Annual Report 2014
For the year ended March 31, 2014

SENKO Co., Ltd.

Contact: Public Relations Division, President Office
Umeda Sky Bldg., Tower West, 1-30, Oyodonaka 1-chome, Kita-ku, Osaka 531-6115, Japan
Tel: +81 6 6440 5156

Fax: +81 6 6440 5148

URL http://www.senko.co.jp/en/

Profile

Established in Osaka in July 1946, Senko Co., Ltd. is an integrated distribution
services company. The Company has grown steadily over the years, listing on theFirst Section of the Osaka Securities Exchange in 1975 and on the First Section of theTokyo Stock Exchange in 1990.
As of March 31, 2014, the Senko Group had a nationwide network with 398 locationsin Japan, an overseas network with facilities in 34 locations, 2,523,015 square metersof warehouse space, and a fleet of 19 owned and chartered ships. The Company has
wide-ranging business activities centered on trucking. Including partner companies,
Senko operates more than 10,000 trucks every day. Activities also encompass
warehousing, marine transport, in-factory services, and multimodal internationalcargo transport.
Senko's forte lies in supplying integrated distribution services, from distribution
consulting to system design and operations, that closely match customer needs.
These efficient integrated distribution services have an excellent reputation in themarket based on the provision of efficient transportation and distribution systems
centered on the Best Partner System that support the construction of customer supply
chain management systems. The Company's Best Partner System is a new logistics
system that takes full advantage of information technology.
Senko will continue to leverage information technology to provide high-quality,
efficient logistics solutions on a global scale. The goal is to become a logistics
information company with capabilities that go well beyond the conventional
activities of logistics companies.

Contents

Consolidated Financial Highlights
1
A Message from the President
2
Review of Operations
4
Outline of New Medium-term Business Plan (FY2013 - FY2016) 6
Topics8
Corporate Social Responsibility
10
Financial Review
14
Financial Section
Report of Independent Auditors
17
Consolidated Balance Sheets
18
Consolidated Statements of Income
20
Consolidated Statements of Comprehensive Income
20
Consolidated Statements of Changes in Net Assets
21
Consolidated Statements of Cash Flows
22
Notes to the Consolidated Financial Statements
23
Stock Information
43
Board of Directors and Corporate Auditors, Executive Officers 44
Corporate Data
44
Domestic and Global Network
45
Subsidiaries
45

Cautionary Statement with Respect to Forward-Looking Statements

Plans and strategies concerning future business performance included in this annual report are forward-looking statements
based not on historical facts but on management’s assumptions and beliefs in the light of the information currently
available to it, and thus involve a certain element of risk and uncertainty.

Consolidated Financial Highlights

SENKO Co., Ltd. and Consolidated Subsidiaries

2014

Years ended March 31

2013

2014
Thousands of
U.S. dollars

Millions of yen

For the year:

Operating revenues¥333,884¥293,534$3,244,112

6,504

5,203

63,195

12,122

Operating income
Net income
At year end:

243,594

Total assets

2,366,828

208,095

72,303

Net assets

117,781

9,909

702,516

67,328Yen

Per share data:

U.S. dollars

Net income¥50.83¥41.45$0.49

Net assets

528.25521.48

5.13

16.00

Cash dividends

0.16

14.00

Note: U.S. dollar amounts are converted from yen, for convenience only, at the prevailing rate of ¥102.92 to U.S.$1 on
March 31, 2014.

Operating revenues

Net income(Billions of yen)

(Millions of yen)

300

6,000

250

5,000

200

4,000

150

3,000

100

2,000

50

1,000

350

Net income per share
(Yen)

60

7,000

50

40

30

0

10

11

12

13

14

0

20

10

10

11

12

13

14

0

10

11

12

13

14

1

A Message from the President

Solid Progress in the First Year of Our

Higher Sales and Earnings due to Aggressive Actions for
GrowthIn the fiscal year ended March 31, 2014 (April 1, 2013 to March 31, 2014),
consumer spending and housing investments in Japan grew robustly
against a backdrop of improved employment and income conditions aswell as last-minute demand before the consumption tax hike. In addition,
corporate earnings improved, supported by the expansion of domestic
demand, mainly in consumer spending and public projects.
In the logistics industry, growth was seen in the cargo volume of
consumer spending-related goods and construction-related materials,
reflecting steady consumer spending and a spike in demand ahead of theconsumption tax hike. The cargo volume of manufacturing-related goods also increased due to a recovery inindustrial production. The industry environment remained severe in terms of cost, with fuel prices kept at ahigh level due to the weaker yen and an increase in outsourcing cost due to a shortage of drivers and trucks.
In this environment, the Senko Group established a four-year medium-term business plan that began in
the fiscal year under review and is based on the slogan “Moving Global.” The plan has three goals:“go beyond logistics,” “make the world go round,” and “revolutionize business.” The Group has been working
to achieve growth in the distribution business and commerce and trade business as well as to foster an evengreater degree of trust among its customers by building a structure for services with high quality andoutstanding performance in relation to cost.
Consolidated operating revenues for the fiscal year ended March 31, 2014 increased 13.7% year on year to333,884 million yen due to efforts to aggressively expand sales, last-minute demand before the consumption
tax hike, and the merger of AST CORPORATION as a consolidated subsidiary. Earnings benefited from thegrowth in sales, cost-cutting measures, and activities to raise productivity, although fuel prices rose andoutsourcing cost soared due to a shortage of drivers and trucks. The consolidation of special-purpose
companies associated with a revision to an accounting standard also affected earnings. As a result, operating
income rose 22.3% to 12,122 million yen, ordinary income increased 11.9% to 11,305 million yen, and net
income advanced 25.0% to 6,504 million yen.

Four-year Medium-term Business Plan

Annual Dividend per Share Increased to 16 Yen Because of Growth in Sales and Earnings
Our basic policy for the distribution of earnings is to return earnings to shareholders while securing the internal
reserves necessary for future business activities and reinforcing our management structure. To distribute earnings,
our policy is to pay a stable dividend as well as dividends that are linked to business results. In accordance withthis policy, and because of our strong performance in the past fiscal year, we increased the interim and year-end
dividends for the fiscal year ended March 31, 2014 by 1 yen each, resulting in a dividend per share of 16 yen
applicable to this fiscal year.

Initiatives for Competitiveness and Other Goals to Reach the Targets of the Medium-term
Business Plan
Although the Japanese economy is forecast to temporarily slow down from the high base of strong sales induced bylast-minute demand before the consumption tax hike, we expect the economy to gradually recover, supported bygovernment stimulation measures designed to mitigate the slowdown and a recovery in consumer spending.
However, since the distribution industry has been facing a structural problem — a shortage of drivers and trucks —we are required to address a serious business challenge: securing transportation capacity and human resources.
In this environment, the Senko Group will tackle the following tasks during the second year of its four-year
Medium-term Business Plan: enhancing its competitiveness, improving its profitability, and upgrading its
operation system.
We ask for the continued support of our shareholders as we take numerous actions for achieving the goals of ourbusiness plan.
August 2014

Yasuhisa Fukuda

President and Representative Director

2

3Review of Operations
Reporting Results of the Fiscal Year Under Review (FY2013) by Business Segment

Chemicals Logistics

Trading and Commerce
Operating revenues

Senko has three business segments: Distribution,
Trading and Commerce, and Others. The
Distribution segment is further divided into thefollowing four categories based on the types of cargo
and characteristics of logistics services provided:
Retail Product Logistics, Housing Logistics,
Chemicals Logistics and Other Logistics.
Retail Product Logistics

Sales composition
Others 1.0 %Trading andCommerce

7.8%

FY2012

333.9
Billion yen

14.3%
Chemicals Logistics

19.5%

Distribution

Housing Logistics

Operating revenues(Billions of yen)

100.7

96.2
4.8%
UP

FY2012

Operating revenues(Billions of yen)

FY2013This category involves the provision of logistics services
primarily for GMS, home improvement centers, department
stores, and other retailers in food, electric appliances andmachinery industries.
During the fiscal year, we opened the Tokyo Bay Fashion
Arena (Ichikawa City, Chiba Prefecture), which specializes in
distribution for the fashion sector in the Tokyo metropolitanarea, and the Kita-Osaka PD Center (Ibaraki City, Osaka
Prefecture), which focuses on distribution for the medical andpharmaceutical industries. To strengthen our base of operations in the Hokkaido and Chubu regions, we started
operations at the Sapporo PD Center No. 2 Warehouse(Sapporo City, Hokkaido Prefecture) and the Komaki No. 2 PD
Center (Komaki City, Aichi Prefecture).
Operating revenues increased 4.8% to 100.7 billion yen.
Increases in the volume of cargo for general merchandise
stores, discount stores, and apparel volume retailers contributed to growth in operating revenues. Our efforts to develop
relationships with new customers in the electrical machineryand other machinery sectors also contributed to operating
revenues.

4

Housing Logistics

65.3

59.6
9.6%
UP
FY2012

47.8

This category includes the transport of resins used to makeplastics and other products, molded plastic products andprocessed products as well as lubricants for machinery andother applications.
We expanded the Daimon Distribution Center (Moriyama
City, Shiga Prefecture) by constructing two new warehouses,
including one for dangerous goods. In partnership with ashipping firm, we constructed two asphalt tankers to serve
routes between South Korea and Japan. In addition, we
worked to expand our bulk transportation business(transportation of resin materials as liquids, powders, andparticles), a sector where we have our own expertise, andreceived new contracts.
Although the Senko Group conducted aggressive sales
promotion activities, a decrease in the cargo volume of current
customers resulted in a 0.2% decrease in operating revenues to47.8 billion yen.

Other Logistics
This category includes all logistics services other than forretail products, housing and chemicals.
Operating revenues increased 5.3% year on year to 25.9
billion yen.

90.7

62.1
46.0%
UP

FY2013

FY2013Major activities in this category include the transport ofproducts from the factories of prefabricated housing
manufacturers to construction sites and the transport ofproducts for manufacturers of homebuilding materials.
We opened the Chubu Housing Distribution Center(Nagoya City, Aichi Prefecture), which functions as a hub for
distributing housing materials in the Chubu region. In
addition, we improved our distribution services by developing
our own transportation management system using
smartphones and GPS (a system for which we obtained apatent). Furthermore, we completed a nationwide network forthe transport of heavy goods and developed new businesses,
such as home-use rechargeable battery distribution andinstallation services.
Housing logistics cargo volume was higher along with theincrease in housing starts in Japan. The result was a 9.6%
increase in operating revenues to 65.3 billion yen.

(Billions of yen)

0.2%
DOWN

30.2%
Operatingrevenues

Other
Logistics

47.8

Retail Product Logistics

27.2%

Operating revenues(Billions of yen)

FY2012FY2013This category includes sales of petroleum products, trading
sales and trading business. Operations include sales oflogistics equipment and materials, and sales of fuel using
petroleum cards. This segment also includes wholesale sales ofcommodities, wrapping materials, alcoholic beverages andpaper products used for households, as well as tradingbusiness.
In the Trading and Commerce business segment, AST
CORPORATION, one of Japan’s largest wholesalers ofhousehold paper products, such as bathroom tissue and othertissue products, joined the Senko Group as a consolidated
subsidiary in October 2013. We will combine Senko’s logistics
expertise with AST’s skill in developing and selling products.
Our goal is to create an integrated business that unifies
trading activities and the physical flow of goods and extends
from manufacturing to marketing. In addition, we developed
the logistics industry’s first invoice search system and havestarted marketing this system.
Operating revenues increased 46.0% to 90.7 billion yen.
Activities that boosted sales in the petroleum marketingbusiness were one reason for this growth. There was also acontribution to revenues from the acquisition of AST CORPORATION. In the Trading business, there was an increase inexports of electronic components to China.

OthersThis segment consists of activities other than the operations of
the Logistics and Trading and Commerce business segments.
Operations include outsourced data processing services, motor
vehicle maintenance, insurance agency services and otheractivities.
Operating revenues increased 8.8% year on year to 3.4
billion yen.

5

Outline of New Medium-term Business Plan (FY2013 - FY2016)
We are executing a new Medium-term Business Planfor the 100th anniversary of the Group’s foundation
Senko is preparing to celebrate the 100th anniversary of its foundation in 2016.
The Medium-term Business Plan covers the four-year period from FY2013 to FY2016 and creates a
growth strategy for the next hundred years in which Senko has set itself the goal of achieving its aimof becoming a “logistics information company trusted both in Japan and overseas.”
In all its corporate activities, Senko strives to execute the practical measures it must adopt tobecome a company that is trusted by all its stakeholders.

Med iu m-ter m Ma nagement Pol ic ie s
As the Group's Medium-term Management Policy, the Company is promoting its business based on the following fiveprinciples.

1 Aiming at the provision of comprehensive and integrated services, challenging the creation of products together
with expanding the range of our businesses in distribution and in trade logistics operations.

2 Fostering a greater degree of trust among our customers, forming a high-quality and high-service structure.
3 Reinforcing our staff training and employment activities to foster and retain group human resources (including
global human resources, and in-house entrepreneurs within the group).

4 Placing emphasis on compliance, and aiming to become a company that is in the vanguard of environmental, safety,
and health issues.

5 Promoting financial policies that are based upon prioritizing the maintenance of financial soundness.

Cor porate I mage Ta rgeted
A Logistics Information Company that can be trusted upon both in Japan and overseas

Med iu m-ter m Bu si ne s s Pla n Ta rget s (F Y2013 - F Y2016)
We have set the following quantitative targets for our Medium-term Business Plan and are making every effort toensure that we achieve them.
Aiming at Operating revenues of 400 billion yen

Senko is aiming to grow its sales by expanding the scope of its logistics center andtrading and commerce businesses, boosting its international logistics operations,taking on the challenge of creating products, and engaging in the promotion ofbusiness partnerships and M&A activities.

Customers and partners in Japan and overseas (collaborative companies, business partners)

Senko is aiming to achieve operating income of 15 billion yen and an operating
profit margin of 3.8%.

Employees (full-time, part-time and casual workers) and their families

Capital investment* A logistics information company means: A company that has a good command of information, including logistics and trade distribution, and provides the appropriate
distribution and logistical services on a global scale.

Cor porate Sloga n
Our corporate slogan is “Moving Global” because it clearly and simply expresses the direction in which Senko shouldbe heading through the concepts of “go beyond logistics,” “make the world go round,” and “revolutionize business”
and is shared by each and every one of the Group’s employees in meeting the challenges that lie ahead as we celebrate
our 100th anniversary.

Go beyond logistics, make the world go round, and revolutionize business.

293.5

FY2012400.0

FY2016(Billions of yen)

Shareholders and investors in Japan and overseas
Society

6

Aiming at Operating income of 15 billion yen(Billions of yen)

9.9

15.0

FY2012FY2016The core aim of our capital investment program lies in establishing new facilities toexpand our operations, and in business partnerships and M&A activities.

Med iu m-ter m Bu si ne s s Pol ic ie s
The present development of the Group’s business operations is predominantly focused on achieving the following five
policies.

1

Expanding the operational scope of our “physical distribution business.”

2

Expanding the operational scope of our “commerce and trading business.”

3

Developing an “international distribution business that prioritizes earnings.”

4

Taking on the challenge of “making things.”

5

Promoting “business partnerships and M&A.”
Please see our web site for more details. http://www.senko.co.jp/en/ir/vision/plan/7

Topics
AST CORPORATION, a Household Paper Products Trading Company, Joins the Senko Group

Commencement of the Transportation of Automobile Parts in Thailand

In October 2013, Senko acquired 70% ownership of AST
AST CORPORATIONNameCORPORATION. It is one of the largest trading companies
January 2003
Establishedin Japan that specializes in household papers such as toilet¥45.1 billion (fiscal year ended Feb. 2013)
Sales
and tissue papers.
169
Employees
AST CORPORATION is not just a wholesaler. It also
has 44 distribution centers (a total of over 66,000 m2 ) acrossthe country, and all the process including product development, procurement, distribution, and sales is solely
handled by it. While aiming at achieving synergy effects in the Trading and Commerce business, we will also
strengthen our distribution services by fully utilizing our new distribution resources in the Logistics business.

In April 2013, “Senko Logistics (Thailand) Co., Ltd.,” which
was established jointly by Toyota Tsusho Corporation and ourcompany, started the business of transporting automobile
parts in Thailand. In this business, automobile parts aretransported among several parts factories and Japanese
automobile plants around Bangkok 24 hours a day. For Senko,
it is the first time to operate a business with our vehicles inThailand.
In addition, we are currently constructing a distribution
center at Laem Chabang Port in Thailand, and bought land for building a distribution center in Ayutthaya City.
Senko aims to develop ASEAN distribution networks centered around Thailand.

Operation of 6 Large-scale Distribution Centers in Japan
Senko is expanding its distribution centers in order to strengthen our
Logistics business. In FY 2013, we began operation of 6 large-scale
distribution centers in Hokkaido, the metropolitan area, Chubu, andKansai.
In October 2013, we launched the “Tokyo Bay Fashion Arena,” amulti-functional fashion distribution center in the metropolitan area
(Chiba Prefecture). It has a total floor area of 57,000 m2 and isequipped with varieties of facilities that respond to the needs of ourcustomers in the apparel industry. It also corresponds to ourcustomers’ mail-order businesses.
In February 2014, we launched the “Kita Osaka PD Center” in
Kansai (Osaka Prefecture). This center is equipped with temperature
controlled facilities and security facilities in order to respond to theneeds of our customers in the medical and pharmaceutical industry.
The building also has earthquake resistant structures. As a
distribution center that is resistant to disasters, we respond to ourcustomers’ BCP needs.

Entry to the Solar Power Generation Market
As one of the measures for reducing environmental burdens, weOperation of “KO-SENKO Distribution Center” at Busan Newport, South Korea
In February 2014, we started the operation of “KO-SENKO
Distribution Center” at Busan Newport, South Korea. Thiscenter is operated by KO-SENKO Logistics Co., Ltd., which isa joint venture with a local company.
Busan Newport is an international hub handling thefifth largest amount of containers in the world. The port isdesignated as a free trade zone (FTZ), where traders are
exempted from tariffs, etc. The distribution center offers
distribution services that would reduce the distribution costs of clients, including import, export, anddistributive processing.

Two Asphalt Tankers for Routes between Japan and Korea
Senko’s Great Crane (photo at left) and Angel Blue (photo at right) asphalt tankers began operations in May
2013 and February 2014, respectively. Both vessels were constructed in collaboration with Itochu Enex Co., Ltd.
The two tankers will transport asphalt made in South Korea to storage facilities in Japan.

started a solar power generation business utilizing the rooftops of
distribution centers in October 2013. The photovoltaic units in 7

regions around Japan, including Kanto, Chubu, Kansai, and Kyushu,
output a total of 5,300 kW. All the generated electricity is sold toelectric power companies. In the fiscal year ending March 2015, weplan to start selling electricity at distribution centers in Kanto,
Chubu, Kansai, and Kyushu.

89Corporate Social Responsibility
C o rp o ra t e G o ve rna nc e a nd C o m p l i a nc e
Corporate Governance Philosophy and Systems

The Senko Group, as a business involved in logistics work of a highly public nature, makes every effort to ensure that its
corporate activities are thoroughly compliant with laws, based on awareness that proper corporate governance is thefoundation of our existence as a business and is regarded as a high priority managerial issue.
General Meeting of Shareholders
Appointment / Dismissal

Accounting Auditors

The transport industry to which Senko’s core business belongs has a highly public mission. It isessential to its continued viability as a company that Senko contributes to society through thepractice of its core business and fulfill its public responsibilities.
In the Medium-term Business Plan that began in fiscal 2013, one of the goals is “placingemphasis on compliance, and aiming to become a company that is in the vanguard ofenvironmental, safety, and health issues.” in order to be recognized as “a Logistics Information
Company that can be trusted upon both in Japan and overseas.” We conduct CSR activities as one
way to achieve this goal.
Stakeholder Relationships in Senko’s Business• Proper distribution of profits• Transparency in management• Proper disclosure of information• Partnerships• Proper information
disclosure• Traffic safety• Environmental consciousness• Regional exchange• Social contribution• Proper disclosure of information

Customers

Transport anddelivery customers

Cooperative companies andprocurement sources

SENKO Co., Ltd.

<Business Activities>

Employees• Partnership• Environmental consciousness• Maintaining safety and health in
the workplace• Nurturing personnel• Fairness in employment

Regional
communities

Government• Legal compliance• Traffic safety• Environmental consciousness

Audit

ReportAssist / Report1
2

We are aware of the critical importance of conducting environmentally responsible logistics operations with respect to protecting theenvironment. Dedicated to green logistics, we are taking actions to cut CO2 emissions and conserve energy and have established numericaltargets. To become a highly advanced environmental organization, we are implementing our Phase V Environmental Master Plan.

SafetyTo promote safety and achieve accident-free workplaces, we have established targets for reducing vehicle accidents and workplace
accidents. We use a PDCA cycle for safety management in order to assess every source of risk in our operations.

HealthWe are committed to maintaining a management framework that reduces risks involving health. We improve workplaces to prevent healthproblems, encourage individuals to use self-care and other measures to lead a healthy life, maintain a staff of nurses and industrial doctors,
and take other actions to provide health-related support for employees.

Appointment / Supervision

Dialogue

Audit

AdviceReportReportInstruct

ReportCompliance Committee

Committee Chairman:
President of the Company
Head Office:General Affairs DivisionCorporate Ethics Committee

Head Office /General Affairs Division

Risk Management Committee

Head Office /General Affairs Division

Environmental Promotion Commitee

Head Office / Safety andEnvironmental Management Division

Social Contribution Promotion Committee

Head Office /General Affairs Division

The CSR Promotion Committee

Each division and affiliated companies

Head Office /Production Management Division

CSR Promotion Committee

Members of the Board of Directors /Executive Officers / Corporate Auditors

CSR Promotion Committee

Representative Director
ReportCorporate Management Committee

Members of the Board of Directors /Corporate Auditors, Chairmen of Other Committees, etc.
Supervise

Compliance Committee
Corporate Ethics Committee
Risk Management Committee
Environmental Promotion Committee
Social Contribution Promotion Committee
Health and Safety Committee
Internal Controls Committee

3
4
5

The board of directors meets at least once a month to decide upon important matters pertaining to the management of the company,in addition to legally required items; it is also positioned as an organization for the monitoring of business operations.
The Senko Group’s CSR management framework consists of the CSR Promotion Committee, Workplace Health and Safety
Committee, and Internal Controls Committee.

The auditors attend the board of directors and observe the performance of directors from an objective perspective, work with the
Auditing Department and accounting auditors to ensure thorough compliance at both Senko and its subsidiaries, and perform strict
audits.

Senko has a contract with accounting auditors in accordance with laws and regulations and receives guidance concerning accounting
matters as required.
The Auditing Department checks the status of measures concerning risk and monitors business operations. To ensure the suitabilityof systems for performing business operations and make improvements, this department performs audits of Senko and its
subsidiaries. Audit results are reported to the representative director and corporate auditors.

Compliance-based Management

D e e p e ni n g Ou r C ommi t m e n t to C o r po r a te S o c ia l R e s p o n s i b i l i t y
The CSR Promotion Committee oversees thecommittees for compliance, corporate ethics,
risk management, environmental protection,and social contribution promotion.
We are dedicated to upgrading our CSR
activities by clearly defining the domains of oursocial responsibility.
In addition to providing guidance to othercommittees, the CSR Promotion Committee
deliberates on proposals submitted by thevarious other committees and draws up theAnnual Action Plan and other plans.

ReportBoard of Directors

Implementing Responsibilities: Auditing and Monitoring

The Senko Group views regulatory compliance, environmental responsibility, and safety-consciousness as the core elements ofmanaging our business in a socially responsible way in order to create a corporate culture that allows us to gain the trust of allof our stakeholders. A high level of awareness among all of our employees will allow us to contribute to society through ourbusiness activities.

10

Accounting Audit

Board of Corporate Auditors

Appointment / Dismissal

Audit

Executive Officers / Departments / Branches / Group Companies

R e i n f orci n g Ou r C SR I n itia tiv e s

The Environment

ReportAuditing Dept.
Legal Counsel

Services• High quality• Low cost
• Efficient• Environmentally conscious• SafeBusiness partners
and vendors

Shareholders

Appointment / Dismissal

The Senko Group has established the Senko Standards of Business Conduct that prescribe all items that executives andemployees must observe regarding every aspect of their job activities based on a thorough understanding of the group’ssocial obligations. Committees have been established to ensure that everyone fully understands these standards and to
implement and upgrade these standards. In addition, there is a Business Ethics Hotline.

Reinforcing Risk Management System

We have built a “risk management system” for various risks that may arise in the course of our business operations. In theevent of an emergency, this system prioritizes human life, limits property damage (corporate losses), enables swift
resumption of business, maintains social trust, and implements measures from a viewpoint that will support andcontribute to the local society.
To execute proper compliance (legal adherence) and social responsibility, we further worked on building a database on
hazardous materials and revised and disseminated our “Risk Manual” in FY2013. We are also operating a logistics
information back-up center to prepare for major disasters.

Initiative to Protect Personal Information

Protection of personal information is a corporate responsibility for distribution corporations because we often receive
personal information of customers when receiving pickup and delivery service requests. The Senko Group implements athorough information protection system by acquiring Privacy Mark certification and ISO 27001 and establishing theinformation security policy.
11

Corporate Social Responsibility
Measu res t o Reduce O u r E n v iro n m e n ta l Im pa c t

S a f e t y I ni t i a t i ve s

As an “advanced environmental organization,” the Senko Group has been executing activities based on the “Phase
V Environmental Master Plan” from fiscal 2013 with the aim of reducing its impact on the environment. Numericaltargets had been established for activities for combating global warming.
All of our business activities incorporate aggressive andvoluntary programs to conserve energy and resources andprotect the environment in other ways. We are determined toplay a part in preserving and consistently improving theenvironment.
The Senko Group’s goal is to cut the environmental impact
associated with business activities to the absolute minimum. To
achieve this goal, we determine the quantity of resources andenergy used (the input) and the quantity of CO2 and wastematerials we produce (the output). By using this approach, weare monitoring and lowering the burden that our collective
business operations place on the environment.

The Senko Group conducts safety programs based on
the themes of “respect for individuals” and “giving
safety priority above all else.” The goal is to eliminate
serious accidents.
We have programs to ensure that every employee
understands that safety in our business operations is
at the core of how we do business and that everyone
must work on improving safety.
In addition, senior executives and all employees at
the Senko Group work as a unified team to maintainand enhance workplace safety.

Diesel oil

11,652 kL

Heavy oil

10,793 kL

Electricity

68,990,775 kWh

CO2 emissions

97,817 t-CO2

Fundamental Stance1

The Senko Group has a strong commitment to the social mission of the logistics business. We will ensure that
all employees have a proper understanding of the critical importance of safety in our business operations andwill take actions aimed at further improving safety.

2

Senior executives will provide strong leadership for improving safety by ensuring the safety for all business
operations based on unified activities by everyone from the president to employees at business sites.

3

The Senko Group will make all employees well aware that a healthy mind and body is the most importantelement of safety and that they must manage their health properly.

Note: The CO2 emission coeﬃcients are the revised and publicly announced values asof December 27, 2013, based on the “Order for Enforcement of the Act on Promotionof Global Warming Countermeasures” and the “Ministerial Order Concerning the
Calculation of the Greenhouse Gas Emissions in Conjunction with the Business
Activities of Speciﬁed Emitters.”

Others
6,772t-CO2
7%
Oﬃces and warehouses,
etc. (Electricity)
33,293t-CO2
34%
Shipping (C heavy oil)
12,630t-CO2
13%

Automobile (Diesel oil)
27,339t-CO2
28%

Shipping (A heavy oil)
17,783t-CO2
18%

Our Basic Principles

121

We will obey legal and regulatory requirements, ordinances, and agreements concerning environmental
matters, and we will endeavor to prevent environmental pollution and to protect the environment.

2

We will examine and assess the environmental impact of our business activities, and continuously strive to
mitigate the factors that place a burden on the environment.
We will implement new technologies and equipment and reduce the environmental burden.

3

We will tirelessly exercise our creativity so that we can offer sophisticated logistics systems that help theenvironment.

4

In order to adhere to these principles, we will establish a program for advancing environmental initiatives,
rules to protect the environment, and environmental objectives.

5

In order to ensure that these principles are understood by all of our employees, along with conducting
environmental training and educational activities, we will disclose these principles externally and provide
relevant information.

A c t i vi t i e s t o P ro m o t e G o o d H e a l t h
Healthy Activity Campaign

The Senko Group started the Healthy Activity
Campaign in fiscal 2011 to help employees stayhealthy. This campaign, in which employees compete
to see who exercises the most, provides for physicalactivity that matches each individual’s life style andcondition. The goal is to help prevent lifestylediseases. Numerous events are held so that all
workplaces can enjoy taking part in this campaign. In
addition, the Senko Group encourages employees toquit smoking as the part of the campaign.

Mental Health Management Training

To support the mental health of employees, the Senko
Group has preventive programs, allows employees totalk with industrial doctors and has a support system
to enable employees to return to their jobs. In fiscal
2013, mental health management training sessions led
by mental health professionals were held at two
locations for managers and supervisors.

13

Financial Review
Performance

Consolidated Sales by Segment

Consolidated operating revenues for the fiscal year ended
March 31, 2014 increased 13.7% year on year to 333,884
million yen due to efforts to aggressively expand sales,
last-minute demand before the consumption tax hike, andthe merger of AST CORPORATION as a consolidated
subsidiary.

Business segment performance for the fiscal year ended
March 2014 was as follows:(Billions of yen)

Earnings benefited from the growth in sales, cost-cutting
measures, and activities to raise productivity, although fuelprices rose and outsourcing cost soared due to a shortage ofdrivers and trucks. The consolidation of special-purpose
companies associated with a revision to an accounting
standard also affected earnings. As a result, operating
income rose 22.3% to 12,122 million yen, and net income
advanced 25.0% to 6,504 million yen.

For the fiscal year
ended March 31, 2014

For the fiscal year
ended March 31, 2013

Component
Sales ratio (%)

Component
GrowthSales ratio (%) Difference rate (%)

Distribution

239.7

71.8

228.3

77.7

11.5

5.0

Retail Product Logistics

100.7

30.2

96.2

32.7

4.6

4.8

Housing Logistics

65.3

19.5

59.6

20.3

5.7

9.6

Chemicals Logistics

47.8

14.3

47.8

16.3

(0.1)

(0.2)

Others

25.9

7.8

24.6

8.4

1.3

5.3

Trading and Commerce

90.7

27.2

62.1

21.2

28.6

46.0

Others

3.4

1.0

3.2

1.1

0.3

8.8

Total

333.9

100.0

293.5

100.0

40.4

13.7

1) Distribution Segment
In retail product logistics, an increase in the volume ofcargo for general merchandise stores, discount stores, andapparel volume retailers contributed to growth inoperating revenues. Our efforts to develop relationships
with new customers in the electrical machinery and othermachinery sectors also led to a rise in operating revenues.
In the housing logistics business, the cargo volume washigher along with the increase in housing starts in Japan.
In the chemicals logistics business, the Senko Group
conducted aggressive sales promotion activities. This
resulted in operating revenues of 239,738 million yen, a
5.0% increase year on year.

Financial Position
Total assets were 243,594 million yen at the end of the fiscal
year under review, 35,499 million yen higher than at the endof the previous fiscal year. This was mainly because there
were increases of 15,314 million yen in current assets and
32,853 million yen in property and equipment, at cost.
Current liabilities increased 15,529 million yen to 79,364
million yen at the end of the fiscal year. There wereincreases of 850 million yen in short-term loans and 8,060
million yen in current portion of long-term debt. Long-term
debt, less current portion was 15,900 million yen higher than
one year earlier.

2) Trading and Commerce Segment
In the commerce business, progress was supported by
activities that boosted sales in the petroleum marketingbusiness and a contribution to revenues from the merger
effect of AST CORPORATION and Obata Co., Ltd., awholesaler of household products that joined the Senko
Group in September 2012. In the Trading business, there
was a rise in exports of electronic components to China.
As a result, operating revenues increased 46.0% year on
year to 90,704 million yen.

Net assets were 72,303 million yen at the end of the fiscal
year under review, 4,975 million yen higher than at the endof the previous fiscal year. This was mainly because there
were increases of 4,596 million yen in retained earnings and2,255 million yen in minority interests, while there was adecrease of 2,530 million yen in remeasurements of defined
benefit plans. The equity ratio decreased 3.5 percentage
points to 27.8%.

3) Others
In this segment, operating revenues rose 8.8% year on
year to 3,442 million yen, partly due to the launch of thesolar electricity sales business.

Operating revenues

Operating income

Net income

Operating income / net income
to operating revenues

Cash dividends per share(Billions of yen)

(Millions of yen)

(Millions of yen)

(%)

(Yen)

(Yen)

300

12,0006,000

Operating income tooperating revenues

50

14

40

12

30

10

20

8

10

6

350

7,000

14,000250

10,000

5,000

200

8,000

4,000

150

6,000

3,000

100

4,000

2,000

50

2,000

1,000

4

60

0

10

11

12

13

14

0

10

11

12

13

14

0

16

3

2

14

Net income per share

1

10

11

12

13

14

0

Net income tooperating revenues

10

11

12

13

14

0

10

11

12

13

14

0

10

11

12

13

14

15

Report of Independent Auditors

Capital Expenditures and Depreciation

million yen, and increases in net defined benefit liability of
6,804 million yen and trade payables of 1,924 million yen,despite a decrease in accrued retirement benefits of 9,301
million yen, an increase in trade receivables of 2,662 million
yen, interest expenses of 1,245 million yen, and income tax
paid of 4,014 million yen.

Capital expenditures in the fiscal year under review
increased 19,596 million yen (445.0%) to 24,000 million yen
compared with the previous fiscal year. The major reason for
the increase is that a number of large-scale Company-owned
distribution centers were opened and rental properties werepurchased in the fiscal year under review, while most of the
distribution centers opened in the previous fiscal year wererental properties so that the amount of capital expenditure
was small.

Net cash used in investing activities was 24,956 million yen.
This was mainly due to the purchases of fixed assets of
23,608 million yen.
Net cash provided by financing activities was 14,551 million
yen. This was mainly due to proceeds from long-term debt
of 20,520 million yen, and proceeds from issuance of
convertible bonds with subscription rights to shares of 7,035
million yen, despite repayment of long-term debt of 9,549
million yen, repayments of finance lease obligations of 2,439
million yen, and dividends paid of 1,898 million yen.

Capital expenditures are planned to decrease 13,900 million
yen (57.9%) to 10,100 million yen in the fiscal year ending
March 2015. We will upgrade and expand distribution basesin Japan and overseas based on the new Medium-term
Business Plan.
Depreciation increased 868 million yen (12.9%) to 7,606 million
yen compared with the previous fiscal year and is expected tobe 8,017 million yen in the fiscal year ending March 2015.
Cash Flows
Cash and cash equivalents at the end of the term increased
by 1,976 million yen year on year to 17,667 million yen.
Net cash provided by operating activities was 10,689 million
yen. This was mainly due to income before income taxes of
11,343 million yen, depreciation and amortization of 7,606

Total assets

Net assets /Eqnity ratio(Billions of yen)250

ROE / ROA(Billions of yen)

(%)

60

30

80

40

(%)

12

10

200

8
150
40

20

20

10

6

ROE

100
4
50

0

16

2

10

11

12

13

14

0

10

11

12

13

14

0

0

ROA

10

11

12

13

14

17

Consolidated Balance Sheets

SENKO Co., Ltd. and Consolidated Subsidiaries
March 31, 2014 and 2013

Thousands of
U.S. dollars

Millions of yen

ASSETS

2014

Current assets:
Cash and cash equivalents¥17,667

2013

2014

¥15,691$171,657

LIABILITIES AND NET ASSETS

2014

Current liabilities:

Trade accounts and notes receivable––Thousands of
U.S. dollars

Millions of yen

2013

2014

Short-term loans (Note 9)¥7,490¥6,640$72,775

Current portion of long-term debt (Note 9)15,895

7,835

154,440

Lease obligations

1,986

2,147

19,297

109

52

1,059

36,49431,326354,586

56

38

544

51,70942,349502,419

(51)

(66)

(495)

Inventories

6,505

4,779

63,204

Deferred tax asset (Note 15)

2,398

2,030

23,300Accrued expenses

7,430

6,887

72,192

5,893

4,042

57,258

Accrued income taxes

2,767

2,540

26,88584,177

68,863817,887

Other current liabilities (Note 15)

7,193

6,408

69,88979,364

63,835771,123

Non-consolidated subsidiaries
OthersLess: allowance for doubtful accounts

Prepaid expenses and other current assets
Total current assets

Trade accounts and notes payable––Non-consolidated subsidiaries
OthersTotal current liabilities
Investments in and long-term loans receivable to non-consolidated subsidiaries

2,840

2,599

27,594Long-term debt, less current portion (Note 9)74,65058,750725,321

Investment securities (Notes 6 and 11)

4,904

4,784

47,649Lease obligations

3,657

3,584

35,532

—

9,269

—

Accrued retirement benefits (Note 10)
212,139

171,593

2,061,203

Net defined benefit liabilities (Note 10)

6,804

—

66,110Less: accumulated depreciation(83,681)(75,988)(813,068)

Other long-term liabilities

6,816

5,329

66,226

Net property and equipment

128,458

95,605

1,248,135

Authorized––294,999,000 shares

20,521

20,521

199,388

Issued––128,989,476 shares

18,897

18,782

183,609

31,065

26,469301,836

2014 and 4,077,506 shares in 2013

(1,093)(1,353)(10,620)

Total Shareholders’ equity

69,39064,419674,213

Net unrealized holdings gain on securities

739

674

7,180

Loss on deferred hedges

(9)

(5)

(87)

Translation adjustments

230

52

2,234

(2,530)—(24,582)(1,570)721(15,255)

236

196

2,293

4,247

1,992

41,26572,30367,328702,516¥243,594¥208,095$2,366,828

Property and equipment, at cost (Notes 8 and 11)

Contingent liabilities (Note 12)Long-term deferred tax assets (Note 15)

4,235

3,436

41,148Other assets

18,98032,808

184,415¥243,594¥208,095$2,366,828

Total assets

Net assets (Note 13):
Shareholders’ equity
Common stock:

Capital surplus
Retained earnings
Less: Treasury stock, at cost ––3,284,287 shares in

Accumulated other comprehensive income:Remeasurements of defined benefit plans
Total accumulated other comprehensive income:Stock acquisition rights (Note 14)
Minority interests
Total net assets
Total liabilities and net assets
See the accompanying notes to the consolidated financial statements.

18

See the accompanying notes to the consolidated financial statements.

19

Consolidated Statements of Income

Consolidated Statements of Changes in Net Assets

SENKO Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2014, 2013 and 2012

Operating revenues
Operating costs and expenses:
Operating costs of revenues
Selling, general and administrative expenses
Operating income
Other income (expenses):
Interest and dividend income
Interest expenses
Others, net
Income before income taxes and minority interests
Income taxes (Note 15):
Current
DeferredThousands of
U.S. dollars

Millions of yen

2014

2013

2012

2014

¥333,884¥293,534¥270,361$3,244,112

299,040
22,722
321,762
12,122

263,898
19,727
283,6259,909

245,426
16,661
262,087
8,274

2,905,558
220,773
3,126,331
117,781262(1,243)
202
(779)

1,129
(1,156)
(264)
(291)

1,094
(1,200)
(384)
(490)

2,546
(12,077)
1,962(7,569)11,343

9,618

7,784

110,212

Income before minority interests

4,315
335
4,650
6,693

3,932
397
4,329
5,289

2,706
1,525
4,231
3,553

41,926
3,255
45,18165,031

Minority interests in gain of consolidated subsidiaries
Net income(189)¥6,504(86)¥5,203(74)¥3,479(1,836)$63,195

SENKO Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2014, 2013 and 2012
Thousands

Balance at March 31, 2011¥50.83
44.37
16.00

U.S. dollars¥41.4537.46
14.00¥27.6525.07
12.00¥(1,047)

¥3

¥(10)

¥(31)

—

¥108

¥1,472

—

—

—

—

—

—

—

(1,385)

—

—

—

—

—

—

—

—

¥18,782¥20,807——

Cash dividends

—

—

—

3,479

Purchases of treasury stock

—

—

—

Other changes

—

—

—

—

—

128,989¥20,521¥18,782

Net income—¥22,901——

Cash dividends

—

—

—

5,203

Purchases of treasury stock

—

—

—

Retirement of treasury stock——

Other changes—

Balance at March 31, 2013

—

—

—

—

—

167

(14)

—

41

229

3,479
(1,385)(2)577¥(1,049)

¥157

¥157

¥(45)

—

¥149

¥1,701————¥63,274

—

—

—

5,203

—

—

—

—

—

—

—

—

(310)

—

—

—

—

—

—

—

6

—

—

—

—

—

—

—

(0)

—

—

—

¥674

(162)

¥(5)

97

¥(1,353)

517

¥52

—

47

¥196

291

¥1,992

—

—

—

—

—

—

—

(1,902)

—

—

—

—

—

—

—

—

(7)

—

—

—

—

—

—

—

267

—

—

—

—

—

—

382

(1,635)—(1,635)
(310)
6
790

¥67,328¥20,521¥18,782—¥26,469——

Cash dividends

—

—

—

6,504

Purchases of treasury stock

—

—

—

Retirement of treasury stock

—

—

115

—

—

—

—

—

—

—

—

—

—

178

(2,530)

40

2,255

4

¥20,521¥18,897¥31,065¥(1,093)65(4)

128,989

—

—

(6)

—

(6)

—

—

Net unrealized
holdings gain
on securities

Adjustment of retained earnings for

Balance at March 31, 2014

¥739

¥230

¥(9)

¥(2,530)¥236¥4,247

6,504(1,902)(7)¥72,303

Thousands of U.S. dollars

Cash dividends
Purchases of treasury stock

2013

2012

2014

Retirement of treasury stock

Income before minority interests
Other comprehensive income (Note 4):
Net unrealized holdings gain on securities
Gain (loss) on deferred hedges
Translation adjustments
Share of other comprehensive income of an affiliate
accounted for using equity method
Total other comprehensive income¥6,693¥5,289¥3,553$65,031

Adjustment of retained earnings for

70
(4)
286

563
(167)
153

181
181
(17)

680
(39)
2,779

—
352

(0)
549

(1)
344

—
3,420

Comprehensive income¥7,045¥5,838¥3,897$68,451

Total comprehensive income attributable to:
Owners of the parent
Minority interests¥6,743¥302¥5,654¥184¥3,786¥111$65,517$2,934

See the accompanying notes to the consolidated financial statements.

—
154¥60,605

128,989

Net income
Thousands of
U.S. dollars

(2)

Total
net
assets

Net income

2014

20

Treasurystock(at cost)¥20,521

Balance at March 31, 2013

Millions of yen

Retainedearnings

$0.49
0.43
0.16

Consolidated Statements of Comprehensive Income

SENKO Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2014, 2013 and 2012

Capitalsurplus—

newly consolidated subsidiaries
Yen

Commonstock

128,989

Balance at March 31, 2012

Net
unrealized Gain (loss) Translation Remeasurements
Stock
Minority
holdings gain on deferred adjustments of defined acquisition interests
hedgeson securities
rightsbenefit plans

Number ofshares ofcommonstock issued

Net income

Other changes

Per share of common stock
Net income
Diluted net income
Cash dividends applicable to the year

Millions of Yen

newly consolidated subsidiaries
Other changes

Balance at March 31, 2014

Commonstock

CapitalsurplusRetainedearnings

Treasurystock(at cost)$199,388$182,491$257,180$(13,146)$6,549$(48)

63,195——————$199,388

—
—
—
1,118
—
—
$183,609

Loss ondeferredhedges———(18,481)

—

—

—

(68)

—

—

—

2,594

—

—

—

—

—

(58)

—

—

—

$301,836$(10,620)

631$7,180

(39)

$(87)

Translation
adjustments

Remeasurements
Stockof definedacquisition Minority
interests
benefit plansrights$505—$1,904$19,355

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

1,729

(24,582)$2,234 $(24,582)

389$2,293

21,910$41,265

Total
net
assets$654,178
63,195(18,481)
(68)
3,712
(58)
38

$702,516

See the accompanying notes to the consolidated financial statements.

21

Consolidated Statements of Cash FlowsSENKO Co., Ltd. and Consolidated Subsidiaries
Year ended March 31, 2014, 2013 and 2012

Cash flows from operating activities:
Income before income taxes and minority interests
Adjustments for:
Depreciation and amortization
Loss on disposals of property and equipment
Loss (gain) on sales of property and equipment
Loss on revaluation of investment securities
Gain on sales of investment securities
Decrease in accured retirement benefits
Increase in net defined benefit liabilities
Increase (decrease) in accrued bonuses to employees
Decrease in provision for loss on disaster
Interest and dividends income
Interest expenses
Increase in trade receivables
Increase in inventories
Increase in trade payables
Other
SubtotalInterest and dividends income received
Interest expenses paid
Income tax paid
Net cash provided by operating activities
Cash flows from investing activities:
Payments for purchases of fixed assets
Proceeds from sales of fixed assets
Payments for purchases of investment securities
Proceeds from sales of investment securities
Payments for purchases of non-consolidated subsidiaries
Proceeds from sales of subsidiaries
Payments for purchase of shares of newly consolidated subsidiaries
Proceeds from purchase of shares of newly consolidated subsidiary
Other
Net cash used in investing activities
Cash flows from financing activities:
Increase (decrease) in short-term loans, net
Proceeds from long-term debt
Repayment of long-term debt
Proceeds from issuance of bondProceeds from issuance of convertible bondPayments for redemption of bondPayments for redemption of convertible bond
Repayments of finance lease obligations
Purchases of treasury stock
Sales of treasury stock
Dividends paid
Other
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Net increase in cash and cash equivalents of newly consolidated subsidiaries
Cash and cash equivalents at end of year

Notes to the Consolidated Financial Statements

Thousands of
U.S.dollars

Millions of yen

2014

2013

2012

2014

¥11,343¥9,618¥7,784$110,212

7,606
212
(187)
—
(550)
(9,301)
6,804
84
—
(262)
1,243
(2,662)
(295)
1,924
(185)
15,774174(1,245)(4,014)
10,689

6,738
201
(26)
77
—
(199)
—
(7)
(44)
(1,129)1,156(1,560)
(338)
526
729
15,742216(1,148)(3,773)
11,037

6,160
190
303
—
—
(470)
—
193
(793)
(1,094)
1,200(4,484)
(802)
3,969
488
12,644254(1,187)(2,369)9,342

73,9022,060(1,817)—(5,344)(90,371)
66,110816—(2,546)
12,077(25,865)(2,866)
18,694(1,798)153,264
1,691(12,097)(39,001)
103,857(23,608)
564
(43)
1,026
(160)
12
(2,365)—(382)(24,956)(6,014)
191
(42)
111
(254)
25
—
24
(277)
(6,236)(11,949)
1,362(1,396)53(22)
22(4,600)—63(16,467)(229,382)
5,480
(418)
9,969
(1,555)
117(22,979)—(3,712)(242,480)

850
20,520(9,549)
—
7,035
(20)
—
(2,439)(7)360(1,898)(301)
14,551100
384
15,691(2,626)
8,870(4,378)—5,000—(4,900)(2,282)(310)
0(1,635)(290)(2,551)54
2,304
13,354152
12,650(8,203)5,000———(1,912)(2)—(1,384)
(207)
6,094
(9)
(1,040)14,394

8,259
199,378(92,781)—
68,354(194)—(23,698)(68)
3,498(18,441)(2,925)
141,382
972
3,731
152,458

1,592¥17,667

33¥15,691—¥13,354

15,468$171,657

SENKO Co., Ltd. and Consolidated Subsidiaries

1. Basis of Presenting Consolidated Financial Statements:

SENKO Co., Ltd. (the “Company”) and its domestic subsidiaries maintain their accounts and records in accordance with the provisions set forthin the Japan Companies Act and the Financial Instruments and Exchange Law of Japan and in conformity with accounting principles generally
accepted in Japan, which are different in several respects as to the accounting and disclosure requirements of International AccountingStandards.
The Company’s foreign subsidiaries maintain their accounts and records in conformity with generally accepted accounting principles andpractices prevailing in their respective countries of domicile.
The accompanying consolidated financial statements are prepared based on the consolidated financial statements of the Company and its
subsidiaries(the“Companies”) which were filed with the Director of Kanto Local Finance Bureau as required by the Financial Instruments andExchange Law of Japan.
In preparing the accompanying consolidated financial statements, certain reclassifications and rearrangements have been made to theconsolidated financial statements issued domestically in order to present them in a form which is more familiar to readers outside Japan.
The translation of Japanese yen amounts into U.S. dollars is included solely for the convenience of the reader, using the exchange rate
prevailing at March 31, 2014, which was ¥102.92 to US$1.00. These convenience translations should not be construed as representations that theJapanese yen amounts have been, could have been, or could in the future be, converted into U.S.dollars at this or any other rate of exchange.

2. Summary of Significant Accounting Policies:(a) Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its significant subsidiaries. All significant intercompany
balances and transactions are eliminated.
Non-consolidated subsidiaries, whose combined assets, net sales, net income and retained earnings in the aggregate are not significant inrelation to those of the consolidation with the Companies.
The investments in other insignificant unconsolidated subsidiaries and affiliates are stated at cost.
(b) Cash and Cash Equivalents
Cash and cash equivalents comprise cash in hand, deposits held at call with banks, net of overdrafts and all highly liquid investments withmaturities of three months or less.
(c) Investment Securities
Investment securities are classified and accounted for, depending on management’s intent.
Marketable other securities, which are not classified as either trading securities or held-to-maturity debt securities, are reported at fairvalue, with unrealized gains and losses, net of applicable taxes, reported in a separate component of net assets.
Non-marketable other securities are stated at cost.
The cost of other securities sold is determined by the moving-average method.
The Companies classified all securities as other securities.
(d) Allowance for Doubtful Accounts
The allowance for doubtful accounts is stated in amounts considered to be appropriate based on the Companies’ past credit loss experience oran evaluation of potential losses in the receivables outstanding.
(e) Inventories
Purchased goods are stated principally at cost determined by the periodic average method (with book values written down on the balance
sheets based on decreased profitability of assets). Finished goods, real estate for sale and work in process are stated principally at cost
determined by the specific method (with book values written down on the balance sheets based on decreased profitability of assets). Raw
materials are stated at cost determined by the last purchase cost method (with book values written down on the balance sheets based on
decreased profitability of assets). Supplies are principally stated at cost determined by the moving-average method (with book values written
down on the balance sheets based on decreased profitability of assets).
(f) Property and Equipment and Depreciation (Except for Leased Assets)

Property and equipment are stated at cost. Depreciation is computed on the straight-line method for the buildings (including fixtures attachedto the buildings), structures and vehicles, and on the declining-balance method for the others, on the estimated useful lives of assets.
The principal estimated useful lives are as follows:
Buildings and structures
3 to 60 years
Machinery and equipment
3 to 17 years(g) Leased Assets
Financial leases other than those that are deemed to transfer the ownership of leased assets to the lessees are accounted for in a similar way topurchases and depreciation for lease assets is computed under the straight-line method with zero residual value over the lease term.
Financial leases other than those that are deemed to transfer the ownership of leased assets to the lessees, which commenced in fiscal years
beginning prior to April 1, 2008, are accounted for in a similar way to operating leases.

See the accompanying notes to the consolidated financial statements.

2223

(h) Retirement Benefits
The Company and certain consolidated subsidiaries have retirement benefit plans for their employees that consist of funded and unfunded
defined benefit pension plans and a defined contribution pension plan. The Company terminated a part of the retirement lump-sum plan andtransferred to a defined contribution pension plan on July 1, 2013.
Under the defined benefit pension plans (all of which are funded benefit plans), lump-sum benefits or pensions are paid based on salaryand the length of service. The Company has set up a retirement benefit trust scheme for certain defined benefit pension plans.
Under the retirement lump-sum plans (though the plans are basically unfunded, some were turned into funded plans after the setting up
of a retirement benefit trust scheme), lump-sum benefits are paid based on salary and length of service.
Net defined benefit liabilities have been provided for employees’ retirement benefits, based on the amount of projected benefit obligation
reduced by pension plan assets at fair value at the balance sheet date.
Actuarial gains and losses are amortized by the straight-line method over a period of 13 years, which is within the estimated averageremaining years of service of the Companies’ employees. The amortization of such gains and losses is recognized effective the year subsequent
to the year in which they are incurred. Prior service costs are amortized in the fiscal year in which they are incurred.
Certain consolidated subsidiaries also have a severance indemnity plan for directors and corporate auditors, whose accrued severance
indemnities are stated at 100% of the amount which is computed according to internal rules.
(i) Income Taxes

Deferred income taxes are recognized by the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities
are determined based on difference of between financial reporting and the tax basis of the assets and liabilities, and are measured using theenacted tax rate and laws that will be in effect when the differences are expected to reverse.

(j) Goodwill

Goodwill amortized over a period of 5 years by the straight-line method. If the economic useful life can be estimated, the useful life is used as
the amortization period.

(k) Derivatives and hedge accounting

The Company and consolidated subsidiaries state derivative financial instruments at market value and recognize changes in the market value
as gain or loss unless the derivative financial instruments are used for hedging purposes. If derivative financial instruments are used as hedges
and meet certain hedging criteria, the Company and consolidated subsidiaries defer recognition of gain or loss resulting from changes in themarket value of the derivative financial instrument until the related loss or gain on the hedged item is recognized. However, when forward
foreign exchange contracts are used as hedges and meet certain hedging criteria, the foreign currency receivables or payables are translated at
the contracted rate. Also, if interest rate swap contracts are used as hedges and meet certain hedging criteria, the net amount to be paid or
received under the interest rate swap contract is added to or deducted from the interest on the asset or liability for which the swap contract
was executed.

(l) Per Share Information

Basic net income per share is computed on the basis of the weighted-average number of shares of common stock outstanding for the period.
Diluted net income per share is computed on the basis of the weighted-average number of shares of common stock outstanding during
each year after giving effect to the dilutive potential of the shares of common stock to be issued upon the conversion of convertible bonds andexercise of stock acquisition rights.
Cash dividends per share are dividends applicable to the respective years including dividends to be paid after the end of the year.

(m) Translation of Foreign Currencies

All monetary assets and liabilities denominated in foreign currencies are translated into Japanese yen at the exchange rate at the balance sheet
date. Revenue and expenses are translated at the rate of exchange prevailing when transactions are made.
Foreign currency financial statements amounts of overseas consolidated subsidiaries are translated into Japanese yen at the exchange rate
for prevailing at the respective balance sheet dates of those subsidiaries for assets and liabilities, and at the historical exchange rate for net
assets. All income and expense amounts are translated at the average rate of exchange during the fiscal year of those subsidiaries.
The resulting translation adjustments are included in net assets as translation adjustments.

(Additional Information)(Accounting Treatment of ESOP Trusts)
In accordance with the resolution at the Board of Directors meeting held on April 25, 2013, the Company introduced an incentive plan for
Company employees in the form of Employee Stock Ownership Plan (ESOP) Trusts (hereinafter, “ESOP Trusts”). The ESOP Trusts plan isdesigned to further improve the welfare program for employees who support the growth of the Company and to improve the Company’s
corporate value in the medium and long term by enhancing employee awareness of the Company’s business performance and stock value andproviding incentives to contribute to increasing the Company’s earnings in a way that brings about a rise in the Company’s stock price.
Under the ESOP Trusts plan, the ESOP Trusts, which are set up to deliver the Company’s own stock to the Senko Group Employee’s
Stockholding (hereinafter, the “Employee’s Stock Holding”), will make a lump purchase of the Company’s own stock, which the Employee’s
Stockholding is expected to acquire over a period of four years and six months, and transfer a certain quantity to the Employee’s Stockholding
on a fixed day each month.
The Company accounts for the purchase and disposal of the Company’s stock by the ESOP Trusts as its own, since the Company
guarantees the liabilities of the ESOP Trusts.
As of March 31, 2014, the ESOP Trusts own 2,680,000 shares of the Company’s stock.

24

3. Changes in Accounting Policies:(a) Application of accounting standard for consolidated financial statements
Starting with the first quarter of the fiscal year ending March 31, 2014, the Company is applying the Accounting Standard for Consolidated
Financial Statements (ASBJ Statement No. 22, March 25, 2011), Guidance on Disclosure about Certain Special Purpose Entities (ASBJ GuidanceNo. 15, March 25, 2011), Guidance on Determining a Subsidiary and an Affiliate (ASBJ Guidance No. 22, March 25, 2011), and Practical
Solution on Application of the Control Criteria and Influence Criteria to Investment Associations (ASBJ Practical Issues Task Force No. 20,
March 25, 2011). As a result, SK Urawa and five other companies have become consolidated subsidiaries.
For the application of the above accounting standards and other items to the six newly consolidated subsidiaries, in accordance with thetransitional handling prescribed in Section 44-4 (3) of the Accounting Standard for Consolidated Financial Statements, at the beginning of thefirst fiscal year of applying this standard the assets and liabilities of the six newly consolidated subsidiaries were valued at the suitable bookvalue for inclusion in the consolidated balance sheet.
The consolidation of these six companies did not have a material effect on retained earnings at the beginning of the fiscal year underreview.

(b) Application of the Accounting Standards for Retirement Benefits
Effective from the current consolidated fiscal year, the Accounting Standard for Retirement Benefits (ASBJ Statement No. 26, issued on May 17,
2012; hereinafter, the “Retirement Benefits Accounting Standard”) and the Guidance on Accounting Standard for Retirement Benefits (ASBJ
Guidance No. 25, issued on May 17, 2012; hereinafter, “Retirement Benefits Guidance”) have been applied (excluding, however, the rules
provided in paragraph 35 of the Retirement Benefits Accounting Standard and in paragraph 67 of the Retirement Benefits Guidance).
Accordingly, the Companies switched to the method of posting the amount gained by deducting pension assets from retirement benefit
obligations as net defined benefit liabilities and posted unrecognized actuarial differences as net defined benefit liabilities.
In accordance with transitional accounting as provided in paragraph 37 of the Accounting Standard for Retirement Benefits, the effects ofthe change have been reflected in re-measurements of defined benefit plans for total other comprehensive income as of the end of the fiscal
year ended March 31, 2014.
Consequently, net defined benefit liabilities of ¥6,804 million ($66,110 thousand) were posted as of the end of the fiscal year ended March
31, 2014. In addition, total other comprehensive income decreased ¥2,530 million ($24,582 thousand).
Net assets per share decreased ¥19.71 ($0.19).

4. Comprehensive Income:The amount of recycling and amount of income tax effect associated with other comprehensive income at March 31, 2014, 2013 and 2012, consistedof the following:Thousands of
U.S. dollars
Millions of yen
2014
2013
2012
2014
Net unrealized holdings gain on securities:
Amount recognized in the period under review$6,277
¥646
¥795
¥282
Amount of recycling(5,257)
(541)
77
(6)
Before income tax effect adjustments
1,020
105
872
276
Amount of income tax effect
(340)
(35)
(309)
(95)
Net unrealized holdings gain on securities
680
70
563
181
Gain (loss) on deferred hedges:
Amount recognized in the period under review
(58)
(6)
(184)
277
Amount of recycling
̶
̶
(85)
12
Before income tax effect adjustments
(58)
(6)
(269)
289
Amount of income tax effect
2
19
102
(108)
Gain (loss) on deferred hedges
(39)
(4)
(167)
181
Translation adjustments:
Amount recognized in the period under review
2,779
286
153
(17)
Share of other comprehensive income of an affiliate:
Amount recognized in the period under review
̶
̶
(0)
(1)
Total other comprehensive income$3,420
¥352
¥549
¥344

25

5. Financial Instruments:(a) Status of financial instruments(1) Policy on financial instruments
The Company and certain of its subsidiaries raise the funds required for capital investment plans for further growth from bank loans andthe issuancee of bond. The Companies manage any temporary surplus funds using highly stable financial assets. The Companies use
derivatives in order to hedge against currency risks associated with merchandise imports as well as interest rate fluctuations risks in loans
payable, and do not engage in speculative transactions.
(2) Details of financial instruments, their risks and management systems
Trade accounts and notes receivable, which are operating receivables, are exposed to the credit risk of the customer and the Companies
operate systems to manage both payment deadlines and balances for each customer and grasp the credit status of each customer.
Investment securities are mainly the shares of companies with which the Companies have a business relationship and the shares
related to capital alliances, and these are exposed to the risk of fluctuations in market prices.
Trade accounts and notes payable, which are operating liabilities, have payment dates of within 1 year.
Trade accounts payable in foreign currencies are exposed to risks of foreign exchange fluctuations. To hedge such fluctuation risks, aconsolidated subsidiary has entered into foreign exchange forward contracts.
Short-term loans are fund procurement related mainly to operating transactions. Long-term debt are fund procurement related mainly
to capital investment.
Loans with variable interest rate are exposed to the risk of fluctuations in payable interest rates, but the Company conduct interest rate
swap transactions in order to hedge the risk of fluctuations in payable interest rates for some long-term debt among variable interest rateloans.
In addition, operating liabilities and loans payable are exposed to liquidity risk, but the Companies implement integrated fundmanagement through the concentration of funds in the Company, which carries out fund settlement, fund procurement, monitoring ofbalances and fund management for the Companies.
Regarding derivatives, the Companies use foreign exchange forward contracts to hedge against foreign exchange rates fluctuation
risks, and interest rate swap transactions aimed at hedging against the risk of future interest rate fluctuations, and also reduce the cost offund procurement by converting variable interest rate liabilities into fixed interest rate liabilities.
Primary risks pertaining to derivative transactions include market risk and credit risk. Market risk is the risk that the value of aninvestment position will decrease due to changes in market factors, and a derivative transaction is exposed to foreign exchange and interest
rate fluctuation risks. The Companies' derivatives effectively offset the risks of assets and liabilities on the balance sheets, and there were noimportant transaction risks. Credit risk is the risk that, in the case of default of the other party, the relevant party would become incapableof benefiting from the effect that would have obtained in the future if the transaction had continued. The Companies' derivative transaction
partners are limited to financial institutions with high credit ratings and the Companies do not foresee the occurrence of losses due to debt
default on the part of transaction partners.
The Company manages derivatives based on authority-related regulations in the Business Management Division. The execution oftransactions requires the permission of the director responsible for the management of derivatives and the details of transactions arereported to the general manager of the Business Management Division and the director after their execution.
Consolidated subsidiaries also manage derivatives based on authority-related regulations, as does the Company.
(3) Supplementary explanation of the estimated market values of financial instruments
The market value of financial instruments includes prices based on market prices and reasonably estimated prices if there are no market prices.
Because estimations of the prices incorporate fluctuating factors, application of different assumptions can in some cases change the prices.

(b) Market value of financial instruments
The values on the consolidated balance sheets, market values and the differences between them are as follows. Financial instruments for which
apprehension of the market value is recognized to be extremely difficult are not included.
2014(1) Cash and cash equivalents(2) Trade accounts and notes receivable(3) Investment securities(4) Long-term loans receivable(including current portion)Less allowance for doubtful accounts (*1)
Total assets(1) Trade accounts and notes payable(2) Short-term loans(3) Bond(4) Convertible bond(5) Long-term debt (including current portion)(6) Lease obligations (including current portion)
Total liabilities
Derivatives (*2)

2013(1) Cash and cash equivalents(2) Trade accounts and notes receivable(3) Investment securities(4) Long-term loans receivable(including current portion)Less allowance for doubtful accounts (*1)
Total assets(1) Trade accounts and notes payable(2) Short-term loans(3) Bond(4) Convertible bond(5) Long-term debt (including current portion)(6) Lease obligations (including current portion)
Total liabilities
Derivatives (*2)

2014(1) Cash and cash equivalents(2) Trade accounts and notes receivable(3) Investment securities(4) Long-term loans receivable(including current portion)Less allowance for doubtful accounts (*1)
Total assets(1) Trade accounts and notes payable(2) Short-term loans(3) Bond(4) Convertible bond(5) Long-term debt (including current portion)(6) Lease obligations (including current portion)
Total liabilities
Derivatives (*2)

Book value¥17,767
51,765
4,403
4,241

Millions of yen
Market value¥17,767
51,765
4,403

Difference
—
—
—

(239)
4,002
¥77,937

4,515¥78,450513¥513¥36,603
7,490
12,06012,031
66,454
5,643¥140,281¥(9)¥36,603
7,490
12,076
11,59667,0895,466¥140,320
¥(9)

—
—
16
(435)
635
(177)
¥39
—

Book value¥15,691
42,387
4,294
4,180

Millions of yen
Market value¥15,691
42,3874,294

Difference
—
—
—

(147)
4,033
¥66,405

4,500¥66,872467¥467¥31,378
6,640
12,0005,000
49,585
5,731¥110,334¥(5)¥31,378
6,640
12,053
4,805
50,0795,670¥110,625
¥(5)

—
—
53
(195)
494
(61)
¥291
—

Book value$172,629
502,963
42,781
41,207

Thousands of U.S. dollars
Market value
Difference$172,629—
502,963—
42,781—(2,322)
38,885$757,258

43,870$762,243

4,985$4,985$355,645
72,775
117,178
116,897645,686
54,829$1,363,010$(87)$355,645
72,775
117,334
112,670
651,856
53,109$1,363,389
$(87)

—
—
156
(4,227)
6,170(1,720)$379—*1. Allowance for doubtful accounts recognized in long-term loans receivable is offset.
*2. “Derivatives” shows net receivables and liabilities generated by derivative transactions, with net liabilities shown in parentheses.

2627Calculation of the market value of financial instruments and items relating to investment securities and derivatives
Assets(1) Cash and cash equivalents, (2) Trade accounts and notes receivable
Because these are settled in a short period of time and market values are roughly equivalent to book values, market value are calculated basedon book values.
(3) Investment securities
The market values of shares are based on stock exchange prices and the market values of bond are based on stock exchange prices and theprices offered by correspondent financial institutions. With regard to details of the investment securities by purpose, please see "Note 6."(4) Long-term loans receivable
The market values of long-term loans receivable are calculated based on the current value discounting future cash flow by a rate adding credit
risk to appropriate indices such as the yield on government bond.

2013
Cash and cash equivalents
Trade accounts and notes receivable
Investment securities
Other securities with maturity period(1) Government bond, local government bond(2) Bond(3) Other
Long-term loans receivable
Total

Within 1 year
¥15,691
42,387————347¥58,425

Liabilities(1) Trade accounts and notes payable, (2) Short-term loans
Because these are settled in a short period of time and market values are roughly equivalent to book values, market values are calculated
based on the book values.
(3) Bond, (4) Convertible bond
The market values of bond issued by the Company are calculated based on the current value discounting the total value of principal andinterest by a rate adding the remaining period of the bond in question and credit risk.
(5) Long-term debt
The market values of long-term debt are calculated based on the current value discounting the total value of principal and interest by a rateenvisioned if a new loan of the same value was taken out. Long-term debt based on variable interest rates are subject to special processing
using interest rate swaps, and are calculated based on the current value discounting the total value of principal and interest processed as aunit with the relevant interest rate swaps by a rate estimated rationally and applied if a loan of the same value was taken out.

2014
Cash and cash equivalents
Trade accounts and notes receivable
Investment securities
Other securities with maturity period(1) Government bond, local government bond(2) Bond(3) Other
Long-term loans receivable
Total

Within 1 year
$172,629
502,693
—
—
—
—
4,538
$680,130

Millions of yen
Over 1 year
Over 5 years
Within 5 years
Within 10 years
—
—
—
—
—
—
10
—
—
1,610
¥1,620———1,377¥1,377

Thousands of U.S. dollars
Over 1 year
Over 5 years
Within 5 years Within 10 years
—
—
—
—
—
—
97
—
—
16,450$16,547———
13,389$13,389

Over 10 years
—
—
—
—
—
—
846
¥846

Over 10 years
—
—
—
—
—
—
6,830
$6,830(6) Lease obligations
The market values of lease obligations are calculated based on the current value discounting the total value of principal and interest by a rateenvisioned if a new loan of the same value was taken out.
Derivatives

See “Note 7.”

Financial instruments for which it is extremely difficulty to determine market value
Millions of yen

2014¥1,373

Unlisted shares2013¥1,256

Thousands of
U.S. dollars
2014$13,340

The financial instruments listed above are not included in “(3) Investment securities,” as there is no market price and determination of
their market value is extremely difficult.
(c) Planned redemption amounts after the balance sheets date for monetary assets and investment securities with maturity dates

2014
Cash and cash equivalents
Trade accounts and notes receivable
Investment securities
Other securities with maturity period(1) Government bond, local government bond(2) Bond(3) Other
Long-term loans receivable
Total

28

Within 1 year
¥17,767
51,765————467¥69,999

Millions of yen
Over 1 year
Over 5 years
Within 5 years Within 10 years
—
—
—
—
—
—
10
—
—
1,693
¥1,703———
1,378¥1,378Over 10 years
—
—
—
—
—
—
703
¥703

29

6. Investment Securities:
The carrying amounts of investment securities at March 31,2014 and 2013, consisted of the following:
Millions of yen
2014
2013
¥4,403¥4,294501
490¥4,904¥4,784Marketable securities
Non-marketable securities

Thousands of
U.S. dollars
2014$42,781
4,868$47,649

The following is a summary of marketable securities included in investment securities, at March 31, 2014 and 2013.

7. Derivatives:
1. Derivative transactions to which hedge accounting is not applied
Not applicable.
2. Derivative transactions to which hedge accounting is applied(1) Currency transactions

Hedge accounting
methodMillions of yen

2014
Equity security
Bond and Others

Acquisition
cost

Gross
unrealized
gains¥2,924153¥3,077¥1,377
8¥1,385Acquisition
cost

Gross
unrealized
gains¥2,933153¥3,086¥1,228
6¥1,234Grossunrealized
losses
¥(59)
—
¥(59)

Book value(Market value)¥4,242161¥4,403

Designated transactions forforward exchange contracts

Millions of yen

2013
Equity security
Bond and Others

Grossunrealized
losses
¥(26)
—
¥(26)

2014
Equity security
Bond and Others

Grossunrealized
gains$28,410
1,487$29,897$13,379
78$13,457

Gross
unrealized
losses$(573)—$(573)¥4,135159¥4,294

Book value(Market value)

Proceeds from sales
Gross realized gain
Gross realized loss

Hedge accounting
methodType ofcontracts

Designated transactions forforward exchange contracts

Forward exchange contracts
Buy
U.S. dollars
Euros
Danish kroner
Total$41,216
1,565$42,781

The proceeds from sales of , and gross realized gain and loss on, other securities for the years at March 31, 2014 and 2013 are summarized as follows.
Millions of yen
2014
2013
¥1,024
¥114
550
12
—
—

Forward exchange contracts
Sell
U.S. dollars
Buy
U.S. dollars
Euros
Danish kroner
Pounds sterling
Chinese yen
Total

Item
hedgedContract
amounts

Trade accounts payable
Trade accounts payable
Trade accounts payable
Trade accounts payable
Trade accounts payable

Thousands of
U.S. dollars
2014$9,9495,344—

Hedge accounting
methodType ofcontracts

Designated transactions forforward exchange contracts

Forward exchange contracts
Sell
U.S. dollars
Buy
U.S. dollars
Euros
Danish kroner
Pounds sterling
Chinese yen
Total

¥0

¥3,209507
38
2
0¥3,758

—
—
—
—
—
—

¥(5)
1
0
0
(0)
¥(4)

Contract
amounts

Trade accounts payable
Trade accounts payable
Trade accounts payable¥1,551273
37¥1,861

Trade accounts receivable
Trade accounts payable
Trade accounts payable
Trade accounts payable
Trade accounts payable
Trade accounts payable

Market value—

ItemhedgedItemhedgedOver 1 year out ofcontract amounts¥2

Trade accounts receivable

Book value(Market value)

Thousands of U.S. dollars

Acquisition
cost

Type ofcontracts

Millions of yen
2014

Contract
amounts

Millions of yen
2013

Over 1 year out ofcontract amounts

Market value

—
—
—
—

¥3
(3)
(0)
¥0

Thousands of U.S. dollars
2014Over 1 year out ofcontract amounts

Market value

$19

—

$0

$31,180
4,926
369
19
0
$36,513

—
—
—
—
—
—

$(49)
10
0
0
(0)
$(39)

Market value is measured based on prices and other criteria presented by our correspondent financial institutions.

30

31

(2) Interest rate swaps

Hedge accounting
methodExceptional accounting
method for interest-rate
swap transactions

Hedge accounting
methodExceptional accounting
method for interest-rate
swap transactions

Hedge accounting
methodExceptional accounting
method for interest-rate
swap transactions

Type ofcontracts

ItemhedgedContract
amounts

Interest rate swap contracts
Floating rate receivable/
Fixed rate payable

Long-term debt

¥40,715Type ofcontracts

ItemhedgedContract
amounts

Interest rate swap contract
Floating rate receivable/
Fixed rate payable

Long-term debt

¥36,223Type ofcontracts

ItemhedgedContract
amounts

Interest rate swap contracts
Floating rate receivable/
Fixed rate payable

Long-term debt

$395,599

At March 31, 2014 and 2013, long-term debt consisted of the following:

Millions of yen
2014

Over 1 year out ofcontract amounts

Market value¥35,257— (*)

Millions of yen
2013

Over 1 year out ofcontract amounts

Market value¥29,665— (*)$342,567

Less current portion¥7,000
—
—
5,000
5,000
—

66,45490,545(15,895)¥74,650

49,58566,585(7,835)¥58,750$68,014195
389
48,581
48,581
68,315645,686
879,761(154,440)$725,321

On July 20, 2012, the Company issued ¥5,000 million ($48,581 thousand) of zero coupon convertible bond with stock acquisition rights due
in 2017. The stock acquisition rights are exercisable during the period from July 6, 2017 at a conversion price of ¥394 ($3.83) per share.

The annual maturities of long-term debt at March 31, 2014 are as follows:

Market value— (*)＊Items treated under exceptional accounting method for interest-rate swap transactions are recorded together with long-term debt included in items hedged.
Therefore, the market value of such items is included in the market value of the relevant long-term debt.

Year ending
March 31

Millions ofyen

Thousands of
U.S. dollars

2015
2016
2017
2018
2019
There after¥15,895
7,296
15,015
21,424
14,465
16,450$154,440
70,890145,890
208,162
140,546
159,833

At March 31, 2014, the Company has committed line and overdraft contracts with sixteen banks aggregating ¥29,800 million ($289,545 thousand).
Of the total credit limit, ¥5,980 million ($58,103 thousand) was used as the above short-term and long-term borrowing, and the rest ¥23,820
million ($231,442 thousand) was unused.

8. Property and Equipment:
At March31, 2014 and 2013, property and equipment at cost consisted of the following:

Land
Buildings and structures
Machinery and equipment, vehicle and vessels
Tools, furniture and fixtures
Construction in Progress
Lease assets¥7,000
20
40
5,000
5,000
7,031

Thousands of
U.S. dollars
2014

On October 15, 2013, the Company issued ¥7,000 million ($68,014 thousand) of zero coupon convertible bond with stock acquisition rights
due in 2018. The stock acquisition rights are exercisable during the period from October 1, 2018 at a conversion price of ¥626 ($6.08) per
share.

Thousands of U.S. dollars
2014Over 1 year out ofcontract amounts

1.31% bond due 2014
0.60% bond due 2015
0.60% bond due 2016
0.80% bond due 2016
Convertible bond due 2017
Convertible bond due 2018
0.20% to 4.50% loans from banks and insurance companies:
Unsecured

Millions of yen
2014
2013

Millions of yen
2014
2013
¥56,093¥40,098
118,145
95,602
22,382
21,460
5,364
4,894
1,646
1,804
8,509
7,735
¥212,139¥171,593

Thousands of
U.S. dollars
2014$545,016
1,147,930
217,470
52,11815,99382,676$2,061,203

10. Retirement Benefits:
Previous consolidated fiscal year (April 1, 2012 to March 31, 2013 and April 1, 2011 to March 31, 2012)(1) Items concerning retirement benefits obligation
Benefits obligation at the end of the year
Fair value of plan assets at the end of the year
Unfunded retirement benefits obligation
Unrecognized actuarial differences
Net retirement benefits obligation
Prepaid pension costAccrued retirement benefits

Millions of yen
2013¥(27,087)
14,552(12,535)
6,118(6,417)2,852¥(9,269)＊ Certain consolidated subsidiaries use the simplified method to calculate retirement benefits obligation.

(2) Items concerning retirement benefits costs

9. Short-term Loans and Long-term Debt:
At March31, 2014 and 2013, short-term loans consisted of the following:

0.61% to 1.47% unsecured loans from banks

Millions of yen

Millions of yen
2013
2014

¥7,490¥6,640Thousands of
U.S. dollars
2014$72,775

Service cost (＊1)
Interest cost
Expected return on plan assets
Amortization:
Recognized actuarial differences
Others (＊2)
Net periodic benefits cost2013
¥1,132
543
(356)

2012
¥1,068
563
(347)

598
183
¥2,100581
126¥1,991＊1. Retirement benefits costs of consolidated subsidiaries using the simplified method are included in “Service cost.”＊2. “Others” refers to premiums paid to the defined contribution pension plan and the Small and Medium Enterprises Retirement Allowance Mutual Aid System.

＊3. In addition to the abovementioned retirement benefits costs, the Company recorded special retirement expenses of ¥53 million ($515 thousand) in the fiscal year

ended March 31, 2013.

32

33

(3) Items concerning the basis for calculating retirement benefits obligation

e. Re-measurements of defined benefit plans
2013

Method of attributing the estimated retirement benefits to the period of service
Discount rate
Expected rate of return on plan assets
Amortization period of actuarial differences

Straight-line
basis
1.00%
3.00%
13years

The breakdown of items posted as re-measurement of defined benefit plans (before tax effect deduction) is as follows:

2012
Straight-line
basisMillions of
yen

1.00%
3.00%
13years

Unrecognized actuarial differences
Total

Benefits obligation at the beginning of the year
Service cost
Interest costAccrued actuarial differences
Retirement benefits paid
Reversal due to the transfer to the defined contribution plan
OthersBenefits obligation at the end of the year
b. Table for adjusting fair value of plan assets at the beginning and end of the year

Fair value of plan assets at the beginning of the year
Expected return on plan assets
Accrued actuarial differences
Contribution by employers
Retirement benefits paid
Fair value of plan assets at the end of the year
c. Table for adjusting benefits obligation, fair value of plan assets at the end of the year, and net
defined benefit liabilities and net defined benefit assets on the consolidated balance sheets

2014¥27,087
1,066
238
(286)
(1,707)(3,542)
32¥22,888

Millions of
yen

2014
¥14,552
436
850
1,046
(800)
¥16,084

Millions ofyen

Net defined benefit liabilities
Net amounts of assets and liabilities on the consolidated balance sheets¥6,804¥6,804Service cost
Interest cost
Expected return on plan assets
Amortization:
Recognized actuarial differences
Retirement benefit costs for the defined benefit plan
Gain associated with transfer to the defined contribution plan (＊)

34

Millions ofyen

Benefits obligation under the unfunded benefit plan
Net amounts of assets and liabilities on the consolidated balance sheets

d. Breakdown of retirement benefit costs＊(i) Main items of plan assets

2014¥21,297(16,084)
5,213
1,591
¥6,804

Benefits obligation under the funded benefit plan
Fair value of plan assets

2014¥(3,928)¥(3,928)

2014$(38,166)$(38,166)

f. Items concerning plan assets

Current consolidated fiscal year (April 1, 2013 to March 31, 2014)(1) Defined benefit plana. Table for adjusting benefits obligation at the beginning and end of the year

Thousands of
U.S. dollars

Millions of
yen

2014
¥1,066
238
(436)
1,054
¥1,922¥(239)

Thousands of
U.S. dollars
2014$263,185
10,3582,312(2,779)(16,586)(34,415)311$222,386

Thousands of
U.S. dollars
2014$141,391
4,236
8,259
10,163(7,773)$156,276

Thousands of
U.S. dollars
2014$206,927(156,276)
50,651
15,459$66,110$66,110$66,110

Thousands of
U.S. dollars
2014$10,358
2,312(4,236)
10,241$18,675$(2,322)

Bonds
StocksOthers
Total

2014
29%
60
11
100%

(ii) Method of setting the expected rate of long-term return on plan assets
The Company has taken into account a forecasted allocation of plan assets and the present and expected long-term return on various
assets that consist of the plan assets to determine the expected rate of long-term return on plan assets.
g. Items concerning the essential basis for actuarial calculation

The essential basis for actuarial calculation at the end of the fiscal year ended March 31, 2014 (weighted average)
Discount rate 1.0%
Expected rate of return on plan assets 3.0%

(2) Defined contribution plan
The Company and its consolidated subsidiaries are required to contribute ¥428 million ($4,159 thousand) to the defined contribution plan.
11. Pledged Assets:
The following assets were pledged as collateral as at March 31, 2014 and 2013.

Land
Buildings
VehiclesInvestment securities

Millions of yen

Thousands of
U.S. dollars

Millions of yen

Thousands of
U.S. dollars

Millions of yen

Thousands of
U.S. dollars

2014¥2,225350
010¥2,5852013¥2,225387
0
10¥2,622

Obligations which were secured on the above assets were as follows:

Long-term debt, including current portion

2014
¥100

2013
¥100

12. Contingent Liabilities:
At March 31, 2014 and 2013, contingent liabilities were as follows:

Guarantees of some obligations
Buyback obligations associated with securitization of receivables
Recourse obligation associated with securitization of guarantee deposits
Trade notes endorsed

2014
¥352
440
139
54
¥985

2013
¥330
474
139
64
¥1,007

2014$21,6193,401
0
97$25,117

2014
$972

2014
$3,420
4,275
1,351
525
$9,571

13. Net Assets:
The Japan Companies Act provides that an amount equal to at least 10% of the amounts to be disbursed as distributions of earnings be
appropriated to the legal reserve until such reserve and additional paid-in capital equals 25% of the common stock account. The Japan Companies
Act also stipulates that, on condition that the sum of the additional paid-in capital and the legal reserve exceeds 25% of the common stock account,
the amount of any such excess is available for appropriation by resolution of the shareholders.
The retained earnings account in the accompanying consolidated financial statements at March 31, 2014, included the Company’s legal reserveof ¥1,506 million ($14,633 thousand).

Gain posted as extraordinary income

3514. Stock Option Plans:
The stock option plans of the Company approved by the shareholders in accordance with the Japan Companies Act at March 31, 2014 were as
follows:(1) Description of stock options
Stock option

Grantees

Number of shares withwarrants granted

Date of
grant

Option price
Shares with
per warrant warrants granted

15. Income Taxes:
The Company and its subsidiaries are subject to several taxes based on income, which in the aggregate resulted in a normal effective statutory tax
rates of approximately 38.0 % for the years ended March 31, 2014 and 2013.
(1) Significant components of deferred tax assets and liabilities at March 31, 2014 and 2013 were as follows:

Exercise period

2007 Stock options (1st)

10 directors
3 auditors

61,000 shares

July 20, 2007

¥1

Common stock

July 21, 2007 - June 30, 2027

2007 Stock options (2nd)

9 operating officers

18,000 shares

July 20, 2007

¥1

Common stock

July 21, 2007 - June 30, 2027

2008 Stock options (4th)

10 directors
3 auditors

71,000 shares

July 1, 2008

¥1

Common stock

July 2, 2008 - June 30, 2028

2008 Stock options (5th)

10 operating officers

22,000 shares

July 1, 2008

¥1

Common stock

July 2, 2008 - June 30, 2028

2009 Stock options (6th)

11 directors
4 auditors

74,000 shares

July 1, 2009¥1

Common stock

July 2, 2009 - June 30, 2029

2009 Stock options (7th)

12 operating officers

27,000 shares

July 1, 2009¥1

Common stock

July 2, 2009 - June 30, 2029

2010 Stock options (8th)

11 directors
4 auditors

90,000 shares

July 1, 2010

¥1

Common stock

July 2, 2010 - June 30, 2030

42,000 shares

July 1, 2010

¥1

Common stock

July 2, 2010 - June 30, 2040

102,000 shares

July 1, 2011

¥1

Common stock

July 2, 2011 - June 30, 2031

96,000 shares

July 1, 2011

¥1

Common stock

July 2, 2011 - June 30, 2041

107,000 shares

July 2, 2012¥1

Common stock

July 3, 2012 - June 30, 2032

92,000 shares

July 2, 2012¥1

Common stock

July 3, 2012 - June 30, 2042

71,000 shares

July 1, 2013

¥1

Common stock

July 3, 2013 - June 30, 2033

82,000 shares

July 1, 2013

¥1

Common stock

July 3, 2013 - June 30, 2043

13 operating officers
13 assistant directors

2010 Stock options (9th)

12 directors
4 auditors

2011 Stock options (10th)

15 operating officers
20 assistant directors

2011 Stock options (11th)

12 directors
4 auditors
16 operating officers
22 assistant directors
12 directors
4 auditors
18 operating officers
26 assistant directors

2012 Stock options (12th)
2012 Stock options (13th)
2013 Stock options(15th)
2013 Stock options(16th)(2) Changes in the number of stock options

The following describes changes in the number of stock options that existed during the year ended March 31, 2014. The number of stock
options is translated into the number of shares.
Share subscription rights
Share subscription rights
which are not yet vested (shares):which have already been vested (shares):
At March 31,
20132007 Stock
options (1st)2007 Stock
options (2nd)2008 Stock
options (4th)2008 Stock
options (5th)2009 Stock
options (6th)2009 Stock
options (7th)2010 Stock
options (8th)2010 Stock
options (9th)2011 Stock
options (10th)
2011 Stock
options (11th)
2012 Stock
options (12th)
2012 Stock
options (13th)
2013 Stock
options (15th)
2013 Stock
options (16th)

36

GrantedForfeited

VestedAt March 31,
2014

50,000

—

—

8,000

42,00010,000———58,000——15,000—74,000At March 31,
2013

31,
Forfeited At March
2014

Millions of yen

Deferred tax assets:
Accrued retirement benefits
Accrued bonuses to employees
Net defined benefit liabilities
Loss carry forward
Impairment losses
Loss on revaluation of land
Accrued enterprise tax
Social insurance premium
Asset retirement obligations
Loss on revaluation of golf club membership
Other
Gross deferred tax assets
Less: valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Reserve for reduction in costs of fixed assets
Asset retirement obligations
Net unrealized holdings gain on other securities
Other
Gross deferred tax liabilities
Net deferred tax assets

Thousands of
U.S. dollars

2014

2013

2014

¥—
1,451
4,812
766
311
311
216
205
127
88
1,200
9,487
(1,393)8,094¥3,930
1,452
—
900
329
307
224
202
115
101
850
8,410
(1,421)
6,989$—
14,09846,755
7,442
3,022
3,022
2,099
1,992
1,234
855
11,65992,178(13,534)
78,644

(852)
(47)
(480)
(405)
(1,784)¥6,310

(854)
(44)
(426)
(490)
(1,814)¥5,175(8,278)(457)(4,664)(3,935)(17,334)$61,310(2) Reconciliation of the statutory effective income tax rate and the income tax rate as a percentage of income before income taxes and minority
interests at March 31, 2014 and 2013 were as follows:
Statutory tax rate
Adjustment:
Non-deductible expenses
Inhabitants’ per capita taxes
Non-taxable dividends income
Net change in valiation allowance
Adjustments of deferred tax assets due to the change in statutory effective tax rates
Special deduction of income taxes
Other
Income tax rate as a percentage of income before income taxes and minority interests

2014
38.0%

2013
38.0%

1.5
1.9
(0.3)
—
1.3
(1.4)
0.0
41.0%

1.5
2.3
(0.2)
3.4
—
(0.3)
0.3
45.0%

VestedExercised

—

8,000

8,000

—

—

10,000

—

—

—

—

—

9,000

49,000

—

9,000

9,000

—

—

—

—

15,000

—

—

—

—

—

(3) Adjusutments of deferred tax assets and liabilities due to the change in statutory effective tax rates——

14,00060,000—14,00014,000——25,000———25,000

—

—

—

—

—

90,000——19,00071,000—19,00019,000——41,000———41,000

—

—

—

—

—

Following the promulgation of the Act for Partial Amendment of the Income Tax Act (Act No. 10 of 2014) on March 31, 2014, the special income
tax for reconstruction will not be imposed as of the consolidated fiscal period starting on April 1, 2014. Consequently, the statutory effective tax
rate used to calculate deferred tax assets and liabilities for this consolidated fiscal period has been changed from the previous consolidated
fiscal period’s rate of 38.0% to 35.6% for a temporary difference that is expected to be settled in the consolidated fiscal period starting on April
1, 2014.
Accordingly, deferred tax assets (after deducting deferred tax liabilities) decreased ¥152 million ($1,477 thousand), while deferred income
taxes increased ¥152 million ($1,477 thousand).

102,000——

14,00088,000—14,00014,000——93,000———93,000

—

—

—

—

—

107,000——

15,00092,000—15,00015,000——92,000———92,000

—

—

—

—

—

—

71,000——71,000

—

—

—

—

—

—

82,000——82,000

—

—

—

—

—

37

(5) Amount of assets and liabilities acquired on the day of the business combination, and breakdown

16. Bussiness Combination Related:(1) Outline of the business combinationa. Name of the acquired company and its business
Name of the acquired company
AST CORPORATIONBusinesses
Wholesaler of household paper products and items for daily use, etc

b. Main reasons for the business combination
As a logistics information company, the Company has sought to make its entire supply chain more efficient and optimized to respond to
the diversification and increasing sophistication of customer needs. In addition to offering logistics services, the Company recently entered thecommerce and trade businesses, a commercial distribution field, to develop a business that integrates the flow of trading activities with thephysical flow of goods. The Company also operates a logistics business for mass merchandisers and retailers, such as major supermarkets,
home improvement centers, drugstores, department stores, and specialty store chains, and has received high ratings from its customers for its
expertise in logistics.
As one of Japan’s largest wholesalers of household paper products, AST CORPORATION ("AST") engages in every phase of its businessfrom product development, marketing, and wholesaling to distribution, mainly for household and commercial-use paper goods, using its
nationwide distribution network. AST aims to further develop its capacity to sell products and to establish a system to efficiently offer logistics
services including overseas procurement. In particular, as a fabless manufacturer, AST’s advantage is its ability to manufacture products anddeliver them directly to mass merchandisers and retailers, including jointly developing new products with its business partners.
The Company and AST agreed to form a capital alliance as both firms judged that it would pave the way to development of a businessmodel that integrates the flow of trading activities with the physical flow of goods from manufacturing to marketing (including productplanning, procurement, and delivery to end-users in Japan and overseas) by combining the Company’s expertise in logistics services for massmerchandisers and retailers with AST’s ability to sell products to the retail industry. This would enable both firms to cultivate new customers
and expand their businesses.
c. Date of business combination
October 31, 2013

Current assets
Non-current assets
Total assets
Current liabilities
Long-term liabilities
Total liabilities

Millions of yen¥11,097
1,692¥12,789¥5,216746¥5,962Thousands of
U.S. dollars$107,822
16,440$124,262$50,680
7,248$57,928(6) Estimated amount and the calculation method of the impact on the consolidated statements of income for the year ended March 31, 2014,
assuming that the business combination has been completed on the first day of the fiscal year under review.

Operating revenues
Operating income
Ordinary income
Income before income taxes
Net income

Net income per share

Millions of yen¥49,738
330
409
336
73

Thousands of
U.S. dollars$483,269
3,206
3,974
3,265
709

yen
¥0.57

U.S. dollars$0.00(Calculation method for estimated amount of impact)
Operating revenues and information on profit and loss computed on the assumption that the business combination was completed on April 1,2013 are defined as the estimated amount.
The relevant estimated amount is unaudited.

d. Legal form of the business combination
Stock acquisitione. Name of the controlling entity after the business combination
The name remains unchanged.
f. Percentage share of voting rights acquired by the Company
70%
g. Main reason for the decision to acquire the company
As the payment of the consideration was designated in cash, it was decided that the Company would be the acquirer, paying the relevant
consideration in cash.
(2) Period of the acquired company’s financial results included in the consolidated statements of income
From November 1, 2013 to March 31, 2014
(3) Acquisition cost of the acquired company and breakdown
Consideration for the acquisition
Expenses directly required for acquisition
Acquisition cost

Cash
Advisory fees, other

Millions of yen

Thousands of
U.S. dollars¥4,756
10¥4,766$46,211
97$46,308(4) Amount of negative goodwill arising, reason for negative goodwill, and method and period of amortizationa. Amount of negative goodwill arising¥13 million ($126 thousand)b. Reason for negative goodwill
As the fair value of net assets exceeds the acquisition cost of the stock, the Company recorded the difference as gain on bargain purchase.
c. Method and period of amortization
Negative goodwill is amortized at once when it is incurred.

38

39

17. Asset Retirement Obligations:
Asset retirement obligations recorded in the consolidated balance sheetsa. Outline of the relevant asset retirement obligations

Of property lease contracts for the Company’s distribution centers, asset retirement obligations are recognized where restoration is required in
the fixed-term leasehold contracts and in the property lease contracts of some consolidated subsidiaries as well as expenses for removing
asbestos in buildings the Company owns.

b. Calculation method for the relevant asset retirement obligations

In calculating the amount of asset retirement obligations recorded under liabilities, an estimated period of use of 10 to 31 years and a discountrate of 0.7% to 2.5% were assumed.

c. Increase in the total amount of asset retirement obligations
Millions of yen
2014
2013
¥324
¥316
42
—
8
8
66
—
¥440
¥324

Balance at the beginning of the term
Increase due to acquisition of a consolidated subsidiary
Reconciliation associated with the passage of time
OthersBalance at the end of the term

Thousands of
U.S. dollars
2014$3,148408
78
641$4,275

18. Segment Information:
1. Summary of reportable segment
The reportable segments of the Companies are components for which separate financial information is available and whose operating results
are regularly reviewed by the board of directors to make decisions about resource allocation and to assess performance.
The Companies divide business operations into three segments: Distribution, Trading & Commerce, and Others
Distribution mainly includes truck transport, railway forwarding, marine transport, global logistics service, integrated retail logistics(distribution centers) etc.
Trading & Commerce mainly includes the sale of petroleum products and the trading business.
Others mainly includes data processing outsousing services, automobile maintenance and insurance agency services
2. Calculation of sales, profit (loss), and assets, etc. of each reportable segment
The accounting policies of the segments are substantially the same as those described in the “Summary of Significant Accounting Policies.”
Profit (loss) of reportable segments is based on operating income or loss.
3. Sales, profit (loss), and assets, etc. of each reportable segment

Operating revenues:
Customers
Intersegment
Total operating revenues
Segment income (loss)
Segment assets
Other items
Depreciation
Increase in tangible andintangible fixed assets

40

Millions of yen
2014

Operating revenues:
Customers
Intersegment
Total operating revenues
Segment income (loss)
Segment assets
Other items
Depreciation
Increase in tangible andintangible fixed assets

Operating revenues:
Customers
Intersegment
Total operating revenues
Segment income (loss)
Segment assets
Other items
Depreciation
Increase in tangible andintangible fixed assets

Millions of yen
2013

Distribution

Trading &Commerce

Others

Total

Adjustments andeliminations

Consolidated¥228,251766
229,017
7,688
173,354¥62,119
10,48872,607
1,943
24,612¥3,164
3,148
6,312
508
4,171

¥293,534
14,402
307,936
10,139202,137—(14,402)(14,402)
(230)
5,958

¥293,534—
293,534
9,909
208,095

5,682

197

172

6,051

687

6,738

2,419

303

157

2,879

2,004

4,883

Distribution

Trading &Commerce$2,329,363
9,230
2,338,593
96,4051,870,900

Thousands of U.S. dollars
2014
Others

Total

Adjustments andeliminations

Consolidated$881,306
115,867
997,173
18,830371,638$33,443
33,38566,8285,325
53,400$3,244,112
158,482
3,402,594
120,560
2,295,938—(158,482)(158,482)(2,779)70,890$3,244,112—
3,244,112
117,7812,366,828

62,485

2,245

2,157

66,887

7,015

73,902

184,9882,604

11,300198,892

72,678271,570(1) Products and Services Information
Information for specific products and services is not shown because the same information is in the segment information.
(2) Geographic Segment Informationa. SalesSales information by geographic segment is not shown because sales in Japan accounted for over 90% of operating revenue on the
consolidated statements of income.
b. Property, plant and equipment
Property, plant and equipment information by geographic segment is not shown because property, plant and equipment in Japan accounted
for over 90% of property, plant and equipment on the consolidated balance sheets.
(3) Information by Major Clients
Information by major clients is not shown because sales to major clients accounted for less than 10% of operating revenue on the
consolidated statements of income.

Distribution

Trading &Commerce

Others

Total

Adjustments andeliminations

Consolidated¥239,738950
240,688
9,922
192,553¥90,704
11,925
102,629
1,938
38,249¥3,442
3,436
6,878
548
5,496

¥333,884
16,311
350,195
12,408236,298—(16,311)(16,311)
(286)
7,296

¥333,884—
333,884
12,122
243,594

6,431

231

222

6,884

722

7,606

19,039268

1,163

20,4707,480

27,950(Information on impairment losses in fixed assets by business segment)
No significant items to be reported.
(Information on amortization of goodwill and amortization balance by business segment)

Distribution
Amortization of goodwill
Balance at the end of period

¥94
675

Trading &Commerce
¥183
2,503

Millions of yen
2014
Others——Adjustments andeliminations——

Consolidated
¥277
3,178

41

Distribution
Amortization of goodwill
Balance at the end of period

¥94
772

Distribution
Amortization of goodwill
Balance at the end of period

$913
6,558

Trading &Commerce
¥192
2,681

Trading &Commerce$1,77824,320Millions of yen
2013
Others——Thousands of U.S. dollars
2014
Others——Stock Information (As of March 31, 2014)

Adjustments andeliminations——

Consolidated

Adjustments andeliminations——

Consolidated

¥286
3,453

$2,69130,878(Information on negative goodwill by business segment)
No significant items to be reported.

Stock Listing
Stock Code
Authorized Shares
Outstanding Share
Number of Shareholders
Administrator of Shareholder’s Register
Independent Auditors
Largest Shareholders

Number of Shares

Percentage Held

Japan Trustee Services Bank, Ltd. (Trust Account)

14,201,000

11.01 %The Master Trust Bank of Japan, Ltd.

7,578,000

5.87 %

Asahi Kasei Corporation

19. Subsequent Event(1) Payment of Dividends
Shareholders approved the following appropriation of retained earning at the annual meeting held on June 27, 2014

Cash dividends

Millions of yen¥1,027

Senko Group Employee's Stockholding
Sekisui Chemical Co., Ltd.

Mitsubishi UFJ Trust and Banking Corporation

Thousands of
U.S. dollars$9,979Tokyo
9069
294,999,000
128,989,476
6,804
Mitsubishi UFJ Trust and Banking Corporation
Osaka Corporate Agency Division
3-6-3, Fushimi Machi, Chuo-ku, Osaka 541-8502, Japan
Otemae Audit Corporation

Isuzu Motors Limited

Trust & Custody Services Bank, Ltd.

Tokio Marine & Nichido Fire Insurance Co., Ltd.
Aioi Nissay Dowa Insurance Co., Ltd.

11,676,726
6,957,743
6,785,900
4,252,000
4,039,689
3,879,000
3,439,170
3,169,655

9.05 %
5.39 %
5.26 %
3.30 %
3.13 %
3.01 %
2.67 %
2.46 %Classification by Type of Shareholder
Number of Shareholders

Percentage Held

Domestic financial institutions

45

47,272,329

36.65 %

Other domestic corporations

234

39,672,568

30.76 %

6,346

26,990,915

Securities firms

Foreign financial institutions and individuals
Individuals and others
Total

42

Number of Shares

33

146

6,804

1,768,611

13,285,053
128,989,476

1.37 %

10.30 %
20.92 %

100.00 %43

Board of Directors and Corporate Auditors, Executive Officers (As of June 27, 2014)

President and Representative Director

Executive Vice President and Representative Director

Yasuhisa Fukuda

President and Representative Director

Yasuhisa Fukuda

Masami Fujimori

Full-time Corporate Auditors

Executive Vice President and Representative Director

Masami Fujimori

Executive Vice President and Director

Takeyo Teduka

Kazumasa Murakami
Tomoyuki Osako

Managing Executive Officers

Directors and Managing Executive Officers

Director and Executive Officer
Outside Directors

Yoshihiro Kawase
Kazuaki Oike
Junji Miyatsu
Hiroshi Yoneji

Executive Officers

Yoshiki Kanaga
Hiroko Ameno
Fumitaka Ojima

Corporate Data (As of March 31, 2014)
Date of Establishment:
Paid-in Capital:
Head Office
Fiscal Year End
Number of Domestic Offices
Number of Overseas Offices
Number of Vehicles
Number of Vessels
Total Warehouse Space
Number of Employees

44

Yutaka Toyama
Takashi Sawada
Takanobu Ishioka
Keiichiro Yoshimoto

Sales Division:
Branches:
Departments:
Worldwide Locations:

Senior Managing Executive Officers

Directors and Senior Managing Executive Officers

Kengo Tanaka
Kazuhiro Yamanaka

Domestic and Global Network (As of April 1, 2014)

July 1946¥20,521,133,751
1-30, Oyodonaka 1-chome, Kita-ku, Osaka
March 31
398
34
3,352
11
2,523,015 square meters
9,341

Kenichi Shiraki
Akira Taniguchi
Takashi Yamamoto
Masami Tada
Noburoh Sasaki
Yoshihito Koresawa
Yukio Murozaki
Kazuharu Tsurudome
Akira Ito
Kiyoshi Rurigaki
Kanji Kawasaki
Tatsuhiro Maeda
Takeo Ikebe
Kunihiko Goto
Seiji Kono
Noboru Ogoshi

Housing Distribution Sales Division, Chemicals Distribution Sales Division, Logistics Sales Division, Fashion Logistics Sales Division
Sapporo, Sapporo Minami, Tohoku, Sendai Kita, Kanto, Kashiwa, Ibaraki, Saitama, Saitama Kita, Saitama Minami, Tokyo,
Higashi Tokyo, Kanagawa, Atsugi, Chiba, Shizuoka, Nagoya, Komaki, Mie, Hokuriku, Keiji, Keiji Higashi, Osaka, Kita Osaka, Hanshin,
Minami Osaka, Okayama, Hiroshima, Kyushu, Kita Kyushu, Minami Kyushu, Nobeoka
International Business, Trading, Marine Transport, Railway Forwarding
China / Dalian, Shenyang, Quingdao, Shanghai, Suzhou, Changshu, Nantong, Hong Kong, Guangzhou, Zhang Jia Gang
Australia / Ingleburn
Singapore
Thailand / Bangkok, Chonburi, Rayong
Unites States / Chicago, Atlanta, Los Angeles, Kentucky
Kazakhstan / Almaty

Subsidiaries (As of March 31, 2014)
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Company Name

Main Business

Senko Trading Co., Ltd.
AST CORPORATION
Smile Corp.
Marufuji Co., Ltd.
Logi Solution Co., Ltd.
Senko Information System Co., Ltd.
Senko Moving Plaza Co., Ltd.
Senko A Line Amano Co., Ltd.
Tokyo Nohin Daiko Co., Ltd.
Inui Transport Co., Ltd.
Sapporo Senko Transport Co., Ltd.
Tohoku Senko Transport Co., Ltd.
Kanto Senko Transport Co., Ltd.
Saitama Senko Transport Co., Ltd.
Senko Housing Logistics Co., Ltd.
Chiba Senko Transport Co., Ltd.
Senko Fashion Logistics Co., Ltd.
Kashiwa Senko Transport Co., Ltd.
Noda Senko Logi Service Co., Ltd.
Kanagawa Senko Transport Co., Ltd.
Atsugi Senko Transport Co., Ltd.
Hokuriku Senko Transport Co., Ltd.
Fuji Senko Transport Co., Ltd.
Daito Senko Apollo Co., Ltd.
Tokai Senko Transport Co., Ltd.
Toyohashi Senko Transport Co., Ltd.
Mie Senko Logistics Co., Ltd.
Shiga Senko Transport Co., Ltd.
Osaka Senko Transport Co., Ltd.
Tokyo Nohin Daiko West Japan Co., Ltd.
Minami Osaka Senko Transport Co., Ltd.
Hanshin Senko Transport Co., Ltd.
Esaka Logistics Service Co., Ltd.
Hanshin Transport Co., Ltd.
Nara Senko Logistics Co., Ltd.
Okayama Senko Transport Co., Ltd.
Chugoku Piano Transport Co., Ltd.
Sankyo Freight Co., Ltd.
Sanyo Senko Transport Co., Ltd.
Chushikoku Logistics Co., Ltd.
Shikoku Reefer Transport and Warehousing Co., Ltd.
Fukuoka Senko Transport Co., Ltd.

Trading and Commerce, Others
Trading and Commerce
Trading and Commerce
Trading and Commerce
Distribution, Others
OthersDistribution
Distribution
Distribution
Distribution
Distribution
Distribution
Distribution
Distribution, Others
Distribution
Distribution, Others
Distribution
Distribution
Distribution
Distribution
Distribution
Distribution
Distribution, Others
Distribution
Distribution
Distribution
Distribution
Distribution, Others
Distribution
Distribution
Distribution, Others
Distribution
Distribution
Distribution
Distribution
Distribution
Distribution
Distribution
Distribution
Distribution
OthersDistribution

Company Name
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Minami Kyushu Senko Co., Ltd.
Miyazaki Senko Transport Co., Ltd.
Miyazaki Senko Apollo Co., Ltd.
Senko Plantec Co., Ltd.
Senko Insurance Services Co., Ltd.
Senko Foods Co., Ltd.
Crefeel Koto Co., Ltd.
S-TAFF Co., Ltd.
Senko Business Support Co., Ltd.
Logi Factoring Co., Ltd.
Senko Medical Logistics Co., Ltd.
Senko School Farm Tottori Co., Ltd.
Fuji Label Co., Ltd.
Takano Machinery Works Co., Ltd.
Obata Co., Ltd.
Delivery Ace Co., Ltd.
PrettyPorters Co., Ltd.
Senko Logistics (U.S.A.) Inc.
Senko (U.S.A.) Inc.
SK MARINE S.A.
Shenyang Senko Logistics Co., Ltd.
DFTZ Best International Trading & Logistics Co., Ltd.
Dalian Tri-Enterprise Logistics Co., Ltd.
Qingdao Xuexing International Logistics Co., Ltd.
Qingdao Senko Logistics Co., Ltd.
Senko Logistics (Shanghai) Co., Ltd.
Shanghai Senko International Freight Co., Ltd.
Shanghai Smile Corp.
Guangzhou Senko Logistics Co., Ltd.
Senko International Logistics (Hong Kong) Ltd.
HONG KONG SMILE CORP LIMITED
Senko (Thailand) Co., Ltd.
Senko International Logistics Pte. Ltd.
Senko Logistics Australia Pty Ltd.
Senko-Lancaster Silk Road Logistics LLP
Japan Select LLPKOREA SMILE CORP.

Main BusinessDistribution
Distribution, Others
Distribution
Distribution
OthersOthersOthersOthersOthersOthersDistribution
OthersTrading and Commerce
Trading and Commerce
Trading and Commerce
Distribution
Distribution
OthersDistribution
Distribution
Distribution
Distribution
Distribution
Distribution
Distribution
Distribution
Distribution
Trading and Commerce
Distribution
Distribution
Trading and Commerce
Distribution
Distribution
Distribution
Distribution
Trading and Commerce
Trading and Commerce● : Consolidated subsidiaries

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