Yusen Logistics Co., Ltd. and Consolidated Subsidiaries

Yusen Logistics Co., Ltd. and Consolidated Subsidiaries Notes to Consolidated Financial Statements Year Ended March 31, 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 2013 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 102.92 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,, include the accounts of the Company and its 69 significant (68 in 2013) subsidiaries (together, the "Group") listed below: Consolidated Subsidiaries Equity Ownership Percentage* 1 Capital Stock* 1 Yusen Logistics (Americas) Inc. 51.00% USD 70,976 thousand Yusen Logistics (Hong Kong) Limited 100.00 HKD 55,000 thousand Yusen Air & Sea Service (China) Ltd. 100.00* 2 HKD 11,000 thousand Yusen Logistics (Singapore) Pte.Ltd. 79.30 SGD 16,950 thousand Yusen Logistics (Benelux) B.V. 100.00* 3 EUR 50 thousand Yusen Logistics (Deutschland) GmbH 100.00* 3 EUR 2,638 thousand Yusen Air & Sea Service (U.K.) Ltd. 100.00* 3 GBP 1,050 thousand Yusen Logistics (Australia) Pty.Ltd. 50.97* 4 AUD 15,478 thousand Yusen Logistics (Canada) Inc. 100.00 CAD 5,000 thousand Yusen Logistics (France) S.A.S. 100.00* 3 EUR 14,185 thousand Yusen Logistics (Taiwan) Ltd. 95.30* 5 TWD 157,398 thousand Beijing Yusen Freight Service Co.,Ltd.* 25 100.00* 2 CNY 9,312 thousand Yusen Logistics (Italy) S.P.A. 100.00* 3 EUR 3,326 thousand PT. Yusen Logistics Indonesia 67.62* 6 USD 3,048 thousand Yusen Logistics (Europe) B.V. 53.69 EUR 34,493 thousand Yusen Logistics (Korea) Co.,Ltd. 100.00 KRW 2,000 million Shanghai Yusen Freight Service Co.,Ltd. 100.00* 2 CNY 16,457 thousand Yusen Air & Sea Service Management (Thailand) Co.,Ltd. 95.00* 7 THB 10,000 thousand Yusen Logistics International (Vietnam) Co.,Ltd. 49.00* 8 USD 600 thousand Yusen Logistics Philippines, Inc. 51.00 PHP 500,000 thousand Guangdong Yusen Freight Service Co.,Ltd.* 25 100.00* 2 CNY 8,009 thousand Yusen Logistics (India) Ltd. 51.00* 9 INR 594,150 thousand Shanghai Yusen Logistics Service (W.G.Q.) Co.,Ltd. * 25 100.00* 2 CNY 5,380 thousand Suzhou Yusen Logistics Service Co.,Ltd.* 25 100.00* 2 CNY 6,844 thousand

Consolidated Subsidiaries Equity Ownership Percentage* 1 Capital Stock* 1 ETA TOO, INC. 100.00* 10 USD 0 Yusen Logistics Transporte S.A.de C.V. 100.00* 11 MXN 50 thousand BRUNI INTERNATIONAL DE MEXICO, S.A.DE C.V. 100.00* 12 MXN 350 thousand Yusen Logistics (UK) Ltd. 100.00* 3 GBP 44,130 thousand Yusen Logistics (Iberica) S.A. 100.00* 3 EUR 585 thousand Yusen Logistics (Polska) Sp.z o.o. 100.00* 3 PLN 2,400 thousand Yusen Logistics (Hungary) KFT. 100.00* 3 HUF 12,420 thousand Yusen Logistics (Edam) B.V. 100.00* 13 EUR 18 thousand Yusen Logistics (Czech) s.r.o. 100.00* 3 CZK 431,729 thousand Yusen Logistics (Vietnam) Co.,Ltd.* 26 49.00* 8 VND 6,375 million NANHAI BUSINESS SOLUTIONS PTE LTD. 100.00* 14 SGD 100 thousand NYK LOGISTICS (AUSTRALIA) PTY. LTD. 100.00* 15 AUD 15,550 thousand Yusen Logistics & Kusuhara Lanka (Pvt.) Ltd. 51.00 LKR 6,500 thousand Yusen Logistics RUS LLC 100.00* 3 RUB 289 thousand Yusen Logistics Center,Inc. 100.00* 16 PHP 35,000 thousand Yusen Logistics (Thailand) Co.,Ltd. 87.80* 17 THB 70,000 thousand PT. Puninar Yusen Logistics Indonesia 51.00 USD 13,000 thousand Yusen Logistics Do Brasil Ltda. 61.88 BRL 14,492 thousand Yusen Logistics (China) Co.,Ltd. 51.00 CNY 158,047 thousand PT. Yusen Logistics Solutions Indonesia 51.00 USD 5,100 thousand TASCO Berhad 51.00* 18 MYR 100,000 thousand Baik Sepakat Sdn Bhd 100.00* 19 MYR 100 thousand Tunas Cergas Logistik Sdn Bhd 100.00* 19 MYR 100 thousand Emulsi Teknik Sdn Bhd 100.00* 19 MYR 100 thousand TASCO Express Sdn Bhd 100.00* 19 MYR 100 thousand Maya Kekal Sdn Bhd 100.00* 19 MYR 2 Precious Fortunes Sdn Bhd 100.00* 19 MYR 8,000 thousand Trans-Asia Shipping Pte Ltd 100.00* 19 SGD 100 thousand Piala Kristal (M) Sdn Bhd 51.22* 20 MYR 205 thousand Omega Saujana Sdn Bhd 51.22* 20 MYR 205 thousand Shenzhen Yusen Freight Service Co.,Ltd.* 23 100.00* 2 CNY 11,430 thousand Double Wing Spirit Service Co.,Ltd.* 23 80.00* 21 THB 7,000 thousand Yusen Real Estate (Hai Phong) Co.,Ltd.* 24 100.00* 14 VND 126,216 million Yusen Keihin Trans Co., Ltd. 100.00 JPY 36 million Yusen Logistics (Kitakanto) Co., Ltd. 100.00 JPY 50 million Yusen Logistics (Tsukuba) Co., Ltd. 100.00 JPY 50 million Yusen Logistics (Shinshu) Co., Ltd. 90.00 JPY 50 million Yusen Logistics (Tohoku) Co., Ltd. 100.00 JPY 30 million Yusen Logistics (Kyushu) Co., Ltd. 100.00 JPY 30 million Yusen Logistics (Chugoku) Co., Ltd. 80.00 JPY 30 million Yusen Logistics (Hokuriku) Co., Ltd. 100.00 JPY 20 million Yusen Logitec Co., Ltd. 100.00 JPY 20 million Yusen Travel Co., Ltd. 100.00 JPY 270 million Ryowa Diamond Air Service Co., Ltd. 99.17* 22 JPY 50 million Yusen Loginet Co., Ltd. 100.00 JPY 20 million * 1 as of March 31, * 2 owned 100.00% by Yusen Logistics (Hong Kong) Limited * 3 owned 100.00% by Yusen Logistics (Europe) B.V. * 4 owned 32.04% by the Company, 18.93% by Yusen Logistics (Singapore) Pte.Ltd. * 5 owned 57.20% by the Company, 38.10% by Yusen Logistics (Hong Kong) Limited * 6 owned 8.88% by the Company, 58.74% by Yusen Logistics (Singapore) Pte.Ltd. * 7 owned 49.00% by Yusen Logistics (Singapore) Pte. Ltd., 46.00% by Yusen Logistics (Thailand) Co., Ltd. * 8 owned 49.00% by Yusen Logistics (Singapore) Pte.Ltd.

* 9 owned 31.53% by the Company, 19.47% by Yusen Logistics (Singapore) Pte.Ltd. * 10 owned 100.00% by Yusen Logistics (Americas) Inc. * 11 owned 50.00% by Yusen Logistics (America) Inc., 50.00% by ETA TOO, INC. * 12 owned 99.71% by Yusen Logistics (Americas) Inc., 0.29% by Yusen Logistics Tranporte S.A.de C.V. * 13 owned 100.00% by Yusen Logistics (Benelux) B.V. * 14 owned 100.00% by Yusen Logistics (Singapore) Pte.Ltd. * 15 owned 100.00% by Yusen Logistics (Australia) Pty.Ltd. * 16 owned 100.00% by Yusen Logistics Philippines, Inc. * 17 owned 33.46% by the Company, 10.80% by Yusen Air & Sea Service Management (Thailand) Co., Ltd. * 18 owned 27.01% by the Company, 23.99% by Yusen Logistics (Singapore) Pte.Ltd. * 19 owned 100.00% by TASCO Berhad * 20 owned 51.22% by TASCO Berhad * 21 owned 80.00% by Yusen Logistics (Thailand) Co., Ltd. * 22 owned 99.17% by Yusen Travel Co., Ltd. * 23 became newly consolidated companies since materiality has increased * 24 became a newly consolidated company as it was established * 25 These consolidated companies changed their company names in this fiscal year * 26 This consolidated company changed its company name 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 influences are accounted for by the equity method. Yusen Logistics (Belgium) N.V. was merged into Yusen Logistics (Benelux) B.V. and excluded from the scope of consolidation. Yusen Air & Sea Service (Thailand) Co., Ltd. was excluded from the scope of consolidation due to liquidation. Investments in three (three in 2013) unconsolidated subsidiaries and two (two in 2013) 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 of 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 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 accounting for property, plant, and equipment and investment properties and incorporation of the 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 on 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, 2010. The Company adopted this standard on April 1, 2010. 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 of 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-for-sale 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. Non-marketable 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. 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 by 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 Furniture and fixtures Machinery, equipment and vehicles 3 60 years 2 20 years 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 is 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 is 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 July and December 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. Retirement and Pension Plans Employee's retirement and pension plans The Company and certain domestic consolidated subsidiaries have a non-contributory 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. Retirement allowance for directors and audit & supervisory board members Retirement allowance for directors and audit & supervisory board members for certain subsidiaries are recorded to state the liability at the amount that would be required if all directors and audit & supervisory board members retired at each balance sheet date. l. 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 1993. The revised accounting standard for lease transactions was effective for fiscal years beginning on or after April 1, 2008. 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, 2008. 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. m. 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. n. 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 sheet. Net gain on disposal of treasury stock is presented under "Capital surplus'' in the equity of the accompanying consolidated balance sheet. o. 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. p. 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. q. Derivatives The Group uses derivative financial instruments to manage its 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: (1) 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 (2) 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 or losses are recognized in consolidated statement of income. r. 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 priorperiod errors, which are made from the beginning of the fiscal year that begins on or after April 1, 2011. s. Per Share Information Net assets per share are 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, and 2013, is not presented since the Company had no securities with a dilutive effect. Cash dividends per share presented in the accompanying consolidated statement of income are dividends applicable to the respective years including dividends to be paid after the end of the year. t. Application of IAS 19 Employee Benefits As International Accounting Standards (IAS) 19 Employee Benefits (amended on June 16, 2011) became applicable to the fiscal year beginning on or after January 1, 2013, some subsidiaries and affiliates started to adopt the revised IAS 19 in the fiscal year ended March 31,. In line with the change in accounting policy, the financial statements for the fiscal year ended March 31, 2013, have been retroactively applied to reflect this change. The retroactive application had only a negligible impact on the financial statements for the fiscal year ended March 31, 2013. u. Change in Accounting Standard for Retirement Benefits In May 2012, the ASBJ issued ASBJ Statement No. 26, "Accounting Standard for Retirement Benefits" and ASBJ Guidance No. 25, "Guidance on Accounting Standard for Retirement Benefits," which replaced the accounting standard for retirement benefits that had been issued by the Business Accounting Council in 1998 with an effective date of April 1,

2000, and the other related practical guidance, and followed by partial amendments from time to time through 2009. (1) Under the revised accounting standard, actuarial gains and losses and past service costs that are yet to be recognized in profit or loss are recognized within equity (accumulated other comprehensive income), after adjusting for tax effects, and any resulting deficit or surplus is recognized as a liability (liability for retirement benefits) or asset (asset for retirement benefits). (2) The revised accounting standard does not change how to recognize actuarial gains and losses and past service costs in profit or loss. Those amounts are recognized in profit or loss over a certain period no longer than the expected average remaining working lives of the employees. However, actuarial gains and losses and past service costs that arose in the current period and have not yet been recognized in profit or loss are included in other comprehensive income and actuarial gains and losses and past service costs that were recognized in other comprehensive income in prior periods and then recognized in profit or loss in the current period shall be treated as reclassification adjustments. This accounting standard and the guidance for (1) and (2) above are effective for the end of annual periods beginning on or after April 1, 2013, with earlier application being permitted from the beginning of annual periods beginning on or after April 31, 2013. However, no retrospective application of this accounting standard to consolidated financial statements in prior periods is required. The Company applied the revised accounting standard and guidance for retirement benefits for (1) and (2) above effective March 31,. As a result, liability for retirement benefits of 350 million ($3,397 thousand) was recorded as of March 31,, and accumulated other comprehensive income for the year ended March 31,, decreased by 269 million ($2,617 thousand). Net assets per share for the year ended March 31,, decreased by 6.39 ($0.062). v. New Accounting Pronouncements Accounting Standard for Retirement Benefits In May 2012, the ASBJ issued ASBJ Statement No. 26, "Accounting Standard for Retirement Benefits" and ASBJ Guidance No. 25, "Guidance on Accounting Standard for Retirement Benefits," which replaced the Accounting Standard for Retirement Benefits that had been issued by the Business Accounting Council in 1998 with an effective date of April 1, 2000, and the other related practical guidance, and followed by partial amendments from time to time through 2009. Major changes are as follows: The revised accounting standard also made certain amendments relating to the method of attributing expected benefit to periods and relating to the discount rate and expected future salary increases. Accounting Standards for Business Combinations and Consolidated Financial Statements On September 13, 2013, the ASBJ issued revised ASBJ Statement No. 21, "Accounting Standard for Business Combinations," revised ASBJ Guidance No. 10, "Guidance on Accounting Standards for Business Combinations and Business Divestitures," and revised ASBJ Statement No. 22, "Accounting Standard for Consolidated Financial Statements." Major accounting changes are as follows: Transactions with non-controlling interest A parent's ownership interest in a subsidiary might change if the parent purchases or sells ownership interests in its subsidiary. The carrying amount of minority interest is adjusted to reflect the change in the parent's ownership interest in its subsidiary while the parent retains its controlling interest in its subsidiary. Under the current accounting standard, any difference between the fair value of the consideration received or paid and the amount by which the minority interest is adjusted is accounted for as an adjustment of goodwill or as profit or loss in the consolidated statement of income. Under the revised accounting standard, such difference shall be accounted for as capital surplus as long as the parent retains control over its subsidiary. Presentation of the consolidated balance sheet In the consolidated balance sheet, "minority interest" under the current accounting standard will be

changed to "non-controlling interest" under the revised accounting standard. Presentation of the consolidated statement of income In the consolidated statement of income, "income before minority interest" under the current accounting standard will be changed to "net income" under the revised accounting standard, and "net income" under the current accounting standard will be changed to "net income attributable to owners of the parent" under the revised accounting standard. Provisional accounting treatments for a business combination If the initial accounting for a business combination is incomplete by the end of the reporting period in which the business combination occurs, an acquirer shall report in its financial statements provisional amounts for the items for which the accounting is incomplete. Under the current accounting standard guidance, the impact of adjustments to provisional amounts recorded in a business combination on profit or loss is recognized as profit or loss in the year in which the measurement is completed. Under the revised accounting standard guidance, during the measurement period, which shall not exceed one year from the acquisition, the acquirer shall retrospectively adjust the provisional amounts recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date and that would have affected the measurement of the amounts recognized as of that date. Such adjustments shall be recognized as if the accounting for the business combination had been completed at the acquisition date. Acquisition-related costs Acquisition-related costs are costs, such as advisory fees or professional fees, which an acquirer incurs to effect a business combination. Under the current accounting standard, the acquirer accounts for acquisition-related costs by including them in the acquisition costs of the investment. Under the revised accounting standard, acquisition-related costs shall be accounted for as expenses in the periods in which the costs are incurred. The above accounting standards and guidance for "transactions with non-controlling interest," "acquisitionrelated costs" and "presentation changes in the consolidated financial statements" are effective for the beginning of annual periods beginning on or after April 1, 2015. Earlier application is permitted from the beginning of annual periods beginning on or after April 1,, except for the presentation changes in the consolidated financial statements. In case of earlier application, all accounting standards and guidance above, except for the presentation changes, should be applied simultaneously. Either retrospective or prospective application of the revised accounting standards and guidance for "transactions with noncontrolling interest" and "acquisition-related costs" is permitted. In retrospective application of the revised standards and guidance for "transactions with non-controlling interest" and "acquisition-related costs," accumulated effects of retrospective adjustments for all "transactions with non-controlling interest" and "acquisition-related costs" which occurred in the past shall be reflected as adjustments to the beginning balance of capital surplus and retained earnings for the year of the first-time application. In prospective application, the new standards and guidance for "transactions with non-controlling interest" and "acquisition-related costs" shall be applied prospectively from the beginning of the year of the firsttime application. The changes in presentation shall be applied to all periods presented in financial statements containing the first-time application of the revised standards and guidance. The revised standards and guidance for "provisional accounting treatments for a business combination" is effective for a business combination which will occur on or after the beginning of annual periods beginning on or after April 1, 2015. Earlier application is permitted for a business combination which will occur on or after the beginning of annual periods beginning on or after April 1,. The Company expects to apply the revised accounting standards and guidance from the beginning of the annual period beginning on April 1, 2015, and is in the process of measuring the effects of applying the revised accounting standards and guidance in future applicable periods.

3. LOSS ON IMPAIRMENT OF FIXED ASSET The Group reviewed its long-lived assets for impairment as of the year ended March 31,, and as a result, recognized an impairment loss of 55 million ($531 thousand) as other expense. The impairment loss for the year ended March 31,, was recorded on certain machinery, equipment and vehicles in Shanghai, China. The Group reduced the book value of these assets to their recoverable amounts due to a noticeable deterioration in profitability. The recoverable amounts for these assets were measured at their value in use. The value in use is calculated based on the projected future cash flows discounted at a rate of 6.15%. 4. INVESTMENTS IN SECURITIES The cost and aggregate fair values of the investments classified as "available-for-sale securities" at March 31, and 2013, are as follows: (1) Available-for-sale securities for which market quotations are available: U.S. Dollars 2013 Cost Fair Value (Carrying Amount) Difference Cost Fair Value (Carrying Amount) Difference Cost Fair Value (Carrying Amount) Difference Securities for which market value exceeds cost Equity securities 293 586 293 168 323 155 $ 2,842 $ 5,692 $ 2,8507 Government bonds 59 60 1 60 60 0 575 580 5 Securities for which market value does not exceed cost Equity securities 56 51 (5) 221 172 (49) 544 496 (48) Total 408 697 289 449 555 106 $ 3,961 $ 6,768 $ 2,807 (2) Proceeds from sale of available-for-sale securities and total amounts of gain and loss on sale of available-for-sale securities: U.S. Dollars 2013 Proceeds from sale of available-for-sale securities 95 67 $927 Total amount of gain on sale of available-for-sale securities 51 65 495 Total amount of loss on sale of available-for-sale securities 3 33 (3) There were no impairment losses of securities for the year ended March 31,. - The impairment losses of securities for the year ended March 31, 2013, amounted to 35 million for the securities of non-consolidated subsidiaries.

5. SHORT-TERM LOANS PAYABLE AND LONG-TERM DEBT Short-term loans payable at March 31,, consisted of notes to financial institutions and bank overdrafts. The weighted-average interest rates applicable to the short-term loans payable were 3.95% and 4.21% at March 31, and 2013, respectively. Long-term debt at March 31, and 2013, consisted of the following: U.S. Dollars 2013 Loans from banks and other financial institutions, due serially to 2024 with average interest rates of 0.93% () and 1.09% (2013); Collateralized $ Unsecured 18,046 13,841 175,343 Finance lease obligation 253 253 2,462 Total 18,299 14,094 177,805 Less current portion (5,359) (1,090) (52,073) Long-term debt, less current portion 12,940 13,004 $125,732 Annual maturities of long-term debt including financial lease obligation at March 31,, were as follows: Year Ending March 31 U.S. Dollars 2015 5,359 $ 52,073 2016 3,878 37,681 2017 4,654 45,223 2018 182 1,772 2019 and thereafter 4,226 41,056 Total 18,299 $177,805 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.

6. RETIREMENT AND PENSION PLANS The Company and certain consolidated subsidiaries have severance payment plans for employees, directors, and audit & supervisory board members. 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. For the year ended March 31, 1. The changes in projected benefit obligation for the year ended March 31,, are as follows: Millions of Yen U.S. Dollars Balance at beginning of year 16,204 $ 157,443 Current service cost 750 7,285 Interest cost 502 4,878 Actuarial gains and losses (37) (356) Benefits paid (794) (7,719) Past service cost 16 160 Others 1,550 15,064 Balance at end of year 18,191 $ 176,755 2. The changes in plan assets for the year ended March 31,, are as follows: Millions of Yen U.S. Dollars Balance at beginning of year 10,759 $ 104,537 Expected return on plan assets 401 3,892 Actuarial gains and losses 58 563 Contributions from the employer 895 8,693 Benefits paid (550) (5,339) Others 1,359 13,210 Balance at end of year 12,922 $ 125,556 3. Reconciliation between the liability recorded in the consolidated balance sheet and the balances of projected benefit obligation and plan assets as of March 31, Millions of Yen U.S. Dollars Funded projected benefit obligation 15,293 $ 148,599 Plan assets (12,922) (125,556) 2,371 23,043 Unfunded projected benefit obligation 2,898 28,157 Net liability (asset) for defined benefit obligation 5,269 $ 51,200

Millions of Yen U.S. Dollars Net defined benefit liability 5,553 $ 53,959 Net defined benefit asset (284) (2,759) Net liability (asset) for defined benefit obligation 5,269 $ 51,200 4. The components of net periodic benefit costs for the year ended March 31,, are as follows: Millions of Yen U.S. Dollars Current service cost 778 $ 7,558 Interest cost 502 4,878 Expected return on plan assets (429) (4,165) Amortization of unrecognized actuarial loss 341 3,312 Amortization of past service cost 16 160 Others 4 37 Net periodic benefit costs 1,212 $ 11,780 5. Other comprehensive income on projected retirement benefit plans for the year ended March 31, Millions of Yen U.S. Dollars Actuarial gains and losses 8 $ 73 Total 8 $ 73 6. Accumulated other comprehensive income on projected retirement benefit plans as of March 31, Millions of Yen U.S. Dollars Unrecognized actuarial gains and losses (1,379) $ (13,394) Total (1,379) $ (13,394) 7. Plan assets as of March 31, (1) Components of plan assets Plan assets consisted of the following: Equity investments 43 % Debt investments 32 % Cash and cash equivalents 2 % Others 23 % Total 100 %

(2) Method of determining the expected rate of return on plan assets Expected rate of return on plan assets is determined considering the long-term rates of return which are currently expected and expected in the future from the variety of asset portfolio components. 8. Assumptions used for the year ended March 31,, are set forth as follows: Discount rate Principally 2.0 % Expected rate of return on plan assets Principally 3.0 % 9. Defined Contribution Plan The amount of contributions which certain consolidated subsidiaries should contribute under the defined contribution plan for the year ended March 31,, is 557 million ($5,408 thousand). For the year ended March 31, 2013 Accrued pension and severance costs for employees at March 31, 2013, consisted of the following: 2013 Projected benefit obligation 16,204 Fair value of plan assets (10,759) Unrecognized actuarial gain (719) Prepaid pension cost 229 Accrued pension and severance costs for employees 4,955 The components of net periodic benefit costs for the year ended March 31, 2013, are as follows: 2013 Service cost 647 Interest cost 426 Expected return on plan assets (381) Amortization of unrecognized actuarial loss 253 Amortization of past service cost 33 Total 978 Other than those listed above, the Company recognized loss on abolishment of retirement pension plan in the amount of 111 million at March 31, 2013, as Yusen Logistics (Americas) Inc. has transferred retirement and pension plan from a defined benefit pension plan to a defined contribution pension plan. Assumptions used for the year ended March 31, 2013, are set forth as follows: 2013 Discount rate Principally 2.0% Expected rate of return on plan assets Principally 3.0% Recognition period of actuarial gain and loss Principally 10 years Amortization period of past service cost 1 year

7. 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 a Board of Directors, (2) having independent auditors, (3) having an Audit & Supervisory Board, 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 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.

8. 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 38.0% for the years ended March 31, and 2013. The tax effects of significant temporary differences resulted in deferred tax assets and liabilities at March 31, and 2013, are as follows: U.S. Dollars 2013 Deferred tax assets: Accrued pension and severance costs for employees 1,534 $ Net defined benefit liability 1,650 16,033 Accrued bonuses to employees 713 661 6,931 Accrued enterprise tax 59 40 577 Accrued pension and severance costs for directors and audit & supervisory board members 108 175 1,046 Allowance for doubtful accounts 329 227 3,196 Depreciation 384 409 3,732 Tax loss carryforwards 2,574 1,774 25,007 Loss on impairment of fixed assets 15 147 Loss on revaluation of investments in securities 88 103 855 Loss on write-down of golf club membership 110 116 1,064 Stock of affiliate company 142 142 1,383 Others 933 594 9,069 Total 7,105 5,775 69,040 Less valuation allowance (1,688) (1,180) (16,397) Total deferred tax assets 5,417 4,595 52,643 Deferred tax liabilities: Depreciation 819 803 7,959 Prepaid pension expenses 32 Net defined benefit asset 70 678 Others 532 219 5,175 Total deferred tax liabilities 1,421 1,054 13,812 Net deferred tax assets 3,996 3,541 $ 38,831

The reconciliation of the difference between the normal effective statutory tax rate and the actual effective tax rate reflected in the accompanying consolidated statements of income for the years ended March 31, and 2013 is as follows: 2013 Normal effective statutory tax rate 38.0% 38.0% Adjustments: Entertainment expenses and other non-deductible permanent differences 4.7 4.1 Dividend income not taxable (6.1) (10.8 ) Effect of elimination of intercompany dividends received 8.8 12.6 Per share levy of local tax 1.0 1.3 Lower income tax rates applicable to income in certain foreign countries (7.1) (9.7 ) Valuation allowance on deferred tax 0.7 6.9 Equity in earnings of affiliated companies and unconsolidated companies (0.4) (2.1 ) Effect of tax reduction 1.1 Goodwill and negative goodwill 5.4 (5.3) Foreign exchange adjustment for provision (1.3) 1.7 Other net 2.5 2.7 Actual effective tax rate 47.3% 39.4% Adjustment of deferred tax assets and liabilities pursuant to the change in the corporate tax rate New tax reform laws in in Japan changed the normal effective statutory tax rate for the fiscal year beginning on or after April 1,, from approximately 38.0% to 35.6%. The effect of this change was to decrease deferred taxes in the consolidated balance sheet as of March 31,, by 58 million ($565 thousand) and to increase income taxesdeferred in the consolidated statement of income for the year then ended by 58 million ($565 thousand). 9. LEASES The Group has various lease agreements whereby the Group acts as lessee. The minimum rental commitments under non-cancelable operating leases at March 31, and 2013, were as follows: U.S. Dollars 2013 Due within one year 9,657 7,596 $ 93,826 Due over one year 20,743 16,816 201,545 Total 30,400 24,412 $295,371

10. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES In March, 2008, the ASBJ revised ASBJ Statement No. 10 Accounting Standard for Financial Instruments and issued ASBJ Guidance No. 19 Guidance on Accounting Standard for Financial Instruments and Related Disclosures. This accounting standard and the guidance were applicable to financial instruments and related disclosures at the end of the fiscal years ending on or after March 31, 2010. The Group applied the revised accounting standard and the new guidance effective March 31, 2010. (1) Group policy for financial instruments The Group limits the use of financial instruments for fund management purposes to short-term bank deposits. The Group also makes it the basic policy to use the cash management system operated within the Group and bank loans to fund its ongoing operations. Derivatives are used, not for speculative purposes, but to manage exposure to financial risks as described in (2) below. (2) Nature and extent of risks arising from financial instruments Receivables such as trade notes and trade accounts are exposed to customer credit risk. Although receivables in foreign currencies are exposed to the market risk of fluctuation in foreign currency exchange rates, the position, net of payables in foreign currencies, is hedged by using forward foreign currency contracts. Investment securities, mainly equity securities of customers and suppliers of the Group, are exposed to the risk of market price fluctuations. Payment terms of payables, such as trade notes and trade accounts, are less than one year. Although payables in foreign currencies are exposed to the market risk of fluctuation in foreign currency exchange rates, those risks are netted against the balance of receivables denominated in the same foreign currency as noted above. Loans, principally from financial institutions, in short-term loans payable are mainly for financing related to business transaction. Loans, principally from financial institutions, in long-term debt are mainly for financing related to business integration and investment in property. Derivatives, which are forward foreign currency contracts, are used to manage exposure to market risks from changes in foreign currency exchange rates of receivables and payables. Please see Note 11 for more details about derivatives. (3) Risk management for financial instruments Credit risk management Credit risk is the risk of economic loss arising from a counterparty s failure to repay or service debt according to the contractual terms. The Group manages its credit risk from receivables on the basis of internal guidelines, which include monitoring of payment term and balances of major customers by each business administration department to identify the default risk of customers in the early stage. The maximum credit risk exposure of financial assets is limited to their carrying amounts as of March 31,. Market risk management (foreign exchange risk and interest rate risk) Foreign currency trade receivables and payables are exposed to market risk resulting from fluctuations in foreign currency exchange rates. Such foreign exchange risk is hedged principally by forward foreign currency contracts. In addition, when foreign currency trade receivables and payables are expected from forecasted transactions, forward foreign currency contracts may be used under the limited contract term of a quarter of a year. Investment securities are managed by monitoring market values and financial position of issuers on a regular basis. The execution and management of derivative transactions are approved by the CFO or the board of directors according to the internal guidelines which prescribe the authority and the limit for each transaction. Counterparties to these derivative transactions are limited to major financial institutions in order to mitigate credit risks.