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

TONAMI TRANSPORTATION CO., LTD.
ANNUAL REPORT 2003

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

Tow years ended March 31, 2003

Thousands of
U.S. dollars

Millions of yen
2002

2003

2003

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

¥ 98,462¥ 97,246$809,035

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

1,942

1,978

16,456

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

578

4,407

36,66445.10$ 0.3752

6.00

6.00

0.0499Total assets ............................................................................... ¥109,767¥108,543$903,020

47,551

395,599

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

¥

5.92

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

¥AT YEAR-END:

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

44,592

Notes: 1 U.S. dollar amounts presented herein are included solely for convenience. The rate of ¥120.20 = U.S.$1,
prevailing on 31st March, 2003, has been used for the translation into U.S. dollar amounts.
2 The computation of net income per share of common stock is based on the weighted average number ofshares outstanding (which represents the number of issued shares less treasury stock.) during each financial
year.

CONTENTS
1
2
4
5
34

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

System Distribution –Continually More to Offer

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

1

A

M E S S A G E

F R O MT H E

P R E S I D E N T

PERFORMANCE
During the first half of the fiscal year
under review, the Japanese economy
showed signs of recovery based on
expanded exports and domestic
production despite lethargic private sector
capital investment and weak personal
consumption. The negative pressures
were compounded in the second half by
anxiety caused by the situation in Iraq anda global slump in equities. In addition,
deflation continued to plague the alreadydifficult business environment.
Under these circumstances, Tonami
introduced a new three-year medium-termbusiness plan that aimed at establishingan organization that can accurately andquickly adapt to changes in the business environment. Specifically, to improvesales, we took steps to increase the quality of our transportation services and to
expand sales of our logistics outsourcing services. These efforts produced
significant results in the second half, but were not enough to compensate for thesales declines of the first half. Consequently, service revenues edged down 1.2%, to¥97.2 billion.
The Company minimized the effects of falling freight prices combined with a hikein fuel costs by improving productivity through more effective use of the vehicle
fleet and higher loading rates and by reducing man hours and administration costs
through the use of information technology (IT). Moreover, the return of thesubstitutional portion of government’s welfare pension fund insurance scheme hada beneficial effect on curtailing personnel expenses. Consequently, operating
income edged forward 1.9%, to ¥2.0 billion. Boosted by a ¥3.5 billion gain on
release from the substitutional portion of the government’s scheme and a ¥2.8
billion gain of sale of land, net income surged 662%, to ¥4.4 billion.
In June 2003, Tonami celebrated its 60th anniversary. In commemoration, a special
dividend of ¥2 per share was declared for the fiscal year under review. Combinedwith interim and year-end dividends of ¥3 per share respectively, total cash
dividends for the fiscal year amounted to ¥8 per share.
Looking at divisional performance, our overall transportation business declined
1.8%. Our core transportation services, revenues from road haulage services,
decreased 1.7% and accounted for 84.4% of total revenues. Among othertransportation services, revenues from removal services dropped 7.3% while
revenues from rail forwarding rose 4.6%. Our warehousing business remained oneof our areas of growth, with its revenues increasing 5.6% and contributing 9.6% of
total revenues. Revenues from other services deceased 5.8%.
2

S T R AT E G I E S A N D P E R S P E C T I V E S
The quick end to the war in Iraq put the U.S. economy back on track to recovery
and the Japanese economy is also viewed to be staging a mild recovery. However,a number of negative factors, including the continued low levels of personal
consumption and private sector investment in Japan, suggest that real recovery is
not yet in sight.
In the transportation industry, the weak economy and continued shift to overseas
production make further declines in haulage volumes unavoidable, placing furtherpressure on performance.
Under our new three-year medium-term business plan, we will seek to stem theimpact of these worsening conditions on our performance through business reform.
In our sales efforts, we will continue to implement IT systems to improveadministrative efficiency and productivity. And we will carry out cost reductions
through thorough cost control programs that utilize administrative expense
management systems to assess costs versus their benefits.
We are revising our system for managing the remaining portion of the government’s
welfare pension fund insurance scheme to reduce the burden of premium
payments in the future. Another significant event is the October 2003 start of stricter
emission standards for vehicles in the Kanto area. While we already meet thesestricter requirements, we will be working to keep ahead of further hikes inemission standards. At the same time, we are proceeding with preparations to
obtain ISO14001 environmental management certification during the current fiscal
year. As a Group, we are wholly committed to steadily upgrading ourenvironmental activities.
In the current fiscal year, we also will be integrating the facilities of the Hiratsuka
and Atsugi offices, which are presently rather cramped, and will begin building the
replacement facilities for the Kakogawa office in Hyogo Prefecture. As we moveahead to meet the challenges of the future, we look forward to the continued
support of our shareholders.
August 2003

Yoshihiro Minami
President and Representative Director

3

BOARDOF

DIRECTORSANDSTATUTORY AUDITORSP 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

S TA N D I N G S TAT U T O R Y A U D I T O R S
Makoto Nagai
Nariyuki Aoki

EXECUTIVE VICE PRESIDENTS
Yohsuke Konishi
Katsusuke Watanuki

S TAT U T O R Y A U D I T O R S
Shinichiro Inujima
Toshio Yaeta
Yoji Ishiguro

SENIOR MANAGING DIRECTOR
Akiyoshi Kunisada(As of 27th June, 2003)

MANAGING DIRECTORS
Tsutomu Chujoh
Noriaki Murata
Kohichi Kishida
Iwao Hamano
DIRECTORS
Shigeki Sakamoto
Takashi Suzuki

4

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

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

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

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

Service Revenues
101.0

100.2

100.5

98.5

97.2

Billions of yen

99

00

01

02

03

Revenues from
Road Haulage

99

00

01

02

82.1

83.6

86.0

85.6

86.2

Billions of yen

03

Revenues from
Warehousing
9.2

8.7

8.2

8.0

8.1

Billions of yen

After a poor performance in the first half due to the continued slump in theJapanese economy and a weakening global economy, efforts to expand sales
met with some success in the second half. However, these gains were not able
to compensate for the sales declines of the first half, and service revenues forthe year ended March 31, 2003 declined 1.2%, to ¥97.2 billion ($809 million). In
response to the difficult business conditions, the Company introduced a new
medium-term business plan to promote accurate reading and quick response tocustomer needs and changes in the operating environment. Specifically, theCompany improved the quality of transport services and expanded its logistics
outsourcing business.
Looking at performance by division, our major operations, revenues from road
haulage services, decreased 1.7%, to ¥82,124 million, accounting for 84.4% of
total service revenues. Business conditions continued to deteriorate, with total
annual road haulage in Japan declining for the third consecutive year,
competition intensifying, and prices weakening. The Company made strong
efforts to contain the decline in road haulage by introducing a variety of sales
efforts and service improvements.
Revenues from warehousing, Tonami’s second largest operations, rose 5.6%, to¥9,193 million, contributing 9.6% of total service revenues. Because of its
sophisticated systems, the Company continues to be confident that demand willremain firm for its warehousing services. Revenues from removal services,which generated 1.6% of total services revenues, declined 7.3%, to ¥1,593
million. Revenues from rail forwarding services, which contributed 1.4% of total
service revenues, climbed 4.6%, to ¥1,394 million, indicating that rail freightcontinues to provide an attractive option to trucking routes because of morereliable scheduling and highly competitive services. Revenues from otherservices fell 5.8%, to ¥2,939 million, accounting for 3.0% of total service
revenues during the fiscal year in review.
Cost of services edged down 1.2%, to ¥92,510 million ($770 million). Selling,
general and administration expenses fell 2.9%, to ¥2,758 million ($22.9 million).
Overall, operating income expanded 1.9%, to ¥1,978 million ($16.5 million).

99

00

01

02

03

Other income and expenses improved substantially to a net income of ¥6,253
million ($52.0 million) compared with net expenses of ¥613 million in theprevious fiscal year. A ¥2,793 million ($23.2 million) gain on disposal ofproperty and equipment, net and ¥3,502 million ($29.1 million) in others
income were mainly responsible for this improvement. Interest and dividend
6

1.54

1.70

1.94

1.98

99

00

01

02

03

Net Income/Net Income per Share
Billions of yen/yen(8.89)(91.05)
0.58
5.92
4.41
45.1

Investments and other assets decreased 20.2%, to ¥11,418 million ($95.0 million)
primarily due to a 57.8% reduction in deferred tax assets, to ¥1,710 million($14.2 million).

Billions of yen
1.27

Net property and equipment declined 3.5%, to ¥57,942 million ($482 million).
Land declined 2.3%, buildings and structures edged down slightly, machineryand tools increased 3.8%, vehicles dropped 10.3%, and there was noconstruction in progress. Tonami continued to maintain its policy of limiting
capital investment to essential areas, such as the maintenance of its haulage andwarehousing network.

Operating Income

0.55
5.59
0.91
9.29

income decreased 10.6%, to ¥288 million ($2.4 million), while interest expenses
declined 9.3%, to ¥330 million ($2.7 million). Income before income taxes,
therefore, amounted to ¥8,231 million ($68.5 million) compared with ¥1,329
million a year earlier. Income taxes for the period increased substantially to¥3,824 million ($31.8 million), consisting of ¥1,768 million ($14.7 million) incurrent income taxes and ¥2,056 million ($17.1 million) in deferred income
taxes. Consequently, the Company recorded net income of ¥4,407 million ($36.7
million) compared with ¥578 million in the previous fiscal year. Net income pershare was ¥45.10 ($0.3752) compared with ¥5.92 per share in the previous year.

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

7

02

03

Capital Expenditures
0.82

1.26

Billions of yen
4.12

Long-term liabilities dropped 31.4%, to ¥25,214 million ($210 million), reflecting
the decline in long-term debt, less current portion to ¥2,110 million ($17.6
million) and the drop in employees’ severance and retirement benefits to¥17,975 million ($150 million).

01

00

3.48

Current liabilities jumped 25.8%, to ¥35,778 million ($298 million), primarily
because of ¥7,000 million ($58.2 million) increase in the current portion ofbonds. Accounts payable increased 11.6%, to ¥8,358 million ($69.5 million).
Income tax payable rose 20.6%, to ¥1,053 million ($8.8 million). Other current
liabilities decreased 9.4%, to ¥5,046 million ($42.0 million). The current ratio
declined to 1.10 from 1.25 in the previous year, chiefly due to the relative
increase in current liabilities and the contraction in total assets.

99

4.80

Current assets increased 10.6%, to ¥39,183 million ($326 million), principally asa result of an increase in cash, which more than doubled to ¥15,750 million($131 million). Marketable securities fell 82.6%, to ¥1,362 million ($11.3 million).
Among trade receivables, notes and accounts receivable rose 2.8%, to ¥18,394
million ($153 million).

99

00

01

02

03

Total Assets
108.5

109.8

109.3

120.7

98.9

Billions of yen

Shareholders’ equity increased 6.6%, to ¥47,551 million ($396 million), mainly
because of the increase in net income for the fiscal year under review. A shift toa new accounting standard resulted in the reclassification of items undershareholders' equity in the fiscal year under review. Reflecting the increase inshareholders' equity, the equity ratio improved to 43.8% compared with 40.6%
in the previous fiscal year.
A N A LY S I S O F C A S H F L O W S

99

00

01

02

03

Shareholders’ Equity
47.6

44.6

44.6

54.0

49.4

Billions of yen

Cash and cash equivalents at beginning of period were ¥13,862 million ($115
million). Net cash provided by operating activities amounted to ¥3,011 million($25.0 million), down ¥2,538 million from the previous fiscal year. A ¥2,793
million ($23.2 million) gain on disposal of property and equipment and a¥3,491 million ($29.0 million) gain on substitutional portion of government’s
welfare pension fund insurance scheme were the main contributors to thedecline. Among other significant items in cash flow from operating activities,
depreciation and amortization was ¥2,051 million ($17.1 million), down 19.0%.
There were also significant increases in trade receivables, accounts payable, andincome taxes paid.
Net cash provided by investing activities amounted to ¥2,995 million ($24.9
million) compared with net cash used of ¥490 million in the previous fiscal
year. The main contributor to this reversal was proceeds from sales of property
and equipment, which expanded ¥4,028 million, to ¥4,088 million ($34.0
million). Purchase of property and equipment increased ¥201 million, to ¥1,149
million ($9.6 million).

99

00

01

02

03

Net Cash Provided by Operating Activities
4.19

5.49

5.55

3.01

Billions of yen

00

01

02

03

Net cash used in financing activities amounted to ¥2,242 million ($18.7 million)
compared with ¥1,039 million a year earlier. The principal reason for thisincrease was the purchase of ¥918 million ($7.6 million) in treasury stock.
Among fund procurement, decrease in short-term loans amounted to ¥160
million ($1.3 million) and proceeds from long-term debt amounted to ¥148
million ($1.2 million). Cash and cash equivalents at the end of the period,
therefore, increased by ¥2,878 million ($23.9 million) to ¥16,740 million ($139
million), providing adequate liquidity for operations.

8

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

Years ended 31st March

Thousands of
U.S. dollars

Millions of yen
1999

2000

2001

2002

2003

2003

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

¥100,962¥100,291¥100,509¥ 98,462¥ 97,246$809,035

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

97,01996,07095,80893,67992,510769,634

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

2,675

2,678

3,006

2,841

2,758

22,945

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

1,268

1,543

1,695

1,942

1,978

16,456

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

1,486

2,061

(14,915)

1,329

8,231

68,478Net income (loss) ......................................................

551

910

(8,888)

578

4,407

36,664

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

4,794

3,483

4,117

823

1,261

10,491

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

3,687

3,458

3,305

2,532

2,051

17,063

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

¥ 5.59¥ 9.29¥(91.05)¥ 5.92¥ 45.10$0.3752

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

6.75

6.00

6.00

6.00

6.00

0.0499Total current assets ...................................................

¥ 40,617¥ 48,404¥ 32,346¥ 35,436¥ 39,183$325,982

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

48,217

61,731

61,88360,02357,942

482,047

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

98,901

120,697

109,261

109,767

108,543

903,020

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

26,21045,971

27,82428,43435,778297,654

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

23,32420,70636,802

36,741

25,214

209,767

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

49,36754,02044,63544,59247,551

395,599

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

98,41097,61097,61097,61097,610

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

5,952

5,757

5,636

5,548

5,462

RESULTS OF OPERATIONS:

Selling, general

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

YEAR-END FINANCIAL POSITION:

Long-term liabilities, excluding of

OTHER YEAR-END DATA:

9NON-CONSOLIDATED BALANCE SHEETSTONAMI TRANSPORTATION CO., LTD

As of 31st March, 2002 and 2003

Thousands of
U.S. dollars(Note 1)Millions of yen
2002

2003

2003

Cash ..............................................................................................................................................

¥ 6,618¥ 15,750$131,032

Marketable securities ...................................................................................................................

7,823

1,362

11,331

Notes and accounts (Note 7) .................................................................................................

17,90018,394

153,028

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

(46)

(51)

(424)

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

142

140

1,165

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

549

507

4,218

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

2,450

3,081

25,632

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

35,43639,183

325,982

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

35,96835,140292,346

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

40,58840,633

338,045

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

5,868

6,091

50,674

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

19,761

17,730147,504

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

1

—

—

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

(42,163)(41,652)(346,522)

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

60,02357,942

482,047

Investments in securities (Note 5) ..............................................................................................

4,511

4,108

34,176

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

1,584

1,631

13,569Loans to employees .....................................................................................................................

27

21

175

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

4,054

1,710

14,226

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

4,132

3,948

32,845

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

14,308

11,41894,991

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

¥109,767¥108,543$903,020

ASSETS
Current assets:

Trade receivables:

Property and equipment (Notes 4 and 5):

Investments and other assets:

The accompanying Notes are an integral part of these statements.

10Thousands of
U.S. dollars(Note 1)Millions of yen
2002

2003

2003

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

¥ 13,520¥ 13,360$111,148

Current portion of long-term debt (Note 5) ...............................................................................

578

578

4,809

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

—

7,000

58,236

Trade accounts payable (Note 7) ...............................................................................................

7,489

8,358

69,534

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

403

383

3,186

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

873

1,053

8,761

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

5,571

5,046

41,980Total current liabilities ..................................................................................................

28,43435,778297,654

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

9,688

2,110

17,554

Deferred tax liabilities from revaluation reserve for land (Note 10) ........................................

5,640

5,088

42,330

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

21,365

17,975

149,542

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

48

41

341

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

36,741

25,214

209,767

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

65,17560,992507,42197,610,118 shares in 2003 ...................................................................................

14,183

14,183

117,995

Capital surplus .............................................................................................................................

14,687

14,687122,188

Retained earnings ........................................................................................................................

7,732

12,065

100,374

Revaluation reserve for land (Note 10) ......................................................................................

7,872

7,494

62,346

Unrealized gain on securities ......................................................................................................

120

42

350

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

(2)

(920)

(7,654)

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

44,59247,551

395,599

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

¥109,767¥108,543$903,020

LIABILITIES AND SHAREHOLDERS’ EQUITYCurrent liabilities:

Long-term liabilities:

Contingent liabilities (Note 9)

Shareholders’ equity (Note 11):
Common stock:
Authorised: 299,200,000 shares in 2002
299,200,000 shares in 2003
Issued, par value ¥50 per share:
97,610,118 shares in 2002

11

NON-CONSOLIDATED STATEMENTS OF INCOME

TONAMI TRANSPORTATION CO., LTD.

For the two years ended 31st March, 2003

Thousands of
U.S. dollars(Note 1)Millions of yen
2002

2003

2003

¥98,462¥97,246$809,035

Cost of services (Notes 7 and 12) ...............................................................................................

93,67992,510769,634

Selling, general and administrative expenses (Note 12) ...........................................................

2,841

2,758

22,94596,52095,268792,579

1,942

1,978

16,456

Interest and dividend income (Note 7) ......................................................................................

322

288

2,396

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

(97)

2,793

23,236

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

(364)

(330)

(2,745)

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

(474)

3,502

29,135

(613)

6,253

52,022

1,329

8,231

68,478Current ..........................................................................................................................................

1,422

1,768

14,709Deferred .......................................................................................................................................

(671)

2,056

17,105751

3,824

31,814578¥ 4,407$ 36,664

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

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

Other income and expenses:

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

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

¥

U.S. dollars(Note 1)Yen

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

The accompanying Notes are an integral part of these statements.

12¥ 5.92¥45.10$0.3752

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

For the two years ended 31st March, 2003

Millions of yen
Sharesof commonstock(thousands)

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

97,610Commonstock

CapitalsurplusRetainedearnings¥14,183¥14,687¥ 7,770

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

Revaluation Unrealized
reservegain onfor land securities¥7,872

Treasury
stock

¥123

578

Cash dividends applicable tothe year (¥6.00 per share) ....................................................

(586)

Revaluation reserve for land ..................................................
Unrealized gain on securities .................................................

(3)

Treasury stock .........................................................................

¥

Bonuses to directors and statutory auditors ..........................
Balance as at 31st March, 2002 ...............................................

(2)

(30)
97,61014,183

14,687

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

7,732

7,872

120

(2)

4,407

Cash dividends applicable tothe year (¥6.00 per share) ....................................................

(586)

Revaluation reserve for land ..................................................

542

(378)

Unrealized gain on securities .................................................

(78)

Treasury stock .........................................................................

(918)

Bonuses to directors and statutory auditors ..........................
Balance as at 31st March, 2003 ...............................................

(30)
97,610¥14,183¥14,687¥12,065¥7,494¥ 42¥(920)

Revaluation Unrealized
reservegain onfor land securities

Treasurystock

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

CapitalsurplusRetainedearnings

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

$117,995 $122,188 $ 64,642

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

4,809$65,491$1,023

Cash dividends applicable tothe year ($0.0499 per share) ................................................

(4,875)

Revaluation reserve for land ..................................................
Unrealized gain on securities .................................................

(25)

Treasury stock .........................................................................

$

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

(17)

(250)
117,995

Balance as at 31st March, 2002 ...............................................
Net income ..............................................................................

122,188

64,32665,491998(17)

36,664

Cash dividends applicable tothe year ($0.0499 per share) ................................................

(4,875)

Revaluation reserve for land ..................................................

4,509(3,145)

Unrealized gain on securities .................................................

(648)

Treasury stock .........................................................................

(7,637)

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

(250)

Balance as at 31st March, 2003 ...............................................

$117,995 $122,188 $100,374

The accompanying Notes are an integral part of these statements.

13$62,346$ 350$(7,654)

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

For the two years ended 31st March, 2003

Millions of yen

Thousands of
U.S. dollars(Note 1)

2002

2003

2003

¥ 1,3292,532
97
0¥ 8,231
2,051(2,793)(0)$ 68,478
17,063(23,236)
(0)

—
(138)
747
99
247
507
23
(322)
361
1,071
9
(332)
108
129
6,467
322
(361)
(879)
5,549

(3,491)
39
323
111
(104)
101
(169)
(288)
327
(494)
2
872
(156)
75
4,637
288
(327)
(1,587)
3,011(29,043)
324
2,687
923
(865)
840
(1,406)(2,396)
2,720(4,110)17
7,255(1,298)624
38,5772,396(2,720)(13,203)
25,050Cash 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 .......................................................................
Liquidation of subsidiary ..............................................................................................................
Investments in loans receivable ..................................................................................................
Proceeds from collection of loans receivable ............................................................................
Other, net ....................................................................................................................................
Net cash (used in) provided by investing activities .........................................................

(198)
316
(200)
803
(948)
60
(776)
766
—
(1,443)
1,283
(153)
(490)

(10)
80
(202)
501
(1,149)
4,088
(612)
306
(19)
(585)
700
(989)
2,109

(83)
666
(1,681)
4,168(9,559)34,010(5,092)
2,546(158)(4,867)
5,824(8,228)17,546

Cash flows from financing activities:
Increase (decrease) in short-term loans .....................................................................................
Proceeds from long-term debt ....................................................................................................
Repayments of long-term debt ...................................................................................................
Purchase of treasury stock ..........................................................................................................
Dividends paid .............................................................................................................................
Net cash used in financing activities .................................................................................

80533(1,066)—(586)(1,039)

(160)
148
(726)
(918)
(586)
(2,242)(1,331)
1,231(6,040)(7,637)(4,875)(18,652)

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 .................................................................................

—
4,020
9,842
¥13,862—
2,878
13,862¥16,740—
23,944
115,324$139,268

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

The accompanying Notes are an integral part of these statements.

14

NOTES TO THE NON-CONSOLIDATED FINANCIAL STATEMENTS

1.

Basis of presenting financial statements(d) Property and equipment and intangible assets

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 ¥120.20 = U.S.$1, prevailing on
31st March, 2003, has been used for the translation into
U.S. dollar amounts in the financial statements.
2.

TONAMI TRANSPORTATION CO., LTD.

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, except for buildings andstructures. The buildings and structures are depreciated by
the straight-line method.
The ranges of useful lives of principal property andequipment are as follows:
Buildings and structures .............. 2-50 years
Machinery and vehicles ............... 2-15 years
Amortization of intangible assets is principally
computed using the straight-line method on thepresumption of having no salvage value.
Cost of software for internal use is amortized by thestraight-line method over the estimated useful years (fiveyears).

Summary of significant accounting policies(a) Non-consolidation(e) Leases

The accompanying non-consolidated financial statements
include only the accounts of the Company.
Investments in subsidiaries and affiliates are stated at
cost.

Finance leases, except those leases for which theownership of the leased assets is considered to betransferred to the lessee, are accounted for by the method
similar to that applicable to ordinary operating leases.

(b) Marketable securities and investments insecurities(f) Employees’ severance and retirement benefits
The Company’s employees are entitled to a lump-sum
payment upon retirement or severance of employment. In
order to provide for the employees’ severance andretirement benefits, the Company provided the liability forseverance and retirement benefits, which is included in theliability section of the non-consolidated balance sheets,
based on the estimated amounts of projected benefit
obligation and plan assets at the balance sheet dates.
Past service costs are recognized in expenses using thestraight-line method over 11 years (a certain period notexceeding the employees average remaining service lives)commencing with the year as occurred.
Actuarial gains and losses are recognized in expenses
using the straight-line method over 11 years (a certain
period not exceeding the employees’ average remaining
service lives) commencing with the next year as occurred.

Securities for which market value is readily determinable
are stated at market value as of the end of the year withunrealized gains and losses, not reflected in earnings but
directly reported as a separate component of shareholders’equity. The cost of such securities sold is determined by
the moving-average method.
Securities for which market value is not readily
determinable are stated at moving average cost.
(c) Allowance for doubtful accounts
Allowance for doubtful accounts is provided in an amountsufficient to cover possible losses on collection. Suchamount is computed by applying the rate of actual losses
on collection experienced in the past with respect togeneral trade receivables and by individually reviewing
their collectibility with respect to certain doubtfulreceivables.

15

Income taxes consist of corporation, enterprise, andinhabitants taxes.
The Company recognizes tax effects of temporary
differences between the financial statement basis and theincome tax basis of assets and liabilities.

of the Committee of Accounting System of The Associationof Japan Certified Public Accountants), and accounted forassuming that the substitutional portion of the projected
benefit obligation and the related pension plan assets to betransferred back to the government’s scheme had been
completed as of the permission date. The amount of thepension plan assets to be transferred back was ¥20,672
million ($171,980 thousand), which was calculated as of
31st March, 2003.

(i) Net income per share of common stock

4.

(g) Stock issue expenses
Stock issue expenses are charged to income as incurred.
(h) Income taxes

The computation of net income per share of common stockis based on the weighted average number of shares
outstanding (which represents the number of issued sharesless treasury stock.) during each financial year.
In accordance with a new accounting standard forearnings per share which became effective April 1, 2002,
net income per share of common stock was computed
based on the net income after subtracting a portion notavailable to shareholders of common stock.

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 ¥269 million ($2,238 thousand) and ¥269 million($2,238 thousand) as at 31st March, 2002 and 2003,
respectively.
5.

Short-term bank loans and long-term debt(j) Statements of cash flows(a) Short-term bank loans

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.

Short-term bank loans as at 31st March, 2002 and 2003
were as follows:—
Millions of yen(k) Reclassifications

3.

2002

2003

2003

Secured ........................................ ¥ 3,474¥ 3,474$28,902

9,886

82,246

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

Certain accounts and amounts stated in the shareholders’equity section of the balance sheets and the statements ofshareholders’ equity for the year ended 31st March, 2002
have been reclassified to conform to the presentation of theyear ended 31st March, 2003.

Thousands of
U.S. dollars

10,046

Interest rates range from 0.588% to 1.375%.
(b) Long-term debt
Long-term debt as at 31st March, 2002 and 2003 was asfollows:—

Supplementary information

Millions of yen

Employees’ severance and retirement benefits

Thousands of
U.S. dollars

2002

2003

2003

straight bonds due 2003 ........... ¥ 7,000¥7,000$58,236

2.05% ¥7 billion unsecured

Based on the newly enacted Defined Benefit Corporate
Pension Pan Law, the Company was permitted by the
Minister of Health, Labor and Welfare on 13th August, 2002
to be released from its future obligation for payments forthe substitutional portion of the Welfare Pension Fund
Insurance Scheme.
The Company applied the provisional treatment under
Clause 47-2 of “Practical Guidance for Accounting ofRetirement Remuneration (Interim Report)” Report No. 13

1.700%-2.100% loans fromfinancial institutions
due 2004 to 2008

16

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

1,867

1,689

14,052

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

1,400

1,000

8,319

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

10,267

9,689

80,607Less amount due within one year ...

578

7,578

63,045¥ 9,689¥2,111$17,562

The maturity date of the ¥7 billion 2.05% unsecured straightbonds, issued in September 1999 is 16th September, 2003.
The annual maturities of long-term debt outstanding as
at 31st March, 2002 were as follows:—

Income taxes applicable to the Company consist of
corporation, enterprise, and inhabitant taxes, which, inaggregate, resulted in a statutory tax rate of 41.7% for theyears ended 31st March, 2002 and 2003, respectively.
Significant differences between the statutory tax rate
and the Company’s effective tax rate after applying thedeferred tax accounting for the years ended 31st March,
2002 and 2003 are as follows:—

Millions of yen

Thousands of
U.S. dollars

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

¥7,578$63,045

2005 .............................................

578

4,808

2006 .............................................

378

3,145

2007 .............................................

178

1,481

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

2008 and thereafter .....................

977

8,128

Increase (decrease) in tax resulting from:Year ending 31st March,

2002

2003

41.7%

41.7%

3.2

0.4

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

(3.2)

(0.4)

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

14.6

2.3

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

(c) Pledged assets

Nontaxable income including dividends

As at 31st March, 2003, Property and equipment having a
net value of ¥19,442 million ($161,747 thousand) was
pledged as collateral for short-term bank loans and longterm debt (including current portion of long-term debt),
and investment in securities of ¥77 million ($641 thousand)was pledged as collateral for short-term bank loans.
6.

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

As described in Note 2(h), the Company recognizes tax
effects of temporary differences between the financial
statement basis and the income tax basis of assets andliabilities.
Significant components of deferred tax assets andliabilities are as follows:—
Thousands of
U.S. dollars

2002

2003

2003

¥ 327

¥ 332

$ 2,762

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

Excess employees' severance andretirement benefits accrued

7,682

6,448

53,644

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

363

411

3,419

Gross deferred tax assets ..

8,372

7,191

59,825

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

—

(194)

(1,614)

Total deferred tax assets ...

8,372

6,997

58,211

(86)

(28)

(233)

Deferred tax liabilities:
Unrealized gain on securities
Reserve under Special Taxation
Measures Law ......................

(3,683)(4,753)(39,542)

Total deferred tax liabilities....

(3,769)(4,781)(39,775)

Net deferred tax assets ....................

¥4,603¥2,216$18,436

2.4
46.4%

On 31st March, 2003, a revised local tax law was enacted
and become effective for fiscal years commencing on 1st
April, 2004 or later. According to the revised local tax law,
income tax law rates for enterprise taxes will be reduced
resulting from introducing the assessment by estimation on
the basis of paid-in capital and value added.
As a result, the statutory effective tax rate applied on
or after 1st April, 2004 to deferred taxes assets andliabilities has been decreased from 41.7% to 40.4%. The
reduction of the statutory effective tax rate resulted in adecrease in deferred tax assets, net of deferred tax
liabilities, of ¥38 million ($316 thousand) and a charge toincome taxes—deferred of ¥38 million ($316 thousand) for
the year ended 31st March, 2003. Also, deferred tax
liabilities on unrealized gain on revaluation for landdecreased by ¥163 million ($1,356 thousand) andunrealized gain on revaluation for land increased by thesame amount for the year ended 31st March, 2003.

Income taxes

Millions of yen

0.2
56.5%

17

7.

Accounts and transactions with subsidiaries andaffiliates

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

As at 31st March, 2003, the Company had 24 subsidiaries
and 8 affiliates.
Receivables from, payables to, and transactions withthese subsidiaries and affiliates are summarized asfollows:—
Thousands of
U.S. dollars

Millions of yen
2002

2003

2003

¥ 327

¥ 306

$ 2,546

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

1,123

1,148

9,551

Trade accounts payable .............

1,544

1,418

11,797

Notes and accounts receivable ..

Millions of yen

Thousands of
U.S. dollars

Difference between the fair market value
Thousands of
U.S. dollars

Millions of yen
2002

2003

2003

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

¥2,109¥2,334$19,418

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

7,038

7,665

63,769Interest income ...........................

25

22

183

8.

of revaluated land at 31st March, 2003
and the revaluated book value ....................

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

The amount of lease payment under finance lease for theyear ended 31st March, 2002 and 2003 were ¥1,339 million($11,140 thousand) and ¥1,859 million ($15,466 thousand),
respectively.
The amount of future lease payments of finance leases
as at 31st March, 2002 and 2003 were as follows:—
Thousands of
U.S. dollars

2002

2003

2003

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

¥1,594¥1,881$15,649

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

4,621

5,265

43,802¥6,215¥7,146$59,451

12. Supplementary income information
Supplementary income information for the two years ended
31st March, 2003 is as follows:—
Millions of yen

9.

Contingent liabilities

As at 31st March, 2003, the Company was contingently
liable as follows:—
Millions of yen

Thousands of
U.S. dollars

to employees ............................

¥$

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

1,307

Guarantees of welfare pension
housing loans sublet
8$50,441

11. Shareholders’ equity

Finance leases

Millions of yen¥6,06367

10,87418

Thousands of
U.S. dollars

2002

2003

2003

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

¥2,532¥2,051$17,063

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

3,290

3,282

27,304

14. Subsequent event
At the Board of Directors’ meeting held on 20th June, 2003,
the following decision on issuance of unsecured bonds was
made.
The second issuance of unsecured bond:Total amount of issue: .....................
¥6,400 million($53,245 thousand)Interest rate: ......................................
0.89%
Redemption date: .............................
30th June, 2008
Payment date: ...................................
30th June, 2003
The third issuance of unsecured bond:Total amount of issue: .....................
Interest rate: ......................................
Redemption date: .............................
Payment date: ...................................

¥600 million($4,992 thousand)
0.52%
30th June, 2008
30th June, 2003

The annual shareholders’ meeting of the Company, which
was held on 27th June, 2003, duly approved the following
appropriations of retained earnings existing as at 31st
March, 2003:—

Dividends (¥5.00 per share) .......

Millions of yen

Thousands of
U.S. dollars¥472$3,92730

250

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

19

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

We have examined the non-consolidated balance sheets of Tonami Transportation Co.,
Ltd. as at 31st March, 2002 and 2003 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, 2002 and 2003 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.
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.

Shin Nihon & Co.
Toyama Prefecture, Japan
27th June, 2003

20

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

Years ended 31st March

Thousands of
U.S. dollars

Millions of yen
1999

2000

2001

2002

2003

2003

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

¥116,829¥117,794¥118,166¥118,515¥116,331$967,812

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

108,979

108,902109,672

110,302

107,928

897,903

Selling, general and administrative expenses ..........

5,906

6,480

6,090

5,755

5,630

46,839Operating income .....................................................

1,944

2,412

2,404

2,458

2,773

23,070Net income (loss) ......................................................

124

1,276

(8,786)

720

4,819

40,091

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

4,470

4,216

4,092

3,303

2,775

23,087¥ 1.26¥13.04¥(90.02)¥ 7.38¥48.99$0.4076

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

¥ 44,610¥ 52,002¥ 37,583¥ 40,245¥ 43,692$363,494

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

53,431

66,99067,16065,33063,258526,273

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

108,546

130,284

120,696

120,759

119,243

992,038

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

31,57951,113

34,11334,184

41,298343,577

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

24,88422,07538,87638,802

26,799222,953

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

51,491

56,431

47,11347,17050,508420,200

—

7,142

7,075

6,952

6,943

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

YEAR-END FINANCIAL POSITION:

Long-term liabilities, excluding of

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

21

CONSOLIDATED BALANCE SHEETS TONAMI TRANSPORTATION CO., LTD.
AND CONSOLIDATED SUBSIDIARIESAs of 31st March, 2002 and 2003

Thousands of
U.S. dollars(Note 1)Millions of yen
2002

2003

2003

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

¥ 8,183¥ 17,023$141,623

Marketable securities (Note 4) ....................................................................................................

7,823

1,362

11,331

Notes and accounts (Note 9) .................................................................................................

21,022

21,239176,697

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

(76)

(84)

(699)

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

602

636

5,291

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

800

608

5,058

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

1,891

2,908

24,193

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

40,245

43,692

363,494

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

37,64436,837

306,464

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

22,71922,179184,518

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

4,350

3,623

30,141

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

1

—

—

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

616

619

5,150

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

65,33063,258526,273

Investments in securities (Notes 4 and 6) ..................................................................................

5,639

5,412

45,025

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

4,187

1,928

16,040Foreign currency translation adjustments ...................................................................................

4

10

83

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

5,354

4,943

41,123

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

15,184

12,293102,271

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

¥120,759¥119,243$992,038

ASSETS
Current assets:

Trade receivables:

Property and equipment (Notes 5 and 6):

Investments and other assets:

The accompanying Notes are an integral part of these statements.

22

Thousands of
U.S. dollars(Note 1)Millions of yen
2002

2003

2003

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

¥ 15,809¥ 15,435$128,411

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

781

903

7,512

LIABILITIES AND SHAREHOLDERS’ EQUITYCurrent liabilities:

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

—

7,000

58,236

Trade notes and accounts payable .............................................................................................

9,535

10,34786,082

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

1,021

1,230

10,233

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

7,038

6,383

53,103

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

34,184

41,298343,577

10,495

2,606

21,680Long-term liabilities:
Long-term debt, less current portion (Note 6) ...........................................................................
Deferred tax liabilities from revaluation reserve for land (Note 10) ........................................

5,640

5,089

42,338

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

22,496

18,964

157,770

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

171

140

1,165

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

38,802

26,799222,953

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

72,986

68,097566,530

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

603

638

5,308

14,183

14,183

117,995

Capital surplus .............................................................................................................................

14,687

14,687122,188

Retained earnings ........................................................................................................................

10,30715,018

124,942

Revaluation reserve for land (Note 10) ......................................................................................

7,872

7,494

62,346

Contingent liabilities (Note 9)
Shareholders’ equity (Note 11):
Common stock:
Authorised: 299,200,000 shares in 2002
299,200,000 shares in 2003
Issued, par value ¥50 per share:
97,610,118 shares in 2001
97,610,118 shares in 2002 .................................................................................

Unrealized gain on securities ......................................................................................................

123

46

383

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

(2)

(920)

(7,654)

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

47,17050,508420,200

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

¥120,759¥119,243$992,038

23

CONSOLIDATED STATEMENTS OF INCOME TONAMI TRANSPORTATION CO., LTD.
AND CONSOLIDATED SUBSIDIARIESFor the two years ended 31st March, 2003

Thousands of
U.S. dollars(Note 1)Millions of yen
2002

2003

2003

¥118,515¥116,331$967,812

118,515

116,331

967,812

Operating cost (Note 12) .............................................................................................................

110,302

107,928

897,903

Selling, general and administrative expenses (Note 12) ...........................................................

5,755

5,630

46,839116,057

113,558

944,742

2,458

2,773

23,070Interest and dividend income .....................................................................................................

363

368

3,062

Loss on sells of property and equipment, net ...........................................................................

(107)

2,765

23,003

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

(424)

(380)

(3,162)Others, net ...................................................................................................................................

(531)

3,534

29,401

(699)

6,287

52,304

1,759

9,060

75,374Current ..........................................................................................................................................

1,726

2,073

17,246

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

(708)

2,121

17,646

1,018

4,194

34,892

21

47

391

4,819

$ 40,091

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 7):

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

¥

720

¥

U.S. dollars(Note 1)Yen

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

The accompanying Notes are an integral part of these statements.

24¥ 7.38¥48.99$0.4076

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY TONAMI TRANSPORTATION CO., LTD.
AND CONSOLIDATED SUBSIDIARIESFor the two years ended 31st March, 2003

Millions of yen
Sharesof commonstock(thousands)

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

97,610Commonstock

CapitalsurplusRetainedearnings¥14,183¥14,687¥10,238

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

Revaluation Unrealized
reservegain onfor land securities¥7,872

Treasury
stock

¥133

720

Cash dividends applicable tothe year (¥6.00 per share) ....................................................

(586)

Revaluation reserve for land ..................................................
Unrealized gain on securities .................................................

(10)

Treasury stock .........................................................................

¥

Bonuses to directors and statutory auditors ..........................
Balance as at 31st March, 2002 ...............................................

(2)

(65)
97,61014,183

14,687

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

10,307

7,872

123

(2)

4,819

Cash dividends applicable tothe year (¥6.00 per share) ....................................................

(586)

Revaluation reserve for land ..................................................

542

(378)

Unrealized gain on securities .................................................

(77)

Treasury stock .........................................................................

¥ (918)Bonuses to directors and statutory auditors ..........................
Balance as at 31st March, 2003 ...............................................

(64)
97,610¥14,183¥14,687¥15,018¥7,494¥ 46¥ (920)

Revaluation Unrealized
reservegain onfor land securities

Treasurystock

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

CapitalsurplusRetainedearnings

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

$117,995 $122,188 $ 85,175

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

5,990$65,491$1,106

Cash dividends applicable tothe year ($0.0499 per share) ................................................

(4,875)

Revaluation reserve for land ..................................................
Unrealized gain on securities .................................................

(83)

Treasury stock .........................................................................

$

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

(17)

(541)

Balance as at 31st March, 2002 ...............................................

117,995

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

122,188

85,74965,491

1,023

(17)

40,091

Cash dividends applicable tothe year ($0.0499 per share) ................................................

(4,875)

Revaluation reserve for land ..................................................

4,509(3,145)

Unrealized gain on securities .................................................

(640)

Treasury stock .........................................................................

(7,637)

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

(532)

Balance as at 31st March, 2003 ...............................................

$117,995 $122,188 $124,942

The accompanying Notes are an integral part of these statements.

25$62,346$ 383$(7,654)

CONSOLIDATED STATEMENTS OF CASH FLOWS TONAMI TRANSPORTATION CO., LTD.
AND CONSOLIDATED SUBSIDIARIESFor the two years ended 31st March, 2003

Millions of yen

Thousands of
U.S. dollars(Note 1)

2002

2003

2003

¥ 1,759
3,303
106
2

¥ 9,060
2,775(2,765)(0)$ 75,374
23,087(23,003)
0

—
(134)
557
123
307
(134)
132
527
0
(228)
422
1,347
(30)
(784)
93
197
7,565
228
(422)
(1,191)
6,180(3,626)
32
338
129
(7)
(167)
81
94
(186)
(201)
380
(219)
(33)
812
(143)
(228)
6,126
201
(380)
(1,864)
4,083(30,166)
266
2,812
1,073
(58)
(1,389)674
782(1,547)(1,672)
3,161(1,822)(275)
6,755(1,190)(1,897)50,965
1,672(3,161)(15,507)
33,969Cash 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 .......................................................................
Liquidation of subsidiary .............................................................................................................
Investments in loans receivable ..................................................................................................
Proceeds from collection of loans receivable ............................................................................
Other, net .....................................................................................................................................
Net (used in) provided by investing activities .................................................................

(494)
569
(200)
803
(1,649)
84
(756)
778
—
(651)
590
(171)
(1,097)

(111)
295
(202)
501
(2,080)
4,118
(764)
322
(19)
(445)
636
(848)
1,403

(923)
2,454
(1,681)
4,168(17,305)
34,260(6,356)
2,679(158)(3,702)
5,291(7,055)
11,672

Cash flows from financing activities:
Net decrease in short-term loans ................................................................................................
Proceeds from long-term debt ....................................................................................................
Repayment of long-term debt .....................................................................................................
Purchase of treasury stock ..........................................................................................................
Dividends paid .............................................................................................................................
Dividends paid to minority interests ..........................................................................................
Net cash used in financing activities .................................................................................

(118)
742
(1,135)—(578)(8)(1,097)(534)
379(1,120)
(918)
(586)
(7)
(2,786)(4,443)
3,153(9,318)(7,637)(4,875)(58)(23,178)

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 .................................................................................

—
3,986
11,187¥15,173—2,700
15,173¥17,873—
22,463
126,231$148,694

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

The accompanying Notes are an integral part of these statements.

26

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

1.

Basis of presenting financial statements

Depreciation of property and equipment is computedby the declining balance method, except for buildings andstructures. The buildings and structures are depreciated by
the straight-line method.
The ranges of useful lives of principal property andequipment are as follows:
Buildings and structures .............. 2-50 years
Machinery and vehicles ............... 2-15 years
Amortization of intangible assets is principally
computed using the straight-line method on thepresumption of having no salvage value.
Cost of software for internal use is amortized by thestraight-line method over the estimated useful years (fiveyears).

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 ¥120.20 = U.S.$1, prevailing on
31st March, 2003, has been used for the translation into
U.S. dollar amounts in the financial statements.
2.

(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.

Summary of significant accounting policies(a) Consolidation(f) Employees’ severance and retirement benefits

The accompanying consolidated financial statements
include the accounts of the Company and its 24 significant
majority-owned subsidiaries for the year ended 31st March,
2003 (25 for 2002).
All significant intercompany accounts and transactions
have been eliminated in consolidation.
Eight of the investments in unconsolidated subsidiaries
or affiliates (9 for 2002) are accounted for by the equity
method.

The Company’s employees are entitled to a lump-sum
payment upon retirement or severance of employment. In
order to provide for the employees’ severance andretirement benefits, the Company and its consolidated
subsidiaries provided the liability for severance andretirement benefits, which is included in the liability sectionof the consolidated balance sheet, based on the estimatedamounts of projected benefit obligation and plan assets atthe balance sheet dates.
Past service costs are recognized in expenses using
the straight-line method over 11 years (a certain period notexceeding the employees average remaining service lives)commencing with the year as occurred.
Actuarial gains and losses are recognized in expenses
using the straight-line method over 11 years (a certain
period not exceeding the employees’ average remaining
service lives) commencing with the next year as occurred.

(b) Marketable securities and investments insecurities
Securities for which market value is readily determinable
are stated at market value as of the end of the year withunrealized gains and losses, not reflected in earnings but
directly reported as a separate component of shareholders’equity. The cost of such securities sold is determined by
the moving-average method.
Securities for which market value is not readily
determinable are stated at moving average cost.

(g) Stock issue expenses
Stock issue expenses are charged to income as incurred.

(c) Allowance for doubtful accounts(h) Remeasurement of assets and liabilities of
consolidated subsidiaries

Allowance for doubtful accounts is provided in an amountsufficient to cover possible losses on collection. Suchamount is computed by applying the rate of actual losses
on collection experienced in the past with respect togeneral trade receivables and by individually reviewing
their collectibility with respect to certain doubtfulreceivables.

Assets and liabilities of the consolidated subsidiaries are
remeasured using the full fair value method.
(i) Amortization of consolidation difference
Differences between the acquisition cost and theunderlying net equity of subsidiaries at the time ofacquisition are amortized on the straight-line basis over theperiod of five or 20 years.
When their amounts are, however, not significant, thedifferences are fully charged or credited to income at thedates of acquisition.

(d) Property and equipment and intangible assets
Property and equipment are stated at cost. However, underJapanese tax law, capital gains arisen from disposals andother similar transactions are deducted from the cost of theproperty and equipment acquired in substitution.
27

4.

(j) Income taxes
Income taxes consist of corporation, enterprise, andinhabitants taxes.
The Company and its consolidated subsidiaries
recognize tax effects of temporary differences between thefinancial statement basis and the income tax basis of assets
and liabilities.

Marketable securities and investments insecurities

Acquisition cost and book value of securities with available
market values as at 31st March, 2002 are summarised asfollows:—(k) Net income per share of common stock

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

The computation of net income per share of common stock
has been based on the weighted average number of shares
outstanding (which represents the number of issued sharesless treasury stock.) during each financial year.
(l) Statements of cash flows
Cash and cash equivalents include cash on hand, deposits
placed with banks on demand, and highly liquid
investments with insignificant risk of changes in value
which have maturities of three months or less whenpurchased.

Thousands of
U.S. dollars

2002

2002

¥1,606
2,103$13,361
17,496¥2,043
1,757$16,997
14,617

Acquisition costs and book values of securities withavailable market values as of 31st March, 2003 aresummarized as follows:—(m) Foreign currency translation
The Company and its consolidated subsidiaries adopted therevised accounting standards for foreign currencytranslation.

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

(n) Reclassifications
Certain accounts and amounts stated in the shareholders’equity section of the balance sheets and the statements ofshareholders’ equity for the year ended 31st March, 2002
have been reclassified to conform to the presentation of theyear ended 31st March, 2003.

3.

Millions of yen

5.

Millions of yen

Thousands of
U.S. dollars

2003

2003

¥1,1601,601$ 9,651
13,319¥1,832
1,470$15,241
12,230Property and equipment

Depreciable property is stated at the net book value in the
consolidated balance sheets. The amounts of accumulated
depreciation were ¥49,513 million ($411,922 thousand) and¥49,094 million ($408,436 thousand) on 31st March, 2002
and 2003, 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 ¥269 million($2,238 thousand) and ¥269 million ($2,238 thousand) on
31st March, 2002 and 2003, respectively.

Supplemental information

Employees’ severance and retirement benefits
Based on the newly enacted Defined Benefit Corporate
Pension Pan Law, the Company and its consolidated
subsidiaries were permitted by the Minister of Health,
Labor and Welfare on 13th August, 2002 to be released
from their future obligation for payments for thesubstitutional portion of the Welfare Pension Fund
Insurance Scheme.
The Company applied the provisional treatment under
Clause 47-2 of “Practical Guidance for Accounting ofRetirement Remuneration (Interim Report)” Report No. 13of the Committee of Accounting System of The Associationof Japan Certified Public Accountants), and accounted forassuming that the substitutional portion of the projected
benefit obligation and the related pension plan assets to betransferred back to the government’s scheme had been
completed as of the permission date.

28

6.

Short-term bank loans and long-term debt

Significant components of deferred tax assets andliabilities are as follows:—(a) Short-term bank loans
Short-term bank loans as at 31st March, 2002 and 2003
were as follows:—
Millions of yen

Millions of yen
2002

Deferred tax assets:
Excess bonuses accrued ........ ¥ 385
Excess employees’ severance andretirement benefits accrued ...
8,090
Other .......................................
323
Gross deferred tax assets ....
8,798
Valuation allowance ..............
—
Total deferred tax assets .....
8,798
Deferred tax liabilities:
Unrealized gain on securities(88)
Reserve under Special Taxation
Measures Law ...................... (3,722)
Total deferred tax liabilities . (3,810)
Net deferred tax assets .................. ¥4,988

Thousands of
U.S. dollars

2002

2003

2003

Secured ........................................ ¥ 4,662
Unsecured ................................... 11,148¥ 4,283
11,152$35,632
92,779Interest rates range from 0.6% to 3.2%.
(b) Long-term debt
Long-term debt as at 31st March, 2002 and 2003 was asfollows:—
Millions of yen
2002

2.05% ¥7 billion unsecured
straight bonds due 2003............ ¥ 7,000
0.6%–3.6% loans from financial
institutions due 2004 to 2008
and thereafter
Secured ...................................
2,348
Unsecured................................
1,928
Total ................................... 11,276
Less: amount due within
one year ....................................
781¥10,495

Thousands of
U.S. dollars

2003

2003

¥ 7,000$58,236

2,049
1,460
10,50917,047
12,14687,4297,903¥ 2,606

65,749$21,680

2004 .............................................
2005 .............................................
2006 ..............................................
2007 ..............................................
2008 and thereafter .....................

Millions of yen

Thousands of
U.S. dollars¥7,903
791
517
268
1,030

$65,749
6,581
4,301
2,230
8,569

Statutory tax rate................................................
Increase (reduction) in tax resulting from:
Nondeductible expenses including
entertainment, etc. ..................................
Nontaxable income including dividends
received deduction, etc. ........................
Per capita portion of inhabitant taxes......
Equity in earnings of affiliates ..................
Other ..........................................................
Effective tax rate ................................................

2003

¥ 394

$ 3,278

6,800
384
7,578
(216)
7,362

56,572
3,195
63,045(1,797)
61,248

(31)

(258)

(4,796)(4,827)¥2,535(39,900)(40,158)$21,090

2002

2003

41.6%

41.6%

4.0

0.6

(2.5)
11.5
(3.2)
6.5
57.9%

(0.4)
2.2
(0.8)
3.1
46.3%

On 31st March, 2003, a revised local tax law wasenacted and become effective for fiscal years commencing
on 1st April, 2004 or later. According to the revised local
tax law, income tax law rates for enterprise taxes will be
reduced resulting from introducing the assessment by
estimation on the basis of paid-in capital and value added.
As a result, the statutory effective tax rate applied on
or after 1st April, 2004 to deferred taxes assets andliabilities has been decreased from 41.59% to 41.58%. The
reduction of the statutory effective tax rate resulted in adecrease in deferred tax assets, net of deferred tax
liabilities, of ¥39 million ($324 thousand) and a charge toincome taxes-deferred of ¥39 million ($324 thousand) for
the year ended March 31, 2003. Also, deferred tax liabilities
on unrealized gain on revaluation for land decreased by¥163 million ($1,356 thousand) and unrealized gain on
revaluation for land increased by the same amount for theyear ended March 31, 2003.

(c) Pledged assets
Property and equipment having a net value of ¥20,557
million ($171,023 thousand) was pledged as collateral for
short-term bank loans and long-term debt, and investment
in securities of ¥87 million ($724 thousand) was pledged ascollateral for short-term bank loans as at 31st March, 2003.
7.

2003

Income taxes applicable to the Company consist of
corporation, enterprise, and inhabitant taxes, which, inaggregate, resulted in a statutory tax rate of 41.6% for theyears ended 31st March, 2002 and 2003, respectively.
Significant differences between the statutory tax rate
and the Company’s effective tax rate after applying thedeferred tax accounting for the years ended 31st March,
2002 and 2003 are as follows:—

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

Income taxes

As described in Note 2(j), the Company and its
consolidated subsidiaries recognizes tax effects of
temporary differences between the financial statement basis
and the income tax basis of assets and liabilities.
29

8.

Finance leases

11. Shareholders’ equity

The amount of lease payment under finance lease for theyear ended March 31, 2002 and 2003 were ¥1,429 million($11,889 thousand) and ¥2,048 million ($17,038 thousand),
respectively. Future lease payments of finance leases as at
31st March, 2002 and 2003 were as follows:—
Thousands of
U.S. dollars

Millions of yen

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

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

2002

2003

2003

¥1,6794,740¥6,419¥2,063
5,752¥7,815$17,163
47,854$65,017

12. Supplementary income information9.

Supplementary income information for the year ended 31st
March, 2002 and 2003 is as follows:—

Contingent liabilities

As at 31st March, 2003, the Company were contingently
liable as follows:—
Millions of yen

Thousands of
U.S. dollars¥ 399$ 3,319

8
55
1,529

67
458
12,720Notes discounted with banks .....
Guarantees of welfare pension
housing loans sublet
to employees .............................
Notes endorsed ...........................
Others ..........................................

Millions of yen

Depreciation expenses ...............
Lease and rental ..........................

2002

2003

2003

¥3,303
4,882¥2,775
4,866$23,087
40,483

13. Subsequent event
At the Board of Directors’ meeting held on 20th June, 2003,
the following decision on issuance of unsecured bonds was
made.
The second issuance of unsecured bond:

10. Revaluation reserve for land

Total amount of issue: ............................

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

Difference between the fair market valueof revalued land at 31st March, 2003
and the revalued book value ......................

¥6,063Thousands of
U.S. dollars

Interest rate: ............................................
Redemption date: ....................................
Payment date: .........................................

The third issuance of unsecured bond:Total amount of issue: .....................
Interest rate: ......................................
Redemption date: .............................
Payment date: ...................................

Thousands of
U.S. dollars¥6,400 million($53,245 thousand)
0.89%
30th June, 2008
30th June, 2003

¥600 million($4,992 thousand)
0.52%
30th June, 2008
30th June, 2003

The annual shareholders’ meeting of the Company, which
was held on 20th June, 2003, duly approved the following
appropriations of retained earnings existing as at 31st
March, 2003:—$50,441

Dividends (¥3.00 per share) .......
Bonuses to directors andstatutory auditors ......................

30

Millions of yen

Thousands of
U.S. dollars¥293$2,19930

225

14. 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 2003 is as follows:—
For the year ended 31st March, 2002
Millions of yen
Logistics

OthersTotal

Eliminations(Notes 1 and 2)

Consolidated

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

¥106,679
16
106,695
105,270¥ 1,425¥11,836
4,140
15,976
14,803¥ 1,173¥118,515
4,156
122,671
120,073¥ 2,598¥—(4,156)(4,156)(4,016)¥ (140)¥118,515—
118,515
116,057¥ 2,458

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

¥ 90,704¥ 3,135¥ 1,397¥ 8,104¥ 0,179¥ 0,279¥ 98,808¥ 3,314¥ 1,676¥ 21,951¥
11¥
9¥120,759¥ 3,303¥ 1,667

For the year ended 31st March, 2003
Millions of yen
Logistics

OthersTotal

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

¥105,785
13
105,798
103,711¥ 2,087¥10,546
4,900
15,446
14,621¥ 825¥116,331
4,913
121,244
118,332¥ 2,912¥—(4,913)(4,913)(4,773)¥(140)¥116,331—
116,331
113,559¥ 2,772

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

¥ 87,653¥ 2,603¥ 1,983¥ 9,532¥ 184¥
77¥ 97,185¥ 2,787¥ 2,060¥ 22,058¥12¥
10¥119,243¥ 2,775¥ 2,07031

Eliminations(Notes 1 and 2)

Consolidated

For the year ended 31st March, 2002
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 ........................................................

$887,512133
887,645875,790$ 11,855$ 98,469
34,443
132,912
123,153$ 9,759$ 985,981
34,576
1,020,557
998,943$ 21,614$—(34,576)(34,576)(33,411)$ (1,165)$ 985,981—
985,981965,532$ 20,449

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

$754,609$ 26,082$ 11,622$ 67,421$ 1,489$ 2,321$ 822,030$ 27,571$ 13,943$182,621$
92$
75$1,004,651$ 27,479$ 13,868

For the year ended 31st March, 2003
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 ........................................................

$880,075
108
880,183
862,820$ 17,363$ 87,737
40,765
128,502
121,639$ 6,863$ 967,812
40,873
1,008,685
984,459$ 24,226$—(40,873)(40,873)(39,709)$ (1,164)$967,812—
967,812944,750$ 23,062

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

$729,226$ 21,655$ 16,498$ 79,301$ 1,531$640$ 808,527$ 23,186$ 17,138$183,511$
99$83$992,038$ 23,087$ 17,221

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 ¥190 million ($1,581 thousand) and ¥188 million ($1,564
thousand) for the years ended 31st March, 2002 and 2003, 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 ¥28,181 million ($234,451 thousand) and ¥28,287 million ($235,333 thousand) for the years
ended 31st March, 2002 and 2003, respectively.
The two business segments mainly consist of the following services:
Logistics ...... Road haulage, freight forwarding, warehousing, and harbor transport and customs services
Others ......... Vehicle maintenance, casualty insurance, leasing, merchandising and commissioned sales andpurchases, travel services, mail order services, travel inn, and other businesses
Neither geographical segment information nor overseas sales have been presented because any of the Company’s
consolidated subsidiaries has not been domiciled outside Japan, and the Company and its consolidated subsidiaries have notoverseas sales for the years ended March 31, 2002 and 2003.
32

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

We have examined the consolidated balance sheets of Tonami Transportation Co., Ltd.
and its consolidated subsidiaries as at 31st March, 2002 and 2003 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, 2002 and 2003 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.
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.

Shin Nihon & Co.
Toyama Prefecture, Japan
27th June, 2003

33

CORPORATE DATAHead Office

Consolidated Subsidiaries

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

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

Tokyo OfficeOsaka Tonami Transportation Co., Ltd.
Road haulage

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

Date of Establishment
June 1943

Common Stock

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

Ishikawa Tonami Transportation Co., Ltd.
Road haulage

Issued and Outstanding Shares
97,610,118 shares

Kanagawa Tonami Transportation Co., Ltd.
Road haulage

Shareholders

Kansai Tonami Transportation Co., Ltd.
Road haulage

8,641

Employees
5,462

Terminals

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

87

Kawai Transportation Co., Ltd.
Road haulage

Warehouses
41

Chukyo Tonami Transportation Co., Ltd.
Road haulage

Motor Vehicles

Saitama Tonami Transportation Co., Ltd.
Road haulage

5,582(As of 31st March, 2003)

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

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

Tow years ended March 31, 2003

Thousands of
U.S. dollars

Millions of yen
2002

2003

2003

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

¥ 98,462¥ 97,246$809,035

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

1,942

1,978

16,456

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

578

4,407

36,66445.10$ 0.3752

6.00

6.00

0.0499Total assets ............................................................................... ¥109,767¥108,543$903,020

47,551

395,599

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

¥

5.92

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

¥AT YEAR-END:

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

44,592

Notes: 1 U.S. dollar amounts presented herein are included solely for convenience. The rate of ¥120.20 = U.S.$1,
prevailing on 31st March, 2003, has been used for the translation into U.S. dollar amounts.
2 The computation of net income per share of common stock is based on the weighted average number ofshares outstanding (which represents the number of issued shares less treasury stock.) during each financial
year.

CONTENTS
1
2
4
5
34

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

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

TONAMI TRANSPORTATION CO., LTD.
ANNUAL REPORT 2003

Printed in Japan