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2011

Annual Report

Yusen Logistics Co.,Ltd.

GO FORWARD, Yusen Logistics


By accomplishing three steps of Integration, Fusion and Dramatic Progress,
we aim to be A Total Logistics Provider operating globally with world-class scale and quality.
In October 2010, Yusen Logistics Co., Ltd. was born out of
integration of Yusen Air & Sea Service, a logistics provider of 55
years of experience and with strength in air freight forwarding, with
NYK Logistics (Japan), another logistics provider having 27 years of
experience with its core business in ocean freight forwarding.
We are currently proceeding with gradual integration with NYK
Logistics overseas business which has strength in ocean freight
forwarding and contract logistics. Once completed, we will be

able to satisfy diversified customer needs in all services that


seamlessly cover air and ocean freight forwarding, land transport
and contract logistics.
We will accomplish steady Integration, promote Fusion of
internal values and then make Dramatic Progress to be able to
provide high-quality services that satisfy requests from many
customers, with an ultimate goal of becoming a total logistics
provider operating globally with world-class scale and quality.

FUSION
Fusion of

employee awareness

INTEGRATION

YAS

Fusion of

Fusion of

organizations

governance

NYK Logistics

Fusion of Operation
Promote Fusion of employee awareness,
organization and governance, in order to
maximize synergies, share corporate values
worldwide within the Yusen Logistics (YLK)
Group and aim to achieve its goals.

Completion of Integration
Plans to complete business integration with NYK
Logistics business by March 2012.

Mission
Maximize enterprise value by contributing to the development
of the global economy and earning the confidence of
customers through the provision of sophisticated, high-quality
logistics services.

Vision
A Total Logistics Provider operating globally with world-class scale
and quality.

Values

Customer
Centric

Quality /
Gemba Focused

Integrity

HR-oriented
Management

Innovation

Environmental
Management

Intensity

DRAMATIC
PROGRESS

Toward

Business
Strategy

World-Top Class
Total Logistics
Sales Strategy

Provider

Area Strategy

For Dramatic Progress


Establish the 3D Management that positions business, sales and area
strategies as three basic strategies, and aim to be A Total Logistics Provider
operating globally with world-class scale and quality.

Portfolio by

Business
segment

(forecast)

FY2013

FY2010
YLK (YAS)

NYK Logistics

Yusen Logistics

Yusen Logistics

(Companies to be Integrated only)

5%

8% 3%
Air
Ocean
Land transport
Logistics
Others

4%

21%

Geographical
segment

23%

26%

42%

12%

14%

68%

30%

33%

27%

Portfolio by

2%

25%

24%

33%

(forecast)

FY2013

FY2010
YLK (YAS)

Yusen Logistics

NYK Logistics

Yusen Logistics

(Companies to be Integrated only)

8%
Americas
Europe
South Asia & Oceania
East Asia
Japan

13%
9%

21%

24%

37%

13%
50%

23%

23%

15%
18%

16%
18%

37%

19%

24%
14%

18%

Yusen Logistics Annual Report 2011

Consolidated Financial Highlights


Yusen Logistics Co., Ltd. and Consolidated Subsidiaries
Years Ended March 31

Millions of Yen

Results of Operations

Financial Position

Per Share Data

2009

2010

2011

2011

167,460

123,453

160,788

$ 1,933,716

Operating income

4,574

2,310

4,947

59,499

Net income

1,083

1,545

3,621

43,542

Total assets

75,733

81,443

88,363

$ 1,062,691

Total equity

51,249

53,663

55,360

665,781

Yen

U.S. Dollars (Note)

Net sales

Basic net income

Net assets

25.68

36.63

85.85

1.032

1,173.84

1,225.21

1,260.69

15.162

18.00

16.00

18.00

0.216

Return on equity (ROE) (%)

2.0

3.1

6.9

Net income to total assets (%)

1.2

2.0

4.3

65.4

63.4

60.2

5,326

5,252

5,623

Cash dividends

Key Ratios

Thousands of U.S. Dollars


(Note)

Equity ratio (%)


Number of employees

Note: The U.S. dollar amounts represent translations of Japanese yen amounts at the rate of 83.15 = US$1. See Note 1 to the consolidated nancial statements on page 23.

Net Sales

Operating Income

Net Income

(Millions of Yen)

(Millions of Yen)

(Millions of Yen)

12,000

200,000

8,000

6,000

150,000
8,000

4,000

100,000
4,000

2,000

50,000

2007 2008 2009 2010 2011

2007 2008 2009 2010 2011

Total Assets

Free Cash Flows

(Millions of Yen)

(Millions of Yen)

100,000

8,000

80,000

6,000

60,000

4,000

40,000

2,000

20,000

-2,000

2007 2008 2009 2010 2011

ROE / Net income to total assets (%)


ROE
Net income to total assets

20

15

10

2007 2008 2009 2010 2011

Yusen Logistics Annual Report 2011

2007 2008 2009 2010 2011

2007 2008 2009 2010 2011

To Our Shareholders

I was appointed to President of Yusen Logistics Co., Ltd. on April 1, 2011.


Yusen Logistics was born in October 2010, out of the integration of Yusen Air & Sea Service and NYK
Logistics (Japan), and is working to realize the business target of being a total logistics provider
operating globally with world-class scale and quality.
In scal 2010 (that ended March 31, 2011), we recorded net sales of 160.8 billion and ordinary
income of 6.1 billion. By implementing our new medium-term business plan that began in scal
2011, "GO FOWARD, Yusen Logistics," we aim to achieve net sales of 500 billion and ordinary income
of 18.5 billion in scal 2013 by realizing integration effects and growth. In addition to becoming
bigger in scale, the new company now has a better sales mix by business and region, which enables
us to respond to increasingly sophisticated logistics needs of our customers in all types of services in
air and ocean freight forwarding, land transport and contract logistics. We expect to (1) grow mainly
in ocean freight forwarding and in Asia, (2) realize integration effects, (3) develop global operations
and (4) expand services to our customers.
We plan to complete integration of our overseas businesses by March 2012. In order to make 1+1
into 3 or 4, we need the Fusion of our operations. Within the forwarding business, air and ocean
freight forwarding differ in various ways and in their business culture. We will spend a year or two to
build workplaces where people respect each other through sharing of the new companys policies
and through exchanges among the workforce. As we believe that revitalization of human resources is
most critical in creating value, we will pursue empowerment, promote young workers and invest in
training of our workforce.
With regard to dividends, we recognize that the return of prots to shareholders is a matter of high
managerial priority. We are committed to pay stable dividends, as long as we generate sufcient
prot. With due consideration to our groups growth and expansion plans, our basic policy is to
increasingly reward our shareholders. Based on this policy, we expect to pay 20 per share dividend
based on our current earnings forecasts for scal 2011.
We would like to ask for your continued support and patronage.

Hiromitsu Kuramoto

President

Yusen Logistics Annual Report 2011

An Interview with the President

Q1
A1

Will you explain the trend in the freight


forwarding industry and effects of the
Great East Japan Earthquake?
The industry is recovering from a
drop in business since the Lehman
Bankruptcy. Demand for international
freight forwarding is on an uptrend in
the medium to long term.

Q2

How do you evaluate your scal 2010


business results?

A2

We achieved growth in sales and


prots, led by favorable business in
Asia, Americas and Europe.

After the Lehman Bankruptcy in 2008, our freight forwarding

We recorded a decrease in sales and income in fiscal 2009,

volume dropped in 2009 but returned to an uptrend in 2010,

mainly due to the worldwide recession triggered by the Lehman

thanks to a global economic recovery. In addition to growth in

Bankruptcy. In fiscal 2010, however, we achieved growth in

Asia, demand has picked up in the developed countries in Europe

sales and profits. Net sales increased by 30.2% year-on-year

and Americas. Demand for international freight forwarding is on

to 160.8 billion and ordinary income by 82.5% to 6.1 billion,

an uptrend in the medium to long term, as manufacturing bases

thanks mainly to global economic recovery and our group-wide

and retailers procurement have become globalized.

cost reduction efforts. In the rst half, our business recovered

However, the Great East Japan Earthquake of March 11,

substantially thanks to an increase in international freight

2011 has further delayed a recovery in Japan-related freight,

forwarding handling volume, particularly in Asian countries

growth of which had already been slow due to the appreciation

and the effects of our Project Plus One an upgraded version

of the yen and overseas inventory adjustment.

of the Urgent project to improve balances that was launched


in fiscal 2009. In the second half of fiscal 2010, overseas
freight forwarding businesses were robust in general but the
appreciation of the yen and overseas inventory adjustment
resulted in a decrease in export and import freight volumes in
Japan. Moreover, the Great East Japan Earthquake of March
11, 2011 affected some businesses. Overall, we had a difcult
time in Japan but that was offset by strong achievement
overseas, in particular based on a recovery in East Asia and a
turnaround in protability in Americas and Europe.

New Medium-Term Business Plan GO FORWARD, Yusen Logistics


Completion of Integration
Integration
(Consolidation)
Schedule

2010
Oct.

2011
Nov.

Dec.

Jan.

2012
Feb.

Oct., 1, 2010
Yusen Logistics
New system starts

Scope of Consolidation
(including equity-method companies)

Mar.

Apr.

Yusen Logistics Annual Report 2011

Jun.

Jul.

Dec.

Jan.

Feb.

Mar.

Apr., 1, 2011
Overseas new system starts

Jul., 1, 2011

By the end of March

The U.S., UK, Hong Kong, etc.


Integration of 22 countries
and regions

From July, integration of


Philippines, India, etc.

China, UAE, and others


Schedule for completion of
Integration of overseas businesses

From Oct., integration of


Thailand

61

41
companies

May

companies

Q3
A3

Please review your previous mediumterm business plan, the YAS FIVESTAR PROJECT.
We were forced to lower numerical
targets due to the global economic
crisis but improved management quality
substantially.

Q4

What are the targets in GO FORWARD,


Yusen Logistics your new mediumterm business plan?

A4

We aim to achieve 500 billion in net


sales and 18.5 billion in ordinary
income in scal 2013.

In the previous business plan for scal 2008-2010, we initially

Our theme in the new business plan for scal 2011-2013, which

aimed to become a total logistics provider and achieve

we announced in April 2011, is to become a total logistics

numerical targets of 260 billion in net sales and 15 billion

provider operating globally with world-class scale and quality.

in ordinary income. However, we lowered numerical targets

We set our numerical targets at 500 billion in net sales and

to 140 billion in net sales and 6.5 billion in ordinary income

18.5 billion in ordinary income for scal 2013. Our net sales

in January 2010 because of the global economic recession

were 160.8 billion in fiscal 2010 but are expected to reach

triggered by the Lehman Bankruptcy in 2008. By the end

338 billion in scal 2011 when integration with NYK Logistics

of the final year, we achieved the net sales target, thanks

overseas business is completed. By then, we will become a

to integration with NYK Logistics (Japan) and higher-than

large-scale company with approximately 16,600 employees.

expected overseas freight volumes, but fell short of ordinary

A global network that covers most countries and regions in

income target because of sluggish growth in Japans freight

the world will be instantly established with a service portfolio

volume.

seamlessly spanning air, ocean and land transport.

In contrast, we made signicant progress toward becoming

In order to be recognized as a global player, we have to

a total logistics provider by realizing business integration. We

have the sufcient levels of freight volume and quality services

obtained the first JISQ9100 (the Quality Management System

that are required for the world top ve players. By scal 2013,

for Aerospace parts) certification in transportation industry,

we aim to achieve ocean freight volume of 1 million TEU and

which proved our quality enhancement, while we promoted

air freight volume of 500 thousand tons. At the same time, we

improvement of our human resources by opening the Yusen

target to become a No. 1 Kaizen (Improvement) Company in

Logistics Professional College.

contract logistics and our sales department aims to establish


the Yusen Logistics brand in the global market.

Fusion of Operations Toward Maximization of Synergies


Fusion of employee awareness
Group value sharing (Integrity, Innovation, and Intensity)

Target Performance for the Final Year of the Project


Numerical target
(Billions of Yen)
500

Rebuild awareness toward A Total Logistics Provider operating globally

427
Net sales

Fusion of organizations
Organic unification, streamlining and IT system cooperation of each of
integrated companies
Improvement of organizational management by each regional headquarters

Fusion of governance
Establishment of 3D management
Restructuring of global compliance system

370

All companies
to be integrated, total (note)
YLK (consolidated)

Ordinary income
All companies
to be integrated, total (note)
YLK (consolidated)

338
12.5
9.1
3.7

8.2

6.7

Net income
YLK (consolidated)

18.5

15

FY 2011

FY 2012

FY 2013

(Note) Total of companies to be integrated by March 2012.

*Ordinary income is calculated by adding to or subtracting from operating income items such interest income or expenses, foreign exchange gains or
losses, dividend income, securities sales gains, losses, or evaluation losses. Ordinary income is the Companys important income indicator.

Yusen Logistics Annual Report 2011

An Interview with the President

Q5
A5

What is the 3D Management?

This is a scheme to efciently expand


and manage business from three
dimensions, namely, by area, by
business and by customers or their
industries.

Q6

What do you as a president nd most


precious?

A6

I nd human resources are most


important.

The 3D Management means to operate business efficiently

What I emphasize most is to revitalize human resources.

from three dimensions, namely, by area, by business and by

We strive to build a meaningful and satisfying company for

customers or their industries, manage them from various

our employees, meaning workplaces where people respect

aspects, and ensure to generate balanced prots.

each other through sharing of the new companys policies

As a logistics company in the Nippon Yusen Group, we

and exchanges among the workforce. When highly-motivated

will put much value on "Customer Centric," "Quality/Gemba

employees with a sense of responsibility make constant efforts

Focused," "HR-oriented Management" and "Environmental

in improving proposals and service quality, customers will

Management" with integrity, innovation and intensity. We will at

become more satised and the companys business will grow.

the same time establish the 3D Management. We will make

In order to revitalize employees, we will pursue empowerment,

best use of our comprehensive capability and respond to more

promote young workers, and invest in development of human

diversifying customer needs for freight forwarding with an

resources. In particular from fiscal 2011 when we enter into

ultimate goal of becoming a total logistics provider operating

a Fusion stage to generate synergies, it will be important

globally with world-class scale and quality.

for people to respect each other through sharing of the new


companys policies and exchanges among the workforce.
Our majority of employees are non-Japanese, with
Japanese accounting for merely about 10% of total workforce.
Fusion between Japanese employees and foreign employees
is an important issue. I myself will get involved in this
revitalizing and fusion effort but expect to take a year or two to
achieve the goal.

3D Management

Organization
HR-oriented
Management

Business Strategy

Japan

East Asia

3D Management

South Asia/Oceania

The Concept of

Europe

Americas

Area Strategy

Air ean
cs
Oc ct Logistisport
a Tran
Contr
Land
r1
ome
Cust
r2
e
om
Cust
r3
e
m
o
Cust
er 4
m
o
t
Cus
r5
ome
Cust

Sales Strategy

IT

Finance

CSR

Environmental
Management

Basic Management Strategy


Intensity

Customer Centric

Quality/Gemba Focused

Integrity

Value

Yusen Logistics Annual Report 2011

Innovation

Q7

Please talk about the Dramatic


Progress which you target after the
Integration and the Fusion.

Q8

What are your earnings forecasts for


scal 2011?

A7

We will achieve the status of A Total


Logistics Provider operating globally
with world-class scale and quality.

A8

We will record a growth in sales and


earnings, partly due to business
integration.

In the new medium-term business plan GO FOWARD, Yusen

We are planning to generate 338 billion in net sales and 9.1

Logistics, we will rst focus on integration and fusion. When

billion in ordinary income in scal 2011, thanks to progress in

we become a lively job-oriented company of employees who

integration of major overseas subsidiaries.

understand the corporate philosophy and with progress in

By region, we expect a profit improvement in Americas,

fusion worldwide, we will become a company that can provide

Europe, South Asia and Oceania. In Japan we are looking

the world best quality total logistics solutions to our customers

for negative impacts from the Great East Japan Earthquake

worldwide. This should result in our becoming a total logistics

of March 11, 2011 but a recovery in freight forwarded in the

provider operating globally with world-class scale and quality.

second half of the year when reconstruction works progress at

We aim to achieve 500 billion in net sales by scal 2013 but,

production bases.

once the Dramatic Progress materializes, we can grow into a

Integration with NYK Logistics business, which has a global

1 trillion company in sales. I appreciate your supports to our

network, will help increase sales signicantly in Americas and

endeavor.

Europe, where our contract


logistics and land transport
businesses will expand.
I n A s i a , p ro f i t g ro w t h i s
expected.

Business Strategy
Strategy_01

Ocean Forwarding Business

Handling target

Strategy_01. 02
Sales Strategy

Purchasing Strategy

Toward
World-Top
Class
Forwarder

FY2013: 1 million TEU

Quantitative expansion by service quality and price


competitiveness
Strategy_02

Air Forwarding Business

Handling target

FY2013: 500 thousand tons

Sales expansion through product development enhanced by


global network and further quality improvements
Strategy_03

Contract Logistics Business

Aim to be No. 1 Kaizen (Improvement) Company


By brand enhancement as No. 1 Kaizen (Improvement)
Company, heighten synergies with forwarding business

Product and Quality Strategy

Strategy_03

Competitive Gemba,
front line
Standard

quality creation
to meet needs
Thorough cost management
Reliable launch
Elaboration

Eco-friendly handling
Cutting-edge technology IT
Quality standards
Cultivation of human resources
Assistance for launch
Strengthen weakness (SWOT)
Cost management

Toward
World-Top Class
Total Logistics
Provider

Yusen Logistics Annual Report 2011

Corporate Governance

Basic Stance and Initiatives on Corporate Governance


YLK (the Company) seeks to maintain its standing as a good corporate
citizen, earning the trust of all stakeholders and their ongoing support.
To this end, the Company upholds a high standard of ethics its business
activities-global logistics services-and strives to engage in fair and
dependable business practices in compliance with prevailing laws and
within accepted social parameters.

Corporate Governance Structure


Outline of Corporate Governance Structure and Reasons for its
Adoption
The Board of Directors, which is the Companys decision-making body,
consists of seven directors who are engaged in determination of legal
matters, resolving of signicant basic policies and surveillance of the
execution of operations. The Company has also adopted the Executive
Officer System with the aim of accelerating decision making in the
execution of operations. At present, the Board of Executive Officers,
comprised of 19 executive ofcers, discusses and resolves signicant
matters to execute operations.
In addition, the Board of Corporate Auditors consists of four
auditors, two of which are from outside the Company, and whose
assignment is to audit the execution of duties of the Board of Directors
and the Board of Executive Officers from an objective and neutral
perspective.
The Company has chosen the above system which it believes to
ensure management transparency and efficiency, with prompt and
appropriate decision making and clear identification of duties and
responsibilities in the execution of operations.

Status of the Internal Control System


The Company carries out efficient compliance promotion, risk
management and internal audits to ensure that its internal control
system functions effectively.
Compliance
The Company established a Code of Conduct in May 2005 to ensure
that each YLK Group employee carries out and accomplishes
corporate activities and routine work in accordance with corporate
ethical guidelines and social morals, as well as by observing laws
and regulations. The Company also distributed the Group Compliance
Manual group-wide (domestically in March 2006 and overseas in March
2008). All Group executives and employees have since adhered to its
guidelines in their daily activities.
As an internal compliance system, the Compliance Committee,
chaired by the President, the position of Chief Compliance Officer
(CCO) and the CSR/Risk Management Chamber have been established.
Moreover, 66 employees of the Company and its Group companies have
been assigned as CSR Leaders to promote compliance within their
workplaces.
Risk Management System
The Company has established the CSR/Risk Management Chamber,
which specializes in managing significant risks that might affect the
management of the Company or might have Company-wide effect.
The CSR/Risk Management Chamber always identies, analyzes, and

Yusen Logistics Annual Report 2011

assesses risks and takes appropriate action.


Each division manage risks relating to its operations in accordance
with relevant internal regulations and in cooperation with the CSR/Risk
Management Chamber.
The CSR/Risk Management Chamber reports risks and risk
management to the Compliance Committee, which is chaired by the
President, and to the Disaster Risk Management Meeting.
Internal Audits, Corporate Audits, and Accounting Audits
The Company has established the Internal Audit Chamber, staffed by
four employees, to undertake regular internal audits of the Group. The
corporate audits are conducted by four auditors including two external
auditors, in accordance with the auditing plan established by the
Board of Auditors. Motonobu Kobayashi, a full-time auditor, had held
a position of executive managing director of NYK Logistics (Japan) Co.,
Ltd. while Masaaki Hashimoto, another full-time auditor, had served as
president of Yusen Air & Sea Service (Chugoku) Co., Ltd. and Yusen Air
& Sea Service (Korea) Co., Ltd. Both auditors have long accumulated
experience and knowledge of logistics business management. The two
external auditors have knowledge and understanding of management:
Makoto Satani through his long experience and performance in the oil
industry; and Setsuko Kusumoto through her experience in business
and academic elds.
At the beginning of each fiscal year, the Company's corporate
auditors hear from the accounting auditors representatives regarding
their auditing plan for the year, and at the year-end, they receive their
reports on the audit results and conrm the methods used. They also
hear from the Internal Audit Chamber regarding its auditing plan and
receive regular updates on auditing results.
The certified public accountants who execute accounting audits
of the Company are Takashi Nagata, Tomoyasu Maruyama and Kenji
Morita, all from Deloitte Touche Tohmatsu. They are assisted in their
accounting operations by three additional certied public accountants
and seven assistants.

External Directors and External Auditors


Among two external auditors, Makoto Satani is an executive consultant
of JX Nippon Oil & Energy Corporation and a councilor of Nippon Kaiji
Kyokai, while Setsuko Kusumoto is a professor at Musashi University.
The Company has no business transaction with JX Nippon Oil & Energy
Corporation, Nippon Kaiji Kyokai and Musashi University and neither of
our two external auditors has any particular interest in the Company.
External Auditors attend the Board of Directors and the Board of
Corporate Auditors and contribute to the meetings from an independent
perspective and with insights and views accumulated from a great deal
of experience. The Company believes that the Board of Directors is
ensured to make objective and neutral decisions by reecting views of
External Auditors in its auditing and using their independent external
perspectives in managing the Company.
While the Company has not appointed an External Director for this
year, the monitoring capability toward the Board of Directors, which is
a management decision-making body and has a function of authority
and direction regarding execution of duties of Directors and Executive
Ofcers, has been enhanced by having two external auditors among the
four auditors. The current structure ensures the function of external
objective and neutral management surveillance, which the Company
believes is an important element of corporate governance.

(1) Details of Remuneration

Amount paid
(Millions of Yen)

Category

Remuneration Paid to Audit Certication Services, etc.


Fiscal 2009

Types of remuneration (Millions of Yen)


Basic salary

Number of recipients

Retirement
benefits

Bonus

Directors (excl.
external directors)

225

160

21

44

10

Auditors (excl.
external auditors)

38

31

External directors
and auditors

15

10

278

201

21

56

16

Total

Fiscal 2010

Payments for
audit certification
services
(Millions of Yen)

Payments for
non-audit
services
(Millions of Yen)

Payments for
audit certification
services
(Millions of Yen)

Payments for
non-audit
services
(Millions of Yen)

The Company

56

65

Consolidated
subsidiaries

60

69

Category

Total

(2) Total amount of consolidated remuneration for directors with


remuneration of 100 million and more: Not applicable.
(3) Signicant employee compensation for employee-directors:
Not applicable
(4) The amount of remuneration, bonuses and any other proprietary
benets to be granted to Directors by the Company in consideration
of their performance of duty (hereinafter referred to as
remuneration) shall be determined by a resolution of a General
Meeting of Shareholders, according to the Articles of Incorporation.
The total amount of Directors remuneration is limited to 300
million per year according to the resolution passed at the 53rd
General Meeting of Shareholders held on June 28, 2007.
The total amount of Auditors remuneration is limited to 80
million per year according to the resolution passed at the 53rd
General Meeting of Shareholders held on June 28, 2007.

(Fiscal 2010) Thirteen consolidated subsidiaries of the Company have


paid 107 million for audit certification services and
33 million for non-audit services to Deloitte Touche
Tohmatsu member firms, which belong to the same
network as the certied public accountants that conduct
audits for the Company.

Number of Directors
The number of directors of the Company is stipulated at 20 or less,
according to the Articles of Incorporation.

Non-Audit Services Provided by Certied Public Accountants, etc. to the


Company
(Fiscal 2009) Not applicable.

Requirements for Resolutions Concerning the Election of Directors


Resolutions to appoint directors must be approved by a majority of
the votes represented by shareholders at meetings in which at least
one-third of the shareholders eligible to exercise voting rights are in
attendance. According to the Articles of Incorporation, no cumulative
voting shall be allowed for the election of directors.

(Fiscal 2010) Not applicable.

Other Important Details on Remuneration


(Fiscal 2009) Thirteen consolidated subsidiaries of the Company
have paid 83 million for audit certication services and
17 million for non-audit services to Deloitte Touche
Tohmatsu member firms, which belong to the same
network as the certied public accountants that conduct
audits for the Company.

Policy on Determining Audit Remuneration


There is no specific policy. Remuneration is determined according
to the days spent on the audit, the size or the Company and the
characteristics of its activities and other factors.

General Meeting of Shareholders


(As of June 30, 2011)

Appointment, dismissal

Appointment, dismissal
Reports

Board of Directors*

Establishment, dissolution

Seven directors
(make business decisions)

Audits

Reports

Compliance
Committee

Appointment,
dismissal

Four auditors, two of whom are


external auditors

Reports

Direction, supervision

Reports

Instructions

Audits

19 executive officers
(execute operations)
Instructions

Accounting
Auditor

Audits

Board of Executive Officers

Instructions

Cooperation

Representative
Directors
Reports

Reports

Opinion
exchange

Board of Corporate Auditors

Appointment,
dismissal, supervision

Personal
Information
Protection
Committee

Appointment, dismissal

Reports

Cooperation

Internal Audit Chamber


(internal auditing department)

Direction, supervision

Audits

Head Office Organization (departments and chamber) Overseas Representative Organization


Instructions

Branch Organization (sales division, branches)

Yusen Logistics Annual Report 2011

Board of Directors, Corporate Auditors and Executive Ofcers

Board of Directors
Shunichi
Yano

Hiromitsu
Kuramoto

Chairman

President

*Representative Director

*Representative Director

Masahiko
Fukatsu

Masahiro
Omori

Hiroyuki
Yasukawa

Kazuo
Kato

Shoji
Murakami

Director,
Senior Managing
Executive Ofcer

Director,
Managing
Executive Ofcer

Director,
Managing
Executive Ofcer

Director,
Managing
Executive Ofcer

Director,
Managing
Executive Ofcer

Motonobu
Kobayashi

Masaaki
Hashimoto

Makoto
Satani

Setsuko
Kusumoto

Auditor

Auditor

External Auditor

External Auditor

Shotaro
Omura

Takashi
Isobe

Kunio
Fujii

Tatsuo
Aoyagi

Toshio
Maekawa

Managing
Executive Ofcer

Executive Ofcer

Executive Ofcer

Executive Ofcer

Executive Ofcer

Kenichi
Kotoku

Toshiyuki
Kimura

Tatsuhiko
Saeki

Eiichi
Suzuki

Taiji
Kitagawa

Executive Ofcer

Executive Ofcer

Executive Ofcer

Executive Ofcer

Executive Ofcer

Akio
Futami

Kazuo
Ishizuka

Hiroyuki
Okamoto

Executive Ofcer

Executive Ofcer

Executive Ofcer

Corporate Auditors

Executive Ofcers

10

Yusen Logistics Annual Report 2011

FINANCIAL SECTION

Financial Section Contents


Consolidated Six-Year Summary

12

Managements Discussion and Analysis

13

Consolidated Balance Sheets

18

Consolidated Statements of Income

20

Consolidated Statement of Comprehensive Income

20

Consolidated Statements of Changes in Equity

21

Consolidated Statements of Cash Flows

22

Notes to Consolidated Financial Statements

23

Independent Auditors Report

39

Corporate History

40

Shareholders Information

41

Consolidated Six-Year Summary


Yusen Logistics Co., Ltd. and Consolidated Subsidiaries
Years Ended March 31
Millions of Yen

Results of Operations

2011

2010

2009

2008

2007

2006

160,788

123,453

167,460

187,518

182,617

168,454

Cost of sales

124,514

92,127

128,663

141,736

138,278

127,321

Gross prot

36,274

31,326

38,797

45,782

44,339

41,133

Selling, general and administrative expenses

31,327

29,016

34,223

35,566

33,901

30,698

4,947

2,310

4,574

10,216

10,438

10,435

Net sales

Operating income
Income before income taxes and minority interests

5,887

3,004

2,859

12,178

11,514

11,197

Net income

3,621

1,545

1,083

7,271

6,722

7,006

Sales by Geographical Segments


Japan

77,635

61,227

72,337

87,355

82,757

86,517

Americas

13,471

10,782

16,696

17,758

17,364

16,813

Europe

15,022

11,888

20,564

21,417

19,236

15,674

East Asia

31,705

22,315

33,079

35,185

39,080

34,192

South Asia and Oceania

25,742

19,332

26,958

28,520

26,915

17,786

2,787

2,091

2,174

2,717

2,735

2,528

160,788

123,453

167,460

187,518

182,617

168,454

2.26

2.21

2.57

2.38

2.46

2.16

60,883

52,690

47,245

66,558

58,300

54,883

Current liabilities

22,538

21,462

17,193

32,716

29,175

31,243

Equity (Note 1)

53,164

51,668

49,501

57,725

51,191

44,138

Total equity (Note 2)

55,360

53,663

51,249

59,614

52,551

Total assets

88,363

81,443

75,733

98,366

89,567

85,613

Inter-segment sales/transfers
Net sales
Consolidated to non-consolidated ratio (times)

Financial Position
Current assets

Net cash provided by operating activities

5,675

840

8,213

8,127

9,048

6,755

Free cash ows (Note 3)

6,970

(796)

4,394

5,255

6,139

4,859
Yen

Per Share Data


Basic net income (Note 4)

85.85

36.63

25.68

172.43

159.46

327.48

Cash dividends (full year) (Note 4)

18.00

16.00

18.00

20.00

15.00

30.00

1,260.69

1,225.21

1,173.84

1,368.84

1,213.90

2,090.18

Net assets (Note 4)

Key Ratios
Gross prot to net sales

22.6

25.4

23.2

24.4

24.3

3.1

1.9

2.7

5.4

5.7

6.2

Cost of sales to net sales

77.4

74.6

76.8

75.6

75.7

75.6

Selling, general and administrative expenses to net sales

18.2

Operating income to net sales

24.4

19.5

23.5

20.4

19.0

18.6

Net income to net sales

2.3

1.3

0.6

3.9

3.7

4.2

Return on equity (ROE)

6.9

3.1

2.0

13.4

14.1

17.5

Net income to total assets

4.3

2.0

1.2

7.7

7.7

8.7

Asset turnover (times)

1.9

1.6

1.9

2.0

2.1

2.1

60.2

63.4

65.4

58.7

57.2

51.6

42,220,800

42,220,800

42,220,800

42,220,800

42,220,800

21,110,400

Equity ratio (Note 4)

Other Year-End Data


Number of shares outstanding (Note 4)

Notes: 1. Equity (53,164 million at 2011) = total equity - minority interests.


2. From the scal year ended March 31, 2007, total equity includes minority interests in accordance with the enforcement of Japans Corporate Law.
3. Net cash provided by operating activities + net cash used in investing activities
4. These gures do not include any adjustments for the execution of a 2-for-1 stock split in April 2006.
5. The above gures included treasury stock of 50,484 shares in 2007, 50,236 shares in 2008, 50,212 shares in 2009, 50,296 shares in 2010 and 50,734 shares in 2011. On April 1, 2006, the Company
executed a 2-for-1 stock split.

12

Yusen Logistics Annual Report 2011

Managements Discussion and Analysis

As of March 31, 2011, the Yusen Logistics Group comprised Yusen


Logistics Co., Ltd. (the Company), Nippon Yusen Kabushiki Kaisha
(parent company), 35 consolidated subsidiaries and ve equity-method
afliates. The Groups major business activities are the cargo business
and the travel business. As of April 1, 2011, Yusen Air & Sea Service
(U.S.A.) Inc. changed its name to Yusen Logistics (Americas) Inc., Yusen
Air & Sea Service (Europe) B.V. changed to Yusen Logistics (Europe)
B.V., Yusen Air & Sea Service (H.K.) Ltd. changed to Yusen Logistics
(Hong Kong) Limited and Yusen Air & Sea Service (Singapore) Pte. Ltd.
changed to Yusen Logistics (Singapore) Pte. Ltd.

Overview
During the fiscal year under review, the world economy recovered
gradually, thanks to economic stimulus measures implemented
by many countries, but the growth has slowed down since the third
quarter (October to December, 2010.) The U.S. saw some bright spots
in consumer spending but little improvement in employment or the
housing market, while Europe in aggregate continued to grow slowly
due to austere fiscal policies that were implemented to deal with
nancial problems. In contrast, China maintained high economic growth
rates, while Vietnam, India and other Asian countries grew steadily,
supported by robust growth in domestic demand.
Japans economy was supported by external demand from Asian
economic growth and turned from a sluggish stage to a recovery stage
by the third quarter. However, the Great East Japan Earthquake of
March 11, 2011 affected Japans economic activities signicantly.
Against this backdrop, the global air freight market generally
recovered steadily despite some differences between region. In Asia,
particularly in fast-growing China, the freight movements of electronic
and automotive components were favorable and contributed to an
increase in freight volumes handled by the Yusen Logistics Group
(hereafter referred to as the YLK Group or the Group). On the other
hand, freight movements have been slow in Japan since the third
quarter, partly due to the appreciation of the yen.
In fiscal 2010, net sales increased by 30.2% year-on-year to
160,788 million (US$1,934 million). Operating income was 114.1%
higher at 4,947 million (US$59 million), while net income increased by
134.4% to 3,621 million (US$44 million).

Net Sales (Left)


Gross Profit Ratio (Right)
Operating Income Ratio (Right)

Cost of Sales (Left)


Cost of Sales Ratio (Right)

Geographical Segment Information


(Figures include inter-segment transactions)

Japan
The Japan segment, including domestic consolidated subsidiaries,
recorded sales of 77,635 million (US$934 million; up 26.8% year-onyear) and segment prot of 333 million (US$4 million; down 64.7% yearon-year.)
Air freight exports, a growth was seen in handling of office
equipment-related freight to Europe and construction machinery-related
freight to Asia at the beginning of the fiscal year under review, but
freight to Europe and the U.S. slowed down in the second quarter due to
the sharp appreciation of the yen and completion of inventory rebuilding
in overseas markets. In the fourth quarter, handling of automotive
components began to recover but did not make a full-edged recovery
as the Great East Japan Earthquake caused a temporary setback in
freight movements in March. As a result, freight volumes handled during
the year under review increased by only 4.3% year-on-year.
Regarding air freight imports, handling of semiconductor-related
products and apparel products from Asia has slowed down since the
third quarter, but handling of medical equipment-related products from
Americas was steady and that of Beaujolais Nouveau from Europe was
robust. As a result, the number of shipments handled during the year
under review increased by 5.8% year-on-year.
The Company's ocean freight forwarding business handled exports
of precision equipment and imports of large medical equipment. In
addition, it completed business integration with NYK Logistics (Japan)
Co., Ltd. and established a new business structure. The volume of ocean
freight exports handled increased from the previous year.
In the travel services segment, demand for corporate business travel
gradually recovered and cruise sales posted a steady performance.
During the scal year under review, the Group generated expenses
that were related to a relocation of the head office and integration of
domestic and overseas logistics businesses of Nippon Yusen Kabushiki
Kaisha.

Americas
The Americas segment recorded sales of 13,471 million (US$162
million; up 24.9% year-on-year) and segment prot of 749 million (US$9
million; compared to a 5 million operating loss in the previous year) .

Selling, general and


administrative expenses (Left)
Selling, general and
administrative expenses Ratio (Right)

Net Income (Left)


Basic net Income per Share (Right)

(Billions of Yen)

(%)

(Billions of Yen)

(%)

(Billions of Yen)

(%)

(Billions of Yen)

(Yen)

200

40

200

100

40

40

400

150

30

150

75

30

30

300

100

20

100

50

20

20

200

50

10

50

25

10

10

100

2007

2008

2009

2010 2011

2007

2008

2009

2010

2011

2007

2008

2009

2010

2011

2007

2008

2009

2010

2011

Yusen Logistics Annual Report 2011

13

While air freight exports were temporarily stagnant because of a


series of airport closures caused by winter storms in North America in
January 2011, air freight exports to Japan were favorable throughout
the year, particularly the handling of automotive components,
semiconductor-related products, spot shipments of wine, and urgent
shipments of medical equipment-related products. As a result, freight
volumes handled during the year increased by 40.3% year-on-year.
Among air freight imports, handling of electronic components,
automotive components, PC-related products as well as at-screen TV
sets related has been steady. However, air freight imports showed signs
of sluggishness, similar to air freight exports, and resulted in growth of
14.0% year-on-year in the number of shipments handled.
In the case of ocean freight exports, strong growth was recorded,
thanks to favorable freight volumes of automotive components as well
as steady freight volumes of frozen meat to Japan.
Ocean freight imports were also rm for automotive components,
similar to ocean freight exports.

Europe
The Europe segment recorded sales of 15,022 million (US$181 million;
up 26.4% year-on-year) and segment profit of 527 million (US$6
million; compared to a 472 million operating loss in the previous year).
In air freight exports, shipments were steady for automotive
components to Asia and medical equipment and pharmaceuticals,
while handling of solar panels in the environmental and energy area,
the industry in which the YLK Group is making strong sales efforts, was
favorable. In January, we handled chocolate from Belgium to Japan,
thanks to its seasonal demand. As a result, freight volumes handled
during the year increased by 67.3% year-on-year.
In air freight imports, handling of ofce equipment related products
and electronic components continued to be strong. Although the volume
handled decreased in the fourth quarter, as a reaction following the
December peak season, the number of shipments handled for the year
grew by 27.5% year-on-year.
Ocean freight exports, shipments were far exceeded those of the
previous year, thanks to steady handling of automotive components as
well as favorable handling of apparel products to Asia.
In ocean freight imports, handling of motorcycle-related products
from Asia and electronic equipment was rm.

Net Sales
by Geographic Region (%)
Japan
Americas
Europe
East Asia
South Asia &
Oceania

East Asia
The East Asia segment recorded sales of 31,705 million (US$381
million; up 42.1% year-on-year) and segment profit of 2,001 million
(US$24 million; up 207.6% year-on-year.)
With regard to air freight exports, we did not experience a peak
freight shipment, which we normally do in the third quarter, and the
freight movements in the fourth quarter were sluggish, partly due to an
impact of the Chinese New Year holidays. Handling of major products,
namely, PC-related products or digital home appliances, was subdued,
despite rush demand prior to Chinese New Year holidays and some
urgent spot shipments. As a result, freight volumes handled during the
year under review increased by 27.2% year-on-year.
Air freight imports, thanks to steady handling of digital home
appliances, PC- and semiconductor-related products as well as
electronic and automotive components from the Asian region, the
number of shipments handled during the year increased by 16.9% yearon-year.
In the ocean freight exports, handling of game equipment bound
for China and motorcycle-related products for Europe and the U.S. was
steady.
Regarding ocean freight imports, handling of game equipment, just
as for exports, and glass substrates for at-screen TVs was strong.
Steady prots were ensured as we did not see a big swing in freight
rates from airline companies, because of lack of a peak in seasonal
demand which we normally see prior to the Christmas season in the U.S.
and Europe.

South Asia and Oceania


The South Asia and Oceania segment recorded sales of 25,742 million
(US$310 million; up 33.2% year-on-year) and segment prot of 1,352
million (US$16 million; up 12.8% year-on-year).
Air freight exports, handling of automotive components to Thailand,
China and Japan, and electronic components within the Asian region
has been steady throughout the year. Despite a setback in freight
movements in the fourth quarter partly due to inuence of the Chinese
New Year holidays, freight volumes handled during the year increased
by 32.5% year-on-year.
Air freight imports, handling of automotive components was steady
throughout the year, despite a slowdown in shipment movements

Japan

Americas

Europe

Total Sales (Left)


Profit (Right)

Total Sales (Left)


Profit (Loss) (Right)

(Billions of Yen)

(Billions of Yen)

(Billions of Yen)

Total Sales (Left)


Profit (Loss) (Right)

15.7%

47.5%

19.4%

100

30

30

75

20

20

50

10

10

25

-10

9.2%
8.2%

Note: Percentages include inter-segment sales/


transfers.

14

Yusen Logistics Annual Report 2011

0
2007

2008

2009

2010

2011

-1
2007

2008

2009

2010

2011

-10

-1
2007

2008

2009

2010

2011

caused by a decrease in material imports that was in turn triggered by


electronic component production adjustment from the third quarter. As
a result, the number of shipment handled during the year increased by
16.1% year-on-year.
Ocean freight exports, freight volumes were increased, due to
steady handling of automotive components to the U.S. and Japan. The
ocean freight imports, shipments were also favorable, supported by
handling of automotive components, similar to ocean freight exports,
and handling of plant equipment and devices. In Australia, we handled
imports of construction equipment from the U.S. to the areas damaged
by the oods in Queensland.

Financial Position
As of March 31, 2011, total assets amounted to 88,363 million (US$1,063
million), up 6,920 million or 8.5% year-on-year. While total property,
plant and equipment and other current assets decreased by 1,050
million and 1,736 million respectively from a year ago, cash and time
deposits increased by 8,712 million and trade notes and accounts
receivable by 1,162 million.
Total liabilities were 33,003 million (US$397 million), up 5,223
million or 18.8% year-on-year. Major factors include a 4,472 million
increase in long-term debts and a 807 million increase in trade notes
and accounts payable, which more than offset a decrease of 1,028
million in current portion of long-term debt.
Total equity amounted to 55,360 million (US$666 million), mainly
due to an increase in retained earnings and a decrease in foreign
currency translation adjustments. The equity ratio was 60.2%.

Cash Flows
Cash and cash equivalents as of March 31, 2011 increased by 8,349
million or 49.9% from a year ago, to 25,089 million (US$302 million).
Net cash provided by operating, investing and financing activities
amounted to 5,675 million, 1,295 million and 2,566 million
respectively.
Net cash provided by operating activities increased by 4,835
million or up 575.6% from the previous year to 5,675 million (US$68
million). The main contribution to this was 5,887 million of income

East Asia

South Asia and Oceania

Total Sales (Left)


Profit (Right)

before income taxes and minority interests, together with depreciation


and amortization of 1,780 million and an increase in trade notes and
accounts payable of 1,302 million, while an increase in trade notes and
accounts receivable of 1,978 million and income tax payment of 1,560
million reduced cash.
Net cash provided by investing activities totaled 1,295 million
(US$16 million), up 2,931 million from the previous year when net
cash used in investing activities amounted to 1,636 million. Proceeds
from withdrawal of time deposits exceeded payments into time deposits
by 721 million and the amount of collections of loans receivable was
1,761 million more than the amount of lending of loans receivable,
while 1,182 million was used to purchase of property, plant and
equipment.
Net cash provided by financing activities totaled 2,566 million
(US$31 million), up 3,933 million from the previous year when net cash
used in nancing activities amounted to 1,367 million. This was mainly
attributable to proceeds from long-term loans payable of 4,500 million
which far exceeded expenditures of 1,000 million for repayment of
long-term debt and an outow of 715 million for cash dividends paid.

Dividend Policy
The Company recognizes the return of prots to shareholders as one
of its top priorities. The Companys basic policy is to offer a stable
dividend within the limits set by business results, and to steadily raise
shareholder returns with due consideration to consolidated payout ratio
while accurately gauging the stages of future business expansion and
corporate growth.
The Company pays dividends twice a year-an interim dividend and
a year-end dividend.
The Company treats payments of year-end dividends as a matter at
the General Meeting of Shareholders, while our Articles of Incorporation
stipulate that interim dividends can be distributed to shareholders of
record as of September 30 each year pursuant to the resolution of the
Board of Directors.
Based on the above policy, the Company has decided to set the
year-end dividend for scal 2010 at 9.00 per share. This will bring the
annual dividend to 18.00 per share, including the 9.00 yen per share
interim dividend paid on December 3, 2010.

Equity Ratio

Cash Flows

Total Sales (Left)


Profit (Right)

(Billions of Yen)

(Billions of Yen)

(%)

Net Cash Provided by Operating Activities


Net Cash Used in Investing Activities
Free Cash Flows*

(Billions of Yen)

40

40

80

10

30

30

60

20

20

40

10

10

20

-5

0
2007

2008

2009

2010

2011

2007

2008

2009

2010

2011

-10
2007

2008

2009

2010

2011

2007

2008

2009

2010

2011

* Net cash provided by operating activities +


net cash used in investing activities

Yusen Logistics Annual Report 2011

15

Fiscal 2011 is a particular important year for the Company, as being


the year to complete overseas business integration and the rst year of
the new medium-term business plan. The Company will make groupwide efforts for raising its corporate value. The Company sincerely asks
our shareholders for their continued support and understanding.

Business Risk Factors


1. General Business Trends
Demand for international transportation services can be inuenced by
economic conditions of a specic country or region and, in particular,
by those of Europe and the U.S., which tend to greatly affect the status
of the world economy. Indeed, air freight forwarding services are used
predominantly for products and components intended for consumers,
such as digital home appliances and IT-related goods. Business
conditions of the importing countries could have an impact on demand
for such services.
The YLK Group seeks to build an operating structure that facilitates
stable growth, and therefore is working to boost transactions for
products, such as medical equipment, pharmaceuticals and automotive
components, which are relatively less susceptible to the changing
economic conditions.

2. Fuel Price Fluctuations


Typically, the fuel surcharge charged by airline companies in line
with short-term uctuations in fuel prices is a fee that customers are
required to pay on top of air freight. Consequently, a surcharge in and of
itself should not have a material impact on the operating results or the
nancial conditions of the YLK Group. However, the Groups protability
may be temporarily impaired if and when conditions precipitate a
sudden rise in the fuel surcharge.

3. Inherent in Global Business Expansion


The Groups business activities extend beyond Japan to other areas
of Asia, as well as Oceania, the Middle East, Europe and Americas.
Roughly half of the Groups sales activities are conducted outside of
Japan. Possible risks that could emerge as the Group works to expand
its presence globally are:
. Political and economic factors,
. Impacts of ofcial rules and regulations, such as business and
investment permits, taxation, foreign exchange control, and trade
regulations,
. Impacts from natural disasters, such as earthquakes, tsunami,
typhoons, and hurricanes,
. Social unrest prompted by such events as war, international
disputes, riots, terrorism, and strikes,
. Globally pervasive economic disruption caused by sudden uctuations
in exchange rates,
. An epidemic of a highly infectious disease with a high mortality rate,
such as a new type of inuenza.
When expanding to a new overseas location, we closely examine
local political and economic conditions as well as its culture, customs
and public health situation, and strive to eliminate as effectively as
possible whatever risks may exist. Nevertheless, unexpected events
do occur and the state of the world does change in ways that cannot
always be fully anticipated. Such developments, which include advanced
information and communications technology, increasingly borderless
economic and cultural environments, the frequency of terrorist activities
and the spread of new infectious diseases, could have a material impact
on the business results and nancial conditions of the Group.

16

Yusen Logistics Annual Report 2011

4. Computer Viruses, Hackers and Cyber-Terrorism


The Company has established a backup system for its computer lines.
We are also working to enhance backup capabilities to minimize
damage to hardware and data in the event of natural disasters, such as
earthquakes or severe storms and flooding. The Company has taken
all possible measures to prevent unauthorized access to its systems
from outside and to block infection of its systems by computer viruses.
Specically, we have installed rewalls and virus-checking software into
our mail servers and all terminals. Despite these defensive measures,
it is possible that unforeseen situations, such as the use of technology
that breaches presumed security protocols and allows a hacker to
gain entry to in-house information systems, could lead to a temporary
shutdown of system functions or facilitate unauthorized disclosure of
information. Such situation could hurt the business results and nancial
conditions of the Group.

5. Leaks of Customer Information Leading to Claims for


Damages and Tarnished Credibility
The YLK Group handles a vast amount of customer information and also
undertake customs clearance services. We thus have an obligation to
protect customer information and strive to prevent information from
leaking outside. Despite such precautions, it is possible that unforeseen
circumstance could result in an information leak. The Groups business
results could be adversely affected if, for example, such leak were to
lead to claims for damages or if the situation tarnished the Groups
reputation.

6. Exchange Rate Fluctuations


The YLK Group endeavors to minimize the impact of exchange rate
uctuations on foreign-currency-denominated receivables and payables
by utilizing forward exchange contracts, and does not take such risk
that would exert a major impact on the Groups business. However, in
preparing the Groups consolidated nancial statements, the Company
translates the financial results of overseas consolidated subsidiaries
into yen, and changes in exchange rates could affect the consolidated
business results and nancial conditions of the Group.

7. Statutory Regulations
The Company is licensed by the Ministry of Land, Infrastructure,
Transport and Tourism as a provider of type 2 freight use forwarding
services, based on Article 20 of the Freight Use Forwarding Business
Law, and conducts air and ocean freight forwarding operations the
primary business of the YLK Group. While this license has no expiration
date, if and when an event of the Company justifies suspension or
withdrawal of the business as stipulated on Article 33 of the law,
the Companys business could be partially or completely suspended
for a set period or permission to engage in such business could be
withdrawn. As of preparation of this document, the YLK Group has not
encountered any such event, but if and when such situations, including
withdrawal of permission to conduct business, may occur for whatever
reason, they could have a material impact on the Groups business
results and nancial conditions.
In addition, the YLK Group is subject to various statutory regulations
in different parts of the world. Major ones include social regulations
(such as those ensuring safety) and legal regulations associated with
transportation services. In Japan, the Company has obtained approval
and required licenses, including the aforementioned permission
to provide type 2 freight use forwarding services, from the relevant
authorities. If statutory regulations pertaining to such approval and
licenses are amended or if approval and licensing status currently held
are cancelled, the fiscal performance and financial conditions of the

Group could be adversely affected.


Approval and licenses currently held by the Company are listed
below:
Approval and Licensing Designation

Issuing Authority

Requirements for
Approval and Licensing

Validity

Type 2 freight use forwarding services

Minister for Land, Infrastructure, Transport and Tourism

Business license

Open

Air service agency business

Minister for Land, Infrastructure, Transport and Tourism

Application to operate as a business

Open

Customs brokerage services

Director-General of Customers in each jurisdictional area

Business license

Open

General cargo transportation services

Director of District Transport Bureaus in each jurisdictional area Business registration

Open

Warehousing services

Director of District Transport Bureaus in each jurisdictional area Business registration

Open

Medical devices manufacturing business:


packaging, labeling or storage category

Prefectural Governors

Business license

Sept. 26, 2010 to


Sept. 25, 2015

Retail or rental business of specially


controlled medical devices

Prefectural Governors

Business license

June 12, 2007 to


June 11, 2013

8. Relationship with the NYK Group


(1) Role of the Company within the NYK Group
As of March 31, 2011, the NYK Group consisted of Nippon Yusen
Kabushiki Kaisha (NYK), 687 consolidated subsidiaries and 112
companies accounted for by the equity method. These companies
primarily conduct integrated logistics business centered largely on
ocean transportation.
The business of the Company, one of consolidated subsidiaries
of NYK, and its Group companies, centers largely on the use of air
transportation. No other company within the NYK Group conducts
business operations using air transportation in the same manner as
the Company, which is licensed by the Ministry of Land, Infrastructure,
Transport and Tourism as a provider of type 2 freight use forwarding
services.
Moreover, the Company strives to ensure its independence as a
listed company. As such, the Company does not need prior approval
from NYK for its own decision-making.

Business transactions take place under the same conditions as general


transactions, taking market conditions into consideration.
a) Transactions with NYK
The main business relationships between the Company and NYK are
transactions in which NYK consigns the transportation of ocean cargo
to the Company. Business transactions in this scal year amounted
to 594 million.
b) Transactions with other consolidated subsidiaries of NYK
The Companys main business relationships with other companies
in the NYK Group are transactions involving ocean transportation
and related peripheral business, which are consigned to UNI-X
Corporation and 51 other companies. In this fiscal year business
transactions amounted to 7,662 million.

(2) Business relationship with NYK and its consolidated subsidiaries


(excluding the YLK Group)
The Companys main business relationships with NYK and its
consolidated subsidiaries during this fiscal year are as follows.

Yusen Logistics Annual Report 2011

17

Consolidated Balance Sheets


Yusen Logistics Co., Ltd. and Consolidated Subsidiaries
March 31, 2011 and 2010
Thousands of
U.S. Dollars (Note 1)

Millions of Yen

ASSETS

2011

2010

2011

25,089

16,740

$ 301,733

1,986

1,623

23,886

30,169

29,007

362,831

841

732

10,116

2,993

4,729

35,996

CURRENT ASSETS:
Cash and cash equivalents (Note 11)
Time deposits (Note 11)
Trade notes and accounts receivable (Note 11)
Deferred tax assets-current (Note 9)
Other current assets
Allowance for doubtful accounts
Total current assets

(195)

(141)

(2,349)

60,883

52,690

732,213

6,716

6,856

80,773

17,582

17,851

211,447

Furniture and xtures

4,368

4,255

52,530

Machinery, equipment and vehicles

1,015

1,039

12,210

54

29,686

30,003

357,014

(12,670)

(11,937)

(152,376)

17,016

18,066

204,638

823

990

9,899

2,028

1,992

24,388

Goodwill

52

12

620

Deposits

1,837

1,725

22,090

Deferred tax assetsnon-current (Note 9)

2,254

2,261

27,110

Other assets

3,470

3,707

41,733

PROPERTY, PLANT AND EQUIPMENT:


Land (Note 4)
Buildings and structures (Note 4)

Construction in progress
Total
Accumulated depreciation
Total property, plant and equipment

INVESTMENTS AND OTHER ASSETS:


Investments in securities (Notes 5 and 11)
Investments in unconsolidated subsidiaries and afliate companies

Total investments and other assets


TOTAL

18

Yusen Logistics Annual Report 2011

10,464

10,687

125,840

88,363

81,443

$1,062,691

Thousands of
U.S. Dollars (Note 1)

Millions of Yen

LIABILITIES AND EQUITY

2011

2010

2011

15,328

14,521

CURRENT LIABILITIES:
Trade notes and accounts payable (Note 11)
Current portion of long-term debt (Notes 6 and 11)

$ 184,337

35

1,063

424

Accrued income taxes (Note 11)

1,046

562

12,585

Accrued bonuses to employees

1,615

1,232

19,427

19

4,512

4,076

54,266

22,538

21,462

271,058

4,537

65

54,561

3,617

3,923

43,491

356

358

4,287

1,728

1,728

20,785

21

Deferred tax liabilities-current (Note 9)


Other current liabilities
Total current liabilities

LONG-TERM LIABILITIES:
Long-term debt (Notes 6 and 11)
Accrued pension and severance costs for:
Employees (Note 7)
Directors and corporate auditors
Provision for alleged Anti-Monopoly Act violation
Negative goodwill
Deferred tax liabilities-non-current (Note 9)
Other long-term liabilities
Total long-term liabilities

75

75

904

150

164

1,803

10,465

6,318

125,852

4,301

4,301

51,726

EQUITY (Notes 8 and 17):


Common stock, no par valueauthorized; 160,000,000 shares in 2011 and 2010,
issued; 42,220,800 shares in 2011 and 2010
Capital surplus
Retained earnings
Treasury stock-at cost; 50,734 shares in 2011 and 50,296 shares in 2010

4,812

4,812

57,866

51,375

47,691

617,855

(69)

(68)

(828)

Accumulated other comprehensive income


Unrealized gain on available-for-sale securities

142

160

1,707

Foreign currency translation adjustments

(7,397)

(5,228)

(88,957)

Total

53,164

51,668

639,369

2,196

1,995

26,412

Minority interests in consolidated subsidiaries


Total equity
TOTAL

55,360

53,663

665,781

88,363

81,443

$1,062,691

See notes to consolidated nancial statements.

Yusen Logistics Annual Report 2011

19

Consolidated Statements of Income


Yusen Logistics Co., Ltd. and Consolidated Subsidiaries
Years Ended March 31, 2011 and 2010
Thousands of
U.S. Dollars (Note 1)

Millions of Yen

NET SALES

2011
160,788

2010
123,453

2011
$1,933,716

124,514
36,274

92,127
31,326

1,497,460
436,256

31,327
4,947

29,016
2,310

376,757
59,499

COST OF SALES
Gross prot
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Note 14)
Operating income
OTHER INCOME (EXPENSES):
Interest and dividend income
Interest expense
Foreign currency exchange gain-net
Equity in earnings of unconsolidated subsidiaries and afliate companies
Amortization of negative goodwill (Note 16)
Loss on impairment of xed assets (Note 4)
Loss on revaluation of investments in securities
Loss on adoption of accounting standard for asset retirement obligations
Others-net
Other income (expense)-net
INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS

144
(20)
570
304
3
(66)
(155)
(11)
171
940
5,887

164
(31)
528
221
3
(229)
(19)
57
694
3,004

1,739
(241)
6,845
3,659
36
(797)
(1,868)
(137)
2,066
11,303
70,802

INCOME TAXES (Note 9):


Current
Deferred
Total income taxes

1,968
(140)
1,828

1,100
(6)
1,094

23,672
(1,682)
21,990

NET INCOME BEFORE MINORITY INTERESTS

4,059

1,910

48,812

438

365

3,621

1,545

MINORITY INTERESTS IN NET INCOME OF CONSOLIDATED SUBSIDIARIES


NET INCOME

Yen

PER SHARE:
Basic net income per share (Note 17)
Cash dividends

85.85
18.00

5,270
$

43,542

U.S. Dollars

36.63
16.00

$1.032
0.216

See notes to consolidated nancial statements.

Consolidated Statement of Comprehensive Income


Yusen Logistics Co., Ltd. and Consolidated Subsidiaries
Years Ended March 31, 2011
Millions of Yen

NET INCOME BEFORE MINORITY INTERESTS

2011
4,059

Thousands of
U.S. Dollars (Note 1)

2011
$ 48,812

OTHER COMPREHENSIVE INCOME (Note 15):


Unrealized gain (loss) on available-for-sale securities
Foreign currency translation adjustments
Share of other comprehensive income in associates

(18)

(217)

(2,233)

(26,852)

(59)

(710)

Total other comprehensive income

(2,310)

(27,779)

COMPREHENSIVE INCOME (Note 15)

1,749

$ 21,033

1,437

$ 17,278

312

3,755

TOTAL COMPREHENSIVE INCOME ATTRITUTABLE TO (Note 15):


Owners of the parent
Minority interests
See notes to consolidated nancial statements.

20

Yusen Logistics Annual Report 2011

Consolidated Statements of Changes in Equity


Yusen Logistics Co., Ltd. and Consolidated Subsidiaries
Years Ended March 31, 2011 and 2010

Thousands

Millions of Yen
Accumulated other
comprehensive income

Outstanding
Number of
Shares of
Common
Stock

BALANCE, APRIL 1, 2009

Common
Stock

Capital
Surplus

Retained
Earnings

Treasury
Stock

Unrealized
Foreign
Gain (Loss) on
Currency
AvailableTranslation
for-sale
Adjustments
Securities

Minority
Interests in
Consolidated
Subsidiaries

Total

Total
Equity

42,171

4,301

4,812

46,668

(68)

(6,214)

49,501

1,748

51,249

Net income for the year ended March 31,


2010

1,545

1,545

1,545

Cash dividends (16.0 per share)

(675)

(675)

(675)

Purchase of treasury stock

(0)

(0)

(0)

(0)

Disposal of treasury stock

(0)

Adjustment of retained earnings due to


recognition of unrecognized actuarial
differences by a foreign consolidated
subsidiary

59

59

59

Adjustment of retained earnings for newly


consolidated subsidiaries

94

94

94

Net change in the year

158

986

1,144

247

1,391

42,171

4,301

4,812

47,691

(68)

160

(5,228)

51,668

1,995

53,663

Adjustments due to change in the scal


period of consolidated subsidiaries

563

563

563

Net income for the year ended March 31,


2011

3,621

3,621

3,621

BALANCE, MARCH 31, 2010

Cash dividends (17.0 per share)

(716)

(716)

(716)

Purchase of treasury stock

(1)

(1)

(1)

(1)

Adjustment of retained earnings due to


recognition of unrecognized actuarial
differences by a foreign consolidated
subsidiary

216

216

216

(18)

(2,169)

(2,187)

201

(1,986)

42,170

4,301

4,812

51,375

(69)

142

(7,397)

53,164

2,196

55,360

Net change in the year


BALANCE, MARCH 31, 2011

Thousands of U.S. Dollars (Note 1)


Accumulated other
comprehensive income
Common
Stock

BALANCE, MARCH 31, 2010

Capital
Surplus

Retained
Earnings

Treasury
Stock

Unrealized
Foreign
Gain (Loss) on
Currency
Available-forTranslation
sale
Adjustments
Securities

Minority
Interests in
Consolidated
Subsidiaries

Total

Total
Equity

$51,726

$57,866

$573,555

$(821)

$1,924

$(62,870)

$621,380

$23,998

$645,378

Adjustments due to change in the scal period of


consolidated subsidiaries

6,774

6,774

6,774

Net income for the year ended March 31, 2011

43,542

43,542

43,542

Cash dividends ($0.204 per share)

(8,622)

(8,622)

(8,622)

Purchase of treasury stock

(6)

(6)

(6)

Adjustment of retained earnings due to recognition


of unrecognized actuarial differences by a foreign
consolidated subsidiary

2,605

2,605

2,605

Net change in the year


BALANCE, MARCH 31, 2011

(217)

(26,087)

(26,304)

2,414

(23,890)

$51,726

$57,866

$617,855

$(828)

$1,707

$(88,957)

$639,369

$26,412

$665,781

See notes to consolidated nancial statements.

Yusen Logistics Annual Report 2011

21

Consolidated Statements of Cash Flows


Yusen Logistics Co., Ltd. and Consolidated Subsidiaries
Years Ended March 31, 2011 and 2010
Thousands of
U.S. Dollars (Note 1)

Millions of Yen

OPERATING ACTIVITIES:
Income before income taxes and minority interests
Adjustment for:
Depreciation and amortization
Amortization of goodwill
Increase (decrease) in accrued pension and severance costs
Interest and dividend income
Interest expense
Loss (gain) on foreign currency exchange, net
Equity in earnings of unconsolidated subsidiaries and affiliate companies
Decrease (increase) in trade notes and accounts receivable
Increase (decrease) in trade notes and accounts payable
Loss on sale of property, plant and equipment, net
Loss on impairment of fixed assets
Loss (gain) on sale of investments in securities
Loss on revaluation of investments in securities
Loss on write-down of golf club membership
Loss (gain) on sales of membership
Increase (decrease) in allowance for doubtful accounts
Loss on adoption of accounting standard for asset retirement obligations
Other-net
Total
Interest and dividend received
Interest paid
Fine for alleged Anti-Monopoly Act violation paid
Income taxes paid
Net cash provided by operating activities
INVESTING ACTIVITIES:
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment
Proceeds from sale of property, plant and equipment
Purchase of investments in securities
Proceeds from sale of investments in securities
Proceeds from sales of membership
Increase in investments in unconsolidated subsidiaries and affiliate company
Lending of loans receivable
Collection of loans receivable
Payments for transfer of business
Other-net
Net cash used in investing activities
FINANCING ACTIVITIES:
Short-term bank loans, net
Proceeds from long-term loans payable
Repayment of long-term debt
Repayment of obligations under finance lease
Cash dividends paid
Cash dividends paid to minority shareholders
Other-net
Net cash used in financing activities
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS ON CASH AND CASH EQUIVALENTS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS OF NEWLY CONSOLIDATED SUBSIDIARIES,
BEGINNING OF YEAR
INCREASE (DECREASE) IN BEGINNING BALANCE OF CASH AND CASH EQUIVALENTS
DUE TO CHANGES IN FISCAL PERIODS OF CONSOLIDATED SUBSIDIARIES
CASH AND CASH EQUIVALENTS, END OF YEAR
See notes to consolidated nancial statements.

22

Yusen Logistics Annual Report 2011

2011

2010

2011

5,887

3,004

$ 70,802

1,780
16
72
(145)
20
(17)
(304)
(1,978)
1,302
6
66
(35)
155
3
(5)
(85)
11
366
7,115
149
(29)
(1,560)
5,675

1,743
6
81
(164)
31
(7)
(221)
(5,260)
3,258
13
229
67
19
13
21
450
3,283
177
(49)
(1,728)
(843)
840

21,409
192
868
(1,739)
241
(210)
(3,659)
(23,789)
15,658
68
797
(423)
1,868
36
(56)
(1,020)
137
4,394
85,574
1,788
(354)
(18,760)
68,248

(2,375)
3,096
(1,182)
22
(12)
74
6
(6,204)
7,965
(143)
48
1,295

(3,018)
2,130
(986)
399
(18)
42
(55)
(9,511)
9,241
140
(1,636)

(28,567)
37,238
(14,211)
266
(150)
894
70
(74,616)
95,795
(1,719)
573
15,573

(45)
4,500
(1,000)
(53)
(715)
(120)
(1)
2,566
(1,123)
8,413
16,740

(3)
(500)
(82)
(674)
(108)
(0)
(1,367)
565
(1,598)
18,196

(540)
54,119
(12,026)
(640)
(8,603)
(1,443)
(7)
30,860
(13,505)
101,177
201,326

142

(64)

(770)

25,089

16,740

$301,733

Notes to Consolidated Financial Statements


Yusen Logistics Co., Ltd. and Consolidated Subsidiaries
Years Ended March 31, 2011 and 2010

1. BASIS OF PRESENTING CONSOLIDATED FINANCIAL STATEMENTS


The accompanying consolidated financial statements have been prepared in
accordance with the provisions set forth in the Japanese Companies Act and
Financial Instruments and Exchange Act and their related accounting regulations
and in conformity with accounting principles generally accepted in Japan
("Japanese GAAP"), which are different in certain respects as to application and
disclosure requirements of International Financial Reporting Standards.
Under Japanese GAAP, a consolidated statement of comprehensive income
is required from the fiscal year ended March 31, 2011 and has been presented
herein. Accordingly, accumulated other comprehensive income is presented in the
consolidated balance sheets and the consolidated statements of changes in equity.
Information with respect to other comprehensive income for the year ended March
31, 2010 is disclosed in Note 15. In addition, net income before minority interests
is disclosed in the consolidated statement of income from the year ended March
31, 2011.

In preparing these consolidated nancial statements, certain reclassications


and rearrangements have been made to the consolidated financial statements
issued domestically in order to present them in a form which is more familiar to
readers outside Japan. In addition, certain reclassications have been made in the
2010 nancial statements to conform to the classications used in 2011.
The consolidated financial statements are stated in Japanese yen, the
currency of the country in which Yusen Logistics Co., Ltd. (the "Company") is
incorporated and operates. The translations of Japanese yen amounts into U.S.
dollar amounts are included solely for the convenience of readers outside Japan
and have been made at the rate of 83.15 to $1, the approximate rate of exchange
at March 31, 2011. Such translations should not be construed as representations
that the Japanese yen amounts could be converted into U.S. dollars at that or any
other rate.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


a. Consolidation
The consolidated nancial statements as of March 31, 2011 include the accounts of the Company and its 35 signicant (35 in 2010) subsidiaries (together, the "Group")
listed below:

Consolidated Subsidiaries

Equity
Ownership
Percentage*1

Capital Stock*1

Yusen Logistics (Americas) Inc.*13 *14

100.00%

US$

14,000 thousand

Yusen Logistics (Hong Kong) Limited*13 *14

100.00

HK$

55,000 thousand

Yusen Air & Sea Service (China) Ltd. *13

100.00*5

HK$

11,000 thousand

Yusen Logistics (Singapore) Pte. Ltd.*13 *14

100.00

S$

16,700 thousand

Yusen Logistics (Benelux) B.V. *13 *14

100.00*2

EUR

700 thousand

Yusen Air & Sea Service (Deutschland) GmbH.*13

100.00*2

EUR

4,000 thousand

Yusen Air & Sea Service (U.K.) Ltd.*13

100.00*2

STG

1,050 thousand

Yusen Logistics (Australia) Pty. Ltd.*13 *14

100.00*3

A$

1,500 thousand

Yusen Logistics (Canada) Inc. *13 *14

100.00

C$

5,000 thousand

Yusen Logistics (France) S.A.S.*13 *14

100.00*2

EUR

4,700 thousand

Yusen Logistics (Taiwan) Ltd.*13 *14

100.00*4

NT$

150,000 thousand

Yusen Air & Sea Service (Beijing) Co., Ltd.


Yusen Logistics (Italy) S.P.A.*13 *14
PT. Yusen Air & Sea Service Indonesia*13

75.00*10

RMB

9,312 thousand

100.00*2

EUR

774 thousand

80.00*6

US$

177 thousand

Yusen Logistics (Europe) B.V. *13 *14

100.00

EUR

18,518 thousand

Yusen Logistics (Korea) Co., Ltd.*13 *14

100.00

KRW

2,000 million

*1
*2

Yusen Shenda Air & Sea Service (Shanghai) Ltd.

50.00*9

RMB

16,457 thousand

*3

Yusen Air & Sea Service Management (Thailand) Co., Ltd.*13

49.00*7

THB

10 million

*4

Yusen Air & Sea Service (Thailand) Co., Ltd.*13

100.00*8

THB

100 million

Yusen Air & Sea Service (Vietnam) Co., Ltd.*13

49.00*7

US$

600 thousand

Yusen Air & Sea Service Philippines Inc.*13

51.00

PHP

200,000 thousand

RMB

8,009 thousand

*7
*8

100.00

*5

Yusen Air & Sea Service (India) Pvt.Ltd.

100.00

*11

INR

90 million

Yusen Keihin Trans Co., Ltd.

100.00

36 million

Yusen Logistics (Kitakanto) Co., Ltd.

100.00

50 million

Yusen Air & Sea Service (Guangdong) Ltd.

*5
*6

*9

Yusen Logistics (Tsukuba) Co., Ltd.

100.00

50 million

*10

Yusen Logistics (Shinshu) Co., Ltd.

90.00

50 million

*11

Yusen Logistics (Tohoku) Co., Ltd.

100.00

30 million

Yusen Logistics (Kyushu) Co., Ltd.

100.00

30 million

*12
*13

Yusen Logistics (Chugoku) Co., Ltd.

80.00

30 million

Yusen Logistics (Hokuriku) Co., Ltd.

100.00

20 million

Yusen Logitec Co., Ltd.

100.00

20 million

Yusen Travel Co., Ltd.

100.00

270 million

Ryowa Diamond Air Service Co., Ltd.


Yusen Loginet Co., Ltd.

99.17*12
100.00

50 million

20 million

*14

as of March 31, 2011


owned 100.00% by Yusen Logistics (Europe)
B.V.
owned 80.00% by the Company, 20.00% by
Yusen Logistics (Singapore) Pte. Ltd.
owned 60.01% by the Company, 39.99% by
Yusen Logistics (Hong Kong) Limited
owned 100.00% by Yusen Logistics (Hong
Kong) Limited
owned 10.50% by the Company, 69.50% by
Yusen Logistics (Singapore) Pte. Ltd.
owned 49.00% by Yusen Air & Sea Service
(Singapore) Pte. Ltd.
owned 51.00% by Yusen Air & Sea Service
Management (Thailand) Co., Ltd., 49.00% by
Yusen Logistics (Singapore) Pte. Ltd.
owned 50.00% by Yusen Logistics (Hong Kong)
Limited
owned 75.00% by Yusen Logistics (Hong Kong)
Limited
owned 100.00% by Yusen Logistics (Singapore)
Pte. Ltd.
owned 99.17% by Yusen Travel Co., Ltd.
These subsidiaries changed their scal year
end from December 31 to March 31 of each
year. The Company included operating results
of these subsidiaries for the 12-month period
ended March 31, 2011 in the consolidated
statements of income, and included their
operating results for the 3-month period
ended March 31, 2010 in the consolidated
statements of changes in equity representing
the effect of changes in the scal year-ends of
these consolidated subsidiaries.
These consolidated subsidiaries changed their
company names after March 31, 2011.

Yusen Logistics Annual Report 2011

23

Under the control or influence concept, those companies in which the


Company, directly or indirectly, is able to exercise control over operations are
fully consolidated, and those companies over which the Group has the ability to
exercise signicant inuences are accounted for by the equity method.
Investments in three (three in 2010) unconsolidated subsidiaries and
two (two in 2010) afliate companies are accounted for by the equity method.
Investments in the remaining unconsolidated subsidiaries and affiliate
companies are stated at cost, which is determined by the moving-average
method. If the equity method of accounting had been applied to the investments
in these companies, the effect on the accompanying consolidated financial
statements would not be material.
The excess of the cost of an acquisition over the fair value of the net assets
of the acquired subsidiary at the date of acquisition is being amortized over a
period of ve years. The goodwill resulting from the acquisition of the business of
NYK Logistics (Japan) Co., Ltd. is being amortized over a period of three years.
All significant intercompany balances and transactions have been
eliminated in consolidation. All material unrealized profit included in assets
resulting from transactions within the Group is eliminated.
b. Unication for Accounting Policies Applied to Foreign Subsidiaries for the
Consolidated Financial Statements
In May 2006, the Accounting Standards Board of Japan (the ASBJ) issued ASBJ
Practical Issues Task Force (PITF) No.18, Practical Solution on Unification
of Accounting Policies Applied to Foreign Subsidiaries for the Consolidated
Financial Statements. PITF No.18 prescribes: (1) the accounting policies
and procedures applied to a parent company and its subsidiaries for similar
transactions and events under similar circumstances should in principle
be unified for the preparation of the consolidated financial statements, (2)
financial statements prepared by foreign subsidiaries in accordance with
either International Financial Reporting Standards or the generally accepted
accounting principles in the United States of America tentatively may be used
for the consolidation process, (3) however, the following items should be
adjusted in the consolidation process so that net income is accounted for in
accordance with Japanese GAAP unless they are not material: 1) amortization
of goodwill; 2) scheduled amortization of actuarial gain or loss of pensions that
has been directly recorded in the equity; 3) expensing capitalized development
costs of R&D; 4) cancellation of the fair value model accounting for property,
plant, and equipment and investment properties and incorporation of the cost
model accounting; 5) recording the prior years' effects of changes in accounting
policies in the income statement where retrospective adjustments to nancial
statements have been incorporated; and 6) exclusion of minority interests from
net income, if contained.
c. Business Combination
In October 2003, the Business Accounting Council (the BAC) issued a Statement
of Opinion, Accounting for Business Combinations, and in December 2005,
the ASBJ issued ASBJ Statement No.7, Accounting Standard for Business
Divestitures and ASBJ Guidance No.10, Guidance for Accounting Standard for
Business Combinations and Business Divestitures. The accounting standard for
business combinations allowed companies to apply the pooling of interests method
of accounting only when certain specic criteria are met such that the business
combination is essentially regarded as a uniting-of-interests. For business
combinations that did not meet the uniting-of-interests criteria, the business
combination was considered to be an acquisition and the purchase method
of accounting was required. This standard also prescribed the accounting for
combinations of entities under common control and for joint ventures.
In December 2008, the ASBJ issued a revised accounting standard
for business combinations, ASBJ Statement No.21, Accounting Standard
for Business Combinations. Major accounting changes under the revised
accounting standard are as follows: (1) The revised standard requires
accounting for business combinations only by the purchase method. As a result,
the pooling of interests method of accounting is no longer allowed. (2) The
current accounting standard accounts for research and development costs to be
charged to income as incurred. Under the revised standard, in-process research
and development (IPR&D) acquired in the business combination is capitalized as
an intangible asset. (3) The previous accounting standard provided for a bargain
purchase gain (negative goodwill) to be systematically amortized over a period

24

Yusen Logistics Annual Report 2011

not exceeding 20 years. Under the revised standard, the acquirer recognizes
the bargain purchase gain in prot or loss immediately on the acquisition date
after reassessing and conrming that all of the assets acquired and all of the
liabilities assumed have been identied after a review of the procedures used in
the purchase allocation. This standard was applicable to business combinations
undertaken on or after April 1, 2010. The Company adopted this standard on
April 1, 2010.
d. Cash Equivalents
Cash equivalents are short-term investments that are readily convertible
into cash and that are exposed to insignicant risk of changes in value. Cash
equivalents include time deposits of which mature or become due within three
months of the date of acquisition.
e. Investments in Securities
Securities are classified into three categories, depending on management's
intent: trading, available-for-sale or held-to-maturity. The Company classies
all investments in securities as available-for-sale securities. Marketable
available-for-sale securities are reported at fair value, with unrealized
gains and losses, net of applicable taxes, reported under accumulated other
comprehensive income in a separate component of equity. Non-marketable
available-for-sale securities are stated at cost determined by the movingaverage method. For other than temporary declines in fair value, nonmarketable investment securities are reduced to net realizable value by a
charge to income.
f. Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation of property,
plant and equipment of the Company and domestic consolidated subsidiaries is
computed substantially by the declining-balance method at rates based on the
estimated useful lives of the assets, except for the buildings and structures at
Toyooka distribution center, Iwata distribution center and Yusen Air Fukumoto
building which are depreciated on the straight-line method. The depreciation of
property, plant and equipment of foreign consolidated subsidiaries is generally
computed by the straight-line method over the estimated useful lives of the
assets. The range of useful lives is principally as follows:
Buildings and structures ............................3-60 years
Furniture and xtures ................................2-20 years
Machinery, equipment and vehicles...........4-6 years
g. Other Assets
Amortization of intangible assets included in other assets is computed by the
straight-line method. Software for internal use is amortized over a five-year
period.
h. Long-lived Assets
The Group reviews its long-lived assets for impairment whenever events or
changes in circumstance indicate the carrying amount of an asset or asset
group may not be recoverable. An impairment loss would be recognized
if the carrying amount of an asset or asset group exceeds the sum of the
undiscounted future cash ows expected to result from the continued use and
eventual disposition of the asset or asset group. The impairment loss would be
measured as the amount by which the carrying amount of the asset exceeds its
recoverable amount, which is the higher of the discounted cash ows from the
continued use and eventual disposition of the asset or the net selling price at
disposition.
i. Allowance for Doubtful Accounts
The Group provides an allowance for doubtful accounts based on the aggregated
amount of estimated credit losses for doubtful receivables plus an amount for
receivables other than doubtful receivables calculated using historical write off
experience over a certain period.
j. Accrued Bonuses to Employees
Employees are paid bonuses in June of every year. The bonuses include amounts
for services rendered during the previous fiscal year which are recorded as
accrued bonuses on the balance sheet as of the respective scal year-end.

k. Accrued Pension and Severance Costs


Employee's retirement and pension plansThe Company and certain domestic
consolidated subsidiaries have a non-contributory funded defined benefit
pension plan and an unfunded retirement benet plan. Certain of the Companys
domestic consolidated subsidiaries have a contributory funded defined
contribution pension plan, while certain foreign consolidated subsidiaries have
either a non-contributory funded dened benet pension plan or a contributory
funded dened contribution pension plan.
The liability for employees' retirement benets is accounted for based on
projected benet obligations and plan assets at the balance sheet date.
In July 2008, the ASBJ issued ASBJ Statement No. 19, Partial Amendments
to Accounting Standard for Retirement Benefits (Part 3), which removed the
option of using a discount rate determined by taking into consideration the
fluctuations in yield of bonds over a certain period, as provided in Note 7 of
Interpretive Note to the Accounting Standard for Retirement Benefits. The
yield of a long term safe bond on closing date should be used for the calculation
of the discount rate in this accounting standard. The Company applied the
revised accounting standard effective April 1, 2009, however, there was no effect
from this change.
Retirement allowance for directors and corporate auditorsRetirement allowance
for directors and corporate auditors for certain subsidiaries are recorded to
state the liability at the amount that would be required if all directors and
corporate auditors retired at each balance sheet date.
l. Asset Retirement Obligations
In March 2008, the ASBJ published the accounting standard for asset retirement
obligations, ASBJ Statement No.18 Accounting Standard for Asset Retirement
Obligations and ASBJ Guidance No.21 Guidance on Accounting Standard
for Asset Retirement Obligations. Under this accounting standard, an asset
retirement obligation is dened as a legal obligation imposed either by law or
contract that results from the acquisition, construction, development and the
normal operation of a tangible xed asset and is associated with the retirement
of such tangible xed asset. The asset retirement obligation is recognized as
the sum of the discounted cash ows required for the future asset retirement
and is recorded in the period in which the obligation is incurred if a reasonable
estimate can be made. If a reasonable estimate of the asset retirement
obligation cannot be made in the period the asset retirement obligation is
incurred, the liability should be recognized when a reasonable estimate of asset
retirement obligation can be made. Upon initial recognition of a liability for an
asset retirement obligation, an asset retirement cost is capitalized by increasing
the carrying amount of the related xed asset by the amount of the liability. The
asset retirement cost is subsequently allocated to expense through depreciation
over the remaining useful life of the asset. Over time, the liability is accreted
to its present value each period. Any subsequent revisions to the timing or the
amount of the original estimate of undiscounted cash ows are reected as an
increase or a decrease in the carrying amount of the liability and the capitalized
amount of the related asset retirement cost. This standard was effective for
scal years beginning on or after April 1, 2010.
The Company applied this accounting standard effective April 1, 2010.
The effect of this change was to decrease operating income by 1 million ($ 9
thousand) and income before income taxes and minority interests by 12 million
($ 147 thousand). The asset retirement obligations that the Group recognized
upon applying this standard aggregated 14 million ($ 167 thousand).
m. Provision for alleged Anti-Monopoly Act violation
On March 18, 2009 the Company received the notice of a cease-and-desist
order and a surcharge payment order from the Japan Fair Trade Commission
(the "JFTC") for violations of Article 3 of the Anti-Monopoly Act (prohibition
of unreasonable restraint of trade). In the period that followed, the Company
scrutinized, confirmed and carefully examined the JFTC orders. Determining
that it was unable to accept the orders as a result of these steps, the Company
resolved at an Extraordinary Meeting of the Board of Directors held on April 17,
2009 to le an application for the commencement of hearings with the JFTC and
received the notices of the acceptance of hearings on July 3, 2009. The hearings
were conducted twice during the current fiscal year and still continue as of

the lling date of the consolidated nancial statements. The estimated losses
arising from surcharge payment order were recorded as a provision in the
balance sheet as of March 31, 2011 and 2010.
n. Leases
In March 2007, the ASBJ issued ASBJ Statement No. 13, Accounting Standard
for Lease Transactions, which revised the previous accounting standard for
lease transactions issued in June 1993. The revised accounting standard for lease
transactions was effective for scal years beginning on or after April 1, 2008.
Under the previous accounting standard, nance leases that were deemed
to transfer ownership of the leased property to the lessee were capitalized.
However, other nance leases were permitted to be accounted for as operating
lease transactions if certain as if capitalized information was disclosed in
the note to the lessees nancial statements. The revised accounting standard
requires that all finance lease transactions be capitalized to recognize lease
assets and lease obligations in the balance sheet. In addition, the accounting
standard permits leases which existed at the transition date and do not transfer
ownership of the leased property to the lessee to continue to be accounted for
as operating lease transactions.
The Company applied the revised accounting standard effective April 1,
2008. In addition, the Company continues to account for leases which existed at
the transition date and do not transfer ownership of the leased property to the
lessee as operating lease transactions.
All other leases are accounted for as operating leases.
o. Income Taxes
The provision for income taxes is computed based on the pretax income included
in the consolidated statement of income. The asset and liability approach is
used to recognize deferred tax assets and liabilities for the expected future tax
consequences of temporary differences between the carrying amounts and the
tax bases of assets and liabilities. Deferred taxes are measured by applying
currently enacted tax laws to the temporary differences.
p. Accounting for the Consumption Tax
In Japan, the consumption tax is imposed at a at rate of 5% on all domestic
consumption of goods and services (with certain exemptions). The consumption
tax imposed on the Group's domestic sales to customers is withheld by the
Group at the time of sale and is subsequently paid to the national government.
The consumption tax withheld upon sale and the consumption tax paid by the
Group on the purchases of goods and services are not included in the related
amounts in the accompanying consolidated statements of income.
q. Appropriation of Retained Earnings
Appropriations of retained earnings are reected in the nancial statements for
the following year upon shareholders' approval.
r. Treasury Stock
Under the Japanese Companies Act, the Company is allowed to acquire its own
shares to the extent that the aggregate cost of treasury stock does not exceed
the maximum amount available for dividends. Treasury stock is stated at cost
in the equity of the accompanying consolidated balance sheets. Net gain on
disposal of treasury stock is presented under "Capital surplus'' in the equity of
the accompanying consolidated balance sheets.
s. Foreign Currency Transactions
All short-term and long-term monetary receivables and payables denominated
in foreign currencies are translated into Japanese yen at the exchange rates at
the balance sheet date. The foreign exchange gains and losses from translation
are recognized in the consolidated statement of income.
t. Foreign Currency Financial Statements
The balance sheet accounts of foreign consolidated subsidiaries, and foreign
subsidiaries accounted for by the equity method are translated into Japanese
yen at the current exchange rate as of the balance sheet date except for equity,
which is translated at historical rate. Differences arising from such translations
are shown as "Foreign currency translation adjustments" under accumulated

Yusen Logistics Annual Report 2011

25

other comprehensive income in a separate component of equity.


Revenue and expense accounts of foreign consolidated subsidiaries are
translated into Japanese yen at the average exchange rates.
u. Derivatives
The Group uses derivative nancial instruments to manage their exposures to
uctuations in foreign exchange and interest rates. Foreign exchange forward
contracts are utilized by the Group. The Group does not enter into derivatives
for trading or speculative purposes.
Derivative financial instruments and foreign currency transactions are
classified and accounted for as follows: (a) all derivatives are recognized as
either assets or liabilities and measured at fair value, and gains or losses on
derivative transactions are recognized in the consolidated statement of income
and (b) for derivatives used for hedging purposes, if derivatives qualify for hedge
accounting because of high correlation and effectiveness between the hedging
instruments and the hedged items, gains or losses on derivatives are deferred
until maturity of the hedged transactions.
The foreign exchange forward contracts employed to hedge foreign
exchange exposures in the Group's operating activities measured at the fair
value and the unrealized gains/losses are recognized in income.
v. Per Share Information
Net assets per share is computed based on the outstanding shares of common
stock at relevant balance sheet dates.
Basic net income per share is computed by dividing net income available
to shareholders by the weighted-average number of shares of common stock
outstanding for the period.
Diluted net income per share for the years ended March 31, 2011 and 2010
is not presented since the Company had no securities with dilutive effect.
Cash dividends per share presented in the accompanying consolidated
statements of income are dividends applicable to the respective years including
dividends to be paid after the end of the year.
w. New Accounting Pronouncements
Accounting Changes and Error CorrectionsIn December 2009, ASBJ issued
ASBJ Statement No. 24 Accounting Standard for Accounting Changes and Error
Corrections and ASBJ Guidance No. 24 Guidance on Accounting Standard for
Accounting Changes and Error Corrections. Accounting treatments under this
standard and guidance are as follows:
(1) Changes in Accounting Policies - When a new accounting policy is
applied with revision of accounting standards, the new policy is applied
retrospectively unless the revised accounting standards include specific
transitional provisions. When the revised accounting standards include
specific transitional provisions, an entity shall comply with the specific
transitional provisions.
(2) Changes in Presentations - When the presentation of financial statements
is changed, prior period financial statements are reclassified in accordance
with the new presentation.
(3) Changes in Accounting Estimates - A change in an accounting estimate is
accounted for in the period of the change if the change affects that period
only, and is accounted for prospectively if the change affects both the period
of the change and future periods.
(4) Corrections of Prior Period Errors - When an error in prior period financial
statements is discovered, those statements are restated.
This accounting standard and the guidance are applicable to accounting
changes and corrections of prior period errors which are made from the
beginning of the fiscal year that begins on or after April 1, 2011.

26

Yusen Logistics Annual Report 2011

3. BUSINESS COMBINATION
On October 1, 2010, the Company acquired certain of the net assets of NYK
Logistics (Japan) Co., Ltd. (NLJ) as well as NLJs operations related to
international ocean freight forwarding, related agency services, container
consolidation, and other services.
The Company and Nippon Yusen Kabushiki Kaisha (NYK LINE) have agreed
to integrate their logistics businesses with the purpose of establishing a firm
position as a world-class logistics service provider through the reorganization and
optimization of their logistics business units. This acquisition was an integration of
their domestic logistics businesses as a part of the overall integration.
The results of operations of NLJ are included in the Groups consolidated
nancial statements of income from the date of acquisition.
In accordance with the ASBJ Statement No.21, Accounting Standard for
Business Combinations and ASBJ Guidance No.10, Guidance on Accounting
Standard for Business Combinations and Accounting Standard for Business
Divestitures, this acquisition was accounted as an acquisition with cash
consideration of a business under common control.
The aggregate acquisition cost was 143 million ($ 1,719 thousand) in cash in
accordance with the Business Transfer Agreement. Goodwill of 59 million ($702
thousand) which represents the expected excess earnings power in the future
from the business integration is reported within the Japan segment. The amount
of the goodwill is net of taxes and is subject to amortization using the straightline method over a period of three years.
The proforma information giving effect as if the combination had been
completed at the beginning of the current scal year is not presented due to minor
effect on the consolidated statements of income.

4. LONG-LIVED ASSETS
The Group reviewed its long-lived assets for impairment as of the year ended
March 31, 2011 and 2010. Due to a signicant decline in market value of certain
xed assets which were planned to be disposed by sale, the Group recognized an
impairment loss of 66 million ($797 thousand) and 229 million as other expense
for the years ended March 31, 2011 and 2010 respectively. The impairment loss
of 66 million for the year ended March 31, 2011 was recorded on idle assets in
Osaka. The impairment loss for the year ended March 31, 2010 consisted of 136
million on certain land, building and structure in Aichi and 93 million on idle
assets in Osaka. The carrying amounts of the relevant assets were written down to
the recoverable amounts. The recoverable amounts of those assets planned to be
disposed by sale were measured at their net selling price determined by quotation
from a third-party vendor.

5. INVESTMENTS IN SECURITIES
The cost and aggregate fair values of the investments classied as "available-for-sale securities" at March 31, 2011 and 2010 are as follows:
(1) Available-for-sale securities for which market quotations are available:
Millions of Yen

Securities for which market value exceeds costEquity securities


Government bonds
Securities for which market value does not exceed costEquity securities
Total

Thousands of U.S. Dollars

2011

2010

2011

Cost

Fair Value
(Carrying
Amount)

Difference

Cost

Fair Value
(Carrying
Amount)

Difference

Cost

Fair Value
(Carrying
Amount)

Difference

264
41

447
42

183
1

304
59

582
60

278
1

$3,174
495

$5,372
503

$2,198
8

105
410

90
579

(15)
169

74
437

70
712

(4)
275

1,262
$4,931

1,089
$6,964

(173)
$2,033

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

2011
74
39
4

Proceeds from sale of available-for-sale securities


Total amount of gain on sale of available-for-sale securities
Total amount of loss on sale of available-for-sale securities

Thousands of U.S. Dollars

2010
41
14
81

2011
$894
472
49

(3) The impairment losses of securities for the year ended March 31, 2011 amounted to 155 million ($ 1,868 thousand) which consists of 16 million ($ 188 thousand) for
available-for-sale securities and 139 million ($ 1,680 thousand) for the securities of non-consolidated subsidiaries.
The impairment losses of securities for the year ended March 31, 2010 was 19 million, which was for available-for-sale securities.

6. SHORT-TERM BANK LOANS AND LONG-TERM DEBT


There were no short term bank loan at March 31, 2011 and 2010.
Long-term debt at March 31, 2011 and 2010 consisted of the following:
Millions of Yen

Thousands of
U.S. Dollars

2011

2010

2011

Unsecured loans from banks and other


financial institutions, due serially to
2016 with average interest rates of
0.50% (2011) and 1.08% (2010)

4,500

1,000

$54,119

Finance lease obligation


Total
Less current portion
Long-term debt, less current portion

72
4,572
(35)
4,537

128
1,128
(1,063)
65

866
54,985
(424)
$54,561

Annual maturities of long-term debt including nancial lease obligation at March


31, 2011, were as follows:
Year Ending March 31

Millions of Yen

2012
2013
2014
2015
2016 and thereafter
Total

35
18
11
2,504
2,004
4,572

Thousands of
U.S. Dollars

424
212
137
30,118
24,094
$54,985

As is customary in Japan, the Company maintains substantial deposit balances with banks with which it has borrowings. Such deposit balances are not legally or
contractually restricted as to withdrawal.
General agreements with respective banks provide, as is customary in Japan, that additional collateral must be provided under certain circumstances if requested by
such banks and that certain banks have the right to offset cash deposited with them against any long-term or short-term debt or obligation that becomes due and, in case
of default and certain other specied events, against all other debt payable to the banks. The Company has never been requested to provide any additional collateral.

7. RETIREMENT AND PENSION PLANS


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

Accrued pension and severance costs for employees at March 31, 2011 and 2010
consisted of the following:
Millions of Yen

Projected benefit obligation


Fair value of plan assets
Unrecognized actuarial gain
Prepaid pension cost
Accrued pension and severance
costs for employees

Thousands of
U.S. Dollars

2011
10,492
(6,101)
(1,037)
263

2010
10,601
(5,931)
(1,075)
328

2011
$126,184
(73,379)
(12,473)
3,159

3,617

3,923

$ 43,491

Yusen Logistics Annual Report 2011

27

The components of net periodic benet costs for the years ended March 31, 2011
and 2010 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Service cost
Interest cost
Expected return on plan assets
Amortization of unrecognized
actuarial loss
Past service cost
Total

2011
593
261
(215)

2010
608
269
(193)

2011
$7,130
3,137
(2,577)

208

259

2,500

(30)
817

0
943

(366)
$9,824

Assumptions used for the years ended March 31, 2011 and 2010 are set forth as
follows:
2011
Principally 2.0%

2010
Principally 2.0%

Principally 3.0%

Principally 3.0%

Recognition period of actuarial


gain/loss

Principally 10 years

Principally 10 years

Amortization period of prior


service cost

1 year

1 year

Discount rate
Expected rate of return on
plan assets

8. EQUITY
Japanese companies are subject to the Companies Act of Japan (the "Companies
Act"). The significant provisions in the Companies Act that affect financial and
accounting matters are summarized below:
a. Dividends
Under the Companies Act, companies can pay dividends at any time during the
scal year in addition to the year-end dividend upon resolution at the shareholders
meeting. For companies that meet certain criteria such as; (1) having the Board
of Directors, (2) having independent auditors, (3) having the Board of Corporate
Auditors, and (4) the term of service of the directors is prescribed as one year
rather than two years of normal term by its articles of incorporation, the Board of
Directors may declare dividends (except for dividends in kind) at any time during
the scal year if the company has prescribed so in its articles of incorporation.
The Company meets all the above criteria.
Semiannual interim dividends may also be paid once a year upon resolution
by the Board of Directors if the articles of incorporation of the company so
stipulate. The Companies Act provides certain limitations on the amounts
available for dividends or the purchase of treasury stock. The limitation is dened
as the amount available for distribution to the shareholders, but the amount of net
assets after dividends must be maintained at no less than 3 million.

be appropriated as a legal reserve (a component of retained earnings) or as


additional paid-in capital (a component of capital surplus) depending on the equity
account charged upon the payment of such dividends until the total of aggregate
amount of legal reserve and additional paid-in capital equals 25% of the common
stock. Under the Companies Act, the total amount of additional paid-in capital
and legal reserve may be reversed without limitation. The Companies Act also
provides that common stock, legal reserve, additional paid-in capital, other capital
surplus and retained earnings can be transferred among the accounts under
certain conditions upon resolution of the shareholders.
c. Treasury Stock and Treasury Stock Acquisition Rights
The Companies Act also provides for companies to purchase treasury stock
and dispose of such treasury stock by resolution of the Board of Directors. The
amount of treasury stock purchased cannot exceed the amount available for
distribution to the shareholders which is determined by specic formula.
Under the Companies Act, stock acquisition rights are presented as a
separate component of equity.
The Companies Act also provides that companies can purchase both treasury
stock acquisition rights and treasury stock. Such treasury stock acquisition rights
are presented as a separate component of equity or deducted directly from stock
acquisition rights.

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


The Companies Act requires that an amount equal to 10% of dividends must

9. INCOME TAXES
The Company and domestic consolidated subsidiaries are subject to Japanese national and local income taxes which, in the aggregate, resulted in a normal effective
statutory rate of approximately 40.4% for the years ended March 31, 2011 and 2010.
The tax effects of signicant temporary differences resulted in deferred tax assets and liabilities at March 31, 2011 and 2010 are as follows:
Millions of Yen

2011
Deferred tax assets:
Accrued pension and severance costs for employees
Accrued bonuses to employees
Accrued enterprise tax
Accrued pension and severance costs for directors and corporate auditors
Allowance for doubtful accounts
Depreciation
Tax loss carryforward
Loss on impairment of xed assets
Loss on revaluation of investments in securities
Loss on write-down of golf club membership
Others
Total
Less valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Depreciation
Prepaid pension expenses
Others
Total deferred tax liabilities
Net deferred tax assets

28

Yusen Logistics Annual Report 2011

Thousands of U.S. Dollars

2010

2011

1,348
665
67
138
159
366
30
473
126
131
185
3,688
(475)
3,213

1,440
526
51
144
197
339
41
446
124
138
240
3,686
(519)
3,167

$16,213
7,998
804
1,664
1,916
4,407
363
5,687
1,518
1,571
2,220
44,361
(5,711)
38,650

77
46
72
195
3,018

79
39
139
257
2,910

929
549
869
2,347
$36,303

The reconciliation of the difference between the normal effective tax rate and the actual effective tax rate reected in the accompanying consolidated statements of income
for the years ended March 31, 2011 and 2010 is as follows:
Normal effective tax rate
Adjustments:
Entertainment expenses and other non-deductible permanent differences
Dividend income not taxable
Effective of elimination of intercompany dividends received
Per capital levy of local tax
Lower income tax rates applicable to income in certain foreign countries
Valuation allowance on deferred tax
Foreign tax credits
Equity in earnings of afliated companies and unconsolidated companies
Other-net
Actual effective tax rate

2011
40.4%

2010
40.4%

2.3
(8.1)
8.5
1.0
(11.1)
0.1
(0.7)
(2.1)
0.7
31.0%

2.2
(1.6)
1.8
2.0
(7.1)
2.7
(1.4)
(3.0)
0.4
36.4%

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

lessee and whose lease inception was before March 31, 2008 to continue to
be accounted for as operating lease transactions if certain as if capitalized
information is disclosed in the note to the nancial statements. The Company
applied the ASBJ Statement No.13 effective April 1, 2008 and accounted for such
leases as operating lease transactions. Pro forma information of leased property
whose lease inception was before March 31, 2008 was as follows:

Pro forma information of leased property whose lease inception was before March 31, 2008
ASBJ Statement No.13, Accounting Standard for Lease Transactions requires
that all finance lease transactions be capitalized to recognize lease assets
and lease obligations in the balance sheet. However, the ASBJ Statement No.
13 permits leases without ownership transfer of the leased property to the
(1) Acquisition cost, accumulated depreciation:

Millions of Yen

Thousands of U.S. Dollars

2011
Machinery,
Equipment
and Vehicles

Acquisition cost
Accumulated depreciation
Net leased property

Furniture and
Fixtures

55
(48)
7

2010
Machinery,
Equipment
and Vehicles

Total

5
(5)
0

60
(53)
7

61
(46)
15

2011

Furniture and
Fixtures

5
(4)
1

Total

66
(50)
16

Machinery,
Equipment
and Vehicles

$666
(578)
$ 88

Furniture and
Fixtures

$59
(57)
$ 2

Total

$725
(635)
$ 90

(2) Obligations under nance leases:


Millions of Yen

Due within one year


Due over one year
Total

2011
5
2
7

Thousands of U.S. Dollars

2010
13
3
16

2011
$63
28
$91

The amount of obligations under finance leases includes the imputed interest expense portion. Depreciation expense which was not reflected in the
consolidated statements of income, computed by the straight-line method over the lease term was 8 million ($93 thousand) and 13 million for the years
ended March 31, 2011 and 2010, respectively.
The minimum rental commitments under non-cancelable operating leases at March 31, 2011 and 2010 were as follow:
Millions of Yen

Due within one year


Due over one year
Total

2011
1,501
3,788
5,289

Thousands of U.S. Dollars

2010
1,696
4,902
6,598

2011
$18,059
45,554
$63,613

11. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES


In March, 2008, the ASBJ revised ASBJ Statement No.10 Accounting Standard for
Financial Instruments and issued ASBJ Guidance No.19 Guidance on Accounting
Standard for Financial Instruments and Related Disclosures. This accounting standard
and the guidance was applicable to nancial instruments and related disclosures at the
end of the scal years ending on or after March 31, 2010. The Group applied the revised
accounting standard and the new guidance effective March 31, 2010.
(1) Group policy for nancial instruments
The Group limits the use of nancial instruments for fund management purposes

to short term bank deposits. The Group also makes it the basic policy to use the
cash management system operated within the Group and bank loans to fund its
ongoing operations. Derivatives are used, not for speculative purposes, but to
manage exposure to nancial risks as described in (2) below.
(2) Nature and extent of risks arising from nancial instruments
Receivables such as trade notes and trade accounts are exposed to customer credit
risk. Although receivables in foreign currencies are exposed to the market risk of
uctuation in foreign currency exchange rates, the position, net of payables in foreign
Yusen Logistics Annual Report 2011

29

currencies, is hedged by using forward foreign currency contracts. Investment


securities, mainly equity securities of customers and suppliers of the Group, are
exposed to the risk of market price uctuations.
Payment terms of payables, such as trade notes and trade accounts, are less
than one year. Although payables in foreign currencies are exposed to the market risk
of uctuation in foreign currency exchange rates, those risks are netted against the
balance of receivables denominated in the same foreign currency as noted above.
Loans, principally from financial institutions, in long-term debt are mainly for
nancing related to business integration and investment in property.
Derivatives, which are forward foreign currency contracts, are used to manage
exposure to market risks from changes in foreign currency exchange rates of
receivables and payables. Please see Note 12 for more detail about derivatives.

resulting from fluctuations in foreign currency exchange rates. Such foreign


exchange risk is hedged principally by forward foreign currency contracts. In
addition, when foreign currency trade receivables and payables are expected from
forecasted transaction, forward foreign currency contract may be used under the
limited contract term of quarter year.
Investment securities are managed by monitoring market values and nancial
position of issuers on a regular basis.
The execution and management of derivative transactions are approved by
CFO or the board of directors according to the internal guidelines which prescribe
the authority and the limit for each transaction. Counterparties to these derivative
transactions are limited to major nancial institutions in order to mitigate credit
risks.

(3) Risk management for nancial instruments


Credit Risk Management
Credit risk is the risk of economic loss arising from a counterparty's failure to
repay or service debt according to the contractual terms. The Group manages
its credit risk from receivables on the basis of internal guidelines, which include
monitoring of payment term and balances of major customers by each business
administration department to identify the default risk of customers in early stage.
The maximum credit risk exposure of financial assets is limited to their
carrying amounts as of March 31, 2011.

Liquidity risk management


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

Market risk management (foreign exchange risk and interest rate risk)
Foreign currency trade receivables and payables are exposed to market risk

(4) Fair values of nancial instruments


Fair values of nancial instruments are based on quoted price in active markets.
If quoted price is not available, other rational valuation techniques are used
instead. As the valuation needs various assumptions, the fair values of nancial
instruments are subject to change when different assumptions are used. Also
please see Note 12 for the detail of fair value for derivatives.

(a) Fair value of nancial instruments


Millions of Yen

March 31, 2011


Cash and cash equivalents
Time deposits
Trade notes and accounts receivable
Investments in securities
available-for-sale securities
Total
Trade notes and accounts payable
Current portion of long-term debt
Accrued income taxes
Long-term debt
Total

Carrying amount

25,089
1,986
30,169

Fair value

Unrealized gain/loss

25,089
1,986
30,169

579

579

57,823
15,328
35
1,046
4,537
20,946

57,823
15,328
35
1,046
4,537
20,946

Millions of Yen

March 31, 2010


Cash and cash equivalents
Time deposits
Trade notes and accounts receivable
Investments in securities
available-for-sale securities
Total
Trade notes and accounts payable
Current portion of long-term debt
Accrued income taxes
Long-term debt
Total

Carrying amount

16,740
1,623
29,007

Fair value

Unrealized gain/loss

16,740
1,623
29,007

712

712

48,082
14,521
1,063
562
65
16,211

48,082
14,521
1,063
562
65
16,211

Thousands of U.S.Dollars

March 31, 2011


Cash and cash equivalents
Time deposits
Trade notes and accounts receivable
Investments in securities
available-for-sale securities
Total
Trade notes and accounts payable
Current portion of long-term debt
Accrued income taxes
Long-term debt
Total

30

Yusen Logistics Annual Report 2011

Carrying amount

Fair value

Unrealized gain/loss

$301,733
23,886
362,831

$301,733
23,886
362,831

6,964

6,964

$695,414
$184,337
424
12,585
54,561
$251,907

$695,414
$184,337
424
12,585
54,561
$251,907

Current assets and liabilities


The fair value of all current assets and liabilities (cash and cash equivalents, time
deposit, trade notes and accounts receivable, trade notes and accounts payable,
current portion of long-term debt, and accrued income taxes) is considered to be
equivalent to their carrying amount due to their short- term maturities.
Investments in securities (available-for-sale securities)
The fair values of investments in securities are measured at the quoted market
price of the stock exchange of the equity instruments, and at the quotes obtained
from the nancial institution for certain debt instruments.
All investments in securities are classied as available-for-sale securities.
The information of the fair values of investments in securities is included in Note 5.

Long-term debt
-Long-term loans payable
The fair value of long-term debt on floating rates approximates carrying
amount due to the oating rate determined by the market interest rate in the
short term.
- Lease obligations
The fair value of lease obligations approximates carrying amount.
Derivatives
The information of the fair value for derivatives is included in Note 12.

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


Carrying Amount
Millions of Yen

March 31, 2011

2011
244

Investments in equity instruments that do not have a quoted market price in an active market

Thousands of U.S. Dollars

2010
279

2011
$2,934

(5) Maturity analysis for nancial assets and securities with contractual maturities
Millions of Yen

March 31, 2011

Due in one year or less

Cash and cash equivalents


Time deposits
Trade notes and accounts receivable
Investments in securities
Available-for-sale securities with contractual maturities
Total

Due after one year


through ve years

Due after ve years


through ten years

Due after ten years

25,089
1,986
30,169

57,244

42
42

Thousands of U.S. Dollars

March 31, 2011

Due in one year or less

Cash and cash equivalents


Time deposits
Trade notes and accounts receivable
Investments in securities
Available-for-sale securities with contractual maturities
Total

Due after one year


through ve years

Due after ve years


through ten years

Due after ten years

$301,733
23,886
362,831

$688,450

$503
$503

12. DERIVATIVES
The Group enters into foreign exchange forward contracts to reduce the exposure to uctuations in interest rates risks and foreign exchange rates associated with certain
assets and liabilities denominated in foreign currencies.
All derivative transactions are entered into to hedge interest and foreign currency exposures incorporated within its business. Accordingly, market risk in these
derivatives is basically offset by opposite movements in the value of hedged assets or liabilities.
Because the counterparties to these derivatives are limited to major international nancial institutions, the Group does not anticipate any losses arising from credit risk.
Derivative transactions entered into by the Group have been made in accordance with internal policies which regulate their authorization.
The Group had the following derivatives contracts outstanding at March 31, 2011 and 2010:
Derivative transactions to which hedge accounting is not applied.
Millions of Yen

Thousands of U.S. Dollars

2011
Contracts Outstanding
Due Within One Year

Foreign currency forward contracts:


Selling U.S. dollar
Buying U.S. dollar
Buying Swiss franc
Buying Hong Kong dollar
Buying Thai baht
Buying euro
Buying Swedish kronor
Buying Canadian dollar

8
319

162
69
657

460

2010
Unrealized
Gain (Loss)

(0)
2

(2)
(0)
16

12

Contracts Outstanding
Due Within One Year

185
391
36
178
19
322
3
11

2011
Unrealized
Gain (Loss)

(0)
7
1
(2)
1
(6)
(0)
0

Contracts Outstanding
Due Within One Year

98
3,835

1,946
832
7,907

5,523

Unrealized
Gain (Loss)

(2)
28

(20)
(7)
197

145

Yusen Logistics Annual Report 2011

31

The contract or notional amounts of derivatives which are shown in the above table do not represent the amounts exchanged by the parties and do not measure the Group's
exposure to credit or market risk.
Derivative transactions to which hedge accounting is applied.
There is no derivative transactions to which hedge accounting was applied for the year ended March 31, 2011 and 2010.

13. COMMITMENTS AND CONTINGENT LIABILITIES


The Group was contingently liable for guarantees of trade payables and bank loans owed by their unconsolidated subsidiaries, afliate companies and a third party company
in the amount of 36 million ($438 thousand) and 46 million at March 31, 2011 and 2010, respectively.

14. BREAKDOWN OF SELLING, GENERAL AND ADMINISTRATIVE EXPENSES


Selling, general and administrative expenses for the years ended March 31, 2011 and 2010 are summarized as follows:
Millions of Yen

Labor and payroll cost


Provision for accrued bonuses to employees
Provision for accrued pension and severance costs for:
Employees
Directors and corporate auditors
Provision for doubtful accounts
Depreciation
Other
Total

Thousands of U.S. Dollars

2011

2010

14,059
1,319

13,406
953

$169,082
15,866

2011

706
112
79
1,223
13,829
31,327

806
101
61
1,112
12,577
29,016

8,490
1,346
951
14,712
166,310
$376,757

15. COMPREHENSIVE INCOME


For the year ended March 31, 2010
Total comprehensive income for the year ended March 31, 2010 was the following:

Other comprehensive income for the year ended March 31, 2010 consisted of the
following:

Millions of Yen

Millions of Yen

2010
Total comprehensive income attributable to:
Owners of the parent
Minority interests
Total comprehensive income

2,688
411
3,099

2010
Other comprehensive income:
Unrealized gain (loss) on available-for-sale securities
Foreign currency translation adjustments
Share of other comprehensive income in associates
Total other comprehensive income

158
991
40
1,189

16. SEGMENT INFORMATION


For the year ended March 31, 2011 and 2010
In March 2008, the ASBJ revised ASBJ Statement No.17 Accounting Standard for Segment Information Disclosures and issued ASBJ Guidance No.20 Guidance on
Accounting Standard for Segment Information Disclosures. Under the standard and guidance, an entity is required to report nancial and descriptive information about
its reportable segments. Reportable segments are operating segments or aggregations of operating segments that meet specied criteria. Operating segments are
components of an entity about which separate nancial information is available and such information is evaluated regularly by the chief operating decision maker in
deciding how to allocate resources and in assessing performance. Generally, segment information is required to be reported on the same basis as is used internally for
evaluating operating segment performance and deciding how to allocate resources to operating segments. This accounting standard and the guidance are applicable to
segment information disclosures for the scal years beginning on or after April 1, 2010.
The segment information for the year ended March 31, 2010 under the revised accounting standard is also disclosed hereunder as required.
1. Description of reportable segments
The Group's reportable segments are those for which separate nancial information is available and regular evaluation by the Company's management is being performed
in order to decide how resources are allocated among the Group. The Group mainly provides global logistics services. In order to provide its services over large region,
the regional headquarters which are located in Japan, USA, Netherlands, Hong Kong, and Singapore control the group companies in Japan, Americas, Europe, East Asia,
and South Asia and Oceania, respectively. Thus, the Group's reportable operating segments are based on geographical service providing structures, which consist of ve
regions: Japan, Americas, Europe, East Asia and South Asia and Oceania.

32

Yusen Logistics Annual Report 2011

2. Methods of measurement for the amounts of sales, prot (loss), assets, liabilities and other items for each reportable segment
The accounting policies of each reportable segment are consistent with those disclosed in Note 2, Summary of Signicant Accounting Policies.
Information about sales, prot (loss), assets, liabilities and other items is as follows.
Millions of Yen

2011
Reportable Segment
Japan

Sales
Sales to external customers
Inter-segment sales/transfers
Total
Segment prot
Segment assets
Other:
Depreciation
Amortizations of goodwill
Investments in unconsolidated subsidiaries and
afliate companies accounted for by the equity
method *1
Increase in property, plant and equipment and
intangible assets

Americas

Europe

South Asia and


Oceania

East Asia

Reconciliation

Total

(2,787)
(2,787)
(15)
(3,532)

Consolidated
Total

77,424
211
77,635

333
45,589

12,843
628
13,471
749
7 ,264

14,200
822
15,022
527
11,178

30,768
937
31,705
2,001
15,826

25,553
189
25,742
1,352
12,038

160,788
2,787
163,575
4,962
91,895

160,788

160,788
4,947
88,363

1,102
10

119

152

98

309
5

1,780
15

1,780
19

502

502

730

1,232

869

56

64

104

185

1,278

1,278

Reconciliation

Consolidated
Total

Millions of Yen

2010
Reportable Segment
Japan

Sales
Sales to external customers
Inter-segment sales/transfers
Total
Segment prot
Segment assets
Other:
Depreciation
Amortizations of goodwill
Investments in unconsolidated subsidiaries and
afliate companies accounted for by the equity
method *1
Increase in property, plant and equipment and
intangible assets

Americas

Europe

South Asia and


Oceania

East Asia

Total

61,047
180
61,227
944
45,324

10,198
584
10,782

(5)
8,149

11,219
669
11,888
(472)
9,988

21,813
502
22,315
651
15,107

19,176
156
19,332
1,198
10,779

123,453
2,091
125,544
2,316
89,347

(2,091)
(2,091)

(6)
(7,904)

123,453

123,453
2,310
81,443

1,019
0

136

183

108

297
5

1,743
5

1,743
9

502

502

494

996

706

29

42

50

143

970

970

Reconciliation

Consolidated
Total

Thousands of U.S. Dollars

2011
Reportable Segment
Japan

Sales
Sales to external customers
Inter-segment sales/transfers
Total
Segment prot
Segment assets
Other:
Depreciation
Amortizations of goodwill
Investments in unconsolidated subsidiaries and
afliate companies accounted for by the equity
method *1
Increase in property, plant and equipment and
intangible assets

Americas

Europe

East Asia

South Asia and


Oceania

Total

$931,138
2,538
933,676
$ 4,007
$548,273

$154,460
7,553
162,013
$ 9,007
$ 87,360

$170,775
9,884
180,659
$ 6,341
$134,433

$ 370,028
11,274
381,302
$ 24,063
$190,329

$307,315
2,265
309,580
$ 16,257
$144,781

$1,933,716
33,514
1,967,230
$ 59,675
$1,105,176

(33,514)
(33,514)
$ (176)
$(42,485)

$1,933,716

1,933,716
$ 59,499
$1,062,691

13,257
118

1,435

1,826

1,175

3,716
66

21,409
184

43

21,409
227

6,031

6,031

8,785

14,816

10,457

668

775

1,255

2,220

15,375

15,375

NOTES: 1. The breakdown for the reconciliation in each item for the year ended March 31, 2011 and 2010 are as follows:
Millions of Yen

Sales:
Elimination of inter-segment transactions
Total

Thousands of U.S. Dollars

2011

2010

(2,787)
(2,787)

(2,091)
(2,091)

2011
$(33,514)
$(33,514)

Yusen Logistics Annual Report 2011

33

Millions of Yen

2011
Segment prot:
Elimination of inter-segment transactions
Amortization of goodwill
Others
Total

Thousands of U.S. Dollars

2010

(11)
(4)
0
(15)

2011
(2)
(4)
0
(6)

$ (135)
(43)
2
$ (176)

Millions of Yen

2011
Segment asset:
Elimination of inter-segment receivables and payables
Elimination of inter-segment investments and equity accounts
Common assets *2
Others
Total

Thousands of U.S. Dollars

2010

(5,477)
(6,693)
8,726
(88)
(3,532)

2011

(3,772)
(6,925)
2,882
(89)
(7,904)

$ (65,874)
(80,490)
104,942
(1,063)
$ (42,485)

*1: The reconciliation column for investments in unconsolidated subsidiaries and afliate companies accounted for by the equity method contains the investments which are not attributable to
any reportable segments.
*2: The common assets mainly consisted of cash and deposits and investment securities.

2. Segment prot is reconciled to operating income in the consolidated statements of income.


For the year ended March 31, 2010
(1) Industry Segments
The Group operates principally in the following three industry segments:
(1) Air and sea cargo
(2) Travel
(3) Other
The segment information of the Group in respect to the years ended March 31, 2010, classied by industry segments is presented below:
Millions of Yen

2010
Industry Segment
Air and Sea Cargo

a. Net sales and operating income


Net sales:
Net sales to outside customers
Inter-segment sales/transfers
Total sales
Operating expenses
Operating income
b. Assets, depreciation and capital expenditures
Assets
Depreciation
Capital expenditures

Travel

Other

Elimination/
Corporate

Total

Consolidated
Total

120,181
120,181
118,198
1,983

3,160
3,160
3,018
142

112
1,355
1,467
1,281
186

123,453
1,355
124,808
122,497
2,311

(1,355)
(1,355)
(1,354)

(1)

123,453
123,453
121,143
2,310

72,592
1,577
925

5,770
47
41

6,538
119
4

84,900
1,743
970

(3,457)
-

81,443
1,743
970

Notes: The amounts of the common assets included in the column "Elimination or Corporate" were 2,882 million for the years ended March 31, 2010, which mainly consisted of surplus funds (cash and securities).

(2) Geographical Segments

Millions of Yen

2010
Geographic Segment
Japan

a. Net sales and operating income


Net sales:
Net sales to outside customers
Inter-segment sales/transfers
Total sales
Operating expenses
Operating income
b. Assets

61,047
180
61,227
60,283
944
45,324

Americas

10,198
584
10,782
10,787

(5)
8,149

Europe

11,219
669
11,888
12,360
(472)
9,988

East Asia

21,813
502
22,315
21,664
651
15,107

South Asia
and Oceania

19,176
156
19,332
18,134
1,198
10,779

Total

123,453
2,091
125,544
123,228
2,316
89,347

Elimination/
Corporate

(2,091)
(2,091)
(2,085)

(6)
(7,904)

Consolidated
Total

123,453
123,453
121,143
2,310
81,443

Notes: The amounts of the common assets included in the column "Elimination or Corporate" were 2,882 million for the years ended March 31, 2010, which mainly consisted of surplus funds (cash and securities).

(3) Net Sales in Foreign Countries


Net sales in foreign countries for the years ended March 31, 2010 amounted to 63,124 million.

34

Yusen Logistics Annual Report 2011

Related information
1. Information about services
Millions of Yen

2011

Sales to external customers

Air and
Sea Cargo

Travel

156,945

3,732

2010
Other

Air and
Sea Cargo

Total

111

160,788

Travel

120,181

Other

3,160

Total

112

123,453

Thousands of U.S. Dollars

2011

Sales to external customers

Air and
Sea Cargo

Travel

Other

Total

$ 1,887,493

$ 44,877

$ 1,346

$ 1,933,716

2. Information about geographical areas


(1) Sales
Millions of Yen

2011

2010

Japan

Americas

Europe

East Asia

South Asia and


Oceania

Others

Total

76,579

12,992

14,424

30,973

25,818

160,788

Japan

60,329

Americas

10,323

Europe

South Asia and


Oceania

East Asia

11,444

21,972

Others

19,382

Total

123,453

Thousands of U.S. Dollars

2011
Japan

Americas

Europe

East Asia

South Asia and


Oceania

Others

Total

$ 920,975

$ 156,245

$ 173,470

$ 372,494

$ 310,498

$ 34

$ 1,933,716

Notes: Sales are classied in countries or regions based on location of customers. The countries and regions classied in the above geographical areas are as follows:
(1) Americas: U.S.A., Canada
(2) Europe: U.K., Germany, France, Italy, Netherlands
(3) East Asia: China, Hong Kong, Taiwan, South Korea
(4) South Asia and Oceania: Singapore, Indonesia, Australia, Thailand, Vietnam, Philippines, India
(5) Others: Other than those above

(2) Property, plant and equipment


Millions of Yen

2011

2010

Japan

Americas

Europe

East Asia

South Asia and


Oceania

Total

Japan

Americas

Europe

East Asia

South Asia and


Oceania

Total

11,782

1,861

1,421

823

1,129

17,016

12,069

2,097

1,753

930

1,217

18,066

Thousands of U.S. Dollars

2011
Japan

Americas

Europe

East Asia

South Asia and


Oceania

Total

$ 141,695

$ 22,386

$ 17,086

$ 9,894

$ 13,577

$ 204,638

(3) Information about major customers


The Group have omitted information about major customers, as sales to any customers is not over 10% of sales of consolidated.

(4) Information about loss on impairment of xed assets


Millions of Yen

2011

2010
Total

Japan

Americas

Europe

East Asia

South Asia and


Oceania

Total

229

229

Japan

Americas

Europe

East Asia

South Asia and


Oceania

66

66

Thousands of U.S. Dollars

2011
Japan

Americas

Europe

East Asia

South Asia and


Oceania

Total

$ 797

$ 797

Yusen Logistics Annual Report 2011

35

(5) Information about amortization of goodwill and negative goodwill


Millions of Yen

2011
Japan

Amortization of goodwill
Goodwill at March 31, 2011
Amortization of negative goodwill
Negative goodwill at March 31, 2011

Americas

Europe

East Asia

10
49
3
2

South Asia and


Oceania

Elimination /
Corporate

5
3
-

Total

4
-

19
52
3
2

Millions of Yen

2010
Japan

Amortization of goodwill
Goodwill at March 31, 2010
Amortization of negative goodwill
Negative goodwill at March 31, 2010

Americas

0
0
3
5

Europe

East Asia

South Asia and


Oceania

Elimination /
Corporate

5
8
-

Total

4
4
-

9
12
3
5

Thousands of U.S. Dollars

2011
Japan

Amortization of goodwill
Goodwill at March 31, 2011
Amortization of negative goodwill
Negative goodwill at March 31, 2011

Americas

Europe

East Asia

$118
587
36
21

South Asia and


Oceania

$66
33
-

Elimination /
Corporate

Total

$43
-

$227
620
36
21

17. PER SHARE INFORMATION


Per share information for the years ended March 31, 2011 and 2010 are summarized as follows:
Yen

U.S. Dollars

2011
Net assets per share
Basic net income per share

2010

1,260.69
85.85

2011

1,225.21
36.63

$15.162
1.032

Diluted net income per share is not presented since there were no securities with dilutive effect for the years ended March 31, 2011 and 2010.
Per share information is computed based on the following:
Millions of Yen

2011
Net income
Net income not subject to distribution to common shareholders
Net income subject to current and future distribution to common stock

Thousands of U.S. Dollars

2010

3,621
3,621

2011

1,545
1,545

$43,542
43,542

Number of Shares of Common Stock

2011
Weighted-average shares for the period

2010

42,170,233

42,170,622

18. RELATED PARTY TRANSACTIONS


Major transactions and major balances the years ended March 31, 2011 and 2010, respectively, with related parties are as follows:
For the year ended March 31, 2011
Transaction for the Year
Name

Address

Amount of
Capital

Nature of
Business

Ownership
Interest (%)

Relationship

Description
of the
Transactions

Millions
of Yen

Loan

5,767

Thousands of
U.S.Dollars

Balance at End of Year


Account Name

Millions
of Yen

Thousands of
U.S. Dollars

69,362

Other current
assets
(Loan receivable)

82

Other current assets


(Accrued interest
receivable)

Transaction with subsidiaries of a common parent:


NYK
FTC
(Singapore)
Pte. Ltd.

36

Singapore

$5,000
thousand

Yusen Logistics Annual Report 2011

Finance

Financing
Interest
received

For the year ended March 31, 2010


Transaction for the Year
Name

Address

Amount of
Capital

Nature of
Business

Ownership
Interest (%)

Relationship

Description of
the Transactions

(Owns the
Company's
shares)
0.0

Purchasing
cruise
tours

Operating
cost

Millions of Yen

Balance at End of Year


Account Name

Millions of Yen

Other current assets


(Prepaid cost)

503

Transaction with subsidiaries of a common parent:


NYK
Cruises
Co., Ltd.

Tokyo, Japan

NYK
FTC
(Singapore)
Pte. Ltd.

2,000
million

Marine
transportation
Travel business

Loan
Singapore

$5,000
thousand

Finance

1,366
Trade notes and
accounts payable
6,215

Financing
Interest
received

15

Other current assets


(Loan receivable)

88

2,035

Other current assets


(Accrued interest
receivable)

Notes: Consumption taxes are excluded from the amount of transactions. Business policy on terms and conditions Interest on loans is decided in consideration of market rate.

Information of parent company


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

19. SUBSEQUENT EVENT


. The Company made an appropriation of retained earnings, proposed by the board of directors and approved by shareholders at the general meeting on June 29, 2011,
as follows:
Cash dividends (9 ($0.11) per share)

Millions of Yen

Thousands of U.S. Dollars

380

$4,564

. As released in "Execution of the Basic Agreement on Integration of Overseas Businesses of NYK and Yusen Logistics" on December 22, 2010, the Company and Nippon
Yusen Kabushiki Kaisha (NYK LINE) (head office: Chiyoda-ku, Tokyo, Japan; president: Yasumi Kudo) (hereinafter "NYK") have conducted the reorganization and
integration of the logistics businesses in order to gain a position as a world-class logistics service provider by reorganizing and optimizing logistics business units. The
outlines of the important transactions are as follows
1. The U.S. logistics businesses have been integrated through an absorption-type merger. Yusen Logistics (Americas)Inc. (formerly, Yusen Air & Sea Service (USA) Inc.),
which is a consolidated subsidiary of the company, became the surviving company and NYK LOGISTICS (AMERICAS) INC., which is a consolidated subsidiary of NYK,
became the extinct company.
After the merger became effective, the company acquired the shares of Yusen Logistics (Americas) Inc. from NYK GROUP AMERICAS INC.,etc. As a result, the
shareholding ratio of the company is 51.0%.
(1) Outline of the business combination

(2) Calculation of Acquisition cost

1. Name, business and recent performance of the acquired company


1) Name of the acquired company
NYK LOGISTICS (AMERICAS) INC.
2) Business of the acquired company
International ocean freight-forwarding, contract logistics, domestic
transportation., etc.
3) Performance of the acquired company for period ending 31 March 2011.

Millions of Yen

Sales
Operating Loss
Ordinary Loss
Net Loss

67,784
(17)
(28)
(683)

2. Date of the business combination


April 1, 2011
3. Legal form of the business combination
Absorption-type merger
4. Name of the company after the business combination:
Yusen Logistics (Americas) Inc.
(Formerly, Yusen Air & Sea Service (U.S.A.) Inc.)
5. Ratio of voting rights acquired
19.7%

Thousands of
U.S. Dollars

$815,205
(198)
(338)
($8,215)

1. Type of shares and merger ratio


1 share of common stock of NYK LOGISTICS (AMERICAS) INC.
: 531 shares of common stock of Yusen Logistics (Americas) Inc.
2. Basis for calculation of the merger ratio
In order to ensure the fairness and appropriateness of the merger ratio, the
Company and NYK decided individually to request a third-party appraiser
that is independent from the two companies to calculate the merger ratio.
Yusen Logistics has appointed PricewaterhouseCoopers Co., Ltd.
(hereinafter PwC) as its third-party appraiser and NYK has appointed
KPMG FAS Co., Ltd. (hereinafter KPMG) as its third-party appraiser.
The company and NYK agreed on the shareholding ratio after careful
consideration by referring to the results calculated by these third-party
appraisers, and by taking into account all factors such as the nancial condition,
the state of assets, and the future outlook of each integration subsidiary.
3. Number of shares delivered
569,763 shares
(3) Amounts of assets and liabilities acquired on the day of the business
combination
Millions of Yen

Current Assets
Fixed Assets
Total assets
Current Liabilities
Fixed Liabilities
Total liabilities

8,912
8,417
17,329
7,476
463
7,939

Thousands of
U.S. Dollars

$107,175
101,228
$208,403
89,910
5,569
$ 95,479

Yusen Logistics Annual Report 2011

37

(4) Contents of share acquisition


1. Number of acquired Shares and Acquisition cost
Number of acquired Shares: 221,980 shares of common stock
Acquisition cost: 4,083 million ($ 49,109 thousand)
2. Status of share acquisition after the transfer

Number of Shares
before the Transfer
(shareholding ratio)

Number of Shares
after the Transfer
(shareholding ratio)

NYK Group Americas Inc.:


563,922 shares
NYK Logistics (Japan) Co.,
Ltd.: 5,841 shares
Total: 569,763 shares
(80.3%)

Yusen Logistics
Co., Ltd.:
140,000 shares
(19.7%)

Yusen Logistics
Co., Ltd.:
361,980 shares
(51.0%)

NYK Group Americas Inc.:


347,783 shares
(49.0%)

(3) Amounts of assets and liabilities acquired on the day of the business
combination
Millions of Yen

Current Assets
Fixed Assets
Total assets
Current Liabilities
Fixed Liabilities
Total liabilities

14,610
12,510
27,120
12,595
3,324
15,919

Thousands of
U.S. Dollars

$175,711
150,450
$326,161
151,472
39,972
$191,444

3. NYK Group Europe Ltd., which is the holding company of the NYK Group in
U.K., transferred all of the shares of Yusen Logistics (UK) Ltd. (formerly, NYK
LOGISTICS (UK) Ltd.), which is a U.K. logistics business company of the NYK
Group, to Yusen Logistics (Europe) B.V. which is a European holding company of
Yusen Logistics Group.
(1) Name of the company transferring shares
NYK Group Europe Ltd.

2. The European holding companies related to the logistics businesses of the


two groups have been integrated through an absorption-type merger. Yusen
Logistics (Europe) B.V. (formerly, Yusen Air & Sea Service (Europe) B.V.), which
is a consolidated subsidiary of the company, became the surviving company and
NYK LOGISTICS (EUROPE CONTINENT) B.V., which is a consolidated subsidiary
of NYK, became the extinct company.

(2) Name, business and recent performance of the acquired company


1. Name of the acquired company
Yusen Logistics (UK) Ltd. (formerly, NYK LOGISTICS (UK) Ltd.)
2. Business of the acquired company
International ocean freight-forwarding, contract logistics, domestic
transportation, etc.
3. Performance for period ending 31 March 2011.

(1) Outline of the business combination


1. Name, business and recent performance of the acquired company
1) Name of the acquired company
NYK LOGISTICS (EUROPE CONTINENT) B.V.
2) Business of the acquired company
Holding company of European logistics companies of NYK Group

Millions of Yen

Sales
Operating Income
Ordinary Loss
Net Loss

24,476
155
(6)
(315)

Thousands of
U.S. Dollars

$294,359
1,868
(70)
($3,788)

3) Performance for period ending 31 March 2011.


Millions of Yen

Sales
Operating Income
Ordinary Loss
Net Income

38,180
143
(3)
118

Thousands of
U.S. Dollars

$459,174
1,720
(34)
$ 1,419

2. Date of the business combination


April 1, 2011
3. Legal form of the business combination
Absorption-type merger
4. Name of the company after the business combination:
Yusen Logistics (Europe) B.V.
(Formerly, Yusen Air & Sea Service (Europe) B.V.)
5. Ratio of voting rights acquired
53.7%
(2) Calculation of Acquisition cost
1. Type of shares and merger ratio
1 share of common stock of NYK LOGISTICS (EUROPE CONTINENT) B.V.
: 88.75 shares of common stock of Yusen Logistics (Europe) B.V.

38

(3) Date of share transfer


April 17, 2011
(4) Contents of share acquisition
1. Number of acquired Shares and Acquisition cost
Number of acquired Shares: 40,930,000 shares of common stock
Acquisition cost: 2,054 million ($ 24,702 thousand)
Number of Shares after the acquisition (shareholding ratio): 40,930,000
shares of common stock (100%)
4 .Yusen Logistics (Hong Kong) Limited (formerly, Yusen Air & Sea Service
(H.K.) Ltd.) purchased a part of the logistics business of NYK LOGISTICS
(HONG KONG) LTD., a consolidated subsidiary of NYK, in the form of a business
transfer to Yusen Logistics (Hong Kong) Limited
(1) Corporate Name of the Transferor
NYK LOGISTICS (HONG KONG) LTD.
(2) Business transferred
International ocean freight-forwarding, contract logistics, domestic
transportation, etc.
(3) Assets and Liabilities to be Transferred

2. Basis for calculation of the merger ratio


In order to ensure the fairness and appropriateness of the merger ratio, the
Company and NYK decided individually to request a third-party appraiser
that is independent from the two companies to calculate the merger ratio.
Yusen Logistics has appointed PricewaterhouseCoopers Co., Ltd.
(hereinafter PwC) as its third-party appraiser and NYK has appointed
KPMG FAS Co., Ltd. (hereinafter KPMG) as its third-party appraiser.
The company and NYK agreed on the shareholding ratio after careful
consideration by referring to the results calculated by these third-party
appraisers, and by taking into account all factors such as the nancial condition,
the state of assets, and the future outlook of each integration subsidiary.

Current Assets
Fixed Assets
Total assets
Current Liabilities
Total liabilities

3. Number of shares delivered


15,975 shares

(5) The date of the business transferred


April 1, 2011

Yusen Logistics Annual Report 2011

Millions of Yen

Thousands of
U.S. Dollars

107
2,165
2,272
76
76

$ 1,289
26,037
$27,326
909
$ 909

(4) Cost for the business transferred


2,145 Millions of Yen ($ 25,800 thousand)

Independent Auditors Report

Yusen Logistics Annual Report 2011

39

Corporate History

Yusen Air & Sea Service


NYK Logistics
Yusen Logistics

1955
Feb. Established Kokusai Ryoko Kosha
for handling of general travel and air
cargo industry.

2000 and after

Dec. Invested in Tosho Unyu Co., Ltd. in


Naka-ku, Yokohama City, Kanagawa.

Building up global network and organization by


expanding its business to Eastern Europe and
BRICs

Mar. Transferred the goodwill from


International Travel Consultants Inc.
(ITC), the member of International Air
Transport Association (IATA).

1988

2000

Jun. Established Yusen Air & Sea Service


(Australia) Pty. Ltd.

Jun. Acquired a customs broker license and


started customs clearance.

Oct. Established Yusen Air & Sea Service


(Canada) Inc.

Feb. Established Yusen Air & Sea Service


(Chugoku) Co., Ltd. in Kurashiki City,
Okayama.

1959
Sep. NYK Line acquired stocks which Osaka
Shosen Kaisha (O.S.K. Line) owned, and
made a subsidiary company by naming it
Yusen Air Service Co., Ltd.

1961
Nov. Changed English corporate name to Yusen
Air & Sea Service Co., Ltd.

1968
Oct. Established Yusen Air & Sea Service
(U.S.A.) Inc.

1973
Aug. Established Yusen Air & Sea Service
(H.K.) Ltd.

1979
Mar. Established Yusen Air & Sea Service
(Singapore) Pte. Ltd.
Dec. Acquired the license of domestic
airfreight forwarder.

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

First half of 1980


Establishment of subsidiaries in Asian countries,
following precedent one in Thailand

1984
Feb. Acquired the license of international
airfreight forwarder.

1989
Nov. Established Yusen Air & Sea Service
(France) S.a.r.l.

1990
Jul. Established Yusen Air & Sea Service
(Taiwan) Ltd.

1991
Jul. Established Yusen Air & Sea Service
(Kitakanto) Co., Ltd. in Utsunomiya City,
Tochigi.

1992
Apr. Established Yusen Air & Sea Service
Philippines Inc.
Oct. Established Yusen Air & Sea Service
(Tsukuba) Co., Ltd. in Ibaraki.

1994
Apr. Established Yusen Travel Co., Ltd. in
Chiyoda-ku, Tokyo.
Oct. Transferred the sales section of the travel
department to Yusen Travel Co., Ltd.

1996
Jan. Established Yusen Air & Sea Service
(Italia) S.r.l.
Feb. Established Yusen Air & Sea Service
(Shinshu) Co., Ltd. in Okaya City, Nagano.
Nov. Registered as over-the-counter stocks
to Japan Securities Dealers Association.

1997
Feb. Established Yusen Air & Sea Service
(Tohoku) Co., Ltd. in Yamagata City,
Yamagata.

Sep. Established Yusen Air & Sea Service


(China) Ltd. in Hong Kong.

2001
Jul. Established Yusen Air Staff Service Co.,
Ltd. in Chuo-ku, Tokyo.
Sep. Established Yusen Air & Sea Service
Logistics (Shanghai) Co., Ltd. in China.
Oct. Established Yusen Air & Sea Service
(Europe) B.V. to succeed Yusen
Air International B.V. to preside
the European business corporation.

2002
Jan. Yusen Air & Sea Service (Singapore) Pte.
Ltd. invested in PT. Pusaka Yudhanusa
of Indonesia, and changed name to PT.
Yusen Air & Sea Service Indonesia.
Jun. Established Yusen Air Logistics (Xiamen)
Co., Ltd. in China.
Sep. Established Yusen Air & Sea Service
(Czech) s.r.o.
Established Yusen Air & Sea Service
(Thailand) Co., Ltd. and Yusen Air & Sea
Service Management (Thailand) Co., Ltd.
Nov. Established Yusen Air & Sea Service
(Korea) Co., Ltd. in South Korea.
Dec. Established Yusen Shenda Air & Sea
Service (Shanghai) Ltd. in China.

2003
Sep. Tosho Unyu Co., Ltd. changed its name
to Yusen Air & Sea Service Keihin Trans
Co., Ltd.
Nov. Established Yusen Air & Sea Service
(Beijing) Co., Ltd. in China.

2004

Second half of 1980

Apr. Established Yusen Air Logistics (Nagoya)


Co., Ltd. in Nagoya City, Aichi.

Integration of brand name to NYK Logistics


internationally

Expansion of network in Europe and Americas


through buyouts or establishment of subsidiaries

Jun. Invested in Ryowa Diamond Air Service


Co., Ltd. in Chuo-ku, Tokyo.

2004

1986

Nov. Established Yusen Air & Sea Service Do


Brasil Ltda.

Oct. Established Yusen Air International B.V.


and Yusen Air & Sea Service (Benelux)
B.V. in the Netherlands.

1987
Mar. Established Yusen Air & Sea Service
(Deutschland) GmbH.

40

Apr. Established Yusen Air & Sea Service


(U.K.) Ltd.

Yusen Logistics Annual Report 2011

1998
Feb. Established Yusen Air & Sea Service
(Kyushu) Co., Ltd. in Hakata-ku,
Fukuoka City, Fukuoka.
Established Yusen Air & Sea Service
(Hokuriku) Co., Ltd. in Komatsu city, Ishikawa.

Jun. Established the Istanbul Representative


Ofce in Turkey.
Sep. Established Yusen Air & Sea Service
(Vietnam) Co., Ltd.
Nov. Established the Krakow Representative
Ofce in Poland.

Shareholders Information
(As of March 31, 2011)

Head Ofce
Sumitomo Fudosan Shiba-Koen Tower
2-11-1, Shiba-Koen Minato-ku, Tokyo 105-0011, Japan
Phone: +81-3-6703-8231
Fax: +81-3-3578-3552
URL: http://www.jp.yusen-logistics.com

2005

Established

Feb. Listed on the First Section of the Tokyo


Stock Exchange.

February 28, 1955

Nov. Established Yusen Air & Sea Service


Logistics (Shenzhen) Ltd. in China.

4,301 million

2006
Feb. Established Yusen Air & Sea Service
(Guangdong) Ltd. in China.

Paid-in Capital
Common Shares
Number of authorized shares: 160,000,000
Number of shares outstanding: 42,220,800

Apr. Established Dubai Representative Ofce


in United Arab Emirates.

Number of Shareholders

Jun. Yusen Air & Sea Staff Service Co., Ltd.


changed its name to Yusen Air Loginet
Co., Ltd.

Number of Employees (Consolidated)

2007

General Meeting of Shareholders

4,756

5,623

Oct. Merger of "NYK Logistics (Japan) Co., Ltd."


with "JIT Co., Ltd." in Japan

The 57th General Meeting of shareholders


in June 29, 2011 in Tokyo, Japan.

2007

Independent Registered Public Accounting Firm

Mar. Established Yusen Air & Sea Service


(India) Pvt. Ltd.

Deloitte Touche Tohmatsu LLC


MS Shibaura Building, 13-23, Shibaura 4-chome, Minato-ku, Tokyo 108-8530, Japan

May Established Yusen Air & Service (RUS)


LLC. in Russia.

Transfer Agent

Jun. Yusen Air Logistics (Nagoya) Co., Ltd.


changed name to Yusen Air Logitec
Co., Ltd.

2008
Oct. Established Yusen Air & Sea Service
Logistics (Suzhou) Co., Ltd. in China.
Nov. Established Yusen Air & Sea Service
(Mexico) S.A.de C.V.

2009
Nov. Commenced discussions for reorganization
and integration of logistics business with
Nippon Yusen.

2010
Feb. Basic letter of agreement concerning
integration of businesses of Yusen Air & Sea
Service Co., Ltd. and NYK Logistics (Japan)
Co., Ltd.
May Transfer of business agreement between
Yusen Air & Sea Service Co., Ltd. and NYK
Logistics (Japan) Co., Ltd.
Oct. Inauguration of Yusen Logistics Co., Ltd.

The Mitsubishi UFJ Trust and Banking Corporation


4-5, Marunouchi 1-chome, Chiyoda-ku,Tokyo 100-8212, Japan

Stock Listing
First Section of the Tokyo Stock Exchange

Stock Price
Years ended March 31
2007

(Yen)

2008

2009

2010

2011

High

3,750

3,210

2,140

1,446

1,522

Low

2,330

1,066

841

932

975

*Stock prices are based on the Tokyo Stock Exchange trading.

Major Shareholders
Name

Nippon Yusen Kabushiki Kaisha (NYK)

Number of
Percentage of Shares
shares held
Held
(Hundred of Shares)

251,321

59.53%

BBH for Fidelity Low-Priced Stock Fund

42,215

10.00%

The Master Trust Bank of Japan, Ltd.


(Trust Account)

12,693

3.01%

Japan Trustee Services Bank, Ltd.


(Trust Account)

11,610

2.75%

Trust & Custody Service Bank, Ltd. (Pension Trust Account)

6,338

1.50%

Yamato Holdings Co., Ltd.

6,058

1.43%

Morgan Stanley & Co. Inc.

5,884

1.39%

Japan Trustee Services Bank, Ltd.


(Trust Account 9)

5,407

1.28%

Bank of Tokyo-Mitsubishi UFJ, Ltd.

5,376

1.27%

Tokio Marine & Nichido Fire Insurance Co., Ltd.

4,064

0.96%

For Contact:
Corporate Communications & IR Department,Yusen Logistics Co., Ltd.
E-mail: yljpird@jp.yusen-logistics.com

Yusen Logistics Annual Report 2011

41

Yu s e n L o g i st i c s C o . , L t d .

Annual Report 2011

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