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

ANNUAL REPORT 2000
TONAMI TRANSPORTATION CO., LTD.

Printed in Japan

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

Tow years ended March 31, 2000

Thousands of
U.S. dollars

Millions of yen
1999

2000

2000

FOR THE YEAR:
Service revenues ...................................................................... ¥100,962
Operating income ....................................................................

1,268

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

551¥100,291$ 944,805

1,543

14,537910

8,574

Consolidated Subsidiaries

2-12, Showa-machi 3-chome, Takaoka,
Toyama Prefecture 933-0946, Japan
Phone: (0766) 21-1073
Fax: (0766) 21-3640

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

Tokyo OfficeOsaka Tonami Transportation Co., Ltd.
Road haulage

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

Date of Establishment
June 1943

Common StockPER SHARE (yen and U.S. dollars):
Net income ...............................................................................

¥ 5.59¥ 9.29$0.0875

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

6.75

6.00

0.0565AT YEAR-END:

49,367¥120,697
54,020Notes: 1 U.S. dollar amounts presented herein are included solely for convenience. The rate of ¥106.15 = U.S.$1,
prevailing on 31st March, 2000, has been used for the translation into U.S. dollar amounts.
2 The computation of net income per share of common stock has been based on the weighted average numberof shares outstanding during each financial year, retroactively adjusted to take account of a free share
distribution.

Ibaraki Tonami Transportation Co., Ltd.
Road haulage
Fukui Tonami Transportation Co., Ltd.
Road haulage
Ishikawa Tonami Transportation Co., Ltd.
Road haulage

Issued and Outstanding Shares
97,610,118 shares

Kanagawa Tonami Transportation Co., Ltd.
Road haulage

Shareholders

Kansai Tonami Transportation Co., Ltd.
Road haulage$1,137,042
508,903

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

10,102

Total assets ............................................................................... ¥ 98,901
Total shareholders’ equity .......................................................

Head Office

Employees
5,757

Terminals

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

90

Kawai Transportation Co., Ltd.
Road haulage

Warehouses
43

Chukyo Tonami Transportation Co., Ltd.
Road haulage

Motor Vehicles

ATS Co., Ltd.
Road haulage

5,549(As of 31st March, 2000)

Nagoya Logistics Co., Ltd.
Warehousing
Nihon Unyu Co., Ltd.
Harbor transport
Kokusai Kyodo Logistics Co., Ltd.
Warehousing

CONTENTS
1
2
4
5
35

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

Tonami Trading Co., Ltd.
Trading Company
Toyo Gomu Hokuriku Hanbai Co., Ltd.
Sale of tires
Shogawa Kanko Co., Ltd.
Travel inns
Toyama Jizake Hanbai Co., Ltd.
Sale of liquor
Tonami Automobile Technology Research Institute Co., Ltd.
Automobile technology R&D
Toyo Tire Toyama shop Co., Ltd.
Sale of tires
Toyo Shinso Co., Ltd.
Sale of bed-clothes

35System Distribution – Continually More to Offer

SYSTEM DISTRIBUTION –PROFILECONTINUALLY MORE TO OFFER

One of Japan’s leading integrated distribution
companies, Tonami has been developing
solutions for the distribution needs of its
customers for over 50 years. The pioneer ofcomputerized distribution systems in Japan,
the Company has a highly advanced
computerized network system and strong
information technology. In addition to
Tonami’s core business of road haulage
services, the Company also offers rail and air
freight; removal; warehousing; marketing,
distribution and information management;
specialty item sales; and casualty insurance
services.

Integrated systems are the key to remaining
competitive in today’s information-oriented
business world. Since our computerization in
the early 1970s, we have been developing
integrated distribution systems that let ourcustomers benefit from better services andbetter information management. Our Tonami
On-line Network, for example, integrates
ordering, manufacturing, and administrative
processes with a full-range of distribution
services-storage, pricing, classification,
packing, wrapping, and delivery-within avalue-added network (VAN). We arecontinually expanding this network to provide
seamless integration of all our services andoffer new distribution and information
services that can be effortlessly linked with ourcustomers’ systems to provide greater
efficiency and cost savings.
1

A

M E S S A G E

F R O MT H E

P R E S I D E N T

PERFORMANCE
Although there were signs of recovery insome sectors of the Japanese economy,
personal consumption remained weakbecause of worsening unemployment andother factors, preventing a full-fledged
economic recovery from getting underway.
In the transportation industry, domestic
freight tonnage declined for the fourthconsecutive year amid a weak recovery inprivate sector demand. Businessconditions remained extremely difficult
because of the sluggish economy andintensifying price competition as well asother forms of competition among companies.
In response, the Company sought for a growth in its operating income throughaggressive sales activities and further improvement in the quality of its
transportation services. In addition, the Company targeted comprehensive
operations by proposing and developing optimum distribution systems and jointdelivery systems for customers. However, the increased revenues earned from these
efforts were not enough to offset the decrease of revenues that resulted from thedecline in domestic freight tonnage. Consequently, service revenues fell 0.7%, to¥100.2 billion.
Looking at divisional performance, in our transportation business, revenues fromroad haulage services slipped 0.7%, accounting for 85.4% of total revenues. In ourwarehousing business, which generated 8.0% of total revenues, revenues edged
down 0.9%. Revenues from removal services, accounting for 2% of total revenues,
were also down, decreasing 8.9%. On the other hand, revenues from rail
forwarding grew 2.0% and revenues from other services jumped 5.1%.
During the fiscal year under review, we focused our capital investment on our
national network. We completed an extension of the Urawa Business Establishment
in Saitama Prefecture in August 2000 to expand operations. We also began
construction of new facilities for the relocation of the computer center in Fukuyama
Prefecture and of new facilities for the Kanazawa joint delivery center in Ishikawa
Prefecture. Total capital investment during the fiscal year was ¥3,483 million. In thecurrent fiscal year, from a full review of our information system, we are planning2the replacement and new purchases of host computers and other office equipment
as well as mobile phones for haulage vehicles to improve customers satisfaction
and office systems.
OUTLOOK
Continued hardship is the forecast for the Japanese economy in the short term. A
self-sustained economic recovery is expected to get under way, driven by private
sector capital investment, especially IT-related investment, and supported by arecovery in corporate profits and an improving investment environment. However,a full-fledged recovery in personal consumption is seen as requiring much moretime, hampering significant recovery in the overall economy.
Under such conditions, the transportation industry will also face a difficult businessclimate. The industry cannot expect substantial recovery in domestic freight
tonnage and the competition among transportation industry should further intensify.
Facing to these circumstances, we target a growth in service revenues by
redoubling our efforts to cope with new demand from the distribution market while
expanding our system distribution operations. Moreover, we are working to
improve profitability through enhancing operating efficiency and costs reduction.
In accordance with the introduction of a new method of accounting for employees
retirement benefits, we plant to write-off 100% of the shortfall of required reservefor employees retirement benefits in the fiscal year ending March 2001 based on
Revised Accounting Principles.
During the fiscal year ahead, we will dedicate ourselves to the task of improving
performance. In pursuing that challenge, we look forward to the continued supportof our shareholders.
September 2000

Yoshihiro Minami
President and Representative Director

3

BOARDOF

DIRECTORSANDP R E S I D E N T A N D R E P R E S E N TAT I V E
DIRECTOR
Yoshihiro Minami
SENIOR MANAGING DIRECTORS
Takeshi Yamagishi
Yohsuke Konishi
MANAGING DIRECTORS
Michiaki Adachi
Yoshio Suito
Hiroki Matsumoto
Mitsuya Naruse
Kunihiko Shibata
Katsusuke Watanuki

STATUTORY AUDITORSS TA N D I N G S TAT U T O R Y A U D I T O R S
Yoshitetsu Sasaki
Tsutomu Uchii
Hisao Saito
S TAT U T O R Y A U D I T O R
Tatsuo Watanabe(As of 29th June, 2000)

DIRECTORSMichio Noguchi
Kohichi Shimazaki
Shuichi Sugioka
Akira Fune
Tsutomu Chujoh
Noriaki Murata
Iwao Hamano
Kohichi Kishida
Shigeki Sakamoto
Takashi Suzuki
Akiyoshi Kunisada

4

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

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

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

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

96

97

98

99

100.2

101.0

106.7

109.0

104.8

Billions of yen

00

Revenues from
Road Haulage

With the backdrop of a struggling economy that could not overcome sluggish
personal consumption, services revenues for the year ended March 31, 2000
declined 0.7%, to ¥100.2 billion ($945 million), as the transportation industry
facing further escalation in competition. To combat these conditions, theCompany implemented a range of active sales activities to increase revenues
while also improving service quality and operations management.
Looking at performance by division, our major operations, revenues from road
haulage services, edged down 0.7%, to ¥85,602 million, accounting for 85.4% of
total service revenues. Demand continued to weaken, causing further decline ofoperating efficiency of haulage vehicles and an escalation in competition ascompanies fought to maintain their share of a shrinking market.

90.2

94.5

91.3

86.2

85.6

Billions of yen

96

97

98

99

00

Revenues from
Warehousing

96

97

98

99

8.0

8.1

8.4

7.8

7.7

Billions of yen

00

Revenues from warehousing, Tonami’s second largest operations, declined
0.9%, to ¥8,058 million, contributing 8.0% of total service revenues. The
Company continues to be confident that demand will remain firm for its
warehousing services. Revenues from removal services, which generated 2.0%
of total service revenues, slipped 8.9%, to ¥2,009 million. However, revenues
from rail forwarding services, which contributed 1.4% of total service revenues,
edged up 2.0%, to ¥1,395 million, reflecting growing popularity for thistransportation mode. Rail freight provides an attractive option to trucking routes
because of more reliable scheduling and highly competitive services. Revenues
from other services expanded 5.1%, to ¥3,225 million, accounting for 3.2% of
total service revenues during the fiscal year in review.
Cost of services decreased 1.0%, to ¥96,070 million ($905 million). Selling,
general and administration expenses edged up slightly to ¥2,678 million ($25.2
million). Overall, operating income increased 21.7%, to ¥1,543 million ($14.5
million).
Other income and expenses jumped substantially to ¥518 million ($4.9 million),principally thanks to an increase in others from minus ¥146 million to ¥402
million. Interest and dividend income slipped slightly to ¥392 million ($3.7
million) while interest expenses increased 17.2%, to ¥306 million ($2.9 million).
Income before income taxes, therefore, rose 38.7%, to ¥2,061 million ($19.4
million). Income taxes increased 23.1%, to ¥1,151 million ($7.8 million) becauseof timing differences between accounting and taxation methods and other

6

1.30

1.27

1.54

Billions of yen
2.92

Net property and equipment expanded 28.0%, to ¥61,731 million ($582 million)
because of increases in land, buildings and structures, machinery and tools, andvehicles. In particular, land increased substantially during the fiscal year underreview because of the purchase of land for the new Kanto Distribution Center.
Construction in progress, on the other hand, decreased. During the fiscal year,
Tonami maintained its policy of concentrating its capital investment to essential
areas, such as the maintenance of its haulage and warehousing network.

Operating Income
2.85

factors. Consequently, net income advanced 65.2%, to ¥910 million ($8.6
million). Net income per share rose to ¥9.29 ($0.0875) compared with ¥5.59 in
the previous year.

96

96

98

99

00

Investments and other assets increased 4.9%, to ¥10,562 million ($99.5 million)
because of growth in investments in subsidiaries and affiliates and in others.
Net Income
1.31

1.30

0.23

0.55

0.91

Billions of yen

A N A LY S I S O F F I N A N C I A L P O S I T I O N

96

97

98

99

00

Current assets expanded 19.2%, to ¥48,404 million ($456 million). Cash grew
25.8%, to ¥4,277 million ($40.3 million) while marketable securities rose 39.7%,
to ¥18,946 million ($178 million). The increases in cash and marketablesecurities were mainly related to the investment of proceeds of a new bondissue. Among trade receivables, notes and accounts receivable remained almost
the same as in the previous fiscal year, at ¥19,480 million ($184 million).

7

2.29

5.59

9.29

¥
13.23

Long-term liabilities sunk 11.2%, to ¥20,706 million ($195 million). This decline
can also be attributed to the shift of the current portion of long-term debt tocurrent liabilities. Long-term debt, less current portion, fell to ¥7,000 million($65.9 million), reflecting a ¥7,000 million issue of straight bonds during the
fiscal year under review. Due to the introduction of several changes inaccounting methods, deferred tax liabilities are now recorded on the balance

Net Income per Share
13.31

Current liabilities also expanded, increasing 75.4%, to ¥45,971 million ($433
million). This substantial increase was attributed to the transfer entry of ¥18,823
million ($177 million) as the current portion of bonds. Accounts payable rose
3.1%, to ¥8,025 million ($75.6 million). Income tax payable jumped 45.0%, to¥1,006 million ($9.5 million). Other current liabilities edged up 1.7%, to ¥6,013
million ($56.6 million). The current ratio fell to 1.05 from 1.55 in the previous
year. Again, this decline was mainly due to the transfer entry of the large
current portion of bonds into current liabilities.

96

97

98

99

00

Capital Expenditures
3.4

4.8

6.4

3.9

4.2

Billions of yen

sheet. With the introduction of tax-effect accounting based on the Revised
Accounting Principles, deferred tax liabilities of ¥3,398 million ($32.0 million)
were posted for the fiscal year. Based on the Law concerning Revaluation ofLand, the Company recorded ¥5,746 million ($54.1 million) in deferred tax
liabilities from revaluation of land. Employees retirement benefits edged up
slightly to ¥4,533 million ($42.7 million). The Company plans to appropriate
shortfall of required reserve for employees retirement benefits based on the
Revised Accounting Principles in the fiscal year ending March 2001.
6.5
6.0
5.5
5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5

Due to the introduction of the accounting method for the non-consolidated
statements of cash flows, comparative figures for previous years are notavailable. Cash and cash equivalents at beginning of period were ¥9,669 million($55.9 million). Cash provided by operating activities amounted to ¥4,191
million ($39.5 million). Among significant items in cash flow from operating
activities, depreciation and amortization was ¥3,458 million ($32.6 million).
1.0
0.5

98

99

00

120.7

97

98.9

0.0

96

Total Assets
100.0

108.7

97.9

Billions of yen

Net cash provided by investing activities amounted to minus ¥4,717 million($44.4 million). Major items included ¥4,670 million for the purchase of
marketable securities, ¥3,096 million ($29.2 million) for the purchase ofproperty and equipment, and ¥2,408 million ($22.6 million) for the cession ofproperty and equipment. Net cash provided by financing activities amounted to¥6,466 million ($60.9 million) because of ¥6,955 million in proceeds fromissuance of bonds. Cash and cash equivalents at the end of the period,
therefore, increased by ¥5,939 million ($5.9 million) to ¥15,609 million ($147
million), ensuring adequate liquidity for operations.
120

100

80

60

40

20

0

96

97

98

99

00

Shareholders’ Equity
54.0

49.4

49.5

50.1

49.6

Billions of yen

Shareholders’ equity climbed 9.4%, to ¥54,020 million ($509 million), principally
because of the inclusion of ¥8,020 million ($75.6 million) in unrealized gainfrom revaluation of land in shareholders’ equity. Despite positive net income forthe year, retained earnings dropped 17.7%, to ¥15,964 million ($150 million)
due to a ¥3,430 million ($32.3 million) prior period adjustment for tax-effectaccounting. Reflecting the increase in total assets, the equity ratio fell to 44.8%
compared with 49.9% in the previous year.
65
60
55
50
45
40
35
30
25
20
15
10
5
0

96

97

98

99

00

8

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

Years ended 31st March

Thousands of
U.S. dollars

Millions of yen
1996

1997

1998

1999

2000

2000

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

¥104,840¥109,009¥106,736¥100,962¥100,291$944,805

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

99,477103,380

102,871

97,01996,070905,040

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

2,514

2,706

2,562

2,675

2,678

25,228Operating income .....................................................

2,849

2,923

1,303

1,268

1,543

14,537

Income before income taxes ....................................

3,170

3,346

922

1,486

2,061

19,417

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

1,305

1,302

226

551

910

8,574

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

4,156

3,907

6,350

4,794

3,483

32,812

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

4,217

4,122

4,064

3,687

3,458

32,577

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

¥13.31¥13.23¥ 2.29¥ 5.59¥ 9.29$0.0875

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

7.50

8.00

7.50

6.75

6.00

0.0565

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

¥42,315¥52,283¥41,589¥40,617¥48,404$455,996

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

45,94345,60247,60848,217

61,731

581,545

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

97,942

108,698

99,95998,901

120,697

1,137,042

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

26,89734,484

27,136

26,21045,971

433,076

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

21,425

24,13023,301

23,32420,706

195,063

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

49,62050,08449,52249,36754,020508,903(thousand) ...............................................................

98,41098,41098,41098,41097,610

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

6,680

6,360

6,195

5,952

5,757

RESULTS OF OPERATIONS:

Selling, general

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

YEAR-END FINANCIAL POSITION:

Long-term liabilities, excluding of

OTHER YEAR-END DATA:
Number of share outstanding

9

NON-CONSOLIDATED BALANCE SHEETSTONAMI TRANSPORTATION CO., LTD

As of 31st March, 1999 and 2000

Thousands of
U.S. dollars(Note 1)Millions of yen
1999

2000

2000

ASSETS
Current assets:
Cash ..............................................................................................................................................
Marketable securities, at cost (Note 5) .......................................................................................

¥

3,399

¥

4,277

$

40,292

13,564

18,946

178,483

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

19,385

19,480183,514

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

(40)

(44)

(414)

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

104

146

1,375

Deferred tax assets (Note 9) .......................................................................................................

—

409

3,853

Other current assets (Note 9) ......................................................................................................

4,205

5,190

48,893

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

40,617

48,404455,996

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

21,68935,392

333,415

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

37,861

38,570363,354

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

5,490

5,902

55,601

Vehicles ........................................................................................................................................

23,587

23,619222,505

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

321

217

2,044

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

(40,731)(41,969)(395,374)

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

48,217

61,731

581,545

Investments in securities, at cost (Notes 5 and 7) .....................................................................

3,577

3,571

33,641

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

1,396

1,589

14,969Loans to employees .....................................................................................................................

36

34

320

Others (Note 3) ............................................................................................................................

5,058

5,368

50,570Total investments and other assets ..............................................................................

10,067

10,56299,501

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

¥ 98,901¥120,697$1,137,042

Trade receivables:

Property and equipment (Notes 6 and 7):

Investments and other assets:

The accompanying Notes are an integral part of these statements.

10Thousands of
U.S. dollars(Note 1)Millions of yen
1999

2000

2000

Short-term bank loans (Note 7) ..................................................................................................

¥ 11,350¥ 11,680$ 110,033

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

—

18,823

177,325

Accounts payable (Note 10) ........................................................................................................

7,781

8,025

75,601

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

473

424

3,994

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

694

1,006

9,477

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

5,912

6,013

56,646

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

26,21045,971

433,076

Long-term debt, less current portion thereof (Note 7) ..............................................................

18,8237,000

65,944

Deferred tax liabilities (Note 9) ..................................................................................................

—

3,398

32,011

Deferred tax liabilities from revaluation of land (Note 13) .......................................................

—

5,746

54,131

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

4,475

4,533

42,704

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

26

29

273

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

23,32420,706

195,063

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

49,534

66,677628,139

97,610,118 shares in 2000....................................................................................

14,183

14,183

133,613Additional paid-in capital ............................................................................................................

14,687

14,687

138,361

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

1,102

1,166

10,984

Unrealized gain from revaluation of land (Note 13) .................................................................

—

8,020

75,554Retained earnings ........................................................................................................................

19,395

15,964150,391

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

49,36754,020508,903

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

¥ 98,901¥120,697$1,137,042

LIABILITIES AND SHAREHOLDERS’ EQUITYCurrent liabilities:

Long-term liabilities:

Contingent liabilities (Note 12)

Shareholders’ equity (Note 14):
Common stock:
Authorised: 300,000,000 shares in 1999
299,200,000 shares in 2000
Issued, par value ¥50 per share:
98,410,118 shares in 1999

11

NON-CONSOLIDATED STATEMENTS OF INCOME

TONAMI TRANSPORTATION CO., LTD.

For the two years ended 31st March, 2000

Thousands of
U.S. dollars(Note 1)Millions of yen
1999

2000

2000

¥100,962¥100,291$944,805

Cost of services (Notes 10 and 15) .............................................................................................

97,01996,070905,040

Selling, general and administrative expenses (Note 15) ...........................................................

2,675

2,678

25,22899,694

98,748930,268

1,268

1,543

14,537

Interest and dividend income (Note 10) ....................................................................................

406

392

3,693

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

219

30

283

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

(261)

(306)

(2,883)

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

(146)

402

3,787

218

518

4,880

1,486

2,061

19,417

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

935

1,594

15,017

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

—

(442)

(4,164)

935

1,151

10,843Service revenues (Note 10) ...........................................................................................................
Operating costs and expenses:

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

Other income and expenses:

Income before income taxes .......................................................................................................
Income taxes (Note 9):

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

¥

551

¥

910

The accompanying Notes are an integral part of these statements.

12¥ 5,59

8,574

U.S. dollars(Note 1)Yen

Net income per share of common stock ...................................................................................

$¥ 9.29$0.0875

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

For the two years ended 31st March, 2000

Millions of yen
Sharesof commonstock(thousands)
Balance as at 31st March, 1998 ...............................................

98,410Commonstock

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

Unrealized
Legalgain fromreserve revaluation

Retainedearnings¥1,031¥19,621—

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

551

Cash dividends paid (¥6.75 per share) ..................................

(664)

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

71

(71)

Bonuses to directors and statutory auditors ..........................
Balance as at 31st March, 1999 ...............................................

(42)
98,41014,183

14,687

1,102—

19,395

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

910

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

(3,431)Retirement of treasury stock ...................................................

(800)

(222)

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

(588)

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

64

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

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

(36)
97,610¥14,183¥14,687¥1,166¥8,020¥15,964

Thousands of U.S. dollars (Note 1)

Balance as at 31st March, 1998 ...............................................

Commonstock

Additional
paid-in
capitalLegalreserve

Unrealized
gain fromrevaluation

Retainedearnings$133,613$138,361$ 9,713—$184,842

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

5,191

Cash dividends paid ($0.0636 per share) ..............................

(6,255)

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

669

(669)

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

(396)

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

133,613138,361

10,382—

182,713

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

8,573

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

(32,322)Retirement of treasury stock ...................................................

(2,091)

Cash dividends paid ($0.0565 per share) ..............................

(5,539)Transfer to legal reserve .........................................................

603

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

(603)$75,554

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

(339)

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

$133,613

The accompanying Notes are an integral part of these statements.

13$138,361$10,984$75,554$150,391

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

For the two years ended 31st March, 1999

Millions of yen
1998

1999

Cash flows from operating activities:
Net income ...........................................................................................................................................................

¥

226

¥

551

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expenses ....................................................................................................................................

4,064

3,687

Provision for allowance for doubtful accounts .............................................................................................

28

(90)

Provision for employees’ retirement benefits, less payments .......................................................................

171

172

(Gain) loss on sales of property and equipment ..........................................................................................

231

(165)

Interest expenses offset with exchange differences in liabilities .................................................................

(45)

—

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

(21)

—

Changes in assets and liabilities:
Decrease in trade receivables .........................................................................................................................

1,058

1,413

(Increase) decrease in inventories .................................................................................................................

8(3)(Increase) decrease in other current assets ...................................................................................................

(1,025)666(Decrease) in accounts payable .....................................................................................................................

(810)

(253)

Increase (decrease) in accrued income and other taxes ..............................................................................

(1,101)

697

Increase (decrease) in other current liabilities ..............................................................................................

1,206(1,186)

Net cash provided by operating activities ................................................................................................

3,990

5,489

(5,996)(5,408)Cash flows from investing activities:
Payments for purchases of property and equipment ........................................................................................
Proceeds from sales of property and equipment ...............................................................................................

291

1,183

(Increase) decrease in investments and advances .............................................................................................

(166)

336

Net cash used in investing activities .........................................................................................................

(5,871)(3,889)Dividends paid .....................................................................................................................................................

(739)

(664)

Repayments of long-term debt ............................................................................................................................

(173)

(175)

Increase (decrease) in short-term debt ...............................................................................................................

240

(60)

Redemptions of notes with warrants ..................................................................................................................

(7,249)—

Redemptions of convertible bonds .....................................................................................................................

(1,000)—Cash flows from financing activities:

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

(50)

(42)

Net cash provided by financing activities .................................................................................................

(8,971)(941)

Net increase (decrease) in cash and cash equivalents ...................................................................................

(10,852)

659

Cash and cash equivalents at beginning of period .........................................................................................

27,156

16,304

Cash and cash equivalents at end of period .....................................................................................................

¥16,304¥16,963

The accompanying Notes are an integral part of these statements.

14

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

For the year ended 31st March, 2000

Millions of yen

Thousands of
U.S. dollars(Note 1)

2000

2000

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

¥ 2,061
3,458
(36)
(97)
93
(11)
58
(58)
(392)
306
404
(42)
233
163
(753)
5,387
392
(306)
(1,282)
4,191$ 19,416
32,577
(339)
(914)
876
(104)
546
(546)
(3,693)
2,883
3,806
(396)
2,195
1,536
(7,094)50,7493,693(2,883)(12,077)
39,482

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

(380)—(4,670)1,366(3,096)
2,408
(287)
101
(2,035)1,892(18)(4,717)(3,580)—(43,994)
12,869(29,166)
22,685(2,704)951(19,171)
17,824(170)(44,437)

Cash flows from financing activities:
Increase in short-term loans ................................................................................................................................
Proceeds from issuance of bonds .......................................................................................................................
Repurchase of treasury stocks .............................................................................................................................
Dividends paid .....................................................................................................................................................
Net cash provided by financing activities .................................................................................................

330
6,955
(222)
(588)
6,466

3,109
65,520(2,091)(5,539)60,914

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

—
5,939
9,669
¥15,609—55,94991,088$147,047

The accompanying Notes are an integral part of these statements.

15

NOTES TO THE NON-CONSOLIDATED FINANCIAL STATEMENTS

1.

Basis of presenting financial statements(f) Employees’ retirement benefits

The accompanying non-consolidated financial statements
have been prepared from accounting records maintainedby Tonami Transportation Co., Ltd. (the “Company”) in
conformity with the Securities and Exchange Law of Japanand accounting principles generally accepted in Japan.
However, in order to facilitate understanding for readers
outside Japan, certain reclassifications have been made to
the non-consolidated financial statements prepared fordomestic purposes.
U.S. dollar amounts presented in the financial
statements are included solely for convenience and should
not be construed as representations that Japanese yenamounts have been or could in the future be converted
into U.S. dollars. The rate of ¥106.15 = U.S.$1, prevailing on
31st March, 2000, has been used for the translation into
U.S. dollar amounts in the financial statements.
2.

TONAMI TRANSPORTATION CO., LTD.

The Company’s employees are entitled to a lump-sum
payment upon retirement or severance of employment. Thebalances of the liability are the maximum allowableamounts under Japanese tax law or 40% of the amounts
which would be required if all employees voluntarily
terminated their employment at those dates.
The Company also has a non-contributory pension
fund, into which on 1st April, 1991, the liquidated
contributory pension fund was transferred. The annual
provisions for pension benefits include current period costs
and amortisation of past service costs.
(g) Stock issue expenses
Stock issue expenses are charged to income as incurred.
(h) Income taxes
Effective from the year ended 31st March, 2000, in
accordance with the Revised Accounting Principles for
Non-consolidated Financial Statements (the “Revised
Accounting Principles”), the Company adopted tax-effectaccounting.
Income taxes consist of corporation, enterprise, andinhabitants taxes.

Summary of significant accounting policies(a) Non-consolidation
The accompanying non-consolidated financial statements
include only the accounts of the Company.
Investments in subsidiaries and affiliates are stated atcost.

(i) Net income per share of common stock(b) Marketable securities and investments insecurities
Marketable securities and investments in securities arestated at cost determined by the moving average method.

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

(c) Allowance for doubtful accounts(j) Statements of cash flows

The allowance for doubtful accounts is provided at an
amount based on the actual write-off rate stipulated by
Japanese tax law plus the estimated amount of probablebad debts.

Cash and cash equivalents include cash on hand, deposits
placed with banks on demand, and highly liquid
investments with insignificant risk of changes in value
which have maturities of three months or less whenpurchased.

(d) Property and equipment and depreciation3.

Property and equipment are stated at cost. However, underJapanese tax law, capital gains arisen from disposals andother similar transactions are deducted from the cost of theproperty and equipment acquired in substitution.
Depreciation of property and equipment is computedby the declining-balance method at rates based on
estimated useful lives, except for buildings and structures.
The buildings and structures are depreciated by thestraight-line method.

Supplementary information(a) Accounting for software for internal use
In accordance with the provisional rule of the JICPA’s
Accounting Committee Report No.12 “Practical Guidance
for Accounting for Research and Development Costs, etc.,”
the Company accounts for software for internal use in thesame manner in 2000 as in the prior years.
Software costs are amortized by the straight-line
method over their estimated useful lives (five years).

(e) Leases
Finance leases, except those leases for which theownership of the leased assets is considered to betransferred to the lessee, are accounted for in the same as
operating leases.
16

4. Reclassification
Effective from the year ended 31st March, 2000, theCompany is required to prepare consolidated statements ofcash flows in accordance with the Revised Accounting
Principles. The consolidated statements of cash flows forthe year ended 31st March, 1999, which were prepared forthe purpose of inclusion in the consolidated financial
statements although such statements were not customarily
prepared in Japan and not required to be filed with the
Ministry of Finance prior to the year ended 31st March,
2000, are not restated, resulting in an inconformity to the2000 presentation under the Revised Accounting Principles.
The consolidated statements of cash flows for the year
ended 31st March, 2000 include interest paid and income
taxes paid under operating activities section, which werepreviously presented as a supplementary cash flow
information in the notes to the consolidated financial
statements.
5.

7.

Short-term bank loans and long-term debt(a) Short-term bank loans
Short-term bank loans as at 31st March, 1999 and 2000
were as follows:—
Millions of yen
1999

2000

2000

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

¥3,394¥3,294$31,032

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

7,956

8,386

79,001

Interest rates range from 0.95% to 1.50%.
(b) Long-term debt
Long-term debt as at 31st March, 1999 and 2000 was asfollows:—
Millions of yen

Thousands of
U.S. dollars

1999

2000

2000

bonds due 2001 ........................ ¥ 8,823¥ 8,823$ 83,118

10,00094,206

0.9% ¥10 billion convertible

Marketable securities and investments insecurities

0.0% ¥10 billion convertible

The cost and market value of marketable equity securities
and other securities included in marketable securities andinvestments in securities as at 31st March, 1999 aresummarised as follows:—

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

10,0002.05% ¥7 billion unsecured
straight bonds due 2003 ...........

—

7,000

65,944

Millions of yen

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

18,82325,823

243,269

1999

Less amount due within one year ...

—18,823

177,325¥18,823¥ 7,000$ 65,944

In marketable securities:
Cost ................................................................................

¥2,749Market value .................................................................

2,829

The ¥10 billion 0.9% convertible bonds, issued in February
1994 are convertible into common stock of the Company atthe conversion rate of ¥841 per share during the period to29th March, 2001.
The ¥10 billion 0.0% convertible bonds, issued in
October 1996 are convertible into common stock of theCompany at the conversion rate of ¥550 per share during
the period to 11st October, 2000.
The maturity date of the ¥7 billion 2.05% unsecured
straight bonds, issued in September 1999 is 16th September,
2003.
The annual maturities of long-term debt outstanding as
at 31st March, 2000 were as follows:—

In investments in securities:
Cost ................................................................................

2,377

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

2,791

Effective from the year ended March 31, 2000, in
accordance with the Revised Accounting Principles, theCompany does not present the market information ofmarketable securities and investments in securities hereon,
but presents it in the notes to the consolidated financial
statements.
6.

Thousands of
U.S. dollars

Property and equipment

As stated above, capital gains arisen from disposals andother similar transactions are deducted from the cost of
property and equipment acquired in substitution. The
amount deducted in the cost of property and equipment
was ¥266 million ($2,506 thousand) and ¥275 million($2,591 thousand) as at 31st March, 1999 and 2000,
respectively.

Millions of yen

Thousands of
U.S. dollars

2001 .............................................

¥18,823$177,325

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

——

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

——

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

7,000

65,9442005 and thereafter .....................

——

Year ending 31st March,17

Income taxes applicable to the Company consist of
corporation, enterprise, and inhabitant taxes, which, inaggregate, resulted in a decrease of statutory rates from
47% for 1999 to 42% for 2000 as a staged reduction incorporate income tax rates since 1999. The statutory tax
rate differs from the effective tax rate reflected in the nonconsolidated statements of income for the year ended
March 31, 2000 for the following reasons:(c) Pledged assets
Property and equipment having a net value of ¥22,275
million ($209,845 thousand) was pledged as collateral for
long-term bank loans and for other purposes, andinvestment in securities of ¥340 million ($3,203 thousand)was pledged as collateral for short-term bank loans as at
31st March, 2000.
8.

Pension plans

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

41.7%

Increase (decrease) in tax resulting from:The Company’s pension plan assets referred to in Note 2(g)as at 31st March, 2000 are ¥26,387 million ($248,582
thousand).

Nondeductible expenses including
entertainment, etc..................................................

6.1

Nontaxable income including dividends

9.

Income taxes

As described in Note 2(h), effective from the year ended
31st March, 2000, the Company has adopted tax-effectaccounting in accordance with the Revised Accounting
Principles. The effect of this adoption of the new
accounting principles was to provide for deferred tax assets(current assets) of ¥409 million ($3,853 thousand) anddeferred tax liabilities (long-term liabilities) of ¥3,397
million ($32,002 thousand), and to increase net income by¥442 million ($4,164 thousand) and unappropreatedretained earnings by ¥734 million ($6,915 thousand).
Significant components of deferred tax assets andliabilities were as follows:

Millions of yen

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

9.7

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

2.6$ 1,73376

716

benefits accrued ..................

331

3,118

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

155

1,460

55.9%

10. Accounts and transactions with subsidiaries
and affiliates
As at 31st March, 2000, the Company had 24 subsidiaries
and eight affiliates.
Receivables from, payables to, and transactions withthese subsidiaries and affiliates are summarized asfollows:—

Thousands of
U.S. dollars

184

Accrued enterprise taxes .......

¥

(4.3)

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

Thousands of
U.S. dollars

Millions of yen

Deferred tax assets:
Excess bonuses accrued ........

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

Excess employees' retirement

1999

2000

2000

Notes and accounts receivable .. ¥ 389¥ 502$ 4,729

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

691

1,154

10,871

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

1,808

2,341

22,054
Thousands of
U.S. dollars

Millions of yen

Gross deferred tax assets ...

747

7,037

1999

2000

2000

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

——

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

¥2,271¥2,127$20,038

Total deferred tax assets ....

747

7,037

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

6,771

7,293

68,705Interest income ...........................

22

34

320

Deferred tax liabilities:
Reserve under Special Taxation
Measures Law ......................

(3,736)(35,195)

Net deferred tax liabilities ..........

¥(2,988)$(28,149)

18

11. Finance leases

14. Shareholders’ equity

Lease payment under finance lease for the year ended
March 31, 1999 and 2000 were ¥150 million ($1,413
thousand) and ¥237 million ($2,233 thousand), respectively.
Future lease payments of finance leases as at March
31, 1999 and 2000 ware as follows:—

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

Thousands of
U.S. dollars

Millions of yen
1999

2000

2000

Due within one year ................... ¥ 121¥ 244$ 2,299

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

225

620

5,841

¥ 346

¥ 864

$ 8,139

15. Supplementary income information
Supplementary income information for the two years ended
31st March, 2000 is as follows:—

12. Contingent liabilities
As at 31st March, 2000, the Company was contingently
liable as follows:—
Millions of yen

Millions of yen

Thousands of
U.S. dollars

Thousands of
U.S. dollars

1999

2000

2000

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

¥3,687¥3,458$32,577

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

3,250

3,218

30,316

Guarantees of employees’
housing loans ...........................

¥

42

$

396

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

837

7,885

Notes receivable discounted ......

——

16. Subsequent event
The annual shareholders’ meeting of the Company, which
was held on 29th June, 2000, duly approved the following
appropriations of retained earnings existing as at 31st
March, 2000:—

13. Revaluation of land
In accordance with the Law concerning Revaluation ofLand enacted on 31st March, 1998, the Company has
revaluated its own land used for business operations on
31st March, 2000 and reported unrealized gain fromrevaluation of land in shareholders’ equity section.
The revaluated book value of land has been
determined based on the value of land registered on the
cadastres and their supplementary records, which areprovided by the Local Tax Law under the Law Cencerning
Revaluation of Land, with making reasonable adjustments.
Millions of yen$203,712

Book value of land after revaluation .............

333,406

35,391Thousands of
U.S. dollars

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

¥ 33

$ 311

Dividends (¥3.00 per share) .......

293

2,760

35

330

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

Thousands of
U.S. dollars

Book value of land before revaluation ......... ¥21,624

Millions of yen

19

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

We have examined the non-consolidated balance sheets of Tonami Transportation Co.,
Ltd. as at 31st March, 1999 and 2000 and the related non-consolidated statements ofincome, shareholders’ equity and cash flows for the years then ended.
Our examinations were made in accordance with auditing standards generally
accepted in Japan and, accordingly, included such tests of the accounting records andsuch other auditing procedures as we considered necessary in the circumstances.
In our opinion, the non-consolidated financial statements referred to above present
fairly the non-consolidated financial position of Tonami Transportation Co., Ltd. as at
31st March, 1999 and 2000 and the results of its operations and cash flows for the years
then ended, in conformity with accounting principles generally accepted in Japanapplied on a consistent basis.
As described in Notes 2 (h) and 3 to the non-consolidated financial statements,
Tonami Transportation Co., Ltd. has adopted new accounting standards for researchand development and tax-effect accounting in the preparation of its non-consolidated
financial statements for the year ended 31st March, 2000.
The United States dollar amounts shown in the accompanying non-consolidated
financial statements have been translated solely for convenience. We have reviewed
this translation and, in our opinion, the non-consolidated financial statements
expressed in yen have been translated into dollars on the basis described in Note 1.
Effective 1st April, 2000, Century Audit Corporation merged with Ota Showa & Co.
and changed its name to Century Ota Showa & Co.

Century Ota Showa & Co.
Toyama Prefecture, Japan
29th June, 2000

20

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

Years ended 31st March

Thousands of
U.S. dollars

Millions of yen
1996

1997

1998

1999

2000

2000

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

¥115,659¥125,299¥125,164¥116,829¥117,794$1,109,694

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

108,163

115,308

117,180

108,979

108,9021,025,925

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

3,953

6,317

5,950

5,906

6,480

61,046

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

3,140

3,220

2,034

1,944

2,412

22,723

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

1,399

1,457

411

124

1,276

12,021

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

4,935

5,007

4,996

4,470

4,216

39,717¥14.27¥14.81¥ 4.18¥ 1.26¥ 13.04$0.1228

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

¥45,740¥56,623¥46,458¥44,610¥52,002$489,892

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

49,50049,82452,54553,431

66,990631,088

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

105,317

117,883

110,144

108,546

130,284

1,227,358

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

30,747

39,68332,85531,57951,113

481,517current portion thereof ...........................................

22,25625,18024,57824,88422,075207,960

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

51,93952,53352,13951,491

56,431

531,616

—

—

—

—

7,142

—

RESULTS OF OPERATIONS:

Selling, general

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

YEAR-END FINANCIAL POSITION:

Long-term liabilities, excluding of

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

21

CONSOLIDATED BALANCE SHEETS TONAMI TRANSPORTATION CO., LTD.
AND CONSOLIDATED SUBSIDIARIESAs of 31st March, 1999 and 2000

Thousands of
U.S. dollars(Note 1)Millions of yen
1999

2000

2000

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

¥ 4,900¥ 5,916

Marketable securities, at cost (Note 5) .......................................................................................

13,591

18,971

178,718

Notes and accounts ................................................................................................................

21,965

21,692

204,352

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

(50)

(82)

(772)

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

424

524

4,936

Deferred tax assets (Note 9) .......................................................................................................

—

473

4,456

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

3,780

4,505

42,440Total current assets .......................................................................................................

44,61052,002489,892

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

23,24337,011

348,667

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

22,792

22,657

213,443

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

6,449

6,541

61,620Construction in progress .............................................................................................................

325

217

2,044

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

622

563

5,304

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

53,431

66,990631,088

Investments in securities, at cost (Notes 5 and 6) .....................................................................

4,280

4,367

41,140Foreign exchange translation adjustments (Note 2) ..................................................................

—

305

2,873

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

6,225

6,619

62,355

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

10,505

11,291

106,368

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

¥108,546¥130,284$1,227,358

ASSETS
Current assets:$

55,732

Trade receivables:

Property and equipment (Notes 6 and 7):

Investments and other assets:

The accompanying Notes are an integral part of these statements.

22

Thousands of
U.S. dollars(Note 1)Millions of yen
1999

2000

2000

Short-term bank loans (Note 7) ..................................................................................................

¥ 13,052¥ 13,732$ 129,364

Current portion of long-term debt (Note 7) ...............................................................................

444

19,308

181,894

Notes and accounts payable .......................................................................................................

9,780

9,471

89,222

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

843

1,234

11,625

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

7,460

7,368

69,411

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

31,57951,113

481,517Long-term debt, less current portion (Note 7) ...........................................................................

20,022

7,893

74,357

Deferred tax liabilities (Note 9) ..................................................................................................

—

3,540

33,349Deferred tax liabilities from revaluation of land (Notes 9 and 12) ...........................................

—

5,746

54,131

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

4,720

4,738

44,635

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

4

—

—

LIABILITIES AND SHAREHOLDERS’ EQUITYCurrent liabilities:

Long-term liabilities:

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

138

159

1,498

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

24,88422,075207,960

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

56,46373,188689,477

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

592

664

6,256

Contingent liabilities (Note 11)
Shareholders’ equity (Note 13):
Common stock:
Authorised: 300,000,000 shares in 1999
299,200,000 shares in 2000
Issued, par value ¥50 per share:
98,410,118 shares in 1999
97,610,118 shares in 2000 .................................................................................

14,183

14,183

133,613Additional paid-in capital ............................................................................................................

14,687

14,687

138,361

Unrealized gain from revaluation of land (Note 12) .................................................................

—

8,021

75,563Retained earnings ........................................................................................................................

22,627

19,541

184,089

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

(6)

(0)

(0)

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

51,491

56,431

531,616

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

¥108,546¥130,284$1,227,358

23

CONSOLIDATED STATEMENTS OF INCOME TONAMI TRANSPORTATION CO., LTD.
AND CONSOLIDATED SUBSIDIARIESFor the two years ended 31st March, 2000

Thousands of
U.S. dollars(Note 1)Millions of yen
1999

2000

2000

¥116,829¥117,794$1,109,694

116,829

117,794

1,109,694

Operating cost (Note 14) .............................................................................................................

108,979

108,9021,025,925

Selling, general and administrative expenses (Note 14) ...........................................................

5,906

6,480

61,046

114,885

115,382

1,086,971

1,944

2,412

22,723

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

438

423

3,985

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

(471)

19

179

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

(338)

(375)

(3,534)

Others, net ...................................................................................................................................

(195)

418

3,938

(566)

485

4,568

1,378

2,897

27,291

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

1,222

2,005

18,888Deferred .......................................................................................................................................

—

(451)

4,248

1,222

1,554

14,640

32

67

631

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

Operating costs and selling, general and administrative expenses:

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

Other income and expenses:

Income before income taxes and minority interests .............................................................
Income taxes (Note 9):

Minority interests ..........................................................................................................................
Net income ......................................................................................................................................

¥

124

¥

1,276

The accompanying Notes are an integral part of these statements.

24¥ 1.26

12,021

U.S. dollars(Note 1)Yen

Net income per share of common stock ...................................................................................

$¥13.04$0.1228

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY TONAMI TRANSPORTATION CO., LTD.
AND CONSOLIDATED SUBSIDIARIESFor the two years ended 31st March, 2000

Millions of yen
Sharesof commonstock(thousands)
Balance as at 31st March, 1998 ...............................................

98,410Commonstock

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

Unrealized
Legalgain fromreserve revaluation

Retainedearnings¥1,108¥22,163

Beginning balance of legal reserve ........................................

1,108(1,108)1,108

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

124

Cash dividends paid (¥6.75 per share) ..................................

(664)

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

(82)

Decrease due to deduction of unconsolidated subsidiaries
and affiliates to which equity method applied ...................
Balance as at 31st March, 1999 ...............................................

(22)
98,41014,183

14,6870

22,627

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

(3,396)

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

(75)

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

1,276

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

(589)

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

¥ 8,020

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

(80)

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

(800)

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

97,610(222)¥14,183¥14,687¥

0¥8,020¥19,541

Thousands of U.S. dollars (Note 1)

Balance as at 31st March, 1998 ...............................................

Commonstock

Additional
paid-in
capitalLegalreserve

Unrealized
gain fromrevaluation

Retainedearnings$133,613$138,361$10,438

10,438$208,789

Beginning balance of legal reserve ........................................

(10,438)

10,438Net income ..............................................................................

1,168

Cash dividends paid ($0.0636 per share) ..............................

(6,255)

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

(772)

Decrease due to deduction of unconsolidated subsidiaries
and affiliates to which equity method applied ...................

(207)

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

133,613138,3610

213,161

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

(31,992)

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

(707)

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

12,021

Cash dividends paid ($0.0565 per share) ..............................

(5,549)Unrealized gain from revaluation of land .............................

$75,554

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

(754)

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

(2,091)

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

$133,613

The accompanying Notes are an integral part of these statements.

25$138,361$

0$75,554$184,089

CONSOLIDATED STATEMENTS OF CASH FLOWS TONAMI TRANSPORTATION CO., LTD.
AND CONSOLIDATED SUBSIDIARIESFor the two years ended 31st March, 1999

Millions of yen
1998

1999

Cash flows from operating activities:
Net income ...........................................................................................................................................................

¥

411

¥

124

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expenses ....................................................................................................................................

4,996

4,470

Provision for allowance for doubtful accounts .............................................................................................

71

(70)

Provision for retirement benefits, less payments ..........................................................................................

116

154

Loss on sales of property assets .....................................................................................................................

226

471

Income applicable to minority interests ........................................................................................................

64

32

Equity in earnings of unconsolidated subsidiaries and affiliates ..................................................................

(11)

(98)

Interest expenses offset with exchange differences in liabilities ................................................................

(45)

—

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

(29)

8

444

1,948

Changes in assets and liabilities, net of effects from the addition of consolidated subsidiaries:
Decrease in trade receivable ..........................................................................................................................
(Increase) decrease in inventories .................................................................................................................

(15)

16

(Increase) decrease in other current assets ...................................................................................................

(1,046)785(Decrease) in accounts payable .....................................................................................................................

(480)

(662)

Increase (decrease) in accrued income and other taxes ..............................................................................

(1,201)

683

Increase (decrease) in other current liabilities ..............................................................................................

1,412(1,512)

Net cash provided by operating activities ................................................................................................

4,913

6,349

(7,373)(6,060)Cash flows from investing activities:
Payments for purchases of property and equipment ........................................................................................
Proceeds from sales of property and equipment ...............................................................................................

81

131

(Increase) decrease in investments and advances .............................................................................................

(36)

614

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

26

112

Net cash used in investing activities .........................................................................................................

(7,302)(5,203)

(750)

(673)

Cash flows from financing activities:
Dividends paid .....................................................................................................................................................
Repayments of long-term debt ............................................................................................................................

44

211

Repayments of short-term debt ...........................................................................................................................

277

321

Redemptions of notes with warrants ..................................................................................................................

(7,249)—

Redemptions of convertible bonds .....................................................................................................................

(1,000)(175)

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

(90)

(106)

Net cash provided by financing activities .................................................................................................

(8,768)(422)

Net increase (decrease) in cash and cash equivalents.....................................................................................

(11,157)

724

Cash and cash equivalents at beginning of period .........................................................................................

28,924

17,767

Cash and cash equivalents at end of period .....................................................................................................

¥17,767¥18,491

The accompanying Notes are an integral part of these statements.

26

CONSOLIDATED STATEMENTS OF CASH FLOWS TONAMI TRANSPORTATION CO., LTD.
AND CONSOLIDATED SUBSIDIARIESFor the year ended 31st March, 2000

Millions of yen

Thousands of
U.S. dollars(Note 1)

2000

2000

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

¥ 2,897
4,217
3
(103)
94
17
(117)
(58)
17
(92)
(305)
375
696
(100)
(438)
164
962
8,229
305
(375)
(1,615)
6,543¥27,292
39,727
28
(970)
886
160
(1,102)
(546)
160
(867)
(2,873)
3,533
6,557
(942)
(4,126)
1,545
9,063
77,522
2,873(3,533)(15,214)
61,639Cash flows from investing activities:
Purchase of time deposits ...................................................................................................................................
Proceeds from redemption of time deposits ......................................................................................................
Purchase of marketable securities .......................................................................................................................
Proceeds from sales of marketable securities ....................................................................................................
Purchase of property and equipment .................................................................................................................
Proceeds from sales of property and equipment ...............................................................................................
Purchase of investments in securities .................................................................................................................
Proceeds from sales of investments in securities ...............................................................................................
Purchases of securities resulting in a change in numbers of consolidated subsidiaries...................................
Loan made ............................................................................................................................................................
Proceeds from collection of loans ......................................................................................................................
Other, net .............................................................................................................................................................
Net cash used in investing activities .........................................................................................................

(524)
115
(4,275)2,418(5,818)
1,991
(76)
120
(190)
(2,096)2,243(894)(6,986)(4,936)
1,083(40,273)
22,779(54,809)18,757(716)
1,130(1,790)(19,746)
21,130(8,422)(65,813)

Cash flows from financing activities:
Increase in short-term loans ................................................................................................................................
Proceeds from long-term debt ............................................................................................................................
Repayment of long-term debt .............................................................................................................................
Proceeds from issuance of bonds .......................................................................................................................
Repurchase of treasury stocks .............................................................................................................................
Dividends paid .....................................................................................................................................................
Dividends paid to minority interests ...................................................................................................................
Net cash provided by financing activities .................................................................................................

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

4,541
3,797
(7,621)
65,520(2,082)(5,455)(75)
58,606

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

—
5,778
11,201¥16,980—
54,432
105,520¥159,962

The accompanying Notes are an integral part of these statements.

27

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

1.

Basis of presenting financial statements(e) Leases
Finance leases other than those which are deemed totransfer the ownership of the leased assets to lessee areaccounted for by the method similar to that applicable toordinary operating leases.

The accompanying consolidated financial statements havebeen prepared from accounting records maintained by
Tonami Transportation Co., Ltd. (the “Company”) and its
consolidated subsidiaries in conformity with the Securities
and Exchange Law of Japan and accounting principles
generally accepted in Japan. However, in order to facilitate
understanding for readers outside Japan, certain
reclassifications have been made to the consolidated
financial statements prepared for domestic purposes.
U.S. dollar amounts presented in the financial
statements are included solely for convenience and should
not be construed as representations that Japanese yenamounts have been or could in the future be converted
into U.S. dollars. The rate of ¥106.15 = U.S.$1, prevailing on
31th March, 2000, has been used for the translation into
U.S. dollar amounts in the financial statements.
2.

(f) Employees’ retirement benefits
The Company’s employees are entitled to a lump-sum
payment upon retirement or severance of employment. Thebalances of the liability are the maximum allowableamounts under Japanese tax law or 40% of the amounts
which would be required if all employees voluntarily
terminated their employment at those dates.
The Company also has a non-contributory pension
fund, into which on 1st April, 1991, the liquidated
contributory pension fund was transferred. The annual
provisions for pension benefits include current period costs
and amortisation of past service costs.

Summary of significant accounting policies(g) Stock issue expenses(a) Consolidation

Stock issue expenses are charged to income as incurred.

The accompanying consolidated financial statements
include the accounts of the Company and its 24 significant
majority-owned subsidiaries for the year ended March 31,
2000 (23 for 1999).
All significant intercompany accounts and transactions
have been eliminated in consolidation.
Eight of the investments in unconsolidated subsidiaries
or affiliates (eight for 1999) are accounted for by the equity
method.

(h) Remeasurement of assets and liabilities of
consolidated subsidiaries
Assets and liabilities of the consolidated subsidiaries are
remeasured using the full fair value method.
(i) Amortization of consolidation difference
Differences between acquisition cost and the underlying
net equity at the time of acquisition are amortized on astraight-line basis over the period of five or 20years. Whentheir amounts are, however, not significant, the differences
are charged or credited to income at the dates ofacquisition.

(b) Marketable securities and investments insecurities
Marketable securities and investments in securities arestated at cost determined by the moving average method.

(j) Income taxes(c) Allowance for doubtful accounts

Effective from the year ended 31st March, 2000, in
accordance with the Revised Accounting Principles for
Consolidated Financial Statements (the “Revised Accounting
Principles”), the Company adopted tax-effect accounting.
Income taxes consist of corporation, enterprise, andinhabitants taxes.

The allowance for doubtful accounts is provided at an
amount based on the actual write-off rate stipulated by
Japanese tax law plus the estimated amount of probablebad debts.
(d) Property and equipment and depreciation(k) Net income per share of common stock

Property and equipment are stated at cost. However, underJapanese tax law, capital gains arisen from disposals andother similar transactions are deducted from the cost of theproperty and equipment acquired in substitution.
Depreciation of property and equipment is computedby the declining balance method at rates based on
estimated useful lives, except for buildings and structures.
The buildings and structures are depreciated by thestraight-line method.

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

28

(l) Statements of cash flows

5.

Cash and cash equivalents include cash on hand, deposits
placed with banks on demand, and highly liquid
investments with insignificant risk of changes in value
which have maturities of three months or less whenpurchased.

The cost and market value of marketable equity securities
and other securities included in marketable securities andinvestments in securities as at 31st March, 2000 are
summarised as follows:—

3.

Supplementary information(a) Accounting for software for internal use

Millions of yen

Thousands of
U.S. dollars

2000

2000

Marketable securities:

In accordance with the provisional rule of the JICPA’s
Accounting Committee Report No.12 “Practical Guidance
for Accounting for Research and Development Costs, etc.,”
the Company accounts for software for internal use in thesame manner in 2000 as in the prior years.
Software costs are amortized by the straight-line
method over their estimated useful lives (five years).

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

¥ 1,959¥18,455

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

2,124

20,009

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

2,439

22,977

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

3,350

31,559Investments in securities:

Effective from the year ended March 31, 2000, in
accordance with the Revised Accounting Principles, theCompany has presented the market information ofmarketable securities and investments in securities in thenotes to the consolidated financial statements.

(b) Remeasurement of assets and liabilities of
consolidated subsidiaries
Prior to the year ended 31st March,2000, in the eliminationof investments in subsidiaries, the portion of assets andliabilities of consolidated subsidiaries attributable tominority shareholders was not evaluated. Effective from theyear ended 31st March, 2000, in accordance with anadministrative notice issued by the Ministry of Finance in
1998, the Company adopts the full fair value method
thereby all the assets and liabilities of consolidated
subsidiaries including the portion attributable to minority
shareholders are remeasured to fair value as of theacquisition of control.
As a result of this remeasurement, total assets andminority interests (net of deferred tax) increased by ¥100
million ($942 thousand) and ¥58 million ($546 thousand),
respectively.
4.

Marketable securities and investments insecurities

6.

Property and equipment

Depreciable property is stated at the net book value in the
consolidated balance sheets. The amounts of accumulated
depreciation were ¥47,153 million ($444,211 thousand) and¥48,409 million ($456,043 thousand) on 31st March, 1999
and 2000, respectively.
Capital gains arisen from disposals and other similartransactions are deducted from the cost of property andequipment acquired in substitution. The amount deductedin the cost of property and equipment was ¥266 million($2,506thousand)and ¥275 million ($2,591thousand) on 31st
March, 1999 and 2000,respectively.

Reclassification
7.

Effective from the year ended 31 March, 2000, theCompany is required to prepare consolidated statements ofcash flows in accordance with the Revised Accounting
Principles. The consolidated statements of cash flows forthe year ended 31st March, 1999, which were prepared forthe purpose of inclusion in the consolidated financial
statements although such statements were not customarily
prepared in Japan and not required to be filed with the
Ministry of Finance prior to the year ended 31st March,
2000, are not restated, resulting in an inconformity to the2000 presentation under the Revised Accounting Principles.
The consolidated statements of cash flows for the year
ended 31st March, 2000 include interest paid and income
taxes paid under operating activities section, which werepreviously presented as a supplementary cash flow
information in the notes to the consolidated financial
statements.

Short-term bank loans and long-term debt(a) Short-term bank loans
Short-term bank loans as at 31st March, 1999 and 2000
were as follows:—
Millions of yen
1999

2000

2000

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

¥3,982¥4,121$38,822

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

9,119

9,611

90,542

Interest rates range from 0.95% to 2.2%.

29

Thousands of
U.S. dollars

(b) Long-term debt(c) Pledged assets

Long-term debt as at 31st March, 1999 and 2000 was asfollows:—

Property and equipment having a net value of ¥23,398
million ($220,423 thousand) was pledged as collateral for
long-term bank loans and for other purposes, andinvestment in securities of ¥340 million ($3,203 thousand)was pledged as collateral for short-term bank loans as at
31st March, 2000.

Millions of yen

Thousands of
U.S. dollars

1999

2000

2000

bonds due 2001 ........................ ¥ 8,823¥ 8,823$83,118

10,00010,00094,206—7,000

65,944

0.9% ¥10 billion convertible

8.

0.0% ¥10 billion convertible
bonds due 2000 ........................

The Company’s pension plan assets referred to in Note 2(f)as at 31st, March 2000 are ¥26,795 million ($252,426
thousand).

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

Pension plans

0.6%–6.1% yen secured

9.

loans from financial

As described in Note 2(j), effective from the year ended
31st March, 2000, the Company has adopted tax-effectaccounting in accordance with the Revised Accounting
Principles. The effect of this adoption of the new
accounting principles was to provide for deferred tax assets(current assets) of ¥474 million ($4,465 thousand) anddeferred tax liabilities (long-term liabilities) of ¥3,540
million ($33,349 thousand) and to increase net income by¥451 million ($4,249 thousand), and unappropreatedretained earnings by ¥2,928 million ($27,584 thousand).
Significant components of deferred tax assets andliabilities for the year ended March 31, 2000 were as
follows:

institutions due 1998 to 2005
Secured ...................................

584

530

4,993

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

1,055

848

7,989

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

20,462

27,201

256,250439

19,308

181,893¥20,023¥ 7,893$74,357

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

The ¥10 billion 0.9% convertible bonds, issued in
February 1994 are convertible into common stock of theCompany at the conversion rate of ¥841 per share during
the period to 29th March, 2001.
The ¥10 billion 0.0% convertible bonds, issued in
October 1996 are convertible into common stock of theCompany at the conversion rate of ¥550 per share during
the period to 11st October, 2000.
The maturity date of the ¥7 billion 2.05% unsecured
straight bonds, issued in September 1999 is 16th September,
2003.
The annual maturities of long-term debt outstanding as
at 31st March, 2000 were as follows:—
Millions of yen

Thousands of
U.S. dollars

2001 .............................................

¥19,308$181,893

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

325

3,062

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

202

1,903

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

7,113

67,0092005 and thereafter .....................

251

2,365

Year ending 31st March,

Income taxes

Millions of yen

Thousands of
U.S. dollars

Deferred tax assets:
Excess bonuses accrued ........
Accrued enterprise taxes .......

¥

224$ 2,110

95

895

343

3,231

Excess employees’ retirement
benefits accrued ..................
Other .......................................

60

565

Gross deferred tax assets ....

724

6,821

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

20

188

Total deferred tax assets .....

704

6,632

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

(3,769)(35,506)

Net deferred tax liabilities ..........

¥(3,065)$(28,874)

Deferred tax liabilities:
Reserve under Special Taxation30

Income taxes applicable to the Company consist of
corporation, enterprise, and inhabitant taxes, which, inaggregate, resulted in statutory rates of 33% for 1999 and
42% for 2000. The statutory tax rate differs from theeffective tax rate reflected in the consolidated statements ofincome for the year ended March 31, 2000 for the following
reasons:
Statutory tax rate ..............................................................

31st March, 2000 and reported unrealized gain fromrevaluation of land in shareholders’ equity section.
The revaluated book value of land has been
determined based on the value of land registered on the
cadastres and their supplementary records, which areprovided by the Local Tax Law under the Law Cencerning
Revaluation of Land, with making reasonable adjustments.

41.6%

Millions of yen

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

3.1

Thousands of
U.S. dollars

Book value of land before revaluation ......... ¥21,624$203,712

Book value of land after revaluation .............

333,406

35,391

Nontaxable income including dividends
received deduction, etc........................................

(1.6)

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

7.2

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

(1.7)

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

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

5.1
53.7%

10. Finance leases
Lease payment under finance lease for the year ended
March 31, 1999 and 2000 were ¥198 million ($1,865
thousand) and ¥316 million ($2,977 thousand), respectively.
Future lease payments of finance leases as at March 31,
2000 ware as follows:—

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

Millions of yen

Thousands of
U.S. dollars¥ 327$ 3,081

797

7,508

¥ 1,125$10,598

14. Supplementary income information
Supplementary income information for the two years ended
31st March, 2000 is as follows:—
Millions of yen

Thousands of
U.S. dollars

1999

2000

2000

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

¥4,470¥4,216$39,717

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

4,484

4,280

40,32011. Contingent liabilities
As at 31st March, 2000, the Company were contingently
liable as follows:—

Notes discounted with banks .....

15. Subsequent event

Millions of yen

Thousands of
U.S. dollars¥ 415$ 3,91042396

The annual shareholders’ meeting of the Company, which
was held on 29th June, 2000, duly approved the following
appropriations of retained earnings existing as at 31st
March, 2000:—

Guarantees of employees’
housing loans ...........................

Millions of yen

Thousands of
U.S. dollars

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

40

377

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

¥ 33

$ 311

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

1,603

15,101Dividends (¥3.00 per share) .......

293

2,760

35

330

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

12. Revaluation of land
In accordance with the Law concerning Revaluation ofLand enacted on 31st March, 1998, the Company has
revaluated its own land used for business operations on

31

16. Segment Information
The Company’s business segments consist of logistics related services classified as Logistics and non-logistics services
classified as Others.
A summary of segment information by industry segment for the two years ended 31st March 2000 is as follows:—
For the year ended 31st March, 1999
Millions of yen
Logistics

OthersTotal

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

¥ 107,450
9
107,459
106,369¥ 1,090¥ 19,379
4,895
14,274
13,314¥960¥ 116,829
4,904
121,733
119,683¥ 2,050

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

¥ 180,060¥ 4,343¥ 8,369¥ 17,840¥
128¥ 1,399¥ 187,900¥ 4,471¥ 9,768

Eliminations(Notes 1 and 2)

Consolidated¥¥—(4,904)(4,904)(4,798)(106)¥ 116,829—
116,829
114,885¥ 1,944¥¥¥

20,593
1
747¥ 108,493¥ 4,470¥ 9,021

For the year ended 31st March, 2000
Millions of yen
Logistics

OthersTotal

Eliminations(Notes 1 and 2)

Consolidated

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

¥107,85910
107,869
106,583¥ 1,286

¥

9,935
4,914
14,84913,463¥ 1,386¥117,794
4,924
122,718
120,046¥ 2,672¥—(4,924)(4,924)(4,664)¥(260)¥117,794—
117,794
115,382¥ 2,412

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

¥ 93,625¥ 4,077¥ 4,983¥¥¥¥101,400¥ 4,217¥ 5,171¥ 28,883¥13¥
12¥130,283¥ 4,204¥ 5,159

32

7,775
140
188

For the year ended 31st March, 1999
Thousands of U.S. dollars
Logistics

OthersTotal

Eliminations(Notes 1 and 2)

Consolidated

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

$1,012,247
85
1,012,332
1,002,063$ 10,269$ 88,356
46,114
134,470
125,426$ 9,044$1,100,603
46,1991,146,802
1,127,489$ 19,313$—(46,199)(46,199)(45,200)$(999)$1,100,603—
1,100,603
1,082,289$ 18,314

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

$754,216$ 40,914$ 78,841$ 73,858$ 1,206$ 13,180$ 828,074$ 42,120$ 92,021$193,999$10$ 7,037$1,022,073$ 42,110$ 84,984

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

OthersTotal

Eliminations(Notes 1 and 2)

Consolidated

Net Sales:
Outside customers .................................................. $1,016,100
Inter segment sales .................................................
94
Total .................................................................... 1,016,194
Costs and expenses ..................................................... 1,004,079
Operating income ........................................................ $ 12,115$ 93,594
46,293
139,887
126,830$ 13,057$ 1,109,694
46,387
1,156,081
1,130,909$ 25,172$—(46,387)(46,387)(43,938)$ (2,449)$1,109,694—
1,109,694
1,086,971$ 22,723

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

$ 73,245$ 1,319$ 1,771$ 955,252$ 39,727$ 48,714$272,096
$
123
$
113

$1,227,348$ 39,604$ 48,601$ 882,007$ 38,408$ 46,943

Note 1. Operating cost and expenses included in the column “Eliminations” mainly consist of those charged by the generalaffairs and finance divisions of the Company, amounting to ¥241 million ($2,270 thousand) and ¥202 million ($1,903
thousand) for the years ended March 31, 1999 and 2000, respectively.
Note 2. Corporate assets included in the column “Eliminations” mainly consist of surplus working fund (cash and marketablesecurities), long-term investment fund (investments in securities), and other assets which belong to the administrative
department, amounting to ¥23,041 million ($217,061) and ¥31,368 million ($295,506 thousand) for the years ended
March 31, 1999 and 2000, respectively.
The two business segments mainly consist of the following services:
Logistics ...... Road haulage, freight forwarding, warehousing, and harbor transport and customs services
Others ......... Vehicle maintenance, casualty insurance, leasing, merchandising and commissioned sales andpurchases, travel services, mail order services, travel inn
Neither geographical segment information nor overseas sales have been presented as any of the Company’s consolidated
subsidiaries are not located outside Japan and the Company and its consolidated subsidiaries have not overseas sales for theyears ended March 31, 1999 and 2000.
33

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

We have examined the consolidated balance sheets of Tonami Transportation Co., Ltd.
and its consolidated subsidiaries as at 31st March, 1999 and 2000 and the related
consolidated statements of income, shareholders’ equity and cash flows for the years
then ended.
Our examinations were made in accordance with auditing standards generally
accepted in Japan and, accordingly, included such tests of accounting records andsuch other auditing procedures as we considered necessary in the circumstances.
In our opinion, the consolidated financial statements referred to above present
fairly the consolidated financial position of Tonami Transportation Co., Ltd. and its
consolidated subsidiaries as at 31st March, 1999 and 2000 and the results of theiroperations and cash flows for the years then ended, in conformity with accounting
principles generally accepted in Japan applied on a consistent basis.
As described in Notes 2 (g) and 3 to the consolidated financial statements, Tonami
Transportation Co., Ltd. has adopted the revised accounting principles for consolidated
financial statements as well as new accounting standards for research and development
and tax-effect accounting in the preparation of its consolidated financial statements forthe year ended 31st March, 2000.
The United States dollar amounts shown in the accompanying consolidated
financial statements have been translated solely for convenience. We have reviewed
this translation and, in our opinion, the consolidated financial statements expressed inyen have been translated into dollars on the basis described in Note 1.
Effective 1st April, 2000, Century Audit Corporation merged with Ota Showa & Co.
and changed its name to Century Ota Showa & Co.

Century Ota Showa & Co.
Toyama Prefecture, Japan
29th June, 2000

34

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

Tow years ended March 31, 2000

Thousands of
U.S. dollars

Millions of yen
1999

2000

2000

FOR THE YEAR:
Service revenues ...................................................................... ¥100,962
Operating income ....................................................................

1,268

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

551¥100,291$ 944,805

1,543

14,537910

8,574

Consolidated Subsidiaries

2-12, Showa-machi 3-chome, Takaoka,
Toyama Prefecture 933-0946, Japan
Phone: (0766) 21-1073
Fax: (0766) 21-3640

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

Tokyo OfficeOsaka Tonami Transportation Co., Ltd.
Road haulage

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

Date of Establishment
June 1943

Common StockPER SHARE (yen and U.S. dollars):
Net income ...............................................................................

¥ 5.59¥ 9.29$0.0875

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

6.75

6.00

0.0565AT YEAR-END:

49,367¥120,697
54,020Notes: 1 U.S. dollar amounts presented herein are included solely for convenience. The rate of ¥106.15 = U.S.$1,
prevailing on 31st March, 2000, has been used for the translation into U.S. dollar amounts.
2 The computation of net income per share of common stock has been based on the weighted average numberof shares outstanding during each financial year, retroactively adjusted to take account of a free share
distribution.

Ibaraki Tonami Transportation Co., Ltd.
Road haulage
Fukui Tonami Transportation Co., Ltd.
Road haulage
Ishikawa Tonami Transportation Co., Ltd.
Road haulage

Issued and Outstanding Shares
97,610,118 shares

Kanagawa Tonami Transportation Co., Ltd.
Road haulage

Shareholders

Kansai Tonami Transportation Co., Ltd.
Road haulage$1,137,042
508,903

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

10,102

Total assets ............................................................................... ¥ 98,901
Total shareholders’ equity .......................................................

Head Office

Employees
5,757

Terminals

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

90

Kawai Transportation Co., Ltd.
Road haulage

Warehouses
43

Chukyo Tonami Transportation Co., Ltd.
Road haulage

Motor Vehicles

ATS Co., Ltd.
Road haulage

5,549(As of 31st March, 2000)

Nagoya Logistics Co., Ltd.
Warehousing
Nihon Unyu Co., Ltd.
Harbor transport
Kokusai Kyodo Logistics Co., Ltd.
Warehousing

CONTENTS
1
2
4
5
35

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

Tonami Trading Co., Ltd.
Trading Company
Toyo Gomu Hokuriku Hanbai Co., Ltd.
Sale of tires
Shogawa Kanko Co., Ltd.
Travel inns
Toyama Jizake Hanbai Co., Ltd.
Sale of liquor
Tonami Automobile Technology Research Institute Co., Ltd.
Automobile technology R&D
Toyo Tire Toyama shop Co., Ltd.
Sale of tires
Toyo Shinso Co., Ltd.
Sale of bed-clothes

35

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

ANNUAL REPORT 2000
TONAMI TRANSPORTATION CO., LTD.

Printed in Japan