ANNUAL REPORT 2014 - Mitsubishi Logistics · 3. Michio Izumi, Yohnosuke Yamada and Kenji Sakurai are Outside Corporate Auditors as stipulated in the Companies Act, Article 2, Item

ANNUAL REPORT 2014Year ended March 31, 2014

Tokyo Dia Building 28-38, Shinkawa, 1-chome, Chuo-ku, Tokyo 104-0033 Japan http://www.mitsubishi-logistics.co.jpThe headquarters will be moved to the following location on September 16, 2014.Nihonbashi Dia Building 19-1 Nihonbashi, 1-chome Chuo-ku, Tokyo 103-8630, Japan

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Company Profile (As of March 31, 2014)

Headquarters and Branches

Headquarters: Chuo-ku, Tokyo

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

Date of Establishment April 15, 1887

Capital ¥22,393,986,570

Number of Shares Issued 175,921,478

Authorized Shares 440,000,000

Number of Employees 847 persons (parent only; not including 152 employees temporarily on loan to other companies. There are also 110 temporary employees, as well as 563 persons temporarily loaned or dispatched within the Group and those from outside the Group companies and accepted by the Company)

4,441 persons (on a consolidated basis; not including 75 employees temporarily on loan to companies outside the Group. There are also 1,345 temporary employees, as well as 948 persons temporarily loaned or dispatched from outside the Group companies and accepted by the Company)

Stock Exchange Listing First Section of the Tokyo Stock Exchange

Securities Code 9301

Major ShareholdersShareholder’s Name Number of Shares Held (Thousands) Shareholding Ratio (%)The Master Trust Bank of Japan, Ltd. (trust account) 13,128 7.5Japan Trustee Services Bank, Ltd. (trust account) 11,705 6.7Meiji Yasuda Life Insurance Company 9,707 5.5MITSUBISHI ESTATE CO., LTD. 7,331 4.2Tokio Marine & Nichido Fire Insurance Co., Ltd. 6,803 3.9Kirin Holdings Company, Limited 5,932 3.4The Bank of Tokyo-Mitsubishi UFJ, Ltd. 3,728 2.1BNP Paribas Securities (Japan) Limited 3,463 2.0ASAHI GLASS CO., LTD. 3,315 1.9Mitsubishi Corporation 3,205 1.8

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

reserved, in addition to the shares stated in the table above.2. The “Shareholding ratio” is calculated after excluding treasury stock (607,344 shares).

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

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

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

Directors and Corporate Auditors (As of June 27, 2014)Position Name Responsibilities and/or Primary Occupation

Chairman of the Board Tetsuro OkamotoPresident* Akio MatsuiManaging Director Yuichi Hashimoto Responsible for Accounting & Financing, Information Systems and Internal AuditManaging Director Yoshinori Watabe Responsible for International Transportation BusinessManaging Director* Masato Hoki Responsible for General Affairs, Corporate Communications, Personnel and PlanningManaging Director Kazuhiko Takayama Responsible for Warehousing & Distribution BusinessManaging Director Takanori Miyazaki Responsible for Technical, Harbor Transportation and Real Estate BusinessesDirector Minoru Makihara Senior Corporate Advisor, Mitsubishi CorporationDirector Shigemitsu Miki Senior Advisor, The Bank of Tokyo-Mitsubishi UFJ, Ltd.Director Koji Miyahara Chairman, Chairman Corporate Officer, Nippon Yusen Kabushiki KaishaDirector Kenji Irie General Manager, Technical DivisionDirector Yoshiji Ohara General Manager, Harbor Transportation DivisionDirector Yoichiro Hara General Manager, Tokyo BranchStanding Corporate Auditor Tohru WatanabeStanding Corporate Auditor Michio IzumiCorporate Auditor Yohnosuke Yamada LawyerCorporate Auditor Shunkyo Harada Managing Director, Kyodo Soko CorporationCorporate Auditor Kenji Sakurai Certified Public Accountant

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To Our Shareholders

Topics

Overview of the Mitsubishi Logistics Group

Independent Auditor’s Report

Consolidated Balance Sheets

Consolidated Statements Of Income

Consolidated Statements Of Comprehensive Income

Consolidated Statements Of Changes In Net Assets

Consolidated Statements Of Cash Flows

Notes To Consolidated Financial Statements

Company Pro�le

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

Logistics Group for the 211th fiscal term (from April 1, 2013, to March 31, 2014).

During the year under review, the global economy was characterized by a moderate economic recovery in the United States, signs of recovery in Europe and moderate growth in emerging countries such as China in the first half, followed by slowing growth in the second half. The Japanese economy showed a moderate recovery, reflecting a recovery in capital investments and increases in consumer spending and production due to a rush in demand before the consumption tax hike at the end of the fiscal year.

In these economic conditions, the business environment surrounding the Group remained difficult in the mainstay business segments of “Logistics” and “Real Estate.” For Logistics, the warehousing and port and harbor operations businesses were adversely affected mainly by the logistics rationalization and intensifying competition, despite a recovery in freight volume. For Real Estate, the rent level decreased for some rental office buildings, although signs of an improvement in the supply and demand of such buildings were seen.

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

As a result, combined revenue for the year under review amounted to ¥198,161 million, an increase of ¥5.9 billion, or 3.1%, from the previous fiscal year. In Logistics, revenue increased because of steady progress in handling pharmaceuticals, nonferrous metal products, and other products in the warehousing and trucking businesses and an increase in revenues in international transportation due to depreciation of the yen. In Real Estate, in its mainstay real estate leasing business, although the renewal of the Kobe Harborland commercial facility complex contributed to revenue, revenue decreased because of a decline in demand for office buildings and a decrease in orders received in the design and supervision of construction work. Cost of services overall increased ¥6,041 million, or 3.5%, year over year to ¥176,942 million, despite our efforts for thorough cost management and higher efficiency of operations. Major factors were an increase in depreciation associated with the start of operation of new facilities in Logistics and temporary expenses incurred by the renewal of the Kobe Harborland commercial facility complex in Real Estate. Selling, general and administrative expenses were ¥9,071 million, about the same level as the previous year.

As a consequence, operating income decreased ¥156 million, or 1.3%, year over year to ¥12,148 million, reflecting the rise in operating income for the Logistics segment and the fall in the Real Estate segment. Ordinary income decreased ¥412 million, or 2.8%, to ¥14,113 million due to a decrease in equity in earnings of unconsolidated subsidiaries and affiliates. Consolidated net income decreased ¥70 million, or 0.8%, to ¥8,520 million from the previous fiscal year due to increases in extraordinary losses and income taxes payable, despite recording a gain on sale of marketable securities and investments in securities as extraordinary income via the effective use of the assets owned by the Company.

In the coming year, a moderate recovery is predicted to continue in the United States, while European economies should gradually recover, and in emerging countries such as China moderate economic expansion will likely continue despite lingering uncertainty. Concerning the Japanese economy, some weakness will remain for a while due to the aftereffect of the rush in demand before the consumption tax rate hike, which will weaken gradually and eventually dissipate, and a gradual recovery is expected to follow, supported by factors such as improvement of the export environment due to solid overseas economies and the effects of administrative policies.

In this economic climate, the business conditions surrounding the Group are expected to remain harsh in both the Logistics and Real Estate business segments. Competition is intensifying in the warehousing and port and harbor operations industries although a moderate increase in freight volume is projected. Also, it will take more time to achieve a full-scale recovery of rent levels in the real estate industry although an improvement in supply and demand for rental office buildings is expected.

Under these circumstances, the Mitsubishi Logistics Group will strive for sustainable growth by further expanding its logistics businesses in response to globalization and the real estate business with an emphasis on building leases, in line with the Medium-Term Management Plan (2013–2015), which covers three years beginning 2013.

As for the distribution of profits of Mitsubishi Logistics for the year ended March 31, 2014, we intend to distribute a year-end dividend of ¥6 per share, the same amount as the interim dividend, taking into account operating results for the year. As a result, the annual dividend per share, including the interim dividend of ¥6 per share, totals ¥12, the same as for the previous fiscal year.

As for dividends for the fiscal year ending March 31, 2015, based on the basic dividend policy of stably distributing dividends with due regard to the profitability level, the interim dividend and the year-end dividend will be ¥6 per share, respectively, and the annual dividend per share therefore will be ¥12, unless any exceptional circumstances take place.

We look forward to your continued support and encouragement.

June 2014

Akio Matsui, President

To Our Shareholders

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Topics

Energy-Saving Initiative to Adopt Photovoltaic Power Generation Facilities and LED Lighting EquipmentAccording to the MLC-Group Environmental Voluntary Plan* established in April 2009, the Company aggressively engages in installing photovoltaic power generation facilities and high-efficiency lighting.

1. Installation of photovoltaic power generation facilities Since the Company formulated the MLC-Group Environmental Voluntary Plan, it has installed photovoltaic power generation equipment for the Company’s use at its Yokohama Dia Building, the Misato No. 1 Distribution Center in Saitama and the Tosu Distribution Center in Saga.

Furthermore, the photovoltaic power generation equipment installed at the Ibaraki No. 3 Distribution Center in Osaka, the Daito Distribution Center in Osaka and the Misato No. 2 Distribution Center in Saitama, which were designated as Disaster-Resistant and Eco-Friendly Warehouses during the previous fiscal year, is compatible with the Business Continuity Plan (BCP) with specifications that allow for the use of air-conditioning equipment and LED lighting even during blackouts.

2. Use of the Feed-in Tariff scheme for Renewable Electric EnergyIn October 2013, the Company introduced photovoltaic power generation facilities at the Sakurajima No. 2 Distribution Center in Osaka, using the “Feed-in Tariff scheme for Renewable Electric Energy.” The feed-in tariff scheme under the Act guarantees that electric utilities purchase electricity generated from renewable energy sources such as solar PV, wind power and hydraulic power for 20 years at fixed prices. The Company uses this system for the first time in response to the Japanese government’s policy aiming to disseminate and expand renewable energies to address global warming and other issues.

The annual electricity amount generated by photovoltaic power generation facilities installed at this Distribution Center is assumed to be approximately 440,000 kWh, which covers electricity consumption at approximately 120 regular houses, and the estimated CO2 reduction is approximately 210 tons.

In the future, we intend to promote the installation of photovoltaic power generation facilities at other facilities of the Company using this government system.

3. Use of LED lightingUsing the “greening subsidy system to help control CO2 emissions toward the low carbon value improvement” under the Low Carbon City Development Guidance formulated by the Ministry of the Environment (in alliance with the Ministry of Land, Infrastructure, Transport and Tourism) in fiscal 2013, we replaced all the old lighting equipment of which the useful life had expired with LED lighting at each warehouse facility. The total number of lighting equipment units replaced at all the warehouses of the Company using this subsidy system amounted to more than 3,000.

The Company intends to continue to replace old lighting equipment with LED lighting using this system in fiscal 2014 and thereafter.

Combining the annual electricity generation (approximately 2.1 million kWh) and the annual energy saving (approximately 0.5 million kWh) through the above initiatives amounted to approximately 2.6 million kWh, realizing energy savings of about 5% of the annual electricity use at the Company’s warehouses during fiscal 2013 of approximately 50.1 million kWh.

The Company will continue to engage in CO2 reduction by installing photovoltaic power generation facilities and LED lighting and taking energy-saving measures, adhering to the MLC-Group Environmental Voluntary Plan.

* For the MLC-Group Environmental Voluntary Plan, please refer to the Company’s Web site: http://www.mitsubishi-logistics.co.jp/csr/earth/voluntary.html (The website is in Japanese.)

Photovoltaic power generation equipment installed at the Sakurajima No. 2 Distribution Center in Osaka

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Participated in the University of Electro-Communications’ 100th Anniversary Campus Development and Management ProjectThe Company received a work order for an entire campus development and management project, as a public private partnership (PPP) project, commemorating the 100th anniversary of the University of Electro-Communications, a government-run university in Japan. This project is to construct and manage a dorm for students, a dorm for the university employees and collaborative research facilities within the premises of the University of Electro-Communications, which is located in Chofu-shi, Tokyo, Japan. The construction is scheduled to start in January 2016 and be completed in February 2017, and the campus management will start in April 2017.

This is the second time the Company has participated in a PPP project. The first one was a Kanagawa Police dorm development and management project, for which one dorm building was completed in July 2013 and the other in November 2013, and management started thereafter.

The Company intends to expand businesses in the PPP project field toward businesses other than building leasing, which is one of the basic strategies under the Medium-Term Management Plan (2013–2015).

Image of completed campus

Established a Local Corporation in IndonesiaAs part of the Company’s business expansion within the ASEAN region, the Company jointly established a local company, P.T. DIA-JAYA FORWARDING INDONESIA (the “new company” below), in Jakarta, Indonesia, with an Indonesian partner and started operations on February 1, 2014. In Indonesia, the Company’s consolidated subsidiary, P.T. Mitsubishi Logistics Indonesia, which was established in 1993, conducts operations such as storage and distribution, whereas marine freight import/export operations and project forwarding were conducted in partnership with local companies. To address the rising demand for total import/export logistics services in Indonesia, we jointly established the new company with a local partner to provide total high-quality services including handling of international freight deliveries and import/export cargo services.

Utilizing the new company, P.T. Mitsubishi Logistics Indonesia and the overseas network of the Mitsubishi Logistics Group, the Company will expand businesses addressing the demand for logistics services within fast growing Indonesia and the ASEAN region.

Outline of the New Company ……………………………………………………………

(1) Company name: P.T. DIA-JAYA FORWARDING INDONESIA(2) Location of the head office: Jakarta, Indonesia(3) Major businesses: Handling of international freight deliveries, handling of import/export

cargo and trucking business(4) Establishment: December 30, 2013(5) Capital: 3 billion Indonesia Rupiah (IDR) (Investment ratio of the Company: 49%)

In the ASEAN region, in addition to the new company in Indonesia, two warehouse facilities in Thailand of approximately 11,600 m2 floor area in total, which are leased and managed by the Company’s consolidated subsidiary Mitsubishi Logistics Thailand Co., Ltd. (the “new warehouses”), started operation in July and October of 2013. The new warehouses are located close to Bangkok, where the country’s largest consumption occurs; the Bangkok Suvarnabhumi International Airport; and the Laem Chabang Port, the country’s largest port of trade.

The building that the new company is in

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Overview of the Mitsubishi Logistics Group (As of March 31, 2014)

Mitsubishi Logistics Corporation

Logistics

Consolidated Subsidiaries (50 companies)

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

Real Estate

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

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

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

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

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

transportation in Japan)

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

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The accompanying notes are an integral part of these statements.

March 31, March 31,

ASSETS 2014 2013 2014(Millions of yen) (Thousands of U.S. dollars)

(Note 1)

CURRENT ASSETS:

Cash and deposits (Notes 2 and 4) ¥ 35,523 ¥ 29,367 $ 345,152

Marketable securities (Notes 2, 4 and 5) 7,600 4,500 73,844

Notes and accounts receivable (Notes 3, 4 and 6) 33,477 33,556 325,272

Allowance for doubtful accounts (86) (56) (836)

33,391 33,500 324,436

Real estate held for sale 6,004 6,324 58,337

Deferred income taxes (Note 7) 1,872 2,112 18,189

Other (Note 2) 1,708 1,643 16,595

TOTAL CURRENT ASSETS 86,098 77,446 836,553

PROPERTY AND EQUIPMENT (Notes 9, 10 and 15):

Land 71,349 66,158 693,247

Buildings and structures 346,662 336,812 3,368,267

Machinery and equipment 33,288 32,220 323,435

Transportation equipment 7,927 7,975 77,021

Construction in progress 5,144 2,935 49,981

464,370 446,100 4,511,951

Accumulated depreciation (274,010) (266,681) (2,662,359)

NET PROPERTY AND EQUIPMENT 190,360 179,419 1,849,592

INVESTMENTS AND OTHER ASSETS:

Investments in unconsolidated subsidiaries and affiliates 7,633 7,153 74,164

Investments in securities (Notes 4, 5 and 10) 87,362 86,977 848,834

Long-term loans receivable 545 567 5,295

Intangible assets 14,388 13,650 139,798

Goodwill 2,147 2,292 20,861


Other 4,870 4,922 47,319

Allowance for doubtful accounts (22) (32) (214)

TOTAL INVESTMENTS AND OTHER ASSETS 119,781 118,315 1,163,826

¥ 396,239 ¥ 375,180 $ 3,849,971

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LIABILITIES AND NET ASSETS March 31, March 31,

2014 2013 2014(Millions of yen) (Thousands of U.S. dollars)

(Note 1)

CURRENT LIABILITIES:

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

debt (Notes 4, 10 and 11) ¥ 24,448 ¥ 15,125 $ 237,544

Notes and accounts payable (Notes 3, 4 and 6) 25,678 27,564 249,495

Income taxes payable 3,122 2,294 30,334

Other (Notes 7 and 10) 3,357 3,745 32,617

TOTAL CURRENT LIABILITIES 56,605 48,728 549,990

LONG-TERM LIABILITIES:

Long-term debt, less current maturities (Notes 4, 10 and 11) 47,715 42,883 463,613

Deposits on long-term leases (Notes 4, 6 and 10) 22,443 23,189 218,063

Retirement benefits (Note 12) 16,125 16,075 156,675


Other 630 709 6,121

TOTAL LONG-TERM LIABILITIES 102,992 98,624 1,000,700

TOTAL LIABILITIES 159,597 147,352 1,550,690

CONTINGENT LIABILITIES (Notes 14)

NET ASSETS

SHAREHOLDERS’ EQUITY:

Common stock

authorized – 440,000,000 shares,

issued – 175,921,478 shares, 22,394 22,394 217,587

Capital surplus 19,618 19,618 190,614

Retained earnings 157,686 151,269 1,532,122

Treasury stock (747) (712) (7,258)

TOTAL SHAREHOLDERS’ EQUITY 198,951 192,569 1,933,065

ACCUMULATED OTHER COMPREHENSIVE INCOME

Net unrealized holding gains on securities 35,044 34,383 340,497

Foreign currency translation adjustments 957 (1,135) 9,299

Remeasurements of defined benefit plans (551) – (5,354)

TOTAL ACCUMULATED OTHER COMPREHENSIVE INCOME 35,450 33,248 344,442

MINORITY INTERESTS 2,241 2,011 21,774

TOTAL NET ASSETS 236,642 227,828 2,299,281

¥ 396,239 ¥ 375,180 $ 3,849,971

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Year ended March 31, Year ended March 31,

2014 2013 2012 2014(Millions of yen) (Thousands of U.S. dollars)

(Note 1)

REVENUE ¥ 198,162 ¥ 192,261 ¥ 203,698 $ 1,925,398

COST OF SERVICES 176,942 170,901 181,645 1,719,218

Gross profit 21,220 21,360 22,053 206,180

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 9,072 9,055 9,520 88,147

Operating income 12,148 12,305 12,533 118,033

OTHER INCOME (EXPENSES):

Interest and dividend income 2,141 2,138 2,090 20,803

Interest expense (777) (763) (748) (7,550)

Gain on sale of marketable securities and investments

in securities1,917 51 – 18,626

Gain (loss) on revaluation of marketable securities and

investments in securities(13) (92) 21 (126)

Loss on disposal of property and equipment, net (880) (769) (315) (8,550)

Impairment loss – – (304) –

Equity in earnings of unconsolidated subsidiaries and

affiliates186 372 224 1,807

Indemnity income of existing facilities for lease (Note 13) 18 37 303 175

Other, net (Note 12) (338) 443 (38) (3,284)

2,254 1,417 1,233 21,901

Income before income taxes and minority interests 14,402 13,722 13,766 139,934

INCOME TAXES (Note 7)

Current 5,289 4,922 5,331 51,390

Deferred 430 123 892 4,178

5,719 5,045 6,223 55,568

Income before minority interests 8,683 8,677 7,543 84,366

MINORITY INTERESTS IN LOSSES (EARNINGS) OF

CONSOLIDATED SUBSIDIARIES (162) (86) 21 (1,574)

NET INCOME ¥ 8,521 ¥ 8,591 ¥ 7,564 $ 82,792

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

Net income ¥ 48.62 ¥ 49.02 ¥ 43.16 $ 0.47

Cash dividends applicable to the year ¥ 12.00 ¥ 12.00 ¥ 12.00 $ 0.12

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(Note 1)

INCOME BEFORE MINORITY INTERESTS ¥ 8,683 ¥ 8,677 ¥ 7,543 $ 84,366

OTHER COMPREHENSIVE INCOME:

Valuation difference on available-for-sale securities 686 8,772 439 6,665

Foreign currency translation adjustments 1,803 858 (166) 17,519

Share of other comprehensive income of affiliates

accounted for using the equity method366 179 11 3,556

Total other comprehensive income (Note 8) 2,855 9,809 284 27,740

COMPREHENSIVE INCOME (Note 8) ¥ 11,538 ¥ 18,486 ¥ 7,827 $ 112,106

Comprehensive income attributable to:

Comprehensive income attributable to owners of the parent ¥ 11,273 ¥ 18,334 ¥ 7,855 $ 109,531

Comprehensive income attributable to minority interests 265 152 (28) 2,575



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Common Stock

Shares AmountCapitalsurplus

Retainedearnings

Treasurystock

Net unrealizedholding gainson securities

Foreign currency

translationadjustments

Remeasurementsof defined

benefit plansMinorityinterests

(Thousands of shares)

(Millions of yen)

Balance at March 31, 2011 175,921 ¥22,394 ¥19,618 ¥139,322 ¥(689) ¥25,195 ¥(1,978) ¥ – ¥1,945

Net income for the year – – – 7,564 – – – – –

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

Purchase of treasury stock – – – – (9) – – – –

Sale of treasury stock – – (0) – 2 – – – –

Changes other than to stockholders’

equity, net– – – – – 439 (150) – (13)

Balance at March 31, 2012 175,921 ¥22,394 ¥19,618 ¥144,782 ¥(696) ¥25,634 ¥(2,128) ¥ – ¥1,932


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


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


equity, net– – – – – 8,749 993 – 79

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


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


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


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

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

CommonStock

Capitalsurplus

Retainedearnings

Treasurystock

Net unrealizedholding gainson securities

Foreign currency

translationadjustments

Remeasurementsof defined

benefit plansMinorityinterests

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

Balance at March 31, 2013 $217,587 $190,614 $1,469,773 $(6,918) $334,075 $(11,028) $ – $19,539

Net income for the year – – 82,792 – – – – –

Cash dividends – – (20,443) – – – – –

Purchase of treasury stock – – – (340) – – – –

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


equity, net– – – – 6,422 20,327 (5,354) 2,235

Balance at March 31, 2014 $217,587 $190,614 $1,532,122 $(7,258) $340,497 $ 9,299 $(5,354) $21,774

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(Note 1)

CASH FLOWS FROM OPERATING ACTIVITIES:

Income before income taxes and minority interests ¥ 14,402 ¥ 13,722 ¥ 13,766 $ 139,934

Depreciation and amortization 12,517 12,098 13,568 121,619

Impairment loss – – 304 –

Decrease (increase) in retirement benefits 57 (558) (221) 554

Loss (gain) on revaluation of marketable

securities and investments in securities5 96 (21) 49

Gain on sales of marketable securities and

investments in securities(1,914) (51) (4) (18,597)

Loss on disposal of property and equipment 244 93 187 2,371

Equity in earnings of unconsolidated subsidiaries and

affiliates(186) (372) (224) (1,807)

Interest and dividend income (2,141) (2,138) (2,090) (20,803)

Interest expense 777 763 748 7,550

Decrease (increase) in notes and accounts receivable 621 10,608 (11,626) 6,034

Decrease (increase) in real estate held for sale 320 (3,826) 4,736 3,109

Increase (decrease) in notes and accounts payable (1,158) (1,057) 704 (11,251)

Decrease in deposits payable (36) (5,177) (1,644) (350)

Other, net (856) (626) (102) (8,319)

Subtotal 22,652 23,575 18,081 220,093

Interest and dividend income received in cash 2,254 2,198 2,168 21,901

Interest expense paid in cash (750) (743) (716) (7,287)

Income taxes paid in cash (4,455) (5,478) (4,902) (43,286)

NET CASH PROVIDED BY OPERATING ACTIVITIES 19,701 19,552 14,631 191,421

CASH FLOWS FROM INVESTING ACTIVITIES:

Cash investment in time deposits (1,048) (665) (684) (10,183)

Cash return from time deposits 604 702 647 5,869

Acquisition of property and equipment (25,166) (14,002) (11,547) (244,520)

Proceeds from sales of property and equipment 218 157 203 2,118

Acquisition of marketable securities and

investments in securities(844) (780) (1,699) (8,201)

Proceeds from sales of marketable securities and

investments in securities3,406 128 269 33,094

Acquisition of investments in subsidiaries (322) – – (3,129)

Acquisition of investments in subsidiaries

resulting in change in scope of consolidation – (2,599) – –

Payments for sales of shares of subsidiaries resulting

in change in scope of consolidation(7) – – (68)

Other, net 14 546 332 137

NET CASH USED IN INVESTING ACTIVITIES (23,145) (16,513) (12,479) (224,883)

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(Note 1)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from short-term bank loans ¥ 9,972 ¥ 2,170 ¥ 2,246 $ 96,891

Repayments of short-term bank loans (1,985) (3,772) (5,038) (19,287)

Proceeds from long-term debt 1,294 9,976 1,050 12,573

Repayments of long-term debt (5,202) (4,193) (989) (50,544)

Issue of bonds 10,000 – 10,000 97,163

Redemption of bonds – – (5,000) –

Dividends paid (2,104) (2,105) (2,104) (20,443)

Other, net (340) (315) (172) (3,304)

NET CASH PROVIDED BY (USED IN)

FINANCING ACTIVITIES11,635 1,761 (7) 113,049

Effect of exchange rate changes on cash and cash equivalents 584 245 (77) 5,673

NET INCREASE IN CASH AND CASH EQUIVALENTS 8,775 5,045 2,068 85,260

CASH AND CASH EQUIVALENTS AT

BEGINNING OF YEAR (Note 2)32,462 27,417 25,349 315,410

CASH AND CASH EQUIVALENTS AT END OF YEAR (Note 2) ¥41,237 ¥32,462 ¥27,417 $400,670


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BASIS OF PRESENTING CONSOLIDATED FINANCIAL

STATEMENTS

The accompanying consolidated financial statements of Mitsubishi Logistics Corporation (the “Company”) have been prepared in accordance with the provisions set forth in the Japanese Financial Instruments and Exchange Law and its related accounting regulations, and in conformity with accounting principles generally accepted in Japan (“Japanese GAAP”), which are different in certain respects as to application and disclosure requirements of International Financial Reporting Standards.

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

The translations of Japanese yen amounts into U.S. dollars are included solely for the convenience of readers outside Japan, using the prevailing exchange rate at March 31, 2014, which was ¥102.92 to U.S. $1. The convenience translations should not be construed as representations that the Japanese yen amounts have been, could have been, or could in the future be converted into U.S. dollars at this or any other rate of exchange.

CONSOLIDATION

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

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

The numbers of consolidated subsidiaries and affiliates accounted for by the equity method at March 31, 2014, 2013 and 2012 were as follows:

March 31,

2014 2013 2012

Consolidated subsidiaries 50 51 48

Unconsolidated subsidiaries

and affiliates under the equity

method 3 3 3

Due to the sale of shares, Nagato Lines Co., Ltd. was excluded from the consolidation scope.

CONSOLIDATED STATEMENTS OF CASH FLOWS

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

CONVERSION OF ASSETS AND LIABILITIES

DENOMINATED IN FOREIGN CURRENCIES

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

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

DERIVATIVES AND HEDGE ACCOUNTING

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

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

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

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

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


NOTE 1 – SUMMARY OF ACCOUNTING POLICIES

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

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

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

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

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

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

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

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

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

TRANSLATION OF FOREIGN CURRENCY STATEMENTS

The balance sheets of overseas subsidiaries are translated into Japanese yen at the rate of exchange at the balance sheet date of the subsidiaries, which is December 31,2013, except for shareholders’ equity accounts, which are translated based on historical rates. The year-end rate of the subsidiaries is also used for translation of income, expenses and net income for the year. The resulting translation adjustments are presented as “foreign currency translation adjustments” in the accompanying consolidated financial statements.

ALLOWANCE FOR DOUBTFUL ACCOUNTS

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

SECURITIES

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

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

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

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

REAL ESTATE HELD FOR SALE

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

INCOME TAXES

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


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DEPRECIATION

(1) Property and equipment

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

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

(2) Intangible assets

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

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

(3) Finance leases

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

ALLOWANCE FOR BONUSES FOR DIRECTORS

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

RETIREMENT BENEFITS AND PENSION PLAN

(1) Employees’ severance and retirement benefits

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

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

Actuarial gains and losses are recognized in statements of income using the straight-line method over 5 to 16 years, beginning from the fiscal year following the incurred year. Prior service costs are recognized in statements of income using the straight-line method over 5 to 15 years, beginning from the incurred year.

Effective from the year ended March 31, 2014, the Company and its consolidated domestic subsidiaries have applied the “Accounting Standard for Retirement Benefits” (ASBJ Statement No. 26, May 17, 2012 (hereinafter, “Statement No. 26”)) and the “Guidance on Accounting Standard for Retirement Benefits” (ASBJ Guidance No. 25, May 17, 2012 (hereinafter, “Guidance No. 25”)), with the exceptions of Article 35 of Statement No. 26 and Article 67 of Guidance No. 25, and, accordingly, actuarial gains and losses and past service costs that are yet to be recognized have been recognized and the difference between retirement benefit obligations and plan assets has been recognized as liability for retirement benefits.

In accordance with Article 37 of Statement No. 26, the effect of the change in accounting policies arising from initial application has been recognized in accumulated adjustments for retirement benefits in accumulated other comprehensive income.

As a result of the application, liability for retirement benefits in the amount of ¥15,898 million ($154,469 thousand) has been recognized and accumulated other comprehensive income has decreased by ¥551 million ($5,354 thousand) at the end of the current fiscal year.

(2) Officers’ severance and retirement benefits

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

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

NET ASSETS

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

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

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

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

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

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

Retained earnings at March 31, 2014 included amounts representing year-end cash dividends of ¥1,052 million ($10,222 thousand) at ¥6.0 ($0.06) per share, which were approved at the shareholders’ meeting held on June 27, 2014.

PER SHARE INFORMATION

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

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

Information on diluted net income per share is not disclosed as no shares which dilute net income per share were outstanding for the years ended March 31, 2014, 2013 and 2012.

ACCOUNTING STANDARDS ISSUED BUT NOT YET

EFFECTIVE

(Accounting Standard for Retirement Benefits)- Statement No. 26- Guidance No. 25

(1) Summary

The revisions are based on the perspective of improving financial reporting and international trends and mainly focus on the accounting treatments of unrecognized actuarial gains or losses as well as unrecognized prior service costs, the calculation methods for retirement benefit obligations as well as service costs and the expansion of disclosures.

(2) Effective dates

Amendments relating to the determination of retirement benefit obligations and current service costs will become effective from the beginning of annual periods ending March 31, 2015.

(3) Effect of application of the standard

The Company and its consolidated domestic subsidiaries are currently in the process of determining the effects of these new standards on the consolidated financial statements.(Business Combinations and Related Standards)

- Accounting Standard for Business Combinations (ASBJ Statement No. 21, September 13, 2013)

- Accounting Standard for Consolidated Financial Statements (ASBJ Statement No. 22, September 13, 2013)

- Accounting Standard for Business Divestitures (ASBJ Statement No. 7, September 13, 2013)

- Accounting Standard for Earnings per Share (ASBJ Statement No. 2, September 13, 2013)

- Guidance on Accounting Standard for Business Combinations and Accounting Standard for Business Divestitures (ASBJ Guidance No. 10, September 13, 2013)

- Guidance on Accounting Standard for Earnings per Share (ASBJ Guidance No. 4, September 13, 2013)

(1) Summary

Major accounting changes under these revised accounting standards concern the following:

(a) Treatment of changes in ownership interests in its subsidiary when the parent retains control over its subsidiary as a result of additional acquisitions or other

(b) Treatment of acquisition-related costs(c) Presentation of net income as well as changing of

presentation from “minority interest” to “non-controlling interest”

(d) Provisional accounting treatment for business combinations

(2) Effective dates

The Company and its domestic subsidiaries will adopt these accounting standards from the fiscal year ending March 31, 2017. However, provisional accounting will be adopted for business combinations conducted on or after April 1, 2016.

(3) Effect of application of the standard

The Company and its consolidated domestic subsidiaries are currently in the process of determining the effects of these new standards on the consolidated financial statements.


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As financial institutions in Japan were closed on March 31, 2013, notes receivable of ¥60 million ($638 thousand) and notes payable of ¥32 million ($340 thousand) were settled on April 1, 2013 and accounted for accordingly.

NOTE 3 – EFFECT OF THE BANK HOLIDAY ON MARCH 31, 2013

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

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

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

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

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

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

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

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

NOTE 4 – FINANCIAL INSTRUMENTS

Reconciliation of cash and deposits in the consolidated balance sheets and cash and cash equivalents in the consolidated statements of cash flows as of March 31, 2014 and 2013 were as follows:

March 31, March 31,


Cash and deposits ¥35,523 ¥29,367 $345,152

Time deposits with maturities over six months (1,886) (1,405) (18,326)

Money funds invested in bonds and domestic

certificates of deposits 7,600 4,500 73,844

Current assets other (money deposited) 0 0 0

Cash and cash equivalents ¥41,237 ¥32,462 $400,670

NOTE 2 – CASH AND CASH EQUIVALENTS

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2. FAIR VALUES OF FINANCIAL INSTRUMENTSBook values, on the consolidated balance sheets, fair values and differences between the two on as of March 31, 2014 and 2013 were as follows. Notably, items for which it is extremely difficult to determine the fair value were not included in the following table (see (Note 2)).

March 31, 2014 March 31, 2014

Bookvalue Fair value Difference


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

(1) Cash and deposits ¥ 35,523 ¥ 35,523 ¥ – $ 345,152 $ 345,152 $ –

(2) Notes and accounts receivable 30,748 30,748 – 298,756 298,756 –

(3) Marketable securities 7,600 7,600 – 73,844 73,844 –

(4) Investment in securities (available-for-sale securities) 86,137 86,137 – 836,932 836,932 –

¥ 160,008 ¥ 160,008 ¥ – $ 1,554,684 $ 1,554,684 $ –

Liabilities

(1) Notes and accounts payable ¥ 18,916 ¥ 18,916 ¥ – $ 183,793 $ 183,793 $ –

(2) Short-term bank loans 17,950 17,950 – 174,407 174,407 –

(3) Bonds *1 39,000 40,080 1,080 378,935 389,429 10,494

(4) Long-term loans payable *2 15,213 15,316 103 147,815 148,815 1,000

(5) Deposits on long-term leases 1,165 1,061 (104) 11,319 10,309 (1,010)

(6) Derivatives – – – – – –

¥ 92,244 ¥ 93,323 ¥ 1,079 $ 896,269 $ 906,753 $ 10,484

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

March 31, 2013


(Millions of yen)Assets

(1) Cash and deposits ¥ 29,367 ¥ 29,367 ¥ –

(2) Notes and accounts receivable 30,721 30,721 –

(3) Marketable securities 4,500 4,500 –

(4) Investment in securities (available-for-sale securities) 85,627 85,627 –

¥150,215 ¥150,215 ¥ –

Liabilities

(1) Notes and accounts payable ¥ 20,038 ¥ 20,038 ¥ –

(2) Short-term bank loans 10,061 10,061 –

(3) Bonds 29,000 30,406 1,406

(4) Long-term loans payable *1 18,946 18,964 18

(5) Deposits on long-term leases 1,165 1,045 (120)

(6) Derivatives – – –

¥ 79,210 ¥ 80,514 ¥1,304

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

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

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

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

determined using the market price. Information on securities categorized by holding purpose is described in NOTE 5 (SECURITIES).

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

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

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

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

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

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

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

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

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

March 31, March 31,


Non-listed stocks *1 ¥ 8,447 ¥ 8,134 $ 82,073

Deposits on long-term leases *2 21,278 22,024 206,744

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

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

March 31, 2014Millions of yen

One year or less

One to five years

Five to ten years

Over ten years

Cash and deposits ¥35,523 ¥ – ¥ – ¥ –

Notes and accounts receivable 30,748 – – –

Marketable securities (certificate of deposits) 7,600 – – –

Investment in securities

Available-for sale securities with maturities (public bonds) 15 18 – –

¥73,886 ¥18 ¥ – ¥ –


One year or less

One to five years

Five to ten years

Over ten years

Cash and deposits ¥29,367 ¥ – ¥ – ¥ –





¥64,618 ¥33 ¥ – ¥ –

March 31, 2014Thousands of U.S. dollars

One year or less

One to five years

Five to ten years

Over ten years

Cash and deposits $345,152 $ – $ – $ –





$717,898 $175 $ – $ –


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


One year or less

One to two years

Two to three years

Three to four years

Four to five years

Over five years

Short-term loans ¥17,950 ¥ – ¥ – ¥ – ¥ – ¥ –

Bonds 5,000 7,000 – – 7,000 20,000

Long-term loans 1,498 1,143 5,289 4,666 1,269 1,348

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

¥24,448 ¥8,143 ¥5,289 ¥4,666 ¥8,269 ¥22,513


One year or less

One to two years

Two to three years

Three to four years

Four to five years

Over five years

Short-term loans ¥10,062 ¥ – ¥ – ¥ – ¥ – ¥ –

Bonds – 5,000 7,000 – – 17,000

Long-term loans 5,063 1,486 1,033 5,166 4,645 1,553


¥15,125 ¥6,486 ¥8,033 ¥5,166 ¥4,645 ¥19,718

March 31, 2014Thousands of U.S. dollars

One year or less

One to two years

Two to three years

Three to four years

Four to five years

Over five years

Short-term loans $174,407 $ – $ – $ – $ – $ –

Bonds 48,581 68,014 – – 68,014 194,326

Long-term loans 14,556 11,106 51,389 45,336 12,330 13,098


$237,544 $79,120 $51,389 $45,336 $80,344 $218,743

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At March 31, 2014, acquisition costs, book values stated at fair values and net unrealized holding gains (losses) of Available-for-sale Securities were as follows:

March 31, 2014 March 31, 2014

Bookvalue

Acquisition cost

Unrealized holdinggains

(losses)Bookvalue

Acquisition cost


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

Securities with book values exceeding

acquisition costs:

Stocks ¥83,807 ¥28,998 ¥54,809 $814,293 $281,753 $532,540

Bonds 32 32 0 311 311 0

Other – – – – – –

83,839 29,030 54,809 814,604 282,064 532,540

Other securities:

Stocks 2,298 2,587 (289) 22,328 25,136 (2,808)

Bonds – – – – – –

Other – – – – – –

2,298 2,587 (289) 22,328 25,136 (2,808)

¥86,137 ¥31,617 ¥54,520 $836,932 $307,200 $529,732

Non-listed stocks and others (book value being ¥1,271 million ($12,349 thousand)) were not included in the above list because their fair values are extremely difficult to estimate (due to lack of market price and inability to estimate their future cash flows).

In the year ended March 31, 2014, the amounts of sale, related gains and related losses of Available-for-sale Securities were as follows:

March 31, 2014 March 31, 2014

Amount of sale

Relatedgains

Related losses

Amount of sale

Relatedgains

Related losses

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

Stocks ¥3,377 ¥1,917 ¥3 $32,812 $18,626 $29

Bonds 29 – – 282 – –

Other – – – – – –

¥3,406 ¥1,917 ¥3 $33,094 $18,626 $29

NOTE 5 – SECURITIES

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At March 31, 2013, acquisition costs, book values stated at fair values and net unrealized holding gains (losses) of Available-for-sale Securities were as follows:

March 31, 2013

Bookvalue

Acquisitioncost


(losses)(Millions of yen)

Securities with book values exceeding acquisition costs:

Stocks ¥83,124 ¥29,202 ¥53,922

Bonds 63 61 2

Other – – –

83,187 29,263 53,924

Other securities:

Stocks 2,440 2,903 (463)

Bonds – – –

Other – – –

2,440 2,903 (463)

¥85,627 ¥32,166 ¥53,461

Non-listed stocks and others (book value being ¥1,399 million) were not included in the above list because their fair values are extremely difficult to estimate (due to lack of market price and inability to estimate their future cash flows).

In the year ended March 31, 2013, the amounts of sale, related gains and related losses of Available-for-sale Securities were as follows:

March 31, 2013

The amountof sale

Relatedgains

Relatedlosses

(Millions of yen)

Stocks ¥116 ¥51 ¥ –

Bonds 13 – –

Other – – –

¥129 ¥51 ¥ –

Total write-down of Available-for-sale Securities with available fair values amounted to ¥83 million in the year ended March 31, 2013.

If the fair value of Available-for-sale Securities declines over 30% compared with its acquisition cost, such decline is recognized as being significant. In this case, the Company and its consolidated subsidiaries write down the book value of such securities taking into account the potential for recovery of the fair value.

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NOTE 7 – INCOME TAXES

The Company and its consolidated subsidiaries are subject to a number of different income taxes which, in the aggregate, reflected a statutory tax rate of approximately 38% for 2014 and 2013 and 41% for 2012.

Reconciliations between the statutory tax rate and the effective tax rate for the years ended March 31, 2014, 2013 and 2012 were as follows:

March 31,

2014 2013 2012

Statutory tax rate – – 40.7%

Entertainment expense etc.

not deductible for Japanese tax purposes– – 1.3

Dividends etc.

not taxable for Japanese tax purposes– – (4.0)

Inhabitant taxes – – 0.7

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

tax rate change– – 6.2

Other – – 0.3

Effective tax rate – – 45.2%

Information on reconciliation of tax rates for the years ended March 31, 2014 and 2013 is not disclosed as difference between the statutory tax rate and the effective tax rate was not more than 5% for the years ended March 31, 2014 and 2013.

NOTE 6 – RECEIVABLES FROM AND PAYABLES TO UNCONSOLIDATED SUBSIDIARIES AND AFFILIATES

Significant receivables from and payables to unconsolidated subsidiaries and affiliates at March 31, 2014 and 2013 were as follows:

March 31, March 31,


Notes and accounts receivable ¥153 ¥136 $1,487

Notes and accounts payable ¥635 ¥585 $6,170

Deposits on long-term leases ¥ 24 ¥ 13 $ 233

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Significant components of the Company and its consolidated subsidiaries’ deferred income tax assets and liabilities as of March 31, 2014 and 2013 were as follows:

March 31, March 31,


Deferred income tax assets:

Accrued enterprise tax ¥ 232 ¥ 192 $ 2,254

Allowance for investment loss 57 60 554

Allowance for doubtful accounts 39 22 379

Accrued employees’ bonuses 998 1,108 9,697

Retirement benefits 5,530 5,586 53,731

Depreciation 6,383 6,136 62,018

Impairment loss 2,908 3,003 28,255

Other 1,979 2,423 19,229

18,126 18,530 176,117

Valuation allowance (1,066) (1,240) (10,357)

Total deferred income tax assets 17,060 17,290 165,760

Deferred income tax liabilities:

Net unrealized holding gains on securities (19,166) (18,842) (186,222)

Reserves deductible for Japanese tax purposes (8,467) (8,539) (82,268)

Other (794) (786) (7,715)

Total deferred income tax liabilities (28,427) (28,167) (276,205)

Net deferred income tax liabilities ¥(11,367) ¥(10,877) $(110,445)

The “Act for Partial Revision of the Income Tax Act, etc.” was promulgated in Japan on March 31, 2014. Accordingly, the statutory income tax rate utilized for the measurement of deferred tax assets and liabilities expected to be settled or realized between April 1, 2014 and March 31, 2015 was changed from 38.0% to 35.6%. As a result of this change, net deferred tax assets decreased by ¥165 million ($1,603 thousand) as of March 31,2014, and deferred income tax expense recognized for the year then ended increased by ¥165 million ($1,603 thousand).

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NOTE 8 – STATEMENTS OF COMPREHENSIVE INCOME

Amounts reclassified to net income for the years ended March 31, 2014, 2013 and 2012 were recognized in other comprehensive income in the current or previous periods, and tax effects for each component of other comprehensive income were as follows:



Valuation difference on available-for-sale securities

Increase (Decrease) during the year ¥2,969 ¥13,572 ¥(2,767) $28,848

Reclassification adjustments (1,901) 41 81 (18,471)

Sub-total, before tax 1,068 13,613 (2,686) 10,377

Tax (expense) or benefit (382) (4,841) 3,125 (3,712)

Sub-total, net of tax 686 8,772 439 6,665

Foreign currency translation adjustments

Increase (Decrease) during the year 1,803 858 (166) 17,519

Share of other comprehensive income of

affiliates accounted for using the equity method

Increase during the year 366 179 11 3,556

Total other comprehensive income ¥2,855 ¥ 9,809 ¥ 284 $27,740


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NOTE 9 – INVESTMENT AND RENTAL PROPERTY

For the year ended March 31, 2014The Company and some of its consolidated subsidiaries have some investments and rental property such as office buildings for rent (including land) in Tokyo and other regions. For the year ended March 31, 2014, profit and loss concerning investment and rental property comprised lease profit of ¥9,654 million ($93,801 thousand), subsidy income of ¥194 million ($1,885 thousand), indemnity income of existing facilities for lease of ¥6 million ($58 thousand) and loss on disposal of property and equipment of ¥733 million ($7,122 thousand).

Information on fair value of investment and rental property included in the consolidated financial statements at March 31, 2014 is as follows:

Book value Fair valueApril 1, 2013 Increase/(Decrease) March 31, 2014 March 31, 2014

(Millions of yen)¥77,216 ¥7,724 ¥84,940 ¥265,008


(Thousands of U.S. dollars)$750,253 $75,048 $825,301 $2,574,893

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

maintenance and renewal of existing facilities amounting to ¥11,483 million ($111,572 thousand), and the main factor for the decrease was the depreciation of ¥6,326 million ($61,465 thousand).

3. Fair value as of March 31, 2014 was the amount mainly based on appraisal by an external real estate appraiser.

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For the year ended March 31, 2013The Company and some of its consolidated subsidiaries have some investments and rental property such as office buildings for rent (including land) in Tokyo and other regions. For the year ended March 31, 2013, profit and loss concerning investment and rental property comprised lease profit of ¥10,657 million, subsidy income of ¥216 million, gain on donation of fixed assets of ¥91 million and loss on disposal of property and equipment of ¥271 million.

Information on fair value of investment and rental property included in the consolidated financial statements at March 31, 2013 is as follows:


(Millions of yen)¥78,722 ¥(1,506) ¥77,216 ¥249,075

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

maintenance and renewal of existing facilities amounting to ¥4,724 million, and the main factor for the decrease was the depreciation of ¥6,141 million.

3. Fair value as of March 31, 2013 was the amount mainly based on appraisal by an external real estate appraiser.

NOTE 10 – PLEDGED ASSETS

The net book values of pledged assets at March 31, 2014 and 2013 were as follows:

March 31, March 31,


Land ¥1,085 ¥1,085 $10,542

Buildings and structures 399 483 3,877

Investments in securities 33 63 321

¥1,517 ¥1,631 $14,740

Liabilities secured by the pledged assets mentioned above at March 31, 2014 and 2013 were as follows:

March 31, March 31,


Short-term bank loans ¥ 700 ¥ 700 $ 6,801

Other in current liabilities 512 544 4,975

Long-term loans payable 6,595 6,708 64,079

Deposits on long-term leases 1,319 1,478 12,816

¥9,126 ¥9,430 $88,671

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Short-term bank loans outstanding at March 31, 2014 and 2013 were ¥17,950 million ($174,407 thousand) and ¥10,061 million, respectively, and the annual interest rates of short-term bank loans were 0.390% to 2.650% and 0.420% to 3.875%, respectively.

Long-term debt at March 31, 2014 and 2013 consisted of the following:

March 31, March 31,


Loans from banks, insurance companies and others,

generally secured, between 0.100%-3.880% and

0.112%-3.880% per annum ¥15,213 ¥18,946 $147,815

Balance in lease obligations 829 885 8,055

1.670% yen bonds due 2014, unsecured 5,000 5,000 48,581





0.442% yen bonds due 2021, unsecured 5,000 – 48,581

0.734% yen bonds due 2024, unsecured 5,000 – 48,581

55,042 48,831 534,805

Less current portion (6,791) (5,337) (65,983)

¥48,251 ¥43,494 $468,822

The aggregate annual maturities of long-term debt at March 31, 2014 were as follows:

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

2015 ¥ 1,498 $ 14,556

2016 1,143 11,106

2017 5,289 51,389

2018 4,666 45,336

2019 1,269 12,330

2020 and thereafter 1,348 13,098

¥15,213 $147,815

The aggregate annual maturities of lease obligation at March 31, 2014 were as follows:

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

2015 ¥293 $2,847

2016 240 2,332

2017 211 2,050

2018 55 535

2019 20 194

2020 and thereafter 10 97

¥829 $8,055

NOTE 11 – SHORT-TERM BANK LOANS AND LONG-TERM DEBT

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NOTE 12 – RETIREMENT BENEFITS AND PENSION PLAN

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

March 31, 2014 March 31, 2014(Millions of yen) (Thousands of U.S. dollars)

Balance at April 1, 2013 ¥21,120 $205,208

Service cost - benefits earned during the year 852 8,278

Interest cost on projected benefit obligation 488 4,742

Actuarial loss 1,571 15,264

Benefits paid (1,439) (13,982)

Balance at March 31, 2014 ¥22,592 $219,510

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


Balance at April 1, 2013 ¥10,072 $ 97,862

Expected return on plan assets 201 1,953

Actuarial gain 717 6,967

Contributions from the Group 1,297 12,602

Benefits paid (1,024) (9,949)

Other 95 923

Balance at March 31, 2014 ¥11,358 $110,358

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


Balance at April 1, 2013 ¥4,743 $46,084

Retirement benefit costs 464 4,508

Benefits paid (462) (4,488)

Contributions from the Group (99) (962)

Other 18 175

Balance at March 31, 2014 ¥4,664 $45,317

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


Funded retirement benefit obligations ¥19,378 $188,282

Plan assets (12,431) (120,783)

6,947 67,499

Unfunded retirement benefit obligations 8,951 86,970

Total net liability (asset) for retirement benefits

at March 31, 2014 ¥15,898 $154,469

Liability for retirement benefits *1 ¥15,898 $154,469

Total net liability (asset) for retirement benefits

at March 31, 2014 ¥15,898 $154,469

*1 Officers’ severance and retirement benefits of ¥ 227 million ($ 2,206 thousand) are not included in the above.

(5) Severance and retirement benefit expenses for employees


Service cost - benefits earned during the year *1 ¥ 756 $ 7,345

Interest cost on projected benefit obligation 488 4,742

Expected return on plan assets (201) (1,953)

Amortization of actuarial losses 75 729

Amortization of prior service costs (166) (1,613)

Severance and retirement benefit expenses based on

simplified methods 464 4,508

Severance and retirement benefit expenses for employees ¥1,416 $13,758

*1 Contributions from employees are not included.

(6) Remeasurements of defined benefit plans


Prior service costs that are yet to be recognized ¥1,000 $9,716

Actuarial losses that are yet to be recognized (119) (1,156)

Total balance at March 31, 2014 ¥ 881 $8,560

(7) Plan assets (a) Plan assets comprise:

General account 36%

Equity securities 34%

Bonds 28%

Other 2%

Total 100%

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

(8) Actuarial assumptionsThe principal actuarial assumptions at March 31, 2014 (expressed in weighted average) were as follows:

Discount rate 1.5%-1.7%

Long-term expected rate of return 2.0%

2. Defined contribution planThe required contribution amount of the Company and its consolidated subsidiaries to the defined contribution plan was ¥236 million ($2,293 thousand).

Indemnity income of existing facilities for lease represented mainly income from cancellation of equipment in leased real estate facilities in Tokyo for the year ended March 31, 2014. For the year ended March 31, 2013, such represented mainly income from cancellation of leased commercial facilities in Kobe.

NOTE 13 – INDEMNITY INCOME OF EXISTING FACILITIES FOR LEASE

At March 31, 2014 and 2013, the balances of guarantee for loans amounted to ¥2,482 million ($24,116 thousand) and ¥2,794 million, respectively.

NOTE 14 – CONTINGENT LIABILITIES

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1. FINANCE LEASES(LESSEE LEASES)Non-transferable finance leases (1) Leased assets

Mainly consisted of system equipment relating to the logistics business (accounted for in “machinery and equipment” under property and equipment).

(2) Depreciation method for leased assets As described in (1) Property and equipment under “DEPRECIATION” in NOTE 1 ( SUMMARY OF ACCOUNTING POLICIES)

2. OPERATING LEASES(LESSEE LEASES)Future minimum lease payments under non-cancelable operating lease as of March 31, 2014 and 2013 were as follows:

March 31, March 31,


Due within one year ¥ 3,196 ¥ 3,073 $ 31,053

Due after one year 12,288 12,214 119,394

¥15,484 ¥15,287 $150,447

(LESSOR LEASES)Future minimum lease receipts under non-cancelable operating lease as of March 31, 2014 and 2013 were as follows:

March 31, March 31,


Due within one year ¥12,269 ¥12,835 $119,209


¥29,609 ¥34,423 $287,689

NOTE 15 – LEASE TRANSACTIONS

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

March 31, March 31,


Buildings and structures and other

Purchase price ¥3,353 ¥3,353 $32,579

Accumulated depreciation 2,246 2,128 21,823

Book value ¥1,107 ¥1,225 $10,756

(b) Lease commitments

March 31, March 31,


Due within one year ¥ 162 ¥ 153 $ 1,574


¥1,758 ¥1,911 $17,081

(c) Rental income, depreciation and interest income equivalents



Rental income ¥274 ¥274 ¥275 $2,662

Depreciation ¥118 ¥124 ¥129 $1,147

Interest income equivalents ¥121 ¥128 ¥137 $1,176

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

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

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NOTE 16 – DERIVATIVE TRANSACTIONS

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

2. Derivative transactions to which hedge accounting is applied

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

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

March 31, March 31,


Notional amount ¥20 ¥240 $194

Portion due after one year included herein – ¥ 20 –

Fair value (Note) – – –

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

The types and numbers of shares outstanding and treasury stock for the years ended March 31, 2014 and 2013 were as follows:

Shares outstanding Treasury stock

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

Year ended March 31, 2014

Balance at beginning of year 175,921,478 654,096

Increase in the accounting period – 22,661

Decrease in the accounting period – (212)

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

Year ended March 31, 2013

Balance at beginning of year 175,921,478 640,604

Increase in the accounting period – 13,492

Decrease in the accounting period – –

Balance at end of year 175,921,478 654,096

NOTE 17 – CHANGES IN NET ASSETS

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

Matters related to dividends were as follows:

(a) Dividends payment Dividends payment during the year ended March 31, 2014 was as follows:

Approval at Ordinary general shareholders’ meeting Board of directors meeting

Approval date June 27, 2013 October 31, 2013

Type of shares Common stock Common stock

Total amount of dividends ¥1,052 million ($10,222 thousand) ¥1,052 million ($10,221 thousand)

Dividends per share ¥6.0 ($0.06) ¥6.0 ($0.06)

Record date March 31, 2013 September 30, 2013

Effective date June 28, 2013 December 2, 2013

Dividends payment during the year ended March 31, 2013 was as follows:

Approval at Ordinary general shareholders’ meeting Board of directors meeting

Approval date June 28, 2012 October 31, 2012

Type of shares Common stock Common stock

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

Dividends per share ¥6.0 ¥6.0

Record date March 31, 2012 September 30, 2012

Effective date June 29, 2012 December 3, 2012

(b) Dividends payment whose record date is attributable to the accounting period ended March 31, 2014 but which becomes effective after said accounting period is as follows:

Approval at Ordinary general shareholders’ meeting

Approval date June 27, 2014

Type of shares Common stock

Funds for dividends Retained earnings

Total amount of dividends ¥1,051 million ($10,212 thousand)

Dividends per share ¥6.0 ($0.06)

Record date March 31, 2014

Effective date June 30, 2014

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For the year ended March 31, 2014, 2013 and 20121. General information about reportable segmentsThe Company’s reportable segments are components for which separate financial information is available, and evaluated regularly by the board of directors in determining allocation of management resources and in assessing performance.

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

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

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

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

3. Information about reported segment revenue, segment income, segment assets and other material itemsReportable segment information for the year ended March 31, 2014 is as follows:

March 31, 2014

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

Revenues:

Non-affiliated customer ¥ 162,058 ¥ 36,104 ¥ 198,162 ¥ – ¥ 198,162

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

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

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

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

Depreciation and amortization ¥ 6,019 ¥ 6,396 ¥ 12,415 ¥ 102 ¥ 12,517

Amortization of goodwill ¥ 299 ¥ – ¥ 299 ¥ – ¥ 299Investments in affiliates accounted for by the equity

method¥ 6,516 ¥ – ¥ 6,516 ¥ – ¥ 6,516

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

NOTE 18 – SEGMENT INFORMATION

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March 31, 2014

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

Revenues:

Non-affiliated customer $ 1,574,601 $ 350,797 $ 1,925,398 $ – $ 1,925,398

Intersegment 4,120 13,408 17,528 (17,528) –

1,578,721 364,205 1,942,926 (17,528) 1,925,398

Segment income 66,236 94,267 160,503 (42,470) 118,033

Segment assets $ 1,771,356 $ 994,948 $ 2,766,304 $ 1,083,667 $ 3,849,971

Depreciation and amortization $ 58,482 $ 62,146 $ 120,628 $ 991 $ 121,619

Amortization of goodwill $ 2,905 $ – $ 2,905 $ – $ 2,905 Investments in affiliates accounted for by the equity

method$ 63,311 $ – $ 63,311 $ – $ 63,311

Increase in tangible and intangible fixed assets $ 99,135 $ 130,296 $ 229,431 $ 602 $ 230,033

*1: The adjustments were as follows:(1) The adjustment of negative ¥4,371 million ($42,470 thousand) in segment income included inter-segment eliminations of

¥19 million ($185 thousand) and corporate expenses of negative ¥4,390 million ($42,655 thousand) not distributed to any reportable segments. Corporate expenses were mainly general and administrative expenses not attributable to any reportable segments.

(2) The adjustment of ¥111,532 million ($1,083,676 thousand) in segment assets was for corporate assets not distributed to any reportable segments. Corporate assets mainly consisted of surplus funds (cash and marketable securities), long-term investments (investments in securities) and assets which belong to the administrative department of the Company.

(3) The adjustment of ¥62 million ($602 thousand) for increase in property, plant and equipment and intangible assets mainly consisted of capital investment by the administrative department of the Company.

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

Reportable segment information for the year ended March 31, 2013 is as follows:

March 31, 2013


Revenues:


Intersegment 405 1,405 1,810 (1,810) –

155,322 38,749 194,071 (1,810) 192,261

Segment income 5,572 11,108 16,680 (4,375) 12,305

Segment assets ¥ 176,543 ¥ 94,405 ¥ 270,948 ¥ 104,232 ¥ 375,180


Amortization of goodwill ¥ 246 ¥ – ¥ 246 ¥ – ¥ 246Investments in affiliates accounted for by the equity method ¥ 6,093 ¥ – ¥ 6,093 ¥ – ¥ 6,093


*1: The adjustments were as follows:(1) The adjustment of negative ¥4,375 million in segment income included inter-segment eliminations of ¥45 million and

corporate expenses of negative ¥4,420 million not distributed to any reportable segments. Corporate expenses were mainly general and administrative expenses not attributable to any reportable segments.

(2) The adjustment of ¥104,232 million in segment assets was for corporate assets not distributed to any reportable segments. Corporate assets mainly consisted of surplus funds (cash and marketable securities), long-term investments (investments in securities) and assets which belong to the administrative department of the Company.

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(3) The adjustment of ¥17 million for increase in property, plant and equipment and intangible assets mainly consisted of capital investment by the administrative department of the Company.


Reportable segment information for the year ended March 31, 2012 is as follows:

March 31, 2012


Revenues:


Intersegment 391 1,304 1,695 (1,695) –

158,316 47,077 205,393 (1,695) 203,698

Segment income 5,020 11,620 16,640 (4,107) 12,533

Segment assets ¥ 162,929 ¥ 101,586 ¥ 264,515 ¥ 88,755 ¥ 353,270


Amortization of goodwill ¥ 220 ¥ – ¥ 220 ¥ – ¥ 220Investments in affiliates accounted for by the equity method ¥ 5,571 ¥ – ¥ 5,571 ¥ – ¥ 5,571


*1: The adjustments were as follows:(1) The adjustment of negative ¥4,107 million in segment income included inter-segment eliminations of ¥28 million and

corporate expenses of negative ¥4,135 million not distributed to any reportable segments. Corporate expenses were mainly general and administrative expenses not attributable to any reportable segments.

(2) The adjustment of ¥88,755 million in segment assets was for corporate assets not distributed to any reportable segments. Corporate assets mainly consisted of surplus funds (cash and marketable securities), long-term investments (investments in securities) and assets which belong to the administrative department of the Company.

(3) The adjustment of ¥74 million for increase in property, plant and equipment and intangible assets mainly consisted of capital investment by the administrative department of the Company.


4. Impairment loss by reportable segment

March 31, 2012

Logistics Real estate Total Adjustment Consolidated(Millions of yen)

Impairment loss ¥ 304 ¥ – ¥ 304 ¥ – ¥ 304

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5. Amortization and unamortized balance of goodwill by reportable segment

March 31, 2014


Amortization of goodwill ¥ 299 ¥ – ¥ 299 ¥ – ¥ 299

Unamortized balance ¥ 2,147 ¥ – ¥ 2,147 ¥ – ¥ 2,147

March 31, 2013




March 31, 2012




March 31, 2014

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

Amortization of goodwill $ 2,905 $ – $ 2,905 $ – $ 2,905

Unamortized balance $ 20,861 $ – $ 20,861 $ – $ 20,861


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Company Profile (As of March 31, 2014)

Headquarters and Branches

Headquarters: Chuo-ku, Tokyo

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

Date of Establishment April 15, 1887

Capital ¥22,393,986,570

Number of Shares Issued 175,921,478

Authorized Shares 440,000,000

Number of Employees 847 persons (parent only; not including 152 employees temporarily on loan to other companies. There are also 110 temporary employees, as well as 563 persons temporarily loaned or dispatched within the Group and those from outside the Group companies and accepted by the Company)

4,441 persons (on a consolidated basis; not including 75 employees temporarily on loan to companies outside the Group. There are also 1,345 temporary employees, as well as 948 persons temporarily loaned or dispatched from outside the Group companies and accepted by the Company)

Stock Exchange Listing First Section of the Tokyo Stock Exchange

Securities Code 9301

Major ShareholdersShareholder’s Name Number of Shares Held (Thousands) Shareholding Ratio (%)The Master Trust Bank of Japan, Ltd. (trust account) 13,128 7.5Japan Trustee Services Bank, Ltd. (trust account) 11,705 6.7Meiji Yasuda Life Insurance Company 9,707 5.5MITSUBISHI ESTATE CO., LTD. 7,331 4.2Tokio Marine & Nichido Fire Insurance Co., Ltd. 6,803 3.9Kirin Holdings Company, Limited 5,932 3.4The Bank of Tokyo-Mitsubishi UFJ, Ltd. 3,728 2.1BNP Paribas Securities (Japan) Limited 3,463 2.0ASAHI GLASS CO., LTD. 3,315 1.9Mitsubishi Corporation 3,205 1.8

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

reserved, in addition to the shares stated in the table above.2. The “Shareholding ratio” is calculated after excluding treasury stock (607,344 shares).

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

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

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

Directors and Corporate Auditors (As of June 27, 2014)Position Name Responsibilities and/or Primary Occupation

Chairman of the Board Tetsuro OkamotoPresident* Akio MatsuiManaging Director Yuichi Hashimoto Responsible for Accounting & Financing, Information Systems and Internal AuditManaging Director Yoshinori Watabe Responsible for International Transportation BusinessManaging Director* Masato Hoki Responsible for General Affairs, Corporate Communications, Personnel and PlanningManaging Director Kazuhiko Takayama Responsible for Warehousing & Distribution BusinessManaging Director Takanori Miyazaki Responsible for Technical, Harbor Transportation and Real Estate BusinessesDirector Minoru Makihara Senior Corporate Advisor, Mitsubishi CorporationDirector Shigemitsu Miki Senior Advisor, The Bank of Tokyo-Mitsubishi UFJ, Ltd.Director Koji Miyahara Chairman, Chairman Corporate Officer, Nippon Yusen Kabushiki KaishaDirector Kenji Irie General Manager, Technical DivisionDirector Yoshiji Ohara General Manager, Harbor Transportation DivisionDirector Yoichiro Hara General Manager, Tokyo BranchStanding Corporate Auditor Tohru WatanabeStanding Corporate Auditor Michio IzumiCorporate Auditor Yohnosuke Yamada LawyerCorporate Auditor Shunkyo Harada Managing Director, Kyodo Soko CorporationCorporate Auditor Kenji Sakurai Certified Public Accountant

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To Our Shareholders

Topics

Overview of the Mitsubishi Logistics Group

Independent Auditor’s Report







Company Pro�le

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ANNUAL REPORT 2014Year ended March 31, 2014

Tokyo Dia Building 28-38, Shinkawa, 1-chome, Chuo-ku, Tokyo 104-0033 Japan http://www.mitsubishi-logistics.co.jpThe headquarters will be moved to the following location on September 16, 2014.Nihonbashi Dia Building 19-1 Nihonbashi, 1-chome Chuo-ku, Tokyo 103-8630, Japan

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Documents

ANNUAL REPORT 2014 - Mitsubishi Logistics · 3. Michio Izumi, Yohnosuke Yamada and Kenji Sakurai are Outside Corporate Auditors as stipulated in the Companies Act, Article 2, Item