Financial Report for Fiscal Year 2009 (Ended December 31, 2009)
January 28, 2010
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. Michio Tanabe, Senior Managing Director
Tel: +81-6-6881-3100
Scheduled date of annual general meeting of shareholders: March 30, 2010
Scheduled date of payment of dividend: Scheduled date of filing of Annual Security Report: March 31, 2010

Company name: Senshukai Co., Ltd.

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

1. Consolidated Financial Results for Fiscal Year 2009 (January 1, 2009 – December 31, 2009)(1) Consolidated operating results(Percentages represent changes from the same period of the previous fiscal year)
Operating income
Ordinary income
Net income

Net sales
Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

147,292
158,285(6.9)
1.0(2,405)2,413(54.4)(1,410)(4,553)-(3,811)(6,271)-

Fiscal Year 2009
Fiscal Year 2008

Ordinary income to Operating income
total assets
to net sales

Net income per
share

Diluted net income
per share

Yen

Yen

%

Fiscal Year 2009(84.18)
Fiscal Year 2008
(134.26)
Reference: Equity in earnings (losses) of affiliates (million yen)

(9.3)
(12.5)
Fiscal Year 2009:

Return on equity

%

%

(1.4)
(4.5)
(65) Fiscal Year 2008:

(1.6)
1.5
(247)

(2) Consolidated financial position
Total assets

Net assets

Millions of yen

Fiscal Year 2009
91,837
Fiscal Year 2008
104,059
Reference: Shareholders’ equity (million yen)

Equity ratio

Net assets per share

Millions of yen%

37,90644,274
Fiscal Year 2009:
37,892

41.3
42.5
Fiscal Year 2008:

Yen

874.89947.1944,245(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

521
3,849

(1,141)(7,388)

1,035
8,199

8,795
8,186

Fiscal Year 2009
Fiscal Year 2008

2. Dividends
Dividend per share
2Q-end 3Q-end Yearend

1Q-endFiscal Year 2008
Fiscal Year 2009
Fiscal Year 2010
(forecasts)

Total

Total dividends(total)Payout ratio Dividend on equity(consolidated)(consolidated)

Yen

Yen

Yen

Yen

Yen

Millions of yen

%

%

-

8.00
6.00

-

9.00
0.00

17.00
6.00

794
280

-

1.6
0.7

-

6.00

-

6.00

12.00

31.5

3. Consolidated Outlook for Fiscal Year 2010 (January 1, 2010 – December 31, 2010)(Percentages represent changes from the same period of the previous fiscal year)
Net income
Operating income
Ordinary income
Net income
per share

Net sales
Millions of yen

2Q 2010 (cumulative)
Full Year 2010

% Millions of yen

71,500 (6.3)
142,300 (3.4)

750
2,100

-1-

%

Millions of yen%

Millions of yen

%

Yen

-

950
2,050

-

730
1,650

-

16.85
38.10

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2009

4. Other(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in changes inscope of consolidation): None
(2) Changes in accounting principles, procedures and presentation methods for preparation of consolidated financial
statements
1) Changes caused by revision of accounting standards: Yes
2) Other changes: None
Note: Please refer to “Changes in Significant Accounting Policies for the Preparation of Consolidated Financial
Statements” on page 24 for further information.

(3) Number of shares outstanding (common shares)
1) Number of shares outstanding at end of period (including treasury stock)
Fiscal Year 2009:

47,630,393 sharesFiscal Year 2008:

47,630,393 sharesFiscal Year 2008:

917,908 shares

2) Number of treasury stock at end of period
Fiscal Year 2009:

4,319,385 shares

Note: Please refer to “Per Share Information” on page 37 for the number of shares used in calculating consolidated net
income per share.

(Reference) Summary of Non-consolidated Financial Results
1. Non-consolidated Financial Results for Fiscal Year 2009 (January 1, 2009 – December 31, 2009)(1) Non-consolidated operating results(Percentages represent changes from the same period of the previous fiscal year)
Net sales

Operating income

Millions of yen

Fiscal Year 2009
Fiscal Year 2008

Fiscal Year 2009
Fiscal Year 2008

136,941
150,729

%

(9.1)
(1.1)

Ordinary income

Millions of yen%(2,347)
2,353

Millions of yen%

Millions of yen

%

(617)
(3,853)-(3,664)(6,155)-(49.0)Net income per share

Diluted net income per share

Yen

Yen

(80.95)(131.77)-

Net income(2) Non-consolidated financial position
Total assets

Net assets

Millions of yen

Fiscal Year 2009
87,757
Fiscal Year 2008
99,613
Reference: Shareholders’ equity (million yen)

Equity ratio

Millions of yen

37,81444,096
Fiscal Year 2009:

Net assets per share%

37,814

Yen

43.1
44.3
Fiscal Year 2008:

873.08943.9944,096

2. Non-consolidated Outlook for Fiscal Year 2010 (January 1, 2010 – December 31, 2010)(Percentages represent changes from the same period of the previous fiscal year)
Net income
Operating income
Ordinary income
Net income
per share

Net sales
Millions of yen

2Q 2010 (cumulative)
Full Year 2010

% Millions of yen

65,900 (7.1)
131,300 (4.1)

700
2,100

%

Millions of yen%

Millions of yen

%

Yen

-

900
2,200

-

900
1,800

-

20.78
41.56

*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 page7.

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Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2009

1. Operating Results(1) Analysis of Operating Results
Overview
In the fiscal year under review, the Japanese economy showed some signs of improvement thanks to benefits fromthe government’s economic stimulus measures, and progress in inventory adjustment, but conditions remained harshoverall as the employment environment deteriorated, household incomes declined, and the government in November
declared that the economy was mired in deflation. In the retail industry, sales of apparel remained weak, with few
exceptions, due in part to unseasonably warm weather in November and December. Personal consumption slumped
as consumers increasingly adopted a “thrifty” and “defensive” stance toward spending. In the mail-order industry,
e-commerce continued to drive overall sales, but general mail-order companies that also issue catalogs saw theirsales continue to decline. The future outlook remains uncertain in our view because the intensely competitiveenvironment has created more price competition, and prompted consumers to become more selective regarding
products and services.
In this environment, the Senshukai Group intends to push forward with core strategies in the second year of its
medium-term management plan which concludes in Fiscal Year 2010.
However, net sales in the current fiscal year significantly declined 6.9% year-over-year to 147,292 million yen fromthe previous fiscal year.
In terms of profits, the flexible implementation of clearance sales and other means to stimulate demand in the faceof rising inventories caused by falling sales were not completely successful, and the resulting increase in the cost
ratio and valuation losses caused gross profits to decline. Operating losses totaled 2,405 million yen (compared with
an operating income of 2,413 million yen in the previous fiscal year) despite efforts to offset the decline in grossprofit by slashing catalog costs and other SG&A expenses. Ordinary losses totaled 1,410 million yen (comparedwith ordinary losses of 4,553 million yen in the previous fiscal year) due to foreign exchange gains and other factors.
Net losses totaled 3,811 million yen (compared with net losses of 6,271 million yen in the previous fiscal year) due
to losses on valuation of investment securities, losses on sales of investment securities, and booking of an
impairment loss.
Segment information(Mail-order Business)
Consolidated sales in the mail-order business, which comprises the catalog and the hanpukai businesses, decreased
9.4% year-over-year to 130,967 million yen in the current fiscal year. In terms of profits, the Group booked an
operating loss of 2,285 million yen (compared with an operating income of 2,866 million yen in the previous fiscal
year), due to a decline in sales, and an increase in the cost-of-sales ratio from a change in the valuation method forinventories that increased valuation losses.
(1) Catalog business
The catalog business provides customers with a variety of lifestyle ideas and offers original Senshukai products
through 18 different catalogs.
Internet orders account for more than 50% of sales in the catalog business, and the Group continues to promote a
shift from catalogs to the Internet. Internet orders also increased year-over-year in the current fiscal year underreview. However, overall sales in the catalog business declined year-over-year in every month except January as theglobal recession reduced consumer spending. As a result, consolidated sales in the catalog business decreased 9.3%
year-over-year to 119,610 million yen in the fiscal year under review.
(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.
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Sales and members declined year-over-year in the current fiscal year under review due to a slump in new productsales, and a below-target retention rate.
As a result, consolidated sales in the hanpukai business declined 10.6% year-over-year to 11,357 million yen.
(Other Businesses)
The “other businesses” segment consists of the services business which primarily offers travel and credit card
services, the storefront business, the pet business, the corporates business which provides products and services tocorporations, and the guesthouse-style wedding business operated by Dears Brain Inc. Consolidated sales in thissegment increased 19.2% year-over-year to 16,325 million yen.
Consequently, operating losses decreased from 439 million yen to 190 million yen.
(2) Analysis of Financial Position
Balance sheet position
Assets totaled 91,837 million yen at the end of the current fiscal year, down 12,222 million yen from the end of theprevious fiscal year.
Current assets decreased 7,881 million yen to 42,117 million yen. The main factors were an increase of 942 million
yen in cash and deposits, decreases of 5,432 million yen in merchandise and finished goods, 639 million yen innotes and accounts receivable-trade, 464 million yen in deferred tax assets and 460 million yen in accounts
receivable-other, respectively. Noncurrent assets decreased 4,340 million yen to 49,720 million yen, mainly due toan increase of 84 million yen in intangible assets, decreases in property, plant and equipment of 484 million yen andinvestments and other assets of 3,940 million yen.
Current liabilities decreased 12,832 million yen to 41,321 million yen. The main factors were an increase of 700
million yen in current portion of bonds, decreases of 6,742 million yen in forward exchange contracts, 4,034 million
yen in short-term loans payable, 2,081 million yen in accounts payable-factoring and 1,592 million yen in notes andaccounts payable-trade, respectively. Noncurrent liabilities increased 6,977 million yen to 12,609 million yen,mainly due to increases in bonds payable of 3,884 million yen and long-term loans payable of 3,471 million yen.
Consequently, the equity ratio was 41.3%.
Cash flow position
The balance of cash and cash equivalents at the end of the current fiscal year was 8,795 million yen, an increase of
608 million yen from the end of the previous fiscal year.
Operating activities provided net cash of 521 million yen (net cash provided of 3,849 million yen in the previous
fiscal year). The main cash inflows were depreciation and amortization of 2,503 million yen and a decrease ininventories of 5,440 million yen. Cash outflows included the payments for cancelation money on derivative contractof 3,760 million yen, and loss before income taxes and minority interests of 3,093 million yen.
Investing activities used net cash of 1,141 million yen (net cash used of 7,388 million yen in the previous fiscal
year). The main cash inflow was a 1,000 million yen proceeds from sales of investment securities. The main cash
outflows were 1,384 million yen for purchase of property, plant and equipment and 987 million yen for purchase ofintangible assets.
Financing activities provided net cash of 1,035 million yen (net cash provided of 8,199 million yen in the previous
fiscal year). The main cash inflows were proceeds from long-term loans payable of 7,184 million yen and proceedsfrom issuance of bonds of 4,872 million yen, while cash outflows include a net decrease in short-term loans payableof 5,000 million yen, repayment of long-term loans payable of 2,761 million yen, purchase of treasury stock of
2,142 million yen, and cash dividends paid of 700 million yen.

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Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2009

Cash flow indicesFiscal Year 2007
(As of Dec. 31, 2007)

Fiscal Year 2008
(As of Dec. 31, 2008)

Fiscal Year 2009
(As of Dec. 31, 2009)

Equity ratio (%)

56.8

42.5

41.3

Equity ratio based on fair value (%)

56.0

31.7

22.3

Average debt repayment period (years)

2.1

3.7

35.1

Interest coverage ratio (times)

20.6

23.6

1.9

Notes: 1. Cash flow indices are calculated as follows using consolidated financial figures:
The equity ratio is shareholders’ equity divided by total assets.
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 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 ofshares issued 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 (used in) operating activities and interests
paid, respectively, on the consolidated statements of cash flows.

(3) Basic Policy Regarding Distribution of Earnings and Dividends in the Current and Next Fiscal Year
The Group’s basic policy is to strengthen the business foundation while maintaining stable dividends, taking into
consideration the payout ratio, and ensuring a fair distribution of earnings to shareholders.
Specifically, the Group’s policy regarding the distribution of earnings to shareholders is to strive continuously for apayout ratio of 30% on a consolidated basis. However, we sincerely regret that we must suspend the yearend
dividend for Fiscal Year 2009, as announced on December 11, 2009, due to the booking of a net loss.
Senshukai apologizes profusely to its shareholders, and promises to work even harder to raise its corporate value
and improve its earnings structure.
Regarding dividends in Fiscal Year 2010, we plan to pay a total annual dividend of 12 yen per share comprised of aninterim dividend of 6 yen per share and a yearend dividend of 6 yen per share, due to the recovery in businessperformance.
(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 significantly and adversely affect 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 forward exchange contracts and other hedging
devices to reduce the risk associated with exchange rate fluctuations, large fluctuations could significantly andadversely affect the Group’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 thePrivacy Mark certification.

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Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2009

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 andfinancial position.
4) Risks associated with natural disasters
Natural disasters or other unexpected events that disrupt the order processing or shipment operations of theSenshukai Group’s mainstay mail-order business could significantly affect the Group’s operating results andfinancial position. To minimize these risks, Senshukai has established a backup system, bolstered the earthquake
resistance of its facilities, and moved to diversify its distribution centers. We have also established a Crisis
Management Committee and formulated rules applicable to emergencies. Nevertheless, damage to Senshukai
facilities and disruptions to order processing or shipment operations resulting from a major disaster could
significantly and adversely affect the Group’s operating results and financial position.
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
amount of time to restore the system could significantly and adversely affect the Group’s operating results andfinancial position since almost all operations at Senshukai are processed by computer.
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 withall laws and regulations. If the 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 demandand sales in the Senshukai Group’s mainstay mail-order business, significantly 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 greaterthan expected increase in the price of paper, pulp, and other raw materials, as well as price hikes by transportationcompanies that deliver the Group’s products to reflect surging crude oil prices, could significantly and adversely
affect the Group’s operating results.
9) Risks associated with share price fluctuation
The Senshukai Group holds marketable shares, primarily those of its business partners, which means it is subject torisks associated with share price fluctuation. Trends in share prices could significantly and adversely affect theGroup’s operating results and financial position.
10) Forward-looking statements
All forward-looking statements in the “Business Risks” section are based on the judgment of the Senshukai Groupas of the presentation date (January 28, 2010) of this financial report for Fiscal Year 2009.

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Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2009(5) Outlook for Fiscal Year 2010
Senshukai sees an uncertain outlook for the domestic economy, and believes the economy could decelerate going
forward given deteriorating employment conditions, a persistent excess of production capacity, and ongoingdeflation. The Group also believes consumers will become more thrifty and show an increased preference forlow-priced goods as sentiment slumps further. In summary, it believes the business environment does not warrant
optimism.
For the new fiscal year, Senshukai forecasts net sales will decline approximately 3.4% year-over-year to 142,300
million yen given the harsh economic outlook. The Group will move forward with efforts to lower a wide range ofcosts, not just fixed costs, and will prioritize the restructuring of its business with an emphasis on moving from
catalogs to the Internet. All companies within the Group will pull together to continue efforts to shift the Group to a
low-cost basis. Senshukai forecasts operating income of 2,100 million yen, ordinary income of 2,050 million yen,and net income of 1,650 million yen. The Group’s policy going forward is to secure stable profits.
Our earnings forecasts for the new fiscal year are as follows.
Consolidated(Million yen)
Net sales

Operating income

Ordinary income

Net income

Fiscal Year 2010 (forecast)

142,300

2,100

2,050

1,650

Fiscal Year 2009 (results)

147,292(2,405)(1,410)(3,811)

(3.4)

-

-

-

Change (%)

Non-consolidated(Million yen)
Operating income

Ordinary income

Fiscal Year 2010 (forecast)

Net sales
131,300

2,100

2,200

1,800

Fiscal Year 2009 (results)

136,941(2,347)(617)(3,664)

(4.1)

-

-

-

Change (%)

Net income* 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) Financial Report for Fiscal Year 2009

2. Group Organization
The Senshukai Group comprises the parent company, 24 subsidiaries, and 3 affiliates. Mail-order sales is themainstay 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 businesssegments.
Segment
Mail-orderbusiness

Otherbusinesses

Major business activity
Mail order

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

Company
Senshukai Co., Ltd., Senshukai Service Hanbai Co., Ltd.,Senshukai Iihana Co., Ltd., RG Marketing Co., Ltd.,
Shanghai Senshu Merchant and Commerce Co., Ltd.,Senshukai Hong Kong Ltd., Luckwin Summit (China) Co.,
Ltd., SENTENs Co., Ltd., Mobakore Co., Ltd., K. Sense Co.,
Ltd., and 7 other companies
Senshukai Call Center Co., Ltd.
Senshu Logisco 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 3 other companies
Senshu Transportation Co., Ltd.

Schematic of businesses-8-Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2009

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
to enhance corporate value and mutual prosperity.
(2) Key Performance Indicators
Our medium-term management plan (runs from Fiscal Year 2008 through Fiscal Year 2010) aims to maximize groupstrengths, and targets strong growth in existing core businesses and new businesses.
Going forward, we aim to enhance corporate value by increasing growth and improving the earnings structure.
(3) Medium- to Long-term Corporate Management Strategy
We have formulated a three-year medium-term management plan that ends in Fiscal Year 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 toachieve synergies.
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 damaging 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
the early 20s market, but steadily win this customer segment over through alliances with other companies and M&A,
and through 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.
2) Fiscal Year 2009 strategies in the Medium-term Management Plani. Promotion of Channel Mix
Each division will have channel control functions starting from previous fiscal year, and will be responsible forpromoting channel mix including administration of channel sales and implementation of policies for Internet andbrick-and-mortar stores. Internet sales totaled 67,100 million yen throughout the Group (of this, pure Internet sales
totaled 41,000 million yen), and we opened five new storefront Kurasu Fuku stores, bringing the total number ofthese stores to 11. We intend to deepen the reach of our sales channels going forward.

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Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2009

ii. Development of Multiple Brands
We are redefining the Belle Maison brand, and working to clarify Belle Maison brands from other brands to improvetheir respective values, and by extension, raise the Senshukai group’s overall value.
iii. Expansion of Customer Base
20s: To capture more customers in their 20s, we renewed the catalog Fashion Plus in March 2009, optimizing its
product lineup, item numbers, and pricing range to suit the lifestyles and tastes of the catalog’s target customer
base. Also, we launched at our website new online services, such as one that allows users to virtually try on
different items, to complement our catalog services, we offered new products that can only be bought online,
and we began offering new brands. We also inserted in the magazine With a bound-in catalog booklet.
50s: For members in their 50s, we launched in July 2009 Kadokawa SS Communications Inc (Kadokawa SSC), and
K. Sense Co., Ltd. to run a seniors’ mail-order business and marketing business. We offered and developed
products that suit the tastes’ of women in their 50s via bound-in catalog booklets inserted in Kadokawa SSC’s
monthly magazine Mainichi ga Hakken (Everyday Brings a New Discovery).
iv. SCM (supply chain management) Promotion
The “delivery-to-order ratio” and the “rapid delivery ratio” improved over the previous fiscal year. Also, we
drastically reduced the value of inventories by approximately 4,000 million yen year-over-year by implementing
bargains quickly after the expiration of catalogs, by implementing bargains over the Internet, and by making precise
orders. We aim to optimize inventory levels going forward to improve the cost ratio.
(4) Other Important Business Matters
Not applicable.

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Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2009

4. Consolidated Financial Statements(1) Consolidated Balance Sheets(Million yen)
Fiscal Year 2009
(As of Dec. 31, 2009)

Fiscal Year 2008
(As of Dec. 31, 2008)
AssetsCurrent assets
Cash and deposits*2

Notes and accounts receivable-trade
Short-term investment securities
Inventories
Merchandise and finished goods
Raw materials and supplies

7,670

*2

8,613

10,888

10,248524

182

16,497--

10,967-

112

Deferred tax assets

1,009

545

Accounts receivable-other

8,028

7,568

Other

5,695

4,174

Allowance for doubtful accounts

(316)

(294)

Total current assets

49,99842,117

Noncurrent assets
Property, plant and equipment
Buildings and structures*2

34,365*2

34,570

Accumulated depreciation(19,305)(20,351)

Buildings and structures, net

15,05914,219Machinery, equipment and vehicles

12,071

12,154(10,938)(11,034)

Accumulated depreciation

1,133

1,120

Tools, furniture and fixtures

Machinery, equipment and vehicles, net

3,313

3,136

Accumulated depreciation(2,151)(2,080)Tools, furniture and fixtures, net

1,162

Land

*4

Construction in progress
Total property, plant and equipment

11,1681,056*4

11,07813577

28,53628,052Intangible assets
Goodwill

2,963

2,793

Other

2,502

2,756

Total intangible assets

5,465

5,549

Investments and other assets
Investment securities*1

11,368*1

9,378Long-term loans receivable

826

631

Lease and guarantee deposits

1,626

1,673

Deferred tax assets

1,546

196

Other

4,894

4,449

Allowance for doubtful accounts

(203)

(210)

Total investments and other assets
Total noncurrent assets
Total assets- 11 -

20,058

16,11854,06049,720104,059

91,837

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2009

(Million yen)
Fiscal Year 2009
(As of Dec. 31, 2009)

Fiscal Year 2008
(As of Dec. 31, 2008)
Liabilities
Current liabilities
Notes and accounts payable-trade

8,527

Short-term loans payable*2

Current portion of bonds

9,957
*2

66

6,934
*2,*5

5,923

*2

766

Accounts payable-other

6,508

6,754

Accounts payable-factoring

15,78913,707

Accrued expenses

1,854

1,983

Income taxes payable

194

271

Accrued consumption taxes

289

361

-

2

Deferred tax liabilities
Provision for sales promotion expenses
Forward exchange contracts
Other
Total current liabilities

346

526

9,788

3,045

831

1,043

54,15341,321

Noncurrent liabilities
Bonds payable*2Long-term loans payable*2

Deferred tax liabilities
Deferred tax liabilities for land revaluation

168

*2

4,052

4,112

*2

7,584

-

1

764

756

Provision for retirement benefits

45

35

Provision for directors’ retirement benefits

335

-

Other

206

178

Total noncurrent liabilities

5,631

12,60959,78453,93020,35920,359

Capital surplus

21,03821,038Retained earnings

14,064

9,517

Treasury stock(631)(2,774)

Total shareholders’ equity

54,83048,140Total liabilities
Net assets
Shareholders’ equity
Capital stock

Valuation and translation adjustments
Valuation difference on available-for-sale securities(1,312)(1,013)

Deferred gains or losses on hedges(2,038)(2,044)

Revaluation reserve for land

(7,103)(7,067)

Foreign currency translation adjustment

(130)

(122)

Total valuation and translation adjustments(10,584)(10,247)

Minority interests
Total net assets
Total liabilities and net assets- 12 -

29

14

44,27437,906

104,059

91,837

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2009

(2) Consolidated Statements of Income(Million yen)
Fiscal Year 2009
(Jan. 1, 2009 – Dec. 31, 2009)

Fiscal Year 2008
(Jan. 1, 2008 – Dec. 31, 2008)
Net sales

158,285

Cost of sales*1

81,912Gross profit

147,292*1

76,37378,92768,364

Selling, general and administrative expenses
Freightage and packing expenses

10,193

8,849

Promotion expenses
Provision for allowance for sales promotion
expenses
Provision of allowance for doubtful accounts

25,30323,507

346

525

287

273

46

39

Bad debts expenses
Directors’ compensations

577

565

Salaries and allowances

11,206

11,631

Bonuses

1,372

1,429

Provision for retirement benefits

13

19

Provision for directors’ retirement benefits

61-

Depreciation

2,127

2,501

Other

22,423

21,427

Total selling, general and administrative expenses*2

73,960Operating income (loss)

2,413

*2

70,770(2,405)Non-operating income
Interest income

270

90

Dividends income

172

314

-

1,403

Foreign exchange gains
Gain on valuation of compound financial
instruments
Co-sponsor fee

-

21

103

42

Miscellaneous income

377

276

Total non-operating income

924

2,148

Non-operating expenses
Interest expenses
Loss on valuation of compound financial
instruments
Equity in losses of affiliates

162

317

1,331

-

247

65

Foreign exchange losses

5,904

-

Commission fee-

450

Bond issuance cost-

127

Miscellaneous loss
Total non-operating expenses
Ordinary loss

245

193

7,890

1,154

(4,553)(1,410)Extraordinary income
Gain on sales of noncurrent assets

*3

245

*3

1

Gain on redemption of debt-

42

Total extraordinary income

245

43

- 13 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2009

(Million yen)
Fiscal Year 2009
(Jan. 1, 2009 – Dec. 31, 2009)

Fiscal Year 2008
(Jan. 1, 2008 – Dec. 31, 2008)
Extraordinary loss
Loss on sales and retirement of noncurrent assets

*4

759

*4

95

Loss on valuation of investment securities

594

573

Loss on sales of investment securities

28

576

Impairment loss

*5

153

*5

356

Special retirement expenses

48

Loss on valuation of golf club membership

2-

Provision of allowance for doubtful accounts

1

28

Other

-

-

95

1,587

1,726

(5,895)(3,093)

Income taxes-current

444

322

Income taxes-deferred

(74)

432

Total income taxes

370

754

Total extraordinary losses
Loss before income taxes and minority interests

Minority interests in income (loss)
Net loss- 14 -

5(36)(6,271)(3,811)Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2009

(3) Consolidated Statements of Changes in Net Assets(Million yen)
Fiscal Year 2008
Fiscal Year 2009
(Jan. 1, 2008 – Dec. 31, 2008) (Jan. 1, 2009 – Dec. 31, 2009)
Shareholders’ equity
Capital stock
Balance at the end of previous period

20,35920,359Changes of items during the period
Total changes of items during the period
Balance at the end of current period--

20,35920,35921,03821,038

Capital surplus
Balance at the end of previous period
Changes of items during the period
Disposal of treasury stock0(0)

Total changes of items during the period0(0)21,03821,03821,691

14,064

Dividends from surplus(1,027)(700)

Net loss(6,271)(3,811)

(256)

(35)

(70)

-

(7,626)(4,547)

14,064

9,517

(630)

(631)

(1)

(2,142)

Balance at the end of current period
Retained earnings
Balance at the end of previous period
Changes of items during the period

Reversal of revaluation reserve for land
Increase (decrease) in retained earnings due to change in
the number of consolidated subsidiaries and equity
method affiliates
Total changes of items during the period
Balance at the end of current period
Treasury stock
Balance at the end of previous period
Changes of items during the period
Purchase of treasury stock
Disposal of treasury stock

0

0

(1)

(2,142)(631)(2,774)62,45854,830

Dividends from surplus(1,027)(700)

Net loss

Total changes of items during the period
Balance at the end of current period
Total shareholders’ equity
Balance at the end of previous period
Changes of items during the period(6,271)(3,811)

Purchase of treasury stock(1)(2,142)

Disposal of treasury stock

0

0

(256)

(35)

(70)

-

(7,627)(6,690)54,83048,140

Reversal of revaluation reserve for land
Increase (decrease) in retained earnings due to change in
the number of consolidated subsidiaries and equity
method affiliates
Total changes of items during the period
Balance at the end of current period- 15 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2009

(Million yen)
Fiscal Year 2008
Fiscal Year 2009
(Jan. 1, 2008 – Dec. 31, 2008) (Jan. 1, 2009 – Dec. 31, 2009)
Valuation and translation adjustments
Valuation difference on available-for-sale securities
Balance at the end of previous period
Changes of items during the period
Net changes of items other than shareholders’ equity
Total changes of items during the period
Balance at the end of current period
Deferred gains or losses on hedges
Balance at the end of previous period
Changes of items during the period
Net changes of items other than shareholders’ equity
Total changes of items during the period
Balance at the end of current period
Revaluation reserve for land
Balance at the end of previous period
Changes of items during the period
Net changes of items other than shareholders’ equity
Total changes of items during the period
Balance at the end of current period
Foreign currency translation adjustment
Balance at the end of previous period
Changes of items during the period
Net changes of items other than shareholders’ equity
Total changes of items during the period
Balance at the end of current period
Total valuation and translation adjustments
Balance at the end of previous period
Changes of items during the period
Net changes of items other than shareholders’ equity
Total changes of items during the period
Balance at the end of current period
Minority interests
Balance at the end of previous period
Changes of items during the period
Net changes of items other than shareholders’ equity
Total changes of items during the period
Balance at the end of current period
Total net assets
Balance at the end of previous period
Changes of items during the period
Dividends from surplus
Net loss
Purchase of treasury stock
Disposal of treasury stockReversal of revaluation reserve for land
Increase (decrease) in retained earnings due to change in thenumber of consolidated subsidiaries and equity method
affiliates
Net changes of items other than shareholders’ equity
Total changes of items during the period
Balance at the end of current period- 16 -

486(1,312)(1,798)(1,798)299
299(1,312)(1,013)376(2,038)(2,415)(2,415)(6)(6)(2,038)(2,044)(7,359)(7,103)

256
256

35
35

(7,103)(7,067)

(16)

(130)

(114)
(114)

8
8

(130)

(122)

(6,512)(10,584)(4,072)(4,072)

336
336(10,584)(10,247)

10

29

18
18

(14)
(14)

29

14

55,95544,274(1,027)(6,271)
(1)
0
(256)

(700)
(3,811)(2,142)
0
(35)

(70)

-

(4,053)322(11,681)(6,367)44,27437,906

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2009

(4) Consolidated Statements of Cash Flows(Million yen)
Fiscal Year 2008
Fiscal Year 2009
(Jan. 1, 2008 – Dec. 31, 2008) (Jan. 1, 2009 – Dec. 31, 2009)
Net cash provided by (used in) operating activities
Loss before income taxes and minority interests(5,895)(3,093)

Depreciation and amortization

2,140

2,503

Impairment loss

153

356

Increase (decrease) in allowance for doubtful accounts

(61)

(14)

Increase (decrease) in allowance for sales promotion expenses

212

180

Interest and dividends income

(442)

(404)

Interest expenses

162

317

5,797

(1,528)

247

65

1,331

(21)

-

127

Foreign exchange losses (gains)
Equity in (earnings) losses of affiliates
Loss (gain) on valuation of compound financial instruments
Bond issuance cost
Loss (gain) on sales of noncurrent assets
Loss (gain) on sales of investment securities

(245)

(1)

-

576

Loss (gain) on sales and retirement of noncurrent assets

759

95

Loss (gain) on valuation of investment securities

594

573

Decrease (increase) in notes and accounts receivable-trade
Decrease (increase) in inventories
Decrease (increase) in other current assets
Increase (decrease) in notes and accounts payable-trade

350

665

2,844

5,440

950

1,908

(3,183)(1,605)

Increase (decrease) in accrued consumption taxes

249

82

Increase (decrease) in other current liabilities(51)(1,871)Other, net

87

(29)

Subtotal

5,998

4,325

Interest and dividends income received

417

433

Interest expenses paid

(163)

(270)

-

(3,760)

Income taxes paid

(2,404)(206)

Net cash provided by (used in) operating activities

3,849

521

Payments for cancelation money on derivative contract

Net cash provided by (used in) investing activities
Purchase of property, plant and equipment(2,617)(1,384)

Proceeds from sales of property, plant and equipment

447

3

Purchase of intangible assets

(659)

(987)

0

-

(2,473)(88)

Proceeds from sales of investment securities

825

1,000

Proceeds from withdrawal of time deposits-

200

Proceeds from sales of intangible assets
Purchase of investment securities

Decrease (increase) in time deposits
Purchase of investments in subsidiaries
Purchase of investments in subsidiaries resulting in change inscope of consolidation
Other, net
Net cash provided by (used in) investing activities- 17 -

*2

(997)

-

-

(65)

(2,297)

-

382

181

(7,388)(1,141)Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2009

(Million yen)
Fiscal Year 2008
Fiscal Year 2009
(Jan. 1, 2008 – Dec. 31, 2008) (Jan. 1, 2009 – Dec. 31, 2009)
Net cash provided by (used in) financing activities
Net increase (decrease) in short-term loans payable

4,566(5,000)

Proceeds from long-term loans payable

5,052

7,184

Repayment of long-term loans payable(358)(2,761)-

4,872

Redemption of bonds

(33)

(416)

Purchase of treasury stock(1)(2,142)

Proceeds from sales of treasury stock00

Proceeds from issuance of bonds

Cash dividends paid

(1,026)(700)

Net cash provided by (used in) financing activities

8,199

1,035

-

(2)

Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents

4,660

413

Cash and cash equivalents at beginning of period
Increase in cash and cash equivalents from newly consolidated
subsidiary

3,526

8,186

-

195

Cash and cash equivalents at end of period*1- 18 -

8,186

*1

8,795

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2009

Going Concern Assumption
Not applicable.
Significant Accounting Policies for the Preparation of Consolidated Financial Statements
Fiscal Year 2008
Fiscal Year 2009
(Jan. 1, 2008 – Dec. 31, 2008)(Jan. 1, 2009 – Dec. 31, 2009)
1. Scope of consolidation
1. Scope of consolidation(1) Number of consolidated subsidiaries: 14(1) Number of consolidated subsidiaries: 13
Main consolidated subsidiaries:
Main consolidated subsidiaries:
Senshukai General Services Co., Ltd.
Senshukai General Services Co., Ltd.
Senshu Logisco Co., Ltd.
Senshu Logisco Co., Ltd.
Senshukai Call Center Co., Ltd.
Senshukai Call Center Co., Ltd.
Dears Brain Inc.
Dears Brain Inc.
Shanghai Senshu Merchant and Commerce Co., Ltd.,Dears Brain Inc., previously accounted for by the
non-consolidated subsidairy in the previous fiscal year, wasequity-method affiliate, was included in the scope of
consolidation due to the acquisition of additional shares in May included in the scope of consolidation due to its increased
importance.
2008. The equity method was applied for the current interim
Senshukai Retailing Service Co., Ltd. was included in the scope
period, as Senshukai sets the assumed acquisition date to theof consolidation due to its establishment.
interim consolidated balance sheet date.
Future Compass Co., Ltd. was liquidated and excluded from
Future Compass Co., Ltd. was liquidated in December 2008.
consolidation in December 2008.
(2) Number of non-consolidated subsidiaries: 10(2) Number of non-consolidated subsidiaries: 11
Main non-consolidated subsidiaries:
Main non-consolidated subsidiaries:
Senshukai Hong Kong Ltd.
Senshukai Hong Kong Ltd.
Reason for exclusion from scope of consolidation
Reason for exclusion from scope of consolidation
Same as on the left.
The consolidated financial statements do not include theaccounts of above mentioned non-consolidated subsidiaries
since their total assets, net sales, net income/loss (equity inearnings) or retained earnings (equity in earnings) have nosignificant effect on the overall results of consolidated financial
statements.
2. Application of equity method
2. Application of equity method(1) Number of non-consolidated subsidiaries accounted for by(1) Number of non-consolidated subsidiaries accounted for by
the equity method: 3
the equity method: 4Same as on the left.
Main non-consolidated subsidiaries accounted for by the equity
method:Shanghai Senshu Merchant and Commerce Co., Ltd. wasSenshukai Hong Kong Ltd.
included in the scope of consolidation and excluded from theequity-method non-consolidated subsidiary in the current fiscal
year due to its increased importance.
(2) Number of equity-method affiliates: 3
Equity-method affiliates:
SENTENs Co., Ltd.
Mobakore Co., Ltd.
K. Sense Co., Ltd.
Dears Brain Inc. was treated as an equity-method affiliate in the K. Sense Co., Ltd. was included in the scope of equity-method
affiliate due to its establishment.
current interim period due to the acquisition of shares in
November 2007, but moved from an equity-method affiliate toa consolidated subsidiary following the acquisition of
additional shares in May 2008. The equity method was applied
for the current interim period, and losses included withinvestment loss on equity method, as Senshukai sets theassumed acquisition date to the interim consolidated balance
sheet date.

(2) Number of equity-method affiliate: 2
Equity-method affiliate:
SENTENs Co., Ltd.
Mobakore Co., Ltd.

- 19 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2009

Fiscal Year 2008
(Jan. 1, 2008 – Dec. 31, 2008)
Mobakore Co., Ltd. was included in the scope of theequity-method affiliate due to its increased importance.

Fiscal Year 2009
(Jan. 1, 2009 – Dec. 31, 2009)(3) Of the companies accounted for by the equity method,certain companies have balance sheet date more than six
months distant from that of the Company. To prepare forconsolidated financial statements, most recent interim
financial statements from the consolidated balance sheet
date of such companies are used.
We make consolidated adjustments as necessary for majortransactions that occur subsequently in the period before theconsolidated balance sheet date.

(3) Of the companies accounted for by the equity method,certain companies have balance sheet date more than six
months distant from that of the Company. To prepare forconsolidated financial statements, most recent
second-quarter financial statements from the consolidatedbalance sheet date of such companies are used.
We make consolidated adjustments as necessary for majortransactions that occur subsequently in the period before theconsolidated balance sheet date.

(4) Main non-consolidated subsidiaries and affiliates not(4) Main non-consolidated subsidiaries and affiliates notaccounted for by the equity method:
accounted for by the equity method:
Innovation Information Technology (Shanghai) Co., Ltd.
Innovation Information Technology (Shanghai) Co., Ltd.
Reason for not accounted for by the equity method
Reason for not accounted for by the equity method
Same as on the left.
The above-mentioned entity is not accounted for under theequity method since its net income/loss (equity in earnings) orretained earnings (equity in earnings) have no significant effecton the overall results of consolidated financial statements.
3. Fiscal years for consolidated subsidiaries
The fiscal years of all consolidated subsidiaries coincide with
Senshukai’s fiscal year.
Dears Brain Inc. has changed its balance sheet date from June
30 to December 31 in the current fiscal year.

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) Short-term 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 andother factors, with unrealized gains or losses, net of
applicable taxes, reported in a separate component of net
assets. The cost of available-for sale securities sold isdetermined based on the moving-average method.

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

Available-for-sale securities whose fair value is not readily
determinable are stated at cost based on the moving-averagemethod.

Same as on the left.

2) Derivatives
Derivatives are stated at market value.

2) Derivatives

3) Inventories
Inventories are stated at the lower of cost, determined by themonthly average method, or market.

3) Inventories
Inventories are stated at cost determined by the monthly
average method (the carrying value on the balance sheet iswritten down to reflect the effect of lower profit margins).

Same as on the left.

- 20 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2009

Fiscal Year 2008
(Jan. 1, 2008 – Dec. 31, 2008)(2) Method for depreciating and amortizing important assets
1) Property, plant and equipment
Depreciation is computed by the declining-balance method, but
the straight-line method is applied to buildings (excluding
attached structures) acquired on or after April 1, 1998.

Fiscal Year 2009
(Jan. 1, 2009 – Dec. 31, 2009)(2) Method for depreciating and amortizing important assets
1) Property, plant and equipment (excluding lease assets)
Same as on the left.

The range of useful lives is as follows:
Buildings and structures: 38-50 years
Machinery, equipment and vehicles: 12 years(Supplemental information)
Following the revision of the Corporate Tax Law, property,
plant and equipment purchased on or before March 31, 2007 isdepreciated equally 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 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 decreased 53
million yen, and ordinary loss and loss before income taxes andminority interests increased by 53 million yen each.
The impact on segment businesses can be found in applicableportions of this report.

(Supplemental information)
Effective from the current fiscal year, the Company and its
domestic consolidated subsidiaries have reviewed the useful
lives of machinery and equipment, etc. as a result of revision to
the Corporate Tax Law and consequently have revised theuseful lives as stipulated in the revised law. This change has no
significant effect on the amount of income.

2) Intangible assets
Intangible assets are amortized using the straight-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 (excluding lease assets)
Same as on the left.

3) Lease assets

3) Lease assets
The straight-line method with no residual value is applied withthe lease period used as the useful life of the asset. For financelease transactions where there is no transfer of ownershipbeginning on or before December 31, 2008, depreciation is
calculated using an accounting method that is based on themethod used for ordinary lease transactions.

(3) Accounting for deferred assets(3) Accounting for deferred assets
Bond issuance cost
Charged to income as accrued.

(4) Accounting for allowances
1) Allowance for doubtful accounts
The allowance for doubtful accounts provides for possible
losses arising from default on accounts receivable. The
allowance is made up of two components: the estimated credit
loss for doubtful receivables based on an individual assessmentof each account, and a general reserve calculated based on
historical default rates.

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

2) Provision for directors’ bonuses
Bonuses to directors and corporate auditors of Senshukai andconsolidated subsidiaries are provided at the amount which
would be required for future estimated bonus obligations.
There are no future estimated bonus obligations in this fiscal
year.

2) Provision for directors’ bonuses
Same as on the left.

- 21 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2009

Fiscal Year 2008
(Jan. 1, 2008 – Dec. 31, 2008)
3) Provision 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 historical redemption ratios.

Fiscal Year 2009
(Jan. 1, 2009 – Dec. 31, 2009)3) Provision for sales promotion expenses
Same as on the left.

4) Provision for 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 are calculated based on thecompendium method.

4) Provision for retirement benefits
Same as on the left.

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

5) Provision for directors’ retirement benefits(Supplemental information)
Retirement benefits to directors and corporate auditors of
Senshukai and of certain consolidated subsidiaries, andSenshukai’s executive officers are provided at the amountwhich would be required if all of them retired at the balance
sheet date pursuant to the internal rules. However, annual
general meeting held on March 27, 2009 resolved to pay current
directors and corporate auditors, upon retirement, a lump sum
for their term of service up through the day of abolishment of
the system. As a result, the Company has drawn down the entirebalance of provision for directors’ retirement benefits, andincluded in the unpaid amount in the “Accounts payable-other”
under current liabilities.

(5) Conversion of credit and liabilities in foreign currencies toJapanese currency
All short-term and long-term monetary receivables andpayables denominated in foreign currencies are translated into
Japanese yen at the spot exchange rates as of the balance sheet
date. The foreign exchange gains and losses from translation
are recognized in the statements of income to the extent thatthey are not hedged by forward exchange contracts, currency
swaps and currency options. The 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 balance sheet date, and foreignexchange gains and losses from translation are included in theforeign currency translation adjustments under net assets.

(5) Conversion of credit and liabilities in foreign currencies toJapanese currency
Same as on the left.

(6) Accounting for promotion expenses
The Company conducts a mail-order business, and amongpromotion expenses, catalog-related expenses corresponding to
net sales in the next fiscal year are classified as prepaid
expenses and included in “Other” under current assets to better
match expenses to earnings in each year.

(6) Accounting for promotion expenses
Same as on the left.

(7) Accounting for leases
Finance leases, other than those that transfer ownership of theleased assets to the lessees, are treated in the same way as
ordinary operating leases for accounting purposes.

(7) Accounting for leases- 22 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2009

Fiscal Year 2008
(Jan. 1, 2008 – Dec. 31, 2008)(8) Accounting for hedging
1) Hedge accounting methods
The deferred hedge accounting method is adopted.

Fiscal Year 2009
(Jan. 1, 2009 – Dec. 31, 2009)(8) Accounting for hedging
1) Hedge accounting methods
Same as on the left.

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

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

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

3) Hedging policy
Same as on the left.

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 forward exchange contracts and other
instruments used in payment for imports and others, theevaluation is omitted in cases where such hedging operations
deems to fully offset cash flow variances that may be caused
due to fluctuation in foreign currency exchange.
(9) Accounting for consumption taxes
Financial statements are prepared exclusive of national andregional consumption taxes.

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

5. Valuation of consolidated subsidiaries’ assets and liabilities
The assets and liabilities of consolidated subsidiaries areevaluated using the fair value method.

5. Valuation of consolidated subsidiaries’ assets and liabilities
Same as on the left.

6. Amortization of goodwill and negative goodwill
Amortization of goodwill and negative goodwill are estimatedfor each period in which it is expected to emerge, and thenequally amortized over the designated amortization period.

6. Amortization of goodwill and negative goodwill
Same as on the left.

7. Scope of cash and cash equivalents
Cash and cash equivalents are cash on hand and short-term
investments that are readily convertible into cash, and that are
exposed to insignificant risk of changes in value. Cashequivalents include time deposits and bond funds, all of whichmature or become due within three months of the date ofacquisition.

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

- 23 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2009

Changes in Significant Accounting Policies for the Preparation of Consolidated Financial Statements
Fiscal Year 2008
(Jan. 1, 2008 – Dec. 31, 2008)

Fiscal Year 2009
(Jan. 1, 2009 – Dec. 31, 2009)(1) Application of “Accounting Standards for Measurement of
Inventories”
In prior years, inventories for regular sales purposes werestated at the lower of cost, determined by the monthly averagemethod, or market. With the adoption of “AccountingStandards for Measurement of Inventories” (AccountingStandards Board of Japan (ASBJ) Statement No. 9) from thecurrent fiscal year, inventories are stated at cost determined by
the monthly average method (the carrying value on the balance
sheet is written down to reflect the effect of lower profit
margins).
As an effect of this change, operating loss, ordinary loss andloss before income taxes and minority interests increased by
1,195 million yen each. The effect of these changes on segment
operations is shown in the Segment Information section.
(2) Application of “Practical Solution on Unification of
Accounting Policies Applied to Foreign Subsidiaries for
Consolidated Financial Statements”
Effective from the current fiscal year, the Company has
adopted “Practical Solution on Unification of Accounting
Policies Applied to Foreign Subsidiaries for Consolidated
Financial Statements” (ASBJ Practical Issue Task Force(Practical Issues Task Force (PITF)) No. 18).
This change has no effect on the amount of income (loss).
(3) Application of “Accounting Standards for Lease
Transactions”
In prior years, the Company accounted for finance leases
where there is no transfer of ownership as ordinary operatingleases for accounting purposes. However, the Company has
adopted “Accounting Standards for Lease Transactions” (ASBJ
Statement No. 13) and “Guidance on Accounting Standards for
Lease Transactions” (ASBJ Guidance No. 16), using an
accounting method for leases that is based on the method used
for ordinary purchases and sales.
This change has no effect on the amount of income (loss).

- 24 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2009

Reclassifications
Fiscal Year 2008
(Jan. 1, 2008 – Dec. 31, 2008)
Consolidated balance sheets:
1. “Goodwill,” presented as a component of “Intangible assets”
in the previous fiscal year, is shown as a separate line itemsince its amount exceeded 1/100 of total assets in the current
fiscal year.
“Goodwill” included in “Intangible assets” in the previous
fiscal year was 227 million yen.

Fiscal Year 2009
(Jan. 1, 2009 – Dec. 31, 2009)
Consolidated balance sheets:
1.

2.

2. With the adoption of “Cabinet Office Ordinance Partially
Revising Regulation of Financial Statements” (Cabinet
Office Ordinance No. 50, August 7, 2008), “Inventories” isdivided into “Merchandise and finished goods,” and “Rawmaterials and supplies” in the current fiscal year.
The amount of “Merchandise and finished goods,” and “Rawmaterials and supplies” included in “Inventories” in theprevious fiscal year was 16,400 million yen and 97 million
yen.

Consolidated statements of income:
1. “Loss on investments in partnership” under non-operating
expenses stated as a separate item in the previous fiscal year,
is included in “Miscellaneous loss” under non-operating
expenses in the current fiscal year since the amount is
insignificant. “Loss on investments in partnership” in thecurrent fiscal year totaled 20 million yen.

Consolidated statements of income:1.

2. “Expenses related to fixed asset investment” under
non-operating expenses stated as a separate item in theprevious fiscal year, is included in “Miscellaneous loss”
under non-operating expenses in the current fiscal year since
the amount is insignificant. “Expenses related to fixed asset
investment” in the current fiscal year totaled 12 million yen.

2.

Consolidated statements of cash flows:
Consolidated statements of cash flows:1.
1. “Increase (decrease) in provision for retirement benefits”
under net cash provided by (used in) operating activities
stated as a separate item in the previous fiscal year, is
included in “Other, net” under net cash provided by (used in)operating activities in the current fiscal year since theamount is insignificant. “Increase (decrease) in provision for
retirement benefits” in the current fiscal year totaled minus 7
million yen.
2.
2. “Foreign exchange losses (gains),” which was included in“Other, net” under net cash provided by (used in) operating
activities in the previous fiscal year, is shown as a separate
line item in the current fiscal year, to clarify its contents.
“Foreign exchange losses (gains)” included in “Other, net”
under net cash provided by (used in) operating activities in
the previous fiscal year was 831 million yen.

- 25 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2009

Notes to Consolidated Financial Statements
Notes to Consolidated Balance Sheets
Fiscal Year 2008
(As of Dec. 31, 2008)*1. Shares of non-consolidated subsidiaries and affiliates
Investment securities(Million yen)

727

Fiscal Year 2009
(As of Dec. 31, 2009)*1. Shares of non-consolidated subsidiaries and affiliates
Investment securities

677

15
748
763

*2. Assets pledged as collateral(1) Collateral-backed assets
Cash and deposits (Time deposits)
Buildings and structures
Total

15
1,003
1,018

*2. Assets pledged as collateral(1) Collateral-backed assets
Cash and deposits (Time deposits)
Buildings and structures
Total(2) Collateral-backed liabilities
Short-term loans payable
Current portion of bonds
Bonds payable
Long-term loans payable
Total

287
66
168
730
1,251

(2) Collateral-backed liabilities
Short-term loans payable
Current portion of bonds
Bonds payable
Long-term loans payable
Total

253
66
102
477
898

30

3. Contingent liabilities
Guarantees of bank loans
Employees’ housing loans21

3. Contingent liabilities
Guarantees of bank loans
Employees’ housing loans*4. Land revaluation*4. Land revaluation
Same as on the left.
The Company revalued its business-use land in accordancewith the “Law Concerning Revaluation of Land” (Law No. 34
enacted on March 31, 1998) and the “Law to Partially Modify
the Law Concerning Revaluation of Land” (revised on March
31, 1999). The result was included in net assets as“Revaluation reserve for land,” after deducting the deferred tax
liabilities relating to land revaluation.
Method of revaluation by Clause 3, Article 3 of the law
The method is based on Article 16 of the “Land-Value Tax
Law” (Ordinance No. 69 enacted in 1991) as specified byClause 4, Article 2 of the “Enforcement Regulations of the
Law Concerning Revaluations of Land” (Ordinance No. 119
enacted on March 31, 1998), and computation by reasonableadjustment of the value calculated by the Director of the
National Tax Agency to calculate land value as the basis of
calculating land taxes as specified by the latter Ordinance.
Date of revaluation
Mar. 31, 2000
Difference between market value of
relevant land on December 31, 2008
(2,606)and its book value after revaluation

Method of revaluation by Clause 3, Article 3 of the law
Same as on the left.

Date of revaluation
Difference between market value of
relevant land on December 31, 2009and its book value after revaluation

Mar. 31, 2000
(2,500)*5. The Company has commitment line agreements withfinancial institutions in order to raise funds efficiently.
The balance of unused credit lines under these agreements asof the end of the current fiscal year was as follows.
Total commitment line
15,500Credit used
3,000
Credit available
12,500- 26 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2009

Fiscal Year 2008
(As of Dec. 31, 2008)

Fiscal Year 2009
(As of Dec. 31, 2009)
6. Financial covenants
The aforementioned commitment line agreements include
financial covenants, and if any of the following are violated,
the Company could lose the benefit of term of all applicabledebts.
(1) The amount calculated after deducting subscription rights
to shares, minority interests and deferred gains or losses onhedges from total net assets in the consolidated andnon-consolidated balance sheets at the end of each fiscal
year must be 75% or greater than the amount calculated
after deducting subscription rights to shares, minority
interests and deferred gains or losses on hedges from net
assets in the balance sheet at the end of Fiscal Year 2008
(ended on December 31, 2008) or the end of theimmediately preceding fiscal year.
(2) Total liabilities in the consolidated and non-consolidatedbalance sheets at the end of each fiscal year must be lessthan 150% of the amount calculated after deducting
subscription rights to shares, minority interests anddeferred gains or losses on hedges from total net assets inthe balance sheet at the end of each fiscal year.
(3) Operating loss in the consolidated and non-consolidated
statements of income at the end of each fiscal year may not
be recorded for two straight fiscal years.
(4) The amount calculated after deducting cash and deposits
from total interest-bearing debts in the consolidated andnon-consolidated balance sheets at the end of each fiscal
year must not exceed five times the amount calculated after
combining net income and depreciation in the consolidated
and non-consolidated statements of income for two straightfiscal years.

- 27 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2009

Notes to Consolidated Statements of Income(Million yen)
Fiscal Year 2008
(Jan. 1, 2008 – Dec. 31, 2008)*1. Among cost of sales, valuation losses using the lower ofcost or market method were 62 million yen.

Fiscal Year 2009
(Jan. 1, 2009 – Dec. 31, 2009)*1.

*2. R&D expenses included in general and administrative
expenses555*3. Gain on sales of noncurrent assets
Machinery, equipment and vehicles
Land and buildings, otherTotal*4. Losses on sales and retirement of noncurrent assets
Losses on retirement of buildings and structures
Losses on retirement of machinery, equipment andvehiclesLosses on sales of machinery, equipment andvehiclesLosses on retirement of furniture and fixtures, others
Losses on retirement of intangible assets, others
Total

5
239
245

59
185
0
29
483
759

*5. Impairment loss
For the current fiscal year, the Senshukai Group posted
impairment loss on the following asset groups.
(Million yen)
Impairment
Location
Primary use
Type
loss
Pet
Pet First Co.,
Buildings,
businessLtd.
structures,
153(Kawasaki City assets
software, andof Kanagawa,othersother)
In principle, the grouping of assets is based on categories ofmanagement accounting.
The book value of the above asset groups was marked down to
the recoverable amount, reflecting a weak prospects for
improved short-term performance due to worsening operating
profitability. This markdown was posted as an impairment loss.
The impairment loss on buildings and strucures, furniture andfixtures, and software were 55 million yen, 15 million yen and
82 million yen, respectively.
The recoverable amount was measured at its net selling price.

The ending inventory is the amount written down to reflect theeffect of lower profit margins. The following loss on valuationof inventories is included in cost of sales.
1,241*2. R&D expenses included in general and administrative
expenses532*3. Gain on sales of noncurrent assets
Machinery, equipment and vehicles
1
Total
1

*4. Losses on sales and retirement of noncurrent assets
Losses on retirement of buildings and structures
Losses on retirement of machinery, equipment andvehiclesLosses on sales of machinery, equipment andvehiclesLosses on retirement of furniture and fixtures, others
Total

58
5
0
32
95

*5. Impairment loss
For the current fiscal year, the Senshukai Group posted
impairment loss on the following asset groups.
(Million yen)
Impairment
PrimaryType
Locationloss
use
Buildings,
Yamagata City Idle
assetsstructures, land, and198
of Yamagata,othersother
Yao City ofBusiness Buildings,
Osaka, otherassetsstructures, and128
othersOther
Other
Goodwill
29
In principle, business assets are based on categories ofmanagement accounting. Idle assets are accounted
independently.
Of the above asset groups, the Company marked down thebook value of business assets and goodwill to the recoverable
amount reflecting weak prospects for improved short-term
performance due to worsening operating profitability, and it
marked down the book value of idle assets to the recoverable
amount because of a decline in the assets’ market value. These
markdowns were booked as an impairment loss.
The impairment loss on buildings and strucures, land,
goodwill, software and other were 166 million yen, 89 million
yen, 29 million yen, 37 million yen, and 34 million yen,respectively.
The recoverable amount was measured at its net selling price.
The net selling price was rationally estimated based onroadside land prices and other benchmarks.

- 28 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2009

Notes to Consolidated Statements of Changes in Net assets
Fiscal Year 2008 (Jan. 1, 2008 – Dec. 31, 2008)
1. Type and number of outstanding shares and treasury stock
Number of shares
as of Dec. 31, 2007
(Thousand shares)

Increase during thecurrent fiscal year
(Thousand shares)

Decrease during thecurrent fiscal year
(Thousand shares)

Number of shares
as of Dec. 31, 2008
(Thousand shares)

47,630--47,63047,630--47,630Common stock (Note)

916

2

0

917

Total

916

2

0

917

Outstanding shares
Common stock
Total
Treasury stock

Note: Common shares of treasury stock increased by 2 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
Board of Directors meeting on
Jul. 31, 2008

Type of share

Total amount of dividend(Million yen)

Dividend pershare (Yen)Record date

Effective dateCommon stock

653

14

Dec. 31, 2007

Mar. 31, 2008

Common stock373

8Jun. 30, 2008

Sep. 1, 2008

(2) Dividends with a record date in the current fiscal year but an effective date in the following fiscal year
Type of
Total amount of
Resource for Dividend per
share
dividend (Million yen) distribution share (Yen)
Retained
Annual general meeting ofCommon9
420
earnings
shareholders on Mar. 27, 2009 stock
Resolution

Record date

Effective date

Dec. 31, 2008

Mar. 30, 2009

Fiscal Year 2009 (Jan. 1, 2009 – Dec. 31, 2009)
1. Type and number of outstanding shares and treasury stock
Decrease during thecurrent fiscal year
(Thousand shares)

Number of shares
as of Dec. 31, 2009
(Thousand shares)

Number of shares
as of Dec. 31, 2008
(Thousand shares)

Increase during thecurrent fiscal year
(Thousand shares)

47,630--47,63047,630--47,630Common stock (Note)

917

3,401

0

4,319

Total

917

3,401

0

4,319

Outstanding shares
Common stock
Total
Treasury stock

Note: Common shares of treasury stock increased by 3,401 thousand shares due to the purchase of treasury stock (3,400 thousand
shares), pursuant to Article 165 applicable in accordance with Article 165, Clause 3 of the Company Act, and the purchase of
odd-lot shares (1 thousand shares). Common shares of treasury 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. 27, 2009
Board of Directors meeting on
Jul. 30, 2009

Type of share

Total amount of dividend(Million yen)

Dividend pershare (Yen)Record date

Effective dateCommon stock420

9Dec. 31, 2008

Mar. 30, 2009

Common stock280

6Jun. 30, 2009

Sep. 1, 2009

(2) Dividends with a record date in the current fiscal year but an effective date in the following fiscal year
Not applicable.

- 29 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2009

Notes to Consolidated Statements of Cash Flows
Fiscal Year 2008
(Jan. 1, 2008 – Dec. 31, 2008)*1. Reconciliation between balance sheet accounts andyear-end balance of cash and cash equivalents(As of Dec. 31, 2008)
Cash and deposits
7,670
Short-term investment securities
524
Short-term investment securities other than cash
(7)
equivalents
Cash and cash equivalents
8,186*2. Breakdown of assets and liabilities of Dears Brain Inc. asof the date the Company made it a consolidated subsidiary
upon the acquisition of its shares, and the relationship withthe purchase price of Dears Brain stock, and net outlays forthe acquisition
Current assets
242
Noncurrent assets
4,002
Current liabilities(2,709)Noncurrent liabilities(781)
Goodwill
2,871
Minority interests(13)
Acquired surplus after application of the equity
32
methodPurchase price of Dears Brain(1,212)
Purchase price of Dears Brain stock
2,431
Cash and cash equivalents of Dears Brain
(134)
2,297
Net outlays for acquisition of Dears Brain(Million yen)
Fiscal Year 2009
(Jan. 1, 2009 – Dec. 31, 2009)*1. Reconciliation between balance sheet accounts andyear-end balance of cash and cash equivalents(As of Dec. 31, 2009)
Cash and deposits
8,613
Short-term investment securities
182
Cash and cash equivalents
8,795

*2.

- 30 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2009

Segment Information
a. Business segments
Fiscal Year 2008 (Jan. 1, 2008 – Dec. 31, 2008)(Million yen)
Mail-orderbusiness

Other businesses

Elimination or
corporate

Total

Consolidated

I Net sales and operating
income (loss)
Net sales(1) Sales to customers

144,585

13,699158,285-

158,285(2) Inter-segment sales

1,178

1,502

2,681

(

2,681)-

145,764

15,202160,967(

2,681)

158,285

Total
Operating expenses

142,898

15,642

158,540(

2,667)

155,872

Operating income (loss)

2,866

(439)

2,426

(

13)

2,413

II Assets, depreciation,
impairment loss andcapital expenditures
Assets94,264

12,145

106,410(

2,351)

104,059

Depreciation

1,794

346

2,140

-

2,140

Impairment loss
Capital expenditures

-

153

153

-

153

2,544

666

3,211

-

3,211

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, and transportation

3. There are no unallocated operating expenses included in the “elimination or corporate.”
4. There are no corporate assets included in the “elimination or corporate.”
5. Supplemental information
Following the revision of the Corporate Tax Law, property, plant and equipment purchased on or before March 31, 2007
is depreciated equally over five years, and booked as a depreciation, 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 decreased by 52 million yen in the current fiscal
year, and operating loss in other businesses increased 0 million yen.

- 31 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2009

Fiscal Year 2009 (Jan. 1, 2009 – Dec. 31, 2009)(Million yen)
Mail-orderbusiness

Other businesses

Elimination or
corporate

Total

Consolidated

I Net sales and operating
income (loss)
Net sales(1) Sales to customers

130,967(2) Inter-segment sales

16,325147,292-

147,292

1,502

1,328

2,830

(

2,830)-

132,469

17,653150,123(2,830)

147,292

Operating expenses

134,755

17,844

152,599(

2,901)

149,69870(2,405)

2,158)

91,837

Total
Operating income (loss)(2,285)(190)(2,476)

II Assets, depreciation,
impairment loss andcapital expenditures
Assets82,478

11,517

93,996

Depreciation

2,024

479

2,503

-

2,503

Impairment loss

270

85

356

-

356

1,735

888

2,624

-

2,624

Capital expenditures(

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, and transportation

3. There are no unallocated operating expenses included in the “elimination or corporate.”
4. There are no corporate assets included in the “elimination or corporate.”
5. Change in accounting policy
As stated in “Changes in Significant Accounting Policies for the Preparation of Consolidated Financial Statements,”“Accounting Standards for Measurement of Inventories” (ASBJ Statement No. 9) has been adopted with effect from thecurrent fiscal year. As an effect of this change, operating loss in the mail-order business increased by 1,195 million yen
in the current fiscal year.
There is no effect on other businesses.
b. Geographical segment information
Fiscal Year 2008 (Jan. 1, 2008 – Dec. 31, 2008)
As there were no overseas consolidated subsidiaries or significant overseas branch offices, geographical segment information
has not been presented.
Fiscal Year 2009 (Jan. 1, 2009 – Dec. 31, 2009)
Geographic segment information has not been presented because the Company and its consolidated subsidiaries have conducted
over 90% of their total net sales and assets in Japan.

c. Overseas sales
Fiscal Year 2008 (Jan. 1, 2008 – Dec. 31, 2008), Fiscal Year 2009 (Jan. 1, 2009 – Dec. 31, 2009)
Overseas sales have not been presented because they represented less than 10% of total consolidated sales.

- 32 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2009

Short-term Investment Securities
Fiscal Year 2008
1. Available-for-sale securities with fair value (As of Dec. 31, 2008)(Million yen)
Acquisition cost

Carrying value

Diffenrence

Securities with carrying value exceeding acquisition cost(1) Stocks

853

1,082

229

Corporate bonds

-

-

-

Other bonds

-

-

-

-

-

-

853

1,082

229

3,484

2,759

(725)

-

-

-

4,800

2,932

(1,867)

721

460

(261)

Subtotal

9,006

6,152

(2,854)

Total

9,860

7,235

(2,625)(2) Bonds(3) Others
Subtotal
Securities with carrying value not exceeding acquisition cost(1) Stocks(2) Bonds
Corporate bonds
Other bonds(3) Others

Notes: 1. The acquisition costs are amounts that have been treated for impairment loss. The impairment loss totaled 446 millionyen.
2. “Other bonds” in the “Securities with carrying value not exceeding acquisition cost” category includes compound
financial instruments, and the unrealized loss of 1,331 million yen is booked as “Loss on valuation of compound
financial instruments” under non-operating expenses.
2. Available-for-sale securities sold during the fiscal year (Jan. 1, 2008 – Dec. 31, 2008)
Proceeds

Total gains on sales
825(Million yen)
Total losses on sales-

28

3. Carrying value of available-for-sale securities whose fair value is not readily determinable (As of Dec. 31, 2008)(Million yen)
Category

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

3,308

MMF, others

516

Others105(2) Subsidiary and affiliate stock
Subsidiary and affiliate stock

727

Note: The carrying values are amounts that have been treated for impairment loss. The impairment loss totaled 147 million yen.
4. Projected future redemption of securities with maturities classified as available-for-sale securities (As of Dec. 31, 2008)(Million yen)
1 year or lessMore than 1 year to 5 years

More than 5 to 10 years--

More than 10 years

Bonds
Corporate bonds--

Other bonds

-

800

200

3,800

Total

-

800

200

3,800

- 33 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2009

Fiscal Year 2009
1. Available-for-sale securities with fair value (As of Dec. 31, 2009)(Million yen)
Acquisition cost

Carrying value

Diffenrence

Securities with carrying value exceeding acquisition cost(1) Stocks

749

1,010

260

-

-

-

200

204

4

23

28

4

972

1,242

269

3,559

2,851

(707)

-

-

-

4,600

2,736

(1,863)

664

464

(199)

Subtotal

8,823

6,053

(2,770)

Total

9,796

7,295

(2,501)(2) Bonds
Corporate bonds
Other bonds(3) Others
Subtotal
Securities with carrying value not exceeding acquisition cost(1) Stocks(2) Bonds
Corporate bonds
Other bonds(3) Others

Notes: 1. The acquisition costs are amounts that have been treated for impairment loss. The impairment loss totaled 28 millionyen.
2. “Other bonds” in the “Securities with carrying value not exceeding acquisition cost” category includes compound
financial instruments, and the unrealized gains of 21 million yen is booked as “Gains on valuation of compound
financial instruments” under non-operating expenses.
2. Available-for-sale securities sold during the fiscal year (Jan. 1, 2009 – Dec. 31, 2009)
Proceeds

Total gains on sales
1,000(Million yen)
Total losses on sales-

576

3. Carrying value of available-for-sale securities whose fair value is not readily determinable (As of Dec. 31, 2009)(Million yen)
Category

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

1,345

MMF, others

182

Others59(2) Subsidiary and affiliate stock
Subsidiary and affiliate stock

677

Note: The carrying values are amounts that have been treated for impairment loss. The impairment loss totaled 545 million yen.
4. Projected future redemption of securities with maturities classified as available-for-sale securities (As of Dec. 31, 2009)(Million yen)
1 year or lessMore than 1 year to 5 years

More than 5 to 10 years

More than 10 years

Bonds
Corporate bonds

-

-

-

-

Other bonds

-

1,000

-

3,800

Total

-

1,000

-

3,800

- 34 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2009

Derivatives
Fiscal Year 2008
1. Matters concerning financial derivative transactions (Jan. 1, 2008 – Dec. 31, 2008)
The Company uses forward exchange contracts for foreign currency-denominated accounts payable to prepare for foreignexchange fluctuation risks in import transactions. Long-term forward exchange contracts are made within the limits of internallydetermined import plans, and the Company’s policy is for these contracts not to exceed future scheduled settlement amounts.
Speculation is not the purpose of derivative transactions.
The Company’s forward exchange contracts embody general market risk from fluctuation in foreign exchange markets. However,it sees little risk of contract default as its derivative transactions are with highly creditworthy financial institutions.
The Accounting Dept. is responsible for managing derivative transactions, and it makes and manages contracts based on internal
rules and in line with decisions made by the general manager of the Accounting Dept.

2. Information on market values (As of Dec. 31, 2008)
Contract amounts, fair value and unrealized gain (loss) on derivatives(Million yen)
Fiscal Year 2008
(As of Dec. 31, 2008)

Type oftransaction

Derivatives

Unrealized gain
(loss)

Contract amounts

Contract amounts
due after one year

7,550

7,550

6,896

(469)

Receive US dollars/Pay yen

6,190

4,096

(5,897)(5,897)

Total

13,741

11,647998(6,367)

Fair value

Forward exchange contracts
Buy
OTC transactions

US dollars
Currency swap transactions

Notes: 1. Valuation method
Forward exchange contracts: calculated based on forward exchange rates.
Currency swap transactions: calculated based on quotations posted by principal financial institutions.
2. The contract amounts of currency swap transactions represent contractual values or notional principal values. Theseamounts do not represent by themselves the market risk and credit risk related to the derivative financial instruments.
3. Items for which hedge accounting is applied are excluded.

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Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2009

Fiscal Year 2009
1. Matters concerning financial derivative transactions (Jan. 1, 2009 – Dec. 31, 2009)
The Company uses forward exchange contracts for foreign currency-denominated accounts payable to prepare for foreignexchange fluctuation risks in import transactions. Long-term forward exchange contracts are made within the limits of internallydetermined import plans, and the Company’s policy is for these contracts not to exceed future scheduled settlement amounts.
Speculation is not the purpose of derivative transactions.
The Company’s forward exchange contracts embody general market risk from fluctuation in foreign exchange markets. However,it sees little risk of contract default as its derivative transactions are with highly creditworthy financial institutions.
The Accounting Dept. is responsible for managing derivative transactions, and it makes and manages contracts based on internal
rules and in line with decisions made by the Board of Directors.

2. Information on market values (As of Dec. 31, 2009)
Contract amounts, fair value and unrealized gain (loss) on derivatives(Million yen)
Fiscal Year 2009
(As of Dec. 31, 2009)

Type oftransaction

Derivatives

Unrealized gain
(loss)

Contract amounts

Contract amounts
due after one year

3,182

3,182

Receive US dollars/Pay yen

1,657

1,657

(846)

(846)

Total

4,839

4,839

2,181

(1,000)Fair value

Forward exchange contracts
Buy
OTC transactions

US dollars

3,028

(153)

Currency swap transactions

Notes: 1. Valuation method
Forward exchange contracts: calculated based on forward exchange rates.
Currency swap transactions: calculated based on quotations posted by principal financial institutions.
2. The contract amounts of currency swap transactions represent contractual values or notional principal values. Theseamounts do not represent by themselves the market risk and credit risk related to the derivative financial instruments.
3. Items for which hedge accounting is applied are excluded.

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Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2009

Business Combinations
Fiscal Year 2008 (Jan. 1, 2008 – Dec. 31, 2008), Fiscal Year 2009 (Jan. 1, 2009 – Dec. 31, 2009)
Not applicable.

Per Share Information(Yen)
Fiscal Year 2008
(Jan. 1, 2008 – Dec. 31, 2008)
Net assets per share
Net loss per share

Fiscal Year 2009
(Jan. 1, 2009 – Dec. 31, 2009)
947.19134.26

Diluted net income per share is not presented since theCompany posted net loss, and has no outstanding dilutive
securities.

Net assets per share
Net loss per share

874.8984.18

Diluted net income per share is not presented since theCompany posted net loss, and has no outstanding residual
securities.

Note: Basis for calculation of net loss per share and diluted net income per share is as follows.
Fiscal Year 2008
(Jan. 1, 2008 – Dec. 31, 2008)(Million yen)
Fiscal Year 2009
(Jan. 1, 2009 – Dec. 31, 2009)

Net loss per share
Net loss(6,271)(3,811)--

Net loss related to common stock(6,271)(3,811)

Average number of shares outstanding during theperiod (thousand shares)

46,71345,277

-

-

-

-

-

-

Amounts unavailable to common shareholders

Diluted net income per share
Adjustment to net income
Increase in number of common stock (thousand
shares)[Including: subscription rights to shares(thousand shares)]
Number of residual securities with no dilution
excluded from calculation of diluted net income per
share

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

Subsequent Events
Fiscal Year 2008 (Jan. 1, 2008 – Dec. 31, 2008), Fiscal Year 2009 (Jan. 1, 2009 – Dec. 31, 2009)
Not applicable.

Omission of DisclosureWith respect to lease transactions, deferred tax accounting, retirement benefits, related party transactions, and stock options are
not presented since the disclosure of such information is not significant in the context of the financial results.

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Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2009

5. Non-consolidated Financial Statements(1) Balance Sheets(Million yen)
Fiscal Year 2009
(As of Dec. 31, 2009)

Fiscal Year 2008
(As of Dec. 31, 2008)
AssetsCurrent assets
Cash and deposits

4,972

Notes receivable-trade
Accounts receivable-trade
Short-term investment securities

6,035

84

113

10,441

10,008

7-

16,154-Merchandise and finished goods-

10,750

Supplies64-

Raw materials and supplies-

66

Merchandise

Advance payments-trade

1,988

1,357

Prepaid expenses

3,314

2,628

871

673

646

1,236

7,966

7,496

Deferred tax assets
Short-term loans receivable to subsidiaries andaffiliates
Accounts receivable-other
Other

293

122

Allowance for doubtful accounts

(287)

(491)

Total current assets

46,51840,000Noncurrent assets
Property, plant and equipment
Buildings
Accumulated depreciation
Buildings, net
Structures
Accumulated depreciation
Structures, net
Machinery and equipment
Accumulated depreciation
Machinery and equipment, net
VehiclesAccumulated depreciation
Vehicles, net

28,29628,521(16,925)(17,671)

11,37010,849

1,988

1,974

(1,590)(1,622)398

352

11,78011,881(10,699)(10,798)

1,081

1,082

110

106

(104)

(102)

6

3

Tools, furniture and fixtures

2,846

2,506

Accumulated depreciation(1,920)(1,756)

Tools, furniture and fixtures, net
LandConstruction in progress
Total property, plant and equipment

926

750

11,095

11,0060-24,88024,045Intangible assets
Goodwill

122

89

Leasehold right

139

139

Software

2,012

1,991

Software in progress

134

427

Other

38

35

2,447

2,682

Total intangible assets- 38 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2009

(Million yen)
Fiscal Year 2009
(As of Dec. 31, 2009)

Fiscal Year 2008
(As of Dec. 31, 2008)
Investments and other assets
Investment securities

10,163

8,262

Stocks of subsidiaries and affiliates

7,011

6,194

Long-term loans receivable

353

346

Long-term loans receivable from employees
Long-term loans receivable from subsidiaries andaffiliates
Lease and guarantee deposits

16

13

2,138

2,417

893

935

Long-term prepaid expenses
Deferred tax assets
Insurance funds for directors
Long-term time deposits

116

89

1,367

28

643

595

3,100

3,000

Other

721

546

Allowance for doubtful accounts(759)(1,153)-(245)

25,76721,02953,09547,757

99,61387,757

Notes payable-trade

2,114

1,354

Accounts payable-trade

5,639

4,980

Short-term loans payable

8,000

3,000

Allowance for investment loss
Total investments and other assets
Total noncurrent assets
Total assets
Liabilities
Current liabilities

Current portion of bonds
Current portion of long-term loans payable

-

700

1,670

2,670

Accounts payable-other

5,913

5,964

Accounts payable-factoring

15,78913,707

Accrued expenses

1,051

1,145

11

81

Income taxes payable
Accrued consumption taxes

206

223

Deposits received

454

529

Provision for sales promotion expenses

337

518

9,788

3,045

152

290

51,12938,211-

3,950

Forward exchange contracts
Other
Total current liabilities
Noncurrent liabilities
Bonds payable
Long-term loans payable

3,330

7,025

Deferred tax liabilities for land revaluation

764

756

Provision for directors’ retirement benefits

289

-

4

-

4,388

11,731

55,51749,943

Other
Total noncurrent liabilities
Total liabilities- 39 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2009

(Million yen)
Fiscal Year 2009
(As of Dec. 31, 2009)

Fiscal Year 2008
(As of Dec. 31, 2008)
Net assets
Shareholders’ equity
Capital stock

20,35920,359

Capital surplus
Legal capital surplus

19,864

19,864

Other capital surplus

1,174

1,174

Total capital surpluses

21,03821,038

1,118

1,118

69

66

36

40

Retained earnings
Legal retained earnings
Other retained earnings
Reserve for advanced depreciation of
noncurrent assets
Reserve for overseas investment loss
General reserve

13,60013,600Retained earnings brought forward(1,129)(5,530)13,695

9,294

Treasury stock(631)(2,774)

Total shareholders’ equity

54,46147,917

Total earned surpluses

Valuation and translation adjustments
Valuation difference on available-for-sale securities(1,223)(987)

Deferred gains or losses on hedges(2,038)(2,047)

Revaluation reserve for land

(7,103)(7,067)

Total valuation and translation adjustments(10,364)(10,103)

44,09637,814

99,61387,757

Total net assets
Total liabilities and net assets- 40 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2009(2) Statements of Income(Million yen)
Fiscal Year 2009
(Jan. 1, 2009 – Dec. 31, 2009)

Fiscal Year 2008
(Jan. 1, 2008 – Dec. 31, 2008)
Net sales

150,729

136,941

79,08175,25871,647

61,682

Freightage and packing expenses

8,817

7,482

Promotion expenses

25,704

23,635

Sales commission
Provision for allowance for sales promotion
expenses
Provision of allowance for doubtful accounts

2,596

2,523

337

518

283

264

46

37

Cost of sales
Total cost of sales
Gross profit
Selling, general and administrative expenses

Bad debts expenses
Directors’ compensations

241

212

Salaries and allowances

5,502

5,567

Bonuses

928

921

Provision for directors’ retirement benefits

60-

Welfare expenses

1,018

1,023

Rent expenses

1,631

1,358

571

572

Commission fee

14,892

13,578Depreciation

1,790

2,018

Research study expenses

Other

4,871

4,315

Total selling, general and administrative expenses

69,29464,0302,353(2,347)

Interest income

101

64

Interest on securities

170

61

Dividends income

663

986

-

1,407

-

32

Operating income (loss)
Non-operating income

Foreign exchange gains
Gain on valuation of compound financial
instruments
Miscellaneous income

318

215

1,253

2,767

Interest expenses

141

222

Interest on bonds

-

64

5,892

-

1,199

-

-

127

Commission fee-

450

Miscellaneous loss

226

172

7,461

1,037

(3,853)(617)

Total non-operating income
Non-operating expenses

Foreign exchange losses
Loss on valuation of compound financial
instruments
Bond issuance cost

Total non-operating expenses
Ordinary loss

- 41 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2009

(Million yen)
Fiscal Year 2009
(Jan. 1, 2009 – Dec. 31, 2009)

Fiscal Year 2008
(Jan. 1, 2008 – Dec. 31, 2008)
Extraordinary income
Gain on sales of noncurrent assets

24

0

Total extraordinary income

240Extraordinary loss
Loss on sales and retirement of noncurrent assets

736

72

Loss on valuation of investment securities

594

573

Loss on sales of investment securities-

517

Loss on liquidation of subsidiaries

43-

Provision of allowance for doubtful accounts

551

631

Provision of allowance for investment loss
Loss on valuation of stocks of subsidiaries andaffiliates
Loss on valuation of golf club membership

-

245

309

580

2

-

Impairment loss
Total extraordinary losses
Loss before income taxes

-

247

2,237

2,868

(6,066)(3,485)

Income taxes-current

104

24

Income taxes-deferred

(15)

155

Total income taxes

89

179

(6,155)(3,664)

Net loss- 42 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2009(3) Statements of Changes in Net assets
Fiscal Year 2008
(Jan. 1, 2008 – Dec. 31, 2008)(Million yen)
Fiscal Year 2009
(Jan. 1, 2009 – Dec. 31, 2009)

20,35920,359

Shareholders’ equity
Capital stock
Balance at the end of previous period
Changes of items during the period
Total changes of items during the period
Balance at the end of current period--

20,35920,35919,864

19,864--

19,864

19,864

1,174

1,174

0

(0)

Capital surplus
Legal capital surplus
Balance at the end of previous period
Changes of items during the period
Total changes of items during the period
Balance at the end of current period
Other capital surplus
Balance at the end of previous period
Changes of items during the period
Disposal of treasury stock
Total changes of items during the period
Balance at the end of current period

0

(0)

1,174

1,174

21,03821,038

Total capital surplus
Balance at the end of previous period
Changes of items during the period
Disposal of treasury stock0(0)

Total changes of items during the period0(0)21,03821,038

1,118

1,118

-

-

1,118

1,118

73

69

(3)

(3)

(3)

(3)

69

66

34

36

Provision of reserve for overseas investment loss

8

7

Reversal of reserve for overseas investment loss

(5)

(3)

Total changes of items during the period

2

3

36

40

Balance at the end of current period
Retained earnings
Legal retained earnings
Balance at the end of previous period
Changes of items during the period
Total changes of items during the period
Balance at the end of current period
Other retained earnings
Reserve for advanced depreciation of noncurrent
assetsBalance at the end of previous period
Changes of items during the period
Reversal of reserve for advanced depreciation of
noncurrent assets
Total changes of items during the period
Balance at the end of current period
Reserve for overseas investment loss
Balance at the end of previous period
Changes of items during the period

Balance at the end of current period- 43 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2009

Fiscal Year 2008
(Jan. 1, 2008 – Dec. 31, 2008)(Million yen)
Fiscal Year 2009
(Jan. 1, 2009 – Dec. 31, 2009)

13,60013,600--13,60013,6006,309(1,129)

3

3

(8)

(7)

General reserve
Balance at the end of previous period
Changes of items during the period
Total changes of items during the period
Balance at the end of current period
Retained earnings brought forward
Balance at the end of previous period
Changes of items during the period
Reversal of reserve for advanced depreciation of
noncurrent assets
Provision of reserve for overseas investment loss
Reversal of reserve for overseas investment loss

5

3

Dividends from surplus(1,027)(700)

Net loss(6,155)(3,664)

Reversal of revaluation reserve for land

(256)

(35)

Total changes of items during the period(7,439)(4,400)(1,129)(5,530)21,134

13,695----

Balance at the end of current period
Total retained earnings
Balance at the end of previous period
Changes of items during the period
Reversal of reserve for advanced depreciation of
noncurrent assets
Provision of reserve for overseas investment loss
Reversal of reserve for overseas investment loss--

Dividends from surplus(1,027)(700)

Net loss(6,155)(3,664)

Reversal of revaluation reserve for land

(256)

(35)

Total changes of items during the period(7,439)(4,400)13,695

9,294

(630)

(631)

(1)

(2,142)

Balance at the end of current period
Treasury stock
Balance at the end of previous period
Changes of items during the period
Purchase of treasury stock
Disposal of treasury stock

0

0

(1)

(2,142)(631)(2,774)

61,902

54,461Dividends from surplus(1,027)(700)

Net loss(6,155)(3,664)(1)(2,142)

Total changes of items during the period
Balance at the end of current period
Total shareholders’ equity
Balance at the end of previous period
Changes of items during the period

Purchase of treasury stock00

Reversal of revaluation reserve for land

Disposal of treasury stock

(256)

(35)

Total changes of items during the period(7,440)(6,543)54,46147,917

Balance at the end of current period- 44 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2009

Fiscal Year 2008
(Jan. 1, 2008 – Dec. 31, 2008)(Million yen)
Fiscal Year 2009
(Jan. 1, 2009 – Dec. 31, 2009)

498(1,223)

Net changes of items other than shareholders’ equity(1,722)235

Total changes of items during the period(1,722)235(1,223)

(987)

376

(2,038)Net changes of items other than shareholders’ equity(2,415)(9)

Total changes of items during the period(2,415)(9)(2,038)(2,047)(7,359)(7,103)256

35

Valuation and translation adjustments
Valuation difference on available-for-sale securities
Balance at the end of previous period
Changes of items during the period

Balance at the end of current period
Deferred gains or losses on hedges
Balance at the end of previous period
Changes of items during the period

Balance at the end of current period
Revaluation reserve for land
Balance at the end of previous period
Changes of items during the period
Net changes of items other than shareholders’ equity
Total changes of items during the period

256

35

(7,103)(7,067)(6,483)(10,364)

Net changes of items other than shareholders’ equity(3,880)261

Total changes of items during the period(3,880)261(10,364)(10,103)

55,41844,096

Dividends from surplus(1,027)(700)

Net loss(6,155)(3,664)(1)(2,142)

Balance at the end of current period
Total valuation and translation adjustments
Balance at the end of previous period
Changes of items during the period

Balance at the end of current period
Total net assets
Balance at the end of previous period
Changes of items during the period

Purchase of treasury stock
Disposal of treasury stockReversal of revaluation reserve for land

0

0

(256)

(35)

Net changes of items other than shareholders’ equity(3,880)261

Total changes of items during the period(11,321)(6,282)44,09637,814

Balance at the end of current period- 45 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2009

Going Concern Assumption
Not applicable.

6. Other(1) Changes in Members of Board of Directors
Not applicable.

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

Fiscal Year 2008
(Jan. 1, 2008 – Dec. 31, 2008)

Fiscal Year 2009
(Jan. 1, 2009 – Dec. 31, 2009)

AmountAmount144,585

Share (%)
91.3

130,967

ChangeShare (%)
88.9

(13,618)

Other businesses

13,6998.7

16,325

11.1

2,625

Total

158,285100.0

147,292

100.0(10,993)

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

b. Sales by type(Million yen)
By type

Fiscal Year 2008
(Jan. 1, 2008 – Dec. 31, 2008)

Fiscal Year 2009
(Jan. 1, 2009 – Dec. 31, 2009)

AmountAmountShare (%)

ChangeShare (%)

Apparel

63,26040.0

58,575

39.7(4,684)

Interior goods

34,65721.9

29,312

19.9(5,344)

Daily sundries

23,586

14.9

21,495

14.6(2,090)Fashion accessories

16,931

10.7

15,12910.3(1,802)

Foods

6,157

3.9

5,728

3.9

(429)

OthersTotal

13,692

8.6

17,051

11.6

3,358

158,285100.0

147,292

100.0(10,993)

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

* 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 ofreaders who prefer an English translation.

- 46 -