DAIIC HIKOSHO CO., LTD.

FY 2004 ending March 31, 2005
Flash Report on the Consolidated Results for the Interim Period Ended September 30, 2004

November 15, 2004
Company Name: DAIICHIKOSHO CO., LTD.
Code Number: 7458
(URL http://www.dkkaraoke.co.jp)
Registered Stock: JASDAQ
Location of Head Office (Prefecture): Metropolis of Tokyo
Representative: Tatsuyoshi Yoneda, President
Contact:
Eiji Hata, Executive Director; Administration Headquarters and General Manager,
Finance Dept.
Phone: (03) 3280-2151
Date of the Board of Directors Meeting on the Closing of Accounts: November 15, 2004
Adoption of U.S. GAAP: No
1. Consolidated Performance for the Interim Period Ended September 2004 (from April 1, 2004,
to September 30, 2004)(1) Consolidated operating results
Note: Amounts below one million yen are truncated.
Net sales

Operating income

Ordinary income¥ Million

6,296

%
(8.5)

¥ Million

60,850

%
6.9

6,195

%
(3.1)

56,910

(2.6)

6,880

15.4

6,392

17.1

¥ Million

Interim period ended September 2004
Interim period ended September 2003
Year ended March 2004

119,335

13,126

Net income¥ Million

Interim period ended September 2004
Interim period ended September 2003
Year ended March 2004

Net income per share

12,331
Fully diluted net income
per share

¥

¥

3,895

%
178.6

108.40103.22

1,398(39.9)

38.87

37.20

132.54126.11

4,898

Notes:1. Equity in net income of unconsolidated subsidiaries and affiliates:
Interim period ended September 2004: (¥ - million)
Interim period ended September 2003: (¥ - million)
Year ended March 2004: (¥ - million)
2. Average number of shares outstanding during the respective periods (consolidated):
Interim period ended September 2004: 35,941,040 sharesInterim period ended September 2003: 35,965,654 sharesYear ended March 2004: 35,958,418 shares
The Company conducted a two-for-one stock split on May 20, 2004. For comparison, “Net income pershare” is stated in the table above as if the stock split had occurred as of April 1, 2003.

3. Change in accounting method: None
4. Percentage figures for net sales, operating income, ordinary income and net income indicate
respective changes from the interim period of the previous year.

1

DAIIC HIKOSHO CO., LTD.

(2) Consolidated financial position

Interim period ended
September 2004
Interim period ended
September 2003
Year ended March 2004

Total assets

Shareholders’ equity

Equity ratio

Shareholders’ equity
per share¥ Million¥ Million%

139,292

63,74645.8

1,773.74¥

133,923

56,36642.1

1,567.49

138,453

60,85644.0

1,689.46

Note: Number of shares outstanding at the end of the respective periods (consolidated):
35,938,948 shares at September 30, 2004
35,959,692 shares at September 30, 2003
35,942,520 shares at March 31, 2004
The Company conducted a two-for-one stock split on May 20, 2004. For comparison, “Shareholders’ equity per share” is stated in the table above as if the stock split had occurred as of April
1, 2003.
(3) Consolidated cash flows
Cash flows fromoperating activities

Cash flows frominvesting activities

Cash flows fromfinancing activities

Cash and cash
equivalents at end of
period¥ Million¥ Million¥ Million¥ Million

11,589(8,396)(1,372)

22,142

11,918(11,348)(2,642)

20,74027,200(26,056)(3,606)

20,300Interim period ended
September 2004
Interim period ended
September 2003
Year ended March 2004

(4) Scope of consolidation and application of the equity method
Number of consolidated subsidiaries: 38
Number of unconsolidated subsidiaries accounted for by the equity method: Number of affiliates accounted for by the equity method: (5) Change in the scope of consolidation and application of the equity method
Consolidation (newly included): 1(Excluded): 1
Equity method (newly applied): (Excluded): 2. Forecast Consolidated Performance for FY 2004 (from April 1, 2004, to March 31, 2005)
FY 2004 ending March 31,
2005 (full year)

Net sales

Ordinary income

Net income¥ Million¥ Million¥ Million

126,000

12,8006,800(Reference) Forecast net income per share (full year): ¥185.51
Note: These projected performance figures are based on information available to the Company’s management at thetime of preparing this report. There are many uncertain factors inherent in forecasting, and there might becases in which actual results differ from forecast values. See page 10 of the Attachment for further information on forecasts.

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DAIIC HIKOSHO CO., LTD.

(Attachment)

1. Corporate GroupThe Daiichikosho Group (“DKG”) consists of Daiichikosho Co., Ltd. (“DK” or “the Company”), and38 subsidiaries. The major group companies engage in the commercial karaoke business, the karaokecabin business, the content business and the music software business.
Business segment

Business line

Commercial
karaoke business

Sales and rental of commercial-use
karaoke equipment

Karaoke cabin
business

Operation of karaoke cabins, as well as
the supply of food and beverages in thecabinsContent businessSupply of music content, etc. via satellite broadcasting and mobile phones

Music software
business

Production and sales of music andvideo software products

Other business

Real estate lease and rental business,
restaurant business, etc.

Domestic

Overseas

Daiichikosho Co., Ltd.
Hokkaido Daiichikosho Co., Ltd.
Tohoku Daiichikosho Co., Ltd.
Taito Daiichikosho Co., Ltd.
Niigata Daiichikosho Co., Ltd.
Tokai Daiichikosho Co., Ltd.
Daiichikosho Kinki Co., Ltd.
Kyushu Daiichikosho Co., Ltd.
and 14 other subsidiaries

DK KOREA
Co., Ltd.
Daiichikosho(Shanghai), Ltd.
and two othersubsidiaries
ShanghaiZong-Yi Music& Entertainment
Co., Ltd.
Saha Daiichi
Kosho Co., Ltd.
BIG ECHO(SHANGHAI)
Co., Ltd.

Gauss Entertainment Co., Ltd.
Nippon Crown Co., Ltd.
Tokuma Japan Communications Co.,Ltd.
First Dis tribution Co., Ltd.
Tri-M, Inc.
Daiichikosho Co., Ltd.
DK Finance, Co., Ltd.
DK Music Publishing Co., Ltd.
Maruhagi Yoshu Kogyo, Co., Ltd.

3

D.K. Enterprises(Guam), Inc.
World Wide Top
Co., Ltd.

DAIIC HIKOSHO CO., LTD.

The following diagram schematically shows the relationships of the respective group companies
and businesses.

(Intermediary services related to
installment sales and loans for
DK and group companies)
DK Finance, Co., Ltd.
(Production and sales of music
and video software products)
Gauss Entertainment Co., Ltd.
Nippon Crown Co., Ltd.
Tokuma Japan Communications
Co., Ltd.
First Distribution Co., Ltd.
Tri-M, Inc.
(Acquisition and management of
copyrights)(Operation of karaoke cabins)
Shanghai Zong-Yi Music & Entertainment Co., Ltd.*4
Saha Daiichi Kosho Co., Ltd.
BIG ECHO (SHANGHAI) Co.,
Ltd.*3

Overseas users

DK KOREA Co., Ltd.
Daiichikosho (Shanghai), Ltd.
Daiichikosho (Hong Kong), Ltd.*2
Daiichi Kosho (Singapore), Pte
Ltd.*1DAIICHIKOSHO CO., LTD. (Reporting company)

Domestic users(Overseas subsidiaries)(Domestic sales subsidiaries)
Hokkaido Daiichikosho Co., Ltd.
Tohoku Daiichikosho Co., Ltd.
Niigata Daiichikosho Co., Ltd.
Kyushu Daiichikosho Co., Ltd.
Taito Daiichikosho Co., Ltd.
Tokai Daiichikosho Co., Ltd.
Daiichikosho Kinki Co., Ltd.
and 14 other companies(Operation and management ofrecreation facilities)
D.K. Enterprises (Guam), Inc.

(Other overseas subsidiary)
World Wide Top Co., Ltd.*2(Nonconsolidated subsidiaries)

DK Music Publishing Co., Ltd.

Union Eiga Co., Ltd.
and 9 other companies(Production and sale of fruitwines)
Maruhagi Yoshu Kogyo, Co.,Ltd.
Sales and rentals of merchandise and products

Operation of karaoke cabins

Notes:
1. *1 indicates a dormant company.
2. *2 indicates a company that is under liquidation proceedings.
3. *3 has been newly included in consolidation as it was newly established in April 2004.
4. *4 Shanghai Zong-Yi Music & Entertainment Co., Ltd., was renamed in July 2004.
5. The liquidation procedure for H.K. Elektronik und Musik GmbH was completed in April 2004.

4

Provision of services

DAIIC HIKOSHO CO., LTD.

2. Management Policies(1) Basic management policy
Based on the corporate philosophy of “More music to the world, more service to the world,” DKG’s basic management policy is “to promote music culture through karaoke and provide people with many places of pleasantcommunications.” To that end, DKG believes it must provide karaoke equipment and an attractive range of karaoke
content that meet users’ needs, as well as karaoke cabins where people can easily gather to enjoy singing karaokesongs. DKG is proud that this objective has been well completed.
Building on the know-how and entertainment content it has accumulated to date, DKG aims to satisfy the expectations and trust not only of investors but also of all the group’s stakeholders by ensuring continued business growthand higher earnings around the core karaoke business.

(2) Basic policy on profit distribution
DK attaches a high priority to ensuring stable, long-term profit distribution to shareholders and follows a policy of
positively paying performance-based dividends. Retained earnings not distributed to shareholders will be systematically and effectively reinvested in the development of new products and operating assets to improve DKG’smarket share and reinforce its profit-enhancing foundation.

(3) Basic views on the reduction of the minimum investment lot of shares
DK intends to fle xibly address this issue by taking into account the increasing liquidity of its shares, past performance and market conditions while focusing on the shareholders’ interests.

(4) Management target indicator
As a priority indicator, DKG aims to achieve a consolidated return on equity (ROE) of 12% or more.

(5) Medium- and long-term management strategies
For the ongoing growth of DKG around the mainstay karaoke business, DKG’s basic management strategies are to a)create new customer-oriented, value-added products and services leveraging off of the latest information technology(IT) and the expanded karaoke telecommunications network; b) encourage reforms of the karaoke business environment and the revitalization of the karaoke market; and c) establish an integrated music entertainment business inwhich “music, karaoke and entertainment” are harmoniously intertwined.

(6) DKG’s tasks ahead
DKG needs to proactively address the following groupwide issues: further extending its karaoke telecommunica tions network and increasing revenue from the network, ② future expansion of the karaoke cabin business andimproving profitability in the business, ③ ensuring a consistent surplus in the satellite broadcasting business, ④
reinforcing the business foundations of the music software business and increasing revenue from the business and ⑤
setting up the “Gateway Business” as a steady and promising new business.
① DKG has established the karaoke telecommunications network to provide a karaoke-streaming service. As of
September 30, 2004, the market share of the operating “ DAM” karaoke equipment had increased to above 50%of the commercial karaoke market. To further expand the network, DKG will focus on increasing the sales andrental contracts of “DAM” karaoke equipment to improve profits including the fee revenue from the provision of
the karaoke-streaming service.
② As of September 30, 2004, DKG operated 209 “ BIG ECHO” karaoke cabin stores, including those overseas.
DKG continues to actively open new stores in prime locations in the Tokyo metropolitan area and regional corecities. DKG will also pursue further diffe rentiation with enhanced equipment and quality services for higher
management efficiency and an improved operating margin.
③ With the multichannel direct broadcast satellite provider, Sky PerfecTV , as its platform, DKG now offers two
television channels and 100 radio channels. DKG intends to record a consistent surplus in the satellite broadcasting business with an aggressive effort to increase the number of commercial-use subscribers to cope with therecent decline in contracts for household services.
④ In view of the harsh business environment in the music recording industry, DK will reinforce the managementfoundation of each music software subsidiary and improve profitability by increasing synergies with DKG’s
mainstay karaoke business.
⑤ DKG has begun s upplying a new, broadband-based interactive service that combines the “ Broadband Cyber
DAM (DAM-G100)” equipment with the information terminal “ DAM Station” beginning from the FY 2004.
DKG intends to commercialize this new “Gateway Business” as a steady source of future corporate growth.

5DAIIC HIKOSHO CO., LTD.

(7) Basic views on corporate governance and the implementation of related measures① Basic views on corporate governance“Shareholders first” corporate governance has become a predominant view among corporations given recent
stock market pressures. Shareholders who shoulder the burden of monetary risk should be the most respectedamong a corporation’s various stakeholders, which also include employees, business partners and suppliers. DK
believes its corporate governance should be carried out and improved in the direction of maximizing shareholder
value while meeting the requirements of the different stakeholders.

② Current status of internal supervising organs
Pursuant to the aforementioned concept, DK reduced the number of directors to eight in FY 2001 from a high of
25 in FY 1997 to achieve swifter managerial decision making. Along with the reduction in the number of directors, DK introduced the corporate officer system in June 2001, in which the responsibility of each corporate
officer in each significant department has been clarified with regard to his/her duties. Meetings of the Board of
Directors and the Executive Board are held periodically according to the “Board of Directors Rules” and the“Executive Board Rules,” respectively. Transparency in managerial decisions is emphasized and respected byallowing responsible staff from the related departments to attend these meetings, and complicated subjects arethoroughly reviewed on the spot to ensure quicker decision making. Although DK currently does not intend to
introduce the outside director system, its implementation will be examined as business activities develop in the
future.

③ Risk management
DK ensures that each of its employees fully understands the urgency of risk management and participates insetting up a contingency system to cope with various risks including management risk. To address an emergency
situation, DK plans to have an emergency response system in place with the formation of the Crisis -Management
Task Force, of which the President will serve as general manager; the establishment of a smooth chain ofcommand; and effective measures to minimize human and physical damages.

④ Compliance
DK endeavors to raise the consciousness of its employees by taking the initiative within the industry in seeking
guidance from specialists. DK believes that every corporate activity should be guided by a recognition of compliance. Consequently, DK is committed to sequentially upgrading the audit and legal affairs departments toreinforce the hold-down function, including the measures for improving moral code of conducts of all employees.

⑤ IR activity
DK’s IR information is quickly disclosed with an emphasis on timeliness and usefulness. Such disclosure occurs
via the Intermediate-Term Business Plan, the Flash Report on the Consolidated Results, the Business Report andother documents from the PR department, for example, in the “NEWS RELEASE” and “FOR INVESTORS”
columns on the DK’s homepage. Moreover, important information is disclosed externally according to theregulations on timely disclosure of corporate information.

⑥ Future tasks
DK believes management-supervising organs such as the Board of Directors and the Board of Statutory Auditors
should be streamlined to solidify corporate governance. More important, management executives such as directors and corporate officers as well as all managerial staff and employees must maintain a high sense of ethics
in carrying out their respective duties. Accordingly, DK strives to establish higher efficiency and sound management by enhancing its quality-focused corporate governance through both top-down and bottom-up approaches.

⑦ Unified corporate governance as a corporate group
DK believes it is most efficient and rational for DK as the parent company to take the initiative in reinforcing thecorporate governance of its subsidiaries. To integrate and share an overall understanding as a powerful corporategroup, DK therefore places corporate governance-related matters on the agenda, as required, at the Subsidiary
Presidents’ Conference and the Sales Promotion Strategy Conference, which are held periodically by convening
the presidents and major management executives of the subsidiaries. DK’s ideas on corporate governance arecommunicated there so that each subsidiary can carry out its respective corporate activities under a unified
groupwide understanding.

(8) Basic policies on relations with a related party
DK clarifies the scope of a related party and strictly investigates the scope and details of its transactions with therelated party. In particular, DK basically discloses all transactions by its officers and principal individual shareholders regardless of the disclosure criteria on transaction amounts.

6

DAIIC HIKOSHO CO., LTD.

3. Operating Results and Financial Position(1) Overview for the Interim Period① Operating results
During the interim period ended September 30, 2004, the Japanese economy showed signs of recovery, supported
by a steady increase in capital investments, a boost in exports and an improved employment situation due principally to an upturn of overall corporate performance. However, the pace of the recovery slowed amid uncertainty due to a sharp rise in crude oil prices.
In the karaoke industry, efforts to revitalize the market were apparent—large-scale stores opened consistently inthe daytime market with karaoke cabins and several manufacturers launched new products —despite intensifying
competition at snack bars and clubs, resulting in lower-priced products and services reflecting the continuously
harsh business environment for the nighttime market.
In these circumstances, DKG concentrated its promotional efforts on the sales and rental of the mainstay“ Broadband Cyber DAM (DAM-G100)” equipment to raise its top market share in the commercial karaokebusiness. In the “ BIG ECHO” karaoke cabin business, DKG opened 10 new stores at prime locations in theTokyo metropolitan area and regional core cities. In the content and the music software businesses, DKG deployed businesses by effectively using its accumulated know-how and content assets. In the new “Gateway
Business,” DKG began supplying a variety of entertainment content services using “ Broadband Cyber DAM(DAM-G100)” equipment and “ DAM Station” information terminals. As described above, DK and DKG aggressively undertook these measures to realize the ideal of integrating the music entertainment business such that“music, karaoke and entertainment” are intertwined in an effort to respond flexibly to rapid environmental
changes in the existing businesses.
Consequently, consolidated net sales for the interim term under review increased 6.9% year over year to ¥60,850
million. Consolidated operating income decreased 8.5% to ¥6,296 million, reflecting various costs to reinforce
content services and an increase in operating expenses for diverse measures to raise market share. Consolidated
ordinary income also stood at ¥6,195 million, down 3.1%. As a result of the eliminated burden of provision forreserve for directors’ retirement allowances for prior years, which had been recorded for the interim p eriod a year
earlier, consolidated net income for the interim period ended September 30, 2004, jumped 178.6% to ¥ 3,895
million, despite a considerable extraordinary loss for the disposal of fixed assets.

Operating results by business segment are summarized as follows (with year-over-year percentagechanges from the same period a year earlier):
Commercial karaoke businessNet sales: ¥35,067 million (+10.7%)
Operating income: ¥7,593 million (+31.9%)
In this segment, given the progress of lower-priced products and the multifunctionality in the market, DKG’s
mainstay product, “ Broadband Cyber DAM (DAM-G100),” which was launched in October 2003, continued to gain popularity principally due to the high added value of such features as extensive onboard functions, diversified content menus and interactive services that leverage on the broadband environment. As aconsequence, a record 19,800 units were shipped in the interim period. As for the rental of karaoke equipment
centering on the nighttime market, the recent decline in the monthly rental fee was more than offset by aconsiderable rise in the number of rental contracts. In addition, as for the fee revenue from the provision of the
karaoke -streaming service, the amount of operating equipment expanded firmly along with increases inequipment sold and the number of rental contracts. As a result, segment net sales expanded 10.7% and operating income rose 31.9% year over year.

7

DAIIC HIKOSHO CO., LTD.

Karaoke cabin businessNet sales: ¥12,771 million (+5.4 %)Operating income: ¥224 million (–82.6%)
In the operation of karaoke cabin stores with the “ BIG ECHO” brand, DKG actively opened 10 new stores inprime locations in the Tokyo metropolitan area and regional core cities during the interim period but closed
two unprofitable stores. Accordingly, the number of karaoke cabin stores directly operated by DKG increased
to 209 as of September 30, 2004 (207 domestically and two overseas), and the number of karaoke rooms totaled 5,896, up 534 from the end of the last fiscal year (March 31, 2004). As a result, segment net sales increased 5.4% year over year. However, net sales at existing stores fell 3.8% mainly affected by increased home
TV viewing of the Olympic Games and such meteorological phenomena as the violent heat and the effects of
typhoons during the interim period. Operating income declined 82.6%, reflecting increases in operating expenses for aggressive store openings and in the provision for the allowance for doubtful accounts to compensate for guarantee money for leased buildings along with the deteriorated financial position of store renters.

Content businessNet sales: ¥4,729 million (–10.3%)
Operating income: ¥483 million (–53.0%)
In this segment, DKG engages in two business fields: satellite broadcasting and e-business. Despite a gradualdecline in the number of household-use subscribers, subscribers of the “ Stardam ” commercial-use satellite
broadcasting service, which offers content menus similar to those supplied for household-use subscribers,
increased steadily and profitability remained steady due to stringent cost controls. In its e-business, DKG
strove to minimize the adverse effect of a decline in the number of subscribers with the start-up of new sites
and extended services to cope with a decline in subscribers for the mobile phone ringtone service. However,the number of subscribes in the e-business market decreased. As a result, segment net sales declined 10.3%
and operating income fell 53.0% year over year, due principally to an increase in new site operation costs.

Music software businessNet sales: ¥5,289 million (–0.3%)
Operating loss: ¥(891) million (down ¥846 million from the same period a year earlier)In this segment, DKG actively promoted sales to expand operations through the group-owned media in light ofthe continuously shrinking market volume of the music CD market. Segment net sales, however, edged down
0.3% year over year owing to fewer hit items in the interim period under review. Operating income decreased¥846 million, leading to an operating loss of ¥891 million due to increases in production costs and selling,
general and administrative expenses.

Other businessNet sales: ¥2,991 million (+17.6%)
Operating income: ¥165 million (–38.0%)
This segment mainly consists of the restaurant business and the real estate lease and rental business. Effectivefrom the current interim period under review, the “Gateway Business” and “Mail-order Business” have been
added to this segment. These new businesses started with the installation of the “ DAM Station” information
terminals and the distribution of mail-order catalogs. As a result, segment net sales increased 17.6% year overyear, whereas operating income declined 38.0% due to an increase in operating expenses related to the start ofthese new businesses.

② Financial position(Cash flows)
For the interim period ended September 30, 2004, the reserve for directors’ retirement allowances decreased andpayments for the acquisition of tangible fixed assets increased, which were more than offset by an increase intime and saving deposits and an increase in proceeds from long-term borrowings. As a result of these cash flow
factors, consolidated cash and cash equivalents as of September 30, 2004, totaled ¥22,142 million, up ¥1,401
million compared with September 30, 2003.

The following describes the consolidated cash flow conditions for the interim period ended September 30, 2004, and their factors.
(Cash flows from operating activities)
Net cash provided by operating activities decreased ¥328 million year over year to ¥11,589 million. This decline was mainly attributable to a decrease of ¥3,390 million in the reserve for directors’ retirement allo wances, which was partly offset by an increase of ¥1,572 million in interim income before income taxes andminority interests and a gain of ¥1,827 million on the disposal of fixed assets.

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DAIIC HIKOSHO CO., LTD.

(Cash flows from investing activities)
Net cash used in investing activities decreased ¥2,952 million year over year to ¥8,396 million. This decline
was primarily attributable to a ¥6,579 million decrease in time and saving deposits despite a decrease of¥2,792 million in payments for the acquisition of tangible fixed assets and a ¥2,034 million decrease in proceeds from the repayment of time and saving deposits.

(Cash flows from financing activities)
Net cash used in financing activities decreased ¥1,270 million year over year to ¥1,372 million. The principal
factor in this decline was a ¥1,979 million increase in long-term borrowings despite a net decrease of ¥620
million in short-term borrowings.

The trends of DKG’s several cash flow indicators are as follows:
FY 2002 ended March 31, 2003

FY 2003 ended March 31, 2004

FY 2004 ending March 31,
2005
Interim period
45.8
84.6

Interim period Fiscal year-end Interim period Fiscal year-end
Equity ratio (%)
39.6
42.1
42.1
44.0
Market value–based equity ratio
37.8
47.7
56.9
87.5
(%)
Debt redemption (years)
3.0
2.6
2.1
1.8
2.1
Interest coverage ratio (times)
26.7
31.6
40.1
47.6
42.3
Notes:
Equity ratio: Shareholders’ equity/Total assets
Market value– based equity ratio: Total market capitalization/Total assets
Debt redemption: Interest-bearing debt/Operating cash flow
Interest coverage ratio: Operating cash flow/Interest payment
1. All of the above indicators are calculated for their respective values on a consolidated basis.
2. Total market capitalization is calculated by multiplying the closing stock price at the end of the periodby the number of shares outstanding at the end of the period.
3. Operating cash flow is the value stated as “Cash flows from operating activities” in the consolidated
interim statements of cash flows.
4. Interest-bearing debt indicates the liabilities for which interest is paid on all the liabilities posted in the
consolidated interim balance sheets. Interest payment corresponds to the amo unt of interest paid in the
consolidated interim statements of cash flows.
5. As for debt redemption, operating cash flow values for the interim period are doubled to calculate themin annual amounts.

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DAIIC HIKOSHO CO., LTD.

(2) Future outlook (full-year)
Although the tendency toward a gradual recovery is expected to continue, ongoing uncertainty exists domesticallyregarding yen appreciation and in the global economy especially relative to rising crude oil prices.
The overall business environment surrounding the karaoke industry remains difficult, and some karaoke cabin chain
operators have begun to cut back on the scale and timing of store openings. Nevertheless, with the nighttime anddaytime markets entering a renewal period for conventional equipment models, replacement demand for broadband-compliant models is expected to expand, thereby stimulating equipment manufacturers to proactively launch
new value-added karaoke telecommunications products.
Given such a business environment, DKG has started its full-fledged “Gateway Business” services to restructure the
karaoke business environment and revitalize the karaoke market. DKG aims to quickly permeate and firmly establish this new business in the market.
Moreover, to solidify its current top share in the commercial-use karaoke telecommunications market, DKG endeavors to differentiate its products and services and improve the DAM brand value with enhanced quality. Furthermore, DKG seeks record shipments in the karaoke telecommunications market in the second half by focusing its
efforts on active shipments. In the karaoke cabin business, DKG will work to open new stores at carefully selectedprime sites by emphasizing investment efficiency, thereby improving the profitability of each store. Having almost
achieved the target of a continuing surplus in the business, DKG will pursue an increase in the number of commercial-use subscription contracts in the satellite broadcasting business. Meanwhile, in the e-business, DKG will
focus on keeping and increasing the number of subscribers with effective measures and the development of superior
content menus, as well as with the start-up of new and interesting sites.
In the music software business engaged by its subsidiaries, DKG will strengthen its sales capability to improve
profitability and devote itself to scouting new artists using the group network and the production of hit songs.
In the continuously harsh operating environment, DKG expects to achieve net sales of ¥126.0 billion, ordinary income of ¥12.8 billion and net income of ¥6.8 billion for the year ending March 31, 2005, on a consolidated basis bysurely carrying out these measures.

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DAIIC HIKOSHO CO., LTD.

4. Consolidated Interim Financial Statements(1) Consolidated Interim Balance Sheets
Fiscal period

Account item
(Assets)
Current assets
Cash and bank deposits
Notes and accounts receivable?
tradeMarketable securities
Inventories
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Fixed assets
Tangible fixed assets
Buildings and structures
Karaoke equipment for rental
Karaoke cabin facilities
Land
Other
Total tangible fixed assets
Intangible assets
Investments and other assets
Investments in securities
Long-term loans receivable
Deferred tax assets
Leasehold deposits and guarantee money
Long-term deposits
Other
Allowance for doubtful accounts
Total investments and otherassetsTotal fixed assets
Total Assets

Previous interim period(As of September 30,
2003)
AmountComposition ratio(%)

Current interim period(As of September 30,
2004)
AmountComposition ratio(%)(Millions of yen)
Last fiscal year
Year-over(As of March 31, 2004)
yearchangeAmountComposition ratio(%)

21,953
13,75730,843
12,90929,28014,011

1,562(1,101)

117
7,319
3,744
3,995
(1,346)49,542

37.0

25
5,733
3,207
3,496
(870)
55,346

39.7

131
5,907
3,613
3,131
(1,432)54,644

39.5

(105)
(174)
(405)
365
562
702

10,115
9,333
9,626
15,8282,273
47,17635.2

7,711
10,16012,13815,1893,010
48,211

34.6

9,094
9,392
10,813
16,626
2,418
48,34534.9(1,382)768
1,325(1,436)
592
(133)

7,615

5.7

8,888

6.4

8,950

6.5

(61)

3,422
3,571
3,116
11,670

6,735
2,356
2,672
13,179

7,214
2,985
2,193
12,604

(478)
(629)
478
575

6,300
4,793
(3,285)29,58822.1

4,511(2,609)26,84519.3

4,001(2,486)
26,513

19.1

509
(123)
332

84,381
133,923

63.0
100.0

83,945
139,292

60.3
100.0

83,808138,453

60.5
100.0

137
839

11

DAIIC HIKOSHO CO., LTD.

Fiscal period

Account item
(Liabilities)
Current liabilities
Notes and accounts payable?
trade
Short-term borrowings
Convertible bonds redeemablewithin one year
Accounts payable? other
Income taxes payable
Reserve for bonuses
Unrealized profit on installment
sales
Other
Total current liabilities
Long-term liabilities
Convertible bonds
Long-term borrowings
Deferred tax liabilities
Reserve for employees’ retirement benefits
Reserve for directors’ retirement
allowances
Consolidation adjustments account
Other
Total long-term liabilities
Total Liabilities(Minority Interests)
Minority interests(Shareholders’ Equity)
Capital stock
Capital surplus
Retained earnings
Land revaluation difference
Net unrealized gains or losses onavailable-for-sale securities
Foreign currency translation
adjustments
Treasury stock
Total Shareholders’ Equity
Total Liabilities, Minority Interests and Shareholders’ Equity

Previous interim period(As of September 30,
2003)
AmountComposition ratio(%)

Current interim period(As of September 30,
2004)
AmountComposition ratio(%)(Millions of yen)
Last fiscal year
Year-over(As of March 31, 2004) yearchangeAmountComposition ratio
(%)

7,069

7,574

7,249

325

19,219-19,665
9,955

19,418
10,799

246
(844)

5,714
1,157
1,139
708

5,682
1,019
1,160
526

6,705
1,125
998
667

(1,023)
(106)
161
(140)

2,425
37,435

2,683
48,267

28.0

34.7

2,576
49,54135.8

106(1,273)

11,514
19,338226
2,748

18,865226
2,741

18,935
226
2,662

(70)
78

3,001

2,752

3,141

(388)

1,091

935

1,016

(81)

1,258
39,17976,615

29.2
57.2

1,135
26,65774,924

19.1
53.8

1,161
27,144
76,685

19.6
55.4

(25)
(487)
(1,760)

941

0.7

621

0.4

910

0.6

(289)

12,34824,00130,436(9,981)
191

9.2
17.9
22.7
(7.5)
0.2

12,35024,00228,961(1,927)
1,025

8.9
17.2
20.8
(1.3)
0.7

12,34924,001
29,716(5,761)
1,286

8.9
17.3
21.5
(4.1)
0.9

0
1
(755)
3,834
(261)

91

0.1

114

0.1

31

0.0

82

(721)
56,366
133,923

(0.5)
42.1
100.0

(780)
63,746139,292

(0.6)
45.8
100.0

(767)
60,856
138,453

(0.5)
44.0
100.0

(12)
2,889
839

12

DAIIC HIKOSHO CO., LTD.

(2) Consolidated Interim Statements of Income
Fiscal period

Account item
Net sales
Cost of sales
Gross profit before adjustment for unrealized
profit on installment
sales
Unrealized profit on installment sales- reversal(+)
Unrealized profit on installment
sales- deferred (–)
Gross profit on sales
Selling, general and administrative expenses
Operating income
Nonoperating income
Interest and dividend
incomeFees and commissions
received
Amortization of consolidation adjustments
account
Other
Nonoperating expenses
Interest expense
Provision for allowancefor doubtful accounts
Loss on disposal of inventories
Loss on valuation of
inventories
Other
Ordinary income
Extraordinary gains
Gain on sales of fixed
assets
Reversal of allowancefor doubtful accounts
Reversal of reserve fordirectors’ retirement allowancesGain on sales of investments in securities
Extraordinary losses
Loss on disposal of
fixed assets
Loss on sales of investments in securities
Loss on valuation of
investments in securities
Provision for reserve fordirectors’ retirement allowances for prior years

Previous interim period(From April 1, 2003, to September 30, 2003)
AmountPercentage(%)
56,910100.0
31,79855.9
25,112
44.1

120

69

Current interim period(From April 1, 2004, to September 30, 2004)
AmountPercentage(%)
60,850100.036,20659.5
24,643
40.5

Year-over-yearchange
(%)

106.9
113.9
98.1

156

51

0.1

25,163
18,283
6,880

17(Millions of yen)
Last fiscal year
(From April 1, 2003, to
March 31, 2004)
AmountPercentage(%)
119,335
100.0
68,85557.7
50,479
42.3

219

139

0.2

272.7

44.2
32.1

24,782
18,486

40.7
30.4

12.1

6,296

10.3

127

92

0.1

98.5
101.1

50,57237,445

42.4
31.4

91.5

13,126

11.0

1,792

1.5

2,587
12,331

2.2
10.3

426

0.4

295

243

540

133

129

275

139

113

283

292

860

1.5

333

819

1.4

95.2

692

290
12

275
24

570
102

256

73

729

429

307

519

360

1,348
6,392

2.4
11.2

239

920
6,195

1.5
10.2

68.3
96.9

665

-

4

16

118

34

201

-

139

-

2

121

0.2

553

731

1.2

603.3

208

400

2,232

1,843

-

6

-

76

-

82

2,921

-

2,921

13

DAIIC HIKOSHO CO., LTD.

Fiscal period

Account item
Loss on arrangement ofsubsidiaries and affiliates(Interim) income before
income taxes and minority interests
Income taxes? current
Income taxes? deferred
Minority interests in income (loss) of consolidated subsidiaries
Net income for theperiodPrevious interim period(From April 1, 2003, to September 30, 2003)
AmountPercentage
(%)
3,398
5.9

Current interim period(From April 1, 2004, to September 30, 2004)
AmountPercentage
(%)
2,238
3.7

3,115

5.5

4,687

1,787
(70)

3.1
(0.1)

1,398

2.5

1,081
706

884
107

65.9

Last fiscal year
(From April 1, 2003, to
March 31, 2004)
AmountPercentage
(%)
5
4,853
4.1

7.7

150.5

7,904

6.6

991
(199)

1.6
(0.3)

55.5
284.1

2,996
8

2.5
0.0

3,895

6.4

278.6

4,898

4.1

Year-over-yearchange
(%)

1,975
1,021

(3) Consolidated Interim Statements of Retained Earnings
Fiscal period

Account item
(Capital surplus)
Capital surplus at beginningof period
Increase in capital surplus
Conversion of convertible
bonds
Gain from purchase and redemption of treasury stock
Capital surplus at end of
period(Retained earnings)
Retained earnings at begi nning of period
Increase in retained earnings(Interim) net income
Decrease in retained earnings
Cash dividends
Bonuses to directors andstatutory auditors
Reversal of land revaluationdifference
Retained earnings at end of
periodPrevious interim period (From Current interim period
April 1, 2003, to September 30, (From April 1, 2004, to Sep2003)
tember 30, 2004)
AmountAmount24,00024,001

0

1,398

0
0

0

24,00001

0024,001

24,00224.001

29,87929,71629,879

1,398

3,895

683
134
23

(Millions of yen)
Last fiscal year
(From April 1, 2003, to March
31, 2004)
Amount

3,895

682
134
841

3,834

30,436

4,898

683
134
4,651
28,961

14

4,898

4,243

5,062
29,716DAIIC HIKOSHO CO., LTD.

(4) Consolidated Interim Statements of Cash Flows
Fiscal period

Account item
Cash flows from operating activities:(Interim) income before income taxes and minority
interests
Depreciation expense
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in reserve for directors’ retirement allowances
Dividend and interest income
Gain or loss on sales of investments in securities
Interest expense
Gain or loss on disposal of fixed assets
Loss on valuation of investments in securities
Decrease (increase) in trade receivables
Decrease (increase) in inventories
Transfer of cost of sales on karaoke equipment forrentalIncrease (decrease) in trade payables
Other
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Income taxes refunded
Net cash provided by operating activities
Cash flows from investing activities:
Increase in time and saving deposits
Proceeds from decrease in time deposits
Payments for acquisition of tangible fixed assets
Proceeds from sales of tangible fixed assets
Payments for acquisition of intangible assets
Payments for purchase of investments in securities
Proceeds from sales of investments in securities
Payments for purchase of subsidiaries’ stocks
Payments for loans
Proceeds from collection of loans
Payments for leasehold deposits and guarantee
money
Proceeds from repayment of leasehold deposits andguarantee money
Other
Net cash used in investing activities
Cash flows from financing activities:
Net increase (decrease) in short-term borrowings
Increase in long-term borrowings
Payments for repayment of long-term borrowings
Payments for retirement of convertible bonds
Cash dividends paid
Payments for purchase of treasury stock
Other
Net cash used in financing activities
Effect of exchange rate changes on cash and cash
equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

Previous interim period(From April 1, 2003, toSeptember 30, 2003)
AmountCurrent interim period(From April 1, 2004, toSeptember 30, 2004)
Amount(Millions of yen)
Last fiscal year
(From April 1, 2003, to
March 31, 2004)
Amount

3,115

4,687

7,904

5,892
299

6,811
(160)

12,884
504

3,001

(388)

3,141

(295)
(2)
290
400
76
(99)
(629)
451

(243)
(547)
275
2,227
911
(607)
514

(540)
(208)
570
1,827
82
(353)
820
943

489
(983)
12,006285(297)(1,078)
1,002
11,918(137)(644)
12,698237(274)(1,162)
89
11,589625
29
28,232541(571)(2,004)
1,002
27,200(6,904)
2,638(4,668)29(2,291)
(93)
9
(174)
(224)
499
(345)

(324)
603
(7,460)748(2,045)
(41)
595
(45)
(212)
542
(790)

(9,008)
3,275(11,684)
46(6,064)(2,093)
223
(265)
(495)
1,101
(1,405)

162

112

241

14
(11,348)(76)(8,396)70(26,056)745
3,777(5,796)
(654)
(683)
(21)
(9)
(2,642)
(17)

124
5,756
(5,705)
(845)
(682)
(12)
(7)
(1,372)
20

618
9,391
(11,481)(1,373)
(684)
(67)
(9)
(3,606)(66)(2,090)22,831
20,7401,841
20,30022,142(2,530)22,831
20,30015

DAIIC HIKOSHO CO., LTD.

Basis of Presenting the Consolidated Interim Financial Statements
1. Scope of Consolidation(1) Consolidated subsidiaries: 38
The names of the consolidated subsidiaries are omitted as they are stated in the “1. Corporate Group.”(2) Major unconsolidated subsidiaries
Major unconsolidated subsidiaries are Union Eiga Co., Ltd., Crown Music Enterprise Co., Ltd., and Zoom Republic.

(Reason for exclusion from consolidation)
The unconsolidated subsidiaries are excluded from consolidation because their respective sums of total assets, net
sales and net income (loss) (corresponding to the amounts owned by DKG) and of retained earnings (corresponding
to the amounts owned by DKG) have no significant impact on the consolidated interim financial statements of DKG.

2. Application of the Equity Method(1) Unconsolidated companies accounted for by the equity method: None
(2) Unconsolidated companies not accounted for by the equity method:
Unconsolidated subsidiaries that are not accounted for by the equity method (e.g., Union Eiga Co., Ltd., Crown
Music Enterprise Co., Ltd., and Zoom Republic) are excluded from the application of the equity method because therespective sums of net income (loss) (corresponding to the amounts owned by DKG) and of retained earnings (corresponding to the amounts owned by DKG) for the current interim period have no significant impact on these accountitems in the consolidated interim financial statements even if they are excluded therefrom, and they are immaterial on
the whole.

3. Closing Date for the Settlement of Accounts of Consolidated Subsidiaries
Of the consolidated subsidiaries, the interim closing date of the following companies is different from the consolidated
interim closing date, which is September 30. In preparing the consolidated interim financial statements, the financial
statements for the respective interim periods are used for those that have an interim closing date that differs from theconsolidated interim closing date, provided that necessary adjustments are made for consolidation purposes with regard
to material transactions that might take place in the period between their respective interim closing dates and the consolidated interim closing date.
Interim closing date is June 30:
Shanghai Zong-Yi Music & Entertainment Co., Ltd., Saha Daiichi Kosho Co., Ltd., Daiichikosho (Shanghai), Ltd.
and BIG ECHO (SHANGHAI) Co., Ltd.
Interim closing date is September 20:
Nippon Crown Co., Ltd., Tokuma Japan Communications Co., Ltd., and Tri-M, Inc.

4. Summary of Significant Accounting Policies(1) Valuation basis and method for important assets① Marketable securities and investments in securities
Held-to-maturity debt securities that are expected to be held to maturity:
Carried at amortized cost using the straight-line method.
Other securities primarily designated as available-for-sale securities for which the fair values are readily
determinable:
Carried at fair value as of the interim balance-sheet date with changes in net unrealized holding gain or loss,
net of the applicable income taxes, included directly in shareholders’ equity. The cost of securities sold isdetermined by the mo ving-average method.
Other securities primarily designated as available-for-sale securities for which the fair values are notreadily determinable:
Carried at cost determined by the moving-average method.

② Inventories
Principally stated at cost determined by the moving-average method.

16

DAIIC HIKOSHO CO., LTD.

(2) Depreciation method of major depreciable assets① Tangible fixed assets
Depreciation is principally computed by the declining-balance method at rates based on the estimated useful
lives of the assets as shown below. However, the straight-line method is adopted for buildings (excluding
building improvements) acquired on or after April 1, 1998.
Building and structures: 3–50 years
Karaoke equipment for rental: 5–6 years
Karaoke cabin facilities: 3–19 years② Intangible assets
Amortization of intangible assets is computed by the straight-line method.

(3) Accounting standard for important reserves
Allowance for doubtful accounts
The allowance for doubtful accounts is provided at an amount of possible losses from uncollectible receivables
based on the actual rate of losses from bad debt for ordinary receivables, and on the estimated recoverability forspecific doubtful receivables.

Reserve for bonuses
The reserve for bonuses is provided at an estimated amount based on the internal payment prediction standard.

Reserve for employees’ retirement benefits
The reserve for employees’ retirement benefits is provided at an amount recognized to have accrued as of theinterim balance-sheet date, based on the projected benefit obligations and plan assets as of March 31, 2005.
Actuarial differences are amortized on a pro rata basis by the straight-line method over a certain period (10years), which is shorter than the average remaining service years for employees at the time of their occurrence,from the following fiscal year of recognition.

Reserve for directors’ retirement allowances
The reserve for directors’ retirement allowances of DK and its domestic consolidated subsidiaries is provided at
amounts that would be required to be paid in accordance with their respective internal rules concerning directors’
retirement allowances if all eligible directors and statutory auditors were to resign their positions as of the respective interim balance-sheet dates.

(4) Translation of important assets and liabilities denominated in foreign currencies into yen
Monetary receivables and payables denominated in foreign currencies are translated into yen at the spot exchange
rate in effect at the interim balance-sheet date. The resulting exc hange differences are charged or credited to income.
The balance sheet accounts, as well as the revenue and expense accounts, of the overseas subsidiaries are translated
into yen at the spot exchange rate in effect at their respective interim balance-sheet dates. The resulting translationdifferences have been recorded as a component of minority interests and presented as “Foreign currency translation
adjustments” in shareholders’ equity.

(5) Accounting for important leases
Finance leases that do not transfer ownership of leased property to the lessee are accounted for as rental transactions.

(6) Hedge accounting
DKG hedges against risks of interest rate fluctuations for its variable -rate borrowings using interest rate swaps. The
preferential treatment is applied to these interest rate swaps.

(7) Other important matters in preparing the consolidated interim financial statements
Accounting for installment sales
Unrealized profit on installment sales is deferred for the amount corresponding to the portion of installment
receivables for which the due date has not expired based on DKG’s installment standards.

Accounting for consumption taxes
Consumption taxes are accounted for using the tax exclusion method.

5. Cash and Cash Equivalents in the Consolidated Interim Statements of Cash Flows
Cash and cash equivalents in the consolidated interim statements of cash flows include cash on hand, demand
deposits and short-term investments due within three months from the acquired date, which are easily convertible
into cash with little risk of value fluctuation.

17

DAIIC HIKOSHO CO., LTD.

Notes to Consolidated Interim Financial Statements(Notes to Consolidated Interim Balance Sheets)(Millions of yen)

1. Accumulated depreciation for tangible fixed assets

As of September
30, 2003
50,335

As of September
30, 2004
48,174As of March 31,
2004
49,527

901

910

899

3,642
3,610
43
7,984
834
1,793
155
18,065

2,466
3,886
22
9,716
964
1,409
155
18,621

3,282
3,311
28
7,576
897
1,634
155
16,886

6,238
8,442
14,681

5,839
7,975
13,815

6,000
6,993
12,994

330,524 shares

682,350 shares339,203 shares

2. Liabilities for guarantee
3. Assets pledged as collateral and secured debt
Notes and accounts receivable? trade
Buildings and structures
Karaoke equipment for rental
Land
Other tangible fixed assets
Long-term loans receivable
Leasehold deposits and guarantee money
Total
Debt corresponding to the above:
Short-term borrowings
Long-term borrowings
Total
4. Treasury stock(Note to Consolidated Interim Statements of Cash Flows)
Relations between the year-end balance of cash and cash equivalents and the accounts listed in the consolidated interim balance sheets(Millions of yen)

Cash and bank deposits
Time and saving deposits for which the deposit period
exceeds three months
Cash and cash equivalents

As of September
30, 2003
21,953(1,212)As of September
30, 2004
30,843(8,701)

As of March 31,
2004
29,280(8,979)20,74022,142

20,30018

DAIIC HIKOSHO CO., LTD.

(Segment Information)
The business and geographical segments of DK and its consolidated subsidiaries for the interim periods ended
September 30, 2003 and 2004, as well as the last fiscal year ended March 31, 2004, are summarized as follows:
1. Business segments
Previous interim period (From April 1, 2003, to September 30, 2003)(Millions of yen)
Item
Sales and operating
incomeSales
Sales to third parties
Intersegment sales
and transfers
Total
Operating expenses
Operating income(loss)

Eliminations andcorporate

Consolidated

56,910-56,910

174

409

(409)

-

2,717
2,450
266

57,31949,014
8,304

(409)
1,015
(1,424)56,91050,0306,880

Commercial karaoke

Karaokecabin

ContentMusic
softwareOther

31,674

12,112

5,273

5,306

2,542

76

-

-

158

31,751
25,992
5,758

12,112
10,817
1,295

5,273
4,245
1,028

5,464
5,509
(44)

Total

Current interim period (From April 1, 2004, to September 30, 2004)(Millions of yen)
Item
Sales and operating
incomeSales
Sales to third parties
Intersegment sales
and transfers
Total
Operating expenses
Operating income(loss)

Eliminations andcorporate

Consolidated

60,850-60,850

337

500

(500)

-

3,328
3,163
165

61,35053,775
7,575

(500)
778
(1,279)60,85054,553
6,296

Commercial karaoke

Karaokecabin

ContentMusic
softwareOther

35,067

12,771

4,729

5,289

2,991

96

-

-

66

35,16427,571
7,593

12,771
12,547
224

4,729
4,246
483

5,356
6,247
(891)

Total

Last fiscal year (From April 1, 2003, to March 31, 2004)(Millions of yen)
Item
Sales and operating
incomeSales
Sales to third parties
Intersegment sales
and transfers
Total
Operating expenses
Operating income(loss)

Eliminations andcorporate

Consolidated

119,335-

119,335

340

753

(753)

-

5,590
5,105
485

120,088
104,434
15,653(753)
1,773(2,527)

119,335
106,208
13,126

Commercial karaoke

Karaokecabin

ContentMusic
software66,50525,156

10,324

12,098

5,249

164

-

-

248

66,67055,986
10,68325,15622,656
2,499

10,324
8,682
1,642

12,347
12,004342

Notes: 1. Segmentation method
According to the DKG’s sales tabulation categories.

19

Other

Total

DAIIC HIKOSHO CO., LTD.

2. Major products and/or services of each business segment
Business segment
Commercial karaoke businessKaraoke cabin business
Content business
Music software business
Other business

Major products and/or services
Sales and rental of commercial-use karaoke equipment and software
Operation of karaoke cabins, as well as the supply of food and beverages in the cabins
Supply of music content, etc., via satellite broadcasting and mobile phones
Production and sales of music and video software products
Real estate lease and rental business, restaurant business, etc.

3. Amounts and major items included in “Elimination and corporate”(Millions of yen)Previous interim
period¥1,424

Amounts of unabsorbed operating expenses included in“Elimination and corporate”

Current interim
period¥1,279Last fiscal year

Major items¥2,527

Expenses required for
operations by administrative departments
such as General Affairs
Dept.

2. Geographical segments
As sales in Japan account for more than 90% of the sum of sales in each region of the respective geographical segments,
the segment information by geographical region is omitted.

3. Overseas sales
As sales overseas account for less than 10% of consolidated net sales, overseas sales related information is omitted.

(Notes to Leases)
1. Finance lease contracts that do not transfer ownership of leased property to the lessee(1) Assumed data as to acquisition cost, accumulated depreciation and remaining book value of leased assets at
end of period

Karaoke cabin facilities
Other tangible fixed
assets
Total

Previous interim period(From April 1, 2003, to September
30, 2003)
AcquisiAccuNet booktion cost
mulatedvalue
depreciation
1,023
801
221

Current interim period(From April 1, 2004, to September
30, 2004)
AcquisiAccuNet booktion cost
mulatedvalue
depreciation
454
335
119

(Millions of yen)
Last fiscal year
(From April 1, 2003, to March 31,
2004)
AcquisiAccuNet booktion cost
mulatedvalue
depreciation
476
319
157

1,624

990

634

1,393

977

416

1,534

964

569

2,647

1,791

855

1,848

1,312

536

2,010

1,283

726

(2) Assumed future lease payments at end of period under finance leases

Due within one year
Due after one year
Total

As of September 30,
2003
491
377
868

As of September 30,
2004
330
212
543

(Millions of yen)
As of March 31,
2004
444
292
736

(3) Lease payments, and assumed depreciation expense and interest expense

Lease payments
Assumed depreciation expense
Assumed interest expense

As of September 30,
2003
355
344
6

As of September 30,
2004
247
240
3

(Millions of yen)
As of March 31,
2004
654
635
11

(4) Computation method of assumed depreciation expense
Depreciation expense is computed by the straight-line method, assuming the lease period as the useful life and noresidual value.

20

DAIIC HIKOSHO CO., LTD.

(5) Computation method of assumed interest expense
The difference between the total lease contract amount and the assumed acquisition cost is assumed to be interest,and interest expense is computed by the interest method.

2. Operating lease contracts
Assumed future lease payments at end of period under operating leases
As of September 30,
2003
424
2,599
3,024

Due within one year
Due after one year
Total

As of September 30,
2004
383
2,224
2,608

(Millions of yen)
As of March 31,
2004
422
2,495
2,918

(Notes to Securities)
1. Other securities primarily designated as available-for-sale securities for which fair values are readily determinable

StocksBonds and debentures
Government andmunicipal bonds
Corporate bonds
Other bonds anddebentures
Other
Total

Previous interim period(As of September 30, 2003)
AcquisiBook
Unrealtion costvalue per ized gain
consoli(loss)
dated
interimbalancesheets
1,132
1,443
311

Current interim period(As of September 30, 2004)
AcquisiBook
Unrealtion costvalue per ized gain
consoli(loss)
dated
interimbalancesheets
876
2,468
1,591

(Millions of yen)
Last fiscal year
(As of March 31, 2004)
AcquisiBook
Unrealtion costvalue per ized gain
consoli(loss)
datedbalancesheets
1,182

3,167

1,984

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

944
2,077

971
2,415

26
338

822
1,699

953
3,421

130
1,722

944
2,127

1,138
4,305

193
2,178

2. Held-to-maturity debt securities and other securities primarily designated as available-for-sale securities forwhich values were not readily determinable as of September 30, 2003 and 2004, and March 31, 2004
(Millions of yen)Book value per consolidated (interim) balance sheets
Previous interim
Current interim
Last fiscal year
periodperiod(As of March 31,(As of September(As of September
2004)
30, 2003)
30, 2004)
Held-to-maturity debt securities
Discount bank debentures
Available-for-sale securities
Unlisted stocks (excluding OTC issues)(Note to Derivative Transactions)
Relevant information is omitted as hedge accounting is applied.

21

9

9

9

398

2,613

2,313

DAIIC HIKOSHO CO., LTD.

(Significant Subsequent Events)
Previous interim period(From April 1, 2003, to September 30,
2003)---------------

Current interim period(From April 1, 2004, to September 30,
2004)---------------------------------------------

Last fiscal year
(From April 1, 2003, to March 31, 2004)
1. The meeting of the Board of Directors
held on March 22, 2004, adopted aresolution to the effect that the land andbuildings at six sales office buildings be
sold to an affiliated company (DK Finance, Co., Ltd.). The sales procedurecompleted on April 27, 2004, resulted ina ¥1,234 million loss on sales of fixed
assets and caused a ¥(3,834) million inreversal of land revaluation difference.
2. Pursuant to a resolution adopted by
the Board of Directors on February
23, 2004, the Company shall issue newshares via a stock split in the following
manner:(1) Two-for-one stock split for common shares on May 20, 2004
1) Number of shares increased via
the stock split:
18,310,463 common shares2) Splitting method:
The Company’s common sharesshall be split at the rate of
two-for-one for the shares owned
by shareholders whose names areregistered or recorded in the lastrecord of shareholders and thelast record of beneficiary shareholders as of March 31, 2004.
(2) Initial date of reckoning for dividends
April 1, 2004
The per share data for the year
ended March 31, 2003, supposingthat the stock split was conducted
as of April 1, 2002, and those forthe year ended March 31, 2004,
supposing that the stock split was
conducted as of April 1, 2003, areas follows:
FY 2002 (FromFY 2003 (FromApril 1, 2002, toApril 1, 2003, to
March 31, 2003)
March 31, 2004)
Shareholders’ eqShareholders’ equity per shareuity per share¥1,540.67
Net income per
share¥187.95
Fully diluted net
income per share¥177.1222¥1,689.46
Net income per
share¥132.54
Fully diluted net
income per share¥126.11

DAIIC HIKOSHO CO., LTD.

5. Production, Orders Received and Sales Performance(1) Production
Fiscal period

Segment
Commercial karaoke business:
Telecommunication-typekaraoke software
Disk-type karaoke software
SubtotalContent business:
Sound delivery/video software for satellite broadcastingMusic software business:
Music and video software
Total

Previous interim period(From April 1, 2003, to September 30, 2003)
Year-over-yea
r change (%)

Current interim period(From April 1, 2004, to September 30, 2004)
Year-over-yea
r change (%)(Millions of yen)
Last fiscal year
(From April 1, 2003, to March
31, 2004)
Year-over-yea
r change (%)

1,014

95.8

990

97.6

3,610

159.6

520
1,535

92.3
94.6

990

64.5

1,032
4,642

84.2
133.1

172

81.1

427

248.4

972

205.0

1,110
2,817

81.2
88.0

1,863
3,281

167.8
116.5

3,474
9,089

127.8
136.1

Note: The above amounts indicate manufacturing costs and software production output.

(2) Orders received
Inapplicable as DKG follows a policy of project production.

(3) Sales performance
Fiscal period

Segment
Commercial karaoke business:
Turnover of merchandise and products
Revenue fromrental of karaokeequipment
Fee revenue fromthe provision of
karaoke-streaming
service
Subtotal
Karaoke cabin business:
Content business:
Satellite broadcasting
e-business
Subtotal
Music software
business:
Other business:
Total

Previous interim period(From April 1, 2003, to September
30, 2003)
CompoYear-oversition-year
ratio (%) change(%)

Current interim period(From April 1, 2004, to September
30, 2004)
CompoYear-oversition-year
ratio (%) change(%)(Millions of yen)
Last fiscal year
(From April 1, 2003, to March 31,
2004)
CompoYear-oversition-year
ratio (%)
change(%)

13,182

23.2

103.8

14,525

23.9

110.2

28,421

23.8

104.4

8,844

15.5

105.8

9,395

15.4

106.2

18,062

15.1

106.6

9,648

17.0

116.2

11,147

18.3

115.5

20,020

16.8

115.6

31,674
12,112

55.7
21.3

107.9
108.4

35,067
12,771

57.6
21.0

110.7
105.4

66,50525,156

55.7
21.1

108.1
106.0

2,293

4.0

99.7

2,274

3.7

99.2

4,592

3.9

100.2

2,980
5,273
5,306

5.2
9.2
9.3

108.2
104.3
50.3

2,455
4,729
5,289

4.1
7.8
8.7

82.4
89.7
99.7

5,731
10,324
12,098

4.8
8.7
10.1

100.1
100.2
72.7

2,542
56,910

4.5
100.0

109.7
97.4

2,991
60,850

4.9
100.0

117.6
106.9

5,249
119,335

4.4
100.0

107.6
101.9

23

DAIIC HIKOSHO CO., LTD.

FY 2004 ending March 31, 2005
Summary of Nonconsolidate d Financial Statements for the Interim Period Ended Se ptember 30, 2004

November 15, 2004
Company Name: DAIICHIKOSHO CO., LTD.
Code Number: 7458
(URL http://www.dkkaraoke.co.jp)
Registered Stock: JASDAQ
Location of Head Office (Prefecture): Metropolis of To kyo
Representative: Tatsuyoshi Yoneda, President
Contact:
Eiji Hata, Executive Director; Administration Headquarters and General Manager,
Finance Dept.
Phone: (03) 3280-2151
Date of the Board of Directors Meeting on the Closing of Accounts: November 15, 2004
Interim Dividend System: Applied
Start Date for Payment of Interim Dividends:−
Unit (tangen) Stock System: Adopted (Unit (tangen) stock of shares: 100 shares)
1. Nonconsolidated Performance for the Interim Period Ended September 2004 (from April 1,
2004, to September 30, 2004)(1)Nonconsolidated operating results
Note: Amounts below one million yen are truncated.
Net sales

Operating income

Ordinary income¥ Million

4,454

%
(6.3)

¥ Million

42,186

%
8.5

4,694

%
4.4

38,888

8.4

4,752

42.7

4,498

21.3

¥ Million

Interim period ended September 2004
Interim period ended September 2003
Year ended March 2004

80,7118,170

Net income¥ Million

Interim period ended September 2004
Interim period ended September 2003
Year ended March 2004

7,531

Net income per share

3,359

%
96.4

1,710

19.0

¥

93.47
47.55

4,679

129.47

Notes:
1. Average number of shares outstanding during the respective periods:
Interim period ended September 2004: 35,941,040 sharesInterim period ended September 2003: 35,965,654 sharesYear ended March 2004: 35,958,418 shares
The Company conducted a two-for-one stock split on May 20, 2004. For comparison, “Net income pershare” is stated in the table above as if the stock split had occurred as of April 1, 2003.

2. Change in accounting method: None
3. Percentage figures for net sales, operating income, ordinary income and net income indicate
the respective changes from the interim period of the previous year.

24

DAIIC HIKOSHO CO., LTD.

(2)Dividends
Interim dividend per share

Annual dividend per share¥¥

Interim period ended September
0.0
2004
Interim period ended September
0.0
2003
Year ended March 2004
19.00
The Company conducted a two-for-one stock split on May 20, 2004. For comparison, “Annual (interim) dividend pershare” is stated in the table above as if the stock split had occurred as of April 1, 2003.

(3)Nonconsolidated financial position
Total assets

Shareholders’equity¥ Million¥ Million%

87,74153,19960.6

1,480.27

84,98646,80155.1

1,301.49

88,57850,81557.4

1,413.14

Interim period ended
September 2004
Interim period ended
September 2003
Year ended March 2004

Equity ratio

Shareholders’equity per share¥

Notes:
1. Number of shares outstanding at the end of the respective periods:
35,938,948 shares at September 30, 2004 35,959,692 shares at September 30, 2003
35,942,520 shares at March 31, 2004
The Company conducted a two- for-one stock split on May 20, 2004. For comparison,“Shareholders’equity per share” is stated in the table above as if the stock split had occurred asof April 1, 2003.
2. Number of treasury stocks at the end of the respective periods:
682,350 shares at September 30, 2004
330,524 shares at September 30, 2003;
339,203 shares at March 31, 2004
2. Forecast Nonconsolidated Performance for FY 2004 (from April 1, 2004, to March 31, 2005)

FY 2004 ending
March 31, 2005
(full year)

Net sales

Ordinary income

Net income¥ Million¥ Million¥ Million

85,250

7,700

4,750

Annual dividend per share
Year-end
¥

¥

20.00

20.00

(Reference) Projected net income per share (full year): ¥131.50
Note: These projected performance figures are based on information available to the Company’s management at thetime of preparing this report. There are many uncertain factors inherent in forecasting, and there might be cases
in which actual results differ from forecast values. See page 10 of the Attachment for further information on
forecasts.

25

DAIIC HIKOSHO CO., LTD.

6. Nonconsolidated Interim Financial Statements(1) Nonconsolidated Interim Balance Sheet
Fiscal period

Account item
(Assets)
Current assets
Cash and bank deposits
Notes receivable? trade
Accounts receivable? trade
Inventories
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Fixed assets
Tangible fixed assets
Buildings
Karaoke equipment for rental
Karaoke cabin facilities
Land
Other
Total tangible fixed assets
Intangible assets
Sound delivery/video software
Other
Total intangible assets
Investments and other assets
Investments in securities
Investment in stocks of subsidiaries
and affiliates
Long-term loans receivable
Deferred tax assets
Leasehold deposits and guaranteemoney
Long-term deposits
Other
Allowance for doubtful accounts
Total investments and other assets
Total fixed assets
Total Assets

Previous interim period(As of September 30,
2003)
AmountComposition ratio(%)

10,251
1,704
6,091
5,217
3,257
2,970
(446)
29,046

4,403
4,100
6,175
4,798
1,298
20,776
3,140
3,997
7,138

Current interim period(As of September 30,
2004)
AmountComposition ratio
(%)

34.2

20,387
650
6,540
2,976
2,938
2,748
(383)
35,859

24.4

1,689
4,691
7,813
2,002
1,765
17,961

8.4

4,588
3,784
8,372

(Millions of yen)
Last fiscal year
Year-over(As of March 31, 2004)
yearchangeAmountComposition ratio
(%)

40.9

17,476
1,136
6,609
3,423
3,340
2,035
(451)
33,571

20.5

3,241
4,388
6,992
4,853
1,186
20,662

9.5

4,369
4,068
8,437

37.9

2,910
(485)
(69)
(447)
(402)
712
67
2,287

23.3

(1,552)302
821(2,851)578(2,701)

9.5

218
(283)
(64)

2,559
5,134

5,870
4,471

6,341
5,080

(471)
(609)

5,801
930
8,914

4,808
1,556
10,268

5,373
963
9,860

(564)
593
407

6,300
3,743
(5,357)28,026

33.0

3,696(5,123)25,54829.1

3,182(4,893)25,907

29.3

514
(229)
(358)

55,94084,98665.8
100.0

51,88287,74159.1
100.0

55,007
88,57862.1
100.0(3,125)(837)

26

DAIIC HIKOSHO CO., LTD.

Fiscal period

Account item
(Liabilities)
Current liabilities
Notes payable? trade
Accounts payable? trade
Short-term borrowings
Convertible bonds redeemablewithin one year
Current portion of long-term borrowings
Accounts payable? other
Income taxes payable
Reserve for bonuses
Other
Total current liabilities
Long-term liabilities
Convertible bonds
Long-term borrowings
Reserve for employees’ retirement
benefits
Reserve for directors’ retirement allowances
Other
Total long-term liabilities
Total Liabilities(Shareholders’ Equity)
Capital stock
Capital surplus
Capital reserve
Other capital surplus
Total capital surplus
Retained earnings
Voluntary reserve
Unappropriated retained earnings(loss) for the period
Total retained earnings
Land revaluation difference
Net unrealized gains or losses onavailable-for-sale securities
Treasury stock
Total Shareholders’ Equity
Total Liabilities and Shareholders’ Equity

Previous interim period(As of September 30,
2003)
AmountComposition ratio(%)

Current interim period(As of September 30,
2004)
AmountComposition ratio(%)

Last fiscal year
(As of March 31, 2004)
AmountYear-overyearchangeComposition ratio
(%)

2,294
3,450
2,000
-

3,204
2,865
600
9,955

2,556
3,049
600
10,799

648
(184)
(844)

3,189

3,188

3,400

(212)

3,907
112
700
1,001
16,655

3,823
213
723
777
25,351

4,711
161
605
1,231
27,116

(888)
52
117
(453)
(1,764)

19.6

28.9

30.6

11,514
7,514
1,021

6,486
1,090

8,049
1,026

(1,563)
63

1,070

1,172

1,130

41

410
21,53038,185

25.3
44.9

442
9,191
34,542

10.5
39.4

440
10,64737,763

12.0
42.6

1
(1,456)(3,220)12,34814.5

12,35014.1

12,349

14.0

0

28.2

4,002
20,00024,00227.4

4,001
20,00024,001

27.1

0
0
1

4,000
20,00024,001
18,6002,365

18,602(66)

18,602
1,114(1,181)

20,965(9,981)
188

24.7(11.7)
0.2

18,535(1,927)
1,018

21.1
(2.2)
1.1

19,716(5,761)
1,277

22.3
(6.5)
1.4

(1,181)
3,834
(258)

(721)
46,801
84,986

(0.8)
55.1
100.0

(780)
53,19987,741

(0.9)
60.6
100.0

(767)
50,81588,578

(0.9)
57.4
100.0

(12)
2,383
(837)

27

DAIIC HIKOSHO CO., LTD.

(2) Nonconsolidated Interim Statement of Income
Fiscal period

Account item
Net sales
Cost of sales
Gross profit before adjustment for unrealized
profit on installment sales
Unrealized profit on installment sales- reversal(+)
Unrealized profit on installment sales- deferred(–)
Gross profit on sales
Selling, general and administrative expenses
Operating income
Nonoperating income
Interest and dividend income
Fees and commissions received
Other
Nonoperating expenses
Interest expense
Provision for allowancefor doubtful accounts
Loss on disposal of inventories
Loss on valuation of inventories
Other
Ordinary income
Extraordinary gains
Gain on sales of investments in securities
Gain on sales of fixed assets
Reversal of allowance for
doubtful accounts
Extraordinary losses
Loss on sales and disposalof fixed assets
Loss on sales of investments in securities
Loss on valuation of investments in securities
Loss on valuation of investment in stocks of subsidiaries and affiliates
Loss on arrangement ofsubsidiaries and affiliates
Provision for reserve fordirectors’ retirement allowances for prior years(Interim) income before
income taxes
Income taxes? current

Previous interim period (FromApril 1, 2003, to September
30, 2003)
AmountPercentage(%)
38,888100.0
23,70961.0
15,179
39.0

124

86

Current interim period (FromApril 1, 2004, to September
30, 2004)
AmountPercentage(%)
42,186100.0
27,30264.7
14,883
35.3

Year-over-yearchange(%)

0.1

15,216
10,464
4,752

15

Amount

108.5
115.2
98.1

94

37

(Millions of yen)
Last fiscal year (From April 1,
2003, to March 31, 2004)

0.2

212.2

106

39.1
26.9

14,962
10,508

35.5
24.9

98.3
100.4

29,61921,448

36.7
26.6

12.2

4,454

10.6

93.7

8,170

10.1

1,049

1.3

1,688
7,531

2.1
9.3

424

0.5

2,621

3.2

5,334

6.6

557

79

77

164

2.0

187

624

1.4

80.9

327

103
476

90
124

202
500

192

39

414

94

29

198

158

1,025
4,498

2.6
11.6

100

384
4,694

0.9
11.1

37.5
104.4

372

2

553

208

-

146

14

118

121

0.3

33

733

1.7

605.1

201

64

1,354

1,136

-

6

-

76

-

77

218

655

303

-

-

5

1,097

50

0.2

79

359

771

125

231

504

188

80,711
51,21729,493

Percentage
(%)
100.0
63.5
36.5

1,455

3.8

3,164

8.1

-

69

28

2,015

4.7

138.5

3,413

8.1

107.9

1,097

100

DAIIC HIKOSHO CO., LTD.

Fiscal period

Account item
Income taxes? deferred
Net income for the period
Surplus brought forwardfrom the previous period
Reversal of land revaluation difference
Unappropriated retained
earnings (loss)

Previous interim period (FromApril 1, 2003, to September
30, 2003)
AmountPercentage
(%)
1,404
1,454
3.7
1,710
4.4

Current interim period (FromApril 1, 2004, to September
30, 2004)
AmountPercentage
(%)
(15)
54
0.1
3,359
8.0

Year-over-yearchange
(%)

3.7
196.4

Last fiscal year (From April 1,
2003, to March 31, 2004)
Amount555

Percentage
(%)
655
0.8
4,679
5.8

679

408

679

(23)

(3,834)(4,243)

2,365

(66)

1,114

29

DAIIC HIKOSHO CO., LTD.

Significant Accounting Policies
1. Valuation basis and method for assets(1) Marketable securities and investments in securities
Investment in stocks of subsidiaries and affiliates:
Stated at cost determined by the mo ving-average method.
Other securities:
Other securities primarily designated as available-for-sale securities for which the fair values are readily
determinable:
Carried at fair value as of the interim balance-sheet date with changes in net unrealized holding gain or loss, netof the applicable income taxes, included directly in shareholders’ equity. The cost of securities sold is determinedby the mo ving-average method.
Other securities primarily designated as available-for-sale securities for which the fair values are not readily determinable:
Carried at cost determined by the moving-average method.

(2) Inve ntories:
Merchandise and finished products:
Carried at cost determined by the moving-average method.
Work in process:
Carried at cost determined by the specific identification method.

2. Depreciation method of fixed assets(1) Tangible fixed assets
Depreciation is computed by the declining-balance method at rates based on the estimated useful lives of the assets asshown below. However, the straight-line method is adopted for buildings (excluding building improvements) acquired on or after April 1, 1998.
Building and structures: 3– 50 years
Karaoke equipment for rental: 5–6 years
Karaoke cabin facilities: 3– 19 years(2) Intangible assets
Amortization of intangible assets is computed by the straight-line method. Computer software for internal use isamortized by the straight-line method over the estimated useful life (five years), and sound delivery and video
software is amortized by the straight-line method over two years.

3. Accounting standards for reserves(1) Allowance for doubtful accounts
The allowance for doubtful accounts is provided at an amount of possible losses from uncollectible receivables basedon the actual rate of losses from bad debt for ordinary receivables, and on the estimated recoverability for specificdoubtful receivables.

(2) Reserve for bonuses
The reserve for bonuses is provided at an estimated amount based on DK’s internal payment prediction standard.

(3) Reserve for employees’ retirement benefits:
The reserve for employees’ retirement benefits is provided at an amount recognized to have accrued as of the interim
balance-sheet date, based on the projected benefit obligations and plan assets as of March 31, 2005. Actuarial differences are amortized on a pro rata basis by the straight-line method over a certain period (10 years), which is shorter
than the average remaining service years for employees at the time of their occurrence, from the following fiscal yearof recognition.

(4) Reserve for directors’ retirement allowances:
The reserve for directors’ retirement allowances is provided at an amount that would be required to be paid in accordance with the DK’s internal rules concerning directors’ retirement allowances if all eligible directors and statutory
auditors were to resign their positions as of the interim balance-sheet date.

30

DAIIC HIKOSHO CO., LTD.

4. Translation of assets and liabilities denominated in foreign currencies into yen
Monetary receivables and payables denominated in foreign currencies are translated into yen at the spot exchange rate ineffect at the interim balance-sheet date. The resulting exchange differences are charged or credited to income.

5. Accounting for leases
Finance leases that do not transfer ownership of leased property to the lessee are accounted for as rental transactions.

6. Other important matters in preparing the nonconsolidated interim financial statements(1) Accounting for installment sales
DK’s installment profit involved in installment sales is deferred for the amount corresponding to the portion of installment receivables for which the due date has not expired.

(2) Accounting for consumption tax, etc.
Consumption taxes are accounted for using the tax exclusion method. Consumption taxes related to installment sales
are deferred for the amount corresponding to the portion of installment receivables for which the due date has not
expired.

31

DAIIC HIKOSHO CO., LTD.

Notes to Nonconsolidated Interim Financial Statements(Notes to Nonconsolidated Interim Balance Sheet)

1. Accumulated depreciation for tangible fixed assets

As of September 30,
2003
23,911

As of September 30,
2004
21,352(Millions of yen)
As of March 31,
2004
23,102

2. Liabilities for guarantee
Liabilities for guarantee
Guarantee by subscription
Letter of undertaking on management services
Total

4,455
326
4,782

3,723
280
67
4,071

3,928
301
4,230

3 Commitment line contract
Total amount of commitment line contracts
Residual amount of borrowed funds
On balance

10,00010,00010,00010,00010,00010,000

Increase in the number of shares outstanding during the interim period ended September 30, 2004
Date of issuanceIssuance category

April 21, 2004

Conversion of convertible bonds
Stock split (two-for-one)

May 20, 2004

Number of shares issued

Issue price (¥)

372

5371.2

Amount credited tocapital stock (¥)
2,686

18,310,463--(Note to Nonconsolidated Statement of Income)Depreciation and amortization executed
Tangible fixed assets
Intangible assets

Previous interim
period (From April
1, 2003, to September 30, 2003)
1,660
2,112

32

Current interim
period (From April
1, 2004, to September 30, 2004)
1,899
2,623

(Millions of yen)
Last fiscal year
(From April 1,
2003, to March 31,
2004)
3,815
4,660

DAIIC HIKOSHO CO., LTD.

(Notes to Leases)
1. Finance lease contracts that do not transfer ownership of leased property to the lessee(1) Assumed data as to acquisition cost, accumulated depreciation and remaining book value of leased assets at end of period

Karaoke cabin facilities
Other tangible fixed
assets
Total

Previous interim period (FromApril 1, 2003, to September 30,
2003)
AcquisiAccuNet booktion cost
mulatedvalue
depreciation
815
681
134

Current interim period (From April
1, 2004, to September 30, 2004)
Acquisition cost

Net book
value

272

Accumulated
depreciation
247

25(Millions of yen)
Last fiscal year
(From April 1, 2003 to March 31,
2004
AcquisiAccuNet booktion cost
mulatedvalue
depreciation
303
247
55

2,356

1,198

1,157

2,570

1,507

1,063

2,423

1,281

1,142

3,172

1,880

1,292

2,834

1,754

1,088

2,726

1,529

1,197

(2) Assumed future lease payments at end of period under finance leases
Due within one year
Due after one year
Total

As of September 30, 2003
734
572
1,306

As of September 30, 2004
580
517
1,098

(Millions of yen)
As of March 31, 2004
668
540
1,209

(3) Lease payments, and assumed depreciation expense and interest expense
Lease payments
Assumed depreciation expense
Assumed interest expense

As of September 30, 2003
466
454
8

As of September 30, 2004
388
380
6

(Millions of yen)
As of March 31, 2004
828
807
15

(4) Computation method of assumed depreciation
Depreciation expense is computed by the straight-line method, assuming the lease period as the useful life and noresidual value.

(5) Computation method of assumed interest expense
The difference between the total lease contract amount and the assumed acquisition cost is assumed to be interest,and interest expense is computed by the interest method.

2. Operating lease contracts
Assumed future lease payments at end of period under operating leases
Due within one year
Due after one year
Total

As of September 30, 2003
327
2,258
2,586

As of September 30, 2004
328
1,980
2,309

(Millions of yen)
As of March 31, 2004
331
2,144
2,476

(Note to Securities)
DK had no available -for-sale securities for which the fair value was readily determinable in its investment in stocks ofsubsidiaries and affiliates for the interim periods ended September 30, 2003 and 2004, and the last fiscal year ended March
31, 2004.

33

DAIIC HIKOSHO CO., LTD.

(Significant Subsequent Events)
Previous interim period(From April 1, 2003, to September 30,
2003)-------------

Current interim period(From April 1, 2004, to September 30,
2004)---------------------------------------

Last fiscal year
(From April 1, 2003, to March 31, 2004)
1. The meeting of the Board of Directors
held on March 22, 2004, adopted aresolution to the effect that the land andbuildings at six sales office buildings be
sold to an affiliated company (DK Finance, Co., Ltd.). The sales procedurecompleted on April 27, 2004, resulted ina ¥1,234 million loss on sales of fixed
assets and caused a ¥(3,834) million inreversal of land revaluation difference.
2. Pursuant to a resolution adopted by
the Board of Directors on February
23, 2004, the Company shall issue newshares via a stock split in the following
manner:(1) Two-for-one stock split for common shares on May 20, 2004
1) Number of shares increased via
the stock split:
18,310,463 common shares2) Splitting method:
The Company’s common sharesshall be split at the rate of
two-for-one for the shares owned
by shareholders whose names areregistered or recorded in the lastrecord of shareholders and thelast record of beneficiary shareholders as of March 31, 2004.
(2) Initial date of reckoning for dividends
April 1, 2004
The per share data for the year
ended March 31, 2003, supposingthat the stock split was conducted
as of April 1, 2002, and those forthe year ended March 31, 2004,
supposing that the stock split was
conducted as of April 1, 2003, areas follows:
FY 2002 (FromFY 2003 (FromApril 1, 2002, toApril 1, 2003, to
March 31, 2003)
March 31, 2004)
Shareholders’ eqShareholders’ equity per shareuity per share¥1,265.09
Net income per
share¥119.19
Fully diluted net
income per share¥112.8234¥1,413.14
Net income per
share¥129.47
Fully diluted net
income per share¥123.22