FINANCIAL RESULTS for the 1st Quarter of the Year Ending March 2007
(Consolidated)
August 11, 2006
Code number: 9792
Listed on: Tokyo Stock Exchange 1st Section

Listed company name: Nichii Gakkan Company（URL: http://www.nichiigakkan.co.jp）
Representative

Title: President and Representative Director

Contact

Title: Director, Vice President of Accounting Division and General Manager of Accounting Department
Name: Koichi Terada

Name: Takashi Mori

TEL: 03-3291-2121

1. Notes on quarterly financial statements(1)Concise methods for accounting procedures: Adopted
Physical stocktaking is omitted for some of the inventory assets.
(2)Change in accounting method since the latest consolidated fiscal year: None
(3)Changes in scope of consolidation and application of equity method: None

2. Operating performance highlights for the 1st quarter of the year ending March 2007 (April 1, 2006 through June 30, 2006)(1) Progress of consolidated operating results(Amounts are rounded to the nearest million yen.)
Net Sales
Operating income
Ordinary income
Net income
Millions of Yen%
Millions of Yen%
Millions of Yen%
Millions of Yen%
1st quarter FY 2007
51,096 (0.6)
260(80.8)
308(78.3)
49(93.0)
1st quarter FY 2006

51,390

3.2

1,353

1.8

1,418

0.3

703

30.9

(Reference) FY 2006
206,222
4,990
5,185
1,974
[Notes] 1. The percentages shown in net sales, operating income, etc. represent the rates of change on a year-on-year basis.
2. The figures shown above have not been audited by the auditing firm.
[Qualitative information on the progress of consolidated operating results]
Japan’s economy reflected in this first quarter that business was steadily progressing due to improved corporate profitability, increased
capital investments, and moderately increased consumer spending, but the outlook was recently clouded by various changes such as
soaring crude oil prices, depressed stock prices, and concern over rising interest rates.
In the current medical and long-term care services environment surrounding our group, the first full-scale revision of the long-term careinsurance system since the enforcement of the system was conducted in April this year in order to establish a sustainable social security
system.

The revision of medical service fees and long-term care benefits concurrently conducted will cause the business environment

for medical institutions and long-term service providers to undergo significant changes.
Under such a situation, our group has followed through on our attempts to develop a new service menu and improve the infrastructure,and in addition has executed sales promotions and sales activities making full use of our “Nationwide network,” “High quality service
abilities,” and “Brand power,” in order to promptly respond to the changing market environment. We are also earnestly introducing
strategic investments and “Improvements in Organization, Human Resources, and IT introduction” as mid- and long-term businessstrategies.
Net sales on our non-consolidated (parent company) base continue to increase, but net sales on the consolidated base decreased becauseof the sale of consolidated subsidiaries due to our group rearrangement. The influence from the revision of long-term care benefits andthe effect of aggressive investment into advertising and promotion toward profits will appear in the second quarter or later, and therefore
the profitability for this first quarter was severely affected due to the prior investments. As a result, first quarter net sales fell to 51,096
million yen (down 0.6% on a year-to-year basis), ordinary income to 308 million yen (down 78.3% on a year-to-year basis), and net
income to 49 million yen (down 93.0% on a year-to-year basis).
‐1‐

Shown below is the segment information of net sales and operating income by business category.
In the Medical Support Business, we have strived to promote medical operation consignment services to hospitals and clinics andsupport DPC (Diagnosis Procedure Combination) –intended hospitals or DPC–prepared hospitals. Also, we are aggressively promoting
our sales to regional medical coordination rooms and home care support clinics, and thus we have already begun to improve regional
medical cooperation (such as cooperation between the medical field and the care service field).
The profitability for this first quarter is steadily progressing, almost as planned, although the acquisition of contracts with medical
institutions as consigner is severe. As a result, net sales increased to 27,614 million yen (up 3.5% on a year-to-year basis) and operating
income fell to 2,424 million yen (down 11.7% on a year-to-year basis).
In the Health Care Business, the revision of long-term care benefits and newly established “community support business” and “newpreventive benefits” associated with the long-term care insurance system reform (executed in April 2006) were conducted, but theavailability of “local comprehensive support centers” managed by respective local governments is moderately progressing, as are thepreventive care services. As a result, in our multi-functional care centers, which made a quick start in providing preventive care services,
the number of new users is increasing, but the present effect on sales is limited. As for the welfare equipment rental service, the increasein new users has tended to slow due to the influence of the system revisions. However, the number of contracts for dispatching services
to facilities, which is not influenced by the long-term care insurance system, has steadily increased.
The effect of the revised long-term care benefits and the limited investment results for multi-functional care centers established last year
caused profitability for this first quarter to be below that of last year. As a result, net sales increased to 19,671 million yen (up 1.9% on a
year-to-year basis) but operating income fell to 265 million yen (down 50.5% on a year-to-year basis).
In the Education Business, we aggressively started promotion activities with a new advertisement strategy in the middle of June 2006.
Raising awareness of our company brand through TV commercials and other appealing advertisement linked with consistent images innewspapers, magazines, and our Web sites, has gradually begun to have an effect. We have revised the curriculum to improveavailability and worked on service expansion. However, the home helper training course, our flagship program, is still suffering from asevere market situation because of the unclear outlook on the possibility that home helpers might be unified into care workers, but the
number of students recovered to above last year’s level.
As for profitability, we are aiming at early profit gains from efficient class management, but this improvement has not yet had a big
effect. As a result, net sales fell to 3,462 million yen (down 4.0% on a year-to-year basis) and operating income fell to 315 million yen(down 308 million yen in the same period last year).
In Other Businesses, net sales fell to 348 million yen (down 80.7% on a year-to-year basis) and operating income fell to 39 million yen(down 33.7% on a year-to-year basis).
Our group is promoting a growth strategy focusing on business enforcement and promotion of new business and services, andorganizational reform such as rearrangement of the group companies, and thus decided to liquidate “The Power Bank Co., Ltd.” this
year.

‐2‐

(2) Changes in consolidated financial state
Total assets
Millions of Yen
1st quarter FY 2007
90,165
1st quarter FY 2006

Shareholders' equity
Millions of Yen
51,526

88,844Equity ratio

Shareholders' equity per shareYen
1,462.83%
57.0

51,019(Reference) FY 2006
97,89852,159[Note] The figures shown above have not been audited by the auditing firm.

57.4

1,448.18

53.3

1,479.74[Qualitative information on changes in consolidated financial state]
The total assets for this first quarter decreased by 7,732 million yen to 90,165 million yen over the previous fiscal
year-end, mainly due to the increase in notes and accounts receivable, as well as buildings and structures, and the decreasein cash and deposits.
Liabilities decreased by 6,967 million yen to 38,638 million yen over the previous fiscal year-end, due to the decrease in
short-term loans payable, income taxes payable and allowance for employee bonuses.
Net assets decreased by 632 million yen to 51,526 million yen over the previous fiscal year-end.
[Reference] Non-consolidated data
(1) Progress of non-consolidated operating results
Net Sales
Millions of Yen%
1st quarter FY 2007
49,9552.5
1st quarter FY 2006

48,756

2.4(Amounts are rounded to the nearest million yen).
Operating income
Ordinary income
Net income
Millions of Yen%
Millions of Yen%
Millions of Yen%
273(80.2)
358(75.8)
144(82.5)
1,385

12.6

1,477

(Reference)FY 2006
197,635
4,956
5,257[Note] 1. The percentages shown in net sales, operating income, etc. represent the rates of change
2. The figures shown above have not been audited by the auditing firm.

10.3

822

34.4

(978)
on a year-on-year basis.

(2) Change in non-consolidated financial state
Total assets

Shareholders' equity

1st quarter FY 2007

Millions of Yen
86,070Millions of Yen
47,675

1st quarter FY 2006

84,71650,282(Reference) FY 2006
92,66648,350[Note] The figures shown above have not been audited by the auditing firm.
3. Forecast of consolidated operating performance for the year ending March 2007 (April 1, 2006 through March 31, 2007)
The six months and full year forecasts of operating performance for the year ending March 2007 remain the same as published in the“Consolidated Financial Statements for the Fiscal Year Ended March 31, 2006” on May 23, 2006.
Please note, however, the above forecast is based on the available information as of the release date of this report.
operating performance may could be different from this forecast due to, depending on various factors.

‐3‐

The actual results ofQuarterly Consolidated Financial Statements (Summary)
1. Quarterly Consolidated Balance Sheet (Summary)
Period(Thousands of Yen)

Current Quarter(1st quarter FY 2007)

Corresponding Quarter ofPrevious Year
(1st quarter FY 2006)

AmountAmount(Reference)

ChangeFY 2006

Item
ASSETS
I. Current assets
1. Cash and deposits
2. Notes and accounts receivable
3. Inventories
4. Short-term loans receivable
5. Deferred tax assets
6. Other current assets
7. Allowance for doubtful accounts
Total current assets
II. Fixed assets(1) Tangible fixed assets
1. Buildings and structures
2. Land
3. Other tangible fixed assets
Total tangible fixed assets(2) Intangible fixed assets
1. Consolidated adjustment account
2. Other intangible fixed assets
Total intangible fixed assets(3) Investments and other assets
1. Investment securities
2. Guarantee money deposited
3. Long-term loans receivable
4. Deferred tax assets
5. Other investments
6. Allowance for doubtful accounts
Total investments and other assets
Total fixed assets
Total Assets

AmountRC

Amount
％4,699,538
25,906,397
2,006,277
2,756,611
2,554,736(125,435)
37,798,125

4,278,692
25,845,698
4,621,284
59,892
2,686,542
3,549,562(100,622)
40,941,050

420,846
60,698(2,615,006)(59,892)
70,069(994,826)(24,813)(3,142,924)

9.8
0.2(56.6)
2.6(28.0)
24.7(7.7)

12,557,413
25,343,630
1,943,892
2,882,923
2,650,723(135,756)
45,242,826

25,929,134
7,844,328
1,456,954
35,230,416

20,124,568
8,002,867
1,622,641
29,750,077

5,804,565(158,539)(165,687)
5,480,339

28.8
(2.0)
(10.2)
18.4

24,699,677
7,844,328
2,571,600
35,115,605

2,829,247
1,080,900
3,910,147

3,058,569
909,334
3,967,904(229,322)
171,565
57,757

(7.5)
18.9
(1.5)

2,881,157
1,114,903
3,996,060

907,563
4,970,301
2,539,671
3,337,776
4,010,841(2,539,143)
13,227,012
52,367,575
90,165,701

1,649,315
5,113,922
5,114,573
1,022,723
1,345,490(60,726)
14,185,299
47,903,281
88,844,331(741,751)(143,620)(2,574,902)
2,315,053
2,665,350(2,478,417)(958,287)
4,464,294
1,321,370(45.0)(2.8)(50.3)
226.4
198.1
(6.8)
9.3
1.5

1,219,031
4,977,231
2,557,397
3,307,304
4,020,965(2,538,361)
13,543,570
52,655,236
97,898,062‐4‐

(Thousands of Yen)
PeriodItem
LIABILITIES
I. Current liabilities
1. Notes and accounts payable
2. Short-term loans payable
3. Current installments of long-term
debt
4. Income taxes payable
5. Consumption taxes payable
6. Accrued expenses
7. Allowance for employee bonuses
8. Other current liabilities
Total current liabilities
II Long-term liabilities
1. Long-term loans payable
2. Allowance for
employee retirement benefits
3. Allowance for directors'
and auditors' retirement benefits
4. Other long-term liabilities
Total long-term liabilities
Total Liabilities(Minority interest)
Minority interests
SHAREHOLDERS’ EQUITY
I. Common stock
II. Capital surplus
III. Retained earnings
IV. Gain or loss from revaluation ofmarketable securities
V. Treasury stock
Total shareholders' equity
Total liabilities, minority
interests, and shareholders' equity
NET ASSETS
I. Shareholders' Equity
1. Common stock
2. Capital surplus
3. Retained earnings
4. Treasury stock
Total shareholders’ equity
II. Effects of revaluation andexchange rate changes
Gain or loss from revaluationof marketable securities
Total effects of revaluationand exchange rate changes
III. Minority interests
Total net assets
Total liabilities and net assets

Corresponding Quarter ofCurrent Quarter(1st quarter for FY 2007) st Previous Year(1 quarter for FY 2006)
AmountAmount(Reference)

ChangeAmountFY 2006
AmountRC％

1,451,827
10,590,000
51,266401,384
1,241,686
15,802,198
1,632,919
4,348,472
35,519,754

2,623,323
5,405,000
74,307
1,755,459
1,230,712
14,923,153
5,561,663
3,320,118
34,893,738(1,171,496)
5,185,000(23,040)(1,354,075)
10,974
879,044(3,928,744)
1,028,353
626,015(44.7)
95.9(31.0)(77.1)
0.9
5.9(70.6)
31.0
1.8

1,736,727
13,063,000
55,1712,074,565
1,742,666
15,402,527
3,475,893
5,017,256
42,567,807

34,197
2,837,224

61,2892,506,793(27,091)
330,430(44.2)
13.2

39,3452,767,862

131,102116,633
3,119,157
38,638,911

129,339
90,1452,787,567
37,681,306

1,762
26,488331,590957,605

1.4
29.4
11.9
2.5

129,209102,333
3,038,751
45,606,559-

143,747--

132,488-

11,933,790
17,354,214
27,452,893--

11,933,790
17,354,214
28,723,606

-

-

-

-

193,700(5,915,321)
51,019,278--

77,628(5,930,226)
52,159,014-

88,844,331--

97,898,062

11,933,790
17,354,214
27,962,329(5,931,124)
51,319,209

-

-

-

-

70,827----70,827
136,753
51,526,790
90,165,701

-

-

-

-

‐5‐

(Thousands ofYen)(Reference)

2. Quarterly Consolidated Statements of Income (Summary)
PeriodItem

I. Net sales
II. Cost of sales
Gross profit
III. Selling, general andadministrative expenses
Operating income
IV. Non-operating income
1. Interest income
2. Dividend income
3. Commission on consignment
for office work
4. Income from lease of fixed
assets5. Others
Total non-operating income
V. Non-operating expenses
1. Interest expenses
2. Compensation for damages
3. Loss on disengagement ofguarantee money deposited
4. Others
Total non-operating expenses
Ordinary income
VI. Extraordinary income
1. Gain on sale of fixed assets
2. Gain on sale ofrelated company stocks
3. Gain on sale ofinvestment in securities
Total extraordinary income
VII. Extraordinary losses
1. Loss on sale of fixed assets
2. Loss on retirement of
fixed assets
3. Loss on revaluation ofrelated company stocks
4. Loss on revaluation of
inventories
5. Transfer to allowance for
doubtful accounts
6. Loss on closedown of offices
7.Impairment loss
8. Others
Total extraordinary losses
Income before income taxes
Income, inhabitants andbusiness taxes
Adjustments for income andother taxes
Minority interest
Net income

Corresponding
Current Quarter
Quarter of Previous(1st quarter FY 2007)
Year(1st quarter FY 2006)
AmountAmountChangeFY March 2006

AmountRC

Amount206,222,324
165,174,725
41,047,599
36,057,561
4,990,037

51,096,916
41,372,554
9,724,361
9,463,982
260,379

51,390,295
40,808,058
10,582,237
9,228,553
1,353,683(293,379)
564,496(857,875)
235,428(1,093,304)

％
(0.6)
1.4
(8.1)
2.6
(80.8)

8,229
12,33321,80920,255
19,60519,857(12,026)(7,271)
1,952(59.4)(37.1)
9.8

36,152
27,911
91,952

7,873
18,02868,274

6,525
18,52484,767

1,347(495)(16,492)

20.7
(2.7)
(19.5)

27,06598,693281,775

17,404
2,057
56
985
20,503308,150

10,744
2,032
2,784
4,268
19,8301,418,620

6,660
24(2,728)(3,283)672(1,110,470)

62.0
1.2
(98.0)(76.9)
3.4(78.3)

57,43011,931931
16,16986,463
5,185,349

-

-

-

-

4
1,489,112

-

-

-

-

552,837
2,041,954-

55,32574,997

-

-

8,719

5,100

3,618

70.9

-

-

-

-

118,492

-

-

-

-

2,422,614

-

-

-

-

2,455,000
7,552
131,098
3,503
5,268,583
1,958,719
3,243,944

-

-

-

-

8,719
299,431
140,452

5,100
1,413,520
1,594,371

3,618(1,114,088)(1,453,918)

70.9(78.8)(91.2)

100,619
8,764
49,595(893,146)
8,767
703,528

993,765(3)(653,932)

0.0(93.0)‐6‐-(3,295,144)
34,984
1,974,934