QUARTERLY BUSINESS REPORT for the 1st quarter of the year ending March 2008
(Consolidated)
August 10, 2007

Listed company name: Nichii Gakkan Company

Code number: 9792
Listed on: Tokyo Stock Exchange 1st Section(URL: http://www.nichiigakkan.co.jp/)
Representative
Contact

Title: President and Representative Director Name: Takashi Mori
Title: Director, Vice President of Accounting Division and General Manager of
Accounting Department
Name: Koichi Terada
Tel: 03-3291-2121*All amounts are rounded off to the nearest million yen.

1. Consolidated Results for the 1st Quarter of the year ending March 2008 (April 1, 2007-June 30, 2007)(1) Business results

Percentage figures represent changes from previous year.

Net Sales

Operating Income

Quarterly
Net Income

Ordinary Income

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

1st Quarter FY2008

48,624(4.8)

229(11.8)

262(14.9)

2(95.8)

1st Quarter FY2007

51,096(0.6)

260(80.8)

308(78.3)

49(93.0)(Reference) FY2007

202,549

2,635

2,709

774

Equity Ratio

Net Assets
per Share

Quarterly Net Income
Per Share after
Adjusting for Latent

Net Income
per Share
Yen

Yen

1st Quarter FY2008

0.06

－

1st Quarter FY2007

1.41

－

(Reference) FY2007

22.00

－

(2) Consolidated financial position
Total Assets

Net Assets

Millions of yen

Millions of yen%

Yen

1st Quarter FY2008

89,23851,47957.5

1,457.22

1st Quarter FY2007

90,16551,52657.0

1,458.95(Reference) FY2007

92,11552,24756.6

1,479.10

2. Dividends
Dividends per share
Record date

1st Quarter ended June 30

1st Quarter FY2007－

1st Quarter FY2008－

13. Forecast of the Consolidated Financial Results for the year ending March 2008
(April 1, 2007-March 31, 2008)

There is no change in our outlook for performance in the half year ending September 30, 2007,
and the full year ending March 31, 2008, as presented in the “Financial Results for the Year
Ended March 2007 (Consolidated)” published May 22, 2007.
4.

Others(1) Changes in significant subsidiaries during the period: None
(Changes in specified subsidiaries resulting in changes in the scope of consolidation)(2) Application of simplified accounting procedures: Yes(3) Difference in the accounting method from the method applied for the most recent fiscal year: None
* Disclaimer regarding Forward-looking Statements and Other Remarks
The forecast of the Consolidated Financial Results for the year ending March, 2008 has been reparedbased on data as of the announcement date. Actual results may differ from the forecasted figuresdue to various factors.

(Reference) Overview of the Non-Consolidated Business Results*All amounts are rounded off to the nearest million yen.

Non-Consolidated Results for the 1st Quarter of the year ending March, 2008 (April 1, 2007-June 30,
2007)(1) Non-Consolidated Operating Results

Percentage figures represent changes from previous year.

Net Sales

Operating Income

Ordinary Income

Net Income

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

1st Quarter FY2008

47,240(5.4)

211(22.6)

287(19.8)

172

19.5

1st Quarter FY2007

49,9552.5

273(80.2)

358(75.8)

144(82.5)(Reference) FY2007

198,099

2,506

2,682

Net Assets

Equity Ratio

856

Net Income
Per ShareYen

1st Quarter FY2008

4.89

1st Quarter FY2007

4.09(Reference) FY2007

24.30(2) Non-Consolidated Financial Position
Total Assets
Millions of yen

Millions of yen

Net Assets Per
Share
%

Yen

1st Quarter FY2008

84,37347,76856.6

1,356.23

1st Quarter FY2007

86,07047,67555.4

1,353.51(Reference) FY2007

86,811

48,36955.7

1,373.29

2

[Qualitative information and financial statements]
1. Qualitative information on consolidated operating results
Although there is some uncertainty due to rising prices of oil and raw materials, Japan’s economy
continued to show a gradual upturn in the 1st quarter under review; improved corporate profits
supported more extensive improvements in capital investment and employment, and there were visible
signs of recovery in personal consumption.
In the market environment surrounding the medical and long-term care business, the Japanese
government carried out fundamental system revisions in April 2006, aiming to realize a sustainablesocial security system for medical and long-term care, in preparation for the expected acceleration offalling birthrate and aging population. While medical institutions and long-term care operators are
eagerly developing new infrastructure and rebuilding business models to match the new public system,
one long-term care provider became a target of public attention for having illegally obtained licenses fora specific business establishment, by making false claims. This scandal has caused society to question
anew how the long-term care insurance system and long-term care operators should function.
Against such a backdrop, the Nichii Gakkan group started, in the current period, to promote sweeping
structural reforms, with a “specialized branch system” and “brand integration” in order to realize more
efficient business development and to intensify management capabilities and our field-work
management system in this increasingly diverse market environment. At the same time, we havecontinued our ongoing proactive efforts for higher awareness of the company utilizing TV commercials.
We have also committed our efforts to development of mid-and-long term strategic products and services,which are progressing steadily toward actual introduction.
The net sales for the quarter decreased due to the ongoing influence of the long-term care insurance
system revisions and the reduction in the number of students in the education business. Associated withthe decrease in net sales, profits also decreased.
As a result of these activities, net sales during the 1st quarter of the year ending March 31, 2008 were¥48,624 million (down 4.8% year on year), ordinary income was ¥262 million (down 14.9% year on year),and net income was ¥2 million (down 95.8% year on year).
Shown below is the segment information on net sales and operating income by business category.
Medical Support BusinessIn the Medical Support Business, our aggressive sales efforts in this business segment were centered onincreasing medical practice services provided for medical institutions, and promotion of support services
for hospitals that are introducing (or have introduced)DPC (Diagnosis Procedure Combination), and ofcommunity health care liaison services. We are also reviewing our career-enhancement system to makeit even more helpful for the employees, and are providing enhanced training for further improvements inquality. These investments in human resources were made with a view toward building a framework
capable of fulfilling user expectations and needs as completely as possible. To improve profits, we arecontinuing our promotion to improve existing contracts.
As a result, net sales were ¥27,475 million (down 0.5% year-on-year) and operating income ¥2,405
million (down 0.8% year-on-year).
Health Care BusinessIn the Health Care Business, after the April 2006 revision of the long-term care insurance system,
people certified as in need of mild long-term care (previously classified as “support required” and “carerequired: level 1”) became ineligible for long-term care insurance, and were instead shifted to the newly
established preventive benefit system. This change caused a drastic drop in the unit price for the carecompensation in the previous period. The influence of this drop continues in the current quarter.
As a result, net sales were ¥18,115 million (down 7.9% year-on-year) and operating income ¥238
million (down 10.1% year-on-year).
Our active engagement in the sales promotion of “community support business” is steadily increasing
the number of commissions received. The Ministry of Health, Labor and Welfare has worked out ameasure to soften the terms and conditions of the basic check list. This is just one of the policies the3

government is developing for revitalizing the community support business, and outsourcing of therelevant business is expected to accelerate in the future.
In addition, we intend to further increase sales in the business domain beyond the coverage of thelong-term care insurance system. Based on this intention, we decided to enter the rental housingbusiness for the aged, and established a new company named “Nichii Living Co., Ltd.” on July 3, 2007.
We plan to develop this business based on the metropolitan district, and believe it will generate strong
synergistic effects with the existing long-term care business and our client medical institutions.
With respect to our compliance with the Long-term Care Insurance Law, we are working to enhance
our management system and training to ensure appropriate operation of our business establishments.
Education BusinessIn the Education Business, because education is our principal business for nurturing and producing thehuman resources who will play a part in the medical and long-term care fields to support our aging
society, we have strived to intensify this business by making active use of a media mix strategy throughnewspapers, magazines and web sites linked with TV commercials. However, the number of students
continues to decline. The main factors in this decline include the fact that the overall qualification course
business is sluggish due to improved employment situations, and that the government has not yet
clarified the timing for integrating the home helper training course and the basic training for long-termcare workers.
As for profit, we could work more on consolidation of classrooms because we shifted to a “specialized
branch system” to enable more efficient class operation. However, the effect on profit remains limited
because of the ongoing fall in net sales. As a result, net sales were ¥2,856 million (down 17.5%
year-on-year) and operating loss ¥351 million (¥315 million in the same quarter last fiscal year).Our
future plans include intensification of PR activities aimed at potential students, exploitation of newmarkets, and pursuit of more efficient class operation.
Other Businesses
In Other Businesses, we are engaging in such businesses as welfare equipment leasing, storage anddelivery service, and production and sale of flowers, ornamental plants, seeds, and saplings. We areadvancing our business growth strategy, primarily concentrating on strengthening existing business andapproaches to new business and services, and restructuring of group companies.
As a result, net sales were ¥177 million (down 49.0% year-on-year), operating income ¥43 million (up10.6% year-on-year).
2. Qualitative information on consolidated financial position
Total assets were ¥89,238 million, having decreased ¥2,876 million compared with the figure at the endof the previous fiscal year, mainly due to trade notes and account receivable increased ¥215 million, cash
and deposit decreased ¥2,206 million, buildings and structures decreased ¥391 million.
Liabilities were ¥37,759 million, having decreased ¥2,108 million compared with the figure at the endof the previous fiscal year, mainly due to reserve for bonuses decreased ¥1,665 million yen and bonds
decreased ¥602 million yen.
Net assets were ¥51,479 million, having decreased ¥768 million compared with the figure at the endof the previous fiscal year.
３. Others(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting inchanges in the scope of consolidation) Not applicable.
(2) Application of simplified accounting procedures
The physical inventory check is omitted for some of the inventory assets.
(3) Difference in the accounting method from the method applied for the most recent fiscal year
Not applicable.

4

Quarterly Consolidated Financial Statements (Summary)
1. Quarterly Consolidated Balance Sheet (Summary)(Thousands of yen)

Corresponding
Quarter ofPrevious Year
(1st quarter
FY2007)

Current
Quarter(1st quarter
FY2008)AmountAmount(Reference)
FY2007

ChangeAmountRC

Amount%ASSETSI Current assets
1. Cash and deposits
2. Notes and accounts receivable
3. Inventories
4. Deferred tax assets
5. Others
6. Allowance for doubtful accounts
Total current assets
II Fixed assets(1) Tangible fixed assets
1. Buildings and structures
2. Land
3. Others
Total tangible fixed assets(2) Intangible fixed assets
1. Consolidated adjustment account
2. Goodwill
3. Others
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. Others
6. Allowance for doubtful accounts
Total investments and other assets
Total fixed assets
Total Assets

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

7,665,658
24,340,491
1,458,698
3,648,706
2,965,968(89,629)
39,989,893

2,966,119(1,565,905)(547,579)
892,094411,232
35,8052,191,767

63.1
(6.0)
(27.3)
32.4
16.1(28.5)
5.8

9,872,547
24,124,838
1,475,298
3,766,302
3,330,480(105,039)
42,464,428

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

25,960,146
7,681,997
425,833
34,067,977

31,012(162,331)(1,031,120)(1,162,439)

0.1
(2.1)
(70.8)(3.3)

26,351,745
7,681,997
440,157
34,473,899

2,829,247－
1,080,900
3,910,147－
2,619,129
1,108,416
3,727,546－－
27,516(182,600)

－
－
2.5
(4.7)

－
2,670,896
1,133,609
3,804,505

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

1,285,627
4,770,360
2,445,332
1,530,179
2,147,243(725,433)
11,453,309
49,248,833
89,238,727

378,063(199,941)(94,339)(1,807,597)(1,863,597)
1,813,709(1,773,702)(3,118,742)(926,974)

41.7
(4.0)
(3.7)
(54.2)(46.5)(71.4)(13.4)(6.0)(1.0)

1,201,807
4,763,833
2,444,542
1,525,228
2,169,636(732,681)
11,372,368
49,650,772
92,115,200

5(Thousands of yen)

Corresponding
Quarter ofPrevious Year
(1st quarter
FY2007)

Current
Quarter(1st quarter
FY2008)AmountAmount(Reference)
FY2007

ChangeAmountRC

Amount%LIABILITIESI Current liabilities
1. Notes and accounts payable
2. Short-term loans payable
3. Current installments of long-term
debt
4. Current redemption of bonds
5. Income taxes payable
6. Consumption tax payable
7. Accrued expenses
8. Allowance for employee bonuses
9. Allowance for directors' andauditors' bonuses
10. Others
Total current liabilities
II Long-term liabilities
1. Bonds
2. Long-term loans payable
3. Allowance for employee retirement
benefits
4. Allowance for directors' andauditors' retirement benefits
5. Others
Total long-term liabilities
Total Liabilities
NET ASSETS
I Shareholders' equity
1. Common stock
2. Capital surplus
3. Retained earnings
4. Treasury stock
Total shareholders' equity
II Unrealized gains and adjustments
Unrealized gains on other securities
Total unrealized gains and adjustments
III Minority interest
Total net assets
Total liabilities and net assets

1,451,827
10,590,000

1,132,504
460,000（319,322）（10,130,000）（22.0）（95.7）

1,144,987
402,000

51,266－401,384
1,241,686
15,802,198
1,632,919

25,903
3,808,000
51,086
1,259,157
16,134,346
1,654,696（25,363）3,808,000（350,297）
17,470332,148
21,777（49.5）－（87.3）
1.4
2.1
1.3

33,1783,808,000
154,193
1,574,166
16,011,429
3,320,330－
4,348,472
35,519,754

22,6805,248,770
29,797,145

22,680900,298（5,722,608）－
20.7（16.1）

4,891,422
31,375,708－
34,197

4,686,000
15,9294,686,000（18,267）－（53.4）

5,288,000
19,1182,837,224

3,015,864

178,640

6.3

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

134,383
110,401
7,962,579
37,759,725

3,281（6,232）
4,843,422（879,186）

2.5
（5.3）
155.3
（2.3）

110,927
8,492,282
39,867,990

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

11,933,790
17,354,214
27,913,321（5,935,447）
51,265,879－－（49,007）（4,323）（53,330）

－
－
（0.2）
0.1
（0.1）

11,933,790
17,354,214
28,686,400(5,934,751)
52,039,654

70,82770,827
136,753
51,526,790
90,165,701

59,09259,092
154,030
51,479,001
89,238,727（11,734）（11,734）
17,276（47,788）（926,974）（16.6）（16.6）
12.6
（0.1）
（1.0）

56,82656,826
150,729
52,247,210
92,115,200

6

36,0002,941,991
132,243

2. Quarterly Consolidated Statements of Income (Summary)(Thousands of yen)

Corresponding
Quarter ofPrevious Year
(1st quarter
FY2007)

Current Quarter(1st quarter
FY2008)AmountAmount(Reference)
FY2007

ChangeAmountRC

Amount%I Net sales
II Cost of sales
Gross profit

51,096,916
41,372,554
9,724,361

48,624,839
39,781,933
8,842,905(2,472,076)(1,590,620)(881,456)

(4.8)
(3.8)
(9.1)

202,549,097
163,310,893
39,238,203

III Selling, general and administrative
expenses
Operating income

9,463,982
260,379

8,613,255
229,650(850,727)(30,728)(9.0)(11.8)

36,602,387
2,635,815

8,229
12,333

5,210
5,261

(3,018)(7,072)(36.7)(57.3)

26,342
12,83821,8097,873
18,02868,274

21,428
8,141
23,162
63,205

(380)
268
5,134
(5,069)

(1.7)
3.4
28.5
(7.4)

90,90430,985
137,690298,762

17,404
－
2,057
－

4,046
19,875
4,036－(13,358)
19,875
1,979－(76.8)－
96.2－

40,451
57,40927,262
32,94056
985
20,503698
1,969
30,625642
984
10,122

－
99.9
49.4

41,06325,500224,627

Ordinary income
VI Extraordinary income
1. Gain on sale of fixed assets
2. Gain on sale of investment insecurities
3. Others
Total extraordinary income
VII Extraordinary losses
1. Loss on sale of fixed assets
2. Loss on retirement of fixed assets
3. Loss on revaluation of inventories
4. Loss on impairment
5. Loss on disengagement of lease
6. Expense for change of brands
Total extraordinary losses

308,150

262,229(45,921)(14.9)

2,709,950

－

38

38

－

29,320

－
－
－

－

－

22,11722,156

22,11722,156

－
－
－

2,850
634
32,804

－

－

－

－

8,719
－
－
－
－

8,873
－
－
－

154
－
－
－

8,719

34,58043,454

34,58034,735

1.8
－
－
－
－

22,14759,472
274,665
52,560103,395－

398.4

512,242

Income before income taxes
Income, inhabitants and business taxes
Adjustments for income and other taxes

299,431
140,452

240,931
119,395(58,500)(21,057)(19.5)(15.0)

2,230,512
510,409

Minority interest

100,619
8,764

111,637
7,800

11,018(963)

11.0(11.0)

912,722
32,612

Net income

49,595

2,098(47,497)(95.8)

774,768

IV Non-operating income
1. Interest income
2. Dividend income
3. Commission on consignment for
office work
4. Income from lease of fixed assets
5. Others
Total non-operating income
V Non-operating expenses
1. Interest expenses
2. Bond interest
3. Compensation for damages
4. Bond issue cost
5. Loss on disengagement of guaranteemoney deposited
6. Others
Total non-operating expenses

7