BRIEF STATEMENT OF CONSOLIDATED FINANCIAL RESULTS
FOR 1ST QUARTER OF THE FISCAL YEAR ENDING MARCH 2008
August 10, 2007
Faith, Inc. (Stock code 4295, Listed on TSE 1st section)(URL http://www.faith.co.jp/)
Representative; Hajime Hirasawa, CEO/President
Contacts; Shigeyoshi Fujiwara, Director/General Manager, Investor & Public Relations,Tel: +81-3-5776-6255
Amounts are rounded down to the nearest JPY 1 million.
st

1. Results for the 1 quarter of the year ending March 2008
(April 1, 2007 through June 30, 2007)(1)

Consolidated financial results
Those figures in “%” show increased/decreased ratio compared with the previous 1st quarter of fiscal term

Net sales

Operating profit

Recurring Profit

Net profit

Million of yen%

Million of yen%

Million of yen%

Million of yen%

11,469

32.8

561

60.3

406

122.8

971

-

8,636

23.3

350 △67.8

254 △77.8△102-44,152

-

1060

853

△1,883-Q1 of the year ending
March 2008
Q1 of the year ended
March 2007
(Ref): Year ended
March 2007--

Net Profit per Share

Diluted Net Profit per share

Yen

Yen

Q1 of the year ending March 2008

816.33-Q1 of the year ended March 2007

△86.23-(Ref): Year ended March 2007

△1581.81-

1

(2) Consolidated financial position
Ratio of Equity
Total assets

Net Assets

CapitalNet Assets per Share

Million of yen

Million of yen%

Yen

40,97317,09639.6

13,617.09

42,684

18,86943.4

15,570.94

39,442

15,914

38.6

12,797.62

Q1 of the year ending
March 2008
Q1 of the year ended
March 2007
(Ref): Year ended
March 2007

2. Dividends
No dividends in every Q1.
Dividends per Share
(Record dates)

InterimYear-end

Total(Annual)

yen

yen

yen

Year Ended March 2007

50

50

100

Year Ended March 2008

-

-

-

Year ending March 2008 (Forecast)

50

50

100

3. Forecasts for the business results for the year ending March 2008
(April 1, 2007 through March 31, 2007)
The figures in “%” show increased/decreased ratio compared with the previous fiscal year and the previous interim result.

Net profit
Net sales
Million of yen%

Operating Profit

Recurring Profit

Million of yen

Million of yen%

Net profit%

Million of yen

per share%

Yen

Interim results of 2008

23,500 16.4

850 31.9

700 24.2

800 -

672.03

Year ending 2008

50,000 13.2

2,100 98.0

1,700 99.1

1,300 -

1,092.05

4. Others(1) Changes in the significant subsidiaries(Accompanying changes in scope of the consolidation):

None(2) Adoption of simplified accounting practices:

Applicable(3) Changes in accounting practices from the recent fiscal year:

None* Note: For details, please see page.5 “Qualitative information and financial statements”4. Others.

* Note: The forecast described above is based on the assumption judged to be reasonable as of the data of
issuing this statement and the actual results may substantially differ from the forecast above.
2[Qualitative information and financial statements]
1. Qualitative information regarding consolidated operating results
During the 1st quarter of the fiscal year ending March 2008, the domestic ringtone distribution services
have continued to shrink as a result of fierce competition in the maturing market. On the other hand, with
continuously spreading broadbandization of the Internet and progresses of the mobile phone market’stransfer into the third generation communication system, increasing distribution services of highly
entertaining music, video and online game, and daily life information including medical services, esthetics
and health, and expanding convenient information services via mobile phones have continued to lead
expansion of the digital content distribution market.
Ahead of movements of the expanding digital contents distribution market, Faith Group has aggressively
promoted acquisitions and the establishment of business tie-up with leading companies, and strived “tocreate new structures to distribute digital contents”. As a part of our activities, Faith Group commenced
commercial service for a new content distribution services using Near Field Rights Management ® (NFRM),
a rights authentification technology developed in-house.
In addition, demand for Faith Group’s ringtone reproduction technology grew steadily, with the global
deployments of the CDMA communication system and semiconductors business promoted by the U.S.
company Qualcomm, Incorporated.
Furthermore, in the electronic money business enjoying boosting demand, the settlement amount by
WebMoney continued to increase significantly, taking advantages of large market shares in the online gameand the music distribution services.
As a result, consolidated net sales for the 1st quarter of FY2007 increased 32.8% compared with the same
period of the preceding year to ¥11,469 million, assisted by continued high growth of the electronic money
business and steady expansion of the domestic content distribution services due to active businessdeployments including acquisition and business-tie up. Consolidated operating profit increased 60.3% fromthe same period a year earlier to ¥561 million and recurring profit rose by 59.9% compared with the same
period last year to ¥406 million, thanks to spinning-off of the MVNO business. Net profit for the 1stquarter of fiscal 2007 stood at ¥971 million (1st quarter of fiscal 2006: loss at ¥102 million), due partly togain on sale of the U.S. content distribution businesses.
Information on each business segment is as follows:<Content Distribution Business>On domestic front, the Faith Group implemented the verification test of a new content distribution platform
linking mobile phones to PCs using NFRM from March 2007 to June 2007, and successfully completed it.
On June 25, 2007, Faith’s subsidiary GIGA Networks, Inc. commenced the first commercial service of
NFRM in Japan. GIGA Networks, engaged in the mobile content distribution services, acquired MVP, Inc.
a producer of cross-media contents for PCs and mobile phones, and Media Complex Co., Ltd. engaged incontent services for senior generations. In collaboration with both companies having know-how for
production of contents for mobile phones and PCs and distribution rights of entertaining programs
including Japanese sit-down comedy and comic dialogues, the Faith Group will make efforts to expand the3

NFRM services. In addition, in May 2007, Faith established Faith. Biz, Inc. in order to expand the scale ofbusinesses with construction of a new distribution platform and to centralize management resources relatedwith distribution platform technologies including software development, and construction and operation of
network systems. With Faith. Biz in charge of construction and operation of the NFRM services, companies
in the Faith Group are now collaborating with each other and striving to spread the new content distribution
schemes.
Demand for our ringtone reproduction (sound source) technology installed in various mobile phone units
grew favorably, through numerous semiconductor makers.
On overseas front, following the restructuring of business operations carried out in February 2007 aiming
for concentration and optimum allocation of management resources, the Company focused on developing
new distribution platform technologies and providing licenses in Europe and the U.S.A. In addition,
demand for the Faith Group’s sound source technology fairly increased mainly in the U.S.A., China, India,
and South America in parallel with the global deployment of the CDMA communication standard andsemiconductor business promoted by the U.S. firm QUALCOMM, Incorporated.
As a result, despite decrease in overseas sales resulted from business restructuring consolidated net sales of
the content distribution business for the 1st quarter of FY2007 increased 18.8% against the same period lastyear to ¥4,165 million, due to steady expansion related acquisitions of the domestic content distribution
business. Operating profit decreased by 40.2% compared with the same period a year earlier to ¥389
million, since gains from the expansion of business scale could not cover adverse effect from a decrease insales of the ringtone distribution services and negative impact of prior investments.

<Electronic Money Business>
According to the Information and Communications Statistics Database of the Ministry of Internal Affairs
and Communications, subscriptions of broadband network exceeded 25 million at the end of March 2007.
Demand for online games, main users of electronic payments, as well as demand for digital contents suchas music and video distribution continued to increase. Under these circumstances, payment by WebMoney
steadily increased, since WebMoney enables “safe” and “convenient” payment within the Internet.
Furthermore, merits of using WebMoney, that is “increases in number of users” and “reliable collection ofbills,” are contributing to an increase in number of member sites.
As a result, consolidated net sales of the electronic money business increased by 45.0% compared with thesame period of the preceding year to ¥6,882 million, and operating profit climbed by 38.1% on a
year-on-year basis to ¥151 million.

4

2. Qualitative information regarding consolidated financial positions
Total assets as of the end of the 1st quarter of FY2007 increased by ¥1,531 million from the end of theprevious consolidated fiscal year to ¥40,973 million, due to sellout of the U.S. content distribution businessand steadily growing of electronic money business. Net assets rose by ¥1,181 million against the end of thepreceding consolidated fiscal year to ¥17,096 million. Shareholders’ equity ratio advanced by 1.0 percent
point from the end of March 2007 to 39.6%.

3. Qualitative information regarding forecast of consolidated financial results
Since operating results for the 1st quarter of FY2007 have advanced as planned compared with forecasts
released on May 11, 2007 in the BRIEF STATEMENT OF ANNUAL FINANCIAL RESULTS FOR THE
YEAR ENDED MARCH 2007 AND FORECASTS FOR THE YEAR ENDING MARCH 2008, theCompany has not revised forecasts for consolidated operating results for fiscal 2007.

4. Others(1) Changes in major subsidiaries during the 1st quarter of FY2007 (Changes in specific subsidiaries
causing change in the scope of consolidation): None
Changes in subsidiaries other than specific subsidiaries are as follows:
New consolidation: MVP Co, Inc. and Media Complex Co., Ltd.
Exclusion: None

(2) Adoption of simplified methods in accounting methods
At the presentation of financial statements for the 1st quarter of fiscal 2007, the Company has compliedwith the accounting standards for interim consolidated financial statements. However, as for items lacking
any significant importance in effects, the Company adopts the simplified methods.

(3) Changes in accounting standards: None5

5. Consolidated financial Results for the 1st quarter(1) Consolidated Balance Sheet for the 1st Quarter(Unit: thousands of yen, %)FY 2006 (As of

FY 2007 Q1 (As of

March 31,2007)

June 30, 2007)

FY 2006 Q1 (As of
Component

Component
Account nameAmountpercentage

June 30, 2006)

Component
Amountpercentage

Amount(Assets)
I. Current assets
1. Cash and deposits

8,217,827

11,833,782

3,615,955

7,054,714

2.Accounts and notes receivable

6,929,263

7,084,889

155,626

5,214,598

3. Marketable securities

347,644

312,607△35,036914,201

4. Inventories

636,880

480,371△156,508

42,518

5. Accrued refund income tax

865,236

867,9462,710-

6. Deferred tax assets

1,350,004

1,127,581△222,423

807,558

7. Others

1,889,891

1,235,164△654,727

1,240,070△206,234△228,307△22,073△88,128

20,030,513

22,714,035

2,683,522

1,031,386

856,579△174,807

1,196,323(1) Goodwill

10,293,255

9,824,115△469,139

14,605,203(2) Others

887,019

990,679

103,659

1,109,038

11,180,274

10,814,794△365,480

15,714,242

5,273,058

5,424,196△151,138

8,081,816

180,045

178,374△1,6701,520

1,440,442

449,260△991,182

1,231,641-

220,400

220,400-

1,037,395

1,017,188△20,207

1,393,246△739,117△708,746

30,371△119,936

Total investments and other assets

7,191,823

6,580,673△611,149

10,588,287

Total fixed assets

19,403,485

18,252,048△1,51,436

prescription

8,161

7,196

△965

Total deferred charges

8,161

7,196

△965

△11.8

-

39,442,160

40,973,280

1,531,120

3.9

42,684,387

Allowance for doubtful accounts
Total current assets

13.2

15,185,532

II. Fixed assets
1. Tangible fixed assets
2. Intangible fixed assets

Total intangible fixed assets
3. Investment and other assets(1) Investment securities(2)Long-term loans(3)Deposits with landlords(4) Deferred tax assets(5)Others
Allowance for
doubtful receivable△5.9

27,498,854

Ⅲ Deferred charges
1.Expenditure for stock delivering

Total assets

6-

FY 2006 (As of MarchFY 2007 Q1 (As31,2007)of June 30, 2007)

FY 2006 Q1 (As of June

Component

Component
Account nameAmountpercentage

30, 2006)

Component
Amountpercentage

Amount(Liabilities)
I. Current liabilities
1. Trade Notes andAccounts payable

4,648,274

4,508,835△139,438

3,585,081

2. Short-term loans

5,215,768

5,064,626△151,142

5,295,671

580,242615,074

34,832

341,829

2,511,846

2,569,946

58,0992,246,447

553,247

518,493△34,753

640,194

129,177

58,431△70,746

57,927

1,844,707

1,578,309△266,398

1,836,841

15,483,265

14,913,718△569,547

1. Long-term liabilities

6,119,854

6,323,219

203,3648,000,000

2. Deferred tax liabilities

535,501

661,896

126,395

1,613,014

35,53538,5353,000

27,5691,298,550

1,355,860

57,31054,611

583,816

529,204

Total fixed liabilities

8,044,052

8,963,816

919,275

5.2

9,810,610

Total liabilities

23,527,318

23,877,046

349,727

1.5

23,814,603

1. Common stock

3,218,000

3,218,000-

3,218,000

2. Capital surplus

3,708,355

3,708,355-

3,708,355

3. Accumulated income

7,276,602

8,188,856

912,254

9,207,576

4. Treasury stock△354,269△354,269

0△354,269

Total shareholders’ equity

13,848,687

14,760,941

912,254

3. Income taxes payable
4. Allowance for costs of carduse
5. Allowance for points
6.

Allowance

for

bonus

payments
7. Others
Total current liabilities△3.7

14,003,993

II. Fixed liabilities

3. Allowance for retirement
benefits
4. Reserve for guarantee losses
5. Others

170,025(Net assets)
I. Shareholders equity

7

6.6

15,779,661

II.

Unrealized

gain

and

gain

on

translation
1.

Unrealized

available-for-sale securities

1,195,867

1,272,519

76,6522,506,574

189,991

176,590△13,400

249,726

1,385,858

1,449,109

63,251

1. subscription right

487

487

-

Total share warrant

487

487

-

0.0

487

IV. Minority interest

679,808

885,694

205,88630.3

333,334

Total Net assets

15,914,842

17,096,234

1,181,392

7.4

18,869,784

Total liabilities and net assets

39,442,160

40,973,280

1,531,120

3.9

42,684,387

2. Foreign currency translation
adjustment accountTotal unrealized gains andtranslations

4.6

2,756,300

III. Share warrant
487(2) Consolidated Income Statement for the 1st Quarter(Unit: thousands of yen, %)FY 2006 Q1 (April 1

FY 2007 (April 1

FY 2007 (April 1

2006 through June2007 through June

2006 through March

30,2006)

30,2007)

31,2007)

Component
Component

Account nameAmountAmountAmountpercentage

AmountI Net sales

8,636,562

11,469,500

2,832,938

32.8

44,152,751

II Cost of Sales

6,023,313

8,180,413

2,157,099

35.8

31,215,018

Gross profit

2,613,248

3,289,087

675,83825.9

12,937,733

2,263,210

2,727,849

464,638

20.5

11,877,157

350,038

561,237

211,19960.3

1,060,576

IV. Other income

22,81399,03876,224334.1

132,383

V. Operating expenses

118,335

253,336

135,000

114.1

339,293

Ordinary profit

254,515

406,939

152,42459.9

853,667

III. Selling, general and administrative
expenses
Operating income8VI. Extraordinary profit
1. Gain on disposal of fixed assets-

228,505

228,505-

2.Gain on transfer of operation-

756,195

756,195--

269,915

269,915

139,137

4 Others

9,772-△9,772

3,573,987

Total extraordinary profit

9,772

1,254,616

1,244,843

valuation-

88,86688,866449,273

2. Others

-

178

178

5,828,259

Total extraordinary loss-

89,04489,044-

6,277,532

minority interests (minus is loss)

264,288

1,572,511

1,308,223

495.0△1,710,741

Income taxes and other taxes

374,355

526,403

152,047

40.6

18,938

Minority interests (minus is loss)△7,41674,33281,748-

153,333△102,651

971,775

1,074,426-△1,883,013

3. Revisions to profit for previous
fiscal year

12,738.1.1

3,713,124VII. Extraordinary loss
1.Lossfrom investment

securities

Income before income taxes andNet profit (minus is loss)(3) Segmental Information<1>Industry segments
1st quarter of the previous fiscal year (April 1, 2006 through June 30, 2006)(Unit: thousands of yen)Contents

Electronic

distribution

payment

services

solution

Eliminations/
MVNO

Others

Total

Corporate

Consolidated

Net sales(1) Sales to customers

3,506,635

4,747,037-

382,889

8,636,562-

8,636,562(2)Iintersegment sales

28,200

3,166

-

-

31,366△31,366-

Total

3,534,836

4,750,203-

382,889

8,667,928△31,366

8,636,562

Operating expenses

2,883,910

4,640,604

361,429

431,946

8,317,890△31,366

8,286,524

Operating income

650,926

109,598△361,429△49,057

350,038-

350,0389

1st quarter of this fiscal year (April 1, 2007 through June 30, 2007)(Unit: thousands of yen)Contents

Electronic

distribution

Money

services

solution(1) Sales to customers

4,165,175

6,882,532

421,793

11,469,500-

11,469,500(2) Intersegment sales

42,950600-

43,550△43,550-

Total

4,208,126

6,883,132

421,793

11,513,051△43,550

11,469,500

Operating expenses

3,818,888

6,731,766

397,238

10,947,892△39,629

10,908,262

Operating income

389,237

151,365

24,555565,158△3,920561,237

Eliminations/
Others

Total

Corporate

Consolidated

Net sales

Previous consolidated fiscal year (April 1, 2006 through March 31, 2007)(Unit: thousands of yen)Contents

Electronic

distribution

payment

services

solution(1) Sales to customers

18,521,680

22,650,535(2) Intersegment sales

128,385

Total

Eliminations/
MVNO

Others

Total

Corporate

Consolidated

24,7182,955,816

44,152,751-

44,152,751

2,400

-

-

130,785△130,785-

18,650,065

22,652,935

24,7182,955,816

44,283,536△130,785

44,152,751

Operating expenses

16,040,748

22,179,663

1,857,699

3,133,882

43,211,994△119,819

43,092,175

Operating income

2,609,317

473,272△1,832,980△178,066

1,071,542△10,966

1,060,576

Net sales<2> Geographical segments
1st quarter of the previous fiscal year (April 1, 2006 through June 30, 2006)(Unit: thousands of yen)
Eliminations/
Japan

Americas

EuropeTotal

Corporate

Consolidated

Net sales(1) Sales to customers(2) Intersegment sales
Total
Operating expenses
Operating income

7,518,623

875,508

242,430

8,636,562-

8,636,562-

143,61430,822

174,436△174,436-

7,518,623

1,019,122

273,252

8,810,998△174,436

8,636,562

6,774,219

1,359,057

327,683

8,460,960△174,436

8,286,524

744,403△339,934△54,430

350,038-

350,038

10

1st quarter of this fiscal year (April 1, 2007 through June 30, 2007)(Unit: thousands of yen)
Eliminations/
Japan

Americas

EuropeTotal

Corporate

Consolidated

Net sales(1) Sales to customers

10,906,414

551,930

11,155

11,469,500-

11,469,500-

126,975

30,839157,814△157,814-

10,906,414

678,905

41,994

11,627,315△157,814

11,469,500

10,339,396

645,798

80,882

11,066,077△157,814

10,908,262

567,018

33,107△38,888561,237-

561,237(2) Intersegment sales
Total
Operating expenses
Operating income

Previous consolidated fiscal year (April 1, 2006 through June 30, 2007)(Unit: thousands of yen)
Eliminations/
Japan

Americas

EuropeTotal

Corporate

Consolidated

Net sales(1) Sales to customers(2)Intersegment sales
Total
Operating expenses
Operating income

39,711,293

3,262,981

1,178,476

44,152,751-

44,152,751-

762,490

139,444

901,934△901,934-

39,711,293

4,025,471

1,317,921

45,054,686△901,934

44,152,751

36,457,943

6,025,549

1,510,616

43,994,110△901,934

43,092,175

3,253,349△2,000,077△192,695

1,060,576-

1,060,576

11

<3>Sales to foreign customers
1st quarter of the previous fiscal year (April 1, 2006 through June 30, 2006)(Unit: thousands of yen)

North America
I. Net sales to foreign customers

Total

746,051

410,737

1,156,789––

8,636,562

8.6

4.8

13.4

II. Consolidated sales
III. Ratio of foreign sales to consolidated sales (%)

Others

1st quarter of this fiscal year (April 1, 2007 through June 30, 2007)(Unit: thousands of yen)

North America
I. Net sales to foreign customers

Total

694,475

159,862

854,338––

11,469,500

6.1

1.4

7.5

II. Consolidated sales
III. Ratio of foreign sales to consolidated sales

OthersPrevious consolidated fiscal year (April 1, 2006 through March 31, 2007)(Unit: thousand of yen)

North America
I. Net sales to foreign customers

OthersTotal

4,231,936

1,758,619

5,990,555––

44,152,751

9.6

4.0

13.6

II. Consolidated sales
III. Ratio of foreign sales to consolidated sales

12