Gulliver International Co., Ltd.

Consolidated Results
First Quarter of the Fiscal Year Ending February 28, 2006

This document has been translated from the original Japanese as a guide for non-Japanese investors. It
contains forward-looking statements based on a number of assumptions and beliefs made bymanagement 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 (Consolidated)
First quarter results for the fiscal year ending February 28, 2006

Gulliver International Co., Ltd.

July 11, 2005
st

Stock Code: 7599
http://www.glv.co.jp/
President: Kenichi Hatori

Listed exchanges: Tokyo (1 Section)
Inquiries: Senior Executive Vice President: Ikuo Murata
Telephone: +81 3 5208-5503

1. Notes to the preparation of these financial statements
i. Adoption of simplified accounting treatments: Partial use of the simple method
ii. Differences in accounting treatments applied compared to previous consolidated fiscal year: Noneiii. Changes in the scope of consolidation and companies accounted for by the equity method compared to previous consolidated fiscal year: None

2. First quarter (March 1, 2005 to May 31, 2005) consolidated financial results for the fiscal year ending February 28, 2006
1) Consolidated Operating Results

Millions of yen, rounded down

Three months ended
May 31, 2005

Three months ended
May 31, 2004(% change)

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

43,763
2,205
2,207
1,134
113.22111.72

Fiscal Year ended
February 28, 2005(% change)

38.7
11.9
11.7
15.2
---

31,544
1,970
1,975
983
97.17
94.34

-------(% change)

156,696
10,22910,2195,652
548.86537.88

28.5
33.7
32.7
39.5
---

Note: Percentage figures for sales, operating income, etc. represent changes compared to the comparable period of the previous fiscal year.

2) Financial Position (consolidated)

Millions of yen, rounded down

As of May 31, 2005
Total assets......................................................
Shareholders’ equity ........................................
Equity ratio (%).................................................
Shareholders’ equity per share (¥) ...................

As of May 31, 2004

35,791
16,25045.4%¥1,619.92
Three months ended
May 31, 2005

As of February 28, 2005

26,44015,84859.9%¥1,561.87
Three months ended
May 31, 2004

34,52916,14346.7%¥1,603.84
Fiscal Year ended
February 28, 2005

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 ....

119
(1,597)
2,075
4,728

892
(1,001)
(421)
8,094

2,724
(5,791)(1,427)4,130

3. Forecasts for the fiscal year ending February 28, 2006 (March 1, 2005 to February 28, 2006)
Millions of yen

InterimSales ...................................................................................
Ordinary income..................................................................
Net Income..........................................................................
Earnings per share (¥).........................................................

79,600
4,500
2,500
--

FY ending February 28, 2006
179,600
11,8006,550654.53

Please refer to subsequent pages of this report for further information regarding these results and forecasts.

Forecasts and forward-looking statements in this document are based on a number of assumptions and beliefs made bymanagement in light of information currently available. Actual financial results may differ materially depending on a number offactors, including economic conditions, legislative and regulatory developments, delay in new product or service launches, andpricing and product initiatives of competitors.
1

Operating Results and Financial Position
1. CONSOLIDATED OPERATING RESULTS
Compared to the end of the previous fiscal year the number of directly-managed Gulliver storesthat handle the purchase and sale of cars (including home-visit purchase outlets) increased byfour to 252 stores, franchise store numbers declined by eight to 241, thus the total number ofstores declined by four to 493. New directly-owned stores were opened and/or relocated and as
a result of an increase in the average number of customers per directly-owned store the numberof cars purchased increased. Despite a decline in the number of franchise stores the number ofcars handled per franchise store increased. The increase in the number of customers per store ispartly the result of a rapid increase in customer awareness of the specialist car repurchasemarket as well as our active advertising and PR initiatives featuring the New York Yankees
Japanese baseball star Hideki Matsui.
We are strengthening staff education, particularly for staff employed in directly-managed stores.
In April 2005 we employed 149 new graduates and along with mid-career hires we are actively
increasing employment along with the growth in store numbers. In addition to rapidly strengthen
our business potential we are moving to enhance our strengths in sales and in management
through a continued focus on a number of training programs including on-the job training.
On average a car bought by a Gulliver store is sold within 7-10 days via one of three sales
routes: The Japan Nationwide Auction; a screen image sales system; or real time auction to used
car dealers via the internet (GAO！Auction) and sales volume through each route are strong.
Consolidated subsidiary G-Trading Co., Ltd. (Listed on JASDAQ in November 2004) handles
used trucks, buses and specialized vehicles and the number of vehicles handled by its 8 outlets
is growing strongly. Gulliver’s other two consolidated subsidiaries are the financial services
company G-One Financial Services Co., Ltd. (name changed from E-Investment Co., Ltd. in
October 2004) and Gulliver Europe Ltd. whose role is to diversify risk arising in our futurebusiness development. Our two non-consolidated subsidiaries are Hucobo Co., Ltd. (establishedin June 2004), which is mainly involved in the transportation of automobiles, and GULLIVER
USA, INC. (established in November 2004), which is developing business in the purchase andsale of used cars in the U.S.
As a result of the above factors in the first quarter of the current consolidated fiscal period,
consolidated sales were ¥43,763 million, an increase of ¥12,219 million (38.7 %) compared to
the first quarter of the previous fiscal year, operating income was ¥2,205 million, up ¥235 million(11.9%), ordinary income was ¥2,207 million, up ¥231 million（11.7%）and net income was¥1,134 million, an increase of ¥150 million（15.2%）compared to the first quarter of the previous
fiscal year.

22. FINANCIAL POSITION
Total assets increased by ¥1,262 million and shareholders’ funds increased by ¥106 million during
the first quarter compared to the end of the previous fiscal year.

Cash flows
During the first quarter of the fiscal year cash flow from operating activities and from financing
activities were positive but cash flows from investing activities were negative. Overall, cash andcash equivalents increased by ¥597 million during the quarter to ¥4,728 million.
Cash flow from operating activities: In the first quarter there was a net positive cash flow fromoperating activities of ¥119 million, mainly as a result of income from the purchase and sale ofcars.
Cash flow from investing activities: In the first quarter cash flow from investing activities was
minus ¥1,597 million, mainly as a result of payments related to the opening of new
directly-managed stores.
Cash flow from financing activities: Cash flow from financing activities in the first quarter was a
net positive ¥2,075 million, mainly as a result of an increase in borrowings.

BUSINESS RESULTS FORECAST FOR THE FISCAL YEAR (March 1, 2005 – February 28, 2006)
As regards the business results for the first quarter we are making good progress towards our previously announced(April 19, 2005) forecast for the fiscal year.

3Consolidated Balance Sheets
As of May 31,
2005
ASSETSAs of February 28,
2005% of total

Millions of yen, rounded down
As of May 31,
2004% of total% of total

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

4,728

4,130

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

7,994

10,015Marketable securities ............................

----

Inventory ...............................................

6,058

4,555

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

529

549

8,094
3,034
238
3,698

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

1,197

1,813

524
1,405

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

(57)

(84)

(111)

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

21,04458.8

20,98060.8

16,884

63.9

Fixed assets
Tangible fixed assets
Buildings and structures........................

5,441

5,340

3,619

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

1,197

1,099

722

Land ......................................................

327

327

327

Other .....................................................
Total tangible fixed assets

521
7,486

20.9

260
7,026

81
20.4

4,750

18.0

Intangible fixed assets
Software................................................

2,395

2,187

1,444

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

101

103

105

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

2,497

7.0

2,290

6.6

1,549

5.8

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

257

373

250

Shares in affiliates..................................

241

224

--

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

2,634

2,185

1,903

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

1,226

960

570

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

142

135

189

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

581

668

614

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

(320)

Total investment and other assets .......

4,763

13.3

4,231

12.2

3,254

12.3

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

14,74741.2

13,548

39.2

9,555

36.1

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

35,791

100.0

34,529100.0

26,440

100.0

(314)

(273)

4

Consolidated Balance Sheets
Millions of yen, rounded down
As of May 31,
2005
LIABILITIESAs of February 28,
2005% of total

As of May 31,
2004% of total% of total

Current liabilities
Accounts payable ...................................

4,610

5,734

2,792

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

6,950

3,950

750

Accrued expenses ..................................

2,616

2,272

1,955

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

1,053

2,677

1,248

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

770

767

813

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

813

519

786

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

1,735

1,513

1,423

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

18,55051.8

17,435

50.5

9,768

36.9

Long-term liabilities
Guarantee deposits received..................

643

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

643

1.8

621
621

1.8

647

647
2.5

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

19,193

53.6

18,05652.3

10,415

39.4

348

1.0

328

1.0

175

0.7

4,157

11.6

4,139

12.0

3,956

15.0

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

4,032

11.3

4,014

11.6

3,886

14.7

Retained earnings .................................
Unrealized gains and losses in othersecurities.............................................
Treasury stock ........................................

13,63938.1

13,668

39.6

9,870

37.3

1
(5,580)0.0(15.6)

10(5,689)0.0(16.5)

12(1,877)0.0(7.1)

Total capital........................................

16,25045.4

16,14346.7

15,848

59.9

Total Liabilities, Minority Interests
and Shareholders’ Equity.......................

35,791

100.0

34,529100.0

26,440100.0

MINORITY INTERESTS
Minority interests ....................................
CAPITAL
Paid-in capital .........................................

5

Consolidated Statements of Income
Millions of yen, rounded down
March 1, 2005 to May
31, 2005

March 1, 2004 to May
31, 2004

March 1, 2004 to February
28, 2005% of total% of total% of total

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

43,763100.0

31,544100.0

156,696

100.0

Cost of goods sold .......................................

33,31776.1

23,75975.3

118,089

75.4

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

10,445

23.9

7,785

24.7

38,607

24.6

Sales, general & administrative expenses ...

8,240

18.9

5,814

18.5

28,377

18.1

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

2,205

5.0

1,970

6.2

10,2296.5

Non-operating income..................................

21

0.0

25

0.1

53

0.0

Non-operating expenses..............................

19

0.0

19

0.0

64

0.0

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

2,207

5.0

1,975

6.3

10,219

6.5

Extraordinary income ...................................

38

0.1

--

--

90

0.1

Extraordinary losses ....................................

78

0.2

1

0.0

251

0.2

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

2,167

4.9

1,973

6.3

10,058

6.4

Income tax, inhabitants tax and enterprise
tax ............................................................

994

2.3

1,077

3.4

4,402

2.8

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

19

0.0

(111)

(0.3)

(81)

(0.0)

Minority interest ...........................................

19

0.0

22

0.1

84

0.0

Net income for the period...................

1,134

2.6

983

3.1

5,652

3.6

6

Consolidated Statements of Cash flows
Millions of yen
March 1, 2004
to May 31, 2004

March 1, 2004
to February 28,
2005

2,167
414
293
(21)
(0)
6
--78
(15)
(94)
2,149
(1,490)
(984)
(87)
361
2,776
0
(6)
(2,650)
119

1,973
235
405
23
(3)
2
-(0)
1
-(83)
2,300
(1,724)
60
(204)
262
3,251
4
(2)
(2,360)892

10,058
1,383
139
37
(5)
12
7
-247
-(83)
(4,757)(2,559)
2,657
(200)
54
6,990
6
(14)
(4,257)
2,724

--115
(642)
0
(446)
(17)
(293)
355
(19)
(650)
-(0)
(1,597)---(403)
0
(301)
-(4)
36
(18)
(310)
-(0)
(1,001)228(100)-(3,565)
0(1,322)
(224)
(105)
118
(14)
(832)
26
(0)
(5,791)

3,000
--40
35
(1,000)-2,075
597
4,130
4,728

200
(0)
-132
3
(757)
-(421)
(530)
8,624
8,094

3,400
-(4,512)491
367(1,341)167(1,427)(4,494)
8,624
4,130

March 1, 2005 to
May 31, 2005
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 ...............................................................................
New share issuance expenses ..................................................
Gain on sale of fixed assets .......................................................
Loss on disposal of fixed assets ................................................
Gain on sale of investment securities ........................................
Payment of directors’ bonuses...................................................
Increase (decrease) in accounts receivable...............................
Increase (decrease) in inventory................................................
Increase (decrease) in accounts payable ..................................
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 marketable securities .............................
Payments for purchase of investment of securities....................
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....................
Acquisition of shares of affiliates................................................
Amounts lent ..............................................................................
Proceeds from repayment of loans ............................................
Increase (decrease) in short-term borrowing .............................
Deposit and guarantee payments ..............................................
Proceeds from repayment of investments..................................
Other ..........................................................................................
Cash flow from investing activities .........................................
III. Cash flow from financing activities
Net increase (decrease) in short term borrowings .....................
Payment of installment obligations.............................................
Payments for acquisition of treasury stock.................................
Proceeds from disposal of treasury stock ..................................
Proceeds from issuance of new shares .....................................
Payment of dividends.................................................................
Payments from minority shareholders........................................
Cash flow from financing activities .........................................
IV. (Decrease) increase in cash and cash equivalents ..........
V. Cash and cash equivalents at beginning of period ...........
VI. Cash and cash equivalents at end of period .....................

7

Additional Information
From the first quarter of the current fiscal year the proportionate amounts of corporation tax onvalue added and capital have been included in Selling, General and Administrative expenses.
This follows the promulgation from March 31, 2004 of the Partial Revisions to the Law
Concerning Regional Tax.1 As a result Selling, General and Administration expenses increasedby ¥28 million and operating income, ordinary income and income before taxes, etc. eachdecreased by ¥28 million.

Segment Information
Segment information by business typeFirst quarter of fiscal year ending February 28, 2006 (March 1, 2005 to May 31, 2005)
Millions of yen

Trading ofused cars

Franchisebusiness

Elimination/
All company

Total

Consolidated

Sales(1) Sales to externalcustomers(2) Inter-segmental sales
or transfers
Total
Operating expenses
Operating income

41,6502,113

43,763043,763

--

--

--

--

--

41,65039,211
2,438

2,113
1,375
738

43,76340,587
3,176

0
970
(970)

43,46341,5572,205First quarter of fiscal year ended February 28, 2005 (March 1, 2004 to May 31, 2004)
Millions of yen

Trading ofused cars

Franchisebusiness

Elimination/
All company

Total

Consolidated

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

29,4482,094

31,543031,544

--

--

--

--

--

29,44827,662
1,786

2,094
894
1,199

31,54328,557
2,986

0
1,016
(1,016)

31,54429,5731,970

1 (2003 Article 9) For fiscal years commencing on or after April 1, 2004, along with the introduction of the tax

system based on business size ‘Treatment of the tax based on business size portion of corporate taxes in
the Statements of Income’ (February 13, 2004, Corporate Accounting Standards Committee Practice Report
12).

8

Fiscal year ending February 28, 2005 (March 1, 2004 to February 28, 2005)
Millions of yen

Trading ofused cars

Franchisebusiness

Elimination/
All company

Total

Consolidated

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

148,1318,564

156,696--

156,696

--

--

--

--

--

148,131
135,438
12,693

8,564
7,167
1,396

156,696
142,605
14,090-3,860(3,860)156,696
146,466
10,229Notes:
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
These classifications apply to the fiscal periods March 1, 2005 to May 31, 2005; March 1, 2005 to May
31, 2004; and March 1, 2004 to February 28, 2005.
Business Classification

Used Car Sales

Principal Product Name or Service Name
Purchase and sales of used automobiles through directly operated outlets and thelikeFranchising

Royalties arising out of franchise agreements and fees for the provision of training
etc., and intermediation in buying and selling of used automobiles

3.

Amount and principal content included in the “Elimination or Total Company” item
Millions of yen

March 1, 2005 to

March 1, 2004 to

March 1, 2004 to

May 31, 2005

May 31, 2004

February 28, 2005

Amount of unallocated operating expenses

970

included in elimination or total company item
Principal content

1,016

3,860

Expenses relating to head office administration at the parent
company9

Segment information by geographical location
For the first quarter of the current consolidated fiscal year and for the previous fiscal year
consolidated subsidiaries were located overseas but as over 90% of sales for each segment
were in Japan segment information by geographical location has been omitted.

Overseas sales
For the first quarter of the current consolidated fiscal year and for the previous fiscal year
overseas sales were less than 10% of consolidated sales and therefore have been omitted.

10