Consolidated Financial Statements

May 18, 2007

For the year ended March 31, 2007
Company name: NIPRO CORPORATION
Stock Exchange listed:
Code No:
8086
Head office location:(URL: http://www.nipro.co.jp/)
Representative: Minoru Sano, President and Representative Director
Contact:
Akihiko Yamabe, Director, General Manager of Accounting andCorporative Planning Division
Date of the general shareholder’s meeting to be held: June 27, 2007
Scheduled date of the annual securities report filing: June 27, 2007
Scheduled date to commence payment of dividends: June 28, 2007

Tokyo and Osaka
Osaka, JapanTEL (06) 6372-2331

1. Consolidated Results for the Year ended March 31, 2007 (From April 1, 2006 to March 31, 2007)(1) Consolidated Results of Operations(Note: Amounts are truncated to 1 million yen)
Net Sales
Operating Income
Recurring Income
Year ended March 31, 2007
Year ended March 31, 2006

Millions of yen%

Millions of yen%

Millions of yen%

184,362
206,801(10.9)
7.5

13,053
12,3315.9
18.5

11,355
12,228(7.1)
40.8

Earnings
per Share
Yen

Net Income
Year ended March 31, 2007
Year ended March 31, 2006
Note:

Equity in loss of affiliate

Millions of yen

%

8,555
4,512

89.6
(0.1)

Ratio of Recurringincome to Total
AssetsRatio of Operating
Income to Net
Sales

Yen

%

%

%

-

7.2
4.3

3.4
3.9

7.1
6.0

134.71
69.57

Year ended March 31, 2007:

Ratio of Net Income
to Shareholders’EquityDiluted Earnings
per share(791) million yen

Year ended March 31, 2006:(702) million yen(2) Consolidated Financial Position
Total Assets

Shareholders’ equity:

Millions of yen

336,659
338,740

127,020
112,390

Year ended March 31, 2007:

Net Assets per
Share

Equity Ratio

Millions of yen
Year ended March 31, 2007
Year ended March 31, 2006
Note:

Net Assets

%

Yen

37.3
33.2

1,979.21
1,767.69

125,651 million yen Year ended March 31, 2006:

112,390 million yen(3) Consolidated Cash Flows
Cash flows fromoperating activities

Cash flows frominvesting activities

Cash flows fromfinancing activities

Millions of yen

Millions of yen

Millions of yen

Millions of yen

14,4886,701(2,924)(27,555)(15,654)
15,712

46,10949,914

Year ended March 31, 2007
Year ended March 31, 2006

Cash and cash
equivalents

2. Dividends
Annual dividends per share
Interimdividends
Yen
Year ended March 31, 2006
Year ended March 31, 2007
Year ending March 31, 2008
(Projected)

3.

Year-end
dividends
Yen

Annualdividends
Yen

16.00
43.00

21.50
37.00

37.50
80.00

23.00

25.50

48.50

Annual totalof dividends

Pay-out
ratio(Consolidated)%

Millions of yen

2,382
5,079

Ratio of dividends
to Net Assets(Consolidated)

%

53.9
59.4

2.3
4.3

46.7

Projected Consolidated Financial Results for the Year ending March 31, 2008 (From April 1, 2007 to March 31,
2008)
Operating
IncomeNet Sales
Millionsof yen%Millionsof yenSix months ending Sept. 30, 2007

Recurring
Income%Millionsof yenEarnings
per Share

Net Income%

Millionsof yen%Yen

79,500 (20.7)
6,200
4.4
5,500
12.9
2,750
(31.5)
43.32
Year ending March 31, 2008 162,000 (12.1)
14,1008.0
13,05014.9
6,600(22.9)
103.96
Note: The % displays in the line of six months ending Sept. 30, 2007 show increase/decrease ratio against the six
months ended Sept.30, 2006. The % displays in the line of Year ending March 31, 2008 show increase/decrease ratio
against the year ended March 31, 2007

-1-

4. Others(1) Change in significant subsidiaries during the year ended March 31, 2007(Resulting in a change in scope of
consolidation): None
(2) Changes in accounting principles, procedures or presentation related to the preparation of consolidated financial
statements (i.e., changes in the basis of significant accounting policies)
1) Changes due to adoption of new accounting standards: Yes
2) Changes other than those included in 1) above: None
Note: Please refer to p. 17 (“Basis of Preparation for the Consolidated Financial Statements”) for further details.
(3) Total number of common shares issued
1) Total number of common shares issued at 31 March 2007. (Including treasury stock):
Year ended March 31, 2007: 63,878,505 sharesYear ended March 31, 2006: 63,878,505 shares2) Total number of shares in treasury at 31 March, 2007:
Year ended March 31, 2007: 393,067 sharesYear ended March 31, 2006: 349,589 shares(Reference) Overview of Non-consolidated financial results
1. Results for the year ended March 31, 2007 (From April 1, 2006 to March 31, 2007)(Note: % shows increase/decrease ratio against the previous years)(1) Results of Operations
Net Sales
Operating Income
Recurring Income
Year ended March 31, 2007
Year ended March 31, 2006

Millions of yen%

Millions of yen%

Millions of yen%

127,407
116,950

8.9
8.5

10,696
10,563

1.3
27.1

11,031
11,492(4.0)
44.8

Millions of yen%

Earnings
per Share
Yen

10,420
4,962

110.0
(3.0)

164.0876.67

Net Income
Year ended March 31, 2007
Year ended March 31, 2006

Diluted Earnings
per shareYen-(2) Financial Position
Total Assets
Year ended March 31, 2007
Year ended March 31, 2006
Note:

Shareholders’ equity:

Net Assets

Equity Ratio

Millions of yen

Millions of yen

306,347
298,767

133,768
122,981Year ended March 31, 2007:

Net Assets per
Share

%

Yen

43.7
41.2

133,768 million yen Year ended March 31, 2006:

2,107.07
1,934.42
122,981 million yen

2. Projections for the Results of the Year ending March 31, 2008 (From April 1, 2007 to March 31, 2008)
OperatingRecurring
Earnings
Net Income
Net Sales
per Share
IncomeIncomeMillionsof yen%Millionsof yen%Millionsof yen%Millionsof yen%Six months ending Sept. 30, 2007

Yen

63,000
1.4
5,050
9.4
5,100
6.2
2,950
(46.0)
46.47
Year ending March 31, 2008
129,000
1.3
11,350
6.1
11,3502.9
6,350(39.1)
100.02
Note: The % displays in the line of six months ending Sept. 30, 2007 show increase/decrease ratio against the six
months ended Sept.30, 2006. The % displays in the line of Year ending March 31, 2008 show increase/decrease ratio
against the year ended March 31, 2007

*Disclaimer regarding projection information including appropriate use of forecasted financial results, and other special notes
The projection figures shown above are based on information that was available at the time of preparation and may containcertain uncertainties. Actual performance and other factors may differ from these projections due to changes in circumstancesand other developments. More information concerning these forecasts can be found in section 1. Business results on page 3 in
the attachments.

-2-

1. Business Results(1) Analysis concerning business results
1) Business results for the period under review and the results by segments
Japanese economy for the period under review appeared to be slowly recovering in the firm tone ofcapital investments and individual consumption while we were afraid of a negative impact torevenues of the enterprises by the quantitative financial relief policy and lifting policy of the zerointerest rate.
Under such circumstances, we have continued to focus on development of innovative products
and reinforced production capacity and sales capability to enhance our brand recognition by
upgrading the qualities of the basic products. Also we divested the consolidated subsidiaries ofstore division, Nissho Corporation and Nissho Drug Co., Ltd. in order to invest our operational
resources intensively to Medical and Pharmaceutical business.
As a result, the consolidated net sales for the period under review decreased by 10.9% from theprevious period to 184,362 million yen, operating income increased by 5.9% to 13,053 million yen
and recurring income decreased by 7.1% to 11,355 million yen. Net income increased by 89.6% to
8,555 million yen mainly due to the increase in extraordinary profit on sales of the shares of thesubsidiary companies.
The results by segments were as follows:a. Medical equipment division
In the domestic business, its environment remained severe due to various factors such as further
holding down of medical costs represented by the performance-based classification of dialyzers or
lowering of the prescription prices. Moreover, the governmental promotion of joint purchase for
consumables among medical institutions intensified marketing battle and price competition to
decrease our sales price.
Under such circumstances, we sought to enhance the efficiency of sales activities and increase thesales forces. We also made efforts to develop and market new products in the fields of dialysis,treatment on circulatory organs, injection and infusion, and examination, as well as to promote
expansion of the business by means of product offerings in the systematized package and to
expand both our market shares and sales.
In the international business, our sales grew constantly with the firm sales results in all productgroups without any big fluctuation by foreign currency exchange. It remained very severe in thebasic medical products area due to the offensive sales of the products made in developing countries.
However, as the qualities of those products have been improved largely to be well applicable to themarket needs, we sold them as our OEM products under our quality instructions to expand ourmarket shares. We started to sell in the field of artificial lung business which we newly purchased,enriching each sales base in the world improving the local service, to be gradually resulted in a goodway. In the field of dialysis-related products, our own Nipro branded products surpassed extensively
the OEM branded products, which we have continued since before, in both of selling quantity andamount.
As a result, net sales of this division increased by 7.1% from the previous period to 97,300 millionyen.
b. Pharmaceutical division
In the Pharmaceutical division, the environment of market also remained very severe, due to thegovernmental controls to suppress medicine costs against augmentation of the domestic medical
cost, and the intensive price competitions against the product of the other competitors.
Under such circumstances, we strove to increase sales of powdered dialysate solutions, kit productof substitution fluid for hemofiltration and hemodiafiltration and pre-filled syringe kits. We also
exerted ourselves to expand sales of “liquid-and-powder” double-bag kits and injectables inplastic-ampoules.
As a result, net sales of this division increased by 19.7% to 42,152 million yen.
c.

Glass & Materials division
In the filed of glass for pharmaceutical purposes, sales of glass tubes for ampoule decreased dueto the impact of the change of container forms, but then sales of glass for tube bottle increased dueto the steady sales of the products for vaccination as well as sales of pre-filled syringe, cartridge andothers started to result in a good way. In the field of other glass & materials item, sales of glass for
vacuum bottle decreased due to the drop of domestic demand, in spite of increase of exportation.
Sales of glass for lighting purpose such as glass for Liquid Cristal Display(LCD) backlight and therelated materials had a good increase due to the expansion of LCD market though we had some
negative impact for inventory adjustment by LCD panel maker of television.
As a result, net sales of this division increased by 8.3% to 12,918 million yen.

-3-

d. Store division
In this division, we transferred the shares of Nissho Corporation in July 2006 and Nissho Drug
Corporation in December 2006.
As a result, net sales of this division decreased by 54.0% to 30,973 million yen.
e. Other division
Net sales of this division, consisting mainly of sales of machine for manufacture of medical
equipment and real estate rentals, decreased by 33.0% to 1,017 million yen.
2) Prospects for the Year Ending March 31, 2008
The business environment is anticipated to remain severe, as there is a concern about such as
jump in crude oil prices, rise in interest rates and drastic decline of U.S. dollar.
Under the conditions, we will strive to improve the business performance by focusing on
development of new products and reinforcement of production capacity and sales capability.
For the year ending March 31, 2008, we project the consolidated net sales of 162,000 million yen(decrease by 12.1% compared with the previous period), operating income of 14,100 million yen(increase by 8.0%), recurring income of 13,050 million yen (increase by 14.9%), and net income of
6,600 million yen (decrease by 22.9%).
Projections on net sales by segments are as follows:
Medical Equipment division: 102,000 million yen (increase by 4.8%),
Pharmaceutical division:
46,000 million yen(increase by 9.1%)
Glass & Materials division: 13,500 million yen(increase by 4.5%)
Other division:
500 million yen(decrease by 50.9%)(2) Analysis of the conditions of assets, liabilities, shareholders’ equity and cash flows
Total assets decreased by 2,081 million yen from the end of the previous period to 336,659 million
yen. Current assets increased by 1,369 million yen to 147,233 million yen, and fixed assets
decreased by 3,451 million yen to 189,426 million yen. Main reason for the increase in current
assets was that trade notes and accounts receivable increased, and main reason for the decrease in
fixed assets was that lease deposits was decreased.
On the other hand, liabilities decreased by 15,098 million yen to 209,639 million yen. Current
liabilities decreased by 7,180 million yen to 104,104 million yen, and fixed liabilities decreased by
7,917 million yen to 105,534 million yen. Main reason for the decrease in current liabilities was thatcurrent portion of bonds and commercial paper decreased, and main reason for the decrease in fixedliabilities was that long-term borrowings decreased.
Net assets including minority interest increased by 13,017 million yen to 127,020 million yen. In
this section, shareholder’s equity increased by 4,512 million yen to 97,044 million yen.
As for cash flows for the period, net cash provided by operating activities was 14,488 million yen,
net cash used in investing activities was 2,924 million yen, and net cash used in financing activities was
15,654 million yen, and as a result, the ending balance of cash and cash equivalents was 46,109 million
yen.
Net cash provided by operating activities mainly reflected net income before adjustment of taxes
and amortization. Net cash used in investing activities reflected the payments for acquisition of fixed
assets, and net cash used in financing activities was mainly from repayments of commercial paper andbond.
(2) Trend of the cash flow indicators

Shareholders’ equity ratio (%)
Ratio of market value ofshareholders’ equity (%)
Debt redemption (years)
Interest coverage ratio

The 51st period
Year ended
March 31, 2004

Year ended
March 31, 2005

The 53rd period
Year ended
March 31, 2006

The 54th period
Year ended
March 31, 2007

33.9

32.9

33.2

37.3

35.5

38.3

33.9

43.4

7.3
9.4

7.1
10.3

21.1
4.6

8.3
8.5

The 52nd period

Note: Shareholders’ equity ratio = Shareholders’ equity / Total Assets
Ratio of market value of shareholders’ equity = Aggregate market value of the outstanding
shares / Total Assets
Debt redemption = Interest-bearing liabilities / Cash flow from operating activities
Interest coverage ratio = Cash flow from operating activities / Interest payments- Each indicator is calculated from consolidated financial data.
- Aggregate market value of the outstanding shares is calculated as the share price at the fiscal
year-end multiplied by the number of issued shares (excluding treasury stock).
-4-- Cash flow from operating activities is taken from cash flows from operating activities on the
consolidated statements of cash flows. Interest-bearing liabilities represent all liabilities on the
consolidated balance sheets for which interest is payable. The amount of interest payments istaken from the payments of interests on the consolidated statements of cash flows.
(3) Basic Policies on Distribution of Profits and Dividends for years ended March 31, 2007 and ending
March 31, 2008.
Our policy is that 50% of the non-consolidated net income is to be distributed to the shareholders.
Employees’ bonuses are determined according to the business performance of the division where theemployees belong and the bonuses of the directors and the statutory auditors are determined based on
the business performance of the Company.
Retained earnings are to be invested in the sales and production facilities as well as in research anddevelopment, in view of establishing the firm management basis and long-term business developments,
so as to ensure stable profits for the future.
In terms of the payment of dividends after the enforcement of corporate law in Japan (2006/5/1), we
will pay at the end of the interim period and at the end of the fiscal year, as before.
Annual dividends are calculated to be 80.00 yen per share. As we already paid interim dividends of
43.00 yen per share, year-end dividends are to be 37.00 yen per share; this will be proposed to theCompany’s 54th ordinary general meeting of shareholders.
Dividends for year ending March 31, 2008 are expected to be made according to the above-mentioned
policy on distribution of profits as 50% of non-consolidated net income.

-5-Corporate GroupOur group consists of the Reporting Company (“the Company”), its 26 subsidiaries and 1 affiliate, and isprimarily engaged in manufacture and sale of medical equipment, pharmaceutical products and glass andmaterial products.
Positioning of each company in connection with the businesses of our group and the relation to thebusiness segments are as follows:<Medical Equipment Division>
Domestic:
The Company and Nipro Medical Industries, Ltd. manufacture medical equipment, andthe Company sells medical equipment manufactured by its foreign subsidiaries.
Overseas:
Nipro (Thailand) Corporation Ltd. (Thailand), Nipro (Shanghai) Co., Ltd. (China) and Nipro
Medical LTDA. (Brazil) purchase some of raw materials and machinery for their production
from the Company, manufacture medical equipment, and sell through the Company and its
subsidiaries as well as locally on their own.
Nipro Europe N.V. (Belgium), Nipro Medical Corporation (U.S.A.), and Nipro Asia Pte. Ltd.
(Singapore) sell medical equipment etc. in the areas of their locations.
Nipro Diabetes Systems, Inc. (U.S.A.) develops and sells diabetes-related products suchas insulin pump.
<Pharmaceutical Division>
The Company, Nipro Pharma Corporation and Nipro Genepha Corporation and Zensei
Pharmaceutical Industries Co.,Ltd manufacture and sell pharmaceutical products. Tohoku
Nipro Pharmaceutical Corporation manufactures pharmaceutical products.
Bipha Corporation, an affiliate accounted for by the equity method, is engaged in researchand development, manufacture and sale of pharmaceutical products such as blood
products.
<Glass and Materials Division>
Domestic:
The Company sells glass tubes in the Kansai area as well as manufactures and sells
other glass products.
In the Kanto area, Shinwa Shoji Co., Ltd. purchases glass tubes as raw materials, andmanufactures and sells glass products.
Overseas:
Shanghai Nissho Vacuum Flask Refill Co., Ltd. (China) sells internal glass sections of
vacuum flask and other glass products.
<Other>
The Company manufactures (purchases, in some cases) and sells machinery for
manufacture of medical equipment, etc.
The Company and Wasyu Kogyo Co., Ltd. lease real estate properties.
Nissho Insurance Services Co., Ltd. operates non-life insurance agency mainly for thegroup companies.
Sanri Kosan Co., Ltd., an other related company, is engaged in leasing of real estate
properties.
The above explanations are illustrated as follows:-6-

(Domestic)(Overseas)
Medical Equipment Division

Medical Equipment Division<Manufacture and Sale>◎Nipro (Thailand) Corporation<Manufacture>

Ltd.

◎Nipro Medical Industries, Ltd.

◎Nipro (Shanghai) Co., Ltd.
◎Nipro Medical LTDA.
And 1 other subsidiary.

Pharmaceutical Division<Manufacture and Sale><Sale>◎Nipro Europe N.V.
◎Nipro Medical Corporation○Nipro Asia Pte. Ltd.
And 9 other subsidiaries◎Nipro Pharma Corporation◎Nipro Genepha Corporation<Manufacture and Sale>◎Zensei Pharmaceuticals Industry Co.,Ltd.

<Development and Sale>◎Tohoku Nipro
Pharmaceutical Corporation<Development,
and Sale>

Manufacture□Bipha Corporation

Nipro Corporation<Manufacture>◎Nipro Diabetes Systems, Inc.

Glass & Materials Division

Glass & Materials Division<Sale><Manufacture and Sale>◎Shanghai Nissho Vacuum Flask
Refill Co., Ltd.

◎Shinwa Shoji Co., Ltd.

Other

Supply of products andmerchandises<Non-life insurance agency>

Supply of raw materials○Nissho Insurance Services Co.,
Ltd.

Other transactions<Rental of real estate>○Wasyu Kogyo Co.,Ltd.

Other<Rental of real estate>△Sanri Kosan Co., Ltd.

-7-◎

Consolidated subsidiary○

Unconsolidated subsidiary□

Affiliate accounted for by theequity method△

Other related company

3. Management Policies(1) Basic Policies of Management
Since our foundation of year 1954, we have based ourselves on “technology” to grow pursuing thetechnologies of which unique products can always solve QOL (Quality of Life) of patients and subjects in
Medical treatment sites, under philosophy in contributing to the society through corporate activities.
As a management structure considering compatibility between “stability” and “growth” that is mostimportant for a company, we implement the “performance-linked remuneration system” that is the rule ofprofit sharing among shareholders, employees and management, and carry out active business
operations, holding the employees responsible for boosting the performance of individual businesses.
(2) Target Management Indicators
As we transferred the shares of the subsidiary companies of Store business (Nissho Corporation andNissho Drug Co., Ltd.) in order to invest our resources intensively to Medical and Pharmaceuticalbusinesses, our performance targets have been changed as 200 billion yen of consolidated net sales,
20 billion yen of recurring income and 10% of return on equity (ratio of net income to shareholders’equity) by the fiscal year 2010.
(3) Medium- and Long-term Management Strategies
In the Medical Equipment division, we are aiming at top share of our main product, dialyzer in theworld by intensive mass production, improvement of its quality and cost reduction driven from fullself-production from the raw materials produced by self-spinning of hollow fibers. We will also strive tostrengthen the product line-up, cost reduction and establishment of sales bases in the field of artificial
lung, which we are aiming to bring up to the world wide products following to the dialyzer.
In the Pharmaceutical division, we enhance our production capacity in freeze dry drug, active
pharmaceutical ingredients refining, anti-cancer drug as well as the expansion of production andimprovement of technologies in the solid-form medicine to be at an advantage in competitive quality andcost, viewing the global competition. As for the generic products, we also devote efforts todevelopments of new items and promote co-development or cooperation with other companies.
In the Glass and Materials division, we will reinforce competitiveness by reducing manufacturing costsof various glass products based on our peerless glass processing technologies, conduct global sales
activities and strive to secure stable profit.
(4) Issues and Challenges that the Group Faces
In the domestic business of the Medical Equipment division, we will focus on dialysis-related products
such as dialyzers, blood tubing sets, and dialysis machines. We will endeavor to react to the market
needs promptly, develop and market new products, improve the product quality, strengthen sales
activities and increase the market share. In the field of cardiovascular products, we develop andintroduce new product such as PTCA balloon catheters, distal protection device and stent to enlarge
product line-up and promote to strengthen market leading and sales to expand our share. We will also
make efforts to increase our market share of injection and infusion-related products such as infusion
sets and syringes, as well as to market and promote new products such as nutrition infusion related
products. In addition, as for the examination-related products, we will market and promote blood glucose
monitoring device for diabetics and test reagents, and strengthen sales of blood collection tubes forblood test and obtain market share by active marketing.
In the international business, as we have been required to have further expansion and supply of ourmain products, we will consider to establish further three or four sales entities in addition to our current
37 entities. As for the dialysis-related products, we will start to sell the new high performance dialyzers
together with its supplies for our sales expansion. As for the dialysis machine, we will strive to expand
the sales actively with our own products and the alliance with Nikkiso Co., Ltd for selling highperformance dialysis machines to the world market, which we will form our sales structure to sell them
together with dialyzers and other supplies. As for main OEM products, though we are exposed to thesevere surroundings because of tough competition against the same kind of products, we will enhance
our cost competitiveness and sales. On the other hand, it is an important subject for us to expand thesales managing the indispensabile situation to get talented persons and bring them up following the
expansion of the market. We also devote to further strict quality management as high quality assurance
is definitively required for both of our own product and OEM product.
In the pharmaceutical division, we are developing the new products such as “liquid-and-powder”
double-bag kits of antibiotics, pre-filled syringes and injectables in plastic-ampoules, as well as toimprove the products including prevention measures of malpractice.
-8-

In terms of oral drugs, as we have developed them to increase largely the item numbers, we continue
to increase our self-development items, even promote co-developments, and develop pharmaceuticallycontrived products, for instance, drugs with prominent easiness to drink.
We will promote to enlarge OEM and selling channels, which will improve productivity ofpharmaceutical production factories of Nipro group. In addition, we will make efforts for early
realization of pharmaceutical products in application of recombinant human serum albumin such as
artificial blood, Drug Delivery System (DDS) and drug of recombinant erythropoietin as new
development theme. We will endeavor to expand our pharmaceutical business by actively developing
injection drugs including kit products and oral drugs.
In the Glass and Materials division, we will continue to innovate glass-processing technology applying
to demands by the pharmaceutical industry, developing mainly glass tubes as well as new materials
actively to expand our sales. In terms of the glass for lighting purposes, we will strive to increase salesof glass materials for Liquid Cristal Display (LCD) backlights and glass-related products in the situationof worldwide expansion of LCD business.

-9-Consolidated Balance Sheets

PeriodAccount(Unit: Millions of yen)
Current Period
Change(as of March 31, 2007)
in amount
AmountRatio

Previous Period(as of March. 31, 2006)
AmountRatio(ASSETS)
Current Assets
Cash on hand and in banks
Trade notes and accounts
receivable

Inventories
Deferred tax assets
Other current assets
Allowance for doubtful accounts

Fixed Assets
Tangible fixed assets
Buildings and structures
Machinery, equipment andvehiclesLand
Construction in progress

OthersIntangible fixed assets
Consolidation adjustments
Goodwill

OthersInvestments and other assets

Investment securities
Long-term loans receivable
Deferred tax assets
Lease deposits
Other assets
Allowance for doubtful
accounts

Total Assets%
145,863%43.1

147,233

43.7

1,369

53,39547,934

5,461

45,79440,558
2,151
4,320
(357)

50,972
40,213
3,033
5,581
(501)

5,177
(345)
881
1,260
(143)

192,87756.9

189,42656.3(3,451)

106,195

31.3

104,88131.2(1,314)

43,245

38,113(5,131)

26,95523,0798,210
4,704

31,10518,032
12,856
4,773

4,150(5,047)
4,646
69

1,292

0.4

1,902

111
1,180
85,389

0.6

609

240
1,661
25.2

82,642

(111)
240
480
24.5

(2,746)

68,3132,405
431
11,003
4,021

77,304
303
61
4,791
3,198

8,991
(2,101)(369)(6,211)
(822)

(784)

(3,017)(2,233)

338,740

100.0

336,659

100.0(2,081)(Notes)(Previous period)

1.Accumulated depreciation of tangible fixed assets
2.Discounted notes receivable

106,320

mil.yen(Current Period)

108,725

223

87

3.Obligations under guarantee contracts

1,638

1,093

4.Pledged assets

17,07816,178- 10 -

mil.yen

Consolidated Balance Sheets

PeriodAccount

Previous Period(as of March. 31, 2006)
AmountRatio(LIABILITIES)Current liabilities
Trade notes and accounts
payable(Unit: Millions of yen)
Current Period
Change(as of March 31, 2007)
in amount
AmountRatio%
111,28532.8%
104,104

30.9(7,180)31,424
44,174
10,020
4,626
3,331
1,606

26,54750,209
60
6,123
8,404
1,461

(4,877)
6,034(9,960)
1,497
5,072
(145)

-

230

230

-

1,954

1,954

Others

2,719
9,000
4,382

3,655
5,457

936
(9,000)
1,075

Fixed liabilities

113,452

Short-term borrowings
Current portion of bonds
Other payables
Accrued income taxes
Allowance for bonuses payable
Allowance for bonuses payablefor directors and corporate
auditors
Allowance for loss on clearanceof businessNotes payable for plant andequipment
Commercial paper

Bonds

33.5

105,534

31.4(7,917)31,03031,450420

14,00047,03815,05414,00038,765
17,417(8,272)
2,362

Other fixed liabilities

2,978
3,350

2,564
1,336

(413)
(2,013)

Total liabilities

224,737

66.3

209,63962.3(15,098)

1,612

0.5

-

-

-

28,663

8.5

-

-

-

29,972

8.9

-

-

-

34,545

10.2

-

-

-

25,563

7.5

-

-

-

(5,705)

(1.7)

-

-

-

(648)

(0.2)

-

-

-

Total shareholders’ equity

112,390

33.2

-

-

-

Total liabilities, minority interests, andshareholders’ equity

338,740

100.0

-

-

-

Convertible type bonds with stockacquisition rights

Long-term borrowings
Deferred tax liabilities
Accrued pension and severance
cost(MINORITY INTERESTS)
Minority interests(SHAREHOLDERS’ EQUITY)
CapitalCapital surplus
Earned surplus
Valuation differences of othersecurities
Foreign currency translation
adjustments

Treasury stock- 11 -

Consolidated Balance Sheets(Unit: Millions of yen)
PeriodPrevious Period(as of March. 31, 2006)

Account

Ratio

Amount(Net Assets)

Shareholders’ Equity

Current Period(as of March 31, 2007)
Amount%Changein amount

Ratio
%

-

-

97,044

28.8-

Capital--28,663

8.5-

Capital surplus--

29,973

8.9-

Earned surplus--

39,148

11.6-

Treasury stock

-

-

(741)

(0.2)

-

-

-

28,606

8.5

-

-

-

29,883

8.9

-

-

-

(1,276)

(0.4)

-

-

-

1,369

0.4

-

Total Net Assets--

127,020

37.7-

Total Liabilities and Net Assets--

336,659

100.0-

Valuation and translation difference
Valuation differences of othersecurities
Foreign currency translation
adjustments

Minority interests(Notes)(Previous period)

5. Accounts related to unconsolidated
subsidiaries and affiliate companies
Investment securities (stock)
Investments other than stock

4,094 mil. yen
23- 12 -(Current period)

3,192 mil. yen
23Consolidated Statements of Income(Unit: Millions of yen)
PeriodAccount

Previous Period

Current Period(From April 1, 2005
To March 31, 2006)(From April 1, 2006
To March 31, 2007)

AmountAmountRatio%

Changein amount

Ratio%

Net sales
Cost of goods sold206,801
149,971

100.0
72.5

184,362
132,142

100.0
71.7

(22,438)(17,829)

Gross profit

56,82927.5

52,22028.3(4,608)44,49721.5

39,16721.2(5,330)12,331

6.0

13,053

7.1

721

2,705
179
508
1,475
541
2,808
1,552
-

1.3

1,657
308
560
313
475
3,355
1,645
381

0.9

(1,047)129
51(1,162)
(66)
547
93
381

Selling, general and administrative
expenses

Operating income
Non-operating income
Interest income
Dividend income
Exchange gain
OthersNon-operating expenses
Interest expenses
Depreciation
Amortization of long-term
prepaid expense
Equity in loss of affiliate
OthersRecurring income
Extraordinary gains
Gain on sale of fixed assets

94
702
458
12,228
201
112

1.4

5.9
0.1

198
791
338
11,355
13,660
30

1.8

6.2
7.4

103
88
(119)
(873)
13,459(81)

Governmental subsidies received

19

661

642

Gain on sale of investment securities

15
54
3,369

12,706261
8,240

12,690207
4,871

OthersExtraordinary losses
Loss on sale and disposal of fixed
assetsImpairment loss on fixed assets
Allowance for loss on clearance ofbusiness
Loss on investment securities
Loss on disposal of inventories
Abnormal manufacturing cost
Retirement allowance
Advanced depreciation on fixed assets

Allowance for doubtful debts
Others

1.6

4.5

497
1,997

516
1,286

19
(710)

195
158
113
19
0
388

1,954
268
253
246
650
2,361
703

1,954
268
58
88
(113)
631
2,360
314

Net income before adjustment of taxes

9,060

4.4

16,7759.1

7,714

Corporate, inhabitants andenterprise taxes
Adjustment for deferred taxes

5,240
(540)

2.5
(0.2)

10,059(1,873)

5.5
(1.0)

4,818
(1,332)

33

0.0

33

8,555

4.6

(151)
4,042

Minority shareholders’ share in net
income of consolidated subsidiaries
Minority shareholders’ share in net lossof consolidated subsidiaries

Net income

151
4,512

0.1
2.2

(Notes) Research and development expenditure included in Selling, general and administrative expenses andmanufacturing cost.
(Previous period)
3,760 mil yen- 13 -(Current period)
4,460 mil yen

Consolidated Statements of Surplus(Unit: Millions of yen)Previous Period
PeriodAccount(From April 1, 2005
To March 31, 2006)

Amount(CAPITAL SURPLUS)
Beginning balance of capital surplus

29,972Ending balance of capital surplus

29,972(EARNED SURPLUS)
Beginning balance of earned surplus

32,181

Increase in earned surplus
Net income

4,512
4,512

Decrease in earned surplus
Dividends

2,148
1,843

Bonuses to directors andcorporate auditors

107[including bonuses to corporate
auditors][3]

Loss on disposal of treasury
stock
Decrease in surplus due to inclusion of
new subsidiary in consolidation

Ending balance of earned surplus

0
197
34,545- 14 -

Consolidated Statement of Shareholders’ Equity
Current period (From April 1, 2006 to March 31, 2007)
Shareholders’ equity
CapitalBalance at March 31, 2006

28,663

Capitalsurplus

EarnedsurplusTreasury
stock

Total

29,972

34,545(648)

shareholders'equity92,532

Increase (decrease) during the period

Dividend of surplus
Bonuses to directors and corporate auditors

Net income(4,096)(4,096)

(91)

(91)

8,555

8,555

Acquisition of treasury stock
Disposal of treasury stock
Increase in earned surplus due todivest of consolidated subsidiaries
Decrease in earned surplus due toaddition of consolidated subsidiaries
Increase (decrease) of the items
other than shareholders’ equity
during the period
Net increase (decrease) during theperiodBalance at March 31, 2007

1

(101)

9

10

436

436

(201)

(201)
-

-

1

4,602

(92)

4,512

28,66329,97339,148(741)

97,044

Valuation and translation differences

Balance at March 31, 2006

(101)

Valuationdifferences of othersecurities

Foreigncurrencytranslation
adjustments

25,563(5,705)

Total
valuationandtranslationdifferences

19,858

Minority
interests

1,612

Total net
assets114,003

Increase (decrease) during the period

Dividend of surplus-(4,096)-(91)

Net income

-

8,555

Acquisition of treasury stock

-

(101)

Disposal of treasury stock

-

10

-

436

-

(201)

Bonuses to directors and corporate auditors

Increase in earned surplus due todivest of consolidated subsidiaries
Decrease in earned surplus due toaddition of consolidated subsidiaries
Increase (decrease) of the items
other than shareholders’ equity
during the period

4,319

4,428

8,748

(243)

8,505

Net increase (decrease) during the period

4,319

4,428

8,748

(243)

13,017

Balance at March 31, 2007

29,883(1,276)28,606

1,369

127,020- 15 -

Consolidated Statements of Cash Flows(Unit: Millions of yen)
PeriodAccount

Previous Period(From April 1, 2005
To March 31, 2006)
AmountCurrent Period(From April 1, 2006
To March 31, 2007)
AmountChangein amount

Cash flows from operating activities
Net income before adjustment for taxes

Depreciation and amortization
Impairment loss on fixed assets
Amortization of consolidation adjustments
Amortization of goodwill

Equity in loss of affiliate
Allowance for doubtful debts
Allowance for loss on clearance of business

Increase (decrease) in allowance for doubtful accounts
Interest and dividend income
Interest expenses
Exchange loss (gain)
Gain on sales of shares of subsidiary company
Decrease (increase) in trade receivables
Decrease (increase) in inventories
Increase (decrease) in trade payables
Decrease (increase) in other assets
Increase (decrease) in other liabilities
Bonuses to directors and corporate auditors

Other non-operating income/expenses and extraordinary gains/losses
SubtotalInterest and dividends received
Interest paid
Other revenues
Other expenditures
Income taxes paid
Cash flows from operating activities
Cash flows from investing activities
Deposits in time deposits
Proceeds from matured time deposits
Payments for purchases of securities
Proceeds from sales of securities
Payments for acquisition with change in scope of consolidated subsidiary
Proceeds from sales of shares with change in scope of consolidated subsidiary
Payments for acquisition of fixed assets
Proceeds from sales of fixed assets
Increase(decrease) in short-term lending
Lending of loans
Collections of loans receivable
Expenditures for other investments
Revenues from other investments
Cash flows from investing activities

9,060
12,315
1,997
27
702
131
(688)
1,552
(1,377)(4,893)(5,754)
1,118(1,371)
(599)
(107)
514
12,628702(1,467)
1,103(597)(5,667)
6,701

16,775
12,469
1,286
129
791
2,361
1,954
(92)
(868)
1,645
(68)
(12,706)(2,186)(3,061)(1,982)
(565)
2,678
(96)
882
19,347830(1,697)1,590(262)(5,320)14,488

7,714
154
(710)
(27)
129
88
2,361
1,954
(224)
(180)
93
1,309
(12,706)
2,707
2,693
(3,100)
806
3,278
10
368
6,719
127
(229)
487
335
347
7,786)(5,067)
4,244(9,504)
3,125(26)(20,359)375(1,421)
1,144
(67)
0
(27,555)(5,792)
7,665(2,244)24(1,220)19,372(19,911)273(1,078)59(112)
40(2,924)

(725)
3,420
7,259
(3,101)(1,193)
19,372447(102)(1,078)
1,421(1,085)(44)
39(24,630)

2,888
2,000
13,384(12,260)
14,922(3,020)
1
(63)
69
(356)
(1,840)(11)
15,712
1,180(3,961)53,734141
49,914121(9,000)20,853(13,181)(10,060)
10
(101)
(205)
(4,090)(0)(15,654)208(3,881)
49,914
77
46,109(2,766)(11,000)
7,469
(920)
(14,922)(7,040)
9
(38)
(69)
150
(2,250)11(31,366)(972)
79(3,820)(64)(3,804)

Cash flows from financing activities

Net increase (decrease) in short-term borrowings
Net increase (decrease) in commercial paper

Proceeds from long-term borrowings
Repayment of long-term borrowings
Proceeds from issuance of bonds
Payments for redemption of bonds
Proceeds from disposal of treasury stock
Payments for acquisitions of treasury stock

Proceeds from sale and lease backRepayments of finance lease obligations
Payments for dividends
Other payments
Cash flows from financing activities

Effect of exchange rate changes on cash and cash equivalents
Increase (decrease) in cash and cash equivalents

Balance of cash and cash equivalents at the beginning of the period
Increase in cash and cash equivalents due to inclusion of new subsidiary in consolidation

Balance of cash and cash equivalents at the end of the period- 16 -

Basis of Preparation for the Consolidated Financial Statements
1. Scope of Consolidation
1) Consolidated subsidiaries: 22
Name of representative consolidated subsidiaries.
・ Nipro Medical Industries, Ltd.
・ Nipro Europe N.V.
・ Nipro Pharma Corporation

・ Nipro (Thailand) Corporation Ltd.
・ Nipro Medical Corporation
・ Tohoku Nipro Pharmaceutical Corporation

Nipro Asia Pte Ltd was included in consolidation due to the increase of importance as well as
Nipro Middle East FZE and Nipro Medical (India) Pvt Ltd due to new foundation, Zensei
Pharmaceutical Co., Ltd. and Nipro Industria e Commercio de Produtos Cardiopulmonares LTDA due
to the company’s acquisition of the stocks.
Besides, the following subsidiaries were excluded from consolidation at the end of theconsolidated accounting period because the all shares held of Nissho Corporation were transferred on
July 31, 2006 as well as Nissho Drug Co., Ltd. on December 15, 2006 and Fuzhou Nipro Co., Ltd. was
liquidated on November 30, 2006, and statement of income of each company to the dates of transfer
or liquidation was consolidated.
2) Unconsolidated subsidiaries: 3
The unconsolidated subsidiaries, Nissho Insurance Services Co., Ltd., Nipro Trading (Shanghai)Co., Ltd., and Wasyu Kogyo Co., Ltd., are small-sized companies, whose combined total assets, net
sales, net income and earned surplus in the aggregate (averaged for recent 5 years) are not material
to the consolidated financial statements.
2. Application of Equity Method
Number of affiliate accounted for by the equity method: 1

Bipha Corporation

The equity method is not applied to the 3 unconsolidated subsidiaries, since they are not material
to the consolidated net income and earned surplus etc., either individually or in the aggregate.
3. Accounting Period of Consolidated Subsidiaries
Among the consolidated subsidiaries, accounts closing date of the foreign subsidiaries is
December 31. Consolidated financial statements as of that date are used in preparing forconsolidated financial statements, and necessary adjustments are made to reflect significant
transactions that occurred between December 31 and March 31.
4. Accounting Principles and Practices
1) Valuation standards and methods for significant assets
a. Securities
Other securities:
Securities with market
quotations ·························Valued at the market price quoted on the balance sheet date.
(Differences in valuation are presented as a component ofshareholders’ equity. Costs are determined by the weighted
average method.)
Securities withoutmarket quotations·············Valued at cost by the weighted average method
b. Inventories
Medical, Pharmaceuticaland Glass & Materials
divisions····························Valued at cost principally by the weighted average method.
Partially first-in first-out method is used.
Supermarket division········Valued at cost by the retail method
2) Method of depreciation and amortization for significant depreciable assets
Tangible fixed assets:·······Declining-balance method
Durable years and residual values are based on the same- 17 -

standards as provided by the Corporate Income Tax Law.
Buildings acquired after April 1, 1998 (excluding attachedstructures), are depreciated by straight-line method.
The foreign subsidiaries use straight-line method in
accordance with the tax laws of their countries.
3) Standards for recognition of significant allowancesa. Allowance for doubtful
accounts ··························· In order to cover the probable losses on collection, an
allowance for doubtful accounts is provided for the estimatedamount of uncollectible receivables. For general receivables,
the amount of provision is based on historical write-off rates, andfor the doubtful receivables, based on the specific collectability.
b. Allowance for bonuses
payables ·························· In order to cover the payment of bonuses to employees, anallowance is provided for the estimated amount of bonuses to be
paid, prorated for the consolidated accounting period.
c. Allowance for bonuses
payables for directors
and corporate auditors······ In order to cover the payment of bonuses to directors andcorporate auditors, an allowance is provided for the estimatedamount of bonuses to be paid, corresponding to the consolidated
accounting period.
d. Allowance for loss on
clearance of business ····· In connection with withdrawal from retail business which wesold the shares of the consolidated subsidiaries, the estimatedloss at the end of the consolidated accounting period is posted
for disposal of land, building and other properties to be soldaccordingly.
e. Accrued pension andseverance cost ················· An allowance is provided for employee’s pension andseverance payments based on the estimated amounts ofprojected benefit obligation and plan assets at the end of the
fiscal year.
Actuarial difference is expensed in the following fiscal years
after the year of such recognition, using the straight-line method
for five years.
4) Standards for translation of significant assets and liabilities denominated in foreign currencies into
Japanese Yen
Monetary assets and liabilities denominated in foreign currencies are translated to Japanese
yen using the spot exchange rate of the consolidated balance sheet date, and translationdifferences are recognized as gains or losses. The assets and liabilities of foreign subsidiaries
etc. are translated to Japanese yen using the spot exchange rate of their balance sheet date,
while revenues and expenses are translated using the average rate for the period. Translationdifferences are included in foreign currency translation adjustments in the Net Assets section.
5) Accounting method for lease transactions
Finance leases, except for those where ownership of the leased assets is deemed to betransferred to the lessee, are accounted for by the method similar to that applicable to ordinary
operating leases.
6) Accounting processing for matured bill on last day of the consolidated period
Matured bill on last day of the consolidated period was processed on traded date of bill. So,
because last day of current interim consolidated period was holiday of financial institute, matured
bill on last day of the consolidated period was included in follow account.
Trade notes receivable
1,095 mil. yen
Trade notes payable453
Notes payable for plant and equipment
237) Other significant basis on preparation for consolidated financial statements
Consumption taxes
Consumption taxes are excluded from revenues and expenses accounts.
5. Evaluation of assets and liabilities of the consolidated subsidiaries
Partial fair market value method is used for valuation of assets and liabilities of consolidated- 18 -

subsidiaries.
6. Amortization of consolidation adjustment
Consolidation adjustment account is amortized using the straight-line method for five years.
7. Range of cash and cash equivalent carried on the consolidated cash flow statement.
Cash and cash equivalent carried on the cash flow statement consist of cash on hand, cash inbanks that is able to withdraw as needed, and short-term investment that will be matured within
three months after acquisition, easy to be converted into cash without much risks from fluctuation ofprices.

(Change in Accounting Method)
1. Accounting standard for directors’ bonus
From the fiscal year under review, we have applied Accounting Standard for Directors’ Bonus,(Accounting Standards Board of Japan, Statement No. 4, November 29, 2005). As a result, operating
income, recurring income and net income before adjustment for taxes are supposed to be decreasing
230 million of yen comparing with the incomes calculated according to the previous standard.
As for the effect to the segment information, please see the notes in the segment information section.
2. Accounting Standard for Presentation of Net Assets in Balance Sheet
Since this interim period, we have adopted “Accounting Standards for Presentation of Net Assets in
Balance Sheet and its Implementation Guidance” (Accounting Standard Board Statement No.5 issued
by the Business Accounting Council of Japan on December 9, 2005) and “Guidance on AccountingStandards for Presentation of Net Assets in Balance Sheet” (Accounting Standard Board Guidance
No.8 issued by the Financial Accounting Standards Board of Japan on December 9, 2005) The effectof the application of the new accounting standard on profit and loss is nothing. Amount that
corresponds to existing total “Shareholders’ Equity” is 125,651 million yen. Due to revision ofRegulations for Consolidated Financial Statement, the Consolidated Financial Statement at theconsolidated accounting period was prepared in accordance with the revised Regulations for
Consolidated Financial Statement.

(Notes to the Consolidated Statements of Income)Loss on Impairment of Fixed Assets
We, the Nipro group, recognized impairment loss on the following assets in this financial period.
Use

Type

Location

Leased asset
Store

Land
Buildings & structures, etc

1 site in Osaka pref.
1 site in Hyogo pref.
Total

Amount of loss
(Millions of yen)
1,272
14
1,286

We categorize its assets principally into the groups of assets for business use, leased assets, idle assets,
and assets for common use. The assets for business use are classified into groups on which separate
financial information is reported for management accounting purposes and individual store, whereas leased
assets and idle assets are individually categorized. Headquarters assets, R&D facilities, dormitory andcompany-offered houses are categorized into assets for common use, since these assets can not generatecash flow in itself.
The book value of assets whose land had significantly depreciated, or which incurred consecutive
operating losses were reduced to recoverable amount, and such deducted amount was recorded as loss on
impairment of fixed assets of 1,286 million yen in the extraordinary loss section. The loss on impairment of
fixed assets consisted of loss on buildings of 12 million yen, on structures of 0 million yen, on machinery andequipment of 0 million yen, and on land of 1,272 million yen.
The recoverable amount of such asset groups are measured by their net realizable value of assets.
Relevant assets were evaluated based on the real estate appraisal standards or on the price of the land
fronting major roads for the immaterial assets. The asset groups which were difficult to sell or which could
not be used for other purpose, however, were evaluated as a minimum unit price.

- 19 -

(Notes to the Consolidated Statement of Shareholders’ equity)
Current period (From April 1, 2006 to March 31, 2007)
1. Sort and total numbers of Shared issues
Sort of shares

Number of shares
As of March 31, 2006
63,878,505

Common stock

Increased numbers

Decreased numbers--

Number of shares
As of March 31, 2007
63,878,505

2. Sort and numbers of Treasury stock
Sort of shares

Number of shares
As of March 31, 2006
349,589

Common stock

Increased numbers

Decreased numbers

48,487

5,009

Number of shares
As of March 31, 2007
393,067(Note) 1. The increased numbers are of purchase of shares which number is less than unit amount.
2. The decreased numbers are of selling of shares which number is less than unit amount.
3. Dividends(1) Amount of dividends paid
Decision

Sort of shares

June 29, 2006 at ordinary
general shareholders’ meeting
November 20, 2006 at board of
directors meeting

Common stock
Common stock

Total amountof dividends
paidMillion of yen
1,365
Million of yen
2,730

Dividends
per shares

Basis date

Effective date

March 31, 2006

June 30, 2006

September 30, 2006

December 8, 2006

Yen
21.50
Yen
43.00

(2) Dividends of basis date belonging to the consolidated accounting period to its effective date be in thenext consolidated accounting period.
Decision
June 27, 2007 at
ordinary generalshareholders’meeting

Sort ofsharesCommonstock

dividends

Total amountof dividends
paid

EarnedsurplusMillion of yen
2,348

Proceeds of(Related Party Transactions)
N/A(Derivative Transactions)
N/A(Stock Options)
N/A- 20 -

Dividends
per shares

Basis date

Effective date

March 31, 2007

June 28, 2007

Yen
37.00

(Segment information)
1. Segment information by business category(1) Previous period (From April 1, 2005 to March 31, 2006)(Millions of yen)

MedicalEquipment

Pharmaceutical

Glass &
Materials

Store(1) Sales to third parties

90,86835,21911,93367,261

1,518(2) Inter-segment sales
and transfers

0

-

3,401

35

Total

90,86835,21915,335

Operating expenses

77,43833,108Operating income

13,429AssetsDepreciation

Eliminations/Corporate

Consolidated

206,801-

206,801

516

3,953

(3,953)-67,296

2,035

210,755(3,953)

206,801

13,49966,718

1,506

192,271

2,197

194,469

2,111

1,835

577

528

18,483(6,151)

12,33198,092

68,86916,18839,245

1,238

223,634

115,106

338,740

4,489

5,607

608

995

5

11,707607

12,315

31

-

-

1,490

475

1,997

-

1,997

8,959

10,621

233

348

19

20,182691

20,874

Other

Total

1. Net sales andoperating income
Net sales

2. Assets, depreciationand capital expenditures

Impairment loss
Capital expenditures(2) Current period (From April 1, 2006 to March 31, 2007)(Millions of yen)

MedicalEquipment

Pharmaceutical

Glass &
Materials

Store(1) Sales to third parties

97,30042,152

12,91830,973

1,017(2) Inter-segment sales
and transfers

3

-

3,445

-

Total

97,30342,152

16,364

Operating expenses

82,97038,854

Operating income

14,333Eliminations/Corporate

Consolidated

184,362-

184,362

220

3,668

(3,668)-30,973

1,238

188,031(3,668)184,362

14,49830,702

1,087

168,113

3,195

171,309

3,298

1,865

270

150

19,918(6,864)

13,053

114,945

80,341

12,482-

6,008

213,778

122,881336,659

5,327

5,495

533

383

88

11,829640

12,469

-

-

-

14

1,272

1,286

-

1,286

11,064

9,489

166

57

85

20,865

2,227

23,093

Other

Total

1. Net sales andoperating income
Net sales

2. Assets, depreciationand capital expenditures

AssetsDepreciation
Impairment loss
Capital expenditures- 21 -

Notes: 1. Classification of business categories and main products in each business category
Business categories are classified based on the proximity in terms of purposes and manners ofusage of the products in the market.
Main products belonging to each business categories are as follows:Business
category
MedicalEquipment

Main products and commodities
Dialyzers, blood tubing sets, injection needles, syringes, and infusion sets, etc.

Pharmaceutical

Half-type and full-type kits, double-bag kits, pre-filled syringes, dialysate
solution, and circulatory drugs, etc.

Glass & Materials

Glass for pharmaceutical containers, glass for thermos bottles, glass forlighting purposes, stoppers for plastic containers and rubber stoppers, etc.

Store

Fresh meat and fish, vegetables, fruits, processed food, daily foods, frozen
foods, general groceries and medicine, etc.

Other

Machinery for manufacture of medical equipment and real estate rental
income, etc.

2. Operating expenses of “Eliminations/Corporate” for the previous and current consolidated
accounting periods included unallocated corporate costs of 6,151 million yen and 6,864 million
yen, respectively. The unallocated corporate costs consisted primarily of the parent company’s
research and development costs and headquarters administration costs.
3. As described in “Changes in accounting method” 1., we have applied Accounting Standard for
Directors’ Bonus from the fiscal year under review. As a result, operating expenses in Medical
Equipment segment, is supposed to be increasing 1 million of yen as well as 229 million of yen in
Elimination and Corporate segment, and operating incomes are supposed to be decreasing
respectively, comparing with the incomes calculated according to the previous standard.
4. Assets of “Eliminations/Corporate” for the previous and current consolidated accounting periods
included corporate assets of 115,320 million yen and 122,930 million yen, respectively. The
corporate assets consisted mainly of parent company’s surplus operating funds (cash on handand in banks), long-term investment funds (investment securities) and assets related to researchand development, as well as of the assets belonging to the headquarters administration
department.
5. Depreciation and capital expenditures included long-term prepaid expenses and its
amortization.

- 22 -

2. Segment information by geographical area
(1) Previous period (From April 1, 2005 to March 31, 2006)
Japan

America(Millions of yen)
Asia

EuropeTotal

Eliminations/Corporate

Consolidated

1. Net sales andoperating income
Net sales(1) Sales to third parties

184,154

14,682

6,312

1,652

206,801-

206,801(2) Inter-segment sales
and transfers

15,829450

410,80327,088(27,088)-

Total

199,983

15,132

6,317

12,455

233,890(27,088)

206,801

Operating expenses

181,129

15,7106,558

11,597214,996(20,526)

194,469

Operating income (loss)

18,854

(577)

(241)

858

18,893(6,562)

12,331

201,235

11,814

3,537

19,738236,325

102,415

338,740

2. Assets(2) Current period (From April 1, 2006 to March 31, 2007)
Japan

America

Europe(Millions of yen)
Asia

Total

Eliminations/Corporate

Consolidated

1. Net sales andoperating income
Net sales(1) Sales to third parties

156,042

17,382

7,102

3,835

184,362-

184,362(2) Inter-segment sales
and transfers

23,610804

86

12,37336,875(36,875)-

Total

179,653

18,186

7,188

16,208221,238(36,875)

184,362

Operating expenses

159,255

19,133

7,050

15,755201,193(29,884)

171,309

Operating income (loss)

20,398

(946)

138

453

20,044(6,991)

13,053214,818

6,426

3,112

6,369

230,726

105,932

336,659

2. Assets

Notes: · 1. Operating expenses of “Eliminations and Corporate” for the previous and current consolidated
accounting periods included unallocated corporate costs of 6,151 million yen and 6,864 million
yen, respectively. The unallocated corporate costs consisted primarily of the parent company’s
research and development costs and the headquarters administration costs.
2. As described in “Changes in accounting method” 1., we have applied Accounting Standard for
Directors’ Bonus from the fiscal year under review. As a result, operating expenses in Japan
segment, is supposed to be increasing 1 million of yen as well as 229 million of yen in Elimination
and Corporate segment, and operating incomes are supposed to be decreasing respectively,
comparing with the incomes calculated according to the previous standard.
3. Assets of “Eliminations/Corporate” for the previous and current consolidated accounting periods
included corporate assets of 115,320 million yen and 122,930 million yen, respectively. The
corporate assets consisted mainly of parent company’s surplus operating funds (cash on handand in banks), long-term investment funds (investment securities) and assets related to researchand development, as well as of the assets belonging to the headquarters administration
department.
4. Classification of countries or areas is based on geographical proximity.
5. The major countries included in each geographical area are as follows:
America…….. The United States of America and Brazil
Europe……… Belgium
Asia…………. China, Thailand and Singapore- 23 -

3. Overseas sales(1) Previous period (From April 1, 2005 to March 31, 2006)

1. Overseas sales(Millions of yen)

America

Europe

Asia

Total

28,876

14,073

6,407

49,358

2. Consolidated net sales
3. Percentage of overseas sales toconsolidated net sales (%)

206,801

14.0%

6.8%

3.1

(2) Current period (From April 1, 2006 to March 31, 2007)

1. Overseas sales(Millions of yen)

America

Europe

Asia

Total

31,89915,071

7,567

54,538

2. Consolidated net sales
3. Percentage of overseas sales toconsolidated net sales (%)

Notes:

1.
2.
3.

23.9%

184,362

17.3%

8.2%

4.1

29.6%

Overseas sales represent those of the Company and the consolidated subsidiaries tocountries and areas outside of Japan.
Classification of countries or areas is based on geographical proximity.
The major countries included in each geographical area are as follows:
America···············The United States of America, Canada and Brazil
Europe·················Belgium, Denmark and Germany
Asia ·····················China, India, Indonesia, Taiwan and Thailand(Lease Transactions)
Finance lease transactions, except for those where ownership of the leased assets is deemed to betransferred to the lessee
Previous period
Current period
Acquisition price equivalent
Accumulated depreciation equivalentBook value equivalent

4,498 mil.yen
3,220
1,277

3,894 mil.yen
2,569
1,324

Lease commitments
Due within one year
Due after over one year
Total

545 mil.yen
653
1,198

523 mil.yen
630
1,154

Lease payments
940 mil.yen
585 mil.yen
757 mil.yen
503 mil.yen
Depreciation equivalent
65 mil.yen
49 mil.yen
Interest expense equivalent
Method of calculation of depreciation equivalent
For the tangible fixed assets, ten ninths of the amount computed by the declining-balancemethod with 10% of hypothetical residual value for the lease term as remaining life is allocated toeach period over the lease term.
Method of calculation of interest equivalent
Difference between total lease payments and acquisition cost equivalent of leased assets
comprises interest expense equivalent, and interest expense equivalent is allocated to each period
over the lease term by the interest method.

- 24 -

(Deferred Taxes)
1. Major components of deferred tax assets and liabilities

Deferred tax assets (current)
Elimination of unrealized profits
Disallowed accrued enterprise tax
Disallowed allowances for bonus payables
Disallowed allowances for loss on clearance of business
Disallowed accounts receivable
Tax loss carryforwards
OthersSubtotal
Allowance accountGross deferred tax assets (current)
Offset with deferred tax liabilities (current)
Net deferred tax assets (current)
Deferred tax liabilities (current)
Reserve for special depreciation
OthersGross deferred tax liabilities (current)
Offset with deferred tax assets (current)
Net deferred tax liabilities (current)

Current period(as of March 31, 2007)
mil. yen
717
618
592
791
202
108
174
3,206
(153)
3,053
(19)
3,033
mil. yen
17
2
19
(19)
mil. yen

Deferred tax assets (fixed)
Impairment loss
Valuation difference of land
Excess of allowance for doubtful accounts over tax-allowableamountExcess of accrued pension and severance cost overtax-allowable amount
Disallowed loss from bad debt
Tax loss carryforwards
OthersSubtotal
Allowance accountGross deferred tax assets (fixed)
Offset with deferred tax liabilities (fixed)
Net deferred tax assets (fixed)

117
2,358
61
5,507
(2,391)
3,116(3,054)61

Deferred tax liabilities (fixed)
Valuation differences of other securities
OthersGross deferred tax liabilities (fixed)
Offset with deferred tax assets (fixed)
Net deferred tax liabilities (fixed)

20,403
68
20,471(3,054)
17,417

848
149
962
1,009

mil. yen

2. Reconciliation of the difference between statutory tax rate and effective tax rate after adoption oftax-effect accounting
Statutory tax rate
40.5 %(Adjustments)
Permanently disallowed items such as entertainment expenses
2.3
Permanently non-taxable items such as dividends received(0.6)
Unrecognized tax benefits of loss-making subsidiaries
4.6
Per capita charges of inhabitants taxes
0.8
Unrecognized tax benefits of equity in loss of affiliate
1.9
Tax credits on research and development expenses, etc.
2.0
Others1.2
Effective tax rate after adoption of tax-effect accounting
48.8- 25 -

(Securities)
1. Other securities with market quotations(Unit: Millions of yen)
Current period(as of March 31, 2007)

Previous period(as of March 31, 2006)
Acquisition
cost

Carrying
value onconsolidated
B/S

Difference

Acquisition
cost

Carrying
value onconsolidated
B/S

Difference

Stock
Bonds
Others21,15788

62,675
108

41,51720

22,95860

72,386
81

49,42820

Subtotal

21,24662,783

41,53723,01874,46749,448Stock
Bonds
Others

-

-

-

309
-

279
-

(29)
-

Subtotal

-

-

-

309

279

(29)

21,24662,783

41,53723,32872,74649,418Classification

Securities whose carrying value
exceeds their acquisition cost

Securities whose carrying value donot exceed their acquisition cost

Total
(Note)

Impairment loss is not recorded on the other securities with market quotations for the previous
consolidated accounting period and the current consolidated accounting period.
Impairment loss is recorded on the securities whose fair values at the end of the consolidated
accounting period have declined by more than 50%, unless the values are reasonably
considered to be recoverable.

2. Other securities sold during the previous and current periods(Unit: Millions of yen)
Current period(From April 1, 2006
To March 31, 2007)

Previous period(From April 1, 2005
To March 31, 2006)
Sales
proceeds

Total gains

3,125

15

Total losses-

Sales
proceeds
24

Total gains-

Total losses
3

3. Securities that do not have market quotations(Unit: Millions of yen)Previous period(as of March 31, 2006)
Carrying value on
Consolidated Balance Sheet

Current period(as of March 31, 2007)
Carrying value on
Consolidated Balance Sheet

Other securities
Unlisted stock
Stocks of subsidiaries andaffiliates
Stocks of unconsolidated
subsidiaries
Stocks of affiliated companies
Total- 26 -

1,435

1,175

113

192

3,980

3,189

5,529

4,557

(Employees Pension and Severance Benefits)
1. Outline of the adopted pension and severance benefit plan
The Company and its domestic consolidated subsidiaries have defined benefit plans, such as
tax-qualified pension plan and lump-sum severance benefit plan.
Certain foreign subsidiaries also have defined benefit plans.
2. Matters related to pension and severance liabilities
Previous period

Current period(as of March 31, 2006)(as of March 31,2007)(1) Pension and severance liabilities(9,601)mil. yen(7,749)(2) Pension plan assets

7,967

6,538

(3) Unfunded pension and severance liabilities (1)+(2)(1,633)(1,210)(4) Unrecognized actuarial differences(1,344)(1,353)(5) Net amount on the consolidated balance sheet (3)+(4)(2,978)(2,564)mil. yen(6) Accrued pension and severance cost
(2,978)(2,564)(Note) Certain subsidiaries adopt a simplified method in calculation of their pension and severance
liabilities.

3. Matters related to pension and severance benefit expenses(1) Service cost(2) Interest cost(3) Expected return on plan assets(4) Amortization of actuarial differences(5) Others (Retirement allowance)(6) Pension and severance benefit expenses(1)+(2)+(3)+(4)+(5)Previous period

Current period(From April 1, 2005
To March 31, 2006)

From April 1, 2006)
To March 31, 2007)

640 mil. yen
226
(95)
174
113
1,060

585 mil. yen
204
(98)
(166)
524

(Note) Pension and severance benefit expenses of consolidated subsidiaries that adopt a simplified
method are included in “(1) Service cost”.
4. Matters related to the basis of calculations of pension and severance liabilities, etc.

(1) Method of allocating expected pension andseverance benefits to reporting periods(2) Discount rate(3) Expected rate of return on plan assets(4) Amortization period of actuarial differences- 27 -

Previous period(as of March 31, 2006)

Current period(as of March 31, 2007)

Fixed base for period

Fixed base for period

Mainly 2.5%

Mainly 2.5%

1.5%

1.5%

5 years bystraight-line methodfrom the following
fiscal years after theyear of recognition ofdifference

5 years bystraight-line methodfrom the following
fiscal years after theyear of recognition ofdifferenceProduction, Orders received and Sales
1. Production(Unit: Millions of yen)

Business segment

Previous period(From April 1, 2005
To March 31, 2006)
Ratio of change fromthe previous period
Amount produced(%)

Current period(From April 1, 2006
To March 31, 2007)
Ratio of change fromthe previous period
Amount produced(%)

Medical Equipment

65,453

11.1

73,011

11.5

Pharmaceutical

35,86740.8

41,744

16.4

Glass & Materials

3,415

(6.9)

3,253

(4.8)

Other

912

84.9

700

(23.3)

Total

105,649

19.3

118,709

12.4

Notes: 1. Amounts produced are calculated based on average selling prices.
2. The above amounts are after eliminations of the inter-segment transactions.
3. The above amounts do not include the related consumption taxes etc.
2. Orders received
Since we adopt the production system based on estimated orders, there is nothing applicable hereto
regarding the amount and the balance of orders received.
3. Sales(Unit: Millions of yen)

Business segment

Previous period(From April 1, 2005
To March 31, 2006)
Ratio of change fromthe previous period
Amount sold(%)

Current period(From April 1, 2006
To March 31, 2007)
Ratio of change fromthe previous period
Amount sold(%)

Medical Equipment

90,86810.1

97,3007.1

Pharmaceutical

35,21934.4

42,152

19.7

Glass & Materials

11,933

2.3

12,9188.3

Store67,261(5.1)

30,973(54.0)

Other

1,518

37.9

1,017

(33.0)

Total

206,801

7.5

184,362(10.9)

Notes: 1. The above amounts are after eliminations of the intersegment transactions.
2. The above amounts do not include the related consumption taxes etc.

- 28 -(Important Subsequent Events)
Acquisition of the shares of Saitama Daiichi Pharmaceutical Co., Ltd. (to be a subsidiary)
We acquired the all shares issued of Saitama Daiichi Pharmaceutical Co., Ltd. to be our subsidiary from theshareholder of Daiichi Sankyo Company, Limited.
1. The reason of acquisition of the shares
Our pharmaceutical business has been conducted by two main businesses, OEM business and Genericdrug business and we have had prominent results mainly in the field of injection drug and oral drug indomestic market, with OEM business. As we are engaged in development of Drug Delivery System and new
drug administer systems for further expansion of OEM business, we are viewing Transdermal Therapeutic
System (TTS) field to extend our possible OEM.
As we expect that Saitama Daiichi Pharmaceutical Co., Ltd can be a part of our group OEM business
manufacturer with research and development in the filed of TTS, which the company has accumulated thetechnology of drugs to be absorbed via skin under Daiichi Pharmaceutical Co., Ltd.(current Daiichi Sankyo
Company, Limited) and has their own research and development department, we acquired the shares of thecompany which we believe their contribution to the expansion of our group pharmaceutical business.
2. Overview of Saitama Daiichi Pharmaceutical Co., Ltd.
(1) Company name(2) Representative(3) Address(4) Established date(5) Main business(6) Capital

Saitama Daiichi Pharmaceutical Co., Ltd.
Koshiro Nakamura, President
8-1, Minamisakae-cho, Kasukabe, Saitama
February 15, 1963
Research, development, manufacturing, marketing, importing and exporting ofpharmaceutical products, mainly of drugs to be absorbed via skin.
1,005 million of yen

3. Overview of Daiichi Sankyo Company, Limited.
(1) Company name(2) Representative(3) Address(4) Established date(5) Main business(6) Capital

Daiichi Sankyo Company, Limited.
Takashi Shoda, President
3-5-1, Nihonbashi-honcho, Chuo-ku, Tokyo
September 28, 2005
Research & Development, Manufacturing , Import, and Sales & Marketing ofpharmaceutical products.
50 billion of yen

4. Acquired numbers of the shares and the situation of the holding shares before and after acquisition(1) Holding numbers of the shares before acquisition(2) Acquired numbers of the shares(3) Holding numbers of the shares after acquisition
5. Acquisition date0 shares (Holding ratio ---- % )297,000 shares
297,000 shares (Holding ratio 100.0%)
May 15, 2007

- 29 -

Balance Sheets
PeriodAccount

Previous Period(as of March 31, 2006)
AmountRatio(ASSETS)
Current Assets
Cash on hand and in banks

Trade notes receivable
Accounts receivable
Merchandise and finishedproducts

Raw materials and supplies
Work in process
Prepaid expenses
Deferred tax assets
Other receivables
Other current assets
Allowance for doubtful
accounts(Unit: Millions of yen)
Current Period
Change(as of March 31, 2007)
in amount
AmountRatio%
108,351

36.3%
116,129

37.9

7,777

39,71912,621
31,99437,437
13,72236,090(2,281)(1,101)
4,096

16,041
2,168
1,726
157
769
944
2,214

17,074
2,848
1,669
303
1,914
1,280
3,826

1,032
679
(56)
145
1,144
336
1,611

(5)

(38)

(33)

Fixed Assets

190,415

63.7

190,218

62.1

(197)

Tangible fixed assets

33,433

11.2

37,482

12.2

4,048

Buildings
Structures
Machinery

VehiclesTools and equipment
Land
Construction in progress
Intangible fixed assets
Software
Others

9,970
327
7,709
19
1,848
10,885
2,673

10,619361
10,87114
2,104
11,225
2,285

214

0.1

278

649
34
3,161
(4)
256
339
(387)
0.1

176
101

146
67
156,768

Investment securities

59,43957,307

69,161
48,433

9,722(8,874)

9,938
382

9,482
294

(456)
(88)

Allowance for investment loss

23,039
1,377
4,893
909
(521)
-

22,292
1,523
4,624
761
(2,563)(1,553)

(747)
145
(268)
(148)
(2,042)(1,553)

Total Assets

298,767

Long-term prepaid expenses
Lease deposits
Other assets
Allowance for doubtful accounts

100.0- 30 -

152,457

29
34

Investments and other assets

Stocks of related companies
Investments other than stock in
related companies
Long-term loans receivable
Long-term loans receivablefrom subsidiaries

52.4

64

306,347

49.8

100.0

(4,310)7,580

Balance Sheets
PeriodAccount

Previous Period(as of March 31, 2006)
AmountRatio(LIABILITIES)Current liabilities
Trade notes payable
Trade accounts payable
Short-term borrowings
Current portion of bonds(Unit: Millions of yen)
Current Period
Change(as of March 31, 2007)
in amount
AmountRatio%
85,75628.7%
86,25328.1

497

16,433
12,592
21,30010,00016,941
13,242
18,600-508
650(2,700)(10,000)

8,448
2,407
591
2,650

19,613
3,819
538
7,500

11,165
1,412
(53)
4,850

Allowance for bonuses payables

50
822

58
850

7
28

Allowance for bonuses payables for
directors and corporate auditors

-

229

229

Allowance for loss on
clearance of business

-

1,954

1,954

969
9,000
492

737
2,168

(231)
(9,000)
1,676

Current portion of long-termborrowings

Other payables
Accrued expenses
Accrued income taxes
Amounts withheld for income taxes,
etc.

Notes payable for plant andequipment

Commercial paper
Other current liabilities

Fixed liabilities
Bonds

90,02930.1

86,32528.2(3,704)31,00031,000-14,00029,424
12,76314,00023,926
14,645(5,498)1,881

Lease deposits received

1,771
1,069

1,543
1,210

(228)
141

Total liabilities

175,78658.8

172,579

56.3(3,207)28,66329,972
29,97242,8081,196
37,296
16

9.6
10.1

-

-

-

Convertible-bond-type bonds withstock acquisition rights

Long-term borrowings
Deferred tax liabilities
Accrued pension and severance
cost(SHAREHOLDERS’ EQUITY)

CapitalCapital surplus
Capital reserve
Earned surplus
Revenue reserve
Voluntary reserves
Reserve for dividends
Reserve for special
depreciation
Special reserve
Unappropriated retained
earnings
Valuation differences of othersecurities

14.3

-

145
37,135

-

-

4,315

-

-

22,186
(648)

7.4
(0.2)

-

-

-

Total shareholders’ equity

122,981

41.2

-

-

-

Total liabilities and shareholders’equity298,767

100.0

-

-

-

Treasury stock- 31 -

Balance Sheets
PeriodAccount

Previous Period(as of March 31, 2006)
Amount

Ratio(Net Assets)
Shareholders’ equity
CapitalCapital surplus
Capital reserve
Other capital surplus
Earned surplus
Revenue reserve
Other revenue reserve
Reserve for dividends
Reserve for special
depreciation
Special reserve

-

%
-

-

-

-

(Unit: Millions of yen)
Current Period(as of March 31, 2007)
ChangeinamountAmountRatio

106,937
28,66329,97329,972
1
49,042
1,196

%
34.9
9.3
9.8

-

16.0

16

-

-

Valuation differences of other securities

-

-

66
39,735
8,028(741)
26,83026,830Total Net Assets--

133,768

43.7-

Total liabilities and net assets--

306,347

100.0-

Retained earnings

Treasury stock
Valuation and translation difference- 32 -(0.2)
8.8

Statements of Income(Unit: Millions of yen)
PeriodAccount

Previous Period

Current Period(From April 1, 2005
To March 31, 2006)(From April 1, 2006
To March 31, 2007)

AmountAmountRatio

Change inamountRatio ofchange

Ratio

%

%

Net sales
Cost of goods sold

116,950
87,751100.0
75.0

127,407
96,439100.0
75.7

10,456
8,688

8.9
9.9

Gross profit

29,19925.0

30,968

24.3

1,768

6.1

18,63616.0

20,271

15.9

1,635

8.8

Operating income

10,563

9.0

10,696

8.4

132

1.3

Non-operating income
Interest income

2,185
404
484
1,053
242
1,256
426
716
113
11,492

1.9

1,544
578
537
343
85
1,209
526
648
34
11,031

1.2

(640)
173
52
(710)
(157)
(46)
99
(67)
(79)
(461)

(29.3)

133
100
19

0.1

14,273
8
661

11.2

Selling, general and administrative
expensesDividend income
Exchange gain
OthersNon-operating expenses
Interest expenses
Interest on bonds
OthersRecurring income
Extraordinary gains
Gains on sales of fixed assets

Governmental subsidies
Gain on sale of investment
securities
Gain on sale of securities inaffiliates

OthersExtraordinary losses
Losses on sales and disposals of
fixed assets
Impairment loss on fixed assets
Allowance for loss on clearanceof business

Loss on investment securities
Loss on devaluation of
investment in affiliates

Allowance for investment loss
on affiliated companies
Advanced depreciation on fixed
assetsAllowance for doubtful debts
Others
Net income before income
taxes
Corporate, inhabitants andenterprise taxes
Adjustment for deferred taxes
Net income
Retained earnings at the
beginning of the period
Loss on disposal of treasury stock
Interim dividends
Unappropriated retained
earnings

1.1

9.8

0.9

8.7

-

(10)

3
3,270

13,58814
7,998

13,588
11
4,727

6.3

368
1,779

176
384

(191)
(1,394)

-

1,954
268

1,954
268

851

700

(151)

-

1,553

1,553

19
252

650
2,200
110

631
2,200
(142)

8,354

7.12

17,306

13.6

8,952

4,400
(1,008)

3.8
(0.9)

9,310
(2,424)

7.3
(1.9)

4,909
(1,416)

4,962

4.2

10,420

8.2

5,458

370
0
1,016

-

-

4,315

-

-

- 33 -(4.0)

14,140
(92)
642

10

2.8

(3.7)

107.2

110.0

Proposal for Appropriation of Retained Earnings(Unit: Millions of yen)Previous Period(From April 1, 2005
To March 31, 2006)

PeriodAccount

AmountUnappropriated retained earnings

4,315

Disposal of voluntary reserves
Reserve for special depreciation
Total

44
44
4,359

Appropriations of retained earnings
Cash dividends[per share]

4,055
1,365
[21.50 yen]

Bonuses to directors and corporate
auditors[including bonuses to corporate
auditors]

89[3]

Special reserve
Retained earnings carried forward

2,600
303

Notes: 1. Reserve for special depreciation is reserve under the Special Taxation Measures Law.
2. On December 9, 2005, the Company appropriated 1,016 million yen for interim dividends (16 yen per
share).

- 34 -

Statement of Shareholders’ Equity
Current period (From April 1, 2006 to March 31, 2007)
Shareholders’ equity
CapitalCapital surplus
Capitalreserve

Othercapitalsurplus

Earned surplus
Total
capitalsurplus

Revenue
reserve

Reservefordividends

Reservefor special
depreciation

Voluntary
reserve

Retainedearnings

Total
EarnedsurplusTreasury

Total

stock

shareholde-

rs’ equity

Balance at March 31, 2006

28,66329,972-

29,972

1,196

16

145

37,1354,315

42,808(648)

100,794

Dividend of surplus(4,096)(4,096)(4,096)

Bonuses to directors
and corporate auditors

(89)

(89)

(89)

10,42010,42010,42078--(2,600)--

Increase (decrease) during
the period

Net income
Reversal of reserve for
special depreciation(78)

Addition to voluntary
reserve

2,600

Acquisition of treasury
stock
Disposal of treasury
stock
Increase (decrease) of
the items other thanshareholders’ equity
during the period
Net increase (decrease)during the period

Balance at March 31, 2007-

28,66329,972

Valuation and translationdifferences

1

1

1

1

1

29,973

1,196

Total net
assetsValuationdifferencesof othersecurities

Total
valuationandtranslationdifferences

22,18622,186

122,981

Dividend of surplus-(4,096)

Bonuses to directors andcorporate auditors

-

(89)

Net income-

10,420

Reversal of reserve for
special depreciation--

Addition to voluntary
reserve--

Acquisition of treasury
stock

-

(101)

-

10

Balance at March 31, 2006

16

Increase (decrease) during
the period

Disposal of treasury
stock
Increase (decrease) of
the items other thanshareholders’ equity
during the period

4,644

4,644

4,644

Net increase (decrease)during the period

4,644

4,644

10,787

Balance at March 31, 2007

26,83026,830133,768- 35 -

(101)

(101)

9

10

(78)

2,600

3,712

6,234

(92)

6,143

66

39,735

8,028

49,042(741)

106,937

Significant Accounting Principles
1. Valuation standards and methods for securities
Stocks issued by subsidiaries
and affiliated companies ·············Valued at cost by the weighted average method
Other securities
Securities with market
quotations································Valued at market price quoted on the balance sheet date.
(Differences in valuation are presented as a component ofshareholders’ equity. Costs of sales are determined by theweighted average method.)
Securities without market
quotations································Valued at cost by the weighted average method
2. Valuation standards and methods for inventories
Merchandises, finished products
and work in process ····················Valued at cost by the weighted average method
Raw materials and supplies ········Valued at cost by the first-in first-out method
3. Method of depreciation and amortization for fixed assets
Tangible fixed assets: ·················Declining-balance method
Durable years and residual values are based on the same
standards as provided by the Corporate Income Tax Law.
Buildings acquired after April 1, 1998 (excluding attachedstructures), are depreciated by straight-line method.
Intangible fixed assets·················Straight-line method
Durable years are based on the same standards as provided
by the Corporate Income Tax Law.
However, the software for internal use is amortized by thestraight-line method for the period during which it is available in
the Company (5 years).
Long-term prepaid expenses ······Straight-line method
Periods of amortization are based on the same standards asprovided by the Corporate Income Tax Law.
4. Standards for recognition of allowances
Allowance for doubtful
accounts ··························· In order to cover the probable losses on collection, an
allowance for doubtful accounts is provided for the estimatedamount of uncollectible receivables. For general receivables,
the amount of provision is based on historical write-off rates, andfor the doubtful receivables, based on the specific collectability.
Allowance for investment
loss ································· In order to cover the payment of bonuses to employees, anallowance is provided for the estimated amount of bonuses to be
paid, prorated for the consolidated accounting period.
Allowance for bonuses
payables ·························· In order to cover the probable losses on investment to theaffiliates, an allowance for loss is provided for the estimatedamount considering the business results and assets situation.
Allowance for bonuses
payables for directors
and corporate auditors······ In order to cover the payment of bonuses to directors andcorporate auditors, an allowance is provided for the estimatedamount of bonuses to be paid, corresponding to the consolidated
accounting period.
Allowance for loss on
clearance of business ····· In connection with withdrawal from retail business which wesold the shares of the subsidiaries, the estimated loss at the endof the consolidated accounting period is posted for disposal of- 36 -

land, building and other properties to be sold accordingly.
Accrued pension andseverance cost ················· An allowance is provided for employee’s pension andseverance payments based on the estimated amounts ofprojected benefit obligation and plan assets at the end of the
fiscal year.
Actuarial difference is expensed in the following fiscal years
after the year of such recognition, using the straight-line method
for five years.
5. Accounting method for lease transactions
Finance leases, except for those where ownership of the leased assets is deemed to betransferred to the lessee, are accounted for by the method similar to that applicable to ordinary
operating leases.
6. Other significant basis on preparation for financial statements
Consumption Taxes
Consumption taxes are excluded from revenues and expenses accounts.

(Change in Accounting Method)
1. Accounting standard for directors’ bonus
From the fiscal year under review, we have applied Accounting Standard for Directors’ Bonus,(Accounting Standards Board of Japan, Statement No. 4, November 29, 2005). As a result, operating
income, recurring income and net income before adjustment for taxes are supposed to be decreasing
229 million of yen comparing with the incomes calculated according to the previous standard.
As for the effect to the segment information, please see the notes in the segment information section.
2. Accounting Standard for Presentation of Net Assets in Balance Sheet
Since this interim period, we have adopted “Accounting Standards for Presentation of Net Assets in
Balance Sheet and its Implementation Guidance” (Accounting Standard Board Statement No.5 issued
by the Business Accounting Council of Japan on December 9, 2005) and “Guidance on AccountingStandards for Presentation of Net Assets in Balance Sheet” (Accounting Standard Board Guidance
No.8 issued by the Financial Accounting Standards Board of Japan on December 9, 2005) The effectof the application of the new accounting standard on profit and loss is nothing. Amount that
corresponds to existing total “Shareholders’ Equity” is 133,768 million yen. Due to revision ofRegulations for Consolidated Financial Statement, the Consolidated Financial Statement at theconsolidated accounting period was prepared in accordance with the revised Regulations for
Consolidated Financial Statement.

Notes to the Financial Statements(Balance Sheet)(Previous period)(Current period)

1. Accumulated depreciation of tangible fixed assets

48,085 mil. yen

50,142 mil. yen

2. Balances with related companies
Short-term receivables
Long-term receivables
Short-term payables

15,022 mil. yen
23,03910,72519,006 mil. yen
22,292
12,488

3. Pledged assets
Buildings
Land

4,793 mil. yen
2,685

4,936 mil. yen
2,685

4. Obligations under guarantee contracts

14,216 mil. yen

7,825 mil. yen

5. Obligations as a co-surety

1,458 mil. yen- mil. yen

6. Notes receivable discounted

24 mil. yen

24 mil. yen

7. Accounting processing for matured bill on last day of the consolidated period
Matured bill on last day of the consolidated period was processed on traded date of bill. So, because last
day of current interim consolidated period was holiday of financial institute, matured bill on last day of the- 37 -

consolidated period was included in follow account.
Trade notes receivable
Trade notes payable
Notes payable for plant and equipment

753 mil. yen
1,471
23

(Statement of Income)(Previous Period)(Current Period)

1. Amounts of transactions with related companies
Sales
Purchases
Other operational transactions
Non-operational transactions

21,410 mil. yen
32,515146
536

26,879 mil. yen
35,180169
692

2. Research and development expenses included inselling, general and administrative expenses

2,901 mil. yen

3,370 mil. yen

3. Loss on impairment of fixed assets
The company recognized impairment loss on following assets in this period.
Amount of loss
(Millions of yen)

Use

Type

Location

Leased assets

Buildings and structures,etc

1 sites in Hyogo pref.

384

The company categorizes its assets principally into the groups of assets for business use, leased assets,
idle assets, and assets for common use. The assets for the business use are classified into groups onwhich separate financial information is reported for management accounting purposes, whereas leased
assets and idle assets are individually categorized. Headquarters assets, R&D facilities, dormitory andcompany-offered houses are categorized into assets for common use, since these assets can not generatecash flow in itself.
The book value of assets whose land had significantly depreciated, or which incurred consecutive
operating losses were reduced to recoverable amount, and such deducted amount was recorded as loss on
impairment of fixed assets of 384 million yen in the extraordinary loss section.
The loss on impairment of fixed assets consisted of loss on buildings of 379 million yen, on structures of 5
million yen.
The recoverable amount of such asset groups is measured by the net realizable value of assets.
Relevant assets were evaluated based on the real estate appraisal standards, or on the price of the land
fronting major roads for the immaterial assets. The asset groups which were difficult to sell or which could
not be used for other purpose, however, were evaluated as a minimum unit price.

(Notes to the Statement of Shareholders’ equity)
Current period (From April 1, 2006 to March 31, 2007)
Sort and numbers of Treasury stock
Sort of shares
Common stock

Number of shares
As of March 31, 2006
349,589

Increased numbers
48,487

Decreased numbers
5,009

Number of shares
As of March 31, 2007
393,067(Note) 1. The increased numbers are of purchase of shares which number is less than unit amount.
2. The decreased numbers are of selling of shares which number is less than unit amount.

- 38 -

(Lease Transactions)
Finance lease transactions, except for those where ownership of the leased assets is deemed to betransferred to the lessee(Previous period)(Current period)

Book value equivalent

903 mil. yen
592
310

858 mil. yen
553
305

Lease commitments
Due within one year
Due after over one year
Total

177 mil. yen
262
439

168 mil. yen
254
422

Lease payments
Depreciation equivalentInterest expense equivalent

213 mil. yen
20210

208 mil. yen
188
10

Acquisition price equivalent
Accumulated depreciation equivalent

Method of calculation of depreciation equivalent
For the tangible fixed assets, ten ninth of the amount computed by the declining-balance methodwith 10% of hypothetical residual value for the lease term as remaining life is allocated to each period
over the lease term.
Method of calculation of interest equivalent
Difference between total lease payments and acquisition cost equivalent of leased assets
comprises interest expense equivalent, and interest expense equivalent is allocated to each period
over the lease term by the interest method.

(Securities)
As of March 31, 2006 and 2007, there was no stock issued by subsidiaries or affiliated companies thathave market quotations.

Net Sales by Division and Proportion to the Total(Millions of yen)
PeriodDivision

Previous Period

Current Period(From April 1, 2005
To March 31, 2006)(From April 1, 2006
To March 31, 2007)

AmountAmountRatio%

Change inAmountRatio ofchangeRatio%%

Medical Equipment division

84,105

71.9

92,557

72.6

8,451

10.0

Pharmaceutical division

18,22815.6

19,154

15.0

925

5.1

Glass & Materials division

12,42610.6

14,084

11.1

1,657

13.3

Other

2,190

1.9

1,611

1.3

(578)

(26.4)

Total

116,950100.0

127,407

100.0

10,4568.9[including Exports][42,105]

36.0[49,422]38.8[7,316]

17.4- 39 -

(Deferred Taxes)
1. Major components of deferred tax assets and liabilities
Deferred tax assets (current)
Disallowed accrued enterprise tax
Disallowed allowances for bonus payables
Disallowed allowances for loss on clearance of business
Disallowed accounts receivable
OthersGross deferred tax assets (current)
Offset with deferred tax liabilities (current)
Net deferred tax assets (current)

Current period(as of March 31, 2007)
mil. yen
587
344
791
202
5
1,931
(17)
1,914
mil. yen

Deferred tax liabilities (current)
Reserve for special depreciation
Gross deferred tax liabilities (current)
Offset with deferred tax assets (current)
Net deferred tax liabilities (current)

17
17
(17)
-

Deferred tax assets (fixed)
Impairment loss
Valuation difference of land
Devaluation of investment to affiliates
Excess of allowance for doubtful accounts over tax-allowableamountDisallowed allowance for loss on investment
Excess of accrued pension and severance cost overtax-allowable amount
Disallowed loss from bad debt
OthersGross deferred tax assets (fixed)
Offset with deferred tax liabilities (fixed)
Net deferred tax assets (fixed)

117
34
3,645
(3,645)-

Deferred tax liabilities (fixed)
Reserve for special depreciation
Valuation differences of other securities
Gross deferred tax liabilities (fixed)
Offset with deferred tax assets (fixed)
Net deferred tax liabilities (fixed)

27
18,263
18,290(3,645)
14,645mil. yen
848
149
283
958
629
624

mil. yen

2. Reconciliation of the difference between statutory tax rate and effective tax rate after adoption oftax-effect accounting
The note is omitted, because the difference between statutory tax rate and effective tax rate after
adoption of tax-effect accounting is less than 5% of statutory tax rate.

Changes in Directors and Corporate Auditors
1. Change in representative of the company
N/A
2. Change in other directors or corporate auditors
N/A- 40 -