Senshukai Co., Ltd. (8165) Interim Financial Report for Fiscal 2008

Interim Financial Report for Fiscal 2008 (Ended June 30, 2008)
July 31, 2008
Stock Exchanges: Tokyo and Osaka, First Sections
Stock Code:8165
URL: http://www.senshukai.co.jp
Representative:
Mr. Yasuhiro Yukimachi, President and Representative Director
Inquiries:
Mr. Kazuhide Fujiyoshi,
Director, Managing Executive Officer, General Manager of the General Affairs Division
Tel: +81-6-6881-3100
Scheduled date of filing of Semiannual Report: September 26, 2008
Scheduled date of payment of dividend: September 1, 2008

Company name: Senshukai Co., Ltd.

(All amounts are rounded down to the nearest million yen)

1. Interim Consolidated Financial Results for Fiscal 2008 (January 1, 2008 – June 30, 2008)(1) Consolidated operating results(Percentages represent changes from the same period of the previous fiscal year)
Net sales

Operating income

Millions of yen

Interim Fiscal 2008
Interim Fiscal 2007
Fiscal 2007%

79,21179,701
156,792

Millions of yen

(0.6)
6.5
-

Net income per share

Ordinary income
%

1,359
3,495
5,291

Net income

Millions of yen(61.1)
38.2
-

816
3,917
5,626

%

Millions of yen%(79.2)
51.9
-

196
2,001
2,494

(90.2)(1.7)-

Diluted net income per
share

Yen

Yen

Interim Fiscal 2008
4.22
Interim Fiscal 2007
43.12
42.95
Fiscal 2007
53.60
53.46
Reference: Investment profit (loss) on equity method (million yen)Interim Fiscal 2008:(183)
Interim Fiscal 2007:

64

Fiscal 2007:(164)(2) Consolidated financial position
Total assets

Net assets

Equity ratio

Net assets per share

Millions of yen

Millions of yen%

Yen

As of Jun. 30, 2008
103,043
As of Jun. 30, 2007
94,130
As of Dec. 31, 2007
98,422
Reference: Shareholders’ equity (million yen)
As of Jun. 30, 2008:
53,94553,975
58,12055,955

52.4
61.7
56.8

1,154.80
1,244.89
1,197.62

As of Jun. 30, 2007:

58,039As of Dec. 31, 2007:

55,945(3) Consolidated cash flows
Cash flows fromoperating activities

Cash flows frominvesting activities

Cash flows fromfinancing activities

Cash and cash equivalents
at end of period

Millions of yen

Millions of yen

Millions of yen

Millions of yen

432
(889)
1,444

(6,132)(1,347)(6,047)

7,879
202
2,305

5,706
3,791
3,526

Interim Fiscal 2008
Interim Fiscal 2007
Fiscal 2007

2. Dividends(Record date)

Dividend per share
Yearend

InterimYen

Fiscal 2007
Fiscal 2008
Fiscal 2008 (forecasts)

Annual

Yen

13.00
8.00

Yen

14.00

27.00
17.00

9.00

3. Consolidated Outlook for Fiscal 2008 (January 1, 2008 – December 31, 2008)(Percentages represent changes from the same period of the previous fiscal year)
Net income
Net income per share
Operating income
Ordinary income

Net sales
Millions of yen

Full year

160,000% Millions of yen

2.0%

Millions of yen

3,000 (43.3)%

2,600 (53.8)-1-

Millions of yen%

Yen

900 (63.9)

19.27

Senshukai Co., Ltd. (8165) Interim Financial Report for Fiscal 2008

4. Other(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in changes in scopeof consolidation): None
(2) Changes in accounting principles, procedures and presentation methods for preparation of interim consolidated
financial statements
1) Changes caused by revision of accounting standards: None
2) Other changes: None

(3) Number of shares outstanding (common shares)
1) Number of shares outstanding at end of period (including treasury stock):
As of Jun. 30, 2008: 47,630,393 shares

As of Jun. 30, 2007: 47,630,393 shares

As of Dec. 31, 2007: 47,630,393 shares

As of Jun. 30, 2007:

As of Dec. 31, 2007:

2) Number of treasury stock at end of period:
As of Jun. 30, 2008:

916,515 shares

1,008,462 shares

916,195 shares

Note: Please refer to “Per Share Information” on page 32 for the number of shares used in calculating consolidated net income pershare.

(Reference) Summary of Non-consolidated Financial Report
1. Interim Non-consolidated Financial Results for Fiscal 2008 (January 1, 2008 – June 30, 2008)(1) Non-consolidated operating results(Percentages represent changes from the same period of the previous fiscal year)
Net sales

Operating income

Millions of yen

Interim Fiscal 2008
Interim Fiscal 2007
Fiscal 2007%

76,77877,320152,367

Millions of yen

(0.7)
4.4
-

1,065
2,716
4,611

Ordinary income%

Millions of yen(60.8)
47.8
-

1,244
3,267
5,364

Net income%

Millions of yen%(61.9)
54.9
-

842
2,029
2,898

(58.5)
10.8-

Net income per share
Yen

Interim Fiscal 2008
Interim Fiscal 2007
Fiscal 2007

18.03
43.72
62.26

(2) Non-consolidated financial position
Total assets

Net assets

Equity ratio

Net assets per share

Millions of yen

Millions of yen%

Yen

As of Jun. 30, 2008
98,058
As of Jun. 30, 2007
91,105
As of Dec. 31, 2007
95,939Reference: Shareholders’ equity (million yen)
As of Jun. 30, 2008:
54,172

54,172
57,12455,418

55.2
62.7
57.8

1,159.67
1,225.28
1,186.32

As of Jun. 30, 2007:

57,124As of Dec. 31, 2007:

55,418

2. Non-consolidated Outlook for Fiscal 2008 (January 1, 2008 – December 31, 2008)(Percentages represent changes from the same period of the previous fiscal year)
Net income
Net income per share
Operating income
Ordinary income

Net sales
Millions of yen

Full year%

152,000 (0.2)

Millions of yen%

Millions of yen

2,900 (37.1)%

3,200 (40.3)

Millions of yen%

Yen

1,800 (37.9)

38.53*Cautionary statement with respect to forward-looking statements
The above projections are based on information available at the time of release of this report. Actual results could differ significantly
from these projections due to a variety of factors.
For further details regarding the projections, please refer to page 6.

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Senshukai Co., Ltd. (8165) Interim Financial Report for Fiscal 2008

1. Operating Results(1) Analysis of Operating Results
Overview
The outlook for the Japanese economy became increasingly uncertain in the interim period under review as surging
crude oil and raw materials prices weighed on corporate profits, and consumer prices rose, damaging consumer
sentiment. The retail industry suffered from weak personal spending, growing disparities among sub-sectors andindividual companies, and poor weather. The business environment remained difficult as competition intensified, andconsumers became more selective regarding prices and products/services.
Against this backdrop, the Senshukai Group focused on priority strategies in the first year of its medium-term
management plan which ends in Fiscal 2010.
Consolidated net sales decreased 0.6% year-over-year to 79,211 million yen in the interim period under review.
Operating income declined 61.1% year-over-year to 1,359 million yen due to a slight rise in the cost ratio, and anincrease in the SG&A-to-sales ratio due to higher catalog-related expenses. Ordinary income declined 79.2% to 816
million yen due to foreign exchange losses and losses on write-down of compound financial instruments. Net income
decreased 90.2% to 196 million yen.
Segment information[Mail-order Business]
Consolidated sales in the mail-order business, which comprises the catalog and the hanpukai businesses, decreased
0.5% year-over-year to 73,808 million yen, and operating income decreased 55.2% to 1,580 million yen in the interim
period under review.
1) Catalog business
The catalog business provides customers with a variety of lifestyle ideas and offers original Senshukai products through18 different catalogs.
Since 1976, the Group has won the support of members by providing them with a wide range of products centered on
fashion apparel, but also accessories, interior goods, daily sundries, maternity goods, and kid’s apparel, tailored to meettheir needs.
As a result, consolidated sales increased 0.2% year-over-year to 67,560 million yen.
2) Hanpukai business
The hanpukai business employs an original, unique sales model differing from other mail-order companies whereby
goods are delivered monthly to all group and individual members, mainly working women.
Focusing on everyday sundries and foods, the business offers a wide lineup of products that are highly collectible,
original, and not available in retail stores.
We created the office vending box (Choko Tabe BOX) business from the previous fiscal year to expand contact points
in various occupational fields and restructure the hanpukai business. However, sales and members declined
year-over-year.
Consolidated sales in the hanpukai business declined 7.6% year-over-year to 6,247 million yen, and average monthly
membership was 479,300.
* The Group transferred some media between the hanpukai and catalog businesses in line with organizational changes
implemented beginning this fiscal year. Year-over-year comparisons are based on figures after the transfer.
[Other Businesses]
In the other businesses segment, which comprises mainly travel and credit card services, as well as transportation andstorefront services, product sales and the pet business, and BtoB operations. Consolidated sales in this segment declined
2.3% year-over-year to 5,402 million yen.
As a result, the business saw an operating loss of 247 million yen, compared with an operating income of 48 million
yen in the interim period of the previous fiscal year.
-3-Senshukai Co., Ltd. (8165) Interim Financial Report for Fiscal 2008

(2) Analysis of Financial Position
Balance sheet position
Assets totaled 103,043 million yen at the end of the interim period under review, up 4,620 million yen from the end of
the previous fiscal year. Current assets decreased 3,217 million yen to 45,007 million yen, mainly due to a 3,410 million
yen decrease in inventories. Fixed assets increased 7,838 million yen to 58,035 million yen, mainly due to property andequipment, intangible assets, and investment and other assets increased 3,622 million yen, 2,745 million yen and 1,470
million yen, respectively.
Liabilities increased 6,601 million yen over the end of the previous fiscal year to 49,067 million yen. Current liabilities
increased 1,752 million yen to 42,927 million yen, mainly due to the net result of a 3,323 million yen decrease in notes
and accounts payable-trade, and a 5,777 million yen increase in short-term bank loans. Long-term liabilities increased
4,848 million yen to 6,140 million yen, mainly due to a 4,563 million yen increase in long-term debt.
Net assets decreased 1,980 million yen over the end of the previous fiscal year to 53,975 million yen, mainly due to a
1,055 million yen decrease in deferred hedge gains (losses). Consequently, the equity ratio was 52.4%.
Cash flow position
The balance of cash and cash equivalents at the end of the interim period under review was 5,706 million yen, an
increase of 1,915 million yen from the end of the previous interim period.
Operating activities provided net cash of 432 million yen (net cash used of 889 million yen same period previous fiscal
year). The main contributing factors were decreases in inventories of 3,433 million yen and other current assets of 3,208
million yen. These factors were partly offset by a decrease in notes and accounts payable-trade of 4,011 million yen,
and income taxes paid of 1,881 million yen.
Investing activities used net cash of 6,132 million yen (net cash used of 1,347 million yen same period previous fiscal
year). The main cash outflows were 2,297 million yen for purchases of subsidiary stock associated with changes in thescope of consolidation, 1,763 million yen for purchases of investment securities, and 1,178 million yen for purchases ofproperty and equipment.
Financing activities provided net cash of 7,879 million yen (net cash provided of 202 million yen same period previous
fiscal year). The main contributing factors were proceeds from long-term debt of 5,032 million yen, and net increase in
short-term bank loans of 3,500 million yen.
Cash flow indices

Equity ratio (%)

Fiscal 2005
Fiscal 2006
Fiscal 2007
Interim Fiscal 2008
(As of Dec. 31, 2005) (As of Dec. 31, 2006) (As of Dec. 31, 2007) (As of Jun. 30, 2008)
56.6
58.3
56.8
52.4

Equity ratio based on fair value (%)

74.3

58.5

56.0

33.9

Average debt repayment period (years)

0.2

0.3

2.1

15.7

Interest coverage ratio (times)

59.1

30.3

20.6

7.4

Notes: 1. Cash flow indices are calculated as follows using consolidated financial figures:
The equity ratio based on fair value is market capitalization divided by total assets.
The average debt repayment period is interest-bearing debt divided by the quantity of operating cash flows.
The average debt repayment period at the end of the interim period in years is interest-bearing debt divided by the quantityof operating cash flows multiplied by two.
The interest coverage ratio is operating cash flows divided by interest payments.
2. Market capitalization is calculated by multiplying the closing share price at the end of the period by the number of sharesissued and outstanding at the end of the period, excluding treasury stock.
3. Interest-bearing debt represents all liabilities shown on the consolidated balance sheets that incur interest.
4. Operating cash flows and interest payments represent net cash provided by operating activities and interests paid,
respectively, on the consolidated statements of cash flows.

-4-Senshukai Co., Ltd. (8165) Interim Financial Report for Fiscal 2008

(3) Basic Policy Regarding Distribution of Earnings and Dividends in the Current Fiscal Year
Strengthening the business foundation while ensuring stable dividends-to-equity ratio and an appropriate return of
earnings to shareholders is our basic policy regarding the distribution of earnings.
Specifically, we intend to maintain a payout ratio of 30% on a consolidated basis going forward.
We will use retained earnings to invest in the development of new businesses, raise the efficiency of existing businesses,
improve the soundness of our financial condition, and strengthen our competitiveness and corporate structure.
We plan an interim dividend of 8 yen per share, and a yearend dividend of 9 yen per share in line with our
aforementioned policy, for a total annual dividend of 17 yen per share.

(4) Business Risks
1) Economic situation in manufacturing countries
The majority of products sold by the Senshukai Group are imported from China and other Asian countries.
Consequently, political and economic conditions in these countries, as well as the occurrence of natural disasters, could
impact the Group’s operating results and financial position.
2) Exchange rate fluctuation
Some products handled in the mail-order business, the Senshukai Group’s mainstay business, are imported anddenominated in foreign currencies. Although Senshukai employs foreign exchange forward contracts and other hedging
devices to reduce the risk associated with exchange rate fluctuations, large fluctuations could adversely affect theGroup’s operating results and financial position.
3) Risks associated with personal information leaks
Senshukai and some subsidiaries handle personal information subject to Japan’s Personal Information Protection Law.
The Senshukai Group adheres to all relevant laws, has assigned a Customer Information Management Officer to prevent
information leaks and strengthened internal control systems. Furthermore, Senshukai obtained the Privacy Markcertification.
However, in the unlikely event that personal information handled by the Senshukai Group leaks, this could damage
public trust and the corporate image, thereby significantly and adversely affect the Group’s operating results.
4) Risks associated with natural disasters
Natural disasters or other unexpected events that disrupt the order processing or shipment operations of the Senshukai
Group’s mainstay mail-order business could significantly affect the Group’s operating results and financial position. To
minimize these risks, Senshukai has established backup processing and shipment systems, and a preparatory framework
for earthquake disasters. We have also established a Crisis Management Committee and formulated rules applicable toemergencies. Nevertheless, severe damage to Senshukai facilities and disruptions to order processing or shipments
resulting from a major disaster could significantly and adversely affect the Group’s operating results.
5) System risk
The Senshukai Group’s computer system could be negatively impacted by a variety of factors including earthquakes,
typhoons, floods, hardware or software trouble, terrorism, and cyber-terror. Trouble that requires an inordinate amountof time to restore the system could significantly and adversely affect the Group’s operating results since almost all
operations at Senshukai are processed by computer.

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Senshukai Co., Ltd. (8165) Interim Financial Report for Fiscal 2008

6) Legal and regulatory risk
The Senshukai Group’s mainstay business, the mail-order business, is governed by laws including the Law Against
Unjustifiable Premiums and Misleading Representations (“Premiums and Representations Law”), the Special Products
Trading Law, the Pharmaceutical Law, and the Product Liability Law. The Company is thorough in educating
employees, and establishing an administrative and compliance structure, to ensure strict compliance with all laws andregulations. If the unlikely event those compliance-related problems were to emerge, however, this could impair the
corporate image, thereby significantly and adversely affect the Group’s business and operating results.

7) Risks related to unfavorable weather
Cool summers, warm winters, long rainy seasons, and other unusual and unfavorable weather could impact demand andsales in the Senshukai Group’s mainstay mail-order business, and adversely affect the Group’s operating results.

8) Risks associated with volatility in raw materials prices
The Senshukai Group’s mainstay business, the mail-order business, uses paper for catalog printing, and a greater than
expected increase in the price of paper, pulp, and other raw materials, as well as price hikes by transportation companies
that deliver the Group’s products to reflect surging crude oil prices, could significantly and adversely affect the Group’s
operating results.

9) Forward-looking statements
All forward-looking statements in the “Business Risks” section are based on the judgment of the Senshukai Group as ofthe presentation date (July 31, 2008) of this interim financial report for Fiscal 2008.

(5) Outlook for Fiscal 2008
The Japanese economy appears likely to cool further as corporate profits deteriorate in the face of surging raw materials
prices, capital equipment investment contracts, and consumer sentiment deteriorates. We expect a difficult environment
for the retail industry as inter-industry competition intensifies.
As we announced on July 17, 2008, we forecast Fiscal 2008 sales of 160,000 million yen, up approximately 3,200
million yen over the previous fiscal year, operating income of 3,000 million yen, ordinary income of 2,600 million yen,and net income of 900 million yen.
Consolidated
Fiscal 2008 (forecast)Fiscal 2007 (results)
Change (%)(Million yen)

Net sales
160,000
156,792
2.0

Operating income
3,000
5,291
(43.3)

Ordinary income
2,600
5,626
(53.8)Net income

Net sales
152,000
152,367(0.2)

Operating income
2,900
4,611
(37.1)

Ordinary income
3,200
5,364
(40.3)Net income
1,800
2,898
(37.9)

Non-consolidated
Fiscal 2008 (forecast)Fiscal 2007 (results)
Change (%)

900
2,494
(63.9)(Million yen)

* The above projections are based on information available at the time of release of this report. Actual results could differ significantly
from projections due to a variety of factors.

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Senshukai Co., Ltd. (8165) Interim Financial Report for Fiscal 2008

2. Group Organization
The Senshukai Group comprises the parent company, 25 subsidiaries, and 2 affiliates. Mail-order sales is the mainstay
business, and other businesses include product sales, services, and transportation.
The following describes the position of each major business activity in the Group’s operations and business segments.
Segment
Mail-orderbusiness

Otherbusinesses

Major business activity
Mail orderCompany
Senshukai Co., Ltd., Senshukai Service Hanbai Co., Ltd.,Senshukai Iihana Co., Ltd. RG Marketing Co., Ltd., SENTENs
Co., Ltd., Shanghai Senshu Merchant and Commerce Co., Ltd.,
Mobakore Co., Ltd., Senshukai Hong Kong Ltd., Luckwin
Summit (China) Co., Ltd., and 7 other companies
Senshukai Call Center Co., Ltd.
Senshu Logisuko Co., Ltd.
AIMER Co., Ltd.
Senshukai Co., Ltd. B·B·S Co., Ltd., Pet First Co., Ltd.
Senshukai Co., Ltd., Senshukai General Services Co., Ltd.,Dears Brain Inc. and 4 other companies
Senshu Transportation Co., Ltd.

Order processing
Transportation and warehousing
Product planning and development
Product sales
Services
Transportation

Consolidated subsidiary

Subsidiary accounted for by the equity method

Non-consolidated subsidiary

Affiliate accounted for by the equity method

Senshukai Iihana Co., Ltd.
RG Marketing Co., Ltd.
Purchases products

Sells products
Shanghai Senshu Merchant and Commerce Co., Ltd.

SENTENs Co., Ltd.

Sells products

Purchases products

Outsources
buying products

Luckwin Summit (China)
Co., Ltd.
3 non-consolidated
subsidiaries

Outsources
product
inspection

Outsources orderprocessing
Outsources productpacking and packaging

Senshukai Service
Hanbai Co., Ltd.

Order
processing

Senshukai Call Center
Co., Ltd.
Senshu Logisuko Co., Ltd.

Outsources productplanning and development
Other outsourcing services

AIMER Co., Ltd.

1 consolidated subsidiary
1 non-consolidated subsidiary

Outsources transportation andwarehousing services
Senshu Transportation Co., Ltd.

Other businesses

Suppliers

2 subsidiaries accounted
for by the equity method

Senshukai Co., Ltd.

Senshukai Hong Kong Ltd.

Outsources customer
services and area marketing

Senshukai General Services Co., Ltd.
Dears Brain Inc.
1 consolidated subsidiary
3 non-consolidated subsidiaries

B•B•S Co., Ltd.
Sells products

Purchases products
Pet First Co., Ltd.

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Provides services

Customers

Mail-order business

Mobakore Co., Ltd.

Senshukai Co., Ltd. (8165) Interim Financial Report for Fiscal 2008

3. Management Policies(1) Basic Management Policy
The Senshukai Group’s corporate philosophy is to “contribute to society by providing customers with outstanding
products and services.”
Senshukai works together with its shareholders, customers, business partners, employees, and all other stakeholders toenhance corporate value and mutual prosperity.

(2) Key Performance Indicators
Our new medium-term management plan aims to maximize group strengths, and targets strong growth in existing corebusinesses and new businesses. Specifically, it targets consolidated sales of 180,000 million yen, operating income of
8,000 million yen (a record), and operating cash flow of 7,000 million yen, by Fiscal 2010.
Going forward, we aim to enhance corporate value by increasing growth and improving the earnings structure.

(3) Medium- to Long-term Corporate Management Strategy and Issues
We have formulated a medium-term management plan that ends in Fiscal 2010.
1) Basic policies of the Medium-term Management Plani. Promotion of Channel Mix
We intend to further deepen “multi-channel promotion” targeted in the previous medium-term management plan, by not
merely expanding channel numbers, but fusing channels in fundamental ways and speeding up operations to achievesynergies.
ii. Development of Multiple Brands
To diversify the business through expansion of product and service offerings, and capture certain age groups that are
difficult to capture with a single brand (Belle Maison), we will move forward with a multi-brand strategy appropriate
for different customer segments and product genres, and avoid the inappropriate use of Belle Maison which could
damage its value.
iii. Expansion of Customer BaseWe will expand customers in the over-50 segment by developing new goods for the seniors market, as well as new
media to reach them. We will also aim to expand customers in their 20s, but we do not intend to rush expansion of theearly 20s market, but steadily win this customer segment over through alliances with other companies and M&A, andthrough the utilization of new media including the Internet, mobile phones, and magazines. We will strengthen
expansion of the late 20s market, and maintain our overall base of 20s customers.
iv. SCM (supply chain management) Promotion
Improving cash flow, which deteriorated due to expanding inventories, is a top priority. We will restructure themanagement framework to improve the efficiency of inventories and further strengthen SCM.

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Senshukai Co., Ltd. (8165) Interim Financial Report for Fiscal 2008

2) Interim Fiscal 2008 strategies in the Medium-term Management Plani. Promotion of Channel Mix
Each division will have channel control functions starting this fiscal year, and will be responsible for promoting channel
mix including administration of channel sales and implementation of policies for Internet and brick-and-mortar stores.
Internet sales totaled 32,948 million yen throughout the Group (of this, pure Internet sales totaled 17,992 million yen),
and we opened two new brick-and-mortar Kurasu Fuku stores.
ii. Development of Multiple Brands
We are currently examining efforts to redefine Belle Maison, and cultivate other brands.
iii. Expansion of Customer Base
20s: We will redevelop our website by product genre to capture more customers in the 20s age group. We will also open
a new website, bellissi, for the 20s age group. Further, we will renew Okaimono with, a catalog developed incollaboration with ‘with’, a magazine popular with women in their 20s, and the catalog Fashion PLUS.
50s: For customers over 50, we will use sales circulars for the catalog Kurasu Fuku, and will expand sizes and tastes for
Style Note and Rashisa to capture new customers and maintain existing ones.
iv. SCM (supply chain management) Promotion
The delivery to order ratio and the rapid delivery ratio deteriorated slightly in the interim period, but catalog productinventories declined approximately 800 million yen compared with the previous interim period. We aim to further
reduce inventories going forward.

(4) Other Important Business Matters
Not applicable.

-9-Senshukai Co., Ltd. (8165) Interim Financial Report for Fiscal 2008

Interim Consolidated Financial Statements and Notes
Interim Consolidated Financial Statements(1) Interim Consolidated Balance Sheets(Million yen)
PeriodAccount

Interim Fiscal 2007
(As of Jun. 30, 2007)

Interim Fiscal 2008
(As of Jun. 30, 2008)

Fiscal 2007 Summary(As of Dec. 31, 2007)

AmountAmountAmount%%%AssetsI Current assets
3,705

5,623

3,444

12,315

12,451

11,21185

93

85

16,84015,90819,31854

43

86

6. Accounts receivable-other

6,934

6,860

9,347

7. Other

1. Cash and deposits*2

2. Notes and accounts receivable-trade
3. Marketable securities
4. Inventories
5. Deferred tax assets

6,375

4,311

4,983

Allowance for doubtful accounts

(480)

(284)

(254)

Total current assets

45,83048.7

45,00743.7

48,224

49.0

II Fixed assets
1. Property and equipment*1(1) Buildings and structures*2

10,423

12,554

10,286(2) Machinery and vehicles

1,824

1,438

1,575

(3) Furniture and fixtures

846

1,026

897

11,412

11,305

11,305

216

2,327

962

24,72228,651

25,028

-

3,067

-

(4) Land(5) Construction in progress
Total property and equipment
2. Intangible assets(1) Goodwill(2) Other
Total intangible assets

3,332

3,024

3,346

3,332

6,091

3,346

16,061

15,12815,573

376

631

366

1,364

1,795

1,442

2,938

5,936

4,743

3. Investments and other assets(1) Investment securities*2(2) Long-term loans receivable(3) Guarantee deposits(4) Other*2

Allowance for doubtful accounts

(497)

(198)

(302)

Total investments and other assets

20,24423,293

21,823

Total fixed assets

48,30051.3

58,03556.3

50,19751.0

Total assets

94,130100.0

103,043

100.0

98,422100.0- 10 -

Senshukai Co., Ltd. (8165) Interim Financial Report for Fiscal 2008

(Million yen)
PeriodAccount

Interim Fiscal 2007
(As of Jun. 30, 2007)

Interim Fiscal 2008
(As of Jun. 30, 2008)

Fiscal 2007 Summary(As of Dec. 31, 2007)

AmountAmountAmount%%%Liabilities
I Current liabilities
1. Notes and accounts payable-trade
2. Short-term bank loans*2

3. Current portion of corporate bonds

*2

9,409

7,699

11,023

61

8,777

3,000

-

66

-

4. Accounts payable-other

5,416

5,498

6,423

5. Accounts payable-factoring

13,75014,95915,027

6. Accrued expenses

1,763

1,764

2,016

7. Accrued income taxes

1,305

348

1,887

8. Accrued consumption taxes

343

446

232

9. Deferred tax liabilities

210

22

64

10. Allowance for sales promotion expenses

301

277

133

11. Other

709

3,067

1,366

33,271

Total current liabilities

35.4

42,92741.7

41,175

41.8

II Long-term liabilities
1. Corporate bonds

*2

-

201

-

2. Long-term debt

*2

354

4,563

-

1,062

0

3

4. Deferred tax liabilities relating to land
revaluation

804

764

764

5. Liabilities for employees’ retirement
benefits

55

56

53

6. Liabilities for retirement benefits for
directors and corporate auditors

434

333

424

7. Other

27

220

45

3. Deferred tax liabilities

Total long-term liabilities

2,738

2.9

6,140

5.9

1,291

1.3

Total liabilities

36,01038.3

49,06747.6

42,466

43.1

1. Common stock

20,35921.6

20,35919.8

20,35920.7

2. Capital surplus

20,99022.3

21,03820.4

21,03821.4

3. Retained earnings

22,30723.7

21,72521.1

22,25322.6

4. Treasury stock

(693)

(0.7)

(630)

(0.6)

(630)

(0.6)

62,96466.9

62,492

60.7

63,02064.1

1. Net unrealized gains on available-for-salesecurities

1,306

1.4

92

0.1

486

0.5

2. Deferred hedge gains (losses)

1,065

1.1

(1,240)

(1.2)

(185)

(0.2)

3. Land revaluation difference(7,301)(7.8)(7,359)(7.2)(7,359)

(7.5)

4

0.0

(40)

(0.0)

(16)

(0.0)

(4,925)(5.3)(8,547)(8.3)(7,074)(7.2)

Net assets
I Shareholders’ equity

Total shareholders’ equity
II Valuation and translation adjustments

4. Foreign currency translation adjustments
Total valuation and translation
adjustments

80

0.1

30

0.0

10

0.0

Total net assets

58,12061.7

53,97552.4

55,955

56.9

Total liabilities and net assets

94,130100.0

103,043

100.0

98,422100.0

III Minority interests- 11 -

Senshukai Co., Ltd. (8165) Interim Financial Report for Fiscal 2008

(2) Interim Consolidated Statements of Income(Million yen)
PeriodAccount

Interim Fiscal 2007
Interim Fiscal 2008
Fiscal 2007 Summary(Jan. 1, 2007 – Jun. 30, 2007) (Jan. 1, 2008 – Jun. 30, 2008) (Jan. 1, 2007 – Dec. 31, 2007)
Amount
79,701%
100.0

Amount
79,211%
100.0

Amount156,792%
100.0

II Cost of sales

40,98751.4

40,93651.7

80,864

51.6

Gross profit

38,71448.6

38,27448.3

75,92848.4

70,637

45.0

5,291

3.4

904

0.6

568

0.4

5,626

3.6

I Net sales

III Selling, general andadministrative expenses
1. Packing and freight

5,285

5,289

10,383

2. Sales promotion expenses

12,084

12,881

24,4303. Provision for allowance for sales
promotion expenses

301

277

133

4. Provision for allowance for
doubtful accounts

161

134

249

5. Directors’ and corporate auditors’
remuneration

279

280

568

6. Salaries

5,180

5,432

10,577

7. Bonuses

743

696

1,621

-

60

2

757

902

1,684

8. Provision for liabilities for
directors and corporate auditors’
bonuses
9. Depreciation expenses
10. Other

10,424

Operating income

35,218

44.2

3,495

4.4

10,95936,914

46.6

1,359

1.7

20,985

IV Other income
1. Interest income

181

156

353

2. Dividend income

86

94

103

3. Investment profit on equity
method64--

4. Foreign exchange gains

67

-

135

5. Other

102

502

0.6

166

417

0.5

311

V Other expenses
1. Interest expenses

26

56

64

2. Losses on write-down ofcompound financial instruments

-

248

212

3. Investment loss on equity
method

-

183

164

4. Expenses related to fixed asset
investment

16

12

41

5. Foreign exchange losses

-

357

-

6. Other36

Ordinary income

79

0.1

3,917

4.9

- 12 -

103

961

1.2

816

1.0

85

Senshukai Co., Ltd. (8165) Interim Financial Report for Fiscal 2008

(Million yen)
PeriodAccount

Interim Fiscal 2007
Interim Fiscal 2008
Fiscal 2007 Summary(Jan. 1, 2007 – Jun. 30, 2007) (Jan. 1, 2008 – Jun. 30, 2008) (Jan. 1, 2007 – Dec. 31, 2007)
Amount%Amount%Amount%VI Extraordinary gains
2

4

38

2. Gains on sales of investment
securities

159

-

174

3. Reversal of allowance for
doubtful accounts

121

1. Gains on sales of fixed assets

*1

283

0.4

-

4

0.0

121

335

0.2

1,212

0.8

4,749

3.0

2,275

1.4

VII Extraordinary losses
1. Losses on sales and disposal of
fixed assets

*2

22

20

338

2. Losses on write-down ofinvestment securities

-

12

94

3. Losses on cancellation ofcontracts

265

-

265

4. Provision for allowance for
doubtful accounts

287

-

-

90

-

-

6. Losses on liquidation ofsubsidiaries

-

-

331

7. Losses on cancellation of leases

13

-

13

8. Other-

5. Losses on write-down ofsubsidiary stock*3

Income before income taxes andminority interests
Income taxes
Deferred income taxes
Minority interests (losses)
Net income

677

0.9

3,523

4.4

1,306
210

-

33

0.0

787

1.0

399
1,516

1.9

5
2,001

2,069
584

0.8

0.0

6

0.0

(20)

(0.0)

2.5

196

0.2

2,494

1.6

- 13 -

184

170

205

Senshukai Co., Ltd. (8165) Interim Financial Report for Fiscal 2008

(3) Interim Consolidated Statements of Changes in Shareholders’ Equity
Interim Fiscal 2007 (Jan. 1, 2007 – Jun. 30, 2007)(Million yen)
Shareholders’ equity
Common stock

Capital surplus

Retained earnings

20,35920,716

20,889Balance as of Dec. 31, 2006
Changes in the period
Dividend of surplus
Net income
Purchases of treasury stock
Disposal of treasury stock
Decrease in retained earnings due
to change in the number ofconsolidated subsidiaries andequity method affiliates
Changes (net) in items other thanshareholders’ equity
Total changes in the period
Balance as of Jun. 30, 2007

Total shareholders’equity(1,041)
60,923

Treasury stock

(460)
2,001

(460)
2,001
(30)
653

(30)
379

274
(122)

20,359274
20,990

(122)

1,417
22,307

348
(693)

2,040
62,964(Million yen)

Balance as of Dec. 31, 2006
Changes in the period
Dividend of surplus
Net income
Purchases of treasury stock
Disposal of treasury stock
Decrease in retained earnings
due to change in the number ofconsolidated subsidiaries andequity method affiliates
Changes (net) in items otherthan shareholders’ equity
Total changes in the period
Balance as of Jun. 30, 2007

Valuation and translation adjustments
Foreign
Net unrealized
Total valuation
Land
Deferredcurrency
gains onand translation
hedge gains revaluationtranslation
available-foradjustments
difference(losses)adjustments
sale securities
1,336
734
(7,301)(31)(5,261)

Minority
interests

Total net
assets46

55,708
(460)
2,001
(30)
653
(122)

(30)

331

-

35

336

34

370

(30)
1,306

331
1,065

(7,301)35
4

336(4,925)

34
80

2,411
58,120- 14 -

Senshukai Co., Ltd. (8165) Interim Financial Report for Fiscal 2008

Interim Fiscal 2008 (Jan. 1, 2008 – Jun. 30, 2008)(Million yen)
Shareholders’ equity
Common stock

Capital surplus

Retained earnings

20,35921,03822,253

Balance as of Dec. 31, 2007
Changes in the period
Dividend of surplus
Net income
Purchases of treasury stock
Disposal of treasury stock
Decrease in retained earnings due
to change in the number ofconsolidated subsidiaries andequity method affiliates
Changes (net) in items other thanshareholders’ equity
Total changes in the period
Balance as of Jun. 30, 2008

Total shareholders’equity(630)
63,020Treasury stock

(653)
196

(653)
196
(0)
0

(0)
0

0
(70)

20,3590
21,038(70)(527)
21,725

(0)
(630)

(527)
62,492(Million yen)

Balance as of Dec. 31, 2007
Changes in the period
Dividend of surplus
Net income
Purchases of treasury stock
Disposal of treasury stock
Decrease in retained earnings
due to change in the number ofconsolidated subsidiaries andequity method affiliates
Changes (net) in items otherthan shareholders’ equity
Total changes in the period
Balance as of Jun. 30, 2008

Valuation and translation adjustments
Total
Foreign
Net unrealized
Land
Deferredcurrency valuation andgains onhedge gains revaluationtranslationtranslation
available-fordifference(losses)adjustments adjustments
sale securities
486
(185)
(7,359)(16)(7,074)

Minority
interests

Total net
assets10

55,955
(653)
196
(0)
0
(70)

(393)

(1,055)-(23)(1,472)20(1,452)(393)
92(1,055)(1,240)(7,359)(23)(40)(1,472)(8,547)20
30(1,980)53,975- 15 -

Senshukai Co., Ltd. (8165) Interim Financial Report for Fiscal 2008

Fiscal 2007 (Jan. 1, 2007 – Dec. 31, 2007)(Million yen)
Shareholders’ equity
Common stock

Capital surplus

Retained earnings

20,35920,716

20,889Balance as of Dec. 31, 2006
Changes in the fiscal year
Dividend of surplus
Net income
Purchases of treasury stock
Disposal of treasury stock
Transfer of land revaluationdifference
Decrease in retained earnings due
to change in the number ofconsolidated subsidiaries andequity method affiliates
Changes (net) in items other thanshareholders’ equity
Total changes in the fiscal year
Balance as of Dec. 31, 2007

Total shareholders’equity(1,041)
60,923

Treasury stock(1,066)
2,494
(32)
443

322

20,359322
21,038(1,066)
2,494
(32)
765

58

58

(122)

(122)

1,363
22,253

411
(630)

2,096
63,020(Million yen)

Balance as of Dec. 31, 2006
Changes in the fiscal year
Dividend of surplus
Net income
Purchases of treasury stock
Disposal of treasury stock
Transfer of land revaluationdifference
Decrease in retained earnings
due to change in the number ofconsolidated subsidiaries andequity method affiliates
Changes (net) in items otherthan shareholders’ equity
Total changes in the fiscal year
Balance as of Dec. 31, 2007

Valuation and translation adjustments
Foreign
Net unrealized
Total valuation
Land
Deferredcurrency
gains onand translation
hedge gains revaluationtranslation
available-foradjustments
difference(losses)adjustments
sale securities
1,336
734
(7,301)(31)(5,261)

Minority
interests

Total net
assets46

55,708(1,066)
2,494
(32)
765
58

(122)

(850)

(919)

(58)

15

(1,813)(36)(1,849)

(850)
486

(919)
(185)

(58)
(7,359)15(16)(1,813)(7,074)

(36)
10

247
55,955- 16 -

Senshukai Co., Ltd. (8165) Interim Financial Report for Fiscal 2008

(4) Interim Consolidated Statements of Cash Flows(Million yen)
PeriodAccount

Interim Fiscal 2007 Interim Fiscal 2008 Fiscal 2007 Summary(Jan. 1, 2007 –(Jan. 1, 2008 –(Jan. 1, 2007 –Jun. 30, 2007)
Jun. 30, 2008)
Dec. 31, 2007)
AmountAmountAmountI Cash flows from operating activities
1. Income before income taxes and minority interests
2. Depreciation expenses
3. Decrease (increase) in allowance for doubtful accounts
4. Increase in liabilities for employees’ retirement benefits
5. Increase (decrease) in allowance for sales promotion
expenses
6. Interest and dividend income
7. Interest expenses
8. Investment profit (loss) on equity method
9. Losses on write-down of compound financial instruments
10. Gains on sales of fixed assets
11. Gains on sales of investment securities
12. Losses on sales and disposal of fixed assets
13. Losses on write-down of investment securities
14. Losses on write-down of subsidiary stock
15. Increase (decrease) in notes and accounts receivable-trade
16. Decrease (increase) in inventories
17. Decrease (increase) in other current assets
18. Decrease in notes and accounts payable-trade
19. Increase in accrued consumption taxes
20. Decrease (increase) in other current liabilities
21. Other
Subtotal
22. Interests and dividends received
23. Interests paid
24. Income taxes paid
Net cash provided by (used in) operating activities
II Cash flows from investing activities
1. Purchases of property and equipment
2. Proceeds from sales of property and equipment
3. Purchases of intangible assets
4. Purchases of investment securities
5. Proceeds from sales of investment securities
6. Purchases of subsidiary stock associated with changes in thescope of consolidation
7. Increase (decrease) in time deposits
8. Purchases of business9. OtherNet cash used in investing activities
III Cash flows from financing activities
1. Net increase in short-term bank loans
2. Proceeds from long-term debt
3. Repayments of long-term debt
4. Purchases of treasury stock
5. Proceeds from sales of treasury stock
6. Proceeds from minority interests
7. Cash dividends paid
8. Cash dividends paid to minority interests
Net cash provided by financing activities
IV Increase (decrease) in cash and cash equivalents
V Cash and cash equivalents at beginning of period
VI Increase in cash and cash equivalents due to consolidationof subsidiary
VII Cash and cash equivalents at end of period- 17 -

3,523
774
126
10

787
914
(97)
2

4,749
1,724
(266)
8

25

143

(142)

(267)
26
(64)
(2)
(159)
22
90
(727)
(264)
1,802
(2,578)165(3,095)
(406)
(999)
248
(30)
(108)
(889)

(251)
56
183
248
(4)
20
12
(1,212)
3,433
3,208(4,011)218(1,767)
243
2,129
243
(58)
(1,881)
432

(456)
64
164
212
(38)
(174)
338
94
375
(2,742)(1,661)
(964)
146
170
(101)
1,501
438
(69)
(426)
1,444

(752)
3
(1,384)(1,113)
1,908(1,178)7(277)(1,763)0(1,904)147(1,827)(3,354)2,623-(2,297)

-

285
(139)
(155)
(1,347)(1,000)376(6,132)(1,217)(236)(278)(6,047)

66
(53)
(30)
653
30
(460)
(2)
202
(2,033)
5,549

3,500
5,032
(0)
0
(652)
7,879
2,179
3,526

3,000
66
(456)
(32)
765
30
(1,065)(2)2,305(2,298)
5,549

275

-

275

3,791

5,706

3,526

Senshukai Co., Ltd. (8165) Interim Financial Report for Fiscal 2008

Significant Accounting Policies for the Preparation of Interim Consolidated Financial Statements
Interim Fiscal 2007
(Jan. 1, 2007 – Jun. 30, 2007)

Interim Fiscal 2008
(Jan. 1, 2008 – Jun. 30, 2008)

Fiscal 2007
(Jan. 1, 2007 – Dec. 31, 2007)

1. Scope of consolidation
1. Scope of consolidation
1. Scope of consolidation(1) Number of consolidated subsidiaries: 13 (1) Number of consolidated subsidiaries: 13 (1) Number of consolidated subsidiaries: 13
Main consolidated subsidiaries:
Main consolidated subsidiaries:
Main consolidated subsidiaries:
Senshukai General Services Co., Ltd.
Senshukai General Services Co., Ltd.
Senshukai General Services Co., Ltd.
Senshu Logisuko Co., Ltd.
Senshu Logisuko Co., Ltd.
Senshu Logisuko Co., Ltd.
Senshukai Call Center Co., Ltd.
Senshukai Call Center Co., Ltd.
Senshukai Call Center Co., Ltd.
Dears Brain Inc.
Dears Brain Inc., previously accounted for Melody Square Co., Ltd., B-BOP Studio
Melody Square Co., Ltd., B-BOP Studioby the equity method has been included inCo., Ltd., Pet First Co., Ltd. and FutureCo., Ltd., Pet First Co., Ltd. and Future
the consolidation due to the acquisition ofCompass Co., Ltd., non-consolidated
compass Co., Ltd., non-consolidated
subsidiaries in the previous fiscal year, were
subsidiaries in the previous fiscal year, were additional shares in May 2008. Only the
included in the scope of consolidation from
included in the scope of consolidation from consolidated balance sheets include thethe current fiscal year due to their incraesed
the current peiriod due to its incraesed
accounts of Dears Brain Inc. since theimportance.
Company sets the assumed acquisition date importance. Melody Square Co., Ltd.
acquired B-BOP Studio Co., Ltd. on July 1,
HBS Co., Ltd. was liquidated and excluded to the interim consolidated balance sheet
2007, and changed the company name tofrom consolidation in December 2006.
date.
RG Marketing Co., Ltd. was included in the
B·B·S Co., Ltd.
scope of consolidation due to its
HBS Co., Ltd. was liquidated and excluded
establishment.
from consolidation in December 2006.
RG Marketing Co., Ltd. was included in thescope of consolidation due to its
establishment.
(2) Number of non-consolidated
subsidiaries: 8Main non-consolidated subsidiaries:
Senshukai Hong Kong Ltd.

(2) Number of non-consolidated
subsidiaries: 12
Same as on the left.

Reason for exclusion from scope of
Reason for exclusion from scope of
consolidation
consolidation
Same as on the left.
The interim consolidated financial
statements do not include the accounts ofabove mentioned non-consolidated
subsidiaries since their total assets, net sales,
net income/loss (equity in earnings) orretained earnings (equity in earnings) haveno significant effect on the overall results ofinterim consolidated financial statements.
2. Application of equity method(1) Number of non-consolidated
subsidiaries accounted for by the equity
method: 4Main non-consolidated subsidiaries
accounted for by the equity method:
Senshukai Hong Kong Ltd.

2. Application of equity method(1) Number of non-consolidated
subsidiaries accounted for by the equity
method: 4Same as on the left.

(2) Number of non-consolidated
subsidiaries: 6
Same as on the left.

Reason for exclusion from scope of
consolidation
The consolidated financial statements do
not include the accounts of above
mentioned non-consolidated subsidiaries
since their total assets, net sales, net
income/loss (equity in earnings) orretained earnings (equity in earnings) haveno significant effect on the overall resultsof consolidated financial statements.
2. Application of equity method(1) Number of non-consolidated
subsidiaries accounted for by the equity
method: 4Same as on the left.

Shanghai Senshu Merchant and CommerceCo., Ltd. was included in the scope of theequity-method non-consolidated subsidiaryfrom the current fiscal year due to its
increased importance.

Shanghai Senshu Merchant and CommerceCo., Ltd. was included in the scope of theequity-method non-consolidated subsidiaryfrom the current period due to its increased
importance.

- 18 -

Senshukai Co., Ltd. (8165) Interim Financial Report for Fiscal 2008

Interim Fiscal 2007
(Jan. 1, 2007 – Jun. 30, 2007)(2) Number of equity-method affiliate: 1
Main equity-method affiliate
SENTENs Co., Ltd.
SENTENs Co., Ltd. was included in thescope of equity-method affiliate due to its
establishment.

Interim Fiscal 2008
(Jan. 1, 2008 – Jun. 30, 2008)

Fiscal 2007
(Jan. 1, 2007 – Dec. 31, 2007)(2) Number of equity-method affiliate: 1(2) Number of equity-method affiliates: 2
Main equity-method affiliate
Main equity-method affiliates
SENTENs Co., Ltd.
SENTENs Co., Ltd.
Mobakore Co., Ltd.
Dears Brain Inc. was treated as an
SENTENs Co., Ltd. was included in theequity-method affiliate in the interim period scope of equity-method affiliate due to its
due to the acquisition of shares inestablishment.
November 2007, but will move from anequity-method affiliate to a consolidated
subsidiary following the acquisition of
additional shares in May 2008. The equity
method will be applied for the interim
period, and losses included with investment
loss on equity method, as the deemed
acquisition date for shares will be the endof the interim period.
Mobakore Co., Ltd. was included in thescope of the equity-method affiliate due toits increased importance.

(3) Of the companies accounted for by the(3) Of the companies accounted for by the(3) Of the companies accounted for by theequity method, certain companies haveequity method, certain companies haveequity method, certain companies havebalance sheet date more than six months
balance sheet date more than six months
balance sheet date more than six months
distant from that of the Company. To
distant from that of the Company. To
distant from that of the Company. To
prepare for consolidated financial
prepare for interim consolidated financial
prepare for interim consolidated financial
statements, most recent interim financial
statements, most recent financial
statements, most recent financial
statements from the consolidated balancestatements from the consolidated balancestatements from the consolidated balance
sheet date of such companies are used.
sheet date of such companies are used.
sheet date of such companies are used.
We make consolidated adjustments as
We make consolidated adjustments as
We make consolidated adjustments asnecessary for major transactions that occur necessary for major transactions that occur necessary for major transactions that occur
subsequently in the period before thesubsequently in the period before thesubsequently in the period before theconsolidated balance sheet date.
consolidated balance sheet date.
consolidated balance sheet date.
(4) Main non-consolidated subsidiaries andaffiliates not accounted for by the equity
method:Mobakore Co., Ltd.
Reason for not accounted for by the equity
methodThe above-mentioned entity is notaccounted for under the equity method
since its net income/loss (equity inearnings) or retained earnings (equity inearnings) have no significant effect on theoverall results of interim consolidated
financial statements.

(4) Main non-consolidated subsidiaries andaffiliates not accounted for by the equity
method:Innovation Information Technology(Shanghai) Co., Ltd.
Reason for not accounted for by the equity
methodSame as on the left.

- 19 -(4) Main non-consolidated subsidiaries andaffiliates not accounted for by the equity
method:Mobakore Co., Ltd.
Reason for not accounted for by the equity
methodThe above-mentioned entity is notaccounted for under the equity method
since its net income/loss (equity inearnings) or retained earnings (equity inearnings) have no significant effect on theoverall results of consolidated financial
statements.

Senshukai Co., Ltd. (8165) Interim Financial Report for Fiscal 2008

Interim Fiscal 2007
(Jan. 1, 2007 – Jun. 30, 2007)

Interim Fiscal 2008
(Jan. 1, 2008 – Jun. 30, 2008)

Fiscal 2007
(Jan. 1, 2007 – Dec. 31, 2007)

3. Interim periods for consolidated
subsidiaries
The interim periods of all consolidated
subsidiaries coincide with Senshukai’s
interim period.

3. Interim periods for consolidated
subsidiaries
The fiscal year of consolidated subsidiary
Dears Brain Inc. ends on June 30. The
Company prepares provisional accounts
for the subsidiary as of the fiscal year
financial results reporting date in order toprepare interim consolidated financial
statements.
The interim periods of other consolidated
subsidiaries coincide with Senshukai’s
interim period.

3. Fiscal years for consolidated subsidiaries
The fiscal years of all consolidated
subsidiaries coincide with Senshukai’s fiscal
year.

4. Accounting standards(1) Valuation standards and accounting
treatment for important asset
1) Investment securities
Available-for-sale securities
Available-for-sale securities are reported
at fair value, determined by the market
price as of the period-end and otherfactors, with unrealized gains or losses,
net of applicable taxes, reported in a
separate component of net assets. The costof available-for sale securities sold isdetermined based on the moving-averagemethod.

4. Accounting standards(1) Valuation standards and accounting
treatment for important asset
1) Investment securities
Available-for-sale securities
Same as on the left.

4. Accounting standards(1) Valuation standards and accounting
treatment for important asset
1) Investment securities
Available-for-sale securities
Available-for-sale securities are reported
at fair value, determined by the market
price as of the fiscal year-end and otherfactors, with unrealized gains or losses,
net of applicable taxes, reported in a
separate component of net assets. The costof available-for sale securities sold isdetermined based on the moving-averagemethod.

Same as on the left.

Same as on the left.

2) Derivatives
Same as on the left.

2) Derivatives
Same as on the left.

3) Inventories
3) Inventories
Same as on the left.
Inventories are stated at the lower of cost,
determined by the monthly average method,or market.

3) Inventories
Same as on the left.

Available-for-sale securities whose fairvalue is not readily determinable arestated at cost based on themoving-average method.
2) Derivatives
Derivatives are stated at market value.

(2) Method for depreciating and amortizing
important assets
1) Property and equipment
Depreciation is computed by the
declining-balance method, but thestraight-line method is applied to buildings(excluding attached structures) acquired on
or after April 1, 1998.

(2) Method for depreciating and amortizing
important assets
1) Property and equipment
Same as on the left.

The range of useful lives is as follows:
Buildings and structures: 38-50 years
Machinery and vehicles: 12 years- 20 -(2) Method for depreciating and amortizing
important assets
1) Property and equipment
Same as on the left.

Senshukai Co., Ltd. (8165) Interim Financial Report for Fiscal 2008

Interim Fiscal 2007
(Jan. 1, 2007 – Jun. 30, 2007)

Interim Fiscal 2008
(Jan. 1, 2008 – Jun. 30, 2008)

Fiscal 2007
(Jan. 1, 2007 – Dec. 31, 2007)(Changes in accounting policy)
Effective from the current period, property
and equipment purchased on or after April
1, 2007 is depreciated in line with methods
prescribed in the revised Corporate Tax
Law.
This change in accounting policy has no
significant effect on the amount of income.

(Supplemental information)
Following the revision of the Corporate Tax
Law, property and equipment purchased onor before March 31, 2007 is depreciatedequally over five years, and booked as adepreciation expense, the difference
between the memorandum value, and 5% of
the acquisition value, beginning in the fiscal
year following the fiscal year in which theasset’s value reaches 5% of the acquisition
value based on depreciation methods prior
to corporate tax law revisions.
As an effect of this change, operating
income, ordinary income and income
before income taxes and minority interests
declined by 26 million yen respectively.
The impact on segment businesses can befound in applicable portions of this report.

(Change in accounting policy)
Effective from the current fiscal year,
property and equipment purchased on orafter April 1, 2007 is depreciated in linewith methods prescribed in the revised
Corporate Tax Law.
This change in accounting policy has no
significant effect on the amount of income.

2) Intangible assets
2) Intangible assets
Same as on the left.
Intangible assets are amortized using thestraight-line method.
However, in-house software is amortized by
the straight-line method based on an
estimated useful life of five years.

2) Intangible assets
Same as on the left.

(3) Accounting for allowances(3) Accounting for allowances
1) Allowance for doubtful accounts
1) Allowance for doubtful accounts
Same as on the left.
The allowance for doubtful accounts
provides for possible losses arising fromdefault on accounts receivable. The
allowance is made up of two components:
the estimated credit loss for doubtfulreceivables based on an individual
assessment of each account, and a generalreserve calculated based on historical default
rates.

(3) Accounting for allowances
1) Allowance for doubtful accounts
Same as on the left.

2) Allowance for sales promotion expenses
This allowance is provided to cover future
cost outlays related to the mileage point
system, which is aimed at sales promotion.
The allowance provides for the projected
monetary redemption value of mileage
points calculated based on the unredeemedvalue of issued points and historicalredemption ratios.

2) Allowance for sales promotion expenses
Same as on the left.

- 21 -

2) Allowance for sales promotion expenses
Same as on the left.

Senshukai Co., Ltd. (8165) Interim Financial Report for Fiscal 2008

Interim Fiscal 2007
(Jan. 1, 2007 – Jun. 30, 2007)

Interim Fiscal 2008
(Jan. 1, 2008 – Jun. 30, 2008)

Fiscal 2007
(Jan. 1, 2007 – Dec. 31, 2007)

3) Liabilities for employees’ retirement
benefits
Allowance for retirement benefits of certain
consolidated subsidiaries are provided
based on the retirement benefit obligations
and pension assets at the interim balance
sheet date.
The retirement benefit obligations arecalculated based on the compendium
method.

3) Liabilities for employees’ retirement
benefits
Same as on the left.

3) Liabilities for employees’ retirement
benefits
Allowance for retirement benefits of certain
consolidated subsidiaries are provided
based on the retirement benefit obligations
and pension assets at the balance sheet date.
The retirement benefit obligations arecalculated based on the compendium
method.

4) Liabilities for retirement benefits for
directors and corporate auditors
Retirement benefits to directors andcorporate auditors of Senshukai and of
certain consolidated subsidiaries, andSenshukai’s executive officers are provided
at the amount which would be required if
all of them retired at the interim balance
sheet date pursuant to the internal rules.

4) Liabilities for retirement benefits for
directors and corporate auditors
Same as on the left.

4) Liabilities for retirement benefits for
directors and corporate auditors
Retirement benefits to directors andcorporate auditors of Senshukai and of
certain consolidated subsidiaries, andSenshukai’s executive officers are provided
at the amount which would be required if
all of them retired at the balance sheet datepursuant to the internal rules.

(4) Conversion of credit and liabilities inforeign currencies to Japanese currency
All short-term and long-term monetary
receivables and payables denominated inforeign currencies are translated into
Japanese yen at the spot exchange rates atthe balance sheet date. The foreignexchange gains and losses from translation
are recognized in the income statement to
the extent that they are not hedged byforward exchange contracts, currency
swaps and currency options.
The interim balance sheet accounts andincome statement accounts of the overseas
equity-method affiliates were translated
into Japanese yen at the spot exchange rate
as of the interim balance sheet date except
for net assets, which are translated at thehistorical rate.

(4) Conversion of credit and liabilities inforeign currencies to Japanese currency
Same as on the left.

(4) Conversion of credit and liabilities inforeign currencies to Japanese currency
All short-term and long-term monetary
receivables and payables denominated inforeign currencies are translated into
Japanese yen at the spot exchange rates atthe balance sheet date. The foreignexchange gains and losses from translation
are recognized in the income statement to
the extent that they are not hedged byforward exchange contracts, currency
swaps and currency options.
The balance sheet accounts and income
statement accounts of the overseas
equity-method affiliates were translated
into Japanese yen at the spot exchange rate
as of the balance sheet date except for net
assets, which are translated at the historicalrate.

(5) Accounting for sales promotion
expenses
The Company conducts a mail-orderbusiness, and among sales promotion
expenses, catalog-related expenses
corresponding to net sales in the second
half of fiscal year are classified as prepaid
expenses and included in other undercurrent assets.

(5) Accounting for sales promotion
expensesSame as on the left.

(5) Accounting for sales promotion
expenses
The Company conducts a mail-orderbusiness, and among sales promotion
expenses, catalog-related expenses
corresponding to net sales in the next fiscal
year are classified as prepaid expenses andincluded in “Other” under current assets tobetter match expenses to earnings in eachyear.

- 22 -

Senshukai Co., Ltd. (8165) Interim Financial Report for Fiscal 2008

Interim Fiscal 2007
(Jan. 1, 2007 – Jun. 30, 2007)

Interim Fiscal 2008
(Jan. 1, 2008 – Jun. 30, 2008)

Fiscal 2007
(Jan. 1, 2007 – Dec. 31, 2007)(6) Accounting for leases(6) Accounting for leases
Same as on the left.
Finance leases, other than those that transfer
ownership of the leased assets to thelessees, are treated in the same way as
ordinary operating leases for accounting
purposes.

(6) Accounting for leases
Same as on the left.

(7) Accounting for hedging
1) Hedge accounting methods
The deferred hedge accounting method isadopted.

(7) Accounting for hedging
1) Hedge accounting methods
Same as on the left.

(7) Accounting for hedging
1) Hedge accounting methods
Same as on the left.

2) Hedging instruments/ hedged items
Hedging instruments:
Foreign exchange forward contracts,
currency options and currency swaps
Hedged items:
Accounts payable for imports,
denominated in foreign currencies

2) Hedging instruments/ hedged items
Hedging instruments:
Foreign exchange forward contracts,
currency options, currency swaps andinterest swaps
Hedged items:
Accounts payable for imports,
denominated in foreign currencies andinterest on borrowings

2) Hedging instruments/ hedged items
Hedging instruments:
Foreign exchange forward contracts,
currency options and currency swaps
Hedged items:
Accounts payable for imports,
denominated in foreign currencies

3) Hedging policy
Risks from fluctuation in foreign currency
exchange and cash flows are hedged inaccordance with internal policies.

3) Hedging policy3) Hedging policy
Risks from fluctuation in foreign currency
Risks from fluctuation in foreign currency
exchange and cash flows are hedged in
exchange, cash flows and interest rate arehedged in accordance with internal policies. accordance with internal policies.

4) Evaluation of hedging effectiveness4) Evaluation of hedging effectivenessSame as on the left.
High correlation and effectiveness between
the hedging instruments and the hedged
items are regularly verified.
However, with respect to foreign exchange
forward contracts and other instruments
used in payment for imports and others, theevaluation is omitted in cases where suchhedging operations deems to fully offset
cash flow variances that may be caused due
to fluctuation in foreign currency exchange.

4) Evaluation of hedging effectivenessSame as on the left.

(8) Accounting for consumption taxes
Financial statements are prepared exclusiveof national and regional consumption taxes.

(8) Accounting for consumption taxes
Same as on the left.

(8) Accounting for consumption taxes
Same as on the left.

5. Scope of cash and cash equivalents
Cash and cash equivalents are cash on handand 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 andbond funds, all of which mature or becomedue within three months of the date ofacquisition.

5. Scope of cash and cash equivalents
Same as on the left.

5. Scope of cash and cash equivalents
Same as on the left.

- 23 -

Senshukai Co., Ltd. (8165) Interim Financial Report for Fiscal 2008

Reclassifications
Interim Fiscal 2007
(Jan. 1, 2007 – Jun. 30, 2007)

Interim Fiscal 2008
(Jan. 1, 2008 – Jun. 30, 2008)
Interim consolidated balance sheets:“Goodwill,” presented as a component of “Intangible assets” inthe previous period, is shown as a separate line item since its
amount exceeded 1/100 of total assets in the current period.
“Goodwill” included in “Intangible assets” in the previous
period was 47 million yen.

Interim consolidated statements of cash flows:“Gains on sales of investment securities,” which was included in“Other” under “Cash flows from operating activities” in theprevious period, is shown as a separate line item in the current
period, to clarify its contents.
The amount of “Gains on sales of investment securities” included
in “Other” under “Cash flows from operating activities” in theprevious period was minus 54 million yen.

- 24 -

Senshukai Co., Ltd. (8165) Interim Financial Report for Fiscal 2008

Notes to Interim Consolidated Financial Statements
Notes to Interim Consolidated Balance Sheets(Million yen)Interim Fiscal 2007
(As of Jun. 30, 2007)

Interim Fiscal 2008
(As of Jun. 30, 2008)

Fiscal 2007
(As of Dec. 31, 2007)*1. Accumulated depreciation on property
and equipment
32,458*1. Accumulated depreciation on property
and equipment
33,227*1. Accumulated depreciation on property
and equipment
32,247*2. Assets pledged as collateral(1) Collateral-backed assets
Investment securities(book value)*2. Assets pledged as collateral(1) Collateral-backed assets
Cash and deposits (Time deposits)
15
Buildings and structures
1,025
Guarantee deposits
22
Total
1,063

*2.

(2) Collateral-backed liabilities
Short-term bank loans
Long-term debt
Total

3. Contingent liabilities
Guarantees of bank loans
Employees’ housing loans

947

42
247
289

38

(2) Collateral-backed liabilities
Short-term bank loans
Current portion of corporate
bonds
Corporate bonds
Long-term debt
Total
3. Contingent liabilities
Guarantees of bank loans
Employees’ housing loans

408
66
201
366
1,042

32

3. Contingent liabilities
Guarantees of bank loans
Employees’ housing loans

35

Notes to Interim Consolidated Statements of Income(Million yen)Interim Fiscal 2007
(Jan. 1, 2007 – Jun. 30, 2007)*1. Gains on sales of fixed assets
Machinery and vehicles
Land
Total

Interim Fiscal 2008
(Jan. 1, 2008 – Jun. 30, 2008)
1
0
2*1. Gains on sales of fixed assets
Machinery and vehicles

Fiscal 2007
(Jan. 1, 2007 – Dec. 31, 2007)
4*1. Gains on sales of fixed assets
Machinery and vehicles, other
Land
Total

3
35
38

*2. Losses on sales and disposal of fixed
assets
Losses on disposal of buildings
5and structures
Losses on disposal of machinery
12and vehicles
Losses on disposal of furniture4
and fixtures
Total
22

*2. Losses on sales and disposal of fixed
assets
Losses on disposal of16
buildings and structures
Losses on disposal of furniture2
and fixtures
Losses on disposal of1machinery and vehicles, other
Total
20

*2. Losses on sales and disposal of fixed
assets
Losses on disposal of
9buildings and structures
Losses on disposal of90
machinery and vehicles
Losses on disposal of furniture13
and fixtures
Losses on disposal of224
intangible assets
Total
338

*3. Losses on write-down of subsidiarystock
A valuation loss was booked upon
dissolution of Shoplat Co., Ltd.

*3.

*3.

- 25 -

Senshukai Co., Ltd. (8165) Interim Financial Report for Fiscal 2008

Notes to Interim Consolidated Statements of Changes in Shareholders’ Equity
Interim Fiscal 2007 (Jan. 1, 2007 – Jun. 30, 2007)
1. Type and number of outstanding shares and treasury stock
Number of shares
as of Dec. 31, 2006
(Thousand shares)

Increase during thecurrent period(Thousand shares)

Decrease during thecurrent period(Thousand shares)

Number of shares
as of Jun. 30, 2007
(Thousand shares)

Outstanding shares
Common stock
47,63047,630Total
47,63047,630Treasury stock
Common stock (Note)
1,548
18
558
1,008
Total
1,548
18
558
1,008
Note: Common shares of treasury stock increased by 18 thousand shares due to the purchase of odd-lot shares. Common shares oftreasury stock decreased by 558 thousand shares due to the transfer of odd-lot shares of 0 thousand shares in response topurchase requests, and issuance of 558 thousand shares upon exercise of stock options.
2. Dividends(1) Dividend payment
Resolution
Annual general meeting ofshareholders on Mar. 29, 2007

Type of share
Common stock

Total amount of
Dividend per share
dividend(Yen)(Million yen)
460

10

Record date

Effective date

Dec. 31, 2006

Mar. 30, 2007

Record date

Effective dateJun. 30, 2007

Aug. 31, 2007

(2) Dividends with a record date in the current period but an effective date in the following period
Resolution

Type of share

Board of Directors meetingon Jul. 26, 2007

Commonstock

Total amount of
Resource for Dividend per
dividend
distribution share (Yen)(Million yen)
Retained
13606
earnings

Interim Fiscal 2008 (Jan. 1, 2008 – Jun. 30, 2008)
1. Type and number of outstanding shares and treasury stock
Number of shares
Increase during the
Decrease during the
Number of shares
as of Dec. 31, 2007
current period
current period
as of Jun. 30, 2008
(Thousand shares)(Thousand shares)(Thousand shares)(Thousand shares)
Outstanding shares
Common stock
47,63047,630Total
47,63047,630Treasury stock
Common stock (Note)
916
0
0
916
Total
916
0
0
916
Note: Common shares of treasury stock increased by 0 thousand shares due to the purchase of odd-lot shares. Common shares oftreasury stock decreased by 0 thousand shares due to the transfer of odd-lot shares in response to purchase requests.
2. Dividends(1) Dividend payment
Resolution
Annual general meeting ofshareholders on Mar. 28, 2008

Type of share
Common stock

Total amount of
Dividend per share
dividend(Yen)(Million yen)
653

14(2) Dividends with a record date in the current period but an effective date in the following period
Total amountResource for Dividend per
Resolution
Type of shareof dividend
distribution share (Yen)(Million yen)
Board of Directors meeting on
Retained
Common stock373
8Jul. 31, 2008
earnings- 26 -

Record date

Effective date

Dec. 31, 2007

Mar. 31, 2008

Record date

Effective dateJun. 30, 2008

Sep. 1, 2008

Senshukai Co., Ltd. (8165) Interim Financial Report for Fiscal 2008

Fiscal 2007 (Jan. 1, 2007 – Dec. 31, 2007)
1. Type and number of outstanding shares and treasury stock
Number of shares
Increase during the
Decrease during the
Number of shares
as of Dec. 31, 2006
current fiscal year
current fiscal year
as of Dec. 31, 2007
(Thousand shares)(Thousand shares)(Thousand shares)(Thousand shares)
Outstanding shares
Common stock
47,63047,630Total
47,63047,630Treasury stock
Common stock (Note)
1,548
19
651
916
Total
1,548
19
651
916
Note: Common shares of treasury stock increased by 19 thousand shares due to the purchase of odd-lot shares. Common shares oftreasury stock decreased by 651 thousand shares due to the transfer of odd-lot shares of 0 thousand shares in response to purchaserequests, and issuance of 651 thousand shares upon exercise of stock options.
2. Dividends(1) Dividend payment
Resolution
Annual general meeting ofshareholders on Mar. 29, 2007
Board of Directors meeting on Jul.
26, 2007

Type of share

Total amount of
Dividend per share
dividend(Yen)(Million yen)

Record date

Effective dateCommon stock

460

10

Dec. 31, 2006

Mar. 30, 2007

Common stock

606

13

Jun. 30, 2007

Aug. 31, 2007

(2) Dividends with a record date in the current fiscal year but an effective date in the following fiscal year
Total amountResource for Dividend per
Resolution
Type of shareof dividendRecord date
distribution share (Yen)(Million yen)
Annual general meeting ofRetained
Common stock653
14Dec. 31, 2007
shareholders on Mar. 28, 2008
earnings

Effective dateMar. 31, 2008

Notes to Interim Consolidated Statements of Cash Flows(Million yen)Interim Fiscal 2007
(Jan. 1, 2007 – Jun. 30, 2007)
Reconciliation between balance sheet
accounts and period-end balance of cash
and cash equivalents(As of Jun. 30, 2007)
Cash and deposits
3,705Marketable securities
85
Cash and cash equivalents
3,791Interim Fiscal 2008
(Jan. 1, 2008 – Jun. 30, 2008)

Fiscal 2007
(Jan. 1, 2007 – Dec. 31, 2007)

Reconciliation between balance sheet
Reconciliation between balance sheet
accounts and year-end balance of cash andaccounts and period-end balance of cash
cash equivalents
and cash equivalents(As of Dec. 31, 2007)(As of Jun. 30, 2008)
Cash and deposits
5,623
Cash and deposits
3,444Marketable securities
93
Marketable securities
85
Time deposits with deposit
Time deposits with deposit(3)(3)
terms exceeding 3 months
terms exceeding 3 months
Marketable securities otherCash and cash equivalents
3,526
(7)
than cash equivalents
Cash and cash equivalents
5,706- 27 -

Senshukai Co., Ltd. (8165) Interim Financial Report for Fiscal 2008

Segment Information
1. Business segments
Interim Fiscal 2007 (Jan. 1, 2007 – Jun. 30, 2007)(Million yen)
Mail-order business

Other businesses

Total

Elimination or
corporate

Consolidated-

79,701

Net sales(1) Sales to customers(2) Inter-segment sales

74,172

5,528

79,701

660

490

1,151

(1,151)-

74,833

6,018

80,852(1,151)79,701

Operating expenses

71,305

5,970

77,275(1,069)76,206

Operating income

3,527

48

3,576

(81)

3,495

Total

Notes: 1. The classification of business segments is based on categories adopted for internal management purposes.
2. Principal activities of each business segment(1) Mail-order business: Catalog and hanpukai businesses(2) Other businesses: Services, transportation and others
3. There are no unallocated operating expenses included in the “elimination or corporate.”
4. Revisions to segment business classifications
The Belle Mariee wedding support business, previously classified in the “mail-order business,” was reclassified to the “otherbusinesses” starting from the current interim period under review because it was restructured as a comprehensive bridal
producer involved in wedding dress sales, wedding hall bookings, and chapel wedding management.
This revision lowered net sales in the mail-order business by 42 million yen, and increased net sales in “other businesses” by
the same amount; similarly, the revision increased operating income in the mail-order business by 98 million yen, andlowered it in other businesses by the same amount.

Interim Fiscal 2008 (Jan. 1, 2008 – Jun. 30, 2008)(Million yen)
Mail-order business

Other businesses

Total

Elimination or
corporate

Consolidated-

79,211

Net sales(1) Sales to customers(2) Inter-segment sales

73,808

5,402

79,211

535

770

1,305

(1,305)-74,344

6,172

80,517(1,305)

79,211

Operating expenses

72,764

6,420

79,184(1,332)77,851

Operating income (loss)

1,580

(247)

1,332

27

1,359

Total

Notes: 1. The classification of business segments is based on categories adopted for internal management purposes.
2. Principal activities of each business segment(1) Mail-order business: Catalog and hanpukai businesses(2) Other businesses: Product sales, services, transportation
3. There are no unallocated operating expenses included in the “elimination or corporate.”
4. Supplemental information
Following the revision of the Corporate Tax Law, property and equipment purchased on or before March 31, 2007 isdepreciated equally over five years, and booked as a depreciation expense, the difference between the memorandum value,and 5% of the acquisition value, beginning in the fiscal year following the fiscal year in which the asset’s value reaches 5%of the acquisition value based on depreciation methods prior to corporate tax law revisions.
As an effect of this change, operating income in the mail-order business and other businesses declined by 26 million yen and
0 million yen respectively.

- 28 -

Senshukai Co., Ltd. (8165) Interim Financial Report for Fiscal 2008

Fiscal 2007 (Jan. 1, 2007 – Dec. 31, 2007)(Million yen)
Mail-order business

Other businesses

Elimination or
corporate

Consolidated

156,792-

156,792

Total

Net sales(1) Sales to customers

145,664(2) Inter-segment sales
Total
Operating expenses

11,128

1,260

1,086

2,347

(2,347)-

146,925

12,215

159,140(2,347)

156,792

141,321

12,508

153,829(2,327)

151,501

5,603

(293)

5,310

(19)

5,291

Operating income (loss)

Notes: 1. The classification of business segments is based on categories adopted for internal management purposes.
2. Principal activities of each business segment(1) Mail-order business: Catalog and hanpukai businesses(2) Other businesses: Services, transportation and others
3. There are no unallocated operating expenses included in the “elimination or corporate.”
4. Revisions to segment business classifications
The Belle Mariee wedding support business, previously classified in the “mail-order business,” was reclassified to the “otherbusinesses” starting from the current fiscal year under review because it was restructured as a comprehensive bridal
producer involved in wedding dress sales, wedding hall bookings, and chapel wedding management.
This revision lowered net sales in the mail-order business by 137 million yen, and increased net sales in other businesses by
the same amount; similarly, the revision increased operating income in the mail-order business by 223 million yen, andlowered it in “other businesses” by the same amount.

2. Geographical segment information
As there were no overseas consolidated subsidiaries or significant overseas branch offices for the interim period ended June 30, 2007,2008 and fiscal year ended December 31, 2007, geographical segment information has not been presented.

3. Overseas sales
Overseas sales have not been presented because they represented less than 10% of total consolidated sales in the interim period ended
June 30, 2007, 2008 and fiscal year ended December 31, 2007.

- 29 -

Senshukai Co., Ltd. (8165) Interim Financial Report for Fiscal 2008

Investment Securities
Interim Fiscal 2007 (As of Jun. 30, 2007)
1. Available-for-sale securities with fair value(Million yen)
Category

Acquisition cost

Carrying value

4,294

6,632

(1) Stocks

Diffenrence
2,338(2) Bonds
Corporate bonds
Other bonds(3) Others
Total

-

-

-

3,900

3,783

(116)

800

779

(21)

8,994

11,1952,200

2. Carrying value of available-for-sale securities whose fair value is not readily determinable(1) Available-for-sale securities
Unlisted stocks
MMF
Other

3,590 million yen
85 million yen
143 million yen(2) Subsidiary and affiliate stock
Subsidiary and affiliate stock

1,131 million yen

Interim Fiscal 2008 (As of Jun. 30, 2008)
1. Available-for-sale securities with fair value(Million yen)
Category

Acquisition cost

Carrying value

4,661

5,411

(1) Stocks

Diffenrence
749(2) Bonds
Corporate bonds
Other bonds(3) Others
Total

-

-

-

4,800

4,126

(673)

745

662

(83)

10,207

10,199(7)

Note: “Other bonds” include compound financial instruments, and the unrealized loss of 248 million yen is booked as “losses on
write-down of compound financial instruments” under other expenses.
2. Carrying value of available-for-sale securities whose fair value is not readily determinable(Million yen)
Category

Carrying value(1) Available-for-sale securities
Unlisted stocks

3,631

MMF

85

Others120(2) Subsidiary and affiliate stock
Subsidiary and affiliate stock

1,184

Note: The carrying values are amounts that have been treated for impairment loss. The impairment loss totaled 12 million yen.

- 30 -

Senshukai Co., Ltd. (8165) Interim Financial Report for Fiscal 2008

Fiscal 2007 (As of Dec. 31, 2007)
1. Available-for-sale securities with fair value(Million yen)
Acquisition cost

Carrying value

Diffenrence

2,597

3,979

Securities with carrying value exceeding acquisition cost(1) Stocks

1,382(2) Bonds
Corporate bonds
Other bonds(3) Others
Subtotal

-

-

-

200

212

12

199

205

5

2,996

4,396

1,400

1,664

1,417

(247)

Securities with carrying value not exceeding acquisition cost(1) Stocks(2) Bonds
Corporate bonds

-

-

-

3,800

3,430

(369)

546

534

(11)

Subtotal

6,010

5,382

(628)

Total

9,007

9,778

771

Other bonds(3) Others

Notes: 1. The acquisition costs are amounts that have been treated for impairment loss. The impairment loss totaled 87 million yen.
2. “Other bonds” in the “securities with carrying value not exceeding acquisition cost” category includes compound financial
instruments, and the unrealized loss of 212 million yen is booked as “losses on write-down of compound financial
instruments” under other expense.
2. Carrying value of available-for-sale securities whose fair value is not readily determinable(Million yen)
Category

Carrying value(1) Available-for-sale securities
Unlisted stocks

3,443

MMF

85

Others143(2) Subsidiary and affiliate stock
Subsidiary and affiliate stock

2,207

Note: The carrying values are amounts that have been treated for impairment loss. The impairment loss totaled 7 million yen.

- 31 -

Senshukai Co., Ltd. (8165) Interim Financial Report for Fiscal 2008

Per Share Information(Yen)
Interim Fiscal 2007
(Jan. 1, 2007 – Jun. 30, 2007)
Net assets per share
Net income per share
Diluted net income per share

Interim Fiscal 2008
(Jan. 1, 2008 – Jun. 30, 2008)

1,244.89
43.12
42.95

Net assets per share
Net income per share

Fiscal 2007
(Jan. 1, 2007 – Dec. 31, 2007)
Net assets per share
Net income per share
Diluted net income per share

1,154.80
4.22

1,197.62
53.60
53.46

Diluted net income per share is not presented
since the Company has no outstanding
dilutive securities.

Note: Basis for calculation of net income per share and diluted net income per share is as follows.
Interim Fiscal 2007
(Jan. 1, 2007 – Jun. 30, 2007)
Net income per share
Net income
Net income unavailable tocommon shareholders
Net income related to common
stock
Average number of shares ofcommon stock outstanding during
the period (thousand shares)
Diluted net income per share
Adjustment to net income
Increase in number of common
stock (thousand shares)[Including: subscription rights(thousand shares)]
Number of latent shares with nodilution excluded from calculation ofdiluted net income per share

Interim Fiscal 2008
(Jan. 1, 2008 – Jun. 30, 2008)(Million yen)
Fiscal 2007
(Jan. 1, 2007 – Dec. 31, 2007)

2,001

196

2,494

-

-

-

2,001

196

2,494

46,417

46,71446,543

-

-

-

187

-

129

[187]

-

[129]

-

Stock options approved byresolution of annual general
meeting of shareholders on
March 30, 2004
(The exercise period ended on
March 31, 2008)-

Subsequent Events
Not applicable.

Omission of DisclosureWith respect to lease transactions, derivative transactions, stock options, and business combinations are not presented since thedisclosure of such information is not significant in the context of the interim financial results.

- 32 -

Senshukai Co., Ltd. (8165) Interim Financial Report for Fiscal 2008

Production, Orders and Sales(1) Production
There were no production activities.
(2) Orders
There were no production activities in response to orders received.
(3) Sales(1) Sales by business segment(Million yen)
PeriodOperating segment

Interim Fiscal 2007
(Jan. 1, 2007 – Jun. 30, 2007)
AmountInterim Fiscal 2008
(Jan. 1, 2008 – Jun. 30, 2008)

Share (%)

AmountShare (%)

Fiscal 2007
(Jan. 1, 2007 – Dec. 31, 2007)
AmountShare (%)

Mail-order business

74,172

93.1

73,80893.2

145,664

92.9

Other businesses

5,528

6.9

5,402

6.8

11,128

7.1

79,701

100.0

79,211

100.0

156,792

100.0

Total

Note: The figures above are stated exclusive of consumption taxes.

(2) Sales by type(Million yen)
PeriodTypeInterim Fiscal 2007
(Jan. 1, 2007 – Jun. 30, 2007)
Amount244

Publications

Interim Fiscal 2008
(Jan. 1, 2008 – Jun. 30, 2008)

Share (%)

Amount0.3

220

Share (%)
0.3

Fiscal 2007
(Jan. 1, 2007 – Dec. 31, 2007)
Amount497

Share (%)
0.3

Clothing

31,03539.0

32,031

40.4

61,306

39.1

Household goods

28,06635.2

27,06334.2

54,84035.0

Hobby and leisure interests goods

13,313

16.7

13,17916.6

25,504

16.3

Others

7,041

8.8

6,716

8.5

14,643

9.3

79,701

100.0

79,211

100.0

156,792

100.0

Total

Note: The figures above are stated exclusive of consumption taxes.

- 33 -

Senshukai Co., Ltd. (8165) Interim Financial Report for Fiscal 2008

Interim Non-consolidated Financial Statements
Interim Non-consolidated Financial Statements(1) Interim Non-consolidated Balance Sheets
PeriodAccount

Interim Fiscal 2007
(As of Jun. 30, 2007)
Amount%Interim Fiscal 2008
(As of Jun. 30, 2008)
Amount%(Million yen)
Fiscal 2007 Summary(As of Dec. 31, 2007)
Amount%AssetsI Current assets
1. Cash and deposits
2. Notes receivable
3. Accounts receivable-trade
4. Marketable securities
5. Inventories
6. Accounts receivable-other
7. Other

1,328

3,192

1,150

6

45

7

11,87011,977

10,836-

7-

16,595
6,722
6,271

15,641
6,977
4,416

19,093
9,304
4,974

Allowance for doubtful accounts(480)

Total current assets

42,314(241)
46.4

42,015(256)
42.8

45,110

47.0

II Fixed assets
1. Property and equipment(1) Buildings

9,772

9,438

9,631

(2) Machinery and equipment

1,735

1,378

1,508

(3) Land

11,260

11,153

11,153(4) Other

1,312

2,903

2,092

24,082

24,874

24,386

3,150

2,914

3,076

14,086

13,16012,534

Total property and equipment
2. Intangible assets
3. Investments and other assets(1) Investment securities(2) Affiliate stock(3) Other
Allowance for doubtful accounts

-

7,310

4,696

8,061

8,203

6,660

(589)

(420)

(524)

Total investments and other assets

21,558

Total fixed assets

48,791

53.6

56,042

28,25357.2

50,82953.0

Total assets

91,105

100.0

98,058100.0

95,939100.0- 34 -

23,366

Senshukai Co., Ltd. (8165) Interim Financial Report for Fiscal 2008

PeriodAccount
Liabilities
I Current liabilities
1. Notes payable
2. Accounts payable-trade
3. Short-term bank loans
4. Accounts payable-other
5. Accounts payable-factoring
6. Accrued expenses
7. Accrued income taxes
8. Allowance for sales promotion expenses
9. Other
Total current liabilities
II Long-term liabilities
1. Long-term debt
2. Deferred tax liabilities
3. Deferred tax liabilities relating to land
revaluation
4. Liabilities for retirement benefits for
directors and corporate auditors
5. OtherInterim Fiscal 2007
(As of Jun. 30, 2007)
Amount
%

3,798
5,245
61
5,124
13,750
1,067
1,026
301
990

Interim Fiscal 2008
(As of Jun. 30, 2008)
Amount
%

1,905
4,768
7,335
5,069
14,959
1,013
129
277
3,201

31,366

34.4

38,660(Million yen)
Fiscal 2007 Summary(As of Dec. 31, 2007)
Amount
%

4,302
6,407
3,000
6,210
15,027
1,254
1,587
133
1,444
39.4

39,369

354
1,050

4,165
-

-

804

764

764

377

289

377

27

6

10

41.0

Total long-term liabilities

2,614

2.9

5,225

5.4

1,152

1.2

Total liabilities
Net assets
I Shareholders’ equity
1. Common stock
2. Capital surplus(1) Capital reserve(2) Other capital surplus

33,981

37.3

43,88644.8

40,521

42.2

20,35922.4

20,35920.8

20,35921.2

Total capital surplus
3. Retained earnings(1) Profit reserve(2) Other retained earnings
Reserve for reduction of fixed assets
Reserve for losses of overseas
investment
General reserve
Retained earnings carried forward

20,990Total retained earnings
4. Treasury stock

21,376
(693)

23.5
(0.8)

21,885
(630)

22.3
(0.6)

21,697
(630)

22.6
(0.6)

Total shareholders’ equity
II Valuation and translation adjustments
1. Net unrealized gains onavailable-for-sale securities
2. Deferred hedge gains (losses)
3. Land revaluation difference

62,032

68.1

62,652

63.9

62,464

65.1

1,327

1.4

117

0.1

498

0.5

1,065
(7,301)

1.2(8.0)(1,236)(7,359)

(1.3)
(7.5)

(185)
(7,359)

(0.2)
(7.6)

Total valuation and translation
adjustments(4,908)(5.4)(8,479)(8.7)(7,046)(7.3)

Total net assets

57,124

62.7

54,17255.2

55,418

57.8

Total liabilities and net assets

91,105

100.0

98,058100.0

95,939100.0

19,864
1,126

19,864
1,174
23.0

21,03819,864
1,174
21.4

21,038

1,118

1,118

1,118

74

71

73

38

37

34

13,6006,544

13,6007,058

13,6006,871- 35 -

21.9

Senshukai Co., Ltd. (8165) Interim Financial Report for Fiscal 2008

(2) Interim Non-consolidated Statements of Income
PeriodAccount

Interim Fiscal 2007
(Jan. 1, 2007 – Jun. 30, 2007)
Amount%(Million yen)Interim Fiscal 2008
Fiscal 2007 Summary(Jan. 1, 2008 – Jun. 30, 2008) (Jan. 1, 2007 – Dec. 31, 2007)
Amount%Amount%I Net sales

77,320100.076,778100.0

152,367

100.0

II Cost of sales

40,483

52.4

40,11252.2

79,903

52.4

Gross profit

36,83747.6

36,66547.8

72,463

47.6

III Selling, general andadministrative expenses

34,12044.1

35,60046.4

67,851

44.6

Operating income

2,716

3.5

1,065

1.4

4,611

3.0

IV Other income

625

0.8

882

1.1

1,127

0.7

V Other expenses

74

0.1

704

0.9

375

0.2

Ordinary income

3,267

4.2

1,244

1.6

5,364

3.5

VI Extraordinary gains

457

0.6

-

-

379

0.3

VII Extraordinary losses

409

0.5

72

0.1

943

0.6

Income before income taxes

3,314

4.3

1,171

1.5

4,800

3.2

Income taxes

1,024

1.3

195

0.2

1,619

1.1

261

0.4

133

0.2

282

0.2

2,029

2.6

842

1.1

2,898

1.9

Deferred income taxes
Net income- 36 -

Senshukai Co., Ltd. (8165) Interim Financial Report for Fiscal 2008

(3) Interim Non-consolidated Statements of Changes in Shareholders’ Equity
Interim Fiscal 2007 (Jan. 1, 2007 – Jun. 30, 2007)(Million yen)

Common stock
Balance as of Dec. 31, 2006
Changes in the period
Reversal of reserve for reduction of
fixed assets
Reversal of reserve for losses ofoverseas investment
Provision for reserve for losses ofoverseas investment
Dividend of surplus
Net income
Purchases of treasury stock
Disposal of treasury stock
Changes (net) in items other thanshareholders’ equity
Total changes in the period
Balance as of Jun. 30, 2007

Balance as of Dec. 31, 2006
Changes in the period
Reversal of reserve for reduction of
fixed assets
Reversal of reserve for losses ofoverseas investment
Provision for reserve for losses ofoverseas investment
Dividend of surplus
Net income
Purchases of treasury stock
Disposal of treasury stock
Changes (net) in items other thanshareholders’ equity
Total changes in the period
Balance as of Jun. 30, 2007

20,359

Shareholders’ equity
Capital surplus
Capital reserve
Other capital surplus
19,864852

Total capital surplus
20,716

274

274

274
1,126

274
20,99020,35919,864

Shareholders’ equity
Retained earnings
Other retained earnings
Total
Reserve for
Retained Total Treasury
shareholders’ProfitReserve forlosses ofGeneral earnings retained stock
equityreserve reduction ofoverseas
reserve carried earnings
fixed assets
investment
forward1,118
76
38 13,600
4,973 19,807 (1,041)
59,841
(1)

1,118

(1)
74

1

-

-

(4)

4

-

-

4

(4)

-

-

(460)
2,029

(460)
2,029
(30)
379

(460)
2,029
(30)
653

348
(693)

2,191
62,032(0)
38

13,600

1,570
6,544

1,568
21,376

Valuation and translation adjustments

Balance as of Dec. 31, 2006
Changes in the period
Reversal of reserve for reduction of
fixed assets
Reversal of reserve for losses ofoverseas investment
Provision for reserve for losses ofoverseas investment
Dividend of surplus
Net income
Purchases of treasury stock
Disposal of treasury stock
Changes (net) in items other thanshareholders’ equity
Total changes in the period
Balance as of Jun. 30, 2007

Net unrealized
gains onavailable-for-salesecurities
1,364

Deferred hedge
gains (losses)

Land revaluationdifference

Total valuationand translation
adjustments

734(7,301)(5,202)

Total net assets

54,638
(460)
2,029
(30)
653

(36)

331

-

294

294

(36)
1,327

331
1,065

(7,301)294(4,908)2,485
57,124- 37 -

Senshukai Co., Ltd. (8165) Interim Financial Report for Fiscal 2008

Interim Fiscal 2008 (Jan. 1, 2008 – Jun. 30, 2008)(Million yen)

Common stock
Balance as of Dec. 31, 2007
Changes in the period
Reversal of reserve for reduction of
fixed assets
Reversal of reserve for losses ofoverseas investment
Provision for reserve for losses ofoverseas investment
Dividend of surplus
Net income
Purchases of treasury stock
Disposal of treasury stock
Changes (net) in items other thanshareholders’ equity
Total changes in the period
Balance as of Jun. 30, 2008

Balance as of Dec. 31, 2007
Changes in the period
Reversal of reserve for reduction of
fixed assets
Reversal of reserve for losses ofoverseas investment
Provision for reserve for losses ofoverseas investment
Dividend of surplus
Net income
Purchases of treasury stock
Disposal of treasury stock
Changes (net) in items other thanshareholders’ equity
Total changes in the period
Balance as of Jun. 30, 2008

20,359

Shareholders’ equity
Capital surplus
Capital reserve
Other capital surplus
19,864
1,174

Total capital surplus
21,038

0

0

0
1,174

0
21,03820,35919,864

Shareholders’ equity
Retained earnings
Other retained earnings
Total
Reserve for
Retained Total Treasury
shareholders’ProfitReserve forlosses ofGeneral earnings retained stock
equityreserve reduction ofoverseas
reserve carried earnings
fixed assets
investment
forward1,118
73
34 13,600
6,871 21,697(630)
62,464
(1)

1,118

(1)
71

1

-

-

(2)

2

-

-

5

(5)

-

-

(653)
842

(653)
842
(0)
0

(653)
842
(0)
0

(0)
(630)

188
62,652

3
37

13,600

186
7,058

188
21,885

Valuation and translation adjustments

Balance as of Dec. 31, 2007
Changes in the period
Reversal of reserve for reduction of
fixed assets
Reversal of reserve for losses ofoverseas investment
Provision for reserve for losses ofoverseas investment
Dividend of surplus
Net income
Purchases of treasury stock
Disposal of treasury stock
Changes (net) in items other thanshareholders’ equity
Total changes in the period
Balance as of Jun. 30, 2008

Net unrealized
gains onavailable-for-salesecurities
498

Deferred hedge
gains (losses)

Land revaluationdifference

Total valuationand translation
adjustments(185)(7,359)(7,046)

Total net assets

55,418
(653)
842
(0)
0

(381)

(1,051)-(1,433)(1,433)(381)
117(1,051)(1,236)(7,359)(1,433)(8,479)(1,245)54,172- 38 -

Senshukai Co., Ltd. (8165) Interim Financial Report for Fiscal 2008

Fiscal 2007 (Jan. 1, 2007 – Dec. 31, 2007)(Million yen)

Common stock
Balance as of Dec. 31, 2006
Changes in the fiscal year
Reversal of reserve for reductionof fixed assets
Provision of reserve for losses ofoverseas investment
Reversal of reserve for losses ofoverseas investment
Dividend of surplus
Net income
Purchases of treasury stock
Disposal of treasury stock
Transfer of land revaluationdifference
Changes (net) in items otherthan shareholders’ equity
Total changes in the fiscal year
Balance as of Dec. 31, 2007

Balance as of Dec. 31, 2006
Changes in the fiscal year
Reversal of reserve for reductionof fixed assets
Provision of reserve for losses ofoverseas investment
Reversal of reserve for losses ofoverseas investment
Dividend of surplus
Net income
Purchases of treasury stock
Disposal of treasury stock
Transfer of land revaluationdifference
Changes (net) in items otherthan shareholders’ equity
Total changes in the fiscal year
Balance as of Dec. 31, 2007

20,359

Shareholders’ equity
Capital surplus
Capital reserve
Other capital surplus
19,864852

Total capital surplus
20,716

322

322

322
1,174

322
21,03820,35919,864

Shareholders’ equity
Retained earnings
Other retained earnings
Total
Total Treasury
Retained
Reserve forshareholders’ProfitReserve for
earnings retained stock
losses ofGeneralequityreserve reduction ofreservecarried earnings
overseas
fixed assets
forwardinvestment
1,118
76
38
13,6004,973 19,807 (1,041)
59,841
(3)

3

-

-

4

(4)

-

-

(9)

9

-

-

(1,066)
2,898(1,066)
2,898(1,066)
2,898
(32)
765

(32)
443

1,118

(3)
73

(4)
34

13,600

58

58

1,897
6,871

1,889
21,697

58

411
(630)

2,622
62,464

Valuation and translation adjustments

Balance as of Dec. 31, 2006
Changes in the fiscal year
Reversal of reserve for reductionof fixed assets
Provision of reserve for losses ofoverseas investment
Reversal of reserve for losses ofoverseas investment
Dividend of surplus
Net income
Purchases of treasury stock
Disposal of treasury stock
Transfer of land revaluationdifference
Changes (net) in items otherthan shareholders’ equity
Total changes in the fiscal year
Balance as of Dec. 31, 2007

Net unrealized gains
on available-for-salesecurities
1,364

Deferred hedge
gains (losses)

Land revaluationdifference734(7,301)

Total valuation
Total net assets
and translation
adjustments(5,202)
54,638(1,066)
2,898
(32)
765
58

(865)

(919)

(58)

(1,843)(1,843)

(865)
498

(919)
(185)

(58)
(7,359)(1,843)(7,046)779
55,418- 39 -

Senshukai Co., Ltd. (8165) Interim Financial Report for Fiscal 2008

* This financial report is solely a translation of summary of “kessan Tanshin” (in Japanese, including attachments), which has been
prepared in accordance with accounting principles and practices generally accepted in Japan, for the convenience of readers who
prefer an English translation.

- 40 -