1. BASIS OF PRESENTING NON-CONSOLIDATED FINANCIAL STATEMENTS
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
3. BANK LOANS AND LONG-TERM DEBT
4. RETIREMENT AND PENSION PLAN
5. SHAREHOLDERS' EQUITY
6. INCOME TAXES
8. TRANSACTIONS WITH SUBSIDIARIES AND AFFILIATES
9. CONTINGENT LIABILITIES
10. SUBSEQUENT EVENT
| 1. BASIS OF PRESENTING NON-CONSOLIDATED FINANCIAL
The accompanying non-consolidated financial statements have been prepared from the accounts maintained by Yamato Transport Co., Ltd. (the Company) in accordance with the provisions set forth in the Japanese Commercial Code (the Code) and in conformity with accounting principles and practices generally accepted in Japan, which are different in certain respects as to application and disclosure requirements of International Accounting Standards. The non-consolidated financial statements are not intended to present the financial position and results of operations in accordance with accounting principles and practices generally accepted in countries and jurisdictions other than Japan.
As consolidated statements of cash flows and certain disclosures are presented in the consolidated financial statements of the Company, non-consolidated statements of cash flows and certain disclosures are not presented herein in accordance with accounting procedures generally accepted in Japan.
In preparing these non-consolidated financial statements, certain reclassifications and rearrangements have been made to the Companys financial statements issued domestically in order to present them in a form which is more familiar to readers outside Japan.
Certain reclassifications have been made in the 2001 financial statements to conform to the classifications used in 2002.
The non-consolidated financial statements are stated in Japanese yen, the currency of the country in which the Company is incorporated and operates. The translations of Japanese yen amounts into U.S. dollar amounts are included solely for the convenience of readers outside Japan and have been made at the rate of ¥133 to $1, the approximate rate of exchange at March 31, 2002.
Such translations should not be construed as representations that the Japanese yen amounts could be converted into U.S. dollars at that or any other rate.
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| 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Recognition of Operating Revenues
The Company recognizes freight charge income as operating revenues at the time when freight has been received from the shipping customer for transportation.
Inventories are stated at cost determined by the first-in, first-out method.
|c. Marketable and Investment Securities
Prior to April 1, 2000, marketable and investment securities were stated at cost determined by the moving-average method.
Effective April 1, 2000, the Company adopted a new accounting standard for financial instruments, including marketable and investment securities.
The standard requires all applicable securities to be classified and accounted for, depending on managements intent, as follows: (1) trading securities, which are held for the purpose of earning capital gains in near term, are reported at fair value, and the related unrealized gains and losses are included in the earnings, (2) held-to-maturity debt securities, which are expected to be held to maturity with the positive intent and ability to hold to maturity are reported at amortized cost, (3) investment securities in subsidiaries and affiliates are reported at cost, and (4) available-for-sale securities, which are not classified as either of the aforementioned securities, are reported at fair value, with unrealized gains and losses, net of applicable taxes, reported in a separate component of shareholders equity. The Company has no such trading securities as of March 31, 2002 and 2001.
Non-marketable available-for-sale securities are stated at cost determined by the moving-average method.
For other than temporary declines in fair value, investment securities are reduced to net realizable value by a charge to income.
d. Investments in Subsidiaries and Affiliates
Investments in subsidiaries and affiliates are stated at cost less a valuation allowance representing possible losses on the investments that is deemed to be other than temporary.
e. Property, Plant and Equipment
Depreciation of property, plant and equipment is computed by the declining-balance method while the straight-line method is applied to buildings acquired after April 1, 1998. Depreciation of the equipment used for refrigerated delivery service is computed by the straight-line method. The range of useful lives is principally as follows:
Maintenance and repairs including minor renewals and improvements are charged to income as incurred.
f. Other Assets
Amortization of intangible assets is computed on the straight-line method over the period specified by the Code.
Bond discounts are deferred as other assets and amortized on the straight-line method over the lives of the bonds.
Bond issuance costs are deferred as other assets and amortized on the straight-line method over a three-year period.
g. Retirement and Pension Plan
The Company has a contributory trusteed pension plan and an unfunded retirement benefits plan which cover 35% and 65%, respectively, of employees retirement benefits. Prior to April 1, 2000, the annual provision for employees retirement benefits for the unfunded retirement benefits plan was provided to state the liability at 40% of the amount that would be required if all employees voluntarily terminated their employment at each balance sheet date. Normal costs of the pension plan were currently funded and charged to income.
Effective April 1, 2000, the Company adopted a new accounting standard for the employees retirement benefits and accounted for the liability for retirement benefits based on projected benefit obligations and plan assets at the balance sheet date.
The amount of ¥44,426 million ($334,030 thousand), which is the net amount of the transitional obligation determined as of the beginning of year and the full amount of prior service cost (credit), is charged to income and presented as Provision for retirement benefits in other expenses. As a result, net periodic benefit costs as compared with the prior method, increased by ¥7,467 million ($56,143 thousand) and loss before income taxes increased by ¥51,893 million ($390,173 thousand).
Directors and corporate auditors are not covered by the retirement and pension plans described above. Benefits paid to such persons are charged to income as paid. Any amounts payable to directors and corporate auditors upon retirement are subject to approval of the shareholders.
All leases are accounted for as operating leases. Under Japanese accounting standards for leases, finance leases that do not transfer ownership of the leased property to the lessee are permitted to be accounted for as operating lease transactions if certain as if capitalized information is disclosed in the notes to the lessees non-consolidated financial statements.
i. Income Taxes
The provision for income taxes is computed based on the pretax income included in the statements of operations. The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Deferred taxes are measured by applying currently enacted tax laws to the temporary differences.
j. Consumption Tax
Consumption tax is levied in Japan on domestic sales of goods and services. Consumption tax is excluded from the amounts of revenues, costs and expenses.
k. Appropriations of Retained Earnings
Appropriations of retained earnings at each year end are reflected in the non-consolidated financial statements for the following year upon shareholders approval.
l. Foreign Currency Translations
Prior to April 1, 2000, short-term receivables and payables denominated in foreign currencies were translated into Japanese yen at the current exchange rates at each balance sheet date, while long-term receivables and payables denominated in foreign currencies were translated at historical rates.
Effective April 1, 2000, the Company adopted a revised accounting standard for foreign currency transactions. In accordance with the revised standard, all short-term and long-term monetary receivables and payables denominated in foreign currencies are translated into Japanese yen at the exchange rates at the balance sheet date. Transactions in foreign currencies are translated into Japanese yen at the current exchange rate.
m. Treasury Stock
Prior to April 1, 2001, treasury stock was included in Marketable securities as an asset.
Effective April 1, 2001, such stock is presented as a separate component of shareholders equity in accordance with the new disclosure requirement for treasury stock.
n. Per Share Information
The computation of net income per share is based on the weighted average number of shares of common stock outstanding during each year. The average number of common shares used in the computation was 461,319 thousand, 451,803 thousand and 442,839 thousand for the years ended March 31, 2002, 2001 and 2000, respectively.
Diluted net income per share of common stock assumes full conversion of the outstanding convertible debentures at the beginning of the year with an applicable adjustment for related interest expense (net of tax).
For the year ended March 31, 2001, diluted net income per share of common stock is not disclosed because of the Companys net loss position.
Cash dividends per share are dividends applicable to the respective years including dividends to be paid after the end of the year.
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| 3. BANK LOANS AND LONG-TERM DEBT
Short-term bank loans at March 31, 2002 and 2001, were represented principally by 365-day notes issued by the Company to banks. The annual interest rates applicable to the bank loans ranged from 0.4% to 0.5338% and from 0.5399% to 0.9391% at March 31, 2002 and 2001, respectively.
Long-term debt at March 31, 2002 and 2001, consisted of the following:
|Annual maturities of long-term debt at March 31, 2002, were as follows:|
| The carrying amount of investment
securities amounted to ¥27 million ($203 thousand) was deposited as
security for dealings at March 31, 2002.
All outstanding convertible debentures of the Company at March 31, 2002, were convertible into 19,024 thousand shares of common stock of the Company. The conversion prices are subject to adjustments to reflect stock splits and certain other events.
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| 4. RETIREMENT AND PENSION PLAN
Under most circumstances, employees terminating their employment are entitled to retirement benefits determined based on the rate of pay at the time of termination, years of service and certain other factors. Such retirement benefits are made in the form of a lump-sum severance payment from the Company and annuity payments from a trustee.
Employees are entitled to larger payments if the termination is involuntary, by retirement at the mandatory retirement age, by death, or by voluntary retirement at certain specific ages prior to the mandatory retirement age. The retirement benefits for directors and corporate auditors are paid subject to the approval of the shareholders.
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| 5. SHAREHOLDERS' EQUITY
The Company is subject to the Code to which certain amendments became effective from October 1, 2001.
Prior to October 1, 2001, the Code required at least 50% of the issue price of new shares, with a minimum of the par value thereof, to be designated as stated capital as determined by resolution of the Board of Directors. Proceeds in excess of amounts designated as stated capital were credited to additional paid-in capital. Effective October 1, 2001, the Code was revised and common stock par values were eliminated resulting in all shares being recorded with no par value.
Prior to October 1, 2001, the Code also provided that an amount at least equal to 10% of the aggregate amount of cash dividends and certain other cash payments which are made as an appropriation of retained earnings applicable to each fiscal period shall be appropriated and set aside as a legal reserve until such reserve equals 25% of stated capital. Effective October 1, 2001, the revised Code allows for such appropriations to be set aside as a legal reserve until the total additional paid-in capital and legal reserve equals 25% of stated capital. The amount of total additional paid-in capital and legal reserve which exceeds 25% of stated capital can be transferred to retained earnings by resolution of the shareholders, which may be available for dividends. Under the Code, the Company may issue new common shares to existing shareholders without consideration as a stock split pursuant to a resolution of the Board of Directors. Prior to October 1, 2001, the amount calculated by dividing the total amount of shareholders equity by the number of outstanding shares after the stock split could not be less than ¥50. The revised Code eliminated this restriction.
Prior to October 1, 2001, the Code imposed certain restrictions on the repurchase and use of treasury stock. Effective October 1, 2001, the Code eliminated these restrictions allowing the Company to repurchase treasury stock by a resolution of the shareholders at the general shareholders meeting and dispose of such treasury stock by resolution of the Board of Directors after March 31, 2002.
The repurchased amount of treasury stock cannot exceed the amount available for future dividend plus amount of stated capital, additional paid-in capital or legal reserve to be reduced in the case where such reduction was resolved at the general shareholders meeting.
The Code permits the Company to transfer a portion of additional paid-in capital and legal reserve to stated capital by resolution of the Board of Directors. The Code also permits the Company to transfer a portion of unappropriated retained earnings, available for dividends, to stated capital by resolution of the shareholders.
Dividends are approved by the shareholders at a meeting held subsequent to the fiscal year to which the dividends are applicable. Semiannual interim dividends may also be paid upon resolution of the Board of Directors, subject to certain limitations imposed by the Code.
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| 6. INCOME TAXES
The Company is subject to Japanese national and local income taxes which, in the aggregate, resulted in a normal effective statutory tax rate of approximately 41% in 2002, 2001 and 2000.
The tax effects of significant temporary differences which resulted in deferred tax assets at March 31, 2002, 2001 and 2000, were as follows:
|A reconciliation between the normal effective statutory tax rates for the years ended March 31, 2002, 2001 and 2000, and the actual effective tax rates reflected in the accompanying non-consolidated statements of operations was as follows:|
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| 7. LEASES
Total lease payments under finance lease arrangements that do not transfer ownership of the leased property to the lessee were ¥6,492 million ($48,812 thousand), ¥6,182 million and ¥5,152 million for the years ended March 31, 2002, 2001 and 2000, respectively.
Pro forma information of leased property such as acquisition cost, accumulated depreciation and obligations under finance leases that do not transfer ownership of the leased property to the lessee on an as if capitalized basis for the years ended March 31, 2002 and 2001, was as follows:
|Obligations under finance leases which included the imputed interest expense portion were as follows:|
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| 8. TRANSACTIONS WITH SUBSIDIARIES AND AFFILIATES
Transactions with subsidiaries and affiliates were summarized as follows:
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| 9. CONTINGENT LIABILITIES
Contingent liabilities for guarantees and items of a similar nature at March 31, 2002, amounted to ¥396 million ($2,977 thousand), which was guaranteed of loans of unaffiliated company jointly and severally by the Company and 18 other unaffiliated companies and ¥531 million ($3,992 thousand), which was guaranteed of loans of subsidiaries.
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| 10. SUBSEQUENT EVENTS
a. Appropriations of Retained Earnings
The following appropriations of retained earnings at March 31, 2002, were approved at the shareholders meeting held on June 27, 2002:
| b. Purchase of Treasury Stock
The Company is authorized to repurchase up to 4,500 thousand shares of the Companys common stock or aggregate amount of ¥10,000 million ($75,188 thousand).