UNOFFICIAL TRANSLATION
The formal official document is in Japanese
Summary of Consolidated Financial Results for the First Quarter of
Fiscal Year ending September 30, 2017 (Japanese Accounting Standards)
January 30, 2017
Listed Company Name: MTI Ltd.
Listing Exchanges: Tokyo Stock Exchange
Securities Code:9438
URL: http://www.mti.co.jp
Representative:
Toshihiro Maeta, President and Chief Executive Officer
Contact:
Hiroshi Matsumoto, Managing Director
Phone: +81-3-5333-6323
Scheduled date to submit the Quarterly Securities Report (Shihanki Houkokusho): February 10, 2017
Scheduled date of dividend payment: –Supplementary documents for quarterly results: Yes
Quarterly results briefing: Yes (for securities analysts and institutional investors)(Figures less than one millions of yen are omitted)

1. Consolidated business results for the three months ended December 31, 2016
(October 1, 2016 – December 31, 2016)(1) Consolidated operating results (cumulative total)
Net sales

Operating income

Millions of yen

First quarter of fiscal year ending
September 30, 2017
First quarter of fiscal year ended
September 30, 2016
(Note) Comprehensive income:(Percentages represent year-on-year changes)
Profit attributable toOrdinary income
owners of parent% Millions of yen% Millions of yen% Millions of yen

%

7,637

(10.6)

1,149

2.4

1,125

0.7

677

(3.0)

8,547

4.1

1,121

(15.9)

1,117(15.0)

697(8.3)

Three months ended December 31, 2016: 743 millions of yen 4.4%
Three months ended December 31, 2015: 711 millions of yen (19.1 %)Net income
Net income
per shareper share/diluted

First quarter of fiscal year ending
September 30, 2017
First quarter of fiscal year ended
September 30, 2016

Yen

Yen

12.30

12.21

12.25

12.10

(2) Consolidated financial position
Total assets

Net assets

Millions of yen

As of December 31, 2016
As of September 30, 2016
(Reference) Shareholders’ equity:

Equity ratio

Millions of yen%

23,043
17,19525,154
17,852As of December 31, 2016: 16,645 millions of yen
As of September 30, 2016: 17,306 millions of yen

72.2
68.8

2. Dividends
End of firstquarter
Fiscal year ended
September 30, 2016
Fiscal year ending
September 30, 2017
Fiscal year ending
September 30, 2017 (forecast)

Dividend per share
End of third
quarter

End of second
quarterYear end

Annual

Yen

Yen

Yen

Yen

Yen

–

8.00

–

8.00

16.00

8.00

–

8.00

16.00

–

(Note) Revision of dividend forecast for during this period : No

3. Forecast for consolidated business results for the fiscal year ending September 30, 2017
(October 1, 2016 – September 30, 2017)
Net sales
For the first half
Full year(Percentages represent year-on-year changes.)
Profit attributable to
Net income
Ordinary income
owners of parent
per share

Operating income

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

Yen

15,50032,500

(8.8)
(2.6)

1,730
4,060

(30.5)(24.2)

1,700
4,000

(30.2)(24.7)

1,100
2,500

(22.8)(24.6)

20.25
46.02

(Note) Revisions to forecasts for consolidated business results published most recently: No

* Notes(1) Important changes of subsidiaries during the term (changes in specified subsidiaries resulting in change in scopeof consolidation): Not applicable
New: –
Exception: –(2) Application of specific accounting treatment to the preparation of quarterly consolidated financial statements: Not
applicable(3) Changes in accounting policies and changes or restatement of accounting estimates(i) Changes in accounting policies due to the modification in accounting methods:(ii) Changes in accounting policies other than (i):(iii) Changes in accounting estimates:(iv) Restatement:Yes
Not applicableNot applicableNot applicable(4) Number of outstanding shares (common shares)(i) Number of shares outstanding at the end of period (including treasury shares):12/2016: 60,655,600 shares
9/2016: 60,549,200 shares(ii) Number of treasury shares at the end of period
12/2016: 6,333,128 shares
9/2016: 4,925,228 shares(iii) Average number of shares during the period (quarterly consolidated cumulative period)
Three months ended 12/2016: 55,047,708 shares Three months ended 12/2015: 56,983,793 shares
The Company conducted a 2-for-1 common stock split that became effective on April 1, 2015. The average number of shares during the period is calculatedon the assumption that this share split was carried out at the beginning of the previous fiscal year after these stock splits.

* Status of a quarterly review
A quarterly review under the Financial Instruments and Exchange Act was being conducted at the publication of this summary of
consolidated financial results.

* Cautionary statement with respect to forward-looking statements
The forward-looking statements included in this material are based on the Company’s judgments, assumptions, and convictions
based on information available to the Company at the time of publication of this document and may differ materially from actual
results for a range of factors, including conditions of Japanese and overseas economies, changes in the situation of operations inJapan and overseas, and uncertainties and potential risks inherent in forward-looking statements. The risks and uncertainties include
unforeseeable effects of future events. The information on consolidated earnings forecasts and other future forecasts on page 3 of
the Accompanying Materials describes notes on the assumptions of the earnings forecasts and the use of the earnings forecasts.
The Company will hold a briefing on earnings in the first three quarters chiefly for securities analysts and institutional investors on
Tuesday, January 31, 2017. A video of the briefing and a document to be used at the briefing will be posted on the Company’s
website as soon as the briefing ends. (A video is Japanese only.)Accompanying materials – Contents
1. Qualitative information on financial results for the current settlement ................................................................... 2(1) Explanation on operating results ................................................................................................................... 2(2) Explanation on financial position ................................................................................................................. 2(3) Explanation of future forecast information including consolidated forecast ................................................ 3
2. Matters relating to summary information (Notes)..................................................................................................... 4(1) Changes in important subsidiaries during the period ...................................................................................... 4(2) Adoption of specific accounting methods for producing quarterly consolidated financial statements ......... 4(3) Changes in accounting policies, changes in accounting estimates, restatements .......................................... 4(4) Additional information .................................................................................................................................. 4
3. Quarterly consolidated financial statements ........................................................................................................... 5(1) Quarterly consolidated balance sheet ............................................................................................................ 5(2) Quarterly consolidated statements of income and quarterly consolidated statements of comprehensive
income .......................................................................................................................................................... 7(3) Notes concerning quarterly consolidated financial statements ..................................................................... 9(Notes concerning going concern assumption) ............................................................................................. 9(Notes on significant changes in shareholders’ equity) ................................................................................. 9

1

1. Qualitative information on financial results for the current settlement(1) Explanation on operating results
Since the abolition of the practice of offering cellphones virtually free of charge in February 2016,
smartphone unit sales have seen sluggish growth. The Company worked to acquire paying subscribers on
smartphones at cellphone shops across Japan, but the number of paying subscribers on smartphones came to5.60 million at the end of December 2016 (down 0.09 million from the end of September 2016), reflecting
sluggish smartphone unit sales. The total number of paying subscribers decreased 0.18 million, to 7.04
million.
Although the ARPU of paying subscribers on smartphones, primarily subscribers to music.jp, a video
distribution service whose product lineup has expanded, maintained an upward trend, the total number ofpaying subscribers declined year on year. As a result, net sales and gross profit declined to ¥7,637 million(down 10.6% year on year) and ¥6,362 million (down 11.4% year on year).
Although gross profit has declined, selling, general and administrative expenses (SG&A) have also
declined due to a decrease in advertising expenses; therefore, operating income, ordinary income and profit
attributable to owners of parent stood at ¥1,149 million (up 2.4% year on year), ¥1,125 million (up 0.7% year
on year), and ¥677 million (down 3.0% year on year), respectively.
Consolidated business results(Period from October 1, 2016 to December 31, 2016)
First quarter
First quarterof the fiscal year ending of the fiscal year ended
September 30, 2017
September 30, 2016

ChangePercentagechangeAmountMillions of yen

Millions of yen

Millions of yen%

Net sales

7,637

8,547

(909)

(10.6)

Cost of sales

1,275

1,362

(87)

(6.4)

Gross profit

6,362

7,184

(821)

(11.4)

SG&A

5,213

6,062

(849)

(14.0)

Operating income

1,149

1,121

+27

+2.4

Ordinary income
Profit attributable to ownersof parent

1,125

1,117

+8

+0.7

677

697

(20)

(3.0)

Breakdown of SG&A
(Period from October 1, 2016 to December 31, 2016)
First quarter
First quarterof the fiscal year ending of the fiscal year ended
September 30, 2017
September 30, 2016

ChangePercentagechangeAmountMillions of yen

Millions of yen

Millions of yen

%

Total

5,213

6,062

(849)

(14.0)

Advertising expenses

1,542

2,532

(990)

(39.1)

Personnel expenses

1,395

1,341

+54

+4.0

Commission fee

926

954

(28)

(2.9)

Subcontract expenses

402

374

+28

+7.6

Depreciation

374

298

+75

+25.2

Other

572

561

+10

+1.9

(2) Explanation on financial position
1) Assets, liabilities and net assets
At the end of the first quarter under review, total assets declined ¥2,110 million from the end of September
2016, to ¥23,043 million.
Current assets decreased ¥3,910 million, mainly due to a fall in cash and deposits. Non-current assets
increased ¥1,799 million, largely as a result of an increase in investment securities.

2

Current liabilities dropped ¥1,490 million, primarily reflecting a decline in income taxes payable. Noncurrent liabilities increased ¥37 million, chiefly due to a rise in net defined benefit liability.
Net assets decreased ¥657 million, chiefly due to the purchase of treasury stock and cash dividends paid
although a profit attributable to owners of parent of ¥677 million was posted.

Total assets

Net assets

Equity ratio

Millions of yen

Millions of yen%

As of December 31, 2016

23,043

17,19572.2

As of September 30, 201625,154

17,85268.8(3) Explanation of future forecast information including consolidated forecast
The Company will continue to focus on acquiring paying subscribers on smartphones and will strive toincrease average revenue per user (ARPU). Although unit sales of smartphones are stagnant, the Company
will promote sales of its content offering high ARPU at cellphone shops nationwide.
In the healthcare-related service business, the Company will work to expand orders for CARADA package
services for corporate customers and for training management services provided by a Group company. The
Company will also take steps to boost the number of contracts with local governments nationwide for theelectronic maternal and child health handbook service.
Our forecasts for consolidated business results for the first half and the full year of the fiscal year ending
September 30, 2017 remain unchanged from the values announced on October 31, 2016.
Earnings forecast for the six months of the fiscal year ending September 30, 2017
(Period from October 1, 2016 to March 31, 2017)
Consolidated profit and loss
Net sales

15,500 millions of yen(an decrease of 8.8% y-o-y)Operating income

1,730 millions of yen(an decrease of 30.5% y-o-y)Ordinary income

1,700 millions of yen(an decrease of 30.2% y-o-y)Profit attributable toowners of parent

1,100 millions of yen(an decrease of 22.8% y-o-y)Earnings forecast for the fiscal year ending September 30, 2017
(Period from October 1, 2016 to September 30, 2017)
Consolidated profit and loss
Net sales

32,000 millions of yen(an decrease of 2.6% y-o-y)Operating income

4,060 millions of yen(an decrease of 24.2% y-o-y)Ordinary income

4,000 millions of yen(an decrease of 24.7% y-o-y)Profit attributable toowners of parent

2,500 millions of yen(an decrease of 24.6% y-o-y)32. Matters relating to summary information (Notes)(1) Changes in important subsidiaries during the period
Not applicable.
(2) Adoption of specific accounting methods for producing quarterly consolidated financial
statements
Not applicable.
(3) Changes in accounting policies, changes in accounting estimates, restatements
Not applicable.
(4) Additional information(Adoption of Implementation Guidance on Recoverability of Deferred Tax Assets)
The Implementation Guidance on Recoverability of Deferred Tax Assets (ASBJ Guidance No. 26, March 28,2016) is applied from the first quarter under review.

43. Quarterly consolidated financial statements（1） Quarterly consolidated balance sheet
Fiscal year ended September 30, 2016 and the first quarter of fiscal year ending September 30, 2017
（Unit: thousands of yen）
Previous fiscal year
(As of September 30, 2016)

Current fiscal year
(As of December 31, 2016)

AssetsCurrent assets
Cash and deposits

12,613,012

8,925,659

Notes and accounts receivable-trade
Deferred tax assets

6,163,789
316,742

6,067,321
178,998

Other
Allowance for doubtful accounts

1,023,195(65,095)

1,036,644(67,184)

Total current assets

20,051,644

16,141,439

Non-current assets
Property, plant and equipment

179,023

179,221

Intangible assets
Software2,462,449

2,552,519

Goodwill
Other

14,89826,83722,71432,1962,504,185

2,607,430

1,054,687
494,9632,635,022
493,323

Deferred tax assets
Other853,155
34,048967,668
37,039Allowance for doubtful accounts(17,519)(17,518)

Total investment and other assets

2,419,334

4,115,535

5,102,543

6,902,187

25,154,188

23,043,627

Total intangible assets
Investments and other assets
Investment securities
Lease and guarantee deposits

Total non-current assets
Total assets

5

(Unit: thousands of yen)Previous fiscal year
(As of September 30, 2016)

Current fiscal year
(As of December 31, 2016)

Account payable-trade
Accounts payable-other

1,177,351
2,290,594

1,065,618
2,256,252

Income taxes payable
Provision for bonuses

1,343,684

461,545
156,921

Liabilities
Current liabilities

Allowance for coin usage
Other－
188,361
1,148,832

Total current liabilities

6,148,824

4,657,991

Non-current liabilities
Net defined benefit liability

1,099,402

1,140,412

31,423
21,587

29,143
20,2181,152,413

1,189,774

7,301,237

5,847,766

Shareholders' equity
Capital stock

5,012,181

5,031,512

Capital surplus
Retained earning

5,834,419
8,727,679

5,853,750
8,959,921

Treasury shares(2,148,888)(3,148,848)

Total shareholders' equity

17,425,392

16,696,336

Valuation difference on available-for-sale securities
Foreign currency translation adjustment

65,027(42,706)

108,999(23,181)

Remeasurements of defined benefit plans(141,548)(136,980)

Total accumulated other comprehensive income(119,227)(51,162)

132,236
414,550

138,246
412,440

17,852,951

17,195,860

25,154,188

23,043,627

Negative goodwill
Other
Total non-current liabilities
Total liabilities

177,895
539,757

Net assets

Accumulated other comprehensive income

Subscription rights to shares
Non-controlling interests
Total net assets
Total liabilities and net assets

6

（2） Quarterly consolidated statement of income and quarterly consolidated statementof comprehensive income
Quarterly consolidated statement of income
For the first quarter of the fiscal year ended September 30, 2016 and fiscal year ending September 30, 2017
(Unit: thousands of yen)First quarter of the previous
fiscal year

First quarter of the current
fiscal year

(from October 1, 2015
to December 31, 2015)(from October 1, 2016
to December 31, 2016)

Net sales

8,547,153

7,637,825

Cost of sales

1,362,805

1,275,444

Gross profit

7,184,348

6,362,380

Selling, general and administrative expenses

6,062,458

5,213,222

Operating income

1,121,889

1,149,157

Interest income
Dividend income

8
2,237

25
2,517

Amortization of negative goodwill
Foreign exchange gains

2,279
3,170

2,279

Other

2,240

－
15,009Total non-operating income

9,937

19,831

1,030－

10,05239,017

－
－
3,168

1,036
2,764

Non-operating income

Non-operating expenses
Interest expenses
Share of loss of entities accounted for using
equity method
Foreign exchange losses
Commission for purchase of treasury shares
Other
Total non-operating expenses
Ordinary income

408

14,251

43,226

1,117,575

1,125,762

9,078

19,922Extraordinary income
Extraordinary losses
Loss on retirement of non-current assets
Total extraordinary losses

9,078

19,922

Income before income taxes

1,108,497

1,105,840

Income taxes-current
Income taxes-deferred

439,311(6,935)437,794
3,171

Total income taxes

432,375

440,965

Profit676,121664,874

Profit (loss) attributable to non-controlling interests(21,817)(12,359)

Profit attributable to owners of parent

697,939

677,233

7

Quarterly consolidated statement of comprehensive income
For the first quarter of the fiscal year ended September 30, 2016 and fiscal year ending September 30, 2017
(Unit: thousands of yen)First quarter of the previous
fiscal year

First quarter of the current
fiscal year

(from October 1, 2015
to December 31, 2015)(from October 1, 2016
to December 31, 2016)

ProfitOther comprehensive income

676,121664,874

Valuation difference on available-for-sale securities
Foreign currency translation adjustment

31,0701,874

45,69327,409Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of entities
accounted for using equity method
Total other comprehensive income

2,649

4,568

221

643

35,81578,314Comprehensive income

711,937

743,188(Comprehensive income attributable to)Comprehensive income attributable to ownersof the parent
Comprehensive income attributable to non-controllinginterests

732,258

745,299(20,320)(2,110)8

（3） Notes concerning quarterly consolidated financial statements(Notes concerning going concern assumption)
Not applicable.
(Notes on significant changes in shareholders’ equity)(Purchase of treasury stock)
Under a resolution made at a meeting of the Board of Directors held on October 31, 2016, the Company
purchased 1,407,900 shares of treasury stock from November 2, 2016 to December 22, 2016. As aresult, the value of treasury stock increased 999,959 thousand yen in the first quarter under review andstood at 3,148,848 thousand yen at the end of the first quarter.

9