Summary of Financial Statements for the Second Quarter of Fiscal Year Ending April 2010
December 3, 2009
Name of listed company: AIN PHARMACIEZ INC.

Exchange listed on: Tokyo, Second Section

Code number:

9627

URL:

Representative:
Inquiries:

Kiichi Ohtani, President and Representative Director
Junichi Kawai, Senior Managing Director and Chief Director of Administration

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

TEL: +81-11-783-0189
Date of filing Quarterly Securities Report: December 15, 2009
(Amounts are rounded down to nearest million yen.)
1. Consolidated results for the second quarter of fiscal year ending April 30, 2010 (May 1, 2009 to October 31, 2009)(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

Six months ended October 31, 2009
Six months ended October 31, 2008

Million yen%

Million yen%

Million yen%

Million yen%

59,74056,859

5.1
–

2,846
2,172

31.0
–

2,762
2,070

33.4
–

1,349
830

62.5
–

Net income
per share
Six months ended October 31, 2009
Six months ended October 31, 2008

Diluted net income
per shareYen
101.01
68.59

Yen
100.8868.39(2) Consolidated financial position

As of October 31, 2009
As of April 30, 2009
Reference: Shareholders’ equity

Shareholders’equity ratio

Net assets

Total assets

Million yen
Million yen
65,36019,65562,032
16,109As of October 31, 2009 ¥19,614 million

%
30.0
25.9
As of April 30, 2009

Net assets per
share
Yen
1,391.01
1,252.54¥16,071 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, 2009
Year ending April 30, 2010
Year ending April 30, 2010
(forecast)
Note: Revision of the above forecasts during the period under review: None–

End of year

Full year

Yen

Yen

30.00

30.00

35.00

35.00

3. Consolidated financial forecasts for the fiscal year ending April 30, 2010 (May 1, 2009 to April 30, 2010)(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
127,000
10.1
6,150
16.1
6,000
19.0
2,900
36.3
211.24
Note: Revision of the above forecasts during the period under review: Yes

1

4. Other(1) Major changes in subsidiaries during the period (changes in specified subsidiaries resulting from changes in scope of
consolidation): None
(2) Application of simplified accounting methods/specified accounting methods for preparation of quarterly consolidated
financial statements: Yes
For details, see “4. Other information” of Qualitative Information / Financial Statements on page 5.
(3) Changes in accounting principles, procedures or presentation methods used in the preparation of the consolidated
financial statements
1. Changes as a result of revisions to accounting standards, etc.: None
2. Changes other than (1): None
(4) Number of outstanding shares (common stock)
1. Number of outstanding shares at end of period (including treasury stock):
As of October 31, 2009
14,104,106 shares
As of April 30, 2009
12,834,106 shares
2. Number of shares held in treasury at end of period:
As of October 31, 2009
2,881 shares
As of April 30, 2009
2,730 shares
3. Average number of shares outstanding
Six months ended October 31, 2009
13,355,903 shares
Six months ended October 31, 2008
12,100,359 shares*Statement regarding the proper use of financial forecasts and other special remarks
1. The financial forecasts for the fiscal year ending April 30, 2010 published on September 1, 2009 were adjusted. For
matters on financial forecasts, please see “3. Qualitative information on the consolidated financial forecasts” in
Qualitative Information / Financial Statements on page 4.
2. The above forecasts are calculated based on the information available as of the publication date of this material, andactual financial results may vary due to change in future economic conditions and others.

2

Qualitative Information / Financial Statements
1. Qualitative information on consolidated operating results
During the first six months of the current fiscal year (May 1, 2009 to October 31, 2009), the Japanese economy
remained in severe conditions especially in the further worsening employment situation although some aspects such asexports and consumer spending were picking up.
In these economic circumstances, the AIN PHARMACIEZ Group (the Group) sought the expansion both in theoperational scale and earnings by powerfully promoting the opening and development of dispensing pharmacies andurban drug stores and by ensuring cost control in the Group.
In addition, it increased its capital ¥2.4 billion in total through a public offering in August 2009 to obtain capital
expenditure funds from the market for further expansion, and as a result successfully reinforced the financial strength.
Financial results for the first six months were favorable: net sales were ¥59,740 million (5.1% up year on year),ordinary income ¥2,762 million (33.4% up year on year), and net income ¥1,349 million (62.5% up year on year).
The financial results by business segments are as indicated below.
(Pharmaceutical business)
In the pharmaceutical business, prescription terms for outside-the-hospital prescriptions were increasingly becoming
longer while unit prices per prescriptions remained on the upward trend. On the other hand, both new and existing
dispensing pharmacies had favorable numbers of visitors. Group-wide cost improvement efforts in the pharmacy
operation and administrative unit brought about higher sales and higher profits compared with the previous year.
As a result of the reorganization among the Group companies for a more agile and efficient group system, thefollowing mergers were carried out: AIN MEDICAL SYSTEMS Inc. (Shinjuku-ku, Tokyo; surviving company) and RejoiceInc. (Shinjuku-ku, Tokyo; defunct company) on August 1, 2009, as well as AIN TOKAI Inc. (Higashi-ku, Nagoya; surviving
company) and Rejoice Pharmacy Inc. (Nakagyo-ku, Kyoto; defunct company) on October 1, 2009. (Upon the merger AIN
TOKAI Inc. was renamed AIN MEDIO Inc.)
In regard to pharmaceutical facilities, we introduced, on a trial basis, an automatic drug picking device (generic namefor a fully automated dispensing device for packed drugs) in multiple locations to verify general effects such as the
improved safety and efficiency through the automated dispensing operation.
Accordingly, our revenues and profits increased in the first six months: net sales were ¥52,891 million (6.0% up year
on year) and operating income of ¥3,682 million (31.9% up year on year).
During the said period, the Group opened six new stores in total and suspended the operation of one store, resulting in
380 operating dispensing pharmacies in total in the Group.
(Product sales business)
The product sales business saw sales and income in existing stores dropped below the results for the year-ago period
mainly because of the stagnant consumption in the retail industry as well as lower prices and sluggish sales in thespecified cosmetics involving counseling sales.
Meanwhile, the specialized cosmetics (general cosmetics) as the Company’s main commercial goods exceeded theresults for the previous fiscal year. We will continuously reinforce the merchandise and promote the opening anddevelopment of urban drug stores to move into the black on an operating basis.
We advanced various efforts based on the partnership with the group of Seven & i Holdings Co., Ltd. including the joint
development of a drug store in Ito Yokado called “Seven’s Garden of Beauty” which referenced the concept of Ainz &Tulpe, conversion of Hirokoji Place Store of Ainz & Tulpe (Naka-ku, Nagoya) into a Seven-Eleven-based store, andagreement on the opening of a store in the Seibu Ikebukuro Main Store (Toshima-ku, Tokyo) (Ikebukuro Store of Ainz &Tulpe was opened in November 2009).
Net sales for the first six months were ¥6,711 million (2.0% down year on year), and operating loss ¥238 million (cf.
operating loss of ¥109 million in the year-earlier period).
During the said period, we opened a new store in Chuo-ku, Sapporo and closed a small store, resulting in 46 drug
stores in total.
(Other businesses)
Net sales and operating loss from other businesses were ¥138 million and ¥35 million, respectively.

3

2. Qualitative information on consolidated financial position(1) Total assets, liabilities, and net assets
The balance of total assets at the end of the second quarter increased by ¥3,327 million from the end of the previous
fiscal year to ¥65,360 million. This is mainly attributable to the increase in cash on hand and in banks associated withthe capital increase through a public offering, rise in notes and accounts receivable and inventories due to the
expansion of the operational scale, and the acquisition of investment securities including the investment in Seven
Health Care Co., Ltd.
The balance of liabilities decreased by ¥218 million to ¥45,705 million. This is primarily because of the fall ininterest-bearing debts, whose balance dropped by ¥1,958 million to ¥16,724 million.
The balance of net assets rose by ¥3,546 million to ¥19,655 million. This is mainly due to the increase of ¥1,203
million each in capital stock and legal capital surplus from capital increase through a public offering and the increase of
net income for the first six months of current fiscal year. As a result, the equity ratio improved by 4.1 points to 30.0%.
(2) Cash flows
In the first six months of the current fiscal year, cash and cash equivalents (hereunder “cash”) increased by ¥2,964
million from the end of the previous fiscal year to ¥12,198 million as of the end of the second quarter.
Cash flows from each activity and their relevant factors are as follows.
During the first six months, net cash provided by operating activities was ¥4,298 million (cf. ¥889 million was used
for operating activities in the year-ago period) with the inflows of ¥2,655 million in net income before income taxes andminority interests and ¥979 million in the increase of accounts payable as well as with the outflow of ¥1,249 million inincome tax payments.
Net cash used for investing activities amounted to ¥1,406 million (10.7% up year on year) mainly due to thepayments of ¥653 million for the acquisition of tangible and intangible fixed assets, ¥389 million for the acquisition of
investment securities, ¥270 million for the acquisition of shares in affiliated companies, and ¥560 million for loans
receivable.
Net cash provided by financing activities was ¥73 million (97.3% down year on year). This is mainly attributable to
the repaid amount of ¥1,958 million as a difference between borrowings and repayments of interest-bearing debts, theproceeds of ¥2,484 million from the exercise of equity warrants and the issuance of shares associated with the capitalincrease through a public offering in August 2009, and the dividend payments of ¥384 million.

3. Qualitative information on the consolidated financial forecasts
In regard to the future outlook, we revised the most recently announced consolidated financial results for the full year
by comprehensively considering certain factors including the actual results up to the end of the first six months of thecurrent fiscal year, the cost reduction effect and possible changes in the timing of store openings in the pharmaceuticalbusiness, delayed turnaround in the product sales business, and the impact on net income per share associated with thecapital increase through a public offering.
The table below shows the differences from the most recently announced consolidated financial results for the fullyear.
The following table shows differences from the consolidated financial forecasts previously published for the full year.
OperatingincomeNet sales

Ordinary
incomeNet income

Net income
per share

Million yen

Million yen

Million yen

Million yen

Yen

127,000
127,000

6,050
6,150

5,850
6,000

2,800
2,900

203.95211.24

Amount of change (B-A)

－

100

150

100

Percentage change (%)

－

1.7

2.6

3.6

115,387

5,296

5,041

2,127

Previously published forecast (A)Current adjusted forecast (B)Actual results of previous fiscal year4

170.74

4. Other information(1) Major changes in subsidiaries during the period (changes in specified subsidiaries resulting from changes in scopeof consolidation): None
(2) Application of simplified accounting methods/specified accounting methods for preparation of quarterly consolidated
financial statements
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 used in the preparation of the consolidated
financial statements: None5

5. Consolidated Financial Statements(1) Consolidated Balance Sheets(Thousand yen)Six months ended
Fiscal year ended
October 31, 2009
April 30, 2009
（As of October 31, 2009） （As of April 30, 2009）
Assets:Current assets:
Cash on hand and in banks

12,198,796

9,234,052

Notes and accounts receivable

9,328,917

8,560,181

Merchandise

6,344,464

5,832,459

Supplies

96,14996,387

Deferred tax assets

625,151

631,776

Short-term loans

954,475

613,327

1,173,006

2,409,241

Other current assets

576,842805,376

Allowance for doubtful accounts(19,930)(12,059)

31,277,872

28,170,743

Buildings and structures, net

5,943,281

5,987,520

Land

5,011,747

4,958,767

Other tangible fixed assets, net

1,374,276

1,292,151

Total tangible fixed assets

12,329,305

12,238,439

12,427,284

12,835,388

Other intangible fixed assets

752,783

657,926

Total intangible fixed assets

13,180,068

13,493,314

2,766,589

2,057,061

839,860

892,856

4,314,769

4,496,234

Other investments and other assets

901,422

952,859

Allowance for doubtful accounts(266,187)(268,587)

Total investments and other assets

8,556,454

8,130,424

34,065,828

33,862,179

Stock issuance cost

17,051－

Total deferred assets

17,051－
62,032,922

Other accounts receivable

Total current assets
Fixed assets:
Tangible fixed assets:

Intangible fixed assets:
Goodwill

Investments and other assets:
Investments in securities
Deferred tax assets
Deposits and guarantees

Total fixed assets
Deferred assets

Total assets

65,360,753

6

(Thousand yen)Six months ended
Fiscal year ended
October 31, 2009
April 30, 2009
（As of October 31, 2009） （As of April 30, 2009）
Liabilities:
Current liabilities:
Accounts payable

19,692,494

18,712,606

Short-term debt

6,805,620

7,576,357

Current portion of bonds

84,000140,000

Accrued income taxes

1,308,222

1,263,593

Deposits received

3,423,406

2,841,871

Allowance for bonuses to employees

923,727

800,017

Allowance for bonuses to directors

30,805

43,114

Reserves for reward obligations

281,232

273,137

Other current liabilities

1,604,239

1,751,482

Total current liabilities

34,153,748

33,402,179

9,834,964

10,966,271

Allowance for retirement benefits

928,640

863,110

Other long-term liabilities

787,794692,253

Total long-term liabilities

11,551,399

12,521,635

Total liabilities

45,705,147

45,923,815

Net Assets:
Shareholders’ equity:
Common stock

6,308,456

5,057,046

Capital surplus

5,498,450

4,247,040

Retained earnings

8,092,164

7,127,988(4,291)(3,912)

19,894,780

16,428,163

Unrealized holding gain on securities(279,817)(356,413)

Total valuation and translation adjustments(279,817)(356,413)

Minority interests

40,64237,357

Total net assets

19,655,605

16,109,107

Total liabilities and net assets

65,360,753

62,032,922

Long-term liabilities:
Long-term debt

Treasury stock
Total shareholders’ equity
Valuation and translation adjustments:7(2) Consolidated Statements of Income(Thousand yen)Six months ended
October 31, 2008
( May 1, 2008 to
October 31, 2008)

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

Net sales

56,859,193

59,740,895

Cost of sales

49,701,350

51,664,935

Gross profit

7,157,843

8,075,960

Selling, general and administrative expenses

4,985,565

5,229,677

Operating income

2,172,278

2,846,283

Interest income

17,207

22,820

Dividend income

12,036

13,653

Commissions received

26,731

41,275

Real estate rental revenue

28,74831,923

Consignment income

16,60521,287

Other non-operating income

38,042

41,291

Total non-operating income

139,371

172,252

Interest expenses

191,396

153,806

Loss on sales of receivable

27,954

41,723

Real estate rental expenses

6,199

15,614

Other non-operating expenses

15,47144,795

Total non-operating expenses

241,022

255,940

2,070,628

2,762,596

582

52,381Gain on sale of tangible fixed assets

2,452

Reversal of allowance for doubtful accounts
Other extraordinary income

－
7,731

－
2,400

Total extraordinary income

10,766－54,781

9,320

29,885

Loss on devaluation of investments in securities

179,747

44,521

Impairment losses

36,96754,910

Other extraordinary losses

51,12932,805

Total extraordinary losses

277,163

162,123

1,804,230

2,655,253

973,475

1,302,851

742

3,285

830,012

1,349,117

Non-operating income:Non-operating expenses:

Ordinary income
Extraordinary income:Gain on sale of investments in securities

Extraordinary losses:
Loss on disposal of fixed assets

Income before income taxes and minority interests
Income taxes
Minority interests
Net income8(3) Consolidated Statements of Cash Flows(Thousand yen)Six months ended
October 31, 2008
(May 1, 2008 to
October 31, 2008)

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

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

1,804,230

2,655,253

Depreciation and amortization

526,697562,226

Impairment losses

36,96754,910

Amortization of goodwill

390,623

433,303

Loss on devaluation of investments in securities

179,747

44,521

Increase in allowance for retirement benefits

77,00965,530

Increase in allowance for bonuses to employees

153,897

123,710Decrease in allowance for bonuses to directors(17,765)(12,309)

Interest and dividend income(29,243)(36,474)

Interest expenses

191,396

153,806

6,867

29,885(2,225,804)(768,735)

Increase in inventories(377,431)(511,767)

Increase (decrease) in accounts payable(417,927)

979,887

Other

234,469

1,893,889

Subtotal

533,734

5,667,639

Interest and dividends received

27,892

34,771(191,184)(154,218)(1,260,327)(1,249,946)(889,883)

4,298,246

Payments for purchases of tangible and intangible fixed
assets(862,089)(653,639)

Proceeds from sales of tangible and intangible fixed
assets

7,152

3,674

(347,580)(389,783)

1,264

67,544(179,675)(270,000)

Payments for loans(4,592)(560,000)

Proceeds from collections of loans

78,074

226,458(24)－

Proceeds from withdrawal of time deposits

120,024

Other(83,685)－
169,156(1,271,131)(1,406,589)

Loss on disposals and sales of tangible fixed assets
Increase in accounts receivable

Interest paid
Income taxes paid
Net cash provided by (used in) operating activities
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

Payments for time deposits

Net cash used in investing activities

9(Thousand yen)Six months ended
October 31, 2008
(May 1, 2008 to
October 31, 2008)

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

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

5,591,032

1,542,307

Repayments for short-term borrowings(6,598,000)(2,632,317)

Proceeds from long-term borrowings

4,000,000

1,150,000

Repayments for long-term borrowings(1,458,348)(1,962,044)

Payment for redemption of bonds(186,000)(56,000)

Proceeds from issue of shares

1,654,684

2,484,765

Repayments of lease obligations(14,396)(68,178)

(309)

(378)

Cash dividends paid

(227,220)(384,941)

Dividend payments to minority shareholders(19,730)(126)

2,741,712

73,086580,6962,964,743

Cash and cash equivalents at beginning of the period

4,195,144

9,234,052

Cash and cash equivalents at end of the period

4,775,841

12,198,796

Payments for purchase of treasury stock

Net cash provided by financing activities
Increase in cash and cash equivalents10(4) Notes on the premise of a going concern
None(5) Segment Information[Business Segment Information]
Six months ended October 31, 2008 (May 1, 2008 to October 31, 2008)(Thousand yen)Pharmaceutical Product sales
businessbusiness

Otherbusinesses

Total

Eliminations/
Corporate

Consolidated

Net sales(1) Sales to externalcustomers

49,877,594

6,849,781

131,81756,859,193－

56,859,193

－

3,000

9,373

12,373(12,373)－

Total

49,877,594

6,852,781

141,191

56,871,567(12,373)

56,859,193

Operating income (loss)

2,792,606(109,543)(36,477)

2,646,584(474,306)

2,172,278(2) Inter-segment sales
and transfers

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]
Six months ended October 31, 2008 (May 1, 2008 to October 31, 2008) and six months ended October 31, 2009
(May 1, 2009 to October 31, 2009)This is not applicable because the Company has no subsidiary or important branch office located in foreign countries.
[Overseas net sales]
Six months ended October 31, 2008 (May 1, 2008 to October 31, 2008) and six months ended October 31, 2009
(May 1, 2009 to October 31, 2009)This is not applicable because the Company has no sales in foreign countries.

11(6) Notes on significant changes in the amount of shareholders’ equity
The Company increased its capital through a public offering in August 2009 for the purposes of improving the equity
capital and enhancing the financial base as well as obtaining capital expenditure funds for new store openings. As aresult, capital stock and capital surplus increased by ¥1,203 million each during the first six months of the current fiscal
year. At the end of the second quarter of the current fiscal year, capital stock and capital surplus were ¥6,308 million and¥5,498 million, respectively.

6. Other information
None

12