Annual Report 2013
For the year ended March 31, 2013

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/
Printed in Japan

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, 2013, the Senko Group had a nationwide network with 340 locationsin Japan, an overseas network with facilities in 31 locations, 2,211,000 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.

Consolidated Financial Highlights

SENKO Co., Ltd. and Consolidated Subsidiaries

Years ended March 31

2013

2012

2013
Thousands of
U.S. dollars

Millions of yen

For the year:
Operating revenues¥ 293,534¥ 270,361$ 3,121,042

Operating income

9,909

8,274

105,359

Net income

5,203

3,479

55,322

Total assets

208,095

202,847

2,212,600

Net assets

67,32863,274

715,875

At year end:

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 President
2
Results of Medium-term Business Plan (FY2010 - FY2012)
4
Outline of New Medium-term Business Plan (FY2013 - FY2016) 6
Review of Operations
8
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
39
Board of Directors and Corporate Auditors, Executive Officers 40
Corporate Data
40
Domestic and Global Network
41
Subsidiaries
41

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.

Yen

Per share data:

U.S. dollars¥ 41.45¥ 27.65$ 0.44

Cash dividends

14.00

12.00

0.15

Net assets

521.48488.25

5.54

Net income

Note : U.S. dollar amounts are converted from yen, for convenience only, at the prevailing rate of ¥ 94.05 to U.S.$ 1 on
March 31, 2013.

Operating revenues

Net income

Net income per share(Billions of yen)

(Millions of yen)

(Yen)

300

6,000

60

250

5,000

50

200

4,000

40

150

3,000

30

100

2,000

20

50

1,000

10

0

09

10

11

12

13

0

09

10

11

12

13

0

09

10

11

12

13

1

A Message from President

Starting New Four-year Medium-term

Business Plan Focused on Next 100 Years

Overview of the Fiscal Year
Growth in both Revenues and Earnings Achieved throughPositively Cultivating New Customers
Some slight degree of recovery in the Japanese economy was initiallyseen in areas including manufacturing activity and consumer
expenditure in response investment in public works for therecovery-related demand from the earthquake and government measures
such as the eco-car subsidy program. Subsequently the economic
environment continued to be challenging because of the persistence ofthe strong yen and a decline in exports caused by the slowdown inoverseas economies combined with the deterioration of the impact ofgovernment policies to stimulate consumer spending. The economy
bottomed towards the end of the year, however, and a gently recovering
trend continued to become evident. Moreover, since the change of government in December, there has been asustained tendency towards yen weakness and rising equity prices in response.
In the logistics industry too, an initial limited improvement in manufacturing activity and consumer
spending resulted in a rising trend in cargo volumes but this was followed by further declines in both exports
and consumer expenditure and so the operating environment remains difficult.
In this environment, the Senko Group is had been conducted aggressive activities in Japan and overseas
because this is the final year of the three-year medium-term business plan based on the corporate slogan“Moving Global” that it started in April 2010.
In Japan, as the companies that ship cargo made moves to spread out the locations of manufacturing andinventory storage locations regionally as a hedge against the risk of natural disasters and strove to secure
multiple sources for raw materials and supplies and concentrated regional warehousing facilities so as toimprove logistical efficiency on a regional basis, the Senko Group took positive steps to satisfy these regional
needs and to serve new customers won by aggressive marketing programs by establishing new logisticalfacilities in the Kanto, Chubu and Kansai regions.
Overseas, a joint venture company was established in Thailand to provide distribution services to the
Toyota Tsusho Corporation, Ltd., and the automobile assembly plants of Japanese corporations. In
Kazakhstan, the Company set up distribution operations to serve the convenience store business of Ministop
Co. Thus, the Company aggressively expanded its business globally.
In September, as part of the drive to strengthen our commerce and trade business, we welcomed Obata
Co., Ltd. into the group as a subsidiary. Obata Co., Ltd. conducts wholesale activities in health foods andbeverages, daily-use items, cosmetics and other goods in the Hokkaido and Tohoku regions.
In the fiscal year ended March 2013, revenues increased 8.6% to 293,534 million yen as a result of
aggressive sales activities to attract new customers, the contribution deriving from the investments made toestablish large new facilities in Noda City in Chiba prefecture, Kitahiroshima City in Hokkaido, and Hyuga
2

City in Miyazaki Prefecture last year, and the acquisitions of Smile Corp. and Chugoku Piano Transport Co., Ltd.
in the previous fiscal year.
Earnings benefited from growth in sales, the contribution from the newly acquired subsidiaries, cost-cutting
measures and steps taken to increase productivity with the result that operating income increased 19.8% to 9,909
million yen, ordinary income increased 21.2% to 10,100 million yen, and net income increased 49.6% to 5,203
million yen.

Annual Dividend Set at 14 Yen per Share on the Basis of Results for Fiscal Year
Our fundamental policy for the distribution of earnings is to pay a dividend that is stable dividend while also
reflecting results of operations in each fiscal year. The goal is to increase the earnings distributions to shareholders
while maintaining sufficient retained earnings to support future growth and build a stronger base of operations.
In accordance with this policy, the year-end dividend for the fiscal year ended March 31, 2013 was initially set
at 6.00 yen per share. But in view of the strong business performance in the current fiscal year, the year-end
dividend was increased to 7.00 yen. Combined with the interim dividend of 7.00 yen, the total annual dividend was
14.00 yen.

Developing New Markets on the Basis of New Medium-term Business Plan
The prospects for the Japanese economy look set to continue to improve due to rising exports in response torecovery in overseas economies and yen weakness, the effects of government measures to stimulate the economy,
anticipatory demand ahead of the rise in the consumption tax rate, and other factors.
In this environment, and based on its new four-year medium-term business plan starting from fiscal 2013 year,
the Senko Group seeks to realize, in addition to its “Moving Global” corporate slogan, the following concepts: “gobeyond logistics”; “make the world go round”; and “revolutionize business.”
In specific terms, this means striving to reinforce earnings power, developing new businesses, strengthening
its operations in Asia and in other regions, expanding its distribution centers operations, and developing andproviding higher value-added services.
We ask for the continued support of our shareholders as we continue moving forward to achieve our goals.
August 2013

Yasuhisa Fukuda
President and Representative Director

3

Results of Medium-term Business Plan (FY2010 - FY2012)
Reporting Results Medium-term Business Plan for FY2010 - FY2012

Resu lt s by Bu si nes s Categor y
Sales by business category(Billions of yen)

293.5

300

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

Re su lt s for Bu si nes s Goa l s
Operating income

Operating revenues(Billions of yen)

227.7 241.0

270.4

300.0
293.5

Ordinary income(Billions of yen)

6.2

9.0

8.3
6.2

8.5

FY2010FY2011FY2012

FY2009Medium-term Business Plan

FY2010FY2011

6.4

FY2012

FY2009Medium-term Business Plan

FY2010FY2011FY2012

FY2009Medium-term Business Plan

3.5

FY2010FY2011

(%)

(%)

(%)

2.6

3.1

3.0

3.4
2.8

FY2010FY2011FY2012Medium-term Business Plan

FY2009FY2010FY2011FY2012Medium-term Business Plan

As a result of proactive market expansion, M&A and otheractivities, operating revenues increased 29% from 227.7
billion yen in the fiscal year ended March 2010 to 293.5
billion yen. Operating income increased 60% to 9.9 billion
yen in response to the impact of growth in revenues andefforts to increase income by raising profitability and otherinitiatives. Ordinary income and net income rose by 63%
and 79% over the same period to 10.1 billion yen and 5.2
billion yen respectively. Profit margins are also improving
steadily.

4

44.1

0.9

1.3

FY2009FY2010FY2011

1.1

FY2012Medium-term Business Plan

41.2
21.5

3.2

1.0

1.2

FY2012FY2010FY2011constructing and opening some 12 logistics centers with a
total of 280,000m2 of capacity.

FY2012

Increased revenues by 12% (against FY2009) through expansionof GMS (general merchandising stores/supermarkets) andfashion/apparel logistics.
Housing Logistics
Raised revenues by 17% (against FY2009) by expanding
residential construction logistics and newly undertaking
contracted distribution of sashes and other homebuilding
materials.

1.1
1.0

FY200962.1

Retail Product Logistics

1.8
1.3

1.4
FY20094.3

Medium-term Business Plan

(%)

2.7

44.5

100

We have expanded our logistic centers right across Japan,
including our largest facility, the Noda No.1 PD (PhysicalDistribution) Center. Furthermore, we have also
proactively engaged in developing our overseas capacity
at our Kentucky Distribution Center (U.S.A.), andincreased total warehousing space by approximately
200,000m2. We are currently in the process of

5.2

2.3

Debet equity ratio

3.4

43.8

FY2009Net income tooperating revenues

3.1

52.3

0

Ordinary income tooperating revenues

2.5

61.4

2.6

Operating income tooperating revenues

2.7

65.6

50

10.1

2.9

FY2009200(Billions of yen)

9.9

6.1

ActualNet income(Billions of yen)

8.3

227.7

150

Target78.9

250

Retail Product Logistics
Housing Logistics
Chemicals Logistics
Other Logistics
Trading and Commerce
OthersExpanding Business Operations
at Logistics Centers

FY2012Medium-term Business Plan

In terms of our initial medium-term plan targets, we havesucceeded, despite a minor shortfall in operating revenues
against target, in greatly exceeding our goals for operating
income, ordinary income and net income.
Moreover, we have proactively engaged in setting up new
facilities to expand our operations and in undertaking M&A
but have also prioritized the maintenance of a soundfinancial base in raising the necessary funds for these
initiatives.

Noda No.1 PD Center (Chiba Prefecture)

Chemicals Logistics
Despite aggressive marketing, revenues declined 2% (against
FY2009) due to the effect of low production volumes caused by
the impact of the Great East Japan Earthquake and of thestrong yen.
Other Logistics
Increased revenues by 7% (against FY2009) due to theconsolidation of the Chugoku Piano Transport Co., Ltd. andexpansion of machinery and food sector logistics.
Trading and CommerceGreatly increased revenues by 189% (against FY2009) as a resultof the inclusion of Smile Corp. and Obata Co., Ltd. into theGroup as subsidiaries and expansion of the trading business.

Kentucky Distribution Center (U.S.A.) Kanazawa PD Center (Ishikawa Prefecture)

Warehousing area
(Thousands of m2)

250

201.6

221.1

200

Maishima PD Center (Osaka Prefecture)

150
100
50
0

FY2009FY2012

Dalian Tri-Enterprise Logistics
Warehouse (China)

5Outline of New Medium-term Business Plan (FY2013 - FY2016)
We have created 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 n agement Pol ic ie s
As the Group's medium-term management policy, the Company will continue to promote its business based on thefollowing five principles.
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.
Fostering a greater degree of trust among our customers, forming a high-quality and high-service structure.
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).
Placing emphasis on compliance, and aiming to become a company that is in the vanguard of environmental, safety,
and health issues.
Promoting financial policies that are based upon prioritizing the maintenance of financial soundness.

Cor porate Image 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 rge t 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)
Shareholders and investors in Japan and overseas
Society
Employees (full-time, part-time and casual workers) and their families* 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” and this has been continued from the previous medium-term business plan
because it clearly and simply expresses the direction in which Senko should be heading through the concepts of “gobeyond logistics”, “make the world go round”, and “revolutionize business” and is shared by each and every one of theGroup’s employees in meeting the challenges that lie ahead as we celebrate our 100th anniversary.

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

400.0

293.5

FY2012FY2016(Billions of yen)

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

9.9

15.0

FY2012FY2016

Capital investment
The 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 future development of the Group’s business operations will be predominantly focused on achieving the following
five policies.
Expanding the operational scope of our “physical distribution business”.
Expanding the operational scope of our “commerce and trading business”.
Developing an “international distribution business’ that prioritizes earnings”.
Taking on the challenge of “making things”.
Promoting “business partnerships and M&A”.

Go beyond logistics, make the world go round, and revolutionize business.
Please see our web site for more details. http://www.senko.co.jp/en/ir/vision/plan/

6

7

Review of Operations
Reporting Results of Current Term (FY2012) by Business Segments.
Retail Product Logistics
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.

Sales composition
Others 1.1%

Trading andCommerce

Retail Product Logistics

21.2%

26.9%
Operatingrevenues

Other
Logistics

15.0%

Chemicals Logistics

Trading and Commerce

Operating revenues

Operating revenues

Operating revenues(Billions of yen)(Billions of yen)(Billions of yen)

78.9

75.0

FY2011

62.1

45.9

5.3%
UP

4.6%
DOWN
FY2012FY2011FY2011FY2012This category involves the provision of logistics services

This category includes the transport of resins used toThis segment includes sales of petroleum products,

primarily for GMS, home improvement centers,

make plastics and other products, molded plastic

trading sales and international trade. Operations

department stores, apparel chain stores, e-commerce

products and processed products as well as lubricants

include sales of products involving logistics, such ascompanies and other retailers.

for machinery and other applications.

sales of cargo distribution and loading equipment, andOperating revenues increased 5.3% mainly because of

Although there were new customers because ofsales of fuel using petroleum cards. This segment also

growth in the volume of cargo for GMS, the result of theaggressive measures to increase sales, operating

includes wholesale sales of household products, cargocompletion of a large distribution center in the prior fiscal

revenues decreased 4.6% as exports and production

wrapping materials, alcoholic beverages and otheryear, and the receipt of orders for new services for apparelactivity declined due to the weak economy and otherproducts. In the trading business, we handle imports

logistics.

reasons.

and exports of raw materials and products forcustomers and perform overseas transactions and otheractivities.

Billion yen

Chemicals Logistics

38.6%
UP

FY2012

293.5
14.9%

44.8

43.8

20.9%

Operating revenues increased 38.6% due to theDistribution

Housing Logistics

Other Logistics

addition of Smile Corp. to the group in the previous

Operating revenues

Operating revenues(Billions of yen)(Billions of yen)

Housing Logistics

61.4

58.5

FY2011business and petroleum products sales business.

44.1

43.1
4.9%
UP

fiscal year and higher revenues in the trading sales

2.3%
UP
FY2012FY2011FY2012OthersMajor activities in this category include the transport ofThis category includes all logistics services other thanThis segment consists of activities other than the

products from the factories of prefabricated housing

for retail products, housing and chemicals. Currently,

operations of the Distribution and Trading andmanufacturers to construction sites and the transport ofthe major activities in this category are logistics services

Commerce business segments. Operations include

products for manufacturers of homebuilding materials.

for food, electrical and other machinery, and goods

outsourced data processing services, motor vehicle

handled by trading companies and a moving service.

maintenance, insurance agency services and other

Operating revenues increased 4.9%. Aggressive sales
activities resulted in growth of revenues fromOperating revenues increased 2.3%. The main

manufacturers of homebuilding materials and there wasreasons were the acquisition of Chugoku Pianoan increase in the volume of cargo for prefabricatedTransport Co., Ltd. and sales activities to capture new

housing manufacturers.

business involving the transport of food products andactivities.
Operating revenues increased 3.6% to 32 billion yen.

electrical and other machinery.

89Corporate Social Responsibility
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 contribute 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

Services

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Customers

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ReportBoard of Directors

Corporate Management Committee
DialogueAccounting Audit
Audit

ReportAppointment / Supervision

Assist / Report

CSR Promotion Committee

Representative Director
ReportReportInstruct
Audit

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

Implementing Responsibilities; Auditing and Monitoring
1 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.

Safty

To 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.

D e e p e ni n g ou r C ommi t m e n t to C o r p o r a te S o c ia l R e s p o n s i b i l i t yCompliance 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

Each division and affiliated companies

Head Office /Production Management Division

CSR Promotion Committee

Head Office Committee

10

Board of Corporate Auditors

Appointment / Dismissal

Audit

Executive Officers / Departments / Branches / Group Companies

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.

The CSR Promotion Committee

Appointment / Dismissal

ReportAuditing Dept.

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.

The CSR Promotion Committee oversees
committees 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.

General Meeting of Shareholders
Appointment / Dismissal

R e i n f orc i n g ou r C SR I n itia tiv e s

The Environment

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.

Legal Counsel

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Shareholders

Corporate Governance Philosophy and Systems

Accounting Auditors

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and vendors

C o rp o ra t e G o ve rna nc e a nd C o m p l i a nc e

2 The Senko Group’s CSR management framework is consists of the CSR Promotion Committee, Workplace Health and Safety
Committee, and Internal Controls Committee.
3 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.
4 Senko has a contract with accounting auditors in accordance with laws and regulations and receives guidance concerning accounting
matters as required.
5 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
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.

Building a Crisis Management Framework
We are compiling a Crisis Response Manual from the standpoint of prioritizing human life, minimizing property damage(economic losses), quickly resuming business operations, maintaining public confidence, and assisting the local
community in the event of an emergency. We are also formulating and using Risk Management Rules that take asystematic approach to risk and clarify departmental responsibilities.

Protecting Personal Information
Senko receives personal information about customers in the course of receiving shipment and delivery requests, andtherefore it is our duty to ensure that we have a rigorous information protection system in place, starting with
implementing an information security policy.

11

Corporate Social Responsibility
Measures t o Reduce o u r E n v iro n m e n ta l Im p a 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 launched the Eco Innovation 2012 campaign infiscal 2010 with the aim of reducing its impact on the environment. Numerical targets 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

10,374 kL

Heavy oil

11,307 kL

Electricity

65,637,525 kWh

CO2 emissions

97,832 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 coeﬃcient is derived from published values calculated on thebasis of the “Ordinance for Enforcement of Act on Promotion of Global WarmingCountermeasures (as amended on June 13, 2008)” and the “Ordinance on the
Method of Calculation of Greenhouse Gas emissions from Business Operations ofSpeciﬁcally Designated Greenhouse Gas Emitters (as amended on March 31, 2010.).”

Others3,847t-CO2
3.9%
Oﬃces and warehouses,
etc. (Electricity)
31,795t-CO2
32.5%
Shipping (C heavy oil)
13,385t-CO2
13.7%

Automobile (Diesel oil)
30,250t-CO2
30.9%

Healthy Activity Campaign
Shipping (A heavy oil)
18,555t-CO2
19.0%

Our Basic Principles

12

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

1

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.

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
2012, 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

In the fiscal year ended March 2013, revenues increased 8.6%
to 293,534 million yen as a result of aggressive sales
activities to attract new customers, the contribution derivingfrom the investments made to establish large new facilities
in Noda City in Chiba prefecture, Kitahiroshima City in
Hokkaido, and Hyuga City in Miyazaki Prefecture, and theacquisitions of Smile Corp. and Chugoku Piano Transport
Co., Ltd. in the previous fiscal year.

Business segment performance for the fiscal ended March2013 was as follows:

Earnings benefited from growth in sales, the contribution
from the newly acquired subsidiaries, cost-cutting measuresand steps taken to increase productivity with the result that
operating income increased 19.8% to 9,909 million yen andnet income increased 49.6% to 5,203 million yen.

Distribution

Operating revenues

Financial Position(Billions of yen)

For the fiscal ended
March 31, 2013

For the fiscal ended
March 31, 2012

Sales

Component
ratio (%)

Sales

228.2

77.7

222.5

82.3

5.7

2.6

Retail Product Logistics

78.9

26.9

75.0

27.7

3.9

5.3

Housing Logistics

61.4

20.9

58.5

21.6

2.9

4.9

Chemicals Logistics

43.8

14.9

45.9

17.0

(2.1)

(4.6)

Others

44.1

15.0

43.1

16.0

1.0

2.3

Trading and Commerce

62.1

21.2

44.8

16.6

17.3

38.6

Others

3.2

1.1

3.1

1.1

0.1

3.6

Total

293.5

100.0

270.4

100.0

23.1

8.6

Operating income

Component
Growthratio (%) Difference rate (%)

Net income

1) Distribution segment
There was an increase in cargo volume for generalmerchandise stores (GMS) in the distribution logistics
business because of the start of operations at large
logistics facilities in the previous fiscal year. In the
housing distribution business, there was an increase incargo volume for housing materials. Chugoku Piano
Transport Co., Ltd., which became a subsidiary in theprevious fiscal year, also contributed to the performancein the period. As a result, segment operating revenues
increased 2.6% to 228,251 million yen.

Total assets at the end of the fiscal year were 208,095 million
yen, 5,248 million yen than one year earlier. There wereincreases of 2,337 million yen in cash and cash equivalents
and 1,699 million yen in trade accounts and notes receivable.

2) Trading and Commerce Segment
Operating revenues increased 38.6% to 62,119 million yen
due to the addition of Smile Corp. to the group in theprevious fiscal year and higher revenues in the tradebusiness and petroleum product marketing business.

Net assets increased 4,054 million yen to 67,328 million yen.
This was mainly the result of increases of 3,568 million yen
in retained earnings and 517 million yen in net unrealized
holdings gain on securities. The equity ratio increased by 1.0
percentage points to 31.3%.

Current liabilities decreased 4,249 million yen to 63,835
million yen at the end of the fiscal year. There weredecreases of 2,625 in short-term loans and 1,736 million yen
in current portion of long-term debt. Long-term debt, lesscurrent potion was 6,327 million yen higher than one year
earlier.

3) Others
Operating revenues increased 3.6% to 3,164 million yen.

Operating income / net income
to operating revenues

Net income per share

Cash dividends per share(Billions of yen)

(Millions of yen)

(Millions of yen)

(%)

(Yen)

(Yen)

300

10,000

6,000

4

60

14

250

Operating income tooperating revenues

5,000

8,000

50

12

3
200

4,000

40

6,000

10

150

3,000

2

30

4,000

8

100

2,000

20
1

2,000

50

0

14

09

10

11

12

13

0

Net income tooperating revenues

1,000

09

10

11

12

13

0

09

10

11

12

13

0

09

10

11

12

6

10

13

0

09

10

11

12

13

0

09

10

11

12

13

15

Report of Independent Auditors

Capital Expenditures and Depreciation

Cash flows

Capital expenditures decreased 10,563 million yen (70.6%) to
4,404 million yen in the fiscal year that ended in March 2013.
This decrease was mainly since expenditures were limited
to preparations for the construction of a new distribution
center scheduled to open after the next fiscal year and also
because the distribution center we opened this year is aleased facility.

Cash and cash equivalents at the end of the fiscal year
increased 2,337 million yen to 15,691 million yen.
Net cash provided by operating activities was 11,037 million
yen. Income before income taxes was 9,618 million yen,depreciation and amortization was 6,738 million yen, tradereceivables down by 1,560 million yen and income taxes
paid of 3,773 million yen.

Capital expenditures are expected to increase 6,890 million
yen (156.4%) to 11, 294 million in the fiscal year ending
March 2014. We will continue to expand our network of
distribution bases and other facilities in Japan and overseas
in accordance with the new three-year medium-termbusiness plan.

Net cash used in investing activities was 6,236 million yen.
Major uses of cash were 6,014 million yen for purchases of
fixed assets.
Net cash used in financing activities was 2,551 million yen.
Proceeds from long-term debt were 8,870 million yen andproceeds from the issuance of convertible bond were 5,000
million yen. Uses of cash were 2,626 million yen for
short-term loans, 4,378 million yen for repayment oflong-term debt, 2,282 million yen for repayments of financelease obligations, 4,900 million yen for repayments forredemption of convertible bond and 1,635 million yen for
dividends paid.

Depreciation increased 578 million yen (9.4%) to 6,737
million yen in the fiscal year that ended in March 2013 andis expected to be 7,020 million yen in the fiscal year endingin March 2014.

Total assets

Net assets /net assets ratio

ROE / ROA(Billions of yen)(Billions of yen)

(%)

(%)

250

80

40

12

60

30

10

200

8
150
40

20

20

10

6

ROE

100
4

50

0

16

2

09

10

11

12

13

0

09

10

11

12

13

0

0

ROA

09

10

11

12

13

17

Consolidated Balance Sheets

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

Thousands of
U.S. dollars

Millions of yen

ASSETS

2013

2013

2012

Current assets:

Thousands of
U.S. dollars

Millions of yen

LIABILITIES AND NET ASSETS

2013

2012

2013

¥ 6,640¥ 9,265$ 70,601

Current portion of long-term debt (Note 8)

7,835

9,571

83,307

Lease obligations

2,147

2,067

22,828

52

55

553

31,32632,243333,078

Current liabilities:

Cash and cash equivalents¥ 15,691¥ 13,354$ 166,837

Trade accounts and notes receivable––Non-consolidated subsidiaries

Short-term loans (Note 8)

38

12

404

42,34940,676450,281

(66)

(53)

(701)

Inventories

4,779

4,431

50,813

Deferred tax asset (Note 14)

2,030

2,052

21,584

Accrued expenses

6,887

6,895

73,227

2,540

2,281

27,007

6,408

5,707

68,134

63,83568,084

678,735

OthersLess : allowance for doubtful accounts

Prepaid expenses and other current assets
Total current assets

Trade accounts and notes payable––Non-consolidated subsidiaries
Others

4,042

3,783

42,977

Accrued income taxes

68,86364,255732,195

Other current liabilities (Note 14)
Total current liabilities

Investments in and long-term loans receivable to non-consolidated subsidiaries and an affiliate

2,599

2,606

27,634Long-term debt, less current portion (Note 8)

58,75052,423624,668

Investment securities (Notes 5 and 10)

4,784

4,052

50,867

Lease obligations

3,584

4,075

38,107

Accrued retirement benefits (Note 9)

9,269

9,468

98,554

Other long-term liabilities

5,329

5,523

56,661

20,521

20,521

218,192

Capital surplus

18,782

18,782

199,702

Retained earnings

26,46922,901

281,435

2013 and 3,183,467 shares in 2012

(1,353)(1,049)(14,385)

Total Shareholders’ equity

64,41961,155684,944

Net unrealized holdings gain on securities

674

157

7,166

Gain (loss) on deferred hedges

(5)

157

(53)

Translation adjustments

52

(45)

553

721

269

7,666

Property and equipment, at cost (Notes 7 and 10)

171,593

167,840

1,824,487

Less : accumulated depreciation(75,988)(71,700)(807,953)

Net property and equipment

95,60596,1401,016,534

Long-term deferred tax assets (Note 14)

3,436

4,000

36,534

Other assets

32,80831,794

348,836

Contingent liabilities (Note 11)

Net assets (Note 12):
Shareholders’ equity
Common stock:
Authorized––294,999,000 shares
Issued––128,989,476 shares

Less : Treasury stock, at cost––4,077,506 shares in

Accumulated other comprehensive income :Total accumulated other comprehensive income :Stock acquisition rights (Note 13)
Minority interests
Total net assets
Total assets¥ 208,095¥ 202,847$ 2,212,600

See the accompanying notes to the consolidated financial statements.

18

Total liabilities and net assets

196

149

2,084

1,992

1,701

21,181

67,32863,274

715,875¥ 208,095¥ 202,847$ 2,212,600

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, 2013, 2012 and 2011

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 14):
Current
DeferredIncome before minority interests

Thousands of
U.S. dollars

Millions of yen

2013

2012

2011

2013

¥ 293,534¥ 270,361¥ 241,046$ 3,121,042

263,898
19,727
283,6259,909

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

220,569
14,377
234,946
6,100

2,805,933
209,750
3,015,683
105,359

SENKO Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2013, 2012 and 2011

Thousands

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

1,085
(1,187)(1,710)(1,812)

12,004(12,291)(2,807)(3,094)

9,618

7,784

4,288

102,265

Commonstock

CapitalsurplusRetainedearnings

Treasurystock(at cost)

111,989¥ 18,346¥ 16,607¥ 19,605¥ (772)¥ 50¥ (23)

¥ (4)

¥ 80

¥ 1,234¥ 55,123

—

—

—

2,261

—

—

—

—

—

—

2,261

17,000

2,175

2,175

—

—

—

—

—

—

—

4,350

Cash dividends

—

—

—

(1,073)

—

—

—

—

—

—

(1,073)Purchases of treasury stock

—

—

—

—

(276)

—

—

—

—

—

(276)

Retirement of treasury stock

—

—

(0)

—

1

—

—

—

—

—

1

—

—

0

14

—

—

—

—

—

—

14

—

—

—

—

—

(47)

13

(27)

28

238

205

Balance at March 31, 2010
Net income

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

2,708
(561)
2,147
2,141

41,8084,221
46,02956,236a newly consolidated subsidiary
Other changes

128,989¥ 20,521¥ 18,782¥ 20,807¥ (1,047)¥3¥ (10)¥ (31)¥ 108¥ 1,472¥ 60,605

Net income

—

—

—

3,479

—

—

—

—

—

—

3,479
(1,385)

Cash dividends

—

—

—

(1,385)

—

—

—

—

—

—

Purchases of treasury stock

—

—

—

—

(2)

—

—

—

—

—

(2)

Other changes

—

—

—

—

—

154

167

(14)

41

229

577

128,989¥ 20,521¥ 18,782¥ 22,901¥ (1,049)

¥ 157

¥ 157

¥ (45)¥ 149¥ 1,701¥ 63,274

Net income

—

—

—

5,203

—

—

—

—

—

—

5,203

Cash dividends

—

—

—

(1,635)

—

—

—

—

—

—

(1,635)Purchases of treasury stock

—

—

—

—

(310)

—

—

—

—

—

(310)

Retirement of treasury stock

—

—

(0)

—

6

—

—

—

—

—

6

Balance at March 31, 2012

Minority interests in loss (gain) of consolidated subsidiaries
Net income

Per share of common stock
Net income
Diluted net income
Cash dividends applicable to the year(86)
¥ 5,203(74)¥ 3,479120¥ 2,261

Yen¥ 41.45
37.46
14.00

(914)
$ 55,322

U.S. dollars¥ 27.65
25.07
12.00

¥ 18.44
16.72
10.00

$ 0.440.40
0.15

Other changes
Balance at March 31, 2013

—

—

—

—

—

517

(162)

97

47

291

790

128,989¥ 20,521¥ 18,782¥ 26,469¥ (1,353)

¥ 674

¥ (5)

¥ 52

¥ 196

¥ 1,992¥ 67,328

Retainedearnings

Treasurystock(at cost)

Thousands of U.S. dollars
Commonstock

Balance at March 31, 2012

Consolidated Statements of Comprehensive Income

SENKO Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2013, 2012 and 2011

Thousands of
U.S. dollars

Millions of yen

2013

2012

2011

2013

Income before minority interests
Other comprehensive income (Note 3):
Net unrealized holdings gain (loss) 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¥ 5,289¥ 3,553¥ 2,141$ 56,236

181
181
(17)

(41)
19
(30)

5,986
(1,776)
1,627

(0)
549

(1)
344

(6)
(58)

(0)
5,837

Comprehensive income¥ 5,838¥ 3,897¥ 2,083$ 62,073

Total comprehensive income attributable to:
Owners of the parent
Minority interests¥ 5,654¥ 184¥ 3,786¥ 111¥ 2,205¥ (122)$ 60,117$ 1,956

Capitalsurplus$ 218,192 $ 199,702 $ 243,497 $ (11,153)

Net unrealized Gain (loss)
holdings gain on deferredon securities
hedgesStockTranslation acquisition Minority
adjustmentsinterests
rights$ 1,669$ 1,669$ (478)$ 1,584$ 18,087

Total
net
assets$ 672,769

Net income——

55,322

—

—

—

—

—

—

55,322

Cash dividends——(17,384)

—

—

—

—

—

—

(17,384)

Purchases of treasury stock

—

—

—

(3,296)

—

—

—

—

—

(3,296)Retirement of treasury stock

—

(0)

—

64

—

—

—

—

—

64

—

—

—

—

5,497

(1,722)

1,031

500

3,094

8,400

$ 218,192 $ 199,702 $ 281,435 $ (14,385)$ 7,166$ (53)$ 553$ 2,084$ 21,181$ 715,875

Other changes
Balance at March 31, 2013

563
(167)
153

Total
net
assetsAdjustment of retained earnings for

Balance at March 31, 2011

3,932
397
4,329
5,289

Net
unrealized Gain (loss)
Stockholdings gain on deferred Translation acquisition Minority
interests
adjustments(loss) on
hedgesrightssecurities

Number ofshares ofcommonstock issued

Issuance of common stock

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

Millions of Yen

See the accompanying notes to the consolidated financial statements.

20

21

Consolidated Statements of Cash FlowsSENKO Co., Ltd. and Consolidated Subsidiaries
Year ended March 31, 2013, 2012 and 2011

Cash flows from operating activities:
Income before income taxes and minority interests
Adjustments for:
Depreciation and amortization
Impairment loss
Loss on disposals of property and equipment
Loss (gain) on sales of property and equipment
Loss on revaluation of investment securities
Loss on disaster
Loss on adjustment for changes of accounting standard for asset retirement obligations
Decrease in accured retirement benefits
Increase (decrease) in accrued bonuses to employees
Decrease in provision for loss on disaster
Interest and dividends income
Interest expenses
Increase in trade receivables
Decrease (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 of long-term loans receivable to non-consolidated subsidiaries
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 convertible bond
Repayments of finance lease obligations
Proceeds from issuance of common stock
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

SENKO Co., Ltd. and Consolidated Subsidiaries
Thousands of
U.S.dollars

Millions of yen

2013

2012

2011

2013

¥ 9,618¥ 7,784¥ 4,288$ 102,265

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

5,590
451
181
—
—
977
130
(183)
(531)
—
(1,085)
1,187
(729)
560
775
(401)
11,210275(1,194)(2,882)
7,409

71,643
—
2,137
(276)
818
—
—
(2,116)(74)(468)(12,004)
12,291(16,587)(3,594)
5,593
7,751
167,379
2,296(12,206)(40,117)
117,352(6,014)
191
(42)
111
(297)
(254)
25
—
24
20
(6,236)(11,949)
1,362(1,396)
53
(119)
(22)
22
(4,600)—182(16,467)(9,646)661(29)
76(1,565)
(573)
—
—
—
(314)
(11,390)(63,945)
2,031
(446)
1,180
(3,158)(2,701)
266
—
255
213
(66,305)(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(450)
9,100(6,490)———(1,544)
4,350
(276)
1
(1,072)
(214)
3,405
(31)
(607)
14,505(27,921)
94,312(46,550)—
53,163(52,100)(24,264)—(3,296)0(17,384)(3,083)(27,123)574
24,498141,98833¥ 15,691—¥ 13,354

496¥ 14,394

351$ 166,837

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, 2013, which was ¥94.05 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) Accrued Retirement Benefits
The Company and certain domestic consolidated subsidiaries have retirement benefit plans for their employees. Such benefits are provided
through the unfunded lump-sum severance indemnity plan and the funded noncontributory pension plan.
The amount of retirement benefits are determined on the basis of length of service, basic salary and certain other factors at the time oftermination of employment.
Allowance for retirement benefits has 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 a consolidated subsidiary 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 a consolidated subsidiary 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 eachyear 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.

3. Comprehensive Income:The amount of recycling and amount of income tax effect associated with other comprehensive income at March 31,2013 and 2012, consisted of
the following:Thousands of
U.S. dollars
Millions of yen
2012
2013
2013
Net unrealized holdings gain on securities:$ 8,453¥ 795¥ 282
Amount recognized in the period under review
819
77
(6)
Amount of recycling
9,272
872
276
Before income tax effect adjustments(309)(3,286)(95)
Amount of income tax effect
563
5,986
181
Net unrealized holdings gain on securities¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬
Gain (loss) on deferred hedges:(1,956)(184)
277
Amount recognized in the period under review
(85)
(904)
12
Amount of recycling(2,860)(269)
289
Before income tax effect adjustments
1,084
102
(108)
Amount of income tax effect(1,776)(167)
181
Gain (loss) on deferred hedges
¬¬¬¬
¬¬¬¬
¬¬¬¬
Translation adjustments:
1,627
153
(17)
Amount recognized in the period under review
Share of other comprehensive income of an affiliate:
(0)
(0)
(1)
Amount recognized in the period under review$ 5,837¥ 549¥ 344
Total other comprehensive income

4. 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 of fundprocurement 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.
A consolidated subsidiary 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.

24

25

(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.

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)

2012(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)

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¥ 66,872

467
¥ 467

¥ 31,378
6,640
12,0005,000
49,5855,731¥ 110,334(¥ 5)¥ 31,378
6,640
12,053
4,805
50,0795,670¥ 110,625
(¥ 5)

—
—
53
(195)
494
(61)
¥ 291
—

Book value¥ 13,354
40,688
3,047
4,252

Millions of yen
Market value¥ 13,354
40,6883,047

Difference———

Total assets

4,512¥ 61,601

338
¥ 338

(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)

¥ 32,298
9,265
12,0004,900
45,094
6,142¥ 109,699¥ 157¥ 32,298
9,265
11,921
4,849
45,131
5,931¥ 109,395
¥ 157

—
—
(79)
(51)
37
(211)
(¥ 304)—

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)

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 5"(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.
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.
(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

(78)
4,174
¥ 61,263

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)

Calculation of the market value of financial instruments and items relating to investment securities and derivatives

Thousands of U.S. dollars
Book valueMarket value
Difference$ 166,837$ 166,837—
450,685—
450,685
45,657—45,65744,444(1,563)42,881$ 706,060

47,847$ 711,026

4,966$ 4,966$ 333,631
70,601
127,592
53,163527,220
60,935$ 1,173,142($ 53)$ 333,631
70,601
128,155
51,090532,472
60,287$ 1,176,236($ 53)——
563(2,073)5,252(648)$ 3,094—

See “Note 6”
Financial instruments for which it is extremely difficulty to determine market value
Thousands of
U.S. dollars

Millions of yen
2013¥ 1,256—

Unlisted shares
Investments in limited partnerships for investment2012¥ 1,7034

2013$ 13,355—

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

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

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

—
—
—
1,377
¥ 1,377

Over 10 years
—
—
—
—
—
—
846
¥ 846

*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.

26

27

2012
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

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
¥ 13,354
40,688————276¥ 54,318

Within 1 year
$ 166,837
450,685
—
—
—
—
3,689
$ 621,211

Millions of yen
Over 1 year
Over 5 years
Within 5 years
Within 10 years
—
—
—
—
—
—
—
—
—
1,548
¥ 1,548

10
—
—
1,507
¥ 1,517

Thousands of U.S. dollars
Over 1 year
Over 5 years
Within 5 years Within 10 years
—
—
—
—
—
—
—
—
—
14,641$ 14,641

106——
17,119$ 17,225

The proceeds from sales of , and gross realized gain and loss on , other securities for the years at March 31,2013 and 2012 are summarized as follows.
Over 10 years
—
—
—
—
—
—
921
¥ 921

Over 10 years
—
—
—
—
—
—
8,995
$ 8,995

Millions of yen
2013
2012
¥ 114
¥ 42
12
18
—
—

Proceeds from sales
Gross realized gain
Gross realized loss

6. 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
Millions of yen
2013
Hedge accounting
methodType ofcontracts

Designated transactions forforward exchange contracts

Forward exchange contracts
Buy
U.S. dollars
Euros
Danish kroner
Total

Item
hedgedContract
amounts

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

5. Investment Securities:
The carrying amounts of investment securities at March 31,2013 and 2012, consisted of the following:
Millions of yen
2013
2012
¥ 4,294¥ 3,047490
1,005¥ 4,784¥ 4,052

Marketable securities
Non-marketable securities

Thousands of
U.S. dollars
2013$ 45,657
5,210$ 50,867

Hedge accounting
methodDesignated transactions forforward exchange contracts

Millions of yen

2013
Equity security
Bond and Others

Acquisitioncost¥ 2,933153¥ 3,086¥ 1,2286¥ 1,234

Gross
unrealized
losses¥ (26)—¥ (26)

Millions of yen

2012
Equity security
Bond and Others

Acquisition
cost

Gross
unrealized
gains¥ 2,456258¥ 2,714

¥ 443
0
¥ 443

Gross
unrealized
losses¥ (102)(8)¥ (110)Type ofcontracts
Forward exchange contracts
Buy
U.S. dollars
Euros
Danish kroner
Pounds sterling
Total

Item
hedgedContract
amounts

Trade accounts payable
Trade accounts payable
Trade accounts payable
Trade accounts payable¥ 3,736279
381¥ 4,054

Book value(Market value)¥ 4,135
159¥ 4,294

Book value(Market value)¥ 2,797250¥ 3,047

Over 1 year out ofcontract amounts

Market value

—
—
—
—

¥3
(3)
(0)
¥0

Millions of yen
2012

The following is a summary of marketable securities included in investment securities, at March 31, 2013 and 2012.

Gross
unrealized
gains

Thousands of
U.S. dollars
2013$ 1,212128—

Over 1 year out ofcontract amounts

Market value

—
—
—
—
—

¥ 125
6
2
(0)
¥ 133

Thousands of U.S. dollars
2013
Hedge accounting
methodType ofcontracts

Designated transactions forforward exchange contracts

Forward exchange contracts
Buy
U.S. dollars
Euros
Danish kroner
Total

Item
hedgedContract
amounts

Trade accounts payable
Trade accounts payable
Trade accounts payable$ 16,491
2,903
393$ 19,787

Over 1 year out ofcontract amounts

—
—
—
—

Market value

$ 32
(32)
(0)
$0

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

Thousands of U.S. dollars

2013
Equity security
Bond and Others

28

Acquisition
cost

Gross
unrealized
gains$ 31,185
1,627$ 32,812$ 13,05764$ 13,121

Gross
unrealized
losses$ (276)—$ (276)

Book value(Market value)$ 43,966
1,691$ 45,65729

(2) Interest rate swaps

At March 31, 2013 and 2012, long-term debt consisted of the following:
Millions of yen
2013

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

¥ 36,223

Over 1 year out ofcontract amounts

Market value¥ 29,665— (*)

Millions of yen
2012
Hedge accounting
methodExceptional accounting
method for interest-rate
swap transactions

Type ofcontracts
Interest rate swap contract
Floating rate receivable/
Fixed rate payableItemhedgedContract
amounts

Over 1 year out ofcontract amounts

Millions of yen
2013
2012
1.31% bond due 2014
0.80% bond due 2016
Convertible bond due 2013
Convertible bond due 20170.35% to 2.34% loans from banks and insurance companies:
UnsecuredLess current portion

Thousands of
U.S. dollars
2013¥ 7,000
5,000
—
5,000

¥ 7,000¥ 5,000
4,900—$ 74,429
53,163—53,16349,58566,585(7,835)¥ 58,750

45,094
61,994(9,571)¥ 52,423

527,220
707,975(83,307)$ 624,668

Market value
On July 20, 2012, the Company issued ¥ 5,000 million ($ 53,163 thousand) of zero coupon convertible bond with stock acquisition rights due in 2017. The stockacquisition rights are exercisable during the period from July 6, 2017 at a conversion price of ¥ 394 ($ 4.19) per share.

Long-term debt

¥ 32,031¥ 29,723— (*)
The annual maturities of long-term debt at March 31, 2013 are as follows:

Thousands of U.S. dollars
2013
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

$ 385,146

Over 1 year out ofcontract amounts$ 315,417

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.

7. Property and Equipment:
At March31,2013 and 2012,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

Millions of yen
2013
2012
¥ 40,098¥ 39,838
95,602
95,267
21,46020,869
4,894
4,778
1,804
230
7,735
6,858
¥ 171,593¥ 167,840

Thousands of
U.S. dollars
2013$ 426,348
1,016,502
228,177
52,03619,181
82,243$ 1,824,487

Millions of yen
2012
2013

30

Millions ofyen

Thousands of
U.S. dollars

2014
2015
2016
2017
2018
There after¥ 7,835
13,736
5,775
13,60820,397
5,234$ 83,307
146,050
61,404
144,689
216,874
55,651At March 31,2013, the Company has committed line and overdraft contracts with seventeen banks aggregating ¥ 27,600 million ($ 293,460 thousand).
Of the total credit limit, ¥ 5,130 million ($ 54,545 thousand) was used as the above short-term and long-term borrowing, and the rest ¥ 22,470 million ($238,915 thousand) was unused.

9. Accrued Retirement Benefits:
The following table sets forth the changes in benefits obligation, plan assets and funded status of the Company and its certain subsidiaries at
March 31, 2013 and 2012.
Thousands ofMillions of yen
U.S.dollars
2013¥ (27,087)
14,552(12,535)
6,118(6,417)2,852¥ (9,269)

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 benefits2012¥ (22,912)
11,853(11,059)
4,295(6,764)2,704¥ (9,468)2013$ (288,006)
154,726(133,280)
65,050(68,230)
30,324$ (98,554)

Retirement benefits costs of the Company and its certain subsidiaries included the following components for the year ended March 31, 2013, 2012
and 2011.
Thousands ofMillions of yen
U.S. dollars

8. Short-term Loans and Long-term Debt:
At March31, 2013 and 2012, short-term loans consisted of the following:

0.61% to 1.47% unsecured loans from banks

Year ending
March 31

¥ 6,640¥ 9,265

Thousands of
U.S. dollars
2013$ 70,601

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

2012
¥ 1,068
563
(347)

2011
¥ 1,206
566
(349)

2013
$ 12,036
5,774(3,785)598
183¥ 2,100

581
126¥ 1,991525—¥ 1,948

6,358
1,946
$ 22,329

3113. Stock Option Plans:
The stock option plans of the Company approved by the shareholders in accordance with the Japan Companies Act at March 31, 2013 were as
follows:

Assumption used in the accounting for the defined benefits plans for the year ended March 31, 2013, 2012 and 2011 is as follows:
2013
Method of attributing benefits to periods of service

Straight-line
basis

2012
Straight-line
basis

2011
Straight-line
basis

1.00%
3.00%
1year
13years

2.50%
3.00%
1year
13years

2.50%
3.00%
1year
13years

Discount rate
Expected rate of return on fund assets
Amortization period of prior service costs
Amortization period of actuarial differences(1) Description of stock options
stock option

10. Pledged Assets:
The following assets were pledged as collateral as at March 31, 2013 and 2012.
Thousands of
U.S. dollars

Millions of yen
Land
Buildings
VehiclesInvestment securities2013¥ 2,225387
0
10¥ 2,6222012¥ 2,225424
2
10¥ 2,661

Obligations which were secured on the above assets were as follows:
Millions of yen
Long-term debt, including current portion

2013
¥ 100

2012
¥ 100

2013
$ 23,658
4,115
0
106
$ 27,879

Grantees

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

2013
¥ 330
474
139
64
¥ 1,007

2012
¥ 176
385
140
47
¥ 748

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

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

11 directors
4 auditors
13 operating officers
13 assistant directors
12 directors
4 auditors2010 Stock options (8th)2010 Stock options (9th)2013$ 1,063

2011 Stock options (11th)

12. 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, 2013, included the Company’s legal reserveof ¥ 1,506 million ($ 16,013 thousand).

15 operating officers
20 assistant directors
12 directors
4 auditors
16 operating officers
22 assistant directors

2012 Stock options (12th)(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, 2013. The number of stock
options is translated into the number of shares.
Share subscription rights
which are not yet vested (shares):
At March 31 ,20122007 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)

32

Exercise period

61,000 shares2011 Stock options (10th)2013$ 3,509
5,040
1,478
680
$ 10,707

Option price
Shares with
per warrant warrants granted

10 directors
3 auditors

Thousands of
U.S. dollars

Thousands of
U.S. dollars

Date ofgrant

2007 Stock options (1st)2012 Stock options (13th)
11. Contingent Liabilities:
At March 31, 2013 and 2012, contingent liabilities were as follows:

Number of shares withwarrants granted

Share subscription rights
which have already been vested (shares):

GrantedForfeited

VestedAt March 31 ,2013

55,000

—

—

5,000

50,00012,000

—

—

2,000

63,000——17,000—74,000At March 31 ,
2012

31 ,
Forfeited At March
2013

VestedExercised

—

5,000

5,000

—

—

10,000

—

2,000

2,000

—

—

5,000

58,000

—

5,000

5,000

—

—

—

2,000

15,000

—

2,000

2,000

—

—

—

—

—

74,000

—

—

—

—

—

27,000

—

—

2,000

25,000

—

2,000

2,000

—

—

90,000———90,000

—

—

—

—

—

42,000

—

—

1,000

41,000

—

1,000

1,000

—

—

102,000———

102,000

—

—

—

—

—

96,000

—

—

3,000

93,000

—

3,000

3,000

—

—

—

107,000——

107,000

—

—

—

—

—

—

92,000——92,000

—

—

—

—

—

33

14. 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 March31, 2013 and 40.6% for the years ended March 31, 2012.
(1) Significant components of deferred tax assets and liabilities at March 31, 2013 and 2012 were as follows:
Thousands of
U.S. dollars

Millions of yen
Deferred tax assets:
Accrued retirement benefits
Accrued bonuses to employees
Loss carry forward
Impairment losses
Loss on revaluation of land
Provision for loss on disasterAccrued 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

2013

2012

2013

¥ 3,930
1,452
900
329
307
—
224
202
115
101
850
8,410
(1,421)
6,989¥ 3,977
1,504
962
339
307
17
187
204
113
98
808
8,516
(1,117)
7,399$ 41,786
15,439
9,569
3,498
3,264
—
2,382
2,148
1,223
1,074
9,038
89,421(15,109)74,312

(854)
(44)
(426)
(490)
(1,814)¥ 5,175

(856)
(49)
(113)
(562)
(1,580)¥ 5,819(9,080)(468)(4,530)(5,210)(19,288)$ 55,024(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, 2013 and 2012 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 rate
Other
Income tax rate as a percentage of income before income taxes and minority interests

34

2013
38.0%

2012
40.6%

1.5
2.3
(0.2)
3.4
—
0.0
45.0%

1.8
2.8
(0.2)
0.0
8.9
0.4
54.3%

15. Asset Retirement Obligations:(a) 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.
(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 20 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
2013
2012
¥ 316
¥ 293
—
15
8
8
¥ 324
¥316

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

Thousands of
U.S. dollars
2013$ 3,360—85$ 3,445

16. 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), assets and liabilities, 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), assets, etc. of each reportable segment
Millions of yen
2013
Operating revenues:
Customers
Intersegment
Total operating revenues
Segment income (loss)
Segment assets
Other items
Depreciation
Increase in tangible andintangible fixed assets

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

35

Millions of yen
2012
Operating revenues:
Customers
Intersegment
Total operating revenues
Segment income (loss)
Segment assets
Other items
Depreciation
Increase in tangible andintangible fixed assets

Millions of yen
2012

Distribution

Trading &Commerce

Others

Total

Adjustments andeliminations

Consolidated¥ 222,495
704
223,199
6,604
171,328¥ 44,811
10,53655,347
1,276
15,299¥ 3,055
3,450
6,505
691
10,084¥ 270,361
14,690285,051
8,571
196,711—(14,690)(14,690)
(297)
6,136

¥ 270,361—
270,3618,274
202,847

5,253

124

172

5,549

611

6,160

16,799138

116

17,053669

17,722

Amortization of goodwill
Balance at the end of period

¥ 85
864

Trading &Commerce
¥ 120
2,866

Others——Adjustments andeliminations——

Consolidated

Adjustments andeliminations——

Consolidated

¥ 205
3,730

Thousands of U.S. dollars
2013
Distribution
Amortization of goodwill
Balance at the end of period

$ 999
8,208

Trading &Commerce$ 2,041
28,506

Others——$ 3,040
36,714(Information on negative goodwill by business segment)
No significant items to be reported.

Thousands of U.S. dollars
2013
Operating revenues:
Customers
Intersegment
Total operating revenues
Segment income (loss)
Segment assets
Other items
Depreciation
Increase in tangible andintangible fixed assets

Distribution

Distribution

Trading &Commerce

Others

Total

Adjustments andeliminations

Consolidated$ 2,426,911
8,145
2,435,056
81,744
1,843,211$ 660,489
111,515772,004
20,659261,691$ 33,642
33,471
67,1135,401
44,349$ 3,121,042
153,1313,274,173
107,804
2,149,251—(153,131)(153,131)(2,445)63,349$ 3,121,042—
3,121,042
105,359
2,212,600

60,415

2,095

1,829

64,3397,304

71,64325,720

3,222

1,669

30,611

21,30851,91917. Subsequent Event:(1) Payment of Dividends
Shareholders approved the following appropriation of retained earning at the annual meeting held on June 27, 2013.

Cash dividends

Millions of yen

Thousands of
U.S. dollars¥ 874$ 9,293(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.
(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)
Millions of yen
2013
Distribution
Amortization of goodwill
Balance at the end of period

36

¥ 94
772

Trading &Commerce
¥ 192
2,681

Others——Adjustments andeliminations——

Consolidated
¥ 286
3,453

37

Stock Information (As of March 31, 2013)
Stock Listings
Stock Code
Authorized Shares
Outstanding Share
Number of Shareholders
Administrator of Shareholder’s Register
Independent Auditors

Tokyo, Osaka
9069
294,999,000
128,989,476
6,891
Mitsubishi UFJ Trust and Banking Corporation
Osaka Corporate Agency Division
3-6-3, Fushimi Machi, Chuo-ku, Osaka 541-8502, Japan
Otemae Audit Corporation

Largest Shareholders
Number of Shares

Percentage Held

Japan Trustee Services Bank, Ltd. (Trust Account)

15,516,000

12.03 %

Asahi Kasei Corporation

11,676,726

9.05 %

Senko Group Employee’s Stockholding

7,590,743

5.88 %

Sekisui Chemical Co., Ltd.

6,785,900

5.26 %The Master Trust Bank of Japan, Ltd.

5,697,000

4.42 %

Mitsubishi UFJ Trust and Banking Corporation

4,252,000

3.30 %

Isuzu Motors Limited

4,139,689

3.21 %

Tokio Marine & Nichido Fire Insurance Co., Ltd.

3,439,170

2.67 %

Aioi Nissay Dowa Insurance Co., Ltd.

3,169,655

2.46 %

Trust & Custody Services Bank, Ltd.

2,641,000

2.05 %

Number of Shareholders

Number of Shares

Percentage Held35.30 %Classification by Type of Shareholder

Domestic financial institutions

45

45,539,329

Securities firms

29

904,4900.70 %

Other domestic corporations

246

39,850,380

30.89 %

139

11,451,996

8.88 %

Individuals and others

6,402

31,243,281

24.22 %

Total

6,891

128,989,476

100.00 %Foreign financial institutions and individuals

38

39

Board of Directors and Corporate Auditors, Executive Officers (As of June 27, 2013)

President and Representative Director

Executive Vice President and Representative Director

Yasuhisa Fukuda

Masami Fujimori

President and Representative Director

Full-time Corporate Auditors

Yasuhisa Fukuda

Yutaka Toyama
Takashi Sawada
Takanobu Ishioka
Keiichiro Yoshimoto

Executive Vice President and Representative Director

Masami Fujimori
Executive Vice President and Director

Takeyo Teduka

Tomoyuki Osako
Executive Officers

Director and Executive Officer

Yoshiki Kanaga
Outside Directors

Hiroko Ameno
Fumitaka Ojima

Corporate Data (As of March 31, 2013)
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

40

Departments:
Worldwide Locations:Kazumasa Murakami
Managing Executive Officer

Directors and Managing Executive Officers

Kazuhiro Yamanaka
Yoshihiro Kawase
Kazuaki Oike
Junji Miyatsu
Hiroshi Yoneji

Sales Division:
Branches:

Senior Managing Executive Officer

Director and Senior Managing Executive Officer

Kengo Tanaka

Domestic and Global Network (As of April 1, 2013)

July 1946¥ 20,521,133,751
1-30, Oyodonaka 1-chome, Kita-ku, Osaka
March 31
340
31
3,240
19
2,211,000 square meters
8,889

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

Subsidiaries (As of March 31, 2013)
Company Name

Main BusinessCompany Name

● Senko Trading Co., Ltd.
Smile Corp.
Marufuji Co., Ltd.
Senko Insurance Services Co., Ltd.
Senko Information System Co., Ltd.
Logi Solution Co., Ltd.
Senko Moving Plaza Co., Ltd.
Senko A Line Amano Co., Ltd.
Tokyo Nohin Daiko Co., Ltd.
Inui Transport Co., Ltd.
Chugoku Piano 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.
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.

Trading and Commerce, Others
Trading and Commerce
Trading and Commerce
OthersOthersOthersDistribution
Distribution
Distribution
Distribution
Distribution
Distribution
Distribution
Distribution
Distribution, Others
Distribution
Distribution, Others
Distribution
Distribution
Distribution
Distribution
Distribution
Distribution, Others
Distribution
Distribution
Distribution
Distribution
Distribution, Others
Distribution
Distribution
Distribution, Others
Distribution
Distribution
Distribution
Distribution
Distribution● 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.
Minami Kyushu Senko Co., Ltd.
Miyazaki Senko Transport Co., Ltd.
Miyazaki Senko Apollo 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.
Senko Logistics (U.S.A.) Inc.
Senko (U.S.A.) Inc.
DFTZ Best International Trading & Logistics Co., Ltd.
Dalian Tri-Enterprise 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.
Qingdao Xuexing International Logistics Co., Ltd.
Shenyang Senko Logistics Co., 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 LLP

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

41