Annual Report 2012

(1) Consolidated Financial StatementsNotes to Consolidated Financial StatementsNippon Express Co., Ltd. and consolidated subsidiaries1. Presentation of amounts in the consolidated financial statementsThe yen amounts are rounded off in millions and U.S. dollar amounts in thousands. The total Japanese yen and U.S. dollar amountsshown in the financial statements do not necessarily agree with the sum of the individual amounts. U.S. dollar amounts presented in thefinancial statements are included solely for convenience. The rate of ¥82.19 to US$1.00, prevailing on March 31, 2012, has been usedfor translation into U.S. dollar amounts in the financial statements. The inclusion of such amounts should not be construed as arepresentation that Japanese yen amounts have been or could in the future be converted into U.S. dollars at that or any other rate.2. Basis of presentation of consolidated financial statements and summary of significant accounting policies(1) Scope of consolidation1) There are 250 consolidated subsidiaries. The names of major subsidiaries are described in “Management Discussion and Analysis,Corporate Overview.” A total of seven companies, including Nippon Express Europe GmbH, are newly included in the scope ofconsolidation from the year ended March 31, 2012 due to establishment or share acquisition.Kato Transport Co., Ltd. was excluded from the scope of consolidation due to the sale of its shares. Toyama Nittsu AutomobileEngineering Co., Ltd. was excluded due to a merger with other consolidated subsidiaries, and five companies including NittsuMinami Iwate Transport Co., Ltd. were excluded due to liquidation.2) A total of 26 subsidiaries, including Nittsu Energy Kanto, are excluded from the scope of consolidation as these companies aresmall, and their impact on the consolidated financial statements in terms of total assets, net sales, net income or loss and retainedearnings corresponding to interest held by the Company is considered to be immaterial as a whole.3) A total of 20 subsidiaries, including Nippon Express Travel U.S.A., Inc., held by 11 overseas consolidated subsidiaries, includingNippon Express U.S.A., Inc., are included in the scope of the consolidation.(2) Application of equity-method1) Companies to which the equity method is applied:a. Subsidiary: Awa Godo Tsuun Co., Ltd.b. Affiliates: There are 21 equity-method affiliates, including Nippon Vopack Co., Ltd.Effective the year ended March 31, 2012, Map Cargo S.A.S. has been included in the scope of equity method affiliates, as theCompany newly acquired a portion of its shares.2) A total of 25 subsidiaries, including Nittsu Energy Kanto, and 41 affiliates, including TOKYO KOUN CO., LTD., other than above22 companies are excluded from the scope of subsidiaries or affiliates accounted for by the equity method, but are carried atcost, since their impact on the consolidated financial statements in terms of net income or loss and retained earningscorresponding to interest held by the Company is considered to be immaterial as a whole.(3) Accounting period of the consolidated subsidiariesA total of 62 overseas consolidated subsidiaries, including Nippon Express U.S.A., Inc., have a balance sheet date of December 31.In preparing the accompanying consolidated financial statements, the financial statements as of December 31 and for the year thenended are used in consolidation after making necessary adjustments for significant transactions occurring from January 1 throughMarch 31.One equity-method affiliate has a balance sheet date of August 31 and eight equity-method affiliates have a balance sheet date ofDecember 31. Significant transactions between these dates and March 31 are reflected in computing the equity earnings attributableto the Group.(4) Significant accounting policies1) Valuation methodsa. SecuritiesAvailable-for-sale Securities- Available-for-sale securities with market valueAvailable-for-sale securities with market value are stated at fair value based on the market price as of the balance sheet datewith any unrealized gains or losses, net of applicable taxes, reported as a component of accumulated other comprehensiveincome. Cost of sold securities is stated using the moving average method.- Available-for-sale securities without market valueAvailable-for-sale securities without market value are stated at cost using the moving-average method.b. DerivativesDerivatives are stated at fair value.c. InventoriesInventories are stated primarily at the lower of cost determined by the moving-average method (balance sheet amounts are writtendown on the basis of any decreased profitability).32 NIPPON EXPRESS Annual Report 2012