Financial Results for the First Six Months of the Fiscal Year Ending March 31, 2013 (J-GAAP)
November 7, 2012
Name of listed company: Nichii Gakkan Company
Listed on: Tokyo Stock Exchange 1st Section
Securities code:
9792
URL: http://www.nichiigakkan.co.jp
Representative:
Masatoshi Saito, President and Representative Director
Contact:
Koichi Terada, Director, Manager of Accounting and Finance Division
TEL: 03-3291-2121
Scheduled date of filing quarterly financial report:
November 12, 2012
Scheduled date to start dividends distribution:
December 10, 2012
Supplementary quarterly materials prepared: Yes
Quarterly results information meeting held: Yes (for institutional investors and analysts)(Figures shown are rounded down to the nearest million yen.)

1. Consolidated financial results for the six months ended September 30, 2012 (April 1, 2012 - September 30, 2012)(1) Consolidated business results(Percentage figures represent changes from the previous year.)

Net Sales

Operating Income

Ordinary Income

Net Income

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

132,132

7.1

3,903

(20.4)

3,491(28.1)

1,432(35.1)

123,342

3.1

4,902

44.1

4,855

30.3

2,208

66.2

Six months ended
September 30, 2012
Six months ended
September 30, 2011

(Note) Comprehensive income: Six months ended September 30, 2012: ¥1,344 million (-39.8 %)Six months ended September 30, 2011: ¥2,233 million (85.0%)

Net Income
per Share
Six months ended
September 30, 2012
Six months ended
September 30, 2011

Diluted Net Income
per Share
Yen

Yen

20.63

―

31.98

―

(2) Consolidated financial position
Total Assets

Net Assets

Equity Ratio

Millions of yen

Millions of yen%

As of September 30, 2012

161,21458,226

35.9

As of March 31, 2012

157,816

57,442

36.2(Reference) Shareholders’ equity: As of September 30, 2012: ¥57,941 million

As of March 31, 2012: ¥57,166 million

2. Dividends
1Q-endYear ended March 31, 2012
Year ending March 31, 2013

Cash Dividends per Share
3Q-end2Q-endYear-end

Annual

Yen

Yen

Yen

Yen

Yen

―
―

8.00
9.00

―

8.00

16.00

―

9.00

18.00

Year ending March 31, 2013
(forecast)(Note) Revision since the most recently announced dividend forecast: None

3. Forecast of consolidated financial results for the year ending March 31, 2013 (April 1, 2012 - March 31, 2013)(Percentage figures represent changes from previous year for full year figures.)

Net Sales
Full year

Operating Income

Ordinary Income

Net Income
per Share

Net Income

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

Yen

266,800

3.7

7,200

(38.3)

6,700(47.1)

2,900(50.8)

41.66(Note) Revision since the most recently announced financial result forecast: Yes

1

Nichii Gakkan Company (9792) Financial Results for the First Six Months of the Fiscal Year Ending March 31, 2013

* Notes(1) Changes in significant subsidiaries during the period (Changes in specified subsidiaries resulting in changes inscope of consolidation): None
(2) Application of the specific accounting for preparing the quarterly consolidated financial statements: None
(3) Changes in accounting policies, accounting estimates and restatement
1) Changes in accounting policies due to revisions of accounting standards, etc.: None
2) Changes in accounting policies due to reasons other than those stated in 1): Yes
3) Changes in accounting estimates: Yes
4) Restatement: None
(Note) These changes are relevant to “Changes in significant matters forming the basis of preparing the quarterly consolidated financial
statements (Section 5 of Article 10)”. For more details, please refer to “2. Summary (Notes) information, (3) Changes in accounting
policies, accounting estimates and restatement” on page 4.

(4) Number of shares outstanding (common stock)1) Number of shares issued andoutstanding (including treasury stock)

As of Sep. 30, 2012:

73,017,952 shares As of March 31, 2012:

73,017,952 shares

2) Number of treasury stock

As of Sep. 30, 2012:

3,574,685 shares As of March 31, 2012:

3,574,673 shares

3) Average number of shares issued andoutstanding in each period(quarterly consolidated cumulative
period)Six months ended
Sep. 30, 2012:

69,443,291 shares

Six months ended
Sep. 30, 2011:

69,061,418 shares* Implementation status of quarterly review procedures

The quarterly review procedure based on the Financial Instruments and Exchange Act does not apply to these quarterly financial statements,
and the procedure based on the Financial Instruments and Exchange Act is in operation as of the release of these quarterly financial
statements.

* Explanation concerning the appropriate use of financial result forecasts and other special notes(Note about forward looking statements)
The above forecasts are based on information Nichii Gakkan Company had in its possession as of the time this report was prepared and on
certain assumptions judged to be reasonable. Various factors may cause actual results to differ significantly from forecasts. Please refer tothe disclaimers, provided under “Qualitative information on consolidated financial result forecasts” on page 4 of the quarterly consolidated
financial results (appendix materials), regarding assumptions upon which forecasts are based and the use of forecasts.
(Calculation of net income per share in financial result forecasts)
As announced in our press release, “Announcement of Merger by Absorption (Simple Merger) of Marunouchi Publishing Co., Ltd.”(Japanese only) as of September 19, 2012, the absorption-type merger was carried out with the allotment of 2,217.745 shares of common
stock of Nichii Gakkan Company per share of common stock of Marunouchi Publishing effective November 1, 2012. Accordingly, 443,549
shares of common stock of Nichii Gakkan Company, held by the Company as treasury stock, were allotted to the shareholders of
Marunouchi Publishing. The figure for net income per share in the financial result forecasts is calculated using the resulting reduced numberof treasury stock shares.

2

Table of Contents for the Attached Document
1. Qualitative information on quarterly financial results·················································································· 2(1) Qualitative information on consolidated business results················································································2(2) Qualitative information on consolidated financial position·············································································4(3) Qualitative information on consolidated financial result forecasts ································································4

2. Summary (Notes) information ························································································································· 4(1) Changes in significant subsidiaries during the period ·····················································································4(2) Application of the specific accounting for preparing the quarterly consolidated financial statements ·····4(3) Changes in accounting policies, accounting estimates and restatement ························································4

3. Quarterly consolidated financial statements ·································································································· 5(1) Quarterly consolidated balance sheets···············································································································5(2) Quarterly consolidated statements of income and comprehensive income ···················································7(Quarterly consolidated statements of income) ······························································································7(Quarterly consolidated statements of comprehensive income)····································································8(3) Notes on premise of a going concern ··················································································································9(4) Notes on significant fluctuation in amounts of shareholders’ equity······························································9(5) Significant subsequent events······························································································································91

Nichii Gakkan Company (9792) Financial Results for the First Six Months of the Fiscal Year Ending March 31, 2013

1. Qualitative information on quarterly financial results(1) Qualitative information on consolidated business results
With revisions to both the long-term care insurance system and to compensation for medical services and long-term care in
April 2012, and the passage of consumption tax-related bills in August to raise the consumption tax rate in stages, theoperating environment in which the Nichii Gakkan Group operates saw significant progress during the first six months of
the fiscal year ending March 31, 2013, toward a comprehensive reform of social security and tax, with the aim of rebuilding
the social security system and strengthening the country’s fiscal health.
Furthermore, under “The Comprehensive Strategy for the Rebirth of Japan” approved by the Cabinet in July, thegovernment has designated medical services and long-term care as priority areas, and aims to create markets worth ¥50
trillion and employment for 2.84 million people in these fields. The Human Resources Development Strategy (education
field) contained in the comprehensive strategy aims to promote globally active human resources development and recurrent
education to comprehensively carry out “a comprehensive reform of the social security and tax” and “The Strategy for theRebirth of Japan.”
Against this backdrop, the Nichii Gakkan Group launched a medium-term management strategy in April 2012 tostrengthen the operating base at each business and improve the balance of the business structure by expanding the scope ofour business, to achieve growth, stability, and profitability.
We intend to strengthen our operating base by reinforcing the human resource platform that forms the basis of ourservices, expanding the service location networks of our core businesses, and consolidating the respective businesses’
personnel services, to raise the Nichii Gakkan Group’s management efficiency.
With regard to expanding the scope of our business, we are striving to develop and provide new services that will resolve
issues at the respective businesses and lead to synergies across businesses. We entered the language education market in
September 2011, and in April of this year launched the new COCO Juku brand. We have built a structure for total support oflanguage education with classrooms across Japan for both group and one-on-one lessons, and support for studying abroad.
We are also developing new services with other businesses, including English lessons for children at our directly-operated
child care centers opened in April.
In terms of business results, with solid growth in the number of users of our long-term care services and the addition of
GABA Corporation to the scope of consolidation (in September 2011), we achieved record net sales in the first six monthsof the fiscal year ending March 31, 2013. The Medical Support and Health Care businesses further enhanced their earnings
strength by raising operational efficiency at medical institutions under contract and long-term care facilities, while profit
declined in the Education Business which experienced lower enrollments for mainline courses and made strategic
investments for COCO Juku.
As a result, consolidated net sales during the first six months ended September 30, 2012 totaled 132,132 million yen(123,342 million yen in the same period of the previous year), with operating income of 3,903 million yen (4,902 millionyen), ordinary income of 3,491 million yen (4,855 million yen), and net income of 1,432 million yen (2,208 million yen).
Results by business segment are as follows:<Medical Support Business>
The Medical Support Business strengthened its human resource base and improved services under the business’s contract
revision strategy, and this led to an expanded scope of operations per hospital and the acquisition of new contracts, primarily
at private hospitals. The number of hospitals under contract as of the end of September rose for the third consecutive year,
and the business maintained gradual but steady sales growth.
In terms of strengthening the human resource base, the enhancement of staff skills led to a greater-than-anticipatedimprovement in operational efficiency, which absorbed the effect of a temporary increase in the operational burden
associated with revisions to compensation for medical services, and made a significant contribution to the segment’s profit
growth.
The business reinforced its management support services by strengthening its development of medical service andlong-term care support services, and developing and providing support services for international medical exchanges. We
also developed new management and medical support services that integrate our strength in human resources withinformation technology in cooperation with Microsoft Japan Co., Ltd.
As a result, the segment sales during the first six months ended September 30, 2012 totaled 51,869 million yen (51,443
million yen in the same period of the previous fiscal year), with operating income of 4,100 million yen (3,884 million yen).

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Nichii Gakkan Company (9792) Financial Results for the First Six Months of the Fiscal Year Ending March 31, 2013

<Health Care Business>
Although the Health Care Business experienced a slight effect in certain services from the April 2012 revisions tocompensation for long-term care, which lowered actual compensation rates and changed the classification of work hours,
the business maintained sales and profit growth by focusing on increasing the number of service users by aggressively
expanding the service center network and increasing facility efficiency.
With regard to the compensation structures for medical services and long-term care workers, we strove to enhance userconvenience and provide services more efficiently through closer cooperation between medical services and long-term careservices, including proactive openings of home-nursing facilities and the expansion of total long-term care services thatincorporate both medical services and long-term care.
We also worked to expand the scope of services not covered by long-term care insurance by strengthening ourdevelopment of welfare services for disabled persons and reinforcing our lineup of our own brand of long-term careproducts to meet the diverse needs of users.
During the first six months ended September 30, 2012, the home-care services facilities opened 12 new care plan
facilities (bringing the total to 749), 19 new home-visit care facilities (1,081; including home-visit bathing facilities), 11
new day-care facilities (337), and 24 new home-nursing facilities (47). In the area of facility-care services, we opened two
new Nichii no Hohoemi facilities (bringing the total to 243) and seven new Nichii no Kirameki facilities (50).
As a result, segment sales for the first six months ended September 30, 2012 totaled 69,934 million yen (65,836 million
yen in the same period of the previous fiscal year), with operating income of 5,587 million yen (4,758 million yen).
<Education Business>
The Education Business has pursued full-fledged initiatives in language education to improve the balance of the businessstructure, to minimize the impact of business fluctuations and achieve stable, long-term growth. GABA Corporation wasmade a Nichii subsidiary in September 2011, followed by the language school SELC in February 2012, and in April thebusiness launched the new COCO Juku brand.
With companies becoming increasingly global and English education starting at an earlier age, the language education
market bottomed out in 2010 and turned around to growth, and we expect the markets for English courses for both adults
and children to grow going forward.
Against this backdrop, enrollment at GABA Corporation has outpaced the market’s growth, and these strong results arecontributing to the strengthening of the segment’s earnings base.
COCO Juku, a key component of the language education business, has begun to expand nationwide with the opening of
43 schools by the end of September 2012. This will drive the development of new services that will lead to growth at otherbusinesses, including international medical exchange support services at the Medical Services Business and English
conversation lessons for children at the child care business. Enrollments during the first six months of the fiscal year trailed
the initial plan, but promotional activities are being reviewed, with campaigns including effective, targeted media
advertising expected to lead to a steady increase in enrollments going forward.
Existing courses continue to face difficulty with a trend of declining enrollment, but enrollment in the Home Helper
Level 2 Course has turned around to year-on-year growth since June.
As a result, segment sales for the first six months ended September 30, 2012 totaled 10,148 million yen (5,900 million
yen in the same period of the previous fiscal year), with a 1,978 million yen operating loss (a 358 million yen profit in thesame period of the previous year).
<Other Businesses>
In Other Businesses, Nichii Green Farm Company strove to raise recognition of our therapeutic dogs and increase sales at
Lakewoods Garden Himeharu no Sato, in Mobara City, Chiba Prefecture, while also working to make the facility’s
operations more efficient.
As a result, segment sales for the first six months ended September 30, 2012 totaled 180 million yen (161 million yen in
the same period of the previous fiscal year), with a 26 million yen operating profit (a 250 million yen loss in the same periodof the previous year).

3

Nichii Gakkan Company (9792) Financial Results for the First Six Months of the Fiscal Year Ending March 31, 2013

(2) Qualitative information on consolidated financial position
Total assets at the end of the first six months ended September 30, 2012 increased by 3,398 million yen from the end of theprevious fiscal year, to 161,214 million yen. The main factor behind this growth was a 4,798 million yen increase innoncurrent assets from growth in property, plant and equipment, which was partially offset by a 1,400 million yen decreasein current assets from a decline in cash and deposits.
Liabilities increased by 2,613 million yen from the previous fiscal year-end, to 102,987 million yen. Despite a 2,337
million yen increase in current liabilities that included an increase in short-term loans payable, an increase in leaseobligations led to a 275 million yen increase in noncurrent liabilities.
Net assets increased by 784 million yen from the previous fiscal year-end, to 58,226 million yen.

(3) Qualitative information on consolidated financial result forecasts
We have revised the forecast of consolidated financial results for the year ending March 31, 2013, announced on May 15,
2012. Please refer to our press release, “Announcement of Revision to Forecast of Consolidated Financial Results” as ofNovember 7, 2012 for details.
The differences between the revised forecast and the forecast announced on May 15, 2012, are as follows.

Previous forecast(A)
Revised forecast(B)
Change(B – A)
Change (%)(Reference)
FY2012 Results

Net Sales

Operating
IncomeOrdinary
IncomeNet Income

Millions of yen

Millions of yen

Millions of yen

Millions of yen

Net Income
per ShareYen

274,000

11,40011,000

5,800

83.52

266,800

7,200

6,700

2,900

41.66

(7,200)(4,200)(4,300)(2,900)－(2.6)(36.8)(39.1)(50.0)－

257,340

11,672

12,674

5,897

85.27

2. Summary (Notes) information(1) Changes in significant subsidiaries during the period
There is no related information.

(2) Application of the specific accounting for preparing the quarterly consolidated financial statements
There is no related information.

(3) Changes in accounting policies, accounting estimates and restatement
Changes in accounting policies(Change in depreciation method for property, plant and equipment)
Previously, for depreciation of property, plant and equipment, the Nichii Gakkan Group (the Nichii Gakkan Company andits consolidated subsidiaries) applied the declining balance method, which has been changed to the straight line method fromthe first three months ended June 30, 2012.
Taking into consideration the Nichii Gakkan Group’s further global business development going forward, a review of theinvestment effect of property, plant and equipment from the perspective of integrating Group accounting policies andproperly adjusting periodic income determined that the straight line method represented an allocation of expenses that
conformed more closely to the actual use of these assets.
The effect of this change was to increase consolidated operating income, ordinary income, and net income before income
taxes and minority interests for the first six months ended September 30, 2012, by 205 million yen, respectively.

4

Nichii Gakkan Company (9792) Financial Results for the First Six Months of the Fiscal Year Ending March 31, 2013

3. Quarterly consolidated financial statements(1) Quarterly consolidated balance sheets(Thousands of yen)

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable-trade
Short-term investment securities
Merchandise and finished goods
Work in process
Raw materials and supplies
OthersAllowance for doubtful accounts
Total current assets
Noncurrent assets
Property, plant and equipment
Buildings and structures (net)
Lease assets (net)Others (net)Total property, plant and equipment
Intangible assets
Goodwill
OthersTotal intangible assets
Investments and other assets
OthersAllowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets

5

FY2012FY2013(As of March 31, 2012)(As of September 30, 2012)

8,699,654
31,802,791
1,599,880
599,236
5,810
333,724
11,099,077(38,293)
54,101,880

6,373,194
31,902,325
2,298,372
638,863
80,694
286,881
11,208,714(87,831)52,701,215

26,996,379
15,540,953
9,632,708
52,170,041

28,038,009
18,103,755
11,154,967
57,296,732

21,918,063
4,900,437
26,818,501

20,949,810
4,539,789
25,489,600

25,733,630(1,007,711)
24,725,918
103,714,460
157,816,341

26,711,991(985,084)
25,726,907
108,513,239
161,214,454

Nichii Gakkan Company (9792) Financial Results for the First Six Months of the Fiscal Year Ending March 31, 2013

(Thousands of yen)

Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Income taxes payable
Accrued expenses
Provision for bonuses
Provision for directors’ bonuses
Other provision
OthersTotal current liabilities
Noncurrent liabilities
Long-term loans payable
Lease obligations
Provision for retirement benefits
Provision for directors’ retirement benefits
Asset retirement obligations
OthersTotal noncurrent liabilities
Total liabilities
Net assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets

6

FY2012FY2013(As of March 31, 2012)(As of September 30, 2012)

957,132
193,091
3,274,561
16,178,955
4,775,256
36,50042,34523,451,659
48,909,502

927,608
1,582,193
2,336,988
16,663,280
5,193,902
22,00037,87724,483,391
51,247,242

24,990,175
15,833,977
4,719,843
162,923
1,542,245
4,215,370
51,464,536
100,374,038

22,422,776
18,437,951
4,901,214
164,232
1,628,143
4,186,056
51,740,374
102,987,617

11,933,790
17,354,214
34,057,020(6,133,715)
57,211,311

11,933,790
17,354,214
34,933,817(6,133,435)
58,088,387(45,042)－(45,042)
276,034
57,442,302
157,816,341(149,506)
2,202(147,303)
285,753
58,226,837
161,214,454

Nichii Gakkan Company (9792) Financial Results for the First Six Months of the Fiscal Year Ending March 31, 2013

(2) Quarterly consolidated statements of income and comprehensive income(Quarterly consolidated statements of income)(Six months ended September 30)(Thousands of yen)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Rent income
Commission on consignment for job creation businesses
Subsidy income
OthersTotal non-operating income
Non-operating expenses
Interest expenses
Rent expenses
OthersTotal non-operating expenses
Ordinary income
Extraordinary losses
Loss on retirement of noncurrent assets
Loss on sales of noncurrent assets
Loss on valuation of investment securities
Loss on disaster
Loss on transfer of defined contribution pension plan
OthersTotal extraordinary losses
Income before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Total income taxes
Income before minority interests
Minority interests in income
Net income (loss)

7

FY2012FY2013(from April 1, 2011
to September 30, 2011)(from April 1, 2012
to September 30, 2012)

123,342,241
97,974,085
25,368,156
20,465,929
4,902,227

132,132,032
104,145,674
27,986,358
24,082,847
3,903,510

66,281122,024
44,104102,410
142,603
477,424

69,519101,063
104,618
112,957
140,765
528,923437,231
28,15158,586523,970
4,855,681

837,823
25,13477,717
940,676
3,491,757

10,189－－70,838
155,795－
236,823
4,618,858
2,471,223(73,851)
2,397,371
2,221,486
12,9542,208,532

15,291
2,082
199,980－－
74,895292,248
3,199,508
1,994,398(241,769)
1,752,629
1,446,879
14,2191,432,660

Nichii Gakkan Company (9792) Financial Results for the First Six Months of the Fiscal Year Ending March 31, 2013

(Quarterly consolidated statements of comprehensive income)(Six months ended September 30)(Thousands of yen)

Income before minority interests
Other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners of the parent
Comprehensive income attributable to minority interests

8

FY2012(from April 1, 2011
to September 30, 2011)

FY2013(from April 1, 2012
to September 30, 2012)

2,221,486

1,446,879

12,241－
12,2412,233,728(104,463)
2,202(102,260)
1,344,619

2,220,773
12,9541,330,400
14,219Nichii Gakkan Company (9792) Financial Results for the First Six Months of the Fiscal Year Ending March 31, 2013

(3) Notes on premise of a going concern
There is no related information.

(4) Notes on significant fluctuation in amounts of shareholders’ equity
There is no related information.

(5) Significant subsequent events(Merger with Marunouchi Publishing Co., Ltd.)At its meeting held on September 19, 2012, the Board of Directors of Nichii Gakkan Company passed a resolution for amerger by absorption of Marunouchi Publishing Co., Ltd. (hereinafter referred to as the “absorbed company”), and basedon a merger agreement concluded on the same day, the absorption-type merger was carried out on November 1, 2012.
1. Overview of merger(1) Name and business lineup of merged company
Name: Marunouchi Publishing Co., Ltd.
Business lineup: Production, sales, etc., of books and educational materials(2) Main reasons for merger
To achieve stable, long-term profit growth, the Nichii Gakkan Group launched a medium-term management
strategy in April 2012, and is focusing on strengthening our operating base and raising the efficiency of ourbusinesses.
The absorbed company had been contributing to Nichii Gakkan Company’s human resource, primarily for homehelpers, development through the production and sales of books and educational materials related to long-term care,primarily for Home Helper courses.
By merging the absorbed company’s business into our Education Business and bringing the development ofeducational materials in-house, we intend to enhance the operational efficiency of the Education Business andcultivate high-quality human resources. This will also lead to the provision of higher quality services that swiftlyreflect the needs of users.
(3) Date of merger
November 1, 2012 (effective date)(4) Legal format of merger
Absorption-type merger, with Nichii Gakkan Company as the surviving company and Marunouchi Publishing Co.,
Ltd., as the absorbed company(5) Company name following the merger
Nichii Gakkan Company
2. Merger ratio by type of shares, method of calculation, and number of shares to be allotted(1) Merger ratio by type of shares
2,217.745 shares of common stock of Nichii Gakkan Company are to be allotted for each share of common stock of
the absorbed company.
(2) Method of merger ratio calculation
To ensure the fairness and appropriateness of the merger ratio calculation, Nichii Gakkan Company entrusted thecalculation of the value of the shares of Nichii Gakkan Company and of the absorbed company to Deloitte
Tohmatsu Financial Advisory Co., Ltd., an independent third-party organization. Based on the results of those
calculations, the merger ratio was determined through discussions and negotiations with the absorbed company.
(3) Number of shares to be allotted
443,549 shares of common stock (all of which are treasury stock shares held by Nichii Gakkan Company)
3. Overview of merged company (as of March 31, 2012)(1) Name
Marunouchi Publishing Co., Ltd.
(2) Business lineup
Production, sales, etc., of books and educational materials(3) Net sales¥233,636 thousand(4) Net income¥60,215 thousand(5) Total assets¥173,286 thousand(6) Net assets¥170,445 thousand

9