The Sumitomo Warehouse Co., Ltd.
Consolidated Balance Sheets (Unaudited)
30 September 2005 and 2006

Millions of yen
ASSETS
Current assets:
Cash and cash equivalents･･･・･････････・･････････・･
Short-term investments (Note 5)･･･・･････････・･･････
Receivables
Trade notes and accounts･･･・･････････・･････････
Other･･･・･････････・･････････・･･･････････････・･
Allowance for doubtful receivables･･･・･････････・

2005
¥

(

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

Property and equipment (Note 5):
Land･･････・･････････・･････････・･････････・･･・････
Buildings and structures･･･・･････････・･････････・･･･
Machinery and equipment･･･・･････････・･････････・･
Construction in progress･･･・･････････・･････････・･･･
Less accumulated depreciation･･･・･････････・･･･････(

Intangibles:
Goodwill･･･・･････・･････････・･････････・･････････・
Leasehold (Note 5)･･･・･････････・･････････・････････
Software･･･・･･･････・･････････・･････････・･････････
Other･･･・･････････・･･･・･････････・･････････・･･････

Deferred tax assets･･･・･････････・･････････・･････････・¥

See accompanying notes.

12,221
598
13,917
1,721
184 )
15,454−559
1,616
30,44868,981
227
4,737
368 )
73,57728,136135,005
20,652
2,782
186,575
94,339 )92,236

2006
¥

(

(

(

10,383
1,337
17,9442,350
163 )
20,131
392
916
1,855
35,014

97,221
420
6,158
257 )
103,542
40,548
147,741
23,626
3,866
215,781
105,327 )110,454

Thousands of
U.S. dollars (Note 1)
2006$

88,066
11,340152,197
19,932
1,383 ）
170,746
3,325
7,769
15,734
296,980(((

824,606
3,562
52,231
2,180 ）
878,219
343,919
1,253,104
200,390
32,791
1,830,204
893,359 )
936,845

−
3,287
183
453
3,923

2,535
2,867
326
1,113
6,841

21,501
24,3172,765
9,441
58,024

5
200,189175
256,026

1,484
2,171,552¥$

The Sumitomo Warehouse Co., Ltd.
Consolidated Balance Sheets (Unaudited)
30 September 2005 and 2006

LIABILITIES AND NET ASSETS
Current liabilities:
Bank loans (Note 5)･･･・･････････・･････････・･･･････････ \Long-term debt due within one year (Note 5)･･･・･････････
Payables:Trade notes and accounts ･･･・･････････・･････････・･･･
Other･････・･････････・･････････・･････････・････････・･

Millions of yen
2005
2006
5,368
1,017

\

16,5093,140

Thousands of
U.S. dollars (Note 1)
2006$

140,025
26,633

7,802
2,976

10,066
4,853

85,377
41,162

10,77814,919126,539

Income taxes payable･･･・･････････・････････････・･･･････
Accrued employees' bonuses･･･・･････････・･････････・･･･
Reserve for bonuses to directors･･･････････････・・・・・・・・
Deferred tax liabilities･･･・･････････・･････････・･････････
Other･･･・･････････・･････････・･･･・･････････・･････････・
Total current liabilities･･･・･････････・･････････・･･････

2,669
1,415
−
3
1,270
22,520

1,838
1,594
5
−
1,783
39,78815,58913,52042−
15,124
337,472

Long-term debt due after one year (Note 5)･･･・･････････・

10,802

21,173

179,584

Deferred tax liabilities･･･・･････････・･････････・･････････・

24,89833,402

283,308

Employees' retirement benefits･･･・･････････・･････････・･･

6,423

3,795

32,188

Directors' and corporate auditors' retirement benefits･･･・

27

131

1,111

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

15,213

14,762

125,208

Other non-current liabilities･･･・･････････・･････････・･････

941

882

7,482

18,604
16,04354,652

21,21018,65056,867

179,898
158,185
482,332

Contingent liabilities (Note 8)
Net assets:
Shareholders' equity:
Common stock
Authorized － 395,872,000 shares
Issued－ 182,119,078 shares at 30 September 2005
－ 193,305,760 shares at 30 September 2006 ･Capital surplus･･･・････････････・･････････・･････････・･･･
Retained earnings･･･・････････････・･････････・･････････・
Treasury stock, at cost
－ 283,393 shares at 30 September 2005
－ 339,670 shares at 30 September 2006･･･・ (Total shareholders' equity･･･・･････････・･････････・････
Valuation and translation adjustments:
Unrealized gains on investment securities･･･・･････････・･･
Foreign currency translation adjustments ･･･・･････････・･･ (Total valuation and translation adjustments･･･・････････
Minority interest in consolidated subsidiaries･･･・････････
Total net assets･･･・･････････・･････････・･････････・･･･\

See accompanying notes.

95 )89,20429,703537 )
29,166995
119,365
200,189

(

(

\

145 )
96,582
42,137
193 )
41,944
3,567
142,093
256,026(($

1,229 )
819,186
357,396
1,637 )
355,759
30,254
1,205,199
2,171,552

The Sumitomo Warehouse Co., Ltd.
Consolidated Statements of Income (Unaudited)
Six Months Ended 30 September 2005 and 2006

Thousands ofMillions of yen
2005
2006

2006

$

Net sales･････・･････････・･････････・･････････・････････・････････ \Cost of sales･････・･････････・･････････・･････････・････････・･････
Selling, general and administrative expenses･････・･････････・･･･

51,03545,186
3,106

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

2,743

Other income (expenses):
Interest and dividend income･････・･････････・･････････・･･･････
Interest expense･････・･････････・･････････・･････････・････････・ (Equity in earnings of affiliates･････・･････････・･････････・･･････
Net gain on sale of investment securities･･・･････････・･････････・
Reversal of allowance for doubtful receivables･････・･････････・･
Loss on liquidation of a subsidiary･････････・･････････・････････ (Loss on disposal of property and equipment･････・･････････・････ (Impairment losses on fixed assets (Note 11)･･・･････････・･･･････ (Fee for arrangement of syndicated loans･･・･････････・･････････・ (Other, net･････・･････････・･････････・･････････・････････・･････

566
73 )
61
3,395
58
141 )
97 )
804 )
400 )
89

Income before income taxes and minority interests･････・･･･････

5,397

3,759

31,883

Minority interests･････・･････････・･････････・･････････・････････
Net income･････・･････････・･････････・･････････・････････・･･････ \

2,483
38 )
2,445
41
2,911

\

1,599
151 )
1,448
62
2,249

13,563
1,281 )
12,282526
19,075

Basic net income per share･････・･････････・･････････・･････････・ \Dilutive net income per share･････・･････････・･････････・･･･････ \

16.45
14.79

Yen
\
\

11.75
11.43

Income taxes
Current･････・･････････・･････････・･････････・････････・･･･････
Deferred･････・･････････・･････････・･････････・････････・･･････ (See accompanying notes.

\

U.S. dollars (Note 1)

55,23848,612
3,330
3,296

(

(
(
(
(

(

597
152 )
79
−
32
−)
11 )
−)
106 )
24

468,516
412,316
28,24427,956

(

(
(
(
(

(

$

5,064
1,289 )
670
−
271
−)
93 )
−)
899 )
203

U.S. dollars (Note 1)

$
$

0.10
0.10

The Sumitomo Warehouse Co., Ltd.
Consolidated Statements of Changes in Net Assets (Unaudited)
Six Months Ended 30 September 2005 and 2006
Millions of yen
Shareholders' equity

Commonstock
Balance at 31 March 2005\

Conversion of convertiblebonds
Net income
Increase resulting fromnewly consolidated
subsidiaries

17,177Retainedearnings

Treasury
stock

Total
shareholders'equity\\(\Capitalsurplus\

1,427

14,617

102 )

1,426

Increase due to changes inaffiliates accounted for by
the equity method
Cash dividends at \5.0 per
share
Bonuses to directors andcorporate auditors
Net decrease in treasurystock
Net changes of items otherthan shareholders' equity
Total changes of items
during the period
Balance at 30 September
2005

52,413\18,604

16,043

Balance at 31 March 2006\

Conversion of convertiblebonds
Net income
Cash dividends at \5.0 per
share
Bonuses to directors andcorporate auditors

20,785425

18,224

Net changes of items otherthan shareholders' equity
Total changes of items
during the period
Balance at 30 September
2006

21,21018,650587\

106,852

532

532

532

66

66

66

(

1,230 )(

1,230 )

(

40 )

(

40 )

(

40 )

2,239
\

7

7
\(

54,65295 )\

89,204Retainedearnings

Treasury
stock

\

\(

\

55,614

129 )

7

5,099

Total
shareholders'equity94,494

\

6,887

119

7,006

408

7,414

6,887

119

7,006

408

12,51329,703

\(

537 )

\

29,166\995

Valuation and translation adjustments
Total
Foreign
Unrealized
valuation andcurrency
gains ontranslationtranslation
investment
adjustments
securities
adjustments

Minority
interest inconsolidated
subsidiaries\\

45,648

\(

231 )

\

45,417

1,130\

119,365

Total
net
assets\141,041

850

850

2,249

2,249

(

956 )

(

956 )

(

956 )

(

40 )

(

40 )

(

40 )

(

15 )

(

15 )

(

1,036 )(

426\

22,160

2,911

1

\

\

2,911

2,249

425

656 )

2,911

425

Net increase in treasury stock\(

1,230 )

Capitalsurplus\\22,816

2,853

Shareholders' equity

Common
stock

\

Total
net
assets(1,426\

Minority
interest inconsolidated
subsidiaries

2,853

7

1,427

84,105

Valuation and translation adjustments
Unrealized
Foreign
Total
gains oncurrency
valuation andinvestment
translationtranslation
securities
adjustments
adjustments

\

16 )

1,253

(

16 )

56,867

\(

145 )

\

(

3,511 )

38(

3,473 )

2,437

2,088

(

3,511 )

38(

3,473 )

2,437

96,582\

42,137

\(

193 )

\

41,944

\

3,567

1,052
\

142,093

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

Balance at 31 March 2006
Conversion of convertiblebonds
Net income
Cash dividends at \ 5.0(U.S.$0.04) per share
Bonuses to directors andcorporate auditors
Net increase in treasurystock
Net changes of items otherthan shareholders' equity
Total changes of items
during the period
Balance at 30 September
2006
See accompanying notes.

Commonstock

CapitalsurplusRetainedearnings

Treasury
stock

Total
shareholders'equity$ 176,293$ 154,572$ 471,705$ ( 1,094 )$ 801,476

3,605

3,605

Valuation and translation adjustments
Foreign
Unrealized
Total
currency
gains onvaluation andinvestment
translationtranslation
securities
adjustments
adjustments

Minority
interest inconsolidated
subsidiaries$ 387,175$$ ( 1,959 )$

385,216

9,584

Total
net
assets$ 1,196,276

7,210
19,075

7,210

19,075

19,075(

8,109 )(

8,109 )(

8,109 )

(

339 )

(

339 )

(

339 )

(

127 )

(

127 )

(

8,787 )

(

8

3,605

3,613

10,627$ 179,898$ 158,185$ 482,332

(

135 )

135 )

17,710$ ( 1,229 )$ 819,186(

29,779 )322(

29,457 )

20,670(29,779 )322(

29,457 )

20,6708,923$ 30,254$ 1,205,199$ 357,396$ ( 1,637 )$

355,759

The Sumitomo Warehouse Co., Ltd.
Consolidated Statements of Cash Flows (Unaudited)
Six Months Ended 30 September 2005 and 2006

2005
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･･･・･････････・･･･・･････････・･･･
Impairment loss on fixed assets・・・・・・・・・・・・・・・・・・・・・・・・・・
Equity in earnings of affiliates･･･・･････････・･･･・･････････・･･･
Interest and dividend income･･･・･････････・･･･・･････････・････
Interest expense･･･・･････････・･･･・･････････・･････････・･･････
Loss on disposal of property and equipment･･･・･････････・･･･・
Net gain on sale of investment securities･･･・･････････・･･･・････
Increase in notes and accounts receivable･･･・･････････・･･･・･･･
Decrease in notes and accounts payable･･･・･････････・･･･・････
Net decrease in allowance for doubtful receivables･･･・･････････
Decrease in employees’ retirement benefits･･･・･････････・･･･・
Decrease in directors’ and corporate auditors’ retirement
benefits･･･・･････････・･･･・･････････・･････････・･････････・･
Increase (decrease) in deposits on contracts･･･・･････････・･･･・･
Fee for arrangement of syndicated loans・・・・・・・・・・・・・・・・・・・・
Other, net･･･・･････････・･･･・･････････・･････････・･････････・･
Sub-total･･･・･････････・･･･・･････････・･････････・･････････・･･
Interest and dividends received･･･・･････････・･･･・･････････・･･
Interest paid･･･・･････････・･･･・･････････・･････････・･････････
Income taxes paid･･･・･････････・･･･・･････････・･････････・････
Net cash provided by operating activities
Cash flows from investing activities:
Acquisition of securities･･･・･････････・･･･・･････････・･････････・･･･
Payments for acquisition of subsidiaries' stock resulting in change
in scope of consolidation･・･････････・･･･････････・･････････・･･
Proceeds from sale or redemption of securities･･･・･････････・･･･・･･･
Acquisition of intangible fixed assets･･･・･････････・･･･・･････････・･
Acquisition of property and equipment･･･・･････････・･･･・･････････・
Proceeds from sale of property and equipment･･･・･････････・･･･・･･･
Advance on loans receivable･･･・･････････・･･･・･････････・･････････
Collection of loans receivable･･･・･････････・･･･・･････････・････････
Time deposits, maturing after three months and other, net･･･・･･･････
Net cash used in investing activities･･･・･････････・･･･・･････････・･････
Cash flows from financing activities:
Dividends paid･･･・･････････・･･･・･････････・･････････・･････････・･
Proceeds from short-term debt･･･・･････････・･･･・･････････・･･･････
Repayments of short-term debt･･･・･････････・･･･・･････････・･･･････
Proceeds from long-term debt･･･・･････････・･･･・･････････・････････
Repayments of long-term debt･･･・･････････・･･･・･････････・･･･････
Proceeds from bond redemption funds･･･・･････････・･･･・･････････・
Payment of fee for arrangement of syndicated loans・・・・・・・・・・・・・・・
Purchase of treasury stock･･･・･････････・･･･・･････････・･････････・･
Cash dividends paid to minority shareholders･･・･････････・･･･・･････
Net cash provided by financing activities･･･・･････････・･･･・･････････・
Effect of exchange rate changes on cash and cash equivalents･･･・･･････
Net increase in cash and cash equivalents･･･・･････････・･･･・･････････・
Cash and cash equivalents of newly consolidated subsidaiaries・・・・・・・・
Cash and cash equivalents at beginning of period･･･・･････････・･･･・･･･
Cash and cash equivalents at end of period･･･・･････････・･･･・･････････ \See accompanying notes.

Thousands of
U.S. dollars(Note 1)
2006

Millions of yen
2006

5,397

\

3,759

$

31,883

2,413
804
(61)
(566)
73
97
(3,395)
(388)
(240)
(58)
(124)

2,371
－
(79)
(597)
152
11
－
(62)
(1,015)(49)(65)

20,110－(670)(5,064)
1,289
93
－
(526)
(8,609)
(416)
(551)

(775)
(1,039)
400
(644)
1,894
569
(70)
(1,976)
417

(11)
5
106
(611)
3,915
599
(81)
(1,926)
2,507

(93)
43
899
(5,182)
33,206
5,081(687)(16,336)
21,264(6,639)(720)(6,107)－(5,475)(46,438)

4,464－(2,917)
10
(33)
25
(421)
(5,511)－(343)(3,119)
17
(29)
25
(359)
(10,003)－(2,909)(26,454)
144
(246)
212
(3,045)(84,843)(1,237)2,329(3,017)
－
－
8,121
(400)
(17)
－
5,779
78
763
768
10,69012,221(956)
7,898(9,106)
12,100
(810)
－
(106)
(15)
(18)
8,987
10
1,501
－
8,882
10,383(8,108)66,989(77,235)
102,629(6,870)
－
(899)
(127)
(153)
76,22684
12,731－75,33588,066\$

The Sumitomo Warehouse Co., Ltd.
Notes to Consolidated Interim Financial Statements (Unaudited)
30 September 2005 and 2006
1. Basis of Presenting Consolidated Interim Financial Statements(a)

The accompanying consolidated interim 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 Securities and Exchange Law
and its related accounting regulations and in conformity with accounting principles generally accepted in Japan ("Japanese GAAP"),
which are different in certain 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 interim financial statements
have been restructured and translated into English (with some expanded descriptions and the inclusion of consolidated statements ofshareholders' equity) from the consolidated interim 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 Securities and Exchange Law.
Some supplementary information included in the statutory Japanese language consolidated interim financial statements, but notrequired for fair presentation, is not presented in the accompanying consolidated interim financial statements.
In preparing the accompanying consolidated interim financial statements, certain reclassifications have been made in the previous
consolidated interim financial statements to conform to the presentation for the current six month period.

(b)

The translation of the Japanese yen amounts into U.S. dollars is included solely for the convenience of readers outside Japan, using theprevailing exchange rate at 30 September 2006, which was ¥117.90 to U.S. $1.00. The convenience 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 27 and 33 significant subsidiaries for the six
months ended 30 September 2005 and 2006, respectively. All significant intercompany transactions and accounts have been
eliminated. The fiscal six-month end of all the consolidated foreign subsidiaries and one consolidated domestic subsidiary is 30 Juneand 31 August, respectively. Significant transactions arising from the use of different fiscal six-month ends 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 to minority shareholders, are evaluated using the fair value at the time the Company acquired control of therespective subsidiary.
The equity method is applied to 4 affiliates for the six months ended 30 September 2005 and 2006, 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 rate at the end ofeach six-month period and resulting 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 rate at theend of each six-month period, except that shareholders’ equity accounts are translated at historical rates.

−1−

(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 estimated uncollectible amounts based on an analysis ofcertain individual receivables.

(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 bysubsidiaries and affiliates and 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 by subsidiaries 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 onthese securities are reported, net of applicable income taxes, as a separate component of net assets. Realized gain or loss on thesale of such securities is computed using moving average cost. Other securities with no available fair market value are statedat moving average cost.
If the market value of held-to-maturity debt securities and available-for-sale securities declines significantly, such securities are stated
at fair market value and the difference between fair market value and the carrying amount is recognized as loss in the period of thedecline. If the fair market value of equity securities issued by unconsolidated subsidiaries and affiliated companies not on the equity
method is not readily available, such 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.

(e) Derivative financial instruments and hedging
1)

Derivatives
Derivatives are revaluated by the market value method.

2)

Hedge accounting
The Companies adopt the deferred hedge accounting method. However, when an interest rate swap contract meets certain
criteria, the Companies adopt the exceptional method.

3)

Hedging instruments and hedged items
Hedging instruments
Foreign exchange forward contracts

4)Interest rate swap contracts
Hedging policy

Hedged items
Accounts receivable and accounts payable inforeign currencies
Bank loans

The Companies utilize financial instruments to hedge risks of fluctuation in currency exchange rates and interest inaccordance with their internal policies and procedures.
5)

Assessment method of hedging effectiveness
The Companies evaluate the effectiveness of their hedging activities by comparing the cumulative changes in fair value or
cumulative changes in cash flow on hedging instruments and the related hedged items. However, when an interest rate swap
contract meets certain criteria for applying the exceptional method, assessment of hedge effectiveness is 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 domestic subsidiaries provide depreciation mainly on adeclining balance method over estimated useful lives. However, depreciation for buildings, except building fixtures, acquired
after 31 March 1998 is stated on the straight-line method.
Consolidated foreign subsidiaries compute depreciation on the straight-line method over estimated useful lives.
(h) Finance leases
Finance leases of the Company and certain consolidated subsidiaries which do not transfer ownership are accounted for in
the same manner as operating leases in accordance with Japanese GAAP. Under Japanese accounting policies for leases,
finance leases that deem to transfer ownership of the leased property to the lessee are to be capitalized, while other financeleases are permitted to be accounted for as operating lease transactions if certain information is disclosed in the notes to thelessee’s financial statements.
(i)

Software costs
The Company and its consolidated domestic subsidiaries depreciate software using the straight-line method over theestimated useful life within five years.

(j)

Income taxes
The Companies recognize tax effects of temporary differences between the carrying amounts of assets and liabilities for tax andfinancial 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 theamounts used for income tax purposes.

(k) Bonuses
The Company and its consolidated domestic subsidiaries follow the general Japanese practice of paying bonuses mainly inJune and December. Accrued bonus liabilities at the balance sheet date are calculated based upon management’s estimate ofannual amounts thereof.
Certain subsidiaries provide for bonuses to directors calculated based upon estimates of amounts incurred for the current
six-month period.
(l)Retirement benefits
1)

Employees:
The Company and its consolidated domestic subsidiaries provide two types of post-employment 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 and salaries at the time of retirement or termination, length of service and certain other factors.
Certain consolidated foreign subsidiaries have unfunded lump-sum benefit 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 plan assets at that date.
Actuarial gains and losses are recognized in expenses using the straight-line method within the average of the estimatedremaining 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 amountof their retirement payment required if they retired from their positions at the balance sheet date.
On 29 June 2005, the Company terminated its retirement benefits plan for directors and corporate auditors. Thebalance of benefits granted prior to the termination date is included in other non-current liabilities.
−3−

(m) Net income per share
The computation of basic net income per share of common stock shown in the consolidated statements of income is basedon the weighted 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 ofcommon stock outstanding increased by the number of shares which would have been outstanding assuming the conversion ofoutstanding dilutive bonds at the beginning of the period. The related interest expense, net of income taxes, has been
eliminated for the purposes of 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 30 September 2006 consisted of the following:

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

Millions of yen
¥
391
1
¥
392

Thousands of U.S.
dollars
$
3,316
9
$
3,325

4. Securities
The following tables summarize the acquisition costs, book values and fair values of securities with available fair values as of 30 September 2005:
Held-to-maturity debt securities:
Book value･･･････････････････････････････････････････････････････
Fair value･････････････････････････････････････････････････････････
Difference･･･････････････････････････････････････････････････

Millions of yen
¥
811
801
¥
( 10)

These debt securities are pledged as deposits on contracts for the lease of land.
Available-for-sale securities:

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

Acquisition cost
¥ 15,597
4¥ 15,601

Millions of yen
Book value¥ 65,8854¥ 65,889

The following table summarizes the book values of securities with no available fair values as of 30 September 2005:
Millions of yen
Available-for-sale securities:
Non-listed equity securities･･････････････････････････････････････¥
2,134
Equity securities issued by subsidiaries and affiliates･･････････････････
958
¥
3,092
Total････････････････････････････････････････････････････････−4−

Difference¥ 50,288−¥ 50,288

The following tables summarize the acquisition costs, book values and fair values of securities with available fair values as of 30
September 2006:
Held-to-maturity debt securities:

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

Thousands of U.S.
dollars
$
6,709
6,582
$ ( 127)

Millions of yen
¥
791
776
¥
( 15)

These debt securities are pledged as deposits on contracts for the lease of land.
Available-for-sale securities

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

Millions of yen
Book value¥
93,692
2¥
93,694

Difference¥
71,355−¥71,355

Thousands of U. S. dollars
Book value$ 794,673
17$ 794,690

Difference$ 605,216−$ 605,216

Acquisition cost
¥ 22,3372¥ 22,339

Acquisition cost
Equity securities･･･････････････････････････････････････････$ 189,457
Other･･･････････････････････････････････････････････････
17$ 189,474
Total･･･････････････････････････････････････････････

The following table summarizes the book values of securities with no available fair values as of 30 September 2006:
Millions of yen
Available-for-sale securities:
Non-listed equity securities････････････････････････････････････････
Equity securities issued by subsidiaries and affiliates････････････････････
Total･･････････････････････････････････････････････････････････¥¥

Thousands of U.S.
dollars

2,329
1,197
3,526

$
$

19,754
10,15329,907

5. Bank Loans and Long-term Debt
Short-term bank loans at 30 September 2005 and 2006 bore interest ranging from 0.47% to 3.74% and from 0.32% to 3.98%, respectively.
Long-term debt at 30 September 2005 and 2006 consisted of the following:

SecuredLoans principally from banks 0.55% ― 4.20% maturing though 2019･･･････････
Unsecured
Zero Coupon convertible bonds due 2009, convertible into shares of theCompany’ common stock at a price of ¥466 (US$3.95) per share･･････････････
Loans principally from banks 0.48% ― 3.23% maturing though 2011･･･････････
Less amounts due within one year･･･････････････････････････････････････････−5−Millions of yen
2005
2006
¥ 2,373¥ 6,074

Thousands of
U. S. dollars
2006$51,518

6,982
2,464
11,819( 1,017)¥ 10,802

15,004
139,695
206,217(26,633)＄179,584

1,769
16,47024,313(3,140)¥ 21,173

The aggregate annual maturities of long-term debt at 30 September 2006 were as follows:
30 September
Millions of yen
2007･･･････････････････････････････････････････････････････････････････････¥ 3,140
2008･･･････････････････････････････････････････････････････････････････････
2,899
2009･･･････････････････････････････････････････････････････････････････････
3,658
2010･･･････････････････････････････････････････････････････････････････････
1,302
2011･･･････････････････････････････････････････････････････････････････････
617
2012 and thereafter･･･････････････････････････････････････････････････････････
12,697¥ 24,313

Thousands of
U. S. dollars$ 26,633
24,58931,026
11,043
5,233
107,693＄ 206,217

At 30 September 2006, assets pledged as collateral for short-term bank loans of ¥6,817 million (US$57,820 thousand) and secured
long-term debt were as follows:
Thousands ofMillions of yen
U. S. dollars¥
225$ 1,909
Deposits placed with banks with maturities of over three months (short-term investments)･････････
Investments securities･･････････････････････････････････････････････････････････････
9,306
78,931
Property and equipment, net of accumulated depreciation･･･････････････････････････････････
4,338
36,794
Leasehold and other････････････････････････････････････････････････････････････････
368
3,121
＄ 120,755¥ 14,237
The Company has concluded commitment line agreements with seven financial institutions in order to obtain funds for operations in astable and efficient manner.
The commitment lines of credit at 30 September 2006 were as follows:
Thousands ofMillions of yen
U. S. dollars¥ 20,000$ 169,635
Total commitment line of credit･････････････････････････････････････････････････
Outstanding borrowings･･･････････････････････････････････････････････････････
8,000
67,854
Net outstanding credit･････････････････････････････････････････････････････････ ¥ 12,000$ 101,781

6. Leases(a) Finance leases as lessee
At 30 September 2005 and 2006, non-capitalized finance leases for machinery and equipment were as follows:

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

Millions of yen
2005
2006
¥ 1,595¥ 2,400( 888)(1,258)¥ 707¥ 1,142

Thousands of
U. S. dollars
2006$ 20,356( 10,670)$ 9,686

Total lease payments under non-capitalized finance lease arrangements were ¥171 million and ¥197 million (US$1,671 thousand) for thesix months ended 30 September 2005 and 2006, respectively.
Lease obligations under non-capitalized finance leases, including finance charges, at 30 September 2005 and 2006 were as follows:
Thousands ofMillions of yen
U. S. dollars
2005
2006
2006
Due within one year･･･････････････････････････････････････････････････
¥ 289
¥ 445
$ 3,774
Due after one year･････････････････････････････････････････････････････
418
697
5,912
¥ 707
¥ 1,142$ 9,686
Total･･･････････････････････････････････････････････････････････････−6−

(b) Finance leases as lessor
At 30 September 2005 and 2006, buildings and structures leased by a consolidated subsidiary under finance leases were as follows:
Thousands ofMillions of yen
U. S. dollars
2005
2006
2006
Acquisition cost･･････････････････････････････････････････････････････¥ 6−−
Less accumulated depreciation･･･････････････････････････････････････････
( 6)
−
−
−
−
−
Total･･･････････････････････････････････････････････････････････････(c) Operating leases as lessee
At 30 September 2005 and 2006, lease costs under operating leases were as follows:
Millions of yen
2005
2006
¥ 1
¥ 52
3
132
¥ 4
¥ 184

Thousands of
U. S. dollars
2006
$ 441
1,120
$ 1,561

Millions of yen
2005
2006
Due within one year･･･････････････････････････････････････････････････ ¥ 544¥ 776
Due after one year･････････････････････････････････････････････････････
4,222
3,907
¥ 4,683
Total･･･････････････････････････････････････････････････････････････ ¥ 4,766

Thousands of
U. S. dollars
2006$ 6,582
33,138$39,720

Due within one year･･･････････････････････････････････････････････････
Due after one year･････････････････････････････････････････････････････
Total･･･････････････････････････････････････････････････････････････(d) Operating leases as lessor
At 30 September 2005 and 2006, lease receipts under operating leases were as follows:

7. Shareholders’ Equity
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 sharesas additional paid-in capital, which is included in capital surplus.
The Company Law of Japan provides that an amount equal to at least 10% of cash dividends and other cash appropriations shall beappropriated and set 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 and additional paid-in capital may be used to eliminate or reduce a deficit by resolution of the shareholders’meeting or may be capitalized by resolution of the Board of Directors. On 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 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
the Company in accordance with the Company Law.
Effective from the period ended 30 September 2006, the Companies adopted Accounting Standards Board of Japan Statement No.5
“Accounting Standard for Presentation of Net Assets in the Balance Sheet” issued by the Accounting Standards Board of Japan on 9
December 2005 and Accounting Standards Board of Japan Guidance No.8 “Guidance on Accounting Standard for Presentation of Net
Assets in the Balance Sheet” issued by the Accounting Standards Board of Japan on 9 December 2005. The amount corresponding toconventional “total shareholder’ equity” in the balance sheet is ¥138,526 million (US$1,174,945 thousand).

8. Contingent Liabilities
At 30 September 2005 and 2006, the Companies were contingently liable for the following:

Guarantees of indebtedness･･････････････････････････････････････････････
Trade notes receivable discounted････････････････････････････････････････
Trade notes receivable endorsed･･････････････････････････････････････････−7−

Millions of yen
2005
2006
¥ 4,191¥ 3,806
−
25
514
655

Thousands of
U. S. dollars
2006$ 32,282212
5,556

9. Derivatives
For the six months ended 30 September 2006, certain consolidated subsidiaries utilized derivative financial instruments as follows:
Millions of yen
Estimated fair value

Type of product

Type of trading

Contract amount

Commodity

Crude oil average swap

Type of product

Type of trading

Contract amountThousands of U. S. dollars
Estimated fair value

Valuation gain

Commodity

Crude oil average swap

$ 25

$ 187

$ 187

¥

3

¥

Valuation gain

22

¥

22

The estimated fair value amount was determined using the price which the corresponding financial institution presented.
Excludes transactions for derivative financial instruments to which hedge accounting is applied.

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

Real estate

Main operations
Warehousing (stock operations, bonded cargo handling)
Harbor transportation, Customs clearance
International multimodal transportation, Air cargo agent
Land transportation
Office space and land leasing

Six months ended 30 September 2005

Logistics

Millions of yen
Corporate
Real estate& Elimination

Sales to outside customers････････････････････････････
Inter-segment transfers･･････････････････････････････
Total sales････････････････････････････････････
Operating cost･････････････････････････････････････
Operating income･･････････････････････････････････

¥

¥

¥

46,666−
46,66644,584
2,082

¥

4,369
87
4,456
2,072
2,384

¥

¥

−
( 87)
( 87)
1,636
(1,723)Six months ended 30 September 2006

Logistics

Millions of yen
Corporate
Real estate& Elimination

Sales to outside customers････････････････････････････
Inter-segment transfers･･････････････････････････････
Total sales････････････････････････････････････
Operating cost･････････････････････････････････････
Operating income･･････････････････････････････････

¥

¥

¥

Logistics

Six months ended 30 September 2006
Sales to outside customers････････････････････････････
Inter-segment transfers･･････････････････････････････
Total sales････････････････････････････････････
Operating cost･････････････････････････････････････
Operating income･･････････････････････････････････

50,6391
50,64048,303
2,337$$

429,5089429,517409,695
19,822

¥

4,599
175
4,774
2,161
2,613

¥

−
( 176)( 176)1,478¥ (1,654)

Consolidated¥¥

51,035−51,03548,292
2,743

Consolidated¥¥

55,238−55,23851,942
3,296

Thousands of U. S. dollars
Corporate
Real estate& Elimination

Consolidated

$

$

$

39,0081,484
40,492
18,32922,163$$−( 1,493)( 1,493)
12,536(14,029)$

468,516−
468,516
440,560
27,956

Corporate costs and expenses of ¥1,723 million and ¥1,654 million (US$14,029 thousand) for the six months ended 30 September 2005
and 2006, respectively, mainly consisted of expenses of administrative departments of the Company.
−8−

(b) Information by geographic segment

Millions of yen
Six months ended 30 September 2006
Sales to outside customers････････････････････････････
Inter-segment transfers･･････････････････････････････
Total sales････････････････････････････････････
Operating cost･････････････････････････････････････
Operating income･･････････････････････････････････

Japan

¥

50,126402
50,52845,831
4,697¥

Others

¥

¥

5,112
2,263
7,375
7,122
253

Corporate& Elimination

Consolidated

¥

¥

¥

−
(2,665)(2,665)(1,011)(1,654)¥55,238−55,23851,942
3,296

Thousands of U. S. dollars

Six months ended 30 September 2006
Sales to outside customers･･･････････････････････････
Inter-segment transfers･･････････････････････････････
Total sales････････････････････････････････････
Operating cost････････････････････････････････････
Operating income･･････････････････････････････････

Japan

$

$

425,157
3,410
428,567
388,728
39,839Corporate& Elimination

Others$$43,35919,19462,55360,4072,146$$

Consolidated$−(22,604)(22,604)( 8,575)(14,029)$

468,516−
468,516
440,560
27,956“Others” consists of Asia, Europe and North America.
Corporate costs and expenses of ¥1,654 million (US$14,029 thousand) for the six months ended 30 September 2006, mainly consisted of
expenses of administrative departments of the Company.
Information by geographic segment for the six months ended 30 September 2005 was immaterial and is not disclosed.
(c) Overseas sales
The Companies’ overseas sales, which represent sales to customers outside Japan, were immaterial. Accordingly, overseas sales are notdisclosed.

11. Impairment Loss on Fixed Assets
The Company and its consolidated domestic subsidiaries grouped their business assets based on business management units and assets forleasing based on each asset. The Company recognized impairment loss on business assets due to the decline in land prices or a decrease inprofitability and wrote them down to the recoverable amounts.
Impairment loss of ¥804 million was recognized in the period ended 30 September 2005 consisting of loss on land.
The recoverable amounts of these business assets were their net realized values principally calculated based on estimated values by realestate appraisers.
The amount of recognized impairment loss was deducted directly from the acquisition costs of land.

12. Subsequent Event
At the Board of Directors’ meeting of the Company held on 16 November 2006, the appropriation of retained earnings at 30 September
2006 was duly approved as follows:

Cash dividends of ¥5.0 (U S $0.04) per share････････････････････････････････････−9−Millions of yen¥ 965

Thousands of
U. S. dollars$ 8,185