Financial Report for Fiscal Year 2011 (Ended December 31, 2011)[Japanese GAAP]
February 9, 2012
Company name: Senshukai Co., Ltd.
Stock exchanges: Tokyo and Osaka, First Sections
Stock code:
8165
URL: http://www.senshukai.co.jp
Representative:
Mr. Michio Tanabe, President and Representative Director
Inquiries:
Mr. Takeshi Naito, Executive Officer, General Manager of the Corporate Development Division
Tel: +81-6-6881-3220
Scheduled date of annual general meeting of shareholders: March 29, 2012
Scheduled date of payment of dividend: March 30, 2012
Scheduled date of filing of Annual Security Report: March 30, 2012
Preparation of supplementary materials for financial results: Yes
Holding of financial results meeting: Yes(All amounts are rounded down to the nearest million yen)

1. Consolidated Financial Results for Fiscal Year 2011 (January 1, 2011 – December 31, 2011)(1) Consolidated operating results(Percentages represent changes from the same period of the previous fiscal year)
Net income
Operating income
Ordinary income

Net sales
Million yen

Fiscal Year 2011
137,261
Fiscal Year 2010
136,859
Note: Comprehensive income (million yen)%

Million yen%

Million yen%

Million yen

%

1,583
2,037
1,791 (- %)(22.3)
-

0.3
3,107
(9.2)
(7.1)
3,422
Fiscal Year 2011: 2,683 (up 49.8%)

3,233
2.1
3,167
Fiscal Year 2010:

Net income per
share

Diluted net income
per share

Return on equity

Ordinary income to Operating income
total assets
to net sales

Yen

Yen

%

%

Fiscal Year 2011
36.56
3.9
Fiscal Year 2010
47.04
5.3
Reference: Equity in earnings (losses) of affiliates (million yen)
Fiscal Year 2011: 110

%

3.6
3.5
Fiscal Year 2010:

2.3
2.5
48

(2) Consolidated financial position
Total assets

Net assets

Million yen

Equity ratio

Million yen

Fiscal Year 2011
90,441
Fiscal Year 2010
90,086
Reference: Shareholders’ equity (million yen) Fiscal Year 2011:

Net assets per share%

41,444
39,411
41,444

Yen

45.8
43.7
Fiscal Year 2010: 39,411

956.94909.99(3) Consolidated cash flows
Cash flows fromoperating activities

Cash flows frominvesting activities

Cash flows fromfinancing activities

Cash and cash equivalents
at end of period

Million yen

Million yen

Million yen

Million yen

448
9,585

(2,077)(1,094)(1,727)(6,417)7,500
10,855

Fiscal Year 2011
Fiscal Year 2010

2. Dividends
1Q-endFiscal Year 2010
Fiscal Year 2011
Fiscal Year 2012
(forecasts)

Dividend per share
2Q-end 3Q-end Year-end

Total

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

Yen

Yen

Yen

Yen

Yen

Million yen

%

%

-

6.00
7.00

-

8.00
7.00

14.00
14.00

606
606

29.8
38.3

1.6
1.5

-

10.00

-

10.00

20.00

28.9

3. Consolidated Outlook for Fiscal Year 2012 (January 1, 2012 – December 31, 2012)(Percentages represent changes from the same period of the previous fiscal year)
Net income
Operating income
Ordinary income
Net income
per share

Net sales
2Q 2012 (cumulative)
Full Year 2012

Million yen%

73,900148,000

6.3
7.8

Million yen%

1,700 (29.1)
4,000 28.7

Million yen%

1,800 (31.6)
4,000 23.7

Million yen%

Yen

1,500 (30.8)
3,000 89.5

34.63
69.27

4. Other(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in changes inscope of consolidation): None
Newly added: -Excluded: -(2) Changes in accounting principles, procedures, presentation methods, etc.
1) Changes caused by revision of accounting standards: Yes
2) Other changes: None

(3) Number of shares outstanding (common shares)
1) Number of shares outstanding at end of period (including treasury stock)
Fiscal Year 2011:

47,630,393 sharesFiscal Year 2010:

47,630,393 sharesFiscal Year 2010:

4,320,645 sharesFiscal Year 2010:

43,310,249 shares

2) Number of shares of treasury stock at end of period
Fiscal Year 2011:

4,321,035 shares

3) Average number of shares outstanding during the period
Fiscal Year 2011:

43,309,511 shares(Reference) Summary of Non-consolidated Financial Results
1. Non-consolidated Financial Results for Fiscal Year 2011 (January 1, 2011 – December 31, 2011)(1) Non-consolidated operating results(Percentages represent changes from the same period of the previous fiscal year)
Net income
Operating income
Ordinary income

Net sales
Fiscal Year 2011
Fiscal Year 2010

Million yen%

Million yen%

Million yen%

Million yen%

124,083
125,966

(1.5)
(8.0)

3,219
2,953

9.0
-

3,513
2,867

22.5
-

1,932
1,506

28.3
-

Net income per share

Diluted net income per share

Yen

Yen

44.62
34.79

-

Fiscal Year 2011
Fiscal Year 2010

(2) Non-consolidated financial position
Total assets

Net assets

Million yen

Equity ratio

Million yen

Fiscal Year 201185,724
Fiscal Year 2010
84,552
Reference: Shareholders’ equity (million yen) Fiscal Year 2011:

41,211
38,82041,211

Net assets per share
%

Yen

48.1
45.9
Fiscal Year 2010: 38,820

951.56896.34

2. Non-consolidated Outlook for Fiscal Year 2012 (January 1, 2012 – December 31, 2012)(Percentages represent changes from the same period of the previous fiscal year)
Net income
Operating income
Ordinary income
Net income
per share

Net sales
2Q 2012 (cumulative)
Full Year 2012

Million yen%

65,700131,000

3.7
5.6

Million yen%

1,500 (40.6)
3,300
2.5

Million yen%

1,700 (40.9)
3,300 (6.1)

Million yen%

Yen

1,600 (38.7)
2,750 42.3

36.94
63.50

* Disclosure regarding the implementation of audit proceduresThis financial report is not subject to the audit procedures based on the Financial Instruments and Exchange Act. Thus, at thetime of its disclosure, the financial statement audit procedures based on the Financial Instruments and Exchange Act have notbeen completed.
* 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 topage 6.

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2011

Contents of Attachments
1. Operating Results(1) Analysis of Operating Results(2) Analysis of Financial Position(3) Basic Policy Regarding Distribution of Earnings and Dividends in the Current and Next Fiscal Years(4) Business Risks(5) Outlook for Fiscal Year 2012

2
2
3
4
4
6

2. Group Organization

7

3. Management Policies(1) Basic Management Policy(2) Key Performance Indicators(3) Medium- to Long-term Corporate Management Strategy and Issues(4) Other Important Business Matters

8
8
8
8
8

4. Consolidated Financial Statements(1) Consolidated Balance Sheets(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income(3) Consolidated Statements of Changes in Net Assets(4) Consolidated Statements of Cash Flows(5) Going Concern Assumption(6) Significant Accounting Policies for the Preparation of Consolidated Financial Statements(7) Changes in Significant Accounting Policies for the Preparation of Consolidated Financial Statements(8) Reclassifications(9) Supplemental Information(10) Notes to Consolidated Financial Statements
Notes to Consolidated Balance Sheets
Notes to Consolidated Statements of Income
Notes to Consolidated Statements of Comprehensive Income
Notes to Consolidated Statements of Changes in Net assets
Notes to Consolidated Statements of Cash Flows
Segment Information
Per Share Information
Subsequent Events

9
9
11
11
13
14
16
18
18
23
24
24
25
25
27
28
28
30
31
34
34

5. Non-consolidated Financial Statements(1) Balance Sheets(2) Statements of Income(3) Statements of Changes in Net assets(4) Going Concern Assumption

35
35
38
40
43

6. Other(1) Changes in Members of Board of Directors(2) Production, Orders and Sales

43
43
43

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Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2011

1. Operating Results(1) Analysis of Operating Results
Overview
In the fiscal year under review, the Japanese economy began to gradually recover from the impact of the Great East
Japan Earthquake, but remained on an uncertain path due to financial uncertainty triggered by the European debt
crisis and protracted appreciation of the yen. In the retail industry, reconstruction demand emerged after theearthquake and consumer sentiment gradually improved, but conditions remained harsh overall. In the mail-orderindustry, sales continued to rise supported by the rapid expansion of Internet shopping, but inter-industry
competition intensified.
In this environment, the Senshukai Group pulled together to advance its growth strategy and achieve the first fiscal
year targets of its medium-term management plan which concludes in Fiscal Year 2013. As a part of this strategy, in
November 2011 it launched its corporate vision “Woman Smile Company” for various business activities.
Net sales in the current fiscal year slightly rose 0.3% year-over-year to 137,261 million yen.
As for profits, the Group worked to cut catalog-related expenses and general and administrative expenses in general,but the cost-of-sales ratio rose due to increases in bargain sales and valuation losses. As a result, operating income
declined 9.2% year-over-year to 3,107 million yen. Ordinary income rose 2.1% to 3,233 million yen due to foreignexchange gains and equity in earnings of affiliates. Net income declined 22.3% to 1,583 million yen due to anincrease in loss on valuation of investment securities and the application of accounting standards for asset retirement
obligations.
Overview by segment(Mail-order Business)
Consolidated sales in the mail-order business, comprising the catalog and the hanpukai businesses, increased 3.2%
year-over-year to 122,946 million yen in the current fiscal year. In terms of profits, printing and production costs forcatalogs were cut by reorganizing and consolidating media. However, the cost-of-sales ratio rose due to an increasein bargain sales and an increase in valuation losses on greater inventory. As a result, operating income declined
19.5% year-over-year to 2,226 million yen.
1) Catalog business
The catalog business provides customers with a variety of lifestyle ideas and offers original Senshukai products
through 18 different catalogs.
Sales temporarily declined due to the impact of the earthquake and unfavorable weather, but steadily recovered inpart due to television commercials and other cross-media promotions. Internet sales and Internet-only sales*
increased due to free-shipping and other promotional campaigns, the distribution of applications to smartphones,
and the opening of a video website. As a result, overall sales in the catalog business increased 4.3% year-over-year
to 112,879 million yen. (*Internet-only sales: Customer makes purchase by putting product into online shoppingcart.)
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.
Consolidated sales in the hanpukai business decreased 8.3% year-over-year to 10,067 million yen, despite strong
sales of new products, due to a decline in members.

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Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2011

(Bridal Business)
Consolidated sales in the bridal business, centered on the subsidiary Dears Brain Inc. which operates the housewedding business, declined temporarily due to the impact of the earthquake, but subsequently recovered steadily
supported by a year-over-year rise in the number of weddings and average sales per wedding. As a result, sales inthe bridal business increased 3.2% year-over-year to 8,407 million yen, and operating income increased 11.6% to482 million yen.
(Corporates Business)
Consolidated sales in the corporates business, which provides products and services to corporations, decreased
45.6% year-over-year to 4,159 million yen due to the end of a contract with a major outsourcing client, but
operating income surged 259.5% year-over-year to 448 million yen.
(Other businesses)
Consolidated sales in other businesses, which consist of the services business (primarily travel and credit card
services) and the pet business (pet goods sales through retail stores), decreased 7.4% year-over-year to 1,748 million
yen. Consequently, operating loss totaled 57 million yen, compared with operating income of 31 million yen in theprevious fiscal year.
Note: As stated in “4. Consolidated Financial Statements, (10) Notes to Consolidated Financial Statements, Segment
Information,” we have changed business segment classifications. Accordingly, the year-over-year changes fornet sales, operating income/loss are based on the recalculated figures for the previous fiscal year.
(2) Analysis of Financial Position(Balance sheet position)
Assets totaled 90,441 million yen at the end of the current fiscal year, up 354 million yen from the end of theprevious fiscal year.
Current assets increased 1,826 million yen to 44,482 million yen. The main factors were a decrease of 3,355 million
yen in cash and deposits, and an increase of 4,422 million yen in merchandise and finished goods. Noncurrent assets
decreased 1,471 million yen to 45,959 million yen, mainly due to an increase of 1,061 million yen in intangible
assets, and decreases of 768 million yen in property, plant and equipment and 1,764 million yen in investments andother assets.
Current liabilities decreased 74 million yen to 41,244 million yen. The main factors were an increase of 1,350
million yen in notes and accounts payable-trade, and a decrease of 1,644 million yen in forward exchange contracts.
Noncurrent liabilities decreased 1,603 million yen to 7,753 million yen. The main factors were decreases of 736
million yen in bonds payable and 1,125 million yen in long-term loans payable.
Net assets increased 2,033 million yen to 41,444 million yen. The main factors were increases of 1,104 million yen
in deferred gains or losses on hedges and 943 million yen in retained earnings. Consequently, the equity ratio was
45.8%.
(Cash flow position)
The balance of cash and cash equivalents at the end of the current fiscal year was 7,500 million yen, a decrease of
3,355 million yen from the end of the previous fiscal year.
Operating activities provided net cash of 448 million yen (net cash provided of 9,585 million yen in the previous
fiscal year). The main cash inflows were depreciation and amortization of 2,343 million yen, income before income
taxes and minority interests of 1,988 million yen and an increase in notes and accounts payable-trade of 1,350
million yen. The main cash outflow was an increase in inventories of 4,418 million yen.

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Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2011

Investing activities used net cash of 2,077 million yen (net cash used of 1,094 million yen in the previous fiscal
year). The main cash inflow was 999 million yen in proceeds from sales of investment securities. The main cash
outflows were 1,915 million yen for the purchase of intangible assets and 924 million yen for the purchase ofproperty, plant and equipment.
Financing activities used net cash of 1,727 million yen (net cash used of 6,417 million yen in the previous fiscal
year). The main cash inflows were an increase in short-term loans payable of 2,500 million yen, 300 million yen inproceeds from long-term loans payable, while main cash outflows include repayment of long-term loans payable of
3,048 million yen, redemption of bonds of 766 million yen, and cash dividends paid of 648 million yen.
Cash flow indicesFiscal Year 2009
(As of Dec. 31, 2009)

Fiscal Year 2010
(As of Dec. 31, 2010)

Fiscal Year 2011
(As of Dec. 31, 2011)

Equity ratio (%)

41.3

43.7

45.8

Equity ratio based on fair value (%)

22.3

23.9

24.8

Average debt repayment period (years)

35.1

1.3

24.8

Interest coverage ratio (times)

1.9

33.7

1.9

Notes: 1. Cash flow indices are calculated, using consolidated financial figures, as follows:
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 interest
expenses paid, respectively, on the consolidated statements of cash flows.

(3) Basic Policy Regarding Distribution of Earnings and Dividends in the Current and Next Fiscal Years
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. The Group will use internal reserves to invest in the development of
new businesses for the medium to long term, to promote the rationalization of existing businesses, to improve thesoundness of its financials, and to generally further strengthen its competitiveness and operations. Based on the
aforementioned policies, the Group plans to pay a year-end dividend of 7 yen per share in line with initial plan.
Together with an interim dividend of 7 yen per share, total annual dividend of 14 yen per share is to be paid.
Regarding dividends in Fiscal Year 2012, we plan to pay a total annual dividend of 20 yen per share comprised of aninterim dividend of 10 yen per share and a year-end dividend of 10 yen per share.
(4) Business Risks
1) Economic situation in manufacturing countries
The majority of products sold by the Senshukai Group are imported from China and other Asian countries.
Consequently, political and economic conditions in these countries, as well as the occurrence of natural disasters,
could 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-4-

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2011devices 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.
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. To minimize these risks, Senshukai hasestablished 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 toemergencies. 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 andfinancial 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. Senshukai is thorough in educating
employees, and establishing an administrative and compliance structure, to ensure strict compliance with all 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 sales in
the Senshukai Group’s mainstay mail-order business, and could 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.

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Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 20119) 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) Risks related to product safety
The Senshukai Group complies with all applicable laws and regulations regarding the products it supplies, and has
established even stricter guidelines and regulations which the entire Group follows to improve the quality of its
products. Nevertheless, the possibility exists that in the future safety or labeling problems could emerge regarding
products the Group sells or in its advertising language. The emergence of such problems could cause the Group tobook large costs and the decline in its image could lower its sales. This could significantly and adversely affect theGroup’s operating results and financial position.
11) 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 (February 9, 2012) of this financial report for Fiscal Year 2011.
(5) Outlook for Fiscal Year 2012
Senshukai foresees a harsh outlook for the Japanese economy going forward due to protracted appreciation of the
yen and the global economy’s slowdown due to the fiscal crisis in Europe. Also, despite restoration demand in thewake of the earthquake, the outlook for personal consumption remains uncertain due to talk of hiking theconsumption tax rate and cooling consumer sentiment.
Senshukai will further advance its growth strategy in the second year of its medium-term management plan. This
includes reorganizing its catalog lineup, capturing new members through the continuation of cross-media
promotions, developing new applications to meet the needs of the growing base of smartphone users, strengthening
the Internet business by increasing sales at the e-commerce website of Mobakore Co., Ltd. and other subsidiaries,and expanding the bridal business by opening new facilities at Dears Brain Inc.
Based on this outlook, our earnings forecasts for the new fiscal year are as follows.
Consolidated(Million yen)
Net sales

Operating income

Ordinary income

Net income

Fiscal Year 2012 (forecast)

148,000

4,000

4,000

3,000

Fiscal Year 2011 (results)

137,261

3,107

3,233

1,583

7.8

28.7

23.7

89.5

Change (%)

Non-consolidated(Million yen)
Net sales

Operating income

Ordinary income

Net income

Fiscal Year 2012 (forecast)

131,000

3,300

3,300

2,750

Fiscal Year 2011 (results)

124,083

3,219

3,513

1,932

5.6

2.5

(6.1)

42.3

Change (%)* The above projections are based on information available at the time of release of this report. Actual results could differ fromprojections due to a variety of factors.

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Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2011

2. Group Organization
The Senshukai Group comprises the parent company, 15 subsidiaries, and 6 affiliates. Mail-order sales is themainstay business, and we also involved in the Bridal Business, Corporates Business and other businesses.
The following describes the position of each major business activity in the Group’s operations and business segments.
Segment
Mail-order
Business

Major business activity
Mail orderCompany
Senshukai Co., Ltd., Senshukai Service Hanbai Co., Ltd.,Senshukai Iihana Co., Ltd., Shanghai Senshu Merchant andCommerce Co., Ltd., Senshukai Hong Kong Ltd., Luckwin
GF 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.
Dears Brain Inc.
Senshukai Co., Ltd.
Pet First Co., Ltd.
Senshukai General Services Co., Ltd., and 1 other company

Order processing
Transportation and warehousing
Bridal BusinessCorporates Business
Other businesses Pet business
Services
Schematic of businesses
Consolidated subsidiaryNon-consolidated subsidiary

Affiliate accounted for by the equity method

Subsidiary accounted for by the equity method

Affiliate not accounted for by the equity method

Senshukai Iihana Co., Ltd.
Purchase products

Mobakore Co., Ltd.

Sell products

SENTENs Co., Ltd.
K. Sense Co., Ltd.

Outsources buying products
Sells products

Purchases products

Outsources customer
services and area
Senshukai Service Hanbai
marketingCo., Ltd.

3 non-equity-method affiliates

Outsources
product
inspection

Outsources
product packing
and packaging

Other outsourcing
services

Senshukai Call Center
Co., Ltd.

Order
processing

Senshu Logisco Co., Ltd.
2 consolidated subsidiaries
1 non-consolidated subsidiary

Dears Brain Inc.

Provides services

Provides solutions services and promotional services

Sells products

Purchases products

Pet First Co., Ltd.
Senshukai General
Services Co., Ltd.
1 non-consolidated subsidiary-7-

Provideservices

BridalBusiness

Luckwin GF China Co., Ltd.

Outsources orderprocessing

Senshukai Co., Ltd.

Suppliers

1 equity-method subsidiary

Corporates
Business

Outsources
buyingproducts

Customers

Senshukai Hong Kong Ltd.

Mail-order BusinessSells products

Shanghai Senshu Merchant andCommerce Co., Ltd.

Other businesses

Purchases products

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2011

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 2011 through Fiscal Year 2013) aims to maximize groupstrengths, and targets strong growth in existing core businesses and new businesses. Specifically, we target
consolidated net sales of 160,000 million yen, and operating income of 6,400 million yen, by Fiscal Year 2013.
Going forward, we aim to enhance corporate value by increasing growth and improving the earnings structure.
(3) Medium- to Long-term Corporate Management Strategy and Issues
We have formulated a three-year medium-term management plan that ends in Fiscal Year 2013.
Basic Policies of the Medium-term Management Plan
i. Create “New Belle Maison”- We position Belle Maison as one strategic unit, and will separate its product development and marketing functions
in order to quickly grasp and respond to market changes ahead of the competition, and to strengthen thedevelopment of original products that can “only be bought here” to create a Belle Maison that our customers viewas necessary.
- To maintain the competitiveness of our Internet business, we will work to expand Belle Maison Net bytransforming its mail-order infrastructure through the leveraging of strengths such as proprietary Internet website
management and proprietary product development.
ii. Strengthen the Internet business- We will enhance cooperation between Belle Maison Net and other Internet businesses to expand the product lineupand strategic sharing of customer assets, strengthen merchandising, further develop the organizational system, andmaximize business synergies to strengthen the Internet business across the Group.
- At our subsidiaries, we will cultivate multiple specialty e-commerce websites that differ from Belle Maison Net to
expand gross profits across the Group.
iii. Expand the bridal business- We will continue to invest in the expansion of the bridal business, conducted by Dears Brain Inc., and strategically
positioning “weddings” as an important source of information for our existing businesses, enhance cooperation
within the Group to expand the customer base across the Group.
iv. Conduct high-quality, low-cost business operations- We will conduct high-quality business operations in which the entire Group gets back to basics and prioritizes the
supply of products and services to satisfy customers.
- We will implement across the Group low-cost business operations capable of flexibly responding to market
changes.

(4) Other Important Business Matters
Not applicable.

-8-Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2011

4. Consolidated Financial Statements(1) Consolidated Balance Sheets(Million yen)
Fiscal Year 2010
(As of Dec. 31, 2010)

Fiscal Year 2011
(As of Dec. 31, 2011)

AssetsCurrent assets
Cash and deposits*2

Notes and accounts receivable-trade

10,855

*2

7,500

6,362

6,589

Short-term investment securities

831

Merchandise and finished goods

12,60017,022

123

118

Raw materials and supplies
Deferred tax assets

1,182

1,051

Accounts receivable-other

8,948

8,802

Other

2,816

3,644

Allowance for doubtful accounts

(241)

(278)

Total current assets

42,65644,482

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

35,730*2

35,649

Accumulated depreciation(21,327)(22,136)

Buildings and structures, net

14,402

13,513

Machinery, equipment and vehicles
Accumulated depreciation
Machinery, equipment and vehicles, net

11,651

8,750(10,772)(7,880)878

869

Tools, furniture and fixtures

3,041

2,963

Accumulated depreciation(2,181)(2,244)Tools, furniture and fixtures, net

859

Land

*4

Construction in progress

10,945

719
*4

0

Other
Accumulated depreciation
Other, net
Total property, plant and equipment

10,880
326

150

215

(19)

(74)

131

140

27,21826,449Intangible assets
Goodwill

2,580

2,429

Other

3,294

4,506

Total intangible assets

5,874

6,935

Investments and other assets
Investment securities

*1

7,761

*1

5,996

Long-term loans receivable

587

943

Lease and guarantee deposits

1,722

1,690

Deferred tax assets

182

60

Other

4,272

4,226

Allowance for doubtful accounts

(187)

(343)

Total investments and other assets
Total noncurrent assets
Total assets-9-

14,338

12,57447,43045,95990,08690,441Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2011

(Million yen)
Fiscal Year 2011
(As of Dec. 31, 2011)

Fiscal Year 2010
(As of Dec. 31, 2010)
Liabilities
Current liabilities
Notes and accounts payable-trade

7,932

Short-term loans payable*2

Current portion of bonds

3,036

*2

9,282
*2,*5

766

*2

3,843
736

Accounts payable-other

7,208

6,852

Accounts payable-factoring

13,54813,710Accrued expenses

2,325

2,464

Income taxes payable

468

146

Accrued consumption taxes

178

124

0

-

Deferred tax liabilities
Provision for directors’ bonuses
Provision for sales promotion expenses

-

31

656

613

Forward exchange contracts

3,585

1,941

Other

1,612

1,497

Total current liabilities

41,31841,2442,550

Noncurrent liabilities
Bonds payable

*2

3,286

Long-term loans payable

*2

5,097

Deferred tax liabilities for land revaluation

*4

*2

723

*4

3,971
631

Provision for retirement benefits

27

31

Asset retirement obligations

-

364

222

203

Other
Total noncurrent liabilities

9,356

7,753

50,67548,997

Capital stock

20,35920,359

Capital surplus

21,03821,038Retained earnings

11,344

12,288Treasury stock(2,775)(2,775)

Total shareholders’ equity

49,96650,910Total liabilities
Net assets
Shareholders’ equity

Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Revaluation reserve for land*4

Foreign currency translation adjustment
Total accumulated other comprehensive income
Total net assets
Total liabilities and net assets- 10 -(928)(1,008)(2,342)(1,237)(7,117)*4(7,041)

(167)

(177)

(10,555)(9,465)39,411

41,44490,08690,441Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2011

(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income(Consolidated Statements of Income)Fiscal Year 2010
(Jan. 1, 2010 – Dec. 31, 2010)(Million yen)
Fiscal Year 2011
(Jan. 1, 2011 – Dec. 31, 2011)

136,859

137,261

Net sales
Cost of sales*1

Gross profit

69,447*1

71,311

67,412

65,950Freightage and packing expenses

8,581

8,386

Promotion expenses

19,905

18,829Provision for allowance for sales promotion expenses

656

613

Provision of allowance for doubtful accounts

233

276

Selling, general and administrative expenses

Bad debts expenses

45

38

Directors’ compensations

475

520

Salaries and allowances

11,129

11,142

Bonuses

1,344

1,703

Provision for directors’ bonuses-

31

Provision for retirement benefits

13

10

2,404

2,343

Depreciation
Other

19,200Total selling, general and administrative expenses*2

Operating income

63,98918,945*2

62,842

3,422

3,107

Interest income

6842

Dividends income

105

106

-

191

Non-operating income

Foreign exchange gains
Co-sponsor fee

109

28

Equity in earnings of affiliates

48

110

Gain on adjustment of account payable-

142

Miscellaneous income

286

179

Total non-operating income

619

801

279

228

Loss on valuation of compound financial instruments

164

208

Foreign exchange losses

256

-

-

108

Non-operating expenses
Interest expenses

Relief aid expenses
Miscellaneous loss

173

129

Total non-operating expenses

873

675

3,167

3,233

Ordinary income- 11 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2011

Fiscal Year 2010
(Jan. 1, 2010 – Dec. 31, 2010)(Million yen)
Fiscal Year 2011
(Jan. 1, 2011 – Dec. 31, 2011)

Extraordinary income
Gain on sales of noncurrent assets

*3

13

*3

1

Gain on sales of investment securities

4

139

Reversal of allowance for doubtful accounts

28-

Gain on negative goodwill

6-

Gain on step acquisitions

12-

Gain on forgiveness of debts-

70

Total extraordinary income

65

210

Extraordinary loss
Loss on sales and retirement of noncurrent assets*4

Loss on valuation of investment securities

217

*4

253

Loss on sales of investment securities

514

110

Impairment loss

*5

385

166
0

*5

203

Provision of allowance for doubtful accounts

24

183

Loss on liquidation of business
Loss on adjustment for changes of accounting standard for
asset retirement obligations
Loss on disaster

317

-

-

111

-

108

Special retirement expenses

-

123

Other

49

44

1,358

1,455

1,874

1,988

494

148

Total extraordinary losses
Income before income taxes and minority interests
Income taxes-current
Income taxes-deferred

(668)

256

Total income taxes

(174)

405

-

1,583

Income before minority interests
Minority interests in income
Net income- 12 -

12

-

2,037

1,583

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2011

(Consolidated Statements of Comprehensive Income)Fiscal Year 2010
(Jan. 1, 2010 – Dec. 31, 2010)(Million yen)
Fiscal Year 2011
(Jan. 1, 2011 – Dec. 31, 2011)

-

1,583

Valuation difference on available-for-sale securities

-

(80)

Deferred gains or losses on hedges

-

1,104

Revaluation reserve for land-85

Foreign currency translation adjustment
Share of other comprehensive income of associates
accounted for using equity method

-

0

-

(10)

Income before minority interests
Other comprehensive income

Total other comprehensive income
Comprehensive income

-

*2

1,099

-

*1

2,683

Comprehensive income attributable toComprehensive income attributable to owners of the parent

-

2,683

Comprehensive income attributable to minority interests--- 13 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2011

(3) Consolidated Statements of Changes in Net Assets(Million yen)
Fiscal Year 2010
Fiscal Year 2011
(Jan. 1, 2010 – Dec. 31, 2010) (Jan. 1, 2011 – Dec. 31, 2011)
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 stock

(0)

(0)

Total changes of items during the period

(0)

(0)

21,03821,038

9,517

11,344

Dividends from surplus

(259)

(649)

Net income

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

2,037

1,583

Reversal of revaluation reserve for land49

9

Total changes of items during the period

1,827

943

11,344

12,288(2,774)(2,775)(0)(0)

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

(0)

(0)

(2,775)(2,775)

48,14049,966

Dividends from surplus

(259)

(649)

Net income

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

2,037

1,583

Purchase of treasury stock

(0)

(0)

Disposal of treasury stock00

Reversal of revaluation reserve for land49

9

Total changes of items during the period

1,826

943

49,96650,910

Balance at the end of current period- 14 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2011

(Million yen)
Fiscal Year 2010
Fiscal Year 2011
(Jan. 1, 2010 – Dec. 31, 2010) (Jan. 1, 2011 – Dec. 31, 2011)
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Balance at the end of previous period(1,013)(928)

Net changes of items other than shareholders’ equity

84

(80)

Total changes of items during the period

84

(80)

(928)

(1,008)(2,044)(2,342)

Net changes of items other than shareholders’ equity

(297)

1,104

Total changes of items during the period

(297)

1,104

(2,342)(1,237)(7,067)(7,117)(49)

75

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
Balance at the end of current period

(49)

75

(7,117)(7,041)

(122)

(167)

(45)

(9)

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

(45)

(9)

(167)

(177)

(10,247)(10,555)

Net changes of items other than shareholders’ equity

(307)

1,089

Total changes of items during the period

(307)

1,089

(10,555)(9,465)14-

Net changes of items other than shareholders’ equity

(14)

-

Total changes of items during the period

(14)

-

-

-

37,906

39,411

Balance at the end of current period
Total accumulated other comprehensive income
Balance at the end of previous period
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

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

(259)

(649)

Net income

2,037

1,583

Purchase of treasury stock

(0)

(0)

Disposal of treasury stock00

Reversal of revaluation reserve for land
Net changes of items other than shareholders’ equity
Total changes of items during the period
Balance at the end of current period- 15 -

49

9

(322)

1,089

1,504

2,033

39,411

41,444

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2011

(4) Consolidated Statements of Cash Flows(Million yen)
Fiscal Year 2010
Fiscal Year 2011
(Jan. 1, 2010 – Dec. 31, 2010) (Jan. 1, 2011 – Dec. 31, 2011)
Net cash provided by (used in) operating activities
Income before income taxes and minority interests

1,874

1,988

Depreciation and amortization

2,404

2,343

Impairment loss

385

203

Gain on negative goodwill(6)-

Loss (gain) on step acquisitions

(12)

-

Increase (decrease) in allowance for doubtful accounts

(76)

193

Increase (decrease) in allowance for sales promotion expenses

129

(42)

Interest and dividends income

(174)

(148)

Interest expenses

279

228

Foreign exchange losses (gains)

241

(540)

Equity in (earnings) losses of affiliates

(48)

(110)

Loss (gain) on valuation of compound financial instruments

164

208

Loss (gain) on sales of investment securities

106

(138)

Loss (gain) on sales and retirement of noncurrent assets

204

165

Loss (gain) on valuation of investment securities
Loss on adjustment for changes of accounting standard for
asset retirement obligations
Decrease (increase) in notes and accounts receivable-trade

253

514

-

111

4,035

(227)

Decrease (increase) in inventories(1,419)(4,418)Decrease (increase) in other current assets

(117)

(583)

Increase (decrease) in notes and accounts payable-trade

704

1,350

Increase (decrease) in accrued consumption taxes

(108)

(214)

Increase (decrease) in other current liabilities

861

(214)

Other, net

275

110

Subtotal

9,956

778

176

277

Interest and dividends income received
Interest expenses paid

(284)

(235)

Income taxes paid

(262)

(372)

Net cash provided by (used in) operating activities

9,585

448

(1,244)(924)

Net cash provided by (used in) investing activities
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment

169

1(1,428)(1,915)Purchase of investment securities

(121)

(20)

Proceeds from sales of investment securities

410

999

Proceeds from redemption of investment securities

700-

Purchase of investments in subsidiaries
Proceeds from purchase of investments in subsidiaries
resulting in change in scope of consolidation
Proceeds from sales of investments in subsidiaries resulting inchange in scope of consolidation
Purchase of stocks of subsidiaries and affiliates

(20)

-

*2

274

-

*3

49

-

(73)

-

Purchase of intangible assets

Other, net
Net cash provided by (used in) investing activities- 16 -

189(218)(1,094)(2,077)

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2011

(Million yen)
Fiscal Year 2010
Fiscal Year 2011
(Jan. 1, 2010 – Dec. 31, 2010) (Jan. 1, 2011 – Dec. 31, 2011)
Net cash provided by (used in) financing activities
Net increase (decrease) in short-term loans payable(3,000)2,500

Proceeds from long-term loans payable

600

300

Repayment of long-term loans payable(2,973)(3,048)

(766)

(766)

(0)

(0)

Redemption of bonds
Purchase of treasury stock
Proceeds from sales of treasury stock
Cash dividends paid
Other, net

0

0

(261)

(648)

(16)

(63)

(6,417)(1,727)

Effect of exchange rate change on cash and cash equivalents

(14)

0

Net increase (decrease) in cash and cash equivalents

2,060(3,355)

Cash and cash equivalents at beginning of period

8,795

10,855

Net cash provided by (used in) financing activities

Cash and cash equivalents at end of period*1- 17 -

10,855*1

7,500

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2011(5) Going Concern Assumption
Not applicable.
(6) Significant Accounting Policies for the Preparation of Consolidated Financial Statements
Fiscal Year 2010
(Jan. 1, 2010 – Dec. 31, 2010)
1. Scope of consolidation(1) Number of consolidated subsidiaries: 13
Main consolidated subsidiaries:
Senshukai General Services Co., Ltd.
Senshu Logisco Co., Ltd.
Senshukai Call Center Co., Ltd.
Dears Brain Inc.
Mobakore Co., Ltd.
Senshu Transportation Co., Ltd. was excluded fromconsolidation due to the sale of stock holdings.
Mobakore Co., Ltd., previously accounted for by the equity
method, was included in the scope of consolidation due to theacquisition of additional shares in November 2010. The equity
method was applied for the current fiscal year, as Senshukai
sets the assumed acquisition date to the consolidated balance
sheet date.
B•B•S Co., Ltd. was liquidated and excluded fromconsolidation in December 2010.

Fiscal Year 2011
(Jan. 1, 2011 – Dec. 31, 2011)
1. Scope of consolidation(1) Number of consolidated subsidiaries: 11
Main consolidated subsidiaries:
Senshukai General Services Co., Ltd.
Senshu Logisco Co., Ltd.
Senshukai Call Center Co., Ltd.
Dears Brain Inc.
Mobakore Co., Ltd.
AIMER Co., Ltd. and RG Marketing Co., Ltd. were liquidated
in June and December 2011 and excluded from consolidation
respectively.

(2) Number of non-consolidated subsidiaries: 9
Main non-consolidated subsidiaries:
Senshukai Hong Kong Ltd.
Reason for exclusion from scope of consolidation
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) Number of non-consolidated subsidiaries: 4Same as on the left.

2. Application of equity method(1) Number of non-consolidated subsidiaries accounted for by
the equity method: 2
Main non-consolidated subsidiaries accounted for by theequity method:
Senshukai Hong Kong Ltd.
Senshukai Thailand Co., Ltd. was liquidated and excluded
from the equity-method non-consolidated subsidiaries in
November 2010.

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

(2) Number of equity-method affiliates: 2
Equity-method affiliates:
SENTENs Co., Ltd.
K. Sense Co., Ltd.
Mobakore Co., Ltd., previously accounted for by theequity-method affiliate, was included in the scope of
consolidation due to the acquisition of additional shares in
November 2010. The equity method was applied for thecurrent fiscal year, as Senshukai sets the assumed acquisition
date to the consolidated balance sheet date.

(2) Number of equity-method affiliates: 2
Same as on the left.

Reason for exclusion from scope of consolidation
Same as on the left.

- 18 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2011

Fiscal Year 2010
(Jan. 1, 2010 – Dec. 31, 2010)(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.

Fiscal Year 2011
(Jan. 1, 2011 – Dec. 31, 2011)(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:
Senshukai Marketing Support 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.

3. Fiscal years for consolidated subsidiaries
Same as on the left.

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

3) Inventories(2) Method for depreciating and amortizing important assets
1) Property, plant and equipment (excluding lease assets)
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.

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

Same as on the left.

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- 19 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2011

Fiscal Year 2010
(Jan. 1, 2010 – Dec. 31, 2010)
2) Intangible assets (excluding lease 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.

Fiscal Year 2011
(Jan. 1, 2011 – Dec. 31, 2011)
2) Intangible assets (excluding lease assets)
Same as on the left.

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) Lease assets(3) 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.

(3) 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
Bonuses to directors and corporate auditors of Senshukai andconsolidated subsidiaries are provided at the amount which
would be required for future estimated bonus obligations.

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.

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.

(4) Recognition criteria for revenues and expenses
The sales of finance and lease transactions are not booked, but
the interest amount is allocated to each fiscal term.

(4) Recognition criteria for revenues and expenses
Same as on the left.

Same as on the left.

- 20 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2011

Fiscal Year 2010
(Jan. 1, 2010 – Dec. 31, 2010)(5) Conversion of assets 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. The balance sheet
accounts and income statement accounts of the overseas
equity-method affiliates were translated into Japanese yen at
the spot exchange rate as of the consolidated balance sheet
date, and foreign exchange gains and losses from translation
are included in the foreign currency translation adjustments
under net assets.

Fiscal Year 2011
(Jan. 1, 2011 – Dec. 31, 2011)(5) Conversion of assets and liabilities in foreign currencies toJapanese currency
Same as on the left.

(6) Accounting for promotion expenses
The Company conducts a mail-order business. 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 hedging
1) Hedge accounting methods
The deferred hedge accounting method is adopted.

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

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

2) Hedging instruments/ hedged items
Hedging instruments:
Same as on the left.

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

Hedged items:
Same as on the left.

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.
(8) Method and period of goodwill amortization
Amortization of goodwill is estimated for each period in which
it is expected to emerge, and then equally amortized over thedesignated amortization period.

(8) Method and period of goodwill amortization
Same as on the left.

- 21 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2011

Fiscal Year 2010
(Jan. 1, 2010 – Dec. 31, 2010)(9) 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.

Fiscal Year 2011
(Jan. 1, 2011 – Dec. 31, 2011)(9) Scope of cash and cash equivalents
Same as on the left.

(10) Accounting for consumption taxes
Financial statements are prepared exclusive of national andregional consumption taxes.
(10) Other significant accounting policies in the preparation of
consolidated financial statements
1) Accounting for consumption taxes
Financial statements are prepared exclusive of national andregional consumption taxes.
2) Application of consolidated taxation system
The Company has adopted the consolidated taxation systemfrom the current fiscal year.

- 22 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2011

(7) Changes in Significant Accounting Policies for the Preparation of Consolidated Financial Statements
Fiscal Year 2010
(Jan. 1, 2010 – Dec. 31, 2010)
1. Application of Accounting Standards for Business
Combinations
Beginning with the current fiscal year, “Accounting Standard
for Business Combinations” (Accounting Standards Board ofJapan (ASBJ) Statement No. 21, December 26, 2008),“Accounting Standard for Consolidated Financial Statements”(ASBJ Statement No. 22, December 26, 2008), “Partial
Amendments to Accounting Standard for Research andDevelopment Costs” (ASBJ Statement No. 23, December 26,2008), “Accounting Standard for Business Divestitures”(ASBJ Statement No. 7, December 26, 2008), “AccountingStandard for Equity Method of Accounting for Investments”(ASBJ Statement No. 16, issued on December 26, 2008), and“Guidance on Accounting Standard for Business Combinations
and Accounting Standard for Business Divestitures” (ASBJ
Guidance No. 10, December 26, 2008) have been adopted.

Fiscal Year 2011
(Jan. 1, 2011 – Dec. 31, 2011)
1. Application of “Accounting Standard for Equity Method of
Accounting for Investments” and “Practical Solution on
Unification of Accounting Policies Applied to Associates
Accounting for Using the Equity Method”
Beginning with the current fiscal year, “Accounting Standard
for Equity Method of Accounting for Investments” (ASBJ
Statement No. 16, issued on March 10, 2008) and “Practical
Solution on Unification of Accounting Policies Applied to
Associates Accounting for Using the Equity Method” (ASBJ
Practical Issue Task Force (PITF) No. 24, March 10, 2008)
have been adopted.
This change has no effect on the amount of income (loss).

2. Application of accounting standard for asset retirement
obligations
Beginning with the current fiscal year, “Accounting Standard
for Asset Retirement Obligations” (ASBJ Statement No. 18,
March 31, 2008) and “Guidance on Accounting Standard for
Asset Retirement Obligations” (ASBJ Guidance No. 21, March
31, 2008) have been adopted.
As an effect of this change, operating income, ordinary income
and income before income taxes and minority interests
decreased by 23 million yen, 28 million yen, and 147 million
yen, respectively.

- 23 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2011(8) Reclassifications
Fiscal Year 2010
(Jan. 1, 2010 – Dec. 31, 2010)

Fiscal Year 2011
(Jan. 1, 2011 – Dec. 31, 2011)
Consolidated statements of income:1. Beginning with the current fiscal year, the Company has
adopted “Cabinet Office Ordinance Partially Revising
Regulation for Terminology, Forms and Presentation of
Financial Statements” (Cabinet Office Ordinance No. 5,
March 24, 2009) based on the “Accounting Standard forConsolidated Financial Statements” (ASBJ Statement No.
22, December 26, 2008,) an item “Income before minority
interests” is presented.

.

2. “Gain on adjustment of account payable,” included in“Miscellaneous income” under non-operating income in theprevious fiscal year, is shown as a separate line item in thecurrent fiscal year since the amount exceeded 10/100 of total
non-operating income.
The amount of “Gain on adjustment of account payable”
included in “Miscellaneous income” under non-operating
income in the previous fiscal year was 62 million yen.
Consolidated statements of cash flows:“Loss (gain) on sales of noncurrent assets” under net cash
provided by (used in) operating activities, stated as a separate
line item in the previous fiscal year, is included in “Loss (gain)on sales and retirement of noncurrent assets” due to its
declining importance.
“Loss (gain) on sales of noncurrent assets” included in “Loss(gain) on sales and retirement of noncurrent assets” in thecurrent fiscal year totaled minus 13 million yen.

(9) Supplemental Information
Fiscal Year 2010
(Jan. 1, 2010 – Dec. 31, 2010)
The Company applied for approval in the current fiscal year to
pay taxes on a consolidated basis, and approval was granted in
December 2010. As a result, accounting procedures from thecurrent fiscal year are based on the application of aconsolidated taxation system in accordance with “Practical
Solution for Tentative Treatment of Tax Effect Accounting
Under Consolidated Taxation System (Part 1)” (ASBJ Practical
Issue Task Force No.5) and “Practical Solution for Tentative
Treatment of Tax Effect Accounting Under Consolidated
Taxation System (Part 2)” (ASBJ PITF No.7).

Fiscal Year 2011
(Jan. 1, 2011 – Dec. 31, 2011)
Beginning with the current fiscal year, “Accounting Standard
for Presentation of Comprehensive Income” (ASBJ Statement
No. 25, June 30, 2010) has been adopted. The “Accumulated
other comprehensive income” and “Total accumulated othercomprehensive income” items for the previous fiscal year
show the amounts for “Valuation and translation adjustments”
and “Total valuation and translation adjustments,” respectively.

- 24 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2011(10) Notes to Consolidated Financial Statements
Notes to Consolidated Balance Sheets(Million yen)
Fiscal Year 2010
(As of Dec. 31, 2010)*1. Shares of non-consolidated subsidiaries and affiliates
Investment securities

539*2. Assets pledged as collateral(1) Collateral-backed assets
Cash and deposits (Time deposits)
Buildings and structures
Total

15
1,073
1,088

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

313
66
36
413
829

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

16

Fiscal Year 2011
(As of Dec. 31, 2011)*1. Shares of non-consolidated subsidiaries and affiliates
Investment securities

485*2. Assets pledged as collateral(1) Collateral-backed assets
Cash and deposits (Time deposits)
Buildings and structures
Total

15
981
997

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

213
36
200
449

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

13*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, as publicly announced, stipulated by the
Director of the National Tax Agency based on Article 16 of
the “Land-Value Tax Law” (Ordinance No. 69 enacted in1991) as specified by Clause 4, Article 2 of the “Enforcement
Regulations of the Law Concerning Revaluations of Land”(Ordinance No. 119 enacted on March 31, 1998) in order tocalculate land value as the basis of calculating land taxes. On
this calculation, a certain reasonable adjustment is made forthe final assessment.
Date of revaluation
Mar. 31, 2000
Difference between market value of
relevant land on December 31, 2010
(2,916)and its book value after revaluation

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

- 25 -

Date of revaluation
Difference between market value of
relevant land on December 31, 2011
and its book value after revaluation

Mar. 31, 2000
(2,734)

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2011

Fiscal Year 2010
(As of Dec. 31, 2010)
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
15,300Credit used
Credit available
15,300Fiscal Year 2011
(As of Dec. 31, 2011)*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
15,300Credit used
2,500
Credit available
12,8006. 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.

6. Financial covenantsSame as on the left.

(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.

- 26 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2011

Notes to Consolidated Statements of Income
Fiscal Year 2010
(Jan. 1, 2010 – Dec. 31, 2010)*1. The ending inventory is the amount written down to reflect
the effect of lower profit margins. The following loss on
valuation of inventories is included in cost of sales.
676(Million yen)
Fiscal Year 2011
(Jan. 1, 2011 – Dec. 31, 2011)*1. The ending inventory is the amount written down to reflect
the effect of lower profit margins. The following loss on
valuation of inventories is included in cost of sales.
796*2. R&D expenses included in general and administrative
expenses*2. R&D expenses included in general and administrative
expenses313*3. Gain on sales of noncurrent assets
Land
Buildings and structures, and others
Total*4. Loss on sales and retirement of noncurrent assets
Loss on retirement of buildings and structures
Loss on retirement of machinery, equipment andvehiclesLoss on retirement of tools, furniture and fixtures
Loss on sales of tools, furniture and fixtures
Loss on retirement of software
Loss on retirement of intangible assets inprogress and others
Total

11
1
13

232
*3. Gain on sales of noncurrent assets
Machinery, equipment and vehicles, and others*4. Loss on sales and retirement of noncurrent assets
Loss on retirement of buildings and structures
Loss on retirement of machinery, equipment andvehiclesLoss on retirement of tools, furniture and fixtures
Loss on retirement of software
Other
Total

103
20
12
2
6
71

1

12
130
14
5
3
166

217

*5. Impairment loss
For the current fiscal year, the Senshukai Group posted
impairment loss on the following asset groups.
(Million yen)
Impairment
PrimaryType
Location
loss
use
Idle
Buildings andNada Ward,assetsstructures, land, and187
Kobe City,
othersother
Business Buildings andShinagawaassetsstructures, and139
Ward, Tokyo,
others
other
Other
Other
Goodwill
58
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, other intangible assets and other were 97
million yen, 34 million yen, 58 million yen, and 48 million
yen, 138 million yen and 7 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.

*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
Kato City,
Idle
Buildings andHyogo, otherassetsstructures, land, and180
othersMisato City,
Business Buildings andSaitama, other assets
structures, and22
othersIn 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 to the recoverable amountreflecting weak prospects for improved short-term performancedue to worsening operating profitability, and it marked down
the book value of idle assets to the recoverable amount becauseof a decline in the assets’ market value. These markdowns werebooked as an impairment loss.
The impairment loss on buildings and strucures, land, tools,
furniture and fixtures, and machinery, equipment and vehicles
were 132 million yen, 64 million yen, 3 million yen, and 2
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.

- 27 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2011

Notes to Consolidated Statements of Comprehensive Income
Fiscal Year 2011 (Jan. 1, 2011 – Dec. 31, 2011)*1. Comprehensive income in the previous fiscal year

(Million yen)Comprehensive income attributable to owners of the parent

1,779

Comprehensive income attributable to minority interests

12

Total

1,791

*2. Other comprehensive income in the previous fiscal year

(Million yen)

Valuation difference on available-for-sale securities

84

Deferred gains or losses on hedges(297)

Foreign currency translation adjustment
Share of other comprehensive income of associates accounted
for using equity method

(8)
(37)

Total

(257)

Notes to Consolidated Statements of Changes in Net assets
Fiscal Year 2010 (Jan. 1, 2010 – Dec. 31, 2010)
1. Type and number of outstanding shares and treasury stock
Number of shares
as of Dec. 31, 2009
(Thousand shares)

Increase during thecurrent fiscal year
(Thousand shares)

Decrease during thecurrent fiscal year
(Thousand shares)

Number of shares
as of Dec. 31, 2010
(Thousand shares)

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

4,319

1

0

4,320

Total

4,319

1

0

4,320

Outstanding shares
Common stock
Total
Treasury stock

Note: Common shares of treasury stock increased by 1 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

Type of share

Total amount of dividend(Million yen)

Dividend pershare (Yen)Record date

Effective date

Board of Directors meeting on
Jul. 29, 2010

Common stock259

6Jun. 30, 2010

Sep. 1, 2010

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

Type of share

Annual general meetingof shareholders on Mar. Common stock
30, 2011

Total amount of
Resource fordividend (Million yen) distribution
346- 28 -

Retainedearnings

Dividend pershare (Yen)Record date

Effective date

8

Dec. 31, 2010

Mar. 31, 2011

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2011

Fiscal Year 2011 (Jan. 1, 2011 – Dec. 31, 2011)
1. Type and number of outstanding shares and treasury stock
Number of shares
as of Dec. 31, 2010
(Thousand shares)

Increase during thecurrent fiscal year
(Thousand shares)

Decrease during thecurrent fiscal year
(Thousand shares)

Number of shares
as of Dec. 31, 2011
(Thousand shares)

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

4,320

0

0

4,321

Total

4,320

0

0

4,321

Outstanding shares
Common stock
Total
Treasury stock

Note: Common shares of treasury stock increased by 0 thousand shares due to the purchase of odd-lot shares. Common shares oftreasury stock decreased by 0 thousand shares due to the transfer of odd-lot shares in response to purchase requests.
2. Dividends(1) Dividend payment
Resolution
Annual general meeting ofshareholders on Mar. 30, 2011
Board of Directors meeting on
Jul. 28, 2011

Type of share

Total amount of dividend(Million yen)

Dividend pershare (Yen)Record date

Effective dateCommon stock346

8Dec. 31, 2010

Mar. 31, 2011

Common stock

303

7Jun. 30, 2011

Sep. 1, 2011

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

Type of share

Annual general meetingof shareholders on Mar. Common stock
29, 2012

Total amount of
Resource fordividend (Million yen) distribution
303- 29 -

Retainedearnings

Dividend pershare (Yen)Record date

Effective date

7

Dec. 31, 2011

Mar. 30, 2012

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2011

Notes to Consolidated Statements of Cash Flows(Million yen)
Fiscal Year 2010
Fiscal Year 2011
(Jan. 1, 2010 – Dec. 31, 2010)(Jan. 1, 2011 – Dec. 31, 2011)*1. Reconciliation between balance sheet accounts and*1. Reconciliation between balance sheet accounts andyear-end balance of cash and cash equivalents
year-end balance of cash and cash equivalents(As of Dec. 31, 2011)(As of Dec. 31, 2010)
Cash and deposits
10,855
Cash and deposits
7,500
Cash and cash equivalents
10,855
Cash and cash equivalents
7,500*2. Breakdown of assets and liabilities of Mobakore Co., Ltd.
as of the date the Company made it a consolidated
subsidiary upon the acquisition of its shares, and therelationship with the purchase price of Mobakore stock,and net proceeds from the acquisition.
Current assets
975
Noncurrent assets
24
Current liabilities(583)
Goodwill25
Acquired surplus after application of the equity(20)
methodInitial acquisition cost of Mobakore(196)
Cost of Mobakore stock at purchase during
225
periodCash and cash equivalents of Mobakore499
Net proceeds from acquisition of Mobakore
274
stock
*3. Senshu Transportation Co., Ltd. is no longer a
consolidated subsidiary due to the sale of its stock. The
breakdown of assets and liabilities as of the date of thesale, as well as the sales price of Senshu Transportation’s
stock and net proceeds from the sales.
Current assets
154
Noncurrent assets
33
Current liabilities(69)
Sales price of Senshu Transportation stock
119
Cash and cash equivalents of Senshu
69
Transportation
Net proceeds from sales of Senshu
49
Transportation stock- 30 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2011

Segment Information
a. Business segments
Fiscal Year 2010 (Jan. 1, 2010 – Dec. 31, 2010)
Mail-orderbusiness(Million yen)
Other businesses

Elimination or
corporate

Total

Consolidated

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

118,227

18,632

136,859(2) Inter-segment sales

2,062

504

2,566

Total

-

136,859(2,566)-

120,289

19,136

139,426(

2,566)

136,859

Operating expenses

117,390

18,679136,069(

2,632)

133,43766

3,422

Operating income

2,898

457

3,356

II Assets, depreciation,
impairment loss andcapital expenditures
Assets80,611

11,032

91,643

Depreciation

1,902

502

2,404

Impairment loss
Capital expenditures(

1,556)

90,086

-

2,404

238

146

385

-

385

1,674

1,198

2,873

-

2,873

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, and services(Note) The transportation business, formerly a major component of “other businesses,” is no longer a major component
because Senshu Transportation Co., Ltd., a consolidated subsidiary, was removed from consolidated accounts
during the fiscal year under review.
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.”b. Geographical segment information
Fiscal Year 2010 (Jan. 1, 2010 – Dec. 31, 2010)
Geographic segment information has not been presented because the Company and its consolidated subsidiaries have generated
over 90% of their total net sales and assets in Japan.

c. Overseas sales
Fiscal Year 2010 (Jan. 1, 2010 – Dec. 31, 2010)
Overseas sales have not been presented because they represented less than 10% of total consolidated sales.

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Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2011

d. Segment information
Fiscal Year 2011 (Jan. 1, 2011 – Dec. 31, 2011)
1. Overview of reportable segment
Segments used for financial reporting are the Company’s constituent units for which separate financial information
is available and for which the Board of Directors performs periodic studies for the purposes of determining theallocation of resources and evaluating performance.
The Senshukai Group primarily operates the mail-order business, bridal business, and corporates business, and theCompany and its group companies manage each of these businesses according to these classifications.
Therefore the Group, comprised of these different business segments, has three reportable segments: the mail-orderbusiness, bridal business, and corporates business.
The mail-order business is engaged in mail-order sales via a variety of media centered on catalogs and the Internet.
The bridal business provides mostly house wedding services. The corporates business uses the Company’s
infrastructure to provide solutions services and promotional services targeting mail-order companies ande-commerce businesses.
2. Calculation methods for net sales, profit/loss, assets, liabilities, and other items for each reportable segment
The accounting methods for reportable segments are generally the same as those listed in “Significant Accounting Policies for

the Preparation of Consolidated Financial Statements.”
Profits for reportable segments are generally operating income figures.
Inter-segment sales are based on market prices.
3. Information related to net sales and profit/loss, assets, liabilities, and other items for each reportable segment
Fiscal Year 2010 (Jan. 1, 2010 – Dec. 31, 2010)(Million yen)

Reportable segment

Amounts shown on
Adjustment
consolidated(Note 2) financial statements(Note 3)Mail-orderbusiness

Bridalbusiness

Corporates
business

Sub-total

Others(Note 1)

Sales to customers

119,170

8,149

7,651

134,971

1,888-

136,859

Inter-segment sales

2,062

-

81

2,144

365

2,509 (

2,509)-

Total

121,232

8,149

7,733

137,1152,253

139,369 (2,509)

136,859

Total

136,859

Net sales

Segment profit

2,766

432

124

3,324

31

3,356

Segment assets

80,785

8,511

1,751

91,048881

91,930 (

66

3,422

1,843)

90,086

Other items
Depreciation
1,941
402
49
2,393
11
2,404
2,404
Amortization of
148
30
179
179
179
goodwill
Investment inequity-method
508
508
508
508
affiliates
Increase in property,
plant and equipment
1,690
1,120
35
2,846
26
2,873
2,873
and intangible assets
Notes: 1. Others represent the businesses which are not included in any of the three reportable segments and consist of theservices business primarily offering travel and credit card services, and the pet business distributing pet goods throughretail stores.
2. Adjustments are as follows.
(1) The 66 million yen adjustment to segment profit comprises elimination for inter-segment transactions.
(2) The 1,843 million yen adjustment to segment assets comprises elimination for inter-segment transactions.
3. Segment profit is adjusted to be consistent with operating income shown on the consolidated statements of income.

- 32 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2011

Fiscal Year 2011 (Jan. 1, 2011 – Dec. 31, 2011)(Million yen)

Reportable segment

Amounts shown on
Adjustment
consolidated(Note 2) financial statements(Note 3)Mail-orderbusiness

Bridalbusiness

Corporates
business

Sub-total

Others(Note 1)

Sales to customers

122,946

8,407

4,159

135,513

1,748-

137,261Inter-segment sales

901

-

281

1,183

88

1,272 (

1,272)-

123,848

8,407

4,441

136,696

1,837

138,534 (

1,272)

137,261

Total

137,261

Net sales

Total
Segment profit (loss)

2,226

482

448

3,157

(57)

3,100

Segment assets

82,481

8,895

579

91,956750

92,707 (

73,1072,265)

90,441Other items
Depreciation
1,814
491
27
2,333
10
2,343
2,343
Amortization of
5
145
151
151
151
goodwill
Investment inequity-method
478
478
478
478
affiliates
Increase in property,
plant and equipment
2,561
474
3,035
11
3,046
3,046
and intangible assets
Notes: 1. Others represent the businesses which are not included in any of the three reportable segments and consist of theservices business primarily offering travel and credit card services, and the pet business distributing pet goods throughretail stores.
2. Adjustments are as follows.
(1) The 7 million yen adjustment to segment profit (loss) comprises elimination for inter-segment transactions.
(2) The 2,265 million yen adjustment to segment assets comprises elimination for inter-segment transactions.
3. Segment profit (loss) is adjusted to be consistent with operating income shown on the consolidated statements ofincome.

e. Related information
Fiscal Year 2011 (Jan. 1, 2011 – Dec. 31, 2011)
1. Information by product or service
This information is omitted because the same information is presented in segment information.
2. Information by region(1) Net sales
This information is omitted because sales to customers in Japan exceed 90% of net sales shown on the
consolidated statements of income.
(2) Property, plant and equipment
This information is omitted because property, plant and equipment in Japan exceed 90% of property, plant andequipment on the consolidated balance sheets.
3. Information by major client
Not applicable because there is no single customer which accounts for more than 10% of net sales shown on the
consolidated statements of income.

- 33 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2011

f. Information related to impairment of noncurrent assets for each reportable segment
Fiscal Year 2011 (Jan. 1, 2011 – Dec. 31, 2011)(Million yen)

Corporates
Mail-order
Bridal businessbusinessbusiness
Impairment loss
201
Note: The amount of “Others” includes figures related to the pet business.

Elimination or
corporate-

Others
1

Total
203

g. Information related to goodwill amortization and the unamortized balance for each reportable segment
Fiscal Year 2011 (Jan. 1, 2011 – Dec. 31, 2011)

Amortization for the period
Balance at end of period

Mail-orderbusiness
5
20(Million yen)
Corporates
business

Bridal business
145
2,408

Others--Eliminationor corporate
-

Total
151
2,429

h. Information related to negative goodwill profits for each reportable segment
Fiscal Year 2011 (Jan. 1, 2011 – Dec. 31, 2011)
Not applicable.
Supplemental information
Beginning with the current fiscal year, “Accounting Standard for Disclosures about Segments of an Enterprise andRelated Information” (ASBJ Statement No. 17, March 27, 2009) and “Guidance on the Accounting Standard forDisclosures about Segments of an Enterprise and Related Information” (ASBJ Guidance No. 20, March 21, 2008)
have been adopted.
Per Share Information(Yen)
Fiscal Year 2010
(Jan. 1, 2010 – Dec. 31, 2010)
Net assets per share
Net income per share

Fiscal Year 2011
(Jan. 1, 2011 – Dec. 31, 2011)909.9947.04

Net assets per share
Net income per share

956.9436.56
Same as on the left.

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

Note: Basis for calculation of net income per share is as follows.

(Million yen)
Fiscal Year 2011
(Jan. 1, 2011 – Dec. 31, 2011)

Fiscal Year 2010
(Jan. 1, 2010 – Dec. 31, 2010)
Net income per share
Net income

2,037

1,583

-

-

Net income related to common stock

2,037

1,583

Average number of shares outstanding during theperiod (thousand shares)

43,31043,309Amounts unavailable to common shareholders

Subsequent Events
Not applicable.

- 34 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2011

5. Non-consolidated Financial Statements(1) Balance Sheets(Million yen)
Fiscal Year 2011
(As of Dec. 31, 2011)

Fiscal Year 2010
(As of Dec. 31, 2010)
AssetsCurrent assets
Cash and deposits

7,687

Notes receivable-trade
Accounts receivable-trade

5,316

130

235

5,919

5,899

Short-term investment securities

831

Merchandise and finished goods

12,186

16,638101

100

Raw materials and supplies
Advance payments-trade

881

1,059

Prepaid expenses

1,612

2,324

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

1,059

876

420

414

8,996

9,149

Other

159

90

Allowance for doubtful accounts

(237)

(272)

Total current assets

38,92541,865

Noncurrent assets
Property, plant and equipment
Buildings

28,30027,919

Accumulated depreciation(18,284)(18,593)

Buildings, net

10,0159,326

Structures
Accumulated depreciation
Structures, net
Machinery and equipment
Accumulated depreciation
Machinery and equipment, net
VehiclesAccumulated depreciation
Vehicles, net

1,968

1,938

(1,654)(1,656)314

281

11,533

8,636(10,664)(7,784)

869

851

76

76

(74)

(75)

1

0

Tools, furniture and fixtures

2,390

2,331

Accumulated depreciation(1,768)(1,791)Tools, furniture and fixtures, net
LandConstruction in progress
Total property, plant and equipment

622

540

10,893

10,8270-

22,717

21,829Intangible assets
Leasehold right0-

Software

1,624

1,847

Software in progress

1,510

2,433

33

43

3,168

4,324

Other
Total intangible assets- 35 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2011

(Million yen)
Fiscal Year 2011
(As of Dec. 31, 2011)

Fiscal Year 2010
(As of Dec. 31, 2010)
Investments and other assets
Investment securities

7,210

5,510

Stocks of subsidiaries and affiliates

6,901

6,817

355

355

7

9

1,318

1,687

843

825

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

75

46

Deferred tax assets

16

28

Insurance funds for directors

481

428

Long-term time deposits

3,000

3,000

Other

563

571

Allowance for doubtful accounts(465)(1,010)Allowance for investment loss

(568)

(568)

Total investments and other assets

19,74017,70445,62743,85984,55285,724

Notes payable-trade

1,245

1,371

Accounts payable-trade

5,802

7,071

Short-term loans payable

-

2,500

Total noncurrent assets
Total assets
Liabilities
Current liabilities

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

700

700

2,660

1,000

Accounts payable-other

6,269

6,290

Accounts payable-factoring

13,54813,710Accrued expenses

1,358

1,432

97

76

Income taxes payable
Accrued consumption taxes

113-

Deposits received

989

834

-

29

Provision for directors’ bonuses
Provision for sales promotion expenses
Forward exchange contracts
Other

641

602

3,585

1,940

382

364

37,39437,923

Bonds payable

3,250

2,550

Long-term loans payable

4,365

3,365

723

631

-

38

Total current liabilities
Noncurrent liabilities

Deferred tax liabilities for land revaluation
Asset retirement obligations
Other
Total noncurrent liabilities
Total liabilities- 36 -

-

4

8,338

6,589

45,73244,513

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2011

(Million yen)
Fiscal Year 2011
(As of Dec. 31, 2011)

Fiscal Year 2010
(As of Dec. 31, 2010)
Net assets
Shareholders’ equity
Capital stock

20,35920,359

Capital surplus
Legal capital surplus

12,864

12,864

Other capital surplus

8,174

8,174

Total capital surpluses

21,03821,038

1,118

1,118

Other retained earnings
Reserve for advanced depreciation of
noncurrent assets
Reserve for overseas investment loss

63

65

40

41

Retained earnings brought forward

9,368

10,659Retained earnings
Legal retained earnings

10,591

11,884

Treasury stock

Total retained earnings(2,775)(2,775)

Total shareholders’ equity

49,21350,506(928)(1,008)Deferred gains or losses on hedges(2,347)(1,244)

Revaluation reserve for land

(7,117)(7,041)

Total valuation and translation adjustments(10,393)(9,294)

Valuation and translation adjustments
Valuation difference on available-for-sale securities

Total net assets
Total liabilities and net assets- 37 -

38,82041,211

84,55285,724

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2011(2) Statements of Income(Million yen)
Fiscal Year 2011
(Jan. 1, 2011 – Dec. 31, 2011)

Fiscal Year 2010
(Jan. 1, 2010 – Dec. 31, 2010)
Net sales

125,966

124,083

10,75012,186

Cost of sales
Beginning goods
Cost of purchased goods

62,18567,539Total

72,936

79,725Ending goods

12,186

16,638

Cost of goods sold60,74963,087

Other cost

5,741

3,021

Total cost of sales

66,491

66,10859,47557,975

Freightage and packing expenses

8,133

8,232

Promotion expenses

Gross profit
Selling, general and administrative expenses

19,754

18,344

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

701

684

641

602

230

259

Bad debts expenses

40

41

Directors’ compensations

214

283

Salaries and allowances

5,195

5,062

887

1,210

-

29

Bonuses
Provision for directors’ bonuses
Welfare expenses

1,038

1,111

Rent expenses

1,172

1,530

322

232

Commission fee

11,744

11,179Depreciation

1,887

1,724

Research study expenses

Other

4,557

4,226

Total selling, general and administrative expenses

56,52154,755

2,953

3,219

59

38

Operating income
Non-operating income
Interest income
Interest on securities

47

28

Dividends income

343

403

Foreign exchange gains-

201

Gain on adjustment of account payable-

142

Miscellaneous income

228

119

Total non-operating income

678

934

- 38 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2011

(Million yen)
Fiscal Year 2011
(Jan. 1, 2011 – Dec. 31, 2011)

Fiscal Year 2010
(Jan. 1, 2010 – Dec. 31, 2010)
Non-operating expenses
Interest expenses

188

153

Interest on bonds

67

56

Foreign exchange losses

220-

Loss on valuation of compound financial instruments

147

208

-

106

Relief aid expenses
Miscellaneous loss

140

116

Total non-operating expenses

764

641

2,867

3,513

13

0

Gain on sales of investment securities

4

139

Gain on liquidation of subsidiaries

35-

Reversal of allowance for doubtful accounts-

23

Total extraordinary income

52

163

Ordinary income
Extraordinary income
Gain on sales of noncurrent assets

Extraordinary loss
Loss on sales and retirement of noncurrent assets

213

140

Loss on valuation of investment securities

253

514

Loss on sales of investment securities

77

0

Provision of allowance for doubtful accounts

188

583

Provision of allowance for investment loss
Loss on valuation of stocks of subsidiaries andaffiliates
Impairment loss

323

-

165

-

337

201

Loss on liquidation of business
Loss on adjustment for changes of accounting
standard for asset retirement obligations
Loss on disaster

150

-

-

29

-

59

Other

100

32

Total extraordinary losses

1,809

1,561

Income before income taxes

1,110

2,115

Income taxes-current

23

6

Income taxes-deferred

(419)

175

Total income taxes

(395)

182

Net income

1,506

1,932

- 39 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2011(3) Statements of Changes in Net assets
Fiscal Year 2010
(Jan. 1, 2010 – Dec. 31, 2010)(Million yen)
Fiscal Year 2011
(Jan. 1, 2011 – Dec. 31, 2011)

20,35920,35920,35920,35919,864

12,864(7,000)-(7,000)12,864

12,864

1,174

8,174

(0)

(0)

7,000

-

6,999
8,174

(0)
8,174

21,03821,038

(0)

(0)

-

-

(0)
21,038(0)
21,038

1,118

1,118

1,118

1,118

66

63

-

4

(3)

(2)

(3)
63

1
65

40

40

3
(2)
0
40

2
(1)
0
41

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
Capital surplus
Legal capital surplus
Balance at the end of previous period
Changes of items during the period
Transfer to other capital surplus from legal capitalsurplus
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
Transfer to other capital surplus from legal capitalsurplus
Total changes of items during the period
Balance at the end of current period
Total capital surplus
Balance at the end of previous period
Changes of items during the period
Disposal of treasury stock
Transfer to other capital surplus from legal capitalsurplus
Total changes of items during the period
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 assets
Balance at the end of previous period
Changes of items during the period
Provision of reserve for advanced depreciation of
noncurrent assets
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
Provision of reserve for overseas investment loss
Reversal of reserve for overseas investment loss
Total changes of items during the period
Balance at the end of current period- 40 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2011

Fiscal Year 2010
(Jan. 1, 2010 – Dec. 31, 2010)(Million yen)
Fiscal Year 2011
(Jan. 1, 2011 – Dec. 31, 2011)

13,600-(13,600)(13,600)--(5,530)

9,368

-

(4)

3

2

(3)
2
13,600
(259)
1,506
49
14,899
9,368

(2)
1
(649)
1,932
9
1,291
10,6599,294

10,591

-

-

-

-

(259)
1,506
49
1,296
10,591

(649)
1,932
9
1,292
11,884(2,774)(2,775)(0)0(0)(2,775)(0)0(0)(2,775)47,91749,213

(259)
1,506
(0)
0
49
1,296
49,213

(649)
1,932
(0)
0
9
1,292
50,506

General reserve
Balance at the end of previous period
Changes of items during the period
Reversal of general reserve
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
Provision of reserve for advanced depreciation of
noncurrent assets
Reversal of reserve for advanced depreciation of
noncurrent assets
Provision of reserve for overseas investment loss
Reversal of reserve for overseas investment loss
Reversal of general reserve
Dividends from surplus
Net income
Reversal of revaluation reserve for land
Total changes of items during the period
Balance at the end of current period
Total retained earnings
Balance at the end of previous period
Changes of items during the period
Provision of reserve for advanced depreciation of
noncurrent assets
Reversal of reserve for advanced depreciation of
noncurrent assets
Provision of reserve for overseas investment loss
Reversal of reserve for overseas investment loss
Reversal of general reserve
Dividends from surplus
Net income
Reversal of revaluation reserve for land
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
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
Dividends from surplus
Net income
Purchase of treasury stock
Disposal of treasury stockReversal of revaluation reserve for land
Total changes of items during the period
Balance at the end of current period- 41 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2011

Fiscal Year 2010
(Jan. 1, 2010 – Dec. 31, 2010)(Million yen)
Fiscal Year 2011
(Jan. 1, 2011 – Dec. 31, 2011)

(987)

(928)

Net changes of items other than shareholders’ equity

59

(80)

Total changes of items during the period

59

(80)

(928)

(1,008)(2,047)(2,347)

Net changes of items other than shareholders’ equity

(299)

1,103

Total changes of items during the period

(299)

1,103

(2,347)(1,244)(7,067)(7,117)(49)

75

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

(49)

75

(7,117)(7,041)(10,103)(10,393)

Net changes of items other than shareholders’ equity

(290)

1,098

Total changes of items during the period

(290)

1,098

(10,393)(9,294)37,81438,820

Dividends from surplus

(259)

(649)

Net income

1,506

1,932

(0)

(0)

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 stock00

Reversal of revaluation reserve for land49

9

Net changes of items other than shareholders’ equity

(290)

1,098

Total changes of items during the period

1,006

2,391

38,82041,211

Balance at the end of current period- 42 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2011(4) 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 2010
(Jan. 1, 2010 – Dec. 31, 2010)

Fiscal Year 2011
(Jan. 1, 2011 – Dec. 31, 2011)

AmountAmountShare (%)

ChangeShare (%)

119,17087.1

122,946

89.6

3,775

Bridal business

8,149

5.9

8,407

6.1

258

Corporates business

7,651

5.6

4,159

3.0

(3,492)Other businesses

1,888

1.4

1,748

1.3

(139)

Total

136,859

100.0

137,261

100.0

402

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

b. Sales by type(Million yen)
By type

Fiscal Year 2010
(Jan. 1, 2010 – Dec. 31, 2010)

Fiscal Year 2011
(Jan. 1, 2011 – Dec. 31, 2011)

AmountAmountShare (%)

ChangeShare (%)

Apparel

51,79737.8

54,648

39.8

2,851

Interior goods

27,501

20.1

29,509

21.5

2,007

Household goods

19,42614.2

18,706

13.6

(720)

Fashion accessories

13,781

10.1

14,010

10.2

229

Foods

5,378

3.9

4,547

3.3

(830)

OthersTotal

18,974

13.9

15,83911.6(3,135)

136,859

100.0

137,261

100.0

402

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.

- 43 -