DAIICHIKOSHO

CO.,

LTD.

FY2009, the year ended March 31, 2010

Flash Report on the Consolidated Results for the Year Ended March 31, 2010
May 14, 2010

Company Name: DAIICHIKOSHO CO., LTD.
Code Number: 7458
(URL http://www.dkkaraoke.co.jp)
Stock Exchange Listing: JASDAQ
Representative: Tadahiko Hoshi, Chairman and CEO
Contact: Shigeki Kobayashi, General Manager, Accounting Department, Administration Headquarters
Phone: (03) 3280-2151
Date of the Ordinary General Meeting of Shareholders: June 27, 2010
Start Date for Dividend Payment: June 28, 2010
Scheduled Date to Submit the Securities Report: June 28, 2010
(Amounts below one million yen are truncated.)

1. Consolidated Performance for the Year Ended March 2010 (from April 1, 2009, to March 31, 2010)(1) Consolidated operating results(Percentage figures indicate increase/decrease from a year earlier.)
Year ended March 2010
Year ended March 2009

Net sales¥ Million
125,300
125,083

%
0.2
(1.4)

Net income
Year ended March 2010
Year ended March 2009

¥ Million
10,725
10,885

Operating income¥ Million%
17,4394.7
16,659
1.7

Ordinary income¥ Million%
18,408
5.4
17,4606.3

Net income per share

Fully diluted net income
per share
¥
―
―

%
(1.5)
85.5

¥
160.17158.76Return on equity

Ordinary income to total
assets%%Year ended March 2010
13.3
14.7
Year ended March 2009
14.5
14.0
(Reference) Equity in net income of unconsolidated subsidiaries and affiliates:
Year ended March 2010: (¥53 million)
Year ended March 2009: (¥13 million)

Operating income to net
sales
%
13.9
13.3

(2) Consolidated financial position
Total assets¥ Million
Year ended March 2010
125,776
Year ended March 2009
124,295(Reference) Shareholders’ equity
Year ended March 2010: ¥83,226 million
Year ended March 2009: ¥78,640 million

Net assets¥ Million
84,054
79,331

1

Equity ratio
%
66.2
63.3

Net assets per share¥
1,263.54
1,165.60

DAIICHIKOSHO

CO.,

LTD.

(3) Consolidated cash flows

Year ended March 2010
Year ended March 2009

Cash flows fromoperating activities

Cash flows frominvesting activities

Cash flows fromfinancing activities¥ Million
31,141
27,490¥ Million(14,116)(17,110)¥ Million(12,754)(8,997)

Cash and cash
equivalents at theend of the year
¥ Million
33,87729,584

2. Dividend
First Quarter
Year ended March 2009
Year ended March 2010
Year ending March 2011
(forecast)Year ended March 2009
Year ended March 2010
Year ending March 2011
(forecast)—――Second Quarter
Yen
0.00
20.00
25.00

Aggregate amount ofdividend (annual)¥ Million
3,036
3,309

Dividend per share
Third Quarter—――

Year-end
Yen
45.00
30.00
30.00

Payout ratio (consolidated)
%
28.3
31.2
37.7

Annual
Yen
45.00
50.00
55.00

Ratio of dividends to net
assets (consolidated)
%
4.1
4.1

3. Forecast Consolidated Performance for FY2010, the Year Ending March 31, 2011 (from April 1,
2010, to March 31, 2011)(Percentage figures indicate increase/decrease from a year earlier: The percentages for full-year forecasts mean theincrease/decrease from the end of the previous year, and the half-year forecast percentages represent theincrease/decrease from the end of the previous interim term.)
Net sales
Operating income
Ordinary income¥ Million%¥ Million%¥ Million%
Six months ending
62,400
(0.1)
8,400
(1.2)
8,900
(1.7)
September 30, 2010
Year ending March 31,
127,000
1.4
16,400(6.0)
17,300(6.0)
2011 (full year)

Six months ending
September 30, 2010
Year ending March 31,
2011 (full year)

Net income¥ Million%
4,750(16.4)
9,600

Net income per share¥
72.11(10.5)

145.752

DAIICHIKOSHO

CO.,

LTD.

4. Other(1) Change in important subsidiaries during the period under review (Change in specific subsidiaries causing achange in the scope of consolidation): No(2) Change in accounting principals, procedure and presentation methods for preparation of consolidated financial
statements (Items set forth in “Changes in important matters in preparing the consolidated financial
statements”)
1) Changes following a revision of accounting standards: No2) Other changes: No(3) Number of common shares issued
1) Number of shares issued (including treasury stock)
Year ended March 2010: 66,670,596 sharesYear ended March 2009: 69,600,596 shares
2) Number of shares of treasury stockYear ended March 2010: 802,735 sharesYear ended March 2009: 2,132,586 shares(Reference) Outline of Nonconsolidated Financial Results
1. Nonconsolidated Performance for the Year Ended March 2010 (from April 1, 2009, to March 31,
2010)(1) Nonconsolidated operating results
Net sales¥ Million

Year ended March 2010
Year ended March 2009

83,58882,882(Percentage figures indicate increase/decrease from a year earlier.)
Operating income
Ordinary income¥ Million¥ Million%%%
0.9
11,30714.3
12,628
10.7
(3.1)
9,892
(2.8)
11,411
2.2

Net income
Year ended March 2010
Year ended March 2009

¥ Million
8,592
6,949

Fully diluted net income
per share¥——

Net income per share
%
23.6
147.7

¥
128.32101.36(2) Nonconsolidated financial position
Total assets¥ Million
Year ended March 2010
82,617
Year ended March 2009
78,837(Reference) Shareholders’ equity:Year ended March 2010: ¥58,730 million
Year ended March 2009: ¥56,297 million

Net assets¥ Million
58,73056,297

Equity ratio
%
71.1
71.4

Net assets per shareYen
891.64
834.43* Explanation for the appropriate use of performance forecasts and other special notes:
These projected performance figures are based on information available to the Company’s management at the timeof preparing this report. There are many uncertain factors inherent in forecasting, and there might be cases in which
actual results differ from forecast values.

3

DAIICHIKOSHO

CO.,

LTD.

(Attachment)

Corporate GroupThe Daiichikosho Group (“DKG”) consists of Daiichikosho Co., Ltd. (“DK” or “the Company”), 39
consolidated subsidiaries and 2 affiliates. The major group companies engage in the commercial
karaoke business, the karaoke cabin and restaurant business, and the music software business.
Business segment

Business line

Commercial
karaoke business

Sales and rental of commercial-use
karaoke equipment, supply of soundsource and video content forcommunication karaoke and supply ofcontent services via the special “DAM
Station” information terminal

Karaoke cabin
and restaurant
business

Operation of karaoke cabins andrestaurants

Music software
business

Production and sales of music andvideo software products

Other business

Satellite broadcasting, supply ofcontent services via mobile phone andreal estate lease and rental 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 18 other subsidiaries

DK KOREA
Co., Ltd.,
Daiichikosho(Shanghai), Ltd.,and 1 othersubsidiary

Daiichikosho Co., Ltd.,
Nippon Crown Co., Ltd.,
Tokuma Japan Communications Co.,Ltd.,
CROWN TOKUMA music
distribution Co., Ltd.1,
Union Eiga Co., Ltd.,and 4 other subsidiaries
Daiichikosho Co., Ltd.,DK Finance Co., Ltd.,and Maruhagi Yoshu Kogyo Co., Ltd.

4

D.K. Enterprises(Guam), Inc.

DAIICHIKOSHO

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
software products)
Nippon Crown Co., Ltd.
Tokuma Japan Communications
Co., Ltd.
CROWN TOKUMA music
distribution Co., Ltd.1
Tri-M, Inc.
DK Music Publishing Co., Ltd.
Union Eiga Co., Ltd.
Crown Music Enterprise Co.
Zoom Republic(Operation and management ofrecreation facilities)
D.K. Enterprises (Guam), Inc.

(Equity method affiliate)
Spice Records Co., Ltd.
Bono Music(Production and sale of fruitwines)
Maruhagi Yoshu Kogyo Co., Ltd.

Sales and rentals of merchandise and products

Overseas users

DK KOREA Co., Ltd.
Daiichikosho (Shanghai), Ltd.
DAIICHI KOSHO (SHANGHAI)
TRADE CO., LTD.

DAIICHIKOSHO 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.
18 other companies

Operation of karaoke cabins and restaurants

Provision of services

Note: 1. BIG ECHO (SHANGHAI) Co., Ltd. and BIG ECHO (SHXG) CO,. LTD. have been excluded from the scope of
consolidation due to sale of all shares in December 2009.
2. Daiichi Kosho (Singapore) Pte Ltd. completed its liquidation in February 2010.
3. First Distribution Co., Ltd. changed its trade name to CROWN TOKUMA music distribution Co., Ltd.1 in March
2010.

5

DAIICHIKOSHO

CO.,

LTD.

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

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable-trade
Inventories
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property, plant and equipment
Buildings and structures
Accumulated depreciation
Buildings and structures, net
Karaoke equipment for rental
Accumulated depreciation
Karaoke equipment for rental, net
Karaoke cabin and restaurant facilities
Accumulated depreciation
Karaoke cabin and restaurant facilities, net
Land
Lease assets
Accumulated depreciation
Lease assets, net
Construction in progress
Other
Accumulated depreciation
Other, net
Total property, plant and equipment
Intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Lease and guarantee deposits
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets

6

FY2008(As of March 31, 2009)

FY2009(As of March 31, 2010)

30,003
8,925
4,778
1,221
3,841
(446)
48,321

34,170
7,367
4,371
1,601
3,875
(461)
50,926

14,565(8,492)
6,073
27,985(20,448)
7,537
30,077(16,506)
13,571
18,463
35
(14)
21
525
7,981
(6,495)
1,485
47,677
7,026

14,972(8,838)6,133
27,487(20,628)
6,859
30,864(17,471)
13,393
18,213
39
(14)
25
89
8,096
(6,823)
1,272
45,986
7,420

2,738
620
3,037
13,332
2,520(979)
21,26975,973
124,295

2,849
506
3,381
13,1162,040(453)
21,441
74,849125,776

DAIICHIKOSHO

CO.,

LTD.

(Millions of yen)

Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Accounts payable-other
Income taxes payable
Provision for bonuses
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Deferred tax liabilities
Provision for retirement benefits
Provision for directors' retirement benefits
Negative goodwill
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholders' equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders' equity
Valuation and translation adjustments
Valuation difference on available-for-sale securities
Revaluation reserve for land
Foreign currency translation adjustment
Total valuation and translation adjustments
Minority interests
Total net assets
Total liabilities and net assets

7

FY2008(As of March 31, 2009)

FY2009(As of March 31, 2010)

4,214
11,018
6,861
1,397
1,167
3,329
27,988

3,714
6,792
6,194
5,379
1,192
3,593
26,866

10,178
150
2,891
2,105
335
1,314
16,97544,964

7,976
150
3,068
2,088
281
1,289
14,854
41,721

12,35020,362
49,207(2,094)79,825

12,35017,28555,563(973)
84,226

(317)
(777)
(90)
(1,184)690
79,331
124,295

(153)
(777)
(68)
(1,000)828
84,054
125,776

DAIICHIKOSHO

CO.,

LTD.

(2) Consolidated Statements of Income(Millions of yen)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Advertising expenses
Promotion expenses
Packing and freight expenses
Provision of allowance for doubtful accounts
Directors' compensations
Provision for directors' retirement benefits
Salaries and bonuses
Provision for bonuses
Retirement benefit expenses
Rent expenses
Depreciation
Other
Total selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Cooperative monetary aid received
Amortization of negative goodwill
Other
Total non-operating income
Non-operating expenses
Interest expenses
Provision of allowance for doubtful accounts
Equity in losses of affiliates
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income

8

FY2008(From April 1, 2008, to
March 31, 2009)

FY2009(From April 1, 2009, to
March 31, 2010)

125,083
72,07253,010125,300
72,324
52,976

3,478
1,841
1,142
53
1,614
346
14,337
917
553
1,607
793
9,665
36,35016,659

3,195
1,570
1,083
－
1,638
388
14,311
946
645
1,627
702
9,427
35,537
17,439

241
373
55
939
1,609

179
481
54
888
1,603

328
10
13
248
207
808
17,460

252
－
53
126
201
633
18,408DAIICHIKOSHO

CO.,

LTD.

(Millions of yen)

Extraordinary income
Gain on sales of noncurrent assets
Reversal of allowance for doubtful accounts
Indemnity of cancellation of leases
Reversal of loss on cancellation of a new business
Other
Total extraordinary income
Extraordinary loss
Loss on disposal of noncurrent assets
Impairment loss
Loss on sales of stocks of subsidiaries and affiliates
Loss on valuation of investment securities
Other
Total extraordinary losses
Income before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Total income taxes
Minority interests in income
Net income

9

FY2008(From April 1, 2008, to
March 31, 2009)

FY2009(From April 1, 2009, to
March 31, 2010)

16
－
119
116
16
269

11
218
248
－
11
490

484
367
－
1,376
53
2,281
15,449
3,807
597
4,405
158
10,885

691
857
57
64
12
1,683
17,215
7,133
(784)
6,348
140
10,725DAIICHIKOSHO

CO.,

LTD.

(3) Consolidated Statements of Changes in Net Assets(Millions of yen)

Shareholders' equity
Capital stock
Balance at the end of previous period
Balance at the end of current period
Capital surplus
Balance at the end of previous period
Changes of items during the period
Retirement of treasury stock
Total changes of items during the period
Balance at the end of current period
Retained earnings
Balance at the end of previous period
Effect of changes in accounting policies applied toforeign subsidiaries
Changes of items during the period
Dividends from surplus
Net income
Change of scope of equity method
Reversal of revaluation reserve for land
Total changes of items during the period
Balance at the end of current period
Treasury stock
Balance at the end of previous period
Changes of items during the period
Purchase of treasury stock
Retirement of treasury stock
Total changes of items during the period
Balance at the end of current period
Total shareholders' equity
Balance at the end of previous period
Effect of changes in accounting policies applied toforeign subsidiaries
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Retirement of treasury stock
Change of scope of equity method
Reversal of revaluation reserve for land
Total changes of items during the period
Balance at the end of current period

10

FY2008(From April 1, 2008, to
March 31, 2009)

FY2009(From April 1, 2009, to
March 31, 2010)

12,35012,35012,35012,35020,362

20,362－－
20,362(3,076)(3,076)
17,28540,14949,207(9)－(1,733)
10,885
(15)
(67)
9,068
49,207(4,369)10,725－－
6,355
55,563(266)(2,094)(1,828)－(1,828)(2,094)(1,955)
3,076
1,121
(973)

72,59579,825(9)－(1,733)
10,885(1,828)
－
(15)
(67)
7,239
79,825(4,369)10,725(1,955)－－－4,400
84,226DAIICHIKOSHO

CO.,

LTD.

(Millions of yen)

Valuation and translation adjustments
Valuation difference on available-for-sale securities
Balance at the end of previous period
Changes of items during the period
Net changes of items other than shareholders' equity
Total changes of items during the period
Balance at the end of current period
Revaluation reserve for land
Balance at the end of previous period
Changes of items during the period
Net changes of items other than shareholders' equity
Total changes of items during the period
Balance at the end of current period
Foreign currency translation adjustment
Balance at the end of previous period
Changes of items during the period
Net changes of items other than shareholders' equity
Total changes of items during the period
Balance at the end of current period
Total valuation and translation adjustments
Balance at the end of previous period
Changes of items during the period
Net changes of items other than shareholders' equity
Total changes of items during the period
Balance at the end of current period
Minority interests
Balance at the end of previous period
Changes of items during the period
Net changes of items other than shareholders' equity
Total changes of items during the period
Balance at the end of current period
Total net assets
Balance at the end of previous period
Effect of changes in accounting policies applied to foreignsubsidiaries
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Change of scope of equity method
Reversal of revaluation reserve for land
Net changes of items other than shareholders' equity
Total changes of items during the period
Balance at the end of current period

11

FY2008(From April 1, 2008, to
March 31, 2009)

FY2009(From April 1, 2009, to
March 31, 2010)

47

(317)

(364)
(364)
(317)

163
163
(153)

(845)

(777)

67
67
(777)

－
－
(777)

64

(90)

(155)
(155)
(90)

21
21
(68)

(733)

(1,184)

(451)
(451)
(1,184)

184
184(1,000)

537

690

153
153
690

137
137
828

72,39979,331(9)－(1,733)
10,885(1,828)
(15)
(67)
(298)
6,941
79,331(4,369)10,725(1,955)
－
－
322
4,723
84,054DAIICHIKOSHO

CO.,

LTD.

(4) Consolidated Statements of Cash Flows(Millions of yen)

Net cash provided by (used in) operating activities
Income before income taxes and minority interests
Depreciation and amortization
Impairment loss
Amortization of negative goodwill
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for directors' retirement
benefits
Interest and dividends income
Loss (gain) on sales of stocks of subsidiaries and affiliates
Gain or loss on investments in investment businessassociations
Interest expenses
Loss (gain) on disposal of noncurrent assets
Loss (gain) on valuation of investment securities
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
Other, net
SubtotalInterest and dividends income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities
Net cash provided by (used in) 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 assets
Payments for acquisition of video licenses
Purchase of investment securities
Proceeds from sales of investment securities
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

12

FY2008(From April 1, 2008, to
March 31, 2009)

FY2009(From April 1, 2009, to
March 31, 2010)

15,44914,012
367
(55)
(306)

17,215
13,781
857
(54)
(511)

256

(17)

(327)
－

(263)
57

(4)

(5)

328
467
1,376

252
680
64

14

1,576

(209)
493
(324)
2,019
33,557325(321)(6,071)
27,490

449
439
(504)
159
34,178262(247)(3,052)
31,141(303)
373(11,272)
175(4,360)(1,170)
(31)
136
(710)
631
(1,302)
589
133(17,110)(132)
257(9,164)59(3,914)(1,163)
－
0
(292)
417
(655)
443
27
(14,116)DAIICHIKOSHO

CO.,

LTD.

(Millions of yen)

Net cash provided by (used in) financing activities
Net increase (decrease) in short-term loans payable
Proceeds from long-term loans payable
Repayment of long-term loans payable
Cash dividends paid
Purchase of treasury stock
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

13

FY2008(From April 1, 2008, to
March 31, 2009)

FY2009(From April 1, 2009, to
March 31, 2010)

(974)
6,250
(10,700)(1,733)(1,828)(10)(8,997)(98)
1,283
28,30029,584(205)
3,730(9,952)(4,359)(1,955)(11)(12,754)
22
4,293
29,58433,877DAIICHIKOSHO

Items
Summary of
Significant
Accounting
Policies

CO.,

FY2008(From April 1, 2008, to March 31, 2009)(1) Valuation basis and method for important
assets1) Marketable securities and investments insecurities
Other securities primarily designated asavailable-for-sale securities for which thefair values are readily determinable:
Carried at fair value as of thebalance-sheet date with changes in net
unrealized holding gain or loss, net of theapplicable income taxes, included
directly in net assets. The cost of
securities sold is determined by themoving-average method.
Other securities primarily designated asavailable-for-sale securities for which thefair values are not readily determinable:
Carried at cost determined by themoving-average method.
With regard to investments in theInvestment Business Limited Liability
Partnership and similar organizations(which are regarded as “securities” inaccordance with Article 2, Paragraph 2, ofFinancial Instruments and Exchange Act),initial investments in such associations arerecognized as receivables from associations
and the amount assumed to be held by theCompany for fluctuations due to thefinancial situation of the associations after
such investment is recognized as receivables
and payables related to such associations.
2) Derivatives
Carried at fair value.
3) Inventories
Principally stated at cost determined by themoving-average method. (balance sheet
values are calculated by the method to
reduce the book value to reflect declined
profitability.)(Change in accounting method)
Effective the current consolidated fiscal year,
the “Accounting Standard for Measurementof Inventories” (ASBJ Statement No. 9, July
5, 2006) has been applied. Although thischange decreased operating income by ¥635
million as compared with the amounts
calculated using the former method, there isno effect on ordinary income or income
before income taxes and minority interests.
The impact on segment information is statedat the relevant points in the Segment
Information.

14

LTD.

FY2009(From April 1, 2009, to March 31, 2010)(1) Valuation basis and method for important
assets1) Marketable securities and investments insecurities
Other securities primarily designated asavailable-for-sale securities for which thefair values are readily determinable:
Same as on the left

Other securities primarily designated asavailable-for-sale securities for which thefair values are not readily determinable:
Same as on the left

2) Derivatives
Same as on the left
3) Inventories
Principally stated at cost determined by themoving-average method. (balance sheet
values are calculated by the method to
reduce the book value to reflect declined
profitability.)DAIICHIKOSHO

Items

CO.,

FY2008(From April 1, 2008, to March 31, 2009)(2) Depreciation method of major depreciable
assets1) Property, plant and equipment (excluding
lease assets)
At DK and its domestic consolidated
subsidiaries, depreciation is principally
computed by the declining-balance method
at rates based on the estimated useful livesof the assets as shown below, while thestraight-line method is adopted by theoverseas consolidated subsidiaries.
However, the straight-line method isadopted for buildings (excluding building
improvements) acquired by DK and its
domestic consolidated subsidiaries on andafter April 1, 1998.
Buildings and structures: 3–50 years
Karaoke equipment for rental: 5–6 years
Karaoke cabin and restaurant facilities:
3–19 years(Additional Information)
DK reviewed the depreciation period formachinery and equipment following the tax
system revision in 2008 and changed thedepreciation method for machinery andequipment to the method of shortening thedepreciation period for certain assets. The
effect of this change on the consolidated
financial statements is immaterial.
2) Intangible assets
At DK and its subsidiaries, amortization of
intangible assets is computed by thestraight-line method.
3) Lease assets
Lease assets are depreciated by thestraight-line method with the useful being
the lease period with a remaining value
being zero.
Finance lease transactions that do nottransfer ownership of leased property whose
lease inceptions predate March 31, 2008 are
accounted for as rental transactions.
(3) Accounting standard for important reserves
1) Allowance for doubtful accounts
The allowance for doubtful accounts isprovided at an amount of possible losses
from uncollectible receivables based on theactual rate of losses from bad debt forordinary receivables, and on the estimatedrecoverability for specific doubtfulreceivables.
2) Reserve for bonuses
The reserve for bonuses of DK and its
domestic consolidated subsidiaries isprovided at an estimated amount based on
the internal payment prediction standard.

15

LTD.

FY2009(From April 1, 2009, to March 31, 2010)(2) Depreciation method of major depreciable
assets1) Property, plant and equipment (excluding
lease assets)
At DK and its domestic consolidated
subsidiaries, depreciation is principally
computed by the declining-balance method
at rates based on the estimated useful livesof the assets as shown below, while thestraight-line method is adopted by theoverseas consolidated subsidiaries.
However, the straight-line method isadopted for buildings (excluding building
improvements) acquired by DK and its
domestic consolidated subsidiaries on andafter April 1, 1998.
Buildings and structures: 3–50 years
Karaoke equipment for rental: 5–6 years
Karaoke cabin and restaurant facilities:
3–19 years

2) Intangible assets (excluding lease assets)
Same as on the left
3) Lease assets
Same as on the left

(3) Accounting standard for important reserves
1) Allowance for doubtful accounts
Same as on the left

2) Reserve for bonuses
Same as on the left

DAIICHIKOSHO

Items

CO.,

FY2008(From April 1, 2008, to March 31, 2009)
3) Reserve for employees’ retirement benefits
The reserve for employees’ retirement
benefits of DK and its domestic
consolidated subsidiaries is provided at an
amount recognized to have accrued as of thebalance-sheet date, based on the projected
benefit obligations and plan assets as of theend of the current consolidated fiscal year.
Actuarial differences are amortized on a pro
rata basis by the straight-line method over acertain period (10 years), which is shorter
than the average remaining service years for
employees at the time of their recognition,from the following fiscal year ofrecognition.

4) 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 inaccordance with their respective internal
rules concerning directors’ retirement
allowances if all eligible directors andstatutory auditors were to resign theirpositions as of the respective balance-sheet
dates.
(4) Translation of important assets and liabilities
denominated in foreign currencies into yen
Monetary receivables and payables
denominated in foreign currencies aretranslated into yen at the spot exchange ratein effect at the consolidated balance-sheet
date. The resulting exchange differences arecharged or credited to income. The balance
sheet accounts of the overseas subsidiaries
are translated into yen at the spot exchange
rate in effect at their respectivebalance-sheet dates, and the revenue andexpense accounts are translated into yen at
the average rate during the fiscal year. The
resulting translation differences have been
included in “Foreign currency translation
adjustments” in Net Assets.

16

LTD.

FY2009(From April 1, 2009, to March 31, 2010)
3) Reserve for employees’ retirement benefits
Same as on the left

(Change in accounting method)
Effective the current consolidated fiscal year,
the “Partial Amendments to AccountingStandard for Retirement Benefits (Part3)(ASBJ Statement No. 19, July 31, 2008)” hasbeen applied. This change has had no impact
on operating income, ordinary income, norincome before income taxes and minority
interests.
4) Reserve for directors’ retirement allowances
Same as on the left

(4) Translation of important assets and liabilities
denominated in foreign currencies into yen
Same as on the left

DAIICHIKOSHO

ItemValuation for
assets andliabilities of
consolidated
subsidiaries

CO.,

FY2008(From April 1, 2008, to March 31, 2009)(5) Hedge accounting
DK 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.
Evaluation of the effectiveness of theseinterest rate swaps is omitted as they
conform to the preferential treatment
requirements.
(6) Other important matters in preparing theconsolidated financial statements
Accounting for consumption taxes
Consumption taxes are accounted for using
the tax exclusion method.
Assets and liabilities of consolidated
subsidiaries are carried at fair value.

LTD.

FY2009(From April 1, 2009, to March 31, 2010)(5) Hedge accounting
Same as on the left

(6) Other important matters in preparing theconsolidated financial statements
Same as on the left

Same as on the left

Amortization of
goodwill andnegativegoodwill

Negative goodwill is equally amortized over 5
or 15 years on a straight-line basis.

Same as on the left

Cash and Cash
Equivalents in
the Consolidated
Statements ofCash Flows

Cash and cash equivalents in the consolidated
statements of cash flows included 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.

Same as on the left

17

DAIICHIKOSHO

CO.,

LTD.

Segment Information
Business segments
FY2008 (From April 1, 2008, to March 31, 2009)
Item
Sales and operating
incomeSales
Sales to third parties
Intersegment sales
and transfers
Total
Operating expenses
Operating income (loss)
Assets, depreciation
and amortization,
impairment loss andcapital expenditure
AssetsDepreciation andamortization
Impairment loss
Capital expenditure

Commercial
karaokeKaraokecabin and
restaurantMusic
software61,031
275

40,574(Millions of yen)
Eliminations Consolidated
and corporate

Other

Total

10,665834

125,083
1,344—

125,083—

12,811234(1,344)—61,30750,725
10,581

40,57435,024
5,549

13,045
11,1291,916

11,5009,908
1,591

126,427
106,788
19,639(1,344)
1,634(2,979)125,083
108,423
16,65955,221
8,124

36,287
2,983

8,854
39

6,064
1,422

106,427
12,57017,86835

124,295
12,606

—

349
4,674

—

17
1,089

367
15,291—156

367
15,4489,465

62FY2009 (From April 1, 2009, to March 31, 2010)
Item
Sales and operating
incomeSales
Sales to third parties
Intersegment sales
and transfers
Total
Operating expenses
Operating income
Assets, depreciation
and amortization,
impairment loss andcapital expenditure
AssetsDepreciation andamortization
Impairment loss
Capital expenditure

Commercial
karaokeKaraokecabin and
restaurantMusic
software61,513306

40,897(Millions of yen)
Eliminations Consolidated
and corporate

Other

Total

10,388857

125,300
1,376—

125,300—

12,501212(1,376)—

61,81950,41911,39940,897
34,695
6,202

12,713
11,3391,374

11,246
9,747
1,498

126,677
106,201
20,475(1,376)
1,659(3,035)

125,300
107,861
17,43954,4198,274

35,920
2,857

7,427
39

6,316
1,285

104,085
12,456

21,69034

125,776
12,491

200
8,495

532
3,630

—

124
1,052

857
13,193—857
13,2181425

Notes:
1. Segmentation method
According to DKG’s sales tabulation categories.
2. Major products and/or services of each business segment
Business segment
Commercial karaoke businessKaraoke cabin and restaurant
business
Music software business
Other business

Major products and/or services
Sales and rental of commercial-use karaoke equipment, supply of sound source andvideo content for communication karaoke, and supply of content services via thespecial “DAM Station” information terminal
Operation of karaoke cabins and restaurants
Production and sales of music and video software products
Satellite broadcasting business, supply of content services via mobile phones and realestate lease and rental business, etc.

18

DAIICHIKOSHO

CO.,

LTD.

3. Amounts and major items included in “Eliminations and corporate”
Amounts of unabsorbed operating
expenses included in“Eliminations and corporate”
Amounts of assets of the overall
Company included in“Eliminations and corporate”

FY2008¥2,979FY2009¥3,035¥18,288¥22,125(Millions of yen)
Major items
Expenses required for operations byadministrative departments such as the General
Affairs Dept.
Surplus funds of the Company (cash and bankdeposits), long-term investment funds(investments in securities) andmanagement-related assets

Significant Subsequent Events
Abolition of the qualified retirement pension plan
The Company has maintained the qualified retirement pension plan and the lump-sum retirement benefit plan.
However, at the meeting of Board of Directors held on April 26, 2010, the Company resolved to abolish thequalified retirement pension plan as of July 1, 2010, and to revise the rules for its retirement benefit plan.
In executing this change, the Company plans to apply the “Accounting for Transfer between Retirement
Benefit Plans” (ASBJ Guidance No.1).
The effects of this change on the Company’s consolidated financial statements for the next fiscal year are being
calculated.

19