Financial Section
60 Consolidated Balance Sheet
62 Consolidated Statement of Income
63 Consolidated Statement ofComprehensive Income

64 Consolidated Statement of
Changes in Equity

65 Consolidated Statement of
Cash Flows

66 Notes to Consolidated Financial
Statements

86 Independent Auditor’s Report

YAMATO HOLDINGS CO., LTD.
Annual Report 201659

Consolidated Balance Sheet
March 31, 2016

Thousands of
U.S. Dollars(Note 1)Millions of Yen

ASSETS

2016

2015

2016

¥ 249,594¥ 247,398$ 2,215,067

Trade197,382

187,834

1,751,705

Installment (Note 3)

43,64842,008387,362

Lease (Note 12)48,89444,948433,923

Allowance for doubtful accounts(1,079)(1,338)(9,577)

Inventories (Note 4)

2,858

3,336

25,363

Deferred tax assets (Note 11)

14,907

15,687

132,300

Prepaid expenses and other current assets

27,77826,333

246,518

583,982566,206

5,182,661

176,139
326,889
196,054

187,964
334,120
194,198

1,563,181
2,901,035
1,739,922

126,243
15,411
23,538123,025
24,02916,025

1,120,363
136,765
208,895

CURRENT ASSETS:
Cash and cash equivalents (Notes 2.d and 13)
Notes and accounts receivable (Note 13):

Total current assets

PROPERTY, PLANT AND EQUIPMENT—At cost:
Land
Buildings and structures
VehiclesMachinery and equipment
Leased assets (Note 12)
Construction in progress
Others
Total
Accumulated depreciation
Net property, plant and equipment

INVESTMENTS AND OTHER ASSETS:
Investment securities (Notes 5 and 13)
Investments in and advances to unconsolidated subsidiaries and affiliates
Long-term loans
SoftwareLease deposits
Deferred tax assets (Note 11)
Other assets (Note 8)
Total investments and other assets
TOTAL
See notes to consolidated financial statements.

60

YAMATO HOLDINGS CO., LTD.
Annual Report 2016

21,70017,795

192,579885,974

897,156

7,862,740(480,332)(477,055)(4,262,793)

405,642

420,101

3,599,947

30,3291,169
1,010
14,526
16,45327,00833,843724
1,040
12,646
17,902
21,978269,162
10,376
8,960
128,910146,013
239,687

9,318

8,091

82,695

99,81396,224885,803¥1,089,437¥1,082,531$ 9,668,411

Thousands of
U.S. Dollars(Note 1)Millions of Yen

LIABILITIES AND EQUITY

2015

2016

2016

CURRENT LIABILITIES:
Short-term bank loans (Notes 7 and 13)

17,766$ 209,574

34,82929,071

309,093Trade148,456

157,480

1,317,501

Other

Current portion of long-term debt (Notes 7, 13 and 14)¥

23,615¥

Notes and accounts payable (Note 13):
14,461

10,470128,338

Income taxes payable

19,78320,024

175,565

Employees’ savings deposits

5,111

4,944

45,356

Accrued expenses

62,50861,295554,744

Deferred profit on installment sales (Notes 3 and 13)

5,895

5,655

52,316

Other current liabilities (Note 9)33,44050,329296,770

348,098

357,034

3,089,257

Long-term debt (Notes 7, 13 and 14)

115,90388,532

1,028,604

Liability for employees’ retirement benefits (Notes 2.j and 8)

71,55153,024

634,996

Deferred tax liabilities (Note 11)

2,800

3,948

24,844

Other long-term liabilities (Note 9)

7,230

8,794

64,162

197,484

154,298

1,752,606

Common stock—authorized, 1,787,541,000 shares in 2016 and 2015;
issued, 411,339,992 shares in 2016 and435,564,792 shares in 2015

127,235

127,235

1,129,169

Capital surplus

36,81370,209326,705

Retained earnings

402,376395,353

3,570,958

Treasury stock—at cost, 12,823,544 shares in 2016 and22,370,985 shares in 2015

(29,076)(43,008)(258,036)

9,790

13,84886,887

751

1,169

6,662

(10,068)

715(89,350)

537,821565,521

4,772,995

6,034

5,678

53,553

Total current liabilities
LONG-TERM LIABILITIES:

Total long-term liabilities
COMMITMENTS LIABILITIES (Note 12)
EQUITY (Notes 10 and 18):

Accumulated other comprehensive income:Unrealized gain on available-for-sale securities
Foreign currency translation adjustments
Remeasurements of defined employees’ retirement benefit plans (Notes 2.j and 8)
Total
Non-controlling interests
Total equity
TOTAL

543,855

571,199

4,826,548¥1,089,437¥1,082,531$9,668,411

YAMATO HOLDINGS CO., LTD.
Annual Report 201661

Consolidated Statement of Income
Year Ended March 31, 2016

Thousands of
U.S. Dollars(Note 1)Millions of Yen
2016

2015

2016

¥1,416,413¥1,396,708$12,570,226

1,306,200

1,290,715

11,592,121

41,67337,046369,832

1,347,873

1,327,761

11,961,953

68,54068,947608,273

Interest and dividend income

833

674

7,395

Interest expense

(548)

(398)

(4,863)

Loss on sales and disposal of property, plant and equipment—net

(91)

(2)

(808)

(1,155)(1,792)(10,249)

54

7

475

OPERATING REVENUESOPERATING COSTS AND EXPENSES:
Operating costs
Selling, general and administrative expenses
Total operating costs and expenses
Operating income
OTHER INCOME (EXPENSES):

Loss on impairment of long-lived assets (Note 6)
Gain on sales of marketable and investment securities (Note 5)
Other—net

446

1,722

3,953

Other (expenses) income—net

(461)

211

(4,097)

INCOME BEFORE INCOME TAXES

68,07969,158604,176

Current

27,43529,815

243,473

Deferred

980

1,740

8,701

28,41531,555

252,174

39,66437,603352,002

239

70

INCOME TAXES (Note 11):

Total income taxes
NET INCOME
NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTERESTSNET INCOME ATTRIBUTABLE TO OWNERS OF THE PARENT¥

39,425¥37,5332,120$

349,882
U.S. Dollars(Note 1)

Yen
2016

2015

Basic net income¥96.45¥90.41$0.86

Diluted net income

95.64

88.26

0.85

Cash dividends applicable to the year

28.00

25.00

0.25

2016

PER SHARE OF COMMON STOCK (Notes 2.q and 16):

See notes to consolidated financial statements.

62

YAMATO HOLDINGS CO., LTD.
Annual Report 2016

Consolidated Statement of Comprehensive Income
Year Ended March 31, 2016

Thousands of
U.S. Dollars(Note 1)Millions of Yen

NET INCOME

2016

2015

¥ 39,664¥ 37,603$ 352,002(3,976)

5,371(35,285)

(419)

826

(3,713)(10,787)

2,443(95,733)(15,182)

8,640(134,731)¥ 24,482¥ 46,243$ 217,271¥ 24,166¥ 45,878$ 214,464

316

365

2,807

2016

OTHER COMPREHENSIVE INCOME (Note 15):
Unrealized (loss) gain on available-for-sale securities
Foreign currency translation adjustments
Remeasurements of defined employees’ retirement benefit plans
Total other comprehensive (loss) income
COMPREHENSIVE INCOME
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO:
Owners of the parent
Non-controlling interests
See notes to consolidated financial statements.

YAMATO HOLDINGS CO., LTD.
Annual Report 201663

Consolidated Statement of Changes in Equity
Year Ended March 31, 2016

Thousands

Millions of Yen
Accumulated Other Comprehensive Income

BALANCE,APRIL 1, 2014

Outstanding
Number of
Shares ofCommon Stock

Common Stock

418,943¥127,235

Capital Surplus Retained Earnings Treasury Stock¥100,863

Cumulative effects ofchanges in an accounting
policy¥371,965¥(56,079)

Remeasurements
Unrealizedof Defined
Gain onForeign Currency
Employees’
Available-for-Sale
Translation
Retirement Benefit
Securities
Adjustments
Plans¥ 8,770¥ 342¥ (1,717)(4,080)RESTATED BALANCE

127,235

100,863

367,885(56,079)

8,770

342

(1,717)

Non-controlling
Interests

Total

Total Equity¥551,379¥ 8,793¥560,172(4,080)(18)(4,098)547,299

8,775

556,074

Net income attributableto owners of the parent

37,53337,53337,533

Cash dividends,¥24 per share(10,065)(10,065)(10,065)(30,588)(30,588)(30,588)(405)

10,746

10,341

10,341(31,507)

31,507

1,258

1,406

2,664

2,664

Purchase oftreasury stock(12,235)

Disposal oftreasury stock

5,590

Retirement oftreasury stock
Change in equity related
to transaction with noncontrolling shareholders896

Net change in the year
BALANCE,MARCH 31, 2015

413,194

127,235

70,209395,353(43,008)

5,078

827

2,432

8,337

(3,097)5,240

13,848

1,169

715

565,5215,678

571,199

Net income attributableto owners of the parent

39,42539,42539,425

Cash dividends,¥26 per share(10,674)(10,674)(10,674)

88

88

88

(50,006)(50,006)(50,006)

11,207

9,570

9,570

(844)

(844)

Adjustment of retained
earnings for changes
in the scope of
consolidation
Purchase oftreasury stock(19,851)

Disposal oftreasury stock

5,173(1,637)Retirement oftreasury stock(30,915)

Change in equity related
to transaction with noncontrolling shareholders(21,816)

52,731(844)

Net change in the year
BALANCE,MARCH 31, 2016

398,516¥127,235¥ 36,813¥402,376¥(29,076)(4,058)(418)(10,783)(15,259)356(14,903)¥ 9,790¥ 751¥(10,068)¥537,821¥ 6,034¥543,855

Thousands of U.S. Dollars (Note 1)
Accumulated Other Comprehensive Income

Common Stock

BALANCE,MARCH 31, 2015

$1,129,169

Capital Surplus Retained Earnings Treasury Stock$ 623,085$3,508,634$(381,681)$122,894$10,375$ 6,348

Non-controlling
Interests

Total$5,018,824$50,396

Total Equity$5,069,220

Net income attributable toowners of the parent

349,882

349,882

349,882

Cash dividends,$0.23 per share(94,730)(94,730)(94,730)

780

780

780

(443,791)(443,791)(443,791)

99,461

84,93484,934(7,486)(7,486)

Adjustment of retained
earnings for changes
in the scope of
consolidation
Purchase oftreasury stock
Disposal oftreasury stock(14,527)

Retirement oftreasury stock(274,367)

Change in equity related
to transaction with noncontrolling shareholders(193,608)

467,975(7,486)

Net change in the year
BALANCE,MARCH 31, 2016

$1,129,169

See notes to consolidated financial statements.

64

Remeasurements
Unrealizedof Defined
Gain onForeign Currency
Employees’
Available-for-Sale
Translation
Retirement Benefit
Securities
Adjustments
Plans

YAMATO HOLDINGS CO., LTD.
Annual Report 2016

$ 326,705$3,570,958$(258,036)(36,007)(3,713)$ 86,887$ 6,662(95,698)(135,418)

3,157(132,261)$(89,350) $4,772,995$53,553$4,826,548

Consolidated Statement of Cash Flows
Year Ended March 31, 2016

Thousands of
U.S. Dollars(Note 1)Millions of Yen
2015

2016

2016

OPERATING ACTIVITIES:
Income before income taxes¥

68,079¥69,158$ 604,176

Adjustments for:
Income taxes—paid(29,228)(30,362)(259,385)

Depreciation and amortization

46,75846,078414,964

Loss on sales and disposal of property, plant and equipment—net
Loss on impairment of long-lived assets
Gain on sales of marketable and investment securities

91

2

808

1,155

1,792

10,249

(54)

(7)

(475)

(15,422)(11,898)(136,869)

Changes in assets and liabilities, net of effects from newly consolidated subsidiaries:
Increase in notes and accounts receivable
Decrease (increase) in inventories
Decrease in notes and accounts payable
Increase in liability for employees’ retirement benefits

473

(47)

4,200

(9,137)(14,666)(81,090)

2,376

2,796

21,089(15,376)

29,774(136,458)

Total adjustments(18,364)

23,462(162,967)

Net cash provided by operating activities

49,715

92,620441,209

Other—net

INVESTING ACTIVITIES:
Proceeds from sale of property, plant and equipment

17,273

2,539

153,293

Purchases of property, plant and equipment(37,426)(54,308)(332,148)

Proceeds from sales of marketable and investment securities
Purchases of marketable and investment securities

110

14

972

(1,846)(1,021)(16,381)(5,243)

Increase in investments in and advances to unconsolidated subsidiaries and affiliates

(591)

(127)

Collection of loans

1,054

1,210

9,354

Payment of loans(1,020)(1,292)(9,048)Other
Net cash used in investing activities(7,784)(5,500)(69,082)(30,230)(58,485)(268,283)

FINANCING ACTIVITIES:
Proceeds from (repayments of) short-term debt—net

2,708(6,757)24,028Proceeds from long-term debt

58,86560,400522,406

Repayments of long-term debt

(16,857)(19,392)(149,598)

Dividends paid

(10,721)(10,146)(95,146)

Purchase of treasury stock—net(50,013)(30,592)(443,851)

(815)

(682)

(7,230)(149,391)

Other
Net cash used in financing activities(16,833)(7,169)FOREIGN CURRENCY TRANSLATION ADJUSTMENTS ON CASH AND CASH EQUIVALENTS

(654)

690

(5,809)NET INCREASE IN CASH AND CASH EQUIVALENTS

1,998

27,656

17,726

CASH AND CASH EQUIVALENTS OF NEWLY CONSOLIDATED SUBSIDIARIES,BEGINNING OF YEAR

213

1,890

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR

247,051

219,395

2,192,503

CASH AND CASH EQUIVALENTS, END OF YEAR (Note 2.d)¥249,262¥247,051$2,212,119

Decrease in capital surplus due to exercise of stock acquisition rights¥ (1,637)¥$

Decrease in treasury stock due to exercise of stock acquisition rights

11,207

10,74599,458Decrease in zero coupon convertible bonds due to exercise of stock acquisition rights

9,570

10,34084,931NONCASH INVESTING AND FINANCING ACTIVITIES:(405)(14,527)

See notes to consolidated financial statements.

YAMATO HOLDINGS CO., LTD.
Annual Report 201665

Notes to Consolidated Financial Statements
Year Ended March 31, 2016

1. BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements have been prepared in accordance with the provisions set forth in theJapanese Financial Instruments and Exchange Act and its related accounting regulations, and in accordance with accounting
principles generally accepted in Japan (“Japanese GAAP”), which are different in certain respects as to the application and disclosure requirements of International Financial Reporting Standards.
In preparing these consolidated financial statements, certain reclassifications and rearrangements have been made to theconsolidated financial statements issued domestically in order to present them in a form which is more familiar to readers outside Japan. In addition, certain reclassifications and rearrangements have been made in the 2015 consolidated financial statements to conform them to the classifications and presentations used in 2016.
According to ASBJ Statement No. 22, “Accounting Standard for Consolidated Financial Statements,” presentation of net
income and others has been changed and presentation of minority interests has been changed to non-controlling interests. In
order to reflect these changes, certain reclassifications have been made in the 2015 consolidated financial statements.
The consolidated financial statements are stated in Japanese yen, the currency of the country in which Yamato Holdings Co.,
Ltd. (the “Company”) is incorporated and operates. The translations of Japanese yen amounts into U.S. dollar amounts areincluded solely for the convenience of readers outside Japan and have been made at the rate of ¥112.68 to $1, the approximate
rate of exchange at March 31, 2016. 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.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa. Consolidation—The consolidated financial statements as of March 31, 2016, include the accounts of the Company and its 40
significant (39 in 2015) subsidiaries (together, the “Group”).
Under the control and influence concepts, those companies in which the Company, 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 unconsolidated 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.
There were no affiliates accounted for by the equity method in 2016 or 2015.
Investments in the unconsolidated subsidiaries and affiliates are stated at cost, less a valuation allowance representing possible losses on the investments that are deemed to be other than temporary. If the equity method of accounting had been applied
to the investments in such companies, the effect on the accompanying consolidated financial statements would not be material.
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 also eliminated.
b. Unification of Accounting Policies Applied to Foreign Subsidiaries for the Consolidated Financial Statements—In May 2006,
the Accounting Standards Board of Japan (the “ASBJ”) issued ASBJ Practical Issues Task Force (PITF) No. 18, “Practical Solution on
Unification of Accounting Policies Applied to Foreign Subsidiaries for the Consolidated Financial Statements” which was subsequently revised in February 2010 and March 2015 to reflect revisions of the relevant Japanese GAAP or accounting standards in otherjurisdictions. PITF No. 18 prescribes that the accounting policies and procedures applied to a parent company and its subsidiaries for
similar transactions and events under similar circumstances should in principle be unified for the preparation of the consolidated
financial statements. However, financial statements prepared by foreign subsidiaries in accordance with either International
Financial Reporting Standards or the generally accepted accounting principles in the United States of America tentatively may be
used for the consolidation process, except for the following items which should be adjusted in the consolidation process so that net
income is accounted for in accordance with Japanese GAAP, unless they are not material: (a) amortization of goodwill; (b) scheduled
amortization of actuarial gain or loss of pensions that has been recorded in equity through other comprehensive income; (c) expensing capitalized development costs of R&D; and (d) cancellation of the fair value model accounting for property, plant and equipment
and investment properties and incorporation of the cost model accounting.
c. Recognition of Operating Revenues—The Group recognizes freight charge income as operating revenue at the time when
freight has been received from the shipping customer for transportation.
Fees from customers based on installment sales contracts are recognized by the equal installment method.

66

YAMATO HOLDINGS CO., LTD.
Annual Report 2016

d. Cash Equivalents—Cash equivalents in the consolidated statement of cash flows are short-term investments that are readily
convertible into cash and that are exposed to insignificant risk of changes in value. Cash equivalents in the consolidated statement of cash flows include time deposits, certificates of deposit, and mutual funds investing in bonds that represent short-term
investments, all of which mature or become due within three months of the date of acquisition.
The difference between cash and cash equivalents in the accompanying consolidated balance sheet and cash and cash equivalents in the accompanying consolidated statement of cash flows is as follows:
Thousands of
U.S. Dollars

Millions of Yen
2016

Cash and cash equivalents presented in the consolidated balance sheet¥249,594

Time deposits due beyond three months

2015

2016

¥247,398$2,215,067(36)

Bank overdraft
Cash and cash equivalents presented in the consolidated statement of cash flows

(332)

(311)

(2,948)¥249,262¥247,051$2,212,119

e. Inventories—Inventories are stated at the lower of cost determined by the first-in, first-out method or net selling value.
f. Marketable and Investment Securities—Marketable and investment securities are classified and accounted for, dependingon 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 earnings, (2) held-to-maturity debt securities, for which there is the positive intent and ability to hold to maturity are reported at amortized cost, and (3) available-for-salesecurities, which are not classified as either of the aforementioned securities, are reported at fair value, with unrealized gains
and losses, net of applicable taxes, reported in a separate component of equity. The Group had no trading securities at March 31,
2016 and 2015.
Nonmarketable 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.
g. Property, Plant and Equipment—Property, plant and equipment are stated at cost. Depreciation of property, plant andequipment excluding leased assets of the Company and its domestic consolidated subsidiaries is computed substantially by
the declining-balance method, while the straight-line method is applied to buildings acquired after April 1, 1998. Depreciationof leased assets is computed by the straight-line method over the lease period with no residual value carried.
The depreciation of property, plant and equipment of foreign consolidated subsidiaries is computed by the straight-line
method over the estimated useful lives of the assets. The range of useful 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.
h. Long-Lived Assets—The Group reviews its long-lived assets for impairment whenever events or changes in circumstancesindicate the carrying amount of an asset or asset group may not be recoverable. An impairment loss is 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 the asset or asset group. The impairment loss would be measured as the amount by which thecarrying amount of the asset exceeds its recoverable amount, which is the higher of the discounted cash flows from the continued
use and eventual disposition of the asset or the net selling price at disposition.
i. Other Assets—Amortization of intangible assets is computed by the straight-line method.
Depreciation of leased assets is computed by the straight-line method over the lease period with no residual value carried.
j. Retirement and Pension Plan—The Company and consolidated subsidiaries mainly have a contributory trusted pension plan
and an unfunded retirement benefit plan. In addition, a defined contribution retirement plan was introduced along with thesedefined benefit pension plans.

YAMATO HOLDINGS CO., LTD.
Annual Report 2016

67

In calculating the retirement benefit obligations, the straight-line basis is used in determining the amount of the expected
retirement benefit obligations attributed to service performed up to the end of the current fiscal year. Past service costs are recognized in profit or loss in full in the fiscal year in which it arises. Actuarial gains and losses are amortized on a straight-line basis
over five years within the average remaining service period of the eligible employees on and after the fiscal year following the
fiscal year in which it arises.
In May 2012, the ASBJ issued ASBJ Statement No. 26, “Accounting Standard for Retirement Benefits” and ASBJ Guidance
No. 25, “Guidance on Accounting Standard for Retirement Benefits,” which replaced the former standard and the other related
practical guidance.
Under the revised accounting standard, actuarial gains and losses are recognized within equity on the consolidated balance
sheet after adjusting for tax effects, and funded status is recognized as a liability or asset.
k. Asset Retirement Obligations—In March 2008, the ASBJ issued ASBJ Statement No. 18, “Accounting Standard for Asset
Retirement Obligations” and ASBJ Guidance No. 21, “Guidance on Accounting Standard for Asset Retirement Obligations.” Under
this accounting standard, an asset retirement obligation is defined as a legal obligation imposed either by law or contract that
results from the acquisition, construction, development, and normal operation of a tangible fixed asset and is associated with theretirement of such tangible fixed asset.
The asset retirement obligation is recognized as the sum of the discounted cash flows required for the future asset retirement
and is recorded in the period in which the obligation is incurred if a reasonable estimate can be made. If a reasonable estimate of
the asset retirement obligation cannot be made in the period the asset retirement obligation is incurred, the liability should berecognized when a reasonable estimate of the asset retirement obligation can be made. Upon initial recognition of a liability for
an asset retirement obligation, an asset retirement cost is capitalized by increasing the carrying amount of the related fixed asset
by the amount of the liability. The asset retirement cost is subsequently allocated to expense through depreciation over theremaining useful life of the asset. Over time, the liability is accreted to its present value each period. Any subsequent revisions to
the timing or the amount of the original estimate of undiscounted cash flows are reflected as reconciliation to the carrying
amount of the liability and the capitalized amount of the related asset retirement cost.
l. Leases—For a lessee, all finance lease transactions are capitalized to recognize lease assets and lease obligations in thebalance sheet.
For a lessor, all finance leases that deem to transfer ownership of the leased property to the lessee are recognized as leasereceivables, and all finance leases that deem not to transfer ownership of the leased property to the lessee are recognized as
investments in leases.
m. Income Taxes—The provision for income taxes is computed based on the pretax income included in the consolidated statement 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. Deferred taxes
are measured by applying currently enacted tax laws to the temporary differences.
n. Foreign Currency Transactions—All short 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.
o. Derivative Financial Instruments—The Company and certain consolidated subsidiaries use derivative financial instruments tomanage their exposures to fluctuations in interest rates. Interest rate swaps are utilized by the Company and the consolidated subsidiaries to reduce interest rate risks. The Group has a policy not to enter into derivatives for trading or speculative purposes.
The interest rate swaps, which qualify for hedge accounting and meet specific matching criteria, are not remeasured at market
value but the differential paid or received under the swap agreements are recognized and included in interest expense or income.
p. Foreign Currency Financial Statements—The balance sheet accounts of the consolidated foreign subsidiaries are translated
into Japanese yen at the current exchange rate as of the balance sheet date except for equity, which is translated at the historicalrate. Differences arising from such translation are shown as “Foreign currency translation adjustments” under accumulated othercomprehensive income in a separate component of equity.
Revenue and expense accounts of the consolidated foreign subsidiaries are translated into Japanese yen at the current
exchange rates as of the balance sheet date.

68

YAMATO HOLDINGS CO., LTD.
Annual Report 2016

q. Per Share Information—Basic net income per share is computed by dividing net income available to common shareholders
by the weighted-average 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 the outstanding convertible notes andbonds at the beginning of the year (or at the time of issuance) with an applicable adjustment for related interest expense, net oftax, and full exercise of outstanding warrants.
Cash dividends per share presented in the accompanying consolidated statement of income are dividends applicable to therespective years, including dividends to be paid after the end of the year.
r. Accounting Changes and Error Corrections—In December 2009, the ASBJ issued ASBJ Statement No. 24, “AccountingStandard for Accounting Changes and Error Corrections” and ASBJ Guidance No. 24, “Guidance on Accounting Standard for
Accounting Changes and Error Corrections.” Accounting treatments under this standard and guidance are as follows:(1) Changes in Accounting Policies—When a new accounting policy is applied following revision of an accounting standard,
the new policy is applied retrospectively unless the revised accounting standard includes specific transitional provisions, inwhich case the entity shall comply with the specific transitional provisions. (2) Changes in Presentation—When the presentationof financial statements is changed, prior-period financial statements are reclassified in accordance with the new presentation.
(3) Changes in Accounting Estimates—A change in an accounting estimate is accounted for in the period of the change if the change
affects that period only, and is accounted for prospectively if the change affects both the period of the change and future periods.
(4) Corrections of Prior-Period Errors—When an error in prior-period financial statements is discovered, those statements are restated.
s. New Accounting Pronouncements
Tax Effect Accounting—In March 2016, the ASBJ issued ASBJ Guidance No. 26, “Guidance on Recoverability of Deferred Tax
Assets,” which revised the previous accounting and auditing guidance issued by the Japanese Institute of Certified Public
Accountants. While the new guidance does not change the framework of the previous guidance, it provides new guideline for theapplication of “Accounting Standards for Tax Effect Accounting” with regard to the recoverability of deferred tax assets.
The previous guidance provided a basic framework which included certain specific restrictions on recognizing deferred tax
assets depending on the company’s classification in respect of its profitability, taxable income and temporary differences. The
new guidance made certain necessary changes in the requirement for the classification and also in the treatment of the amountof deferred tax assets.
The guidance will be applied to the Company and its domestic consolidated subsidiaries from the beginning of the fiscal yearthat begins on or after April 1, 2016.
The Company is now in the process of measuring the effect of applying the guidance.

3. NOTES AND ACCOUNTS RECEIVABLE
Sales recorded on the installment basis were 0.3% of operating revenues in both 2016 and 2015.
Annual maturities of notes and accounts receivable—installment at March 31, 2016, and related amortization of deferred profit
on installment sales are as follows:
Millions of Yen
Year Ending March 31

Receivables

Thousands of U.S. Dollars

Deferred Profit on
Installment Sales

Receivables

Deferred Profit on
Installment Sales

2017¥21,438¥2,286$190,256$20,287

2018

10,9501,626

97,17814,426

2019

6,172

1,007

54,776

8,940

2020

3,113

541

27,623

4,803

2021

1,396

271

12,393

2,404

579

164

5,136

1,456

¥43,648¥5,895$387,362$52,3162022 and thereafter
Total

YAMATO HOLDINGS CO., LTD.
Annual Report 2016

69

4. INVENTORIESInventories at March 31, 2016 and 2015, consisted of the following:Thousands of
U.S. Dollars

Millions of Yen

Merchandise

2016

2015

2016

¥ 738

¥ 722

$ 6,550

Work in process

184

512

1,635

Raw materials and supplies

1,936

2,102

17,178

Total¥2,858¥3,336$25,363

5. MARKETABLE AND INVESTMENT SECURITIESMarketable and investment securities as of March 31, 2016 and 2015, consisted of the following:Thousands of
U.S. Dollars

Millions of Yen
2015

2016

2016

Noncurrent:
Marketable equity securities¥29,216¥33,017$259,282

Nonmarketable equity securities

719

730

6,380

Other

394

96

3,500

¥30,329¥33,843$269,162

Total

Information regarding each category of the securities classified as available-for-sale at March 31, 2016 and 2015, was as follows:
Millions of Yen
2016
Cost

Unrealized Gains

Unrealized Losses¥14,048¥84

Fair Value

Securities classified as:
Available-for-sale: Equity securities¥15,252¥29,216

Millions of Yen
2015
Cost

Unrealized Gains

Unrealized Losses¥19,261¥38

Fair Value

Securities classified as:
Available-for-sale: Equity securities¥13,794¥33,017

Thousands of U.S. Dollars
2016
Cost

Unrealized Gains

Unrealized Losses$124,670$745

Fair Value

Securities classified as:
Available-for-sale: Equity securities$135,357$259,282

Information for available-for-sale securities, which were sold during the years ended March 31, 2016 and 2015, was as follows:
Millions of Yen
March 31, 2016

Proceeds

Realized Gains

Realized Losses

¥110

¥54

¥–

¥110

¥54

¥–

¥14

¥7

¥–

¥14

¥7

¥–

Available-for-sale:
Equity securities
Other
Total
March 31, 2015

Available-for-sale:
Equity securities
Other
Total

70

YAMATO HOLDINGS CO., LTD.
Annual Report 2016

Thousands of U.S. Dollars
March 31, 2016

Proceeds

Realized Gains

Realized Losses

$972

$475

$–

$972

$475

$–

Available-for-sale:
Equity securities
Other
Total

6. LONG-LIVED ASSETSThe Group reviewed its long-lived assets for impairment as of the years ended March 31, 2016 and 2015. As a result, the Group
recognized an impairment loss of ¥1,155 million ($10,249 thousand) as other expense for the asset groups of the Tokushima
Regional Branch of Yamato Transport Co., Ltd. and eight other asset groups for the year ended March 31, 2016, and ¥1,792 million
as other expense for the asset groups of Yamato (China) Transport Co., Ltd. and ten other asset groups for the year ended March
31, 2015, due to continuous operating losses of those units or significant declines in market prices. The carrying amounts of therelevant asset groups were written down to the recoverable amounts. In the case where net selling prices were used as recoverable
amounts, the relevant asset groups were evaluated mainly based on Real Estate Appraisal Standards, assessed value of fixed assets,
and posted land prices.

7. BANK LOANS AND LONG-TERM DEBT
Short-term bank loans at March 31, 2016 and 2015, consisted of notes to banks and bank overdrafts. The weighted-average interest
rates applicable to the bank loans as of March 31, 2016 and 2015, were approximately 0.708% and 0.755%, respectively.
Long-term debt at March 31, 2016 and 2015, consisted of the following:Thousands of
U.S. Dollars

Millions of Yen
2016

0.010% to 5.500% loans from banks due 2016 to 2020
0.120% to 6.400% loans from banks due 2015 to 2019

7,898

Unsecured 0.050% bonds due in March 201910,000Unsecured 0.090% bonds due in March 2021

10,000

Zero coupon convertible bonds due in March 2016
Less current portion
Total

2016

$1,090,114¥100,554

Lease obligations

Total

2015

¥122,834
7,389

70,08988,74788,747

9,660
150,732

117,603

1,337,697(34,829)(29,071)(309,093)¥115,903¥ 88,532$1,028,604

Millions of Yen

Thousands of
U.S. Dollars

Annual maturities of long-term debt at March 31, 2016, were as follows:Year Ending March 31

2017¥ 34,829$ 309,093

2018

45,934

407,647

2019

45,213401,2532020

14,112

125,2412021

10,331

91,6812022 and thereafter
Total

313

2,782

¥150,732$1,337,697

YAMATO HOLDINGS CO., LTD.
Annual Report 2016

71

8. RETIREMENT AND PENSION PLANS
The Group has defined benefit pension plans and defined contribution retirement plans for employees.
The defined benefit pension plans provide, under most circumstances, that employees terminating their employment areentitled to retirement benefits determined based on the rate of pay at the time of termination, years of service, and certain otherfactors. Such retirement benefits are made in the form of a lump-sum severance payment from the Company or from the consolidated subsidiaries and annuity payments from a trustee. Employees are entitled to larger payments if the termination is
involuntary, by retirement at the mandatory retirement age, by death, or by voluntary retirement at certain specific ages prior tothe mandatory retirement age.
(1) Defined Benefit Pension Plans
The changes in defined benefit obligation for the years ended March 31, 2016 and 2015, were as follows:
Thousands of
U.S. Dollars

Millions of Yen
2015

2016

Balance at beginning of year

¥133,1262016¥119,136

Cumulative effects of changes in an accounting policy$1,181,453

6,312

Restated balance

133,126

125,448

1,181,453

Service cost

10,074

9,704

89,400Interest cost

1,147

1,098

10,183

Actuarial loss arising during the year

14,943

1,917

132,612Retirement benefits paid

(5,777)(5,041)(51,268)¥153,513¥133,126$1,362,380

Balance at end of year

The changes in plan assets for the years ended March 31, 2016 and 2015, were as follows:
Thousands of
U.S. Dollars

Millions of Yen
2015

2016

Balance at beginning of year

¥80,358¥72,079

804

721

7,132

(1,445)

5,269(12,824)

Expected return on plan assets
Actuarial (loss) gain arising during the year

2016

$713,157

Contributions from the employer

4,261

4,137

37,817Retirement benefits paid

(1,962)(1,848)(17,413)¥82,016¥80,358$727,869

Balance at end of year

Reconciliation between the liability recorded in the consolidated balance sheet and the balances of defined benefit obligation andplan assets as of March 31, 2016 and 2015, were as follows:
Thousands of
U.S. Dollars

Millions of Yen
2016

2015

Defined benefit obligation of funded plan

¥ 60,980¥ 53,415$ 541,182

Plan assets(82,016)(80,358)(727,869)(21,036)(26,943)(186,687)

92,53379,711

821,198¥ 71,497¥ 52,768$ 634,511

Defined benefit obligation of unfunded plan
Net liability arising from defined benefit obligation

2016

Thousands of
U.S. Dollars

Millions of Yen

Liability for employees’ retirement benefits
Asset for employees’ retirement benefits
Net liability arising from defined benefit obligation

2016

2015

¥71,551¥53,024

2016$634,996

(54)

(256)

(485)

¥71,497¥52,768$634,511

The amount of liability and asset for employees’ retirement benefits that are offset individually by the Company and subsidiaries are combined.

72

YAMATO HOLDINGS CO., LTD.
Annual Report 2016

The components of net periodic benefit costs for the years ended March 31, 2016 and 2015, were as follows:
Thousands of
U.S. Dollars

Millions of Yen
2016

2015

2016

Service cost

¥10,074¥ 9,704$89,400

Interest cost

1,147

1,098

10,183

Expected return on plan assets

(804)

(721)

(7,132)

Recognized actuarial loss

790

399

7,003

5

(13)

46

¥11,212¥10,467$99,500

OthersNet periodic benefit costs

Amounts recognized in other comprehensive income (before income tax effect adjustments) in respect of defined retirement
benefit plans for the years ended March 31, 2016 and 2015, were as follows:
Thousands of
U.S. Dollars

Millions of Yen
2016

2015

Actuarial (loss) and gain¥(15,598)¥3,751$(138,433)

Total¥(15,598)¥3,751$(138,433)

2016

Amounts recognized in accumulated other comprehensive income (before income tax effect adjustments) in respect of defined
retirement benefit plans as of March 31, 2016 and 2015, were as follows:
Thousands of
U.S. Dollars

Millions of Yen
2016

2015

Unrecognized actuarial (loss) and gain¥(14,531)¥1,067$(128,962)

Total¥(14,531)¥1,067$(128,962)

2016

2015

2016

Plan assets as of March 31, 2016 and 2015, consisted of the following:
General accounts

34%

31%

Debt investments

27

24

Equity investments

21

24

Others

18

21

Total

100%

100%

Assumptions used for the years ended March 31, 2016 and 2015, were set forth as follows:
2016

2015

Discount rate

0.1%

0.9%

Expected rate of return on plan assets

1.0%

1.0%

The expected rate of return on plan assets is determined on the basis of the distribution of plan assets, past performance ofrespective assets that make up investments of plan assets, and market trends.
(2) Defined Contribution Retirement Plans
The amounts contributed to the defined contribution retirement plans of the Group for the years ended March 31, 2016 and 2015,
were ¥2,193 million ($19,462 thousand) and ¥2,136 million, respectively.

YAMATO HOLDINGS CO., LTD.
Annual Report 201673

9. ASSET RETIREMENT OBLIGATIONS
The changes in asset retirement obligations for the years ended March 31, 2016 and 2015, were as follows:
Thousands of
U.S. Dollars

Millions of Yen
2016

2015

2016

¥4,980¥4,789$44,193

Additional provisions associated with the acquisition of property,
plant and equipment

150

170

1,329

Reconciliation associated with passage of time

95

93

843

Reconciliation associated with changes in accounting estimates

30

2

270

Reduction associated with settlement of asset retirement obligations

(61)

(80)

(543)

Others

(10)

6

(90)

¥5,184¥4,980$46,002

Balance at beginning of year

Balance at end of year

Changes in accounting estimates were recorded as it became evident that the estimate of the discounted cash flows required
for future asset retirement would change at the beginning of the year, which resulted from certain events such as obtaining new
information. A reconciliation has been prepared for the change, which resulted in an increase of the asset retirement obligation
for the years ended March 31, 2016 and 2015, by ¥30 million ($270 thousand) and ¥2 million, respectively.

10. EQUITY
Japanese companies are subject to the Companies Act of Japan (the “Companies Act”). The significant provisions in the
Companies Act that affect financial and accounting matters are summarized below:
a. Dividends
Under the Companies Act, companies can pay dividends at any time during the fiscal year in addition to the year-end dividend
upon resolution at the shareholders meeting. For companies that meet certain criteria such as (1) having a Board of Directors,(2) having independent auditors, (3) having an Audit & Supervisory Board, and (4) the term of service of the directors beingprescribed as one year rather than the normal two-year term by its articles of incorporation, the Board of Directors may declare
dividends (except for dividends-in-kind) at any time during the fiscal year if the company has prescribed so in its articles of incorporation. The Company meets all the above criteria.
The Companies Act permits companies to distribute dividends-in-kind (noncash assets) to shareholders subject to a certain
limitation and additional requirements.
Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if the articles of incorporation of the company so stipulate. The Companies Act provides certain limitations on the amounts available for dividends or
the purchase of treasury stock. The limitation is defined as the amount available for distribution to the shareholders, but theamount of net assets after dividends must be maintained at no less than ¥3 million.
b. Increases/Decreases and Transfer of Common Stock, Reserve and Surplus
The Companies Act requires that an amount equal to 10% of dividends must be appropriated as a legal reserve (a component ofretained earnings) or as additional paid-in capital (a component of capital surplus) depending on the equity account charged
upon the payment of such dividends until the aggregate amount of legal reserve and additional paid-in capital equals 25% of thecommon stock. Under the Companies Act, the total amount of additional paid-in capital and legal reserve may be reversed without limitation. The Companies Act also provides that common stock, legal reserve, additional paid-in capital, other capital surplus, and retained earnings can be transferred among the accounts under certain conditions upon resolution of the shareholders.
c. Treasury Stock
The Companies Act also provides for companies to purchase treasury stock and dispose of such treasury stock by resolution of theBoard of Directors. The amount of treasury stock purchased cannot exceed the amount available for distribution to the shareholders, which is determined by a specific formula. The Companies Act also provides that companies can purchase both treasury stockacquisition rights and treasury stock. Such treasury stock acquisition rights are presented as a separate component of equity.

74

YAMATO HOLDINGS CO., LTD.
Annual Report 2016

11. INCOME TAXESThe Company and its domestic subsidiaries are subject to Japanese national and local income taxes, which, in the aggregate,
resulted in normal effective statutory tax rates of 33.1% and 35.6% for the years ended March 31, 2016 and 2015.
The tax effects of significant temporary differences, which resulted in deferred tax assets and liabilities at March 31, 2016 and2015, were as follows:
Thousands of
U.S. Dollars

Millions of Yen
2016

2015

¥ 9,441¥ 9,711$ 83,788

1,774

1,769

15,7392016

Deferred tax assets:
Current:
Accrued expenses
Enterprise tax
Allowance for doubtful accounts
Legal welfare expense
Other

184

216

1,635

1,524

1,818

13,529

2,215

2,466

19,660¥ 15,138¥ 15,980$ 134,351

Liability for employees’ retirement benefits¥ 22,029¥ 17,728$ 195,499

Loss on valuation of investment securities

1,881

1,992

16,692

Loss on valuation of land

20,75921,898184,233

Loss on impairment of long-lived assets

4,575

4,188

40,598

468

495

4,157

2,138

1,914

18,976

Deferred tax assets—current
Noncurrent:

Loss on valuation of telephone subscription rights
Unrealized profit
Other

10,288

10,69391,303

Less valuation allowance(31,943)(33,122)(283,481)

Deferred tax assets—noncurrent¥ 30,195¥ 25,786$ 267,977

Current—other

¥

(231)

¥

(293)

$

(2,051)

Deferred tax liabilities—current

¥

(231)

¥

(293)

$

(2,051)

Deferred tax liabilities:

Noncurrent:
Unrealized gain on available-for-sale securities
Other
Deferred tax liabilities—noncurrent
Deferred tax assets—net¥ (3,405)¥ (4,740)(2,582)(3,016)(22,917)¥ (5,987)¥ (7,756)$ (53,134)¥ 39,115¥ 33,717$ 347,143$ (30,217)

YAMATO HOLDINGS CO., LTD.
Annual Report 201675

Reconciliation between the normal effective statutory tax rates and the actual effective tax rates reflected in the accompanying
consolidated statement of income for the year ended March 31, 2016, with the corresponding figures for 2015 is as follows:
2015

2016

Normal effective statutory tax rate

33.1%

Per capita levy of local taxes

4.3

4.2

Valuation allowance

0.8

(0.2)

Downward revision to deferred tax assets as of end of the period
due to the change in the corporate tax rate

2.7

5.0

35.6%

Other—net

0.8

1.0

Actual effective tax rate

41.7%

45.6%

On March 29, 2016, new tax reform laws were enacted in Japan, which changed the normal effective statutory tax rate from
32.3% to 30.9%, effective for the fiscal years beginning on April 1, 2016 and 2017, and to 30.6% for the fiscal years beginning on or after
April 1, 2018.
The effects of the reform were to decrease deferred tax assets (after subtraction of deferred tax liabilities) in the consolidated balance sheet as of March 31, 2016, by ¥1,895 million ($16,816 thousand), of which ¥1,893 million ($16,802 thousand) is the effect of thechange in tax rates, and to increase income taxes—deferred in the consolidated statement of income for the year then ended by ¥1,834
million ($16,275 thousand), of which ¥1,832 million ($16,261 thousand) is the effect of the change in tax rates.

12. LEASES(1) Lessee
The Group leases certain machinery, computer equipment and other assets.
Future rental payments under noncancelable operating leases at March 31, 2016 and 2015, were as follows:
Thousands of
U.S. Dollars

Millions of Yen
2015

2016

2016

Due within one year

¥153

¥ 85

Due after one year

408

65

3,616

Total

¥561

¥150

$4,975$1,359(2) Lessor
The net investments in lease as of March 31, 2016 and 2015, are summarized as follows:
Thousands of
U.S. Dollars

Millions of Yen

Gross lease receivables

2016

2015

¥47,496¥44,5802016$421,511

Unguaranteed residual values

5,069

4,207

44,990

Unearned interest income(3,671)(3,839)(32,578)¥48,894¥44,948$433,923

Investments in leases—current

Maturities of lease receivables for finance leases that are deemed not to transfer ownership of the leased property to the lessee asof March 31, 2016, are as follows:
Millions of Yen

Thousands of
U.S. Dollars

2017¥15,792$140,147

2018

13,404

118,9612019

10,07889,439

2020

5,844

51,865

2021

1,986

17,624

Year Ending March 312022 and thereafter
Total

76

YAMATO HOLDINGS CO., LTD.
Annual Report 2016

392

3,475

¥47,496$421,511

The minimum rental commitments under noncancelable operating leases at March 31, 2016 and 2015, are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Due within one year

2016

2015

2016

¥3,361¥2,812$29,826

Due after one year

6,416

5,846

56,942

Total¥9,777¥8,658$86,768

13. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES(1) Group Policy for Financial Instruments
The Group uses financial instruments, mainly long-term debt including bank loans and bonds, in order to expand its businessbased on its investment plan to expand its network. Cash surpluses, if any, are invested in low risk financial assets. Derivatives areused, not for speculative purposes, but to manage exposure to interest fluctuation risk. Certain consolidated subsidiaries conductleasing or installment sales operations.
(2) Nature and Extent of Risks Arising from Financial Instruments and the Risk Management for Financial Instruments
Receivables such as notes and accounts receivable and installment sales receivable are exposed to customer credit risk.
Therefore, the Group maintains customers’ credit risk by monitoring collections and accrued receivables at due dates.
Marketable and investment securities are mainly equity securities of the companies with which the Group has business relationships or capital alliances. Such securities are exposed to the risk of market price fluctuations.
Most payment terms of payables such as notes and accounts payable are less than one year.
Short-term bank loans and long-term bank loans are mainly related to a financial business. Although a portion of such bankloans are exposed to market risks from changes in variable interest rates, those risks are mitigated by using derivatives such as
interest rate swaps. In addition, such interest rate swaps are contracted in accordance with internal rules, which prescribe theauthority over derivative transactions.
Accounts payable and bank loans exposed to liquidity risks are managed by each company of the Group, such as throughfund settlement, bookkeeping, monitoring of the balances outstanding, and managing cash flows.
(3) Fair Values of Financial Instruments
Fair values of financial instruments are based on quoted prices in active markets. If a quoted price is not available, other rational
valuation techniques are used instead. The value could vary depending on the technique used.
Fair values of financial instruments at March 31, 2016 and 2015, were as follows:
Millions of Yen
March 31, 2016

Carrying Amount

Cash and cash equivalents¥249,594

Trade notes and accounts receivable

197,382

Allowance for doubtful accounts

Difference¥249,594(125)
197,257

Installment sales receivable

Fair Value

198,154

¥ 897

5,826

43,648

Allowance for doubtful accounts(646)

Deferred profit on installment sales(5,895)
37,10742,933

Investment securities

29,216

29,216

Trade notes and accounts payable

148,456

148,456

Short-term loans

55,93456,01884

Long-term loans

90,51590,859344

Derivatives

YAMATO HOLDINGS CO., LTD.
Annual Report 201677

Millions of Yen
March 31, 2015

Carrying Amount

Cash and cash equivalents¥247,398

Trade notes and accounts receivable

187,834

Allowance for doubtful accounts

Difference¥247,398(122)
187,712Installment sales receivable

Fair Value

188,298

¥ 586

5,428

42,008

Allowance for doubtful accounts(802)

Deferred profit on installment sales(5,655)35,551

40,979Investment securities

33,01733,017

Trade notes and accounts payable

157,480

157,480

Short-term loans

34,44334,51572

Long-term loans

83,877

83,834(43)

Derivatives
Thousands of U.S. Dollars
March 31, 2016

Carrying Amount

Fair Value

Cash and cash equivalents$2,215,067$2,215,067

Trade notes and accounts receivable

1,751,705

Allowance for doubtful accounts(1,107)1,750,598

Installment sales receivable
Allowance for doubtful accounts
Deferred profit on installment sales
Investment securities
Trade notes and accounts payable

Difference

1,758,560$ 7,962

329,316

381,02151,705259,282259,282

387,362(5,730)(52,316)

1,317,501

1,317,501

Short-term loans

496,393

497,142749

Long-term loans

803,295

806,348

3,053

Derivatives

Cash and cash equivalents

The carrying values of cash and cash equivalents approximate fair value because of their short maturities.
Trade notes and accounts receivable

The fair values of receivables are measured at the amount to be received at maturity discounted at the Group’s assumed corporate
discount rate. A portion of these receivables is determined by discounting the cash flows related to the receivables at the rate ofgovernment bonds.
Installment sales receivable

Allowances for doubtful accounts and deferred profit on installment sales are deducted from the fair values of installment salesreceivable, which are determined by discounting the cash flows related to the installment sales receivable at the market interest rate.
Marketable and investment securities

The fair values of marketable and investment securities are measured at the quoted market price of the stock exchange for theequity instruments, and at the quoted price obtained from the financial institution for certain debt instruments. Fair value information for marketable and investment securities by classification is included in Note 5.
Trade notes and accounts payable

The fair values of payables, all of which are substantially paid within one year, are measured at the amount to be paid.

78

YAMATO HOLDINGS CO., LTD.
Annual Report 2016

Short-term loans and long-term loans

The fair values of short-term bank loans and long-term loans are determined by discounting the cash flows related to the debt at
the Group’s assumed corporate borrowing rate.
The current portion of long-term bank loans is included in short-term loans in the above table in addition to short-term bankloans on the consolidated balance sheet. Lease payments are not included in long-term loans in the above table.
Derivatives

Fair value information for derivatives is included in Note 14.
(4) Financial Instruments Whose Fair Value Cannot Be Reliably Determined
Thousands of
U.S. Dollars

Millions of Yen

Investments in equity instruments that do not have a quoted market price inan active market

2016

2015

2016

¥2,282¥1,551$20,256(5) Maturity Analysis for Financial Assets and Securities with Contractual Maturities
Millions of Yen
March 31, 2016

Due in One Yearor Less

Due after One Yearthrough Five Years

Due after
Five Years

Cash and cash equivalents¥249,594

Trade notes and accounts receivable

181,984¥15,197

Installment sales receivable

21,43821,631579¥453,016¥36,828

¥780

¥181

Total

¥201

March 31, 2015

Cash and cash equivalents¥247,398

Trade notes and accounts receivable

174,738¥12,915

Installment sales receivable

20,655

20,730623¥442,791¥33,645

¥804

Total

Thousands of U.S. Dollars
March 31, 2016

Due in One Yearor Less

Cash and cash equivalents$2,215,067

Trade notes and accounts receivable

1,615,051$134,869

190,256

191,970

5,136$4,020,374$326,839$6,921

Installment sales receivable
Total

Due after One Yearthrough Five Years

Due after
Five Years$1,785(6) Maturity Analysis for Long-term loans
Year Ending March 31

Millions of Yen

Thousands of
U.S. Dollars

2017¥ 32,319$ 286,819

2018

43,915

389,735

2019

33,600298,1892020

13,000115,371

Total¥122,834$1,090,114

Please see Note 7 for annual maturities of long-term loans.

YAMATO HOLDINGS CO., LTD.
Annual Report 201679

14. DERIVATIVESThe Company and certain consolidated subsidiaries use derivative financial instruments to manage their exposure to fluctuationsin interest rates. Interest rate swaps are utilized by the Company and the consolidated subsidiaries to reduce interest rate risk.
The Group has a policy not to enter into derivatives for trading or speculative purposes.
The interest rate swaps, which qualify for hedge accounting and meet specific matching criteria, are not remeasured at market
value but the differential paid or received under the swap agreements is recognized and included in interest expense or income.
Derivative Transactions to Which Hedge Accounting Is Applied
Millions of Yen
Contract AmountContract AmountDue after One Year

Long-term bank loans¥26,376¥8,220*Long-term bank loans¥38,582¥26,376*

March 31, 2016

Hedged Item

Interest rate swaps(fixed rate payment, floating rate receipt)

Fair Value

March 31, 2015

Interest rate swaps(fixed rate payment, floating rate receipt)

Thousands of U.S. Dollars
March 31, 2016

Hedged Item

Interest rate swaps(fixed rate payment, floating rate receipt)

Long-term bank loans* The fair value of interest rate swaps is included in that of hedged items (see Note 13).

80

YAMATO HOLDINGS CO., LTD.
Annual Report 2016

Contract AmountContract AmountDue after One Year

$234,079$72,950

Fair Value*15. COMPREHENSIVE INCOME
The components of other comprehensive income for the years ended March 31, 2016 and 2015, were as follows:
Thousands of
U.S. Dollars

Millions of Yen
2015

2016

2016

Unrealized (loss) gain on available-for-sale securities:
Adjustments arising during the year

¥ (5,252)¥ 7,258$ (46,607)

(53)

(7)

(475)
(47,082)

Reclassification adjustments to profit or loss
Amount before income tax effect(5,305)

7,251

Income tax effect1,329(1,880)11,797¥ (3,976)¥ 5,371$ (35,285)

¥

¥

$

Total
Foreign currency translation adjustments:
Adjustments arising during the year

(419)

826

(3,713)Remeasurements of defined employees’ retirement benefit plans:
Adjustments arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effectTotal
Total other comprehensive (loss) income¥(16,388)¥ 3,352

790

399

7,003

(15,598)

3,751(138,433)$(145,436)

4,811(1,308)42,700¥(10,787)¥ 2,443$ (95,733)¥(15,182)¥ 8,640$(134,731)

16. NET INCOME PER SHARE
Reconciliation of the differences between basic and diluted net income per share (“EPS”) for the years ended March 31, 2016 and2015, is as follows:
Millions of Yen

Year Ended March 31, 2016

Basic EPS—Net income available to common shareholders
Adjustment in net income—Administrative fee (net of tax)

Net Income
Attributable to
Weighted-average
Owners of the Parent
Shares¥39,425

408,743

Yen

U.S. Dollars

EPS¥96.45

$0.86

$0.85

15

Effect of dilutive securities—Convertible bonds
Diluted EPS—Net income for computation

Thousands ofShares3,644¥39,440

412,387¥95.64¥37,533

415,131¥90.41

Year Ended March 31, 2015

Basic EPS—Net income available to common shareholders
Adjustment in net income—Administrative fee (net of tax)

5

Effect of dilutive securities—Convertible bonds
Diluted EPS—Net income for computation

10,187¥37,538

425,318¥88.26

YAMATO HOLDINGS CO., LTD.
Annual Report 201681

17. SEGMENT INFORMATION(1) Description of Reportable Segments
The Group identifies operating segments as components of entity for which discrete financial information is available and whose
operating results are regularly reviewed by the Board of Directors in order to make decisions about resources to be allocated tothe segments and assess their performance.
The Company, as a pure holding company, forms six reportable segments classified according to business content and manages them based on these reportable segments. Therefore, the Group has the following six reporting segments: “Delivery,” “BIZLogistics,” “Home Convenience,” “e-Business,” “Financial,” and “Autoworks” based on the above policy.
The Group defines the reporting segments as follows:
Delivery:

Small-parcel delivery services such as TA-Q-BIN (door-to-door parcel delivery) andKuroneko DM-Bin (posting service)
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 andhousehold effects delivery 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
Autoworks:
Vehicle maintenance services and fuel supply targeted at transport companies(2) Methods of Measurement for the Amounts of Segment Revenues, Segment Income, Segment Assets, and Other
Items for Each Reportable Segment
The accounting policies of each reportable segment are consistent with those disclosed in Note 2, “Summary of Significant
Accounting Policies.”

82

YAMATO HOLDINGS CO., LTD.
Annual Report 2016

(3) Information about Segment Revenues, Segment Income, Segment Assets, and Other Items
Millions of Yen

2016
Delivery

BIZ-Logistics

Home Convenience

e-Business

Financial

Autoworks

Other

Total

Reconciliation

Consolidated

Segment revenues:
Segment revenues
from customers¥106,823
12,553¥119,376¥48,981
15,247¥64,228¥43,358
30,367¥73,725¥72,455
3,352¥75,807¥24,459
27,539¥51,998¥ 8,470
49,860¥58,330¥1,416,413
205,001¥1,621,414¥

Total segment revenues¥1,111,867
66,083¥1,177,950–(205,001)¥(205,001)¥1,416,413

Segment income

¥

¥

4,906
60,471¥ 1,147
21,437¥ 9,00943,620¥ 8,685
243,037¥ 3,373
24,264¥26,515
11,268¥ 91,826
1,053,923¥ (23,286)
35,514¥ 68,540
1,089,437

Intersegment revenues

Segment assets

38,191
649,826¥1,416,413

Other:
Depreciation and amortization

33,958

2,161

532

4,241

4,069

783

296

46,040699

46,739

Increase of tangible andintangible fixed assets

34,977

2,840

716

6,414

7,466

696

692

53,801

144

53,945

Millions of Yen

2015
Delivery

BIZ-Logistics

Home Convenience

e-Business

Financial

Autoworks

Other

Total

Reconciliation

Consolidated

Segment revenues:
Segment revenues
from customers¥103,821
12,151¥115,972¥48,475
14,546¥63,021¥40,487
28,253¥68,740¥ 66,650
3,402¥ 70,052¥27,153
28,558¥55,711¥ 6,933
45,995¥52,928¥1,396,708
197,150¥1,593,858¥

Total segment revenues¥1,103,189
64,245¥1,167,434–(197,150)¥(197,150)¥1,396,708

Segment income

¥

¥

4,683
61,508¥ 613
20,242¥ 7,757
40,377¥ 8,942
239,027¥ 3,733
24,794¥23,940
10,033¥ 89,272
1,057,961¥ (20,325)
24,570¥ 68,947
1,082,531

Intersegment revenues

Segment assets

39,604
661,980¥1,396,708

Other:
Depreciation and amortization

34,805

1,818

557

3,761

3,438

768

247

45,394664

46,058

Increase of tangible andintangible fixed assets

33,841

3,201

711

4,965

8,397

455

211

51,781

241

52,022Thousands of U.S. Dollars

2016
Delivery

BIZ-Logistics

Home Convenience

e-BusinessTotal segment revenues$ 9,867,479
586,463$10,453,942$ 948,016
111,406$1,059,422$434,696
135,310$570,006$384,785
269,497$654,282

Segment income$$

43,537536,663$ 10,175
190,246$ 79,954
387,112Financial

Autoworks

Other

Total

Reconciliation

Consolidated$ 643,016
29,749$ 672,765$217,064
244,403$461,467$ 75,170 $12,570,226
442,493
1,819,321$517,663 $14,389,547$$

77,0802,156,878$ 29,933
215,341$235,314 $ 814,925
99,9999,353,241$ (206,652) $ 608,273
315,1709,668,411

Segment revenues:
Segment revenues
from customers
Intersegment revenues

Segment assets

338,932
5,767,002– $12,570,226(1,819,321)$(1,819,321) $12,570,226

Other:
Depreciation and amortization

301,367

19,178

4,724

37,63336,108

6,948

2,631

408,5896,205

414,794

Increase of tangible andintangible fixed assets

310,408

25,204

6,356

56,91966,261

6,178

6,146

477,472

1,275

478,747

Notes: Effective from the fiscal year ended March 31, 2016, the Delivery Business segment includes the staffing service business, previously included in Other, due to changes involving business segment categories made in accordance with actual circumstances related to management and administration. The segment information for the fiscal year ended
March 31, 2015 has been prepared and presented according to the new classification.
“Other” includes JITBOX charter services and shared services.
Segment revenues and segment income of “Other” include dividends for the years ended March 31, 2016 and 2015, of ¥24,890 million ($220,887 thousand) and ¥22,101 million, respectively, which the Company received from its subsidiaries as a pure holding company.
Reconciliations are as follows:(1) Reconciliations of segment income for the years ended March 31, 2016 and 2015, of ¥23,286 million ($206,652 thousand) and ¥20,325 million, respectively, are intersegment eliminations and others.
(2) Reconciliations of segment assets at March 31, 2016 and 2015, of ¥35,514 million ($315,170 thousand) and ¥24,570 million, respectively, include intersegment eliminations of assets and liabilities of ¥164,798 million ($1,462,531 thousand) and ¥164,857 million, and corporate assets which are not allocated to each reporting segments of¥200,312 million ($1,777,701 thousand) and ¥189,427 million, respectively.
(3) Reconciliations of increases of tangible and intangible fixed assets at March 31, 2016 and 2015, of ¥144 million ($1,275 thousand) and ¥241 million, respectively, include
the Company’s capital investment.
Segment income is reconciled with the consolidated statement of income.

YAMATO HOLDINGS CO., LTD.
Annual Report 201683

[Related Information about Reporting Segments](1) Information about products and services
Operating revenues from customers for the years ended March 31, 2016 and 2015, are as follows:
Millions of Yen
2015

2016
TA-Q-BIN¥939,470

Kuroneko DM-Bin¥82,701

Other¥394,242

Total

TA-Q-BIN¥912,563¥1,416,413

Kuroneko Mail

Other

¥111,885¥372,260

Total¥1,396,708

Thousands of U.S. Dollars
2016
TA-Q-BIN$8,337,505

Kuroneko DM-Bin$733,950

Other

Total

$3,498,771 $12,570,226(2) Information about geographical areas
Operating revenues for the years ended March 31, 2016 and 2015, are as follows:
Millions of Yen
2015

2016
Japan

¥1,390,082

North America

Other¥11,481¥14,850

Total

Japan

¥1,416,413¥1,368,793

North America

Other¥10,261¥17,654

Total¥1,396,708

Thousands of U.S. Dollars
2016
Japan

$12,336,547

North America

Other$101,890

Total$131,789 $12,570,226

Property, plant and equipment at March 31, 2016 and 2015, are as follows:
Millions of Yen
2015

2016
Japan

¥404,092

North America

Other

¥432

¥1,118

Total¥405,642

Thousands of U.S. Dollars
2016
Japan

$3,586,189

84

YAMATO HOLDINGS CO., LTD.
Annual Report 2016

North America$3,831

Other$9,927

Total$3,599,947

Japan¥418,202

North America

¥442

Other

¥1,457

Total¥420,101

(3) Information about loss on impairment of long-lived assets by reporting segments
Loss on impairment of long-lived assets by reporting segments for the years ended March 31, 2016 and 2015, are as follows:
Millions of Yen
2016
Delivery

BIZ-Logistics

¥817

¥192

Loss on impairmentof long-lived assets

Home
Convenience

e-Business

Financial

Autoworks

¥10

¥136

Other

Eliminations or
Corporate
Consolidated

Total¥1,155¥1,155

Millions of Yen

2015

Loss on impairmentof long-lived assets

Delivery

BIZ-Logistics

Home
Convenience¥1,404¥91¥297

e-Business

Financial

Autoworks

Other

Eliminations or
Corporate
Consolidated

Total¥1,792¥1,792Thousands of U.S. Dollars
2016

Loss on impairmentof long-lived assets

Delivery

BIZ-Logistics$7,245$1,707

Home
Convenience

e-Business

Financial

Autoworks$87$1,210Other

Eliminations or
Corporate
Consolidated

Total$10,249$10,249

18. SUBSEQUENT EVENT
Appropriations of Retained Earnings
The following appropriation of retained earnings at March 31, 2016, was approved at the Company’s Board of Directors meeting
held on May 19, 2016:

Year-end cash dividends, ¥15.00 ($0.13) per share*

Millions of Yen

Thousands of
U.S. Dollars¥5,978$53,051* The dividend per share of ¥15.00 ($0.13) includes commemorative dividends of ¥2.00 ($0.02) for the 40th anniversary of launching TA-Q-BIN.

YAMATO HOLDINGS CO., LTD.
Annual Report 201685

Independent Auditor’s Report

To the Board of Directors of
Yamato Holdings Co., Ltd.:We have audited the accompanying consolidated balance sheet of Yamato Holdings Co., Ltd. and its consolidated subsidiaries as of March 31,
2016, and the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for the year then ended,
and a summary of significant accounting policies and other explanatory information, all expressed in Japanese yen.

Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance withaccounting principles generally accepted in Japan, and for such internal control as management determines is necessary to enable thepreparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of theconsolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures thatare appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made bymanagement, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial
position of Yamato Holdings Co., Ltd. and its consolidated subsidiaries as of March 31, 2016, and the consolidated results of their operations
and their cash flows for the year then ended in accordance with accounting principles generally accepted in Japan.
Convenience Translation
Our audit also comprehended the translation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, such translation has
been made in accordance with the basis stated in Note 1 to the consolidated financial statements. Such U.S. dollar amounts are presented
solely for the convenience of readers outside Japan.

June 3, 201686

YAMATO HOLDINGS CO., LTD.
Annual Report 2016