BRIEF STATEMENT OF CONSOLIDATED FINANCIAL RESULTS
FOR THE 1st 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.

August 8, 2014
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: August 13, 2014
Starting Date of the Dividend Payment: Preparation of Supplementary Materials for Quarterly Financial Results: Applicable
Information Meeting for Quarterly Financial Results to be Held: None
Amounts are rounded down to the nearest JPY 1 million.

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

Net Sales

Q1 of the year ending
March 2015
March 2014

Millionsof yenOperating Income

%

4,445
1,639

171.1
△1.8

Millionsof yenOrdinary Income
Millionsof yen

%
—
△35.5

△391
179

△386
179

%
—
△21.6

Net Income
Millionsof yen

%
—
△1.8

△293
181

(Note) Comprehensive income: 1st quarter of the fiscal year ending March 2015: △¥433 million (—%); 1st quarter of the fiscal year
ending March 2014: ¥194 million (35.3%)

Net Income per
Share

Diluted Net
Income per ShareYen△25.77
15.89

Yen
—
15.89

Q1 of the year ending
March 2015
March 2014
(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 net income per share and 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

Ratio of Equity Capital

Net Assets Per Share

Millions of yen

Millions of yen%

Yen

28,713

21,822

71.3

1,797.14

29,88722,34069.6

1,825.44

Q1 of the year ending
March 2015
Year ending March 2014

Net Assets(Reference) Equity capital: 1st quarter of fiscal year ending March 2015: ¥20,469 million; fiscal year ending March 2014: ¥20,792 million

2. Dividends
Dividends per Share
(Record dates)

Year ending March 2014
Year ending March 2015
Year ending March 2015
(Forecast)st

1 Quarteryen——

3rd Quarter

InterimYear-end

Total

yen
50.00

yen
—

yen
5.00

yen
—

5.00

—

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 Results for the Year Ending March 2015
（from April 1，2014 to March 31，2015）(Percentages indicate changes compared with the previous fiscal year and the previous interim result.)

Net Sales

First
half
(cumulative)
Full year

Operating Income

Ordinary Income

Net Income

Net Income
per Share

Millions ofyen%Millionsof yen%Millionsof yen%Millionsof yen%Yen

10,000

215.2

△160

—

△170

—

△250

—

△21.9421,500

239.1

450

△11.5

430

△26.7

100

△75.2

8.77

(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 4 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, andDisclosure Methods” on page 4 of the accompanying material.

(4) Outstanding shares (common shares)(i) Outstanding shares at the end of the fiscal years (including treasury shares):
The 1st 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 years:
The 1st quarter of the fiscal year ending March 2015: 569,770 shares
The fiscal year ending March 2014: 569,670 shares(iii) Average number of shares at the interim accounting period
The 1st quarter of the fiscal year ending March 2015: 11,390,270 shares
The 1st 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 that the stock split had taken place atthe 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 materials related to the Company’s quarterly and other financial results are posted on the company website.

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Contents
1. Qualitative Information Concerning the Settlement of Accounts for the 1st 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.

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

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

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1. Qualitative Information Concerning the Settlement of Accounts for the 1st Quarter(1) Explanation Concerning the Operating Results
Information and communications technology (ICT) including the internet, mobile phones, etc., is now
widespread in all spheres of daily life, and the impact of ICT on society, such as in the fields ofcorporate activity and consumer activity, is steadily increasing. Looking at the Japanese domestic
communication service utilization situation, the number of users of smart devices (smartphones andtablet devices) is continuing to expand, while the performance of devices themselves is improving,creating an environment in which vast amounts of information provided on the internet can be accessedanytime and anywhere. At the end of March 2014, the number of internet users in Japan rose above 100
million for the first time, and the internet diffusion ratio reached 82.8%. But in the utilized deviceclassification, the PC utilization ratio was 86.3%, down 7.3% year on year, and the feature phone
utilization ratio was 24.5%, down 18.3% year on year. By contrast, smartphones have continued tospread rapidly, and their utilization ratio has increased from 31.4% to 42.4% over the past year.
Utilization of tablet devices has also spread steadily, rising from 7.9% to 12.4% year on year. Moreover,the popularity of social media is continuing to expand, with its utilization among people in the 13-39
year-old group now above 50%. (*1)
In the Japanese music market, paid music distribution sales during the January-March 2014 period stoodat 100% of their level during January-March 2013. However, in the package products market, whichforms a major part of the music market, sales of music software including music videos fell to 97% of
the previous year’s level, and the overall declining trend in this market is showing no signs of bottoming
out. (*2)(*1) "Communications Usage Trend Survey" compiled by the Ministry of Internal Affairs and Communications(*2) Research by the Recording Industry Association of Japan

In this market environment, the Faith Group is proceeding with its Multi-Content and Multi-Platform
Strategy of creating an environment that allows people to enjoy a wide diversity of contents whenever
and wherever they choose while providing compatibility with the increasingly popular smart devices.
We have made a continuous effort to strengthen the functions of our platforms that gather relevant
information from the mass that floods the internet, sort it into categories, increase its added value, andprovide it to users, as well as to strengthen our approach to expanding social media functions, etc.
In June 2014, for the purpose of upgrading and expanding our platform functions in support of musicalactivity, the Company’s consolidated subsidiary Faith Wonderworks became the operator of with9,
Japan’s largest social media service for band member recruitment. From now on too, the Faith Group isplanning to provide high value-added services that deepen the ties between artists and their fans.
Moreover, in order to further improve our competitiveness and strengthen our approach in fields ofgrowth, we will deepen the cooperation between the Group’s companies such as Nippon Columbia, Co.,
Ltd., Japan’s oldest record company, and OK Life Inc., the operator of Japan’s largest-scale musicsocial media service “OK Music”.
In keeping with the change of status of Nippon Columbia, Co., Ltd. from an equity-method affiliate to a
fully consolidated subsidiary, this company’s sales and business performance have been included in theFaith Group’s consolidated financial results from the start of the fiscal year ending March 2015. As aresult, for the first quarter of the current fiscal year, the Group recorded net sales of ¥4,445 million (anincrease of 171.1% compared with the same term of the previous fiscal year), an operating loss of ¥391
million (compared with an operating income of ¥179 million for the same term of the previous year), an
ordinary loss of ¥386 million (compared with an ordinary income of ¥179 million for the same term of
the previous year), and a net loss of ¥293 million (compared with a net income of ¥181 million for thesame term of the previous year).
Information on each business segment is as follows.
Content BusinessIn the Content Business, although ringtone melody sales have decreased in line with the gradual shift
from feature phones to smartphones, the Company is continuously launching new services with highvalue-added contents in response to the needs of users of highly functional smart devices.

2

In June 2014, as an advanced version of “Connecting Card™”, the O2O platform that links artists withfans and currently has approx. 200,000 members, the Company launched the “U-CONNECT” service
jointly with UNIVERSAL MUSIC LLC. U-CONNECT is a service that allows users to download
music, watch videos, apply for special benefits, make electronic ticket purchases, etc., by authenticating
a number inscribed on a card. Because these cards can be enclosed in a CD package or sold in stores,
the system is expected to grow as a new music business, Faith and UNIVERSAL MUSIC is planning todevelop U-CONNECT with partner companies beginning with other members of the Faith Group.
The internet-based radio service “FaRao®”, which has begun a new distribution service in the music
market, is striving continuously to achieve multi-device compatibility. While doing so, in order to help
the service achieve greater recognition and diffusion, we carried out a campaign targeted at encouraging
users to install “HIKARI BOX+ HB-1000”, provided by NTT West Corporation, and we also embarked
on a project in collaboration with OK Music and Japan’s largest charity music festival “COMIN’ KOBE
14”.
In addition, in the lifestyle field apart from music, jointly with Nippon Columbia Co., Ltd., theCompany released an app entitled “Kotsuban Yoga Diet”, which is produced by a leading yoga expert.
As a result of the above developments, taking into account the ongoing deployment of new services andthe decline in sales of services to feature phone users, the Content Business recorded net sales of ¥1,093
million (a decline of 15.0% year on year), and an operating income of ¥0 (a decline of 99.4% year onyear).
Point Service BusinessIn the Point Service Business, sales of points by member stores increased due to a surge of last-minutedemand prior to the increase in the consumption tax rate, with the result that this business recorded net
sales of ¥586 million (an increase of 66.1% 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 of former points in line with the shift to server-based management and to anincrease in initial costs in line with the startup of new businesses, resulting in an operating income of¥20 million (a decrease of 22.0% year on year).
Columbia Business
The Columbia Business is engaged in the planning, production, advertising and sales of audio, video
and game software, etc. During the first quarter under review, although in the Sales/Digital Distribution
Business a rise in sales of large-scale J-Pop products made a contribution to sales, overall sales of
non-J-Pop music CDs, digital distribution titles and sales to mail-order companies decreased steeply,
due to the influence of the declining music market over the period and the rise in the Consumption Tax
rate. Also, a decrease in the sales ratio of titles using high-profit-margin sound sources was a factor inforcing down the profitability of this business.
As a result, for the first quarter of the current consolidated fiscal year, the Columbia Business recorded
net sales of ¥2,765 million yen and an operating loss of ¥413 million yen. Moreover, as the Columbia
Business has been included in the Faith Group’s business performance only from the start of the current
fiscal year, no comparisons with the same period of the previous fiscal year are given here.

(2) Explanation Concerning the Financial Position
Total assets as of June 30, 2014 decreased by ¥1,173 million compared to March 31, 2014 to ¥28,713
million. This result was mainly due to decreases in accounts and notes receivable.
Total liabilities decreased by ¥655 million compared to the end of the previous consolidated fiscal yearto ¥6,891 million. This result was mainly due to decreases in accounts and notes payable and accrued
expenses payable.
Total net assets decreased by ¥517 million compared to the end of the previous consolidated fiscal yearto ¥21,822 million. This was mainly due to a decrease in retained earnings in accordance with thepayment of dividends and the recording of a quarterly net loss.

3

As a result of the above, the equity ratio increased by 1.7 percentage points to 71.3%.

(3) Explanation Concerning Future Forecast Information on the Consolidated Financial
Results, etc.
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 forecast issued on May 14, 2014.

2. Summary Information(1) Changes in Major Subsidiaries during the 1st Quarter
Not applicable(2) Adoption of Simplified Methods in the Preparation of the 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 profit before tax deduction for the consolidated financial year including the current 1stquarter accounting period, and then multiplying the amount of quarterly net profit 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 current first quarter accounting period, 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 theretirement benefit obligations and the service cost calculation method.
These changes will have no material impact on the Group’s retained earnings or profitability.

4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
OthersTotal current liabilities
Fixed liabilities
Long-term loans payable
Net defined retirement benefits
Lease obligations
Deferred tax liabilities
OthersTotal fixed liabilities
Total liabilities

5(Unit: thousands of yen)
1st Quarter of FY 2014

(As of June 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

13,749,201
2,384,781
241,501
486,969
504,914
69,16832,095286,380
859,180△71,185
18,543,009

3,062,848

3,029,393

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

4,198,228
902,481
5,100,710

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

1,700,160
638,557△298,177
2,040,540
10,170,643
28,713,653

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

962,214596,424
40,725
1,910,982
76,346
51,193
227,309
116,126
1,252,709
5,234,032

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

379,980
975,30337,439217,433
46,9291,657,086
6,891,118

(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

6(Unit: thousands of yen)
1st Quarter of FY 2014

FY 2013(As of March 31, 2014)(As of June 30, 2014)

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

3,218,000
3,708,355
14,042,897△755,298
20,213,953

227,400－－

242,584△1,132
14,404

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

255,856
61,9491,290,776
21,822,534
28,713,653

(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
Foreign exchange gain
Miscellaneous receipts
Total non-operating income
Non-operating expenses
Interest paid
Investment loss on equity method
Investment partnership operation loss
Foreign exchange loss
Miscellaneous expenses
Total non-operating expenses
Ordinary income or loss (△)
Extraordinary income
Gain on transfer of businessTotal extraordinary income
Extraordinary losses
Loss on disposal of fixed assets
Relocation expenses
Total extraordinary losses
Net income or net loss before income taxes (△)
Corporate, local, and business taxes
Net income or net loss before minority interests (△)
Minority interests in loss (△)
Net income or loss for the current quarter (△)

7

1st Quarter of FY 2013

1st Quarter of FY 2014

(April 1-June 30, 2013)
1,639,776
898,188741,588562,081
179,506(April 1-June 30, 2014)
4,445,100
2,828,565
1,616,535
2,007,871△391,336

5,957
4,407
642
1,795
1,709
14,511

2,346
4,058
35
－
4,893
11,334

1,815
12,024－－222
14,062
179,956

2,489
959
2,240
557
412
6,659
△386,661

28,32028,320

－
－

41
2,253
2,295
205,981
24,952
181,028－
181,028－－－△386,661
88,679△475,341△181,869△293,471

(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

8

1st Quarter of FY 2013

1st Quarter of FY 2014

(April 1-June 30, 2013)
181,028(April 1-June 30, 2014)△475,341

12,032

15,616－－
1,798△2,22328,266－

13,831
194,859

41,659△433,681

194,859△265,016－△168,664

(3) 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 1st quarter of the previous consolidated fiscal year/FY 2013 (April 1, 2013 through June 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
Total
Segment income/loss

1,287,044

352,731－

1,639,776－

1,639,776

3,376

50

－

3,427

△3,427－1,290,421

352,782－

1,643,203△3,427

1,639,776

153,244

26,010－179,254

252

179,506

Notes: 1. The segment income adjustment amount of ¥252 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 1st quarter of the current consolidated fiscal year/FY 2014 (April 1, 2014 through June 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
Total
Segment income/loss

1,093,507

586,018

2,765,574

4,445,100－

4,445,100

32,0192

5,317

37,340△37,340－

1,125,527

586,0212,770,892

4,482,440△37,340

4,445,100

950

20,298△413,399△392,150

814△391,336

Notes: 1. The segment loss adjustment amount of ¥814 thousand is calculated by eliminating intersegment transactions.
2. Segment income/loss is adjusted with operating income in the quarterly consolidated profit and loss statement.

9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 first quarter presented ascomparison information with the first 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.

10