Reaching Higher - 株式会社近鉄エクスプレス[KWE] · PDF fileKintetsu World Express Annual Report 2011 Global Logistics Partner Kintetsu World Express, Inc. Annual Report

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Global Logistics Partner

Kintetsu World Express, Inc.

Annual Report 2011Year Ended March 31, 2011

Reaching Higher

Ohtemachi Bldg., 1-6-1, Ohtemachi, Chiyoda-ku, Tokyo 100-0004, JapanTel: +81-3-3201-2654 Fax: +81-3-3201-2666http://www.kwe.com

Printed in Japan

<5.6% 7.4%

Growth rate forecast for

worldwide air cargo traffic

Growth rate forecast for

air cargo traffic in intra Asia region

COPYRIGHT © 2011 THE BOEING COMPANY

Average

annual growth

Average

annual growth

Kintetsu World Express Annual Report 2011 01

5.6%

Our path to joining the world’s top logistics providers

ANNUAL REPORT 2011 CONTENTS

StrengthsExpectations and ForecastsThis annual report contains statements about our expectations and forecasts regarding plans, strategies, and business results related to the future of Kintetsu World Express, Inc. (KWE). These statements reflect our expectations based on personal beliefs and assumptions that were determined in light of information that was available at the time the report was prepared. There are innumerable risk factors and uncertainties that could affect the future, including economic trends, competition in the logistics industry, market conditions, fuel prices, exchange rates, and tax or other regulatory system considerations. Please be well advised that because of these risk factors, actual results may differ from our expectations.

01 Ready for the Next!06 To Our Shareholders08 Top Interview12 KWE at a Glance 12 One-Stop Service 14 Global Network 16 Report by Five Regions

21 Efforts to Protect the Environment22 Corporate Governance24 Management25 Management’s Discussion and Analysis30 Financial Statements47 Investor Information

The only thing that doesn’t change is changeThe world continues to change at an unprecedented pace on an unprecedented scale.

One thing that keeps constantly expanding and changing amid this dramatic change is

the logistics business. With the rise of new economic blocs, diversifying customer

requirements, technological developments, modal shifts... the potential for great growth

lies ahead for KWE.

The leap that will make KWE a company that can compete as an equal with the major global competitors

“Ready for the Next!” has but one objective:

To become a company that can compete as an equal

with the major global competitors. Human resources,

assets, capital, information, management...we will

concentrate all of our management resources and

barrel ahead to achieve this one objective.

Pursuing Asia’s possibilities means grasping the world’s potential.

Seeking the possibilities that the logistics business holds

means seeking customer satisfaction... and making that

great leap that KWE has been aspiring to...

Ready for the Next!

Pursue possibilities

Average annual growth, 2010-2030

Growth rate forecast for worldwide air cargo traffic

Ready for the Next!

Source: Current Market Outlook; Boeing Copyright Boeing, All rights reserved.

Kintetsu World Express Annual Report 2011 0302 Kintetsu World Express Annual Report 2011

KWE is making its bonded logistics business in China overwhelmingly strong

Adding Strength to Strength

China leads growth in Asia. KWE was one of the first Japanese logistics provid-

ers to enter the Chinese market, and has since built the industry’s leading logis-

tics networks within China. We intend to continue making concentrated invest-

ments in the enhancement of bonded logistics in China, and to establish an

overwhelming competitive advantage there.

Unifying overseas regions to speed expansionOur five global regions can no longer grow by simply acting indepen-

dently and rapidly. KWE has clearly entered a more advanced growth

phase, and we have further strengthened oversight of our global

customer base and all Group projects so that we can implement strategies

for optimizing our business on a Group-wide basis.

Tomorrow is too late. Today is when we can do what we need

to do for tomorrow, in order to harness the power of Asia

to grow as a global company.

Ready to Win

Seize the momentumBasic Information of KWE ChinaSeptember 30, 2010 – March 31, 2011

Subsidiaries

Locations

Warehouses

Total area ofwarehouses

54 58

1714

108

322,265m2

362,540m2

112

Japan

Europe, Middle East& Africa

East Asia & Oceania

The Americas

Southeast Asia

Sep. 30,2010

Mar. 31,2011

Sep. 30,2010

Mar. 31,2011

Sep. 30,2010

Mar. 31,2011

Sep. 30,2010

Mar. 31,2011

Ready for the Next!

KWE Group


Ready for the Next!

An endless appetite for growth and challenge

Vitality, Growth and SuccessAs KWE works its way up to the top level of global logistics providers, “enough”

is not a word we keep in our dictionary. Our objective is not a place where we

intend to come to rest; rather it is a place from which to move higher. The good

performance we achieved in our first year is nothing more than a point of

passage. Vitality, growth, and success are part of KWE’s very nature.

KWE is zooming ahead to join the world’s top players on the

global logistics stage, a place that is full of possibilities. We are

shifting into top gear in order to ensure that we achieve what

we promised everyone we would achieve.

KWE is growing faster than ever. By implementing the

measures in our medium-term business plan, we are

getting ready to take a big jump to the Next Stage.

Ready to Step on the Gas…

Shift into Top GearGroup-wide Targets

Airfreight Export Ocean Freight Export

432,954277,250

248,012278,263

340,000

377,395

497,508

600,000

700,000 400,000

To the Next Stage: in order to keep our promises to all of KWE's stakeholders

’09/3(Result)

’10/3(Result)

’11/3(Result)

’12/3(Target)

’13/3(Target)

’09/3(Result)

’10/3(Result)

’11/3(Result)

’12/3(Target)

’13/3(Target)

Weight (tons) Volume (TEUs)


To Our Shareholders

To Our Shareholders

“We are about to start running at full speed to build a management structure that will enable us to compete as equals with major global competitors.”

In the fiscal year through March 2011, KWE bounced back sharply from the lackluster

performance that had continued since the financial crisis of late 2008. By overcoming

short-term negative factors like soaring crude oil prices, and by focusing on our “Ready for

the Next!” Medium-Term Management Plan and continuing to implement streamlining

measures, we believe we have succeeded in preparing a framework for our next big leap.

We never lose sight of our long-term vision: to become a global company that can com-

pete on equal terms with the world’s largest logistics companies. Our “Ready for the

Next!” Medium-Term Management Plan prepares us to realize that vision. We feel sure that

the things that we are focusing on now — strengthening our bonded logistics business in

China and building new networks in Asian and emerging countries — will further

strengthen KWE’s foundation as we aim for a spot among the world’s top logistics provid-

ers. In April 2011, we further strengthened the KWE Group’s overall management controls,

and shifted to a framework that allows for Group-wide optimization across organizational

and geographical lines. We are about to start running at full speed to build a management

structure that will enable us to compete as equals with major global competitors.

We ask for the continued support of all of our shareholders and investors.

Satoshi IshizakiPresident and Chief Executive Officer

In the first year of our “Ready for the Next!” Medium-Term Plan, we achieved a V-shaped recovery and succeeded in preparing a framework for our next leap ahead.

DalianBeijing

Shanghai

Guangzhou

Dalian Comprehensive Bonded Area (Dayaowan)

Shanghai Pudong Airport Free Trade Zone

Shanghai MinhangExport Processing Zone

Guangdong Zhong ShanBonded Logistics Center

Focusing especially on bonded logistics business, which would be highly demanded.

Secure a position of absolute advantage in bonded logistics business in China.

Provide one-stop service Aggressively move intobonded areas

Top Interview


Top Interview

“Ready for the Next!” Summary of first year results

“In light of the good performance overseas, we revised our Ready for the Next! targets upward”

Amid increasing demand for transport, we greatly exceeded initial targets for both net sales and operating income.

We adjusted our second and third year numerical targets upward and now aim for record high net sales and operating income in the final year of the plan.

Business environment in the first year　Two ideas that we espoused in the KWE Grand Design for the 21st Century, “customer intimacy” (by which we mean providing maximum value to customers) and the goal of serving as a Global Logistics Partner, form the essence of our “Ready for the Next!” Medium-Term Management Plan. Our primary objective is to prepare a foundation for KWE’s business that will enable us to compete as equals with major global competitors. The fiscal year through March 2011 was the first year covered by the “Ready for the Next!” plan. Although freight costs, fuel surcharges, and other expenses increased, transport demand rose sharply thanks to a generally solid world economy.

Results exceeded initial projectionsThanks to the increased demand described above, the volume of freight handled by the KWE Group returned to the peak that it reached before the world plunged into financial crisis in September 2008. Business was good in much of the world: in Asia, the Americas, and Europe. In Japan too, domestic subsidiaries were able to perform better than expected. Moreover, the streamlining measures that we have been implementing since 2008 contributed by greatly reducing fixed and variable costs, allowing us to far exceed our original sales and income targets. Net sales increased 26.4% over the previous fiscal term to 267.688 billion yen (compared to our

original target of 235.0 billion yen) and operating income rose 59.7% to 11.899 billion yen (versus target of 10.0 billion). Net income for the fiscal term through March 2011 soared 72.4% to 7.881 billion yen, compared to the initial target of 5.8 billion. By category, freight forwarding, logistics, and ocean freight all registered more than double-digit growth in operating income compared to the previous fiscal term. Each of our five regions also achieved double-digit growth in both net sales and operating income.

Upward revision of “Ready for the Next!” targets Although we succeeded in achieving our numerical targets in the first year of our medium-term business plan, we are by no means satisfied, because our goal remains being able to compete as equals with major global competitors. Rather than resting on our laurels, we upwardly revised our numerical targets for the remaining years of the plan in order to accelerate the realization of that goal. In the final year of the plan, the fiscal term through March 2013, we aim to achieve net sales of 322.0 billion yen and operating income of 15.0 billion yen. These figures exceed the KWE Group’s previous record highs, achieved in the fiscal term ended March 2008. Amid soaring crude oil prices and fears of inflation in developing countries, the business environment is increasingly difficult to predict. We plan to concentrate management resources in Asia and press boldly forward to achieve our goals.

Creating a Strong Asia, Selling a Strong Asia – Further Strengthening Our Business in China

Establish a subsidiary in Shanghai Pudong Airport Free Trade Zone

Establish subsidiaries in bonded areas of Zhong Shan (Guangdong Province), Fengxian (Shanghai) and Dayaowan (Dalian)

Strengthen one-stop service in China, with bonded logistics at its core

Realize a sixfold increase in Shanghai bonded warehouse floor space　The KWE Group has one of the largest logistics networks in China. One of the major policies of “Ready for the Next!” is to focus on bonded logistics in order to further strengthen our business in China. In May 2010, we established Shanghai Kintetsu World Express Co., Ltd. in the Shanghai Pudong Airport Free Trade Zone and began offering international and domestic freight forwarding with a focus on bonded logistics. This unit has a very convenient location adjacent to Shanghai Pudong International Airport, which is China’s biggest gateway. In addition to being near Yangshan Bonded Port Area and Waigaoqiao Free Trade Zone, facilitating its function as KWE’s hub for freight forwarding by air, sea, and land, the new company is also next to Shanghai, China’s biggest production center and consumer market. We have made the most of these advantages to expand our business smoothly. During the fiscal term through March 2012, we plan to increase our warehouse floor space sixfold, from 7,000m2 to 42,000m2.

Speeding up reinforcement of our bonded logistics businessIn January 2011, we began operating Zhong Shan Kintetsu Logistics Co., Ltd., which has 10,152m2 of warehouse space and engages in Zhong Shan Bonded Logistics Center, Guangdong Province. In February of the same year, we started

“We will further enhance our service network and business infrastructure in China.”

Outline of “Ready for the Next!” Medium-Term Management Plan

KWE’s Network of Business Bases in China

Aim to build a strong corporate structure that will enable us to compete on an even footing with global competitors

“Ready for the Next!” Revised Numerical Targets

Targets by March 2013

Management Strategy

Net sales: ¥322 billion ( +50% from FY ended March 2010) Revised from the original target on May 11, 2011Operating income: ¥15 billion ( +100% from FY ended March 2010)Operating margin: 4.7% ( 1.2 point improvement over FY ended March 2010 )

1. Create a Strong Asia (focused investment of management resources)2. Sell a Strong Asia (create a sales structure that allows for competition with major global

competitors)3. Strengthen core competencies (human resources, quality, IT) 4. Ensure thorough compliance and strengthen a management system for the environment

’11/3 (Original target)

’11/3 (Results)


’12/3 (Revised target)


’13/3 (Revised target)

¥10 billion

Operating incomeNet income

Net sales ¥292.3 billion (’08/3)　 Operating income ¥13.8 billion (’08/3)

¥11 billion¥12 billion ¥13 billion

¥15 billion ¥15 billion

¥8.8 billion¥8.8 billion¥8.0 billion¥7.0 billion¥7.8 billion¥5.8 billion

Net sales¥235billion






¥5.8 billion¥7.8 billion ¥7.0 billion ¥8.0 billion ¥8.8 billion ¥8.8 billion

The first year of medium-termmanagement plan

Aim for ’08/3’s record high

Original target / Revised target

up Shanghai Fengxian Kintetsu Logistics Co., Ltd., with 5,903m2 of warehouse space in Shanghai Minhang Export Processing Zone. And in April, we launched Dalian BLP Kintetsu Logistics Co., Ltd., with 3,504m2 of warehouse space in the Dalian Bonded Logistics Park. By focusing on bonded logistics, which is expected to continue to attract strong demand, we are working to establish an overwhelming advantage in the bonded logistics business in China.

Providing one-stop service With the investments described above, we have established a framework for bonded logistics that includes operating bases in four cities along the coast of China: Beijing, Dalian, Shanghai and Zhong Shan. During the fiscal year ended March 2011, we also increased the number of subsidiaries in our Chinese business network from 11 to 17, raised the number of operating locations from 109 to 112, and added two cities for a total of 46 cities served. We are focusing on bonded logistics, which is expected to continue to attract strong demand in the future, and strengthening the one-stop service that we offer with bonded logistics at its core.

南アジア新興国

インド

Areas outside of Asia, and Asia other than China Strengthen sales in India

New Corporate Structure (from April 2011)

Joint venture with HTS

Management Strategy and Major Policies

1. Create a Strong Asia (focused investment of management resources)

(1) Secure a position of overwhelming advantage in the bonded logistics business in China•Aggressive investment in bonded areas in China •Establish a new subsidiary in the Shanghai Pudong Airport Free Trade Zone •Greater South China Concept: Expand business through integrated operation of

subsidiaries in Southern China

(2) Construct a distribution network that covers all of Asia•Strengthen warehouse businesses and logistics functions in South Korea, Taiwan, the

Philippines, India, and Thailand

(3) Enter the markets of emerging countries ahead of competitors (coping with our customers’ “China plus one” strategies)•Begin operating in Bangladesh •Consider entering Cambodia and Myanmar

(4) Improve logistics functions in the American consumer market•Strengthen logistics functions •Create a structure for expanding trans-Pacific business

(5) Make ocean freight forwarding into a core business•In addition to the NVOCC business, work on supplementary services such as CFS,

warehousing, and buyer’s consolidation, etc.

2. Sell a Strong Asia (create a sales structure to compete with global competitors)

(1) Expand freight volume by enhancing logistics functions•Expand the freight volume between Asia and Japan, Asia and the Americas, and Asia and

Europe

•Expand the freight volume within Asia

(2) Boost competitiveness by raising productivity•Strengthen buying power •Standardize operations

(3) Engage in sales in ways that accurately reflect customer needs•Have personnel exchanges based on sales strategies •Conduct proactive efforts in logistics services between countries other than Japan

(4) Share customer information horizontally, throughout the KWE Group•Construct long-term stable relationships with customers

3. Strengthen core competencies (human resources, quality, IT)

(1) Construct and implement a global personnel system•Select, train, and hire executive candidates on a Group-wide basis, and promote diversity •Implement global hiring for specified purposes

(2) Improve service quality all over the world •Use numerically-based quality control to increase employee awareness of quality and to

increase customer satisfaction

(3) Strengthen global IT functions•Enrich and strengthen internal infrastructure supporting global sales

4. Ensure thorough compliance and strengthen a management system for the environment •Instill a keen awareness of compliance throughout the Group •Strengthen a Group management system for the environment

インド

Middle East• Aim to expand project-related transportations for

oils, gases, plants, heavy machineries, etc.• Expand business between the Middle East and Asia,

the Americas, and Europe, primarily through Saudi Arabian joint venture

India• Expand handling of transport

between India and Europe, Asia, South Asia, and the Americas

• Enhance services and infrastructure in order to expand logistics business

Emerging South Asian Countries• Reinforce marketing

ASEAN Nations• Bolster logistics sales, especially

in Thailand, the Philippines, Indonesia and Vietnam

Hyderabad

ChennaiCoimbatore

Cochin

Kolkata

Delhi Noida

Nagpur

Ahmedabad

Pune

Mumbai

Bangalore�(Head Office)

Corporate Strategy Headquarters

Corporate Sales & Marketing Headquarters

Corporate Forwarding Headquarters

Corporate Logistics Headquarters

Air Freight Dept.

Sea Freight Dept.

Quality Management Dept.

President and CEO

DelhiDelhi

AhmedabadAhmedabadAhmedabadNoida warehouse, the 19th location in India, was established in May 2011


Top Interview

Laying groundwork for long-term growth in areas other than China　In 2010, China became the number two world economic power in terms of GDP. But in other parts of Asia as well, demand for logistics is beginning to increase markedly as economic growth heats up. In order for KWE to achieve greater growth in the long term, we need to quickly fill demand and quickly expand and strengthen our logistics networks in other areas of Asia besides China, and in other economic zones besides Asia.

Reinforcing sales in India and ASEAN nationsWe intend to enhance our logistics facilities and reinforce our sales capacity in ASEAN nations that are experiencing marked economic growth. Our main markets among the ASEAN nations are Thailand, the Philippines, Indonesia, and Vietnam. We plan to expand freight handling between India and Europe, Asia, South Africa, and the Americas. In order to expand our logistics business in India, we will enhance our service infrastructure.

Creating a Strong Asia, Selling a Strong Asia – Asian Markets Other Than China

Strengthen logistics sales in ASEAN nations

Enhance infrastructure and expand logistics business in India

Lay groundwork for expanding oil, gas, and plant-related transport in the Middle East

Achieve overall optimization by reinforcing Group-wide management controlsIn the fiscal term ended March 2011, overseas business accounted for 75% of the KWE Group’s operating income. Looking ahead, continued expansion of overseas business will be the key to KWE’s growth. In the past, we transferred a great deal of authority to each regional headquarters overseas, giving them a large degree of independence. We feel that this system

“We are laying the groundwork for a new era by building new services and infrastructure.”

In order to strengthen global management...

Outline of KWE’s “Ready for the Next!” Medium-Term Management Plan

Reinforce Group management controls

Shift to new organization in Japan, align with customers’ business

“We will strengthen our global management framework through simultaneous transfer of authority and Group-wide optimization.”

functioned well in the environment that existed until recent years. Going forward, however, we feel that we need to strengthen Group-wide management controls and create systems for Group-wide optimization across organizational and regional lines. Based on this idea, we launched a new organizational system in April 2011.

A sales framework that transcends transport modesIn tandem with the changes described above, we realigned our Japanese sales organization into “export” and “import” sales departments that work with the business modes that are most convenient for each customer's industry and business format, in place of the “air” and “ocean” departments that we used in the past. This change gives us a framework for making effective use of the customer bases that both “air” and “ocean” divisions have cultivated over the course of many years and for allowing each salesperson to offer air and ocean service efficiently.

Reinforcing oil, gas, and plant-related transport in the Middle East We have started developing the Middle East market as a new area for KWE outside of Asia. In June 2010, we established a joint venture with a local company in Saudi Arabia and began forwarding freight related to oil, gas, and plant. In July 2011, we teamed up with Hitachi Transport System, Ltd. to form a joint venture Project Cargo Japan, Inc. that specializes in plant related shipments and project-based transport of heavy equipment. By cooperating in a field in which both partners can make use of our respective strengths, we can expand into areas that we were

reluctant to enter in the past due to a lack of know-how even when prospective clients expressed interest.

One-Stop Service

At KWE, our core business is consolidated services by which cargo collected from multiple shippers are sorted and assembled per airport of overseas destination, and are consigned as KWE cargo to airlines for international airfreight forwarding.

Our export services include document preparations for air carriage, customs clearance and surface transportation. We provide such services through a closely working network in our sales division, which includes sales offices and branches, and our operation division.

Once the consolidated cargo arrives at its destination airport, KWE’s local overseas subsidiary or agent picks it up at the airline warehouse for import customs clearance and delivery to the consignee.

The amount of international airfreight handled by KWE is ranked among the top 10 in the world.

Services in the field of logistics have the highest growing demand in the distribution industry. At KWE, we have continued to provide total logistics services including customs clearance, providing temporary storage, processing products during distribution, and providing distribution and inventory services.

In recent years, customers’ needs for logistics services have expanded and diversified due to their efforts to streamline and reduce costs of distribution. Services include not only procuring materials, processing products, distribution, handling merchandise returns and waste disposal but also handling orders, inventory management, information management and analyzing results.

We support global companies by developing and operating third-party logistics services that employ the latest technologies to meet our customers’ every need.

In the field of international ocean freight forwarding, KWE is a non-vessel operating common carrier (NVOCC), making use of the shipping lines’ transportation services. The flow of ocean freight forwarding is basically the same as that of airfreight: In addition to transporting full container loads, we provide consolidated services whereby we pack less-than-container loads into ocean containers, arrange transport with a shipping company, clear the cargo through customs and sort it at the destination port, and deliver it to customers.

We provide highly customized ocean-based transport services such as buyer's consolidation (combining customers' commercial distribution and logistics), door-to-door service supporting the establishment of overseas production bases (including transport and installation of equipment), environmentally friendly rail transport, etc.

One of KWE’s greatest strengths is our ability to provide door-to-door transportation services all over the world. For example, our domestic freight forwarding service, which we provide primarily to users of our international freight forwarding services, uses our nationwide service network to collect freight from every part of Japan from Hokkaido to Okinawa, transport it to an airport via one of our cargo centers, and have an airline fly it to the desired destination. At that destination, we transport the cargo from the airport to the appropriate regional cargo center.

Our various affiliates provide specialized and sophisticated services such as the customized and careful packing of precision machinery that is required for door-to-door delivery, temporary staffing, transport of materials for events and exhibitions, hand carry, and IT support, etc.

0

50,000

100,000

150,000

200,000

’10/3 ’11/3’09/3’08/3

Net Sales (Millions of yen) Net Sales (Millions of yen) Net Sales (Millions of yen) Net Sales (Millions of yen)Sales Breakdownby Service (’11/3)

49.5%

Sales Breakdownby Service (’11/3)

19.5%


19.2%


11.8%

Main airfreight export items• Digital electronic appliances, computers, semiconductors and other

electronics products and components• Telecommunications devices and components, including mobile phones• Automobile parts and components• Medical and chemical products• Machine tools and construction machinery

Main airfreight import items• Electronics products and components, including computers,

semiconductors and their manufacturing equipment• Medical and chemical products• Fashion products such as textile products and high-end brand products• Automobile parts and components• Beaujolais wine, etc.

Main logistics services and systems• Logistics consulting• PO (Purchase Order) management• Inventory control management• Assembly works• Call center functions• Reverse logistics (RMA): Return Material Authorization• Cross-dock operations• VMI (Vendor Managed Inventory)• Transport/forwarding management• Project management• Product inspection

Main ocean freight export items• Household electric appliances • Raw materials • Parts and semi-finished goods (such as mobile phone components) • Automotive-related products • Plant equipment transportation • Aircraft-related products• Equipment to be used at events and for broadcasting (such as for

international sporting events, musicals and exhibitions)

Main ocean freight import items• Computers and their peripherals • Household electric appliances• Automotive-related products • Apparel• Medical and chemical products• Mail-order products • General merchandise and retail goods

Main domestic services• Domestic airfreight forwarding• Pick-up and delivery of export and import freight• Customized packaging, transport, and installation of precision machinery• Temporary staffing, primarily for logistics and trading businesses• Transport of art objects and other materials for events and exhibitions• Hand carry service• IT and other types of support for 3PL

Five domestic affiliates provide specialized services• Kintetsu Logistics Systems, Inc. • Kintetsu World Express Delivery Co., Ltd.• Kintetsu Cosmos, Inc. • Kintetsu World Express Sales, Inc.• Kintetsu World Express Shikoku, Inc.

’10/3 ’11/3’09/3’08/3 ’10/3 ’11/3’09/3’08/3 ’10/3 ’11/3’09/3’08/30

10,000

30,000

20,000

40,000

60,000

50,000

0

10,000

20,000

30,000

50,000

60,000

40,000

0

10,000

20,000

40,000

30,000


Targets and Policies

One-Stop Service

KWE’s business structure is definitely superior due to its ability to offer one-stop service that meets various logistics needs.

Forwarding Logistics Ocean Other Operations

Net Sales by Category (Millions of yen, %)

Airfreight forwardingLogisticsOcean freight forwardingOther operations

267,688

322,000

’11/3 Results ’13/3 Targets

Expand our logistics and ocean freight forwarding businesses

49.5%

19.5%

19.2%

11.8%

11.8%

19.5%

20.1%

48.6%

KWE at a Glance:

Japan

Europe, Middle East & AfricaKintetsu World Express (U.K.) Ltd.Kintetsu World Express (Deutschland) GmbH.Kintetsu World Express (France) S.A.S.Kintetsu World Express (Benelux) B.V.Kintetsu World Express (RUS), Inc., LLC.Kintetsu World Express (Ireland) Ltd.Kintetsu World Express South Africa (Pty) Ltd.Kintetsu World Express (Switzerland) Ltd.Kintetsu World Express (Italia) S.R.L.Kintetsu World Express (Sweden) ABKintetsu World Express (Middle East) FZEKintetsu World Express (Czech) S.R.O.Kintetsu World Express (Saudi Arabia) Ltd.plus 2 other companies

East Asia & OceaniaKintetsu World Express (HK) Ltd.Kintetsu World Express (Taiwan), Inc.Kintetsu World Express (Australia) Pty. Ltd.Kintetsu World Express (Korea), Inc.Beijing Kintetsu World Express Co., Ltd.Shanghai Kintetsu World Express Co., Ltd.Kintetsu World Express (Xiamen) Co., Ltd.Kintetsu Logistics (Shenzhen) Co., Ltd.Shanghai Kintetsu Logistics Co., Ltd.Dalian Kintetsu Logistics Co., Ltd.Suzhou Kintetsu Logistics Co., Ltd.Kintetsu Logistics (Xiamen) Co., Ltd.Yantai Kintetsu Logistics Co., Ltd.Kintetsu World Express (Philippines) Inc.Kintetsu World Express (Subic) Inc.Kintetsu World Express (Clark) Inc.Kintetsu Logistics (Philippines) Inc.plus 6 other companies

Southeast AsiaKWE-Kintetsu World Express (S) Pte Ltd.Kintetsu World Express (Malaysia) Sdn. Bhd.Kintetsu Logistics (M) Sdn. Bhd.KWE-Kintetsu World Express (Thailand) Co., Ltd.Kintetsu Logistics (Thailand) Co., Ltd.Kintetsu World Express (India) Pvt Ltd.PT. Kintetsu World Express IndonesiaKintetsu World Express (Vietnam), Inc.Kintetsu Logistics (Vietnam), Inc.plus 1 other company

Kintetsu World Express, Inc.Kintetsu Logistics Systems, Inc.Kintetsu World Express Delivery Co., Ltd.Kintetsu Cosmos, Inc.Kintetsu World Express Sales, Inc.Kintetsu World Express Shikoku, Inc.

The AmericasKintetsu World Express (U.S.A.), Inc.Kintetsu Blue Grass, Inc.Kintetsu World Express (Canada) Inc.World Wide Customs Brokers Ltd.

OtherKintetsu Global I.T., Inc.KWE Reinsurance, Inc.Kintetsu Aerospace Logistics, Ltd.

41.1%

8.8%

12.0%

28.3%

9.1%

Sales Breakdownby Region (’11/3) Sales Breakdown

by Region (’11/3)

Sales Breakdownby Region (’11/3)




Targets and Policies

Global Network

KWE divides the world into five regions and operates the Five Regional Management System, through which it keeps improving management’s efficiency and speed.

Net Sales by Region (Millions of yen, %)

267,688

322,000

’11/3 Results ’13/3 Targets

Accelerate overseas network expansion in countries other than China as well

Global NetworkJapanThe AmericasEurope, Middle East & AfricaEast Asia & OceaniaSoutheast AsiaOther

9.1%

9.4%

29.2%

9.4%

11.1%

40.3%

0.6%

28.3%

8.8%12.0%

41.1%

0.7%

KWE at a Glance:

Net Sales

Operating Income

Operating Margin

‘08/3

127,073

4,444

3.5%

‘09/3

114,252

1,191

1.0%

‘11/3

112,725

2,918

2.6%

‘10/3

95,296

1,629

1.7%

(Millions of yen)

Net Sales

Operating Income

Operating Margin

‘08/3

38,848

2,685

6.9%

‘09/3

37,504

2,538

6.8%

‘11/3

32,855

2,327

7.1%

‘10/3

26,053

1,097

4.2%

(Millions of yen)

Performance in the Fiscal Year Ended March 2011

Main Policies for the Fiscal Year through March 2012Business in the first quarter (April-June 2011) of the fiscal term through March 2012 was affected by the Great East Japan Earthquake, resulting in weak cargo movements. Compared to the same period a year earlier, airfreight exports decreased 10.7%*1, airfreight imports declined 4.1%*2, ocean freight exports decreased 10.1%*3, and ocean freight imports increased 8.2%*2. As the core company of the KWE Group, KWE Japan will continue to exercise leadership as we implement the following initiatives and promote sales, in order to build a business base that will enable us to compete head-to-head with major global competitors.(1) Strengthen our Japanese sales framework in order to

meet Group-wide volume targets, i.e. expand corporate accounts and actively pursue offshore business.

(2) Expand the volume of airfreight that we bring into and out of Japan.

(3) Further expand ocean freight forwarding (reinforce ocean freight sales in coordination with airfreight sales).

(4) Expand sales of logistics services (establish industry-specific solutions; actively market logistics services tied to air and ocean freight; bolster solution-oriented business).

(5) Engage in aggressive sales efforts linked to Asia, where our strength lies (accurately target clients’ Asian businesses).

Solid cargo movements, mainly to Asian destinationsAirfreight exports: The first half of the term saw solid shipments of Asia-bound electronic components (primarily related to liquid crystal displays) and semiconductor manufac-turing equipment. From August however, cargo movements slowed due to inventory adjustments, and overall airfreight exports increased only 12.9%*1 over the previous term.Airfreight imports: Japan’s “eco-point” program for promot-ing eco-friendly home appliances helped increase volumes of items like flat-panel televisions, but because there was a big drop in handling of telecommunications equipment, airfreight imports declined by 1.6%*2 from a year earlier.Ocean freight: Exports increased 11.2%*3 year on year thanks largely to brisk movements of chemicals and production equipment. Imports also increased, by 18.8%*2, mostly because of increased shipments of electronic products and general merchandise.

Results: Overall net sales including those generated by domestic subsidiaries amounted to 112,725 million yen, up 18.3% from the previous term, while operating income grew by 79.1% to 2,918 million yen.*1 based on weight *2 based on number of shipments *3 based on TEUs (Twenty-foot Equivalent Units)

Highlights of the Fiscal Year Ended March 2011May 2010 Began selling “Sky Cubes” (transport containers) June 2010 Launched data service, providing CO2 emissions data

related to international airfreight forwarding Began KWE-brand consolidated less-than-container

load (LCL) export service out of NagoyaOctober 2010 Opened customer service office at Haneda AirportNovember 2010 No. 4 Baraki Terminal received ISO13485 Quality

Management System Standard for Medical Devices Certification

March 2011 Completed installation of private power generator at Narita Terminal


Main Policies for the Fiscal Year through March 2012In the fiscal term through March 2012, freight move-ments continued to regain momentum, as they did in the previous term. Business got off to a good start in the first quarter (January-March*1), with airfreight exports up 9.0%*2 from the same period the previous year, airfreight imports up 2.4%*3, ocean freight exports up 16.5%*4 and ocean freight imports down 9.6%*3. We intend to imple-ment the following measures in order to firmly establish the region on a growth track.

First, we will restructure our organization and increase cooperation with other regions in order to boost freight volumes. We have established a new Corporate Sales & Marketing Dept. and will work harder at landing new corporate accounts that make large-volume shipments. In this way we will actively take on freight not only from the Americas, but from other regions as well. In order to reinforce ocean freight imports, we made the Sea Freight & Logistics Dept., which markets ocean freight forward-ing and contract logistics services together. To increase cooperation with other regions, we will continue to hold

Trans Atlantic Development Meetings with the Europe, Middle East & Africa headquarters to increase freight volumes between the Americas and that region. We also reestablished an automotive business team to pursue sales activities strategically targeted at automotive business.

The second measure is to reinforce our sales frame-work in Central and South America. We added staff to our representative offices in Brazil and Mexico in order to undertake full-fledged sales operations in the region.

Third, we intend to expand logistics sales based on enlarging our warehouse in Guelph, a suburb of Toronto, Canada. We began operating the warehouse in July 2010 and are enlarging the floor space from 13,500m2 to 23,200 m2. We receive many inquiries in the Toronto area and plan to further expand our logistics business.

Growth mainly in electronics-related freightAirfreight exports: We enjoyed a sharp increase in handling of electronics-related freight, especially semiconductors and liquid crystal displays. Airfreight exports grew 32.1%*2 relative to the previous term.Airfreight imports: Imports of digital home appliances increased, helping to boost airfreight imports 22.3%*3 over the previous term.Ocean freight: Exports increased 12.6%*4 and imports increased 15.5%*3 from a year earlier.

Results: Overall net sales by the Americas region amounted to 32,855 million yen（up 26.1% year on year), while operating income was 2,327 million yen (up 112.1%).*1 KWE’s overseas subsidiaries close their accounts at the end of December. *2 based on weight *3 based on number of shipments *4 based on TEUs (Twenty-foot Equivalent Units)

Highlights of the Fiscal Year Ended March 2011July 2010 Kintetsu World Express (Canada) Inc. opened a new

warehouse in Guelph, in the suburb of Toronto

As the core company of the KWE Group, KWE Japan will continue to exercise leadership

Restructure our organization and increase cooperation with other regions

Reinforce our sales framework in Central and South America

Expand logistics sales


JapanGeneral manager,The AmericasTakashi Bamba

Report by Five Regions

Keeping Group-wide goals in mind as we boost sales

The AmericasWorking more actively to expand volume by reorganizing North American sales


Net Sales

Operating Income

Operating Margin

‘08/3

27,493

394

1.4%

‘09/3

24,318

469

1.9%

‘11/3

24,085

679

2.8%

‘10/3

19,831

(6)

-

(Millions of yen)

Net Sales

Operating Income

Operating Margin

‘08/3

81,561

4,809

5.9%

‘09/3

71,191

3,674

5.2%

‘11/3

77,607

4,212

5.4%

‘10/3

56,614

3,433

6.1%

(Millions of yen)


Main Policies for the Fiscal Year through March 2012The first quarter (January-March*1) of the fiscal term through March 2012 went smoothly, with active freight movements continuing from the previous term. Export business was particularly strong, thanks to the euro’s continued weakness from the previous term and because we picked up new business. Compared to the same quarter the previous year, airfreight exports grew 36.6%*2, while airfreight imports grew by 1.1%*3, ocean freight exports increased 16.2%*4 and ocean freight imports grew 9.3%*3. We intend to implement the following measures in order to accelerate growth.

The first measure is to strengthen the European region’s gateway functions. While cooperating with the Global Deal that the entire KWE Group has been working on forging with airlines and shipping companies, we aim to increase the frequency of usage and boost the functionality of Frankfurt as our gateway for airfreight and Rotterdam as our ocean gateway.

The second initiative is to expand energy-related business. We will make a full-fledged start to approach oil and gas-related companies, primarily through the joint venture that

we established with a local company in Saudi Arabia in June 2011. We also plan to open an office in Bahrain soon, to cultivate energy-related customers.

Third, we aim to expand healthcare-related business. Before the end of last fiscal term we already gained some new business in this area, and we will build on the expertise and track record from that business to further increase sales. We are working on acquiring relevant licenses and plan to actively increase business related to healthcare, a field that is relatively unaffected by economic fluctuations.

The fourth measure is to expand fashion-related business. We will focus on boosting business through Kintetsu World Express (Italia) S.R.L. and Kintetsu World Express (France) S.A.S. In the near future, we will also assign dedicated staff to handle fashion freight in the U.S. and China, and work more strategically to expand sales. As a powerful sales point for winning new business, we will emphasize KWE’s expertise in using our unique packing methods to ship apparel and fashion goods safely.

Solid freight movements to the Middle East; sharp growth in overall demand for transportAirfreight exports: In addition to strong freight movements from existing customers, we handled more medical cargo and more spot freight shipments bound for the Middle East. As a result, airfreight exports grew 41.9%*2 over the previous term.Airfreight imports: Besides brisk shipments of automotive goods, increased shipments related to flat-panel televisions for Central and Eastern Europe also helped boost overall airfreight imports by 21.6%*3 year on year.Ocean freight: Exports increased 12.9%*4 and imports increased 26.7%*3 from a year earlier.

Results: Net sales for the Europe, Middle East & Africa region as a whole totaled 24,085 million yen, up 21.5％ from a year earlier, while operating income was 679 million yen, compared to an operating loss of 6 million yen the previous year. *1 KWE’s overseas subsidiaries close their accounts at the end of December. *2 based on weight *3 based on number of shipments *4 based on TEUs (Twenty-foot Equivalent Units)

Highlights of the Fiscal Year Ended March 2011June 2010 Established a joint venture, Kintetsu World Express

(Saudi Arabia) Ltd.December 2010 Kintetsu World Express (U.K.) Ltd. became certified

as an authorized economic operator (AEO)


Main Policies for the Fiscal Year through March 2012Relative to the sharp rebound in freight movements a year earlier, growth slowed in the first quarter (January-March*1) of the fiscal term through March 2012. We still achieved good results, with airfreight exports rising 0.6%*2 over the same quarter a year earlier while airfreight imports grew 3.3%*3, ocean freight exports rose 17.4%*4 and ocean freight imports rose 7.5%*3.

As the regional headquarters responsible for driving steady implementation of measures designed to “Create a Strong Asia” and “Sell a Strong Asia,” KWE’s East Asia & Oceania headquarters will join forces with other regional headquarters and promote further growth in the entire KWE Group. Toward that end, we will continue to work on expanding cargo volumes within Asia and focus on our contract logistics business in the fiscal term through March 2012. In January 2011, Shanghai Kintetsu World Express Co., Ltd. and Zhong Shan Kintetsu Logistics Co., Ltd. began marketing contract logistics services, as did our subsidiary Shanghai Fengxian Kintetsu Logistics Co, Ltd. in February.

In June of the same year, we established a joint venture company with a Chinese state-owned enterprise in Chongqing, in order to develop our business in the promis-ing markets for Chinese inland transport and bonded logistics. We believe that building a framework for inland service will help distinguish KWE from the competition.

KWE has established a number of advantages in China: our own service network with 112 operating locations, expertise in bonded logistics (primarily handling electronic components), our own domestic trucking network covering the major cities of China’s interior, cutting-edge logistics facilities, and a comprehensive service framework that enables us to organically combine all of these strengths with airfreight and ocean freight forwarding services. We believe that further enhancing these strengths will allow us to continue to meet our customers’ needs as they become more sophisticated and diverse. We intend to spare no effort to ensure that KWE will remain the overwhelming leader in China into the future.

Expanding freight forwarding with a focus on digital home appliances and electronic goodsAirfreight exports: The volume of freight related to digital home appliances, printers and other electronic goods increased, which helped boost airfreight exports by 46.3%*2

year on year.Airfreight imports: Despite a slowdown in the second half of the term as some manufacturers adjusted production, overall demand for airfreight imports remained strong, rising 14.2%*3 from a year earlier.Ocean freight: Exports increased 21.1%*4 and imports increased 10.9%*3 from a year earlier.

Results: Net sales by the East Asia & Oceania region increased 37.1% from the previous year to 77,607 million yen and operating income rose 22.7% to 4,212 million yen.*1 KWE’s overseas subsidiaries close their accounts at the end of December. *2 based on weight *3 based on number of shipments *4 based on TEUs (Twenty-foot Equivalent Units)

Highlights of the Fiscal Year Ended March 2011May 2010 Yantai Kintetsu Logistics Co., Ltd. Shanghai Kintetsu World Express Co., Ltd. January 2011 Zhong Shan Kintetsu Logistics Co., Ltd. February 2011 Shanghai Fengxian Kintetsu Logistics Co., Ltd. April 2011 Dalian BLP Kintetsu Logistics Co., Ltd.

Expand energy and healthcare-related business

Expand fashion-related business in Italia and France

Boost the functionality of Frankfurt and Rotterdam as our gateways

Develop our business in the promising markets for Chinese inland transport and bonded logistics

Expand cargo volumes within Asia and focus on our contract logistics business


Europe, Middle East & Africa General Manager,

East Asia & OceaniaYoshinori Watarai

General manager,Europe, Middle East & AfricaToshiyuki Kase


Strengthening Europe’s gateway functions and expanding business related to energy, healthcare, and fashion

East Asia & OceaniaBuilding a framework for inland service; further widening KWE’s competitive edge


Net Sales

Operating Income

Operating Margin

‘08/3

25,325

1,576

6.2%

‘09/3

19,786

1,178

6.0%

‘11/3

25,079

1,522

6.1%

‘10/3

17,640

1,054

6.0%

(Millions of yen)

Efforts to Protect the Environment


Main Policies for the Fiscal Year through March 2012Business was generally good in the first quarter of the fiscal term through March 2012 (January – March*1). In particular, airfreight exports of electronics-related items grew. Overall airfreight exports increased by 34.4%*2, while airfreight imports increased 0.3%*3. Ocean freight exports declined 6.6%*4 and ocean freight imports rose 5.1%*3. We intend to implement the following measures in order to accelerate growth.

The first measure is to expand our ocean freight business. Since 2010, one of our major customers has changed its export origins, causing a big drop in our business volume. In order to compensate, we are focusing on expanding other ocean freight business. Specifically, we intend to start offering our own consolidated service for intra-Asian less-than container load (LCL) cargo, and to expand cargo volume in trans-Pacific lanes.

Second, we aim to expand contract logistics business. In particular, our KWE (Singapore) has made progress in handling healthcare-related cargo, a business that we want to develop among other subsidiaries.

The third initiative is to expand our cross-border trucking service. We currently offer regular service between Singa-pore and Kuala Lumpur and between Bangkok and Kuala Lumpur. In the future, we plan to begin regular transport of automotive products between Bangkok and Phnom Penh (Cambodia).

Fourth, we will work to expand business in emerging countries that are likely to continue to attract attention in the future. We are focusing especially on expanding business in India and Bangladesh. In addition, on July 1, 2011, we incorporated a new company through a consolidation-type merger of Kintetsu World Express (Thailand) Co., Ltd. and a new KWE subsidiary since January 2009, TKK Logistics Co., Ltd. The aim of this merger is to maximize synergy of the both companies, primarily in automotive-related logistics.

Solid results, especially from electronics-related freightAirfreight exports: In addition to a smooth recovery in electronics-related freight, growth in spot shipments also helped boost airfreight exports 46.0%*2 year on year.Airfreight imports: Freight movements remained strong, especially movements of electronics-related cargo. Airfreight imports rose 15.9%*3 from the previous year.Ocean freight: Exports declined 10.3%*4 as some major customers reduced shipments, but imports continued to recover, gaining 18.1%*3 over the previous fiscal term.

Results: Net sales in Southeast Asia increased 42.2% from the previous year to 25,079 million yen, and operating income grew 44.4% to 1,522 million yen. *1 KWE’s overseas subsidiaries close their accounts at the end of December. *2 based on weight *3 based on number of shipments *4 based on TEUs (Twenty-foot Equivalent Units)

Highlights of the Fiscal Year Ended March 2011April 2010 Established a delegate office in Bangladesh January 2011 Opened Tanjung Priok office, operation base of ocean

freight forwarding, in Indonesia.

Expand our ocean freight business

Expand business in India and Bangladesh

Expand contract logistics business

Expand our cross-border trucking service



Southeast Asia General Manager,Southeast AsiaYoshinobu Mitsuhashi

Efforts to Protect the Environment

Expanding ocean freight forwarding as well as business in developing countries

Aiming for a “Low Carbon Society”KWE is working in a variety of ways to realize a “low carbon society” domestically and abroad.

Environmental Initiatives at KWE WarehousesWays that we reduce electric power consumption at terminals directly operated by KWE include introducing energy-efficient machinery, controlling heating and cooling temperatures more carefully, and turning off lights during lunchtime, as well as installing a solar power genera-tor at our Narita Terminal. We will also continue to work on reducing waste and conserving resources.

Reducing Vehicle Fuel ConsumptionIn order to reduce fuel consumption by delivery trucks, cargo handling vehicles, and company cars, we are reducing fuel consumption in vehicles used for bonded transport between airports and KWE warehouses, and switching to battery-powered forklifts in warehouses and to eco-friendly cars, among other measures.

Acquisition of ISO Certification for Our Environmental Management SystemsAs of March 2011, KWE had received ISO14001 certification from the International Standards Organization for environmental management systems at three of the KWE Group’s locations in Japan, and for 10 locations overseas.

Environmental Protection PoliciesKWE’s behavioral guidelines for employees call for careful use of resources and protection of the environment. In October 2009, we updated the Environmental Protection Policies that we adopted in January 2001. In July 2011, we made some additions to our Environmental Protection

Policies and created a new Energy Management Policy in response to revisions to Japan’s Act Concerning the Ratio-nal Use of Energy. In the future, we will continue to work hard at preserving the environment through efforts related to our warehouses and equipment, and to our other business activities.

Solar power generator (Narita Terminal, Japan)

Basic PhilosophyKWE will strive to contribute to society through our global logistics services and to protect the global environment.

Basic Policies(1) Having established an organization that allows us to

properly manage the environmental impact of our logistics services, which consist primarily of international forwarding services, we will promote ongoing environ-mental management activities.

(2) We will assess our business’ impact on the environment, establish environmental goals and targets, take steps to prevent pollution, and continuously improve our environ-mental efforts by using environmental management systems.

(3) In addition to abiding by relevant environmental laws, regulations and other requirements, we will go beyond those requirements in protecting the environment.

(4) We will take particular care regarding the following types of environmental impact resulting from our business activities:- Reducing electrical power consumption, promoting

energy-saving activities and updating equipment based on Japan’s Act Concerning the Rational Use of Energy

- Curbing CO2 emissions • Curbing exhaust emissions from vehicles - Reducing waste and promoting recycling

(5) We will prevent environmental pollution by cooperating and collaborating with our business partners and affiliates.

(6) We will educate all of our employees regarding our environmental policies, goals and targets. We will also announce our environmental policies to the public.

Energy Management PolicyWe will actively implement comprehensive, group-wide measures in order to meet our target of reducing annual specific energy consumption by at least 1%.(1) We will expand on our existing energy conservation and

management activities by establishing and implementing stronger energy management regulations.

(2) We will establish and fully implement medium- and long-term plans for boosting energy efficiency at existing facilities and for ensuring a high level of energy efficiency at newly constructed facilities.

(3) When investing in new facilities, we will make the use of energy-saving plant and equipment a priority.

Environmental Protection Policies

22 Kintetsu World Express Annual Report 2011 23Kintetsu World Express Annual Report 2011

Corporate GovernanceCorporate Governance

Basic PhilosophyKWE’s corporate philosophy is to “create new values and optimal environments through our logistics services, in order to contribute to the development of a global society together with our clients, shareholders and employees.” We work at building corporate value while maintaining good relationships with all stakeholders. From this perspective, it is important that our management strengthens corporate governance and makes its decision-making processes more transparent and fair.

Special Features of KWE’s GovernanceKWE’s governance system basically consists of the Board of Directors and Board of Auditors. In order to speed up decision-making and to make a clear separation between supervisory functions and executive functions, we adopted an executive officer system and elect four executive officers. In addition, we established “KWE Group Top Strategy Meeting” and an “Executive Committee,” both under the supervision of the Board of Directors, in order to ensure that decisions are reached with adequate care and to provide better forums for discussing general management policies and important issues related to business execution.

Board of DirectorsKWE’s Board of Directors consists of 13 members, including two outside directors. The Board of Directors selects executive officers and candidates to be directors or auditors after deliberating such factors as character, insight, and performance within the Company. Compensation – including bonuses – is structured to refl ect each director’s position and the Company’s financial results, based on prescribed Company standards. Directors are appointed for one-year terms, in order to establish clear accountability and to allow for quick response to changes in business conditions.

The Board of Directors held 14 meetings in the fi scal year ended March 2011, and the two outside directors attended 86% of the meetings.

AuditorsKWE’s internal auditing is supervised by our seven-member Audit Department, which audits operations and accounting, and works to improve operations and management effi ciency.

Two of the four members of our Board of Auditors are outside auditors. Each of the auditors conducts audits according to the auditing plan determined by the Board of Auditors. The system allows for adequate supervision of directors’ job execution, with important documents being turned over to auditors and the standing auditors attending important meetings such as Executive Committee and KWE Group Top Strategy Meeting. As a rule, the Board meets once a month. In addition to determining basic policies regarding auditing, etc., board members report

to each other the findings of their daily auditing activities and exchange views.

We established Auditors’ Offi ce to handle clerical work related to the Board of Auditors and auditors’ work, and it operates in close coordination with the Audit Department, which conducts internal audits. We have also established mechanisms that enable auditors to demand whatever reports they require from directors, executive offi cers, or employees, and to investigate the status of KWE’s business and assets at any time.

KWE’s accounting auditor is KPMG AZSA & Co. Audits were conducted thoroughly throughout the fi scal term, and we have created an environment that facilitates auditing.

Our Audit Department, Board of Auditors, and accounting auditor meet regularly to coordinate their annual schedules and report on operations, etc. They cooperate even more closely by exchanging information as necessary.

The Board of Auditors held 14 meetings in the fiscal year ended March 2011, and the two outside auditors attended 96% of the meetings.

Relationships with Outside Directors and Outside AuditorsKWE’s outside directors are Akio Tsujii, an adviser to Kintetsu Corporation, and Masanori Yamaguchi, Chairman of the Board of Kintentsu Corporation. Our outside auditors are Naoyuki Okamoto, President and Representative Director of Mie Kotsu Group Holdings, Inc., and Masao Kishida, Professor at Waseda University’s Graduate School of Finance, Accounting and Law. Although Kintetsu Corporation is a major shareholder, holding 40.98% of KWE’s shares, KWE has minimal business dealings with Kintetsu, and our outside directors and outside auditors have no particular vested interest in KWE.

Executive Committee and KWE Group Top Strategy MeetingKWE’s Executive Committee is composed of full-time directors and auditors, executive offi cers, and departmental managers, etc. It meets twice monthly under the supervision of the Board of Directors as a forum for discussing important matters concerning management policies for the entire group and their execution. In addition, the Company holds a KWE Group Top Strategy Meeting once every three months, with participation from the general managers of the regional headquarters. The Group also holds meetings for the heads of its regional headquarters and other meetings as its own forums.

Director CompensationWe do not see a need to offer extra incentives to our directors, as we believe our performance management system and other existing mechanisms serve adequately to provide motivation and maintain morale. In the year ended March 2011, we paid a total of 286 million yen to 15 directors, including 23 million yen to the two outside directors.

ComplianceOne of the important principles that is clearly stated in the KWE Ethics and Action Standards that guides the actions of KWE executives and employees is that we should live up to the public’s trust with fairness, a strong sense of ethics and responsibility. The Group has established and publicized internally the KWE Group Conduct Compliance Standards, the basis for specific actions, as well as an “Operational Compliance Q&A.” In addition to establishing and publicizing internally a “KWE Group Compliance Manual” and a “KWE Group Antimonopoly Compliance Manual,” the Group regularly conducts compliance training for executives and employees and compliance audits. KWE has also established a Compliance Committee to oversee companywide compliance and has compliance managers in each department. In addition to managing these organizations, the Group has positioned thorough compliance as a strategic priority in its “Ready for the Next!” Medium-Term Management Plan, which starts with the fi scal year ended March 2011.

Risk ManagementIn order to create a framework for managing risk, KWE established risk management standards and ensured that all relevant personnel are familiar with them. The Company also established a Risk Management Committee to oversee companywide risk, and designated individuals to be responsible for risk management within each division. The Risk Management Committee determines basic policies and systems for managing risk and works through the divisional risk managers to identify and manage risk factors that need to be addressed from a companywide perspective. In addition, KWE has prepared a crisis plan, which includes rules for responding to accidents, so that we will be prepared in the face of any new dangers that might suddenly emerge and substantially affect the Company’s business operations.

Investor RelationsIn order to make our management more transparent, we disclose information about the status of our business through our website and other means, and work at maintaining good relations with shareholders and investors.

The Company discloses on its website monthly figures for airfreight export tonnage and the number of airfreight import shipments clearing customs in Japan, for KWE and for the entire industry; KWE’s standing in the industry; and its quarterly overseas cargo volume. In addition, the Company strives to help investors understand its businesses by providing videos that clarify its operations and, on its website, announcing notices of shareholders’ meetings, providing videos of shareholders’ meetings and fi nancial results briefi ngs, and publishing segment information.

Supplemental explanation Representatives explain face to face

Preparation and publication of disclosure policy

Disclosure policy is available on our website –

Regular brief ings for individual investors

Held several times per year. Most recent briefi ng was attended by about 200 people.

Yes

Regular briefi ngs foranalysts andinstitutional investors

Held biannually, in May and November. Most recent briefi ng was attended by about 80 people.

Yes

Posting of IR material on website

Our website:http://www.kwe.com/ir/index.htmlContains links to President’s message, corporate philosophy, management plans, information about the Company, industry, and Group subsidiaries and affi liates, fi nancial statements, share information

–

Establishment of IRgroup or dedicatedpersonnel

General Affairs Department(IR/PR Group) –

Nomination and dismissal

Supervise


Cooperation

Cooperation Report


General Shareholders’ Meeting

Supervise


Supervise


Board of Directors

Representative Directors

Top Strategy Meeting & Executive CommitteeIndependent Auditors

Auditors’ Office

Cooperation

Board of Auditors

Audit Department

Risk Management Committee

Compliance Committee

Corporate Logistics Headquarters

Corporate Forwarding Headquarters

Corporate Sales & Marketing Headquarters

Corporate Strategy Headquarters

Operational Audit

Accounting Audit

Internal auditing

Risk management

Compliance management

Sales Departments

Administration Departments


Management’s Discussion and Analysis

OVERVIEWThe KWE Group consists of Kintetsu World Express, Inc., 60 consolidated subsidiaries, and four affiliated companies accounted for by the equity method. Our principle businesses are international and domestic freight forwarding using transport provided by airlines and shipping companies, and representation on behalf of air carriers. We also offer customs clearance, warehousing, trucking, temporary staffing, insurance agency, property management and packing services.

Although KWE’s business falls within the single segment of freight transportation, we divide our operations into the following four categories: airfreight forwarding (which accounted for 49.5% of net sales in the fiscal year ended March 2011), logistics (19.5%), ocean freight forwarding (19.2%) and other operations (11.8%).

The KWE Group uses a Five Regional Management System. In the fiscal year ended March 2011, each region’s contribution to overall net sales* was as follows: Japan 41.1%, the Americas 12.0%, Europe, Middle East & Africa 8.8%, East Asia & Oceania 28.3%, Southeast Asia 9.1% and other 0.7%. In all, 58.2% of KWE’s total net sales came from overseas operations. * Simple totals before eliminations. “Other” is a business segment not

included in reportable segments. It consists mainly of incidental logistics operations within the KWE Group.

OPERATIONSReview of the global economy during the fiscal year ended March 31, 2011 reveals economic growth in emerging countries, especially in Asia, and gradual economic recoveries in the U.S. and Europe amid concerns about their future outlook. Japan’s economy also showed modest recovery as both exports and production improved, but with employment conditions still severe, this recovery did not seem self-sustaining. Moreover, the economy was seriously affected by the Great East Japan Earthquake in March. Turning to the international freight market in which the KWE Group mainly operates, freight volumes recovered noticeably both overseas and in Japan. However, costs continued to rise in all regions as air and ocean freight rates and fuel surcharges were raised.

In this environment however, the volume of freight handled by the KWE Group returned to the peak that it reached before the world plunged into financial crisis in September 2008, and in the airfreight forwarding business, export volumes (by weight) rose by 31.8% from the previous year and imports (by number of shipments) increased by 11.1%. In the ocean freight forwarding business, export volumes grew by 12.2% and imports (by number of shipments) increased by 16.6%.

Net SalesReflecting the recovery in freight volumes noted above, the KWE Group’s consolidated net sales grew by 26.4% from the previous year to 267.688 billion yen.

In the airfreight forwarding business, net sales grew by 41.4%, as economic growth fueled an especially strong recovery. Net sales also increased by 16.6% for logistics, by 19.3% for ocean freight forwarding, and by 4.5% for other operations.

All regions had recoveries, but cargo movements were especially brisk in East Asia & Oceania and in Southeast Asia. Consequently, net sales increased from the previous year in all five regions: by 18.3% in Japan, by 26.1% in the Americas, by 21.5% in Europe, Middle East & Africa, by 37.1% in East Asia & Oceania, and by 42.2% in Southeast Asia*. * Based on simple totals, before eliminations.

Cost of SalesIn the fiscal year ended March 2011, the cost of sales rose by 29.1% from the previous year to 226.846 billion yen, and the percentage to net sales increased by 1.7 percentage points to 84.7%. We attribute this increase to higher costs in all regions as a result of airlines and shipping companies raising freight rates and fuel surcharges.

Selling, General and Administrative ExpensesIn the fiscal year ended March 2011, selling, general and administrative expenses rose by 1.0% from the previous year to 28.943 billion yen as a result of growth in net sales,

Net Sales by Category

Airfreight forwardingLogisticsOcean freight forwardingOther operations

49.5%

19.5%

19.2%

11.8%

Management

Akio TsujiiChairman

Satoshi IshizakiPresident andChief Executive Officer

Hirohiko UenoSenior Managing Director

Haruto NakataManaging Director

Hiroyuki HoshiaiSenior Managing Director

Joji TomiyamaSenior Managing Director

Shinya AikawaDirector

Kazuya MoriManaging Director

Yoshinori WataraiManaging Director

Masanori YamaguchiOutside Director

Toshimichi InamuraDirector

Takashi BambaDirector

Yoshinobu MitsuhashiDirector

24 Kintetsu World Express Annual Report 2010


Management MD&A.indd 24-25 11.8.18 4:39:16 PM


but the percentage to net sales improved by 2.7 percentage points to 10.8%, due to continued benefits from a series of rationalization measures taken since 2008.

Operating IncomeIn the fiscal year ended March 2011, operating income grew by 59.7% from the previous year to 11.899 billion yen. Moreover, the operating income margin improved to 4.4%, up 0.9 percentage points from 3.5% in the previous year. Although the cost of sales to net sales deteriorated, this was more than offset by improvement in selling, general and administrative expenses to net sales.

Other Income (Expenses)In the fiscal year ended March 2011, net other income totaled 0.778 billion yen, up from 0.144 billion yen in the previous year. This increase is due mainly to a gain on sales of investment securities of 0.741 billion yen.

Income Before Income Taxes and Minority InterestsIn the fiscal year ended March 2011, income before income taxes and minority interests grew by 66.9% from the previous year to 12.677 billion yen.

Income TaxesIn the fiscal year ended March 2011, income taxes rose by 68.6% from the previous year to 4.406 billion yen. After adjustments, the effective tax rate was 34.8%, up from 34.4% in the previous year.

Net IncomeIn the fiscal year ended March 2011, net income grew by 72.4% from the previous year to 7.881 billion yen. As a result, net income per share rose to 218.92 yen, up from 126.97 yen in the previous year; and return on equity improved to 11.7%, up from 7.3% in the previous year.

OUTLOOK FOR THE YEAR THROUGH MARCH 2012In the international freight market, although we anticipate continued growth in transport demand, especially in Asia, we expect costs to increase on higher crude oil prices and cargo movements to slow as a result of the Great East Japan Earthquake. In this environment, the KWE Group will continue to implement its “Ready for the Next!” Medium-Term Management Plan, which commenced in the fiscal year ended March 2011 and covers the three years through the fiscal year ending March 2013. The main focus on this plan is to lay the groundwork for a robust management structure that allows us to compete on an equal footing with major global competitors. During the fiscal year ending March 2012, the second year of our medium-term management plan, we intend to accelerate the expansion of overseas business, especially in Asia, where we anticipate further growth in the future. We will also actively pursue groupwide efforts to expand our core airfreight forwarding business as well as our ocean freight forwarding and logistics businesses. Moreover, to enhance our competitiveness in global markets, we will steadily implement measures to expand groupwide handling

volumes. As a result of these efforts, we expect net sales in the fiscal year ending March 2012 to grow by 7.2% from the previous year to 287.000 billion yen and operating income to grow by 9.3% to 13.000 billion yen.

SEGMENT TRENDS BY REGIONFor a breakdown of segment trends by region, please refer to the Report by Five Regions on pages 16 to 20.

FINANCIAL POSITIONIn the fiscal year ended March 2011, total assets grew by 3.1% from the previous year to 120.280 billion yen.

Current assets rose by 11.2%, or 7.821 billion yen, to 77.864 billion yen, due mainly to an increase in cash and time deposits.

Total property and equipment declined by 5.4%, or 1.867 billion yen, to 32.765 billion yen. Intangible assets decreased by 11.6%, or 0.241 billion yen, to 1.831 billion yen.

Investments and other assets shrank by 21.0%, or 2.074 billion yen, to 7.820 billion yen, due mainly to investments in affiliates and others falling by 47.6%, or 2.588 billion yen, as a result of some sales. As a result, total long-term assets decreased by 9.0%, or 4.182 billion yen, to 42.415 billion yen.

Total liabilities rose by 0.7%, or 0.361 billion yen, to 48.963 billion yen. Current liabilities grew by 0.7% to 42.329 billion yen, and long-term liabilities increased by 1.0% to 6.634 billion yen.

In the fiscal year ended March 2011, net assets rose to

71.317 billion yen, up 4.8%, or 3.279 billion yen, from 68.039 billion yen in the previous year. Total shareholders’ equity rose from 69.579 billion yen to 76.415 billion yen as a result of retained earnings rising from 57.496 billion yen to 64.332 billion yen. Additionally, total accumulated other comprehensive income (a deduction) increased from 3.953 billion yen to 7.084 billion yen, due partly to foreign currency translation adjustments (a deduction) rising from 4.127 billion yen to 7.163 billion yen. The equity ratio at the end of the fiscal year was 57.6%, up from 56.3% at the end of the previous year.

LIQUIDITY AND CAPITAL RESOURCESIn the fiscal year ended March 2011, net cash provided by operating activities totaled 9.843 billion yen, up 57.3%, or 3.583 billion yen, from the previous year. Main items included an increase in net income before income taxes and minority interests of 5.080 billion yen and an increase in the provision for U.S. antitrust matter of 1.014 billion yen.

Net cash provided by investing activities totaled 0.780 billion yen, versus net cash used of 3.834 billion yen in the previous year. The increase was due mainly to payments for purchases of property and equipment falling from 3.322 billion yen to 1.465 billion yen and proceeds from sales of securities rising from 0.034 billion yen to 3.247 billion yen.

Net cash used in financing activities totaled 2.703 billion yen, down from 3.996 billion yen in the previous year. The decrease was due mainly to the net decrease in short-term debt narrowing from 2.008 billion yen to 1.102 billion yen and proceeds from long-term debt rising from 0.357 billion

Net Sales

0

50

150

100

200

250

300

350

’07/3 ’08/3 ’09/3 ’10/3

(Billions of yen)

’11/3

Net Sales

0

50

100

150

200

250

350

300

’06/32010 ’07/3 ’08/3 ’09/3

(Billions of yen)

0

50

100

150

200

250

300

350

SGA Expenses to Net Sales

0

5

10

15

’07/3 ’08/3 ’09/3 ’10/3

(%)

’11/3

Europe, Middle East & AfricaThe AmericasJapanOtherElimination or Unallocated

East Asia & OceaniaSoutheast Asia

Net Sales by Region

-50

150

100

50

200

250

300

350

’07/3 ’08/3 ’09/3 ’10/3

(Billions of yen)

’11/3

0

’10/3 ’11/3-50

0

50

100

150

200

250

300

350

0

50

100

150

200

250

300

350

Europe, Middle East & AfricaThe AmericasJapanOtherElimination or Unallocated

East Asia & OceaniaSoutheast Asia

Operating Income (Loss) by Region

-2.5

5.0

2.5

7.5

10.0

12.5

15.0

’07/3 ’08/3 ’09/3 ’10/3

(Billions of yen)

’11/3

0

-2.5

0.0

2.5

5.0

7.5

10.0

12.5

15.0

Gross Profit Margin

0

5

10

15

20

’07/3 ’08/3 ’09/3 ’10/3

(%)

’11/30

5

10

15

20

Operating Income Margin

0

3.0

4.0

5.0

’07/3 ’08/3 ’09/3 ’10/3

(%)

2.0

1.0

’11/30

1

2

3

4

5




yen to 1.879 billion yen. Also, payments of cash dividends rose by 38.1% from the previous year to 1.044 billion yen.

As a result of the above, cash and cash equivalents as of March 31, 2011 increased by 5.921 billion yen from a year earlier to 30.966 billion yen.

DISCLOSURE OF RISKSIGNIFICANT RISK FACTORS WITH POTENTIAL TO IMPACT OPERATING RESULTSThe followings are the major risk factors that KWE recognizes as having the potential to affect our operations.

1. Economic conditionsKWE operates on a global basis, with operations primarily located within our Five Regional Management System consisting of Japan; the Americas; Europe, Middle East & Africa; East Asia & Oceania; and Southeast Asia. The main products we handle are shipping items such as electronics items (electronic components, semiconductors and semiconductor production equipment, telecommunications-related items, LCD-related items, digital electronic appliances, etc.), automobile items (including auto parts and fully assembled vehicles), medical and chemical items (related to medical care or pharmaceuticals, and chemicals), high-end apparel and related products, and goods for sale by mass merchandisers.

The performance or financial condition of the KWE Group could be affected if there is a change in demand for electronics items, which are particularly sensitive to economic fluctuations, or in the event of a major

international occurrence like the terrorist attacks that took place in the United States in September 2001, the start of the 2003 Iraq war, outbreaks of SARS and avian influenza that occurred in 2004, or the worldwide financial crisis that began in the autumn of 2008, or if there is some other issue of concern at the global level, such as recent fears that swine flu could become a worldwide epidemic.

2. Exchange rate fluctuationsKWE has built a Five Regional Management System, consisting of Japan; the Americas; Europe, Middle East & Africa; East Asia & Oceania; and Southeast Asia regions. Fluctuations in foreign exchange rates in any of these regions could affect KWE’s performance or financial condition. In order to minimize risks arising from such currency fluctuations, KWE uses foreign exchange forward contracts. Our policy is to use these forward contracts only to hedge the amount of KWE’s net debts or credits related to business contracts denominated in foreign currencies. In principle, we do not enter into forward contracts with terms of more than one year. Moreover, we have a policy of not engaging in speculative dealings or highly leveraged transactions. We use foreign exchange forward contracts only to offset the risk posed by potential future fluctuations in relation to normal business dealings denominated in a foreign currency.

3. Fluctuations in crude oil pricesTaking into account the influence that a sudden surge in oil prices might have on distribution and transport, KWE maintains close relationships with air and ocean carriers and

works at expanding our channels for procuring cargo space. Nevertheless, it is possible that unforeseeable circumstances could affect our corporate performance. In the event that airlines should increase their fuel surcharges, we will do our best to pass on the increased costs to customers. However, fuel prices may be volatile in the future and it is possible that they could affect our corporate performance.

4. Legal regulationsEach nation has enacted various regulations governing transport, warehousing, storage management, and other businesses in which we engage. Most of these are statutory regulations (to ensure safety, for example) or legal regulations affecting the transport business. It is possible that changes to existing regulations could cause a temporary spike in capital spending, which could affect KWE’s performance.

5. Transport accidentsKWE takes the utmost care as we work to expand our logistics business, based on the know-how that we have accumulated as an airfreight forwarder. We work hard to secure and increase the trust that our customers place in us. Nevertheless, KWE’s performance could be affected in the event of a transport accident occurring, for example, due to an unpredictable disaster.

6. Storage and security at distribution facilitiesKWE owns distribution-related facilities in five regions: Japan; the Americas; Europe, Middle East & Africa; East

Asia & Oceania; Southeast Asia. We take measures to ensure safe storage and security at these facilities; for example, we have obtained Level A certification from the Transported Asset Protection Association (TAPA, an organization that sets international freight security standards) for facilities in 19 locations in Japan and abroad. However, if our storage or security measures should cease to function due to wide-area disaster such as earthquake, war or terrorist attack, etc., KWE’s performance could be adversely affected.

7. Customer data management / information leaksKWE systematically manages customer and freight movement information through our intra-Group information network. We perform regular audits and inspections to ensure that there are no information leaks. In addition, in accordance with Japan’s Act on the Protection of Personal Information, KWE instituted a companywide policy regarding the safeguarding of personal information, and we strive to make every employee familiar with it. Therefore, we believe the risk of customer data being leaked outside the Company is extremely small. Nevertheless, in the unlikely event that for some reason customer information should be leaked to an outside party, the resulting loss of trust in the Company could affect our corporate performance.

8. Information system securityKWE uses integrated computer systems group-wide and manages much of its global operations with IT systems. We strive to ensure that these information systems operate reliably by using a redundant structure of data centers and network connections, and have hardware and software safeguards against unauthorized access and viruses. Nevertheless, in spite of these precautionary measures, our financial results could be adversely affected if these information systems temporarily malfunction as a result of unforeseen virus or hacker attacks.

ROE

0

5

10

15

’07/3 ’08/3 ’09/3 ’10/3

(%)

’11/3

Cash Flows

-5

0

5

10

(Billions of yen)

Effect of exchange rate changesNet increase in cash and cash equivalents

Investing activitiesOperating activities

Financing activities

Total Assets

0

50

100

150

’07/3 ’08/3 ’09/3 ’10/3

(Billions of yen)

’11/30

50

100

150

Net Assets and Equity Ratio

0

25

50

75

’07/3 ’08/3 ’09/3 ’10/3

(Billions of yen)

0

25

50

75

(%)

’11/3

Net Assets (left)Equity Ratio (right)



Thousands of U.S. dollars

(Note 1)

2011 2010 2011

Millions of yen

ASSETS

Current assets :

Cash and time deposits (Notes 3 and 12)

Notes and accounts receivable – trade (Note 12)

Less: Allowance for doubtful accounts

Marketable securities (Notes 4, 6 and 12)

Deferred tax assets (Note 8)

Other current assets

Total current assets

Property and equipment :

Land (Note 6)

Buildings and structures (Note 6)

Machinery and equipment

Lease Assets

Other

Less: Accumulated depreciation

Total property and equipment

Intangible assets :

Goodwill

Other intangible assets

Total intangible assets

Investments and other assets :

Investments in (Notes 4 and 12) :

Affiliates

Other

Long-term loans receivable (Note 12)

Deferred tax assets (Note 8)

Other investments

Less: Allowance for doubtful accounts

Total investments

See accompanying notes.

¥ 31,755

42,416

(246)

138

773

3,028

77,864

10,706

31,655

2,423

1,111

8,340

54,235

(21,470)

32,765

356

1,475

1,831

1,407

1,445

234

1,049

3,933

(248)

7,820

¥ 120,280

¥ 25,934

41,133

(260)

–

679

2,557

70,043

10,799

31,404

2,824

1,156

10,096

56,279

(21,647)

34,632

126

1,945

2,071

1,199

4,240

250

702

3,921

(417)

9,895

¥ 116,641

$ 381,900

510,114

(2,958)

1,660

9,296

36,416

936,428

128,755

380,698

29,140

13,361

100,301

652,255

(258,208)

394,047

4,281

17,739

22,020

16,921

17,378

2,814

12,616

47,300

(2,982)

94,047

$ 1,446,542


(Note 1)

2011 2010 2011

Millions of yen

LIABILITIES AND NET ASSETS

Current liabilities :

Notes and accounts payable – trade (Note 12)

Short-term debt (Notes 5 and 12)

Current maturities of long-term debt (Notes 5 and 12)

Lease obligations (Note 5)

Income taxes payable (Note 12)

Deferred tax liabilities (Note 8)

Accrued bonuses to employees

Accrued bonuses to directors and corporate auditors

Provision for U.S. antitrust matter

Other current liabilities

Total current liabilities

Long-term liabilities :

Long-term debt (Notes 5 and 12)

Lease obligations (Note 5)

Accrued retirement benefits to employees (Note 7)

Deferred tax liabilities (Note 8)

Other long-term liabilities

Total long-term liabilities

Contingent liabilities (Note 9)

Net assets (Note 10) :

Shareholders’ equity :

Common stock

Authorized 120,000,000 shares

Issued 36,000,000 shares

Capital surplus

Retained earnings

Treasury stock

Total shareholders’ equity

Accumulated other comprehensive income

Net unrealized holding gains on available-for-sale securities

Foreign currency translation adjustments

Total accumulated other comprehensive income

Minority interests in consolidated subsidiaries

Total net assets


¥ 19,842

8,852

243

185

1,957

80

1,699

205

1,014

8,252

42,329

4,850

547

1,042

125

70

6,634

7,216

4,868

64,332

(1)

76,415

79

(7,163)

(7,084)

1,986

71,317

¥ 120,280

¥ 19,529

10,092

1,864

187

990

64

1,589

168

–

7,549

42,032

3,349

762

2,200

88

171

6,570

7,216

4,868

57,496

(1)

69,579

174

(4,127)

(3,953)

2,413

68,039

¥ 116,641

$ 238,629

106,458

2,922

2,225

23,536

962

20,433

2,465

12,195

99,243

509,068

58,328

6,578

12,532

1,503

842

79,783

86,783

58,545

773,686

(12)

919,002

950

(86,146)

(85,196)

23,885

857,691

$ 1,446,542

Kintetsu World Express, Inc. and Subsidiaries

Consolidated Balance SheetsMarch 31, 2011 and 2010


KWE2011財務.indd 30-31 11.8.18 4:35:49 PM


(Note 1)


(Note 1)

2011

2011

2010

2010

2011

2011

Millions of yen

Millions of yen

Net sales (Note 15) Cost of sales Gross profit Selling, general and administrative expenses (Note 16) Operating income (Note 15) Other income (expenses) : Interest and dividend income Interest expense Foreign currency exchange gain, net Equity in earnings (loss) of affiliates, net Gain on sales of investment securities Gain on negative goodwill Provision for U.S. antitrust matter Loss on offices closing Loss on valuation of investment securities Other, net (Note 17) Income before income taxes and minority interests

Income taxes (Note 8) : Current Deferred Income before minority interests

Minority interests in net income of consolidated subsidiaries

Net income

Income before minority interests Other comprehensive income Unrealized gain on available-for-sale securities Foreign currency translation adjustments Share of other comprehensive income of associates accounted for using equity methodTotal other comprehensive income Comprehensive Income

Comprehensive income attribute to (Note 18) Comprehensive income attribute to owners of the parent Comprehensive income attribute to minority interests



¥ 267,688 226,846 40,842

28,943 11,899

192 (269) 628 169 741 188 (1,014) – – 143 778 12,677

4,723 (317) 4,406 8,271

390

¥ 7,881

¥ 8,271

(113) (3,103)

18 (3,198)

¥ 5,073

¥ 4,750 323

¥ 211,837 175,720 36,117

28,665 7,452

218 (301) 529 (93) – – – (205) (87) 83 144 7,596

2,503 109 2,612 –

413

¥ 4,571

–

– –

– –

–

– –

$ 3,219,339 2,728,154 491,185

348,082 143,103

2,309 (3,235) 7,553 2,032 8,912 2,261 (12,195) – – 1,720 9,357 152,460

56,801 (3,812) 52,989 99,471

4,690

$ 94,781

$ 99,471

(1,359) (37,318)

216 (38,461)

$ 61,010

$ 57,126 3,884

U.S. dollars(Note 1)

2011 2010 2011

Yen

Amounts per share : Net income Cash dividends applicable to the year

¥ 218.92 30.00

¥ 126.97 24.00

$ 2.63 0.36



Consolidated Statements of IncomeYears ended March 31, 2011 and 2010

Consolidated Statements of Comprehensive Income Years ended March 31, 2011 and 2010


Consolidated Statements of Changes in Net AssetsYears ended March 31, 2011 and 2010


Shareholders’ equityThousands of U.S. dollars (Note 1)


Balance at March 31, 2010Net income Adjustments from translation of foreign currency financial statementsNet decrease in unrealized holding gains on available-for- sale securitiesPurchase of treasury stockCash dividends paid Other, netBalance at March 31, 2011

Total netassets

$ 818,268 94,781

(36,512)

(1,143) (0) (12,568) (5,135)$ 857,691

Minority interests in

consolidated subsidiaries

$ 29,020 –

–

– – – (5,135)$ 23,885

Totalaccumulated

othercomprehensive

income

$ (47,541) –

(36,512)

(1,143) – – – $ (85,196)

Foreigncurrency

translationadjustments

$ (49,634) –

(36,512)

– – – – $ (86,146)

Net unrealizedholding gainson available-

for-sale securities

$ 2,093 –

–

(1,143) – – – $ 950

Total shareholders’

equity

$ 836,789 94,781

–

– (0) (12,568) – $ 919,002

Treasurystock

$ (12) –

–

– (0) – – $ (12)

Retained earnings

$ 691,473 94,781

–

– – (12,568) – $ 773,686

Capitalsurplus

$ 58,545 –

–

– – – – $ 58,545

Common stock

$ 86,783 –

–

– – – – $ 86,783

Number of shares of common

stock(thousands)

36,000 –

–

– – – – 36,000

Shareholders’ equityMillions of yen


Balance at March 31, 2009Net income Adjustments from translation of foreign currency financial statementsNet increase in unrealized holding gains on available- for-sale securitiesPurchase of treasury stockCash dividends paid Other, netBalance at March 31, 2010Net income Adjustments from translation of foreign currency financial statementsNet decrease in unrealized holding gains on available- for-sale securitiesPurchase of treasury stockCash dividends paid Other, netBalance at March 31, 2011

Total netassets

¥ 61,874 4,571

1,096

589 (0) (756) 665 ¥ 68,039 7,881

(3,036)

(95) (0) (1,045) (427)¥ 71,317

Minority interests in

consolidated subsidiaries

¥ 1,748 –

–

– – – 665 ¥ 2,413 –

–

– – – (427)¥ 1,986

Totalaccumulated

othercomprehensive

income

¥ (5,638) –

1,096

589 – – – ¥ (3,953) –

(3,036)

(95) – – – ¥ (7,084)

¥ (5,223) –

1,096

– – – – ¥ (4,127) –

(3,036)

– – – – ¥ (7,163)

Net unrealizedholding gainson available-

for-sale securities

¥ (415) –

–

589 – – – ¥ 174 –

–

(95) – – – ¥ 79

Total shareholders’

equity

¥ 65,764 4,571

–

– (0) (756) –¥ 69,579 7,881

–

– (0) (1,045) – ¥ 76,415

Treasurystock

¥ (1) –

–

– (0) – – ¥ (1) –

–

– (0) – – ¥ (1)

Retained earnings

¥ 53,681 4,571

–

– – (756) – ¥ 57,496 7,881

–

– – (1,045) – ¥ 64,332

Capitalsurplus

¥ 4,868 –

–

– – – – ¥ 4,868 –

–

– – – – ¥ 4,868

Common stock

¥ 7,216 –

–

– – – – ¥ 7,216 –

–

– – – – ¥ 7,216

Number of shares of common

stock(thousands)

36,000 –

–

– – – – 36,000 –

–

– – – – 36,000

Foreigncurrency

translationadjustments


KWE2011財務.indd 32-33 11.8.18 4:35:50 PM


(Note 1)

2011 2010 2011

Millions of yen

CASH FLOWS FROM OPERATING ACTIVITIES: Net income before income taxes and minority interests

Adjustments to reconcile net income before income taxes to net cash provided by operating activities : Depreciation and amortization Gain on negative goodwill Increase (Decrease) in accrued bonuses to employees Increase (Decrease) in accrued bonuses to directors and corporate auditors Increase (Decrease) in accrued retirement benefits to employees Interest and dividend income Interest expense Gain on sales of investment securities Increase (Decrease) in provision for U.S. antitrust matter Changes in assets and liabilities: (Increase) Decrease in notes and accounts receivable Increase (Decrease) in notes and accounts payable (Increase) Decrease in other assets Increase (Decrease) in other liabilities Other, net Sub-total Interest and cash dividend received Interest paid Payments for antitrust penalty Income taxes paidNet cash provided by (used in) operating activities CASH FLOWS FROM INVESTING ACTIVITIES: Payments for purchases of securities Proceeds from sales of securities Payments for purchases of property and equipment Proceeds from sales of property and equipment Proceeds from loans receivable Purchase of investments in subsidiaries Purchase of investments in subsidiaries resulting in change in scope of consolidation Other, netNet cash provided by (used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES: Net increase (decrease) in short-term debt Payments of capital lease obligations Proceeds from long-term debt Payments for long-term debt Payments of cash dividends Payments of cash dividends to minority shareholders Other, netNet cash provided by (used in) financing activities Effect of exchange rate changes on cash and cash equivalentsNet increase (decrease) in cash and cash equivalentsCash and cash equivalents at beginning of yearCash and cash equivalents at end of year (Note 3)

¥ 12,677

2,999 (188) 203 50 (1,134) (192) 269 (741) 1,014

(4,522) 2,532 (676) 1,336 73 13,700 179 (271) – (3,765) 9,843

(68) 3,247 (1,465) 86 19 (978) – (61) 780

(1,102) (196) 1,879 (1,923) (1,044) (317) (0) (2,703)

(1,999) 5,921 25,045 ¥ 30,966

¥ 7,596

3,114 – 155 (27) 1,071 (218) 301 – –

(4,322) 2,869 612 3 86 11,240 261 (327) (1,495) (3,419) 6,260

(32) 34 (3,322) 103 43 – (115) (545) (3,834)

(2,008) (191) 357 (1,054) (756) (344) (0) (3,996)

710 (860) 25,905 ¥ 25,045

$ 152,460

36,068 (2,261) 2,441 601 (13,638) (2,309) 3,235 (8,912) 12,195

(54,384) 30,451 (8,130) 16,067 878 164,762 2,153 (3,259) – (45,280) 118,376

(818) 39,050 (17,619) 1,034 229 (11,762) – (733) 9,381

(13,253) (2,357) 22,598 (23,127) (12,556) (3,812) (0) (32,507)

(24,041) 71,209 301,202 $ 372,411


Consolidated Statements of Cash FlowsYears ended March 31, 2011 and 2010



Notes to Consolidated Financial StatementsYears ended March 31, 2011 and 2010

The accompanying consolidated financial statements of Kintetsu World Express, Inc. (The “Company”) and its consolidated subsidiaries have been prepared in accordance with the provisions set forth in the 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 aspects as to application and disclosure requirements from International Financial Reporting Standards.

The accounts of overseas consolidated subsidiaries are based on their accounting records maintained in conformity with generally accepted accounting principles prevailing in the respective countries domicile. Based on the accounting standard, “Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for the Consolidated Financial Statements (issued by the Accounting Standards Board of Japan (“ASBJ”) on May 17, 2006)”, the difference of between Japanese GAAP and those in overseas are adjusted in the consolidation process. The accompanying consolidated financial statements have been reformatted and translated into English with some expanded descriptions from the consolidated financial statements of the Company provided in accordance with Japanese GAAP and filed with the appropriate Local Finance Bureau of the Ministry of Finance as required by the Financial Instruments and Exchange Law. Certain supplementary information included in the statutory Japanese language consolidated financial statements is not presented in the accompanying consolidated financial statements.

The translations of the Japanese yen amounts into U.S. dollars are included solely for the convenience of readers, using the prevailing exchange rate at March 31, 2011 which was ¥83.15 to U.S. $1. The convenience translations should not be construed as representations could in the future be, converted into U.S. dollars at this or any other rate of exchange.

Certain prior year amounts have been reclassified to conform to the year 2011 presentation. These changes had no impact on previously reported results of operations.

(1) Scope of ConsolidationThe Consolidated financial statements include the accounts of the Company and 60 subsidiaries for the year ended March 31, 2011. At March 31, 2010 the Company had 54 subsidiaries and consolidated all of them.

The Company and the consolidated subsidiaries are together referred to as the “Companies” hereinafter.

(2) Consolidation and EliminationFor the purposes of preparing the consolidated financial statements, all significant intercompany transactions, account balances and unrealized profits have been eliminated, and the portion thereof attributable to minority interests is charged to minority interests.

In the elimination of investments in subsidiaries, the assets and liabilities of the subsidiaries, including the portion attributable to minority shareholders, are evaluated using the fair value at the time of the Company acquired control of the respective subsidiaries.

(3) Investments in Affiliates At March 31, 2011, 4 affiliates of which the Company has the ability to exercise significant influence over operating and financial policies are accounted for by the equity method whereby the costs of

investments are adjusted for equity in undistributed earnings or losses since acquisition. At March 31, 2010, 3 affiliates were accounted for by the equity method.

(4) Cash and Cash EquivalentsIn preparing the consolidated statements of cash flows, cash on hand, readily-available deposits and short term highly liquid investments with maturities of not exceeding three months at the time of purchase are considered to be cash and cash equivalents.

(5) SecuritiesSecurities are classified as (a) securities held for trading purposes (hereafter, “trading securities”), (b) debt securities intended to be held to maturity (hereafter, “held-to-maturity debt securities”), (c) equity securities issued by subsidiaries and affiliated companies, and (d) all other securities that are not classified in any of the above categories (hereafter, “available-for-sale securities”).

Securities held by the Companies are classified into three categories. Held-to-maturity debt securities are stated at amortized cost. Available-for-sale securities with market value are stated at market value. Unrealized gains and losses on these securities are reported, net of applicable income taxes, as a separate component of net assets. Realized gains on sales of such securities are computed using weighted-average cost. Other securities that do not have market value are stated at weighted-average cost. If the market value of available-for-sale securities declines significantly, such securities are stated at market value and the difference between market value and the carrying amounts is recognized as loss in the period of the decline.

(6) Allowance for Doubtful Accounts The Companies adopted the policy of providing the allowance for doubtful accounts using the actual rate of bad debt losses experienced in the past for the receivable other than those, for which allowance is provided based on individual evaluation of their possibility of collection.

The allowance for doubtful accounts held by overseas consolidated subsidiaries represents the amount deemed necessary to cover possible losses.

(7) Property and Equipment(a)Property and Equipment excluding Lease Assets

Property and equipment are stated at cost. Depreciation for buildings held by the Company and domestic consolidated subsidiaries is computed on the straight-line method based on the estimated useful lives of assets. Depreciation for others held by the Company and domestic consolidated subsidiaries is mainly computed using the declining-balance method. Depreciation of property and equipment held by overseas consolidated subsidiaries is mainly computed by the straight-line method. Normal repairs and maintenance, including minor renewals and improvements, are charged income as incurred. The range of useful lives is principally as follows: Buildings and Structures ................ 13-38 yearsMachinery and equipment ............ 3- 6 yearsOthers ............................................. 3-10 years

(b)Lease AssetsAssets used under finance lease arrangements are capitalized. Depreciation for Lease Assets is amortized on the straight-line method with their residual values being zero over their leased periods used as the number of years

Note 1: Basis of Presenting the Consolidated Financial Statements

Note 2: Summary of Significant Accounting Policies


KWE2011財務.indd 34-35 11.8.18 4:35:50 PM

for useful lives. The finance leases without transfer of ownerships started before April 1, 2008 are continuously accounted for by a method similar to that used for operating leases.

(8) Intangible Assets excluding Lease AssetsAmortization of intangible assets is computed using the straight-line method. Software for internal use is amortized on the straight-line method over their estimated useful lives (primarily 5 years). Goodwill and negative goodwill which was accounted on or before March 31, 2010 are amortized on the straight line method over a 20-year-period. Immaterial goodwill is amortized as incurred.

(9) Accounting for impairment of Fixed Assets The Companies review its long lived assets for impairment whenever changes in circumstance indicate the carrying amount of an asset or asset group may not be recoverable. An impairment loss would be recognized if the carrying amount of an asset or asset group exceeds the sum of the undiscounted future cash flows expected to result from the continued use and eventual disposition of the asset or asset group. The impairment loss would be measured as the amount by which the carrying amount of the asset exceeds its recoverable amount, which is the higher of the discounted cash flows from the continued use and eventual disposition of the asset or the net selling price at disposition.

(10) Accrued Bonuses to EmployeesBonuses to employees are provided for the portion of relevant to the current year of the estimated amount of bonus payments.

(11) Accrued Bonuses to Directors and Corporate AuditorsBonuses to directors and corporate auditors are provided for the portion relevant to the current year of the estimated amount of bonus payments.

(12) Accrued Retirement Benefits to EmployeesThe Companies adopted the accounting standard for employee’s severance and retirement benefits, under which allowance and expenses for severance and pension benefits are determined based on the amounts obtained by actuarial calculations.

The Company and certain domestic consolidated subsidiaries have a defined benefit pension plan while certain overseas subsidiaries have either a defined benefit pension plan or a defined contribution pension plan. Effective April 1, 2001 the Company integrated entire lump-sum payment plan into funded pension plan. The transition amount arising from the integration of ¥84 million is amortized on the straight-line method over the period of 13 years commencing with the year ended March 31, 2002. The excess of the projected benefit obligation over the total of the fair value of pension assets as of April 1, 2000 and the liabilities for severance and retirement benefits recorded as of April 1, 2000 (the “net translation obligation”) amounted to ¥3,788 million, is recognized in expenses in equal amounts primarily over 15 years commencing with the year ended March 31, 2001. Unrecognized net actuarial differences are amortized as expenses from the next fiscal year by the straight-line method over the prescribed years within the estimated remaining service period (13 years).

(13) Provision for U.S. antitrust matterFrom January 2008, the Company has been under an ongoing investigation by the United States Department of Justice into alleged violation of antitrust laws in relation to prices of fuel surcharge on shipments originating Japan. The investigation is still in progress. A best estimate reserve has been recorded for losses that may arise in the future.

(14) Foreign Currency Transactions All short-term and long-term monetary receivables and payables denominated in foreign currencies are translated into Japanese yen at the exchange rates at the year-end date. The foreign exchange

gains and losses from transactions are recognized in the consolidated statements of income and the consolidated statements of comprehensive income to the extent that they are not hedged by forward exchange contracts.

(15) Foreign Currency Financial StatementsThe balance sheet accounts of foreign consolidated subsidiaries and affiliates are translated into Japanese yen at current exchange rates prevailing at the relevant balance sheet date except for equity, which is translated at the historical rates. Revenue and expense accounts of the foreign consolidated subsidiaries and affiliates are translated into Japanese yen at the average exchange rates. The differences arising from such translations were shown as “Foreign currency translation adjustments” and “Minority interests in consolidated subsidiaries” in separate components of equity.

(16) Income TaxesIncome taxes consist of corporation, enterprise and inhabitant taxes. The provision for income taxes is computed based on the pretax income of each of the Company and its consolidated subsidiaries with certain adjustments required for tax purposes. The Company and its consolidated subsidiaries recognize tax effects of temporary differences between the carrying amounts of assets and liabilities for tax purposes and financial reporting purposes. The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary timing differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

(17) DerivativesDerivative financial instruments are stated at fair value and changes in their fair values are recognized as gains or losses.

(18) Per Share Information Net income per share of common stock is computed based upon the weighted-average number of shares outstanding during the year. Diluted earnings per share of common stock for the years ended March 31, 2011 and 2010 are not presented since the Company had no securities with dilutive effect. Cash dividends per share presented in the consolidated statements of income represent dividends declared as applicable to the respective year, including dividends paid after the end of the year.

(19) Presentation of Comprehensive Income Effective March 31, 2011, the Company adopted “Accounting Standard for Presentation of Comprehensive Income” (ASBJ Statement No. 25, issued on June 30, 2010) and “Revised Accounting Standard for Consolidated Financial Statements” (ASBJ Statement No. 22, revised on June 20, 2010).

As a result of the adoption of these standards, the Company has presented the consolidated statements of comprehensive income in the consolidated financial statements for the year ended March 31, 2011. And the consolidated balance sheets and the consolidated statements of changes in net assets as of and for the fiscal year ended March 31, 2010 have been modified to conform with the new presentation rules of 2011.

(20) Changes in Basis of Presentation of Consolidated Financial Statements

(1) Application of Accounting Standard for Equity Method of Accounting for Investments and Practical Solution on Unification of Accounting PoliciesEffective April 1, 2010, the Company adopted “Accounting Standard for Equity Method of Accounting for Investments” (ASBJ Statement No.16, issued on March 10, 2008) and “Practical Solution of Unification of Accounting Policies Applied to Associates Accounted for Using the Equity Method” (ASBJ PITF Statement No. 24, issued on March 10, 2008). The change had no material impact on the


consolidated financial statements.(2) Application of Accounting Standard for Asset Retirement

ObligationsEffective April 1, 2010, the Company and its consolidated domestic subsidiaries adopted “Accounting Standard for Asset Retirement Obligations” (ASBJ Statement No. 18, issued on March 31, 2008) and “Guidance on Accounting Standard for Asset Retirement Obligations” (ASBJ Guidance No. 21, March 31, 2008). The change had no material impact on the consolidated financial statements.

(3) Application of Accounting Standards for Business Combinations and Related MattersEffective April 1, 2010, the Company and its consolidated domestic subsidiaries adopted “Accounting Standard for Business Combinations”(ASBJ Statement No. 21, issued on December 26, 2008), “Accounting Standard for Consolidated Financial Statements”(ASBJ Statement No. 22, issued on December 26, 2008), “Partial amendments to Accounting Standard for Research and Development Costs” (ASBJ Statement No. 23, issued on December 26, 2008), “Revised Accounting Standard for Business

Divestitures”(ASBJ Statement No. 7, issued on December 26, 2008), “Revised Accounting Standard for Equity Method of Accounting for Investments”(ASBJ Statement No. 16, issued on December 26, 2008), and “Revised Guidance on Accounting Standard for Business Divestitures”(ASBJ Guidance No. 10, issued on December 26, 2008).

DifferenceMarketvalue

Bookvalue


Bookvalue

Millions of yen Thousands of U.S. dollars

Held-to-maturity debt securities, at March 31, 2011

Securities with available fair values exceeding book valueOther securities Total

¥ 138 – ¥ 138

¥ 140 – ¥ 140

¥ 2 – ¥ 2

$ 1,660 – $ 1,660

$ 1,684 – $ 1,684

$ 24 – $ 24


Bookvalue

Millions of yen

Held-to-maturity debt securities, at March 31, 2010

Securities with available fair values exceeding book valueOther securities Total

¥ 136 – ¥ 136

¥ 140 – ¥ 140

¥ 4 – ¥ 4

The following tables summarize acquisition costs, book values and fair values of securities with available fair values at March 31, 2011 and 2010:

Note 4: Securities

DifferenceAcquisition

costBookvalue


costBookvalue


Available-for-sale securities, at March 31, 2011

Securities with book value exceeding acquisition costsOther securities Total

¥ 620 245 ¥ 865

¥ 418 369 ¥ 787

¥ 202 (124)¥ 78

$ 7,456 2,946 $ 10,402

$ 5,027 4,438 $ 9,465

$ 2,429 (1,492)$ 937


costBookvalue

Millions of yen

Available-for-sale securities, at March 31, 2010

Securities with book value exceeding acquisition costsOther securities Total

¥ 3,238 311 ¥ 3,549

¥ 2,916 365 ¥ 3,281

¥ 322 (54)¥ 268

Reconciliations of cash and time deposits shown in the consolidated balance sheets and cash and cash equivalents shown in the consolidated statements of cash flows as of March 31, 2011 and 2010 are as follows:

Note 3: Cash and Cash Equivalents

Cash and time deposits Deposits over three monthsCash and cash equivalents

¥ 31,755 (789)¥ 30,966

¥ 25,934 (889)¥ 25,045

$ 381,900 (9,489)$ 372,411


2011 2010 2011

Millions of yen

KWE2011財務.indd 36-37 11.8.18 4:35:50 PM

Available-for-sale securities sold during the years ended March 31, 2011 and 2010 are as follows:

At March 31, 2011, assets pledged as collateral for long-term debt mentioned in Note 5 are as follows:

In addition, the Company pledged security ¥138 million ($1,660 thousand) as collateral for deferred payment of customs duties.

Held-to-maturity debt securities sold during the years ended March 31, 2011 and 2010 are as follows:

Book value of available-for-sale securities, with no fair market value, as of March 31, 2011 and 2010 are as follows:

Short-term debt consisted principally of borrowings from banks. The weighted average interest rate of short-term debt as of March 31, 2011 and 2010 were 1.03% and 1.04%, respectively.

Long-term debt at March 31, 2011 and 2010 consists of the following:

Annual maturities of long-term debt at March 31, 2011 are as follows:

Accrued retirement benefits included in the liability section of the consolidated balance sheets as of March 31, 2011 and 2010 consist of the following:

The components of net periodic benefit cost for the years ended March 31, 2011 and 2010 are as follows:

The discount rates used by the Company to measure the projected pension benefit obligation was 2.0% for 2011 and 2010 and the rate of expected return on plan assets was 4.0% for 2011 and 2010.

Projected benefit obligationUnrecognized prior service costUnrecognized actuarial differencesLess fair value of plan assetsLess unrecognized net transition obligationPrepaid pension cost Accrued retirement benefits

¥ 16,904

(32)

(2,943) (12,198)

(1,016) 327

¥ 1,042

¥ 16,970

(38)

(2,726) (10,737)

(1,269) 0

¥ 2,200

$ 203,295

(385)

(35,394) (146,698)

(12,219) 3,933

$ 12,532


2011 2010 2011

Millions of yen

Service cost – benefits earned during the yearInterest cost on projected benefit obligationExpected return on plan assets Amortization on net transition obligationAmortization on prior service costAmortization on actuarial differences Retirement benefit expenses

¥ 1,023

319

(422)

252

6

391

¥ 1,569

¥ 1,036

326

(371)

252

7

530

¥ 1,780

$ 12,303

3,836

(5,074)

3,031

72

4,702

$ 18,870


2011 2010 2011

Millions of yen

Note 7: Accrued Retirement Benefits to Employees


Non-listed securitiesNon-listed equity securities issued by affiliates Total

¥ 580

1,407 ¥ 1,987

¥ 555

1,199 ¥ 1,754

$ 6,975

16,921 $ 23,896


2011 2010 2011

Millions of yen

Available-for-sale securities

Buildings and structuresLand

¥ 653 773 ¥ 1,426

$ 7,853 9,296 $ 17,149


Millions of yen

20122013201420152016 and thereafter Total

Year ending March 31¥ – 334 4,391 128 544 ¥ 5,397

$ – 4,017 52,808 1,539 6,542 $ 64,906


Millions of yen

Note 6: Pledged Assets

Sales valueGain on salesLoss on sales

¥ 3,098 741 –

¥ 5 – 0

$ 37,258 8,912 –


2011 2010 2011

Millions of yen

Available-for-sale securities

Sales valueGain on salesLoss on sales

¥ – – –

¥ 28 0 –

$ – – –


2011 2010 2011

Millions of yen

Held-to-maturity debt securities

Long-term debt from banks and other financial institutions due 2012 to 2036, with average interest of 2.37% for 2011 and 2.89% for 2010 Secured Unsecured

Less: Portion due within one year

¥ 49 5,776 5,825

(428)¥ 5,397

¥ 43 6,119 6,162

(2,051)¥ 4,111

$ 589 69,464 70,053

(5,147)$ 64,906


2011 2010 2011

Millions of yen

Note 5: Short-term Debt and Long-term Debt

Income taxes consist of corporation, inhabitant and enterprise taxes. The statutory tax rate for the years ended March 31, 2011 and 2010 was 40.69%. Significant components of the Companies’ deferred tax assets and liabilities as of March 31, 2011 and 2010 are as follows:

The significant difference between the statutory tax rate and the Company’s effective tax rate for financial statement purposes for the years ended March 31, 2011 and 2010 is as follows:

Deferred tax assets : Operating loss carryforwards Accrued bonuses Allowance for doubtful accounts Accrued retirement benefits to employees Accrued enterprise tax Net unrealized holding losses on available- for-sale securities Other Total Valuation allowance Total deferred tax assets Deferred tax liabilities : Net unrealized holding gains on available-for- sale securities Depreciation and other Total deferred tax liabilities Net deferred tax assets

¥ 338 390

127

1,075 105

57 460 2,552 (501)

2,051

(32) (402)

(434)

¥ 1,617

¥ 416 454

148

825 52

51 355 2,301 (586)

1,715

(109) (377)

(486)

¥ 1,229

$ 4,065 4,690

1,527

12,928 1,262

686 5,533 30,691 (6,025)

24,666

(385) (4,834)

(5,219)

$ 19,447


2011 2010 2011

Millions of yen

Statutory tax rate Entertainment expenses and other non-deductible permanent differences Dividend income and other non- taxable income Difference of the statutory tax rate among countries other than Japan Effect of elimination of intercompany dividends received Compensable tax loss in subsidiaries Corporate inhabitant tax Valuation allowance on deferred tax Equity in earnings of affiliated companies Provision for U.S. antitrust matter Adjustment of Income tax for previous year Gain on sale of shares of subsidiaries to another subsidiary Other, netEffective tax rate

40.69%

1.32

(0.18)

(9.66)

0.52 (1.30) 1.12 (0.81)

(0.54) 3.26 1.13

– (0.79) 34.76%

40.69%

2.61

(1.19)

(11.97)

0.96 – 1.22 3.52

– –

(3.35)

1.33 0.57 34.39%

2011 2010

Note 8: Income Taxes

The Companies have no contingent liabilities as of March 31, 2011.

Net assets are comprised of three subsections, which are shareholders’ equity, accumulated other comprehensive income and minority interests in consolidated subsidiaries. Under Japanese laws and regulations, the entire amount of payment for new shares is required to be designated as common stock, although, generally, 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. Japanese Company Law (the “Law”) became effective on May 1, 2006, and, at the same time, the Japanese Commercial Code (the “Code”) was repealed. Under the Code, companies were required to set aside an amount equal to at least 10% of cash dividends and other cash appropriations as legal earnings reserve until the total of legal earnings reserve and additional paid-in capital equaled 25% of common stock. Under the Law, in cases when dividends are paid, an amount equal to 10% of the dividends or the excess of 25% of common stock over the total of additional paid-in capital and legal earnings reserve, whichever is the smaller, must be set aside as additional paid-in capital or legal earnings reserve. Under the Code, additional paid-in capital and legal earnings reserve were available for distribution by the resolution of the shareholders’ meeting as long as the total amount of legal earnings reserve and additional paid-in capital remained equal to or exceeded 25% of common stock. Under the Law, even when the total amount of additional paid-in capital and legal earnings reserve is less than 25% of common stock, additional paid-in capital and legal earnings reserve may be available for dividends if there are sufficient distributable surplus. Under the Code, legal earnings reserve and additional paid-in capital could be used to eliminate or reduce a deficit by a resolution of the shareholders’ meeting or may be capitalized by a resolution of the Board of Directors. Under the Law, both of those appropriations require a resolution of the shareholders’ meeting. Legal earnings reserve is included in retained earnings in the accompanying consolidated balance sheets. 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 the Japanese laws and regulations.

Note 10: Net Assets

Note 9: Contingent Liabilities

Financial lease transactions which are deemed to transfer ownership of the leased assets to lessees entered into before April 1, 2008 are continuously accounted for by a method similar to that used for operating leases.

Note 11: Accounting for Leases

KWE2011財務.indd 38-39 11.8.18 4:35:50 PM

1. Qualitative information on financial instruments(1) Policies for using financial instruments

The Companies raise funds through bank loans and make short-term deposits for fund management purposes.

The Companies also utilize derivative financial instruments to hedge various risks as described in detail below and do not enter into derivatives for speculative purposes.

(2) Details of financial instruments used and the exposures to risks and policies and processes for managing the risksNotes and accounts receivable – trade are exposed to credit risk of customers. To minimize the credit risk, the Companies perform due date controls and balance controls for each customer in accordance with internal customer credit management rule and regularly screens customers’ credit status.

Investment securities are exposed to stock market fluctuation risk. However, those are primarily the shares of companies with which the Companies have operational relationships, and the Companies are continuously monitoring the investees’ financial condition and the market values. The credit risk of Held-to-maturity debt securities is deemed to be very low because the Companies only invested debt securities with high credit rating.

Maturities of Notes and accounts payable-Trade are

mostly within one year. Among loans payable, Short-term debts are primarily for fund raising related to sales transactions, and Long-term debts are primarily for fund raising related to capital investments. Those payables and debts are exposed to liquidity risk at time of settlement. However, the Companies reduce that risk by having each company review its fund-raising plans periodically and by controlling the liquidity position.

Foreign exchange forward contracts as derivative transactions are used in order to avoid the risk of currency exchange associated with assets and liabilities denominated in foreign currencies. Derivative transactions are executed and controlled by the finance section upon request of the overseas settlement section according to the Companies’ internal polices.

The credit risk of derivative transactions is deemed to be very low because the Companies only conduct transactions with financial institutions with high credit ratings.

2. Fair value of financial instrumentsThe carrying amounts on the consolidated balance sheets, fair value, and differences as of March 31, 2011 are as follows.

Moreover, financial instruments, for which it is extremely difficult to measure the fair value, are not included (See Note 2).

Note 12: Financial Instruments


$ 381,900 510,114

1,684

10,403 2,814 $ 906,915

$ 238,629 106,458 23,536 62,285 $ 430,908 $ 204

$ 381,900 510,114

1,660

10,403 2,814 $ 906,891

$ 238,629 106,458 23,536 61,250 $ 429,873 $ 204

¥ – –

2 – – ¥ 2

¥ – – – 86 ¥ 86 ¥ –

¥ 31,755 42,416

140

865 234 ¥ 75,410

¥ 19,842 8,852 1,957 5,179 ¥ 35,830 ¥ 17

¥ 31,755 42,416

138

865 234 ¥ 75,408

¥ 19,842 8,852 1,957 5,093 ¥ 35,744 ¥ 17

Book value Fair value Difference Book value Fair value Difference

$ – –

24 – –$ 24

$ – – – 1,035 $ 1,035 $ –

Note 1. Fair value measurement of financial instruments Assets (1) Cash and time deposits and (2) Notes and accounts

receivable – tradeThe relevant book values are used because the settlement periods of the above items are short and their fair values are almost the same as their book values.(3) Marketable securities and (4) Investment securitiesThe fair value equals quoted market price or provided price by financial institutions.(5) Long-term loans receivable The relevant book values are used because their fair values are almost the same as their book values in view of loan collection schedule and condition of interest rates.

Liabilities(6) Notes and accounts payable – trade, (7) Short-term debt and (8) Income taxes payableThe relevant book values are used because the settlement

periods of the above items are short and their fair valuesare almost the same as their book values.(9) Long-term debtThe fair value of long-term debt is based on the present value of future cash flows discounted using the currentborrowing rate for similar debt of a comparable maturity.

Derivative transactionsDerivative assets and liabilities are on a net base. Net liabilities are disclosed in brackets.

Note 2. Unlisted equity securities (carrying amount: ¥1,987 million ($23,897 thousand)) are not included in Assets (4) Investment securities as they do not have a quoted market price in an active market.

Note 3. The redemption schedule for money claim and held-to-maturity debt securities with maturity dates subsequent to the consolidated balance sheet date.

Assets(1) Cash and time deposits(2) Notes and accounts receivable – trade(3) Marketable securities Held-to-maturity debt securities(4) Long-term loans receivable Total


$ – –

– 1,022 $ 1,022

$ 381,900 510,114

1,660 – $ 893,674

¥ – –

– 149 ¥ 149

¥ – –

– 85 ¥ 85

¥ 31,755 42,416

138 – ¥ 74,309

One year or less

One to five years

Over five years

One year or less

One to five years

Over five years

$ – –

– 1,792 $ 1,792

Assets :(1) Cash and time deposits (2) Notes and accounts receivable – trade(3) Marketable securities Held-to-maturity debt securities(4) Investment securities Other securities(5) Long-term loans receivable TotalLiabilities :(6) Notes and accounts payable – trade(7) Short-term debt(8) Income taxes payable(9) Long-term debt (including current maturities of long-term debt) TotalDerivative transactions

Fair value is based on information provided by financial institutions at the end of fiscal year. Derivative transactions to which hedge accounting is not applied as of March 31, 2011 are as follows:

Note 13: Derivatives

Off-market transactionsForeign currency forward contracts to Purchase U.S. dollar Purchase euro Purchase pound sterling Purchase Swiss franc Purchase Hong Kong dollar Purchase Swedish krona


$ 72 120 0 12 (0) 0 $ 204

$ 4,655 4,245 625 313 204 60 $ 10,102

¥ 6 10 0 1 (0) 0 ¥ 17

¥ 6 10 0 1 (0) 0 ¥ 17

¥ 387 353 52 26 17 5 ¥ 840

Contracts outstanding

due within one year

Fair valueUnrealized gain

(loss)

Contracts outstanding

due within one year

Fair valueUnrealized gain

(loss)

$ 72 120 0 12 (0) 0 $ 204


Machinery and equipment : Assumed acquisition cost Accumulated depreciation Net book valueOthers (tools, dies, furniture and fixtures): Assumed acquisition cost Accumulated depreciation Net book valueOther intangible assets (Software): Assumed acquisition cost Accumulated depreciation Net book value

¥ 6

(5)¥ 1

¥ 480

(353)¥ 127

¥ 160

(126)¥ 34

¥ 6

(3)¥ 3

¥ 613

(368)¥ 245

¥ 188

(117)¥ 71

$ 72

(60)$ 12

$ 5,772

(4,245)$ 1,527

$ 1,924

(1,515)$ 409


2011 2010 2011

Millions of yen

(1) A summary of assumed amounts of acquisition cost, accumulated depreciation and net book value for non-capitalized finance leases at March 31, 2011 and 2010 is as follows:

Payments due within one year Payments due after one year

Payments due within one year Payments due after one year

Lease paymentsDepreciation expense portionInterest expense portion

¥ 104

64 ¥ 168

¥ 2,527

4,338 ¥ 6,865

¥ 167 158 6

¥ 161

168 ¥ 329

¥ 2,529

3,929 ¥ 6,458

¥ 205 194 10

$ 1,251

769 $ 2,020

$ 30,391

52,171 $ 82,562

$ 2,008 1,900 72




2011

2011

2011

2010

2010

2010

2011

2011

2011

Millions of yen

Millions of yen

Millions of yen

(2) Lease obligations under non-capitalized finance leases, including finance charges at March 31, 2011 and 2010 are as follows:

(3) Lease payments and the amounts corresponding to depreciation and interest expense under such leases for the years ended March 31, 2011 and 2010 are as follows:

In addition, lease obligations under operating leases, including finance charges, at March 31, 2011 and 2010 are as follows:

KWE2011財務.indd 40-41 11.8.18 4:35:51 PM

Business Combinations in the fiscal year ended March 31, 2011 are as follows :

(a) Acquisition of an additional equity of subsidiary in Malaysia1. Name and nature of business subject to transaction,

statutory form of business combination, name of company after transaction, and outline and purpose of the transaction(1)Name and nature of business subject to transaction Name of business : Kintetsu Integrated Air Services Sdn. Bhd. Nature of business : International air and ocean freight forwarding(2)Statutory form of business combination Acquisition of an additional equity (3)Name of company after transaction Kintetsu World Express (Malaysia) Sdn. Bhd.(4)Outline and purpose of transaction The Company acquired all equity from minority shareholders in

order to obtain greater management efficiency.

2. Outline of the accounting treatment implementedThis transaction was accounted for as a transaction under common control based on “Accounting Standard for Business Combinations” (ASBJ statement No. 21, December 26, 2008) and “Revised Guidance on Accounting Standard for Business Combinations and Accounting Standard for Business Divestitures” (ASBJ Guidance No. 10, December 26, 2008) issued by the Accounting Standard Board of Japan.

3. Acquisition cost The Company paid cash of ¥923 million ($11,100 thousand) for this acquisition.

4. Goodwill The result of elimination of additional Equity, which was deducted from the minority interest and the Company’s additional investment was accounted as goodwill of ¥272 million ($3,271 thousand) and amortized by the straight-line method for over 20 years.

(b) Acquisition of an additional equity of subsidiary in Thailand1. Name and nature of business subject to transaction,

statutory form of business combination, name of company after transaction, and outline and purpose of the transaction(1) Name and nature of business subject to transaction Name of business : TKK Logistics Co., Ltd. Nature of business : International air and ocean freight forwarding(2) Statutory form of business combination Acquisition of an additional equity (3) Name of company after transaction TKK Logistics Co., Ltd.(4) Outline and purpose of transaction The Companies acquired additional equity of 20% from a minority

shareholder. As a result, the Companies’ controlling share was increased from 60% to 80% for the fiscal year.

2. Outline of the accounting treatment implementedThis transaction was accounted for as a transaction under common control based on “Accounting Standard for Business Combinations” (ASBJ statement No. 21, December 26, 2008) and “Revised Guidance on Accounting Standard for Business Combinations and Accounting Standard for Business Divestitures” (ASBJ Guidance No. 10, December 26, 2008) issued by the Accounting Standard Board of Japan.

3. Acquisition cost The Companies paid cash of ¥56 million ($673 thousand) for this acquisition.

4. Negative Goodwill The balance between acquisition cost and decrease of minority interest of ¥188 million ($2,261 thousand) was accounted as gain on negative goodwill for this fiscal year.

Note 14: Business Combination

(Additional Information)“Accounting Standard for Disclosures about Segments of an Enterprise and Related Information” (ASBJ Statement No. 17, March 27, 2009) and “Guidance on Accounting Standard for Disclosures about Segments of an Enterprise and Related information” (ASBJ Guidance No. 20, March 21, 2008) (hereafter “the new standards”) were applied for the fiscal year ended March 31, 2011.

(1) Overview of reportable segmentsReportable segments of the Company are components of an entity about which separate financial information is available and such information is evaluated regularly by the board of directors in deciding how to allocate resources and in assessing performance.

The Company has established a Corporate Strategic Headquarters who sets global strategy and controls overall business activities of the Company and subsidiaries.

Under a Corporate Strategic Headquarters, the Company manages business activities of domestic subsidiaries and each regional headquarters manages business activities of overseas subsidiaries. Consolidated subsidiaries both within Japan and overseas are independent business entities and conduct business activities in their particular area under the guidance of

either the Company or the respective regional headquarters.Therefore, the Company and its consolidated subsidiaries

consist of 5 regional reportable segments as “Japan”,“ The Americas”, “Europe, Middle East & Africa”, “East Asia & Oceania” and “Southeast Asia”. Each regional segments performs business activities mainly in international freight forwarding, logistics, ocean freight forwarding and other (Domestic freight forwarding) services.

(2) Calculation for net sales, segment income or loss, assets and other of reportable segments

Accounting practice for reportable segments is the same as the practice described in “Basis of Presenting the Consolidated Financial Statements”.

Income of reportable segments is based on operating income. Inter-segment sales or transfer are accounted for market price to be used under general business conditions.

(3) Net sales, segment income or loss, assets and others of reportable segments

The segment information of the Companies for the years ended March 31, 2011 and 2010 is presented below:

Note 15: Segment Information

Year ended March 31, 2011 : Net sales to outside customers Inter-segment sales/transfers Total sales

Operating Expenses Segment incomeAt March 31, 2011: Segment assetsYear ended March 31, 2011 :Others : Depreciation Amortization of goodwill Investment in affiliates Increase in Property and equipment and other intangible assets

Year ended March 31, 2010 : Net sales : Net sales to outside customers Inter-segment sales/Transfers Total sales

Operating expenses Segment income (loss)At March 31, 2010 : Segment assetYear ended March 31, 2010 :Others : Depreciation Amortization of goodwill Investment in affiliates Increase in Property and equipment and other intangible assets

Millions of yen

Reportable Segments

Elimination orUnallocated

(2)Consolidated

(3)TotalOther (1)TotalSoutheast

Asia East Asia &

Oceania

Europe, Middle East

& Africa

The Americas

Japan

¥ 267,688 – 267,688

255,789 ¥ 11,899

¥ 120,280

¥ 2,976 58 1,407

1,847

¥ 211,837 – 211,837

204,385 ¥ 7,452

¥ 116,641

¥ 3,101 48 1,199

4,207

¥ – (6,642) (6,642)

(6,586)¥ (56)

¥ (5,579)

– – –

–

¥ – (5,763) (5,763)

(5,705)¥ (58)

¥ (6,990)

¥ – – –

–

¥ 267,688 6,642 274,330

262,375 ¥ 11,955

¥ 125,859

¥ 2,976 58 1,407

1,847

¥ 211,837 5,763 217,600

210,090 ¥ 7,510

¥ 123,631

¥ 3,101 48 1,199

4,207

¥ 297 1,682 1,979

1,682 ¥ 297

¥ 1,232

¥ 179 – –

102

¥ 338 1,828 2,166

1,863 ¥ 303

¥ 1,283

¥ 149 – –

144

¥ 267,391 4,960 272,351

260,693 ¥ 11,658

¥ 124,627

¥ 2,797 58 1,407

1,745

¥ 211,499 3,935 215,434

208,227 ¥ 7,207

¥ 122,348

¥ 2,952 48 1,199

4,063

¥ 24,738 341 25,079

23,557 ¥ 1,522

¥ 11,801

¥ 274 34 –

260

¥ 17,316 324 17,640

16,586 ¥ 1,054

¥ 10,687

¥ 283 24 –

129

¥ 76,782 825 77,607

73,395 ¥ 4,212

¥ 28,795

¥ 386 9 –

292

¥ 55,787 827 56,614

53,181 ¥ 3,433

¥ 28,025

¥ 465 9 –

213

¥ 23,119 966 24,085

23,406 ¥ 679

¥ 11,236

¥ 319 15 14

141

¥ 19,215 616 19,831

19,837 ¥ (6)

¥ 10,971

¥ 318 15 –

147

¥ 31,148 1,707 32,855

30,528 ¥ 2,327

¥ 11,994

¥ 162 – –

358

¥ 24,792 1,261 26,053

24,956 ¥ 1,097

¥ 11,712

¥ 170 – –

962

¥ 111,604 1,121 112,725

109,807 ¥ 2,918

¥ 60,801

¥ 1,656 – 1,393

694

¥ 94,389 907 95,296

93,667 ¥ 1,629

¥ 60,953

¥ 1,716 – 1,199

2,612

Year ended March 31, 2011 Net sales : Net sales to outside customers Inter-segment sales/transfers Total sales

Operating expenses Segment incomeAt March 31, 2011 : Segment assetsYear ended March 31, 2011Others : Depreciation Amortization of goodwill Investment in affiliates Increase in Property and equipment and other intangible assets

Thousand of U.S. dollars

Reportable Segments

Elimination orUnallocated ConsolidatedTotalOtherTotal

Southeast Asia

East Asia &Oceania

Europe, Middle East

& Africa

The Americas

Japan

$ 3,219,339 – 3,219,339

3,076,236 $ 143,103

$ 1,446,542

$ 35,792 697 16,921

22,213

$ – (79,880) (79,880)

(79,207)$ (673)

$ (67,096)

$ – – –

–

$3,219,339 79,880 3,299,219

3,155,443 $ 143,776

$ 1,513,638

$ 35,792 697 16,921

22,213

$ 3,572 20,228 23,800

20,228 $ 3,572

$ 14,817

$ 2,154 – –

1,227

$ 3,215,767 59,652 3,275,419

3,135,215 $ 140,204

$ 1,498,821

$ 33,638 697 16,921

20,986

$ 297,511 4,101 301,612

283,308 $ 18,304

$ 141,924

$ 3,295 409 –

3,127

$ 923,416 9,922 933,338

882,683 $ 50,655

$ 346,302

$ 4,642 108 –

3,512

$ 278,040 11,618 289,658

281,492 $ 8,166

$ 135,129

$ 3,836 180 168

1,696

$ 374,600 20,529 395,129

367,143 $ 27,986

$ 144,245

$ 1,948 – –

4,305

$ 1,342,200 13,482 1,355,682

1,320,589 $ 35,093

$ 731,221

$ 19,917 – 16,753

8,346


Notes 1. “Other” is segment which is not included in reportable segments and provides incidental logistics related services within the Companies.

2. Amounts in “Elimination or Unallocated” represents as follows : Segment income of ¥(56) million ($(673) thousand ) and ¥(58) million for the years ended March 31, 2011 and 2010, respectively represents elimination of inter-segment transactions.

Segment assets of ¥(5,579) million ($(67,096) thousand) and ¥(6,990) million at March 31, 2011 and 2010 respectively includes elimination of inter-segment transactions and surplus operating fund (cash and time deposit) of the Company which are not allocated to each segments.

3. Segment income is adjusted with operating income in the consolidated statements of income.

KWE2011財務.indd 42-43 11.8.18 4:35:51 PM

(7) Information on Amortization of goodwill and balance of goodwill of reportable segments

Amortization of goodwill and the balance of goodwill by reportable segments for the years ended March 31, 2011 and 2010 are presented below :

(8) Information on gain on negative goodwill by reportable segments

Fiscal year ended March 31, 2011 Effective April 1, 2011, within the Southeast Asia segment, the Companies acquired an additional 20% of the equity held by a minority shareholder of its subsidiary company in Thailand, TKK

Logistics Co., Ltd. In this acquisition, counter value was less than the decrease of equity of a minority shareholder recorded in the consolidated balance sheet.

As a result, the Companies recorded a gain on negative goodwill of ¥188 million ($2,261 thousand).

Year ended March 31, 2011 Goodwill Amortization of goodwill Balance of goodwill Negative goodwill Amortization of negative goodwill Balance of negative goodwillYear ended March 31, 2010 Goodwill Amortization of goodwill Balance of goodwill Negative goodwill Amortization of negative goodwill Balance of negative goodwill

Year ended March 31, 2011 Goodwill Amortization of goodwill Balance of goodwill Negative goodwill Amortization of negative goodwill Balance of negative goodwill

Millions of yen

Thousand of U.S. dollars

Reportable Segments

Reportable Segments

Total

Total

Other

Other

Total

Total

Southeast Asia

Southeast Asia

East Asia &Oceania

East Asia &Oceania

Europe, Middle East

& Africa

Europe, Middle East

& Africa

The Americas

The Americas

Japan

Japan

¥ 58 797

35 441

¥ 48 603

35 477

$ 697

9,585

421

5,304

¥ – –

– –

¥ – –

– –

$ –

–

–

–

¥ 58 797

35 441

¥ 48 603

35 477

$ 697

9,585

421

5,304

¥ 34 436

6 118

¥ 24 218

6 125

$ 409

5,244

84

1,419

¥ 9 145

29 323

¥ 9 154

29 352

$ 108

1,744

337

3,885

¥ 15 216

– –

¥ 15 231

– –

$ 180

2,597

–

–

¥ – –

– –

¥ – –

– –

$ –

–

–

–

¥ – –

– –

¥ – –

– –

$ –

–

–

–

Selling, general and administrative expenses during the years ended March 31, 2011 and 2010 are summarized as follows:

On June 21, 2011, the shareholders of the Company approved the payment of a cash dividend to shareholders of record as of March 31, 2011 of ¥18.00 ($0.22) per share for a total of ¥648 million ($7,793 thousand). Such appropriations have not been accrued in the consolidated financial statements as of March 31, 2011 and will be recognized in the period in which they are approved by the shareholders.

Other, net during the years ended March 31, 2011 and 2010 are summarized as follows:

Comprehensive Income for the fiscal year ended March 31, 2010 is as follows:

Other Comprehensive income for the last fiscal year ended March 31, 2010 is as follows:

Labor and payroll cost Provision for accrued bonuses to employeesProvision for accrued retirement benefits to employeesProvision for doubtful accountsOthers

Loss on sales or disposals of property and equipment, netAmortization of negative goodwillLoss on valuation of golf club membershipBad debt expenseRestructuring lossOther, net

Comprehensive income attribute to owners of the parentComprehensive income attribute to minority interests

Unrealized gain on available-for-sale securitiesForeign currency translation adjustmentShare of other comprehensive income of associates accounted for using equity method

¥ 14,255

955

1,120

99 12,514 ¥ 28,943

¥ (61)

35

(8) – – 177 ¥ 143

¥ 13,918

926

1,059

179 12,583 ¥ 28,665

¥ (40)

35

(8) (61) (35) 192 ¥ 83

$ 171,437

11,485

13,470

1,191 150,499 $ 348,082

$ (734)

421

(96) – – 2,129 $ 1,720

¥ 6,256 513

¥ 6,769

¥ 585 1,196

4

¥ 1,785



Millions of yen

Millions of yen

2011

2011

2010

2010

2011

2011

2010

2010

Millions of yen

Millions of yen

Note 16: Note 19:

Note 17:

Note 18:

Selling, General and Administrative Expenses

Subsequent Events

Other Income (Expenses)

Consolidated Statements of Comprehensive Income


Net Sales by service : Forwarding Logistics Ocean freight forwarding Others

Net Sales classified by Country or Geographic area Japan China North America Asia and Oceania Europe Others

Property and equipment classified by country or Geographic area Japan China North America Asia and Oceania Europe Others

¥ 132,467 52,235 51,285 31,701 ¥ 267,688

¥ 111,604 59,911 31,442 41,612 17,835 5,284 ¥ 267,688

¥ 23,484 1,471 2,700 4,474 268 368 ¥ 32,765

¥ 93,700 44,806 42,985 30,346 ¥ 211,837

¥ 94,388 44,010 25,130 29,093 14,711 4,505 ¥ 211,837

¥ 24,531 1,824 2,744 4,697 302 534 ¥ 34,632

$ 1,593,109 628,202 616,777 381,251 $ 3,219,339

$ 1,342,201 720,517 378,136 500,445 214,492

63,548 $ 3,219,339

$ 282,429 17,691 32,472 53,806

3,223 4,426

$ 394,047




2011

2011

20112010

2010

20102011

2011

2011

Millions of yen

Millions of yen

Millions of yen

(4) Net Sales by ServiceNet Sales by Service for the years ended March 31, 2011 and 2010 are presented below :

(5) Net Sales classified by Country or Geographic areaNet Sales classified by country or geographic area for the years ended March 31, 2011 and 2010 are presented below :

(6) Property and equipment classified by Country or Geographic areaProperty and equipment classified by country or geographic area for the years ended March 31, 2011 and 2010 arepresented below :

Amounts are classified by country or geographic where service is rendered.

KWE2011財務.indd 44-45 11.8.18 4:35:51 PM

Head Office*:

Ohtemachi Bldg., 1-6-1, Ohtemachi,

Chiyoda-ku, Tokyo 100-0004, Japan

Tel: +81-3-3201-2580

Established:

January 1970

Paid-in Capital

¥ 7,216 million

Number of Common Stocks

Authorized 120,000,000 shares

Issued and outstanding 36,000,000 shares

General Annual Meeting:

The annual meeting of shareholders of the Company is held every June in Tokyo, Japan.

Shareholder Register Administrator:

Mitsubishi UFJ Trust and Banking Corporation

Number of Employees:

9,238 (worldwide on a consolidated basis)

Investor Relations*:

Kintetsu World Express, Inc. (KWE)

Ohtemachi Bldg., 1-6-1, Ohtemachi,

Chiyoda-ku, Tokyo 100-0004, Japan

Tel: +81-3-3201-2654

Fax: +81-3-3201-2666

Website Address:

http://www.kwe.com

Investor Information

Major Shareholders

(As of March 31, 2011)

Kintetsu Corporation

Mitsui O.S.K. Lines, Ltd.

Japan Trustee Services Bank, Ltd. (Trust Account)

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

State Street Bank and Trust Co.

The Chase Manhattan Bank N.A. London S.L.Omnibus Account

Hokko Daiwa Taxi Co., Ltd.

Juniper

Okunikko Kogen Hotel

Hakone Kogen Hotel

14,752,900

1,799,500

1,484,300

1,316,000

1,136,741

1,025,014

937,500

778,300

587,500

537,500

40.98%

5.00%

4.12%

3.66%

3.16%

2.85%

2.60%

2.16%

1.63%

1.49%

Shareholder Number of shares held % of shares held

(As of March 31, 2011)

Kintetsu World Express, Inc. (KWE)

46 Kintetsu World Express Annual Report 2011

KWE2011財務.indd 46 11.8.18 4:35:56 PM

*In December 2011, KWE plans to move to a new head office of following address: Shinagawa Intercity TowerA-24F 2-15-1 Konan, Minato-ku, Tokyo 108-6024, Japan

Kintetsu World Express Annual Report 2011 47

Documents

Reaching Higher - 株式会社近鉄エクスプレス[KWE] · PDF fileKintetsu World Express Annual Report 2011 Global Logistics Partner Kintetsu World Express, Inc. Annual Report