Summary of Financial Statements for the Second Quarter of Fiscal Year Ending April 2011
December 2, 2010
Name of listed company:

AIN PHARMACIEZ INC.

Exchange listed on:First Section of Tokyo Stock Exchange and Sapporo Securities Exchange

Code number:

9627

Representative:
Inquiries:

Kiichi Otani, President and Representative Director
Hiromi Kato, Senior Managing Director and Chief Director of Administration, TEL: +81-11-783-0189

URL: http://www.ainj.co.jp/

Date of filing Quarterly Securities Report:

December 15, 2010

Date of scheduled payment of dividends:
Supplementary documents for this summary offinancial statements:
Explanation meeting for financial results

Yes
Yes (for institutional investors and analysts)(Amounts are rounded down to nearest million yen.)
1. Consolidated results for the second quarter of fiscal year ending April 30, 2011 (May 1, 2010 to October 31, 2010)(1) Consolidated operating results(The percentages indicate the rates of increase or decrease compared with the preceding second quarter.)
Net sales
Operating income
Ordinary income
Net income
Million yen%

Million yen%

Million yen%

Million yen%

Six months ended October 31, 2010

61,840

3.5

3,417

20.1

3,469

25.6

1,697

25.8

Six months ended October 31, 2009

59,740

5.1

2,846

31.0

2,762

33.4

1,349

62.5

Net income
per share

Diluted net income
per share
Yen

Yen

Six months ended October 31, 2010

115.47-Six months ended October 31, 2009

101.01100.88(2) Consolidated financial position
Shareholders’equity ratio

Net assets

Total assets

Net assets per
share

Million yen

Million yen%

Yen

As of October 31, 2010

72,061

27,23037.7

1,705.14

As of April 30, 2010

65,89821,49232.5

1,520.81

Reference: Shareholders’ equity

As of October 31, 2010 ¥27,181 million

As of April 30, 2010 ¥21,445 million

2. Dividends
Record date

End of firstquarterYen

End of second
quarter
Yen

Dividend per share
End of third
quarter
Yen––
Year ended April 30, 2010––
Year ending April 30, 2011
Year ending April 30, 2011
(forecast)
Note: Revision of the above forecasts during the period under review: None

End of year

Full year

Yen

Yen

–

40.00

40.00

–

45.00

45.00

3. Consolidated financial forecasts for the fiscal year ending April 30, 2011 (May 1, 2010 to April 30, 2011)(The percentages indicate the rates of increase or decrease compared with the preceding fiscal year.)
Net income
Net sales
Operating income
Ordinary income
Net income
per share
Million yen%
Million yen%
Million yen%
Million yen%
Yen
Full year

132,000

5.2

7,800

20.1

7,650

Note: Revision of the above forecasts during the period under review: Yes

20.2

3,820

22.0

249.99

4. Other(1) Major changes in subsidiaries during the period: None
(Note) This refers to changes in specified subsidiaries resulting from changes in scope of consolidation during theperiod under review.
(2) Application of simplified accounting methods/specified accounting methods: Yes(Note) This refers to whether the simplified accounting methods and specified accounting methods for preparation ofquarterly consolidated financial statements were adopted.
(3) Changes in accounting principles, procedures or presentation methods, etc.
1. Changes as a result of revisions to accounting standards, etc.: Yes
2. Changes other than 1: None
(Note) This refers to the changes in the accounting principles, procedures and the presentation methods for
preparation of quarterly consolidated financial statements stated in “Changes in Basis of Presentation of
Quarterly Consolidated Financial Statements.”(4) Number of outstanding shares (common stock):
1. Number of outstanding shares (including treasury stock):
As of October 31, 2010
15,944,106 shares
As of April 30, 2010
14,104,106 shares
2. Number of shares held in treasury:
As of October 31, 2010
2,992 shares
As of April 30, 2010
2,942 shares
3. Average number of shares outstanding:
Six months ended October 31, 2010
14,699,456 shares
Six months ended October 31, 2009
13,355,903 shares*Status of execution of the quarterly review of financial statements:
The procedure for the review of the financial statements under the Financial Instruments and Exchange Act was notcomplete at the moment of disclosing this summary.
*Statement regarding the proper use of financial forecasts and other special remarks
The above forecasts are calculated based on the information available as of the publication date of this material, and actual
financial results may vary due to change in future economic conditions and others. For detail of the financial forecasts, see“Qualitative information on the consolidated financial forecasts” on page 3 of the Attachment.

AIN PHARMACIEZ, INC. (9627) Summary of Financial Statements for the Second Quarter of the Fiscal Year Ending April 30, 2011

Contents
1. Qualitative information / financial statements..................................................................................................................... 2(1) Qualitative information on the consolidated operating results ........................................................................................ 2(2) Qualitative information on the consolidated financial position ........................................................................................ 3(3) Qualitative information on the consolidated financial forecasts ...................................................................................... 3
2. Other information ............................................................................................................................................................. 4(1) Major changes in subsidiaries during the period ........................................................................................................... 4(2) Application of simplified accounting methods/specified accounting methods.................................................................. 4(3) Changes in accounting principles, procedures or presentation methods........................................................................ 4
3. Consolidated financial statements .................................................................................................................................... 5(1) Consolidated balance sheets....................................................................................................................................... 5(2) Consolidated statements of income ............................................................................................................................. 7(3) Consolidated statements of cash flows ........................................................................................................................ 8(4) Notes on the premise of a going concern ................................................................................................................... 10(5) Segment Information................................................................................................................................................. 10(6) Notes on significant changes in the amount of shareholders’ equity .............................................................................11

1

AIN PHARMACIEZ, INC. (9627) Summary of Financial Statements for the Second Quarter of the Fiscal Year Ending April 30, 2011

1. Qualitative information / financial statements(1) Qualitative information on the consolidated operating results
During the first six months of the current fiscal year (May 1, 2010 to October 31, 2010), despite a moderate
improvement being witnessed with corporate profits recovering and consumer spending picking up, the Japanese
economy remained fraught with concerns, including worries about the potential downturn of the global economy as well
as changes in foreign exchange rates and stock prices.
Under the economic circumstances described above, the AIN PHARMACIEZ Group (the Group) sought to expand its
operations by aggressively opening and developing dispensing pharmacies and urban drug stores while strengthening
its financial position by means including a capital increase of ¥4.7 billion in total through a public offering and a private
placement.
In addition, in order to enhance its creditworthiness and its management transparency, the Group acquired a new
credit rating on September 28, 2010 (a long-term senior debts rating of BBB+ from Japan Credit Rating Agency, Ltd.).
Financial results for the first six months were favorable: net sales were ¥61,840 million (3.5% up year on year),ordinary income ¥3,469 million (25.6% up year on year), and net income ¥1,697 million (25.8% up year on year).
The financial results by business segments are as indicated below.
(Pharmaceutical business)
In the pharmaceutical business, the Group sought to expand the scale of its sales and profitability by developing
dispensing pharmacies, including through M&As, as well as by promoting the use of generic drugs and pursuing higher
efficiency in pharmacy operations.
With respect to sales, the Group compensated for the effects of the April 2010 revisions to drug prices and dispensing
fees with new store openings, despite a delay in the implementation of its original pharmacy opening plan. Profits
increased thanks to the changes made in the proportion of additional technical fees for handling generic drugs and ahigher pharmacy operational efficiency.
Accordingly, our revenues and profits increased in the first six months: net sales were ¥54,409 million (2.9% up year
on year) and operating income of ¥4,485 million (19.3% up year on year).
During the said period, the Group opened 11 new stores in total and closed four stores, resulting in 404 operating
dispensing pharmacies in total.
(Product sales business)
In the product sales business, the Group endeavored to strengthen its sales and earnings capabilities by promoting thedevelopment of ainz & tulpe, a mainstay urban drugstore, in major cities across Japan while improving its merchandizing
and drastically revising its sales and administrative expenses.
Our business performance on a same-store basis generally improved year-on-year both in terms of sales and profits due
to lower purchase prices resulting from a partial logistical integration with the Seven & i Holdings Group.
Net sales for the first six months were ¥7,315 million (9.0% up year on year), and operating loss amounted to ¥108
million (cf. operating loss of ¥198 million in the year-earlier period).
During the said period, there were a total of three new openings of ainz & tulpe urban drugstores: Tokyo Station Store
within Japan Railway’s Tokyo Station, BISSE ODORI Store in Chuo-ku, Sapporo and coppice KICHIJOJI Store near
Japan Railway’s Kichijoji Station in Musashino-shi, Tokyo. With the closure of one cosmetics shop during the period, thenumber of our drug stores at the end of the period totaled 51.
(Other businesses)
Net sales and operating loss from other businesses were ¥116 million and ¥35 million, respectively.
(Note) Effective from May 1, 2010, the Company applied the Accounting Standard for Disclosures about Segments of anEnterprise and Related Information (ASBJ Statement No. 17, released on March 27, 2009) and the Guidance on
Accounting Standards for the Disclosure about Segments of an Enterprise and Related Information (ASBJ Guidance
No. 20, released on March 21, 2008). Since these applications do not have any effect on the Company’s businesssegmentation, a year-on-year comparison is provided for the first six months of the current fiscal year.

2

AIN PHARMACIEZ, INC. (9627) Summary of Financial Statements for the Second Quarter of the Fiscal Year Ending April 30, 2011(2) Qualitative information on the consolidated financial position
The balance of total assets at the end of the second quarter increased by ¥6,162 million from the end of the previous
fiscal year to ¥72,061 million. This is mainly attributable to the increase in cash on hand and in banks associated withthe capital increase through a public offering and a private placement and to a rise in inventories and accounts
receivable.
The balance of liabilities increased by ¥423 million to ¥44,830 million. This is primarily because of the increase inaccounts payable. Interest-bearing debts decreased by ¥1,655 million to ¥13,321 million.
The balance of net assets rose by ¥5,738 million to ¥27,230 million. This is mainly due to the increase of ¥2,374
million each in common stock and capital surplus from capital increase through a public offering as well as theincrease of net income for the first six months of current fiscal year. As a result, the equity ratio improved by 5.2 points
to 37.7%.
(Cash flows)
In the first six months of the current fiscal year, cash and cash equivalents (hereunder “cash”) increased by ¥4,007
million from the previous fiscal year end to ¥15,196 million.
Cash flows from each activity and their relevant factors are as follows.
During the first six months, net cash provided by operating activities was ¥2,756 million (cf. ¥4,298 million wasprovided a year earlier) with the inflows of ¥3,281 million in income before income taxes and minority interests and¥1,370 million in the increase of accounts payable as well as with the outflow of ¥2,267 million in other accounts
receivable and ¥1,697 million in income tax payments.
Net cash used for investing activities amounted to ¥1,147 million (cf. ¥1,406 million was used a year earlier) mainly
due to the payments of ¥637 million for the acquisition of property, plant and equipment, and intangible fixed assets,¥132 million for the acquisition of investment securities, ¥121 million for loans receivable.
Net cash provided by financing activities was ¥2,398 million (cf. ¥73 million was generated a year earlier). This ismainly attributable to the repaid amount of ¥1,655 million as a difference between borrowings and repayments ofinterest-bearing debts, the proceeds of ¥4,720 million from the issuance of new shares by way of a public offering anda private placement in September 2010, and the dividend payments of ¥564 million.

(3) Qualitative information on the consolidated financial forecasts
While the Company’s business performance remains broadly favorable, centered mainly on established stores, werevised our sales forecast for the full year to ¥132,000 million, down ¥5,750 million yen from our most recently
announced consolidated sales forecast for the full year by comprehensively considering certain factors including
possible changes in the timing of store openings in the pharmaceutical and product sales businesses from the third
quarter of the current fiscal year.
No revision was made with respect to operating income, ordinary income, net income and net income per share fromthe most recently announced consolidated financial forecast for the full year.
The following table shows differences from the consolidated financial forecasts previously announced for the full year.
Net sales
Previously announced forecast (A)Revised forecast (B)Amount of change (B-A)
Percentage change (%)
Actual results of previous fiscal year

OperatingincomeOrdinary
incomeNet income

Net income
per share

Million yen

Million yen

Million yen

Million yen

Yen137,750132,000(5,750)(4.2)
125,495

7,800
7,800
－
－
6,492

7,650
7,650
－
－
6,362

3,820
3,820
－
－
3,131

249.99249.993228.08AIN PHARMACIEZ, INC. (9627) Summary of Financial Statements for the Second Quarter of the Fiscal Year Ending April 30, 2011

2. Other information(1) Major changes in subsidiaries during the period: None
(2) Application of simplified accounting methods/specified accounting methods
1. Calculation method for depreciation of fixed assets
Depreciation of fixed assets was calculated by the method in which the estimated annual depreciation amountbased on the budget for the current fiscal year was proportionally distributed over the year to adjust actual results ofacquisition, sale or retirement during the year.
2. Judgment on the collectability of deferred tax assets
As no significant change was found in the management environment and the occurrence of temporary differences
after the end of the previous consolidated fiscal year, the projected financial results and tax planning for the futureused in the settlement of the previous consolidated fiscal year were used in the judgment on the collectability ofdeferred tax assets.
3. Calculation method for deferred and accrued accounts
Deferred and accrued accounts were calculated by posting estimated figures based on a reasonable
computation method.
4. Calculation of tax expenses
Tax expenses were calculated by reasonably estimating the effective tax rate after the application of the tax effectaccounting to the net income before taxes for the consolidated fiscal year including the first six months period, andmultiplying the estimated effective tax rate by the net income before taxes and other adjustments for the quarter.
In addition, deferred income taxes are included in income taxes.
(3) Changes in accounting principles, procedures or presentation methods
1. Calculation method for depreciation of fixed assets
Effective from May 1, 2010, the Company applied the Accounting Standard for Asset Retirement Obligations (ASBJ
Statement No. 18, released on March 31, 2008) and the Guidance on Accounting Standard for Asset Retirement
Obligations (ASBJ Guidance No. 21, released on March 31, 2008).
This reduced operating income and ordinary income for the first six months of the current fiscal year by ¥14,056
thousand each, and net income before income taxes and minority interests for the same period by ¥174,652
thousand. The change in asset retirement obligations due to the application of the accounting standards was¥359,044 thousand.
2. Judgment on the collectability of deferred tax assets
Effective from May 1, 2010, the Company applied the Accounting Standard for Business Combinations (ASBJ
Statement No. 21, released on December 26, 2008), the Accounting Standard for Consolidated Financial Statements(ASBJ Statement No. 22, released on December 26, 2008), partial amendments to the Accounting Standard for
Research and Development Costs (ASBJ Statement No. 23, released on December 26, 2008), the revised
Accounting Standard for Business Divestitures (ASBJ Statement No. 7, revised on December 26, 2008), the revised
Accounting Standard for Equity Method of Accounting for Investments (ASBJ Statement No. 16, revised on
December 26, 2008) and the revised Guidance on Accounting Standard for Business Combinations and AccountingStandard for Business Divestitures (ASBJ Guidance No. 10, revised on December 26, 2008).

4

AIN PHARMACIEZ, INC. (9627) Summary of Financial Statements for the Second Quarter of the Fiscal Year Ending April 30, 2011

3. Consolidated financial statements(1) Consolidated balance sheets(Thousand yen)Six months ended
October 31, 2010
（As of October 31, 2010）

Fiscal year endedApril 30, 2010
（As of April 30, 2010）

Assets:Current assets:
Cash on hand and in banks

15,196,110

11,188,462

Notes and accounts receivable

8,532,954

9,269,803

Merchandise

7,278,465

6,841,202

Supplies

106,11396,821

Deferred tax assets

738,617723,032

Short-term loans

952,640

892,880

3,701,471

1,404,247

Other current assets

635,908

850,723

Allowance for doubtful accounts(31,105)(24,957)

37,111,175

31,242,215

Buildings and structures, net

6,220,518

5,993,445

Land

5,011,521

5,001,721

Other property, plant and equipment, net

1,633,038

1,515,631

Total property, plant and equipment

12,865,078

12,510,799

11,742,052

12,154,420

Other intangible fixed assets

975,889

923,368

Total intangible fixed assets

12,717,941

13,077,789

Investments in securities

2,842,169

2,802,672

Deferred tax assets

1,159,126

995,611

Deposits and guarantees

4,537,291

4,462,540

Other investments and other assets

1,008,361

1,013,395

Allowance for doubtful accounts(217,815)(220,215)

Total investments and other assets

9,329,134

9,054,003

34,912,155

34,642,592

Stock issuance cost

38,423

14,042

Total deferred assets

38,423

14,042

72,061,753

65,898,850

Other accounts receivable

Total current assets
Fixed assets:
Property, plant and equipment:

Intangible fixed assets:
Goodwill

Investments and other assets:

Total fixed assets
Deferred assets

Total assets

5

AIN PHARMACIEZ, INC. (9627) Summary of Financial Statements for the Second Quarter of the Fiscal Year Ending April 30, 2011

(Thousand yen)Six months ended
October 31, 2010
（As of October 31, 2010）

Fiscal year endedApril 30, 2010
（As of April 30, 2010）

Liabilities:
Current liabilities:
Accounts payable

21,036,930

19,666,791

Short-term debt

6,285,152

6,549,284

Accrued income taxes

1,710,343

1,709,338

Deposits received

3,309,727

3,036,027

Allowance for bonuses to employees

981,393875,171

Allowance for bonuses to directors

11,54521,072

Reserve for reward obligation

315,346

297,728

Other current liabilities

1,847,975

1,984,635

Total current liabilities

35,498,413

34,140,049

Long-term debt

7,036,094

8,427,212

Allowance for retirement benefits

1,118,442

1,017,997

Other long-term liabilities

1,177,808

821,540

Total long-term liabilities

9,332,345

10,266,750

44,830,758

44,406,799

Common stock

8,682,976

6,308,456

Capital surplus

7,872,970

5,498,450

Retained earnings

11,007,509

9,874,264(4,607)(4,445)27,558,849

21,676,725

Unrealized holding losses on securities(376,955)(231,603)

Total valuation and translation adjustments(376,955)(231,603)

Minority interests

49,101

46,929Total net assets

27,230,994

21,492,051

Total liabilities and net assets

72,061,753

65,898,850

Long-term liabilities:

Total liabilities
Net Assets:
Shareholders’ equity:

Treasury stock
Total shareholders’ equity
Valuation and translation adjustments:

6

AIN PHARMACIEZ, INC. (9627) Summary of Financial Statements for the Second Quarter of the Fiscal Year Ending April 30, 2011

(2) Consolidated statements of income(Thousand yen)Six months ended
October 31, 2010
( May 1, 2010 to
October 31, 2010)

Six months ended
October 31, 2009
( May 1, 2009 to
October 31, 2009)
Net sales

59,740,895

61,840,968

Cost of sales

51,664,935

52,697,173

Gross profit

8,075,960

9,143,795

Selling, general and administrative expenses

5,229,677

5,725,810

Operating income

2,846,283

3,417,985

Interest income

22,82029,296

Dividend income

13,653

20,165

Commissions received

41,27523,677

Real estate rental revenue

31,923

43,162

Consignment income

21,28742,771Other non-operating income

41,291

110,930

Total non-operating income

172,252

270,003

Interest expenses

153,806

117,064

Loss on sales of accounts receivable

41,72334,801

Real estate rental expenses

15,614

24,684

Other non-operating expenses

44,79541,555Non-operating income:Non-operating expenses:

Total non-operating expenses
Ordinary income

255,940

218,106

2,762,596

3,469,882

Extraordinary income:Gain on sale of investments in securities
Gain on sale of property, plant and equipment
Gain on transfer of business

52,381

－

－

979

－

19,047

2,400

2,400

State subsidy－

38,648Other extraordinary income－

583

Total extraordinary income

54,781

61,659Loss on disposal of fixed assets

29,88535,207

Loss on devaluation of investments in securities

44,521

34,689Impairment losses

54,910－－160,596

32,805

19,914

Reversal of allowance for doubtful accounts

Extraordinary losses:

Loss on adjustment for changes of accounting
standard for asset retirement obligations
Other extraordinary losses
Total extraordinary losses

162,123

250,407

Income before income taxes and minority interests

2,655,253

3,281,134

Income taxes

1,302,851

1,581,670－

1,699,463

3,285

2,171

1,349,117

1,697,291

Income before minority interests
Minority interests
Net income

7

AIN PHARMACIEZ, INC. (9627) Summary of Financial Statements for the Second Quarter of the Fiscal Year Ending April 30, 2011

(3) Consolidated statements of cash flows(Thousand yen)Six months ended
October 31, 2009
(May 1, 2009 to
October 31, 2009)

Six months ended
October 31, 2010
(May 1, 2010 to
October 31, 2010)

Cash flows from operating activities:
Income before income taxes and minority interests
Depreciation and amortization

2,655,253

3,281,134

562,226

680,813

Impairment losses

54,910－

Amortization of goodwill

433,303

440,940

Gain on transfer of business－(19,047)

Loss on devaluation of investments in securities

44,521

34,689

Increase in allowance for retirement benefits

65,530100,445

Increase in allowance for bonuses to employees

123,710106,221

Decrease in allowance for bonuses to directors(12,309)(9,527)

Interest and dividend income(36,474)(49,461)Interest expenses

153,806

117,064

Loss on disposals and sales of property, plant and equipment

29,88534,227

Loss on adjustment for changes of accounting standard for
asset retirement obligations－

160,596

Decrease (increase) in accounts receivable(768,735)

736,849

Increase in inventories(511,767)(463,854)－(2,267,194)

979,887

1,370,139

Increase in other accounts receivable
Increase in accounts payable
Other

1,893,889

269,213

Subtotal

5,667,639

4,523,249

Interest and dividends received

34,771

48,629(154,218)(117,710)

Income taxes paid

(1,249,946)(1,697,685)

Net cash provided by operating activities

4,298,246

2,756,482

Payments for purchases of property, plant and equipment, andintangible fixed assets(653,639)(637,612)

Proceeds from sales of property, plant and equipment, andintangible fixed assets

3,674

4,039

(389,783)(132,160)

67,544－

Interest paid

Cash flows from investing activities:

Payments for purchases of investments in securities
Proceeds from sales of investments in securities
Payments for purchases of shares in affiliated companies(270,000)－－

16,005

Payments for loans receivable(560,000)(121,565)

Proceeds from collections of loans receivable

226,458

8,000

Other

169,156(284,434)(1,406,589)(1,147,727)

Proceeds from transfer of businessNet cash used in investing activities

8

AIN PHARMACIEZ, INC. (9627) Summary of Financial Statements for the Second Quarter of the Fiscal Year Ending April 30, 2011

(Thousand yen)Six months ended
October 31, 2009
(May 1, 2009 to
October 31, 2009)

Six months ended
October 31, 2010
(May 1, 2010 to
October 31, 2010)

Cash flows from financing activities:
Proceeds from short-term debts

1,542,307

1,100,000

Repayments for short-term debts(2,632,317)(900,000)

Proceeds from long-term debts

1,150,000

100,000

Repayments for long-term debts(1,962,044)(1,955,250)

Payment for redemption of bonds(56,000)－

2,484,765

4,720,038(68,178)(101,682)

(378)

(161)

(384,941)(564,046)

Dividend payments to minority shareholders

(126)

(6)

Net cash provided by financing activities

73,0862,398,891

Increase in cash and cash equivalents

2,964,743

4,007,647

Cash and cash equivalents at beginning of the period

9,234,052

11,188,462

Cash and cash equivalents at end of the period

12,198,796

15,196,110

Proceeds from issuance of new shares
Repayments of lease obligations
Payments for purchase of treasury stock
Cash dividends paid

9

AIN PHARMACIEZ, INC. (9627) Summary of Financial Statements for the Second Quarter of the Fiscal Year Ending April 30, 2011

(4) Notes on the premise of a going concern
None(5) Segment Information[Business Segment Information]
Six months ended October 31, 2009 (May 1, 2009 to October 31, 2009)(Thousand yen)Pharmaceutical Product sales
businessbusiness

Otherbusinesses

Total

Eliminations/
Corporate

Consolidated

Net sales(1) Sales to externalcustomers

52,891,322

6,711,249

138,323

59,740,895－

59,740,895

－

3,000

6,613

9,613

(9,613)－

Total

52,891,322

6,714,249

144,937

59,750,509(9,613)59,740,895

Operating income (loss)

3,682,825(238,900)(35,385)

3,408,539(562,256)

2,846,283(2) Inter-segment sales
and transfers

Notes:

1. Business segmentation
Businesses are segmented based on the method adopted for internal management.
2. Individual business segments involve the following activities.
Pharmaceutical business: Management of dispensing pharmacies, franchise operation,
temporary staff/recruiting and consulting services, selling ofpharmaceuticals and generic drugs.
Product sales business: Selling of pharmaceuticals, cosmetics and household groceries,
franchise operation, consultant practice on opening of shopping centers,
management of pharmacies
Other businesses:
Real-estate leasing service[Segment information by location]
This is not applicable because the Company has no subsidiary or important branch office located in foreign countries.
[Overseas net sales]
This is not applicable because the Company has no sales in foreign countries.

10

AIN PHARMACIEZ, INC. (9627) Summary of Financial Statements for the Second Quarter of the Fiscal Year Ending April 30, 2011

[Segment Information]
1. Description of the reportable segments
The Company’s reporting segments consist of those of its components for which it is possible to obtain separate
financial information that is examined by its Board of Directors on a regular basis for the purpose of deciding on the
allocation of corporate resources and assessing business performance.
The Group’s business comprises three units that together represent its main business units, namely, apharmaceutical business that consists of dispensing pharmacies, selling of generic drugs, temporary staff/recruiting
and consulting services, and a product sales business that consists of the management of urban, cosmetics andsuburban drugstores, as well as other businesses that consist mainly of real-estate leasing services. The formulationand examination of business strategy is conducted individually for each business.
Accordingly, the reporting segments of the Group are composed of three units, namely, pharmaceutical business,
product sales business and other businesses.
2. Net sales and profit (loss) by reportable segment
Six months ended October 31, 2010 (May 1, 2010 to October 31, 2010)(Thousand yen)
Reportable segments
Pharmaceutical Product sales
businessbusiness

Otherbusinesses

Total

Adjustment(Note) 1

Carried on
Statement of
Income(Note) 2

Net sales(1) Sales to externalcustomers

54,409,063

7,315,727

116,178

61,840,968－

61,840,968

－

－

6,613

6,613

(6,613)－

Total

54,409,063

7,315,727

122,792

61,847,582(6,613)

61,840,968

Segment income (loss)

4,485,998(108,402)(35,809)

4,341,787(871,904)

3,469,882(2) Intersegment sales
and transfers

Notes:

1. Segment income (loss) in “Adjustment” totaling (¥871,904 thousand) includes ¥708,780 thousand in overall groupexpenses, ¥97,594 thousand in loss that may not be allocated to the reporting segments, and ¥65,529 thousandin elimination due to inter-segment transactions.
The overall group expenses consist mainly of expenses associated with the administrative divisions of the parent
company, such as general affairs and accounting divisions.
2. Segment income is adjusted with the ordinary income of quarterly income statements.

3. Impairment loss on fixed assets and goodwill by reportable segment[Significant impairment loss on fixed assets]: None
[Significant changes in the amount of goodwill]: None
[Additional information]
Effective from May 1, 2010, the Company applied the Accounting Standard for Disclosures about Segments of anEnterprise and Related Information (ASBJ Statement No. 17, released on March 27, 2009) and the Guidance on
Accounting Standards for the Disclosure about Segments of an Enterprise and Related Information (ASBJ Guidance
No. 20, released on March 21, 2008).

(6) Notes on significant changes in the amount of shareholders’ equity
In the second quarter of the current fiscal year, the Company conducted the issuance of shares and secondary shareoffering through a public offering and a private placement in accordance with a resolution adopted by its Board of
Directors on August 17, 2010 for the purpose of improving equity capital and strengthening the Company’s financial
position, as well as obtaining capital expenditure funds for new store openings. As a result, common stock and capitalsurplus increased by ¥2,374 million each during the first six months of the current fiscal year. At the end of the second
quarter of the current fiscal year, common stock and capital surplus were respectively ¥8,682 million and ¥7,872 million.

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