We are Always in Motion - Yusen Logistics · Founded in 1955, Yusen Air & Sea Service Co., Ltd....
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We are Always in Motion ANNUAL REPORT 2008 Yusen Air & Sea Service Co., Ltd.
Transcript of We are Always in Motion - Yusen Logistics · Founded in 1955, Yusen Air & Sea Service Co., Ltd....
We are Always in
Motion
ANNUAL REPORT 2008Yusen Air & Sea Service Co., Ltd.
Founded in 1955, Yusen Air & Sea Service Co., Ltd. (YAS) is one of the world’s leading international air freight forwarders, and a member of the NYK Group. Leveraging in-depth expertise of international logistics, a global network spanning Asia, Oceania, Europe and the U.S. and a worldwide information system linking operational bases, warehouses and customers, we provide speedy and effective support for our clients’ logistics strategies.
Under our new medium-term business plan, YAS FIVE-STAR PROJECT, we are taking wide-ranging steps to reinforce our operations. A key aim is to establish business infrastructure that enables us to complement air freight forwarding with ocean freight, logistics and warehouse services. Committed to delivering optimal customer service, we aim to establish a solid presence throughout the world as a total logistics provider.
Contents
Consolidated Financial Highlights01 Key Strategic Measures08Yusen Air & Sea Service at a Glance02 Management System12
An Interview with the President04 Board of Directors, Corporate Auditors and Executive Officers 16The New Medium-Term Business Plan07 Financial Section17
FIVE-STAR
Throughout this annual report, figures have been rounded to the nearest decimal.
We are always in motion. Not only are we, at any given moment, delivering goods worldwide through our high-capacity global logistics network—we are also constantly working to expand our service range, enhance quality and efficiency, and drive growth.
01
All statements contained in this Annual Report other than statements of historical fact are forward-looking statements that reflect plans and expectations, based on information available to management as of the date of this Report. These forward-looking statements involve known and unknown risks, uncertainties and other facts that may cause the Company’s actual results, performance or achievements to differ materially from stated goals and objectives. The Company undertakes no obliga-tion to update or revise forward-looking statements, whether as a result of new information, future events or otherwise.
Consolidated Financial HighlightsYusen Air & Sea Service Co., Ltd., and Its Consolidated Subsidiaries for the Years Ended March 31
PROJECT
Forward-Looking Statements
■ Total Assets ■ Equity
(Millions of yen) Years Ended March 31
● ROE ● ROA
(%) Years Ended March 31
■ Net Sales (Left)■ Operating Income (Right)
(Millions of yen) Years Ended March 31
2006 2007 2008
20
15
10
5
02006 2007 2008
100,000
70,000
50,000
25,000
0
200,000
150,000
100,000
50,000
0
20,000
15,000
10,000
5,000
02006 2007 2008
Thousands of U.S. dollarsMillions of yen
Results of Operations
Net sales
Operating income
Net income
Financial Position
Total assets
Equity Note 2
Per Share Data (Yen/U.S. Dollars) Note 3
Net income
Net assets
Dividends
Key Ratios
ROE (%)
ROA (%)
Shareholders' equity ratio
Number of employees
2007
¥ 182,617
10,438
6,722
89,567
52,551
159.46
1,213.90
15.00
14.1
7.7
57.2
4,769
2006
¥ 168,454
10,435
7,006
85,613
44,138
327.48
2,090.18
30.00
17.5
8.7
51.6
4,458
2008
¥ 187,518
10,216
7,271
98,366
59,614
172.43
1,368.84
20.00
13.4
7.7
58.7
5,065
2008
$1,871,626
101,964
72,576
981,791
595,005
1.721
13.662
0.200
Notes: 1. The United States dollar amounts represent translations of Japanese yen amounts at the rate of ¥100.19 = US$1. See Note 1 to consolidated financial statements. 2. From the fiscal year ended March 31, 2007, total equity includes minority interests in accordance with
the enforcement of Japan’s Corporate Law. 3. On April 1, 2006, the Company executed a 2-for-1 stock split.
02
Yusen Air & Sea Service at a Glance
A Growing Presence Across Five
■Japan ■East Asia ■South Asia, Oceania■Europe ■North America
■Japan ■East Asia ■South Asia, Oceania■Europe ■North America
Weight of Air Freight Exports by Geographic Region (Tons)
Fiscal Term: Japan: From April 1 to March 31Other regions: From January 1 to December 31
Fiscal Term:Japan: From April 1 to March 31Other regions: From January 1 to December 31
Note: Figures include intra-group revenues and income between segments. For this reason, the total amount does not correspond to the total amount for net sales.
More than
240 offices and
5,000employees in 33 countries.
In North America, we offer a wide range of services, which we continually enhance by expanding the floor space of warehouses and gateway functions. All major ware-houses here are TAPA Class A-certified.
United States, Canada, Mexico, Brazil
★ The Americas
2006
166,592167,080
2007 2008
200,000
150,000
100,000
50,000
0
154,431
187,074168,784
180,657
Number of Air Freight Import Transactions by Geographic Region
Net Sales by RegionYear Ended March 31, 2008
2006 2007 2008
800,000
600,000
400,000
200,000
0
315,527
691,212
309,605 302,632
739,790 752,535
East Asia18.8%
Total
187.5(Billions of yen)
Europe11.4%
North America9.5%
Japan46.6%
South Asia,Oceania15.2%
・The colored parts of the map are countries where the Company has business offices of consolidated subsidiaries.・ marks the location of head offices, including those of non-
consolidated subsidiaries.
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Regions
Note: Figures include intra-group revenues and income between segments. For this reason, the total amount does not correspond to the total amount for operating income.
In Europe, we use a well-developed network to provide highly cost-effective logistics services, with particular focus on Eastern and Central Europe, and Russia.
United Kingdom, Netherlands, Belgium, Luxembourg, Germany, France, Italy, Czech Republic, Austria, Sweden, Spain, Turkey, Hungary, Russia, Poland
★ Europe
★ South Asia, OceaniaIn South Asia and Oceania, we continue to strengthen our position in the region’s emerging markets, utilizing our strong busi-ness relationships in countries such as India, Vietnam, Singapore and Thailand.
Singapore, Malaysia, Indonesia, Thailand, Australia, Philippines, Vietnam, UAE, India
With a focus on developing new business models, we are extending our network in the fast-growing Chinese market from the coastal areas into the inland areas.
PRC, Hong Kong, Taiwan, South Korea
★ East Asia
We provide optimal transportation services through a nationwide network of sales offices, state-of-the-art warehouses and logistics centers.
★ Japan
Operating Income by RegionYear Ended March 31, 2008
Air Exports from Japan byTop 100 Companies (by weight)
Year Ended March 31, 2008
Air Imports from Japan byTop 100 Companies (number of shipments)
Year Ended March 31, 2008
East Asia22.8%
Total
10.2(Billions of yen)
Europe9.8%
North America9.7%
Japan41.3%
South Asia,Oceania17.0%
Electronics,electrical machinery56%
Automobile-relatedproducts18%
Machinery10%
Trading companies5%
Chemicals, medical goods1%
Audiovisual equipment4% Textiles
1%Other5%
Electronics,electrical machinery51%
Medical equipment18%
Automobile-relatedproducts11%
Machinery7%
Perishables4%
Trading companies3%
Other2%
Audiovisual equipment1%
Chemicals,medical goods1%
Textiles2%
04
In fiscal 2007, the year ended March 31, 2008, net sales increased by 2.7% year on year to ¥187.5 billion ($1,872 million), and ordinary income rose 4.2% to ¥12.0 billion. This represents a record high in net sales for the sixth consecutive year, and for the fourth consecutive year for ordinary income. Net income also reached a new record high. Although soaring fuel prices and other factors prevented us from fully reaching our targets for net sales and ordinary income, this was a very satisfying result indeed. Operating income declined by 2.1% year on year to ¥10.2 billion ($102 million). However, this reflects advance outlays to fund the development of new infrastructure in Russia, Eastern Europe, India and other regions. Fiscal 2007 was also the final fiscal year of our previous medium-term business plan, YAS Global Challenge (Fiscal 2005–2007). Looking at key events that characterized the market environment, the year got off to a slow start due to an unexpected decline in air freight forwarding from Japan in the first quarter. This resulted from a fall in demand for rush freight, and inventory adjustments related to electronic components and semiconductors. However, in the second quarter there were signs of recovery, and the third quarter saw brisk shipments of automobile parts and digital home appliance products, as well as of materials and parts. Freight for East Asia and Europe in particular shifted into positive growth territory, and contributed to profits in fiscal 2007. In the second half of the year, the subprime loan crisis in the U.S. took center stage and the price of oil skyrocketed. These factors reinforced a growing sense of uncertainty in the economic environ-ment. Despite this, the fundamental economic momentum continued, with the economies of South Asia and Oceania proving very robust and East Asia managing to squeeze increased profits from decreasing revenues. Before fiscal 2007, all of our regions of activity had registered increases in both sales and profits. But, from fiscal 2007 on, regional characteristics came into focus.
An Interview with the President
How do you view the business environment and your business results in fiscal 2007?Q1
“The global air freight market is expected to continue to grow, and we are well-positioned to grow with it.”
Shunichi YanoPresident
Consolidated Net Sales■ Target ■ Result
Consolidated Ordinary Income■ Target ■ Result
Reviewing the Medium-Term Business Plan (FY2005 to FY2007)(Billions of yen)
200
150
100
50
02005FY 2006 2007
16
12
8
4
02005FY 2006 2007
05
An overall reinforcement of our business infrastructure brought solid results. As our business is essentially a type of network business, we put particular emphasis on augmenting operating bases in areas where there is substantial customer demand. In China, for instance, we set up operating bases both in the inland and coastal regions, and also further strengthened our operating bases in Vietnam; among Japanese investors, Vietnam is seen as offering the greatest investment potential in East Asia outside China. Moreover, we have opened operating bases in Poland and elsewhere in Eastern Europe, as well as set up companies in India and Russia. Our momentum is particularly good in India, where we continue to expand the number of operating bases. As a result, as of June 30, 2008, the YAS Group had grown to encompass 243 bases worldwide. Over the three years of Global Challenge alone, the number of bases jumped by 40. I also believe that we have built secure foundations for further growth through alliances with other companies. In our alliance with the Yamato Group, we are broadening a “co-loading” initiative with Yamato Logistics Co., Ltd., which is in the same industry. Under this alliance, both partners jointly reserve space from an airline, thereby gaining scale advantages and lower costs by consolidating cargos through mixed palletizing. We are also linking our high-capacity international network with Yamato Transport's top-ranking domestic Cool Takkyubin courier (air-conditioned delivery) network. By doing so, we aim to create a new business model that we call Customized International Door-To-Door Delivery Service. In fiscal 2007, this collaboration consisted of a pilot home delivery service of American cherries directly from producers on the U.S. west coast to Japanese consumers. Having always primarily been a B2B business, this marks our first venture into B2C territory. We believe that this type of service could attract demand from other businesses, and we are looking into suitable new applications. Under our alliance with the Swiss Panalpina Group, YAS acts as Panalpina’s agent in Japan while gaining access to the Group’s extensive network and in-depth market knowledge. This relationship has been beneficial in boosting YAS’s volume of cargo handling in Japan. The Panalpina Group is a large company that boasts 800 branches spread throughout the world. This alliance is significant in terms of expanding our sales channels in regions where our network is as yet inadequate, such as in Africa, Central Asia and Central and South America.
Under the new medium-term business plan, we aim to become a “total logistics provider with a substantial global presence.” Our targets for fiscal 2010, the plan’s final year, are net sales of ¥260.0 billion and ordinary income of ¥15.0 billion. To achieve these targets, we have established three primary strategies: a Sales Strategy, an Organizational Strategy and a Basic Management Strategy. The Organizational Strategy and the Basic Management Strategy together underpin the Sales Strategy. Up until now, our core business has been air freight forwarding. In the future, we will comple-ment this business area with ocean and land transportation services, as well as with warehouse-based logistics services. By combining transport modes and warehousing (logistics), we will be
“We have built secure foundations for further growth through alliances with other companies.”
“We intend to raise the quality of our integrated services to a level that puts us clearly in the lead.”
Please tell us about the achievements made under the previous medium-term business plan, YAS Global Challenge.Q2
Please give us an overview of the new medium-term business plan, YAS FIVE-STAR PROJECT, which runs from April 2008 to March 2011. What is your vision for this plan? Q3
Developing a strong operating base
・Expanded the sales network from 201 bases to 243 in Japan and overseas.・Expanded co-loading destinations
and approached the B to C market through strategic cooperation with the Yamato Group.・Enhanced so-called gateway facilities,
which are key logistics facilities, at airports and in key cities, for instance Amsterdam.
Strengthening our management base
・Developing next core operating system (YUNAS).・Developed “Attack 10” project by the
members of the YAS Group in Japan (Cost reduction and operational
efficiency).・Launched the Accident Disclosure
System.
Enhance personnel and upgrade the skills to support YAS group operations
・Increased recruitment of experienced staff.
・Improved systems for training overseas.・Expanded the training program for
key staff worldwide.
Reviewing the Medium-Term Business Plan (YAS Global Challenge)
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able to provide optimal service whatever the customer’s needs may be—this is what we mean by being a “total logistics provider.” We are placing particular emphasis on precisely understanding and flexibly accommodating customer needs by improving our expertise and system infrastructure for ocean freight forwarding. At present, ocean freight accounts for 18% of the consolidated net sales of the YAS Group. By fiscal 2010, we expect to raise this proportion to 25%. The Sales Strategy aims to “expand sales with outstanding operational quality and extensive business development.” The basic elements of forwarding quality are safety, reliability and speed. Other key elements are sales and customs clearance. In all of these areas, we offer very high levels. However, by providing even higher satisfaction in terms of forwarding safety, reliability and speed; by enhancing the quality of our Customs Clear-ance Service through new standards of accuracy and speed; and by boosting the quality and efficiency of our sales efforts to respond even more flexibly to customer needs, we intend to raise the quality of our integrated services to a level that puts us clearly in the lead. We are a service business, which means that we must constantly refine our capabilities to attract customers. We should be sensitive to, and anticipate, their potential needs so that our sales staff can offer truly beneficial solutions. This approach should form the basis of our efforts to reinforce sales proposals. For this reason, I am convinced that it is crucial for us to reinforce our training and learning programs to enhance our communication capabilities, and our sensitivity to potential needs. Up to now, our main customers have been in the automobile, electric and electronic equipment industries. In the future, we must put additional emphasis on markets where growth is expected, including aviation parts and parts for environmental installations, such as emission-reducing devices, solar cells and wind power turbines, as well as medical and healthcare-related equipment and pharmaceuticals. Besides augmenting operating bases in India and other emerging markets, we will expand warehouse facilities overall. We will also give priority to reinforcing existing operating bases, including improving gateway functions. Under the previous medium-term business plan, we implemented the “Attack 10” project, which focused on enhancing operational efficiency while cutting costs. Through this project, we found some inefficiencies in our daily operations, and we will focus on improving these in the future. In addition, we are currently developing a next-generation core operating system, YUNAS, which will give us a single integrated database covering the entire world. Data input into any operating base in Japan will immediately be accessible at our operating bases overseas, and vice versa. By improving efficiency, and especially by reducing errors, we expect to reduce system costs by about 20% from the current level.
Of course, YAS must grow in order to fulfill shareholders’ expectations, and ensuring appropri-ate shareholder returns is a top management priority. Accordingly, in fiscal 2007 we raised the per-share dividend by ¥5 year on year to ¥20. If you compare today's dividend level with the level five years ago, you will see that it has risen greatly, and this policy will remain unchanged. In order to become a total logistics provider with a solid presence worldwide, Yusen Air & Sea Service Co., Ltd. will continue to work to lay firm foundations for further advances. We look forward to the support of all of our stakeholders as we move toward our goals.
“In fiscal 2007 we raised the per-share dividend by ¥5 year on year to ¥20.”
What is your policy regarding shareholder returns? Q4
President Shunichi Yano
Central Tasks
1) Boost sales.2) Lower the cost of operations
through improved services and greater efficiency.
3) Apply information technology innovations.
4) Improve quality of transport services.5) Develop human resources.
Consolidated Net Sales■ Result ■ Target
Consolidated Ordinary Income■ Result ■ Target
Consolidated Profit Targets(Billions of yen)
2007FY 2008 2009 2010
280
210
140
70
0
2007FY 2008 2009 2010
16
12
8
4
0
07
The New Medium-Term Business Plan (from FY2008 to FY2010)
▶ Strategic Goal To be a total logistics provider with a substantial global presence
Net Sales Share by Business
Net Sales Share by Region
▶ To Be a Total Logistics Provider
▶ Profit Target
Consolidated net sales
Consolidated operating income
Consolidated ordinary income
FY2007 (Result) FY2010 (Target)
▶ Three Key Business Strategies 1. Sales Strategy Expand sales with outstanding operational quality
and extensive business development. ・Aim for an extremely high quality of service. ・Continue to expand sales and marketing. ・Achieve significant cost savings. ・Develop the ocean freight forwarding business.
2. Organizational Strategy Develop global human resources and a vibrant
working environment. ・Reinforce human resources as a basis for all strategies. ・Create a vibrant and challenging working environment.
3. Basic Management Strategy Practice fair and transparent corporate management,
making a positive contribution to our shareholders and to society.
・Healthy corporate management. ・ Make a positive contribution to our shareholders and to
society.
¥187.5 billion
¥10.2 billion
¥12.0 billion
¥260.0 billion
¥14.0 billion
¥15.0 billion
FY2010
East Asia21%
Europe13%
North America11% Japan
39%
South Asia,Oceania16%
FY2007
East Asia19%
Europe11%
North America9% Japan
46%
South Asia,Oceania15%
FY2007
Logistics6%
Air76%Ocean
18%
FY2010
Logistics10%
Ocean25%
Air65%
Sales increase in overseas segment
Strengthen ocean freight and logistics business
¥187.5 billion ¥260.0 billion
Note: Composition ratio of cargo business
Key Strategic Measures — Developing a Strong Operational Base
Yusen Air & Sea Service Co., Ltd. (YAS) is both expanding its network in growth regions and augmenting its gateway functions in every region. On top of this, YAS is adding warehouse space in key operating bases, and is also strengthening its functions to enhance logistics services both in terms of forwarding and other capabilities. Meanwhile, we maintain an unwavering focus on quality and security, which are crucial elements of our services. Many subsidiaries within the Group have acquired ISO 9001-2000 certification*1
and/or Class A certification from the TAPA*2 (Transported Asset Protection Association). Underscoring our commitment to establish a solid presence throughout the world, we are mak-ing steady progress in refining our transportation systems to reflect our watchwords Safety, Reliability and Speed.
*1 ISO 9001−2000 (International Organization for Standardization): An international standard for quality assurance and quality control, aimed at ensuring customer satisfaction by establishing criteria for quality management systems within organizations.
*2 TAPA (Transported Asset Protection Association):A non-profit association of security professionals and related business partners from high technology compa-nies established to enforce measures to prevent theft by international crime syndicates and other threats to security. TAPA certification is divided into three levels, A, B and C, with Class A being the highest level.
*3 ULD (Unit Load Device): The general term for transportation pallets and containers used to bundle cargo from different customers before being loaded onto planes. ULDs facilitate aircraft loading and enhance the speed and security of unloading.
*4 VMI (Vender Managed Inventory): This term refers to vendors managing part of the inven-tory of set manufacturers. To set manufacturers, this has the benefit of reducing surplus inventory as well as the risk of running out of stock.
In June 2007, Yusen Air & Sea Service (U.S.A.) Inc. increased the floor space of its Miami Branch warehouse by about 40% to accommodate growing logistical needs for automobile parts and cargos destined for Central and South America. This move resulted in the warehouse becoming the largest among those belonging to Japanese forwarders with operating bases in Miami, which is a gateway to Central and South America. In addition, the expansion allows the company to provide multimodal logis-tics services as a transit point for inven-tory storage, distribution, re-forwarding and other purposes. In August 2007, Yusen Air & Sea Service (U.S.A.) Inc. moved to new quarters in order to expand the ware-house of the Boston Branch. The new facility has about 80% more floor space than its predecessor, and we are aiming to expand export cargo to Asia, including Japan. Similarly, in the same month, Yusen Air & Sea Service (Canada) Inc. expanded the floor space of its ware-house by about 40% at the Toronto Branch with the aim of boosting sales. In May 2008, this warehouse obtained TAPA Class A certification, assuring customers of the reliability of its security measures.
In June 2007, the Moscow head office of Yusen Air & Sea Service (RUS) LLC established a branch in St. Petersburg. Many foreign companies, including Jap-anese-affiliated companies, have set up operations in Moscow and St. Petersburg, and logistics demand is expected to rise in response to air freight and ocean freight demand from Japanese-affiliated automakers in the surrounding regions. In September 2007, the head office and Dusseldorf Branch of Yusen Air & Sea Service (Deutschland) GmbH. was relocated. Its warehouses, which were previously in six different locations, were consolidated into a single location to en-hance business efficiency and customer convenience, resulting in a floor space increase of approximately 60%. The facili-ties have also been upgraded in terms of equipment. The new installments include a roller bed system for which security has been reinforced with the latest security technology, and that can directly load packed ULDs*3. There is also cargo stor-age for about 10,000 palettes, and a high rack system capable of sorting cargo. Yusen Air & Sea Service (Deutschland) GmbH. aims to further build up its de-livery network in Central and Eastern Europe, where markets are growing. After opening its Poland Branch in Warsaw, the company opened facilities in Krakow in April 2007 and in Wroclaw in March 2008, thereby reaching a total of four operating bases in Poland. Turning to France, Yusen Air & Sea Service (France) S.a.r.l. opened a Le Havre Branch in May 2007, launching ocean freight import services as the only Japanese-affiliated forwarder at the port of Le Havre.
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New York
BostonToronto
Krakow
Warsaw
Wroclaw
Moscow
Le Havre
St. Petersburg
Miami
Reinforcing the Overseas NetworkCloser Integration of Logistics Services
Amsterdam
Dusseldorf
★The Americas ★Europe
To expand its logistics business from Bangkok to southeast Thailand, Yusen Air & Sea Service (Thailand) Co., Ltd. opened a logistics center near Bangkok Suvarnabhumi Airport in February 2007. The center features state-of-the-art security systems and 24-hour surveil-lance by cameras and guards. A team of 150, handling customs clearance, trans-portation, warehousing and other tasks, provides truly integrated logistic services. More recently, YAS established YAS Real Estate (Vietnam) Co., Ltd., a warehouse leasing company, in the Phuc Dien Industrial Zone II in suburban Hanoi, Vietnam, and is now building a bond warehouse. Operations will commence in September 2008. The bustling Hanoi region has numerous Japanese-affiliated manufacturers, and the new warehouse includes temper-ature-controlled storage facilities that accommodate VMI*4. In April 2007, Yusen Air & Sea Service (Singapore) Pte. Ltd. relocated its office and warehouse at Changi International Airport to new facilities that are twice as large and feature dedicated passage-ways for trucks and dollies, facilitating cargo transport to and from airplanes. After opening its Delhi Head Office and Bangalore Branch in April 2007, Yusen Air & Sea Service (India) Pvt. Ltd. now also has operating bases in Mumbai, Chennai and Pune. The Delhi Head Office has been relocated near the airport and the Manesar industrial park to better accommodate India’s growing logistics demand.
YAS’s development of operating bases in China is advancing from the coast to the inland. In eastern China, in October 2007, Yusen Air & Sea Service (China) Ltd. commenced operation in Chengdu, the provincial capital of Sich-uan Province. In December the same year, Yusen Shenda Air & Sea Service (Shanghai) Ltd. launched sales in Hefei, the provincial capital of Anhui Province. The company also opened an office in Ningbo, Zhejiang to augment its ocean freight logistic services. In March 2008, Yusen Air & Sea Service (Guangdong) Ltd. opened a branch in Zhuhai, which has significant industry. In southern China, starting July 2007, Yusen Air & Sea Service (H.K.) Ltd. launched a new regularly sched-uled consolidated trucking service, called China Vietnam X (Cross) Border Express, for goods dispatched from southern China to Vietnam. This enables Japanese-affiliated set manufacturers starting up operations in northern Vietnam to procure parts and materials reliably from southern China. Finally, Peninsula Bridge, a combined air and ocean freight service going between Japan and northern China via Incheon Airport in Korea, was launched in December 2007. Between Japan and Korea, cargos are transported by air, while transportation between Korea and northern China (Yantai and Weihai in Shandong) is done by ship.
In December 2007, Yusen Air & Sea Service (Tsukuba) Co., Ltd. opened a sales office in Hitachinaka City. This is one of Ibaraki Prefecture’s foremost industrial areas, with fast-growing companies in the fields of electrical machinery and appliances, machinery, precision machines and paper products. In April 2008, Yusen Air & Sea Service (Kyushu) Co., Ltd. opened its Kitakyushu Sales Office in Kitakyushu City, Fukuoka Prefecture. The area is attracting many automakers and parts manufacturers, and also has significant activity in semi-conductor manufacturing, heavy industry and other sectors. Anticipating solid demand for international logistics, YAS has moved strategically to establish a strong presence here. In June 2007, YAS completed and commenced full-scale operation of a new exclusive-use Kansai Logistics Center in Kansai Airport’s international cargo zone. In the same year, Kansai Airport's second runway opened, resulting in an increase in flights and sharply increased cargo volumes. Export and import cargo spaces were consolidated, great-ly augmenting the airport’s gateway functions and facilitating the assembly, unloading and delivery of ULD cargos. In June 2007, the Narita Logistics Center acquired permission to handle retail and rental of specially controlled medical devices. The center can now provide integrated logistics services, ranging from packaging, labeling and storage to delivery or return of products, for medical equipment-related products under the Pharmaceutical Affairs Law.
09
SingaporeHong Kong
Hanoi
Delhi
PuneBangalore
Mumbai
ChennaiBangkok Chengdu Ningbo
Incheon
Kansai AirportKitakyushu
NaritaHitachinaka
Hefei
Qingdao
Yantai
Weihai
ZhuhaiTokyo
★ South Asia and Oceania
★East Asia ★Japan
Key Strategic Measures — Global Alliances
Expanding Business Domains through Strategic AlliancesUnder a business alliance with Yamato Logistics Co., Ltd., the YAS Group is undertaking joint mixed palletizing operations for import/export freight. In addition, we are developing customized import services tailored to the needs of customers by combining the overseas network of the YAS Group with the domestic network of Yamato Transport. We also take pride in our alliance with the Panalpina Group, one of the world's premier integrated logistics corporations. Besides acting as an agent for Panalpina in Japan, we gain access to Panalpina's network, which encompasses about 800 branches in more than 80 countries worldwide.
10
Alliance with the Yamato Group
▶My Fresh (international door-to-door fresh food delivery service)By linking our international air transport system with Yamato Transport's Cool Takkyubin delivery
network, we are able to offer door-to-door delivery from production centers overseas to Japanese
homes. This service involves the application of the logistics network system Yamato NYK Global
Portal Solution (YY–GPS), which tracks and supplies information about deliveries from the depar-
ture airport overseas up to the final delivery at the customer's home. As a trial run, we commenced
door-to-door delivery of American cherries produced on the U.S. west coast from June 2007. This
formula can also be applied to other general air freight transportation services, and could potentially
result in a new business model suitable for imports of custom cargos by other businesses.
Benefits of the Alliance with the Panalpina Group
Under the terms of the alliance signed in February 2007 between YAS and the Panalpina
Group, YAS acts as Panalpina's agent in Japan for air and ocean freight.
The benefits of this alliance clearly showed in our fiscal 2007 business results. In the air freight busi-
ness, there was an increase in the handling of exports from Japan to the Asian region in particular, and
to Europe. Ocean freight not only contributed to the volume handled but allowed us to further enhance
our expertise in this area. Another aspect of this alliance allowed us to take advantage of Panalpina's
network of about 800 branches in more than 80 countries around the world. This enabled us to
secure new sales channels for the Central and South America regions, with the exception of Mexico
and Brazil, as well as access to Central Asia and Africa, where our network was inadequate.
YUSEN AIR & SEA SERVICE YAMATO LOGISTICS
YUSEN AIR & SEA SERVICE PANALPINA
American cherries
Key Strategic Measures — Quality of Transportation
Aiming for Extremely High Quality of Service The goal of the YAS FIVE-STAR PROJECT is to achieve five-star class services. As a part of reaching this goal, the Company has undertaken to obtain ISO certification.In addition, the YAS Group has formulated its own operation manuals to create a standardized code of behavior to be followed by Group employees in all countries, regardless of different legal and tax frameworks, company size, business customs and other factors.
11
Initiatives to Improve the Quality of Transportation
In December 2007, Yusen Air & Sea Service Logistics (Shanghai) Co., Ltd. obtained ISO 9001
certification*, a first for an overseas warehousing company. ISO 9001 certifications were also
obtained by Yusen Air & Sea Service (India) Pvt. Ltd. and Yusen Air & Sea Service (Czech) s.r.o.
Meanwhile, the Amsterdam Branch of Yusen Air & Sea Service (Benelux) B.V. and the Toron-
to Branch of Yusen Air & Sea Service (Canada) Inc. are working to obtain Class A, the highest
TAPA certification*.
In July 2007, YAS launched its Accident Reporting System. The new system, which is now
used actively to prevent accidents, enables quick initial responses and precise information
collection. Users can also analyze accident trends and formulate precautions by searching
accumulated data about incidents and various accident conditions at any time. These initiatives
are aimed at further improving the quality of our transportation services.
The basics of transportation are safety, reliability and speed. Nonetheless, there are occasional
risks of damage to freight from wear, tear, wetness, thefts and loss. To eliminate the risk of such
damage, we provide ULD Intact Transport Services through our own warehouse facilities.
In these services, cargo is bundled onto pallets, Unit Load Devices (ULDs)*, at YAS Group
facilities before dispatch. After arriving at the point of import, the ULDs are taken directly from
the plane to our own facilities.
We handle this ULD cargo ourselves to the greatest extent possible. Doing so not only helps
to prevent theft and accidental damage, but also shortens the delivery time to customers.
Promoting Our ULD Intact Transport Services for Air Cargo
The warehouse of the Amsterdam Branch
*Please see footnotes on page 8.
*Please see footnotes on page 8.
Preparing a ULD for loading onto an airplane
12
Management System
Corporate Governance
YAS seeks to maintain its standing as a good corporate citizen
with the heartfelt trust of all stakeholders and their constant
support. Toward this end, the Company takes a high moral
road in executing its business activities—global logistics
services—and strives to uphold dependable and fair business
practices, in compliance with prevailing laws and within
accepted social parameters.
The Board of Directors consists of seven directors, one of
whom is from outside the Company. The Board of Executive
Officers has 16 members who are responsible for the execu-
tion of operations under the authority and instruction from the
Board of Directors, and who work to ensure rapid decision-
making. The Board of Auditors consists of four auditors, two
of whom are from outside the Company, and whose job it is
to audit the execution of duties by the Board of Directors and
the Board of Executive Officers from an objective and neutral
perspective.
The Company established the Internal Audit office, staffed by
four people, to undertake regular internal audits of the
Company and the Group.
At the beginning of each fiscal year, the Company’s corporate
auditors hear from the accounting auditor’s representatives regard-
ing their auditing plan for the year, and at the interim and year-end,
they receive reports describing the results of audits. Corporate
auditors are also present during actual audits by the accounting
auditor and will confirm the methods used in such audits.
Basic Stance and Initiatives on Corporate Governance
Management StructureDirectors, Executive Officers and Auditors
Internal Audits, Corporate Audits and Accounting Audits
General Shareholders Meeting
Instructions
Direction, Supervision
Direction, Supervision
Appointment, dismissal
Appointment, dismissal
Appointment,dismissal, supervision
Establish, dissolve Reports
Audits
Audits
Audits
Reports Cooperation
Cooperation
Opinionexchange
Reports
Reports
Reports
ReportsReports
Instructions
Instructions
Instructions
Appointment, dismissal Appointment, dismissal
Board of DirectorsSeven directors, one of whom is an external director
(make business decisions)
Board of Corporate AuditorsFour auditors, two of whom are external auditors
Board of Executive Officers16 executive officers (execute operations)
RepresentativeDirectors
InternalAudit office
(internal auditing department)
AccountingAuditor
PersonalInformationProtectionCommittees
ComplianceCommittees
Head Office (departments and offices)
Branch Structure (sales division, departments, branches)
13
They also hear from the Internal Audit office regarding that
office’s own auditing plan and receive regular updates on the
results of these audits. The certified public accountants, who
execute accounting audits of the Company, are Takashi Nagata
and Michiharu Matsuda, both from Deloitte Touche Tohmatsu.
They are assisted in their accounting operations by three addi-
tional certified public accountants, three junior accountants and
four other assistants.
The external director is a member of Nippon Yusen Kabushiki
Kaisha (NYK). Of the two external auditors, one is the president
of Ichikawa Associates Co, Ltd., and the other is a corporate
auditor for Bellrock Media Japan Inc. and Sedona Capital, Inc.
YAS and NYK, the Company’s principal shareholder,
maintain a cooperative relationship in all logistics services, but
business transactions between the two companies are negli-
gible. No business transactions take place between YAS and
Ichikawa Associates, Bellrock Media or Sedona Capital, and
neither the external director nor the external auditors have any
particular interest in the Company.
The Company carries out efficient compliance promotion, risk
management and internal audits to ensure that its internal
control system functions effectively.
▶ ComplianceWe established a Code of Conduct in May 2005 to ensure
that each YAS Group employee carries out and accomplish-
es corporate activities and routine work in accordance with
corporate ethical guidelines and social morals, as well as
by observing laws and regulations. We have also distributed
a Group Compliance Manual group-wide (domestically in
March 2006, overseas in March 2008). All Group executives
and employees are now putting its guidelines into action in
their routine work.
The in-house system consists of the Compliance Commit-
tee, which is chaired by the President, the Chief Compliance
Officer (CCO), and the CSR Risk Management Office, which
is the promotional organization. Moreover, 59 CSR Leaders
are stationed within the Company and the companies of the
YAS Group to promote compliance in the workplace.
▶ Risk Management SystemThe Company has established the CSR Risk Management
office as a promotional organization under the Representative
Director, who is in charge of managing risks. In addition, the
controllers of each department are in charge of department-
related risks. The risks surrounding the Company and the YAS
Group are handled as described below.
a) Major risks that may impact business and/or the entire Company— A director or corporate executive officer will be
promptly put in charge of handling the risk. The results of the
risk management will be reported at meetings of the Board of
Directors and corporate executive officers.
b) Risks associated with department-specific operations— Internal regulations have been formulated
covering all risks confronted by the concerned department
and appropriate risk management will be conducted.
▶ Remuneration for Directors and Corporate Auditors (FY2007)
▶ Auditors' Bonuses (from April 2007 to March 2008)
▶ Number of DirectorsThe number of directors of the Company is stipulated at 20 or
less, according to the Articles of Incorporation.
▶ Requirements for Resolutions Concerning the Election of DirectorsResolutions to appoint directors must be approved by a majority
of the votes represented by shareholders at meetings in which at
least one-third of the shareholders eligible to exercise voting rights
are in attendance. Under the Articles of Incorporation, no cumula-
tive voting shall be allowed for the election of directors.
External Director and External Auditors
Status of the Internal Control System
Directors’ bonuses for fiscal 2007 were as follows:
Bonuses paid to internal directors
Bonuses paid to external directors
Total
¥ 208 million
¥ 47 million
¥ 255 million
Auditors' bonuses for fiscal 2007 were as follows:
Compensation related to activities set forth under Article 2,
Paragraph 1 of the Certified Public Accountants' Law
Compensation related to other activities
Total
¥ 32 million
¥ 19 million
¥ 51 million
14
Management System
CSR
Responding to the expectations of all stakeholders, includ-
ing shareholders, the members of the YAS Group daily
engage in CSR activities that take into account the Group’s
corporate social responsibilities as a business enterprise.
We will strive to contribute to society and in turn be valued
by society. This section presents some examples of our
CSR initiatives in Japan.
Compliance promotion is one of our most important CSR
activities. Seeking to create a spirited and upright corporate
culture characterized by a high sense of business ethics,
all executives take the lead in ensuring proper management
of risks associated with customs clearance, transporta-
tion, labor and information. In addition, we work to improve
employees’ awareness of the importance of observing laws
and regulations and acting in an ethical manner, while at the
same time carrying out an annual compliance program that
emphasizes training/education and anchors the results in
the daily tasks performed by employees.
In keeping with our goal of disaster mitigation, we do our
utmost to protect all employees and their families from disaster.
Our group companies are implementing measures against a
wide range of risks. We actively carry out measures
for disaster prevention and mitigation based on the worst-
case scenarios in cooperation with local regions, and strive to
recover and restore everything to its original state as soon as
possible if a major disaster occurs.
1. Protect human life—this is the top priority.
2. Protect assets, and plan the recovery and restoration of
operations at the earliest possible stage.
3. Secure the continuity of operations.
Since March 2008, our subsidiary Yusen Air & Sea Logitec
Co., Ltd. has been operating four-ton, low-polluting trucks
that run on natural gas. As a company engaged in transpor-
tation businesses, we are dedicated to environment-friendly
transportation that conserves the precious resources of the
earth and passes them on to coming generations.
CSR at YASFocused on Sustainable Development
Biannual director training (March 11, 2008)
Automated External Defibrillator (AED) training
Fire emergency training for employees
All-Japan CSR promotion staff meeting (February 20, 2008)
Compliance Promotion(Observance of Laws and Regulations)Striving for Spirited and Sound Business
Disaster Prevention
Fundamental Policy of Disaster Preventionand Mitigation
Our Environmental Response—Passing on a GoodEnvironment to Coming Generations
15
Guided by our corporate philosophy of contributing to the
enrichment of society, our group companies’ approach is to
make social contributions as good corporate citizens with the
active support of each employee.
▶ Regional Contribution ActivitiesThe operations of our own facilities usually enjoy the under-
standing and cooperation of concerned local governments
and local residents. In order to contribute further to the
region and community, we participate in locally sponsored
clean-up initiatives, including clean-up activities in the area
around Tokyo’s Narita Airport.
▶ Welfare ActivitiesFrom January 2007, we have been collecting used postage
stamps and prepaid cards within the Company. Such items
are useful to support nursing homes for the elderly and
visually impaired via volunteer organizations. In July 2007, we
also began supporting domestic volunteer organizations by
installing collection boxes in all domestic offices.
▶ Disaster Support ActivitiesAs a member of the NYK Group, we help to raise funds to
provide relief for disaster-struck areas. In 2007, we worked
with the NYK Group to raise funds for relief efforts follow-
ing the Noto Peninsula Earthquake, the Niigata-Chuetsu
Earthquake, the 2007 Peru Earthquake and Cyclone Sidr
in Bangladesh. YAS also collected donations to provide
disaster relief for the victims of the Big Sichuan Earthquake
in China, which struck on May 12, 2008. We will continue to
provide support through our business activities and through
fund-raising activities.
▶ Introduction of Junior Temporary Transfer ProgramStarting June 2007, YAS introduced the Junior Tem-porary Transfer Program, which aims to rapidly train human resources that can play active roles in the Group’s global operations. Under this program, young employees in their 6th to 10th year with the Company are transferred to an overseas affiliate for two years, where they gain new skills and a broader outlook. We have also revised our established overseas long-term training program. Having previously covered employ-ees in their 4th to 6th years, it has now been broadened to cover employees in their 3rd through 6th years. The program helps them to gain knowledge and language skills, for instance of Spanish and Mandarin Chinese, that are in high demand in today's logistics business. The YAS Group’s business outside Japan is grow-ing rapidly. Today, we have more than 240 operating bases worldwide, and Japanese employees are dis-patched to a wide range of countries including India, the United Arab Emirates and Russia. As a result, we need human resources with strategic potential, and who can adapt to a wide variety of environments.
▶YAS GLOBAL TRAINING 2007Our annual training program, YAS GLOBAL TRAINING, took place on November 11–22. Aimed at key manager-level foreign employees of Group affiliates outside Japan, this program aims to broaden the outlooks of the leaders who will shoulder the future of the YAS Group. Marking the 11th year of the program, the focus of this year's session was on “meeting people.” There were 21 attendees from 17 countries, including India and other growth regions where our operating bases are flourishing. After learning about the current progress of Group companies and customers, beginning with those in Japan, the attendees gained a better understanding of the YAS Group’s overall direction. They also enjoyed visits to offices and facilities, as well as lectures and tours of Tokyo, Nagoya and Osaka. In terms of sales training, it was their first experience of holding meetings with Japanese sales staff and making visits to customers together with managers. The attendees, who hailed from different countries and held different positions, also exchanged views through various group activities. At the end of the training session, the participants did a presentation of the results to the President and other executives.
Social Contributions
Training Program for Employees
NGV (Natural Gas Vehicle)
16
Board of Directors, Corporate Auditors and Executive Officers
Kazuyoshi Iwahazama Takashi Isobe Kunio Fujii Hiroyuki Yasukawa Shotaro Omura
Takao Takano
Kazuo Kato
Shizuo Kikuyama
▶ Executive Officers
Isao Takano Masaki Tanaka Yukio Umemoto Tomohiro Iida Shoji Murakami
Director and Managing▶ Executive Officer ▶ Directors
Masayoshi Ono
Akio Futami
Taizo Taguchi Shu Ichikawa Rikuichi Yoshisue
Corporate Auditors
Hiroshi Harada Masaaki Suemune Masahiro Omori
▶ Managing Executive Officers
Executive Officers
Shunichi Yano
Directors and Senior Managing▶ Executive Officers
Board of Directors
▶ President
17
Financial Section
Financial Section Contents
Consolidated Six-Year Summary 18
Management’s Discussion and Analysis 19
Consolidated Balance Sheets 24
Consolidated Statements of Income 26
Consolidated Statements of Changes in Equity 27
Consolidated Statements of Cash Flows 28
Notes to Consolidated Financial Statements 29
Independent Auditors’ Report 41
Corporate Data — Principal Group Companies 42
Shareholders’ Information 43
18
Consolidated Six-Year Summary
Millions of yen
Results of Operations 2008 2007 2006 2005 2004 2003
Net sales ¥187,518 ¥182,617 ¥168,454 ¥148,263 ¥118,465 ¥110,996Cost of sales 141,736 138,278 127,321 109,255 85,132 78,763Gross profit 45,782 44,339 41,133 39,008 33,333 32,233Selling, general and administrative expenses 35,566 33,901 30,698 28,600 26,111 24,841Operating income 10,216 10,438 10,435 10,408 7,222 7,392Income before income taxes 12,178 11,514 11,197 10,828 6,323 7,199Net income 7,271 6,722 7,006 6,797 3,738 4,632
Sales by Geographic RegionJapan 87,355 82,757 86,517 84,249 68,648 65,692North America 17,758 17,364 16,813 12,470 10,510 11,712Europe 21,417 19,236 15,674 15,261 12,085 10,687East Asia 35,185 39,080 34,192 24,262 16,694 15,827South Asia and Oceania 28,520 26,915 17,786 14,131 12,213 7,844Intersegment sales/transfers 2,717 2,735 2,528 2,110 1,685 766Net sales 187,518 182,617 168,454 148,263 118,465 110,996
Consolidated to non-consolidated ratio (times) 2.38 2.46 2.16 1.93 1.91 1.87
Financial PositionCurrent assets 66,558 58,300 54,883 46,171 40,734 38,895Current liabilities 32,716 29,175 31,243 26,978 25,247 28,125Equity 57,725 51,191 44,138 35,894 29,488 27,137Total equity *1 59,614 52,551 — — — —Total assets 98,366 89,567 85,613 75,485 66,332 64,780Cash flows from operating activities 8,127 9,048 6,755 8,371 3,997 3,762Free cash flows 5,255 6,139 4,859 3,235 1,824 677
Per Share Data (yen):Net income—primary *2 172.43 159.46 327.48 317.17 208.38 259.34Net income—fully diluted — — — — — —Dividends (full year) *2 20.00 15.00 30.00 30.00 15.00 15.00Net assets *2 1.368.84 1,213.90 2,090.18 1,698.40 1,673.80 1,539.33
Key Ratios (%)Gross profit to net sales 24.4 24.3 24.4 26.3 28.1 29.0Operating income to net sales 5.4 5.7 6.2 7.0 6.1 6.6Cost of sales to net sales 75.6 75.7 75.6 73.7 71.9 71.0
Selling, general and administrative expenses to net sales 19.0 18.6 18.2 19.3 22.0 22.4
Net income to net sales 3.9 3.7 4.2 4.6 3.2 4.2Return on equity 13.4 14.1 17.5 20.8 13.2 18.3Return on assets 7.7 7.7 8.7 9.6 5.7 7.5Asset turnover (times) 2.0 2.1 2.1 2.1 1.8 1.8Equity ratio *3 58.7 57.2 51.6 47.6 44.4 41.9
Other Year-End DataNumber of shares outstanding *4 42,220,800 42,220,800 21,110,400 21,067,412 17,573,300 17,583,360
Notes: 1. From the fiscal year ended March 31, 2007, total equity includes minority interests in accordance with the enforcement of Japan’s Corporate Law.2. These figures do not include any adjustments due to the execution of a 1.2-for-1 stock split in May, 2004, and a 2-for-1 stock split in April, 2006.3. Equity capital (¥57,725 million at 2008) = total equity - minority interests.4. The above figures included treasury stock of 50,484 shares in 2007 and 50,236 share in 2008.
On April 1, 2006, the Company executed a 2-for-1 stock split.
Yusen Air & Sea Service Co., Ltd., and Its Consolidated Subsidiaries for the Years Ended March 31
19
Management’s Discussion and Analysis
The scope of consolidation for this review of fiscal 2007, ended March
31 2008, covers Yusen Air & Sea Service Co., Ltd. (hereafter referred
to as “YAS” or “the Company”), and 34 consolidated subsidiaries,
including Yusen Air & Sea Service (U.S.A.) Inc., Yusen Air & Sea Service
(Deutschland) GmbH., Yusen Air & Sea Service (H.K.) Ltd., and Yusen Air
& Sea Service (Singapore) Pte. Ltd.
Overview
The economic environment has grown even more challenging, reflecting
the global impact of the U.S. subprime loan problem and steep rises
in the prices of crude oil and raw materials. Nonetheless, trends in the
world air cargo market are by and large favorable, underscored by
steady underlying demand in Europe and Asia. The handling of sea cargo
transportation has increased steadily, benefiting from the success of
various overseas collaborations and growth in demand.
After hitting bottom in summer 2007, air-freighted exports departing
from Japan seemed to pick up thereafter, and handling volume slowly
increased in step with the underlying basic tone of recovery. Air-freighted
imports, in contrast, remained by and large at a standstill throughout the
year under review, reflecting sanitary issues related to imported foods.
Under these challenging conditions, the Yusen Air & Sea Service Group
(hereafter referred to as “the YAS Group" or “the Group") rolled out a cost
reduction movement covering the expansion of the network of operating
bases as well as a review of operations. In addition, Group members
worked closely to achieve the targets of the medium-term business plan.
Although net sales rose on both a consolidated and non-consolidated
basis, a few targets were not achieved due to indirect factors such as the
appreciation of the yen and downward pressure on the economy caused
by the steep rise in the price of crude oil.
Operating income declined on both a consolidated basis and non-
consolidated basis, reflecting rising crude oil prices, as well as expenses
associated with the expansion of infrastructure for the network of operating
bases and advance costs associated with compliance with the J-SOX law.
As a result, consolidated net sales for fiscal 2007 increased by 2.7%
over the previous fiscal year to ¥187,518 million ($1,872 million) while
consolidated operating income declined by 2.1% to ¥10,216 million
($102 million). Consolidated net income rose by 8.2% to ¥7,271 million
($73 million). This increase reflected increases in interest received and
foreign exchange gains, as well as net gains from the liquidation of
affiliated companies.
Segment Performance by Business Type(Figures include intersegment transactions)
Cargo Freight Business
At the beginning of the year under review, air freight to and from Japan
slowed. However, encouraging signs began to appear in the second
quarter. Led by results in Japan, net sales rose. Overseas, we focused on
the ongoing broadening of our sales and operating base network, including
the establishment of new companies in India and Russia. At the same time,
we worked to boost sales elsewhere by encouraging cooperation between
locations throughout the world. Still, we had to shoulder advance costs
associated with building the infrastructure of our network of operating
bases in Europe and Asia. Total sales of our cargo freight businesses rose
by 2.6% year on year to ¥181,843 million ($1,815 million) while operating
income decreased by 2.4% to ¥9,512 million ($95 million).
Travel Services
Although sales cruise ship vacations failed to rise, there was favorable
demand for package tour arrangements and business travel. Total sales
in this segment topped the level of the previous fiscal year. Nonetheless,
there were decreases in fees for airline sales and increases in personnel
expenses, and consequently operating income dropped.
Total sales in this segment rose by 3.9% over the previous year to
¥5,509 million ($55 million), while operating income decreased by 10.4%
to ¥521 million ($5 million).
Other
The main businesses in this segment consist of non-life insurance agent
services, the financing business, real estate leasing, and staffing services.
Total sales of the segment surged by 29.4% to ¥1,522 million ($15 million)
over the previous year, and operating income jumped by 86.0% to ¥184
million ($2 million).
Segment Performance by Geographical Region(Figures include intersegment transactions)
Japan
Total sales rose by 5.6% to ¥87,355 million ($872 million) year on
year, while operating income decreased by 10.3% to ¥4,216 million
($42 million).
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* These figures do not include any adjustments due to the execution of a 1.2-for-1 stock split in May, 2004, and a 2-for-1 stock split in April, 2006.
20
The slump in air-freighted exports continued, negatively affected by
a decrease in demand for urgent cargo and inventory adjustments for
electronic components and semiconductor-related products in the first
quarter. At the beginning of the second quarter, however, there were
encouraging signs of a recovery in shipments.
As the third quarter began, there was increasing activity in shipments
of automotive components and digital home appliance products, as well
as of materials and parts. We also saw the benefits of the alliances with
the Panalpina Group and the Yamato Group through increases in cargo
handling volume, particularly in shipments to Asia and Europe.
As a result, the volume of freight exported by air rose by 9% year
on year. In contrast, there were decreases in imports of Beaujolais
Nouveau and food-related products from China as well as a slump
in imports of clothing because of the mild winter, and the handling of
freight imported by air continued to decline, mirroring the same trend
in the industry as a whole.
The volume of sea cargo grew steadily, highlighted by import-export
activities, to top the level of the previous fiscal year. This increase was the
result of an ongoing switch in transportation from air cargo transportation,
as well as a reinforcement of our business systems infrastructure and
sales to accommodate our business alliances.
Turning to costs, we reviewed our business management practices
at the beginning of the fiscal year to optimize efficiency. In addition, we
unrolled a Company-wide movement aimed at strengthening operations
and cutting costs. Despite these efforts, however, profits decreased
because of the need to strengthen the sea cargo transportation business
and its systems infrastructure in connection with the launch of the alliance
with the Panalpina Group. There were also cost pressures, such as the
increase in subcontracting expenses to accommodate the J-SOX law.
North America
Total sales in this segment rose by 2.3% year on year to ¥17,758 million
($177 million) and operating income increased by 16.2% to ¥994 million
($10 million).
The volume of freight exported by air decreased, marked by declines
in the handling of medical equipment-related products and food-related
products, which had registered large shipments in the previous fiscal
year. From the second quarter on, however, shipments of automotive
components and semiconductors bound for Asia and Japan were firm.
For air-freighted imports, the second half of the year saw vigorous activity
in shipments of automotive components from Asia. However, the overall
volume decreased, reflecting a slowdown of shipments of construction
equipment-related items and a return to sea cargo transportation for
aircraft-related components and parts, which in the previous term had
boomed in Canada.
The volume of sea cargo increased, reflecting our alert response to
capture rising demand associated with the change in transportation mode
for aircraft-related and automobile-related materials and parts. At the same
time, there was a firm trend in transportation within the Americas, including
cross-border transportation between the U.S. and Mexico.
For reference, the exchange rate used to calculate the above figures
was ¥114.15 to the U.S. dollar as of the fiscal year-end on March 31,
2008, compared with ¥119.11 at the fiscal 2006 year-end.
Europe
Total sales of European operations posted a favorable rise of 11.3%
to ¥21,417 million ($214 million) year on year, while operating income
dropped by 24.2% to ¥1,001 million ($10 million).
The volume of freight exported by air increased, underpinned by a
firm trend in automotive components and medical equipment-related
products as well as food-related products for Asia. The handling of
air-freighted imports also rose, buoyed by close reciprocal business
relationships with Asian regions. This boost primarily entailed increases
in automotive components from Asia as well as products related to office
appliances and digital home appliances. At the same time, transportation
within Europe remained steady in a broad scope covering Amsterdam
and Frankfurt, which are our European airport gateways to Central and
Eastern Europe.
Turning to sea cargo transportation, imports and exports remained
firm, especially in automotive components and products related to home
appliances, with the result that shipments remained steady. In addition,
we began to strengthen sales in underdeveloped areas, thanks to our
business alliance with the Panalpina Group.
In other areas, we moved ahead energetically, putting facility
infrastructure in place to accommodate the development of operating
bases in Central and Eastern Europe, including the establishment of a
company in Russia in June 2007, and strengthening logistics operations
within Europe. Consequently, there was an increase in the burden of
advance expenses.
For reference, the exchange rate used to calculate the above figures
was ¥166.66 to the euro as of the fiscal year-end on March 31, 2008,
compared with ¥156.50 at the fiscal 2006 year-end.
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21
East Asia
Total sales in the East Asia region decreased by 10.0% to ¥35,185
million ($351 million), while operating income rose by 2.8% to ¥2,331
million ($23 million).
The first half of the term saw smooth increases in freight exported by
air, including shipments from China of OA equipment and electronic and
electric components for Europe and America. In the middle of the fiscal
year, there were increases in the handling of electronic and automotive
components destined for Europe and North America. However, the
volume of shipments from Hong Kong to the developed countries and
regions, including Japan, Europe and North America, which had been
robust in the previous fiscal year, experienced a downturn in connection
with the shift to sea cargo transportation. At the same time, the handling
of volume exported from Taiwan, which is transferring its production
bases to China, remained sluggish.
Exports were generally sluggish compared with the previous year.
To compensate for this, we endeavored to strengthen marketing,
emphasizing the reduction of purchasing costs and the resulting profits.
For freight imported by air, volume remained favorable, underpinned by
strong shipments of automotive and electronic components, and parts for
electric equipment. In sea cargo transportation, the volume of products
for Christmas sales remained steady, along with favorable exports of OA
equipment destined for Europe.
South Asia and Oceania
Total sales in the South Asia and Oceania region rose by 6.0% year on
year to ¥28,520 million ($285 million), and operating income surged by
31.2% to ¥1,738 million ($17 million).
The volume of freight exported by air remained steady, centered on
shipments of audio-related equipment and automobile-related items.
There was also a trend toward increase in the handling of freight within
the South Asia and Oceania region, including massive shipments of
automobile-related parts for Australia.
For freight imported by air, shipments of home appliances as well
as automotive components and digital device-related products rose
steadily. Imports and exports by sea cargo transportation also remained
firm, including shipments of digital home appliance-related items and
automotive components.
In addition, the operating base network of our subsidiary in India,
which was established in April, expanded rapidly and we developed
infrastructure for a cargo handling system. These efforts helped to expand
net sales of YAS Group companies in the ASEAN countries, where we
have strong business relationships.
Financial Position
As of March 31, 2008, total assets amounted to ¥98,366 million ($982
million), up 9.8% year on year. This growth consisted primarily of
increases in cash and cash equivalents as well as in trade notes and
accounts receivable. Total liabilities amounted to ¥38,752 million ($387
million), an increase of 4.7% year on year. Interest-bearing liabilities
decreased, but this was more than offset by the increase in trade liability.
Total equity rose by 13.4% to ¥59,614 million ($595 million) due to an
increase in retained earnings. This marked an increase of 13.4% over the
previous fiscal year.
In terms of indicators of performance, net assets per share rose by
12.8% to ¥1,368.84, and the equity ratio improved by 1.5 percentage
points year on year to 58.7%. However, return on equity (ROE) dropped
by 0.7 percentage points to 13.4%. Notes: 1. Equity (¥57,725 million as of March 31, 2008) = Total equity - minority interests
2. Equity ratio = shareholders’ equity / total assets3. ROE = net income / average shareholders’ equity
Cash Flows
Cash and cash equivalents as of March 31, 2008 rose by 19.3% year
on year to ¥20,764 million ($207 million), reflecting the revenues from
operating activities absorbing increases in outlays due to investment and
financial activities.
Net cash provided by operating activities declined by 10.2% over
the previous year to ¥8,127 million ($81 million). The main factors
here were revenues from increases in trade payables and retirement
benefit allowances to employees, decreases in outlays for payments
such as corporate taxes, and dramatic increases in trade notes and
accounts receivable.
Net cash used in investing activities amounted to ¥2,872 million
($29 million). This marked a decrease of 1.3% year on year, reflecting
increases in outlays for the acquisition of fixed assets and loans along with
reductions in outlays for investment securities and purchasing of shares in
consolidated subsidiaries.
Net cash used in financing activities dropped by 58.9% year on year
to ¥1,924 million ($19 million). The main factor here was the decrease in
outlays for the repayment of long-term debt.
40
30
20
10
0
4
3
2
1
004 08070605
South Asia and OceaniaTotal Sales (Left)Operating Income (Right)
(Billions of yen)
60
45
30
15
004 08070605
Equity Ratio
(%)
24
18
12
6
004 08070605
Return on Equity/Return on Assets
Return on EquityReturn on Assets
(%)
10
5
0
-5
-1004 08070605
Free Cash Flows*Net Cash Provided by Operating ActivitiesNet Cash Used in Investing ActivitiesFree Cash Flows
(Billions of yen)
* Net cash provided by operating activities + net cash used in investing activities
22
Shareholder Return Policy
YAS recognizes the return of profits to shareholders as one of its top
priorities. The Company’s basic policy is to offer a stable dividend within
the limits set by business results, and to steadily raise shareholder returns
while accurately gauging the stages of corporate growth and the eventual
need for funds to finance future expansion.
The Company has decided to set the year-end dividend for the year
ended March 31, 2008 at ¥11.00. Together with the interim dividend of
¥9.00, the annual dividend will be ¥20.00 per share for shareholders of
record, an increase of ¥5.00 over the level of the previous term. By doing
so, the total amount of dividends distributed for the year ended March 31,
2008 amounted to ¥843 million.
Internal reserves will be channeled into investments in IT systems,
network infrastructure, and capital investment for facilities development.
We will also channel reserves into quality enhancements and
reinforcements of human resources, both of which are management
priorities, to bring about a sustained increase in our corporate value.
Risk Information
1. General Business Trends
The business climate that prevails in a specific country or region where
companies have set up operations and business trends in Europe and
the United States—markets with the capacity to alter the status of the
world economy—can influence demand for international air transportation
services. Indeed, air freight forwarding services are used predominantly for
products and components aimed at consumers, such as digital appliances
for the home and items featuring information technology. Business trends in
the importing countries could have an impact on demand for these services.
The YAS Group seeks to build an operating structure that facilitates
stable growth and is therefore working to boost transactions for products,
such as medical equipment and pharmaceutical- and automotive- related
items, which are relatively less susceptible to the changing tides of business.
2. Fluctuating Fuel Prices
Typically, the fuel surcharge charged by airline companies in line with
short-term fluctuations in fuel prices is a fee that clients are required
to pay on top of air freight. Consequently, a surcharge in and of itself
should have no great impact on the operating results or the financial
standing of the Group. However, the Group’s profitability could be
impaired if the response to a continued skyward ascent of fuel costs
causes air freight itself to increase, or if conditions precipitate a sudden
rise in the fuel surcharge.
3. Inherent in Global Business Expansion
The Group’s business activities extend beyond Japan to other areas of
Asia, as well as Oceania, the Middle East, Europe and the Americas.
Roughly half of the Group’s sales activities are conducted outside of
Japan. Possible risks that could emerge as the Group works to expand its
presence globally are presented below.
i. Fallout from political and economic disruption.
ii. Problems related to official rules and regulations, including business
and investment permits, taxation, foreign exchange control, trade
regulations and travel regulations.
iii. Issues stemming from natural disasters, such as earthquakes,
tsunami, typhoons and hurricanes.
iv. Social unrest prompted by such events as war, riots, terrorism,
strikes, civil strife and international disputes.
v. Globally pervasive economic disruption caused by sudden
fluctuations in exchange rates.
vi. The spread of highly contagious diseases demonstrating a high death
rate, such as Severe Acute Respiratory Syndrome, more commonly
known as the SARS virus, and bird flu.
Each additional investment abroad is carefully considered. The
Company looks into local political and economic conditions as well as
the culture, customs and public heath situation and strives to eliminate as
effectively as possible whatever risks may exist at the time before making
the investment.
However, unexpected events do occur and the state of the
world does change in ways not always correctly anticipated. Such
developments, which include greater sophistication in information and
communications technology, increasingly borderless economic and
cultural environments, the frequency of terrorist activities and the spread
of new infectious diseases, could impact the business results and financial
standing of the Group.
4. Computer Viruses, Hackers and Cyber-Terrorism
YAS has established a backup system for its computer lines. The
Company is also working to enhance backup capabilities to minimize
damage to hardware and data in the event of natural disasters, such as
earthquakes or severe storms with flooding.
The Company has taken all possible measures to prevent
unauthorized access to its systems from outside and to block infection of
its systems by computer viruses. Specifically, the Company has installed
firewalls and virus-checking software into its mail servers and all terminals.
Despite these defensive measures, it is possible that unforeseen
situations, such as the use of technology that breaches presumed security
protocols and allows a hacker to gain entry to in-house information
systems, could lead to a temporary shutdown of system functions or
facilitate unauthorized disclosure of information. Such a situation could
hurt the business results and financial standing of the Group.
5. Claims for Damages and Tarnished Credibility Due to Leaks of
Client Information
The YAS Group handles a vast amount of client information. The Group
also undertakes customs clearance services. Therefore, the Group has an
obligation to protect client information and strives to prevent information
from leaking outside. Despite existing precautions, it is possible that
unforeseen circumstance could result in an information leak. The Group’s
business results could be adversely affected if, for example, such a
leak were to lead to claims for damages or if the situation tarnished the
Group’s reputation.
6. Fluctuating Exchange Rates
The YAS Group endeavors to minimize the impact of fluctuating exchange
rates on foreign-currency-denominated receivables and payables by
utilizing hedging transactions, such as forward exchange contracts and
currency swaps, and therefore eliminates such risk that would exert a
23
major impact on the Group’s business. However, in preparing the Group’s
consolidated financial statements, the Company translates the financial
results of overseas consolidated subsidiaries into yen, and fluctuating
exchange rates could have an effect on the business results and financial
standing of the Group, based on such consolidated financial statements.
7. Statutory Regulations
YAS is licensed by the Ministry of Land, Infrastructure and Transport as
a provider of type 2 freight forwarding services, based on Article 20 of
the Freight Forwarding Business Law, and conducts air and sea cargo
transportation operations—the primary business of the YAS Group.
This license has no expiration date, but if, as set forth in Article 33
of the Freight Forwarding Business Law, an event causes operations to
be suspended or eliminated, the Company’s business will be partially or
completely suspended for a set period and permission to engage in those
areas of business will be withdrawn.
To date, the YAS Group has never encountered such an event, but
situations, including the withdrawal of permission to conduct business,
may occur in the future for any number of reasons, and could have a
sizable impact on the fiscal performance and financial standing of the
Group.
In addition, different parts of the world apply different statutory
regulations with which Group companies must comply. Major rules and
regulations include social issues, such as maintaining safety, and legal
issues related to transportation services.
In Japan, YAS has obtained approval and required licenses, including
the aforementioned permission to provide type 2 freight forwarding
services, from the relevant authorities. If statutory regulations pertaining
to such approval and licenses are amended or if approval and licensing
status currently held is cancelled, the fiscal performance and financial
standing of the Group could be adversely affected.
Approval and licenses currently held by YAS are listed below.
On April 16, 2008, YAS underwent an on-the-spot inspection by the Fair
Trade Commission on suspicion of having violated the Anti-Monopoly Act
regarding unit fares and fuel surcharges related to international air cargo
transportation. The results of the inspection may have an effect on the
Company’s operating results.
8. The role of YAS within the NYK Group
As of the end of March 2008, the NYK Group consisted of 687
consolidated subsidiaries and 74 companies accounted for the equity
method. These companies conduct integrated logistics business centered
largely on ocean transportation.
The business of the YAS Group centers largely on the use of air
transportation. No other company within the companies of the NYK
Group conducts business operations using air transportation in the same
manner as YAS, which is licensed by the Ministry of Land, Infrastructure,
Transport and Tourism as a provider of type 2 freight forwarding services.
Moreover, the Company strives to ensure its independence as a listed
company. As such, YAS does not need approval in advance from Nippon
Yusen Kabushiki Kaisha for its own decision-making.
Personal relationships with the NYK Group
Among 11 Company executives as of June 27, 2008, one held a
concurrent position as a Corporate Officer of the NYK Group. Following
are the details concerning the said person’s position, name and position
within the companies of the NYK Group.
Position at YAS NamePosition within the companies of the NYK Group (excluding the YAS Group)
Director Shoji Murakami Corporate Officer of Nippon Yusen Kabushiki Kaisha
Business relationships with Nippon Yusen Kabushiki Kaisha and its subsidiaries
Following are the main business relationships between the
Company and subsidiaries of Nippon Yusen Kabushiki Kaisha during
this consolidated fiscal year. Business transactions take place under
the same conditions as general transactions, taking market forces
into consideration. In the case of real estate transactions, conditions
are determined by negotiations between both companies after giving
consideration to the local market.
a) Transactions with Nippon Yusen Kabushiki Kaisha
The main business relationships between the Company and Nippon
Yusen Kabushiki Kaisha are transactions in which Nippon Yusen
consigns the transportation of air cargo to the Company. Business
transactions in this consolidated fiscal year amounted to ¥37 million.
b) Transactions with subsidiaries of Nippon Yusen Kabushiki Kaisha
The main business relationships between the Company and NYK
Group companies are transactions involving ocean transportation and
related peripheral business, which are consigned to UNI-X Corporation
and 12 other companies as well as transactions in which Yusen Real
Estate Corporation rents the Company’s head office and Kanagawa
Branch Office. Business transactions in this consolidated fiscal year
amounted to ¥6,497 million.
Approval and Licensing Designation Issuing AuthorityRequirements for Approval and Licensing
Validity
Type 2 freight forwarding services Ministry of Land, Infrastructure and Transport Business license Open
Air service agency business Ministry of Land, Infrastructure and Transport Application to operate as a business Open
General cargo truck transportation services Ministry of Land, Infrastructure and Transport Business license Open
Customs brokerage services Regional customs and duty office Business license Open
Warehousing services Regional transportation bureau Business registration Open
Medical devices manufacturing business: packaging, labeling or storage category Prefectural offices Business license Sept. 26, 2005 to
Sept. 25, 2010
Retail or rental business of specially controlled medical devices Prefectural offices Business license June 12, 2007 to
June 11, 2013
24
Consolidated Balance Sheets
Millions of yen Thousands of U.S. dollars (Note 1)
ASSETS 2008 2007 2008
CURRENT ASSETS:
Cash and cash equivalents ¥ 20,764 ¥ 17,404 $ 207,250
Time deposits 260 374 2,587
Trade notes and accounts receivable 41,040 37,134 409,625
Deferred tax assets—current (Note 8) 901 825 8,989
Other current assets 3,774 2,748 37,669
Allowance for doubtful accounts (181) (185) (1,804)
Total current assets 66,558 58,300 664,316
PROPERTY, PLANT AND EQUIPMENT:
Land (Note 3) 7,681 7,774 76,659
Buildings and structures (Note 3) 19,627 19,113 195,903
Furniture and fixtures 4,531 3,894 45,220
Machinery, equipment and vehicles 1,243 1,136 12,403
Construction in progress 11 47 110
Total 33,093 31,964 330,295
Accumulated depreciation (11,077) (9,906) (110,550)
Total property, plant and equipment 22,016 22,058 219,745
INVESTMENTS AND OTHER ASSETS:
Investments in securities (Notes 4 and 5) 1,783 1,936 17,795
Investments in unconsolidated subsidiaries and affiliate companies 1,396 857 13,936
Goodwill 31 40 305
Deposits 1,715 1,708 17,119
Deferred tax assets—non-current (Note 8) 1,859 1,841 18,555
Other assets 3,008 2,827 30,020
Total investments and other assets 9,792 9,209 97,730
TOTAL ¥ 98,366 ¥ 89,567 $ 981,791
See notes to consolidated financial statements.
Yusen Air & Sea Service Co., Ltd. and Consolidated Subsidiaries, March 31, 2008 and 2007
25
Millions of yen Thousands of U.S. dollars (Note 1)
LIABILITIES AND EQUITY 2008 2007 2008
CURRENT LIABILITIES:
Trade notes and accounts payable ¥ 21,798 ¥ 19,267 $ 217,568
Short-term bank loans (Note 5) 161 322 1,606
Current portion of long-term debt (Note 5) 1,628 871 16,248
Accrued income taxes 2,436 2,240 24,314
Accrued bonuses to employees 1,484 1,386 14,811
Deferred tax liabilities—current (Note 8) 2 3 19
Other current liabilities 5,207 5,086 51,973
Total current liabilities 32,716 29,175 326,539
LONG-TERM LIABILITIES:
Long-term debt (Note 5) 1,628 3,021 16,254
Accrued pension and severance costs for:
Employees (Note 6) 3,827 3,953 38,193
Directors and corporate auditors 308 330 3,077
Negative goodwill 33 63 330
Deferred tax liabilities—non-current (Note 8) 100 115 997
Other long-term liabilities 140 359 1,396
Total long-term liabilities 6,036 7,841 60,247
COMMITMENTS AND CONTINGENT LIABILITIES(Notes 9, 10 and 11)
EQUITY (Notes 7 and 15):
Common stock, no par value—
authorized; 160,000,000 shares in 2008 and 2007 issued; 42,220,800 shares in 2008 and 2007 4,301 4,301 42,928
Capital surplus 4,812 4,811 48,026
Retained earnings 46,775 40,125 466,866
Unrealized gain on available-for-sale securities 69 206 690
Foreign currency translation adjustments 1,836 1,816 18,325
Treasury stock—at cost; 50,236 shares in 2008 and 50,484 shares in 2007 (68) (68) (682)
Total 57,725 51,191 576,153
Minority interests in consolidated subsidiaries 1,889 1,360 18,852
Total equity 59,614 52,551 595,005
TOTAL ¥ 98,366 ¥ 89,567 $ 981,791
See notes to consolidated financial statements.
26
Consolidated Statements of Income
Millions of yen Thousands of U.S. dollars (Note 1)
2008 2007 2008
NET SALES ¥ 187,518 ¥ 182,617 $ 1,871,626
COST OF SALES 141,736 138,278 1,414,679
Gross profit 45,782 44,339 456,947
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Note 12) 35,566 33,901 354,983
Operating income 10,216 10,438 101,964
OTHER INCOME (EXPENSES):
Interest and dividend income 640 367 6,383
Interest expense (88) (126) (878)
Gain on liquidation of affiliate company 261 — 2,611
Foreign currency exchange gain—net 925 510 9,230
Equity in earnings of unconsolidated subsidiaries and affiliate companies 46 39 460
Amortization of negative goodwill 30 47 301
Gain on sale of property, plant and equipment — 51 —
Loss on impairment of fixed assets (Note 3) (104) — (1,039)
Others—net 252 188 2,513
Other income—net 1,962 1,076 19,581
INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS 12,178 11,514 121,545
INCOME TAXES (Note 8):
Current 4,470 4,217 44,613
Deferred (72) 188 (723)
Total income taxes 4,398 4,405 43,890
MINORITY INTERESTS IN NET INCOME OF CONSOLIDATED SUBSIDIARIES 509 387 5,079
NET INCOME ¥ 7,271 ¥ 6,722 $ 72,576
Yen U.S. dollars
PER SHARE:
Basic net income per share (Note 14) ¥ 172.43 ¥ 159.46 $ 1.721
Cash dividends 20.00 15.00 0.200
See notes to consolidated financial statements.
Yusen Air & Sea Service Co., Ltd. and Consolidated Subsidiaries for the Years Ended March 31, 2008 and 2007
27
Consolidated Statements of Changes in Equity
Thousands Millions of yen
OutstandingNumber of Shares of Common
Stock
CommonStock
CapitalSurplus
RetainedEarnings
UnrealizedGain (Loss)
on Available-for-sale
Securities
ForeignCurrency
TranslationAdjustments
TreasuryStock Total
MinorityInterests in
ConsolidatedSubsidiaries
TotalEquity
BALANCE, APRIL 1, 2006 21,065 ¥4,301 ¥4,744 ¥34,409 ¥232 ¥ 570 ¥(118) ¥44,138 ¥1,086 ¥45,224
Increase in the number of shares by stock split (Note 7) 21,065 — — — — — — — — —
Net income for the year ended March 31, 2007 — — — 6,722 — — — 6,722 — 6,722
Cash dividends (¥27.5 per share) — — — (737) — — — (737) — (737)
Bonuses to directors and corporate auditors — — — (108) — — — (108) — (108)
Purchase of treasury stock (1) — — — — — (4) (4) — (4)
Disposal of treasury stock 0 — 0 — — — 0 0 — 0
Disposal of treasury stock by simplified stock exchange 41 — 67 — — — 54 121 — 121
Adjustment of retained earnings at beginning of period due to adoption of local pension fund accounting standards by foreign consolidated subsidiary
— — — (161) — — — (161) — (161)
Net change in the year — — — — (26) 1,246 — 1,220 274 1,494
BALANCE, MARCH 31, 2007 42,170 4,301 4,811 40,125 206 1,816 (68) 51,191 1,360 52,551
Net income for the year ended March 31, 2008 — — — 7,271 — — — 7,271 — 7,271
Cash dividends (¥16.5 per share) — — — (696) — — — (696) — (696)Purchase of treasury stock (0) — — — — — (1) (1) — (1)Disposal of treasury stock 1 — 1 — — — 1 2 — 2
Adjustment of retained earnings due to recognition of unrecognized actuarial differences by foreign consolidated subsidiary
— — — 75 — — — 75 — 75
Net change in the year — — — — (137) 20 — (117) 529 412
BALANCE, MARCH 31, 2008 42,171 ¥4,301 ¥4,812 ¥46,775 ¥ 69 ¥1,836 ¥ (68) ¥57,725 ¥1,889 ¥59,614
Thousands of U.S. dollars (Note 1)
CommonStock
CapitalSurplus
RetainedEarnings
UnrealizedGain (Loss)
on Available-for-sale
Securities
ForeignCurrency
TranslationAdjustments
TreasuryStock Total
MinorityInterests in
ConsolidatedSubsidiaries
TotalEquity
BALANCE, MARCH 31, 2007 $42,928 $48,023 $400,481 $2,060 $18,123 $ (679) $510,936 $13,574 $524,510Net income for the year ended March 31, 2008 — — 72,576 — — — 72,576 — 72,576
Cash dividends ($0.165 per share) — — (6,945) — — — (6,945) — (6,945)
Purchase of treasury stock — — — — — (14) (14) — (14)
Disposal of treasury stock — 3 — — — 11 14 — 14
Adjustment of retained earnings due to recognition of unrecognized actuarial differences by foreign consolidated subsidiary
— — 754 — — — 754 — 754
Net change in the year — — — (1,370) 202 — (1,168) 5,278 4,110
BALANCE, MARCH 31, 2008 $42,928 $48,026 $466,866 $690 $18,325 $ (682) $576,153 $18,852 $595,005
See notes to consolidated financial statements.
Yusen Air & Sea Service Co., Ltd. and Consolidated Subsidiaries for the Years Ended March 31, 2008 and 2007
28
Consolidated Statements of Cash Flows
Millions of yen Thousands of U.S. dollars (Note 1)
2008 2007 2008OPERATING ACTIVITIES:
Income before income taxes and minority interests ¥ 12,178 ¥ 11,514 $ 121,545Adjustment for:
Depreciation and amortization 1,891 1,905 18,878 Amortization of goodwill (21) (40) (206) Increase (decrease) in accrued pension and severance costs 17 (642) 168 Interest and dividend income (640) (368) (6,383) Interest expense 88 126 878 Equity in earnings of unconsolidated subsidiaries and affiliate companies (46) (39) (460) Decrease (increase) in trade notes and accounts receivable (3,638) 1,117 (36,308) Increase (decrease) in trade notes and accounts payable 2,201 (486) 21,973 Gain on sale of property, plant and equipment — (50) — Loss on impairment of fixed assets 104 — 1,039 Gain on sale of investments in securities (0) (0) (3) Gain on liquidation of affiliate company (261) — (2,611) Gain on sale of golf club membership (14) — (137) Loss on write-down of golf club membership 13 — 120 Increase (decrease) in allowance for doubtful accounts 1 (46) 9 Other—net 19 593 195 Total 11,892 13,584 118,697 Interest and dividend received 602 374 6,013 Interest paid (88) (132) (877) Income taxes paid (4,279) (4,778) (42,715) Net cash provided by operating activities 8,127 9,048 81,118
INVESTING ACTIVITIES:Purchase of property, plant and equipment (1,916) (1,055) (19,120)Proceeds from sale of property, plant and equipment 39 314 391Purchase of investments in securities (53) (928) (529)Proceeds from sale of investments in securities 1 0 12Purchase of shares of consolidated subsidiaries — (406) —
Increase in investments in unconsolidated subsidiaries and affiliate company (513) — (5,119)
Proceeds from liquidation of affiliate company 262 — 2,611Proceeds from sale of golf club membership 15 — 152Lending of loans receivable (1,515) (488) (15,123)Collection of loans receivable 751 42 7,493Other—net 57 (388) 563
Net cash used in investing activities (2,872) (2,909) (28,669)
FINANCING ACTIVITIES:Short-term bank loans—net (184) 2 (1,835)Proceeds from long-term debt — 2 —Repayment of long-term debt (872) (3,688) (8,703)Repayment of obligations under finance lease (121) — (1,205)Contributions from minority shareholders — 4 —Cash dividends paid (696) (737) (6,946)Cash dividends paid to minority shareholders (52) (165) (515)Other—net 1 (99) 1
Net cash used in financing activities (1,924) (4,681) (19,203)
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS ON CASH AND CASH EQUIVALENTS 29 587 296
INCREASE IN CASH AND CASH EQUIVALENTS 3,360 2,045 33,542CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 17,404 15,161 173,708CASH AND CASH EQUIVALENTS OF NEWLY CONSOLIDATED SUBSIDIARIES, BEGINNING OF YEAR — 198 —
CASH AND CASH EQUIVALENTS, END OF YEAR ¥ 20,764 ¥ 17,404 $ 207,250
See notes to consolidated financial statements.
Yusen Air & Sea Service Co., Ltd. and Consolidated Subsidiaries for the Years Ended March 31, 2008 and 2007
29
Notes to Consolidated Financial StatementsYusen Air & Sea Service Co., Ltd. and Consolidated Subsidiaries for the Years Ended March 31, 2008 and 2007
1. BASIS OF PRESENTING CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements have been prepared in accordance with the provisions set forth in the Japanese Corporate Law and Financial Instruments and Exchange Law (Formerly, Securities and Exchange Law) and its related accounting regulations and in conformity with accounting principles generally accepted in Japan (“Japanese GAAP”), which are different in certain respects as to application and disclosure requirements of International Financial Reporting Standards.
In preparing these consolidated financial statements, certain reclassifications and rearrangements have been made to the
consolidated financial statements issued domestically in order to present them in a form of which is more familiar to readers outside Japan.
The consolidated financial statements are stated in Japanese yen, the currency of the country in which Yusen Air & Sea Service Co., Ltd. (the “Company”) is incorporated and operates. The translations of Japanese yen amounts into U.S. dollar amounts are included solely for the convenience of readers outside Japan and have been made at the rate of ¥100.19 to $1, the approximate rate of exchange at March 31, 2008. Such translations should not be construed as representations that the Japanese yen amounts could be converted into U.S. dollars at that or any other rate.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Consolidation—The consolidated financial statements as of March 31, 2008 include the accounts of the Company and its 34 significant (34 in 2007) subsidiaries (together, the “Group”) listed below:
Consolidated SubsidiariesEquity
OwnershipPercentage*1
Capital Stock*1
Yusen Air & Sea Service (U.S.A.) Inc. 100.00% US$14,000 thousandYusen Air & Sea Service (H.K.) Ltd. 100.00 HK$55,000 thousandYusen Air & Sea Service (Singapore) Pte. Ltd. 100.00 S$16,700 thousandYusen Air & Sea Service (Europe) B.V. 100.00 EUR18,518 thousandYusen Air & Sea Service (Benelux) B.V. 100.00*2 EUR700 thousandYusen Air & Sea Service (Deutschland) GmbH. 100.00*2 EUR4,000 thousandYusen Air & Sea Service (U.K.) Ltd. 100.00*2 STG1,050 thousandYusen Air & Sea Service (Australia) Pty. Ltd. 100.00*3 A$1,500 thousandYusen Air & Sea Service (Canada) Inc. 100.00 C$5,000 thousandYusen Air & Sea Service (France) S.a.r.l. 100.00*2 EUR4,700 thousandYusen Air & Sea Service (Taiwan) Ltd. 100.00*4 NT$22,505 thousandYusen Air & Sea Service (Italia) S.r.l. 100.00*2 EUR774 thousandYusen Air & Sea Service (China) Ltd. 100.00*5 HK$11,000 thousandP.T. Yusen & Sea Service Indonesia 80.00*6 US$177 thousandYusen Air & Sea Service Management (Thailand) Co., Ltd. 49.00*7 THB10 millionYusen Air & Sea Service (Thailand) Co., Ltd. 100.00*8 THB100 millionYusen Shenda Air & Sea Service (Shanghai) Ltd. 50.00*9 RMB16,457 thousandYusen Air & Sea Service (Beijing) Co., Ltd. 75.00*10 RMB9,312 thousandYusen Air & Sea Service (Korea) Co., Ltd. 100.00 KRW2,000 millionYusen Air & Sea Service (Vietnam) Co., Ltd. 49.00*7 US$600 thousandYusen Air & Sea Service Philippines Inc. 51.00 PHP175,000 thousandYusen Air Logitec (Hamamatsu) Co., Ltd. 100.00 ¥20 millionYusen Air & Sea Service Keihin Trans Co., Ltd. 90.00 ¥36 millionYusen Air & Sea Service (Kitakanto) Co., Ltd. 80.00 ¥50 millionYusen Air & Sea Service (Tsukuba) Co., Ltd. 100.00 ¥50 millionYusen Travel Co., Ltd. 100.00 ¥270 millionYusen Air & Sea Service (Shinshu) Co., Ltd. 90.00 ¥50 millionYusen Air & Sea Service (Tohoku) Co., Ltd. 100.00 ¥30 millionYusen Air Logitec Co., Ltd. 100.00 ¥20 millionRyowa Diamond Air Service Co., Ltd. 99.17*11 ¥50 millionYusen Air & Sea Service (Kyushu) Co., Ltd. 100.00 ¥30 millionYusen Air & Sea Service (Hokuriku) Co., Ltd. 100.00 ¥20 millionYusen Air & Sea Service (Chugoku) Co., Ltd. 80.00 ¥30 millionYusen Air Loginet Co., Ltd. 100.00 ¥20 million
*1 as of March 31, 2008*2 owned 100.00% by Yusen Air & Sea
Service (Europe) B.V.*3 owned 80.00% by the Company,
20.00% by Yusen Air & Sea Service (Singapore) Pte. Ltd.
*4 owned 60.01% by the Company, 39.99% by Yusen Air & Sea Service (H.K.) Ltd.
*5 owned 100.00% by Yusen Air & Sea Service (H.K.) Ltd.
*6 owned 10.50% by the Company, 69.50% by Yusen Air & Sea Service (Singapore) Pte. Ltd.
*7 owned 49.00% by Yusen Air & Sea Service (Singapore) Pte. Ltd.
*8 owned 51.00% by Yusen Air & Sea Service Management (Thailand) Co., Ltd., 49.00% by Yusen Air & Sea Service (Singapore) Pte. Ltd.
*9 owned 50.00% by Yusen Air & Sea Service (H.K.) Ltd.
*10 owned 75.00% by Yusen Air & Sea Service (H.K.) Ltd.
*11 owned 99.17% by Yusen Travel Co., Ltd.
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Under the control or influence concept, those companies in which the Company, directly or indirectly, is able to exercise control over operations are fully consolidated, and those companies over which the Group has the ability to exercise significant influences are accounted for by the equity method.
Investments in 3 (3 in 2007) unconsolidated subsidiaries are accounted for by the equity method. Investments in the remaining unconsolidated subsidiaries and affiliate companies are stated at cost, which is determined by moving-average method. If the equity method of accounting had been applied to the investments in these companies, the effect on the accompanying consolidated financial statements would not be material.
The excess of the cost of an acquisition over the fair value of the net assets of the acquired subsidiaries at the date of acquisition is being amortized over a period of 5 years.
All significant intercompany balances and transactions have been eliminated in consolidation. All material unrealized profit included in assets resulting from transactions within the Group is eliminated.
b. Cash Equivalents—Cash equivalents are short-term investments that are readily convertible into cash and that are exposed to insignificant risk of changes in value. Cash equivalents include time deposits of which mature or become due within three months of the date of acquisition.
c. Investments in Securities—Securities are classified into three categories, depending on management’s intent: trading, available-for-sale securities or held-to-maturity. The Company classifies all investments in securities as available-for-sale securities. Marketable available-for-sale securities are reported at fair value, with unrealized gains and losses, net of applicable taxes, reported in a separate component of equity. Non-marketable available-for-sale securities are stated at cost determined by the moving-average method. For other than temporary declines in fair value, non-marketable investment securities are reduced to net realizable value by a charge to income.
d. Property, Plant and Equipment—Property, plant and equipment are stated at cost. Depreciation of property, plant and equipment of the Company and domestic consolidated subsidiaries is computed substantially by the declining-balance method at rates based on the estimated useful lives of the assets, except for the buildings and structures at Toyooka distribution center, Iwata distribution center and Yusen Air Fukumoto building which are depreciated on the straight-line method. The depreciation of property, plant and equipment of foreign consolidated subsidiaries is generally computed by the straight-line method over the estimated useful lives of the assets. The range of useful lives is principally as follows:
Buildings and structures 3–60 yearsFurniture and fixtures 2–20 yearsMachinery, equipment and vehicles 4–6 years
e. Other Assets—Amortization of intangible assets included in other assets is computed by the straight-line method. Software for internal use is amortized over a five-year period.
f. Impairment of Long-lived Assets—The Group reviews its long-lived assets for impairment whenever events or changes in circumstance indicate the carrying amount of an asset or asset group may not be recoverable. An impairment loss would be recognized if the carrying amount of an asset or asset group exceeds the sum of the undiscounted future cash flows expected to result from the continued use and eventual disposition of the asset or asset group. The impairment loss would be measured as the amount by which the carrying amount of the asset exceeds its recoverable amount, which is the higher of the discounted cash flows from the continued use and eventual disposition of the asset or the net selling price at disposition.
g. Allowance for Doubtful Accounts—The Group provides the allowance for doubtful accounts based on the aggregated amount of estimated credit losses for doubtful receivables plus an amount for receivables other than doubtful receivables calculated using historical write off experience over a certain period.
h. Accrued Bonuses to Employees—Employees are paid bonuses in June of every year. The bonuses include amounts for services rendered during the previous fiscal year which are recorded as accrued bonuses on the balance sheet as of the respective fiscal year-end.
i. Accrued Pension and Severance CostsEmployee’s retirement and pension plans—The Company and certain domestic consolidated subsidiaries have a non-contributory funded defined benefit pension plan and an unfunded retirement benefit plan. The Company’s certain domestic consolidated subsidiaries have a contributory funded defined contribution pension plan, while certain foreign consolidated subsidiaries have either of a non-contributory funded defined benefit pension plan or a contributory funded defined contribution pension plan.
The liability for employees’ retirement benefits is accounted for based on projected benefit obligations and plan assets at the balance sheet date.
Retirement allowance for directors and corporate auditors—Retirement allowance for directors and corporate auditors for
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certain subsidiaries are recorded to state the liability at the amount that would be required if all directors and corporate auditors retired at each balance sheet date.
j. Presentation of Equity—On December 9, 2005, the ASBJ published a new accounting standard for presentation of equity. Under this accounting standard, certain items which were previously presented as assets or liabilities are now presented as components of equity. Such items include stock acquisition rights, minority interests, and any deferred gain and loss on derivatives accounted for under hedge accounting. This standard was effective for fiscal years ending on or after May 1, 2006. The balances of such items as of March 31, 2006 were reclassified as separate components of equity as of April 1, 2006 in the consolidated statement of changes in equity.
k. Leases—Finance leases other than those that are deemed to transfer the ownership of the leased assets to lessees are generally accounted for by the method that is applicable to ordinary operating leases.
l. Income Taxes—The provision for income taxes is computed based on the pretax income included in the consolidated statement of income. The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Deferred taxes are measured by applying currently enacted tax laws to the temporary differences.
m. Accounting for the Consumption Tax—In Japan, the consumption tax is imposed at a flat rate of 5% on all domestic consumption of goods and services (with certain exemptions). The consumption tax imposed on the Group’s domestic sales to customers is withheld by the Group at the time of sale and is paid to the national government subsequently. The consumption tax withheld upon sale and the consumption tax paid by the Group on the purchases of goods and services are not included in the related amounts in the accompanying consolidated statements of income.
n. Appropriation of Retained Earnings—Appropriations of retained earnings are reflected in the financial statements for the following year upon shareholders’ approval.
o. Treasury Stock—Under the Japanese Corporate Law, the Company is allowed to acquire its own shares to the extent that the aggregate cost of treasury stock does not exceed the maximum amount available for dividends. Treasury stock is stated at cost in the equity of the accompanying
consolidated balance sheets. Net gain on disposal of treasury stock is presented under “Capital surplus’’ in the equity of the accompanying consolidated balance sheets.
p. Foreign Currency Transactions—All short-term and long-term monetary receivables and payables denominated in foreign currencies are translated into Japanese yen at the exchange rates at the balance sheet date. The foreign exchange gains and losses from translation are recognized in the consolidated statement of income.
q. Foreign Currency Financial Statements—Foreigncurrency financial statements of foreign consolidated subsidiaries, and foreign subsidiaries accounted for by the equity method are translated into Japanese yen at the current exchange rate as of the balance sheet date except for equity, which is translated at historical rate. Differences arising from such translations were shown as “Foreign currency translation adjustments” in a separate component of equity.
r. Derivatives—The Group uses derivative financial instruments to manage their exposures to fluctuations in foreign exchange and interest rates. Foreign exchange forward contracts, interest rate swaps and currency swaps are utilized by the Group. The Group does not enter into derivatives for trading or speculative purposes.
Derivative financial instruments and foreign currency transactions are classified and accounted for as follows: (a) all derivatives are recognized as either assets or liabilities and measured at fair value, and gains or losses on derivative transactions are recognized in the consolidated statement of income and (b) for derivatives used for hedging purposes, if derivatives qualify for hedge accounting because of high correlation and effectiveness between the hedging instruments and the hedged items, gains or losses on derivatives are deferred until maturity of the hedged transactions.
The foreign exchange forward contracts employed to hedge foreign exchange exposures in the Group’s operating activities measured at the fair value and the unrealized gains/losses are recognized in income. Interest rate swaps and currency swaps are utilized to hedge interest rate exposures of long-term debt. While currency swaps are measured at fair value and the unrealized gains/losses are recognized in earnings, interest rate swaps which qualify for hedge accounting and matching criteria are not remeasured at market value but the differential paid or received under the swap agreements are recognized and included in interest expense or income.
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s. Per Share Information—Net assets per share is computed based on the outstanding shares of common stock at relevant balance sheet dates.
Basic net income per share is computed by dividing net income available to shareholders by the weighted-average number of shares of common stock outstanding for the period.
Diluted net income per share for the years ended March 31, 2008 and 2007 is not presented since the Company had no securities with dilutive effect.
Cash dividends per share presented in the accompanying consolidated statements of income are dividends applicable to the respective years including dividends to be paid after the end of the year.
t. New Accounting PronouncementsLease Accounting—On March 30, 2007, the ASBJ issued ASBJ Statement No. 13, “Accounting Standard for Lease Transactions,” which revised the existing accounting standard for lease transactions issued on June 17, 1993.
Under the existing accounting standard, finance leases that deem to transfer ownership of the leased property to the lessee are to be capitalized, however, other finance leases are permitted to be accounted for as operating lease transactions if certain “as if capitalized” information is disclosed in the note to the lessee’s financial statements.
The revised accounting standard requires that all finance lease transactions should be capitalized. The revised accounting standard for lease transactions is effective for fiscal years beginning on or after April 1, 2008, with early adoption permitted for fiscal years beginning on or after April 1, 2007.
Unification of Accounting Policies Applied to Foreign Subsidiaries for the Consolidated Financial Statements—Under Japanese GAAP, a company currently can use the financial statements of foreign subsidiaries which are prepared
in accordance with generally accepted accounting principles in their respective jurisdictions for its consolidation process unless they are clearly unreasonable. On May 17, 2006, the ASBJ issued ASBJ PITF No. 18, “Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for the Consolidated Financial Statements.” The new task force prescribes: (1) the accounting policies and procedures applied to a parent company and its subsidiaries for similar transactions and events under similar circumstances should in principle be unified for the preparation of the consolidated financial statements, (2) financial statements prepared by foreign subsidiaries in accordance with either International Financial Reporting Standards or the generally accepted accounting principles in the United States tentatively may be used for the consolidation process, (3) however, the following items should be adjusted in the consolidation process so that net income is accounted for in accordance with Japanese GAAP unless they are not material;
(1) Amortization of goodwill (2) Actuarial gains and losses of defined benefit plans
recognized outside profit or loss(3) Capitalization of intangible assets arising from
development phases(4) Fair value measurement of investment properties, and
the revaluation model for property, plant and equipment, and intangible assets
(5) Retrospective application when accounting policies are changed
(6) Accounting for net income attributable to a minority interest
The new task force is effective for fiscal years beginning on or after April 1, 2008 with early adoption permitted.
3. LOSS ON IMPAIRMENT OF FIXED ASSETS
The Group reviewed its long-lived assets for impairment as of the year ended March 31, 2008, and, as a result, recognized an impairment loss of ¥104 million ($1,039 thousand) on idle assets and assets to be disposed of due to a significant
decline in their market value. The impairment losses consisted of ¥95 million ($943 thousand) on land in Osaka and ¥9 million ($96 thousand) on buildings and structures in Shanghai. The carrying amounts of the relevant assets were written down to the recoverable amounts.
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4. INVESTMENTS IN SECURITIES
Detailed information about the investments in securities classified as “available-for-sale securities” at March 31, 2008 and 2007 is as follows:
(1) Available-for-sale securities for which market quotations are available:Millions of yen Thousands of U.S. dollars
2008 2007 2008
CostFair Value (CarryingAmount)
Difference CostFair Value (CarryingAmount)
Difference CostFair Value (CarryingAmount)
Difference
Securities for which market value exceeds cost—
Equity securities ¥ 230 ¥ 552 ¥ 322 ¥ 663 ¥ 1,063 ¥ 400 $ 2,291 $ 5,508 $ 3,217
Securities for which market value does not exceed cost—
Equity securities 827 624 (203) 277 241 (36) 8,257 6,226 (2,031)
Total ¥ 1,057 ¥ 1,176 ¥ 119 ¥ 940 ¥ 1,304 ¥ 364 $ 10,548 $ 11,734 $ 1,186
(2) Available-for-sale securities for which market quotations are not available:Carrying Amount
Millions of yen Thousands of U.S. dollars
2008 2007 2008
Available-for-sale securities:
Unlisted equity securities ¥ 440 ¥ 475 $ 4,398
Corporate bonds 167 157 1,663
Total ¥ 607 ¥ 632 $ 6,061
(3) The future redemption schedule of available-for-sale securities with maturities comprises the following:Millions of yen Thousands of U.S. dollars
2008 2007 2008
WithinOne Year
OverOne Year but within Five Years
Over Five Years
WithinOne Year
OverOne Year but within Five Years
Over Five Years
WithinOne Year
OverOne Year but within Five Years
Over Five Years
Debt securities—Corporate bonds — ¥ 167 — — ¥ 157 — — $ 1,663 —
Total — ¥ 167 — — ¥ 157 — — $ 1,663 —
(4) Proceeds from sale of available-for-sale securities and total amounts of gain and loss on sale of available-for-sale securities:Millions of yen Thousands of U.S. dollars
2008 2007 2008
Proceeds from sale of available-for-sale securities ¥ 1 ¥ 0 $ 12
Total amount of gain on sale of available-for-sale securities 0 0 3
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5. SHORT-TERM BANK LOANS AND LONG-TERM DEBT
Short-term bank loans at March 31, 2008 and 2007 consisted of notes to banks and bank overdrafts. The weighted-average interest rate applicable to the short-term bank loans was 3.47% and 4.64% at March 31, 2008 and 2007, respectively. Long-term debt at March 31, 2008 and 2007 consisted of the following:
Millions of yenThousands of U.S. dollars
2008 2007 2008
Loans from banks and other financial institutions, due serially to 2011 with average interest rates of 0.90% (2008) and 0.90% (2007):
Collateralized ¥ 20 ¥ 40 $ 200
Unsecured 3,001 3,852 29,955
Finance lease obligation 235 — 2,347
Total 3,256 3,892 32,502
Less current portion (1,628) (871) (16,248)
Long-term debt, less current portion ¥ 1,628 ¥ 3,021 $ 16,254
Annual maturities of long-term debt at March 31, 2008, were as follows:
Year Ending March 31 Millions of yenThousands of U.S. dollars
2009 ¥ 1,628 $ 16,248
2010 597 5,970
2011 1,020 10,179
2012 10 96
2013 1 9
Total ¥ 3,256 $ 32,502
The carrying amount of assets pledged as collateral for the above-mentioned collateralized long-term debt at March 31, 2008 and 2007 were as follows:
Millions of yenThousands of U.S. dollars
2008 2007 2008
Investments in securities ¥ 104 ¥ 165 $ 1,041
As is customary in Japan, the Company maintains substantial deposit balances with banks with which it has borrowings.Such deposit balances are not legally or contractually restricted as to withdrawal.
General agreements with respective banks provide, as is customary in Japan, that additional collateral must be provided under certain circumstances if requested by such banks and that certain banks have the right to offset cash deposited with them against any long-term or short-term debt or obligation that becomes due and, in case of default and certain other specified events, against all other debt payable to the banks. The Company has never been requested to provide any additional collateral.
6. RETIREMENT AND PENSION PLANS
The Company and certain consolidated subsidiaries have severance payment plans for employees, directors and corporate auditors. Under most circumstances, employees terminating their employment are entitled to retirement benefits determined based on the rate of pay at the time of termination, years of service and certain other factors. Such retirement benefits are made in the form of a lump-sum severance payment from the Company or from certain consolidated subsidiaries and annuity payments from a trustee. Employees are entitled to larger payments if the termination is involuntary, by retirement at the mandatory retirement age, by death, or by voluntary retirement at certain specific ages prior to the mandatory retirement age.
Since the year ended December 31, 2006, Yusen Air & Sea Service (U.S.A) Inc. has adopted SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans” and has recognized the actuarial differences which were not included in periodic cost as liability and equity, after considering tax effect.
Accrued pension and severance costs for employees at March 31, 2008 and 2007 consisted of the following:
Millions of yenThousands of U.S. dollars
2008 2007 2008
Projected benefit obligation ¥ 10,131 ¥ 10,014 $ 101,115
Fair value of plan assets (6,315) (6,543) (63,024)
Unrecognized actuarial (gain) loss (688) 25 (6,873)
Prepaid pension cost 699 457 6,975Accrued pension and severance costs for employees ¥ 3,827 ¥ 3,953 $ 38,193
The components of net periodic benefit costs for the years ended March 31, 2008 and 2007 are as follows:
Millions of yenThousands of U.S. dollars
2008 2007 2008
Service cost ¥ 602 ¥ 614 $ 6,018
Interest cost 255 242 2,543
Expected return on plan assets (243) (209) (2,427)Amortization of unrecognized actuarial loss 72 88 715
Past service cost 1 (123) 5
Total ¥ 687 ¥ 612 $ 6,854
Assumptions used for the years ended March 31, 2008 and 2007 are set forth as follows:
2008 2007
Discount rate Principally 2.0% Principally 2.0%Expected rate of return on plan assets Principally 3.0% Principally 3.0%
Recognition period of actuarial gain/loss
Principally10 years
Principally10 years
Amortization period of prior service cost 1 year 1 year
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7. EQUITY
Since May 1, 2006, Japanese companies have been subject to a new corporate law of Japan (the “Corporate Law”), which reformed and replaced the Commercial Code of Japan with various revisions that are, for the most part, applicable to events or transactions which occur on or after May 1, 2006 and for the fiscal years ending on or after May 1, 2006. The significant changes in the Corporate Law that affect financial and accounting matters are summarized below:
a. DividendsUnder the Corporate Law, companies can pay dividends at any time during the fiscal year in addition to the year-end dividend upon resolution at the shareholders meeting. For companies that meet certain criteria such as; (1) having the board of directors, (2) having independent auditors, (3) having the board of corporate auditors, and (4) the term of service of the directors is prescribed as one year rather than two years of normal term by its articles of incorporation, the board of directors may declare dividends (except for dividends in kind) at any time during the fiscal year if the company has prescribed so in its articles of incorporation. The Company meets all the above criteria.
Semiannual interim dividends may also be paid once a year upon resolution by the board of directors if the articles of incorporation of the company so stipulate. The Corporate Law provides certain limitations on the amounts available for dividends or the purchase of treasury stock. The limitation is defined as the amount available for distribution to the shareholders, but the amount of net assets after dividends must be maintained at no less than ¥3 million.
b. Increases/Decreases and Transfer of Common Stock, Reserve and Surplus
The Corporate Law requires that an amount equal to 10% of dividends must be appropriated as a legal reserve (a component of retained earnings) or as additional paid-in capital (a component of capital surplus) depending on the equity account charged upon the payment of such dividends until the total of aggregate amount of legal reserve and additional paid-in capital equals 25% of the common stock. Under the Corporate Law, the total amount of additional paid-in capital and legal reserve may be reversed without limitation. The Corporate Law also provides that common stock, legal reserve, additional paid-in capital, other capital surplus and retained earnings can be transferred among the accounts under certain conditions upon resolution of the shareholders.
c. Treasury Stock and Treasury Stock Acquisition Rights
The Corporate Law also provides for companies to purchase treasury stock and dispose of such treasury stock by resolution of the board of directors. The amount of treasury stock purchased cannot exceed the amount available for distribution to the shareholders which is determined by specific formula.
Under the Corporate Law, stock acquisition rights, which were previously presented as a liability, are now presented as a separate component of equity.
The Corporate Law also provides that companies can purchase both treasury stock acquisition rights and treasury stock. Such treasury stock acquisition rights are presented as a separate component of equity or deducted directly from stock acquisition rights.
8. INCOME TAXES
The Company and domestic consolidated subsidiaries are subject to Japanese national and local income taxes which, in the aggregate, resulted in a normal effective statutory rate of approximately 40.4% for the years ended March 31, 2008 and 2007.
The tax effects of significant temporary differences resulted in deferred tax assets and liabilities at March 31, 2008 and 2007 are as follows:
Millions of yenThousands of U.S. dollars
2008 2007 2008
Deferred tax assets: Accrued pension and
severance costs for employees ¥ 1,348 ¥ 1,250 $ 13,455
Accrued bonuses to employees 642 596 6,413
Accrued enterprise tax 158 146 1,572
Accrued pension and severance costs for directors and corporate auditors
124 133 1,241
Allowance for doubtful accounts 155 154 1,551
Depreciation 278 — 2,774
Tax loss carryforward — 2 — Loss on impairment of
fixed assets 403 364 4,019
Others 276 651 2,748
Total 3,384 3,296 33,773
Less valuation allowance (354) (326) (3,537)
Total deferred tax assets 3,030 2,970 30,236
Deferred tax liabilities:
Depreciation 100 143 996
Prepaid pension expenses 215 136 2,142
Others 57 143 570
Total deferred tax liabilities 372 422 3,708
Net deferred tax assets ¥ 2,658 ¥ 2,548 $ 26,528
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The reconciliation of the difference between the normal effective tax rates and the actual effective tax rates reflected in the accompanying consolidated statements of income for the years ended March 31, 2008 and 2007 is as follows:
2008 2007
Normal effective tax rate 40.4% 40.4%
Adjustments: Entertainment expenses and
other non-deductible permanent differences 0.7 0.7
Dividends income not taxable (0.6) (1.1) Effective of elimination of intercompany
dividends received 3.4 4.1
Per capita levy of local tax 0.5 0.6 Lower income tax rates applicable
to income in certain foreign countries (7.5) (6.5)
Other—net (0.8) 0.1
Actual effective tax rate 36.1% 38.3%
9. LEASES
The Group has various lease agreements whereby the Group acts as lessee.Total lease payments under finance lease arrangements that do not transfer ownership of the leased property to the lessee
were ¥29 million ($293 thousand) and ¥46 million for the years ended March 31, 2008 and 2007, respectively.Pro forma information of leased property such as acquisition cost, accumulated depreciation, and obligations under finance
leases that do not transfer ownership of the leased property to the lessee on an “as if capitalized” basis for the years ended March 31, 2008 and 2007 was as follows:
Millions of yen
2008 2007
Machinery,Equipment
and Vehicles
Furniture and Fixtures Software Total
Machinery,Equipment
and Vehicles
Furniture and Fixtures Software Total
Acquisition cost ¥ 65 ¥ 28 ¥ 22 ¥ 115 ¥ 71 ¥ 42 ¥ 86 ¥ 199
Accumulated depreciation (26) (21) (21) (68) (40) (29) (74) (143)
Net leased property ¥ 39 ¥ 7 ¥ 1 ¥ 47 ¥ 31 ¥ 13 ¥ 12 ¥ 56
Thousands of U.S. dollars
2008
Machinery,Equipment
and Vehicles
Furniture and Fixtures Software Total
Acquisition cost $ 651 $ 283 $ 215 $ 1,149
Accumulated depreciation (257) (213) (211) (681)
Net leased property $ 394 $ 70 $ 4 $ 468
Obligation under finance leases which includes the imputed interest expense portion, and non-cancelable operating leases as of March 31, 2008 and 2007 were as follows:
Millions of yen Thousands of U.S. dollars
2008 2007 2008
Finance Lease Operating Lease Finance Lease Operating Lease Finance Lease Operating Lease
Due within one year ¥ 18 ¥ 1,788 ¥ 29 ¥ 985 $ 177 $ 17,850
Due over one year 29 6,027 27 5,274 291 60,151
Total ¥ 47 ¥ 7,815 ¥ 56 ¥ 6,259 $ 468 $ 78,001
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10. DERIVATIVES
The Group enters into derivative financial instruments, including interest swap, foreign currency forward contracts and currency swaps, to reduce the exposure to fluctuations in interest rates risk and foreign exchange rates risk associated with certain assets and liabilities denominated in foreign currencies.
All derivative transactions are entered into to hedge interest and foreign currency exposures incorporated within its business. Accordingly, market risk in these derivatives is basically offset by opposite movements in the value of hedged assets or liabilities.
Because the counterparties to these derivatives are limited to major international financial institutions, the Group does not anticipate any losses arising from credit risk.
Derivative transactions entered into by the Group have been made in accordance with internal policies which regulate the authorization.
The Group had the following derivatives contracts outstanding at March 31, 2008 and 2007:Millions of yen Thousands of U.S. dollars
2008 2007 2008Contracts
OutstandingUnrealizedGain (Loss)
ContractsOutstanding
UnrealizedGain (Loss)
ContractsOutstanding
UnrealizedGain (Loss)
Foreign currency forward contracts:Selling U.S. dollar ¥ 705 ¥ 7 ¥ 36 ¥ 0 $ 7,040 $ 73Selling euro 48 1 — — 481 10Buying U.S. dollar 389 (4) 492 1 3,886 (41)Buying Swiss franc 49 1 24 0 488 7Buying Singaporean dollar 4 (0) 4 (0) 40 (1)Buying Japanese yen 15 (0) 21 (0) 154 (2)Buying pounds sterling 65 (0) 37 0 648 (4)Buying Hong Kong dollar 192 (3) 161 (1) 1,911 (29)Buying Thai baht 56 (1) 96 1 558 (6)Buying euro 453 5 136 2 4,523 53Buying Swedish kronor 11 0 16 0 106 1Buying Canadian dollar 25 (1) — — 247 (4)
Currency swap transactions—Thai baht receipt, Singaporean dollar payment — — 364 (16) — —
Interest swap contracts which qualify for hedge accounting for the years ended March 31, 2008 and 2007 are excluded from the disclosure of market value information.
The contract or notional amounts of derivatives which are shown in the above table do not represent the amounts exchanged by the parties and do not measure the Group’s exposure to credit or market risk.
11. COMMITMENTS AND CONTINGENT LIABILITIES
The Group was contingently liable for guarantees of trade payables and bank loans owed by their unconsolidated subsidiaries, affiliate companies and a third party company in an amount of ¥95 million ($947 thousand) and ¥103 million at March 31, 2008 and 2007, respectively.
On April 16, 2008, the Japan Fair Trade Commission conducted an investigation of the Company on suspicion of violating the Antimonopoly Act in respect to the air fares and fuel surcharges for international forwarding. This inspection may have an effect on the financial position of the Company in the future, however, it is difficult to foresee the outcome of the investigation as of the submission date of the annual security report.
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12. BREAKDOWN OF SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses during the years ended March 31, 2008 and 2007 are summarized as follows:Millions of yen Thousands of U.S. dollars
2008 2007 2008Labor and payroll cost ¥ 15,206 ¥ 14,507 $ 151,774Provision for accrued bonuses to employees 1,171 1,122 11,683Provision for accrued pension and severance costs for:
Employees 557 489 5,558Directors and corporate auditors 107 105 1,065
Provision for doubtful accounts 41 34 413Depreciation 1,097 1,083 10,945Amortization of goodwill 9 7 95Other 17,378 16,554 173,450Total ¥ 35,566 ¥ 33,901 $ 354,983
13. SEGMENT INFORMATION
(1) Industry SegmentsThe Group operates principally in the following three industry segments:(1) Air and sea cargo(2) Travel(3) Other
The segment information of the Group in respect to the years ended March 31, 2008 and 2007, classified by industry segments are presented below:
Millions of yen
2008
Industry Segment Elimination or Unallocatable
Amounts
ConsolidatedTotalAir and Sea Cargo Travel Other Total
a. Net sales and operating incomeNet sales:
Net sales to outside customers ¥ 181,843 ¥ 5,509 ¥ 166 ¥ 187,518 — ¥ 187,518Inter-segment sales/transfers 0 — 1,356 1,356 ¥ (1,356) —
Total sales 181,843 5,509 1,522 188,874 (1,356) 187,518Operating expenses 172,331 4,988 1,338 178,657 (1,355) 177,302Operating income ¥ 9,512 ¥ 521 ¥ 184 ¥ 10,217 ¥ (1) ¥ 10,216b. Assets, depreciation and capital expendituresAssets ¥ 86,239 ¥ 6,713 ¥ 8,020 ¥ 100,972 ¥ (2,606) ¥ 98,366Depreciation 1,714 52 125 1,891 — 1,891Capital expenditures 1,910 25 33 1,968 — 1,968
Millions of yen
2007
Industry Segment Elimination or Unallocatable
Amounts
ConsolidatedTotalAir and Sea Cargo Travel Other Total
a. Net sales and operating incomeNet sales:
Net sales to outside customers ¥ 177,178 ¥ 5,301 ¥ 138 ¥ 182,617 — ¥ 182,617Inter-segment sales/transfers 0 0 1,038 1,038 ¥ (1,038) —
Total sales 177,178 5,301 1,176 183,655 (1,038) 182,617Operating expenses 167,430 4,720 1,077 173,227 (1,048) 172,179Operating income ¥ 9,748 ¥ 581 ¥ 99 ¥ 10,428 ¥ 10 ¥ 10,438b. Assets, depreciation and capital expendituresAssets ¥ 79,859 ¥ 6,588 ¥ 8,154 ¥ 94,601 ¥ (5,034) ¥ 89,567Depreciation 1,747 50 108 1,905 — 1,905Capital expenditures 1,168 70 18 1,251 — 1,251
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Thousands of U.S. dollars
2008
Industry Segment Elimination or Unallocatable
Amounts
ConsolidatedTotalAir and Sea Cargo Travel Other Total
a. Net sales and operating income
Net sales:
Net sales to outside customers $ 1,814,978 $ 54,988 $ 1,660 $ 1,871,626 — $ 1,871,626
Inter-segment sales/transfers 1 — 13,527 13,528 $ (13,528) —
Total sales 1,814,979 54,988 15,187 1,885,154 (13,528) 1,871,626
Operating expenses 1,720,038 49,788 13,352 1,783,178 (13,516) 1,769,662
Operating income $ 94,941 $ 5,200 $ 1,835 $ 101,976 $ (12) $ 101,964
b. Assets, depreciation and capital expenditures
Assets $ 860,747 $ 67,007 $ 80,052 $ 1,007,806 $ (26,015) $ 981,791
Depreciation 17,111 522 1,245 18,878 — 18,878
Capital expenditures 19,068 246 332 19,646 — 19,646
Note: The amounts of the common assets included in the column “Elimination or unallocatable amounts” were ¥5,083 million ($50,738 thousand) and ¥3,809 million for the years ended March 31, 2008 and 2007, respectively, which mainly consisted of surplus funds (cash and securities).
(2) Geographical SegmentsThe segment information of the Group in respect of the years ended March 31, 2008 and 2007, classified by geographic segments are presented below:
Millions of yen
2008
Geographic Segment Elimination or Unallocatable
Amounts
ConsolidatedTotalJapan North America Europe East Asia South Asia
and Oceania Total
a. Net sales and operating income
Net sales:
Net sales to outside customers ¥ 87,107 ¥ 16,885 ¥ 20,345 ¥ 34,883 ¥ 28,298 ¥ 187,518 — ¥ 187,518
Inter-segment sales/transfers 248 873 1,072 302 222 2,717 ¥ (2,717) —
Total sales 87,355 17,758 21,417 35,185 28,520 190,235 (2,717) 187,518
Operating expenses 83,139 16,764 20,416 32,854 26,782 179,955 (2,653) 177,302
Operating income ¥ 4,216 ¥ 994 ¥ 1,001 ¥ 2,331 ¥ 1,738 ¥ 10,280 ¥ (64) ¥ 10,216
b. Assets ¥ 53,260 ¥ 9,578 ¥ 14,411 ¥ 16,098 ¥ 12,219 ¥ 105,566 ¥ (7,200) ¥ 98,366
Millions of yen
2007
Geographic Segment Elimination or Unallocatable
Amounts
ConsolidatedTotalJapan North America Europe East Asia South Asia
and Oceania Total
a. Net sales and operating income
Net sales:
Net sales to outside customers ¥ 82,484 ¥ 16,325 ¥ 18,346 ¥ 38,769 ¥ 26,693 ¥ 182,617 — ¥ 182,617
Inter-segment sales/transfers 273 1,039 890 311 222 2,735 ¥ (2,735) —
Total sales 82,757 17,364 19,236 39,080 26,915 185,352 (2,735) 182,617
Operating expenses 78,056 16,509 17,915 36,810 25,591 174,881 (2,702) 172,179
Operating income ¥ 4,701 ¥ 855 ¥ 1,321 ¥ 2,270 ¥ 1,324 ¥ 10,471 ¥ (33) ¥ 10,438
b. Assets ¥ 50,347 ¥ 9,049 ¥ 13,286 ¥ 15,537 ¥ 9,885 ¥ 98,104 ¥ (8,537) ¥ 89,567
40
Thousands of U.S. dollars
2008
Geographic Segment Elimination or Unallocatable
Amounts
ConsolidatedTotalJapan North America Europe East Asia South Asia
and Oceania Total
a. Net sales and operating income
Net sales:
Net sales to outside customers $ 869,422 $ 168,526 $ 203,068 $ 348,166 $ 282,444 $1,871,626 — $1,871,626
Inter-segment sales/transfers 2,471 8,715 10,700 3,019 2,212 27,117 $ (27,117) —
Total sales 871,893 177,241 213,768 351,185 284,656 1,898,743 (27,117) 1,871,626
Operating expenses 829,812 167,321 203,773 327,915 267,313 1,796,134 (26,472) 1,769,662
Operating income $ 42,081 $ 9,920 $ 9,995 $ 23,270 $ 17,343 $ 102,609 $ (645) $ 101,964
b. Assets $ 531,588 $ 95,602 $ 143,835 $ 160,676 $ 121,958 $1,053,659 $ (71,868) $ 981,791
Note: The amounts of the common assets included in the column “Elimination or unallocatable amounts” were ¥5,083 million ($50,738 thousand) and ¥3,809 million for the years ended March 31, 2008 and 2007, respectively, which mainly consisted of surplus funds (cash and securities).
(3) Net Sales in Foreign CountriesNet sales in foreign countries for the years ended March 31, 2008 and 2007 are presented below:
Millions of yenThousands of U.S. dollars
2008 2007 2008
Net sales in foreign countries:
North America ¥ 17,033 ¥ 16,450 $ 170,006
Europe 20,556 18,437 205,168
East Asia 35,071 38,930 350,045
South Asia and Oceania 28,554 26,959 284,994
Others 6 3 72
Total ¥101,220 ¥100,779 $1,010,285Percentage of such sales against consolidated net sales 54.0% 55.2%
14. PER SHARE INFORMATION
Per share information for the years ended March 31, 2008 and 2007 are summarized as follows:
Yen U.S. dollars
2008 2007 2008
Net assets per share ¥1,368.84 ¥1,213.90 $13.662
Basic net income per share 172.43 159.46 1.721
Diluted net income per share is not mentioned since there was no securities with dilutive effect for the years ended March 31, 2008 and 2007.
Per share information is computed based on the following:
Millions of yenThousands of U.S. dollars
2008 2007 2008
Net income ¥ 7,271 ¥ 6,722 $ 72,576
Net income not subject to distribution to common shareholders
— — —
Net income subject to current and future distribution to common stock
7,271 6,722 72,576
Number of Shares of Common Stock
2008 2007Weighted-average shares for the period 42,170,139 42,154,057
15. SUBSEQUENT EVENT
The Company made an appropriation of retained earnings, proposed by the board of directors and approved by shareholders at the general meeting on June 27, 2008, as follows:
Millions of yen Thousands of U.S. dollars
Cash dividends (¥11 ($0.110) per share) ¥ 463 $ 4,630
41
Independent Auditors’ Report
42
AMERICAS
Yusen Air & Sea Service (U.S.A.) Inc. * Yusen Air & Sea Service (Canada) Inc. * Yusen Air & Sea Service do Brasil Ltda. Yusen Travel (U.S.A.) Inc.
EUROPE
Yusen Air & Sea Service (Europe) B.V. * Yusen Air & Sea Service (Benelux) B.V. * Yusen Air & Sea Service (Deutschland) GmbH. * Yusen Air & Sea Service (U.K.) Ltd. * Yusen Air & Sea Service (France) S.a.r.l. * Yusen Air & Sea Service (Italia) S.r.l. * Yusen Air & Sea Service (Czech) s.r.o. Yusen Air & Sea Service (RUS) LLC
EAST ASIA
Yusen Air & Sea Service (H.K.) Ltd. * Yusen Air & Sea Service (China) Ltd. * Yusen Air & Sea Service Logistics (Shanghai) Co., Ltd. Yusen Shenda Air & Sea Service (Shanghai) Ltd. * Yusen Air Logistics (Xiamen) Co., Ltd. Yusen Air & Sea Service (Beijing) Co., Ltd. * Yusen Air & Sea Service Logistics (Shenzhen) Ltd. Yusen Air & Sea Service (Guangdong) Ltd. Yusen Air & Sea Service (Taiwan) Ltd. * Yusen Air & Sea Service (Korea) Co., Ltd. * Yusen Travel (H.K.) Ltd.
SOUTH ASIA AND OCEANIA
Yusen Air & Sea Service (Singapore) Pte. Ltd. * P.T. Yusen Air & Sea Service Indonesia* Yusen Air & Sea Service (Australia) Pty. Ltd. * Yusen Air & Sea Service Philippines Inc. * Yusen Air & Sea Service (Thailand) Co., Ltd. * Yusen Air & Sea Service Management (Thailand) Co., Ltd. * Yusen Air & Sea Service (Vietnam) Co., Ltd. * Yusen Air & Sea Service (India) Pvt. Ltd. YAS Real Estate (Vietnam) Co., Ltd. Trans Asia Shipping Corporation Bhd. (Tasco) Yusen Travel (Singapore) Pte. Ltd.
JAPAN
Yusen Air & Sea Service (Tohoku) Co., Ltd. * Yusen Air & Sea Service (Kitakanto) Co., Ltd. * Yusen Air & Sea Service (Tsukuba) Co., Ltd. * Yusen Air & Sea Service (Shinshu) Co., Ltd. * Yusen Air & Sea Service (Hokuriku) Co., Ltd. * Yusen Air & Sea Service (Chugoku) Co., Ltd. * Yusen Air & Sea Service (Kyushu) Co., Ltd. * Yusen Air Logitec Co., Ltd. * Yusen Air & Sea Service Keihin Trans Co., Ltd. * Yusen Travel Co., Ltd. * Ryowa Diamond Air Service Co., Ltd. * Yusen Air Loginet Co., Ltd. *
*Consolidated subsidiary Cargo freight business (air and sea cargo) Travel business Other business
Principal Group Companies (As of July 1, 2008)
43
Head Office
Yusen Hakozaki-cho Building,30-1, Nihonbashi Hakozaki-cho, Chuo-ku,Tokyo 103-0015, JapanPhone: +81-3-3669-4381Fax: +81-3-3669-8540URL: http://www.yusen.co.jp/
Established
February 28, 1955
Paid-in Capital
¥4,301 million
Common Shares
Authorized: 160,000,000Issued: 42,220,800
Number of Shareholders
5,230
Number of Employees (Consolidated)
5,065
Annual Meeting
The annual meeting of shareholders is held in June in Tokyo, Japan.
Independent Registered Public Accounting Firm
Deloitte Touche TohmatsuMS Shibaura Building, 13-23, Shibaura4-chome, Minato-ku, Tokyo 108-8530, Japan
Transfer Agent
The Mitsubishi UFJ Trust and Banking Corporation4-5, Marunouchi 1-chome, Chiyoda-ku,Tokyo 100-8212, Japan
Stock Listing
First Section of Tokyo Stock Exchange
Stock Price
Years ended March 31 (Yen)
2004 2005 2006 2007 20083,800 6,840 3,750 3,210
High 3,480 4,740 *1 3,480 *3
4,940 *2
3,310 3,500Low 1,100 3,640 *1 2,950 *3 2,330 1,066
4,290 *2
The above table sets forth the high and low sale prices in the:* 1 Tokyo Stock Exchange (from February 28, 2005);* 2 Jasdaq Securities Exchange (from December 13, 2004, to February 27, 2005)
Other data are based on announcements by the Japan Securities Dealers Association.
* 3 Indicates the ex-rights price by stock split.
Principal Shareholders
NameThousands of
sharesPercentage of voting rights
Nippon Yusen Kabushiki Kaisha (NYK) 25,123 59.68%
State Street Bank & Trust Co. 2,100 4.98%
Japan Trustee Services Bank, Ltd. (Trust Account) 1,437 3.41%
Trust & Custody Service Bank, Ltd. 1,224 2.90%
The Master Trust Bank of Japan, Ltd. (Trust Account) 1,140 2.70%
Morgan Stanley & Co. Incorporated. 749 1.78%
Yamato Holdings Co., Ltd. 605 1.43%
Bank of Tokyo-Mitsubishi UFJ, Ltd. 537 1.27%
RBC Dexia Investor Services Trust, London-lending Account Client Account 459 1.09%
Japan Trustee Service Bank, Ltd. (Trust Account 4) 422 1.00%
For Further Information Contact:
Corporate Communications & IR Department, Yusen Air & Sea Service Co., Ltd.E-mail: [email protected]
Shareholders’ Information (As of March 31, 2008)
