annual report 2013 - mitsubishi logistics report 2013 year ended march 31, 2013 tokyo dia building...

ANNUAL REPORT 2013Year ended March 31, 2013

Tokyo Dia Building 28-38, Shinkawa, 1-chome, Chuo-ku, Tokyo 104-0033 Japan http://www.mitsubishi-logistics.co.jp

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Company Profile (As of March 31, 2013)

Headquarters and Branches

Headquarters: Chuo-ku, Tokyo

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

Date of Establishment April 15, 1887

Capital ¥22,393,986,570

Number of Shares Issued 175,921,478

Authorized Shares 440,000,000

Number of Employees 843 persons (parent only; not including 159 employees temporarily on loan to other companies. There are also 87 temporary employees, as well as 571 persons temporarily loaned or dispatched within the Group and those from outside the Group companies and accepted by the Company)

4,471 persons (on a consolidated basis; not including 68 employees temporarily on loan to companies outside the Group. There are also 1,287 temporary employees, as well as 932 persons temporarily loaned or dispatched from outside the Group companies and accepted by the Company)

Stock Exchange Listing First Section of the Tokyo Stock Exchange

Securities Code 9301

Major ShareholdersShareholder’s Name Number of Shares Held (Thousands) Shareholding Ratio (%)Japan Trustee Services Bank, Ltd. (trust account) 12,606 7.2The Master Trust Bank of Japan, Ltd. (trust account) 11,600 6.6Meiji Yasuda Life Insurance Company 9,707 5.5Tokio Marine & Nichido Fire Insurance Co., Ltd. 7,775 4.4MITSUBISHI ESTATE CO., LTD. 7,331 4.2Kirin Holdings Company, Limited 5,932 3.4The Bank of Tokyo-Mitsubishi UFJ, Ltd. 3,728 2.1ASAHI GLASS CO., LTD. 3,315 1.9Mitsubishi Corporation 3,205 1.8Takenaka Corporation 3,010 1.7

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

reserved, in addition to the shares stated in the table above.2. The “Shareholding ratio” is calculated after excluding treasury stock (584,895 shares).

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

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

independent corporate auditors as required by the rules of the Tokyo Stock Exchange, and reported it to the Exchange.4. Tetsuro Okamoto, Chairman of the Board, concurrently serves as President of The Japan Warehousing Association Inc., a general incorporated association.

Directors and Corporate Auditors (As of June 27, 2013)Position Name Responsibilities and/or Primary Occupation

Chairman of the Board Tetsuro OkamotoPresident* Akio MatsuiManaging Director Makoto Sakaizawa Responsible for Technical, Harbor Transportation and Real Estate BusinessesManaging Director Koji Yoneyama Responsible for International Transportation BusinessManaging Director Yuichi Hashimoto Responsible for Accounting & Financing, Information System, and Internal AuditManaging Director Yoshinori Watabe Responsible for Warehousing & Distribution BusinessManaging Director* Masato Hoki Responsible for General Affairs, Corporate Communications, Personnel, and Planning; and General Manager, Personnel DivisionDirector Minoru Makihara Senior Corporate Advisor, Mitsubishi CorporationDirector Jiro Nemoto Chief Board Advisor, Nippon Yusen Kabushiki KaishaDirector Shigemitsu Miki Senior Advisor, The Bank of Tokyo-Mitsubishi UFJ, Ltd.Director Kenji Irie General Manager, Technical DivisionDirector Kazuhiko Takayama General Manager, Nagoya BranchDirector Takanori Miyazaki General Manager, Kobe BranchStanding Corporate Auditor Tohru WatanabeStanding Corporate Auditor Michio IzumiCorporate Auditor Yohnosuke Yamada LawyerCorporate Auditor Shunkyo Harada Managing Director, Kyodo Soko CorporationCorporate Auditor Saburo Horiuchi Certified Public Accountant

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To Our Shareholders

Outline of the Mitsubishi Logistics Group Medium-Term Management Plan (2013–2015)

Topics

Overview of the Mitsubishi Logistics Group

Independent Auditor’s Report

Consolidated Balance Sheets

Consolidated Statements Of Income

Consolidated Statements Of Comprehensive Income

Consolidated Statements Of Changes In Net Assets

Consolidated Statements Of Cash Flows

Notes To Consolidated Financial Statements

Company Pro�le

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

Logistics Group for the 210th fiscal term (the year ended March 31, 2013).

During the year under review, the global economy was characterized by a moderate recovery of the economy that continued in the United States and a recovery in the pace of economic expansion that was seen in emerging countries such as China during the second half despite the fact that Europe performed weakly against a backdrop of the debt crisis. Although the Japanese economy remained weak against a backdrop of deceleration of the global economy and other factors, signs of recovery were seen during the second half, represented by solid consumer spending and public investments.

In these economic conditions, the business environment surrounding the Group remained difficult in the mainstay business segments of “Logistics” and “Real Estate.” For Logistics, businesses such as the warehousing and port and harbor operations businesses were adversely affected by the logistics rationalization and other factors. For Real Estate, although signs of improvement in supply-demand relationship for rental office buildings were seen, the rent level partially decreased.

Under these circumstances, the Mitsubishi Logistics Group appropriately responded to a review of distribution bases of its customers, which was triggered by the occurrence of the Great East Japan Earthquake, and promoted aggressive marketing activities. In Logistics, we strove to extend distribution center operations especially for pharmaceuticals and expand and reinforce operational bases overseas. In Real Estate, we focused our efforts on securing good tenants, maintaining and improving rent levels. Meanwhile, we endeavored to further improve business performance via thorough cost management and efficiency improvement of diverse business operations.

As a result, revenue for the Logistics segment for the year under review decreased and revenue for the Real Estate segment also decreased, amounting to a combined ¥192,260 million, a decrease of ¥11,436 million, or 5.6%, from the previous fiscal year. In Logistics, revenue decreased because freight volumes decreased in port and harbor operations and international transportation despite steady progress in handling pharmaceuticals and paper products in the warehousing and trucking businesses. In Real Estate, revenue decreased mainly due to the negative effect of a decline in demand for office buildings and a decrease in the number of condominiums sold.

Cost of services on the whole decreased ¥10,744 million, or 5.9%, year over year to ¥170,900 million, partly due to decreases in operational and transportation consignment costs in Logistics reflecting a decrease in freight volume, a decline in costs for real estate sales in Real Estate reflecting a decrease in the number of condominiums sold, and decreases in facility rental expenses and depreciation in both Logistics and Real Estate, as well as our efforts for thorough cost management and efficiency improvement of diverse business operation. Selling, general and administrative expenses decreased ¥464 million, or 4.9%, year over year to ¥9,054 million, reflecting the change in presentation methods for expenses at consolidated subsidiaries and other factors.

As a consequence, operating income decreased ¥228 million, or 1.8%, year over year to ¥12,305 million, reflecting profit growth for the Logistics segment and the decline in the Real Estate segment. Ordinary income increased ¥17 million, or 0.1%, to ¥14,526 million due to increases in dividend income and equity in earnings of unconsolidated subsidiaries and affiliates. Consolidated net income rose ¥1,026 million, or 13.6%, to ¥8,591 million from the previous fiscal year, when we conducted

a reversal of deferred tax assets resulting from a reduction in the effective statutory tax rate due to changes in the taxation system.

In the coming year, the global economy is expected to remain weak in Europe, whereas a moderate recovery is anticipated in the United States and a recovery in the pace of economic expansion will likely continue in emerging countries such as China. The Japanese economy is expected to recover gradually against a backdrop of improvement of the export environment due to solid overseas economies and yen depreciation as well as the effects of stimulus policies and other factors.

In this economic climate, the business conditions surrounding the Group are expected to remain harsh in view of the effects of the logistics rationalization in the logistics industry such as the warehousing and port and harbor operations businesses, as well as intensifying competition in the real estate industry although an improvement in supply-demand relationship for rental office buildings is expected.

Under these circumstances, the Mitsubishi Logistics Group will strive for sustainable growth by further expanding its logistics businesses in response to globalization and the real estate business with an emphasis on building leases in line with the new Medium-Term Management Plan (2013–2015) that covers the coming three years, the first of which is the fiscal year ending March 2014.

As for the distribution of profits of Mitsubishi Logistics for the fiscal year ended March 31, 2013, we intend to distribute a year-end dividend of ¥6 per share, the same amount as the interim dividend, taking into account operating results for the year. As a result, the annual dividend per share, including the interim dividend of ¥6 per share, totals ¥12, the same as that for the previous fiscal year.

As for dividends for the fiscal year ending March 31, 2014, based on the basic dividend policy of stably distributing dividends with due regard to the profitability level, the interim dividend and the year-end dividend will be ¥6 per share, respectively, and the annual dividend per share therefore will be ¥12, unless any exceptional circumstances take place.

As of April 1, 2013, President Tetsuro Okamoto assumed the position of Chairman of the Board and Managing Director Akio Matsui assumed the position of President.

We look forward to your continued support and encouragement.

June 2013

Akio Matsui, President

To Our Shareholders

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Mitsubishi Logistics Corporation has developed a new medium-term management plan for FY2013–2015, ending fiscal year ending March 2016. This plan is designed to further enhance overall Group performance and reinforce future growth in response to the rapid changes in political, economic and social climates in Japan and across the globe.

1. Basic Policy(1) Further improve and expand our logistics business in

response to globalization(2) Reinforce and expand real estate business framework(3) Enhance quality of Group services(4) Strengthen crisis management, including natural

disaster countermeasures, and reinforce global environmental measures

2. Basic Strategy The following six points, based on the abovementioned Basic Policy, form our Basic Strategy.(1) Expand logistics business and strengthen logistics

business base Further fortify our domestic logistics business base while expanding our highly efficient container terminal business and distribution center services based upon the high-quality inventory, warehouse and transport control for which we have won the trust of our customers.

(2) Expand domestic and international logistics services in tandem

Taking advantage of the Group’s strengths, accelerating the tandem expansion of domestic and international logistics businesses, with an emphasis on America, China and Southeast Asia—areas where rapid growth is expected.

(3) Expand real estate business with an emphasis on leases Acquire long-term and stable profitability in the real estate business by maintaining and improving the

features and functions of existing properties while expanding businesses other than building leasing.

(4) Strengthen risk management with a focus on disaster countermeasures

Promote the strengthening of risk management to respond to the increase in various risks, with a focus on natural disasters, while implementing thorough countermeasures.

(5) Strengthen global environmental measures Strive to enhance environmental consciousness throughout the Group, promoting environmental measures to reinforce the competitiveness of our businesses while fulfilling our social responsibilities as a corporation.

(6) Strengthen management base Strengthen our management base to better support businesses through personnel development and deployment, financial base stabilization, comprehensive compliance, Group management enhancement, and high synergy M&A and business alliances.

3. Plan Period and Corporate Performance Goals(1) Period

FY2013 to FY2015 (three years)(2) Performance goals (FY2015 consolidated basis)

Operating revenue : 250 billion yenOperating income : 15.5 billion yenOrdinary income : 16.5 billion yenNet income for the year : 10.2 billion yen

4. Investment Plan During this period, investments totaling 60 billion yen are planned: 22 billion yen allocated for logistics business, 33.5 billion yen for real estate business and 4.5 billion yen for disaster-prevention and global environmental measures.

Topics

Establishment of a Local Corporation in MyanmarThe Company established a local corporation, Jupiter MLC Logistics (Myanmar) Limited (the “new firm”), in Yangon, Myanmar, under an alliance agreement with Jupiter Global Limited (“JPT”), the Company’s affiliate in Hong Kong established under a business alliance agreement with Japan Airlines Co., Ltd. The new firm started its businesses on April 1, 2013.

In Myanmar, since the inauguration of the new government under Thein Sein, rapid democratization and economic reform is under way and in the years ahead, high economic growth is anticipated from the increase in overseas investments.

Leveraging the new firm, the Company intends to develop businesses to address logistics needs of customers.

Outline of the new firm …………………………(1) Company name Jupiter MLC Logistics (Myanmar) Limited(2) Location of headquarters Yangon, Myanmar(3) Major businesses International freight forwarding and trucking(4) Date of establishment April 1, 2013(5) Capital $50,000 (the Company’s investment ratio: 50%, JPT: 50%)

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“umie” and the KOBE ANPANMAN CHILDREN’S MUSEUM & MALL Opened in Kobe Harborland.On April 18, 2013, the Commercial Wing of the Harborland Dia Nissei Building jointly owned by the Company and Nippon Life Insurance Company and MOSAIC, a neighboring commercial building owned by the Company, were integrated and renewed and reopened as a large commercial facility complex named “umie.”

Both buildings, which had been loved by local residents since their establishment in 1992, were reborn with new tenants in commemoration of their 20th anniversary and started operation as a new commercial facility complex.

Concept of “umie” is “Sea, Town and People—A Spark That Can Only Be Found Here” with the catchphrase “Seaside town that makes us smile.” “Umi” of “umie” stands for sea and “e” stands for “entrance,” “entertainment,” “enjoy” and “egao (smile)”.

“umie” is anticipated to draw 15 million guests annually as the single entertainment facility complex where customers across diverse generations and tiers including Japanese and foreign tourists can gather to enjoy the amenities and be full of smiles.

Outline of the “umie” Facility …………………………………………………………………(1) Name of facility umie NORTH MALL, SOUTH MALL umie MOSAIC

(Former names) (Commercial Wing of the Harborland Dia Nissei Building)

(MOSAIC)

(2) Location Higashi Kawasaki-cho 1-chome, Chuo-ku, Kobe-shi, Hyogo

Same as the left

(3) Total floor area Approx. 165,000 m2 Approx. 33,000 m2

(4) Number of stores 142 83

Completion of Disaster-Resistant and Eco-Friendly WarehousesTo ensure high business continuity capabilities as a distribution center, construction of the Company’s three “disaster-resistant and ecofriendly warehouses” was completed. These buildings also address a reduction of the environmental load emitted from the business activities of the Group.

Moreover, on April 19, 2013, the day following the opening of “umie,” at a Company-owned premises adjacent to “umie,” the KOBE ANPANMAN CHILDREN’S MUSEUM & MALL (dedicated facility constructed by the Company and leased to a management company) opened and everyday many families comes to visit.

Ibaraki No. 3 Distribution Center (Completed on October 23, 2012) ………………………………………………………

(1) Location Ibaraki City, Osaka Prefecture (Approx. 2 km from the Ibaraki I.C. of MEISHIN EXPRESSWAY)

(2) Total floor area Approx. 17,700 m2 (4 floors above ground)(3) Purpose for use Warehouse exclusively for pharmaceuticals(4) Major equipment and specifications Photovoltaic power generation equipment (350 kW), LED lighting in

entire building, air-conditioning in all rooms (using high-efficiency air-conditioning equipment), emergency power generator and dust-proof specifications for all floors

Ibaraki No. 3 Distribution Center

Daito Distribution Center (Completed on December 11, 2012) ……………………………………………………………

(1) Location Daito City, Osaka Prefecture (Approx. 2 km from the Daito-Tsurumi I.C. and approx. 3 km from the Kadoma I.C. of KINKI EXPRESSWAY)

(2) Total floor area Approx. 11,600 m2 (5 floors above ground)(3) Purpose for use Distribution center for Zojirushi Corporation(4) Major equipment and specifications Photovoltaic power generation equipment (85 kW), LED lighting and

dust-proof specifications for all floorsDaito Distribution Center

Misato No. 2 Distribution Center (Completed on March 5, 2013) ……………………………………………………………

(1) Location Misato City, Saitama Prefecture (Close to the Misato I.C., the intersection point of SHUTO (METROPOLITAN) EXPRESSWAY, JOBAN EXPRESSWAY and TOKYO-GAIKAN EXPRESSWAY)

(2) Total floor area Approx. 26,500 m2 (4 floors above ground)(3) Purpose for use Warehouse exclusively for pharmaceuticals(4) Major equipment and specifications Photovoltaic power generation equipment (530 kW), LED lighting in

entire building, air-conditioning in all rooms (using high-efficiency air-conditioning equipment), emergency power generator and dust-proof specifications for all floors

Misato No. 2 Distribution Center

umie NORTH MALL, SOUTH MALL

umie

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Overview of the Mitsubishi Logistics Group (As of March 31, 2013)

Mitsubishi Logistics Corporation

Logistics

Consolidated Subsidiaries (51 companies)

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

Real Estate

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

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

Note: Effective from the 210th fiscal term, the year ended March 31, 2013, the companies marked with an asterisk (*) have been included as a consolidated subsidiary.

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

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

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

transportation in Japan)

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

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The accompanying notes are an integral part of these statements.

March 31, March 31,

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

(Note 1)

CURRENT ASSETS:

Cash and deposits (Notes 2 and 4) ¥ 29,367 ¥ 23,813 $ 312,249

Marketable securities (Notes 2, 4 and 5) 4,500 5,000 47,847

Notes and accounts receivable (Notes 3, 4 and 6) 33,556 44,320 356,789

Allowance for doubtful accounts (56) (69) (595)

33,500 44,251 356,194

Real estate held for sale 6,324 2,498 67,241

Deferred income taxes (Note 7) 2,112 2,050 22,456

Other (Note 2) 1,643 1,717 17,469

TOTAL CURRENT ASSETS 77,446 79,329 823,456

PROPERTY AND EQUIPMENT (Notes 10, 11 and 16):

Land 66,158 66,069 703,434

Buildings and structures 336,812 325,114 3,581,201

Machinery and equipment 32,220 30,521 342,584

Transportation equipment 7,975 7,929 84,795

Construction in progress 2,935 575 31,208

446,100 430,208 4,743,222

Accumulated depreciation (266,681) (257,468) (2,835,524)

NET PROPERTY AND EQUIPMENT 179,419 172,740 1,907,698

INVESTMENTS AND OTHER ASSETS:

Investments in unconsolidated subsidiaries and affiliates 7,153 6,475 76,055

Investments in securities (Notes 4, 5 and 11) 86,977 72,729 924,795

Long-term loans receivable 567 835 6,029

Intangible assets 13,650 11,106 145,136

Goodwill (Note 9) 2,292 1,878 24,370


Other 4,922 5,202 52,334

Allowance for doubtful accounts (32) (33) (340)

TOTAL OTHER ASSETS 118,315 101,201 1,258,002

¥ 375,180 ¥ 353,270 $ 3,989,156

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LIABILITIES AND NET ASSETS March 31, March 31,

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

(Note 1)

CURRENT LIABILITIES:

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

debt (Notes 4, 11 and 12) ¥ 15,125 ¥ 15,799 $ 160,819

Notes and accounts payable (Notes 3, 4 and 6) 27,564 29,565 293,078

Income taxes payable 2,294 2,840 24,391

Other (Notes 7 and 11) 3,745 3,898 39,819

TOTAL CURRENT LIABILITIES 48,728 52,102 518,107

LONG-TERM LIABILITIES:

Long-term debt, less current maturities (Notes 4, 11 and 12) 42,883 37,991 455,960

Deposits on long-term leases (Notes 4, 6 and 11) 23,189 23,803 246,560

Retirement benefits (Note 13) 16,075 16,769 170,920


Other 709 322 7,540

TOTAL LONG-TERM LIABILITIES 98,624 89,632 1,048,636

TOTAL LIABILITIES 147,352 141,734 1,566,743

CONTINGENT LIABILITIES (Notes 15)

NET ASSETS

SHAREHOLDERS’ EQUITY:

Common stock

authorized – 440,000,000 shares,

issued – 175,921,478 shares, 22,394 22,394 238,107

Capital surplus 19,618 19,618 208,591

Retained earnings 151,269 144,782 1,608,389

Treasury stock (712) (696) (7,570)

TOTAL SHAREHOLDERS’ EQUITY 192,569 186,098 2,047,517

ACCUMULATED OTHER COMPREHENSIVE INCOME

Net unrealized holding gains on securities 34,383 25,634 365,582

Foreign currency translation adjustments (1,135) (2,128) (12,068)

TOTAL ACCUMULATED OTHER COMPREHENSIVE INCOME 33,248 23,506 353,514

MINORITY INTERESTS 2,011 1,932 21,382

TOTAL NET ASSETS 227,828 211,536 2,422,413

¥ 375,180 ¥ 353,270 $ 3,989,156

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Year ended March 31, Year ended March 31,

2013 2012 2011 2013(Millions of yen) (Thousands of U.S. dollars)

(Note 1)

REVENUE ¥ 192,261 ¥ 203,698 ¥ 175,880 $ 2,044,242

COST OF SERVICES 170,901 181,645 155,832 1,817,129

Gross profit 21,360 22,053 20,048 227,113

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 9,055 9,520 7,884 96,278

Operating income 12,305 12,533 12,164 130,835

OTHER INCOME (EXPENSES):

Interest and dividend income 2,138 2,090 1,605 22,733

Interest expense (763) (748) (741) (8,113)

Gain on sale of marketable securities and investments

in securities51 – 12 542

Gain (loss) on revaluation of marketable securities and

investments in securities(92) 21 (437) (978)

Loss on disposal of property and equipment, net (769) (315) (945) (8,177)

Impairment loss – (304) – –

Equity in earnings of unconsolidated subsidiaries and

affiliates372 224 229 3,955

Indemnity income of existing facilities for lease (Note 14) 37 303 – 393

Loss on earthquake disaster – – (681) –

Other, net (Note 13) 443 (38) 233 4,711

1,417 1,233 (725) 15,066

Income before income taxes and minority interests 13,722 13,766 11,439 145,901

INCOME TAXES (Note 7)

Current 4,922 5,331 4,744 52,334

Deferred 123 892 (354) 1,308

5,045 6,223 4,390 53,642

Income before minority interests 8,677 7,543 7,049 92,259

MINORITY INTERESTS IN LOSSES (EARNINGS) OF

CONSOLIDATED SUBSIDIARIES (86) 21 (76) (914)

NET INCOME ¥ 8,591 ¥ 7,564 ¥ 6,973 $ 91,345

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

Net income ¥ 49.02 ¥ 43.16 ¥ 39.78 $ 0.52

Cash dividends applicable to the year ¥ 12.00 ¥ 12.00 ¥ 12.00 $ 0.13

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(Note 1)

INCOME BEFORE MINORITY INTERESTS ¥ 8,677 ¥ 7,543 ¥ 7,049 $ 92,259

OTHER COMPREHENSIVE INCOME:

Valuation difference on available-for-sale securities 8,772 439 (5,240) 93,270

Foreign currency translation adjustments 858 (166) (372) 9,123

Share of other comprehensive income of affiliates

accounted for using the equity method179 11 (16) 1,903

Total other comprehensive income (Note 8) 9,809 284 (5,628) 104,296

COMPREHENSIVE INCOME (Note 8) ¥ 18,486 ¥ 7,827 ¥ 1,421 $ 196,555

Comprehensive income attributable to:

Comprehensive income attributable to owners of the parent ¥ 18,334 ¥ 7,855 ¥ 1,353 $ 194,939

Comprehensive income attributable to minority interests 152 (28) 68 1,616



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Common Stock

Shares AmountCapitalsurplus

Retainedearnings

Treasurystock

Net unrealizedholding gainson securities

Foreign currency

translationadjustments

Minorityinterests

(Thousands of shares)

(Millions of yen)

Balance at March 31, 2010 175,921 ¥22,394 ¥19,618 ¥134,421 ¥(654) ¥30,458 ¥(1,621) ¥1,295Net income for the year – – – 6,973 – – – –Cash dividends – – – (2,105) – – – –Increase due to mergers of unconsolidated subsidiary – – – 33 – – – –

Purchase of treasury stock – – – – (36) – – –Sale of treasury stock – – (0) – 1 – – –Adjustment from revaluation of available-for-sale securities – – – – – (5,263) – –

Adjustment from translation of foreign currency financial statements – – – – – – (357) –

Increase in minority interests – – – – – – – 650Balance at March 31, 2011 175,921 ¥22,394 ¥19,618 ¥139,322 ¥(689) ¥25,195 ¥(1,978) ¥1,945Net income for the year – – – 7,564 – – – –Cash dividends – – – (2,104) – – – –Increase due to mergers of unconsolidated subsidiary – – – – – – – –

Purchase of treasury stock – – – – (9) – – –Sale of treasury stock – – (0) – 2 – – –Adjustment from revaluation of available-for-sale securities – – – – – 439 – –

Adjustment from translation of foreign currency financial statements – – – – – – (150) –

Increase in minority interests – – – – – – – (13)Balance at March 31, 2012 175,921 ¥22,394 ¥19,618 ¥144,782 ¥(696) ¥25,634 ¥(2,128) ¥1,932Net income for the year – – – 8,591 – – – –Cash dividends – – – (2,104) – – – –Increase due to mergers of unconsolidated subsidiary – – – – – – – –

Purchase of treasury stock – – – – (16) – – –Sale of treasury stock – – – – – – – –Adjustment from revaluation of available-for-sale securities – – – – – 8,749 – –

Adjustment from translation of foreign currency financial statements – – – – – – 993 –

Increase in minority interests – – – – – – – 79Balance at March 31, 2013 175,921 ¥22,394 ¥19,618 ¥151,269 ¥(712) ¥34,383 ¥(1,135) ¥2,011

CommonStock

Capitalsurplus

Retainedearnings

Treasurystock

Net unrealizedholding gainson securities

Foreign currency

translationadjustments

Minorityinterests

(Thousands of U.S. dollars) (Note 1)Balance at March 31, 2012 $238,107 $208,591 $1,539,415 $(7,400) $272,568 $(22,626) $20,542Net income for the year – – 91,345 – – – –Cash dividends – – (22,371) – – – –Increase due to mergers of unconsolidated subsidiary – – – – – – –

Purchase of treasury stock – – – (170) – – –Sale of treasury stock – – – – – – –Adjustment from revaluation of available-for-sale securities – – – – 93,014 – –

Adjustment from translation of foreign currency financial statements – – – – – 10,558 –

Increase in minority interests – – – – – – 840Balance at March 31, 2013 $238,107 $208,591 $1,608,389 $(7,570) $365,582 $(12,068) $21,382

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(Note 1)

CASH FLOWS FROM OPERATING ACTIVITIES:

Income before income taxes and minority interests ¥ 13,722 ¥ 13,766 ¥ 11,439 $ 145,901

Depreciation and amortization 12,098 13,568 13,654 128,634

Impairment loss – 304 – –

Decrease in retirement benefits (558) (221) (851) (5,933)

Loss (gain) on revaluation of marketable

securities and investments in securities96 (21) 437 1,021

Gain on sales of marketable securities and

investments in securities(51) (4) (12) (542)

Loss on disposal of property and equipment 93 187 252 989

Equity in earnings of unconsolidated subsidiaries and

affiliates(372) (224) (229) (3,955)

Interest and dividend income (2,138) (2,090) (1,605) (22,733)

Interest expense 763 748 741 8,113

Decrease (increase) in notes and accounts receivable 10,608 (11,626) (844) 112,791

Decrease (increase) in real estate held for sale (3,826) 4,736 (3,535) (40,680)

Increase (decrease) in notes and accounts payable (1,057) 704 730 (11,239)

Decrease in deposits payable (5,177) (1,644) (1,484) (55,045)

Other, net (626) (102) 1,041 (6,657)

Subtotal 23,575 18,081 19,734 250,665

Interest and dividend income received in cash 2,198 2,168 1,628 23,371

Interest expense paid in cash (743) (716) (722) (7,900)

Income taxes paid in cash (5,478) (4,902) (4,990) (58,247)

NET CASH PROVIDED BY OPERATING ACTIVITIES 19,552 14,631 15,650 207,889

CASH FLOWS FROM INVESTING ACTIVITIES:

Cash investment to time deposits (665) (684) (912) (7,071)

Cash return from time deposits 702 647 644 7,464

Acquisition of property and equipment (14,002) (11,547) (5,936) (148,878)

Proceeds from sales of property and equipment 157 203 33 1,669

Acquisition of marketable securities and

investments in securities(780) (1,699) (148) (8,293)

Proceeds from sales of marketable securities and

investments in securities128 269 535 1,361

Acquisition of investments in subsidiaries

resulting in change in scope of consolidation (2,599) – (8,006) (27,634)

Payments for additional acquisition of subsidiaries’ shares – – (427) –

Other, net 546 332 (20) 5,805

NET CASH USED IN INVESTING ACTIVITIES (16,513) (12,479) (14,237) (175,577)

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(Note 1)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from short-term bank loans ¥ 2,170 ¥ 2,246 ¥ 7,510 $ 23,073

Repayments of short-term bank loans (3,772) (5,038) (4,052) (40,106)

Proceeds from long-term debt 9,976 1,050 500 106,071

Repayments of long-term debt (4,193) (989) (5,798) (44,583)

Issue of bonds – 10,000 – –

Redemption of bonds – (5,000) – –

Dividends paid (2,105) (2,104) (2,104) (22,382)

Other, net (315) (172) (156) (3,349)

NET CASH PROVIDED BY (USED IN)

FINANCING ACTIVITIES1,761 (7) (4,100) 18,724

Effect of exchange rate changes on cash and cash equivalents 245 (77) (162) 2,605

NET INCREASE (DECREASE) IN CASH AND

CASH EQUIVALENTS5,045 2,068 (2,849) 53,641

CASH AND CASH EQUIVALENTS AT

BEGINNING OF YEAR (Note 2)27,417 25,349 28,160 291,516

INCREASE IN CASH AND CASH EQUIVALENTS DUE TO:

Merger’s of unconsolidated subsidiary – – 38 –

CASH AND CASH EQUIVALENTS AT END OF YEAR (Note 2) ¥32,462 ¥27,417 ¥25,349 $345,157


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BASIS OF PRESENTING CONSOLIDATED FINANCIAL

STATEMENTS

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

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

The translation of the Japanese yen amounts into U.S. dollars are included solely for the convenience of readers outside Japan, using the prevailing exchange rate at March 31, 2013, which was ¥94.05 to U.S. $1. The convenience translations should not be construed as representations that the Japanese yen amounts have been, could have been, or could in the future be, converted into U.S. dollars at this or any other rate of exchange.

CONSOLIDATION

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

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

The number of consolidated subsidiaries and affiliates accounted for on the equity method at March 31, 2013, 2012 and 2011 was as follows:

March 31,

2013 2012 2011

Consolidated subsidiaries 51 48 47

Unconsolidated subsidiaries

and affiliates under the equity

method 3 3 2

The following three companies have been included as consolidated subsidiaries from this consolidated fiscal year: T’ACT Co., Ltd. due to becoming a wholly-owned subsidiary; Mitsubishi Logistics China Co., Ltd. (“Mitsubishi Logistics China”) due to its establishment in the current fiscal year; and, Shanghai Qingke Warehouse Management Co., Ltd. due to its acquisition by Mitsubishi Logistics China.

CONSOLIDATED STATEMENTS OF CASH FLOWS

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

CONVERSION OF ASSETS AND LIABILITIES

DENOMINATED IN FOREIGN CURRENCIES

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

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

DERIVATIVES AND HEDGE ACCOUNTING

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

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

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

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

amount of the hedged foreign currency receivable or payable translated using the spot rate at the inception date of the contract and the book value of the receivable or payable is recognized in the statement of


NOTE 1 – SUMMARY OF ACCOUNTING POLICIES

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income in the period which includes the inception date, and

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

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

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

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

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

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

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

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

The Company and its consolidated subsidiaries don’t enter into derivatives for speculative purposes.

TRANSLATION OF FOREIGN CURRENCY STATEMENTS

The balance sheets of overseas subsidiaries are translated into Japanese yen at the rate of exchange at the balance sheet date of the subsidiaries, which is December 31, 2012, except for shareholders’ equity accounts, which are translated based on historical rates. The year-end rate of the subsidiaries is also used for translation of income, expenses and net income for the year. The resulting translation adjustments are presented as “Foreign currency translation adjustments” in the accompanying consolidated financial statements.

ALLOWANCE FOR DOUBTFUL ACCOUNTS

Notes and accounts receivable, including loans and other receivables, are valued by providing a reserve by applying a percentage based on the actual rate of bad debts incurred in the past plus an amount based on individually estimated uncollectible receivables.

SECURITIES

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

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

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

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

REAL ESTATE HELD FOR SALE

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

INCOME TAXES

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


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PROPERTY AND EQUIPMENT, DEPRECIATION

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

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

(Change in accounting policies with amendment of respective law or regulation that are not distinguishable from change in accounting estimates)

From the year ended March 31, 2013, in accordance with the amendment in corporate tax law, the Company and its domestic consolidated subsidiaries have changed its depreciation method for property and equipment. Of the assets acquired on or after April 1, 2012, those assets that were computed on a declining–balance method are now depreciated using the method prescribed in the amended corporate tax law. Due to such change in the depreciation method, operating income and income before income taxes and minority interests have each increased by ¥89 million ($946 thousand).

INTANGIBLE ASSETS

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

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

FINANCE LEASES

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

As permitted, finance leases which commenced prior to April 1, 2008 and have been accounted for as operating leases, continue to be accounted for as operating leases with disclosure of certain “as if capitalized” information.

ALLOWANCE FOR BONUSES FOR DIRECTORS

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

RETIREMENT BENEFITS AND PENSION PLAN

(1) Employees’ severance and retirement benefits

The Company and its consolidated domestic subsidiaries provide two types of post-employment benefit plans, unfunded lump-sum payment plans and funded contributory defined benefit pension plans, under which employees severing their connection with the Company and its consolidated subsidiaries on retirement are entitled to lump-sum retirement benefit payments or pension payments based on pay rates, length of service and certain other factors. And the Company and its consolidated domestic subsidiaries provide defined contribution pension plan.

The Company and its consolidated subsidiaries provided allowance for employees’ severance and retirement benefits based on the estimated amounts of projected benefit obligation and the fair value of the plan assets at year-end.

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

(2) Officers’ severance and retirement benefits

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

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

NET ASSETS

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

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

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

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

The maximum amount that the Company can distribute as dividends is calculated based on the non-consolidated financial

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statements of the Company in accordance with Japanese laws and regulations.

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

Retained earnings at March 31, 2013 include amounts representing year-end cash dividends of ¥1,052 million ($11,186 thousand), ¥6.0 ($0.06) per share, which were approved at the shareholders’ meeting held on June 27, 2013.

PER SHARE INFORMATION

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

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

Information on diluted net income per share is not disclosed as no shares which dilute net income per share are outstanding for the years ended March 31, 2013, 2012 and 2011.

ACCOUNTING STANDARDS ISSUED BUT NOT YET

EFFECTIVE

(Accounting Standard for Retirement Benefits)- Accounting Standard for Retirement Benefits (ASBJ

Statement No. 26, May 17, 2012)- Guidance on Accounting Standard for Retirement

Benefits (ASBJ Guidance No. 25, May 17, 2012)

(1) Summary

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

(2) Effective dates

Effective for the end of annual periods ending on or after March 31, 2014. Amendments relating to determination of retirement

benefit obligations and current service costs are effective from the beginning of annual periods ending on or after March 31, 2015.

(3) Effect of application of the standard

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

CHANGES TO PRESENTATION METHOD

From the year ended March 31, 2013, Fuji Logistics Co., Ltd. (“Fuji Logistics”), the Company’s consolidated subsidiary, has recorded parts of its head office’s operating costs and system-related costs as COST OF SERVICES, rather than SELLING, GENERAL AND ADMINISTRATIVE EXPENSES as it had done in the past, because of changes within its internal organization at beginning of the year. Because of changes within the organization, it became possible for Fuji Logistics to ascertain the respective amounts of its head office’s operating costs and system-related costs, which were to be recorded as cost of services from the year ended March 31, 2013.

The above change in presentation was not reflected in past consolidated financial statements because past data could not be reclassified for the reorganized divisions of Fuji Logistics and also allocation using appropriate assumption could not be performed, both of which made it practically impossible to reasonably ascertain the amounts to be reclassified for presentation purposes as of the previous consolidated fiscal year.

As a result of the above change in presentation, SELLING, GENERAL AND ADMINISTRATIVE EXPENSES decreased by ¥707 million ($7,517 thousand) and, of COST OF SERVICES, personnel expenses increased by ¥519 million ($5,518 thousand), depreciation and amortization increased by ¥118 million ($1,255 thousand), facility rental expenses increased by ¥26 million ($276 thousand) and other costs increased by ¥44 million ($468 thousand). However, operating income and income before income taxes and minority interests were not impacted from such change.


Reconciliation of cash and deposits in the consolidated balance sheets and cash and cash equivalents in the consolidated statements of cash flows as of March 31, 2013 and 2012 were as follows:

March 31, March 31,


Cash and deposits ¥29,367 ¥23,813 $312,249

Less time deposits with maturities exceeding six months (1,405) (1,417) (14,939)

Add money funds invested in bonds and domestic certificates

of deposits 4,500 5,000 47,847

Current assets other (money deposited) 0 21 0

Cash and cash equivalents ¥32,462 ¥27,417 $345,157

NOTE 2 – CASH AND CASH EQUIVALENTS

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As financial institutions in Japan were closed on March 31, 2012 and 2013, notes receivable and notes payable were settled on the following business day, April 2, 2012 and April 1, 2013, the notes receivable and payable, were accounted for as if settled on March 31, 2012 and 2013 are as follows:

March 31, March 31,


Notes receivable ¥60 ¥ 48 $638

Notes payable ¥32 ¥120 $340

NOTE 3 – EFFECT OF THE MARCH 31, 2012 AND 2013, BANK HOLIDAY

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

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

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

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

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

Short-term bank loans are mainly funds raising related to trade, otherwise long-term debts are mainly funds raising related to investments, in property and equipment. Because long-term debts with floating interest rates are subject to risk of fluctuation of these rates, a consolidated subsidiary utilizes interest rate swap contracts as hedging instruments for each loan contract to attempt to avoid such risk of a part of long-term debts.

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

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

NOTE 4 – FINANCIAL INSTRUMENTS

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

March 31, 2013 March 31, 2013

Bookvalue Fair value Difference


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

(1) Cash and deposits ¥ 29,367 ¥ 29,367 ¥ – $ 312,249 $ 312,249 $ –

(2) Notes and accounts receivable 30,721 30,721 – 326,645 326,645 –

(3) Marketable securities 4,500 4,500 – 47,847 47,847 –

(4) Investment in securities (available-for-sale securities) 85,627 85,627 – 910,441 910,441 –

¥ 150,215 ¥ 150,215 ¥ – $ 1,597,182 $ 1,597,182 $ –

Liabilities

(1) Notes and accounts payable ¥ 20,038 ¥ 20,038 ¥ – $ 213,057 $ 213,057 $ –

(2) Short-term bank loans 10,061 10,061 – 106,975 106,975 –

(3) Bonds 29,000 30,406 1,406 308,347 323,296 14,949

(4) Long-term debt *1 18,946 18,964 18 201,446 201,638 192

(5) Deposits on long-term leases 1,165 1,045 (120) 12,387 11,111 (1,276)

(6) Derivatives – – – – – –

¥ 79,210 ¥ 80,514 ¥ 1,304 $ 842,212 $ 856,077 $ 13,865

*1 This includes long-term loans payable due within one year.

March 31, 2012


(Millions of yen)Assets

(1) Cash and deposits ¥ 23,813 ¥ 23,813 ¥ –

(2) Notes and accounts receivable 41,623 41,623 –

(3) Marketable securities 5,000 5,000 –

(4) Investment in securities (available-for-sale securities) 70,395 70,395 –

¥140,831 ¥140,831 ¥ –

Liabilities

(1) Notes and accounts payable ¥ 20,876 ¥ 20,876 ¥ –

(2) Short-term bank loans 11,561 11,561 –

(3) Bonds 29,000 30,090 1,090

(4) Long-term debt *1 13,230 13,328 98

(5) Deposits on long-term leases 1,000 831 (169)

(6) Derivatives – – –

¥ 75,667 ¥ 76,686 ¥1,019

*1 This includes long-term loans payable due within one year.

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

The relevant book values are used because the settlement term of the above item are short and their fair values are almost the same as their book values.

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

determined using the market price. The information of securities categorized by holding purposes is described a NOTE 5 “SECURITIES”.

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

The relevant book values are used because the settlement term of the above item are short and their fair values are almost the same as their book values.

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

(4) Long-term debtLong-term debt with a floating interest rate has condition that the interest rate is reformed every certain period. So the

relevant book values are used because the fair values are almost the same as the book values. And long-term debt with a fixed interest rate is calculated by the present value of the amount of principal and interest money discounted using the current borrowing rate for similar debt of a comparable maturity.

Long-term loans payable with floating interest rates are subject to special treatment of interest rate swaps (See NOTE 17), and their fair values are calculated by discounting the total amount of principal and interest that have been recorded together with the said interest rate swap by interest rates that would reasonable be estimated to apply to a similar loan.

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

(6) DerivativesThe information is described at NOTE 17 ”DERIVATIVE TRANSACTIONS”.

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

March 31, March 31,


Non-listed stocks *1 ¥ 8,134 ¥ 8,700 $ 86,486

Deposits on long-term leases *2 22,024 22,803 234,173

*1 Non-listed stocks are not included in “Assets (4) Investment in securities (available-for-sale securities)”, because they have no market price and it is extremely difficult to measure the fair values. Unconsolidated subsidiary stocks and affiliate stocks are included.*2 Deposits on long-term leases are not included in “Liabilities (5) Deposits on long-term leases”, because they cannot estimate the future cash flow and it is extremely difficult to measure the fair values.

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(Note 3) The redemption schedule for money claim and securities with contractual maturities.

March 31, 2013Millions of yen

One year or less

One to five years

Five to ten years

Over ten years

Cash and deposits ¥29,367 ¥ – ¥ – ¥ –

Notes and accounts receivable 30,721 – – –

Marketable securities (Certificate of deposits) 4,500 – – –

Investment in securities

Available-for sale securities with maturities (public bonds) 30 33 – –

¥64,618 ¥33 ¥ – ¥ –


One year or less

One to five years

Five to ten years

Over ten years

Cash and deposits ¥23,813 ¥ – ¥ – ¥ –





¥70,446 ¥67 ¥ – ¥ –

March 31, 2013Thousands of U.S. dollars

One year or less

One to five years

Five to ten years

Over ten years

Cash and deposits $312,249 $ – $ – $ –





$687,060 $351 $ – $ –


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


One year or less

One to two years

Two to three years

Three to four years

Four to five years

Over five years

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

Bonds – 5,000 7,000 – – 17,000

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

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

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


One year or less

One to two years

Two to three years

Three to four years

Four to five years

Over five years

Short-term debt ¥11,561 ¥ – ¥ – ¥ – ¥ – ¥ –

Bonds – – 5,000 7,000 – 17,000

Long-term debt 4,239 4,862 1,024 581 769 1,755


¥15,800 ¥4,862 ¥6,024 ¥7,581 ¥769 ¥19,755

March 31, 2013Thousands of U.S. dollars

One year or less

One to two years

Two to three years

Three to four years

Four to five years

Over five years

Short-term debt $106,986 $ – $ – $ – $ – $ –

Bonds – 53,163 74,428 – – 180,756

Long-term debt 53,833 15,800 10,984 54,928 49,389 16,512


$160,819 $68,963 $85,412 $54,928 $49,389 $209,655

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

March 31, 2013 March 31, 2013

Bookvalue

Acquisition cost

Unrealized holdinggains

(losses)Bookvalue

Acquisition cost


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

Securities with book values exceeding

acquisition costs:

Stocks ¥83,124 ¥29,202 ¥53,922 $883,827 $310,494 $573,333

Bonds 63 61 2 670 649 21

Other – – – – – –

83,187 29,263 53,924 884,497 311,143 573,354

Other securities:

Stocks 2,440 2,903 (463) 25,944 30,867 (4,923)

Bonds – – – – – –

Other – – – – – –

2,440 2,903 (463) 25,944 30,867 (4,923)

¥85,627 ¥32,166 ¥53,461 $910,441 $342,010 $568,431

Non-listed stocks and others (book value is ¥1,399 million ($14,875 thousand)) were not included in the above list. Because they are admitted that it is extremely difficult to estimate for fair values (there are no market price and cannot estimate the future cash flow).

In the year ended March 31, 2013, the amount of sale, related gains and related losses of available-for-sale securities were as follows:

March 31, 2013 March 31, 2013

The amount of sale

Relatedgains

Related losses

The amount of sale

Relatedgains

Related losses

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

Stocks ¥116 ¥51 ¥ – $1,233 $542 $ –

Bonds 13 – – 139 – –

Other – – – – – –

¥129 ¥51 ¥ – $1,372 $542 $ –

Total write-down of available-for-sale securities with available fair values amounted to ¥83 million ($883 thousand) in the year ended March 31, 2013.

If the fair values of available-for-sale securities declines over 30% compared with its acquisition costs, the decline is recognized as significant. In this case, the Company and its consolidated subsidiaries write-down the book value of the securities considering possibilities for recovery of the fair value.

NOTE 5 – SECURITIES

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At March 31, 2012, acquisition costs, book values stated at fair values and net unrealized holding gains (losses) of available-for-sale securities were as follows:

March 31, 2012

Bookvalue

Acquisitioncost


(losses)(Millions of yen)

Securities with book values exceeding acquisition costs:

Stocks ¥67,516 ¥27,056 ¥40,460

Bonds 77 75 2

Other – – –

67,593 27,131 40,462

Other securities:

Stocks 2,802 3,416 (614)

Bonds – – –

Other – – –

2,802 3,416 (614)

¥70,395 ¥30,547 ¥39,848

Non-listed stocks and others (book value is ¥2,403 million) were not included in the above list. Because they are admitted that it is extremely difficult to estimate for fair values (there are no market price and cannot estimate the future cash flow).

In the year ended March 31, 2012, the amount of sale, related gains and related losses of available-for-sale securities were as follows:

March 31, 2012

The amountof sale

Relatedgains

Relatedlosses

(Millions of yen)

Stocks ¥234 ¥4 ¥ –

Bonds 14 – –

Other 21 – –

¥269 ¥4 ¥ –

Total write-down of available-for-sale securities with available fair values amounted to ¥81 million in the year ended March 31, 2012.

If the fair values of available-for-sale securities declines over 30% compared with its acquisition costs, the decline is recognized as significant. In this case, the Company and its consolidated subsidiaries write- down the book value of the securities considering possibilities for recovery of the fair value.

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NOTE 7 – INCOME TAXES

The Company and its domestic consolidated subsidiaries are subject to a number of different income taxes which, in the aggregate, reflect a statutory tax rate of approximately 38% for 2013, 41% for 2012 and 2011, respectively.

Reconciliation from the statutory tax rate to the effective tax rate for the years ended March 31, 2013, 2012 and 2011 were as follows:

March 31,

2013 2012 2011

Statutory tax rate – 40.7% 40.7%

Entertainment expense etc.

not deductible for Japanese tax purposes– 1.3 1.3

Dividends etc.

not taxable for Japanese tax purposes– (4.0) (3.5)

Inhabitant taxes – 0.7 0.9

Write down of deferred income tax assets at end of period by tax

rate changes– 6.2 –

Other – 0.3 (1.0)

Effective tax rate – 45.2% 38.4%

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

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

Significant receivables from and payables to unconsolidated subsidiaries and affiliates at March 31, 2013 and 2012 were as follows:

March 31, March 31,


Notes and accounts receivable ¥136 ¥160 $1,446

Notes and accounts payable ¥585 ¥628 $6,220

Deposits on long-term leases ¥ 13 ¥512 $ 138

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Significant components of the Company and its consolidated subsidiaries’ deferred income tax assets and liabilities as of March 31, 2013 and 2012 were as follows:

March 31, March 31,


Deferred income tax assets:

Accrued enterprise tax ¥ 192 ¥ 227 $ 2,041

Loss on investments in securities 60 59 638

Allowance for doubtful accounts 22 19 234

Accrued employees’ bonuses 1,108 1,109 11,781

Retirement benefits 5,586 5,833 59,394

Depreciation 6,136 5,795 65,242

Impairment loss 3,003 3,052 31,930

Other 2,423 2,596 25,763

18,530 18,690 197,023

Valuation allowance (1,240) (1,194) (13,185)

Total deferred income tax assets 17,290 17,496 183,838

Deferred income tax liabilities:

Net unrealized holding gains on securities (18,842) (14,169) (200,340)

Reserves deductible for Japanese tax purposes (8,539) (8,617) (90,792)

Other (786) (404) (8,357)

Total deferred income tax liabilities (28,167) (23,190) (299,489)

Net deferred income tax liabilities ¥(10,877) ¥ (5,694) $(115,651)

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NOTE 8 – STATEMENTS OF COMPREHENSIVE INCOME

Amounts reclassified to net income in the current period that were recognized in other comprehensive income in the current or previous periods and tax effects for each component of other comprehensive income are as follows:

Year ended March 31, 2013

Millions of yen Thousands ofU.S. dollars

Valuation difference on available-for-sale securities

Increase during the year ¥13,572 $144,306

Reclassification adjustments 41 436

Sub-total, before tax 13,613 144,742

Tax (expense) or benefit (4,841) (51,472)

Sub-total, net of tax 8,772 93,270

Foreign currency translation adjustments

Increase during the year 858 9,123

Share of other comprehensive income of

affiliates accounted for using the equity method

Increase during the year 179 1,903

Total other comprehensive income ¥ 9,809 $104,296


NOTE 9 – BUSINESS COMBINATIONS

For the year ended March 31, 2013The Company acquired the 100% interests of Shanghai Qingke Warehouse Management Co., Ltd. on December 19, 2012. The details of this acquisition were as follows:

1. Summary of the transaction(1) Name of acquired company and description of its business

Name of acquired company : Shanghai Qingke Warehouse Management Co., Ltd.Description of business : Logistics

(2) Main reasons for undertaking business combinationFor the medium-term management plan (2010-2012), the Company had set as its number one basic policy the “expansion of the logistics business, both domestically and overseas, in response to globalization”. In accordance with this policy, it newly established Mitsubishi Logistics China Co., Ltd., the Company’s wholly-owned subsidiary (“Mitsubishi Logistics China”), in Shanghai City, China, on August 1, 2012, mainly to manage the business companies, and for investment purposes, in China. Furthermore, the Company acquired, through Mitsubishi Logistics China, the entire interests of Shanghai Qingke Warehouse Management Co., Ltd., which owns warehouse facilities of approximately forty thousands m2 in Shanghai City, on December 19, 2012.

As a result of the above, the Company group’s logistic facilities in China have further expanded.

(3) Date of business combinationDecember 19, 2012

(4) Legal structure of business combinationAcquisition of interests by cash

(5) Name of combined entity after business combinationShanghai Qingke Warehouse Management Co., Ltd.

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(6) Ratio of acquired voting rights100%

(7) Main basis behind the determination of the acquiring companyAcquisition by cash of the entire interests of Shanghai Qingke Warehouse Management Co., Ltd. by Mitsubishi Logistics China, a consolidated subsidiary of the Company

2. Period of operating result of the acquired company included in the consolidated financial statementsBecause the deemed acquisition date is December 31, 2012 and the fiscal-end date of the acquiree was December 31, 2012, gain or loss of such acquiree has not been included in the consolidated financial statement of income for the year ended March 31, 2013.

3. Acquisition cost detail

Amount

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

Purchase price ¥3,241 $34,460

Acquisition cost ¥3,241 $34,460

4. Amount of goodwill, cause of goodwill, amortization method and amortization period(1) Amount of goodwill: ¥634 million ($6,741 thousand)

(2) Cause of goodwill: As the acquisition cost exceeded the net amount allocated to acquired assets and assumed liabilities, the excess has been posted as goodwill.

(3) Amortization method and amortization periodStraight-line method for 10 years

5. Total assets acquired and liabilities assumed on the date of business combination and the main components thereof

Amount


Current assets ¥ 298 $ 3,168

Fixed assets 2,583 27,464

Total assets ¥2,881 $30,632

Amount


Current liabilities ¥ 56 $ 595

Long-term liabilities 218 2,318

Total liabilities ¥274 $2,913

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NOTE 10 – INVESTMENT AND RENTAL PROPERTY

For the year ended March 31, 2013The Company and a part of its consolidated subsidiaries have some investment and rental property like an office buildings for rent (including lands) in Tokyo and other regions. For the year ended March 31, 2013, the profit and loss concerning investment and rental property is composed of lease profit ¥10,657 million ($113,312 thousand), subsidy income ¥216 million ($2,297 thousand), gain on donation of fixed assets ¥91 million ($968 thousand) and loss on disposal of property and equipment ¥271 million ($2,881 thousand).

Information about fair value of investment and rental property included in the consolidated financial statement at March 31, 2013, was as follows:

Book value Fair valueApril 1, 2012 Increase/(Decrease) March 31, 2013 March 31, 2013

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


(Thousands of U.S. dollars)$837,023 $(16,013) $821,010 $2,648,325

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

existing facilities ¥4,724 million ($50,229 thousand), and the main factor of decrease was depreciation ¥6,141 million ($65,295 thousand).

3. Fair value as of March 31, 2013, is the amount that is mainly based on the evaluation document by a real estate appraiser outside the Company.

For the year ended March 31, 2012The Company and a part of its consolidated subsidiaries have some investment and rental property like an office buildings for rent (including lands) in Tokyo and other regions. For the year ended March 31, 2012, the profit and loss concerning investment and rental property is composed of lease profit ¥10,026 million, subsidy income ¥210 million, indemnity income of existing facilities for lease ¥298 million and loss on disposal of property and equipment ¥135 million.

Information about fair value of investment and rental property included in the consolidated financial statement at March 31, 2012, was as follows:


(Millions of yen)¥83,869 ¥(5,147) ¥78,722 ¥250,889

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

existing facilities ¥1,562 million, and the main factor of decrease was depreciation ¥7,357 million.3. Fair value as of March 31, 2012, is the amount that is mainly based on the evaluation document by a real estate appraiser

outside the Company.


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NOTE 11 – PLEDGED ASSETS

The net book value of pledged assets at March 31, 2013 and 2012 was as follows:

March 31, March 31,


Land ¥1,085 ¥1,085 $11,536

Buildings and structures 483 544 5,136

Investments in securities 63 67 670

¥1,631 ¥1,696 $17,342

Liabilities secured by the pledged assets mentioned above at March 31, 2013 and 2012 were as follows:

March 31, March 31,


Short-term bank loans ¥ 700 ¥ 950 $ 7,443

Other in current liabilities 544 576 5,784

Long-term debt 6,708 6,618 71,324

Deposits on long-term leases 1,478 1,638 15,715

¥9,430 ¥9,782 $100,266

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Short-term bank loans outstanding at March 31, 2013 and 2012 were ¥10,061 million ($106,975 thousand) and ¥11,561 million, respectively, and generally represented by short-term bank loans with interest at annual rates of 0.42% to 3.875% and 0.43% to 4.02%, respectively.

Long-term debt at March 31, 2013 and 2012 consisted of the following:

March 31, March 31,


Loans from banks, insurance companies and other in

generally secured, 0.112%-3.88% and 0.53%-2.55%

per annum ¥18,946 ¥13,230 $201,446

Balance in lease obligations 885 392 9,410

1.67% yen bonds due 2014, unsecured 5,000 5,000 53,163



0.933% year bonds due 2019, unsecured 5,000 5,000 53,163


48,831 42,622 519,201

Less current portion (5,337) (4,402) (56,746)

¥43,494 ¥38,220 $462,455

The aggregate annual maturities of long-term debt at March 31, 2013 were as follows:

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

2014 ¥ 5,063 $ 53,833

2015 1,486 15,800

2016 1,033 10,984

2017 5,166 54,928

2018 4,645 49,389

2019 and thereafter 1,553 16,512

¥18,946 $201,446

The aggregate annual maturities of lease obligation at March 31, 2013 were as follows:

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

2014 ¥273 $2,903

2015 215 2,286

2016 192 2,041

2017 163 1,733

2018 25 266

2019 and thereafter 17 181

¥885 $9,410

NOTE 12 – SHORT-TERM BANK LOANS AND LONG-TERM DEBT

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NOTE 13 – RETIREMENT BENEFITS AND PENSION PLAN

The liabilities for retirement benefits included in the liability section of the consolidated balance sheets as of March 31, 2013 and 2012 consists of the following:

March 31, March 31,


Projected benefit obligation ¥26,935 ¥26,610 $286,390

Less fair value of pension assets (11,145) (9,566) (118,501)

Unfunded projected benefit obligation 15,790 17,044 167,889

Unrecognized net actuarial loss (221) (1,084) (2,350)

Unrecognized prior service costs 285 452 3,031

Employees’ retirement benefits 15,854 16,412 168,570

Retirement benefits to directors and corporate

statutory auditors221 357 2,350

Liability for retirement benefits ¥16,075 ¥16,769 $170,920

Included in the consolidated statements of income for the years ended March 31, 2013, 2012 and 2011 are severance and retirement benefit expenses for employees comprising of the following:



Service costs-benefits earned during the year ¥1,173 ¥1,209 ¥1,155 $12,473

Interest cost on projected benefit obligation 478 556 485 5,082

Expected return on pension assets (170) (223) (190) (1,808)

Amortization of actuarial gains and losses 345 216 (44) 3,668

Amortization of prior service costs (167) (166) (163) (1,776)

Contributions to defined contribution plans 148 133 127 1,574

Severance and retirement benefit expenses for employees ¥1,807 ¥1,725 ¥1,370 $19,213

The discount rate and the rate of expected return on pension assets used by the Company and its consolidated subsidiaries are 1.7-2.5% and 2.0% for 2013, 1.7-2.5% and 2.0-2.5% for 2012, 2.5% and 2.0-2.5% for 2011, respectively. The estimated amount of all retirement benefits to be paid at the future retirement date is allocated equally to each service year using the estimated number of total service years and point basis.

For the year ended March 31, 2013A consolidated subsidiary of the Company conducted voluntary retirement in connection with its reorganization. Due to the retirement, the subsidiary recorded an extraordinary loss of ¥89 million ($946 thousand) as additional retirement payments.

For the year ended March 31, 2012Fuji Logistics Co., Ltd. participated in Fuji Electric’s corporate pension fund at the end of March, 2012. A part of the fund employed certain fund management services of AIJ Investment Advisors Co., Ltd. At this time, it has turned out that the majority of the funds under management are missing. The Company made a reasonable estimate of the amount of the pension funds expected to have been lost and recorded an extraordinary loss of ¥218 million.

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Indemnity income of existing facilities for lease represents mainly income from cancellation of leased commercial facilities for the year ended March 31, 2013. For the year ended March 31, 2012, that represents mainly income from cancellation of equipment leases in real estate facilities.

NOTE 14 – INDEMNITY INCOME OF EXISTING FACILITIES FOR LEASE

At March 31, 2013 and 2012, the balances of guarantee for loans amounted to ¥2,794 million ($29,708 thousand) and ¥2,615 million, respectively.

NOTE 15 – CONTINGENT LIABILITIES

Non-transferable finance leases (1) Leased assets

Mainly consisted of system equipment relating to the logistics business (accounted for in “Machinery and equipment” of Property and equipment).

(2) Depreciation method for leased assets As described in “PROPERTY AND EQUIPMENT, DEPRECIATION” under “NOTE 1 – SUMMARY OF ACCOUNTING POLICIES”

Prior to April 1, 2008, the Company and its consolidated domestic subsidiaries accounted for finance leases which do not transfer ownership of the leased property to the lessee as operating leases.

FINANCE LEASES(LESSEE LEASES)Finance lease transactions without ownership transfer to lessee (a) Purchase price equivalents, Accumulated depreciation equivalents, and Book value equivalents

March 31, March 31,


Machinery and equipment and other

Purchase price equivalents ¥85 ¥657 $903

Accumulated depreciation equivalents 78 587 829

Book value equivalents ¥ 7 ¥ 70 $ 74

Purchase price equivalents were calculated using the inclusive-of-interest method.

(b) Lease commitments

March 31, March 31,


Due within one year ¥7 ¥63 $74

Due after one year – 7 –

¥7 ¥70 $74

Lease commitments as lessee were calculated using the inclusive-of-interest method.

NOTE 16 – LEASE TRANSACTIONS

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(c) Lease payments and Depreciation equivalents



Lease payments ¥63 ¥200 ¥300 $670

Depreciation equivalents ¥63 ¥200 ¥300 $670

(d) Calculation method of depreciation equivalents

Depreciation equivalents are computed on a straight-line method over the lease period without residual value.

(LESSOR LEASES)Finance lease transactions without ownership transfer to lessee (a) Purchase price, Accumulated depreciation and Book value

March 31, March 31,


Buildings and structures and other

Purchase price ¥3,353 ¥3,382 $35,651

Accumulated depreciation 2,128 2,021 22,626

Book value ¥1,225 ¥1,361 $13,025

(b) Lease commitments

March 31, March 31,


Due within one year ¥ 153 ¥ 145 $ 1,627

Due after one year 1,758 1,911 18,692

¥1,911 ¥2,056 $20,319

(c) Rental income, Depreciation and Interest income equivalents



Rental income ¥274 ¥275 ¥275 $2,913

Depreciation ¥124 ¥129 ¥134 $1,318

Interest income equivalents ¥128 ¥137 ¥144 $1,361

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

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

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OPERATING LEASES(LESSEE LEASES)Future minimum lease payments under non-cancelable operating lease as of March 31, 2013 and 2012 were as follows:

March 31, March 31,


Due within one year ¥ 3,073 ¥ 2,970 $ 32,674


¥15,287 ¥15,806 $162,541

(LESSOR LEASES)Future minimum lease receipts under non-cancelable operating lease as of March 31, 2013 and 2012 were as follows:

March 31, March 31,


Due within one year ¥12,835 ¥13,387 $136,470


¥34,423 ¥35,316 $366,007

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NOTE 17 – DERIVATIVE TRANSACTIONS

1. Derivative transactions to which hedge accounting is not applied at March 31, 2013 and 2012None

2. Derivative transactions to which hedge accounting is applied at March 31, 2013 and 2012

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

under the derivatives

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

March 31, March 31,


Notional amount ¥240 ¥660 $2,552

Portion due after one year included herein ¥ 20 ¥240 $ 213

Fair value (Note) – – –

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

Type and number of shares outstanding and treasury stock for the years ended March 31, 2013 and 2012 were as follows:

Shares outstanding Treasury stock

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


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

Increased in the accounting period – 13,492

Decreased in the accounting period – –

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


Balance at beginning of year 175,921,478 632,099

Increased in the accounting period – 9,722

Decreased in the accounting period – (1,217)

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

NOTE 18 – CHANGES IN NET ASSETS

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

Matters related to dividends were as follows:

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

Approvals by Ordinary general shareholders meeting The Board of Directors meeting

Approval date June 28, 2012 October 31, 2012

Type of shares Common stock Common stock

Total amount of dividends ¥1,052 million ($11,186 thousand) ¥1,052 million ($11,186 thousand)

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

Record date March 31, 2012 September 30, 2012

Effective date June 29, 2012 December 3, 2012

Dividends payment during the year ended March 31, 2012 was as follows:

Approvals by Ordinary general shareholders meeting The Board of Directors meeting

Approval date June 29, 2011 October 31, 2011

Type of shares Common stock Common stock

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

Dividends per share ¥6.0 ¥6.0

Record date March 31, 2011 September 30, 2011

Effective date June 30, 2011 December 1, 2011

(b) Dividends whose record date is attributable to the accounting period ended March 31, 2013 but to be effective after the said accounting period were as follows:

Approvals by Ordinary general shareholders meeting

Approval date June 27, 2013

Type of shares Common stock

Funds for dividends Retained earnings

Total amount of dividends ¥1,052 million ($11,186 thousand)

Dividends per share ¥6.0 ($0.06)

Record date March 31, 2013

Effective date June 28, 2013

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For the year ended March 31, 2013, 2012 and 20111. General information about reportable segmentsThe Company’s reportable segments are components for which separate financial information is available, and evaluated regularly by the Board of Directors in determining allocation of management resources and in assessing performance.

The Company decided its reportable segments by considering resemblance between the business activities of the Company and its consolidated subsidiaries from the aspects of business type, business nature, method of providing service, market of service and other. The Company has two reportable segments, “Logistics” and “Real estate”.

Each segment is composed by following business:Logistics: - Warehousing, Transportation, Port-terminal operation and International freight forwarding.Real estate:- Rental for office buildings and sales for real estate.

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

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

As described in “Change in accounting policies with amendment of respective law or regulation that are not distinguishable from change in accounting estimates”, in accordance with the amendment in corporate tax law, from the year ended March 31, 2013, the Company and its domestic subsidiaries have changed its depreciation method for property, plant and equipments that were computed on a declining–balance method acquired on or after April 1, 2012. Depreciation method for the reporting segment has been changed to reflect the amendment in corporate tax law. Due to such change, income for the Logistics segment and Real estate segment have increased by ¥73 million ($776 thousand) and ¥16 million ($170 thousand), respectively.

3. Information about reported segment revenue, segment income, segment assets and other material itemsReportable segment information for the year ended March 31, 2013, is as follows:

March 31, 2013

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

Revenues:

Non-affiliated customer ¥ 154,917 ¥ 37,344 ¥ 192,261 ¥ – ¥ 192,261

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

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

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

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

Depreciation and amortization ¥ 5,592 ¥ 6,352 ¥ 11,944 ¥ 154 ¥ 12,098

Amortization of goodwill ¥ 246 ¥ – ¥ 246 ¥ – ¥ 246Investments in affiliates accounted for by the equity

method¥ 6,093 ¥ – ¥ 6,093 ¥ – ¥ 6,093

Increase in tangible and intangible fixed assets ¥ 12,644 ¥ 5,063 ¥ 17,707 ¥ 17 ¥ 17,724

NOTE 19 – SEGMENT INFORMATION

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March 31, 2013

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

Revenues:

Non-affiliated customer $ 1,647,177 $ 397,065 $ 2,044,242 $ – $ 2,044,242

Intersegment 4,307 14,939 19,246 (19,246) –

1,651,484 412,004 2,063,488 (19,246) 2,044,242

Segment income 59,245 118,107 177,352 (46,517) 130,835

Segment assets $ 1,877,118 $ 1,003,775 $ 2,880,893 $ 1,108,263 $ 3,989,156

Depreciation and amortization $ 59,458 $ 67,538 $ 126,996 $ 1,638 $ 128,634

Amortization of goodwill $ 2,616 $ – $ 2,616 $ – $ 2,616 Investments in affiliates accounted for by the equity

method$ 64,785 $ – $ 64,785 $ – $ 64,785

Increase in tangible and intangible fixed assets $ 134,439 $ 53,833 $ 188,272 $ 181 $ 188,453

*1 The adjustments are as follows; (1) The adjustments of negative ¥4,375 million ($46,517 thousand) in segment income include inter-segment eliminations of

¥45 million ($478 thousand) and corporate expenses of negative ¥4,420 million ($46,995 thousand) not distributed to any reportable segments. The corporate expenses are mainly general and administrative expenses not attributable to any reportable segments.

(2) The adjustments of ¥104,232 million ($1,108,263 thousand) in segment assets are corporate assets not distributed to any reportable segments. The corporate assets mainly consist of surplus funds (cash and marketable securities), long-term investments (investments in securities), and assets which belong to the administrative department of the Company.

(3) The adjustments of ¥17 million ($181 thousand) for increase of property, plant and equipment and intangible assets mainly consist of the capital investment for the administrative department of the Company.

*2 Segment income is reconciled to operating income described in the consolidated statement of income.

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

March 31, 2012


Revenues:


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

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

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

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


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


*1 The adjustments are as follows; (1) The adjustments of negative ¥4,107 million in segment income include inter-segment eliminations of ¥28 million and

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

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

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

*2 Segment income is reconciled to operating income described in the consolidated statement of income.

Reportable segment information for the year ended March 31, 2011, is as follows:

March 31, 2011


Revenues:


Intersegment 401 1,112 1,513 (1,513) –

140,064 37,329 177,393 (1,513) 175,880

Segment income 4,974 11,107 16,081 (3,917) 12,164

Segment assets ¥ 157,962 ¥ 102,375 ¥ 260,337 ¥ 90,089 ¥ 350,426


Amortization of goodwill ¥ 106 ¥ – ¥ 106 ¥ – ¥ 106Investments in affiliates accounted for by the equity method ¥ 3,764 ¥ – ¥ 3,764 ¥ – ¥ 3,764


*1 The adjustments are as follows; (1) The adjustments of negative ¥3,917 million in segment income include inter-segment eliminations of ¥30 million and

corporate expenses of negative ¥3,947 million not distributed to any reportable segments. The corporate expenses are mainly general and administrative expenses not attributable to any reportable segments.

(2) The adjustments of ¥90,089 million in segment assets are corporate assets not distributed to any reportable segments. The corporate assets mainly consist of surplus funds (cash and marketable securities), long-term investments (investments in securities), and assets which belong to the administrative department of the Company.

(3) The adjustments of ¥124 million for increase of property, plant and equipment and intangible assets mainly consist of the capital investment for the head office and others.

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

4. Impairment loss by reportable segment

March 31, 2012

Logistics Real estate Total Adjustment Consolidated(Millions of yen)

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

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5. Amortization and unamortized balance of goodwill by reportable segment

March 31, 2013


Amortization of goodwill ¥ 246 ¥ – ¥ 246 ¥ – ¥ 246

Unamortized balance ¥ 2,292 ¥ – ¥ 2,292 ¥ – ¥ 2,292

March 31, 2012




March 31, 2011




March 31, 2013

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

Amortization of goodwill $ 2,616 $ – $ 2,616 $ – $ 2,616

Unamortized balance $ 24,370 $ – $ 24,370 $ – $ 24,370


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Company Profile (As of March 31, 2013)

Headquarters and Branches

Headquarters: Chuo-ku, Tokyo

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

Date of Establishment April 15, 1887

Capital ¥22,393,986,570

Number of Shares Issued 175,921,478

Authorized Shares 440,000,000

Number of Employees 843 persons (parent only; not including 159 employees temporarily on loan to other companies. There are also 87 temporary employees, as well as 571 persons temporarily loaned or dispatched within the Group and those from outside the Group companies and accepted by the Company)

4,471 persons (on a consolidated basis; not including 68 employees temporarily on loan to companies outside the Group. There are also 1,287 temporary employees, as well as 932 persons temporarily loaned or dispatched from outside the Group companies and accepted by the Company)

Stock Exchange Listing First Section of the Tokyo Stock Exchange

Securities Code 9301

Major ShareholdersShareholder’s Name Number of Shares Held (Thousands) Shareholding Ratio (%)Japan Trustee Services Bank, Ltd. (trust account) 12,606 7.2The Master Trust Bank of Japan, Ltd. (trust account) 11,600 6.6Meiji Yasuda Life Insurance Company 9,707 5.5Tokio Marine & Nichido Fire Insurance Co., Ltd. 7,775 4.4MITSUBISHI ESTATE CO., LTD. 7,331 4.2Kirin Holdings Company, Limited 5,932 3.4The Bank of Tokyo-Mitsubishi UFJ, Ltd. 3,728 2.1ASAHI GLASS CO., LTD. 3,315 1.9Mitsubishi Corporation 3,205 1.8Takenaka Corporation 3,010 1.7

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

reserved, in addition to the shares stated in the table above.2. The “Shareholding ratio” is calculated after excluding treasury stock (584,895 shares).

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

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

independent corporate auditors as required by the rules of the Tokyo Stock Exchange, and reported it to the Exchange.4. Tetsuro Okamoto, Chairman of the Board, concurrently serves as President of The Japan Warehousing Association Inc., a general incorporated association.

Directors and Corporate Auditors (As of June 27, 2013)Position Name Responsibilities and/or Primary Occupation

Chairman of the Board Tetsuro OkamotoPresident* Akio MatsuiManaging Director Makoto Sakaizawa Responsible for Technical, Harbor Transportation and Real Estate BusinessesManaging Director Koji Yoneyama Responsible for International Transportation BusinessManaging Director Yuichi Hashimoto Responsible for Accounting & Financing, Information System, and Internal AuditManaging Director Yoshinori Watabe Responsible for Warehousing & Distribution BusinessManaging Director* Masato Hoki Responsible for General Affairs, Corporate Communications, Personnel, and Planning; and General Manager, Personnel DivisionDirector Minoru Makihara Senior Corporate Advisor, Mitsubishi CorporationDirector Jiro Nemoto Chief Board Advisor, Nippon Yusen Kabushiki KaishaDirector Shigemitsu Miki Senior Advisor, The Bank of Tokyo-Mitsubishi UFJ, Ltd.Director Kenji Irie General Manager, Technical DivisionDirector Kazuhiko Takayama General Manager, Nagoya BranchDirector Takanori Miyazaki General Manager, Kobe BranchStanding Corporate Auditor Tohru WatanabeStanding Corporate Auditor Michio IzumiCorporate Auditor Yohnosuke Yamada LawyerCorporate Auditor Shunkyo Harada Managing Director, Kyodo Soko CorporationCorporate Auditor Saburo Horiuchi Certified Public Accountant

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To Our Shareholders


Topics

Overview of the Mitsubishi Logistics Group

Independent Auditor’s Report







Company Pro�le

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005_0808001372509.indd 2 2013/08/07 17:15:47

ANNUAL REPORT 2013Year ended March 31, 2013

Tokyo Dia Building 28-38, Shinkawa, 1-chome, Chuo-ku, Tokyo 104-0033 Japan http://www.mitsubishi-logistics.co.jp

005_0808001372509.indd 1 2013/08/07 17:15:46

annual report 2013 - mitsubishi logistics report 2013 year ended march 31, 2013 tokyo dia building...

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