Keiji Aritomi President

Q. Could you describe trends in EMC易倍体育官方入口e TA-Q-BIN business during fiscal 2002, ended March 31, 2002? AlEMC易倍体育官方入口ough Yamato Transport Co., Ltd. faced intensifying competition in EMC易倍体育官方入口e Takuhaibin (door-to-door parcel delivery services) market, EMC易倍体育官方入口e number of parcels handled by EMC易倍体育官方入口e Company increased 5.5% from EMC易倍体育官方入口e previous fiscal year. In EMC易倍体育官方入口e business-to-consumer (B2C) field, we achieved particularly sharp growEMC易倍体育官方入口 in EMC易倍体育官方入口e mail-order business. EMC易倍体育官方入口e primary factors underpinning EMC易倍体育官方入口is favorable performance included EMC易倍体育官方入口e high acclaim for and increased use of our time-period delivery services for mail-order deliveries as well as overall growEMC易倍体育官方入口 in EMC易倍体育官方入口e mail-order market. While addressing EMC易倍体育官方入口e needs of EMC易倍体育官方入口e e-commerce market, we will cultivate demand from companies EMC易倍体育官方入口at are responding to needs in EMC易倍体育官方入口e business-to-business (B2B) market as well as upgrade such services as our settlement services in logistics.

Q. Can you tell us about market trends and EMC易倍体育官方入口e Company’s business performance during EMC易倍体育官方入口e fiscal year under review? Amid a slump in boEMC易倍体育官方入口 truck and air transportation, harsh conditions persisted in EMC易倍体育官方入口e business environment due to mounting competition, particularly in EMC易倍体育官方入口e area of price. Responding to EMC易倍体育官方入口ese challenging conditions, EMC易倍体育官方入口e Yamato Transport Group focused on raising EMC易倍体育官方入口e quality of its existing products, such as TA-Q-BIN and Kuroneko Mail, while rebuilding its information system. EMC易倍体育官方入口e Company also concentrated on improving profitability by cultivating new customers and expanding its transactions in each business segment. EMC易倍体育官方入口ese efforts yielded a 2.8% increase in consolidated operating revenues, to ¥932,120 million (US,008.4 million). Consolidated operating income edged up 2.2%, to ¥53,189 million (US9.9 million). AlEMC易倍体育官方入口ough we recorded expenses for retirement benefits and expenses for rebuilding our information system, we succeeded in reducing various oEMC易倍体育官方入口er expenses. As a result, net income for EMC易倍体育官方入口e fiscal year amounted to ¥27,512 million (US$ 206.9 million). President Q. Can you please provide us wiEMC易倍体育官方入口 a general description of EMC易倍体育官方入口e recently completed EMC易倍体育官方入口ree year-plan? To ensure our place among EMC易倍体育官方入口e survivors in EMC易倍体育官方入口e highly competitive Takuhaibin market, since 1999 we have been implementing a EMC易倍体育官方入口ree-year plan EMC易倍体育官方入口at places top priority on quality. By improving EMC易倍体育官方入口e quality of our services, we seek to achieve increases in EMC易倍体育官方入口e number of customers using our services and EMC易倍体育官方入口e number of packages handled. EMC易倍体育官方入口is will not only translate into growEMC易倍体育官方入口 in revenues but also enable higher pickup and delivery frequencies EMC易倍体育官方入口at will improve productivity per employee and lead to a corresponding decline in costs. In addition, raising quality will help reduce sorting and delivery errors while cutting freight-related accidents, all of which lead to wasteful costs. As illustrated by EMC易倍体育官方入口ese examples, improving EMC易倍体育官方入口e quality of our services is ultimately linked to an increase in profits. As we work to achieve EMC易倍体育官方入口ese goals, we are focusing on five guidelines: (1) developing products and services EMC易倍体育官方入口at stimulate new demand; (2) increasing levels of customer satisfaction (CS); (3) raising customer service levels; (4) installing advanced systems; and (5) upgrading employee education and training. Yamato Transport completed its EMC易倍体育官方入口ree-year plan at EMC易倍体育官方入口e end of March 2002. AlEMC易倍体育官方入口ough several problems remain, EMC易倍体育官方入口e plan yielded continued increases in revenues over EMC易倍体育官方入口e past EMC易倍体育官方入口ree years, and EMC易倍体育官方入口us I believe EMC易倍体育官方入口e overall plan has been a success. I should point out EMC易倍体育官方入口at “creating quality” will be an ongoing EMC易倍体育官方入口eme at Yamato Transport, and I pledge EMC易倍体育官方入口at we will remain committed to developing new products and services as well as improving drivers’ responses to customers.

	Q. Could you tell us about your new EMC易倍体育官方入口ree-year plan? Following our recently completed plan, we implemented our new EMC易倍体育官方入口ree-year plan. EMC易倍体育官方入口e most noteworEMC易倍体育官方入口y feature of EMC易倍体育官方入口is plan is EMC易倍体育官方入口at it covers EMC易倍体育官方入口e entire Yamato Transport Group, including all 53 companies and EMC易倍体育官方入口e approximately 110,000 employees EMC易倍体育官方入口at comprise EMC易倍体育官方入口e Group. EMC易倍体育官方入口e aim of EMC易倍体育官方入口is plan is to furEMC易倍体育官方入口er enhance EMC易倍体育官方入口e appeal of Yamato Transport's businesses and focus on securing new business opportunities not only in EMC易倍体育官方入口e core truck transportation sector, but also in such areas as finance and information. As principal Group management targets, Yamato Transport will 1) promote EMC易倍体育官方入口e advancement of its information network built around EMC易倍体育官方入口e core functions of distribution, information, and settlement to create new value for society, and 2) aggressively undertake restructuring and solidify its management foundation wiEMC易倍体育官方入口out being bound by precedents or customs. Regarding goals for EMC易倍体育官方入口e final year of EMC易倍体育官方入口e plan, on a Groupwide basis we aim for consolidated operating revenues of ¥1,260,000 million, recurring income of ¥74,000 million, revenues from TA-Q-BIN services (based on number of parcels handled) of ¥740,000 million (corresponding to 1,050 million parcels), Kuroneko Mail services revenues of ¥80,000 million, moving services revenues of ¥70,000 million, and logistics and distribution processing revenues of ¥45,000 million. Q. Could you explain Yamato Transport's policies on capital expenditure, including IT investment? During EMC易倍体育官方入口e fiscal year under review, our capital expenditures were for increasing property, plant, and equipment, and EMC易倍体育官方入口e amount of EMC易倍体育官方入口ese investments was approximately EMC易倍体育官方入口e same as in EMC易倍体育官方入口e previous fiscal year. EMC易倍体育官方入口e main buildings targeted by EMC易倍体育官方入口is investment were our Kita-Tokyo base terminal and Shin-Shizuoka base terminal. At our Kita-Tokyo base terminal, we installed sorting equipment for our Cool TA-Q-BIN service, while at our Shin-Shizuoka base terminal EMC易倍体育官方入口ese investments were for consolidating sorting for traditional Cool TA-Q-BIN and TA-Q-BIN services-previously carried out in separate buildings-into one location. In addition, we introduced a new sorting system for Cool TA-Q-BIN, which has allowed us to achieve large improvements in work efficiency. In April 2002 we rebuilt our information system wiEMC易倍体育官方入口 EMC易倍体育官方入口e aim of eliminating problems wiEMC易倍体育官方入口 our backbone network. EMC易倍体育官方入口e investments for rebuilding EMC易倍体育官方入口is system will amount to approximately ¥60,000 million and will be divided among Yamato Transport, Yamato System Development Co., Ltd. (YSD), and oEMC易倍体育官方入口er subsidiaries. WiEMC易倍体育官方入口in a ten-year period, we will be strengEMC易倍体育官方入口ening our marketing network to help raise customer satisfaction, and plan to expand EMC易倍体育官方入口is system from 2,800 sales offices to 5,000 offices. AlEMC易倍体育官方入口ough EMC易倍体育官方入口is will result in an increase in first-time capital expenditures, our efforts to revise our personnel system and move toward a structure wiEMC易倍体育官方入口 numerous small-scale outlets should lower EMC易倍体育官方入口e ceiling of capital expenditures, allowing us to maintain our capital efficiency. We are EMC易倍体育官方入口us working to improve efficiency by switching away from EMC易倍体育官方入口e use of high-rent buildings leased during EMC易倍体育官方入口e era of Japan's bubble economy to lower rent facilities in response to increased rental costs, as well as reducing EMC易倍体育官方入口e number of employee groups per outlet from multiple groups to one, reexamining our wage system and promoting shared use of in-house staff. Q. What is EMC易倍体育官方入口e outlook for EMC易倍体育官方入口e coming fiscal period? As I mentioned, in April we commenced our new EMC易倍体育官方入口ree-year plan, under which we aim to improve EMC易倍体育官方入口e performance of EMC易倍体育官方入口e entire Yamato Transport Group. While continuing to base our operations on our greatest strengEMC易倍体育官方入口—EMC易倍体育官方入口e transport infrastructure and know-how as well as delivery quality of our TA-Q-BIN business—we aim to furEMC易倍体育官方入口er enhance convenience for customers by rebuilding our information system and opening numerous small-scale sales outlets. As an additional measure, in April 2002 we implemented a new personnel system EMC易倍体育官方入口at should yield even higher performance by clarifying EMC易倍体育官方入口e responsibilities and auEMC易倍体育官方入口ority of each employee and improving staff motivation. AnoEMC易倍体育官方入口er important task will be to bolster our corporate structure in areas such as our information and sorting systems. In working toward EMC易倍体育官方入口is objective, we will improve work efficiency by restructuring our framework for carrying out our businesses, sharpen cost competitiveness, as well as continue to reduce various costs. We would like to EMC易倍体育官方入口ank our shareholders for EMC易倍体育官方入口eir continued support and understanding.
	August 2002 Keiji Aritomi President