Gulliver International Co., Ltd.

Financial Results
Fiscal 2008
(March 1, 2007 to February 29, 2008)

This document is a translation of sections of the original Japanese as a guide for non-Japanese
investors. It contains forward-looking statements based on a number of assumptions and beliefs madeby management in light of information currently available. Actual financial results may differ materiallydepending on a number of factors, including changing economic conditions and the pricing and productinitiatives of new and existing competitors.

SUMMARY OF FINANCIAL STATEMENTS
Results for the fiscal year ended February 29, 2008

Gulliver International Co., Ltd.

April 18, 2008

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Stock Code: 7599
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http://www.glv.co.jp/company/en
Inquiries:
Managing．．
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．Senior．．．．．
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．．．．Director: Ikuo Murata
President:
Kenichi
Hatori
Telephone: +81 3 5208-5503．．．．．．
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Scheduled date of the regular shareholders’ meeting: May 28, 2008
Scheduled date for distribution of dividends: May 29, 2008
Scheduled date for submission of the financial report: May 29, 2008
1. Consolidated financial results for the fiscal year ended February 29, 2008
1) Consolidated Operating Results(Millions of yen, rounded down)

Fiscal year ended
February 29, 2008

Fiscal year ended
February 28, 2007(% change)

Sales..............................................................................
Operating income...........................................................
Ordinary income.............................................................
Net income.....................................................................
Earnings per share (¥) ...................................................
Fully diluted earnings per share (¥)................................
Return on equity (%) ......................................................
Ratio of ordinary income to shareholders’ equity (%).....
Ratio of operating income to sales (%) ..........................

190,592
8,698
8,699
4,650
482.27482.15
23.6
18.0
4.6

(% change)

4.6(21.8)(20.8)(29.1)------

182,166
11,123
10,9986,566
672.19669.68
37.5
25.9
6.1

(0.2)
18.0
17.2
48.5
------

Notes:
1. Investment gains and losses under equity method: FY ended February 2008: ¥ -- million; FY ended February 2007: ¥ -- million
2. Percentage figures for sales, operating income, etc. represent changes compared to the previous fiscal year.

2) Financial Position (consolidated)
Total assets....................................................................
Net assets ......................................................................
Shareholders’ equity ratio (%)........................................
Shareholders’ equity per share (¥).................................

(Millions of yen, rounded down)

As of February 29, 2008
50,426
20,76940.4
2,122.06

As of February 28, 2007
45,947
19,30341.2
1,936.38

Note:
1. Shareholders’ equity: FY ended February 2008: ¥20,365 million; FY ended February 2007: ¥18,936 million

3) Consolidated cash flows

Cash flow from operating activities ................................
Cash flow from investing activities .................................
Cash flow from financing activities .................................
Cash and cash equivalents at end of period ..................

(Millions of yen, rounded down)

Fiscal year ended
February 28, 2007
6,103
(5,604)
9784,855

Fiscal year ended
February 29, 2008
1,354
(2,960)177
3,639

2. Dividends
Fiscal year ended
February 28, 2007
Interim dividend per share(¥) .........................................
Year-end dividend per share(¥) .....................................
Annual dividend per share(¥) .........................................
Total dividends paid (Millions of yen) .............................
Dividend ratio (%) ..........................................................
Dividends to net assets ratio (%) ...................................

81.00
93.00
174.00
1,699
25.8
9.7

－ 1 －

Fiscal year ended
February 29, 2008
87.00
87.00
174.00
1,744
36.1
8.6

Fiscal year ended
February 28, 2009
(forecast)
62.00
62.00
124.00
-29.8
--

3.

Consolidated forecasts for the fiscal year ending February 28, 2009 (March 1, 2008 to February 28, 2009)(Millions of yen, rounded down)

Sales............................................................................
Operating income ........................................................

Interim period ending
August 31, 2008
89,6002.7%
3,200

FY ending
February 28, 2009
196,300

3.0%

7,400

(14.9)%(32.7)%

Ordinary income ..........................................................

3,200(33.0)%

7,400(14.9)%Net Income ..................................................................

1,700(37.2)%

4,000(14.0)%

Earnings per share (¥) .................................................

177.14--416.79--Percentage figures for sales, operating income, etc. represent changes compared to the previous comparable fiscal period.

4. Other
1) Transfer of important subsidiaries during the period Transfers of subsidiaries resulting in changes in the scope of
consolidation: Yes
New companies: (1) Gulliver USA, Inc.
2) Changes in accounting principles, procedures and presentation in the preparation of these financial statements(1) Changes in accordance with revision to accounting standards: Yes(2) Other changes: No
Note: For details, see page 14 of ‘Material Items Forming the Basis for the Preparation of the Consolidated Financial
Statements’3) Number of shares outstanding (ordinary shares)(1) Number of shares outstanding at end of period (including treasury shares):
As of February 29, 2008: 9,597,077 shares; As of February 28, 2007: 9,779,343 shares(2) Number of treasury shares at end of period:
As of February 29, 2008: 1,091,723 shares; As of February 28, 2007: 909,457 shares

Forecasts and forward-looking statements in this document are based on a number of assumptions and beliefs made by management in light of
information currently available. Actual financial results may differ materially depending on a number of factors, including economic conditions,legislative and regulatory developments, delay in new product or service launches, and pricing and product initiatives of competitors.

－ 2 －Reference: Outline of Non-Consolidated Financial Results1.

Non-Consolidated financial results for the fiscal year ended February 29, 2008.

1) Non-Consolidated operating results(Millions of yen, rounded down)

Fiscal year ended
February 28, 2007

Fiscal year ended
February 29, 2008(% change)

Sales...............................................................................
Operating income ...........................................................
Ordinary income .............................................................
Net income .....................................................................
Earnings per share (¥) ....................................................
Fully diluted earnings per share (¥) ................................

167,219
8,459
8,614
4,293
445.27445.160.4(21.0)(18.0)(23.9)---(% change)

166,466
10,715
10,5095,645
577.92575.76

(1.9)
5.6
3.6
6.1
---

Percentage figures for sales, operating income, etc. represent changes compared to the previous fiscal year

2) Financial position (Non-Consolidated)(Millions of yen, rounded down)

As of February 29, 2008

As of February 28, 2007

35,37819,38954.8
2,020.31

40,414
18,10144.8
1,850.96

Total assets ...................................................................
Net assets......................................................................
Shareholders’ equity ratio (%) .......................................
Shareholders’ equity per share (¥) ................................

Note:
1. Shareholders’ equity: FY ended February 2008: ¥19,389 million; FY ended February 2007: ¥18,101 million

2. Non-Consolidated forecasts for the fiscal year ending February 28, 2009 (March 1, 2008 to February 28, 2009)(Millions of yen, rounded down)

Sales..............................................................................
Operating income ..........................................................
Ordinary income ............................................................
Net Income ....................................................................
Earnings per share (¥) ...................................................

Interim period ending
August 31, 2008
79,0003.3%
3,100(29.9)%
3,100(30.6)%
1,650(33.3)%
171.93--

FY ending
February 28, 2009
170,000
1.7%
7,200(14.9)%
7,200(16.4)%
3,800(11.5)%
395.95--Percentage figures for sales, operating income, etc. represent changes compared to the previous comparable fiscal period.

Forecasts and forward-looking statements in this document are based on a number of assumptions and beliefs made by management in light of
information currently available. Actual financial results may differ materially depending on a number of factors, including economic conditions,legislative and regulatory developments, delay in new product or service launches, and pricing and product initiatives of competitors.

－ 3 －1. Operating results(1) Outline of consolidated operating results
Among the stores involved in the sale and purchase of cars, 299 were directly operated (8 more than at the end of
the previous fiscal year). Compared to the previous fiscal year, the net increase in the number of stores was lower
due to a reduction in the pace of opening new venues and the closure of certain stores. Our policy to continue toopen new stores and replace (relocate and rebuild) stores remains unchanged.
In the first half of the fiscal year, investment in advertising was restrained. However, active investment inadvertising in the second half led to an increase in the number of cars sold through directly operated stores during
the second half of the year. The number of cars sold for the year, however, was slightly lower than in the previous
fiscal year.
Sales, general and administrative expenses increased at certain subsidiaries.
As a result of the factors noted above, consolidated net sales for the fiscal year under review increased by 4.6%
or ¥8,426 million compared to the previous fiscal year to ¥190,592 million and operating income decreased 21.8%
or ¥2,425 million to ¥8,698 million. Ordinary income decreased 20.8% or ¥2,298 million to ¥8,699 million and net
income decreased 29.1% or ¥1,915 million to ¥4,650 million.

Performance by segment
i. Sales of used automobiles
As previously mentioned, the number of cars sold through directly operated stores decreased in comparison to
the previous fiscal year. However, the average price-per-car increased due to a rise in prices of used cars soldthrough auction.
As a result, consolidated net sales increased 2.8% or ¥5,013 million over the previous fiscal year to ¥179,443
million and operating income decreased 13.2% or ¥1,739 million to ¥11,394 million.
ii. Financing business
G-One Financial Services Co., Ltd. a financial services company that primarily handles auto loans, steadily
expanded its operating base and grew revenues, however sales, general and administration expenses increased asa result of business expansion.
As a result, consolidated net sales for the period under review increased 83.5% (¥2,334 million) over the previous
fiscal year to ¥5,126 million, and operating income decreased 52.1% (¥159 million) to ¥146 million.
iii. Other businesses
The number of Gulliver franchised stores decreased by a net 33 compared to the previous fiscal year end to 151
stores. As a result, revenues from Gulliver franchised stores also decreased.
As a result, consolidated net sales increased 15.7% (¥1,436 million) to ¥10,540 million and operating income
decreased 2.8% (¥80 million) to ¥2,700 million.

－ 4 －Outlook for the fiscal year ending February 28, 2009
Note: Forecasts represent changes compared to the previous fiscal year.

The Company aims to efficiently increase the number of cars sold and to continue to open new directly operated
stores for the sale of used cars—its core operations. For the year ending February 28, 2009, the number of directly
operated stores is forecast to increase to 307 stores at the end of the period, a net increase of 8 stores. As a result,the number of cars sold is also forecast to increase.
The following factors are expected to cause a rise in sales, general and administrative expenses:•

A forecasted increase in investment in advertising for the continued implementation of test marketing andstrengthening of retail sales•

A forecasted increase in personnel expenses as a result of the increase in staff numbers due to active hiring in
the previous fiscal year•

A forecasted increase in land and facilities rents due to the rise in the number of directly operated stores•

A forecasted increase in sales, general and administrative expenses as a result of investments made for thedevelopment of operations overseas in China and India.
Development of the Financing business as an operation focusing on auto loans will continue. Results are

expected to be largely in line with those of the previous fiscal year.
As regards Other businesses, the number of Gulliver franchised stores is expected to decline to 137 stores, a net
decrease of 14 stores. As a result, a decrease in income from royalties, commissions, etc., is also expected.
As a result, consolidated forecasts for the fiscal year ending February 28, 2009 are for net sales to increase 3.0%
to ¥196,300 million, operating income to decrease 14.9% to ¥7,400 million, ordinary income to decrease 14.9% to¥7,400 million, and net income for the period to decrease 14.0% to ¥4,000 million.

－ 5 －(2) Financial position

Consolidated financial position and related analysis
Assets, liabilities and shareholders’ equity
1) Current assets
The balance of current assets at the end of the period under review increased ¥4,268 compared to the end of theprevious fiscal period to ¥31,148 million due primarily to a ¥2,625 million increase in inventories and a ¥2,501 million
increase in accounts receivable.
2) Fixed assets
The balance of fixed assets at the end of the period under review increased ¥211 million compared to the end of theprevious fiscal period to ¥19,278 million largely due to a ¥326 million increase in construction cooperation money
and security and guarantee deposits due to the expansion of new directly operated stores.
3) Current liabilities
The balance of current liabilities at the end of the period under review decreased ¥1,145 million compared to theend of the previous fiscal period to ¥24,078 million due primarily to a shift of funds used for the expansion ofoperations from short-term borrowings (down ¥459 million from the end of the previous fiscal year) to long-termborrowings.
4) Long-term liabilities
The balance of long-term liabilities at the end of the period under review increased ¥4,159 million to ¥5,578 million
compared to the end of the previous fiscal period due primarily to a ¥3,535 million increase in long-term borrowings
for the expansion of operations.
5) Net assets
The balance of net assets at the end of the period under review increased ¥1,465 million compared to the end of theprevious fiscal period to ¥20,769 million primarily due to a ¥2,549 million increase in retained profit.

Cash flow
For the fiscal year ended February 29, 2008, cash flow from operating activities and financing activities was positive
while cash flow from investing activities was negative. Overall cash flow was a negative figure of ¥1,421 million. Thebalance of cash and cash equivalents at the end of the period was ¥3,639 million.
Cash flow from operating activities
Cash and cash equivalents (“cash”) generated from operating activities was ¥1,354 million.
Principal components of this included net income before adjustment for taxes of ¥8,495 million, a decrease inaccounts receivable of ¥2,267 million, and corporate taxes paid of ¥5,214 million.
Cash flow from investing activities
Net cash used in investing activities was ¥2,960 million. The principal factors contributing to this result were
investments in the opening of new directly managed stores and in internal systems.
Cash flow from financing activities
Net cash from financing activities was ¥177 million. This was largely due to the proceeds from long-term borrowings.

－ 6 －Trends in Gulliver’s shareholders’ equity and cash flow indicators are as follows:
FY 2004

FY 2005

FY 2006

FY 2007

FY 2008

Equity ratio (%)

59.3

46.7

41.3

41.2

40.4

Shareholders’ equity(market price base)ratio (%)

338.6

443.4

338.5

181.9

80.6

Debt redemption years(years)

0.1

1.4

2.1

2.3

12.7

Interest coverage ratio

604.2

207.9

141.3

93.6

9.6

Notes:
1. Breakdown of each indicator
Equity ratio = shareholders’ equity/total assets
Shareholders’ equity to asset ratio by market price = Market capitalization/Total assets
Debt redemption years = Interest bearing debt/Operating cash flow
Interest coverage ratio = Operating cash flow/Interest payments
2. Each index is calculated from consolidated figures
3. Market capitalization is calculated using the formula: closing share price at period end x number of shares issued (excluding
treasury stock).

2. Basic policy concerning distribution of profits and dividend forecasts
We have identified the return of profits to investors as an important management issue and also place emphasize
on our dividend payout ratio. The Company had previously announced a target dividend payout ratio of
approximately 30% of non-consolidated net income for the fiscal year ended February 29, 2008. However, from thefiscal year ended February 28, 2009, the target dividend payout ratio has been revised and will be based on
consolidated net income. Actual dividends may differ from previously announced forecasted dividends due toconsolidated net income results.
Based on these policies, dividends per share for the fiscal year ended February 29, 2008 were ¥174.00. Further,based on the forecasted consolidated net income, the planned dividend per share for the fiscal year ending
February 28, 2009 is for an annual dividend of ¥124.00 per share, comprising an interim dividend of ¥62.00 and a
year-end dividend of ¥62.00.
With the intention of further increasing profits and increasing corporate value, as well as strengthening
competitiveness and improving services, retained capital will be used to carry out effective and efficient investments
in such areas as opening new directly operated stores, strengthening internal infrastructure (IT), developing new
businesses, including those overseas, and training personnel.

－ 7 －Consolidated Balance Sheets(Millions of yen)
As of February 29, 2008

As of February 28, 2007%ASSETS%

Current assets
Cash and deposits .................................

3,639

4,855

Accounts receivable...............................

16,166

13,664Inventory................................................

7,294

4,668

Short-term loans receivable...................

2,085

1,571

Deferred tax assets................................

407

445

Others....................................................

1,581

1,743

Allowance for doubtful accounts ............

(25)

(69)

Total current assets...........................

31,14861.8

26,88058.5

Fixed assets
Tangible fixed assets
Building and structures ..........................

10,547

9,911

Depreciation .......................................

(2,699)(2,079)Vehicles and transportation ...................

48

42

Depreciation .......................................

(36)

(15)

Tools, fixtures and equipment................

3,259

2,899

Depreciation .......................................

(1,839)(1,515)Land.......................................................

327

327

Construction in progress........................

124

116

Other......................................................

25--

Total tangible fixed assets .....................
Intangible fixed assets

9,758

19.4

9,687

Goodwill.................................................

103

30

Software ................................................

1,994

2,082

Other .....................................................

122

Total intangible fixed assets ..............

2,220

21.1

79
4.4

2,192

4.8

Investments and other assets
Investment securities .............................

98

96

Shares in affiliate companies ...............

5

108

Long-term loans.....................................

161

13

Deposits and guarantee money.............

3,404

3,749

Construction cooperation fund...............

3,180

2,508

Deferred tax assets................................

465

489

Other......................................................

275

296

Allowance for doubtful accounts ............

(292)

(74)

Total investments and other assets....
Total fixed assets ...............................

7,298
19,278

14.4
38.2

7,187
19,066

51.6
41.5

Total Assets ...........................................

50,426100.0

45,947

100.0

1

－ 8 －

Consolidated Balance Sheets(Millions of yen)
As of February 29, 2008

As of February 28, 2007%

LIABILITIESCurrent liabilities
Accounts payable ...................................

3,505

3,303

Short-term borrowing ..............................

13,131

13,590Accrued expenses ..................................

3,039

2,900

Accrued corporate taxes.........................

1,306

2,957

Deposits received ...................................

351

809

Reserve for bonuses...............................

562

453

Reserve for director’s bonuses ...............

63

73

Others.....................................................

2,119

1,136

Total current liabilities...........................

24,07847.7

25,224

54.9

Long-term liabilities
Long-term borrowing ..............................

4,085

550

Guarantee deposits received..................

1,021

869

Other ......................................................

471

--

Total long-term liabilities.......................

5,578

11.1

1,419

3.1

Total liabilities.....................................

29,65758.8

26,64358.0

Paid in capital .........................................

4,157

8.3

4,157

9.1

Capital surplus ........................................

4,032

8.0

4,032

8.8

Retained profit ........................................

22,83345.3

20,283

44.1

Treasury stock ........................................

(10,678)(21.2)(9,540)(20.8)

Total shareholders’ equity ..................

20,34440.4

18,932

41.2

7

0.0

6

0.0

13

0.0

(2)

(0.0)

NET ASSETS

Valuation difference on othermarketable securities .........................
Valuation and translation
adjustments ........................................
Translation adjustments .........................

20

0.0

3

0.0

Warrants for new shares ...........................

4

0.0

1

0.0

Minority interests .......................................

400

0.8

366

0.8

Total net assets................................

20,76941.2

19,30342.0

Total liabilities and net assets ........

50,426100.0

45,947

100.0

－ 9 －

Consolidated Statements of Income
March 1, 2007 to
February 29, 2008

(Millions of yen)March 1, 2006 to
February 28, 2007%

Sales ...................................................................

190,592 100.0

182,166

100.0

Cost of sales........................................................

147,03277.1

140,228

77.0

Gross profit ...................................................

43,55922.941,937

23.0

Sales general and administrative expenses ........

34,86018.3

30,813

16.9

Operating income...............................................

8,698

4.6

11,1236.1*1

Non-operating income
Interest received ..............................................

50

Dividends received...........................................

17

1

Commissions received.....................................

4

7

Compensation received ...................................

15--

Other................................................................

265

68

Total non-operating income

307

0.2

79

0.0

Non-operating expenses
Interest paid ....................................................

140

65

Share issuance expenses ...............................

--

7

Addition to allowance of doubtful accounts .....

27

37

Contract cancellation expenses ......................

--

3

Exchange related losses .................................

33--

Other...............................................................

105

91

Total non-operating expenses ............................

306

0.2

204

0.1

Ordinary income .................................................

8,699

4.6

10,9986.0

Extraordinary profit
Gains on cancellation of insurance contracts..

20

Gains from cancellation in the previous term ..

92--

Unrealized profit on installment sales .............

--

1,164

Gain from sale of fixed assets.........................

15--

Other ...............................................................

17

Total extraordinary profit......................................

146

--

-0.1

1,164

0.6

Extraordinary losses
Loss on disposal of fixed assets*2 ...................

330

689

Impairment losses*3.........................................

--

278

Other...............................................................

19

45

Total extraordinary losses ..................................

350

0.2

1,013

0.5

Income before taxes, etc.................................

8,495

4.5

11,149

6.1

Income tax, inhabitants tax and enterprisetax.................................................................

3,669

4,880

Corporate tax adjustment ................................

126

(313)

Minority interests (deduction) ..........................

49

0.0

16

0.0

Net income .........................................................

4,650

2.5

6,566

3.6

－ 10 －

Changes in Consolidated Shareholders’ Equity: March 1, 2007 to February 29, 2008

(Millions of yen)
Shareholders’ equity
Capital4,157

Balance as of February 28, 2007

Capital surplus

Retained profit

4,032

20,283

Treasury stock

Total shareholders’ equity(9,540)18,932

Change during the period
Surplus dividend(1,744)(1,744)

Net income

4,650

4,650

Acquisition of treasury stock(1,320)(1,320)

182

56

(126)

Disposal of treasury stock
Decrease in retained profit
following changes to the scope

(309)

(309)

78

78

of consolidation
Increase in retained profit
following changes to the scope of
consolidation
Changes to items other thanshareholders’ equity during the

－

－

－

－

－

－

－

2,549

(1,137)

1,411

4,157

4,032

22,833(10,678)

20,344

period (net)Total change during period
Balance as of February 29, 2008

Valuation and differences due to foreign exchange
Valuationdifferences on other Adjustment due tomarketableexchange ratesecurities
Balance as of February 28, 2007

6

Total valuation andtranslation

Warrants

Minority interests

Total net assets

366

19,303

adjustments

(2)

3

1

Change during the period
Surplus dividend(1,744)

Net income

4,650

Acquisition of treasury stock(1,320)

Disposal of treasury stock56

Decrease in retained profit(309)

following changes to thescope of consolidation
Increase in retained profit

78

following changes to thescope of consolidation
Changes to items other than
1

15

17

3

Total change during period

1

15

17

3

33

1,465

Balance as of February 29, 2008

7

13

20

4

400

20,769shareholders’ equity during the

33

53

period (net)－ 11 －

Changes in Consolidated Shareholders’ Equity: March 1, 2006 to February 28, 2007
(Millions of yen)
Shareholders’ equity
CapitalBalance as of February 28, 2006

Capital surplus

4,157

Retained profit

4,032

Total shareholders’

Treasury stock

15,822equity(8,067)

15,944

Change during the period
Surplus dividend
Bonuses to directors through profit
appropriation
Net income(1,608)(1,608)

(73)

(73)

6,566

6,566

Acquisition of treasury stock
Disposal of treasury stock
Changes to items other than

(2,079)

(423)

606

183

--

--

--

--

--

--

--

4,460

(1,472)

2,988

4,157

4,032

20,283(9,540)18,932shareholders’ equity
Total change during the period
Balance as of February 28, 2007

(2,079)Valuation and differences due to foreign exchange
Valuationdifferences on

Translation

Total valuationotheradjustment

and translation

marketableaccount

differences

Minority

Warrants

Total net assetsinterests

securities
Balance as of February 28, 2006

67

(0)

67

--

352

16,364(5)(1,613)

Change during the period
Surplus dividend
Bonuses to directors through profit(73)

appropriation
Net income

6,566

Acquisition of treasury stock(2,079)

Disposal of treasury stock

183

Changes to items other thanshareholders’ equity

(60)

(2)

(63)

1

19

(42)

Total change during the period

(60)

(2)

(63)

1

13

2,939

Balance as of February 28, 2007

6

(2)

3

1

366

19,303－ 12 －

Consolidated Statements of Cash flows
March 1, 2007 to
February 29, 2008

(Millions of yen)March 1, 2006 to
February 28, 2007

8,495
2,342
109
174
(5)
140
-(15)
330
--(2,267)(2,588)
169
(601)
(89)
508
6,705
5
(140)
(5,214)
1,354

11,149
2,352
(68)
(66)
(2)
65
7
-689
278
(73)
(2,825)108444(1,292)
(177)
(749)
9,838
2
(65)
(3,671)
6,103-(1,946)
116
(824)
(0)
(3)
3
(305)
-(2,960)

100(3,731)
1
(581)
(5)
(61)
6
(1,327)(5)(5,604)

(471)
(986)
4,661
(1,320)56-(1,744)
(5)
(10)
-177

4,190
(207)
500
(2,079)183(7)(1,608)
(5)
-13
978

6

3

(1,421)
4,855

1,481
3,374

205

--

3,639

4,855

I. Cash flow from operating activities
Income before taxes, etc................................................................
Depreciation ...................................................................................
Increase (decrease) in reserve for bonuses...................................
Increase (decrease) in allowance for doubtful accounts ................
Interest and dividends received .....................................................
Interest paid ...................................................................................
Share issuance expense................................................................
Gain on disposal of fixed assets ....................................................
Loss on disposal of fixed assets ....................................................
Impairment losses ..........................................................................
Payment of directors’ bonuses.......................................................
Increase (decrease) in accounts receivable...................................
Increase (decrease) in inventory....................................................
Increase (decrease) in accounts payable ......................................
Increase (decrease) in operating loans..........................................
Increase (decrease) in accrued consumption tax ..........................
Other ..............................................................................................
Subtotal ..........................................................................................
Interest and dividends received .....................................................
Interest paid ...................................................................................
Corporate taxes paid......................................................................
Cash flow from operating activities ...........................................
II. Cash flow from investing activities
Proceeds from sale of investment securities..................................
Payments for acquisition of tangible fixed assets ..........................
Proceeds from sale of tangible fixed assets...................................
Payments for acquisition of intangible fixed assets ......................
Payments for acquisition of shares in affiliates ..............................
Amounts lent ..................................................................................
Proceeds from repayment of loans ................................................
Increase (decrease) in deposits and guarantee payments ............
Other ..............................................................................................
Cash flow from investing activities ............................................
III. Cash flow from financing activities
Net increase (decrease) in short-term borrowings .........................
Repayment of long-term debt.........................................................
Proceeds from long-term borrowings .............................................
Payments for acquisition of treasury stock.....................................
Proceeds from disposal of treasury stock ......................................
Payments for issuance of new shares ...........................................
Dividend payments.........................................................................
Dividends paid to minority shareholders ........................................
Proceeds from payments from minority shareholders....................
Other ..............................................................................................
Cash flow from financing activities............................................
IV. Cash and cash equivalents currency translationdifferences ...............................................................................
V. (Decrease) increase in cash and cash equivalents..................
VI. Cash and cash equivalents at beginning of period ................
VII. Increase in cash and cash equivalents from change
in scope of consolidation ........................................................
VIII. Cash and cash equivalents at end of period ........................

－ 13 －

Material Items Forming the Basis for the Preparation of theConsolidated Financial Statements for Fiscal Year Ended February 29, 2008
Item
1.Items relating to thescope ofconsolidation

March 1, 2007 - February 29, 2008
(1) Number of consolidated subsidiaries: 13
G-One Financial Services Co., Ltd.
G-Care Kyousaikai.
Gulliver Europe Ltd.
G-One Credit Services Co., Ltd.
G-Trading Co., Ltd.
G-Bus, Ltd.
Samurai Motors Co.
G-Trading Rus LLC
G-Rental Co., Ltd.
Hucobo Co., Ltd.
Takeoff Co., Ltd.
Gulliver USA, Inc.
Gulliver East, Inc.
(Change in scope of consolidation)
Of the above G-Care Kyousaikai, Gulliver USA,
Inc. and Gulliver East, Inc. have been includedin the scope of consolidation since theirsignificance has increased during the fiscal
year. As a result of an acquisition of shares in
G-Rental Co., Ltd. during the consolidated fiscal
year and having newly established G-One
Credit Services Co., Ltd., both companies havebeen included in the scope of consolidation.
However, Carbross Co., Ltd. has been excluded
from consolidation since its significance has
decreased during the fiscal period.

2. Application of theequity method

March 1, 2006 – February 28, 2007
(1) Number of consolidated subsidiaries: 9
G-Trading Co., Ltd.
G-One Financial Services Co., Ltd.
Gulliver Europe Ltd.
Hucobo Co., Ltd.
Samurai Motors Co.
G-Bus, Ltd.
Carbross Co., Ltd.
Takeoff Co., Ltd.
G-Trading Rus LLC(Change in scope of consolidation)
Of the above Takeoff Co., Ltd. has been
included in the scope of consolidation
following the new acquisition of shares
during the fiscal year and G-Trading Rus
LLC was established during the fiscal year
and included in consolidation.

(2) Main non-consolidated subsidiaries:(2) Non-consolidated subsidiaries:
Carbross Co., Ltd.
Gulliver USA, Inc.
G-One Insurance Services Co., Ltd.
Reasons for exclusion from consolidation:
Reasons for exclusion from consolidation:
Carboss Co., Ltd. and G-One Insurances
Gulliver USA, Inc. is small and its total assets,
Services Co., Ltd. are small and their total assets, sales, net income and retained profit, etc. do notsales, net income and retained profit, etc. do not significantly affect the consolidated financial
significantly affect the consolidated financial
statements.
statements.
(1) There are no non-consolidated subsidiaries or (1) There are no non-consolidated subsidiaries oraffiliates to which the equity method is applied.
affiliates to which the equity method is applied.
(2) Non-consolidated subsidiaries and affiliates to(2) Non-consolidated subsidiaries and affiliates towhich the equity method is not applied:which the equity method is not applied:Gulliver USA, Inc.
Carboss Co., Ltd.
UG Powers Co., Ltd.
G-One Insurance Services Co,. Ltd.
UG Powers Co., Ltd.
Reasons for not applying the equity method:
The effect of the company on net income andretained profit is immaterial and its overall
importance is low.

－ 14 －

Reasons for not applying the equity method:
The effect of the company on net income andretained profit is immaterial and its overall
importance is low.

Item

March 1, 2007 - February 29, 2008

March 1, 2006 – February 28, 2007

Of the consolidated subsidiaries, Gulliver Europe
3. Items relating to the Of the consolidated subsidiaries, Gulliver Europe
settlement days of Ltd., Samurai Motors Co. and G-Trading Rus LLC, Ltd., Samurai Motors Co. and G-Trading Rus LLC,
have a December 31 settlement date that differ from Takeoff Co., Ltd. have a December 31 settlement
consolidated
the consolidated settlement date of the end ofdate and Takeoff Co., Ltd. has an August
subsidiaries
February. Since the gap between the Consolidated settlement date that both differ from the
Financial Statements settlement dates for Gulliver consolidated settlement date of the end ofEurope Ltd., Samurai Motors Co., Takeoff Co., Ltd. February. Since the gap between the Consolidated
and G-Trading Rus LLC does not exceed 3 months, Financial Statements settlement dates for Gulliverconsolidation is performed based on the said
Europe Ltd., Samurai Motors Co. and G-Trading
subsidiary’s financial statements. For material
Rus LLC does not exceed 3 months, consolidationtransactions occurring between the settlement dates is performed based on the said subsidiary’s
necessary, consolidation adjustments are made.
financial statements. For material transactions
occurring between the settlement dates necessary,consolidation adjustments are made. In the case of
Takeoff Co., Ltd., as the gap exceeds 3 months,
consolidation is performed based on provisional
statements.
4. Items relating to
1. Marketable securities
1. Marketable securities
accounting
Bonds intended to be held to maturity:
Bonds intended to be held to maturity:
treatment
Amortizing cost method (straight line)
Amortizing cost method (straight line)(1) Valuation criteria
and valuation
Other marketable securities
Other marketable securities
methods for
As at rightThose with a market price: Valued by the market
material assets
method based on the market price as at theaccounting date. Valuation gains or losses aretaken direct to net assets and the book value isdetermined by moving average method.
Those without a market value:Those without a market value:
As at rightThe cost method using the moving averagemethodShareholdings in subsidiaries:
As at right

Shareholdings in subsidiaries:
The cost method using the moving averagemethod

2. Derivatives

2. Derivatives
As at rightMarket price method

3. Inventories
A. Merchandise:
Vehicles: As at right
Other: As at right
B. Supplies:
As at right

3. Inventories
A. Merchandise:
Vehicles: Actual cost method
Other:First in first out method applied
B. Supplies:
Final cost method applied(i) Tangible Fixed Assets(2) Depreciation
As at rightmethods applied
to material
depreciable
assets(i) Tangible Fixed Assets
Declining Balance Method is applied. However,for buildings (excluding attached equipment)
acquired since April 1, 1998, the StraightLine Method has been applied. The useful lives
are as follows:
Buildings and Structures: 15 – 20 years
Vehicles: 2-6 years(ii) Intangible Fixed Assets
As at right(ii) Intangible Fixed Assets
The Straight Line Method is applied. However,with respect to software for internal use, theStraight Line Method based on useful lives forinternal use (5 years) has been applied.

(iii) Long Term Prepaid Expenses
As at right(iii) Long Term Prepaid Expenses
The Straight Line Method is applied－ 15 －

Item

March 1, 2007 - February 29, 2008

March 1, 2006 – February 28, 2007

Share issue expenses
As at right

Share issue expenses
Expensed in their entirety at the time of
expenditure(i) Reserve for Doubtful Accounts(4) Criteria for
As at rightrecordingmaterial reserves(i) Reserve for Doubtful Accounts
To prepare for the losses occurring from bad
debts, with respect to general claims the actual
bad debt to loan rate is applied. Specific claims,
such as those where there are concerns on theprobability of recovery, are assessed on an
individual basis and estimated unrecoverable
amounts are recorded.
(ii) Reserve for Bonuses
To prepare for the payment of bonuses to
employees, amounts are recorded based on theestimated payment amount.
(iii) Bonuses for directors
Amount based on forecasted provisional amountin preparation for payment of bonuses todirectors.

(3) Treatment ofdeferred assets(ii) Reserve for Bonuses
As at right(iii) Reserve for Directors’ Bonuses
As at right(5) Treatment ofmaterial leasetransactions

As at right

Financing leases other than those lease assets
whose title is deemed to pass to the lessee havebeen accounted for in accordance with methods
applied to normal lease transactions.

(6) Material hedge
accounting(i) Method of Hedge Accounting
As at right(i) Method of Hedge Accounting
According to Deferred Hedge Method(ii) Hedging Tools and Hedge Targets
As at right(ii) Hedging Tools and Hedge Targets
Hedging Tools – Interest Rate Swaps
Hedge Targets – Interest on borrowings(iii) Hedging Policy(iii) Hedging Policy
Interest Rate Swap transactions are entered into
for the purpose of hedging the risk of interest rate
fluctuation on borrowings and entered into only
for the target obligations.

As at right(7) Other material
items in the
preparation of theconsolidated
financial statements
5.

Evaluation ofassets andliabilities of
consolidated
subsidiaries(iv) Method of evaluating hedge effectivenessAs at right(iv) Method of evaluating hedge effectivenessEvaluations are based on the amount of volatilityof hedging tools and hedge targets compared tototal market price volatility for the period from thetime the hedge was initiated until the evaluationfor effectiveness.

Accounting treatment for consumption tax
As at right

Accounting treatment for consumption tax

As at right

The Tax Exclusion Method is applied in theaccounting treatment of Consumption Tax.

Market valuation method is fully applied.

－ 16 －

Item

March 1, 2007 - February 29, 2008

March 1, 2006 – February 28, 2007

6. Amortization of
goodwill andnegative goodwill

The period of amortization of goodwill andnegative goodwill will be based on a reasonableestimate of the period during which benefit will be
realized not exceeding 20 years.
Small amounts are written off in full in the fiscal
year in which they arise.

The period of amortization of goodwill will bebased on a reasonable estimate of the period
during which benefit will be realized notexceeding 20 years.
Small amounts are written off in full in the fiscal
year in which they arise.

7. Assets in the scopeof consolidated
cash flows

As at right.

The category ‘cash’ covers cash on hand,demand deposits, and easily convertible
short-term investments with low risk of pricefluctuation that mature within three months ofacquisition.

－ 17 －

Changes in Accounting Treatment
March 1, 2007 - February 29, 2008

March 1, 2006 – February 28, 2007――――――

Accounting standards relating to impairment losses on
fixed assets
As of the fiscal year ended February 28, 2007 the ‘Statement
Regarding the Establishment of Accounting Policies for
Impairment Losses on Fixed Assets’ (Business Accounting
Council, August 9, 2002) and ‘Guidelines for the Application of
Accounting Policies for Impairment Losses on Fixed Assets(Guideline for Application of Business Accounting Policies,
Article 6; Business Accounting Council, October 31, 2003) havebeen applied as accounting standards relating to impairment
losses.
As a result of this change, and in comparison to previous
accounting methods, there is a ¥278 million decrease in net
income before taxes.
Accounting treatments relating to income generated
through auto loans
Previously, in respect of auto loans at the consolidated
subsidiary G-One Financial Services Co., Ltd. the entire amountof the income was recorded as income over the period of theloan. However, from the current fiscal period, we have begun toemploy a method in which the financing cost for the unexpired
portion is accounted for over the contract period. For theremaining portion, excluding income related to foreseeable
losses arising from early repayment or subrogated performancethe income is recorded in full at the time of contracting for the
auto loan.
We made this change as most of the costs associated with auto
loan income occur at the time of contracting and also because
the expertise and internal data we have accumulated on theauto loans business allows us to rationally forecast early
repayment or subrogated performance. As a result we believe
the new method better reflects actual operating conditions.
In order to make loan contracts signed in previous fiscal years
conform to this method, the balance of unpaid loans at the endof the fiscal year ended February 28, 2006, excluding income
related to financing rates and foreseeable losses arising fromearly repayment or subrogated performance, has been recorded
as extraordinary profit.
As a result of this change, net sales, gross profit on sales,
operating income and ordinary income have increased by ¥547
million compared to the previous method, and net income
before adjustment for income taxes has increased ¥1,711
million.

――――――－ 18 －

March 1, 2007 - February 29, 2008

March 1, 2006 – February 28, 2007――――――

Accounting standards relating to presentation of net assets onbalance sheets
From the fiscal year ended February 28, 2007, the ‘Statement
Regarding the Presentation of Net Assets on the Balance Sheet’(Business Accounting Council, December 9, 2005, Article No. 5) and‘’Guidelines for the Application of Accounting Policies for the
Presentation of Net Assets on the Balance Sheet’ (Guidelines for the
Application of Business Accounting Polices, Article 8; BusinessAccounting Council, December 9, 2005) have been applied. The
equivalent amount previously recorded as‘Capital’is ¥18,936 million.
Following changes to the regulations on financial statements, net
assets on the balance sheet have been recorded in accordance withthe revised regulations.
Accounting standards relating to directors’ bonuses
From the fiscal year ended February 28, 2007, the ‘Accounting Standard
Regarding Directors’ Bonuses’ (Business Accounting Council, November
11, 2005, Article No. 4) has been applied. As a result of both ordinary
income and net income before adjustment for income taxes have eachdecreased ¥73 million.

――――――――――――

Changes to the depreciation method of tangible fixed assets
From the period of the fiscal year ended February 29, 2008, in
accordance with the revision of Corporation Tax Law (Law
Concerning the Partial Revision of Income Tax No. 6, issued on
March 30, 2007 and Government Ordinance Concerning the Partial
Revision of Corporation Tax Law Order No. 83, issued on March 30,2007), the method of depreciation of tangible fixed assets acquired
after April 1, 2007 has been revised. The effects of this change on
operating income, ordinary income or net income before adjustment
for income taxes is immaterial.

Method of presentation of current assets
March 1, 2007 - February 29, 2008

March 1, 2006 – February 28, 2007――――――

1. In the previous consolidated fiscal year, ‘operating loans’ were
included in ‘other’ among current assets. In this consolidated fiscal
year, operating loans exceed 1% of total assets and are therefore
listed separately.
At the end of consolidated fiscal year February 28, 2006
‘operating loans’ were ¥215 million.
2. The item referring to goodwill has changed from the term trading
rights to goodwill.

Notes
Related to the consolidated balance sheets
February 29, 2008
1.

Other items relating to non-consolidated
companies as follows:
Shares in subsidiaries: ¥5 million

February 28, 2007
andaffiliate－ 19 －------------------

(Items related to the consolidated statements of income)(Millions of yen)March 1, 2007 – February 29, 2008

March 1, 2006 - February 28, 2007

1. Principal components of SGA expenses
Advertising
Contracting fees
Salaries
Bonuses
Transfer to reserve for doubtful
accounts
Transfer to reserve for bonuses
Transfer to reserve for directors’
bonuses
Depreciation
Rent
2.

1. Principal components of SGA expenses
5,557
1,934
8,659
1,294
-573
63
2,342
4,881

Components of losses on disposal of fixed assets
Buildings and structures
Tools & equipment
Software
Long-term prepaid expenses
Restoration expenses
Other
Total

224
22
24
0
57
1
330

Advertising
Contracting fees
Salaries
Bonuses
Transfer to reserve for doubtful
accounts
Transfer to reserve for bonuses
Transfer to reserve for directors’
bonuses
Depreciation
Rent

4,619
1,785
8,066
1,314
7
448
73
2,352
4,405

2. Components of losses on disposal of fixed assets
Buildings and structures
Tools & equipment
Software
Long-term prepaid expenses
Restoration expenses
Other
Total

－ 20 －

325
54
108
0
191
8
689

March 1, 2007 – February 29, 2008-----------March 1, 2006 - February 28, 2007
3.Impairment losses
During the fiscal year ended February 28, 2007, theGroup recognized impairment losses on the following
group assets(1) Assets for which impairment losses recorded
Place

Usage

Type

AmountSoftware¥273 million

Chiyoda-ku,

Other

Tokyo

businesses

Chiyoda-ku,

OtherTools &

Tokyo

businesses

equipment¥4 million(2) Details of recognition of impairment losses
For certain businesses in ‘other businesses’ where theinitially expected business has been cancelled orsuspended and there is no future use for the asset,
impairment losses have been recognized.
(3) Method of grouping assets
According to the Group’s application of accounting for
impaired assets, the minimum cash flow generating
unit is mainly a store. For unutilized assets, theindividual assets are grouped.
(4) Method for calculating recoverable value
The group’s recoverable value is calculated based on
useful value with future cash flows discounted at
3.15%.

－ 21 －

Changes to shareholders’ equity and other items
Consolidated fiscal year March 1, 2007 to February 29, 2008
1. Number and types of shares issued as of fiscal year ended February 29, 2008
Number of sharesat end of previous
fiscal year

(Thousands of shares)

Increase

Decrease

Number of shares at
end of current fiscal
year

Shares outstanding
Ordinary shares

10,688－

10,688－－

10,688

909

200

17

1,091

909

200

17

1,091

Total

10,688

Ordinary shares1,2
Total

－

Treasury stock(Note) 1. The increase of 200,000 in ordinary shares of treasury stock results form a market purchase authorized by a decisionby the board of directors.
2. The 17,000 decrease in ordinary shares of treasury stock is a result of stock options exercised.
2.

Information on new share warrants at end of fiscal year ended February 29, 2008
(Millions of yen)Segment

Breakdown of new share warrants

Balance at endof fiscal year

Consolidated
subsidiaries

Stock options as new share warrants

4

Total

4

3. Items related to dividends(1) Dividend payments
Total dividends Dividend perType of shares (Millions of yen)share (yen)Resolution

Date of record

Effective date

May 23, 2007
Regular shareholders’ meeting

Ordinaryshares909

93.00

February 28, 2007

May 24, 2007

October 17, 2007
Meeting of the board of directors

Ordinaryshares834

87.00

August 31, 2007

November 13, 2007

(2) Of dividends for which the record date is in the current fiscal year, those for which the effective date is in the following fiscal
year.
Resolution
May 28, 2008
Regular shareholders’ meeting

Total dividends
Type of shares (Millions of yen)
Ordinaryshares

Source ofcapitalRetainedearnings

834－ 22 －

Dividend per
Date of record
share (yen)87.00

February29, 2008

Effective date
May 29, 2008

Consolidated fiscal year March 1, 2006 to February 28, 2007
1. Number and types of shares issued as of fiscal year ended February 28, 2007
Number of shares at end of
previous fiscal year

(Thousands of shares)

Increase

Decrease

Number of shares at endof current fiscal year

Shares outstanding
Ordinary shares
Total

10,688－－

10,688

10,688－－

10,688

823

143

58

909

823

143

58

909

Treasury stock
Ordinary shares1,2
Total(Note) 1. The increase of 143,000 in ordinary shares of treasury stock results form a market purchase authorized by a decisionby the board of directors.
2. The 58,000 decrease in ordinary shares of treasury stock is a result of stock options exercised.
1.

Information on new share warrants at end of fiscal year ended February 28, 2007
(Millions of yen)Segment

Breakdown of new share warrants

Consolidated
subsidiaries

Stock options as new share warrants

Balance at end of fiscal year
1

Total

1

3. Items related to dividends(1) Dividend payments
Total dividends
Type of shares (Millions of yen)

Resolution
May 24, 2006
Regular shareholders’ meeting
October 17, 2006
Meeting of the board of directors

OrdinarysharesOrdinarysharesDividend pershare (yen)Date of record

Effective date

818

83.00

February 28, 2006

May 25, 2006

789

81.00

August 31, 2006

November 14, 2006

(2) Of dividends for which the record date is in the current fiscal year, those for which the effective date is in the following fiscal
year.
Resolution
May 23, 2007
Regular shareholders’ meeting

Total dividends
Type of shares (Millions of yen)
Ordinaryshares

Source ofcapitalRetainedearnings909－ 23 －

Dividend per
Date of record
share (yen)
93.00

February28, 2007

Effective date
May 24, 2007

(Millions of yen)

Notes related to the Consolidated Statements of Cash Flows
March 1, 2007 – February 29, 2008
1.

Balance of cash and cash equivalents and other items at
end of term
Cash and deposits account
3,639
Cash and cash equivalents
3,639

March 1, 2006 - February 28, 2007
2.

Balance of cash and cash equivalents and other items
at end of term
Cash and deposits account
4,855
Cash and cash equivalents
4,855

Lease, marketable securities, derivative transactions, stock options, etc., tax accounting, transactions with relatedparties and items related to business integration
These items are of limited importance and have therefore been omitted.
Retirement benefits
Not applicable－ 24 －

4. Segment Information
Segment information by business type
Fiscal year ended February 29, 2008 (March 1, 2007 to February 29, 2008)
Trading of

Financing

Other

used cars

businessbusiness(Millions of yen)

Elimination/

Total

Consolidated

All company

Sales(1) Sales to external

178,455

4,503

7,632

190,592－

190,592

987

623

2,908

4,518

(4,518)－179,443

5,126

10,540

195,111(4,518)

190,592

Operating expenses

168,048

4,980

7,840

180,869

1,024

181,893

Operating income

11,394146

2,700

14,241(5,543)

8,698

Assets28,78012,8771,880

43,537

6,889

50,426

Depreciation

1,497

85

251

1,835

507

2,342

Capital expenditure

1,792

453

29

2,275

407

2,682

customers(2) Inter-segmental sales ortransfers
Total

Assets, Depreciation andCapital ExpenditureNotes:
1. Method of business classification: Businesses have been classified according to the classification used in calculating sales.
2. Names of principal products or services attributable to each business classification:
Business Classification

Principal Product Name or Service Name

Used car sales

Purchase and sales of used automobiles through directly operated stores and the like.

Financing business

Consolidated subsidiary G-One Financial Services Co., Ltd. provides financing services such as autoloans.

Other business

Provision of services for franchises relating to the management of Gulliver, for the sale and purchaseof cars, and stores established for the graphic sales systems.

3. Amount and principal content included in the “Elimination or Total Company” item

Amount of operating expense
which cannot be allocatedPrevious fiscal year

Current fiscal year

5,097

5,543

Amount of assets included in“Eliminations or Total(Millions of yen)
Principal content
Expenses relating to head officeadministration at the parent company
Assets, etc., related to management of

1,904

6,889

Company” item

surplus funds and head officeadministration at the parent company－ 25 －

Segment information by business type
Fiscal year ended February 28, 2007 (March 1, 2006 to February 28, 2007)(Millions of yen)

Trading of

Financingused cars

business

173, 289

2,369

6,507

182,166--

182,166

1,140

423

2,596

4,160

(4,160)--174, 429

2,792

9,104

186,326(4,160)182,166

Operating expenses

161,295

2,486

6,323

170,105937

171,042

Operating income

13,134305

2,780

16,221(5,097)

11,123

Assets31,221

9,643

3,177

44,043

1,904

45,947

Depreciation

1,395

18

378

1,792

559

2,352

Other businessElimination/

Total

Consolidated

All company

Sales(1) Sales to externalcustomers(2) Inter-segmental sales ortransfers
Total

Assets, Depreciation,
Impairment losses andCapital Expenditure

Impairment losses

--

--

278

278

--

278

Capital expenditure

2,562

124

67

2,754

323

3,078

Notes:
1. Method of business classification: Businesses have been classified according to the classification used in calculating sales.
2. Names of principal products or services attributable to each business classification:
Business Classification

Principal Product Name or Service Name

Used car sales

Purchase and sales of used automobiles through directly operated stores and the like.

Financing business

Consolidated subsidiary G-One Financial Services Co., Ltd. provides financing services such as autoloans.

Other business

Provision of services for franchises relating to the management of Gulliver, for the sale and purchaseof cars, and stores established for the graphic sales systems.

3. Amount and principal content included in the “Elimination or Total Company” item
Previous fiscal year

Current fiscal year

Amount of operating
expense which cannot be

3,696

5,097

10,184

1,904

allocated to a segment
Amount of assets includedin “Eliminations or Total(Millions of yen)
Principal content

Expenses relating to head office administration at
the parent company
Expenses related to management of surplus funds

Company” itemand head office administration at the parent
company－ 26 －

Non-Consolidated Balance Sheet(Millions of yen)
As ofFebruary 29, 2008
% of total

ASSETS
Current assets
Cash and deposits............................................
Accounts receivable .........................................
Merchandise.....................................................
Inventory ..........................................................
Funds forwarded ..............................................
Prepaid expenses.............................................
Accrued credit ..................................................
Advances paid..................................................
Temporary loans to related companies ............
Deferred tax assets ..........................................
Others...............................................................
Allowance for doubtful accounts .......................
Total current assets.......................................
Fixed assets
Tangible fixed assets*1
Buildings............................................................
Depreciation.....................................................
Structures ..........................................................
Depreciation.....................................................
Tools, fixtures & equipment ...............................
Depreciation ...................................................
Land ..................................................................
Construction in progress ..................................
Total tangible fixed assets............................
Intangible fixed assets
Goodwill.............................................................
Trademarks .......................................................
Software ...........................................................
Telephone subscription rights............................
Facility rights......................................................
Total intangible fixed assets ..........................
Investments and other assets
Investment securities .........................................
Shares of affiliates .............................................
Investments .......................................................
Long-term loans.................................................
Long-term staff loans .....................................
Long-term loans to affiliates...............................
Defaulted claims, etc .........................................
Long-term prepaid expenses .............................
Deposits and guarantee money.........................
Construction cooperation money .......................
Insurance reserves ............................................
Deferred tax assets ...........................................
Allowance for doubtful accounts ........................
Total investment and other assets ..............
Total fixed assets ..........................................
Total Assets...................................................

As of
February 28, 2007

2,004
5,125
4,001
41
9
396
300
280
-344
96
(7)
12,592% of total

3,337
5,854
2,953
112
4
627
1,098
351
5,373
447
2
(229)
35.6

19,933

49.3

25.7

8,074
(1,467)
1,809
(608)
2,817
(1,500)
327
109
9,561

23.7

5.2

5
9
1,910
63
9
1,998

4.9

98
2,267
0
-0
3,116
19
58
3,035
3,180
79
238
(257)
11,837－ 27 －
22,785

33.5
64.4

96
2,191
0
7
0
--33
120
3,651
2,508
72
270
(33)
8,921
20,48022.1
50.7

35,378100.0

40,414

100.0

8,438
(1,917)
1,805
(731)
2,873
(1,817)
327
124
9,103
91
7
1,673
63
9
1,845

Non-consolidated Balance Sheet

LIABILITIESCurrent liabilities
Accounts payable .........................................................
Short-term borrowing....................................................
Accrued expenses ........................................................
Accrued corporate taxes...............................................
Accrued consumption taxes .........................................
Accrued expenses ........................................................
Advances received .......................................................
Deposits received .........................................................
Reserve for bonuses ....................................................
Reserve for directors’ bonuses ...................................
Accrued expenses for facilities.....................................
Others...........................................................................
Total current liabilities.................................................
Long-term liabilities
Long-term debt .............................................................
Guarantee deposits received........................................
Total long-term liabilities.............................................
Total liabilities ..........................................................
NET ASSETS
Shareholders’ equity
Common stock ............................................................
Capital surplus
Capital reserves ........................................................
Total capital surplus
Accumulated earnings
Profit reserve...............................................................
Other accumulated earnings
Deferred accumulated earnings...............................
Total accumulated earnings ....................................
Treasury stock.............................................................
Total shareholders’ equity........................................
Valuation and translation differences
Valuation difference on other marketable securities....
Total Valuation and translation differences.....................
Total net assets.............................................................

As of
February 29, 2008
% of total
2,217
5,300
1,185
1,122
90
842
266
322
473
63
106
52
12,04334.0

2,953
11,600
1,696
2,590
244
709
178
721
415
73
261
-21,443

53.1

3,100
844
3,944
15,988

11.2
45.2

-869
869
22,313

2.1
55.2

4,157

11.8

4,157

10.3

4,032
4,032

11.4

4,032
4,032

10.0

39

39

21,83061.8

19,406
19,44548.1

19,381(30.2)
54.8(9,540)18,094(23.6)
44.8

7
7
19,389

0.0
0.0
54.8

6
6
18,101

0.0
0.0
44.8

35,378100.0

40,414100.0

21,869(10,678)

Total liabilities and other net assets ...........................

－ 28 －(Millions of yen)
As ofFebruary 28, 2007
% of total

Non-consolidated Statements of Income(Millions of yen)March 1, 2006 to
February 28, 2007

March 1, 2007 to
February 29, 2008
% of total% of total

Sales
Merchandise sales .......................................................
1

160,874

Sales of other goods ...................................................

6,344

Total sales................................................................

167,219

159,401
7,065
100.0

166,466

100.0

Cost of goods soldCost of merchandise soldInventory at start of period ...........................................

2,681

3,034

Purchases during the year ...........................................

129,123

125,799

Total......................................................................

131,805

128,833

Inventory at end of term .............................................

3,628

2,953

2

Other transfers ............................................................

409

18

Net: cost of goods sold ................................................

127,767

125,862

Other operating revenues cost of goods sold ..............

536

663

Total cost of sales of other goods .........................

128,303

126,526

76.0

Gross profit on sales ....................................................

38,91539,940

24.0

76.7

Sales, general and administrative expenses
Advertising ...................................................................

5,381

4,532

Directors’ remuneration................................................

282

281

Salaries ........................................................................

7,452

7,450

Bonuses .......................................................................

1,215

1,242

Addition to reserve for directors’ bonuses ....................

63

73

Addition to reserve for bonuses ..................................

473

415

Stautory welfare expenses...........................................

1,103

1,136

Contracting fees...........................................................

2,089

2,031

Travel and transportation .............................................

966

960

Communication expense .............................................

748

726

Consumables ...............................................................

419

375

Depreciation.................................................................

2,219

2,318

Rent ...........................................................................

228

322

Land rent......................................................................
Transfer to allowance for doubtful
accounts.....................................................................

4,475

4,150

--

0

Other............................................................................

3,337

Total sales, general and administrative expenses....

30,45618.2

29,224

17.6

Operating income.........................................................

8,459

5.1

10,715

6.4

3,204

Non-operating income
Interest income3 ...........................................................

70

15

Dividends income3 .......................................................

11

8

Commissions income...................................................

4

7

Interest on securities....................................................

--

0Compensation received ...............................................

15--

Other............................................................................

255

29

Total non-operating expenses ..................................
Other............................................................................

356－ 29 －

0.2

61

0.1

Non-operating expenses
Interest expense..........................................................
Addition to allowance for doubtful ...............................
accounts ..................................................................
Cancellation penalties .................................................

98

46

18

181

--

3

Other ...........................................................................

84

Total non-operating expenses .................................

201

0.1

268

0.2

Ordinary income..........................................................

8,614

5.2

10,509

6.3

37

Extraordinary income
Gain from sale of shares in affiliates ...........................

--

520

Gain from cancellation of insurance policy ..................

20--

Total extraordinary income ......................................

20

0.0

520

0.3

Extraordinary loss
4

Losses on disposal of fixed assets ............................

326

689

Impairment losses ......................................................

--

278

Evaluation loss on shares in affiliate companies .........

572

9

Legal settlements. .......................................................

--

40

5

Total extraordinary expenses ..................................

898

0.5

1,018

0.6

Net income before taxes .............................................
Corporate income tax, inhabitants tax and enterprisetax............................................................................
Corporate tax adjustments ..........................................

7,735

4.7

10,010

6.0

Total taxes ...............................................................

3,442

2.0

4,365

2.6

Net income.................................................................

4,293

2.7

5,645

3.4

3,307

4,486

135

(121)

－ 30 －

(3) Changes to shareholders’ equity
Changes to shareholders’ equity for the fiscal year ended March 1, 2007 to February 29, 2008 (Millions of yen)
Shareholders’ equity
Capital surplus

Accumulated earnings
Other accumulated

CapitalCapital

Total capital

Profitearnings

reserves

surplusreserve

Deferred profit

Total

Treasury

accumulated

stock

earnings

reserve
Balance as of February 28, 2007

4,157

4,032

4,032

39

(9,540)Total
shareholders’equity19,406

19,44518,094(1,744)(1,744)(1,744)

4,293

4,293

4,293

Change during the period
Surplus dividend
Net income
Acquisition of treasury stock
Disposal of treasury stock
Changes to items other thanshareholders’ equity during the period
Total change during the period
Balance as of February 29, 2008

(126)

182

56

--

--

--

--

--

--

--

--

--

--

--

--

2,423

2,423

(1,137)

1,286

4,157

4,032

4,032

39

21,83021,869(10,678)

19,381

Valuation and translation differences
Valuation differences onother marketable

Total valuation andTotal net assets

translation differences

securities
6

6

18,101

Change during the period
Surplus dividend(1,744)

Net income

4,293

Acquisition of treasury stock(1,320)

Disposal of treasury stock
Changes to items other than shareholders’

56
1

1

1

Total change during the period

1

1

1,287

Balance as of February 29, 2008

7

7

19,389equity during the period(1,320)(126)(Millions of yen)

Balance as of February 28, 2007

(1,320)－ 31 －

Changes to shareholders’ equity for the fiscal year ended March 1, 2006 to February 28, 2007

(Millions of yen)

Shareholders’ equity
Capital surplus

Accumulated earnings
Other

Capital

Total

CapitalProfitcapitalreserves

surplusreserve

Total

accumulated

Total

earnings

accumulated

Deferred profit

earnings

Treasury stock

shareholders’equityreserve
Balance as of February 28, 2006

4,157

4,032

4,032

39

15,866

15,905(8,067)

16,027(1,608)(1,608)(1,608)

(73)

(73)

(73)

5,645

5,645

5,645

Change during the period
Surplus dividend
Bonuses to directors through profit
appropriation
Net income
Acquisition of treasury stock
Disposal of treasury stock
Changes to items other thanshareholders’ equity during the period
Total change during the period
Balance as of February 28, 2007

(423)

606

183

--

--

--

--

--

--

--

--

--

--

--

--

3,539

3,539

(1,472)

2,067

4,157

4,032

4,032

39

19,406

19,445(9,540)18,094

Valuation and translation differences
Valuation differences onother marketable

Total valuation andTotal net assets

translation differences

securities

67

67

16,094

Change during the period(1,608)

Surplus dividend
Bonuses to directors through profit(73)

appropriation
Net income

5,645

Acquisition of treasury stock(2,079)

Disposal of treasury stock

183

Changes to items other than shareholders’

(60)

(60)

(60)

Total change during the period

(60)

(60)

2,006

Balance as of February 28, 2007

6

6

18,101equity during the period(2,079)(423)(Millions of yen)

Balance as of February 28, 2006

(2,079)－ 32 －

Material Items Forming the Basis for the Preparationof the Non-Consolidated Financial Statements
Item
1. Valuation

March 1, 2007 – February 29, 2008
(1) Bonds intended to be held to maturity.
As at rightcriteria andMarch 1, 2006 – February 28, 2007
(1) Bonds intended to be held to maturity.
Amortizing cost method (straight-line method)

valuation methods
for marketablesecurities(2) Shares of subsidiaries(2) Shares of subsidiaries
As at rightThe cost method using the moving average method(3) Other securities(3) Other securitiesThose with market value:Those with market value:

As at rightMarket value method based on market value as of thefinancial closing date (valuation gains or losses aretaken directly into net assets and the cost of sales
calculated using the moving average method)Those without market value:Those without market value:

As at right
2. Basis forvaluation of

Cost method using the moving average method(1) Merchandise(1) Merchandise
Vehicles: As at right

Vehicles:Other: As at right

Other:

Cost method using actual cost method

inventory andvaluation method

First in first out method applied(2) Stored goods: As at right(2) Stored goods
Final cost method applied

3. Depreciation(1) Tangible Fixed Assets

method for fixed(1) Tangible Fixed Assets

As at rightDeclining Balance Method is applied. However, forassetsbuildings (excluding attached equipment) acquiredsince April 1, 1998, the StraightLine Method has been applied. The useful lives are as
follows:
Buildings and Structures: 15 – 20 years(2) Intangible Fixed Assets

Vehicles: 2-6 years
2) Intangible Fixed Assets

As at right

The Straight Line Method is applied. However, withrespect to software for internal use, the Straight Line

(3) Long Term Prepaid Expenses

Method based on useful lives for internal use (5 years)

As at righthas been applied.
3) Long-term prepaid expenses
The Straight Line Method is applied

4. Treatment ofDeferred assets

Share issue expenses:

Share issue expenses:
As at rightExpensed in their entirety at time of expenditure－ 33 －

Item
5. Criteria for

March 1, 2007 – February 29, 2008(i) Reserve for Doubtful Accounts

recording material

March 1, 2006 – February 28, 2007(i) Reserve for Doubtful Accounts

As at right

To prepare for the losses occurring from bad debts,

reserves

with respect to general claims the actual bad debt toloan rate is applied. Specific claims, such as thosewhere there are concerns on the probability ofrecovery, are assessed on an individual basis andestimated unrecoverable amounts are recorded.
(ii) Reserve for Bonuses
To prepare for the payment of bonuses to employees,
amounts are recorded based on the estimated payment(ii) Reserve for Bonuses

amount.
As at right(iii) Bonuses for directors
Amount based on forecasted provisional amount n(iii) Reserve for Directors’ Bonuses

preparation for payment of bonuses to directors.

As at right
6. Treatment of

As at right

Finance leases other than those lease assets whose title ismaterial lease

deemed to pass to the lessee have been accounted for intransactions

accordance with methods applied to normal lease

7. Other material
items in the
preparation of the
non-consolidated
financial accounts

1. Accounting Treatment of Consumption Tax:
Tax Exclusion Method is applied in the accounting
treatment of consumption tax－ 34 －

transactions
Accounting Treatment of Consumption Tax:
As at left

Changes to Accounting Treatment
March 1, 2007 – February 29 2008――――――March 1, 2006 – February 28, 2007
Accounting standards relating to impairment losses on fixed
assets
As of the fiscal year ended February 28, 2007 the ‘Statement
Regarding the Establishment of Accounting Policies for Impairment
Losses on Fixed Assets’ (Business Accounting Council, August 9,2002) and ‘Guidelines for the Application of Accounting Policies for
Impairment Losses on Fixed Assets (Guideline for Application ofBusiness Accounting Policies, Article 6; Business Accounting Council,
October 31, 2003) have been applied as accounting standards
relating to impairment losses.
As a result of this change, and in comparison to previous accounting
methods, there is a ¥278 million decrease in net income before taxes.

――――――

Accounting standards relating to presentation of net assets onbalance sheets
From the fiscal year ended February 28, 2007, the ‘Statement
Regarding the Presentation of Net Assets on the Balance Sheet’(Business Accounting Council, December 9, 2005, Article No. 5) and‘’Guidelines for the Application of Accounting Policies for the
Presentation of Net Assets on the Balance Sheet’ (Guidelines for the
Application of Business Accounting Polices, Article 8; BusinessAccounting Council, December 9, 2005) have been applied. The
equivalent amount previously recorded as ‘Capital’ is ¥18,101 million.
Following changes to the regulations on financial statements, net
assets on the balance sheet have been recorded in accordance withthe revised regulations.

――――――

From the fiscal year ended February 28, 2007, the ‘AccountingStandard Regarding Directors’ Bonuses’ (Business Accounting Council,
November 29, 2005, Article No. 4) has been applied. As a result,ordinary income and net income before adjustment for income taxes
have each decreased ¥73 million.

Changes to the depreciation method of tangible fixed assets
From the period of the fiscal year ended February 29, 2008, in
accordance with the revision of Corporation Tax Law (Law
Concerning the Partial Revision of Income Tax No. 6, issued on
March 30, 2007 and Government Ordinance Concerning thePartial Revision of Corporation Tax Law Order No. 83, issued on
March 30, 2007), the method of depreciation of tangible fixed
assets acquired after April 1, 2007 has been revised. The effectsof this change on operating income, ordinary income or net
income before adjustment for income taxes is immaterial.

――――――

Accounting standards relating to directors’ bonuses

Changes to Presentation Method
March 1, 2007 – February 29, 2008----------------------March 1, 2006 – February 28, 2007
Fixed assets
The item referring to goodwill has changed from the term trading
rights to goodwill.

－ 35 －

Notes to Balance Sheet
February 29, 2008

February 28, 2007

1. Additional assets and liabilities of affiliate companies:

1. Additional assets and liabilities of affiliate companies:(Millions of yen)Accounts receivable

173

Accrued credit

13

Trade accounts payable274

Accrued expenses

148

Advances received

3(Millions of yen)Accrued credit

2. Upper credit limit amount and lending balance
To ensure the efficient procurement and management offunds, amounts are lent to subsidiaries and affiliate companies
within the Group. The upper credit limit and lending balance
are as follows:(Millions of yen)
Upper credit limit

11,200Lending balance

3,116

Difference

8,083

Funds are provided based on the financial position and cash
position of each company and in the amounts may not beprovided in full.
3.

Contingent liabilities
Debt guarantees
Guarantor
G-One Financial
Services
Total(Millions of yen)AmountComments

5,000

Debt

5,000

--

－ 36 －

449

Notes to Statements of Income(Millions of yen)March 1, 2007– February 29, 2008

March 1, 2006 – February 28, 2007

1. Breakdown of other operating revenues is as follows:

1. Breakdown of other operating revenues is as follows:

Membership fee revenue:

Membership fee revenue:

56

161

1,627

Royalty revenue

Other

4,660

Other

4,865

Total

6,344

Total

7,065

Royalty revenue

2,038

2. Other transfers break down as follows:

2. Other transfers break down as follows:
Merchandise

409

Merchandise

18

Total

409

Total

18

3. Transactions with affiliate companies is as follows:

3. Transactions with affiliate companies is as follows:
Interest received

67

Interest received

15

Dividends received

6

Dividends received

6

Total

74

Gain from disposal ofshares of affiliatecompany

520

Total

542

4. Breakdown of losses from disposal of fixed assets is as

4. Breakdown of losses from disposal of fixed assets is asfollows:

Building

266
59

Building

162

Structures

Structures

59

Tools, fixtures andTools, fixtures andequipment

54

equipment

21

Software108

Software24

Long-term prepaid

Long-term prepaid

expenses0

expenses0

Restoration expenses

Restoration expenses

57

Other

8

Other

0

Total

689

Total

326

－ 37 －

191

follows:

5.

------------------

5.

Impairment losses
During the fiscal year ended February 28, 2007, the Group
recognized impairment losses on the following group assets(1) Assets for which impairment losses recorded
Place

Usage

Type

AmountSoftware273

Chiyoda-ku,

Other

Tokyo

businesses

Chiyoda-ku,

OtherTools &

Tokyo

businesses

equipment

4(2) Details of recognition of impairment losses
For certain businesses in ‘other businesses’ where the initially
expected business has been cancelled or suspended and there isno future use for the asset, impairment losses have beenrecognized.
(3) Method of grouping assets
According to our application of accounting for impaired assets, theminimum cash flow generating unit is mainly a store. For
unutilized assets, the individual assets are grouped.
(4) Method for calculating recoverable value
The recoverable amount is calculated based on the useful value
using estimates of future cash flows.

－ 38 －

Changes to shareholders’ equity and other items
Non-Consolidated fiscal year March 1, 2007 to February 29, 2008
1. Number and types of shares issued as of fiscal year ended February 28, 2007
Number of sharesat end of previous
fiscal year
Ordinary shares
Total

Increase(Thousands of shares)

Decrease

Number of shares at endof current fiscal year

909

200

17

909

909

200

17

909

(Note) 1. The increase of 200,000 in ordinary shares of treasury stock results form a market purchase authorized by a decisionby the board of directors.
2. The 17,000 decrease in ordinary shares of treasury stock is a result of stock options exercised.
Non-Consolidated fiscal year March 1, 2006 to February 28, 2007
1. Number and types of shares issued as of fiscal year ended February 28, 2007
Number of sharesat end of previous
fiscal year
Ordinary shares
Total

Increase(Thousands of shares)

Decrease

Number of shares at endof current fiscal year

823

143

58

909

823

143

58

909

(Note) 1. The increase of 143,000 in ordinary shares of treasury stock results form a market purchase authorized by a decisionby the board of directors.
2. The 58,000 decrease in ordinary shares of treasury stock is a result of stock options exercised.
Leases, marketable securities and tax accounting related items
These items are of limited importance and have therefore been omitted.

－ 39 －