Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending March 31, 2012 (J-GAAP)
November 7, 2011
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 10, 2011
Scheduled date to start dividends distribution
December 9, 2011
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 second quarter ended September 30, 2011 (April 1, 2011 – September 30, 2011)(1) Consolidated operating results(Percentage figures represent changes from the same period in the previous year.)

Net Sales

Ordinary Income

Net Income

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

123,342

3.1

4,902

44.1

4,855

30.3

2,208

66.2

119,623

6.2

3,401

41.9

3,727

62.6

1,329

96.1

Six months ended
September 30, 2011
Six months ended
September 30, 2010
Note: Comprehensive income:Operating Income

Six months ended September 30, 2011:
Six months ended September 30, 2010:

2,233 million yen (85.0%)
1,207 million yen (– %)Diluted Net Income
per Share

Net Income per ShareYen

Six months ended
September 30, 2011
Six months ended
September 30, 2010

Yen

31.98

—

19.25

—

(2) Consolidated financial position
Total Assets

Net Assets

Equity Ratio

Millions of yen

Millions of yen%

As of September 30, 2011

146,365

53,96936.7

As of March 31, 2011

125,781

52,20041.3

Reference: Shareholders’ equity:

As of September 30, 2011: 53,681 million yen

As of March 31, 2011: 51,944 million yen

2. Dividends
Annual Dividends (Yen)First Quarter-End

Second Quarter-End

Year ended March 31, 2011

―

7.00

Year ending March 31, 2012

—

8.00

Third Quarter-End

Year ending March 31, 2012
(Forecast)Year-End

Annual

―

7.00

14.00

―

8.00

16.00

Note: Revisions since the most recently announced dividend forecast: None

3. Consolidated financial result forecasts for the year ending March 31, 2012 (April 1, 2011 – March 31, 2012)(Percentage figures represent changes from the same period in the previous year.)

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

253,700

5.3

11,00039.8

11,700

21.1

5,700

63.9

82.39

Note: Revisions since the most recently announced financial result forecast: Yes

4. Others(1) Significant changes to subsidiaries during the term (Transfers of specific subsidiaries with changes in the scopeof 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 of revisions
1) Changes in accounting policies due to the revision of accounting standard, etc.:
2) Changes in accounting policies other than 1):
3) Changes in accounting estimates:
4) Restatement of revisions:

None
None
None
None

(4) Number of shares issued and outstanding (common stock)1) Number of shares issued andoutstanding (including treasury stock)2) Number of treasury stock3) Average number of shares issued andoutstanding in each period (quarterly
consolidated cumulative period)

As of September 30,
2011
As of September 30,
2011
Six months ended
September 30, 2011

73,017,952 shares

As of March 31, 2011

73,017,952 shares

3,956,561 shares

As of March 31, 2011

3,956,331 shares

69,061,418 shares

Six months ended
September 30, 2010

69,062,344 shares* Presentation of implementation status for quarterly review procedure
The quarterly review procedure based on the Financial Instruments and Exchange Act does not apply to the quarterly
consolidated financial results and the procedure based on this Act was not complete as of the release of these Consolidated
Financial Results.
* Explanation concerning the appropriate use of financial forecasts and other special notes(Notes on forward-looking statements, etc.)
The above forecasts are based on information Nichii Gakkan had in its possession as of the time this report was prepared andon certain assumptions judged to be reasonable. Various factors may cause actual results to differ significantly fromforecasts. Please refer to the 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 forecast net income per share)
As announced in “Exchange of Shares between Nichii Gakkan Company and GABA Corporation to Make the Latter a
Wholly Owned Subsidiary (in Japanese only)” on October 31, 2011, 250 Nichii Gakkan common shares will be exchanged
for each GABA common share effective December 5, 2011. Nichii Gakkan will use 382,250 shares of treasury stock toaccomplish this share exchange. The per-share net income forecast for the current fiscal year has been calculated using atreasury stock figure adjusted for the shares used in the share exchange.

Nichii Gakkan Company (9792) Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending March 31, 2012

Contents of the appendix materials
1. Qualitative information on quarterly consolidated financial results.........................................................................2(1) Qualitative information on consolidated operating results..............................................................................................2(2) Qualitative information on consolidated financial position ............................................................................................4(3) Qualitative information on consolidated financial result forecasts .................................................................................4

2. Summary (other) information ...................................................................................................................................4(1) Significant changes to 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 quarterly consolidated statements of 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 .........................................................................................................................................9-1-

Nichii Gakkan Company (9792) Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending March 31, 2012

1. Qualitative information on quarterly consolidated financial results(1)

Qualitative information on consolidated operating results
Key developments in the Nichii Group’s business environment during the first six months of the fiscal year occurred in thearea of social welfare policy, where progress was made on tax reforms to provide stable financial resources for social
security programs. A proposal for the combined reform of the social security and tax systems was put forth in June, anddirections were set for combining and increasing the availability of kindergarten and daycare services for children, and forstrengthening ties between medical and long-term care services to establish a foundation for improving efficiency, setting
priorities, and increasing functionality. At the same time, discussions on how to create a medium-scale, high-performancesocial security system that is sustainable over the medium-to-long term were also moved forward.
Against that backdrop, the Nichii Group focused on broadening its business activities by, for example, expanding its
various management support services in its Medical Support Business and enhancing its uninsured service offerings in its
Health Care Business.
In our Education Business, we acquired 96.59% of the issued and outstanding common shares of GABA Corporation(“GABA”), the leading provider of one-on-one English conversation instruction, through a tender offer implemented
between August 8 and September 21, 2011. GABA was made into a consolidated subsidiary as of September 29, 2011. A
share exchange will be pursued to make GABA into a wholly owned subsidiary (prospectively as of December 5, 2011).
Moving forward, the Company will work to achieve further success in developing and expanding its language-learning
services and build operations that are fundamentally resilient against economic fluctuation risks. This will be accomplishedthrough the effective use of business resources to pursue efficient course development, and other initiatives aimed atstrengthening the development of our language instruction services.
Our entry into the business of providing English language instruction will be key not only to the development of our
Education Business but also to the enhancement of educational content for our childcare business, the pursuit ofinternational medical exchanges in our Medical Support Business, and the development of new services that will promoteinternal synergies. Using our English language instruction services as a source of competitiveness, we will strengthen therelationships among our various businesses.
Turning to the impacts of the Great East Japan Earthquake, we have continued to provide nearly all of the services
offered through each of our businesses, achieving this result on the strength of the Group’s overall capabilities and theefforts of local staff driven by a powerful sense of mission to do everything possible to serve customers under extremely
trying circumstances.
In addition, we have worked to assist people living in affected areas by, for example, providing mobile bathing services
and supplying goods for daily needs. In August, we were consigned to establish and operate a support center, to serve theelderly and others affected by the March disasters in Kamaishi, a city in Iwate Prefecture. Through this and other means,
we are continuing to assist in the recovery of disaster-stricken areas.
As for our business results, despite a temporary sales decline in disaster-hit areas, solid sales revenues from hospitals in
our Medical Support Business and steady increases in Health Care Business service users resulted in a fourth consecutive
period of record net sales.
Success carried through to our earnings, as well. Here, operational efficiency improvements in our main businesses
helped us to surpass initial forecasts by a wide margin to record the third highest income in our history.
As a result, net sales during the first six months ended September 30, 2011 were 123,342 million yen (119,623 million
yen in the same period of the previous year), operating income was 4,902 million yen (3,401 million yen in the same periodof the previous year), ordinary income was 4,855 million yen (3,727 million yen in the same period of the previous year)
and net income was 2,208 million yen (1,329 million yen in the same period of the previous year).
Operating results by segment were as follows.
<Medical Support Business>
In our Medical Support Business, we continued to pursue our contract revision strategy, and recorded solid sales results byusing our management support services to sign new contracts primarily with private-sector hospitals and by pursuing
initiatives like one aimed at strengthening sales activities targeting the expansion of our contract-based services. With thecontract revision strategy, which will yield staff compensation improvements, greater customer satisfaction, and otherbenefits, beginning to pay off and operational efficiency improving, earnings for this business increased by 31.6%
compared to the same period last year.
Regarding our management support services, we enhanced promotion of our “cyber clerk” services applying voicerecognition technology, embarked on the nationwide release of our “Media Antenna” medical care market survey service,and launched other initiatives aimed at expanding our management support services. At the same time, we pushed ahead-2-

Nichii Gakkan Company (9792) Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending March 31, 2012

with groundwork for pursuing medical exchange services responding to the internationalization of medical care, and otherendeavors, as well.
As a result, sales of this segment during the six months ended September 30, 2011 were 51,443 million yen (51,213
million yen in the same period of the previous year), and operating income was 3,884 million yen (2,951 million yen in thesame period of the previous year).
<Health Care Business>
In our Health Care Business, we recorded increases in both net sales and earnings on solid growth in users of our homevisit care and other home-care services, and users of our group homes and other facility-care services. Our additions of new
locations for our facility-care services are proceeding according to plans, and these new facilities are operating at highutilization rates, contributing to both sales and earnings.
During the first six months ended September 30, 2011, we opened 21 new home-visit care facilities (bringing the total to1,043), 10 new day-care facilities (bringing the total to 304), 23 new home-care support facilities (bringing the total to 717),
2 new care equipment leasing facilities (bringing the total to 134), and 16 new home-nursing facilities (bringing the total to18). The latter are the focus of a full-fledged development effort aimed at establishing solid ties to medical care. All of thisactivity took place in our home-care services. In our facility-care services, we opened 16 new Nichii no Hohoemi facilities(bringing the total to 233) and 4 new Nichii no Kirameki facilities (bringing the total to 38).
Regarding uninsured services, the scale of our operations is steadily increasing, led by welfare services for thehandicapped, and we will move ahead with efforts to broaden our business activities, so that we can not only avoid
institutional risk, but also build a service delivery system that provides daily-life assistance to our customers and further
increases customer satisfaction.
As for our business development plans in the Chinese market, which is expected to grow rapidly, we have decided, as
announced in “Nichii Carenet, the Subsidiary of the Company, to Establish a New Company in China; to Acquire Businessfrom China-based Company (in Japanese only)” on September 20, 2011, to establish a new care equipment wholesalecompany in China (prospectively in January 2012) and have reached a basic agreement with Changzhou Zhongjin Medical
Equipment Co., Ltd. to acquire a portion of its operations. Both of these actions were taken in furtherance of preparations
for the full-scale development of a care equipment wholesale business in the Chinese market.
As a result, sales of this segment during the first six months ended September 30, 2011 were 65,836 million yen (61,126
million yen in the same period of the previous year) and operating income was 4,758 million yen (3,102 million yen in thesame period of the previous year).
<Education Business>
In the Education Business, demand for professional qualifications has entered a downward trend as employment conditions
continue the process of stabilizing. As such, enrollment in the Company’s mainstay Medical Administration and Home
Helper Level 2 courses has declined relative to the same period a year ago.
As for our Web College operations, we added 12 new courses (bringing the total to 72) in September. Among our new
offerings are courses in bookkeeping and accounting, IT and personal computers, and other courses that are useful for workand daily life and are part of our effort to attract a broader cross-section of students.
As a result, sales of this segment during the first six months ended June September 30, 2011 were 5,900 million yen(7,073 million yen in the same period of the previous year) and operating income was 358 million yen (1,043 million yen in
the same period of the previous year).
To respond to growing needs to learn foreign languages led by globalization, the Education Business is using the Web
College to develop language course offerings. However, it will also draw on the language education know-how of GABA,
and proceed to develop teaching facilities that can fully leverage synergies arising from the Company’s acquisition of
GABA and course offerings incorporating Web College resources. Looking ahead, our aim is to achieve even greater
differentiation, build a solid operational foundation, and ultimately secure stable earnings for our Education Business bymaking a full-fledged entry into the field of language education.
Regarding the reporting of GABA’s business results, it should be noted that balance sheet consolidation (covering thefirst six months of the current fiscal year) has taken place as of September 30, 2011. Income statement consolidation isscheduled to begin with the third quarter of the current fiscal year (ending March 31, 2012).
<Other Businesses>
In our Other Businesses, we have actively undertaken various steps including promotional activities aimed at delivering“joy” and “healing” to customers at Lakewoods Garden Himeharu no Sato (“Lakewoods”), which held its grand opening in
April of this year.
In addition, believing that we should use Lakewoods resources in our other businesses, we have laid the groundwork forusing its Australian Labradoodles, which are excellent therapy dogs, at long-term care and other facilities.

-3-

Nichii Gakkan Company (9792) Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending March 31, 2012

As a result, sales of this segment during the first six months ended September 30, 2011 were 161 million yen (209
million yen in the same period of the previous year) and operating loss was 250 million yen (5 million yen of operating
income in the same period of the previous year).

(2)

Qualitative information on consolidated financial position
Total assets at the end of the first six months ended September 30, 2011 increased by 20,584 million yen compared with thefigure at the end of the previous fiscal year to 146,365 million yen. This change was caused mainly by an increase inmarketable securities in connection with the addition of GABA as a consolidated subsidiary. Current assets increased by
6,018 million yen, and goodwill and other fixed assets increased by 14,566 million yen.
Total liabilities increased by 18,815 million yen compared with the figure at the end of the previous fiscal year to 92,396
million yen. This is mainly because current liabilities increased by 15,855 million yen due to an increase in short-term loans
payable, etc.
Total net assets increased compared with the figure at the end of the previous fiscal year by 1,769 million yen to 53,969
million yen.

(3)

Qualitative information on consolidated financial result forecasts
The results forecast for the fiscal year ending March 31, 2012, which were announced on May 16, 2011, have been revised.
For more information on the details of the revisions, please refer to the announcement on revised results forecasts dated
November 7, 2011.
The differences between the forecast included in the financial results released on May 16, 2011 and the revised forecast
are as shown below.
Net sales

OperatingincomeOrdinary
incomeMillions of yen

Millions of yen

Millions of yen

Millions of yen

Yen

250,000
253,700
3,700
1.5

9,000
11,000
2,000
22.2

9,300
11,700
2,400
25.8

4,500
5,700
1,200
26.7

65.16
82.39
－
－

240,827

7,868

9,660

3,478

50.37

Previously announced forecast (A)Revised forecast (B)Change (B – A)
Change (%)(Reference) Results for the year
ended March 31, 2011

Net income

2. Summary (other) information(1)

Significant changes to 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

There is no related information.

-4-

Net income per
share

Nichii Gakkan Company (9792) Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending March 31, 2012

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

As of March 31, 2011

As of September 30, 2011

AssetsCurrent assets
Cash and deposits

3,912,556

5,694,313

Notes and accounts receivable

29,891,605

31,133,248

Short-term investment securities－

1,498,845

Merchandise and finished goods

404,983

460,448

4,283

2,861

278,660

343,720

9,728,268

11,092,781(56,829)(44,565)

44,163,528

50,181,654

Buildings and structures (net)26,596,675

26,865,203

Others (net)13,730,227

18,707,946

Total tangible fixed assets

40,326,903

45,573,149

Goodwill

13,564,666

21,882,593

Others5,453,793

5,048,303

Total intangible fixed assets

19,018,460

26,930,896

Others23,331,685

24,723,338

Allowance for doubtful accounts(1,059,406)(1,043,417)

Total investments and other assets

22,272,279

23,679,921

81,617,643

96,183,967

125,781,172

146,365,621

Work in process
Raw materials and supplies
OthersAllowance for doubtful accounts
Total current assets
Fixed assets
Tangible fixed assets

Intangible fixed assets

Investments and other assets

Total fixed assets
Total assets-5-Nichii Gakkan Company (9792) Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending March 31, 2012
(Thousands of yen)

As of March 31, 2011

As of September 30, 2011

Liabilities
Current liabilities
Notes and accounts payable

979,919

776,127

Short-term loans payable

1,318,002

11,278,002

Income taxes payable

3,538,277

3,110,932

Other accrued expenses

14,457,396

14,974,996

Allowance for employees’ bonuses

4,223,744

5,211,738

35,10022,950

Others

15,003,932

20,036,947

Total current liabilities

39,556,372

55,411,693

Long-term loans payable

18,991,565

17,389,460

Allowance for employees’ retirement benefits

4,428,149

4,600,754

Allowance for directors’ retirement benefits

157,921

159,136

Asset retirement obligations

1,233,067

1,333,952

Others9,213,699

13,501,028

Total long-term liabilities

34,024,403

36,984,332

73,580,776

92,396,026

Common stock

11,933,790

11,933,790

Capital surplus

17,354,214

17,354,214

Retained earnings

29,492,922

31,217,936

Treasury stock(6,789,290)(6,789,454)

Total shareholders’ equity

51,991,637

53,716,486

Unrealized gains (losses) on other securities(46,849)(34,608)

Total accumulated other comprehensive income(46,849)(34,608)

Minority interests

255,608

287,716

Total net assets

52,200,395

53,969,595

125,781,172

146,365,621

Allowance for directors’ bonuses

Long-term liabilities

Total liabilities
Net assets
Shareholders’ equity

Accumulated other comprehensive income

Total liabilities and net assets-6-Nichii Gakkan Company (9792) Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending March 31, 2012

(2) Quarterly consolidated statements of income and quarterly consolidated statements of comprehensive income(Quarterly consolidated statements of income)(Six months ended September 30)(Thousands of yen)Six months ended
September 30, 2010

Six months ended
September 30, 2011

Net sales

119,623,409

123,342,241

Cost of sales

95,685,813

97,974,085

Gross profit

23,937,596

25,368,156

Selling, general and administrative expenses

20,535,625

20,465,929

Operating income

3,401,970

4,902,227

Interest income

55,702

66,281

Commission on consignment for office work

57,55257,552Rent income

89,602122,024

Commission on consignment for job creation businesses

227,424

44,104

Subsidy income

98,484102,410

Others131,31385,050Total non-operating income

660,079

477,424

Interest expenses

279,823437,231

Rent expenses

25,33628,151Others29,506

58,586

Total non-operating expenses

334,667

523,970

3,727,383

4,855,681

210－

Non-operating income

Non-operating expenses

Ordinary income
Extraordinary income
Gain on sales of fixed assets

111,148

－

5,119

－

116,478－

28,792

10,189－70,838504,813－－

155,795

5,716－

539,321236,823

Income before income taxes and minority interests

3,304,540

4,618,858

Income taxes

1,953,541

2,471,223

1,306(73,851)

Total income and other taxes

1,954,847

2,397,371

Income before minority interests

1,349,692

2,221,486

20,542

12,954

1,329,149

2,208,532

Reversal of allowance for employees’ bonuses
Gain on sales of investment securities
Total extraordinary income
Extraordinary losses
Loss on retirement of fixed assets
Loss on disaster
Loss on adjustment for changes of accounting standards
for asset retirement obligations
Loss on transfer of defined contribution pension plan
OthersTotal extraordinary losses

Income taxes–deferred

Minority interests in income
Net income-7-Nichii Gakkan Company (9792) Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending March 31, 2012

(Quarterly consolidated statements of comprehensive income)(Six months ended September 30)(Thousands of yen)Six months ended
September 30, 2010
Income before minority interests

Six months ended
September 30, 2011

1,349,692

2,221,486(142,146)(142,146)

12,241
12,241

1,207,546

2,233,728

1,187,003
20,5422,220,773
12,954

Other comprehensive income
Unrealized gains (losses) on other securities
Total other comprehensive income
Comprehensive income(Breakdown of comprehensive income)Parent company portion of comprehensive income
Minority interest portion of comprehensive income-8-Nichii Gakkan Company (9792) Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending March 31, 2012

(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(Share exchange to make GABA into a wholly owned subsidiary)
The Company, in a Board of Directors meeting held in October 31, 2011, resolved to make GABA Corporation, which had
become a consolidated subsidiary, into a wholly owned subsidiary, via share exchange, as of December 5, 2011.
1. Share Exchange Summary(1) Name of the company whose shares are to be acquired: GABA Corporation(2) Legal form of the combination: Share exchange
The Company, pursuant to Article 796.3 of the Companies Act, will undertake a simplified share exchange notrequiring approval in a general meeting of shareholders.
(3) Share exchange date: December 5, 2011 (Effective date)(4) Purpose of the share exchange
It is anticipated that making GABA Corporation into a wholly owned subsidiary of the Company will result in rapidbusiness development and synergies from the combination of management resources, ultimately enabling an increase incorporate value for the Group.
(5) Details of the share exchange
250 of the Company’s common shares will be exchanged for each GABA Corporation common share. It should be
noted that the Company, instead of issuing new shares, will use 382,250 shares of treasury stock for the exchange.
2. Accounting Treatment Summary
The share exchange will be accounted for as a business transaction under common control in accordance with the
Accounting Standard for Business Combinations (ASBJ Statement No. 21, December 26, 2008) and the Revised Guidanceon Accounting Standard for Business Combinations and Accounting Standard for Business Divestitures (ASBJ GuidanceNo. 10, December 26, 2008).

-9-