annual report 2016 - mitsubishi logistics · 2016-09-28 · annual report 2016 year ended march 31,...

ANNUAL REPORT 2016Year ended March 31, 2016

Nihonbashi Dia Building 19-1 Nihonbashi, 1-chome Chuo-ku, Tokyo 103-8630, Japanhttp://www.mitsubishi-logistics.co.jp

005_0808001372808.indd 1 2016/08/01 14:38:14

43

Company Profile (As of March 31, 2016)

Headquarters and Branches

Headquarters: Chuo-ku, Tokyo

Branches: Tokyo, Yokohama, Nagoya, Osaka, Kobe and Fukuoka

Date of Establishment April 15, 1887

Capital ¥22,393,986,570

Number of Shares Issued 175,921,478

Authorized Shares 440,000,000

Number of Employees 845 persons (parent only; not including 152 employees temporarily on loan to other companies. There are also 123 temporary employees, as well as 569 persons temporarily loaned or dispatched within the Group and those from outside the Group companies and accepted by the Company.)

4,499 persons (on a consolidated basis; not including 59 employees temporarily on loan to companies outside the Group. There are also 1,379 temporary employees, as well as 1,037 persons temporarily loaned or dispatched from outside the Group companies and accepted by the Company.)

Stock Exchange Listing First Section of the Tokyo Stock Exchange

Securities Code 9301

Major ShareholdersShareholder’s Name Number of Shares Held (Thousands) Shareholding Ratio (%)The Master Trust Bank of Japan, Ltd. (trust account) 15,151 8.6Japan Trustee Services Bank, Ltd. (trust account) 12,516 7.1Meiji Yasuda Life Insurance Company 9,707 5.5MITSUBISHI ESTATE CO., LTD. 7,331 4.2Kirin Holdings Company, Limited 5,932 3.4Tokio Marine & Nichido Fire Insurance Co., Ltd. 5,831 3.3The Bank of Tokyo-Mitsubishi UFJ, Ltd. 3,728 2.1ASAHI GLASS CO., LTD. 3,315 1.9Mitsubishi Corporation 3,205 1.8Takenaka Corporation 3,010 1.7

Notes:1. The Bank of Tokyo-Mitsubishi UFJ, Ltd. has set 1,500,000 Mitsubishi Logistics’ shares as trust funds for retirement benefits for which voting rights are

reserved, in addition to the shares stated in the table above.2. The “Shareholding ratio” is calculated after excluding treasury stock (643,258 shares).

Notes:1. Directors with an asterisk (*) are representative directors.2. Minoru Makihara, Shigemitsu Miki and Koji Miyahara are Outside Directors as stipulated in the Companies Act, Article 2, Item 15. The Company designated them as

independent directors as required by the rules of the Tokyo Stock Exchange, and reported it to the Exchange.3. Yoshihito Yoshizawa, Yohnosuke Yamada and Kenji Sakurai are Outside Corporate Auditors as stipulated in the Companies Act, Article 2, Item 16. The Company designated

them as independent corporate auditors as required by the rules of the Tokyo Stock Exchange, and reported it to the Exchange.

Directors and Corporate Auditors (As of June 29, 2016)Position Name Responsibilities and/or Primary Occupation

Chairman of the Board Tetsuro OkamotoPresident* Akio MatsuiManaging Director Kazuhiko Takayama Responsible for Warehousing & Distribution BusinessManaging Director Takanori Miyazaki Responsible for Accounting & Financing, Information System, Technical and Real Estate

BusinessesManaging Director Yoshiji Ohara Responsible for Harbor Transportation BusinessManaging Director Noboru Hiraoka Responsible for International Transportation BusinessManaging Director* Fumihiro Shinohara Responsible for General Affairs, Corporate Communications, Personnel, Planning and

Internal AuditDirector Minoru Makihara Senior Corporate Advisor, Mitsubishi CorporationDirector Shigemitsu Miki Senior Advisor, The Bank of Tokyo-Mitsubishi UFJ, Ltd.Director Koji Miyahara Board Counselor, Nippon Yusen Kabushiki KaishaDirector Yasushi Saito General Manager, Accounting & Financing DivisionDirector Hitoshi Wakabayashi General Manager, Warehousing & Distribution Business DivisionDirector Tomohiko Takami General Manager, International Transportation Business DivisionDirector Masao Fujikura General Manager, Osaka BranchStanding Corporate Auditor Tohru WatanabeStanding Corporate Auditor Yoshihito YoshizawaCorporate Auditor Yohnosuke Yamada LawyerCorporate Auditor Kenji Sakurai Certified Public AccountantCorporate Auditor Hiroshi Imai Standing Auditor, Fuji Logistics Co., Ltd.

Contents Contents ...

...

...

...

...

...

...

...

...

...

...

To Our Shareholders

Outline of the Mitsubishi Logistics Group New Medium-Term Management Plan Fiscal 2016–2018

Overview of the Mitsubishi Logistics Group

Independent Auditor’s Report

Consolidated Balance Sheets

Consolidated Statements Of Income

Consolidated Statements Of Comprehensive Income

Consolidated Statements Of Changes In Net Assets

Consolidated Statements Of Cash Flows

Notes To Consolidated Financial Statements

Company Pro�le

1

2

4

5

6

8

9

10

11

13

43

005_0808001372808.indd 2 2016/08/01 14:38:14

1

We are obliged to you for your continued support and patronage.I hereby report the business overview of the Mitsubishi

Logistics Group for the 213th fiscal term (from April 1, 2015 to March 31, 2016).

During the year under review, the global economy was characterized by a continued economic recovery in the United States and a moderate recovery in Europe despite some weakness including the moderate deceleration of growth in China. The Japanese economy, despite showing signs of weakness, continued on a moderate recovery trend reflecting an improved employment situation and a recovery in capital expenditure.

In these economic conditions, the business environment surrounding the Group remained difficult in the business segments of “Logistics” and “Real Estate.” For Logistics, the warehousing and port and harbor operations businesses were adversely affected mainly by the decrease in import/export freight volume and intensifying competition. For Real Estate, the previous decline in the rent level for rental office buildings has not fully recovered, although signs of an improvement in the supply and demand of such buildings were seen.

Under these circumstances, the Mitsubishi Logistics Group promoted aggressive marketing activities. In Logistics, we strove to extend distribution center operations, especially for pharmaceuticals, and expand and reinforce operational bases overseas. In Real Estate, we focused our efforts on securing good tenants, maintaining and improving rent levels and the smooth operation of the Nihonbashi Dia Building, which started operation at the end of the previous interim term. Meanwhile, we endeavored to improve business performance thorough cost management and further efficiency improvement of business operations.

As a result, combined revenue for the year under review amounted to ¥206,831 million, an increase of ¥2,469 million, or 1.2%, from the previous fiscal year. Although the freight handled increased in warehousing, the freight handled in port and harbor operations and international transportation decreased, leading to a decline in revenue. In Real Estate, revenue increased due to the contribution of the Nihonbashi Dia Building, which started operation at the end of the previous interim term, in addition to an increase in condominiums sold. On the other hand, cost of services overall increased ¥2,611 million, or 1.4%, year over year to ¥185,838 million. In Logistics, operational and transportation consignment costs decreased as the freight handled decreased, while facility rental expenses and depreciation increased in line with leases of warehouses and harbor facilities as well as reinforcement of transportation vehicles. In Real Estate, real estate sales costs increased as sales of condominiums increased. Selling, general and administrative expenses amounted to ¥9,684 million, about the same level as the previous year.

As a consequence, operating income decreased ¥139 million, or 1.2%, year over year to ¥11,309 million, reflecting the fall in operating income for the Logistics segment and the rise in the Real Estate segment. Ordinary income decreased ¥430 million, or 3.0%, to ¥14,025 million mainly due to a decrease in dividend income. Profit attributable to owners of parent increased ¥216 million, or 2.4%, from the previous fiscal year, to ¥9,350 million due to an increase in gain on sale of marketable securities and investments in securities, under extraordinary income, via the effective investment of the assets owned by the Company and a decrease in income taxes payable because the effective statutory tax rate was lowered for the fiscal year under review.

With respect to the prospects of the world economy, the recovery of the U.S. economy is predicted to continue, a moderate recovery of the European economies is expected to continue, and steady growth is expected to be maintained in China. The Japanese economy is projected to head toward recovery, supported by continuous improvements in the

employment and income environments and the effects of various government policies.

In this economic climate, concerning the business environment surrounding the Group, harsh business conditions will continue due to sluggish growth in freight volume and intensifying competition in Logistics, mainly in the warehousing and port and harbor operations industries. In the Real Estate business segment, although an improvement in supply and demand for rental office buildings is expected, it will take more time to achieve a recovery of rent levels to improve the business situation in the real estate industry.

Under these circumstances, in line with the newly formulated Medium-Term Management Plan (2016–2018) spanning three years beginning fiscal 2016, the Mitsubishi Logistics Group will strive for sustainable growth mainly by further expanding its domestic/overseas integrated logistics business in response to changes in customers’ global supply chains, and expanding the real estate business with an emphasis on building leases.

As for the distribution of profits of Mitsubishi Logistics for the fiscal year ended March 31, 2016, we intend to distribute a year-end dividend of ¥6 per share, the same amount as the interim dividend, taking into account such factors as operating results for the year.

As a result, the annual dividend per share, including the interim dividend of ¥6 per share, totals ¥12, the same as for the previous fiscal year.

As for dividends for the fiscal year ending March 31, 2017, with due regard to the profitability level and taking into consideration the 130th anniversary of Mitsubishi Logistics Corporation on April 15, 2017, as a gesture in response to the shareholders’ support, the interim dividend will be ¥6 per share, the same as for the current fiscal year, and the year-end dividend of ¥8 per share will include ¥2 per share as a commemorative dividend for the 130th anniversary unless any exceptional circumstances take place. The annual dividend per share therefore will be ¥14, an increase of ¥2 year over year.

We look forward to your continued support and encouragement.

June 2016

Akio Matsui, President

To Our Shareholders

010_0808001372808.indd 1 2016/09/01 16:24:48

2


Mitsubishi Logistics Corporation has developed a new medium-term management plan for fiscal 2016–2018, ending in the fiscal year

ending March 2019. This plan is designed to further enhance overall Group corporate value and reinforce future growth in response to the

rapid changes in the political, economic and social climates in Japan and around the globe.

1. Basic Policy

(1) Improve and expand our logistics business to adapt to the change of the global supply chains of customers in Japan and around

the globe

(2) Reinforce and expand the revenue framework of the real estate business

(3) Enhance the service quality of Group services and the promotion of CSR

(4) Select and concenter of management resources

2. Basic Strategy

The following three points, based on the Basic Policy, form our Basic Strategy.

(1) Expand domestic and international logistics services in tandem and strengthen the logistics business base

Expand the field of domestic and international logistics services in tandem by thoroughly ensuring that the first priority is

placed on customers.

In addition, promote the improvement of the system through reorganization, etc. to reinforce the logistics business framework

and improve the service quality and reinforce cost competitiveness.

(2) Expand the real estate business with an emphasis on leases

Acquire long-term and stable profitability in the real estate business, by maintaining and improving the features and functions

of existing properties, by expanding businesses other than building leasing.

(3) Strengthen the Group management base

Promote the reinforcement of Group management, and select and concenter management resources, and enhance overall

Group productivity. In addition, thoroughly ensure risk management including disaster countermeasures, global environment

measures, compliance and CSR as well as implement proper capital policy and secure financial soundness, thereby enhancing

corporate value.

3. Plan Period and Corporate Performance Goals

(1) Period

Fiscal 2016 to Fiscal 2018 (three years)

(2) Performance goals (Fiscal 2018 consolidated basis)

Revenue: ¥240.0 billion

Operating income: ¥15.5 billion

Ordinary income: ¥17.5 billion

EBITDA: ¥28.8 billion

(EBITDA = operating income + depreciation)

010_0808001372808.indd 2 2016/09/01 16:24:48

3

4. Investment Plan

During this period, investments totaling ¥60 billion are planned: ¥30 billion allocated to the logistics business and ¥30 billion

to the real estate business.

[Reference] Comparison of Fiscal 2015 figures and targets for Fiscal 2018

Consolidated Figures (Billions of yen)

Fiscal 2015 Fiscal 2018Fiscal 2015/2018 ratio

Amount of change Rate of change

Revenue Total 206.8 240.0 +33.2 16%

Logistics 169.0 202.0 +33.0 20%

Real Estate 39.8 40.0 +0.2 1%

Elimination of inter-segment transactions

(2.0) (2.0) 0 –

Operating Income Total 11.3 15.5 +4.2 37%

Logistics 5.5 9.2 +3.7 67%

Real Estate 10.6 11.3 +0.7 7%

Total Group costs (4.8) (5.0) (0.2) –

Ordinary income 14.0 17.5 +3.5 25%

EBITDA 25.1 28.8 +3.7 15%

010_0808001372808.indd 3 2016/09/01 16:24:48

4

Overview of the Mitsubishi Logistics Group (As of March 31, 2016)

Mitsubishi Logistics Corporation

Logistics

Consolidated Subsidiaries (52 companies)

Subsidiaries and Af�liates Accounted for by the Equity Method (3 companies)

Real Estate

Tohoku Ryoso Transportation Co., Ltd.Sairyo Service Co., Ltd.Dia Pharmaceutical Network Co., Ltd.Tokyo Dia Service Co., Ltd.Dia Systems CorporationRyoso Transportation Co., Ltd.Unitrans Ltd.Keihin Naigai Forwarding Co., Ltd.Touryo Kigyo Co., Ltd.Fuji Logistics Co., Ltd.Tokyo Juki Transport Co., Ltd.SII Logistics Inc.Fuji Logistics Operations Co., Ltd.Fuji Logistics Support Co., Ltd.Kinko Service Co., Ltd.Chubu Trade Warehousing Co., Ltd.Meiryo Kigyo Co., Ltd.Ryoyo Transportation Co., Ltd.Kyokuryo Warehouse Co., Ltd.Hanryo Kigyo Co., Ltd.Shinryo Koun Co., Ltd.Naigai Forwarding Co., Ltd.Kyushu Ryoso Transportation Co., Ltd.Monryo Transport CorporationHakuryo Koun Co., Ltd.Seiho Kaiun Kaisha., Ltd.Saryo Service Co., Ltd.Mitsubishi Logistics America CorporationMitsubishi Warehouse California CorporationMitsubishi Logistics Europe B.V.Fuji Logistics Europe B.V.Mitsubishi Logistics China Co., Ltd.Shanghai Linghua Logistics Co., Ltd.Shanghai Qingke Warehouse Management Co., Ltd.*Shanghai Lingyun Global Forwarding Co., Ltd.Fuji Logistics (China) Co., Ltd.Fuji Logistics (Dalian F.T.Z.) Co., Ltd.Fuji Logistics (Shanghai) Co., Ltd.Mitsubishi Logistics Hong Kong Ltd.Fuji Logistics (H.K.) Co., Ltd.Mitsubishi Logistics Thailand Co., Ltd.P.T. Mitsubishi Logistics Indonesia*P.T. Dia-Jaya Forwarding IndonesiaFuji Logistics Malaysia SDN. BHD.

Dia Buil-Tech Co., Ltd.Yokohama Dia Building Management CorporationChubo Kaihatsu Co., Ltd.Nagoya Dia Buil-Tech Co., Ltd.Osaka Dia Buil-Tech Co., Ltd.Kobe Dia Service Co., Ltd.Kobe Dia Maintenance Co., Ltd.T'ACT Co., Ltd.

Note: Companies with an asterisk (*) were incorporated into the scope of consolidation beginning with the fiscal year under review.

Nippon Container Terminals Co., Ltd.Kusatsu Soko Co., Ltd.Jupiter Global Limited

Major BusinessesLogistics:Warehousing and Distribution: Storage of outsourced cargo in warehouses and bringing in/delivery thereof

to/from warehouses by cargo handlingTrucking: Transportation using trucksPort and harbor operations: Coastal and in-vessel cargo handling at ports and harborsInternational transportation: Handling of international freight deliveries (including marine freight

transportation in Japan)

Real Estate: Buying, selling, leasing and management of real estate, as well as contracting of construction work, and design and supervision thereof

010_0808001372808.indd 4 2016/09/01 16:24:48

5

011_0808001372808.indd 5 2016/09/05 16:41:53

6


The accompanying notes are an integral part of these statements.

March 31, March 31,

ASSETS 2016 2015 2016(Millions of yen) (Thousands of U.S. dollars)

(Note 1)

CURRENT ASSETS:

Cash and deposits (Notes 2 and 3) ¥ 45,399 ¥ 38,493 $ 402,902

Marketable securities (Notes 2, 3 and 4) 2,000 6,600 17,749

Notes and accounts receivable (Notes 3 and 5) 34,427 35,600 305,529

Allowance for doubtful accounts (89) (82) (790)

34,338 35,518 304,739

Real estate held for sale 10,968 6,040 97,338

Deferred income taxes (Note 6) 1,529 1,906 13,569

Other (Note 2) 1,857 1,963 16,481

TOTAL CURRENT ASSETS 96,091 90,520 852,778

PROPERTY AND EQUIPMENT (Notes 8, 9, 13 and 15):

Land 74,322 73,861 659,585

Buildings and structures 368,133 364,778 3,267,067

Machinery and equipment 34,479 34,738 305,990

Transportation equipment 8,296 8,086 73,624

Construction in progress 557 1,334 4,943

485,787 482,797 4,311,209

Accumulated depreciation (291,594) (282,192) (2,587,806)

NET PROPERTY AND EQUIPMENT 194,193 200,605 1,723,403

INVESTMENTS AND OTHER ASSETS:

Investments in unconsolidated subsidiaries and affiliates 8,656 8,485 76,819

Investments in securities (Notes 3, 4 and 9) 89,928 108,955 798,083

Long-term loans receivable 502 510 4,455

Intangible assets 14,548 14,675 129,109

Goodwill 1,584 1,925 14,057


Other 5,326 4,929 47,267

Allowance for doubtful accounts (23) (23) (204)

TOTAL INVESTMENTS AND OTHER ASSETS 122,981 141,917 1,091,418

¥ 413,265 ¥ 433,042 $ 3,667,599

011_0808001372808.indd 6 2016/09/05 16:41:53

7

LIABILITIES AND NET ASSETS March 31, March 31,

2016 2015 2016(Millions of yen) (Thousands of U.S. dollars)

(Note 1)

CURRENT LIABILITIES:

Short-term bank loans and current maturities of long-term

debt (Notes 3, 9 and 10) ¥ 16,028 ¥ 25,043 $ 142,244

Notes and accounts payable (Notes 3, 5 and 10) 26,410 28,065 234,381

Income taxes payable 2,522 2,795 22,382

Other (Notes 6 and 9) 4,206 3,410 37,326

TOTAL CURRENT LIABILITIES 49,166 59,313 436,333

LONG-TERM LIABILITIES:

Long-term debt, less current maturities (Notes 3, 9 and 10) 54,926 51,265 487,451

Deposits on long-term leases (Notes 3, 5 and 9) 22,776 22,972 202,130

Retirement benefits (Note 11) 13,751 13,766 122,036


Other (Note10) 317 512 2,813

TOTAL LONG-TERM LIABILITIES 106,575 110,640 945,820

TOTAL LIABILITIES 155,741 169,953 1,382,153

CONTINGENT LIABILITIES (Notes 14)

NET ASSETS

SHAREHOLDERS’ EQUITY:

Common stock

authorized – 440,000,000 shares,

issued – 175,921,478 shares, 22,394 22,394 198,740

Capital surplus 19,618 19,618 174,104

Retained earnings 172,200 164,905 1,528,222

Treasury stock (807) (784) (7,162)

TOTAL SHAREHOLDERS’ EQUITY 213,405 206,133 1,893,904

ACCUMULATED OTHER COMPREHENSIVE INCOME

Net unrealized holding gains on securities 40,282 51,994 357,490

Foreign currency translation adjustments 1,703 2,300 15,114

Remeasurements of defined benefit plans (450) 129 (3,994)

TOTAL ACCUMULATED OTHER COMPREHENSIVE INCOME 41,535 54,423 368,610

NON-CONTROLLING INTERESTS 2,584 2,533 22,932

TOTAL NET ASSETS 257,524 263,089 2,285,446

¥ 413,265 ¥ 433,042 $ 3,667,599


011_0808001372808.indd 7 2016/09/05 16:41:53

8



Year ended March 31, Year ended March 31,

2016 2015 2014 2016(Millions of yen) (Thousands of U.S. dollars)

(Note 1)

REVENUE ¥ 206,832 ¥ 204,362 ¥ 198,162 $ 1,835,570

COST OF SERVICES 185,839 183,227 176,942 1,649,264

Gross profit 20,993 21,135 21,220 186,306

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 9,684 9,686 9,072 85,942

Operating income 11,309 11,449 12,148 100,364

OTHER INCOME (EXPENSES):

Interest and dividend income 2,332 2,517 2,141 20,696

Interest expense (700) (769) (777) (6,212)

Gain on sale of marketable securities and investments

in securities (Note 4)2,378 2,107 1,917 21,104

Gain (loss) on revaluation of marketable securities and

investments in securities(26) 69 (13) (231)

Loss on disposal of property and equipment, net (703) (1,018) (880) (6,239)

Impairment loss (Note13) (1,013) (727) – (8,990)

Equity in earnings of unconsolidated subsidiaries and

affiliates550 487 186 4,881

Indemnity income of exiting facilities for lease (Note 12) 139 35 18 1,234

Other, net 404 701 (338) 3,585

3,361 3,402 2,254 29,828

Profit before income taxes 14,670 14,851 14,402 130,192

INCOME TAXES (Note 6)

Current 4,889 5,078 5,289 43,388

Deferred 369 489 430 3,275

5,258 5,567 5,719 46,663

Profit 9,412 9,284 8,683 83,529

PROFIT ATTRIBUTABLE TO NON-CONTROLLING

INTERESTS (61) (150) (162) (542)

PROFIT ATTRIBUTABLE TO OWNERS OF PARENT ¥ 9,351 ¥ 9,134 ¥ 8,521 $ 82,987

AMOUNTS PER SHARE: Yen U.S. dollars (Note 1)

Profit attributable to owners of parent ¥ 53.37 ¥ 52.12 ¥ 48.62 $ 0.47

Cash dividends applicable to the year ¥ 12.00 ¥ 12.00 ¥ 12.00 $ 0.11

011_0808001372808.indd 8 2016/09/05 16:41:53

9



(Note 1)

PROFIT ¥ 9,412 ¥ 9,284 ¥ 8,683 $ 83,529

OTHER COMPREHENSIVE INCOME:

Net unrealized holding gains (losses) on securities (11,658) 16,976 686 (103,461)

Foreign currency translation adjustments (627) 1,118 1,803 (5,564)

Remeasurements of defined benefit plans (594) 681 – (5,272)

Share of other comprehensive income of affiliates

accounted for using the equity method(28) 364 366 (248)

Total other comprehensive income (Note 7) (12,907) 19,139 2,855 (114,545)

COMPREHENSIVE INCOME (Note 7) ¥ (3,495) ¥ 28,423 ¥ 11,538 $ (31,016)

Comprehensive income attributable to:

Comprehensive income attributable to owners of parent ¥ (3,537) ¥ 28,107 ¥ 11,273 $ (31,389)

Comprehensive income attributable to non-controlling interests 42 316 265 373



011_0808001372808.indd 9 2016/09/05 16:41:53

10



Common Stock

Shares AmountCapitalsurplus

Retainedearnings

Treasurystock

Net unrealizedholding gainson securities

Foreign currency

translationadjustments

Remeasurementsof defined

benefit plansNon-controlling

interests(Thousands of shares)

(Millions of yen)

Balance at March 31, 2013 175,921 ¥22,394 ¥19,618 ¥151,269 ¥(712) ¥ 34,383 ¥(1,135) ¥ – ¥2,011

Profit attributable to owners of

parent– – – 8,521 – – – – –

Cash dividends – – – (2,104) – – – – –

Purchase of treasury stock – – – – (35) – – – –

Sale of treasury stock – – 0 – 0 – – – –

Changes other than to stockholders’

equity, net– – – – – 661 2,092 (551) 230

Balance at March 31, 2014 175,921 ¥22,394 ¥19,618 ¥157,686 ¥(747) ¥ 35,044 ¥ 957 ¥(551) ¥2,241

Cumulative effects of changes in

accounting policies– – – 189 – – – – –

Restated balance at March 31, 2014 175,921 ¥22,394 ¥19,618 ¥157,875 ¥(747) ¥ 35,044 ¥ 957 ¥ (551) ¥2,241


parent– – – 9,134 – – – – –

Cash dividends – – – (2,104) – – – – –



equity, net– – – – – 16,950 1,343 680 292

Balance at March 31, 2015 175,921 ¥22,394 ¥19,618 ¥164,905 ¥(784) ¥ 51,994 ¥ 2,300 ¥ 129 ¥2,533


parent– – – 9,351 – – – – –

Cash dividends – – – (2,103) – – – – –


Change of scope of consolidation – – – 47 – – – – –

Change in treasury shares of parent

arising from transactions with

non-controlling shareholders

– – 0 – – – – – –


equity, net– – – – – (11,712) (597) (579) 51

Balance at March 31, 2016 175,921 ¥22,394 ¥19,618 ¥172,200 ¥(807) ¥ 40,282 ¥ 1,703 ¥(450) ¥2,584

CommonStock

CapitalSurplus

Retainedearnings

Treasurystock

Net unrealizedholding gainson securities

Foreign currency

translationadjustments

Remeasurementsof defined

benefit plansNon-controlling

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

Balance at March 31, 2015 $198,740 $174,104 $1,463,481 $(6,958) $ 461,431 $20,412 $ 1,145 $22,480

Profit attributable to owners of parent

– – 82,987 – – – – –

Cash dividends – – (18,663) – – – – –

Purchase of treasury stock – – – (204) – – – –

Change of scope of consolidation – – 417 – – – – –

Change in treasury shares of parent

arising from transactions with

non-controlling shareholders

– 0 – – – – – –

Changes other than to stockholders’ equity, net

– – – – (103,941) (5,298) (5,139) 452

Balance at March 31, 2016 $198,740 $174,104 $1,528,222 $(7,162) $ 357,490 $15,114 $(3,994) $22,932

011_0808001372808.indd 10 2016/09/05 16:41:53

11




(Note 1)

CASH FLOWS FROM OPERATING ACTIVITIES:

Profit before income taxes ¥ 14,670 ¥ 14,851 ¥ 14,402 $ 130,192

Depreciation and amortization 13,831 13,389 12,517 122,746

Impairment loss 1,013 727 – 8,990

Increase (decrease) in retirement benefits (36) (2,309) 57 (319)

Loss (gain) on revaluation of marketable

securities and investments in securities26 (69) 5 231

Gain on sales of marketable securities and

investments in securities(2,378) (2,107) (1,914) (21,104)

Loss on disposal of property and equipment 273 348 244 2,423

Equity in earnings of unconsolidated subsidiaries and

affiliates(550) (487) (186) (4,881)

Interest and dividend income (2,332) (2,517) (2,141) (20,696)

Interest expense 700 769 777 6,212

Decrease (increase) in notes and accounts receivable 1,099 (1,736) 621 9,753

Decrease (increase) in real estate held for sale (4,928) (36) 320 (43,734)

Increase (decrease) in notes and accounts payable (1,317) 1,548 (1,158) (11,688)

Increase (decrease) in deposits payable 336 590 (36) 2,982

Other, net 294 1,313 (856) 2,608

Subtotal 20,701 24,274 22,652 183,715

Interest and dividend income received in cash 2,528 2,605 2,254 22,435

Interest expense paid in cash (713) (774) (750) (6,327)

Income taxes paid in cash (5,269) (5,414) (4,455) (46,761)

NET CASH PROVIDED BY OPERATING ACTIVITIES 17,247 20,691 19,701 153,062

CASH FLOWS FROM INVESTING ACTIVITIES:

Cash investment in time deposits (1,392) (1,508) (1,048) (12,354)

Cash return from time deposits 1,247 1,628 604 11,067

Acquisition of property and equipment (9,678) (23,765) (25,166) (85,889)

Proceeds from sales of property and equipment 32 95 218 284

Acquisition of marketable securities and

investments in securities(899) (366) (844) (7,978)

Proceeds from sales of marketable securities and

investments in securities3,617 3,349 3,406 32,100

Acquisition of investments in subsidiaries – – (322) –

Payments for sales of shares of subsidiaries

resulting in change in scope of consolidation– – (7) –

Other, net 40 4 14 354

NET CASH USED IN INVESTING ACTIVITIES (7,033) (20,563) (23,145) (62,416)


011_0808001372808.indd 11 2016/09/05 16:41:53

12




(Note 1)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from short-term bank loans ¥ 1,975 ¥ 8,048 ¥ 9,972 $ 17,528

Repayments of short-term bank loans (8,247) (9,255) (1,985) (73,190)

Proceeds from long-term debt 9,000 11,767 1,294 79,872

Repayments of long-term debt (1,204) (1,473) (5,202) (10,685)

Issue of bonds – – 10,000 –

Redemption of bonds (7,000) (5,000) – (62,123)

Dividends paid (2,104) (2,104) (2,104) (18,672)

Other, net (348) (344) (340) (3,089)

NET CASH PROVIDED BY (USED IN)

FINANCING ACTIVITIES(7,928) 1,639 11,635 (70,359)

Effect of exchange rate changes on cash and cash equivalents (264) 273 584 (2,343)

NET INCREASE IN CASH AND CASH EQUIVALENTS 2,022 2,040 8,775 17,944

CASH AND CASH EQUIVALENTS AT

BEGINNING OF YEAR (Note 2)43,277 41,237 32,462 384,070

INCREASE IN CASH AND CASH EQUIVALENTS

RESULTING FROM CHANGE OF SCOPE OF

CONSOLIDATION

360 – – 3,195

CASH AND CASH EQUIVALENTS AT END OF YEAR (Note 2) ¥45,659 ¥43,277 ¥41,237 $405,209


011_0808001372808.indd 12 2016/09/05 16:41:54

13

BASIS OF PRESENTING CONSOLIDATED FINANCIAL

STATEMENTS

The accompanying consolidated financial statements of Mitsubishi Logistics Corporation (the “Company”) have been prepared in accordance with the provisions set forth in the Japanese Financial Instruments and Exchange Law and its 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.

The accompanying consolidated financial statements have been restructured and translated into English from the consolidated financial statements of the Company prepared in accordance with Japanese GAAP and filed with the appropriate Local Finance Bureau of the Ministry of Finance as required by the Japanese Financial Instruments and Exchange Law. Some supplementary information included in the statutory Japanese language consolidated financial statements, but not required for fair presentation, is not presented in the accompanying consolidated financial statements.

The translations of Japanese yen amounts into U.S. dollars are included solely for the convenience of readers outside Japan, using the prevailing exchange rate at March 31, 2016, which was ¥112.68 to U.S. $1. The convenience translations should not be construed as representations that the Japanese yen amounts have been, could have been, or could in the future be converted into U.S. dollars at this or any other rate of exchange.

CONSOLIDATION

In consolidation, all significant inter-company transactions, account balances and unrealized profits are eliminated. Differences between the acquisition costs and underlying net equities of investments in consolidated subsidiaries are recorded as goodwill in the consolidated balance sheets and amortized over 5 to 10 years on a straight-line basis. Any immaterial amounts are fully recognized as expenses as incurred. The effect on retained earnings and net income of unconsolidated subsidiaries and affiliates not accounted for by the equity method is immaterial to the consolidated financial statements, and investments therein are carried at cost after adjusting for any substantial and non-recoverable decline in value.

The Company holds 51% of voting rights in MLC ITL Logistics Company Limited, however, the other shareholders’ agreement is necessary to decide important policies on finance and trade. Therefore, the Company does not treat MLC ITL Logistics Company Limited as its subsidiary.

The numbers of consolidated subsidiaries and affiliates accounted for by the equity method at March 31, 2016, 2015 and 2014 were as follows:

March 31,

2016 2015 2014

Consolidated subsidiaries 52 50 50

Unconsolidated subsidiaries

and affiliates under the equity

method 3 3 3

In the fiscal year ended March 31,2016, the two subsidiaries which were not consolidated in the previous fiscal years are added to consolidation because the importance of them has risen.

CONSOLIDATED STATEMENTS OF CASH FLOWS

In preparing the consolidated statements of cash flows, cash on hand, readily-available deposits and short-term highly liquid investments with negligible risk of changes in value and maturities not exceeding six months at the time of purchase are considered to be cash and cash equivalents.

CONVERSION OF ASSETS AND LIABILITIES

DENOMINATED IN FOREIGN CURRENCIES

Receivables and payables denominated in foreign currencies are translated into Japanese yen at the year-end rates.

Gains or losses resulting from conversion are credited or charged to income as incurred.

DERIVATIVES AND HEDGE ACCOUNTING

The accounting standard for financial instruments requires companies to state derivative financial instruments at fair value and to recognize changes in fair value as gains and losses unless derivative financial instruments are used for hedging purposes.

If derivative financial instruments are used as hedges and meet certain hedging criteria, the Company and its consolidated subsidiaries defer recognition of gains and losses resulting from changes in fair value of derivative financial instruments until related gains and losses on the hedged items are recognized.

However, in cases where forward foreign exchange contracts are used as hedges and meet certain hedging criteria, forward foreign exchange contracts and hedged items are accounted for in the following manner.

(1) If a forward foreign exchange contract is executed to hedge an existing foreign currency receivable and payable:(i) The difference, if any, between the Japanese yen

amount of the hedged foreign currency receivable or payable translated using the spot rate at the inception date of the contract and the book value of the receivable or payable is recognized in the statements of income in the period which includes the inception date; and


NOTE 1 – SUMMARY OF ACCOUNTING POLICIES

011_0808001372808.indd 13 2016/09/05 16:41:54

14

(ii) The discount or premium on the contract (that is, the difference between the Japanese yen amount of the contract translated using the contracted forward rate and that translated using the spot rate at the inception date of the contract) is recognized over the term of the contract.

(2) If a forward foreign exchange contract is executed to hedge a future forecasted transaction denominated in foreign currency, the future transaction will be recorded using the contracted forward rate, and no gains or losses on the forward foreign exchange contract are recognized.Also, if interest rate swap contracts are used as hedges and

meet certain hedging criteria, the net amount to be paid or received under the interest rate swap contract is added to or deducted from the interest on the assets or liabilities for which the swap contract was executed.

The following summarizes hedging derivative financial instruments used by the Company and its consolidated subsidiaries and hedged items.

Hedging instruments: Foreign exchange contracts and interest rate swap contracts.

Hedged items: Foreign currency assets and liabilities and interest rates of bank loans.

The hedge effectiveness of foreign exchange contracts accounted for in the above manner and that of interest rate swaps meeting specific hedging criteria are not evaluated at the end of the period.

The Company and its consolidated subsidiaries use foreign exchange contracts and interest rate swap contracts for the purpose of managing the exposure to fluctuations in foreign currency exchange and interest rates of bank loans, respectively.

The Company and its consolidated subsidiaries do not enter into derivatives for speculative purposes.

TRANSLATION OF FOREIGN CURRENCY STATEMENTS

The balance sheets of overseas subsidiaries are translated into Japanese yen at the rate of exchange at the balance sheet date of the subsidiaries, which is December 31, 2015, except for shareholders’ equity accounts, which are translated based on historical rates. The year-end rate of the subsidiaries is also used for translation of income, expenses and net income for the year. The resulting translation adjustments are presented as “foreign currency translation adjustments” and “non-controlling interests” in the accompanying consolidated financial statements.

ALLOWANCE FOR DOUBTFUL ACCOUNTS

Allowance for notes and accounts receivable, including loans and other receivables, is determined by applying a percentage based on the actual rate of bad debts incurred in the past plus an amount based on individually estimated uncollectible receivables.

SECURITIES

Available-for-sale securities (see explanation (d) below) with available fair market values are stated at fair market value. Unrealized gains and unrealized losses on these securities are reported, net of applicable income taxes, as a separate component of net assets. Realized gains and losses on sale of such securities are computed using moving-average cost. Available-for-sale securities with no available fair value are stated at moving-average cost. Equity securities issued by unconsolidated subsidiaries and affiliates which are not consolidated or accounted for using the equity method are stated at moving-average cost.

Under the accounting standard for financial instruments, all companies are required to examine their intent for holding each security and classify those securities as (a) securities held for trading purposes (hereinafter, “Trading Securities”), (b) debt securities intended to be held to maturity (hereinafter, “Held-to-maturity Debt Securities”), (c) equity securities issued by subsidiaries and affiliates, and (d) all other securities that are not classified in any of the above categories (“Available-for-sale Securities”).

The Company and its consolidated subsidiaries only hold those securities classified as equity securities issued by subsidiaries and affiliates and Available-for-sale Securities.

If the market value of Available-for-sale Securities declines significantly, such securities are stated at fair market value, and the difference between fair market value and the book value is recognized as loss in the period of decline. For equity securities with no available fair market value, if the net asset value of the investee declines significantly, such securities are required to be written down to the net asset value with the corresponding losses recognized in the period of decline. In these cases, such fair market value or the net asset value will be the book value of the securities at the beginning of the next year.

REAL ESTATE HELD FOR SALE

Real estate held for sale is stated at cost determined using the specific identification cost method. In case the net selling value falls below the acquisition cost at the end of the period, real estate held for sale is carried at the net selling value on the balance sheet.

INCOME TAXES

Income taxes consist of corporation, enterprise and inhabitants taxes. Income taxes for recognition are computed based on the pretax income of the Company and each of its consolidated subsidiaries with certain adjustments required for consolidated and tax purposes. The asset and liability approach is used to recognize deferred tax assets and liabilities for loss carryforwards and expected future tax consequences of temporary differences between the book value and the tax bases of assets and liabilities. Valuation allowances are recorded to reduce deferred tax assets based on the assessment of realizability of tax benefits.


011_0808001372808.indd 14 2016/09/05 16:41:54

15

DEPRECIATION

(1) Property and equipment

Property and equipment are stated at cost. Depreciation of depreciable assets, except for warehouse facilities (buildings) and leased commercial facilities (buildings), is computed on a declining- balance method over the estimated useful life based on the Corporate Income Tax Law of Japan. Depreciation of warehouse facilities (buildings) is computed on a straight-line method over the estimated useful life based on the Corporate Income Tax Law of Japan. Depreciation of leased commercial facilities (buildings) is computed on a straight-line method over the economic useful life of the assets (a 20-year period is considered to be the standard economic useful life, however, it varies depending on the contract terms, etc.).

The cost and accumulated depreciation applicable to assets retired or otherwise disposed of are eliminated from related accounts, and gains or losses on disposal is credited or charged to income. Expenditures for new facilities and those which substantially increase the useful life of existing property and equipment are capitalized. Maintenance, repair and minor renewal costs are charged to expense as incurred.

(2) Intangible assets

Intangible assets are amortized on a straight-line method.The capitalized computer software costs for internal use

are amortized on a straight-line method over the estimated useful life (over 5 to 10 years).

(3) Finance leases

Property and equipment capitalized under finance leases, except for finance leases which do not transfer ownership of the leased property to the lessee, are depreciated over the estimated useful life or the lease term of the respective assets.

ALLOWANCE FOR BONUSES FOR DIRECTORS

The Company provides allowance for bonuses for directors based on the estimated amounts of payment.

RETIREMENT BENEFITS AND PENSION PLAN

(1) Employees’ severance and retirement benefits

The Company and its consolidated subsidiaries have adopted defined benefit plans which include unfunded lump-sum payment plans and funded contributory defined benefit pension plans. Furthermore, the Company and its consolidated subsidiaries provide a defined contribution pension plan.

The Company and its consolidated subsidiaries provide allowance for employees’ severance and retirement benefits based on the estimated amounts of projected benefit obligation and the fair value of the plan assets at year-end. Some consolidated subsidiaries apply the simplified methods for the calculation of retirement benefit obligations and employees’ severance and retirement benefit expenses.

In calculating retirement benefit obligations, the method of attributing the projected benefit to the accounting period is based on the benefit formula basis. Actuarial gains and losses are recognized in statements of income using the straight-line method over 5 to 16 years, beginning from the fiscal year following the incurred year. Prior service costs are recognized in statements of income using the straight-line method over 15 years, beginning from the incurred year.

(2) Officers’ severance and retirement benefits

Officers’ (directors and corporate statutory auditors) severing their connection with certain consolidated domestic subsidiaries on retirement are entitled to lump-sum retirement benefit payments based on pay rates, length of services and certain other factors.

Retirement benefits to officers of certain consolidated domestic subsidiaries are provided based on each entity’s rules.

NET ASSETS

Under the Japanese Corporate Law (the “Law”) and regulations, the entire amount paid for new shares is required to be designated as common stock. However, a company may, by a resolution of the board of directors, designate an amount not exceeding one-half of the price of the new shares as additional paid-in capital, which is included in capital surplus in the accompanying consolidated balance sheets.

Under the Law, in cases where a dividend distribution of surplus is made, the smaller of an amount equal to 10% of the dividend or the excess, if any, of 25% of common stock over the total of additional paid-in capital and legal earnings reserve must be set aside as additional paid-in capital or legal earnings reserve. Legal earnings reserve is included in retained earnings in the accompanying consolidated balance sheets.

Under the Law, legal earnings reserve and additional paid-in capital could be used to eliminate or reduce a deficit or capitalized by a resolution at the shareholders’ meeting.

Additional paid-in capital and legal earnings reserve may not be distributed as dividends. Under the Law, all additional paid-in capital and all legal earnings reserve may be transferred to other capital surplus and retained earnings, respectively, which may potentially become available as dividends.

The maximum amount that the Company can distribute as dividends is calculated based on the non-consolidated financial statements of the Company in accordance with Japanese laws and regulations.

Appropriations are not accrued in the consolidated financial statements for the corresponding period, but are recorded in the subsequent accounting period after shareholders’ approval has been obtained.

Retained earnings at March 31, 2016 included amounts representing year-end cash dividends of ¥1,052 million ($9,336 thousand) at ¥6.0 ($0.05) per share, which were approved at the shareholders’ meeting held on June 29, 2016.

011_0808001372808.indd 15 2016/09/05 16:41:54

16

PER SHARE INFORMATION

Basic earnings per share is computed based upon the weighted average number of shares outstanding during each fiscal year.

Cash dividends per share are presented on an accrual basis and include dividends to be approved after the balance sheet date, but applicable to the year then ended.

Information on diluted earnings per share is not disclosed as no shares which diluted earnings per share were outstanding for the years ended March 31, 2016, 2015 and 2014.

CHANGE IN ACCOUNTING POLICIES

The Company and its domestic subsidiaries adopted “Revised Accounting Standard for Business Combinations” (ASBJ Statement No.21, September 13, 2013 (hereinafter, “Statement No.21”)), “Revised Accounting Standard for Consolidated Financial Statements” (ASBJ Statement No.22, September 13, 2013 (hereinafter, “Statement No.22”)) and “Revised Accounting Standard for Business Divestitures” (ASBJ Statement No.7, September 13, 2013 (hereinafter, “Statement No.7”)) (together, the “Business Combination Accounting Standards”), from the current fiscal year. As a result, the Company changed its accounting policies to recognize in capital surplus the differences arising from the changes in the Company’s ownership interest of subsidiaries over which the Company continues to maintain control and to record acquisition related costs as expenses in the fiscal year in which the costs are incurred. In addition, the Company changed its accounting policy for the reallocation of acquisition costs due to the completion following provisional accounting to reflect such reallocation in the consolidated financial statements for the fiscal year in which the business combination took place. The Company also changed the presentation of net income and the term “non-controlling interests” is used instead of “minority interests”. Certain amounts in the prior year comparative information were reclassified to conform to such changes in the current year presentation.

With regard to the application of the Business Combination Accounting Standards, the Company followed the provisional treatments in article 58-2 (4) of Statement No.21, article 44-5 (4) of Statement No.22 and article 57-4 (4) of Statement No.7 with application from the beginning of the current fiscal year prospectively.

The impact of these changes on operating income, profit before income taxes in the year ended March 31, 2016 and capital surplus as of March 31,2016 was minimal, respectively.

In the consolidated statements of cash flows, cash flows from acquisition or disposal of shares of subsidiaries with no changes in the scope of consolidation are included in “Cash flows from financing activities” and cash flows from acquisition related costs for shares of subsidiaries with changes in the scope of consolidation or costs related to acquisition or disposal of shares of subsidiaries with no changes in the scope of consolidation are included in “Cash flows from operating activities”.

The impact of these changes on capital surplus as of March 31, 2016 in the consolidated statements of changes in net assets and per share information in the year ended March 31, 2016 was minimal, respectively.

ACCOUNTING STANDARDS ISSUED BUT NOT YET

EFFECTIVE

“Revised Implementation Guidance on Recoverability of Deferred Tax Assets” (ASBJ Guidance No. 26, March 28, 2016 (hereinafter, “Guidance No.26”)

(1) SummaryFollowing the framework in Auditing Committee Report No. 66 “Audit Treatment regarding the Judgment of Recoverability of Deferred Tax Assets”, which prescribes estimation of deferred tax assets according to the classification of the entity by one of five types, the following treatments were changed as necessary:1. Treatment for an entity that does not meet any of the

criteria in types 1 to 5;2. Criteria for types 2 and 3;3. Treatment for deductible temporary differences which

an entity classified as type 2 is unable to schedule; 4. Treatment for the period which an entity classified as

type 3 is able to reasonably estimate with respect to future taxable income before consideration of taxable or deductible temporary differences that exist at the end of the current fiscal year; and

5. Treatment when an entity classified as type 4 also meets the criteria for types 2 or 3.

(2) Effective dateEffective from the beginning of the fiscal year ending March 31, 2017

(3) Effects of application of the GuidanceThe Company and its consolidated subsidiaries are currently in the process of determining the effects of these new standards on the consolidated financial statements.


011_0808001372808.indd 16 2016/09/05 16:41:54

17

1. CONDITIONS OF FINANCIAL INSTRUMENTS(1) Policy for using financial instruments

The Company and its consolidated subsidiaries raise necessary funds in accordance with their performance plans and capital investment plans mainly by bank loans or issuance of bonds. Temporary cash surplus, if any, are invested in highly-secured deposits, public bonds and corporate bonds. Derivatives are used not for speculative purposes but based on actual demand.

(2) Details of financial instruments used, risks and risk managementNotes and accounts receivable are exposed to credit risk of customers. Against such credit risk, the Company and its consolidated subsidiaries perform due date and balance controls for each customer in accordance with internal customer credit management rules and regularly screen customers’ credit status.

Stocks as investments in securities are subject to risk of changes in market price. They are mainly stocks issued by companies with which the Company and/or its consolidated subsidiaries have business relations. The Company and its consolidated subsidiaries ascertain the fair values of stocks at regular intervals, and the fair values are reported at each board of directors meeting.

The account derived from operating expenses, notes and accounts payable, is all settled within a year, and subject to risk of liquidity. The Company and its consolidated subsidiaries hedge such risk by timely reconsideration of monthly financial plans.

Short-term bank loans are obtained mainly for financing related to trade. Otherwise, long-term debts are obtained mainly for financing related to investments in property and equipment. Because long-term debts with floating interest rates are subject to risk of fluctuation of these rates, one consolidated subsidiary utilizes interest rate swap contracts as hedging instrument for each loan contract to attempt to avoid such risk found in long-term debts.

It is prescribed that approval by the manager of each entity’s finance section is necessary for execution and management of such derivative transaction in accordance with the Company’s policy on authorizing transactions, limiting the amount and others.

(3) Supplemental information on fair valuesFair values of financial instruments comprise values determined based on market prices and values determined reasonably when there is no market price available. Since variable factors are considered in computing the relevant fair values, such fair values may vary depending on different factors used.

NOTE 3 – FINANCIAL INSTRUMENTS

Reconciliation of cash and deposits in the consolidated balance sheets and cash and cash equivalents in the consolidated statements of cash flows as of March 31, 2016 and 2015 were as follows:

March 31, March 31,


Cash and deposits ¥45,399 ¥38,493 $402,902

Time deposits with maturities over six months (1,740) (1,817) (15,442)

Money funds invested in bonds and domestic

certificates of deposits 2,000 6,600 17,749

Current assets other (money deposited) – 1 –

Cash and cash equivalents ¥45,659 ¥43,277 $405,209

NOTE 2 – CASH AND CASH EQUIVALENTS

011_0808001372808.indd 17 2016/09/05 16:41:54

18

2. FAIR VALUES OF FINANCIAL INSTRUMENTSBook values, on the consolidated balance sheets, fair values and differences between the two on as of March 31, 2016 and 2015 were as follows. Notably, items for which it is extremely difficult to determine the fair value were not included in the following table (see (Note 2)).

March 31, 2016 March 31, 2016

Bookvalue Fair value Difference


(Millions of yen) (Thousands of U.S. dollars)Assets

(1) Cash and deposits ¥ 45,399 ¥ 45,399 ¥ – $ 402,902 $ 402,902 $ –

(2) Notes and accounts receivable 31,509 31,509 – 279,633 279,633 –

(3) Marketable securities 2,000 2,000 – 17,749 17,749 –

(4) Investment in securities (available-for-sale securities) 88,722 88,722 – 787,380 787,380 –

¥167,630 ¥167,630 ¥ – $1,487,664 $1,487,664 $ –

Liabilities

(1) Notes and accounts payable ¥ 18,954 ¥ 18,954 ¥ – $ 168,211 $ 168,211 $ –

(2) Short-term bank loans 10,610 10,610 – 94,160 94,160 –

(3) Bonds 27,000 27,755 755 239,616 246,317 6,701

(4) Long-term loans payable *1 33,345 33,561 216 295,927 297,844 1,917

(5) Deposits on long-term leases 1,165 1,171 6 10,339 10,392 53

(6) Derivatives – – – – – –

¥ 91,074 ¥ 92,051 ¥ 977 $ 808,253 $ 816,924 $ 8,671

*1: Long-term loans payable include long-term loans payable due within one year.

March 31, 2015


(Millions of yen)Assets

(1) Cash and deposits ¥ 38,493 ¥ 38,493 ¥ –

(2) Notes and accounts receivable 32,570 32,570 –

(3) Marketable securities 6,600 6,600 –

(4) Investment in securities (available-for-sale securities) 107,785 107,785 –

¥185,448 ¥185,448 ¥ –

Liabilities

(1) Notes and accounts payable ¥ 20,327 ¥ 20,327 ¥ –

(2) Short-term bank loans 16,762 16,762 –

(3) Bonds *1 34,000 34,906 906

(4) Long-term loans payable *2 25,546 25,781 235

(5) Deposits on long-term leases 1,165 1,063 (102)

(6) Derivatives – – –

¥ 97,800 ¥ 98,839 ¥ 1,039

*1: Bonds include bonds due within one year.*2: Long-term loans payable include long-term loans payable due within one year.


011_0808001372808.indd 18 2016/09/05 16:41:54

19

(Note 1) Calculation method of fair values of financial instruments and matters concerning securitiesAssets:(1) Cash and deposits (2) Notes and accounts receivable (3) Marketable securities

Relevant book values are used because the settlement term of the above items is short and their fair values approximate their book values.

(4) Investment in securities (Available-for-sale Securities)The fair values of stocks are determined using the quoted price at the stock exchange, and the fair values of bonds are

determined using the market price. Information on securities categorized by holding purpose is described in NOTE 4 (SECURITIES).

Liabilities:(1) Notes and accounts payable (2) Short-term bank loans

Relevant book values are used because the settlement term of the above items is short and their fair values approximate their book values.

(3) BondsThe fair values of bonds issued by the Company are calculated using the market price.

(4) Long-term loans payableLong-term loans payable with floating interest rates require that the interest rates be amended at certain periods of

time. Thus, relevant book values are used because their fair values approximate their book values. Long-term loans payable with fixed interest rates are calculated using the present value of the amount of principal and interest discounted using the current borrowing rate for similar loans of comparable maturity.

A part of the long-term loans payable with floating interest rates is subject to special treatment of interest rate swaps (See NOTE 16). Thus, the fair values of such long-term loans payable are calculated by discounting the total amount of principal and interest that have been recorded together with said interest rate swap by an interest rate that would reasonably be estimated to apply to a similar loan.

(5) Deposits on long-term leasesDeposits on long-term leases are calculated by the present value of future cash flows discounted using a risk free rate.

(6) DerivativesInformation on this item is described in NOTE 16 (DERIVATIVE TRANSACTIONS).

(Note 2) Book value of financial instruments on the consolidated balance sheets for which it is extremely difficult to determine the fair value

March 31, March 31,


Non-listed stocks and others *1 ¥ 9,515 ¥ 9,147 $ 84,443

Deposits on long-term leases *2 21,611 21,807 191,791

*1 Non-listed stocks are not included in “investment in securities (available-for-sale securities)” under “assets” because they have no market price and their fair values are extremely difficult to measure. Unconsolidated subsidiary stocks and affiliate stocks are included.*2 Deposits on long-term leases are not included in “deposits on long-term leases” under “liabilities” because their future cash flows cannot be estimated and their fair values are extremely difficult to measure.

011_0808001372808.indd 19 2016/09/05 16:41:54

20

(Note 3) The redemption schedule for monetary claims and securities with contractual maturities

March 31, 2016Millions of yen

One year or less

One to five years

Five to ten years

Over ten years

Cash and deposits ¥45,399 ¥ – ¥ – ¥ –

Notes and accounts receivable 31,509 – – –

Marketable securities (certificate of deposits) 2,000 – – –

¥78,908 ¥ – ¥ – ¥ –


One year or less

One to five years

Five to ten years

Over ten years

Cash and deposits ¥38,493 ¥ – ¥ – ¥ –



Investment in securities

Available-for sale securities with maturities (public bonds) 18 – – –

¥77,681 ¥ – ¥ – ¥ –

March 31, 2016Thousands of U.S. dollars

One year or less

One to five years

Five to ten years

Over ten years

Cash and deposits $402,902 $ – $ – $ –



$700,284 $ – $ – $ –


011_0808001372808.indd 20 2016/09/05 16:41:54

21

(Note 4) Repayment schedule of short-term loans, bonds, long-term loans and deposits on long-term leases


One year or less

One to two years

Two to three years

Three to four years

Four to five years

Over five years

Short-term loans ¥10,610 ¥ – ¥ – ¥ – ¥ – ¥ –

Bonds – – 7,000 5,000 5,000 10,000

Long-term loans 5,418 9,893 1,383 5,475 5,252 5,923

Deposits on long-term leases – – – – – 1,165

¥16,028 ¥9,893 ¥8,383 ¥10,475 ¥10,252 ¥17,088


One year or less

One to two years

Two to three years

Three to four years

Four to five years

Over five years

Short-term loans ¥16,762 ¥ – ¥ – ¥ – ¥ – ¥ –

Bonds 7,000 – – 7,000 5,000 15,000

Long-term loans 1,281 5,022 10,197 1,384 5,468 2,194


¥25,043 ¥5,022 ¥10,197 ¥8,384 ¥10,468 ¥18,359

March 31, 2016Thousands of U.S. dollars

One year or less

One to two years

Two to three years

Three to four years

Four to five years

Over five years

Short-term loans $ 94,160 $ – $ – $ – $ – $ –

Bonds – – 62,123 44,373 44,373 88,747

Long-term loans 48,084 87,797 12,274 48,589 46,610 52,565


$142,244 $87,797 $74,397 $92,962 $90,983 $151,651

011_0808001372808.indd 21 2016/09/05 16:41:54

22


At March 31, 2016, acquisition costs, book values stated at fair values and net unrealized holding gains (losses) of Available-for-sale Securities were as follows:

March 31, 2016 March 31, 2016

Bookvalue

Acquisition cost

Unrealized holdinggains

(losses)Bookvalue

Acquisition cost

Unrealizedholdinggains

(losses)(Millions of yen) (Thousands of U.S. dollars)

Securities with book values exceeding

acquisition costs:

Stocks ¥85,629 ¥26,782 ¥58,847 $759,931 $237,682 $522,249

85,629 26,782 58,847 759,931 237,682 522,249

Other securities:

Stocks 3,093 3,641 (548) 27,449 32,312 (4,863)

3,093 3,641 (548) 27,449 32,312 (4,863)

¥88,722 ¥30,423 ¥58,299 $787,380 $269,994 $517,386

Non-listed stocks and others (book value being ¥1,248 million ($11,076 thousand)) were not included in the above list because their fair values are extremely difficult to estimate (due to lack of market price and inability to estimate their future cash flows).

In the year ended March 31, 2016, the amounts of sale, related gains and related losses of Available-for-sale Securities were as follows:

March 31, 2016 March 31, 2016

Amount of sale

Related gains

Related losses

Amount of sale

Relatedgains

Related losses

(Millions of yen) (Thousands of U.S. dollars)

Stocks ¥3,599 ¥2,378 ¥ – $31,940 $21,104 $ –

Bonds 18 – – 160 – –

¥3,617 ¥2,378 ¥ – $32,100 $21,104 $ –

NOTE 4 – SECURITIES

011_0808001372808.indd 22 2016/09/05 16:41:54

23

At March 31, 2015, acquisition costs, book values stated at fair values and net unrealized holding gains (losses) of Available-for-sale Securities were as follows:

March 31, 2015

Bookvalue

Acquisitioncost

Unrealized holdinggains

(losses)(Millions of yen)

Securities with book values exceeding acquisition costs:

Stocks ¥107,588 ¥30,616 ¥76,972

Bonds 18 18 0

107,606 30,634 76,972

Other securities:

Stocks 180 184 (4)

180 184 (4)

¥107,786 ¥30,818 ¥76,968

Non-listed stocks and others (book value being ¥1,196 million) were not included in the above list because their fair values are extremely difficult to estimate (due to lack of market price and inability to estimate their future cash flows).

In the year ended March 31, 2015, the amounts of sale, related gains and related losses of Available-for-sale Securities were as follows:

March 31, 2015

Amount ofsale

Related gains

Relatedlosses

(Millions of yen)

Stocks ¥3,334 ¥2,107 ¥ –

Bonds 15 – –

¥3,349 ¥2,107 ¥ –

011_0808001372808.indd 23 2016/09/05 16:41:54

24


NOTE 6 – INCOME TAXES

The Company and its consolidated subsidiaries are subject to a number of different income taxes which, in the aggregate, reflected a statutory tax rate of approximately 33% for 2016, 36% for 2015 and 38% for 2014.

Reconciliations between the statutory tax rate and the effective tax rate for the years ended March 31, 2016, 2015 and 2014 were as follows:

March 31,

2016 2015 2014

Statutory tax rate 33.1% 35.6% –

Entertainment expense, etc.

not deductible for Japanese tax purposes 0.9 1.1 –

Dividends, etc.

not taxable for Japanese tax purposes (1.0) (2.8) –

Inhabitant taxes 0.7 0.7 –

Equity in earnings of unconsolidated

subsidiaries and affiliates (1.2) (1.2) –

Write-down of deferred income tax assets at end of period due to

tax rate changes 2.3 4.3 –

Other 1.0 (0.2) –

Effective tax rate 35.8% 37.5% –

Information on reconciliation of tax rates for the year ended March 31, 2014 is not disclosed as difference between the statutory tax rate and the effective tax rate was not more than 5% for the year ended March 31, 2014.

NOTE 5 – RECEIVABLES FROM AND PAYABLES TO UNCONSOLIDATED SUBSIDIARIES AND AFFILIATES

Significant receivables from and payables to unconsolidated subsidiaries and affiliates at March 31, 2016 and 2015 were as follows:

March 31, March 31,


Notes and accounts receivable ¥354 ¥159 $3,142

Notes and accounts payable ¥503 ¥490 $4,464

Deposits on long-term leases ¥ 17 ¥ 24 $ 151

011_0808001372808.indd 24 2016/09/05 16:41:54

25

Significant components of the Company and its consolidated subsidiaries’ deferred income tax assets and liabilities as of March 31, 2016 and 2015 were as follows:

March 31, March 31,


Deferred income tax assets:

Accrued enterprise tax ¥ 201 ¥ 224 $ 1,784

Allowance for investment loss 36 30 319

Allowance for doubtful accounts 36 38 319

Accrued employees’ bonuses 851 932 7,552

Retirement benefits 4,248 4,516 37,700

Depreciation 5,898 5,973 52,343

Impairment loss 2,898 2,800 25,719

Other 1,599 1,908 14,191

15,767 16,421 139,927

Valuation allowance (973) (1,111) (8,635)

Total deferred income tax assets 14,794 15,310 131,292

Deferred income tax liabilities:

Net unrealized holding gains on securities (17,633) (24,543) (156,487)

Reserves deductible for Japanese tax purposes (7,188) (7,639) (63,792)

Other (852) (922) (7,561)

Total deferred income tax liabilities (25,673) (33,104) (227,840)

Net deferred income tax liabilities ¥ (10,879) ¥ (17,794) $ (96,548)

The “Act for Partial Revision of the Income Tax Act, etc.” and “Act for Partial Revision of the Local Tax Act, etc.” were enacted in the Diet session on March 29, 2016. Accordingly, the statutory income tax rate utilized for the measurement of deferred tax assets and liabilities expected to be settled or realized between April 1, 2016 and March 31, 2018 and on or after April 1, 2018 were changed from 32.3% to 30.9% and 30.6%, respectively.

As a result of this change, net deferred tax liabilities (after deducting the deferred tax assets) decreased by ¥634 million ($5,627 thousand) as of March 31, 2016, deferred income tax expense recognized for the year then ended increased by ¥334 million ($2,964 thousand), net unrealized holding gains on securities increased by ¥977 million ($8,671 thousand) and remeasurements of defined benefit plans decreased by ¥9 million ($80 thousand).

011_0808001372808.indd 25 2016/09/05 16:41:54

26


NOTE 7 – STATEMENTS OF COMPREHENSIVE INCOME

Amounts reclassified to net income for the years ended March 31, 2016, 2015 and 2014 were recognized in other comprehensive income in the current or previous periods, and tax effects for each component of other comprehensive income were as follows:



Net unrealized holding gains (losses) on securities

Increase (Decrease) during the year ¥(16,394) ¥24,555 ¥ 2,969 $(145,492)

Reclassification adjustments (2,275) (2,107) (1,901) (20,190)

Sub-total, before tax (18,669) 22,448 1,068 (165,682)

Tax effect 7,011 (5,472) (382) 62,221

Sub-total, net of tax (11,658) 16,976 686 (103,461)

Foreign currency translation adjustments

Increase (Decrease) during the year (627) 1,118 1,803 (5,564)

Remeasurements of defined benefit plans

Increase (Decrease) during the year (804) 1,153 – (7,135)

Reclassification adjustments (58) (104) – (515)

Sub-total, before tax (862) 1,049 – (7,650)

Tax effect 268 (368) – 2,378

Sub-total, net of tax (594) 681 – (5,272)

Share of other comprehensive income of

affiliates accounted for using the equity method

Increase (Decrease) during the year (28) 364 366 (248)

Total other comprehensive income ¥(12,907) ¥19,139 ¥ 2,855 $(114,545)

011_0808001372808.indd 26 2016/09/05 16:41:54

27

NOTE 8 – INVESTMENT AND RENTAL PROPERTY

For the year ended March 31, 2016The Company and some of its consolidated subsidiaries have some investments and rental property such as office buildings for rent (including land) in Tokyo and other regions. For the year ended March 31, 2016, profit and loss concerning investment and rental property comprised lease profit of ¥10,642 million ($94,444 thousand), subsidy income of ¥206 million ($1,828 thousand), indemnity income of exiting facilities for lease of ¥128 million ($1,136 thousand) and loss on disposal of property and equipment of ¥437 million ($3,878 thousand).

Information on fair value of investment and rental property included in the consolidated financial statements at March 31, 2016 is as follows:

Book value Fair valueApril 1, 2015 Decrease March 31, 2016 March 31, 2016

(Millions of yen)¥91,113 ¥(5,750) ¥85,363 ¥308,910

Book value Fair valueApril 1, 2015 Decrease March 31, 2016 March 31, 2016

(Thousands of U.S. dollars)$808,600 $(51,030) $757,570 $2,741,480

Note:1. Book value is the net amount of acquisition cost and accumulated depreciation.2. Concerning net amount of increase and decrease in book value, the main factor for the increase was the costs incurred for

maintenance and renewal of existing facilities amounting to ¥2,369 million ($21,024 thousand), and the main factor for the decrease was the depreciation of ¥6,753 million ($59,931 thousand).

3. Fair value as of March 31, 2016 was the amount mainly based on appraisal by an external real estate appraiser.

For the year ended March 31, 2015The Company and some of its consolidated subsidiaries have some investments and rental property such as office buildings for rent (including land) in Tokyo and other regions. For the year ended March 31, 2015, profit and loss concerning investment and rental property comprised lease profit of ¥9,222 million, subsidy income of ¥194 million, indemnity income of exiting facilities for lease of ¥30 million, impairment loss of ¥727 million and loss on disposal of property and equipment of ¥693 million.

Information on fair value of investment and rental property included in the consolidated financial statements at March 31, 2015 is as follows:

Book value Fair valueApril 1, 2014 Increase March 31, 2015 March 31, 2015

(Millions of yen)¥84,940 ¥6,173 ¥91,113 ¥285,256

Note:1. Book value is the net amount of acquisition cost and accumulated depreciation.2. Concerning net amount of increase and decrease in book value, the main factor for the increase was the costs incurred for

maintenance and renewal of existing facilities amounting to ¥11,744 million, and the main factor for the decrease was the depreciation of ¥6,824 million.

3. Fair value as of March 31, 2015 was the amount mainly based on appraisal by an external real estate appraiser.

011_0808001372808.indd 27 2016/09/05 16:41:54

28


The net book values of pledged assets at March 31, 2016 and 2015 were as follows:

March 31, March 31,


Land ¥1,085 ¥1,085 $ 9,629

Buildings and structures 237 317 2,103

Investments in securities – 18 –

¥1,322 ¥1,420 $11,732

Liabilities secured by the pledged assets mentioned above at March 31, 2016 and 2015 were as follows:

March 31, March 31,


Short-term bank loans ¥ 300 ¥ 300 $ 2,662

Other in current liabilities 448 480 3,976

Long-term loans payable 6,761 6,879 60,002

Deposits on long-term leases 1,000 1,160 8,875

¥8,509 ¥8,819 $75,515

NOTE 9 – PLEDGED ASSETS

011_0808001372808.indd 28 2016/09/05 16:41:54

29

Short-term bank loans outstanding at March 31, 2016 and 2015 were ¥10,610 million ($94,160 thousand) and ¥16,762 million, respectively, and the annual interest rates of short-term bank loans were 0.325% to 2.360% and 0.380% to 10.750%, respectively.

Long-term debt at March 31, 2016 and 2015 consisted of the following:

March 31, March 31,


Loans from banks, insurance companies and others,

generally secured, between 0.100%-3.870% and

0.100%-3.870% ¥33,344 ¥25,546 $295,919

Balance in lease obligations 527 747 4,677

1.750% yen bonds due 2015, unsecured – 7,000 –

2.080% yen bonds due 2018, unsecured 7,000 7,000 62,123





60,871 60,293 540,211

Less current portion (5,727) (8,613) (50,825)

¥55,144 ¥51,680 $489,386

The aggregate annual maturities of long-term loans at March 31, 2016 were as follows:

Year ending March 31, Amount(Millions of yen) (Thousands of U.S. dollars)

2017 ¥ 5,418 $ 48,084

2018 9,893 87,797

2019 1,383 12,274

2020 5,475 48,589

2021 5,252 46,610

2022 and thereafter 5,923 52,565

¥33,344 $295,919

The aggregate annual maturities of lease obligation at March 31, 2016 were as follows:

Year ending March 31, Amount(Millions of yen) (Thousands of U.S. dollars)

2017 ¥309 $2,742

2018 99 879

2019 66 586

2020 40 355

2021 13 115

2022 and thereafter – –

¥527 $4,677

NOTE 10 – SHORT-TERM BANK LOANS AND LONG-TERM DEBT

011_0808001372808.indd 29 2016/09/05 16:41:54

30

1. Defined benefit plan (1) Movement in retirement benefit obligations, except for plans to which the simplified methods have been applied

March 31, March 31,


Balance at beginning of year ¥21,837 ¥22,592 $193,797

Cumulative effects of changes in

accounting policies– (292) –

Restated balance ¥21,837 ¥22,300 $193,797

Service cost - benefits earned during the year 1,041 1,111 9,239

Interest cost on projected benefit obligation 211 214 1,873

Actuarial loss (gain) 279 (191) 2,476

Benefits paid (1,490) (1,597) (13,224)

Balance at end of year ¥21,878 ¥21,837 $194,161

(2) Movements in plan assets, except for plans to which the simplified methods have been applied

March 31, March 31,



Expected return on plan assets 257 227 2,281

Actuarial gain (loss) (525) 962 (4,659)

Contributions from the Group 1,298 1,302 11,519

Benefits paid (1,088) (1,109) (9,656)

Other 96 96 852


(3) Defined benefit plans to which the simplified methods have been applied

March 31, March 31,



Retirement benefit costs 501 419 4,446

Benefits paid (432) (414) (3,834)

Contributions from the Group (119) (103) (1,056)

Other 7 25 62



NOTE 11 – RETIREMENT BENEFITS AND PENSION PLAN

011_0808001372808.indd 30 2016/09/05 16:41:54

31

(4) Reconciliations between retirement benefit obligations and plan assets and liability for retirement benefits, including for plans to which the simplified methods have been applied

March 31, March 31,2016 2015 2016


Funded retirement benefit obligations ¥19,350 ¥19,564 $171,725

Plan assets (14,027) (13,973) (124,485)

5,323 5,591 47,240

Unfunded retirement benefit obligations 8,230 8,002 73,039

Total net liability (asset) for retirement benefits

at end of year ¥13,553 ¥13,593 $120,279

Liability for retirement benefits *1 ¥13,553 ¥13,593 $120,279

Total net liability (asset) for retirement benefits

at end of year ¥13,553 ¥13,593 $120,279

*1 Officers’ severance and retirement benefits of ¥198 million ($1,757 thousand) as of March 31, 2016 and ¥173 million as of March 31, 2015 are not included in the above.

(5) Severance and retirement benefit expenses for employees

Year ended March 31, Year ended March 31,2016 2015 2016


Service cost - benefits earned during the year *1 ¥ 945 ¥1,015 $ 8,387

Interest cost on projected benefit obligation 211 214 1,873

Expected return on plan assets (257) (227) (2,281)

Amortization of actuarial gains (55) (19) (488)

Amortization of prior service costs (3) (85) (27)

Severance and retirement benefit expenses based on

simplified methods 501 419 4,446

Severance and retirement benefit expenses for employees ¥1,342 ¥1,317 $11,910

*1 Contributions from employees are not included.

(6) Remeasurements of defined benefit plans, before tax

March 31, March 31,2016 2015 2016


Prior service costs ¥ (3) ¥ (85) $ (27)

Actuarial gains (losses) (859) 1,134 (7,623)

Total ¥(862) ¥1,049 $(7,650)

011_0808001372808.indd 31 2016/09/05 16:41:54

32

(7) Remeasurements of defined benefit plans

March 31, March 31,2016 2015 2016


Prior service costs that are yet to be recognized ¥ (31) ¥ (34) $ (275)

Actuarial losses (gains) that are yet to be recognized 725 (134) 6,434

Total ¥694 ¥(168) $6,159

(8) Plan assets (a) Plan assets comprise:

March 31,2016 2015

General account 37% 34%

Equity securities 31% 34%

Bonds 28% 29%

Other 4% 3%

Total 100% 100%

(b) Long-term expected rate of returnCurrent and target asset allocations and current and expected returns on various categories of plan assets have been considered in determining the long-term expected rate of return.

(9) Actuarial assumptionsThe principal actuarial assumptions at March 31, 2016 and 2015 were as follows:

Year ended March 31,2016 2015

Discount rate 0.3%-0.9% 0.9%-1.2%

Long-term expected rate of return 2.0% 2.0%

2. Defined contribution planThe required contribution amount of the Company and its consolidated subsidiaries to the defined contribution plan at March 31, 2016 and 2015 were ¥258 million ($2,290 thousand) and ¥260 million, respectively.


011_0808001372808.indd 32 2016/09/05 16:41:54

33

At March 31, 2016 and 2015, the balances of guarantee for loans amounted to ¥1,891 million ($16,782 thousand) and ¥2,187 million, respectively.

NOTE 14 – CONTINGENT LIABILITIES

Indemnity income of exiting facilities for lease represented mainly income from cancellation of leased commercial facilities in Yokohama and leased real estate facilities in Nagoya for the year ended March 31, 2016. For the year ended March 31, 2015, such represented mainly income from cancellation of leased commercial facilities in Yokohama and Kobe.

NOTE 12 – INDEMNITY INCOME OF EXITING FACILITIES FOR LEASE

The impairment loss for the year ended March 31, 2016 and 2015 were as follows:

Year ended March 31, 2016Asset group Location Asset type Millions of yen Thousands of U.S. dollars

Warehouse facilitiesOsaka City, Osaka

PrefectureBuilding and others ¥188 $1,668

Warehouse facilitiesKobe City, Hyogo

PrefectureBuilding, Machinery and

equipment and others¥825 $7,322

Year ended March 31, 2015Asset group Location Asset type Millions of yen

Commercial facilities for rent

Takasago City, Hyogo Prefecture

Land, building and others

¥727

At March 31, 2016 and 2015, the Company classified fixed assets by cash generating units which were considered to be independent from cash flows of other groups and recognized impairment loss on certain groups of assets.

For the year ended March 31, 2016, the Company recognized the impairment loss amounting to ¥1,013 million ($8,990 thousand) as other expense in the consolidated statements of income by devaluating the book value of each fixed asset to its recoverable amount, comprising ¥839 million ($7,446 thousand) for building, ¥153 million ($1,358 thousand) for machinery and equipment and ¥21 million ($186 thousand) for others.

The recoverable amounts of warehouse facilities are their net realizable value or value in use. The net realizable value is calculated from estimated disposal value and the value in use is calculated from the projected future cash flows discounted at a rate of 9%.

For the year ended March 31, 2015, the Company recognized the impairment loss amounting to ¥727 million as other expense in the consolidated statements of income by devaluating the book value of each fixed asset to its recoverable amount, comprising ¥676 million for land, ¥50 million for building and ¥1 million for others.

The recoverable amount of commercial facilities for lease is its net realizable value based on an amount determined by valuations made in accordance with real estate appraisal value.

NOTE 13 – IMPAIRMENT LOSS

011_0808001372808.indd 33 2016/09/05 16:41:54

34

1. OPERATING LEASES(LESSEE LEASES)Future minimum lease payments under non-cancelable operating lease as of March 31, 2016 and 2015 were as follows:

March 31, March 31,


Due within one year ¥ 3,733 ¥ 3,245 $ 33,129

Due after one year 12,478 10,218 110,739

¥16,211 ¥13,463 $143,868

(LESSOR LEASES)Future minimum lease receipts under non-cancelable operating lease as of March 31, 2016 and 2015 were as follows:

March 31, March 31,


Due within one year ¥12,493 ¥12,604 $110,871


¥25,365 ¥27,630 $225,106

NOTE 15 – LEASE TRANSACTIONS


011_0808001372808.indd 34 2016/09/05 16:41:54

35

2. FINANCE LEASES INITIATED BEFORE APRIL 1, 2008(LESSOR LEASES)Finance lease transactions without transfer of ownership to lessee (1) Purchase price, accumulated depreciation and book value

March 31, March 31,


Buildings and structures and other

Purchase price ¥3,353 ¥3,353 $29,757

Accumulated depreciation 2,475 2,362 21,965

Book value ¥ 878 ¥ 991 $ 7,792

(2) Lease commitments

March 31, March 31,


Due within one year ¥ 180 ¥ 171 $ 1,597


¥1,424 ¥1,596 $12,638

(3) Rental income, depreciation and interest income equivalents



Rental income ¥274 ¥274 ¥274 $2,432

Depreciation ¥113 ¥116 ¥118 $1,003

Interest income equivalents ¥103 ¥112 ¥121 $ 914

(4) Calculation of interest income equivalents The excess of total rental income and estimated residual value over acquisition costs is regarded as an amount representing

interest income equivalents and is allocated to each period using the interest method.

011_0808001372808.indd 35 2016/09/05 16:41:54

36

NOTE 16 – DERIVATIVE TRANSACTIONS

1. Derivative transactions to which hedge accounting is not applied None

2. Derivative transactions to which hedge accounting is applied

Interest rate-related derivativesHedge accounting method : Interest income or expense on the hedged items reflects net amount to be paid or received

under the derivativesType of transaction : Interest rate swap, receive floating, pay fixedMajor hedged items : Long-term debt

March 31, March 31,


Notional amount ¥100 ¥100 $887

Portion due after one year included herein ¥100 ¥100 $887

Fair value (Note) – – –

Note: With respect to interest rate swap contracts which meet certain conditions, fair values of the interest rate swap contracts are included in the fair values of the relevant long-term loans payable, since they are used for recording long-term loans payable as hedged items.

The types and numbers of shares outstanding and treasury stock for the years ended March 31, 2016 and 2015 were as follows:

Shares outstanding Treasury stock

Type of shares Common stock Common stockNumber of shares: (Shares)

Year ended March 31, 2016

Balance at beginning of year 175,921,478 698,107

Increase during the year – 14,352

Decrease during the year – –

Balance at end of year 175,921,478 712,459

Year ended March 31, 2015

Balance at beginning of year 175,921,478 676,545

Increase during the year – 21,562

Decrease during the year – –

Balance at end of year 175,921,478 698,107

NOTE 17 – CHANGES IN NET ASSETS


011_0808001372808.indd 36 2016/09/05 16:41:54

37

Increase in the number of shares was due to purchases of less-than-one-unit shares.

Matters related to dividends were as follows:

(a) Dividends payment Dividends payment during the year ended March 31, 2016 was as follows:

Approval at Ordinary general shareholders’ meeting Board of directors meeting

Approval date June 26, 2015 October 30, 2015

Type of shares Common stock Common stock

Total amount of dividends ¥1,052 million ($9,336 thousand) ¥1,051 million ($9,327 thousand)

Dividends per share ¥6.0 ($0.05) ¥6.0 ($0.05)

Record date March 31, 2015 September 30, 2015

Effective date June 29, 2015 December 1, 2015

Dividends payment during the year ended March 31, 2015 was as follows:

Approval at Ordinary general shareholders’ meeting Board of directors meeting

Approval date June 27, 2014 October 31, 2014

Type of shares Common stock Common stock

Total amount of dividends ¥1,052 million ¥1,052 million

Dividends per share ¥6.0 ¥6.0

Record date March 31, 2014 September 30, 2014

Effective date June 30, 2014 December 1, 2014

(b) Dividends payment whose record date is attributable to the accounting period ended March 31, 2016 but which becomes effective after said accounting period is as follows:

Approval at Ordinary general shareholders’ meeting

Approval date June 29, 2016

Type of shares Common stock

Funds for dividends Retained earnings

Total amount of dividends ¥1,052 million ($9,336 thousand)

Dividends per share ¥6.0 ($0.05)

Record date March 31, 2016

Effective date June 30, 2016

011_0808001372808.indd 37 2016/09/05 16:41:54

38

For the year ended March 31, 2016, 2015 and 20141. General information about reportable segmentsThe Company’s reportable segments are components for which separate financial information is available, and evaluated regularly by the board of directors in determining allocation of management resources and in assessing performance.

The Company decided its reportable segments by considering similarities between the business activities of the Company and its consolidated subsidiaries from the aspects of business type, business nature, method of providing service, market of service and others. The Company has two reportable segments - “logistics” and “real estate.”

Each segment operates the following businesses.Logistics: - Warehousing, transportation, port-terminal operation and international freight forwarding.Real estate:- Rental of office buildings and sale of real estate

2. Basis of measurement about reported segment revenue, segment income, segment assets and other material itemsThe accounting methods of business segments reported are consistent with those stated in NOTE 1 (SUMMARY OF ACCOUNTING POLICIES).

Segment income is based on the figures of operating income. Amounts for inter-segment transactions or transfers are calculated based on market prices.

3. Information about reported segment revenue, segment income, segment assets and other material itemsReportable segment information for the year ended March 31, 2016 is as follows:

March 31, 2016

Logistics Real estate Total Adjustment *1 Consolidated *2(Millions of yen)

Revenues:

Non-affiliated customer ¥ 168,397 ¥ 38,435 ¥ 206,832 ¥ – ¥ 206,832

Intersegment 609 1,442 2,051 (2,051) –

169,006 39,877 208,883 (2,051) 206,832

Segment income 5,580 10,615 16,195 (4,886) 11,309

Segment assets ¥ 190,318 ¥ 106,215 ¥ 296,533 ¥ 116,732 ¥ 413,265

Depreciation and amortization ¥ 6,786 ¥ 6,810 ¥ 13,596 ¥ 235 ¥ 13,831

Amortization of goodwill ¥ 304 ¥ – ¥ 304 ¥ – ¥ 304Investments in affiliates accounted for by the equity method ¥ 7,607 ¥ – ¥ 7,607 ¥ – ¥ 7,607

Increase in tangible and intangible fixed assets ¥ 6,392 ¥ 2,369 ¥ 8,761 ¥ 80 ¥ 8,841


NOTE 18 – SEGMENT INFORMATION

011_0808001372808.indd 38 2016/09/05 16:41:55

39

March 31, 2016

Logistics Real estate Total Adjustment *1 Consolidated *2(Thousands of U.S. dollars)

Revenues:

Non-affiliated customer $ 1,494,471 $ 341,099 $ 1,835,570 $ – $ 1,835,570

Intersegment 5,405 12,797 18,202 (18,202) –

1,499,876 353,896 1,853,772 (18,202) 1,835,570

Segment income 49,521 94,205 143,726 (43,362) 100,364

Segment assets $ 1,689,013 $ 942,625 $ 2,631,638 $ 1,035,961 $ 3,667,599

Depreciation and amortization $ 60,224 $ 60,436 $ 120,660 $ 2,086 $ 122,746

Amortization of goodwill $ 2,698 $ – $ 2,698 $ – $ 2,698Investments in affiliates accounted for by the equity method $ 67,510 $ – $ 67,510 $ – $ 67,510

Increase in tangible and intangible fixed assets $ 56,727 $ 21,024 $ 77,751 $ 710 $ 78,461

*1: The adjustments were as follows:(1) The adjustment of negative ¥4,886 million ($43,362 thousand) in segment income included inter-segment eliminations of

¥14 million ($124 thousand) and corporate expenses of negative ¥4,900 million ($43,486 thousand) not distributed to any reportable segments. Corporate expenses were mainly general and administrative expenses not attributable to any reportable segments.

(2) The adjustment of ¥116,732 million ($1,035,961 thousand) in segment assets was for corporate assets not distributed to any reportable segments. Corporate assets mainly consisted of surplus funds (cash and marketable securities), long-term investments (investments in securities) and assets which belong to the administrative department of the Company.

(3) The adjustment of ¥80 million ($710 thousand) for increase in property and equipment and intangible assets mainly consisted of capital investment by the administrative department of the Company.

*2: Segment income was reconciled to operating income as described in the consolidated statements of income.

Reportable segment information for the year ended March 31, 2015 is as follows:

March 31, 2015


Revenues:


Intersegment 542 1,439 1,981 (1,981) –

170,402 35,941 206,343 (1,981) 204,362

Segment income 7,204 9,166 16,370 (4,921) 11,449

Segment assets ¥ 191,261 ¥ 106,753 ¥ 298,014 ¥ 135,028 ¥ 433,042



Increase in tangible and intangible fixed assets ¥ 11,856 ¥ 10,306 ¥ 22,162 ¥ 2,300 ¥ 24,462

*1: The adjustments were as follows:(1) The adjustment of negative ¥4,921 million in segment income included inter-segment eliminations of ¥21 million and

corporate expenses of negative ¥4,942 million not distributed to any reportable segments. Corporate expenses were mainly general and administrative expenses not attributable to any reportable segments.

(2) The adjustment of ¥135,028 million in segment assets was for corporate assets not distributed to any reportable segments. Corporate assets mainly consisted of surplus funds (cash and marketable securities), long-term investments (investments in securities) and assets which belong to the administrative department of the Company.

011_0808001372808.indd 39 2016/09/05 16:41:55

40

(3) The adjustment of ¥2,300 million for increase in property and equipment and intangible assets mainly consisted of capital investment by the administrative department of the Company.


Reportable segment information for the year ended March 31, 2014 is as follows:

March 31, 2014


Revenues:


Intersegment 424 1,380 1,804 (1,804) –

162,482 37,484 199,966 (1,804) 198,162

Segment income 6,817 9,702 16,519 (4,371) 12,148

Segment assets ¥ 182,308 ¥ 102,400 ¥ 284,708 ¥ 111,531 ¥ 396,239



Increase in tangible and intangible fixed assets ¥ 10,203 ¥ 13,410 ¥ 23,613 ¥ 62 ¥ 23,675

*1: The adjustments were as follows:(1) The adjustment of negative ¥4,371 million in segment income included inter-segment eliminations of ¥19 million and

corporate expenses of negative ¥4,390 million not distributed to any reportable segments. Corporate expenses were mainly general and administrative expenses not attributable to any reportable segments.

(2) The adjustment of ¥111,531 million in segment assets was for corporate assets not distributed to any reportable segments. Corporate assets mainly consisted of surplus funds (cash and marketable securities), long-term investments (investments in securities) and assets which belong to the administrative department of the Company.

(3) The adjustment of ¥62 million for increase in property and equipment and intangible assets mainly consisted of capital investment by the administrative department of the Company.



011_0808001372808.indd 40 2016/09/05 16:41:55

41

4. Related information (1) Information about products and services

Information is omitted, as the classification is the same as that for reportable segments.

(2) Information about geographic areasThe information about geographic areas as of and for the years ended March 31, 2016 and 2015 is as follows:

(a) Revenues



Revenues:

Japan ¥183,291 ¥181,302 $1,626,651

Other 23,541 23,060 208,919

¥206,832 ¥204,362 $1,835,570

Note: Revenues are classified by country and region based on customer location.

(b) Property and equipment

Information is omitted, as the balance of property and equipment located in Japan amounts to more than 90% of the total

balance of property and equipment.

(3) Information about major customersInformation is omitted, as there is no major non-affiliated customer who accounts for 10% or more of the revenues on the consolidated statements of income.

5. Impairment loss by reportable segment

March 31, 2016

Logistics Real estate Total Adjustment Consolidated(Millions of yen)

Impairment loss ¥ 1,013 ¥ – ¥ 1,013 ¥ – ¥ 1,013

March 31, 2015


Impairment loss ¥ – ¥ 727 ¥ 727 ¥ – ¥ 727

March 31, 2016

Logistics Real estate Total Adjustment Consolidated(Thousands of U.S. dollars)

Impairment loss $ 8,990 $ – $ 8,990 $ – $ 8,990

011_0808001372808.indd 41 2016/09/05 16:41:55

42

6. Amortization and unamortized balance of goodwill by reportable segment

March 31, 2016


Amortization of goodwill ¥ 304 ¥ – ¥ 304 ¥ – ¥ 304

Unamortized balance ¥ 1,584 ¥ – ¥ 1,584 ¥ – ¥ 1,584

March 31, 2015




March 31, 2014




March 31, 2016

Logistics Real estate Total Adjustment Consolidated(Thousands of U.S. dollars)

Amortization of goodwill $ 2,698 $ – $ 2,698 $ – $ 2,698

Unamortized balance $ 14,057 $ – $ 14,057 $ – $ 14,057


011_0808001372808.indd 42 2016/09/05 16:41:55

43

Company Profile (As of March 31, 2016)

Headquarters and Branches

Headquarters: Chuo-ku, Tokyo

Branches: Tokyo, Yokohama, Nagoya, Osaka, Kobe and Fukuoka

Date of Establishment April 15, 1887

Capital ¥22,393,986,570

Number of Shares Issued 175,921,478

Authorized Shares 440,000,000

Number of Employees 845 persons (parent only; not including 152 employees temporarily on loan to other companies. There are also 123 temporary employees, as well as 569 persons temporarily loaned or dispatched within the Group and those from outside the Group companies and accepted by the Company.)

4,499 persons (on a consolidated basis; not including 59 employees temporarily on loan to companies outside the Group. There are also 1,379 temporary employees, as well as 1,037 persons temporarily loaned or dispatched from outside the Group companies and accepted by the Company.)

Stock Exchange Listing First Section of the Tokyo Stock Exchange

Securities Code 9301

Major ShareholdersShareholder’s Name Number of Shares Held (Thousands) Shareholding Ratio (%)The Master Trust Bank of Japan, Ltd. (trust account) 15,151 8.6Japan Trustee Services Bank, Ltd. (trust account) 12,516 7.1Meiji Yasuda Life Insurance Company 9,707 5.5MITSUBISHI ESTATE CO., LTD. 7,331 4.2Kirin Holdings Company, Limited 5,932 3.4Tokio Marine & Nichido Fire Insurance Co., Ltd. 5,831 3.3The Bank of Tokyo-Mitsubishi UFJ, Ltd. 3,728 2.1ASAHI GLASS CO., LTD. 3,315 1.9Mitsubishi Corporation 3,205 1.8Takenaka Corporation 3,010 1.7

Notes:1. The Bank of Tokyo-Mitsubishi UFJ, Ltd. has set 1,500,000 Mitsubishi Logistics’ shares as trust funds for retirement benefits for which voting rights are

reserved, in addition to the shares stated in the table above.2. The “Shareholding ratio” is calculated after excluding treasury stock (643,258 shares).

Notes:1. Directors with an asterisk (*) are representative directors.2. Minoru Makihara, Shigemitsu Miki and Koji Miyahara are Outside Directors as stipulated in the Companies Act, Article 2, Item 15. The Company designated them as

independent directors as required by the rules of the Tokyo Stock Exchange, and reported it to the Exchange.3. Yoshihito Yoshizawa, Yohnosuke Yamada and Kenji Sakurai are Outside Corporate Auditors as stipulated in the Companies Act, Article 2, Item 16. The Company designated

them as independent corporate auditors as required by the rules of the Tokyo Stock Exchange, and reported it to the Exchange.

Directors and Corporate Auditors (As of June 29, 2016)Position Name Responsibilities and/or Primary Occupation

Chairman of the Board Tetsuro OkamotoPresident* Akio MatsuiManaging Director Kazuhiko Takayama Responsible for Warehousing & Distribution BusinessManaging Director Takanori Miyazaki Responsible for Accounting & Financing, Information System, Technical and Real Estate

BusinessesManaging Director Yoshiji Ohara Responsible for Harbor Transportation BusinessManaging Director Noboru Hiraoka Responsible for International Transportation BusinessManaging Director* Fumihiro Shinohara Responsible for General Affairs, Corporate Communications, Personnel, Planning and

Internal AuditDirector Minoru Makihara Senior Corporate Advisor, Mitsubishi CorporationDirector Shigemitsu Miki Senior Advisor, The Bank of Tokyo-Mitsubishi UFJ, Ltd.Director Koji Miyahara Board Counselor, Nippon Yusen Kabushiki KaishaDirector Yasushi Saito General Manager, Accounting & Financing DivisionDirector Hitoshi Wakabayashi General Manager, Warehousing & Distribution Business DivisionDirector Tomohiko Takami General Manager, International Transportation Business DivisionDirector Masao Fujikura General Manager, Osaka BranchStanding Corporate Auditor Tohru WatanabeStanding Corporate Auditor Yoshihito YoshizawaCorporate Auditor Yohnosuke Yamada LawyerCorporate Auditor Kenji Sakurai Certified Public AccountantCorporate Auditor Hiroshi Imai Standing Auditor, Fuji Logistics Co., Ltd.

Contents Contents ...

...

...

...

...

...

...

...

...

...

...

To Our Shareholders


Overview of the Mitsubishi Logistics Group

Independent Auditor’s Report







Company Pro�le

1

2

4

5

6

8

9

10

11

13

43

005_0808001372808.indd 2 2016/08/01 14:38:14

ANNUAL REPORT 2016Year ended March 31, 2016

Nihonbashi Dia Building 19-1 Nihonbashi, 1-chome Chuo-ku, Tokyo 103-8630, Japanhttp://www.mitsubishi-logistics.co.jp

005_0808001372808.indd 1 2016/08/01 14:38:14

annual report 2016 - mitsubishi logistics · 2016-09-28 · annual report 2016 year ended march 31,...

Documents