Gulliver International Co., Ltd.

Non-consolidated Results
Interim period 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 (Non-consolidated)
Interim results for the fiscal year ending February 28, 2006

Gulliver International Co., Ltd.

October 19, 2005

Stock Code: 7599
http://www.glv.co.jp/
President: Kenichi Hatori
Date of the meeting of the board of directors: October 19, 2005
Date of payment of interim dividend: November 9, 2005

st

Listed exchanges: Tokyo (1 Section)
Inquiries: Senior Executive Vice President: Ikuo Murata
Telephone: +81 3 5208-5503
Existence of interim dividend system: Yes
Existence of unit trading system: Yes (one unit = ten shares)

1. Non-consolidated financial results for the interim period ended August 31, 2005
1) Non-consolidated Operating Results

Millions of yen, rounded downInterim period ended
August 31, 2005

Interim period ended
August 31, 2004(% change)

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

80,486
3,797
3,819
2,085
¥208.14¥205.60

29.5
7.2
7.9
4.0

Fiscal Year ended
February 28, 2005(% change)

62,122
3,541
3,539
2,004
¥197.62¥192.01

19.2
31.1
29.3
43.9

(% change)

147,486
9,601
9,584
5,259
¥510.03¥499.92

Notes to the preparation of these financial statements:
1. Average number of shares outstanding during the period: Interim period of FY ending February 2006 – 10,017,053
Interim period of FY ended February 2005 – 10,142,562
FY ended February 2005 – 10,127,471
2. Differences in accounting treatments applied compared to previous consolidated fiscal year: None
3. Percentage figures for sales, operating income, etc. represent changes compared to the comparable period of the previous fiscal year.

2) Dividends

Interim dividend per share...............................
Annual dividend per share...............................

Millions of yen

Interim period ended
August 31, 2005
¥79.00--Interim period ended
August 31, 2005
¥57.50--Fiscal year ended
February 29, 2004-¥157.50
Millions of yen, rounded down

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

As of August 31, 2005

As of August 31, 2004

As of February 28, 2005

30,341
14,94649.2
1,502.82

25,142
15,994
63.6
1,576.52

29,285
15,32752.3
1,522.30

Notes:
1. Number of shares outstanding at end period:
Interim period of FY ending February 2006: 9,945,687; Interim period of FY ended February 2005: 10,145,427; FY ended February 2005: 10,007,067
2. Number of treasury shares at end of period:
Interim period of FY ending February 2006: 743,113; Interim period of FY ended February 2005: 416,973; FY ended February 2005: 670,133

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

FY ending February 28, 2006
Sales ......................................................................................
Ordinary income.....................................................................
Net Income.............................................................................
Final dividend per share (¥)....................................................
Annual dividend per share (¥) ................................................

167,200
11,1006,100¥79.00¥158.00

Forecast earnings per share (full year): ¥609.56

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Non-consolidated Balance Sheets
As of August 31,
2005
ASSETSAs of February 28,
2005% of total

Millions of yen
As of August 31,
2004% of total% of total

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

3,303

2,378

5,495

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

4,612

7,358

2,917

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

--

--

237

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

4,222

3,842

3,640

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

418

505

367

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

2,274

1,277

1,325

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

(58)

(68)

(27)

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

14,77348.7

15,293

52.2

13,956

55.5

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

5,749

5,333

4,645

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

1,215

1,090

904

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

327

327

327

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

203
7,495

24.7

256
7,007

45
23.9

5,922

23.6

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

2,659

2,177

1,661

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

98

101

100

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

2,757

9.1

2,279

7.8

1,762

7.0

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

270

373

254

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

2,323

1,848

1,730

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

1,432

960

707

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

102

135

164

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

1,499

1,702

923

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

(313)

(315)

(279)

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

5,315

17.5

4,705

16.1

3,500

13.9

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

15,56851.3

13,99147.8

11,185

44.5

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

30,341

100.0

29,285100.0

25,142100.0

2Non-consolidated Balance Sheets
Millions of yen, rounded down
As of August 31,
2005
LIABILITIESAs of February 28,
2005% of total

As of August 31,
2004% of total% of total

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

2,753

4,203

2,345

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

6,050

2,000

--

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

1,744

2,014

2,153

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

1,446

2,507

1,556

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

382

338

604

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

686

765

705

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

556

508

432

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

1,131

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

14,751

997
48.6

13,336

723
45.6

8,521

33.9

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

643

621

625

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

643

2.1

621

2.1

625

2.5

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

15,39550.7

13,958

47.7

9,147

36.4

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

4,157

13.7

4,139

14.1

3,962

15.8

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

4,032

13.3

4,014

13.7

3,838

15.3

CAPITAL

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

39

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

13,636

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

13,67545.1

12,85243.9

10,435

41.5

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

50(6,969)0.2(23.0)

10(5,689)0.0(19.4)

13(2,256)0.0(9.0)

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

14,94649.3

15,32752.3

15,994

63.6

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

30,341

100.0

29,285100.0

25,142100.0

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

39

39

12,813

10,3963

Non-consolidated Statements of Income
Millions of yen
March 1, 2005 to August
31, 2005

March 1, 2004 to August
31, 2004%%

March 1, 2004 to
February 28, 2005%

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

80,486100.0

62,122100.0

147,486

100.0

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

60,35675.0

46,47974.8

110,361

74.8

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

20,12925.0

15,64225.2

37,125

25.2

Sales, general & administrative expenses ........

16,332

20.3

12,101

19.5

27,523

18.7

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

3,797

4.7

3,541

5.7

9,601

6.5

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

43

0.0

15

0.0

25

0.0

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

20

0.0

17

0.0

42

0.0

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

3,819

4.7

3,539

5.7

9,584

6.5

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

58

0.0

45

0.1

7

0.0

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

281

0.3

--

--

249

0.2

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

3,597

4.4

3,584

5.8

9,342

6.3

Corporate income tax, inhabitants tax andenterprise tax .............................................

1,419

1,540

4,150

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

92

39

(67)

Corporate tax etc. and adjustments ..................

1,512

1.8

1,579

2.6

4,083

2.8

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

2,085

2.6

2,004

3.2

5,259

3.5

Profits carried forward from prior period .....

11,718

8,424

8,424

Interim dividends.........................................

--

--

583

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

167

32

287

Unappropriated profit at end of period .........

13,636

10,396

12,8134

Material Items Forming the Basis for the Preparation of the Interim Consolidated
Financial Statements
Item
1. Valuation
criteria andvaluation methods
for material assets

2) Fixed Asset
Depreciation
MethodMarch 1, 2005 – August 31,

March 1, 2004 – August 31,

March 1, 2004 – February 28,

20051) Marketable Securities
Bonds intended to be held tomaturity:
Amortizing cost method (straightline)
Shares in subsidiaries:
At cost based on moving
average method
Other securities:
Those with a market value:
Valued by the market method
based on the market price as at
the interim settlement date.
Valuations are taken direct tocapital and the book value isdetermined by the moving
average method.

2004
1) Marketable securities
Bonds intended to be held tomaturity:
As at left

20051) Marketable Securities
Bonds intended to be held tomaturity:
As at left

Shares in subsidiaries:
As at left

Shares in subsidiaries:
As at left

Other securities:
As at left

Other securities:
Those with a market value:
Valued by the market method
based on the market price as at
the settlement date. Valuations
are taken direct to capital andthe book value is determined by
the moving average method.

Those without a market value:
The cost method using themoving average method.

Those without a market value:
As at leftThose without a market value:
As at left

2)

2)

2)

Inventory Merchandise:
Vehicles: Actual cost method(specific identification)
Other: Cost method under firstin first out method
Supplies: Cost method underlast purchase method
1) Tangible Fixed Assets
The Declining Balance Method isapplied. However, for buildings(excluding attached equipment)
acquired since April 1, 1998, theStraight Line Method has been
applied. The useful lives are as
follows:
Buildings and structures: 15-20
yrs.

Inventory Merchandise:
Vehicles: As at left

Inventory Merchandise:
Vehicles: As at left

Other: As at left

Other: As at left

Supplies: As at left

Supplies: As at left

2) Intangible Fixed Assets
The Straight Line Method isapplied. However, with respect
to software for internal use, theStraight Line Method based on
useful lives for internal use (fiveyears) has been applied.

2). Intangible Fixed Assets
As at left

1) Tangible Fixed Assets
The Declining Balance Method isapplied. However, for buildings
excluding attached equipment)
acquired since April 1, 1998, theStraight Line Method has been
applied. The useful lives are as
follows:
Buildings and structures: 15-20
yrs.
Vehicles & transportationequipment: 2- 6 years
2) Intangible Fixed Assets
As at left

3) Long-term prepaid expenses
Straight line method is applied3). Long-term prepaid expenses
As at left

3) Long-term prepaid expenses
As at left1). Tangible fixed assets
As at left

5

Item
3) Treatment ofDeferred assets
4) Criteria for
Recording Material
Reserves

March 1, 2005 – August 31,

March 1, 2004 – August 31,

March 1, 2004 – February 28,

2005

2004

2005

New share issue expenses:
Expensed in their entirety attime of expenditure
1) Reserve for Doubtful
Accounts

New share issue expenses:
As at left

New share issue expenses:
As at left

1)

Reserve for Doubtful
Accounts
As at left

1) Reserve for Doubtful
Accounts
As at left

2)

Reserve for Bonuses
As at left

2) Reserve for Bonuses
As at left

To prepare for losses occurringfrom bad loans, the actual badloan rate is applied. Specificclaims, such as those where
there are concerns on theprobability for recovery, areassessed on an individual basis
and estimated unrecoverable
amounts are recorded.
2) Reserve for Bonuses
To prepare for the payment ofbonuses to employees,
amounts are recorded basedon the estimated payment
amount.

5) Treatment ofmaterial Lease
Transactions

Financing leases other thanthose lease assets whose title
is deemed to pass to the lessee
have been accounted for inaccordance with methods
applied to normal leasetransactions6) Other Material
Items in the
Preparation of theConsolidated
Financial Accounts

Accounting Treatment ofConsumption Tax:
Tax Exclusion Method isapplied in the accounting
treatment for Consumption Tax
and Provisional Payment ofConsumption Tax andProvisional Receipt
Consumption Tax are offset
and included in Current
Liabilities: ‘Other’.

As at left

Accounting Treatment ofConsumption Tax:
As at left

As at left

Accounting Treatment ofConsumption Tax:
1) Tax Exclusion Method isapplied in the accounting
treatment of consumption tax(2) Method of Presentation in theConsolidated Balance Sheet
In accordance with theamendments to the Financial
Statement Rules, the segments
related to capital in the balance
sheet have been prepared under
the amended Financial
Statement Rules.

6

Changes to Accounting Treatment
March 1, 2005 – August 31, 2005

March 1, 2004 – August 31, 2004
(Method of presentation of Gainsfrom Sale of Courtesy Cars andProcurement Expenses for
Courtesy Cars)
In the previous consolidated fiscal
year, the acquisition, expense andgains on sale of vehicles to be used
as courtesy cars were presented as‘Gains on Sale of Courtesy Cars’ in
Non-Operating income, but due tothe fact 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 wasas other used vehicles, the numberof cars sold has been increasing,resulting in increased materiality.
Thus, the amount of the proceeds ofsuch sales has been recorded in
Sales while the cost of acquisition
has been included in Cost of Goods
Sold.
In addition the equivalent amounts in
respect of courtesy cars that werepreviously included under ‘Vehicles
and Transportation Equipment’ havebeen included under inventory fromthis interim period. The impact of thechange is not material

March 1, 2004 – February 28, 2005
(Method of presentation of Gainsfrom Sale of Courtesy Cars andProcurement Expenses for
Courtesy Cars)
In the previous consolidated fiscal
year, the acquisition, expense andgains on sale of vehicles to be used
as courtesy cars were presented as‘Gains on Sale of Courtesy Cars’ in
Non-Operating income, but due to thefact that in many cases such cars
were sold after use, and in addition toa change in policy to actively market
the vehicles in the same was as otherused vehicles, the number of cars
sold has been increasing, resulting inincreased materiality. Thus, theamount of the proceeds of such sales
has been recorded in Sales while thecost of acquisition has been included
in Cost of Goods Sold.
The impact of the change is notmaterial

Changes to presentation method
March 1, 2005 – August 31, 2005

March 1, 2004 – August 31, 2004
Recording of ‘Construction Cooperation Money’
Construction Cooperation Money was formerly included in ‘Deposits andGuarantees’ under ‘Investments and Other Assets’. Due to the increase inimportance of these amounts they are now recorded separately. Construction
cooperation money for this interim period was ¥285 million.

Additional Information
March 1, 2005 – August 31, 2005

March 1, 2004 – August 31,

March 1, 2004 – February

2004

28, 2005(Treatment of the tax based on business size portionof 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 of Income’ (February 13, 2004,
Corporate Accounting Standards Committee Practice
Report 12), from this interim accounting 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 ¥56 million and operating income,ordinary income and income before taxes, etc. eachdecreased by ¥56 million.

7

NotesBalance Sheet related
August 31, 2005

*1 Accumulated Depreciation of
Tangible Fixed Assets: ¥2,958 million

August 31, 2004

February 28, 2005

*1 Accumulated Depreciation of
Tangible Fixed Assets: ¥2,446 million*1 Accumulated Depreciation of
Tangible Fixed Assets: ¥2,682 million

Statements Of Income related
August 31, 2005

August 31, 2004

February 28, 2005

*1 Principal items in Non-operating
income:Interest received: ¥8 million*1 Principal items in Non-operating
income:Interest received: ¥1 million*1 Principal items in Non-operating
income:Interest received: ¥9 million*2 Depreciation
Tangible fixed assets: ¥525 million
Intangible fixed assets: ¥355 million*2 Depreciation
Tangible fixed assets: ¥308 million*2 Depreciation
Tangible fixed assets: ¥830 million

Intangible fixed assets: ¥200 million

Intangible fixed assets: ¥489 million

8

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

March 1, 2005 - August 31, 2005
I.

Financing leases other than those

March 1, 2004 - August 31, 2004
I.

Financing leases other than those

March 1, 2004 - February 28, 2005
I.

Financing leases other than thoselease assets whose title is deemed to passlease assets whose title is deemed to passto the lessee

to the lessee

to the lessee1)1)1) Equivalents of purchase value,

Equivalents of purchase value,

Equivalents of purchase value,

accumulated depreciation and period

accumulated depreciation and period

accumulated depreciation and period

end balanceend balanceend balance

Purchase

Accumulated

Balance

Purchase

Accumulated

Balance

Purchase

Accumulated

Balancevalue ofdepreciation

at end ofvalue ofdepreciation

at end ofvalue ofdepreciation

at end ofperiodleasedperiodleasedleased
asset

asset

Tools,
Fixtures

762

526

235

Fixtures

Tools,

1,185

718

Fixtures467

andEquipment

86

71

16

Total

849

596

254

100

61

39

Software

Total

1,286

779

506

Total

2) Period end balance of unexpired
lease commitment equivalents
Within 1 year:¥163
More than 1 year: ¥103
¥267

2)

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

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

Interest payment assumed to be the

97

69

27

1,218

824

393

2) Period end balance of unexpired
lease commitment equivalents
Within 1 year:¥248
More than 1 year: ¥166
¥4143) Lease payments, depreciation
expense equivalents & interest
payment equivalents
Lease Payment: ¥337
Depreciation expense: ¥318
Interest payment: ¥14

expense equivalents

Straight line method, useful life
assumed to be the lease period;
residual value zero.

interest

3664) Method of calculating depreciation 4) Method of calculating depreciation

expense equivalents

Method of calculating
payment equivalents

Period end balance of unexpired
lease commitment equivalents
Within 1 year:¥297
More than 1 year: ¥232
¥530

Lease Payment: ¥163
Depreciation expense: ¥154
Interest payment: ¥74) Method of calculating depreciation

754

Equipment

SoftwareLease Payment: ¥147
Depreciation expense: ¥137
Interest payment: ¥4

1,120

and

Equipment

Softwareperiodasset

Tools,

and5)lease assets whose title is deemed to pass

expense equivalents

As at left

5)

Method of calculating
payment equivalents
As at left

As at leftinterest 5)

Method of calculating
payment equivalentsinterest

As at leftbalance between the total lease payment
and purchase price equivalent; Allocated toeach period by the interest method

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

II. Operating Leases
Within 1 year:¥0More than 1 year: --Total¥092. Marketable Securities

As of end of interim period (August 31, 2005)
Item
Shares held in subsidiarycompanies
Shares held in affiliatecompanies
Total

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

53

4,137

774

-53

-4,137-774

As of end of previous interim period (August 31, 2004)
No marketable shares were held in subsidiaries.
As of end of previous fiscal year (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

-4,063-4,01010

Information on a per-share basis
March 1, 2005 - August 31,
2005

March 1, 2004 - August 31,
2004

March 1, 2004 - February 28,
2005

Net assets per share:¥1,502.82

Net assets per share:¥1,576.52

Net assets per share:¥1,522.30

Interim net income per¥208.14

Interim net income per¥197.62

Net income per share:¥510.03¥192.01

Fully diluted net¥499.82

share:
Fully diluted interim

share:¥205.60

net income per share:

Fully diluted interim
net income per share:

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 August 31, 2005

March 1, 2004 August 31, 2004

March 1, 2004 February 28, 2005

2,085

2,004

5,259

2,085

2,004

5,165

---

---

94

10,017

10,142

10,127

---

---

---

2

93

61

121

202

144

124

296

206

Net income per share:
Net income (¥ million)
Amount attributable to ordinary
shares (¥ million)
Amount not attributable to ordinary
shares (¥ million):
Bonuses paid to directors as partof the appropriation of surplus
Average number of ordinary
shares outstanding during theperiod (1,000 shares)
Net income per share (diluted):
Net income adjustment (¥ million)
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)
Residual securities not included

Warrants Class 1---

Warrants Class 1

in the calculation of the fully
diluted net income per share due

Dilution from these

Dilution from theseto the fact that these securities

warrants would be

warrants would be 43, 000

had no dilutive effect.

22, 000 sharesshares11