UNOFFICIAL TRANSLATION
The formal official document is in Japanese
Summary of Consolidated Financial Results for the First Three Quarters of
Fiscal Year ending September 30, 2016 (Japanese Accounting Standards)
July 29, 2016
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, Director
Phone: +81-3-5333-6323
Scheduled date to submit the Quarterly Securities Report (Shihanki Houkokusho): August 10, 2016
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 million yen are omitted)

1.

Consolidated business results for the nine months ended June 30, 2016
(October 1, 2015 – June 30, 2016)(1) Consolidated operating results (cumulative total)
Net sales

Operating income

Millions of yen

First three quarters of fiscal year
ending September 30, 2016
First three quarters of fiscal year
ended September 30, 2015
(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%

24,919

0.2

4,385

24.3

4,329

25.9

2,621

34.8

24,881

8.1

3,528

82.7

3,439

78.7

1,944

92.6

Nine months ended June 30, 2016: 2,504 millions of yen (16.8%)
Nine months ended June 30, 2015: 2,145 million of yen (122.4%)
Net income
Net income
per shareper share/diluted

First three quarters of fiscal year
ending September 30, 2016
First three quarters of fiscal year
ended September 30, 2015

Yen

Yen

46.99

46.48

36.90

36.21

(2) Consolidated financial position
Total assets

Net assets

Millions of yen

As of June 30, 2016
As of September 30, 2015
(Reference) Shareholders’ equity:

2.

Equity ratio

Millions of yen%

23,277
17,242
24,738
16,591
As of June 30, 2016: 16,674 millions of yen
As of September 30, 2015: 16,034 millions of yen

71.6
64.8

Dividends
End of firstquarter

End of second
quarter
Yen

Yen

Fiscal year ended–
12.00
September 30, 2015
Fiscal year ending–
8.00
September 30, 2016
Fiscal year ending
September 30, 2016 (forecast)(Note) Revisions to dividend forecasts published most recently: No

Dividend per share
End of third
quarterYear end

Annual

Yen

Yen

Yen

–

8.00

20.00

8.00

16.00

–

The Company conducted a 2-for-1 common stock split that became effective on April 1, 2015. The dividend per share at the end of the second period of the
fiscal year ended September 30, 2015 is calculated based on the number of shares before the stock split, but the year-end dividend per share is calculated
based on the number of shares after the stock split.

Forecast for consolidated business results for the fiscal year ending September 30, 2016
(October 1, 2015 – September 30, 2016)
Net sales
Millions of yen

Operating income% Millions of yen(Percentages represent year-on-year changes.)
Profit attributable to
Net income
Ordinary income
owners of parent
per share% Millions of yen% Millions of yen

Full year
32,500 (2.9)
5,000
17.8
4,940
19.2
(Note) Revisions to forecasts for consolidated business results published most recently: Yes

3,000

%

Yen

15.1

54.01

* 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):6/16: 60,470,800 shares
9/15: 60,226,800 shares(ii) Number of treasury shares at the end of period
6/16: 4,925,228 shares
9/15: 3,260,928 shares(iii) Average number of shares during the period (quarterly consolidated cumulative period)
Nine months ended 6/16: 55,776,592 shares
Nine months ended 6/15: 52,690,540 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
calculated on 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 3~4of 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
Monday, August 1, 2016. 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.

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 .................................................................................................................. 3(3) Explanation of future forecast information including consolidated forecast ................................................. 3
2. Matters relating to summary information (Notes)..................................................................................................... 5(1) Changes in important subsidiaries during the period ...................................................................................... 5(2) Adoption of specific accounting methods for producing quarterly consolidated financial statements .......... 5(3) Changes in accounting policies, changes in accounting estimates, restatements .......................................... 5
3. Quarterly consolidated financial statements ........................................................................................................... 6(1) Quarterly consolidated balance sheet ............................................................................................................ 6(2) Quarterly consolidated statements of income and quarterly consolidated statements of comprehensive
income ................................................................................................................................................................. 8(3) Notes concerning quarterly consolidated financial statements .....................................................................10(Notes concerning going concern assumption) ............................................................................................10(Notes on significant changes in shareholders’ equity) ................................................................................10

1

1． Qualitative information on financial results for the current settlement(1) Explanation on operating results
Overview of the first three quarters ended June 30, 2016 (From October 1, 2015 to June 30, 2016)
During the first three quarters under review, smartphone unit sales grew temporarily due to a cash refund
campaign launched by cellphone carriers before the abolition of the practice of offering cellphones virtually freeof charge in February 2016. However, since the abolition of this practice, smartphone unit sales remained low
in the period that included March, the month which the biggest sales battle usually takes place annually.
Consequently, smartphone unit sales also remained sluggish in the third quarter.
In this environment, the Company focused on efforts to acquire paying subscribers on smartphones to its
content offering high average revenue per user (ARPU) at cellphone shops across Japan and other businesslocations. However, the number of paying subscribers on smartphones came to 5.74 million at the end of June
2016 (down 0.26 million from the end of September 2015), reflecting the low pace of their acquisition in thesecond and third quarters under review. As a result, the total number of paying subscribers decreased 0.59 million,
to 7.35 million at the end of June 2016.
Although the total number of paying subscribers declined year on year, in the mainstay services, the ARPU
of paying subscribers on smartphones maintained an upward trend. As a result, net sales remained largely
unchanged at ¥24,919 million (up 0.2% year on year), while gross profit came to ¥20,990 million (up 0.3% year
on year).
Operating income, ordinary income and profit attributable to owners of parent amounted to ¥4,385 million(up 24.3% year on year), ¥4,329 million (up 25.9% year on year) and ¥2,621 million (up 34.8% year on year),respectively. These results reflected a decline in selling, general and administrative expenses (SG&A) mainly
attributable to a year on year drop in advertising expenses.
Consolidated business results(From October 1, 2015 to June 30, 2016)
First three quarters
First three quartersof the fiscal year ending of the fiscal year ended
September 30, 2016
September 30, 2015

ChangePercentagechangeAmountMillions of yen

Millions of yen

Millions of yen%

Net sales

24,91924,881+37+0.2

Cost of sales

3,929

3,947

(18)

(0.5)

Gross profit

20,99020,933

+56

+0.3

SG&A

16,604

17,405

(800)

(4.6)

Operating income

4,385

3,528

+857

+24.3

Ordinary income
Profit attributable to ownersof parent

4,329

3,439

+889

+25.9

2,621

1,944

+677

+34.8

2

Breakdown of SG&A
(From October 1, 2015 to June 30, 2016)
ChangeFirst three quarters of
the fiscal year ending
September 30, 2016

First three quarters of
the fiscal year ended
September 30, 2015

Millions of yen

Millions of yen

Millions of yen%

16,604

17,405

(800)

(4.6)

Advertising expenses

5,959

6,497

(537)

(8.3)

Personnel expenses

4,112

4,211

(99)

(2.4)

Commission fee

2,832

2,758

+73

+2.7

Subcontract expenses

1,073

1,027

+45

+4.4

918

1,009

(91)

(9.1)

1,708

1,900

(192)

(10.1)

Total

Depreciation
Other

AmountPercentagechange(2) Explanation on financial position
1) Assets, Liabilities and Net assets
At the end of the first three quarters under review, total assets fell ¥1,460 million from the end of September
2015, to ¥23,277 million.
Current assets decreased ¥1,666 million, mainly due to falls in notes and accounts receivable-trade andaccounts receivable-other. Non-current assets increased ¥205 million, chiefly reflecting rises in software andinvestment securities.
Current liabilities shrank ¥2,130 million as a result of factors such as falls in the current portion of long-termloans payable and accounts payable-other. Non-current liabilities grew ¥18 million, primarily owing to anincrease in net defined benefit liability.
Net assets increased ¥651 million, mainly attributable to ¥2,621 million posted as profit attributable to ownersof parent and the disposal of treasury stock, offsetting the purchase of treasury stock and cash dividends paid.
Total assets

Net assets

Equity ratio

Millions of yen

Millions of yen%

As of June 30, 2016

23,277

17,242

71.6

As of September 30, 2015

24,738

16,59164.8(3) Explanation of future forecast information including consolidated forecast
In the fourth quarter, smartphone unit sales are expected to remain low, reflecting the adverse effects of theabolition of the practice of offering cellphones virtually free of charge. In this situation, the Company aims toachieve its targets for consolidated operating results by maintaining its focus on expanding the number of paying
subscribers on smartphones and working to increase average revenue per user (ARPU).
Faced with the ongoing stagnation in the sales of smartphones, the Company will continue promoting the salesof its content offering high ARPU by making the most of its strong sales channels, which consist of cellphone
shops throughout Japan that promote the sales of content to customers. By promoting cooperation with MVNOs(*), the Company will also work to acquire paying subscribers on smartphones.
In the healthcare-related service business, which the Company is approaching with a medium- to long-term
perspective, the Company will pursue a number of strategies to increase sales. This business has tremendous
potential for future growth and is expected to shift to a stock-type business with long-term support stages in the
lives of customers.
Specifically, the Company will aggressively promote the sales of CARADA package services to corporate
customers through companies operating cellphone shops nationwide (dealers). At the same time, the Company
will increase the number of contracts for training management services provided by a group company with fitness3

clubs, incorporated schools and the like.
Forecasts for consolidated business results for the fiscal year ending September 30, 2016 are as stated in the“Notice related to the Amendment of Forecasts for Consolidated Business Results” that was announced today.
* MVNO is an abbreviation for mobile virtual network operator. An MVNO provides mobile network services, such as
cellphones and PHS, through its own brands. It does not develop or manage wireless communication link facilities.

Forecasts for consolidated business results for the fiscal year ending September 30, 2016
(From October 1, 2015 to September 30, 2016)
Consolidated
Net sales

32,500 millions of yen(Down 2.9% year on year)

Operating income

5,000 millions of yen(Up 17.8% year on year)

Ordinary income

4,940 millions of yen(Up 19.2% year on year)

Profit attributable toowners of parent

3,000 millions of yen(Up 15.1% year on year)4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
statement
Not applicable.
(3) Changes in accounting policies, changes in accounting estimates, restatements
Changes in accounting policies(Application of the Accounting Standard for Business Combinations, etc.)
From the first quarter of the fiscal year under review, the Company applied the “Accounting Standard
for Business Combinations” (ASBJ statement No. 21, September 13, 2013; hereinafter the “AccountingStandard for Business Combinations”), the “Accounting Standard for Consolidated Financial Statements”(ASBJ statement No. 22, September 13, 2013; hereinafter the “Accounting Standard for Consolidated
Financial Statements”) and the “Accounting Standard for Business Divestures” (ASBJ statement No. 7,
September 13, 2013; hereinafter the “Accounting Standard for Business Divestures”). The purpose of
applying these standards was to change the method for recording the difference from changes in the
Company’s equity in its subsidiaries that remain controlled by the Company as capital surplus and theexpenses related to acquisition as an expense in the consolidated fiscal year in which the expenses are
incurred. For business combinations implemented after the beginning of the first quarter of the fiscal year
under review, the method will be changed to one that reflects the revision of the distributed amounts ofacquisition costs by determining provisional accounting treatment in the quarterly consolidated financial
statements for the quarterly consolidated accounting period to which the date of the relevant businesscombination belongs. In addition, the Company has changed the presentation of net income and otheritems and the presentation of minority interests to non-controlling interests. To reflect these changes, theCompany rearranged the interim consolidated financial statements for the first three quarters of theprevious fiscal year and the consolidated financial statements for the previous fiscal year.
The Accounting Standard for Business Combinations and other standards are applied in accordancewith the transitional treatment prescribed in Article 58-2 (4) of the Accounting Standard for Business
Combinations, Article 44-5 (4) of the Accounting Standard for Consolidated Financial Statements, andArticle 57-4 (4) of the Accounting Standard for Business Divestitures. These standards have been applied
since the beginning of the first quarter of the fiscal year under review. Their application will continue
going forward.
As a result, capital surplus at the end of the third quarter under review declined ¥73,381 thousand.
(Depreciation method of property, plant and equipment)
Following the revision to the Corporation Tax Act, the Company adopted the “Practical Solution on a
Change in Depreciation Method Due to Tax Reform 2016” (ASBJ PITF No. 32, June 17, 2016) effectivefrom the third quarter under review. In adopting this solution, it changed the depreciation method used
for facilities attached to buildings and structures acquired on or after April 1, 2016, switching from thedeclining balance method to the straight line method.
As in the first three quarters under review, this change did not have any impact on the Company’squarterly financial statements.

5

3． Quarterly consolidated financial statements（1） Quarterly consolidated balance sheets
Fiscal year ended September 30, 2015 and first three quarters of ending September 30, 2016
(Thousands of yen)
As of September 30, 2015

As of June 30, 2016

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable-trade

11,608,562
6,885,765

11,342,410
6,266,248

Deferred tax assets
Other

358,149
1,430,037

207,532
804,127

Allowance for doubtful accounts(71,095)(75,349)

20,211,420

18,544,969

146,488

147,743

2,254,746
336

2,333,774

Total current assets
Noncurrent assets
Property, plant and equipment
Intangible assets
Software
Goodwill

22,168－26,608

Total intangible assets

2,277,251

2,360,383

Investments and other assets
Investment securities

796,241874,591

Lease and guarantee deposits
Deferred tax assets

501,636
792,649494,631
843,586

Other
Allowance for doubtful accounts

30,145(17,589)

29,031(17,601)

Total investment and other assets

2,103,083

2,224,239

Other

Total noncurrent assets
Total assets

6

4,526,824

4,732,365

24,738,244

23,277,334

(Thousands of yen)
As of September 30, 2015

As of June 30, 2016

Liabilities
Current liabilities
Account payable-trade
Current portion of long-term loans payable

1,179,484
518,679

1,097,346

Accounts payable-other
Income taxes payable

2,571,997
1,354,619－
1,855,255
953,067

Provision for bonuses
Allowance for coin usage－
234,836

163,944
204,994

Other

1,334,097

788,233

Total current liabilities

7,193,715

5,062,842

Long-term loans payable
Net defined benefit liability

79,925
832,740－
937,805

Negative goodwill
Other

40,541
141

33,702
141

Total noncurrent liabilities

953,349

971,649

8,147,064

6,034,491

Shareholders' equity
Capital stock

4,947,984

4,995,544

Capital surplus
Retained earning

5,469,051
6,300,484

5,817,782
8,031,134

Treasury stock(695,491)

Total shareholders' equity

16,022,029(2,148,888)

Noncurrent liabilities

Total liabilities
Net assets

Accumulated other comprehensive income
Valuation difference on available-for-salesecurities
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive
incomeSubscription rights to shares

83,69164,807(7,837)(29,579)

12,884(56,214)

127,100

145,055(62,969)

Non-controlling interests

16,695,572(20,986)

429,165

423,201

Total net assets

16,591,180

17,242,842

Total liabilities and assets

24,738,244

23,277,334

7

（2） Quarterly consolidated statements of income and quarterly consolidated statementsof comprehensive income
Quarterly consolidated statements of income
For the first three quarters of the fiscal year ended September 30, 2015 and fiscal year ending September 30, 2016
(Thousands of yen)First three quarters of the fiscal
year ended September 30, 2015

First three quarters of the fiscal
year ending September 30, 2016

Net sales

24,881,485

24,919,315

Cost of sales

3,947,714

3,929,215

Gross profit

20,933,771

20,990,099

Selling, general and administrative expenses

17,405,260

16,604,288

Operating income

3,528,511

4,385,810

Interest income
Dividend income

138
6,059

168
6,206

Amortization of negative goodwill
Gain on reversal of subscription rights to shares

6,838
4,558

6,838
－

Compensation income
Other

12,37536,707－
7,658

Total non-operating income

66,676

20,871

3,617

2,178

97,26853,834Non-operating income

Non-operating expenses
Interest expenses
Share of loss of entities accounted for using
equity method
Share issuance cost
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on step acquisitions

24,8152,240

29,54819,054

155,249

77,3073,439,938

4,329,374

33,509

－

－

4,592

33,5094,592

Loss on sales of non-current assets
Impairment loss

5,183
20,820Loss on retirement of non-current assets
Loss on valuation of investment securities

64,153－－
16,218100,000

Gain on sales of non-current assets
Total extraordinary income
Extraordinary loss

Settlement package－
15,468

Total extraordinary loss

105,626－
116,218

Income before income taxes and minority interests

3,367,821

4,217,749

Income taxes-current
Income taxes-deferred

1,113,322
206,638

1,564,291
104,127

Total income taxes

1,319,960

1,668,419

Net income

2,047,860

2,549,330

103,710(71,859)

1,944,150

2,621,189

Profit (loss) attributable to non-controlling interests
Profit attributable to owners of parent

8

Quarterly consolidated statements of comprehensive income
For the first three quarters of the fiscal year ended September 30, 2015 and fiscal year ending September 30, 2016
(Thousands of yen)First three quarters of the fiscal
year ended September 30, 2015

First three quarters of the fiscal
year ending September 30, 2016

2,047,860

2,549,330

70,080(20,805)

17,799(28,875)

6,258

6,755

3,155

(1,811)

Net income
Other comprehensive income
Valuation difference on available-for-salesecurities
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net oftax
Share of other comprehensive income of entities
accounted for using equity method
Total other comprehensive income

97,293(44,737)

Comprehensive income

2,145,154

2,504,592(Comprehensive income attributable to)Comprehensive income attributable toowners of the parent
Comprehensive income attributable to noncontrolling interests

2,047,160

2,587,318

97,993(82,725)9

（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)
The Company purchased treasury stock totaling 2,814,300 shares in the period between February 2,
2016 and March 31, 2016 in accordance with the resolutions of the meetings of the Board of Directors
held on January 29, 2016 and February 18, 2016. As a result, treasury stock increased ¥1,955,144
thousand in the first three quarters under review.
(Disposal of treasury stock)
The Company disposed of treasury stock totaling 1,150,000 shares through private placement with
MEDIPAL HOLDINGS CORPORATION as an underwriter on June 23, 2016 in accordance with theresolution of the meeting of the Board of Directors held on June 7, 2016. As a result, capital surplus
increased ¥374,552 thousand and treasury stock decreased ¥501,747 thousand in the first three quarters
under review.
(Additional purchase of shares of subsidiaries)
The Company made an additional purchase of shares of CLIMB Factory Co., Ltd. through a capitalincrease through private placement that was carried out by CLIMB Factory Co., Ltd., the Company’s
consolidated subsidiary, on April 25, 2016 in accordance with the resolution of the meeting of the Boardof Directors held on April 21, 2016. As a result, capital surplus decreased ¥73,381 thousand in the first
three quarters under review.
As a result of the above, capital surplus stood at ¥5,817,782 thousand and treasury stock came to¥2,148,888 thousand at the end of the first three quarters under review.

10