2013
Annual Report
For the year ended March 31, 2013

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
10 Corporate Social Responsibility Activities
11 Financial Section
39 Consolidated Subsidiaries
40 Board of Directors and Corporate Auditors
40 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, 2013 and 2012
Thousands of
U.S. dollars(Note 1)Millions of yen
2013
2012

2013

FOR THE YEAR:
Operating revenues:¥115,864¥117,710$1,231,949

105,728

107,500

1,124,171

Information processing

2,633

2,718

28,003

Sales

6,717

6,697

71,425

Others

785

795

8,350

Operating income

2,767

1,404

29,430Net income

1,785

633

18,984Comprehensive income

2,215

1,470

23,553

Logistics

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

¥

19.67

Net income, diluted
Cash dividends

¥

6.97

$

0.2091

—

—

—

5.00

4.00

0.0532¥117,189¥116,085$1,246,036

47,64346,046

506,577

AT YEAR-END:
Total assets
Total net assets

Notes: 1. U.S. dollar amounts presented herein are included solely for convenience. The rate of ¥94.05 = U.S.$1, prevailing on March 29, 2013,
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 years ended March 31, 2013 and 2012, since there were no residual securities.

Operating Revenues by
Business Segment
150(Billions of yen)

3

100

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

2.0(Billions of yen)

(Yen)

20

1.5

15

1.5

10

0.5

5

2

50

0

Operating Income

1

’09

’10

’11

’12

’13

0

’09

’10

’11

’12

’13

0

’09

’10

’11

’12

’13

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

Logistics
Information processing
Sales
Others01

0

To Our Shareholders and Investors

President, Katsusuke Watanuki

During the fiscal year ended March 31, 2013, there was steady demand associated with reconstruction in the aftermath of the Great East Japan Earthquake. Following the change of the government
in December 2012, expectations of a recovery of the Japanese economy rose in light of policies forJapan’s revitalization implemented by the Abe administration, the weakening of the yen, and arecovery of share prices.
On the other hand, conditions are expected to remain tough for the real economy, in view of theJapanese government’s announcement of participation in the negotiations on the Trans-PacificPartnership (TPP) Agreement, international tensions in East Asia, the contemplated increase in the
consumption tax, and unstable foreign currency exchange rates.
The distribution industry experienced an upward trend in freight volumes, reflecting a modest
recovery of production and personal consumption, but the situation remained challenging asexports and personal consumption subsequently plateaued.
In these circumstances, the Tonami Holdings Group strove to secure stable revenues from truck
transport and freight forwarding and to expand third-party logistics (3PL), the Group’s priority. At
the same time, we analyzed the profitability of transactions in order to improve margins. As a result,operating revenues amounted to ¥115,864 million, a decrease of 1.6% or ¥1,844 million from theprevious year.
With regard to profits, negative factors included revisions to freight charges and unit rates andconcerns about the possibility of a rise in fuel costs. Nevertheless, operating income increased
97.2% or ¥1,364 million from the previous year to ¥2,767 million, as a result of the promotion of
the structural reform of the business, which is the key policy of the Three-year Medium-term
Business Plan launched in April 2012.
Net income increased 182.2% or ¥1,152 million to ¥1,785 million.
Total annual dividends for the year ended March 2013 amounted to ¥5 per share, including aninterim dividend of ¥2 per share, an ordinary dividend of ¥2 per share, and a special dividend of ¥1
per share to commemorate the 70th anniversary of the company’s foundation.
Results by Segment

The Group strove to expand business with existing customers and cultivate new customers for road
haulage and 3PL services. Partly because the Group sought to minimize unprofitable transactions
and export-related logistics demand remained sluggish, operating revenues from the logistics-related
business decreased 1.6% or ¥1,771 million from the previous year to ¥105,728 million. Segment
income increased 207.4% or ¥1,388 million to ¥2,058 million owing to improved profitability of
the key 3PL services and a reduction in costs through enhanced operational efficiency of the mainstay road haulage service, despite concerns about various factors pushing up costs, such as that offuel.
Operating revenues from the information processing business amounted to ¥2,633 million, adecrease of 3.1% or ¥84 million from the previous year. Segment income was ¥212 million, an
increase of 107.3% or ¥110 million.
Operating revenues from the sales business, which includes merchandising, consignment sales,
and a non-life insurance agency, amounted to ¥6,717 million, an increase of 0.3% or ¥20 million
from the previous year. Segment income decreased 32.9% or ¥141 million to ¥288 million.
02

Operating revenues from other businesses, which include automobile repair and direct mail service, amounted to ¥785 million, a decrease of 1.2% or ¥9 million from the previous year. Segment
income edged down 0.5% or ¥0.6 million to ¥113 million.
Outlook for the Year ending March 31, 2014

The Japanese economy is expected to continue to grow in view of rising exports due to the improving performance of overseas economies and the weaker yen, the positive impacts of the Japanese
government’s economic policies, and last-minute demand in the run-up to the increase in the consumption tax.
On the other hand, the operating environment is likely to remain challenging for the time being
and it is expected to take some time for transportation demand related to freight movement andexports and imports to recover.
In order to continue expanding the business in an environment where markets are shrinking
because of Japan’s declining population and considering the weakening of the yen, logistics companies are not only fulfilling domestic logistics demand but also accelerating globalization and seeking
opportunities in other countries, including emerging-market countries.
The Group aims to continue to strengthen complementary relationships among operating companies and to promote M&A and business alliances with other companies. We are also taking steps toimprove our financial performance by steadily increasing revenues from the logistics business andstrengthening our integrated logistics system that covers both Japan and overseas as we expand
business at our overseas subsidiaries in Dalian, China, and in Thailand.
The Group is also striving to expand business by strengthening its 3PL service that combines
logistics IT systems and logistics services. We seek to continuously improve logistics quality and cut
costs of logistics services in collaboration with customers by adopting cloud-based logistics systems.
We will propose optimal logistics services and actively conduct promotional activities aimed at winning new orders. Furthermore, we intend to enhance operational efficiency by restructuring theoperations of the distribution centers.
Our forecast for the Group’s business results for the year ending March 31, 2014, is as follows:
Operating revenues ¥116,900 million(an increase of 0.9% year on year)
Operating income ¥3,000 million(an increase of 8.4% year on year)¥1,890 million(an increase of 5.9% year on year)
Net income
Note: The forecast of consolidated business results presented above is based on certain assumptions that management
believes reasonable at the time of announcement and may be revised.

Positioning the enhancement of profitability through structural reform of our business and the
expansion of the scale of business and the strengthening of market competitiveness through the creation of new logistics businesses as vital management issues, the Group launched the 19th Threeyear Medium-Term Business Plan in April 2012 under the slogan “The Road to Self-Innovation!
Innovation Plan 19.”
The Tonami Holdings Group will vigorously promote joint sales & marketing among Group companies. As the business environment becomes increasingly sophisticated and diversified, we will
promote restructuring by making full use of information and communication technology (ICT) as amanagement strategy and starting operation of a “business management system” that provides powerful support to the core business with the aim of maximizing corporate value.
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 2013
Katsusuke Watanuki
President and Representative Director

03Operating Subsidiaries and Affiliates
Transportation business:

Group companies that support
business activities in Asia

Tonami Transportation
Tonami Transportation Shinetsu
Tonami Transportation Chugoku
and other companies

Group companies that support
domestic business operations

Warehousing business:

Tonami Transportation
Keishin Warehouse
Tonami Global Logistics Daiichi Warehouseand other companies

Tonami Logistics (Dalian)

IT System:

Keishin System Research

Financial Services

Tonami Business Service

Temporary Staffing
Tonami Staff Support

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

Mahaporn Transport
H&R Forwarding

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, Toyo Tire Toyama shop,
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

Board of Directors(Representative directors)(Directors)

OpinionSupervision

Election

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

Reporting

Independent auditors

Internal Audit Office
Auditing

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

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.

06

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

4) State of Internal Auditing and Auditing by Corporate Auditors
The Internal Audit Office (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 of
Directors on Internal Audit Office staff changes require approval of the Board of Corporate Auditors.
The Internal Audit Office conducts periodic and unscheduled internal audits of the Company’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
No outside directors are appointed by the Company.
In accordance with the provisions of Paragraph 3, Article 335 of the Companies Act, five corporate
auditors, including standing and part-time corporate auditors, are appointed by the Company, threeof whom are outside corporate auditors, and therefore uninvolved in the execution of the business of
the Company, who conduct auditing from a third-party standpoint in order to strengthen the auditing function.
The Company considers that outside 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.
Three outside corporate auditors are appointed by the Company. Their function is to state appropriate opinions, as necessary, as experienced experts. The role of outside corporate auditors is tocontribute to enhancement of transparency and accountability of the Board of Directors throughauditing of the compliance of the directors by attending meetings of the Board of Directors and otherimportant meetings, by offering their opinions, and by other means.

07

The Company considers individuals who have no personal, capital, or business relationships with
the Company or other interests in the Company, possess expertise, and are capable of overseeing
management based on excellent insight to be suitable for election as outside corporate auditors.
None of the three outside corporate auditors have any of the above-mentioned relationships with
the Company. The Company appointed one of the three outside corporate auditors as an independent officer as required by the Tokyo Stock Exchange and has notified the Tokyo Stock Exchange
accordingly.
Although Outside Corporate Auditor Mr. Yohji Ishiguro, who is the independent officer appointed
by the Company, owns shares of the Company, the capital relationship between him and theCompany is negligible and he has no business relationships with the Company or other interests in
the Company.
Outside Corporate Auditor Mr. Toshio Kaido has no capital or business relationships with theCompany or other interests in the Company.
Outside Corporate Auditor Mr. Shinichiro Inushima used to work for The Hokuriku Bank, Ltd.,
which is a customer of the Company and is also a shareholder of the Company. These facts, however,
have no impact on objective decisions of shareholders and investors because Outside Corporate
Auditor Mr. Inushima himself has no interests in the Company. Outside Corporate Auditor Mr.
Inushima has no capital relationships with the Company or other interests in the Company.
The Company has concluded limited liability contracts with the outside corporate auditors. The
outside corporate auditor’s liability for damages is limited to the sum of compensation and other feesthat the outside corporate auditor received from the Company during his/her term of office or thesum of property benefits that he/she is to receive for each fiscal year, whichever the higher.
(Internal structure as an alternative to a structure under which outside directors are elected andreasons for adopting such a structure)
The Company has adopted a “company with auditors and with board of auditors” system as its
corporate governance structure based on the judgment that management by the Board of Directors
consisting of internal directors who are well versed in the Company’s operations is suitable for theCompany, which is a logistics company. Meanwhile, the Company is enhancing the effectiveness of
the audit function of corporate auditors.
Regarding management transparency, the Company believes that a structure is in place that canfully function in terms of management supervision because the Company has appointed three independent outside corporate auditors.

08

(2) State of Development of the Risk Management Structure

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

09Corporate Social Responsibility Activities

Basic Policy on Corporate Social Responsibility
Adhering to the action principle “Ensure compliance throughout business activities,” the Tonami Holdings Groupendeavors 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 arecommitted to fulfilling these responsibilities by adhering to corporate ethics, ensuring compliance with laws and regulations, and enhancing corporate governance.
The Group is making a concerted effort involving all employees to minimize the waste of energy throughout its
business activities. This effort involves improved logistics efficiency, our initiative to promote environmentally friendly
driving through the introduction of digital tachographs, and joint delivery.
As the actions of human beings have environmental impacts, environmental protection, not least initiatives toreduce CO2 emissions, has risen to the top of the global agenda.
Constraints on electricity supply in the aftermath of the Great East Japan Earthquake spurred concerted efforts tominimize the consumption of electricity. Moreover, the disruption caused by the earthquake brought home theimportance of business continuity planning, prompting companies to construct back-up systems for their missioncritical information. The Group is working to enhance the information security of its Internet data center (IDC) business. An important milestone in that regard was the Group’s gaining of ISMS certification for its information security
management system.
We are reinforcing our commitment to CSR by executing socially responsible business activities in accordance with
our mission.
With an eye to the prosperity and quality of life of future generations, the Group endeavors to achieve sustainablegrowth of the business while minimizing environmental impacts. In this way, we are striving to fulfill our social
responsibility.
Principal CSR Initiatives and State of Implementation
Environmental Protection Activities
Recognizing that environmental protection is a crucially important theme
that concerns the maintenance of the ecosystem, adhering to our principle—“Contribute to society through transportation and strive to protect
the environment”—we will act in accordance with the following policies.
1. We will do the following to mitigate environmental pollution associatedwith transportation services:(a) We will introduce environmentally friendly vehicles.
This truck runs on natural gas(b) We will practice environmentally friendly driving.
(c)	We will create eco-friendly distribution systems through more efficient distribution.
(d)	We will establish a recycling system to contribute to establishment of a recycling-based society.
Annual social and(e)	We will promote development and provision of environmentally friendly products.
environmental report(f)	We will make continuous efforts to save resources and energy and to achieve improvements everyday.
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 throughvarious 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.
10

A clean-up in progressFinancial Section

12

Consolidated Five-Year Summary

13

Consolidated Financial Review

16

Consolidated Balance Sheets

18

Consolidated Statements of Income and Consolidated Statements of Comprehensive Income

19

Consolidated Statements of Changes in Net Assets

20

Consolidated Statements of Cash Flows21

Notes to the Consolidated Financial Statements

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

2009

2010

2011

2012

2013

Thousands of
U.S. dollars
2013

Operating revenues¥126,930¥113,601¥118,979¥117,710¥115,864$1,231,949

Operating cost

119,596

106,522

111,355

110,069

106,908

1,136,721

6,664

6,345

6,425

6,237

6,188

65,798Operating income

670

734

1,199

1,404

2,767

29,430Net income

244

702

315

633

1,785

18,984

2,848

3,157

3,504

3,882

4,286

45,575¥2.69¥7.73¥3.476.97¥19.67$0.2091

5.00

4.00

4.00

4.00

5.00

0.0532¥34,702¥33,860¥35,723¥ 33,045¥33,538$356,599

Net property and equipment

66,63369,44770,037

71,597

71,856764,022

Total assets

113,141

115,502

117,412116,085

117,189

1,246,036

Total current liabilities

34,24832,61733,98934,222

36,279385,752

Long-term liabilities, excluding of current portion thereof

34,011

37,65638,47835,81733,266

353,707

Total net assets

44,88245,22944,94546,04647,643

506,577

7,361

7,235

7,025

6,762

6,561

Millions of yen

RESULTS OF OPERATIONS:

Selling, general and administrative expenses

Depreciation expenses
PER SHARE (yen and U.S. dollars):
Net income
Cash dividends¥

YEAR-END FINANCIAL POSITION:
Total current assets

OTHER YEAR-END DATA:
Number of employees

12Consolidated Financial Review

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

Significant Accounting Policies and Estimates

The consolidated financial statements of the Tonami Holdings Group have been prepared in accordance withaccounting principles generally accepted in Japan. Estimates used in the preparation of the consolidated financial statements that may affect the reported amounts of assets and liabilities on the closing date and the reported revenues and expenses for the reporting period are principally deferred tax assets, the allowance for
doubtful accounts, 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, 2013, operating revenues decreased 1.6% year on year to ¥115,864
million, partly due to sluggish export-related logistics demand. This result also reflected the Group’s efforts tominimize unprofitable transactions in its growing mainstay business, namely the road haulage operations andfreight forwarding operations, as well as in the 3PL services.
Composition of Operating Revenues
Percentage pointchange from theprevious year

Composition

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

−0.1
+0.1
−0.2
−0.0
−0.0
+0.1
−0.0

91.2%
69.6
16.5
5.1
2.3
5.8
0.7

Operating Cost

Operating cost decreased 2.9% year on year to ¥106,908 million. Although there were factors increasing costs,
such as rising prices of diesel oil and raw materials, the Group’s efforts to improve operational efficiency andreduce facilities costs as well as the drive to minimize unprofitable transactions resulted in enhanced profitability.
As a result, the ratio of operating cost to operating revenues decreased 1.2 percentage points from the previous
year to 92.3%.
Selling, General and Administrative Expenses

Selling, general and administrative expenses decreased 0.8% year on year to ¥6,188 million. The main reason
was management integration of subsidiaries included in the scope of consolidation. The ratio of selling, generaland administrative expenses to operating revenues was unchanged from the previous year at 5.3%.
As a result, operating income increased 97.2% year on year to ¥2,767 million. The ratio of operating income
to operating revenues was 2.4%, an increase of 1.2 percentage points from the previous 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

’09

’10

’11

’12

’13

0

’09

13

’10

’11

’12

’13

0

(Billions of yen)

’09

’10

’11

’12

’13

Net Income

Income before income taxes and minority interests was ¥3,115 million, up 66.5% year on year. Net income
soared 182.2% year on year to ¥1,785 million.

Analysis of Cash Flows

Cash and cash equivalents on a consolidated basis for the year under review increased ¥1,053 million from theprevious year to ¥9,645 million as a result of net cash provided by operating activities amounting to ¥5,637 million, net cash used in investing activities amounting to ¥2,911 million, and net cash used in financing activities
amounting to ¥1,671 million.
Cash Flows from Operating Activities

Net cash provided by operating activities totaled ¥5,637 million, an increase of ¥1,273 million from the previous year.
Principal items were income before income taxes and minority interests amounting to ¥3,115 million anddepreciation and amortization amounting to ¥4,286 million.
Cash Flows from Investing Activities

Net cash used in investing activities totaled ¥2,911 million, a decrease of ¥539 million from the previous year.
The principal item was payments of ¥3,310 million for the purchase of property and equipment.
Cash Flows from Financing Activities

Net cash used in financing activities totaled ¥1,671 million, a decrease of ¥1,789 million from the previous year.
Cash outflows included a net decrease in short-term loans amounting to ¥3,100 million and repayment oflease obligations amounting to ¥2,127 million, whereas proceeds from issuance of bonds amounted to ¥5,000
million.

Analysis of the Financial Position
AssetsCurrent assets were ¥33,538 million, an increase of 1.5% from the previous fiscal year-end. This increase wasmainly attributable to a ¥1,065 million increase in cash and time deposits.
Property and equipment amounted to ¥71,856 million, an increase of 0.4% from the previous fiscal year-end.
This increase was attributable to a ¥343 million increase in buildings and structures.
Investments and other assets were ¥11,795 million, an increase of 3.0% from the previous fiscal year-end,
mainly owing to a ¥920 million increase in investments in securities.
As a result, total assets amounted to ¥117,189 million, an increase of 1.0% from the previous fiscal year-end.
Liabilities

Current liabilities were ¥36,279 million, an increase of 6.0% from the previous fiscal year-end. This increase wasmainly due to a ¥1,896 million increase in current portion of long-term debt and a ¥3,000 million increase incurrent portion of bonds, whereas short-term bank loans decreased ¥3,100 million.
Long-term liabilities were ¥33,266 million, a decrease of 7.1% from the previous fiscal year-end. Thisdecrease was mainly attributable to a ¥972 million decrease in long-term debt including corporate bonds and a¥1,261 million decrease in employees’ severance and retirement benefits.
As a result, total liabilities amounted to ¥69,546 million, a decrease of 0.7% from the previous fiscal year-end.
Net assets

Net assets amounted to ¥47,643 million, an increase of 3.5% from the previous fiscal year-end. Main factors
were a ¥1,509 million increase in retained earnings as a result of booking of net income of ¥1,785 million and a¥419 million increase in unrealized gain on other securities.

Sales of Other Business

1.5(Billions of yen)

Net Income

Operating Cost andOperating Income
150(Billions of yen)3

2.0(Billions of yen)

1.5
100

1.0

2
1.0

50

0.5

1
0.5

0

’09

’10

’11

’12

’13

0

’09

’10

’11

’12

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

14

’13

0

0

’09

’10

’11

’12

’13

Risk Factors

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

Strategic Position and Outlook

The Japanese economy is expected to continue to grow in view of rising exports due to the improving performance of overseas economies and the weaker yen, the positive impacts of the Japanese government’s economic
policies, and last-minute demand in the run-up to the increase in the consumption tax.
On the other hand, the operating environment is likely to remain challenging for the time being and it isexpected to take some time for transportation demand related to freight movement and exports and imports torecover.
In these circumstances, the Group is implementing a growth strategy in accordance with its Three-year
Medium-Term Business Plan launched in April 2012. Positioning the enhancement of profitability throughstructural reform of our business and the expansion of the scale of business and the strengthening of market
competitiveness through the creation of new logistics businesses as vital management issues, the Group is pursuing initiatives to enhance the quality and added value of logistics attuned to customer needs.
We are also upgrading our IT infrastructure, including computer networks , and are striving to enhance ourcapabilities for providing customer service and proposing solutions. By promoting international multimodaltransport through collaboration with overseas bases, we aim to secure and expand the freight volume we handle. By deploying the business management system to maximum effect, we will sharpen our focus on enhancement of productivity and strengthening of the business foundation.

Net Cash Used in Investing
Activities

Net Cash Provided byOperating Activities
6(Billions of yen)

0(Billions of yen)

Total Assets andTotal Net Assets
150(Billions of yen)

-1
100

4
-2

50

2
-3

0

’09

’10

’11

’12

’13

-4

’09

’10

’11

’12

’13

0

’09

’10

Total assets
Total net assets

15

’11

’12

’13

Consolidated Balance Sheets
TONAMI HOLDINGS CO., LTD.
AND CONSOLIDATED SUBSIDIARIESAs of March 31, 2013 and 2012ASSETS

Thousands of
U.S. dollars(Note 1)
2013

Millions of yen
2013
2012

Current assets:
Cash and time deposits (Notes 11 and 13)

8,636$103,154

20,191

20,019214,694

(65)

(45)

(696)

Investments in lease assets

241

376

2,572

Inventories

546

606

5,810

¥9,701¥

Marketable securities
Trade receivables:
Notes and accounts (Notes 5, 8 and 13)
Less: allowance for doubtful accounts

Deferred tax assets (Note 18)

527

511

5,607

2,394

2,942

25,45833,53833,045356,599Land

41,08541,304

436,850

Buildings and structures

21,684

21,341

230,562

Machinery and vehicles

2,130

2,050

22,653

Leased assets

6,095

6,057

64,810Construction in progress

72

92

776

Other

787

753

8,371

71,856

71,597764,022

6,551

5,631

69,655

Deferred tax assets (Note 18)

—

298

—

Good will

19

95

212

5,224

5,419

55,548

11,795

11,443

125,414¥117,189¥116,085$1,246,036

Other current assets
Total current assets

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

Total property and equipment

Investments and other assets:
Investments in securities (Note 14)

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

16

LIABILITIES AND NET ASSETS

Thousands of
U.S. dollars(Note 1)
2013

Millions of yen
2013
2012

Current liabilities:
Short-term bank loans (Notes 4 and 12)
Current portion of long-term debt (Notes 4, 7, 12 and 14)
Current portion of bonds (Note 6)
Trade notes and accounts payable (Notes 8 and 12)
Lease obligations (Note 12)
Income taxes payable
Other current liabilities¥10,390
3,104
3,000
11,341
2,137
607
5,698

¥ 13,490
1,208—
10,928
1,930
416
6,250

$110,473
33,00631,898120,591
22,7306,464
60,591

36,27934,222385,752

9,480
4,793
317
4,694
12,817117
153
892
33,26669,546

10,453
5,083
—
4,742
14,079154
1,076
35,81770,039100,804
50,965
3,375
49,910136,286
1,248
1,630
9,489
353,707739,459

14,183
11,682
16,51614,183
11,682
15,007150,799
124,213
175,616(2,018)(2,016)(21,459)

Total shareholders’ equity
Other comprehensive income
Unrealized gain on other securities (Note 13)
Revaluation reserve for land (Note 6)

40,36338,856429,169

846
6,326

427
6,413

9,001
67,263

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

7,172

6,840

76,264

107
47,643¥117,189

350
46,046¥116,085

1,144
506,577$1,246,036

Total current liabilities
Long-term liabilities:
Long-term debt, less current portion thereof (Notes 4, 7, 12 and 14)
Lease obligations (Note 12)
Deferred tax liability
Deferred tax liabilities from revaluation reserve for land (Note 6)
Employees’ severance and retirement benefits (Note 15)
Retirement benefits for directors and corporate auditors
Negative goodwill
Other long-term liabilities
Total long-term liabilities
Total liabilities
Net assets
Shareholders’ equity (Note 16):
Common stock:
Authorized: 299,200,000 shares in 2013
299,200,000 shares in 2012
Issued: 97,610,118 shares in 2013
97,610,118 shares in 2012
Capital surplus
Retained earnings
Treasury stock, at cost: 6,857,237 shares in 2013
6,845,870 shares in 2012

17

230

Consolidated Statements of Income and Consolidated Statements of Comprehensive Income
TONAMI HOLDINGS CO., LTD.
AND CONSOLIDATED SUBSIDIARIESFor the years ended March 31, 2013 and 2012
Thousands of
U.S. dollars(Note 1)
2013

Millions of yen
2013
2012

Operating revenues (Note 21):
¥115,864¥117,710$1,231,949

115,864

117,7101,231,949

106,908

110,069

1,136,721

6,188

6,237

65,798113,096

116,306

1,202,519

2,767

1,404

29,430Interest and dividend income

326

292

3,470

Equity in earnings of unconsolidated subsidiaries and affiliates

59

53

632

Loss on sale of property and equipment, net

70

304

749

Interest expenses

(487)

(500)

(5,187)

Impairment losses

(61)

—

(653)

Gain on negative goodwill

117

—

1,244

Settlement package

(113)

—

(1,207)

Other, net

436

318

4,646

347

467

3,695

3,115

1,871

33,125Current

985

701

10,482

Deferred

334

548

3,562

1,319

1,249

14,044

1,794

622

19,081

9

(11)

97

¥1,785¥633$18,984

9

(11)

97

1,794

622

19,081

Valuation difference on other securities

416

175

4,433

Revaluation reserve for land

—

678

—

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

3

(5)

39

Operating revenues
Operating costs and selling, general and administrative expenses:
Operating cost (Note 19)
Selling, general and administrative expenses (Note 19)
Operating income (Note 21)
Other income and expenses:

Income before income taxes and minority interests
Income taxes (Note 18):

Net income before minority interests
Minority interests
Net income
Minority interests
Net income before minority interests
Other comprehensive income (Note 10)

Total other comprehensive income
Total comprehensive income for the year

420

848

4,472

¥2,215¥1,470$23,553¥2,205¥1,481$23,446

10

(11)

107

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

18

Consolidated Statements of Changes in Net Assets
TONAMI HOLDINGS CO., LTD.
AND CONSOLIDATED SUBSIDIARIESFor the years ended March 31, 2013 and 2012

Millions of yen
Shares ofcommonstock(thousands)

Balance as at April 1, 2011

Cash dividends applicable tothe year (¥4.00 per share)
Net income
Reversal of Revaluation reserve for land
Treasury stock
Net changes in items other thanshareholders’ equity

Balance as at March 31, 2012
Balance as at April 1, 2012

Commonstock

CapitalsurplusTreasurystock

97,610 ¥14,182 ¥11,682 ¥14,685¥(2,014) ¥38,535

(363)
632
51

(363)
632
51
(1)

97,610 ¥14,182 ¥11,682 ¥15,007
97,610 ¥14,182 ¥11,682 ¥15,007
Shares ofcommonstock(thousands)

Commonstock

Capitalsurplus

Cash dividends applicable tothe year (¥4.00 per share)
Net income
Reversal of Revaluation reserve for land
Treasury stock
Net changes in items other thanshareholders’ equity

Balance as at March 31, 2013

Retainedearnings

Accumulated
Total
Unrealized Revaluation other comshareholders’ gain on other reserve
prehensive
equitysecurities
for landincomeRetainedearnings

(363)
1,785
87

(1)

¥(2,016) ¥38,855¥(2,016) ¥38,855
Treasury
stock

(2)

¥257

¥5,787¥6,044

Minority
interests¥365 ¥44,945
(363)
632
51
(1)

169
¥426
¥426

626
¥6,413¥6,413796¥6,840¥6,840

Accumulated
Total
Unrealized Revaluation other comshareholders’ gain on other reserve
prehensive
equitysecurities
for landincome(15)780¥349 ¥46,045¥349 ¥46,045
Minority
interests

(363)
1,785
87
(2)

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

Total
net assets

Total
net assets

(363)
1,785
87
(2)
419
¥846

(87)
332
¥6,326 ¥7,172

(242)
90
¥107 ¥47,643

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

Balance as at April 1, 2012

Cash dividends applicable tothe year ($0.0425 per share)
Net income
Reversal of Revaluation reserve for land
Treasury stock
Net changes in items other thanshareholders’ equity

Balance as at March 31, 2013

CapitalsurplusRetainedearnings

Treasurystock

Accumulated
Total
Unrealized Revaluation other comshareholders’ gain on other reserve
prehensive
equitysecurities
for landincome$150,799 $124,213 $159,565 $(21,437) $413,140(3,861)
18,984928(3,861)
18,984
928
(22)
(22)

—
$150,799 $124,213 $175,616 $(21,459)$429,169

The accompanying Notes are an integral part of these statements.

19$4,539 $68,191 $72,730

Minority
interests

Total
net assets$3,720 $489,590(3,861)
18,984
928
(22)

4,462
(928) 3,534$9,001 $67,263 $76,264(2,576)958$1,144 $506,577

Consolidated Statements of Cash FlowsTONAMI HOLDINGS CO., LTD.
AND CONSOLIDATED SUBSIDIARIESFor the years ended March 31, 2013 and 2012

Millions of yen
2013
2012

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

Thousands of
U.S. dollars(Note 1)
2013

¥3,115
4,286
61
(70)
(0)
5
3
4
(117)
(59)
54
(1,261)
(37)
(9)
(326)
487
(172)
59
413
287
(85)
6,638
326
(516)
(811)
5,637

¥1,871
3,882
—
(304)
0
13
2
26
—
(53)
(3)
(575)
(41)
0
(291)
500
417
69
(32)
(222)
153
5,412
292
(502)
(838)
4,364

$33,125
45,575
653
(749)
(3)
55
35
45
(1,244)(632)
584(13,415)
(394)
(100)
(3,470)5,187(1,834)
630
4,399
3,053
(912)
70,584
3,470(5,487)(8,626)59,941

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
Purchase of investments in subsidiaries
Investments in loans receivable
Proceeds from collection of loans receivable
Other, net
Net cash used in investing activities(34)
22(3,310)
717
(173)
1
(201)
(199)
240
25
(2,911)(34)
22(3,609)
439
(20)
3
(0)
(251)
42
(44)
(3,452)(362)
234(35,200)
7,632(1,847)13(2,143)(2,124)2,560
275(30,961)

Cash flows from financing activities:
Net decrease in short-term loans
Proceeds from long-term debt
Repayment of long-term debt
Proceeds from bond issuance
Repayments of lease obligations
Purchase of treasury stock
Dividends paid
Dividends paid to minority interests
Net cash used in financing activities(3,100)165(1,240)5,000(2,127)
(2)
(363)
(3)
(1,671)(100)—(1,354)—(1,638)
(1)
(363)
(5)
(3,461)(32,961)
1,754(13,189)
53,163(22,617)(22)(3,861)(41)(17,773)

1,053
8,591
¥9,645(2,549)
11,140¥8,591

11,20791,352$102,558

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 11)
The accompanying Notes are an integral part of these statements.

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

1 Basis of presenting financial statements
The accompanying consolidated financial statements have been prepared based on the accounts 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 the2012 financial statements to conform to the classifications used in 2013.
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 ¥94.05 to
U.S.$1, the approximate rate of exchange at March 29, 2013. 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, 2013 include the accounts of theCompany and its 27 (27 in 2012) consolidated subsidiaries and 7 (6 in 2012) 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. Three subsidiaries considered insignificant in view of total assets, operating revenues, net income and retained earnings are excluded
from the scope of consolidation and not accounted for by the equity method.
The difference between the cost of an acquisition and the fair value of the net assets of the acquired subsidiary at the date of acquisition is being equally amortized over a period of 5 years after incurred. However, if theamount is immaterial, it is fully charged to income at the date of acquisition.
All significant intercompany balances and transactions have been eliminated in consolidation.
(b) Marketable securities and investments in securities

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

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

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

Property and equipment are stated at cost. However, under Japanese tax law, capital gains arisen from disposals
and other similar transactions are deducted from the cost of the property and equipment acquired in
substitution.
Depreciation of property and equipment, except for leased assets, is computed by the declining balancemethod over the useful life of the assets as determined by law, except for buildings and structures, which are21

depreciated by the straight-line method.
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. Saidamount is computed by applying the rate of actual losses on collection experienced in the past with respect togeneral trade receivables and by individually reviewing their collectibility with respect to certain doubtfulreceivables.
(g) 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.
Additional information
The Company intends to apply the ASBJ Statement No. 26 Accounting Standard for Retirement Benefits issued
in May 2012 effective from the end of the fiscal year beginning April 1, 2013. However, the Company intends
22to apply the amendments relating to determination of retirement benefit obligations and current service costs
effective from the beginning of the fiscal year beginning April 1, 2014. The impact of application of thisaccounting standard is currently being evaluated.

3 Property and equipment
Property and equipment is stated at the net book value in the consolidated balance sheets. The amounts ofaccumulated depreciation were ¥55,043 ($585,261 thousand) million and ¥52,541 million on March 31, 2013
and 2012, respectively.
Capital gains resulting from disposals and other similar transactions are deducted from the cost of property
and equipment acquired in substitution. The amounts deducted from the cost of property and equipment were¥180 million ($1,915 thousand) and ¥180 million on March 31, 2013 and 2012, respectively.

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

Short-term bank loans as at March 31, 2013 and 2012 were as follows:—
Millions of yen
2013
2012

SecuredUnsecured¥3,020
7,370¥3,120
10,370Thousands of
U.S. dollars
2013$ 32,111
78,362

Interest rates range from 0.580% to 1.550%.
(b) Long-term debt

Long-term debt as at March 31, 2013 and 2012 was as follows:—
Millions of yen
2013
2012

2.11% ¥3.0 billion unsecured straight bonds due 2013
1.01% ¥5.0 billion unsecured straight bonds due 2016
0.580%-2.520% loans from financial institutions due 2013 to 2017
and thereafter:
SecuredUnsecured
Total
Less: amount due within one year

Thousands of
U.S. dollars
2013¥3,000
5,000¥3,000—$31,898
53,163

1,052
6,532
15,584
6,104¥9,480

1,053
6,400
10,453
1,208¥9,245

11,192
69,455
165,708
64,904$100,804

The maturity date of the ¥3.0 billion 2.11% unsecured straight bonds, issued in June 2008 was June 5, 2013.
The maturity date of the ¥5.0 billion 1.01% unsecured straight bonds, issued in March 2013 is March 22,
2016.
The annual maturities of long-term debt outstanding as at March 31, 2013 are as follows:—
Year ending March 31,

Millions ofyen

Thousands of
U.S. dollars

2014
2015
2016
2017
2018 and thereafter¥ 6,104
3,508
5,626
98
247

$ 64,904
37,301
59,825
1,052
2,627(c) Pledged assets

Property and equipment having a net value of ¥13,415 million ($143,537 thousand) was pledged as collateralfor short-term bank loans and long-term debt as at March 31, 2013.

23

5 Contingent liabilities
As at March 31, 2013, the Company was contingently liable as follows:—
Notes endorsed
OthersMillions ofyen

Thousands of
U.S. dollars

¥10
235

$113
2,507

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, 2013
and the revalued book value

Millions ofyen

Thousands of
U.S. dollars¥12,193$129,646

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, 2013, was as follows:
Maximum credit line of overdraft facility and commitment agreement
Used credit
Total

Millions ofyen

Thousands of
U.S. dollars¥3,000—¥3,000$31,898—$31,898

	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, 2013: ¥6,400 million ($68,049 thousand)) include restrictive financial covenants requiring
assets at a fiscal year-end to exceed the predetermined amount.

8 Notes due at the end of the fiscal year
Notes due at the end of the fiscal year are treated as if they were settled on the due date.
Since the last day of the fiscal year, March 31, 2012, was a holiday for financial institutions, the following
notes due at the end of the fiscal year were treated as if they were settled on the due date.
Notes receivable
Notes payable

Millions ofyen

Thousands of
U.S. dollars

¥403
198

$4,2892,114

9 Impairment losses
During the fiscal year ended March 31, 2013, the Group recorded an impairment loss on land and buildings(in Fukui-shi, Fukui Prefecture).
As a comprehensive logistics enterprise, the Group employs management accounting at offices that belong toroad haulage business or other business groups.
The Group’s business sites nationwide are the Group’s bases for offering services as a comprehensive logistics
enterprise to customers and, in many cases, offices of two or more business groups are located at a business site
to respond to customers.
Offices of business groups complement one another and a business site is a unit that generates cash flows.
Thus, the aggregate of assets of business groups’ offices located at a business site constitutes an asset group.
24Regarding the asset group for which an impairment loss was recorded, the sum of estimated future cash
flows from the asset group in question is less than its book value owing to an increase in payables to subcontractors and a rise of fuel costs because of increasing crude oil prices. Thus, the book value of the asset group
was reduced to the recoverable amount and the difference amounting to ¥61 million ($653 thousand) was recognized as impairment losses and reported under other expenses.
The amounts of impairment losses for land and buildings were ¥11 million ($119 thousand) and ¥50 million ($533 thousand), respectively.
For the land and buildings in the asset group in question, the recoverable amount is measured by means of
the net sale value. The net sale value is assessed principally based on the appraisal value quoted by a real-estateappraiser. For immaterial assets, the net sale value is assessed based on the residual book value.

10 Consolidated statement of comprehensive income
Reclassification adjustments and tax effects relating to other comprehensive income
Millions of yen
2013
2012

Valuation difference on other securities:
Amount arising during the year
Reclassification adjustment
Before tax-effect adjustment
Tax effect
Valuation difference on other securities
Revaluation reserve for land:Tax effect
Share of other comprehensive income of affiliates accounted for using equity method:Amount arising during the year
Total other comprehensive income

Thousands of
U.S. dollars
2013

¥628
5
633
(216)
416

¥233
9
242
(67)
175

$6,67854
6,732(2,299)
4,433

—

678

—

3
420

(5)
848

39
4,472

11 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, 2013 and 2012 are as follows:—
Millions of yen
2013
2012

Cash and time deposits
Time deposits with maturities exceeding three months
Cash and cash equivalents¥9,701(56)¥9,645¥8,636(45)¥8,591Thousands of
U.S. dollars
2013$103,154(595)$102,558

12 Leases(a) Finance leases other than those which are deemed to transfer the ownership of the leased assets to the lessee● Contents of leased assets:		 Tangible fixed assets (mainly, machinery, equipment and vehicles for distribution related business)● Depreciation method:		Leased assets are depreciated by the straight-line method over the respective lease periods without residual values. However, if the guaranteed salvage value is specified in the lease contracts, they are depreciatedby the straight-line method considering such salvage value.
(b) Finance lease transactions which commenced prior to April 1, 2008 and do not transfer ownership of theleased assets to the lessee are accounted for as operating lease transactions as before.
The following are pro forma amounts of the acquisition costs, accumulated depreciation, accumulated
impairment losses and net book value of leased property if they were capitalized as of March 31, 2013 and2012 for finance leases accounted for as operating leases:—25

Millions of yen
2013
2012

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
2013¥2,473
5,833¥8,307¥5,3455,834¥11,179$26,295
62,020$88,325¥2,2492,473¥4,723¥4,6482,227¥6,876$23,913
26,295$50,218

¥

—
756
¥ 756

¥—
756
¥756

$

¥ 223
2,603
¥2,827¥697
2,850¥3,547$ 2,371
27,677$30,058—
8,038$ 8,038

Amounts of depreciation expense equivalents and interest expense equivalents for the years ended March 31,
2013 and 2012 are as follows:—
Millions of yen
2013
2012

Depreciation expense
Interest expense

¥521
106

¥979
134

Thousands of
U.S. dollars
2013$5,5401,127

Lease payments relating to finance leases accounted for as operating leases amounted to ¥735 million ($7,818 thousands) and ¥1,230 million, which were equal to the depreciation expense of the leased assets computed by thestraight-line method over the lease terms, for the years ended March 31, 2013 and 2012, respectively.
In the year ended March 31, 2006, impairment losses on leased assets amounting to ¥756 million were recorded. Since these leased assets are off-balance-sheet, the equivalent amount is included in “Other long-term
liabilities”.
Impairment losses on leased assets is realized over the lease term. Reversal of impairment losses on leased assets
recorded in the fiscal year ended March 31, 2013 and 2012, amounted to ¥42 million ($446 thousand) and ¥42
million, respectively.
Future minimum lease payments (including the interest portion thereon) and the balance of impairment losses
on leased assets as at March 31, 2013 and 2012 for finance leases accounted for as operating leases are summarized
as follows:—
Millions of yen
2013
2012

Due within one year
Due over one year
Total

¥ 283
3,053
¥3,337¥ 420

Impairment losses on leased assets

¥ 796
3,337
¥4,133¥ 462

Thousands of
U.S. dollars
2013$ 3,00932,461$35,481$ 4,466(c) Operating leases
Millions of yen
2013
2012

Due within one year
Due over one year
Total

¥ 273
2,753
¥3,026

26

¥ 274
3,027
¥3,300Thousands of
U.S. dollars
2013$ 2,903
29,272$32,174

13 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,
the Group has established the risk management system to monitor and control payment term and balancesof customers.
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, 2013
and 2012 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

¥9,701
3,349
16,842
4,102¥33,996¥9,701
3,349
16,842
4,102¥33,996

¥ —
—
—
—
¥ —

¥936
10,405
10,390
8,000
7,584
6,930
¥44,247—¥936
10,405
10,390
7,989
7,663
7,317
¥44,702
—

¥ —
—
—
(11)
79
387
¥455
—

Carrying
amountMillions of yen
Fair
value

¥ 8,636
3,636
16,3833,330¥31,985¥ 8,636
3,636
16,3833,330¥31,985

For the year ended March 31, 2013

Assets:Cash and time deposits
Trade receivables – notes
Trade receivables – accounts
Investments in securities (other securities)
Total assets
Liabilities:
Trade notes payable
Trade accounts payable
Short-term bank loans
Bonds
Long-term debt
Lease obligations
Total liabilities
Derivatives:
For the year ended March 31, 2012

Assets:Cash and time deposits
Trade receivables – notes
Trade receivables – accounts
Investments in securities (other securities)
Total assets

27

Difference

Difference

¥ —
—
—
—
¥ —

Liabilities:
Trade notes payable
Trade accounts payable
Short-term bank loans
Bonds
Long-term debt
Lease obligations
Total liabilities
Derivatives:¥787
10,141
13,490
3,000
8,661
7,013
¥43,092—¥787
10,141
13,490
3,042
8,782
7,087
¥43,329
—

¥ —
—
—
42
122
74
¥238
—

Thousands of U.S. dollars
Carrying
Fair
Difference
amountvalue

For the year ended March 31, 2013

Assets:Cash and time deposits
Trade receivables – notes
Trade receivables – accounts
Investments in securities (other securities)
Total assets
Liabilities:
Trade notes payable
Trade accounts payable
Short-term bank loans
Bonds
Long-term debt
Lease obligations
Total liabilities
Derivatives:$103,154
35,609179,085
43,620$361,468$103,154
35,609179,085
43,620$361,468$$9,954
110,637
110,473
85,06180,64773,695$470,467—$9,954
110,637
110,473
84,94881,48877,806$475,305
—

$

$

—
—
—
—
—

—
—
—
(113)
841
4,111
$4,839—

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 ¥2,448 million ($26,035 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 15 “Derivative transactions”.
(c) Information about maturities of financial instruments
Annual maturities of monetary receivables and other securities with contractual maturities as of March 31,
2013 and 2012 are as follows:
Millions of yen

For the year ended March 31, 2013

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

28

Due in one
year

Due after one
year throughfive years

Due after five
years throughten years¥9,680
3,349
16,842—¥29,872

¥—
—
—
61
¥61

¥—
—
—
—
¥—

Due after
ten years

¥—
—
—
—
¥—

Millions of yen

For the year ended March 31, 2012

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¥8,612
3,636
16,383—¥28,631

¥—
—
—
59
¥59

¥—
—
—
—
¥—

For the year ended March 31, 2013
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$102,928
35,609179,085—$317,622

$—
—
—
649
$649

$—
—
—
—
$—

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, 2013 are as follows:
Millions of yen

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

Due in one
year

Due after one
year throughtwo years¥10,390
3,000
2,137
3,104
¥18,631

¥—
—
1,461
3,508
¥4,969

Due in one
year

Due after one
year throughtwo years$110,473
31,89822,73033,006$198,107$——15,54337,301$52,844

¥—
5,000
1,124
626
¥6,750

¥—
—
781
98
¥880

¥—
—
398
53
¥452

Due after
five years

¥—
—
1,026
193
¥1,219

Thousands of U.S. dollars

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

Due after two Due after three
years through years throughthree years
four years$—53,163
11,955
6,661$71,779

$—
—
8,314
1,052
$9,366

Due after four
years throughfive years

$—
—
4,240
573
$4,813

Due after
five years$——
10,9132,054$12,967

14 Marketable securities and investments in securities
No trading securities or held-to-maturity securities were held at March 31, 2013 or 2012. 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, 2013 and 2012 are summarized as follows:—
Carrying
value

Millions of yen
2013
Acquisitioncosts¥3,209—51¥1,856—50¥1,352—
1

832—
9¥4,102958—
10¥2,874

(125)
—
(0)
¥1,227For the year ended March 31, 2013

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

29

Unrealized
gain (loss)

For the year ended March 31, 2012

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

Carrying
value

Millions of yen
2012
Acquisitioncosts¥1,892¥1,018

¥874

50

50

0

1,378

1,663

(285)

10
¥3,33010¥2,7410¥589

Unrealized
gain (loss)

Thousands of U.S. dollars
2013
Carrying
Acquisition
Unrealized
value
costs
gain (loss)

For the year ended March 31, 2013

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

$34,124—545$19,744—532$14,380
—
13

8,848
—
104
$43,620

10,187—
106$30,569(1,339)—(2)$13,052

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 ¥5 million ($54 thousand) is charged to income for the year ended
March 31, 2013.
Equity securities whose fair value is 50% or less than the acquisition cost are necessarily restated at fairvalue and those whose fair value is between 50% and 30% of the acquisition cost are restated at fairvalue, if they are judged to be unrecoverable considering the trend of the market value for the past certain period and performances of the issuers.
Other securities sold during the year ended March 31, 2013, and the year ended March 31, 2012, amounted
to ¥1 million ($11 thousand) and ¥3 million, respectively, of which a gain on sales amounted to ¥0 million ($3thousand) and a loss on sales amounted to ¥0 million, respectively.

15 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
2013
2012

Contract amount Total
Due after one year
Fair value¥6,400
3,660*¥7,140
6,400*

Thousands of
U.S. dollars
2013$68,049
38,915**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).

30

16 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
2013
2012

Projected benefit obligation
Plan assets
Net unrecognized amount
Employees’ severance and retirement benefits¥(19,355)
5,093
1,444
¥(12,817)¥(19,527)
4,005
1,443
¥(14,079)

Thousands of
U.S. dollars
2013$(205,803)
54,15815,359$(136,286)

The net unrecognized amounts were as follows:—
Millions of yen
2013
2012

Unrecognized benefit obligation:
Adjustment for actuarial assumptions
Past service cost
Net unrecognized amounts¥1,557(112)¥1,444¥2,230(787)¥1,443Thousands of
U.S. dollars
2013$16,555(1,196)$15,359

The components of net periodic pension and severance costs excluding the employees’ contributory portion
were as follows:—
Millions of yen
2013
2012

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¥ 856
241
(96)
256
(674)
¥ 582Thousands of
U.S. dollars
2013

¥732
253
(50)
1,075
(582)
¥1,428$ 9,103
2,565(1,030)2,726(7,174)$ 6,190

2013

2012

1.3%
2.5%

1.3%
2.5%

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

17 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 bemade by resolution of the shareholders.
Under the Company Law, distributions of reserves to shareholders may be made at any time by resolution of
the shareholders.
The Company’s Articles of Incorporation also provide that the Board of Directors may make distributions toshareholders based on a resolution of the Board of Directors, provided that such distributions are limited toonce per fiscal year.
31

Information concerning changes in net assets

Treasury stock
Class of shares

Common stock (shares)

At March 31, 2012

Increase

Decrease

At March 31, 2013

6,845,870

11,367—

6,857,237

Reason for the change:
The increase attributable to the purchase of shares less than one unit: 11,367 shares

18 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
2013
2012

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
OtherTotal deferred tax liabilities
Net deferred tax assets

Thousands of
U.S. dollars
2013

¥411
4,618
2,692
150
1,171
9,043
(4,114)4,929¥ 417
5,018
2,748
163
1,220
9,566
(4,226)
5,340$4,372
49,102
28,6291,601
12,457
96,161(43,745)
52,416(378)(4,341)—(4,719)
¥209

(161)
(4,370)(0)(4,531)¥ 809(4,022)(46,161)—(50,184)$2,232

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, 2013 and 2012 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.
Gain on negative goodwill
Change in valuation allowance related to deferred tax assets
Adjustment of deferred tax assets following a change in statutory tax rates
Other
Effective tax rate

2013

2012

37.75%

40.43%

1.95(3.93)
7.45(0.72)
3.52(1.42)(1.63)—(0.57)
42.40%

3.29(7.14)
12.33(1.16)
6.30
—
6.12
4.75
1.26
66.18%

19 Supplementary income information
Supplementary income information for the years ended March 31, 2013 and 2012 is as follows:—
Millions of yen
2013
2012

Depreciation expenses
Lease and rental¥4,286
4,911

32¥3,882
4,928

Thousands of
U.S. dollars
2013$45,575
52,22020 Amounts per share
Amounts per share of common stock for the years ended March 31, 2013 and 2012 were as follows:—
Yen

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

2013

2012

¥ 19.67—
5.00¥523.80¥6.97—4.00¥503.46

U.S. dollars
2013$0.2091—
0.0532$5.5694

Basis for the calculation of net assets per share for the years ended March 31, 2013 and 2012 were as follows:—
Millions of yen
2013
2012

Total net assets as reported on the consolidated balance sheets
Deduction from total net assets:
Minority interests
Adjusted net assets allocated in common stock
Number of shares of common stock outstanding at the end ofyear on which net assets per share is calculated¥47,643
107
107
47,535¥46,046350
350
45,69690,752,881

90,764,248

Thousands of
U.S. dollars
2013$506,577
1,144
1,144
505,432

Basis for the calculation of basic and diluted net income per share for the years ended March 31, 2013 and2012 was as follows:—
Millions of yen
2013
2012

Net income available to shareholders of common stock:
Net income
Net income not available to shareholders of common stock
Net income available to shareholders of common stock
Weighted-average number of shares of common stock outstanding (shares)¥1,785—
1,785
90,759,737

¥633
—
633
90,768,846

Thousands of
U.S. dollars
2013$18,984—
18,98421 Segment information(1)	Overview of reportable segments
	The Company’s segments are the Group’s components for which discrete financial information is available
and whose operating results are regularly reviewed by the Company’s board of directors to make decisions
on the allocation of resources to the segments and to assess their performance.
		 The Group, in doing business, classifies business models of operating companies, which are under theCompany (pure holding company), according to the nature of services and formulates comprehensive strategies for individual business models.
		 Therefore, the Group consists of segments according to services based on these business models and theGroup’s reportable segments are: Logistics, Information Processing, and Sales.
		 Principal services of the Logistics segment are road haulage, freight forwarding, warehousing, and harbortransport. The principal service of the Information Processing segment is information processing. Principal
services of the Sales segment are merchandising, consignment sales, and a non-life insurance agency.
(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“Basis of Presenting Consolidated Financial Statements.” Income of reportable segments is on an operating
income basis. Intersegment revenues and transfers are based on market prices.

33

(3) Information on operating revenues, income/loss, assets/liabilities, and other items by reportable segment
For the year ended March 31, 2013
Logistics

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

Millions of yen
Reportable segment
Information
processing
Sales

Total

Adjustment(Note 2)

Consolidated(Note 3)

¥—

¥115,864¥2,633¥6,717¥115,079¥785¥115,864

36
105,764

281
2,915

4,896
11,614

5,214
120,294

828
1,613

6,043
121,907(6,043)(6,043)—
115,864¥2,058

¥212

¥288

¥2,559¥113¥2,672¥95¥2,767¥105,100¥1,698¥9,409¥116,207¥11,158¥127,366¥(10,176)¥117,189¥3,776

¥431

¥43

¥4,251¥24¥4,275¥10¥4,286

¥66

¥14

¥—

¥80

¥—

¥80

¥—

¥80

¥—
¥61

¥—
¥—

¥ 117
¥—

¥117
¥
61

¥—
¥—

¥117
¥61

¥—
¥—

¥117
¥61

¥5,098

¥127

¥30

¥5,255¥12¥5,268¥9¥5,277

Millions of yen

Logistics

Other items:
Depreciation
Amortization of
goodwill
Increases in property
and equipment andintangible fixed assets

Others(Note 1)

¥105,728

For the year ended March 31, 2012

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

Total

Reportable segment
Information
processing
Sales

Total

Others(Note 1)

Total

Adjustment(Note 2)

Consolidated(Note 3)

¥107,500¥2,718¥6,697¥116,915¥795¥117,710¥—¥117,710

27
107,527

256
2,974

5,527
12,224

5,810
122,725

831
1,626

6,641
124,351(6,641)(6,641)—
117,710

¥670

¥103

¥430

¥1,203¥114¥1,317¥87¥1,404¥105,550¥2,095¥9,132¥116,777¥11,309¥128,086¥(12,001)¥116,085¥3,368

¥438

¥40

¥3,846¥26¥3,872¥10¥3,882

¥

¥

14

¥—

¥

102

¥—

¥

¥

¥

¥246

¥52

¥5,846¥6¥5,85288¥5,548

34

102

—

¥8

102

¥5,860

For the year ended March 31, 2013

Logistics

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

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

Total

$1,124,171$28,003$71,425 $1,223,599

385
1,124,556

2,997
31,00052,063
123,488

55,445
1,279,043

Others(Note 1)

Total

$8,350 $1,231,949
8,810
17,15964,254
1,296,203

Adjustment(Note 2)

Consolidated(Note 3)

$— $1,231,949(64,254)(64,254)—
1,231,949$21,885$2,261$3,068 $27,214$1,202 $28,416$1,014 $29,430$1,117,492$18,058$100,047 $1,235,597$118,645 $1,354,242$(108,207) $1,246,036$4,587$467 $45,204$261 $45,465$110 $45,575$155$— $860$— $860$— $860$—$—$1,244 $1,244$— $
653$— $1,244$— $653$— $1,244$— $653$ 1,350$320 $55,881$136 $56,017$101 $56,118

Other items:$40,151
Depreciation
Amortization of$705
goodwill
Gain on negative$—
goodwill$653
Impairment losses
Increases in property
and equipment andintangible fixed assets $54,210

Notes:
1. “Others” corresponds to operating segments that are not included in the reported operating segments
and includes automobile repair and direct mail service.
2. Adjustments are as follows:(1) Adjustments of segment income
For the fiscal year ended March 31, 2013 and 2012, adjustments of segment income amounted to¥95 million ($1,014 thousand) and ¥87 million, respectively. Adjustments include intersegment
eliminations and corporate expenses not allocated to any reportable segments.
For the fiscal year ended March 31, 2013 and 2012, the above-mentioned intersegment eliminations amounted to ¥720 million ($7,665 thousand) and ¥733 million, respectively, and corporate
expenses not allocated to any reportable segments amounted to ¥(625) million ($6,651 thousand)and ¥(646) million, respectively. Corporate expenses are mainly expenses of the Company’s operations that do not belong to any reportable segments.
(2) Adjustments of segment assets
For the fiscal year ended March 31, 2013 and 2012, adjustments of segment assets amounted to¥(10,176) million ($108,207 thousand) and ¥(12,000) million, respectively. Adjustments include
intersegment eliminations and corporate assets not allocated to any reportable segments.
For the fiscal year ended March 31, 2013 and 2012, the above-mentioned intersegment eliminations amounted to ¥(19,960) million ($212,232 thousand) and ¥(19,606) million, respectively, andcorporate assets not allocated to any reportable segments amounted to ¥9,783 million ($104,025
thousand) and ¥7,606 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, 2013 and 2012, adjustments of increases in property andequipment and intangible fixed assets amounted to ¥9 million ($101 thousand) and ¥8 million,
respectively. Adjustments include intersegment eliminations and corporate assets not allocated to
any reportable segments.
For the fiscal year ended March 31, 2013 and 2012, the above-mentioned intersegment eliminations amounted to ¥(3) million ($34 thousand) and ¥(12) million, respectively, and corporate assets
not allocated to any reportable segments amounted to ¥12 million ($135 thousand) and ¥20 million, respectively.
3. Segment income is adjusted to operating income in the consolidated financial statements.

35

(4) Related information
For the year ended March 31, 2013:
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.
For the year ended March 31, 2012:
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, 2013:
Information on fixed asset impairment losses by reportable segment is omitted because similar information
is presented in the segment information.
For the year ended March 31, 2012:
Not applicable36(6) Information on amortization of goodwill and unamortized balance by reportable segment
For the year ended March 31, 2013

Millions of yen

Logistics

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

Reportable segment
Information
processing
Sales

Adjustment

Total

¥14

¥—

¥80

¥—

¥—

¥80

¥—

¥ 19

¥—

¥ 19

¥—

¥—

¥ 19

¥76

¥—

¥—

¥ 76

¥—

¥—

¥ 76

¥153

¥—

¥—

¥153

¥—

¥—

¥153

Total

OthersAdjustment

Total

Millions of yen

Logistics

Reportable segment
Information
processing
Sales

¥88

¥14

¥—

¥103

¥—

¥—

¥103

¥66

¥29

¥—

¥ 95

¥—

¥—

¥ 95

¥76

¥—

¥—

¥ 76

¥—

¥—

¥ 76

¥230

¥—

¥—

¥230

¥—

¥—

¥230

OthersAdjustment

Total

For the year ended March 31, 2013
Logistics

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

Others¥66

For the year ended March 31, 2012

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

Total

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

$705

$155

$—

$860

$—

$—

$860

$—

$212

$—

$212

$—

$—

$212

$815

$—

$—

$815

$—

$—

$815

$1,630$—$—$1,630$—$—$1,630(7) Information on gain on negative goodwill by reportable segment
For the year ended March 31, 2013:
In the Sales Segment, consolidated subsidiary Toyo Gomu Hokuriku Hanbai Co., Ltd. became a wholly
owned subsidiary as a result of additional acquisition of its shares by the Company.
Accordingly, a gain on negative goodwill amounting to ¥117 million ($1,244 thousand) was recorded in thefiscal year ended March 31, 2013.
For the year ended March 31, 2012:
Not applicable37

22 Subsequent events
Cash dividends

The annual shareholders’ meeting of the Company, which was held on June 27, 2013, duly approved the payment of dividends as follows:
Cash dividends (¥3.00 per share)

38

Millions ofyen

Thousands of
U.S. dollars¥272$2,895

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 Staff Support Co., Ltd.

Temporary Staffing

Toyo Tire Toyama shop Co., Ltd.

Sale of tires

Tonami Automobile Technology Research Institute Co., Ltd.

Automobile technology R&D

39

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

Directors
Shigeki Sakamoto
Shigeyuki Okada
Yoshimi Nagahara
Kazuo Takata
Shinichi Izumi
Mitsuharu Wadachi(As of June 27, 2013)

Corporate Data

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

Common Stock¥14,183 million

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

Shareholders
6,930

Issued and Outstanding Shares
97,610,118 shares

Date of Established
June 1943

Employees
55(As of March 31, 2013)40

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

Printed in Japan on recycled paper