Member of the Financial Accounting Standards Foundation

February 8, 2011

Summary Report of Consolidated Operating Results for Fiscal 2010
(Year ended December 31, 2010)
Company name:
Future Architect, Inc.
Shares listed on:First Section of Tokyo Stock Exchange
Security code number: 4722
Website:http://www.future.co.jp
Representative:
Shin Yasunobe, President & COO
Contact:
Yoshihiko Nakajima, Executive Officer
TEL:+81-3-5740-5724
Scheduled date of annual general shareholders’ meeting: March 22, 2011
Scheduled date for submitting Yuka Shoken Hokokusho (financial documents): March 23, 2011
Scheduled date for distribution of dividend payments: March 23, 2011
(Figures are rounded to the nearest 1 million.)

1. Consolidated Results for Fiscal 2010 (January 1, 2010 to December 31, 2010)(1) Consolidated operating results
Fiscal 2010
Fiscal 2009

Net sales
Million yen% change
22,639-4.3
23,658-16.0

Net income per share

Operating income
Million yen% change
3,141
19.9
2,618
0.8

Net income per share(fully diluted)(Percentage figures reflect year-on-year change)
Ordinary income
Net income
Million yen% change Million yen% change
3,281
21.3
1,591
32.1
2,704
1.0
1,204
71.7

Return on equity

Yen
Yen
Fiscal 2010
3,485.23-Fiscal 2009
2,719.50-(Reference) Profit/loss from equity method investments:
Fiscal 2010:
21 million yen
Fiscal 2009:(10) million yen

Ratio of ordinary
income to total
assets

%
15.6
13.0

Operating profit
margin

%
24.8
20.5

%
13.9
11.1

(2) Consolidated financial position
Total assets
Million yen
Fiscal 2010
Fiscal 2009
(Reference) Shareholders’ equity
Fiscal 2010:
Fiscal 2009:

Net assets
Million yen
13,931
12,557

Shareholders’ equity ratio
Percent (%)
10,662
76.5
9,841
77.9

Net assets per share
Yen
23,349.47
21,422.20

10,662 million yen
9,782 million yen(3) Consolidated cash flow position
Cash flow from operating Cash flow from investing Cash flow from financing
activities
activities
activities
Million yen
Fiscal 2010
Fiscal 2009

Million yen
2,163
2,834

Million yen
170
(999)

(762)
(871)

Cash and cash
equivalents at theend of the period
Million yen
5,153
3,585

2. Dividends

Fiscal 2009
Fiscal 2010
Fiscal 2011 (Forecast)First
quarterYenDividends per share
SecondThird
Annualquarterquarter
dividend
Yen
Yen
Yen
0.00
1,600.00

0.00
1,200.00

750.00750.00

Total

Total annual
dividends

Yen
1,600.00
1,200.00
1,500.00

Million yen
730
547


Dividend payout
ratio(consolidated)

%
58.8
34.4
35.1

Ratio ofdividends to net
assets(consolidated)

%
7.8
5.4


3. Projected Consolidated Results for Fiscal 2011 (January 1, 2011 to December 31, 2011)
Net sales(Percentage figures reflect year-on-year change)
Ordinary income
Net income
Net income per
share

Operating income

Million yen% change

Million yen% change

Million yen% change

Million yen% change

12,00024,500

9.7
8.2

1,650
3,400

52.7
8.2

1,680
3,450

46.5
5.1

950
1,950

79.5
22.5

Second quarter
Full yearyen

2,080.45
4,270.40

4. Other(1) Changes in significant subsidiaries during the period under review (changes in specified subsidiaries thatinvolved changes in the scope of consolidation): None
Notes: Presence or absence of changes in specified subsidiaries that involved changes in the scope of
consolidation.
(2) Changes in accounting principles, procedures, and classifications for the preparation of consolidated financial
statements (described in Significant Accounting Policies for the Preparation Regarding Consolidated Financial
Statements)
a. Changes accompanying revision of accounting standards: Yes
b. Changes other than a: None
Note: For details, please refer to “Changes in Material Information for the Preparation of Consolidated
Financial Statements” on page 27 of [Attached Materials].
(3) Number of outstanding shares (common stock)a. Total outstanding shares as of the end of the period (including treasury stocks)
Fiscal 2010:
476,640sharesFiscal 2009:
476,640sharesb. Total treasury stocks as of the end of the period
Fiscal 2010:
20,008sharesFiscal 2009:
20,008shares
Note: For details of the number of shares that serves as the base for calculating (consolidated) net income pershare, please refer to “Per share data” on page 39 of [Attached Materials].

(Reference) Overview of non-consolidated results
1. Non-consolidated Results for Fiscal 2010 (January 1, 2010 to December 31, 2010)(1) Non-consolidated operating results(Percentage figures reflect year-on-year change)
Net sales
Million yen

Fiscal 2010
Fiscal 2009

Operating income% change

14,29015,400Million yen

-7.2
-19.9

Net income per shareYen
3,242.94
2,361.40

Fiscal 2010
Fiscal 2009

Ordinary income% change

3,039
2,726

Million yen

11.5
-5.7

Net income% change

3,108
2,768

Million yen

12.3
-11.2

% change

1,480
1,046

41.5
3.0

Fully diluted earnings per
share
Yen



(2) Non-consolidated financial position
Total assets
Million yen
Fiscal 2010
Fiscal 2009
(Reference) Shareholders’ equity
Fiscal 2010:
Fiscal 2009:

Net assets
Million yen
12,521
11,574

Shareholders’ equity ratio
Percent (%)
10,511
83.9
9,741
84.2

Net assets per share
Yen
23,018.71
21,332.54

10,511 million yen
9,741 million yen

2. Non-consolidated Results for Fiscal 2011 (January 1, 2011 to December 31, 2011)(Percentage figures reflect year-on-year change)

Net sales
Million yen

Second quarter
Full year

7,800
15,500Operating income% change

12.4
8.5

Million yen

1,520
3,200

% change

34.8
5.3

Ordinary income
Million yen

1,550
3,250

% change

32.2
4.6

Net income
Million yen

892
1,850

Net income pershare% change

33.4
24.9

1,953.43
4,051.40

*Points to note about the proper use of projections, and other noteworthy events
The above projection, representing our best estimate based on information currently available to us, incorporates uncertain
factors. Please refer to page 4 of [Attached Materials] for assumptions and other matters related to the projections.

1. Operating Results(1) Analysis of operating results(Overview of fiscal year under review)
The Group’s consolidated operating results for fiscal year under review were as follows:
Net sales:¥22,639 million (down 4.3% year-on-year)
Operating income:¥3,141 million (up 19.9% year-on-year)
Ordinary income:¥3,281 million (up 21.3% year-on-year)
Net income:¥1,591 million (up 32.1% year-on-year)
The noteworthy events of this period were as follows:
The operating results by business segment represent values before adjustment of internal sales or transfers among
segments.
During the fiscal year under review in Japan, the deflationary trend did not improve and the employment situation
remained harsh, although there were some signs of an earnings recovery in some business categories, mainly
supported by the government’s economic measures and a recovery in exports following the development ofemerging markets. Uncertainty over the course of the Japanese economy seems likely to remain, as exemplified
by the rapid advance in the appreciation of the yen and financial issues in Europe.
Despite some signs of recovery in capital investment in IT, a full-scale recovery is yet to come. Hence, the IT
service industry as a whole is facing a harsh business environment.
Under such circumstances, net sales of the Group decreased from the previous consolidated fiscal year primarily
due to a slowdown in orders received and delay in concluding contracts, mainly affected by the unstable businesstrends in the first fiscal half. On the other hand, the profit structure improved remarkably even in such a situation,
thanks to our efforts to increase the accuracy of project management and further improve cost management.
In addition, both orders received and our order backlog, including those received from new customers, have beensteadily increasing since the beginning of the second fiscal half. We believe that net sales will also increase in andafter the next fiscal year.
1. IT Consulting BusinessNet sales recovered in the second half due to an increase in projects including new ones. This, however, failed tooffset poor sales in the first half. As a result, net sales for the fiscal year under review were ¥13,981 million, down
8.0% from a year earlier.
Meanwhile, profits improved significantly from the previous fiscal year, thanks to the success in appropriately
controlling delivery periods, quality of services and man-hours through enhanced project management as well as
thorough cost management. Operating income advanced 7.3% year-on-year to ¥2,995 million, and the operating
profit margin rose to 21.4% from 18.4% for the previous fiscal year.
By business category, sales at the IT Consulting Business are broken down into: 80% (70% in the previous year)
for the logistics and service industries; 19% (20% in the previous year) for the financial industry; and 1% (10% in
the previous year) for the other industries.
Sales at the IT Consulting Business are broken down into 14% (13% in the previous year) for the strategic phase,
30% (24% in the previous year ) for the design phase, 43% (51% in the previous year) for the development phaseand 13% (12% in the previous year) for the operation and maintenance phase.
2. Package & Service BusinessBusinesses on consignment of Ascendia Inc. continued to be strong due to a recovery in orders received throughthe year and sales from its maintenance services in cooperation with Future Architect, Inc. increased steadily.
Earnings of ELM Corporation remained poor in the first half, but picked up in the second half because it madeevery effort to drastically reinforce its marketing abilities and the economy hit the bottom. As a result, net sales ofthis business segment were ¥4,415 million, up 4.8% from a year ago, and operating income was ¥170 million,
compared with the year-before loss of ¥16 million.
3. Corporate Revitalization/New Business Cultivation Business
The grocery supermarket (Uoei Shoten Corporation), which constitutes a major part of the business, continuously
benefited from enhanced competitiveness achieved by renovating old outlets, a streamlined sales strategy
achieved by introducing IT, and reduced costs achieved by restructuring. However, net sales of this businesssegment remained almost on the same level as in the previous fiscal year at ¥4,558 million. The segment posted
an operating loss of ¥40 million, an improvement from a loss of ¥103 million a year ago.

-4-

4. Non-operating income and expenses; ordinary income
The Group booked non-operating income of ¥152 million, including ¥69 million in amortization of negative
goodwill.
Meanwhile, non-operating expenses were ¥11 million, including ¥3 million in interest expenses. As a result,ordinary income for the fiscal year under review was ¥3,281 million (up 21.3% from the previous year).
5. Extraordinary income and losses, net income before taxes, corporate taxes, and net income
The Group booked extraordinary income of ¥50 million, including ¥30 million in gains on sale of investment
securities. Meanwhile, extraordinary losses were ¥492 million, including ¥260 million in impairment losses and¥73 million in losses on valuation of investment securities. Net income before taxes was ¥2,840 million.
As a result of incorporating corporate taxes and minority interest in net loss into net income before taxes, net
income was ¥1,591 million (up 32.1% year-on-year).

-5-

(Outlook for the next fiscal year)
1. Forecast for the next fiscal year
Our earnings forecast for the fiscal year ending December 2010 is as follows:
Net sales:¥24,500 million (up 8.2% year-on-year)
Operating income:¥3,400 million (up 8.2% year-on-year)
Ordinary income:¥3,450 million (up 5.1% year-on-year)
Net income:¥1,950 million (up 22.5 % year-on-year)
The noteworthy events for the following fiscal year are as follows:
1) IT Consulting Business
Though corporations are expected to remain cautious about IT investment as a whole, orders received by theGroup have been increasing, centering on customers in the logistics and service industries where IT investment
is very important. The Group expects these orders received to result in increased sales in the next fiscal year.
Also, the Group plans to launch large projects successively in the next fiscal year, and this is expected to boost
the operating ratio of employees and increase outsourcing costs. The Group believes that one of its major
challenges is to post a steady profit through proper project management, while maintaining an optimum
management system by making the most of its efforts in the past several years.
2)Package & Service Business
Though the wave of global economic slowdown, triggered by the financial crisis in 2008, had a great impact
particularly on small and midsize companies, the recession has bottomed out. As a result, IT investment thatwas curbed is now recovering, and a growing number of corporations are implementing strategic IT investment
in pursuit of new innovation.
Against this backdrop, the Group will reorganize the package business for small and midsize companies within
the Group and integrate human resources and products that are dispersed within the Group. The aim is toenhance the sales system and bring out next-generation products that conform to new technological innovation.
In the belief that technologies such as cloud computing and next-generation mobile terminals will encourage
new IT investment in the market of small and midsize companies as well, the Group will also fully pushforward with unearthing this market.
3)Corporate Revitalization Business / New Business Cultivation BusinessUoei Shoten Corporation is a midsize supermarket chain with seven outlets and is based in the Chuetsu Regionof Niigata Prefecture. This company has improved its gross profit margin notably, but it will continue to makeefforts toward this end. It will also strive to push forward with thorough improvement of operational efficiency
and reinforcement of customer analysis capability and increase customer satisfaction and expand sales byreflecting the results of customer analysis in sales strategies.

-6-(2) Analysis of financial condition
1. Assets, liabilities and net assets
The following are the status of assets, liabilities and capital as of the end of fiscal year under review.
Assets:Liabilities:
Net assets:¥13,931 million (up 10.9% year-on-year)¥3,269 million (up 20.4% year-on-year)¥10,662 million (up 8.3% year-on-year)

The following is the analysis of financial condition for the fiscal year under review.
1) Current assets
Current assets were ¥10,274 million on a consolidated basis at the end of the fiscal year under review, up¥2,133 million from the previous year. The main factors were increases of cash and deposits (an increase of¥1,447 million from the end of the previous consolidated fiscal year) and notes receivable and accounts
receivable (an increase of ¥640 million from the end of the previous consolidated fiscal year).
For the breakdown of decrease in cash and deposits, please see “2. Analysis of cash flows.”
2) Fixed assets
Fixed assets amounted to ¥3,657 million at the end of the fiscal year under review, down ¥759 million from thepreceding year. The main factors included a decrease in software (a decrease of ¥260 million from the end of
the previous consolidated fiscal year) and a decline in lease and lease and guarantee deposits (a decrease of¥177 million from the end of the previous consolidated fiscal year).
3) Current liabilities
Current liabilities amounted to ¥3,171 million at the end of the fiscal year under review, up ¥721 million from ayear earlier. The main factors included an increase in accounts payable (an increase of ¥48 million from the endof the previous consolidated fiscal year) and a rise in income tax payable and other taxes (an increase of ¥515
million from the end of the previous consolidated fiscal year).
4) Fixed liabilities
Non-current liabilities were ¥98 million at the end of the fiscal year under review, down ¥167 million from theprevious year. The main factors were decreases in long-term borrowings (a decrease of ¥32 million from theend of the previous consolidated fiscal year) and allowance for retirement benefits (a decrease of ¥102 million
from the end of the previous consolidated fiscal year).
5) Net assets
Net assets were ¥10,662 million at the end of the fiscal year under review, up ¥820 million from the precedingyear.
The main factors included an increase of retained earnings (an increase of ¥860 million from the end of
previous consolidated fiscal year).
6) Total assets
Total assets were ¥13,931 million at the end of the fiscal year under review, up ¥1,374 million from a year
earlier.
2. Analysis of cash flows
The following is the analysis of the Group’s consolidated cash flows for the fiscal year under review.
1) Cash flows from operating activities
Net income before taxes recorded a cash inflow of ¥2,840 million. Sales accounts receivable decreased ¥646
million. As a result, net cash flow from operating activities showed a net inflow of ¥2,163 million (comparedwith an inflow of ¥2,834 million in the previous fiscal year).
2) Cash flows from investing activities
Net cash flow from investment activities showed a net inflow of ¥170 million (compared with an outflow of¥999 million in the previous fiscal year), due mainly to proceeds from withdrawals of time deposits of ¥200
million and proceeds from collection of deposits and guarantees of ¥205 million.
3) Cash flows from financing activities
Net cash flow from financing activities showed a net outflow of ¥762 million, due primarily to an outflow of¥730 million from dividend payments (compared with an outflow of ¥871 million in the previous fiscal year).

-7-4) Cash and cash equivalents at end of the period
Cash and cash equivalents outstanding at the end of the fiscal year under review were ¥5,153 million, becauseof an increase of ¥1,567 million in cash and cash equivalents, the result of calculating cash flows fromoperating, investing and financing activities.
3. Capital resources and liquidity
1) Demand for operating funds
Demands for operating funds at the Group are as follow:(Working capital)
Working capital, common to the IT Consulting Business, Package & Service Business and Corporate
Revitalization Business, is used primarily to cover cost of sales and operating expenses such as selling,
general and administrative expenses, as well as payments for taxes such as corporation tax.
Major operating expenses consist of salaries, bonuses, welfare expenses, traveling expenses, rent on offices
and other buildings, and subcontracting expenses. Meanwhile, in the IT Consulting Business, the contracts
concluded with clients provide that prices of services be charged and collected basically according to theprogress of the project on a monthly basis. Accordingly, demand for funds in association with operating
expenses is not so large and generally can be covered by cash flows from operating activities. However,funds may be borrowed from financial institutions when bonuses or income taxes and other taxes are paid.
In the Package & Service Business, we need funds for operating expenses because we charge for andcollect service fees after clients inspect and receive those services. The Group raises such funds byfinancing within the Group, and dependence on outside funds remains low. In the Corporate
Revitalization/New Business Cultivation Business, funds for operating expenses generally can be coveredby cash flows from operating activities, partly thanks to improvement in gross profit.
(Funds for strategic investments)
The Group needs funds to purchase investment securities for strategic investments for M&A and alliances.
(Funds for R&D activities)
The Group continuously focuses on research and development activities and needs funds for that purpose.
Such funds are mainly used to cover R&D expenses in the category of selling, general and administrative
expenses, as well as software in the category of intangible fixed assets, in the IT Consulting Business andthe Package & Service Business.
(Funds for outlets)
In the Corporate Revitalization/New Business Cultivation Business, the Group needs funds for renovation
and repair of retail stores.
(Funds for other purposes)
The Group sometimes acquires its treasury stocks as one of the means of carrying out capital policies, andneeds funds for that purpose.
2) Financial policies
The Group’s main policy is to use internal reserves, which are allocated from profits, and short-termborrowings from financial institutions to provide the funds it needs such as working capital, funds for strategic
investments, funds for R&D activities and funds for stores. The Group is also efficiently utilizing funds within
the Group through lending of necessary funds by the parent to subsidiaries when they procure funds.
As described in “(3) Dividend policy and dividends for the current year” and “a. Demand for operating funds”
on page 8, the Group will allocate internal reserves, focusing on the investments intended to a) enhance R&D
activities for design and development techniques so that the Group can have a technical edge over its peers,which is necessary to maximize the Group’s value over the medium to long term; b) recruit and train humanresources; and c) implement measures for boosting project management d) proceed M&A activities and e)
strengthen alliances with external partner companies in order to raise the value added of services provided by
the Group. Aiming for an astute M&A in the IT-related industries, where business is fast, the Group regards
borrowings from financial institutions as an option to raise funds, while considering liquidity at hand asimportant funds for that purpose. In addition, the Group pays attention to recouping its investments by selling
products, for the purpose of effective utilization of funds.
At its developing stage, the Group needs to raise funds directly from capital markets in order to further growand expand, including the effective utilization of treasury stocks (acquisition, allotment, retirement). Therefore,
the Group will continue to consider pursuing direct financing as well as financial operations as describedabove.
3) Acquisition and disposal of treasury stocks-8-

The Group neither acquired nor disposed of treasury stock in the fiscal year under review. However, aiming tomaximize corporate value, the Group will consider the timing to acquire or dispose of treasury stock by taking
into consideration the economic situation, market trends and other factors, with a view to following flexible
capital policies. The amount of treasury stock amounted to 20,008 shares worth ¥1,171 million at the end of thesaid period.
(3) Dividend policy and dividends for the current and next year
The Company seeks to maximize medium- to long-term total returns (capital and income gains) to ourshareholders. In order to achieve this goal, and depending on our business performance while comprehensively
taking into purchase of treasury shares, we will give due consideration to a proper balance between dividend
payout and internal reserves needed for important investments. We will make such investments to enhance R&D
activities for design and development technologies to ensure medium-term technological superiority—the coresource of maximizing medium- to long-term corporate value; to attract and train personnel; to implement
measures for strengthening project management; and to enhance M&A activities and alliances with external
partner companies in order to increase the value-added of services.
Historically, the Company has maintained a dividend payout ratio on a non-consolidated basis of 30% or more of
earnings, and in accordance with this standard, the Company plans to pay dividends for fiscal 2010 in the amountof ¥1,200 per share. This corresponds to a consolidated dividend payout ratio of 34.4% and a non-consolidated
payout ratio of 37.0%. The Company’s planned dividend payment for the next fiscal year would be ¥1,500 per
share, and this would represent a dividend payout ratio of 35.1% on a consolidated basis and that of 37.0% on a
non-consolidated basis.
(4) Business risks
The followings are major factors that could cause risks in association with the Group’s businesses as well as otherparties, and thus could have a significant impact on investors’ decisions.
The factors described need not necessarily be regarded as risk factors, but the Group deemed them as importantfor investors who are considering investing, and also useful in terms of proactive information disclosure toinvestors. Given the possibility of these risks, the Group will strive to prevent them from occurring and respond tothem in the event they occur.
The forecasts referred to in the text are based on the Group’s judgment as of February 8, 2011.
1) Economic conditions and business climate
The outlook for the Japanese economy is not encouraging, as exemplified by a rapid advance in theappreciation of the yen and financial issues in Europe. The deflationary trend has not improved, although there
were some signs of a recovery in the Japanese economy, mainly supported by the government’s economic
measures and a recovery in exports following the development of emerging markets. In the Company’s majorclient sectors, the logistics and service fields, demand remains strong for the time being. However, the future
direction is uncertain in the financial sector, and it is necessary to implement management that can handle
abrupt changes in the business environment at any time.
Under such a harsh business climate, the Group is expected to face competition not only in consulting functions
but also in delivery capability.
Under such circumstances, the Group has renewed its conviction that its highly specialized solutions andtechnical know-how about downsizing are an effective means of establishing competitiveness fortechnologically-advanced companies. The Group will steadily enhance its internal structure by training staff
and strengthening project management, and join hands with user companies to promote their managerialreforms.
The use of IT by small and medium-sized companies, which are the majority of Japanese corporations, remains
at comparatively low levels. Such companies have got out of the critical situation resulting from the economic
downturn triggered by the financial crisis in 2008, and their IT investment, which had been curbed, started
picking up. However, they have not recovered enough to be able to make sufficient investment in IT.
Hence, it is effective for these companies to use solutions based on inexpensive and highly versatile software
packages to improve the efficiency of their operations. In the Package & Service Business, the Group will
increase additional libraries to reduce the customization processes in order to realize low-cost packages that canbe installed quickly, as well as develop products in anticipation of the next generation.
As described above, the Group will continue to implement measures to further increase its competitive edge.
However, it is highly likely that corporate investments will slow due to the economic trends, and orders will
decrease. Hence, we need make preparations so that we will be able to better respond to such a situation.
In the Corporate Revitalization Business, the Group provides services that closely meet the needs of local
clients. However, its operational results may be influenced by such external factors as economic trends,
heightened competition, and substantial price fluctuations of perishables owing to abnormal weather.
-9-2) Staying abreast of technological innovation
Ever since its establishment, the IT Consulting Business of the Group has endeavored to specialize in open
systems that do not rely on specific products, by using cutting-edge IT and network technologies. Independentof any vendors, the Group strives to select the optimal products for clients, but the options of hardware,
middleware, etc. may narrow as some vendors drop out due to the excessively harsh competition.
Thus, the Group needs to raise and maintain its competitiveness by putting its efforts and resources into theresearch and introduction of cutting-edge technologies, centering on IT. To this end, the Group is always
gathering the latest information on software and hardware, with the core technology division at the helm. In the
Package & Service Business, the Group is gradually upgrading software packages by making existing ones
compatible with and developing next-generation products so that our software packages stay abreast of newtechnologies.
However, should the Group not manage to fully keep abreast of new technologies, its competitiveness may
decline leading to fewer orders being received.
3) R&D activities
In recent years, the economic climate that our clients find themselves in has been dramatically changing andthe rate of progress in IT has been increasing, causing the information systems of our clients to become
obsolete more quickly. Therefore, it is crucial for the Group to develop advanced systems in shorter time spans,
while taking future trends into full account. Against this backdrop, the Group is making the most of various
components and development support tools.
Such components and development support tools have enabled the Group to significantly improve system
quality and productivity in actual systems development. However, the technological evolution of IT is rapid
and client needs are becoming more sophisticated and complicated.
To respond to such needs, it is important for the Group to continue to incorporate new technical elements into
these components and development support tools so that it can develop high-quality systems more promptly;
improve processing performance through decentralization; facilitate the system maintenance throughcentralized management; and standardize interfaces to enable smooth interconnectivity with other systems.
The Group also needs to expand the range of industry-specific platform models, in order to effectively andefficiently leverage the know-how it has accumulated.
In the Package & Service Business, the Group uses templates by business type and additional libraries that are
prepared in advance, when customizing packages to suit clients’ needs, aiming to offer high-quality products
and deliver them in a short time. The Group is adding variations to these templates and libraries one by one.
In the future, the Group will continue to focus on such research and development. To facilitate this, the Groupwill further make efforts to obtain able personnel who proceed with such R&D. However, there is a possibility
that the Group may fail to recruit such persons or that the R&D activities do not fare as well as expected, which
would have an adverse effect on the Group’s competitive edge.
4) Software(Software for in-house use)
The Group develops software for internal use to improve information available for business management andto make its operations more efficient. Software for in-house use may be stated in assets, with the expectationthat costs decrease due to improvement in operational efficiency, but the value of software can decline if
specific functions should rapidly become obsolete due to changes in technological trends and drastic
operational changes.
(Software for sale)
The Group invests in the development of software that standardizes successful platform models for real-time
management for divisions such as finance, retailing or manufacturing (distribution industry), and will strive toobtain orders and make systems development more efficient.
Some consolidated subsidiaries are engaged in developing various types of software packages.
The Group states these types of software by making reasonable assessments of future orders received and sales.
However, the Group may fail to fully recoup its investments because of unforeseen abrupt changes in market
conditions and changes in technical trends.
5) Recruitment and training
The Group understands that recruiting excellent personnel and training them are the most important tasks forthe development of the Group’s businesses. To this end, the Group develops various employment activities andfocuses on training and education. In the fiscal year under review, recruitment and training expenses amounted
to ¥92 million and ¥111 million, respectively. The Group intends to continue to attach importance to personnel
acquisition and training. However, should these efforts prove unsuccessful the Group’s growth potential would
be hampered.
Moreover, increases in the number of employees result in higher fixed labor costs, creating downward pressure- 10 -

on performance when the Group fails to receive orders sufficient to cover those increases in fixed costs.
6) Strengthening relations with partners
The Group is committed to the acquisition and training of talented staff as a corporate resource. However, in
response to the demand of each phase of a given project, we also think it is crucial to obtain appropriate
external partners in a timely manner. Consequently, the Group is endeavoring to strengthen its alliance withbusiness partners and create corporate structures that will serve the Group flexibly in the expansion of the scaleof its business. In order to raise productivity and the quality of the Group’s system development, training isprovided on the Group’s proprietary design and development methods for partners who support Groupmanagement policies.
However, as the Group’s degree of dependence on partners increases, there is a possibility that additional costs
may be incurred which were not foreseen at the time of the concluding of contracts, due to the delay inbringing service quality to a level that fully satisfies customers, or a possibility that projects may be delayed as
no partners who agree to the management policies of the Group are found
7) Project management
There is no doubt that project management is required for every project. Accordingly, project control is one of
the key issues for the Group to tackle.
To enhance its project control, the IT Consulting Business of the Group is strengthening and strictly operating a
project review system through engineers experienced in quality control.
The Group is also integrating, expanding and evolving present standard project promotion methods, while
establishing and adopting quality control techniques consistent with global standards in model configuration. In
addition, the Group is making great efforts to share knowledge concerning IT and to focus on education andtraining in project management, while solving bugs and thoroughly managing progress in projects using a new
project information sharing system.
In the Package & Service Business, though most projects are small and relatively easy to control, the Group is
striving to improve quality management, including enhancing the review system.
As seen above, the Group is continuing to strengthen quality control and project management. However, as it is
impossible to completely eliminate risks associated with projects, unless the Group’s project management
functions satisfactorily, the profitability of projects may deteriorate.
8) Dependence on specific clientsThe IT Consulting Business of the Group may come to rely heavily on sales to specific clients for a time, whenlarge-scale projects enter the development phase and a significant portion of human resources within (andoutside) the Group has to be allocated to such projects.
While the method of receiving orders in installments allows the Group to at least temporarily refrain fromproceeding to the next phase of a project when a client has failed to make timely payment (or when their credit
standing has deteriorated), the Group may nevertheless be affected by the financial performance of its clients.
9) Expanding scale of projects
The average size of clients’ operations is growing. In addition, needs for projects involving the comprehensive
rebuilding of both information and mission-critical systems (large-scale downsizing projects) with open systemtechnologies is increasing and such projects are beginning to occupy a greater share of the Group’s total sales.
As a result, the scale of projects undertaken by the Group is growing. To pilot these large-scale projects tosuccess and ensure complete client satisfaction, a high level of project management skill is required.
The Group assigns highly experienced project leaders to such large-scale projects. As the project progresses, ateach important milestone, the project review team composed of personnel in charge of their specialized areas
meet to identify potential problems at an early stage and to ensure timely implementation of necessary
countermeasures. However, as projects grow in scale, so inevitably do the potential risks. To achieve quality
standards that will fully satisfy the clients, additional costs may be incurred that were not foreseeable at thetime the contract was concluded. Furthermore, it may at times become necessary to revise the delivery scheduleowing to various factors such as a change in specifications, which could affect sales and profits for an entire
fiscal period.
Once a large-scale project is completed, the large number of consultants previously assigned to the projects
need to be reassigned to other projects. Because of the number of consultants involved, they may not bereassigned to other projects in timely manner, which could have adverse effects on sales and profits for a fiscal
period.
The Group is making the utmost effort to maintain quality of service and to meet delivery commitments, inorder to ensure that clients do not suffer losses through any service offered by the Group. While maximum
damages payable to clients are stated in the contracts, if a client claims for damages or makes a complaint
about a transaction or project, the Group may incur legal expenses, damages or other expenditures affecting thecorporate resources.
- 11 -

10) Reserve for quality assurance and provision for loss on project
The Group may provide its clients with free services that were unforeseeable at the time of concluding
contracts or at the close of the accounting period, in order to guarantee the quality of its product so that
customers will be completely satisfied. Although this enhances customer confidence in the Group and theirevaluation of it, if the project management malfunctions, the project has to be extended or additional personnel
have to be allocated because of an unexpected problem or a discrepancy between the estimated number of
man-hours worked and the actual number worked, then there is a possibility that the group will be liable for thecosts involved.
To cope with the risk of additional costs after the end of projects, which is among the risks mentioned above,
the Group has established a reserve for quality assurance, stating an amount for future costs based on estimatescalculated from past experience. For the fiscal year under review, the Group set aside ¥139 million as a reserve,considering this amount sufficient to meet potential future payments.
For specific ongoing projects for which a loss is expected to occur, the Group has established a provision forloss on projects, stating an amount for future loss based on estimates calculated reasonably. For the fiscal year
under review, the Group set aside ¥7 million as provision.
The possibility remains that actual payments may exceed this amount if there are extenuating circumstances.
11) Fixed assets
In the Corporate Revitalization Business, the Group operates retail stores. If the business environment changes
significantly because of such factors as competitors establishing large stores in their marketing areas, the Groupmay post impairment losses on buildings of specific stores, etc. and its earnings may affected.
12) Prior investments in assets
In the Package & Service Business, the Group makes prior investments in development of software packages,
and sells them after finishing the development, resulting in a time lag until investments are recouped. There issimilar time lag in the Corporate Revitalization Business as well. That is, the Group purchases land andbuildings, arranges the interiors and procures goods, before selling them.
Before developing software packages, establishing stores and procuring goods, the Group carefully conducts
marketing research. However, unless sales targets are achieved satisfactorily, it will become difficult to secure
operating funds, and the Group’s financial conditions may be affected.
13) Hygiene management
Consumers are increasing their awareness about food safety, as seen in the publicized cases of food whoseplace of origin and ingredients have been mislabeled. Under such circumstances, the Group, whose Corporate
Revitalization Business deals with food, makes great efforts to secure high-quality foods and thoroughlymanage safety and hygiene, while emphasizing food safety more than ever. However, if problems occur
relating to the safety of goods, such as food poisoning, and an unexpected situation breaks out, such as BSE
issue, avian influenza or a norovirus, the Group’s earnings may be affected.
14) Information security
In the course of undertaking transactions, the Group comes to know various top-secret information of its clients,
ranging from technical to management information.
Accordingly, the Group regards “information management” as a key managerial issue, and formulates measuresagainst the leakage of such top secret information considering from various perspectives. The measures
include: the establishment of a security committee to maintain and strengthen the information management
system within the Group; and promotion of activities to enlighten and educate the Group’s employees on
information management as well as enhancing their awareness for this issue. However, in the event of theleakage of a client’s confidential information, the Group may face lawsuits and the client in question will belost to us. The result may seriously affect the Group’s earnings.
Moreover, the Group is endeavoring to strengthen its entire system for protecting personal information. To thisend, it has set up a special project which is tasked to familiarize every officer and employee with theimportance of personal information through enlightenment activities. The Group has acquired Japan’s “Privacy
Mark”, a sign of quasi-official acknowledgment that the holder properly manages personal information.
15) Strategic investments
The Group may make investments in securities taking business relationships and the prospect of possible future
partnerships into consideration. There is a risk that it would sustain losses equivalent to the entire investment insuch a company, because of such a firm’s major business failure. Furthermore, depending on operating
performance of the firms in which the Group invests, the Group earnings may be affected as a result of thestatutory requirement to devalue its investment in the firms.
16) Lawsuits, etc.
The Company initiated legal action in November 2009 relating to payment of contract fees, etc. against NITTO- 12 -

DENKO CORPORATION, and the case is still pending in the Tokyo District Court. There also is a possibility
that lawsuits or disputes will occur between the Company and the targets of investment and loans, business
partners, suppliers, and other parties as the Group operates its business. At this time, we cannot foresee the final
judgment that will be passed by courts concerning the lawsuit currently under trial and cases of lawsuits that
could occur in the future. However, the details and results of these lawsuits may seriously affect the Group’s
earnings and performance.
Furthermore, regardless of the results of these lawsuits, the Group’s earnings may be adversely affected as aresult of a decline in the credibility and reputation of the Group due to critical reports concerning the lawsuits.

- 13 -

2. The Future GroupThe Group (the parent and related companies) consists of 10 consolidated subsidiaries and 5 equity-method affiliates,and operates three main businesses, the IT Consulting Business, the Package & Service Business, and the Corporate
Revitalization Business / New Business Cultivation Business. Business activities and involved companies are as
follows.
(IT Consulting Business)
In this business, the Group helps clients solve problems, by sharing management issues with them from a managerial
perspective, understanding the essence of the clients’ businesses and establishing information systems for them using
advanced IT.
Company name
Future Architect, Inc. (Parent company)

Future Financial Strategy Corp. (subsidiary)
ABM Corporation (subsidiary)
Shanghai UFIDA Future Consulting Ltd.
(affiliate)

Business activities
Using its advanced information technology, Future System Consulting Corp. offers IT
consulting, hardware and other procurement services from an objective andindependent position. The Company also functions as corporate headquarters for theGroup.
Future Financial Strategy Corp. is engaged in consulting services for financial
institutions and research on financial technology.
Development and sales of managerial accounting packages and related consulting
Provision of consulting service for the retail and logistics service sectors in China.

(Package & Service Business)
In this business, the Group helps clients improve their operational efficiency, by selling or providing via ASP
operations software packages for highly specialized fields, such as sales management and ERP, and developing
mission-critical systems on a commission basis.
Company name
Future Architect, Inc. (Parent company)
Elm Corporation (subsidiary)
Ascendia Inc. (subsidiary)
dit Co., Ltd. (affiliate)
Cyber Solution, Inc. (affiliate)
Elmos Inc. (affiliate)

Business activities
Provision of total solutions based on ERP packages for midsize companies
Development and sales of operational support systems by industry for small andmidsize companies, backbone systems and EOS systems, and provision of related
support services
Development of systems based on Java and Web technologies, personnel training, salesof systems for e-Government and development tools
Development and sales of security network products and development and provision ofsuch services
Establishment of ASP service systems and corporate information system bases, andprovision of operations planning and management services
General printing, and sales of office fixtures, OA (office automation) supplies, OA
equipment, POS systems, etc.

(Corporate Revitalization Business)
In this business, the Group goes deep into the management of client companies, revitalizes them through quick anddrastic reforms, and creates models of success for each industry. In forming alliances with companies operating
businesses that the Group does not run, and founding and making investments in the new firms, the Group maximizes
these companies’ value and accelerates their growth by using and combining the Company’s know-how andtechnologies in management, operations, and overall IT, aiming to contribute to the development of these companies’
industries.
Company nameUoei Shoten Corporation (subsidiary)
Zakura Inc. (subsidiary)
Axis Solutions Corporation (affiliate) (new)Business activities
Grocery supermarket
Internet media business and provision of information system consulting service
Information system consulting service

To expand and complement the above three businesses, the Group needs to enhance its research and development
systems, strengthen its consulting capabilities for specific industries and explore new markets, as well as provide
enhanced services. To this end, a subsidiary specializing in investment and management establishes and operates
affiliates in a carefully planned way.
Company name
Future Investment Corp. (subsidiary)
RI Partners Limited Liability Association(subsidiary)
Future Architect, Inc. (subsidiary)
Associant Technology Inc. (subsidiary)Business activities
Securities holding, management and investment
Investment
Research, development and study of advanced information technology in the U.S.
Asset management- 14 -

Sales of
products[Consolidated subsidiary (Domestic)]
Ascendia Inc.
[Equity-method investment (Domestic
subsidiary)]
dit. Co., Ltd.

[Consolidated Subsidiaries (domestic)]
Zakura Inc.
[Equity-method investment (Domestic
subsidiary)]
Axis Solutions Corporation

Businessalliance[Consolidated Subsidiaries (domestic)]
Uoei Shoten Corporation
Investment

Investment
Investment
targets

Investment[Consolidated subsidiaries (Domestic)]
Future Investment Corp.
RI Partners Limited Liability Association- 15 -

Investment

Future Architect, Inc.

Contracting/servies
Provision of services
and sales of products
Services[Equity-method investment (Domestic
subsidiary)]
Cyber Solution, Inc.

Sales ofproducts[Consolidated subsidiary (Domestic)]
Elm Corporation

Services

Provision of services, sales of
products, etc.

[Consolidated subsidiary (Domestic)]
ABM Corporation[Equity-method investment (Domestic
subsidiary)]
Elmos Inc.

Sales ofproducts

CLIENTS
Consumers

Corporate
Revitalization/New
Business Cultivation
Business

Package & Service Business

Provision ofservices sales of
products, etc.

[Consolidated subsidiaries (Domestic)]
e-Manufacturing Co., Ltd.
Future Financial Strategy Corp.

Contractin
g/servies

Services

IT Consulting Business[Equity-method investment (Chinese
subsidiary)]
Shanghai UFIDA Future Consulting Ltd.

Affiliated companies(1) Consolidated subsidiaries
Capital(in thousandsof yen)Main Businessactivities

Voting rightratio (%)

Relationship
Interlocking directors
Monetary
Number of
Number ofassistancecompany
company
directors
employees

Name

Location

FutureFinancial
Strategy Corp.

Shinagawa-ku,
Tokyo

30,000IT Consulting
Business

100.0

1

3

None

ABM
Corporation

Shinagawa-ku,
Tokyo

80,000IT Consulting
Business

100.0

-

2

Fund lending

Elm
Corporation

Shinagawa-ku,
Tokyo

200,000

Package &ServiceBusiness

100.0

1

2

None

Ascendia Inc.

Oita-shi, Oita

100.0

-

3

Fund lending

Uoei Shoten
Corporation

Minami-ku,
Niigata

100.0(100.0)-1

Fund lending

None

Zakura Inc.

Shinagawa-ku,
Tokyo

100.0
(100.0)-2

Fund lending

Receipt ofservices fordevelopment

Package &ServiceBusiness
Corporate
Revitalization/
198,000 New Business
Cultivation
Business
Corporate
Revitalization/
17,500 New Business
Cultivation
Business
83,700Businesstransactions
Consigning offinancialconsulting
Provision of
the license for
ABC cost
accounting
packages
Provision of
the license forsales
management
packages
Receipt ofservices fordevelopment

FutureInvestment
Corp.

Shinagawa-ku,
Tokyo

10,000

Entirecompany

100.0

2

1

Fund lending

Consignmentof custody andmanagement ofstocks, andinvestment

RI Partners
LimitedLiability
Association

Shinagawa-ku,
Tokyo

348,000

Entirecompany

100.0(100.0)

-

-

None

Consignmentof investment

FutureArchitect, Inc.

California,
USA

11,912(US$ 100
thousand )Entirecompany

100.0

3

-

None

None

AssociantTechnology
Inc.

Oita-shi, Oita

273,475

Entirecompany

100.0

1

1

None

None

Notes:
1. The name of the business segment is stated in “Main business activities.”
2. Elm Corporation, Uoei Shoten Corporation and Associant Technology Inc. are specified subsidiaries.
3. The above subsidiaries file neither securities registration statements nor securities reports.
4. Figures in the parentheses in “Voting right ratio” represent an indirectly owned ratio and are included in the figures above theparentheses.
5. Future Investment Corp. is a managing partner of RI Partners Limited Liability Association.

- 16 -

(2) Affiliated companies to which equity method is applicable:
Capital(in thousandsof yen)Main Businessactivities

Voting rightratio (%)

Relationship
Interlocking directors
Monetary
Number of
Number ofassistancecompany
company
directors
employees

Name

Location

Shanghai UFIDA
FutureConsulting Ltd.

Shanghai, China

28,703(US$ 247
thousand)IT Consulting
Business

40.1

2

–

None

dit Co., Ltd.

Koto-ku, Tokyo

428,745

Package &Service Business

47.9

1

–

None

Cyber Solution,
Inc.

Koto-ku, Tokyo

310,000

Package &Service Business

47.9(47.9)

1

–

None

None

Elmos Inc.

Axis Solutions
Corporation

Chuo-ku, Osaka

Koto-ku, Tokyo

Businesstransactions
Provision of IT
Consulting
services in the
Chinese market
Receipt ofservices for
network
consulting

10,000

Package &Service Business

40.0(40.0)

1–

None

Purchase of OA
equipment andfixtures17,000

Corporate
Revitalization/
New Business
Cultivation
Business

20.0(20.0)––

None

Receipt ofservices fordevelopment

Notes:
1. The name of the business segment is stated in “Main business activities.”
2. Figures in the parentheses in “Voting right ratio” represent an indirectly owned ratio and are included in the figures above theparentheses.

- 17 -

3. Management Policy(1) Basic corporate tenets
The Group provides IT consulting services, in which our staff members help clients solve problems, by sharing
management issues with them from a managerial perspective, understanding the essence of clients’ businesses andestablishing advanced IT-based information systems using practical and sophisticated technologies.
Firstly, the Group has been pursuing optimum solutions from a vendor-neutral position, without relying on
specific hardware and software vendors, to maximize the performance of open systems — the key tonext-generation information systems — in which the Company has specialized since its foundation.
Second, the Group provides integrated services, from the strategic IT consulting phase through the successive
stages of system design, applications software development, selection and procurement of hardware and software
products, and including the training and operational phases. The Group believes that it can best satisfy its clientsby actually realizing the outcome of consultations as actual systems that they can put to practical use to produce
business results, rather than merely stopping at the presentation of ideas.
Given the increase in requests for real-time computing, the high demand for rebuilding mission-critical systems(large-scale downsizing projects), and the acceleration of corporate reconstruction, reorganization and integration,
we forecast that client needs will continue growing for the Group’s unique IT consulting Business. This businessprovides integrated services, by combining IT and business practically and effectively, from establishing throughto running systems that help clients overhaul operations and solve management problems.
In the Package & Service Business, the Group offers in-house developed sales management and accounting
software packages, which are intended to improve operational efficiency, mainly to small and midsize companies,
through our sales channels, partners, OEM agreements, or ASPs.
We fully meet the client’s needs by not only providing IT systems that support businesses of the client at a lower
cost and in a shorter installation period in accordance with the needs of small and midsize companies, but also
customizing these software packages according to the client’s business type and market. We are also striving to
upgrade software packages so that we can offer cutting-edge functions, such as visualization of internal control
and work, as standards.
In the Corporate Revitalization Business, the Group will revitalize the operations of a regional supermarket chain
with seven stores (a consolidated subsidiary) by fully using its strategic and technical experiences in the
distribution industry and introducing information technologies. In the New Business Cultivation Business, we aim
to contribute to the relevant industries by maximizing the value of target companies or accelerating their growth.
We will do this by using and merging the know-how and technological capabilities of the Company concerning
management, operation and IT in general through alliances with corporations that operate businesses in which theGroup is not engaged, by establishing rising companies, making investments and taking other measures.

(2) Goals and objectives
To differentiate ourselves from our competitors and maintain continuous growth, the Group concentrates
management resources on the fields in which it makes strategic investments, such as research and development,
training, and recruiting. At the same time, however, we have set a goal for ordinary income growth of 20% ormore per year with regard to the mainstay IT Consulting Business. We also aim to achieve an ordinary income
margin of at least 10% at the Package & Service Business, and about 5% at the Corporate Revitalization
Business.
(3) Medium to long-term management strategies
Ever since its establishment, the Group has consistently pushed forward with creating the future value of clientsby providing the proper state in which business should be and an optimal mechanism to realize it by proactively
taking in cutting-edge IT technologies. We will further develop this basic policy and put designing management
and IT in the center of our medium to long-term management strategies, as a leading company of IT consulting.
In addition, the Group will organically combine the know-how on management reform, IT technologicalcapabilities, etc., obtained in the IT Consulting Business, with the Package & Service Business, aiming to have its
solutions utilized by small and midsize companies more than ever.
As mentioned above, we will endeavor to enhance the Group’s corporate value.
The specific strategies for this are as follows:
IT Consulting Business
1) The Group will strive to become a force for change, changing the people and companies that choose it aspartners, through further strengthening of technology, professionalism, and sense of mission in the pursuit ofboth the philosophy and realities of reform.
2) The Group will endeavor to further differentiate itself from its rivals in speed, cost and quality, by responding- 18 -

to clients’ needs to see benefit in the short-term through knowledge-sharing, enhanced component groups andthe use of easily re-configured system architecture.
3) Through successful upgrading of project management, risk control and design methodologies, The Group will
strengthen its ability to build large-scale systems, thereby ensuring continued high growth.
4) The Group will establish an infrastructure to ensure continued recruitment of high caliber human resources
who are thoroughly committed to their craft and are results-oriented. Through continued research anddevelopment, training and enhanced career planning, the Group aims to improve employee satisfaction levels
and ensure high employee retention. The Group believes that by upholding its corporate principles andstrengthening its corporate culture, it can further enhance Group cohesion.
5) In addition to its existing business domains, the Group will launch the ERP business for large companies toincrease opportunities for making proposals to clients while aiming to build backbone systems that are a hybridof component-type development and ERP.

Package & Service Business
1) The Group will provide software packages for small and midsize companies to support them in revitalizing
businesses and reforming management. To offer solutions based on such packages and various other related
services, the Group will enhance proprietary technologies and business know-how at early stages.
2) Aiming to integrate organizations involved in software packages, which were dispersed within the Group, andconsolidation of sales, technologies and business know-how, the Group will carry out reorganization and fully
develop the market of small and midsize companies.
3) Also to meet the needs of clients that are diversifying, the Group will aim to realize one-stop solution for small
and midsize companies by innovating its existing product system and using the technologies and know-how
cultivated in the IT Consulting Business.

Corporate Revitalization Business / New Business Cultivation Business
1) The Group will get deeply involved in the management team of client firms, assess and relieve bottlenecks of
their operations, expedite their decision-making process, and improve their profitability.
2) Aiming at quick revitalization of client firms through short-term and drastic reform focusing on IT, the Groupwill proactively use the know-how obtained through and components developed in the IT Consulting Business.
3) Then, the Group will establish models for success for each industry, spreading such models within the Group.
4) In addition, the Group uses and combines its extensive technological skills and know-how in management,
sales, and general IT activities for a wide range of different industries, focusing them in order to contribute todevelopments in each target industry. In this way, the Group continuously seeks to expand the range of its
operations, establishing alliances with companies that are active in sectors that the Group has not worked inpreviously and investing in venture companies to expand its business portfolio in the most appropriate manner.

(4) Issues the Company faces
1) Stepping up our large scale project management capabilities and establishing a support infrastructure [ITConsulting Business, Package & Service Business]
The size of projects to upgrade existing mission critical systems grows ever larger, requiring us to continue tobuild our project management capabilities. At the same time, in addition to further refining and standardizing
design and development technologies we will endeavor to build closely integrated, preventive support
infrastructure that can respond to any issue that arises during construction of the system or after it is put into
operation.
2) Research and development of core design and development technologies [IT Consulting Business]
A number of proprietary core design/development technologies are already being applied to our projects andare contributing to the improvement in productivity. However, in order to ensure medium-term technologicalsuperiority, it is necessary to continue research and development to expand the applications of these coretechnologies and to achieve a wider sharing of knowledge within the Company.
3) Recruitment and training of professionals and strengthening of alliances with external partners [IT Consulting
Business, Package & Service Business]
As the scale of our projects continues to increase, it is a key for us to consistently recruit and train highly
qualified personnel. By challenging the frontiers of information technology, we aim to create an environment
conducive to proactively attracting talented people. We also continue to strengthen our alliances with external
partners, to ensure their timely participation when and where needed as a project progresses.
- 19 -

4) Enhancement of outside alliances [IT Consulting Business]
Ever since its establishment, the Company has maintained a neutral position, independent of any hardware
vendors or software vendors, and has been pursuing optimization of information systems.
To always provide optimal solutions to clients, the Company will maintain good relations with corporations
that have particularly excellent technologies and strive to enhance alliances with them, while grasping thetechnological trends in the world and widely seeking companies with excellent technologies.
5) Overseas (Asia) development [IT Consulting Business and Package & Service Business]
Compared with the Japanese IT market that is entering a period of maturity, the IT markets in Asia outside ofJapan are smoothly expanding, backed by the growth of China and India in recent years. The Group believes
that it is vital to enter not only China but also such Asian countries as Southeast Asian nations for its future
growth. Against this backdrop, the Group will drive ahead with development of markets in steps and expand
business in Asia by making existing solutions and products conform to multiple languages and utilizing
software packages and cloud computing.
6) Improvement of product capability of software packages [Package & Service Business]
In the Package & Services Business, the Group customizes existing software packages. However,customization services involve risks such as a prolonged period up to the completion of a project and lower
profitability, if it takes time to decide specifications with clients or customization requires more development
person-hours than expected.
Accordingly, the Group will enhance the completeness of software packages to reflect the needs of clients
while reducing customization person-hours as much as possible, aiming to reduce risks.
7) Enhancement of sales capability [Package & Service Business]
The profitability of the package business is closely related to its market share, and in order to expand market
share, it is essential to strengthen marketing abilities. The Group has so far carried out sales activities mainly in
the Kanto region, centering on Tokyo, and the Kansai region, centering on Osaka. From now on, we willconcentrate sales resources on Tokyo, where most companies are located, to expand our sales share.
8) Management of information on sales, purchase and inventory [Corporate Revitalization Business/ New
Business Cultivation Business]
To further develop in the retail industry, where competition is fierce among rivals, companies are required tosupply products that consistently meet the needs of the market. Hence, the Group will strive to develop newpurchase routes, aiming to provide better products in a more timely fashion and at lower prices. We will also
improve the accuracy of sales, purchase and inventory plans so that we can reduce unnecessary costs and sell
products efficiently.
9) Enhancement of individual stores [Corporate Revitalization Business/ New Business Cultivation Business]
The Corporate Revitalization Business is in a severe management environment, and earnings of existing stores
have reached their ceiling. Against this backdrop, the Group will aggressively renovate stores to attract morecustomers through the maximum and effective use of limited resources, improve operational efficiency throughthe overhaul of organizations and work flows in stores, realize low-cost management through reviewing cost
structures, and establish a stable business foundation.

(5) Management’s awareness of issues and future policies
Uncertainty over the course of the Japanese economy seems likely to remain as there are such misgivings as a
rapid advance in the appreciation of the yen and financial issues in Europe, despite some signs of an earnings
recovery in some business categories.
With regard to the market’s awareness of the value of IT, some clients are strongly demanding only a shorter
period between development and delivery and lower prices. Given this, the Group predicts that its businessenvironment will remain severe and continue to change violently.
The Group ensured profits of the highest levels through precise project management and improved costmanagement, although net sales declined. Net sales have remained firm since the second fiscal half when
corporate earnings started recovering. As orders received and our order backlog, including those received fromnew clients, are recovering, we believe that net sales will also increase in and after the next fiscal year.
The Group will be required to properly manage the delivery time, quality and person-hours in the next fiscal year,
since the projects acquired during the fiscal year under review will move to the development phase and large
projects that have been under way for several years will be released. Under such circumstances, we will endeavor
to expand into other business areas and ensure profits by making more efforts than ever to enhance project
management.
Also, we will further focus on the business targeting small and midsize companies by making Elm Corporation
succeed the software package division of the Company through company spin-off and make a fresh start as Future- 20 -

One, Inc.

- 21 -

4. Consolidated Financial Statements(1) Consolidated balance sheets(in thousands of yen)

Fiscal 2009
(December 31, 2009)
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable
Merchandise and finished goods
Work in process
Deferred tax assets
Accounts receivable-other
Other
Allowance for doubtful accounts
Total current assets
Fixed assets
Tangible fixed assets
Buildings and structures
Accumulated depreciation
Buildings and structures, net
Land
Other
Accumulated depreciation
Other, net
Total tangible fixed assets
Intangible fixed assets
Software
Other
Total intangible fixed assets
Investments and other assets
Investment securities
Lease and guarantee deposits
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total fixed assets
Total assets

*4

*2

*2

3,785,549
2,301,382
133,162
38,529185,654
1,374,764
330,850(9,302)8,140,590

2,779,272(2,339,229 )
440,043
172,662
1,446,479(1,174,914)
271,565884,271

Fiscal 2010
(December 31, 2010)

*4

*2

*2

439,805
94,016
533,821*1- 22 -

1,883,250
946,669
100,552
166,900(98,813 )2,998,559
4,416,652
12,557,243

5,233,036
2,941,834
136,929
48,752
188,282
1,419,725
318,544(13,001 )10,274,105

2,783,895(2,361,122 )422,772
127,762
1,459,776(1,223,002)
236,773787,309179,203
20,529199,732*1, *5

1,778,560
769,357
115,096
60,044(52,565 )2,670,494
3,657,535
13,931,640

Fiscal 2009
(December 31, 2009)
Liabilities
Current liabilities
Accounts payable
Short-term borrowings
Long-term borrowings due within one year
Accounts payable-other
Income tax payable, etc.
Reserve for bonuses
Reserve for quality assurance
Reserve for loss on projects
Other
Total current liabilities
Non-current liabilities
Long-term borrowings
Allowance for retirement benefits
Negative goodwill
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Common stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Valuation, translation adjustments, etc.
Net unrealized gain (loss) on available-for-sale securities
Foreign currency translation adjustments
Total valuation, translation adjustments, etc.
Minority interests
Total net assets
Total liabilities and net assets*3- 23 -(in thousands of yen)
Fiscal 2010
(December 31, 2010)

591,498
30,00032,000599,736
365,079
61,18274,301
696,1122,449,910

639,573
30,00032,000607,229880,886
98,783
139,163
7,000
736,393
3,171,030

48,000102,027
102,228
13,378
265,634
2,715,544

16,00052,786
29,71098,496
3,269,527*3

1,421,815
2,495,772
6,975,347(1,171,668 )
9,721,266

1,421,815
2,495,772
7,836,204(1,171,668 )
10,582,123

62,355(1,558)60,79759,634
9,841,698
12,557,243

82,095(2,105 )79,98910,662,113
13,931,640

(2) Consolidated Statements of Income
Fiscal 2009
(from January 1, 2009
to December 31, 2009)
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Officers’ remuneration
Salaries and bonuses
Miscellaneous salaries
Employee training expenses
Research & development expenditures
Depreciation
Recruitment expenses
Amortization of goodwill
Other
Total selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividends income
Amortization of negative goodwill
Equity in earnings of affiliates
Other
Total non-operating income
Non-operating expenses
Interest expenses
Expenses for equity-method affiliates
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income

23,658,414
14,990,335
8,668,078*2- 24 -

363,2482,854,772
126,179
263,584
50,715
191,435
82,545
137,628
1,979,265
6,049,374
2,618,704(in thousands of yen)
Fiscal 2010
(from January 1, 2010
to December 31, 2010)*1*2

22,639,154
13,605,853
9,033,301
274,186
3,032,964
91,446
111,596
85,072116,051
92,8227,235
2,080,881
5,892,257
3,141,043

6,559
10,21056,75338,385111,908

2,820
20,33569,797
21,95737,423
152,335

9,911
10,245
5,458
25,6152,704,998

3,508
3,302
4,804
11,6153,281,763

Fiscal 2009
(from January 1, 2009
to December 31, 2009)
Extraordinary income
Gains on sale of investment securities
Gain on transfer of business
Gain on sales of fixed assets
Total extraordinary income
Extraordinary losses
Loss on prior period adjustment
Losses on sales of fixed assets
Loss on retirement of non-current assets
Losses on the sale of investment securities
Losses on valuation of investment securities
Impairment losses
Office transfer expenses
Valuation loss on goods
Litigation expenses
Total Extraordinary losses
Net income before taxes
Corporate, residential and enterprise taxes
Corporate tax adjustments
Total income taxes
Minority interests in net income (loss)
Net income

70,45770,457

*5
*3

*7
*8

- 25 -

6,068
6,125
19,220249,777
161,619
15,669458,4812,316,974
834,121278,685
1,112,806(635)
1,204,802(in thousands of yen)
Fiscal 2010
(from January 1, 2010
to December 31, 2010)

*4

*6

*3

*7

30,51812,365
7,635
50,51999,214
4,874
23,99373,430260,764
30,000492,277
2,840,005
1,278,671(28,770)
1,249,900(1,363)
1,591,467

(3) Consolidated Statements of Changes in Shareholders’ Equity
Fiscal 2009
(from January 1, 2009
to December 31, 2009)
Shareholders’ equity
Common stock
Balance at the end of the previous period
Changes of items during the period
Total changes of items during the period
Balance at the end of the period
Capital surplus
Balance at the end of the previous period
Changes of items during the period
Disposal of treasury stock
Total changes of items during the period
Balance at the end of the period
Retained earnings
Balance at the end of the previous period
Changes of items during the period
Dividends from surplus
Net income
Disposal of treasury stock
Total changes of items during the period
Balance at the end of the period
Treasury stock
Balance at the end of the 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 the period
Total shareholders’ equity
Balance at the end of the previous period
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Disposal of treasury stock
Total changes of items during the period
Balance at the end of the period- 26 -(in thousands of yen)
Fiscal 2010
(from January 1, 2010
to December 31, 2010)

1,421,815

1,421,815

1,421,815

1,421,815

2,866,178

2,495,772(370,405)(370,405)
2,495,772

2,495,772

6,493,346

6,975,347(703,006)
1,204,802(19,794)
482,001
6,975,347(730,611)
1,591,467
860,856
7,836,204(2,252,724)(1,171,668)(90,144)
1,171,200
1,081,055(1,171,668)(1,171,668)

8,528,615

9,721,266(703,006)
1,204,802(90,144)
781,000
1,192,651
9,721,266(730,611)
1,591,467
860,856
10,582,123

Fiscal 2009
(from January 1, 2009 to
December 31, 2009)
Valuation, translation adjustments, etc.
Net unrealized gain (loss) on available-for-sale securities
Balance at the end of the previous period
Changes of items during the period
Changes in items other than the shareholders’ equity during
the fiscal year (net amount)
Total changes of items during the period
Balance at the end of the period
Foreign currency translation adjustments
Balance at the end of the previous period
Changes of items during the period
Changes in items other than the shareholders’ equity during
the fiscal year (net amount)
Total changes of items during the period
Balance at the end of the period
Total valuation, translation adjustments, etc.
Balance at the end of the previous period
Changes of items during the period
Changes in items other than the shareholders’ equity during
the fiscal year (net amount)
Total changes of items during the period
Balance at the end of the period
Minority interests
Balance at the end of the previous period
Changes of items during the period
Changes in items other than the shareholders’ equity during
the fiscal year (net amount)
Total changes of items during the period
Balance at the end of the period
Total net assets
Balance at the end of the previous period
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Disposal of treasury stock
Changes in items other than the shareholders’ equity during the
fiscal year (net amount)
Total changes of items during the period
Balance at the end of the period- 27 -(in thousands of yen)
Fiscal 2010
(from January 1, 2010 to
December 31, 2010)

179,601

62,355(117,245)

19,740(117,245)
62,35519,74082,095(1,665)(1,558)

107

(547)

107
(1,558)(547)(2,105)

177,936

60,797(117,138)

19,192(117,138)
60,797

19,192
79,98961,522

59,634(1,887)(59,634)(1,887)59,634(59,634)-

8,768,073

9,841,698(703,006)
1,204,802(90,144)
781,000(730,611)
1,591,467-(119,026)(40,441)

1,073,624
9,841,698

820,414
10,662,113

(4) Consolidated statements of cash flows
Fiscal 2009
(from January 1, 2009 to
December 31, 2009)
Cash flows from operating activities
Net income before taxes
Depreciation
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in reserve for bonuses to directors/reserve forbonuses
Increase (decrease) in reserves for quality assurance
Increase (decrease) in reserve for loss on projects
Increase (decrease) in allowance for retirement benefits
Earned interest and dividends
Interest expenses
Equity in income (losses) of subsidiaries & affiliates
Gains (losses) on transfer of business
Valuation loss on goods
Office transfer expenses
Gains (losses) on sale of fixed assets
Loss on retirement of non-current assets
Gains on sale of investment securities
Losses on the sale of investment securities
Gains (losses) on valuation of investment securities
Litigation expenses
Impairment losses
Gains (losses) on prior period adjustment
Increase (decrease) in accounts receivable
Increase (decrease) in inventories
Increase (decrease) in other assets
Increase (decrease) in accounts payable
Increase (decrease) in other liabilities
SubtotalInterest and dividends income received
Interest paid
Income and other taxes
Payment of litigation expenses
Net cash provided by (used in) operating activities- 28 -*2(in thousands of yen)
Fiscal 2010
(from January 1, 2010 to
December 31, 2010)

2,316,974
501,412(20,035)

2,840,005
248,133(11,601)

9,863

37,601(102,146)(38,044)(16,770)
9,911
10,245
15,669161,619
6,068
6,125(70,457)
19,220249,777
3,296,960
60,465(1,213,056)(468,635)(351,556)
4,383,611
15,989(11,693)(1,552,935)
2,834,972

64,862
7,000
14,226(23,156)
3,508(21,957)(12,365)(7,635)
4,874(30,518)
23,99373,43030,000260,764
99,214(646,569)(13,989)
32,57648,074(91,083)2,929,389
23,508(3,673)(756,078)(30,000)
2,163,146

Fiscal 2009
(from January 1, 2009 to
December 31, 2009)
Cash flows from investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of tangible fixed assets
Proceeds from sale of tangible fixed assets
Acquisition of intangible fixed assets
Purchase of investment in subsidiaries
Purchase of stocks of subsidiaries and affiliates
Purchase of investment securities
Proceeds from sale of investment securities
Proceeds from redemption of investment securities
Payments for lease and guarantee deposits
Proceeds from collection of lease and guarantee deposits
Proceeds from collection of loans
Proceeds from business transfer
Other
Net cash provided by (used in) investing activities
Cash flows from financing activities
Net increase (decrease) in short-term borrowings
Repayment of long-term borrowings
Purchase of treasury stock
Proceeds from sales of treasury stock
Dividends paid
Dividends paid to minority shareholders
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Increase in cash and cash equivalents
Cash and cash equivalents at beginning of the period
Cash and cash equivalents at end of the period*1- 29 -(in thousands of yen)
Fiscal 2010
(from January 1, 2010 to
December 31, 2010)(65,323)
107,812(153,172)
3,877(168,827)(5,680)(795,000 )
102,817(108,378)
81,890520(999,463)(80,000 )200,000(205,933)
52,800(39,929)(45,151)(5,000)82,624
5,200(12,364)
205,312
12,365910
170,833(602,000)(259,466)(90,845)
781,000(698,934)(1,252)(871,498)
8,577
972,586
2,612,962
3,585,549(32,000)(730,642)(762,642)(3,850)1,567,487
3,585,549
5,153,036*1

Notes regarding the premise of a going concern
None- 30 -

Significant Accounting Policies Regarding the Preparation of Consolidated Financial Statements
Item
1. Scope of consolidation

2. Application of equity
method3. Accounting period of
consolidated subsidiaries

4. Accounting policies(1) Valuation
standards/methods forprincipal assets

Fiscal 2009
(from January 1, 2009 to December 31, 2009)
Number of consolidated subsidiaries: 10
Names and other details of consolidated
subsidiaries
Future Financial Strategy Corporation, ABM
Corporation, Elm Corporation, Ascendia Inc.,
Uoei Shoten Corporation, Zakura, Inc., Future
Investment Corporation, RI Partners LLC., Future
Architect Inc., Associant Technology Inc.
XEBEC LAND Inc. was removed from the scopeof consolidation because it was absorbed as aresult of the merger with Elm Corporation on
December 1, 2009.
There are no non-consolidated subsidiaries.
Number of affiliated companies to which
equity-method is applicable: 4Names and other details of affiliated companies towhich equity-method is applicable
Shanghai UFIDA Future Consulting Ltd., dit
Co., Ltd., Cyber Solution Inc., Elmos Inc, andd-worx Inc.
d-worx Inc. ceased to be an affiliated companyof the Company due to the transfer of shares
owned by the Company on November 30, 2009.
Meanwhile, Success Consulting Co., Ltd.
ceased to be an affiliated company due to thetransfer of shares owned by the Company on
December 7, 2009. There are nonon-consolidated subsidiaries and affiliates towhich the equity method is not applicable.
Uoei Shoten Corporation’s account settlement dateis November 30.
In preparing consolidated financial statements, theGroup normally presents the balance sheet
position of consolidated subsidiaries using figures
as of the fiscal year-end date of each subsidiary.
However, if there are any major transactions or
events affecting the financial condition of thesubsidiaries between the date of their book closing
and the parent company’s fiscal year-end, theGroup makes necessary adjustments to its
financial statements to reflect these transactions.

Fiscal 2010
(from January 1, 2010 to December 31, 2010)
Number of consolidated subsidiaries: 10
Names and other details of consolidated
subsidiaries
Future Financial Strategy Corporation, ABM
Corporation, Elm Corporation, Ascendia Inc.,
Uoei Shoten Corporation, Zakura, Inc., Future
Investment Corporation, RI Partners LLC., Future
Architect Inc., Associant Technology Inc.
There are no non-consolidated subsidiaries.

(a) Securities
Other securities:
Stated at fair value based on the market
price as of the end of the financial period(Unrealized holding gains/losses arereported as a net amount in a separate
component of net assets. Cost of sale iscalculated based on moving averagemethod).
Non-marketable securities:
Stated at cost based on moving averagemethod.

(a) Securities
Other securities:
Marketable securities:
Same as on the left.

- 31 -

Number of affiliated companies to which
equity-method is applicable: 5Names and other details of affiliated companies towhich equity-method is applicable
Shanghai UFIDA Future Consulting Ltd., dit
Co., Ltd., Cyber Solution Inc., Elmos Inc,d-worx Inc., and Axis Solutions Corporation
On April 9, 2010, the Group purchased sharesof Axis Solutions Corporation, and made it anaffiliate to which the equity method isapplicable.
There are no non-consolidated subsidiaries andaffiliates to which the equity method is notapplicable.

Same as on the left.

Non-marketable securities:
Same as on the left.

Item(2) Depreciation/amortization of major
depreciable/ amortizable
assets(3) Accounting standards forallowances/reserves

Fiscal 2009
(from January 1, 2009 to December 31, 2009)(b) Inventories
Merchandise and finished goods
Stated at lower of cost or market using thegross average method (amounts in the balance
sheets are calculated using the method todevaluate the book value according to thedecrease in profitability)
Uoei Shoten Corporation adopts the cost
method based on the retail method (amounts inthe balance sheets are calculated using themethod to devaluate the book value according
to the decrease in profitability).
Work in process:Stated at cost based on the specific cost
method (amounts in the balance sheets arecalculated using the method to devaluate thebook value according to the decrease inprofitability).
(a) Tangible fixed assets (Excluding lease assets)
The Group mainly uses the declining balancemethod to depreciate assets, though someitems are depreciated using the straight-line
method.
If the acquisition price of the asset to be
depreciated is between ¥100,000 and¥200,000, it is depreciated evenly using thestraight-line method over three (3) years.
Useful life are as follows:
Buildings 3-34 years
Other 3-20 years(b) Intangible fixed assets (Excluding lease assets)
Software for in-house use
Software for in-house use is depreciated using
the straight-line method over its useful life (5years).
Software for sale
Software for sale is depreciated by the largerof either of the amount calculated based on
projected sales volume or the amount from thestraight-line method over the period for which
they are expected to remain salable (3 years).
Other
Straight-line method(c) Lease assets
Lease assets concerning finance leasetransactions not accompanying the transfer ofproperty rights
Of lease transactions other than those deemedto accompany the transfer of property rights tolessees, lease transactions that commenced
before the start of the initial year of theapplication of the “Accounting Standard forLease Transactions” (Accounting Standard
Board of Japan Statement No. 13) areaccounted for in a manner similar to theaccounting treatment for regular leasetransactions.
(a) Allowance for doubtful accounts
To prepare for losses incurred through bad
debts, the amount of potential loss iscalculated by using the historical loss ratio incase of non-classified loans/receivables.
Potential losses for classified loans/receivables
are individually assessed- 32 -

Fiscal 2010
(from January 1, 2010 to December 31, 2010)(b) Inventories
Commodities/products
Same as on the left.

Work in process:Same as on the left.

(a) Tangible fixed assets (Excluding lease assets)
Same as on the left.

(b) Intangible fixed assets (Excluding lease assets)
Software for in-house use
Same as on the left.

Software for saleSame as on the left.

Other
Same as on the left.
(c) Lease assets
Lease assets concerning finance leasetransactions not accompanying the transfer ofproperty rights
Same as on the left.

(a) Allowance for doubtful accounts
Same as on the left.

Item

Fiscal 2009
(from January 1, 2009 to December 31, 2009)(b) Reserve for quality assurance
In projects related to open system consultationand system development (IT consulting
services and Packaging & Services), where
technological changes are taking place rapidly,
there are occasions where we are obliged toprovide services to our clients in order toresolve problems that were unforeseeable atthe time of the signing of the contract or as of
the close of accounting period.
There are instances where Future Architect
and its consolidated subsidiaries provide suchservices without compensation in order toguarantee quality standards that will fully
satisfy its customers in IT consulting services
and Packaging & Services.
To prepare for additional cost of sales in IT
consulting services and Packaging & Services
that may arise after sales are stated, estimatedamount of such additional cost, calculated
based on past experience, is stated in thereserve for quality assurance.
______

Fiscal 2010
(from January 1, 2010 to December 31, 2010)(b) Reserve for quality assurance
In projects related to open system consultationand system development (IT consulting
services and Packaging & Services), where
technological changes are taking place rapidly,
there are occasions where we are obliged toprovide services to our clients after sales arestated in order to resolve problems that were
unforeseeable at the time of the signing of thecontract or as of the close of accounting
period. There are instances where Future
Architect and its consolidated subsidiaries
provide such services without compensation inorder to guarantee quality standards that will
fully satisfy its customers in IT consulting
services and Packaging & Services.
To prepare for additional cost of sales in IT
consulting services and Packaging & Services
that may arise after sales are stated, estimatedamount of such additional cost, calculated
based on past experience, is stated in thereserve for quality assurance.
(c) Reserve for loss on project
In projects related to open system consultationand system development (IT consulting
services and Packaging & Services), where
technological changes are taking place rapidly,
there are occasions where we are obliged toprovide services to our clients in order toresolve problems that were unforeseeable atthe time of the signing of the contract.
To prepare for future loss in IT consulting
services and Packaging & Services, estimatedamount of such loss in and after the following
fiscal year is stated in the reserve for loss on
project, concerning ongoing projects for whichloss is projected to be incurred as of the end of
the fiscal year under review and for which it ispossible to rationally estimate the amount of loss.
(Additional information)
Reserve for future loss expected to occur
concerning ongoing projects was previously
stated in the reserve for quality assurance.
However, with the application of the“Accounting Standard for Construction
Contracts” (ASBJ Statement No. 15,
December 27, 2007) and the “Guidance on
Accounting Standard for Construction
Contracts” (ASBJ Guidance No. 18,
December 27, 2007), reserve for future loss
projected to be incurred concerning ongoingprojects is stated in reserve for loss on projectfrom the fiscal year under review.

- 33 -

Item(4) Recognition of sales andcost of sales(5) Other material
information concerning
the compiling offinancial statements
5. Valuation of assets andliabilities of consolidated
subsidiaries
6. Amortization of goodwill
and negative goodwill

7. Cash and cash
equivalents

Fiscal 2009
(from January 1, 2009 to December 31, 2009)(d) Allowance for bonuses
In order to set aside funds for the payment ofbonuses to employees at consolidated
subsidiaries, the estimated amount of expenses
for bonus payments in the fiscal year underreview is set aside in the reserve for bonuses
account.
(e) Allowance for retirement benefits
To prepare for the payment of retirement
benefits to employees, allowance forretirement benefits is provided in accordancewith the simplified method (based on theamount that would be required if all
employees voluntarily terminated theiremployment, the balance of liability reserveand the balance of pension funds) stipulated in
the Practical Guidelines for Accounting for
Retirement Benefits (Interim Report) (JICPA
Accounting Committee Report No. 13).

Costs of sales for IT consulting services arerecognized on an accrual basis for each individual
project. Corresponding sales are recognized basedon” percentage-of-completion” by taking the ratioof accrued cost to total estimated cost of the
project.
Accounting treatment of consumption taxes, etc.
Transactions subject to consumption taxes arerecorded at amounts exclusive of consumption
taxes.
The full market price method is adopted.

Goodwill and negative goodwill are amortizedevenly over their useful lives.
However, if they are of little significance in termsof monetary amounts they are treated as profits orlosses for the fiscal year in which they occur.
“Cash (cash and cash equivalents)” included in the
consolidated statements of cash flow include cashin hand, demand deposits, and short-term
investments readily convertible to cash withminimum price risk.

- 34 -

Fiscal 2010
(from January 1, 2010 to December 31, 2010)(d) Allowance for bonuses
Same as on the left.

(e) Allowance for retirement benefits______(Additional information)
The Group abolished the retirement benefit
system as of December 31, 2010.
The outstanding balance of allowance forretirement benefits as of December 31, 2010
has been transferred to “Accounts
payable-other” under current liabilities as
fixed obligations.
Same as on the left.

Accounting treatment of consumption taxes, etc.
Same as on the left.

Same as on the left.

Same as on the left.

Same as on the left.

Changes in Material Information for the Preparation of Consolidated Financial Statements
Fiscal 2009
(from January 1, 2009 to December 31, 2009)

Fiscal 2010
(from January 1, 2010 to December 31, 2010)(Accounting standard for lease transaction)
Finance lease transactions not accompanying the transfer ofproperty rights were previously accounted for in a manner similar
to the accounting treatment for regular lease transactions.
However, the Company applied “Accounting Standard for Lease
Transactions” (ASBJ Statement No. 13 prescribed by the First
Division of Corporate Accounting Council on June 17, 1993,
revised on March 30, 2007) and “Guidance on AccountingStandard for Lease Transactions” (ASBJ Guidance No. 16
prescribed by the Accounting System Committee of Public
Accountant Association of Japan on January 18, 1994, revised on
March 30, 2007) from the fiscal year under review, and financelease transactions not accompanying transfer of property rights
have been accounted for in a similar manner to the accounting
treatment for regular sale transactions. Also, straight line method isapplied to depreciation of leased assets, with leasing period as
useful life and residual value as zero. For finance leasetransactions without transfer of property right, which
commencement date of lease was before the first year of adopting
the above standards, accounting procedure based on regular leasetransaction is applied continuously.
There is no effect of the above change of procedure to profit andloss.
(Consolidated Financial Statement)
The “Practical Solution on Unification of Accounting Policies
Applied to Foreign Subsidiaries for Consolidated Financial
Statement” (ASBJ Practical Issues Task Force No. 18, May 17,2006) was applied effective of the fiscal year under review.
There is no effect of the above change of procedure to profit andloss.

(Accounting standard for construction contracts)
The “Accounting Standard for Construction Contracts” (ASBJ
Statement No. 15, December 27, 2007) and the “Guidance on
Accounting Standard for Construction Contracts” (ASBJ GuidanceNo. 18, December 27, 2007) were applied effective of the fiscal
year under review.
This adoption had no effect on the Group’s earnings for the
fiscal year under review.
(Accounting standard for business combinations, etc.)
The “Accounting Standard for Business Combinations” (ASBJ
Statement No. 21, December 26, 2008), the “Accounting Standard
for Consolidated Financial Statements” (ASBJ Statement No. 22,
December 26, 2008), the “Partial Amendments to the AccountingStandard for Research and Development Cost” (ASBJ Statement
No. 23, December 26, 2008) , the “Accounting Standard forBusiness Divestitures” (ASBJ Statement No. 7, December 26,2008), the “Accounting Standard for Equity Method of Accounting
for Investments” (ASBJ Statement No. 16, announced on
December 26, 2008) and the “Implementation Guidance on
Accounting Standard for Business Combinations and Business
Divestitures” (ASBJ Guidance No. 10, December 26, 2008) wereapplied effective of the fiscal year under review.

- 35 -

Change in classification
Fiscal 2009
(from January 1, 2009 to December 31, 2009)

Fiscal 2010
(from January 1, 2010 to December 31, 2010)(Consolidated balance sheets)
With the application of the “Cabinet Office Ordinance on Partial
Amendment of the Regulations on Terminology, Format andPreparation Method of Financial Statements, etc.” (Cabinet Office
Ordinance No. 50, August 7, 2008), what was stated as“Inventories” in the previous fiscal year are separately stated as“Merchandise and finished goods” and “Work in process,” startingfrom the fiscal year under review. “Merchandise and finishedgoods” and “Work in process,” which were included in“Inventories” in the previous fiscal year, respectively amounted to¥171,746 thousand and ¥76,080 thousand. “Accounts
receivable-other” (¥63,104 thousand in the previous fiscal year)
had been included in the “Other” section of the current assets
account until the previous fiscal year. However, since the amountof accounts receivable-other exceeded 5/100 of the total assets inthe period under review, the item in question was reported
separately.

(Consolidated balance sheets)
With the application of the “Accounting Standard forConstruction Contracts” (ASBJ Statement No. 15, December 27,2007) and the “Guidance on Accounting Standard for Construction
Contracts” (ASBJ Guidance No. 18, December 27, 2007) from thefiscal year under review, what was stated as “Reserve for quality
assurance” in the previous fiscal year are separately stated as“Reserve for quality assurance” with regard to reserve for loss on
repair to be provided without compensation, which is projected tooccur after the end of projects, and “Reserve for loss on project”
concerning reserve for future loss, projected to be incurred about
ongoing projects.
“Reserve for quality assurance” in the previous fiscal year,
which amounted to ¥74,301 thousand, did not include what fell
under “Reserve for loss on project.”(Consolidated statements of income)“Foreign exchange losses” was separately reported in the
non-operating expenses account in the previous fiscal year.”
Foreign exchange gains” (¥8,486 thousand in the fiscal year underreview) was posted in the fiscal year under review. However, as
the amount of foreign exchange gains is insignificant, the subject
item was included in the “Other” section.
_________(Consolidated statements of income)“Foreign exchange gains” (¥8,486 thousand in the previous
fiscal year) was included in the “Other” section of the
non-operating income account in the previous fiscal year. “Foreignexchange losses” was posted in the fiscal year under review. Since
the amount of foreign exchange losses exceeded 10/100 of the total
non-operating expenses in the period under review, the item inquestion was reported separately.
(Consolidated statements of cash flows)“Proceeds from collection of loans” (¥1,410 thousand in thefiscal year under review) under cash flows from investing
activities was separately reported in the previous fiscal year.
However, as the amount of proceeds from collection of loans is
insignificant, the subject item was included in the “Other” sectionin the fiscal year under review.
With the application of the “Accounting Standard forConstruction Contracts” (ASBJ Statement No. 15, December 27,2007) and the “Guidance on Accounting Standard for Construction
Contracts” (ASBJ Guidance No. 18, December 27, 2007) from thefiscal year under review, what was stated as “Increase (decrease) inreserve for quality assurance” in the previous fiscal year are
separately stated as “Increase (decrease) in reserve for quality
assurance” with regard to the increase (decrease) in reserve for loss
on repair to be provided without compensation, which is projected
to occur after the end of projects, and “Increase (decrease) inreserve for loss on project” concerning the increase (decrease) inreserve for future loss, projected to be incurred about ongoingprojects.
Of ¥102,146 thousand in “Decrease in reserve for quality
assurance” in the previous fiscal year, ¥176,447 thousand fell
under “Decrease in provision for loss on project.”- 36 -

Notes(Notes to consolidated balance sheet)(in thousands of yen unless otherwise noted)

Fiscal 2009
(December 31, 2009)

Fiscal 2010
(December 31, 2010)*1. Investments in non-consolidated subsidiaries and affiliates
Investment securities (stocks)¥309,997*1. Investments in non-consolidated subsidiaries and affiliates
Investment securities (stocks)¥336,955*2. Total asset impairment losses are included in accumulated
depreciation*2. Same as on the left.

*3. Goodwill and negative goodwill
After offsetting goodwill against negative goodwill, net
goodwill is stated under negative goodwill of non-current
liabilities.
Before offsetting, the amounts of goodwill and negative
goodwill are as follows:
Goodwill¥11,007
Negative goodwill-¥113,235*3. Goodwill and negative goodwill
After offsetting goodwill against negative goodwill, net
goodwill is stated under negative goodwill of non-current
liabilities.
Before offsetting, the amounts of goodwill and negative
goodwill are as follows:
Goodwill¥3,831
Negative goodwill-¥56,617*4. Lawsuit
The Company initiated legal action in the Tokyo District Court
relating to payment of contract fees, etc. (¥1,462 million)
against NITTO DENKO CORPORATION as of November 30,
2009. The Company delivered the deliverables on September
4, 2009 in accordance with an agreement with NITTO
DENKO. However, NITTO DENKO did not recognize theaction by the Company as delivery and refused to pay thecontract fees etc. Against this backdrop, the Company initiatedlegal action.

*4. Lawsuit
Same as on the left.

_________*5. Of investment securities, ¥168,686 thousand is lent understock loan agreements.

_________

6. Discount of notes receivable(Notes to consolidated statements of income)¥1,519(in thousands of yen unless otherwise noted)

Fiscal 2009
(from January 1, 2009 to December 31, 2009)

Fiscal 2010
(from January 1, 2010 to December 31, 2010)_________*1. Total of provision of reserve for loss on project
Amount of provision of reserve for loss on project included incost of sales¥7,000*2. Total amount of research & development expenditures
Research & development expenses included in selling, generaland administrative expenses¥50,715*2. Total amount of research & development expenditures
Research & development expenses included in selling, generaland administrative expenses¥85,072*3. Breakdown of loss on retirement of non-current assets
Buildings and structures¥497
Software¥313
Other¥5,314
Total¥6,125_________*3. Breakdown of loss on retirement of non-current assets
Buildings and structures¥4,012
Other
¥862
Total
¥4,874*5. Breakdown of losses on the disposal of fixed assets
Other
Total

*4. Breakdown of gain on sales of fixed assets
Land
Other
Total
_________¥6,068¥6,068- 37 -¥4,568¥3,066¥7,635Fiscal 2009
(from January 1, 2009 to December 31, 2009)

Fiscal 2010
(from January 1, 2010 to December 31, 2010)_________*7. Impairment losses
In the fiscal year under review, the Group reported impairment
losses of the following asset groups.

*6. Breakdown of loss on prior period adjustment¥41,549
Adjustment of impairment losses
reported in prior period
Adjustment of intangible fixed assets¥30,851
and others reported in prior period
Other¥26,812
Total¥99,214*7. Impairment losses
In the fiscal year under review, the Group reported impairment
losses of the following asset groups.

(1) Main assets on which impairment losses were recognized(1) Main assets on which impairment losses were recognized

Use
Food retail businessType
Buildings, land, and
other

Use
In-house system
ASP accounting business

Location-Type
Software
Other

Location-(2) Background of the recognition of impairment losses
As the revitalization business for the food retail industry
continued to be weak due to sluggish consumer spending,the Group reduced the book values of asset groups in thefood retail business to recoverable values.

(2) Background of the recognition of impairment losses(i) As the Group changed to a policy to adopt the latest
outside software and the state-of-the-art proprietary
design method of the Company for the developmentof in-house systems under development in and after
the following fiscal year, what cannot be utilized bysuch new technologies and new design method
occurred in existing deliverables. The Group
recognized the portion that cannot be utilized as
impairment losses.
(ii) The Group reviewed business plans at subsidiaries in
response to the cautious stance of the financial
industry toward IT investment. As a result, the Group
reduced the whole amount of book values of asset
groups in the consulting business for financial
companies, which amounted to ¥17,979.

(3) Amounts of impairment losses
Buildings and structures
Land
Other
Total

(3) Amounts of impairment losses
Software
Other
Total

¥177,560¥36,302¥35,915¥249,777¥242,785¥17,979¥260,764(4) Asset grouping method
The Company groups assets by businesses in terms ofmanagement accounting and by stores in terms of the foodretail business, which it regards as the smallest units thatgenerate almost independent cash flows.

(4) Asset grouping method
The Company groups assets by businesses in terms ofmanagement accounting, which it regards as the smallest
units that generate almost independent cash flows.

(5) Calculation method of recoverable amounts
The recoverable value is the higher of either of the net
selling price or the use value. The net selling price iscalculated based on real estate appraisal, and the use value
is calculated by discounting estimated future cash flows at
3% (capital costs).

(5) Calculation method of recoverable amounts
With regard to in-house systems, the Company measures
recoverable amounts based on use value, and reports
impairment losses, judging the use value of existing
deliverables that cannot be used to be zero. As for assets
for the consulting business for financial companies, theCompany measures recoverable amounts based on use
value, and values the use value of such assets as zero after
estimating the use value based on future cash flows.
_________*8. Office transfer expenses
Office transfer expenses include: expenses for restoration tooriginal condition; expenses for cancellation of lease contracts;
and loss on retirement of non-current assets.

- 38 -

(Statements of changes in shareholders' equity)
Fiscal 2009 (from January 1, 2009 to December 31, 2009)
1. Matters related to the types and numbers of outstanding stocks and treasury stocks
Number of stocks at
the end of theprevious fiscal year

(Unit: Shares)
Number of stocks at
the end of this fiscal
year

Number of stocks
decreased during
this fiscal year

Number of stocks
increased during
this fiscal year

Outstanding stocks
Common stockTotal

476,640--

476,640

476,640--

476,640

37,261

2,747

20,00020,008Treasury stock
Common stock (*)

Total
37,261
2,747
20,00020,008(Note) 2,747 treasury stocks of common stock increased owing to the acquisition resolved by the Board of Directors, and 20,000
treasury stocks of common stock decreased owing to the disposal of treasury stock for a third-party allocation underwritten by
SG Holdings Co., Ltd.
2. Matters related to dividends(1) Dividends paid

Resolution

Stock type

Total dividend
amount(in thousands ofyen)

Ordinary general meeting ofshareholders held on March
19, 2009

Common stock

703,006

Dividends per
share
(yen)
1,600

Base date

Effective date

December 31,
2008

March 23, 2009

(2) Among dividends for which the record date falls within the fiscal year under review, the dividend for which the effective dateof payment falls in the next fiscal year is as follows:

Resolution

Stock type

Total dividend
amount(in thousandsof yen)Ordinary general meeting ofshareholders held on March
19, 2010

Commonstock

730,611- 39 -

Source offunds fordividends

Dividends per
share
(yen)

Retainedearnings

1,600

Base date

December
31,2009

Effective date

March 23,2010

Fiscal 2010 (from January 1, 2010 to December 31, 2010)1

Matters related to the types and numbers of outstanding stocks and treasury stocks
Number of stocks at
the end of theprevious fiscal year

Number of stocks
increased during thisfiscal year

Number of stocks
decreased during thisfiscal year

Number of stocks at
the end of this fiscal
year476,640--

476,640

476,640--

476,640

20,008--20,00820,008--20,008

Outstanding stocks
Common stock
Total
Treasury stock
Common stock
Total
2. Matters related to dividends(1) Dividends paid

Resolution

Stock type

Total dividend
amount(thousands ofyen)

Ordinary general meeting ofshareholders held on March
19, 2010

Common stock730,611

Dividends per
share
(yen)

Base date

Effective date

1,600

December
31,2009

March 23, 2010

(2) Among dividends for which the record date falls within the fiscal year under review, the dividend for which the effective dateof payment falls in the next fiscal year is as follows:

Resolution
Ordinary general meeting ofshareholders held on March
22, 2011

Stock type

Total dividend
amount(thousands ofyen)

Source offunds fordividends

Dividends per
share
(yen)

Base date

Effective date

547,958

Retainedearnings

1,200

December
31,2010

March 23,
2011

Commonstock(Notes regarding consolidated statements of cash flows)(in thousands of yen unless otherwise noted)

Fiscal 2009
(from January 1, 2009 to December 31, 2009)*1. Cash and cash equivalents at the end of the fiscal year andamounts stated in consolidated balance sheet
Cash and deposits
Time deposits for which thedepositing term is over three months
Cash and cash equivalents:

Fiscal 2010
(from January 1, 2010 to December 31, 2010)*1. Cash and cash equivalents at the end of the fiscal year andamounts stated in consolidated balance sheet¥3,785,549

Cash and deposits
Time deposits for which the depositing
term is over three months
Cash and cash equivalents:______-¥200,000¥3,585,549*2. Increase (decrease) in accounts receivable under cash flows
from operating activities includes ¥1,337,175 thousand, which
was transferred from Accounts receivable to Accounts
receivable-other.

- 40 -¥5,233,036-¥80,000¥5,153,036

(Securities)
Fiscal 2009 (ended December 31, 2009)
1. Marketable securities(in thousands of yen)Type

Acquisition cost

Amount stated in
B/S

134,545251,015

116,470---(1) Stocks

Difference(2) Bonds
Securities stated in
B/S whose amountexceeds acquisition
cost

1) Central/local government bonds2) Corporate bonds

-

-

-

3) Other---(3) Other---

134,545251,015

116,470

120,402

109,065(11,336)---

Subtotal(1) Stocks(2) Bonds
Securities stated in
B/S whose amount
does not exceed
acquisition cost

1) Central/local government bonds2) Corporate bonds

-

-

-

3) Other---(3) Other---

120,402

109,065(11,336)

Subtotal

Total
254,947
360,081
105,134
Notes: Impairment losses of ¥111,786 thousand were posted for other securities for which the market price was available.
When the market value of the securities at the end of the fiscal year had declined by more than 50% from the acquisition price,
the full value was written off as an asset impairment loss. When the market value declined by 30%-50% from the acquisition
price, the Group decided whether or not to write off the amount as an asset impairment loss after considering whether the total
amount of this decline in value was significant, and considering the likelihood of a recovery in value.
2. Other securities” sold in fiscal 2009 (from January 1, 2009 to December 31, 2009)
Sale value
Total profits on sale
102,8173(in thousands of yen)
Total losses on sale

70,457

Non-marketable securities
Type(in thousands of yen)Amount stated in B/S(1) Stocks of subsidiaries and affiliates

309,997(2) Other securities:
Non-listed stocks

1,188,708

Corporate bonds
24,300Notes: 1. Impairment losses of ¥19,220 thousand were posted for other securities (unlisted shares).
2. Allowance for doubtful accounts of ¥23,800 thousand was set for other securities (corporate bonds).
The amount stated in B/S in the table represents the amount before the deduction of allowance for doubtful accounts.

- 41 -

4. Amount of payments receivable on other securities that have maturity dates but on which payments have not yet been made(in thousands of yen)Over one year but
Over five years
Type
Within one year
Over ten years
within five years
butwithin ten years
1. Bonds(1) Central / local government bonds(2) Corporate bonds(3) Other
Total

-

-

-

-

11,70012,600

-

-

-

-

-

-

11,70012,600--Fiscal 2010 (ended December 31, 2010)
1. Other securities:(in thousands of yen)Amount stated in
B/S

Acquisition cost

253,103

101,121

151,9811) Central / local government bonds

-

-

-

2) Corporate bonds

-

-

-

3) Other---(3) Other---

Subtotal

253,103

101,121

151,981(1) Stocks

69,371

82,935(13,564)

1) Central / local government bonds

-

-

-

2) Corporate bonds

-

-

-

3) Other---(3) Other---

69,371

82,935(13,564)

322,474

184,056

138,417Type(1) Stocks

Difference(2) Bonds
Securities stated in
B/S whose amountexceeds acquisition
cost(2) Bonds
Securities stated in
B/S whose amount
does not exceed
acquisition cost

Subtotal
Total

Notes: Unlisted shares, etc. (the amount stated in B/S: ¥1,119,130 thousand) are not included in “Other securities” in the table, since
they have no market price and it is deemed to be very difficult to grasp their market value.

- 42 -

2. “Other securities” sold in fiscal 2010 (from January 1, 2010 to December 31, 2010)
Type
Sale value
Total profits on sale(1) Stocks(in thousands of yen)
Total losses on sale82,62430,51823,993

1) Central / local government
bonds

-

-

-

2) Corporate bonds

-

-

-

3) Other

-

-

-

-

-

-

82,62430,51823,993(2) Bonds(3) OtherTotal
3. Securities for which impairment losses are recognized

In the fiscal year under review, impairment losses of ¥73,430 thousand were posted for securities (unlisted shares among othersecurities, for which the market price was not available: ¥73,430 thousand). When the market value of the securities at the end of
the fiscal year had declined by more than 50% from the acquisition price, the full value was written off as an asset impairment
loss. When the market value declined by 30%-50% from the acquisition price, the Group decided whether or not to write off theamount as an asset impairment loss after considering whether the total amount of this decline in value was significant, andconsidering the likelihood of a recovery in value.

(Derivative transactions)
There are no applicable items, since the Group does not utilize derivative transactions.

- 43 -(Tax effect accounting)(in thousands of yen unless otherwise noted)
Fiscal 2009
(December 31, 2009)
1. Breakdown of major causes for deferred tax assets andliabilities[Current]
Deferred tax assets:¥163,254
Losses carried forward for tax
purposes¥63,235
Office transfer expenses¥35,173
Enterprise tax payable¥30,233
Reserve for quality assurance¥25,069
Excess amount over the maximum
reserve for bonus¥12,002
Office tax payable¥37,988
Other¥366,957
Subtotal of deferred tax assets-¥181,302
Valuation allowance¥185,654
Total deferred tax asset[Non-current]
Deferred tax assets:¥947,699
Losses carried forward for tax
purposes¥400,502
Depreciation excess¥172,854
Loss on valuation of investment
securities¥41,826
Allowance for retirement benefits¥27,176
Excess amount over the maximum
provision of allowance for
doubtful accounts
¥252
Other
¥1,590,312
Subtotal of deferred tax assets-¥1,371,439
Valuation allowance¥218,873
Total deferred tax asset
Deferred tax liabilities:¥39,563Net
unrealized
gainonavailable-for-sale securities¥68,960
Taxable temporary differences,consolidated¥7,784
Reserve for programs¥2,012
Other¥118,320
Total deferred tax liabilities¥100,552
Net deferred tax assets
2. Breakdown of difference between the normal effective
statutory tax rate and the rate of income taxes after applicationof deferred tax accounting
Normal effective statutory tax rate
(Adjustment)
Amortization of goodwill
Valuation allowance
Inhabitant tax, flat-rate
Other
Rate of income taxes after applicationof deferred accounting

Fiscal 2010
(December 31, 2010)
1. Breakdown of major causes for deferred tax assets andliabilities[Current]
Deferred tax assets:
Enterprise tax payable
Reserve for quality assurance
Excess amount over the maximum
reserve for bonus
Office tax payable
Retirement benefits payable
Other
Subtotal of deferred tax assets
Valuation allowance
Total deferred tax asset[Non-current]
Deferred tax assets:
Losses carried forward for tax
purposes
Depreciation excess
Loss on valuation of investment
securities
Other
Subtotal of deferred tax assets
Valuation allowance
Total deferred tax asset
Deferred tax liabilities:
Net
unrealized
gainonavailable-for-sale securities
Taxable temporary differences,consolidated
Reserve for programs
Total deferred tax liabilities
Net deferred assets¥69,396¥57,688¥40,468¥11,519¥48,582¥41,347¥269,003-¥80,720¥188,282¥1,345,298¥449,421¥203,685¥31¥1,998,436-¥1,760,115¥238,321¥45,549¥76,118¥1,556¥123,224¥115,096

2. Breakdown of difference between the normal effective
statutory tax rate and the rate of income taxes after applicationof deferred tax accounting

40.7%

-2.5％

Normal effective statutory tax rate
(Adjustment)
Amortization of negative goodwill
Valuation allowance
Inhabitant tax, flat-rate
Other

48.0％

Rate of income taxes after
application of deferred accounting

1.3%
7.3%
1.2%

- 44 -

40.7%
-1.0%
2.3%
0.9%
1.1％
44.0％

(Segment information)(a) Business segment information
Fiscal 2009 (from January 1, 2009 to December 31, 2009)
IT
Consulting
BusinessI(in thousands of yen)
Corporate
Revitalization/
New Business
Cultivation
Business

Package &ServiceBusiness

Total

Elimination or
corporate

Consolidated

Net sales and operating
income (or loss)
Net sales(1) Net sales to outsideclients

15,196,383

3,953,011

4,508,953

23,658,348

66

23,658,414

2,400

260,10250,302

312,804(312,804)

-

Total

15,198,783

4,213,113

4,559,255

23,971,152(312,738)

23,658,414

Operating expenses

12,408,584

4,229,559

4,662,532

21,300,677(260,967)

21,039,709

Operating income (loss)

2,790,198(16,446)(103,276)

2,670,475(51,770)2,618,704

7,391,047

1,503,136

713,939

9,608,123

2,949,119

12,557,243

357,540

85,55856,083

499,183

2,228

501,412--249,777

249,777-

249,777

200,241

26,23095,527321,999-

321,999(2) Inter-segment sales ortransfer

II Assets, depreciation,
impairment losses andcapital expenditures
AssetsDepreciation
Impairment losses
Capital expenditures

Fiscal 2010 (from January 1, 2010 to December 31, 2010)I(in thousands of yen)

IT
Consulting
Business

Package &ServiceBusiness

Corporate
Revitalization/New
Business
Cultivation
Business(1) Net sales to outsideclients

13,951,554

4,158,491

4,528,645(2) Inter-segment sales ortransfer

30,294

257,507

Total

13,981,848

Operating expenses
Operating income (loss)

Eliminationor corporate

Consolidated

22,638,691

463

22,639,154

30,213

318,015(318,015)-

4,415,998

4,558,859

22,956,706(317,551)

22,639,154

10,986,799

4,245,595

4,599,717

19,832,113(334,002)

19,498,110

2,995,049

170,403(40,858)

3,124,593

16,4503,141,043

8,818,270

1,970,463

663,265

11,451,999

2,479,641

13,931,640

Depreciation

152,033

48,961

44,910245,904

2,228

248,133

Impairment losses

252,554

8,210

41,549302,314-302,314

Capital expenditures

89,23760,746

95,879245,862-

245,862

Total

Net sales and operating
income (or loss)
Net sales

II Assets, depreciation,
impairment losses andcapital expenditures
Assets- 45 -

Notes: 1. Method of classifying business segments
Business segments are classified according to the contents of businesses.
2. Main products in each business segment
Business segment

Business operations

IT
Consulting
Business
Package & Service
Business

To provide solutions by establishing information systems with cutting-edge IT and practical,
advanced techniques, while sharing clients’ managerial issues from the viewpoint ofmanagement and understanding the essence of clients’ businesses.

Helping clients improve their operational efficiency by using ASP operations to sell or provide
software packages for highly specialized fields. Such as sales management and ERP, and todevelop mission-critical systems on a commission basis.
Corporate
To get deeply involved in the management team of client firms, quickly revitalize client firms
Revitalization/New
through drastic reform focusing on IT, and establish models of success for each industry. In
Business Cultivation forming alliances with companies operating businesses that the Group does not run, andBusinessfounding and making investments in the new firms, the Group maximizes these companies’
value and accelerates their growth by using and combining the Company’s know-how andtechnologies in management, operations, and overall IT, aiming to contribute to thedevelopment of these companies’ industries.
3. The amount of assets which were included under “Elimination or corporate” was ¥4,037,550 thousand in the previous fiscal
year and ¥3,162,842 thousand in the fiscal year under review, and these assets consist mainly of surplus funds (cash andsecurities) and assets relating to the administration sector.
4. Of the impairment losses for the fiscal year under review, ¥41,549 thousand is adjustment of the amount of impairment losses
posted for the prior period and included in loss on the prior period adjustment.
b. Geographical segment information
Domestic operations accounts for more than 90% of consolidated sales and assets in the previous and the period under review.
Geographical segment information is therefore omitted.
c. Overseas sales
In the previous and the period under review, sales from overseas operations accounts for less than 10% of consolidated sales.
Overseas sales information is therefore omitted.

- 46 -

(Per share data)(in yen)Fiscal 2009
(from January 1, 2009 to
December 31, 2009)

Fiscal 2010
(from January 1, 2010 to
December 31, 2010)

Net asset value per share¥21,422.20¥23,349.47

Net income per share¥2,719.50¥3,485.23

Fully diluted net income per share isnot stated because the average stock
price during the period is below theexercise price of stock acquisitionrights and hence net income per shareis not diluted.

Fully diluted net income per share isnot stated because the average stock
price during the period is below theexercise price of stock acquisitionrights and hence net income per shareis not diluted.

Net income per share (fully diluted)

Notes: Net income per share is calculated based on the following:
Fiscal 2010
(from January 1, 2010 to
December 31, 2010)

Fiscal 2009
(from January 1, 2009 to
December 31, 2009)
Net income per share
Net income (thousands of yen)

1,204,802

1,591,467

Amount not available for commonshareholders to common shares(thousands of yen)--

Net income attributable to commonshares (thousands of yen)

1,204,802

1,591,467

443,023456,632

Stock options granted by resolution of
the Ordinary General Meeting of
Shareholders on March 24, 2005
(Stock acquisition rights: 1,150 units)
Common stock: 4,600 shares

Stock options granted by resolution of
the Ordinary General Meeting of
Shareholders on March 24, 2005
(Stock acquisition rights: 996units)
Common stock: 3,984 shares

Average outstanding shares of common
stock during the period (shares)
Latent shares that have no dilution effect and thus are
not included in the calculation of diluted net income
per share- 47 -

(Significant subsequent events)
Fiscal 2009
(from January 1, 2009 to December 31, 2009)

Fiscal 2010
(from January 1, 2010 to December 31, 2010)──────

Company split
At the Board of Directors meeting of the Company and that of Elm
Corporation, a consolidated subsidiary of the Company, both held
on February 8, 2011, the following were decided concerning
absorption-type company split, through which Elm Corporation
will succeed the Company’s package solution business for small
and midsize companies.
1. Purpose of the company split
To establish a system that can provide high-value-added
services more quickly to satisfy IT system needs that are
expected to continue to increase, by realigning and enhancing
the IT solution business for small and midsize companies,
which is dispersed within the Group
2. Operations and scale of business to be spun off(1) Business operations
Business concerning services relating to the introductionof “NewRRR” application software in accordance withbusiness characteristics of small and midsize companies
and maintenance services after the introduction of thesaid system(2) Net sales (Fiscal year ended December 2010)¥449 million
3. Form of company split
Absorption-type company split, with the Company as the
splitting company and Elm Corporation as the succeedingcompany
4. Name, assets, liabilities and net assets of the succeedingcompany in the company split(1) Name
Elm Corporation(2) Assets¥1,218 million(3) Liabilities¥375 million(4) Net assets¥843 million
5. Time of the company split
April 1, 2011 (planned)
6. Other important matters
Elm Corporation plans to change its trade name to “Future
One, Inc.” on the effective date, subject to a resolution at theOrdinary General Meeting of Shareholders of Elm
Corporation, scheduled to be held in late March 2011.

(Notes that are not stated)
Notes to lease transactions, financial instruments, retirement benefits, stock options, corporate consolidations, real estate forleasing, and related party transactions are not stated since disclosure is deemed unnecessary.

- 48 -

5. Non-consolidated Financial Statements(1) Non-consolidated balance sheets

Fiscal 2009
(December 31, 2009)
AssetsCurrent assets
Cash and deposits
Accounts receivable
Merchandise and finished goods
Work in process
Prepaid expenses
Deferred tax assets
Short-term loans to subsidiaries and affiliates
Accounts receivable-other
Other
Allowance for doubtful accounts
Total current assets
Fixed assets
Tangible fixed assets
Buildings
Accumulated depreciation
Buildings, net
Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures, net
Land
Total tangible fixed assets
Intangible fixed assets
Goodwill
Patent right
Trademark right
Software
Other
Total intangible fixed assets
Investments and other assets
Investment securities
Stocks of subsidiaries and affiliates
Long-term loans to affiliated companies
Deferred tax assets
Lease and guarantee deposits
Other
Allowance for doubtful accounts
Reserve for investment losses
Total investments and other assets
Total fixed assets
Total assets*1, *3*1- 49 -

3,067,270
1,802,523
28
926
267,467
113,593240,000
1,481,592
24,750(2,412)
6,995,740(in thousands of yen)
Fiscal 2010
(December 31, 2010)*3

4,202,350
2,410,164
8,007
253,852
107,567
120,000
1,422,568
16,092
8,540,603

421,320(212,976)
208,344
1,015,628(825,281)
190,346
23,719422,409424,270(236,728)
187,541
997,587(844,666)
152,920
23,719364,181

1,031
706
1,983
387,700
10,710402,132525
1,237
122,631
10,710135,104

1,155,011
1,316,355
1,069,238
31,429824,334
60,338(388,394)(313,788)
3,754,526
4,579,068
11,574,808*4*1

1,117,404
1,286,445
1,110,226
98,246
647,705
22,060(486,792)(313,788)
3,481,505
3,980,792
12,521,396

Fiscal 2009
(December 31, 2009)(in thousands of yen)
Fiscal 2010
(December 31, 2010)

Liabilities
Current liabilities
Accounts payable
Short-term borrowings
Long-term borrowings due within one year
Accounts payable-otherAccrued expenses
Income tax payable, etc.
Consumption tax payable, etc.
Deposits received
Deferred revenues
Reserve for quality assurance
Reserve for loss on projects
Total current liabilities
Fixed liabilities
Long-term borrowings
Total fixed liabilities
Total liabilities
Net assets*1

Shareholders’ equity
Common stock
Capital surplus
Capital reserves
Other capital surplus
Total capital surplus
Retained earnings
Legal retained earnings
Other legal retained earnings
Retained earnings brought forward
Total retained earnings
Treasury stock
Total shareholders’ equity
Valuation, translation adjustments, etc.
Net unrealized gain (loss) on available-for-sale securities
Total valuation, translation adjustments, etc.
Total net assets
Total liabilities and net assets- 50 -

191,228300,000
32,000430,050413
343,103
61,996
189,878
162,716
74,301
1,785,688

236,600
32,000400,669248
857,329
73,175
159,788
169,474
58,0317,000
1,994,316

48,00048,0001,833,688

16,00016,0002,010,316

1,421,815

1,421,815

2,495,772
2,495,772

2,495,772
2,495,772

27,74827,7486,905,097
6,932,845(1,171,668)
9,678,764

7,655,316
7,683,065(1,171,668)
10,428,984

62,35562,3559,741,120
11,574,808

82,09582,095
10,511,079
12,521,396

(2) Non-consolidated statements of income
Fiscal 2009
(from January 1, 2009 to
December 31, 2009)
Net sales
IT Consulting Business
IT Consulting service
Procurement services related to hardware
Total of IT Consulting Business
Package & Service Business
Package & service
Procurement services related to hardware
Total of Package & service
Total net sales
Cost of sales
IT Consulting Business
IT Consulting service
Procurement services related to hardware
Total of IT Consulting Business
Package & Service Business
Package & service
Procurement services related to hardware
Total of Package & service
Total cost of sales
Gross profit
Selling, general and administrative expenses
Advertising costs
Officers’ remuneration
Salaries and bonuses
Miscellaneous salaries
Welfare expenses
Employee training expenses
Research & development expenditures
Depreciation
Rents
Recruitment expenses
Amortization of goodwill
Other
Total selling, general and administrative expenses
Operating income

*10

*1

- 51 -(in thousands of yen)
Fiscal 2010
(from January 1, 2010 to
December 31, 2010)

14,605,155
249,377
14,854,532

12,986,988
776,994
13,763,983

514,516
31,875546,392
15,400,924

498,456
28,053
526,509
14,290,493

8,692,756
215,956
8,908,713

6,935,230
636,653
7,571,884

290,459
26,307316,766
9,225,480
6,175,444

256,638
23,777
280,416
7,852,301
6,438,192

218,717
246,702
1,518,792
134,538
30,311
261,750
20,966
102,574
319,099
77,407
102,993415,5123,449,367
2,726,077

370,442
160,850
1,637,210
97,22566,795
107,633
49,34445,056
332,80182,504
1,031
447,447
3,398,344
3,039,847*1

Fiscal 2009
(from January 1, 2009 to
December 31, 2009)
Non-operating income
Interest income
Dividends income
Proceeds from compensation for damage
Group management expense
Foreign exchange gains
Other
Total non-operating income
Non-operating expenses
Interest expenses
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gains on sale of investment securities
Gain on sales of fixed assets
Total extraordinary income
Extraordinary losses
Losses on sales of non-current assets
Loss on retirement of non-current assets
Losses on the sale of investment securities
Loss on valuation of stocks of subsidiaries and affiliates
Provision of reserve for investment losses
Impairment losses
Litigation expenses
Office transfer expenses
Provision of allowance for doubtful accounts
Other
Total Extraordinary losses
Net income before taxes
Corporate, residential and enterprise taxes
Corporate tax adjustments
Total income taxes
Net income

*2
*2

*2

*2

*3

*4
*5

*6

*8
*9

- 52 -

16,27424,911
2,219
1,993
10,801
56,201(in thousands of yen)
Fiscal 2010
(from January 1, 2010 to
December 31, 2010)*2*2

11,3402,771
14,111
2,768,166
58,233532
58,765
6,068
4,808
313,788
101,286
310,394
736,346
2,090,586
814,924
229,507
1,044,432
1,046,153

14,274
16,94011,14027,982
6,712
77,051
3,419
3,303
2,062
8,785
3,108,112

*3

*5

*7

*9

29,391
3,066
32,4584,344
23,99329,970242,785
30,000128,398
15,177474,668
2,665,902
1,259,405(74,333)
1,185,071
1,480,830

Statement of cost of sales
1. IT Consulting Business(1) IT Consulting service(in thousands of yen)
Fiscal 2009
(from January 1, 2009
to December 31, 2009)
Item

Ratio
(%)

AmountLabor expenses
1. Salaries and bonuses
2. Welfare expenses
II Subcontract expenses
1. Subcontract expenses
III Overheads
1. Traveling expenses
2. Depreciation
3. Rents
4. Supplies expenses
5. Provision (reversal) of reserve for
quality assurance
6. Provision (reversal) of reserve for loss
on project
7. Other
Total manufacturing expenses in the
periodWork in process at the beginning of
the period
TotalWork in process at the end of theperiodTransfer to other accounts (*1)
Cost of sales

Fiscal 2010
(from January 1, 2010
to December 31, 2010)
Ratio
(%)

AmountI

3,736,767
456,163

4,192,931

48.2

3,653,991
471,058

4,125,049

59.5

2,964,294

2,964,294

34.1

1,725,167

1,725,167

24.9

1,086,073

15.6

6,936,290

100.0

669,106
250,386
412,060
102,339

372,006
99,662396,908
72,702(97,825)(12,856)

199,704

7,000
1,535,771

17.7

8,692,997

100.0

150,649--

8,692,997

6,936,290

-

-

240
8,692,756

1,059
6,935,230(Note) *1. The table below provides a breakdown of transfers to other accounts.

Item

Fiscal 2009
(from January 1, 2009
to December 31, 2009)

Transfer to selling, general and administrative
expensesTotal
2. Actual job-order costing for each project is used to compute costs.

- 53 -

Fiscal 2010
(from January 1, 2010
to December 31, 2010)

240

1,059

240

1,059

(2) Procurement services related to hardware(in thousands of yen)

Item

Fiscal 2009
(from January 1, 2009 to December 31,
2009)
Ratio
Amount(%)

Commodities inventories at the beginning of
the period
Product inventories at the beginning of theperiodPurchases of commodities during the period
Purchases of products during the period
Total
Commodities inventories at the end of theperiodProduct inventories at the end of the period
Cost of sales

10,523

-

3,415

-

201,711306
215,956

636,448204
636,653--

215,956

636,653(Note): Actual job-order costing for each project is used to compute costs.

- 54 -

Fiscal 2010
(from January 1, 2010 to December 31,
2010)
Ratio
Amount(%)

2. Package & Service Business(1) Package & service(in thousands of yen)

Fiscal 2009
(from January 1, 2009
to December 31, 2009)
Item

Ratio
(%)

AmountLabor expenses
1. Salaries and bonuses
2. Welfare expenses
II Subcontract expenses
1. Subcontract expenses
III Overheads
1. Traveling expenses
2. Depreciation
3. Rents
4. Supplies expenses
5.
Provision (reversal) of reserve for
quality assurance
6. Other
Total manufacturing expenses in the
periodWork in process at the beginning of theperiodTotal
Work in process at the end of the period
Transfer to other accounts (*1)
Cost of sales

Fiscal 2010
(from January 1, 2010
to December 31, 2010)
Ratio
(%)

AmountI

75,447
10,97986,427

34.4

122,661
17,395140,056

53.1

66,231

66,231

26.4

28,75628,756

10.9

94,95336.0

263,766

100.0

13,095
10,36736,205
5,791

15,544
4,026
32,6204,155(4,321)

3,586

37,28598,42539.2

251,084

100.0

35,02140,309926

291,394926
8
290,459

264,693
8,007
46
256,638(Note) *1 The table below provides a breakdown of transfers to other accounts.
(in thousands of yen)

Item

Fiscal 2009
Fiscal 2010
(from January 1, 2009 to December (from January 1, 2010 to December
31, 2009)
31, 2010)

Transfer to selling, general and administrative
expensesTotal
2. Actual job-order costing for each project is used to compute costs.

8

46

8

46

(2) Procurement services related to hardware
Fiscal 2009
(from January 1, 2009
to December 31, 2009)
Item

Ratio
(%)

AmountCommodities inventories at the beginning of
the period
Product inventories at the beginning of theperiodPurchases of commodities during the period
Purchases of products during the period
Total
Commodities inventories at the end of theperiodProduct inventories at the end of the period
Cost of sales- 55 -(in thousands of yen)
Fiscal 2010
(from January 1, 2010
to December 31, 2010)
Ratio
Amount
(%)

6,712

28

-

-

19,623
26,33623,74923,77728-

26,307

23,777

(3) Statements of changes in shareholders’ equity(in thousands of yen)
Fiscal 2010
(from January 1, 2010
to December 31, 2010)

Fiscal 2009
(from January 1, 2009
to December 31, 2009)
Shareholders’ equity
Common stock
Balance at the end of the previous period
Changes of items during the period
Total changes of items during the period
Balance at the end of the period
Capital surplus
Capital reserves
Balance at the end of the previous period
Changes of items during the period
Total changes of items during the period
Balance at the end of the period
Other capital surplus
Balance at the end of the previous period
Changes of items during the period
Disposal of treasury stock
Total changes of items during the period
Balance at the end of the period
Total capital surplus
Balance at the end of the previous period
Changes of items during the period
Disposal of treasury stock
Total changes of items during the period
Balance at the end of the period
Retained earnings
Legal retained earnings
Balance at the end of the previous period
Changes of items during the period
Total changes of items during the period
Balance at the end of the period
Other legal retained earnings
Retained earnings brought forward
Balance at the end of the previous period
Changes of items during the period
Dividends from surplus
Net income
Disposal of treasury stock
Total changes of items during the period
Balance at the end of the period- 56 -

1,421,815

1,421,815

1,421,815

1,421,815

2,495,772

2,495,772

2,495,772

2,495,772

370,405-(370,405)(370,405)--

2,866,178

2,495,772(370,405)(370,405)
2,495,772

2,495,772

27,74827,74827,74827,7486,581,744

6,905,097(703,006)
1,046,153(19,794)
323,352
6,905,097(730,611)
1,480,830
750,219
7,655,316

Fiscal 2009
(from January 1, 2009 to
December 31, 2009)
Total retained earnings
Balance at the end of the previous period
Changes of items during the period
Dividends from surplus
Net income
Disposal of treasury stock
Total changes of items during the period
Balance at the end of the period
Treasury stock
Balance at the end of the 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 the period
Total shareholders’ equity
Balance at the end of the previous period
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Disposal of treasury stock
Total changes of items during the period
Balance at the end of the period
Valuation, translation adjustments, etc.
Net unrealized gain (loss) on available-for-sale securities
Balance at the end of the previous period
Changes of items during the period
Changes in items other than the shareholders’ equity during the
fiscal year (net amount)
Total changes of items during the period
Balance at the end of the period
Total valuation, translation adjustments, etc.
Balance at the end of the previous period
Changes of items during the period
Changes in items other than the shareholders’ equity during the
fiscal year (net amount)
Total changes of items during the period
Balance at the end of the period
Total net assets
Balance at the end of the previous period
Changes of items during the period
Dividends from surplus- 57 -(in thousands of yen)
Fiscal 2010
(from January 1, 2010 to
December 31, 2010)

6,609,493

6,932,845(703,006)
1,046,153(19,794)
323,352
6,932,845(730,611)
1,480,830
750,219
7,683,065(2,252,724)(1,171,668)(90,144)
1,171,200
1,081,055(1,171,668)(1,171,668)

8,644,762

9,678,764(703,006)
1,046,153(90,144)
781,000
1,034,002
9,678,764(730,611)
1,480,830
750,219
10,428,984

179,601

62,355(117,245)

19,740(117,245)
62,35519,74082,095

179,601

62,355(117,245)

19,740(117,245)
62,35519,74082,0958,824,363

9,741,120(703,006)(730,611)

Fiscal 2009
(from January 1, 2009 to
December 31, 2009)
Net income
Purchase of treasury stock
Disposal of treasury stock
Changes in items other than the shareholders’ equity during the
fiscal year (net amount)
Total changes of items during the period
Balance at the end of the period- 58 -(in thousands of yen)
Fiscal 2010
(from January 1, 2010 to
December 31, 2010)

1,046,153(90,144)
781,000

1,480,830-(117,245)

19,740916,756
9,741,120

769,959
10,511,079

Notes regarding the premise of a going concern
Not applicable- 59 -

Significant Accounting Policies
Item
1. Valuation standards andmethods for securities

2. Valuation standards andmethod for inventories

3. Depreciation method of
fixed assets

Fiscal 2009
(from January 1, 2009 to December 31, 2009)

Fiscal 2010
(from January 1, 2010 to December 31, 2010)(1)

Stocks issued by subsidiaries/affiliates
Stated at cost based on moving averagemethod.

(1)

Stocks issued by subsidiaries/affiliates
Same as on the left.

(2)

Other securities:
Marketable securities:
Stated at fair value based on the market
price as of the end of the financial period(Unrealized holding gains/losses arereported as a net amount in a separate
component of shareholders’ equity. Costof sale is calculated based on moving
average method).
Non-marketable securities:
Stated at cost based on moving averagemethod.

(2)

Other securities:
Marketable securities:
Same as on the left.
Non-marketable securities:
Same as on the left.

(1)

Merchandise and finished goods
Stated at lower of cost or market using thegross average method (amounts in thebalance sheets are calculated using themethod to devaluate the book value
according to the decrease in profitability)(1)

Merchandise and finished goods
Same as on the left.

(2) Work in process:Stated at cost based on the specific cost
method (amounts in the balance sheets arecalculated using the method to devaluate thebook value according to the decrease inprofitability).

(2) Work in process:Same as on the left.

(1)

(1)

Tangible fixed assets
Declining balance method:
If the acquisition cost of the asset to be
depreciated is between ¥100,000 and¥200,000, it is depreciated evenly using
straight-line method over three (3) years.
Useful life are as follows:
Buildings
3 - 31 years
Tools, furniture and fixtures 3 - 10 years

Tangible fixed assets
Same as on the left.

(2) Intangible fixed assets(a) Software for in-house use
Software for in-house use is depreciatedusing the straight-line method over its
useful life (5 years).

(2) Intangible fixed assets(a) Software for in-house use
Same as on the left.

(b) Software for sale
Software for sale is depreciated by thelarger of either of the amount calculated
based on projected sales volume or theamount from the straight-line method overthe period for which they are expected toremain salable (3 years).

(b) Software for saleSame as on the left.

(c) Goodwill
Goodwill is amortized evenly over its usefullife.
However, if they are of little significance interms of monetary amounts they are treatedas profits or losses for the fiscal year inwhich they occur.

(c) Goodwill
Same as on the left.

(d) Other
Straight-line method(d) OtherSame as on the left.

- 60 -

Item
4. Accounting standards forallowances/ reserves

Fiscal 2009
(from January 1, 2009 to December 31, 2009)

Fiscal 2010
(from January 1, 2010 to December 31, 2010)(1)

Allowance for doubtful accounts
To prepare for losses incurred through bad
debts, the amount of potential loss iscalculated by using the historical loss ratio
in case of non-classified loans/receivables.
Potential
lossesforclassified
loans/receivables are individually assessed(1)

Allowance for doubtful accounts
Same as on the left.

(2)

Reserve for quality assurance
In projects related to open system
consultation and system development (ITconsulting services and Package & Service
business), where technological changes aretaking place rapidly, there are occasions
where we are obliged to provide services toour clients in order to resolve problems thatwere unforeseeable at the time of thesigning of the contract or as of the close ofaccounting period. There are instanceswhere Future Architect provides suchservices without compensation in order toguarantee quality standards that will fully
satisfy its customers in IT consulting
services and Package & Service business.
To prepare for additional cost of sales in IT
consulting services and Package & Service
business that may arise after sales arestated, estimated amount of such additionalcost, calculated based on past experience, isstated in the reserve for quality assurance.

(2)

Reserve for quality assurance
In projects related to open system
consultation and system development (ITconsulting services and Packaging &Services), where technological changes aretaking place rapidly, there are occasions
where we are obliged to provide services toour clients after sales are stated in order toresolve problems that were unforeseeable atthe time of the signing of the contract or asof the close of accounting period. There are
instances where Future Architect provides
such services without compensation in orderto guarantee quality standards that will fully
satisfy its customers in IT consulting
services and Packaging & Services.
To prepare for additional cost of sales in IT
consulting services and Package & Service
business that may arise after sales arestated, estimated amount of such additionalcost, calculated based on past experience, isstated in the reserve for quality assurance.

______________- 61 -(3) Reserve for loss on project
In projects related to open system
consultation and system development (ITconsulting services and Packaging &Services), where technological changes aretaking place rapidly, there are occasions
where we are obliged to provide services toour clients in order to resolve problems thatwere unforeseeable at the time of thesigning of the contract.
To prepare for future loss in IT consulting
services and Packaging & Services,estimated amount of such loss in and after
the following fiscal year is stated in thereserve for loss on project, concerning
ongoing projects for which loss is projected
to be incurred as of the end of the fiscal
year under review and for which it ispossible to rationally estimate the amount of
loss.

Item

Fiscal 2009
(from January 1, 2009 to December 31, 2009)

Fiscal 2010
(from January 1, 2010 to December 31, 2010)(Additional information)
Reserve for future loss expected to occur
concerning ongoing projects was previously
stated in the reserve for quality assurance.
However, with the application of the“Accounting Standard for Construction
Contracts” (ASBJ Statement No. 15,
December 27, 2007) and the “Guidance on
Accounting Standard for Construction
Contracts” (ASBJ Guidance No. 18,
December 27, 2007), reserve for future loss
projected to be incurred concerning ongoingprojects is stated in reserve for loss on
project from the fiscal year under review.

(4)

Reserve for investment losses
To prepare for losses on investments inaffiliated companies, estimated amount ofpotential losses, calculated in considerationof financial conditions and othercharacteristics of the relevant companies, isstated in the reserve for investment losses.
(Additional information)
With regard to stocks of subsidiaries andaffiliates, whose actual values declined but
are judged to be able to recover, theCompany decided to set aside reserve forinvestment losses from the standpoint offinancial soundness, since there areuncertain factors about future projections.
As a result, provision of reserve forinvestment losses increased by 313,788
thousand yen, and net income before taxed
decreased by the same amount.

(4) Reserve for investment losses
To prepare for losses on investments inaffiliated companies, estimated amount ofpotential losses, calculated in considerationof financial conditions and othercharacteristics of the relevant companies, isstated in the reserve for investment losses.

5. Recognition of sales andcost of sales

Cost of sales for IT consulting services isrecognized on an accrual basis for eachindividual project. Corresponding sales arerecognizedbasedon“percentage-of-completion method” bytaking the ratio of accrued cost to total
estimated cost of the project.

Same as on the left.

6. Other material
information concerning
the compiling of financial
statements

Accounting treatment of consumption taxes, etc.
Transactions subject to consumption taxes
are recorded at amounts exclusive ofconsumption taxes.

Accounting treatment of consumption taxes, etc.
Same as on the left.

- 62 -

Change in significant accounting policies
Fiscal 2009
(from January 1, 2009 to December 31, 2009)

Fiscal 2010
(from January 1, 2010 to December 31, 2010)(Accounting standard for lease transaction)
Finance lease transactions not accompanying the transfer ofproperty rights were previously accounted for in a manner similar
to the accounting treatment for regular lease transactions.
However, the Company applied “Accounting Standard for Lease
Transactions” (ASBJ No. 13 prescribed by the First Division of
Corporate Accounting Council on June 17, 1993, revised on March
30, 2007) and “Guidance on Accounting Standard for Lease
Transactions” (ASBJ Guidance No. 16 prescribed by the
Accounting System Committee of Public Accountant Associationof Japan on January 18, 1994, revised on March 30, 2007) from thefiscal year under review, and finance lease transactions notaccompanying transfer of property rights have been accounted forin a similar manner to the accounting treatment for regular saletransactions. Also, straight line method is applied to depreciationof leased assets, with leasing period as useful life and residual
value as zero. For finance lease transactions without transfer ofproperty right, which commencement date of lease was before thefirst year of adopting the above standards, accounting procedure
based on regular lease transaction is applied continuously.
There is no effect of the above change of procedure to profit andloss.

(Accounting standard for construction contracts)
The “Accounting Standard for Construction Contracts” (ASBJ
Statement No. 15, December 27, 2007) and the “Guidance on
Accounting Standard for Construction Contracts” (ASBJ GuidanceNo. 18, December 27, 2007) were applied effective of the fiscal
year under review.
This adoption had no effect on the Company’s earnings for the
fiscal year under review.

Change in classification
Fiscal 2009
(from January 1, 2009 to December 31, 2009)

Fiscal 2010
(from January 1, 2010 to December 31, 2010

(Balance sheets)
With the application of the “Cabinet Office Ordinance on Partial
Amendment of the Regulations on Terminology, Format andPreparation Method of Financial Statements, etc.” (Cabinet Office
Ordinance No. 50, August 7, 2008), what were stated as“Commodities” and “Products” in the previous fiscal year, arecollectively stated as “Merchandise and finished goods,” startingfrom the fiscal year under review. “Commodities,” which isincluded in the fiscal year under review, amounted to ¥28
thousand, with no outstanding balance of “Products” at the end of
the fiscal year.

(Balance sheets)
With the application of the “Accounting Standard forConstruction Contracts” (ASBJ Statement No. 15, December 27,2007) and the “Guidance on Accounting Standard for Construction
Contracts” (ASBJ Guidance No. 18, December 27, 2007) from thefiscal year under review, what was stated as “Reserve for quality
assurance” in the previous fiscal year are separately stated as“Reserve for quality assurance” with regard to reserve for loss on
repair to be provided without compensation, which is projected tooccur after the end of projects, and “Reserve for loss on project”
concerning reserve for future loss, projected to be incurred about
ongoing projects.
“Reserve for quality assurance” in the previous fiscal year,
which amounted to ¥74,301 thousand, did not include what fell
under “Reserve for loss on project.

(Income Statement)
Until the previous fiscal year, “Advertising costs” (¥56,272
thousand at the end of the previous fiscal year) were included in
the “Other” section of the selling, general and administrative
expenses account. However, since the amount exceeded 5/100 of
total selling, general and administrative expenses, they are now
stated separately.

______________- 63 -

Notes(Notes regarding balance sheets)(in thousands of yen unless otherwise noted)
Fiscal 2010
(December 31, 2010)

Fiscal 2009
(December 31, 2009)*1.

Items concerning affiliates
Assets and liabilities in relation to affiliated companies,
which are not separately stated, are as follows:
Accounts receivable-other:¥121,339
Reserve for investment losses-¥313,788
Short-term borrowings:¥300,000______________*3.

Lawsuit
The Company initiated legal action in the Tokyo District
Court relating to payment of contract fees, etc. (¥1,462
million) against NITTO DENKO CORPORATION as ofNovember 30, 2009.
The Company delivered the deliverables on September 4,2009 in accordance with an agreement with NITTO
DENKO. However, NITTO DENKO did not recognize theaction by the Company as delivery and refused to pay thecontract fees etc. Against this backdrop, the Company
initiated legal action.
______________*1.

Items concerning affiliates
Assets and liabilities in relation to affiliated companies,
which are not separately stated, are as follows:
Reserve for investment losses-¥313,788*2.

Debt guarantees
Guarantee against trade accounts payable to suppliers*3.

Guarantee

AmountUoei Shoten Corporation¥78,859

LawsuitSame as on the left.

*4. Of investment securities, ¥168,686 thousand is lent understock loan agreement.

(Notes regarding consolidated statements of income)(in thousands of yen unless otherwise noted)
Fiscal 2010
(January 1, 2010 to December 31, 2010)

Fiscal 2009
(January 1, 2009 to December 31, 2009)*1.

Total amount of research & development expenditures
Research & development expenses included in selling,
general and administrative expenses¥20,966*1.

Total amount of research & development expenditures
Research & development expenses included in selling,
general and administrative expenses¥49,344*2.

Transactions with group affiliates are summarized below:
Interest income¥14,115
Dividends income¥16,840
Group management expense¥2,219Interest expenses¥2,234*2.

Transactions with group affiliates are summarized below:
Interest income¥13,229
Group management expense¥27,982*3.

Breakdown of gain on sales of fixed assets*3.

Breakdown of gain on sales of fixed assets

Tools, furniture and fixtures
Total
*4.

Total

Total

¥3,066¥3,066______________¥6,068¥6,068*5.

Breakdown of loss on retirement of non-current assets
Buildings
Tools, furniture and fixtures

*6.

Total

¥532

Breakdown of losses on sales of fixed assets
Tools, furniture and fixtures*5.

Tools, furniture and fixtures¥532

Breakdown of loss on retirement of non-current assets
Buildings
Tools, furniture and fixtures¥497¥4,310Total¥4,808Provision of reserve for investment losses
Provision of reserve for investment losses is in relation toaffiliated companies.
- 64 -¥3,771¥573¥4,344______________

Fiscal 2009
(January 1, 2009 to December 31, 2009)

Fiscal 2010
(January 1, 2010 to December 31, 2010)______________

*7.

(1)

Impairment losses
In the fiscal year under review, the Group reported
impairment losses of the following asset groups.
Main assets on which impairment losses were recognizedUse

In-house system
(2)

(3)

(4)

(5)

*8.

*9.

*10.

Office transfer expenses
Office transfer expenses include: expenses for restoration tooriginal condition; expenses for cancellation of lease
contracts; and loss on retirement of non-current assets.
Provision of allowance for doubtful accounts
Provision of allowance for doubtful accounts is in relation
to affiliated companies.
Loss on valuation of inventories included in
Cost of sales

Type
Software

Software¥242,785

Total¥242,785

Asset grouping method
The Company groups assets by businesses in terms ofmanagement accounting, which it regards as the smallest
units that generate almost independent cash flows.
Calculation method of recoverable amounts
The Company measures recoverable amounts based on use
value, and reports impairment losses, judging the use valueof existing deliverables that cannot be used to be zero.

Provision of allowance for doubtful accounts
Same as on the left.
______________¥1,270- 65 --

Background of the recognition of impairment losses
As the Company changed to a policy to adopt the latest
outside software and the state-of-the-art proprietary design
method of the Company for the development of in-housesystems under development in and after the following
fiscal year, what cannot be utilized by such newtechnologies and new design method occurred in existing
deliverables. The Company recognized the portion thatcannot be utilized as impairment losses.
Amounts of impairment losses______________*9.

Location(Notes regarding statements of changes in shareholders’ equity)
Fiscal 2009 (from January 1, 2009 to December 31, 2009)
Type and number of treasury shares(Unit: Shares)

Number of shares at
end of fiscal 2008

Increase in numberof shares in fiscal
2009

Decrease in numberof shares in fiscal
2009

Number of shares at
end of fiscal 2009

37,261

2,747

20,00020,008Treasury stock
Common stock Notes:

Total
37,261
2,747
20,00020,008Notes: 2,747 treasury stocks of common stock increased owing to the acquisition resolved by the Board of Directors, and 20,000
treasury stocks of common stock decreased owing to the disposal of treasury stock for a third-party allocation underwritten by
SG Holdings Co., Ltd.
Fiscal 2010 (from January 1, 2010 to December 31, 2010)
Type and number of treasury shares(Unit: Shares)

Number of shares at
end of fiscal 2009

Increase in numberof shares in fiscal
2010

Decrease in numberof shares in fiscal
2010

Number of shares at
end of fiscal 2010

20,008--20,00820,008--20,008Treasury stock
Common stock
Total(Securities)
There were no stocks issued by subsidiaries or affiliates for which market price is available for the previous fiscal year (as ofDecember 31, 2009), and the fiscal year under review (as of December 31, 2010).

- 66 -(Tax effect accounting)(in thousands of yen unless otherwise noted)

Fiscal 2009
(December 31, 2009)

Fiscal 2010
(December 31, 2010)

1. Breakdown of major causes for deferred tax assets andliabilities

1. Breakdown of major causes for deferred tax assets andliabilities[Current][Current]

Deferred tax assets:

Deferred tax assets:

Office transfer expenses¥41,213Enterprise tax payable¥67,635

Enterprise tax payable¥33,322¥23,612Reserve for quality
assurance¥30,233

Reserve for quality
assurance
Office tax payable¥8,474

Office tax payable¥8,823

Other¥7,843

Total deferred tax asset¥113,593

Total deferred tax asset[Non-current][Non-current]

Deferred tax assets:

Deferred tax assets:¥107,567

Stocks of subsidiaries andaffiliates¥539,533

Stocks of subsidiaries andaffiliates¥551,728

Provision of reserve forinvestment losses¥127,680

Provision of reserve forinvestment losses¥127,680

Excess amount over the
maximum reserve for
doubtful accounts¥60,593

Excess amount over the
maximum reserve for
doubtful accounts¥112,705

Depreciation excess¥32,326

Depreciation excess¥105,128

Other

¥438

Subtotal of deferred tax assets¥760,572

Valuation allowance
Total deferred tax asset

Other
Subtotal of deferred tax assets¥897,679-¥689,580

Valuation allowance-¥753,886¥70,992

Total deferred tax asset¥143,795

Deferred tax liabilities:
Net unrealized gain on
available-for-sale securities¥438

Deferred tax liabilities:
Net unrealized gain on
available-for-sale securities¥39,563¥45,549

Total deferred tax liabilities¥39,563

Total deferred tax liabilities¥45,549

Net deferred tax assets¥31,429

Net deferred tax assets¥98,246

2. Breakdown of difference between the normal effective
statutory tax rate and the rate of income taxes after applicationof deferred tax accounting
Normal effective statutory tax rate

2. Breakdown of difference between the normal effective
statutory tax rate and the rate of income taxes after applicationof deferred tax accounting
Normal effective statutory tax rate

40.7%

40.7%

(Adjustment)(Adjustment)
Valuation allowance

8.9%

Taxes on retained profits

0.5%

Earnings excluded from dividends
income-0.4%

Valuation allowance

2.4%

2.0%

Earnings excluded from dividends
income-0.1%

Amortization of goodwill
Other

-1.2%

Inhabitant tax, flat-rate

0.3%

Rate of income taxes after applicationof deferred accounting

Added permanent difference

0.7%

50.0%

Rate of income taxes after applicationof deferred accounting

44.5%- 67 -

(Per share data)(in yen)Fiscal 2009
(from January 1, 2009
to December 31, 2009)

Fiscal 2010
(from January 1, 2010
to December 31, 2010)

Net asset value per share¥21,332.54

Net income per share¥2,361.40¥3,242.94

Fully diluted net income per share isnot stated because the average stock
price during the period is below theexercise price of stock acquisitionrights and hence net income per shareis not diluted.
Note: Net income per share is calculated based on the following:

Fully diluted net income per share isnot stated because the average stock
price during the period is below theexercise price of stock acquisitionrights and hence net income per shareis not diluted.

Net income per share (fully diluted)

Fiscal 2009
(from January 1, 2009
to December 31, 2009)¥23,018.71

Fiscal 2010
(from January 1, 2010
to December 31, 2010)

Net income per share
Net income for the period (in thousands ofyen)

1,046,153

1,480,830--

Net income for the period attributable tocommon shares (in thousands of yen)

1,046,153

1,480,830

Average outstanding shares of common
stock during the period (shares)

443,023456,632

Amount not available for commonshareholders (in thousands of yen)

Latent shares that have no dilution effect andthus are not included in the calculation ofdiluted net income per share

Stock options granted by resolution of
the Ordinary General Meeting of
Shareholders on March 24, 2005 (stockacquisition rights: 1,150 units)
Common stock: 4,600 shares- 68 -

Stock options granted by resolution of
the Ordinary General Meeting of
Shareholders on March 24, 2005 (stockacquisition rights: 996 units)
Common stock: 3,984 shares

(Significant subsequent events)
Fiscal 2009
(from January 1, 2009
to December 31, 2009)

Fiscal 2010
(from January 1, 2010
to December 31, 2010)______________

Company split
At the Board of Directors meeting of the Company and that of Elm
Corporation, a consolidated subsidiary of the Company, both held
on February 8, 2011, the following were decided concerning anabsorption-type company split, through which Elm Corporation
will succeed the Company’s package solution business for small
and midsize companies.
1. Purpose of the company split
To establish a system that can provide high-value-added
services more quickly to satisfy IT system needs that are
expected to continue to increase, by realigning and enhancing
the IT solution business for small and midsize companies,
which is dispersed within the Group
2. Operations and scale of business to be spun off(1) Business operations
Business concerning services relating to the introductionof “NewRRR” application software in accordance withbusiness characteristics of small and midsize companies
and maintenance services after the introduction of thesaid system(2) Net sales (Fiscal year ended December 2010)¥449 million
3. Form of company split
Absorption-type company split, with the Company as the
splitting company and Elm Corporation as the succeedingcompany
4. Name, assets, liabilities and net assets of the succeedingcompany in the company split(1) Name
Elm Corporation(2) Assets¥1,218 million(3) Liabilities¥375 million(4) Net assets¥843 million
5. Time of the company split
April 1, 2011 (planned)
6. Other important matters
Elm Corporation plans to change its trade name to “Future One,
Inc.” on the effective date, subject to a resolution at theOrdinary General Meeting of Shareholders of Elm Corporation,scheduled to be held in late March 2011.

(Omitted notes)
Notes to lease transactions are not stated since disclosure is deemed unnecessary.

- 69 -

6. Other(1) Changes in Directors
None(2) Other
Orders received (outstanding contracts)(in thousands of yen)
Fiscal 2009
(from January 1, 2009
to December 31, 2009)
Orders received

Fiscal 2010
(from January 1, 2010
to December 31, 2010)

Order backlog

Orders received

Order backlog

IT Consulting Business

13,058,767

3,131,047

15,491,466

4,670,958

Package & Service Business

3,447,873

598,783

4,257,228

697,057

27,901

2,167

48,711

6,597

16,534,542

3,731,998

19,797,406

5,374,613

Corporate Revitalization/New Business
Cultivation Business
Total- 70 -