Investor relations Annual report

Annual Report 2000

(For year ended March 31,2000)

Kawasaki Kisen Kaisha, Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2000

1.	Summary of Significant Accounting Policies
	(a) Basis of presentation
		Kawasaki Kisen Kaisha, Ltd. (the "Company") and its domestic subsidiaries maintain their accounting records and prepare their financial statements in accordance with accounting principles and practices generally accepted in Japan, and its foreign subsidiaries maintain their books of account in conformity with those of the countries of their domicile. The accompanying consolidated financial statements have been prepared from the financial statements filed with the Ministry of Finance as required by the Securities and Exchange Law of Japan. Accordingly, the accompanying consolidated financial statements are not intended to present the consolidated financial position, results of operations and cash flows in accordance with accounting principles and practices generally accepted in countries and jurisdiction other than Japan. For the purposes of this document, certain reclassifications have been made to present the accompanying consolidated financial statements in a format which is familiar to readers outside Japan. However, no adjustments have been made which would change the financial position or the results of operations presented in the original financial statements. The translation of yen amounts into U.S. dollar amounts is included solely for convenience and has been made, as a matter of arithmetic computation only, at the rate of ¥106.15=U.S.$1.00, the approximate rate of exchange on March 31, 2000 on the Tokyo Foreign Exchange Market. Furthermore, the translation should not be construed as a representation that yen have been, could have been, or could in the future be, converted into U.S. dollars at that or any other rate.

	*(b) Principles of consolidation and accounting for investments in unconsolidated subsidiaries and affiliates*
		The accompanying consolidated financial statements include the accounts of the Company and 87 subsidiaries for the year ended March 31, 2000. For the purpose of consolidation, all significant intercompany transactions, account balances and unrealized profit among the consolidated group companies have been eliminated. The significant difference between the cost and the underlying net equity in the consolidated subsidiaries at their respective dates of acquisition is, as a rule, amortized over a period of five years. Effective the year ended March 31, 2000, in accordance with a revision to the regulations governing consolidation financial statements, the scope of consolidation has been changed from including subsidiaries whose voting interests are owned more than 50% by a consolidated group, to expanding the scope to include subsidiaries whose voting interests are owned more than 40% and up to 50% by a consolidated group and, in addition, whose decision-making control over their operations is significantly affected by the consolidated group through financial or technical support, personnel, transactions, and so forth. The effect of this change was that the Company consolidated one additional subsidiary for the year ended March 31, 2000. In addition, effective the year ended March 31, 2000, the scope of affiliates who should be accounted for by the equity method has been expanded to include companies (other than subsidiaries as defined above) whose decision-making control over their operations is significantly affected by the consolidated group in various ways even if they are owned less than 20%. This change, however, had no impact on the group consolidation for the year ended March 31, 2000.

	*(c) Accounting period*
		The Company's fiscal year ends on March 31. The fiscal year of 63 consolidated subsidiaries ends on December 31 and, in addition, 4 subsidiaries' balance sheet dates fall within 3 months of March 31. All significant adjustments considered necessary during the periods from the consolidated fiscal year end to the different year ends have been made on consolidation. During the year ended March 31, 2000, Asahi Shipping Co., Ltd., Kawaki Kosan Kaisha, Ltd., Japan Express Transportation Co., Ltd., and Maizuru Kousoku Yusou Co., Ltd. changed their closing date from March 31 to December 31, and their 9-month results have been included in the consolidated accounts. Intermodal Engineering Co., Ltd. and Nitto Tugboat Co., Ltd. changed their closing date from March 31 to the last day of February each year, and the 11-month results have been included in the consolidated accounts.

	*(d) Translation of foreign currencies*
		All monetary assets and liabilities denominated in foreign currencies other than those hedged by forward foreign exchange contracts are translated into yen at the rates of exchange in effect on the dates of acquisition. Gains and losses resulting from the settlement of these items are credited or charged currently to operations. Accounts hedged by forward foreign exchange contracts are translated into yen at the contracted rates, with the resulting translation differences allocated to income based on the number of months in the respective contract periods.

	*(e) Translation of accounts of foreign consolidated subsidiaries*
		The accounts of the foreign consolidated subsidiaries, except for the components of shareholders' equity, are translated into yen at the rates of exchange in effect at the balance sheet date. The components of shareholders' equity are translated at their historical exchange rates. Differences arising from the translation are presented as translation adjustments in the accompanying consolidated financial statements.

	*(f) Revenues and related costs*
		Revenues from cargo freight and the related costs and expenses, except for those from container vessels, are recorded in full as of the date on which the vessels complete their voyages. Revenues from container vessels are recorded in full as of the date on which a vessel embarks from the port where the cargo was loaded, and no year-end adjustments are made for any portions of uncompleted voyages. The related costs and expenses are charged to income as incurred. Revenues and costs with respect to charter services are accounted for on an accrual basis.

	*(g) Cash and cash equivalents*
		The Company and its subsidiaries substantially consider all highly liquid investments with a maturity of three months or less from the purchase date, are to be cash equivalents.

	*(h) Investments*
		Investments in marketable and other securities are generally carried at cost determined by the moving average method. The Commercial Code of Japan requires investments to be written down where there has been a permanent decline in their value. Where considered necessary, the Company has written down the value of such investments.

	*(i) Fuel and supplies*
		Fuel and supplies are stated at cost determined by the moving average method.

	*(j) Vessels, property and equipment and depreciation*
		Vessels, property and equipment are stated at cost except that the cost of certain property and equipment has been reduced by the capital gains resulting from the disposal of certain vessels, property and equipment as permitted under the Corporation Tax Law of Japan. The depreciation of property and equipment is computed principally by the declining-balance method over the estimated useful lives of the respective assets which differ according to general category, type of construction and use. The depreciation of vessels is computed by the straight-line or the declining-balance method over the estimated useful lives of the respective vessels. Maintenance, repairs and minor improvements are charged to income as incurred. Major improvements are capitalized.

	*(k) Capitalization of interest expense*
		Interest expense is generally charged to income as incurred. However, interest expense incurred in the construction of certain assets, vessels in particular, are capitalized and included in the costs of the assets when the construction period is substantially long and the amount of interest incurred during the period is significantly large.

	*(l) Accrued expenses for overhaul of vessels*
		The Company's vessels are subject to periodic overhaul. An accrual is provided for the current portion of the estimated total expense for overhauling the vessels.

	*(m) Leases*
		Noncancelable lease transactions are accounted for as operating leases (whether such leases are classified as operating or finance leases) except that lease agreements which stipulate the transfer of ownership of the leased property to the lessee are accounted for as finance leases.

	*(n) Income taxes*
		Effective the year ended March 31, 2000, the Company and its consolidated subsidiaries have fully adopted tax-effect accounting in accordance with a recent revision to the regulations governing reporting for consolidated financial statements. The effect of this change on deferred income tax assets amounted to ¥5,003 million (US$47,130 thousand; ¥579 million as current assets and ¥4,424 million as non-current assets) and the effect on deferred income tax liabilities amounted to ¥6,051 million (US$57,004 thousand; ¥278 million as current liabilities and ¥5,773 million as non-current liabilities) as of March 31, 2000. In addition, the effect of this change was to increase net income by ¥1,222 million (US$11,514 thousand) and consolidated retained earnings by ¥361 million (US$3,397 thousand) from the amounts which would have been recorded under the method followed in the previous year.

	*(o) Employees' retirement benefits*
		The Company has a funded non-contributory pension plan covering certain employees who meet specific eligibility requirements as to age and length of service. The Company also has a lump-sum severance benefits plan for its maritime employees in accordance with the terms of an optional retirement plan. Accrued employees' retirement benefits consisted of: (1) the unamortized balance of the retirement benefits for eligible employees who had been entitled to receive lumpsum severance payments under the lumpsum severance plan referred to above, which was replaced by the pension plan, and (2) retirement benefits for maritime employees stated at the amount which, as of the balance sheet date, would have been required to be made as additional payments under the optional retirement plan.

	*(p) Reclassifications*
		In accordance with a recent revision to certain regulations relating to the Securities and Exchange Law of Japan, certain reclassifications have been made to conform the prior-year presentation to the fiscal 2000 presentation.

Change in Method of Accounting

During the year ended March 31, 2000, the Company investigated its severance and retirement benefit plans for all employees. As a result, the understatement of the recognition of prior service cost in the pension plan and the accrued retirement benefits for maritime employees under the lump-sum severance payment plan (the "Optional retirement plan") were identified. Therefore, effective the year ended March 31, 2000, the Company shortened the amortization period of prior service cost. In addition, the accrual for retirement benefits for maritime employees has been changed from being provided at 40% to being provided at 100% of the amount which would be required to be paid as of the balance sheet date in order to recognize the obligation more appropriately and to enhance the financial condition of the Company.
Daito Corporation ("Daito"), a consolidated subsidiary, provided an accrual for its employees' lump-sum retirement payments at 40% of the amount which would be required to be paid as of the balance sheet date except for the portion covered by the Daito pension plan which has replaced a portion of its employees' lump-sum retirement plan. Effective the year ended March 31, 2000, Daito changed its method of accruing the liability for its employees' lump-sum retirement payments to providing 100% of the amount referred to above plus the unamortized prior service cost as of the balance sheet date.
These changes increased extraordinary loss by ¥1,058 million (US$9,968 thousand) and decreased income before income taxes by the same amount from the amount which would have been recorded under the method applied in previous years.

Cash and Cash Equivalents

Cash and cash equivalents as of March 31, 2000 was reconciled to cash and time deposits stated on balance sheet at March 31, 2000 as follows:

	Millions of yen	Thousands of U.S. dollars
Cash and time deposits	¥25,698	$242,091
Time deposits with a maturity more than 3 months after March 31, 2000	(798)	(7,522)
Highly liquid marketable securities with low risks	1,068	10,062
	¥25,968	$244,631

Marketable and Investment Securities

Information with respect to the book and related aggregate market value at March 31, 2000 of current and non-current marketable securities included in marketable securities, investments in and advances to subsidiaries and affiliates, and investments in other securities for which market prices are available is summarized as follows:

	Millions of yen
	Book value	Market value
Marketable securities	¥44,273	¥45,338
Investments in securities, including investments in subsidiaries and affiliates	6,341	8,381

	Thousands of U.S. dollars
	Book value	Market value
Marketable securities	$417,075	$427,112
Investments in securities, including investments in subsidiaries and affiliates	59,735	78,956

Short-Term Loans and Long-Term Debt

(a) Short-term loans from banks and insurance companies at an average interest rate of 1.55% per annum amounted to ¥58,405 million (US$550,212 thousand) at March 31, 2000.

(b) Long-term debt at March 31, 2000 consisted of the following:

	Millions of yen	Thousands of U.S. dollars
Loans from banks and insurance companies payable in installments at average interest rate of 1.07% per annum for fixed-rate loans and at variable rates for floating-rate loans	¥206,159	$1,942,146
Long-term accounts payable	1,982	18,678
2.45% notes in Japanese yen, due October 24, 2000	10,000	94,206
3.10% notes in Japanese yen, due May 30, 2002	5,000	47,103
2.50% notes in Japanese yen, due July 4, 2000	5,000	47,103
2.15% notes in Japanese yen, due December 10, 2001	7,000	65,944
2.45% notes in Japanese yen, due December 12, 2002	2,500	23,552
3.37% notes in Japanese yen, due February 24, 2004	2,500	23,552
1.30% notes in Japanese yen, due June 13, 2002	3,000	28,262
1.43% notes in Japanese yen, due July 29, 2002	3,000	28,262
2.04% notes in Japanese yen, due March 18, 2005	5,000	47,103
Total	251,141	2,365,911
Less: Current portion of long-term loans	28,042	264,176
Current portion of long-term account payable	15,000	141,309
	¥208,099	$1,960,426

(c) The aggregate annual maturities of long-term loans from banks and insurance companies subsequent to March 31, 2000 are summarized as follows:

Year ending March 31,	Millions of yen	Thousands of U.S. dollars
2001	¥ 28,042	$ 264,176
2002	27,982	263,605
2003	27,905	262,885
2004	18,331	172,692
2005 and thereafter	103,889	978,788
	¥206,159	$1,942,146

(d) A summary of assets pledged as collateral for long-term debt at March 31, 2000 is presented below:

	Millions of yen	Thousands of U.S. dollars
Marketable securities	¥ 7,599	$ 71,589
Vessels and property, at net book value	212,132	1,998,415
Other	697	6,566

As is customary in Japan, short-term notes are generally issued to banks under uniform standard agreements which provide that additional collateral (including cash on deposit with such banks) will be furnished at the banks' request, and that any collateral so furnished will be applicable to all indebtedness to such banks. Certain of the collateralized loan agreements contain provisions which permit the lenders to require additional collateral.

Income Taxes

The Company is subject to a number of taxes based on income, which, in the aggregate, result in statutory tax rates of approximately 38.1% for 2000, and 43.8% for 1999.
A reconciliation between the statutory tax rate and the effective tax rate as a percentage of income before income taxes for the year ended March 31, 2000 is summarized as follows:

	2000
Statutory income tax rate	38.1%
Taxes at different rates for foreign subsidiaries	(4.7)
Equity in earnings of affiliates	(2.3)
Non-deductible expenses for income tax purposes	3.6
Other	(0.5)
Effective income tax rate	34.2%

The net tax effect of temporary differences which gave rise to a significant portion of the deferred tax assets and liabilities as of March 31, 2000 is analyzed as follows:

	Millions of yen	Thousands of U.S. dollars
Deferred tax assets:
Accrued employees' retirement benefits	¥ 1,692	$ 15,937
Adjustment for unrealized profit/loss	1,248	11,761
Allowance for certain items	1,007	9,481
Other	1,056	9,951
Total deferred tax assets	5,003	47,130
Deferred tax liabilities:
Reserve for special depreciation	(3,335)	(31,412)
Deferred gain for tax purposes	(1,498)	(14,116)
Other	(1,218)	(11,476)
Total deferred tax liabilities	(6,051)	(57,004)
Net deferred tax liabilities	¥(1,048)	$ (9,874)

7. Leases

The following pro forma amounts represent the acquisition costs, accumulated depreciation and net book value of leased property as of March 31, 2000 and the related depreciation and interest expense for the year ended March 31, 2000, which would have been reflected in the consolidated balance sheet and the related consolidated statement of income if finance lease accounting had been applied to the finance lease transactions currently accounted for as operating leases:

	Millions of yen
	Equipment	Other	Total
Acquisition costs	¥6,589	¥4,464	¥11,053
Accumulated depreciation	3,645	2,452	2,452
Net book value	¥2,944	¥2,012	¥ 4,956

	Thousands of U.S. dollars
	Equipment	Other	Total
Acquisition costs	$62,073	$42,053	$104,126
Accumulated depreciation	34,342	23,095	57,437
Net book value	$27,731	$18,958	$ 46,689

	Millions of yen	Thousands of U.S. dollars
Depreciation	¥1,460	$13,751
Interest expense	¥ 184	$ 1,729

Lease expenses relating to finance leases accounted for and operating leases amounted to ¥1,271 million (US$11,978 thousand) and ¥1,928 million, and finance lease revenues amounted to ¥24 million (US$224 thousand) and ¥27 million for the years ended March 31, 2000 and 1999, respectively.
Future minimum lease payments and revenues subsequent to March 31, 2000 for finance leases accounted for as operating leases are summarized as follows:

	Payments
Year ending March 31,	Millions of yen	Thousands of U.S. dollars
2001	¥1,365	$12,858
2002 and thereafter	3,816	35,946

	Revenues
Year ending March 31,	Millions of yen	Thousands of U.S. dollars
2001	¥16	$153
2002 and thereafter	15	144

Future minimum lease payments subsequent to March 31, 2000 for operating leases are summarized as follows:

	Payments
Year ending March 31,	Millions of yen	Thousands of U.S. dollars
2001	¥ 1,813	$ 17,078
2002 and thereafter	12,782	120,418

Legal Reserve

The legal reserve has been provided in accordance with the Commercial Code of Japan which requires that an amount equal to at least 10% of cash dividends and directors' and statutory auditors' bonuses in respect of each fiscal period be appropriated to the legal reserve until such reserve equals 25% of stated capital. This reserve is not available for dividends but may be used to reduce or eliminate a deficit or may be transferred to stated capital by resolution of the shareholders.

Amounts per Share

The amounts per share of net income and net assets, as presented below, are based on the average number of shares of common stock of the Company outstanding during each year and the number of shares outstanding at each balance sheet date, respectively:

	Yen		U.S. dollars
	2000	1999	2000
Net income	¥ 11.68	¥ 2.73	$0.110
Net assets	125.01	117.23	1.178

Diluted net income per share is not presented because the Company has issued no common stock equivalents such as bonds with warrants or convertible bonds.

10.

Commitments and Contingent Liabilities

As of March 31, 2000, commitments made by the Company amounted to US$13,601 thousand (¥1,444 million) for the construction of vessels.
Contingent liabilities for notes receivable discounted and endorsed, loans guaranteed, joint indebtedness as of March 31, 2000 were as follows:

	Millions of yen	Thousands of U.S. dollars
Notes receivable discounted and endorsed	¥ 283	$ 2,666
Loans guaranteed	10,408	98,049
Joint indebtedness	123,308	1,161,639
Total	¥133,999	$1,262,354

11.

Derivatives and Hedging Activities

The Company and its consolidated subsidiaries (the "Group") have entered into forward foreign exchange contracts to reduce their exposure to adverse fluctuations in foreign exchange rates related to its receivables and payables denominated in foreign currencies. The Group has also entered into interest rate and currency swap agreements and currency option agreements to minimize the impact of foreign exchange and interest rate movements related to its outstanding debt.
     The purpose of the Group's hedging with forward exchange contracts is to protect the Group from the related market risks. In addition, the purpose of the interest rate and currency swap agreements and currency option agreements is to modify effectively the characteristics of the principal and interest on its outstanding debt.
     The Group is exposed to certain market risks arising from its forward foreign exchange contracts, swap agreements and option agreements. The Group is also exposed to the risk of credit loss in the event of non performance by the counterparties to the currency and interest rate derivatives; however, the Group does not anticipate non performance by any of these counterparties all of whom are financial institutions with high bond ratings.
     At March 31, 2000, the outstanding forward foreign exchange contracts were as follows:

	Millions of yen	Thousands of U.S. dollars
Currency-related
Forward exchange contracts:
Sell (U.S. dollar):
Contracts outstanding	¥19,195	$206,841*
Unrealized gain (loss)	(594)	(5,599)
Buy (U.S. dollars):
Contracts outstanding	¥32,552	$339,681*
Unrealized gain(loss)	(13)	(121)
Buy (Euro):
Contracts outstanding	¥ 5	50,000**
Unrealized gain (loss)	(0)	$(1)
Buy (pounds sterling):
Contracts outstanding	¥13	£75,000***
Unrealized gain (loss)	(0)	$(2)

Option contracts:
Written;
Calls U.S. dollars against Yen:
Contracts outstanding	¥3,889	$35,000*
Book value	13	122
Unrealized gain (loss)	(3)	(32)
Puts U.S. dollars against Yen:
Contracts outstanding	¥21	$200*
Book value	0	1
Unrealized gain (loss)	(0)	(1)
Purchased;
Calls U.S. dollars against Yen:
Contracts outstanding	¥11	$100*
Book value	0	1
Unrealized gain (loss)	0	0
Puts U.S. dollars against Yen:
Contracts outstanding	¥3,500	$35,000*
Book value	13	122
Unrealized gain (loss)	(4)	(39)

Swap contracts:
Receive U.S.dollars/Pay Japanese yen:
Contracts outstanding	¥2,252	$22,000*
Unrealized gain (loss)	5	45

*represents the contracted amounts in thousands of U.S. dollars.
**represents the contracted amounts in Euro.
***represents the contracted amounts in pounds sterling.

At March 31, 2000, outstanding interest rate swap agreements were as follows:

	Millions of yen	Thousands of U.S. dollars
Interest related
Interest rate swap agreements:
Fixed-rate into floating-rate obligations:
(U.S. dollar)
Notional amounts	¥11,776	$111,769*
Unrealized gain (loss)	38	368**
(Japanese Yen)
Notional amounts	¥14,653	$138,039
Unrealized gain (loss)	640	6,031
Floating-rate into fixed-rate obligations:
(U.S. dollar)
Notional amounts	¥30,817	$290,314*
Unrealized gain (loss)	543	5,114**
(Japanese Yen)
Notional amounts	¥17,916	$168,784
Unrealized gain (loss)	(979)	(9,219)

*represents the contracted amounts in thousands of U.S. dollars.
** represents unrealized gain (loss) in the contracted currency.

The notional amounts represent the maximum amount of principal in the period remaining for each agreement.



12.		Segment Information
	*(a) Business segment information*
		For the years ended March 31, 2000 and 1999, the consolidated results have been divided into three segment.

Year ended March 31, 2000*	Millions of yen
Year ended March 31, 2000*	Marine transportation	Service incidental to transportation	Other	Total	Eliminations	Consolidated
1. Revenues:
(1) Operating revenues	¥390,430	¥ 83,408	¥11,855	¥485,693	¥ -	¥485,693
(2) Intra-group sales and transfers	1,789	35,741	5,676	43,206	(43,206)	-
Total revenues	392,219	119,149	17,531	528,899	(43,206)	485,693
2. Operating expenses	370,083	115,256	16,702	502,041	(43,165)	458,876
Operating income	¥ 22,136	¥ 3,893	¥ 829	¥ 26,858	¥ (41)	¥ 26,817
3. Assets, depreciation and capital expenditures:
(1) Total assets	¥426,806	¥ 92,149	¥52,121	¥571,076	¥(56,274)	¥514,802
(2) Depreciation	¥ 25,965	¥ 4,043	¥ 1,077	¥ 31,085	¥ -	¥ 31,085
(3) Capital expenditures	¥ 37,743	¥ 2,679	¥ 330	¥ 40,752	¥ -	¥ 40,752

Year ended March 31, 1999	Millions of yen
Year ended March 31, 1999	Marine transportation	Service incidental to transportation	Other	Total	Eliminations	Consolidated
1. Revenues:
(1) Operating revenues	¥415,820	¥ 83,615	¥13,665	¥513,100	¥ -	¥513,100
(2) Intra-group sales and transfers	1,345	37,587	6,727	45,659	(45,659)	-
Total revenues	417,165	121,202	20,392	558,759	(45,659)	513,100
2. Operating expenses	398,520	119,982	19,286	537,788	(46,196)	491,592
Operating income	¥ 18,645	¥ 1,220	¥ 1,106	¥ 20,971	¥ 537	¥ 21,508
3. Assets, depreciation and capital expenditures:
(1) Total assets	¥432,929	¥ 71,729	¥52,875	¥557,533	¥(35,034)	¥522,499
(2) Depreciation	¥ 26,380	¥ 3,571	¥ 908	¥ 30,859	¥ -	¥ 30,859
(3) Capital expenditures	¥ 29,372	¥ 2,219	¥ 328	¥ 31,919	¥ -	¥ 31,919

Year ended March 31, 2000*	Thousands of U.S. dollars
Year ended March 31, 2000*	Marine transportation	Service incidental to transportation	Other	Total	Eliminations	Consolidated
1. Revenues:
(1) Operating revenues	$3,678,099	$ 785,750	$111,687	$4,575,536	$ -	$4,575,536
(2) Intra-group sales and transfers	16,853	336,710	53,468	407,031	(407,031)	-
Total revenues	3,694,952	1,122,460	165,155	4,982,567	(407,031)	4,575,536
2. Operating expenses	3,486,414	1,085,781	157,351	4,729,546	(406,646)	4,322,900
Operating income	$ 208,538	$ 36,679	$ 7,804	$ 253,021	$ ( 385)	$ 252,636
3. Assets, depreciation and capital expenditures:
(1) Total assets	$4,020,782	$ 868,102	$491,014	$5,379,898	$(530,137)	$4,849,761
(2) Depreciation	$ 244,606	$ 38,090	$ 10,150	$ 292,846	$ -	$ 292,846
(3) Capital expenditures	$ 355,563	$ 25,235	$ 3,114	$ 383,912	$ -	$ 383,912

As stated in Note 1, the initial adoption of tax-effect accounting was to increase the total assets belonging to the segments of Marine transportation, Service incidental to transportation and Other by ¥2,437 million (US$22,954 thousand), ¥2,383 million (US$22,455 thousand) and ¥210 million (US$1,979 thousand), respectively from the amounts which would have been recorded under the method followed in the previous year.


	(b) Geographical segment information
		Each segment principally covers following countries or regions: North America: U.S.A. and Canada Europe: U.K., Germany, the Netherlands and France Asia: Hong Kong, Singapore and Thailand Other: Australia

Year ended March 31, 2000*	Millions of yen
Year ended March 31, 2000*	Japan	North America	Europe	Asia	Other	Total	Eliminations	Consolidated
1. Revenues:
(1) Operating revenues	¥468,675	¥ 9,580	¥ 3,280	¥ 4,051	¥ 107	¥485,693	¥ -	¥485,693
(2) Intra-group sales and transfers	278	16,181	2,972	5,090	425	24,946	(24,946)	-
Total revenues	468,953	25,761	6,252	9,141	532	510,639	(24,946)	485,693
2. Operating expenses	444,012	24,854	5,981	8,431	530	483,808	(24,932)	458,876
Operating income	¥ 24,941	¥ 907	¥ 271	¥ 710	¥ 2	¥ 26,831	¥ (14)	¥ 26,817
3. Assets	¥494,950	¥23,528	¥25,142	¥10,113	¥1,557	¥555,290	¥(40,488)	¥514,802

Year ended March 31, 1999	Millions of yen
Year ended March 31, 1999	Japan	North America	Europe	Asia	Other	Total	Eliminations	Consolidated
1. Revenues:
(1) Operating revenues	¥492,404	¥12,678	¥ 4,146	¥3,816	¥ 56	¥513,100	¥ -	¥513,100
(2) Intra-group sales and transfers	378	17,044	2,911	5,270	436	26,039	(26,039)	-
Total revenues	492,782	29,722	7,057	9,086	492	539,139	(26,039)	513,100
2. Operating expenses	472,459	28,948	7,275	9,035	471	518,188	(26,596)	491,592
Operating income	¥ 20,323	¥ 774	¥ (218)	¥ 51	¥ 21	¥ 20,951	¥ 557	¥ 21,508
3. Assets	¥479,091	¥27,537	¥29,352	¥7,016	¥1,646	¥544,642	¥(22,143)	¥522,499

Year ended March 31, 2000*	Thousands of U.S. dollars
Year ended March 31, 2000*	Japan	North America	Europe	Asia	Other	Total	Eliminations	Consolidated
1. Revenues:
(1) Operating revenues	$4,415,211	$ 90,251	$ 30,899	$38,166	$ 1,009	$4,575,536	$ -	$4,575,536
(2) Intra-group sales and transfers	2,622	152,438	27,999	47,954	3,999	235,012	(235,012)	-
Total revenues	4,417,833	242,689	58,898	86,120	5,008	4,810,548	(235,012)	4,575,536
2. Operating expenses	4,182,874	234,145	56,341	79,426	4,994	4,557,780	(234,880)	4,322,900
Operating income	$ 234,959	$ 8,544	$ 2,557	$ 6,694	$ 14	$ 252,768	$ (132)	$ 252,636
3. Assets	$4,662,741	$221,652	$236,850	$95,267	$14,669	$5,231,179	$(381,418)	$4,849,761

As stated in Note 1, the initial adoption of tax-effect accounting was to increase the total assets located in Japan, North America, Europe, Asia and Other by ¥4,087 million (US$38,503 thousand), ¥827 million (US$7,789 thousand), ¥104 million (US$979 thousand), ¥5 million (US$48 thousand) and ¥7 million (US$68 thousand), respectively from the amounts which would have been recorded under the method followed in the previous year.



13.	Subsequent Events
		On June 29, 2000, the shareholders of the Company approved the following appropriations of retained earnings:

	Millions of yen	Thousands of U.S. dollars
Retained earnings at March 31, 2000	¥5,264	$49,591
Transfer from general reserve	891	8,391
Cash dividends	(2,375)	(22,376)
Transfer to legal reserve	(244)	(2,294)
Directors' bonuses	(60)	(565)
Transfer to special reserve	(1,026)	(9,667)
Retained earnings to be carried forward	¥2,450	$23,080

In Japan, cash dividends proposed by the Board of Directors from retained earnings accumulated as of the end of the year are approved at the general shareholders' meeting held in the following year. In the accompanying consolidated financial statements, cash dividends are presented as a deduction from consolidated retained earnings in the year in which they are approved and paid. Accordingly, such appropriations are not reflected in the current year's financial statements.
On April 28, 2000, the Company issued 1.12% unsecured bonds in Japanese yen due April 11, 2003 in the amount of ¥5,000 million (US$47,103 thousand) to finance for the redemption of bonds and the repayment of loans.

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