The Sumitomo Warehouse Co., Ltd.
Consolidated Balance Sheets
31 March 2007 and 2008

Millions of yen
ASSETS
Current assets:
Cash and cash equivalents (Note 4)･･･・･････････・･･･
Short-term investments (Note 6)･･･・･････････・･･････
Receivables
Trade notes and accounts･･･・･････････・･････････
Other･･･・･････････・･････････・･･･････････････・･
Allowance for doubtful receivables･･･・･････････・

2007
\

(

Real estate inventories (Note 3)･･････・･･････････････
Deferred tax assets (Note 10)･･････・･････････・･･････
Other･･･・･････････・･････････・･････････････････・･･
Total current assets･･･・･････････・･････････・･･･････
Investments and other noncurrent assets:
Investment securities (Notes 4, 5 and 6)･･･・･････････
Long-term loans receivable･･･・･････････・･････････・
Deferred tax assets (Note 10)･･････・･････････・･･････
Other (Notes 4, 5 and 6)･･･・･････････・･････････・･･･
Allowance for doubtful receivables･･･・･････････・･･･(

Property and equipment (Note 6) :Land･･････・･････････・･････････・･････････・･･・････
Buildings and structures･･･・･････････・･････････・･･･
Machinery and equipment･･･・･････････・･････････・･
Construction in progress･･･・･････････・･････････・･･･
Less accumulated depreciation･･･・･････････・･･･････(

Intangibles:
Goodwill･･･・･･･････・･････････・･････････・･････････
Leasehold (Note 6)･･･・･････････・･････････・････････
Software･･･・･･･････・･････････・･････････・･････････
Other･･･・･････････・･･･・･････････・･････････・･･････\

See accompanying notes.

13,977907
18,2562,034
115 )
20,175
379
1,012
1,155
37,605

111,015
400
226
6,292
228 )
117,705

44,428150,271
24,137
4,117
222,953
107,480 )
115,473

3,071
3,476
325
1,502
8,374
279,157

2008
\

(

(

(

\

11,7181,257
18,0422,261
110 )
20,193
287
996
1,113
35,56466,436
598
205
6,792
269 )
73,762

46,067156,21024,7587,380
234,415
112,451 )
121,964

2,748
3,576
338
2,440
9,102
240,392

Thousands of
U.S. dollars (Note 1)
2008$

116,958
12,546
180,078
22,567
1,098 ）
201,547
2,865
9,941
11,109354,966

(

(

(

$

663,100
5,969
2,046
67,791
2,685 ）
736,221459,796
1,559,138
247,11173,6602,339,705
1,122,378 )
1,217,327

27,42835,692
3,374
24,35390,8472,399,361

The Sumitomo Warehouse Co., Ltd.
Consolidated Balance Sheets
31 March 2007 and 2008

LIABILITIES AND NET ASSETS
Current liabilities:
Bank loans (Note 6)･･･・･････････・･････････・･･･････････ \Long-term debt due within one year (Note 6)･･･・････････
Payables:Trade notes and accounts ･･･・･････････・･････････・･･･
Other･････・･････････・･････････・･････････・････････・

Thousands of
U.S. dollars (Note 1)
2008

Millions of yen
2007
2008
28,315
3,693

\

8,416
2,776

$

84,00027,707

Income taxes payable･･･・･････････・････････････・･･･････
Reserve for bonuses･･･・･････････・･････････・･････････・･
Reserve for bonuses to directors･･･・･････････・･････････・
Other･･･・･････････・･････････・･･･・･････････・･････････・
Total current liabilities･･･・･････････・･････････・･･････

10,3193,102
13,421
2,436
1,529
10
1,881
51,285

10,292
4,515
14,807
2,300
1,513
－
2,043
31,855

102,725
45,064
147,789
22,956
15,101－
20,393317,946

Long-term debt due after one year (Note 6)･･･・･････････・

23,66047,746

476,555

Deferred tax liabilities (Note 10)･･･・･････････・･････････・

36,94818,207

181,725

Employees' retirement benefits (Note 8)･･･・･････････・･･･

3,688

3,306

32,997

Directors' and corporate auditors' retirement benefits･･･

198

86

858

Deposits on contracts･･･・･････････・･････････・･････････・･

14,137

13,556135,303

Other noncurrent liabilities･･･・･････････・･････････・･････

869

923

9,212

21,27018,711
58,862

21,823
19,17962,180217,816
191,426
620,621

Contingent liabilities (Note 12)
Net assets:
Shareholders' equity:
Common stock
Authorized － 395,872,000 shares
Issued－ 193,563,270 shares at 31 March 2007
－ 195,936,231 shares at 31 March 2008 ･･･・
Capital surplus･･･・････････････・･････････・･････････・･･
Retained earnings･･･・････････････・･････････・･････････・
Treasury stock, at cost
－ 1,667,091 shares at 31 March 2007
－ 4,690,909 shares at 31 March 2008 ･･･・･ (Total shareholders' equity･･･・･････････・･････････・･･･
Valuation and translation adjustments:
Unrealized gains on investment securities･･･・･････････・･
Deferred gains and losses on hedges････・･････････・･････
Foreign currency translation adjustments ･･･・･････････・･
Total valuation and translation adjustments･･･・･････････・･････････・･････････・･････
Subscription rights to shares･・･････････・･････････・･････・･････････・･････････・････
Minority interests in consolidated subsidiaries･･･・･･･････
Total net assets･･･・･････････・･････････・････････・････\
See accompanying notes.

1,466 )
97,37747,0096
147
47,16232
3,801
148,372
279,157(\

3,115 )
100,067

19,99925352
20,37652
4,218
124,713240,392($

31,091 )998,772

199,611250
3,513
203,374
519
42,1001,244,765
2,399,361

The Sumitomo Warehouse Co., Ltd.
Consolidated Statements of Income
Years Ended 31 March 2007 and 2008

Thousands ofMillions of yen
2007
2008
Net sales･････・･････････・･････････・･････････・････････・････････ \Cost of sales･････・･････････・･････････・･････････・････････・･････
Selling, general and administrative expenses･････・･････････・･･･

121,588
107,493
6,728

Operating income･････・･････････・･････････・･････････・････････

7,367

Other income (expenses):
Interest and dividend income･････・･････････・･････････・･･･････
Interest expense･････・･････････・･････････・･････････・････････・ (Equity in earnings of affiliates･････・･････････・･････････・･･････
Gain on sale of investment securities (Note 4)･････・･････････・･･
Gain on sale of property and equipment････・･････････・････････
Loss on write-down of investment securities･・･････････・･･･････ (Loss on disposal of property and equipment････・･････････・･････ (Bond conversion expense･････・･････････・･････････・･････････・ (Fee for arrangement of syndicated loans････・･････････・････････ (Contributions ･････・･････････・･････････・･････････・････････・･ (Lawsuit expense･････････・･････････・････････・･････････・･････ (Loss on business restructuring (Note 13)･････････・･････････・･･･ (Cost of compensation for damage･･・･････････・･････････・･･････ (Loss on dissolution of the welfare pension fund of consolidated
subsidiaries (Note 8)･･・･････････・･････････・････････・･･･････ (Other, net･････・･････････・･････････・･････････・････････・･････
Income before income taxes and minority interests･････・･･･････
Income taxes
Current･････・･････････・･････････・･････････・････････・･･･････
Deferred･････・･････････・･････････・･････････・････････・･･････ (Minority interests･････・･････････・･････････・･････････・････････
Net income･････・･････････・･････････・･････････・････････・･･････ \Basic net income per share･････・･････････・･････････・･････････・ \Dilutive net income per share･････・･････････・･････････・･･･････ \Cash dividends applicable to the year････・･････････・･････････・･ \See accompanying notes.

1,092
437 )
168
1,615
20
147 )
176 )
6)
126 )
10 )
116 )
－)
−)
−)
110

\

(

(
(
(
(
(
(
(
(
(

9,354

U.S. dollars (Note 1)

2008

137,732
122,135
7,140$ 1,374,708
1,219,034
71,264

8,457

84,410

1,307
753 )
160
972
34
69 )
127 )
7)
40 )
25 )
－)
237 )
410 )
190 )
97

(

(
(
(
(
(
(
(
(

(

9,169

4,074
131 )
3,943
201
5,210

\

27.12
26.51
10.00

Yen
\
\
\

(

3,620
113 )
3,507
432
5,230

13,0457,516 )
1,597
9,702
339
689 )
1,268 )
70 )
399 )
250 )
－)
2,366 )
4,092 )
1,896 )
969
91,516($36,131
1,128 )
35,003
4,312
52,201

U.S. dollars (Note 1)

27.02
26.88
10.00

$
$
$

0.27
0.27
0.10

The Sumitomo Warehouse Co., Ltd.
Consolidated Statements of Changes in Net Assets
Years Ended 31 March 2007 and 2008

Millions of yen
Shareholders' equity

Commonstock
Balance at 31 March 2006\

Conversion of convertiblebonds
Net income
Cash dividends at \10.0 per
share
Bonuses to directors andcorporate auditors
Net increase in treasurystock
Net changes in items otherthan shareholders' equity
Total changes in items
during the period
Balance at 31 March 2007

Balance at 31 March 2006

See accompanying notes.

\

485

Retainedearnings

18,224\55,614

Treasury
stock
\(

129 )

Valuation and translation adjustments
DeferredForeign
gains orcurrency
losses ontranslation
hedgesadjustments

Totalvaluation andtranslation
adjustments

\

\

\

\

485

\

21,2701,921 )(

1,921 )

(

41 )

(

41 )

(

1,335 )(

487\

18,711

Subscription
rights tosharesMinority
interest inconsolidated
subsidiaries

\

\

－

1,130

\

(

1,337 )

58,862\(

1,466 )

Total
net
assets\141,041970(

1,921 )

(

41 )

(

1,335 )

32

2,671

4,448

32

2,671

7,331

32

\

3,801

\

1,337 )

3,248

5,210

\

45,648

－

\(

231 )

45,417

5,210

(

2

485

94,494970

5,210

Conversion of convertiblebonds
Net income
Cash dividends at \10.0 per
share
Bonuses to directors andcorporate auditors
Net increase in treasurystock
Net changes in items otherthan shareholders' equity
Total changes in items
during the period
Balance at 31 March 2007

20,785

Capitalsurplus

Total
shareholders'equityUnrealized
gains oninvestment
securities

148,372

2,883\

97,377

\

1,361

6

378

1,745

1,361

6

378

1,745

47,009

\

6

\

147

\

47,162

The Sumitomo Warehouse Co., Ltd.
Consolidated Statements of Changes in Net Assets
Years Ended 31 March 2007 and 2008

Millions of yen
Shareholders' equity

Commonstock
Balance at 31 March 2007\

Conversion of convertiblebonds
Net income
Employee welfare fund
Increase resulting from a
newly consolidated
subsidiary
Cash dividends at \10.0 per
share
Net increase in treasurystock
Net changes in items otherthan shareholders' equity
Total changes in items
during the period
Balance at 31 March 2008

Balance at 31 March 2007

See accompanying notes.

\

553

Retainedearnings

18,711\

58,862

(

5,230
2)

Treasurystock\(

1,466 )

Valuation and translation adjustments
Foreign
Deferred
gains orcurrency
losses ontranslation
hedgesadjustments

Totalvaluation andtranslation
adjustments\

97,377\47,009\147\

47,162

(

5,230
2)

(

27,010 )

19

205

(

26,786 )2,690(

27,010 )

19

205

(

26,786 )100,067\

19,999352\

20,376

553

(
(

553
\

21,823

19,179Subscription
rights tosharesMinority
interest inconsolidated
subsidiaries

\

\

32

3,801

(

\

(

1,649 )

62,180\(3,115 )

Total
net
assets\(148,372

5,230
2)
22

(

1,932 )(

1,734 )

20

417

(

26,349 )

20

417

(

23,659 )4,218\

124,71352\

1,649 )

3,318

1,106

\

\

22

1,932 )

85 )

468
\

6

1,106

22

Conversion of convertiblebonds
Net income
Employee welfare fund
Increase resulting from a
newly consolidated
subsidiary
Cash dividends at \10.0 per
share
Net increase in treasurystock
Net changes in items otherthan shareholders' equity
Total changes in items
during the period
Balance at 31 March 2008

21,270Capitalsurplus

Total
shareholders'equityUnrealized
gains oninvestment
securities(

1,932 )(

1,734 )

\

\

25

\

The Sumitomo Warehouse Co., Ltd.
Consolidated Statements of Changes in Net Assets
Years Ended 31 March 2007 and 2008

Thousands of U.S. dollars (Note 1)
Shareholders' equity

Commonstock
Balance at 31 March 2007$

Conversion of convertiblebonds
Net income
Employee welfare fund212,296

Capitalsurplus$5,520

186,755

Retainedearnings$

587,504(

52,20120 )(

971,923$

469,199(

52,201
20 )(

269,588 )

5,520

26,849(269,588 )$

217,816

191,426

Subscription
rights tosharesMinority
interest inconsolidated
subsidiaries

$

$

319

(

4,671

$

998,772$

199,61137,938$(16,459 )620,621$(31,091 )Total
net
assets$ 1,480,906(

52,201
20 )
219

$

(

19,283 )(17,308 )

200

4,162

(

262,990 )

200

4,162

(

236,141 )

42,100$ 1,244,765

519$

16,459 )33,117

11,040Cash dividends at \10 .0(U.S.$0.10) per share
Net increase in treasurystock
Net changes in items otherthan shareholders' equity
Total changes in items
during the period

$

1,467

$

470,726

190

2,046

(

267,352 )

190

2,046

(

267,352 )

3,513

$

203,374

60

$

Total
valuation andtranslation
adjustments

219

19,283 )849 )Increase resulting from a
newly consolidated
subsidiary

See accompanying notes.

$

Valuation and translation adjustments
Foreign
Deferredcurrency
gains ortranslation
losses onhedgesadjustments

11,040(Conversion of convertiblebonds
Net income
Employee welfare fund

Balance at 31 March 2008

14,632 )219

Cash dividends at \10 .0(U.S.$0.10) per share
Net increase in treasurystock
Net changes in items otherthan shareholders' equity
Total changes in items
during the period

Balance at 31 March 2007

$(

5,520

Increase resulting from a
newly consolidated
subsidiary

Balance at 31 March 2008

Treasury
stock

Total
shareholders'equityUnrealized
gains oninvestment
securities(

19,283 )(17,308 )

$

$

250

$

The Sumitomo Warehouse Co., Ltd.
Consolidated Statements of Cash Flows
Years Ended 31 March 2007 and 2008

2007
Cash flows from operating activities:
Income before income taxes and minority interests･･･・･････････・･･･ \Adjustments to reconcile income before income taxes andminority interests to net cash provided by operating activities:
Depreciation and amortization･･･・･････････・･･･・･････････・･･
Amortization of goodwill･･････・･････････・･･･････････・･･････
Decrease in allowance for doubtful receivables･･･・･････････・･･
Decrease in employees’ retirement benefits･･･・･････････・･･･・
Increase（decrease）in directors’ and corporate auditors’
retirement benefits･･･・･････････・･･･・･････････・･････････・･
Decrease in accrued employees’bonuses･･･・･････････・･･･・･･･
Interest and dividend income･･･・･････････・･･･・･････････・････
Interest expense･･･・･････････・･･･・･････････・･････････・･････
Equity in earnings of affiliates･･･・･････････・･･･・･････････・･･
Gain on sale of property and equipment･･･・･････････・････････
Loss on disposal of property and equipment･･･・･････････・･･･・
Gain on sale of investment securities･･･・･････････・･･･・･･･････
Loss on write-down of investment securities･･･・･････････・･･･・
Loss on business restructuring･･･・･････････・･･･・･････････・・・
Increase（decrease） in notes and accounts receivable･･･・･･･････
Decrease in notes and accounts payable･･･・･････････・･･･・････
Decrease in deposits on contracts･･･・･････････・･･･・･････････・
Fees for arrangement of syndicated loans・・・・・・・・・・・・・・・・・・・
Other, net･･･・･････････・･･･・･････････・･････････・･････････・･
Subtotal･･･・･････････・･･･・･････････・･････････・･････････・･･
Interest and dividends received･･･・･････････・･･･・･････････・･･
Interest paid･･･・･････････・･･･・･････････・･････････・････････
Income taxes paid･･･・･････････・･･･・･････････・･････････・･･･
Net cash provided by operating activities
Cash flows from investing activities:
Acquisition of time deposits maturing after three months ･･･・････････
Proceeds from time deposits maturing after three months･･･・････････
Acquisition of property and equipment･･･・･････････・･･･・･････････・
Proceeds from sale of property and equipment･･･・･････････・･･･・･･･
Acquisition of intangible fixed assets･・･････････・･･･・･････････・･･･
Acquisition of securities･･･・･････････・･･･・･････････・･････････・･･
Proceeds from sale and redemption of securities･･･・･････････・･･･・･
Payments for acquisition of subsidiaries’ stock resulting in change
in scope of consolidation･･･・･････････・･･･・･････････・･････････・･
Advances on loans receivable･･･・･････････・･･･・･････････・････････
Collection of loans receivable･･･・･････････・･･･・･････････・････････
Other, net･･･・･････････・･･･・･････････・･････････・･････････・･････
Net cash used in investing activities･･･・･････････・･･･・･････････・････
Cash flows from financing activities:
Proceeds from short-term debt･･･・･････････・･･･・･････････・･･･････
Repayments of short-term debt･･･・･････････・･･･・･････････・･･･････
Proceeds from long-term debt･･･・･････････・･･･・･････････・････････
Repayments of long-term debt･･･・･････････・･･･・･････････・･･･････
Purchase of treasury stock･･･・･････････・･･･・･････････・･････････・･
Dividends paid･･･・･････････・･･･・･････････・･････････・･････････・･
Dividends paid to minority shareholders･･･・･････････・･･･・････････
Payment of fees for arrangement of syndicated loans・・・・・・・・・・・・・・
Other, net･･･・･････････・･･･・･････････・･････････・･････････・･････
Net cash provided by 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 period ･･･・･････････・･･･・･･
Cash and cash equivalents of a newly consolidated subsidiary・・・・・・・・
Cash and cash equivalents at end of period ･･･・･････････・･･･・････････ \See accompanying notes.

Thousands of
U.S.dollars(Note 1)
2008

Millions of yen
2008

9,354

\

9,169

$

91,516

5,165
150
(127)
(172)

5,709
324
(4)
(382)

56,982
3,234(40)(3,813)57－(1,093)
437
(168)
(20)
174
(1,615)
147
－
(16)
(852)
(969)
126
410
10,9881,131(329)(4,059)
7,731

(112)
(37)
(1,307)
753
(160)
(34)
127
(972)
69
237
271
(152)
(485)
40
(83)
12,971
1,309(678)(3,775)
9,827(1,118)(369)(13,045)
7,516(1,597)(339)
1,268(9,702)
689
2,366
2,705
(1,517)(4,841)399(830)
129,464
13,065(6,767)(37,678)
98,084(1,011)
1,086(12,215)326(1,401)(7,813)
2,985

(747)
398
(10,767)108(1,099)(1,255)
1,227(7,456)
3,972(107,466)
1,078(10,969)(12,526)
12,247(6,405)

−

−

(71)
154
(73)
(24,438)

(370)
140
(598)
(12,963)(3,693)
1,397(5,968)(129,384)

21,764(11,204)
17,161(2,696)(1,336)(1,921)
(43)
(126)
－
21,599
203
5,095
8,882
－
13,977

4,405(4,313)8,150(3,782)(1,831)(1,932)
(97)
(40)
5
565
146
(2,425)
13,977166
11,71843,966(43,048)
81,345(37,748)(18,275)(19,283)
(968)
(399)
49
5,639
1,457
(24,204)
139,505
1,657
116,958\$

The Sumitomo Warehouse Co., Ltd.
Notes to Consolidated Financial Statements
31 March 2007 and 2008
1. Basis of Presenting Consolidated Financial Statements(a)

The accompanying consolidated financial statements of the Sumitomo Warehouse Co., Ltd. (the “Company”) and its consolidated subsidiaries
have been prepared in accordance with the provisions set forth in the Japanese Financial Instruments and Exchange Law and its related
accounting regulations and in conformity with accounting principles generally accepted in Japan (“Japanese GAAP”), which are different incertain respects from the application and disclosure requirements of International Financial Reporting Standards.
The accounts of overseas subsidiaries are based on their accounting records maintained in conformity with generally accepted accounting
principles prevailing in the respective countries of domicile. The accompanying consolidated financial statements have been restructured andtranslated into English with some expanded descriptions and the inclusion of consolidated statements of changes in net assets from theconsolidated financial statements of the Company prepared in accordance with Japanese GAAP and filed with the appropriate Local Finance
Bureau of the Ministry of Finance as required by the Financial Instruments and Exchange Law. Some supplementary information included in
the statutory Japanese language consolidated financial statements, but not required for fair presentation, is not presented in the accompanying
consolidated financial statements.
In preparing the accompanying consolidated financial statements, certain reclassifications have been made in the previous consolidated financial
statements to conform to the presentation for the current year.

(b)

The translation of the Japanese yen amounts into U.S. dollar amounts is included solely for the convenience of readers outside Japan, using theprevailing exchange rate at 31 March 2008, which was ¥100.19 to U.S. $1.00. The translations should not be construed as representations that
the Japanese 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. Significant Accounting Policies(a)Consolidation
The consolidated financial statements include the accounts of the Company and 36 significant subsidiaries for the years ended 31
March 2007 and 2008. All significant intercompany transactions and accounts have been eliminated. The fiscal year-end of all the
consolidated foreign subsidiaries and one consolidated domestic subsidiary is 31 December and 29 February, respectively. Significant
transactions arising from the use of different fiscal year-end are reflected in the consolidated financial statements.
In the elimination of investments in subsidiaries, the assets and liabilities of each subsidiary, including the portion attributable tominority shareholders, are evaluated using the fair value at the time the Company acquired control of the respective subsidiary.
Goodwill and negative goodwill are amortized using the straight-line method over periods between 5 and 10 years. If the amountis small, it is fully recognized as incurred.
The equity method is applied to 3 affiliates for the yearended 31 March 2007 and 5 affiliates for the yearended 31 March 2008,
respectively. Other unconsolidated subsidiaries and affiliates are not accounted for by the equity method because they are immaterial.

(b)

Foreign currency translation
Monetary assets and liabilities denominated in foreign currencies are translated into Japanese yen at the year-end rates and theresulting gains and losses are recognized in the statements of income.
The financial statements of consolidated foreign subsidiaries and affiliates are translated into Japanese yen at the year-end rates,
except for shareholders’ equity accounts, which are translated at historical rates.

(c) Allowance for doubtful receivables
The Company and its consolidated subsidiaries (the “Companies”) provide for doubtful accounts principally at an amountcomputed based on the actual ratio of bad debts in the past plus the estimated uncollectible amounts of certain individual receivables.

−1−

(d)

Securities
The Companies classify securities as 1) securities held for trading purposes (hereafter, “trading securities”), 2) debt securities
intended to be held to maturity (hereafter, “held-to-maturity debt securities”), 3) equity securities issued by subsidiaries and affiliatesor 4) all other securities that are not classified in any of the above categories (hereafter, “available-for-sale securities”). The
Companies have no trading securities. Held-to-maturity debt securities are stated at amortized cost. Equity securities issued bysubsidiaries and affiliates which are not consolidated or accounted for using the equity method are stated at moving average cost.
Available-for-sale securities with available fair market values are stated at fair market value. Unrealized gains and losses on thesesecurities are reported, net of applicable income taxes, as a separate component of net assets. Realized gain or loss on the sale of suchsecurities is computed using moving average cost. Other securities with no available fair market value are stated at moving average
cost.
If the market value of held-to-maturity debt securities and available-for-sale securities declines significantly, the securities are stated at fairmarket value and the difference between fair market value and the carrying amount is recognized as loss in the period of the decline. If the fairmarket value of equity securities issued by unconsolidated subsidiaries and affiliated companies not on the equity method is not readily
available, the securities should be written down to net asset value with a corresponding charge in the income statement in the event net asset
value declines significantly. In these cases, fair market value or the net asset value will be the carrying amount of the securities at the beginningof the next year.

(e)

Derivative financial instruments and hedging
1)

Derivatives
Derivatives are revaluated by the market value method.

2)

Hedge accounting
The Companies use the deferred hedge accounting method. However, when foreign exchange forward contracts meet certain
conditions, accounts receivable and accounts payable covered by these contracts are translated by using the contract rates. In addition,
when an interest rate swap contract meets certain conditions, the net amount to be paid or received under the contract is added to or
deducted from the interest on the hedged items.

3)

4)

Hedging instruments and hedged items
Hedging instruments

Hedged items

Foreign exchange forward contracts

Accounts receivable and accounts payable in foreign
currencies

Interest rate swap contracts

Bank loans

Crude oil average swap
Hedging policy

Fuel prices

The Companies utilize financial instruments to hedge risk of fluctuations in currency exchange rates, interest rates and fuel prices inaccordance with internal policies and procedures.
5)

Method for assessing hedge effectiveness
The Companies evaluate the effectiveness of their hedging activities by comparing the cumulative changes in fair value or the
cumulative changes in cash flows on hedging instruments and the related hedged items. However, when a foreign exchange forward
contract and an interest rate swap contract meet certain criteria for applying exceptional methods, an assessment of hedge effectivenessis not performed.

(f)Inventories
Real estate for sale and real estate for sale in progress are stated at specific cost. Supplies are stated at moving average cost.

−2−

(g)

Property and equipment
Property and equipment are carried at cost. The Company and its consolidated domestic subsidiaries provide for depreciation ofproperty and equipment mainly by the declining balance method over the estimated useful life of the asset. However, depreciation forbuildings, except building fixtures, acquired after 31 March 1998 is computed by the straight-line method.
Consolidated foreign subsidiaries compute depreciation on the straight-line method over the estimated useful life of the asset.
Starting from this period, pursuant to an amendment to the Japanese Corporate Tax Law, the Company and its consolidated
domestic subsidiaries have depreciated tangible fixed assets acquired on or after 1 April 2007 in accordance with the method
stipulated in the amended Japanese Corporation Tax Law. As a result, for the year ended 31 March 2008, operating income andincome before income taxes and minority interests were each ¥70 million (US$ 699 thousand) less than they would have been using theprevious method. For the impact on segment information, please refer to “Segment Information.”
Pursuant to an amendment to the Japanese Corporate Tax Law, after having fully depreciated tangible fixed assets acquired on or
before 31 March 2007 up to 5% of the acquisition cost based on the prior Japanese Corporate Tax Law, the Company and its
consolidated domestic subsidiaries depreciate the difference between 5% of the acquisition cost and the memorandum price using astraight-line method over 5 years and expense the amounts as “Depreciation and amortization.” The straight-line depreciation starts
from the year following the year, when the book value of the tangible asset acquired on or before 31 March 2007 reaches 5% of theacquisition cost. As a result, for the year ended 31 March 2008, operating income and income before income taxes and minority
interests were each ¥181 million (US$ 1,807 thousand) less than they would have been using the previous method. For the impact on
segment information, please refer to “15. Segment Information.”(h)Finance leases
Finance leases of the Company and certain consolidated subsidiaries that do not transfer ownership are accounted for in the samemanner as operating leases in accordance with Japanese GAAP. Under Japanese accounting policies for leases, finance leases thatdeem to transfer ownership of the leased property to the lessee are to be capitalized, while other finance leases are permitted to beaccounted for as operating lease transactions if certain information is disclosed in the notes to the lessee’s financial statements.

(i)

Software costs
The Companies depreciate software using the straight-line method over the estimated useful life of 5 years.

(j)

Income taxes
The Companies recognize tax effects of temporary differences between the carrying amounts of assets and liabilities for tax and financial
reporting. The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of
temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income
tax purposes.

(k)Bonuses
The Company and its consolidated domestic subsidiaries follow the general Japanese practice of paying bonuses to employees
mainly in June and December. Accrued bonus liabilities at the balance sheet date are calculated based upon managements’ estimatesof annual amounts thereof.
At 31 March 2007, certain subsidiaries provided for bonuses to directors based upon estimates of amounts incurred for the current
year.

−3−

(l)

Retirement benefits
1)

Employees
The Company and certain consolidated subsidiaries provide two types of defined benefit plans, unfunded lump-sum payment plans
and funded non-contributory pension plans, under which all eligible employees are entitled to benefits based on the level of wages andsalaries at the time of retirement or termination, length of service and certain other factors. Certain consolidated subsidiaries provide
defined contribution plans.
The liabilities and expenses for retirement benefits are determined based on the amounts actuarially calculated using certain
assumptions. The Company and its consolidated domestic subsidiaries provide for the liability for employees’ retirement benefits at thebalance sheet date based on the estimated amount of projected benefit obligation and fair value of the plan assets at that date. Actuarial
gains and losses are recognized in expenses using the straight-line method within the average of the estimated remaining service years
commencing with the following period.

2)

Directors and corporate auditors
Certain subsidiaries accrue the liability for directors’ and corporate auditors’ retirement benefits equal to the amount thatwould be required if they retired from their positions at the balance sheet date.

(m)

Net income per share
The computation of basic net income per share of common stock shown in the consolidated statements of income is based on theweighted average number of shares outstanding during the period and net income available to common shareholders. The
computation of dilutive net income per share of common stock is based on the weighted average number of shares of common stock
outstanding increased by the number of shares which would have been outstanding assuming the conversion of all outstanding
dilutive bonds at the beginning of the period. The related interest expense, net of income taxes, has been eliminated for the purposesof this calculation.

(n)Cash and cash equivalents
Cash and cash equivalents include cash on hand, readily available deposits and short-term investments which have original
maturities of three months or less, are easily convertible into cash and present insignificant risk of change in value.

3. Real Estate Inventories
Real estate inventories at 31 March 2007 and 2008 consisted of the following:

2007

2008

Thousands of
U. S. dollars
2008

¥ 379
−
¥ 379

¥ 284
3
¥ 287

$ 2,83530$ 2,865

Millions of yen

Real estate for sale･･････････････････････････････････････････････････････
Real estate for sale in progress････････････････････････････････････････････
Total･････････････････････････････････････････････････････････････

4. Securities
The following tables summarize the acquisition costs, book values and fair value of securities with available fair values as of 31 March 2007:
Held-to-maturity debt securities:
Securities with available fair values not exceeding book values
Millions of yen

Book value･････････････････････････････････････････････････････
Fair value･･････････････････････････････････････････････････････
Difference･･･････････････････････････････････････････････････
These debt securities are pledged as deposits on contracts for the lease of land.

−4−

¥
¥

791
778
( 13)

Available-for-sale securities:
Securities with book values exceeding acquisition cost:
Millions of yen

Equity securities･･･････････････････････････････････････
Other ･･･････････････････････････････････････････････
Total･････････････････････････････････････････････

Acquisition cost

Book value

¥

¥

¥

28,597
1
28,598¥Difference

108,2971
108,298¥

79,700−79,700¥

Securities with book values not exceeding acquisition cost:
Millions of yen

Equity securities･･･････････････････････････････････････
Other････････････････････････････････････････････････
Total･････････････････････････････････････････････

Acquisition cost

Book value

Difference

¥

¥

¥

¥

801
2
803

¥

725
2
727

¥

( 76)
−
( 76)

The following table summarizes the book values of securities with no available fair values as of 31 March 2007:
Millions of yen

Available-for-sale securities
Non-listed equity securities･･････････････････････････････････････････
Other･･･････････････････････････････････････････････････････････
Equity securities issued by subsidiaries and affiliates･････････････････････････
Total･･･････････････････････････････････････････････････････････

¥

¥

1,026
60
963
2,049

Held-to-maturity debt securities at 31 March 2007 mature as follows:
Millions of yen
Within one year

Government bonds･･････････････････････････････････････¥−

Over one year but

Over five years but

within five years¥
22

within ten years¥ 767

Total sales of available-for-sale securities in the year ended 31 March 2007 amounted to ¥2,987 million and the related gains amounted to¥1,615 million.

The following tables summarize the acquisition costs, book values and fair value of securities with available fair values as of 31 March 2008:
Held-to-maturity debt securities:
Securities with available fair values exceeding book values
Millions of yen

Book value･････････････････････････････････････････････････････
Fair value･･････････････････････････････････････････････････････
Difference･･･････････････････････････････････････････････････

¥
¥

775
783
8

Thousands of U.S. dollars

$
$

7,735
7,815
80

Securities with available fair values not exceeding book values
Millions of yen

Book value･････････････････････････････････････････････････････
Fair value･･････････････････････････････････････････････････････
Difference･･･････････････････････････････････････････････････
These debt securities are pledged as deposits on contracts for the lease of land.

−5−

¥
¥

15
15
−

Thousands of U.S. dollars

$
$

150
150
−

Available-for-sale securities:
Securities with book values exceeding acquisition cost:
Millions of yen

Equity securities･･･････････････････････････････････････
Other ･･･････････････････････････････････････････････
・
・
・
・
・
・
・
・
・
・
・
・
Total････････････････････････････････・

Acquisition cost

Book value

¥

¥

¥

20,2281
20,229Difference

58,034
1
58,035¥¥37,806−37,806¥

Thousands of U. S. dollars

Equity securities· ･･････････････････････････････････････
Other･･･････････････････････････････････････････････
Total･････････････････････････････････････････････

Acquisition cost

Book value

$

$

$

201,89610
201,906$

Difference579,23910
579,249$

377,343−
377,343$

Securities with book values not exceeding acquisition cost:
Millions of yen

Equity securities･･･････････････････････････････････････
Other････････････････････････････････････････････････
Total･････････････････････････････････････････････

Acquisition cost

Book value

Difference

¥

¥

¥

10,0472
10,049

¥

6,172
1
6,173

¥

¥

( 3,875)( 1)( 3,876)

Thousands of U. S. dollars

Equity securities･･･････････････････････････････････････
Other･･･････････････････････････････････････････････
Total･････････････････････････････････････････････

Acquisition cost

Book value

Difference

$

$

$

$

100,27920
100,299$

61,602
10
61,612$( 38,677)( 10)( 38,687)

The following table summarizes the book values of securities with no available fair values as of 31 March 2008:
Millions of yen

Available-for-sale securities
Non-listed equity securities･･････････････････････････････････････････
Other･･･････････････････････････････････････････････････････････
Equity securities issued by subsidiaries and affiliates･････････････････････････
Total･･･････････････････････････････････････････････････････････¥¥

Thousands of U.S. dollars

992
60
1,235
2,287

$

$

9,901
599
12,327
22,827

Held-to-maturity debt securities at 31 March 2008 mature as follows:
Millions of yen
Within one year

Government bonds･･････････････････････････････････････¥

15

Over one year but

Over five years but

within five years¥
774

within ten years¥−

Thousands of U. S. dollars
Within one year

Government bonds･･････････････････････････････････････$

150

Over one year but

Over five years but

within five years$
7,725

within ten years$−

Total sales of available-for-sale securities in the year ended 31 March 2008 amounted to ¥1,227 million (US$12,247 thousand) and the related
gains amounted to ¥972 million (US$9,702 thousand).

−6−

5. Investments in Related Companies
Investments in non-consolidated subsidiaries and affiliates included in the balance sheet at 31 March 2007 and 2008 were as follows:
Thousands of
U. S. dollars

Millions of yen

Investment securities and investment in capital････････････････

¥

2007
1,171

¥

2008
1,389

2008
$ 13,864

6. Bank Loans and Long-term Debt
Short-term bank loans at 31 March 2007 and 2008 bore interest ranging from 0.64% to 4.00% and from 0.83% to 2.98%, respectively.

Long-term debt at 31 March 2007 and 2008 consisted of the following:Thousands of
U. S. dollars

Millions of yen

SecuredLoans principally from banks at 0.68% - 4.20%, maturing through 2019･･････
Unsecured
Zero coupon convertible bonds, due 2009, convertible into shares of theCompany’s common stock at a price of ¥466 (US$4.65) per share･･････････

2007¥ 5,8292008¥ 6,7372008$ 67,242

1,649

450

4,492

Loans principally from banks at 0.53% - 3.48% , maturing through 2017･･････

19,87543,335432,528

Less amounts due within one year･･････････････････････････････････････

27,353(3,693)
23,66050,522(2,776)47,746504,262(27,707)＄476,555

The aggregate annual maturities of long-term debt at 31March 2008 were as follows:Year ending 31 March
2009･･･････････････････････････････････････････････････････････････････
2010･･･････････････････････････････････････････････････････････････････
2011･･･････････････････････････････････････････････････････････････････
2012･･･････････････････････････････････････････････････････････････････
2013･･･････････････････････････････････････････････････････････････････
2014 and thereafter････････････････････････････････････････････････････････

Millions of yen¥ 2,776
2,186
1,416
755
20,53522,854¥50,522

Thousands of
U. S. dollars$27,70721,81814,133
7,536
204,961
228,107＄504,262

At 31 March 2008, assets pledged as collateral for short-term bank loans of ¥6,941 million (US$69,278 thousand) and secured
long-term debt of ¥6,737million (US$67,242 thousand) were as follows:
Millions of yen

¥225
2,406
10,954368¥13,953

Deposits placed with banks with maturities of over three months (short-term investments)･････
Investment securities･･･････････････････････････････････････････････････････････
Property and equipment, net of accumulated depreciation･･･････････････････････････････
Leasehold and other････････････････････････････････････････････････････････････

Thousands of
U. S. dollars$2,24624,014
109,332
3,673＄139,265

The Company has concluded commitment line agreements with seven financial institutions in order to ensure the availability of funds for
operations in a stable and efficient manner. The commitment lines of credit at 31 March 2007 and 2008 were as follows:
Thousands of
U. S. dollars

Millions of yen
2007

Total commitment lines of credit････････････････････････････････････････ ¥ 20,000
Outstanding borrowings･･･････････････････････････････････････････････
20,000Net outstanding credit････････････････････････････････････････････････ ¥
−

−7−

2008

¥
¥

5,000
5,000
−

2008

$ 49,905
49,905$ −7. Leases(a)Finance leases as lessee
Non-capitalized finance leases for machinery and equipment at 31 March 2007 and 2008 were as follows:
Thousands of
U. S. dollars

Millions of yen

Original lease obligations･･･････････････････････････････････････････
Lease payments･･････････････････････････････････････････････････
Remaining lease obligations･････････････････････････････････････････

2007

2008

¥ 2,616( 1,269)¥1,347¥3,190( 1,294)¥1,8962008＄ 31,840( 12,916)＄ 18,924

Total lease payments under non-capitalized finance leases arrangements were ¥502 million and ¥576 million (US$5,749 thousand) for theyears ended 31 March 2007 and 2008, respectively.

Lease obligations under non-capitalized finance leases, including finance charges, at 31 March 2007 and 2008 were as follows:
Thousands of
U. S. dollars

Millions of yen

Due within one year･･･････････････････････････････････････････････
Due after one year･････････････････････････････････････････････････
Total･･･････････････････････････････････････････････････････････

(b)

2007

2008

2008

¥ 482
865
¥ 1,347

¥ 588
1,308
¥ 1,896$ 5,869
13,055$ 18,924

Operating leases as lessee
Lease obligations under operating leases at 31 March 2007 and 2008 were as follows:

2008

Thousands of
U. S. dollars
2008

80
398
¥ 478

$ 798
3,973
$4,771Millions of yen
2007

Due within one year･･･････････････････････････････････････････････
Due after one year･････････････････････････････････････････････････
Total･･･････････････････････････････････････････････････････････
(c)

¥

56
120
¥ 176

¥

Operating leases as lessor
Lease receipts under operating leases at 31 March 2007 and 2008 were as follows:
Thousands of
U. S. dollars

Millions of yen

Due within one year･･･････････････････････････････････････････････
Due after one year･････････････････････････････････････････････････
Total･･･････････････････････････････････････････････････････････

2007

2008

2008

¥ 1,042
3,816¥ 4,858¥ 1,043
3,417¥ 4,460$ 10,410
34,105$ 44,515

8. Employees’ Retirement Benefits
The liabilities for employees’ retirement benefits included in the liability section of the consolidated balance sheets as of 31 March 2007 and2008 consisted of the following:Thousands of
U. S. dollars

Millions of yen
2007

Projected retirement benefit obligation････････････････････････････････････ ¥ (11,910)
Plan assets･････････････････････････････････････････････････････････
8,637( 3,273)
Unfunded retirement benefit obligation･･･････････････････････････････････
Less unrecognized actuarial differences･･･････････････････････････････････( 415)¥ ( 3,688)
Liability for retirement benefits･････････････････････････････････････････

−8−

2008

2008

¥ (11,638)
6,823( 4,815)
1,.509¥ ( 3,306)$ (116,159)
68,100( 48,059)
15,062$ ( 32,997)

Included in the consolidated statements of income for the years ended 31 March 2007 and 2008 were retirement benefit expenses comprising
the following:Thousands of
U. S. dollars

Millions of yen

Service costs – benefits earned during the year･････････････････････････････
Interest cost on projected benefit obligation････････････････････････････････
Expected return on plan assets･･････････････････････････････････････････
Amortization of actuarial differences･････････････････････････････････････
Subtotal ･･･････････････････････････････････････････････････････
Contributions for defined contribution pension plan･････････････････････････
Contributions for welfare pension funds･･････････････････････････････････
Additional contributions for the dissolution of the welfare pension fund･･････････
Total･･･････････････････････････････････････････････････････････

2007

2008

2008

¥ 621
253
( 90)
81
865
−
−
−
¥ 865

¥ 706
254
( 93)
35
902
40
114
190
¥ 1,246$ 7,047
2,535( 928)
349
9,003
399
1,138
1,896
$ 12,436

The assumptions and bases used for the calculation of retirement benefit obligations for the years ended 31 March 2007 and 2008 were as
follows:
2007

Discount rate････････････････････････････････････････････････････････････････
2.0%−2.5%
Expected return rate for plan assets･･･････････････････････････････････････････････
2.0%
Amortization period for actuarial differences･･･････････････････････････････････････ 3 years−10 years

2008

2.0%−2.5%
2.0%
3 years−10 years

The estimated amount of all retirement benefits to be paid at future retirement dates is allocated equally to each service year using the estimatednumber of total service years.

9. Stock Option Plans(a)Expenses for stock option plans for the year ended 31 March 2007 and 2008 were recorded in selling general and administrative expenses in
the amount of ¥32 million and ¥19 million (US$190 thousand), respectively.

(b) The details, scale and movement of stock options
Year ended 31 March 2007
1) The following table summarizes the details of stock options as of 31 March 2007:
Company name

The Sumitomo Warehouse Co., Ltd.

Date of the annual shareholders’ meeting

13 February 2007

Position and number of grantees

Directors: 7

Number of shares and class of stock

125,000 shares of common stock

Date of issue

1 March 2007−

Conditions on settlement of rights
Period grantees provide service in return for stock options
Period in which subscription rights are to be exercised−9−−
From 14 February 2009 to 13 February 2017

2) The following tables summarize the scale and movement of stock options as of 31 March 2007:
Non-exercisable stock options−

Stock options outstanding at 1April 2006
Stock options granted

125,000−

Forfeitures
Conversion to exercisable stock options

125,000−

Stock options outstanding at 31 march 2007
Exercisable stock options−

Stock options outstanding at 1April 2006
Already exercisable

125,000

Stock options exercised−

Forfeitures−

Stock options outstanding at 31 march 2007

125,000

The following tables summarize price information on stock options as of 31 March 2007:
Paid-in value¥986

Average market price of stock at time of exercise−

Fair market value on grant date¥262

Year ended 31 March 2008
1) The following table summarizes the details of stock options as of 31 March 2008:
Company name

Position and number of grantees

The Sumitomo Warehouse Co., Ltd.
Stock options (stock acquisition Stock options (stock acquisitionrights) for the fiscal year ending rights) for the fiscal year ending
31 March 2007
31 March 2008
Directors: 7
Directors: 7

Number of shares and class of stock

125,000 shares of common stock

125,000 shares of common stock

Date of issue

1 March 200717 December 2007

Name

Conditions on settlement of rights
Period grantees provide service in returnfor stock options
Period in which subscription rights are to be
exercised

−

−

−

−

From 14 February 2009
to 13 February 2017−10−

From 30 November 2009
to 29 November 2017

2) The following tables summarize the scale and movement of stock options as of 31 March 2008:
Non-exercisable stock options
Company name

The Sumitomo Warehouse Co., Ltd.
Stock options (stock acquisition Stock options (stock acquisitionrights) for the fiscal year ending rights) for the fiscal year ending
31 March 2007
31 March 2008
−
−

Name
Stock options outstanding at 1April 2007
Stock options granted−

125,000

Forfeitures−−

Conversion to exercisable stock options−

125,000

Stock options outstanding at 31 march 2008−−

Exercisable stock options
Company name

The Sumitomo Warehouse Co., Ltd.
Stock options (stock acquisition Stock options (stock acquisitionrights) for the fiscal year ending rights) for the fiscal year ending
31 March 2007
31 March 2008
125,000−

Name
Stock options outstanding at 1April 2007
Already exercisable−

125,000

Stock options exercised

−

−

−

−

125,000

125,000

Forfeitures
Stock options outstanding at 31 march 2008

The following tables summarize price information of stock options as of 31 March 2008:
Company name

The Sumitomo Warehouse Co., Ltd.
Stock options (stock acquisition Stock options (stock acquisitionrights) for the fiscal year ending rights) for the fiscal year ending
31 March 2007
31 March 2008
¥986 (US$9.84)¥618 (US$6.17)

Name
Paid-in value(c)

Average market price of stock at time of exercise−−

Fair market value on grant date¥262 (US$2.62)¥153 (US$1.53)

Estimation of fair value of stock options
Stock options (stock acquisition rights) for the fiscal year ending 31 March 2007
The method: Black-Scholes formula
Volatility of stock price (*1)

30.688%

Expected life of the stock option (*2)

6 years

Forecasted dividends per share (*3)

¥10.00Risk-free interested rate (*4)

1.326%(*1) Calculated on the price of stock from 1 March 2001 to 1 March 2007.
(*2) Assumed that the stock options are exercised at the halfway point of the exercise period because there is insufficient data toestimate otherwise.
(*3) Based on the dividends for the year ended 31 March 2007.
(*4) The interest on government bonds corresponding to the expected life of the stock option.

Stock options (stock acquisition rights) for the fiscal year ending 31 March 2008
The method: Black-Scholes formula
Volatility of stock price (*1)

29.939%

Expected life of the stock option (*2)

6 years

Forecasted dividends per share (*3)

¥10.00Risk-free interested rate (*4)

1.123%−11−

(*1) Calculated on the price of stock from 17 December 2001 to 17 December 2007.
(*2) Assumed that the stock options are exercised at the halfway point of the exercise period because there is insufficient data toestimate otherwise.
(*3) Based on the dividends for the year ended 31 March 2007.
(*4) The interest on government bonds corresponding to the expected life of the stock option.

10. Deferred Income Taxes
Significant components of the Companies’ deferred tax assets and liabilities at 31 March 2007 and 2008 were as follows:
Thousands of
U. S. dollars

Millions of yen

Deferred tax assets:
Employees’ retirement benefits･････････････････････････････････････････
Accrued employees’ bonuses ･････････････････････････････････････････
Directors’ and corporate auditors’ retirement benefits････････････････････････
Impairment loss on fixed assets･････････････････････････････････････････
Enterprise taxes･････････････････････････････････････････････････････
Allowance for doubtful receivables･･････････････････････････････････････
Accrued real estate acquisition tax･･･････････････････････････････････････
Other･･････････････････････････････････････････････････････・・・････
Total deferred tax assets････････････････････････････････････････････
Less valuation allowance･･････････････････････････････････････････････
Net deferred tax assets･････････････････････････････････････････････
Deferred tax liabilities:
Unrealized gains on investment securities･････････････････････････････････
Deferred gains on properties for tax purposes･･････････････････････････････
Reserve for special depreciation･････････････････････････････････････････
Other･････････････････････････････････････････････････････････････
Total deferred tax liabilities･･････････････････････････････････････････
Net deferred tax liabilities･･････････････････････････････････････････････

2007

2008

2008

¥ 2,500
620
394
364
199
111
81
551
4,820
( 1,027)
3,793¥ 2,385
613
363
355
197
163
68
768
4,912
( 1,188)
3,724$ 23,805
6,118
3,623
3,543
1,966
1,627
679
7,666
49,027( 11,858)
37,169(32,378)( 6,720)( 106)( 299)(39,503)¥ (35,710)(13,799)( 6,597)(69)( 265)(20,730)¥ (17,006)(137,728)( 65,845)( 689)( 2,645)(206,907)$( 169,738)

Classifications of “Deferred tax liabilities, net” on the consolidated balance sheet as of 31 March 2007 and 2008 were as follows:
Thousands of
U. S. dollars

Millions of yen

Balance sheet item
Deferred tax assets･･････････････････････････････
Deferred tax assets･･････････････････････････････
Deferred tax liabilities････････････････････････････

Current assets
Noncurrent assets
Noncurrent liabilities

2007

¥

2008

1,012

226
(36,948)¥ (35,710)

¥

996

205
(18,207)¥ (17,006)

2008

$

9,941

2,046
(181,725)＄(169,738)

The differences between the aggregate statutory income tax rates and the effective income tax rates for the year ended 31 March 2007 wereimmaterial.

The significant differences between the aggregate statutory income tax rates and the effective income tax rates for the year ended 31 March
2008 were as follows:
2008

Statutory income tax rate･･････････････････････････････････････････････････････････
Non-deductible expenses･･･････････････････････････････････････････････････････
Increase in valuation allowance･････････････････････････････････････････････････
Nontaxable dividend income････････････････････････････････････････････････････
Difference in tax rate applied to foreign subsidiaries･･････････････････････････････････
Equity in earnings of affiliates･･･････････････････････････････････････････････････
Other･･････････････････････････････････････････････････････････････････････
Effective income tax rate･･･････････････････････････････････････････････････････

−12−

40.7%
1.3%
1.0%
( 3.2%)( 2.4%)( 0.7%)
1.5%
38.2%

11. Net Assets
Under the Company Law of Japan, the entire amount of the issue price of shares is required to be accounted for as capital, although a company
may, by resolution of its Board of Directors, account for an amount not exceeding one-half of the issue price of the new shares as additional paid-in
capital, which is included in capital surplus.
The Company Law of Japan provides that an amount equal to 10% of cash dividends and other cash appropriations shall be appropriated andset aside as a legal reserve until the total amount of legal reserve and additional paid-in capital equals 25% of common stock. The legal reserve andadditional paid-in capital may be used to eliminate or reduce a deficit by resolution of the shareholders’ meeting or may be capitalized by resolutionof the Board of Directors. On the condition that the total amount of legal reserve and additional paid-in capital remains equal to or exceeding 25%
of common stock, they are available for distribution by the resolution of the shareholders’ meeting. Legal reserve is included in retained earnings in
the accompanying financial statements.
The maximum amount that the Company can distribute as dividends is calculated based on the non-consolidated financial statements of theCompany in accordance with the Company Law of Japan.

12. Contingent Liabilities
At 31 March 2007 and 2008, the Companies were contingently liable for the following:Thousands of
U. S. dollars

Millions of yen

Guarantees of indebtedness････････････････････････････････････････････
Trade notes receivable discounted･･･････････････････････････････････････
Trade notes receivable endorsed･････････････････････････････････････････

2007

2008

2008

¥ 3,51054665¥ 3,10759
370$ 31,011
589
3,693

13. Loss on business restructuring
Loss from the transfer of business from the affiliated companies in Indonesia.

14. Supplemental Cash Flow Information
Supplemental cash flow information for the year ended 31 March 2007 and 2008 was as follows:
Noncash financing activities:
Conversion of convertible bonds:

Thousands of
U.S. dollars

Millions of yen
2007

Increase in common stock by conversion of convertible bonds････････････¥

Increase in capital surplus by conversion of convertible bonds････････････
Treasury stock used for conversion of convertible bonds････････････････
Total････････････････････････････････････････････････････････

−13−

¥

2008

2008

485

¥ 553

$ 5,520

485

553

5,520

−

93

928

970

¥1,199$ 11,968

Assets and liabilities of the newly consolidated subsidiaries by acquisition of shares at the inception of their consolidation, relatedacquisition cost and net expenditure for the acquisition of shares:
Thousands of
U.S. dollars

Millions of yen
2007

2008

2008

Current assets･････････････････････････････････････････････････ ¥

5,889

−

$ −

Noncurrent assets･･････････････････････････････････････････････

14,323−−¥

Goodwill･････････････････････････････････････････････････････

3,215

−

−

Current liabilities･･･････････････････････････････････････････････( 8,007)−−

Noncurrent liabilities････････････････････････････････････････････( 5,121)−−

Minority interests in consolidated subsidiaries････････････････････････
Acquisition cost of shares or investments
accounted for by the equity method at beginning of year･････････････( 2,499)

−

−

(

96)

−

−

Acquisition cost of shares for the year･･･････････････････････････････

7,704

−

−

Cash and cash equivalents････････････････････････････････････････( 1,299)−−

Payment for acquisition of shares of newly consolidated subsidiaries･･････ ¥

6,405

−

$ −

Consolidated¥

15. Segment Information(a) Information by operational segment
Segment
Logistics

Main operations
Warehousing (stock operations, bonded cargo handling)
Harbor transportation, Customs clearance

Real Estate

International multimodal transportation, Air cargo agent
Land transportation
Office space and land leasing

Millions of yen

Year ended 31 March 2007

Logistics

Real Estate

Corporate& Elimination

Sales to outside customers･････････････････････････
Intersegment transfers･････････････････････････････
Total sales･･･････････････････････････････････
Operating cost･･･････････････････････････････････
Operating income････････････････････････････････¥ 112,249
2
112,251
106,655
¥
5,596

¥

¥

Assets･････････････････････････････････････････
Depreciation････････････････････････････････････
Capital expenditures･･････････････････････････････¥ 126,040¥
2,954¥ 10,638¥−( 381)( 381)
3,016(3,397)

¥

¥

9,339
379
9,718
4,550
5,168

¥

121,588−
121,588
114,221
7,367

¥
¥
¥

37,3232,062
1,693¥ 115,794
¥
149
¥
671

¥
¥
¥

279,157
5,165
13,002Millions of yen

Year ended 31 March 2008

Logistics

Real Estate

Corporate& Elimination

Sales to outside customers･････････････････････････
Intersegment transfers･････････････････････････････
Total sales･･･････････････････････････････････
Operating cost･･･････････････････････････････････
Operating income････････････････････････････････¥ 127,776
2
127,778
121,238
¥
6,540

¥

¥

Assets･････････････････････････････････････････
Depreciation････････････････････････････････････
Capital expenditures･･････････････････････････････¥ 135,037¥
3,441¥ 11,995
−14−

¥

9,956
386
10,342
4,633
5,709

¥
¥
¥

35,2192,103676

Consolidated¥¥−( 388)( 388)
3,404(3,792)¥

137,732−
137,732
129,275
8,457

¥
¥
¥

70,136
165
535

¥
¥
¥

240,392
5,709
13,206

Thousands of U. S. dollars
Year ended 31 March 2008
Real Estate

Logistics
Sales to outside customers･･････････････････････････
Intersegment transfers････････････････････････････
Total sales･･･････････････････････････････････
Operating cost･･･････････････････････････････････
Operating income････････････････････････････････$ 1,275,337
20
1,275,357
1,210,081$
65,276

Assets･････････････････････････････････････････
Depreciation････････････････････････････････････
Capital expenditures･･････････････････････････････$ 1,347,809$
34,345$ 119,723

Corporate& Elimination

Consolidated$ 1,374,708−
1,374,708
1,290,298$
84,410$ 2,399,361$
56,982$
131,810$$

99,371
3,853
103,224
46,242
56,982$−( 3,873)(3,873)33,975(37,848)$$$

351,522
20,990
6,747

$
$
$

700,030
1,647
5,340

$

Corporate costs and expenses of ¥3,397 million and ¥ 3,792 million (US$ 37,848 thousand) for years ended 31 March 2007 and 2008,
respectively, consisted mainly of expenses of administrative departments of the Company and some of its consolidated subsidiaries.
Corporate assets of ¥122,720 million and ¥77,005 million (US$ 768,590 thousand) at 31 March 2007 and 2008, respectively, consisted
mainly of cash and cash equivalents, investment securities and assets of the administrative departments of the Company and some of its
consolidated subsidiaries.
As noted in “Significant Accounting Policies”, “(g) Property and equipment,” starting from this period, tangible fixed assets acquired on orafter 1 April 2007 are depreciated in accordance with the method stipulated in the amended Japanese Corporation Tax Law. With this change,
for the year ended 31 March 2008, operating income for “Logistics,” “Real Estate” and “Corporate & Elimination” was ¥59 million (US$589
thousand), ¥11 million (US$110 thousand) and ¥1 million (US$10 thousand) less, respectively, than the amounts that would have beenrecorded without the amendment.
Pursuant to an amendment to the Japanese Corporate Tax Law, after having fully depreciated tangible fixed assets acquired on or before 31
March 2007 up to 5% of the acquisition cost, based on the prior Japanese Corporate Tax Law, the Company and its consolidated domestic
subsidiaries depreciate the difference between 5% of the acquisition cost and the memorandum price using the straight-line method over 5 years
and expense the amounts as “Depreciation and amortization.” The straight-line depreciation starts from the year following the year, when thebook value of tangible assets acquired on or before 31 March 2007 reaches 5% of the acquisition cost. With this change, for the year ended 31
March 2008, operating income of “Logistics,” “Real Estate” and “Corporate & Elimination” was ¥134 million (US$1,337 thousand), ¥42
million (US$419 thousand) and ¥5 million (US$50 thousand) less, respectively, than the amounts that would have been recorded without theamendment.

(b) Information by geographic segment
Millions of yen

Year ended 31 March 2007

Japan

OthersConsolidated¥−( 5,520)( 5,520)( 2,123)(3,397)¥¥

11,077
4,759
15,836
15,201
635¥

121,588−
121,588
114,221
7,367¥

14,265¥ 115,639¥

279,157

Sales to outside customers･････････････････････････
Intersegment transfers･････････････････････････････
Total sales･･･････････････････････････････････
Operating cost･･･････････････････････････････････
Operating income････････････････････････････････¥ 110,511
761
111,272
101,143¥ 10,129¥

Assets･････････････････････････････････････････¥ 149,253−15−

Corporate& Elimination¥

Millions of yen

Year ended 31 March 2008

Japan

Corporate& Elimination

OthersSales to outside customers･････････････････････････
Intersegment transfers･････････････････････････････
Total sales･･･････････････････････････････････
Operating cost･･･････････････････････････････････
Operating income････････････････････････････････¥ 124,496
780
125,276
113,854¥ 11,422¥¥

13,236
4,898
18,13417,307
827

Assets･････････････････････････････････････････¥ 155,418¥

14,935

Consolidated¥¥−( 5,678)( 5,678)( 1,886)( 3,792)¥

137,732−
137,732
129,275
8,457¥

70,039¥240,392¥

Thousands of U. S. dollars
Year ended 31 March 2008
Japan
Sales to outside customers･･････････････････････････ $Intersegment transfers･････････････････････････････
Total sales･･･････････････････････････････････
Operating cost･･･････････････････････････････････
Operating income････････････････････････････････ $1,242,599
7,785
1,250,384
1,136,381
114,003

Assets･･････････････････････････････････････････ $1,551,232

OthersCorporate& Elimination

Consolidated$ 1,374,708−
1,374,708
1,290,298$
84,410$ 2,399,361$$

132,10948,887
180,996
172,741
8,255$−( 56,672)( 56,672)( 18,824)( 37,848)$

149,067$

699,062$“Others” consists of Asia, Europe and North America.
Corporate costs and expenses of ¥3,397 million and ¥3,792 million (US$ 37,848 thousand) for year ended 31 March 2007 and 2008,
respectively, consisted mainly of expenses of administrative departments of the Company and some of its consolidated subsidiaries.
Corporate assets of ¥122,720 million and ¥77,005 million (US$ 768,590 thousand) at 31 March 2007 and 2008, respectively, consisted mainlyof cash and cash equivalents, investment securities and assets of the administrative departments of the Company and some of its consolidated
subsidiaries.
As noted in “Significant Accounting Policies”, “(g) Property and equipment,” starting from this period, tangible fixed assets acquired on or after
1 April 2007 are depreciated in accordance with the method stipulated in the amended Japanese Corporation Tax Law. With this change, for theyear ended 31 March 2008, operating income for “Japan” and “Corporate & Elimination” was ¥69 million (US$689 thousand) and ¥1 million(US$10 thousand) less, respectively, than the amounts that would have been recorded without the amendment.
Pursuant to an amendment to the Japanese Corporate Tax Law, after having fully depreciated tangible fixed assets acquired on or before 31
March 2007 up to 5% of the acquisition cost, based on the prior Japanese Corporate Tax Law, the Company and its consolidated domestic
subsidiaries depreciate the difference between 5% of the acquisition cost and the memorandum price using the straight-line method over 5 years
and expense the amounts as “Depreciation and amortization.” The straight-line depreciation starts from the year following the year, when the bookvalue of tangible assets acquired on or before 31 March 2007 reaches 5% of the acquisition cost. With this change, for the year ended 31 March
2008, operating income of “Japan” and “Corporate & Elimination” was ¥177 million (US$1,767 thousand) and ¥5 million (US$50 thousand) less,respectively, than the amounts that would have been recorded without the amendment.

(c) Overseas sales
The Companies’ overseas sales, which represent sales to customers outside Japan, were immaterial. Accordingly, overseas sales were notdisclosed.

−16−15. Subsequent Events(a) Appropriation
At the ordinary shareholders’ meeting of the Company held on 26 June 2008, the appropriation of retained earnings at 31 March 2008 was
duly approved as follows:

Cash dividends of ¥ 5.0 (U. S. $0.05) per share･･･････････････････････････････････････

Millions of yen

Thousands of
U. S. dollars¥ 956$ 9,542(b) Purchases of treasury stock
The Board of Directors of the Company, at its meeting held on 12 May 2008, resolved matters concerning purchases of its treasury stock inaccordance with Article 156 of the Company Law of Japan, as applied pursuant to Article 165, Paragraph 3 of the Law.

1)

Reason for the purchase of treasury stock
To facilitate the execution of flexible capital policies to cope with changes in the business environment.

2)

Details of the purchases
Type of shares to be acquired
Total number of shares to be acquired

Common stock of the Company
5,900,000 shares(Ratio to the total number of shares issued (treasury stock excluded): 3.08%)

Total value of shares to be acquired

3,000,000,000 yen (maximum)

Acquisition period

15 May 2008 to 22 September 2008−17−