BRIEF STATEMENT OF CONSOLIDATED FINANCIAL RESULTS
FOR THE 2nd QUARTER OF THE FISCAL YEAR ENDING MARCH 2015
This is an English translation of summarized consolidated financial results prepared
for the convenience of non-resident shareholders. Should there be any inconsistency
between the translation and the official Japanese text, the latter shall prevail.

November 11, 2014
Company name: Faith, Inc. (Stock code 4295, Listed on TSE 1st section)(URL http://www.faith.co.jp/)
Representative: Hajime Hirasawa, CEO/President
Contact: Jiro Saeki, CFO/Director (Tel: +81-3-5464-7633)
Date of Submission of Securities Report: November 14, 2014
Starting Date of the Dividend Payment: December 10, 2014
Preparation of Supplementary Materials for Quarterly Financial Results: Applicable
Information Meeting for Quarterly Financial Results to be Held: Applicable (for Institutional
Investors and Analysts)
Amounts are rounded down to the nearest JPY 1 million.

1. Consolidated Results for the 2nd Quarter of the Fiscal Year Ending March 2015
(From April 1, 2014 to September 30, 2014)(1) Consolidated Operating Results
Percentages indicate changes compared with the 2nd quarter of the previous fiscal year

Net Sales

Q2 of the year ending

Millionsof yenOperating Income%

Millionsof yen%Ordinary Income
Millionsof yen%Net Income
Millionsof yen%March 2015

9,082

186.3

△830

—

△791

—

△697

—

March 2014

3,172

△7.1

309

△45.0

342

△39.8

332

△34.8

(Note) Comprehensive income: 2nd quarter of fiscal year ending March 2015: △¥1,135 million (—%); 2nd quarter of fiscal year ending
March 2014: ¥543 million (△19.2%)

Net Income per ShareQ2 of the year ending
March 2015
March 2014
(Note)

Diluted Net Income per ShareYen△61.20

Yen
—

29.17

29.17

With effect from October 1, 2013, the Company carried out a stock split of its common shares at a ratio of 10 shares per share. For
this reason, the quarterly Net Income per share and the quarterly diluted Net Income per share are calculated under the supposition
that the stock split had taken place at the beginning of the previous consolidated fiscal year.

(2) Consolidated Financial Position
Total Assets

Q2 of the year ending
March 2015
Year ending March 2014

Ratio of Equity Capital

Net Income Per Share

Millions of yen

Net Assets
Millions of yen%

yen

28,382

21,11770.7

1,762.92

29,88722,34069.6

1,825.44(Reference) Equity Capital: 1st quarter of fiscal year ending March 2015: ¥20,079 million; fiscal year ended March 2014: ¥20,792 million

2. Dividends
Dividends per share(Record dates)

Year ending March 2014
Year ending March 2015

1st Quarter

yen
―
―

Interim

yen
50.00
5.00

Year ending March 2015 (Forecast)

3rd Quarter

Year-end

Total

yen
―

yen
5.00

yen
—

―

5.00

10.00

(Notes) Forecasts for dividends have not been modified since the time of the most recently announced business forecast.
With effect from October 1, 2013, the Company carried out a stock split of its common shares at a ratio of 10 shares per share.

13. Forecast for the Consolidated Business Results for the Year Ending March 2015
(from April 1, 2014 to March 31, 2015)(Percentages indicate changes compared with the previous fiscal year.)

Net Sales

Full year
ending March2015

Operating Income

Ordinary Income

Net Income

Millionsof yen%Millionsof yen%Millionsof yen%Millionsof yen%18,200

187.1

△810

—

△770

—

△920

—

Net Income
per ShareYen△80.77(Notes) Forecasts for business results have not been modified since the time of the most recently announced business forecast.

※ Notes(1) Changes in significant subsidiaries (accompanying changes in scope of consolidation): None
Newly added subsidiaries: 0 companies (subsidiary’s name:)Removed subsidiaries: 0 companies (subsidiary’s name:)(2) Adoption of simplified accounting practices or specific procedures in preparation of the quarterly
consolidated financial reports: Applicable* For details, please refer to “2. Summary Information, (2) Adoption of Simplified Accounting Methods in the
Preparation of Quarterly Financial Statements” on page 5 of the accompanying material.

(3) Changes in accounting policy, changes in accounting estimates, and restatements(i) Changes accompanying revisions of accounting standards, etc.: Applicable(ii) Changes other than the above: None(iii) Changes in accounting estimates: None(iv) Restatements: None
* For details, please refer to “2. Summary Information, (3) Changes in Accounting Principles, Procedures, and Disclosure
Methods” on page 5 of the accompanying material.

(4) Outstanding shares (common shares)(i) Outstanding shares at the end of the fiscal periods (including treasury shares):
The 2nd quarter of the fiscal year ending March 2015: 11,960,000 shares
The fiscal year ending March 2014: 11,960,000 shares(ii) Treasury shares at the end of the fiscal periods:
The 2nd quarter of the fiscal year ending March 2015: 570,130 shares
The fiscal year ending March 2014: 569,670 shares(iii) Average number of shares at the interim accounting period
The 2nd quarter of the fiscal year ending March 2015: 11,390,115 shares
The 2nd quarter of the fiscal year ending March 2014: 11,393,430 shares(Note) With effect from October 1, 2013, the Company carried out a stock split of its common shares at a ratio of 10
shares per share. For this reason, the numbers of shares listed above are calculated under the supposition thatthe stock split had taken place at the beginning of the previous consolidated fiscal year.
* Indication of auditing procedures implementation status
This financial results report is exempt from quarterly review procedures under Japan’s Financial Instruments and Exchange
Law. As of the time of disclosure of this report, the auditing procedure based on the Financial Instruments and Exchange Law
has not been completed.
* Statement regarding the proper use of financial forecasts and other special remarks(Notice regarding statements concerning the future)
Statements concerning the future, such as performance forecasts, etc., described in the present material are based on
information currently available to the Company and on certain assumptions judged as reasonable by the Company. The
Company’s actual performance may differ substantially from these forecasts as a result of various factors beyond theCompany’s control. For details of cautions, etc., employed in making performance forecasts and the assumptions underlying
performance forecasts, please refer to “1. (3) Explanation Concerning Future Forecast Information on the Consolidated
Financial Results, etc.” on page 4 of the accompanying material.
(To obtain supplemental documents relating to financial results)
Supplemental documents related to the Company’s quarterly and other financial results are posted on the company website.
(URL: http://www.faith-inc.com/ir/library.html

2

Contents
1. Qualitative Information Concerning the Settlement of Accounts for the 2nd Quarter ····················(1) Explanation Concerning the Operating Results ····························································(2) Explanation Concerning the Financial Position ····························································(3) Explanation Concerning Future Forecast Information on the Consolidated Financial Results, etc.

2
2
4
4

2. Summary Information ······························································································(1) Changes in Major Subsidiaries During the 2nd Quarter ····················································(2) Adoption of Simplified Methods in the Preparation of the Quarterly Financial Statements ·········(3) Changes in Accounting Principles, Procedures, and Disclosure Methods ······························

5
5
5
5

3. Consolidated Financial Statements ··············································································· 6(1) Consolidated Balance Sheet ··················································································· 6(2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income ········ 8(Consolidated Statement of Income) ·········································································· 8(Consolidated Statement of Comprehensive Income) ······················································· 9(3) Consolidated Statement of Cash Flows ······································································· 10(4) Notes Concerning the Consolidated Financial Statements ················································· 12(Note Concerning the Premise of a Going Concern) ························································ 12(Note in the Case of Significant Changes in the Amount of Shareholders’ Equity) ··················· 12(Segment Information) ························································································· 12

11. Qualitative Information Concerning the Settlement of Accounts for the 1st Quarter(1) Explanation Concerning the Operating Results
Information and communications technology (ICT) is spreading rapidly on a global scale, and in
keeping with the development of the Internet infrastructure, high-performance mobile devices such as
smartphones and tablets have become widespread throughout the world. According to the 2014
Information and Telecommunications White Paper, while the smartphone ownership ratio in Japan is50%, the corresponding ratios in other major industrialized countries such as the US, UK and France arearound 60%, and the ratios in South Korea and Singapore are over 80%, so the Japanese ratio can be
expected to rise further in future. (*1)
Changes in lifestyle brought about by the spread of the Internet and smartphones are strongly
influencing people’s consumption behavior. For instance, Internet shopping is becoming mainstream, as
illustrated by the fact that more CDs and DVDs are now purchased at online stores than at real
brick-and-mortar stores. Also, in the contents distribution field including video and music, theimportance of smartphones and other mobile devices is increasing in line with the growth of the Internet.
For example, 66% of smartphone users watch video and 39% listen to music on their smartphone. In
keeping with these lifestyle changes, in the Japanese music market, paid music distribution sales during
the January-June 2014 period stood at 103% of their level during the same period in 2013, reflecting
favorable sales of subscription distribution services. However, in the package products market, whichforms a major part of the music market, sales of music software including music videos during theJanuary-September 2014 period fell to 94% of the previous year’s level, and the overall declining trend
in the Japanese music market is continuing. (*2)(*1) From the 2014 Information and Telecommunications White Paper(*2) Research by the Recording Industry Association of Japan

In this market environment, the Faith Group is continuing to move ahead with its Multi-Content andMulti-Platform Strategy of creating an environment that allows people to enjoy a wide diversity ofcontents whenever and wherever they choose while providing compatibility with today’s increasingly
popular smart devices. We have made unceasing efforts to strengthen the functions of our platforms thatgather relevant information from the mass that floods the Internet, sort it into categories, increase its
added value, and provide it to users, as well as to develop new services in response to the changing
market environment. In the music market, Faith is focusing primarily on music service platform
construction, which does not depend on packaged products, by making effective use of the businesssynergies between the companies within the Group, and also on the subscription-based music
distribution business, for which there is an expanding market.
However, in line with the increasing popularization of smarphones, there has been a decline in sales offeature phone-use services, which form a major pillar of Faith’s business, and sales of music CDs anddigital distribution titles have fallen below their planned levels, with the result that the Group’s businessperformance has remained sluggish.
In keeping with the change of status of Nippon Columbia, Co., Ltd. from an equity-method affiliate to a
fully consolidated subsidiary in April 2014, this company’s sales and business performance have been
included in the Faith Group’s consolidated financial results since the start of current fiscal year. For thecurrent 2nd quarter, the Faith Group with the inclusion of the Columbia Business Segment recorded net
sales of ¥9,082 million (an increase of 186.3% compared with the same period of the previous fiscal
year), an operating loss of ¥830 million (compared with an operating income of ¥309 million for thesame period of the previous year), and an ordinary loss of ¥791 million (compared with an ordinary
income of ¥342 million for the same period of the previous year), Moreover, due to the reporting of an
extraordinary loss of ¥150 million in connection with the organizational reform of a consolidated
subsidiary, and of a minority interest loss of ¥515 million, the Group recorded a net loss for the current
quarter of ¥697 million (compared with a net income of ¥332 million for the same period of theprevious year).
Information on each business segment is as follows.

2

Content BusinessIn the Content Business, Faith is actively engaged in new business development and is continuing topromote the introduction of high value-added services to match the changing lifestyles of consumers in
response to the popularization of smartphones, etc.
Under a strategy that calls for expanding and commercializing the contact points between artists andfans, the Faith Group is making use of its diversified music and artist-related service functions, and in
this context has begun to partially provide Fans™, which is a platform for connecting artists directlywith fans. By making use of the Fans™ platform, artists can construct their own websites and send out
activity information to their fan bases. Moreover, the platform makes possible sales of e-tickets for live
performances, CDs, DVDs and merchandise, music and video distribution, live performance relay
broadcasts, fan club site operation, linkage with social media, web promotion, and global development
through the use of multiple language sites. Fans™ is a highly-usable service that allows artists tomanage and operate a wide variety of functions via a dedicated user interface without having to learn
special knowledge, while for fans too, it provides a wealth of contact points with their favorite artists.
Color-code is a female vocal unit discovered through the POP ICON PROJECT TOKYO, an artist
raising and development approach featuring Nicola Formichetti as a producer. Using Fans, this groupmade its major debut in September 2014 from Nippon Columbia Co, Ltd. and is starting to develop as
an iconic pop group sending out Japanese culture to the wider world.
In order to expand recognition of its services while continuing to promote a multi-device approach, theinternet-based radio service FaRao® carried out a present campaign in July 2014 with D&M Holdings
Inc. in which it offered its premium service free of charge to purchasers of Denon’s Envaya DSB-200
Bluetooth® Speaker System who applied using the 30-day free use coupon accompanying the purchase.
In future, FaRao® will not limit itself to targeting ordinary users but will also seek to develop abusiness-use BGM service aimed at restaurants and retail stores.
In the lifestyle field apart from music, in March 2014, Faith launched a photo communication app called
SmileLog®, together with a new service that allows users of this app to create photo book compilationsof newly shared photos. Thanks to this additional function, SmileLog® combines in a single app a photobook service and photo decoration (both of which are becoming popular among families with smallchildren), allowing users to decorate photos with a choice of over 500 kinds of stamps. Furthermore,
Kidzapplanet®, a worldwide intellectual training application brand for pre-school children that was
launched in February 2013, released a child rearing app called BabySmile, which was planned anddeveloped by a father and mother team while they were raising their own children, and another app
called Akubi Girl no Mushimegane Tanken, which features the popular anime character Akubi Girl.
Child rearing services for smartphone users are a field for which there is a considerable need andnational and local governments are also considering making use of these apps. Faith is planning tolaunch further new services in this field in future.
As a result of the abovementioned developments, taking into account the active ongoing deployment of
new services in response to the changing market environment and the decline in sales of services tofeature phone users, the Content Business recorded net sales of ¥2,266 million (a decline of 10.0% year
on year). Also, due to increasing costs in connection with the start up of new services, etc., in addition
to the abovementioned decline in sales, this business recorded an operating income of ¥45 million (adecline of 83.2% year on year).
Point Service BusinessIn the Point Service Business, sales of points increased in line the opening of new point member storesand positive point sales promotion, with the result that this business recorded net sales of ¥1,169 million(an increase of 78.9% year on year). However, although we worked to control sales-related expenses
and general management expenses, the business experienced a profit ratio decline due to redemptions offormer points in line with the shift to server-based management and to an increase in initial costs in linewith the startup of new businesses, resulting in an operating income of ¥2 million (a decrease of 93.9%
year on year).

3

Columbia Business
Amid the severe environment facing the music and video-related industry in line with the continuing
shrinking of the music market, the Columbia Business experienced an overall decline in sales of music
CDs, digital distribution titles, and products supplied to mail order companies. Also, due to declines insales of high-margin titles released in past years and in transactions utilizing high-margin sound sources,
this business reported net sales for the 2nd quarter of FY 2014 of ¥5,647 and an operating loss of ¥883
million. Moreover, as the Columbia Business has been included in the Faith Group’s businessperformance only since the start of the current fiscal year, no comparisons with the 2nd quarter of theprevious fiscal year are given here.

(2) Explanation Concerning the Financial Position(Analysis of Financial Position)
Total assets as of September 30, 2014 decreased by ¥1,504 million compared to March 31, 2014 to ¥28,382
million. This result was mainly due to decreases in cash and deposits and accounts and notes receivable.
Total liabilities decreased by ¥281 million compared to the end of the previous consolidated fiscal year to¥7,265 million. This result was mainly due to decreases in accounts and notes payable.
Total net assets decreased by ¥1,222 million compared to the end of the previous consolidated fiscal year to¥21,117 million. This was mainly due to a decrease in retained earnings in accordance with the payment ofdividends and the recording of a quarterly net loss, as well as to a decrease in minority interests.
As a result of the above, the equity ratio increased by 1.1 percentage points to 70.7%.
(Cash Flow Situation)
Cash and cash equivalents for the consolidated cumulative 2nd quarter of the current fiscal year
decreased by ¥1,659 million from the end of the previous consolidated fiscal year to ¥9,755 million.
Details of cash flow for the consolidated cumulative 2nd quarter and its contributory factors are as
follows:(Cash flow from operating activities)
Cash flow from operating activities amounted to an outflow of ¥123 million (compared with an inflowof ¥1,308 million for the same period of the previous fiscal year), due to due to the addition of adecrease of ¥765 million yen in notes and accounts receivable to a net loss before taxes for the previous
quarter of ¥943 million.
(Cash flow from investing activities)
Cash flow from investing activities amounted to an outflow of ¥1,381 million (compared with an inflowof ¥1,173 million for the same period of the previous fiscal year), due mainly to income of ¥3,023
million in respect of reimbursement of fixed-term deposits, despite outgoings of ¥4,144 million in
respect of making fixed-term deposits.
(Cash flow from financing activities)
Cash flow from financing activities amounted to an outflow of ¥161 million (a decline of 37.7%
compared the same period of the previous fiscal year), due mainly to outgoings of ¥300 million in
respect of a net decrease in short term loans payable, ¥236 million in respect of repayment of long-termloans, and ¥57 million in respect of dividend payments, despite income of ¥500 million from long-termloans payable.

(3) Qualitative Information Regarding the Forecast of Consolidated Financial Results
Performance forecasts are made based on information currently available to the Company, but there is apossibility that the actual performance figures will differ significantly from the forecast figures due to avariety of factors. In addition, the current performance forecast for the full financial year is unchanged
from the revised forecast issued on October 28, 2014.

4

2. Summary Information(1) Changes in Major Subsidiaries during the 2nd Quarter
None(2) Adoption of Simplified Methods in the Preparation of Quarterly Financial Statements
Tax expenses for the Company and a portion of its consolidated subsidiaries are calculated by making areasonable estimate of the effective tax rate after applying tax effect accounting to the amount ofquarterly Net Income before tax deduction for the consolidated financial year including the current 2ndquarter accounting period, and then multiplying the amount of quarterly Net Income before tax
deduction by the current estimated effective tax rate.

(3) Changes in Accounting Principles, Procedures, and Disclosure Methods(Changes in Accounting Principles)
For certain consolidated subsidiaries, with effect from the beginning of the first quarter of the current
consolidated fiscal year, we have applied the regulations stipulated in the main texts of Item 35 of the
Accounting Standard for Retirement Benefits (ASBJ Statement No. 26, May 17, 2012) and Item 67 of
the Guidance on Accounting Standard for Retirement Benefits (ASBJ Guidance No. 25, May 17, 2012)
in revising the retirement benefit obligations and the service cost calculation method.
These changes will have no material impact on the Group’s retained earnings or profitability for thecurrent 2nd quarter accounting period.

5

3. Consolidated Financial Statements(1) Consolidated Balance Sheet
FY 2013(As of March 31, 2014)(Assets)
Current assets
Cash and deposits
Accounts and notes receivable
Marketable securities
Commercial products
Products in progress
Primary materials and inventory goods
Corporation tax refund receivable, etc.
Deferred tax assets
OthersAllowance for doubtful accounts
Total current assets
Fixed assets
Tangible fixed assets
Intangible fixed assets
Goodwill
OthersTotal intangible fixed assets
Investment and other assets
Investment securities
OthersAllowance for doubtful accounts
Total investments and other assets
Total fixed assets
Total assets(Liabilities)
Current liabilities
Accounts and notes payable
Short-term loans payable
Lease obligations
Accrued expenses payable
Income taxes payable
Reserve for bonuses
Reserve for point card certificates
Reserve for sales returns
Allowance for organizational reform
OthersTotal current liabilities
Fixed liabilities
Long-term loans payable
Net defined retirement benefits
Lease obligations
Deferred tax liabilities
OthersTotal fixed liabilities
Total liabilities

6(Unit: thousands of yen)
2nd Quarter of FY 2014

(As of Sept. 30, 2014)

14,196,991
3,238,570
241,587
464,387
440,60363,564
67,118286,638
774,474△74,763
19,699,173

13,658,407
2,452,187
242,125
557,530
424,815
70,234－
178,484
759,836△65,257
18,278,365

3,062,848

3,012,845

4,247,061
871,886
5,118,948

4,134,058
922,559
5,056,617

1,679,127
623,900△296,727
2,006,300
10,188,097
29,887,271

1,700,739
633,312△298,915
2,035,137
10,104,600
28,382,965

1,243,213
906,520
51,491
2,062,945
73,76370,403
191,510
148,890—
1,399,389
6,148,127

1,015,143
506,528
30,882
2,267,381
167,074
82,55021,776
109,713150,000
1,202,416
5,553,467

105,400
996,110
41,915
209,823
45,628
1,398,877
7,547,004

469,100
954,268
33,043211,888
43,428
1,711,729
7,265,196

(Net assets)
Shareholder's equity
Common stock
Capital surplus
Retained earnings
Treasury stock
Total shareholder's equity
Other accumulated comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustments
Cumulative adjustment for retirement benefit
obligations
Total other accumulated comprehensive income
Stock acquisition rights
Minority interests
Total net assets
Total liabilities and net assets

7(Unit: thousands of yen)
2nd Quarter of FY 2014

FY 2013(As of March 31, 2014)(As of Sept. 30, 2014)

3,218,000
3,708,355
14,393,333△754,679
20,565,008

3,218,000
3,708,355
13,639,272△755,634
19,809,992

227,400－－

234,256
4,023
31,156

227,400
61,949
1,485,909
22,340,267
29,887,271

269,437
59,543
978,796
21,117,769
28,382,965

(2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income(Consolidated Statement of Income)(Unit: thousands of yen)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income or loss (△)
Non-operating income
Interest income
Dividend income
Interest on securities
Investment gain on equity method
Investment partnership operation gain
Foreign exchange gain
Interest on refund
Gain on disposal of unpaid royalties
Miscellaneous receipts
Total non-operating income
Non-operating expenses
Interest paid
Investment loss on equity method
Investment partnership operation loss
Miscellaneous expenses
Total non-operating expenses
Ordinary income or loss (△)
Extraordinary income
Gain on sale of investment securities
Gain on change in equity
Gain on transfer of business
Gain on reversal of subscription rights to shares
Total extraordinary income
Extraordinary losses
Loss on disposal of fixed assets
Overseas tax-related loss
Organizational reform-related loss
Relocation expenses
Total extraordinary losses
Net income or net loss before income taxes (△)
Corporate, local, and business taxes
Corporate tax adjustment amount
Net income or net loss before minority interests (△)
Minority interests in loss (△)
Net income or loss for the current quarter (△)

8

2nd Quarter of FY 2013

2nd. Quarter of FY 2014

(April 1-Sept. 30, 2013)
3,172,633
1,757,326
1,415,307
1,105,334
309,973(April 1-Sept. 30, 2014)
9,082,895
5,998,116
3,084,779
3,915,230△830,451

9,708
4,407
1,525
－
4,909
1,861
18,669－6,344
47,426

5,311
4,058
72
4,765
11,412
1,574－
10,301
13,72551,222

3,077
11,558－－
14,636
342,762

5,713
－
6,244
523
12,480△791,709

25,2203,759
28,320－57,300

－
－
－
2,406
2,406

8,983
7,491
－
2,314
18,790381,272
45,862
3,037
332,372－
332,372

4,308－
150,000－
154,308△943,611
162,149
106,040△1,211,801△514,720△697,080

(Consolidated Statement of Comprehensive Income)(Unit: thousands of yen)

Net income or net loss before minority interests (△)
Other comprehensive income
Valuation difference on other available-for-salesecurities
Foreign currency translation adjustment
Retirement benefit adjustments
Share in comprehensive income of equity method
affiliates
Total other comprehensive income
Comprehensive income(Details)
Comprehensive income attributable to shareholders of
the parent company
Comprehensive income attributable to minority
interests

9

2nd Quarter of FY 2013

2nd. Quarter of FY 2014

(April 1-Sept. 30, 2013)
332,372(April 1-Sept. 30, 2014)△1,211,801

208,264

7,539

－
－
2,509

7,896
61,140－210,773
543,146

76,575△1,135,225

543,146△655,044－△480,181

(3) Consolidated Statement of Cash Flows(Unit: thousands of yen)

Cash flow from operating activities
Income before income taxes and minority interests
Depreciation and amortization
Amortization of goodwill
Increase/decrease in allowance for doubtful accounts (△ =decrease)
Increase/decrease in reserve for bonus (△ = decrease)
Increase/decrease in allowance for unexercised sales
promotion points (△ = decrease)
Increase/decrease in allowance for retirement benefits (△ =decrease)
Increase/decrease in liabilities for retirement benefits (△ =decrease)
Increase/decrease in allowance for organizational reform (△= decrease)
Interest and dividends income
Interest on securities
Interest paid
Gain or loss on foreign exchange (△ = gain)
Gain or loss on sale of investment securities (△ = gain)
Gain or loss on sale of shares in affiliates (△ = gain)
Gain or loss on equity method (△ = gain)
Gain or loss on disposal of fixed assets (△ = gain)
Gain or loss on transfer of business (△ = gain)
Increase/decrease in trade receivables (△ = increase)
Increase/decrease in inventory assets (△ = increase)
Increase/decrease in trade payables (△ = decrease)
OthersSub-totalInterest and dividends received
Interest paid
Income tax refunded
Income tax paid
Cash flow from operating activities

10

2nd Quarter of FY 2013
(April 1-Sept. 30, 2013)

2nd Quarter of FY 2014
(April 1-Sept. 30, 2014)

381,272
121,835
15,336△1,826△943,611
176,622
129,278△7,31820,598
1,918

12,147△169,733△6,296－－

19,298－150,000△14,116△1,525
3,077△1,861△25,220
11,558△3,7598,983△28,320
116,020△5,623△69,308△83,488439,254
326,312△3,144
698,805△152,946
1,308,281△9,370△72
5,713△6,119－△4,765－
4,308－
765,388△84,023△252,429
76,691△137,995
13,551△5,897
67,776△61,011△123,577

(Unit: thousands of yen)

Cash flow from investing activities
Expenditure for opening of term deposits
Proceeds from withdrawal of term deposits
Proceeds from withdrawal marketable securities
Expenditure for acquisition of tangible fixed assets
Expenditure for acquisition of software
Expenditure for acquisition of investment securities
Proceeds from sale of investment securities
Expenditure for acquisition of shares of affiliates
Proceeds from transfer of business
Expenditure for acquisition of goodwill
Expenditure for acquisition of shares of subsidiaries resulting
from changes in scope of consolidation
Expenditure for loans receivable
Proceeds from collection of loans receivable
Expenditure for guaranteeing security deposits
Proceeds from collection of security deposits
OthersNet cash flow from investing activities
Cash flow from financing activities
Net increase/decrease in short-term loans payable (△ =decrease)
Expenditure for repayment of financing and lease obligations
Proceeds from long-term loans payable
Expenditure for repayment of long-term borrowing
Payment of dividends
Payment of dividends to minority shareholders
OthersNet cash flow from financing activities
Effect of exchange rate on cash and cash equivalents
Net increase/decrease in cash and cash equivalents (△ =decrease)
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of the quarter11

2nd Quarter of FY 2013
(April 1-Sept. 30, 2013)

2nd Quarter of FY 2014
(April 1-Sept. 30, 2014)△4,023,238
5,192,145
200,000△26,495△103,115△50,000
26,220△30,000
28,571△5,000△35,926△4,144,075
3,023,242－△49,134△198,338－－△0－△15,600－－
40△5,082
5,082－
1,173,199△15,000
6,186
△462
849
11,071△1,381,261－△300,000△2,255－△199,992△56,418－－△258,665
1,861
2,224,677△31,055
500,000△236,292△57,349△25,521△10,826△161,044
6,119△1,659,764

6,125,200
8,349,878

11,415,340
9,755,576

(4) Notes Concerning the Consolidated Financial Statements(Note Concerning the Premise of a Going Concern)
Not applicable(Note in the Case of Significant Changes in the Amount of Shareholders’ Equity)
Not applicable(Segment Information)
Ⅰ 2nd quarter of the previous consolidated fiscal year/FY 2013 (April 1, 2013 through Sept. 30, 2013)

1. Information on sales and profit or loss by reportable segment(Unit: thousands of yen)Content

Point Service Columbia

Total

Amount recorded in
Adjustment
Consolidated Financial
amount (Note 1) Statements (Note 2)

Net sales
Sales to externalcustomers
Intersegment sales
or transfer amount

2,519,306

653,326－

3,172,633－

3,172,633

7,152

112

－

7,264

△7,264－

Total

2,526,459

653,438－

3,179,898△7,264

3,172,633

272,971

36,497－309,469504

309,973

Segment income/loss

Notes: 1. The segment income adjustment amount of ¥504 thousand is calculated by eliminating intersegment transactions.
2. Segment income/loss is adjusted with operating income in the quarterly consolidated profit and loss statement.

2. Information regarding impairment loss on fixed assets or goodwill by segment reported
This information is omitted since there is no critical impairment loss on fixed assets or significant
change in amount of goodwill.
Ⅱ 2nd quarter of the current consolidated fiscal year/FY 2014 (April 1, 2014 through Sept. 30, 2014)

1. Information on sales and profit or loss by reportable segment(Unit: thousands of yen)Content

Point Service Columbia

Total

Amount recorded in
Adjustment
Consolidated Financial
amount (Note 1) Statements (Note 2)

Net sales
Sales to externalcustomers
Intersegment sales
or transfer amount

2,266,130

1,169,082

5,647,682

9,082,895－

9,082,895

73,980312

11,32585,618△85,618－

Total

2,340,111

1,169,394

5,659,008

9,168,514△85,618

9,082,895

45,7302,235△883,810△835,845

5,394△830,451

Segment income/loss

Notes: 1. The segment loss adjustment amount of ¥5,394 thousand is calculated by eliminating intersegment transactions.
2. Segment income/loss is adjusted with operating income in the quarterly consolidated profit and loss statement.

12

2. Note concerning changes in reportable segments, etc.
As a result of the acquisition of additional shares of stock in Nippon Columbia Co., Ltd., by meansof a public tender offer that took place in March 2014, Nippon Columbia Co., Ltd. and its
subsidiaries have been included as consolidated subsidiaries of Faith, Inc. from the end of theprevious consolidated fiscal year. Accordingly, the Company has reorganized its business segmentclassification method so that the existing classification into two segments of the Content Businessand the Point Service Business has been changed to a classification into the three segments of theContent Business, the Point Service Business, and the Columbia Business. Moreover, in keepingwith this change, segment information for the previous consolidated 2nd quarter presented ascomparison information with the 2nd quarter of the current consolidated first quarter is reproduced
based on the revised reportable segment classification.

3. Information regarding impairment loss on fixed assets or goodwill by segment reported
That information is omitted since there is no critical impairment loss on fixed assets or significant
change in amount of goodwill.

13