DAIICHIKOSHO

CO.,

LTD.

FY2005, the year ended March 31, 2006

Flash Report on the Consolidated Results for the Year Ended March 31, 2006
May 15, 2006

Company Name: DAIICHIKOSHO CO., LTD.
Code Number: 7458
(URL http://www.dkkaraoke.co.jp)
Stock Exchange Listing: JASDAQ

Location of Head Office (Prefecture): Metropolis of Tokyo
Representative: Tatsuyoshi Yoneda, President
Contact: Eiji Hata, Managing Director and Senior Corporate Officer; and Executive Director, Administration
Headquarters

Phone: (03) 3280-2151
Date of the Board of Directors Meeting on the Closing of Accounts: May 15, 2006
Adoption of U.S. GAAP: No
1. Consolidated Performance for the Year Ended March 2006 (from April 1, 2005, to March 31, 2006)(1) Consolidated operating results

Year ended March 2006
Year ended March 2005

Net sales¥ Million
129,341
122,085

Note: Amounts below one million yen are truncated.
Operating income
Ordinary income¥ Million%¥ Million%
11,286
8.7
11,61817.0
10,383(20.9)
9,932(19.5)%
5.9
2.3

Net income
Year ended March 2006
Year ended March 2005

¥ Million
4,009
5,118

Net income per share%(21.7)
4.5

Return on equity
Year ended March 2006
Year ended March 2005

%
6.2
8.3

¥
112.60139.83

Fully diluted net income
per share¥――

Ordinary income to total
assets%8.8
7.3

Ordinary income to net
assets%9.0
8.1

Notes: 1. Equity in net income of unconsolidated subsidiaries and affiliates:
Year ended March 2006: (¥ 0 million)
Year ended March 2005: (¥ ‐million)
2. Average number of shares outstanding during the respective fiscal years (consolidated):
Year ended March 2006: 34,802,451 sharesYear ended March 2005: 35,745,780 shares“Fully diluted net income per share” is not stated because no residual securities existed as convertible
bonds were redeemed at maturity as of March 31, 2005 and 2006.
3. Change in accounting method: Yes
4. Percentages for net sales, operating income, ordinary income and net income show respective
year-over-year changes from the previous fiscal year.

1

DAIICHIKOSHO

CO.,

LTD.

(2) Consolidated financial position
Note: Amounts below one million yen are truncated.
Shareholders’Equity ratio
Shareholders’equityequity per share¥ Million¥ Million%¥
Year ended March 2006
133,524
66,44049.8
1,906.58
Year ended March 2005
131,996
62,19447.1
1,783.56
Note: Number of shares outstanding at the end of the year (consolidated):
34,800,491 shares at March 31, 2006
34,804,216 shares at March 31, 2005
Total assets(3) Consolidated cash flows
Cash flows fromoperating activities
Year ended March 2006
Year ended March 2005

¥ Million
24,081
24,221

Note: Amounts below one million yen are truncated.
Cash flows from
Cash flows from
Cash and cash
investing activities financing activities
equivalents at theend of the year
¥ Million¥ Million¥ Million(21,808)(2,018)24,222(10,999)(11,106)
22,428(4) Scope of consolidation and application of the equity method
Number of consolidated subsidiaries: 47
Number of nonconsolidated subsidiaries accounted for by the equity method: ―Number of affiliates accounted for by the equity method: 2(5) Change in the scope of consolidation and application of the equity method
Consolidation (newly included): 15 (Excluded): 5
Equity method (newly applied): 2 (Excluded): ―2. Forecast Consolidated Performance for FY2006, the Year Ending March 31, 2007 (from April 1,
2006, to March 31, 2007)
Net sales¥ Million
65,400Six months ending
September 30, 2006
Year ending March 31,
134,200
2007 (full year)(Reference) Forecast net income per share (full year): ¥172.41

Ordinary income¥ Million
5,600

Net income¥ Million
2,800

12,0006,000

Note: These projected performance figures are based on information available to the Company’s management at
the time of preparing this report. There are many uncertain factors inherent in forecasting, and there might becases in which actual results differ from forecast values.

2

DAIICHIKOSHO

CO.,

LTD.

(Attachment)

1. Corporate GroupThe Daiichikosho Group (“DKG”) consists of Daiichikosho Co., Ltd. (“DK” or “the Company”), 47
consolidated subsidiaries and two affiliates. The major group companies engage in the commercial
karaoke business, the karaoke cabin and restaurant business, the Gateway business and the music
software business.
Effective from the fiscal year under review, the business segmentation was changed as shown in(Segment Information).
Business segment

Business line

Commercial
karaoke business

Sales and rental of commercial-use
karaoke equipment

Karaoke cabin
and restaurant
business

Operation of karaoke cabins andrestaurants

Gateway businessSupply of content service via thespecial “DAM Station” information
terminal and mobile phones

Music software
business

Production and sales of music andvideo software products

Other business

Satellite broadcasting, real estate lease
and rental business, etc.

Domestic
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 19 other subsidiaries

Daiichikosho Co., Ltd.
Nippon Crown Co., Ltd.
Tokuma Japan Communications Co.,Ltd.
First Distribution Co., Ltd.
Union motion picture Co., Ltd.
and four other subsidiaries
Daiichikosho Co., Ltd.
DK Finance, Co., Ltd.
Maruhagi Yoshu Kogyo, Co., Ltd.

3

Overseas
DK KOREA
Co., Ltd.
Daiichikosho(Shanghai), Ltd.
and one othersubsidiary
Saha Daiichi
Kosho Co., Ltd.
BIG ECHO(SHANGHAI)
Co., Ltd.
and four othersubsidiaries

D.K. Enterprises(Guam), Inc.
and one othersubsidiary

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.
First Distribution Co., Ltd.
Tri-M, Inc.
DK Music Publishing Co., Ltd.
Union motion picture Co., Ltd.
Crown Music Enterprise Co.
Zoom Republic

DK KOREA Co., Ltd.
Daiichikosho (Shanghai), Ltd.
Daiichi Kosho (Singapore), Pte
Ltd.

(Operation and management ofrecreation facilities)
D.K. Enterprises (Guam), Inc.
(Other overseas subsidiaries)
Daiichikosho (Beijing) Music &Culture Co., Ltd.
(Nonconsolidated subsidiary)
Shubi Planet CO., LTD
and one other subsidiary(Production and sale of fruitwines)
Maruhagi Yoshu Kogyo, Co.,Ltd.

Sales and rentals of merchandise and products(Operation of karaoke cabins andrestaurants)
Saha Daiichi Kosho Co., Ltd.
BIG ECHO (SHANGHAI) Co., Ltd.
BIG ECHO (SHXG) CO., LTD.
BIG ECHO (SHSG) CO., LTD.
Shanghai Daiichi Kosho F&B Co.,LTD.
BEIJIN DAIICHI KOSHORESTAURANT CONSULTANT
CO., LTD.

Overseas users(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.
and 19 other companies

DAIICHIKOSHO CO., LTD. (Reporting company)

Domestic users(Overseas subsidiaries)(Equity method affiliate)
Spice Records Co., Ltd.
Breezeway Corp.

Operation of karaoke cabins and restaurants

4

Provision of services

DAIICHIKOSHO

CO.,

LTD.

4. Consolidated Financial Statements(1) Consolidated Balance Sheet
Fiscal year

Account item
(Assets)
I Current assets
1. Cash and bank deposits
2. Notes and accounts receivable―trade
3. Inventories
4. Deferred tax assets
5. Other
6. Allowance for doubtful accounts
Total current assets
II Fixed assets
1. Tangible fixed assets(1) Buildings and structures
Accumulated depreciation(2) Karaoke equipment for rental
Accumulated depreciation(3) Karaoke cabin and restaurant
facilities
Accumulated depreciation(4) Land(5) Construction in progress(6) Other
Accumulated depreciation
Total tangible fixed assets
2. Intangible assets
3. Investments and other assets(1) Investments in securities(2) Long-term loans receivable(3) Deferred tax assets(4) Leasehold deposits andguarantee money(5) Other(6) Allowance for doubtful accounts
Total investments and other assets
Total fixed assets
Total Assets(Millions of yen)
Year-over-yearchangeFY2004(As of March 31, 2005)
ComAmount
positionratio (%)

FY2005(As of March 31, 2006)
AmountComposition
ratio (%)

23,094
12,241

24,732
12,092

1,637
(149)

6,843
3,102
4,706
(1,075)
48,913

7,683
2,254
4,376
(1,173)49,965

839
(848)
(329)
(98)
1,052

15,5198,597
29,402
19,404
27,643
14,628

8,015
5,341

37.1

14,977
9,069
28,537
18,83429,640

6,921
9,998

13,015
15,463
179

15,956

9,902
6,015

2,674
48,252
8,665

36.5
6.6

37.4

5,907

(1,013)

9,702

(295)

13,684
14,284172

669(1,178)(7)

3,886
47,638
7,950

35.7
5.9

1,212
(613)
(715)

6,971
1,294
2,494
13,418

10,7191,086
1,111
13,373

3,748(208)(1,383)(45)

4,331(2,345)
26,16583,083
131,996

3,789(2,110)27,96983,558
133,524

(542)
235
1,804
474
1,527

19.8
62.9
100.0

5

21.0
62.6
100.0

DAIICHIKOSHOFiscal year

Account item
(Liabilities)
I Current liabilities
1. Notes and accounts
payable―trade
2. Short-term borrowings
3. Accounts payable―other
4. Income taxes payable
5. Reserve for bonuses
6. Unrealized profit on installment
sales
7. Other
Total current liabilities
II Long-term liabilities
1. Long-term borrowings
2. Deferred tax liabilities
3. Reserve for employees’ retirement
benefits
4. Reserve for directors’ retirement
allowances
5. Consolidation adjustment account
6. Other
Total long-term liabilities
Total Liabilities(Minority Interests)
Minority Interests(Shareholders’ Equity)
I Capital stock
II Capital surplus
III Retained earnings
IV Land revaluation difference
V Net unrealized gains or losses onavailable-for-sale securities
VI Foreign currency translation
adjustments
VII Treasury stock
Total Shareholders’ Equity
Total Liabilities, Minority Interests
and Shareholders’ Equity

CO.,

FY2004(As of March 31, 2005)
AmountComposition
ratio (%)

LTD.

FY2005(As of March 31, 2006)
AmountComposition
ratio (%)

(Millions of yen)
Year-overyear change

7,672

5,262

(2,409)21,107
7,067
907
1,035
463

20,109
6,466
1,407
1,044
373

(998)
(600)
499
9
(89)

2,660
40,91431.0

3,151
37,81528.3

491(3,098)20,492226
2,764

21,096
817
2,590

604
590
(174)

2,959

2,153

(805)

818
1,096
28,35869,272

21.5
52.5

620
1,224
28,502
66,318

21.3
49.6

(197)
127
144
(2,954)

528

0.4

764

0.6

236

12,35024,00230,050(1,794)
1,113

9.4
18.2
22.8
(1.4)
0.8

12,35024,00332,029
(845)
2,354

9.2
18.0
24.0
(0.6)
1.8

―
0
1,978
948
1,241

101

0.1

188

0.1

87

(3,629)62,194
131,996

(2.8)
47.1
100.0

(3,639)66,440133,524

(2.7)
49.8
100.0

(10)
4,246
1,527

6

DAIICHIKOSHO

CO.,

LTD.

(2) Consolidated Statement of Income
Fiscal year

Account item
I Net sales
II Cost of sales
Gross profit before adjustment for
unrealized profit on installment sales
Unrealized profit on installment
sales─reversal (+)
Unrealized profit on installment
sales─deferred (–)
Gross profit on sales
III Selling, general andadministrative expenses
Operating income
IV Nonoperating income
1. Interest income
2. Interest income on installment
sales
3. Insurance payment received
4. Fees and commissions received
5. Amortization of consolidation
adjustments account
6. Foreign exchange gain
7. Other
V Nonoperating expenses
1. Interest expense
2. Loss on disposal of inventories
3. Loss on devaluation of inventories
4. Provision for allowance for
doubtful accounts
5. OtherOrdinary income
VI Extraordinary gains
1. Gain on sales of fixed assets
2. Gain on sales of investments insecurities
3. Reversal of allowance for doubtful
accounts
4. Reversal of reserve for directors’
retirement allowances
5. Indemnity on relocation of
warehouse
VII Extraordinary losses
1. Loss on sales and disposal of fixed
assets
2. Impairment loss on fixed assets
3. Loss on sales of investments insecurities
4. Loss on valuation of investments
in securities
5. Loss on cancellation of a new
business
Income before income taxes andminority interests
Income taxes―current
Income taxes―deferred
Minority interests in income (loss) ofconsolidated subsidiaries
Net income

FY2004(From April 1, 2004, to March
31, 2005)
AmountPercentage(%)
122,085
100.0
73,86860.5
48,21639.5
250
48FY2005(From April 1, 2005, to March 31,
2006)
AmountPercentage (%)

16

0.1

44.3

39.7
31.2

50,431
39,145

39.0
30.3

104.2
102.9

10,383

8.5

11,286

8.7

108.7

2,184

1.7

125.3

1,852
11,618

1.4
9.0

84.4
117.0

599

0.5

52.1

4,107

3.2

89.6

8,110

6.3

124.8

4,104
(3)

3.2
0.0

245.4
1.3

4,009

3.1

78.3

1,743

1.4

551
96
1,203
25

273
975
477
33
887
50

2,195
9,932

1.8
8.1

402

54
757

98
370

71

75

139

55
1,150

0.9

―

4,547

1,165

―

6

2,493
4

29

7

1,342
330

89

48,41938,035

182
180
232

―

105.9
106.9
104.4

0.2

12
241
230

128

100.0
61.1
38.9

202

95
244

318

129,341
78,99950,342
106

115
294

191
657

(Millions of yen)
Year-over-yearchange (%)

4,583

3.7

6,499

5.3

1,672
(291)

1.3
(0.2)

5,118

4.2

7

435

2,062
2,041

DAIICHIKOSHO

CO.,

LTD.

(3) Consolidated Statements of Retained Earnings
FY2004(From April 1, 2004,
to March 31, 2005)
AmountFiscal year
Account item
(Capital surplus)
I
Capital surplus at the beginning of the year
II Increase in capital surplus
1. Conversion of convertible bonds
2. Gain from purchase and redemption of treasury stock
III Capital surplus at the end of the fiscal year

(Millions of yen)
FY2005(From April 1, 2005,
to March 31, 2006)
Amount24,0010
0(Retained earnings)
I
Retained earnings at the beginning of the year
II Increase in retained earnings
1. Net income
2. Increase in retained earnings due to the increase in thenumber of consolidated subsidiaries
III Decrease in retained earnings
1. Cash dividends
2. Bonuses to directors and statutory auditors
3. Reversal of land revaluation difference
IV Retained earnings at the end of the fiscal year1
24,002

24,002―
029,716
5,118
―
682
134
3,966

8

5,118

4,783
30,050024,00330,050

4,009
414
1,392
104
948

4,424

2,445
32,029DAIICHIKOSHO

CO.,

LTD.

(4) Consolidated Statements of Cash Flows(Millions of yen)
Fiscal year
Account item

Year-over-yearchangeFY2004(From April 1, 2004,
to March 31, 2005)
Amount

FY2005(From April 1, 2005,
to March 31, 2006)
Amount6,499
14,853
―
(230)
23
(182)
(447)
(751)
(2)

8,110
15,783
2,493
(232)
43
(842)
(460)
(365)
4

551
4,493
29
―
1,707
(1,717)
1,293

477
1,067
7
435
415
(928)
1,016

85
(148)
26,059448(552)(1,732)
24,221(1,980)626
25,672453(460)(1,583)24,081(630)
8,943(16,071)
1,477(4,269)(1,057)
(358)
1,628
(45)
(395)
1,129
(1,709)
220

(358)
515
(14,628)605(4,766)(1,512)(2,598)
544
―
(996)
1,249
(908)
819

139
(10,999)

227(21,808)(10,809)829
14,576(12,159)(845)(9,955)(683)(2,862)(7)(11,106)11(2,606)15,322(13,330)――(1,391)(10)(2)(2,018)
141

9,088
130

2,127
20,300395
22,428(1,731)
2,127

―

1,398

1,398

22,42824,222

1,794

I Cash flows from operating activities:
Income before income taxes and minority interests
Depreciation expense
Impairment loss on fixed assets
Amortization of consolidation adjustment account
Increase in allowance for doubtful accounts
Decrease in reserve for directors’ retirement allowances
Dividend and interest income
Gain or loss on sales of investments in securities
Gain or loss on investments in investment businessassociations
Interest expense
Gain or loss on disposal of fixed assets
Loss on valuation of investments in securities
Loss on cancellation of a new business
Decrease in trade receivables
Increase in inventories
Transfer of cost of sales on karaoke equipment forrentalIncrease (decrease) in trade payables
Other
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Net cash provided by operating activities
II Cash flows from investing activities:
Increase in time and saving deposits
Proceeds from decrease in time and saving deposits
Payments for acquisition of tangible fixed assets
Proceeds from sales of tangible fixed assets
Payments for acquisition of intangible assets
Payments for acquisition of video licenses
Payments for purchase of investments in securities
Proceeds from sales of investments in securities
Payments for purchase of subsidiaries’ stocks
Payments for loans
Proceeds from collection of loans receivable
Payments for leasehold deposits and guarantee money
Proceeds from repayment of leasehold deposits andguarantee money
Other
Net cash used in investing activities
III Cash flows from financing activities:
Net increase in short-term borrowings
Increase in long-term borrowings
Payments for repayment of long-term borrowings
Payments for retirement of convertible bonds
Payments for redemption of convertible bonds
Cash dividends paid
Payments for purchase of treasury stock
Other
Net cash used in financing activities
IV Effect of exchange rate changes on cash and cash
equivalents
V Net increase (decrease) in cash and cash equivalents
VI Cash and cash equivalents at the beginning of theyear
VII Increase in cash and cash equivalents due to theincrease in the number of newly consolidated
subsidiaries
VIII Cash and cash equivalents at the end of the fiscal
year

9

Increase anddecrease(140)

DAIICHIKOSHO

CO.,

LTD.

Summary of Significant Accounting Policies(1) Valuation basis and method for important assets① Marketable securities and investments in securities
Held-to-maturity debt securities:
Carried at amortized cost using the straight-line method.
Other securities primarily designated as available-for-sale securities for which the fair values are readily
determinable:
Carried at fair value as of the balance-sheet date with changes in net unrealized holding gain or loss, net ofthe applicable income taxes, included directly in shareholders’ equity. The cost of securities sold isdetermined by the moving-average method.
Other securities primarily designated as available-for-sale securities for which the fair values are notreadily determinable:
Carried at cost determined by the moving-average method.
With regard to investments in the Investment Business Limited Liability Partnership and similarorganizations (which are regarded as “securities” in accordance with Article 2, Paragraph 2, of the Securities
Exchange Law), initial investments in such associations are recognized as receivables from associations andthe amount assumed to be held by the Company for fluctuations due to the financial situation of theassociations 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 the moving-average method.
(2) Depreciation method of major depreciable assets① Tangible fixed assets
Depreciation is principally computed by the declining-balance method at rates based on the estimated useful
lives of the assets as shown below. However, the straight-line method is adopted for buildings (excluding
building improvements) acquired after March 31, 1998.
Buildings and structures: 3–50 years
Karaoke equipment for rental: 5–6 years
Karaoke cabin and restaurant facilities: 3–19 years② Intangible assets
Amortization of intangible assets is computed by the straight-line method.
(3) Accounting standard for important reserves① Allowance for doubtful accounts
The allowance for doubtful accounts is provided at an amount of possible losses from uncollectible receivables
based on the actual rate of losses from bad debt for ordinary receivables, and on the estimated recoverability forspecific doubtful receivables.
② Reserve for bonuses
The reserve for bonuses of DK and its domestic consolidated subsidiaries is provided at an estimated amountbased on the internal payment prediction standard.
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 the balance-sheet date, based on the projected benefit obligations
and plan assets as of March 31, 2006.
Actuarial differences are amortized on a pro rata basis by the straight-line method over a certain period (10years), which is shorter than the average remaining service years for employees at the time of their recognition,from the following fiscal year of recognition.
(Change of accounting policies)
From the current consolidated fiscal year, the Company has adopted the “Partial Amendment to the AccountingStandard for Retirement Benefits” (Financial Accounting Standard No. 3, March 16, 2005) and the“Implementation Guidance for Partial Amendment to the Accounting Standard for Retirement Benefits”(Financial Accounting Standards Implementation Guidance No. 7, March 16, 2005). As a result, operating
income, ordinary income and income before income taxes each increased ¥26 million. The adoption of these10

DAIICHIKOSHO

CO.,

LTD.

standards does not have a significant impact on the segment information.
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 in accordance with their respective internal rules concerning directors’
retirement allowances if all eligible directors and statutory auditors were to resign their positions as of therespective balance-sheet dates.
(4) Translation of important assets and liabilities denominated in foreign currencies into yen
Monetary receivables and payables denominated in foreign currencies are translated into yen at the spot exchange
rate in effect at the consolidated balance-sheet date. The resulting exchange differences are charged or credited toincome. The balance sheet accounts, as well as the revenue and expense accounts, of the overseas subsidiaries aretranslated into yen at the spot exchange rate in effect at their respective balance-sheet dates. The resulting translationdifferences have been recorded and presented as a component of minority interests and as “Foreign currencytranslation adjustments” in shareholders’ equity.
(5) Accounting for important leases
Finance leases that do not transfer ownership of leased property to the lessee are accounted for as rental transactions.
(6) Hedge accounting
DK and its domestic consolidated subsidiaries hedge against risks of interest rate fluctuations for its variable-rateborrowings using interest rate swaps. The preferential treatment is applied to these interest rate swaps.
(7) Other important matters in preparing the consolidated financial statements① Accounting for installment sales
Unrealized profit on installment sales is deferred for the amount corresponding to the portion of installment
receivables for which the due date has not expired based on the installment standards used by DK and some of its
domestic consolidated subsidiaries.
② Accounting for consumption taxes
Consumption taxes are accounted for using the tax exclusion method.

5. Valuation for assets and liabilities of consolidated subsidiaries
Assets and liabilities of consolidated subsidiaries are carried at fair value.

6. Amortization of consolidation adjustment account
The consolidation adjustment account is equally amortized over 5 or 15 years on a straight-line basis.

7. Appropriation of retained earnings
The appropriation of retained earnings for consolidated subsidiaries was prepared based on the appropriation
determined during the consolidated fiscal year under review.

8. Cash and Cash Equivalents in the Consolidated Statements of Cash Flows
Cash and cash equivalents in the consolidated statements of cash flows included cash on hand, demand deposits andshort-term investments due within three months from the acquired date, which are easily convertible into cash withlittle risk of value fluctuation.

11

DAIICHIKOSHO

CO.,

LTD.

(Segment Information)
1. Business segments
CFY2004 (From April 1, 2004, to March 31, 2005)(Millions of yen)
Item
Sales and operating
incomeSales
Sales to third
partiesIntersegment sales
and transfers
Total
Operating expenses
Operating income(loss)
Assets, depreciation
and amortization andcapital expenditure
AssetsDepreciation andamortization
Capital expenditure

CommerKaraokecial karaoke cabin andrestaurant

GatewayMusic
software

Other

Total

Eliminations andcorporate

Consolidated

68,67830,027

4,769

11,672

6,937

122,085―

122,085

210

―

―

141

716

1,068

(1,068)―68,88856,678
12,21030,027
28,775
1,252

4,769
5,526
(756)

11,814
12,564
(750)

7,653
6,377
1,275

123,153
109,922
13,231(1,068)
1,779(2,847)122,085
111,701
10,383

59,111
9,501

30,052
2,575

7,807
1,044

9,775
25

12,2881,136

119,035
14,283

12,961
60

131,996
14,344

10,334

7,346

2,169

17

510

20,37857

20,436

CFY2005 (From April 1, 2005, to March 31, 2006)(Millions of yen)
Item
Sales and operating
incomeSales
Sales to third
partiesIntersegment sales
and transfers
Total
Operating expenses
Operating income(loss)
Assets, depreciation
and amortization,
impairment loss andcapital expenditure
AssetsDepreciation andamortization
Impairment loss
Capital expenditure

CommerKaraokecial karaoke cabin andrestaurant

GatewayMusic
software

Other

Total

Eliminations andcorporate

Consolidated

69,67233,307

4,780

14,261

7,319

129,341―

129,341

238

―

―

166

696

1,101

(1,101)―

69,91058,660
11,25033,30730,101
3,206

4,780
7,238
(2,457)

14,42813,988
439

8,015
6,118
1,896

130,442
116,106
14,336(1,101)
1,948(3,049)129,341
118,054
11,28667,314
8,823

30,4972,854

10,664
1,624

8,741
35

3,130
1,182

120,347
14,521

13,17660

133,524
14,582

65
9,924

1,273
5,183

—
3,041

—
46

814
349

2,153
18,545

340
38

2,493
18,583

12

DAIICHIKOSHO

CO.,

LTD.

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
Gateway business
Music software business
Other business

Major products and/or services
Sales and rental of commercial-use karaoke equipment and software
Operation of karaoke cabins and restaurants
Supply of music content, etc., via “DAM Station” special information terminals andmobile phones
Production and sales of music and video software products
Satellite broadcasting business and real estate lease and rental business, etc.

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”

FY2004¥2,847

FY2005¥3,049¥13,390¥13,596(Millions of yen)
Major items
Expenses required for operations byadministrative departments such as General
Affairs Dept.
Surplus fund of the Company (cash and bankdeposits), long-term investment fund (investments
in securities) and management-related assets

4. Change in business segmentation
The business segmentation was reviewed and changed for this consolidated fiscal year as follows:
The “Restaurant business,” which was included in “Other businesses” until fiscal 2004, was combined with the former“Karaoke cabin business” and changed to the “Karaoke cabin and restaurant business,” effective from the consolidated
fiscal year under review. This change clarifies the corresponding relationships between our internal management
segmentation and business segmentation subsequent to the system change to develop the multifunctional store businessthat combines the karaoke cabin business and the restaurant business.
The “Gateway business,” which was included in “Other businesses” until fiscal 2004, was combined with “e-business”
in the “Content business” and changed to the “Gateway business.” This change resulted from a review of businesssegmentation due to the increased importance of the Gateway business, which concluded that both the Gateway ande-businesses share the same function of offering content menus via information terminals. The similarity in service
content and markets was also considered in reviewing the accounting items of sales from each business. The change
could improve the effectiveness of segment information by relating new internal management segments and businesssegments resulting from the change.
The “Satellite broadcasting business” previously included with e-business in the “Content business” was newly
included in “Other businesses,” effective from the consolidated fiscal year under review, due to the decreased
importance in the revenue amount.
The aforementioned segment information for the previous consolidated fiscal year was prepared based on the businesssegmentation after the change.

2. Geographical segments
As sales and assets in Japan account for more than 90% of the sum of sales and the sum of assets, respectively, in eachregion of the respective geographical segments, the segment information by geographical region is omitted.

3. Overseas sales
As sales overseas account for less than 10% of consolidated net sales for fiscal 2004 and 2005, overseas sales-related
information is omitted.

13

DAIICHIKOSHO

CO.,

LTD.

FY2005, the year ended March 31, 2006
Summary of Nonconsolidated Financial Statements for the Year Ended March 31,
2006
May 15, 2006

Company Name: DAIICHIKOSHO CO., LTD.
Code Number: 7458
(URL http://www.dkkaraoke.co.jp)
Stock Exchange Listing: JASDAQ

Location of Head Office (Prefecture): Metropolis of Tokyo
Representative: Tatsuyoshi Yoneda, President
Contact: Eiji Hata, Managing Director and Senior Corporate Officer; and Executive Director, Administration
Headquarters

Phone: (03) 3280-2151
Date of the Board of Directors Meeting on the Closing of Accounts: May 15, 2006
Interim Dividend System: Applied
Start Date for Payment of Dividends: June 26, 2006
Date of the Ordinary General Meeting of Shareholders: June 24, 2006
Unit (tangen) Stock System: Adopted (Unit (tangen) stock of shares: 100 shares)
1. Nonconsolidated Performance for the Year Ended March 2006 (from April 1, 2005, to March 31,
2006)(1) Nonconsolidated operating results
Note: Amounts below one million yen are truncated.
Net sales¥ Million

Year ended March 2006
Year ended March 2005

%
5.6
2.7

87,53782,862
Net income

Year ended March 2006
Year ended March 2005

¥ Million
2,333
3,939

Ordinary income¥ Million¥ Million

6,418
6,447

%
(0.5)
(21.1)%(40.8)(15.8)

%
4.5
7.7

6,735
6,490

%
3.8
(13.8)

66.48
109.74

Fully diluted net income
per share¥――

Ordinary income to total
assets
%8.3
7.7

Ordinary income to net
assets%7.7
7.8

Net income per share

Return on equity
Year ended March 2006
Year ended March 2005

Operating income¥

Notes: 1. Average number of shares outstanding at the end of the respective years:
Year ended March 2006: 34,802,451 sharesYear ended March 2005: 35,745,780 shares“Fully diluted net income per share” is not stated because no residual securities existed as convertible
bonds were redeemed at maturity as of March 31, 2005 and 2006.
2. Change in accounting method: Yes
3. Percentages for net sales, operating income, ordinary income and net income show respective
year-over-year changes from the interim period of the previous fiscal year.

14

DAIICHIKOSHO

CO.,

LTD.

(2) Dividends
Ratio ofdividends toshareholders’InterimYear-end
equity¥¥¥¥ Million%%
Year ended March 2006
30.00
0
30.00
1,044
45.1
2.0
Year ended March 2005
40.00
0
40.00
1,392
36.5
2.7
Note: Dividends at the end of the year ended March 31, 2005, consisted of an ordinary dividend of ¥20.00 and amemorial dividend for the 30th anniversary of ¥20.00.
Total
dividends(annual)Annual dividend per share

Payoutratio(3) Nonconsolidated financial position
Total assets

Note: Amounts below one million yen are truncated.
Shareholders’ equity
Shareholders’ equity
Equity ratio
per share¥ Million%¥
53,16964.3
1,527.27¥ Million
Year ended March
82,6302006
Year ended March
80,11251,021
63.7
2005
Notes: 1. Average number of shares outstanding at the end of the respective years:
34,800,491 shares at March 31, 2006
34,804,216 shares at March 31, 2005
2. Number of treasury stocks at the end of the respective years:
1,820,807 shares at March 31, 2006
1,817,082 shares at March 31, 2005

1,465.47

2. Forecast Nonconsolidated Performance for FY2006, the Year Ending March 31, 2007 (from April 1,
2006, to March 31, 2007)
Net sales

Ordinary income

Net income¥ Million¥ Million¥ Million

Six months
45,6003,300
endingSeptember 30,
2006
Year ending
91,5006,300
March 31, 2007
(full year)(Reference) Forecast net income per share (full year): ¥91.95

Annual dividend per share
InterimYear-end
¥

¥

¥

1,600

0

―

―

3,200

―

40.00

40.00

Note: These projected performance figures are based on information available to the Company’s management at thetime of preparing this report. There are many uncertain factors inherent in forecasting, and there might becases in which actual results differ from forecast values.

15