2011
Annual Report
For the year ended March 31, 2011

TONAMI HOLDINGS CO., LTD.

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

We Want to Deliver Value a Stride Ahead

Contents
1 Consolidated Financial Highlights
2 To Our Shareholders and Investors
5 Corporate Governance
8 Corporate Social Responsibility Activities
9 Financial Section
37 Consolidated Subsidiaries
38 Board of Directors and Corporate Auditors
38 Corporate Data

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

Consolidated Financial Highlights
TONAMI HOLDINGS CO., LTD.
AND CONSOLIDATED SUBSIDIARIES
Years ended March 31, 2011 and 2010
Thousands of
U.S. dollars(Note 1)Millions of yen
2011
2010

2011

FOR THE YEAR:
Operating revenues:¥118,979¥113,601$1,430,891

109,031103,339

1,311,251

Information processing

2,689

2,950

32,342

Sales

6,459

6,593

77,679Others

800

719

9,619

1,199

734

14,419Net income

315

702

3,783

Comprehensive income

102

972

1,223

¥3.47

¥7.73

$0.0417

—

7.42

—

4.00

4.00

0.0481¥117,412¥115,502$1,412,049

44,94545,229540,533

Logistics

Operating income

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

AT YEAR-END:
Total assets
Total net assets

Notes: 1. U.S. dollar amounts presented herein are included solely for convenience. The rate of ¥83.15 = U.S.$1, prevailing on March 31, 2011,
has been used for the translation into U.S. dollar amounts.
2. The computation of net income per share of common stock is based on the weighted average number of shares outstanding (which
represents the number of issued shares less treasury stock.) during each financial year.
3. Diluted net income per share is not presented for the year ended March 31, 2011, since there were no residual securities.

Operating Revenues by
Business Segment
150(Billions of yen)

Operating Income

3

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

4.0

(Billions of yen)

(Yen)

30

100

2

2.0

15

50

1

0

0

0

’07

’08

’09

’10

’11

0

’07

’08

’09

’10

’11

-2.0

’07

’08

’09

’10

’11

-15

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

Logistics
Information processing
Sales
Others01

To Our Shareholders and Investors

President, Katsusuke Watanuki

We offer our deepest sympathy to all the people affected by the Great East Japan Earthquake.
During the fiscal year ended March 31, 2011, a broadly based improvement in the businessresults of Japanese companies indicated an economic recovery was gaining traction led by risingexports to emerging economies centering on Asia. However, the impact of the Great East Japan
Earthquake of March 11 on the domestic economy is difficult to estimate and the outlook for theJapanese economy is unclear.
Factors contributing to this uncertainty include the strong yen, weak stock prices, deterioration of
the labor market, and cooling of personal consumption.
The distribution industry continues to operate in a challenging business environment. Despite amoderate recovery of transport demand, the downward trend of freight charges and unit rates owing
to intensifying competition among companies continued and the upward trend of fuel prices
became more apparent.
In these circumstances, the Tonami Group strove to expand logistics-related businesses centeringon truck transport, freight forwarding, and third-party logistics (3PL). As a result, operating revenues increased 4.7% or ¥5,378 million from the previous year to ¥118,979 million.
With regard to profits, despite the increased cost burden due to increases of both fuel prices andprices of raw materials, operating income surged 63.3% or ¥465 million from the previous year to¥1,199 million as a result of the Group’s efforts to reduce costs through improved operational efficiency in addition to the impact of increased revenues.
However, partly due to increased income taxes, net income decreased 55.2% or ¥387 million
from the previous year to ¥315 million.
Total annual dividends for the year ended March 2011 amounted to ¥4 per share, including theinterim dividend of ¥2 per share.
Results by Segment

Operating revenues from the logistics-related business amounted to ¥109,031 million. The Group’s
efforts to expand business with existing customers and cultivate new customers resulted in an
upturn in the demand for logistics services from mainstay operations, including truck transport,
freight forwarding, third-party logistics (3PL), and harbor transport. Segment income was ¥281 million owing to improved labor productivity as a result of the revised workforce structure in addition
to the impact of increased revenues.
Operating revenues from the information processing business amounted to ¥2,689 million andsegment income was ¥382 million.

02

Operating revenues from the sales business, which includes merchandising, consignment sales,
and a non-life insurance agency, amounted to ¥6,459 million and segment income was ¥379 million.
Operating revenues from other businesses, which include automobile repair and direct mail services, amounted to ¥800 million and segment income was ¥53 million.
Outlook for the Year ending March 31, 2012

The Great East Japan Earthquake cast a shadow over a Japanese economy that had been showing
signs of a moderate recovery and anxiety is mounting.
The natural disaster’s economic impact is by no means limited to the Tohoku region, much ofwhich was devastated by the earthquake and tsunami, but extends to parts suppliers far from theareas that suffered physical damage. There is concern that electricity shortages in the Kanto andTohoku regions will constrain economic activities and it is necessary to monitor the evolving situation.
In the distribution industry, it is difficult to forecast transport demand because of mounting
uncertainty concerning prospects for domestic freight volumes owing to the impact of possible electricity shortages and the difficulty of procuring certain parts in the aftermath of the earthquake. In
addition, intensifying competition among companies and an increase in costs owing to sharp
increases in fuel prices are likely to make the operating environment more challenging.
In these circumstances, the Tonami Holdings Group completed the final year of its three-year
medium-term business plan at the end of March 2011. Positioning fiscal 2012 as a year for grasping
the features of the rapidly changing business environment and reinforcing the fundamentals of ourbusiness for the next three-year plan, we have formulated a single-year plan for the year ending
March 31, 2012.
The Tonami Holdings Group will strive to improve earnings by precisely responding to fluctuations in the business environment and vigorously implementing comprehensive sales & marketingthrough effective utilization of the Group’s resources.
As there may be a shift of logistics demand from East Japan to West Japan reflecting adjustments
to production sites and supply chains, we intend to control costs flexibly through reform of theearnings structure.
Taking the above into consideration, our forecast for the Group’s business results for the year ending March 31, 2012, is as follows:
Forecast of consolidated business results
Operating revenues ¥120,200 million (an increase of 1.0% year on year)
Operating income ¥1,400 million (an increase of 16.9% year on year)
Net income¥700 million (an increase of 122.9% year on year)
We will continue making a concerted effort to raise business performance so as to meet the expectations of our shareholders. In all our endeavors, we will be grateful for your continued support.
June 2011

Katsusuke Watanuki
President and Representative Director

03Operating Subsidiaries and Affiliates
Group companies that support
business activities in Asia

Group companies that support
domestic business operations

Transportation business:

Tonami Transportation
Tonami Transportation Shinetsu
Tonami Transportation Chugoku
and other companies

Tonami International Logistics(Dalian)Warehousing business:

Tonami Transportation
Keishin Warehouse
Tonami Global Logistics and other companies

CP System:

Tonami Transportation
Keishin Warehouse
Tonami Global Logistics

Keishin System Research

Hokkaido Tonami Transportation
Tonami（Thailand）

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

Anan Transportation
Nationwide Shirobo JSE Courier

Kanto Tonami Transportation
Ibaraki Tonami Transportation
Tonami Shutoken Logistics

Osaka Tonami Transportation
Kansai Tonami Transportation

Chukyo Tonami Transportation
Touto Transportation

Tonami Trading, Toyo Gomu Hokuriku Hanbai, Tonami Business Service,
Tonami Stuff Support, Takaoka Cable Network, Shogawa Kanko, etc.

Tonami Logistics Solutions

Physical distribution
consulting functions

Physical distribution
network functions

Procurement logistics

Production logistics

Raw materials (Parts etc.)
manufacturers

Factories

Environmental
logistics

Consumers

Goods returned, repairs,
waste, etc.

In-house logistics

Warehouses, distribution
centers

Sales logistics
Destinations in Japan

Wholesalers, retailers
Overseas suppliers

ExportImportDestinations overseas

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

Information systemdevelopment functions

Operational functions04

Corporate Governance

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

(1) Overview of the Corporate Governance System and Reason for Adopting the System

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

05

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

Election

Auditing

Attorney
OpinionBoard of Directors(Representative directors)(Directors)
Supervision

Election

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

Reporting

Independent auditors

Internal Audit Office
Auditing

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

Human Resource
Management Group

Business Planning OfficeCompliance Committee

Business Administration Group

Business Risk Management
Committee

Internal
controlInternal
controlPlanformulation,
reporting

Policypresentation,plan approvalGroup operating subsidiaries

3) Description of Management Organization and State of Development of Internal Control Systems
With regard to the design of its internal control systems, the Company has established a basic policy
concerning business risk management for the Tonami Holdings Group and is working to appropriately respond to various types of risk that might affect the operation of operating subsidiaries, inorder to stabilize the fundamentals of the Group and, should a business risk materialize, to minimize
the impact and as far as possible ensure that neither a business loss nor a social loss is incurred.
The Company recognizes the importance of legal compliance and has established the Compliance
Committee to ensure compliance. The Group’s operating subsidiaries have appointed compliancepromotion officers to inculcate corporate ethics and compliance among their officers and employees.
The compliance promotion officers conduct education and hold briefings concerning compliance.
Within the Company, activity plans etc. are required to be reported to the Compliance Committee
to enable potential violations in the course of business activities to be detected in advance and theiroccurrence prevented. This system enables swift correction of any violations that occur and implementation of measures to prevent recurrence.
The executive officers strive to promptly execute business in accordance with the basic policy
decided by the Board of Directors. The Board of Directors obtains and refers to advice from certified
public accountants, attorneys, and other specialists concerning compliance matters related to management, as necessary.
The Company has put in place a structure enabling a rapid response to changes in the businessenvironment and strives to ensure sound management. To this end, the Group’s operating subsidiaries have established their own regulations based on the Group Operation Regulations and theCompany conducts administration of the Group’s operating subsidiaries in accordance with theGroup Company Administration Procedures that specify matters requiring approval by the headquarters and those to be reported.
The Internal Audit Office conducts internal audits to verify whether business is executed appropriately and efficiently. It reports to the corporate auditors and the Board of Directors.
4) State of Internal Auditing and Auditing by Corporate Auditors
The Internal Audit Office (six personnel) of the Company is an internal auditing unit independent of
the business units and its staff assists with the work of the corporate auditors. The Internal Audit
Office’s independence from the Board of Directors is ensured since decisions of the Board of06

Directors on Internal Audit Office staff changes require approval of the Board of Corporate Auditors.
The Internal Audit Office conducts periodic and unscheduled internal audits of the Company’s business, reports to the Board of Corporate Auditors and the Board of Directors, and requests
improvements.
The Company’s corporate auditors exchange information with the independent auditors, cooperate with the Internal Audit Office, conduct appropriate audits, and hold periodic meetings of theBoard of Corporate Auditors.
One standing corporate auditor and three outside corporate auditors possess significant expertise
concerning financial and accounting matters gained through their experience over many years.

5) Relationships between Outside Directors and Outside Corporate Auditors
The Company does not elect outside directors.
In accordance with the Companies Act, the Company has elected five corporate auditors of whomthree are elected from outside the Company in order to strengthen auditing from a third-party standpoint without being involved in execution of the business of the Company.
The Company considers that corporate auditors who do not execute business and are independent
are conducting appropriate auditing of the supervisory function of the Board of Directors, which is
the main function of the Board of Directors.
The three outside corporate auditors are experienced experts who have no business relationships
with the Group or other interests concerning the Group. Corporate auditors’ principal activities are
the attending of meetings of the Board of Directors and meetings of the Board of Corporate Auditors,
stating of appropriate opinions, as necessary, and auditing of the compliance of directors.
The Company considers individuals possessing insight and expertise who are capable of overseeing management to be suitable for election as outside corporate auditors.
(2) State of Development of the Risk Management Structure

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

Basic Policy on Corporate Social Responsibility Activities
Adhering to the action principle “Ensure compliance throughout business activities,” by means of selection and focus
and reinforcement of the fundamentals, the Tonami Holdings Group endeavors to create value through the logistics
business and fulfill its corporate social responsibility (CSR).
It is essential to ensure transportation safety, accord consideration to the environment, ensure legal compliance andcompliance with other rules, respect human rights, and contribute to local communities. As a logistics expert, we areresolved to fulfill these responsibilities by adhering to corporate ethics, ensuring compliance with laws and regulations, and enhancing corporate governance.
In business activities, with the objective of achieving customer satisfaction, we are endeavoring to be an enterprisethat contributes to the development of society and strives to protect the environment and where employees canachieve job satisfaction, take pride in their work, and are motivated.
In view of the increasing concern about the impact of CO2 emissions on climate, the Group recognizes the urgent
need for more efficient use of energy. The Group is making a concerted effort involving all employees to minimize thewaste of energy throughout its business activities. This effort involves improved logistics efficiency, introduction of
low-pollution vehicles, modal shift, and our initiative to promote environmentally friendly driving through the introduction of digital tachographs.
The Environmental Division is spearheading the Group’s efforts centering on the “Society and the Environment”
theme, aiming to contribute to the establishment of a recycling-based society. Our Ecolock System supports locally
self-sufficient recycling of resources. Additionally, as we are a certified wide-area waste disposal agent under the
Ministry of the Environment’s certification system, we can implement highly efficient recycling activities covering awide geographical area.
We are currently working to realize practical application of the Ecozo System for proposing the optimum recycling
route for industrial waste, positioning it at the heart of our environmental logistics. We own a business model patent
for the Ecozo System (business model patent publication number 2009-110333).
We are reinforcing our commitment to CSR by executing socially responsible business activities in accordance with
our mission: to achieve corporate growth while protecting the environment for future generations. Through continuous and sustainable activities, we strive to enhance corporate value and fulfill our social responsibility to stakeholders.
Principal CSR Initiatives and State of Implementation
Environmental Protection Activities
Recognizing that environmental protection is a crucially important theme
that concerns the maintenance of the ecosystem, adhering to our principle— “Contribute to society through transportation and strive to protect theenvironment” — we will act in accordance with the following policies.
1. We will do the following to mitigate environmental pollution associatedwith transportation services:(A) We will introduce environmentally friendly vehicles.
This truck runs on natural gas(B) We will practice environmentally friendly driving.
(C) We will create eco-friendly distribution systems through more efficient distribution.
(D) We will establish a recycling system to contribute to establishment of a recycling-based society.
(E) We will promote development and provision of environmentally friendly products.
Annual social and(F) We will make continuous efforts to save resources and energy and to achieve improvements every
environmental reportday.
2. We will ensure compliance with environment-related laws and regulations at the national and municipal levels and other requirements that the Company undertakes to fulfill in its efforts to protect theenvironment.
3. We will set specific environmental objectives and environmental goals, conduct periodic reviews, andwork to achieve continuous improvement of environmental management systems.
4. We will communicate these policies to all employees through internal environmental education andawareness raising initiatives, and we will disclose these policies to the public. We will also vigorously
participate in environmental protection activities in local communities.

Encouraging local people to take up
badminton

Social Contributions
We are eager to contribute to local communities through various activities as a corporate citizen.
Our social contribution activities include participation involuntary clean-up campaigns, such as “neighborhood adoption” programs promoted by local government, and the donation of vehicles to social welfare facilities through theestablishment of the Tonami Shozyukai Foundation.
We transport relief supplies when natural disasters occur.
The Tonami Transportation Badminton Club offers badmintoncoaching as a local sports promotion activity.
08

A clean-up in progressFinancial Section

10

Consolidated Five-Year Summary

11

Consolidated Financial Review

14

Consolidated Balance Sheets

16

Consolidated Statements of Income and Consolidated Statements of Comprehensive Income

17

Consolidated Statements of Changes in Net Assets

18

Consolidated Statements of Cash Flows

19

Notes to the Consolidated Financial Statements

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

2007

2008

2009

2010

2011

Thousands of
U.S. dollars
2011

Operating revenues¥130,020¥130,188¥126,930¥113,601¥118,979$1,430,891

Operating cost

122,065

121,875

119,596

106,522

111,355

1,339,200

Selling, general and administrative expenses

5,936

6,426

6,664

6,345

6,425

77,272

Operating income

2,019

1,887

670

734

1,199

14,419Net income (loss)

1,889

(911)

244

702

315

3,783

Depreciation expenses

2,650

2,594

2,848

3,157

3,504

42,139¥(10.03) ¥2.69¥7.73¥3.47$0.0417

RESULTS OF OPERATIONS:PER SHARE (yen and U.S. dollars):
Net income (loss)¥20.77
6.00

6.00

5.00

4.00

4.00

0.0481¥40,425¥36,017¥34,702¥33,860¥35,723$429,622

Net property and equipment

62,75862,194

66,63369,44770,037842,304

Total assets

119,341

112,511113,141

115,502

117,412

1,412,049

Total current liabilities

34,50936,991

34,24832,61733,989408,766

Long-term liabilities, excluding of current portion thereof

36,50929,55834,011

37,65638,478462,750

Total net assets

48,32345,96244,88245,22944,945

540,533

7,129

7,310

7,361

7,235

7,025

Cash dividends
YEAR-END FINANCIAL POSITION:
Total current assets

OTHER YEAR-END DATA:
Number of employees

10Consolidated Financial Review

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

Significant Accounting Policies and Estimates

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

Analysis of Consolidated Operating Results
Operating Revenues

During the fiscal year ended March 31, 2011, operating revenues increased 4.7% or ¥5,378 million from theprevious year to ¥118,979 million, owing to a great increase in transportation demand with respect to theroad haulage operations and freight forwarding operations and recovery of exports to emerging economies in
Asia with respect to the harbor transport operations.
Composition of Operating Revenues
Percentage pointchange from theprevious year

Composition

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

+0.6
+1.2
−1.0
+0.4
−0.3
−0.4
+0.1

91.6%
68.8
17.7
5.1
2.3
5.4
0.7

Operating Cost

Operating cost increased 4.5% or ¥4,833 million from the previous year to ¥111,355 million as a result of anincrease in subcontracting expenses in line with the increase in operating revenues, as well as sharp increases inprices of diesel fuel and raw materials since the second half of the year under review. On the other hand, theratio of operating cost to operating revenues decreased 0.2 percentage points from the previous year to 93.6%
owing to improved operational efficiency and a review of facility expenses.
Selling, General and Administrative Expenses

Selling, general and administrative expenses increased 1.3% or ¥80 million from the previous year to ¥6,425
million mainly because of a change in the scope of consolidation. The ratio of selling, general and administrative expenses to operating revenues decreased 0.2 percentage points to 5.4%.
As a result, operating income increased 63.3% or ¥465 million from the previous year to ¥1,199 million.
The ratio of operating income to operating revenues was 1.0%, an increase of 0.4 percentage points from theprevious year.
Sales of Logistics

Operating Revenues

150(Billions of yen)

150

Sales of Information
Processing Business(Billions of yen)

3

100

100

2

50

50

1

0

’07

’08

’09

’10

’11

0

’07

11

’08

’09

’10

’11

0

(Billions of yen)

’07

’08

’09

’10

’11

Net Income

Net income plunged 55.2% or ¥387 million from the previous year to ¥315 million. This decrease was attributable to a 66.9% or ¥341 million increase in income taxes compared with the amount for the previous year.

Analysis of Cash Flows

Cash and cash equivalents on a consolidated basis for the year under review increased ¥781 million from theprevious year to ¥11,140 million as a result of net cash provided by operating activities amounting to ¥4,271
million, net cash used in investing activities amounting to ¥2,749 million, and net cash used in financing activities amounting to ¥741 million.
Cash Flows from Operating Activities

Net cash provided by operating activities totaled ¥4,271 million, an increase of ¥47 million from the previous
year.
Principal items were trade notes and accounts payable amounting to ¥1,149 million and depreciation andamortization amounting to ¥3,504 million.
Cash Flows from Investing Activities

Net cash used in investing activities totaled ¥2,749 million, a decrease of ¥739 million from the previous year.
The principal item was payments of ¥2,786 million for the purchase of property and equipment.
Cash Flows from Financing Activities

Net cash used in financing activities totaled ¥741 million, a decrease of ¥1,112 million from the previous year.
While proceeds from long-term debt amounted to ¥3,309 million, cash outflows included repayment of longterm debt amounting to ¥1,738 million and repayment of lease obligations amounting to ¥1,508 million.

Analysis of the Financial Position
AssetsCurrent assets were ¥35,723 million, an increase of 5.5% from the previous fiscal year-end. This increase wasmainly attributable to a ¥772 million increase in cash and time deposits and a ¥723 million increase in notes
and accounts receivable.
Property and equipment amounted to ¥70,037 million, an increase of 0.8%. This increase was attributable toa ¥522 million increase in land and a ¥304 million increase in leased assets.
Investments and other assets were ¥11,652 million, a decrease of 4.5%, mainly owing to a ¥378 million
decrease in investments in securities.
As a result, total assets amounted to ¥117,412 million, an increase of 1.7% from the previous fiscal year-end.
Liabilities

Current liabilities amounted to ¥33,989 million, an increase of 4.2% from the previous fiscal year-end, mainly
due to a ¥1,149 million increase in trade notes and accounts payable.
Long-term liabilities amounted to ¥38,478 million, an increase of 2.2% from the previous fiscal year-end.
This increase was mainly attributable to a ¥1,324 million increase in long-term debt including corporate bonds.
As a result, total liabilities amounted to ¥72,467 million, an increase of 3.1% from the previous fiscal yearend.
Net Assets

Net assets amounted to ¥44,945 million, a decrease of 0.6% from the previous fiscal year-end. The main factor
was a ¥223 million decrease in accumulated other comprehensive income.

Risk Factors

The principal business of the Tonami Holdings Group is the logistics-related business centering on road haulage
operations and freight forwarding operations. The Group’s business is subject to impacts of fluctuation of theSales of Other Business

15(Billions of yen)

Net Income (Loss)

Operating Cost andOperating Income
150(Billions of yen)

3

4.0

10

100

2

2.0

5

50

1

0

0

-2.0

0

’07

’08

’09

’10

’11

0

’07

’08

’09

’10

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

12

’11

(Billions of yen)

’07

’08

’09

’10

’11

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

Strategic Position and Outlook

The Great East Japan Earthquake cast a shadow over a Japanese economy that had been showing signs of amoderate recovery and anxiety is mounting.
The natural disaster’s economic impact is by no means limited to the Tohoku region, much of which was devastated by the earthquake and tsunami, but extends to parts suppliers far from the areas that suffered physicaldamage. There is concern that electricity shortages in the Kanto and Tohoku regions will constrain economic
activities and it is necessary to monitor the evolving situation.
In the distribution industry, it is difficult to forecast transport demand because of mounting uncertainty concerning prospects for domestic freight volumes owing to the impact of possible electricity shortages and the difficulty of procuring certain parts in the aftermath of the earthquake. In addition, intensifying competition
among companies and an increase in costs owing to sharp increases in fuel prices are likely to make the operating environment more challenging.
In view of the anticipated shift of production to emerging economies whose markets are expanding, increasein procurement overseas, and progress in globalization of logistics, consolidation of the industry through tie-ups
and mergers & acquisitions is also likely to continue.
In these circumstances, the Group completed the final year of its three-year medium-term business plan at
the end of March 2011. Positioning fiscal 2012 as a year for grasping the features of the rapidly changing business environment and reinforcing the fundamentals of our business for the next three-year plan, we have formulated a single-year plan for the year ending March 31, 2012.
The Tonami Holdings Group will strive to improve earnings by precisely responding to fluctuations in thebusiness environment and vigorously implementing comprehensive sales & marketing through effective utilization of the Group’s resources.
As there may be a shift of logistics demand from East Japan to West Japan reflecting adjustments to production sites and supply chains, we intend to control costs flexibly through reform of the earnings structure.
Net Cash Used in Investing
Activities

Net Cash Provided byOperating Activities
6(Billions of yen)

0(Billions of yen)

Total Assets andNet Assets
150(Billions of yen)

-1
100

4
-2

50

2
-3

0

’07

’08

’09

’10

’11

-4

’07

’08

’09

’10

’11

0

’07

’08

Total assets
Net assets

13

’09

’10

’11

Consolidated Balance Sheets
TONAMI HOLDINGS CO., LTD.
AND CONSOLIDATED SUBSIDIARIESAs of March 31, 2011 and 2010ASSETS

Thousands of
U.S. dollars(Note 1)
2011

Millions of yen
2011
2010

Current assets:
Cash and time deposits¥11,283¥10,511$135,691

17

—

208

20,437

19,714

245,782

(33)

(32)

(397)

Investments in lease assets

514

325

6,188

Inventories

675

609

8,115

Marketable securities (Note 11)
Trade receivables:
Notes and accounts (Note 5)
Less: allowance for doubtful accounts

Deferred tax assets (Note 15)

598

671

7,190

2,232

2,062

26,84535,72333,860429,622Land

40,91940,397492,111

Buildings and structures

19,80420,871

238,174

Machinery and vehicles

2,067

2,257

24,864

Leased assets

5,556

5,252

66,820

Other current assets
Total current assets

Property and equipment (Notes 3, 4, 6 and 9):

Construction in progress

990—

11,906

Other

701

670

8,429

70,03769,447842,304

5,340

5,718

64,221862

749

10,364

5,450

5,728

65,538

Total property and equipment

Investments and other assets:
Investments in securities (Note 11)
Deferred tax assets (Note 15)
Other
Total investments and other assets
Total assets
The accompanying Notes are an integral part of these statements.

14

11,652

12,195140,123¥117,412¥115,502$1,412,049

LIABILITIES AND NET ASSETS

Thousands of
U.S. dollars(Note 1)
2011

Millions of yen
2011
2010

Current liabilities:
Short-term bank loans (Note 4)¥13,590¥14,023$163,440

Current portion of long-term debt (Note 4)

1,354

1,108

16,287

Trade notes and accounts payable

10,9609,811

131,806

Lease obligations

1,507

1,117

18,121

Income taxes payable

527

497

6,338

Other current liabilities

6,051

6,061

72,77433,98932,617408,766

Total current liabilities
Long-term liabilities:
Long-term debt, less current portion thereof (Note 4)

11,66010,336140,232

Lease obligations

5,067

4,895

60,938Deferred tax liabilities from revaluation reserve for land (Note 6)

5,455

5,455

65,607

Employees’ severance and retirement benefits (Note 13)

14,65415,306

176,237

Retirement benefits for directors and corporate auditors

196

190

2,353

Negative goodwill

307

385

3,688

1,139

1,089

13,695

Other long-term liabilities
Total long-term liabilities

38,47837,656

462,750

Total liabilities

72,46770,273

871,516

14,183

14,183

170,567

Capital surplus

11,682

11,682

140,495

Retained earnings

14,686

14,734

176,616(2,015)(2,012)(24,230)

38,536

38,587463,448

Unrealized gain on other securities

257

480

3,092

Revaluation reserve for land (Note 6)

5,787

5,787

69,598

6,044

6,267

72,690

365

375

4,395

Net assets
Shareholders’ equity (Note 14):
Common stock:
Authorized: 299,200,000 shares in 2011
299,200,000 shares in 2010
Issued: 97,610,118 shares in 2011
97,610,118 shares in 2010

Treasury stock, at cost: 6,822,582 shares in 2011
6,803,610 shares in 2010
Total shareholders’ equity
Other comprehensive income

Accumulated other comprehensive income
Minority interests:
Minority interests
Total net assets
Total liabilities and net assets

15

44,94545,229540,533¥117,412¥115,502$1,412,049

Consolidated Statements of Income and Consolidated Statements of Comprehensive Income
TONAMI HOLDINGS CO., LTD.
AND CONSOLIDATED SUBSIDIARIESFor the years ended March 31, 2011 and 2010
Thousands of
U.S. dollars(Note 1)
2011

Millions of yen
2011
2010

Operating revenues:¥118,979¥113,601 $1,430,891

118,979

113,6011,430,891

111,355

106,522

1,339,200

6,425

6,345

77,272

117,780

112,867

1,416,472

1,199

734

14,419Interest and dividend income

268

237

3,228

Equity in earnings of unconsolidated subsidiaries and affiliates

50

62

604

Loss on sale of property and equipment, net

(40)

(110)

(488)

Interest expenses

(502)

(344)

(6,043)Operating revenues

Operating costs and selling, general and administrative expenses:
Operating cost (Note 16)
Selling, general and administrative expenses (Note 16)
Operating income
Other income and expenses:

Impairment losses

(54)

—

(654)

Other, net

255

655

3,071

(23)

500

(282)

1,176

1,234

14,137

Current

720

852

8,665

Deferred

130

22

1,560

850

509

10,225

Net income before minority interests

326

725

3,912

Minority interests

11

23

129

¥315

¥702

$3,783

Minority income

11

23

129

Net income before minority interests

326

725

3,912

Valuation difference on other securities

(224)

247

(2,689)Total other comprehensive income

(224)

247

(2,689)Total comprehensive income for the year

102

972

1,223

Owners of the parent

92

948

1,104

Minority interests

10

24

119

Income before income taxes and minority interests
Income taxes (Note 15):

Net income

Other comprehensive income

Total comprehensive income attributable to:

The accompanying Notes are an integral part of these statements.

16

Consolidated Statements of Changes in Net Assets
TONAMI HOLDINGS CO., LTD.
AND CONSOLIDATED SUBSIDIARIESFor the years ended March 31, 2011 and 2010

Millions of yen
Shares ofcommonstock(thousands)

Balance as at March 31, 2009

Cash dividends applicable tothe year (¥4.00 per share)
Net income
Transfer of capital surplus toretained earnings
Treasury stock
Net changes in items other thanshareholders’ equity

Balance as at March 31, 2010

Cash dividends applicable tothe year (¥4.00 per share)
Net income
Increase in retained earnings due to sales ofinvestments in consolidated subsidiaries
Treasury stock
Net changes in items other thanshareholders’ equity

Balance as at March 31, 2011

Commonstock

CapitalsurplusRetainedearnings

Treasurystock

Accumulated
Total
Unrealized Revaluation other comshareholders’ gain on other reserve
prehensive
equitysecurities
for landincome¥(2,008) ¥38,249

(363)
702

(363)
702

(363)
702

4
(4)

4
(4)

(4)

¥6,020—¥(2,012) ¥38,587

(363)
315

(363)
315

(363)
315

—
(3)

—
(3)

—
97,610 ¥14,183 ¥11,682 ¥14,686 ¥(2,015) ¥38,536¥5,787(223)¥257 ¥5,787

247¥6,267¥613 ¥44,882

97,610 ¥14,183 ¥11,682 ¥14,734

(3)

247
¥480

¥5,787Total
net assets

97,610 ¥14,183 ¥11,682 ¥14,392

4

¥233

Minority
interests(223)¥6,044(238)
8¥375 ¥45,229

(9)
(232)
¥365 ¥44,945

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

Balance as at March 31, 2010

Cash dividends applicable tothe year ($0.0481 per share)
Net income
Increase in retained earnings due to sales ofinvestments in consolidated subsidiaries
Treasury stock
Net changes in items other thanshareholders’ equity

Balance as at March 31, 2011

CapitalsurplusRetainedearnings

Treasurystock

Accumulated
Total
Unrealized Revaluation other comshareholders’ gain on other reserve
prehensive
equitysecurities
for landincome$170,567 $140,495 $177,201 $(24,199) $464,064(4,368)
3,783$5,772 $69,598 $75,370

Minority
interests

Total
net assets$4,507 $543,941(4,368)
3,783(4,368)
3,783

—
(31)

—
(31)

—
$170,567 $140,495 $176,616 $(24,230)$463,448(2,680)(2,680)(112) (2,792)$3,092 $69,598 $72,690 $4,395 $540,533(31)

The accompanying Notes are an integral part of these statements.

17

Consolidated Statements of Cash FlowsTONAMI HOLDINGS CO., LTD.
AND CONSOLIDATED SUBSIDIARIESFor the years ended March 31, 2011 and 2010
Thousands of
U.S. dollars(Note 1)
2011

Millions of yen
2011
2010

Cash flows from operating activities:
Net income before income taxes and minority interests
Depreciation and amortization
Impairment losses
Loss on disposal of property and equipment
Loss on sales of investments in securities
Loss on devaluation of investments in securities
Amortization of goodwill
Equity in earnings of unconsolidated subsidiaries and affiliates
Decrease in allowance for doubtful accounts
Decrease in employees’ severance and retirement benefits
Increase (decrease) in directors’ and corporate auditors’ retirement benefits(Decrease) increase in accrued bonuses to employees
Interest and dividend income
Interest expenses
Increase in trade receivables(Increase) decrease in inventories
Increase (decrease) in accounts payable
Increase in accrued consumption taxes
Other, net
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Net cash provided by operating activities¥1,176
3,504
54
40
25
29
33
(50)
(2)
(651)
6
(64)
(268)
502
(723)
(65)
1,149
39
487
5,221
268
(513)
(705)
4,271

¥1,234
3,157
—
110
—
7
104
(62)
(57)
(396)
(18)
20
(237)
344
(11)
58
(189)
447
186
4,697
237
(355)
(355)
4,224

$14,137
42,139
654
488
300
351
398
(604)
(27)
(7,835)69(769)(3,228)6,043(8,692)(787)
13,815471
5,852
62,775
3,228(6,167)(8,481)
51,355(44)
53(2,786)
119
(104)
77
—
(23)

(138)
18
(3,198)
71
(198)
11
50
—

(529)
637
(33,500)
1,433(1,256)
932
—
(282)

—

31

—

—

6

—

Cash flows from investing activities:
Purchase of time deposits
Proceeds from redemption of time deposits
Purchase of property and equipment
Proceeds from sales of property and equipment
Purchase of investments in securities
Proceeds from sales of investments in securities
Proceeds from redemption of investments in securities
Purchase of investments in subsidiaries
Proceeds from acquisition of investments in subsidiaries resulting in changes in scope of
consolidation
Proceeds from sales of investments in subsidiaries
Payments for acquisition of investments in subsidiaries resulting in changes in scope of
consolidation
Investments in loans receivable
Proceeds from collection of loans receivable
Other, net
Net cash used in investing activities

—

(35)

—

(31)
4
(14)
(2,749)

(250)
300
(156)
(3,488)

(376)
53
(167)
(33,055)

Cash flows from financing activities:
Net (decrease) increase in short-term loans
Proceeds from long-term debt
Repayment of long-term debt
Redemption of bonds
Purchase of treasury stock
Dividends paid
Dividends paid to minority interests
Repayment of lease obligations
Net cash used in financing activities

(433)
3,309
(1,738)
—
(3)
(363)
(5)
(1,508)
(741)

950
2,600
(1,632)(2,500)
(4)
(363)
(4)
(900)
(1,853)(5,207)39,794(20,906)—(31)(4,368)(58)(18,134)(8,910)781
10,359¥11,140(1,117)
11,476¥10,359

9,390
124,591$133,981

Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year (Note 8)
The accompanying Notes are an integral part of these statements.

18

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

1 Basis of presenting financial statements
The accompanying consolidated financial statements have been prepared based on the accounts maintained by
Tonami Holdings Co., Ltd. (the “Company”) and consolidated subsidiaries in accordance with accounting principles generally accepted in Japan, which differ in certain respects as to the application and disclosure requirements of International Financial Reporting Standards.
In preparing these consolidated financial statements, certain reclassifications and rearrangements have been
made to the Company’s consolidated financial statements issued domestically in order to present them in a format which is more familiar to readers outside Japan. In addition, certain reclassifications have been made in the2010 financial statements to conform to the classifications used in 2011.
The consolidated financial statements are stated in Japanese yen, the currency of the country in which theCompany is incorporated and operates. The translations of Japanese yen amounts into U.S. dollar amounts areincluded solely for the convenience of readers outside Japan and have been made at the rate of ¥83.15 to U.S.$1,
the approximate rate of exchange at March 31, 2011. Such translations should not be construed as representations that the Japanese yen amounts could be converted into U.S. dollars at that or any other rate.

2 Summary of significant accounting policies(a) Consolidation

The accompanying consolidated financial statements as of March 31, 2011 include the accounts of theCompany and its 30 (30 in 2010) consolidated subsidiaries and 6 (6 in 2010) affiliates accounted for by theequity method.
Under the control or influence concept, those companies in which the Company, directly or indirectly, isable to exercise control over operations are fully consolidated, and those companies over which the Company
has the ability to exercise significant influence are accounted for by the equity method. A subsidiary which isconsidered to be insignificant as a whole in view of total assets, operating revenues, net income and retained
earnings is excluded from the scope of consolidation, nor accounted for by the equity method.
The difference between the cost of an acquisition and the fair value of the net assets of the acquired subsidiary at the date of acquisition is being equally amortized over a period of 5 years after incurred. However, if theamount is immaterial, it is fully charged to income at the date of acquisition.
All significant intercompany balances and transactions have been eliminated in consolidation.
(b) Marketable securities and investments in securities

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

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

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

Property and equipment are stated at cost. However, under Japanese tax law, capital gains arisen from disposals
and other similar transactions are deducted from the cost of the property and equipment acquired in substitution.
Depreciation of property and equipment, except for leased assets, is computed by the declining balancemethod over the useful life of the assets as determined by law, except for buildings and structures, which are
depreciated by the straight-line method.
19

The ranges of useful lives of principal property and equipment are as follows:
Buildings and structures . . 2–67 years
Machinery and vehicles . . . 2–17 years
Leased assets under the finance lease arrangements which do not transfer ownership of the leased assets tothe lessee are depreciated by the straight-line method over the respective lease periods without residual values.
However, if the guaranteed salvage value is specified in the lease contracts, they are depreciated by thestraight-line method considering such salvage value.
Finance leases which commenced prior to April 1, 2008 and do not transfer ownership of the leased assets
are accounted for as operating lease transactions as before.
Amortization of intangible assets is principally computed using the straight-line method on the presumptionof having no salvage value.
(f) Allowance for doubtful accounts

Allowance for doubtful accounts is provided in an amount sufficient to cover possible losses on collection.
Said amount is computed by applying the rate of actual losses on collection experienced in the past withrespect to general trade receivables and by individually reviewing their collectibility with respect to certain
doubtful receivables.
(g) Employees’ severance and retirement benefits

Full-time employees of the Company and its consolidated subsidiaries are entitled to a lump-sum payment
upon retirement or severance of employment. In order to provide for the employees’ severance and retirement
benefits, the Company and its consolidated subsidiaries assume a liability for severance and retirement benefits,
which is included in the liability section of the consolidated balance sheet, based on the estimated amounts ofprojected benefit obligation and plan assets at the balance sheet dates.
Past service costs are recognized in expenses using the straight-line method over 9 years (a period notexceeding the employees average remaining service years) commencing with the year incurred.
Actuarial gains and losses are recognized in expenses using the straight-line method over 9 years (a period
not exceeding the employees’ average remaining service years) commencing with the year following theiroccurrence.
(h) Retirement benefits for directors and corporate auditors

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

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

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

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

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

20

3 Property and equipment
Depreciable property is stated at the net book value in the consolidated balance sheets. The amounts of accumulated depreciation were ¥50,068 ($602,140 thousand) million and ¥51,972 million on March 31, 2011 and2010, respectively.
Capital gains resulting from disposals and other similar transactions are deducted from the cost of property
and equipment acquired in substitution. The amounts deducted from the cost of property and equipment were¥180 million ($2,167 thousand) and ¥195 million on March 31, 2011 and 2010, respectively.

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

Short-term bank loans as at March 31, 2011 and 2010 were as follows:—
Millions of yen
2011
2010

SecuredUnsecured¥3,220
10,370¥3,453
10,570Thousands of
U.S. dollars
2011$38,725
124,715Interest rates range from 0.610% to 1.600%.
(b) Long-term debt

Long-term debt as at March 31, 2011 and 2010 was as follows:—
Millions of yen
2011
2010

2.11% ¥3.0 billion unsecured straight bonds due 2013
0.625%-2.520% loans from financial institutions due 2012 to 2016
and thereafter
SecuredUnsecured
Total
Less: amount due within one year

Thousands of
U.S. dollars
2011¥3,000¥3,000$36,080

1,958
8,056
13,014
1,354¥11,660

1,675
6,769
11,444
1,108¥10,336

23,55496,885
156,519
16,287$140,232

The maturity date of the ¥3.0 billion 2.11% unsecured straight bonds, issued in June 2008 is June 5, 2013.
The annual maturities of long-term debt outstanding as at March 31, 2011 are as follows:—
Year ending March 31,

Millions ofyen

Thousands of
U.S. dollars

2012
2013
2014
2015
2016 and thereafter¥1,354
1,207
3,057
3,461
935

$16,287
14,52336,764
41,621
11,244(c) Pledged assets

Property and equipment having a net value of ¥14,687 million ($157,151 thousand) was pledged as collateralfor short-term bank loans and long-term debt as at March 31, 2011.

5 Contingent liabilities
As at March 31, 2011, the Company was contingently liable as follows:—
Notes endorsed
Others21

Millions ofyen

Thousands of
U.S. dollars

¥34
419

$404
5,045

6 Revaluation reserve for land
In accordance with the Law concerning Revaluation of Land enacted on March 31, 1998, the Company has
revaluated its owned land used for business operations as at March 31, 2000 and reported a revaluation reserve
for land under “Net assets.”
The revaluated book value of land was determined based on the value of land registered on the cadastres ortheir supplementary records, which are provided by the Local Tax Law under the Law Concerning Revaluationof Land, after making reasonable adjustments.
Difference between the fair market value of revalued land at March 31, 2011
and the revalued book value

Millions ofyen

Thousands of
U.S. dollars¥11,327$136,221

7 Restrictive financial covenants(1) The Company has entered into overdraft facility and credit line commitment agreements with ten banks forthe purpose of efficient procurement of working capital.
Outstanding balance of unused credit concerning overdraft facility and credit line commitment agreements
at March 31, 2011, was as follows:
Maximum credit line of overdraft facility and commitment agreement
Used credit
Total

Millions ofyen

Thousands of
U.S. dollars¥4,000—¥4,000$48,106—$48,106

The agreements include restrictive financial covenants requiring net assets as of the fiscal year end to exceed
predetermined amount.
(2) Of borrowings of the Company and certain subsidiaries, syndicated loan agreements (outstanding balance
at March 31, 2011: ¥7,880 million ($94,768 thousand)) include restrictive financial covenants requiring assets
at a fiscal year-end to exceed the predetermined amount.

8 Cash flow statements
Reconciliation of cash and time deposits shown in the consolidated balance sheets and cash and cash equivalents shown in the consolidated statements of cash flows as at March 31, 2011 and 2010 are as follows:—
Millions of yen
2011
2010

Cash and time deposits
Time deposits with maturities exceeding three months
Cash and cash equivalents¥11,283(142)¥11,141¥10,511(151)¥10,360

Thousands of
U.S. dollars
2011$135,691(1,710)$133,981

9 Finance leases(a) Finance leases other than those which are deemed to transfer the ownership of the leased assets to the lesseel Contents of leased assets: Tangible fixed assets (mainly, machinery, equipment and vehicles for distribution related business)l Depreciation method: Leased assets are depreciated by the straight-line method over the respective lease
periods without residual values. However, if the guaranteed salvage value is specified in the lease contracts, they are depreciated by the straight-line method considering such salvage value.
(b) Finance lease transactions which commenced prior to April 1, 2008 and do not transfer ownership of theleased assets to the lessee are accounted for as operating lease transactions as before.

22

The following are pro forma amounts of the acquisition costs, accumulated depreciation, accumulated
impairment losses and net book value of leased property if they were capitalized as of March 31, 2011 and2010 for finance leases accounted for as operating leases:—Millions of yen
2011
2010

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

Thousands of
U.S. dollars
2011¥7,5815,834¥13,415¥9,473
5,837¥15,310$91,173
70,162$161,335¥5,955
1,947¥7,902¥6,4811,738¥8,219$71,618
23,415$95,033

¥

—
756
¥756

¥—
756
¥756

$

¥1,626
3,131¥4,757¥2,992
3,343¥6,335$19,555
37,655$57,210—
9,092$9,092

Amounts of depreciation expense equivalents and interest expense equivalents for the years ended March 31,
2011 and 2010 are as follows:—
Millions of yen
2011
2010

Depreciation expense
Interest expense¥1,424168¥1,816
228

Thousands of
U.S. dollars
2011$17,126
2,020

Lease payments relating to finance leases accounted for as operating leases amounted to ¥1,713 million($20,597 thousands) and ¥2,136 million, which were equal to the depreciation expense of the leased assets
computed by the straight-line method over the lease terms, for the years ended March 31, 2011 and 2010,
respectively.
In the year ended March 31, 2006, impairment losses on leased assets amounting to ¥756 million were recorded.
Since these leased assets are off-balance-sheet, the equivalent amount is included in “Other long-term liabilities”.
Impairment losses on leased assets is realized over the lease term. In the fiscal year ended March 31, 2011 and2010, reversal of impairment losses on leased assets amounting to ¥42 million ($505 thousand) was recorded.
Future minimum lease payments (including the interest portion thereon) and the balance of impairment
losses on leased assets as at March 31, 2011 and 2010 for finance leases accounted for as operating leases are
summarized as follows:—
Millions of yen
2011
2010

Due within one year
Due over one yearTotal

¥1,2424,167¥5,409¥504

Impairment losses on leased assets¥1,693
5,376¥7,069¥546

Thousands of
U.S. dollars
2011$14,937
50,114$65,051$6,061(c) Operating leases
Millions of yen
2011
2010

Due within one year
Due over one year
Total

¥274
3,300
¥3,574
23

¥274
3,574
¥3,848

Thousands of
U.S. dollars
2011$3,295
39,687$42,982

10 Financial instruments and related disclosures(a) Financial instruments
The Group invests cash surplus, if any, in low risk financial assets and raises funds for short-term working
fund by bank borrowings. For capital investment, the Group raises necessary funds in light of capital investment plan by bank borrowings or issuance of corporate bonds. Derivatives are employed to mitigate the riskof fluctuations in interest rates, and not used for speculative purposes.
Trade receivables such as notes and accounts are exposed to customer credit risk. For such credit risk, theGroup has established the risk management system to monitor and control payment term and balances ofcustomers.
Investments in securities such as equity securities are exposed to the market risk of fluctuation in market
prices, but major components are equity securities issued by the business partners and their fair values are
periodically reported to the in-charge directors.
Almost all the trade payables such as notes and accounts payable are due within one year.
Of borrowings, short-term bank loans are used mainly to procure funds for operating transactions andlong-term debt and corporate bonds are used to procure funds for capital investment. For floating-rate debt,
derivative transactions (interest rate swaps) are used as hedges to avoid the risk of interest rate fluctuations
and fix interest payments.
The Company executes and manages derivative transactions in accordance with internal rules that specify
transaction authority, and since large borrowings are subject to the decision of the board of directors, theboard of directors also decides whether to enter into a corresponding swap agreements. Moreover, theCompany enters into derivative transactions only with financial institutions with high credit ratings to mitigate counterparty default risk.
Trade payables and loans are exposed to the liquidity risk, but the Group controls such liquidity risk by
the monthly cash management plans prepared by each company.
(b) Fair value of financial instruments
The carrying amount, fair value and the related difference of the financial instruments as of March 31, 2011
and 2010 are as follows:
Financial instruments whose fair values are extremely difficult to determine are not included in the following tables.
Carrying
amountMillions of yen
Fair
value

¥11,283
3,501
16,9363,089¥34,809¥11,283
3,501
16,9363,089¥34,809

—
—
—
—
—

¥938
10,022
13,5903,000
6,574
10,014¥44,138—¥938
10,022
13,5903,067
6,840
10,151¥44,608
—

—
—
—
67
266
137
¥470
—

For the year ended March 31, 2011

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

24

DifferenceFor the year ended March 31, 2010

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

Carrying
amountMillions of yen
Fair
value

¥10,511
3,218
16,4963,453¥33,678¥10,511
3,218
16,4963,453¥33,678

—
—
—
—
—

¥893
8,918
14,023
3,000
6,012
8,444
¥41,290
—

¥893
8,918
14,023
3,040
6,939
8,633
¥42,446
—

—
—
—
40
927
189
¥1,156—

Difference

Thousands of U.S. dollars
Carrying
Fair
Difference
amountvalue

For the year ended March 31, 2011

Assets:Cash and time deposits
Trade receivables – notes
Trade receivables – accounts
Investments in securities (other securities)
Total assets
Liabilities:
Trade notes payable
Trade accounts payable
Short-term bank loans
Bonds
Lease obligations
Long-term debt
Total liabilities
Derivatives:$135,691
42,107
203,675
37,145$418,618$135,691
42,107
203,675
37,145$418,618

—
—
—
—
—

$11,276
120,530
163,440
36,08079,059120,439$530,824—$11,276
120,530
163,440
36,88582,258122,080$536,469
—

—
—
—
805
3,199
1,641
$5,645—

For cash and time deposits, trade notes receivable and trade accounts receivable, the carrying amount is presented as the fair value since the fair value approximates the carrying amount because of the short maturity ofthese instruments.
For investments in securities, the fair value of equity securities is determined using the quoted price of thestock exchanges. Unlisted equity securities whose fair value is extremely difficult to identify in the carrying
amount of ¥2,268 million ($27,284 thousand) are not included in the above table.
For trade notes payable, trade accounts payable and short-term bank loans, the carrying amount is presented
as the fair value since the fair value approximates the carrying amount because of the short maturity of these
instruments.
For bonds, lease obligations and long-term debt, the fair value is determined using the present value of
aggregated principal and interest discounted at a rate assumed if the new loans or lease arrangements weremade.
For derivatives, please see Note 12 “Derivative transactions”.

25

(c) Information about maturities of financial instruments
Annual maturities of monetary receivables and other securities with contractual maturities as of March 31,
2011 and 2010 are as follows:
Millions of yen

For the year ended March 31, 2011

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

Due in one
year

Due after one
year throughfive years

Due after five
years throughten years¥11,253
3,501
16,93617¥31,707

¥—
—
—
60
¥60

¥—
—
—
—
¥—

Due in one
year

Due after one
year throughfive years

Due after five
years throughten years¥10,476
3,218
16,496—¥30,190

¥—
—
—
68
¥68

¥—
—
—
9
¥9

Due after
ten years

¥—
—
—
—
¥—

Millions of yen

For the year ended March 31, 2010

Time deposits
Trade notes receivable
Trade accounts receivable
Investments in securities (other securities with contractual maturities)
Total
For the year ended March 31, 2011

Due in one
year

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

Thousands of U.S. dollars
Due after one Due after five
year through years throughfive years
ten years$135,336
42,107
203,675208$381,326

$—
—
—
722
$722

$—
—
—
—
$—

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

Due after four
years throughfive years

Due after
ten years

¥—
—
—
—
¥—

Due after
ten years

$—
—
—
—
$—

Annual maturities of monetary payables as of March 31, 2011 are as follows:
Millions of yen

Bonds
Lease obligations
Long-term debt
Total

Due in one
year

Due after one
year throughtwo years

¥—
1,507
1,354
¥2,861

¥—
1,502
1,207
¥2,709

Due in one
year

Due after one
year throughtwo years$—18,121
16,297$34,419$—
18,062
14,523$32,585¥3,000
1,384
3,057¥7,441

¥—
718
3,461
¥4,179

¥—
335
589
¥924

Due after
five years

¥—
1,128
346
¥1,474

Thousands of U.S. dollars

Bonds
Lease obligations
Long-term debt
Total

26

Due after two Due after three
years through years throughthree years
four years$36,080
16,63936,764$89,483$—8,636
41,621$50,257

Due after four
years throughfive years

$—
4,031
7,083
$11,114

Due after
five years$—
13,5704,161$17,731

11 Marketable securities and investments in securities
No trading securities or held-to-maturity securities were held at March 31, 2011 or 2010. Securities classified
as other securities are included in “marketable securities” and “investments in securities” in the accompanying
consolidated balance sheets.
The components of unrealized gain or loss on marketable securities classified as other securities at March 31,
2011 and 2010 are summarized as follows:—
Carrying
value

Millions of yen
2011
Acquisitioncosts¥1,730¥1,019

¥712

—
—
50

—
—
50

—
—
0

1,281

1,647

(366)

—
17
10
¥3,089—100
10¥2,826

—
(83)
(0)
¥263

Carrying
value

Millions of yen
2010
Acquisitioncosts

For the year ended March 31, 2011

Unrealized gain:
Stocks (Note)
Bonds:
Corporate bonds
Other
Other
Unrealized loss:
Stocks (Note)
Bonds:
Corporate bonds
Other
Other
Total
For the year ended March 31, 2010

Unrealized gain:
StocksBonds:
Corporate bonds
Other
Other
Unrealized loss:
StocksBonds:
Corporate bonds
Other
Other
Total

27

Unrealized
gain (loss)

Unrealized
gain (loss)¥2,752¥1,902

¥850

—
—
—

—
—
—

—
—
—

623

728

(105)

—
19
59
¥3,453—100
60¥2,790

—
(81)
(1 )
¥663

Thousands of U.S. dollars
2011
Carrying
Acquisition
Unrealized
value
costs
gain (loss)

For the year ended March 31, 2011

Unrealized gain:
Stocks (Note)
Bonds:
Corporate bonds
Other
Other
Unrealized loss:
Stocks (Note)
Bonds:
Corporate bonds
Other
Other
Total

$20,810$12,252$8,558

—
—
606

—
—
601

—
—
5

15,40519,803(4,398)—208
116$37,145

—
1,206
121
$33,983

—
(998)
(5)
$3,162

Note:	Equity securities with fair value, classified as other securities, are restated at the fair value and related loss
on impairment in an amount of ¥23 million ($278 thousand) is charged to income for the year ended
March 31, 2011. Equity securities whose fair value is 50% or less than the acquisition cost are necessarily
restated at fair value and those whose fair value is between 50% and 30% of the acquisition cost are restated at fair value, if they are judged to be unrecoverable considering the trend of the market value forthe past certain period and performances of the issuers.
Other securities sold during the year ended March 31, 2011, and the year ended March 31, 2010, amounted
to ¥1 million ($12 thousand) and ¥10 million, respectively, of which a gain on sales amounted to ¥0 million($0 thousand) and ¥0 million, respectively.

12 Derivative transactions(a) Derivative transactions to which hedge accounting is not applied
There is no applicable transaction.
(b) Derivative transactions to which hedge accounting is applied
Hedge accounting method: Special treatment for interest rate swaps
Type of transactions: Interest rate swaps:
Fixed rate payment/Floating rate receipt
Major hedged item: Long-term debt
Millions of yen
2011
2010

Contract amount Total
Due after one year
Fair value¥7,880
7,140*¥5,895
5,680*

Thousands of
U.S. dollars
2011$94,768
85,869**The fair value is regarded to be included in the fair value of the long-term debt as hedged instruments, since
the interest rate swaps which qualify for hedge accounting and meet specific criteria are not remeasured atmarket value, but the differentials paid or received under the swap agreements are recognized and included ininterest expenses or income (special treatment).

28

13 Employees’ severance and retirement benefits
Employees who terminate their service with the Company and consolidated subsidiaries are, in most cases,
entitled to pension annuity payments or to a lump-sum severance payment determined by reference to thebasic rate of pay, length of service and the conditions under which the termination occurs.
The Company and certain consolidated subsidiaries have defined benefit plans, including a lump-sum payment plan and a contributory welfare pension plan and an approved retirement annuity plan. The Company
revised its pension plans and shifted them to a cash balance plan (money market-interest-rate linked type) on
June 1, 2004.
The projected benefit obligation and the funded status of the plans summarized as follows:—
Millions of yen
2011
2010

Projected benefit obligation
Plan assets
Net unrecognized amountPrepaid pension cost
Employees’ severance and retirement benefits¥(20,013)
3,519
1,840
0
¥(14,654)¥(20,563)
3,072
2,186
¥(15,305)

Thousands of
U.S. dollars
2011$(240,686)
42,321
22,1290$(176,236)

The net unrecognized amounts were as follows:—
Millions of yen
2011
2010

Unrecognized benefit obligation:
Adjustment for actuarial assumptions
Past service cost
Net unrecognized amounts¥3,209(1,369)¥1,840¥4,243(2,058)¥2,185

Thousands of
U.S. dollars
2011$38,593(16,464)$22,129

The components of net periodic pension and severance costs excluding the employees’ contributory portion
were as follows:—
Millions of yen
2011
2010

Service cost
Interest cost on projected benefit obligation
Expected return on plan assets
Amortization of adjustment for actuarial assumptions
Amortization of past service cost
Net periodic pension and severance costs

¥836
260
(74)
1,117
(582)
¥1,557

¥792
471
(61)
1,141
(582)
¥1,761

2011

2010

1.3%
2.5%

1.3%
2.5%

Thousands of
U.S. dollars
2011$10,054
3,127
(890)
13,434(6,999)$18,726

The assumptions used were as follows:—
Discount rates
Expected rates of return on plan assets

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

29

(a) Information concerning changes in net assets

Treasury stock
Class of shares

Common stock (shares)

At March 31, 2010

Increase

Decrease

At March 31, 2011

6,822,582

15,185—

6,837,767

Reason for the change:
The increase attributable to the purchase of shares less than one unit: 15,185 shares(b) Stock options(1) Details of the stock options
Company nameDate of resolution
Category and number of individuals to whom
stock options were granted*2

Class of shares and number of stock options
granted (shares) (notes 1 and 2)
Grant dateConditions for vesting
Eligible service period
Exercisable period

Tonami Holdings Co., Ltd.
June 29, 2005
Directors of the Company: 12
Corporate auditors of the Company: 5
Executive officers of the Company: 11
Chairmen and presidents of consolidated subsidiaries who weredeemed eligible by the directors of the Company: 22
Common stock: 1,340,000
August 9, 2005
Not definedNot defined
From July 1, 2007, to June 30, 2010

Notes:
1. The number is converted to the number of shares for presentation.
2. Individuals to whom stock options were granted and the number of stock options granted are those at thetime of resolution.
(2) Scale of stock options and changes
1) Number of stock options
Company nameDate of resolution
Prior to vesting:
At beginning (shares)
Granted (shares)
Expired (shares)
Vested (shares)
Unvested (shares)
After vesting:
At beginning (shares)
Vested (shares)
Exercised (shares)
Expired (shares)
Unexercised (shares)

Tonami Holdings Co., Ltd.
June 29, 2005
—
—
—
—
—
860,000——
860,000—

2) Unit priceCompany nameDate of resolution
Exercise price (yen)Average stock price upon exercise (yen)Fair value on the grant date (yen)Tonami Holdings Co., Ltd.
June 29, 2005
393
—
—

30

15 Income taxes
As described in Note 2(j), the Company and its consolidated subsidiaries recognizes tax effects of temporary
differences between the carrying amounts of assets and liabilities for tax and financial reporting.
Significant components of deferred tax assets and liabilities were as follows:—
Millions of yen
2011
2010

Deferred tax assets:
Excess bonuses accrued
Excess employees’ severance and retirement benefits accrued
Excess loss on impairment of tangible fixed assets (except for leased assets)
Accumulated loss on impairment of leased assets
Other
Gross deferred tax assets
Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Unrealized gain on other securities
Reserve under Special Taxation Measures Law
Total deferred tax liabilities
Net deferred tax assets

Thousands of
U.S. dollars
2011

¥455
5,949
3,216
204
1,180
11,004(4,530)
6,474

¥490
6,174
3,398
221
780
11,063(4,333)6,730$5,473
71,544
38,6752,451
14,196132,339(54,481)
77,858(91)(4,922)(5,014)¥1,460(301)(5,009)(5,310)¥1,420(1,092)(59,191)(60,304)$17,554

Income taxes applicable to the Company consist of corporate income tax, inhabitant taxes and enterprise tax.
Significant differences between the statutory tax rate and the Company’s effective tax rate after applying thedeferred tax accounting for the years ended March 31, 2011 and 2010 were as follows:—

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

2011

2010

40.43%

40.43%

4.42(10.54)19.09(1.73)
9.52
6.24
5.80
73.23%

2.86(7.77)
18.47(2.02)
13.33(20.54)(1.61)
43.15%

16 Supplementary income information
Supplementary income information for the years ended March 31, 2011 and 2010 is as follows:—
Millions of yen
2011
2010

Depreciation expenses
Lease and rental¥3,504
5,368

31¥3,157
6,101

Thousands of
U.S. dollars
2011$42,139
64,56017 Amounts per share
Amounts per share of common stock for the years ended March 31, 2011 and 2010 were as follows:—
Yen

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

2011

2010

¥3.47—4.00¥491.12¥7.737.42
4.00¥494.05

U.S. dollars
2011$0.0417—
0.0481$5.9064

Cash dividends per share represent the cash dividends paid during the respective years together with the interim cash dividends paid.
Basis for the calculation of net assets per share for the years ended March 31, 2011 and 2010 were as
follows:—
Millions of yen
2011
2010

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

Thousands of
U.S. dollars
2011¥45,229$540,533

44,58044,854365
375
Shares97,610,118 97,610,118
6,837,767
6,822,582

536,138
4,395¥44,945

90,772,351

90,787,536

Basis for the calculation of basic and diluted net income per share for the years ended March 31, 2011 and2010 was as follows:—
Millions of yen
2011
2010

Net income available to shareholders of common stock:
Net income
Net income not available to shareholders of common stock(of which appropriation of bonuses to directors
and corporate auditors)
Net income available to shareholders of common stock
Weighted-average number of shares of common stock outstanding (shares)
Diluted net income available to shareholders of common stock:
Adjustments to net income:(of which commission for bonds)
Incremental number of shares of common stock(of which stock acquisition rights)

Common stock equivalents not included in calculation ofdiluted net income per share due to their non-dilutive effectThousands of
U.S. dollars
2011

¥702
—

$3,783
—

(—)
(—)
315
702
90,781,100 90,797,062

(—)
3,783

—
(—)
3,710,045(3,710,045)

—
(—)

¥315
—

—
(—)
—
(—)

*

* (Stock option)
Stock options approved at the annual shareholders’ meeting of the Company held on June 29, 2005
(The number of stock acquisition rights was 860.)

32

18 Segment information(1) Overview of reportable segments
The Company’s segments are the Group’s components for which discrete financial information is available andwhose operating results are regularly reviewed by the Company’s board of directors to make decisions on the
allocation of resources to the segments and to assess their performance.
The Group, in doing business, classifies business models of operating companies, which are under theCompany (pure holding company), according to the nature of services and formulates comprehensive strategies
for individual business models.
Therefore, the Group consists of segments according to services based on these business models and theGroup’s reportable segments are: Logistics, Information Processing, and Sales.
Principal services of the Logistics segment are road haulage, freight forwarding, warehousing, and harbortransport. The principal service of the Information Processing segment is information processing. Principal services of the Sales segment are merchandising, consignment sales, and a non-life insurance agency.
(2)	Methods of calculating operating revenues, income/loss, assets/liabilities, and other items by reportablesegment
Accounting procedures applied to the reported operating segments are the same as those described in the “Basisof Presenting Consolidated Financial Statements.” Income of reportable segments is on an operating income
basis. Intersegment revenues and transfers are based on market prices.
(3) Information on operating revenues, income/loss, assets/liabilities, and other items by reportable segment
For the year ended March 31, 2011
Logistics

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

Millions of yen
Reportable segment
Information
processing
Sales

Total

Others(Note 1)

Total

Adjustment(Note 2)

Consolidated(Note 3)

¥109,031¥2,689¥6,459¥118,179¥800¥118,979¥—¥118,979

8
109,039

188
2,877

5,431
11,8905,627
123,806

822
1,622

6,449
125,428(6,449)(6,449)—118,979

¥281

¥382

¥379

¥1,042¥53¥1,095¥104¥1,199¥105,949¥1,583¥8,726¥116,258¥11,288¥127,546¥(10,134)¥117,412¥3,137

¥286

¥40

¥3,463¥29¥3,492¥12¥3,504

¥103
¥
54

¥14
¥—

¥—
¥—

¥118
¥
54

¥—
¥—

¥118
¥54

¥—
¥—

¥118
¥54

¥4,103

¥305

¥25

¥4,433¥8¥4,441¥(6)¥4,435

33

For the year ended March 31, 2010

Millions of yen

Logistics

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

Reportable segment
Information
processing
Sales

Others(Note 1)

Total

Adjustment(Note 2)

Consolidated(Note 3)

¥103,339¥2,950¥6,593¥112,882¥719¥113,601¥—¥113,601

58
103,397

201
3,151

5,315
11,908

5,574
118,456

626
1,345

6,200
119,801(6,200)(6,200)—113,601(223)¥ 431¥¥102,404¥¥1,738¥ 7,820

411¥111,962¥13,173¥125,135¥ (9,633)¥115,502¥2,922

¥162

¥38

¥3,122¥19¥3,141¥16¥3,157

¥107

¥—

¥—

¥

107

¥—

¥107

¥—

¥

¥3,907

¥202

¥22

¥4,131¥10¥4,141¥(2)¥4,139

Adjustment(Note 2)

Consolidated(Note 3)For the year ended March 31, 2011

¥

619

¥

80

¥

699

¥

35

¥

734

107

Thousands of U.S. dollars

Logistics

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

Total$1,311,251

Reportable segment
Information
processing
Sales$32,342

Total$77,679 $1,421,272

Others(Note 1)

Total

$9,619 $1,430,891$— $1,430,891

107

2,258

65,312

67,677

9,887

77,564(77,564)

1,311,358

34,600142,991

1,488,949

19,506

1,508,455(77,564)—
1,430,891$3,388$4,593$4,556 $12,537$633 $13,170$1,249 $14,419$1,274,200$19,032$104,940 $1,398,172$135,751 $1,533,923$(121,874) $1,412,049$3,445$481 $41,645$347 $41,992$147 $42,139

$173
$—

$— $1,414$— $654$— $1,414$— $654$— $1,414$— $654$3,668$295 $53,322$91 $53,413$(77) $

Other items$37,719
Depreciation
Amortization of$1,241
goodwill$654
Impairment losses
Increases in property
and equipment andintangible fixed assets $49,359

53,336Note 1. “Others” corresponds to operating segments that are not included in the reported operating segments
and includes automobile repair and direct mail service.
Note 2. Adjustments are as follows:(1) Adjustments of segment income
For the fiscal year ended March 31, 2011 and 2010, adjustments of segment income amounted to¥104 million ($1,249 thousand) and ¥35 million, respectively. Adjustments include intersegment
eliminations and corporate expenses not allocated to any reportable segments.
For the fiscal year ended March 31, 2011 and 2010, the above-mentioned intersegment eliminations amounted to ¥764 million ($9,200 thousand) and ¥699 million, respectively, and corporate
expenses not allocated to any reportable segments amounted to –¥660 million ($7,949 thousand)and –¥664 million, respectively. Corporate expenses are mainly expenses of the Company’s operations that do not belong to any reportable segments.

34

(2) Adjustments of segment assets
For the fiscal year ended March 31, 2011 and 2010, adjustments of segment assets amounted to–¥10,134 million ($121,874 thousand) and –¥9,632 million, respectively. Adjustments include
intersegment eliminations and corporate assets not allocated to any reportable segments.
For the fiscal year ended March 31, 2011 and 2010, the above-mentioned intersegment eliminations amounted to –¥19,411 million ($233,439 thousand) and –¥18,171 million, respectively, andcorporate assets not allocated to any reportable segments amounted to ¥9,277 million ($111,565
thousand) and ¥8,539 million, respectively. Corporate assets are mainly cash and time deposits andinvestments in securities of the head office that does not belong to any reportable segments.
(3) Adjustments of increases in property and equipment and intangible fixed assets
For the fiscal year ended March 31, 2011 and 2010, adjustments of increases in property andequipment and intangible fixed assets amounted to –¥6 million ($77 thousand) and –¥3 million,
respectively. Adjustments include intersegment eliminations and corporate assets not allocated to
any reportable segments.
For the fiscal year ended March 31, 2011 and 2010, the above-mentioned intersegment eliminations amounted to –¥7 million ($91 thousand) and –¥5 million, respectively, and corporate assets
not allocated to any reportable segments amounted to ¥1 million ($14 thousand) and ¥2 million,
respectively.
Note 3. Segment income is adjusted to operating income in the consolidated financial statements.
(Additional information)
Effective from the fiscal year ended March 31, 2011, the Company adopted the revised “Accounting Standard
for Disclosures about Segments of an Enterprise and Related Information” (ASBJ Statement No. 17) issued in
March 2009.

(4) Related information
For the year ended March 31, 2011
1) Information by product and service
Information by product and service is omitted because similar information is presented in the segment
information.
2) Information by geographical area
Not applicable for operating revenues because there are no operating revenues from outside customers
other than those in Japan.
Not applicable for property and equipment because there is no property and equipment located inplaces other than Japan.
3) Information by major customer
Not applicable because, concerning operating revenues from outside customers, no outside customer
accounts for 10% or more of operating revenues in the consolidated financial statements.
(5) Information on fixed asset impairment losses by reportable segment
For the year ended March 31, 2011
Information on fixed asset impairment losses by reportable segment is omitted because similar information
is presented in the segment information.

35

(6) Information on amortization of goodwill and unamortized balance by reportable segment
For the year ended March 31, 2011

Millions of yen

Logistics

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

Total

OthersAdjustment

Total

¥103

¥15

¥—

¥118

¥—

¥—

¥118

¥155

¥43

¥—

¥198

¥—

¥—

¥198

¥83

¥—

¥2

¥85

¥—

¥—

¥85

¥307

¥—

¥—

¥307

¥—

¥—

¥307

OthersAdjustment

Total

For the year ended March 31, 2011
Logistics

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

Reportable segment
Information
processing
Sales

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

$1,241

$173

$—

$1,414$—$—$1,414$1,858

$519

$—

$2,377$—$—$2,377

$991

$—

$25

$1,016$—$—$1,016$3,688$—$—$3,688$—$—$3,688(7) Information on gain on negative goodwill by reportable segment
For the year ended March 31, 2011
Not applicable

19 Subsequent events
Cash dividends

The annual shareholders’ meeting of the Company, which was held on June 29, 2011, duly approved the payment of dividends as follows:
Cash dividends (¥2.00 per share)

36

Millions ofyen

Thousands of
U.S. dollars¥181$2,177

Consolidated Subsidiaries

Logistics
Company NameBusiness Line

Tonami Transportation Co., Ltd.

Road haulage

Tonami Transportation Shinetsu Co., Ltd.

Road haulage

Tonami Transportation Chugoku Co., Ltd.

Road haulage

Kanto Tonami Transportation Co., Ltd.

Road haulage

Gosei Tonami Transportation Co., Ltd.

Road haulage

Tonami Shutoken Logistics Co., Ltd.

Road haulage

Osaka Tonami Transportation Co., Ltd.

Road haulage

Zento Transportation Co., Ltd.

Road haulage

Ishikawa Tonami Transportation Co., Ltd.

Road haulage

Ibaraki Tonami Transportation Co., Ltd.

Road haulage

Kansai Tonami Transportation Co., Ltd.

Road haulage

Chukyo Tonami Transportation Co., Ltd.

Road haulage

Fukui Tonami Transportation Co., Ltd.

Road haulage

Niigata Tonami Transportation Co., Ltd.

Road haulage

Takefu Transportation Co., Ltd.

Road haulage

Anan Transportation Co., Ltd.

Road haulage

Nationwide Shirobo JSE Courier Co., Ltd.

Road haulage

Tonami Global Logistics Co., Ltd.

Harbor transport service

Keishin Warehouse Co., Ltd.

Warehousing

Daiichi Warehouse Co., Ltd.

Warehousing

Information Processing and Others
Company NameBusiness Line

Tonami Trading Co., Ltd.

Trading Company

Toyo Gomu Hokuriku Hanbai Co., Ltd.

Sale of tires

Keishin System Research Co., Ltd.

Development and sale of software

Tonami Business Service Co., Ltd.

Financial service

Tonami Stuff Support Co., Ltd.

Detached service

Toyo Tire Toyama shop Co., Ltd.

Sale of tires

Tonami Automobile Technology Research Institute Co., Ltd.

Automobile technology R&D

37

Board of Directors and Corporate Auditors

President and Representative Director
Katsusuke Watanuki
Managing Director
Yasuo Terabayashi

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

Director and Senior Adviser
Yoshihiro Minami
Directors
Shigeki Sakamoto
Shigeyuki Okada
Yoshimi Nagahara
Kazuo Takata
Mitsuharu Wadachi(As of June 29, 2011)

Corporate Data

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

Common Stock¥14,183 million

Tokyo Office
3-8, Higashinihonbashi 3-chome, Chuo-ku,
Tokyo 103-0004, Japan
Phone: (03) 3664-5403
Fax: (03) 3664-5405

Shareholders
7,225

Issued and Outstanding Shares
97,610,118 shares

Date of Established
June 1943

Employees
55(As of March 31, 2011)38

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

Printed in Japan on recycled paper