Notes to Consolidated Financial Statements
Years Ended March 31, 2004 and 2003

1. BASIS OF PRESENTING CONSOLIDATED FINANCIAL
STATEMENTS
The accompanying consolidated financial statements have been prepared inaccordance with the provisions set forth in the Japanese Securities andExchange Law and its related accounting regulations, and in conformity withaccounting principles generally accepted in Japan, which are different incertain respects as to application and disclosure requirements ofInternational Financial Reporting Standards.
In preparing these consolidated financial statements, certain
reclassifications and rearrangements have been made to the consolidated
financial statements issued domestically in order to present them in a form
which is more familiar to readers outside Japan.
The consolidated financial statements are stated in Japanese yen, thecurrency of the country in which Yamato Transport Co., Ltd. (the“Company”) is incorporated and operates. The translations of Japanese yenamounts into U.S. dollar amounts are included solely for the convenience ofreaders outside Japan and have been made at the rate of ¥105.69 to $1, theapproximate rate of exchange at March 31, 2004. Such translations should
not be construed as representations that the Japanese yen amounts could
be converted into U.S. dollars at that or any other rate.
Certain reclassifications and rearrangements have been made in the2003 financial statements to conform to the classifications andpresentations used in 2004.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa. Consolidation—The consolidated financial statements as of March 31,
2004 include the accounts of the Company and its 40 significant (27 in2003) subsidiaries (together, the “Group”).
Under the control or influence concept, those companies in which theCompany, directly or indirectly, is able to exercise control over operations are
fully consolidated, and those companies over which the Group has the ability
to exercise significant influence are accounted for by the equity method.
The remaining non-consolidated subsidiaries, whose combined assets,
net sales, net income and retained earnings in the aggregate are notsignificant to the consolidated financial statements, have not been
consolidated with the Company.
Investments in 2 (3 in 2003) affiliates are accounted for by theequity method.
Investments in the remaining non-consolidated subsidiaries andaffiliates are stated at cost less a valuation allowance representing possible
losses on the investments that is deemed to be other than temporary. If theequity method of accounting had been applied to the investments in suchcompanies, the effect on the accompanying consolidated financial
statements would not be material.
The excess of the costs over the underlying net equity of investments inconsolidated subsidiaries is allocated to identifiable assets, and the remaining
amount is recognized as goodwill and amortized on a straight-line basis over a
five-year period, with the exception of minor amounts which are charged or
credited to income in the period of acquisition.
All significant intercompany balances and transactions have been
eliminated in consolidation. All material unrealized profit included in assets
resulting from transactions within the Group is eliminated.
b. Recognition of Operating Revenues—The Group recognizes freightcharge income as operating revenues at the time when freight has been
received from the shipping customer for transportation.
c. Cash Equivalents—Cash equivalents are short-term investments that arereadily convertible into cash and that are exposed to insignificant risk ofchanges in value. Cash equivalents include time deposits, certificate ofdeposits and mutual funds investing in bonds that represent short-term
investments, all of which mature or become due within three months of thedate of acquisition.

The difference between cash and time deposits in the accompanying
consolidated balance sheets and cash and cash equivalents in theaccompanying consolidated statements of cash flows is as follows:

Cash
Time deposits
Total
Bank overdraft included in cash
Cash and cash equivalents

Millions of Yen

Thousands of
U.S. Dollars

2004
2003
¥116,913 ¥132,320
119
241
117,032 132,561
(1)
(168)
¥117,031 ¥132,393

2004$1,106,190
1,122
1,107,312(7)$1,107,305

d. Inventories—Inventories which mainly consist of supplies are stated atcost as determined by the first-in, first-out method.
e. Marketable and Investment Securities—Marketable and investment
securities are classified and accounted for, depending on management’s
intent, as follows: (1) trading securities, which are held for the purpose of
earning capital gains in near term are reported at fair value, and the related
unrealized gains and losses are included in the earnings, (2) held-to-maturity
debt securities, which are expected to be held to maturity with the positive
intent and ability to hold to maturity are reported at amortized cost and(3) available-for-sale securities, which are not classified as either of theaforementioned securities, are reported at fair value, with unrealized gains
and losses, net of applicable taxes, reported in a separate component ofshareholders' equity. The Group has no such trading securities.
Non-marketable available-for-sale securities are stated at cost
determined by the moving-average method.
For other than temporary declines in fair value, investment securities
are reduced to net realizable value by a charge to income.
f. Property, Plant and Equipment—Property, plant and equipment arestated at cost. Depreciation of property, plant and equipment of theCompany and its consolidated domestic subsidiaries is computed
substantially by the declining-balance method at rates based on theestimated useful lives of the assets, while the straight-line method is applied
to the buildings acquired after April 1, 1998, and to the equipment used forrefrigerated delivery service. The depreciation of property, plant andequipment of foreign consolidated subsidiaries is computed on the straightline method over the estimated useful lives of the assets. The range ofuseful lives is principally as follows:
Buildings and structures
VehiclesMachinery and equipment

7– 60 years
2– 7 years
2– 20 years

Maintenance and repairs including minor renewals and improvements
are charged to income as incurred.
g. Other Assets—Amortization of intangible assets is computed on thestraight-line method over the period specified by the Japanese Commercial
Code (the “Code”).
Bond issuance costs are deferred as other assets and amortized on thestraight-line method over a three-year period.
h. Retirement and Pension Plan—The Company and certain consolidated
subsidiaries have a contributory trusteed pension plan and an unfunded
retirement benefits plan. The foreign subsidiaries have a defined contribution retirement plan. Other consolidated subsidiaries have an unfunded
retirement benefits plan.
According to first paragraph of Article 112 of the Defined Benefit
Pension Plan Law, the Company obtained an approval by the Ministry of
Health, Labour and Welfare on March 31, 2004, transferred the premium of
the basic portion of the governmental pension program and additional
portion from the contributory funded defined benefit pension plan to the
cash balance plan.
As a result of this transfer, the Company and certain subsidiaries
recognized a gain on decrease from pension obligation with transfer to cash
balance plan in the amount of ¥40,470 million ($382,911 thousand) for theyear ended March 31, 2004.

YAMATO TRANSPORT CO., LTD.

Annual Report 200433

Directors and corporate auditors are not covered by the retirement andpension plans described above. Benefits paid to such persons are charged toincome as paid. Any amounts payable to directors and corporate auditors
upon retirement are subject to approval of the shareholders.
i. Leases—All leases are accounted for as operating leases. Under Japanese
accounting standards for leases, finance leases that deem to transfer
ownership of the leased property to the lessee are to be capitalized, whileother finance leases are permitted to be accounted for as operating leasetransactions if certain “as if capitalized” information is disclosed in the notes
to the lessee’s financial statements.
j. Income Taxes—The provision for income taxes is computed based on thepretax income included in the consolidated statements of income. The asset
and liability approach is used to recognize deferred tax assets and liabilities
for the expected future tax consequences of temporary differences between
the carrying amounts and the tax bases of assets and liabilities. Deferredtaxes are measured by applying currently enacted tax laws to the temporary
differences.
k. Appropriations of Retained Earnings—Appropriations of retained earnings at each year end are reflected in the consolidated financial statements
for the following year upon shareholders’ approval.
l. Foreign Currency Transactions—All short-term and long-term monetary
receivables and payables denominated in foreign currencies are translated into
Japanese yen at the exchange rates at the balance sheet date.

3. MARKETABLE AND INVESTMENT SECURITIESMarketable and investment securities as of March 31, 2004 and 2003
consisted of the following:Thousands of
U.S. Dollars

Millions of Yen

Current:
Government andcorporate bonds
Other
Total

2004

2003

2004

¥ 4,5113,567¥ 8,078¥ 6,011501¥ 6,512$ 42,681
33,750$ 76,431¥ 7,409
1,560$132,332
14,273

4,704
5,730¥19,403

20,565$167,170

Non-current:
Marketable equity securities¥13,986
Non-marketable equity securities
1,509
Government andcorporate bonds
Other
2,173
Total
¥17,668

Information regarding each category of the securities classified asavailable-for-sale and held-to-maturity at March 31, 2004 and 2003 was
as follows:
Millions of Yen

2004
m. Foreign Currency Financial Statements—The balance sheet accounts ofthe consolidated foreign subsidiaries are translated into Japanese yen at thecurrent exchange rate as of the balance sheet date except for shareholders’equity, which is translated at the historical rate. Differences arising fromsuch translation were shown as “Foreign currency translation adjustments”
in a separate component of shareholders’ equity.
Revenue and expense accounts of the consolidated foreign subsidiaries
are translated into Japanese yen at the current exchange rates as of thebalance sheet date.
n. Per Share Information—Basic net income per share is computed by
dividing net income available to common shareholders, by the weightedaverage number of common shares outstanding for the period, retroactively
adjusted for stock splits.
Diluted net income per share reflects the potential dilution that could
occur if securities were exercised or converted into common stock. Diluted
net income per share of common stock assumes full conversion of theoutstanding convertible notes and bonds at the beginning of the year (or at
the time of issuance) with an applicable adjustment for related interest
expense, net of tax, and full exercise of outstanding warrants.
Cash dividends per share presented in the accompanying consolidated
statements of income are dividends applicable to the respective years
including dividends to be paid after the end of the year.
o. New Accounting Pronouncements—In August 2002, the BusinessAccounting Council issued a Statement of Opinion, “Accounting for
Impairment of Fixed Assets”, and in October 2003 the Accounting Standards
Board of Japan (“ASB”) issued ASB Guidance No.6, “Guidance for AccountingStandard for Impairment of Fixed Assets”. These new pronouncements are
effective for fiscal years beginning on or after April 1, 2005 with early
adoption permitted for fiscal years ending on or after March 31, 2004.
The new accounting standard requires an entity to review its long-lived
assets for impairment whenever events or changes in circumstances indicatethat the carrying amount of an asset or asset group may not be recoverable.
An impairment loss would be recognized if the carrying amount of an asset
or asset group exceeds the sum of the undiscounted future cash flows
expected to result from the continued use and eventual disposition of theasset or asset group. The impairment loss would be measured as the amountby which the carrying amount of the asset exceeds its recoverable amount,which is the higher of the discounted cash flows from the continued use andeventual disposition of the asset or the net selling price at disposition.
The Company is currently in the process of assessing the effect of
adoption of these pronouncements.

34

YAMATO TRANSPORT CO., LTD.

Annual Report 2004

Securities classified as:
Available-for-sale—equity securities
Held-to-maturity

Cost

Unrealized
Gains

Unrealized
LossesFair
Value¥ 7,013
9,076¥ 6,9877¥ 14¥ 13,986
9,083

Millions of Yen

2003
Unrealized
Gains

Cost

Securities classified as:
Available-for-sale—equity securities
Held-to-maturity¥ 6,988
15,819¥824
3

Unrealized
Losses

¥403
5

Fair
Value

¥

7,409
15,817

Thousands of U.S. Dollars

2004
Securities classified as:
Available-for-sale—equity securities
Held-to-maturity

Cost

Unrealized
Gains

Unrealized
LossesFair
Value$66,358
85,874$66,10569$130$132,333
85,943The majority of available-for-sale securities whose fair value is notreadily determinable as of March 31, 2004 and 2003 were as follows:
Carrying AmountMillions of Yen

Available-for-sale:
Equity securities
Preferred shares

Thousands of
U.S. Dollars

2004

2003

2004

¥1,5081,000¥1,5601,000$14,273
9,462

Proceeds from sales of available-for-sale securities for the years ended
March 31, 2004 and 2003 were ¥3 million ($31 thousand) and ¥9 million,
respectively. Gross realized gains and losses on these sales, computed on themoving average cost basis, were ¥0 million ($0 thousand) and ¥0 million ($2thousand), respectively, for the year ended March 31, 2004 and ¥1 millionand ¥0 million, respectively, for the year ended March 31, 2003.

The carrying values of debt securities by contractual maturities forsecurities classified as held-to-maturity at March 31, 2004 are as follows:
Millions of Yen
Held to Maturity

Thousands of
U.S. Dollars
Held to Maturity¥8,078998¥9,076$76,4319,443$85,874

Due in one year or lessDue after one year through five years
Total

4. BANK LOANS AND LONG-TERM DEBT
Short-term bank loans at March 31, 2004 and 2003 consisted of notes tobanks and bank overdrafts. The annual interest rates applicable to the bankloans ranged from 1% to 6% and 0.05% to 6% at March 31, 2004 and2003, respectively.
Long-term debt at March 31, 2004 and 2003 consisted of the following:
Millions of Yen

2004
Unsecured 2.6% bonds due
in July 2004
¥ 15,000
Unsecured 0.8% bonds due
in December 2004
2,000
Unsecured 1.2% convertible
debentures, convertible into
common stock at ¥1,211.80
per share, due in September 2009
13,425
Total
30,425Less current portion(17,000)
Total¥ 13,425

5. RETIREMENT AND PENSION PLANS
The Company and its consolidated subsidiaries have severance payment
plans for employees.
Under most circumstances, employees terminating their employment
are entitled to retirement benefits determined based on the rate of government bond, years of service and certain other factors. Such retirement
benefits are made in the form of a lump-sum severance payment from theCompany or from the consolidated subsidiaries and annuity payments froma trustee. Employees are entitled to larger payments if the termination is
involuntary, by retirement at the mandatory retirement age, by death, or byvoluntary retirement at certain specific ages prior to the mandatory retirement age. The retirement benefits for directors and corporate auditors arepaid subject to the approval of the shareholders.
The liability for employees' retirement benefits at March 31, 2004 and2003 consisted of the following:Thousands of
U.S. Dollars

2003

2004

¥15,000$ 141,925

2,000

18,923

Projected benefit obligation
Fair value of plan assets
Unrecognized actuarial loss
Net liability

Millions of Yen

Thousands of
U.S. Dollars

2004
2003
¥ 87,154 ¥126,763(40,293) (28,457)(28,616) (50,582)¥ 18,245 ¥ 47,724

2004$ 824,618(381,238)(270,751)$ 172,629

The components of net periodic benefit costs for the years ended
March 31, 2004 and 2003 are as follows:
13,42530,425¥30,425

127,023
287,871(160,848)$ 127,023

Based on debt assumption agreements with financial institutions, theCompany has transferred the debt repayment obligation for certain bonds
to such financial institutions and provided such financial institutions withcash for the payment of principal and interest on these bonds. As a resultof such transactions, the balance of such bonds has derecognizedamounted to ¥25,000 million ($236,541 thousand) as of March 31, 2004
and 2003 (see Note 9).
Annual maturities of long-term debt at March 31, 2004 were as follows:Year Ending March 31

Millions of Yen

Thousands of
U.S. Dollars

2005
2010
Total

¥17,000
13,425¥30,425$160,848
127,023$287,871

At March 31, 2004, land with carrying amount of ¥209 million ($1,980
thousand) was pledged as collateral for short-term bank loans of ¥48 million($454 thousand). Marketable securities and investment securities with acarrying amount of ¥10 million ($95 thousand) and ¥18 million ($167
thousand) were deposited as security for dealings at March 31, 2004.
All outstanding convertible debentures of the Company at March 31,
2004, were convertible into 11,078 thousand shares of common stock of theCompany. The conversion prices are subject to adjustments to reflect stock
splits and certain other events.
The Company has entered into loan commitment agreements
amounting to ¥30,000 million ($283,849 thousand) with financial facilities.
The loans receivable outstanding and the unused balances under these
credit facilities as of March 31, 2004 amounted to ¥0 million ($0 thousand)and ¥30,000 million ($283,849 thousand), respectively.

Thousands of
U.S. Dollars

Millions of Yen

Service cost
Interest cost
Expected return on plan assets
Recognized actuarial loss
Amortization of prior service cost
Net periodic benefit costs
Gain on exemption from future
pension obligation of thegovernmental program
Total benefit costs—net

2004
2003
¥ 8,665 ¥ 11,336
2,541
6,316
(490)
7,763
15,337(39,674)(21,195)
32,989(45,703)¥(21,195) ¥(12,714)$

2004
81,98924,044(4,636)73,455(375,381)(200,529)$(200,529)

Assumptions used for the years ended March 31, 2004 and 2003 are
set forth as follows:

Discount rate
Expected rate of return on plan assets
Amortization period of prior service cost
Recognition period of actuarial gain/loss:
Company
Consolidated subsidiaries

2004
2.0%
2.0%
1 year

2003
2.0%
0.0%
1 year

7 years
5 years

7 years
5 years

YAMATO TRANSPORT CO., LTD.

Annual Report 2004

35

6. SHAREHOLDERS’ EQUITY
Japanese companies are subject to the Code to which certain amendments
became effective from October 1, 2001.
The Code was revised whereby common stock par value was eliminatedresulting in all shares being recorded with no par value and at least 50% of
the issue price of new shares is required to be recorded as common stockand the remaining net proceeds as additional paid-in capital, which isincluded in capital surplus. The Code permits Japanese companies, upon
approval of the Board of Directors, to issue shares to existing shareholders
without consideration as a stock split. Such issuance of shares generally
does not give rise to changes within the shareholders’ accounts.
The revised Code also provides that an amount at least equal to 10%of the aggregate amount of cash dividends and certain other appropriationsof retained earnings associated with cash outlays applicable to each period
shall be appropriated as a legal reserve (a component of retained earnings)
until such reserve and additional paid-in capital equals 25% of common
stock. The amount of total additional paid-in capital and legal reserve thatexceeds 25% of the common stock may be available for dividends byresolution of the shareholders. In addition, the Code permits the transfer ofa portion of additional paid-in capital and legal reserve to the common
stock by resolution of the Board of Directors.
The revised Code eliminated restrictions on the repurchase and use oftreasury stock allowing Japanese companies to repurchase treasury stock by
a resolution of the shareholders at the general shareholders meeting anddispose of such treasury stock by resolution of the Board of Directors. The
repurchased amount of treasury stock cannot exceed the amount available
for future dividend plus amount of common stock, additional paid-in capitalor legal reserve to be reduced in the case where such reduction was resolved
at the general shareholders meeting.
The amount of retained earnings available for dividends under the Codewas ¥126,460 million ($1,196,514 thousand) as of March 31, 2004, basedon the amount recorded in the parent company’s general books of account.
In addition to the provision that requires an appropriation for a legal reservein connection with the cash payment, the Code imposes certain limitations
on the amount of retained earnings available for dividends.
Dividends are approved by the shareholders at a meeting held
subsequent to the fiscal year to which the dividends are applicable.
Semiannual interim dividends may also be paid upon resolution of the Boardof Directors, subject to certain limitations imposed by the Code.

7. INCOME TAXESThe Company and its domestic subsidiaries are subject to Japanese national
and local income taxes which, in the aggregate, resulted in a normal effective statutory tax rate of approximately 41% for the years ended March 31,
2004 and 2003.
On March 31, 2003, a tax reform law concerning enterprise tax wasenacted in Japan which changed the normal effective statutory tax ratefrom 41% to 40%, effective for years beginning on or after April 1, 2004.
The deferred tax assets and liabilities which will be realized on or after April
1, 2004 are measured at the effective tax rate of 40% as at March 31, 2004
and 2003.

36

YAMATO TRANSPORT CO., LTD.

Annual Report 2004

The tax effects of significant temporary differences which resulted indeferred tax assets and liabilities at March 31, 2004 and 2003 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Deferred tax assets:
Current:
Accrued expenses
Enterprise tax
Legal welfare expense
Other
Deferred tax assets—current

2004

2003

2004

¥10,109
1,501
1,187
969
¥13,766¥ 7,875
2,086
810¥10,771$ 95,648
14,197
11,2359,172$130,252¥18,105
2,536$ 63,271
24,049Non-current:
Liability for employees’
retirement benefits¥ 6,687
Investment securities
2,542
Investment in and advances tonon-consolidated
Subsidiaries and affiliates
2,636
Loss on devaluation of telephone
subscription rights
475
Loss on devaluation of land
Unrealized profit
572
Unrealized gain on availablefor-sale securities(2,789)Other(12)Less valuation allowance(2,636)
Deferred tax assets—non-current ¥ 7,475
Deferred tax liabilities:
Revaluation of fixed assets
in accordance with special
tax measures
Other
Deferred tax liabilities

24,943
4,495
2,722
460

5,412

(324)
(2,722)¥20,777(26,393)(109)(24,943)$ 70,725

¥
¥

414
(349)
65

A reconciliation between the normal effective statutory tax rate for theyear ended March 31, 2003 and the actual effective tax rate reflected in theaccompanying consolidated statements of income is as follows:

Normal effective statutory tax rate
Per capita levy of local taxes
Differences from tax rates of foreign consolidated subsidiaries
Valuation allowance
Other—net
Actual effective tax rate

2003
41.0%
1.8
0.1
3.0
0.8
46.7%

The difference between the normal effective statutory tax rate for theyear ended March 31, 2004 and the actual effective tax rate is not exceeding 5% of the normal effective statutory tax rate.

8. LEASES

9. CONTINGENT LIABILITIES

Total lease payments under finance lease arrangements that do not transfer
ownership of the leased property to the lessee were ¥3,252 million ($30,768
thousand) and ¥3,035 million for the years ended March 31, 2004 and 2003,
respectively.
Pro forma information of leased property such as acquisition cost,
accumulated depreciation and obligations under finance leases that do nottransfer ownership of the leased property to the lessee on an “as if capitalized”
basis for the years ended March 31, 2004 and 2003 was as follows:

Contingent liabilities for guarantees and items of a similar nature at March
31, 2004 amounted to ¥274 million ($2,596 thousand) representing
guarantees of loans of an unaffiliated company jointly and severally by theCompany and 18 other unaffiliated companies and ¥68 million ($648
thousand) as guarantees of loans of non-consolidated subsidiaries.
Based on debt assumption agreements with financial institutions, theCompany has transferred the debt repayment obligation for certain bonds
to such financial institutions. At March 31, 2004, the Company had
contingent obligations of ¥25,000 million ($236,541 thousand) in respectof these bonds.

Millions of Yen

2004

Acquisition cost
Accumulated depreciation
Net leased property

10. NET INCOME PER SHARE

Buildings
andStructures

MachineryandEquipment

Vehicles

¥ 99
11
¥ 88

¥ 288 ¥ 16,114 ¥ 106 ¥ 16,607
190
9,290
58
9,549
¥ 98 ¥ 6,824 ¥ 48 ¥ 7,058

Other
Assets

Total

Year Ended March 31, 2004

Thousands of U.S. Dollars

2004

Acquisition cost
Accumulated depreciation
Net leased property

MachineryandEquipment

Reconciliation of the differences between basic and diluted net income pershare (“EPS”) for the years ended March 31, 2004 and 2003 is as follows:

Buildings
andStructures

Vehicles

$934
103
$831

$2,726 $152,463 $1,008 $157,131
1,796
87,894554
90,347$ 930 $ 64,569 $ 454 $ 66,784

Other
Assets

Total

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

Millionsof YenThousandsof Shares

Net
IncomeWeighted-average
Shares¥49,625

461,598

101

11,078¥49,726

U.S.
Dollars

Yen
EPS¥107.51$1.02

472,676¥105.20$1.00

Millionsof YenThousandsof Shares

Yen

Net
IncomeWeighted-average
SharesEPS¥48,346462,607¥104.51

106

14,145¥48,452

476,752

Millions of Yen

2003

Acquisition cost
Accumulated depreciation
Net leased property

Buildings
andStructures

Vehicles

¥

¥

¥

5
2
3

¥

MachineryandEquipment

Other
Assets72 ¥ 14,772 ¥34
7,661
38 ¥ 7,111 ¥Total

97 ¥ 14,946
64
7,761
33 ¥ 7,185

Obligations under finance leases which included the imputed interest
expense portion, and noncancelable operating leases as of March 31, 2004
and 2003 were as follows:
Millions of Yen

2004
Due within one year
Due after one year
Total

Year Ended March 31, 2003

Basic EPS—Net income
available to commonshareholders
Effect of dilutive
securities—
Convertible bonds
Diluted EPS—Net income
for computation¥101.63

Thousands of
U.S. Dollars

2004

Finance
Lease

Operating
Lease

Finance
Lease

OperatingLease¥3,063
3,995¥7,058

¥456
92
¥548

$28,984
37,800$66,784$4,312869$5,181Millions of Yen

2003
Due within one year
Due after one year
Total

Finance
Lease

OperatingLease¥2,861
4,324¥7,185

¥328
475
¥803

YAMATO TRANSPORT CO., LTD.

Annual Report 200437

11. SEGMENT INFORMATION
Information about industry segments, geographic segments and operating revenues to foreign customers of the Company and consolidated subsidiaries for theyears ended March 31, 2004 and 2003 is as follows:(1) Industry Segments
Millions of Yen

2004
Delivery

BIZLogistics

Home
Convenience

e-BusinessEliminations
or Corporate

Financial

Consolidated

a. Operating revenues and operating income:Operating revenues to customers
Intersegment operating revenues
Total operating revenues
Operating costs and expenses
Operating income¥ 834,495 ¥ 90,236
22,6006,400
857,095
96,636
821,547
93,548¥ 35,548 ¥ 3,088¥ 42,611
12,94455,55555,545¥10¥ 21,082 ¥ 22,920
13,437
7,680
34,51930,60032,072
24,254¥ 2,447 ¥ 6,346¥1,011,344¥ (63,061)(63,061) 1,011,344(62,281)964,685¥(780) ¥ 46,659

b. Assets, depreciation and capital expenditures:
AssetsDepreciation
Capital expenditures¥ 405,577 ¥ 39,056
27,806
1,007
35,753678¥ 18,167 ¥ 19,308 ¥ 52,709
687
850
5,123
1,183
857
8,972

¥ 117,975 ¥ 652,792
190
35,663
144
47,587

Thousands of U.S. Dollars

2004
Delivery

BIZLogistics

Home
Convenience

e-BusinessEliminations
or Corporate

Financial

Consolidated

a. Operating revenues and operating income:Operating revenues to customers
Intersegment operating revenues
Total operating revenues
Operating costs and expenses
Operating income$7,895,685 $853,774 $403,172 $199,468 $216,866$9,568,965
213,837
60,558 122,472 127,134
72,659 $ (596,660)
8,109,522
914,332 525,644 326,602 289,525(596,660) 9,568,965
7,773,184
885,116 525,552 303,446 229,478(589,277) 9,127,499$ 336,338 $ 29,216 $92 $ 23,156 $ 60,047 $(7,383) $ 441,466

b. Assets, depreciation and capital expenditures:
AssetsDepreciation
Capital expenditures$3,837,420 $369,532 $171,895 $182,684 $498,713 $1,116,238 $6,176,482
263,086
9,528
6,502
8,038
48,477
1,796
337,427
338,281
6,417
11,194
8,107
84,892
1,361
450,252

Effective April 1, 2004, the Group changed its industry segmentation from “Domestic Transportation,” “International Transportation,” “Information
Communications” and “Others” to “Delivery,” “BIZ-Logistics,” “Home Convenience,” “e-Business” and “Financial” according to the classification of businessformation based on the Company’s middle-term management plan.
If the segment information for the year ended March 31, 2003 were prepared using the new segmentation, such information would be as follows;
Millions of Yen

2003
Deliverya. Operating revenues and operating income:Operating revenues to customers
Intersegment operating revenues
Total operating revenues
Operating costs and expenses
Operating incomeb. Assets, depreciation and capital expenditures:
AssetsDepreciation
Capital expenditures

BIZLogistics

Home
Convenience

e-BusinessEliminations
or Corporate

Financial

800,463 ¥ 87,102 ¥ 43,642 ¥ 19,728 ¥ 21,200
15,3984,950
11,234
11,0758,294
815,861
92,05254,87630,80329,494
769,819
89,35453,36829,05923,696¥
46,042 ¥ 2,698 ¥ 1,508 ¥ 1,744 ¥ 5,798¥¥

394,258
24,73332,290¥ 38,920
984
912¥ 13,791
500
873¥ 21,232
581
4,522

¥

¥

¥ 51,217 ¥
4,747
3,937

¥ 972,135(50,951)(50,951)
972,135(49,979)
915,317(972) ¥ 56,818

136,459 ¥186
57

Notes: Delivery: Small-parcel delivery services such as Takkyubin (door-to-door parcel delivery) and Kuroneko Mail
BIZ-Logistics: Intercompany logistics services, aimed at the B2B supply-chain management market
Home Convenience: Lifestyle support services intimately connected with the needs of local markets, such as moving and home cleaning services
e-Business: Information services targeted at the business market, including ASP services and the development of information systems
Financial: Financial services targeted at business customers and consumers, such as settlement and collection

38

YAMATO TRANSPORT CO., LTD.

Annual Report 2004

Consolidated

655,877
31,731
42,591

(2) Geographic Segments
The geographic segments of the Company and consolidated subsidiaries for the years ended March 31, 2004 and 2003 are summarized as follows:
Millions of Yen

2004
Eliminations
or Corporate

Japan

U.S.A.

EuropeAsia

Operating revenues:
Outside customers
Interarea
Total operating revenues

Consolidated¥ 991,961
3,998
995,959¥ 11,576
2,459
14,035¥ 3,610
1,143
4,753

¥ 4,197
1,975
6,172

¥

(9,575)(9,575)

1,011,344

Operating costs and expenses
Operating income (loss)
Assets949,648¥ 46,311¥ 515,953¥¥

13,879
156
2,738

4,768
¥ (15)¥ 1,734

5,932
¥ 240
¥ 2,068(9,542)¥(33)¥ 130,299

964,685¥ 46,659¥ 652,792

Eliminations
or Corporate

Consolidated¥1,011,344

Thousands of U.S. Dollars

2004
Japan

U.S.A.

EuropeAsia

Operating revenues:
Outside customers
Interarea
Total operating revenues$9,385,575
37,827
9,423,402$109,527
23,263
132,790$34,153
10,822
44,975$39,710
18,68858,398$(90,600)(90,600)

9,568,965

Operating costs and expenses
Operating income (loss)
Assets8,985,224$ 438,178$4,881,760

131,314$ 1,476$ 25,909

45,112$ (137)$16,40256,131$ 2,267$19,571(90,282)$(318)$1,232,840

9,127,499$ 441,466$ 6,176,482

Eliminations
or Corporate

Consolidated$ 9,568,965

Millions of Yen

2003
Japan

U.S.A.

EuropeAsia

Operating revenues:
Outside customers
Interarea
Total operating revenues¥ 950,980
4,443
955,423¥ 12,661
2,726
15,387¥ 3,573
1,197
4,770

¥ 4,921
2,475
7,396

¥

Operating costs and expenses
Operating income (loss)
Assets899,115¥ 56,308¥ 495,914¥¥

15,141
246
3,132

4,822
¥
(52)
¥ 2,003

7,086
¥ 310
¥ 2,688(10,847)¥
6¥ 152,140¥(10,841)(10,841)

972,135
972,135¥¥

915,31756,818655,877

Operating revenues and assets are summarized by geographic area based on the countries where subsidiaries are located.
(3) Operating Revenues to Foreign Customers
Operating revenues to foreign customers for the years ended March 31, 2004 and 2003 amounted to ¥22,831 million ($216,017 thousand) and ¥24,402
million, respectively.

12. SUBSEQUENT EVENTSAt the general shareholders meeting held on June 29, 2004, the Company’s
shareholders approved the following appropriations of retained earnings andpartial amendment to the articles of incorporation.
a. Appropriations of Retained Earnings
The following appropriations of retained earnings at March 31, 2004 wereapproved at the Company's shareholders meeting held on June 29, 2004:

Year-end cash dividends,¥10.00 ($0.09) per share
Bonuses to directors andcorporate auditors

Millions of Yen

Thousands of
U.S. Dollars¥4,564$43,184

65

615

b. Purchase of Treasury Stock
Pursuant to the revision of the Code, the Company revised its articles ofincorporation as the Company could repurchase its common stock as
treasury stock by resolution of the Board of Directors.

YAMATO TRANSPORT CO., LTD.

Annual Report 2004

39