Gulliver International Co., Ltd.

Consolidated Results
Fiscal 2006
(March 1, 2006 to February 28, 2007)

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 (Consolidated)
Results for the fiscal year ended February 28, 2007

Gulliver International Co., Ltd.

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President:
Kenichi
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． board of directors: April 18, 2007
U.S. GAAP: Not adopted

April 18, 2007

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Inquiries:
Executive．．
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．Senior．．．．．
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．．．．Vice President: Ikuo Murata
Telephone: +81 3 5208-5503

1. Consolidated financial results for the fiscal year ended February 28, 2007
1) Consolidated Operating Results

Millions of yen, rounded down

Fiscal year ended
February 28, 2007

Fiscal year ended
February 28, 2006(% 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 ordinary income to sales (%) ............................

182,166
11,123
10,9986,566
672.19669.68
37.5
25.9
6.0

(0.2)
18.0
17.2
48.5
------(% change)

182,649
9,423
9,382
4,421
435.61
431.10
27.4
25.5
5.2

16.5
(7.8)
(8.1)
(21.7)------

Notes:
1. Investment gains and losses under equity method: FY ended February 2007: ¥ -- million; FY ended February 2006: ¥ -- million
2. Average number of shares outstanding during FY ended February 2007: 9,768,287; FY ended February 2006: 9,979,943
3. Differences in accounting treatments applied compared to previous consolidated fiscal year: Yes
4. 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 28, 2007
45,947
19,30341.2
1,936.38

Note:
Number of shares outstanding (consolidated) at end of period: FY ended February 2007: 9,779,343;

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 ..................

As of February 28, 2006
38,812
16,01141.3
1,623.01
FY ended February 2007: 9,865,317
Millions of yen, rounded down

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

Fiscal year ended
February 28, 2006
4,442
(6,385)
1,029
3,374

4) Scope of consolidation and application of the equity method
Number of consolidated subsidiaries: 9; Number of non-consolidated subsidiaries under the equity method: 0; Number of affiliated companies underthe equity method: 0
Changes in the scope of consolidation and companies accounted for by the equity method: Consolidated companies: new 2; excluded 0; Equity
method: new 0; excluded 0

2. Forecasts for the fiscal year ending February 28, 2008 (March 1, 2007 to February 28, 2008) Millions of yen, rounded down

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

Interim period ending
August 31, 2007
90,000
4,800
2,550
--

FY ending
February 29, 2008
194,400
12,1006,500
664.66− 1 −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. Management Policy
1. Basic management policy
Gulliver has adopted ‘Growing together’ as its corporate philosophy and, under the principle of coexistence
and mutual prosperity, the company is striving to become a corporation that is well regarded by communityand society, as well as all those involved in the Group, including customers, employees, partners andshareholders. Under this philosophy, Group management is making every effort to create an attractive
company that is worthy of support from customers. We also aim to bring about a revolution in the
distribution of cars, and to support the ‘car life’ of our customers.

2. Basic policy concerning distribution of profits
We have identified the return of profits to investors as an important management issue and also placeemphasis on our dividend payout ratio. Concretely, we are targeting a dividend payout of approximately
30% of non-consolidated net income for the period.
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 efficientinvestments in such areas as opening new directly operated stores, strengthening internal infrastructure (IT),developing new business, and training and nurturing personnel.

3. Management targets
We consider return on equity (ROE) to be an important management financial indicator and aim to maintainROE above 20% over the medium to long term, excepting the financial business. Further, we are aiming toachieve a Gulliver Group annual purchase volume of one million cars.

4. Mid- to long-term management strategy
We have set an annual purchase volume of one million cars as a specific objective, with the aim of securing
a dominant market share in the used car industry. We feel that, in order to realize our goal of bringing abouta revolution in the distribution of cars, this is the volume necessary to ensure a dominant number one
position in the industry. In order to achieve this goal, the following measures are being taken.
・ Continued opening of directly operated stores
・ Increasing productivity at each store
・ Increasing business capabilities through strengthening personnel development and training
・ Enhancing brand power and recognition
・ Improving service quality and customer satisfaction
・ Improving retail sales through ‘Dolphinet System’
・ Improving in-house sales utilizing ‘GAO! Auction− 2 −5. Tasks ahead
In Japan’s very large market for used vehicles, where eight million vehicles (including buses,
trucks, etc.) are registered each year, there are a range of issues that must be addressed by theGroup in order to maintain our dominant market share and improve profitability. As part of our strategic
marketing activities, these include further enhancing our brand power, broadening our customer basethrough improving brand recognition in a wide range of age groups, making qualitative improvements inservice and customer satisfaction, and strengthening operations through personnel development andtraining.

6. Items relating to the parent company
None

− 3 −

3. Operating results and Financial Position(1) Outline of consolidated operating results
Gulliver operates 291 directly operated stores involved in the sale and purchase of cars (13 more than at
the end of the previous fiscal year) and has 184 affiliated stores (33 fewer than at the end of the previous
fiscal year). In total, Gulliver operates 475 stores (20 fewer than at the end of the previous fiscal year).
In our directly operated store operations, we have continued to open new stores and replace (relocate
and rebuild) stores. We closed a number of stores in the first quarter of the year ending February 28, 2007,
and in line with our policy we aim to increase the number of our stores.
In the fiscal year under review, there was an emphasis on efficient management and more effective
investments in marketing activities were made compared to the end of the previous fiscal year. As regards
personnel, we are implementing policies with an emphasis on efficiency through such initiatives asenhancing staff training and modifying our sales structure along with reducing the number of new hires.
Further, although the number of cars handled at our directly operated stores declined slightly compared tothe end of the previous fiscal year, our cost effectiveness improved based on the implementation of policies
that emphasize efficiency. Also, at our affiliated stores, the number of cars handled per store is increasing
despite a reduction in the number of stores.
Vehicles handled by Gulliver are sold quickly, with an average timeframe of only one week to ten days
required to achieve a sale via channels that include 1) auction sites throughout Japan, 2) the company’s
unique on-screen selling system ‘Dolphinet’, and 3) GAO! Auction, the internet based real-time auction
aimed at used car dealers. The number of cars handled has through each of these channels has increased
even where advertising-related expenses and cost of sales have been reduced.
The financial condition of our main consolidated subsidiaries is as follows. As regards G-Trading Co., Ltd.,the second-hand truck, bus and construction vehicles purchase, sales and export company, the number ofvehicles sold and revenues each increased steadily, however operating income was lower than in theprevious fiscal year.
We have been steadily increasing the operating base of the consolidated auto-loan and financial
business company G-One Financial Services Co., Ltd through such steps as increasing the number of
automobile loans sold. Further, as announced on July 11, 2006, an extraordinary gain of approximately¥1.164 billion was recorded as a result of changes to the accounting treatment of automobile loans.
As a result of the factors noted above, consolidated net sales for the fiscal year under review decreased
by 0.2% or ¥483 million compared to the previous fiscal year to ¥182,166 million and operating income
increased 18.0% or ¥1,700 million to ¥11,123 million. Ordinary income increased 17.3% or ¥1,627 million to¥11,009 million and net income increased 48.5% or ¥2,144 million to ¥6,566 million.
Performance by Segment
Sales of used automobiles
In comparison to the previous fiscal year, as a result of implementing efficient investments in advertising,
the numbers of cars handled at Gulliver directly managed stores slightly decreased, however cost
efficiencies as measured by expenses relative to benefits, improved.
As a result, consolidated net sales decreased 0.2% or ¥358 million over the previous fiscal year to− 4 −¥173,289 million and operating income increased 31.3% or ¥3,580 million to ¥15,001 million.

Other businesses
Due to the decrease in the number of Gulliver affiliated stores compared to the previous fiscal year, revenue
from this area of business decreased. However, as a result of developments at GAO! Auction and in thefinancing business, commissions and other revenues increased.
As a result, consolidated net sales decreased 1.3% (¥124 million) to ¥8,876 million and operating income
decreased 20.0% (¥341 million) to ¥1,357 million.

(2) Financial position
For the fiscal year ending February 28, 2007, cash flow from operating activities was positive and cash flowfrom investing activities was negative, while overall cash flow was a positive figure of ¥1,481 million. Thebalance of cash and cash equivalents at the end of the period was ¥4,855 million.
Cash flow from operating activities
Cash and cash equivalents (“cash”) generated from operating activities was ¥6,103 million.
Principal components of this included net income before adjustment for taxes of ¥11,149 million, a decreasein trade receivables of ¥2,825 million, and an increase in operating loans of ¥1,292 million.
Cash flow from investing activities
Net cash used in investing activities was ¥5,604 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 ¥978 million. This was largely the result of an increase in short-termborrowings.

− 5 −Trends in Gulliver’s cash flow indicators are as follows:
FY 2002

FY 2003

FY 2004

FY 2005

FY 2006

Equity ratio (%)

62.6

59.3

46.7

41.3

41.2

Shareholders’ equity toasset ratio by market
price (%)

146.3

338.6

443.4

338.5

181.9

Debt redemption years(years)

0.2

0.1

1.4

2.1

2.3

Interest coverage ratio

447.6

604.2

207.9

141.3

93.6

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

(3) Outlook for the fiscal year ending February 28, 2008
Gulliver intends to pursue higher profits through such measures as seeking to increase the number ofvehicles handled (increasing customer numbers per store) and further implementing low cost operations.
Consolidated forecasts for the fiscal year ending February 2008 are for net sales to increase 6.7% to¥194,000 million, ordinary income to increase 10.0% to ¥12,100 million, and net income for the period todecrease 1.0% to ¥6,500 million.
Non-consolidated forecasts for the fiscal year ending February 2008 are for net sales to increase 5.8% to¥176,200 million, ordinary income to increase 8.5% to ¥11,400 million, and net income to increase 8.1% to¥6,100 million.
Note: The above figures do not include consumption tax.

− 6 −Consolidated Balance Sheets
Millions of yen
As of February 28, 2007

As of February 28, 2006%ASSETS%

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

4,855

3,374

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

13,667

11,180Marketable securities .................................................

--

100

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

4,668

4,659

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

1,571

--

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

445

468

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

1,743

1,393

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

(69)

(84)

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

26,88058.5

21,091

54.4

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

9,911

8,433

Accumulated depreciation .......................................

(2,079)(1,621)

Vehicles and transport equipment...........................

42

16

Accumulated depreciation .......................................

(15)

(10)

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

2,899

3,110

Accumulated depreciation......................................

(1,515)(1,421)

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

327

327

Construction in progress ............................................
Total tangible fixed assets

116
9,687

409
21.1

9,244

23.8

Intangible fixed assets
28

36

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

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

2,082

2,719

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

81

85

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

2,192

4.8

2,841

7.3

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

96

199

Shares of related companies.......................................

108

103

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

13

18

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

3,749

3,052

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

2,508

1,890

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

489

111

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

307

629

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

(74)

(371)

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

7,187

15.6

5,633

14.5

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

19,06641.5

17,72045.6

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

45,947100.0

38,812

100.0

− 7 −

Consolidated Balance Sheets
Millions of yen
As of February 28, 2007
LIABILITIESAs of February 28, 2006%%

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

3,303

3,501

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

13,5909,350

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

2,900

4,156

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

2,957

1,867

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

809

462

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

453

532

Reserve for directors’ bonuses..............................

73--

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

1,136

1,678

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

25,22454.9

21,54955.5

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

550

304

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

869

594

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

1,419

3.1

898

2.3

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

26,64658.0

22,448

57.8

--

--

352

0.9

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

--

--

4,157

10.7

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

--

--

4,032

10.4

Retained earnings ..................................................

----

15,822

40.8

Unrealized gains and losses in other securities........

--

--

67

0.2

Translation adjustments ...........................................

----

Treasury stock Note 1 ............................................

--

--

(0)
(8,067)(0.0)(20.8)

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

----

16,011

41.3

Total Liabilities, Minority Interests andShareholders’ Equity ................................................

----

38,812100.0

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

4,157

9.1

--

--

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

4,032

8.8

--

--

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

20,283

44.1

--

--

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

(9,540)(20.8)

--

--

--

--

MINORITY INTERESTS
Minority interests......................................................
CAPITAL

NET ASSETS

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

18,932

41.2

Valuation difference on other marketable securities..........

6

0.0

Valuation and differences due to foreign exchange ...........

(2)

0.0

--

--

Translation adjustments .....................................................

3

0.0

--

--

1

0.0

--

--

366

0.8

--

--

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

19,303

42.0

--

--

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

45,947

100.0

--

--

Warrants for new shares .......................................................
Minority interests− 8 −Consolidated Statements of Income
Millions of yen
March 1, 2006 to
February 28, 2007

March 1, 2005
to February 28, 2006%%
Sales .......................................................................

182,166

100.0

182,649

100.0

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

140,22877.0

139,371

76.3

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

41,93723.0

43,27823.7

30,81316.9

33,85518.5

11,123

6.1

9,423

5.2

Sales general and administrative expenses Note 1
Operating income...................................................
Non-operating income
Interest received .................................................

0

1

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

10Commissions received........................................

7

16

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

68

103

Total non-operating income

79

0.0

120

0.1

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

65

31

New shares issuance expense ...........................

7

5

Addition to reserve for doubtful accounts

37

35

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

3

9

Investment fund valuation loss ...........................

--

2

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

91

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

204

0.1

161

0.1

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

10,998

6.0

9,382

5.2

77

Extraordinary profit
Gains on sales of fixed assets Note 2.................

--

3

Gains on sale of investment securities ................

--

45

Insurance gains ..................................................

--

6

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

1,164

--

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

--

1

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

1,164

0.6

56

0.0

Extraordinary losses
Loss on disposal of fixed assets Note 3..............

689

Impairment losses Note 4 ...................................

278

--

Loss on cancellation of insurance contracts .......

--

121

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

45--

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

1,013

0.5

1,001

0.6

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

11,149

6.1

8,437

4.6

Income tax, inhabitants tax and enterprise tax ...

4,880

3,935

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

(313)

66

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

4,566

2.5

4,002

2.2

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

16

0.0

14

0.0

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

6,566

3.6

4,421

2.4

− 9 −

879

Consolidated Statement of Surplus
Millions of yen
March 1, 2005 to
February 28, 2006
Capital Surplus
Capital surplus at beginning of period ...............

4,014

Increase in capital surplus
Issuance of new shares through capital ...............

17

Gains on disposal of treasury stock..................

--

Total increase in capital surplus........................

17

Reduction in capital surplus
Reduction in capital surplus...............................

--

Capital surplus at end of period ..........................

4,032

Retained earnings
Retained earnings at beginning of period ...............

13,668

Increase in retained earnings
Net income for the period .....................................

4,421

Reduction in retained earnings
Dividends .............................................................

1,786

Directors’ bonuses................................................

94

Losses on disposal of treasury stock....................

387

Reduction resulting from new consolidation .........

0

Total increase in retained earnings.......................

2,267

Retained earnings at end of period.....................

15,822− 10 −

Changes in consolidated shareholders’ equity
For the fiscal year ended 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(2,079)(2,079)

(423)

606

183

4,460

(1,472)

2,988

20,283(9,540)18,932

Changes to items other thanshareholders’ equity
Total change during the period
Balance as of February 28, 2007

4,157

4,032

Valuation and differences due to foreign exchange

Balance as of February 28, 2006

Valuation differences

Translation

Total valuationon other marketableadjustment

and translation

securities

account

differences

67

(0)

67

Minority
Warrants

interests--

Total net assets

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 during the

(60)

(2)

(63)

1

19

(42)

(60)

(2)

(63)

1

13

2,939

6

(2)

3

1

366

19,303

periodTotal change during the period
Balance as of February 28, 2007

− 11 −

Consolidated Statements of Cash flows
March 1, 2006 to February
28, 2007

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

I. Cash flow from operating activities
Income before taxes, etc.................................................

11,1498,437

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

2,352

2,061

Increase (decrease) in reserve for bonuses....................

(68)

2

Increase (decrease) in allowance for doubtful accounts .

(66)

47

Interest and dividends received ......................................

(2)

(1)

Interest paid ....................................................................

65

28

New share issuance expenses .......................................

7

5

Gain on sale of fixed assets ............................................

−(3)

Loss on disposal of fixed assets .....................................

689

879

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

278−

Gain on sale of investment securities..............................

−

(45)

Payment of directors’ bonuses........................................

(73)

(94)

(Increase) decrease in accounts receivable....................

(2,825)(660)(Increase) decrease in inventory.....................................

108

(17)

Increase (decrease) in accounts payable........................

444(1,079)

Increase (decrease) in amount of operating loans ..........

(1,292)−

Increase (decrease) in accrued consumption tax............

(177)

328

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

(749)

(549)

Subtotal...........................................................................

9,838

9,339

Interest and dividends received ......................................

2

1

Interest paid ....................................................................

(65)

(26)

Corporate taxes paid.......................................................

(3,671)(4,871)

Cash flow from operating activities...............................

6,103

4,442

II. Cash flow from investing activities
Proceeds from sale of investment securities...................

100

212

Payments for acquisition of tangible fixed assets............

(3,731)(3,032)

Proceeds from sale of tangible fixed assets....................

1

7

Payments for acquisition of intangible fixed assets .........

(581)(1,558)Acquisition of shares of affiliates .....................................

(5)−

Amounts lent ...................................................................

(61)

(492)

Proceeds from repayment of loans .................................

6

577

Increase (decrease) in short-term borrowing ..................

−

(130)

Deposit and guarantee payments ...................................

(1,327)(2,096)

Proceeds from transfer of operations ..............................

−

127

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

(5)

1

Cash flow from investing activities ...............................

(5,604)(6,385)− 12 −

Consolidated Statements of Cash flows
March 1, 2006 to
February 28, 2007

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

III. Cash flow from financing activities
Net increase (decrease) in short-term borrowings..............

4,190

5,687

Payment of long-term debt .................................................

(207)

(340)

Proceeds from long-term borrowings .................................

500

200

Payments for acquisition of treasury stock .........................

(2,079)(2,974)

Proceeds from disposal of treasury stock...........................

183

209

Payments for issuance of new shares................................

(7)

(5)

Proceeds from issuance of new shares..............................

−

35

Payment of dividends .........................................................

(1,608)(1,786)

Payments of dividends to minority shareholders ................

(5)−

Payments from minority shareholders ................................

−

3

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

13−

Cash flow from financing activities ..................................
IV. Translation difference related to (Decrease)increase in cash and cash equivalents...................
V. (Decrease) increase in cash and cash equivalents....

978

1,029

3

1

1,481

(913)

VI. Cash and cash equivalents at beginning of period...
VII. Increase in cash and cash equivalents fromchanges in the scope of consolidation...................

3,374

4,130

−

155

VIII. Cash and cash equivalents at end of period ...........

4,855

3,374

− 13 −

Material Items Forming the Basis for the Preparation of the Consolidated Financial
Statements for Fiscal Year Ended February 28, 2007
Item
1.Items relating to thescope ofconsolidation

2. Application of theequity method

March 1, 2006 – February 28, 2007

March 1, 2005 - February 28, 2006

(1) Number of consolidated subsidiaries: 9
G Trading Co., Ltd.
G One Financial Service Co., Ltd.
Gulliver Europe Ltd.
Hakobo Co., Ltd.
SAMURAI MOTORS CO. Ltd.
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 newacquisition of shares during the fiscal year
and G-Trading Rus LLC was establishedduring the fiscal year and included inconsolidation.
(2) Non-consolidated subsidiaries:
Gulliver USA Inc.
Reasons for exclusion from consolidation:
As at right1) Number of consolidated subsidiaries: 7
G Trading Co., Ltd.
G One Financial Service Co., Ltd.
Gulliver Europe Ltd.
Hakobo Co., Ltd.
SAMURAI MOTORS CO. Ltd.
G-Bus., Ltd.
Carbross Co., Ltd.
(Change in scope of consolidation)
Of the above Hakobo Co., Ltd. has been
included in the scope of consolidation as its
importance to the financial statements has
increased. Further, as SAMURAI MOTORS
CO. Ltd., G-Bus., Ltd., and Carbross Co.,
Ltd. were all established in the year underreview, they have been included in thescope of consolidation.

There are no non-consolidated subsidiaries oraffiliates to which the equity method is applied
Non-consolidated subsidiaries and affiliates towhich the equity method is not applied:Gulliver USA Inc.
UG Powers Co., Ltd.
Reasons for not applying the equity method:
As at right

3. Items relating to the(interim) settlement
days ofconsolidated
subsidiaries

Items relating toaccounting
treatment(1) Valuation criteria

Of the consolidated subsidiaries, Gulliver
Europe Ltd., SAMURAI MOTORS, TAKEOFF
Co., Ltd. and G-Trading Rus LLC have asettlement date (August 31) that differs fromthe consolidated settlement date (endFebruary). Since the gap between theConsolidated Financial Statements settlement
dates for Gulliver Europe Ltd., SAMURAI
MOTORS, TAKEOFF Co., Ltd. and G-Trading
Rus LLC does not exceed 3 months,
consolidation is performed based on the said
subsidiary’s financial statements. For materialtransactions occurring between the settlement
dates necessary consolidation adjustments are
made.
Since the settlement date for TAKEOFF Co.,
Ltd, exceeds 3 months, consolidation is
performed based on the said subsidiary’s
provisional settlement as of the date of thefinancial report.

(2) Non-consolidated subsidiaries:
Gulliver USA Inc.
Reasons for exclusion from consolidation:
Gulliver USA, Inc. is small and its total assets,
sales, net income and retained profit, etc. do notsignificantly affect the consolidated financial
statements.
There are no non-consolidated subsidiaries andaffiliates to which the equity method is applied
Non-consolidated subsidiaries and affiliatecompanies to which the equity method is notapplied:Gulliver USA Inc.
Reasons for not applying the equity method: The
effect of the company on net income and retained
profit is immaterial and its overall importance islow.
Of the consolidated subsidiaries, Gulliver Europe
Ltd., SAMURAI MOTORS and TAKEOFF Co.,
Ltd, have a settlement date (December 31) thatdiffers from the Consolidated Settlement Date(end February). The gap in Gulliver Europe Ltd.,SAMURAI MOTORS’s settlement dates does notexceed 3 months, consolidation is performed
based on the said subsidiary’s financial
statements. For material transactions occurring
between the settlement dates necessary
consolidation adjustments are made.

4.

1. Marketable securities

1. Marketable securities− 14 −

and valuation
methods formaterial assets

Bonds intended to be held to maturity:
As at rightBonds intended to be held to maturity:
Amortizing cost method (straight line)

Other marketable securities
Other marketable securitiesThose with a market price: Valued by theThose with a market price: Valued by themarket method based on the market price asmarket method based on the market priceat the accounting date. Valuation gains or
as at the accounting date. Valuation gains orlosses are taken direct to net assets and thelosses are taken direct to capital and thebook value is determined by moving averagebook value is determined by moving
method.
average method.
Those without a market value:Those without a market value:
As at rightThe cost method using the moving average method
Shareholdings in subsidiaries:
As at right

Shareholdings in subsidiaries:
The cost method using the moving averagemethod
2. Derivatives
Market price method
3. Inventories
A. Merchandise
Vehicles: Actual cost method
Other: Cost method under first in, first out
methodB. Supplies:
Cost method under last purchase method(i) Tangible Fixed Assets
Declining Balance Method is applied. However,for buildings excluding attached equipment)
acquired since April 1, 1998,
the Straight Line Method has been applied. The
useful lives are as follows:
Buildings and Structures: 15 – 20 years
Vehicles and transportation equipment: 2-6 years(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
The Straight Line Method is applied

2. Derivatives
As at right
3. Inventories
A. Merchandise:
Vehicles:As at right
Other:
As at right
B. Supplies:(2) Depreciation
methods applied
to material
depreciable
assets

As at right(i) Tangible Fixed Assets
As at right(ii) Intangible Fixed Assets
As at right(iii) Long Term Prepaid Expenses
As at right
Share acquisition expenses
Expensed in their entirety at the time of
expenditure(i) Reserve for Doubtful Accounts(4) Criteria for
To prepare for the losses occurring from badrecordingmaterial reserves 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
the estimated payment amount.
(iii) Bonuses for directors
As at right(3) Treatment ofdeferred assets− 15 −----------(i) Reserve for Doubtful Accounts
As at right(ii) Reserve for Bonuses
As at right(iii) Bonuses for directors
Amount based on forecasted provisional amountin preparation for payment of bonuses for
directors.
（Accounting standards related to Bonuses for
directors）
Effective from the fiscal year ended February 28,
2006, Accounting Standards Board Statement
No. 4, “Accounting Standards for Directors’
Bonuses” issued by the Accounting Standards
Board on November 29, 2005. The effect of this isa decrease of ¥73 million on each of operating
income, ordinary income and net income before
adjustment for income taxes.

As at right(5) Treatment ofmaterial leasetransactions(6) Material hedge
accounting(i) Method of Hedge Accounting
As at right(ii) Hedging Tools and Hedge Target
As at right(iii) Hedging Policy
As at right(iv)Method of evaluating hedge effectivenessAs 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.
(i) Method of Hedge Accounting
According to Deferred Hedge
Treatment(ii) Hedging Tools and Hedge Target
Hedging Tools – Interest Rate Swap
Hedge Target – Interest on borrowings(iii) Hedging Policy
Interest Rate Swap transactions
are entered into for the purposeof hedging the risk of interest rate fluctuation on
borrowings and entered into only for the target
obligations.
(iv) Method of evaluating hedge effectiveness
The target cumulative market fluctuation of thehedge target and the hedge tool are compared
during the period from the initiation of the hedge
to the time of assessing the effectiveness and theevaluation
is made based on the variance of the two values.

(7) Other material
items in the
preparation of theconsolidated
financial statements
5. Items relating to
the valuation ofassets andliabilities of
consolidated
subsidiaries
6. Items relating to
the amortization of
the consolidation
adjustment
account

7. Items relating to
the appropriationof profits
8. Definition of cashin theconsolidated
statements of cashflow

Accounting treatment for

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

Consumption Tax
As at right
As at right

The Market Value Method is used for thevaluation of all assets and liabilities of
consolidated subsidiaries.

As at rightAmortization of the consolidation adjustment
account is conducted in equal installments over a
period of up to 20 years based on a rational
assessment of the period over which the benefitsof contributory factors will be realized.
Further, when the amounts are small, a onetime
amortization is conducted in the consolidated
financial year.
In respect of the appropriation of profits ofconsolidated subsidiaries the Consolidated
Statement of Surplus is based on confirmed profit
appropriation during the consolidated fiscal year.
Cash on hand, deposits that can be withdrawn as
needed, and short term investments that areeasily convertible into cash and that have low riskof fluctuation in value and whose maturities are 3
months or less at the date of acquisition.

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

As at right− 16 −

Changes in Accounting Treatment
March 1, 2006 – February 28, 2007

March 1, 2005 - February 28, 2006

Accounting standards relating to impairment losses on fixed assets
As of the fiscal year ending 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 treatments relating to income generated throughautoloans
Previously, in respect of autoloans at the consolidated subsidiary G-One
Financial Service Co., Ltd. the entire amount of the income wasrecorded as income over the period of the loan. However, from thecurrent fiscal period, we have begun to employ a method in which thefinancing cost for the unexpired portion is accounted for over thecontract period. For the remaining portion, excluding income related toforeseeable losses arising from early repayment or subrogatedperformance the income is recorded in full at the time of contracting forthe autoloan.
We made this change as most of the costs associated with autoloan
income occur at the time of contracting and also because the expertiseand internal data we have accumulated on the auto-loans businessallows us to rationally forecast early repayment or subrogatedperformance. As a result we believe the new method better reflects
actual operating conditions.
In order to make loan contracts signed in previous fiscal years conformto this method, the balance of unpaid loans at the end of the fiscal year
ended February 28, 2006, excluding income related to financing rates
and foreseeable losses arising from early repayment or subrogatedperformance, 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 comparedto the previous method, and net income before adjustment for income
taxes has increased ¥1,711 million.
Accounting standards relating to presentation of net assets onbalance sheets
From the fiscal year ending 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 ʻCapitalʼ is ¥18,936 million.
Following changes to the regulations on financial statements, net
assets on the balance sheet have been recorded in accordance with therevised regulations.

――――――――――――――――――

Accounting standards relating to directors’ bonuses
From the fiscal year ending 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.

− 17 −

Method of presentation of current assets
March 1, 2006 – February 28, 2007

March 1, 2005 - February 28, 2006――――――In the previous consolidated fiscal year, ‘operating loans’ were
included in ‘other’ among current assets. In this consolidated fiscal
year, as these exceed 1% of total assets that are listed separately.
At the end of consolidated fiscal year February 28, 2006 ‘operatingloans’ were ¥215 million.

Additional information
March 1, 2006 – February 28, 2007

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 Accounting Standards
Committee Practice Report 12), from this accounting period the
proportionate amounts of corporation tax on value added andcapital have been included in Selling, General and Administrative
expenses. As a result Selling, General and Administration expenses
increased by ¥126 million and operating income, ordinary income
and income before taxes, etc. each decreased by ¥126 million.

− 18 −

Notes(Related to the consolidated balance sheets)
February 28, 2007

February 28, 2006------------------

1 Number of treasury shares held:
The number of Gulliver shares held by consolidated
companies is as follows:
Ordinary shares:
823,000 shares(Related to the consolidated statements of income)(Millions of yen)March 1, 2006 – February 28, 2007

March 1, 2005 - February 28, 2006

1. Principal components of SGA expenses

1. Principal components of SGA expenses

Advertising
4,619
Contracting fees
1,785
Salaries
8,066
Bonuses
1,314Transfer to reserve for doubtful
7
accounts
Transfer to reserve for bonuses
448
Transfer to directors’ bonuses
73
Depreciation
2,352
Rent
4,405
2. Components of gains on sales of fixed assets.

――――――

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

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

325
54
108
0
191
8
689

546
2,064
3,540

2. Components of gains on sales of fixed assets.
Buildings and structures--

Tools & equipment

3

Vehicles and transportation equipment

--

Total
3.

6,300
1,839
8,178
1,641
13

3

3. Components of losses on disposal of fixed assets
Buildings and structures
Vehicles and transportation
Tools & equipment
Construction in progress
Software
Long-term prepaid expenses
Total− 19 −

699
0
50
51
80
0
879

March 1, 2006 – February 28, 2007

March 1, 2005 - February 28, 2006

Impairment losses

４

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

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 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 amount is calculated based on
the useful value using estimates of future cash flows.

− 20 −

(Changes to shareholders’ equity and other items)
Consolidated fiscal year March 1, 2006 to February 28, 2007
1. Number and types of shares issued (thousands of shares) as of fiscal year ended February 28, 2006
Number of sharesat end of previous
fiscal year

Increase

Number ofshares at end ofcurrent fiscal
year

Decrease

Shares outstanding
Ordinary shares
Total

10,688,800−−

10,688,800

10,688,800−−

10,688,800

823

143

58

909

823

143

58

909

Treasury stock
Ordinary shares
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.
2. Information on new share warrants at end of fiscal year ended February 28, 2007
Segment

Breakdown of new share warrants

Consolidated
subsidiary

Stock options as new share warrants(Millions of yen)Type of shares received upon
exercising new share warrants

Total

Balance at end of fiscal
year

−

1

−

1

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

Resolution

Dividend pershare (yen)Date of record

Effective date

May 24, 2006
Regular shareholders’ meeting

Ordinaryshares818

83.00

February 28, 2006

May 24, 2006

October 17, 2006
Meeting of the board of directors

Ordinaryshares789

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)
Ordinaryshares909

Source ofcapitalRetainedearnings− 21 −

Dividend per
Date of record
share (yen)
93.00

February28, 2007

Effective date
May 23, 2007

Notes related to the Consolidated Statements of Cash Flows(Millions of yen)March 1, 2006 – February 28, 2007
1.

Balance of cash and cash equivalents and other items at
end of term
Cash and deposits accountCash and cash equivalents──────

4,855
4,855

March 1, 2005 - February 28, 2006
1.

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

3,374

Cash and cash equivalents

3,374

2. Breakdown of major items of increase in assets andliabilities resulting from business transfer
Brain Trust Co., Ltd.（January 31, 2006）
Current assets
158
Fixed assets
49
Total assets
Current liabilities
Fixed liabilities

208
138
56

Total liabilities

195

Consideration upon transfer ofbusiness (unpaid）− 22 −

13

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

Trading of

Other businessused cars

Elimination/

Total

Consolidated

All company

Sales(1) Sales to external

173, 289

8,876

182,166--

182,166

--

--

--

--

--

Total

173, 289

8,876

182,166--

182,166

Operating expenses

158,288

7,518

165,807

5,235

171,042

Operating income

15,001

1,357

16,358(5,235)

11,123

Assets31,221

12,82144,043

1,904

45,947

Depreciation

1,395

396

1,792

559

2,352

Impairment losses

--

278

278

--

278

Capital expenditure

2,562

191

2,754

323

3,078

customers(2) Inter-segmental sales
or transfers

Assets,Depreciation,

Impairment losses 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 outlets and the like.

Other businessRoyalties arising out of franchise agreements and fees for the provision of training etc., andintermediation in buying and selling of used automobiles, fees arising from financial business andother business.

− 23 −

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

Current fiscal year

5,235

3,696

Amount of operating expense whichcannot be allocatedPrincipal content

Expenses relating to head officeadministration at the parent
company

Amount of assets included in“Eliminations or Total Company”
item

Expenses related to management
1,904

10,184of surplus funds and head officeadministration at the parent
company.

Segment information by geographical location
For the current consolidated fiscal year and for the previous fiscal year over 90% of total sales and assets for each segment were in Japan sosegment information by geographical location has been omitted.

Overseas sales
For the current consolidated fiscal year, and for the previous fiscal year, overseas sales were less than 10% of consolidated sales and havetherefore been omitted.

− 24 −

Fiscal year ended February 28, 2006 (March 1, 2005 to February 28, 2006)
Millions of yen

Trading of

Other businessused cars

Elimination/

Total

All company

Consolidated

Sales
Sales to external

173, 648

9,001

182,649--

182,649

--

--

--

--

--

Total

173, 648

9,001

182,649--

182,649

Operating expenses

162,227

7,302

169,529

3,696

173,226

Operating income

11,420

1,698

13,119(3,696)

9,423

Assets24,411

4,187

28,628

10,18438,812

Depreciation

1,127

235

1,363

701

2,064

Capital expenditure

2,546

416

2,963

2,595

5,558

customers
Inter-segmental sales ortransfers

Notes:

1.

Method of business classification: Businesses have been classified according to the classification used in calculating sales. Further, due tothe increased importance of other business in the ‘Franchise operations’ segment this segment has been renamed ‘Other businesses’commencing from the fiscal year ended February 28, 2006.

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 outlets and the like.

Other businessRoyalties arising out of franchise agreements and fees for the provision of training etc., andintermediation in buying and selling of used automobiles, fees arising from financial businessand other business.

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

Amount of operating expense
which cannot be allocatedAmount of assets included in“Eliminations or Total Company”
item

March 1, 2004 to

March 1, 2005 to

February 28, 2005

February 28, 2006

3,860

3,696

7,879

10,184− 25 −

Principal content

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