2015
Annual Report
For the year ended March 31, 2015

TONAMI HOLDINGS CO., LTD.

Capitalizing on expertise originally gained in the transportation business,
the Tonami Group has long been a trailblazer in logistics.
We were among the first in the industry to introduce computer systems.
In recent years, we have taken systematized distribution services fully
utilizing IT to new heights. In particular, our third-party logistics (3PL),
offering companies the optimum solutions to their logistics needs, hasenabled us to cultivate a loyal and growing customer base.
Tonami Holdings Co., Ltd. is now strengthening the fundamentals of thebusiness as it embarks on a new round of development, bringing its capabilities as a pure holding company into full play. Leveraging theaccumulated expertise and business know-how of the Tonami HoldingsGroup, we are sharpening our responsiveness to customer needs not onlyin the field of logistics but also in related businesses and new fields.
We strive to offer value-added services that transcend the traditional conception of logistics. As a pioneer with strengths in information processing,
we are committed to delivering value a stride ahead.
By deploying IT infrastructure attuned to the increasingly diverse andsophisticated needs of the era, we aim to maximize the corporate value of
the Tonami Holdings Group and be an enterprise needed
and respected by society.
We are taking a big stride toward realization of
our “More Than Transportation” vision.

We Want to Deliver Value a Stride Ahead

Contents
1 Consolidated Financial Highlights
2 To Our Shareholders and Investors
5 Corporate Governance
10 Corporate Social Responsibility Activities
11 Financial Section
41 Consolidated Subsidiaries
42 Board of Directors and Corporate Auditors
42 Corporate Data

Forward-Looking Statements
This annual report includes forward-looking statements that represent Tonami’s assumptions and expectations in light of currently available
information. These statements reflect industry trends, clients’ situations and other factors, and involve risks and uncertainties which may
cause actual performance results to differ from those discussed in the forward-looking statements in accordance with changes in thebusiness environment.

Consolidated Financial Highlights
TONAMI HOLDINGS CO., LTD.
AND CONSOLIDATED SUBSIDIARIES
Years ended March 31, 2015 and 2014
Thousands of
U.S. dollars(Note 1)Millions of yen
2015
2014

2015

FOR THE YEAR:
Operating revenues:¥122,547¥121,129$1,019,785

112,720

110,692

938,012

Information processing

3,015

3,059

25,095

Sales

6,105

6,616

50,808Others

705

762

5,870

Operating income

4,752

3,240

39,549Net income

3,238

2,370

26,946Comprehensive income

5,296

2,582

44,078Logistics

PER SHARE (Yen and U.S. dollars):
Net income, basic

¥

35.69

Net income, diluted
Cash dividends

¥

26.13

$

0.2970

—

—

—

6.00

4.50

0.0499¥120,887¥117,149$1,005,974

54,64749,292454,754

AT YEAR-END:
Total assets
Total net assets

Notes: 1. U.S. dollar amounts presented herein are included solely for convenience. The rate of ¥120.17 = U.S.$1, prevailing on March 31,
2015, has been used for the translation into U.S. dollar amounts.
2. The computation of net income per share of common stock is based on the weighted average number of shares outstanding (which
represents the number of issued shares less treasury stock.) during each fiscal year.
3. Diluted net income per share is not presented for the years ended March 31, 2015 and 2014, since there were no residual securities.

Operating Revenues by
Business Segment
150(Billions of yen)

Operating Income

5

Net Income and
Net Income per Share, Basic(Billions of yen)

4.0

4(Billions of yen)

(Yen)

40

3.0

30

2.0

20

1.0

10

100
3
2
50
1
0

’11

’12

’13

’14

’15

0

’11

’12

’13

’14

’15

0

’11

’12

’13

’14

’15

Net Income (Left scale)
Net Income per Share, Basic (Right scale)

Logistics
Information processing
Sales
Others01

0

To Our Shareholders and Investors

President, Katsusuke Watanuki

I welcome this opportunity to report to our shareholders and investors on our operating environment and business results for the year ended March 31, 2015.
For the fiscal year ended March 31, 2015, record-high profits surpassing those of the fiscal year
ended March 31, 2014 are expected at listed companies in the manufacturing and other industries
against the backdrop of the recovery trend in domestic demand and overseas business expansion
propelled by the weaker yen.
Under these circumstances, the Group started its 20th Three-year Medium-Term Business Plan in
April 2015. We will pursue sustainable growth by moving forward with management issues such ascontinuing structural reform of our business, promoting capital investment and strengthening
recruitment and development of human resources, with a view to securing an even more stable basein the increasingly competitive logistics industry.
In order to achieve this, it is essential to build a stronger and more flexible management structurewith maneuverability, adhering to the fundamental spirit set forth in our corporate philosophy andcorporate vision while casting off conventional ideas and practices. We recognize the importance ofa management strategy aimed at record-high performance that makes high-quality management
backed up by compliance and corporate governance its primary focus.
Continuing from the 19th Three-year Medium-Term Business Plan, “The Road to Self-Innovation!
Innovation Plan 19,” we will strive to improve corporate value by working to achieve the performance targets of the 20th Three-year Medium-Term Business Plan under the slogan “Leading step
up 2017 — Aiming for even higher-quality management!”
In view of the robust financial performance, we increased the year-end ordinary dividend by ¥1 to¥3.50 per share. With an interim dividend of ¥2.50 per share, total annual dividends for the year
ended March 2015 amounted to ¥6 per share.
Overview of Operations

In the logistics industry, despite signs of a moderate recovery trend in logistics demand, the businessclimate remains severe as we must deal with a rapidly changing environment that includes risingoutsourcing costs associated with an increasingly serious shortage of truck drivers, and intensifying
competition among operators for orders.
In these circumstances, the Group pushed forward with the implementation of the growth strategy and strove to achieve the performance targets of the 19th Three-year Medium-Term Business Planin its final year.
As a result, operating revenues amounted to ¥122,547 million, an increase of 1.2% from the previous year.
With regard to profits, the Group worked to absorb cost increases from high subcontractor feesand rising raw materials costs by reinforcing profitability through the progress of the structuralreform of the business in accordance with the Three-year Medium-term Business Plan and revisions
to freight charges and unit rates. As a result, operating income increased 46.7% to ¥4,752 million.
Net income increased 36.6% to ¥3,238 million.
Results by Segment

Despite little growth in freight volumes in the aftermath of the last-minute demand before the con02

sumption tax increase in the previous year, operating revenues from the logistics-related businessincreased 1.8% from the previous year to ¥112,720 million and segment income increased 57.4% to¥3,923 million, owing to promotion of measures to maintain freight charges and fees at a reasonablelevel in road haulage, freight forwarding, and 3PL services.
Operating revenues from the information processing business decreased 1.4% to ¥3,015 million.
Segment income was ¥253 million, an increase of 1.3%.
Operating revenues from the sales business, which includes merchandising, consignment sales,
and a non-life insurance agency, amounted to ¥6,105 million, a decrease of 7.7%. Segment income
was ¥394 million, a decrease of 8.7%.
Operating revenues from other businesses, which include automobile repair and direct mail service, amounted to ¥705 million, a decrease of 7.4%. Segment income increased 39.2% to ¥119
million.
Outlook for the Year ending March 31, 2016

Although improvement in personal consumption is anticipated owing to an increase in real wages
and other factors, recovery of the Japanese economy is expected to be moderate, affected by rising
prices of raw materials and other items owing to the weaker yen.
In view of this trend, the logistics industry is likely to experience a recovery of freight volumes,
but the business environment is expected to remain challenging in view of persisting negative factors, including worsening labor shortages and rising outsourcing costs.
Under the 19th Three-year Medium-Term Business Plan, the Group sought to achieve innovationin transportation technology, operational efficiency, product development, and sales activities to create new value through structural reform of the Group. Building on the achievements of the 19thplan, the Group launched the 20th Three-year Medium-Term Business Plan covering the period
from April 1, 2015 to March 31, 2018. Positioning these three years as a period for further growth
as a company indispensable to society, we will strive to achieve the performance targets for the final
year.
Going forward, it is crucially important to have closer communication with our customers as theirlogistics partner and achieve mutual growth and profit. We are committed to enhancing the quality
and comprehensive strength of the Group as a whole in order to provide high-value-added services
and support customers’ development.
For this purpose, we have formulated six basic policies: 1) reinforcement of earnings capacity,2) enhancement of business base, 3) promotion of business strategy, 4) development of humanresources, 5) top-level logistics quality, and 6) reinforcement of compliance system. By implementing measures based on these policies, we are working to secure stable earnings and cash flows overthe long term and maximize corporate value.
With regard to the IT systems that underpin our growth stagey, we are promoting the shift to an
open environment. We will support and strengthen the enhancement of productivity, cost performance and high quality logistics through realization of a flexible business administration system thatcan respond immediately to changes in the environment.
Forecast of business results on a consolidated basis
Operating revenues ¥126,400 million (an increase of 3.1% year on year)
Operating income ¥4,900 million(an increase of 3.1% year on year)
Net income¥3,400 million(an increase of 5.0% year on year)
We will continue making a concerted effort to raise business performance so as to meet the expectations of our shareholders. In all our endeavors, we will be grateful for your continued support.
June 2015
Katsusuke Watanuki
President and Representative Director
03Operating Subsidiaries and Affiliates
Transportation business:

Group companies that support
business activities in Asia

Tonami Transportation
Tonami Transportation Shinetsu
Tonami Transportation Chugoku
and other companies

Group companies that support
domestic business operations

Warehousing business:

Tonami Transportation
Keishin Warehouse
Daiichi Warehouse and other companies

Tonami Logistics (Dalian)

IT System:

Keishin System Research
Client Focus

Financial Services

Tonami Business Service

Hokkaido Tonami Transportation
Tonami (Thailand)

Tonami Computer Center
Anan Transportation
Gosei Tonami Transportation
Fukui Tonami Transportation
Ishikawa Tonami Transportation
Niigata Tonami Transportation
Zento Transportation
Takaoka Transportation
Takefu Transportation

Mahaporn Transport
H&R Forwarding

Kanto Tonami Transportation
Ibaraki Tonami Transportation
Tonami Shutoken Logistics
Tonami Global Logistics
Ryosei Logistics Co., Ltd.

Chukyo Tonami Transportation
Touto Transportation
Tonami Kinki Logistics

Tonami Trading, Toyo Gomu Hokuriku Hanbai,
Takaoka Cable Network, Shogawa Kanko, etc.

Tonami Logistics Solutions

Physical distribution
consulting functions

Physical distribution
network functions

Procurement logistics

Production logistics

Raw materials (Parts etc.)
manufacturers

Factories

Environmental
logistics

Consumers

Goods returned, repairs,
waste, etc.

In-house logistics

Warehouses, distribution
centers

Sales logistics
Destinations in Japan

Wholesalers, retailers
Overseas suppliers

ExportImportDestinations overseas

International logistics
Systematized distribution (3PL), information sharing
Supply chain management (SCM)

Information systemdevelopment functions

Operational functions04

Corporate Governance

At a meeting of the Board of Directors held on October 1, 2008, the Company passed
a resolution concerning a basic policy for internal control systems. The Company,
with the Internal Control Committee in a central role, is implementing sound internal control systems in accordance with the policy, aiming to increase the corporate
value of the Tonami Holdings Group.

(1) Corporate Governance System

1) Overview of the Corporate Governance System and Reason for Adopting the System
The Board of Directors of the Company is the organization responsible for important matters concerning business policy and business strategy. In accordance with the Board of Directors Regulations,
meetings of the Board of Directors are held, in principle, once a month, and as necessary, enabling
the directors to attain mutual understanding and engage in mutual supervision of the execution ofbusiness. The Board of Directors utilizes the services of outside experts as necessary to prevent violations of the law or the Articles of Incorporation.
The Company employs a corporate auditor system as part of its internal control framework. The
Board of Corporate Auditors consists of four corporate auditors (two standing corporate auditors andtwo outside corporate auditors). The corporate auditors audit the legality of the directors’ actions byattending meetings of the Board of Directors and other important meetings, by offering their opinions, and by other means.
The corporate auditors, including the outside corporate auditors, audit the execution of businessby the directors in accordance with the auditing policy and task assignments decided by the Board of
Corporate Auditors.
In the event that a director discovers a violation of the law or the Articles of Incorporation on thepart of another director, the director is required to promptly report the violation to the corporate
auditors and the Board of Directors and a remedy will be sought. The Company has an internal
auditing unit, the Internal Audit Office, which is an organization independent of the business units.
Moreover, the Company has established the Tonami Group Employee Code of Conduct as thefoundation of the Group’s compliance system and the Internal Control Committee, chaired by thepresident, as the decision-making body. The Company’s effort to enhance its internal control systems
is led by an officer responsible for internal control.
The Compliance Committee is a compliance control organization, and the Internal Control Team
within the Internal Audit Office performs control, operation and training in order to maintain andenhance internal control systems.
To ensure the propriety of business operations of the Group’s operating subsidiaries, the Company
applies the Tonami Group Employee Code of Conduct and the Group Operation Regulations to all
operating subsidiaries of the Group, and each of the Group’s operating subsidiaries has established
its own regulations based on them.
With regard to administration of operating subsidiaries, the Group Company Administration
Procedures specify matters requiring approval by the headquarters and those to be reported.

05

2) The Relationship between the Management Organization and Internal Control
General Meeting of Shareholders
Election

Election

Auditing

Attorney

Board of Directors(Representative directors)(Directors)

OpinionSupervision

Election

Board of Corporate Auditors(Corporate auditors)(Outside corporate auditors)
Reporting

Reporting

Independent auditors

Internal Audit Office
Auditing

ReportingBusiness Execution
Internal Control Committee(Internal Control Office)Internal auditing

Business Strategy OfficeBusiness Planning OfficeCompliance Committee

Human Resource
Management Group

Business Administration Group

Business Risk Management
Committee

Internal
controlInternal
controlPlanformulation,
reporting

Policypresentation,plan approvalGroup operating subsidiaries

3) Description of Management Organization and State of Development of Internal Control Systems
With regard to the design of its internal control systems, the Company has established a basic policy
concerning business risk management for the Tonami Holdings Group and is working to appropriately respond to various types of risk that might affect the operation of operating subsidiaries, inorder to stabilize the fundamentals of the Group and, should a business risk materialize, to minimize
the impact and as far as possible ensure that neither a business loss nor a social loss is incurred.
The Company recognizes the importance of legal compliance and has established the Compliance
Committee to ensure compliance. The Group’s operating subsidiaries have appointed compliancepromotion officers to inculcate corporate ethics and compliance among their officers and employees.
The compliance promotion officers conduct education and hold briefings concerning compliance.
Within the Company, activity plans etc. are required to be reported to the Compliance Committee
to enable potential violations in the course of business activities to be detected in advance and theiroccurrence prevented. This system enables swift correction of any violations that occur and implementation of measures to prevent recurrence.
The executive officers strive to promptly execute business in accordance with the basic policy
decided by the Board of Directors. The Board of Directors obtains and refers to advice from certified
public accountants, attorneys, and other specialists concerning compliance matters related to management, as necessary.

06

The Company has put in place a structure enabling a rapid response to changes in the businessenvironment and strives to ensure sound management. To this end, the Group’s operating subsidiaries have established their own regulations based on the Group Operation Regulations and theCompany conducts administration of the Group’s operating subsidiaries in accordance with theGroup Company Administration Procedures that specify matters requiring approval by the headquarters and those to be reported.
The Internal Audit Office conducts internal audits to verify whether business is executed appropriately and efficiently. It reports to the corporate auditors and the Board of Directors.

4) State of Internal Auditing and Auditing by Corporate Auditors
The Internal Audit Office (five personnel) of the Company is an internal auditing unit independentof the business units and its staff assists with the work of the corporate auditors. The Internal Audit
Office’s independence from the Board of Directors is ensured since decisions of the Board of
Directors on Internal Audit Office staff changes require approval of the Board of Corporate Auditors.
The Internal Audit Office conducts periodic and unscheduled internal audits of the Company’sbusiness, reports to the Board of Corporate Auditors and the Board of Directors, and requests
improvements.
The Company’s corporate auditors exchange information with the independent auditors, cooperate with the Internal Audit Office, conduct appropriate audits, and hold periodic meetings of theBoard of Corporate Auditors.
One standing corporate auditor and two outside corporate auditors possess significant expertise
concerning financial and accounting matters gained through their experience over many years.

5) Relationships between Outside Directors and Outside Corporate Auditors
The Company has appointed one outside director. Director Mr. Shinichiro Inushima has no capitalor business relationships with the Company or other interests in the Company.
The Company considers individuals who have no personal, capital, or business relationships with
the Company or other interests in the Company, possess expertise, and are capable of overseeing theCompany’s overall management based on excellent insight to be suitable for election as outside
directors.
The Company has appointed two outside corporate auditors. Although Corporate Auditor Mr.
Yohji Ishiguro owns shares of the Company, the capital relationship between him and the Company
is negligible and he has no business relationships with the Company or other interests in the
Company. Outside Corporate Auditor Mr. Toshio Kaido has no capital or business relationships with
the Company or other interests in the Company.
The Company considers individuals who have no personal, capital, or business relationships with
the Company or other interests in the Company, possess expertise, and are capable of overseeing
management based on excellent insight to be suitable for election as outside corporate auditors.

07

Neither of the two outside corporate auditors have any of the above-mentioned relationships with
the Company. The Company appointed one of the outside corporate auditors as an independent officer as required by the Tokyo Stock Exchange and has notified the Tokyo Stock Exchange
accordingly.
Linkage among auditing by corporate auditors, including outside corporate auditors, internal
auditing, and accounting auditing as well as relationships with the internal control unit are describedin 4) State of Internal Auditing and Auditing by Corporate Auditors. Through reporting andexchange of opinions at meetings of the Board of Directors, the Company strives to strengthen collaboration among supervision by the outside director, auditing by corporate auditors, internal
auditing, and accounting auditing and establish fruitful relationships between the outside director
and the internal control unit.
Pursuant to Article 427, Paragraph 1 of the Companies Act, the Company has concluded contracts
with the outside director and outside corporate auditors that limit their liability under Article 423,
Paragraph 1. The liability for damages pursuant to these contracts is limited to the liability amountprescribed by laws and regulations. The limitation of liability stated above is only applicable if theoutside director or outside corporate auditor is without knowledge and is not grossly negligent in
performing his duties causing such liability.

08

(2) State of Development of the Risk Management Structure

In accordance with the Tonami Group Business Risk Management Regulations, the president serves
as the Chief Risk Management Officer, risk management officers are appointed for each type of risk,
and a risk management structure is established. In the event of unforeseen circumstances, in accordance with the Tonami Group Large-scale Disaster Response Regulations and the Tonami Group
Emergency Response Regulations, the Company will establish an Emergency Response
Headquarters, which will be headed by the president. The Company will mount a rapid and appropriate response in accordance with the regulations and put in place a structure to prevent the spreadof damage and minimize damage.
To ensure the propriety of business operations of the Group’s operating subsidiaries, the Company
has established the Tonami Group Employee Code of Conduct, consisting of action guidelines, and
the Group’s operating subsidiaries have established regulations based on the code of conduct.
With regard to administration of the Group’s operating subsidiaries, matters requiring approval by
the headquarters and those to be reported are specified in the Group Company Administration
Procedures and management of operations is in accordance with the Group Operation Regulations.
In the event that a director discovers a violation of the law or any other important matter related
to compliance in an operating subsidiary of the Group, the director is required to report the matterto a corporate auditor. In the event that an operating subsidiary of the Group finds that the administration by the Company or management instructions issued by the Company violate the law or
becomes aware of any other compliance-related problem, the subsidiary is required to report thematter to the Internal Audit Office. In such a case, the Internal Audit Office promptly reports thematter to a corporate auditor and the corporate auditor receiving the report may express an opinion
and request improvement measures.
The Company has established the Tonami Group Internal Reporting Regulations and operates aninternal reporting system concerning violations of the law and other matters related to compliancecovering the entire Tonami Holdings Group.
The Company prohibits disadvantageous treatment of the Company’s directors or employees who
made such reports to the Group’s corporate auditors on the grounds that they made such reports andensures that the Group’s directors and employees are thoroughly aware of this policy.
The Company will have no relationships with antisocial forces. The Company will take resoluteaction against any undue claims or actions by antisocial forces on the basis of cross-organizational
cooperation in close collaboration with the police and other external specialist organizations and will
never provide any benefit to antisocial forces.

09Corporate Social Responsibility Activities

Basic Policy on Corporate Social Responsibility
The Tonami Holdings Group views management that emphasizes fulfillment of social responsibility based on compliance as the foundation for creation of corporate value and aspires to contribute to society continuously from anincreasingly global perspective.
Adhering to the Tonami Group Employee Code of Conduct, and with the action principle “Ensure compliancethroughout business activities,” the Tonami Holdings Group endeavors to create further value through the logistics
business and fulfill its corporate social responsibility (CSR).
In addition, we are working to bolster systems to ensure compliance based on appropriate operation of businessprocesses by inspecting premises and issuing guidance to them through the business process improvement projects
and periodic auditing of business processes by the Internal Audit Office.
As a logistics enterprise, we must ensure transportation safety, accord consideration to the environment, ensure
legal compliance and compliance with other rules, respect human rights, and contribute to local communities. We
are committed to further strengthening corporate governance and promoting compliance management.
Transportation is an aspect of social infrastructure. Through our initiatives to improve logistics efficiency, encourage
fuel-efficient driving by using digital tachographs, and promote joint delivery, we aim to make our business activities
environmentally friendly with minimal waste of energy so as to contribute to environmental protection.
In view of the frequent occurrence of unprecedented disasters, we will review our role and functions for business
continuity planning (BCP) on a continuous basis (Large-scale Disaster Response Regulations) and will endeavor tomaintain effective logistics support in the event of a disaster by swiftly obtaining information on core business processes.
With an eye to the prosperity and quality of life of future generations, the Group endeavors to achieve sustainablegrowth of the business while minimizing environmental impacts. In this way, we are striving to fulfill our social
responsibility far into the future.
Principal CSR Initiatives and State of Implementation
Environmental Protection Activities
Recognizing that environmental protection is a crucially important theme
that concerns the maintenance of the ecosystem, adhering to our principle—“Contribute to society through transportation and strive to protect
the environment”—we will act in accordance with the following policies.
1. We will do the following to mitigate environmental pollution associatedwith transportation services:(a) We will introduce environmentally friendly vehicles.
This truck runs on natural gas(b) We will practice environmentally friendly driving.
(c)	We will create eco-friendly distribution systems through more efficient distribution.
(d) We will establish a recycling system to contribute to establishment of a recycling-based society.
Annual social and(e) We will promote development and provision of environmentally friendly products.
environmental report(f)	We will make continuous efforts to save resources and energy and to achieve improvements
every day.
2. We will ensure compliance with environment-related laws and regulations at the national and municipal levels and other requirements that the Company undertakes to fulfill in its efforts to protect theenvironment.
3. We will set specific environmental objectives and environmental goals, conduct periodic reviews, andwork to achieve continuous improvement of environmental management systems.
4. We will communicate these policies to all employees through internal environmental education andawareness-raising initiatives, and we will disclose these policies to the public. We will also vigorously
participate in environmental protection activities in local communities.

Encouraging local people to take up
badminton

Social Contributions
We are eager to contribute to local communities through various activities as a corporate citizen.
Our social contribution activities include participation involuntary clean-up campaigns, such as “neighborhood adoption” programs promoted by local government, and the donation of vehicles to social welfare facilities through the General
Incorporated Association “Tonami Holdings Shozyukai.”
We transport relief supplies when natural disasters occur.
The Tonami Transportation Badminton Club offers badmintoncoaching as a local sports promotion activity.
10

A clean-up in progressFinancial Section

12

Consolidated Five-Year Summary

13

Consolidated Financial Review

16

Consolidated Balance Sheets

18

Consolidated Statements of Income and Consolidated Statements of Comprehensive Income

19

Consolidated Statements of Changes in Net Assets

20

Consolidated Statements of Cash Flows21

Notes to the Consolidated Financial Statements

11Consolidated Five-Year Summary
TONAMI HOLDINGS CO., LTD
AND CONSOLIDATED SUBSIDIARIES
Years ended March 31

2011

2012

2013

2014

2015

Thousands of
U.S. dollars
2015

Operating revenues¥118,979¥117,710¥115,864¥121,129¥122,547$1,019,785

Operating cost

111,355

110,069

106,908

111,651

111,775

930,147

Selling, general and administrative expenses

6,425

6,237

6,188

6,237

6,019

50,089Operating income

1,199

1,404

2,767

3,240

4,752

39,549

315

633

1,785

2,370

3,238

26,946

3,504

3,882

4,286

4,361

4,365

36,325¥3.47¥6.97¥19.67¥26.13¥35.69$0.2970

4.00

4.00

5.00

4.50

6.00

0.0499¥35,723¥33,045¥33,538¥34,204¥36,076$300,212

Net property and equipment

70,037

71,597

71,856

70,837

71,168592,233

Total assets

117,412116,085

117,189

117,149

120,887

1,005,974

Total current liabilities

33,98934,222

36,27937,48039,333327,313Long-term liabilities, excluding of current portion thereof

38,47835,81733,26630,376

26,906

223,907

Total net assets

44,94546,04647,64349,29254,647454,754

7,025

6,762

6,561

6,492

6,447

Millions of yen

RESULTS OF OPERATIONS:Net income
Depreciation expenses
PER SHARE (yen and U.S. dollars):
Net income
Cash dividends
YEAR-END FINANCIAL POSITION:
Total current assets

OTHER YEAR-END DATA:
Number of employees

12Consolidated Financial Review

Forward-looking statements in the discussion below represent the best judgment of the Tonami HoldingsGroup as of the end of the fiscal year under review.

Significant Accounting Policies and Estimates

The consolidated financial statements of the Tonami Holdings Group have been prepared in accordance withaccounting principles generally accepted in Japan. Estimates used in the preparation of the consolidated financial statements that may affect the reported amounts of assets and liabilities on the closing date and the reported revenues and expenses for the reporting period are principally deferred tax assets, the allowance for
doubtful accounts, net defined benefit liability, and income taxes. These estimates are subject to continuous,
reasonable assessment.
Estimates, judgments, and assessments are made on the basis of factors that are deemed reasonable in lightof past performance and conditions. However, since estimates invariably involve uncertainties, actual results
may differ from the estimates.

Analysis of Consolidated Operating Results
Operating Revenues

Operating revenues increased 1.2% or ¥1,417 million year on year to ¥122,547 million, owing to improved
demand for 3PL services and other logistics services.
Composition of Operating Revenues
Percentage pointchange from theprevious year

Composition

Logistics:
Road haulage operations and freight forwarding operations
Warehousing operations
Harbor transport operations
Information processing business
Sales businesses
Other businesses

+0.6
−0.1
+0.4
+0.3
−0.1
−0.5
−0.0

92.0%
70.2
17.1
4.7
2.4
5.0
0.6

Operating income

Operating income amounted to ¥4,752 million, an increase of 46.7% or ¥1,511 million year on year. Revisions
to freight charges and unit rates and progress in the structural reform of the business contributed to earnings
while improved profitability in the logistics-related business offset factors adversely affecting profitability of thesales businesses.
Net income

Net income amounted to ¥3,238 million, an increase of 36.6% or ¥867 million year on year. This increase waspartly attributable to the recording of temporary other expenses in the previous fiscal year.

Sales of Logistics

Operating Revenues

150(Billions of yen)

150

Sales of Information
Processing Business(Billions of yen)

4

(Billions of yen)

3
100

100

2
50

50

1

0

’11

’12

’13

’14

’15

0

’11

13

’12

’13

’14

’15

0

’11

’12

’13

’14

’15

Analysis of Cash Flows

Cash and cash equivalents on a consolidated basis for the year under review increased ¥2,946 million from theprevious year to ¥12,185 million as a result of net cash provided by operating activities amounting to ¥9,286
million, net cash used in investing activities amounting to ¥1,881 million, and net cash used in financing activities amounting to ¥4,459 million.
Cash Flows from Operating Activities

Net cash provided by operating activities totaled ¥9,286 million, an increase of ¥3,263 million from the previous year. Principal items were income before income taxes and minority interests amounting to ¥5,269 million
and depreciation and amortization amounting to ¥4,365 million.
Cash Flows from Investing Activities

Net cash used in investing activities totaled ¥1,881 million, a decrease of ¥636 million from the previous year.
The principal item was payments of ¥2,619 million for the purchase of property and equipment.
Cash Flows from Financing Activities

Net cash used in financing activities totaled ¥4,459 million, an increase of ¥547 million from the previous year.
Cash outflows included repayment of short-term loans amounting to ¥2,170 million and repayment of longterm debt amounting to ¥3,786 million, and repayment of lease obligations amounting to ¥2,105 million,
whereas proceeds from long-term debt amounted to ¥4,070 million.

Analysis of the Financial Position
AssetsCurrent assets were ¥36,076 million, an increase of 5.5% from the previous fiscal year-end. This increase wasmainly attributable to a ¥2,954 million increase in cash and time deposits and a ¥766 million decrease in tradeaccounts receivable.
Non-current assets amounted to ¥84,811 million, an increase of 2.3% from the previous fiscal year-end. This
increase was mainly attributable to an ¥864 million increase in leased assets and a ¥1,542 million increase ininvestments in securities.
As a result, total assets amounted to ¥120,887 million, an increase of 3.2% or ¥3,737 million from the previous fiscal year-end.
Liabilities

Current liabilities were ¥39,333 million, an increase of 4.9% from the previous fiscal year-end. This increase wasmainly due to a ¥5,000 million increase in current portion of bonds, a ¥2,170 million decrease in short-termbank loans, and a ¥2,513 million decrease in current portion of long-term debt.
Long-term liabilities were ¥26,906 million, a decrease of 11.4% from the previous fiscal year-end. Thisdecrease was mainly attributable to a ¥5,000 million decrease in bonds, whereas long-term debt increased¥2,797 million.
As a result, total liabilities amounted to ¥66,240 million, a decrease of 2.4% or ¥1,616 million from the previous fiscal year-end.
Net assets

Net assets amounted to ¥54,647 million, an increase of 10.9% from the previous fiscal year-end. The main factor was a ¥3,600 million increase in retained earnings as a result of recording net income of ¥3,238 million.

Sales of Other Business

1.5(Billions of yen)

Net Income

Operating Cost andOperating Income
200(Billions of yen)

5

160

4

120

3

80

2

40

1

4.0

(Billions of yen)

3.0

1.0
2.0
0.5

0

’11

’12

’13

’14

’15

0

’11

’12

’13

’14

Operating cost (Left scale)Operating income (Right scale)

14

’15

0

1.0

0

’11

’12

’13

’14

’15

Risk Factors

The principal business of the Tonami Holdings Group is the logistics-related business centering on road haulage
operations and freight forwarding operations. The Group’s business is subject to impacts of fluctuation of theJapanese economy and the world economy, customers’ streamlining of logistics, restructuring, and deteriorationof business results, and suspension of business transactions with customers. The business environment in which
the Group operates entails the risk of difficulty in absorbing cost increases due to such factors as sharp increases
in the price of crude oil and interest rate increases that exceed expectations.
In the event of the occurrence of a major disaster, such as an earthquake, in the regions where the Group
operates, there is a risk that damage to facilities may greatly affect the Group’s business operations.
In the event that the retention, development and recruitment of human resources indispensable for businessexpansion do not progress as envisaged in the plan, strategic tie-ups including acquisitions and capital partnerships do not develop as planned, or that social risks materialize with respect to the Group’s overseas businessexpansion, there may be an adverse impact on the Group’s business activities and business results.
The Group handles a huge amount of customer information and strives to appropriately manage such information. However, in the event of leakage of information owing to trouble concerning safekeeping, the credibilityof the Group may be undermined and claims may be made for damages against the Group. In the event of trouble concerning IT systems caused by a natural disaster, computer virus infection, etc., there may be an adverse
impact on the Group’s business results and financial condition.
There is also a possibility of cost increases due to the strengthening of environmental regulations and for
ensuring compliance with stricter safety regulations, and the increased burden may have an adverse impact on
the Group’s business results and financial condition.
In the event of the occurrence of a serious problem, such as a vehicle accident, there is a risk of loss of customer confidence and public trust that could have an adverse impact on the Group’s business results and financial position.
In the event that impairment becomes necessary in accordance with the impairment accounting applicable to
fixed assets for business use or there is a great change in the estimates of future taxable income and reversal ofdeferred tax assets is required, there may be an adverse impact on the Group’s business results and financial
position.

Strategic Position and Outlook

The Japanese economy is expected to remain on a moderate recovery track. Although improvement of personal
consumption is in prospect owing to an increase in real wages, rises in prices of raw materials and commodities
owing to the weak yen will have an adverse impact on the Japanese economy.
In these circumstances, freight volumes are expected to recover. However, the business environment of thelogistics industry is likely to remain challenging owing to persisting negative factors, such as increasingly pronounced manpower shortages and sharp increases in subcontractor fees.
In the Medium-Term Business Plan for the period from April 1, 2012 to March 31, 2015, the Tonami
Holdings Group emphasized innovation in transportation technology, operational efficiency, product development, and sales & marketing activities to realize structural reform of the Group’s business so as to create newvalue.
As a result, in the rapidly changing business environment, the Group managed to achieve the profit goal forthe final year of the plan while contributing to the safety and security of society.
Having launched a new Medium-Term Business Plan for the period from April 1, 2015 to March 31, 2018,
which is positioned as three years of further growth, we are striving toward the achievement of the performancetargets in the final year of the plan.

Net Cash Used in Investing
Activities

Net Cash Provided byOperating Activities
10(Billions of yen)

08(Billions of yen)

Total Assets andTotal Net Assets
150(Billions of yen)

-1
100

6
-2
4
50
-3

2
0

’11

’12

’13

’14

’15

-4

’11

’12

’13

’14

’15

0

’11

’12

Total assets
Total net assets

15

’13

’14

’15

Consolidated Balance Sheets
TONAMI HOLDINGS CO., LTD.
AND CONSOLIDATED SUBSIDIARIESAs of March 31, 2015 and 2014ASSETS

Thousands of
U.S. dollars(Note 1)
2015

Millions of yen
2015
2014

Current assets:
Cash and time deposits (Notes 10 and 12)¥12,252¥9,297$101,959

Notes and accounts (Notes 5 and 12)

20,53021,313

170,845

Less: allowance for doubtful accounts

(58)

(75)

(487)

Investments in lease assets

55

117

465

Inventories

574

613

4,780

Deferred tax assets (Note 17)

714

567

5,942

2,007

2,370

16,70736,07634,204300,212Land

40,294

40,686335,314

Buildings and structures

21,27321,061

177,027

Machinery and vehicles

2,196

2,134

18,278

Leased assets

6,657

5,792

55,399Construction in progress

—

373

—

Other

746

789

6,215

71,16870,837592,233

8,453

6,911

70,344

Goodwill

10

14

91

Other

5,178

5,182

43,094

13,642

12,108113,529¥120,887¥117,149$1,005,974

Trade receivables:

Other current assets
Total current assets

Property and equipment (Notes 3, 4 and 6):

Total property and equipment

Investments and other assets:
Investments in securities (Note 13)

Total investments and other assets
Total assets
The accompanying Notes are an integral part of these statements.

16

LIABILITIES AND NET ASSETS

Thousands of
U.S. dollars(Note 1)
2015

Millions of yen
2015
2014

Current liabilities:
Short-term bank loans (Notes 7 and 12)
Current portion of long-term debt (Notes 4, 7, 12 and 14)
Current portion of bonds (Note 4)
Trade notes and accounts payable (Note 12)
Lease obligations (Note 12)
Income taxes payable
Other current liabilities
Total current liabilities
Long-term liabilities:
Long-term debt, less current portion thereof (Notes 4, 7, 12 and 14)
Lease obligations (Note 12)
Deferred tax liability (Note 17)
Deferred tax liabilities from revaluation reserve for land (Note 6)
Retirement benefits for directors and corporate auditors
Net defined benefit liability (Note 15)
Negative goodwill
Other long-term liabilities
Total long-term liabilities
Total liabilities
Net assets
Shareholders’ equity (Note 16):
Common stock:
Authorized: 299,200,000 shares in 2015
299,200,000 shares in 2014
Issued: 97,610,118 shares in 2015
97,610,118 shares in 2014
Capital surplus
Retained earnings
Treasury stock, at cost: 6,896,199 shares in 2015
6,872,859 shares in 2014
Total shareholders’ equity
Other comprehensive income
Unrealized gain on other securities
Revaluation reserve for landRemeasurements of defined benefit plans (Note 15)
Accumulated other comprehensive income (Note 9)
Minority interests:
Minority interests
Total net assets
Total liabilities and net assets

17¥10,770
1,055
5,000
11,367
2,140
1,225
7,774
39,333¥12,940
3,568—
11,773
1,919
870
6,408
37,480$89,623
8,785
41,60894,594
17,814
10,19564,694
327,313

5,908
5,201
2,119
3,977
130
6,747
—
2,821
26,906
66,240

8,111
4,445
631
4,534
113
9,030
3,432
30,37667,85749,17043,281
17,63933,103
1,086
56,152—
23,476
223,907551,220

14,182
11,682
22,324

14,182
11,682
18,724

118,022
97,214
185,776(2,028)46,160(2,021)
42,567(16,883)
384,129

1,957
6,182
256
8,395

1,040
6,035
(461)
6,614

16,28651,4492,133
69,86791
54,647¥120,887

110
49,292¥117,149

758
454,754$1,005,97476

Consolidated Statements of Income and Consolidated Statements of Comprehensive Income
TONAMI HOLDINGS CO., LTD.
AND CONSOLIDATED SUBSIDIARIESFor the years ended March 31, 2015 and 2014
Thousands of
U.S. dollars(Note 1)
2015

Millions of yen
2015
2014

Operating revenues (Note 20):
¥122,547¥121,129$1,019,785

122,547

121,129

1,019,785

111,775

111,651

930,147

6,019

6,237

50,089117,794

117,889

980,236

4,752

3,240

39,549Interest and dividend income

325

296

2,711

Equity in earnings of unconsolidated subsidiaries and affiliates

78

68

649

Loss on sale of property and equipment, net

44

101

367

(283)

(361)

(2,357)

Impairment losses (Note 8)

—

(449)

—

Gain on negative goodwill

110

—

919

Operating revenues
Operating costs and selling, general and administrative expenses:
Operating cost (Note 18)
Selling, general and administrative expenses (Note 18)
Operating income (Note 20)
Other income and expenses:

Interest expenses

Gain on transfer to a defined contribution pension plan (Note 15)

—

792

—

Other, net

241

208

2,011

516

655

4,301

5,269

3,896

43,850Current

1,819

1,243

15,140

Deferred

199

264

1,658

2,018

1,507

16,798

3,250

2,388

27,052

Income before income taxes and minority interests
Income taxes (Note 17):

Net income before minority interests
Minority interests

12

17

106

¥3,238¥2,370$26,946

12

17

106

3,250

2,388

27,052

Valuation difference on other securities

913

194

7,598

Revaluation reserve for land

411

—

3,428

Remeasurement of defined benefit plans

717

—

5,972

3

0

28

Net income
Minority interests
Net income before minority interests
Other comprehensive income (Note 9):

Share of other comprehensive income (loss) of associates accounting for using the equity method
Total other comprehensive income
Total comprehensive income for the year

2,046

194

17,026¥5,296¥2,582$44,078¥5,284¥2,565$43,972

12

17

106

Total comprehensive income attributable to:
Owners of the parent
Minority interests
The accompanying Notes are an integral part of these statements.

18

Consolidated Statements of Changes in Net Assets
TONAMI HOLDINGS CO., LTD.
AND CONSOLIDATED SUBSIDIARIESFor the years ended March 31, 2015 and 2014

Millions of yen
Shares ofcommonstock(thousands)

Balance as at April 1, 2013

Cash dividends applicable tothe year (¥5.00 per share)
Net income
Reversal of Revaluation reserve for land
Treasury stock
Net changes in items other thanshareholders’ equity

Balance as at March 31, 2014
Balance as at April 1, 2014

Cumulative effects of changes
in accounting policies

Restated balance as at April 1, 2014
Cash dividends applicable tothe year (¥5.00 per share)
Net income
Reversal of Revaluation reserve for land
Treasury stock
Net changes in items other thanshareholders’ equity

Balance as at March 31, 2015

Commonstock

CapitalsurplusRetainedearnings

Accumulated
Total
Unrealized Revaluation Remeasurements other comof defined prehensive
shareholders’ gain on other reserveincomeequitysecurities
for land benefit plans

Treasurystock

97,610 ¥14,182 ¥11,682 ¥16,516 ¥(2,018) ¥40,363
(453)
2,370
290

(3)

11,682551
19,275551(2,021) 43,118

(453)
3,238
264

(453)
3,238
264
(7)

(7)

¥6,326¥  —¥7,172—
97,610 ¥14,182 ¥11,682 ¥22,324 ¥(2,028) ¥46,160

Total
net assets¥107 ¥47,643

(453)
2,370
290
(3)

—
97,610 ¥14,182 ¥11,682 ¥18,724 ¥(2,021) ¥42,567
97,610 ¥14,182 ¥11,682 ¥18,724 ¥(2,021) ¥42,567
14,182¥846

Minority
interests

(453)
2,370
290
(3)
194
¥1,040¥1,040(290)¥6,035¥6,035(461)(557)¥(461) ¥6,614¥(461) ¥6,6142(554)¥110 ¥49,292¥110 ¥49,292

1,040

6,035

(461)

110

6,614

551
49,844
(453)
3,238
264
(7)

916
¥1,957147¥6,182

717
¥256

1,781
¥8,395(19) 1,761¥91 ¥54,647

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

CapitalsurplusRetainedearnings

Treasurystock

Accumulated
Total
Unrealized Revaluation Remeasurements other comshareholders’ gain on other reserveof defined prehensive
equitysecurities
for land benefit plansincomeBalance as at April 1, 2014

$118,022 $97,214 $155,815 $(16,822) $354,229

Restated balance as at April 1, 2014

118,022

Cumulative effects of changes
in accounting policies

Cash dividends applicable tothe year ($0.0416 per share)
Net income
Reversal of Revaluation reserve for land
Treasury stock
Net changes in items other thanshareholders’ equity

Balance as at March 31, 2015

4,587
4,587
97,214 160,402 (16,822) 358,815(3,776)
26,946
2,205

19

Total
net assets$8,660 $50,225$(3,840) $55,046$919 $410,193

8,660(3,840) 55,046

4,587
919 414,780

50,225(3,776)
26,946
2,205
(61)
(61)

—
7,626
1,223
$118,022 $97,214 $185,776 $(16,883) $384,129 $16,286 $51,449

The accompanying Notes are an integral part of these statements.

Minority
interests(3,776)
26,9462,205(61)
5,972 14,822$2,133 $69,867(161) 14,661$758 $454,754

Consolidated Statements of Cash FlowsTONAMI HOLDINGS CO., LTD.
AND CONSOLIDATED SUBSIDIARIESFor the years ended March 31, 2015 and 2014

Millions of yen
2015
2014

Cash flows from operating activities:
Income before income taxes and minority interests
Depreciation and amortization
Impairment losses
Gain on disposal of property and equipment
Loss on devaluation of investments in securities
Loss on devaluation of golf club memberships
Gain on transfer to a defined contribution pension plan
Amortization of goodwill
Gain on negative goodwill
Equity in earnings of unconsolidated subsidiaries and affiliates(Decrease) increase in allowance for doubtful accounts
Decrease in net defined benefit liability
Increase (decrease) in directors’ and corporate auditors’ retirement benefits
Increase in accrued bonuses to employees
Interest and dividend income
Interest expenses
Decrease (increase) in trade receivables
Decrease (increase) in inventories(Decrease) increase in accounts payable
Increase in accrued consumption taxes
Other, net
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Net cash provided by operating activities

Thousands of
U.S. dollars(Note 1)
2015

¥5,269
4,365
—
(44)
0
2
—
(72)
(110)
(78)
(22)
(332)
6
171
(325)
283
916
42
(468)
1,286
(166)
10,722324(276)(1,483)9,286¥3,896
4,361
449
(101)
4
18
(792)
(58)
—
(68)
149
(562)
(3)
109
(296)
361
(1,074)
(66)
387
3
353
7,071
297
(358)
(987)
6,023

$43,850
36,325
—
(367)
6
17
—
(607)
(919)
(649)
(185)
(2,765)53
1,430(2,711)
2,357
7,629
353
(3,902)
10,702(1,389)89,2282,704(2,301)(12,349)
77,282

Cash flows from investing activities:
Purchase of time deposits
Proceeds from redemption of time deposits
Purchase of property and equipment
Proceeds from sales of property and equipment
Purchase of investments in securities
Proceeds from redemption of investments in securities
Purchase of investments in subsidiaries(Payment for) proceeds from purchase of investments in consolidated subsidiaries
Investments in loans receivable
Proceeds from collection of loans receivable
Other, net
Net cash used in investing activities(62)
68(2,619)
1,188
(245)
50
(19)
(141)
(298)
238
(39)
(1,881)(42)
40(2,602)
262
(167)
—
(11)
6
(209)
191
14
(2,517)(523)
569(21,797)
9,890(2,045)416(161)(1,176)(2,484)
1,984(330)(15,657)

Cash flows from financing activities:
Net increase (decrease) in short-term loans
Proceeds from long-term debt
Repayment of long-term debt
Redemption of bonds
Repayments of lease obligations
Purchase of treasury stock
Dividends paid
Dividends paid to minority interests
Net cash used in financing activities(2,170)4,070(3,786)—(2,105)
(7)
(453)
(6)
(4,459)

2,550
2,200
(3,104)(3,000)(2,096)
(3)
(453)
(4)
(3,912)(18,058)
33,869(31,507)—(17,520)(61)(3,776)(55)(37,108)

2,946
9,238
¥12,185

(406)
9,645
¥9,238

24,51876,882$101,400

Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year (Note 10)
The accompanying Notes are an integral part of these statements.

20Notes to the Consolidated Financial Statements
TONAMI HOLDINGS CO., LTD.
AND CONSOLIDATED SUBSIDIARIES

1 Basis of presenting financial statements
The accompanying consolidated financial statements have been prepared based on the accounts maintainedby Tonami Holdings Co., Ltd. (the “Company”) and consolidated subsidiaries in accordance with accounting
principles generally accepted in Japan, which differ 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 havebeen made to the Company’s consolidated financial statements issued domestically in order to present themin a format which is more familiar to readers outside Japan. In addition, certain reclassifications have been
made in the 2014 financial statements to conform to the classifications used in 2015.
The consolidated financial statements are stated in Japanese yen, the currency of the country in which theCompany is incorporated and operates. The translations of Japanese yen amounts into U.S. dollar amounts
are included solely for the convenience of readers outside Japan and have been made at the rate of ¥120.17 to
U.S.$1, the approximate rate of exchange at March 31, 2015. 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 policies(a) Consolidation

The accompanying consolidated financial statements as of March 31, 2015 include the accounts of theCompany and its 25 (25 in 2014) consolidated subsidiaries and 7 (7 in 2014) affiliates accounted for by theequity method.
Under the control or influence concept, those companies in which the Company, directly or indirectly, isable to exercise control over operations are fully consolidated, and those companies over which the Company
has the ability to exercise significant influence are accounted for by the equity method. Four subsidiaries andtwo affiliates considered insignificant in view of total assets, operating revenues, net income and retained earnings are excluded from the scope of consolidation and not accounted for by the equity method.
The difference between the cost of an acquisition and the fair value of the net assets of the acquired subsidiary at the date of acquisition is being equally amortized over a period of 5 years after incurred. However, if theamount is immaterial, it is fully charged to income at the date of acquisition.
All significant intercompany balances and transactions have been eliminated in consolidation.
(b) Marketable securities and investments in securities

Securities, except for investments in unconsolidated subsidiaries and affiliates, are classified as trading securities, held-to-maturity securities or other securities. Trading securities are carried at fair value. Held-to-maturity
securities are carried at amortized cost. Marketable securities classified as other securities are carried at fairvalue with any unrealized gain or loss reported as a separate component of net assets, net of taxes.
Non-marketable securities classified as other securities are carried at cost determined by the moving-averagemethod.
Cost of securities sold is determined principally by the moving average method.
(c) Inventories

Inventories are stated at the lower of cost, determined principally by the last purchase price method or partiallyby the specific identification method, or net selling value.
(d) Derivatives

Derivative financial instruments are stated at fair value.
Interest-rate swaps which meet specific matching criteria and qualify for hedge accounting treatment are not
re-measured at market value; however, the differentials paid or received under the respective swap agreements
are recognized and included as interest expense or income.
(e) Property and equipment and intangible assets

Property and equipment are stated at cost. However, under Japanese tax law, capital gains arisen from disposals
and other similar transactions are deducted from the cost of the property and equipment acquired in
substitution.
Depreciation of property and equipment, except for leased assets, is computed by the declining balancemethod over the useful life of the assets as determined by law, except for buildings and structures, which are
depreciated by the straight-line method.
21

The ranges of useful lives of principal property and equipment are as follows:
Buildings and structures 2–67 years
Machinery and vehicles 2–17 years
Leased assets under the finance lease arrangements which do not transfer ownership of the leased assets tothe lessee are depreciated by the straight-line method over the respective lease periods without residual values.
However, if the guaranteed salvage value is specified in the lease contracts, they are depreciated by thestraight-line method considering such salvage value.
(f) Allowance for doubtful accounts

Allowance for doubtful accounts is provided in an amount sufficient to cover possible losses on collection. Saidamount is computed by applying the rate of actual losses on collection experienced in the past with respect togeneral trade receivables and by individually reviewing their collectibility with respect to certain doubtfulreceivables.
(g) Retirement benefits for directors and corporate auditors

Some consolidated subsidiaries provide necessary payments to directors and corporate auditors at the end of
the fiscal year determined according to internal company rules to a reserve for retirement benefits for directors
and corporate auditors.
(h) Accounting method for retirement benefits

Full-time employees of the Company and its consolidated subsidiaries are entitled to a lump-sum payment
upon retirement or severance of employment. In order to provide for the employees’ severance and retirement
benefits, the Company and its consolidated subsidiaries record a net defined benefit liability, which is includedin the liability section of the consolidated balance sheet, based on the estimated amounts of projected benefit
obligation and plan assets at the balance sheet dates. In calculating the retirement benefit obligations, the benefit formula basis is used in determining the amount of the expected retirement benefit obligation attributed toservice performed up to the end of the current fiscal year.
Past service costs are recognized in expenses using the straight-line method over 9 years (a period notexceeding the employees average remaining service years) commencing with the year incurred.
Actuarial gains and losses are recognized in expenses using the straight-line method over 9 years (a period
not exceeding the employees’ average remaining service years) commencing with the year following theiroccurrence.
Certain consolidated subsidiaries use the simplified method whereby the amount that would be required tobe paid if all their eligible employees voluntarily terminated their employment as of the balance sheet date istreated as projected benefit obligation for the calculation of net defined benefit liability and retirement benefit
cost.
(i) Foreign currency translation

All monetary assets and liabilities denominated in foreign currencies are translated into yen at the current
exchange rates at the balance sheet date, and any gain or loss on translation is credited or charged to income.
(j) Income taxes

Income taxes consist of corporate income tax, inhabitant taxes and enterprise tax.
The Company and its consolidated subsidiaries recognize tax effects of temporary differences between the
carrying amounts of assets and liabilities for tax and financial reporting.
(k) Cash equivalents

Cash equivalents include deposits placed with banks on demand and highly liquid investments with insignificant risk of changes in value which have maturities of three months or less when purchased.
(l) Net income per share

Basic income per share is computed using the weighted-average number of shares of common stock outstanding, which represents the number of issued shares less treasury stock, during each year.

22Changes in accounting policies
Effective from the fiscal year ended March 31, 2015, the Company has applied the provisions in Paragraph 35
of ASBJ Statement No. 26 Accounting Standard for Retirement Benefits issued in May 2012 and the provisions
in Paragraph 67 of ASBJ Guidance No. 25 Guidance on Accounting Standard for Retirement Benefits issued in
March 2015. Accordingly, the Company has revised the calculation methods for retirement benefit obligationand service cost and changed the method of determining the amount of the expected retirement benefits
attributed to periods of service from the straight-line basis to the benefit formula basis. In addition, the methodfor determining the discount rate has been changed from the method using the estimated average remaining
service years of employees to the method using a single-weighted average discount rate which reflects the estimated payment periods of retirement benefits and the amounts for the respective estimated payment periods.
For application of the standard, the Company followed the transitional treatment specified in Paragraph 37of the Accounting Standard for Retirement Benefits and the effects of changes of the calculation methods for
retirement benefit obligation and service cost were added to or deducted from retained earnings at the beginning of the fiscal year ended March 31, 2015.
As a result, at the beginning of the fiscal year ended March 31, 2015, net defined benefit liability decreasedby ¥854 million and retained earnings increased by ¥551 million. In addition, the effects of this change on
income or loss were immaterial. The effects on per share information are described in the respective section.
Unapplied accounting standards
The Company is scheduled to apply ASBJ Statement No. 21 Revised Accounting Standard for Business
Combinations, ASBJ Statement No. 22 Revised Accounting Standard for Consolidated Financial Statements,
ASBJ Statement No. 7 Revised Accounting Standard for Business Divestitures, ASBJ Statement No. 2 Revised
Accounting Standard for Earnings Per Share, ASBJ Guidance No. 10 Revised Guidance on Accounting Standard
for Business Combinations and Accounting Standard for Business Divestitures, and ASBJ Guidance No. 4
Revised Guidance on Accounting Standard for Earnings Per Share, all issued in September 2013, from the
beginning of the fiscal year ending March 31, 2016.
The effects of this application have yet to be determined.

3 Property and equipment
Property and equipment are stated at the net book value in the consolidated balance sheets. The amounts ofaccumulated depreciation were ¥56,362 million ($469,021 thousand) and ¥55,544 million on March 31, 2015
and 2014, respectively.
Capital gains resulting from disposals and other similar transactions are deducted from the cost of property
and equipment acquired in substitution. The amounts deducted from the cost of property and equipment were¥180 million ($1,499 thousand) and ¥180 million on March 31, 2015 and 2014, respectively.

4 Short-term bank loans and long-term debt(a) Short-term bank loans

Short-term bank loans as at March 31, 2015 and 2014 were as follows:—
Millions of yen
2015
2014

SecuredUnsecured¥2,8207,950Interest rates range from 0.671% to 1.500%.

23¥2,920
10,020Thousands of
U.S. dollars
2015$23,467
66,156

(b) Long-term debt

Long-term debt as at March 31, 2015 and 2014 was as follows:—
Millions of yen
2015
2014

1.01% ¥5.0 billion unsecured straight bonds due 2016
1.000%-2.490% loans from financial institutions due 2015 to 2019 and thereafter:
SecuredUnsecured
Total
Less: amount due within one year

Thousands of
U.S. dollars
2015¥5,000¥5,000$41,608

711
6,253
11,9646,055¥5,908

954
5,726
11,6803,568¥8,111

5,918
52,037
99,56350,393$49,170

The maturity date of the ¥5.0 billion 1.01% unsecured straight bonds, issued in March 2013 is March 22,
2016.
The annual maturities of long-term debt outstanding as at March 31, 2015 are as follows:—
Year ending March 31,

Millions ofyen

Thousands of
U.S. dollars

2016
2017
2018
2019
2020

¥ 6,055
2,591
583
531
2,202

$ 50,393
21,563
4,857
4,423
18,327(c) Pledged assets

Property and equipment having a net value of ¥13,276 million ($110,482 thousand) was pledged as collateralfor short-term bank loans and long-term debt as at March 31, 2015.

5 Contingent liabilities
As at March 31, 2015, the Company was contingently liable as follows:—
Notes endorsed
OthersMillions ofyen

Thousands of
U.S. dollars

¥19
163

$161
1,362

6 Revaluation reserve for land
In accordance with the Law concerning Revaluation of Land enacted on March 31, 1998, the Company has
revaluated its owned land used for business operations as at March 31, 2000 and reported a revaluation reserve
for land under “Net assets.”
The revaluated book value of land was determined based on the value of land registered on the cadastres ortheir supplementary records, which are provided by the Local Tax Law under the Law Concerning Revaluationof Land, after making reasonable adjustments.
Difference between the fair market value of revalued land at March 31, 2015
and the revalued book value

24

Millions ofyen

Thousands of
U.S. dollars¥12,334$102,640

7 Restrictive financial covenants(1) 	The Company has entered into overdraft facility and credit line commitment agreements (term of contractof three years) with ten banks for the purpose of efficient procurement of working capital.
		 Outstanding balance of unused credit concerning overdraft facility and credit line commitment agreements at March 31, 2015, was as follows:—
Maximum credit line of overdraft facility and commitment agreement
Used credit
Total

Millions ofyen

Thousands of
U.S. dollars¥3,000—¥3,000$24,965—$24,965

	The agreements include restrictive financial covenants requiring net assets as of the fiscal year end to exceed
predetermined amount.
(2)	Of borrowings of the Company and certain subsidiaries, syndicated loan agreements (outstanding balance
at March 31, 2015: ¥2,200 million ($18,307 thousand)) include restrictive financial covenants requiring
assets at a fiscal year-end to exceed the predetermined amount.

8 Impairment Losses
The Group recorded impairment losses on the asset groups stated below.
Fiscal year ended March 31, 2014
As a comprehensive logistics enterprise, the Group employs management accounting at offices that belong toroad haulage business or other business groups.
The Group’s business sites nationwide are the Group’s bases for offering services as a comprehensive logistics
enterprise to customers and, in many cases, offices of two or more business groups are located at a business site
to respond to customers.
Offices of business groups complement one another and a business site is a unit that generates cash flows.
Thus, the aggregate of assets of business groups’ offices located at a business site constitutes an asset group.
On the other hand, each idle asset constitutes an asset group.
During the year ended March 31, 2014, the book value of the idle assets was reduced to the recoverable
amount and the decreased amount was recognized as an impairment loss for land amounting to ¥449 million
and reported under other expenses.
The recoverable amount is measured by means of the net sale value, which is assessed principally based on
the appraisal value quoted by a real-estate appraiser and the estimated sales amount.
Fiscal year ended March 31, 2015
Not applicable25

9 Consolidated statement of comprehensive income
Reclassification adjustments and tax effects relating to other comprehensive income
Thousands of
U.S. dollars
2015

Millions of yen
2015
2014

Valuation difference on other securities:
Amount arising during the year
Reclassification adjustment
Before tax-effect adjustment
Tax effect
Valuation difference on other securities
Revaluation reserve for land:Tax effectRemeasurements of defined benefit plans:
Amount arising during the year
Reclassification adjustment
Before tax-effect adjustment
Tax effectRemeasurements of defined benefit plans
Share of other comprehensive income of affiliates accounted for using equity method:Amount arising during the year
Total other comprehensive income¥1,277
—
1,277
(364)
913

¥298
—
298
(104)
194

$10,632—
10,632(3,034)
7,598

411

—

3,428

900
194
1,095
(377)
717

—
—
—
—
—

7,496
1,619
9,115
(3,143)5,972

3¥2,046

0
¥194

28
$17,026

10 Cash flow statements
Reconciliation of cash and time deposits shown in the consolidated balance sheets and cash and cash equivalents shown in the consolidated statements of cash flows as at March 31, 2015 and 2014 are as follows:—
Millions of yen
2015
2014

Cash and time deposits
Time deposits with maturities exceeding three months
Cash and cash equivalents¥12,252(67)¥12,185¥9,297(58)¥9,238

Thousands of
U.S. dollars
2015$101,959(559)$101,400

11 Leases(a) Finance leases other than those which are deemed to transfer the ownership of the leased assets to the lesseeContents of leased assets:
Tangible fixed assets (mainly, machinery, equipment and vehicles for distribution related business)
Depreciation method:
Leased assets are depreciated by the straight-line method over the respective lease periods without residual
values. However, if the guaranteed salvage value is specified in the lease contracts, they are depreciated by
the straight-line method considering such salvage value.
(b) Finance lease transactions which commenced prior to April 1, 2008 and do not transfer ownership of theleased assets to the lessee are accounted for as operating lease transactions as before.
The following are pro forma amounts of the acquisition costs, accumulated depreciation, accumulated
impairment losses and net book value of leased property if they were capitalized as of March 31, 2015 and2014 for finance leases accounted for as operating leases:—26

Millions of yen
2015
2014

Acquisition costs:
Machinery and tools
Buildings
Accumulated depreciation:
Machinery and tools
Buildings
Accumulated impairment losses:
Machinery and tools
Buildings
Net book value:
Machinery and tools
Buildings

Thousands of
U.S. dollars
2015

¥ —
5,833
¥5,833¥16
5,833¥5,850—
48,547$48,547

¥ —
2,967
¥2,967¥152,720¥2,735

$

¥

—
756
¥756

¥—
756
¥756

$

¥ —
2,110
¥2,110¥12,357¥2,358$$

—24,690$24,690—
6,292$ 6,292—
17,564$17,564

Amounts of depreciation expense equivalents and interest expense equivalents for the years ended March 31,
2015 and 2014 were as follows:—
Millions of yen
2015
2014

Depreciation expense
Interest expense

¥246
84

¥246
92

Thousands of
U.S. dollars
2015$2,052707

Lease payments relating to finance leases accounted for as operating leases amounted to ¥427 million ($3,554 thousand) and ¥427 million, which were equal to the depreciation expense of the leased assets computed by thestraight-line method over the lease terms, for the years ended March 31, 2015 and 2014, respectively.
In the year ended March 31, 2006, impairment losses on leased assets amounting to ¥756 million were recorded.
Since these leased assets are off-balance-sheet, the equivalent amount is included in “Other long-term liabilities.”
Impairment losses on leased assets is realized over the lease term. Reversal of impairment losses on leased assets
recorded in the fiscal year ended March 31, 2015 and 2014, amounted to ¥42 million ($349 thousand) and ¥42
million, respectively.
Future minimum lease payments (including the interest portion thereon) and the balance of impairment losses
on leased assets as at March 31, 2015 and 2014 for finance leases accounted for as operating leases were summarized as follows:—
Millions of yen
2015
2014

Due within one year
Due over one year
Total

¥291
2,486
¥2,778¥336

Impairment losses on leased assets¥ 2832,778¥3,062¥ 378

Thousands of
U.S. dollars
2015$2,427
20,694$23,120$2,797(c) Operating leases
Millions of yen
2015
2014

Due within one year
Due over one year
Total

¥322
2,917
¥3,23927¥ 2692,493¥2,762

Thousands of
U.S. dollars
2015$2,680
24,277$26,958

12 Financial instruments and related disclosures(a) Financial instruments
The Group invests cash surplus, if any, in low risk financial assets and raises funds for short-term working
fund by bank borrowings. For capital investment, the Group raises necessary funds in light of capital investment plan by bank borrowings or issuance of corporate bonds. Derivatives are employed to mitigate the riskof fluctuations in interest rates, and not used for speculative purposes.
Trade receivables such as notes and accounts are exposed to customer credit risk. For such credit risk, theGroup has established the risk management system to monitor and control payment term and balances ofcustomers.
Investments in securities such as equity securities are exposed to the market risk of fluctuation in market
prices, but major components are equity securities issued by the business partners and their fair values are
periodically reported to the in-charge directors.
Almost all the trade payables such as notes and accounts payable are due within one year.
Of borrowings, short-term bank loans are used mainly to procure funds for operating transactions andlong-term debt and corporate bonds are used to procure funds for capital investment. For floating-rate debt,
derivative transactions (interest rate swaps) are used as hedges to avoid the risk of interest rate fluctuations
and fix interest payments.
The Company executes and manages derivative transactions in accordance with internal rules that specify
transaction authority, and since large borrowings are subject to the decision of the board of directors, theboard of directors also decides whether to enter into a corresponding swap agreements. Moreover, theCompany enters into derivative transactions only with financial institutions with high credit ratings to mitigate counterparty default risk.
Trade payables and loans are exposed to the liquidity risk, but the Group controls such liquidity risk by
the monthly cash management plans prepared by each company.
(b) Fair value of financial instruments
The carrying amount, fair value and the related difference of the financial instruments as of March 31, 2015
and 2014 were as follows:—
Financial instruments whose fair values are extremely difficult to determine are not included in the following tables.
Carrying
amountMillions of yen
Fair
value

¥12,252
3,367
17,1625,659¥38,442¥12,252
3,367
17,1625,659¥38,442

¥—
—
—
—
¥—

¥858
10,508
10,770
5,000
6,964
7,341
¥41,443—¥858
10,508
10,770
5,026
7,044
7,527
¥41,734
—

¥—
—
—
26
79
185
¥291
—

For the year ended March 31, 2015

Assets:Cash and time deposits
Trade receivables – notes
Trade receivables – accounts
Investments in securities (other securities)
Total assets
Liabilities:
Trade notes payable
Trade accounts payable
Short-term bank loans
Bonds
Long-term debt
Lease obligations
Total liabilities
Derivatives

28

DifferenceFor the year ended March 31, 2014

Assets:Cash and time deposits
Trade receivables – notes
Trade receivables – accounts
Investments in securities (other securities)
Total assets
Liabilities:
Trade notes payable
Trade accounts payable
Short-term bank loans
Bonds
Long-term debt
Lease obligations
Total liabilities
Derivatives

Carrying
amountMillions of yen
Fair
value

¥ 9,297
3,458
17,8544,416¥35,027¥ 9,297
3,458
17,8544,416¥35,027

¥ —
—
—
—
¥ —

¥ 958
10,815
12,940
5,000
6,680
6,364
¥42,758—¥ 958
10,815
12,940
5,000
6,737
6,595
¥43,046
—

¥ —
—
—
0
57
230
¥288
—

Difference

Thousands of U.S. dollars
Carrying
Fair
amountvalue
Difference

For the year ended March 31, 2015

Assets:Cash and time deposits
Trade receivables – notes
Trade receivables – accounts
Investments in securities (other securities)
Total assets
Liabilities:
Trade notes payable
Trade accounts payable
Short-term bank loans
Bonds
Long-term debt
Lease obligations
Total liabilities
Derivatives$101,959
28,024
142,82147,096$319,900$101,959
28,024
142,82147,096$319,900$$7,145
87,44889,623
41,60857,95561,095$344,875—$7,145
87,44889,623
41,82858,61862,637$347,300
—

$

$

—
—
—
—
—

—
—
—
220
663
1,542
$2,425—

For cash and time deposits, trade notes receivable and trade accounts receivable, the carrying amount is presented as the fair value since the fair value approximates the carrying amount because of the short maturity ofthese instruments.
For investments in securities, the fair value of equity securities is determined using the quoted price of thestock exchanges. Unlisted equity securities whose fair value is extremely difficult to identify in the carrying
amount of ¥2,803 million ($23,331 thousand) are not included in the above table. The unlisted equity securities were restated at fair value and related loss on impairment amounting to ¥39 million ($332 thousand) was
charged to income for the year ended March 31, 2015.
For trade notes payable, trade accounts payable and short-term bank loans, the carrying amount is presented
as the fair value since the fair value approximates the carrying amount because of the short maturity of these
instruments.
For bonds, lease obligations and long-term debt, the fair value is determined using the present value of
aggregated principal and interest discounted at a rate assumed if the new loans or lease arrangements weremade.
For derivatives, please see Note 14 “Derivative transactions.”(c) Information about maturities of financial instruments
Annual maturities of monetary receivables and other securities with contractual maturities as of March 31,
2015 and 2014 were as follows:29Millions of yen

For the year ended March 31, 2015

Time deposits
Trade notes receivable
Trade accounts receivable
Investments in securities (other securities with contractual maturities)
Total

Due in one
year

Due after one
year throughfive years

Due after five
years throughten years¥12,232
3,367
17,16210¥32,772

¥—
—
—
—
¥—

¥—
—
—
—
¥—

Due in one
year

Due after one
year throughfive years

Due after five
years throughten years¥9,272
3,458
17,85450¥30,635

¥—
—
—
10
¥10

¥—
—
—
—
¥—

Due after
ten years

¥—
—
—
—
¥—

Millions of yen

For the year ended March 31, 2014

Time deposits
Trade notes receivable
Trade accounts receivable
Investments in securities (other securities with contractual maturities)
Total
For the year ended March 31, 2015

Due in one
year

Time deposits
Trade notes receivable
Trade accounts receivable
Investments in securities (other securities with contractual maturities)
Total

Thousands of U.S. dollars
Due after one Due after five
year through years throughfive years
ten years$101,791
28,024
142,82183$272,719

$—
—
—
—
$—

$—
—
—
—
$—

Due after
ten years

¥—
—
—
—
¥—

Due after
ten years

$—
—
—
—
$—

Annual maturities of bonds, long-term debt, lease obligations, and other interest-bearing debts as of March 31, 2015
and 2014 are as follows:
Millions of yen

For the year ended March 31, 2015

Short-term debt
Bonds
Long-term debt
Lease obligations
Total

Due in one
year

Due after one
year throughtwo years¥10,770
5,000
1,055
2,140
¥18,966

¥—
—
2,591
1,870
¥4,462

Due in one
year

Due after one
year throughtwo years¥12,940
—
3,568
1,919
¥18,427

¥—
5,000
647
1,554
¥7,202

Due in one
year

Due after one
year throughtwo years$ 89,623
41,608
8,785
17,814$157,830$——21,563
15,568$37,131

¥—
—
531
1,063
¥1,594

¥—
—
2,202
482
¥2,684

Due after
five years

¥—
—
—
279
¥279

Due after two Due after three
years through years throughthree years
four years

¥—
—
2,177
1,256
¥3,434

¥—
—
169
888
¥1,057

Due after four
years throughfive years

¥—
—
117
444
¥562

Due after
five years

¥—
—
—
300
¥300

Thousands of U.S. dollars

For the year ended March 31, 2015

Short-term debt
Bonds
Long-term debt
Lease obligations
Total

¥—
—
583
1,504
¥2,088

Due after four
years throughfive years

Millions of yen

For the year ended March 31, 2014

Short-term debt
Bonds
Long-term debt
Lease obligations
Total

Due after two Due after three
years through years throughthree years
four years

30

Due after two Due after three
years through years throughthree years
four years

$—
—
4,857
12,520$17,378

$—
—
4,423
8,849
$13,272

Due after four
years throughfive years$——
18,3274,016$22,343

Due after
five years

$—
—
—
2,327
$2,327

13 Marketable securities and investments in securities
No trading securities or held-to-maturity securities were held at March 31, 2015 or 2014. Securities classified
as other securities are included in “marketable securities” and “investments in securities” in the accompanying
consolidated balance sheets.
The components of unrealized gain or loss on marketable securities classified as other securities at March 31,
2015 and 2014 are summarized as follows:—
Carrying
value

Millions of yen
2015
Acquisition
costs¥5,176——¥2,337——¥2,838——473—
9¥5,659508—
10¥2,855(34)—(0)¥2,804

Carrying
value

Millions of yen
2014
Acquisitioncosts¥3,784—50¥2,126—50¥1,658
—
0

571
—
9
¥4,416704—
10¥2,890

(132)
—
(0)
¥1,526

At March 31, 2015

Unrealized gain:
StocksBonds
Other
Unrealized loss:
Stocks
Bonds
Other
Total
At March 31, 2014

Unrealized gain:
StocksBonds
Other
Unrealized loss:
Stocks
Bonds
Other
Total

Unrealized
gain (loss)

Unrealized
gain (loss)

Thousands of U.S. dollars
2015
Carrying
Acquisition
Unrealized
value
costs
gain (loss)

At March 31, 2015

Unrealized gain:
StocksBonds
Other
Unrealized loss:
Stocks
Bonds
Other
Total

$43,073——$19,450——$23,623
—
—

3,940
—
83
$47,096

4,228—
83$23,761

(288)
—
(0)
$23,334

With regard to equity securities with fair value, classified as other securities, there was no impairment for theyears ended March 31, 2014 and 2015.
Equity securities whose fair value is 50% or less than the acquisition cost are necessarily restated at fair value
and those whose fair value is between 50% and 30% of the acquisition cost are restated at fair value, if they are
judged to be unrecoverable considering the trend of the market value for the past certain period and performances of the issuers.

14 Derivative transactions(a) Derivative transactions to which hedge accounting is not applied
There is no applicable transaction.

31

(b) Derivative transactions to which hedge accounting is applied
Hedge accounting method: Special treatment for interest rate swaps
Type of transactions: Interest rate swaps:
Fixed rate payment/Floating rate receipt
Major hedged item: Long-term debt
Millions of yen
2015
2014

Contract amountContract amount due after one year
Fair value¥2,2001,400*¥3,660400*

Thousands of
U.S. dollars
2015$18,307
11,650**The fair value is regarded to be included in the fair value of the long-term debt as hedged instruments, since
the interest rate swaps which qualify for hedge accounting and meet specific criteria are not remeasured atmarket value, but the differentials paid or received under the swap agreements are recognized and included ininterest expenses or income (special treatment).

15 Employees’ severance and retirement benefits(a) Outline of retirement benefit plans
In order to provide for the employees’ severance and retirement benefits, the Company and its consolidated
subsidiaries have funded and unfunded defined benefit plans and defined contribution plans.
Under the defined benefit corporate pension plans (all of which are funded plans), a lump sum or a pension based on the salary and the service years are paid. However, the Company and certain consolidated
subsidiaries have introduced cash balance plans for the defined benefit corporate pension plans. In theseplans, hypothetical individual employee accounts correspond to the funded amount and the principal of thepension amount for each participant. In each hypothetical individual employee account, the contributions
based on the salary standard and interest amount based principally on the market interest rates areaccumulated.
Under the lump-sum payment plans (all of which are unfunded plans), a lump sum based on the salaryand service years are paid as retirement benefits. The Company and certain consolidated subsidiaries transferred part of the lump-sum payment plans to the defined contribution pension plans.
In the defined benefit corporate pension plans and lump-sum payment plans of certain consolidated subsidiaries, net defined benefit liability and retirement benefit cost are calculated by the simplified method.
(b) Defined benefit plans
Reconciliation of beginning and ending balances of retirement benefit obligation (excluding the plan forwhich the simplified method is applied)
Millions of yen
2015
2014

Retirement benefit obligation at beginning of year
Cumulative effects of changes in accounting policies
Restated balance at beginning of year
Service cost
Interest cost
Actuarial loss
Payment of retirement benefits
Decrease due to transfer part of the lump-sum payment plans to thedefined contribution pension plan
Retirement benefit obligation at end of year

Thousands of
U.S. dollars
2015¥13,918(854)
13,063
697
104
(205)
(974)

¥18,376—
18,376
817
238
(103)
(1,350)$115,823(7,112)
108,7105,807
869(1,707)(8,110)—(4,061)—¥12,686¥13,918$105,570

Reconciliation of beginning and ending balances of plan assets (excluding the plan for which the simplified
method is applied)32

Millions of yen
2015
2014

Plan assets at beginning of year
Expected return on plan assets
Actuarial gain or loss
Contributions by the Company
Employee contributions
Payment of retirement benefits
Plan assets at end of year

¥5,737
143
695
586
68
(416)
¥6,815¥4,954
123
206
839
69
(457)
¥5,737

Thousands of
U.S. dollars
2015$47,748
1,194
5,789
4,879
572
(3,469)$56,713

Reconciliation of beginning and ending balances of net defined benefit liability for which the simplified
method is applied
Millions of yen
2015
2014

Net defined benefit liability at beginning of year
Retirement benefit costs
Payment of retirement benefits
Contributions to the plan
Increase resulting from change in scope of consolidation
Net defined benefit liability at end of year

¥849
90
(60)
(14)
10
¥876

Thousands of
U.S. dollars
2015

¥840
90
(72)
(9)
—
¥849

$7,071
754
(500)
(120)
91
$7,295Reconciliation of ending balances of retirement benefit obligation and plan assets and the net defined benefit liability/asset on consolidated balance sheet
Millions of yen
2015
2014

Funded retirement benefit obligation
Pension assets
Unfunded retirement benefit obligation
Net amount of liability (asset) on consolidated balance sheet
Net defined benefit liability
Net defined benefit asset
Net amount of liability (asset) on consolidated balance sheet¥7,690(6,958)
732
6,015
6,747
6,747
—
¥6,747¥7,596(5,877)
1,719
7,311
9,030
9,030
—
¥9,030

Thousands of
U.S. dollars
2015$63,998(57,903)
6,095
50,05756,15356,153—$56,153

Note: Including the plans for which the simplified method is applied
Retirement benefit costs and breakdown
Millions of yen
2015
2014

Service cost (Note 1)
Interest cost
Expected return on plan assets
Amortization of actuarial gain or loss
Amortization of past service cost
Retirement benefit costs calculated by the simplified method
Retirement benefit costs for defined benefit plans
Loss due to transfer to defined contribution plan (Note 2)

¥629
104
(143)
194
—
90
875
¥—

¥747
238
(123)
410
(112)
90
1,251
(¥792)Thousands of
U.S. dollars
2015$5,235869(1,194)
1,619
—
754
7,284
$—

(Note 1) Employee contributions to the corporate pension fund are not included in the amounts shown.
(Note 2) Recorded in non-operating expenses

33

Items recorded in other comprehensive income
Breakdown of items recorded in remeasurements of defined benefit plans (before tax effect deduction)
Thousands of
U.S. dollars
2015

Millions of yen
2015
2014

Actuarial gain or loss
Total

—
—

¥1,095¥1,095$9,115$9,115

Items recorded in accumulated other comprehensive income
Breakdown of items recorded in remeasurements of defined benefit plans (before tax effect deduction)
Millions of yen
2015
2014

Unrecognized actuarial gain or loss
Total(¥379)(¥379)¥716¥716

Thousands of
U.S. dollars
2015($3,155)($3,155)

Plan assets
Plan asset components as a percentage of total plan assets

Bonds
StocksInsurance company general accounts
Cash and time deposits
Other
Total

2015

2014

42.3%
32.3
10.8
3.9
10.7
100.0%

48.6%
26.8
12.5
2.9
9.2
100.0%

Long-term expected rate of return on plan assets is determined considering the pension asset allocation andlong-term expected return on plan assets composed of various types of assets, at the present and in the
future.
Basis of actuarial calculation
2015

Discount rateLong-term expected return on plan assets

0.8%
2.5%

2014

1.3%
2.5%

(c) Defined contribution plan
Millions of yen
2015
2014

Required contributions to the defined contribution pension plan

¥335

Thousands of
U.S. dollars
2015

¥96

$2,792(d) Other items related to retirement benefits
The impact of the partial transfer from the lump-sum payment plan to the defined contribution plan
(before tax effect deduction) was as follows:
Millions of yen
2015
2014

Decrease in retirement benefit obligation
Unrecognized actuarial gain or loss¥——

¥4,061
119

Thousands of
U.S. dollars
2015

$—
—

16 Net assets
The Company Law provides that an amount equal to at least 10% of the aggregate amount to be distributed as
cash dividends or cash appropriations must be transferred to the legal reserve until the additional paid-in capital, which is part of the capital surplus account, and the legal reserve, which is part of retained earnings, equals
25% of the common stock account.
Transfers from the legal reserve to common stock, additional paid-in capital, and other reserves may be madeby resolution of the shareholders.
34Under the Company Law, distributions of reserves to shareholders may be made at any time by resolution of
the shareholders.
The Company’s Articles of Incorporation also provide that the Board of Directors may make distributions toshareholders based on a resolution of the Board of Directors, provided that such distributions are limited toonce per fiscal year.
Information concerning changes in net assets

Treasury stock
Class of shares

Common stock (shares)

At March 31, 2014

Increase

Decrease

At March 31, 2015

6,872,859

23,340—6,896,199

Reason for the change:
The increase attributable to the purchase of shares less than one unit: 23,340 shares

17 Income taxes
As described in Note 2(j), the Company and its consolidated subsidiaries recognizes tax effects of temporary
differences between the carrying amounts of assets and liabilities for tax and financial reporting.
Significant components of deferred tax assets and liabilities were as follows:—
Millions of yen
2015
2014

Deferred tax assets:
Provision for bonuses
Net defined benefit liability
Accounts payable upon transfer to defined contribution pension plan
Accumulated loss on impairment of property and equipment
Accumulated loss on impairment of leased assets
Other
Gross deferred tax assets
Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Unrealized gain on other securities
Reserve under Special Taxation Measures Law
Undistributed earnings
Total deferred tax liabilities
Net deferred tax assets

Thousands of
U.S. dollars
2015

¥454
2,215
823
2,343
108
791
6,736
(3,336)
3,400

¥424
2,991
1,120
2,637
133
1,182
8,489
(3,806)
4,683$3,782
18,4406,850
19,502899
6,587
56,060(27,766)
28,294(845)(3,809)(150)(4,805)¥(1,405)(483)(4,263)—(4,746)¥(63)(7,037)(31,703)(1,251)(39,991)$(11,697)

Income taxes applicable to the Company consist of corporate income tax, inhabitant taxes and enterprise tax.
Significant differences between the statutory tax rate and the Company’s effective tax rate after applying thedeferred tax accounting for the years ended March 31, 2015 and 2014 were as follows:—

Statutory tax rate:
Increase (reduction) in tax resulting from:
Nondeductible expenses including entertainment, etc.
Nontaxable income including dividends received deduction, etc.
Per capita portion of inhabitant taxes
Equity in earnings of affiliates
Elimination of dividends received from consolidated subsidiaries, etc.
Change in valuation allowance related to deferred tax assets
Adjustment of deferred tax assets following a change in statutory tax rates
Other
Effective tax rate

35

2015

2014

35.38%

37.75%

1.08(4.12)
4.34(0.52)
3.75(2.91)(1.03)
2.34
38.31%

1.74(3.86)
6.11(0.66)
3.43(6.15)
1.81(1.48)
38.69%

18 Supplementary income information
Supplementary income information for the years ended March 31, 2015 and 2014 is as follows:—
Millions of yen
2015
2014

Depreciation expenses
Lease and rental

Thousands of
U.S. dollars
2015¥4,361
5,093¥4,365
5,292$36,325
44,04019 Amounts per share
Amounts per share of common stock for the years ended March 31, 2015 and 2014 were as follows:—
Yen

Net income per share:
Basic
DilutedCash dividends
Net assets per share:

2015

2014

¥35.69—6.00¥601.41¥26.13—4.50¥542.03

U.S. dollars
2015$0.2970—0.0499$5.0047(Note) As described in “Changes in accounting policies,” the Company has applied the Accounting Standard for
Retirement Benefits, etc. and followed the transitional treatment specified in Paragraph 37 of the
Accounting Standard for Retirement Benefits.
As a result, net assets per share at March 31, 2015 increased by ¥6.08 ($0.0506).
The effect of this change on net income per share was immaterial.
Basis for the calculation of net assets per share for the years ended March 31, 2015 and 2014 were as follows:—
Millions of yen
2015
2014

Total net assets as reported on the consolidated balance sheets
Deduction from total net assets:
Minority interests
Adjusted net assets allocated in common stock
Number of shares of common stock outstanding at the end ofyear on which net assets per share is calculated

Thousands of
U.S. dollars
2015¥54,647¥49,292$454,754

91¥54,556

110¥49,182758$453,996

90,713,919

90,737,259

Basis for the calculation of basic and diluted net income per share for the years ended March 31, 2015 and2014 was as follows:—
Millions of yen
2015
2014

Net income
Net income not available to shareholders of common stock
Net income available to shareholders of common stock
Weighted-average number of shares of common stock outstanding (shares)¥3,238—¥3,23890,729,769¥2,370—¥2,37090,748,092

Thousands of
U.S. dollars
2015$26,946—$26,946

20 Segment information(1)	Overview of reportable segments
	The Company’s segments are the Group’s components for which discrete financial information is available
and whose operating results are regularly reviewed by the Company’s board of directors to make decisions
on the allocation of resources to the segments and to assess their performance.
		 The Group, in doing business, classifies business models of operating companies, which are under theCompany (pure holding company), according to the nature of services and formulates comprehensive strategies for individual business models.
		 Therefore, the Group consists of segments according to services based on these business models and theGroup’s reportable segments are: Logistics, Information Processing, and Sales.
		 Principal services of the Logistics segment are road haulage, freight forwarding, warehousing, and harbortransport. The principal service of the Information Processing segment is information processing. Principal
services of the Sales segment are merchandising, consignment sales, and a non-life insurance agency.
36

(2)	Methods of calculating operating revenues, income/loss, assets/liabilities, and other items byreportable segment
	Accounting procedures applied to the reported operating segments are the same as those described in the“Basis of Presenting Consolidated Financial Statements.” Income of reportable segments is on an operating
income basis. Intersegment revenues and transfers are based on market prices.
		 As described in “Changes in accounting policies,” the Company has revised the calculation methods for
retirement benefit obligation and service cost, and accordingly revised those applied to the reported operating segments in the same manner.
		 The effect of this change on segment income was immaterial.
(3)	Information on operating revenues, income/loss, assets/liabilities, and other items byreportable segment
For the year ended March 31, 2015

Millions of yen

Logistics

Operating revenues:
Revenues from outside customers
Intersegment revenues or transfers
Total
Segment income
Segment assets
Other items:
Depreciation
Amortization of
goodwill
Gain on negative goodwill
Increases in property
and equipment andintangible fixed assets

Reportable segment
Information
processing
Sales

Total

Adjustment(Note 2)

Consolidated(Note 3)

¥3,015¥6,105¥121,842¥705¥122,547¥—¥122,547

30
112,751¥3,923¥105,409

293
3,309
¥253
¥2,470

4,631
10,737¥394¥9,393

4,955
126,797¥4,571¥117,273

297
1,002
¥119
¥10,918

5,253
127,800¥4,691¥128,192(5,253)(5,253)¥61¥(7,304)—
122,547¥4,752¥120,887¥3,931

¥351

¥46

¥4,329¥22¥4,351¥13¥4,365

¥—
¥110

¥3
¥—

¥—
¥—

¥3
¥
110

¥—
¥—

¥3
¥110

¥—
¥—

¥3
¥110

¥4,756¥1,097¥16¥5,870¥5¥5,875¥8¥5,884

Millions of yen

Logistics

Other items:
Depreciation
Amortization of
goodwill

Others(Note 1)

¥112,720

For the year ended March 31, 2014

Operating revenues:
Revenues from outside customers
Intersegment revenues or transfers
Total
Segment income
Segment assets

Total

Reportable segment
Information
processing
Sales

Total

Others(Note 1)

Total

Adjustment(Note 2)

Consolidated(Note 3)

¥110,692¥3,059¥6,616¥120,367¥762¥121,129¥—¥121,12932
110,724

283
3,342

5,261
11,878

5,577
125,945

719
1,481

6,297
127,427(6,297)(6,297)—
121,129¥2,493

¥250

¥432

¥3,176¥85¥3,261¥(21)¥3,240¥104,991¥2,002¥9,480¥116,474¥10,969¥127,443¥(10,293)¥117,149¥3,896

¥386

¥43

¥4,326¥23¥4,350¥11¥4,361

¥

0

¥

18

¥—

¥18

¥—

¥

18

¥

—

¥

Impairment losses

¥449

¥

—

¥—

¥449

¥—

¥

449

¥

—

¥449

Increases in property
and equipment andintangible fixed assets¥4,267

¥387

¥161

¥4,816¥33¥4,850¥5¥4,85537

18

For the year ended March 31, 2015

Logistics

Operating revenues:
Revenues from outside customers
Intersegment revenues or transfers
Total
Segment income
Segment assets
Other items:
Depreciation
Amortization of
goodwill
Gain on negative goodwill
Increases in property
and equipment andintangible fixed assets

Thousands of U.S. dollars
Reportable segment
Information
processing
Sales

Total

Others(Note 1)

Total

Consolidated(Note 3)

$938,012$25,095$50,808 $1,013,916

252
938,264

2,445
27,54038,54289,350$32,647$2,113$3,284 $38,044$993 $39,037$512 $39,549$877,174$20,560$78,165 $975,898$90,862 $1,066,760$(60,786) $1,005,974$32,713$2,925$388 $36,026$185 $36,211$113 $36,325

$—
$919

$31
$—

$— $31$— $919$— $31$— $919$— $31$— $919$39,580$9,130$139 $48,848$47 $48,895$69 $48,964

41,2381,055,154$5,870 $1,019,785

Adjustment(Note 2)

2,477
8,346

43,715
1,063,500$— $1,019,785(43,715)(43,715)—
1,019,785

Notes:
1. “Others” corresponds to operating segments that are not included in the reported operating segments
and includes automobile repair and direct mail service.
2. Adjustments are as follows:(1) Adjustments of segment income
For the fiscal year ended March 31, 2015 and 2014, adjustments of segment income amounted to¥(61) million ($(512) thousand) and ¥(21) million, respectively. Adjustments include intersegment
eliminations and corporate expenses not allocated to any reportable segments.
For the fiscal year ended March 31, 2015 and 2014, the above-mentioned intersegment eliminations amounted to ¥798 million ($6,647 thousand) and ¥711 million, respectively, and corporate
expenses not allocated to any reportable segments amounted to ¥(737) million ($(6,135) thousand)and ¥(732) million, respectively. Corporate expenses are mainly expenses of the Company’s operations that do not belong to any reportable segments.
(2) Adjustments of segment assets
For the fiscal year ended March 31, 2015 and 2014, adjustments of segment assets amounted to¥(7,304) million ($(60,786) thousand) and ¥(10,293) million, respectively. Adjustments include
intersegment eliminations and corporate assets not allocated to any reportable segments.
For the fiscal year ended March 31, 2015 and 2014, the above-mentioned intersegment eliminations amounted to ¥(23,607) million ($(196,450) thousand) and ¥(20,511) million, respectively,
and corporate assets not allocated to any reportable segments amounted to ¥16,302 million($135,664 thousand) and ¥10,217 million, respectively. Corporate assets are mainly cash and time
deposits and investments in securities of the head office that does not belong to any reportablesegments.
(3) Adjustments of increases in property and equipment and intangible fixed assets
For the fiscal year ended March 31, 2015 and 2014, adjustments of increases in property andequipment and intangible fixed assets amounted to ¥8 million ($69 thousand) and ¥5 million,
respectively. Adjustments include intersegment eliminations and corporate assets not allocated to
any reportable segments.
For the fiscal year ended March 31, 2015 and 2014, the above-mentioned intersegment eliminations amounted to ¥0 million ($0 thousand) and ¥(8) million, respectively, and corporate assets notallocated to any reportable segments amounted to ¥8 million ($69 thousand) and ¥13 million,
respectively.
3. Segment income is adjusted to operating income in the consolidated financial statements.

38

(4) Related information
For the year ended March 31, 2015
1) Information by product and service
Information by product and service is omitted because similar information is presented in the segment
information.
2) Information by geographical area
Information about operating revenues by geographical area is omitted because operating revenues fromoutside customers in Japan exceeded 90% of operating revenues in the consolidated financial statements.
Not applicable for property and equipment because there is no property and equipment located inplaces other than Japan.
3) Information by major customer
Not applicable because, concerning operating revenues from outside customers, no outside customer
accounts for 10% or more of operating revenues in the consolidated financial statements.
For the year ended March 31, 2014
1) Information by product and service
Information by product and service is omitted because similar information is presented in the segment
information.
2) Information by geographical area
Not applicable for operating revenues because there are no operating revenues from outside customers
other than those in Japan.
Not applicable for property and equipment because there is no property and equipment located inplaces other than Japan.
3) Information by major customer
Not applicable because, concerning operating revenues from outside customers, no outside customer
accounts for 10% or more of operating revenues in the consolidated financial statements.
(5) Information on fixed asset impairment losses by reportable segment
For the year ended March 31, 2015
Not applicable
For the year ended March 31, 2014
Information on fixed asset impairment losses by reportable segment is omitted because similar information
is presented in the segment information.

39

(6) Information on amortization of goodwill and unamortized balance by reportable segment
For the year ended March 31, 2015

Millions of yen

Logistics

Goodwill:
Amortization
Balance at end of year
Negative goodwill:
Amortization
Balance at end of year

Reportable segment
Information
processing
Sales

Total

OthersAdjustment

Total

¥—

¥3

¥—

¥3

¥—

¥—

¥3

¥—

¥ 10

¥—

¥ 10

¥—

¥—

¥ 10

¥76

¥—

¥—

¥ 76

¥—

¥—

¥ 76

¥—

¥—

¥—

¥—

¥—

¥—

¥—

Total

OthersAdjustment

Total

For the year ended March 31, 2014

Millions of yen

Logistics

Goodwill:
Amortization
Balance at end of year
Negative goodwill:
Amortization
Balance at end of year

¥0

¥18

¥—

¥18

¥—

¥—

¥18

¥—

¥14

¥—

¥ 14

¥—

¥—

¥ 14

¥76

¥—

¥—

¥ 76

¥—

¥—

¥ 76

¥76

¥—

¥—

¥76

¥—

¥—

¥76

OthersAdjustment

Total

For the year ended March 31, 2015
Logistics

Goodwill:
Amortization
Balance at end of year
Negative goodwill:
Amortization
Balance at end of year

Reportable segment
Information
processing
Sales

Thousands of U.S. dollars
Reportable segment
Information
processing
Sales
Total

$—

$31

$—

$31

$—

$—

$31

$—

$91

$—

$91

$—

$—

$91

$638

$—

$—

$638

$—

$—

$638

$—

$—

$—

$—

$—

$—

$—

(7) Information on gain on negative goodwill by reportable segment
For the year ended March 31, 2015
In the Logistics Segment, consolidated subsidiary Zento Transportation Co., Ltd. became a wholly owned
subsidiary as a result of additional acquisition of its shares by the Company. In addition, also in the
Logistics Segment, Ryosei Logistics Co., Ltd. became a subsidiary as a result of new acquisition of its sharesby the Company.
	 Accordingly, a gain on negative goodwill amounting to ¥110 million ($919 thousand) was recorded in thefiscal year ended March 31, 2015.
For the year ended March 31, 2014
Not applicable

21 Subsequent events
Cash dividends

The annual shareholders’ meeting of the Company, which was held on June 26, 2015, duly approved the payment of dividends as follows:
Cash dividends (¥3.50 per share)

40

Millions ofyen

Thousands of
U.S. dollars¥317$2,643

Consolidated Subsidiaries

Logistics
Company NameBusiness Line

Tonami Transportation Co., Ltd.

Road haulage

Tonami Transportation Shinetsu Co., Ltd.

Road haulage

Tonami Transportation Chugoku Co., Ltd.

Road haulage

Kanto Tonami Transportation Co., Ltd.

Road haulage

Gosei Tonami Transportation Co., Ltd.

Road haulage

Tonami Shutoken Logistics Co., Ltd.

Road haulage

Tonami Kinki Logistics Co., Ltd.

Road haulage

Zento Transportation Co., Ltd.

Road haulage

Ishikawa Tonami Transportation Co., Ltd.

Road haulage

Ibaraki Tonami Transportation Co., Ltd.

Road haulage

Chukyo Tonami Transportation Co., Ltd.

Road haulage

Fukui Tonami Transportation Co., Ltd.

Road haulage

Niigata Tonami Transportation Co., Ltd.

Road haulage

Takefu Transportation Co., Ltd.

Road haulage

Anan Transportation Co., Ltd.

Road haulage

Ryosei Logistics Co., Ltd.

Road haulage

Tonami Global Logistics Co., Ltd.

Harbor transport service

Keishin Warehouse Co., Ltd.

Warehousing

Daiichi Warehouse Co., Ltd.

Warehousing

Information Processing and Others
Company NameBusiness Line

Tonami Trading Co., Ltd.

Trading Company

Toyo Gomu Hokuriku Hanbai Co., Ltd.

Sale of tires

Keishin System Research Co., Ltd.

Development and sale of software

Client Focus Co., Ltd.

Development and sale of software

Tonami Business Service Co., Ltd.

Financial service

Tonami Automobile Technology Research Institute Co., Ltd.

Automobile technology R&D

41

Board of Directors and Corporate Auditors

President and Representative Director
Katsusuke Watanuki
Managing Director
Yasuo Terabayashi

Standing Corporate Auditors
Mitsuo Matsuda
Masafumi Takebe
Corporate Auditors
Yohji Ishiguro
Toshio Kaido

Directors
Yoshimi Nagahara
Kazuo Takata
Shinichi Izumi
Takeshi Akamatsu
Mitsuharu Wadachi
Shinichiro Inushima(As of June 26, 2015)

Corporate Data

Head Office2-12, Showa-machi 3-chome, Takaoka,
Toyama Prefecture 933-8788, Japan
Phone: (0766) 32-1073
Fax: (0766) 32-1077

Common Stock¥14,183 million

Tokyo Office8-4, Nihonbashihoridome-cho 2-chome, Chuo-ku,
Tokyo 103-0012, Japan
Phone: (03) 3664-5403
Fax: (03) 3664-5405

Shareholders
6,326

Issued and Outstanding Shares
97,610,118 shares

Date of Established
June 1943

Employees
66(As of March 31, 2015)42

TONAMI HOLDINGS CO., LTD.
URL: http://www.tonamiholdings.co.jp/

Printed in Japan on recycled paper