Millions of Yen Thousands of U.S. Dollars (Note 1) 2010 2009 2010 Operating Activities: Income before income taxes and minority interests ¥ 3,863 ¥ 6,600 $ 41,525 Adjustments for: Income taxes—paid (7,052) (15,906) (75,793) Depreciation and amortization 32,916 35,158 353,788 Loss on impairment of long-lived assets 15,122 6,623 162,536 Amortization of goodwill 1,585 250 17,038 Amortization of negative goodwill (668) (441) (7,184) Increase in allowance for doubtful accounts 420 9,347 4,510 Foreign exchange loss 108 484 1,164 Loss on sales of or write-down of investments in securities 3,078 348 33,086 Equity in earnings of associated company (1,142) (12,279) Loss on sales and disposal of property, plant and equipment 1,845 1,819 19,829 Changes in assets and liabilities, net of effects: Decrease in trade notes and accounts receivable 2,252 32,470 24,201 Decrease in inventories 18,132 192 194,887 Decrease in trade notes and accounts payable (5,363) (16,094) (57,645) Increase (decrease) in allowance for loss on factory restructurings 559 (161) 6,010 Decrease in liability for employees’ retirement benefits (1,349) (17) (14,496) Decrease (increase) in prepaid pension expenses 1,060 (6,022) 11,394 Other 2,708 9,277 29,092 Total adjustments 64,211 57,327 690,138 Net cash provided by operating activities 68,074 63,927 731,663 Investing Activities: Decrease in time deposits 5,446 4,780 58,542 Purchases of marketable securities (178,358) (115,877) (1,917,005) Proceeds and redemption from sales of marketable securities 198,359 75,889 2,131,973 Acquisition of tangible and intangible fixed assets (25,645) (32,267) (275,638) Proceeds from sales of tangible and intangible fixed assets 2,262 1,975 24,309 Purchases of investment securities (9,241) (3,739) (99,326) Proceeds from sales and redemption of investment securities 50 4,970 535 Payments for the purchases of newly consolidated subsidiaries (Note 16) (9,554) (102,692) Increase in short-term loans (2,194) (2,374) (23,581) Payments for long-term loans (2,244) (2,127) (24,123) Collection of long-term loans 1,919 3,986 20,623 Purchases of money held in trust (13,500) (145,099) Proceeds from redemption of money held in trust 9,000 96,733 Payments for other investments (5,143) (1,361) (55,271) Collection of other investments 1,509 3,063 16,229 Net cash used in investing activities (27,334) (63,082) (293,791) Financing Activities: (Decrease) increase in short-term loans—net (4,714) 1,083 (50,665) Decrease in liquidation of receivables of trade among the consolidated companies—net (3,792) (1,214) (40,753) Proceeds from long-term debt 56,618 45,550 608,530 Repayments of long-term debt (63,495) (11,324) (682,450) Repayments of lease obligations (1,037) (366) (11,145) Repayments due to redemption of straight bonds (170) (530) (1,827) Proceeds from sales of treasury stock 1 9 11 Purchase of treasury stock (16) (35) (171) Dividends paid (11,156) (11,157) (119,906) Payments of cash dividends for minority shareholders of consolidated subsidiaries (64) (102) (690) Net cash (used in) provided by financing activities (27,825) 21,914 (299,066) Foreign Currency Translation Adjustments on Cash and Cash Equivalents (340) (1,886) (3,647) Net Increase in Cash and Cash Equivalents 12,575 20,873 135,159 Cash and Cash Equivalents, Beginning of Year 73,973 52,679 795,068 Increase in Cash and Cash Equivalents Due to New Consolidation of Subsidiaries 2,488 401 26,747 Increase in Cash and Cash Equivalents Due to the Merger of Non-Consolidated Subsidiaries 266 20 2,855 Cash and Cash Equivalents, End of Year ¥ 89,302 ¥ 73,973 $ 959,829 See notes to consolidated financial statements. Consolidated Statements of Cash Flows Annual Report 2010 JS Group Corporation 62 JS Group Corporation and Consolidated Subsidiaries  Years Ended March 31, 2010 and 2009