日本 | 郵船ロジスティクス - financial highlights...unrealized gains or losses on...

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1Q 2Q 3Q FY

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Financial Highlights

03/2013 03/2014 03/2015 03/2016 03/2017

FY 339,049 406,040 460,968 469,816 439,1413Q 248,634 303,536 334,192 358,954 326,3002Q 161,818 199,450 213,527 237,417 214,5841Q 77,658 99,270 103,658 117,562 108,650

03/2013 03/2014 03/2015 03/2016 03/2017

FY 1,119 1,315 2,775 2,699 (2,511)3Q 1,494 913 1,884 3,828 (8)2Q 1,345 282 695 2,371 (189)1Q 1,267 (592) (518) 642 355

Net Sales (Millions of Yen)

Net Income Attributable toOwners of the Parent (Millions of Yen)

03/2013 03/2014 03/2015 03/2016 03/2017

FY 2,744 4,942 10,007 10,003 5,9703Q 3,078 3,740 6,896 8,806 5,1752Q 2,040 1,897 4,038 5,518 3,8551Q 1,107 186 1,409 2,033 1,765

Ordinary Income (Millions of Yen)Operating Income (Millions of Yen)

Net Income per Share (Yen)

03/2013 03/2014 03/2015 03/2016 03/2017

FY 1,659 4,523 9,303 9,057 4,2243Q 2,210 3,478 6,295 7,514 3,7412Q 1,235 1,538 3,630 4,598 2,8961Q 447 (140) 1,295 1,863 1,202

03/2013 03/2014 03/2015 03/2016 03/2017

FY 26.53 31.17 65.81 64.01 (59.54)3Q 35.44 21.65 44.68 90.79 (0.18)2Q 31.90 6.68 16.49 56.22 (4.49)1Q 30.04 (14.03) (12.29) 15.23 8.42

2017 Annual Report 39

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FinancialInformation

003/2013 03/2014 03/2015 03/2016 03/2017

5

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5

-5

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5

-5

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5

10

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03/2013 03/2014 03/2015 03/2016 03/2017

10

-10

20

003/2013 03/2014 03/2015 03/2016

25

75

50

100

03/20171Q 2Q 3Q FY

03/2013 03/2014 03/2015 03/2016 03/2017

FY 0.5 1.1 2.0 1.9 1.0

03/2013 03/2014 03/2015 03/2016 03/2017

FY 0.7 0.7 1.3 1.3 (1.2)03/2013 03/2014 03/2015 03/2016 03/2017

FY 1.8 2.0 3.8 3.6 (3.5)

03/2013 03/2014 03/2015 03/2016 03/2017

FY 0.8 1.2 2.2 2.1 1.403/2013 03/2014 03/2015 03/2016 03/2017

FY 0.3 0.3 0.6 0.6 (0.6)

Operating Income to Net Sales (%)

Net Income to Total Assets (%)

Net Income to Net Sales (%)Ordinary Income to Net Sales (%)

Return on Equity (%) Shareholders’ Equity Ratio (%)

03/2013 03/2014 03/2015 03/2016 03/2017

FY 36.7 36.0 34.6 36.4 33.43Q 36.6 35.9 34.7 36.3 34.32Q 36.1 35.9 35.4 36.0 34.81Q 36.4 36.1 35.1 35.6 35.9


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Six-Year Summary

Results of OperationsMillions of Yen

Thousands ofU.S. Dollars

(Note 1)

2012 2013 2014 2015 2016 2017 2017

Net sales ¥309,004 ¥339,049 ¥406,040 ¥460,968 ¥469,816 ¥439,141 $3,914,258

Cost of sales 257,296 286,734 341,112 384,208 388,667 364,510 3,249,040

Gross profit 51,708 52,315 64,928 76,760 81,149 74,631 665,218

Selling, general and administrative expenses 45,436 50,656 60,405 67,457 72,092 70,407 627,565

Operating income 6,272 1,659 4,523 9,303 9,057 4,224 37,653

Income before income taxes 6,673 4,074 5,157 7,687 9,174 4,005 35,700

Net income (loss) attributable to owners of the parent 2,526 1,119 1,315 2,775 2,699 (2,511) (22,378)

Sales by Geographical SegmentMillions of Yen


(Note 1)

2012 2013 2014 2015 2016 2017 2017

Japan ¥83,761 ¥74,853 ¥76,212 ¥92,196 ¥83,300 ¥82,816 $738,178

Americas 70,056 77,269 91,709 108,119 117,666 95,973 855,454

Europe 76,822 76,157 92,289 103,498 106,503 93,941 837,333

East Asia 39,884 54,988 75,074 77,094 85,414 91,428 814,936

South Asia and Oceania 42,440 60,483 78,476 94,573 93,537 90,652 808,023

Reconciliation (3,959) (4,701) (7,720) (14,512) (16,604) (15,669) (139,666)

Consolidated total 309,004 339,049 406,040 460,968 469,816 439,141 3,914,258

Consolidated to non-consolidated ratio (times) 4.00 4.95 5.87 5.40 6.36 6.19 —

Financial PositionMillions of Yen


(Note 1)

2012 2013 2014 2015 2016 2017 2017

Current assets ¥93,907 ¥104,700 ¥115,068 ¥142,923 ¥128,155 ¥134,954 $1,202,901

Current liabilities 52,580 62,025 68,794 85,030 69,682 73,704 656,956

Equity (Note 2) 57,708 63,263 68,290 76,968 73,032 68,473 610,325

Total equity 79,558 92,290 100,450 113,904 109,642 106,018 944,987

Total assets 151,115 173,664 189,923 222,736 200,409 205,252 1,829,500

Cash FlowsMillions of Yen


(Note 1)

2012 2013 2014 2015 2016 2017 2017

Net cash provided by (used in) operating activities ¥2,719 ¥8,910 ¥6,280 ¥9,345 ¥13,751 ¥(709) $(6,323)

Net cash provided by (used in) investing activities (13,901) (9,694) (6,896) (8,504) (6,166) (5,845) (52,103)

Net cash provided by (used in) financing activities 2,149 (1,049) 2,481 672 (4,304) 1,255 11,186


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Per Share DataYen U.S. Dollars

(Note 1)

2012 2013 2014 2015 2016 2017 2017

Basic net income (loss) ¥59.91 ¥26.53 ¥31.17 ¥65.81 ¥64.01 ¥(59.54) $(0.531)

Cash dividends (full year) 20.00 18.00 18.00 19.00 20.00 18.00 0.160

Net assets 1,368.47 1,500.21 1,619.42 1,825.21 1,731.87 1,623.76 14.473

Key Ratios% Thousands of

U.S. Dollars

2012 2013 2014 2015 2016 2017 2017

Gross profit to net sales 16.7 15.4 16.0 16.7 17.3 17.0

Operating income to net sales 2.0 0.5 1.1 2.0 1.9 1.0

Cost of sales to net sales 83.3 84.6 84.0 83.3 82.7 83.0

Selling, general and administrative expenses to net sales 14.7 14.9 14.9 14.6 15.3 16.0

Net income to net sales 0.8 0.3 0.3 0.6 0.6 (0.6)

Return on equity (ROE) 4.6 1.8 2.0 3.8 3.6 (3.5)

Net income to total assets 2.1 0.7 0.7 1.3 1.3 (1.2)

Asset turnover (times) 2.6 2.1 2.2 2.2 2.2 2.2

Shareholders’ equity ratio 38.2 36.7 36.0 34.6 36.4 33.4

Other Data 2012 2013 2014 2015 2016 2017

Number of issued and outstanding shares 42,220,800 42,220,800 42,220,800 42,220,800 42,220,800 42,220,800

Notes:1. The translations of Japanese yen amounts into U.S. dollar amounts are included solely for the convenience of readers outside Japan and have been made at the rate of ¥112.19 to $1, the approximate rate

of exchange at March 31, 2017.2. Equity (¥68,473 million in 2017) = total equity - non-controlling interests.


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Consolidated Financial StatementsYusen Logistics Co., Ltd. and Consolidated Subsidiaries

Consolidated Balance Sheet March 31, 2017

Millions of Yen


(Note 1) ASSETS 2017 2016 2017

CURRENT ASSETS: Cash and cash equivalents (Note 10) ¥ 27,073 ¥ 32,911 $ 241,314 Time deposits (Note 10) 3,333 6,065 29,705 Trade notes and accounts receivable (Note 10) 88,705 78,512 790,665 Deferred tax assets—current (Note 8) 736 1,158 6,561 Other current assets 16,006 10,554 142,665 Allowance for doubtful accounts (899) (1,045) (8,009)

Total current assets 134,954 128,155 1,202,901

PROPERTY, PLANT AND EQUIPMENT: Land (Note 3) 15,508 16,702 138,234 Buildings and structures (Note 3) 48,699 49,675 434,078 Furniture and fixtures 16,102 16,364 143,524 Machinery, equipment and vehicles 22,979 21,537 204,817 Construction in progress 1,940 825 17,292 Total 105,228 105,103 937,945 Accumulated depreciation (53,252) (51,210) (474,657)

Total property, plant and equipment 51,976 53,893 463,288

INVESTMENTS AND OTHER ASSETS: Investments in securities (Notes 4 and 10) 1,155 1,019 10,291 Investments in unconsolidated subsidiaries and affiliated companies (Note 10) 2,288 1,832 20,392

Net defined benefit asset (Note 6) 1,228 832 10,948 Goodwill 2,302 2,907 20,516 Deposits 3,553 3,422 31,673 Deferred tax assets—non-current (Note 8) 1,991 3,299 17,748 Other assets (Note 3) 5,805 5,050 51,743

Total investments and other assets 18,322 18,361 163,311

TOTAL ¥205,252 ¥200,409 $ 1,829,500

Yusen Logistics Co., Ltd. and Consolidated Subsidiaries

Consolidated Balance Sheet March 31, 2017

Millions of Yen


(Note 1) LIABILITIES AND EQUITY 2017 2016 2017

CURRENT LIABILITIES: Trade notes and accounts payable (Note 10) ¥ 47,227 ¥ 41,142 $ 420,954 Short-term loans payable (Notes 5 and 10) 3,457 1,605 30,814 Current portion of long-term debt (Notes 5, 10 and 17) 1,900 5,168 16,937 Accrued income taxes (Note 10) 1,322 1,890 11,787 Accrued bonuses to employees 4,025 4,205 35,873 Deferred tax liabilities—current (Note 8) 1 89 5 Other current liabilities (Note 17) 15,772 15,583 140,586

Total current liabilities 73,704 69,682 656,956

LONG-TERM LIABILITIES: Long-term debt (Notes 5 and 10) 17,353 13,660 154,675 Accrued pension and severance costs for � directors and audit & supervisory board members 475 432 4,238 Net defined benefit liability (Note 6) 5,626 5,195 50,146 Deferred tax liabilities—non-current (Note 8) 789 343 7,034 Other long-term liabilities 1,287 1,455 11,464

Total long-term liabilities 25,530 21,085 227,557

EQUITY (Notes 7 and 16): Common stock, no par value— authorized; 160,000,000 shares in 2017 and 2016, issued; 42,220,800 shares in 2017 and 2016 4,301 4,301 38,337 Capital surplus 4,504 4,490 40,144 Retained earnings 59,028 62,303 526,143 Treasury stock—at cost; 51,778 shares in 2017 and 51,726 shares in 2016 (70) (70) (625) Accumulated other comprehensive income Unrealized gains or losses on available-for-sale securities 351 212 3,126 Deferred gains or losses on hedges (13) (11) (118) Foreign currency translation adjustments 1,059 2,711 9,445 Pension liability adjustment (687) (904) (6,127) Total 68,473 73,032 610,325 Non-controlling interests 37,545 36,610 334,662

Total equity 106,018 109,642 944,987

TOTAL ¥205,252 ¥200,409 $ 1,829,500

See notes to consolidated financial statements.


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Consolidated Statement of Income Year Ended March 31, 2017

Millions of Yen


(Note 1) 2017 2016 2017

NET SALES ¥ 439,141 ¥ 469,816 $ 3,914,258

COST OF SALES 364,510 388,667 3,249,040

Gross profit 74,631 81,149 665,218

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Note 13) 70,407 72,092 627,565

Operating income 4,224 9,057 37,653

OTHER INCOME (EXPENSES): Interest and dividend income 420 444 3,747 Interest expense (326) (431) (2,903) Foreign currency exchange gain—net 1,059 43 9,439 Share of profit of entities accounted for using equity method 109 38 970 Gain on negative goodwill 131 32 1,171 Compensation income 433 – 3,859� Impairment loss (Note 3) (1,439) (1,003) (12,829) � Special retirement expenses (936) – (8,340) � Loss on step acquisitions (153) – (1,368) Other—net 483 994 4,301

Other income (expenses)—net (219) 117 (1,953)

INCOME BEFORE INCOME TAXES 4,005 9,174 35,700

INCOME TAXES (Note 8): Current 2,600 3,217 23,174 Deferred 1,927 188 17,179

Total income taxes 4,527 3,405 40,353

NET INCOME (LOSS) (522) 5,769 (4,653)

NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTERESTS 1,989 3,070 17,725

NET INCOME (LOSS) ATTRIBUTABLE TO OWNERS OF THE PARENT ¥ (2,511) ¥ 2,699 $ (22,378)

Yen U.S. Dollars

PER SHARE: Basic net income (loss) per share (Note 16) ¥ (59.54 ) ¥ 64.01 $ (0.531) Cash dividends 18.00 20.00 0.160



Consolidated Statement of Comprehensive IncomeYear Ended March 31, 2017

Millions of Yen


(Note 1) 2017 2016 2017

NET INCOME (LOSS) ¥ (522) ¥ 5,769 $ (4,653)

OTHER COMPREHENSIVE INCOME (Note 14): � Unrealized gains or losses on available-for-sale securities 139 (189) 1,240� Deferred gains or losses on hedges (4) (25) (35) � Foreign currency translation adjustments (2,625) (9,158) (23,399) � Pension liability adjustment 184 74 1,641� Share of other comprehensive income of entities accounted � for using equity method (15) (79) (138) � Total other comprehensive income (2,321) (9,377) (20,691)

� COMPREHENSIVE INCOME ¥ (2,843) ¥ (3,608) $(25,344)

TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO: � Owners of the parent ¥ (3,801) ¥ (2,990) $ (33,885) � Non-controlling interests 958 (618) 8,541



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Consolidated Statement of Changes in Equity Year Ended March 31, 2017

Thousands Millions of Yen OutstandingNumber ofShares of Common

Stock

Accumulated Other Comprehensive Income

CommonStock

Capital Surplus

RetainedEarnings

TreasuryStock

Unrealized Gains or Losses on Available-for-sale

Securities

Deferred Gains or

Losses on Hedges

Foreign Currency

TranslationAdjustment

Pension Liability

Adjustments Total

Non-controlling Interests

TotalEquity

BALANCE, MARCH 31, 2015 42,169 ¥ 4,301 ¥ 4,733 ¥ 60,340 ¥ (70) ¥ 400 ¥ 1 ¥ 7,968 ¥ (705) ¥ 76,968 ¥ 36,936 ¥ 113,904

Net income attributable to owners of the parent for the year ended March 31, 2016 – – – 2,699 – – – – – 2,699 – 2,699 Cash dividends (¥20.0 per share) – – – (844) – – – – – (844) – (844) Purchase of treasury stock (0) – – – (1) – – – – (1) – (1) Disposal of treasury stock 2 – 1 – 1 – – – – 2 – 2 Change of scope of consolidation (2) – – 88 – – – – – 88 – 88 Adjustment due to change in the fiscal period of

consolidated subsidiaries – – – 20 – – – – – 20 – 20 Change in ownership interest of parent due to

transactions with non-controlling interests – – (244) – – – – – – (244) – (244) Net changes of items other than shareholders' equity – – – – – (188) (12) (5,257) (199) (5,656) (326) (5,982)

BALANCE, MARCH 31, 2016 42,169 4,301 4,490 62,303 (70) 212 (11) 2,711 (904) 73,032 36,610 109,642

Net loss attributable to owners of the parent for the year ended March 31, 2017 – – – (2,511) – – – – – (2,511) – (2,511) Cash dividends (¥18.0 per share) – – – (801) – – – – – (801) – (801) Purchase of treasury stock (0) – – – (0) – – – – (0) – (0) Change of scope of consolidation – – – 59 – – – – – 59 – 59 Change of scope of equity method – – – 63 – – – – – 63 – 63 Adjustment due to change in the fiscal period of

consolidated subsidiaries – – – (80) – – – – – (80) – (80) Adjustment due to change in the fiscal period of

entities accounted for using equity method – – – (5) – – – – – (5) – (5) Change in ownership interest of parent due to

transactions with non-controlling interests – – 14 – – – – – – 14 – 14 Net changes of items other than shareholders' equity – – – – – 139 (2) (1,652) 217 (1,298) 935 (363)

BALANCE, MARCH 31, 2017 42,169 ¥ 4,301 ¥ 4,504 ¥ 59,028 ¥ (70) ¥ 351 ¥ (13) ¥ 1,059 ¥ (687) ¥ 68,473 ¥ 37,545 ¥106,018


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Consolidated Statement of Changes in Equity Year Ended March 31, 2017

Thousands of U.S. Dollars (Note 1) Accumulated Other Comprehensive Income

CommonStock

Capital Surplus

Retained Earnings

Treasury Stock

Unrealized Gains or Losses on Available-for-sale

Securities

Deferred Gains or

Losses on Hedges

Foreign Currency

Translation Adjustment

Pension Liability

Adjustments Total

Non-controlling

Interests Total

Equity

BALANCE, MARCH 31, 2016 $ 38,337 $ 40,020 $ 555,338 $ (624) $ 1,889 $ (100) $ 24,163 $ (8,062) $ 650,961 $ 326,324 $977,285

Net loss attributable to owners of the parent for the year ended March 31, 2017 – – (22,378) – – –

–– (22,378) – (22,378)

Cash dividends ($0.160 per share) – – (7,142) – – – – – (7,142) – (7,142) Purchase of treasury stock – – – (1) – – – – (1) – (1)

Change of scope of consolidation – – 527 – – – – – 527 – 527 Change of scope of equity method – – 558 – – – – – 558 – 558

Adjustment due to change in the fiscal period of consolidated subsidiaries – – (715) – – –

–– (715) – (715)

Adjustment due to change in the fiscal period of entities accounted for using equity method – – (45) – – –

–– (45) – (45)

Change in ownership interest of parent due to transactions with non-controlling interests – 124 – – – –

–– 124 – 124

Net changes of items other than shareholders' equity – – – – 1,237 (18) (14,718) 1,935 (11,564) 8,338 (3,226)

BALANCE, MARCH 31, 2017 $ 38,337 $ 40,144 $ 526,143 $ (625) $ 3,126 $ (118) $ 9,445 $ (6,127) $ 610,325 $ 334,662 $ 944,987



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Consolidated Statement of Cash Flows Year Ended March 31, 2017

Millions of Yen


(Note 1) 2017 2016 2017

OPERATING ACTIVITIES: Income before income taxes ¥ 4,005 ¥ 9,174 $ 35,700 Adjustments for: Depreciation and amortization 5,430 6,254 48,403 Loss (gain) on sale of property, plant and equipment, net (84) (249) (749) Impairment loss 1,439 1,003 12,829 Compensation income (433) – (3,859) Special retirement expenses 936 – 8,340 Loss (gain) on step acquisitions 153 – 1,368

Amortization of goodwill� 248 326 2,208 Share of loss (profit) of entities accounted for using equity method (109) (38) (970) Increase (decrease) in allowance for doubtful accounts (58) 51 (519) Increase (decrease) in net defined benefit liability 363 (723) 3,233 Interest and dividend income (420) (444) (3,747) Interest expense 326 431 2,903 Loss (gain) on foreign currency exchange, net (140) 211 (1,251) Loss (gain) on sale of investments in securities (0) (11) (0) Decrease (increase) in trade notes and accounts receivable (11,186) 11,160 (99,708) Increase (decrease) in trade notes and accounts payable 7,266 (4,904) 64,762 Other—net (5,598) (2,819) (49,888) Total 2,138 19,422 19,055 Interest and dividend received 481 468 4,288 Interest paid (314) (434) (2,795) Paid expenses related to antitrust law – (1,753) – Income taxes paid (3,014) (3,952) (26,871)

Net cash provided by (used in) operating activities (709) 13,751 (6,323)

INVESTING ACTIVITIES: Payments into time deposits (7,400) (9,022) (65,963) Proceeds from withdrawal of time deposits 10,147 7,377 90,442 Lending of loans receivable (43) (36) (384) Collection of loans receivable 33 94 293 Purchase of property, plant and equipment (6,808) (5,434) (60,682) Proceeds from sale of property, plant and equipment 154 981 1,374 Purchase of investments in securities (691) (93) (6,156) Proceeds from sale of investments in securities 0 72 3

Purchase of investments in subsidiaries resulting in change in scope of consolidation� (555) – (4,950) Proceeds from purchase of investments in subsidiaries resulting in change in scope of consolidation� 36 429 319 Payments for transfer of business (188) (267) (1,674)

Other—net (530) (267) (4,725)

Net cash provided by (used in) investing activities (5,845) (6,166) (52,103)

FORWARD ¥ (6,554) ¥ 7,585 $ (58,426)


Consolidated Statement of Cash Flows Year Ended March 31, 2017

Millions of Yen


(Note 1) 2017 2016 2017

FORWARD ¥ (6,554) ¥ 7,585 $ (58,426)

FINANCING ACTIVITIES: Short-term loans payable, net 1,721 (1,347) 15,343 Proceeds from long-term loans payable 6,137 3,365 54,699 Repayment of long-term debt (5,626) (4,666) (50,150) Repayment of obligations under finance lease (127) (170) (1,135) Proceeds from share issuance to non-controlling shareholders 254 – 2,263 Cash dividends paid (801) (844) (7,140) Cash dividends paid to non-controlling interests (299) (425) (2,668) Payments from changes in ownership interests in subsidiaries that do not result in change in scope of consolidation (3) (222) (25) Other—net (1) 5 (1)

Net cash provided by (used in) financing activities 1,255 (4,304) 11,186

FOREIGN CURRENCY TRANSLATION ADJUSTMENTS ON CASH AND CASH EQUIVALENTS (590) (2,709) (5,257)

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (5,889) 572 (52,497)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 32,911 32,107 293,353

CASH AND CASH EQUIVALENTS OF NEWLY CONSOLIDATED SUBSIDIARIES, BEGINNING OF YEAR 69 199 618

INCREASE (DECREASE) IN BEGINNING BALANCE OF CASH AND

CASH EQUIVALENTS DUE TO CHANGES IN FISCAL PERIODS OF CONSOLIDATED SUBSIDIARIES (18) 33 (160)

CASH AND CASH EQUIVALENTS, END OF YEAR ¥ 27,073 ¥ 32,911 $ 241,314



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Notes to Consolidated Financial Statements Year Ended March 31, 2017

1. BASIS OF PRESENTING CONSOLIDATED FINANCIAL STATEMENTS

The accompanying consolidated financial statements have been prepared in accordance with the provisions set forth in the Japanese Companies Act and Financial Instruments and Exchange Act and their related accounting regulations and in conformity with accounting principles generally accepted in Japan ("Japanese GAAP"), which are different in certain respects as to application and disclosure requirements of International Financial Reporting Standards.

In preparing these consolidated financial statements, certain reclassifications and rearrangements have been made to the consolidated financial statements issued domestically in order to present them in a form which is more familiar to readers outside Japan. In addition, certain reclassifications have been made in the 2016 consolidated financial statements to conform to the classifications used in 2017.

The consolidated financial statements are stated in Japanese yen, the currency of the country in which Yusen Logistics Co., Ltd. (the "Company") is incorporated and operates. The translations of Japanese yen amounts into U.S. dollar amounts are included solely for the convenience of readers outside Japan and have been made at the rate of ¥112.19 to $1, the approximate rate of exchange at March 31, 2017. Such translations should not be construed as representations that the Japanese yen amounts could be converted into U.S. dollars at that or any other rate.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Consolidation—The consolidated financial statements as of March 31, 2017, include the accounts of the Company and its 77 significant (75 in 2016) subsidiaries (together, the "Group") listed below:

Consolidated Subsidiaries

Equity Ownership

Percentage*1 Capital Stock*1

Yusen Logistics (Americas) Inc. 51.00% USD 70,976 thousandYusen Logistics (Hong Kong) Limited 100.00 HKD 55,000 thousandYusen Global Freight Management Limited 100.00*2 HKD 11,000 thousandYusen Logistics (Singapore) Pte.Ltd. 79.30 SGD 16,950 thousandYusen Logistics (Benelux) B.V. 100.00*3 EUR 50 thousandYusen Logistics (Deutschland) GmbH 100.00*3 EUR 2,638 thousandYusen Logistics (Australia) Pty.Ltd. 50.97*4 AUD 15,478 thousandYusen Logistics (Canada) Inc. 100.00 CAD 5,000 thousandYusen Logistics (France) S.A.S. 100.00*3 EUR 14,185 thousandYusen Logistics (Taiwan) Ltd. 95.30*5 TWD 157,398 thousandBeijing Yusen Freight Service Co.,Ltd. 100.00*2 CNY 9,312 thousandYusen Logistics (Italy) S.P.A. 100.00*3 EUR 2,872 thousandPT. Yusen Logistics Indonesia 67.62*6 USD 3,048 thousandYusen Logistics (Europe) B.V. 53.69 EUR 39,493 thousandYusen Logistics (Korea) Co.,Ltd. 100.00 KRW � 2,000 millionShanghai Yusen Freight Service Co.,Ltd. 100.00*2 CNY 16,457 thousandYusen Logistics (SAO Region) Co.,Ltd. *27 95.00*7 THB 10,000 thousandYusen Logistics International (Vietnam) Co.,Ltd. 49.00*8 USD 600 thousandYusen Logistics Philippines, Inc. 51.00 PHP 500,000 thousandGuangdong Yusen Freight Service Co.,Ltd. 100.00*2 CNY 8,009 thousandYusen Logistics (India) Private Limited 51.00*9 INR 1,094 million Shanghai Yusen Logistics Service (W.G.Q.) Co.,Ltd. 100.00*2 CNY 5,380 thousandSuzhou Yusen Logistics Service Co.,Ltd. 100.00*2 CNY 6,844 thousand

Consolidated Subsidiaries

Equity Ownership

Percentage*1 Capital Stock*1

Yusen Logistics (UK) Ltd. 100.00*3 GBP 44,130 thousandYusen Logistics (Iberica) S.A. 100.00*3 EUR 585 thousandYusen Logistics (Polska) Sp.z o.o. 100.00*3 PLN 2,400 thousandYusen Logistics (Hungary) KFT. 100.00*3 HUF 12,420 thousandYusen Logistics (Edam) B.V. 100.00*10 EUR 18 thousandYusen Logistics (Czech) s.r.o. 100.00*3 CZK 431,729 thousandYusen Logistics (Vietnam) Co.,Ltd. 99.00*11 VND 6,375 million NANHAI BUSINESS SOLUTIONS PTE LTD. 100.00*12 SGD 100 thousandYusen Logistics & Kusuhara Lanka (Pvt.) Ltd. 51.00 LKR 6,500 thousandYusen Logistics RUS LLC 100.00*3 RUB 1,000 thousandYusen Logistics Center,Inc. 100.00*13 PHP 85,000 thousandYusen Logistics (Thailand) Co.,Ltd. 87.80*14 THB 70,000 thousandPT. Puninar Yusen Logistics Indonesia 51.00 IDR 172,588 thousandYusen Logistics Do Brasil Ltda. 72.36 BRL 50,912 thousandYusen Logistics (China) Co.,Ltd. 51.00 CNY 158,047 thousandPT. Yusen Logistics Solutions Indonesia 51.00 IDR 67,488 thousandTASCO Berhad 55.38*15 MYR 100,000 thousandBaik Sepakat Sdn Bhd 100.00*16 MYR 250 thousandTunas Cergas Logistik Sdn Bhd 100.00*16 MYR 250 thousandEmulsi Teknik Sdn Bhd 100.00*16 MYR 250 thousandTASCO Express Sdn Bhd 100.00*16 MYR 100 thousandMaya Kekal Sdn Bhd 100.00*16 MYR 0 thousandPrecious Fortunes Sdn Bhd 100.00*16 MYR 8,000 thousandTrans-Asia Shipping Pte Ltd 100.00*16 SGD 100 thousandPiala Kristal (M) Sdn Bhd 51.22*17 MYR 205 thousandOmega Saujana Sdn Bhd 51.22*17 MYR 205 thousandTitian Pelangi Sdn. Bhd. 100.00*16 MYR 3,380 thousandYusen Logistics (Shenzhen) Co.,Ltd. *27 100.00*2 CNY 11,430 thousandDouble Wing Spirit Service Co.,Ltd. 80.00*18 THB 7,000 thousandYusen Real Estate (Hai Phong) Co.,Ltd. 100.00*12 VND 126,216 million Yusen Logistics (Mexico), S.A. de C.V. 100.00*19 MXN 170,568 thousandYusen Logistics and Transportation (Vietnam) � Co.,Ltd. 49.00*8 VND 2,104 million Yusen Logistics (Argentina) S.A. 51.00 ARS 18 thousandXiamen Yusen Logistics Service Co.,Ltd. 100.00*2 CNY 4,132 thousandYAS Real Estate (Vietnam) Co.,Ltd. 100.00*2 VND 47,916 million Yusen Logistics (Middle East) L.L.C. 49.00 AED 300 thousandYusen Logistics (Bangladesh) Ltd. 51.00 BDT 10,000 thousandYusen Inci Lojistik ve Ticaret A.S. *24 60.00*20 TRY 29,864 thousandTransfreight Automotive Logistics Europe Ltd. *25 100.00*21 GBP 592 thousandTransfreight Automotive Logistics Europe S.A.S. *25 100.00*22 EUR 3,040 thousandYusen Logistics (Cambodia) Co.,Ltd. *26 100.00*12 USD 500 thousandYusen Keihin Trans Co., Ltd. 100.00 JPY 36 million Yusen Logistics (Kitakanto) Co., Ltd. 100.00 JPY 50 million Yusen Logistics (Tsukuba) Co., Ltd. 100.00 JPY 50 million Yusen Logistics (Shinshu) Co., Ltd. 90.00 JPY 50 million Yusen Logistics (Tohoku) Co., Ltd. 100.00 JPY 30 million Yusen Logistics (Kyushu) Co., Ltd. 100.00 JPY 30 million Yusen Logistics (Chugoku) Co., Ltd. 80.00 JPY 30 million Yusen Logistics (Hokuriku) Co., Ltd. 100.00 JPY 20 million Yusen Logitec Co., Ltd. 100.00 JPY 20 million Yusen Travel Co., Ltd. 100.00 JPY 270 million Ryowa Diamond Air Service Co., Ltd. 99.17*23 JPY 50 million Yusen Loginet Co., Ltd. 100.00 JPY 20 million Transcontainer Limited 53.88 JPY 100 million


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*1 as of March 31, 2017 *2 owned 100.00% by Yusen Logistics (Hong Kong) Limited *3 owned 100.00% by Yusen Logistics (Europe) B.V. *4 owned 32.04% by the Company, 18.93% by Yusen Logistics (Singapore) Pte.Ltd. *5 owned 57.20% by the Company, 38.10% by Yusen Logistics (Hong Kong) Limited *6 owned 8.88% by the Company, 58.74% by Yusen Logistics (Singapore) Pte.Ltd. *7 owned 49.00% by Yusen Logistics (Singapore) Pte.Ltd., 46.00% by Yusen Logistics (Thailand) Co.,

Ltd. *8 owned 49.00% by Yusen Logistics (Singapore) Pte.Ltd. *9 owned 31.53% by the Company, 19.47% by Yusen Logistics (Singapore) Pte.Ltd. *10 owned 100.00% by Yusen Logistics (Benelux) B.V. *11 owned 99.00% by Yusen Logistics (Singapore) Pte.Ltd. *12 owned 100.00% by Yusen Logistics (Singapore) Pte.Ltd. *13 owned 100.00% by Yusen Logistics Philippines, Inc.*14 owned 33.46% by the Company, 10.80% by Yusen Logistics (SAO Region) Co.,Ltd. *15 owned 31.39% by the Company, 23.99% by Yusen Logistics (Singapore) Pte.Ltd. *16 owned 100.00% by TASCO Berhad *17 owned 51.22% by TASCO Berhad *18 owned 80.00% by Yusen Logistics (Thailand) Co., Ltd. *19 owned 93.08% by the Company, 6.92% by Yusen Logistics (Americas) Inc. *20 owned 60.00% by Yusen Logistics (Europe) B.V. *21 owned 100.00% by Yusen Logistics (UK) Ltd. *22 owned 100.00% by Yusen Logistics (France) S.A.S. *23 owned 99.17% by Yusen Travel Co., Ltd. *24 became a newly consolidated company as a result of a merger with Yusen Logistics Turkey Lojistik

Hizmetleri Limited Sirketi and the Group owned the majority of shares *25 became newly consolidated companies as a result of the acquisition of the stock *26 became a newly consolidated company since materiality has increased *27 changed its company name in this fiscal year

Under the control or influence concept, those companies in which the Company, directly or indirectly, is able to exercise control over operations are fully consolidated, and those companies over which the Group has the ability to exercise significant influences are accounted for by the equity method.

ETA TOO, INC. was excluded from the scope of consolidation due to liquidation. Yusen Logistics Turkey

Lojistik Hizmetleri Limited Sirketi was merged into Yusen Inci Lojistik ve Ticaret A.S. and excluded from the scope of consolidation.

Investments in four (three in 2016) unconsolidated subsidiaries and two (three in 2016) affiliated companies are accounted for by the equity method. Investments in the remaining unconsolidated subsidiaries and affiliated companies are stated at cost, which is determined by the moving-average method. If the equity method of accounting had been applied to the investments in these companies, the effect on the accompanying consolidated financial statements would not be material.

The excess of the cost of an acquisition over the fair value of the net assets of the acquired subsidiary at the date of acquisition is being amortized using the straight-line method over a period not exceeding 20 years.

All significant intercompany balances and transactions have been eliminated in consolidation. All material unrealized profit included in assets resulting from transactions within the Group is eliminated.

b. Accounting period—The Company’s accounting period begins each year on April 1 and ends the following year on March 31. During the fiscal year ended March 31, 2017, December 31 was used by 13 consolidated subsidiaries listed below as the closing date for their financial statements.

Yusen Logistics (Mexico), S.A. de C.V.*1

Yusen Logistics (Argentina) S.A.*1

Yusen Logistics Do Brasil Ltda.*1

Beijing Yusen Freight Service Co.,Ltd.*1

Guangdong Yusen Freight Service Co.,Ltd.*1

Yusen Logistics (Shenzhen) Co.,Ltd.*1

Shanghai Yusen Logistics Service (W.G.Q.) Co.,Ltd.*1

Suzhou Yusen Logistics Service Co.,Ltd.*1

Xiamen Yusen Logistics Service Co.,Ltd.*1

Yusen Logistics RUS LLC*2

Yusen Logistics (China) Co.,Ltd.*2

Shanghai Yusen Freight Service Co.,Ltd.*2

PT. Yusen Logistics Indonesia*2

*1 Necessary adjustments have been made to address transactions that occurred between closing dates different to that of the Company and March 31.

*2 They provide financial statements based on provisional settlement of accounts as of March 31 to facilitate preparation of the consolidated financial statements.

From the fiscal year ended March 31, 2017, in order to provide more appropriate disclosures in the consolidated financial statements, Yusen Logistics RUS LLC has changed to a method in which they prepare provisional financial statements as of the consolidated fiscal year end of March 31, for consolidation purposes. In accordance with this change, the consolidated financial statements are prepared based on the statements of income for twelve-month fiscal periods from April 1, 2016 to March 31, 2017of those subsidiaries. Profit or loss for the period from January 1, 2016 to March 31, 2016 has been incorporated as an adjustment of retained earnings.

c. Unification of Accounting Policies Applied to Foreign Subsidiaries for the Consolidated Financial Statements—In May 2006, the Accounting Standards Board of Japan ("ASBJ") issued ASBJ Practical Issues Task Force ("PITF") No. 18, "Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for the Consolidated Financial Statements," the accounting policies and procedures applied to a parent company and its subsidiaries for similar transactions and events under similar circumstances should in principle be unified for the preparation of the consolidated financial statements. However, financial statements prepared by foreign subsidiaries in accordance with either International Financial Reporting Standards or generally accepted accounting principles in the United States of America (Financial Accounting Standards Board Accounting Standards Codification—"FASB ASC") tentatively may be used for the consolidation process, except for the following items that should be adjusted in the consolidation process so that net income is accounted for in accordance with Japanese GAAP, unless they are not material: (1) amortization of goodwill; (2) scheduled amortization of actuarial gain or loss of pensions that has been recorded in equity through other comprehensive income; (3) expensing capitalized development costs of R&D; and (4) cancellation of the fair value model of accounting for property, plant and equipment and investment properties and incorporation of the cost model of accounting.

d. Cash Equivalents—Cash equivalents are short-term investments that are readily convertible into cash and that are exposed to insignificant risk of changes in value. Cash equivalents include time deposits which mature or become due within three months of the date of acquisition.

e. Investments in Securities—Securities are classified into three categories, depending on management's intent: trading, available-for-sale, or held-to-maturity. The Company classifies all investments in securities as available-for-sale securities. Marketable available-for-sale securities are reported at fair value, with unrealized gains and losses, net of applicable taxes, reported under accumulated other comprehensive income in a separate component of equity. Non-marketable available-for-sale securities are stated at cost determined by the moving-average method. For other than temporary declines in fair value, non-marketable investment securities are reduced to net realizable value by a charge to income.

f. Property, Plant and Equipment—Property, plant and equipment are stated at cost. Depreciation of property, plant and equipment of the Company and domestic consolidated subsidiaries is computed substantially by the declining balance method at rates based on the estimated useful lives of the assets, except for the buildings and structures acquired on or after April 1, 2016 which are depreciated by the straight line method. The depreciation of property, plant and equipment of foreign consolidated subsidiaries is generally computed by the straight line method over the estimated useful lives of the assets. The range of useful lives is principally as follows:

Buildings and structures 3–60 yearsFurniture and fixtures 2–20 yearsMachinery, equipment and vehicles 4–6 years


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g. Other Assets—Amortization of intangible assets included in other assets is computed by the straight-line method. Software for internal use is amortized over a five-year period.

h. Long-lived Assets—The Group reviews its long-lived assets for impairment whenever events or changes in circumstance indicate the carrying amount of an asset or asset group may not be recoverable. An impairment loss is recognized if the carrying amount of an asset or asset group exceeds the sum of the undiscounted future cash flows expected to result from the continued use and eventual disposition of the asset or asset group. The impairment loss is measured as the amount by which the carrying amount of the asset exceeds its recoverable amount, which is the higher of the discounted cash flows from the continued use and eventual disposition of the asset or the net selling price at disposition.

i. Allowance for Doubtful Accounts—The Group provides an allowance for doubtful accounts based on the aggregated amount of estimated credit losses for doubtful receivables, plus an amount for receivables other than doubtful receivables calculated using historical write off experience over a certain period.

j. Accrued Bonuses to Employees—Employees are paid bonuses in July and December of every year. The bonuses include amounts for services rendered during the previous fiscal year which are recorded as accrued bonuses on the balance sheet as of the respective fiscal year-end.

k. Retirement and Pension PlansEmployee's retirement and pension plans—The liability for employees' retirement benefits is accounted for based on projected benefit obligations and plan assets at the balance sheet date.

In calculating projected benefit obligations, the expected amount of retirement benefits attributed to a period up to the current fiscal year is primarily determined based on a benefit formula basis. Actuarial gains and losses are amortized in the year following the year in which the gains and losses arise by the straight-line method over a certain period (8-10 years) which is not more than the average remaining service period of employees. Past service costs are recognized in profit or loss in full in the fiscal year in which they arise.

Retirement allowance for directors and audit & supervisory board members—Retirement allowance for directors and audit & supervisory board members for certain subsidiaries are recorded to state the liability at the amount that would be required if all directors and audit & supervisory board members retired at each balance sheet date.

l. Income Taxes—The provision for income taxes is computed based on the pretax income included in the consolidated statement of income. The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Deferred taxes are measured by applying currently enacted tax laws to the temporary differences.

m. Treasury Stock—Under the Japanese Companies Act, the Company is allowed to acquire its own shares to the extent that the aggregate cost of treasury stock does not exceed the maximum amount available for dividends. Treasury stock is stated at cost in the equity of the accompanying consolidated balance sheet. Net gain on disposal of treasury stock is presented under "Capital surplus'' in the equity of the accompanying consolidated balance sheet.

n. Foreign Currency Transactions—All short-term and long-term monetary receivables and payables denominated in foreign currencies are translated into Japanese yen at the exchange rates at the balance sheet date. The foreign exchange gains and losses from translation are recognized in the consolidated statement of income.

o. Foreign Currency Financial Statements—The balance sheet accounts of foreign consolidated subsidiaries and foreign subsidiaries accounted for by the equity method are translated into Japanese yen at the current exchange rate as of the balance sheet date except for equity, which is translated at the historical rate. Differences arising from such translations are shown as "Foreign currency translation adjustments" under accumulated other comprehensive income in a separate component of equity.

Revenue and expense accounts of foreign consolidated subsidiaries are translated into Japanese yen at the average exchange rates.

p. Derivatives—The Group uses derivative financial instruments to manage its exposures to fluctuations in foreign exchange and interest rates. Foreign exchange forward contracts are utilized by the Group. The Group does not enter into derivatives for trading or speculative purposes.

Derivative financial instruments and foreign currency transactions are classified and accounted for as follows: (1) all derivatives are recognized as either assets or liabilities and measured at fair value, and gains or losses on derivative transactions are recognized in the consolidated statement of income and (2) for derivatives used for hedging purposes, if derivatives qualify for hedge accounting because of high correlation and effectiveness between the hedging instruments and the hedged items, gains or losses on derivatives are deferred until maturity of the hedged transactions.

The foreign exchange forward contracts employed to hedge foreign exchange exposures in the Group's operating activities are measured at the fair value and the unrealized gains or losses are recognized in consolidated statement of income.

q. Accounting Changes and Error Corrections―In December 2009, the ASBJ issued ASBJ Statement No. 24 “Accounting Standard for Accounting Changes and Error Corrections” and ASBJ Guidance No. 24 “Guidance on Accounting Standard for Accounting Changes and Error Corrections.” Accounting treatments under this standard and guidance are as follows: (1) Changes in Accounting Policies - When a new accounting policy is applied following revision of an accounting standard, the new policy is applied retrospectively, unless the revised accounting standardincludes specific transitional provisions. When the revised accounting standard includes specific transitional provisions, an entity shall comply with the specific transitional provisions. (2) Changes in Presentation - When the presentation of financial statements is changed, prior-period financial statements are reclassified in accordance with the new presentation. (3) Changes in Accounting Estimates - A change in an accounting estimate is accounted for in the period of the change if the change affects that period only, and is accounted for prospectively if the change affects both the period of the change and future periods. (4) Corrections of Prior Period Errors - When an error in prior-period financial statements is discovered, those statements are restated.

This accounting standard and the guidance are applicable to accounting changes and corrections of prior- period errors, which are made from the beginning of the fiscal year that begins on or after April 1, 2011.

r. Per Share Information—Net assets per share are computed based on the outstanding shares of common stock at relevant balance sheet dates.

Basic net income per share is computed by dividing net income available to shareholders by the weighted-average number of shares of common stock outstanding for the period.

Diluted net income per share for the years ended March 31, 2017 and 2016, is not presented since the Company had no securities with a dilutive effect.

Cash dividends per share presented in the accompanying consolidated statement of income are dividends applicable to the respective years including dividends to be paid after the end of the year.

s.��

� Change in Accounting Standard Application of Practical Solution on a change in depreciation method due to Tax Reform 2016 —

Pursuant to an amendment to the Corporate Tax Act, the Company adopted Accounting Standards Board of Japan Practical Issues Task Force No. 32 ‘Practical Solution on a change in depreciation method due to Tax Reform 2016’ and changed the depreciation method for building improvements and structures acquired on or after April 1, 2016, from the declining-balance method to the straight-line method. As a result, the effect from this accounting change was immaterial.

t. Changes in presentation�Consolidated statement of Income Prior to April 1, 2016, the "Subsidy income" was separately presented in the other income (expenses) section of the consolidated statement of income. Since during this fiscal year ended March 31, 2017, the materiality of the amount decreased, such amount is now included in "Other-net" within the other income (expenses) section of the consolidated statement of income. The amount previously presented as "Subsidy income" for the year ended March 31, 2016, was ¥151 million.


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u. Additional information Guidance on Recoverability of Deferred Tax Assets�The Company applied ASBJ Guidance No. 26, "Guidance on Recoverability of Deferred Tax Assets," effective April 1, 2016. There was no impact from this for the year ended March 31, 2017.

Acquisition of companies through share acquisition�In January 2017, TASCO Berhad, a subsidiary of the Company in Malaysia, has reached agreements to acquire Gold Cold Transport Sdn Bhd and one other company, cold chain logistics provider in Malaysia.

1. Purpose of the acquisition The purpose is to support growth and business expansion by making a full-scale entry into the cold chain logistics segment in Malaysia and combining ocean and air cargo transport with contract logistics.

2. Name of the company to be acquired, description of its business (1) Name: Gold Cold Transport Sdn Bhd and one other company (2) Description of business: Cold chain business


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3. LOSS ON IMPAIRMENT OF FIXED ASSETS

The Group reviewed its long-lived assets for impairment as of the year ended March 31, 2017 and 2016, and as a result, recognized an impairment loss of ¥1,439 million ($12,829 thousand) and ¥1,003 million as other expenses for the year ended March 31, 2017 and 2016 respectively.

The impairment loss of ¥1,439 million for the year ended March 31, 2017 was recorded on certain buildings and land in Osaka, Japan. The Group reduced the book value of these assets to their recoverable amounts due to a significant decline in market value of certain fixed assets which were planned to be disposed of by sale. Assets in use comprised ¥ 84 million for buildings and ¥1,355 million for land. The recoverable amounts of those assets planned to be disposed by sale were measured at their net selling price determined by quotation from a third party vendor.

The impairment loss of ¥1,003 million for the year ended March 31, 2016 was recorded on a certain operating system in Hong Kong, China. The Group reduced the book value of this asset to its recoverable amount due to earlier retirement than originally planned. The recoverable amount of this asset was measured at its value in use. The value in use is calculated based on the projected future cash flows discounted at a rate of 3.86%.

4. INVESTMENTS IN SECURITIES

The cost and aggregate fair values of the investments classified as "available-for-sale securities" at March 31, 2017 and 2016, are as follows:

(1) Available-for-sale securities for which market quotations are available:

Millions of Yen Thousands of U.S. Dollars 2017 2016 2017

Cost

Fair Value(Carrying Amount) Difference Cost

Fair Value(Carrying Amount) Difference Cost

Fair Value(Carrying Amount) Difference

Securities for which market value exceeds cost— Equity securities ¥ 307 ¥ 737 ¥ 430 ¥ 305 ¥ 580 ¥ 275 $ 2,734 $ 6,564 $ 3,830 Government bonds 42 42 0 60 60 0 372 376 4

Securities for which market value does not exceed cost— Equity securities 55 45 (10 ) 55 36 (19) 495 403 (92) Total ¥ 404 ¥ 824 ¥ 420 ¥ 420 ¥ 676 ¥ 256 $ 3,601 $ 7,343 $ 3,742

(2) Proceeds from sale of available-for-sale securities and total amounts of gain and loss on sale of available-for-sale securities:

Millions of Yen Thousands ofU.S. Dollars

2017 2016 2017

Proceeds from sale of available-for-sale securities ¥ 0 ¥ 72 $ 3 Total amount of gain on sale of available-for-sale securities 0 10 0Total amount of loss on sale of available-for-sale securities – – –


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5. SHORT-TERM LOANS PAYABLE AND LONG-TERM DEBT

Short-term loans payable at March 31, 2017, consisted of notes to financial institutions and bank overdrafts. The weighted-average interest rates applicable to the short-term loans payable were 3.40% and 1.44% at March 31, 2017 and 2016, respectively.

Long-term debt at March 31, 2017 and 2016, consisted of the following:

Millions of Yen Thousands of U.S. Dollars

2017 2016 2017

Loans from banks and other financial institutions, due serially to 2027 with average interest rates of 1.11% (2017) and 1.00% (2016); Collateralized – – – Unsecured ¥ 18,877 ¥ 18,568 $ 168,261 Finance lease obligations 376 260 3,351 Total 19,253 18,828 171,612 Less current portion (1,900) (5,168) (16,937)

Long-term debt, less current portion ¥ 17,353 ¥ 13,660 $ 154,675

Annual maturities of long-term debt including finance lease obligations at March 31, 2017, were as follows:

Year Ending March 31 Millions of Yen

Thousands of U.S. Dollars

2018 ¥ 1,900 $ 16,937 2019 2,250 20,054 2020 790 7,043 2021 1,000 8,919 2022 and thereafter 13,313 118,659 Total ¥ 19,253 $ 171,612

As is customary in Japan, the Company maintains substantial deposit balances with banks with which it has borrowings. Such deposit balances are not legally or contractually restricted as to withdrawal.

General agreements with respective banks provide, as is customary in Japan, that additional collateral must be provided under certain circumstances if requested by such banks and that certain banks have the right to offset cash deposited with them against any long-term or short-term debt or obligation that becomes due and, in case of default and certain other specified events, against all other debt payable to the banks. The Company has never been requested to provide any additional collateral.

6. RETIREMENT AND PENSION PLANS

The Company and certain domestic consolidated subsidiaries have a non-contributory funded defined benefit pension plan and an unfunded retirement benefit plan. Certain of the Company’s domestic consolidated subsidiaries have a contributory funded defined contribution pension plan, while certain foreign consolidated subsidiaries have either a non-contributory funded defined benefit pension plan or a contributory funded defined contribution pension plan. In addition, a certain domestic consolidated subsidiary participates in a multi-employer plan for which the Company cannot reasonably calculate the amount of plan assets corresponding to the contributions made by the Company. Therefore, it is accounted for using the same method as a defined contribution plan.

For the years ended March 31, 2017 and 2016

1. Defined Benefit Plan

(1) The changes in projected benefit obligation for the years ended March 31, 2017 and 2016, are as follows:


2017 2016 2017 Balance at beginning of year ¥ 18,731 ¥ 19,404 $ 166,955� Current service cost 1,129 1,068 10,063� Interest cost 303 391 2,697� Actuarial gains and losses 828 (304) 7,376� Benefits paid (1,044) (1,225) (9,302)� Past service cost – (10) –� Others (810) (593) (7,219)Balance at end of year ¥ 19,137 ¥ 18,731 $ 170,570

(2) The changes in plan assets for the years ended March 31, 2017 and 2016, are as follows:


2017 2016 2017 Balance at beginning of year ¥ 14,368 ¥ 15,254 $ 128,065 Expected return on plan assets 409 449 3,647� Actuarial gains and losses 653 (722) 5,817� Contributions from the employer 920 975 8,200� Benefits paid (745) (889) (6,644) Others (866) (699) (7,713)Balance at end of year ¥ 14,739 ¥ 14,368 $ 131,372


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(3) Reconciliation between the liability recorded in the consolidated balance sheet and the balances of projected benefit obligation and plan assets as of March 31, 2017 and 2016, is as follows:


2017 2016 2017 Funded projected benefit obligation ¥ 14,190 ¥ 14,724 $ 126,477Plan assets (14,739) (14,368) (131,372)

(549) 356 (4,895)Unfunded projected benefit obligation 4,947 4,007 44,093Net liability (asset) for defined benefit obligation ¥ 4,398 ¥ 4,363 $ 39,198


2017 2016 2017 Net defined benefit liability ¥ 5,626 ¥ 5,195 $ 50,146Net defined benefit asset (1,228) (832) (10,948)Net liability (asset) for defined benefit obligation ¥ 4,398 ¥ 4,363 $ 39,198

(4) The components of net periodic benefit costs for the years ended March 31, 2017 and 2016, are as follows:


2017 2016 2017 Current service cost ¥ 1,129 ¥ 1,068 $ 10,063Interest cost 303 391 2,697Expected return on plan assets (409) (449) (3,647)Amortization of actuarial gains and losses 423 380 3,767Amortization of past service cost – (10) –Others 14 0 138� Net periodic benefit costs ¥ 1,460 ¥ 1,380 $ 13,018

(5) Amounts recognized in other comprehensive income (before income tax effect) in respect of defined retirement benefit plans for the years ended March 31, 2017 and 2016, are as follows:


2017 2016 2017 Actuarial gains and losses ¥ 267 ¥ 1 $ 2,378 Total ¥ 267 ¥ 1 $ 2,378

(6) Amounts recognized in accumulated other comprehensive income (before income tax effect) in respect of defined retirement benefit plans as of March 31, 2017 and 2016, are as follows:


2017 2016 2017 Unrecognized actuarial gains and losses ¥ (1,197) ¥ (1,464) $ (10,676)Total ¥ (1,197) ¥ (1,464) $ (10,676)

(7) Plan assets as of March 31, 2017 and 2016

(a) Components of plan assets Plan assets consisted of the following:

2017 2016 Equity investments 46 % 50 %Debt investments 13 12 General account 19 19 Others 22 19

Total 100 % 100 %

(b) Method of determining the expected rate of return on plan assets The expected rate of return on plan assets is determined considering the long-term rates of return which are currently expected and expected in the future from the variety of asset portfolio components.

(8) Assumptions used for the years ended March 31, 2017 and 2016, are set forth as follows:

2017 2016 Discount rate Principally 0.30�2.77% Principally 0.30�3.30%Expected rate of return on plan assets Principally 1.25�3.00% Principally 1.25�3.60%

2. Defined Contribution Plan

The amount of contributions which certain consolidated subsidiaries (including the multi-employer pension plan of the welfare pension insurance fund accounted for similar to the defined contribution plans) contributed under the defined contribution plan is ¥801 million ($7,139 thousand) and ¥772 million for the years ended March 31, 2017 and 2016, respectively.


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7. EQUITY

Japanese companies are subject to the Companies Act of Japan (the "Companies Act"). The significant provisions in the Companies Act that affect financial and accounting matters are summarized below:

a. Dividends

Under the Companies Act, companies can pay dividends at any time during the fiscal year in addition to the year-end dividend upon resolution at the shareholders meeting. For companies that meet certain criteria such as: (1) having a Board of Directors, (2) having independent auditors, (3) having an Audit & Supervisory Board, and (4) the term of service of the directors is prescribed as one year rather than two years of normal term by its articles of incorporation, the Board of Directors may declare dividends (except for dividends in kind) at any time during the fiscal year if the company has prescribed so in its articles of incorporation. The Company meets all the above criteria.

Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if the articles of incorporation of the company so stipulate. The Companies Act provides certain limitations on the amounts available for dividends or the purchase of treasury stock. The limitation is defined as the amount available for distribution to the shareholders, but the amount of net assets after dividends must be maintained at no less than ¥3 million.

b. Increases/Decreases and Transfer of Common Stock, Reserve, and Surplus

The Companies Act requires that an amount equal to 10% of dividends must be appropriated as a legal reserve (a component of retained earnings) or as additional paid-in capital (a component of capital surplus) depending on the equity account charged upon the payment of such dividends until the total of aggregate amount of legal reserve and additional paid-in capital equals 25% of the common stock. Under the Companies Act, the total amount of additional paid-in capital and legal reserve may be reversed without limitation. The Companies Act also provides that common stock, legal reserve, additional paid-in capital, other capital surplus, and retained earnings can be transferred among the accounts under certain conditions upon resolution of the shareholders.

c. Treasury Stock and Treasury Stock Acquisition Rights

The Companies Act also provides for companies to purchase treasury stock and dispose of such treasury stock by resolution of the Board of Directors. The amount of treasury stock purchased cannot exceed the amount available for distribution to the shareholders which is determined by a specific formula.

Under the Companies Act, stock acquisition rights are presented as a separate component of equity.

The Companies Act also provides that companies can purchase both treasury stock acquisition rights and treasury stock. Such treasury stock acquisition rights are presented as a separate component of equity or deducted directly from stock acquisition rights.

8. INCOME TAXES

The Company and domestic consolidated subsidiaries are subject to Japanese national and local income taxes which, in the aggregate, resulted in a normal effective statutory rate of approximately 30.9% and 33.1% for the years ended March 31, 2017 and 2016, respectively.

The tax effects of significant temporary differences resulted in deferred tax assets and liabilities at March 31, 2017 and 2016, are as follows:

Millions of YenThousands of U.S. Dollars

2017 2016 2017Deferred tax assets: � Net defined benefit liability ¥ 1,545 ¥ 1,430 $ 13,774 Accrued bonuses to employees 719 761 6,405 Accrued enterprise tax 52 41 468 Accrued pension and severance costs for directors and audit & supervisory board members 147 135 1,310 Allowance for doubtful accounts 112 127 996 Depreciation 384 400 3,422 Tax loss carryforwards 5,458 4,038 48,647 Loss on impairment of fixed assets 446 6 3,974 Loss on revaluation of investments in securities 94 60 840 Loss on write-down of golf club membership 101 108 898 Stock of affiliated company 117 117 1,045 Other 731 762 6,523 Total 9,906 7,985 88,302 Less valuation allowance (6,355) (2,530) (56,645)

Total deferred tax assets 3,551 5,455 31,657

Deferred tax liabilities: Depreciation 709 686 6,322� Net defined benefit asset 367 244 3,275 Other 538 500 4,790

Total deferred tax liabilities 1,614 1,430 14,387

Net deferred tax assets ¥ 1,937 ¥ 4,025 $ 17,270


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The reconciliation of the difference between the normal effective statutory tax rate and the actual effective tax rate reflected in the accompanying consolidated statements of income for the years ended March 31, 2017 and 2016 is as follows:

2017 2016

Normal effective statutory tax rate 30.9% 33.1% Adjustments: Entertainment expenses and other non-deductible permanent differences 9.9 4.3 Dividend income not taxable (10.6) (1.8 ) Per share levy of local tax 1.3 0.6 Effect of elimination of intercompany dividends received 11.3 2.5 Lower income tax rates applicable to income in certain foreign countries (13.9) (11.2 ) Valuation allowance on deferred tax 82.6 6.9 Equity in earnings of affiliated companies and unconsolidated companies (0.8) (0.1 ) Effect of tax reduction – 1.6 Amortization of goodwill 1.7 0.7 Other—net 0.6 0.5

Actual effective tax rate 113.0% 37.1%

9. LEASES

The Group has various lease agreements whereby the Group acts as lessee.

The minimum rental commitments under non-cancelable operating leases at March 31, 2017 and 2016, were as follows:

Thousands of

Millions of Yen U.S. Dollars 2017 � 2016 2017

Due within one year ¥ 11,478 ¥10,325 $ 102,307 Due after one year 26,186 21,327 233,413

Total ¥ 37,664 ¥ 31,652 $335,720

10. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES

In March 2008, the ASBJ revised ASBJ Statement No. 10 “Accounting Standard for Financial Instruments” and issued ASBJ Guidance No. 19 “Guidance on Accounting Standard for Financial Instruments and Related Disclosures.” This accounting standard and the guidance were applicable to financial instruments and related disclosures at the end of the fiscal years ending on or after March 31, 2010. The Group applied the revised accounting standard and the new guidance effective March 31, 2010.

(1) Group policy for financial instruments

The Group limits the use of financial instruments for fund management purposes to short-term bank deposits. It is the basic policy of the Group to use the cash management system operated within the Group and bank loans to fund its ongoing operations. Derivatives are used, not for speculative purposes, but to manage exposure to financial risks as described in (2) below.

(2) Nature and extent of risks arising from financial instruments

Receivables such as trade notes and trade accounts are exposed to customer credit risk. Although receivables in foreign currencies are exposed to the market risk of fluctuation in foreign currency exchange rates, the position, net of payables in foreign currencies, is hedged by using forward foreign currency contracts. Investment securities, mainly equity securities of customers and suppliers of the Group, are exposed to the risk of market price fluctuations.

Payment terms of payables, such as trade notes and trade accounts, are less than one year. Although payables in foreign currencies are exposed to the market risk of fluctuation in foreign currency exchange rates, those risks are netted against the balance of receivables denominated in the same foreign currency as noted above.

Loans, principally from financial institutions, in short-term loans payable are mainly for financing related to business transaction.

Loans, principally from financial institutions, in long-term debt are mainly for financing related to investment in property.

Derivatives, which are forward foreign currency contracts, are used to manage exposure to market risks from changes in foreign currency exchange rates of receivables and payables. Please see Note 11 for more details about derivatives.

(3) Risk management for financial instruments

Credit risk management

Credit risk is the risk of economic loss arising from a counterparty’s failure to repay or service debt according to the contractual terms. The Group manages its credit risk from receivables on the basis of internal guidelines, which include monitoring of payment term and balances of major customers by each business administration department to identify the default risk of customers in the early stage.

The maximum credit risk exposure of financial assets is limited to their carrying amounts as of March 31, 2017.

Market risk management (foreign exchange risk and interest rate risk)

Foreign currency trade receivables and payables are exposed to market risk resulting from fluctuations in foreign currency exchange rates. Such foreign exchange risk is hedged principally by forward foreign currency contracts. In addition, when foreign currency trade receivables and payables are expected from forecasted transactions, forward foreign currency contracts may be used under the limited contract term of a quarter of a year.

Investment securities are managed by monitoring market values and financial position of issuers on a regular basis.

The Group executes and manages derivative transactions according to the internal guidelines which prescribe the authority and the limit for each transaction. Counterparties to these derivative transactions are limited to major financial institutions in order to mitigate credit risks.


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Liquidity risk management

Liquidity risk comprises the risk that the Group cannot meet its contractual obligations in full on maturity dates. The Group manages its liquidity risk by holding adequate volumes of liquid assets, along with adequate financial planning by the corporate treasury department.

(4) Fair values of financial instruments

Fair values of financial instruments are based on quoted prices in active markets. If quoted prices are not available, other rational valuation techniques are used instead. As the valuation of financial instruments requires various assumptions, the fair values of financial instruments are subject to change when different assumptions are used. Please see Note 11 for fair value information for derivatives.

(a) Fair value of financial instruments

Millions of Yen

March 31, 2017 Carrying Amount � Fair Value �

Unrealized Gain/Loss

Cash and cash equivalents ¥ 27,073 ¥ 27,073 –Time deposits 3,333 3,333 –Trade notes and accounts receivable 88,705 88,705 –Investments in securities: �

Available-for-sale securities 824 824 –Total ¥ 119,935 ¥ 119,935 –

Trade notes and accounts payable ¥ 47,227 ¥ 47,227 –Short-term loans payable 3,457 3,457 –Accrued income taxes 1,322 1,322 –Long-term debt 19,253 19,507 ¥ 254

Total ¥ 71,259 ¥ 71,513 ¥ 254� � � � � �

� � � � � �

Millions of Yen

March 31, 2016 Carrying Amount � Fair Value �

Unrealized Gain/Loss

Cash and cash equivalents ¥ 32,911 ¥ 32,911 –Time deposits 6,065 6,065 –Trade notes and accounts receivable 78,512 78,512 –Investments in securities: �

Available-for-sale securities 676 676 –

Total ¥ 118,164 ¥ 118,164 –

Trade notes and accounts payable ¥41,142 ¥ 41,142 –Short-term loans payable 1,605 1,605 –Accrued income taxes 1,890 1,890 –Long-term debt 18,828 19,290 ¥ 462Total ¥ 63,465 ¥ 63,927 ¥ 462

� � � � � �

� � � � � �


March 31, 2017 Carrying Amount � Fair Value Unrealized Gain/Loss

Cash and cash equivalents $ 241,314 $ 241,314 –Time deposits 29,705 29,705 –Trade notes and accounts receivable 790,665 790,665 –Investments in securities:

Available-for-sale securities 7,343 7,343 –Total $1,069,027 $1,069,027 –

Trade notes and accounts payable $ 420,954 $ 420,954 –Short-term loans payable 30,814 30,814 –Accrued income taxes 11,787 11,787 –Long-term debt 171,612 173,877 $ 2,265

Total $ 635,167 $ 637,432 $ 2,265

Note: Current portion of long-term debt is included in "Long-term debt."

Current assets and liabilities

The fair value of all current assets and liabilities (cash and cash equivalents, time deposits, trade notes and accounts receivable, trade notes and accounts payable, short-term loans payable, current portion of long-term debt, and accrued income taxes) is considered to be equivalent to their carrying amount due to their short-term maturities.

�

Investments in securities (available-for-sale securities)

The fair values of investments in securities are measured at the quoted market price of the stock exchange for the equity instruments, and at the quotes obtained from the financial institution for certain debt instruments. For information on securities classified by holding purpose, please refer to Note 4.

�

Long-term debt

-Long-term loans payable

Long-term loans payable with variable interest rates are stated at book value as the interest rate on these loans reflects the market rate in the short term and their market values approximate book values. Long-term loans payable with fixed interest rates are stated at present value. The present value is calculated by discounting a periodically divided portion of the principal and interest of these loans*, using the assumed rate applied to a similar loan.

*As to the long-term loans payable related to the interest rate swap agreements that meet the requirements for exceptional accounting (Refer to Note 11, “Derivatives”), the total amount of principal and interest income at the post-swap rate is applied.

- Lease obligations

The fair value of lease obligations approximates carrying amount. �


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Derivatives

The fair value information for derivatives is included in Note 11.

(b) Financial instruments whose fair value cannot be reliably determined

Carrying Amount

Millions of Yen �


2017 � 2016 2017 Investments in unconsolidated subsidiaries

and affiliated companies ¥ 2,288 ¥ 1,832 $ 20,392Investments in equity instruments that do not have

a quoted market price in an active market 331 343 2,948Total ¥ 2,619 ¥ 2,175 $ 23,340

(5) Maturity analysis for financial assets and securities with contractual maturities

Millions of Yen Due after Due afterone year five years

Due in one through through Due afterMarch 31, 2017 year or less five years ten years ten years

Cash and cash equivalents ¥ 27,073 – – –Time deposits 3,333 – – –Trade notes and accounts receivable 88,705 – – –Investments in securities:

Available-for-sale securities with contractual maturities – ¥ 42 – –

Total ¥ 119,111 ¥ 42 – –

Millions of Yen Due after Due afterone year five years

Due in one through through Due after March 31, 2016 year or less five years ten years ten years

Cash and cash equivalents ¥ 32,911 – – –Time deposits 6,065 – – –Trade notes and accounts receivable 78,512 – – –Investments in securities:

Available-for-sale securities with contractual maturities 18 ¥ 42 – –

Total ¥ 117,506 ¥ 42 – –

Thousands of U.S. Dollars Due after Due afterone year five years

Due in one through through Due afterMarch 31, 2017 year or less five years ten years ten years

Cash and cash equivalents $ 241,314 – – –Time deposits 29,705 – – –Trade notes and accounts receivable 790,665 – – –Investments in securities:

Available-for-sale securities with contractual maturities – $ 374 – –

Total $1,061,684 $ 374 – –


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11. DERIVATIVES

The Group enters into foreign exchange forward contracts, interest rate swaps and currency swaps to reduce the exposure to fluctuations in interest rate risks and foreign exchange rates associated with certain assets and liabilities denominated in foreign currencies.

All derivative transactions are entered into to hedge interest and foreign currency exposures incorporated within the Group's business. Accordingly, market risk in these derivatives is basically offset by opposite movements in the value of hedged assets or liabilities.

Because the counterparties to these derivatives are limited to major international financial institutions, the Group does not anticipate any losses arising from credit risk.

Derivative transactions entered into by the Group have been made in accordance with internal policies which regulate their authorization.

The Group had the following derivative contracts outstanding at March 31, 2017 and 2016:

Derivative transactions to which hedge accounting is not applied.

Currency related


Contracts Contracts Contracts Outstanding Outstanding Outstanding Contracts Due Over Contracts Due Over � Contracts Due Over �

Outstanding One Year Fair Value Outstanding One Year Fair Value� Outstanding One Year Fair Value� Foreign currency forward contracts:

Selling Euro ¥ 144 – ¥ (8 ) ¥ 204 – ¥ 16 $ 1,281 – $ (71 )Selling British pound ¥ 55 – ¥ 1 ¥ 197 – ¥ 4 $ 493 – $ 4Selling Canadian dollar ¥ 334 – ¥ (2 ) – – – $ 2,979 – $ (18 )Buying U.S. dollar ¥ 786 – ¥ (7 ) ¥ 838 – ¥ (1 ) $ 7,008 – $ (59 )Buying Singapore dollar ¥ 1,225 – ¥ 50 ¥ 846 – ¥ (26 ) $ 10,915 – $ 444Buying Japanese yen ¥ 211 ¥ 211 ¥ (58 ) – – – $ 1,884 $ 1,884 $ (515 )Buying Hong Kong dollar ¥ 116 – ¥ (1 ) ¥ 148 – ¥ (1 ) $ 1,036 – $ (7 )Buying Euro – – – ¥ 9 – ¥ 0 – – –Buying Canadian dollar ¥ 335 – ¥ 2 – – – $ 2,982 – $ 15Buying Taiwan dollar ¥ 1,429 – ¥ 60 – – – $ 12,736 – $ 535

Currency swaps: Receipts - U.S. dollar, payments - Japanese yen ¥ 1,420 – ¥ 4 – – – $ 12,660 – $ 36Receipts - Singapore dollar, payments - U.S. dollar ¥ 474 ¥ 412 ¥ (60 ) ¥ 589 ¥ 524 ¥ (46 ) $ 4,226 $ 3,672 $ (533 )Receipts - Thai baht, payments - Euro ¥ 914 – ¥ 21 ¥ 942 – ¥ (10 ) $ 8,149 – $ 182Receipts - Thai baht, payments - Japanese yen ¥ 2,641 – ¥ 116 ¥ 957 – ¥ (31 ) $ 23,537 – $1,036

Total ¥ 10,084 ¥ 623 ¥ 118 ¥ 4,730 ¥ 524 ¥ (95 ) $ 89,886 $ 5,556 $1,049

Fair values are calculated using the prices offered by transacting financial institutions.


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Derivative transactions to which hedge accounting is applied.

(1) Currency related


Contracts Contracts Contracts Outstanding Outstanding Outstanding

Contracts Due Over Contracts Due Over � Contracts Due Over �

Hedged Item Outstanding One Year Fair Value Outstanding One Year Fair Value� Outstanding One Year Fair Value�Derivative transactions qualifying for general

accounting policies, deferral hedge accounting Currency swaps:

Receipts - U.S. dollar, payments - Malaysian Ringgit Long-term debt ¥ 1,228 ¥ 842 ¥ 184 ¥ 1,319 ¥ 854 ¥ 167 $10,946 $ 7,509 $ 1,643

Total ¥ 1,228 ¥ 842 ¥ 184 ¥1,319 ¥ 854 ¥ 167 $10,946 $ 7,509 $ 1,643


(2) Interest related


Contracts Contracts Contracts Outstanding Outstanding Outstanding

Contracts Due Over Contracts Due Over � Contracts Due Over �

Hedged Item Outstanding One Year Fair Value Outstanding One Year Fair Value� Outstanding One Year Fair Value�Interest-rate swap derivative transactions

qualifying for exceptional accounting Interest-rate swaps:

Receipts floating, payments fixed Long-term debt ¥ 2,707 ¥ 2,606 ¥ (74) ¥2,811 ¥2,710 ¥ (125) $24,127 $23,227 $(658 )Total ¥ 2,707 ¥ 2,606 ¥ (74) ¥2,811 ¥2,710 ¥ (125) $24,127 $23,227 $(658 )



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12. COMMITMENTS AND CONTINGENT LIABILITIES

The Group was contingently liable for guarantees of trade payables and bank loans owed mainly by their unconsolidated subsidiaries and affiliated companies in the amount of ¥151 million ($1,345 thousand) and ¥267 million at March 31, 2017 and 2016, respectively.

13. BREAKDOWN OF SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses for the years ended March 31, 2017 and 2016, are summarized as follows:

Millions of Yen Thousands of U.S. dollars

2017 2016 2017

Labor and payroll cost ¥ 33,781 ¥ 35,266 $301,108Provision for accrued bonuses to employees 2,909 3,241 25,926Provision for accrued pension and severance costs for:

Employees 1,406 1,319 12,530Directors and audit & supervisory board members 165 161 1,471

Provision for doubtful accounts 152 193 1,351Depreciation 1,982 2,335 17,667Other 30,012 29,577 267,512

Total ¥ 70,407 ¥ 72,092 $627,565

14. COMPREHENSIVE INCOME


The components of other comprehensive income consist of the following:


2017 2016 2017

Unrealized gain (loss) on available-for-sale securities Gains arising during the year ¥ 164 ¥ (223) $ 1,462 Reclassification adjustments to profit or loss (0 ) (2) (0)Amount before income tax effect 164 (225) 1,462 Income tax effect (25 ) 36 (222)Total 139 (189) 1,240

Deferred gains or losses on hedges Gains arising during the year (4 ) (7) (35)Reclassification adjustments to profit or loss – (18) –Amount before income tax effect (4 ) (25) (35)Income tax effect – – –Total (4 ) (25) (35)

Foreign currency translation adjustments Adjustments arising during the year (2,625 ) (9,158) (23,399)Reclassification adjustments to profit or loss – – –Amount before income tax effect (2,625 ) (9,158) (23,399)Income tax effect – – –Total (2,625 ) (9,158) (23,399)

Pension liability adjustment Adjustments arising during the year (156 ) (379) (1,389)Reclassification adjustments to profit or loss 423 380 3,767 Amount before income tax effect 267 1 2,378 Income tax effect (83 ) 73 (737)Total 184 74 1,641

Share of other comprehensive income of entities accounted for using equity method

Gains arising during the year (59 ) (79) (525)Reclassification adjustments to profit or loss 44 – 387 Total (15 ) (79) (138)

Total other comprehensive income ¥ (2,321 ) ¥ (9,377) $ (20,691)


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15. SEGMENT INFORMATION


Under ASBJ Statement No. 17, "Accounting Standard for Segment Information Disclosures" and ASBJ Guidance No. 20, "Guidance on Accounting Standard for Segment Information," an entity is required to report financial and descriptive information about its reportable segments. Reportable segments are operating segments or aggregations of operating segments that meet specified criteria. Operating segments are components of an entity about which separate financial information is available and such information is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Generally, segment information is required to be reported on the same basis as is used internally for evaluating operating segment performance and deciding how to allocate resources to operating segments.

1. Description of reportable segments

The Group’s reportable segments are those for which separate financial information is available and regular evaluation by the Company’s management is being performed in order to decide how resources are allocated among the Group. The Group mainly provides global logistics services. In order to provide its services over a large region, the regional headquarters which are located in Japan, U.S.A., Netherlands, Hong Kong, and Singapore control the group companies in Japan, Americas, Europe, East Asia, and South Asia and Oceania, respectively. Thus, the Group’s reportable operating segments are based on geographical service providing structures, which consist of five regions: Japan, Americas, Europe, East Asia, and South Asia and Oceania.

2. Methods of measurement for the amounts of sales, profit (loss), assets, liabilities, and other items for each reportable segment

The accounting policies of each reportable segment are consistent with those disclosed in Note 2, “Summary of Significant Accounting Policies.”

Information about sales, profit (loss), assets, liabilities, and other items is as follows.

Millions of Yen 2017

Reportable Segment

Japan Americas Europe East Asia South Asia

and Oceania Total ReconciliationConsolidated

Total Sales

Sales to external customers ¥ 80,718 ¥ 90,924 ¥ 90,969 ¥ 87,850 ¥ 88,680 ¥ 439,141 – ¥ 439,141Intersegment sales/transfers 2,098 5,049 2,972 3,578 1,972 15,669 ¥ (15,669) –

Total 82,816 95,973 93,941 91,428 90,652 454,810 (15,669) 439,141Segment profit (loss) ¥ (1,850) ¥ (505) ¥ 691 ¥ 1,166 ¥ 4,817 ¥ 4,319 ¥ (95) ¥ 4,224Segment assets ¥ 61,657 ¥ 33,944 ¥ 43,293 ¥ 36,078 ¥ 70,710 ¥ 245,682 ¥ (40,430) ¥ 205,252Other:

Depreciation 839 756 1,127 532 2,176 5,430 – 5,430Amortization of goodwill – 154 39 25 65 283 96 379Investments in unconsolidated subsidiaries and affiliate

companies accounted for by the equity method *1 186 – – – 439 625 447 1,072Increase in property, plant and equipment and

intangible assets 1,328 1,594 733 180 2,861 6,696 – 6,696


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Reportable Segment


and Oceania Total Reconciliation Consolidated

Total Sales

Sales to external customers ¥ 81,288 ¥113,169 ¥103,744 ¥ 80,153 ¥ 91,462 ¥ 469,816 – ¥ 469,816Intersegment sales/transfers 2,012 4,497 2,759 5,261 2,075 16,604 ¥ (16,604) –

Total 83,300 117,666 106,503 85,414 93,537 486,420 (16,604) 469,816Segment profit (loss) ¥ (60) ¥ 62 ¥ 518 ¥ 2,395 ¥ 6,248 ¥ 9,163 ¥ (106) ¥ 9,057Segment assets ¥ 58,626 ¥ 32,108 ¥ 40,442 ¥ 28,783 ¥ 66,902 ¥ 226,861 ¥ (26,452) ¥ 200,409Other:

Depreciation 839 782 1,388 857 2,388 6,254 – 6,254Amortization of goodwill – 171 44 29 6 250 108 358Investments in unconsolidated subsidiaries and affiliate

companies accounted for by the equity method *1 163 – 243 – 426 832 388 1,220Increase in property, plant and equipment and

intangible assets 532 839 920 274 2,913 5,478 – 5,478

Thousands of U.S. Dollars 2017

Reportable Segment


and Oceania Total ReconciliationConsolidated

Total Sales

Sales to external customers $ 719,480 $ 810,446 $ 810,843 $ 783,042 $790,447 $3,914,258 – $3,914,258Intersegment sales/transfers 18,698 45,008 26,490 31,894 17,576 139,666 $ (139,666) –

Total 738,178 855,454 837,333 814,936 808,023 4,053,924 (139,666) 3,914,258Segment profit (loss) $ (16,491) $ (4,497) $ 6,159 $ 10,389 $ 42,938 $ 38,498 $ (845) $ 37,653Segment assets $ 549,577 $ 302,561 $ 385,888 $ 321,580 $ 630,267 $2,189,873 $ (360,373) $1,829,500Other:

Depreciation 7,477 6,736 10,048 4,748 19,394 48,403 – 48,403Amortization of goodwill – 1,373 351 221 576 2,521 858 3,379Investments in unconsolidated subsidiaries and affiliate

companies accounted for by the equity method *1 1,658 – – – 3,911 5,569 3,984 9,553Increase in property, plant and equipment and

intangible assets 11,835 14,212 6,529 1,602 25,506 59,684 – 59,684


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Notes: 1. The breakdown for the reconciliation of each item for the years ended March 31, 2017 and 2016, is as follows:

Thousands of Millions of Yen U.S. Dollars

2017 2016 2017 Sales:

Elimination of intersegment transactions ¥ (15,669) ¥ (16,604) $ (139,666)

Total ¥ (15,669) ¥ (16,604) $ (139,666)

� � � � �

� � � � �


2017 2016 2017 Segment profit:

Elimination of intersegment transactions – – –Amortization of goodwill ¥ (96) ¥ (108) $ (858)Others 1 2 13

Total ¥ (95) ¥ (106) $ (845)

� � � � �

� � � � �


2017 2016 2017 Segment asset:

Elimination of intersegment receivables and payables ¥ (22,047) ¥ (11,528) $ (196,512)Elimination of intersegment investments and equity accounts (19,863) (19,826) (177,044)Common assets *2 1,564 4,988 13,939Others (84) (86) (756)

Total ¥ (40,430) ¥ (26,452) $ (360,373)

*1: The reconciliation column for investments in unconsolidated subsidiaries and affiliated companies accounted for by the equity method contains investments which are not attributable to any reportable segment.

*2: The common assets mainly consisted of cash and deposits and investment securities.

2. Segment profit (loss) is reconciled to operating income in the consolidated statement of income.


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Related information

1. Information about services

The Group has omitted information about services as of March 31, 2017 and 2016, as sales to external customers in air and sea cargo is over 90% of consolidated sales.

2. Information about geographical areas

(1) Sales



and Oceania Others Total U.S.A. China

¥ 79,737 ¥91,243 ¥ 83,789 ¥ 91,073 ¥ 88,115 ¥ 75,255 ¥ 88,972 ¥ 1 ¥ 439,141




¥ 80,200 ¥ 113,449 ¥ 104,769 ¥ 103,951 ¥ 80,426 ¥ 74,337 ¥ 91,789 ¥ 1 ¥ 469,816




$ 710,736 $ 813,289 $ 746,853 $ 811,772 $ 785,411 $ 670,784 $ 793,045 $ 5 $ 3,914,258

Notes: (1) Sales are classified by country or region based on the location of customers. (2) Hong Kong is included in China.


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(2) Property, plant and equipment


Japan Americas Europe East Asia South Asia and Oceania Total U.S.A. Thailand Malaysia

¥ 7,181 ¥ 9,201 ¥ 7,862 ¥ 10,728 ¥ 2,065 ¥ 22,801 ¥10,318 ¥ 4,980 ¥ 51,976



¥ 8,737 ¥ 8,443 ¥ 7,863 ¥ 11,843 ¥ 2,205 ¥ 22,665 ¥10,031 ¥ 5,687 ¥ 53,893



$ 64,012 $ 82,014 $ 70,077 $ 95,626 $ 18,403 $ 203,233 $ 91,972 $ 44,393 $ 463,288

(3) Information about major customers

The Group has omitted information about major customers, as sales to any particular customer is not over 10% of consolidated sales at March 31, 2017 and 2016.

(4) Information about loss on impairment of fixed assets



and Oceania Total ¥ 1,439 – – – – ¥ 1,439



and Oceania Total – – – ¥ 1,003 – ¥ 1,003



and Oceania Total $ 12,829 – – – – $ 12,829


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(5) Information about balance of goodwill

Millions of Yen

2017


and Oceania Elimination / Corporate Total

Goodwill at March 31, 2017 – ¥ 1,265 ¥ 373 ¥ 395 ¥ 269 – ¥ 2,302

Millions of Yen

2016



Goodwill at March 31, 2016 – ¥ 1,431 ¥ 439 ¥ 460 ¥ 478 ¥ 99 ¥ 2,907




Goodwill at March 31, 2017 – $11,278 $ 3,321 $3,522 $ 2,395 – $20,516


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16. PER SHARE INFORMATION

Per share information for the years ended March 31, 2017 and 2016, is summarized as follows:

Yen U.S. Dollars 2017 2016 2017

Net assets per share ¥ 1,623.76 ¥ 1,731.87 $ 14.473Basic net income (loss) per share (59.54 ) 64.01 (0.531 )

Diluted net income per share is not presented since net loss per share was recorded for the year ended March 31, 2017 and there were no securities with a dilutive effect for the years ended March 31, 2017 and 2016.

Per share information is computed based on the following:

Millions of Yen Thousands ofU.S. Dollars

2017 2016 2017

Net income (loss) attributable to owners of the parent ¥ (2,511) ¥ 2,699 $ (22,378) Net income (loss) attributable to owners of the parent not subject to distribution to common shareholders – – –Net income (loss) attributable to owners of the parent subject to current and future distribution to common stock (2,511) 2,699 (22,378)

Outstanding Number of Shares of Common Stock 2017 2016

Weighted-average shares for the period 42,169,022 42,168,957


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17. RELATED PARTY TRANSACTIONS

(1) The transaction between the Company and related parties

There were no significant transactions between the Company and related parties for the year ended March 31, 2016.

Major transactions between the Company and related parties for the year ended March 31, 2017 are as follows:

For the year ended March 31, 2017

Nature of Business

Ownership Interest (%) Relationship

Description of the Transactions

Transaction for the Year

Account Name

Balance at end of Year

Type of Related Party Name Address Amount of

Capital Millions of Yen


Millions of Yen


Parent company Nippon Yusen Kabushiki Kaisha

Chiyoda-ku,Tokyo

¥ 144,319 million

Ocean transportation

business

Owned Direct 59.66 Indirect 0.06

Transfer of funds

Transfer of funds 3,043 27,120Other current assets

(CMS deposits) 3,750 33,425

Receipt of Interest

1 9Other current assets (Interest receivable)

0 1

Notes: Business policy on terms and conditions Interest on loans and transfer of funds are decided in consideration of the market rate. The transaction amount in yen for transferring funds is calculated as the average of the period.


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(2) The transaction between the Group and related parties

Major transactions between the Group and related parties for the years ended March 31, 2017 and 2016 are as follows:


Nature of BusinessOwnership

Interest (%) RelationshipDescription of the

Transactions


Account Name





Millions of Yen


Subsidiary of a common parent

NYK INTERNATIONAL PLC U.K.

$ 32,285 thousand

Finance � Financing Transfer of funds 1,318 11,748

Other current liabilities (CMS deposits)

530 4,724

Payment of interest 9 84

Other current liabilities (accrued interest payable)

1 7


NYK INTERNATIONAL (USA) INC. U.S.A.

$ 2,161 thousand

Finance � Financing Transfer of funds 809 7,207


732 6,528



1 7


Nature of BusinessOwnership

Interest (%) RelationshipDescription of the

Transactions


Account Name





Millions of Yen



NYK INTERNATIONAL PLC U.K.

$ 32,285 thousand

Finance � Financing

Transfer of funds 2,252 19,982Other current liabilities

(CMS deposits) 623 5,530

Loan (net amount)

(1,104) (9,796) Current portion of long-term debt � �



1 8


NYK INTERNATIONAL (USA) INC. U.S.A.

$ 2,161 thousand

Finance � Financing Transfer of funds 1,914 16,985


79 703



0 3

Notes: Business policy on terms and conditions Interest on loans and transfer of funds are decided in consideration of the market rate. The transaction amount in yen for transferring funds is calculated as the average of the period.

Information about the parent company

Nippon Yusen Kabushiki Kaisha (Listed on the Tokyo Stock Exchange and Nagoya Stock Exchange)


CompanyData

ESG /Sustainability

OurStrategy

BusinessOverview



18. SUBSEQUENT EVENT

The Company made an appropriation of retained earnings, proposed by the board of directors and approved by shareholders at the general meeting on June 23, 2017, as follows:

Millions of YenThousands of U.S. Dollars

Cash dividends (¥9 ($0.08) per share) ¥ 380 $ 3,383

Independent Auditor’s Report


CompanyData

ESG /Sustainability

OurStrategy

BusinessOverview



日本 | 郵船ロジスティクス - financial highlights...unrealized gains or losses on...

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