Mitsubishi Logistics Corporation

ANNUAL REPORT 2012 Year ended March 31, 2012

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

005_0808001372409.indd 1 2012/08/20 20:33:31 Company Profile (As of March 31, 2012)

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 830 persons (parent only; not including 162 employees temporarily on loan to other companies. There are also 75 temporary employees, as well as 585 persons temporarily loaned or dispatched within the Group and those from outside the Group companies and accepted by the Company) 4,386 persons (on a consolidated basis; not including 63 employees temporarily on loan to companies outside the Group. There are also 1,277 temporary employees, as well as 1,031 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 First Section of the Osaka Securities Exchange Securities Code 9301

Major Shareholders Shareholder’s Name Number of Shares Held (Thousands) Shareholding Ratio (%) Japan Trustee Services Bank, Ltd. (trust account) 11,862 6.8 The Master Trust Bank of Japan, Ltd. (trust account) 10,058 5.7 Meiji Yasuda Life Insurance Company 9,707 5.5 Tokio Marine & Nichido Fire Insurance Co., Ltd. 7,775 4.4 MITSUBISHI ESTATE CO., LTD. 7,331 4.2 Kirin Holdings Company, Limited 6,921 3.9 The Bank of Tokyo-Mitsubishi UFJ, Ltd. 3,728 2.1 Contents ASAHI GLASS CO., LTD. 3,315 1.9 Mitsubishi Corporation 3,205 1.8 1 ... To Our Shareholders Takenaka Corporation 3,010 1.7 2 ... Topics 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 4 ... Overview of the Mitsubishi Logistics Group reserved, in addition to the shares stated in the table above. 2. The “Shareholding ratio” is calculated after excluding treasury stock (571,403 shares). 5 ... Independent Auditor’s Report 6 ... Consolidated Balance Sheets Directors and Corporate Auditors (As of June 28, 2012) Position Name Responsibilities and/or Primary Occupation 8 ... Consolidated Statements Of Income Chairman of the Board Naoshi Ban President* Tetsuro Okamoto 9 ... Consolidated Statements Of Comprehensive Income Managing Director Makoto Sakaizawa Responsible for Technical, Harbor Transportation and Real Estate Businesses 10 ... Consolidated Statements Of Changes In Net Assets Managing Director Koji Yoneyama Responsible for International Transportation Business Managing Director Yuichi Hashimoto Responsible for Accounting & Financing, Information System, and Internal Audit 11 ... Consolidated Statements Of Cash Flows Managing Director Yoshinori Watabe Responsible for Warehousing & Distribution Business 13 ... Notes To Consolidated Financial Statements Managing Director* Akio Matsui Responsible for General Affairs, Corporate Communications, Personnel, and Planning; and General Manager, Personnel Division Director Minoru Makihara Senior Corporate Advisor, Mitsubishi Corporation 37 ... Company Pro le Director Jiro Nemoto Chief Board Advisor, Nippon Yusen Kabushiki Kaisha Director Shigemitsu Miki Senior Advisor, The Bank of Tokyo-Mitsubishi UFJ, Ltd. Director Kenji Irie General Manager, Technical Division Director Masato Hoki General Manager, Yokohama Branch Director Kazuhiko Takayama General Manager, Nagoya Branch Director Takanori Miyazaki General Manager, Kobe Branch Standing Corporate Auditor Tohru Watanabe Standing Corporate Auditor Michio Izumi Corporate Auditor Yohnosuke Yamada Lawyer Corporate Auditor Shunkyo Harada Managing Director, Kyodo Soko Corporation Corporate Auditor Saburo Horiuchi Certified Public Accountant 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 the Osaka Securities Exchange, and reported it to both the Exchanges. 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 the Osaka Securities Exchange, and reported it to both the Exchanges. 37

005_0808001372409.indd 2 2012/08/20 20:33:32 To Our Shareholders

We are obliged to you for your continued support and patronage. I hereby report the business overview of the Mitsubishi Logistics Group for the 209th fiscal term (the year ended March 31, 2012). During the year under review, the global economy was characterized by slowing growth rates in emerging countries such as China and economic sluggishness in Europe against a backdrop of the debt crisis despite a moderate recovery that continued in the United States. Although a sense of economic deceleration strengthened, affected by the decline in exports and production due to the impact of the Great East Japan Earthquake along with the fall in consumer spending, the Japanese economy subsequently showed signs of recovery owing to the effect of stimulus policy and other factors. 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 a decline in export freight volume and the logistics rationalization despite an expansion of import freight volume. For Real Estate, the vacancy rate did not improve and the rent level partially deferred tax assets resulting from a reduction in the effective decreased for some rental office buildings. statutory tax rate due to changes in the taxation system because Under these circumstances, the Mitsubishi Logistics Group extraordinary losses such as the loss on disposal of fixed assets appropriately responded to a review of distribution bases at its decreased in addition to the posting of loss on earthquake customers, which was triggered by the occurrence of the Great disaster resulting from the damage caused by the Great East East Japan Earthquake, and promoted aggressive marketing Japan Earthquake as an extraordinary loss item in the previous activities. In Logistics, we strove to extend distribution center fiscal year. operations especially for pharmaceuticals and expand and In the coming year, the global economy is expected to reinforce operational bases overseas. In Real Estate, we focused continue the slowing trend in the growth rate in emerging our efforts on securing good tenants, maintaining and improving countries such as China and sluggishness is expected to linger in rent levels. Meanwhile, we endeavored to further improve Europe although a moderate recovery is anticipated in the United business performance via thorough cost management and States. The Japanese economy is expected to experience a efficiency improvement of diverse business operations. moderate recovery mainly due to an increase in public Moreover, in an effort to expand the logistics business, we investment to meet the demand for reconstruction from the Great entered into a three-party business alliance agreement with Japan East Japan Earthquake despite concerns about economic Airlines Co., Ltd., and its subsidiary Jupiter Global Limited. As slowdown overseas and the impact of yen appreciation. the Company subsequently accepted the allocation of new shares In this economic climate, the business conditions to a third party conducted by Jupiter Global Limited in late surrounding the Group are expected to remain harsh in view of August 2011, Jupiter Global Limited has been included in the the effects of the logistics rationalization in the logistics industry category of affiliates accounted for by the equity method of the such as the warehousing and port and harbor operations business Company from the end of the second quarter. despite a moderate increase expected for freight volumes, as well As a result, revenue for the Logistics segment for the year as the weak supply-demand relationship and intensifying under review increased and revenue for the Real Estate segment competition in the real estate industry. also increased, amounting to a combined ¥203,697 million, an Under these circumstances, the Mitsubishi Logistics Group increase of ¥27,818 million, or 15.8%, from the previous fiscal will strive for sustainable growth by expanding both the year. In Logistics, revenue rose because freight volumes domestic and overseas logistics businesses in tandem and the real increased in each business of warehousing, trucking and estate business with an emphasis on building leases, in line with international transportation, and Fuji Logistics Co., Ltd. and its the current Medium-term Management Plan (2010–2012), which subsidiaries were included as consolidated subsidiaries from the was formulated in April 2010. Furthermore, we will engage in second half of the previous fiscal year. In Real Estate also, the early creation of synergies with Fuji Logistics Co., Ltd., its revenue increased mainly due to the posting of revenue from subsidiaries, and Jupiter Global Limited, as well as appropriately condominium sales despite the negative effect of decline in respond to short-, medium- and long-term changes to the demand for office buildings. logistics and real estate businesses resulting from the effects of Cost of services on the whole increased ¥25,813 million, or the Great East Japan Earthquake. 16.6%, year over year to ¥181,645 million, partly due to As for the distribution of profits of Mitsubishi Logistics for increases in operational and transportation consignment costs, the year ended March 31, 2012, we intend to distribute a year- personnel expenses and facility rental expenses in Logistics, end dividend of ¥6 per share, taking into account operating reflecting an increase in freight volume and the inclusion of Fuji results for the year. As a result, the annual dividend per share, Logistics Co., Ltd. and its subsidiaries as consolidated including the interim dividend of ¥6 per share, totals ¥12, the subsidiaries, and the posting of costs for real estate sales in Real same as that for the previous fiscal year. Estate. Selling, general and administrative expenses increased As for dividends for the fiscal year ending March 31, 2013, ¥1,635 million, or 20.7%, year over year to ¥9,519 million, based on the basic dividend policy of stably distributing reflecting the inclusion of Fuji Logistics Co., Ltd. and its dividends with due regard to the profitability level, the interim subsidiaries as consolidated subsidiaries. dividend and the year-end dividend will be ¥6 per share, As a consequence, operating income increased ¥369 million, respectively, and the annual dividend per share therefore will be or 3.0%, year over year to ¥12,533 million, reflecting the profit ¥12, unless any exceptional circumstances take place. growth for both the Logistics and Real Estate segments. We look forward to your continued support and Ordinary income increased ¥820 million, or 6.0%, to ¥14,508 encouragement. million additionally due to an increase in dividends income. June 2012 Consolidated net income rose ¥591 million, or 8.5%, from the previous fiscal year to ¥7,564 million despite a reversal of Tetsuro Okamoto, President 1

010_0808001372409.indd 1 2012/08/21 11:40:37 Topics

Construction of Eco-Friendly and Disaster-Resistant Warehouses The Company started construction of three buildings that will serve as disaster-resistant and ecofriendly warehouses to support its customers in their efforts to continue their businesses in the event of a disaster while responding to requirements for the global environment. The warehouses will be capable of resisting earthquakes and other natural disasters thanks to the latest earthquake-resistant structure whose index values exceed those specified by the Building Standards Act, etc. They also have high environmental performance such as the installation of photovoltaic power generation equipment and the adoption of LED lighting.

Ibaraki No. 3 Distribution Center (Osaka)…………………………………………………………………………………………… (1) Location Ibaraki City, Osaka Prefecture (Approx. 2 km from the Ibaraki I.C. of MEISHIN EXPRESSWAY) (2) Total floor area Approx. 17,600 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 (5) Construction period Construction started in November 2011, and completion is planned for October 2012 Ibaraki No. 3 Distribution Center (Rendering)

Daito Distribution Center (Osaka) …………………………………………………………………………………………………… (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. 11,500 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 floors (5) Construction period Construction started in March 2012, and completion is planned for December 2012

Daito Distribution Center (Rendering)

Misato No. 2 Distribution Center (Saitama) ………………………………………………………………………………………… (1) Location Misato City, Saitama Prefecture (Approx. 3 km from the Misato Junction, the nodal 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 (5) Construction period Construction started in April 2012, and completion Misato No. 2 Distribution Center (Rendering) is planned for February 2013

010_0808001372409.indd 2 2012/08/21 11:40:41 Establishment of a Subsidiary Specializing in Pharmaceuticals Transportation The Company established Dia Pharmaceutical Network Co., Ltd. (hereinafter “NewCo”), a subsidiary specializing in transporting pharmaceuticals. NewCo started its business in January 2012. Two dedicated pharmaceuticals transportation companies, which have a strong business base in the Kanto region and the Kansai region, respectively, have an investment ratio of 15% each in NewCo’s capital. The Company has engaged in the storage and distribution of Logo mark of NewCo pharmaceuticals on consignment from Japanese and foreign pharmaceutical companies for approximately 30 years to provide high-quality logistics Outline of NewCo ……………………………… operations for pharmaceuticals. With NewCo’s start of operations, we will (1) Company name endeavor to improve the quality of delivery and distribution of Dia Pharmaceutical Network Co., Ltd. pharmaceuticals in order to meet customers’ needs such as thorough (2) Location of headquarters Yashio City, Saitama Prefecture temperature control, enhanced traceability and crisis-management measures. (3) Major businesses The Company will provide consistent and sophisticated services ranging Trucking from the operation of distribution centers for pharmaceuticals to the (4) Date of establishment transportation and distribution thereof. November 1, 2011 (5) Capital ¥100 million (the Company’s investment ratio: 70%)

Started Reconstruction of the Nihonbashi Dia Building, an Eco-Friendly, Disaster-Resistant Office Building In October 2011, the Company started reconstruction of the Edobashi Soko Building (Nihonbashi, Chuo-ku, Tokyo), which had been used as the Company’s head office and trunk room for storage. The construction of the renewed Nihonbashi Dia Building is planned to be completed in August 2014. The building has 18 floors above ground and one basement floor with a total floor area of approximately 30,000m2 and is approximately 90 meters in height; the upper floors are dedicated rental office floors, whereas the lower floors will be used as the head office of the Company and a trunk room. The reconstruction was also designed to conserve the appearance of the former Edobashi Soko Building, which was designated as one of the “Selected Historical Buildings of Tokyo Metropolitan Government,” as much as possible. In light of the experience of the Great East Japan Earthquake, the Nihonbashi Dia Building is structured to be highly resistant to earthquakes by installing seismic isolators. In addition, electric rooms and vital facilities are installed on the upper floors to prepare for water damage and emergency power generators are installed to cope with long-term power outage. Furthermore, this state-of-the-art, disaster-proof, urban building is designed as a core base for corporate business continuity taking into account circumstances where many people may be left in the city without the means to return home. Nihonbashi Dia Building (Rendering) The building proactively addresses the mitigating environmental load on the Earth by setting our energy reduction ratio target of approximately 45%. Accordingly, our environmental initiative for this building will receive the highest “Rank S” certification in the Comprehensive Assessment System for Building Environment Efficiency (CASBEE) and the “AAA Evaluation,” the highest score in the Tokyo Metropolitan Government’s energy efficiency labeling system.

010_0808001372409.indd 3 2012/08/21 11:40:42 Overview of the Mitsubishi Logistics Group (As of March 31, 2012)

Mitsubishi Logistics Corporation

Logistics Real Estate Consolidated Subsidiaries (48 companies)

Tohoku Ryoso Transportation Co., Ltd. Dia Buil-Tech Co., Ltd. Sairyo Service Co., Ltd. Yokohama Dia Building Management Corporation Dia Pharmaceutical Network Co., Ltd.* Tokyo Dia Service Co., Ltd. Chubo Kaihatsu Co., Ltd. Dia Systems Corporation Nagoya Dia Buil-Tech Co., Ltd. Ryoso Transportation Co., Ltd. Osaka Dia Buil-Tech Co., Ltd. Unitrans Ltd. Keihin Naigai Forwarding Co., Ltd. Kobe Dia Service Co., Ltd. Touryo Kigyo Co., Ltd. Kobe Dia Maintenance Co., Ltd. Fuji Logistics Co., Ltd. Tokyo Juki Transport Co., Ltd. Note: Effective from the 209th ﬁscal term, the year SII Logistics Inc. ended March 31, 2012, the company marked with Fuji Logistics Operations Co., Ltd. an asterisk (*) has been included as a Fuji Logistics Support Co., Ltd. consolidated subsidiary. 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 Corporation Hakuryo Koun Co., Ltd. Seiho Kaiun Kaisha., Ltd. Saryo Service Co., Ltd. Mitsubishi Logistics America Corporation Mitsubishi Warehouse California Corporation Mitsubishi Logistics Europe B.V. Fuji Logistics Europe B.V. Shanghai Linghua Logistics 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 Indonesia Fuji Logistics Malaysia SDN.BHD.

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

Note: Effective from the 209th ﬁscal term, the year Nippon Container Terminals Co., Ltd. ended March 31, 2012, the company marked with Kusatsu Soko Co., Ltd. an asterisk (*) has been included as an afﬁliate Jupiter Global Limited* accounted for by the equity method.

Major Businesses Logistics: Warehousing and Distribution: Storage of outsourced cargo in warehouses and bringing in/delivery thereof to/from warehouses by cargo handling Trucking: Transportation using trucks Port and harbor operations: Coastal and in-vessel cargo handling at ports and harbors International 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

010_0808001372409.indd 4 2012/08/21 11:40:42 5

011_0808001372409.indd 5 2012/08/28 18:01:27 Consolidated Balance Sheets

March 31, March 31, ASSETS 2012 2011 2012 (Millions of yen) (Thousands of U.S. dollars) (Note 1) CURRENT ASSETS: Cash and deposits (Notes 2 and 4) ¥23,813 ¥22,779 $289,731 Marketable securities (Notes 2, 4 and 5) 5,000 3,000 60,835

Notes and accounts receivable (Notes 3, 4 and 6) 44,320 32,339 539,238 Allowance for doubtful accounts (69) (77) (840) 44,251 32,262 538,398 Real estate held for sale 2,498 7,235 30,393 Deferred income taxes (Note 7) 2,050 2,189 24,942 Other 1,717 3,205 20,891 TOTAL CURRENT ASSETS 79,329 70,670 965,190

PROPERTY AND EQUIPMENT (Notes 9, 10 and 16): Land 66,069 61,281 803,857 Buildings and structures 325,114 326,186 3,955,639 Machinery and equipment 30,521 30,383 371,347 Transportation equipment 7,929 8,013 96,472 Construction in progress 575 294 6,996 430,208 426,157 5,234,311 Less accumulated depreciation (257,468) (249,015) (3,132,595) NET PROPERTY AND EQUIPMENT 172,740 177,142 2,101,716

INVESTMENTS AND OTHER ASSETS: Investments in unconsolidated subsidiaries and affiliates 6,475 4,547 78,781 Investments in securities (Notes 4, 5 and 10) 72,729 75,716 884,889 Long-term loans receivable 835 851 10,159 Intangible assets 11,106 10,522 135,126 Goodwill 1,878 2,099 22,849 Deferred income taxes (Note 7) 3,009 3,201 36,610 Other 5,202 5,704 63,292 Allowance for doubtful accounts (33) (26) (401) TOTAL OTHER ASSETS 101,201 102,614 1,231,305 ¥353,270 ¥350,426 $4,298,211

The accompanying notes are an integral part of these statements.

011_0808001372409.indd 6 2012/08/28 18:01:27 LIABILITIES AND NET ASSETS March 31, March 31, 2012 2011 2012 (Millions of yen) (Thousands of U.S. dollars) (Note 1) CURRENT LIABILITIES: Short-term bank loans and current maturities of long-term debt (Notes 4,10 and 11) ¥ 15,799 ¥20,328 $192,225 Notes and accounts payable (Notes 3, 4 and 5) 29,565 25,832 359,715 Income taxes payable 2,840 2,380 34,554 Allowance for loss on disaster – 601 – Other (Notes 7 and 10) 3,898 4,253 47,427 TOTAL CURRENT LIABILITIES 52,102 53,394 633,921

LONG-TERM LIABILITIES: Long-term debt, less current maturities (Notes 4,10 and 11) 37,991 31,188 462,234 Deposits on long-term leases (Notes 4, 6 and 10) 23,803 29,363 289,609 Retirement benefits (Note 12) 16,769 17,005 204,027 Deferred income taxes (Note 7) 10,747 13,316 130,758 Other 322 353 3,918 TOTAL LONG-TERM LIABILITIES 89,632 91,225 1,090,546 TOTAL LIABILITIES 141,734 144,619 1,724,467

CONTINGENT LIABILITIES AND COMMITMENTS (Notes 15 and 16)

NET ASSETS SHAREHOLDERS’ EQUITY: Common stock authorized – 440,000,000 shares, issued – 175,921,478 shares, 22,394 22,394 272,466 Capital surplus 19,618 19,618 238,691 Retained earnings 144,782 139,322 1,761,552 Treasury stock (696) (689) (8,468) TOTAL SHAREHOLDERS’ EQUITY 186,098 180,645 2,264,241 ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) Net unrealized holding gains on securities 25,634 25,195 311,887 Foreign currency translation adjustments (2,128) (1,978) (25,891) TOTAL ACCUMULATED OTHER COMPREHENSIVE INCOME 23,506 23,217 285,996 MINORITY INTERESTS 1,932 1,945 23,507 TOTAL NET ASSETS 211,536 205,807 2,573,744 ¥353,270 ¥350,426 $4,298,211

The accompanying notes are an integral part of these statements.

011_0808001372409.indd 7 2013/07/02 16:06:15 Consolidated Statements Of Income

Year ended March 31, Year ended March 31, 2012 2011 2010 2012 (Millions of yen) (Thousands of U.S. dollars) (Note 1) REVENUE ¥203,698 ¥175,880 ¥148,347 $2,478,379 COST OF SERVICES 181,645 155,832 131,768 2,210,062 Gross profit 22,053 20,048 16,579 268,317 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 9,520 7,884 6,298 115,829 Operating income 12,533 12,164 10,281 152,488 OTHER INCOME (EXPENSES): Interest and dividend income 2,090 1,605 1,477 25,429 Interest expense (748) (741) (840) (9,101) Gain on sale of marketable securities and investments – 12 120 – in securities Gain (loss) on revaluation of marketable securities and 21 (437) (746) 256 investments in securities Loss on disposal of property and equipment, net (315) (945) (320) (3,833) Impairment loss (Note 14) (304) – (321) (3,699) Equity in earnings of unconsolidated subsidiaries and 224 229 140 2,725 affiliates Indemnity income of exiting facilities for lease (Note 13) 303 – 40 3,687 Loss on earthquake disaster – (681) – – Other, net (Note 12) (38) 233 440 (462) 1,233 (725) (10) 15,002 Income before income taxes and minority interests 13,766 11,439 10,271 167,490 INCOME TAXES (Note 7) Current 5,331 4,744 4,746 64,862 Deferred 892 (354) (552) 10,853 6,223 4,390 4,194 75,715 Income before minority interests 7,543 7,049 6,077 91,775 MINORITY INTERESTS IN LOSSES (EARNINGS) OF CONSOLIDATED SUBSIDIARIES 21 (76) 29 256 NET INCOME ¥7,564 ¥6,973 ¥6,106 $92,031

AMOUNTS PER SHARE: Yen U.S. dollars (Note 1) Net income ¥43.16 ¥39.78 ¥34.82 $0.53 Cash dividends applicable to the year ¥12.00 ¥12.00 ¥12.00 $0.15

The accompanying notes are an integral part of these statements.

011_0808001372409.indd 8 2012/08/28 18:01:28 Consolidated Statements Of Comprehensive Income

Year ended March 31, Year ended March 31, 2012 2011 2010 2012 (Millions of yen) (Thousands of U.S. dollars) (Note 1) INCOME BEFORE MINORITY INTERESTS ¥7,543 ¥7,049 ¥– $91,775 OTHER COMPREHENSIVE INCOME: Valuation difference on available-for-sale securities 439 (5,240) – 5,341 Foreign currency translation adjustments (166) (372) – (2,020) Share of other comprehensive income of affiliates 11 (16) – 135 accounted for using the equity method Total other comprehensive income (Note 8) 284 (5,628) – 3,456

COMPREHENSIVE INCOME (Note 8) ¥7,827 ¥1,421 ¥– 95,231

Comprehensive income attributable to: Comprehensive income attributable to owners of the parent ¥7,855 ¥1,353 ¥– $95,571 Comprehensive income attributable to minority interests (28) 68 – (340)

The accompanying notes are an integral part of these statements.

011_0808001372409.indd 9 2012/08/28 18:01:28 Consolidated Statements Of Changes In Net Assets

Common Stock Foreign Net unrealized Deferred currency Capital Retained Treasury holding gains losses on translation Minority Shares Amount surplus earnings stock on securities hedges adjustments interests (Thousands (Millions of yen) of shares)

Balance at March 31, 2009 175,921 ¥22,394 ¥19,618 ¥129,717 ¥(626) ¥16,605 ¥(16) ¥(1,670) ¥ 911 Net income for the year – – – 6,106 ––––– Cash dividends – – – (2,105) – – – – – Increase due to change in the number – – – 703 – – – – – of consolidated subsidiaries Purchase of treasury stock – – – – (29) – – – – Sale of treasury stock – – (0) – 1 – – – – Adjustment from revaluation of available-for-sale securities – – – – – 13,853 – – – Adjustment from revaluation of derivatives – – – – – – 16 – – Adjustment from translation of foreign currency financial statements – – – – – – – 49 – Increase in minority interests – – – – – – – – 384 Balance at March 31, 2010 175,921 ¥22,394 ¥19,618 ¥134,421 ¥(654) ¥30,458 ¥– ¥(1,621) ¥1,295 Net 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 – – – – – – – (357) – foreign currency financial statements Increase in minority interests – – – – – – – – 650 Balance at March 31, 2011 175,921 ¥22,394 ¥19,618 ¥139,322 ¥(689) ¥25,195 ¥– ¥(1,978) ¥1,945 Net 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 – – – – – 439 – – – of available-for-sale securities 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) ¥1,932

Foreign Net unrealized Deferred currency Common Capital Retained Treasury holding gains losses on translation Minority Stock surplus earnings stock on securities hedges adjustments interests (Thousands of U.S. dollars) (Note 1) Balance at March 31, 2011 $272,466 $238,691 $1,695,121 $(8,383) $306,546 $ – $(24,066) $23,665 Net income for the year – – 92,031 – – – – – Cash dividends – – (25,600) – – – – – Increase due to mergers of –––––––– unconsolidated subsidiary Purchase of treasury stock – – – (110) – – – – Sale of treasury stock – 0 – 25 – – – – Adjustment from revaluation of – – – – 5,341 – – – available-for-sale securities Adjustment from translation of foreign currency financial statements – – – – – – (1,825) – Increase in minority interests – – – – – – – (158) Balance at March 31, 2012 $272,466 $238,691 $1,761,552 $(8,468) $311,887 $ – $(25,891) $23,507

The accompanying notes are an integral part of these statements.

011_0808001372409.indd 10 2012/08/28 18:01:29 Consolidated Statements Of Cash Flows

Year ended March 31, Year ended March 31, 2012 2011 2010 2012 (Millions of yen) (Thousands of U.S. dollars) (Note 1) CASH FLOWS FROM OPERATING ACTIVITIES: Income before income taxes and minority interests ¥13,766 ¥11,439 ¥10,271 $167,490 Depreciation and amortization 13,568 13,654 12,091 165,081 Impairment loss 304 – 321 3,699 Decrease in retirement benefits (221) (851) (29) (2,689) Loss (gain) on revaluation of marketable (21) 437 746 (256) securities and investments in securities Gain on sales of marketable securities and (4) (12) (106) (49) investments in securities Loss on disposal of property and equipment 187 252 135 2,275 Equity in earnings of unconsolidated subsidiaries and (224) (229) (140) (2,725) affiliates Interest and dividend income (2,090) (1,605) (1,477) (25,429) Interest expense 748 741 840 9,101 Increase in notes and accounts receivable (11,626) (844) (836) (141,453) Decrease (increase) in real estate held for sale 4,736 (3,535) (2,915) 57,623 Increase in notes and accounts payable 704 730 1,253 8,566 Decrease in deposits payable (1,644) (1,484) (287) (20,002) Other, net (102) 1,041 (35) (1,242) Subtotal 18,081 19,734 19,832 219,990 Interest and dividend income received in cash 2,168 1,628 1,503 26,378 Interest expense paid in cash (716) (722) (958) (8,712) Income taxes paid in cash (4,902) (4,990) (4,492) (59,642) NET CASH PROVIDED BY OPERATING ACTIVITIES 14,631 15,650 15,885 178,014

CASH FLOWS FROM INVESTING ACTIVITIES: Cash investment to time deposits (684) (912) (521) (8,321) Cash return from time deposits 647 644 289 7,872 Acquisition of property and equipment (11,547) (5,936) (23,065) (140,492) Proceeds from sales of property and equipment 203 33 58 2,470 Acquisition of marketable securities and (1,699) (148) (404) (20,672) investments in securities Proceeds from sales of marketable securities and 269 535 1,227 3,273 investments in securities Acquisition of investments in subsidiaries – (8,006) – – resulting in change in scope of consolidation Payments for additional acquisition of subsidiaries’ shares – (427) – – Other, net 332 (20) 45 4,039 NET CASH USED IN INVESTING ACTIVITIES (12,479) (14,237) (22,371) (151,831)

The accompanying notes are an integral part of these statements. 11

011_0808001372409.indd 11 2012/08/28 18:01:30 Consolidated Statements Of Cash Flows

Year ended March 31, Year ended March 31, 2012 2011 2010 2012 (Millions of yen) (Thousands of U.S. dollars) (Note 1) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from short-term bank loans 2,246 7,510 1,985 27,327 Repayments of short-term bank loans (5,038) (4,052) (2,061) (61,297) Proceeds from long-term debt 1,050 500 8,315 12,775 Repayments of long-term debt (989) (5,798) (3,023) (12,033) Issue of bonds 10,000 – – 121,669 Redemption of bonds (5,000) – (10,000) (60,835) Dividends paid (2,104) (2,104) (2,104) (25,599) Other, net (172) (156) (83) (2,092) NET CASH PROVIDED BY (USED IN) (7) (4,100) (6,971) (85) FINANCING ACTIVITIES

Effect of exchange rate changes on cash and cash equivalents (77) (162) 26 (937) NET INCREASE (DECREASE) IN CASH AND 2,068 (2,849) (13,431) 25,161 CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT 25,349 28,160 39,642 308,420 BEGINNING OF YEAR (Note 2) INCREASE IN CASH AND CASH EQUIVALENTS DUE TO: Newly consolidated subsidiary at beginning of year – – 1,949 – Merger’s of unconsolidated subsidiary – 38 – – CASH AND CASH EQUIVALENTS AT END OF YEAR (Note 2) ¥27,417 ¥25,349 ¥28,160 $333,581

The accompanying notes are an integral part of these statements.

011_0808001372409.indd 12 2012/08/28 18:01:30 Notes To Consolidated Financial Statements

NOTE 1 – SUMMARY OF ACCOUNTING POLICIES

BASIS OF PRESENTING CONSOLIDATED FINANCIAL March 31, STATEMENTS The accompanying consolidated financial statements of 2012 2011 2010 Mitsubishi Logistics Corporation (“the Company”) have been Consolidated subsidiaries 48 47 36 prepared in accordance with the provisions set forth in the Unconsolidated subsidiaries Japanese Financial Instruments and Exchange Law and its and affiliates under the equity related accounting regulations, and in conformity with accounting principles generally accepted in Japan (“Japanese method 3 2 2 GAAP”), which are different in certain respects as to application Dia Pharmaceutical Network Co., Ltd., which the Company and disclosure requirements of International Financial Reporting established in the current fiscal year, became a consolidated Standards. subsidiary. The accompanying consolidated financial statements have The Company underwrote capital increase of Jupiter been restructured and translated into English from the Global Limited through a third-party allotment of new shares. As consolidated financial statements of the Company prepared in a result, Jupiter Global Limited became an affiliate accounted for accordance with Japanese GAAP and filed with the appropriate on the equity method. Local Finance Bureau of the Ministry of Finance as required by the Japanese Financial Instruments and Exchange Law. Some CONSOLIDATED STATEMENTS OF CASH FLOWS supplementary information included in the statutory Japanese In preparing the consolidated statements of cash flows, cash on language consolidated financial statements, but not required for hand, readily-available deposits and short-term highly liquid fair presentation, is not presented in the accompanying investments with negligible risk of changes in value and consolidated financial statements. maturities not exceeding six months at the time of purchase are The translation of the Japanese yen amounts into U.S. considered to be cash and cash equivalents. dollars are included solely for the convenience of readers outside Japan, using the prevailing exchange rate at March 31, 2012, CONVERSION OF ASSETS AND LIABILITIES which was ¥82.19 to U.S. $1. The convenience translations DENOMINATED IN FOREIGN CURRENCIES should not be construed as representations that the Japanese yen Receivables and payables denominated in foreign currencies are amounts have been, could have been, or could in the future be, translated into Japanese yen at the year-end rates. converted into U.S. dollars at this or any other rate of exchange. Gains or losses resulting from conversion are credited or charged to income as incurred. CONSOLIDATION In consolidation, all significant inter-company transactions, DERIVATIVES AND HEDGE ACCOUNTING account balances and unrealized profits are eliminated. Accounting standard for financial instruments requires Differences between the acquisition costs and underlying net companies to state derivative financial instruments at fair value equities of investments in consolidated subsidiaries are recorded and to recognize changes in the fair value as gains and losses as goodwill in the consolidated balance sheets and amortized unless derivative financial instruments are used for hedging over 5 to 10 years on a straight-line basis. Any immaterial purposes. amounts are fully recognized as expenses as incurred. The effect If derivative financial instruments are used as hedges and on retained earnings and net income of unconsolidated meet certain hedging criteria, the Company and its consolidated subsidiaries and affiliates not accounted for on the equity method subsidiaries defer recognition of gains and losses resulting from is immaterial to the consolidated financial statements and those changes in fair value of derivative financial instruments until the investments are carried at cost, adjusted for any substantial and related losses and gains on the hedged items are recognized. non-recoverable decline in value. However, in cases where forward foreign exchange The Company holds 51% of voting rights of MLC ITL contracts are used as hedges and meet certain hedging criteria, Logistics Company Limited, however, the other shareholder’s forward foreign exchange contracts and hedged items are agreement is necessary to decide important policies of finance accounted for in the following manner, and trade. Therefore, the Company does not treat MLC ITL Logistics Company Limited as its subsidiary. (1) If a forward foreign exchange contact is executed to hedge The number of consolidated subsidiaries and affiliates an existing foreign currency receivable and payable, accounted for on the equity method at March 31, 2012, 2011 and (i) the difference, if any, between the Japanese yen 2010 was as follows: 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 13

011_0808001372409.indd 13 2012/08/28 18:01:30 Notes To Consolidated Financial Statements

income in the period which includes the inception date, SECURITIES and Available-for-sale securities (see explanation (d) below) with (ii) the discount or premium on the contract (that is, the available fair market values are stated at fair market value. difference between the Japanese yen amount of the Unrealized gains and unrealized losses on these securities are contract translated using the contracted forward rate reported, net of applicable income taxes, as a separate and that translated using the spot rate at the inception component of net assets. Realized gains and losses on sale of date of the contract) is recognized over the term of the such securities are computed using moving-average cost. contract. Available-for-sale securities with no available fair value are (2) If a forward foreign exchange contract is executed to stated at moving-average cost. Equity securities issued by hedge a future forecasted transaction denominated in unconsolidated subsidiaries and affiliates which are not foreign currency, the future transaction will be recorded consolidated or accounted for using the equity method are stated using the contracted forward rate, and no gains or losses on at moving-average cost. the forward foreign exchange contract are recognized. Upon the accounting standard for financial instruments, all Also, if interest rate swap contracts are used as hedges and companies are required to examine the intent of holding each meet certain hedging criteria, the net amount to be paid or security and classify those securities as (a) securities held for received under the interest rate swap contract is added to or trading purposes (hereafter, “trading securities”), (b) debt deducted from the interest on the assets or liabilities for which securities intended to be held to maturity (hereafter, “held-to- the swap contract was executed. maturity debt securities”), (c) equity securities issued by The following summarizes hedging derivative financial subsidiaries and affiliates, and (d) for all other securities that are instruments used by the Company and its consolidated not classified in any of the above categories (“available-for-sale subsidiaries and hedged items. securities”). Hedging instruments: Foreign exchange contracts and The Company and its consolidated subsidiaries only hold interest rate swap contracts. those securities classified as equity securities issued by Hedged items: Foreign currency assets and liabilities and subsidiaries and affiliates, and available-for-sale securities. interest rates of bank loans. If the market value of available-for-sale securities declines The hedge effectiveness of foreign exchange contracts significantly, such securities are stated at fair market value and accounted for in the above manner and that of interest rate swaps the difference between fair market value and the book value is meeting specific hedging criteria are not evaluated at the end of recognized as loss in the period of the decline. For equity the period. securities with no available fair market value, if the net asset The Company and its consolidated subsidiaries use foreign value of the investee declines significantly, such securities are exchange contracts and interest rate swap contracts for the required to be written down to the net asset value with the purpose of managing the exposure to fluctuations in foreign corresponding losses in the period of decline. In these cases, currency exchange and interest rates of bank loans, respectively. such fair market value or the net asset value will be the book The Company and its consolidated subsidiaries don’t enter value of the securities at the beginning of the next year. into derivatives for speculative purposes. REAL ESTATE HELD FOR SALE TRANSLATION OF FOREIGN CURRENCY STATEMENTS Real estate held for sale is stated at cost determined using the The balance sheets of overseas subsidiaries are translated into specific identification cost method. In case that the net selling Japanese yen at the rate of exchange at the balance sheet date of value falls below the acquisition cost at the end of the period, the subsidiaries, which is December 31, 2011, except for real estate held for sale is carried at the net selling value on the shareholders’ equity accounts, which are translated based on balance sheet. historical rates. The year-end rate of the subsidiaries is also used for translation of income, expenses and net income for the year. INCOME TAXES The resulting translation adjustments are presented as “Foreign Income taxes consist of corporation, enterprise and inhabitants currency translation adjustments” in the accompanying taxes. The provision for income taxes is computed based on the consolidated financial statements. pretax income of the Company and each of its consolidated subsidiaries with certain adjustments required for consolidated ALLOWANCE FOR DOUBTFUL ACCOUNTS and tax purposes. The asset and liability approach is used to Notes and accounts receivable, including loans and other recognize deferred tax assets and liabilities for loss receivables, are valued by providing a reserve by applying a carryforwards and the expected future tax consequences of percentage based on the actual rate of bad debts incurred in the temporary differences between the book value and the tax bases past plus an amount based on individually estimated of assets and liabilities. Valuation allowances are recorded to uncollectible receivables. reduce deferred tax assets based on the assessment of the realizability of the tax benefits.

011_0808001372409.indd 14 2012/08/28 18:01:31 PROPERTY AND EQUIPMENT, DEPRECIATION The Company and its consolidated subsidiaries provided Property and equipment are stated at cost. Depreciation of allowance for employees’ severance and retirement benefits depreciable assets, except for warehouse facilities (buildings) based on the estimated amounts of projected benefit obligation and leased commercial facilities (buildings), is computed on a and the fair value of the plan assets at year-end. declining- balance method over the estimated useful lives based Actuarial gains and losses are recognized in statements of on the Corporate Income Tax Law in Japan. Depreciation of income using the straight-line method over 5 to 16 years, warehouse facilities (buildings) is computed on a straight-line beginning the following fiscal year of recognition. Prior services method over the estimated useful lives based on the Corporate costs are recognized in statements of income using the straight- Income Tax Law in Japan. Depreciation of leased commercial line method over 5 to 15 years. facilities (buildings) is computed on a straight-line method over the economic useful lives of the assets (20-year period is (2) Officers’ severance and retirement benefits considered to be a standard economic useful life, however it Officers’ (directors and corporate statutory auditors) severing varies depending on the contract terms etc.). their connection with certain consolidated domestic subsidiaries The cost and accumulated depreciation applicable to assets on retirement are entitled to lump-sum retirement benefit retired or otherwise disposed of are eliminated from the related payments based on pay rates, length of services and certain other accounts and the gains or losses on disposal is credited or factors. charged to income. Expenditures for new facilities and those Retirement benefits to officers of certain consolidated which substantially increase the useful lives of existing property domestic subsidiaries are provided based on each entity’s rules. and equipment are capitalized. Maintenance, repair and minor renewals are charged to expense as incurred. NET ASSETS Under the Japanese Corporate Law (“the Law”) and regulations, INTANGIBLE ASSETS the entire amount paid for new shares is required to be Intangible assets are amortized on a straight-line method. designated as common stock. However, a company may, by a The capitalized computer software costs for internal use resolution of the Board of Directors, designate an amount not are amortized on the straight-line method over the estimated exceeding one-half of the price of the new shares as additional useful lives (five years). paid-in capital, which is included in capital surplus in the accompanying consolidated balance sheets. FINANCE LEASES Under the Law, in cases where a dividend distribution of Property and equipment capitalized under finance lease, except surplus is made, the smaller of an amount equal to 10% of the for the finance leases which do not transfer ownership of the dividend or the excess, if any, of 25% of common stock over the leased property to the lessee, are arrangements depreciated over total of additional paid-in capital and legal earnings reserve must the estimated useful lives or the lease term of the respective be set aside as additional paid-in capital or legal earnings assets. reserve. Legal earnings reserve is included in retained earnings As permitted, finance leases which commenced prior to in the accompanying consolidated balance sheets. April 1, 2008 and have been accounted for as operating leases, Under the Law, legal earnings reserve and additional paid- continue to be accounted for as operating leases with disclosure in capital could be used to eliminate or reduce a deficit or could of certain “as if capitalized” information. be capitalized by a resolution of the shareholders’ meeting. Additional paid-in capital and legal earnings reserve may ALLOWANCE FOR BONUSES FOR DIRECTORS not be distributed as dividends. Under the Law, all additional The Company provides allowance for bonuses for directors paid-in capital and all legal earnings reserve may be transferred based on the estimated amounts of payment. to other capital surplus and retained earnings, respectively, which are potentially available for dividends. The maximum amount that the Company can distribute as RETIREMENT BENEFITS AND PENSION PLAN dividends is calculated based on the non-consolidated financial (1) Employees’ severance and retirement benefits statements of the Company in accordance with Japanese laws The Company and its consolidated domestic subsidiaries provide and regulations. two types of post-employment benefit plans, unfunded lump-sum The appropriations are not accrued in the consolidated payment plans and funded contributory defined benefit pension financial statements for the corresponding period, but are plans, under which employees severing their connection with the recorded in the subsequent accounting period after shareholders’ Company and its consolidated subsidiaries on retirement are approval has been obtained. entitled to lump-sum retirement benefit payments or pension Retained earnings at March 31, 2012 include amounts payments based on pay rates, length of service and certain other representing year-end cash dividends of ¥1,052 million ($12,800 factors. And the Company and its consolidated domestic thousand), ¥6.0 ($0.07) per share, which were approved at the subsidiaries provide defined contribution pension plan. shareholders’ meeting held on June 28, 2012.

011_0808001372409.indd 15 2012/08/28 18:01:31 Notes To Consolidated Financial Statements

PER SHARE INFORMATION ADDITIONAL INFORMATION Net income per share is computed based upon the weighted The Company and its consolidated domestic subsidiaries adopted average number of shares outstanding during each fiscal year. “Accounting Standard for Accounting Changes and Error Cash dividends per share have been presented on an Corrections” (Accounting Standards Board of Japan (“ASBJ”) accrual basis and include dividends to be approved after the Statement No.24 issued on December 4, 2009) and “Guidance on balance sheet date, but applicable to the year then ended. Accounting Standard for Accounting Changes and Error Information on diluted net income per share is not Corrections” (ASBJ Guidance No.24, issued on December 4, disclosed as no shares which dilute net income per share are 2009) for accounting changes and corrections of prior period outstanding for the years ended March 31, 2012, 2011 and 2010. errors which are made after April 1, 2011.

NOTE 2 – CASH AND CASH EQUIVALENTS 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, 2012 and 2011 were as follows: March 31, March 31, 2012 2011 2012 (Millions of yen) (Thousands of U.S. dollars) Cash and deposits ¥23,813 ¥22,779 $289,731 Add money funds invested in bonds and domestic certificates of deposits 5,000 3,000 60,835 Less time deposits with maturities exceeding six months (1,417) (1,398) (17,241) Current assets other (money deposited) 21 968 256 Cash and cash equivalents ¥27,417 ¥25,349 $333,581

NOTE 3 – EFFECT OF BANK HOLIDAY ON MARCH 31, 2012 As financial institutions in Japan were closed on March 31, 2012, notes receivable of ¥48 million ($584 thousand) and notes payable of ¥120 million ($1,460 thousand) were settled on the following business day, April 2, 2012 and accounted for accordingly.

NOTE 4 – FINANCIAL INSTRUMENTS 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 management Notes 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. 16

011_0808001372409.indd 16 2012/08/28 18:01:31 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 values Fair 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.

2. FAIR VALUES OF FINANCIAL INSTRUMENTS Book value on the consolidated balance sheets, fair values, and differences as of March 31, 2012, 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, 2012 March 31, 2012 Book Book value Fair value Difference value Fair value Difference (Millions of yen) (Thousands of U.S. dollars) Assets (1) Cash and deposits ¥23,813 ¥23,813 ¥– $289,731 $289,731 $– (2) Notes and accounts receivable 41,623 41,623 – 506,424 506,424 – (3) Marketable securities 5,000 5,000 – 60,835 60,835 –

(4) Investment in securities (available- 70,395 70,395 – 856,491 856,491 – for-sale securities) ¥140,831 ¥140,831 ¥– $1,713,481 $1,713,481 $–

Liabilities (1) Notes and accounts payable ¥20,876 ¥20,876 ¥– $253,997 $253,997 $– (2) Short-term bank loans 11,561 11,561 – 140,662 140,662 – (3) Bonds 29,000 30,090 1,090 352,841 366,103 13,262 (4) Long-term debt *1 13,230 13,328 98 160,968 162,161 1,193 (5) Deposits on long-term leases 1,000 831 (169) 12,167 10,110 (2,057) (6) Derivatives – – – – – – ¥75,667 ¥76,686 ¥1,019 $920,635 $933,033 $12,398 *1 This includes long-term loans payable due within one year. March 31, 2011 Book value Fair value Difference (Millions of yen) Assets (1) Cash and deposits ¥22,779 ¥22,779 ¥– (2) Notes and accounts receivable 30,107 30,107 – (3) Marketable securities 3,000 3,000 – (4) Investment in securities (available-for-sale securities) 73,144 73,144 – ¥129,030 ¥129,030 ¥–

Liabilities (1) Notes and accounts payable ¥19,374 ¥19,374 ¥– (2) Short-term bank loans 14,368 14,368 – (3) Bonds*1 24,000 24,984 984 (4) Long-term debt*1 13,149 13,297 148 (5) Deposits on long-term leases 6,174 5,940 (234) ¥77,065 ¥77,963 ¥898 *1 These accounts include bonds and long-term loans payable due within one year. 17

011_0808001372409.indd 17 2012/08/28 18:01:31 Notes To Consolidated Financial Statements

(Note 1) Calculation method of fair values of financial instruments and the matter concerning securities Assets: (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) Bonds The fair values of bonds issued by the Company are calculated by the market price. (4) Long-term debt Long-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 leases Deposits on long-term leases are calculated by the present values of future cash flows discounted using risk free rate. (6) Derivatives The 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, 2012 2011 2012 (Millions of yen) (Thousands of U.S. dollars) Non-listed stocks*1 ¥ 8,700 ¥ 7,104 $105,852 Deposits on long-term leases*2 22,803 23,189 277,443

*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.

(Note 3) The redemption schedule for money claim and securities with contractual maturities. March 31, 2012 Millions of yen One year One to Five to Over or less five years ten years ten years Cash and deposits ¥23,813 ¥ – ¥ – ¥ – Notes and accounts receivable 41,623 – – – Marketable securities (Certificate of deposits) 5,000 – – – Investment in securities Available-for sale securities with maturities (public bonds) 10 67 – –

18 ¥70,446 ¥67 ¥ – ¥ –

011_0808001372409.indd 18 2012/08/28 18:01:31 March 31, 2011 Millions of yen One year One to Five to Over or less five years ten years ten years Cash and deposits ¥22,779 ¥ – ¥ – ¥ – Notes and accounts receivable 30,107 – – – Marketable securities (Certificate of deposits) 3,000 – – – Investment in securities Available-for sale securities with maturities (public bonds) 14 77 – – ¥55,900 ¥77 ¥ – ¥ –

March 31, 2012 Thousands of U.S. dollars One year One to Five to Over or less five years ten years ten years Cash and deposits $289,731 $– $– $– Notes and accounts receivable 506,424 – – – Marketable securities (Certificate of deposits) 60,835 – – – Investment in securities Available-for sale securities with maturities (public bonds) 122 815 – – $857,112 $815 $– $–

(Note 4) Repayment schedule of bonds, long-term debts and deposits on long-term leases. March 31, 2012 Millions of yen One year One to Two to Three to four Four to Over or less two years three years years five years five years Bonds ¥– ¥– ¥5,000 ¥7,000 ¥– ¥17,000 Long-term debt 4,239 4,862 1,024 581 769 1,755 Deposits on long-term leases – – – – – 1,000 ¥4,239 ¥4,862 ¥6,024 ¥7,581 ¥769 ¥19,755

March 31, 2011 Millions of yen One year One to Two to Three to four Four to Over or less two years three years years five years five years Bonds ¥5,000 ¥– ¥– ¥5,000 ¥7,000 ¥7,000 Long-term debt 961 4,122 4,721 1,011 386 1,948 Deposits on long-term leases – 5,174 – – – 1,000 ¥5,961 ¥9,296 ¥4,721 ¥6,011 ¥7,386 ¥9,948

March 31, 2012 Thousands of U.S. dollars One year One to Two to Three to four Four to Over or less two years three years years five years five years Bonds $– $– $60,835 $85,168 $– $206,838 Long-term debt 51,575 59,156 12,459 7,069 9,356 21,353 Deposits on long-term leases – – – – – 12,167 $51,575 $59,156 $73,294 $92,237 $9,356 $240,358

011_0808001372409.indd 19 2012/08/28 18:01:31 Notes To Consolidated Financial Statements

NOTE 5 – SECURITIES 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 March 31, 2012 Unrealized Unrealized holding holding Book Acquisition gains Book Acquisition gains value cost (losses) value cost (losses) (Millions of yen) (Thousands of U.S. dollars) Securities with book values exceeding acquisition costs: Stocks ¥67,516 ¥27,056 ¥40,460 $821,462 $329,188 $492,274 Bonds 77 75 2 937 913 24 Other – – – – – – 67,593 27,131 40,462 822,399 330,101 492,298 Other securities: Stocks 2,802 3,416 (614) 34,092 41,562 (7,470) Bonds – – – – – – Other – – – – – – 2,802 3,416 (614) 34,092 41,562 (7,470) ¥70,395 ¥30,547 ¥39,848 $856,491 $371,663 $484,828

Non-listed stocks and others (book value is ¥2,403 million ($29,237 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, 2012, the amount of sale, related gains and related losses of available-for-sale securities were as follows: March 31, 2012 March 31, 2012 The amount Related Related The amount Related Related of sale gains losses of sale gains losses (Millions of yen) (Thousands of U.S. dollars) Stocks ¥234 ¥4 ¥ – $2,847 $49 $ – Bonds 14 – – 170 – – Other 21 – – 256 – – ¥269 ¥4 ¥ – $3,273 $49 $ –

Total write-down of available-for-sale securities with available fair values amounted to ¥81 million ($986 thousand) 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.

011_0808001372409.indd 20 2012/08/28 18:01:32 At March 31, 2011, acquisition costs, book values stated at fair values and net unrealized holding gains (losses) of available-for-sale securities were as follows: March 31, 2011 Unrealized holding Book Acquisition gains value cost (losses) (Millions of yen) Securities with book values exceeding acquisition costs: Stocks ¥67,588 ¥24,102 ¥43,486 Bonds 91 88 3 Other – – – 67,679 24,190 43,489 Other securities: Stocks 5,465 6,420 (955) Bonds – – – Other – – – 5,465 6,420 (955) ¥73,144 ¥30,610 ¥42,534

Non-listed stocks and others (book value is ¥2,634 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, 2011, the amount of sale, related gains and related losses of available-for-sale securities were as follows: March 31, 2011 The amount Related Related of sale gains losses (Millions of yen) Stocks ¥ 21 ¥ 2 ¥ 0 Bonds 514 10 – Other – – – ¥535 ¥12 ¥ 0

Total write-down of available-for-sale securities with available fair values amounted to ¥234 million in the year ended March 31, 2011.

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.

011_0808001372409.indd 21 2012/08/28 18:01:32 Notes To Consolidated Financial Statements

NOTE 6 – RECEIVABLES FROM AND PAYABLES TO UNCONSOLIDATED SUBSIDIARIES AND AFFILIATES Significant receivables from and payables to unconsolidated subsidiaries and affiliates at March 31, 2012 and 2011 were as follows: March 31, March 31, 2012 2011 2012 (Millions of yen) (Thousands of U.S. dollars) Notes and accounts receivable ¥160 ¥197 $1,947 Notes and accounts payable ¥628 ¥946 $7,641 Deposits on long-term leases ¥512 ¥1,341 $6,229

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 41% for the years ended March 31, 2012, 2011 and 2010, respectively. Reconciliation from the statutory tax rate to the effective tax rate for the year ended March 31, 2012 and 2011 were as follows: March 31, 2011 2012 2011 Statutory tax rate 40.7% 40.7% Entertainment expense etc. 1.3 1.3 not deductible for Japanese tax purposes Dividends etc. (4.0) (3.5) not taxable for Japanese tax purposes Inhabitant taxes 0.7 0.9 Write down of deferred income tax assets at end of period by tax 6.2 – rate changes Other 0.3 (1.0) Effective tax rate 45.2% 38.4%

Information on reconciliation of the tax rates for the years ended March 31, 2010 is not disclosed as difference between the statutory tax rate and the effective tax rate was less than 5% of the statutory tax rate for the years ended March 31, 2010.

011_0808001372409.indd 22 2012/08/28 18:01:32 Significant components of the Company and its consolidated subsidiaries’ deferred income tax assets and liabilities as of March 31, 2012 and 2011 were as follows: March 31, March 31, 2012 2011 2012 (Millions of yen) (Thousands of U.S. dollars) Deferred income tax assets: Accrued enterprise tax ¥227 ¥218 $2,763 Loss on investments in securities 59 109 718 Allowance for doubtful accounts 19 31 231 Accrued employees’ bonuses 1,109 1,189 13,493 Retirement benefits 5,833 6,619 70,970 Depreciation 5,795 5,978 70,507 Impairment loss 3,052 3,491 37,133 Other 2,596 3,547 31,585 18,690 21,182 227,400 Valuation allowance (1,194) (1,430) (14,528) Total deferred income tax assets 17,496 19,752 212,872 Deferred income tax liabilities: Net unrealized holding gains on securities (14,169) (17,294) (172,393) Reserves deductible for Japanese tax purposes (8,617) (9,924) (104,842) Other (404) (466) (4,916) Total deferred income tax liabilities (23,190) (27,684) (282,151) Net deferred income tax liabilities ¥(5,694) ¥(7,932) $(69,279)

The “Act for Partial Revision of the Income Tax Act, etc. for the Purpose of Creating a Taxation System that Responds to Changes in Economic and Social Structures” and the “Act on Special Measures for Securing the Financial Resources Necessary to Implement Measures for Reconstruction Following the Great East Japan Earthquake” were promulgated in Japan on December 2, 2011. Accordingly the statutory income tax rates utilized for the measurement of deferred tax assets and liabilities expected to be settled or realized from April 1, 2012 to March 31, 2015 and on or after April 1, 2015 were changed from 40.7% to 38.0% and 35.6%, respectively. As a result of this change, net deferred tax liabilities decreased by ¥1,172 million ($14,260 thousand) as of March 31,2012 and net unrealized holding gains on securities as of March 31,2012 and deferred income tax expense recognized for the year then ended increased by ¥2,027 million ($24,662 thousand) and ¥855 million ($10,403 thousand), respectively.

011_0808001372409.indd 23 2012/08/28 18:01:32 Notes To Consolidated Financial Statements

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, 2012 Thousands of Millions of yen U.S. dollars Valuation difference on available-for-sale securities Decrease during the year ¥(2,767) $(33,666) Reclassification adjustments 81 986 Sub-total, before tax (2,686) (32,680) Tax (expense) or benefit 3,125 38,021 Sub-total, net of tax 439 5,341

Foreign currency translation adjustments Decrease during the year (166) (2,020)

Share of other comprehensive income of affiliates accounted for using the equity method Increase during the year 11 135

Total other comprehensive income ¥284 $3,456

NOTE 9 – INVESTMENT AND RENTAL PROPERTY For the year ended March 31, 2012 The 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 ($121,986 thousand), subsidy income ¥210 million ($2,555 thousand), indemnity income of exiting facilities for lease ¥298 million ($3,626 thousand) and loss on disposal of property and equipment ¥135 million ($1,643 thousand).

Information about fair value of investment and rental property included in the consolidated financial statement at March 31, 2012, was as follows: Book value Fair value March 31, 2011 Increase/(Decrease) March 31, 2012 March 31, 2012 (Millions of yen) ¥83,869 ¥(5,147) ¥78,722 ¥250,889

Book value Fair value March 31, 2011 Increase/(Decrease) March 31, 2012 March 31, 2012 (Thousands of U.S. dollars) $1,020,428 $(62,623) $957,805 $3,052,549

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 ($19,005 thousand), and the main factor of decrease was depreciation ¥7,357 million ($89,512 thousand). 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. 24

011_0808001372409.indd 24 2012/08/28 18:01:32 For the year ended March 31, 2011 The 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, 2011, the profit and loss concerning investment and rental property is composed of lease profit ¥10,758 million, subsidy income ¥201 million, loss on disposal of property and equipment ¥367 million and loss on earthquake disaster ¥268 million.

Information about fair value of investment and rental property included in the consolidated financial statement at March 31, 2011, was as follows: Book value Fair value March 31, 2010 Increase/(Decrease) March 31, 2011 March 31, 2011 (Millions of yen) ¥88,860 ¥(4,991) ¥83,869 ¥266,815

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 ¥2,792 million, and the main factor of decrease was depreciation ¥7,689 million. 3. Fair value as of March 31, 2011, is the amount that is mainly based on the evaluation document by a real estate appraiser outside the Company.

NOTE 10 – PLEDGED ASSETS The net book value of pledged assets at March 31, 2012 and 2011 was as follows: March 31, March 31, 2012 2011 2012 (Millions of yen) (Thousands of U.S. dollars) Land ¥1,085 ¥1,104 $13,201 Buildings and structures 544 640 6,619 Investments in securities 67 87 815 ¥1,696 ¥1,831 $20,635

Liabilities secured by the pledged assets mentioned above at March 31, 2012 and 2011 were as follows: March 31, March 31, 2012 2011 2012 (Millions of yen) (Thousands of U.S. dollars) Short-term bank loans ¥950 ¥ 963 $11,559 Other in current liabilities 576 608 7,008 Long-term debt 6,618 6,726 80,521 Deposits on long-term leases 1,638 1,797 19,929 ¥9,782 ¥10,094 $119,017

011_0808001372409.indd 25 2012/08/28 18:01:32 Notes To Consolidated Financial Statements

NOTE 11 – SHORT-TERM BANK LOANS AND LONG-TERM DEBT Short-term bank loans outstanding at March 31, 2012 and 2011 were ¥11,561 million ($140,662 thousand) and ¥14,368 million, respectively, and generally represented by short-term bank loans with interest at annual rates of 0.43% to 4.02% and 0.43% to 10.75%, respectively.

Long-term debt at March 31, 2012 and 2011 consisted of the following: March 31, March 31, 2012 2011 2012 (Millions of yen) (Thousands of U.S. dollars) Loans from banks, insurance companies and other in generally secured, 0. 53%-2.55% and 0.53%-3.4418% ¥13,230 ¥13,149 $160,968 per annum Balance in lease obligations 392 404 4,769 1.17% yen bonds due 2011, unsecured – 5,000 – 1.67% yen bonds due 2014, unsecured 5,000 5,000 60,835 1.75% yen bonds due 2015, unsecured 7,000 7,000 85,169 2.08% yen bonds due 2018, unsecured 7,000 7,000 85,169 0.933% year bonds due 2019, unsecured 5,000 – 60,835 1.230% yen bonds due 2021, unsecured 5,000 – 60,835 42,622 37,553 518,580 Less current portion (4,402) (6,102) (53,559) ¥38,220 ¥31,451 $465,021

The aggregate annual maturities of long-term debt at March 31, 2012 were as follows: Year ending March 31, Amount (Millions of yen) (Thousands of U.S. dollars) 2013 ¥ 4,239 $ 51,575 2014 4,862 59,156 2015 1,024 12,459 2016 581 7,069 2017 769 9,356 2018 and thereafter 1,755 21,353 ¥13,230 $160,968

The aggregate annual maturities of lease obligation at March 31, 2012 were as follows: Year ending March 31, Amount (Millions of yen) (Thousands of U.S. dollars) 2013 ¥163 $1,983 2014 120 1,460 2015 62 754 2016 35 426 2017 12 146 2018 and thereafter – – ¥392 $4,769

011_0808001372409.indd 26 2012/08/28 18:01:33 NOTE 12 – RETIREMENT BENEFITS AND PENSION PLAN The liabilities for retirement benefits included in the liability section of the consolidated balance sheets as of March 31, 2012 and 2011 consists of the following: March 31, March 31, 2012 2011 2012 (Millions of yen) (Thousands of U.S. dollars) Projected benefit obligation ¥26,610 ¥28,273 $323,762 Less fair value of pension assets (9,566) (11,633) (116,389) Unfunded projected benefit obligation 17,044 16,640 207,373 Unrecognized net actuarial loss (1,084) (578) (13,189) Unrecognized prior service costs 452 571 5,500 Employees’ retirement benefits 16,412 16,633 199,684 Retirement benefits to directors and corporate 357 372 4,343 statutory auditors Liability for retirement benefits ¥16,769 ¥17,005 $204,027

Included in the consolidated statements of income for the years ended March 31, 2012, 2011 and 2010 are severance and retirement benefit expenses for employees comprising of the following: Year ended March 31, Year ended March 31, 2012 2011 2010 2012 (Millions of yen) (Thousands of U.S. dollars) Service costs-benefits earned during the year ¥1,209 ¥1,155 ¥ 984 $14,710 Interest cost on projected benefit obligation 556 485 420 6,765 Expected return on pension assets (223) (190) (149) (2,713) Amortization of actuarial gains and losses 216 (44) 106 2,628 Amortization of prior service costs (166) (163) (82) (2,020) Contributions to defined contribution plans 133 127 73 1,618 Severance and retirement benefit expenses for employees ¥1,725 ¥1,370 ¥1,352 $20,988

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 2.0-2.5% for 2012, 2.5% and 2.0-2.5% for 2011, 2.5% and 2.0% for 2010, 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. Fuji 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 ($2,652 thousand).

011_0808001372409.indd 27 2012/08/28 18:01:33 Notes To Consolidated Financial Statements

NOTE 13 – INDEMNITY INCOME OF EXITING FACILITIES FOR LEASE Indemnity income of existing facilities for lease represents mainly income from cancellation of equipment leases in real estate facilities for the year ended March 31, 2012. For the year ended March 31, 2010, that represents mainly income from cancellation of leased real estate facilities and commercial facilities by tenants.

NOTE 14 – IMPAIRMENT LOSS The impairment loss for the year ended March 31, 2012 and 2010 consists of the following: March 31, 2012 Asset group Location Asset type Millions of yen Thousands of U.S. dollar Buildings, structures Warehouse facilities Hakata, Fukuoka City ¥304 $3,699 and others March 31, 2010 Asset group Location Asset type Millions of yen Commercial facilities Takasago City, Hyogo Land, building and ¥321 for rent Prefecture others

As of March 31, 2012 and 2010, the Company and its consolidated domestic subsidiaries classified fixed assets by cash generating units which were considered to be independent from cash flows of other groups and recognized impairment loss on certain groups of assets. For the year ended March 31, 2012, the Company and its consolidated subsidiaries recognized the impairment loss amounting to ¥304 million as other expense in the consolidated statements of income by devaluating the book value of each fixed asset to its recoverable amount. The recoverable amounts of warehouse facilities are value in use. For the year ended March 31, 2010, the Company and its consolidated subsidiaries recognized the impairment loss amounting to ¥321 million as other expense in the consolidated statements of income by devaluating the book value of each fixed asset to its recoverable amount. The recoverable amount of commercial facilities for lease is its net realizable value based on an amount determined by valuations made in accordance with real estate appraisal standards.

NOTE 15 – CONTINGENT LIABILITIES At March 31, 2012 and 2011, the balances of guarantee for loans amounted to ¥2,615 million ($31,817 thousand) and ¥2,774 million, respectively.

011_0808001372409.indd 28 2012/08/28 18:01:33 NOTE 16 – LEASE TRANSACTIONS 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, 2012 2011 2012 (Millions of yen) (Thousands of U.S. dollars) Machinery and equipment and other Purchase price equivalents ¥657 ¥1,219 $7,994 Accumulated depreciation equivalents 587 963 7,142 Book value equivalents ¥ 70 ¥ 256 $ 852

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

(b) Lease commitments March 31, March 31, 2012 2011 2012 (Millions of yen) (Thousands of U.S. dollars) Due within one year ¥63 ¥189 $767 Due after one year 7 67 85 ¥70 ¥256 $852

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

(c) Lease payments and Depreciation equivalents Year ended March 31, Year ended March 31, 2012 2011 2010 2012 (Millions of yen) (Thousands of U.S. dollars) Lease payments ¥200 ¥300 ¥367 $2,433 Depreciation equivalents ¥200 ¥300 ¥367 $2,433

(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, 2012 2011 2012 (Millions of yen) (Thousands of U.S. dollars) Buildings and structures and other Purchase price ¥3,382 ¥3,382 $41,149 Accumulated depreciation 2,021 1,892 24,590 Book value ¥1,361 ¥1,490 $16,559

011_0808001372409.indd 29 2012/08/28 18:01:33 Notes To Consolidated Financial Statements

(b) Lease commitments March 31, March 31, 2012 2011 2012 (Millions of yen) (Thousands of U.S. dollars) Due within one year ¥ 145 ¥ 138 $ 1,764 Due after one year 1,911 2,056 23,251 ¥2,056 ¥2,194 $25,015

(c) Rental income, Depreciation and Interest income equivalents Year ended March 31, Year ended March 31, 2012 2011 2010 2012 (Millions of yen) (Thousands of U.S. dollars) Rental income ¥275 ¥275 ¥294 $3,346 Depreciation ¥129 ¥134 ¥148 $1,570 Interest income equivalents ¥137 ¥144 ¥151 $1,667

(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.

OPERATING LEASES (LESSEE LEASES) Future minimum lease payments under non-cancelable operating lease as of March 31, 2012 and 2011 were as follows: March 31, March 31, 2012 2011 2012 (Millions of yen) (Thousands of U.S. dollars) Due within one year ¥ 2,970 ¥ 3,104 $ 36,136 Due after one year 12,836 15,305 156,175 ¥15,806 ¥18,409 $192,311

(LESSOR LEASES) Future minimum lease receipts under non-cancelable operating lease as of March 31, 2012 and 2011 were as follows: March 31, March 31, 2012 2011 2012 (Millions of yen) (Thousands of U.S. dollars) Due within one year ¥13,387 ¥14,420 $162,879 Due after one year 21,929 21,765 266,808 ¥35,316 ¥36,185 $429,687

011_0808001372409.indd 30 2012/08/28 18:01:33 NOTE 17 – DERIVATIVE TRANSACTIONS 1. Derivative transactions to which hedge accounting is not applied at March 31, 2012 and 2011 None

2. Derivative transactions to which hedge accounting is applied at March 31, 2012 and 2011

Interest rate related derivatives Hedge 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 fixed Major hedged items : Long-term debt March 31, March 31, 2012 2011 2012 (Millions of yen) (Thousands of U.S. dollars) Notional amount ¥660 ¥780 $8,030 Portion due after one year included herein ¥240 ¥660 $2,920 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.

NOTE 18 – CHANGES IN NET ASSETS Type and number of shares outstanding and treasury stock for the years ended March 31, 2012 and 2011 were as follows: Shares outstanding Treasury stock Type of shares Common stock Common stock Number of shares: (Shares) Year ended March 31, 2012 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 Year ended March 31, 2011 Balance at beginning of year 175,921,478 599,657 Increased in the accounting period – 33,895 Decreased in the accounting period – (1,453) Balance at end of year 175,921,478 632,099

011_0808001372409.indd 31 2012/08/28 18:01:33 Notes To Consolidated Financial Statements

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, 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 ($12,800 thousand) ¥1,052 million ($12,800 thousand) Dividends per share ¥6.0 ($0.07) ¥6.0 ($0.07) Record date March 31, 2011 September 30, 2011 Effective date June 30, 2011 December 1, 2011 Dividends payment during the year ended March 31, 2011 was as follows: Approvals by Ordinary general shareholders meeting The Board of Directors meeting Approval date June 29, 2010 October 29, 2010 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, 2010 September 30, 2010 Effective date June 30, 2010 December 2, 2010

(b) Dividends whose record date is attributable to the accounting period ended March 31, 2012 but to be effective after the said accounting period were as follows: Approvals by Ordinary general shareholders meeting Approval date June 28, 2012 Type of shares Common stock Funds for dividends Retained earnings Total amount of dividends ¥1,052 million ($12,800 thousand) Dividends per share ¥6.0 ($0.07) Record date March 31, 2012 Effective date June 29, 2012

011_0808001372409.indd 32 2012/08/28 18:01:33 NOTE 19 – SEGMENT INFORMATION For the year ended March 31, 2012 and 2011 1. General information about reportable segments The 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 items The 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.

3. Information about reported segment revenue, segment income, segment assets and other material items Reportable segment information for the year ended March 31, 2012, is as follows: March 31, 2012 Logistics Real estate Total Adjustment *1 Consolidated *2 (Millions of yen) Revenues: Non-affiliated customer ¥157,925 ¥45,773 ¥203,698 ¥– ¥203,698 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 Depreciation and amortization ¥5,835 ¥7,526 ¥13,361 ¥207 ¥13,568 Amortization of goodwill ¥220 ¥– ¥220 ¥– ¥220 Investments in affiliates accounted for by the equity ¥5,571 ¥– ¥5,571 ¥– ¥5,571 method Impairment loss ¥304 ¥– ¥304 ¥– ¥304 Increase in tangible and intangible fixed assets ¥9,007 ¥1,868 ¥10,875 ¥74 ¥10,949

011_0808001372409.indd 33 2012/08/28 18:01:33 Notes To Consolidated Financial Statements

March 31, 2012 Logistics Real estate Total Adjustment *1 Consolidated *2 (Thousands of U.S. dollars) Revenues: Non-affiliated customer $1,921,462 $556,917 $2,478,379 $– $2,478,379 Intersegment 4,757 15,866 20,623 (20,623) – 1,926,219 572,783 2,499,002 (20,623) 2,478,379 Segment income 61,078 141,380 202,458 (49,970) 152,488 Segment assets $1,982,346 $1,235,990 $3,218,336 $1,079,875 $4,298,211 Depreciation and amortization $70,994 $91,568 $162,562 $2,519 $165,081 Amortization of goodwill $2,677 $– $2,677 $– $2,677 Investments in affiliates accounted for by the equity $67,782 $– $67,782 $– $67,782 method Impairment loss $3,699 $– $3,699 $– $3,699 Increase in tangible and intangible fixed assets $109,587 $22,728 $132,315 $901 $133,216

*1 The adjustments are as follows; (1) The adjustments of negative ¥4,107 million ($49,970 thousand) in segment income include inter-segment eliminations of ¥28 million ($340 thousand) and corporate expenses of negative ¥4,135 million ($50,310 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 ¥88,755 million ($1,079,875 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 ¥74 million ($901 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, 2011, is as follows: March 31, 2011 Logistics Real estate Total Adjustment *1 Consolidated *2 (Millions of yen) Revenues: Non-affiliated customer ¥139,663 ¥36,217 ¥175,880 ¥– ¥175,880 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 Depreciation and amortization ¥5,430 ¥8,023 ¥13,453 ¥201 ¥13,654 Amortization of goodwill ¥106 ¥– ¥106 ¥– ¥106 Investments in affiliates accounted for by the equity method ¥3,764 ¥– ¥3,764 ¥– ¥3,764 Increase in tangible and intangible fixed assets ¥4,425 ¥1,974 ¥6,399 ¥124 ¥6,523 *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. 34

011_0808001372409.indd 34 2012/08/28 18:01:34 (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.

Segment information for the years ended March 31, 2010 based on the revised Accounting standard, “Accounting Standard for Disclosures about Segments of an Enterprise and Related Information” (Accounting Standards Board of Japan (“ASBJ”) Statement No.17, issued on March 27, 2009 ) and the “Guidance on Disclosures about Segments of an Enterprise and Related Information” ( ASBJ Guidance No.20, issued on March 21, 2008) is omitted because approximately the same information for the years ended March 31, 2010 is shown in “For the years ended March 31, 2010”.

4. Impairment loss by reportable segment March 31, 2012 Logistics Real estate Total Adjustment Consolidated (Millions of yen) Impairment loss ¥304 ¥– ¥304 ¥– ¥304

March 31, 2012 Logistics Real estate Total Adjustment Consolidated (Thousands of U.S. dollars) Impairment loss $3,699 $– $3,699 $– $3,699

5. Amortization and unamortized balance of goodwill by reportable segment March 31, 2012 Logistics Real estate Total Adjustment Consolidated (Millions of yen) Amortization of goodwill ¥220 ¥– ¥220 ¥– ¥220 Unamortized balance ¥1,878 ¥– ¥1,878 ¥– ¥1,878

March 31, 2011 Logistics Real estate Total Adjustment Consolidated (Millions of yen) Amortization of goodwill ¥106 ¥– ¥106 ¥– ¥106 Unamortized balance ¥2,099 ¥– ¥2,099 ¥– ¥2,099

March 31, 2012 Logistics Real estate Total Adjustment Consolidated (Thousands of U.S. dollars) Amortization of goodwill $2,677 $– $2,677 $– $2,677 Unamortized balance $22,849 $– $22,849 $– $22,849

For the years ended March 31, 2010 The Company and its consolidated subsidiaries are primarily in operation with the following two businesses. (1) Logistics business: Warehousing, transportation, port-terminal operation and international freight forwarding (2) Real estate business: Rental for office buildings and sales for real estate

011_0808001372409.indd 35 2013/07/10 20:44:17 Notes To Consolidated Financial Statements

Business segment information for the years ended March 31, 2010 was as follows: March 31, 2010 Elimination or corporate assets Logistics Real estate Total or expenses Consolidated (Millions of yen) Revenues: Non-affiliated customer ¥111,902 ¥36,445 ¥148,347 ¥– ¥148,347 Intersegment 378 1,103 1,481 (1,481) – 112,280 37,548 149,828 (1,481) 148,347 Operating expenses 108,917 26,592 135,509 2,557 138,066 Operating income ¥3,363 ¥10,956 ¥14,319 ¥(4,038) ¥10,281 Identifiable assets ¥131,893 ¥104,287 ¥236,180 ¥105,543 ¥341,723 Depreciation and amortization ¥5,346 ¥6,544 ¥11,890 ¥201 ¥12,091 Impairment loss ¥– ¥321 ¥321 ¥– ¥321 Capital expenditures ¥1,704 ¥21,507 ¥23,211 ¥34 ¥23,245

Geographical information and overseas revenue were omitted as they were immaterial to the consolidated financial statements.

011_0808001372409.indd 36 2012/08/28 18:01:34 Company Profile (As of March 31, 2012)

005_0808001372409.indd 2 2012/08/20 20:33:32 ANNUAL REPORT 2012 Year ended March 31, 2012

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

005_0808001372409.indd 1 2012/08/20 20:33:31