Gulliver International Co., Ltd.

Consolidated Results
First Quarter of the Fiscal Year Ending February 28, 2007
(Three-month period ended May 31, 2006)

This document has been translated from the original Japanese as a guide for non-Japanese investors. It
contains forward-looking statements based on a number of assumptions made and beliefs held bymanagement in light of information currently available. Actual financial results may differ materiallydepending on a number of factors, including changing economic conditions and the pricing and productinitiatives of new and existing competitors.

SUMMARY OF FINANCIAL STATEMENTS (Consolidated)
First quarter results for the fiscal year ending February 28, 2007

Gulliver International Co., Ltd.

July 11, 2006

Stock Code: 7599
Listed exchanges: Tokyo (1st Section)
http://www.glv.co.jp/
Inquiries: Senior Managing Director: Ikuo Murata
President: Kenichi Hatori
Telephone: +81 3 5208-5503
1. Notes to preparation of these financial statements
1. Adoption of simplified accounting treatments:
Yes (partial use of the simplified method)
2. Differences in accounting treatments applied compared to previous consolidated fiscal year:
Yes
For further details regarding the differences in accounting treatments applied see page 8: Changes to Material Items
Forming the Basis for the Preparation of the First Quarter Consolidated Financial Statements
3. Changes to scope of consolidation or equity method accounting:None
2. Consolidated financial results for the three month period ended May 31, 2006
1) Consolidated Operating Results

Millions of yen, rounded down

Three months ended
May 31, 2006

Three months ended
May 31, 2005(%
change)(% change)

Sales ...............................................................
Operating income............................................
Ordinary income..............................................
Net income......................................................
Earnings per share (¥) ....................................
Fully diluted earnings per share (¥).................

44,292
2,104
2,089
2,040
¥207.87¥206.34

1.2
(4.5)
(5.3)
79.9
---

Fiscal Year ended
February 28, 2006

43,763
2,205
2,207
1,134
¥113.22¥111.72

38.7
11.9
11.7
15.2
---

(% change)

182,649
9,423
9,382
4,421
¥435.61¥431.10

16.5
(7.8)
(8.1)
(21.7)---

Notes to the preparation of these financial statements:
Percentage figures for sales, operating income, etc. represent changes compared to the comparable period of the previous fiscal year.

2) Financial Position (consolidated)

Millions of yen, rounded down

As of May 31, 2006

As of May 31, 2005

As of February 28, 2006

Total assets......................................................

38,86235,791

38,812

Shareholders’ equity ........................................
Equity ratio (%) ................................................
Shareholders’ equity per share (¥) ...................

15,475

16,25016,01139.9
1,589.55

45.4
1,619.92

41.3
1,623.01

3) Consolidated cash flows

Cash flow from operating activities...................
Cash flow from investing activities ...................
Cash flow from financing activities ...................
Cash and cash equivalents at end of period ....

Three months ended
May 31, 2006
1,464
(2,610)747
2,977

Three months ended
May 31, 2005
119
(1,597)
2,075
4,728

Fiscal Year ended
February 28, 2006
4,442
(6,385)
1,029
3,374

3. Forecasts for the fiscal year ending February 28, 2007 (March 1, 2006 to February 28, 2007)
Millions of yen

Sales .......................................................................................
Ordinary income......................................................................
Net Income..............................................................................
Earnings per share (¥) ............................................................

Interim period ending
August 31, 2006
94,800
3,900
2,400
--

FY ending
February 28, 2007
205,400
11,2005,700585.47

Forecasts and forward-looking statements in this document are based on a number of assumptions made and beliefs held bymanagement in light of information currently available. Actual financial results may differ materially depending on a number offactors, including economic conditions, legislative and regulatory developments, delay in new product or service launches, andpricing and product initiatives of competitors.

− 1 −Operating results and financial position
Gulliver operates 268 directly operated stores involved in the purchase and sale of cars (10fewer than at the end of the previous fiscal year) and has 203 affiliated stores (14 fewer than at
the end of the previous fiscal year). In total, Gulliver operates 471 stores (24 fewer than at theend of the previous fiscal year). The number of directly operated store operations has decreased
compared to the end of the previous fiscal year due to closures in the first quarter of the fiscal
year ending February 28, 2007, but our previous policy of opening new branches andreplacement stores (relocating or launching new stores) remains unchanged.
In the three months to May 31, 2006 we have cut back investments in marketing andimplemented streamlined marketing activities. Further, regarding the personnel issues that weneeded to address, we have made changes to our sales structure and have taken measures
such as the strengthening of staff training. As a result of such measures emphasizing efficiency,
the number of cars handled has remained at the same level as the same period of the previous
fiscal year.
Vehicles handled by Gulliver are sold quickly, with an average timeframe of only one week to tendays required to achieve a sale via channels that include: 1). auction sites throughout Japan, 2).
the on-screen selling system ‘Dophinnet’, 3). GAO! Auction, the internet based real-time auction
aimed at used car dealers. Sales from all three channels are currently performing well.
There are currently seven subsidiaries of Gulliver International. Details of the management
status of G-Trading Co., Ltd., the second-hand truck, bus and construction vehicles purchase,sales and export company are as follows.
Domestically, we focused on gaining new medium and large-scale customers by utilizing thebranch network that we expanded in the previous period, with the result that the number of cars
handled increased steadily. Revenue, however, decreased slightly due to a reduction in thenumber of high-unit-price newer cars handled, and a more aggressive approach to purchasing
activities that saw purchase prices increase slightly in order to secure new customers. In exports,
where the impact of high oil prices in overseas markets is beginning to reduce, efforts were madeto strengthen sales in areas showing signs of recovery. However, overall demand for commercial
vehicles has not recovered and revenues decreased from the previous fiscal period.
As a result of the factors noted above, consolidated net sales for the period under review
increased 1.2% (¥528 million) to ¥44,292 million and operating income decreased 4.5% (¥101
million) to ¥2,104 million. Ordinary income decreased 5.3% (¥117 million) to ¥2,089 million andnet income increased 79.9% (¥906 million) to ¥2,040 million as a result of changes in accounting
treatments at subsidiaries.

Financial Position
In the first quarter of the fiscal year ending February 28, 2007, total assets increased ¥50 million
and net assets declined from the previous fiscal year to ¥5536 million. (From this fiscal period− 2 −minority interests are considered to be part of net assets. If calculated using the same standards
as the previous fiscal year the decrease compared to the end of the previous fiscal year would be¥888 million.)
Cash flow
In the first quarter of the fiscal year ending February 28, 2007, cash flow from operating activities
was positive and cash flow from investing activities was negative, while overall cash flow was anegative figure of ¥396 million. The balance of cash and cash equivalents as of the end of theperiod was ¥2,977 million.
Cash flow from operating activities
Cash generated from operating activities was ¥1,464 million. This was primarily due to anincrease in operating revenue from the purchase and sale of cars.

Cash flow from investing activities
Net cash used in investing activities was ¥2,610 million. This was primarily due to investment in
the opening of new directly operated stores.

Cash flow from financing activities
Net cash generated from financing activities was ¥747 million. This was primarily due to anincrease in borrowings.

Qualitative information regarding forecasts
Due to changes to accounting treatments at G-One Financial Service Co., Ltd., the auto-loan andfinancial business company, we have adjusted net income forecasts for the interim period of the
fiscal year ending February 28, 2007 to ¥2,400 million. Due to the possibility of the disposal of
fixed assets in the second half of the year, consolidated net income forecasts for the period haveremained unchanged. With regard to non-consolidated forecasts, we are making good progress
towards achieving the forecasts previously announced on April 18, 2006.

− 3 −Consolidated Balance Sheets
As of May 31,
2006
ASSETS

Millions of yen
As of February 28,
2006

As of May 31,
2005% of total% of total% of total

Current assets
Cash and deposits ................................

2,977

4,728

3,374

Accounts receivable..............................

8,843

7,994

11,180Marketable securities ............................

100

--

100

Inventory ...............................................

5,626

6,058

4,659

Deferred tax assets...............................

346

529

468

Others ...................................................

3,247

1,790

1,393

Allowance for doubtful accounts ...........

(86)

(57)

(84)

Total current assets ...........................

21,05454.2

21,044

58.8

21,091

54.4

Fixed assets
Tangible fixed assets
Buildings and structures........................

7,148

5,441

6,812

Tools, fixtures and equipment ...............

1,594

1,197

1,689

Land......................................................

327

327

327

Other.....................................................

272

521

415

Total tangible fixed assets

9,341

24.0

7,486

20.9

9,244

23.8

Intangible fixed assets
Software................................................

2,591

2,395

2,719

Other.....................................................

118

101

121

Total intangible fixed assets ..............

2,710

7.0

2,497

7.0

2,841

7.3

Investments and other assets
Investment securities .............................

191

257

199

Shares of related companies .................

108

241

103

Deposits and guarantee money .............

3,174

2,634

3,052

Construction cooperation fund ...............

1,962

1,226

1,890

Deferred tax assets................................

112

142

111

Others ....................................................

567

581

648

Allowance for doubtful accounts ............

(360)

Total investments and other assets .....

5,756

Total fixed assets ..............................
Total Assets.............................................

(320)

(371)

14.8

4,763

17,80845.8

14,74741.2

17,72045.6

38,862100.0

35,791

100.0

38,812

100.0

− 4 −

13.3

5,633

14.5

Consolidated Balance Sheets
Millions of yen
As of May 31,
2006

As of May 31,
2005

LIABILITIES%As of February 28,
2006
%

%

Current liabilities
Accounts payable ...........................................

2,860

4,610

3,501

Short-term borrowing ......................................

13,060

6,950

9,350

Accrued expenses ..........................................

2,290

2,616

4,156

Accrued corporate taxes.................................

948

1,053

1,867

Deposits received ...........................................

891

770

462

Reserve for bonuses.......................................

371

813

532

Others .............................................................

2,174

1,735

1,678

Total current liabilities ..................................

22,59758.1

18,55051.8

21,54955.5

Long-term liabilities
Long-term debt .............................................

200

--

304

Guarantee deposits received..........................

589

643

594

Total long-term liabilities ..............................

789

2.0

643

1.8

898

2.3

Total liabilities ............................................

23,38760.1

19,19353.6

22,448

57.8

--

--

348

1.0

352

0.9

Paid-in capital .................................................

--

--

4,157

11.6

4,157

10.7

Capital surplus ................................................

--

--

4,032

11.3

4,032

10.4

Retained earnings .........................................

----

13,63938.1

15,82240.8

securities .........................................................

--

--

1

0.0

67

0.2

Translation adjustments ..................................

--

--

--

--

(0)

(0.0)

Treasury stock ................................................

----(5,580)(15.6)(8,067)(20.8)

Total capital ...............................................

----

16,25045.4

16,011

41.3

--

--

35,791

100.0

38,812100.0-

MINORITY INTERESTS
Minority interests.............................................
CAPITAL

Unrealized gains and losses in otherTotal Liabilities, Minority Interests andShareholders’ Equity ......................................
NET ASSETS
Shareholders’ equity..........................................
Paid-in capital .................................................

4,157

--

--

Capital surplus ................................................

4,032

--

--

Retained earnings...........................................

16,867----

Treasury shares(9,998)--

Total shareholders’ equity .........................

15,058

38.8

--

---

--

--

Appraisal and translation differences
Unrealized gains and losses in othersecurities.........................................................
Translation adjustments..................................
Total Appraisal and translation

62

--

--

2

--

--

65

0.2

--

--

--

--

351

0.9

--

--

--

--

Total capital .....................................................

15,475

39.9

--

--

--

--

Total liabilities and capital..............................

38,862100.0--

differences .................................................
Minority interests

− 5 −

--

Consolidated Statements of Income
Millions of yen
March 1, 2006 to

March 1, 2005 to

May 31, 2006

May 31, 2005

March 1, 2005 to
February 28, 2006

%

%

%

Sales .....................................................

44,292100.0

43,763100.0

182,649

100.0

Cost of sales .........................................

34,31477.5

33,31776.1

139,371

76.3

Gross profit.....................................

9,978

22.5

10,44523.9

43,278

23.7

Sales general and administrative
expenses............................................

7,873

17.7

8,240

18.9

33,855

18.5

Operating income ...........................

2,104

4.8

2,205

5.0

9,423

5.2

Non-operating income ........................

21

0.0

21

0.0

120

0.1

Non-operating expenses ......................

36

0.1

19

0.0

161

0.1

Ordinary income ..................................

2,089

4.7

2,207

5.0

9,382

5.2

Extraordinary profit ...............................

1,181

2.7

38

0.1

56

0.0

Extraordinary losses......................... ...

169

0.4

78

0.2

1,001

0.6

Net income before taxes, etc. .......

3,102

7.0

2,167

4.9

8,437

4.6

Income tax, inhabitants tax andenterprise tax..................................

932

2.1

994

2.3

3,935

2.2

Corporate tax adjustment ...............

124

0.3

19

0.0

66

0.0

Minority interests ............................

4

0.0

19

0.0

14

0.0

Net income ................................ ...

2,040

4.6

1,134

2.6

4,421

2.4

− 6 −

Consolidated Statements of Cash flows
Millions of yen
March 1, 2005 to
February 28, 2006

March 1, 2006 to
May 31, 2006

March 1, 2005 to
May 31, 2005

I. Cash flow from operating activities
Income before taxes, etc...................................................................

3,102

2,167

8,437

Depreciation......................................................................................

535

414

2,061

Increase (decrease) in reserve for bonuses .....................................

(140)

293

2

Increase (decrease) in allowance for doubtful accounts...................

(8)

(21)

47

Interest and dividends received ........................................................

(0)

(0)

(1)

Interest paid ......................................................................................

9

6

28

New share issuance expenses .........................................................

--

--

5

Gain on sale of fixed assets..............................................................

--

--

(3)

Loss on disposal of fixed assets .......................................................

169

78

879

Gain on sale of investment securities ...............................................

--

(15)

(45)

Payment of directors’ bonuses..........................................................

(73)

(94)

(94)
(660)

Increase (decrease) in accounts receivable .....................................

1,948

2,149

Increase (decrease) in inventory.......................................................

(960)(1,490)(17)

Increase (decrease) in accounts payable .........................................

(520)

(984)

(1,079)

Increase (decrease) in accrued consumption tax .............................

(251)

(87)

328

Other .................................................................................................

(297)

361

(549)
9,339

Subtotal.............................................................................................

3,509

2,776

Interest and dividends received ........................................................

0

0

1

Interest paid ......................................................................................

(9)

(6)

(26)

Corporate taxes paid.........................................................................

(2,036)(2,650)(4,871)

Cash flow from operating activities ................................................

1,464

119

4,442

II. Cash flow from investing activities
Proceeds from sale of investment securities ....................................

--

115

212

Payments for purchase of marketable securities ..............................

(1,866)(642)(3,032)

Proceeds from sale of marketable securities ....................................

0

0

7

Payments for acquisition of intangible fixed assets ..........................

(123)

(446)

(1,558)

Payments for acquisition of shares of affiliates.................................

--

(17)

--

Amounts lent .....................................................................................

(35)

(293)

(492)

Proceeds from repayment of loans ...................................................

13

355

577

Increase (decrease) in short-term borrowing ....................................

(393)

(19)

(130)
(2,096)

Deposit and guarantee payments .....................................................

(199)

(650)

Payments for acquisition in shares of subsidiaries ...........................

5

--

--

Proceeds from transfer of operations................................................

--

--

127

Other .................................................................................................

(0)

(0)

1

Cash flow from investing activities .................................................

(2,610)(1,597)(6,385)

III. Cash flow from financing activities
Net increase (decrease) in short term borrowings ............................

3,660

3,000

5,687

Repayment of long-term loans..........................................................

(54)

--

(340)

Proceeds from long-term loans.........................................................

--

--

200

Payments for acquisition of treasury stock .......................................

(2,079)--(2,974)

Proceeds from disposal of treasury stock .........................................

45

40

209

Proceeds from issuance of new shares ............................................

--

35

35

Payment of dividends........................................................................

(824)(1,000)(1,786)

Payments from minority shareholders ..............................................

--

--

3

Cash flow from financing activities.................................................

747

2,075

1,029

IV. Cash and cash equivalents currency translation differences.

0

--

1

V. (Decrease) increase in cash and cash equivalents ...................

(396)

597

(913)

VI. Cash and cash equivalents at beginning of period ..................
VII. Increase in cash and cash equivalents from change inscope of consolidation .....................................................................
VIII. Cash and cash equivalents at end of period...........................

3,374

4,130

4,130

− 7 −

--

--

155

2,977

4,728

3,374

Changes to Material Items Forming the Basis for the Preparation of theFirst Quarter Consolidated Financial Statements
March 1, 2006 – May 31, 2006
Accounting standards relating to theimpairment of fixed assets
From the first quarter of the fiscal year
ending February 28, 2007, we haveapplied the ‘Accounting Standards for
Impairment of Fixed Assets’ (issued by
the Accounting Standards Board of Japanon August 9, 2002) and the Financial
Accounting Standards Implementation
Guidance No. 6, ‘Implementation
Guidance for Accounting Standards for
Impairment of Fixed Assets’ (issued by
the Accounting Standards Board of Japanon October 31, 2003). This change has
had no material effect on profit and loss
statements.
Accounting treatments relating toincome generated through auto-loans
Previously, a deferred accounting method
for the unpaid portion of the loan was
employed for income generated throughauto-loans at the consolidated subsidiary
G-One Financial Service Co., Ltd.
However, from the current fiscal period,
we have begun to employ a method whichmakes a one-time calculation of theunpaid portion at the time of signing of theloan contract, excluding income related to
procurement rates and foreseeable loss
arising from early repayment or
subrogated performance. In order tomake loan contracts signed in theprevious year conform to this method, thebalance of unpaid loans from the end of
the fiscal year ended February 28, 2006,
excluding income related to procurement
rates and foreseeable loss arising fromearly repayment or subrogatedperformance, has been recorded as
extraordinary profit.
We made this change based on theexpertise and internal data we haveaccumulated based on the auto-loans
business, and we believe that the relatingof income generated through auto-loans
to expenses (rebates) arising at the timeof the signing of the contract betterreflects actual operating conditions.
As a result of this change, net sales,
gross profit on sales, operating income
and ordinary income have increased ¥208
million compared to the previous method,and net income before adjustment forincome taxes has increased ¥1,372
million.

March 1, 2005 – May 31, 2005

− 8 −March 1, 2005 – February 28, 2006

4. Segment Information
Segment information by business typeFirst quarter of the fiscal year ending February 28, 2007 (March 1, 2006 to May 31, 2006)
Millions of yen

Trading of

Other

Elimination/
Total

used cars

Consolidated

businesses

All company

Sales(1) Sales to external
42,0172,274

44,292--

44,292

--

--

--

--

--

Total

42,0172,274

44,292--

44,292

Operating expenses

38,923

1,972

40,896

1,291

42,187

Operating income

3,093

302

3,396

(1,291)

2,104

customers(2) Inter-segmental sales
or transfers

Note:
1. Method of business classification: Businesses have been classified according to the classification used in calculating sales.

Business Classification

Principal Product Name or Service Name

Used Car Sales

Purchase and sales of used automobiles through directly operated outlets and the like

Other businesses

Royalties arising out of franchise agreements and fees for the provision of training etc., andintermediation in buying and selling of used automobiles

First quarter of the fiscal year ended February 28, 2006 (March 1, 2005 to May 31, 2005)
Millions of yen

Trading ofFranchise

Elimination/
Total

used cars

Consolidated

business

All company

Sales(1) Sales to external
41,6502,113

43,763043,763

--

--

--

--

--

Total

41,6502,113

43,763043,763Operating expenses

39,211

1,375

40,587970

41,557

Operating income

2,438

738

3,176

(970)

2,205

customers(2) Inter-segmental sales ortransfers− 9 −Note:
1. Method of business classification: Businesses have been classified according to the classification used in calculating sales.
Business Classification

Principal Product Name or Service Name

Used Car Sales

Purchase and sales of used automobiles through directly operated outlets and the likeFranchising

Royalties arising out of franchise agreements and fees for the provision of training etc., andintermediation in buying and selling of used automobiles

Fiscal year ended February 28, 2006 (March 1, 2005 to February 28, 2006)
Millions of yen

Trading of

Other

Elimination/
Total

used cars

Consolidated

businesses

All company

Sales(1) Sales to external
173,648

9,001

182,649--

182,649

--

--

--

--

--

173,648

9,001

182,649--

182,649

Operating expenses

162,227

7,302

169,529

3,696

173,226

Operating income

11,420

1,698

13,119(3,696)

9,423

customers(2) Inter-segmental sales ortransfers
Total

Notes:
1. Method of business classification: Businesses have been classified according to the classification used in calculating sales.
Business Classification

Principal Product Name or Service Name

Used Car Sales

Purchase and sales of used automobiles through directly operated outlets and the like

Other businesses

Royalties arising out of franchise agreements and fees for the provision of training etc., andintermediation in buying and selling of used automobiles

2. Amount and principal content included in the “Elimination or Total Company” item
Millions of yen
March 1, 2006 to

March 1, 2005 to

March 1, 2005 to

May 31, 2006

May 31, 2005

February 28, 2006

1,291

970

3,696

Amount of unallocated operating expenses included inelimination or total company item
Principal content

Expenses relating to head office administration at the parent company

Segment information by geographical location
For the first quarter of the current consolidated fiscal year and for the previous fiscal year consolidated
subsidiaries were located overseas, but as over 90% of sales for each segment were in Japan segment− 10 −

information by geographical location has been omitted.

Overseas sales
For the first quarter of the current consolidated fiscal year, and for the previous fiscal year, overseas sales
were less than 10% of consolidated sales and have therefore been omitted.

− 11 −