annual report 2013 - 郵船ロジスティクス · medium- to long-term targets. we announced...

2013Annual Report

Year ended March 31, 2013

Yusen Logistics Co., Ltd.

President’s Message P.1 President’s Message P.1 President’s Interview

Feature P.7 FY2011 —Integration— P.10 FY2012 —Fusion— P.12 FY2013 —Driving Dramatic Progress— Operations P.17 Operations

Governance P.23 Corporate Social Responsibility (CSR) P.25 Corporate Governance P.31 Management

Financial P.36 Financial Highlights P.38 Management’s Discussion and Analysis P.42 Financial Statements P.50 Notes to Consolidated Financial Statements P.81 Independent Auditor’s Report

About Us P.82 Company Profile P.83 History P.84 Investor Information

Contents

Forward-Looking Statements

This annual report contains operating results forecasts of the Company and certain other statements that are not historical facts. These forward-looking

statements are based on information currently available to management when the annual report was produced and contain many uncertainties. Actual

performance may differ from projections for various reasons. Furthermore, the information contained in this annual report and other information on the

Company's website referred to herein includes information for reference in making investment decisions. However, this does not constitute solicitation to

buy or sell the Company's shares. The final investment decision rests solely with the user of this website and its content.

Editorial Policy

The Company issues this annual report only on its website.

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In principle, figures contained in graphs, tables, etc., in this annual report have been rounded to the nearest billion yen or million yen or to the nearest

whole number in the case of percentages, unless otherwise stated.

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Please Note

This annual report contains links to the Company's website, which includes the latest information on the Company and is outside the reporting scope of

this annual report.

http://www.jp.yusen-logistics.com/ir/library/ar2013/

Annual Report 2013 1

President’s Message

Reflections on Fiscal 2012

Q: Please summarize the business environment and your performance in fiscal 2012.

A: Our earnings declined even though sales increased year on year thanks to sales

expansion and the integration.

The international logistics market in fiscal 2012 lacked strength as a whole, as highlighted by persistent sluggishness

in the European economy and slowing growth in Asia. Most notable was a 14% year-on-year drop in air freight cargo

originating from Japan, which reflected a combination of industry structural changes, including the off-shore transfer of

production bases and a modal shift for cutting logistics costs.

Under these conditions, consolidated net sales were ¥339,049 million, up ¥30,045 million year on year on the back of

expanded sales and the business integration. However, consolidated operating income dropped ¥4,613 million year on

year to ¥1,659 million on account of a decline in volumes handled in air freight forwarding and lower profitability in

ocean freight forwarding.

In April 2012, we completed the integration of overseas logistics businesses with Nippon Yusen

Kabushiki Kaisha by consolidating as subsidiaries local companies in China and Malaysia. In

fiscal 2012, we also established local subsidiaries in Bangladesh and Turkey, and took other

actions that expanded Yusen Logistics’ global logistics network to 440 locations in 38 countries

worldwide.

Now we intend to take full advantage of integration synergies to bolster our sales and marketing

capabilities and continue expanding our bases. In tandem, we will focus on building our

corporate platform, including the fusion of human resources and organizations, as we strive to

become a world-class international forwarder.

Yusen Logistics Co., Ltd.2

Q: Looking back at fiscal 2012, what went well and not so well?

A: We saw the benefits of the business integration steadily show through and we

increased our international presence.

Having completed the integration of overseas logistics businesses early in the year, we worked hard in fiscal 2012 to

link our ocean freight forwarding, air freight forwarding and logistics businesses, to expand sales through base

expansion, to fuse human resources more and to accomplish other goals.

Medium-term Business Plan Progress

Q: Please explain the revisions to your medium-term business plan targets.

A: We initially made 1,000,000 TEU for ocean freight exports and 500,000 tons for air

freight exports medium-term business plan handling targets. However, because we

subsequently expected to have difficulty achieving these targets, we extended them into

medium- to long-term targets.

We announced revisions to our medium-term business plan numerical targets on April 27, 2012. Furthermore, on April

30, 2013, we made the following revisions for fiscal 2013, the final year of the plan, because market conditions are

vastly different from the ones we initially expected. We recognize that achieving the revised targets is a major

management challenge, and to this end, we are implementing the Project Re-engineering Yusen Logistics program.

In terms of linking ocean freight forwarding, air freight forwarding and logistics businesses, we worked on many fronts

to capitalize on the integration rather than respond as individual businesses. We focused on PLUS ONE sales

activities where we offer comprehensive services to customers spanning our various businesses as the name might

suggest. We also supported customers by harnessing our collective strengths across countries, thereby leveraging

our global network to good effect; we worked on marketing in a bid to win more business from non-Japanese

customers; and we made efforts to develop cross-trade business between Europe and the U.S. to Asia, and off-shore

business. Going forward, we plan to continue to step up these activities.

I feel that our international presence has been increasing recently. Through our businesses we have many

opportunities to make proposals for total logistics solutions to customers around the world.

Another noteworthy development for us in fiscal 2012 was our aggressive base development in emerging economies in

Asia. We established a local subsidiary in Bangladesh, and expanded and enhanced warehouse facilities in India and

Indonesia. And that’s in addition to base expansion in East Asia, and South Asia & Oceania that we achieved through

the business integration.

We now have approximately 16,000 employees in the YLK Group. As an international forwarder, we are pushing

ahead with programs to develop global human resources, including training for local staff, in order to ensure that all

staff work from a shared perspective.


Feature: FY2011—Integration—

FY2012—Fusion—

FY2013—Driving Dramatic Progress—

Q: What progress have you made with your business and sales strategies?

A: We have stepped up approaches to strategic customers through industry-based

marketing, and expanded the off-shore business.

Under our business strategy, we have expanded the handling of off-shore business, which doesn’t come through

Japan, and European and U.S. business in both air freight and ocean freight. Furthermore, we have worked to

enhance service quality, which is underscored by certification under the Authorized Economic Operator (AEO)

program.

In terms of our sales strategy, we have identified our strong fields and the industries we should focus on, and

developed strategic marketing approaches for each field, and associated sales activities. The eight fields we are

focusing on are health care/medical equipment, automobile-related, aircraft-related, project-related including plant

export, environmental energy, retail, chemical, and technology.

http://www.yusen-logistics.com/ir/library/ar2013/feature/2011/index.html




pr gram.

In fiscal 2012, we concentrated on certain marketing activities. These included the international pharmaceuticals trade

show INTERPHEX JAPAN in the health care/medical equipment field, and the Japan International Aerospace

Exhibition in the aircraft-related field. In the automobile-related field, we entered into a business alliance with a major

Mexican trucking company to expand land transport services in Mexico.

Furthermore, we promoted our Corporate Account Program (CAP), which strategically targets approximately 30

customers. Thanks to this initiative to provide strategic support across the group beyond the frameworks of individual

businesses and regions, we were able to expand our business domains in fiscal 2012, including winning new

business.

Our logistics business is working on expanding sales through warehouse facility expansion, and has developed one of

the largest warehouse networks of any Japanese logistics company in Australia and India.

Q: Please explain your area strategy, including developments in emerging markets.

A: We are actively expanding bases with the view to making inroads in emerging markets.

We continue to strategically develop our operations in emerging markets. In fiscal 2012 we established local

subsidiaries in Bangladesh and Turkey.

In the same vein, we are looking at establishing local subsidiaries in Cambodia and Myanmar, where growth potential

is huge, in the summer of 2013. To support these developments, we held well-attended logistics seminars targeting

Cambodia, Myanmar and Bangladesh at three locations in Japan in fiscal 2012. In Russia, we opened a branch as a

stepping stone into the Far East. We have also opened a new branch in China.

In another strategic move, we opened a representative office in South Africa as part of our efforts to develop the African

market, which is expected to witness strong growth going forward. In South America, we are making progress

expanding bases in countries like Brazil.

The YLK Group’s base network has increased with the opening of bases in China and warehouse expansion in South

Asia & Oceania.


Q: What are the main initiatives you have planned for fiscal 2013?

A: We intend to make even more progress with our existing strategies.

We plan to build on our existing strategies (business, sales, area and basic management) through greater

Corporate Platform Strengthening

Q: Please discuss the development of the people who will be key to strengthening the

business platform.

A: We are continuing to run training programs and take other steps to fuse and develop

people with a global outlook.

People are our greatest asset. Indeed, in order for us to grow as an international forwarder, it is crucial that we develop

people with a broad outlook who can provide total logistics solutions.

Global human resources (GHR) is a key aspect of our management plan. True to this positioning, we are promoting

local employees to management positions at overseas subsidiaries and exchanging personnel within the group. To

promote this, we held various training programs in fiscal 2012. These included the Senior Management Program

(SMAP) for employees who are candidates for senior positions in the future, and the Global Sales Enrichment

Program (GSEP) for mid-level sales employees. In the second program after being launched in fiscal 2011, GSEP

aims to develop people who can make proposals for total logistics solutions and to build a network among employees.

Fiscal 2011 program participants have quickly demonstrated the benefits through their activities around the world and

cooperation with fellow participants.

Q: What is your stance on CSR?

A: I view this as an extremely important theme in our drive to raise our value as a global

logistics company.

Only by earning the trust of the global community can a company continuously raise its value as a corporation. I see

CSR activities as an extremely important theme for this. That is why we are working to increase quality, safety and

satisfaction, as we run the company in a way that is mindful of corporate ethics, the protection of human rights and

service to regional communities.

cooperation between Japan and each region around the world.

Under our business strategy, we plan to work actively in all businesses—ocean freight forwarding, air freight

forwarding and logistics.

Specifically, we aim to handle 650,000 TEU in ocean freight forwarding by strengthening relations with core carriers

globally. A concurrent goal is to improve operational efficiency to secure earnings.

In air freight forwarding, we will strengthen cooperation within the YLK Group network to expand off-shore cargo

transportation, which doesn’t come through Japan.

In the logistics business, as we aim to increase earnings at all bases, we plan to continue expanding bases,

especially in South Asia & Oceania, as well as further raise service quality by continuing the No. 1 Kaizen Company

program.


Message for Fiscal 2013

Q: What is your outlook for fiscal 2013? And what expectations do you have for it?

A: We will work to reform our structures and improve our operational efficiency to equip

us with top-class international competitiveness.

In fall 2013, we will mark the third year since our business integration. Up to now, we have prioritized the expansion of

volumes handled. In fiscal 2013, in addition to these initiatives, we intend to strengthen our cost competitiveness. For

this, in April 2013, we launched the Project Re-engineering Yusen Logistics program. This is not simply a cost-

reduction project, as we also intend to fundamentally reform our operational and organizational approaches over the

next two years. First of all, during the course of fiscal 2013, we aim to reduce administration division costs by ¥1.0

l g t p .

Compliance is an issue that each and every employee must make their own respons bility. We are instilling this

awareness in employees and creating frameworks for that so employees practice rigorous compliance in their daily

business. Governance is an equally important issue. We have established a system according to regional needs, built

on close cooperation between Head Office in Japan and each region around the world.

Another important theme is environmental protection. One of our main initiatives here is a forest adoption program in

Japan that seeks to reduce CO2 emissions and protect biodiversity, among other aims. Additionally, in a recent move

in fiscal 2012, Yusen Logistics (Americas) Inc. installed a solar power generation system at one of its warehouse

facilities.

billion. By the end of fiscal 2014, meanwhile, we aim to improve the efficiency of sales and business divisions, as well

as revamp our organizational structure.

Q: Finally, do you have a message for shareholders?

A: We will strive to harness the strengths of all the YLK Group’s employees to raise our

corporate value and in this way meet the expectations of all stakeholders.

Our operating environment remains challenging, as underscored by protracted malaise in the international logistics

market. However, we are gradually seeing the benefits of the integration show through in increased volumes handled

and other areas. We are also making steady progress with the fusion of human resources and other measures toward

achieving our next stage of growth.

So that we continue to meet the expectations of all stakeholders, we aim to raise our corporate value by achieving

growth as a group. We also see the return of profits to shareholders as the highest priority of management. In line with

this, we are committed to paying stable dividends, as long as we generate sufficient profit.

Harnessing the passion and strengths of all the group’s employees, we aim to become a world-class international

forwarder.


Yusen Logistics was established in October 2010 as result of the integration in Japan of Yusen Air & Sea Service

Co., Ltd., which had strengths in air freight forwarding, and NYK Logistics (Japan) Co., Ltd., which had strengths in

contract logistics and ocean freight forwarding. Following the integration in Japan, overseas logistics businesses were

progressively integrated. This process was completed in April 2012 with the consolidation as subsidiaries of

companies in China and Malaysia.

This integration has created a world-class company with a global network with more than 400 locations in 38

countries. Possessing a broad range of services extending from air and ocean freight forwarding to contract logistics,

we are now capable of supporting customers to optimize their logistics as a total logistics provider.


A global network based on five regions

We have a global network covering five regions—Japan, Americas, Europe, East Asia, and South Asia & Oceania—in

38 countries and regions, as of March 31, 2013. Leveraging this global network, we can meet customers’ needs in

any region and offer the operational knowhow we have amassed in Japan for delivering high-quality logistics services

worldwide.

A balanced business structure

The integration has created a well-balanced structure not only in terms of the mix of businesses (air freight forwarding,

ocean freight forwarding and logistics), but also the share of sales in regions around the world. With a business

structure that isn’t excessively dependent on any particular region or business, we have a firm business base.


The ability to make proposals for various logistics needs

Yusen Logistics can make optimal and speedy logistics strategy proposals for customers’ increasingly diverse and

sophisticated needs because we offer air and ocean freight forwarding and contract logistics services, and have a

global network of bases. The proposals are also backed by the extensive expertise and experience of our people

amassed over more than 50 years in the logistics business.


In fiscal 2012, we made progress with our strategies for business, sales, areas and basic management under our “GO

FORWARD, Yusen Logistics” medium-term business plan. In particular, we worked to expand our business bases for

“Driving Dramatic Progress” in the future and to fuse the organization and change employee awareness. Following the

completion of overseas logistics business integration in April 2012, we established local subsidiaries in Bangladesh,

Turkey and elsewhere, and expanded our bases in South Asia & Oceania to expand sales. Moreover, we developed

training for local staff and made gains fusing the entire group.


Human resources are our greatest asset. The business integration has created a total logistics provider that is able to

offer various services—air and ocean freight forwarding and contract logistics. As such, we are also developing

logistics professionals who can sell all of these services. We continue to concentrate on equipping all our employees

worldwide with the insight and expertise to provide detailed responses to customers’ logistics needs. This should

strengthen our organization and enable us to achieve our medium- and long-term targets.

* Click here for more details on "3D Management".

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Under our medium-term business plan, we have made progress with organizational integration and achieved greater

fusion. However, we have revised our numerical targets because business conditions are vastly different from what we

initially expected. In order to achieve the revised targets for fiscal 2013, the final year of our medium-term business

plan, we must make progress expanding sales in a way that meets customer needs, and initiate the Project Re-

engineering Yusen Logistics program to reform operations and improve earnings.


Our business integration was basically completed in April 2012. However, in order to avoid any operational confusion

caused by integration, we have essentially maintained the existing organizational structure. In fiscal 2013, we plan to

implement the Project Re-engineering Yusen Logistics program to revamp our cost structures.


We will continue to promote our unique “3D Management” strategy, which seeks to secure balanced profits by

expanding sales efficiently in three dimensions, by area, business, and customer or industry, and by managing them

from various aspects. We will further improve our basic management, business, sales and area strategies with

integrity, innovation, and intensity.


Review of Operations


The Japan segment, including domestic consolidated subsidiaries, saw sales drop 10.6% to

¥74,853 million and segment profit fall 93.8% to ¥103 million from the previous fiscal year.

Market Conditions and Company Initiatives

Air Freight Forwarding

The volume of air freight exports declined 15.2% year on year, reflecting a number of factors. These included

protracted economic sluggishness in Europe, an economic slowdown in Asia, the absence of hit products to create

special demand, and logistics cost revisions, which spurred a shift to ocean freight forwarding and led to lower air

freight movement. Air freight imports mirrored air freight exports in terms of the modal shift to ocean freight forwarding.

Air freight imports were soft as a whole due also to a lackluster domestic economy. As a result, freight volumes

handled declined 2.0% year on year.

Ocean Freight Forwarding

In the ocean freight forwarding business, the volume of ocean freight exports handled on a TEU basis increased 9.7%

year on year due to progress expanding sales. In terms of imports, however, freight volumes handled declined 0.4%

year on year, despite movement of apparel and other imports.


The Americas segment recorded sales of ¥77,269 million, up 10.3% year on year. The segment

recorded an operating loss of ¥6 million due primarily to increased expenses at newly

consolidated companies. In the previous fiscal year, the segment recorded an operating loss of

¥577 million.



In air freight exports, freight volumes handled in the year under review increased 4.8% year on year mainly on the

back of higher volumes of medical equipment-related products. In air freight imports, freight volume handled rose 6.6%

year on year, reflecting mainly freight movement of automotive components.


In the ocean freight forwarding business, freight volumes handled on a TEU basis increased 18.5% year on year. This

increase was primarily attributable to volumes handled of automotive components exports. Ocean freight imports

handled rose 10.8% year on year, reflecting mainly consumer goods-related freight.

Logistics

In logistics operations, earnings improved due to the benefits of cost reduction, as well as increased consumer goods-

related volumes in line with recovering personal spending.

*Exchange Rate: ¥82.33 (2013)

($1) ¥79.06 (2012)


The Europe segment recorded sales of ¥76,157 million, down 0.9% year on year, amid persistent

economic sluggishness. The segment recorded an operating loss of ¥247 million, compared with

a profit of ¥924 million in the previous fiscal year.



In air freight exports, volumes handled rose 5.6% year on year, thanks to volumes of electronic and electrical

equipment-related products. Air freight imports, meanwhile, recorded a 15.4% year-on-year decline in volumes

handled, with the main decreases coming in freight originating from Japan and Asia.


In the ocean freight forwarding business, export volumes handled on a TEU basis increased 1.4%, the result mainly of

volumes handled of automotive components. Imports handled rose 2.4% year on year, even though the market was

soft. This increase was partly due to the modal shift from air freight forwarding.

Logistics

Logistics operations saw volumes handled comprising mainly automotive components and electronic and electrical

equipment-related products. However, some companies, particularly in southern Europe, saw business results

deteriorate.

*Exchange Rate: ¥106.48 (2013)

(€1) ¥110.20 (2012)


The East Asia segment recorded sales of ¥54,988 million, up 37.9% year on year due to growth in

volumes handled and sales. However, the segment recorded an operating loss of ¥1,149 million,

compared with a profit of ¥2,114 million in the previous fiscal year, due to higher ocean freight

rates and other factors.



In air freight exports, volumes handled rose 1.0% year on year. However, intensifying competition in the market

pressured profitability. In air freight imports, freight volumes handled increased only 0.3%, with little evidence of an

upturn in freight forwarding due to the protracted global economic malaise.


In the ocean freight forwarding business, export volumes handled on a TEU basis jumped 111.6% and import volumes

handled climbed 25.6% due to sales expansion and business integration in China.

Logistics

Sales expanded along with increased business from business integration. However, higher costs during the integration

process meant that these higher sales did not translate into improved profits.


The South Asia & Oceania segment recorded sales of ¥60,483 million, up 42.5%, the result mainly

of business integration. Segment operating income was ¥3,269 million, up 40.2% year on year.



In air freight exports, volumes handled declined 4.4% year on year due to a give-back following emergency transport

demand related to the floods in Thailand in the previous fiscal year and an economic slowdown in South Asian

countries. In air freight imports, freight volumes handled rose 9.0% year on year, the result of the contribution from

business integration.


In the ocean freight forwarding business, business integration and sales expansion led to a 44.9% rise in export

volumes handled on a TEU basis. Import volumes handled rose 99.1% for the same reasons.

Logistics

Sales in logistics operations increased year on year, reflecting efforts to expand bases, as well as the effects of

business integration.


Corporate Social Responsibility (CSR)

The YLK Group engages in various activities guided by its CSR activity policy.

Environmental Activities

Installation of LED Lighting at NARITA Logistics Center

In 2011, lighting on the first floor of the warehouse, an

area of approximately 6,864 m2, was replaced with LED

lighting. This move was part of efforts to reduce energy

use and save electricity under the Act on the Rational

Use of Energy. Thereafter, in September 2012 all

mercury lamp light fittings on the third floor of the

warehouse were replaced with LED lights. These

replacements are expected to cut electricity

consumption by approximately 40% in the areas where

LED lighting has been installed. The total reduction for

the warehouse facility as a whole is estimated at

approximately 25%.

Given the meaning of CSR (Corporate Social Responsibility), corporate activities that focus only on compliance are

incomplete. Indeed, companies today are required to go a step further and understand that they are members of

society and must therefore give due consideration to social ethics, human rights, the global environment and local

communities. Embracing this change in the social environment, the YLK Group is tackling its corporate social

responsibility sincerely, determined to meet the expectations of shareholders while aiming to achieve sustainable

development.


replace ents ar e ect

Adopted Forest Absorbs 25.2 Tons of CO2

The YLK Group is participating in Japan’s National

Campaign for Building Beautiful Forests. As a specific

activity, the YLK Group signed a three-year Forest

Foster Parent (Forest of Creation) agreement with

Tateshina Town in Kitasaku-gun, Nagano Prefecture, in

October 2010 and began forest regeneration activities.

Since then, employees and their family members have

volunteered their time to care for the forest.

In fiscal 2011, the year ended March 31, 2012, the

adopted forest absorbed 25.2 tons of CO2. On July 18, 2012, we received a forest CO2 absorption certificate* from

Nagano Prefecture.

*Certifies via evaluation and screening the CO2 volume absorbed by efforts of environmentally advanced companies through the “Adopt-a-Forest

Program” being promoted by Nagano Prefecture.

Environmental Load Data Collection Activities

Up to the fiscal year ended March 2010, we

conducted environmental load data collection

activities as part of the NYK Group’s environmental

activities. As a new initiative, we developed a

system for managing environmental load data,

which came online in the year ended March 2011.

Using this system to collect environmental load

data for all group companies, we aim to reduce

environmental emissions from each business site

by analyzing the emissions data in more detail than

before.

Compliance

The Company distributes a Code of Conduct for all YLK Group employees. The Code of Conduct ensures that our

company is in line with social standards, and requires each YLK Group employee not only to observe laws and

regulations, but also to carry out and accomplish corporate activities and routine work in accordance with corporate

ethical guidelines and social morals. Our aim is to ensure that we win recognition from society and are respected as a

trustworthy company. To this end, the Company has also distributed the Group Compliance Manual, which requires

all officers to lead by example in terms of compliance. It also asks Group employees to improve their understanding of

compliance and at the same time serves as guidelines for their daily activities.


Corporate Governance

1. Independent Corporate Auditors Support System

The Company appoints independent corporate auditors in order to ensure the objectivity and neutrality of Board of

Directors’ decision making by reflecting external, independent viewpoints in management. Matters for deliberation in

and reporting to the Board of Executive Officers and the Board of Directors are notified in advance to independent

corporate auditors and time is set aside for them to express their opinions at these meetings, so that corporate

auditors can properly fulfill the function expected of them.

Auditors

The Company seeks to maintain its standing as a good corporate citizen, earning the trust of all stakeholders and

their ongoing support. To this end, the Company upholds a high standard of ethics its business activities—global

logistics services—and strives to engage in fair and dependable business practices in compliance with prevailing laws

and within accepted social parameters.

The Company introduced an executive officer system in June 2005 with two aims: (1) to clarify the functions of the

Board of Directors for quick decision making on management strategies and policies and (2) to accelerate decision

making and clarify responsibility in the execution of operations.

Directors and executive officers are obliged to report to the Board of Directors and the Board of Executive Officers,

respectively, which in turn deliberate on and supervise operations.

The corporate auditors ensure healthy and good-quality corporate governance by inspecting the directors’ performance

of their duties and by monitoring the directors’ implementation of their duty of care in cooperation with the Internal

Audit Chamber and through reports from the Accounting Auditor.


The corporate auditors attend meetings of the Board of Directors and Board of Executive Officers to stay abreast of

business challenges. Furthermore, in order to develop a deeper understanding of the actual status of operations, they

also attend other important Company-wide meetings, including sales meetings and budget meetings. Moreover,

corporate auditors conduct proper audits designed to prevent violations of laws and regulations and the Articles of

Incorporation.

The Company has established the Internal Audit Chamber, which carries out planned audits of the Company. The

Company’s corporate auditors conduct hearings on the audit plans of the Accounting Auditor at the beginning of the

fiscal year and receive reports on audit results at the end of the fiscal year. Corporate auditors are also present when

the Accounting Auditor conducts audits to confirm the audit methodology. Moreover, corporate auditors cooperate

with the Internal Audit Chamber and receive regular reports on the audit results.

The certified public accountants that performed the accounting audit of the Company were Yuji Itagaki, Tomoya Noda

and Kenji Morita, who all belong to Deloitte Touche Tohmatsu LLC. In addition, four other certified public accountants

and five other people assisted with accounting audit work of the Company.

3. Reasons for Selecting Current Corporate Governance Framework

The Company’s Board of Directors has five members. In order to inspect the decision making of the Board of Directors

from an objective and neutral viewpoint, four corporate auditors, including two independent corporate auditors, conduct

audits.

The Company has not appointed any outside directors at present. However, the Company believes that it has

established a framework for proper supervision of management functions properly by independent corporate auditors,

who express opinions and offer advice from objective viewpoints at Board of Directors’ meetings based on their

external insight and experience.

2. Matters Relating to Business Execution, Audit and Supervision, Nomination,

Compensation Setting and Other Functions (Overview of Current Corporate

Governance Framework)

The Company has a system where the directors perform their duties properly and efficiently in accordance with their

authority and the decision-making rules stipulated in the regulations of the Board of Directors and the rules for

submitting proposals to the Board of Directors. The Company has five directors. The directors pass resolutions about

matters stipulated in laws and regulations and the Articles of Incorporation and important management issues at

ordinary Board of Directors meetings, which are held once a month, or extraordinary Board of Directors meetings,

which are held as needed.

Furthermore, the Company has introduced an executive officer system. The Board of Executive Officers, which is

made up of 19 executive officers, including executives who are also directors, meets twice a month. All executive

officers perform their duties under the directions and supervision of the representative directors. This system

accelerates decision making, clarifies responsibility in the execution of duties and raises management transparency

and efficiency.


The Company is putting in place the necessary mechanism (internal control system) to ensure that work is done

appropriately, based on the Companies Act and in compliance with laws and regulations. The Company’s basic

policies are set out below.

1. System ensuring that the directors and other officers’ performance of their duties

comply with laws and regulations

1. Considering that fulfilling corporate social responsibility (CSR) is the core of management, the Company has

developed the Compliance Manual and the Code of Conduct. The Code of Conduct stipulates guidelines that the

directors, executive officers and employees should follow. The directors take the lead in complying with the Code of

Conduct, and make sure that a workable internal system is in place to keep concerned parties within and outside of

the Company informed about the Code of Conduct.

2. The Company has established the Compliance Committee as an organ to ensure that the directors and executive

officers comply with laws and regulations and perform their duties appropriately.

3. The Board of Directors is seeking to maintain an environment where the corporate auditors can carry out effective

audits.

2. System ensuring that the employees’ performance of their duties comply with laws and

regulations

1. The Company has prepared the Compliance Manual, a handbook consisting of the Code of Conduct and other

compliance regulations, so that the employees of the Group will comply with laws and regulations and will perform

corporate activities and day-to-day operations in compliance with the corporate ethical guidelines and social morals.

2. To promote compliance, the Company has established the Compliance Committee, chaired by the President, the

position of Chief Compliance Officer (CCO), and the CSR/Risk Management Chamber. The Company and each

Group company appoint a CSR Leader at each workplace, who promotes compliance, to promote thorough

compliance with corporate ethics and social norms in an organized way.

3. To promote compliance, the Company works out a Group compliance program each year to operate education and

training systems, and maintains whistle-blowing and consulting systems to identify compliance risks. By the end of

each fiscal year, a general review of compliance is carried out, and the results are reported to the Compliance

Committee.

3. System for storage and management of information on the directors’ performance of

their duties

1. Documents and other information relating to the performance of duties of the directors of the Company are stored

and managed properly under internal regulations including the document management rules.

2. Critical documents of the Company are managed and stored and laid open for inspection in accordance with their

levels of importance and confidentiality.


4. Regulations and system relating to management of risks of loss

1. The Company has established the CSR/Risk Management Chamber, which specializes in managing significant

risks that might affect the management of the Company or might have Company-wide effects. The CSR/Risk

Management Chamber is responsible for identifying, analyzing, and assessing risks and for taking appropriate

action.

2. Each division manages risks relating to its operations in accordance with relevant internal regulations and in

cooperation with the CSR/Risk Management Chamber.

3. The CSR/Risk Management Chamber reports risks and risk management to the Compliance Committee, which is

chaired by the President, and to the Disaster Risk Management Meeting.

4. The Company has authorized a Business Continuity Basic Policy and a BCP Manual, which stipulate measures for

disaster prevention and mitigation, steps to confirm the safety of employees and their families, and post-disaster

recovery actions, including the establishment of a disaster response office in the event of an emergency situation,

such as a major disaster or disruption. Based on the policy and manual, the Company has established a crisis-

management system.

5. The Company has established the Personal Information Management Regulations to protect personal information.

5. System ensuring that the directors and other officers perform their duties efficiently

1. There is a system where the directors perform their duties properly and efficiently in accordance with their authority

and the decision-making rules stipulated in the regulations of the Board of Directors and the rules for submitting

proposals to the Board of Directors.

2. The directors pass resolutions about matters stipulated in laws and regulations and the Articles of Incorporation

and important management issues at ordinary Board of Directors meetings, which are held once a month, or

extraordinary Board of Directors meetings, which are held as needed.

3. The executive officers pass resolutions on necessary issues and deliberate on issues to be submitted to the Board

of Directors in advance at meetings of the Board of Executive Officers, which are, in principle, held twice a month,

based on the regulations of the Board of Executive Officers. The executive officers thereby ensure prompt and

efficient decision making by the Board of Directors.

4. The Board of Directors determines the rank and responsibilities of each director and executive officer and discloses

them immediately after they are determined.

6. System ensuring appropriate operations at the Company and the Group, consisting of

the parent company and subsidiaries

1. To ensure the healthy and efficient management of the Group, the Company has established the Group

Management Basic Policy and develops Group management strategies and systems based on the policy.

2. The Company has established sections at head office that are responsible for the operations of its subsidiaries in

Japan and overseas. Those sections manage the subsidiaries appropriately based on the situation of the

subsidiaries under the affiliate management regulations.


p

3. The Company has each Group company seek to comply with laws, regulations, and norms through compliance

activities under the Code of Conduct in developing and operating an internal control system.

4. The internal auditing department assesses the status of risk management and compliance activities at each Group

company through internal audits and gives advice and makes suggestions for improvement as needed.

7. Corporate auditors’ requests to have employees who will support their performance of

duties

1. The directors maintain a system to respect the corporate auditors’ requests to have employees who will support the

performance of their duties.

8. Independence of the employees mentioned in the preceding item from the directors

1. If the corporate auditors have employees who will support the performance of their duties, the directors maintain a

system to respect the opinion of the corporate auditors about the independence of the employees from the

directors.

9. System for the directors and employees to report to the corporate auditors and

systems relating to other reports to the corporate auditors

1. The Board of Directors ensures that the corporate auditors perform their duties stipulated in the regulations of the

Board of Corporate Auditors.

2. Corporate auditors exercise the authority granted them under laws and regulations and communicate with the

directors, executive officers and employees to carry out fair audits of the legality and efficiency of their performance

of duties.

3. Corporate auditors carry out fair audits to prevent violations of laws and regulations and the Articles of Incorporation,

seeking to assess business challenges and actual business conditions through the following activities:

• Attendance at meetings of the Board of Directors and the Board of Executive Officers

• Attendance at important Company-wide meetings, including sales meetings and budget meetings

• Attendance at compliance meetings and disaster risk management meetings

• Holding regular meetings for exchanging opinions with the representative directors, including the President

• Perusing important documents relating to the execution of business, including the minutes of Board of Directors

meetings and circulars sent to obtain approval for decisions on proposals made at meetings of the Board of

Directors and the Board of Corporate Auditors

10. Another system for ensuring efficient audits by the corporate auditors

1. The corporate auditors maintain a system for enhancing the effectiveness and efficiency of audits in which they

cooperate and exchange opinions with the Accounting Auditor and the Internal Audit Chamber.


t

11. System for ensuring compliance with the Financial Instruments and Exchange Act

1. The Company has built an internal control system necessary for preparing adequate financial statements under the

Financial Instruments and Exchange Act and assesses the effectiveness of the development and operation of the

system.


Motonobu Kobayashi

Auditor (Full-time)

Masaaki Hashimoto

Auditor (Full-time)

Hiromitsu Kuramoto

President andRepresentative Director

Hiroyuki Yasukawa

Representative Director,Senior Managing ExecutiveOfficer

Shoji Murakami

Representative Director,Senior Managing Executive Officer

Kenichi Kotoku

Director,Managing Executive Officer

Akio Futami

Director,Managing Executive Officer

As of June 27, 2013

Management

Makoto Satani

Auditor (Part-time),Independent Auditor

Setsuko Kusumoto

Auditor (Part-time),Independent Auditor


Tatsuo Aoyagi

Managing Executive Officer

Takashi Isobe

Executive Officer

Toshiyuki Kimura

Executive Officer

Tatsuhiko Saeki

Executive Officer

Eiichi Suzuki

Executive Officer

Taiji Kitagawa

Executive Officer

Kazuo Ishizuka

Executive Officer

Hidetoshi Nakanishi

Executive Officer

Minoru Futonaka

Executive Officer

Toru Kamiyama

Executive Officer

In


Yasuhiko Ueda

Executive Officer

Masayuki Yokoyama

Executive Officer

Takeshi Hagiwara

Executive Officer

Kunihiko Miyoshi

Executive Officer


Board of Directors

Appointment Name Management Area

President andRepresentative Director

Hiromitsu Kuramoto

Representative Director Hiroyuki Yasukawa Japan Region, Corporate Officer of NipponYusen Kabushiki Kaisha

Shoji Murakami Business Development & Planning Dept.,Global Ocean Freight Business Dept., GlobalAir Freight Business Dept., Contract Logistics& Transport Dept.

Directors Kenichi Kotoku Internal Audit Chamber, CSR･RiskManagement Chamber, General Affairs Dept.,Human Resources Dept., OperationAdministration Dept., Information BusinessSystem Dept., Customs Clearance ControlChamber, Public Relations Dept.

Akio Futami Corporate Planning Dept., Accounting Dept.,Investor Relations Dept.

Auditors

Appointment Name

Auditors (Full-time) Motonobu Kobayashi

Masaaki Hashimoto

Auditors (Part-time),Independent Auditors

Makoto Satani

Setsuko Kusumoto


Executive Officers

Appointment Name Management Area

President Hiromitsu Kuramoto

Senior Managing ExecutiveOfficers

Hiroyuki Yasukawa East Japan Export Sales Div., East JapanImport Sales Div.,In charge of Central Japan Sales Div., WestJapan Sales Div., Contract Logistics SalesDept.

Shoji Murakami Business Development & Planning Dept.,Global Ocean Freight Business Dept., GlobalAir Freight Business Dept., Contract Logistics& Transport Dept.

Managing Executive Officers Kenichi Kotoku Internal Audit Chamber, CSR·RiskManagement Chamber, Human ResourcesDept.In charge of General Affairs Dept., PublicRelations Dept.

Akio Futami Corporate Planning Dept.In charge of Accounting Dept., InvestorRelations Dept.

Tatsuo Aoyagi In charge of Information Business SystemDept., Operation Administration Dept.,Customs Clearance Control Chamber

Executive Officers Takashi Isobe Director of Yamato Global Logistics Japan Co.,Ltd.

Toshiyuki Kimura In charge of South Asia & Oceania Region,Chairman of Yusen Logistics (Singapore) Pte.Ltd.

Tatsuhiko Saeki In charge of Contract Logistics & TransportDept.

Eiichi Suzuki In charge of Internal Audit Chamber, CSR･RiskManagement Chamber

Taiji Kitagawa In charge of Business Development & PlanningDept.

Kazuo Ishizuka In charge of Americas Region, President ofYusen Logistics (Americas) Inc.

Hidetoshi Nakanishi General Manager of Global Air FreightBusiness Dept.

Minoru Futonaka In charge of Global Ocean Freight BusinessDept.

Toru Kamiyama In charge of East Asia Region, Chairman ofYusen Logistics (China) Co., Ltd.

Yasuhiko Ueda General Manager of Human Resources Dept.

Masayuki Yokoyama General Manager of Corporate Planning Dept.

Takeshi Hagiwara General Manager of East Japan Export SalesDiv.In charge of East Japan Import Sales Div.

Kunihiko Miyoshi In charge of Europe Region, Managing Directorof Yusen Logistics (Europe) B.V.


Financial Highlights

Yusen Logistics Co., Ltd. and Consolidated Subsidiaries

Years Ended March 31

Millions of YenThousands of

U.S. Dollars

Results of Operations 2013 2012 2011 2010 2009 2008 2013

Net sales ¥339,049 ¥309,004 ¥160,788 ¥123,453 ¥167,460 ¥187,518 $3,604,987

Cost of sales 286,734 257,296 124,514 92,127 128,663 141,736 3,048,742

Gross profit 52,315 51,708 36,274 31,326 38,797 45,782 556,245

Selling, general and administrativeexpenses 50,656 45,436 31,327 29,016 34,223 35,566 538,608

Operating income 1,659 6,272 4,947 2,310 4,574 10,216 17,637

Income before income taxes andminority interests 4,074 6,673 5,887 3,004 2,859 12,178 43,318

Net income 1,119 2,526 3,621 1,545 1,083 7,271 11,896

Millions of YenThousands of

U.S. Dollars

Sales by Geographical Segments 2013 2012 2011 2010 2009 2008 2013

Japan ¥74,853 ¥83,761 ¥77,635 ¥61,227 ¥72,337 ¥87,355 $795,887

Americas 77,269 70,056 13,471 10,782 16,696 17,758 821,561

Europe 76,157 76,822 15,022 11,888 20,564 21,417 809,760

East Asia 54,988 39,884 31,705 22,315 33,079 35,185 584,667

South Asia and Oceania 60,483 42,440 25,742 19,332 26,958 28,520 643,098

Inter-segment sales/transfers (4,701) (3,959) (2,787) (2,091) (2,174) (2,717) (49,986)

Net sales 339,049 309,004 160,788 123,453 167,460 187,518 3,604,987

Consol idated to non-consolidated ratio(times) 4.95 4.00 2.26 2.21 2.57 2.38

Millions of YenThousands of U.S.

Dollars

Financial Position 2013 2012 2011 2010 2009 2008 2013

Current assets ¥104,700 ¥93,907 ¥60,883 ¥52,690 ¥47,245 ¥66,558 $1,113,234

Current liabilities 62,113 52,580 22,538 21,462 17,193 32,716 660,421

Equity (Note 2) 63,859 57,708 53,164 51,668 49,501 57,725 678,994

Total equity (Note 3) 93,295 79,558 55,360 53,663 51,249 59,614 991,972

Total assets 173,823 151,115 88,363 81,443 75,733 98,366 1,848,196

Net cash provided by operatingactivities 8,910 2,719 5,675 840 8,213 8,127 94,740

Free cash ｆｌows (Note 4) (784) (11,182) 6,970 (796) 4,394 5,255 (8,331)


3

Yen U.S. Dollars

Per Share Data 2013 2012 2011 2010 2009 2008 2013

Basic net income(Note 5) ¥26.53 ¥59.91 ¥85.85 ¥36.63 ¥25.68 ¥172.43 $0.282

Cash dividends (full year) (Note 5) 18.00 20.00 18.00 16.00 18.00 20.00 0.191

Net assets (Note 5) 1,514.34 1,368.47 1,260.69 1,225.21 1,173.84 1,368.84 16.101

%

Key Ratios 2013 2012 2011 2010 2009 2008

Gross profit to net sales 15.4 16.7 22.6 25.4 23.2 24.4

Operating income to net sales 0.5 2.0 3.1 1.9 2.7 5.4

Cost of sales to net sales 84.6 83.3 77.4 74.6 76.8 75.6

Selling, general and administrative expenses to net sales 14.9 14.7 19.5 23.5 20.4 19.0

Net income to net sales 0.3 0.8 2.3 1.3 0.6 3.9

Return on equity (ROE) 1.8 4.6 6.9 3.1 2.0 13.4

Net income to total assets 0.7 2.1 4.3 2.0 1.2 7.7

Asset turnover (times) 2.0 2.6 1.9 1.6 1.9 2.0

Equity ratio (Note 5) 36.7 38.2 60.2 63.4 65.4 58.7

Other Year-End Data 2013 2012 2011 2010 2009 2008

Number of shares outstanding (Note 5) 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 andhave been made at the rate of ¥94.05 to $1, the approximate rate of exchange at March 31, 2013.

2. Equity (¥63,859 mill ion in 2013) = total equity - minority interests.

3. From the fiscal year ended March 31, 2007, total equity includes minority interests in accordance with the enforcement of Japan's CorporateLaw.

4. Net cash provided by operating activities + net cash used in investing activities

5. The above figures included treasury stock of 50,236 shares in 2008, 50,212 shares in 2009, 50,296 shares in 2010, 50,734 shares in 2011,50,862 shares in 2012 and 50,958 shares in 2013.


Management’s Discussion and Analysis

The economic environment in fiscal 2012, the year ended March 31, 2013, saw economic sluggishness persist in

Europe, as highlighted by a negative real GDP growth rate. The U.S. economy, however, moved onto a moderate

recovery footing on the back of firmer consumer spending and steady capital investment spurred by a job market

recovery, and other factors.

In Asia, China’s GDP improved as a result of government economic policies. However, Asia as a whole lacked vigor,

with varied economic conditions across the region. Japan, meanwhile, saw only a gentle economic recovery as the

yen weakened due to quantitative easing and other policy measures implemented after the change of government.

Amid global contraction, the international logistics market was generally lackluster, with softness most notable in the

air freight forwarding sector for cargo originating from Asia, including Japan, and bound for Europe.

Under these conditions, the YLK Group recorded much higher sales year on year in its logistics and ocean freight

forwarding businesses due to the integration with Nippon Yusen Kabushiki Kaisha logistics businesses. However, the

YLK Group underperformed compared with its initial plans. Furthermore, growth in freight volumes handled decreased

compared with initial plans, reflecting the market conditions.

In fiscal 2012, consolidated net sales increased 9.7% year on year to ¥339,049 million (US$3,604 million), reflecting

mainly higher volumes handled in ocean freight forwarding and the business integration. However, operating income

dropped 73.6% year on year to ¥1,659 million (US$17 million) due to a decline in volumes handled in air freight

forwarding and lower profitability in ocean freight forwarding.

As of March 31, 2013, the Yusen Logistics Group (YLK Group) comprised Yusen Logistics Co., Ltd. (“the Company”),

Nippon Yusen Kabushiki Kaisha (parent company), 68 consolidated subsidiaries and 5 equity-method affiliates. The

YLK Group’s major business activities are the cargo business and the travel business, which the YLK Group is

developing globally.


The YLK Group is currently implementing the “GO FORWARD, Yusen Logistics” medium-term business plan, which

was launched in fiscal 2011.

In terms of progress, in April 2012 the consolidation of local companies in China and Malaysia completed the

integration of overseas logistics businesses with Nippon Yusen Kabush ki Kaisha. The establishment of subsidiaries in

Bangladesh, Turkey and elsewhere was another highlight of the year under review. In addition, the Company

expanded logistics businesses in South Asia & Oceania. Moreover, the Company strove to deepen integration of the

whole group through human resource development of local staff.

In terms of numerical targets, on April 27, 2012, the Company revised its targets. Furthermore, on April 30, 2013, the

Company revised the final-year targets for the year ending March 31, 2014, in light of market conditions. The Company

is now forecasting net sales of \400.0 billion, ordinary income of \4.8 billion and net income of \1.5 billion for the final

year of the current medium-term business plan.

FY2011 FY2012 FY2013

Targets Actual Revised Targets Actual Revised Targets

Net Sales 355,000 309,004 370,000 339,049 400,000

Ordinary Income 11,500 7,485 9,500 2,744 4,800

Net Income 5,200 2,526 5,000 1,119 1,500

Performance Targets (Consolidated)

FY2011 FY2012 FY2013

Targets Actual Revised Targets Actual Revised Targets

Ocean Freight (Exports) 510,000 TEU 450,000 TEU 640,000 TEU 550,000 TEU 650,000 TEU

Air Freight (Exports) 400,000 ton 350,000 ton 420,000 ton 310,000 ton 330,000 ton

Handling Targets (YLK Group Total)


As of March 31, 2013, total assets amounted to ¥173,823 million (US$1,848 million), up ¥22,708 million, or 15.0%,

year on year. This change mainly reflected increases in the total of cash and cash equivalents and time deposits of

¥1,477 million, trade notes and accounts receivable of ¥8,702 million, and total property, plant and equipment of

¥11,862 million, which outweighed a decrease of ¥1,818 million in total investments and other assets.

Total liabilities were ¥80,528 million (US$856 million), up ¥8,971 million, or 12.5%, year on year. The main factors

were a ¥2,481 million increase in trade notes and accounts payable, and a ¥5,275 million increase in other current

liabilities.

Total equity amounted to ¥93,295 million (US$991 million), mainly due to an increase in retained earnings and a

decrease in the negative amount of foreign currency translation adjustments. The equity ratio was 36.7%.

Net cash provided by operating activities increased by ¥6,191 million year on year to ¥8,910 million (US$94 million).

The main factors were income before income taxes and minority interests of ¥4,074 million, down ¥2,599 million year

on year; depreciation and amortization of ¥4,899 million, up ¥627 million; a decrease in trade notes and accounts

receivable of ¥3,961 million, compared with a ¥4,132 million increase in the previous fiscal year; and an increase in

other—net of ¥4,023 million, compared with a decrease of ¥1,855 million in the previous fiscal year. On the other

hand, there was a ¥4,684 million decrease in trade notes and accounts payable, ¥3,932 million more than the

decrease in the previous fiscal year; and income taxes paid of ¥1,928 million, which was ¥1,009 million less year on

year.


The Company recognizes the return of profits to shareholders as one of its top priorities. The Company’s policy is to

offer a stable dividend within the limits set by business results. The Company’s basic policy is also to steadily raise

shareholder returns by working to increase corporate value through YLK Group business expansion and growth.

Based on the above policy, the Company decided to set the year-end dividend at ¥9 per share. This will bring the

annual dividend to ¥18 per share, including the ¥9 per share interim dividend paid on December 5, 2012. For fiscal

2013, the Company plans to pay a dividend of ¥18 per share, provided its results are in line with its consolidated

earnings forecast.

Net cash used in investing activities was ¥9,694 million (US$103 million), down ¥4,207 million year on year. The main

uses of cash were ¥2,362 million for payments into time deposits, up ¥435 million year on year; ¥8,274 million for

purchase of property, plant and equipment, up ¥5,035 million year on year; and ¥2,112 million for purchase of

subsidiaries’ shares. Cash was mainly provided by proceeds from withdrawal of time deposits of ¥2,005 million, down

¥762 million year on year, and ¥1,043 million from proceeds from sale of property, plant and equipment, up ¥430

million year on year.

Financing activities used net cash of ¥1,049 million (US$11 million), compared with ¥2,149 million provided in the

previous fiscal year. This mainly reflected cash used of ¥1,444 million for the repayment of long-term debt, ¥45 million

more year on year, and cash used of ¥802 million for cash dividends paid, down ¥1 million year on year. On the other

hand, cash of ¥1,397 million was provided by a net increase in short-term loans payable, up ¥609 million year on

year.

Cash and cash equivalents at March 31, 2013 were ¥24,467 million (US$260 million), up ¥821 million from March 31,

2012. This was the result of the aforementioned changes as well as the impact of foreign currency translation

adjustments on cash and cash equivalents.


Financial Statements

Consolidated Balance Sheet

sen Logistics Co., Lt . and

Millions of Yen

Thousands ofU.S. Dollars

(Note 1) ASSETS 2013 2012 2013

CURRENT ASSETS: Cash and cash equivalents (Note 10) ¥ 24,467 ¥ 23,646 $ 260,147 Time deposits (Note 10) 1,719 1,063 18,281 Trade notes and accounts receivable (Note 10) 70,539 61,837 750,017 Deferred tax assets—current (Note 8) 1,392 1,471 14,804 Other current assets 7,507 6,868 79,814 Allowance for doubtful accounts (924) (978) (9,829)

Total current assets 104,700 93,907 1,113,234

PROPERTY, PLANT AND EQUIPMENT: Land 16,382 13,020 174,180 Buildings and structures 42,042 35,852 447,016 Furniture and fixtures 13,462 10,116 143,143 Machinery, equipment and vehicles 19,585 13,118 208,238 Construction in progress 1,953 173 20,762 Total 93,424 72,279 993,339 Accumulated depreciation (41,796) (32,513) (444,401)

Total property, plant and equipment 51,628 39,766 548,938

INVESTMENTS AND OTHER ASSETS: Investments in securities (Notes 4 and 10) 861 876 9,156 Investments in unconsolidated subsidiaries and affiliate companies 2,351 3,001 24,996 Goodwill 3,054 2,881 32,470 Deposits 2,730 2,447 29,026 Deferred tax assets—non-current (Note 8) 2,328 2,546 24,752 Other assets 6,171 5,691 65,624

Total investments and other assets 17,495 17,442 186,024

TOTAL ¥173,823 ¥151,115 $1,848,196

Yusen Logistics Co., Ltd. and Consolidated SubsidiariesMarch 31, 2013 and 2012


Millions of Yen


(Note 1) LIABILITIES AND EQUITY 2013 2012 2013

CURRENT LIABILITIES: Trade notes and accounts payable (Note 10) ¥ 32,747 ¥ 30,266 $ 348,191 Short-term loans payable (Notes 5 and 10) 2,393 512 25,446 Current portion of long-term debt (Notes 5 and 10) 1,090 893 11,594 Accrued income taxes (Note 10) 892 1,212 9,490 Accrued bonuses to employees 2,047 2,048 21,760 Provision for alleged antitrust law violation 1,451 1,268 15,428 Deferred tax liabilities—current (Note 8) 139 350 1,477 Other current liabilities 21,354 16,031 227,035

Total current liabilities 62,113 52,580 660,421

LONG-TERM LIABILITIES: Long-term debt (Notes 5 and 10) 13,004 12,302 138,269 Accrued pension and severance costs for: Employees (Note 6) 4,011 4,046 42,650 Directors and audit & supervisory board members 467 383 4,969 Provision for alleged Anti-Monopoly Act violation – 1,728 – Deferred tax liabilities—non-current (Note 8) 345 304 3,671 Other long-term liabilities 588 214 6,244

Total long-term liabilities 18,415 18,977 195,803

EQUITY (Notes 7 and 16): Common stock, no par value— authorized; 160,000,000 shares in 2013 and 2012, issued; 42,220,800 shares in 2013 and 2012 4,301 4,301 45,731 Capital surplus 4,733 4,733 50,326 Retained earnings 57,025 56,456 606,324 Treasury stock—at cost; 50,958 shares in 2013 and 50,862 shares in 2012 (69) (69) (734) Accumulated other comprehensive income Unrealized gain on available-for-sale securities 87 154 923 Pension liability adjustment of foreign consolidated subsidiaries – (50) – Deferred gains or losses on hedges (7) – (78) Foreign currency translation adjustments (2,211) (7,817) (23,498) Total 63,859 57,708 678,994 Minority interests in consolidated subsidiaries 29,436 21,850 312,978

Total equity 93,295 79,558 991,972

TOTAL ¥ 173,823 ¥ 151,115 $ 1,848,196

See notes to consolidated financial statements.


Consolidated Statement of Income


sen Logistic Co., Ltd and Cons Cons lida ed S at en Income

d h , 2

Millions of Yen


(Note 1) 2013 2012 2013

NET SALES ¥ 339,049 ¥ 309,004 $ 3,604,987

COST OF SALES 286,734 257,296 3,048,742

Gross profit 52,315 51,708 556,245

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Note 13) 50,656 45,436 538,608

Operating income 1,659 6,272 17,637

OTHER INCOME (EXPENSES): Interest and dividend income 270 255 2,877 Interest expense (265) (285) (2,823) Foreign currency exchange gain—net 520 508 5,531 Equity in earnings of unconsolidated subsidiaries and affiliate companies 229 657 2,431 Compensation for accidents (91) – (968) Gain on negative goodwill 1,314 498 13,966 Loss on revaluation of investments in securities (35) (17) (368) Loss on cancellation of leasehold contracts (79) – (842) Loss on abolishment of retirement benefit plan (Note 6) (111) – (1,180) Loss related to competition law case – (33) – Provision for alleged antitrust law violation – (1,268) – Others—net 663 86 7,057

Other income (expense)—net 2,415 401 25,681

INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS 4,074 6,673 43,318

INCOME TAXES (Note 8): Current 1,740 2,299 18,495 Deferred (135) 663 (1,431)

Total income taxes 1,605 2,962 17,064

NET INCOME BEFORE MINORITY INTERESTS 2,469 3,711 26,254

MINORITY INTERESTS IN NET INCOME OF CONSOLIDATED SUBSIDIARIES 1,350 1,185 14,358

NET INCOME ¥ 1,119 ¥ 2,526 $ 11,896

Yen U.S. Dollars

PER SHARE: Basic net income per share (Note 16) ¥ 26.53 ¥ 59.91 $ 0.282 Cash dividends 18.00 20.00 0.191



Consolidated Statement of Comprehensive Income


sen Logistic Co., Ltd and Consolidated Subsid Conso ida ed S eme t o Comprehensive Inco

h 3 , 2

Millions of Yen


(Note 1) 2013 2012 2013

NET INCOME BEFORE MINORITY INTERESTS ¥ 2,469 ¥ 3,711 $ 26,254

OTHER COMPREHENSIVE INCOME: Unrealized gain (loss) on available-for-sale securities (67) 12 (714) Deferred gains or losses on hedges (16) – (169) Foreign currency translation adjustments 9,171 (88) 97,522 Share of other comprehensive income in associates 253 (176) 2,693 Pension liability adjustment of foreign consolidated subsidiaries 99 (64) 1,048 Gain or loss on change in equity 65 3,309 687 Total other comprehensive income(loss) (Note 14) 9,505 2,993 101,067 COMPREHENSIVE INCOME ¥ 11,974 ¥ 6,704 $ 127,321

TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO: Owners of the parent ¥ 6,884 ¥ 5,413 $ 73,203 Minority interests 5,090 1,291 54,118



Consolidated Statement of Changes in Equity


sen Logistics Co., Ltd. and Conso idated S Co so ida ed me o anges in qui y

Thousands

Outstanding Number of Shares of Common

Stock

Common Stock

Capital Surplus

RetainedEarnings

TreasuryStock

BALANCE, MARCH 31, 2011 42,170 ¥4,301 ¥4,812 ¥ 51,375 ¥ (69) Change by transfer of business – – (79) – – Net income for the year ended March 31, 2012 – – – 2,526 – Cash dividends (¥19.0 per share) – – – (801) – Purchase of treasury stock (0 ) – – – (0) Adjustment of retained earnings for newly consolidated subsidiaries – – – 53 – Gain or loss on change in equity – – – 3,309 – Other – – – (6) – Net change in the year – – – BALANCE, MARCH 31, 2012 42,170 4,301 4,733 56,4 (69) Net income for the year ended March 31, 2013 – – – 1,119 – Cash dividends (¥19.0 per share) – – – (801) – Purchase of treasury stock (0 ) – – – (0) Adjustment of retained earnings for newly consolidated subsidiaries – – – 154 – Gain or loss on change in equity – – – 85 – Other – – – 12 – Net change in the year – – – – – BALANCE, MARCH 31, 2013 42,170 ¥4,301 ¥4,733 ¥ 57,025 ¥ (69)

Common Stock

Capital Surplus

RetainedEarnings

TreasuryStock

BALANCE, MARCH 31, 2012 $ 45,731 $ 50,326 $ 600,269 $ (733)

Net income for the year ended March 31, 2013 – – 11,896 – Cash dividends ($0.202 per share) – – (8,519) – Purchase of treasury stock – – – (1 )

Adjustment of retained earnings for newly consolidated subsidiaries – – 1,642 –

Gain or loss on change in equity – – 899 – Other – – 137 – Net change in the year – – – –

BALANCE, MARCH 31, 2013 $ 45,731 $ 50,326 $ 606,324 $ (734)



Millions of Yen

Accumulated Other Comprehensive Income

Unrealized Gain (loss) on

Available-for-sale Securities

Pension Liability Adjustment of

Foreign Consolidated Subsidiaries

Deferred Gains or

Losses on Hedges

Foreign Currency

Translation Adjustments Total

Minority Interests in

ConsolidatedSubsidiaries

Total Equity

¥ 142 ¥ – ¥ – ¥ (7,397) ¥ 53,164 ¥ 2,196 ¥ 55,360 – – – – (79) – (79) – – – – 2,526 – 2,526 – – – – (801) – (801) – – – – (0) – (0) – – – – 53 – 53 – – – – 3,309 – 3,309 – – – – (6) – (6) 12 (50) – (420) (458) 19,654 19,196

154 (50) – (7,817) 57,708 21,850 79,558 – – – – 1,119 – 1,119 – – – – (801) – (801) – – – – (0) – (0) – – – – 154 – 154 – – – – 85 – 85 – – – – 12 – 12 (67) 50 (7) 5,606 5,582 7,586 13,168

¥ 87 ¥ – ¥ (7) ¥ (2,211) ¥ 63,859 ¥ 29,436 ¥ 93,295

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

Unrealized Gain (loss) on

Available-for-saleSecurities

Pension Liability Adjustment of

Foreign Consolidated Subsidiaries

Deferred Gains or

Losses on Hedges

Foreign Currency

Translation Adjustments Total

Minority Interests in

ConsolidatedSubsidiaries

Total Equity

$1,637 $ (534) $ – $ (83,107) $ 613,589 $ 232,327 $ 845,916

– – – – 11,896 – 11,896 – – – – (8,519) – (8,519) – – – – (1) – (1)

– – – – 1,642 – 1,642

– – – – 899 – 899 – – – – 137 – 137 (714) 534 (78) 59,609 59,351 80,651 140,002

$ 923 $ – $ (78) $ (23,498) $ 678,994 $ 312,978 $ 991,972


Consolidated Statement of Cash Flows


sen Logistic Co., Ltd and Consolid Cons lidated Stat men o Cas Flows

d h , 2

Millions of Yen


(Note 1) 2013 2012 2013

OPERATING ACTIVITIES: Income before income taxes and minority interests ¥ 4,074 ¥ 6,673 $ 43,318 Adjustment for: Depreciation and amortization 4,899 4,272 52,089

Amortization of goodwill and gain on negative goodwill (552) 89 (5,865) Increase (decrease) in accrued pension and severance costs (169) 216 (1,794) Interest and dividend income (270) (255) (2,877) Interest expense 265 285 2,823 Loss (gain) on foreign currency exchange, net (43) 49 (457) Equity in earnings of unconsolidated subsidiaries and affiliate companies (229) (657) (2,431) Decrease (increase) in trade notes and accounts receivable 3,961 (4,132) 42,118 Increase (decrease) in trade notes and accounts payable (4,684) (752) (49,804) Loss on sale of property, plant and equipment, net (325) (13) (3,459) Loss (gain) on sale of investments in securities (65) (38) (696) Loss on revaluation of investments in securities 35 17 368 Increase (decrease) in allowance for doubtful accounts (211) 238 (2,247) Increase in provision for alleged antitrust law violation – 1,268 – Other—net 4,052 (1,674) 43,089 Total 10,738 5,586 114,175 Interest and dividend received 373 356 3,968 Interest paid (273) (286) 2,906) Income taxes paid (1,928) (2,937) (20,497)

Net cash provided by operating activities 8,910 2,719 94,740

INVESTING ACTIVITIES: Payments into time deposits (2,362) (1,927) (25,113) Proceeds from withdrawal of time deposits 2,005 2,767 21,316 Purchase of property, plant and equipment (8,274) (3,239) (87,971) Proceeds from sale of property, plant and equipment 1,043 613 11,087 Purchase of investments in securities (961) (181) (10,213) Proceeds from sale of investments in securities 67 54 713 Lending of loans receivable (99) (183) (1,053) Collection of loans receivable 56 1,212 Purchase of investments in subsidiaries (2,112) – (22,458)

Purchase of investments in subsidiaries resulting in change in scope of consolidation (Note 3) (39) (10,567) (418) Proceeds from purchase of investments in subsidiaries resulting in change in scope of consolidation 458 – 4,873 Proceeds from purchase of investments in capital of subsidiaries resulting in change in scope of consolidation 392 – 4,165

Payments for transfer of business – (2,282) Other—net 132 (168) 1,403

Net cash (used in) provided by investing activities (9,694) (13,901) (103,071)

FORWARD ¥ (784) ¥ (11,182) $ (8,331)


Millions of Yen


(Note 1) 2013 2012 2013

FORWARD ¥ (784) ¥ (11,182) $ (8,331)

FINANCING ACTIVITIES: Short-term loans payable, net 1,397 788 14,857 Proceeds from long-term loans payable 862 4,000 9,164 Repayment of long-term debt (1,444) (1,399) (15,358) Repayment of obligations under finance lease (302) (233) (3,215) Cash dividends paid (802) (803) (8,529) Cash dividends paid to minority shareholders (756) (192) (8,038) Other—net (4) (12) (38)

Net cash provided by financing activities (1,049) 2,149 (11,157)

FOREIGN CURRENCY TRANSLATION ADJUSTMENTS ON CASH AND CASH EQUIVALENTS 2,347 (207) 24,958

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 514 (9,240) 5,470

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 23,646 25,089 251,414

CASH AND CASH EQUIVALENTS OF NEWLY CONSOLIDATED SUBSIDIARIES, BEGINNING OF YEAR 94 180 1,000

INCREASE IN CASH AND CASH EQUIVALENTS RESULTING FROM MERGER 213 7,617 2,263

CASH AND CASH EQUIVALENTS, END OF YEAR ¥ 24,467 ¥ 23,646 $ 260,147



Notes to Consolidated Financial Statements

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 2012 financial statements to conform to the classifications used in 2013.

The consolidated financial statements are stated in Japanese yen, the currency of the country in which 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 ¥94.05 to $1, the approximate rate of exchange at March 31, 2013. Such translations should not be construed as representations that the Japanese yen amounts could be converted into U.S. dollars at that or any other rate.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Consolidation—The consolidated financial statements as of March 31, 2013 include the accounts of the Company and its 68 significant (56 in 2012) 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 Air & Sea Service (China) Ltd. 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 Air & Sea Service (U.K.) Ltd. 100.00*3 GBP 1,050 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 thousandYusen Air & Sea Service (Beijing) Co., Ltd. 100.00*2 CNY ,312 thousandYusen Logistics (Italy) S.P.A. 100.00*3 EUR 3,326 thousandP.T. Yusen Logistics Indonesia 67.62*6 USD 3,048 thousandYusen Logistics (Europe) B.V. 53.69 EUR 34,493 thousandYusen Logistics (Korea) Co., Ltd. 100.00 KRW 2,000 million Shanghai Yusen Freight Service Co.,Ltd. 100.00*2 CNY 16,457 thousandYusen Air & Sea Service Management (Thailand) Co., Ltd. 95.00*7 THB 10 million Yusen Air & Sea Service (Thailand) Co., Ltd. 100.00*8 THB 100 million Yusen Logistics International (Vietnam) Co., Ltd. 49.00*9 USD 600 thousandYusen Logistics Philippines, Inc. 51.00 PHP 500,000 thousandYusen Air & Sea Service (Guangdong) Ltd. 100.00*2 CNY 8,009 thousandYusen Logistics (India) Ltd. 51.00*10 INR 594 million Yusen Air & Sea Service Logistics (Shanghai) Co., Ltd. 100.00*2 CNY 5,380 thousandYusen Air & Sea Service Logistics (Suzhou) Co., Ltd. 100.00*2 CNY 6,844 thousandETA TOO, INC 100.00*11 USD 0 Yusen Logistics Transporte S.A.de C.V 100.00*12 MXN 50 thousandBRUNI INTERNATIONAL DE MEXICO, S.A.DE C.V. 100.00*13 MXN 350 thousand


Consolidated Subsidiaries

EquityOwnership

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*14 EUR 18 thousandYusen Logistics (Belgium) N.V. 100.00*14 EUR 16,345 thousandYusen Logistics (Czech) s.r.o. 100.00*3 CZK 431,729 thousandYusen Logistics Solutions (Vietnam) Co., Ltd. 49.00*9 VND 6,375 million NANHAI BUSINESS SOLUTIONS PTE LTD. 100.00*15 SGD 100 thousandNYK LOGISTICS (AUSTRALIA) PTY. LTD. 100.00*16 AUD 15,550 thousandYusen Logistics & Kusuhara Lanka (Pvt.) Ltd. 51.00 LKR 6,500 thousandYusen Logistics RUS LLC 100.00*3 RUB 289 thousandYusen Logistics Center,Ltd. 100.00*17 PHP 12,500 thousandYusen Logistics (Thailand) Co., Ltd. 87.80*18 THB 70,000 thousandPT. Puninar Yusen Logistics Indonesia 51.00 USD 10,000 thousandYusen Logistics Do Brasil Ltda. *23 61.88 BRL 14,492 thousandYusen Logistics (China) Co.,Ltd. *24 51.00 CNY 158,047 thousandPT. Yusen Logistics Solutions Indonesia*24 51.00 USD 5,100 thousandTASCO Berhad*25 51.00*19 MYR 100,000 thousandBaik Sepakat Sdn Bhd*24 100.00*20 MYR 100 thousandTunas Cergas Logistik Sdn Bhd*24 100.00*20 MYR 100 thousandEmulsi Teknik Sdn Bhd*24 100.00*20 MYR 100 thousandTASCO Express Sdn Bhd*24 100.00*20 MYR 100 thousandMaya Kekal Sdn Bhd*24 100.00*20 MYR 2 Precious Fortunes Sdn Bhd*24 100.00*20 MYR 8,000 thousandTrans-Asia Shipping Pte Ltd*24 100.00*20 SGD 100 thousandPiala Kristal (M) Sdn Bhd*24 51.22*21 MYR 205 thousandOmega Saujana Sdn Bhd*24 51.22*21 MYR 205 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*22 JPY 50 million Yusen Loginet Co., Ltd. 100.00 JPY 20 million

*1 as of March 31, 2013 *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 57.2% 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 51.00% by Yusen Air & Sea Service Management (Thailand) Co., Ltd., 49.00% by Yusen Logistics (Singapore) Pte. Ltd. *9 owned 49.00% by Yusen Logistics (Singapore) Pte. Ltd. *10 owned 31.53% by the Company, 19.47% by Yusen Logistics (Singapore) Pte. Ltd. *11 owned 100.00% by Yusen Logistics (Americas) Inc. *12 owned 50.00% by Yusen Logistics (America) Inc., 50.00% by ETA TOO, INC. *13 owned 99.71% by Yusen Logistics (Americas) Inc., 0.29% by Yusen Logistics Tranporte S.A.de C.V. *14 owned 100.00% by Yusen Logistics (Benelux) B.V. *15 owned 100.00% by Yusen Logistics (Singapore) Pte. Ltd. *16 owned 100.00% by Yusen Logistics (Australia) Pty. Ltd. *17 owned 100.00% by Yusen Logistics Philippines, Inc. *18 owned 33.46% by the Company, 10.80% by Yusen Air & Sea Service Management (Thailand) Co., Ltd. *19 owned 27.01% by the Company, 23.99% by Yusen Logistics (Singapore) Pte. Ltd.


*20 owned 100.00% by TASCO Berhad *21 owned 51.22% by TASCO Berhad *22 owned 99.17% by Yusen Travel Co., Ltd. *23 became newly consolidated companies since materiality has increased *24 became newly consolidated companies as the result of the reorganization and integration of the logistics businesses that

have been conducted by the Company and Nippon Yusen Kabushiki Kaisha (NYK LINE) (head office: Chiyoda-ku, Tokyo, Japan; president: Yasumi Kudo) (hereinafter "NYK").

*25 became newly consolidated company as the result of the additional acquisition of the stock.

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.

Agate Electro Supplies Sdn Bhd became an affiliate company as a result of the acquisition of the stock and was included in the scope of the companies accounted for by equity method from this year. TASCO Berhad was excluded from the scope of the companies accounted for by equity method since it became a newly consolidated company as the result of the additional acquisition of the stock.

Investments in three (three in 2012) unconsolidated subsidiaries and two (two in 2012) affiliate companies are accounted for by the equity method. Investments in the remaining unconsolidated subsidiaries and affiliate 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 principally 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. Unification for 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”. PITF No. 18 prescribes: (1) 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, (2) financial statements prepared by foreign subsidiaries in accordance with either International Financial Reporting Standards or the generally accepted accounting principles in the United States of America tentatively may be used for the consolidation process, (3) however, the following items 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 directly recorded in the equity; 3) expensing capitalized development costs of R&D; 4) cancellation of the fair value model accounting for property, plant, and equipment and investment properties and incorporation of the cost model accounting; and 5) exclusion of minority interests from net income, if contained.

c. Business Combination―In October 2003, the Business Accounting Council (“BAC”) issued a Statement of Opinion, “Accounting for Business Combinations”, and in December 2005, the ASBJ issued ASBJ Statement No. 7, “Accounting Standard for Business Divestitures” and ASBJ Guidance No. 10, “Guidance for Accounting Standard for Business Combinations and Business Divestitures”. The accounting standard for business combinations allowed companies to apply the pooling of interests method of accounting only when certain specific criteria are met such that the business combination is essentially regarded as a uniting-of- interests. For business combinations that did not meet the uniting-of- interests criteria, the business combination was considered to be an acquisition and the purchase method of accounting was required. This standard also prescribed the accounting for combinations of entities under common control and for joint ventures.

In December 2008, the ASBJ issued a revised accounting standard for business combinations, ASBJ Statement No.21, “Accounting Standard for Business Combinations.” Major accounting changes under the revised accounting standard are as follows: (1) The revised standard requires accounting for business combinations only by the purchase method. As a result, the pooling of interests method of accounting is no longer allowed. (2) The previous accounting standard required research and development costs to be charged to income as incurred. Under the revised standard, in-process research and development


(IPR&D) acquired in the business combination is capitalized as an intangible asset. (3) The previous accounting standard provided for a bargain purchase gain (negative goodwill) to be systematically amortized over a period not exceeding 20 years. Under the revised standard, the acquirer recognizes the bargain purchase gain in profit or loss immediately on the acquisition date after reassessing and confirming that all of the assets acquired and all of the liabilities assumed have been identified after a review of the procedures used in the purchase allocation. This standard was applicable to business combinations undertaken on or after April 1, 2010. The Company adopted this standard on April 1, 2010.

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 of 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 at Toyooka distribution center, Iwata distribution center and Yusen Logi Fukumoto building which are depreciated on 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 years Furniture and fixtures 2–20 years Machinery, equipment and vehicles 4–6 years

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 would be 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 would be 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 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. Accrued Pension and Severance CostsEmployee's 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.

The liability for employees' retirement benefits is accounted for based on projected benefit obligations and plan assets at the balance sheet date.

In July 2008, the ASBJ issued ASBJ Statement No. 19, “Partial Amendments to Accounting Standard for Retirement Benefits (Part 3)”, which removed the option of using a discount rate determined by taking into


consideration the fluctuations in yield of bonds over a certain period, as provided in Note 6 of “Interpretive Note to the Accounting Standard for Retirement Benefits”. The yield of a long term safe bond on closing date should be used for the calculation of the discount rate in this accounting standard. The Company applied the revised accounting standard effective April 1, 2009, however, there was no effect from this change.

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. Asset Retirement Obligations―In March 2008, the ASBJ published the accounting standard for asset

retirement obligations, ASBJ Statement No. 18 “Accounting Standard for Asset Retirement Obligations” and ASBJ Guidance No. 21 “Guidance on Accounting Standard for Asset Retirement Obligations”. Under this accounting standard, an asset retirement obligation is defined as a legal obligation imposed either by law or contract that results from the acquisition, construction, development, and the normal operation of a tangible fixed asset and is associated with the retirement of such tangible fixed asset. The asset retirement obligation is recognized as the sum of the discounted cash flows required for the future asset retirement and is recorded in the period in which the obligation is incurred if a reasonable estimate can be made. If a reasonable estimate of the asset retirement obligation cannot be made in the period the asset retirement obligation is incurred, the liability should be recognized when a reasonable estimate of asset retirement obligation can be made. Upon initial recognition of a liability for an asset retirement obligation, an asset retirement cost is capitalized by increasing the carrying amount of the related fixed asset by the amount of the liability. The asset retirement cost is subsequently allocated to expense through depreciation over the remaining useful life of the asset. Over time, the liability is accreted to its present value each period. Any subsequent revisions to the timing or the amount of the original estimate of undiscounted cash flows are reflected as an increase or a decrease in the carrying amount of the liability and the capitalized amount of the related asset retirement cost. This standard was effective for fiscal years beginning on or after April 1, 2010.

m. Provision for Alleged Antitrust Law Violation—The Company has recorded a provision for possible future losses associated with U.S. antitrust laws in the amount estimated as of the present time.

n. Leases—In March 2007, the ASBJ issued ASBJ Statement No. 13, “Accounting Standard for Lease Transactions”, which revised the previous accounting standard for lease transactions issued in June 1993. The revised accounting standard for lease transactions was effective for fiscal years beginning on or after April 1, 2008.

Under the previous accounting standard, finance leases that were deemed to transfer ownership of the leased property to the lessee were capitalized. However, other finance leases were permitted to be accounted for as operating lease transactions if certain “as if capitalized” information was disclosed in the note to the lessee’s financial statements. The revised accounting standard requires that all finance lease transactions be capitalized to recognize lease assets and lease obligations in the balance sheet. In addition, the accounting standard permits leases which existed at the transition date and do not transfer ownership of the leased property to the lessee to continue to be accounted for as operating lease transactions.

The Company applied the revised accounting standard effective April 1, 2008. In addition, the Company continues to account for leases which existed at the transition date and does not transfer ownership of the leased property to the lessee as operating lease transactions.

All other leases are accounted for as operating leases. o. 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.

p. Accounting for the Consumption Tax—In Japan, the consumption tax is imposed at a flat rate of 5% on

all domestic consumption of goods and services (with certain exemptions). The consumption tax imposed on the Group's domestic sales to customers is withheld by the Group at the time of sale and is subsequently paid to the national government. The consumption tax withheld upon sale and the


consumption tax paid by the Group on the purchases of goods and services are not included in the related amounts in the accompanying consolidated statement of income.

q. Appropriation of Retained Earnings—Appropriations of retained earnings are reflected in the financial

statements for the following year upon shareholders’ approval. r. 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.

s. 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.

t. 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 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.

u. Derivatives—The Group uses derivative financial instruments to manage their 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: (a) 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 (b) 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 measured at the fair value and the unrealized gains/losses are recognized in income.

v. Accounting Changes and Error Corrections―In December 2009, 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 with revision of accounting standards, the new policy is applied retrospectively, unless the revised accounting standards include specific transitional provisions. When the revised accounting standards include specific transitional provisions, an entity shall comply with the specific transitional provisions. (2) Changes in Presentations - 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.

w. Per Share Information—Net assets per share is 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, 2013 and 2012, is not presented since the Company had no securities with 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.

x. Changes in the Method of Depreciation－The Company and domestic consolidated subsidiaries,

accompanying the revisions in the Corporation Tax Act of Japan, have changed their accounting methods for depreciation based on the revised Corporation Tax Act for tangible fixed assets acquired on or after April 1, 2012. The effect of this change was to decrease depreciation by ¥ 19 million and increased operating income, income before income taxes and minority interests by ¥ 19 million.

y. New Accounting Pronouncements

Employee Benefits—On June 16, 2011, the International Accounting Standards Board issued a revised accounting standard for benefit plans, International Accounting Standard No. 19, “Employee Benefits”.

Major accounting changes under the revised accounting standard are as follows: In respect to defined benefit plans, the “corridor approach” for actuarial gains and losses are eliminated and instead their immediate recognition in other comprehensive income is required. The amounts of current and past service cost, gain or loss on non-routine settlements, and net interest on the net defined benefit liability are permitted to be recognized in the statement of income, thus remeasurements including changes in fair value of plan assets that arise from factors other than time value and actuarial gains and losses on obligations are required to be recognized in other comprehensive income.

This accounting standard is effective from the end of fiscal years beginning on or after April 1, 2013, and its impact on consolidated financial statements is being evaluated at the time of preparation.

Accounting Standard for Retirement Benefits—On May 17, 2012, the ASBJ issued ASBJ Statement No. 26, “Accounting Standard for Retirement Benefits” and ASBJ Guidance No. 25, “Guidance on Accounting Standard for Retirement Benefits,” which replaced the Accounting Standard for Retirement Benefits that had been issued by the BAC in 1998 with effective date of April 1, 2000, and the other related practical guidance.

Major changes are as follows: (1) Treatment in the Consolidated Balance Sheet – Under the current requirements, actuarial gains and losses and past service costs that are yet to be recognized in profit or loss are not recognized in the consolidated balance sheet, and the difference between retirement benefit obligations and plan assets (hereinafter, “deficit or surplus”), adjusted by such unrecognized amounts, is recognized as a liability or asset.

Under the revised accounting standard, actuarial gains and losses and past service costs that are yet to be recognized in profit or loss shall be recognized within equity (accumulated other comprehensive income), after adjusting for tax effects, and the deficit or surplus shall be recognized as a liability or asset.

(2) Treatment in the consolidated statement of income and the statement of comprehensive income - The revised accounting standard would not change how to recognize actuarial gains and losses and past service costs in profit or loss. Those amounts would be recognized in profit or loss over a certain period no longer than the expected average remaining working lives of the employees. However, actuarial gains and losses and past service costs that arose in the current period and are yet to be recognized in profit or loss shall be included in other comprehensive income and actuarial gains and losses and past service costs that were recognized in other comprehensive income in prior periods and then recognized in profit or loss in the current period shall be treated as reclassification adjustments.

This accounting standard and the guidance are effective from the end of fiscal years beginning on or after April 1, 2013 with earlier adoption permitted from the beginning of fiscal years beginning on or after April 1, 2013. However, no retrospective application of this accounting standard to consolidated financial statements in prior periods is required.

The Company and certain domestic consolidated subsidiaries expect to apply the revised accounting standard from the fiscal year ending on or after March 31, 2014 and are in the process of measuring the effects of applying the revised accounting standard.


z. Changes in presentation－Consolidated statement of Cash Flows Prior to April 1, 2012, the “Loss on write-down of golf club membership” was disclosed separately in the cash flows from operating activities section of the consolidated statement of cash flows. Since during this fiscal year ended March 31, 2013, the materiality of the amount was decreased, such amount is now included in “Other—net” within the cash flows from operating activities section of the consolidated statement of cash flows. The amount included in “Other—net” for the year ended March 31, 2012, was ¥5 million.

Prior to April 1, 2012, the “Purchase of stocks of affiliate companies” was disclosed separately in the cash flows from investing activities section of the consolidated statement of cash flows. Since during this fiscal year ended March 31, 2013, the items of this account have been reviewed with the objective of increasing clarity, such amount is now included in “Purchase of investments in securities” within the cash flows from investing activities section of the consolidated statement of cash flows. The amount included in “Purchase of investments in securities” for the year ended March 31, 2012, was ¥140 million.

Prior to April 1, 2012, the “Proceeds from sales of stocks of affiliate companies” was disclosed separately in the cash flows from investing activities section of the consolidated statement of cash flows. Since during this fiscal year ended March 31, 2013, the items of this account have been reviewed with the objective of increasing clarity, such amount is now included in “Proceeds from sale of investments in securities” within the cash flows from investing activities section of the consolidated statement of cash flows. The amount included in “Proceeds from sale of investments in securities” for the year ended March 31, 2012, was ¥54 million.

Prior to April 1, 2012, the “Purchase of investments in subsidiaries” was disclosed separately in the cash flows from investing activities section of the consolidated statement of cash flows. Since during this fiscal year ended March 31, 2013, the items of this account have been reviewed with the objective of increasing clarity, such amount is now included in “Purchase of investments in subsidiaries resulting in change in scope of consolidation” within the cash flows from investing activities section of the consolidated statement of cash flows. The amount included in “Purchase of investments in subsidiaries resulting in change in scope of consolidation” for the year ended March 31, 2012, was ¥10,567 million.

3. CASH AND CASH EQUIVALENTS

The Group has omitted information for the year ended March 31, 2013, as there are no significant purchases of investments.

Yusen Logistics (UK) Ltd. was acquired for the year ended March 31, 2012. Its assets and liabilities at the time of consolidation, acquisition costs, and the payment (net amount) required for acquisition were as follows:

Millions of Yen

Current assets ¥6,658 Fixed assets 3,710 Goodwill 434 Current liabilities (7,486) Fixed liabilities (1,262) Acquisition costs 2,054 Cash and cash equivalents of the acquired company (4) Payment required for acquisition ¥2,050

The Group has omitted information for the year ended March 31, 2013, as there are no significant financial transactions.


NYK LOGISTICS (AMERICAS) INC. was merged with Yusen Logistics (Americas) Inc. for the year ended March 31, 2012. Common stocks and capital surplus have not increased due to the merger. The acquired assets and liabilities were as follows:

Millions of Yen

Current assets ¥8,912Fixed assets 8,417Total assets ¥17,329

Current liabilities 7,476Fixed liabilities 463Total liabilities ¥7,939

NYK LOGISTICS (EUROPE CONTINENT) B.V. was merged with Yusen Logistics (Europe) B.V. for the year ended March 31, 2012. Common stocks and capital surplus have not increased due to the merger. The acquired assets and liabilities were as follows:

Millions of Yen

Current assets ¥14,610 Fixed assets 12,510Total assets ¥27,210

Current liabilities 12,595Fixed liabilities 3,324Total liabilities ¥15,919

4. INVESTMENTS IN SECURITIES

The cost and aggregate fair values of the investments classified as "available-for-sale securities" at March 31, 2013 and 2012 are as follows:

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

Millions of Yen Thousands of U.S. Dollars 2013 2012 2013

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 ¥168 ¥323 ¥155 ¥261 ¥461 ¥200 $1,788 $3,438 $1,6507 Government bonds 60 60 0 59 60 1 634 638 4

Securities for which market value does not exceed cost— Equity securities 221 172 (49) 117 93 (24) 2,354 1,828 (526)

Total ¥449 ¥555 ¥106 ¥437 ¥614 ¥177 $4,776 $5,904 $1,128


(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 of U.S. Dollars

2013 2012 2013

Proceeds from sale of available-for-sale securities ¥67 ¥60 $713Total amount of gain on sale of available-for-sale securities 65 42 696Total amount of loss on sale of available-for-sale securities – – –

(3) The impairment losses of securities for the year ended March 31, 2013, amounted to ¥ 35 million ($ 368 thousand) for the securities of non-consolidated subsidiaries. The impairment losses of securities for the year ended March 31, 2012, amounted to ¥ 17 million, which consist of ¥ 17 million for available-for-sale securities.

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

Short-term loans payable at March 31, 2013, consisted of notes to financial institutions and bank overdrafts. The weighted- average interest rate applicable to the short-term loans payable was 4.21% and 5.39% at March 31, 2013 and 2012, respectively.

Long-term debt at March 31, 2013 and 2012, consisted of the following:


2013 2012 2013

Loans from banks and other financial institutions, due serially to 2023 with average interest rates of 1.09% (2013) and 1.07% (2012) Collateralized ¥ - ¥ 11 $ - Unsecured 13,841 12,850 147,168Finance lease obligation 253 334 2,695 Total 14,094 13,195 149,863Less current portion (1,090) (893) (11,594) Long-term debt, less current portion ¥13,004 ¥12,302 $138,269

Annual maturities of long-term debt including financial lease obligation at March 31, 2013, were as follows:

Year Ending March 31 Millions of Yen Thousands of U.S. Dollars

2014 ¥ 1,090 $ 11,594 2015 4,792 50,955 2016 3,581 38,079 2017 4,100 43,595 2018 and thereafter 531 5,640 Total ¥14,094 $ 149,863

The carrying amount of assets pledged as collateral for the above-mentioned collateralized long-term debt at March 31, 2013 and 2012, was as follows:


2013 2012 2013

Buildings and structures ¥ - ¥ 49 $ -


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 consolidated subsidiaries have severance payment plans for employees, directors, and audit & supervisory board members. Under most circumstances, employees terminating their employment are entitled to retirement benefits determined based on the rate of pay at the time of termination, years of service, and certain other factors. Such retirement benefits are made in the form of a lump-sum severance payment from the Company or from certain consolidated subsidiaries and annuity payments from a trustee. Employees are entitled to larger payments if the termination is involuntary, by retirement at the mandatory retirement age, by death, or by voluntary retirement at certain specific ages prior to the mandatory retirement age.

Accrued pension and severance costs for employees at March 31, 2013 and 2012, consisted of the following:

Millions of Yen Thousands ofU.S. Dollars

2013 2012 2013

Projected benefit obligation ¥ 16,204 ¥ 15,862 $ 172,292Fair value of plan assets (10,759) (10,317) (114,396)Unrecognized actuarial gain (2,029) (1,861) (21,577)Prepaid pension cost 595 362 6,331

Accrued pension and severance costs for employees ¥ 4,011 ¥ 4,046 $ 42,650

The components of net periodic benefit costs for the years ended March 31, 2013 and 2012, are as follows:

Millions of Yen Thousands ofU.S. Dollars

2013 2012 2013

Service cost ¥ 647 ¥ 580 $ 6,876Interest cost 426 500 4,534Expected return on plan assets (381) (422) (4,050)Amortization of unrecognized actuarial loss 253 349 2,691Past service cost 4 348

Total ¥ 978 ¥ 1,011 $ 10,399

Other than those listed above, the Company recognized loss on abolishment of retirement pension plan in the amount of ¥111 million ($1,180 thousand) at March 31, 2013, as Yusen Logistics (Americas) Inc. has transferred retirement and pension plan from a defined benefit pension plan to a defined contribution pension plan.

Assumptions used for the years ended March 31, 2013 and 2012, are set forth as follows:

2013 2012

Discount rate Principally 2.0% Principally 2.0% Expected rate of return on plan assets Principally 3.0% Principally 3.0% Recognition period of actuarial gain/loss Principally 10 years Principally 10 yearsAmortization period of prior service cost 1 year 1 year


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 the Board of Directors, (2) having independent auditors, (3) having the 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 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 38.0% and 40.4% for the years ended March 31, 2013 and 2012, respectively.

The tax effects of significant temporary differences resulted in deferred tax assets and liabilities at March 31, 2013 and 2012, are as follows:


2013 2012 2013 Deferred tax assets: Accrued pension and severance costs for employees ¥1,317 ¥1,310 $14,008 Accrued bonuses to employees 661 628 7,025 Accrued enterprise tax 40 46 431 Accrued pension and severance costs for directors and audit & supervisory board members 175 142 1,856 Allowance for doubtful accounts 227 304 2,411 Depreciation 409 370 4,352 Tax loss carry forward 1,774 1,493 18,866 Loss on impairment of fixed assets – 1 – Loss on revaluation of investments in securities 103 73 1,095 Loss on write-down of golf club membership 116 117 1,236 Stock of affiliate company 142 142 1,514 Others 594 542 6,307 Total 5,558 5,168 59,101 Less valuation allowance (1,180) (772) (12,551)

Total deferred tax assets 4,378 4,396 46,550

Deferred tax liabilities: Depreciation 803 623 8,536 Prepaid pension expenses 120 32 1,279 Others 219 378 2,326

Total deferred tax liabilities 1,142 1,033 12,141

Net deferred tax assets ¥3,236 ¥3,363 $34,409


The reconciliation of the difference between the normal effective statutory tax rate and the actual effective tax rate reflected in the accompanying consolidated statement of income for the years ended March 31, 2013 and 2012 is as follows:

2013 2012

Normal effective statutory tax rate 38.0% 40.4%Adjustments: Entertainment expenses and other non-deductible permanent differences 4.1 1.1 Dividend income not taxable (10.8) (27.8) Effective of elimination of intercompany dividends received 12.6 26.4 Per capital levy of local tax 1.3 0.9 Lower income tax rates applicable to income in certain foreign countries (9.7) (7.0) Valuation allowance on deferred tax 6.9 2.5 Foreign tax credits – (0.4) Equity in earnings of affiliated companies and unconsolidated companies (2.1) (4.0) Effect of tax reduction – 3.1 Provision for alleged antitrust law violation – 7.7 Goodwill and negative goodwill (5.3) 0.5 Foreign exchange adjustment for provision 1.7 - Other—net 2.7 1.0

Actual effective tax rate 39.4% 44.4%

9. LEASES

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

Pro forma information of leased property whose lease inception was before March 31, 2008

ASBJ Statement No.13, “Accounting Standard for Lease Transactions” requires that all finance lease transactions be capitalized to recognize lease assets and lease obligations in the balance sheet. However, the ASBJ Statement No. 13 permits leases without ownership transfer of the leased property to the lessee and whose lease inception was before March 31, 2008, to continue to be accounted for as operating lease transactions if certain “as if capitalized” information is disclosed in the note to the financial statements. The Company applied the ASBJ Statement No. 13 effective April 1, 2008, and accounted for such leases as operating lease transactions. Pro forma information of leased property whose lease inception was before March 31, 2008, was as follows:

(1) Acquisition cost, accumulated depreciation:


2013 2012 2013 Machinery, Equipment,

andVehicles

Furnitureand

Fixtures Total

Machinery,Equipment,

andVehicles

Furnitureand

FixturesTotal

Machinery, Equipment,

andVehicles

Furnitureand

FixturesTotal

Acquisition cost ¥16 ¥ - ¥16 ¥24 ¥5 ¥29 $166 $ - $166

Accumulateddepreciation (16 ) - (16 ) (22 ) (5 ) (27 ) (166 ) - (166 )

Net leased property ¥ - ¥ - ¥ - ¥2 ¥ - ¥2 $ - $ - $ -


(2) Obligations under finance leases:

Thousands of Millions of Yen U.S. Dollars 2013 2012 2013

Due within one year ¥- ¥2 $ - Due over one year - - -

Total ¥- ¥2 $ -

The amount of obligations under finance leases includes the imputed interest expense portion. Depreciation expense which was not reflected in the consolidated statement of income, computed by the straight-line method over the lease term was ¥2 million ($23 thousand) and ¥5 million for the years ended March 31, 2013 and 2012, respectively.

The minimum rental commitments under non-cancelable operating leases at March 31, 2013 and 2012, were as follows:

Thousands of Millions of Yen U.S. Dollars 2013 2012 2013 Due within one year ¥ 7,596 ¥ 7,151 $80,768Due over one year 16,816 13,847 178,801

Total ¥ 24,412 ¥ 20,998 $259,569

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. The Group also makes it the basic policy 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 business integration and 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 detail 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 early stage. The maximum credit risk exposure of financial assets is limited to their carrying amounts as of March 31, 2013.

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 transaction, forward foreign currency contract may be used under the limited contract term of quarter year.

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

The execution and management of derivative transactions are approved by CFO or the board of directors 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.

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 price in active markets. If quoted price is not available, other rational valuation techniques are used instead. As the valuation needs various assumptions, the fair values of financial instruments are subject to change when different assumptions are used. Also please see Note 11 for the detail of fair value for derivatives.


(a) Fair value of financial instruments

Millions of yen

March 31, 2013 Carrying Amount Fair Value Unrealized Gain/Loss

Cash and cash equivalents ¥ 24,467 ¥ 24,467 –Time deposits 1,719 1,719 –Trade notes and accounts receivable 70,539 70,539 –Investments in securities: Available-for-sale securities 555 555 –

Total ¥ 97,280 ¥ 97,280 –

Trade notes and accounts payable ¥ 32,747 ¥ 32,747 –Short-term loans payable 2,393 2,393 –Current portion of long-term debt 1,090 1,090 –Accrued income taxes 892 892 –Long-term debt 13,004 13,004 –Total ¥ 50,126 ¥ 50,126 –

Millions of yen


Cash and cash equivalents ¥ 23,646 ¥ 23,646 –Time deposits 1,063 1,063 –Trade notes and accounts receivable 61,837 61,837 –Investments in securities: Available-for-sale securities 614 614 –

Total ¥ 87,160 ¥ 87,160 –

Trade notes and accounts payable ¥ 30,266 ¥ 30,266 –Short-term loans payable 512 512 –Current portion of long-term debt 893 893 –Accrued income taxes 1,212 1,212 –Long-term debt 12,302 12,302 –Total ¥ 45,185 ¥ 45,185 –


Thousands of U.S. Dollars


Cash and cash equivalents $ 260,147 $ 260,147 –Time deposits 18,281 18,281 –Trade notes and accounts receivable 750,017 750,017 –Investments in securities: Available-for-sale securities 5,904 5,904 –

Total $1,034,349 $1,034,349 –

Trade notes and accounts payable $ 348,191 $ 348,191 –Short-term loans payable 25,446 25,446 –Current portion of long-term debt 11,594 11,594 –Accrued income taxes 9,490 9,490 –Long-term debt 138,269 138,269 –

Total $ 532,990 $ 532,990 –

Current assets and liabilities

The fair value of all current assets and liabilities(cash and cash equivalents, time deposit, 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 of the equity instruments, and at the quotes obtained from the financial institution for certain debt instruments. All investments in securities are classified as available-for-sale securities. The information of the fair values of investments in securities is included in Note 4.

Long-term debt

-Long-term loans payable

The fair value of long-term debt on floating rates approximates carrying amount due mainly to the floating rate determined by the market interest rate in the short term.

- Lease obligations

The fair value of lease obligations approximates carrying amount.

Derivatives

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

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

Carrying amount

Millions of Yen Thousands of U.S.Dollars

Investments in equity instruments that do not have 2013 2012 2013 a quoted market price in an active market ¥ 306 ¥ 262 $ 3,252


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

Millions of Yen Due after Due after one year five years Due in one through through Due after

March 31, 2013 year or less five years ten years ten yearsCash and cash equivalents ¥ 24,467 – – –Time deposits 1,719 – – –Trade notes and accounts receivable 70,539 – – –Investments in securities:

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

Total ¥ 96,767 ¥ 18 – – Thousands of U.S.Dollars Due after Due after one year five years

Due in one through through Due afterMarch 31, 2013 year or less five years ten years ten years

Cash and cash equivalents $ 260,147 – – –Time deposits 18,281 – – –Trade notes and accounts receivable 750,017 – – –Investments in securities:

Available-for-sale securities with contractual maturities 447 $ 191 – –

Total $ 1,028,892 $ 191 – –

11. DERIVATIVES

The Group enters into foreign exchange forward contracts, interest rate swap and currency swap 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 its 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 derivatives contracts outstanding at March 31, 2013 and 2012:

Derivative transactions to which hedge accounting is not applied.


(1) Currency related


2013 2012 2013

Contracts Contracts Contracts Outstanding Outstanding Outstanding

Contracts Due Over Fair Contracts Due Over Fair Contracts Due Over Fair

Outstanding One Year Value Outstanding One Year Value Outstanding One Year Value

Foreign currency forward contracts: Selling U.S. dollar －－－ ¥ 2 － ¥ (0 ) －－－Selling Singapore dollar ¥ 208

－ ¥ (1 ) －

－－ $ 2,215

－$ (6)

Selling British pound ¥ 498 － ¥ (12 ) －－－ $ 5,287 － $(135)Buying U.S. dollar ¥1,681 ¥ 553 ¥ 18 ¥ 327 － ¥ (1 ) $17,884 $ 5,889 $ 193Buying Hong Kong dollar ¥ 125

－ ¥ (3 ) ¥ 249

－¥ (6 ) $ 1,325

－$ (37)

Buying Thai baht ¥ 24 － ¥ (1 ) ¥ 136 － ¥ (2 ) $ 260 － $ (5)Buying euro ¥ 197 － ¥ (3 ) ¥ 81 － ¥ 5 $ 2,090 － $ (30)

The contract or notional amounts of derivatives which are shown in the above table do not represent the amounts exchanged by the parties and do not measure the Group's exposure to credit or market risk.

(2)Interest related


2013 2012 2013

Contracts Contracts Contracts Outstanding Outstanding Outstanding

Contracts Due Over Fair Contracts Due Over Fair Contracts Due Over Fair

Outstanding One Year Value Outstanding One Year Value Outstanding One Year ValueInterest-rate swap: Receipts floating, payments fixed ¥176 – ¥ (3) ¥182 ¥154 ¥ (8) $ 1,869 – $ (33)Total ¥176 – ¥ (3) ¥182 ¥154 ¥ (8) $ 1,869 – $ (33)

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

Derivative transactions to which hedge accounting is applied.

Millions of Yen Thousands of U.S. Dollars 2013 2012 2013 Contracts Contracts Contracts Outstanding Outstanding Outstanding Contracts Due Over Contracts Due Over Contracts Due Over Hedged

item Outstanding One YearFair

Value Outstanding One YearFair

Value Outstanding One YearFair

ValueCurrency swap: Receipts - U.S. dollar, payments - Malaysian Ringgit

Long-term debt ¥921 ¥559 ¥ (58) ¥ – ¥ – ¥ – $9,789 $5,938 $(621)

Total ¥921 ¥559 ¥ (58) ¥ – ¥ – ¥ – $9,789 $5,938 $(621)

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


12. COMMITMENTS AND CONTINGENT LIABILITIES

The Group was contingently liable for guarantees of trade payables and bank loans owed by their unconsolidated subsidiaries, affiliate companies, and a third-party company in the amount of ¥96 million ($1,024 thousand) and ¥62 million at March 31, 2013 and 2012, respectively.

The Company has been under investigation since January 2008 for an alleged violation of the U.S. Anti-Trust Law in connection with its freight forwarding services for international air cargo shipments. As a result, the Company has concluded a plea agreement with the Department of Justice of the United States on March 8, 2013, in which the Company agreed to pay a USD15,428,207 fine, and it will be taken with the approval from the court in the future.

Also, the Company has been named as a defendant in a class action lawsuit in the United States on suspicion that more than 60 international cargo forwarding service companies around the world formed a variety of cartels. Regarding its ultimate outcome, there is a possibility that the outcome of this lawsuit can have an impact on the Company’s operating results, but it is difficult to reasonably predict the impact on the Company’s operating results at this time.

13. BREAKDOWN OF SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses for the years ended March 31, 2013 and 2012, are summarized as follows:


2013 2012 2013

Labor and payroll cost ¥ 23,546 ¥ 20,754 $ 250,361Provision for accrued bonuses to employees 1,509 1,537 16,041Provision for accrued pension and severance costs for:

Employees 920 882 9,778Directors and audit & supervisory board members 150 173 1,594

Provision for doubtful accounts 380 445 4,043Depreciation 1,975 1,894 20,997Other 22,176 19,751 235,794

Total ¥ 50,656 ¥ 45,436 $ 538,608


14. COMPREHENSIVE INCOME

For the year ended March 31, 2013

Each component of other comprehensive income consists of the following:


2013 2012 2013 Unrealized gain (loss) on available-for-sale securities

Gains arising during the year ¥ (71 ) ¥ 18 $ (752)Reclassification adjustments to profit or loss － (4) －

Amount before income tax effect (71 ) 14 (752)Income tax effect 4 (2) 38Total (67 ) 12 (714)

Deferred gains or losses on hedges Gains arising during the year (16 ) － (169)Reclassification adjustments to profit or loss －－－

Amount before income tax effect (16 ) － (169)Income tax effect －－－

Total (16 ) － (169)Foreign currency translation adjustments

Adjustments arising during the year 9,171 (88) 97,522Reclassification adjustments to profit or loss －－－

Amount before income tax effect 9,171 (88) 97,522Income tax effect －－－

Total 9,171 (88) 97,522Share of other comprehensive income in associates

Gains arising during the year 253 (176) 2,693Pension liability adjustment of foreign consolidated subsidiaries

Adjustments arising during the year (12 ) (113) (132)Reclassification adjustments to profit or loss 183 － 1,944Amount before income tax effect 171 (113) 1,812Income tax effect (72 ) 49 (764)Total 99 (64) 1,048

Gain or loss on change in equity Gains arising during the year 65 3,309 687Reclassification adjustments to profit or loss －－－

Amount before income tax effect 65 3,309 687Income tax effect －－－

Total 65 3,309 687Total other comprehensive income ¥ 9,505 ¥ 2,993 $ 101,067


15. SEGMENT INFORMATION

For the years ended March 31, 2013 and 2012

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, USA, 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”.

Change in the method of depreciation－The Company and domestic consolidated subsidiaries, accompanying the revisions in the Corporation Tax Act of Japan, have changed their accounting methods for depreciation based on the revised Corporation Tax Act for tangible fixed assets acquired on or after April 1, 2012. This change increased segment profit by ¥19 million ($206 thousand) in “Japan” segment.

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

Millions of Yen 2013 Reportable Segment

Japan Americas Europe East Asia

South Asiaand

Oceania Total ReconciliationConsolidated

Total Sales

Sales to external customers ¥ 74,339 ¥ 75,680 ¥ 75,008 ¥ 54,044 ¥ 59,978 ¥ 339,049 － ¥ 339,049Inter-segment sales/transfers 514 1,589 1,149 944 505 4,701 ¥ (4,701) －

Total 74,853 77,269 76,157 54,988 60,483 343,750 (4,701) 339,049Segment profit ¥ 103 ¥ (6 ) ¥ (247) ¥ (1,149 ) ¥ 3,269 ¥ 1,970 ¥ (311) ¥ 1,659Segment assets ¥ 53,214 ¥ 25,196 ¥ 40,272 ¥ 26,431 ¥ 50,135 ¥ 195,248 ¥ (21,425) ¥ 173,823Other:

Depreciation 1,042 576 1,367 535 1,379 4,899 － 4,899Amortizations of goodwill 19 117 176 49 － 361 401 762Investments in unconsolidated subsidiaries and affiliate

companies accounted for by the equity method *1 163 －－－ 343 506 231 737

Increase in property, plant and equipment and

intangible assets 1,010 240 1,221 881 5,129 8,481 － 8,481


Millions of Yen 2012 Reportable Segment


South Asiaand


Total Sales

Sales to external customers ¥ 83,476 ¥ 68,538 ¥ 75,470 ¥ 39,362 ¥ 42,158 ¥ 309,004 － ¥ 309,004Inter-segment sales/transfers 285 1,518 1,352 522 282 3,959 ¥ (3,959 ) －

Total 83,761 70,056 76,822 39,884 42,440 312,963 (3,959 ) 309,004Segment profit ¥ 1,675 ¥ (577 ) ¥ 924 ¥ 2,114 ¥ 2,331 ¥ 6,467 ¥ (195 ) ¥ 6,272

Segment assets ¥ 55,668 ¥ 23,440 ¥ 36,633 ¥ 19,959 ¥ 34,142 ¥ 169,842 ¥ (18,727 ) ¥ 151,115

Other: Depreciation 1,057 648 1,386 417 764 4,272 － 4,272Amortizations of goodwill 20 112 173 － 3 308 281 589Investments in unconsolidatedsubsidiaries and affiliate

companies accounted for by theequity method *1 502 －－－ 662 1,164 1,070 2,234

Increase in property, plant andequipment and

intangible assets 591 617 834 665 944 3,651 － 3,651

Thousands of U.S. Dollars 2013 Reportable Segment


South Asiaand


Total Sales

Sales to external customers $ 790,419 $ 804,668 $ 797,539 $ 574,632 $ 637,729 $3,604,987 － $3,604,987Inter-segment sales/transfers 5,468 16,893 12,221 10,035 5,369 49,986 $ (49,986) －

Total 795,887 821,561 809,760 584,667 643,098 3,654,973 (49,986) 3,604,987Segment profit

$ 1,095 $ (67) $ (2,628) $ (12,219) $ 34,760 $ 20,941 $ (3,304) $ 17,637Segment assets $ 565,806 $ 267,901 $ 428,197 $ 281,033 $ 533,068 $2,076,005 $(227,809) $1,848,196Other:

Depreciation 11,076 6,124 14,530 5,687 14,672 52,089 － 52,089Amortizations of goodwill 207 1,240 1,873 516 － 3,836 4,266 8,102Investments in unconsolidated subsidiaries and affiliate

companies accounted for by the equity method *1 1,733 －－－ 3,650 5,383 2,449 7,832

Increase in property, plant and equipment and

intangible assets 10,742 2,552 12,987 9,367 54,524 90,172 － 90,172


NOTES: 1. The breakdown for the reconciliation in each item for the year ended March 31, 2013 and 2012, are as follows:

Thousands of Millions of Yen U.S. Dollars

2013 2012 2013 Sales:

Elimination of inter-segment transactions ¥ (4,701) ¥ (3,959 ) $ (49,986)

Total ¥ (4,701) ¥ (3,959 ) $ (49,986)

Thousands of Millions of Yen U.S. Dollars 2013 2012 2013 Segment profit:

Elimination of inter-segment transactions ¥ 0 ¥ (2) $ 0Amortization of goodwill (401) (281) (4,266)Others 90 88 962

Total ¥ (311) ¥ (195) $ (3,304)

Thousands of Millions of Yen U.S. Dollars 2013 2012 2013 Segment asset:

Elimination of inter-segment receivables and payables ¥ (9,521) ¥ (7,781 ) $ (101,230)Elimination of inter-segment investments and equity accounts (15,841) (14,669 ) (168,428)Common assets *2 4,024 3,811 42,783Others (87) (88 ) (934)

Total ¥ (21,425) ¥ (18,727 ) $ (227,809)

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

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

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


Related information

1. Information about services

The Group has omitted information about services on March 31, 2013 and 2012, as sales to external customers on Air and sea cargo is over 90% of sales of consolidated.

2. Information about geographical areas

(1) Sales Millions of Yen

2013

Japan Americas Europe East Asia South Asia

and Oceania Others Total U.S.A China

¥ 73,476 ¥ 75,871 ¥ 72,822 ¥ 75,139 ¥ 54,271 ¥ 49,452 ¥ 60,291 ¥ 1 ¥ 339,049

Millions of Yen 2012



¥ 82,748 ¥ 68,684 ¥ 67,522 ¥ 75,563 ¥ 39,552 ¥ 35,926 ¥ 42,455 ¥ 2 ¥ 309,004

Thousands of U.S. Dollars 2013



$ 781,239 $ 806,712 $ 774,292 $ 798,925 $ 577,049 $ 525,802 $ 641,053 $ 9 $ 3,604,987

Notes: (1) Sales are classified in countries or regions based on location of customers. (2) Hong Kong is included in China. (3) U.S.A and China are shown separately, because those countries accounted for over 10% of sales of consolidated at March 31, 2013 and 2012.

(2) Property, plant and equipment Millions of Yen

2013 Japan Americas Europe East Asia South Asia and Oceania Total

U.S.A Thailand ¥ 10,954 ¥ 7,508 ¥ 6,885 ¥ 12,581 ¥ 2,512 ¥ 18,073 ¥ 8,652 ¥ 51,628

Millions of Yen 2012

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

¥ 11,169 ¥ 6,799 ¥ 6,326 ¥ 11,724 ¥ 2,428 ¥ 7,646 ¥ 4,526 ¥ 39,766

Thousands of U.S. Dollars 2013

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

$ 116,468 $79,833 $ 73,205 $ 133,773 $ 26,711 $ 192,153 $ 91,995 $ 548,938

Notes: U.S.A and Thailand are shown separately, because those countries accounted for over 10% of property, plant and equipment of consolidated at March 31, 2013 and 2012.

(3) Information about major customers

The Group has omitted information about major customers, as sales to any customers is not over 10% of sales of consolidated at March 31, 2013 and 2012.

(4) Information about loss on impairment of fixed assets

There were no losses on impairment of fixed assets at March 31, 2013 and 2012.


(5) Information about amortization of goodwill and negative goodwill

Millions of Yen

2013


South Asia and

Oceania Elimination/ Corporate Total

Amortization of goodwill ¥19 ¥117 ¥176 ¥49 - ¥401 ¥762

Goodwill at March 31, 2013 10 1,593 690 106 - 655 3,054

Amortization of negative goodwill 0 - - - - - 0

Negative goodwill at March 31, 2013 - - - - - - -

Millions of Yen

2012


South Asia and

Oceania Elimination/ Corporate Total

Amortization of goodwill ¥20 ¥112 ¥173 - ¥3 ¥281 ¥589

Goodwill at March 31, 2012 29 1,509 807 - - 536 2,881


Negative goodwill at March 31, 2012 0 - - - - - 0


2013


South Asia and

Oceania

Elimination/

Corporate Total

Amortization of goodwill $207 $1,240 $1,873 $516 - $4,266 $8,102

Goodwill at March 31, 2013 104 16,943 7,335 1,131 - 6,957 32,470


Negative goodwill at March 31, 2013 - - - - - - -

(6)Information about gain on negative goodwill

The Company recognized gains on negative goodwill in the amount of ¥1,314 million ($13,966 thousand) at March 31, 2013, due to the reorganization and integration of the logistics businesses between the Company and NYK.

There were no important gains on negative goodwill at March 31, 2012.


16. PER SHARE INFORMATION

Per share information for the years ended March 31, 2013 and 2012 is summarized as follows:

Yen U.S. Dollars 2013 2012 2013

Net assets per share ¥ 1,514.34 ¥ 1,368.47 $ 16.101Basic net income per share 26.53 59.91 0.2

Diluted net income per share is not presented since there were no securities with dilutive effect for the years ended March 31, 2013 and 2012.

Per share information is computed based on the following:


2013 2012 2013

Net income ¥ 1,119 ¥ 2,526 $ 11,896Net income not subject to distribution to common shareholders Net income subject to current and future distribution to common stock 1,119 2,526 11,896

Number of Shares of Common Stock

2013 2012

Weighted-average shares for the period 42,169,930 42,170,022


17. RELATED PARTY TRANSACTIONS

Major transactions and major balances for the years ended March 31, 2013 and 2012, with related parties are as follows:


Nature of Business

Ownership interest

(%) Relationship

Description of the

transactions

Transaction for the year

AccountName

Balance at end of year

Name AddressAmount of

capitalMillionsof Yen


Millionsof Yen

Thousandsof

U.S.Dollars

Transaction with subsidiaries of a common parent:

NYK INTERNATIONAL

PLCU.K.

USD32,285

thousandFinance － Financing

Transfer of funds

4,359 46,343

Other current liabilities

(CMSdeposits)

5,083 54,034

Loan (net amount)

(343) (3,652)

Current portion of long-term

debt

300 3,186

(484) (5,144) Long-term

debt2,227 23,681

Payment of interest

72 764

Other current liabilities(accruedinterest payable)

7 73

NYK INTERNATIONAL

(USA) INC. U.S.A.

USD2,161


Transfer of funds

3,158 33,575

Other current liabilities

(CMSdeposits)

2,824 30,028

Payment of interest

14 146

Other current liabilities( accrued interest payable)

1 14



Nature of Business

Ownership interest (%) Relationship

Description of the

transactions

Transaction for the year

Account Name

Balance at end of year

Name Address Amount

of capital Millions of Yen

Millions of Yen

Transaction with subsidiaries of a common parent:

NYK GROUP AMERICAS INC.

U.S.A.USD4,000

thousand

Managementfor NYK Group companies in U.S.A

－－Acquisition of shares

3,976 －－

N.Y.K. (THAILAND) CO., LTD.

ThailandTHB

164,000 thousand

Managementfor NYK Group companies in Thailand


3,187 －－

NYK GROUP EUROPE LTD.

U.K.GBP

81,490 thousand

Managementfor NYK Group companies in Europe and Shipping agency


2,054 －－

NYK LOGISTICS (HONG KONG) LTD.

Hong Kong HKD

115,846 thousand

Logistics －－Assignmentof business

2,145 －－

NYK EURO FINANCE PLC

U.K.EUR9,765


Transfer of funds

1,641 Other current

liabilities(CMS deposits)

44

Loan (net

amount)

(233) Current portion

of long-term debt

193

(52) Long-term debt 1,749

Payment of interest

83

Other current liabilities (accrued interest payable)

1

NYK INTERNATIONAL

PLCU.K.

GBP 20,203


Transfer of funds

1,429 Other current


1,784

Payment of interest

12

Other current liabilities(accruedinterest payable)

1

NYK INTERNATIONAL (USA) INC.

U.S.A.USD2,161


Transfer of funds

1,708 Other current


2,009

Payment of interest

7

Other current liabilities( accrued interest payable)

1


Form 2215S-J (9-06)

Notes: 1) On April 1, 2012, NYK EURO FINANCE PLC conducted transfer of its business to NYK INTERNATIONAL PLC. As a result, NYK INTERNATIONAL PLC succeeded the assets and liabilities which the Group had in NYK EURO FINANCE PLC.

2) Business policy on terms and conditions Interest on loans and transfer of funds is decided in consideration of market rate. The amount of transaction in Yen used to for transfer funds is calculated as an average of each month-ended balance. The amount of compensation for the acquisition of shares and assignment of business is determined by a quotation from a third-party vendor.

Information of parent company

Nippon Yusen Kabushiki Kaisha (NYK LINE) (Listed in Tokyo Stock Exchange, Nagoya Stock Exchange and Osaka Securities Exchange)

18. SUBSEQUENT EVENT

Ⅰ. The Company made an appropriation of retained earnings, proposed by the board of directors and approved by shareholders at the general meeting on June 27, 2013 as follows:


Cash dividends (¥9 ($0.10) per share) ¥ 380 $ 4,035


Independent Auditor’s Report


Company Profile

Trade Name YUSEN LOGISTICS CO., LTD.

Founded February 28, 1955

Capital JPY 4,301,000,000

Employees 16,700 as of March 31, 2013 (consolidated)

Representative Hiromitsu Kuramoto, President

Head Office Sumitomo Fudosan Shiba-Koen Tower 2-11-1, Sh ba-Koen Minato-ku, Tokyo 105-0011, Japan [Access Map ]

Business Functions • Agency business for air and ocean carriers• Freight forwarding business• Customs clearance• Warehousing• Integrated international shipping and agency services• Motor vehicle transportation business• Marine shipping brokerage• Packing, display and storage business of medical devices• Leasing of containers loading equipment, distribution equipment and logitics information systems• Real estate leasing and management• Other business incidental to or connected with the above

Domestic Subsidiaries • YUSEN LOGISTICS (TOHOKU) CO., LTD.• YUSEN LOGISTICS (KITAKANTO) CO., LTD.• YUSEN LOGISTICS (TSUKUBA) CO., LTD.• YUSEN LOGISTICS (SHINSHU) CO., LTD.• YUSEN LOGISTICS (HOKURIKU) CO., LTD.• YUSEN LOGISTICS (CHUGOKU) CO., LTD.• YUSEN LOGISTICS (KYUSHU) CO., LTD.• YUSEN LOGITEC CO., LTD.• YUSEN KEIHIN TRANS CO., LTD.• YUSEN TRAVEL CO., LTD.• YUSEN LOGINET CO., LTD.

http://www.jp.yusen-logistics.com/eng/corporate/profile/map/index.html


YUSEN AIR & SEA SERVICE CO., LTD. NYK Logistics

1950's 1955Establishes Kokusai Ryoko Kosha for handling of general travel and air cargo industry. Commences operations as an air transport agent certified by the International Air Transport Association (IATA)

1959NYK acquires stock which Osaka Shosen Kaisha (O.S.K. Line) owned, creating subsidiary company called Yusen Air Service Co., Ltd.

1960's 1961Changes English name to Yusen Air & Sea Service Co., Ltd.

1970's 1979Acquisition of domestic air freight forwarder license in Japan

1980's 1984Acquisition of international air freight forwarder license

1983Setting up Logistics Department in Harbor Division of NYK Head Quarter Establishment of Japan Intermodal Transport (later, JIT Co., Ltd.) in Japan, mainly handling ocean freight forwarding.

First half of 1980Establishment of subsidiaries in Asian countries, following precedent in Thailand

Second half of 1980Expansion of network in Europe and Americas through buyouts or establishment of subsidiaries

1990's 1994Transfer of the sales section of the travel department to Yusen Travel Co., Ltd.

1996Registers over-the-counter stock with the Japan Securities Dealers Association

2000's 2005Listing on the First Section of the Tokyo Stock Exchange

2000 and afterBuilding up global network and organization by expanding its business to Eastern Europe and BRICs

2004Integration of brand name to NYK Logistics internationally

2007Merger of NYK Logistics (Japan) Co., Ltd. with JIT Co., Ltd. in Japan

2010's 2010 FebruaryBasic letter of agreement concerning integration of businesses of Yusen Air & Sea Service and NYK Logistics Japan

2010 MayTransfer of business agreement between Yusen Air & Sea Service and NYK Logistics Japan

Inauguration of Yusen Logistics Co., Ltd.2010 October

History


Investor Information

Outline of Stocks

Total Number of Shares (As of Mar. 31, 2013)

Common stock 160,000,000

Stock exchange listings 42,220,800


Shareholders (As of Mar. 31, 2013)

Classification

Stock situation (Number of shares in a unit: 100 shares)

National and local governments, local

public entities

Financial institutions

Financial instruments

business operators

Other corporations

Foreign corporations, etc.

Number of shareholders 0 28 25 75 120

Number of shares held (unit) 0 50,351 4,621 261,933 72,556

Percentage of the number of shares held (%) 0.00 11.93 1.10 62.04 17.19

Classification

Stock situation (Number of shares in a unit: 100 shares)

Stock situation (shares

amounting to less than one

unit)Individual investors included in foreign corporations, etc.

Individual investors, etc. Total

Number of shareholders 5 7,180 7,428 -

Number of shares held (unit) 15 32,178 421,639 56,900

Percentage of the number of shares he d (%) 0.00 7.75 99.87 -

*Treasury stock (50,998 shares) is included in "individual investors, etc." (509 units). The number of treasury stock (50,998 shares) is according to the shareholder list and the actual number of treasury stock was 50,958 shares as of Mar. 31, 2013.

Major Shareholders (As of Mar. 31, 2013)

Name Number of shares held

Ratio of the number of shares held to the total number of shares

outstanding (%)

Nippon Yusen Kabushiki Kaisha (NYK) 25,132,184 59.53

BBH for Fidelity Low-Priced Stock Fund 4,221,500 10.00

The Chase Manhattan Bank, N.A. London Secs Lending Omnibus Account 919,500 2.18

The Master Trust Bank of Japan, Ltd. (Trust Account) 882,500 2.09

Japan Trustee Services Bank, Ltd. (Trust Account) 669,500 1.59

Yamato Holdings Co., Ltd. 605,800 1.43

Bank of Tokyo-Mitsubishi UFJ, Ltd. 537,600 1.27

Tokio Marine & Nichido Fire Insurance Co.,Ltd. 406,400 0.96

The Nomura Trust and Banking Co., Ltd. (Investment Trust Account) 397,800 0.94

Yusen Logistics Employee Stock Ownership Plan 310,108 0.73

Total 34,082,892 80.73

s | An IC L

Sumitomo Fudosan Shiba-Koen Tower 2-11-1, Shiba-Koen Minato-ku, Tokyo 105-0011, Japan