Non-consolidated Financial and Operating Results
for the Nine Months Ended December 31, 2006
February 9, 2007

Company Name:(URL: http://www.nafco.tv)
Listed on:

NAFCO Corporation
JASDAQ (Stock code: 2790)

Inquiries:

Katsuyoshi Fukamachi
President and CEOKanji Muraoka
Managing Director & General Manager, Accounting Division
TEL +81-93-521-7030

1. Matters related to the preparation of the quarterly financial information①Adoption of a simplified accounting method: Yes;
Corporate tax accounting standards are calculated in accordance with predicted yearly tax based on thepresent legally effective tax rate.
②Change in accounting method compared with the most recent fiscal year: None
2. Financial and Operating Results for the Nine Months Ended December 31, 2006 (April 1, 2006 throughDecember 31, 2006)(1) Operating results
Sales
Nine months ended Millions of yen
Y-on-Y,%
December 31, 2006
151,138+ 1.5
December 31, 2005
148,959+3.0
Year ended March190,114
31, 2006 (Reference)
Net income

Note: Amounts rounded to the nearest million.
Operating income
Ordinary income
Millions of yen
Y-on-Y,% Millions of yen
Y-on-Y,%
11,765+12.4
11,951+11.210,470+10.7
10,751+9.9
11,314
Earnings per commonshare-Basic
Yen
218.14
188.19

11,795
Earnings per commonshare-Diluted
Yen
217.99187.85

Nine months ended Millions of yen
Y-on-Y,%
December 31, 2006
6,490+16.1
December 31, 2005
5,590
+8.2
Year ended March
6,156
205.98205.6331, 2006 (Reference)
Note: The above percentages in sales, operating income, ordinary income, and net income for nine months represent
the rates of year-over-year changes.
［Major Factors Affecting Financial and Operating Results］
In the 3rd quarter, although the Japanese economy recorded favorable growth in the corporate sector, the lack of acorresponding strengthening in household demand created slight unease. However, improved corporate revenues
resulted in increases in both capital investment and manufacturing, indicating the slow recovery trend is continuing.
In the furniture and home-center industry, competition continued to intensify and unseasonable weather had a major
impact on the operating environment. Despite these conditions、NAFCO, based on its philosophy of providing “100%Customer Satisfaction,” continued to strengthen sales capability through ongoing personnel education and training andimproved product strategies aimed at meeting customers’ needs. In line with the expansion of our operating base, 11
new stores were opened, but to improve business efficiency 2 stores were closed. As a result, as at the end of the 3rdquarter the total number of NAFCO retail outlets is 210, centering on our three core product lines of “hardware, DIY

1

and gardening,” “daily living” and “furniture and home fashion.” NAFCO continued to strengthen both its productappeal and differentiation from competitors, while at the same time as aiming to increase total sales revenues and todecrease operating costs through increases in operational efficiency. As a result, at the end of the 3rd quarter NAFCO
recorded sales of 151,138 million yen, operating income of 11,765 million yen, ordinary income of 11,951 million yen,and net income of 6,490 million yen.

(2) Financial position
Total assets
Nine months ended
December 31, 2006
December 31, 2005
Year ended March 31,2006 (Reference)

Millions of yen
157,576
152,155
143,056

82,874

Cash flows
Cash flows fromoperating activities
Nine months ended
December 31, 2006
December 31, 2005
Year ended March 31,
2006 (Reference)

Note: Amounts rounded to the nearest million.
Ratio ofNet assets per
shareholders’
Net assets
shareequity
Millions of yen%
Yen
88,50556.2
2,974.51
82,30454.1
2,768.92

Millions of yen
13,8349,420

57.9

2,784.08

Note: Amounts rounded to the nearest million.
Cash and cash
Cash flows from
Cash flows fromequivalents at theinvesting activities financing activities
end of the term
Millions of yen
Millions of yen
Millions of yen(6,179)3,722
16,451(9,244)
3,084
14,614

4,562(11,089)

245

5,073

［Major Factors Affecting Changes in Financial Position］
As of the end of the 3rd quarter, total assets are 157,576 million yen, an increase of 14,520 million yen compared to theend of the previous fiscal year. In addition, net assets increased by 5,630 million yen, to 88,505 million yen, for ashareholders’ equity ratio of 56.2%.
（Cash Flows from Operating Activities）
Net cash provided by operating activities is 13,834 million yen. The major items as at the end of the 3rd quarter are
income before income taxes of 12,019 million yen and an increase in trade payables of 5,250 million yen as against
income taxes paid of 5,486 million yen.
（Cash Flows from Investing Activities）
Net cash used in investing activities is 6,179 million yen. The major items are payment for acquisition of tangible
fixed assets of 5,870 million yen.
（Cash Flows from Financing Activities）
Net cash provided by financing activities is 3,722 million yen. The major items are an increase in short-termborrowings of 3,300 million yen and proceeds from long-term debt of 3,500 million yen.
As a result cash and cash equivalents at the end of the 3rd quarter are 16,451 million yen, an increase of 11,377
million yen compared to the end of the previous fiscal year.

2[Reference]
Forecast Results for the Fiscal Period Ending March 31, 2007 (From April 1, 2006 to March 31, 2007)

Note: Amounts are rounded to the nearest million.
Sales

Ordinary Income

Millions of yen
Year Ending March 31,
196,000
2007 (Full-year)（Reference）Expected net income per share (Full-year) ¥221.81

Net Income

Millions of yenMillions of yen

12,5006,600［Major Factors Affecting Forecast Financial Results］
No factors have arisen that will affect the total fiscal year forecast results published on November 17, 2006.
However, as forecast results are based upon information available at the time of publication of this report,
they may differ from actual results.

3

〔Reference Materials〕(1) Balance Sheet (Abbreviated)Account Item
（Assets）
I. Current Assets
Cash and cash equivalents
Accounts receivable―trade
Inventories
Current assets , other
Allowance for doubtful accountTotal current assets
II. Fixed AssetsProperty, plant and equipment
Intangible assets
Total investments and otherassets
Total fixed assets
Total assets（Liabilities）
I. Current Liabilities
Trade notes payable
Accounts payable- trade
Short-term borrowings
Current portion of Long-termborrowings
Current liabilities, otherTotal current liabilities
II. Fixed Liabilities
Long-term borrowings
Allowance for retirement
benefits
Reserve for director’s
retirement benefit
Fixed liabilities, otherTotal fixed liabilities
Total Liabilities(Shareholders’ Equity)
I. Capital Stock
II. Capital Surplus
Capital reserve
Total capital surplus
III. Retained Earnings
Legal reserve
Voluntary reserve
Unappropriated retained
earnings
Total retained earnings
IV. Balance on revaluation of otherSecurities
Total shareholders’ equity
Total liabilities and shareholders’equity（Millions of yen）
Nine months ended
December 31, 2006
Comp
Amountositionratio％

20,5881,449
44,8952,012(20)
68,925

43.7

Nine months ended
December 31, 2005
Comp
Amountositionratio％

18,745
1,337
45,5181,805(18)67,38944.3

Increase/Decrease
Amount

Ratio
％

1,842
111(623)207(2)
1,5352.3

March 31, 2006
(Reference)Comp
Amountosition
ratio
％

9,243
1,390
44,4731,777(20)
56,86476,058
1,403

72,524
1,365

3,534
37

73,767
1,406

11,188

10,875313

11,01788,650157,576

56.3
100.0

84,765
152,155

55.7
100.0

3,885
5,421

4.6
3.6

86,191
143,056

18,98315,01910,03019,75916,8838,730(776)(1,864)1,300

16,915
11,836
6,730

2,883

3,070

(186)

2,974

11,09958,01536.8

11,05559,49939.1

43(1,484)(2.5)

12,06350,519

6,024

5,498

525

4,721

3,323

3,224

99

3,271

1,462

1,402

59

1,417

39.7

60.3
100.0

35.3

245
11,05569,071

7.0
43.8

226
10,35069,850

6.8
45.9

19
704
(779)

6.8
(1.1)

251
9,661
60,181

6.8
42.1

―

―

3,505

2.3

―

―

3,521

2.5

―
―

―
―

4,190
4,190

2.8

―
―

―
―

4,206
4,206

2.9

―
―

―
―

37
66,197

―
―

―
―

37
66,197

―

―

8,154

―

―

8,720

―

―

74,38948.9――74,955

52.4

―

―

219

0.1

―

―

190

0.1

―

―

82,30454.1――

82,87457.9――

152,155100.0――143,056

100.04

Account Item(Net assets)
I. Shareholders’ equity
1.Capital stock
2. Capital surplus
Capital reserve
Total capital surplus
3. Retained earnings(1) Legal reserve(2) Other retained earnings
Advanced depreciation
General reserve
Retained earnings brought
forward
Total retained earnings
Total shareholders’ equity
II. Valuation and translationdifferences
Balance on revaluation of otherSecurities
Total valuation and translationdifferences
Total net assets
Total liabilities and net assets

Nine months ended
December 31, 2006
CompAmountosition
ratio％

3,521

Nine months ended
December 31, 2005
Comp
Amountositionratio％％

March 31, 2006
(Reference)Comp
Amountositionratio％

Increase/Decrease
Amount

Ratio

2.2

―

―

―

―

―

―

2.7

―
―

―
―

―
―

―
―

―
―

―
―

37

―

―

―

―

―

―

197
71,000

―
―

―
―

―
―

―
―

―
―

―
―

9,387

―

――――――――――――――
―

―
―

―

―

―

―

―

―

4,206
4,206

80,621
88,350

51.2
56.1

154
154

0.1

―

―

―

―

―

―

88,505
157,576

56.2
100.0

―
―

―
―

―
―

―
―

―
―

―
―

Note: Amounts rounded to the nearest million.

5(2) Statements of Income (Abbreviated)(Millions of yen)Account Item

Nine months in thecurrent fiscal year
（From April 1, 2006
to December 31,2006）
PercentAmountage％

Nine months in theprevious fiscal year
(From April 1, 2005
to December 31, 2005)
AmountPercentage％

Increase/Decrease

AmountRatio％The previous fiscalyear（From April 1,2005
to March 31, 2006）(Reference)
PercentAmountage％

I.Net sales

151,138100.0

148,959

100.0

2,178

1.5

190,114

100.0

II. Cost of Sales

103,257

68.3103,056

69.2

200

0.2

131,59469.2

47,881

31.7

45,903

30.8

1,978

4.3

58,51930.8

III. Selling, General and
Administrative Expenses

36,11523.9

35,432

23.8

682

1.9

47,205

24.8

Operating Income

11,765

7.8

10,470

7.0

1,295

12.4

11,314

6.0

IV. Nonoperating Income

491

0.3

579

0.4

(88)

(15.2)

798

0.4

V. Nonoperating Expenses

306

0.2

299

0.2

62.2

318

0.2

Ordinary Income

11,951

7.9

10,751

7.2

1,200

11.2

11,795

6.2

VI. Extraordinary Income

70

0.1――700.0

100.0VII. Extraordinary Losses

10.0

392

0.2

(390)

(99.5)

486

0.3

Income before income taxes

12,0198.0

10,358

7.0

1,661

16.0

11,318

5.9

Income taxes—current

5,529

3.7

4,768

3.2

761

16.0

5,338

2.7

Income taxes—deferred

―

―

―

―

―

―

(175)

0.0

6,490

4.3

5,590

3.8

900

16.1

6,156

3.2

Gross profit

Net Income
Unapproriated retained earnings
brought forward

―

2,950

―

2,950

Interim dividends

―

386

―

386

Unappropriated retained earnings

―

8,154

―

8,720

Note: Amounts rounded to the nearest million.

63. Statement of Change in Shareholders’ Equity etc.
Nine months ended December 31, 2006 (From April 1, 2006 to December 31, 2006)
Shareholders’ Equity
Capital Surplus
Item

Balance as at March
31, 2006 (Millions ofyen)
Change during the 3rdquarter
Appropriation of
UnappropriatedEarnings (Note)
Directors’ bonuses（Note）
Special reserve（Note）
Net income as at theend of the 3td quarter
Change during the 3rdquarter except forshareholders’ equity(Net)
Total Change amountduring the 3rd quarter(Millions of yen)
Balance as atDecember 31, 2006
(Millions of yen)

Item

Balance as at March31, 2006 (Millions ofyen)
Change during the 3rdquarter
Appropriation ofUnappropriated Earnings()
Directors’
bonuses（Note）
Special reserve（Note）
Net income as at the endof the 3td quarter
Change during the 3rdquarter except forshareholders’ equity (Net)
Total Change amountduring the 3rd quarter(Millions of yen)
Balance as at December
31, 2006 (Millions ofyen)

CapitalStock

Retained Earnings
Other retained Earnings
Retained
Advanced
General earnings
depreciation reserve
brought
forwardTotal
capitalsurplus

Legalreserve

3,521

4,206

4,206

37

197

66,0008,720

74,95582,683

―

―――――

(788)

(788)

(788)

―

―

―

―

―

―

(35)

(35)

(35)

―

―

―

―

―

5,000

(5,000)

―

―

―

―

―

―

―

―

6,490

6,490

6,490

―

―

―

―

―

5,000

666

5,666

5,666

3,521

4,206

4,206

37

197

71,0009,387

80,621

88,350

Valuation and translationdifferences
Total
Balance onvaluation
revaluation
andof othertranslation
Securities
differences

Total
retainedearnings

Total
shareholders’equityCapitalreserve

Total net assets

190

190

82,874

―

―

(788)

―

―

(35)

―

―

―

―

―

6,490

(36)

(36)

(36)

(36)(36)

5,630

154

154

88,505（Note）Appropriation items were determined at the ordinary general meeting of shareholders held on June 29, 2006 and the Board of Directors
meeting on October 20, 2006.

7

(4) Statement of Cash Flows (Abbreviated)（Millions of yen）

Account item
I. Cash Flows from Operating Activities
Income before income taxes
Depreciation and amortization
Impairment loss on fixed assets
Amortization of intangible assets
Amortization of long-term prepaid expenses
Loss on retirement of tangible fixed assets
Gain on sale of tangible fixed assets
Loss on sale of tangible fixed assets
Loss on retirement of investment assets and other
Increase in allowance for doubtful account
Increase in reserve for employees’ retirement benefits
Increase in reserve for directors’ retirement
allowances
Increase (decrease) in reserve for bonuses
Dividend and interest income
Interest expense
Decrease (increase) in trade receivables
Decrease (increase) in inventories

Nine months in thecurrent fiscal year
（From April 1, 2006
to December 31, 2006）
AmountNine months in theprevious fiscal year
(From April 1, 2005
to December 31, 2005)
Amount

The previous fiscal year
（From April 1, 2005
to March 31, 2006）(Reference)
Amount12,019
2,420
192
55―
―――
―
52

10,358
2,276
185
101
59
13
―
―
1
4
127

11,318
3,116
185
140
79
55
(10)
0
1
6174

45

14

28(415)(15)
204(714)

(370)
(19)
192
(706)

14(24)
236
(143)

(421)

(5,731)(4,686)

5,250
557
(122)
554
(35)
19,52812(219)(5,486)
13,834

8,078
(75)
(144)
980
(36)
15,31017(192)(5,713)9,420

187(191)
(132)
190
(36)
10,51019(257)(5,709)4,562(5,870)
―(89)
―
(160)

(7,398)―(202)(5)(330)(9,015)32(282)(5)(477)

Increase (decrease) in trade payables
Increase (decrease) in consumption taxes payable
Increase in other assets
Increase in other liabilities
Bonuses to directors paid
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Net cash provided by operating activities
II. Cash Flows from Investing Activities:
Payments for acquisition of tangible fixed assets
Proceeds from sale of tangible fixed assets
Payments for acquisition of intangible assets
Payments for purchase of investment securitiesPayments for leasehold deposits and guarantee money
Proceeds from collection of leasehold deposits andguarantee money
Decrease (increase) in other investments
Net cash used in investing activities
III. Cash Flows from Financing Activities:
Increase in short-term borrowings
Proceeds from long-term debt
Payments for repayment of long-term debt
Proceeds from issuance of shares
Cash dividends paid
Net cash provided by financing activities
IV. Net increase (decrease) in cash and cash equivalents
V. Cash and cash equivalents at beginning of term
VI. Cash and cash equivalents at the end of term

Note: Amounts rounded to the nearest million.

84384

109(102)(6,179)(1,392)(9,244)(1,450)(11,089)

3,300
3,500
(2,288)―(788)
3,722
11,377
5,073
16,451

2,000
4,000(2,245)88(757)3,084
3,260
11,354
14,614―4,000(3,118)
121(756)245(6,280)11,3545,073

Sales by Sector（Millions of yen）

Segment

Hardware, DIY, Gardening
Daily Living
Furniture, Home Fashion
OtherTotal

Nine months in the current
fiscal year
（From April 1, 2006
to December 31, 2006）
ComposiAmounttion ratio

56,14943,22336,001
15,763
151,138

Nine months in the previous
fiscal year
(From April 1, 2005
to December 31, 2005)
ComposiAmounttion ratio

Y-on-Y％
36.1
29.0
24.4
10.5
100.0％
104.4
99.9
99.1
101.2
101.5

％
37.2
28.6
23.8
10.4
100.0

53,78943,24936,342
15,577
148,959

The previous fiscal year
（From April 1, 2005
to March 31, 2006）(Reference)
ComposiAmounttion ratio

67,40454,79047,78920,129190,114

％
35.5
28.8
25.1
10.6
100.0

（Note）Composition according to each sector is as follows.
Hardware, DIY, Gardening（Carpentry tools, fasteners, paint, brushes, masonry, gardening, plumbing,exterior items, timber, shelves, room accessories, hardware, trees,electrical wiring, etc.）
Daily Living（Home-use items, seasonal goods, storage, everyday items, stationery,footwear, cooking appliances）
Furniture, Home Fashion（Furniture, flooring, drapes, interior items, lighting, bedding）
Other（Automotive goods, bicycles, pet goods, remodeling items, heating oil,etc.）9