seino holdings co., ltd. and subsidiaries … · seino holdings co., ltd. and subsidiaries...

SEINO HOLDINGS CO., LTD. and Subsidiaries Consolidated Balance Sheets March 31, 2007 and 2006

Millions of Yen Thousands of U.S. Dollars

2007 2006 2007 Assets: Current assets:

Cash and cash equivalents ¥ 42,753 ¥ 55,226 $ 362,314 Short-term investments (Notes 3 and 5) 9,668 7,356 81,932 Trade receivables 90,153 79,414 764,008 Inventories 6,694 9,309 56,729 Deferred tax assets (Note 10) 4,560 4,533 38,644 Other current assets 16,631 6,165 140,940 Allowance for doubtful accounts (753) (795) (6,381)

Total current assets 169,706 161,208 1,438,186

Property and equipment (Notes 4 and 5):

At cost 446,628 400,764 3,784,983 Accumulated depreciation (204,254) (174,949) (1,730,966)

Property and equipment, net 242,374 225,815 2,054,017

Investments and other assets:

Investment securities (Note 3) 33,926 35,891 287,509 Investments in and long-term loans to

affiliates (Note 3) 3,593 6,907 30,449 Deferred tax assets (Note 10) 10,380 9,713 87,966 Other assets 8,027 7,399 68,026

Total investment and other assets 55,926 59,910 473,950 Total assets ¥ 468,006 ¥ 446,933 $ 3,966,153

See accompanying Notes to Consolidated Financial Statements.

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2007 2006 2007 Liabilities: Current liabilities:

Short-term borrowings (Note 5) ¥ 3,700 ¥ 4,371 $ 31,356Current portion of long-term debt (Note 5) 1,023 7,187 8,669Trade payables 66,317 54,333 562,009Accrued expenses 13,060 12,446 110,678Income taxes payable 4,445 5,265 37,670Other current liabilities (Note 10) 10,435 9,198 88,432

Total current liabilities 98,980 92,800 838,814 Long-term debt (Note 5) 2,412 1,061 20,441Employee retirement benefit liability (Note 6) 48,652 41,842 412,305Deferred tax liabilities (Note 10) 9,563 7,626 81,042Negative goodwill 14,642 18,250 124,085Other long-term liabilities 909 910 7,703

Total liabilities 175,158 162,489 1,484,390 Equity (Note 9):

Common stock 42,482 - 360,017Capital surplus 73,582 - 623,576Retained earnings 171,034 - 1,449,441Less, treasury stock, at cost (9,557) - (80,992)

Total shareholders’ equity 277,541 - 2,352,042Other components of equity 8,810 - 74,661Minority interests 6,497 - 55,060

Total equity 292,848 - 2,481,763Total liabilities and equity ¥ 468,006 - $ 3,966,153

Minority interests - 5,528 -Shareholders' equity:

Common stock - 42,482 -Capital surplus - 73,353 -Retained earnings - 164,490 -Land revaluation decrement - (295) -Net unrealized gains on available-for-sale securities - 9,860 -Foreign currency translation adjustment - (402) -Less, treasury stock, at cost - (10,572) -

Total shareholders’ equity - 278,916 -Total liabilities, minority interests and

shareholders’ equity - ¥ 446,933 -

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SEINO HOLDINGS CO., LTD. and Subsidiaries Consolidated Statements of Operations For the Years Ended March 31, 2007, 2006 and 2005


2007 2006 2005 2007 Operating revenue (Note 11) ¥ 449,486 ¥ 427,520 ¥ 423,833 $ 3,809,203 Operating costs and expenses (Notes 6 and 11):

Operating costs 408,395 386,995 381,970 3,460,974 Selling, general and administrative expenses 30,295 30,443 29,816 256,737

438,690 417,438 411,786 3,717,711 Operating income 10,796 10,082 12,047 91,492

Other income (expenses):

Interest and dividend income 825 2,008 2,306 6,992 Interest expenses (164) (243) (353) (1,390) (Loss) gain on sale or disposal of property and equipment (386) (458) 154 (3,271) Equity in net (loss) income of affiliates (368) (485) 238 (3,119) Amortization of negative goodwill 4,181 8,518 6,521 35,432 Impairment loss on fixed assets (1,727) (21,924) - (14,636) Loss on liquidation or sale of subsidiaries and affiliates - (136) (205) - Recoveries of bad debts previously written-off - - 211 - Miscellaneous, net 1,422 1,450 1,225 12,051

3,783 (11,270) 10,097 32,059 Income (loss) before income taxes and minority interests 14,579 (1,188) 22,144 123,551

Income taxes (Note 10) 5,617 7,822 6,643 47,602 Minority interests in net income (loss) of subsidiaries 165 (676) 1,228 1,398

Net income (loss) ¥ 8,797 ¥ (8,334) ¥ 14,273 $ 74,551 Yen U.S. Dollars Per share:

Net income (loss): -Basic ¥ 44.71 ¥ (43.35) ¥ 72.26 $ 0.38 -Diluted - - 70.67 -

Cash dividends 11.00 11.00 11.00 0.09 See accompanying Notes to Consolidated Financial Statements.

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SEINO HOLDINGS CO., LTD. and Subsidiaries Consolidated Statements of Changes in Equity For the Years Ended March 31, 2007, 2006 and 2005

Number ofcommon

shares issued Common stock Capital surplus

Retained earnings

Land revaluation decrement

Net unrealized gains on

available-for-sale securities

Foreign currency translation adjustment

Treasury stock

Total shareholders’

equity Millions of Yen Balance at March 31, 2004 198,631,167 ¥ 42,482 ¥ 64,874 ¥ 163,242 ¥ (413) ¥ 3,742 ¥ (676) ¥ (557) ¥ 272,694

Net income for the year - - - 14,273 - - - - 14,273 Treasury stock reissued upon exercise of stock option - - 21 - - - - 179 200 Cash dividends - - - (2,158) - - - - (2,158) Bonuses to directors and statutory auditors - - - (97) - - - - (97) Reversal of land revaluation decrement - - - (33) 33 - - - - Decrease due to a change of voting interest on a subsidiary - - - - 1 - - - 1 Net change in unrealized gains on available-for-sale

securities, net of applicable income taxes - - - - - 1,174 - - 1,174 Translation adjustment - - - - - - 99 - 99 Purchase of treasury stock and fractional shares, net - - - - - - - (2,834) (2,834)

Balance at March 31, 2005 198,631,167 42,482 64,895 175,227 (379) 4,916 (577) (3,212) 283,352 Net loss for the year - - - (8,334) - - - - (8,334) Stocks issued under stock-for-stock exchange offerings 9,048,616 - 8,489 - - - - 3,143 11,632 Cash dividends - - - (2,129) - - - - (2,129) Bonuses to directors and statutory auditors - - - (75) - - - - (75) Reversal of land revaluation decrement - - - (84) 84 - - - - Net change in unrealized gains on available-for-sale

securities, net of applicable income taxes - - - - - 4,944 - - 4,944 Translation adjustment - - - - - - 175 - 175 Purchase of treasury stock and increase in treasury stock

held by group companies, net - - (31) (115) - - - (10,503) (10,649) Balance at March 31, 2006 207,679,783 ¥ 42,482 ¥ 73,353 ¥ 164,490 ¥ (295) ¥ 9,860 ¥ (402) ¥ (10,572) ¥ 278,916 Shareholders’ equity Other components of equity

Number ofcommon

shares issued Common stock Capital surplus

Retained earnings

Treasury stock

Total shareholders’

equity

Net unrealized gains on

available-for- sale securities

Land revaluation decrement

Foreign currency translation adjustment

Total other components of

equity Minority interests Total equity Millions of Yen Balance at March 31, 2006 207,679,783 ¥ 42,482 ¥ 73,353 ¥ 164,490 ¥ (10,572) ¥ 269,753 ¥ 9,860 ¥ (295) ¥ (402) ¥ 9,163 ¥ 5,528 ¥ 284,444

Net income for the year - - - 8,797 - 8,797 - - - - - 8,797Treasury stock reissued under stock-for-stock exchange

offerings (Note 2 (a-ii)) - - 229 - 1,105 1,334 - - - - - 1,334Cash dividends - - - (2,151) - (2,151) - - - - - (2,151)Bonuses to directors and statutory auditors - - - (102) - (102) - - - - - (102)Fractional shares aquired, net - - - - (90) (90) - - - - - (90)Net changes other than shareholders’ equity - - - - - - (376) (23) 46 (353) 969 616

Balance at March 31, 2007 207,679,783 ¥ 42,482 ¥ 73,582 ¥ 171,034 ¥ (9,557) ¥ 277,541 ¥ 9,484 ¥ (318) ¥ (356) ¥ 8,810 ¥ 6,497 ¥ 292,848 Thousands of U.S. Dollars Balance at March 31, 2006 $ 360,017 $ 621,635 $ 1,393,983 $ (89,593) $ 2,286,042 $ 83,559 $ (2,500) $ (3,407) $ 77,652 $ 46,848 $ 2,410,542

Net income for the year - - 74,551 - 74,551 - - - - - 74,551Treasury stock reissued under stock-for-stock exchange

offerings (Note 2 (a-ii)) - 1,941 - 9,364 11,305 - - - - - 11,305Cash dividends - - (18,229) - (18,229) - - - - - (18,229)Bonuses to directors and statutory auditors - - (864) - (864) - - - - - (864)Fractional shares aquired, net - - - (763) (763) - - - - - (763)Net changes other than shareholders’ equity - - - - - (3,186) (195) 390 (2,991) 8,212 5,221

Balance at March 31, 2007 $ 360,017 $ 623,576 $ 1,449,441 $ (80,992） $ 2,352,042 $ 80,373 $ (2,695) $ (3,017) $ 74,661 $ 55,060 $ 2,481,763 See accompanying Notes to Consolidated Financial Statements.

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SEINO HOLDINGS CO., LTD. and Subsidiaries Consolidated Statements of Cash Flows For the Years Ended March 31, 2007, 2006 and 2005


2007 2006 2005 2007 Cash flows from operating activities:

Income (loss) before income taxes and minority interests ¥ 14,579 ¥ (1,188) ¥ 22,144 $ 123,551 Adjustments for:

Depreciation 16,253 14,660 13,744 137,737 Impairment loss on fixed assets 1,727 21,924 - 14,636 Amortization of negative goodwill (4,181) (8,518) (6,521) (35,432) Net provision for employee retirement benefit liability 1,442 1,154 1,680 12,220 Loss (gain) on sale or disposal of property and equipment 386 458 (154) 3,271 Equity in net loss (income) of affiliates 368 485 (238) 3,119 Loss on liquidation or sale of subsidiaries and affiliates - 136 205 - (Gain) loss on sale of investment securities - (16) 107 - Recoveries of bad debts previously written-off - - (211) -

(Increase) decrease in trade receivables (3,432) (3,412) 1,534 (29,085) Decrease (Increase) in inventories 1,976 (3,308) (756) 16,746 Increase (decrease) in trade payables and accrued expenses 6,193 976 (142) 52,483 Repayments of employees' saving deposits - - (3,686) - Increase in beneficial interest in trusts in relation to trade payables (11,714) - - (99,271) Other, net (326) 1,370 (2,987) (2,763)

Sub-total 23,271 24,721 24,719 197,212 Interest and dividend received 824 2,083 2,390 6,983 Interest paid (169) (243) (369) (1,432) Income taxes paid (6,406) (6,819) (7,417) (54,288)

Net cash provided by operating activities 17,520 19,742 19,323 148,475 Cash flows from investing activities:

Increase in property and equipment (16,310) (15,164) (16,402) (138,221) Increase in long-term investments and loans (3,768) (302) (2,558) (31,932) Decrease in property and long-term investments 1,448 7,045 3,930 12,271 Decrease in short-term investments 1,877 14,832 12,608 15,907

Net cash (used in) provided by investing activities (16,753) 6,411 (2,422) (141,975) Cash flows from financing activities:

Increase in long-term debt 1 60 72 9 Repayment of long-term debt (8,689) (9,806) (438) (73,636) Net decrease in short-term borrowings (3,755) (457) (26,351) (31,822) Cash dividends paid (2,158) (2,232) (2,269) (18,288) Other, net (78) (9,099) (2,631) (661)

Net cash used in financing activities (14,679) (21,534) (31,617) (124,398) Effect of exchange rate changes on cash and cash equivalents 8 1 2 68 Net (decrease) increase in cash and cash equivalents (13,904) 4,620 (14,714) (117,830) Cash and cash equivalents at beginning of year 55,226 50,606 65,320 468,017 Increase in cash and cash equivalents upon inclusion of additional subsidiaries on consolidation 1,431 - - 12,127

Cash and cash equivalents at end of year ¥ 42,753 ¥ 55,226 ¥ 50,606 $ 362,314 See accompanying Notes to Consolidated Financial Statements.

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SEINO HOLDINGS CO., LTD. and Subsidiaries Notes to Consolidated Financial Statements 1. Basis of Consolidated Financial Statements (a) Basis of presenting the consolidated financial statements

The accompanying consolidated financial statements of SEINO HOLDINGS CO., LTD. (the “Company”) and its subsidiaries (together with the Company, the “Seino Group”) have been prepared on the basis of accounting principles generally accepted in Japan, which are different in certain respects as to the application and disclosure requirements of International Financial Reporting Standards. These consolidated financial statements are compiled from the original consolidated financial statements in Japanese prepared by the Company as required by the Securities and Exchange Law of Japan and submitted to the Director of Kanto Finance Bureau of Japan.

(b) U.S. dollar amounts The Company maintains its accounting records in Japanese Yen. The U.S. dollar amounts included in the accompanying consolidated financial statements and notes thereto represent the arithmetic results of translating Japanese Yen into U.S. dollars at a rate of ¥118 to $1, the approximate rate of exchange at March 31, 2007. The inclusion of such dollar amounts is solely for the convenience of the readers and is not intended to imply that the assets and liabilities originating in Yen have been or could be readily converted, realized or settled in dollars at ¥118 to $1 or at any other rate.

2. Summary of Significant Accounting Policies

(a-i) Principles of consolidation The accompanying consolidated financial statements include the accounts of the Company and all of its subsidiaries. Investment in significant affiliates is accounted for by the equity method. Investment in affiliates not accounted for by the equity method is stated at cost. Differences between the acquisition cost of investments in subsidiaries and the underlying equity in their net assets adjusted based on the fair value at the time of acquisition are deferred as goodwill or negative goodwill, which were presented as consolidating adjustment account in the prior years’ consolidated financial statements, and amortized over five years on a straight-line basis. All intercompany transactions and accounts have been eliminated. Under the accounting standard for consolidation, a subsidiary is defined as an enterprise which is controlled by another enterprise, and that is a majority (more than 50%) owned enterprise or 40% to 50% owned enterprise that meets certain criteria. In addition, an affiliated company is defined as an enterprise in which the investor has a significant influence, and that is an enterprise, other than a subsidiary, with 20% or more of voting stock as well as 15% to 19% owned enterprise that meets certain criteria. For the years ended March 31, 2007, 2006 and 2005, the number of the companies with not exceeding 50% voting interest classified as subsidiaries based on the self-judgment of the Company in accordance with the accounting standard was five, five and fifteen, respectively. The number of subsidiaries and affiliates for the three years ended March 31, 2007 was as follows:

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2007 2006 2005 Subsidiaries: Domestic 46 39 39 Overseas 4 4 5 Affiliates, accounted for by the equity method 2 6 6 Affiliates, stated at cost 8 10 11

The Company’s overseas subsidiaries close their books at December 31 every year, three months earlier than the Company and other domestic subsidiaries. The Company has consolidated such subsidiaries’ financial statements as of their year-end. Significant transactions for the period between subsidiaries’ year-end and the Company’s year-end are adjusted on consolidation. Overseas subsidiaries adopt accounting principles generally accepted in their respective countries, and no adjustments to conform to accounting principles generally accepted in Japan have been made to their financial statements on consolidation as allowed under accounting principles and practices generally accepted in Japan.

(a-ii) Stock-for-stock exchange agreements with the subsidiaries

On May 17, 2005, the Company entered into the stock-for-stock exchange agreements with its four subsidiaries in order to make the Company’s respective equity share in such subsidiaries increase to 100%. The agreements were subsequently approved by the shareholders at the annual general meeting of the Company and the respective companies held in June 2005. In accordance with this agreement, on October 1, 2005 (stock-for-stock exchange date), the Company newly issued 9,048,616 shares of the Company’s common stock and reissued 3,234,381 shares of the treasury stock at the exchange rates of a certain number of shares of the Company’s common stock (see below) for one share of common stock of the four subsidiaries to their respective minority shareholders. The details of information of stock-for-stock exchange transactions for the subsidiaries were as follows:

Exchange rate of the number

of shares of the Company for one share of subsidiaries

(shares) Toyota Corolla Gifu Co., Ltd. (“Corolla”) 1.68 Gifu Hino Motor Co., Ltd. (“Hino”) 1.11 Netz Toyota Gifu Co., Ltd. (“Netz”) 27.80 Netz Toyota Centro Gifu Co., Ltd. (“Centro”) 5.12

The unaudited financial information of the subsidiaries above as at or for the six months ended September 30, 2005 was as follows:

Corolla Hino Netz Centro Millions of Yen Operating revenue ¥ 17,172 ¥ 12,663 ¥ 9,383 ¥ 4,990Net (loss) income for the period (540) (148) 103 (421)Total assets 35,858 28,274 11,992 7,035Net assets 28,184 17,069 7,083 2,680 On October 1, 2006, the Company exercised the stock-for-stock exchange transaction with an affiliate, Hokkaido Seino Transportation Co., Ltd. (“Hokkaido Seino”), in order to make the

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Company’s equity share in the affiliate increase from 39.05% to 100%. This reorganization of the Seino Group is expected to strengthen its integration, improve the efficiency, and correspond to the change in the business environment mobile and flexibly. On October 1, 2006, the Company reissued 438,840 shares of the Company’s treasury stock at the exchange rate of 0.24 shares of the Company’s treasury stock for 1 share of common stock of the affiliate to its shareholders. As a result of this transaction, negative goodwill of ¥147 million ($1,246 thousand) was recorded as the excess of the underlying equity in the fair value of acquired net assets over the acquisition cost of ¥533 million ($4,517 thousand). The assets acquired and the liabilities assumed of Hokkaido Seino as of October 1, 2006 was as follows:

Millions of

Yen Thousands of U.S. Dollars

Assets: Current assets ¥ 2,831 $ 23,991 Non-current assets 5,628 47,695

Total assets ¥ 8,459 $ 71,686 Liabilities:

Current liabilities ¥ 4,247 $ 35,992 Non-current liabilities 2,021 17,127

Total liabilities ¥ 6,268 $ 53,119

The unaudited effect of this transaction on the consolidated results of operations of the Seino Group for the year ended March 31, 2007, assuming the transaction was completed as of April 1, 2006 (the beginning of the fiscal year), is as follows:

Millions of


Operating revenue ¥ 2,576 $ 21,831 Operating loss (116) (983) Net loss (75) (636)

In addition, on October 1, 2006, the Company exercised the stock-for-stock exchange transaction with its subsidiary “Seino Information Service Co., Ltd.”, in order to make the Company’s equity share in such a subsidiary increase to 100%. On October 1, 2006, the Company reissued 673,128 shares of the Company’s treasury stock at the exchange rate of 280.47 shares of the Company’s treasury stock for 1 share of common stock of the subsidiary. As a result of this transaction, negative goodwill of ¥31 million ($263 thousand) was recognized as the excess of the underlying equity of net assets of the subsidiary over the acquisition cost of ¥814 million ($6,898 thousand).

(a-iii) Acquisition for the current year

During the year ended March 31, 2007, as the Company acquired additional equity share of Shikoku Seino Transportation Co., Ltd. (“Shikoku Seino”), which was previously an affiliate accounted for by the equity method, Shikoku Seino became to a subsidiary. The assets and the liabilities as of the initial consolidation of Shikoku Seino were as follows.

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Millions of


Assets: Current assets ¥ 3,941 $ 33,398 Non-current assets 9,033 76,551

Total assets ¥ 12,974 $ 109,949 Liabilities:

Current liabilities ¥ 4,987 $ 42,263 Non-current liabilities 5,966 50,559

Total liabilities ¥ 10,953 $ 92,822 During the year ended March 31, 2007, the Company acquired additional common shares of two affiliates, which were Showa Seino Transportation Co., Ltd. (“Showa Seino”) and Hinomaru Seino Transportation Co., Ltd. (“Hinomaru Seino”), and the companies became subsidiaries of the Company effective October 1, 2006. The assets and the liabilities as of the initial consolidation of the companies were as follows.

Showa Seino Hinomaru Seino

Millions of


Millions of Yen

Thousands of U.S. Dollars

Current assets ¥ 1,977 $ 16,754 ¥ 1,238 $ 10,491 Non-current assets 3,528 29,899 3,275 27,754 Current liabilities (2,193) (18,585) (1,319) (11,178)Non-current liabilities (5,152) (43,661) (2,168) (18,373)Goodwill 387 3,280 33 280

Minority interests - - (498) (4,220)Equity interests held by the

Company 1,463 12,398 (382) (3,237)Additional acquisition cost 10 85 179 1,517 Cash and cash equivalents held

by the Company 420 3,560 134 1,136 Increase (decrease) in cash

presented on the accompanying consolidated statements on cash flows ¥ 410 $ 3,475 ¥ (45) $ (381)

(b) Cash and cash equivalents

The Seino Group considers cash equivalents to be highly liquid debt instruments purchased with an original maturity of three months or less.

(c) Investments and marketable securities

The Seino Group classifies certain investments in debt and equity securities as “held-to-maturity”, “trading” or “available-for-sale”, whose classification determines the respective accounting method as stipulated by the accounting standard for financial instruments. Held-to-maturity securities are stated at amortized cost. Marketable securities with market quotations for available-for-sale securities are stated at fair value and net unrealized gains or losses on these securities are reported as a component of equity, net of applicable income taxes. Gains and losses on disposition of available-for-sale securities are computed based on the moving-average method. Nonmarketable securities without available market quotations for available-for-sale securities are carried at cost determined by the moving-average method. Adjustments in carrying values of individual securities are charged to income through write-downs, when a decline in value is

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deemed other than temporary. (d) Accounting for derivatives

At March 31, 2007 and 2006, the Seino Group does not hold or has not issued any derivative transactions.

(e) Allowance for doubtful accounts Allowance for doubtful accounts has been provided for at the aggregate amount of estimated credit loss based on the individual financial review approach for doubtful or troubled receivables and a general reserve for other receivables calculated based on the historical loss experience for a certain past period.

(f) Inventories Inventories for supplies are principally stated at moving-average cost, and inventories for vehicles and work-in-process are principally stated at cost determined by the specific identification method.

(g) Property and equipment, and depreciation Property and equipment, including significant renewals and additions, are stated at cost. Property and equipment of the Company and its certain subsidiaries have been depreciated by the straight-line method for buildings and vehicles, and by the declining-balance method for other property. Property and equipment of other subsidiaries have been principally depreciated by the declining-balance method, except for the buildings acquired on and after April 1, 1998 and the property held for leases. The buildings acquired on and after April 1, 1998 by domestic subsidiaries have been depreciated by the straight-line method. Some of the subsidiaries capitalize property of the cost of not less than ¥100,000 and below ¥200,000 each and depreciate the property over three years on a straight-line basis. Expenditure on maintenance and repairs is charged to operating income as incurred. Upon the disposal of property, the cost and accumulated depreciation are removed from the accounts and any gain or loss is recorded as income or expenses.

(h) Leases

Where financing leases do not transfer ownership of the leased property to the lessee during the term of the lease, the leased property of the Company and its domestic subsidiaries as lessee is not capitalized and the relating rental and lease expenses are charged to income as incurred as accepted by the “Opinion Concerning Accounting Standard for Leases” issued by the Business Accounting Council of Japan (“BACJ”) and the related practical guideline issued by the Japanese Institute of Certified Public Accountants. The leased property of a certain subsidiary engaged in the leasing operations as lessor was recorded at cost as property held for leases, which was included in property and equipment in the accompanying consolidated balance sheets, and was depreciated over the lease contract terms by the straight-line method to the amount equal to the estimated disposal value at the lease termination date.

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(i) Intangible assets Intangible assets are amortized on a straight-line basis. Software, which is included in intangible assets, is amortized using the straight-line method over a five-year period as its estimated useful life.

(j) Accounting standard for impairment of fixed assets

On August 9, 2002, BACJ issued "Accounting Standard for Impairment of Fixed Assets", which is effective for the fiscal years beginning on and after April 1, 2005. The Accounting Standards Board of Japan (“ASBJ”) issued related practical guidance on October 31, 2003. The Company and its domestic subsidiaries adopted this accounting standard and related practical guidance effective from the year ended March 31, 2006. The standard requires that fixed assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss shall be recognized in the income statement by reducing the carrying amount of impaired assets or a group of assets to the recoverable amount to be measured as the higher of the asset’s net selling price or value in use. Fixed assets include land, buildings and other forms of property as well as intangible assets and are to be grouped at the lowest level for which there are identifiable cash flows from other groups of assets. For the purpose of recognition and measurement of an impairment loss, fixed assets are grouped into cash-generating units, such as operating business branches, other than idle or unused property. At March 31, 2007 and 2006, recoverable amounts of the assets were measured based on value in use calculated using discounted future cash flows at rates principally of 5.4% and 4.7%, respectively, or net selling prices primarily using appraisal valuations. As a result, the Seino Group recognized impairment loss for the property of 38 business branches, 4 idle properties and goodwill for the year ended March 31, 2007 and 69 business branches and 14 idle properties for the year ended March 31, 2006 as follows:

Millions of Yen


2007 2006 2007

Buildings and structures ¥ 90 ¥ 2,016 $ 763 Land 1,227 19,653 10,398 Other property 23 255 195 Goodwill 387 - 3,280 ¥ 1,727 ¥ 21,924 $ 14,636

Accumulated impairment losses have been directly deducted from the applicable assets.

(k) Employee retirement benefits Employees who terminate their service with the Seino Group are entitled to retirement benefits generally determined by the reference of current basic rates of pay, length of service and conditions under which the termination occurs. In accordance with the accounting standard for employee retirement benefits, the Seino Group has recognized the retirement benefits for employees including pension cost and related liability based on actuarial present value of projected benefit obligation using actuarial appraisal approach and the pension plan assets available for benefits at the fiscal year-ends. Unrecognized actuarial differences as changes in the projected benefit obligation or pension plan assets resulting from the experience different from that assumed and from changes in assumptions are amortized on a straight-line basis over ten years as a certain period within average remaining service lives of employees from the next year in which they arise. Unrecognized prior service cost is amortized using the straight-line method over ten years as a certain period within average remaining service

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lives of employees from the year in which it occurs.

(l) Accrued severance indemnities for directors and statutory auditors The Seino Group may pay severance indemnities to directors and statutory auditors, which are subject to the approval of the shareholders. Some of the subsidiaries have provided for at the full amount of the liabilities of directors' and statutory auditors' severance indemnities at the respective balance sheet dates. At March 31, 2007 and 2006, other long-term liabilities in the accompanying consolidated balance sheets included these accruals for directors and statutory auditors in the amounts of ¥723 million ($6,127 thousand) and ¥756 million, respectively.

(m) Income taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the carrying amounts of existing assets and liabilities and their respective tax bases and operating loss carryforward. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date.

(n) Enterprise taxes

With the implementation of the Revision of the Local Tax Law”(Legislation No.9, 2003) on March 31, 2005, size-based corporate taxes for local government enterprise taxes have been levied. The Company and its domestic subsidiaries record enterprise taxes calculated based on the “added value” and “capital” amounts as selling, general and administrative expenses in accordance with practical guidance issued by ASBJ.

(o) Revenue recognition for freight charges

The Seino Group recognizes freight charges as revenue when freight is received for shipment. In relation to its revenue recognition, the Seino Group records freight charges from customers and paid to interline carriers as operating revenue and operating costs and expenses, respectively.

(p) Appropriation of retained earnings Cash dividends and bonuses to directors and statutory auditors are recorded in the fiscal year during which a proposed appropriation of retained earnings is approved by the Board of Directors and/or shareholders. See Note 2(s-iii) for the accounting for bonuses to directors and statutory auditors.

(q) Translation of foreign currency accounts Receivables, payables and securities, other than stocks of subsidiaries and certain other securities, are translated into Japanese Yen at the exchange rates at the fiscal year-end. Transactions in foreign currencies are recorded based on the prevailing exchange rates on the transaction dates. Resulting translation gains or losses are included in the current earnings. In respect of the financial statement items of overseas subsidiaries, all asset, liability, income and expense accounts are translated into Yen by applying the exchange rates in effect at the fiscal year-end. Translation differences, after allocating to minority interests portions attributable to minority interests, are reported as foreign currency translation adjustment in a component of equity on the accompanying consolidated balance sheets.

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(r) Per share data Basic net income (loss) per share is computed by dividing income (loss) applicable to common shareholders by the weighted-average number of shares of common stock outstanding during the respective years. Diluted net income per share is computed assuming convertible bonds were converted at the time of issue unless having anti-dilutive effects and as if warrants or stock options were exercised at the beginning of the relevant year or (if later) on their first exercise date and as if the funds obtained thereby were used to purchase common stock at the average market price during the respective years under the treasury stock method. Diluted net income per share is not disclosed as the Seino Group had no diluted common shares for the years ended March 31, 2007 and 2006. Cash dividends per share shown for each fiscal year in the accompanying consolidated statements of operations represent dividends declared as applicable to the respective years.

(s) Accounting changes for the current year (s-i) Adoption of accounting standard for presentation of net assets in the balance sheet

ASBJ issued “Accounting Standard for Presentation of Net Assets in the Balance Sheet (ASBJ Statement No.5)” and Implementation Guidance “Guidance on Accounting Standard for Presentation of Net Assets in the Balance Sheet (ASBJ Guidance No. 8)” on December 9, 2005, which are applied for the period ending on and after May 1, 2006. The standard requires presenting the equity section in the balance sheet as similar to International Financial Reporting Standards. The Seino Group has adopted these new accounting standards effective for the year ended March 31, 2007. If the previous accounting method had been applied for the consolidated balance sheet at March 31, 2007, equity would have amounted to ¥286,351 million ($2,426,703 thousand).

(s-ii) Adoption of accounting standard for business combinations

BACJ issued “Accounting Standard for Business Combinations” on October 31, 2003, and ASBJ issued “Accounting Standard for Business Divestitures (ASBJ Statement No.7)” on December 27, 2005 and Implementation Guidance “Guidance on Accounting Standard for Business Combinations and Accounting Standard on Business Divestitures (ASBJ Guidance No. 10)” on December 22, 2006, which are applied for the year beginning on and after April 1, 2006. The Seino Group has adopted these standards effective for the year ended March 31, 2007. This accounting change resulted in no material effect on the operational results of the Seino Group.

(s-iii) Adoption of accounting standard for directors’ bonus

From the year ended March 31, 2007, the Seino Group has adopted “Accounting Standard for Directors’ Bonus (ASBJ Statement No.4)” issued by ASBJ on November 29, 2005. The standard requires that the directors’ bonuses, including those for statutory auditors, shall be accounted for as an expense of the accounting period in which such bonuses are accrued. Until the year ended March 31, 2006, bonuses to directors and statutory auditors were recorded as a part of the appropriation of retained earnings in the fiscal year when a proposed appropriation of retained earnings for directors’ bonuses was approved by the Board of Directors and/or shareholders. As a result, as compared with the previous accounting method, operating income and income before income taxes and minority interests decreased by ¥111 million ($941 thousand), respectively, for the year ended March 31, 2007.

(s-iv) Accounting change of the recognition for installment sale commission

With effect from the year ended March 31, 2007, the Seino Group changed the accounting method

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of the income classification to record installment sale commission in the income statement from other income to operating revenue. This change resulted from the increase in the importance of such commission income under the recent business development of the Seino Group and the comparative purposes for the information of the competitors. As a result, as compared with the previous accounting method, operating income increased by ¥1,044 million ($8,847 thousand), although there was no effect on income before income taxes and minority interests for the year ended March 31, 2007.

(s-v) Accounting change of the recognition for vehicle sales

Effective April 1, 2006, the Seino Group changed the accounting method for the recognition for vehicle sales. From the year ended March 31, 2007, the Seino Group recognizes the vehicle sales when a vehicle is registered, rather than when a vehicle is delivered to the customers under the previous accounting method. This accounting change was made for the comparative purposes for the information of the competitors and for the improvement of the effective accounting treatments under the business reorganization of the Seino Group. As a result, as compared with the previous accounting method, operating revenue increased by ¥854 million ($7,237 thousand), and operating income and income before income taxes and minority interests increased by ¥110 million ($932 thousand), respectively, for the year ended March 31, 2007.

3. Investments

At March 31, 2007 and 2006, short-term investments consisted of the following:


2007 2006 2007 Marketable securities:

Bonds ¥ 1,907 ¥ 2,369 $ 16,161 Total marketable securities 1,907 2,369 16,161

Other nonmarketable securities 2,000 - 16,949 Time deposits with an original maturity of

more than three months 5,761 4,987 48,822 ¥ 9,668 ¥ 7,356 $ 81,932

At March 31, 2007 and 2006, investment securities consisted of the following:


2007 2006 2007 Marketable securities:

Equity securities ¥ 26,411 ¥ 24,343 $ 223,822 Bonds 5,430 7,396 46,017 Other 225 227 1,907

Total marketable securities 32,066 31,966 271,746 Other nonmarketable securities 1,860 3,925 15,763 ¥ 33,926 ¥ 35,891 $ 287,509

At March 31, 2007 and 2006, fair value of marketable securities classified as held-to-maturity and related net unrealized gains were as follows: Carrying value Fair value Net unrealized

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gains Millions of Yen Bonds included in investment securities:

At March 31, 2007 ¥ 500 ¥ 499 ¥ (1) At March 31, 2006 500 497 (3)

Thousands of U.S. Dollars Bonds included in investment securities:

At March 31, 2007 $ 4,238 $ 4,229 $ (9) Marketable securities classified as available-for-sale are stated at fair value with unrealized gains and losses excluded from the current earnings and reported as a net amount within the equity account until realized. At March 31, 2007 and 2006, gross unrealized gains and losses for marketable securities classified as available-for-sale are summarized as follows:

Cost

Gross unrealized

gains

Gross unrealized

losses

Fair and carrying

value Millions of Yen At March 31, 2007:

Equity securities ¥ 9,536 ¥ 16,920 ¥ (45) ¥ 26,411Bonds 6,876 41 (80) 6,837Other 133 98 (6) 225

¥ 16,545 ¥ 17,059 ¥ (131) ¥ 33,473At March 31, 2006:

Equity securities ¥ 7,186 ¥ 17,185 ¥ (28) ¥ 24,343Bonds 9,326 53 (114) 9,265Other 133 100 (6) 227

¥ 16,645 ¥ 17,338 ¥ (148) ¥ 33,835

Thousands of U.S. Dollars At March 31, 2007:

Equity securities $ 80,813 $ 143,390 $ (381) $ 223,822Bonds 58,271 347 (678) 57,940Other 1,127 831 (51) 1,907

$ 140,211 $ 144,568 $ (1,110) $ 283,669 Expected maturities of held-to-maturity and available-for-sale debt securities at March 31, 2007 were as follows:

Millions of


Due in one year or less ¥ 3,900 $ 33,051 Due after one year through five years 3,920 33,220 Due after five years through ten years 847 7,178 Due after ten years 700 5,932 ¥ 9,367 $ 79,381

At March 31, 2007 and 2006, investments in and long-term loans to affiliates consisted of the

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following:

Millions of Yen Thousands ofU.S. Dollars

2007 2006 2007 Investments, accounted for by the equity method for

significant affiliates and at cost for others ¥ 3,541 ¥ 3,483 $ 30,008Interest bearing long-term loans 52 3,424 441 ¥ 3,593 ¥ 6,907 $ 30,449

4. Property and Equipment

At March 31, 2007 and 2006, property and equipment consisted of the following:

Millions of Yen


2007 2006 2007 Property held for own use, at cost:

Land ¥ 131,250 ¥ 119,914 $ 1,112,288 Buildings and structures 202,232 181,657 1,713,831 Vehicles 87,755 74,236 743,686 Machinery and equipment 24,121 22,592 204,415 Construction in progress 553 1,674 4,687

445,911 400,073 3,778,907 Less, accumulated depreciation (203,786) (174,499) (1,727,000)

Sub-total 242,125 225,574 2,051,907 Property held for leases, at cost:

Vehicles, equipment and other 717 691 6,076 Less, accumulated depreciation (468) (450) (3,966)

249 241 2,110 Total property and equipment ¥ 242,374 ¥ 225,815 $ 2,054,017

One of the consolidated subsidiaries elected to carry out one-time revaluation to restate the cost of land used for the business operations at values rationally reassessed effective on March 31, 2002, reflecting appropriate adjustments for land shape and other factors, based on the appraisal values issued by the Japanese National Tax Agency in accordance with the Law Concerning Revaluation of Land (“Law”). According to the Law, the excess of the original book values over sound reassessed values, net of the tax effect and minority interests portion, is recorded in the equity as land revaluation decrement account in the accompanying consolidated balance sheets. At March 31, 2007 and 2006, the differences between the carrying values of land used for the business operations after revaluation over the current market value of such land at the fiscal year-end amounted to ¥1,281 million ($10,856thousand) and ¥1,205 million, respectively.

5. Short-term Borrowings and Long-term Debt

At March 31, 2007 and 2006 short-term borrowings consisted of the following:

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2007 2006 2007 Unsecured bank overdrafts with interest rates ranging

from 0.95% to 8.5% per annum at March 31, 2007 ¥ 55 ¥ 51 $ 466 Short-term bank borrowings, principally unsecured

and represented by notes with interest rates ranging from 0.378% to 5.8% per annum at March 31, 2007 3,645 4,320 30,890

¥ 3,700 ¥ 4,371 $ 31,356

At March 31, 2007, the Company and certain subsidiaries had unsecured overdraft agreements with 12 banks. Under such agreements, the Company and such subsidiaries were entitled to withdraw up to ¥22,311 million ($189,076 thousand). The Company and such subsidiaries are not obligated to pay commitment fees on the unused portions of such overdraft facilities. At March 31, 2007 and 2006, long-term debt consisted of the following:


2007 2006 2007 Loans from banks, partly secured, due through

2017 repayable on an installment basis with interest rates ranging from 0.942% to 2.55% per annum at March 31, 2007 1,681 7,949 14,246

Loans from government agencies, principally mortgage, repayable on an installment basis with interest rates ranging from 0.321% to 3.6% per annum at March 31, 2007 1,656 182 14,034

Other 98 117 830 3,435 8,248 29,110 Less, current portion (1,023) (7,187) (8,669) ¥ 2,412 ¥ 1,061 $ 20,441 At March 31, 2007 and 2006, the following assets were pledged as collateral for certain short-term borrowings and long-term debt in the aggregate amounts of ¥3,129 million ($26,517 thousand) and ¥200 million, respectively:


2007 2006 2007 Land ¥ 7,936 ¥ 104 $ 67,254 Buildings and structures 4,990 692 42,288 Time deposits included in short-term investments 11 20 93

The aggregate annual maturities of long-term debt as at March 31, 2007 were as follows:

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Year ending March 31, Millions of Yen Thousands of U.S. Dollars

2008 ¥ 1,023 $ 8,669 2009 742 6,288 2010 553 4,687 2011 420 3,559 2012 218 1,848 Thereafter 479 4,059 ¥ 3,435 $ 29,110 6. Employee Retirement Benefits

The Company and its domestic subsidiaries have defined benefit plans. The following table reconciles the benefit liability as at March 31, 2007 and 2006:

Millions of Yen Thousands of U.S Dollars

2007 2006 2007 Reconciliation of benefit liability:

Projected benefit obligation ¥ 56,400 ¥ 47,647 $ 477,966 Less, fair value of pension plan assets at end of year (2,428) (1,421) (20,576)

53,972 46,226 457,390 Less, unrecognized actuarial differences (loss) (2,926) (2,437) (24,797)Less, unrecognized prior service cost (2,394) (1,947) (20,288)

Net amounts of employee retirement benefit liability recorded on the consolidated balance sheets ¥ 48,652 ¥ 41,842 $ 412,305

Notes: 1. Projected benefit obligation of certain subsidiaries was calculated using the simplified

calculation method as permitted by the accounting standard for employee retirement benefits.

2. The above table excluded the amounts for the assets not separately allocatable to some of the domestic subsidiaries in certain pension funds organized by others together with the subsidiaries or effectively restricted so that they cannot be used by the employees for other purpose, which amounted to ¥7,585 million ($64,280 thousand) and ¥7,159 million atMarch 31, 2007 and 2006, respectively.

The component of net periodic retirement benefit expense for the years ended March, 2007, 2006 and 2005 was as follows:

Millions of Yen Thousands of U.S Dollars

2007 2006 2005 2007 Net periodic retirement benefit expenses:

Service cost ¥ 2,760 ¥ 2,492 ¥ 2,618 $ 23,390Interest cost 1,033 925 914 8,754Expected return on pension plan assets (34) (22) (21) (288)Amortization of actuarial differences 494 482 615 4,186Amortization of prior service cost 335 295 179 2,839Other - - 17 -

Total retirement benefit expenses ¥ 4,588 ¥ 4,172 ¥ 4,322 $ 38,881

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Major assumptions used in the calculation of the above information for the three years ended March 31, 2007 were as follows: 2007 2006 2005 Method attributing the projected benefits to

periods of services Straight-line

method Straight-line

method Straight-line

method Discount rate 2.0% 2.0% 2.0% Expected rate of return on pension plan assets 2.0% 2.0% 2.0% Amortization of prior service cost 10 years 10 years 10 years Amortization of actuarial differences principally principally

10 years principally

10 years 10 years 7. Contingent Liabilities

At March 31, 2007 and 2006, the Seino Group was contingently liable for trade notes endorsed to affiliates and the third parties, and for guarantees, including substantial guarantees, principally of indebtedness of affiliates and the third parties in the aggregate amounts of ¥3,059 million ($ 25,924 thousand) and ¥4,488 million, respectively.

8. Lease Commitments The Seino Group has entered into various rental and lease agreements for land and buildings to be used for truck terminals and warehouses which are generally cancelable with a few months' advance notice and also non-cancelable lease agreements for computer equipment and radio facilities with two-to-six year contract terms as lessee. The aggregate minimum future lease payments for such non-cancelable lease agreements, including the imputed interest portion, as at March 31, 2007 and 2006 were as follows:


2007 2006 2007 Due within one year ¥ 735 ¥ 881 $ 6,229 Due after one year 949 984 8,042 ¥ 1,684 ¥ 1,865 $ 14,271

A certain consolidated subsidiary engaged in the leasing operations entered into various lease agreements principally for vehicles with the third parties as lessor, which were categorized as financing leases. At March 31, 2007 and 2006, the aggregate future minimum lease commitments to be received for such non-cancelable lease agreements, including the imputed interest, were as follows:


2007 2006 2007 Due within one year ¥ 175 ¥ 162 $ 1,483 Due after one year 233 261 1,975 ¥ 408 ¥ 423 $ 3,458 In addition to above, a certain consolidated subsidiary engaged in the leasing operations leases the property as lessee and also leases the same property to affiliates and the third parties as lessor.

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At March 31, 2007 and 2006, the future minimum commitments under such agreements, including the imputed interest portion, were as follows:

Minimum rentals Minimum rentals to be paid to be received to be paid to be received

Millions of Yen Thousands of U.S. Dollars At March 31, 2007: Due within one year ¥ 145 ¥ 157 $ 1,229 $ 1,330 Due after one year 33 35 279 297 ¥ 178 ¥ 192 $ 1,508 $ 1,627 At March 31, 2006: Due within one year ¥ 519 ¥ 553 Due after one year 209 224 ¥ 728 ¥ 777

9. Equity (a) The authorized number of shares of common stock without par value is 794,524,668 shares. At

March 31, 2007 and 2006, respectively, the number of shares of common stock issued was 207,679,783 shares. At March 31, 2007.and 2006, respectively, number of treasury stock held by the Seino Group was 10,382,693 and 11,417,339 shares. Capital surplus principally consisted of additional paid-in capital. At March 31, 2007 and 2006, respectively, retained earnings included legal reserve of the Company in the amount of ¥4,262 million ($36,119 thousand). The Corporate Law of Japan (formerly the Commercial Code of Japan) provides that an amount equivalent to 10% of cash dividends as an appropriation of retained earnings shall be appropriated as a legal reserve until a total amount of additional paid-in capital and such legal reserve equals 25% of common stock. The reduction of legal reserve is restricted under the certain circumstance by proper actions of shareholders of the Company.

(b) On July 1, 2005, the Company implemented a rights plan using stock acquisition rights and trust

mechanism (”trust-type rights plan”) as a means of dealing with the acquisition of the Company’s common stock resulting in a particular shareholder holding more than 20% of the Company’s common stock and proposals of acquisition without the prior approval of the Board of Directors, and issued stock acquisition rights to The Sumitomo Trust & Banking Co., Ltd. at no charge as part of the plan based on the approval of shareholders at the annual general meeting of shareholders in June 2005. Up to 397,262,334 shares of the common stock would be issuable at a certain price for exercise of these stock acquisition rights for the period from July 1, 2005 to June 30, 2008.

(c) The shareholders of the Company approved the followings appropriations of retained earnings at

the annual general meeting of shareholders on June 26, 2007:


Cash dividends (¥11 per share) ¥ 2,195 $ 18,602

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10. Income Taxes

Income taxes for the years ended March 31, 2007, 2006 and 2005 consisted of the following:


2007 2006 2005 2007 Income taxes:

Current ¥ 5,912 ¥ 6,644 ¥ 7,483 $ 50,102 Deferred (295) 1,178 (840) (2,500)

¥ 5,617 ¥ 7,822 ¥ 6,643 $ 47,602

The tax effects on temporary differences that give rise to a significant portion of deferred tax assets and liabilities at March 31, 2007 and 2006 were as follows:


2007 2006 2007 Deferred tax assets:

Employee retirement benefit liability ¥ 20,226 ¥ 17,160 $ 171,407Enterprise tax accruals 370 480 3,136Accrued bonuses 3,768 3,596 31,932Intercompany capital gain 902 932 7,644Loss on assets transferred 1,511 1,971 12,805Impairment loss on fixed assets 10,089 8,699 85,500Unrealized losses on available-for-sale

securities 37 43 314Other 4,312 3,588 36,542

41,215 36,469 349,280Less, valuation allowance (15,877) (12,448) (134,551)

25,338 24,021 214,729Deferred tax liabilities:

Deferred capital gain 6,278 5,956 53,203Unrealized gains on available-for-sale

securities 6,734 6,839 57,068Valuation adjustment for consolidation 6,953 4,614 58,924 19,965 17,409 169,195Net deferred tax assets ¥ 5,373 ¥ 6,612 $ 45,534

At March 31, 2007 and 2006, deferred tax assets and liabilities were recorded as follows:


2007 2006 2007 Deferred tax assets: Current ¥ 4,560 ¥ 4,533 $ 38,644 Noncurrent 10,380 9,713 87,966 Deferred tax liabilities: Current 4 8 34 Noncurrent 9,563 7,626 81,042

In assessing the realizability of deferred tax assets, management of the Seino Group considers whether it is more likely than not that some portion or all of the deferred tax assets will not be

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realized. The ultimate realization of deferred tax assets is dependent upon the generation of the future taxable income during the periods in which those temporary differences become deductible. At March 31, 2007 and 2006, a valuation allowance was provided to reduce the deferred tax assets to the extent that the management believes that the amount of the deferred tax assets is expected to be realizable. A reconciliation of the differences between the Japanese statutory effective tax rate and the actual effective income tax rate on pretax income reflected in the accompanying consolidated statements of operations for the year ended March 31, 2005 was as follows.

Percentage of pretax income 2005 Japanese statutory effective tax rate 40.4 % Increase (decrease) due to:

Permanently nondeductible expenses 0.6 Tax exempt income (0.1) Local minimum taxes-per capita levy 2.4 Amortization of consolidating adjustment account (11.9) Equity in net income of affiliates (0.4) Other (1.0)

Actual effective income tax rate 30.0 % Such reconciliation for the years ended March 31, 2007 and 2006 was not disclosed, as the difference was not material for the year ended March 31, 2007 and the Seino Group recorded net loss for the year ended March 31, 2006.

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11. Segment Information

During the current year, the Seino Group operates in four business segments: transportation services, vehicle sales, leasing for real estate services and other services. Information by industry segment for the years ended March 31, 2007, 2006 and 2005 was summarized as follows:

Transportation

services Vehicle sales

Leasing for real estate services Other Total Elimination Consolidated

Millions of Yen For the year 2007:

Operating revenue: External customers ¥ 327,574 ¥ 85,549 ¥ 1,079 ¥ 35,284 ¥ 449,486 ¥ - ¥ 449,486 Inter-segment sales 1,705 10,180 - 36,578 48,463 (48,463) -

Total operating revenue 329,279 95,729 1,079 71,862 497,949 (48,463) 449,486 Operating costs and expenses 323,724 92,608 174 70,574 487,080 (48,390) 438,690

Operating income ¥ 5,555 ¥ 3,121 ¥ 905 ¥ 1,288 ¥ 10,869 ¥ (73) ¥ 10,796

Identifiable assets ¥ 338,669 ¥ 86,114 ¥ 9,260 ¥ 27,385 ¥ 461,428 ¥ 6,578 ¥ 468,006 Depreciation 14,555 1,601 49 304 16,509 (256) 16,253 Impairment loss on fixed assets 1,619 97 - 11 1,727 - 1,727 Capital expenditures 14,435 1,675 - 171 16,281 (255) 16,026

For the year 2006:

Operating revenue: External customers ¥ 307,888 ¥ 82,334 ¥ 1,004 ¥ 36,294 ¥ 427,520 ¥ - ¥ 427,520 Inter-segment sales 1,768 9,153 - 35,719 46,640 (46,640) -

Total operating revenue 309,656 91,487 1,004 72,013 474,160 (46,640) 427,520 Operating costs and expenses 303,782 89,333 167 70,786 464,068 (46,630) 417,438


Identifiable assets ¥ 308,671 ¥ 83,101 ¥ 9,015 ¥ 29,178 ¥ 429,965 ¥ 16,968 ¥ 446,933 Depreciation 12,897 1,533 45 413 14,888 (228) 14,660 Impairment loss on fixed assets 17,794 1,991 2,129 10 21,924 - 21,924 Capital expenditures 13,478 2,959 2 120 16,559 (276) 16,283

Thousands of U.S. Dollars For the year 2007:

Operating revenue: External customers $ 2,776,051 $ 724,991 $ 9,144 $ 299,017 $ 3,809,203 $ - $ 3,809,203 Inter-segment sales 14,449 86,272 - 309,983 410,704 (410,704) -

Total operating revenue 2,790,500 811,263 9,144 609,000 4,219,907 (410,704) 3,809,203 Operating costs and expenses 2,743,424 784,813 1,474 598,085 4,127,796 (410,085) 3,717,711

Operating income $ 47,076 $ 26,450 $ 7,670 $ 10,915 $ 92,111 $ (619) $ 91,492

Identifiable assets $ 2,870,076 $ 729,780 $ 78,475 $ 232,076 $ 3,910,407 $ 55,746 $ 3,966,153 Depreciation 123,348 13,568 415 2,576 139,907 (2,170) 137,737 Impairment loss on fixed assets 13,721 822 - 93 14,636 - 14,636 Capital expenditures 122,331 14,195 - 1,449 137,975 (2,161) 135,814

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Transportation

services Merchandise

sales Information

services Other Total Elimination Consolidated Millions of Yen For the year 2005:

Operating revenue: External customers ¥ 307,264 ¥ 98,259 ¥ 5,268 ¥ 13,042 ¥ 423,833 ¥ - ¥ 423,833 Inter-segment sales 1,932 27,916 6,001 13,559 49,408 (49,408) -

Total operating revenue 309,196 126,175 11,269 26,601 473,241 (49,408) 423,833 Operating costs and expenses 301,265 123,801 11,195 24,928 461,189 (49,403) 411,786


Identifiable assets ¥ 340,636 ¥ 92,639 ¥ 5,211 ¥ 14,794 ¥ 453,280 ¥ 17,212 ¥ 470,492 Depreciation 12,045 1,544 255 127 13,971 (227) 13,744 Capital expenditures 15,163 2,252 111 168 17,694 (373) 17,321

Notes: 1. Identifiable assets in the elimination column represent unallocated general corporate items which are not assigned to a particular industry segment such as cash, short-term

and long-term investment securities, net of inter-segment balances.

2. Accounting changes: (Accounting change in the composition of reportable business segment) Effective from the year ended March 31, 2006, the Company changed the composition of its reportable business segment from “transportation services”, “merchandise sales”, “information services” and “other” segment to “transportation services”, “vehicle sales”, “leasing for real estate services” and “other” segment in order to disclose segment information more properly. For the year ended March 31, 2006, “vehicle sales” segment, which was the core business of the “Seino Group”, was separately shown, and “merchandise sales, except for vehicle sales” and “information services”, which were not material as the “Seino Group”, were included in “other” segment. “Leasing for real estate services” segment was separately shown, as operating income of its business segment became material to be disclosed. If the previous reportable business segment composition was applied, operating results for the year ended March 31, 2006 were reclassified as follows:

Merchandise sales

Information services

Other

Millions of Yen Operating revenue ¥ 100,962 ¥ 4,954 ¥ 13,717 Operating income 2,778 18 1,415

(Accounting standard for directors’ bonus)

As disclosed in Note 2(s-iii), from the year ended March 31, 2007, the Seino Group has adopted the new accounting standard for directors’ bonus. As a result, as compared with the previous accounting method, operating income of “transportation” segment, “vehicle sales” segment and “other” segment decreased by ¥35 million ($297 thousand), ¥50 million ($424 thousand) and ¥26 million ($220 thousand) for the year ended March 31, 2007, respectively.

(Accounting change of the recognition for installment sale commission）

As disclosed in Note 2(s-iv), with effect from the year ended March 31, 2007, the Seino Group changed the accounting method of the income classification to record installment sale commission. As a result, as compared with the previous accounting method, operating income of “vehicle sales” segment increased by ¥1,044 million ($8,847 thousand) for the year ended March 31, 2007.

(Accounting change of the recognition for vehicle sales) As also described in Note 2(s-v), effective April 1, 2006, the Seino Group changed the accounting method for the recognition for vehicle sales. As a result, as compared with the previous accounting method, operating revenue and operating income of “vehicle sales” segment increased by ¥854 million ($7,237 thousand) and ¥110 million ($932 thousand), respectively, for the year ended March 31, 2007.

Geographic segment information is not shown, as operating revenue and total assets of overseas subsidiaries were not material in the three years ended March 31, 2007. Information for overseas sales is not disclosed as such sales were not material.

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