Gulliver International Co., Ltd.

Consolidated Results
Third Quarter of the Fiscal year Ending February 28, 2006
(Nine month period ended November 30, 2005)

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 and beliefs made 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)
Third quarter results for the fiscal year ending February 28, 2006

Gulliver International Co., Ltd.

January 11, 2006
st

Stock Code: 7599
Listed exchanges: Tokyo (1 Section)
http://www.glv.co.jp/
Inquiries: Senior Executive Vice President: 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:
None
3. Changes to scope of consolidation or equity method accounting:Yes
Three companies newly included:
Hucobo Co., Ltd., G-BUS., LTD., Samurai Motors Co.
2. Consolidated financial results for the nine month period ended November 30, 2005
1) Consolidated Operating Results

Millions of yen, rounded downNine months ended
November 30, 2005

Nine months ended
November 30, 2004(% change)

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

133,219
5,920
5,882
2,795
¥279.67¥276.55

19.9(21.2)(21.5)(31.8)---

Fiscal Year ended
February 28, 2005(% change)

111,029
7,513
7,496
4,102
¥404.08¥393.76-------(% change)

156,696
10,22910,2195,652¥548.86¥537.88

28.5
33.7
32.7
39.5
---

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 November 30, 2005

As of November 30, 2004

As of February 28, 2005

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

35,83328,71934,529

Shareholders’ equity ........................................

15,772

16,44616,143Equity ratio (%) ................................................
Shareholders’ equity per share (¥) ...................

44.0
1,583.02

57.2
1,626.15

46.7
1,603.84

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 ....

Nine months ended
November 30, 2005
3,578
(5,655)
2,607
4,826

Nine months
endedNovember 30, 2004
3,335
(4,116)(2,466)
5,376

Fiscal Year ended
February 28, 2005
2,724
(5,791)(1,427)4,130

3. Forecasts for the fiscal year ending February 28, 2006 (March 1, 2005 to February 28, 2006)
Millions of yen

FY ending February 28, 2006
Sales .......................................................................................
Ordinary income......................................................................
Net Income..............................................................................
Earnings per share (¥) ............................................................

181,900
10,3005,000¥502.73

Forecasts and forward-looking statements in this document are based on a number of assumptions and beliefs made 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 (20more than at the end of the previous fiscal year) and has 219 franchise stores (30 fewer thanat the end of the previous fiscal year). In total, Gulliver operates 487 stores (ten fewer thanat the end of the previous fiscal year). In our directly owned store operations, we continued
to open new branches and replacement stores (relocating or launching new stores), andthrough improving brand recognition and marketing activities were able to increase thenumber of customers per store and also the number of vehicles handled. Affiliated stores,
despite a decrease in the number of stores, continued to perform well in numbers of cars
handled.

The company has contracted Hideki Matsui of the New York Yankees as its campaign
personality and is undertaking comprehensive marketing and public relations activities. Also,
staff have been actively recruited along with the opening of more directly owned stores. As aresult, the efficiency of investments in marketing and personnel costs decreased somewhat
in the interim period of the fiscal year ending February 28, 2006 and we are presently
striving to raise efficiency. In particular, in order to rapidly enhance our strength in sales weare focusing on training and raising the sales capabilities of directly operated store
employees, continuing with a range of OJT (on-the-job training) programs, flexibly adapting
our operating sales structures and implementing measures to increase motivation.

Vehicles handled by Gulliver are sold quickly, with an average timeframe of only one week
to ten days required to achieve a sale via channels that include auction sites throughout
Japan, the Company’s unique selling system ‘Dolphinet’, and GAO! Auction, the internet
based real-time auction aimed at used-car dealers. GAO! Auction was launched in January2005 and had around 19,000 members as of the end of November 2005, it is performing
well with a closure rate of approximately 40%.

There are currently four subsidiaries of Gulliver International: G-Trading Co., Ltd., thesecond-hand truck, bus and construction vehicles purchase, sales and export company(listed on JASDAQ in November 2006); G-One Financial Service Co., Ltd., the consolidated
auto-loan and financial business subsidiary; Gulliver Europe Ltd., which aims to spread risks
in future business activities; and Hucobo Co., Ltd. which was registered in June 2004 and ismainly involved in the car transportation business. The Group also includes Gulliver USA,
INC., a non-consolidated affiliate that is involved in the purchase and sale of second-handcars in the U.S.
At G-Trading Co., Ltd. we attempted to broaden our customer base through such activities− 2 −as a November campaign to attract new customers, but profitability decreased as a result of
an increase in the cost of goods purchased. As regards exports, while the effects of higher
oil prices steadily lessened, we strengthened our sales efforts in recovering regions.
However, the demand for commercial-use vehicles failed to improve and the contribution to
profits remained low.

At consolidated subsidiary Samurai Motors Co. (Moscow), initial investments have not yet
been recovered but, since commencing internet-based sales methods, sales results havebegun to improve. Similarly, at consolidated subsidiary G-BUS, sales are steadily improving
through use of the internet and the company is currently implementing measures to improve
brand recognition.

At G-One Financial Services, business development is progressing well, but an ordinary
loss was recorded due to the accounting treatments adopted. During the period, G-One
began full-fledged sales of auto-loan products. As a result, Gulliver has been receiving loan
rebates from G-One for automobile loan contracts. Previously, Gulliver received rebatesfrom outside companies, through the provision of loan services from other companies.
Income from automobile loans sold by G-One (a certain proportion of the total credit
provided) is recorded on a deferred basis, whereas rebates are recorded as a one-time
expense, and in the period under review, this led to a loss at the ordinary income level. In
the previous period we had expected that in the case of securitization of loan receivables,
income could be recorded as a lump sum, but the Company now understands that recording
income on a deferred basis is the appropriate accounting treatment and we have been
implementing this treatment since the interim period of the year ending February 28, 2006.

Hucobo Co., Ltd. began operations in earnest and in the third quarter period, expenses
relating to business establishment resulted in an ordinary loss.

As a result of the factors noted above, consolidated net sales for the nine month period
ending November 30, 2005 increased 19.9% (¥22,190 million) to ¥133,219 million andoperating income decreased 21.2% (¥1,593 million) to ¥5,920 million. Ordinary income
decreased 21.5% (¥1,613 million) to ¥5,882 million and net income decreased 31.8%(¥1,306 million) to ¥2,795 million.

Financial Position
As of November 30, 2005, total assets increased by ¥1,304 million compared to the end of
the previous fiscal year and shareholders’ equity decreased by ¥370 million.
− 3 −Cash flow
Cash flow from operating and financing activities in the period under review was positive,
however cash flow from investment activities was negative, while overall cash flow was apositive figure of ¥531 million. The balance of cash and cash equivalents as of November 30,
2005 was ¥4,826 million.

Cash flow from operating activities
Net cash generated from operating activities was ¥3,578 million. The principal factor
contributing to this result was an increase in operating revenue from the sale and purchaseof automobiles.

Cash flow from investment activities
Net cash used in investment activities was ¥5,655 million. The principal factor contributing tothis result was investment in the opening of new directly operated stores.

Cash flow from financing activities
Net cash generated from financing activities was ¥2,607 million. The principal factor
contributing to this result was an increase in loans.

3. Forecasts for the fiscal year ending February 28, 2006 (March 1, 2005 to February
28, 2006)
Millions of yen

FY ending February 28, 2006
Sales ................................................................
Ordinary income ...............................................
Net Income .......................................................
Earnings per share (¥)......................................

181,900
10,3005,000
502.73

Qualitative information regarding forecasts:
Results in the period under review showed good progress towards the forecasts previously
announced on October 19, 2005

− 4 −Consolidated Balance Sheets
As of November 30,
2005
ASSETS

Millions of yen
As of November 30,
2004

As of February 28,
2005% of total% of% of total

total

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

4,826

4,130

5,376

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

5,661

10,015

3,557

Marketable securities ............................

--

--

237

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

6,257

4,555

5,309

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

558

549

556

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

1,949

1,813

1,596

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

(69)

(84)

(28)

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

19,184

53.5

20,98060.8

16,605

57.8

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

5,910

5,340

4,840

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

1,261

1,099

997

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

327

327

327

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

318

260

135

Total tangible fixed assets

7,818

21.8

7,026

20.4

6,300

21.9

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

2,987

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

98

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

3,085

2,187

1,932

103
8.6

2,290

103
6.6

2,036

7.1

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

319

373

244

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

3,295

2,185

2,133

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

1,636

960

822

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

96

135

170

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

749

892

698

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

(351)

Total investments and other assets .....

5,745

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

(314)
16.0

4,231

16,64946.5

13,54835,833100.0

34,529

− 5 −

(293)
12.2

3,776

13.2

39.2

12,113100.0

28,71942.2
100.

Consolidated Balance Sheets
Millions of yen
As of November 30,
2005

As of February 28,
2005

LIABILITIES%As of November 30,
2004
%

%

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

2,810

5,734

2,889

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

9,500

3,950

1,100

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

2,294

2,272

2,054

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

677

2,677

1,867

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

700

767

981

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

970

519

792

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

1,932

1,513

1,650

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

18,88552.7

17,43550.5

11,336

39.5

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

200

--

--

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

628

621

630

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

828

2.3

621

1.8

630

2.2

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

19,71455.0

18,05652.3

11,966

41.7

346

1.0

328

1.0

305

1.1

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

4,157

11.6

4,139

12.0

4,126

14.4

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

4,032

11.3

4,014

11.6

4,002

13.9

Retained earnings .................................
Unrealized gains and losses in othersecurities .................................................

14,30439.9

13,66839.6

12,336

42.9

79

0.2

10

0.0

8

0.0

Translation adjustments ..........................
Treasury stock ........................................

0(6,799)0.0
19.0-(5,689)

16.5-(4,027)-14.0

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

15,77244.0

16,14346.7

16,446

57.2

Total Liabilities, Minority Interests
and Shareholders’ Equity.......................

35,833100.0

34,529100.0

28,719100.0

MINORITY INTERESTS
Minority interests.....................................
CAPITAL− 6 −Consolidated Statements of Income
Millions of yen
March 1, 2005 to

March 1, 2004 to

March 1, 2004

November 30, 2005

November 30, 2004

to February 28, 2005

%

%

%

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

133,219100.0

111,029100.0

156,696

100.0

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

101,909

76.5

83,45875.2

118,089

75.4

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

31,31023.5

27,57124.8

38,607

24.6

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

25,39019.1

20,05718.1

28,377

18.1

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

5,920

4.4

7,513

6.7

10,2296.5

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

65

0.1

23

0.0

53

0.0

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

102

0.1

40

0.0

64

0.0

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

5,882

4.4

7,496

6.7

10,219

6.5

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

49

0.0

128

0.1

90

0.1

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

365

0.3

1

0.0

251

0.2

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

5,566

4.1

7,623

6.8

10,058

6.4

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

2,780

2.1

3,580

3.1

4,402

2.8

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

(17)

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

7

0.0

61

0.0

84

0.0

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

2,795

2.0

4,102

3.7

5,652

3.6

(81)

(121)

− 7 −

Consolidated Statements of Cash flows
Millions of yen
March 1, 2004 to
February 28,
2005

March 1, 2005 toNovember 30,
2005

March 1, 2004 toNovember 30,
2004

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

5,566

7,623

10,058Depreciation..........................................................................................

1,437

900

1,383

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

440

411

139

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

21

(40)

37

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

(1)

(4)

(5)

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

22

7

12

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

5

7

7

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

244

1

247

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

(45)

—

—

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

(94)

(83)

(83)

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

5,701

1,809

(4,757)

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

(1,634)(3,320)(2,559)

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

(2,382)

159

2,657

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

187

(200)

(200)

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

(998)

310

54

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

8,470

7,583

6,990

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

1

5

6

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

(21)

(8)

(14)

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

(4,871)(4,244)(4,257)

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

3,578

3,335

2,724

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

—

—

228

Payments for purchase of investment of securities ..............................

—

—

(100)

II. Cash flow from investing activities

Proceeds from sale of investment securities ........................................

212

—

—

Payments for acquisition of tangible fixed assets .................................

(2,033)(2,336)(3,565)

Proceeds from sale of tangible fixed assets .........................................

0

0

0

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

(1,520)(1,065)(1,322)

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

(19)

(124)

(224)

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

(291)

(4)

(105)

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

68

93

118

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

16

(16)

(14)

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

(2,080)

(663)

(832)
26

Proceeds from repayment of investments ............................................

——

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

(7)

(0)

(0)

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

5,655(4,116)(5,791)

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

5,550

550

3,400

Proceeds from long-term loans

200

—

—

Payment of installment obligations .......................................................

—

(0)

—

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

(1,545)(2,559)(4,512)

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

155

374

491

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

30

335

367

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

(1,786)(1,341)(1,341)

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

3

173

167

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

2,607(2,446)(1,427)

IV. Cash and cash equivalents currency translation differences.....

(0)

—

—

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

531(3,248)(4,494)

VI. Cash and cash equivalents at beginning of period ......................

4,130

8,624

8,624

—

—

5,376

4,130

VII. Increase in cash and cash equivalents from new
consolidations .......................................................................................

164

VIII. Cash and cash equivalents at end of period...............................

4,826

− 8 −

Additional Information
From the first quarter of the current fiscal year the proportionate amounts of corporation tax
on value added and capital have been included in Selling, General and Administrative
expenses. This follows the promulgation from March 31, 2004 of the Partial Revisions to the
Law Concerning Regional Tax.1 As a result Selling, General and Administration expenses
increased by ¥90 million and operating income, ordinary income and income before taxes,
etc. each decreased by ¥90 million.

1 (2003 Article 9) For fiscal years commencing on or after April 1, 2004, along with the introduction of the tax

system based on business size ‘Treatment of the tax based on business size portion of corporate taxes in
the Statements of Income’ (February 13, 2004, Corporate Accounting Standards Committee Practice Report
12).
− 9 −

4. Segment Information
Segment information by business type
Third quarter of the fiscal year ending February 28, 2006 (March 1, 2005 to November 30, 2005)
Millions of yen

Trading ofFranchise

Elimination/
Total

used cars

Consolidated

business

All company

Sales(1) Sales to external
126,704

6,514

133,2190

133,219

--

--

--

--

--

Total

126,704

6,514

133,2190

133,219

Operating expenses

118,820

5,128

123,948

3,351

127,299

Operating income

7,884

1,386

9,270

(3,350)5,920

customers(2) Inter-segmental sales
or transfers

Third quarter of the fiscal year ended February 28, 2005 (March 1, 2004 to November 30, 2004)
Millions of yen

Trading ofFranchise

Elimination/
Total

used cars

Consolidated

business

All company

Sales(1) Sales to external
104,5826,447

111,029--

111,029

--

--

--

--

--

Total

104,5826,447

111,029--

111,029

Operating expenses

95,505

5,377

100,883

2,633

103,516

Operating income

9,076

1,070

10,146(2,633)

7,513

customers(2) Inter-segmental sales ortransfers− 10 −

Fiscal year ending February 28, 2005 (March 1, 2004 to February 28, 2005)
Millions of yen

Trading ofFranchise

Elimination/
Total

used cars

Consolidated

business

All company

Sales(1) Sales to external
148,1318,564

156,696--

156,696

--

--

--

--

--

148,1318,564

156,696--

156,696

Operating expenses

135,438

7,167

142,605

3,860

146,466

Operating income

12,693

1,396

14,090(3,860)

10,229customers(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 likeFranchising

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, 2005 to

March 1, 2004 to

March 1, 2004 toNovember 30, 2005

November 30, 2004

February 28, 2005

Amount of unallocated operating expenses included in
3,351

2,633

3,860

elimination or total company item
Principal content

Expenses relating to head office administration at the parent company

Segment information by geographical location
For the third 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
information by geographical location has been omitted.

Overseas sales
For the third 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 −