Financial Report for Fiscal Year 2010 (Ended December 31, 2010)
February 3, 2011
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. Kiichi Tagawa, Senior Managing Director
Tel: +81-6-6881-3100
Scheduled date of annual general meeting of shareholders: March 30, 2011
Scheduled date of payment of dividend: March 31, 2011
Scheduled date of filing of Annual Security Report: March 31, 2011

Company name: Senshukai Co., Ltd.

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

1. Consolidated Financial Results for Fiscal Year 2010 (January 1, 2010 – December 31, 2010)(1) Consolidated operating results(Percentages represent changes from the same period of the previous fiscal year)
Operating income
Ordinary income
Net income

Net sales
Fiscal Year 2010
Fiscal Year 2009

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

136,859
147,292

(7.1)
(6.9)

3,422
(2,405)-

3,167(1,410)-2,037(3,811)-

Net income per
share

Diluted net income
per share

Yen

Yen

%

Fiscal Year 2010
47.04
Fiscal Year 2009(84.18)Reference: Equity in earnings (losses) of affiliates (million yen)

5.3
(9.3)
Fiscal Year 2010:

Return on equity

Ordinary income to Operating income
total assets
to net sales
%

%

3.5
(1.4)
48 Fiscal Year 2009:

2.5
(1.6)
(65)

(2) Consolidated financial position
Total assets

Net assets

Millions of yen

Fiscal Year 2010
90,086
Fiscal Year 2009
91,837
Reference: Shareholders’ equity (million yen)

Equity ratio

Net assets per share

Millions of yen%

39,41137,906
Fiscal Year 2010:
39,411

43.7
41.3
Fiscal Year 2009:

Yen

909.99874.8937,892(3) Consolidated cash flows
Cash flows fromoperating activities

Cash flows frominvesting activities

Cash flows fromfinancing activities

Cash and cash equivalents
at end of period

Millions of yen

Millions of yen

Millions of yen

Millions of yen

9,585
521

(1,094)(1,141)(6,417)
1,035

10,855
8,795

Fiscal Year 2010
Fiscal Year 2009

2. Dividends
1Q-endFiscal Year 2009
Fiscal Year 2010
Fiscal Year 2011
(forecasts)

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

Total

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

Yen

Yen

Yen

Yen

Yen

Millions of yen

%

%

-

6.00
6.00

-

0.00
8.00

6.00
14.00

280
606

29.8

0.7
1.6

-

7.00

-

7.00

14.00

30.3

3. Consolidated Outlook for Fiscal Year 2011 (January 1, 2011 – December 31, 2011)(Percentages represent changes from the same period of the previous fiscal year)
Net income
Operating income
Ordinary income
Net income
per share

Net sales
Millions of yen

2Q 2011 (cumulative)
Full Year 2011

% Millions of yen

69,000 (0.9)
137,500
0.5% Millions of yen

1,200 (41.7)
2,000 (41.6)-1-%1,600 (20.4)
2,700 (14.8)

Millions of yen%

Yen

1,100 (24.2)
2,000 (1.8)

25.40
46.18

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 and presentation methods for preparation of consolidated financial
statements
1) Changes caused by revision of accounting standards: Yes
2) Other changes: None
Note: Please refer to “Changes in Significant Accounting Policies for the Preparation of Consolidated Financial
Statements” on page 24 for further information.

(3) Number of shares outstanding (common shares)
1) Number of shares outstanding at end of period (including treasury stock)
Fiscal Year 2010:

47,630,393 sharesFiscal Year 2009:

47,630,393 sharesFiscal Year 2009:

4,319,385 shares

2) Number of treasury stock at end of period
Fiscal Year 2010:

4,320,645 shares

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

(Reference) Summary of Non-consolidated Financial Results
1. Non-consolidated Financial Results for Fiscal Year 2010 (January 1, 2010 – December 31, 2010)(1) Non-consolidated operating results(Percentages represent changes from the same period of the previous fiscal year)
Net sales
Fiscal Year 2010
Fiscal Year 2009

Operating income

Ordinary income

Net income

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

125,966
136,941

(8.0)
(9.1)

2,953
(2,347)

-

2,867
(617)

-

1,506
(3,664)-

Net income per share

Diluted net income per share

Yen

Yen

34.79
(80.95)-

Fiscal Year 2010
Fiscal Year 2009

(2) Non-consolidated financial position
Total assets

Net assets

Millions of yen

Fiscal Year 2010
84,552
Fiscal Year 2009
87,757
Reference: Shareholders’ equity (million yen)

Equity ratio

Millions of yen

Net assets per share%

38,82037,814
Fiscal Year 2010:
38,820

Yen

45.9
43.1
Fiscal Year 2009:

896.34873.0837,814

2. Non-consolidated Outlook for Fiscal Year 2011 (January 1, 2011 – December 31, 2011)(Percentages represent changes from the same period of the previous fiscal year)
Net income
Operating income
Ordinary income
Net income
per share

Net sales
Millions of yen

2Q 2011 (cumulative)
Full Year 2011

% Millions of yen

61,700 (4.1)
122,500 (2.8)% Millions of yen

1,000 (44.5)
1,600 (45.8)% Millions of yen

1,450 (24.7)
2,300 (19.8)%

Yen

1,200 (23.8)
2,000 32.7

27.71
46.18

* Cautionary statement with respect to forward-looking statements
The above projections are based on information available at the time of release of this report. Actual results could differ
significantly from these projections due to a variety of factors. For further details regarding the projections, please refer to page8.

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Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2010

1. Operating Results(1) Analysis of Operating Results
Overview
In the fiscal year under review, the Japanese economy showed some signs of improvement as the government’s
economic stimulus measures boosted consumption and growing demand in emerging markets triggered a recovery inexports, but conditions remained harsh overall as the employment environment deteriorated and household incomesremained stagnant. In the retail industry, personal consumption continued to stagnate as consumers increasingly
adopted a “thrifty” and “defensive” stance toward spending. In the mail-order industry, online competition
intensified due to the entry of new online mail-order firms. The future outlook remains uncertain in our view
because the intensely competitive environment has created more price competition, and prompted consumers to
become more selective regarding products and services.
In this environment, the Senshukai Group pushed forward with the core strategies of its medium-term management
plan which concluded in Fiscal Year 2010, the fiscal year under review.
However, net sales in the current fiscal year significantly declined 7.1% year-over-year to 136,859 million yen fromthe previous fiscal year.
In terms of profits, despite the decline in sales, operating income improved to 3,422 million yen in the current fiscal
year under review, compared with operating loss of 2,405 million yen in the previous fiscal year, due to a decline in
the cost ratio on a decline in loss on valuation of inventories, a decline in catalog expenses from the migration ofusers to online shopping, and a significant reduction in administration expenses from more efficient use of expenses.
Ordinary income improved to 3,167 million yen in the current fiscal year, compared with ordinary loss of 1,410
million yen in the previous fiscal year, due to foreign exchange losses among other factors. Net income improved to
2,037 million yen in the current fiscal year, compared with net loss of 3,811 million yen in the previous fiscal year,
due to loss on valuation of investment securities, loss on sales of investment securities, and impairment loss.

Segment information(Mail-order Business)
Consolidated sales in the mail-order business, which comprises the catalog and the hanpukai businesses, decreased
9.7% year-over-year to 118,227 million yen in the current fiscal year. Operating income improved to 2,898 million
yen, compared with operating loss of 2,285 million yen in the previous fiscal year, due to a rise in the gross profit
margin from a decline in valuation losses, and a reduction in SG&A expenses.

1) Catalog business
The catalog business provides customers with a variety of lifestyle ideas and offers original Senshukai products
through 18 different catalogs.
Senshukai reorganized some catalogs including “sumutoco” and “Remie style,” and launched some new catalogs
including “men’s kurasufuku” and “Otona no Fuku,” and also made various efforts to boost sales such as by opening
new sales channels via the iPad and Wii. Also, net sales over the Internet only* increased. However, overall sales in
the catalog business declined year-over-year. As a result, consolidated sales in the catalog business decreased 9.4%
year-over-year to 108,321 million yen in the fiscal year under review. (*net sales over the Internet only: Customer
makes purchase by putting product into online shopping cart.)

2) Hanpukai business
The hanpukai business employs an original, unique sales model differing from other mail-order companies whereby
goods are delivered monthly to all group and individual members, mainly working women.

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Consolidated sales in the hanpukai business declined 12.8% year-over-year to 9,905 million yen due to weak salesof new products and a decline in members.

(Other Businesses)
The “other businesses” segment consists of the services business which primarily offers travel and credit card
services, the storefront business, the pet business, the corporates business which provides products and services tocorporations, and the bridal business operated by Dears Brain Inc. Consolidated sales in the “other businesses”
segment increased 14.1% year-over-year to 18,632 million yen due to an increase in contract sales in the corporates
business and an increase in weddings in the bridal business. Consequently, operating income improved to 457
million yen, compared with operating loss of 190 million yen in the previous fiscal year.

(2) Analysis of Financial Position(Balance sheet position)
Assets totaled 90,086 million yen at the end of the current fiscal year, down 1,750 million yen from the end of theprevious fiscal year.
Current assets increased 539 million yen to 42,656 million yen. The main factors were decrease of 3,886 million yen
in notes and accounts receivable-trade, and increases of 2,242 million yen in cash and deposits, 1,633 million yen inmerchandise and finished goods and 1,379 million yen in accounts receivable-other. Noncurrent assets decreased
2,289 million yen to 47,430 million yen, mainly due to an increase of 324 million yen in intangible assets, anddecreases of 834 million yen in property, plant and equipment and 1,780 million yen in investments and other assets.
Current liabilities decreased 2 million yen to 41,318 million yen. The main factors were decrease of 2,886 million
yen in short-term loans payable, and increases of 997 million yen in notes and accounts payable-trade and 568
million yen in other. Noncurrent liabilities decreased 3,252 million yen to 9,356 million yen, mainly due todecreases in bonds payable of 766 million yen and long-term loans payable of 2,486 million yen.
Net assets increased 1,504 million yen to 39,411 million yen. The main factor was increase in retained earnings of
1,827 million yen. Consequently, the equity ratio was 43.7%.
(Cash flow position)
The balance of cash and cash equivalents at the end of the current fiscal year was 10,855 million yen, an increase of
2,060 million yen from the end of the previous fiscal year.
Operating activities provided net cash of 9,585 million yen (net cash provided of 521 million yen in the previous
fiscal year). The main contributing factors were a 4,035 million yen decrease in notes and accounts receivable-trade,
depreciation and amortization of 2,404 million yen and income before income taxes and minority interests of 1,874
million yen. Negative factor included a 1,419 million yen increase in inventories.
Investing activities used net cash of 1,094 million yen (net cash used of 1,141 million yen in the previous fiscal
year). The main cash inflows were a 700 million yen proceeds from redemption of investment securities and a 410
million yen proceeds from sales of investment securities. The main cash outflows were 1,428 million yen for thepurchase of intangible assets, and 1,244 million yen for the purchase of property, plant and equipment.
Financing activities used net cash of 6,417 million yen (net cash provided of 1,035 million yen in the previous fiscal
year). The main cash inflow was a 600 million yen proceeds from long-term loans payable, while cash outflows
include a 3,000 million yen decrease in short-term loans payable, a repayment of long-term loans payable of 2,973
million yen and redemption of bonds of 766 million yen.

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Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2010

Cash flow indicesFiscal Year 2008
(As of Dec. 31, 2008)

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

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

Equity ratio (%)

42.5

41.3

43.7

Equity ratio based on fair value (%)

31.7

22.3

23.9

Average debt repayment period (years)

3.7

35.1

1.3

Interest coverage ratio (times)

23.6

1.9

33.7

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 and in light of the recent trend in earnings, the Group intends to raise its planned yearend
dividend payment by 2 yen per share, from 6 yen per share to 8 yen per share. This translates into a total annual
dividend of 14 yen per share, comprised of a yearend dividend of 8 yen per share and an interim dividend of 6 yen
per share.
Regarding dividends in Fiscal Year 2011, we plan to pay a total annual dividend of 14 yen per share comprised of aninterim dividend of 7 yen per share and a yearend dividend of 7 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
devices to reduce the risk associated with exchange rate fluctuations, large fluctuations could significantly andadversely affect the Group’s operating results and financial position.

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Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2010

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. The Company is thorough in
educating employees, and establishing an administrative and compliance structure, to ensure strict compliance withall laws and regulations. If the event those compliance-related problems were to emerge, however, this could impair
the corporate image, thereby significantly and adversely affect the Group’s business and operating results.
7) Risks related to unfavorable weather
Cool summers, warm winters, long rainy seasons, and other unusual and unfavorable weather could impact demandand sales in the Senshukai Group’s mainstay mail-order business, significantly and adversely affect the Group’s
operating results.
8) Risks associated with volatility in raw materials prices
The Senshukai Group’s mainstay business, the mail-order business, uses paper for catalog printing, and a greaterthan expected increase in the price of paper, pulp, and other raw materials, as well as price hikes by transportationcompanies that deliver the Group’s products to reflect surging crude oil prices, could significantly and adversely
affect the Group’s operating results.

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Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2010

9) Risks associated with share price fluctuation
The Senshukai Group holds marketable shares, primarily those of its business partners, which means it is subject torisks associated with share price fluctuation. Trends in share prices could significantly and adversely affect theGroup’s operating results and financial position.
10) Risks related to product safety
The Group complies with all applicable laws and regulations regarding the products it supplies, and has establishedeven 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 to book large
costs and the decline in its image could lower its sales. This could adversely affect the Group’s operating results andfinancial position.

11) Forward-looking statements
All forward-looking statements in the “Business Risks” section are based on the judgement of the Senshukai Groupas of the presentation date (February 3, 2011) of this financial report for Fiscal Year 2010.

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Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2010(5) Outlook for Fiscal Year 2011
Senshukai sees increasing uncertainty going forward as the economic recovery appears to be pausing. We havebegun to see some positive signs regarding personal consumption due to improvements in income conditions, but webelieve it will take more time for a full recovery. Overall, we believe the business environment remains
unpredictable.
For the new fiscal year, Senshukai forecasts net sales of 137,500 million yen, roughly on a par with previous year’slevel, due to the harsh outlook for consumption. Senshukai expects an increase in the cost ratio due to surging raw
materials costs, an increase in labor costs in China, and a rise in valuation losses in the wake of efforts to boost
inventories to enhance the product supply ratio. In fiscal year 2011, the first year of our new medium-term
management plan, we will work to capture new members through the implementation of new promotional
campaigns, and to build a structure for the further strengthening and expansion of the Internet business, to solidify
our business foundation. As a result, we forecast operating income of 2,000 million yen, ordinary income of 2,700
million yen, and net income of 2,000 million yen.

Consolidated(Million yen)
Net sales

Operating income

Ordinary income

Net income

Fiscal Year 2011 (forecast)

137,500

2,000

2,700

2,000

Fiscal Year 2010 (results)

136,859

3,422

3,167

2,037

0.5

(41.6)(14.8)(1.8)

Change (%)

Non-consolidated(Million yen)
Net sales

Operating income

Ordinary income

Net income

Fiscal Year 2011 (forecast)

122,500

1,600

2,300

2,000

Fiscal Year 2010 (results)

125,966

2,953

2,867

1,506

(2.8)

(45.8)(19.8)

32.7

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 2010

2. Group Organization
The Senshukai Group comprises the parent company, 22 subsidiaries, and 2 affiliates. Mail-order sales is themainstay business, and other businesses include product sales, services, and transportation.
The following describes the position of each major business activity in the Group’s operations and businesssegments.
Segment
Mail-orderbusiness

Otherbusinesses

Major business activity
Mail orderCompany
Senshukai Co., Ltd., Senshukai Service Hanbai Co., Ltd.,Senshukai Iihana Co., Ltd., RG Marketing Co., Ltd.,
Shanghai Senshu Merchant and Commerce Co., Ltd.,Senshukai Hong Kong Ltd., Luckwin 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.
Senshukai Co., Ltd., Pet First Co., Ltd.
Senshukai Co., Ltd., Senshukai General Services Co., Ltd.,Dears Brain Inc., and 3 other companies

Order processing
Transportation and warehousing
Product sales
Services

Schematic of businesses
Consolidated subsidiary

Subsidiary accounted for by the equity method

Non-consolidated subsidiary

Affiliate accounted for by the equity method

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

Purchases products

Shanghai Senshu Merchant andCommerce Co., Ltd.

Sells products

Mobakore Co., Ltd.
SENTENs Co., Ltd.

Sells products

Purchases products
Outsources
buyingproducts

Luckwin GF China Co.,Ltd.
3 non-consolidated
subsidiaries

Outsources
product
inspection

Outsources orderprocessing

Senshukai Service
Hanbai Co., Ltd.

Order
processing

Senshukai Call Center
Co., Ltd.

Outsources productpacking and packaging
Senshu Logisco Co., Ltd.

Other outsourcing services

2 consolidated subsidiaries
1 non-consolidated subsidiary

Senshukai General Services Co., Ltd.

Other businesses

Suppliers

1 subsidiary accounted forby the equity method

Senshukai Co., Ltd.

Senshukai Hong Kong Ltd.

Outsources customer
services and area marketing

Dears Brain Inc.
1 consolidated subsidiary
2 non-consolidated subsidiaries

Sells products

Purchases products
Pet First Co., Ltd.

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Providesservices

Customers

Mail-order business

K. Sense Co., Ltd.

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2010

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.

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Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2010

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

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

AssetsCurrent assets*2

Cash and deposits

8,613

*2

10,248Notes and accounts receivable-trade

10,855
6,362

Short-term investment securities

182

8

Merchandise and finished goods

10,967

12,600Raw materials and supplies

112

123

Deferred tax assets

545

1,182

Accounts receivable-other

7,568

8,948

Other

4,174

2,816

Allowance for doubtful accounts

(294)

(241)

Total current assets

42,11742,656

Noncurrent assets
Property, plant and equipment*2

Buildings and structures

34,570*2

35,730

Accumulated depreciation(20,351)(21,327)

Buildings and structures, net

14,21914,402

Machinery, equipment and vehicles

12,154

11,651(11,034)(10,772)

Accumulated depreciation

1,120

878

Tools, furniture and fixtures

3,136

3,041

Accumulated depreciation(2,080)(2,181)

Machinery, equipment and vehicles, net

1,056

Tools, furniture and fixtures, net*4Land
Construction in progress
Other
Accumulated depreciation

11,078859*410,945

577

0

-

150

-

(19)

-

131

28,052

27,218Goodwill

2,793

2,580

Other

2,756

3,294

Total intangible assets

5,549

5,874

Other, net
Total property, plant and equipment
Intangible assets

Investments and other assets*1

Investment securities

9,378

*1

7,761

Long-term loans receivable

631

587

Lease and guarantee deposits

1,673

1,722

Deferred tax assets
Other

196

182

4,449

4,272

Allowance for doubtful accounts

(210)

(187)

Total investments and other assets

16,11814,33849,72047,43091,83790,086

Total noncurrent assets
Total assets- 11 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2010

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

Fiscal Year 2009
(As of Dec. 31, 2009)
Liabilities
Current liabilities
6,934

Notes and accounts payable-trade*2, *5

Short-term loans payable

5,923

*2

Current portion of bonds

766

7,932
*2

3,036

*2

766

Accounts payable-other

6,754

7,208

Accounts payable-factoring

13,707

13,548

Accrued expenses

1,983

2,325

Income taxes payable

271

468

Accrued consumption taxes

361

178

Deferred tax liabilities
Provision for sales promotion expenses
Forward exchange contracts

2

0

526

656

3,045

3,585

Other

1,043

1,612

Total current liabilities

41,321

41,318

Noncurrent liabilities
Bonds payable

*2

4,052

*2

3,286

Long-term loans payable

*2

7,584

*2

5,097

Deferred tax liabilities
Deferred tax liabilities for land revaluation

1

-

756

723

Provision for retirement benefits

35

27

Other

178

222

12,6099,356

53,93050,675

Capital stock

20,35920,359

Capital surplus

21,03821,038Retained earnings

9,517

11,344

Treasury stock(2,774)(2,775)

Total shareholders’ equity

48,14049,966

Total noncurrent liabilities
Total liabilities
Net assets
Shareholders’ equity

Valuation and translation adjustments
Valuation difference on available-for-sale securities(1,013)(928)

Deferred gains or losses on hedges(2,044)(2,342)

Revaluation reserve for land

(7,067)(7,117)

Foreign currency translation adjustment

(122)

(167)

Total valuation and translation adjustments(10,247)(10,555)

14-

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

37,906

39,411

91,83790,086

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2010

(2) Consolidated Statements of Income
Fiscal Year 2009
(Jan. 1, 2009 – Dec. 31, 2009)(Million yen)
Fiscal Year 2010
(Jan. 1, 2010 – Dec. 31, 2010)

147,292

136,859

Net sales
Cost of sales*1

Gross profit

78,927*1

68,36469,44767,412

Selling, general and administrative expenses
Freightage and packing expenses

8,849

8,581

Promotion expenses

23,507

19,905

Provision for allowance for sales promotion expenses

525

656

Provision of allowance for doubtful accounts

273

233

Bad debts expenses

39

45

Directors’ compensations

565

475

Salaries and allowances

11,631

11,129Bonuses

1,429

1,344

19

13

Provision for retirement benefits
Depreciation

2,501

2,404

Other

21,427

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

Operating income (loss)

70,770(2,405)*2

63,9893,422

Non-operating income
Interest income

9068

Dividends income

314

105

Foreign exchange gains

1,403

-

Gain on valuation of compound financial instruments

21-

Co-sponsor fee

42

109

Equity in earnings of affiliates

-

48

276

286

2,148

619

317

279

Loss on valuation of compound financial instruments-

164

Equity in losses of affiliates

65

-

-

256

450

-

Miscellaneous income
Total non-operating income
Non-operating expenses
Interest expenses

Foreign exchange losses
Commission fee
Bond issuance cost

127-

Miscellaneous loss

193

173

1,154

873

(1,410)3,167

Total non-operating expenses
Ordinary income (loss)- 13 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2010

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

Fiscal Year 2009
(Jan. 1, 2009 – Dec. 31, 2009)
Extraordinary income
Gain on sales of noncurrent assets

*3

1

*3

13

Gain on redemption of debt

42-

Gain on sales of investment securities-

4

Reversal of allowance for doubtful accounts-

28

Gain on negative goodwill-

6

Gain on step acquisitions-

12

Total extraordinary income

4365

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

Loss on valuation of investment securities

95

*4

573

Loss on sales of investment securities

253

576

Impairment loss

*5

356

217
110

*5

385

Provision of allowance for doubtful accounts

28

24

Loss on liquidation of business

-

317

Other

95

49

1,726

1,358

(3,093)

1,874

Total extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes-current

322

494

Income taxes-deferred

432

(668)

Total income taxes

754

(174)

Minority interests in income (loss)
Net income (loss)- 14 -(36)

12(3,811)

2,037

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2010

(3) Consolidated Statements of Changes in Net Assets(Million yen)
Fiscal Year 2009
Fiscal Year 2010
(Jan. 1, 2009 – Dec. 31, 2009) (Jan. 1, 2010 – Dec. 31, 2010)
Shareholders’ equity
Capital stock
20,359Balance at the end of previous period

20,359Changes 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)

21,03821,03814,064

9,517

(700)

(259)

Balance at the end of current period
Retained earnings
Balance at the end of previous period
Changes of items during the period
Dividends from surplus(3,811)

2,037

Reversal of revaluation reserve for land

(35)

49

Total changes of items during the period(4,547)

1,827

9,517

11,344(631)(2,774)(2,142)(0)

Net income (loss)

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 stock00(2,142)(0)(2,774)(2,775)54,83048,140

(700)

(259)

Net income (loss)(3,811)

2,037

Purchase of treasury stock(2,142)(0)

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

00Reversal of revaluation reserve for land

(35)

49

Total changes of items during the period(6,690)1,826

48,14049,966

Disposal of treasury stock

Balance at the end of current period- 15 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2010

(Million yen)
Fiscal Year 2009
Fiscal Year 2010
(Jan. 1, 2009 – Dec. 31, 2009) (Jan. 1, 2010 – Dec. 31, 2010)
Valuation and translation adjustments
Valuation difference on available-for-sale securities
Balance at the end of previous period
Changes of items during the period
Net changes of items other than shareholders’ equity
Total changes of items during the period
Balance at the end of current period
Deferred gains or losses on hedges
Balance at the end of previous period
Changes of items during the period
Net changes of items other than shareholders’ equity
Total changes of items during the period
Balance at the end of current period
Revaluation reserve for land
Balance at the end of previous period
Changes of items during the period
Net changes of items other than shareholders’ equity
Total changes of items during the period
Balance at the end of current period
Foreign currency translation adjustment
Balance at the end of previous period
Changes of items during the period
Net changes of items other than shareholders’ equity
Total changes of items during the period
Balance at the end of current period
Total valuation and translation adjustments
Balance at the end of previous period
Changes of items during the period
Net changes of items other than shareholders’ equity
Total changes of items during the period
Balance at the end of current period
Minority interests
Balance at the end of previous period
Changes of items during the period
Net changes of items other than shareholders’ equity
Total changes of items during the period
Balance at the end of current period
Total net assets
Balance at the end of previous period
Changes of items during the period
Dividends from surplus
Net income (loss)
Purchase of treasury stock
Disposal of treasury stockReversal 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- 16 -(1,312)(1,013)

299
299

84
84

(1,013)(928)(2,038)(2,044)

(6)
(6)

(297)
(297)

(2,044)(2,342)(7,103)(7,067)

35
35

(49)
(49)

(7,067)(7,117)

(130)

(122)

8
8

(45)
(45)

(122)

(167)

(10,584)(10,247)

336
336

(307)
(307)

(10,247)(10,555)

29

14

(14)
(14)

(14)
(14)

14

-

44,27437,906(700)(3,811)(2,142)
0
(35)
322

(259)
2,037
(0)
0
49
(322)

(6,367)

1,504

37,906

39,411Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2010

(4) Consolidated Statements of Cash Flows(Million yen)
Fiscal Year 2009
Fiscal Year 2010
(Jan. 1, 2009 – Dec. 31, 2009) (Jan. 1, 2010 – Dec. 31, 2010)
Net cash provided by (used in) operating activities
Income (loss) before income taxes and minority interests(3,093)

1,874

Depreciation and amortization

2,503

2,404

356

385

-

(6)

Impairment loss
Gain on negative goodwill
Loss (gain) on step acquisitions
Increase (decrease) in allowance for doubtful accounts

-

(12)

(14)

(76)

Increase (decrease) in allowance for sales promotion expenses

180

129

Interest and dividends income

(404)

(174)

317

279

(1,528)241

Equity in (earnings) losses of affiliates

65

(48)

Loss (gain) on valuation of compound financial instruments

(21)

164

Bond issuance cost

127-

Loss (gain) on sales of noncurrent assets(1)-

Loss (gain) on sales of investment securities

576

106

Loss (gain) on sales and retirement of noncurrent assets

95

204

Loss (gain) on valuation of investment securities

573

253

Interest expenses
Foreign exchange losses (gains)

665

4,035

5,440

(1,419)Decrease (increase) in other current assets

1,908

(117)

Increase (decrease) in notes and accounts payable-trade(1,605)

704

82

(108)

(1,871)861

Decrease (increase) in notes and accounts receivable-trade
Decrease (increase) in inventories

Increase (decrease) in accrued consumption taxes
Increase (decrease) in other current liabilities
Other, net

(29)

275

Subtotal

4,325

9,956

433

176

(270)

(284)

(3,760)-Interest and dividends income received
Interest expenses paid
Payments for cancelation money on derivative contract
Income taxes paid

(206)

(262)

Net cash provided by (used in) operating activities

521

9,585

- 17 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2010

(Million yen)
Fiscal Year 2009
Fiscal Year 2010
(Jan. 1, 2009 – Dec. 31, 2009) (Jan. 1, 2010 – Dec. 31, 2010)
Net cash provided by (used in) investing activities
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment(1,384)(1,244)3

169

Purchase of intangible assets(987)(1,428)Purchase of investment securities

(88)

(121)

Proceeds from sales of investment securities

1,000

410

-

700

Proceeds from redemption of investment securities
Proceeds from withdrawal of time deposits

200-

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

(65)

(20)

-

*2

274

-

*3

49

-

(73)

181

189

(1,141)(1,094)

Net increase (decrease) in short-term loans payable(5,000)(3,000)

Proceeds from long-term loans payable

7,184

600

Repayment of long-term loans payable(2,761)(2,973)

Proceeds from issuance of bonds

4,872

-

(416)

(766)

(2,142)(0)

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

Redemption of bonds
Purchase of treasury stock
Proceeds from sales of treasury stock
Cash dividends paid
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Increase in cash and cash equivalents from newly consolidated
subsidiary*1

Cash and cash equivalents at end of period- 18 -

0

0

(700)

(261)

-

(16)

1,035

(6,417)

(2)

(14)

413

2,060

8,186

8,795

195

-

8,795

*1

10,855

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2010

Going Concern Assumption
Not applicable.

Significant Accounting Policies for the Preparation of Consolidated Financial Statements
Fiscal Year 2009
(Jan. 1, 2009 – Dec. 31, 2009)
1. Scope of consolidation(1) Number of consolidated subsidiaries: 14
Main consolidated subsidiaries:
Senshukai General Services Co., Ltd.
Senshu Logisco Co., Ltd.
Senshukai Call Center Co., Ltd.
Dears Brain Inc.

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 from
Shanghai Senshu Merchant and Commerce Co., Ltd.,
consolidation due to the sale of stock holdings.
non-consolidated subsidairy in the previous fiscal year, was
Mobakore Co., Ltd., previously accounted for by the equity
included in the scope of consolidation due to its increased
method, was included in the scope of consolidation due to theimportance.
Senshukai Retailing Service Co., Ltd. was included in the scope acquisition of additional shares in November 2010. The equity
method was applied for the current fiscal year, as Senshukaiof consolidation due to its establishment.
sets the assumed acquisition date to the consolidated balance
Future Compass Co., Ltd. was liquidated and excluded fromsheet date.
consolidation in December 2008.
B•B•S Co., Ltd. was liquidated and excluded fromconsolidation in December 2010.
(2) Number of non-consolidated subsidiaries: 9(2) Number of non-consolidated subsidiaries: 10
Same as on the left.
Main non-consolidated subsidiaries:
Senshukai Hong Kong Ltd.
Reason for exclusion from scope of consolidation
Reason for exclusion from scope of consolidation
Same as on the left.
The consolidated financial statements do not include theaccounts of above mentioned non-consolidated subsidiaries
since their total assets, net sales, net income/loss (equity inearnings) or retained earnings (equity in earnings) have nosignificant effect on the overall results of consolidated financial
statements.
2. Application of equity method
2. Application of equity method(1) Number of non-consolidated subsidiaries accounted for by(1) Number of non-consolidated subsidiaries accounted for by
the equity method: 2
the equity method: 3Same as on the left.
Main non-consolidated subsidiaries accounted for by the equity
method:Senshukai Hong Kong Ltd.
Senshukai Thailand Co., Ltd. was liquidated and excluded from
Shanghai Senshu Merchant and Commerce Co., Ltd. wasconsolidation in November 2010.
included in the scope of consolidation and excluded from theequity-method non-consolidated subsidiary in the current fiscal
year due to its increased importance.
(2) Number of equity-method affiliates: 3
Equity-method affiliates:
SENTENs Co., Ltd.
Mobakore Co., Ltd.
K. Sense Co., Ltd.

(2) Number of equity-method affiliates: 2
Equity-method affiliates:
SENTENs Co., Ltd.
K. Sense Co., Ltd.

- 19 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2010

Fiscal Year 2009
(Jan. 1, 2009 – Dec. 31, 2009)
K. Sense Co., Ltd. was included in the scope of equity-method
affiliate due to its establishment.

Fiscal Year 2010
(Jan. 1, 2010 – Dec. 31, 2010)
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 the current
fiscal year, as Senshukai sets the assumed acquisition date to
the consolidated balance sheet date.

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

(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:Same as on the left.
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

Same as on the left.

Same as on the left.

- 20 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2010

Fiscal Year 2009
(Jan. 1, 2009 – Dec. 31, 2009)(2) Method for depreciating and amortizing important assets
1) Property, plant and equipment (excluding lease assets)
Depreciation is computed by the declining-balance method, but
the straight-line method is applied to buildings (excluding
attached structures) acquired on or after April 1, 1998.

Fiscal Year 2010
(Jan. 1, 2010 – Dec. 31, 2010)(2) Method for depreciating and amortizing important assets
1) Property, plant and equipment (excluding lease assets)
Same as on the left.

The range of useful lives is as follows:
Buildings and structures: 38-50 years
Machinery, equipment and vehicles: 12 years(Supplemental information)
Effective from the current fiscal year, the Company and its
domestic consolidated subsidiaries have reviewed the useful
lives of machinery and equipment, etc. as a result of revision
to the Corporate Tax Law and consequently have revised theuseful lives as stipulated in the revised law. This change has no
significant effect on the amount of income.
2) Intangible assets (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.

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 deferred assets
Bond issuance cost
Charged to income as accrued.

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

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

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

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

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.

Same as on the left.

- 21 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2010

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

Fiscal Year 2010
(Jan. 1, 2010 – Dec. 31, 2010)4) Provision for retirement benefits
Same as on the left.

5) Provision for directors’ retirement benefits
5) Provision for directors’ retirement benefits(Supplemental information)
Retirement benefits to directors and corporate auditors of
Senshukai and of certain consolidated subsidiaries, andSenshukai’s executive officers are provided at the amountwhich would be required if all of them retired at the balance
sheet date pursuant to the internal rules. However, annual
general meeting held on March 27, 2009 resolved to pay current
directors and corporate auditors, upon retirement, a lump sum
for their term of service up through the day of abolishment of
the system (December 31, 2008). As a result, the Company has
drawn down the entire balance of provision for directors’
retirement benefits, and included in the unpaid amount in the“Accounts payable-other” under current liabilities.
(5)(5) 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.

(6) 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.

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

(7) 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.

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

(8) Accounting for hedging
1) Hedge accounting methods
The deferred hedge accounting method is adopted.

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

- 22 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2010

Fiscal Year 2009
(Jan. 1, 2009 – Dec. 31, 2009)
2) Hedging instruments/ hedged items
Hedging instruments:
Forward exchange contracts, currency options, and interest
rateswaps
Hedged items:
Accounts payable for imports, denominated in foreign
currencies and interest on borrowings

Fiscal Year 2010
(Jan. 1, 2010 – Dec. 31, 2010)
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.
(9) Method and period of goodwill amortization(9) 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.

(10) Scope of cash and cash equivalents(10) 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.

(11) Accounting for consumption taxes
Financial statements are prepared exclusive of national andregional consumption taxes.

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

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

5. Valuation of consolidated subsidiaries’ assets and liabilities

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

6. Amortization of goodwill and negative goodwill

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

7. Scope of cash and cash equivalents- 23 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2010

Changes in Significant Accounting Policies for the Preparation of Consolidated Financial Statements
Fiscal Year 2009
(Jan. 1, 2009 – Dec. 31, 2009)
1. Application of “Accounting Standards for Measurement of
Inventories”
In prior years, inventories for regular sales purposes werestated at the lower of cost, determined by the monthly averagemethod, or market. With the adoption of “AccountingStandards for Measurement of Inventories” (AccountingStandards Board of Japan (ASBJ) Statement No. 9, July 5,2006) from the current fiscal year, inventories are stated at cost
determined by the monthly average method (the carrying valueon the balance sheet is written down to reflect the effect oflower profit margins).
As an effect of this change, operating loss, ordinary loss andloss before income taxes and minority interests increased by
1,195 million yen each. The effect of these changes on segment
operations is shown in the Segment Information section.

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), “Accounting Standard
for Equity Method of Accounting for Investments” (ASBJ
Statement No. 16, December 26, 2008), and “Guidance on
Accounting Standard for Business Combinations andAccounting Standard for Business Divestitures” (ASBJ
Guidance No. 10, December 26, 2008) have been adopted.

2. Application of “Practical Solution on Unification of
Accounting Policies Applied to Foreign Subsidiaries for
Consolidated Financial Statements”
Effective from the current fiscal year, the Company has
adopted “Practical Solution on Unification of Accounting
Policies Applied to Foreign Subsidiaries for Consolidated
Financial Statements” (ASBJ Practical Issue Task Force(Practical Issues Task Force (PITF)) No. 18).
This change has no effect on the amount of income (loss).
3. Application of “Accounting Standards for Lease
Transactions”
In prior years, the Company accounted for finance leases
where there is no transfer of ownership as ordinary operatingleases for accounting purposes. However, the Company has
adopted “Accounting Standards for Lease Transactions” (ASBJ
Statement No. 13) and “Guidance on Accounting Standards for
Lease Transactions” (ASBJ Guidance No. 16), using an
accounting method for leases that is based on the method used
for ordinary purchases and sales.
This change has no effect on the amount of income (loss).

- 24 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2010

Reclassifications
Fiscal Year 2009
(Jan. 1, 2009 – Dec. 31, 2009)
Consolidated balance sheets:
With the adoption of “Cabinet Office Ordinance Partially
Revising Regulation of Financial Statements” (Cabinet Office
Ordinance No. 50, August 7, 2008), “Inventories” is divided
into “Merchandise and finished goods,” and “Raw materials
and supplies” in the current fiscal year.
The amount of “Merchandise and finished goods,” and “Rawmaterials and supplies” included in “Inventories” in theprevious fiscal year was 16,400 million yen and 97 million yen.

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

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.

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

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 Practical Issue Task Force
No.7).

- 25 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2010

Notes to Consolidated Financial Statements
Notes to Consolidated Balance Sheets
Fiscal Year 2009
(As of Dec. 31, 2009)*1. Shares of non-consolidated subsidiaries and affiliates
Investment securities(Million yen)

677

Fiscal Year 2010
(As of Dec. 31, 2010)*1. Shares of non-consolidated subsidiaries and affiliates
Investment securities*2. Assets pledged as collateral(1) Collateral-backed assets
Cash and deposits (Time deposits)
Buildings and structures
Total

15
748
763

*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

253
66
102
477
898

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

313
66
36
413
829

21

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

16

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

539*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, 2009
(2,500)and its book value after revaluation

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

*5. The Company has commitment line agreements withfinancial institutions in order to raise funds efficiently.
The balance of unused credit lines under these agreements asof the end of the current fiscal year was as follows.
Total commitment line
15,500Credit used
3,000
Credit available
12,5005. 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
15,300Date of revaluation
Difference between market value of
relevant land on December 31, 2010
and its book value after revaluation- 26 -

Mar. 31, 2000
(2,916)

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2010

Fiscal Year 2009
(As of Dec. 31, 2009)
6. Financial covenants
The aforementioned commitment line agreements include
financial covenants, and if any of the following are violated,
the Company could lose the benefit of term of all applicabledebts.

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

- 27 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2010

Notes to Consolidated Statements of Income
Fiscal Year 2009
(Jan. 1, 2009 – Dec. 31, 2009)*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.
1,241(Million yen)
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*2. R&D expenses included in general and administrative
expenses*2. R&D expenses included in general and administrative
expenses532*3. Gain on sales of noncurrent assets
Machinery, equipment and vehicles
Total

1
1

313
*3. Gain on sales of noncurrent assets
Land
Buildings and structures, and others
Total

11
1
13

*5. Impairment loss
For the current fiscal year, the Senshukai Group posted
impairment loss on the following asset groups.
(Million yen)
Impairment
PrimaryType
Loc tionloss
use
Buildings,
Yamagata City Idle
assetsstructures, land, and198
of Yamagata,othersother
Yao City ofBusiness Buildings,
Osaka, otherassetsstructures, and128
othersOther
Other
Goodwill
29*4. Loss on sales and retirement of noncurrent assets
103
Loss on retirement of buildings and structures
Loss on retirement of machinery, equipment and20
vehicles12
Loss on retirement of tools, furniture and fixtures2
Loss on sales of tools, furniture and fixtures
6
Loss on retirement of software
Loss on retirement of intangible assets in71
progress and others
217
Total
*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,
Nada Ward,assetsstructures, land, and187
Kobe City,
othersother
Business Buildings,
Shinagawaassetsstructures, 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 and other were 166 million yen, 89 million
yen, 29 million yen, 37 million yen, and 34 million yen,respectively.
The recoverable amount was measured at its net selling price.
The net selling price was rationally estimated based onroadside land prices and other benchmarks.

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.

*4. Loss on sales and retirement of noncurrent assets
Loss on retirement of buildings and structures
Loss on retirement of machinery, equipment andvehiclesLoss on sales of machinery, equipment and vehicles,
and others
Loss on retirement of tools, furniture and fixtures,and others
Total

58
5
0
32
95

- 28 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2010

Notes to Consolidated Statements of Changes in Net assets
Fiscal Year 2009 (Jan. 1, 2009 – Dec. 31, 2009)
1. Type and number of outstanding shares and treasury stock
Number of shares
as of Dec. 31, 2008
(Thousand shares)

Increase during thecurrent fiscal year
(Thousand shares)

Decrease during thecurrent fiscal year
(Thousand shares)

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

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

917

3,401

0

4,319

Total

917

3,401

0

4,319

Outstanding shares
Common stock
Total
Treasury stock

Note: Common shares of treasury stock increased by 3,401 thousand shares due to the purchase of treasury stock (3,400 thousand
shares) based on the Board of Directors’ resolution, and the purchase of odd-lot shares (1 thousand shares). Common sharesof treasury stock decreased by 0 thousand shares due to the transfer of odd-lot shares in response to purchase requests.
2. Dividends(1) Dividend payment
Resolution
Annual general meeting ofshareholders on Mar. 27, 2009
Board of Directors meeting on
Jul. 30, 2009

Type of share

Total amount of dividend(Million yen)

Dividend pershare (Yen)Record date

Effective dateCommon stock420

9Dec. 31, 2008

Mar. 30, 2009

Common stock280

6Jun. 30, 2009

Sep. 1, 2009

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

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- 29 -

Retainedearnings

Dividend pershare (Yen)Record date

Effective date

8

Dec. 31, 2010

Mar. 31, 2011

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2010

Notes to Consolidated Statements of Cash Flows(Million yen)
Fiscal Year 2009
Fiscal Year 2010
(Jan. 1, 2009 – Dec. 31, 2009)(Jan. 1, 2010 – Dec. 31, 2010)*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, 2010)(As of Dec. 31, 2009)
Cash and deposits
10,855
Cash and deposits
8,613
Short-term investment securities
182
Cash and cash equivalents
10,855
Cash and cash equivalents
8,795
2.

3.

*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
975
Current assets
24
Noncurrent assets(583)
Current liabilities
25
Goodwill
Acquired surplus after application of the equity(20)
method(196)
Initial acquisition cost of Mobakore
Cost of Mobakore stock at purchase during
225
period499
Cash and cash equivalents of Mobakore
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.
154
Current assets
33
Noncurrent assets(69)
Current liabilities
119
Sales price of Senshu Transportation stock
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 2010

Segment Information
a. Business segments
Fiscal Year 2009 (Jan. 1, 2009 – Dec. 31, 2009)(Million yen)
Mail-orderbusiness

Other businesses

Elimination or
corporate

Total

Consolidated

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

130,967

16,325147,292-

147,292(2) Inter-segment sales

1,502

1,328

2,830

(

2,830)-

132,469

17,653150,123(2,830)

147,292

Operating expenses

134,755

17,844

152,599(

2,901)

149,698

Operating income (loss)(2,285)(190)(2,476)70(2,405)

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

11,517

93,996

2,158)

91,837

Depreciation

2,024

479

2,503

-

2,503

Total

Impairment loss
Capital expenditures

(

270

85

356

-

356

1,735

888

2,624

-

2,624

Notes: 1. The classification of business segments is based on categories adopted for internal management purposes.
2. Principal activities of each business segment(1) Mail-order business: Catalog and hanpukai businesses(2) Other businesses:

Product sales, services, and transportation

3. There are no unallocated operating expenses included in the “elimination or corporate.”
4. There are no corporate assets included in the “elimination or corporate.”
5. Change in accounting policy
As stated in “Changes in Significant Accounting Policies for the Preparation of Consolidated Financial Statements,”“Accounting Standards for Measurement of Inventories” (ASBJ Statement No. 9) has been adopted with effect from thecurrent fiscal year. As an effect of this change, operating loss in the mail-order business increased by 1,195 million yen
in the current fiscal year.
There is no effect on other businesses.
Fiscal Year 2010 (Jan. 1, 2010 – Dec. 31, 2010)(Million yen)
Mail-orderbusiness

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

(

-

136,8592,566)-

120,289

19,136

139,426(

2,566)

136,859

Operating expenses

117,390

18,679136,069(

2,632)

133,437

66

3,422

Total
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

- 31 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2010

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 was previously a mainstay of the Company’s other businesses, but it is no longer amainstay following the removal of Senshu Transportation Co., Ltd. from the Company’s consolidated accounts in thecurrent fiscal year.
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 2009 (Jan. 1, 2009 – Dec. 31, 2009), Fiscal Year 2010 (Jan. 1, 2010 – Dec. 31, 2010)
Geographic segment information has not been presented because the Company and its consolidated subsidiaries have conducted
over 90% of their total net sales and assets in Japan.
c. Overseas sales
Fiscal Year 2009 (Jan. 1, 2009 – Dec. 31, 2009), 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.

Per Share Information(Yen)
Fiscal Year 2009
(Jan. 1, 2009 – Dec. 31, 2009)
Net assets per share
Net loss per share

Fiscal Year 2010
(Jan. 1, 2010 – Dec. 31, 2010)
874.8984.18

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

Net assets per share
Net income per share

909.9947.04

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

Note: Basis for calculation of net income (loss) per share and diluted net income per share is as follows.
(Million yen)
Fiscal Year 2010
(Jan. 1, 2010 – Dec. 31, 2010)

Fiscal Year 2009
(Jan. 1, 2009 – Dec. 31, 2009)
Net income (loss) per share(3,811)

2,037

-

-

Net income (loss) related to common stock(3,811)

2,037

Average number of shares outstanding during theperiod (thousand shares)

45,27743,310

-

-

-

-

-

-

Net income (loss)
Amounts unavailable to common shareholders

Diluted net income per share
Adjustment to net income
Increase in number of common stock (thousand
shares)[Including: subscription rights to shares(thousand shares)]
Number of residual securities with no dilution
excluded from calculation of diluted net income pershare- 32 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2010

Subsequent Events
Fiscal Year 2009
(Jan. 1, 2009 – Dec. 31, 2009)(Reduction of legal capital surplus and treatment of othercapital surplus)
Senshukai’s Board of Directors resolved at a meeting held on
February 19, 2010 to propose at the annual general meeting ofshareholders a reduction of the amount of legal capital surplus
and the transfer of this to other capital surplus. The proposal
was adopted at the annual general meeting of shareholders
held on March 30, 2010.

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

1. Purpose and overview of reducing legal capital surplus
For the purpose of ensuring flexibility and mobility of its
future capital policy, Senshukai reduced the amount of legal
capital surplus and transferred the same amount to othercapital surplus in line with Article 448, Clause 1 of theCompany Act.
(1) Amount of decline in reserves
Legal capital surplus:
7,000,000,000 yen of 19,864,139,367 yen(2) Increase in surplus item and amount
Other capital surplus: 7,000,000,000 yen
2. Purpose and overview of treatment of surplus
For the purpose of covering for the loss in retained earnings
brought forward and to ensure flexibility and mobility of thecapital policy, Senshukai reduced the entire amount of generalreserves and transferred the same amount to retained earnings
brought forward in line with Article 452 of the Company Act.
(1) Decline in surplus item and amount
General reserves: 13,600,000,000 yen(2) Increase in surplus item and amount
Retained earnings brought forward: 13,600,000,000 yen
3. Timeline of reduction of legal capital surplus(1) Date of resolution of meeting of the Board of Directors:
February 19, 2010
(2) Official start of period for creditors to state theirobjections: February 26, 2010
(3) Official end of period for creditors to state theirobjections: March 26, 2010
(4) Date of resolution of annual general meeting ofshareholders: March 30, 2010(5) Effective date: March 31, 2010

Omission of DisclosureWith respect to lease transactions, related party transactions, deferred tax accounting, financial instruments, investment securities,
derivatives, retirement benefits, stock options, business combinations, and rental and other properties are not presented since thedisclosure of such information is not significant in the context of the financial results.

- 33 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2010

5. Non-consolidated Financial Statements(1) Balance Sheets(Million yen)
Fiscal Year 2010
(As of Dec. 31, 2010)

Fiscal Year 2009
(As of Dec. 31, 2009)
AssetsCurrent assets
6,035

Cash and deposits
Notes receivable-trade
Accounts receivable-trade

7,687

113

130

10,008

5,919

Short-term investment securities-

8

Merchandise and finished goods

10,75012,186

Raw materials and supplies

66

101

Advance payments-trade

1,357

881

Prepaid expenses

2,628

1,612

673

1,059

1,236

420

7,496

8,996

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

122

159

Allowance for doubtful accounts

(491)

(237)

Total current assets

40,00038,925

Noncurrent assets
Property, plant and equipment
28,521

28,300

Accumulated depreciation(17,671)(18,284)

Buildings, net

10,84910,015

1,974

1,968

(1,622)(1,654)

Buildings

Structures
Accumulated depreciation

352

314

11,881

11,533(10,798)(10,664)

1,082

869

106

76

(102)

(74)

3

1

Tools, furniture and fixtures

2,506

2,390

Accumulated depreciation(1,756)(1,768)750

622

11,006

10,893Structures, net
Machinery and equipment
Accumulated depreciation
Machinery and equipment, net
VehiclesAccumulated depreciation
Vehicles, net

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

024,04522,717

Intangible assets
Goodwill

89-

Leasehold right

139

0

1,991

1,624

427

1,510

Software
Software in progress
Other
Total intangible assets- 34 -

35

33

2,682

3,168

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2010

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

Fiscal Year 2009
(As of Dec. 31, 2009)
Investments and other assets
Investment securities

8,262

7,210

Stocks of subsidiaries and affiliates

6,194

6,901

Long-term loans receivable

346

355

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

13

7

2,417

1,318

935

843

Long-term prepaid expenses

89

75

Deferred tax assets

28

16

Insurance funds for directors
Long-term time deposits

595

481

3,000

3,000

546

563

Allowance for doubtful accounts(1,153)(465)

Allowance for investment loss

(245)

(568)

Other

21,02919,74047,75745,62787,75784,552

Notes payable-trade

1,354

1,245

Accounts payable-trade

4,980

5,802

Short-term loans payable

3,000

-

Current portion of bonds

700

700

2,670

2,660

Total investments and other assets
Total noncurrent assets
Total assets
Liabilities
Current liabilities

Current portion of long-term loans payable
Accounts payable-other

5,964

6,269

Accounts payable-factoring

13,707

13,548

Accrued expenses

1,145

1,358

Income taxes payable81

97

Accrued consumption taxes

223

113

Deposits received

529

989

518

641

3,045

3,585

290

382

38,21137,394

Bonds payable

3,950

3,250

Long-term loans payable

7,025

4,365

756

723

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

Deferred tax liabilities for land revaluation
Total noncurrent liabilities
Total liabilities- 35 -

11,731

8,338

49,94345,732Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2010

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

Fiscal Year 2009
(As of Dec. 31, 2009)
Net assets
Shareholders’ equity
Capital stock

20,35920,359

Capital surplus
Legal capital surplus

19,864

12,864

Other capital surplus

1,174

8,174

Total capital surpluses

21,03821,038

1,118

1,118

66

63

40

40

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

13,600-Retained earnings brought forward(5,530)

9,368

9,294

10,591

Treasury stock(2,774)(2,775)

Total shareholders’ equity

47,91749,213

Total retained earnings

Valuation and translation adjustments
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges

(987)

(928)

(2,047)(2,347)

Revaluation reserve for land

(7,067)(7,117)

Total valuation and translation adjustments(10,103)(10,393)

37,81438,82087,75784,552

Total net assets
Total liabilities and net assets- 36 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2010(2) Statements of Income

Net sales

Fiscal Year 2009
(Jan. 1, 2009 – Dec. 31, 2009)
136,941(Million yen)
Fiscal Year 2010
(Jan. 1, 2010 – Dec. 31, 2010)
125,966

75,25866,491

61,68259,475

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

7,482

8,133

Promotion expenses

23,63519,754

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

2,523

701

518

641

264

230

37

40

Bad debts expenses
Directors’ compensations

212

214

Salaries and allowances

5,567

5,195

921

887

Welfare expenses

1,023

1,038

Rent expenses

1,358

1,172

572

322

Commission fee

13,578

11,744

Depreciation

2,018

1,887

Other

4,315

4,557

Bonuses

Research study expenses

64,03056,521(2,347)2,953

Interest income

6459Interest on securities

61

47

Total selling, general and administrative expenses
Operating income (loss)
Non-operating income

986

343

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

1,407

-

32

-

215

228

Total non-operating income

2,767

678

Interest expenses

222

188

Interest on bonds

64

67

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

-

220

-

147

127

-

Commission fee

450-

Miscellaneous loss

172

140

1,037

764

(617)

2,867

Dividends income

Non-operating expenses

Total non-operating expenses
Ordinary income (loss)- 37 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2010

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

Fiscal Year 2009
(Jan. 1, 2009 – Dec. 31, 2009)
Extraordinary income
Gain on sales of noncurrent assets

013Gain on sales of investment securities-

4

Gain on liquidation of subsidiaries-

35

Total extraordinary income

052

Extraordinary loss
Loss on sales and retirement of noncurrent assets

72

213

Loss on valuation of investment securities

573

253

Loss on sales of investment securities

517

77

Provision of allowance for doubtful accounts

631

188

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

245

323

580

165

247

337

-

150

Loss on liquidation of business-100

Total extraordinary losses

2,868

1,809

Income (loss) before income taxes(3,485)

1,110

Other

Income taxes-current

24

23

Income taxes-deferred

155

(419)

Total income taxes

179

(395)

Net income (loss)(3,664)

1,506- 38 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2010(3) Statements of Changes in Net assets(Million yen)
Fiscal Year 2009
Fiscal Year 2010
(Jan. 1, 2009 – Dec. 31, 2009) (Jan. 1, 2010 – Dec. 31, 2010)
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 capital surplus
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 capital surplus
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 capital surplus
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
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- 39 -

20,35920,35920,35920,35919,864

19,864

19,864(7,000)(7,000)12,864

1,174

1,174

(0)
(0)
1,174

(0)
7,000
6,999
8,174

21,03821,038(0)(0)
21,038(0)(0)
21,038

1,118

1,118

1,118

1,118

69

66

(3)

(3)

(3)
66

(3)
63

36

40

7
(3)
3
40

3
(2)
0
40

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2010

Fiscal Year 2009
(Jan. 1, 2009 – Dec. 31, 2009)(Million yen)
Fiscal Year 2010
(Jan. 1, 2010 – Dec. 31, 2010)

13,60013,60013,600(13,600)(13,600)-(1,129)(5,530)

3

3

(7)
3
(700)
(3,664)(35)(4,400)(5,530)(3)
2
13,600
(259)
1,506
49
14,8999,368

13,695

9,294

-

-

(700)
(3,664)(35)(4,400)
9,294

(259)
1,506
49
1,296
10,591(631)(2,774)(2,142)0(2,142)(2,774)(0)0(0)(2,775)54,46147,917(700)(3,664)(2,142)0(35)(6,543)
47,917

(259)
1,506
(0)
0
49
1,296
49,213General 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
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 (loss)
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
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 (loss)
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 (loss)
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- 40 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2010

Fiscal Year 2009
(Jan. 1, 2009 – Dec. 31, 2009)(Million yen)
Fiscal Year 2010
(Jan. 1, 2010 – Dec. 31, 2010)(1,223)(987)

Net changes of items other than shareholders’ equity

235

59

Total changes of items during the period

235

59

(987)

(928)

(2,038)(2,047)

Net changes of items other than shareholders’ equity

(9)

(299)

Total changes of items during the period

(9)

(299)

(2,047)(2,347)(7,103)(7,067)

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

35

(49)

Total changes of items during the period

35

(49)

(7,067)(7,117)(10,364)(10,103)

Net changes of items other than shareholders’ equity

261

(290)

Total changes of items during the period

261

(290)

(10,103)(10,393)

44,09637,814

(700)

(259)

Net income (loss)(3,664)

1,506

Purchase of treasury stock(2,142)(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
Dividends from surplus

Disposal of treasury stockReversal 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- 41 -

0

0

(35)

49

261

(290)

(6,282)

1,006

37,81438,820Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2010

Going Concern Assumption
Not applicable.

6. Other(1) Changes in Members of Board of Directors
1) Changes in Representative Director
The change in Representative Director was already disclosed on November 26, 2010.
2) Changes in Other Directors and Executive Officers (as of March 30, 2011)- Candidate for Auditors(Full-time) Auditor: Yoshihiro Nakabayashi (current Executive Officer)(Full-time) Auditor: Makoto Yamamoto (current Executive Officer)- Retiring Auditors(Full-time) Auditor: Shoji Tottori(Full-time) Auditor: Yoshihiro Inoda- Retiring Executive Officers
Executive Officer: Yoshihiro Nakabayashi
Executive Officer: Makoto Yamamoto- 42 -

Senshukai Co., Ltd. (8165) Financial Report for Fiscal Year 2010

(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

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

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

AmountAmountShare (%)

ChangeShare (%)

Mail-order business

130,96788.9

118,227

86.4(12,740)

Other businesses

16,325

11.1

18,632

13.6

2,307

Total

147,292

100.0

136,859

100.0(10,433)

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

b. Sales by type(Million yen)
By type

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

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

AmountAmountShare (%)

ChangeShare (%)

Apparel

58,575

39.7

51,79737.8(6,778)Interior goods

29,312

19.9

27,50120.1(1,810)Household goods

21,495

14.6

19,42614.2(2,068)

Fashion accessories

15,12910.3

13,781

10.1(1,348)

Foods

5,728

3.9

5,378

3.9

(349)

Others

17,051

11.6

18,974

13.9

1,922

147,292

100.0

136,859

100.0(10,433)

Total

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 -