertible bonds
Diluted EPS—Net income
for computation

Millionsof YenThousandsof Shares

Net
IncomeWeighted-average
Shares¥49,625

461,598

101

11,078¥49,726

U.S.
Dollars

Yen
EPS¥107.51$1.02

472,676¥105.20$1.00

Millionsof YenThousandsof Shares

Yen

Net
IncomeWeighted-average
SharesEPS¥48,346462,607¥104.51

106

14,145¥48,452

476,752

Millions of Yen

2003

Acquisition cost
Accumulated depreciation
Net leased property

Buildings
andStructures

Vehicles

¥

¥

¥

5
2
3

¥

MachineryandEquipment

Other
Assets72 ¥ 14,772 ¥34
7,661
38 ¥ 7,111 ¥Total

97 ¥ 14,946
64
7,761
33 ¥ 7,185

Obligations under finance leases which included the imputed interest
expense portion, and noncancelable operating leases as of March 31, 2004
and 2003 were as follows:
Millions of Yen

2004
Due within one year
Due after one year
Total

Year Ended March 31, 2003

Basic EPS—Net income
available to commonshareholders
Effect of dilutive
securities—
Convertible bonds
Diluted EPS—Net income
for computation¥101.63

Thousands of
U.S. Dollars

2004

Finance
Lease

Operating
Lease

Finance
Lease

OperatingLease¥3,063
3,995¥7,058

¥456
92
¥548

$28,984
37,800$66,784$4,312869$5,181Millions of Yen

2003
Due within one year
Due after one year
Total

Finance
Lease

OperatingLease¥2,861
4,324¥7,185

¥328
475
¥803

YAMATO TRANSPORT CO., LTD.

Annual Report 200437

11. SEGMENT INFORMATION
Information about industry segments, geographic segments and operating revenues to foreign customers of the Company and consolidated subsidiaries for theyears ended March 31, 2004 and 2003 is as follows:(1) Industry Segments
Millions of Yen

2004
Delivery

BIZLogistics

Home
Convenience

e-BusinessEliminations
or Corporate

Financial

Consolidated

a. Operating revenues and operating income:Operating revenues to customers
Intersegment operating revenues
Total operating revenues
Operating costs and expenses
Operating income¥ 834,495 ¥ 90,236
22,6006,400
857,095
96,636
821,547
93,548¥ 35,548 ¥ 3,088¥ 42,611
12,94455,55555,545¥10¥ 21,082 ¥ 22,920
13,437
7,680
34,51930,60032,072
24,254¥ 2,447 ¥ 6,346¥1,011,344¥ (63,061)(63,061) 1,011,344(62,281)964,685¥(780) ¥ 46,659

b. Assets, depreciation and capital expenditures:
AssetsDepreciation
Capital expenditures¥ 405,577 ¥ 39,056
27,806
1,007
35,753678¥ 18,167 ¥ 19,308 ¥ 52,709
687
850
5,123
1,183
857
8,972

¥ 117,975 ¥ 652,792
190
35,663
144
47,587

Thousands of U.S. Dollars

2004
Delivery

BIZLogistics

Home
Convenience

e-BusinessEliminations
or Corporate

Financial

Consolidated

a. Operating revenues and operating income:Operating revenues to customers
Intersegment operating revenues
Total operating revenues
Operating costs and expenses
Operating income$7,895,685 $853,774 $403,172 $199,468 $216,866$9,568,965
213,837
60,558 122,472 127,134
72,659 $ (596,660)
8,109,522
914,332 525,644 326,602 289,525(596,660) 9,568,965
7,773,184
885,116 525,552 303,446 229,478(589,277) 9,127,499$ 336,338 $ 29,216 $92 $ 23,156 $ 60,047 $(7,383) $ 441,466

b. Assets, depreciation and capital expenditures:
AssetsDepreciation
Capital expenditures$3,837,420 $369,532 $171,895 $182,684 $498,713 $1,116,238 $6,176,482
263,086
9,528
6,502
8,038
48,477
1,796
337,427
338,281
6,417
11,194
8,107
84,892
1,361
450,252

Effective April 1, 2004, the Group changed its industry segmentation from “Domestic Transportation,” “International Transportation,” “Information
Communications” and “Others” to “Delivery,” “BIZ-Logistics,” “Home Convenience,” “e-Business” and “Financial” according to the classification of businessformation based on the Company’s middle-term management plan.
If the segment information for the year ended March 31, 2003 were prepared using the new segmentation, such information would be as follows;
Millions of Yen

2003
Deliverya. Operating revenues and operating income:Operating revenues to customers
Intersegment operating revenues
Total operating revenues
Operating costs and expenses
Operating incomeb. Assets, depreciation and capital expenditures:
AssetsDepreciation
Capital expenditures

BIZLogistics

Home
Convenience

e-BusinessEliminations
or Corporate

Financial

800,463 ¥ 87,102 ¥ 43,642 ¥ 19,728 ¥ 21,200
15,3984,950
11,234
11,0758,294
815,861
92,05254,87630,80329,494
769,819
89,35453,36829,05923,696¥
46,042 ¥ 2,698 ¥ 1,508 ¥ 1,744 ¥ 5,798¥¥

394,258
24,73332,290¥ 38,920
984
912¥ 13,791
500
873¥ 21,232
581
4,522

¥

¥

¥ 51,217 ¥
4,747
3,937

¥ 972,135(50,951)(50,951)
972,135(49,979)
915,317(972) ¥ 56,818

136,459 ¥186
57

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 home cleaning 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

38

YAMATO TRANSPORT CO., LTD.

Annual Report 2004

Consolidated

655,877
31,731
42,591

(2) Geographic Segments
The geographic segments of the Company and consolidated subsidiaries for the years ended March 31, 2004 and 2003 are summarized as follows:
Millions of Yen

2004
Eliminations
or Corporate

Japan

U.S.A.

EuropeAsia

Operating revenues:
Outside customers
Interarea
Total operating revenues

Consolidated¥ 991,961
3,998
995,959¥ 11,576
2,459
14,035¥ 3,610
1,143
4,753

¥ 4,197
1,975
6,172

¥

(9,575)(9,575)

1,011,344

Operating costs and expenses
Operating income (loss)
Assets949,648¥ 46,311¥ 515,953¥¥

13,879
156
2,738

4,768
¥ (15)¥ 1,734

5,932
¥ 240
¥ 2,068(9,542)¥(33)¥ 130,299

964,685¥ 46,659¥ 652,792

Eliminations
or Corporate

Consolidated¥1,011,344

Thousands of U.S. Dollars

2004
Japan

U.S.A.

EuropeAsia

Operating revenues:
Outside customers
Interarea
Total operating revenues$9,385,575
37,827
9,423,402$109,527
23,263
132,790$34,153
10,822
44,975$39,710
18,68858,398$(90,600)(90,600)

9,568,965

Operating costs and expenses
Operating income (loss)
Assets8,985,224$ 438,178$4,881,760

131,314$ 1,476$ 25,909

45,112$ (137)$16,40256,131$ 2,267$19,571(90,282)$(318)$1,232,840

9,127,499$ 441,466$ 6,176,482

Eliminations
or Corporate

Consolidated$ 9,568,965

Millions of Yen

2003
Japan

U.S.A.

EuropeAsia

Operating revenues:
Outside customers
Interarea
Total operating revenues¥ 950,980
4,443
955,423¥ 12,661
2,726
15,387¥ 3,573
1,197
4,770

¥ 4,921
2,475
7,396

¥

Operating costs and expenses
Operating income (loss)
Assets899,115¥ 56,308¥ 495,914¥¥

15,141
246
3,132

4,822
¥
(52)
¥ 2,003

7,086
¥ 310
¥ 2,688(10,847)¥
6¥ 152,140¥(10,841)(10,841)

972,135
972,135¥¥

915,31756,818655,877

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, 2004 and 2003 amounted to ¥22,831 million ($216,017 thousand) and ¥24,402
million, respectively.

12. SUBSEQUENT EVENTSAt the general shareholders meeting held on June 29, 2004, the Company’s
shareholders approved the following appropriations of retained earnings andpartial amendment to the articles of incorporation.
a. Appropriations of Retained Earnings
The following appropriations of retained earnings at March 31, 2004 wereapproved at the Company's shareholders meeting held on June 29, 2004:

Year-end cash dividends,¥10.00 ($0.09) per share
Bonuses to directors andcorporate auditors

Millions of Yen

Thousands of
U.S. Dollars¥4,564$43,184

65

615

b. Purchase of Treasury Stock
Pursuant to the revision of the Code, the Company revised its articles ofincorporation as the Company could repurchase its common stock as
treasury stock by resolution of the Board of Directors.

YAMATO TRANSPORT CO., LTD.

Annual Report 2004

39

Independent Auditors’ Report

To the Board of Directors of
Yamato Transport Co., Ltd.:We have audited the accompanying consolidated balance sheets of Yamato Transport Co., Ltd. and consolidated subsidiaries as ofMarch 31, 2004 and 2003, and the related consolidated statements of income, shareholders’ 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 weplan and perform 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, theconsolidated financial position of Yamato Transport Co., Ltd. and consolidated subsidiaries as of March 31, 2004 and 2003, andthe consolidated results of their operations and their cash flows for the years then ended in conformity with accounting
principles generally accepted in Japan.
As described in Note 11, Yamato Transport Co., Ltd. and consolidated subsidiaries changed the method of classification of thebusiness segment information from “Domestic Transportation,” “International Transportation,” “Information Communications”
and “Others” to “Delivery,” “BIZ-Logistics,” “Home Convenience,” “e-Business” and “Financial”.
Our audits also comprehended the translation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, suchtranslation has been made in conformity with the basis stated in Note 1. Such U.S. dollar amounts are presented solely for theconvenience of readers outside Japan.

June 29, 200440

YAMATO TRANSPORT CO., LTD.

Annual Report 2004

Corporate Data
Head Office
Yamato Transport Co., Ltd.
16-10, Ginza 2-chome, Chuo-ku, Tokyo
104-8125, Japan
Telephone: (03) 3541-3411
Facsimile: (03) 5565-3428

Chubu Yamato Home Convenience

Taiwan Yamato International

Co., Ltd.*

Logistics, Inc.

Kansai Yamato Home Convenience

Yamato Systems U.S.A., Inc.

Co., Ltd.*

Yamato Transport (Canada) Inc.

Chugoku Yamato Home Convenience

Yamato Travel Hong Kong Ltd.

Co., Ltd.*

Yamato Transport (M) Sdn. Bhd.

Shikoku Yamato Home Service Co., Ltd.*

Yamato (Shanghai) Logistics Co., Ltd.

Kyushu Yamato Home Service Co., Ltd.*

Yamato Architects & Design Co., Ltd.

Yamato Parcel Service Co., Ltd.

Yamato Contact Service Co., Ltd.

Domestic Offices

Miyagi Green Liner Co., Ltd.*

Dream Create Co., Ltd.

3,279

Iwate Green Liner Co., Ltd.*
Saitama Green Liner Co., Ltd.**Consolidated subsidiaries

Major Subsidiaries

Kanagawa Green Liner Co., Ltd.*and Affiliates

Niigata Green Liner Co., Ltd.*

Common Stock

Kanazawa Green Liner Co., Ltd.*

Authorized: 530,000,000 shares

Aichi Green Liner Co., Ltd.*

Issued: 469,475,456 shares

Yamato System Development Co., Ltd.*
Yamato Packing Service Co., Ltd.*
Konan Industry Co., Ltd.*
Okinawa Yamato Transport Co., Ltd.*
Kyoto Yamato Transport Co., Ltd.*
Kobe Yamato Transport Co., Ltd.*
Yamato Collect Service Co., Ltd.*
Yamato Lease Co., Ltd.*
Yamato Auto Works Co., Ltd.*
Book Service Co., Ltd.*
Yamato Global Freight Co., Ltd.*
Yamato Logistics Co., Ltd.*
Yamato Home Convenience Co., Ltd.*
Hokkaido Yamato Home Convenience
Co., Ltd.*
Tohoku Yamato Home Convenience
Co., Ltd.*
Hokushinetsu Yamato Home Convenience

Chugoku Green Liner Co., Ltd.*
Okayama Green Liner Co., Ltd.*

Stock Exchange Listing

Shikoku Green Liner Co., Ltd.*Tokyo Stock Exchange

Fukuoka Green Liner Co., Ltd.*
Kagoshima Green Liner Co., Ltd.*
Yamato Staff Supply Co., Ltd.*

Transfer Agent and Registrar

Swan Co., Ltd.

Mizuho Trust & Banking Co., Ltd.

Swan Net Co., Ltd.
Swan Charcoal Distribution Co., Ltd.

Annual Meeting

Minami Kyushu Green Co., Ltd.

The annual meeting of shareholders is

Yamato Career Service Co., Ltd.

normally held in June in Tokyo, Japan.

Yamato Transport U.S.A., Inc.*
Yamato Transport (U.K.) Ltd.*

Auditors

Yamato Transport Europe B.V.*

Deloitte Touche Tohmatsu

Yamato Transport (Hong Kong) Ltd.*(by Tohmatsu & Co., the Japanese

Yamato Transport (S) Pte. Ltd.*

member of Deloitte Touche Tohmatsu)

Co., Ltd.*Principal Shareholders

Stock Price Range
Percentage of total
shares outstanding

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

8.32%

Japan Trustee Services Bank, Ltd. (Trust Account)

7.10%

The Meiji Life Insurance Co.

5.30%

Mizuho Bank, Ltd.

3.82%

The Chase Manhattan Bank, NA London

3.74%(Tokyo Stock Exchange)

(Yen)

High

Low

First quarter

1,406

1,212

Second quarter

1,650

1,254

Third quarter

1,729

1,177

Fourth quarter

1,773

1,234

Distribution of Shareholders

Yamato Employees’ Shareholding Association

3.03%

State Street Bank and Trust Company

2.17%

Yamato Trading-Partner Shareholding Association

2.04%

Financial Institutions

45.3%

1.90%

Securities Companies

1.2%

1.87%

Other Institutions

6.2%

39.29%

Foreign Investors

26.5%

The Nomura Trust and Banking Co., Ltd.
The Sumitomo Life Insurance Co.
Total

Individuals and Others

21.0%

Total

100.0%(As of March 31, 2004)
YAMATO
TRANSPORT
CO.,
LTD.
Report2004
YAMATO
TRANSPORT
CO.,LTD. Annual
AnnualReport2004

41
41

YAMATO TRANSPORT CO., LTD.

A n n u a l R e p o r t 2004

Printed in Japan on recycled paper