DAIICHIKOSHO

CO.,

LTD.

FY2016, the year ending March 31, 2017

Flash Report on the Consolidated Results for the Second Quarter Ended
September 30, 2016 [JGAAP]
November 7, 2016

Company Name:
DAIICHIKOSHO CO., LTD.
Stock Exchange Listing: Tokyo Stock Exchange
Code Number:
7458
URL:
http://www.dkkaraoke.co.jp
Representative:
Saburo Hayashi, President
Contact:
Shigeki Kobayashi,
Corporate Officer; and General Manager, Accounting Department
Phone:+81-3-3280-2151
Scheduled Date to Submit the Quarterly Securities Report: November 11, 2016
Start Date for Dividend Payment: December 5, 2016
Availability of Supplementary Briefing Material on Quarterly Financial Results: Available
Schedule of Quarterly Financial Results Briefing Session: None
(Amounts below one million yen are truncated.)

1. Consolidated Performance for the Six months Ended September 30, 2016 (From April 1, 2016,to September 30, 2016)(1) Consolidated operating results(Percentage figures indicate increase/decrease from a year earlier.)
Net sales
68,821

Operating income
Ordinary income% Millions of yen% Millions of yen%
(2.2)
9,739
(1.7)
10,012(6.7)

70,362

8.2

Millions of yen

Six months ended
September 30, 2016
Six months ended
September 30, 2015

9,910

Net income attributable toowners of parent
Millions of yen%
4,203(35.0)

Six months ended
September 30, 2016
Six months ended
6,467
September 30, 2015
(Note) Comprehensive income:Six months ended September 30, 2016:
Six months ended September 30, 2015:

2.3

Yen
72.98
111.85111.82

6,759million yen
4,013million yen

68.4 %(35.8) %(2) Consolidated financial position
Total assets
Millions of yen

Net assets
Millions of yen

As of September 30, 2016
182,659
115,858
As of March 31, 2016
179,641
112,754(Reference) Shareholders’ equity:
As of September 30, 2016: 114,429 million yen
As of March 31, 2016:
111,402 million yen

1(0.6)

Fully diluted net income
per share
Yen
72.94

Basic earnings per share(0.4)

10,727

Equity ratio
%
62.6
62.0

DAIICHIKOSHO

CO.,

LTD.

2. Dividend
First Quarter

Second Quarter
Yen
54.00

Annual dividend
Third Quarter

Year ended March 31, 2016——
Year ending March 31,—54.002017
Year ending March 31,—2017 (forecast)(Note) Changes in dividends forecast from most recently announced figures: None

Year-end
Yen
54.00

Annual54.00

Yen
108.00108.003. Forecast Consolidated Performance for FY2016, the Year Ending March 31, 2017
(From April 1, 2016, to March 31, 2017)
Net sales
Millions of yen

Year ending March 31,2017 (full year)

142,200(Percentage figures indicate increase/decrease from a year earlier.)
Operating income
Ordinary income% Millions of yen% Millions of yen%
0.6

19,000Net income attributable toowner of parent
Millions of yen%(4.5)

20,400(3.4)

Basic earnings per share

Yen
Year ending March 31,
10,100(19.8)
175.862017 (full year)(Note) Changes in forecast of consolidated operating results from most recently announced figures: None*Notes(1) Significant changes in subsidiaries during the period under review (changes to specific subsidiaries resulting
from changes in scope of consolidation): None
(2) Adoption of special accounting policies for quarterly financial statements: None
(3) Changes in accounting standard, accounting estimation change and error correction
1) Changes due to changes in accounting standard: Yes
2) Changes due to changes in accounting standard except (3) 1): None
3) Changes due to accounting estimation change: None
4) Error correction: None
(4) Number of common shares issued
1) Number of shares issued
As of57,434,200 As of
57,634,200(including treasury stock)
September 30, 2016
shares March 31, 2016
shares2) Number of shares of
As of
3,102 As of
3,070
treasury stock
September 30, 2016
shares March 31, 2016
Shares3) Average number of shares
Six months ended
57,596,885 Six months ended
57,826,375
during the period
shares September 30, 2015
shares
September 30, 2016
* Presentation regarding the implementation status of the quarterly review:
This flash report on the consolidated results for the Three months is not covered by the quarterly review procedure
stipulated in the Financial Instruments and Exchange Act. At the time of the publication of this report, the quarterlyreview procedure for quarterly consolidated financial statements is being implemented.
* Explanation for the appropriate use of performance forecasts and other special notes:
The statements regarding forecast of financial results in this report are based on the information that is available, as
well as estimates, assumptions and projections that are believed to be reasonable at the time of publication.
Therefore, there might be cases in which actual results greatly differ from forecast values.

2

DAIICHIKOSHO

CO.,

LTD.

Quarterly Consolidated Financial Statements(1) Quarterly Consolidated Balance Sheets(Millions of yen)

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable-trade
Securities
Inventories
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Karaoke equipment for rental, net
Karaoke cabin and restaurant facilities, netLand
Other, net
Total property, plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Lease and guarantee deposits
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

3FY2016(As of March 31, 2016)

Current Second quarter(As of September 30,2016)

51,478
7,113
1,007
6,243
6,263
(149)
71,95647,925
6,175
7,055
6,784
7,002
(159)
74,783

10,943
19,112
31,595
5,995
67,646

11,43319,06536,781
7,14674,426

1,882
5,971
7,853

1,663
5,855
7,519

9,997
14,2507,972(36)
32,184
107,684
179,641

4,337
14,542
7,086(35)
25,930107,876
182,659DAIICHIKOSHO

CO.,

LTD.

(Millions of yen)

Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Current portion of bonds
Income taxes payable
Provision for bonuses
Other
Total current liabilities
Non-current liabilities
Bonds payable
Long-term loans payable
Provision for directors' retirement benefits
Net defined benefit liability
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders' equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders' equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Revaluation reserve for land
Foreign currency translation adjustment
Remeasurements of defined benefits plans
Total accumulated other comprehensive income
Subscription rights to shares
Non-controlling interests
Total net assets
Total liabilities and net assets]

4FY2016(As of March 31, 2016)

Current Second quarter(As of September 30,2016)

4,048
4,201
3,237
1,086
11,14523,718

4,371
4,384
3,500
2,887
1,565
10,212
26,92010,00023,362
1,263
5,398
3,143
43,16866,8866,500
23,554
982
5,615
3,227
39,87966,80012,350
4,001
98,329(13)
114,668

12,350
4,001
98,838(12)
115,177(2,074)
(733)
108
(566)
(3,265)
81
1,270
112,754
179,641

509
(733)
(9)
(513)
(748)
132
1,297
115,858
182,659DAIICHIKOSHO

CO.,

LTD.

(2) Quarterly Consolidated Statements of Income and Comprehensive Income(Quarterly Consolidated Statements of Income)(Millions of yen)Six months ended
September 30, 2015
(From April 1, 2015 to
September 30, 2015)
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Cooperative monetary aid received
Other
Total non-operating income
Non-operating expenses
Interest expenses
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of non-current assets
Gain on acquisition of non-current assets
Gain on sales of investment securities
Total extraordinary incomeExtraordinary loss
Loss on disposal of non-current assets
Impairment loss
Loss on sales of investment securities
Loss on valuation of investment securities
Total extraordinary losses
Income before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Total income taxes
Net income
Net income attributable to non-controlling interests
Net income attributable to owners of parent

5

Six months ended
September 30, 2016
(From April 1, 2016 to
September 30, 2016)

70,362
43,19027,172
17,261
9,910

68,821
42,237
26,583
16,844
9,739

411
165
586
1,164

231
196
418
846

170
50
127
347
10,727

166
320
85
573
10,012

88

4350
4360

160
208
368
10,3674,233(367)
3,866
6,500
32
6,467

148
24
8
3,305
3,487
6,885
2,857
(214)
2,642
4,242
39
4,203

DAIICHIKOSHO

CO.,

LTD.

(Quarterly Consolidated Statements of Comprehensive Income)(Millions of yen)Six months ended
September 30, 2015
(From April 1, 2015 to
September 30, 2015)
Net income
Other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners of theparent
Comprehensive income attributable to minority interests

6Six months ended
September 30, 2016
(From April 1, 2016 to
September 30, 2016)

6,500

4,242

(2,473)(59)
46(2,486)
4,013

2,583(118)
52
2,517
6,759

3,981

6,720

3239

DAIICHIKOSHO

CO.,

LTD.

(3) Quarterly Consolidated Statements of Cash Flows(Millions of yen)Six months ended
September 30, 2015
(From April 1, 2015 toSeptember 30, 2015)
Cash flows from operating activities
Income before income taxes and minority interests
Depreciation
Impairment loss
Increase (decrease) in provision for bonuses
Increase (decrease) in provision for directors' retirement
benefits
Interest and dividend income
Interest expenses
Foreign exchange losses (gains)
Gain on acquisition of non-current assets
Loss(gain) on sales of investment securities
Loss (gain) on valuation of investment securities
Loss (gain) on disposal of non-current assets
Decrease (increase) in notes and accounts
receivable-trade
Decrease (increase) in inventories
Transfer of cost of sales on karaoke equipment for rental
Increase (decrease) in notes and accounts payable-trade
Increase (decrease) in accounts payable-other
Other, net
SubtotalInterest and dividend income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Increase in time and saving deposits
Proceeds from decrease in time and saving deposits
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of intangible assetsPayments for acquisition of video licenses
Proceeds from sales of investment securities
Payments for transfer of business
Payments of loans receivableCollection of loans receivable
Payments for lease and guarantee deposits
Proceeds from collection of lease and guarantee deposits
Other, net
Net cash provided by (used in) investing activities
Cash flows from financing activities
Net increase (decrease) in short-term loans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Cash dividends paid
Purchase of treasury shares
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate change 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
7

Six months ended
September 30, 2016
(From April 1, 2016 to
September 30, 2016)

10,367
7,429
208
471

6,885
7,831
24
478

(1,242)

(281)

(488)
170
(5)
151

(309)
166
308
(350)
4
3,305
143

963

917

583
83
800
(1,399)(925)
17,167525(171)(5,049)12,472

(584)
68
351
(219)
(986)
17,756444(118)(3,271)
14,811(417)
56(10,014)23(1,700)(1,421)(1,577)
(299)
336
(365)
251
(190)
(15,320)(367)
53(11,859)
12(1,812)
(870)
6,135
(171)
274
(333)
279
(7)
(8,667)350
1,460(1,285)(2,901)(1,700)(23)(4,100)(46)(6,996)60,00753,011130
1,485(1,240)(3,111)(810)(23)(3,569)(394)
2,179
52,24754,426DAIICHIKOSHO

CO.,

LTD.

(4) Segment Information
Six months ended September 30, 2015 (From April 1, 2015, to September 30, 2015)
Reportable segments(Millions of yen)
Postedamount to theAdjusted
consolidated
amountquarterly(Note)
statements ofincome

Commercial
karaokeKaraokecabin andrestaurantMusic
softwareSubtotal

OtherTotal

Sales

35,247

27,348

4,325

66,921

3,441

70,362－70,362

Segment income orSegment loss
(Operating income or
Operating loss)

7,941

2,757

(24)

10,673735

11,408(1,498)9,910(Note) The (1,498) million yen adjustment posted to Segment income is primarily composed of General andAdministrative Expenses incurred from the administrative department at the head office that are not attributable toany particular segment.

Six months ended September 30, 2016 (From April 1, 2016, to September 30, 2016)
Reportable segments(Millions of yen)
Postedamount to theconsolidated
Adjustedquarterly
amountstatements of(Note)
incomeCommercial
karaokeKaraokecabin andrestaurantMusic
softwareSubtotal

Other

Total

Sales

33,521

27,0834,490

65,095

3,726

68,821－

68,821

Segment income(Operating income)

7,721

2,824

76

10,622778

11,400(1,661)

9,739(Note) The (1,661) million yen adjustment posted to Segment income is primarily composed of General andAdministrative Expenses incurred from the administrative department at the head office that are not attributable toany particular segment.

8DAIICHIKOSHO

CO.,

LTD.

(5) Issues Related to Summary Information (Notes)
Changes to Accounting Policies, Changes to Accounting Estimates, and Revision Restatements(Revised Implementation Guidance on Recoverability of Deferred Tax Assets)
From the first quarter, the Company has applied the “Revised Implementation Guidance on Recoverability of Deferred TaxAssets” (Accounting Standards Board of Japan (ASBJ) Accounting Statement No.26 of March 28, 2016; hereinafter called
the “Revised Implementation Guidance on Recoverability”), and has revised the part of accounting method regard to therecoverability of deferred tax assets.
For an application Revised Implementation Guidance on Recoverability, adhere to the transitional handling prescribed in
the paragraph 49(4) of the Implementation Guidance on Recoverability, and the difference between the amount of deferredtax assets in case where has applied the paragraph 49(3)1to3 of the Implementation Guidance on Recoverability as of thebeginning of the first quarter and the amount of deferred tax assets at the previous fiscal year-end has added to retainedearnings at the beginning of the first quarter.
As a result, deferred tax assets included in Investments and other assets, and Retained earnings at the beginning of the firstquarter increased by 228 million yen respectively.

(The change in depreciation method due to Tax Reform 2016)
Accompanying revised in Corporate Tax Law, has applied the "Practical Solution on a change in depreciation method dueto Tax Reform 2016" (Practical Issues Task Force No.32 of June 17, 2016) from the first quarter.
Depreciation method pertaining to facilities attached to buildings and structures, which acquire on or after April 1, 2016,
have changed to the straight - line method from the declining - balance method.
This change in accounting policy has minimal impact on profit and loss for the period under review.

9