Creating Satisfaction

Accelerating Innovation
Annual Report 2010
Year ended March 31, 2010

Increasing Value in a

Changing World
ProfileThe Yamato Group consists of Yamato Holdings Co., Ltd. (“the Company”), 45 subsidiaries
and 9 affiliated c­ ompanies. It is primarily involved in seven business segments: Delivery,
BIZ-Logistics, Home Convenience, e-Business, Financial, Truck Maintenance and Other, as
well as services incidental to these activities.
The goal of the Yamato Group is to help bring about a better society by further refining
the Takkyubin network, which is a part of the social infrastructure, creating services thatfacilitate more convenient, comfortable lifestyles, and developing innovative logistics systems. The Group has managed its businesses in pursuit of this goal, toward which it willcontinue to strive. To this end, the Group is working to maximize corporate value throughimproving quality by constantly putting ourselves in our customers’ position, while alsousing the capabilities of the whole Group to develop unique services that further improve
convenience for our customers.

Yamato Holdings Co., LTD.

Contents
2 Market Data
4 Six-Year Consolidated Financial Summary
5 To Our Shareholders
6 A Message From the President
12 At a Glance
14 Overview of Operations
14 Delivery
16 BIZ-Logistics
18 Home Convenience
20 e-Business
22 Financial
24 Truck Maintenance
26 Other
27 Organization
28 Corporate Social Responsibility
30 Corporate Governance
32 Directors and Auditors
34 Analysis of Financial Position andManagement Results
38 Consolidated Balance Sheets
40 Consolidated Statements of Income
41 Consolidated Statements of Changes in Equity
Forward-Looking Statements
This annual report contains forward-looking statements concerning
Yamato Holdings’ 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 Holdings therefore cautions readers that actual results may
differ materially from these predictions.

42 Consolidated Statements of Cash Flows
43 Notes to Consolidated Financial Statements
60 Independent Auditors’ Report
61 Corporate Data

ANNUAL REPORT 20101

Market Data

Growth in the Express Home Delivery Market

Growth of Takkyubin

Trends in Parcel Delivery Volume

Takkyubin is the Yamato Group’s flagship service offering. Since its

This survey uses company-reported parcel delivery volume data

launch in 1976, we have pursued a strategy of differentiationcompiled by Japan’s Ministry of Land, Infrastructure, Transport

based on development of additional strategic offerings such as

and Tourism.

Cool Takkyubin and Takkyubin Collect, and improvement of delivery

In the data, “parcels” denotes individual packages weighing lessquality, including enhanced features such as Time Period Delivery

than 30 kg, irrespective of the type of delivery (C2C, B2C, or B2B).

and Driver Direct services. As a result of these efforts, the Yamato

However, lots in which multiple packages are sent together andGroup has outperformed the growth in the express home delivery

parcels that do not require a signature on delivery are not counted

market as a whole, and steadily expanded our market share.

as “parcels” for the purposes of the survey.
(Millions of Parcels)

4,000

3,500

3,000

2,500

2,000

1,500

1988 Cool Takkyubin service launched

1,000
1986 Takkyubin Collect launched

Timeline of New Product Development
Source: Japan Post Service Co., Ltd.
Japan Post Holdings Co., Ltd.

500

YamatoJapan Post
0

1975
2

YAMATO HOLDINGS CO., LTD.

1980

1985

1990

Currently, we are moving beyond developing strategic offerings

expand Takkyubin operations farther beyond Japan’s shores toand simply improving service quality. Targeting business areas

more parts of Asia, where vigorous growth is expected going for-where future growth is anticipated, we are creating new businesses

ward. By providing the high-quality Takkyubin service and offeringand solution models driven by the three functions of information

global consumers new value previously unavailable outside oftechnology (IT), logistics technology (LT), and financial technology

Japan, we will strive to become a global supply-chain logistics(FT), to achieve further growth in the Takkyubin service.

company centering on Asia.

In fiscal 2010, as part of our global strategy, in the Asia region
we expanded Takkyubin operations to overseas locations such as
Shanghai and Singapore. Moving forward, the Yamato Group will

1999
In fiscal 1999, certain firms switched
their existing parcels to express homedelivery, and the data for the year
reflects this increase. Excluding thisextraordinary factor, year-on-year
growth was 5.9%.

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

Trends in Delivery Volume
Truck

Total Number of Deliveries

Note: “Total Number of Deliveries” includes express home delivery services
involving transport by truck, air, and other methods.
Source: Statistical survey by the Ministry of Land, Infrastructure, Transport
and Tourism.

Enhancingsender-side customer service

Enhancingdelivery-side customer service

Enhancing
services by proposing solutions

2007 Kuroneko Members service launched2002 Start of Driver Direct service

2009 Enhancement of e-money Services
2009 5 Solution Models

1998 Start of Time Period Delivery
1996 Start of year-round operations

1995

2000

2005

2010
ANNUAL REPORT 20103

Six-Year Consolidated Financial Summary

Thousands of
U.S. Dollars (Note 1)

Millions of Yen

Operating revenues
Delivery
Non-Delivery
Operating costs
Selling, general andadministrative expenses
Operating income
Delivery (Note 2)
Non-Delivery (Note 2)
Income before income taxes andminority interests
Income taxes
Net income (loss)

2010¥1,200,834
966,480
234,354
1,110,971

2009¥1,251,922
997,898
254,024
1,167,764

2008¥1,225,974
981,142244,832
1,129,008

2007¥1,161,568
934,607226,961
1,064,044

2006¥1,144,961
908,228
236,733
1,043,372

2005¥1,071,903––
998,7862010$12,906,645
10,387,792
2,518,852
11,940,789

28,474
61,38938,34523,04428,43755,721
31,344
24,37628,786
68,18040,35027,83030,363
67,161
43,69823,46332,86868,72147,053
21,66821,914
51,203––306,048
659,808
412,137
247,671

60,43428,09632,282

48,99623,34925,52367,596
31,44735,353

66,82532,47033,813

7,712
31,276(23,968)

61,741
27,95933,848649,551
301,974
346,973
U.S. Dollars (Note 1)

Yen

Per share of common stock:
Basic net income (loss)
Diluted net income
Cash dividends
Net assets per share

¥

71.84
71.16
22.00
1,130.33

¥

57.60
56.45
22.00
1,073.86

¥

79.80
78.12
22.00
1,050.99

¥

75.59
74.00
20.00
1,005.63¥(53.47)¥20.00
951.08

74.02
72.48
18.00
1,019.02

0.77
0.76
0.24
12.15

Thousands of
U.S. Dollars (Note 1)

Millions of Yen

Working capital
Total shareholders’ equity
Total assets
Capital expenditures
Depreciation
Net cash provided by operating activities$¥ 165,890
512,910878,641
39,70039,88377,064¥ 159,937
475,815
869,606
45,856
42,69784,463¥ 125,355
465,801
874,219
124,832
44,772
116,896¥ 140,377
445,263829,72148,881
40,15080,763¥ 123,483
423,690793,222
48,86535,00384,675

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

5.11
2.69
3.69
6.53
159.82
58.38
1.37
88.35

4.45
2.04
2.93
5.42
158.00
54.72
1.44
58.57

5.56
2.88
4.15
7.76
144.8953.28
1.44
223.00

5.78
2.91
4.17
7.78
149.3053.66
1.43
260.66

Number of employees
Full-timePart-time
Takkyubin delivery volume(Millions of parcels)
Unit price (Note 3) (Yen)
Kuroneko Mail handling volume(Millions of units)
Unit price (Yen)

167,555
82,39585,160170,662
82,601
88,061

169,836
80,843
88,993

1,262
624

1,232
646

2,262
65

2,231
65

¥

80,843458,792
676,156
40,96637,146
76,642$ 1,782,997
5,512,795
9,443,695
426,699
428,659828,290

6.00(2.09)(3.26)(5.43)
143.7753.41
1.56
137.92

4.78
3.16
5.09
7.50
142.8567.85
1.61
104.19

–
–
–
–
–
–
–
–

157,653
77,17080,483

152,787
75,552
77,235

141,60274,571
67,031

–
–
–

1,236
644

1,174
647

1,128
653

1,063
666

–
–

2,206
64

1,970
66

1,734
69

1,432
73

–
–

Notes: 1. U.S. dollar amounts have been translated, for convenience only, at the rate of ¥93.04 to U.S.$1.
2. In November 2005, the Yamato Group shifted to a pure holding company structure, with Yamato Holdings Co., Ltd. as the parent company. This decision was made in order to clarify the distinction
between decision-making and business execution functions, with a view to optimizing the distribution of management resources and increasing the speed of operations. Since the year ended March
31, 2006, the Group has reported operating income for the delivery business and non-delivery businesses with eliminations or corporate allocated by segment. Eliminations or corporate for the current
fiscal years are shown with segment information on p. 56.
3. Operating revenues for Takkyubin operations for fiscal 2009 include the revenues of consigned business from the domestic air-freight business as a result of the business’ in-house spin-off. Unit pricecalculated by the same method as the previous year was ¥643.

4

YAMATO HOLDINGS CO., LTD.

To Our Shareholders

Creating Satisfaction

Accelerating
Innovation
left

Keiji Aritomi
Director and Advisor
rightKaoru Seto
Representative Director,
President and Executive Officer

The Yamato Group has a basic policy of generating sustained growthcompany with a network extending all the way to the end user, theand maximizing corporate value while balancing growth potential,

Yamato Group will welcome such change as opportunity. We will

financial soundness and operating efficiency.

further reinforce our firm standing in the industry and establish an

Fiscal 2010, ended March 31, 2010, was the second year of ourunwavering position.

“Create Satisfaction Three-Year Plan” medium-term management
plan, and marked the ninetieth anniversary of our establishment.

“Accelerating Innovation”

We carried out business on the basis of two major policies out-

The Yamato Group will continue to be the logistics partner chosen

lined in the plan: establishing the overwhelming leadership posi-

and trusted by customers by providing society with new value andtion in the parcel delivery service market and creating strategic

creating the defining trends of the times.

global footholds in the Asia region.
Looking back at fiscal 2010, we took steady steps forward in
the broad sense and thereby successfully made inroads toward
future growth.

The Yamato Group will harness the energies of its 167,000
employees and tirelessly work to become a global supply-chain
logistics company centered on Asia.
We thank you for your continuing encouragement and support.

Specifically, in January 2010, we launched Takkyubin parcel delivSeptember 10, 2010

ery operations in Shanghai and Singapore, a very significant development, and in fiscal 2011 we will pave the way for our global
strategy in the Asia region.
Recent business conditions continue to be unpredictable andexceedingly challenging, but our commitment to the medium- andlong-term growth of comprehensive logistics, including Takkyubin,

Keiji Aritomi
Director and Advisor

remains unchanged. We intend to continue managing the company
along the same lines with a view to the future.
It is likely that conditions faced by the Yamato Group will completely change over the next few years. As the only logistics

Kaoru Seto
Representative Director, President and Executive Officer

ANNUAL REPORT 2010

5

A Message From the President

Kaoru Seto
Representative Director, President
and Executive Officer

There Is Always

Progress to Be Made
The Yamato Group is committed to becoming a global

In this message I will first recap initiatives I promoted

supply-chain logistics company based in Asia by organi-in fiscal 2010, while adding some of my own analysis, andcally combining information technology, logistics tech-then discuss the direction forward for the Yamato Group.

nology and financial technology—our management
resources—to create new value, while also expanding

Review of Fiscal 2010

the delivery business centered on Takkyubin operations.

Consolidated operating revenues in fiscal 2010 declined

Fiscal 2010 marked the second year of our “Create

4.1% from the previous year to ¥1,200,834 million,

Satisfaction Three-Year Plan” medium-term management

while operating income increased 10.2% to ¥61,389

plan, and also coincided with the ninetieth anniversary of

million. Although not entirely pleased with these results,

our establishment.

we were able to achieve higher profits, albeit on lower
revenues, in the midst of harsh business

Financial Results

conditions caused by Japan’s prolonged
Millions of Yen

Operating Revenues
Delivery
Non-Delivery
Total
Operating Income(Margin)
Net Income(Margin)

6

YAMATO HOLDINGS CO., LTD.

FY08/3

FY09/3

FY10/3

ChangeIncrease/
DecreaseYoY (%)¥ 981,142
244,832
1,225,974
68,1805.6%
35,353
2.9%¥ 997,898
254,024
1,251,922
55,721
4.5%
25,5232.0%¥ 966,480
234,354
1,200,834
61,3895.1%
32,2822.7%¥(31,418)(19,670)(51,088)
5,668
–
6,759
–

(3.1)
(7.7)
(4.1)
10.2
–
26.5
–

economic slump.
However, starting in the year underreview, accounting for air freight waschanged from a gross basis to a net
basis, which impacted both operating
revenues and operating costs by approximately ¥32.2 billion. Effectively therefore, consolidated operating revenues

Results of Labor Productivity Improvement Measures
FY2010 Delivery Business Revenues(Actual)

12.0

12.0

10.0

10.0

Excluding impact of Yamato Global Express split

8.0
6.0

■ YoY change in revenues fromexternal customers
YoY growth rate of Takkyubintransactions (right scale)

8.0

8.6
6.2

1st half ¥(13.7) billion

6.0
4.0

4.0
3.1

2.0
0
(2.0)

2.0
0

0.1

(2.0)

(1.8)

(1.4)

(4.0)

(4.0)

2nd half ¥4.4 billion

(6.0)
(8.0)

(6.0)

(6.4)

(7.3)

(8.0)

(10.0)(Billions of yen)

FY2010 Delivery Business Expenses(Actual)12.0

Excluding impact of Yamato Global Express split

8.0

10.0

6.0

■ Subcontracting■ Personnel■ Vehicle expenses■ Other expenses
YoY growth rate of Yamato Transport
Co., Ltd. employees (right scale)

4.0(10.0)

1Q

2Q

3Q

Other
VehiclePersonnel
Subcontracting

(3.5)
(3.7)
(5.4)
(4.0)

8.0
6.0
0.5
2.0
2.1

(2.0)

(2.0)

(2.0)
(0.9)

(4.0)

(4.5)

(2.5)

(0.7)
(0.1)
(0.7)
(1.7)

(1.7)

(6.0)
(8.0)

(6.4) (1.2)
(1.8)

(4.8)

(6.9)

At the start of fiscal 2010 I laid out two major policies

(0.3)

4.0
2.0
0
(2.0)

(2.8)

(4.0)
(6.0)
(8.0)

(10.0)

declined by 1.5%. Operating income was not affected.

10.0

(2.0)
(0.2)
1.9
1.4

2.0
0

12.0

2nd half ¥1.1 billion

1st half ¥(16.8) billion
Other
VehiclePersonnel
Subcontracting

(%)

4Q

(10.0)For individual customers, we added to our lineup ofenhanced services for members of the Kuroneko Members

aimed at sustained growth for the Yamato Group into the
future: 1) Establish an overwhelming leading position in
the parcel delivery service market, and 2) Create strategic
global footholds in the Asia region.
With regard to the first policy, in the first half of fiscal

Revenues from 5 solution models(Billions of yen)
24.8

25.0

3.3
20.0

2010 shipment movements overall were not particularly
good, as is shown in the chart above, but transaction

17.4
15.0

volume was up year on year starting in the second half.
Our solution models for corporate clients in manu-

6.0
5.6

10.0
14.0

facturing, mail order and distribution, which leverage
information technology, logistics technology and financial technology, were launched in fiscal 2009, and while
their contribution to our bottom line is still modest, in
my analysis their steady growth has produced somepositive results.

7.5

15.0

5.0

0

9.4

2008

11.4

2009

2010

■ Today Shopping Service■ Maintenance Support■ Other (Net Super; Global Direct; Web Shipment)

ANNUAL REPORT 20107

A Message From the President

Takkyubin Center in Shanghai

Sales driver and Takkyubin Center in Singapore

club by employing rigorous customer relationship man-for major revenues in the future. I think it is extremely

agement, and successfully paved the way for further

significant that we were able to make inroads toward

solidifying the Yamato Group’s customer base.

future growth.

At the same time, on the cost side, fundamental

In fiscal 2011 we intend to make headway on a strat-

operational reforms in the Takkyubin business bore

egy to differentiate ourselves in the parcel delivery

fruit. One benefit was being able to continue lowering

market and on our global strategy in the Asia region.

personnel costs and other expenses through increased

Industry Analysis

labor productivity.
As for the second policy, in January 2010 we suc-

I will next summarize trends in the parcel delivery market

cessfully launched Takkyubin operations in Shanghai

using the chart to the bottom left of the page in order toand Singapore.

provide you with a better understanding of the trajectory

Transaction volume in both countries is still modest,but an analysis of customer trends and market penetration suggests a positive response, indicating the potentialof the Yamato Group’s strategy.
The chart shows market shares for delivery companies based on annual data from Japan’s Ministry ofLand, Infrastructure, Transport and Tourism on parcels
handled by each company.
As you can see, Japan’s parcel delivery market

Market Sharehas been dominated by the top two companies,(Millions of parcels)

one of which is Yamato Transport. I believe that

3,500
3,000

12.0%

14.4%

8.4%

7.8%

2,500

10.4%

10.4%

9.6%

8.9%

8.5%

8.5%

8.7%

10.5%

10.3%

8.5%
6.2%

33.4%

36.2%

32.8%

32.4%

31.6%

why the market is trending this way: customers
38.6%

36.8%

35.8%

500

■ Yamato■ Japan Post

40.6%

38.7%

want comprehensive logistics services that cover
the entirety of supply-chain management. This2006
■ Sagawa■ Other

2007

2008

2009

2010

■ JP Express (Nippon Express)

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

8

employed by customers when choosing a logistics
company “with legs” like us provides one reason

1,000

0

going forward.
A careful analysis of the criteria and values

2,000
1,500

this trend will continue and will likely accelerate

YAMATO HOLDINGS CO., LTD.

includes not only highly refined services like
end-user pickup, delivery at specific times,
refrigerated delivery and settlement services, butComparison of Domestic Parcel Delivery Market Growth andYamato Takkyubin Service Growth
(%)
7.5
6.2
6.0

5.5
4.0

4.5
3.0

2.4
2.8

1.5
1.0

0

(0.3)

0.7

(0.6)

(1.5)
(3.0)

■

Market (YoY)

(2.2)

2006
■

2007

2008

2009

2010

Yamato (YoY)

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

also maintenance, operation and management of inven-approach to financial progress, which was based on how

tory itself at the customer’s warehousing facilities.

much transportation costs could be reduced per cus-

The Yamato Group provides comprehensive logistics

tomer parcel, is coming to an end. The future will beservices, including Takkyubin parcel delivery, to manufac-

about providing solutions to customers based on theturers and mail order companies. A certain foreign-approach of raising corporate value by improving cash

affiliated manufacturer with global operations rates theflow efficiency for customers.

Yamato Group’s logistics services as “Excellent,” the high-Next, I will explain some of the specific signs of

est ranking in the company’s internal assessment scheme.

change taking place in customer value while using actual

The services we provide have helped this customer reduce

examples from the Yamato Group to illustrate.

their own logistics costs. We also have customers that use
our services as an internal benchmark.
The domestic parcel delivery market has grown at a

Transition in Customer Value
In Japan at present the business-to-consumer market

rapid pace alongside our Takkyubin service, which has

continues to grow, centering on mail order sales and the

been making door-to-door deliveries since 1976. Somelike. We recognize this as evidence that a new lifestyleobservers contend that market growth has come to an

pattern has become widespread in the country: shopping

end, a view derived perhaps from the downturn in handling volumes of the last two or three years or structural
factors like the shift toward international specializationand the declining population.
However, in my view what is occurring now throughthis series of events does not represent market contraction but rather signals changes in shipment movements.
That is to say, the era in which parcels were acquired
and business scale expanded based on the conventional

ANNUAL REPORT 20109

A Message From the President

from the comfort of home and purchasing high quality

support for cumbersome back-office tasks, including

products at reasonable prices compared to standard

taking orders by phone and reconciliation work for prod-

market prices. I believe that this trend will continue.

uct collection.

The B2B (business-to-business) market is also grow-We also have an innovative scheme for repairs. Whening. As background, various industries are working torepairs or upgrades are needed for an electronics productreduce inventory by stocking only the amount of prod-or other product, the consumer sends the product to theuct that will sell or by only making the amount of prod-

manufacturer and requests the repair or upgrade. Two or

uct that will sell (built-to-order), in an effort to better

three days later the repaired product is sent to the con-manage cash flow. As a part of this process companies

sumer via Takkyubin and, if necessary, the cost of theare effectively utilizing Takkyubin services.

repair is collected on delivery.

While it is true that parcel delivery costs may rise as a

Our recycling scheme is very similar to this. It can be

portion of logistics expenses, operation and maintenanceused for products like copier toner, which is refilled andcosts for round-the-clock warehousing at distribution

then returned to the customer.

facilities will decline considerably. It is unexpectedly easy

Such schemes are made possible by our resources,

to reduce total logistics costs in this way. Upper manage-

which enable us to provide comprehensive support.

ment and divisional heads who recognize this fact, I

These resources include channel diversity, in the form ofbelieve, are effectively utilizing a logistics company “withsome 32,000 sales drivers active on weekdays, 3,900

legs” like us.

direct retail stores and 260,000 express agencies, as well

Moreover, C2B (consumer-to-business) logistics has

as guaranteed high-quality delivery, tracking informa-also grown substantially in recent years. This is because

tion management, and payment agency services, formajor manufacturers in various industries have jointly

which we have received high praise from customers.

created platforms that make it easy for consumers tosend back a product to the manufacturer, due to a recall,

Initiatives for Further Growth

for repairs or to recycle, for example.

The environment surrounding the Yamato Group isWith regard to recalls, first of all, procedures for collecting defective product when a defect is discoveredbusiness targeting consumer-to-consumer delivery of

have generally been inadequate. Fully leveraging the

Takkyubin parcels at 740 yen per parcel, considered anGroup’s resources, however, we offer a total solution in

extremely niche segment of the logistics industry, thewhich we collect the defective product for the customer.

market is still growing.

We do the legwork involved in picking up and delivering
the product, but we can also comprehensively provide

10

undergoing great change. As can be seen from the

YAMATO HOLDINGS CO., LTD.

I predict that this trend will not remain limited to
distribution in Japan but that it will emerge ininternational logistics. This is because international

conduct management with sufficient recognition of

specialization is becoming more and more ingrained incapital costs, which reflect the profit expectations inves-

the global economy.

tors have of us. Return on equity (ROE) is therefore used

With sites of production becoming separated fromas a management indicator for capital efficiency.

sites of consumption, international logistics is expected

In fiscal 2010, we took measures to ensure adequate

to accelerate and, in addition to conventional distribu-

cash in order to reinforce liquidity, due to as yet unpre-

tion, I believe we will see dramatic growth in demand

dictable financial markets and expected investment

for seamless global logistics, such as logistics from over-necessary for future growth, including the Haneda

seas to end-users in Japan or logistics from Japan to

Logistics Center. As a result the equity ratio was 58.4%

end-users overseas.

and return on equity was 6.5%.

There are currently no logistics companies, even when

We plan to pay out dividends, buy back stock andlooking at imports from overseas, that provide total sup-cancel treasury stock while balancing growth potential,

port services for everything from import procedures tofinancial soundness and operating efficiency, with a viewdomestic delivery, payment services and tracking informa-

to sustained corporate growth and maximum corporatetion management. The growth driver for the Yamato Groupvalue for the medium to long term. We will pursue capitalover the medium term, therefore, will primarily be differen-efficiency to achieve a shareholders’ equity ratio of

tiation through seamless global supply-chain logistics,

around 50% on a steady basis and a return on equity ofwhich we will accomplish by expanding our sphere of

10% over the medium term.

business to include the Asia region.

Depending on profit growth and progress of invest-

What will make this differentiation strategy possible isment plans, we will continue to approach stock buy-backs

the Yamato Group’s robust delivery network in Japan andwith flexibility. On dividend policy, we are committed to

the know-how we have built up over many years. It will

increasing the per-share dividend alongside profit growth,be very difficult for competitors to keep up, either quali-

but for the immediate future we will maintain a consoli-

tatively or quantitatively.

dated payout ratio of 30%.

The lynchpin of the strategy is the Haneda Logistics

Based on this policy, for fiscal 2010 we will pay a

Center, which is scheduled to commence operations infull-term dividend of ¥22 per share, which includes thethe fall of 2012. Our business model is to rigorously carry¥11 per share dividend paid for the first half.

out the differentiation strategy by providing customers

The Yamato Group will continue working to raisewith seamless global supply-chain management, from

corporate value through dialogue with stakeholders. We

procurement to distribution, and to comprehensively

thank you for your ongoing encouragement and support.

support supply-chain management for customers
through global cross-docking and innovative logistics

September 10, 2010services that cover Asia.
The Yamato Group will unflaggingly continue efforts
to become a global supply-chain logistics company basedin Asia.

Kaoru Seto
Representative Director, President and Executive Officer

Raising Shareholder ValueThe Yamato Group regards returning profits to shareholders as one of the highest priorities of management. We

ANNUAL REPORT 201011

At a Glance

Operating Revenues (Millions of Yen)

Delivery

1,000,000
800,000
600,000
400,000
200,000
0

BIZ-Logistics

2008

2009

2010

2008

2009

2010

2008

2009

2010

2008

2009

2010

2008

2009

2010

2008

2009

2010

2008

2009

2010

100,000
80,00060,00040,00020,0000Home Convenience

60,00045,00030,00015,0000

Share of Net Sales

e-Business

40,00030,00020,00010,000

0

Financial

60,00045,000■ Delivery . . . . . . . . . . . .80.5%

30,000■ BIZ-Logistics . . . . . . . . .6.6%

15,000■ Home Convenience . . . .4.2%■ e-Business . . . . . . . . . . .2.7%

0Truck Maintenance

20,00016,000■ Financial . . . . . . . . . . . .4.4%

12,000■ Truck Maintenance . . . .1.3%

8,000
4,000

■ Other . . . . . . . . . . . . . . .0.3%

0

Other

5,000
4,000
3,000
2,000
1,000
0

12

YAMATO HOLDINGS CO., LTD.

Operating Income (Loss) (Millions of Yen)

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

40,00030,00020,00010,000

0

2008

2009

2010

BIZ-Logistics handles logistics and other B2B distribution operations.
BIZ-Logistics helps its corporate clients manage their supply chains by providing innovative
logistics services and reducing total costs, and presents proposals for optimized logistics systems.

6,000

4,500

3,000

1,500

0

2008

2009

2010

Home Convenience is rooted in moving services, lifestyle support services and distribution services. It
provides lifestyle support services tailored closely to the needs of particular regions. In particular, theinstallation delivery business which installs electrical appliances for customers is steadily increasing
market penetration, with the high-value-added technical delivery services now available nationwide.

800

400

0

(400)

(800)

2008

2009

2010

e-Business is involved in a range of information services for corporations, including ASP services andinformation system development.
By acting as an information and communications technology partner for our customers in promoting enhanced business process efficiency, the e-Business helps resolve customers’ latent issues
and proposes solutions that lead to greater sales and lower costs for customers.

8,000

6,000

4,000

2,000

0

2008

2009

2010

The Financial business includes settlement and other financial services targeted at consumers andbusiness customers, beginning with mail order firms.
The business offers several types of settlement methods, including payment on delivery andpayment by credit card. Along with the increasing popularity of Internet shopping in recent years, wehave constructed an environment that enables customers to conduct transactions with complete
peace of mind.

12,000

9,000

6,000

3,000

0

2008

2009

2010

The truck maintenance business mainly comprises maintenance of trucks and other vehicles fortransportation companies. Leveraging the Group’s technologies for maintaining its vehicles, thebusiness provides customers with solutions to their vehicle-related problems.

2,500
2,000
1,500
1,000
500
0

2008

2009

2010

These businesses comprise a broad range of shared services, including highway transportation andpersonnel placement services.

35,00028,00021,00014,000
7,000
0

2008

2009

2010

* Other business operating income includes dividends received from each Group company.

ANNUAL REPORT 201013

Overview of Operations

Delivery
However, this result reflected a change in our accounting method
for airfreight expenses from a gross to a net method that added
approximately ¥22.0 billion to both operating revenues andexpenses. On a real basis, therefore, operating revenues actually
decreased by approximately 1.0%. The change in accounting
method had no effect on operating income.
In Japan, our efforts focused on being more oriented to people’s
lifestyles and regional characteristics. We took steps to support the

Makoto Kigawa
Representative Director, President and Executive Officer of
Yamato Transport Co., Ltd.

sales of supermarket clients by offering our Net Super Support
services and by eliminating shopping inconveniences for customers
related to low-density population areas and old age. Specifically, incollaboration with local supermarkets, we made it possible for cus-

Guided by its basic corporate philosophy of “Total Reliability,”

tomers to use our IT infrastructure to place orders to supermarkets

the Delivery Business utilizes the business resources of thethrough our NekoPit terminals, establishing a business model thatGroup in the Japanese and overseas markets to pursue business

utilizes our Takkyubin service to deliver their purchases. In February

development that improves the convenience of customers’

2010, to further reduce the stress of shopping for customers, welives. In the Japanese market, the Delivery Business aims tointroduced a Takkyubin Delivery Option service for Kuroneko

achieve further development of its Takkyubin service based on

Members. The service sends customers an e-mail message prior toa core strategy of introducing business innovations to increase

delivery that allows them to select the day, timeslot, and method ofmarket share, boost services and operations quality, anddelivery of their parcels.

improve its cost structure. In overseas markets, the Delivery

Overseas, our main business activities focused on achieving bor-Business is targeting expansion of its Takkyubin business in thederless operations from the perspective of becoming a more global

Asia region.

operation. We worked to locally procure raw materials and produce
supplies used in our businesses and import those goods to Japan. In

Review of Fiscal 2010

addition, we made a full-fledged start to developing our business inIn the fiscal year ended March 31, 2010, we realized that there had

the Asia region by commencing Takkyubin services in Singapore andbeen a notable contraction in the delivery service market because of

Shanghai in January 2010. Preliminary results indicate that the busi-

the economic recession. Our strategic response was to introduce

ness model used in Japan will be a success overseas as well.

strategies to maintain our workforce and our network and to make14

business plans that take into consideration the downsizing in rev-

Strategies in Fiscal 2011

enues caused by market contraction. Based on a core strategy of

The fiscal year ending March 31, 2011 marks the final year of ourintroducing business innovations to increase market share, boost

three-year medium-term management plan “Create Satisfaction

services and operations quality, and improve our cost structure, weThree-Year Plan.” As such, it is a year in which we will complete theworked together as a group to establish an overwhelming competi-

old plan as well as one in which we will set the path for our transi-

tive advantage over our rivals in preparation for when the economy

tion to the next three-year plan. During the fiscal year we intend todoes recover. We also strengthened our cost control capabilities bymake great progress by taking full advantage of the opportunities

reforming our in-house structure, such as making our labor costs

offered to us in the current competitive environment, and to thor-

flexible in conjunction with our pickup and delivery system reforms

oughly solidify our base for business expansion in preparation for aand further constricting working hours. As a result, although operat-

great leap forward under the next three-year plan. We will do so by

ing revenues declined 3.1% year on year, to ¥966,480 million, we

pursuing two major business strategies. In Japan, we will further

were able to increase operating income 22.3%, to ¥38,071 million.

increase the quality of our operations to establish an overwhelming

YAMATO HOLDINGS CO., LTD.

competitive advantage over our rivals. Overseas, we will expand ourefforts to expand the sales of S-PAT, our shared delivery service, by

Takkyubin business in the Asia region.

including such value-added content as our Cool Takkyubin service andproxy fee collection functions. Another of our goals is to develop

Japan Market: Achieving an enormous leap in quality
through a regional-oriented approachbusinesses that link production and consumption areas throughout

Guided by the concept of “from home delivery to personal delivery,”more toward people’s lifestyles and regional characteristics.

Japan. Based on these business activities, we will orient our operations

we will develop convenient services that will make Kuroneko
Members glad to be members, introduce new services that willplease customers in the same way as our Takkyubin Delivery Option

Overseas market: promoting and strengthening development of our Takkyubin service in Asia

service, and support the sale of products in regional markets and to

Along with the further expansion and improvement of our overseas

elderly people with the combined use of next-generation systems,

network, we will seek to offer the same high-quality and value-

fully digitized systems, and electric settlement systems. Throughadded services that we do in Japan and make them available in eachthese activities we will seek to make our services even more region-

country and region. Moreover, we intend to start offering an inter-ally and personally oriented.

national Takkyubin service between these expanded regions and ourexisting Takkyubin network. We have already renewed our interna-

We will proceed with network expansion of our Today Shopping
Service, a direct sales business solution for corporate clients. In falltional Takkyubin service connecting Singapore, where we have

2010, we will establish a new base in the Chubu region to comple-

started a Takkyubin service, with Taiwan and Japan. In fall 2010, we

ment our operations in the Kanto, Kansai, and Kyushu regions. In someplan to add Shanghai to our international Takkyubin service, withof these regions, we will be developing business solution services

the goal of expanding the Takkyubin business in Asia.
As we proceed with these business activities, our strategies tocombining dispersed inventories, auto-pick factories (automatedwarehousing), and merge functions that will be able to provide deliv-

gain a foothold in the international market will be to increase

ery services in as little as four hours. To improve the joint transport

market share and service quality while providing a differentiatedservices offered by Express Network Co., Ltd., we are going to imple-

service at a reasonable cost. In addition, we will allocate an appro-

ment advances to make the network easier to use. Besides expanding

priate amount of staff to deal with customer needs, an area

the number of routes and areas for which the service is available as

included in the second stage of our cost structure reforms, continu-

well as the number of participating companies, we will pursue further

ing our efforts to establish an optimum pickup and delivery system.

integration of the shared IT system. In other areas, we will makeTakkyubin Service
Customers who request delivery(Corporate or Individual)(FY2010)

Express Agency:
Direct Retail Stores:
Sales Drivers:

260,000*
3,900*
54,000** Approximate figure.

■ Upgrading Information Infrastructure• Parcels Inquiry System• Settlement Service, such as Payment on Delivery

Customers who expect toreceive packages(Corporate or Individual)

Acceleration of Multi-store (3,900 Stores)• High-density Network with Our Catch-phrase “No Matter What Time Serve
the Customer, No Matter How Many Times Serve the Customer”• Time-differentiated High Service Quality• Delivery System with In-house Employees• Delivery not Dependent on Trucks
Actions for Environment and Safety

CenterCenterCenterSmall Group

Small Group

CenterSmall Group

Base

Arterial
Transportation

Small Group

Base

Center(about 70 centers nationwide)

Small Group

CenterSmall Group(Outsource)

ANNUAL REPORT 201015

Overview of Operations

BIZ-Logistics
Review of Fiscal 2010
In the fiscal year ended March 2010, operating revenues fell 15.1%
from a year earlier, to ¥78,927 million, struggling under the impactof the economic slump. Operating income shed 16.8%, to¥2,657 million. Taking into consideration the change in our
accounting method for airfreight expenses introduced from fiscal
2010, the real decline in operating revenues was 4.2%. There wasno effect on operating income.

Masaki Yamauchi
Representative Director, President and Executive Officer of
Yamato Logistics Co., Ltd.

Although performance was disappointing, the BIZ-Logistics
Business achieved major advances in its logistics systems during
the period under review. The following are two examples.
In case 1, we expanded and improved the network of the Today

The BIZ-Logistics Business aims to amaze and satisfy its

Shopping Service and strengthened its services. More concretely,

customers and the consumers of its products and services by

we built two new specialized distribution centers called Auto-pickexceeding their expectations. The business realizes this goal byfactories (automated warehousing) in Tokyo and Fukuoka. Of theachieving daily advances in logistics systems as only thetwo centers, the Tokyo center used its special feature as a “directly

Yamato Group can offer them, such as the Today Shopping

linked Takkyubin facility” to launch a “4-hour delivery service” forService, the Maintenance Support service, and the Global Direct

certain areas, a service that our competitors cannot match.

service, all of which are business solutions that fully utilize theGroup infrastructure.

Using this service, an item on inventory at the center can bedelivered to a consumer in as few as four hours from a direct
sales order being received. This means that a customer could, forexample, order wine or cheese in the morning and have it fordinner at night.
This “4-hour delivery service” is a breakthrough that represents
a giant leap forward in consumer convenience for direct sales.
Going forward, the BIZ-Logistics Business plans to develop it into
one of its core services. Besides building more centers to make theservice available to consumers throughout Japan, we plan to introduce the service overseas as part of the development of our
Takkyubin business.

16

YAMATO HOLDINGS CO., LTD.

Case 2 concerns
our Global Direct

and retailers that send dry goods procured overseas to their own

service. Originally, we

retail outlets around the country. In future, we will endeavor tobegan this service as

develop the service into one that can handle all varieties of goods,

a consumer purchasessuch as fresh foods and pharmaceuticals.

support service. By

An Auto-pick factory allows items to be picked out
automatically without relying on a human operator

deliver products made overseas directly to retail outlets in Japan,

As can be seen, although external factors resulted in perfor-

having Takkyubinmance falling below that of the previous fiscal year, we madeservice parcel delivery

significant progress in developing and expanding our businesses.

slips attached toitems purchased

Strategies in Fiscal 2011

overseas, we achieved the fastest possible delivery times for con-

In the fiscal year ending March 31, 2011, the BIZ-Logistics Busi-

sumers by delivering the items directly to them following arrival ofness will aim to attain further business development and to amaze

the items at airports or harbors in Japan. During the fiscal year

and satisfy its customers and the consumers of its products andunder review, however, we upgraded this service into an item

services. We will do so by achieving daily advances in logistics

supply support service for retail outlets. We took this action

systems as only the Yamato Group can offer them, such as the

because of the advantages this service offers retailers in terms ofToday Shopping Service, the Maintenance Support service, and thecost reductions through eliminating intermediate logistic route

Global Direct service, all of which are business solutions that fully

processing and temporary warehousing, shortened lead times, andutilize the Group infrastructure.

reduced inventories. Following its introduction, the service has
been highly praised by such customers as manufacturers that

Logistics
Logisti
gistics
tics
ti
cs b
base

Global Direct Service

Airport (customs)
Harbor (customs)

Manufacturer
Logistics processing atoverseas bases

Shipment to JapanEnd customer
Direct shipment fromairport or seaport to consumers

Integrated information management from overseas to Japan (YY-GPS)

ANNUAL REPORT 201017

Overview of Operations

Home Convenience
Review of Fiscal 2010
In our delivery with installation business, a service that not only
delivers but also sets up large-sized furniture and consumer electronics goods, we actively endeavored to acquire new customers
based on the appeal of our nationwide network and immediate
set-up after delivery service.
Moreover, using our technicians and drivers we proactively
sought to create a new high value-added market for delivery and

Makoto Hasegawa

installation plus repair, maintenance, and construction services.

Representative Director, President and Executive Officer of
Yamato Home Convenience Co., Ltd.

Examples of our services include installation management systemservices for environmental protection related housing installation
work, and repair and maintenance services for household elec-

The Home Convenience Business is responsible for offering life

tronics goods. Through these services, we sought to differentiate

environment services that take a step inside the lifestyles ofourselves from our rivals by increasing the degree of conveniencecustomers. The business is developing and providing

provided to customers.
Reflecting these efforts, operating revenues grew despite thecomprehensive lifestyle support services that enrich and makemore convenient customers’ lives not only in the home, butdifficult business environment.
In the moving business, we endeavored to expand our share ofalso in the office.

the corporate personnel moving market by eliminating themoving inconveniences faced by businessmen and women who
have been transferred to a new city or town. We did so by offering
our Tanshin-Hikkoshi Just Service, which takes advantage of thespecial strengths of our network to enable the transport of individual moving crates. In addition, as a comprehensive lifestylesupport service for people moving households, we began offering
the Kuroneko Leave-It-to-Us Rental service. This service collects

Household Takkyubin Service

YamatoManufacturer

18

YAMATO HOLDINGS CO., LTD.

Packaging/Shipment

Installation/Set-up

Consumer

unwanted furniture and household electronic goods and sells

popularization of energy-saving houses and household electronics.

them in recycling shops as well as leasing household electronic

With the Government of Japan subsidizing purchases to promote

goods at a reasonable price to businesspeople living on their own

their use, there is a growing market for these products. We believe

away from their families.

that our business can use its strengths to gain an advantage in the

Although operating revenues from the corporate personnel

eco-friendly housing market by offering a total service thatmoving market increased substantially, the overall moving businessincludes procurement in addition to our delivery with installation

remained at a low ebb because of the contraction in the household

plus construction services. As a moving and lifestyle support ser-moving market as evidenced by the decline in housing starts during

vice, our recycling and rental business also has strong

the fiscal year.

market potential.

As a result, operating revenues decreased 5.6% year on year,

In terms of developing technological capabilities into one ofto ¥50,351 million. We took various steps to reduce operating

our strengths, we have established our own technological capabil-

expenses, including reforming our business structure to improve

ity qualification standards to be used in the development of ourefficiency by restructuring the organizations of our set up andtechnicians and drivers who make up the core of our technologicalmoving businesses and merging them into a single operation andstrength. Based on those standards, we will continue our develop-

improving services. We also cut subcontracting expenses by pro-ment and training programs with the goal of upgrading andmoting more in-house handling of areas where delivery services

expanding technician and driver skills.

are usually subcontracted. Although operating expenses did con-

Although we expect that the currently difficult market condi-

tract 4.4% year on year, it was insufficient to offset revenue

tions will continue, we will aim to implement innovative logistics

decline, and the Home Convenience Business suffered ansystem reforms to make the lives of our customers more comfort-

operating loss of ¥701 million.

able. Our goal will be to achieve sustainable growth by offering awide range of services that provide greater convenience for cus-

Strategies in Fiscal 2011

tomers and by increasing our corporate value.

In the fiscal year ending March 31, 2011, we will continue toexpand our share of markets in which we can take advantage of
our network’s strengths, which have advanced from last year. We
will also develop new services into businesses.
We believe that the key words for the success of our strategies
are network, technological capabilities, and eco-friendly. In ourdelivery with installation business, we will offer solution models

Household Takkyubin Handling Volume(Items)4,000,000

that directly link manufacturers and consumers. Examples of such

3,574,772

3,709,274

solutions are our repair logistics service, which eliminates thetradeoff between improving the after-sales services of the manu-

3,000,000

facturer and reducing distribution costs, and solutions that separate commercial distribution from physical distribution in the2,303,909
2,000,000

furniture and electronic appliances distribution markets. In our
moving business, we will continue to expand our market share byachieving greater convenience for customer and we will lower

1,000,000

costs in the business personnel moving market.
Because of the growing awareness of global environmental

0

2008

2009

2010

issues, there has been a surge in the development and

ANNUAL REPORT 201019

Overview of Operations

e-Business
Review of Fiscal 2010
During the year under review, the e-Business contributed to
improving the efficiency of its customers’ business processes by
providing ASP services, developing information systems, and otheractions. At the same time, we actively suggested solutions forpotential business problems to our customers. Furthermore, keeping up with the aggressive business development of the YamatoGroup, we developed and operated Group systems.

Kenji Minaki

Along with the Group’s development of the Takkyubin business

Representative Director, President and Executive Officer of
Yamato System Development Co., Ltd.

in Asia, we created an ASP-type Takkyubin system and provided
services in Singapore and Shanghai, China. In setting up the

Our e-Business is involved in a range of information services forcorporations, including application service provider (ASP)

Group’s new in-house IT system, the 7th generation NEKO system,
we converted the communications format of our portable POS
terminals to a wireless data transmission system for mobile

services and information system development. Using

phones to supply service functions to the many electronic money

information and communication technology (ICT), thee-Business works in partnership with customers in promoting
efficient business processes. Based on these services, thee-Business provides solutions for potential business problems
and proactively proposes solutions that result in sales growth

settlement systems under our roof and to improve the productivity of vehicle drivers. In addition, we established a relay system
to provide settlement information to our customers in the electronic money business.

and cost reductions for customers.

e-Logistics Tracing Solution
Individual Parcel Management Enables Faster, More Accurate Response
Yamato Group
Business Partner

Business Partner’s
Customers

Yamato Group Operations

Production Base

Customer

Information and Tracking Management
Storage, Transport and Delivery

Distribution Base

Flow of Goods

Sales BaseUsing Tracing to Achieve Uniform Information Management

20

YAMATO HOLDINGS CO., LTD.

Flow of Information

computers throughout this life cycle, from purchasing to disposal,

Our e-direct sales solution business, which develops businessoutside the Group, took steps to develop the “net supermarket”

and including installation and setting up of software, delivery,business, in which we expect demand will expand. The businesson-site installation, operating support and maintenance services.
Although the measures mentioned above supported expansion

targeted retail business customers, such as supermarkets anddepartment stores, in expanding its Net Super Support service, ain Internet direct sales and tracing services and in services for thecomprehensive service offering Web system creation, delivery ofcredit card industry, the current curtailing of IT capital investments

items, and collection of payments. Taking advantage of the multi-

by corporate clients reduced overall demand. As a result, operating

functionality of the Yamato Group, this service has gained a strong

revenues edged down 0.6% year on year, to ¥32,094 million, while

reputation for its overall power as a service that deals with theoperating income slid 0.7%, to ¥6,016 million.

underlying social trends of an aging society and the depopulation

Strategies in Fiscal 2011of rural areas. Consequently, business is expanding firmly.

Our first strategy is to transfer and develop the high-quality

In our e-logistics tracing solution business, we worked to provide services that contribute to the reduction of customers’ inven-

Takkyubin system developed in Japan to countries in Asia in sup-tories and costs through the integration of distribution andport of the Group’s development of its Takkyubin business in Asia.
Next, to further increase the number of businesses involved

information functions. Business expanded in the fiscal year underreview along with robust sales of our Sales Promotion Materials

with e-Business formation, we plan to create multiple solution

On-Demand and SCM Tracing services. The former supports

units (SUs), our seeds for new business, and commercialize them.

improved sales efficiency and inventory reductions by providing

Our third strategy is to use ICT to nurture a workforce that canmanagement, on-demand printing, and just-in-time delivery ofdrive the development of the Yamato Group. Utilizing ICT, we will

customers’ sales promotion materials. The latter is a supply-chain

develop human resources with the capability of creating total

management tracing service that contributes to lower inventories

solutions that combine logistics technology (LT) and financial

through individual parcel management of customers’ manufac-

technology (FT), dispersing them throughout the Group.
Going forward, we will strive for superior ability to use thetured products.

combined power of the Group in our business, continuing to offer

Revenues of the IT operating solutions business increased on thestrength of expanded demand for its PC Life Cycle Service, which

new solutions that contribute to improved efficiency in the busi-

increases the efficiency of customers’ PC management operations.

ness processes of our customers.

The business provides a full service for customers’ personal

Net Super Support Service

Customer places order

End customer
Able to accept settlement
using electronic money

Order(NekoPit/Internet)

Same-day delivery• In-store selection• Collection by sales driver

Base

Center

ANNUAL REPORT 201021

Overview of Operations

Financial
Review of Fiscal 2010
The Financial Business proposes total comprehensive solutions for
mail-order companies that offer greater convenience for purchasers(end-users) and an improved business environment for the mailorder companies. To provide greater convenience to purchasers, ourhigh-quality Takkyubin Collect service offers customers who use
mail-order shopping the same secure, comfortable shopping environment they have when shopping in a store.

Kenichi Shibasaki

Purchasers who are satisfied with the service become repeat

Representative Director, President and Executive Officer of
Yamato Financial Co., Ltd.

customers, and mail-order companies who develop a good reputation gain new customers, which leads to higher revenues.
To improve the business environment for mail-order companies,

The Financial Business is currently expanding from delivery

we offer support in building mail order systems, while also offering

settlement services to business-to-business logistics

systems for reducing costs relating to settlement processing. The

settlement. During the year under review, the business took

proposals we make to increase revenues and cut costs improve thesteps to respond with a wide array of settlement methods

business performance of corporate customers. Moreover, wetailored to customer requirements.

continue to pursue greater convenience in methods of payment,
actively promoting electronic money payments in addition to payments by cash, credit or debit card.
Surveys indicate that one in five users of electronic money
chooses to shop at stores that accept electronic money, and that
one in four users would like to be able to use electronic money
to make payments for Internet shopping.

Cash on Delivery Service
1 Purchase Agreement

Mail-order Company

Purchaser

2 Product Dispatched

3 Delivery

4 Money Collection

Flow of Goods

6 Funds Transfer

Yamato Group
Flow of Money
Product Purchase
Price

Hand-over of ProductConditional upon Payment
Improved Cash-flow to
Mail-order Company

22

YAMATO HOLDINGS CO., LTD.

Delivery BusinessTransport Fee
Financial BusinessCollection Fee

5 Temporary Holding of Funds

The Growing Mail-order Sales Market and Takkyubin Collect
(%)
16.0
14.7
14.0
12.0
10.5
9.5

10.0
8.0

6.8

6.0

6.5
5.4

4.0

6.7

6.2

6.0
4.1

2.0
0

■

2006

2007

YoY growth in mail-order sales

■

2008

2009

2010

YoY growth in Takkyubin Collect parcel volume

Source: The Japan Direct Marketing Association

Yamato Financial introduced systems for making payment byFirst, for our corporate clients we will propose optimal solutions

electronic money for the Takkyubin Collect service using a PC orfor innovating logistics operations, thereby contributing to a flourish-

mobile phone in November 2007. Since then the scope of users

ing mail-order shopping market and comfortable lifestyles supported

has expanded, and in June 2010 we introduced a single terminalby mail-order shopping.

able to process multiple electronic money settlements, andSecond, the electronic money settlement market is estimatedlaunched a service allowing recipients to pay by electronic money

to be worth around ¥7 trillion, and we expect that going forward

at the time of delivery.

the major part of this market will be settlements for small

Operating revenues for this segment for fiscal 2010 wereamounts here in Japan. We will therefore work to expand the¥52,659 million, down 1.8% year on year, partly because of themarkets for electronic money and transactions even further.

tightening of relevant laws in the shopping credit business despite
healthy numbers of settlements in the Takkyubin Collect service.
Operating income for the Financial segment declined 2.3% to¥10,260 million.

Strategies for Fiscal 2011
The Financial Business will continue to work on creating convenient, user-friendly services to suit a range of settlement scenarios
for all corporate customers and end-users in regional areas.
Specifically, we will focus on two themes.

Drivers can take payments by credit card on delivery,right on the customer’s doorstep

ANNUAL REPORT 201023

Overview of Operations

Truck Maintenance
Review of Fiscal 2010
In the fiscal year ended March 2010, our operating revenues
amounted to ¥16,002 million, while operating income was ¥1,649
million. These figures represent declines in revenues and profit
because we were unable to compensate for the downturn in theeconomy, particularly the slumps in domestic haulage and in fueldemand, and for the dramatic fluctuations in the diesel oil market.
The number of automobile safety inspections done for com-

Keishiro Sasaki
Representative Director, President and Executive Officer of
Yamato Autoworks Co., Ltd.

panies outside the Yamato Group totaled 30,565 vehicles, up
25.0% from the previous fiscal year and supporting growth inoverall operations.
During the fiscal year under review, we opened two high oper-

Since October 2003, the Truck Maintenance Business has

ating efficiency Superworks vehicle maintenance plants in theoperated in-industry vehicle maintenance plants for logistics

Tokyo metropolitan area and one in the Osaka area. With thesecompanies. Over the years, the business has expanded the

additions, 18 of our 70 vehicle maintenance plants are Superworks

industry’s first maintenance service into a 24 hours a day, 365

plants. We expect that the strengthening of our vehicle mainte-days a year, membership service that enables customers tonance plant network will result in growth in our customer base.

service their vehicles without stopping operations, schedule
automobile safety inspections, and have routine check-ups.

Strategies in Fiscal 2011

Based on the perspective of “Transform inconvenience into

In the fiscal year ending March 2011, we will endeavor to upgradeconvenience from the customer’s standpoint”—the corporate

our business into a comprehensive consulting service guided by

DNA of the Yamato Group— the business offers one-stop

the key words of “vehicle management.” We intend to expand andservices that go beyond vehicle maintenance to include body

improve our services by shifting our viewpoint from vehicle main-

and tire maintenance, inspection consultations and fueltenance to business management support.

supplies. These total vehicle management services are designed
to vitalize the logistics businesses of customers.

As a start, we will launch a 12-month fixed payment tire management service. The service charges will be based not on thefrequency of occurrence of tire problems, but will offer a schemethat allows the customer to set a budget for tire maintenance.
Consequently, the new service will contribute to improvement incustomers’ cash flow.
Based on the introduction of this new scheme, we expect toacquire new maintenance contracts for 25,000 vehicles. For the
fiscal year ahead, our performance targets in the one million
vehicle strong commercial truck market will be 150,000 vehicles under management, 75,500 automobile safety inspections,and a 21.0% increase in the number of vehicles serviced for
non-Group companies.

24

YAMATO HOLDINGS CO., LTD.

Superworks Locations
18 locations in total (as of March 31, 2010)
Hokkaido

Yamagata

MiyagiA mechanic services a customer’s vehicle at a highly
efficient Superworks vehicle maintenance plant

Fukushima
Saitama

IbarakiTokyo

Fukuoka

Chiba
Hyogo Aichi
Kanagawa
Mie Shizuoka
Osaka
KagawaOkinawa

Basic Concepts—The Four “Cs”
Yamato Autoworks pursues one-stop services for vehicles
based on observing the four “Cs.”
The first “C” is Compliance. Using our Repairworks mobile
plants that enable vehicle inspections in customers’ garages,
we have contributed to improving the completion rate forstatutory vehicle inspections of our customers. We also offer
a Manager Development Support Program for G Mark andGreen Management certified operations.
Next, we have Convenience. Based on this concept, we
support improvement in operating rates for commercial
vehicles by promoting a shift to night-time working hours
and operating 24 hours a day, 365 days a year in order toIndustry Analysis
Since the freight market in Japan is continuing to shrink, thetotal haulage and number of trucks will also likely decline.
However, since we have entered a period where logistics
companies must carefully use each vehicle and pursue higher
operating rates, the number of years that companies operate

carry out vehicle inspections when the vehicles are not in
operation. In addition, we have introduced a Large Vehicle 3
Hour Service and expanded the items on our “on-the-go”
maintenance services menu.
Our third “C” stands for Cost reduction. By increasing thecompletion rate for statutory vehicle inspections, we havemade it possible to implement preventative maintenance,
which helps limit occurrences of unexpected costs.
Finally, we have Clean. Guided by this concept, we support our customers’ efforts to deal with environmental
issues through such measures as installing LED or other
low-energy consumption lights and recommending the useof rebuilt parts.

their trucks and buses as well as their useful lives will certainly increase. As a business that emerged from the maintenance department of a logistics company, we will contributeto the truck and bus maintenance market by creating
schemes that increase the useful life of trucks and support
their efficient and effective use.

ANNUAL REPORT 201025

Overview of Operations

Other
With respect to the “JITBOX Charter” service, the Yamato Group
took aggressive marketing approaches, supported by a sales structure composed of 15 Group companies, to promote market penetration of its product characteristics including just-in-time andfrequent, right-volume delivery by transport box.
Although handling volume for fiscal 2010 decreased due partly
to sluggish shipment movements as a result of production adjustments by companies, fourth quarter volumes were up year on
year, and we saw signs of a recovery.
Operating income in other businesses, excluding dividends and
JITBOX Charterother payments which Yamato Holdings received from Group
companies, increased 34.4% to ¥1,872 million.

Operating Income

Track Record of JITBOX Charter(Millions of Yen)

(Units)35,000491,446

500,000
460,506

30,00030,152
390,233

400,000
25,00022,90320,00018,634

2,000

1,872

300,000

200,000
1,392

1,500

100,000

1,000
500
0

528

2008

■ Including Yamato Holdings

26

YAMATO HOLDINGS CO., LTD.

2009

2010

■ Excluding Yamato Holdings

0

2008

2009

2010

Organization(As of March 31, 2010)

Yamato Transport Co., Ltd.
Okinawa Yamato Transport Co., Ltd.
DeliveryYamato Global Express Co., Ltd.
Express Network Co., Ltd.
Yamato Dialog & Media Co., Ltd.
Yamato Transport (S) Pte. Ltd.
Yamato (China) Transport Co., Ltd.
Shanghai Bus Chemical Logistics Co., Ltd.
Zhangjiagang Free Trade Zone Bus Logistics Co., Ltd.
Yamato Logistics Co., Ltd.
Yamato Global Logistics Japan Co., Ltd.
Yamato Multi-Maintenance Solutions Co., Ltd.
Yamato Packing Service Co., Ltd.
Yamato Packing Technology Institute Co., Ltd.
Konan Industry Co., Ltd.
Yamato Transport U.S.A., Inc.

BIZ-Logistics

Yamato Transport Europe B.V.
Yamato Transport (Hong Kong) Ltd.
Taiwan Yamato International Logistics Inc.
Yamato Asia Pte. Ltd.
Yamato International Logistics Co., Ltd.
Yamato Transport (M) Sdn. Bhd.
Yamato Logistics India Pvt. Ltd.
Shanghai Wai Gao Qiao Bonded Logistics Zone Yamato Warehouse Co., Ltd.

Yamato Holdings Co., Ltd.
Home Convenience

e-BusinessYamato Home Convenience Co., Ltd.
Yamato System Development Co., Ltd.
Yamato Career Service Co., Ltd.
Yamato Financial Co., Ltd.

Financial

Fine Credit Co., Ltd.
Yamato Lease Co., Ltd.
Yamato Payment Service (S) Pte. Ltd.
Yamato Autoworks Co., Ltd.
Yamato Autoworks Asahikawa Co., Ltd.

Truck MaintenanceYamato Autoworks Iwate Co., Ltd.
Yamato Autoworks Hokushinetsu Co., Ltd.
Yamato Autoworks Shikoku Co., Ltd.
Yamato Autoworks Okinawa Co., Ltd.
Box Charter Co., Ltd.
Yamato Box Charter Co., Ltd.
Yamato•Staff•Supply Co., Ltd.

Other

Yamato Management Service Co., Ltd.
Yamato Multi Charter Co., Ltd.
Kobe Yamato Transport Co., Ltd.
Swan Co., Ltd.

Consolidated subsidiaries

Yamato Contact Service Co., Ltd.

Non-consolidated subsidiaries

ANNUAL REPORT 201027

Corporate Social Responsibility

Compliance is one of the top priorities of management at theEnvironment

Group. As such, the Group believes that the Company’s sustained

Active Deployment of Low-Emission Delivery Vehicles

growth is largely contingent upon not only business profitability,

Under its medium-term plan, the “Create Satisfaction Three-Yearbut also proper conduct as a business group with operations that

Plan,” the Yamato Group is aiming to reduce its overall CO2 emis-

require a high degree of social interaction.

sions volume to 99% of the levels in fiscal 2007. As a Group with

With the interests of all stakeholders in mind, the Groupbusiness operations centering on the field of logistics, Yamato is

actively conducts social contribution activities to fulfill its Corpo-

striving to reach this goal through a more robust environmental

rate Social Responsibility (CSR) from the perspectives of safety,

stance, including reductions in fuel usage through the introduction

the environment and society in line with the Yamato Group Cor-of low-emission vehicles.
As a specific measure for achieving this objective, by fiscal

porate Philosophy.
The extensive promotion of CSR management in tandem with

2013 Yamato Transport is aiming to have 20,000 low-emission

business expansion is also an integral part of the “Create Satisfac-delivery vehicles in operation in its fleet of vehicles. In fiscal 2010,tion Three-Year Plan,” the Yamato Group’s medium-term manage-

we added 1,298 low-emission vehicles, including 379 hybrids, toment plan for guiding management policy that we launched inbring the total to 11,538.
As Yamato Transport’s vehicles account for 87% of the Group’s

April 2008.
The Group is placing particular emphasis on two elements ofthe plan—compliance and environmental concerns.

total vehicle fleet, this brings the total proportion of low-emission
vehicles in the Yamato Group’s fleet to 25.7%.

Diagram of Yamato Group Corporate Philosophy

Customers

Local
residents

Shareholders

Partners

Employees

Management
Philosophy

Corporate Stance

Employee Codeof Conduct

Yamato Group Corporate Philosophy

Precepts
Founding Spirit

28

YAMATO HOLDINGS CO., LTD.

As of March 2010, Yamato Transport had a nationwide networkof 971 satellite centers for parcel delivery located primarily in

Changes in the Number of
Low-emission Vehicles

20,000urban centers. Parcel delivery from these satellite centers is conducted primarily through the use of handcarts and bicycles with
attached trailers, rather than motor vehicles.

12,00010,0008,000

Satellite Centers Eliminate Use of Vehicles
6,000

for Parcel Delivery
The opening of more satellite centers reduces the parcel delivery

4,000

volume per sales driver for a given delivery area. This lighter load

2,000

not only enables drivers to provide more detailed services to each0customer, but also helps to curb increases in the number of vehicles required to keep pace with increased parcel volume. The
Group is targeting a network of 1,000 satellite centers acrossJapan by fiscal 2013.

2006

2007

2008

2009

2010

2013
(Plan)■ Hybrid Cars
■ CNG Cars
■ LPG Cars
■ Others■ TotalExternal Evaluation
The FTSE Group confirms that Yamato Holdings has been independently assessed according to the FTSE4Good criteria, and has satisfied the requirements to become a constituent of the FTSE4Good
Index Series.
Created by the global index company FTSE Group, FTSE4Good is anSocietyequity index series that is designed to

Safety Classes for Children

facilitate investment in companies that

The Yamato Group always puts safety first in its businessmeet globally recognized corporate

activities. Preventing traffic accidents involving children is

responsibility standards. Companies inan especially important safety issue.

the FTSE4Good Index Series have met stringent social and environ-

We have held safety classes for children since 1998. Heldmental criteria, and are positioned to capitalize on the benefits ofall over Japan, these classes seek to teach children ways toresponsible business practices.

protect themselves from traffic accidents.
Taught entirely by Yamato Transport employees, the funand entertaining classes employ various means to teachchildren about traffic safety. In fiscal 2010, classes were held
at 1,500 locations andaround 150,000 children participated.

ANNUAL REPORT 201029

Corporate Governance
As of March 31, 2010

Basic Position on Corporate Governanceauditors of the major operating companies to confer on auditing

Based on its corporate philosophy, the Yamato Group carries out

policies and procedures, exchange information and otherwisebusiness activities in accordance with the law and social norms

enhance collaboration. Meetings with internal auditors are also

and actively promotes compliance management. Striving to maxi-

held periodically to exchange information.

mize corporate value by effectively utilizing the management

Internal audits are performed by a seven-member team that

resources of the Group is one of the top priorities of management,

operates independently from any other Group organ. Together

and we work to bolster management systems and implementwith the 106 employees who conduct internal audits for Group

policies to this end.

companies, the Yamato Group has a total of 113 internal auditors,
who check whether the business and affairs of the Group as a

Status of Corporate Governancewhole are being carried out appropriately and efficiently based on

The Board of Directors, Management Advisory Committee andthe annual auditing plan. A structure is in place under which results

Executive Committee serve as administrative organs involved inare reported to the Board of Directors and the Board of Auditors.

decision-making, supervision and execution for the Yamato Group.

Also, the Group Internal Auditing Committee meets regularly forThis management structure enables decisions to be made rapidly

the internal auditors of the operating companies to confer onand precisely on important matters. The number of Board mem-

auditing policies and audit results, exchange information, and tobers cannot exceed 12 as stipulated in the Company’s articles ofotherwise enhance collaboration.

incorporation. As of June 25, 2010, the Board comprised six directors, two of whom are outside directors. The term of office ofTohmatsu LLC holds regular meetings with auditors and conducts

directors has been set at one year in order to clarify management

effective accounting audits. Accounting audits are performed byresponsibilities for each fiscal year.

two certified public accountants, Yoshiaki Kitamura and Takeshi

The Board of Auditors is made up of one full-time auditor andthree outside auditors. Auditors attend meetings of the Board of
Directors and other important meetings to assist them in con-

Kosaka, assisted by another five certified public accountants andeleven other staff members.
Outside directors draw on their extensive experience as manag-

ducting audits on the legality of business execution, and otherwise

ers to provide necessary advice and recommendations on manage-

endeavor to improve the soundness of management and the trust

ment as a whole. They also provide advice regarding any internalof the public. A full-time staff member has been appointed tocontrol irregularities discovered by the accounting auditors or theassist the auditors to put in place a framework that enables the

Audit Division and internal issues, with the aim of improving col-auditors to smoothly carry out their functions. In addition, Grouplaboration between internal control divisions.

Auditors’ Liaison Meetings are held periodically for the full-time

30

As the Group’s appointed accounting auditor, Deloitte Touche

YAMATO HOLDINGS CO., LTD.

Outside auditors attend Board of Auditors meetings as well as

The current status of provision for oversight of business execu-

periodic meetings to exchange opinions with the president andtion and management, internal control and related functions at

auditors and to present opinions from their own standpoint as

Yamato Holdings is illustrated in the diagram below.

auditors. These meetings also serve to confirm the status of directors’ execution of duties, by means of including questions regarding management policy.

Corporate Governance Framework
General Meeting of Shareholders
Elect

Elect

Board ofAuditors

Elect/
Supervise

Audit

Nomination andCompensation
Committee

Board ofDirectors

Management
Advisory Committee

ReportReportIndependent
Auditor

Elect

Make decisions/Supervise

ReportPropose/ReportExecutive
Committee

Accounting
audit

Execute business

CSR Division

Legal Advisor

Propose/ReportInternal
audit

Audit Division

Group Companies

ANNUAL REPORT 201031

Directors and Auditors(As of June 25, 2010)❙ Directors
Keiji Aritomi

Kaoru Seto

Director and Advisor

Representative Director,
President and Executive Officer

Haruo Kanda

Makoto Kigawa

Representative Director andManaging Executive Officer

Director and Executive Officer(Human Resources Strategy, Facilities

Executive Officer of Yamato Transport Co., Ltd.)(Representative Director, President andStrategy, Public Relations Strategy,
CSR and Audit)❙ Members of the Board
Masayoshi Sato

Toshitaka Hagiwara

Hiroshi Kawada

Keiko Kitamura

Koji Okawa

Motoharu Yokose❙ Auditors

32

YAMATO HOLDINGS CO., LTD.

❙ Executive Officers
Kenji Minaki

Kenichi Shibasaki(Representative Director, President and(Representative Director, President andExecutive Officer of Yamato System

Executive Officer of Yamato Financial Co., Ltd.)

Development Co., Ltd.)

Toshizo Kurisu

Masaki Yamauchi(Financing and Accounting, Investor Relations;(Representative Director, President andRepresentative Director, President andExecutive Officer of Yamato Logistics Co., Ltd.)

Executive Officer of Yamato Management
Service Co., Ltd.)

Makoto Hasegawa

Atsushi Ichino(Representative Director, President and(Planning and Administration)

Executive Officer of Yamato Home
Convenience Co., Ltd.)

Hidenori Osano(Marketing and Administration, IT Planning)

ANNUAL REPORT 201033

Analysis of Financial Position and Management Results

The Finance Strategy of the Yamato Group
Details of the Yamato Group’s performance are presented in To Our Shareholders (page 5) and Overview of Operations (page 14). This section focuses on the Group’s finance strategy.
The Yamato Group is currently promoting various growth strategies, with the aim of expanding
corporate value through growth in profits.
In order to pursue strategic and flexible business and achieve this growth in profits, we haveformulated medium- and long-term strategies that look five and ten years down the road, respectively. Based on these strategies we will conduct the necessary investments, including well-timed

Toshizo Kurisu

M&As, being sure not to overlook the crucial openings for future growth.

(Executive Officer, responsible for Financing andAccounting, Investor Relations)

The logistics industry in which the Group operates is currently in a period of great transformation.
From the perspective of CFO, I believe that the ability of a company in the logistics industry to raise
its corporate value indefinitely depends on whether it is able to implement the management measures based on its medium- to long-term plan.
In other words, strategic and well-timed growth investments are absolutely critical to raising
corporate value in the future. Another key factor in determining whether a company will be able togrow is whether or not that company has a financial base that enables the company to make continuous investments.
Despite the poor economic conditions, Yamato Holdings has secured around ¥100.0 billion on an
EBITDA basis. The shareholders’ equity ratio is around 50%, and both cash flow generation capabilities and financial soundness are at high levels compared to competitors.
Going forward, we will pay careful attention to the balance between shareholders’ equity andinterest-bearing debt, and maintain the strong financial base we need to promote strategic andflexible business. Moreover, we will conduct the well-timed investments needed to secure future
growth in order to expand corporate value.

Procurement and Use of CapitalIn the fiscal year ended March 2010, we conducted annual capital expenditures of ¥35.3 billion,
including for vehicle investment and renovation of Takkyubin base terminals.

Operating Revenues

Operating Income/Operating Margin(Millions of Yen)

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

80,0001,225,974

1,200,000

1,144,961

1,251,922

1,161,568

1,200,834

8.00
68,721

67,161

68,18061,38960,0001,000,000

6.00

55,721
5.78

6.00

5.56
5.11

800,000
4.45

40,0004.00

600,000
400,000

20,0002.00

200,000
0

0

2006

34

Yamato Holdings Co., LTD.

2007

2008

2009

2010

0

2006

2007

n

Operating Income (left scale)nOperating Margin (right scale)

2008

2009

2010

As stated earlier, the logistics industry is confronting a period of great change. The age of theconventional approach to management—which focused on improving the bottom line by lowering
customer delivery costs as much as possible—is coming to an end.
In the future, the paradigm will go beyond simple delivery costs, and it will be increasingly important to approach management from the perspective of improving corporate value by raising customers’ corporate value as much as possible.
As we have communicated to investors with information and case studies, the Yamato Group has
focused on creating and proposing solutions that leverage information technology (IT), logistics
technology (LT), and financial technology (FT) to help boost customers’ cash flow efficiency. We
believe that this type of approach, which focuses on raising corporate value for the customer, is a
crucial element that will make a logistics company indispensable to society.
To give just one example, we feel that the conventional single-function base terminals where
packages are sorted will not be sufficient going forward.
In future, we will need to offer customers more than simply efficient modes of delivery; we must
offer them comprehensive value that will further raise our competitiveness. For example, we need toprovide value along the entire supply chain, from procurement to distribution.
After thorough analysis of the market conditions for transport volumes and the flow of goods, theYamato Group expects to continue successive renovations to create the new types of base terminals
needed in order to provide the value it is targeting.
Moreover, including investments related to maintenance, and for the Haneda Logistics Center
acquired in December 2008 (scheduled to begin operations in the autumn of 2012), we plan to makeannual capital expenditures of approximately ¥100.0 billion in the two year period starting in fiscal 2011.
In future, should operating cash flows prove insufficient to cover capital demand, we will turn tothe financial markets to procure the shortfall. We would seek to meet such needs by using debt
financing, primarily in the form of loans.
The Yamato Group views return of profit to shareholders as one of our most important management policies. Under these conditions, we conduct business fully recognizing that levels of capital
cost should reflect the expectations investors hold for the revenue of the Yamato Group.

Net Income (Loss)/Return on Revenues

Operating and Investing Cash Flows/Free Cash Flows(Millions of Yen, %)(Millions of Yen)

40,00033,8132.91

30,00035,3532.88
20,00032,282
3.00

25,523116,896

120,000

4.00

80,00084,67584,46380,76377,06461,368

2.69

42,8212.00

2.04

40,00010,00030,404

19,865
4,857

1.00
0

0

0
(23,095)(40,000)(10,000)(20,000)(1.00)(2.00)(2.09)(34,243)(54,271)(60,898)(80,000)(23,968)(30,000)(3.00)

2006

2007

n	Net Income (Loss) (left scale)nReturn on Revenues (right scale)

2008

2009

(112,039)(120,000)

2010

2006

2007

2008

n

Cash Flows from Operating ActivitiesnCash Flows from Investing Activities

2009

2010

Free Cash Flows* Free Cash Flows = C ash Flows from Operating Activities+ Cash Flows from Investing ActivitiesnAnnual Report 201035

Analysis of Financial Position and Management Results

In connection with this, we also consider ROE, which shows capital efficiency, an importantmanagement indicator.
In fiscal 2010, the financial markets remained uncertain and we held back on investments needed
for future growth, including the Haneda Logistics Center. In order to increase liquidity at hand, we
took steps to secure cash. As a result, the shareholders’ equity ratio was 58.4% and ROE was 6.5%.
In order to achieve sustained growth and maximize corporate value in the medium to long term,
we will seek a balance among the three elements of growth potential, soundness, and efficiency,
distributing profits and conducting share buybacks and cancellations in pursuit of capital efficiency
with the shareholders’ equity ratio at a steady level of around 50% and medium-term ROE of 10%.
With regard to share buybacks, the Yamato Group repurchased a total of approximately¥50.0 billion in treasury stock over the five years from fiscal 2003 to fiscal 2007. The Group­cancelled approximately 12 million of these shares in fiscal 2006.
In addition, in fiscal 2006 and 2007, the Company utilized approximately 3 million shares for the
purpose of M&As.
Going forward, we will consider further share buybacks depending on growth in profits and progress on investment plans.
The basic dividend policy of the Yamato Group is to increase the amount of dividend per share as
profits grow. For the foreseeable future, we intend to maintain a consolidated dividend payout ratioof 30%.
Based on this policy, for the fiscal year ended March 2010 we paid dividends of ¥22 per share,including an interim dividend of ¥11.

Management of Funds
In order to make effective use of surplus funds, the Yamato Group utilizes cash management systems(CMS) for each Group company.
We divide up funds into funds from logistics businesses such as the Delivery and BIZ-logistics
businesses and funds from the Financial Business, which covers the settlement business. We thendirect fund investments for future growth.

Capital Expenditure

Interest-bearing Liabilities/Equity(Millions of Yen)

(Millions of Yen)

140,000

600,000
123,591

523,473

120,000

500,000
451,695

423,690

100,000

486,259

475,984

400,000
80,000300,000
60,00047,72649,16047,52440,000200,000
35,322100,000

20,00096,426112,222

107,427

81,598

0

0

2006

36

97,894

2007

n Vehiclesn	Landn Equipmentn Others

Yamato Holdings Co., LTD.

2008n Buildings

2009

2010

2006

2007

n

Interest-bearing LiabilitiesnEquity

2008

2009

2010

Credit Ratings
As of March 2010, Yamato Holdings has received the following credit rating from Rating & Investment Information, Inc. (R&I).
R&I AAThe business environment has remained severe amid the global economic recession following theLehman Shock. The Yamato Group will strive to minimize risk of loss of performance to secure target
profits, maintaining awareness of capital costs, while at the same time maintaining and improving
credit ratings in order to facilitate smooth capital procurement.

Reforming Cost Structures
In order to achieve the lower costs that accompany enhanced business process efficiency, YamatoGroup company Yamato Transport Co., Ltd. has relocated some back-office business processes suchas management of accounts and receivables from its 69 administrative centers in Japan to the IBM
Global Delivery Center located in Dalian, China. Operations in China began in November 2009.
As of March 2010, approximately 250 employees are operating the Dalian center. Going forward,
we plan to progressively expand the scope of operations and increase the number of staff as processing volumes grow.

Risk Management
The risks that could affect the business operations of the Yamato Group fall into two categories:
macroeconomic risks and risks specific to the logistics industry.
	Naturally, it is impossible to avoid risk completely, and without taking certain risks it is not possible to achieve commensurate or increased returns.
In order to achieve returns that are greater than risk, the Yamato Group is seeking to eliminate
excessive dependence on the delivery business and to compose an optimized business portfolio as ameans of minimizing risk and pursuing high returns.

ROA/ROE
(%)
7.78

8.00

7.76
6.53

6.00

5.42
4.17

4.00

4.15

3.69
2.93

2.00
0
(2.00)(4.00)(6.00)(3.26)(5.43)

2006

2007

2008

2009

2010

n ROA
n ROE

Annual Report 201037

Consolidated Balance Sheets
March 31, 2010 and 2009

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

2010

2009

2010

¥ 189,658¥ 179,753$ 2,038,455   Trade

145,895

138,405

1,568,088   Installment (Note 3)

52,94562,062569,060  Lease (Note 11)

17,363

19,778

186,616   Allowance for doubtful accounts(4,692)(5,405)(50,436)

Inventories (Note 4)

2,511

2,388

26,988Deferred tax assets (Note 10)

18,71018,017201,098

ASSETS
CURRENT ASSETS:
Cash (Notes 2.d and 12) Notes and accounts receivable (Note 12): Prepaid expenses and other current assets

20,81020,711

223,670    Total current assets

443,200

435,709

4,763,539

181,480

177,761

1,950,563

Buildings and structures (Note 6)

263,633

261,077

2,833,543

Vehicles

178,961

177,590

1,923,485

16,84015,338

180,992

Machinery and equipment

101,996

96,183

1,096,262

Construction in progress

4,009

638

43,086

Others

2,907

1,627

31,247PROPERTY, PLANT AND EQUIPMENT—At cost: Land (Note 6) Leased assets (Note 11)    Total
Accumulated depreciation   Net property, plant and equipment

749,826

730,2148,059,178(394,634)(371,409)(4,241,548)

355,192

358,805

3,817,630

21,39818,930229,984

INVESTMENTS AND OTHER ASSETS:
Investment securities (Notes 5 and 12)
Investments in and advances to non-consolidated subsidiaries and affiliates, net of   valuation allowance of ¥406 million ($4,364 thousand) in 2010 and ¥91 million in 2009

5,262

731

56,559 Long-term loans

1,515

2,014

16,286 Lease deposits

22,80024,617

245,060

Deferred tax assets (Note 10)15,152

15,458

162,850

Other assets

14,122

13,342

151,787

80,24975,092

862,526¥ 878,641¥ 869,606$ 9,443,695    Total investments and other assets
TOTAL
See notes to consolidated financial statements.

38

Yamato Holdings Co., LTD.

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

2010

2009

2010

¥ 18,847¥ 14,450$  202,564

16,54332,889177,808   Trade

113,889

117,899

1,224,084   Construction

LIABILITIES AND EQUITYCURRENT LIABILITIES:
Short-term bank loans (Notes 7 and 12)
Current portion of long-term debt (Notes 7 and 12) Notes and accounts payable (Note 12):23,301

10,432

250,437

Income taxes payable

18,694

17,569200,925

Employees’ savings deposits

3,639

3,382

39,118

Accrued expenses

55,75252,487599,229

Deferred profit on installment sales (Note 3)

8,645

11,556

92,915

Other current liabilities

18,00015,108

193,463    Total current liabilities

277,310275,772

2,980,543

46,20860,088496,649

LONG-TERM LIABILITIES: Long-term debt (Notes 7, 12 and 13) Long-term accounts payable Liability for employees’ retirement benefits (Note 8)
Retirement allowances for directors and corporate auditors
Deferred tax liabilities (Note 10)27

15,770286

27,86228,397

299,469

8

8

85

905

573

9,730

Other long-term liabilities

2,848

2,739

30,606    Total long-term liabilities

77,858

107,575

836,825

COMMITMENTS AND CONTINGENT LIABILITIES (Notes 11 and 14)
EQUITY (Notes 9 and 17):
Common stock—authorized, 1,787,541,000 shares in 2010 and 2009;   issued, 468,052,892 shares in 2010 and 457,315,176 shares in 2009

127,235

120,729

1,367,528

Capital surplus

121,315

114,8141,303,905

Retained earnings

288,408

266,035

3,099,831

Unrealized gain on available-for-sale securities

3,197

1,552

34,358Foreign currency translation adjustments

(739)

(877)

(7,941)(26,506)(26,438)(284,886)
5,512,795

Treasury stock—at cost, 14,282,503 shares in 2010 and 14,227,149 shares in 2009    Total

512,910475,815

Minority interests

10,563

10,444

113,532    Total equity

523,473486,2595,626,327

TOTAL¥878,641¥869,606$9,443,695

Annual Report 201039

Consolidated Statements of Income
Years Ended March 31, 2010 and 2009

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

OPERATING REVENUES

2010

2009

2010

¥1,200,834¥1,251,922$12,906,645

1,110,971

1,167,764

11,940,789

28,47428,437

306,048

1,139,445

1,196,201

12,246,837

61,38955,721

659,808

OPERATING COSTS AND EXPENSES:
Operating costs
Selling, general and administrative expenses    Total operating costs and expenses    Operating income
OTHER (INCOME) EXPENSES:Interest and dividend income

(551)

(859)

(5,918)Interest expense

697

955

7,484

Gain on sales of marketable and investment securities

(38)

(128)

(413)

 Loss on valuation of investment securities

265

6,209

 Loss on valuation of investment in subsidiaries

61 Loss on sales of investments in subsidiaries

357
2,841
656

 Loss on disposal of property, plant and equipment

576

1,138

6,194

 Loss on impairment of long-lived assets (Note 6)

1,794

974

19,282

14

14

152

(2,178)(1,935)(23,407)

955

6,725

10,25760,434

48,996

649,551

Current

29,08325,447

312,585

Deferred(987)(2,098)(10,611)

28,09623,349301,974

Bond issuance costs Provision of allowance for investment loss of a non-consolidated subsidiary

315

Other—net    Other expenses—net
INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS

3,386

INCOME TAXES (Note 10):    Total income taxes

56

124

604

¥    32,282¥    25,523$   346,973

MINORITY INTERESTS IN NET EARNINGS OF CONSOLIDATED SUBSIDIARIESNET INCOME

Yen

U.S. Dollars

2009

2010

2010

PER SHARE OF COMMON STOCK (Notes 2.s and 15):
Basic net income

71.84

¥

57.60

$

0.77

71.16

56.45

0.76

Cash dividends applicable to the year

22.00

22.00

0.24

See notes to consolidated financial statements.

40¥Diluted net income

Yamato Holdings Co., LTD.

Consolidated Statements of Changes in Equity
Years Ended March 31, 2010 and 2009

Thousands
Outstanding
Number of
Shares ofCommonStockMillions of Yen

CommonStock¥120,725

CapitalSurplusRetained
Earnings

Unrealized
Gain onAvailablefor-sale
Securities¥114,847¥250,711¥ 5,994

BALANCE, APRIL 1, 2008
Adjustment of retained earnings due to an adoption of  PITF No. 18 (Note 2.b)
 Net income
Cash dividends, ¥23 per share
Adjustment of retained earnings for changes in   the scope of consolidation Purchase of treasury stock
Disposal of treasury stock
Shares issued on conversion of convertible debt
 Net change in the year

443,203

(172)
51
6

4

(36)
3

BALANCE, MARCH 31, 2009
 Net income
Cash dividends, ¥22 per share
Adjustment of retained earnings for changes in   the scope of consolidation Purchase of treasury stock
Disposal of treasury stock
Shares issued on conversion of convertible debt
 Net change in the year
BALANCE, MARCH 31, 2010

443,088

120,729

114,814

Deferred
Loss onDerivatives
under
Hedge
Accounting

Foreign
Currency
Translation
Adjustments¥(63)¥ (93)

Treasury
Stock

Total

Minority
Interests

Total
Equity¥(26,320)¥465,801¥10,183¥475,984(4)
25,523(10,193)
(2)
(213)
95
(4,442)
266,035
32,282(9,865)

63

1,552

(784)
(877)

(26,438)

(44)
(62)
7
10,737

6,506

(5)
6,506

453,770¥127,235¥121,315

1,645¥ 3,197138¥(739)(4)
25,523(10,193)

(2)
(213)
59
7
(5,163)

(2)
(213)
59
7
(4,902)475,815
32,282(9,865)261
10,444486,259
32,282(9,865)¥(26,506)

(44)
(81)
8
13,012
1,783¥512,910

119¥10,563

(44)
(81)
8
13,012
1,902¥523,473

Treasury
Stock

Total

Minority
Interests

Total
Equity(81)
13¥288,408(4)
25,523(10,193)

Thousands of U.S. Dollars (Note 1)

CommonStock

BALANCE, MARCH 31, 2009
 Net income
Cash dividends, $0.24 per share
Adjustment of retained earnings for changes in   the scope of consolidation Purchase of treasury stock
Disposal of treasury stock
Shares issued on conversion of convertible debt
 Net change in the year
BALANCE, MARCH 31, 2010

$1,297,601

CapitalSurplusRetained
Earnings$1,234,033$2,859,362
346,973(106,035)

Unrealized
Gain onAvailablefor-sale
Securities$16,681(469)

69,927(55)
69,927$1,367,528$1,303,905

Deferred
Loss onDerivatives
under
Hedge
Accounting

Foreign
Currency
Translation
Adjustments$(9,432) $(284,156) $5,114,089 $112,251
346,973(106,035)$5,226,340
346,973(106,035)

(469)
(867)
82
139,854
1,491
19,168
1,281$(7,941) $(284,886) $5,512,795 $113,532

(469)
(867)
82
139,854
20,449$5,626,327

(867)
137

$3,099,831

17,677$34,358

See notes to consolidated financial statements.

Annual Report 201041

Consolidated Statements of Cash Flows
Years Ended March 31, 2010 and 2009

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

2010

2009

2010

¥ 60,434¥   48,996$  649,551   Income taxes—paid(27,749)(27,370)(298,247)   Depreciation and amortization

39,88342,697

428,659

OPERATING ACTIVITIES:
Income before income taxes and minority interests
Adjustments for:  Loss on disposal of property, plant and equipment

576

1,138

6,194

1,794

974

19,282   Gain (loss) on sales of marketable and investment securities

(28)

229

(296)

  Loss on valuation of investment securities

325

6,209

3,497

    Decrease in notes and accounts receivable

2,337

16,96325,114    Increase (decrease) in inventories

(122)

782

(1,313)(40,457)  Loss on impairment of long-lived assets   Changes in assets and liabilities, net of effects from newly consolidated subsidiaries:(3,764)(4,026)    Decrease (increase) in liability for employees’ retirement benefits    Decrease in notes and accounts payables

(535)

1,193

(5,755)   Other—net

3,913(3,322)

42,061    Total adjustments

16,63035,467

178,739   Net cash provided by operating activities

77,06484,463

828,290

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

360

559

3,872

(32,387)(36,986)(348,100)

61

10,158

658

(10)

(11)

(110)

Increase in investments in and advances to non-consolidated subsidiaries and affiliates(4,590)(403)(49,338)

Cash collected from long-term loans

1,289

1,384

13,858Cash advanced for long-term loans

(799)

(533)

(8,588)

Other

1,833

2,737

19,706(34,243)(23,095)(368,042)   Net cash used in investing activities
FINANCING ACTIVITIES: Proceeds from short-term bank loans

91,540114,500

983,878

Repayments of short-term loans(91,827)(122,784)(986,968) Proceeds from long-term debt
Repayments of long-term debt

(18,799)(22,008)(202,053)

Dividends paid

(9,976)(10,387)(107,225)

(73)

(154)

(784)

Repurchase of treasury stocks
Other   Net cash used in financing activities

1,011

3

10,865(28,124)(28,830)(302,287)

FOREIGN CURRENCY TRANSLATIONADJUSTMENTS ON CASH AND CASH EQUIVALENTS

106

(458)

1,145

NET INCREASE IN CASH AND CASH EQUIVALENTS

14,80332,080159,106

63

101

672

CASH AND CASH EQUIVALENTS OF NEWLYCONSOLIDATED SUBSIDIARIES, BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS DECREASEDBY EXCEPTION OF CONSOLIDATED SUBSIDIARIES

(17)

(182)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR

174,502142,321

1,875,564

CASH AND CASH EQUIVALENTS, END OF YEAR (Note 2.d)

¥189,351¥ 174,502$2,035,160

See notes to consolidated financial statements.

42

12,000

Yamato Holdings Co., LTD.

Notes to Consolidated Financial Statements
Years Ended March 31, 2010 and 2009

1. BASIS OF PRESENTING CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements have been prepared in accordance with the provisions set forth in the Japanese Financial Instruments and Exchange Act and its related accounting regulations, and in conformity with accounting principles generally accepted in Japan (“Japanese
GAAP”), which are different in certain respects as to application and disclosure requirements of International 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. In addition, certain reclassifications and rearrangements have been made in the 2009 consolidated financial statements to conform to the classifications and presentations usedin 2010.
The consolidated financial statements are stated in Japanese yen, the currency of the country in which Yamato Holdings Co., Ltd. (the “Company”)
is incorporated and operates. The translations of Japanese yen amounts into U.S. dollar amounts are included solely for the convenience of readers
outside Japan and have been made at the rate of ¥93.04 to $1, the approximate rate of exchange at March 31, 2010. 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.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa. Consolidation—The consolidated financial statements as of March 31, 2010 include the accounts of the Company and its 34 significant (32 in2009) subsidiaries (together, the “Group”).
Under the control or influence concept, those companies in which the Company, directly or indirectly, is able to exercise control over operations are
fully consolidated, and those companies over which the Group has the ability to exercise significant influence are accounted for by the equity method.
The remaining non‍‑‍consolidated subsidiaries, whose combined assets, net sales, net income and retained earnings in the aggregate are notsignificant to the consolidated financial statements, have not been consolidated with the Company.
There were no affiliates accounted for by the equity method in 2010 or 2009.
Investments in the remaining non‍‑‍consolidated subsidiaries and affiliates are stated at cost less a valuation allowance representing possible
losses on the investments that are deemed to be other than temporary. If the equity method of accounting had been applied to the investments insuch companies, the effect on the accompanying consolidated financial statements would not be material.
The excess of the costs over the underlying net equity of investments in consolidated subsidiaries is recognized as goodwill and amortized on astraight‍‑‍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. Unification of Accounting Policies Applied to Foreign Subsidiaries for the Consolidated Financial Statements—In May 2006, the AccountingStandards Board of Japan (the “ASBJ”) issued ASBJ Practical Issues Task Force (“PITF”) No. 18, “Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for the Consolidated Financial Statements.” PITF No. 18 prescribes (1) the accounting policies and procedures
applied to a parent company and its subsidiaries for similar transactions and events under similar circumstances should in principle be unified forthe preparation of the consolidated financial statements, (2) financial statements prepared by foreign subsidiaries in accordance with either International Financial Reporting Standards or the generally accepted accounting principles in the United States of America tentatively may be used forthe consolidation process, (3) however, the following items should be adjusted in the consolidation process so that net income is accounted for inaccordance with Japanese GAAP unless they are not material: (a) amortization of goodwill; (b) scheduled amortization of actuarial gain or loss ofpensions that has been directly recorded in the equity; (c) expensing capitalized development costs of R&D; (d) cancellation of the fair value modelaccounting for property, plant and equipment and investment properties and incorporation of the cost model accounting; (e) recording the prioryears’ effects of changes in accounting policies in the income statement where retrospective adjustments to financial statements have been incorporated; and (f) exclusion of minority interests from net income, if contained. PITF No. 18 was effective for fiscal years beginning on or after April 1,2008 with early adoption permitted.
The Company applied this accounting standard effective April 1, 2008, and adjusted the beginning balance of retained earnings at April 1, 2008
as if accounting standard had been retrospectively applied.

Annual Report 201043

Notes to Consolidated Financial Statements

c. Recognition of Operating Revenues—The Group recognizes freight charge income as operating revenues at the time when freight has been
received from the shipping customer for transportation.
The Group also records installment sales receivables, which include principal and fees from customers, after the Group has accepted the relevant
contracts which are referred to the Group by participating member stores. Fees from customers and member stores were generally recognized inequal installments over the lives of each respective contract.
d. Cash Equivalents—Cash equivalents are short‍‑‍term investments that are readily convertible into cash and that are exposed to insignificant riskof changes in value. Cash equivalents include time deposits, certificate of deposits and mutual funds investing in bonds that represent short‍‑‍term
investments, all of which mature or become due within three months of the date of acquisition.
The difference between cash and time deposits in the accompanying consolidated balance sheets and cash and cash equivalents in the accompanying consolidated statements of cash flows is as follows:
Thousands of
U.S. Dollars

Millions of Yen

CashTime deposits due beyond three months
Bank overdraft included in cash
Cash and cash equivalents

2010

2009

2010

¥189,658¥179,753(5,000)(251)¥174,502$2,038,455(307)¥189,351(3,295)$2,035,160

e. Inventories—Inventories are stated at the lower of cost determined by the first-in, first-out method or net selling value.
f. 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 therelated unrealized gains and losses are included in earnings, (2) held‍‑‍to‍‑‍maturity debt securities, which are expected to be held to maturity withthe positive intent and ability to hold to maturity are reported at amortized cost and (3) available‍‑‍for‍‑‍sale securities, which are not classified aseither of the aforementioned securities, are reported at fair value, with unrealized gains and losses, net of applicable taxes, reported in a separate
component of equity. The Group has no trading securities at March 31, 2010 and 2009, respectively.
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.
g. Property, Plant and Equipment—Property, plant and equipment are stated at cost. Depreciation of property, plant and equipment excluding
leased assets of the Company and its domestic consolidated subsidiaries is computed substantially by the declining‍‑‍balance method, while thestraight‍‑‍line method is applied to the buildings acquired after April 1, 1998. Depreciation of leased assets is computed on the straight‍‑‍line method
over the lease period with no residual value carried.
The depreciation of property, plant and equipment of foreign consolidated subsidiaries is computed on the straight‍‑‍line method over the estimated useful lives of the assets. The range of useful lives is principally as follows:
Buildings and structures
VehiclesMachinery and equipment

7–60 years
2– 7 years
2–20 years

Maintenance and repairs, including minor renewals and improvements, are charged to income as incurred.

44

Yamato Holdings Co., LTD.

h. Long‍‑‍lived Assets—The Group reviews its long‍‑‍lived assets for impairment whenever events or changes in circumstance indicate 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 the asset or
asset group. The impairment loss would be measured as the amount by which the carrying amount of the asset exceeds its recoverable amount,which is the higher of the discounted cash flows from the continued use and eventual disposition of the asset or the net selling price at disposition.
i. Other Assets—Amortization of intangible assets is computed on the straight‍‑‍line method.
Bond issuance costs are deferred as other assets and amortized on the straight‍‑‍line method over the repayment period.
Depreciation of leased assets is computed on the straight‍‑‍line method over the lease period with no residual value carried.
j. Retirement and Pension Plan—The Company and substantially most domestic consolidated subsidiaries have a contributory trusteed pension plan
and an unfunded retirement benefit plan. In addition, a defined contribution retirement plan was introduced along with these defined benefit pension plans.
Certain domestic consolidated subsidiary participates in a cooperative welfare pension fund as a substitute for the aforementioned contributory
trusteed pension plan. The foreign subsidiaries have respective defined contribution retirement plans.
Effective April 1, 2009, the Company applied ASBJ Statement No. 19, “Partial Amendments to Accounting Standard for Retirement Benefit (part 3).”The effect of adoption of the new accounting standard for the year ended March 31, 2010 was no effective.
Directors and corporate auditors are not covered by the retirement and pension plans described above. Benefits paid to such persons are charged
to income as paid. Any amounts payable to directors and corporate auditors upon retirement are subject to the approval of the shareholders.
k. Retirement Allowances for Directors and Corporate Auditors—Retirement allowances for directors and corporate auditors for certain subsidiaries are recorded to state the liability at the amount that would be required if all directors and corporate auditors retired at each balance sheet date.
l. Leases—All finance lease transactions are capitalized to recognize lease assets and lease obligations.
m. Bonuses to Directors—Bonuses to directors were accrued at the year end to which such bonuses were attributable, but they are no longer
recognized from this year end.
n. Income Taxes—The provision for income taxes is computed based on the pretax income included in the consolidated statements of income. The
asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences
between the carrying amounts and the tax bases of assets and liabilities. Deferred taxes are measured by applying currently enacted tax laws to thetemporary differences.
o. Appropriations of Retained Earnings—Appropriations of retained earnings at each year end are reflected in the consolidated financial statements for the following year upon shareholders’ approval.
p. Foreign Currency Transactions—All short‍‑‍term and long‍‑‍term monetary receivables and payables denominated in foreign currencies are translated into Japanese yen at the exchange rates at the balance sheet date.
q. Derivative Financial Instruments—Certain consolidated subsidiaries use derivative financial instruments to manage their exposures to fluctuations in interest rates. Interest rate swaps are utilized by the consolidated subsidiaries to reduce interest rate risks. The consolidated subsidiaries do
not enter into derivatives for trading or speculative purposes.
The interest rate swaps which qualify for hedge accounting and meet specific matching criteria are not remeasured at market value but thedifferential paid or received under the swap agreements are recognized and included in interest expense or income.

Annual Report 201045

Notes to Consolidated Financial Statementsr. Foreign Currency Financial Statements—The balance sheet accounts of the consolidated foreign subsidiaries are translated into Japanese yen at
the current exchange rate as of the balance sheet date except for equity, which is translated at the historical rate. Differences arising from suchtranslation were shown as “Foreign currency translation adjustments” in a separate component of equity.
Revenue and expense accounts of the consolidated foreign subsidiaries are translated into Japanese yen at the current exchange rates as of thebalance sheet date.
s. Per Share Information—Basic net income per share is computed by dividing net income available to common shareholders, by theweighted‍‑‍average 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 the outstanding convertible notes and bonds at the beginning of theyear (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.
t. New Accounting Pronouncements
Asset Retirement Obligations—In March 2008, the ASBJ published a new accounting standard for asset retirement obligations, ASBJ Statement No. 18“Accounting Standard for Asset Retirement Obligations” and ASBJ Guidance No. 21 “Guidance on Accounting Standard for Asset Retirement Obligations.” Under this accounting standard, an asset retirement obligation is defined as a legal obligation imposed either by law or contract that resultsfrom the acquisition, construction, development and the normal operation of a tangible fixed asset and is associated with the retirement of suchtangible fixed asset.
The asset retirement obligation is recognized as the sum of the discounted cash flows required for the future asset retirement and is recorded in
the period in which the obligation is incurred if a reasonable estimate can be made. If a reasonable estimate of the asset retirement obligation
cannot be made in the period the asset retirement obligation is incurred, the liability should be recognized when a reasonable estimate of asset
retirement obligation can be made. Upon initial recognition of a liability for an asset retirement obligation, an asset retirement cost is capitalized
by increasing the carrying amount of the related fixed asset by the amount of the liability. The asset retirement cost is subsequently allocated to
expense through depreciation over the remaining useful life of the asset. Over time, the liability is accreted to its present value each period. Any
subsequent revisions to the timing or the amount of the original estimate of undiscounted cash flows are reflected as an increase or a decrease in
the carrying amount of the liability and the capitalized amount of the related asset retirement cost.
This standard is effective for fiscal years beginning on or after April 1, 2010 with early adoption permitted for fiscal years beginning on or before
March 31, 2010.
Segment Information Disclosures—In March 2008, the ASBJ revised ASBJ Statement No. 17 “Accounting Standard for Segment Information Disclosures” and issued ASBJ Guidance No. 20 “Guidance on Accounting Standard for Segment Information Disclosures.” Under the standard and guidance, a company is required to report financial and descriptive information about its reportable segments. Reportable segments are operating
segments or aggregations of operating segments that meet specified criteria. Operating segments are components of an entity about which separate financial information is available and such information is evaluated regularly by the chief operating decision maker in deciding how to allocate
resources and in assessing performance.
Generally, segment information is required to be reported on the same basis as is used internally for evaluating operating segment performanceand deciding how to allocate resources to operating segments.
This accounting standard and the guidance are applicable to segment information disclosures for the fiscal years beginning on or after April 1, 2010.

46

Yamato Holdings Co., LTD.

3. NOTES AND ACCOUNTS RECEIVABLE
Sales recorded on the installment basis were 0.6% and 0.7% of operating revenues in 2010 and 2009, respectively.
Annual maturities of notes and accounts receivable—installment at March 31, 2010 and related amortization of deferred profit on installment
sales are as follows:
Millions of Yen

2011
2012
2013
2014
2015
2016 and thereafter
Total

Thousands of U.S. Dollars

Receivables

Deferred Profit
on Installment
Sales

Receivables

Deferred Profit
on Installment
Sales¥25,623
15,652
7,304
2,813
1,153
400
¥52,945¥4,093
2,501
1,251
505
209
86
¥8,645$275,393
168,230
78,50930,236
12,3974,295$569,060$43,985
26,884
13,450
5,433
2,246
917
$92,915

4. INVENTORIESInventories at March 31, 2010 and 2009 consisted of the following:Thousands of
U.S. Dollars

Millions of Yen

MerchandiseWork in process
Raw materials and supplies
Total

2010

2009

2010

¥  889778
844¥2,511¥  855325
1,208¥2,388$ 9,555
8,367
9,066$26,988

5. MARKETABLE AND INVESTMENT SECURITIESMarketable and investment securities as of March 31, 2010 and 2009 consisted of the following:Thousands of
U.S. Dollars

Millions of Yen

Non-current:
Marketable equity securities Non-marketable equity securities
Other
Total

2010

2009

2010

¥19,536
1,748
114¥21,398¥16,944
1,870
116¥18,930$209,977
18,786
1,221$229,984

Information regarding each category of the securities classified as available‍‑‍for‍‑‍sale at March 31, 2010 and 2009 was as follows:
Millions of Yen
2010
Cost

Securities classified as:
Available-for-sale: Equity securities¥14,874

Unrealized Gains¥4,826

Unrealized
Losses¥164

Fair Value¥19,536

Annual Report 201047

Notes to Consolidated Financial Statements

Millions of Yen
2009
Cost

Securities classified as:
Available-for-sale: Equity securities

Unrealized
Losses

Unrealized Gains¥15,068¥2,560¥684

Fair Value¥16,944

Thousands of U.S. Dollars
2010

Securities classified as:
Available-for-sale: Equity securities

Cost

Unrealized Gains$159,867$51,876

Unrealized
Losses$1,766

Fair Value$209,977

Available-for-sale securities whose fair value is not readily determinable as of March 31, 2009 was as follows. The similar information for 2010 isdisclosed in Note 12.
Carrying AmountMarch 31, 2009

Millions of Yen

Available-for-sale: Equity securities¥1,870

The Proceeds from sales of available-for-sale securities for the year ended March 31, 2009 were ¥10,158 million. Gross realized gains on thesesales, computed on the moving average cost basis, were ¥128 million for the year ended March 31, 2009.
The information of available-for-sale securities which were sold during the year ended March 31, 2010 was as follows:
Millions of Yen
March 31, 2010

Available-for-sale:
Equity securities
Other
Total

Proceeds

¥52
21
¥73

Realized gains

Realized loss

¥38

¥11

¥38

¥11

Thousands of U.S. Dollars
March 31, 2010

Available-for-sale:
Equity securities
Other
Total

Proceeds

$558
229
$787

Realized gains

Realized loss

$413

$117

$413

$117

The impairment losses on available-for-sale equity securities for the years ended March 31, 2010 and 2009 were ¥325 million ($3,497 thousand) and ¥5,064 million, respectively.

6. LONG‍‑‍LIVED ASSETSThe Group reviewed its long‍‑‍lived assets for impairment as of the years ended March 31, 2010 and 2009. As a result, the Group recognized an
impairment loss of ¥1,794 million ($19,282 thousand) as other expense for the asset groups of the Sapporo Regional Branch of Yamato Transport
Co., Ltd. and another nine regional branches for the year ended March 31, 2010, and ¥974 million as other expense for the asset groups of the
Chitose Regional Branch of Yamato Transport Co., Ltd. and another five regional branches for the year ended March 31, 2009, respectively, due tocontinuous operating losses of those units. The carrying amounts of the relevant asset groups were written down to the recoverable amounts. In
the case where net selling prices were used as recoverable amounts, relevant buildings were evaluated based on assessed value of fixed assets, andrelevant land was evaluated based on posted land prices. In the case where the recoverable amounts were measured at its value in use, the discountrate used for computation of present value of future cash flows was 7.69%.

48

Yamato Holdings Co., LTD.

7. BANK LOANS AND LONG‍‑‍TERM DEBT
Short‍‑‍term bank loans at March 31, 2010 and 2009 consisted of notes to banks and bank overdrafts. The annual interest rates applicable to thebank loans ranged from 0.420% to 1.480% and 0.650% to 8.50% at March 31, 2010 and 2009, respectively.
Long‍‑‍term debt at March 31, 2010 and 2009 consisted of the following:Thousands of
U.S. Dollars

Millions of Yen

0.650% to 2.000% loans from a Japanese bank due 2010 to 2014
Lease obligations due in December 2016
Unsecured 1.59% bonds due in November 2010
Unsecured 1.2% convertible debentures, convertible into common stock at¥1,211.80 per share, due in September 2009
Total
Less current portion
Total

2010

2009

2010

¥ 47,147
10,6045,000¥ 65,895
9,019
5,000

$ 506,739
113,978
53,74062,751(16,543)¥ 46,208

13,063
92,977(32,889)¥ 60,088

674,457(177,808)$ 496,649

Millions of Yen

Thousands of
U.S. Dollars¥16,543
15,80814,24915,385762
4¥62,751$177,808
169,903
153,156
165,3578,191
42$674,457

Annual maturities of long‍‑‍term debt at March 31, 2010 were as follows:Year Ending March 31

2011
2012
2013
2014
2015
2016 and thereafterTotal

8. RETIREMENT AND PENSION PLANS
The Group has severance payment plans for employees.
Under most circumstances, employees terminating their employment are entitled to retirement benefits determined based on the rate of government bonds, years of service and certain other factors. Such retirement benefits are made in the form of a lump‍‑‍sum severance payment fromthe Company or from the consolidated subsidiaries and annuity payments from a trustee. Employees are entitled to larger payments if the termination is involuntary, by retirement at the mandatory retirement age, by death, or by voluntary retirement at certain specific ages prior to the
mandatory retirement age. The retirement benefits for directors and corporate auditors are not included in aforementioned plans, which are paid
subject to the approval of the shareholders.
The liability for employees’ retirement benefits at March 31, 2010 and 2009 consisted of the following:Thousands of
U.S. Dollars

Millions of Yen
2010

Projected benefit obligation
Fair value of plan assets
Unrecognized actuarial loss
Prepaid pension cost
Net liability¥ 86,631(56,453)(2,568)252¥ 27,862

2009

2010

¥ 82,691(48,520)(5,982)208¥ 28,397$ 931,120(606,757)(27,605)
2,711$ 299,469

Annual Report 201049

Notes to Consolidated Financial Statements

The components of net periodic benefit costs for the years ended March 31, 2010 and 2009 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

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

2010

2009

¥ 4,862
1,641¥ 4,718
1,615(1,127)795¥ 6,001$ 52,256
17,638

2010

2009

2.0%
0.0%
1 year
5 years

2.0%
2.0%
1 year
5 years(1,943)¥ 4,560

2010(20,878)$ 49,016

Assumptions used for the years ended March 31, 2010 and 2009 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

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

50

Yamato Holdings Co., LTD.

10. 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 40% for the years ended March 31, 2010 and 2009.
The tax effects of significant temporary differences which resulted in deferred tax assets and liabilities at March 31, 2010 and 2009 were as follows:
Thousands of
U.S. Dollars

Millions of Yen
2010

2009

2010

Deferred tax assets:
Current:   Accrued expenses   Enterprise tax   Allowance for doubtful accounts  Legal welfare expense   Other
Deferred tax assets—current¥ 11,651
1,755
1,277
1,689
2,500
¥ 18,872¥ 10,703
1,691
1,643
1,453
2,667
¥ 18,157$ 125,219
18,866
13,727
18,156
26,864$ 202,832 Non-current:  Liability for employees’ retirement benefits   Investment securities   Investment in and advances to non-consolidated subsidiaries and affiliates  Loss on devaluation of land  Loss on impairment of long-lived assets  Loss on devaluation of telephone subscription rights   Unrealized profit   Other  Less valuation allowance
Deferred tax assets—non-current¥ 11,059
1,534
44
27,181
4,118
615
1,053
6,267
(35,344)¥ 16,527¥ 11,278
3,734
29
27,181
3,663
615
898
3,486
(34,677)¥ 16,207$ 118,861
16,482
469
292,148
44,2656,610
11,32067,355(379,878)$ 177,632

Deferred tax liabilities:
Current—other
Deferred tax liabilities—current¥    161¥    161¥    140¥    140$    1,734$    1,734

Non-current:
Unrealized gain on available-for-sale securities
Other
Deferred tax liabilities—non-current
Deferred tax assets—net¥   1,544
737¥   2,281¥ 32,957¥    532
789¥   1,321¥ 32,903$   16,596
7,916$   24,512$ 354,218

A reconciliation between the normal effective statutory tax rates and the actual effective tax rates reflected in the accompanying consolidated
statements of income for the years ended March 31, 2010 and 2009 were as follows:

Normal effective statutory tax rate
Per capita levy of local taxes
Valuation allowance
Other—net
Actual effective tax rate

2010

2009

40.0%
4.5
1.1
0.9
46.5%

40.0%
5.5
1.2
1.0
47.7%

Annual Report 201051

Notes to Consolidated Financial Statements

11. LEASES(1) Lessee
The Group leases certain machinery, computer equipment and other assets.
The minimum rental commitments under non-cancelable operating leases at March 31, 2010 and 2009 were as follows:
Thousands of
U.S. Dollars

Millions of Yen
2009

2010

Due within one year
Due after one year
Total

¥135
63
¥198

¥ 79
130
¥209

2010

$  846
1,400$2,246(2) Lessor
The net investment in lease as of March 31, 2010 and 2009 are summarized as follows:
Thousands of
U.S. Dollars

Millions of Yen

Gross lease receivables
Unguaranteed residual values
Unearned interest income
Investments in lease, current

2010

2009

¥18,886
1,566(3,089)¥17,363¥21,674
1,926(3,822)¥19,7782010$202,986
16,828(33,198)$186,616

Maturities of lease receivables for finance leases that are deemed not to transfer ownership of the leased property to the lessee are as follows:Year Ending March 31

Millions of Yen

2011
2012
2013
2014
2015
2016 and thereafterTotal¥ 6,902
5,737
3,917
1,780
550
¥18,886

Thousands of
U.S. Dollars$ 74,183
61,66342,09919,1255,915
1$202,986

The minimum rental commitments under non-cancelable operating leases at March 31, 2010 and 2009 were as follows:
Thousands of
U.S. Dollars

Millions of Yen
2010

Due within one year
Due after one year
Total

52

Yamato Holdings Co., LTD.

¥219
727
¥946

2009

¥ 74
275
¥349

2010

$ 2,353
7,815$10,16812. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURESOn March 10, 2008, the ASBJ revised ASBJ Statement No. 10 “Accounting Standard for Financial Instruments” and issued ASBJ Guidance No. 19“Guidance on Accounting Standard for Financial Instruments and Related Disclosures.” This accounting standard and the guidance are applicable tofinancial instruments and related disclosures at the end of the fiscal years ending on or after March 31, 2010 with early adoption permitted fromthe beginning of the fiscal years ending before March 31, 2010. The Group applied the revised accounting standard and the new guidance effective
March 31, 2010.
(1) Group Policy for Financial Instruments
The Group uses financial instruments, mainly long-term debt including bank loans and bonds, in order to expand its business based on its investment
plan for expand its network. Cash surpluses, if any, are invested in low risk financial assets. Derivatives are used, not for speculative purposes, but tomanage exposure to interest fluctuation risk. Certain consolidated subsidiaries conduct leasing or installment sales operations.
(2) Nature and Extent of Risks Arising from Financial Instruments and the Risk Management for Financial Instruments
Receivables such as notes and accounts receivable and installment are exposed to customer credit risk.
Therefore, the Group maintains customer’s credit risk by monitoring collections and accrued receivable at due dates.
Marketable and investment securities are mainly equity securities of the companies that have business relationships or capital alliances. Suchsecurities are exposed to the risk of market price fluctuations.
Most payments terms of payables such as notes and accounts payable are less than one year.
Short-term bank loans are related to a financial business, and long-term bank loans are used for expanding its business and network. Although a
portion of such bank loans are exposed to market risks from changes in variable interest rates, those risks are mitigated by using derivatives ofinterest rate swaps. In addition, such interest rate swaps are contracted in accordance with the internal rule which prescribe the authority of derivative transactions.
Account payable and bank loans exposed to liquidity risks are managed by each company of the Group, through such as fund settlement, bookkeeping, monitoring of the balances outstanding, and managing cash flows.
(3) Fair Values of Financial Instruments
Fair values of financial instruments are based on quoted price in active markets. If quoted price is not available, other rational valuation techniques
are used instead. According to which techniques are used, the value could be changed.
Fair values of financial instruments at March 31, 2010 were as follows:
Millions of Yen
March 31, 2010

Cash
Trade notes and accounts receivable
Allowance for doubtful accounts
Installment sales receivable
Allowance for doubtful accounts   Deferred profit on installment sales
Investment securities
Notes and accounts payable
Short-term loans
Long-term loans
Derivatives

Carrying Amount

Fair Value¥189,658
145,895(153)
145,742
52,945(4,013)(8,645)40,287
19,536
113,889
26,855
39,139¥189,658

Difference

146,200¥  45848,05019,536
113,889
26,88039,300

7,763

25
161

Annual Report 201053

Notes to Consolidated Financial Statements

Thousands of U.S. Dollars
March 31, 2010

Carrying Amount

Fair Value

Cash
Trade notes and accounts receivable
Allowance for doubtful accounts$2,038,455
1,568,088(1,644)
1,566,444
569,060(43,137)(92,915)
433,008
209,977
1,224,084
288,635
420,669$2,038,455

Installment sales receivable
Allowance for doubtful accounts   Deferred profit on installment sales
Investment securities
Notes and accounts payable
Short-term loans
Long-term loans
Derivatives

Difference

1,571,370$ 4,926

516,440
209,977
1,224,084
288,905422,396

83,432

270
1,727

Cash
The carrying values of cash approximates fair value because of their short maturities.
Trade notes and accounts receivable
The fair values of receivables are measured at the amount to be received at maturity discounted at the Group’s assumed corporate discount rate. A
portion of these receivable are determined by discounting the cash flows related to the receivables at the rate of government bonds.
Installment sales receivable
Allowance for doubtful accounts and deferred profit on installment sales are deducted from the fair values of installment receivables. The fair valuesof installment receivables are determined by discounting the cash flows related to the installment receivables at the market interest rate.
Marketable and investment securities
The fair values of marketable and investment securities are measured at the quoted market price of the stock exchange for the equity instruments,
and at the quoted price obtained from the financial institution for certain debt instruments. The information of the fair value for marketable andinvestment securities by classification is included in Note 5.
Notes and accounts payable
The fair values of payables, which are almost all paid within one year, are measured at the amount to be paid.
Short-term loans and long- term loans
The fair values of short-term bank loans and long-term debt are determined by discounting the cash flows related to the debt at the Group’s
assumed corporate borrowing rate.
Current portion of long-term bank loans are included in short-term loans in the above table in addition to short-term bank loans on the consolidated balance sheets. Lease payments are not included in long-term loans in the above table.
Derivatives
The information of the fair value for derivatives is included in Note 13.
(4)Financial Instruments Whose Fair Value Cannot Be Reliably Determined
Carrying AmountMarch 31, 2010

Investments in equity instruments that do not have a quoted market price in an active market

54

Yamato Holdings Co., LTD.

Millions of Yen

Thousands of
U.S. Dollars¥7,000$75,240

(5)Maturity Analysis for Financial Assets and Securities with Contractual Maturities
Millions of Yen

March 31, 2010

Cash
Trade notes and accounts receivable
Installment sales receivable
Total

Due in one year
or less

Due after
one year throughfive years¥189,658
140,194
30,406¥360,258¥ 5,592
22,224¥27,816

Due after
five years

¥109
315
¥424

Thousands of U.S.Dollars

March 31, 2010

Due in one year
or less

Due after
one year throughfive years

Cash
Trade notes and accounts receivable
Installment sales receivable
Total$2,038,455
1,506,814
326,804$3,872,073$ 60,101
238,871$298,972

Due after
five years$1,173
3,385$4,558

Please see Note 7 for annual maturities of long-term debt.

13. DERIVATIVES
Certain consolidated subsidiaries use derivative financial instruments to manage their exposures to fluctuations in interest rates. Interest rate swaps
are utilized by the consolidated subsidiaries to reduce interest rate risks. The consolidated subsidiaries do not enter into derivatives for trading or
speculative purposes.
The interest rate swaps which qualify for hedge accounting and meet specific matching criteria are not remeasured at market value but thedifferential paid or received under the swap agreements are recognized and included in interest expense or income.
As noted in Note 12, the Group applied ASBJ Statement No. 10 “Accounting Standard for Financial Instruments” and ASBJ Guidance No. 19“Guidance on Accounting Standard for Financial Instruments and Related Disclosures.” The accounting standard and the guidance are applicable tofinancial instruments and related disclosures at the end of the fiscal years ending on or after March 31, 2010, therefore, the required information isdisclosed only for 2010.
Derivative Transactions to Which Hedge Accounting Is Applied at March 31, 2010
Millions of Yen

At March 31, 2010

Interest rate swaps(fixed rate payment, floating rate receipt)

Hedged item

Contract
AmountContract Amountdue after One
Year

Fair Value

Long-term bank loans¥40,172¥32,848*

Hedged item

Contract
AmountContract Amountdue after One
Year

Fair Value

Long-term bank loans$431,771$353,052*

Thousands of U.S. Dollars

At March 31, 2010

Interest rate swaps(fixed rate payment, floating rate receipt)* The information of the fair value of interest rate swaps is included in that of hedged items (see Note 12).

Annual Report 201055

Notes to Consolidated Financial Statements

14. CONTINGENT LIABILITIESContingent liabilities for guarantees and items of a similar nature at March 31, 2010 amounted to ¥75 million ($808 thousand) as guarantees ofloans of a non‍‑‍consolidated subsidiary.

15. NET INCOME PER SHARE
Reconciliation of the differences between basic and diluted net income per share (“EPS”) for the years ended March 31, 2010 and 2009 is as follows:Year ended March 31, 2010

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

Millions of Yen

Thousands ofSharesNet Income

Weightedaverage Shares¥32,28212¥32,294

449,334
4,550
453,884¥71.84$0.77¥71.16$0.76¥25,52399¥25,622443,140
10,782453,922¥57.60Yen

U.S. Dollars
EPS

Year ended March 31, 2009

Basic EPS—Net income available to common shareholders
Effect of dilutive securities—Convertible bonds
Diluted EPS—Net income for computation¥56.45

16. SEGMENT INFORMATION
Information about industry segments, geographic segments and operating revenues to foreign customers of the Company and consolidated subsidiaries for the years ended March 31, 2010 and 2009 is as follows:(1) Industry Segments
Millions of Yen
2010
Home
BIZ-Logistics Convenience

e-Business

Financial

Truck
MaintenanceOther¥  966,480¥78,927¥50,351¥32,094¥ 52,659¥16,002¥ 4,321¥1,200,834

44,2301,010,710
972,639¥    38,071

10,86389,79087,133¥ 2,657

15,63021,351
65,98153,44566,68247,429¥ (701) ¥ 6,016

4,300
56,95946,699¥ 10,260

24,05140,05338,404¥ 1,649

47,57451,89533,261¥18,634¥(167,999)(167,999) 1,200,834(152,802) 1,139,445¥ (15,197) ¥    61,389¥  526,012
31,34628,747¥48,764
1,583
1,820

¥21,995
1,050
705¥171,490
1,110
1,834

¥19,539902
2,033¥10,854952
655¥ 49,182
29
30

Deliverya. Operating revenues andoperating income:Operating revenues   to customers
Intersegment operating   revenues   Total operating revenues
Operating costs and expenses
Operating income (loss)b. Assets, depreciation andcapital expenditures:
AssetsDepreciation
Capital expenditures

56

Yamato Holdings Co., LTD.

¥30,805
2,910
3,876

Eliminations or
Corporate

Consolidated¥  878,641
39,88239,700Thousands of U.S. Dollars
2010
DeliveryHome
BIZ-Logistics Convenience

e-Business

Financial

Truck
Maintenance

Other

Eliminations or
Corporate

Consolidateda. Operating revenues andoperating income:Operating revenues   to customers$10,387,792 $848,318 $541,176 $344,945 $  565,982 $171,989 $ 46,443$12,906,645
Intersegment operating   revenues
475,381 116,751 167,990 229,490
46,216 258,499 511,332 $(1,805,659)   Total operating revenues
10,863,173 965,069 709,166 574,435
612,198 430,488 557,775 (1,805,659) 12,906,645
Operating costs and expenses 10,453,986 936,513 716,703 509,774
501,922 412,764 357,497 (1,642,322) 12,246,837
Operating income (loss)$   409,187 $ 28,556 $ (7,537) $ 64,661 $  110,276 $ 17,724 $200,278 $   (163,337) $    659,808
b. Assets, depreciation andcapital expenditures:
AssetsDepreciation
Capital expenditures$ 5,653,611 $524,122 $236,406 $331,096 $1,843,185 $210,005 $116,657 $   528,613 $ 9,443,695
336,91217,008
11,286
31,27911,928
9,697
10,235314
428,659
308,976
19,566
7,576
41,657
19,707
21,8487,041
328
426,699
Millions of Yen
2009
Deliverya. Operating revenues andoperating income:Operating revenues   to customers
Intersegment operating   revenues   Total operating revenues
Operating costs and expenses
Operating income(loss)b. Assets, depreciation andcapital expenditures:
AssetsDepreciation
Capital expenditures

Home
BIZ-Logistics Convenience

e-Business

Financial

Truck
Maintenance

Other

Eliminations or
Corporate

Consolidated¥  997,898 ¥ 92,947¥53,315¥32,273¥ 53,608¥17,555¥ 4,326¥1,251,922

42,478
11,6271,040,376 104,574
1,009,253 101,379¥    31,123 ¥   3,195

16,11520,07669,43052,34969,77046,290¥ (340) ¥ 6,059

3,772
57,38046,874¥ 10,506

25,17142,72641,015¥ 1,71150,40654,732
31,829¥22,903¥(169,645)(169,645)
1,251,922(150,209)
1,196,201¥ (19,436) ¥    55,721¥  526,645 ¥ 45,808
34,9501,479
33,923
2,153¥24,492
1,212
627¥186,378
784
1,912¥16,123
692
3,099¥10,491
1,062
292¥   31,510
25
26¥28,159
2,493
3,824

¥  869,606
42,69745,856

Notes: Delivery:
Small‍‑‍parcel delivery services such as Takkyubin (door‍‑‍to‍‑‍door parcel delivery) and Kuroneko Mail
BIZ‍‑‍Logistics:
Intercompany logistics services, aimed at the B2B supply‍‑‍chain management market
Home Convenience:	Lifestyle support services intimately connected with the needs of local markets, such as moving and household effects delivery services
	e‍‑‍Business:
Information services targeted at the business market, including ASP services and the development of information systems
Financial:
Financial services targeted at business customers and consumers, such as settlement and collection
Truck Maintenance:
Vehicle maintenance services and fuel supply targeted at transport companies
Other:
Group support services, shared services centering on arterial transport, and staffing services

Annual Report 201057

Notes to Consolidated Financial Statements(2) Geographic Segments
The geographic segments of the Company and consolidated subsidiaries for the years ended March 31, 2010 and 2009 are summarized as follows:
Millions of Yen
2010

Operating revenues and operating income:Operating revenues to customers
Interarea operating revenues   Total operating revenues
Operating costs and expenses
Operating income (loss)
AssetsJapan

U.S.A.

EuropeAsia

Eliminations or
Corporate¥1,184,846
4,287
1,189,133
1,127,780¥    61,353¥  783,363¥ 8,392
3,139
11,531
11,347¥   184¥ 2,858¥2,564
1,359
3,923
3,976
¥ (53)¥1,155¥5,032
3,265
8,297
8,295
¥     2
¥4,607¥(12,050)(12,050)(11,953)¥     (97)¥86,658

1,200,834
1,139,445¥    61,389¥  878,641

Consolidated

Consolidated¥1,200,834

Thousands of U.S. Dollars
2010

Operating revenues and operating income:Operating revenues to customers
Interarea operating revenues   Total operating revenues
Operating costs and expenses
Operating income (loss)
AssetsJapan

U.S.A.

EuropeAsia

Eliminations or
Corporate$12,734,805
46,074
12,780,879
12,121,449$   659,430$ 8,419,635$ 90,204
33,740123,944
121,962$   1,982$ 30,720$27,556
14,60842,16442,737$ (573)$12,420$54,080
35,09389,17389,156$     17$49,511$(129,515)(129,515)(128,467)$   (1,048)$931,409

12,906,645
12,246,837$   659,808$ 9,443,695

Consolidated$12,906,645

Millions of Yen
2009

Operating revenues and operating income:Operating revenues to customers
Interarea operating revenues   Total operating revenues
Operating costs and expenses
Operating income
AssetsJapan

U.S.A.

EuropeAsia

Eliminations or
Corporate¥1,232,517
4,794
1,237,311
1,181,772¥    55,539¥  789,878¥10,672
3,848
14,52014,131¥   389¥ 2,613¥2,745
1,747
4,492
4,489
¥     3
¥1,409¥5,988
3,361
9,349
9,269
¥    80¥3,000¥(13,750)(13,750)(13,460)¥ (290)¥ 72,706¥1,251,922
1,251,922
1,196,201¥    55,721¥  869,606

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, 2010 and 2009 amounted to ¥17,145 million ($184,277 thousand) and¥21,042 million, respectively.

58

Yamato Holdings Co., LTD.

17. SUBSEQUENT EVENT
Appropriations of Retained Earnings
The following appropriations of retained earnings at March 31, 2010 were approved at the Company’s board of directors meeting held on May 14, 2010:

Year-end cash dividends, ¥11.00 ($0.12) per share

Millions of Yen

Thousands of
U.S. Dollars¥4,991$53,649

Annual Report 201059

Independent Auditors’ Report

To the Board of Directors of
Yamato Holdings Co., Ltd.:We have audited the accompanying consolidated balance sheets of Yamato Holdings Co., Ltd. (the “Company”) and consolidated subsidiaries as ofMarch 31, 2010 and 2009, and the related consolidated statements of income, changes in equity, and cash flows for the years then ended, allexpressed in Japanese yen. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is toexpress an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in Japan. Those standards require that we plan and performthe audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial positionof Yamato Holdings Co., Ltd. and consolidated subsidiaries as of March 31, 2010 and 2009, and the consolidated results of their operations andtheir cash flows for the years then ended in conformity with accounting principles generally accepted in Japan.
Our audits also comprehended the translation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, such translation has been
made in conformity with the basis stated in Note 1. Such U.S. dollar amounts are presented solely for the convenience of readers outside Japan.

June 9, 2010

60

Yamato Holdings Co., LTD.

Corporate Data
(As of March 31, 2010)

Principal Shareholders

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

Percentage of total
shares outstanding

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

6.24%

Japan Trustee Services Bank, Ltd. (Trust Account)

5.56%

Mizuho Bank, Ltd.

3.68%

Yamato Employees’ Shareholding Association

3.65%

State Street Bank and Trust Company 505223

2.96%

Nippon Life Insurance Company

2.84%

Meiji Yasuda Life Insurance Company

2.62%

Yamato Trading-Partner Shareholding Association

2.36%

SOMPO JAPAN INSURANCE INC.

1.39%

Transfer Agent and Registrar

Japan Trustee Services Bank, Ltd. (Trust Account 9)

1.36%

Mizuho Trust & Banking Co., Ltd.

Total

32.66%

Common Stock
Authorized: 1,787,541,000 shares
Issued: 468,052,892 shares

Stock Exchange Listing
Tokyo Stock Exchange

Annual Meeting
The annual meeting of shareholders is normallyheld in June in Tokyo, Japan.

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

Stock Price Range (Tokyo Stock Exchange)
(Yen)

(Yen)

2,500

18,00016,0002,000
14,0001,500

12,00010,000
1,000
8,000

500

07/4

7

10

08/1

4

n Stock Price Range (left scale)

7

10
Average (left scale)

09/1

4

7

10

10/1

6,000

Nikkei Stock Average (right scale)

Annual Report 201061

YAMATO HOLDINGS CO., LTD.

Annual Report 2010

Printed in Japan on recycled paper