TONAMI TRANSPORTATION CO., LTD.
Head Office: 2-12, Showa-machi 3-chome, Takaoka, Toyama Pref., Japan
Phone: 0766-21-1073 Fax: 0766-21-3640

TONAMI TRANSPORTATION CO., LTD.
ANNUAL REPORT 2001

Printed in JapanN O N -C O N S O L I D AT E D F I N A N C I A L H I G H L I G H T S
TONAMI TRANSPORTATION CO., LTD

Tow years ended March 31, 2001

Thousands of
U.S. dollars

Millions of yen
2000

2001

2001

Service revenues ...................................................................... ¥100,291¥100,509$ 811,210

FOR THE YEAR:

Operating income ....................................................................

1,543

1,695

13,680Net income (loss) ....................................................................

910(8,888)(71,734)

Net income (loss) ....................................................................

¥ 9.29¥(91.05)$(0.7349)

Cash dividends .........................................................................

6.00

6.00

0.0484

Total assets ............................................................................... ¥120,697¥109,261$881,848

44,63536,250PER SHARE (yen and U.S. dollars):

AT YEAR-END:

Total shareholders’ equity .......................................................

54,020Notes: 1 U.S. dollar amounts presented herein are included solely for convenience. The rate of ¥123.90 = U.S.$1,
prevailing on 31st March, 2001, has been used for the translation into U.S. dollar amounts.
2 The computation of net income per share of common stock has been based on the weighted average numberof shares outstanding during each financial year, retroactively adjusted to take account of a free share
distribution.

CONTENTS
1
2
4
5
35

PROFILEA MESSAGE FROM THE PRESIDENTB O A R D O F D I R E C T O R S A N D S TAT U T O R Y A U D I T O R S
FINANCIAL SECTIONC O R P O R AT E D ATA

System Distribution – Continually More to Offer

PROFILEOne of Japan’s leading integrated distribution companies, Tonami has
been developing solutions for the distribution needs of its customers
for over 50 years. The pioneer of computerized distribution systems
in Japan, the Company has a highly advanced computerized network
system and strong information technology, and has recently
completed an upgrade of its information network, including adding
mobile connections to all of its vehicles. In addition to Tonami’s corebusiness of road haulage services, the Company also offers rail and air
freight; removal; warehousing; marketing, distribution andinformation management; specialty item sales; and casualty insurance
agency services.
1

A

M E S S A G E

F R O MT H E

P R E S I D E N T

PERFORMANCE
The fortunes of the Japanese economy
rose and fell during the fiscal year underreview. During the first half, major
Japanese manufacturing companies began
to show signs of performance recovery,
supported by strong private sector capital
investment and booming exports. Personal
consumption, however, remained in thedoldrums. In the second half, signs of theslowdown in the U.S. economy began tosteadily emerge, reversing production andexport growth trends and pushing Japan’s
economy back into a recessionary trend.
In the transportation industry, domestic
freight tonnage began to expand in the first half as the economy steadily picked up
steam. Entering 2001, however, freight tonnage slowed rapidly, reflecting thedownturn. In addition, competition intensified, producing a difficult businessclimate.
In dealing with these circumstances, the Company sought growth in its operating
income through aggressive sales activities and joint delivery systems and throughefforts to expand sales of new transportation services, such as recycling of used on
expired confidential documents. In addition, Tonami actively worked to further
improve its transportation system and to develop its system distribution operations,which propose outsourcing services to companies. Thanks to these efforts, service
revenues increased 0.2% despite the difficult business climate, to ¥100.5 billion.
Despite a host of increasing expenses, such as rising fuel and vehicle costs, theCompany combined improvement in vehicle load capacity use with cost cuts andgreater operating efficiency to post a 9.9% increase in operating income. Although a
net loss was recorded in the fiscal year under review, it was primarily due to thebooking of extraordinary expenses related to the adoption of a new accounting
standard for retirement benefits.

Looking at divisional performance, in our transportation business, revenues fromroad haulage services increased 0.5%, accounting for 85.6% of total revenues. In ourwarehousing business, revenues rose 2.1%, contributing 8.2% of total revenues. Allother business recorded year-on-year declines. Revenues from removal services fell
2.8%, revenues from rail forwarding fell 4.4%, and revenues from other services
deceased 7.2%.
2

During the fiscal year under review, we concentrated our capital investment on our
national network and the total upgrade of our information systems. We completed
the construction of new facilities for the relocation of the computer center inToyama Prefecture in June 2000. Other construction completed included the
Hokuriku joint delivery center in Ishikawa Prefecture in October 2000 and the new
Niigata distribution center in Niigata Prefecture in February 2001. In addition, we
finished installing mobile terminals in all of our vehicles and new computer
terminals in all of our offices. Utilizing this upgraded information system,
employees are working together to improve customer service and the productivityof our vehicles. Total capital investment during the fiscal year was ¥4,117 million.
OUTLOOKThe economic downturn, falling commodity prices caused by a deflationary
environment, and continued stagnation in personal consumption suggest thatJapan’s economy will continue to struggle for the time being.
The transportation industry will also face difficulties, with minus growth forecast in
domestic freight haulage and competition intensifying within the industry.
To cope with these circumstances, we will target growth in service revenues byfurther escalating our sales efforts, increasing the sales of new transportation
services, expanding our system distribution operations, and cooperating withsubsidiaries. By combining these efforts to provide integrated distribution services,
we intend to targeted profitability growth. We will also work toward this goal byusing our new information system to improve the quality of our services and raise
efficiency throughout the Company.
In the current fiscal year ahead, we will again commit ourselves to improving
performance. In pursuing that challenge, we look forward to the continued supportof our shareholders.
September 2001

Yoshihiro Minami
President and Representative Director

3

BOARDOF

DIRECTORSANDP R E S I D E N T A N D R E P R E S E N TAT I V E
DIRECTOR
Yoshihiro Minami
SENIOR MANAGING DIRECTORS
Yohsuke Konishi
Katsusuke Watanuki
MANAGING DIRECTORS
Hiroki Matsumoto
Kunihiko Shibata
Akiyoshi Kunisada
Kohichi Shimazaki

STATUTORY AUDITORSS TA N D I N G S TAT U T O R Y A U D I T O R S
Yoshitetsu Sasaki
Hisao Saito
Makoto Nagai
S TAT U T O R Y A U D I T O R
Tsutomu Uchii(As of 28th June, 2001)

DIRECTORS
Takeshi Yamagishi
Akira Fune
Tsutomu Chujoh
Noriaki Murata
Iwao Hamano
Kohichi Kishida
Shigeki Sakamoto
Takashi Suzuki

4

F I N A N C I A LS E C T I O N

6 MANAGEMENT DISCUSSION AND ANALYSIS
OF OPERATIONS AND FINANCIAL POSITION
9 NON-CONSOLIDATED FIVE-YEAR SUMMARY
10 NON-CONSOLIDATED BALANCE SHEETS
12 NON-CONSOLIDATED STATEMENTS OF
INCOME
13 NON-CONSOLIDATED STATEMENTS OF
SHAREHOLDERS’ EQUITY
14 NON-CONSOLIDATED STATEMENTS OF
CASH FLOWS
15 NOTES TO THE NON-CONSOLIDATEDFINANCIAL STATEMENTS
20 REPORT OF THE INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS ON THE NONCONSOLIDATED FINANCIAL STATEMENTS
21 CONSOLIDATED FIVE-YEAR SUMMARY
22 CONSOLIDATED BALANCE SHEETS
24 CONSOLIDATED STATEMENTS OF INCOME
25 CONSOLIDATED STATEMENTS OF
SHAREHOLDERS’ EQUITY
26 CONSOLIDATED STATEMENTS OF
CASH FLOWS
27 NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS
33 REPORT OF THE INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS ON THE
CONSOLIDATED FINANCIAL STATEMENTS

5M A N A G E M E N T DI S C U S S I O N A N D A N A LY S I S O F O P E R AT I O N S A N D F I N A N C I A L P O S I T I O N

A N A LY S I S O F O P E R AT I O N S

Service Revenues

97

98

99

00

100.5

100.2

101.0

106.7

109.0

Billions of yen

01

Revenues from
Road Haulage
94.5

91.3

86.2

85.6

86.0

Billions of yen

97

98

99

00

01

Revenues from
Warehousing

97

98

99

00

8.2

8.0

8.1

8.4

7.8

Billions of yen

01

Despite an up and down year for the Japanese economy, services revenues forthe year ended March 31, 2001 increased 0.2%, to ¥100.5 billion ($881 million),as the Company combined a range of active sales activities to increase revenues
while also improving service quality and operations management.
Looking at performance by division, our major operations, revenues from road
haulage services, increased 0.5%, to ¥85,998 million, accounting for 85.6% of
total service revenues. Although road haulage was expanding along with therecovery in the economy in the first half, growth ground to a halt in the second
half because of the economic downturn. Nevertheless, strong marketing efforts
helped operations post a slight year-on-year increase amid heightenedcompetition in the market.
Revenues from warehousing, Tonami’s second largest operations, grew 2.1%, to¥8,230 million, contributing 8.2% of total service revenues. The Company
continues to be confident that demand will remain firm for its warehousing
services. Revenues from removal services, which generated 1.9% of total
services revenues, declined 2.8%, to ¥1,952 million. Revenues from rail
forwarding services, which contributed 1.3% of total service revenues, lost 4.4%,
to ¥1,333 million. Although revenues declined in the fiscal year under review,rail freight still provides an attractive option to trucking routes because of morereliable scheduling and highly competitive services. Revenues from otherservices sunk 7.2%, to ¥2,992 million, accounting for 3.0% of total service
revenues during the fiscal year in review.
Cost of services edged down slightly to ¥95,808 million ($773 million). Selling,
general and administration expenses rose 1.2%, to ¥3,006 million ($24.3
million). Overall, operating income expanded 9.9%, to ¥1,695 million ($13.7
million).
Other income and expenses fell substantially to a net expense of ¥16,610
million ($134 million), primarily due to the appropriation of shortfall of required
reserve for employee retirement benefits based on the Revised AccountingStandards of ¥16,038 million ($129 million) compared with income of ¥402
million in the previous fiscal year. Interest and dividend income increased 9.7%,
to ¥430 million ($3.5 million) while interest expenses rose 30.74%, to ¥400
million ($3.2 million). Loss before income taxes, therefore, amounted to ¥14,915
million ($120 million). Income taxes for the period decreased slightly to ¥1,085
million ($8.8 million) while deferred income taxes rose significantly to ¥7,112
6

Operating Income
1.30

1.27

1.54

1.70

Billions of yen
2.92

million ($57.4 million). Consequently, the Company recorded a loss of ¥8,888
million ($71.7 million) compared with net income of ¥910 million in theprevious fiscal year. Loss per share was ¥91.05 ($0.7349) compared with net
income per share of ¥9.29 in the previous year.

97

98

99

00

01

Net property and equipment rose slightly, to ¥61,883 million ($499 million)
because of increases in land and buildings and structures. Machinery and tools
and vehicles declined somewhat, and construction in progress was minimal.
Tonami continued to maintain its policy of limiting capital investment toessential areas, such as the maintenance of its haulage and warehousing
network.

Net Income/Net Income per Share(8.89)(91.05)

Billions of yen/yen
1.30
13.23
0.23
2.29
0.55
5.59
0.91
9.29

Investments and other assets jumped 42.3%, to ¥15,032 million ($121 million)
principally because of the reclassification of securities from current assets toinvestments in securities due to the implementation of new accounting
standards for financial instruments and the addition of ¥3,565 million ($28.8
million) in deferred tax assets.
A N A LY S I S O F F I N A N C I A L P O S I T I O NCurrent assets decreased 33.3%, to ¥32,346 million ($261 million), mainly due tothe reclassification of some marketable securities to investments and otherassets under the new accounting standards adopted for financial instruments.
Cash fell 11.3%, to ¥3,794 million ($30.6 million) while marketable securities
dropped 62.8%, to ¥7,050 million ($56.9 million) mainly because of theredemption of bonds amounting to ¥18,823 million ($152 million). Among tradereceivables, notes and accounts receivable declined 2.6%, to ¥18,971 million($153 million).

97

98

99

00

01

Capital Expenditures

7

6.4

4.8

3.4

4.1

Long-term liabilities jumped 43.7%, to ¥36,802 million ($297 million). This
increase can be attributed to the increase of a ¥16,325 million ($132 million) to¥20,858 million ($168 million) of retirement benefit reserve in accordance with

Billions of yen
3.9

Current liabilities also dropped, falling 39.5%, to ¥27,824 million ($225 million).
The considerable decline resulted from absence of ¥18,823 million in thecurrent portion of bonds that was redeemed during the fiscal year underreview. Accounts payable decreased 2.6%, to ¥7,819 million ($63.1 million).
Income tax payable fell 66.8%, to ¥334 million ($2.7 million). Other current
liabilities declined 12.1%, to ¥5,285 million ($42.7 million). The current ratio
increased to 1.16 from 1.05 in the previous year. This improvement also wasmainly due to the absence of the current portion of bonds.

97

98

99

00

01

Total Assets

97

98

99

00

109.3

120.7

98.9

100.0

108.7

Billions of yen

01

new accounting standards. Long-term debt, less current portion was unchanged
from the prior year, at ¥7,000 million ($56.5 million). Deferred tax liabilities
were down 36.9%, to ¥3,267 million ($264 million). Deferred tax liabilities fromrevaluation of land declined slightly to ¥5,640 million ($45.5 million).
Shareholders' equity dropped 17.4%, to ¥44,635 million ($360 million),principally because of a 59.0% decline in retained earnings, to ¥6,542 million($52.8 million) due to the loss incurred during the fiscal year. In addition,
unrealized gain from revaluation of land edged down 1.8%, to ¥7,872 million($6.5 million). Reflecting the decrease in shareholders’ equity, the equity ratio
fell to 40.9% compared with 44.8% in the previous fiscal year.
A N A LY S I S O F C A S H F L O W S

Shareholders’ Equity

97

98

99

00

44.6

54.0

49.4

49.5

50.1

Billions of yen

01

Net Cash Provided by Operating Activities

Cash and cash equivalents at beginning of period were ¥15,609 million ($126
million). Net cash provided by operating activities amounted to ¥5,489 million($44.3 million), up ¥1,298 million from the previous fiscal year. Although theCompany recorded a loss of ¥14,915 before income taxes, this decrease wasmore than offset by the net increase in retirement benefit reserves. Among othersignificant items in cash flow from operating activities, depreciation andamortization was ¥3,305 million ($26.7 million), down 4.4%.
Net cash provided by investing activities amounted to ¥2,589 million ($20.9
million) compared with net cash used in the previous fiscal year. Contributors
to this reversal included proceeds from sales of marketable securities, which
increased ¥7,615 million, to ¥8,981 million ($72.5 million), and purchase of
marketable securities, which declined ¥2,061 million, to ¥2,609 million ($21.1
million). Purchase of property and equipment increased ¥1,468 million, to¥4,564 million ($36.8 million).

4.2

5.5

Billions of yen

00

01

Net cash used in financing activities amounted to ¥13,846 million ($112 million).
Cash flows from financing activities reversed from the net cash provided
position in the previous fiscal year because of the ¥18,823 million ($152 million)
redemption in bonds. Among fund procurement, increase in short-term loans
amounted to ¥1,760 million ($14.2 million) and proceeds from long-term loans
amounted to ¥4,250 million ($34.3 million). Cash and cash equivalents at theend of the period, therefore, decreased by ¥5,767 million ($46.5 million) to¥9,842 million ($79.4 million), but still provided adequate liquidity for
operations.

8

NON-CONSOLIDATED FIVE-YEAR SUMMARY TONAMI TRANSPORTATION CO., LTD

Years ended 31st March

Thousands of
U.S. dollars

Millions of yen
1997

1998

1999

2000

2001

2001

Service revenues .......................................................

¥109,009¥106,736¥100,962¥100,291¥100,509$811,210

Cost of services .........................................................

103,380

102,871

97,01996,07095,808773,269

and administrative expenses ..................................

2,706

2,562

2,675

2,678

3,006

24,261

Operating income .....................................................

2,923

1,303

1,268

1,543

1,695

13,680

Income (loss) before income taxes ..........................

3,346

922

1,486

2,061

(14,915)(120,378)

Net income (loss) ......................................................

1,302

226

551

910

(8,888)(71,734)

Capital expenditures .................................................

3,907

6,350

4,794

3,483

4,117

33,228Depreciation expenses .............................................

4,122

4,064

3,687

3,458

3,305

26,675

Net income (loss) ......................................................

¥13.23¥ 2.29¥ 5.59¥ 9.29¥(91.05)$(0.7349)

Cash dividends ..........................................................

8.00

7.50

6.75

6.00

6.00

0.0484

Total current assets ...................................................

¥52,283¥41,589¥40,617¥48,404¥32,346$261,065

Net property and equipment ....................................

45,60247,60848,217

61,731

61,883

499,459

Total assets ................................................................

108,698

99,95998,901

120,697

109,261

881,848

Total current liabilities ..............................................

34,484

27,136

26,21045,971

27,824

224,568

current portion thereof ...........................................

24,13023,301

23,32420,70636,802

297,030

Total shareholders’ equity ........................................

50,08449,52249,36754,02044,635360,250

Number of share outstanding (thousand) ...............

98,41098,41098,41097,61097,610

Number of employees ..............................................

6,360

6,195

5,952

5,757

5,636

RESULTS OF OPERATIONS:

Selling, general

PER SHARE (yen and U.S. dollars):

YEAR-END FINANCIAL POSITION:

Long-term liabilities, excluding of

OTHER YEAR-END DATA:

9NON-CONSOLIDATED BALANCE SHEETSTONAMI TRANSPORTATION CO., LTD

As of 31st March, 2000 and 2001

Thousands of
U.S. dollars(Note 1)Millions of yen
2000

2001

2001

ASSETS
Current assets:
Cash ..............................................................................................................................................
Marketable securities (Note 3) ....................................................................................................

¥

4,277

¥

3,794

$

30,621

18,946

7,050

56,901

Notes and accounts (Notes 7 and 10) ...................................................................................

19,48018,971

153,115

Less: allowance for doubtful accounts ..................................................................................

(44)

(45)

(363)

Inventories ...................................................................................................................................

146

152

1,227

Deferred tax assets (Note 6) .......................................................................................................

409

365

2,946

Other current assets .....................................................................................................................

5,190

2,059

16,618

Total current assets .......................................................................................................

48,40432,346

261,065

Land ..............................................................................................................................................

35,39235,968290,298

Buildings and structures ..............................................................................................................

38,57040,366

325,795

Machinery and tools ....................................................................................................................

5,902

5,537

44,689Vehicles ........................................................................................................................................

23,61922,425

180,993

Construction in progress .............................................................................................................

217

0

0

Less: accumulated depreciation ..................................................................................................

(41,969)(42,413)(342,316)

Net property and equipment ........................................................................................

61,731

61,883

499,459

Investments in securities (Notes 3 and 5) ..................................................................................

3,571

5,222

42,147

Investments in subsidiaries and affiliates ...................................................................................

1,589

1,776

14,334Loans to employees .....................................................................................................................

34

28

226

Deferred tax assets (Note 6) .......................................................................................................

—

3,565

28,773

Others ...........................................................................................................................................

5,368

4,441

35,844

Total investments and other assets ..............................................................................

10,562

15,032

121,324

Total assets ....................................................................................................................

¥120,697¥109,261$ 881,848

Trade receivables:

Property and equipment (Notes 4 and 5):

Investments and other assets:

The accompanying Notes are an integral part of these statements.

10Thousands of
U.S. dollars(Note 1)Millions of yen
2000

2001

2001

Short-term bank loans (Note 5) ..................................................................................................

¥ 11,680¥ 13,440$ 108,475

Current portion of long-term debt ..............................................................................................

—

533

4,302

Current portion of bonds ............................................................................................................

18,823——

Accounts payable (Note 7) ..........................................................................................................

8,025

7,819

63,107

Deposits from employees ...........................................................................................................

424

413

3,333

Income taxes payable ..................................................................................................................

1,006

334

2,696

Other current liabilities ................................................................................................................

6,013

5,285

42,655

Total current liabilities ..................................................................................................

45,971

27,824

224,568

Long-term debt, less current portion thereof (Note 5) ..............................................................

7,000

10,26782,865

Deferred tax liabilities (Note 6) ..................................................................................................

3,398

—

—

Deferred tax liabilities from revaluation of land (Note 11) .......................................................

5,746

5,640

45,521

Employees’ retirement benefits ...................................................................................................

4,533

—

—

Employees’ severance and retirement benefits (Note 3) ...........................................................

—

20,858168,345

Other long-term liabilities ...........................................................................................................

29

37

299

Total long-term liabilities ..............................................................................................

20,70636,802

297,030

Total liabilities ...............................................................................................................

66,67764,626

521,598

97,610,118 shares in 2001....................................................................................

14,183

14,183

114,471

Additional paid-in capital ............................................................................................................

14,687

14,687

118,539

Legal reserve ................................................................................................................................

1,166

1,228

9,911

Unrealized gain from revaluation of land (Note 11) .................................................................

8,020

7,872

63,535Retained earnings ........................................................................................................................

15,964

6,542

52,801

Unrealized gain from securities ..................................................................................................

—

123

993

Total shareholders’ equity ............................................................................................

54,02044,635360,250

Total liabilities and shareholders’ equity .....................................................................

¥120,697¥109,261$ 881,848

LIABILITIES AND SHAREHOLDERS’ EQUITYCurrent liabilities:

Long-term liabilities:

Contingent liabilities (Note 9)

Shareholders’ equity (Note 12):
Common stock:
Authorised: 299,200,000 shares in 2000
299,200,000 shares in 2001
Issued, par value ¥50 per share:
97,610,118 shares in 2000

11

NON-CONSOLIDATED STATEMENTS OF INCOME

TONAMI TRANSPORTATION CO., LTD.

For the two years ended 31st March, 2001

Thousands of
U.S. dollars(Note 1)Millions of yen
2000

2001

2001

¥100,291¥100,509$811,210

Cost of services (Notes 7 and 13) ...............................................................................................

96,07095,808773,269

Selling, general and administrative expenses (Note 13) ...........................................................

2,678

3,006

24,261

98,74898,814

797,530

1,543

1,695

13,680Interest and dividend income (Note 7) ......................................................................................

392

430

3,471

Gain on disposal of property and equipment, net ....................................................................

30

(232)

(1,872)

Interest expenses .........................................................................................................................

(306)

(400)

(3,228)Others ...........................................................................................................................................

402(16,408)(132,429)

518(16,610)(134,060)

2,061(14,915)(120,378)

Current ..........................................................................................................................................

1,594

1,085

8,757

Deferred .......................................................................................................................................

(442)(7,112)(57,401)

1,151(6,027)(48,644)910¥ (8,888)$ (71,734)

Service revenues (Note 7) .............................................................................................................
Operating costs and expenses:

Operating income ..........................................................................................................................

Other income and expenses:

Income (loss) before income taxes ............................................................................................
Income taxes (Note 6):

Net income (loss) ...........................................................................................................................

¥

U.S. dollars(Note 1)Yen

Net income (loss) per share of common stock .......................................................................

The accompanying Notes are an integral part of these statements.

12¥ 9.29¥ (91.05)$(0.7349)

NON-CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITYTONAMI TRANSPORTATION CO., LTD.

For the two years ended 31st March, 2001

Millions of yen
Sharesof commonstock(thousands)

Balance as at 31st March, 1999 ...............................................

98,410Commonstock

Additional
paid-in
capital¥14,183¥14,687

Unrealized
Legal gain fromreserve revaluation

Retainedearnings¥1,102¥19,395—

Net income ..............................................................................

910

Prior period adjustment for tax-effect accounting ................
Retirement of treasury stock ...................................................

(3,431)
(800)

(222)

Cash dividends applicable to the year (¥6.00 per share) .....

(588)

Transfer to legal reserve .........................................................

64

Unrealized gain from revaluation of land ..............................

(64)¥8,020Bonuses to directors and statutory auditors ..........................
Balance as at 31st March, 2000 ...............................................

(36)
97,61014,183

14,687

1,166

8,020

15,964

Net income ..............................................................................

(8,888)Cash dividends applicable to the year (¥6.00 per share) .....

(586)

Transfer to legal reserve .........................................................

62

Unrealized gain from revaluation of land ..............................

(62)
(148)

148

Unrealized gain from securities ..............................................

¥123

Bonuses to directors and statutory auditors ..........................
Balance as at 31st March, 2001 ...............................................

Unrealized
gain fromsecurities(35)
97,610¥14,183¥14,687¥1,228¥7,872¥6,541¥123

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

Balance as at 31st March, 1999 ...............................................

Additional
paid-in
capital$114,471 $118,539

Unrealized
Legal gain fromreserve revaluation$8,894Retainedearnings

Unrealized
gain fromsecurities— $156,538

Net income ..............................................................................

7,345

Prior period adjustment for tax-effect accounting ................

(27,692)

Retirement of treasury stock ...................................................

(1,792)

Cash dividends applicable to the year ($0.0484 per share) .

(4,746)

Transfer to legal reserve .........................................................

517

Unrealized gain from revaluation of land ..............................

(517)$64,730

Bonuses to directors and statutory auditors ..........................

(291)

Balance as at 31st March, 2000 ...............................................

114,471

118,539

9,411

64,730128,846

Net income ..............................................................................

(71,735)

Cash dividends applicable to the year ($0.0484 per share) .

(4,730)Transfer to legal reserve .........................................................

500

Unrealized gain from revaluation of land ..............................

(500)(1,195)

1,195

Unrealized gain from securities ..............................................

$993

Bonuses to directors and statutory auditors ..........................

(282)

Balance as at 31st March, 2001 ...............................................

$114,471 $118,539

The accompanying Notes are an integral part of these statements.

13$9,911$63,535$52,793$993

NON-CONSOLIDATED STATEMENTS OF CASH FLOWSTONAMI TRANSPORTATION CO., LTD.

For the two years ended 31st March, 2001

Millions of yen

Thousands of
U.S. dollars(Note 1)

2000

2001

2001

Cash flows from operating activities:
Net income (loss) before income taxes ......................................................................................
Depreciation and amortization ...................................................................................................
(Gain) loss on disposal of property and equipment .................................................................
Gain on sales of marketable securities .......................................................................................
Loss on devaluation of marketable securities ............................................................................
Gain on sales of investments in securities .................................................................................
Loss on devaluation of investments in securities .......................................................................
Loss on devaluation of golf club memberships .........................................................................
(Decrease) increase in allowance for doubtful accounts ..........................................................
Increase (decrease) in employees’ retirement benefits .............................................................
Increase in accrued employees’ severance and retirement benefits .........................................
Decrease in accrued bonuses to employees ..............................................................................
Interest and dividend income .....................................................................................................
Interest expenses .........................................................................................................................
Decrease in trade receivables .....................................................................................................
Increase in inventories ................................................................................................................
Increase (decrease) in accounts payable ...................................................................................
Increase (decrease) in accrued consumption taxes ...................................................................
Other, net ....................................................................................................................................
Subtotal ....................................................................................................................................
Interest and dividends received ..................................................................................................
Interest paid .................................................................................................................................
Income taxes paid .......................................................................................................................
Net cash provided by operating activities ........................................................................

¥ 2,061
3,458
(36)
(97)
93
—
—
—
(11)
58
—
(58)
(392)
306
404
(42)
233
163
(753)
5,387
392
(306)
(1,282)
4,191¥(14,915)
3,305
232
(30)
—
(25)
421
183
202
(4,533)
20,858
(238)
(430)
398
509
(6)
(203)
(70)
1,556
7,214
430
(398)
(1,757)5,489$(120,379)
26,675
1,872
(242)
—
(202)
3,398
1,477
1,630
(36,586)
168,345(1,921)(3,471)
3,212
4,108
(48)
(1,638)(565)
12,55958,224
3,471(3,212)(14,181)44,302

Cash flows from investing activities:
Purchase of time deposits ...........................................................................................................
Proceeds from redemption of time deposits ..............................................................................
Purchase of marketable securities ..............................................................................................
Proceeds from sales of marketable securities ............................................................................
Purchase of property and equipment .........................................................................................
Proceeds from sales of property and equipment ......................................................................
Purchase of investments in securities .........................................................................................
Proceeds from sales of investments in securities .......................................................................
Loan made ....................................................................................................................................
Proceeds from collection of loans ..............................................................................................
Other, net ....................................................................................................................................
Net cash (used in) provided by investing activities .........................................................

(380)—(4,670)1,366(3,096)
2,408
(287)
101
(2,035)1,892(18)(4,717)(178)
360(2,609)8,981(4,564)
587
(643)
307
(668)
738
278
2,589

(1,437)2,905(21,057)
72,486(36,836)
4,738(5,190)2,478(5,391)
5,956
2,244
20,896

Cash flows from financing activities:
Increase in short-term loans ........................................................................................................
Proceeds from long-term debt ....................................................................................................
Repayments of long-term debt ...................................................................................................
Proceeds from issuance of bonds ...............................................................................................
Redemption of bonds ..................................................................................................................
Repurchase of treasury stocks ....................................................................................................
Dividends paid .............................................................................................................................
Other, net .....................................................................................................................................
Net cash provided by (used in) financing activities ........................................................

330
—
—
6,955
—
(222)
(588)
—
6,466

1,760
4,250
(450)
—
(18,823)—(586)
3(13,846)

14,20534,302(3,632)—(151,921)—(4,730)24(111,752)

Effect of exchange rate change on cash and cash equivalents ............................................
Net increase (decrease) in cash and cash equivalents ...........................................................
Cash and cash equivalents at beginning of year .....................................................................
Cash and cash equivalents at end of year .................................................................................

—
5,939
9,669
¥ 15,609—(5,767)
15,609¥ 9,842—(46,546)
125.,981$ 79,435

The accompanying Notes are an integral part of these statements.

14

NOTES TO THE NON-CONSOLIDATED FINANCIAL STATEMENTS

1.

other similar transactions are deducted from the cost of theproperty and equipment acquired in substitution.
Depreciation of property and equipment is computedby the declining-balance method, except for buildings andstructures. The buildings and structures are depreciated by
the straight-line method.
Amortization of intangible assets is principally
computed using the straight-line method on thepresumption of having no salvage value.
Cost of software for internal use is amortized by thestraight-line method over the estimated useful years (fiveyears).

Basis of presenting financial statements

The accompanying non-consolidated financial statements
have been prepared from accounting records maintainedby Tonami Transportation Co., Ltd. (the “Company”) in
conformity with the Securities and Exchange Law of Japanand accounting principles generally accepted in Japan.
However, in order to facilitate understanding for readers
outside Japan, certain reclassifications have been made to
the non-consolidated financial statements prepared fordomestic purposes.
U.S. dollar amounts presented in the financial
statements are included solely for convenience and should
not be construed as representations that Japanese yenamounts have been or could in the future be converted
into U.S. dollars. The rate of ¥123.90 = U.S.$1, prevailing on
31st March, 2001, has been used for the translation into
U.S. dollar amounts in the financial statements.
2.

TONAMI TRANSPORTATION CO., LTD.

(e) Leases
Finance leases, except those leases for which theownership of the leased assets is considered to betransferred to the lessee, are accounted for by the method
similar to that applicable to ordinary operating leases.
(f) Employees’ severance and retirement benefits

Summary of significant accounting policies

The Company’s employees are entitled to a lump-sum
payment upon retirement or severance of employment. In
order to provide for the employees’ severance andretirement benefits, the Company provided the liability forseverance and retirement benefits, which is included in theliability section of the non-consolidated balance sheet as ofMarch 31, 2001, based on the estimated amounts ofprojected benefit obligation and plan assets at that time.
Net transition obligation resulting from the adoption of
new accounting standards for employees’ severance andretirement benefits amounting to ¥16,038 million ($129,443
thousand) were fully charged to income and stated as
extraordinary losses.
Actuarial gains and losses are recognized in expenses
using the straight-line method over 12 years (a certain
period not exceeding the employees’ average remaining
service lives commencing with the next year).

(a) Non-consolidation
The accompanying non-consolidated financial statements
include only the accounts of the Company.
Investments in subsidiaries and affiliates are stated atcost.
(b) Marketable securities and investments insecurities
Securities for which market value is readily determinable
are stated at market value as of the end of the year withunrealized gains and losses, not reflected in earnings but
directly reported as a separate component of shareholders’equity. The cost of such securities sold is determined by
the moving-average method.
Securities for which market value is not readily
determinable are stated at moving average cost.
(c) Allowance for doubtful accounts(g) Stock issue expenses

Allowance for doubtful accounts is provided in an amountsufficient to cover possible losses on collection. Suchamount 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.

Stock issue expenses are charged to income as incurred.
(h) Income taxes
Income taxes consist of corporation, enterprise, andinhabitants taxes.
The Company recognizes tax effects of temporary
differences between the financial statement basis and theincome tax basis of assets and liabilities.

(d) Property and equipment and intangible assets
Property and equipment are stated at cost. However, underJapanese tax law, capital gains arisen from disposals and(i) Net income per share of common stock
The computation of net income per share of common stock15

thousand) and investments in securities increased by thesame amount.

is based on the weighted average number of shares
outstanding during each financial year, retroactively
adjusted to take account of a free share distribution.

(c) Foreign currency translation(j) Statements of cash flows

Effective 1st April, 2000, the Company adopted the revised
accounting standard for foreign currency translation,“Opinion concerning Revision of Accounting Standard for
Foreign Currency Translation,” issued by the BusinessAccounting Deliberation Council on 22nd October, 1999.
The effect on the non-consolidated income statements fromadopting the revised accounting standard is nothing.

Cash and cash equivalents include cash on hand, 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 whenpurchased.
3.

Supplementary information
4.

(a) Accounting standard for employees’ severance
and retirements benefits

Property and equipment

As stated above, capital gains arisen from disposals andother similar transactions are deducted from the cost of
property and equipment acquired in substitution. The
amount deducted in the cost of property and equipment
was ¥275 million ($2,220 thousand) and ¥271 million($2,187 thousand) as at 31st March, 2000 and 2001,
respectively.

Effect 1st April, 2000, the Company adopted the new
accounting standard for employees’ severance andretirement benefits, “Opinion on Setting AccountingStandard for Employees’ Severance and Retirement
Benefits,” issued by the Business Accounting Deliberation
Council on 16th June, 1998.
As a result of the adoption of the new accounting
standard, severance and retirement benefit expenses
increased by ¥295 million ($2,381 thousand), operating
income and income before income taxes decreased by thesame amount, respectively, compared with what would
have been recorded under the previous accounting
standard.
The liability for severance and retirement benefits andthe amortization of prior service costs recorded as of 1st
April, 2000 were included in the severance and retirement
benefit expenses for the year ended 31st March, 2001.

5.

Short-term bank loans and long-term debt(a) Short-term bank loans
Short-term bank loans as at 31st March, 2000 and 2001
were as follows:—
Millions of yen
2000

2001

2001

Secured ........................................

¥3,294¥3,474$28,039

Unsecured ...................................

8,386

9,966

80,436

Interest rates range from 0.706% to 1.500%.

(b) Financial instruments
Effective 1st April, 2000, the Company adopted the new
accounting standard for financial instruments, “Opinion on
Setting Accounting Standard for Financial Instruments,”
issued by the Business Accounting Deliberation Council on
22nd January, 1999. The effect on the non-consolidated
income statements from adopting the new accounting
standard is immaterial.
Based on the examination of the intent of holding
each securities upon application of the new accounting
standard at 1st April, 2000, held-to-maturity securities andavailable-for-sale securities with maturity of one year or lessand short-term highly liquidated available-for-sale securities
like deposits are included in current assets, and othersecurities are included in investment in securities. As aresult, at 1st April, 2000 marketable securities included incurrent assets decreased by ¥1,720 million ($13,882
16

Thousands of
U.S. dollars

Significant components of deferred tax assets andliabilities are as follows:—(b) Long-term debt
Long-term debt as at 31st March, 2000 and 2001 was asfollows:—
Thousands of
U.S. dollars

Millions of yen
2000

2001

—

—

10,000—

2001

Excess bonuses accrued ........ ¥

184

¥ 215

$ 1,735

Accrued enterprise taxes .......

76

—

—

331

7,290

58,838retirement benefits accrued—

2.05% ¥7 billion unsecured
straight bonds due 2003 ...........

2001

Excess employees' severance and0.0% ¥10 billion convertible
bonds due 2000 ........................

2000

Deferred tax assets:

2001

0.9% ¥10 billion convertible
bonds due 2001 ........................ ¥ 8,823

Thousands of
U.S. dollars

Millions of yen

7,000¥ 7,000$56,4971.700%-2.100% loans fromfinancial institutions

Other .......................................

155

244

1,969

Gross deferred tax assets ..

747

7,750

62,550

Valuation allowance ..............

—

—

—

Total deferred tax assets ...

747

7,750

62,550

—

(88)

(710)

(3,733)(30,129)

Deferred tax liabilities:

due 2001 to 2006
Secured ...................................

—

2,000

16,142

Unrealized gain from securities

Unsecured ..............................

—

1,800

14,528Reserve under Special Taxation

Total ...................................

25,823

10,80087,167

Measures Law ......................

(3,736)

Less amount due within one year ...

18,823533

4,302

Total deferred tax liabilities....

(3,736)(3,821)(30,839)

Net deferred tax (liabilities) assets.... ¥(2,988)¥3,929$31,711¥ 7,000¥10,267$82,865

Income taxes applicable to the Company consist of
corporation, enterprise, and inhabitant taxes, which, inaggregate, resulted in a statutory tax rate of 42% for theyears ended 31st March, 2000 and 2001, respectively.
Significant differences between the statutory tax rate
and the Company’s effective tax rate after applying thedeferred tax accounting for the years ended 31st March,
2000 and 2001 are as follows:—

The maturity date of the ¥7 billion 2.05% unsecured straightbonds, issued in September 1999 is 16th September, 2003.
The annual maturities of long-term debt outstanding as
at 31st March, 2001 were as follows:—
Millions of yen

Thousands of
U.S. dollars

2002 .............................................

¥ 533$ 4,302

2003 .............................................

578

4,665

2004 .............................................

7,578

61,162

Year ending 31st March,2005 .............................................

578

4,665

2006 and thereafter .....................

1,533

12,373

Statutory tax rate................................................

2000

2001

41.7%

41.7%

6.1

(0.3)

(4.3)

0.3

Increase (decrease) in tax resulting from:
Nondeductible expenses including
entertainment, etc. ..................................

(c) Pledged assets

Nontaxable income including dividends

Property and equipment having a net value of ¥21,990
million ($177,482 thousand) was pledged as collateral for
short-term bank loans and long-term debt (including
current portion of long-term debt), and investment insecurities of ¥348 million ($2,809 thousand) was pledged ascollateral for short-term bank loans as at 31st March, 2001.

received deduction, etc. .........................

6.

Per capita portion of inhabitant taxes......

9.7

(0.0)

Other .........................................................

2.6

(1.3)

55.9%

40.4%

Effective tax rate ................................................

Income taxes

As described in Note 2(h), the Company recognizes tax
effects of temporary differences between the financial
statement basis and the income tax basis of assets andliabilities.

17

7.

Accounts and transactions with subsidiaries andaffiliates

10. Trade Notes Maturing on Bank Holiday as at 31st
March, 2001

As at 31st March, 2001, the Company had 25 subsidiaries
and 10 affiliates.
Receivables from, payables to, and transactions withthese subsidiaries and affiliates are summarized asfollows:—

As financial institutions in Japan were closed on 31st
March, 2001, trade notes maturing on 31st March, 2001
were accounted for as if they were settled at that date.
The amount of trade notes maturing as at 31st March,
2001 was as follows:—

Thousands of
U.S. dollars

Millions of yen
2000

2001

2001

Notes and accounts receivable .. ¥ 502¥ 422$ 3,406

Loans receivable .........................

1,154

904

7,296

Accounts payable ........................

2,341

1,829

14,762

Trade notes receivable ...................................

2000

2001

2001

Service revenues .........................

¥2,127¥2,273$18,345

Cost of services ...........................

7,293

7,563

61,041

Interest income ...........................

34

29

234

The amount of lease payment under finance lease for theyear ended 31st March, 2000 and 2001 were ¥237 million($1,913 thousand) and ¥554 million ($4,471 thousand),
respectively.
The amount of future lease payments of finance leases
as at 31st March, 2000 and 2001 were as follows:—

2001

2001

Due within one year ................... ¥ 244¥ 968$ 7,813

Due after one year ......................

9.

Millions of yen

620

3,318

26,780¥ 864¥4,286$34,592of revaluated land at 31st March, 2001
and the revaluated book value ....................

Thousands of
U.S. dollars

Guarantees for employees’
Others ..........................................

¥

28
1,150

$

$20,928

Year-end dividends shall be approved at a meeting ofshareholders held after the end of each financial year andinterim dividends may be declared by the Board of
Directors held after the end of each first six month period,
respectively.
In accordance with the Commercial Code, year-end
dividends and the related appropriation of retained
earnings are not reflected in the financial statements at theend of the financial year, but are recorded at the time they
are approved.

As at 31st March, 2001, the Company was contingently
liable as follows:—

housing loans ...........................

¥2,593

12. Shareholders’ equity

Contingent liabilities

Millions of yen

Thousands of
U.S. dollars

Difference between the fair market value

Thousands of
U.S. dollars

2000$4,342

In accordance with the Law concerning Revaluation ofLand enacted on 31st March, 1998, the Company has
revaluated its own land used for business operations as at
31st March, 2000 and reported unrealized gain fromrevaluation of land in shareholders’ equity section.
The revaluated book value of land was determinedbased on the value of land registered on the cadastres ortheir supplementary records, which are provided by the
Local Tax Law under the Law Cencerning Revaluation ofLand, with making reasonable adjustments.

Finance leases

Millions of yen¥538

Thousands of
U.S. dollars

11. Revaluation of land

Thousands of
U.S. dollars

Millions of yen

8.

Millions of yen

226
9,282

18

13. Supplementary income information
Supplementary income information for the two years ended
31st March, 2001 is as follows:—
Millions of yen

Thousands of
U.S. dollars

2000

2001

2001

Depreciation expenses ...............

¥3,458¥3,305$26,675

Lease and rental ..........................

3,218

3,195

25,787

14. Subsequent event
The annual shareholders’ meeting of the Company, which
was held on 28th June, 2001, duly approved the following
appropriations of retained earnings existing as at 31st
March, 2001:—
Millions of yen

Thousands of
U.S. dollars

Transfer to legal reserve .............

¥ 33

$ 266

Dividends (¥3.00 per share) .......

293

2,365

30

242

Bonuses to directors andstatutory auditors ......................

19

REPORT OF THE INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
ON THE NON-CONSOLIDATED FINANCIAL STATEMENTS
OF THE COMPANY
To the Board of Directors ofTonami Transportation Co., Ltd.

We have examined the non-consolidated balance sheets of Tonami Transportation Co.,
Ltd. as at 31st March, 2000 and 2001 and the related non-consolidated statements ofincome, shareholders’ equity and cash flows for the years then ended.
Our examinations were made in accordance with auditing standards generally
accepted in Japan and, accordingly, included such tests of the accounting records andsuch other auditing procedures as we considered necessary in the circumstances.
In our opinion, the non-consolidated financial statements referred to above present
fairly the non-consolidated financial position of Tonami Transportation Co., Ltd. as at
31st March, 2000 and 2001 and the results of its operations and cash flows for the years
then ended, in conformity with accounting principles generally accepted in Japanapplied on a consistent basis.
As described in Notes 2 (f) and 3 to the non-consolidated financial statements, inthe year ended 31st March, 2001, Tonami Transportation Co., Ltd. adopted new
accounting standards for employee’s severance and retirement benefits, financial
instruments, and foreign currency translation in the preparation of its non-consolidated
financial statements for the year ended 31st March, 2001.
The United States dollar amounts shown in the accompanying non-consolidated
financial statements have been translated solely for convenience. We have reviewed
this translation and, in our opinion, the non-consolidated financial statements
expressed in yen have been translated into dollars on the basis described in Note 1.

Century Ota Showa & Co.
Toyama Prefecture, Japan
28th June, 2001

20

CONSOLIDATED FIVE-YEAR SUMMARYTONAMI TRANSPORTATION CO., LTD
AND CONSOLIDATED SUBSIDIARIES

Years ended 31st March

Thousands of
U.S. dollars

Millions of yen
1997

1998

1999

2000

2001

2001

Operating revenues ...................................................

¥125,299¥125,164¥116,829¥117,794¥118,166$ 953,721

Operating cost ...........................................................

115,308

117,180

108,979

108,902109,672

885,165

and administrative expenses ..................................

6,317

5,950

5,906

6,480

6,090

49,153Operating income .....................................................

3,220

2,034

1,944

2,412

2,404

19,403

Net income (loss) ......................................................

1,457

411

124

1,276

(8,786)(70,912)

Depreciation expenses .............................................

5,007

4,996

4,470

4,216

4,092

33,027¥14.81¥ 4.18¥ 1.26¥13.04¥(90.02)$(0.7266)

Total current assets ...................................................

¥56,623¥46,458¥44,610¥52,002¥37,583$303,333

Net property and equipment ....................................

49,82452,54553,431

66,99067,160542,050

Total assets ................................................................

117,883

110,144

108,546

130,284

120,696

974,140

Total current liabilities ..............................................

39,68332,85531,57951,113

34,113

275,327

current portion thereof ...........................................

25,18024,57824,88422,07538,876

313,769

Total shareholders’ equity ........................................

52,53352,13951,491

56,431

47,113

380,250

—

—

—

7,142

7,075

RESULTS OF OPERATIONS:

Selling, general

PER SHARE (yen and U.S. dollars):
Net income (loss) ......................................................

YEAR-END FINANCIAL POSITION:

Long-term liabilities, excluding of

OTHER YEAR-END DATA:
Number of employees ..............................................

21

CONSOLIDATED BALANCE SHEETS TONAMI TRANSPORTATION CO., LTD.
AND CONSOLIDATED SUBSIDIARIESAs of 31st March, 2000 and 2001

Thousands of
U.S. dollars(Note 1)Millions of yen
2000

2001

2001

Cash and time deposits ...............................................................................................................

¥ 5,916¥ 5,348$43,164

Marketable securities (Notes 3 and 4) ........................................................................................

18,971

7,052

56,917

Notes and accounts (Note 10) ................................................................................................

21,692

22,369180,541

Less: allowance for doubtful accounts .................................................................................

(82)

(78)

(630)

Inventories ...................................................................................................................................

524

573

4,625

Deferred tax assets (Note 7) .......................................................................................................

473

611

4,931

Other current assets .....................................................................................................................

4,505

1,708

13,785

Total current assets .......................................................................................................

52,00237,583

303,333

Land ..............................................................................................................................................

37,01137,644

303,826

Buildings and structures ..............................................................................................................

22,657

23,591

190,403

Machinery and vehicles ................................................................................................................

6,541

5,309

42,849Construction in progress .............................................................................................................

217

0

0

Other ............................................................................................................................................

563

616

4,972

Total property and equipment .....................................................................................

66,99067,160542,050

Investments in securities, at cost (Notes 3, 4, and 6) ................................................................

4,367

6,262

50,541

Deferred tax assets (Note 7) .......................................................................................................

—

3,657

29,516

Foreign currency translation adjustments (Note 2) ....................................................................

305

311

2,510

Others ...........................................................................................................................................

6,619

5,723

46,190Total investments and other assets ..............................................................................

11,291

15,953

128,757

Total assets ....................................................................................................................

¥130,284¥120,696$974,140ASSETS
Current assets:

Trade receivables:

Property and equipment (Notes 5 and 6):

Investments and other assets:

The accompanying Notes are an integral part of these statements.

22

Thousands of
U.S. dollars(Note 1)Millions of yen
2000

2001

2001

Short-term bank loans (Note 6) ..................................................................................................

¥ 13,732¥ 15,640$126,231

Current portion of long-term debt (Note 6) ...............................................................................

19,308979

7,902

Notes and accounts payable (Note 10) ......................................................................................

9,471

10,31983,285

Income taxes payable ..................................................................................................................

1,234

485

3,914

Other current liabilities ................................................................................................................

7,368

6,690

53,995

Total current liabilities ..................................................................................................

51,113

34,113

275,327

Long-term debt, less current portion (Note 6) ...........................................................................

7,893

11,112

89,685

Deferred tax liabilities (Note 7) ..................................................................................................

3,540

—

—

Deferred tax liabilities from revaluation of land (Note 11) .......................................................

5,746

5,640

45,521

Employees’ retirement benefits ...................................................................................................

4,738

—

—

Employees’ severance and retirement benefits (Note 3) ...........................................................

—

21,969177,312LIABILITIES AND SHAREHOLDERS’ EQUITYCurrent liabilities:

Long-term liabilities:

Consolidation difference .............................................................................................................

—

—

—

Other long-term liabilities ...........................................................................................................

159

155

1,251

Total long-term liabilities ..............................................................................................

22,07538,876

313,769

Total liabilities ...............................................................................................................

73,18872,989589,096

Minority interests ..........................................................................................................................

664

594

4,794

97,610,118 shares in 2001 .................................................................................

14,183

14,183

114,471

Additional paid-in capital ............................................................................................................

14,687

14,687

118,539

Contingent liabilities (Note 9)
Shareholders’ equity (Note 12):
Common stock:
Authorised: 299,200,000 shares in 2000
299,200,000 shares in 2001
Issued, par value ¥50 per share:
97,610,118 shares in 2000

Unrealized gain from revaluation of land (Note 11) .................................................................

8,021

7,872

63,535Retained earnings ........................................................................................................................

19,541

10,23882,631

Unrealized gain from securities ..................................................................................................

—

133

1,073

Treasury stock, at cost .................................................................................................................

(0)

(0)

(0)

Total shareholders’ equity ............................................................................................

56,431

47,113

380,250

Total liabilities, minority interests, and shareholders’ equity .....................................

¥130,284¥120,696$974,140

23

CONSOLIDATED STATEMENTS OF INCOME TONAMI TRANSPORTATION CO., LTD.
AND CONSOLIDATED SUBSIDIARIESFor the two years ended 31st March, 2001

Thousands of
U.S. dollars(Note 1)Millions of yen
2000

2001

2001

¥117,794¥118,166$ 953,721

117,794

118,166

953,721

Operating cost (Note 13) .............................................................................................................

108,902109,672

885,165

Selling, general and administrative expenses (Note 13) ...........................................................

6,480

6,090

49,153

115,382

115,762

934,318

2,412

2,404

19,403

Interest and dividend income .....................................................................................................

423

423

3,414

Gain (loss) on sells of property and equipment, net ................................................................

19

(227)

(1,832)

Interest expenses .........................................................................................................................

(375)

(467)

(3,769)Others, net ...................................................................................................................................

418(17,094)(137,966)

485(17,365)(140,153)

2,897(14,961)(120,750)

Current ..........................................................................................................................................

2,005

1,409

11,372

Deferred .......................................................................................................................................

(451)(7,526)(60,742)

1,554(6,117)(49,370)

Minority interests ..........................................................................................................................

67

(58)

(468)

Net income (loss) ...........................................................................................................................

¥ 1,276¥ (8,786)$ (70,912)

Operating revenues:
Operating revenues .....................................................................................................................

Operating costs and selling, general and administrative expenses:

Operating income ..........................................................................................................................

Other income and expenses:

Income (loss) before income taxes and minority interests ..................................................
Income taxes (Note 7):

U.S. dollars(Note 1)Yen

Net income (loss) per share of common stock .......................................................................

The accompanying Notes are an integral part of these statements.

24¥13.04¥(90.02)$(0.7266)

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY TONAMI TRANSPORTATION CO., LTD.
AND CONSOLIDATED SUBSIDIARIESFor the two years ended 31st March, 2001

Millions of yen
Sharesof commonstock(thousands)

Balance as at 31st March, 1999 ...............................................

98,410Commonstock

Additional
paid-in
capital¥14,183¥14,687

Unrealized
gain fromrevaluation

Retainedearnings

Unrealized
gain fromsecurities¥22,627

Prior period adjustments for tax-effect accounting ...............

(3,396)

Adjustments of retained earnings for newly consolidated
subsidiary ..............................................................................

(75)

Net income ..............................................................................

1,276

Cash dividends paid (¥6.00 per share) ..................................

(589)

Unrealized gain from revaluation of land...............................

¥ 8,020

Bonuses to directors and statutory auditors ..........................

(80)

Retirement of treasury stock ...................................................

(800)

Balance as at 31st March, 2000 ...............................................

97,610(222)
14,183

14,6878,020

19,541

Net income ..............................................................................

(8,786)

Cash dividends applicable to the year (¥6.00 per share) .....

(586)

Unrealized gain from revaluation of land ..............................

148

148

Unrealized gain from securities ..............................................

¥133

Bonuses to directors and statutory auditors ..........................

(78)

Decrease due to the increase of affiliates accounted forby the equity method ...........................................................
Balance as at 31st March, 2001 ...............................................

(1)
97,610¥14,183¥14,687¥7,872¥10,238¥133

Thousands of U.S. dollars (Note 1)

Balance as at 31st March, 1999 ...............................................

Commonstock

Additional
paid-in
capital$114,471$118,539

Unrealized
gain fromrevaluation

Retainedearnings

Unrealized
gain fromsecurities$182,623

Prior period adjustment for tax-effect accounting ................

(27,409)

Adjustments of retained earnings for newly consolidated
subsidiary ..............................................................................

(605)

Net income ..............................................................................

10,299Cash dividends paid ($0.0484 per share) ..............................

(4,754)

Unrealized gain from revaluation of land ..............................

$64,730

0Bonuses to directors and statutory auditors ..........................

(646)

Retirement of treasury stock ...................................................

(1,792)

Balance as at 31st March, 2000 ...............................................

114,471

118,539

64,730157,716

Net income ..............................................................................

(70,912)

Cash dividends applicable to the year ($0.0484 per share) .

(4,730)

Unrealized gain from revaluation of land ..............................

1,195

1,195

Unrealized gain from securities ..............................................

$1,073

Bonuses to directors and statutory auditors ..........................

(630)

Decrease due to the increase of affiliates accounted forby the equity method ...........................................................

(8)

Balance as at 31st March, 2001 ...............................................

$114,471

The accompanying Notes are an integral part of these statements.

25$118,539$63,535$82,631$1,073

CONSOLIDATED STATEMENTS OF CASH FLOWS TONAMI TRANSPORTATION CO., LTD.
AND CONSOLIDATED SUBSIDIARIESFor the two years ended 31st March, 2000 and 2001

Millions of yen

Thousands of
U.S. dollars(Note 1)

2000

2001

2001

Cash flows from operating activities:
Net income (loss) before income taxes and minority interests ................................................
Depreciation and amortization ...................................................................................................
Loss on disposal of property and equipment ............................................................................
Gain on sales of marketable securities .......................................................................................
Loss on devaluation of marketable securities ............................................................................
Gain on sales of investments in securities .................................................................................
Loss on devaluation of investments in securities .......................................................................
Loss on devaluation of golf club memberships .........................................................................
Amortization of foreign exchange translation adjustments .......................................................
Equity in earnings of associated companies ..............................................................................
(Decrease) increase in allowance for doubtful accounts ..........................................................
Increase (decrease) in employees’ retirement benefits .............................................................
Increase in employees’ severance and retirement benefits .......................................................
Decrease in accrued bonuses to employees ..............................................................................
Interest and dividend income .....................................................................................................
Interest expenses .........................................................................................................................
Decrease (increase) in trade receivables ....................................................................................
Increase in inventories ................................................................................................................
(Decrease) increase in accounts payable ...................................................................................
Increase (decrease) in accrued consumption taxes ...................................................................
Other, net .....................................................................................................................................
Subtotal ....................................................................................................................................
Interest and dividends received ..................................................................................................
Interest paid .................................................................................................................................
Income taxes paid .......................................................................................................................
Net cash provided by operating activities ........................................................................

¥ 2,897
4,217
3
(103)
94
—
—
—
17
(117)
(58)
17
—
(92)
(305)
375
696
(100)
(438)
164
962
8,229
305
(375)
(1,615)
6,543¥(14,961)
4,081
227
(40)
—
(23)
428
235
20
(87)
239
(4,738)21,969
(278)
(337)
467
(640)
(46)
810
(69)
1,319
8,576
337
(467)
(2,158)6,288$(120,751)
32,938
1,832
(323)
—
(186)
3,454
1,897
161
(702)
1,929
(38,240)
177,312(2,244)(2,720)3,769(5,165)
(371)
6,538
(557)
10,646
69,2172,720(3,769)(17,417)50,751

Cash flows from investing activities:
Purchase of time deposits ...........................................................................................................
Proceeds from redemption of time deposits ..............................................................................
Purchase of marketable securities ..............................................................................................
Proceeds from sales of marketable securities ............................................................................
Purchase of property and equipment .........................................................................................
Proceeds from sales of property and equipment ......................................................................
Purchase of investments in securities .........................................................................................
Proceeds from sales of investments in securities .......................................................................
Payment for purchase of investments in a newly consolidated subsidiary ..............................
Proceeds from purchase of investments in a newly consolidated subsidiary ..........................
Net increase in loans receivable .................................................................................................
Proceeds from collection of loans receivable ............................................................................
Other, net .....................................................................................................................................
Net (used in) provided by investing activities .................................................................

(524)
115
(4,275)2,418(5,818)
1,991
(76)
120
(190)
—
(2,096)2,243(894)(6,986)(356)
619(2,188)9,000(5,298)
627
(599)
321
—
15
(751)
798
(601)
1,587

(2,873)
4,996(17,659)
72,639(42,760)
5,060(4,835)2,591—
121(6,061)
6,441(4,851)
12,809Cash flows from financing activities:
Net increase in short-term loans .................................................................................................
Proceeds from long-term debt ....................................................................................................
Repayment of long-term debt .....................................................................................................
Proceeds from issuance of bonds ...............................................................................................
Redemption of bonds ..................................................................................................................
Repurchase of treasury stocks ....................................................................................................
Dividends paid .............................................................................................................................
Dividends paid to minority interests ..........................................................................................
Net cash provided by (used in) financing activities ........................................................

482
403
(809)
6,955
—
(221)
(579)
(8)
6,221

2,158
4,746
(1,165)—(18,823)
—
(578)
(8)
(13,670)

17,41738,305(9,403)—(151,921)—(4,665)(64)(110,331)

Effect of exchange rate change on cash and cash equivalents .............................................
Net increase (decrease) in cash and cash equivalents ............................................................
Cash and cash equivalents at beginning of year .....................................................................
Cash and cash equivalents at end of year .................................................................................

—
5,778
11,201¥16,980—(5,794)
16,980¥ 11,186—(46,764)
137,046$ 90,282

The accompanying Notes are an integral part of these statements.

26

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS TONAMI TRANSPORTATION CO., LTD.
AND CONSOLIDATED SUBSIDIARIES

1.

property and equipment acquired in substitution.
Depreciation of property and equipment is computedby the declining balance method, except for buildings andstructures. The buildings and structures are depreciated by
the straight-line method.
Amortization of intangible assets is principally
computed using the straight-line method on thepresumption of having no salvage value.
Cost of software for internal use is amortized by thestraight-line method over the estimated useful years (fiveyears).

Basis of presenting financial statements

The accompanying consolidated financial statements havebeen prepared from accounting records maintained by
Tonami Transportation Co., Ltd. (the “Company”) and its
consolidated subsidiaries in conformity with the Securities
and Exchange Law of Japan and accounting principles
generally accepted in Japan. However, in order to facilitate
understanding for readers outside Japan, certain
reclassifications have been made to the consolidated
financial statements prepared for domestic purposes.
U.S. dollar amounts presented in the financial
statements are included solely for convenience and should
not be construed as representations that Japanese yenamounts have been or could in the future be converted
into U.S. dollars. The rate of ¥123.90 = U.S.$1, prevailing on
31th March, 2001, has been used for the translation into
U.S. dollar amounts in the financial statements.

(e) Leases
Finance leases other than those which are deemed totransfer the ownership of the leased assets to lessee areaccounted for by the method similar to that applicable toordinary operating leases.
(f) Employees’ severance and retirement benefits2.

Summary of significant accounting policies

The Company’s employees are entitled to a lump-sum
payment upon retirement or severance of employment. In
order to provide for the employees’ severance andretirement benefits, the Company and its consolidated
subsidiaries provided the liability for severance andretirement benefits, which is included in the liability sectionof the consolidated balance sheet as of March 31, 2001,
based on the estimated amounts of projected benefit
obligation and plan assets at that time.
Net transition obligation resulting from the adoption of
new accounting standards for employees’ severance andretirement benefits amounting to ¥16,916 million ($136,529
thousand) were fully charged to income and stated as
extraordinary losses.
Actuarial gains and losses are recognized in expenses
using the straight-line method over 12 years (a certain
period not exceeding the employees’ average remaining
service lives commencing with the next year).

(a) Consolidation
The accompanying consolidated financial statements
include the accounts of the Company and its 25 significant
majority-owned subsidiaries for the year ended March 31,
2001 (24 for 2000).
All significant intercompany accounts and transactions
have been eliminated in consolidation.
10 of the investments in unconsolidated subsidiaries oraffiliates (eight for 2000) are accounted for by the equity
method.
(b) Marketable securities and investments insecurities
Securities for which market value is readily determinable
are stated at market value as of the end of the year withunrealized gains and losses, not reflected in earnings but
directly reported as a separate component of shareholders’equity. The cost of such securities sold is determined by
the moving-average method.
Securities for which market value is not readily
determinable are stated at moving average cost.

(g) Stock issue expenses
Stock issue expenses are charged to income as incurred.
(h) Remeasurement of assets and liabilities of
consolidated subsidiaries(c) Allowance for doubtful accounts

Assets and liabilities of the consolidated subsidiaries are
remeasured using the full fair value method.

Allowance for doubtful accounts is provided in an amountsufficient to cover possible losses on collection. Suchamount 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.

(i) Amortization of consolidation difference
Differences between acquisition cost and the underlying
net equity of the subsidiaries at the time of acquisition areamortized on the straight-line basis over the period of fiveor 20years.
When their amounts are, however, not significant, thedifferences are fully charged or credited to income at thedates of acquisition.

(d) Property and equipment and intangible assets
Property and equipment are stated at cost. However, underJapanese tax law, capital gains arisen from disposals andother similar transactions are deducted from the cost of the27

available-for-sale securities with maturity of one year or lessand short-term highly liquidated available-for-sale securities
like deposits are included in current assets, and othersecurities are included in investment in securities. As aresult, at 1st April, 2000 marketable securities included incurrent assets decreased by ¥1,734 million ($13,995
thousand) and investments in securities increased by thesame amount.

(j) Income taxes
Income taxes consist of corporation, enterprise, andinhabitants taxes.
The Company and its consolidated subsidiaries
recognize tax effects of temporary differences between thefinancial statement basis and the income tax basis of assets
and liabilities.
(k) Net income per share of common stock(c) Foreign currency translation

The computation of net income per share of common stock
has been based on the weighted average number of shares
outstanding during each financial year, retroactively
adjusted to take account of a free share distribution.

Effective 1st April, 2000, the Company and its consolidated
subsidiaries adopted the revised accounting standard forforeign currency translation, “Opinion concerning Revisionof Accounting Standard for Foreign Currency Translation,”
issued by the Business Accounting Deliberation Council on
22nd October, 1999. The effect on the consolidated income
statements from adopting the revised accounting standard
is nothing.

(l) Statements of cash flows
Cash and cash equivalents include cash on hand, 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 whenpurchased.
3.

4.

Supplementary information

Marketable securities and investments insecurities

Acquisition cost and available market value of the equity
and debt securities included in marketable securities andinvestments in securities as at 31st March, 2000 are
summarised as follows:—(a) Accounting standard for employees’ severance
and retirements benefits
Effect 1st April, 2000, the Company and its consolidated
subsidiaries adopted the new accounting standard for
employees’ severance and retirement benefits, “Opinion on
Setting Accounting Standard for Employees’ Severance andRetirement Benefits,” issued by the Business Accounting
Deliberation Council on 16th June, 1998.
As a result of the adoption of the new accounting
standard, severance and retirement benefit expenses
increased by ¥312 million ($2,518 thousand), operating
income and income before income taxes and minority
interests decreased by the same amount, respectively,
compared with what would have been recorded under theprevious accounting standard.
The liability for severance and retirement benefits andthe amortization of prior service costs recorded as of 1st
April, 2000 were included in the severance and retirement
benefit expenses for the year ended 31st March, 2001.

Millions of yen

Thousands of
U.S. dollars

2000

2000

Cost ...............................................

¥1,959$15,811

Market value .................................

2,124

17,143

Cost ...............................................

¥2,439$19,685

Market value..................................

3,350

27,038Marketable securities:

Investments in securities:

Acquisition costs and book values of held-to-maturity
and available-for-sale securities with available market
values as of 31st March, 2001 are summarized as follows:—(b) Marketable securities and investment insecurities

Securities with book values
exceeding acquisition costs:
Acquisition cost .............................
Book value ....................................
Securities with book values
not exceeding acquisition costs:
Acquisition cost .............................
Book value ....................................

Effective 1st April, 2000, the Company and its consolidated
subsidiaries adopted the new accounting standard forfinancial instruments, “Opinion on Setting AccountingStandard for Financial Instruments,” issued by the BusinessAccounting Deliberation Council on 22nd January, 1999.
The effect on the consolidated income statements fromadopting the new accounting standard is immaterial.
Based on the examination of the intent of holding
each securities upon application of the new accounting
standard 1st April, 2000, held-to-maturity securities and5.

Millions of yen

Thousands of
U.S. dollars

2001

2001

¥2,2262,860$17,966
23,083¥1,4191,013$11,453
8,176

Property and equipment

Depreciable property is stated at the net book value in the
consolidated balance sheets. The amounts of accumulated28

depreciation were ¥48,409 million ($390,710 thousand) and¥49,417 million ($398,846 thousand) on 31st March, 2000
and 2001, respectively.
Capital gains arisen from disposals and other similartransactions are deducted from the cost of property andequipment acquired in substitution. The amount deductedin the cost of property and equipment was ¥275 million($2,220 thousand) and ¥271 million ($2,187 thousand) on
31st March, 2000 and 2001,respectively.
6.

The annual maturities of long-term debt outstanding as
at 31st March, 2001 were as follows:—
Year ending 31st March,Thousands of
U.S. dollars

Millions of yen

2002 .............................................

¥

979$ 7,902

2003 .............................................

887

7,159

2004 .............................................

7,807

63,0102005 ..............................................

707

5,706

2006 and thereafter .....................

1,711

13,810

Short-term bank loans and long-term debt(a) Short-term bank loans(c) Pledged assets

Short-term bank loans as at 31st March, 1999 and 2000
were as follows:—

Property and equipment having a net value of ¥23,276
million ($187,861 thousand) was pledged as collateral for
short-term bank loans and long-term debt, and investment
in securities of ¥368 million ($2,970 thousand) was pledged
as collateral for short-term bank loans as at 31st March,
2001.

Thousands of
U.S. dollars

Millions of yen
2000

2001

2001

Secured ........................................ ¥ 4,121¥ 4,495$36,279

Unsecured ...................................

11,14589,9529,611

7.
Interest rates range from 0.71% to 3.0%.

As described in Note 2(j), the Company and its
consolidated subsidiaries recognizes tax effects of
temporary differences between the financial statement basis
and the income tax basis of assets and liabilities.
Significant components of deferred tax assets andliabilities are as follows:—(b) Long-term debt
Long-term debt as at 31st March, 2000 and 2001 was asfollows:—
Thousands of
U.S. dollars

Millions of yen
2000

2001

Income taxes

2001

2000

0.9% ¥10 billion convertible
bonds due 2001 ........................ ¥ 8,823

¥

—

$

Thousands of
U.S. dollars

Millions of yen
2001

2001

Deferred tax assets:—

0.0% ¥10 billion convertible

Excess bonuses accrued ........ ¥

224

260

$ 2,098

bonds due 2000 ........................

Accrued enterprise taxes .......

95

—

—

10,000——¥

Excess employees’ severance and2.05%¥7 billion unsecured

retirement benefits accrued ...

343

7,684

62,0180.8%–6.1% loans from financial

Other .......................................

60

190

1,533

institutions due 2001 to 2006

Gross deferred tax assets ....

724

8,135

65,658and thereafter

Valuation allowance ..............

(20)

—

—

Total deferred tax assets .....

704

8,135

65,658

—

(94)

(759)

7,902

Measures Law ...................... (3,769)(3,772)(30,444)$89,685

Total deferred tax liabilities . (3,769)(3,867)(31,211)Net deferred tax (liabilities) assets . ¥(3,065)¥ 4,267$ 34,439

straight bonds due 2003............

7,000

7,000

56,497

Secured ...................................

530

2,646

21,356

Unsecured................................

848

2,445

19,734

Total ...................................

27,201

12,091

97,587

Deferred tax liabilities:
Unrealized gain from securities
Reserve under Special Taxation

Less: amount due within
one year ....................................

19,308¥ 7,893979¥11,112The maturity date of the ¥7 billion 2.05% unsecured
straight bonds, issued in September 1999 is 16th September,
2003.

Income taxes applicable to the Company consist of
corporation, enterprise, and inhabitant taxes, which, inaggregate, resulted in a statutory tax rate of 42% for theyears ended 31st March, 2000 and 2001, respectively.
Significant differences between the statutory tax rate
and the Company’s effective tax rate after applying the29deferred tax accounting for the years ended 31st March,
2000 and 2001 are as follows:—
Statutory tax rate................................................

11. Revaluation of land

2000

2001

41.6%

41.6%

3.1

(0.5)

In accordance with the Law concerning Revaluation ofLand enacted on 31st March, 1998, the Company has
revaluated its own land used for business operations on
31st March, 2000 and reported unrealized gain fromrevaluation of land in shareholders’ equity section.
The revaluated book value of land was determinedbased on the value of land registered on the cadastres ortheir supplementary records, which are provided by the
Local Tax Law under the Law Cencerning Revaluation ofLand, with making reasonable adjustments.

Increase (reduction) in tax resulting from:
Nondeductible expenses including
entertainment, etc. ..................................
Nontaxable income including dividends
received deduction, etc. ........................

(1.6)

0.3

Per capita portion of inhabitant taxes......

7.2

(1.4)

Equity in earnings of affiliates ..................

(1.7)

0.2

Other ..........................................................

5.1

0.7

53.7%

40.9%

Effective tax rate ................................................

Millions of yen

Thousands of
U.S. dollars

Difference between the fair market valueof revalued land at 31st March, 2001

8.

and the revalued book value ......................

Finance leases

The amount of lease payment under finance lease for theyear ended March 31, 2000 and 2001 were ¥316 million($2,550 thousand) and ¥656 million ($5,295 thousand),
respectively. Future lease payments of finance leases as at
March 31, 2001 ware as follows:—

Due within one year ...................
Due after one year ......................

9.

Millions of yen

Thousands of
U.S. dollars¥ 1,074$ 8,668

3,524

28,442¥ 4,598$37,111¥2,593$20,928

12. Shareholders’ equity
Year-end dividends shall be approved at a meeting ofshareholders held after the end of each financial year andinterim dividends may be declared by the Board of
Directors held after the end of each first six month period,
respectively.
In accordance with the Commercial Code, year-end
dividends and the related appropriation of retained
earnings are not reflected in the financial statements at theend of the financial year, but are recorded at the time they
are approved.

Contingent liabilities
13. Supplementary income information

As at 31st March, 2001, the Company were contingently
liable as follows:—

Notes discounted with banks .....

Millions of yen

Thousands of
U.S. dollars¥ 354$ 2,857

Supplementary income information for the two years ended
31st March, 2001 is as follows:—
Millions of yen

Guarantees for employees’

Thousands of
U.S. dollars

2000

2001

2001

housing loans ...........................

28

226

Depreciation expenses ...............

¥4,216¥4,092$33,027

Notes endorsed ...........................

32

258

Lease and rental ..........................

4,280

4,763

38,442Others ..........................................

1,927

15,553

14. Subsequent event
10. Trade Notes Maturing on Bank Holiday as at 31st
March, 2001

The annual shareholders’ meeting of the Company, which
was held on 28th June, 2001, duly approved the following
appropriations of retained earnings existing as at 31st
March, 2001:—

As financial institutions in Japan were closed on 31st
March, 2001, trade notes maturing on 31st March, 2001
were accounted for as if they were settled at that date.
The amount of trade notes maturing as at 31st March,
2001 was as follows:—

Millions of yen

Thousands of
U.S. dollars

Transfer to legal reserve .............

¥ 33

$ 266

293

2,365

30

242

Millions of yen

Thousands of
U.S. dollars

Dividends (¥3.00 per share) .......

Trade notes receivable ...............

¥538$4,342statutory auditors ......................

Trade notes payable ...................

65

525

Bonuses to directors and30

15. Segment Information
The Company’s business segments consist of logistics related services classified as Logistics and non-logistics services
classified as Others.
A summary of segment information by industry segment for the two years ended 31st March 2001 is as follows:—
For the year ended 31st March, 2000
Millions of yen
Logistics

OthersTotal¥ 117,794
4,924
122,718
120,046¥ 2,672¥ 101,400¥ 4,217¥ 5,171

Net sales:
Outside customers ..................................................
Inter segment sales .................................................
Total ....................................................................
Costs and expenses .....................................................
Operating income ........................................................

¥ 107,859
10
107,869
106,583¥ 1,286

¥

¥

9,935
4,914
14,84913,463
1,386

Assets, depreciation and capital expenditures:
Identifiable assets: ..................................................
Depreciation: ..........................................................
Capital expenditures: ..............................................

¥ 93,625¥ 4,077¥ 4,983

¥
¥
¥

7,775
140
188

Eliminations(Notes 1 and 2)¥

Consolidated¥—(4,924)(4,924)(4,664)(260)¥ 117,794—
117,794
115,382¥ 2,412¥¥¥28,88313
12¥ 130,283¥ 4,204¥ 5,159

For the year ended 31st March, 2001
Millions of yen
Logistics

OthersTotal

Eliminations(Notes 1 and 2)

Consolidated

Net Sales:
Outside customers ..................................................
Inter segment sales .................................................
Total ....................................................................
Costs and expenses .....................................................
Operating income ........................................................

¥109,04011
109,051
107,733¥ 1,318

¥

9,126
4,094
13,22011,962¥ 1,258¥118,166
4,105
122,271
119,695¥ 2,576¥—(4,105)(4,105)(3,933)¥(172)¥118,166—
118,166
115,762¥ 2,404

Assets, depreciation and capital expenditures:
Identifiable assets: ..................................................
Depreciation: ..........................................................
Capital expenditures: ..............................................

¥ 96,148¥ 3,948¥ 4,751¥¥¥¥105,106¥ 4,092¥ 4,898¥ 15,589¥
11¥
17¥120,695¥ 4,081¥ 4,881

31

8,958
144
147

For the year ended 31st March, 2000
Thousands of U.S. dollars
Logistics

OthersTotal

Eliminations(Notes 1 and 2)

Consolidated

Net Sales:
Outside customers ..................................................
Inter segment sales .................................................
Total ....................................................................
Costs and expenses .....................................................
Operating income ........................................................

$ 870,532
81
80,613860,234$ 10,379$

80,186
39,661
119,847
108,660$ 11,187$ 950,718
39,742
990,460
968,894$ 21,566$—(39,742)(39,742)(37,643)$ (2,098)$ 950,718—
950,718
931,251$ 19,467

Assets, depreciation and capital expenditures:
Identifiable assets: ..................................................
Depreciation: ..........................................................
Capital expenditures: ..............................................

$ 755,650$ 32,906$ 40,218$$$$ 818,402$ 34,036$ 41,735$ 233,115
$
105
$
97

$1,051,517$ 33,931$ 41,638

62,752
1,130
1,517

For the year ended 31st March, 2001
Thousands of U.S. dollars
Logistics

Net Sales:
Outside customers .................................................. $ 880,065
Inter segment sales .................................................
89
Total ....................................................................
880,154
Costs and expenses .....................................................
889,516
Operating income ........................................................ $ 10,638

OthersTotal

73,65633,043
106,699
96,546$ 10,153$$$$

Assets, depreciation and capital expenditures:
Identifiable assets: .................................................. $ 776,013
Depreciation: .......................................................... $ 31,865
Capital expenditures: .............................................. $ 38,345

72,3001,162
1,187

Eliminations(Notes 1 and 2)

Consolidated$ 953,721
33,132986,852
966,061$ 20,791$—(33,132)(33,132)(31,744)$ (1,388)$ 953,721—
953,721934,318$ 19,403$ 848,313$ 33,027$ 39,532$ 125,819
$
89
$
137

$ 974,132$ 32,938$ 39,395

Note 1. Operating cost and expenses included in the column “Eliminations” mainly consist of those charged by the generalaffairs and finance divisions of the Company, amounting to ¥202 million ($1,630 thousand) and ¥204 million ($1,646
thousand) for the years ended March 31, 2000 and 2001, respectively.
Note 2. Corporate assets included in the column “Eliminations” mainly consist of surplus working fund (cash and marketablesecurities), long-term investment fund (investments in securities), and other assets which belong to the administrative
department, amounting to ¥31,368 million ($253,172 thousand) and ¥22,918 million ($185,480 thousand) for the years
ended March 31, 2000 and 2001, respectively.
The two business segments mainly consist of the following services:
Logistics ...... Road haulage, freight forwarding, warehousing, and harbor transport and customs services
Others ......... Vehicle maintenance, casualty insurance, leasing, merchandising and commissioned sales andpurchases, travel services, mail order services, travel inn, and other businesses
Neither geographical segment information nor overseas sales have been presented as any of the Company’s consolidated
subsidiaries are not located outside Japan, and the Company and its consolidated subsidiaries have not overseas sales for theyears ended March 31, 2000 and 2001.
32

REPORT OF THE INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
ON THE CONSOLIDATED FINANCIAL STATEMENTS
OF THE COMPANY AND ITS CONSOLIDATED SUBSIDIARIESTo the Board of Directors ofTonami Transportation Co., Ltd.

We have examined the consolidated balance sheets of Tonami Transportation Co., Ltd.
and its consolidated subsidiaries as at 31st March, 2000 and 2001 and the related
consolidated statements of income, shareholders’ equity and cash flows for the years
then ended.
Our examinations were made in accordance with auditing standards generally
accepted in Japan and, accordingly, included such tests of accounting records andsuch other auditing procedures as we considered necessary in the circumstances.
In our opinion, the consolidated financial statements referred to above present
fairly the consolidated financial position of Tonami Transportation Co., Ltd. and its
consolidated subsidiaries as at 31st March, 2000 and 2001 and the results of theiroperations and cash flows for the years then ended, in conformity with accounting
principles generally accepted in Japan applied on a consistent basis.
As described in Notes 2 (f) and 3 to the consolidated financial statements, Tonami
Transportation Co., Ltd. adopted the new accounting standards for employees’
severance and retirement benefits, financial instruments, and foreign currencytranslation in the preparation of its consolidated financial statements for the year ended
31st March, 2001.
The United States dollar amounts shown in the accompanying consolidated
financial statements have been translated solely for convenience. We have reviewed
this translation and, in our opinion, the consolidated financial statements expressed inyen have been translated into dollars on the basis described in Note 1.

Century Ota Showa & Co.
Toyama Prefecture, Japan
28th June, 2001

33

CORPORATE DATAHead Office

Consolidated Subsidiaries

2-12, Showa-machi 3-chome, Takaoka,
Toyama Prefecture 933-8566, Japan
Phone: (0766) 21-1073
Fax: (0766) 21-3640

Kanto Tonami Transportation Co., Ltd.
Road haulage
Gosei Tonami Transportation Co., Ltd.
Road haulage

Tokyo OfficeOsaka Tonami Transportation Co., Ltd.
Road haulage

3-8, Higashinihonbashi 3-cyome, Chuo-ku,
Tokyo 103-0004, Japan
Phone: (03) 3664-5401
Fax: (03) 3664-5405

Date of Establishment
June 1943

Common Stock

Shonan Tonami Transportation Co., Ltd.
Road haulage
Ibaraki Tonami Transportation Co., Ltd.
Road haulage
Fukui Tonami Transportation Co., Ltd.
Road haulage¥14,183 million

Ishikawa Tonami Transportation Co., Ltd.
Road haulage

Issued and Outstanding Shares
97,610,118 shares

Kanagawa Tonami Transportation Co., Ltd.
Road haulage

Shareholders

Kansai Tonami Transportation Co., Ltd.
Road haulage

10,134

Employees
5,636

Terminals

Zento Transportation Co., Ltd.
Road haulage
Takefu Transportation Co., Ltd.
Road haulage

88

Kawai Transportation Co., Ltd.
Road haulage

Warehouses
43

Chukyo Tonami Transportation Co., Ltd.
Road haulage

Motor Vehicles

Saitama Tonami Transportation Co., Ltd.
Road haulage

5,589(As of 31st March, 2001)

ATS Co., Ltd.
Road haulage
Niigata Tonami Transportation Co., Ltd.
Road haulage
Nihon Unyu Co., Ltd.
Harbor transport
Kokusai Kyodo Logistics Co., Ltd.
Warehousing
Tonami Trading Co., Ltd.
Trading Company
Toyo Gomu Hokuriku Hanbai Co., Ltd.
Sale of tires
Shogawa Kanko Co., Ltd.
Travel inns
Toyama Jizake Hanbai Co., Ltd.
Sale of liquor
Tonami Automobile Technology Research Institute Co., Ltd.
Automobile technology R&D
Toyo Tire Toyama shop Co., Ltd.
Sale of tires
Toyo Shinso Co., Ltd.
Sale of bed-clothes34

N O N -C O N S O L I D AT E D F I N A N C I A L H I G H L I G H T S
TONAMI TRANSPORTATION CO., LTD

Tow years ended March 31, 2001

Thousands of
U.S. dollars

Millions of yen
2000

2001

2001

Service revenues ...................................................................... ¥100,291¥100,509$ 811,210

FOR THE YEAR:

Operating income ....................................................................

1,543

1,695

13,680Net income (loss) ....................................................................

910(8,888)(71,734)

Net income (loss) ....................................................................

¥ 9.29¥(91.05)$(0.7349)

Cash dividends .........................................................................

6.00

6.00

0.0484

Total assets ............................................................................... ¥120,697¥109,261$881,848

44,63536,250PER SHARE (yen and U.S. dollars):

AT YEAR-END:

Total shareholders’ equity .......................................................

54,020Notes: 1 U.S. dollar amounts presented herein are included solely for convenience. The rate of ¥123.90 = U.S.$1,
prevailing on 31st March, 2001, has been used for the translation into U.S. dollar amounts.
2 The computation of net income per share of common stock has been based on the weighted average numberof shares outstanding during each financial year, retroactively adjusted to take account of a free share
distribution.

CONTENTS
1
2
4
5
35

PROFILEA MESSAGE FROM THE PRESIDENTB O A R D O F D I R E C T O R S A N D S TAT U T O R Y A U D I T O R S
FINANCIAL SECTIONC O R P O R AT E D ATA

TONAMI TRANSPORTATION CO., LTD.
Head Office: 2-12, Showa-machi 3-chome, Takaoka, Toyama Pref., Japan
Phone: 0766-21-1073 Fax: 0766-21-3640

TONAMI TRANSPORTATION CO., LTD.
ANNUAL REPORT 2001

Printed in Japan