a. Consolidation-The consolidated financial statements as of March 31, 2012 include the accounts of the

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1 Annual Report Notes to Consolidated Financial Statements 1. Basis of Presenting Consolidated Financial Statements The accompanying consolidated financial statements have been prepared in accordance with the provisions set forth in the Japanese Companies Act and Financial Instruments and Exchange Act and their related accounting regulations and in conformity with accounting principles generally accepted in Japan ("Japanese GAAP"), which are different in certain respects as to application and disclosure requirements of International Financial Reporting Standards. In preparing these consolidated financial statements, certain reclassifications and rearrangements have been made to the consolidated financial statements issued domestically in order to present them in a form which is more familiar to readers outside Japan. In addition, certain reclassifications have been made in the 2011 financial statements to conform to the classifications used in The consolidated financial statements are stated in Japanese yen, the currency of the country in which Yusen Logistics Co., Ltd. (the "Company") is incorporated and operates. The translations of Japanese yen amounts into U.S. dollar amounts are included solely for the convenience of readers outside Japan and have been made at the rate of \82.19 to $1, the approximate rate of exchange at March 31, Such translations should not be construed as representations that the Japanese yen amounts could be converted into U.S. dollars at that or any other rate. 2. Summary of Significant Accounting Policies a. Consolidation-The consolidated financial statements as of March 31, 2012 include the accounts of the Company and its 56 significant (35 in 2011) subsidiaries (together, the "Group") listed below: Consolidated Subsidiaries Equity Ownership Percentage *1 Capital Stock *1 Yusen Logistics (Americas) Inc % USD 70,976 thousand Yusen Logistics (Hong Kong) Limited HKD 55,000 thousand Yusen Air & Sea Service (China) Ltd *9 HKD 11,000 thousand Yusen Logistics (Singapore) Pte. Ltd SGD 16,950 thousand Yusen Logistics (Benelux) B.V. * *5 EUR 50 thousand Yusen Logistics (Deutschland) GmbH * *5 EUR 2,638 thousand Yusen Air & Sea Service (U.K.) Ltd *5 GBP 1,050 thousand Yusen Logistics (Australia) Pty. Ltd *12 AUD 15,478 thousand Yusen Logistics (Canada) Inc CAD 5,000 thousand Yusen Logistics (France) S.A.S. * *5 EUR 14,185 thousand Yusen Logistics (Taiwan) Ltd *8 TWD 157,398 thousand Yusen Air & Sea Service (Beijing) Co., Ltd *11 CNY 9,312 thousand Yusen Logistics (Italy) S.P.A. * *5 EUR 3,326 thousand P.T. Yusen Logistics Indonesia * *13 USD 2,548 thousand Yusen Logistics (Europe) B.V EUR 34,493 thousand Yusen Logistics (Korea) Co., Ltd KRW 2,000 million Yusen Shenda Air & Sea Service (Shanghai) Ltd *10 CNY 16,457 thousand

2 54 Yusen Logistics Co., Ltd. Yusen Air & Sea Service Management (Thailand) Co., Ltd *14 THB 10 million Yusen Air & Sea Service (Thailand) Co., Ltd *16 THB 100 million Yusen Logistics International (Vietnam) Co., Ltd *15 USD 600 thousand Yusen Logistics Philippines, Inc PHP 500,000 thousand Yusen Air & Sea Service (Guangdong) Ltd *9 CNY 8,009 thousand Yusen Logistics (India) Ltd. * *17 INR 594 million Yusen Air & Sea Service (Czech) s.r.o. * *5 CZK 17,500 thousand Yusen Air & Sea Service Logistics (Shanghai) Co., Ltd. * *9 CNY 5,380 thousand Yusen Air & Sea Service Logistics (Suzhou) Co., Ltd. * *9 CNY 6,844 thousand ETA TOO, INC. * *2 USD 0 Yusen Logistics Transporte S.A.de C.V. * *4 MXN 50 thousand BRUNI INTERNATIONAL DE MEXICO, S.A.DE C.V. * *3 MXN 350 thousand Yusen Logistics (UK) Ltd. * *5 GBP 44,130 thousand Yusen Logistics (Iberica) S.A. * *5 EUR 585 thousand Yusen Logistics (Polska) Sp.z o.o. * *5 PLN 2,400 thousand Yusen Logistics (Hungary) KFT. * *5 HUF 12,420 thousand Yusen Logistics (Edam) B.V. * *6 EUR 18 thousand Yusen Logistics (Belgium) N.V. * *6 EUR 16,345 thousand Yusen Logistics (Czech) s.r.o. * *7 CZK 431,729 thousand Yusen Logistics Solutions (Vietnam) Co., Ltd. * *15 USD 400 thousand NANHAI BUSINESS SOLUTIONS PTE LTD. * *21 SGD 100 thousand NYK LOGISTICS (AUSTRALIA) PTY. LTD. * *18 AUD 15,550 thousand Yusen Logistics & Kusuhara Lanka (Pvt.) Ltd. * LKR 6,500 thousand Yusen Logistics RUS LLC * *5 RUB 289 thousand NYK LOGISTICS CENTER, LTD. * *17 PHP 12,500 thousand Yusen Logistics (Thailand) Co., Ltd. * *20 THB 70,000 thousand PT. Puninar Yusen Logistics Indonesia *24* USD 10,000 thousand Yusen Keihin Trans Co., Ltd JPY 36 million Yusen Logistics (Kitakanto) Co., Ltd JPY 50 million Yusen Logistics (Tsukuba) Co., Ltd JPY 50 million Yusen Logistics (Shinshu) Co., Ltd JPY 50 million Yusen Logistics (Tohoku) Co., Ltd JPY 30 million Yusen Logistics (Kyushu) Co., Ltd JPY 30 million Yusen Logistics (Chugoku) Co., Ltd JPY 30 million Yusen Logistics (Hokuriku) Co., Ltd JPY 20 million Yusen Logitec Co., Ltd JPY 20 million Yusen Travel Co., Ltd JPY 270 million Ryowa Diamond Air Service Co., Ltd *22 JPY 50 million Yusen Loginet Co., Ltd JPY 20 million

3 Annual Report *1 as of March 31, 2012 *2 owned % by Yusen Logistics (Americas) Inc. *3 owned 99.71% by Yusen Logistics (Americas) Inc., 0.29% by Yusen Logistics Tranporte S.A.de C.V. *4 owned 50.00% by Yusen Logistics (Americas) Inc., 50.00% by ETA TOO, INC. *5 owned % by Yusen Logistics (Europe) B.V. *6 owned % by Yusen Logistics (Benelux) B.V. *7 owned 89.70% by Yusen Logistics (Europe) B.V., 10.3% by Yusen Air & Sea Service (Czech) s.r.o. *8 owned 57.2% by the Company, 38.1% by Yusen Logistics (Hong Kong) Limited *9 owned % by Yusen Logistics (Hong Kong) Limited *10 owned 50.00% by Yusen Logistics (Hong Kong) Limited *11 owned 75.00% by Yusen Logistics (Hong Kong) Limited *12 owned 32.04% by the Company, 18.93% by Yusen Logistics (Singapore) Pte. Ltd. *13 owned 10.50% by the Company, 69.50% by Yusen Logistics (Singapore) Pte. Ltd. *14 owned 49.00% by Yusen Logistics (Singapore) Pte. Ltd., 46.00% by Yusen Logistics (Thailand) Co., Ltd. *15 owned 49.00% by Yusen Logistics (Singapore) Pte. Ltd. *16 owned 51.00% by Yusen Air & Sea Service Management (Thailand) Co., Ltd., 49.00% by Yusen Logistics (Singapore) Pte. Ltd. *17 owned 31.53% by the Company, 19.47% by Yusen Logistics (Singapore) Pte. Ltd. *18 owned % by Yusen Logistics (Australia) Pty. Ltd. *19 owned % by Yusen Logistics Philippines, Inc. *20 owned 33.46% by the Company, 1.78% by Yusen Air & Sea Service Management (Thailand) Co., Ltd. *21 owned % by Yusen Logistics (Singapore) Pte. Ltd. *22 owned 99.17% by Yusen Travel Co., Ltd. *23 became newly consolidated companies since materiality has increased. *24 became newly consolidated companies as the result of the reorganization and integration of the logistics businesses that have been conducted by the Company and Nippon Yusen Kabushiki Kaisha (NYK LINE) (head office: Chiyoda-ku, Tokyo, Japan; president: Yasumi Kudo) (hereinafter "NYK"). *25 These consolidated companies changed their company names after March 31, Under the control or influence concept, those companies in which the Company, directly or indirectly, is able to exercise control over operations are fully consolidated, and those companies over which the Group has the ability to exercise significant influence are accounted for by the equity method. LOGISTICS ALLIANCE (THAILAND) CO., LTD. became an affiliate company as the result of the acquisition of stock and was included in the scope of the companies accounted for by equity method from this year. Kombinasi Restu (M) Sdn. Bhd. was excluded from the scope of the companies accounted for by the equity method since materiality has decreased. Investments in three (three in 2011) unconsolidated subsidiaries are accounted for by the equity method. Investments in two (two in 2011) affiliate companies are accounted for by the equity method. Investments in the remaining unconsolidated subsidiaries and affiliate companies are stated at cost, which is determined by the moving-average method. If the equity method of accounting had been applied to the investments in these companies, the effect on the accompanying consolidated financial statements would not be material. The excess of the cost of an acquisition over the fair value of the net assets of the acquired subsidiary at the date of acquisition is being amortized using the straight-line method principally over a period not exceeding 20 years. All significant intercompany balances and transactions have been eliminated in consolidation. All material unrealized profit included in assets resulting from transactions within the Group is eliminated. b. Unification for Accounting Policies Applied to Foreign Subsidiaries for the Consolidated Financial Statements-In May 2006, the Accounting Standards Board of Japan ("ASBJ") issued ASBJ Practical Issues Task Force (PITF) No. 18, "Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for the Consolidated Financial Statements." PITF No. 18 prescribes: (1) the accounting policies and procedures applied to a parent company and its subsidiaries for similar transactions and events under similar circumstances should in principle be unified for the preparation of the consolidated financial statements, (2) financial

4 56 Yusen Logistics Co., Ltd. statements prepared by foreign subsidiaries in accordance with either International Financial Reporting Standards or the generally accepted accounting principles in the United States of America tentatively may be used for the consolidation process, (3) however, the following items should be adjusted in the consolidation process so that net income is accounted for in accordance with Japanese GAAP unless they are not material: 1) amortization of goodwill; 2) scheduled amortization of actuarial gain or loss of pensions that has been directly recorded in the equity; 3) expensing capitalized development costs of R&D; 4) cancellation of the fair value model of accounting for property, plant, and equipment and investment properties and incorporation of cost model accounting; and 5) exclusion of minority interests from net income, if contained. c. Business Combination-In October 2003, the Business Accounting Council ("BAC") issued a Statement of Opinion, "Accounting for Business Combinations," and in December 2005, the ASBJ issued ASBJ Statement No. 7, "Accounting Standard for Business Divestitures" and ASBJ Guidance No. 10, "Guidance for Accounting Standard for Business Combinations and Business Divestitures." The accounting standard for business combinations allowed companies to apply the pooling of interests method of accounting only when certain specific criteria are met such that the business combination is essentially regarded as a uniting-of-interests. For business combinations that did not meet the uniting-of-interests criteria, the business combination was considered to be an acquisition and the purchase method of accounting was required. This standard also prescribed the accounting for combinations of entities under common control and for joint ventures. In December 2008, the ASBJ issued a revised accounting standard for business combinations, ASBJ Statement No. 21, "Accounting Standard for Business Combinations." Major accounting changes under the revised accounting standard are as follows: (1) The revised standard requires accounting for business combinations only by the purchase method. As a result, the pooling of interests method of accounting is no longer allowed. (2) The previous accounting standard required research and development costs to be charged to income as incurred. Under the revised standard, in-process research and development (IPR&D) acquired in the business combination is capitalized as an intangible asset. (3) The previous accounting standard provided for a bargain purchase gain (negative goodwill) to be systematically amortized over a period not exceeding 20 years. Under the revised standard, the acquirer recognizes the bargain purchase gain in profit or loss immediately on the acquisition date after reassessing and confirming that all of the assets acquired and all of the liabilities assumed have been identified after a review of the procedures used in the purchase allocation. This standard was applicable to business combinations undertaken on or after April 1, The Company adopted this standard on April 1, d. Cash Equivalents-Cash equivalents are short-term investments that are readily convertible into cash and that are exposed to insignificant risk of changes in value. Cash equivalents include time deposits which mature or become due within three months of the date of acquisition. e. Investments in Securities-Securities are classified into three categories, depending on management's intent: trading, available-for-sale, or held-to-maturity. The Company classifies all investments in securities as available-forsale securities. Marketable available-for-sale securities are reported at fair value, with unrealized gains and losses, net of applicable taxes, reported under accumulated other comprehensive income in a separate component of equity. Nonmarketable available-for-sale securities are stated at cost determined by the moving-average method. For other than temporary declines in fair value, non-marketable investment securities are reduced to net realizable value by a charge to income.

5 Annual Report f. Property, Plant and Equipment-Property, plant and equipment are stated at cost. Depreciation of property, plant and equipment of the Company and domestic consolidated subsidiaries is computed substantially by the declining-balance method at rates based on the estimated useful lives of the assets, except for the buildings and structures at Toyooka distribution center, Iwata distribution center and Yusen Logi Fukumoto building which are depreciated on the straight-line method. The depreciation of property, plant and equipment of foreign consolidated subsidiaries is generally computed by the straight-line method over the estimated useful lives of the assets. The range of useful lives is principally as follows: Buildings and structures 3-60 years Furniture and fixtures 2-20 years Machinery, equipment and vehicles 4-6 years g. Other Assets-Amortization of intangible assets included in other assets is computed by the straight-line method. Software for internal use is amortized over a five-year period. h. Long-lived Assets-The Group reviews its long-lived assets for impairment whenever events or changes in circumstance indicate the carrying amount of an asset or asset group may not be recoverable. An impairment loss would be recognized if the carrying amount of an asset or asset group exceeds the sum of the undiscounted future cash flows expected to result from the continued use and eventual disposition of the asset or asset group. The impairment loss would be measured as the amount by which the carrying amount of the asset exceeds its recoverable amount, which is the higher of the discounted cash flows from the continued use and eventual disposition of the asset or the net selling price at disposition. i. Allowance for Doubtful Accounts-The Group provides an allowance for doubtful accounts based on the aggregated amount of estimated credit losses for doubtful receivables, plus an amount for receivables other than doubtful receivables calculated using historical write off experience over a certain period. j. Accrued Bonuses to Employees-Employees are paid bonuses in June of every year. The bonuses include amounts for services rendered during the previous fiscal year which are recorded as accrued bonuses on the balance sheet as of the respective fiscal year-end. k. Accrued Pension and Severance Costs Employee's retirement and pension plans-the Company and certain domestic consolidated subsidiaries have a noncontributory funded defined benefit pension plan and an unfunded retirement benefit plan. Certain of the Company's domestic consolidated subsidiaries have a contributory funded defined contribution pension plan, while certain foreign consolidated subsidiaries have either a non-contributory funded defined benefit pension plan or a contributory funded defined contribution pension plan. The liability for employees' retirement benefits is accounted for based on projected benefit obligations and plan assets at the balance sheet date.

6 58 Yusen Logistics Co., Ltd. In July 2008, the ASBJ issued ASBJ Statement No. 19, "Partial Amendments to Accounting Standard for Retirement Benefits (Part 3)," which removed the option of using a discount rate determined by taking into consideration the fluctuations in yield of bonds over a certain period, as provided in Note 8 of "Interpretive Note to the Accounting Standard for Retirement Benefits." The yield of a long term safe bond on closing date should be used for the calculation of the discount rate in this accounting standard. The Company applied the revised accounting standard effective April 1, 2009, however, there was no effect from this change. Retirement allowance for directors and corporate auditors-retirement allowance for directors and corporate auditors for certain subsidiaries is recorded to state the liability at the amount that would be required, if all directors and corporate auditors retired at each balance sheet date. l. Asset Retirement Obligations-In March 2008, the ASBJ published the accounting standard for asset retirement obligations, ASBJ Statement No. 18, "Accounting Standard for Asset Retirement Obligations," and ASBJ Guidance No. 21, "Guidance on Accounting Standard for Asset Retirement Obligations." Under this accounting standard, an asset retirement obligation is defined as a legal obligation imposed either by law or contract that results from the acquisition, construction, development, and the normal operation of a tangible fixed asset and is associated with the retirement of such tangible fixed asset. The asset retirement obligation is recognized as the sum of the discounted cash flows required for the future asset retirement and is recorded in the period in which the obligation is incurred if a reasonable estimate can be made. If a reasonable estimate of the asset retirement obligation cannot be made in the period the asset retirement obligation is incurred, the liability should be recognized when a reasonable estimate of asset retirement obligation can be made. Upon initial recognition of a liability for an asset retirement obligation, an asset retirement cost is capitalized by increasing the carrying amount of the related fixed asset by the amount of the liability. The asset retirement cost is subsequently allocated to expense through depreciation over the remaining useful life of the asset. Over time, the liability is accreted to its present value each period. Any subsequent revisions to the timing or the amount of the original estimate of undiscounted cash flows are reflected as an increase or a decrease in the carrying amount of the liability and the capitalized amount of the related asset retirement cost. This standard was effective for fiscal years beginning on or after April 1, The Company applied this accounting standard effective April 1, The effect of this change was to decrease operating income by \1 million and income before income taxes and minority interests by \12 million. The asset retirement obligations that the Group recognized upon applying this standard aggregated \14 million m. Provision for alleged Anti-Monopoly Act violation-on March 18, 2009, the Company received the notice of a cease-and-desist order and a surcharge payment order from the Japan Fair Trade Commission (the "JFTC") for violations of Article 3 of the Anti-Monopoly Act (prohibition of unreasonable restraint of trade). In the period that followed, the Company scrutinized, confirmed, and carefully examined the JFTC orders. Determining that it was unable to accept the orders as a result of these steps, the Company resolved at an Extraordinary Meeting of the Board of Directors held on April 17, 2009, to file an application for the commencement of hearings with the JFTC and thereafter the hearings were repeatedly conducted. On July 6, 2011, however, the Company received a decision (endorsing the cease-and-desist order and a surcharge payment order) from the JFTC to the effect that the above request in the hearing was to be turned down. As to this decision, the Board of Directors decided to bring a lawsuit seeking to quash the decision in the Tokyo High Court of Japan on July 29, 2011, and submitted a written complaint on August 3, The lawsuit has been pending to this day. The estimated losses arising from the surcharge payment order were recorded as a provision in the balance sheets as of March 31, 2012 and 2011.

7 Annual Report n. Provision for alleged antitrust law violation-the Company has recorded a provision for possible future losses associated with U.S. antitrust laws in the amount estimated as of the present time. o. Leases-In March 2007, the ASBJ issued ASBJ Statement No. 13, "Accounting Standard for Lease Transactions," which revised the previous accounting standard for lease transactions issued in June The revised accounting standard for lease transactions was effective for fiscal years beginning on or after April 1, Under the previous accounting standard, finance leases that were deemed to transfer ownership of the leased property to the lessee were capitalized. However, other finance leases were permitted to be accounted for as operating lease transactions if certain "as if capitalized" information was disclosed in the note to the lessee's financial statements. The revised accounting standard requires that all finance lease transactions be capitalized to recognize lease assets and lease obligations in the balance sheet. In addition, the accounting standard permits leases which existed at the transition date and do not transfer ownership of the leased property to the lessee to continue to be accounted for as operating lease transactions. The Company applied the revised accounting standard effective April 1, In addition, the Company continues to account for leases which existed at the transition date and do not transfer ownership of the leased property to the lessee as operating lease transactions. All other leases are accounted for as operating leases. p. Income Taxes-The provision for income taxes is computed based on the pretax income included in the consolidated statement of income. The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Deferred taxes are measured by applying currently enacted tax laws to the temporary differences. q. Accounting for the Consumption Tax-In Japan, the consumption tax is imposed at a flat rate of 5% on all domestic consumption of goods and services (with certain exemptions). The consumption tax imposed on the Group's domestic sales to customers is withheld by the Group at the time of sale and is subsequently paid to the national government. The consumption tax withheld upon sale and the consumption tax paid by the Group on the purchases of goods and services are not included in the related amounts in the accompanying consolidated statements of income. r. Appropriation of Retained Earnings-Appropriations of retained earnings are reflected in the financial statements for the following year upon shareholders' approval. s. Treasury Stock-Under the Japanese Companies Act, the Company is allowed to acquire its own shares to the extent that the aggregate cost of treasury stock does not exceed the maximum amount available for dividends. Treasury stock is stated at cost in the equity of the accompanying consolidated balance sheets. Net gain on disposal of treasury stock is presented under "Capital surplus" in the equity of the accompanying consolidated balance sheets.

8 60 Yusen Logistics Co., Ltd. t. Foreign Currency Transactions-All short-term and long-term monetary receivables and payables denominated in foreign currencies are translated into Japanese yen at the exchange rates at the balance sheet date. The foreign exchange gains and losses from translation are recognized in the consolidated statement of income. u. Foreign Currency Financial Statements-The balance sheet accounts of foreign consolidated subsidiaries and foreign subsidiaries accounted for by the equity method are translated into Japanese yen at the current exchange rate as of the balance sheet date except for equity, which is translated at the historical rate. Differences arising from such translations are shown as "Foreign currency translation adjustments" under accumulated other comprehensive income in a separate component of equity. Revenue and expense accounts of foreign consolidated subsidiaries are translated into Japanese yen at the average exchange rates. v. Derivatives-The Group uses derivative financial instruments to manage their exposures to fluctuations in foreign exchange and interest rates. Foreign exchange forward contracts are utilized by the Group. The Group does not enter into derivatives for trading or speculative purposes. Derivative financial instruments and foreign currency transactions are classified and accounted for as follows: (a) all derivatives are recognized as either assets or liabilities and measured at fair value, and gains or losses on derivative transactions are recognized in the consolidated statement of income and (b) for derivatives used for hedging purposes, if derivatives qualify for hedge accounting because of high correlation and effectiveness between the hedging instruments and the hedged items, gains or losses on derivatives are deferred until maturity of the hedged transactions. The foreign exchange forward contracts employed to hedge foreign exchange exposures in the Group's operating activities are measured at the fair value and the unrealized gains/losses are recognized in income. w. Accounting Changes and Error Corrections-In December 2009, the ASBJ issued ASBJ Statement No. 24, "Accounting Standard for Accounting Changes and Error Corrections," and ASBJ Guidance No. 24, "Guidance on Accounting Standard for Accounting Changes and Error Corrections." Accounting treatments under this standard and guidance are as follows: (1) Changes in Accounting Policies - When a new accounting policy is applied with revision of accounting standards, the new policy is applied retrospectively, unless the revised accounting standards include specific transitional provisions. When the revised accounting standards include specific transitional provisions, an entity shall comply with the specific transitional provisions. (2) Changes in Presentations - When the presentation of financial statements is changed, prior-period financial statements are reclassified in accordance with the new presentation. (3) Changes in Accounting Estimates - A change in an accounting estimate is accounted for in the period of the change if the change affects that period only, and is accounted for prospectively if the change affects both the period of the change and future periods. (4) Corrections of Prior Period Errors - When an error in prior-period financial statements is discovered, those statements are restated. This accounting standard and the guidance are applicable to accounting changes and corrections of prior-period errors, which are made from the beginning of the fiscal year that begins on or after April 1, 2011.

9 Annual Report x. Per Share Information-Net assets per share is computed based on the outstanding shares of common stock at relevant balance sheet dates. Basic net income per share is computed by dividing net income available to shareholders by the weighted-average number of shares of common stock outstanding for the period. Diluted net income per share for the years ended March 31, 2012 and 2011, is not presented since the Company had no securities with dilutive effect. Cash dividends per share presented in the accompanying consolidated statements of income are dividends applicable to the respective years including dividends to be paid after the end of the year. 3. Business Combination As released in "Execution of the Basic Agreement on Integration of Overseas Businesses of NYK and Yusen Logistics" on December 22, 2010, the Company and NYK have conducted the reorganization and integration of the logistics businesses in order to gain a position as a world-class logistics service provider by reorganizing and optimizing logistics business units. The outlines of the important transactions are as follows. 1. The U.S. logistics businesses have been integrated through an absorption-type merger. Yusen Logistics (Americas) Inc., which is a consolidated subsidiary of the Company, became the surviving company and NYK LOGISTICS (AMERICAS) INC., which is a consolidated subsidiary of NYK, became the extinct company. After the merger became effective, the Company acquired the shares of Yusen Logistics (Americas) Inc. from NYK GROUP AMERICAS INC., etc. As a result, the shareholding ratio of the Company is 51.0%. (1) Outline of the business combination 1 Name and business of the acquired company 1) Name of the acquired company NYK LOGISTICS (AMERICAS) INC. 2) Business of the acquired company International ocean freight-forwarding, contract logistics, domestic transportation, etc. 2 Date of the business combination April 1, Legal form of the business combination Absorption-type merger 4 Name of the company after the business combination Yusen Logistics (Americas) Inc. 5 Ratio of voting rights acquired 19.7%

10 62 Yusen Logistics Co., Ltd. (2) Period of the performance of the acquired company in the consolidated statements of income From 1 April 2011 to 31 March 2012 (3) Acquisition costs and those details Fair value of the shares of Yusen Logistics (Americas) Inc. granted at the acquisition date: \2,575 million ($31,332 thousand) (4) Calculation of acquisition cost 1 Type of shares and merger ratio 1 share of common stock of NYK LOGISTICS (AMERICAS) INC. : 531 shares of common stock of Yusen Logistics (Americas) Inc. 2 Basis for calculation of the merger ratio In order to ensure the fairness and appropriateness of the merger ratio, the Company and NYK decided individually to request a third-party appraiser that is independent from the two companies to calculate the merger ratio. The Company has appointed PricewaterhouseCoopers Co., Ltd. (hereinafter "PwC") as its third-party appraiser and NYK has appointed KPMG FAS Co., Ltd. (hereinafter "KPMG") as its third-party appraiser. The Company and NYK agreed on the merger ratio after careful consideration by referring to the results calculated by these third-party appraisers, and by taking into account all factors such as the financial condition, the state of assets, and the future outlook of each integration subsidiary. 3 Number of shares delivered 569,763 shares (5) Contents of share acquisition 1 Number of acquired shares and acquisition cost Number of acquired shares: 221,980 shares of common stock Acquisition cost: \4,083 million ($49,682 thousand) 2 Status of share acquisition after the transfer Number of Shares before the Transfer (shareholding ratio) Number of Shares after the Transfer (shareholding ratio) Yusen Logistics Co., Ltd.: 140,000 shares (19.7%) Yusen Logistics Co., Ltd.: 361,980 shares (51.0%) NYK GROUP AMERICAS INC: 563,922 shares NYK LOGISTICS (JAPAN) Co., Ltd.: 5,841 shares Total: 569,763 shares (80.3%) NYK GROUP AMERICAS INC.: 347,783 shares (49.0%) (6) Amount, cause, method, and period of amortization of goodwill 1 Amount of goodwill \495 million ($6,026 thousand) 2 Cause of goodwill Anticipated future profitability in excess of net asset value 3 Method and period of amortization of goodwill Straight-line method over three years

11 Annual Report (7) Amounts of assets acquired and liabilities assumed on the day of the business combination Current assets \8,912 $108,427 Fixed assets 8, ,410 Total assets \17,329 $210,837 Current liabilities \7,476 $90,961 Fixed liabilities 463 5,634 Total liabilities \7,939 $96, The European holding companies related to the logistics businesses of the two groups have been integrated through an absorption-type merger. Yusen Logistics (Europe) B.V., which is a consolidated subsidiary of the Company, became the surviving company and NYK LOGISTICS (EUROPE CONTINENT) B.V., which is a consolidated subsidiary of NYK, became the extinct company. (1) Outline of the business combination 1 Name and business of the acquired company 1) Name of the acquired company NYK LOGISTICS (EUROPE CONTINENT) B.V. 2) Business of the acquired company Holding company of European logistics companies of NYK Group 2 Date of the business combination April 1, Legal form of the business combination Absorption-type merger 4 Name of the company after the business combination Yusen Logistics (Europe) B.V. 5 Ratio of voting rights acquired 53.7% (2) Period of the performance of the acquired company in the consolidated statements of income From 1 April 2011 to 31 March 2012 (3) Acquisition costs and those details Fair value of the shares of Yusen Logistics (Europe) B.V. granted at the acquisition date: \1,087 million ($13,227 thousand) (4) Calculation of acquisition cost 1 Type of shares and merger ratio 1 share of common stock of NYK LOGISTICS (EUROPE CONTINENT) B.V. : shares of common stock of Yusen Logistics (Europe) B.V.

12 64 Yusen Logistics Co., Ltd. 2 Basis for calculation of the merger ratio In order to ensure the fairness and appropriateness of the merger ratio, the Company and NYK decided individually to request a third-party appraiser that is independent from the two companies to calculate the merger ratio. The Company has appointed PricewaterhouseCoopers Co., Ltd. (hereinafter "PwC") as its third-party appraiser and NYK has appointed KPMG FAS Co., Ltd. (hereinafter "KPMG") as its third-party appraiser. The Company and NYK agreed on the merger ratio after careful consideration by referring to the results calculated by these third-party appraisers, and by taking into account all factors such as the financial condition, the state of assets, and the future outlook of each integration subsidiary. 3 Number of shares delivered 15,975 shares (5) Amounts of assets acquired and liabilities assumed on the day of the business combination Current assets \14,610 $177,763 Fixed assets 12, ,207 Total assets \27,120 $329,970 Current liabilities \12,595 $153,241 Fixed liabilities 3,324 40,439 Total liabilities \15,919 $193, NYK GROUP EUROPE LTD., which is the holding company of the NYK Group in U.K., transferred all of the shares of Yusen Logistics (UK) Ltd., which is a U.K. logistics business company of the NYK Group, to Yusen Logistics (Europe) B.V. which is a European holding company of the Company. (1) Outline of the business combination 1 Name of the company transferring shares NYK GROUP EUROPE LTD. 2 Name and business of the acquired company 1) Name of the acquired company Yusen Logistics (UK) Ltd. 2) Business of the acquired company International ocean freight-forwarding, contract logistics, domestic transportation, etc. 3 Date of share transfer April 17, Legal form of the business combination Acquisition of shares (2) Period of the performance of the acquired company in the consolidated statements of income From 1 April 2011 to 31 March 2012

13 Annual Report (3) Contents of share acquisition 1 Number of acquired shares and acquisition cost Number of acquired shares: 40,930,000 shares of common stock 2 Acquisition cost: \2,054 million ($24,991 thousand) 3 Number of shares after the acquisition (shareholding ratio): 40,930,000 shares of common stock (100%) (4) Amount, cause, method, and period of amortization of goodwill 1 Amount of goodwill \434 million ($5,285 thousand) 2 Cause of goodwill Anticipated future profitability in excess of net asset value 3 Method and period of amortization of goodwill Straight-line method over three years (5) Amounts of assets acquired and liabilities assumed on the day of the business combination Current assets \6,658 $81,000 Fixed assets 3,710 45,141 Total assets \10,368 $126,141 Current liabilities \7,486 $91,081 Fixed liabilities 1,262 15,354 Total liabilities \8,748 $106, Yusen Logistics (Hong Kong) Limited purchased a part of the logistics business of NYK LOGISTICS (HONG KONG) LTD., a consolidated subsidiary of NYK, in the form of a business transfer to Yusen Logistics (Hong Kong) Limited (1) Outline of the business combination 1 Name of transferor NYK LOGISTICS (HONG KONG) LTD. 2 Outline of the acquired business International ocean freight-forwarding, contract logistics, domestic transportation, etc. 3 Date of the business combination April 1, Legal form of the business combination Transfer of business (2) Period of the performance of the acquired company in the consolidated statements of income From 1 April 2011 to 31 March 2012

14 66 Yusen Logistics Co., Ltd. (3) Cost for the transfer of business \2,145 million ($26,101 thousand) (4) Assets and liabilities transferred Current assets \107 $1,304 Fixed assets 2,165 26,341 Total assets \2,272 $27,645 Current liabilities Total liabilities \76 $920 \76 $ Cash and Cash Equivalents Yusen Logistics (UK) Ltd. was acquired in the year ended March 31, Its assets and liabilities at the time of consolidation, acquisition costs, and the payment (net amount) required for acquisition were as follows: Current assets \6,658 $81,000 Fixed assets 3,710 45,141 Goodwill 434 5,285 Current liabilities (7,486) (91,081) Fixed liabilities (1,262) (15,354) Acquisition costs 2,054 24,991 Cash and cash equivalents of the acquired company (4) (54) Payment required for acquisition \2,050 $24,937 NYK LOGISTICS (AMERICAS) INC. was merged with Yusen Logistics (Americas) Inc. in the year ended March 31, Common stocks and capital surplus have not increased due to the merger. The acquired assets and liabilities were as follows: Current assets \8,912 $108,427 Fixed assets 8, ,410 Total assets \17,329 $210,837 Current liabilities \7,476 $90,961 Fixed liabilities 463 5,634 Total liabilities \7,939 $96,595

15 Annual Report NYK LOGISTICS (EUROPE CONTINENT) B.V. was merged with Yusen Logistics (Europe) B.V. in the year ended March 31, Common stocks and capital surplus have not increased due to the merger. The acquired assets and liabilities were as follows: Current assets \14,610 $177,763 Fixed assets 12, ,207 Total assets \27,210 $329,970 Current liabilities \12,595 $153,241 Fixed liabilities 3,324 40,439 Total liabilities \15,919 $193, Long-lived Assets The Group reviewed its long-lived assets for impairment as of and for the years ended March 31, 2012 and 2011, and as a result, there were no long-lived assets for impairment as of and for the year ended March 31, On the other hand, due to a significant decline in market value of certain fixed assets which were planned to be disposed of by sale, the Group recognized an impairment loss of \66 million as other expense for the year ended March 31, The impairment loss of \66 million for the year ended March 31, 2011, was recorded on idle assets in Osaka. The carrying amounts of the relevant assets were written down to the recoverable amounts. The recoverable amounts of those assets planned to be disposed by sale were measured at their net selling price determined by quotation from a thirdparty vendor. 6. Investments in Securities The cost and aggregate fair values of the investments classified as "available-for-sale securities" at March 31, 2012 and 2011 are as follows: (1) Available-for-sale securities for which market quotations are available: Cost Fair Value (Carrying Amount) Difference Cost Fair Value (Carrying Amount) Difference Securities for which market value exceeds cost- Equity securities \261 \461 \200 \264 \447 \183 Government bonds Securities for which market value does not exceed cost- Equity securities (24) (15) Total \437 \614 \177 \410 \579 \169

16 68 Yusen Logistics Co., Ltd. Cost Fair Value (Carrying Amount) 2012 Difference Securities for which market value exceeds cost- Equity securities $3,178 $5,619 $2,441 Government bonds Securities for which market value does not exceed cost- Equity securities 1,422 1,130 (292) Total $5,320 $7,476 $2,156 (2) Proceeds from sale of available-for-sale securities and total amounts of gain and loss on sale of available-for-sale securities: Proceeds from sale of available-for-sale securities \60 \74 $730 Total amount of gain on sale of available-for-sale securities Total amount of loss on sale of available-for-sale securities (3) The impairment losses of securities for the year ended March 31, 2012, amounted to \17 million ($200 thousand) which consists of \17 million ($200 thousand) for available-for-sale securities. The impairment losses of securities for the year ended March 31, 2011, amounted to \155 million which consists of \16 million for available-for-sale securities and \139 million for the securities of non-consolidated subsidiaries. 7. Short-term Loans Payable and Long-term Debt Short-term loans payable at March 31, 2012, consisted of notes to banks and bank overdrafts. The weighted-average interest rate applicable to the short-term loans payable was 5.39% at March 31, There were no short-term loans payable at March 31, Long-term debt at March 31, 2012 and 2011, consisted of the following: Loans from banks and other financial institutions, due serially to 2034 with average interest rates of 1.07% (2012) and 0.50% (2011) Collateralized \11 - $133 Unsecured 12,850 \4, ,340 Finance lease obligation ,064 Total 13,195 4, ,537 Less current portion (893) (35) (10,864) Long-term debt, less current portion \12,302 \4,537 $149,673

17 Annual Report Annual maturities of long-term debt including financial lease obligation at March 31, 2012, were as follows: Year Ending March \893 $10, , ,324 52, ,943 35, and thereafter 4,444 54,069 Total \13,195 $160,537 The carrying amount of assets pledged as collateral for the above-mentioned collateralized long-term debt at March 31, 2012 and 2011, were as follows: Buildings and structures \49 \- $598 As is customary in Japan, the Company maintains substantial deposit balances with banks with which it has borrowings. Such deposit balances are not legally or contractually restricted as to withdrawal. General agreements with respective banks provide, as is customary in Japan, that additional collateral must be provided under certain circumstances if requested by such banks and that certain banks have the right to offset cash deposited with them against any long-term or short-term debt or obligation that becomes due and, in case of default and certain other specified events, against all other debt payable to the banks. The Company has never been requested to provide any additional collateral. 8. Retirement and Pension Plans The Company and certain consolidated subsidiaries have severance payment plans for employees, directors, and corporate auditors. Under most circumstances, employees terminating their employment are entitled to retirement benefits determined based on the rate of pay at the time of termination, years of service, and certain other factors. Such retirement benefits are made in the form of a lump-sum severance payment from the Company or from certain consolidated subsidiaries and annuity payments from a trustee. Employees are entitled to larger payments if the termination is involuntary, by retirement at the mandatory retirement age, by death, or by voluntary retirement at certain specific ages prior to the mandatory retirement age.

18 70 Yusen Logistics Co., Ltd. Accrued pension and severance costs for employees at March 31, 2012 and 2011, consisted of the following: Projected benefit obligation \15,862 \10,492 $193,001 Fair value of plan assets (10,317) (6,101) (125,526) Unrecognized actuarial gain (1,861) (1,037) (22,645) Prepaid pension cost ,400 Accrued pension and severance costs for employees \4,046 \3,617 $49,230 The components of net periodic benefit costs for the years ended March 31, 2012 and 2011, are as follows: Service cost \580 \593 $7,066 Interest cost ,082 Expected return on plan assets (422) (215) (5,134) Amortization of unrecognized actuarial loss ,247 Past service cost 4 (30) 45 Total \1,011 \817 $12,306 Assumptions used for the years ended March 31, 2012 and 2011, are set forth as follows: Discount rate Principally 2.0% Principally 2.0% Expected rate of return on plan assets Principally 3.0% Principally 3.0% Recognition period of actuarial gain/loss Principally 10 years Principally 10 years Amortization period of prior service cost 1 year 1 year

19 Annual Report Equity Japanese companies are subject to the Companies Act of Japan (the "Companies Act"). The significant provisions in the Companies Act that affect financial and accounting matters are summarized below: a. Dividends Under the Companies Act, companies can pay dividends at any time during the fiscal year in addition to the year-end dividend upon resolution at the shareholders meeting. For companies that meet certain criteria such as; (1) having the Board of Directors, (2) having independent auditors, (3) having the Board of Corporate Auditors, and (4) the term of service of the directors is prescribed as one year rather than two years of normal term by its articles of incorporation, the Board of Directors may declare dividends (except for dividends in kind) at any time during the fiscal year if the company has prescribed so in its articles of incorporation. The Company meets all the above criteria. Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if the articles of incorporation of the company so stipulate. The Companies Act provides certain limitations on the amounts available for dividends or the purchase of treasury stock. The limitation is defined as the amount available for distribution to the shareholders, but the amount of net assets after dividends must be maintained at no less than \3 million. b. Increases/Decreases and Transfer of Common Stock, Reserve, and Surplus The Companies Act requires that an amount equal to 10% of dividends must be appropriated as a legal reserve (a component of retained earnings) or as additional paid-in capital (a component of capital surplus) depending on the equity account charged upon the payment of such dividends until the total of aggregate amount of legal reserve and additional paid-in capital equals 25% of the common stock. Under the Companies Act, the total amount of additional paid-in capital and legal reserve may be reversed without limitation. The Companies Act also provides that common stock, legal reserve, additional paid-in capital, other capital surplus, and retained earnings can be transferred among the accounts under certain conditions upon resolution of the shareholders. c. Treasury Stock and Treasury Stock Acquisition Rights The Companies Act also provides for companies to purchase treasury stock and dispose of such treasury stock by resolution of the Board of Directors. The amount of treasury stock purchased cannot exceed the amount available for distribution to the shareholders which is determined by a specific formula. Under the Companies Act, stock acquisition rights are presented as a separate component of equity. The Companies Act also provides that companies can purchase both treasury stock acquisition rights and treasury stock. Such treasury stock acquisition rights are presented as a separate component of equity or deducted directly from stock acquisition rights.

20 72 Yusen Logistics Co., Ltd. 10. Income Taxes The Company and domestic consolidated subsidiaries are subject to Japanese national and local income taxes which, in the aggregate, resulted in a normal effective statutory rate of approximately 40.4% for the years ended March 31, 2012 and The tax effects of significant temporary differences which resulted in deferred tax assets and liabilities at March 31, 2012 and 2011, are as follows: Deferred tax assets: Accrued pension and severance costs for employees \1,310 \1,348 $15,936 Accrued bonuses to employees ,635 Accrued enterprise tax Accrued pension and severance costs for directors and corporate auditors ,728 Allowance for doubtful accounts ,701 Depreciation ,500 Tax loss carry forward 1, ,159 Loss on impairment of fixed assets Loss on revaluation of investments in securities Loss on write-down of golf club membership ,426 Stock of affiliate company 142-1,732 Others ,600 Total 5,168 3,688 62,886 Less valuation allowance (772) (475) (9,390) Total deferred tax assets 4,396 3,213 53,496 Deferred tax liabilities: Depreciation ,576 Prepaid pension expenses Others ,608 Total deferred tax liabilities 1, ,579 Net deferred tax assets \3,363 \3,018 $40,917