Annual Report 2003 - Yusen Logistics · 2016-12-27 · Relevant sea freight export volume grew...

Annual Report 2003

Yusen Air & Sea Service Co., Ltd. (YAS) is a well-known

freight forwarder. Since its establishment in 1955, the

Company has accumulated the expertise and know-how

required of a top-class forwarder. The Company has

steadily expanded its stock of warehouses and other on-

land facilities, has developed in-house electronic data

interchange (EDI) systems, and is making vigorous efforts

to expand the scope of its EDI transactions. The Company

plans to launch more sophisticated services, including

time-definite delivery, in close cooperation with other major

forwarders and air carriers.

P r o f i l e

Financial Highlights ......................................................... 1

A Talk with the President ................................................. 2

New Developments in China Business ............................ 6

Financial Review.............................................................. 8

Consolidated Balance Sheets.......................................... 10

Consolidated Statements of Income ................................ 12

Consolidated Statements of Shareholders’ Equity........... 13

Consolidated Statements of Cash Flows ......................... 14

Notes to Consolidated Financial Statements ................... 15

Report of Independent Auditors ....................................... 25

World-Wide Service Network ........................................... 26

Board of Directors and Corporate Auditors...................... 28

Corporate Information ...................................................... 29

Forward-Looking Statements:

Statements contained in this report concerning plans,predictions, and strategies to improve future performance("forward-looking statements") are based on informationcurrently available to the Company's management, andinevitably involve a certain element of risk and uncertainty.

C o n t e n t s

Yusen Air & Sea Service Co., Ltd. and its SubsidiariesFor the years ended March 31

Thousands ofMillions of yen U.S. dollars

2003 2002 2001 2000 1999 2003

Net Sales ¥110,996 ¥91,517 ¥102,632 ¥87,943 ¥85,629 $923,427

Operating Income 7,392 2,271 4,899 3,754 1,570 61,498

Net Income 4,632 1,346 1,920 2,100 824 38,536

Shareholders’ Equity 27,137 23,607 20,966 20,362 13,101 225,765

Total Assets 64,780 57,967 58,865 52,879 51,001 538,936

Per Share Data (in single yen and U.S. dollars):

Net Income – Primary ¥ 259.34 ¥ 76.52 ¥ 109.16 ¥ 156.86 ¥ 62.59 $ 2.158

Net Income – Fully diluted — — — — — —

Dividends 15.00 10.00 10.00 10.00 10.00 0.125

Shareholders’ Equity 1,539.33 1,342.08 1,191.80 1,388.93 995.47 12.806

Note: The United States dollar amounts represent translations of Japanese yen amounts at the rate of ¥120.20 =U.S.$1. See Note 3 to consolidated financialstatements.

1

Financial Highlights

Net Sales

Millions of Yen

110,996

99 00 01 02 03

Net Income

Millions of Yen

4,632

99 00 01 02 03

Shareholders’ Equity

Millions of Yen

27,137

99 00 01 02 030

20,000

40,000

60,000

80,000

100,000

120,000

0

1,000

2,000

3,000

4,000

5,000

0

5,000

10,000

15,000

20,000

25,000

30,000

Looking back at fiscal 2002YAS has recorded the best business performance in its

history in fiscal 2002, with operating revenue (recorded as

“net sales” in the financial statements) up 21.3% year-on-

year, operating income jumping 225.4%, and net income

soaring 244.1%. Could you describe some of the background

to these excellent results?

Well, first of all I have to say that nobody at YAS expected

such good performance. This is clear from our start-of-

term projections. I would like to point out that all of the Company’s

operations, without exception, enjoyed good business results for

fiscal 2002. Up to now, there have always been disparities in

performance from region to region and from one operational

division to another. For instance, in fiscal 2000, when we posted

record profits overall, this was thanks to the earnings generated by

our transport overseas of freight by air from Japan. In fiscal 2001,

on the other hand, our overseas operations were strong enough to

partially offset poor business in the domestic market.

Last year, we set ourselves the target of ¥5 billion in recurring

profit(*) for fiscal 2003. We set this goal as it would mean that we

had reached the critical mass – in terms both of total revenue and

cash flow – required to enable us to successfully weather the

severe competition expected over the next few years. In the event,

we reached this target one year ahead of schedule.

This success was the result of a number of factors. Firstly, we

enjoyed an overall growth in freight volume. Air freight export

volume in terms of weight registered a year-on-year growth of

25%, while the growth in the number of air freight import

transactions was 20.5%. Relevant sea freight export volume grew

14.6% and the number of sea freight import transactions was up

16.2% over the previous year. The most notable one-off factor

behind these results was, of course, the closure of the US West

Coast ports in the autumn of 2002. This created a special,

temporary demand for air freight services in place of sea freight

which lasted for around two months.

From the start of the term, YAS enjoyed a higher growth rate in

demand for air freight exports than the forwarding industry

average, with the monthly figures on a weight basis surpassing the

year-before levels by over 10%. In October and November, affected

by the US port closure, our growth rate was more than 30% over

the same months in the previous year.

Turning to revenue from overseas operations by YAS Group,

particularly strong growth was recorded in Southeast Asia,

centered on Singapore, which is categorized by YAS as part of the

“South Asia and Oceania” region in our sales breakdown. Our

Indonesian affiliate became a consolidated subsidiary with effect

from the fiscal 2002 term, which also helped to push up total

consolidated earnings.

If we look at operating revenue from export forwarding in a

breakdown of customers according to industrial sector, we find

that the electronic sector had the lion’s share, at 58%, while the

automotive industry grew to 21%. The situation is rather similar

when we turn to imports into Japan, where electronics accounted

for 49%, followed by the automotive industry at 11%. A

geographical breakdown of the Group's total operating revenue

shows 59.1% for Japan and 40.9% for overseas. The breakdown of

total operating income is 65.7% for Japan and 34.3% for overseas.

An analysis of our sea freight operations shows that while

exports by our United States subsidiary declined during fiscal

2002, exports by the parent company and all our other overseas

subsidiaries recorded growth. Meanwhile, all our operations

enjoyed growth in imports. Imports by the American subsidiary

climbed 15%, thanks to our active development of ancillary

logistics services to meet the increasingly demanding requirements

of today’s customers.

The posting of a record-high operating revenue reflects our

improved marketing capabilities, allowing us to communicate the

advantages of our extensive range of services to a larger number of

potential customers. This was not achieved overnight, but is the

fruit of our efforts over the years to utilize state-of-the-art

information technology to develop increasingly sophisticated

2

A Talk with the President

Q

A

Michio TanakaPresident and Representative Director

3

logistics services; to set up an operation system to cater to the

markets in China and Eastern Europe, where there is considerable

potential demand; and our creation of a global marketing system

based on five hubs, i.e. Japan, North America, Europe, East Asia,

and South Asia & Oceania.

Compared with fiscal 2000, the term in which we registered our

previous record-high operating revenue, fiscal 2002 saw growth of

¥8,400 million, or 8.2%. Gross profit also grew, by approximately

6.5%. Turning to costs, transportation operations, being the largest

element in total costs, accounted for 61.4%, compared to 60.1% in

the previous year. On the other hand, selling, general and

administrative expenses declined by ¥275 million from the previous

term, with the ratio of SG&A expenses to sales declining to 22.4%

on a consolidated basis and 20.6% on a non-consolidated basis.

This was a major factor in pushing up the operating income figure.

As a result, the ratio of recurring profit to sales rose steeply to

7.0% from only 2.9% for the previous term. In the case of our

company, because the effects of non-operating income and

expenses were negligible, the ratio of operating income to sales

showed a similar tendency. In my view, this reflects the Company’s

improved operating efficiency, allowing us to lower costs to a more

appropriate ratio compared to revenue. In short, we have become

more skilled in cost and revenue management.

In last year’s annual report, I remarked that there were three

main points that must be addressed in order to realize a business

model that would be more resistant to the impact of economic

fluctuations. First was to speed up development of our business

operations in China, which had been a little slow getting off the

ground. Second was to strengthen our air freight import business,

and third was to steadily expand our logistics services.

In Shanghai last year we set up a joint-venture forwarding

company, in which we have a 50 percent equity stake, with a

Chinese company. This joint venture began operations in January

of this year, after about two years of preparations, and we expect it

to greatly facilitate the expansion of our operations in China. We

are also planning to establish a forwarding company in Beijing

within this year, together with a partner selected with a view to

facilitating further expansion in the future.

In the field of air freight imports, our imports into Japan are

expanding from the traditional mainstay of finished products for

the retail market to electronic equipment and components for

manufacturing sector customers. In North America, our imports of

automotive components are growing. In the logistics business,

which is the most promising field of operations, our performance

has grown particularly strongly in North America. We achieved

business synergies by combining our developing logistics services

with the freight handling business there, which this has led to an

increase in the number of import transactions.

In Japan, we have concluded a formal business alliance

agreement with Hitachi Transport System – our partner of many

years and the possessor of sophisticated software development

capabilities – which we believe prepares us for future expansion.

During fiscal 2002, we became the first Japanese forwarder to

construct its own warehouse within the airport freight-handling

area at Frankfurt. The warehouse, which began operating in

February of this year, was built to prepare for an expected growth

in business by Japanese companies with Central and Eastern

European countries attendant on the expansion of the European

Union, and we look forward to a significant increase in business

volume.

The travel agency business was a drag on YAS Group’s

earnings during fiscal 2001, and in the term under review we

withdrew from unprofitable areas of operation such as general

tourism. As a result, this segment was able to rack up an operating

income of ¥80 million. We will make further efforts to improve

profitability in this field.

Note: * Recurring profit is a basic benchmark for business performance in Japan. Dueto reclassification, however, recurring profit is not registered in the incomestatement in the English-language version of the Annual Report.

The outlook for this termIt is clear that YAS achieved a remarkable

improvement in business performance in fiscal 2002, and is

still on an uptrend. What do you foresee for fiscal 2003?

Most observers are becoming increasingly pessimistic

about the prospects of a recovery by the US economy this

term. Also, because of various unpredictable factors like SARS, it is

also impossible to say what trends lie ahead for production levels

in East Asia, which is now the “workshop of the world.” In the light

of these factors, it seems probable that our operating revenue for

this term on a consolidated basis will grow by only a slight margin,

and that we will have to brace ourselves for declines at the profit

level.

One of the reasons for this somewhat pessimistic projection is

the one-off demand stemming from the West Coast port closures,

Q

A

which I mentioned earlier. It is very difficult to precisely quantify

the value of this transient demand factor, but I would estimate that

it accounted for approximately ¥1 billion out of total operating

income. The non-repetition of this one-off demand in the current

term means that our export to the United States of auto parts from

Japan will decline by an equivalent amount. I do not expect,

however, that the operating revenue from our overseas operations

will fall below the level for fiscal 2002. We anticipate a sharp

growth in business in Southeast Asia, centered on Singapore,

which is categorized by us in our South Asia and Oceania segment.

This will be partly attributable to the expansion of the scope of

consolidation. Even discounting special factors, however, we

project some gain in revenues in North America, a smaller growth

in European business, and a large increase in revenue from East

Asian operations. Overall, the growth in revenues overseas would

offset the decline in revenue from our Japan-based business.

As to profit level, our latest forecasts as of May put

consolidated operating income at ¥6,200 million. This will be far in

excess of our previous highest figure prior to the special demand

resulting from the West Coast port closures, that is, ¥4,899 million

we posted for fiscal 2000. At the same time, our projection for

recurring profit of ¥6,300 million would put us well beyond the

critical mass line of ¥5,000 million.

Turning to transportation costs, the ratio of transportation

charges to sales for air freight operations in fiscal 2002 came to

61.4% including surcharges, which compares with 60.1% for the

previous term, as mentioned before. Although the ratio of recurring

profit to sales for this term is unlikely to reach the 7.0% recorded

in fiscal 2002, it has remained above 6% so far, and even allowing

for the unpredictable factors I mentioned before, I do not expect

any difficulty in achieving our revenue and income forecasts.

Medium-term prospectsNow that you have reached your targeted critical mass

of ¥5,000 million in recurring profit, what issues must be

addressed to reach the next major stage in the Company's

development?

Our indicators of capital efficiency, such as the rate of

recurring profit to total capital or the rate of recurring profit

to operating revenue, are already at quite high levels. This is proof

of the high-level efficiency of our operational system. At the time of

the one-off special demand in the autumn of last year, the total

amount of air freight exports from Japan that we handled increased

by 70% year-on-year by weight. Exports from the Nagoya area,

where automobile component makers are concentrated, doubled

over the previous year. The fact that we were able to handle this

sudden, massive increase in business volume – even though this

busy period did not last long – and without resorting to any new

hiring, testifies to the efficiency of our operations.

Although we have reached our targeted critical mass, we are

not under the illusion that we can go on to the next major stage

without changes in our earning structure and operational system.

Currently, the majority of the goods we handle are capital goods

such as semiconductors and automotive components. We still

handle only a small proportion of consumer goods. But when you

consider that Japan is the second-largest market for consumer

goods in the world, and that a number of distribution companies

are already operating on a large scale utilizing huge logistics

centers, it is clear that the right way for us to proceed is to focus

increasingly on consumer goods. The greater part of the goods

handled by such large-scale logistics centers originates in China,

and thus, for companies in our sector, it is crucial to draft effective

strategies to develop their China-related business. It is in view of

such factors that YAS is pressing ahead with the establishment of a

local subsidiary in Beijing as the second step in our China-wide

development strategy following the Shanghai subsidiary.

Because of the sheer size of China, there are considerable

differences in conditions and market demands from one region to

another, making it imperative for us to carefully select suitable local

partners in each part of the country where we intend to conduct

operations. The Chinese authorities have now relaxed the

restrictions on foreign ownership of forwarders, with non-Chinese

companies now being allowed to own up to a 75% equity stake in

such enterprises. Insofar as is possible, we intend to ensure a 75%

stake for YAS in all joint ventures that we set up, including the

Beijing venture to be established this year.

To expand the Company’s business scale further, it is

important for us to open new distribution and logistics centers to

match the pace of globalization of business by Japanese

companies. The opening of our own warehouse at Frankfurt Airport

is a big step toward further expansion into Eastern Europe. We also

need to give thought to eventually moving into markets that are still

relatively new to us, such as Russia and India. When we do, we will

need qualified staff, and we must therefore learn from the example

4

Q

A

of European forwarders. During the long course of their history,

European forwarders have learned to train staff capable of

effectively conducting business anywhere in the world, and we

must do likewise.

Looking closely at the Company’s earnings structure, we find

that through a synergistic effect, when business in Japan is

performing well, overseas business follows the same trend. As our

Japanese corporate clients are gradually transferring more and

more of their production operations overseas, to maintain our

position as a forwarder we must also expand our overseas

operations. We must always bear in mind that our business base

lies in Japan. The automotive and electronics industries are the two

main pillars holding up the Japanese economy. This situation has

continued to prevail since the 1980s. Many of our customers

operate in these sectors, and YAS has developed overseas in

tandem with moves by these customers. In some cases we have

anticipated their further expansion and preceded them into new

markets. By devoting ourselves to creating a distribution system

that links Japan with other countries and serves to support the

global production networks being constructed by our customers,

we have naturally been led to build up our sea freight operations.

A further topic of top priority for the management of YAS is

how to maximize synergy between our own operations and those of

our parent company NYK and its subsidiaries.

Profit distribution policyCould you explain your basic stance on profit

distribution to shareholders, and any changes in dividend

payments you may have in mind?

We assign top management priority to the distribution of

profit to shareholders, and our basic policy is to pay a

stable level of dividends each term insofar as the Company’s

business performance permits this.

Since our initial public offering, we have paid an annual

dividend per share of ¥10, including an interim dividend of ¥4 per

share. As we posted our highest-ever profit for the term under

review, we decided to return profit to our shareholders at an

appropriate level by paying an annual dividend for the term of ¥15.

YAS marks the 50th anniversary of its establishment in 2005,

and in celebration of this we plan to pay a special dividend, which

will be determined on the basis of a comprehensive overview of the

business environment and the Company’s business performance

forecasts.

Regarding retained earnings, which we intend to reserve for

future capital investment, we will put more emphasis on overseas

investments and financing to overseas subsidiaries, as we have no

plans for large-scale projects in Japan other than the second stage

of the Narita Logistics Center and the facilities in the new Chubu

Airport. We will seek optimal investment and financing based on

our strategy for global operations.

YAS already operates the Logistics Center at Narita Airport, and

to cope with growing customer needs, we plan to construct

additional facilities on an adjacent site. This second-stage

construction should be completed by January 2005, and will bring

the total floorspace of the Logistics Center to 35,000 square

meters. At the Chubu Airport, which is scheduled to open in 2005,

we have secured a site within the freight terminal area, where we

plan to build our own facilities to meet the large volume of demand

from potential users in this part of Japan.

Although the investment amount will fluctuate year by year, we

intend to procure external funds on favorable terms and conditions

for all required investments to supplement retained earnings from

operating cash flow, which are expected to grow.

5

A Talk with the President

Q

A

6

New Developments in China Business

YAS is in the process of extending its service network into various

parts of China, and as part of this overall effort, we established the

Hotline China Help Desk at our headquarters in May 2002 to serve

as an exclusive business advisory section for mainland China, Hong

Kong, and Taiwan. Since the start of the current business term, the

Help Desk has been renamed the Sales Promotion China Section

under the Sales Administration Department, and its functions have

been expanded accordingly. The section fulfills an essential strategic

role at the Japanese end of our support system for Greater China

business, which is changing rapidly day by day. The staff deal with

inquiries from both Japan and overseas, undertaking information

handling, marketing support, and planning and marketing for the

growth of our Greater China business.

The Company first gained a foothold in China in 1986 with the

opening of a representative office in Beijing. Our latest development

was the start of operations of a joint-venture company in Shanghai

in January 2003, following an accelerating series of developments in

our Chinese business over the past few years. As of April 2003, our

Chinese sales network – including Hong Kong – comprised five local

subsidiaries and fifteen representative offices. Our current business

mainly involves international freight forwarding of industrial

products manufactured by Japanese companies (including joint

ventures) in the areas of Shanghai, Suzhou, and Wuxi.

However, our Hong Kong subsidiary has established a wholly-

owned subsidiary for bonded warehouse operation in Wai Gao Qiao,

Shanghai as a preparation for offering a full range of logistics

services in the future. Furthermore, we plan to establish subsidiaries

for the freight forwarding business in Beijing and Guangzhou during

the current business term.

The commencement of freight forwarding business by our

Shanghai subsidiary marks the start of a new stage in our business

development in China. In other words, we have plunged into a

rapidly expanding and fiercely competitive market, as the demands

for freight forwarding services to and from China are growing at an

explosive pace. The volume of air freight into, and out of, China in

fiscal 2002 rose 20% year-on-year for the whole country, and 40%

for the Shanghai area. Consolidated air cargo forwarding from

Japan to this area in the same period saw a rise of 47% as a result

of the large number of factories opened by Japanese companies in

the greater Shanghai area. Even further, the volume of ocean freight

from Japan to China increased by an astonishing 70% in the first

half of fiscal 2002.

Not only is the volume of freight rising steeply, but customers

are also becoming more demanding with respect to a wide range of

high quality services such as fixing rates for door-to-door delivery

and uniform area services, providing world-class supply chain

management services and sophisticated IT solutions, and enhancing

security systems.

In China, too, it is now becoming essential to offer logistics

services that most closely meet the clients’ needs in the fields of

ocean, air, and land transportation, and warehousing services. In

particular, ocean freight is becoming one of the most important

transportation modes. With the promulgation of new ocean freight

regulations in 2002 by the Chinese authorities, ocean freight

operators are now required to register as a non-vessel operating

common carrier (NVOCC) and an issuer of bills of lading. We have

already completed B/L registration and issued our own bills of

lading for ocean freight to and from China. In addition, YAS has

concluded business tie-ups with local NVOCC operators at the major

seaports.

Since China’s entry into the WTO in November 2001, the pace of

entry into the country by foreign enterprises has accelerated

sharply, and demand for logistics services has expanded

accordingly. In addition, as is well known, the reduction of China’s

import duties has led to a sharp increase in the volume of imports.

Despite these factors, there is still a need for significant

improvement in terms of safety and quality assurance for cargo

transportation within China. The Chinese government is well aware

of the problems, and they are taking steps to improve the

transportation infrastructure, particularly in and around such major

cities as Beijing, Shanghai, Guangzhou, and Shenzhen. For example,

they are improving access to airports and harbors, as well as

building networks of expressways and high-speed railway lines to

connect all parts of the country. Measures have also been taken to

dramatically shorten the time required for obtaining business

permits. Restrictions on foreign ownership of companies operating

in China, including those in the international freight forwarding

business, are also being gradually relaxed as part of an overall

program of deregulation.

China’s rapid economic development has raised the standard of

living of the population and created a huge market for consumer

goods. Japanese companies have recently been looking at China in

a very different way. Rather than viewing the country almost solely

as a manufacturing base, they are now seeing it as a potential

market for consumer goods. In reflection of this change in attitude

by customers, YAS aims to continue its development in China with

the objectives of eventually covering the country with a unsurpassed

network of operational bases and routes.

Beijing Representative Office

Dalian Representative Office

Qingdao Representative Office

Yusen Shenda Air & Sea Service (Shanghai) Ltd.

Yusen Air & Sea Service Logistics (Shanghai) Co., Ltd.

Shanghai Office

Suzhou Office

Hangzhou Office

Fuzhou Office

Yusen Air Logistics (Xiamen) Co., Ltd.

Xiamen Office

Shantou Office

Guangzhou Office

Dongguan Office

Shenzhen Office

Zhuhai Office

Yantian Office

Yusen Air & Sea Service (H.K.) Ltd.

Yusen Air & Sea Service (China) Ltd.

Xian Office

Beijing

Dalian

Qingdao

Shanghai

Suzhou

Hangzhou

Fuzhou

Xiamen

Shantou

Guangzhou

Dongguan

Shenzhen

Zhuhai

Yantian

Hong Kong

Xian

YAS representative offices

Local subsidiaries’ offices

Legend

7

North-Eastern(Office Network)

Beijing, Dalian and Qingdao

(Strategies)

* Establish centralized freight management system* Open a forwarding subsidiary in Beijing* Establish Tianjin representative office

Eastern(Office Network)

Shanghai, Suzhou and Hangzhou

(Strategies)

* Early establishment of offices in Wuxi * Comprehensive services related to plant transfer, including installation

of equipment* Providing inventory management services for components and

merchandise, and other logistic services

Southern(Office Network)

Hong Kong, Xiamen, Guangzhou, Dongguan, Shenzhen, Zhuhai, Shantou, Yantian and Fuzhou

(Strategies)

* Early establishment of forwarding subsidiaries in Guangzhou andXiamen

* Feasibility study for early establishment of an office in Chung Shan* Enhancing provision of value added services

Central (Office Network)

Xian

(Strategies)

* In-depth marketing research* Feasibility study for establishment of offices in Chongqing and

Wuhan

China Marketing Strategy by Area The Company has divided the Chinese market into fourareas for marketing purpose – North-Eastern, Eastern,Southern and Central.

The North-Eastern Area includes Beijing, Tianjin andthe coastal areas including the provinces of Liaoning andShangdong. The Eastern Area is centered on Shanghaiand includes the coastal provinces of Jiangsu andZhejiang as well as Anhwei Province. The Southern Areais centered on Hong Kong and includes the coastalprovinces of Guangdong and Fujian. The Central Areaincludes the inland provinces of Shanxi, Henan, Hubei,Sichuan and Hunan.

8

Business Environment

Thanks to active shipments by the automotive industry in

addition to the completion of inventory adjustment by the

semiconductor industry, and against the backdrop of the US

economic recovery, international air freight shipments

followed an upward trend during the term under review, the

business year ended March 31, 2003. In autumn, the closure

of major ports on the West Coast of the United States

suddenly generated additional demand for air freight

shipment, and we were kept very busy meeting customer

needs.

Operating Results

On a consolidated basis, net sales surged 21.3% over the

previous term, to ¥110,996 million (US$923,427 thousand)

against the backdrop of recovering air transportation demand

from the IT sector. One-time demand resulting from the West

Coast port closure generated additional revenue. The cost of

sales also increased, by a similar rate of 22.8% to ¥78,763

million (US$655,266 thousand), in line with growth of

operations. As a result, gross profit substantially increased

by 17.7% to ¥32,233 million (US$268,161 thousand), and

the gross profit ratio came to 29.0% for the term, down 0.9

percentage points from the previous term. Selling, general

and administrative expenses, however, decreased 1.1% to

¥24,841 million (US$206,663 thousand), resulting in an

astonishing increase in operating income of ¥7,392 million

(US$61,498 thousand), more than three times the ¥2,271

million for the previous term.

Net other expenses amounted to ¥193 million (US$1,606

thousand), due partially to an increase in retirement benefits

under an early retirement scheme.

Accordingly, income before income taxes amounted to

¥7,199 million (US$59,892 thousand), up 160.6% and net

income also greatly increased by 244.1% to ¥4,632 million

(US$38,536 thousand).

Financial Position

Current assets as of March 31, 2003 increased by a

substantial 18.5% over the previous term-end to ¥38,895

million (US$323,586 thousand), mainly due to an increase in

trade notes and accounts receivable in line with an increase

in net sales. On the other hand, noncurrent assets remained

virtually unchanged to stand at ¥25,885 million (US$215,350

Cost of Sales

Millions of Yen

78,763

99 00 01 02 03

Operating Income

Millions of Yen

7,392

99 00 01 02 03

Net Income per Share

Yen

259.34

99 00 01 02 030

100

200

300

0

20,000

40,000

60,000

80,000

0

2,000

4,000

6,000

8,000

Financial ReviewOn a consolidated basis

9

thousand). Deferred tax assets, however, increased by ¥424

million . As a result, total assets increased 11.8% to ¥64,780

million (US$538,936 thousand).

Current liabilities also increased by a substantial 23.0%

to ¥28,125 million (US$233,986 thousand), due to an

increase in trade notes and accounts payable. On the other

hand, long-term liabilities decreased by ¥1,908 million, or

17.4%, to ¥9,081 million (US$75,549 thousand). This

decrease was attributable to the repayment of long-term

debt. As a result, total liabilities increased 9.9% over the

previous term-end to ¥37,206 mill ion (US$309,535

thousand).

Shareholders’ equity increased by a substantial 15.0% to

¥27,137 million (US$225,765 thousand), due to a ¥4,399

million increase in retained earnings. The equity ratio

improved by 1.2 percentage points to stand at 41.9% at the

end of the term, and the return on equity came to 18.3%

compared with 6.0% for the previous term. Shareholders’

equity per share (excluding treasury stock) increased

¥197.25 during the term to ¥1,539.33 (US$12.806).

Cash Flows

Net cash inflows from operating activities increased 28.3% to

¥3,762 million (US$31,298 thousand). In addition to a

¥4,437 million increase in income before income taxes, a

decline in income taxes paid of ¥868 million contributed to

an increase in net cash provided by operating activities. On

the other hand, trade notes and accounts receivable

increased ¥5,233 million, compared with a decrease of

¥5,497 million for the previous term.

Net cash outflows from investing activities increased

23.5% to ¥3,085 million (US$25,666 thousand), mainly due

to expenditures for the additional purchase of subsidiary

shares in the amount of ¥823 million.

Net cash inflows from financing activities decreased ¥38

million to ¥94 million (US$782 thousand). The net decrease

in long-term debt of ¥610 million was offset by proceeds

from subsidiary share issuance of ¥653 million. As a result,

cash and cash equivalents increased ¥662 million during the

term, to stand at ¥9,196 million (US$76,506 thousand) at the

end of the term.

Return on Equity

18.3

99 00 01 02 03

Return on Total Assets

%%

7.15

99 00 01 02 03

Capital Expenditure

99 00 01 02 03

Millions of Yen

0

5

10

15

20

0

2

4

6

8

0

1,000

2,000

3,000

1,122

10

Thousands ofU.S. dollars

Millions of yen (Note 3)2003 2002 2003

ASSETSCurrent assets:

Cash and time deposits (Note 6) ¥ 8,852 ¥ 8,613 $ 73,644Marketable securities (Note 4) 385 — 3,203Trade notes and accounts receivable 27,266 22,065 226,839Deferred tax assets — current (Note 8) 675 371 5,616Other current assets 2,010 2,033 16,722Less: Allowance for doubtful accounts (293) (267) (2,438)

Total current assets 38,895 32,815 323,586

Investments and advances:Investments in securities (Note 4) 1,539 1,923 12,804Investments in unconsolidated subsidiaries and affiliates 1,282 765 10,666Deferred tax assets — non-current (Note 8) 1,217 793 10,125Other investments and advances 3,583 2,979 29,808

Total investments and advances 7,621 6,460 63,403

Property, plant and equipment:Buildings and structures (Note 6) 12,159 12,440 101,156Machinery and equipment 2,503 2,324 20,824Motor vehicles 829 799 6,897

15,491 15,563 128,877Less: Accumulated depreciation (6,026) (5,304) (50,133)

9,465 10,259 78,744Land (Note 6) 7,530 7,633 62,645Construction in progress 491 0 4,085

Total property, plant and equipment 17,486 17,892 145,474

Intangible assets 778 800 6,473

¥64,780 ¥57,967 $538,936

The accompanying notes are an integral part of the statements.

Consolidated Balance SheetsYusen Air & Sea Service Co., Ltd. and its SubsidiariesMarch 31, 2003 and 2002

11



LIABILITIES AND SHAREHOLDERS’ EQUITYCurrent liabilities:

Short-term bank loans (Note 6) ¥ 5,101 ¥ 4,810 $ 42,438Current portion of long-term debt (Note 6) 2,858 1,479 23,777Trade notes and accounts payable 13,029 11,784 108,395Accrued income taxes 2,785 332 23,170Accrued bonuses to employees 1,069 1,095 8,894Deferred tax liabilities — current (Note 8) 4 4 33Other current liabilities 3,279 3,358 27,279

Total current liabilities 28,125 22,862 233,986

Long-term liabilities:Long-term debt (Note 6) 4,116 6,133 34,243Accrued retirement benefits to:

Employees (Note 7) 4,112 4,251 34,210Directors and statutory auditors 289 259 2,404

4,401 4,510 36,614Deferred tax liabilities — non-current (Note 8) 372 201 3,095Excess of investment cost over underlying equity in net assets of consolidated subsidiaries 95 9 790

Other long-term liabilities 97 136 807Total long-term liabilities 9,081 10,989 75,549

Minority interests in consolidated subsidiaries 437 509 3,636

Commitments and contingent liabilities (Note 9)

Shareholders’ equity:Common stock, no par value;

Authorized; 40,000,000 shares at March 31, 2003 and 2002Issued; 17,592,000 shares at March 31, 2003 and 2002 4,301 4,301 35,782

Additional paid-in capital 4,744 4,744 39,468Retained earnings (Note 13) 18,460 14,061 153,577Unrealized gains (losses) on securities 55 109 458Adjustments on foreign currency statement translation (412) 394 (3,428)Less: treasury stock, at cost

March 31, 2003 — 8,640 shares (11) — (92)March 31, 2002 — 2,000 shares — (2) —

Total shareholders’ equity 27,137 23,607 225,765

¥64,780 ¥57,967 $538,936

U.S. dollarsYen (Note 3)

Shareholders’ equity per share ¥1,539.33 ¥1,342.08 $12.806

12



Net sales ¥110,996 ¥91,517 $923,427

Cost of sales 78,763 64,129 655,266Gross profit 32,233 27,388 268,161

Selling, general and administrative expenses (Note 10) 24,841 25,117 206,663Operating income 7,392 2,271 61,498

Other income (expenses):Interest and dividend income 82 152 682Interest expense (215) (258) (1,789)Gains on sale of investments in securities — 20 —Loss on sale of investments in securities (48) — (399)Loss on sale of unconsolidated subsidiaries (30) — (250)Loss on write-down of investments in securities (128) (82) (1,065)Loss on write-down of unconsolidated subsidiaries (18) — (150)Exchange gain 241 257 2,005Extra retirement benefits to employees (424) (61) (3,527)Equity in earnings of unconsolidated subsidiaries and affiliates 139 13 1,156Loss on write-down of golf club memberships (47) (56) (390)Gains of return of allowance for doubtful accounts — 88 —Gains of sales of consolidated subsidiaries — 59 —Gains of liquidation of affiliated company — 205 —Loss of liquidation of consolidated subsidiaries (8) — (67)Others, net 263 154 2,188

(193) 491 (1,606)Income before income taxes 7,199 2,762 59,892

Income taxes (Note 8):Current 3,486 1,156 29,002Deferred (515) 231 (4,285)

2,971 1,387 24,7174,228 1,375 35,175

Minority interests in net (income) expenses of consolidated subsidiaries 404 (29) 3,361

Net income ¥ 4,632 ¥ 1,346 $ 38,536

U.S. dollarsYen (Note 3)

Per share:Net income — primary ¥259.34 ¥76.52 $2.158Net income — fully diluted — — —Dividends 15.00 10.00 0.125


Consolidated Statements of IncomeYusen Air & Sea Service Co., Ltd. and its SubsidiariesFor the years ended March 31, 2003 and 2002

13

Millions of yenAdjustments

Number of on foreignshares of Additional Net unrealized currency

common stock Common paid-in Retained gains (losses) statement Treasury(thousands) stock capital earnings on securities translation stock

Balance as at March 31, 2001 17,592 ¥4,301 ¥4,744 ¥12,983 ¥ — ¥(1,062) ¥ (0)Net income for the year ended March 31, 2002 — — — 1,346 — — —Cash dividends — — — (106) — — —Interim dividends — — — (70) — — —Directors’ and statutory auditors’ bonuses — — — (52) — — —Decrease in retained earnings due to exclusion from application of the equity method of investment in an affiliate — — — (40) — — —

Adoption of new accounting standard — — — — 109 — —Changes in foreign currency translation adjustments — — — — — 1,456 —Purchase of treasury stock — — — — — — (2)

Balance as at March 31, 2002 17,592 4,301 4,744 14,061 109 394 (2)Net income for the year ended March 31, 2003 — — — 4,632 — — —Cash dividends — — — (106) — — —Interim dividends — — — (70) — — —Directors’ and statutory auditors’ bonuses — — — (54) — — —Decrease in retained earnings due to inclusion in consolidation of additional subsidiaries — — — (3) — — —

Unrealized losses on securities — — — — (54) — —Changes in foreign currency translation adjustments — — — — — (806) —Purchase of treasury stock — — — — — — (9)

Balance as at March 31, 2003 17,592 ¥4,301 ¥4,744 ¥18,460 ¥ 55 ¥ (412) ¥(11)

Thousands of U.S. dollars (Note 3)Adjustments

Number of on foreignshares of Additional Net unrealized currency

common stock Common paid-in Retained gains (losses) statement Treasury(thousands) stock capital earnings on securities translation stock

Balance as at March 31, 2002 17,592 $35,782 $39,468 $116,980 $907 $ 3,278 $(17)Net income for the year ended March 31, 2003 — — — 38,535 — — —Cash dividends — — — (882) — — —Interim dividends — — — (582) — — —Directors’ and statutory auditors’ bonuses — — — (449) — — —Decrease in retained earnings due to inclusion in consolidation of additional subsidiaries — — — (25) — — —

Unrealized losses on securities — — — — (449) — —Changes in foreign currency translation adjustments — — — — — (6,706) —Purchase of treasury stock — — — — — — (75)

Balance as at March 31, 2003 17,592 $35,782 $39,468 $153,577 $458 $(3,428) $(92)


Consolidated Statements of Shareholders’ EquityYusen Air & Sea Service Co., Ltd. and its SubsidiariesFor the years ended March 31, 2003 and 2002

14



Cash flows from operating activities:Income before income taxes ¥7,199 ¥2,762 $59,892Depreciation and amortization 1,127 1,081 9,376Amortization of difference between investment costs and equityin net assets acquired of consolidated subsidiaries (27) 66 (225)

Provision (reversal) for accrued retirement benefits to employees (132) 137 (1,098)Interest and dividend income (82) (152) (682)Interest expense 215 258 1,789Equity in earnings of affiliates (139) (13) (1,156)Decrease (increase) in trade notes and accounts receivable (5,233) 5,497 (43,536)Increase (decrease) in trade notes and accounts payable 1,075 (3,580) 8,943Loss (gain) on sale of investments in securities 48 (20) 399Loss on write-down of investments in securities 128 82 1,065Loss on write-down of golf club memberships 47 56 391Other, net 529 (1,254) 4,401

4,755 4,920 39,559Interest and dividend received 267 184 2,221Interest paid (218) (262) (1,814)Income taxes paid (1,042) (1,910) (8,668)

Net cash provided by operating activities 3,762 2,932 31,298

Cash flows from investing activities:Purchase of property, plant and equipment (1,122) (2,588) (9,334)Proceeds from sale of property, plant and equipment 17 40 141Purchase of investments in securities (49) (145) (408)Proceeds from sale of investments in securities 162 398 1,348Purchase of consolidated subsidiaries (823) (61) (6,847)Lending of loans (780) (45) (6,489)Collection of loans 68 50 566Proceeds from purchase of (sale of) investments in consolidatedsubsidiaries due to change in scope of consolidation 84 (185) 699

Others (642) 39 (5,342)Net cash used in investing activities (3,085) (2,497) (25,666)

Cash flows from financing activities:Short-term bank loans, net 285 1,008 2,371Borrowing of long-term debt 863 2,448 7,180Repayment of long-term debt (1,473) (3,053) (12,255)Issuance of common stock on consolidated subsidiaries 653 — 5,433Cash dividends paid (176) (176) (1,464)Cash dividends paid to minority shareholders (2) (2) (17)Other, net (56) (93) (466)

Net cash provided by financing activities 94 132 782

Effect of exchange rate changes on cash and cash equivalents (128) 365 (1,064)Increase in cash and cash equivalents 643 932 5,350Cash and cash equivalents at beginning of year 8,534 7,587 70,998Adjustments of new consolidated subsidiaries on cash and cash equivalents 19 15 158

Cash and cash equivalents at end of year (Note 11) ¥9,196 ¥8,534 $76,506


Consolidated Statements of Cash FlowsYusen Air & Sea Service Co., Ltd. and its SubsidiariesFor the years ended March 31, 2003 and 2002

15

1. Basis of Presenting Consolidated FinancialStatements

(1) Accounting principles and presentationThe accompanying consolidated financial statements have beenprepared from the accounts maintained by Yusen Air & SeaService Co., Ltd. (the “Company”) and its consolidatedsubsidiaries (the “Companies”) in accordance with provisions setforth in the Japanese Commercial Code (the “Code”) and the

Securities and Exchange Law, and in conformity with accountingprinciples and practices generally accepted in Japan, which aredifferent in certain respects as to application and disclosurerequirements of International Accounting Standards.

Certain items presented in the consolidated financial state-ments filed with the Financial Services Agency of Japan havebeen reclassified for the convenience of readers outside Japan.

(2) Scope of consolidationThe Company had 43 subsidiaries as at March 31, 2003 (41 at March 31, 2002). The consolidated financial statements include theaccounts of the Company and 29 of its subsidiaries as at March 31, 2003 (28 at March 31, 2002). The 29 major subsidiaries which havebeen consolidated with the Company are listed below:

Equity ownershipConsolidated subsidiaries percentage (*1) Capital stock (*1)

Yusen Air & Sea Service (U.S.A.) Incorporated 100% US$14,000 thousandYusen Air & Sea Service (Hong Kong) Limited 100 HK$55,000 thousandYusen Air & Sea Service (Singapore) Pte. Ltd. 100 S$16,700 thousandYusen Air & Sea Service (Europe) B.V. 100 EURO18,518 thousandYusen Air & Sea Service (Benelux) B.V. 100 (*2) EURO700 thousandYusen Air & Sea Service (Deutschland) GmbH 100 (*2) EURO4,000 thousandYusen Air & Sea Service (U.K.) Limited 100 (*2) STG1,050 thousandYusen Air & Sea Service (Australia) Pty. Ltd. 100 (*3) A$1,500 thousandYusen Air & Sea Service (Canada) Inc. 100 C$5,000 thousandYusen Air & Sea Service (France) S.a.r.l. 100 (*2) EURO4,700 thousandYusen Air & Sea Service (Taiwan) Ltd. 100 (*4) NT$20,000 thousandYusen Sea Freight (Taiwan) Ltd. 100 NT$7,500 thousandYusen Air & Sea Service (Italia) S.r.l. 100 (*2) EURO774 thousandYusen Air & Sea Service Holdings, Incorporated 100 (*5) US$3,200 thousandYusen Air & Sea Service (China) Ltd. 100 (*6) HK$11,000 thousandP.T. Yusen & Sea Service Indonesia 60 (*7) IDR 600,000 thousandYusen Air Logistics (Hamamatsu) Co., Ltd. 100 ¥20 millionTosho Unyu Co., Ltd. 90 ¥36 millionYusen Air & Sea Service (Kitakanto) Co., Ltd. 75 ¥50 millionYusen Air & Sea Service (Tsukuba) Co., Ltd. 65 ¥50 millionYusen Travel Co., Ltd. 51.11 ¥270 millionYusen Air & Sea Service (Shinshu) Co., Ltd. 80 ¥50 millionYusen Air & Sea Service (Tohoku) Co., Ltd. 80 ¥30 millionYusen Air Logistics (Nagoya) Co., Ltd. 100 ¥20 millionRyowa Diamond Air Service Co., Ltd. 99.17 (*8) ¥50 millionYusen Air & Sea Service (Kyushu) Co., Ltd. 100 ¥30 millionYusen Air & Sea Service (Hokuriku) Co., Ltd. 100 ¥20 millionYusen Air & Sea Service (Chugoku) Co., Ltd. 80 ¥30 millionYusen Air Staff Service Co., Ltd. 100 ¥20 million(*1) as of March 31, 2003(*2) owned 100% by Yusen Air & Sea Service (Europe) B.V. (*3) owned 80% by the Company 20% by Yusen Air & Sea Service (Singapore) Pte. Ltd.(*4) owned 55% by the Company 45% by Yusen Air & Sea Service (Hong Kong) Limited(*5) owned 100% by Yusen Air & Sea Service (U.S.A.) Inc.(*6) owned 100% by Yusen Air & Sea Service (Hong Kong) Ltd.(*7) owned 10.50% by the Company 49.50% by Yusen Air & Sea Service (Singapore) Pte. Ltd.(*8) owned 99.17% by Yusen Travel Co., Ltd.

The Company and these consolidated subsidiaries are together referred to as “the Companies” hereinafter.The remaining 14 (13 for 2002) subsidiaries, whose combined total assets, net sales, net income and retained earnings are not signifi-

cant in relation to those of the consolidated financial statements of the Companies, have not been consolidated with the Company.

Notes to Consolidated Financial StatementsYusen Air & Sea Service Co., Ltd. and its Subsidiaries

16

(3) Consolidation and eliminationFor the purposes of preparing the consolidated financial state-ments, all significant intercompany transactions, account balancesand unrealized profits among the Companies have been elimi-nated, and the portion thereof attributable to minority interests ischarged to minority interests.

Elimination of cost of investments in consolidated subsidiaries with the underlying equity in net assets of such subsidiaries has been made to include equity in the net income (loss) of thesubsidiaries earned subsequent to the acquisition of each blockof shares. Any difference between the cost of an investment in asubsidiary and the amount of underlying equity in net assets of thesubsidiary is in principle deferred and amortized over 5-yearperiod on a straight-line basis. If such amount is not material, it isdirectly charged/credited against income for the year.

(4) Investments in unconsolidated subsidiaries and affiliatesAt March 31, 2003, the Company had 14 (13 for 2002) unconsoli-dated subsidiaries and 4 (4 for 2002) affiliates, and investments in4 (5 for 2002) unconsolidated subsidiaries and 1 (1 for 2002)affiliates are accounted for by the equity method whereby thecosts of investments are adjusted for subsequent movement ofequity in undistributed earnings of the subsidiaries and affiliates.

Investments in the remaining unconsolidated subsidiaries andaffiliates are stated at cost as they would not have had materialeffect on the consolidated financial statements.

(5) Remeasurement of assets and liabilities of subsidiariesThe Company adopts “full fair value method” that full portion of theassets and liabilities of the subsidiaries is marked to fair value asof the acquisition of the control for new consolidated subsidiaries.

2. Summary of Significant Accounting Policies(1) Financial instruments

(a) SecuritiesInvestments of the Company in equity securities issued byunconsolidated subsidiaries and affiliates are accounted for bythe equity method. Exceptionally, investments in certain uncon-solidated subsidiaries and affiliates are stated at cost, costbeing determined by moving-average method, because theeffect of application of the equity method would be immaterial.

Other securities for which market quotations are availableare stated at fair value. Net unrealized gains or losses on thesesecurities are reported as a separate item in the shareholders’equity at a net-of-tax amount.

Other securities for which market quotations are unavail-able are stated at cost, cost being determined by moving-average method, except as stated in the paragraph below.

In case where the fair value of equity securities issued byunconsolidated subsidiaries and affiliates or other securitieshas declined significantly and such impairment of the value isnot deemed temporary, those securities are written down to thefair value and the resulting losses are included in net profit orloss for the period.

(b) DerivativesAll derivatives are stated at fair value, with changes in fair valueincluded in net profit or loss for the period in which they arise,except for derivatives that are designated as “hedging instru-ments.” (see (c) Hedge Accounting below)(c) Hedge accountingThe derivatives designated as hedging instruments by theCompany are interest swaps and currency swaps. The relatedhedged items are long-term bank loans and long-termadvances.

The hedging interest rate swaps and currency swaps thatmeet the conditions for applying the hedge accounting are notmeasured at fair value. They are assumed together with thehedged asset or liability as a synthetic instrument withconverted terms. Net cash flow from interest rate swap contractare adjusted to the interests on the hedged asset or liability,and currency swaps are assigned to the claim and debt inforeign currency which is hedge object, rather than deferringchanges in fair value of those contracts.

The Companies do not anticipate that the companies occursignificant losses from the derivative arrangements due to theevent of nonperformance by the counter parties.

(2) Property, plant and equipmentProperty, plant and equipment are stated at cost. Depreciation forproperty, plant and equipment held by the Company anddomestic consolidated subsidiaries is computed on the declining-balance method at rates based on the estimated useful lives ofassets which are prescribed by the Japanese tax laws.

Exceptionally, buildings and structures at Toyooka distributioncenter, Iwata distribution center and Yusen Air Fukumoto Buildingare depreciated on the straight-line method.

Depreciation of these tangible fixed assets held by overseasconsolidated subsidiaries is generally based on the straight-linemethod.

Normal repairs and maintenance, including minor renewalsand improvements, are charged to income as incurred.

(3) AmortizationAmortization of intangible assets and long-term prepaid expensesincluded in “Other investments and advances” is computed usingthe straight-line method, over a period prescribed by theJapanese tax laws.

Software costs for internal use are amortized over theirexpected useful lives (less than 5 years) on a straight-line basis.

(4) Allowance for doubtful accountsThe Company and its domestic consolidated subsidiaries providethe allowance for doubtful accounts by the method which uses thepercentage of its own actual bad debt loss against the balance oftotal receivables plus the amount of uncollectible receivablesestimated on an individual basis. Overseas consolidatedsubsidiaries provide mainly for the amount of uncollectible receiv-ables estimated on an individual basis.

17

(5) Accrued bonuses to employeesAccrued bonuses to employees is provided for the portion rele-vant to the current year of the estimated amount of bonuspayment in Summer.

(6) Accrued retirement benefits The Company, its domestic consolidated subsidiaries and certainoverseas consolidated subsidiary have a funded pensionprogram to cover the employees’ retirement benefits. The amountof such retirement benefits is determined by reference to the latestrate of pay, length of service and conditions under which theretirements occur. Unrecognized actuarial differences are amor-tized on a straight-line basis over the period of 10 years from thenext year in which they arise.

The Company and its 3 consolidated subsidiaries provide forlump-sum retirement payments for directors and statutory auditorsin amounts that would be required pursuant to the internal regula-tion if they retired at the balance sheet dates.

(7) Foreign currency translationAll monetary assets and liabilities denominated in foreign curren-cies, whether long-term or short-term, are translated intoJapanese yen at the exchange rates prevailing at the balancesheet date. Resulting gains and losses are included in net profit orloss for the period.

(8) Translation of foreign currency financial statements(Accounts of overseas subsidiaries and affiliates)

Foreign currency financial statements of overseas consolidatedsubsidiaries, and overseas subsidiaries and affiliates accounted forby the equity method are translated into Japanese yen at currentexchange rates prevailing at the relevant balance sheet dates ofthese subsidiaries and affiliates, except that shareholders’ equity aretranslated at historical rates.

In this connection, a certain adjusting account is set up in theconsolidated balance sheets to enable debit and credit totals tobe balanced. Such adjusting account balances are shown as“Adjustments on foreign currency statement translation” and areincluded in Shareholders’ Equity.

(9) Income taxesIncome taxes of the Company and its domestic subsidiariesconsist of corporate income taxes, local inhabitants taxes andenterprise taxes.

The Company and its subsidiaries adopted deferred taxaccounting to recognize deferred tax assets and liabilities for theexpected future tax consequences of temporary differencesbetween the carrying amounts and the tax bases of assets andliabilities.

(10) Accounting for the consumption taxIn Japan, the consumption tax is imposed at a flat rate of 5 % onall domestic consumption of goods and services (with certainexemptions). The consumption tax imposed on the Companies’domestic sales to customers is withheld by the Companies at thetime of sales and is paid to the national government subsequently.The consumption tax withheld upon sale and the consumption taxpaid by the Companies on the purchases of goods and servicesare not included in the related amounts in the accompanyingconsolidated statements of income.

(11) Finance leasesFinance leases other than those that are deemed to transfer theownership of the leased assets to lessees are accounted for bythe method that is applicable to ordinary operating leases.

(12) Net income and dividends per share“Shareholders’ equity per share” is computed based on theoutstanding shares of common stock at relevant balance sheetsdates.

“Net income — primary per share” is computed based on theweighted average number of shares of common stock outstandingduring each year.

“Net income — fully diluted per share” for the year endedMarch 31, 2003 and 2002 is not shown in the consolidated state-ments of operations since there were no outstanding convertiblebonds or other common stock equivalents.

“Cash dividends per share” shown for each year in the consoli-dated statement of income represent dividends declared as applic-able to the respective year rather than those paid in each year.

Effective from the year ended March 31, 2003, the Companyadopted the new accounting standard for net income per shareand excluded bonuses to directors’ from net income available tocommon stockholders in the computation of shareholders’ equityper share and net income per share, as an appropriation ofretained earnings’ applicable to the respective years. If this newmethod had been applied in the prior year, shareholders’ equityper share for the year ended March 31, 2002 would have been¥1,339.00 and net income per share for the year ended March 31,2002 would have been ¥73.44.

(13) Appropriation of retained earningsUnder the Japanese Commercial Code and the Articles ofIncorporation of the Company, the plan for appropriation ofretained earnings (primarily for cash dividend payments)proposed by the Board of Directors should be approved by theshareholders’ meeting which must be held within three monthsafter the end of each financial year. The appropriation of retainedearnings reflected in the accompanying consolidated financialstatements represents the results of such appropriations applic-able to the immediately preceding financial year which wasapproved by the shareholders’ meeting and disposed of duringthat year. Dividends are paid to shareholders on the shareholders’

register at the end of each financial year. As is customary practicein Japan, the payment of bonuses to directors and statutoryauditors is made out of retained earnings instead of being chargedto income of the year, which constitute a part of appropriationsmentioned above. The Japanese Commercial Code also providesthat an amount equals to at lease 10% of cash distributions fromretained earnings should be appropriated as legal reserve until theamount of additional paid-in capital and legal reserve equals 25%of common stock. The legal reserve may be used to reduce adeficit or may be transferred to common stock through resolutionsby shareholders and/or directors, and may be transferred tounappropriated retained earnings to the extent that the amount ofadditional paid-in capital and legal reserve does not fall below25% of common stock. Legal reserve is included in “Retainedearnings” in the accompanying consolidated financial statements.

(14) Treasury stockUnder the amended Code, the Company is allowed to acquire itsown shares to the extent that the aggregate cost of treasury stockdoes not exceeds the maximum amount available for dividends.Treasury stock are stated at cost in the shareholders’ equity in theaccompanying consolidated balance sheets. Net gain on resale oftreasury stock are presented under “additional paid-in capital’’ inthe shareholders’ equity in the accompanying consolidatedbalance sheets.

(15) Cash and cash equivalentsCash and cash equivalents in the consolidated statements of cashflows are composed of cash on hand, demand deposits in banksand short-term investments with original maturity of three months orless and which represent a minor risk of the value fluctuation.

3. United States Dollar AmountsThe accompanying consolidated financial statements are prepared in Japanese yen. The U.S. dollar amounts included in the consolidatedfinancial statements and notes thereto represent the arithmetical results of translating Japanese yen to U.S. dollars on a basis of¥120.20=U.S.$1, the approximate effective rate of exchange prevailing at March 31, 2003. The inclusion of such U.S. dollar amounts issolely for convenience and is not intended to imply that yen amounts have been or could be readily converted, realized or settled in U.S.dollars at the rate or any other rate.

4. Marketable Securities and Investments in SecuritiesMarketable securities and Investments in securities classified into “other securities” at March 2003 and 2002 were follows:(1) Other securities for which market quotations are available were comprise the following:

Millions of yen Thousands of U.S. dollars

2003 2002 2003

Fair value Fair value Fair value(Carrying (Carrying (Carrying

March 31 Cost amount) Difference Cost amount) Difference Cost amount) Difference

Securities for which marketvalue exceeds cost:Equity securities ¥274 ¥472 ¥198 ¥ 421 ¥ 687 ¥266 $2,280 $3,927 $1,647Debt securities:

Government bond – Local bond 59 59 0 59 59 0 491 491 0Corporate bond 23 26 3 68 86 18 191 216 25

Other 9 9 0 5 6 1 75 75 0¥365 ¥566 ¥201 ¥ 553 ¥ 838 ¥285 $3,037 $4,709 $1,672

Securities for which marketvalue does not exceed cost:

Equity securities ¥394 ¥305 ¥ (89) ¥ 404 ¥ 330 ¥ (74) $3,277 $2,537 $ (740)Debt securities:

Government bond – Local bond — — — — — — — — —Corporate bond 10 10 (0) 10 9 (1) 83 83 (0)

Other — — — 41 28 (13) — — —¥404 ¥315 ¥ (89) ¥455 ¥ 367 ¥ (88) $3,360 $2,620 $ (740)

Total ¥769 ¥881 ¥112 ¥1,008 ¥1,205 ¥197 $6,397 $7,329 $ 932

18

19

5. Financial Derivative Transactions(1) Transactions, policy and purpose of derivative transactionsThe Companies use derivative financial instruments, which compriseprincipally interest swap transactions, foreign forward exchangecontract to reduce interest rate and foreign exchange rate risks.

The Companies do not hold or issue derivative financialinstruments for trading purposes.

(2) Risk of transactionsThe derivative transactions have market risk associated with themarket price volatility and credit risk related to the possibility of acounter party’s default.

The Companies do not anticipate that the companies occursignificant losses from the derivative arrangements due to theevent of nonperformance by the counter parties.

(3) Risk managementThe Companies have established control regulations whichinclude policies and procedures for the approval and reporting oftransactions involving derivative financial instruments.

All derivative transactions are reported and are approved bychief financial officer.

Material derivative transactions are reported to and areapproved by board of directors in accordance with internal rules.

(4) Derivative contracts outstandingThe following tables summarize market value information as ofMarch 31, 2003 and 2002 of outstanding derivative transactionsfor which hedge accounting has not been applied. The exchangerate prevailing at the end of the fiscal year for translation offorward foreign exchange transactions is forward foreignexchange rate.

(4) Proceeds from sale of other securities, total amount of gain on sale of other securities and total amount of loss on sale of other securities were comprise the following:


2003 2002 2003

Proceeds from sale of other securities ¥142 ¥187 $1,181

Total amount of gain on sale of other securities 25 27 208

Total amount of loss on sale of other securities 73 7 607

(2) Other securities for which market quotations are not available were comprise the following:


2003 2002 2003

Other securitiesUnlisted equity securities ¥ 658 ¥718 $5,474Money market funds 385 — 3,203

¥1,043 ¥718 $8,677

(3) The future redemption schedule of other securities with maturities comprise the following:


2003 2002 2003

Over Over Over one year one year one year

Within but within Over Within but within Over Within but within Over one year five years five years one year five years five years one year five years five years

Debt securities:Government bond ¥ 59 ¥ — ¥ — ¥ — ¥ 59 ¥ — $491 $ — $ —Corporate bond 8 28 — 42 51 2 67 232 —

¥ 67 ¥28 ¥ — ¥ 42 ¥110 ¥ 2 $558 $232 $ —

20

6. Long-Term DebtLong-term debt as at March 31, 2003 and 2002 comprise the followings:


2003 2002 2003

Loans from banks and other financial institutions due 2003 through 2013 ¥6,974 ¥7,612 $58,020

Less: Portion due within one year (2,858) (1,479) (23,777)¥4,116 ¥6,133 $34,243

As is customary in Japan, short-term and long-term bank loansare made under general agreements which provides that securityand guarantees for future and present indebtedness will be givenupon request of the bank, and that the bank shall have the right,as the obligations become due, or in the event of their default, tooffset cash deposits against such obligations due to the bank.

At March 31, 2003, assets pledged as collateral for short-termbank loans and long-term debt, including the current portion oflong-term debt, were as follows:


2003 2002 2003

Buildings and structures ¥ 817 ¥ 868 $ 6,797Land 1,889 1,889 15,715Time deposits — 3 —

¥2,706 ¥2,760 $22,512

7. Retirement Benefit PlansThe Company, its domestic consolidated subsidiaries and certainoverseas consolidated subsidiary have a funded pensionprogram to cover the employees’ retirement benefits. The amountof such retirement benefits is determined by reference to the latestrate of pay, length of service and conditions under which theretirements occur.

The following table sets forth a reconciliation of projectedbenefit obligations, plan assets, funded status of the retirementbenefit plans and net liability recognized in the accompanyingbalance sheets at March 31, 2003 and 2002:


2003 2002 2003

Projected benefit obligation ¥(8,616) ¥(8,594) $(71,681)Plan assets 3,240 3,243 26,955Funded status of the plans (5,376) (5,351) (44,726)Unrecognized net actuarial loss 1,786 1,492 14,859Unrecognized past service

obligation 41 — 341Net liability recognized (3,549) (3,859) (29,526)Prepaid pension expenses 563 392 4,684Accrued retirement benefitsto employees ¥(4,112) ¥(4,251) $(34,210)

The net periodic post-employment benefit cost for the yearsended March 31, 2003 and 2002, included the following components:


2003 2002 2003

Service cost ¥533 ¥453 $4,434Interest cost 197 238 1,639Expected return on plan assets (100) (137) (832)Amortization of unrecognized actuarial differences 113 32 940

¥743 ¥586 $6,181


2003 2002 2003

Contracts Unrealized Contracts Unrealized Contracts Unrealized outstanding gain (loss) outstanding gain (loss) outstanding gain (loss)

Currency-relatedforward foreign currencyexchange contracts:

Buy U.S. dollar ¥ 136 ¥ (0) ¥ 275 ¥ 9 $ 1,131 $ (0)Buy Australian dollar 17 (0) 11 0 141 (0)Buy Singaporean dollar 27 (1) 9 (0) 225 (8)Buy Swiss franc — — 23 0 — —Buy Japanese yen 384 (7) 398 (13) 3,195 (58)Buy Pounds sterling 80 (1) 58 (0) 666 (8)Buy Hong Kong dollar 392 (13) 162 (1) 3,261 (109)Buy Thai baht 193 (4) 128 (1) 1,606 (33)Buy Euro 157 0 77 (0) 1,306 0Buy Swedish kronor 17 (0) — — 141 (0)Others — — 0 0 — —

¥1,403 ¥(26) ¥1,141 ¥(6) $11,672 $(216)

21

The discount rate used to determine the actuarial present value ofprojected benefit obligations under the plan that coversemployees of the Company and the domestic subsidiaries was2.0% as of March 31, 2003 (2.0% as of March 31, 2002). The rateof expected return on plan assets was 3.0% as of March 31, 2003(3.0% as of March 31, 2002). Attribution of retirement benefit toeach year of service of the employees is based on “benefit/years-of-service” approach, whereby the same amount of the benefit isattributed to each year.

8. Income TaxesThe statutory tax rate used for calculating deferred tax assets anddeferred tax liabilities as of March 31, 2002 was 41.8%.

A corporation size-based enterprise tax will be imposed forthe year ended March 31, 2005. In consideration of the newlyenacted tax, the statutory tax rate used for calculating deferredtax assets and deferred tax liabilities as of March 31, 2003 for theircurrent portion is 41.8% and the statutory tax for the remainingportion is changed.

The change in the tax rates had no material impact on theaccompanying consolidated financial statements.

Significant components of deferred tax assets and liabilitiesare as follows:


2003 2002 2003

Deferred tax assets:Accrued retirement benefits to employees ¥1,091 ¥ 859 $ 9,077

Accrued bonuses to employees 357 285 2,970Accrued enterprise tax 193 25 1,606Accrued retirement benefits to directors and statutory auditors 115 102 957

Allowance for doubtful accounts 72 45 599Deficit brought forward 355 192 2,953Loss on write-down of investment in unconsolidated affiliates 206 — 1,714

Others 349 378 2,894Total 2,738 1,886 22,770

Valuation allowance (566) (463) (4,708)Total deferred tax assets ¥2,172 ¥1,423 $18,062

Deferred tax liabilities:Depreciation 170 203 1,414Special tax-purpose reserve 10 18 83Prepaid pension expenses 225 156 1,872Eliminated loss on write-down of investment in unconsolidated affiliates 206 — 1,714

Others 45 87 375Total deferred tax liabilities 656 464 5,458

Net deferred tax assets ¥1,516 ¥ 959 $ 12,604

The reconciliation of the difference between the statutory tax rateand the effective income tax rate is as follows:

2003 2002

Statutory tax rate 41.8% 41.8%Adjustments:

Entertainment expenses and othernot deductible 0.9 2.6

Dividends income not taxable (0.1) (3.5)Per capita levy of local residentincome taxes 0.7 2.7

Differences arising from statutory taxrates on taxable income betweenJapan and other countries (5.6) (8.0)

Unrecognized tax benefit of consolidated subsidiaries’ deficit — 11.7

Other 3.6 2.8Effective income tax rate 41.3% 50.1%

9. Commitments and Contingent LiabilitiesThe Companies were contingently liable for guarantees of tradepayables and bank loans owed by their unconsolidatedsubsidiaries, affiliates and a third party company in an amount of¥378 million ($3,145 thousand) at March 31, 2003 (¥106 million atMarch 31, 2002).

10. Breakdown of Selling, General andAdministrative Expenses

Selling, general and administrative expenses during the yearsended March 31, 2003 and 2002 are summarized as follows:


2003 2002 2003

Labor and payroll cost ¥10,930 ¥10,999 $ 90,932Provision for accrued bonusesto employees 890 876 7,404

Provision for accrued retirement benefits to:

Employees 642 504 5,341Directors and statutory auditors 84 85 699

Provision for doubtful accounts 70 22 582Depreciation 632 640 5,258Amortization of difference between investment costs and equity in net assets acquired of consolidated subsidiaries — 77 —

Other 11,593 11,914 96,447¥24,841 ¥25,117 $206,663

22

11. Cash and Cash Equivalents Consisted of:Thousands of

Millions of yen U.S. dollars

2003 2002 2003

Cash and bank deposits ¥8,852 ¥8,612 $73,644Marketable securities 385 — 3,203Time deposits with deposit term of over 3 months (41) (78) (341)

Cash and cash equivalents ¥9,196 ¥8,534 $76,506

12. Accounting for LeasesThe Companies have various lease agreements whereby theCompanies act as a lessee. Finance lease contracts other thanthose that are deemed to transfer the ownership of the leasedassets to lessees are accounted for by the method that is applic-able to ordinary operating leases.

Certain key information on lease contracts of the Companiesas lessees for the years ended March 31, 2003 and 2002 were asfollows:(1) Finance lease contracts other than those which are

deemed to transfer the ownership of the leasedassets to lessees:

Acquisition cost, accumulated depreciation, net book value anddepreciation of the leased assets would have been presented inthe consolidated financial statements as shown below if thoseleased assets had been capitalized. Acquisition costs include theportion of interest thereon and depreciation is based on thestraight-line method over the lease term of the leased assets withnil residual value.


2003 2002 2003

Machinery and equipment:Acquisition cost ¥ 615 ¥ 693 $ 5,116Accumulated depreciation (348) (330) (2,895)Net book value ¥ 267 ¥ 363 $ 2,221

Motor vehicles:Acquisition cost ¥ 110 ¥ 96 $ 915Accumulated depreciation (64) (49) (532)Net book value ¥ 46 ¥ 47 $ 383


2003 2002 2003

Software:Acquisition cost ¥ 281 ¥ 273 $ 2,338Accumulated depreciation (166) (170) (1,381)Net book value ¥ 115 ¥ 103 $ 957

Depreciation ¥ 218 ¥ 259 $ 1,814

The scheduled maturities of future lease rental payments:

Due within one year ¥ 207 ¥ 217 $ 1,722Due over one year 221 295 1,839

¥ 428 ¥ 512 $ 3,561

Lease/rental expenses for the year ¥ 218 ¥ 259 $ 1,814

(2) Operating lease contracts:Thousands of

Millions of yen U.S. dollars

2003 2002 2003

The scheduled maturities of future lease rental payments:

Due within one year ¥ 799 ¥ 713 $ 6,647Due over one year 4,288 2,057 35,674

¥5,087 ¥2,770 $42,321

13. Subsequent EventsThe Company made an appropriation of retained earnings,proposed by the Board of Directors and approved by share-holders at the general meeting on June 27, 2003, as follows:


Retained earnings at March 31, 2003 ¥5,434 $45,208Reversal of special tax-purpose reserve 5 42Appropriations:

Cash dividends (¥11 per share) 193 1,606Directors’ and statutory auditors’ bonuses 60 499

Transfer to general reserves 300 2,496Total 553 4,601

Retained earnings to be carried forward ¥4,886 $40,649

Note: The appropriation of retained earnings above is based onthe non-consolidated financial statements for the year endedMarch 31, 2003.

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14. Segment Information(1) Industry segmentsThe Company and its subsidiaries operate principally in the following three industry segments:

i) Air and sea cargoii) Traveliii) Other

The segment information of the Companies in respect of the years ended March 31, 2003 and 2002, classified by industry segments arepresented below:


Millions of yen (Note 3)

Industry segment Elimination orunallocatable Consolidated Consolidated

Year ended March 31, 2003 Air and sea cargo Travel Other Total amounts total total

Net sales:Net sales to outside customers ¥107,380 ¥3,537 ¥ 79 ¥110,996 ¥ — ¥110,996 $923,427Inter-segment sales/transfers 1 — 301 302 (302) — —

Total sales 107,381 3,537 380 111,298 (302) 110,996 923,427Operating expenses 100,144 3,456 298 103,898 (294) 103,604 861,929

Operating income ¥ 7,237 ¥ 81 ¥ 82 ¥ 7,400 ¥ (8) ¥ 7,392 $ 61,498

Assets ¥ 54,141 ¥3,721 ¥3,895 ¥ 61,757 ¥3,023 ¥ 64,780 $538,936Depreciation 946 99 82 1,127 — 1,127 9,376Capital expenditures 1,079 42 1 1,122 — 1,122 9,334



Industry segment Elimination orunallocatable Consolidated Consolidated

Year ended March 31, 2002 Air and sea cargo Travel Other Total amounts total total

Net sales:Net sales to outside customers ¥87,568 ¥3,880 ¥ 69 ¥91,517 ¥ — ¥91,517 $686,806Inter-segment sales/transfers 4 — 193 197 (197) — —

Total sales 87,572 3,880 262 91,714 (197) 91,517 686,806Operating expenses 84,895 4,380 171 89,446 (200) 89,246 669,763

Operating income ¥ 2,677 ¥ (500) ¥ 91 ¥ 2,268 ¥ 3 ¥ 2,271 $ 17,043

Assets ¥46,202 ¥4,741 ¥3,196 ¥54,139 ¥3,828 ¥57,967 $435,024Depreciation 891 113 77 1,081 — 1,081 8,113Capital expenditures 2,244 53 291 2,588 — 2,588 19,432

Note: The amounts of the common assets included in the column “Elimination or unallocatable amounts” are ¥4,145 million ($34,484 thousand) and

¥4,423 million for the years ended March 31, 2003 and 2002, respectively, which mainly consist of surplus funds (cash and securities).

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(2) Geographic areasThe segment information of the Companies in respect of the years ended March 31, 2003 and 2002, classified by geographic areas arepresented below:



Geographic area Elimination orNorth East South Asia unallocatable Consolidated Consolidated

Year ended March 31, 2003 Japan America Europe Asia and Oceania Total amounts total total

Net sales:Net sales to outside customers ¥65,561 ¥11,447 ¥10,471 ¥15,747 ¥7,770 ¥110,996 ¥ — ¥110,996 $923,427Inter-segment sales/transfers 131 265 216 80 74 766 (766) — —

Total sales 65,692 11,712 10,687 15,827 7,844 111,762 (766) 110,996 923,427Operating expenses 60,837 10,985 10,245 14,881 7,422 104,370 (766) 103,604 861,929

Operating income ¥ 4,855 ¥ 727 ¥ 442 ¥ 946 ¥ 422 ¥ 7,392 ¥ (0) ¥ 7,392 $ 61,498

Assets ¥36,808 ¥ 8,170 ¥ 7,689 ¥ 7,858 ¥5,158 ¥ 65,683 ¥(903) ¥ 64,780 $538,936



Geographic area Elimination orNorth East South Asia unallocatable Consolidated Consolidated

Year ended March 31, 2002 Japan America Europe Asia and Oceania Total amounts total total

Net sales:Net sales to outside customers ¥52,773 ¥11,096 ¥8,765 ¥14,632 ¥4,251 ¥91,517 ¥ — ¥91,517 $686,806Inter-segment sales/transfers 189 430 104 41 40 804 (804) — —

Total sales 52,962 11,526 8,869 14,673 4,291 92,321 (804) 91,517 686,806Operating expenses 52,058 11,286 8,776 13,698 4,259 90,077 (831) 89,246 669,763

Operating income ¥ 904 ¥ 240 ¥ 93 ¥ 975 ¥ 32 ¥ 2,244 ¥ 27 ¥ 2,271 $ 17,043

Assets ¥33,756 ¥ 6,480 ¥6,064 ¥ 7,290 ¥3,254 ¥56,844 ¥1,123 ¥57,967 $435,024

Note: The amounts of the common assets included in the column “Elimination or unallocatable amounts” are ¥4,145 million ($34,484 thousand) and

¥4,423 million for the years ended March 31, 2003 and 2002, respectively, which mainly consist of surplus funds (cash and securities).

(3) Net sales in overseas countriesNet sales of the Companies from sources outside Japan for the years ended March 31, 2003 and 2002 are presented below:


Years ended March 31, 2003 2002 2003

Net sales in overseas countries:North America ¥11,772 ¥11,556 $ 97,937Europe 10,749 8,896 89,426East Asia 15,883 14,710 132,138South Asia and Oceania 7,911 4,360 65,815Others 3 1 25

¥46,318 ¥39,523 $385,341

Percentage of such sales against consolidated net sales 41.7% 43.3%

To the Board of Directors of Yusen Air & Sea Service Co., Ltd.

We have audited the accompanying consolidated balance sheets of Yusen Air & Sea Service Co., Ltd.

and its consolidated subsidiaries as of March 31, 2003 and 2002, and the related consolidated state-

ments of income, shareholders’ equity and cash flows for the years then ended, all expressed in

Japanese yen. These consolidated financial statements are the responsibility of the Company’s manage-

ment. Our responsibility is to express an opinion on these consolidated financial statements based on our

audits.

We conducted our audits in accordance with auditing standards generally accepted in Japan. Those

standards require that we plan and perform the audit to obtain reasonable assurance about whether the

consolidated financial statements are free of material misstatement. An audit includes examining on a

test basis, evidence supporting the amounts and disclosures in the consolidated financial statements.

An audit also includes assessing the accounting principles used and significant estimates made by

management, as well as evaluating the overall consolidated financial statement presentation. We

believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly the consolidated

financial position of Yusen Air & Sea Service Co., Ltd. and its consolidated subsidiaries as of March 31,

2003 and 2002, and the consolidated results of their operations and their cash flows for the years then

ended in conformity with accounting principles and practices generally accepted in Japan (see Note 1)

applied on a consistent basis.

As described in Note 2 (1), effective for the year ended March 31, 2002, Yusen Air & Sea Service Co.,

Ltd. and its subsidiaries have adopted new Japanese accounting standards for valuation of other

securities.

The amount expressed in U.S. dollars, provided solely for the convenience of the reader, have been

translated on the basis set forth in Note 3 to the accompanying consolidated financial statements.

Tokyo, Japan

June 27, 2003

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Report of Independent Auditors

26

YUSEN AIR & SEA SERVICE (U. K.) LTD.Unit 3, Horton Industrial Park, Horton Road, West Drayton, Middlesex UB7 8JD, U.K.Phone: +44-1895-420606Fax: +44-1895-441289

YUSEN AIR & SEA SERVICE (FRANCE) S. A. R. L.Village Fret 7, rue du Te, Bat. 3447 Fret 4, Roissy, Charles de Gaulle, FrancePhone: +33-1-7437-2000Fax: +33-1-7437-2020

YUSEN AIR & SEA SERVICE (BENELUX) B.V.Prestwickweg 8, 1118 LB, Schiphol South-East, The NetherlandsPhone: +31-20-316-0010Fax: +31-20-316-0080

YUSEN AIR & SEA SERVICE (EUROPE) B. V.Prestwickweg 8, 1118 LB, Schiphol South-East, The NetherlandsPhone: +31-20-316-0081Fax: +31-20-316-1780

YUSEN AIR & SEA SERVICE (DEUTSCHLAND) GmbHMuendelheimer Weg 59, 40472 Düesseldorf, GermanyPhone: +49-211-41854-0Fax: +49-211-41854-100

YUSEN AIR & SEA SERVICE (ITALIA) S. R. L.Via Copernico, 14/16 20060 Cassina de’ Pecchi, Milano, ItalyPhone: +39-02-954497-250Fax: +39-02-9534-1282

YUSEN AIR & SEA SERVICE (CZECH) s.r.o.Zlicin Business Centre, Na Radosti 399, 155 21 Prague 5, Czech RepublicPhone: +420-233-012-444Fax: +420-233-012-450

YUSEN AIR & SEA SERVICE (THAILAND) CO., LTD.Shinawatra Tower III, 18th Floor, 1010 Viphavadi Rangsit Road, Ladyao, Chatuchak, Bangkok 10900, ThailandPhone: +66-2-949-2452Fax: +66-2-949-2475

TRANS ASIA SHIPPING CORPORATION BHD. (TASCO)YUSEN AIR DEPT.KUALA LUMPUR AIRPORT BRANCHLot A-7, Malaysia Airlines Freight Forwarders Complex, KLIA Free Commercial Zone, Southern Zone, Kuala Lumpur Int’l Airport 64000 Sepang, Selangor, Darul Ehsan, MalaysiaPhone: +60-3-8787-2700Fax: +60-3-8787-2900

YUSEN AIR & SEA SERVICE (SINGAPORE) PTE. LTD.Yusen Air & Sea Singapore Logistics Centre, 2 Changi South Avenue 2, Singapore 486354Phone: +65-6546-8858Fax: +65-6546-8044

YUSEN AIR & SEA SERVICE (AUSTRALIA) PTY. LTD.Unit 3, 286-288 Coward Street, Mascot, N.S.W. 2020, AustraliaPhone: +61-2-9667-5400Fax: +61-2-9693-5335

P.T. YUSEN AIR & SEA SERVICE INDONESIAJL.R.E. Martadinata No.1, Blok A1-A2, Jakarta 14430,IndonesiaPhone: +62-21-6902133Fax: +62-21-6902132

YUSEN TRAVEL (SINGAPORE) PTE. LTD.391 A Orchard Road #09-03, Ngee Ann City Tower A, Singapore 0923 Phone: +65-732-1511Fax: +65-733-0216

YUSEN TRAVEL (H. K.) LTD.Unit 504-504A, Admiralty Centre, Tower 2 18 Harcourt Road, Hong Kong Phone: +852-2865-3783 Fax: +852-2520-6992

World-Wide Service Network

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YUSEN SHENDA AIR & SEASERVICE (SHANGHAI) LTD.Room 305, Shanghai International Trade Centre, 2201 Yan An Road (West),Shanghai 200336, People’s Republic of ChinaPhone: +86-21-6270-0609Fax: +86-21-6270-0415

YUSEN AIR & SEA SERVICE LOGISTICS (SHANGHAI) CO., LTD.No.275, Ba Sheng Road, Wai Gao Qiao Free Trade Zone, Shanghai 200137, People’s Republic of ChinaPhone: +86-21-5048-3070Fax: +86-21-5048-3178

YUSEN SEA FREIGHT (TAIWAN) LTD.Golden Tower, 8th Floor, No.88, Sec.2, Chung Hsiao East Road, Taipei, Taiwan, The Republic of ChinaPhone: +886-2-2343-5575Fax: +886-2-2341-7163

YUSEN AIR & SEA SERVICE (CANADA) INC.261 Parkhurst Square, Brampton, Ontario, Canada L6T 5H5Phone: +1-905-458-9622Fax: +1-905-458-7120

YUSEN AIR & SEA SERVICE DO BRASIL LTDA.Av. Paulista, 542-9 Andar, Cep 01310-000, Sao Paulo, SP, BrasilPhone: +55-11-3262-1459Fax: +55-11-3262-1460

YUSEN AIR & SEA SERVICE (H.K.) LTD.25/F., Ever Gain Plaza, Tower One, 88 Container Port Road, Kwai Chung, N.T., Hong Kong SAR, People’s Republic of ChinaPhone: +852-2265-9112Fax: +852-2265-9151

YUSEN AIR & SEA SERVICE (CHINA) LTD.25/F., Ever Gain Plaza, Tower One, 88 Container Port Road, Kwai Chung, N.T., Hong Kong SAR, People’s Republic of ChinaPhone: +852-2265-9150Fax: +852-2265-9151

YUSEN AIR & SEA SERVICE (KOREA) CO., LTD.1st Floor, Korea Bldg., 544, Dohwa-dong, Mapo-ku, Seoul, 121-704, KoreaPhone: +82-2-2077-3000Fax: +82-2-2077-3083

YUSEN AIR LOGISTICS (XIAMEN) CO., LTD.No. 1, Terminal Bldg., Xiamen Gao Qi International Airport, Xiamen, Fujian 361006, People’s Republic of ChinaPhone: +86-592-5736-333Fax: +86-592-5736-555

YUSEN AIR & SEA SERVICE (TAIWAN) LTD.Golden Tower, 8th Floor, No.88, Sec.2, Chung Hsiao East Road, Taipei, Taiwan, The Republic of ChinaPhone: +886-2-2351-6185Fax: +886-2-2396-4160

YUSEN AIR & SEA SERVICE (PHILIPPINES) INC.Lot 5, Sta Agueda Avenue, Sto Nino, Paranaque, Metro Manila, PhilippinesPhone: +63-2-852-7101Fax: +63-2-851-9989

YUSEN AIR & SEA SERVICE (U.S.A.) INC.377 Oak Street, Garden City, NY 11530, U.S.A.Phone: +1-516-222-1777Fax: +1-516-222-0003

Overseas cargo business company head office

Overseas cargo business company branch

Liaison office

Overseas agent

Overseas passenger business company

Overseas passenger business company branch

YUSEN TRAVEL (U.S.A.) INC. Head Office500 Fifth Avenue, Suite 1100,

New York, NY 10110, U.S.A.Phone: +1-646-366-1557 Fax: +1-646-366-1547

YUSEN TRAVEL (U.S.A.) INC. New Jersey Sales Officec/o NYK LINE (NORTH AMERICA) INC.300 Lighting Way, 5th Floor,Secaucus, NJ 07094, U.S.A.Phone: +1-201-330-3410 Fax: +1-201-867-9059

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Front row from left:

Bumpei Hashizume Managing Director

Yasuo FukushimaManaging Director

Back row from left:

Kaizo Yamaguchi Managing Director

Masakatsu IshikawaManaging Director

Masatoshi MoriyaManaging Director


Michio TanakaPresident

Hiroshi TakahashiBoard Counselor

Back row from left:

Genta Oyama Senior Managing Director

Yoshiaki YakoSenior Managing Director


Isao Takano Director

Tomohiro IidaDirector

Back row from left:

Yukio Umemoto Director

Masaki Tanaka Director

Board of Directors and Corporate Auditors

President and Representative Director

Michio Tanaka

Senior Managing Director and Representative Director

Genta Oyama

Senior Managing Director

Yoshiaki Yako

Managing Directors

Bumpei HashizumeYasuo FukushimaMasakatsu IshikawaKaizo YamaguchiMasatoshi Moriya

Director and Board Counselor

Hiroshi Takahashi

Directors

Isao TakanoTomohiro IidaYukio UmemotoMasaki Tanaka

Standing Corporate Auditors

Shigenobu KojimaKazutoshi Uno

Corporate Auditors

Naoyoshi IshikawaToshiaki Takeda

As of June 27, 2003

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Head Office:Yusen Hakozaki-cho Building, 30-1, Nihombashi Hakozaki-cho, Chuo-ku, Tokyo 103-0015, JapanPhone: +81-3-3669-4381Fax: +81-3-3669-8540Website: http://www.yusen.co.jp

Established:February 28, 1955

Paid-in Capital:¥4,301 million

Common Shares:Authorized: 40,000,000Issued: 17,592,000

Number of Shareholders:3,835

Principal Shareholders:Number of Percentage of

shares owned total shares(Thousands) issued

Nippon Yusen Kaisha (NYK Line) 10,720 60.94%Mitsubishi Corporation 412 2.35MC Trans International Incorporated 408 2.32The Master Trust Bank of Japan, Ltd. 364 2.07The Tokio Marine and Fire Insurance Company, Limited 336 1.91The Bank of Tokyo-Mitsubishi, Ltd. 324 1.84UFJ Trust Bank Limited 304 1.73

Transfer Agent:The Mitsubishi Trust and Banking Corporation4-5, Marunouchi 1-chome, Chiyoda-ku, Tokyo 100-8212, Japan

Number of Employees:1,036

Business Activities:Aircargo Consolidation BusinessFreight ForwardingCustoms ClearanceWarehousingAir & Ocean Agency BusinessTrucking BusinessNon-Life Insurance Agency ServicesOther business incidental or related to the above businesses

Sales Offices:East Japan Export Sales Div. (Tokyo)

Phone: +81-3-3669-6034East Japan Import Sales Div. (Narita)

Phone: +81-476-33-8702Logistics Div. (Tokyo)

Phone: +81-3-5283-5772Sea Freight Div. (Tokyo)

Phone: +81-3-6404-3456Central Japan Sales Div. (Nagoya)

Phone: +81-52-221-7671West Japan Sales Div. (Osaka)

Phone: +81-6-6615-3656

Subsidiaries in 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 Logistics (Hamamatsu) Co., Ltd.Yusen Air Logistics (Nagoya) Co., Ltd.Tosho Unyu Co., Ltd.Yusen Travel Co., Ltd.Yusen Air Staff Service Co., Ltd.

Corporate InformationAs of March 31, 2003

Printed in Japan

Yusen Hakozaki-cho Building, 30-1, Nihombashi Hakozaki-cho, Chuo-ku,Tokyo 103-0015, JapanPhone: +81-3-3669-6436 Fax: +81-3-3669-8540Website: http://www.yusen.co.jp

Annual Report 2003 - Yusen Logistics · 2016-12-27 · Relevant sea freight export volume grew...

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