Consolidated Financial Statements

November 20, 2006

For the Six-Month Period ended September 30, 2006 (Fiscal Year Ending March 31,2007)
Company name: NIPRO CORPORATION

Shares Exchange listed:Tokyo and Osaka
Code No:
8086
Head office location:
Osaka, Japan(URL: http://www.nipro.co.jp/)
Representative: Minoru Sano, President and Representative Director
Contact:
Akihiko Yamabe, Director, General Manager of Accounting andCorporative Planning Division
TEL (06) 6372-2331
Date of the meeting of the Board of Directors for approval of the financial statements: November 20, 2006
Name of related company: Sanri Kosan Co., Ltd. (Code no: N/A)
Percentage of voting rights of Nipro Corporation held by related company: 20.6%
Adoption of U.S. GAAP: N/A

1.

Consolidated Results for the Six months ended September 30, 2006 (From April 1, 2006 to Sep. 30, 2006)(1) Consolidated Results of Operations(Note: Amounts are truncated to 1 million yen)
Net Sales
Operating Income
Recurring Income
Millions of yen%

Millions of yen%

Millions of yen%

100,280
101,952
206,801

(1.6)
6.6

5,940
6,195
12,331

(4.1)
2.9

4,869
6,206
12,228(21.5)
11.0

Six months ended Sep.30, 2006
Six months ended Sep.30, 2005
Year ended March 31, 2006

Earnings
per Share

Net Income

Diluted Earnings
per Share

Millions of yen

%

Yen

Yen

4,016
2,034
4,512

97.4
(46.1)

63.24
32.01
69.57

-

Six months ended Sep.30, 2006
Six months ended Sep.30, 2005
Year ended March 31, 2006
Notes: 1. Equity in loss of affiliate:

Six months ended Sep.30, 2006: (356) million yen
Six months ended Sep.30, 2005: (319) million yen
Year ended March 31, 2006:(702) million yen
2. The weighted average number of outstanding shares for the period (consolidated) :Six months ended Sep.30, 2006: 63,519,183 shares Six months ended Sep.30, 2005: 63,559,272 sharesYear ended March 31, 2006:
63,548,846 shares
3. Accounting method: Changed
4. Percentages in the above table for Net Sales, Operating Income, Recurring Income and Net Income represent changes from thecorresponding six month period of the previous fiscal year.

(2) Consolidated Financial Position
Total Assets
Six months ended Sep.30, 2006
Six months ended Sep.30, 2005
Year ended March 31, 2006
Note:

Shareholders’’
EquityMillions of yen

Millions of yen

319,733
301,248
338,740

116,166
101,790
112,390

The number of outstanding shares at the end of the period (consolidated):Six months ended Sep.30, 2006: 63,503,190 sharesYear ended March 31, 2006:
63,528,916 shares

Shareholders’EquityShare

Ratio of Shareholders’Equity to Total Assets
%

per
Yen

35.7
33.8
33.2

1,795.78
1,601.76
1,767.69

Six months ended Sep.30, 2006: 63,549,130 shares(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

7,984
2,391
6,701

7,146
(13,106)(27,555)(23,946)(6,138)15,712

41,16037,46049,914Six months ended Sep.30, 2006
Six months ended Sep.30, 2005
Year ended March 31, 2006

Cash and cash
equivalents(4) Matters related to scope of consolidation and application of equity method
Number of consolidated subsidiaries:
Number of unconsolidated subsidiaries accounted for by the equity method:
Number of affiliate company accounted for by the equity method:

2101(5) Change of reporting entities
Number of consolidated companies
Number of companies accounted for by the equity method2.

Added:
Added:

30Removed:Removed:10

Projected Consolidated Financial Results for the Year ending March 31, 2007 (From April 1, 2006 to March 31,
2007)

Net Sales

Recurring Income

Millions of yen

Millions of yen

Net Income
Millions of yen

Year ending March 31, 2007
178,000
9,600
8,000(Reference) Projected earnings per share for the year ending March 31, 2007: 125.98 yen* The projections shown above are prepared based on information available as of the issuing date of this report.
The actual results may differ from the projected figures due to various factors. Concerning the matters related tothe above projections, please refer to the Page 7.

-1-

Corporate GroupOur group consists of the Reporting Company (“the Company”), its 24 subsidiaries and 1 affiliate, and isprimarily engaged in manufacture and sale of medical equipment, pharmaceutical products and glass andmaterial products as well as management of drugstores.
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, 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) sells 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, 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) manufactures internal glass
sections of vacuum flask and other glass products, and sells locally as well as exports.
<Store Division>
Nissho Drug Co., Ltd. carries out drugstores mainly in the Hanshin region, retailing
medicine and general grocery, etc.
<Other>
The Company manufactures (purchases, in some cases) and sells machinery for
manufacture of medical equipment, etc.
The Company and Washu 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:-2-

(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◎Nipro Pharma Corporation◎Nipro Genepha Corporation<Manufacture and Sale>

And 6 other subsidiaries◎Zensei PharmaceuticalIndustries Co., Ltd.

<Development and Sale><Manufacture>
Pharmaceutical Corporation<Development,
and Sale>

Manufacture□Bipha Corporation

Glass & Materials Division◎Nipro Diabetes Systems, Inc.

Nipro Corporation◎Tohoku Nipro

Glass & Materials Division<Manufacture and Sale><Sale>◎Shinwa Shoji Co., Ltd.

◎Shanghai Nissho Vacuum Flask
Refill Co., Ltd.

Store Division<Drugstore management>

Supply of products andmerchandises◎Nissho Drug Co., Ltd.

Supply of raw materials

Other<Non-life insurance agency>

Other transactions○Nissho Insurance Services Co.,Ltd.

<Rental of real estate>◎

Consolidated subsidiary○Washu Kogyo Co., Ltd.

○

Unconsolidated subsidiary□

Affiliate accounted for by theequity method△

Other related company

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

-3-

Management Policies
1. Basic Policies of Management
Since our foundation, we have based ourselves on “technology” and aimed at manufacturing better
products at lower costs. We set our management philosophy in contributing to the society throughcorporate activities, especially focusing on developing new products in the fields of medicals andpharmaceuticals.
As a management structure in pursuit of compatibility between “stability” and “growth” that is mostimportant for any company, we implement the “performance-linked remuneration system” that is the ruleof profit sharing among shareholders, employees and management, and carry out active business
operations, holding the employees responsible for boosting the performance of individual businesses.

2. Basic Policies on Distribution of Profits
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.

3. Position and Policy on Reduction of Trading Unit of Shares
We consider that reduction of trading unit of shares will promote individual investors into the market
and lead to the vitalization of securities market. In view of the large amount of implementation costs etc.,
we will consider to reduce the reduction of trading unit at the occasion of transition to the company without
share certificate.

4. Target Management Indicators
To concentrate management resources on Medical Equipment and Pharmaceutical division, we
transferred all shares of a consolidated subsidiary (Nissho Corporation) in Store division on July, this year.
With this thing, we modified managerial goal that we have ever aimed to achieve by the fiscal year 2010.
The modified managerial goal is 200 billion yen of consolidated net sales, 20 billion yen of recurringincome and 10% of return on equity (ratio of net income to shareholders’ equity)

5. Medium- and Long-term Management Strategies
In the Medical Equipment division, we are maintaining to make capital investment to increase
production capacity of dialyzers which is main production in this division. We will seek to increase themarket share by reducing cost and improving quality of the product by concentration of production andfull-scale manufacturing from raw materials by self spinning of hollow fiber. And with regard to artificial
heart lung, we will develop to world-class product by reducing cost and reinforcing the product line-up andsales office.
In the Pharmaceutical division, with regard to injection solutions, we will establish competitive
advantage in cost and quality with an eye to global competition by increasing productive capacity oflyophilized formulation, substance refine and carcinostatic, and expanding production and upgrade
technology of solid formulation. And with regard to generic product, we will concentrate to develop newly
variety, and engage in collaborative development and competitive work with other companies.
In the Glass and Materials division, we will increase competitiveness by reducing manufacturingcosts of various glass products based on our peerless glass processing technologies, conduct global
sales activities and strive to secure stable profit.

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6. 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. And 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 disposable products, we will make efforts to increase ourmarket share of injection and infusion-related products such as infusion sets and syringes, as well as todevelop, market and promote new products.
With regard to the cardiovascular products, we will enlarge the product line-up by developing andintroducing new products such as PTCA balloon, distal protection catheter and stent, reinforce marketingand sales forces, and increase our market share. In addition, as for the examination-related products,
we will market and promote blood glucose monitoring device for diabetics, test reagents and bloodcollection tubes for blood test, strengthen sales, and obtain market share by active marketing.
In the international business, we have been exposed to severe change and competition, and we are
required to reinforce core products, and develop new products early.
To strengthen market
competitiveness, we understand necessity to contain external product in addition to internal production.
Meanwhile, we are also facing the necessity to tackle opening branch to expand direct selling net work ofcore products such as artificial lung, and expansion of medical market in developing countries. It is issue
to overcome increase of expense occurred from above things. We will be continuing to deal with control
regarding quality assurance strictly to supply and sale of safe and secure products.
In the pharmaceutical division, we aims to increase in product numbers of our kit products such as“liquid-and-powder” double-bag kits of antibiotics and pre-filled syringes, as well as to improve theproducts including prevention measures of malpractice.
In terms of oral drugs, we made Zensei Pharmaceutical industries Co., Ltd. our subsidiary on April,
this year. Hereby, we, even more, increase our own generic products to a large extent, we focus on the
co-development of oral drugs. Furthermore we intend to develop pharmaceutically contrived products,
for instance, drugs with prominent easiness to drink. And, cooperation with Nichi-iko Pharmaceutical Co.,
Ltd. , for example, in addition to we reinforce sales outlet, we aim to expand productivity of pharmaceuticalmanufacturing plant. In addition, we will make efforts for early realization of pharmaceutical products inapplication of recombinant human serum albumin such as artificial blood and Drug Delivery System (DDS)
and products related to recombinant protein for the renal diseases. We will endeavor to expand ourpharmaceutical 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, develop
applied uses of glass tubes, and expand the overseas market and production of the glass pre-filled
syringes. In addition, we will actively develop new product. In terms of the glass for lighting purposes,
we will strive to increase sales of glass materials for LCD backlights and glass-related products in thesituation of expanding business of FPD (Flat Panel Display).

７. Parent or Related Company(1) The Name etc. of Parent or Related Company(As of September 30, 2006)
Name
Sanri Kosan Co., Ltd.

Attribute
The listed company’s relatedcompany

Percentageofvoting rights held byparent or relatedcompany

20.62 %

Shares exchange etc. where
the shares of parent or relatedcompany are listed

N/A(2) Roles Assigned to the Listed Company in the Group of Parent or Related Company
Sanri Kosan Co., Ltd., a related company, does not involve in the Company’s management, and theCompany operates its management independently.

-5-

(3) Transactions with Parent or Related Company
N/A

Business Results and Financial Conditions
1. Business Results(1) Summary of Overall Business and Results by Segments
Japanese economy for the current interim period under review was apprehended that corporate
profit slipped by rise of market interest rate due to lift of quantative monetoray easing policy andzero-interest-rate policy of Bank of Japan, but appeared to be extensional led by limited effect on capital
investment and individual consumption.
Under such circumstances, we have continued to focus on the development of new products,
reinforced production capacity, sales capability to improve business performance, and enhanced valueof Nipro brand by improving quality of basal common product. In addition, we intended to concentrate
management resources on Medical Equipment and Pharmaceutical division, so that we transferredshares of a consolidated subsidiary (Nissho Corporation).
As a result, the consolidated net sales for the period under review decreased by 1.6% to 100,280
million yen, the consolidated operating income decreased by 4.1% to 5,940 million yen, andconsolidated recurring income decreased by 21.5% to 4,869 million yen.
On the other hand, net income increased by 97.4% from the same period of the previous year to
4,016 million yen, due to the increase of extraordinary gains owing to the share transfer of subsidiary.
Business situations by segment are as follows below.
a. Medical Equipment division
For the domestic business, its environment has been severe as more hospitals started jointpurchase arrangement for consumables, and competitions became harder, which caused the
downward pressure on prices, and function classificatetion of dialyzer occurred from implementation of
NHL price revision.
Under such circumstances, we sought to enhance the efficiency of sales activities and strengthen
the sales bases, sales office and staffs for sales. We also made efforts to develop and launch new
products in the fields of dialysis, injection and infusion, treatment on circulatory organs andexamination, as well as to promote expansion of the business by means of product offerings in thesystematized package and to expand both our market shares and sales.
On the other hand, as for the international business, the active reinforcement of foreign sales
resulted in steady performance. Especially, sales of dialysis related product achieved steadyextension in Southeast Asia and Latin America area. And these product that have be for advanced
countries ever expanded swiftly in developing countries. In addition, steady performance of foreign
branches result in steady extension on sales.
As a result, net sales of the division increased by 2.6% to 45,897 million yen.
b. Pharmaceutical division
In the Pharmaceutical division, the environment of market remained very severe, due to thegovernmental controls to suppress medical expenditures and to the intensified price competition.
Under such circumstances, we strove to increase sales of powdered dialysate solutions and kit
product of substitution fluid for hemofiltration and hemodiafiltration. We also exerted ourselves toexpand sales of “liquid-and-powder” double-bag kits, pre-filled syringe kits, and plastic-ampoules, as aresult, business of this division showed a prosperous growth.
As a result, net sales of the division increased by 26.0% from the same period of the previous year
to 20,331 million yen.

-6-

c.

Glass & Materials Division
In the Glass & Materials division, In the filed of glass for pharmaceutical purposes, sales of glass
tubes for ampoule decreased due to the impact of the change of container forms.
And net sales ofglasses for tubes bottle increase in new product and pre-filled syringe kits but, remained at the samelevel due to slowdown of existing product. Although glasses for vacuum bottle are decreasing due todecline of domestic sales, the business related to glasses for lighting purpose was sustained byincreasing sales of glasses for LCD backlight and related materials due to prosperous activity ofmarket of FPD.
As a result, net sales of the division increased by 21.7% to 7,021 million yen.

d. Store division
In the supermarket sector, we transferred all shares of Nissho Corporation on the last day, Julythis year.
The drug store sector eforted to improve its profit resulted in increase of profit by the restraint in
opening new stores, improving profit rate and focusing on cost reduction in instensive competition.
As a result, net sales of the division decreased by 23.8% to 26,428 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 4.1 % to 601 million yen.

(2) Prospects for the Fiscal Year Ending March 31, 2007
The business environment is anticipated to remain severe, with concerns about appreciation of
crude-oil prices and rise of interest rate, or concerns about slowdown of the U. S. economy and risk ofappreciation of yen in exchange markets.
However 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, 2007, we project the consolidated net sales of 178,000 million yen(decrease by 13.9% compared with the previous period), recurring income of 9,600 million yen(decrease by 21.5%), and net income of 8,000 million yen (increase by 77.3%).
Projections on net sales by segments are as follows:
Medical division:
91,700 million yen (increase by 0.9%)
Pharmaceutical division:
40,900 million yen (increase by 16.1%)
Glass and Materials division: 13,100 million yen (increase by 9.8%)
Store division:
31,200 million yen (decrease by 53.6%)
Other division:
1,100 million yen (decrease by 27.6%)

2. Financial Conditions(1) Analysis of the conditions of assets, liabilities, shareholders’ equity and cash flows
Total assets decreased by 1,907 million yen from the end of the previous period to 319,733 million
yen. Current assets decreased by 3,211million yen to 142,652 million yen, and fixed assets decreased
by 15,795 million yen to 177,081 million yen. Main reason for the decrease in current assets was thatcash on hand and in banks decreased, and main reason for the decrease in fixed assets was that landand buildings & structures in tangible fixed assets, and investment securities and lease deposits ininvestments and other assets decreased.
On the other hand, liabilities decreased by 21,170 million yen to 203,567 million yen. Current
liabilities decreased by 10,526 million yen to 100,758 million yen, and the fixed liabilities decreased by
10,644 million yen to 10,288 million yen. Main reason for the decrease in current liabilities was thatcurrent potion of bonds and commercial paper decreased, and main reason for the decrease in fixedliabilities was that long-term borrowings and differed tax liabilities decreased.
Shareholders’ equity contained minority interests increased by 2,163 million yen to 116,166 million
yen. In this section, earned surplus increased by 2,358 million yen to 3,694 million yen, and valuationdifferences of other securities decreased by 2,249 million yen to 23,314 millionyen.
As for cash flows for the interim period, net cash provided by operating activities was 7,984 million
yen, net cash provided in investing activities was 7,146 million yen, and net cash used in financing
activities was 23,946 million yen, and as a result, cash and cash equivalents was 41,160 million yen.
Net cash provided by operating activities mainly reflected interim net income before adjustment of-7-

taxes and depreciation and amortization. Net cash provided in investing activities reflected theproceeds from sellout of shares of subsidiary, and net cash used in financing activities mainly reflected
the for commercial paper, long-term borrowings, and bonds.
(2) Trend of the cash flow indicators

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

Fiscal Year
ended
March. 31, 2005

Six Months
ended
Sept. 30, 2005

Fiscal Year
ended
March. 31, 2006

Six Months
ended
Sept. 30, 2006

32.9

33.8

33.2

35.7

38.3

36.0

33.9

42.8

7.1
10.3

3.1

21.1
4.6

8.6

Note: Shareholders’ equity ratio = (Shareholders’ equity – Minority interest / 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 shares).
- 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.

-8-Consolidated Balance Sheets

PeriodAccount

Previous Interim Period(as of Sept. 30, 2005)
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

Current Interim Period(as of Sept. 30, 2006)
AmountRatio%
126,547(Unit: Millions of yen)Previous Period(as of March 31, 2006)
Amount

Ratio

%

42.0

142,65244.6%
145,863

41,27043,24053,39542,96337,146
1,975
3,510
(317)

48,626
43,214
3,639
4,382
(450)

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

43.1

174,700

58.0

177,08155.4

192,87756.9

106,74435.4

102,47632.1

106,195

31.3

43,87939,11943,24527,717
23,131
6,946
5,068

29,585
18,408
10,717
4,644

26,95523,079
8,210
4,704

1,079

0.4

1,618

115
964
66,876

260
1,358
22.2

22.8

64,595
1,393
508
6,158
3,494
(3,163)100.0

319,733

1,292

0.4

111
1,180

72,98549,5692,375
605
11,392
3,580(646)
301,248

0.5

85,38925.2

68,3132,405
431
11,003
4,021
(784)
100.0

338,740100.0(Notes)(Previous Interim period)

1.Accumulated depreciation of tangible fixed assets
2.Discounted notes receivable(Current Interim Period)

102,035 mil.yen
272 〃104,254 mil.yen
51 〃(Previous Period)

106,320 mil.yen
223 〃3.Obligations under guarantee contracts

1,911

〃

1,366

〃

1,638 〃

4.Pledged assets

16,259〃16,672〃

17,078 〃-9-Consolidated Balance Sheets

PeriodAccount

Previous Interim Period(as of Sept. 30, 2005)
AmountRatio(LIABILITIES)Current liabilities
Trade notes and accounts payable

AmountRatio%
110,154

36.6(Unit: Millions of yen)Previous Period(as of March 31, 2006)

Current Interim Period(as of Sept 30, 2006)

AmountRatio%
100,75831.5%
111,285

30,38540,56013,020
4,318
2,921
1,871

31,84843,238
60
4,220
7,134
2,733

31,424
44,174
10,020
4,626
3,331
1,606

-

1,954

-

Others

4,334
7,000
5,743

4,814
4,754

2,719
9,000
4,382

Fixed liabilities

87,700

Short-term borrowings
Current portion of bonds
Other payables
Accrued income taxes
Allowance for bonuses payable
Allowance for enterpriseliquidation loss
Notes payable for plant andequipment
Commercial paper

Bonds
Convertible type bonds with sharesacquisition rights

Long-term borrowings
Deferred tax liabilities
Accrued pension and severance
cost

Other fixed liabilities
Total liabilities

29.1

102,80832.2

113,452

16,04031,48031,03014,00041,461
9,596

14,00039,633
13,302

14,00047,03815,054

3,160
3,441

2,783
1,609

2,978
3,350

32.8

33.5

197,855

65.7

203,56763.7

224,737

66.3

1,602

0.5

-

-

1,612

0.5

28,66329,972
33,083

9.5
9.9
11.0

-

-

28,66329,972
34,545

8.5
8.9
10.2

17,755

5.9--

25,563

7.5(7,070)
(614)

(2.3)
(0.2)

-

-

(5,705)
(648)

(1.7)
(0.2)

Total shareholders’ equity

101,790

33.8

-

-

112,390

33.2

Total liabilities, minority interests, andshareholders’ equity

301,248

100.0

-

-

338,740

100.0(MINORITY INTERESTS)
Minority interests(SHAREHOLDERS’ EQUITY)

CapitalCapital surplus
Earned surplus
Valuation differences of othersecurities
Foreign currency translation
adjustments

Treasury shares- 10 -

Consolidated Balance Sheets
PeriodAccount

Previous Interim Period(as of Sept. 30, 2005)
AmountCurrent Interim Period(as of Sept 30, 2006)%

Amount(Unit: Millions of yen)Previous Period(as of March 31, 2006)%

Amount%(NET ASSETS)
Shareholders’ equity--

94,838

29.7--

Capital--28,663

9.0--

Capital surplus--

29,972

9.4--

Earned surplus--

36,904

11.5--

Treasury shares

-

-

(701)

(0.2)

-

-

-

-

19,199

6.0

-

-

-

-

23,314

7.3

-

-

-

-

(4,114)

(1.3)

-

-

-

-

2,128

0.6

-

-

-

-

116,166
319,733

36.3
100.0

-

-

Valuation and translation differences
Valuation differences of othersecurities
Foreign currency translation
adjustments
Minority interests
Total net assets
Total liabilities and net assets(Notes)5. Number of treasury shares
Common share(Previous Interim period)(Current Interim period)(Previous Period)

329,375 shares

375,315 shares

349,589shares- 11 -

Consolidated Statements of Income
PeriodAccount

Previous Interim Period

Current Interim Period(Unit: Millions of yen)Previous Period(From April 1, 2005
To September 30, 2005)(From April 1, 2006
To September 30, 2006)(From April 1, 2005
To March 31, 2006)

AmountRatio%

AmountRatio%

AmountRatio%

Net sales
Cost of goods sold

101,952
73,729100.0
72.3

100,280
72,443100.0
72.2

206,801
149,971

100.0
72.5

Gross profit

28,222

27.7

27,83627.8

56,82927.5

22,02621.6

21,89621.9

44,497

21.5

6,195

6.1

5,940

5.9

12,331

6.0

1,277
78
246
641
312
1,266
769
319
177
6,206
112
12

1.2

657
133
295
227
1,727
830
0
204
356
336
4,869
9,625
18

0.7

2,705
179
508
1,475
541
2,808
1,552
702
553
12,228
201
112

1.3

Selling, general and administrative
expenses

Operating income
Non-operating income
Interest income
Dividend income
Exchange gain
OthersNon-operating expenses
Interest expenses
Exchange loss
Depreciation and amortization
Equity in loss of affiliate
OthersRecurring income
Extraordinary gains
Gain on sale of fixed assets

1.2

6.1
0.1

1.7

4.9
9.6

Reversion of allowance forbonuses

53--

Governmental subsidies
received

19

-

19

17
9
2,436

9,576
29
6,571

15
54
3,369

Gain on sale of investment
securities

OthersExtraordinary losses
Loss on sale and disposal of fixed
assetsImpairment loss on fixed assets
Transfer to allowance forenterprise liquidation loss
Loss on investment securities
Loss on disposal of inventories
Abnormal manufacturing cost
Retirement allowanceTransfer to allowance for bad debt
Others
Net income before adjustment oftaxes
Corporate, inhabitants andenterprise taxes
Adjustment for deferred taxes
Minority shareholders’ share in net lossof consolidated subsidiaries

Net income

2.4

6.6

176
1,920

219
1,286

497
1,997

45
98
101
93

1,954
268
100
134
2,306
300

195
158
113
0
407

1.4

5.9
0.1

1.6

3,882

3.8

7,923

7.9

9,060

4.4

2,645
(673)

2.6
(0.7)

6,573
(2,656)

6.6
(2.7)

5,240
(540)

2.5
(0.2)

124
2,034

0.1
2.0

10
4,016

0.0
4.0

151
4,512

0.1
2.2

- 12 -

Consolidated Statements of Surplus(Unit: Millions of yen)
PeriodAccount

Previous Interim Period

Current Interim Period(From April 1, 2005
To Sept.30 2005)(From April 1, 2006
To Sept. 30,2006)

AmountAmount(CAPITAL SURPLUS)
Beginning balance of capital surplus

29,972

29,972Ending balance of capital surplus

29,972

29,972Beginning balance of earned surplus

32,18132,181

Increase in earned surplus
Net income

2,034
2,034

4,512
4,512

Decrease in earned surplus
Dividends

1,132
826

2,148
1,843

Bonuses to directors andcorporate auditors

107

107

[including bonuses to corporate
auditors]

[ 3 ]

[3]

-

0

198
33,083

197
34,545(EARNED SURPLUS)

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

Ending balance of earned surplus- 13 -

Consolidated Statement of Shareholders’ Equity
Current Interim Period (From April 1, 2006 to Sept. 30, 2006)(Unit: Millions of yen)

Shareholders’ equity
CapitalBalance at March 31, 2006
Increase (decrease) during the period
Dividend of surplus
Bonuses to directors and corporate
auditors
Net (Interim) income
Acquisition of treasury shares
Disposal of treasury shares
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 Sept. 30, 2006

Capitalsurplus

Earnedsurplus28,66329,972

34,545(648)

92,532--(1,365)-(1,365)

-

-

(91)

-

(91)

-

0

4,016
-

(56)
3

4,016
(56)
4

-

-

(201)

-

(201)

-

-

-

-

-

-

0

2,358

(52)

2,306

28,66329,97236,904(701)

94,838Valuation and translation differences

Balance at March 31, 2006
Increase (decrease) during the period
Dividend of surplus
Bonuses to directors and corporate
auditors
Net (Interim) income
Acquisition of treasury shares
Disposal of treasury shares
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 Sept. 30, 2006

Total
shareholders’equityTreasurysharesValuationdifferences ofothersecurities
25,563Foreigncurrencytranslation
adjustments(5,705)

Total valuationand translationdifferences

Minority

Totalinterests

assets19,8581,612

114,003

-

-

-

-

(1,365)

-

-

-

-

(91)

-

-

-

-

4,016
(56)
4

-

-

-

-

(201)

(2,249)

1,590

(659)

515

(143)

(2,249)

1,590

(659)

515

2,163

23,314(4,114)19,1992,128

116,166- 14 -

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

Previous Interim Period(From April 1, 2005 To Sept.30, 2005)

Current Interim Period(From April 1, 2006 To Sept 30, 2006)

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

AmountAmountAmountCash 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
Transfer to allowance for doubtful accounts
Transfer to allowance for enterprise liquidation loss
Increase (decrease) in allowance for doubtful accounts
Interest and dividend income
Interest expenses
Exchange loss (gain)
Profit on sale of subsidiaries’ shares
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 andextraordinary gains/losses

3,882
5,589
1,920
14
319
(18)
(324)
769
(526)
(2,389)(2,842)
604
(446)
(790)
(107)

7,923
5,855
1,286
100
356
2,306
1,954
97
(429)
830
79
(9,576)(1,488)(2,657)
1,776
247
1,352
(96)

9,060
12,315
1,997
27
702
131
(688)
1,552
(1,377)(4,893)(5,754)
1,118(1,371)
(599)
(107)

83

773

514

5,738
284
(760)
411
(146)
(3,136)

10,692
396
(923)
658
(182)
(2,658)

12,628702(1,467)
1,103(597)(5,667)

2,391

7,984

6,701

(2,951)
1,660
(420)
58

(1,081)
2,642
(90)
24

(5,067)
4,244(9,504)
3,125

(26)

(517)

(26)

Revenues from other investments(11,566)
171
(0)
34
(66)
-

15,264(8,669)
90
(539)
33
(50)
40

(20,359)375(1,421)
1,144
(67)
0

Cash flows from investing activities(13,106)

7,146(27,555)(32)
300(5,424)
(10)
(27)
69
(187)
(826)
-

2,389
(9,000)930(6,665)(10,030)
4
(56)
(152)
(1,365)
(0)

2,888
2,000
13,384(12,260)
14,922(3,020)
1
(63)
69
(356)
(1,840)(11)(6,138)437(23,946)(15)

15,712
1,180(16,415)(8,831)(3,961)53,73449,91453,734

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 of new consolidated
subsidiary
Proceeds for acquisition of new consolidated
subsidiary
Payments for acquisition of fixed assets
Proceeds from sales of fixed assets
Increase(decrease) in short-term borrowings
Lending of loans
Collections of loans receivable
Expenditures for other investments

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 shares
Payments for acquisitions of treasury shares
Proceeds for sale and lease backRepayments of finance lease obligations
Payments for dividends
Other expenditures
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 theperiodIncrease 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

141

77

141

37,46041,16049,914- 15 -

Basis of Preparation for the Consolidated Financial Statements
1. Scope of Consolidation
1) Consolidated subsidiaries: 21
・ Nipro Medical Industries, Ltd.
・ Nipro Europe N.V.
・ Nipro Pharma Corporation
・ Nissho Drug Co., Ltd.

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

Nipro Asia Pte. Ltd. was included in consolidation due to Increase of its importance, Nipro Middle
East Free Zone Establishment was due to new foundation, and Zensei Pharmaceutical Industries Co.,
Ltd. was due to the company’s acquisition of the shares.
And due to transfer all shares on July 31, 2006, Profit and Loss Statement ending same date ofNissho Corporation was consolidated, and removed from consolidation at the end of current interim
consolidated accounting period.
2) Unconsolidated subsidiaries: 3
The unconsolidated subsidiaries, Nissho Insurance Services Co., Ltd., Nipro Trading (Shanghai)Co., Ltd., and Washu 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, overseas subsidiaries close their interim accounts on June
30. Interim financial statements as of that date are used in preparing for consolidated interim
financial statements, and necessary adjustments are made to reflect significant transactions that
occurred between June 30 and September 30.
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 Equipment, 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
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.
- 16 -

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. Accrued bonuses ·············· 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 forenterprise liquidation
loss ···································· In order to cover the loss on disposal of fixed asset etc. thatarise from scheduled enterprise liquidation, an allowance forenterprise liquidation loss is provided for the estimated amountof loss.
d. Accrued pension andseverance cost·················· An allowance is provided for employees 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 Shareholders’ Equity
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 interim consolidated period
Matured bill on last day of Interim consolidated period was processed on traded date of bill.
So, because last day of current interim consolidated period was holiday of financial institute, matured billon last day of interim consolidated period was included in follow account.
Trade notes receivable
Trade notes payable

905 mil. yen
581 mil. yen

7) Other significant basis on preparation for consolidated financial statements
Consumption taxes are excluded from revenues and expenses accounts.
5. Range of cash and cash equivalent carried on the consolidated interim 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.

- 17 -

(Change in Accounting Method)
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 Accounting Standards
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 effect of the application of the
new accounting standard on profit and loss is nothing. Amount that correspond to existing total“Shareholders’ Equity” is 114,037 million yen.
Due to revision of Regulations for interim Consolidated Financial Statement, interim Consolidated
Financial Statement at current interim consolidated accounting period was prepared in accordance with therevised Regulations for interim Consolidated Financial Statement.

(Notes to the Interim Financial Statements)
Loss on Impairment of Fixed Assets
We, the Nipro group, recognized impairment loss on the following assets in this interim period.
Amount of loss
(Millions of yen)

Use

Type

Location

Leased asset
Store

Land
Buildings & structures, etc

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

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 realestate appraisal standards, and marginal assets were evaluated based 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 Interim Statement of Shareholders’ Equity)
Current Interim Period(From April 1, 2006 to Sept. 30, 2006)
1. Total number and class of outstanding sharesClass of shares

Number of sharesin previous period

Common share

63,878,505 shares

Number of shares
increased in current
interim period- shares

Number of shares
decreased in current
interim period- shares

Number of shares incurrent period
63,878,505 shares

2. Number and class of treasury sharesClass of shares

Number of sharesin previous period

Common share

349,589 shares(notes)1.
2.

Number of shares
increased in current
interim period
27,721 shares

Number of shares
decreased in current
interim period
1,995 shares

Number of sharesin current period
375,315 shares

Number of shares increased in current interim period is due to purchase of odd lot.
Number of shares decreased in current interim period is due to sales of odd lot.
- 18 -

3. Dividend
1)

Dividend paid

Date of decision

Class of shares

Total dividend
paid

Dividend paid per
share

Common share

1,365 mil. yen

Record date

Actual date

March 31, 2006

June 30, 2006

29 June, 2006
Ordinary general
meeting ofshareholders

2)

21.50 yen

Dividend that actual date of dividend is after current interim consolidated accounting period in
dividend that record date of dividend is in current interim consolidated accounting period.

Date of decision

Class ofsharesResourceofdividend

Total dividend paid

Dividend
paid pershare

Record date

Actual date

20 November,
2006
Board ofdirectors

Commonshare

Earnedsurplus2,730 mil. yen

43.00 yen

September 30,
2006

December 8,
2006(Lease Transactions)
Finance lease transactions, except for those where ownership of the leased assets is deemed to betransferred to the lessee
Previous interim
Current interimPrevious period
periodperiodAcquisition price equivalent
Accumulated depreciationequivalentBook value equivalent
Lease commitments
Due within one year
Due after over one year
Total
Lease payments
Depreciation equivalentInterest expense equivalent

4,474 mil.yen

3,680 mil.yen

4,498 mil.yen

3,018

〃

2,468

〃

3,220

〃

1,455

〃

1,212

〃

1,277

〃

629 mil.yen
823
〃
1,453

574 mil.yen
851
〃

〃

1,425

570 mil.yen
444 mil.yen
39 mil.yen〃

355 mil.yen
274 mil.yen
35 mil.yen

545 mil.yen
653
〃
1,198

〃

940 mil.yen
757 mil.yen
65 mil.yen

Method of calculation of depreciation equivalent
For the tangible fixed assets, ten ninths 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.

- 19 -

(Segment information)
1. Segment information by business category(1)Previous Interim period (From April 1, 2005, to September 30, 2005)(Unit: Millions of yen)

MedicalEquipment

Pharmaceutical

Glass &
Materials

Store

Other

Total

(1) Sales to third parties

44,745

16,138

5,771

34,670627(2) Inter-segment sales
and transfers

-

-

1,585

15

Total

44,745

16,138

7,356

Operating expenses

37,885

15,180Operating income

6,860

958

Eliminations/Corporate

Consolidated

101,952-

101,952

255

1,856

(1,856)-

34,685882

103,808(1,856)

101,952

6,572

34,552533

94,724

1,032

95,756

783

133

348

9,084

(2,888)6,195

1. Net sales andoperating income
Net sales(2) Current Interim period (From April 1, 2006 to September 30, 2006)(Unit: Millions of yen)

MedicalEquipment

Pharmaceutical

Glass &
Materials

Store

Other

Total

(1) Sales to third parties

45,897

20,331

7,021

26,428601(2) Inter-segment sales
and transfers

3

-

1,645

-

Total

45,901

20,331

8,666

Operating expenses

38,996

18,880Operating income

6,905

1,450

Eliminations/Corporate

Consolidated

100,280-

100,280

188

1,837

(1,837)-

26,428789

102,117(1,837)100,280

7,699

26,193648

92,418

1,921

94,339

966

234

140

9,698

(3,758)5,940

1. Net sales andoperating income
Net sales(3) Previous period (From April 1, 2005 to March 31, 2006)(Unit: Millions of yen)

MedicalEquipment

Pharmaceutical

Glass &
Materials

Store

Other

Total

(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

13,4292,111

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

1,835

577

528

18,483(6,151)

12,331

1. Net sales andoperating income
Net sales- 20 -

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

Main products

MedicalEquipment

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 six months ended September 30, 2006,
2005 and the year ended March 31, 2006 included unallocated corporate costs of 3,758 million
yen, 2,888 million yen, and 6,151 million yen respectively. The unallocated corporate costs
consisted primarily of the parent company’s research and development cost and headquarters’
administrative expenses.

- 21 -

2. Segment information by geographical area
(1) Previous Interim period (From April 1, 2005 to September 30, 2005)
Japan

America

Asia

Europe(Unit: Millions of yen)
Total

Eliminations/Corporate

Consolidated

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

91,072

7,220

2,904

755

101,952-

101,952(2) Inter-segment sales
and transfers

7,946

184

3

5,080

13,215(13,215)-

Total

99,019

7,404

2,907

5,835

115,167(13,215)

101,952

Operating expenses

89,672

7,538

3,044

5,541

105,796(10,039)

95,756

Operating income (loss)

9,347

(134)

(136)

294

9,371

(3,175)

6,195(2) Current Interim period (From April 1, 2006 to September 30, 2006)
Japan

America

Asia

Europe(Unit: Millions of yen)
Total

Eliminations/Corporate

Consolidated

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

87,774

7,357

3,320

1,828

100,280-

100,280(2) Inter-segment sales
and transfers

11,370

332

3

5,758

17,464(17,464)-

Total

99,144

7,689

3,323

7,586

117,744(17,464)

100,280

Operating expenses

89,202

8,217

3,190

7,277

107,887(13,547)

94,339Operating income (loss)

9,942

(528)

133

309

9,857

(3,916)

5,940(3) Previous period (From April 1, 2005 to March, 31, 2006)
Japan

America(Unit: 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- 22 -

Notes:

1. Operating expenses of “Eliminations and Corporate” for the six months ended September 30,
2006, 2005 and the year ended March 31, 2006 included unallocated corporate costs of 3,758
million yen, 2,888 million yen and 6,151 million yen respectively. The unallocated corporate
costs consisted primarily of the parent company’s research and development costs and theheadquarters administration costs.
2. Classification of countries or areas is based on geographical proximity.
3. 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

3. Overseas sales(1) Previous Interim period (From April 1, 2005 to September 30, 2005)
America
1. Overseas sales

Europe14,208

6,763(Unit: Millions of yen)
Asia

Total

2,864

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

101,952

14.0%

6.6%

2.8%

(2) Current Interim period (From April 1, 2006 to September 30, 2006)
America

1. Overseas sales

Europe14,524

7,017

consolidated net sales (%)

Asia

Total

3,727

14.5%

7.0%

America

3.7%

Europe28,876consolidated net sales (%)

Notes:

25.2%(Unit: Millions of yen)

14,073

Asia

Total

6,407

2. Consolidated net sales
3. Percentage of overseas sales to25,268100,280(3) Previous period (From April 1, 2005 to March 31, 2006)

1. Overseas sales

23.4%(Unit: Millions of yen)

2. Consolidated net sales
3. Percentage of overseas sales to23,83649,358206,801

14.0%

6.8%

3.1%

23.9%

1.Overseas sales represent those of the Company and the consolidated subsidiaries to countries
and areas outside of Japan.
2.Classification of countries or areas is based on geographical proximity.
3.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- 23 -

(Securities)
1. Other securities with market quotations(Unit: Millions of yen)
As of September 30, 2005

As of September 30, 2006

As of March 31, 2006

Acquisition cost

Carrying
value onconsolidated
B/S

Difference

Acquisition cost

Carrying
value onconsolidated
B/S

DifferEnce

Acquisition cost

Carrying
value onconsolidated
B/S

Difference

Shares12,07940,47928,40021,11359,46638,352

21,15762,67541,517

Bonds

-

-

-

-

-

-

-

-

-

Others

81

88

6

60

75

15

88

108

20

12,16040,56728,406

21,17459,54138,367

21,24662,783

41,537

Total(Note)

No impairment loss was recorded for the other securities with market quotations for the bothprevious and current interim 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. Securities that do not have market quotations
Carrying value on
Consolidated Balance
Sheet
As of Sept. 30, 2005
Other securities
Unlisted shares (excluding
those traded on theover-the-counter market)
Shares of subsidiaries andaffiliates
Shares of unconsolidated
subsidiaries
Shares of affiliatedcompanies
Total

Carrying value on
Consolidated
Balance Sheet
As of Sept. 30, 2006

(Unit: Millions of yen)
Carrying value on
Consolidated
Balance Sheet
As of March 31, 2006

4,525

1,236

1,435

113

192

113

4,364

3,624

3,980

9,002

5,053

5,529

(Derivative Transactions)
N/A(Shares Option)
N/A- 24 -

Production, Orders received and Sales
1. Production(1) Previous Interim Period (From April. 1, 2005 To September, 30, 2005)(Unit: Millions of yen)
Business segment

Ratio of change fromthe previous period (%)

Amount produced

Medical Equipment

32,313

11.3

Pharmaceutical

16,47029.8

Glass & Materials

1,675

(7.6)

Other

218

(42.8)

Total

50,67715.4(2) Current Interim Period (From April 1, 2006 To September 30, 2006)(Unit: Millions of yen)
Business segment

Ratio of change fromthe previous period (%)

Amount produced

Medical Equipment

30,303(6.2)

Pharmaceutical

20,012

21.5

Glass & Materials

1,742

4.0

Other

386

76.8

Total

52,444

3.5(3) Previous Period (From April 1, 2006 To March 31, 2006)(Unit: Millions of yen)
Business segment

Ratio of change fromthe previous period (%)

Amount produced

Medical Equipment

65,453

11.1

Pharmaceutical

35,867

40.8

Glass & Materials

3,415

(6.9)

Other

912

84.9

Total

105,649

19.3

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.

- 25 -

3. Sales(1) Previous Interim Period (From April 1, 2005 To September 30, 2005)(Unit: Millions of yen)
Business segment

Ratio of change fromthe previous period (%)

Sales Amount

Medical Equipment

44,745

9.6

Pharmaceutical

16,13824.0

Glass & Materials

5,771

3.3

Store

34,670

(2.9)

Other

627

20.0

Total

101,952

6.6(2) Current Interim Period (From April 1, 2006 To September 30, 2006)(Unit: Millions of yen)
Business segment

Ratio of change fromthe previous period (%)

Sales Amount

Medical Equipment

45,897

2.6

Pharmaceutical

20,331

26.0

Glass & Materials

7,021

21.7

Store

26,428(23.8)

Other

601

(4.1)

Total

100,280(1.6)(3) Previous Period (From April 1, 2005 To March 31, 2006)(Unit: Millions of yen)
Business segment

Ratio of change fromthe previous period (%)

Sales Amount

Medical Equipment

90,868

10.1

Pharmaceutical

35,21934.4

Glass & Materials

11,933

2.3

Store67,261

(5.1)

Other

1,518

37.9

Total

206,801

7.5

Notes:1.The above amounts is after eliminations of the inter-segment transactions.
2.The above amounts do not include the related consumption taxes etc.

- 26 -(Important Subsequent Events)
We concluded share transfer agreement regarding transfer of shares of Nissho Drug Co., Ltd. which was ourconsolidated subsidiary with Kirindo Co., Ltd.
1. Reason of share transfer
Nissho Drug Co., Ltd. is our consolidated subsidiary which manages drugstore and drug shop mainly inHanshin region and has expanded to having 91 stores now by active opening new store recently. However,under the circumstances that foray of major competitors based in Kanto region or Tyubu region into Kansai region
has being accelerating, Nissho Drug Co., Ltd. based in Kansai region was facing the necessity to consider thestyle of business in future.
While, we transferred shares of a subsidiary, Nissho Corporation, which manage food supermarket businessto Hankyu Department Stares Inc. on July, 2006 and clearly intended to concentrate more management resourceson medical and pharmaceutical business which is our core business.
Considering this policy, we decided it’s better that store development of Nissho drug Co., Ltd. is carried out
under pure drugstore company. So, the result of consultation with Kirindo Co., Ltd. which want to reinforce sales
and achieve dominance in Kansai region, we concluded share transfer agreement.
2.

Corporate date of subsidiary transferring its shares.
1)

Business nameNissho Drug Co., Ltd.

2)

Description of business

Sales of drugs and medicines, cosmetics, miscellaneous daily goods.

3.

Corporate data of company transferring shares to.
1) Business name
Kirindo Co., Ltd.
2) Description of businessretail of drugs and medicines, health foods, cosmetics, nursery items,
miscellaneous goods.

4.

Number of shares transferred, amount of shares transferred, and status of ownership of shares before orafter transfer.
1) Ownership of shares before transfer
2) Number of shares transferred3) Ownership of shares after transfer
4) Amount of shares transferred

5.

600 shares (rate of ownership 72.4%)600 shares- shares
5,289 mil. yen (rate of ownership-%)

Expected date of share transfer
December 15, 2006

- 27 -

Summary of Non-consolidated Financial Statements

November 20, 2006

For the Six-Month Period ended September 30, 2006 (Fiscal Year Ending March 31,2007)
Company name: NIPRO CORPORATION
Shares 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 meeting of theInterim dividend plan:

Tokyo and Osaka

Osaka, JapanTEL (06) 6372-2331
AdoptedBoard of Directors for approvalof the financial statements:
Scheduled date to commence
payment of dividends:
Unit share system:

November 20, 2006
December 8, 2006
Adopted (1,000 shares/unit)

1. Interim results for the year ending March 31, 2006 (From April 1, 2006 to September 30, 2006)(1) Results of Operations(Note: Amounts are truncated to one million yen)
Net Sales
Operating Income
Recurring Income
Six months ended Sep.30, 2006
Six months ended Sep.30, 2005
Year ended March 31, 2006

Millions of yen%

Millions of yen%

Millions of yen%

62,13457,536116,950

8.0
7.0

4,615
5,599
10,563(17.6)
24.5

4,802
5,963
11,492(19.5)
28.7

Earnings
per Share

Net Income
Six months ended Sep.30, 2006
Six months ended Sep.30, 2005
Year ended March 31, 2006

Millions of yen

%

Yen

5,465
2,039
4,962

167.9
(37.4)

86.04
32.09
76.67

Notes: 1. The weighted average number of shares outstanding for the period:
Six months ended September.30, 2006: 63,519,183 shares Six months ended September.30, 2005: 63,559,272 sharesYear ended March 31, 2006:
63,548,846 shares
2. Change in accounting method: Adopted
3. Percentages in the above table for Net Sales, Operating Income, Recurring Income and Net Income represent changes from theprevious interim period.

(2) Financial Position
Total Assets
Six months ended Sep.30, 2006
Six months ended Sep.30, 2005
Year ended March 31, 2006

Shareholders’EquityMillions of yen

Millions of yen

284,700
260,931
298,767

125,376
114,094
122,981

Ratio of Shareholders’Equity to Total Assets

Shareholders’Equity
Share

%

44.0
43.7
41.2

per
Yen

1,974.34
1,795.38
1,934.42

Notes: 1.

The number of outstanding shares at the end of the period:
Six months ended September 3, 2006: 63,503,190 shares Six months ended September 30, 2005: 63,549,130 sharesYear ended March 31, 2006:
63,528,916 shares
2. The number of treasury shares at the end of the period:
Six months ended September 30, 2006:
375,315 shares Six months ended September 30,2005:
329,375 sharesYear ended March 31, 2006:
349,589 shares

2. Projections for the Results of the Year ending March 31, 2007 (From April 1, 2006 to March 31, 2007)
Net SalesYear ending March 31, 2007

Recurring Income

Net Income

Millions of yen

Millions of yen

Millions of yen

122,000

9,600

10,000(Reference) Projected earnings per share for the year ending March 31, 2007: 157.47 yen
3. Dividends･Dividends by cash
Year ended March 31, 2006
Year ending march 31,
2007(actual)
Year ending march 31,
2007(projection)

Dividends per share (Yen)Interim dividends per share

Year-end dividends per share

Annual dividends per share

16.00

21.50

37.50

43.00

-- . ---- . --

35.50

78.50

* The projections shown above are prepared based on information available as of the issuing date of thisreport. The actual results may differ from the projected figures due to various factors. Concerning thematters related to the above projections, please refer to the Page 7.
- 28 -

Balance Sheets

PeriodAccount

Previous Interim Period(as of Sept. 30, 2005)
AmountRatio(ASSETS)
Current Assets
Cash on hand and in banks

Trade notes receivable
Accounts receivable
Merchandise and finished products

Deferred tax assets
Other current assets
Allowance for doubtful accounts
Fixed Assets
Tangible fixed assets
Buildings
Machinery

Land
Other tangible fixed assets
Intangible fixed assets

Current Interim Period(as of Sept 30, 2006)
AmountRatio%
92,47035.4

28,57913,112
28,726
17,063
712
4,280
(5)

(Unit: Millions of yen)Previous Period(as of March 31, 2006)
Amount%106,42737.4

32,187
13,48034,085
20,644
2,281
3,783
(36)

Ratio
%

108,351

36.3

39,71912,621
31,994
19,937
769
3,316
(5)

168,460

64.6

178,272

62.6

190,415

63.7

34,20913.1

36,182

12.7

33,433

11.2

10,417
8,282
10,946
4,562

10,207
10,787
10,885
4,301

9,970
7,709
10,885
4,868

219

0.1

257

0.1

214

0.1

Investments and other assets

134,03151.4

141,83249.8

156,768

52.4

Investment securities

41,66956,29556,63649,81659,43957,307

9,938
417

8,537
358

9,938
382

Allowance for investment loss

19,239
6,856
(387)
-

22,9296,924(2,738)(631)

23,039
7,180
(521)
-

Total Assets

260,931

Shares of related companies
Investments other than shares inrelated companies
Long-term loans receivable
Long-term loans receivable fromsubsidiaries

Other assets
Allowance for doubtful accounts

100.0- 29 -

284,700

100.0

298,767100.0

Balance Sheets

PeriodAccount

Previous Interim Period(as of Sept. 30, 2005)
AmountRatio(LIABILITIES)Current liabilities
Trade notes payable
Trade accounts payable
Short-term borrowings
Current portion of bonds
Accrued income taxes, etc
Accrued bonuses
Allowance for enterpriseliquidation loss
Commercial paper
Other current liabilities

Fixed liabilities
Bonds

Current Interim Period(as of Sept. 30, 2006)
AmountRatio%
83,07931.9(Unit: Millions of yen)Previous Period(as of March 31, 2006)
Amount%74,93326.3%
85,756

15,592
10,751
27,627
13,0002,420
1,061

16,26913,56827,9136,420
1,928

16,433
12,592
29,74810,000
2,650
822

7,000
5,626

1,954
6,879

9,000
4,511

63,75624.4

84,389

29.7

Ratio

90,02928.7

30.1

16,00031,00031,000

Lease deposits received

14,00022,904
7,936
1,883
1,031

14,00025,81010,6881,686
1,204

14,00029,424
12,763
1,771
1,069

Total liabilities

146,83656.3

159,32356.0

175,786

58.8

28,66329,972
29,97240,902
1,196
37,2962,410
15,170
(614)

11.0
11.5

-

-

28,66329,972
29,97242,8081,196
37,296
4,315
22,186
(648)

9.6
10.1

5.8
(0.3)

-

7.4
(0.2)

Total shareholders’ equity

114,094

43.7

-

-

122,98141.2

Total liabilities and shareholders’ equity

260,931

100.0

-

-

298,767

100.0

Convertible-bond-type bonds with sharesacquisition rights

Long-term borrowings
Deferred tax liabilities
Accrued pension and severance cost

(SHAREHOLDERS’ EQUITY)

CapitalCapital surplus
Capital reserve
Earned surplus
Revenue reserve
Voluntary reserves
Undivided retained interim earnings
Valuation differences of other securities

Treasury shares

15.7- 30 --

14.3

Balance Sheets(Unit: Millions of yen)
PeriodAccount

Previous Interim Period(as of Sept. 30, 2005)
Amount%Current Interim Period(as of Sept. 30, 2006)
Amount%Previous Period(as of March 31, 2006)
Amount%(NET ASSETS)
Shareholders’ equity--

104,751

36.8

-

-

Capital--28,663

10.1--

Capital surplus--

29,972

10.5

-

-

16.4

-

-

Capital surplus

29,972Other capital surplus
Earned surplus

0--

Earned surplus

46,817
1,196

Other earned surplus
Dividend reserve

16

Special depreciation reserve

83

Other reserve

39,735

Earned surplus carried forward

5,786

Treasury shares
Valuation and translation differences
Valuation differences of othersecurities
Total net assets
Total liabilities and net assets

-

-

(701)

(0.2)

-

-

-

-

20,625

7.2

-

-

-

-

20,625

7.2

-

-

-

-

125,376

44.0

-

-

-

-

284,700

100.0

-

-

- 31 -

Statements of Income
PeriodAccount

Previous Interim Period

Current Interim Period(Unit: Millions of yen)
Current Period(From April 1, 2005
To Sept. 30, 2005)(From April 1, 2006
To Sept. 30, 2006)(From April 1, 2005
To March 31, 2006)

AmountAmountAmount

Ratio

Ratio

%

Ratio

%

%

Net sales
Cost of goods sold57,53642,904100.0
74.6

62,13447,266100.0
76.1

116,950
87,751100.0
75.0

Gross profit

14,632

25.4

14,86723.9

29,199

25.0

9,033

15.7

10,252

16.5

18,636

16.0

Operating income

5,599

9.7

4,615

7.4

10,5639.0

Non-operating income

986
182
237
389
177
621
209
353
58
5,963

1.7

803
271
284
210
38
616
242
354
19
4,802

1.3

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

1.9

Selling, general and administrative
expenses

Interest income
Dividend income
Exchange gain
OthersNon-operating expenses
Interest expenses
Interest on bonds
OthersRecurring income
Extraordinary gains
Gain on sale of fixed assets
Gain on sale of investment
securities
Gain on sale of shares ofaffiliated company
Governmental subsidies
OthersExtraordinary losses
Loss on sale and disposal of
fixed assets
Impairment loss on fixed assets
Transfer to allowance forenterprise liquidation loss
Loss on investment securities
Loss on devaluation of
investment in affiliated company
Transfer to allowance forinvestment loss in affiliatedcompany

Transfer to allowance for bad
debt
Others
Net income before income
taxes
Corporate, inhabitants andenterprise taxes
Adjustment for deferred taxes

39
10

1.0

10.4
0.1

10,495
5

1.0

7.7
16.9

133
100

10

-

10

19
2,691

10,478
11
6,250

19
3
3,270

4.7

10.0

19
1,779

63
384

368
1,779

-

1,954
268

-

851

700

851

-

631

-

41

2,200
47

272

1.1

9.8
0.1

2.8

3,311

5.8

9,047

14.6

8,354

7.1

2,275
(1,003)

4.0
(1.7)

6,106
(2,524)

9.8
(4.0)

4,400
(1,008)3.8(0.9)

Net income
Retained earnings at the
beginning of the period
Loss on disposal of treasury
sharesInterim dividends

2,039

3.5

5,465

8.8

4,962

4.2

Undivided retained earnings

370

-

370

-

-

0
1,016

2,410

-

4,315

- 32 -

Statement of Shareholders’ Equity
Current Interim Period(From April 1, 2006 to Sept. 30, 2006)(Unit:Millions of yen)

Shareholders’ equity
TreasurysharesEarned surplus
Capital surplus
Other earned surplus

CapitalOther
capitalsurplusCapitalsurplus

Balance at March 31,
2006
Increase (decrease)during the period
Dividend of surplus
Bonuses to directors
and corporate auditors
Net (Interim) income
Amount of reversal of
special depreciation
reserve
Addition to otherreserve
Acquisition of treasury
shares
Disposal of treasury
sharesIncrease (decrease) of
the items other thanshareholders’ equity
during the period
Net increase (decrease)during the period
Balance at Sept. 30, 2006

28,66329,972

Earnedsurplus29,972

1,196

Dividend
reserve

Other
reserve

Earnedsurpluscarriedforward16

145

37,1354,315

42,808(1,365)(1,365)

(89)

(89)

(89)

5,465

5,465

5,465

earnedsurplus(648)

100,794(1,365)

61
2,600

0

Total

Specialdepreciation
reserve(61)(2,600)

0

(56)

(56)

3

4

-

-

0

0

-

-

(61)

2,600

1,470

4,009

(52)

3,957

28,66329,972

029,972

1,196

16

83

39,735

5,786

46,817(701)

104,751

Valuation andtranslationdifferences

Balance at March 31,
2006
Increase (decrease)during the period
Dividend of surplus
Bonuses to directors
and corporate auditors
Net (Interim) income
Amount of reversal of
special depreciation
reserve
Addition to otherreserve
Acquisition of treasury
shares
Disposal of treasury
sharesIncrease (decrease) of
the items other thanshareholders’ equity
during the period
Net increase (decrease)during the period
Balance at Sept. 30, 2006

-

Total
capitalsurplus

Total
shareholders’equityValuation

Total

differences ofvaluation andothertranslation

securities

differences

22,18622,186

Total
assets122,981(1,365)
(89)
5,465
(56)
4

(1,561)(1,561)(1,561)(1,561)(1,561)

2,395

20,625

20,625

125,376- 33 -

Significant Accounting Principles
1. Valuation standards and methods for significant assets(1) Valuation standards and methods for securities
Shares 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
2. 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).
3. 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 forInvestment loss ··························In order to cover the loss on investment in affiliated companies,
an allowance for investment is provided for the amount required
based on operating results and asset components of appropriate
affiliated companies.
Accrued bonuses························· 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 enterprise
Liquidation loss···························· In order to cover the loss on disposal of fixed asset etc. thatarise from scheduled enterprise liquidation, an allowance forenterprise liquidation loss is provided for the estimated amountof loss.
Accrued pension andseverance cost ···························· An allowance is provided for employees 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. Accounting method for lease transactions
Finance leases, except for those where ownership of the leased assets is deemed to be transferredto the lessee, are accounted for by the method similar to that applicable to ordinary operating leases.
- 34 -

5. Other significant basis on preparation for financial statements
Consumption taxes are excluded from revenues and expenses accounts.

(Change in Accounting Method)
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 Accounting Standards
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 effect of the application of the
new accounting standard on profit and loss is nothing. Amount that corresponds to existing total“Shareholders’ Equity” is 125,376 million yen.
Due to revision of Regulations for interim Consolidated Financial Statement, interim Consolidated
Financial Statement at current interim consolidated accounting period was prepared in accordance with therevised Regulations for interim Consolidated Financial Statement.

Notes to the Interim Financial Statements(Balance Sheet)
1. Accumulated depreciation of tangible fixed assets

As of
September 30, 2005

As of
September 30, 2006

As ofMarch 31, 2006

48,257 mil.yen

49,143 mil.yen

48,085 mil.yen

4,972 mil.yen

5,134 mil.yen

4,793 mil.yen

2. Pledged assets
Buildings
Land

2,685

〃

2,685

〃

2,685

〃

3. Obligations under guarantee contracts

13,912 mil.yen

8,675 mil.yen

14,216 mil.yen

4. Obligations as a co-surety

1,562 mil.yen- mil.yen

1,458 mil.yen

5. Notes receivable discounted

25 mil.yen

32 mil.yen

24 mil.yen

6. Number of treasury shares

375,315 shares
349,589 Shares
329,375 shares
7. Accounting processing for matured bill on last day of interim consolidated period
Matured bill on last day of Interim 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 onlast day of interim consolidated period was included in follow account.
Trade notes receivable
Trade notes payable

630 mil. yen
1,194〃(Statement of Income)1. Amount of implementation of depreciation
From April 1, 2005
To September 30, 2005

From April 1, 2006
From April 1, 2005
To September 30, 2006 To March 31, 2006

1. Amount of depreciation
Tangible fixed assets

1,583 mil.yen

1,632 mil.yen

3,339 mil.yen

Intangible fixed assets

37 mil.yen

42 mil.yen

77 mil.yen- 35 -

2. Impairment loss
The company recognized impairment loss on following assets in this interim period.
Use

Type

Location

Leased assets

Land & buildings, etc

1 sites in Hyogo pref.

Amount of loss
(Millions of yen)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 which incurred consecutive operating losses was reduced to recoverable amount,and such deducted amount was recorded as loss on impairment of fixed assets of 384 million yen in theextraordinary loss section. The loss on impairment of fixed assets consisted of loss on buildings of 379
million yen, and 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, and marginal assets were evaluated based on the price of the land fronting major roads for theimmaterial assets. The asset groups which were difficult to sell or which could not be used for otherpurpose, however, were evaluated as a minimum unit price.

(Statement of Shareholders’’ Equity)
Current Interim Period(From April 1, 2006 to Sept. 30, 2006)
Number and class of treasury sharesClass of shares

Number of sharesin previous period

Common share

349,589 shares

Number of shares
increased in current
interim period
27,721 shares

Number of shares
decreased in current
interim period
1,995 shares

Number of sharesin current period
375,315 shares(notes)1. Number of shares increased in current interim period is due to purchase of odd lot.
2. Number of shares decreased in current interim period is due to sales of odd lot.

(Securities)
As of September 30, 2006, 2005 and March 31, 2006 there was no shares issued by subsidiaries oraffiliated companies that have market quotations.

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

Acquisition price equivalent
Accumulated depreciationequivalentBook value equivalent
Lease commitments
Due within one year
Due after over one year
Total

As of
September 30, 2005

As of
September 30, 2006

909 mil.yen

909 mil.yen

903 mil.yen

566

〃

611

〃

592

〃

343

〃

298

〃

310

〃

179 mil.yen
286
〃
466

Lease payments
Depreciation equivalentInterest expense equivalent

As ofMarch 31,2006

167 mil.yen
244
〃

〃

〃

411

108 mil.yen
96 mil.yen
5 mil.yen

177 mil.yen
262
〃
〃

439

104 mil.yen
83 mil.yen
5 mil.yen

213 mil.yen
202 mil.yen
10 mil.yen

Method of calculation of depreciation equivalent
For the tangible fixed assets, ten ninths 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.

Net Sales by Division and Proportion to the Total(Millions of yen)
PeriodFrom April 1, 2004
To September 30, 2005

AmountDivision

From April 1, 2005
To September 30, 2006

Ratio

AmountFrom April 1, 2005
To March 31, 2006

Ratio

%

Amount%

Ratio%

Medical Equipment division

41,82072.7

44,77072.1

84,10571.9

Pharmaceutical division

8,777

15.2

8,963

14.4

18,228

15.6

Glass & Materials division

5,979

10.4

7,481

12.0

12,426

10.6

959

1.7

919

1.5

2,190

1.9

Total

57,536100.0

62,134100.0

116,950

100.0[including Exports][20,686]

36.0[23,958]

38.6[42,105]

36.0

Other

- 37 -(Important Subsequent Events)
We concluded share transfer agreement regarding transfer of shares of Nissho Drug Co., Ltd. which was ourconsolidated subsidiary with Kirindo Co., Ltd.
1.

Reason of share transfer
Nissho Drug Co., Ltd. is our consolidated subsidiary which manages drugstore and drug shop mainly inHanshin region and has expanded to having 91 stores now by active opening new store recently. However,under the circumstances that foray of major competitors based in Kanto region or Tyubu region into Kansai region
has being accelerating, Nissho Drug Co., Ltd. based in Kansai region was facing the necessity to consider thestyle of business in future.
While, we transferred shares of a subsidiary, Nissho Corporation, which manage food supermarket businessto Hankyu Department Stares Inc. on July, 2006 and clearly intended to concentrate more management resourceson medical and pharmaceutical business which is our core business.
Considering this policy, we decided it’s better that store development of Nissho drug Co., Ltd. is carried out
under pure drugstore company. So, the result of consultation with Kirindo Co., Ltd. which want to reinforce sales
and achieve dominance in Kansai region, we concluded share transfer agreement.
2.

Corporate date of subsidiary transferring its shares.
1)

Business nameNissho Drug Co., Ltd.

2)

Description of business

Sales of drugs and medicines, cosmetics, miscellaneous daily goods.

3.

Corporate data of company transferring shares to.
1) Business name
Kirindo Co., Ltd.
2) Description of businessretail of drugs and medicines, health foods, cosmetics, nursery items,
miscellaneous goods.

4.

Number of shares transferred, amount of shares transferred, and status of ownership of shares before orafter transfer.
1)
2)
3)
4)

5.

Ownership of shares before transfer
Number of shares transferred
Ownership of shares after transfer
Amount of shares transferred

600 shares (rate of ownership 72.4%)600 shares- shares
5,289 mil. yen (rate of ownership-%)

Expected date of share transfer
December 15, 2006

- 38 -