Gulliver International Co., Ltd.

Non-consolidated Results
Fiscal 2005
(March 1, 2005 to 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 (Non-consolidated)
Results for the fiscal year ending February 28, 2006

Gulliver International Co., Ltd.

April 18, 2006
st

Stock Code: 7599
Listed exchanges: Tokyo (1 Section)
http://www.glv.co.jp/
Inquiries:
Senior Executive Vice President: Ikuo Murata
President: Kenichi Hatori
Telephone:+81 3 5208-5503
Date of the meeting of the board of directors: April 19, 2006
Existence of interim dividend system: Yes
Scheduled date of payment of interim dividend: May 25, 2006
Date of regular shareholders’ meeting: May 24, 2006
Existence of sharetrading unit system: Yes (one unit = ten shares)
1. Non-consolidated financial results for the fiscal year ended February 28, 2006
1) Non-consolidated Operating Results

Millions of yen, rounded down

Fiscal Year ended
February 28, 2006

Fiscal Year ended
February 28, 2005(% change)

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

169,735
10,143
10,1355,320¥525.75¥520.30
33.8
31.1
5.9

15.0
5.6
5.7
1.1
------(% change)

147,486
9,601
9,584
5,259
¥510.03¥499.92
34.5
35.6
6.5

28.2
33.9
32.5
36.1
------

Notes to the preparation of these financial statements:
1. Average number of shares outstanding during the period: FY ended February 28, 2006 – 9,979,943
FY ended February 28, 2005 – 10,127,471
2. Differences in accounting treatments applied compared to previous consolidated fiscal year: Yes
3. Percentage figures for sales, operating income, ordinary income and net income. represent changes compared to the comparable period of theprevious fiscal year.

2) Dividends

Millions of yen

Fiscal year ended
February 28, 2006
Interim dividend per share...............................
Final dividend per share ..................................
Annual dividend per share...............................
Total dividend payment ...................................
Dividend payout ratio (%) ................................
Dividend to shareholders’ equity ratio (%).......

Fiscal year ended
February 28, 2005
¥79.00¥83.00¥162.00
1,604
30.1
9.9

¥57.50¥100.00¥157.50
1,583
30.0
10.3
Millions of yen, rounded down

3) Financial Position (non-consolidated)
Total assets.....................................................
Shareholders’ equity .......................................
Equity ratio (%)................................................
Shareholders’ equity per share (¥) ..................

As of February 28, 2006

As of February 28, 2005

35,697
16,09445.1
1,631.46

29,285
15,32752.3
1,522.30

Notes:
1. Number of shares outstanding at end of period:
FY ended February 2006: 9,865,317; FY ended February 2005: 10,007,067
2. Number of treasury shares at end of period:
FY ended February 2006: 823,483; FY ended February 2005: 670,133

1

2. Forecasts for the fiscal year ending February 28, 2007 (March 1, 2006 to February 28, 2007)
Millions of yen

Sales ......................................................................................
Ordinary income.....................................................................
Net Income.............................................................................
Final dividend per share (¥)....................................................
Annual dividend per share (¥) ................................................

Interim period ending August 31,
2006
87,100
4,200
2,400
81.00
--

FY ending February 28, 2007
190,000
11,7002,400
81.00
162.00

Forecast earnings per share (full year): 539.26

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.

2

Non-consolidated Balance Sheets
As of February 28, 2006ASSETS

Millions of yen
As of February 28, 2005

% of total% of total

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

2,107

2,378

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

7,235

7,358

Marketable securities.....................................

100

--

Merchandise..................................................

3,229

3,763

Stored goods.................................................

79

78

Advanced payments .....................................

4

14

Pre-paid expenses ........................................

567

875

Accounts due ................................................

570

--

Advances ......................................................

223

112

Temporary loans to related companies.........

2,769

--

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

448

505

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

11

275

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

(98)

(68)

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

17,24948.3

15,293

52.2

Fixed assets
Tangible fixed assets
Buildings ........................................................

5,558

4,049

Structures .......................................................

1,247

1,283

Vehicle transport equipment..........................

--

24

Tools, fixtures & equipment ............................

1,679

1,090

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

327

327

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

409

231

Total tangible fixed assets

9,221

25.8

7,007

23.9

Intangible fixed assets
Business rights..............................................

10

16

Trademarks ...................................................

11

13

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

2,694

2,177

Telephone subscription rights.........................

63

62

Facility use rights............................................

9

9

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

2,789

7.8

2,279

7.8

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

199

373

Shares of affiliates ..........................................

494

475

Investments ....................................................

00Long-term loans..............................................

--

0Long-term staff loans......................................

20Long-term loans to affiliates ...........................

500

710

Defaulted claims, etc. ...................................

367

362

Long-term prepaid expenses..........................

153

95

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

3,011

1,848

Construction cooperation money....................

1,890

960

Insurance reserves .........................................

65

58

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

105

135

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

(352)

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

6,436

18.0

4,705

(315)

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

18,44751.7

13,991

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

35,697100.0

29,285

16.1
3

47.8
100.0

Non-consolidated Balance Sheets
As of February 28,
2006
LIABILITIESMillions of yen, rounded down
As of February 28,
2005% of total% of total

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

3,386

4,203

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

8,000

2,000

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

1,642

1,540

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

1,815

2,507

Accrued consumption tax .......................

414

188

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

848

808

Advances received .................................

335

338

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

451

765

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

513

508

Accrued liability for equipment................

1,598

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

19,007473
53.3

13,336

45.6

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

594

621

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

594

1.7

621

2.1

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

19,602

54.9

13,958

47.7

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

4,157

11.6

4,139

14.1

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

4,032

4,014

CAPITAL

Other capital surplus...............................

----

Gains from disposal of treasury shares ..

----Capital surplus........................................

4,032

11.3

4,014

13.7

Retained earnings
Profit reserve ..........................................

39

39

Unappropriated profit ..............................

15,866

12,813

Total retained earnings ......................

15,90544.5

12,852

43.9

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

67(8,067)0.2(22.6)

10(5,689)0.0(19.4)

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

16,09445.0

15,327

52.3

Total Liabilities and Shareholders’Equity.......................................................

35,697100.0

29,285100.0

Unrealized gains and losses in othersecurities ................................................

4

Non-consolidated Statements of Income
March 1, 2005 to February 28, 2006

Millions of yen

March 1, 2004 to February 28, 2005%%

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

169,735

Sales of merchandise .........................

169,735

139,300

Other operating revenues ...................

8,537

8,186

Inventory at start of period ..................

3,743

1,528

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

125,545

111,180

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

129,288

112,708

Inventory at end of period ..................

3,229

3,763

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

126

125
108,818

100.0

147,486

100.0

Cost of goods sold

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

125,932

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

126,850

74.7

110,361

74.8

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

42,88425.3

37,125

25.2

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

6,210

4,675

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

280

277

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

8,436

7,291

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

1,603

1,255

Provision for bonus reserve ...............

513

508

Statutory welfare expense .................

1,210

988

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

1,910

1,582

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

1,127

1,062

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

1,028

869

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

507

376

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

2,045

1,371

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

469

565

Land rent ...........................................

3,381

2,830

Provision for allowance forbad debt ............................................

40

24

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

3,973

3,843

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

32,74019.3

27,523

18.7

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

10,143

6.0

9,601

6.5

5

Millions of yen
March 1, 2005 to February 28, 2006

March 1, 2004 to February 28, 2005

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

14

4

Dividend income..............................

03

Commission income........................

16

3

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

0

1

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

38

13

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

68

0.0

25

0.0

Non-operating expenses
Interest expense .............................

14--

New share issue expense ...............

0

1

Provision for allowance forbad debt ..........................................

28

11

Cancellation penalties .....................

911

Unrealized losses on investment
partnerships ....................................

2

5

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

22

12

Total

77

0.0

42

0.0

10,135

6.0

9,584

6.5

Ordinary income..............................
Extraordinary income
Gains on sale of fixed assets
Note 3...............................................

3--

Gains from insurance ......................

6--

Gains on sales of investment
securities.........................................

45--

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

--

7

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

54

0.0

7

0.0

Extraordinary loss
Losses on disposal of fixed assets
Note 4...............................................
Losses on cancellation of insurance
contracts .........................................

879

245

121

--

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

--

4

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

1,000

0.6

249

0.2

Net income before taxes ..........................

9,189

5.4

9,342

6.3

Corporate income tax, inhabitants tax
and enterprise tax ....................................

3,820

4,150

Corporate tax adjustments.......................

47

(67)

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

5,320

Profits carried forward from the previous
year..........................................................

11,7188,424Interim dividends......................................

785

583

Losses on disposal of treasury shares.....

387

287

Unappropriated profits at end of period....

15,866

12,813

3.1

5,259

3.5

6

Planned Profit Appropriation
Millions of yen
As of May 24, 2006
Unappropriated profits at end of period

As of May 25, 2005
15,866

12,813

Profits appropriatedDividends

1,000

Directors’ bonuses

73

94(of which, auditors’ bonuses)

(--)

(--)

Total

1,094

Profits carried forward

11,718

Note: These figures are dated as of the general meeting of shareholders.

7Material Items Forming the Basis for the Preparation of the Consolidated Financial
Statements
Item

March 1, 2005 – February 28,

March 1, 2004 – February 28, 2005

2006
1. Valuation
criteria andvaluation methods
for material assets(1) Bonds intended to be held to maturity.
As at right(1) Bonds intended to be held to maturity.
Amortizing cost method (straight-line
method)(2) Shares of subsidiaries
As at right(2) Shares of subsidiaries
The cost method using the moving
average method

3) Other securities
As at right(3) Other securitiesThose with market value:
Market value method based on market
value as of the financial closing date(valuation gains or losses are taken
directly into capital and the cost of sales
calculated using the moving averagemethod)Those without market value:
Cost method using the moving averagemethod

2. Basis forvaluation of
inventory andvaluation method(1) Merchandise(1) Merchandise
As at right

Vehicles:Cost method using actual cost method
Other:(2) Stored goods
As at right

Cost method under first-in, first-out
method(2) Stored goods
Final purchase cost method

3. Fixed asset
depreciation
method1). Tangible fixed assets
As at right2). Intangible Fixed Assets
As at right

4. Treatment ofDeferred assets

1) Tangible Fixed Assets
The Declining Balance Method is applied.
However, for buildings (excluding attachedequipment) acquired since April 1, 1998, theStraight Line Method has been applied. The
useful lives are as follows:
Buildings and structures: 15-20 yrs.
Vehicle and transportation equipment: 2-6 yrs

2) 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 (five years) has been applied.

3). Long-term prepaid expenses
As at right3) Long-term prepaid expenses
Straight line method is applied

New share issue expenses:
As at right

New share issue expenses:
Expensed in their entirety at time of expenditure85. Criteria for
Recording Material
Reserves

6. Treatment ofmaterial Lease
Transactions
7. Other Material
Items in the
Preparation of theConsolidated
Financial Accounts

1) Reserve for Doubtful Accounts
As at right1) Reserve for Doubtful Accounts
To prepare for losses occurring from bad loans,the actual bad loan rate is applied. Specificclaims, such as those where there are concernson the probability for recovery, are assessed on
an individual basis and estimated unrecoverable
amounts are recorded.

2) Reserve for Bonuses
As at right2) Reserve for Bonuses
To prepare for the payment of bonuses to
employees, amounts are recorded based on theestimated payment amount.

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
Accounting Treatment of Consumption Tax:
(1) Tax Exclusion Method is applied in theaccounting treatment of consumption tax.
(2)

Accounting Treatment of Consumption Tax:
1) As at right(2)

9

Changes to Accounting Treatment
March 1, 2005 – February 28 2006

March 1, 2004 – February 28, 2005
(Method of presentation of Gains from Sale ofCourtesy Cars and Procurement Expenses for
Courtesy Cars)
In the previous consolidated fiscal year, the acquisition,
expense and gains on sale of vehicles to be used as
courtesy cars were presented as ‘Gains on Sale ofCourtesy Cars’ in Non-Operating income, but due to thefact that in many cases such cars were sold after use,
and in addition to a change in policy to actively market
the vehicles in the same way as other used vehicles, thenumber of cars sold has been increasing, resulting inincreased materiality. Thus, the amount of the proceedsof such sales has been recorded in Sales while the costof acquisition has been included in Cost of Goods Sold.
In addition the equivalent amounts in respect of courtesy
cars that were previously included under ‘Vehicles andTransportation Equipment’ have been included underinventory from this period. The impact of the change is
not material.

Changes to Presentation Method
March 1, 2005 – February 28, 2006

March 1, 2004 – February 28, 2005

Method of presentation of liquid assets
In the previous fiscal year, ‘Accounts Receivable’ were
presented as ‘Others’ in Liquid Assets. As they have now
increased to more than 1% of assets, they are recorded
separately. Accounts receivable at the end of the previous
fiscal year totaled ¥260 million.
Method of presentation of non-operating expenses
In the previous fiscal year, ‘Interest Expense’ wasincluded as ‘Others’ in Non-operating Expenses. As it has
now increased to over 10% of Non-operating expense, it
is recorded separately. Interest expense in the previous
fiscal year totaled ¥1 million.

Additional Information
March 1, 2005 – February 28, 2006
Treatment of the tax based on business size portion of
corporate taxes in the statements of income
Following the promulgation of ‘Treatment of the tax based on
business size portion of corporate taxes in the Statements ofIncome’ (February 13, 2004, Corporate AccountingStandards Committee Practice Report 12), from thisaccounting period the proportionate amounts of corporation
tax on value added and capital have been included in
Selling, General and Administrative expenses. As a result
Selling, General and Administration expenses increased by¥122 million and operating income, ordinary income andincome before taxes, etc. each decreased by ¥122 million.

March 1, 2004 – February 28, 200510

Notes to Balance Sheet
February 28, 2006
*1 Total number ofshares approved to
be issued by theCompany
Total number of shares
outstanding*2 Number of treasury
sharesFebruary 28, 2005

Ordinary shares

40,000,000

Ordinary shares

10,688,280

Ordinary shares

823,483*1 Total number ofshares approved to
be issued by theCompany
Total number of shares
outstanding*2 Number of treasury
sharesOrdinary shares

40,000,000

Ordinary shares

10,677,200

Ordinary shares

670,133

Notes to Statement of Income
Millions of yen (rounded down)
March 1, 2005 – February 28, 2006

March 1, 2004 – February 28, 2005

1. Breakdown of other operating revenues is as follows:

1. Breakdown of other operating revenues is as follows:

Membership fee revenue:

Membership fee revenue:

112

96

Royalty revenue

2,552

Royalty revenue

3,763

Other

5,872

Other

4,326

Total

8,537

Total

8,186

2. Other transfers break down as follows:
Merchandise
Tools, fixtures and2. Other transfers break down as follows:126--

equipment
Sales and general

Tools, fixtures and125--

equipment--

administration expense
Total

Merchandise

Sales and general--administration expense
126

Total

125

3. Breakdown of the gains from the sales of fixed assets is as

3. Breakdown of the gains from the sales of fixed assets isfollows:

as follows:

Buildings and Structures--

Buildings and Structures--

Tools, fixtures and3

Tools, fixtures and--equipment
Total

equipment
3

Total

--

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

4. Breakdown of losses from disposalof fixed assets is as

Building

465

follows:

Structures

233

Building

177

Vehicle transport

0

Structures

38

Tools, fixtures and50

Vehicle transport

0

Tools, fixtures and8equipment
Construction in progress

51

equipment

Software80

Software

14

Long-term prepaid0Long-term prepaid

5

expenses
Total

expenses
879

Total

245

11

1. Lease Transactions and Equivalent Values(Millions of yen, rounded down)

March 1, 2005 – February 28, 2006
I.

Financing leases other than those lease assets whose

March 1, 2004 - February 28, 2005
I.

Financing leases other than those lease assets whose title istitle is deemed to pass to the lessee

deemed to pass to the lessee1)1) Equivalents of purchase value, accumulated depreciation andEquivalents of purchase value, accumulated

period end balance

depreciation and period end balance
Purchase

Accumulated

Balance at end ofvalue of leased

depreciation

periodasset

Tools, Fixtures

Tools, Fixturesand Equipment

and Equipment

Software

Software

Total

Purchase value

Accumulated

Balance at end ofof leased asset

depreciation

period

1,120

754

366

97

69

27

1,218

824

393

2) Period end balance of unexpired lease commitment
equivalents
Within 1 year:¥
More than 1 year: ¥Total2) Period end balance of unexpired lease commitment
equivalents
Within 1 year:¥248
More than 1 year: ¥166
Total
¥414

3) Lease payments, depreciation expense equivalents& interest payment equivalents

3) Lease payments, depreciation expense equivalents &interest payment equivalents

Lease Payment:
Depreciation expense:
Interest payment:

Lease Payment: ¥337
Depreciation expense: ¥318
Interest payment: ¥144) Method of calculating depreciation expenseequivalents
As at right5) Method of calculating interest payment equivalents
As at right4) Method of calculating depreciation expense equivalents
Straight line method, useful life assumed to be the lease
period; residual value zero.
5)

Method of calculating interest payment equivalents

Interest payment assumed to be the balance between the totallease payment and purchase price equivalent; Allocated to eachperiod by the interest method.

II. Operating Leases
Within 1 year:
More than 1 year:
Total

II. Operating Leases
Within 1 year:¥0More than 1 year: -Total¥012

2. Marketable Securities
As of February 28, 2006
Item
Shares held in subsidiarycompanies
Shares held in affiliatecompanies
Total

Book value(Millions of yen, rounded down)Market value
Difference

53

2,028

1,975

-53

-2,028-1,975

As of February 28, 2005
Item
Shares held in subsidiarycompanies
Shares held in affiliatecompanies
Total

Book value(Millions of yen, rounded down)Market value
Difference

53

4,063

4,010

-53

-4,063-4,01013

3. Tax Effect Accounting
Millions of yen (rounded down)
March 1, 2005 – February 28, 2006

March 1, 2004 – February 28, 2005

1. Breakdown of the principal causes for deferred tax assets

1. Breakdown of the principal causes for deferred tax assets:(i) Current assets(i) Current assets:

Accrued disallowed enterprise tax

129

Accrued disallowed enterprise tax

216

Accrued disallowed business office4

Accrued disallowed business office

4

tax

tax

Provisions in excess of expensable

209

limit for reserve for bonus
Provisions in excess of expensable

206

limit for reserve for bonus
74

limit for allowance of bad debt
Disallowed valuation loss on

Provisions in excess of expensable
Provisions in excess of expensable

27

limit for allowance of bad debt
25

inventories

Disallowed valuation loss on

12inventories

Other

41

Other

37

Total

483

Total

505

(ii) Fixed assets
Provisions in excess of expensable(ii) Fixed assets
108

limit for allowance for bad debts
Disallowed valuation losses on

1

Disallowed valuation losses on--investment securities--

limit for software
Unrealized gains and losses on other127

limit for allowance for bad debts

investment securities
Amortization in excess of allowable

Provisions in excess of expensable

Amortization in excess of allowable

9

limit for software--

securities

Unrealized gains and losses on other(6)

securities

Other

7

Other

5

Total

117

Total

135

2. Breakdown of principal causes for the difference between the

2. Breakdown of principal causes for the difference between

statutory effective tax rate and corporate tax rate after

the statutory effective tax rate and corporate tax rate after

application:

application:

Statutory effective tax rate

40.6%

Statutory effective tax rate

Adjustments
Items permanently excluded for

42.0%

Adjustments
0.5

expenses such as entertainment

Items permanently excluded for

0.7

expenses such as entertainment

expenseexpenseTax on retained income

2.3

Tax on retained income

Equal allocation of inhabitants tax

1.2

Equal allocation of inhabitants tax

1.0

IT promotion tax system(2.6)

IT promotion tax system

(2.1)

Other

(0.1)

Other

(0.1)

Corporate tax burden rate after

42.1

Corporate tax burden rate after

43.7

application of tax effect accounting

2.2

application of tax effect accounting

14Per-share Information
March 1, 2005 – February 28, 2006

March 1, 2004 - February 28, 2005

Net assets per share:¥1,631.46

Net assets per share:¥1,522.30

Interim net income per¥525.75

Net income per share:¥510.03¥520.30

Fully diluted net income per share:¥499.82

share:
Fully diluted interim
net income per share:
Note: Net income and fully diluted net income per share are calculated based on net income for the period.

Item

March 1, 2005 – February 28,
2006

March 1, 2004 - February 28,
2005

5,320

5,259

5,246

5,165

73

94

73

94

9,979

10,127

1

61

103

144

104

206

Net income per share:
Net income (¥ million)
Amount attributable to ordinary
shareholders (¥ million)
Amount not attributable to ordinary
shareholders (¥ million):
Bonuses paid to directors as partof the appropriation of surplus
Average number of ordinary
shares outstanding during theperiod (1,000 shares)
Main components of the increasein ordinary shares whencalculating the fully diluted net
income per share
Subscription rights
Warrants
Increase in the number ofordinary shares (1,000 shares)
Warrants Class

Warrants Class 1

diluted net income per share due

Dilution from these warrants would

Dilution from these warrants would beto the fact that these securities

be 22,000 shares

43, 000 shares

Residual securities not includedin the calculation of the fully

had no dilutive effect.

Material subsequent events
No applicable items
Changes to executives
None15