Consolidated Financial Statements
For the year ended February 20, 2015

Nitori Holdings Co., Ltd.

Consolidated Balance Sheet
Nitori Holdings Co., Ltd. and consolidated subsidiaries
As at February 20, 2015

ASSETS
Current Assets:
Cash and deposits (Notes 9 and 11)
Notes and accounts receivable-trade (Note 11)
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets (Note 16)
Forward exchange contracts
Other
Allowance for doubtful accounts (Note 11)
Total current assets
Non-Current Assets:
Property, plant and equipment:
Buildings and structures, net (Notes 5 and 17)
Machinery, equipment and vehicles, net (Note 5)
Tools, furniture and fixtures, net (Note 5)
Land (Note 17)
Leased assets, net (Notes 5 and 10)
Construction in progress
Total property, plant and equipment
Intangible assets
Investments and other assets:
andInvestment
securities
est e t secu
t es ((Notes
otes 5, 11 ad 12))
Long-term loans receivable
Guarantee deposits (Notes 5 and 11)
Lease deposits (Note 11)
Deferred tax assets (Note 16)
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

Millions of Yen

Thousands of
U.S. Dollars(Note 2)

2014

2015

2015

¥21,973
11,92434,799
248
1,966
2,861
4,446
10,779(0)88,999¥26,409
13,063
41,563
184
2,740
831
25,873
13,333(5)
123,994$221,740
109,681
348,980
1,548
23,011
6,982
217,242
111,950(46)
1,041,091

84,545
3,174
3,605
81,8533,187
1,000
177,366
9,678

85,224
3,462
3,985
111,106
2,907
4,255
210,942
10,460715,574
29,072
33,465
932,882
24,41135,731
1,771,138
87,831

1,047
,0
712
17,77815,767
2,487
7,875
(10)
45,658
232,703¥321,703

1,569
,569
642
17,042
17,0501,030
22,070(9)59,396
280,799¥404,793

13,1753, 5
5,396
143,097
143,161
8,653
185,310(83)
498,7102,357,681$3,398,773

1

Consolidated Balance Sheet
Nitori Holdings Co., Ltd. and consolidated subsidiaries
As at February 20, 2015

LIABILITIES AND NET ASSETS
Current Liabilities:
Notes and accounts payable-trade (Notes 5 and 11)
Short-term loans payable (Notes 11 and 21)
Lease obligations (Notes 10 and 21)
Accounts payable-other (Note 11)
Income taxes payable (Note 11)
Deferred tax liabilities (Note 16)
Provision for bonuses
Provision for point card certificates
Provision for special benefits to shareholders
Asset retirement obligations (Note 22)
Other
Total current liabilities

Millions of Yen

Thousands of
U.S. Dollars(Note 2)

2014

2015

2015

¥13,412
4,095
197
11,654
12,635¥16,473
4,392
188
18,031
13,961
5,167
2,374
1,029
121
26
14,241
76,007$138,314
36,876
1,581
151,402117,227
43,38919,933
8,645
1,015
224
119,573
638,184

2,129
2,706
3,020

17,882
22,72425,3601,922
19,694
19,031
46,658153,27453,
791,459

2,320
1,785
108
39
11,642
57,891

Non-Current Liabilities:
Long-term loans payable (Notes 11 and 21)
Lease obligations (Notes10 and 21)
Deferred tax liabilities (Note 16)
Provision for retirement benefits (Note 14)
Provision for directors' retirement benefits
Net defined benefit liability (Note 14)
Asset retirement obligations (Note 22)
Other (Note 5)
Total
ota non-current
o cu e t liabilities
ab t es
Total liabilities

1,947
5,229
15,9135,9 3
73,805

228
2,345
2,266
5,557
18,2548, 594,262NET ASSETS (Note 8)
Shareholders’ Equity:
Common stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity

13,37013,581
232,398(15,848)
243,502

13,37013,725
267,963(14,639)
280,419

112,265
115,241
2,249,902(122,917)
2,354,491

309
2,624
662
3,597

586
25,0953,345(33)
28,993

4,925
210,71228,087(284)
243,440757
40247,898¥321,703

1,050
66
310,531¥404,793

8,824
558
2,607,314$3,398,773

Accumulated Other Comprehensive Income:Unrealized holding gain (loss) on securities (Note 12)
Unrealized gain (loss) from hedging instruments (Note 13)
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Subscription Rights to Shares
Minority Interests
Total net assets
Total liabilities and net assets

3,560
2,893
0
2,053
228

See Notes to Consolidated Financial Statements.

2

Consolidated Statement of Income
Nitori Holdings Co., Ltd. and consolidated subsidiaries
For the year ended February 20, 2015

Net Sales:
Cost of Sales:
Gross profit:
Selling, General and Administrative Expenses (Notes 6 and 15)
Operating income
Non-Operating Income:Interest income
Dividends income
Foreign exchange gains
Vending machine income
Gain on sales of goods
Other
Non-Operating Expenses:
Interest expenses
Foreign exchange losses
Other
Ordinary income
Special Gains:
Gain on sales of non-current assets (Note 6)
Gain on reversal of subscription rights to shares
Special Losses:
Loss on sales and disposal of non-current assets (Note 6)
Penalty for the scrap and build of outlets
Impairment loss (Note 6)
Special retirement expenses
Other
Income before income taxes and minority interests
Income Taxes (Note 16):
Current
Deferred

Net Income Before Minority Interests
Minority Interests in Income
Net Income

Millions of Yen

Thousands of
U.S. Dollars(Note 2)

2014
¥387,605
185,948
201,656
138,583
63,073

2015¥417,285
198,947
218,337
152,029
66,3072015$3,503,656
1,670,426
1,833,230
1,276,489
556,740

369
19

431
23
466
226
258
333
1,740

3,621
197
3,920
1,903
2,171
2,800
14,613

236
196
355
1,177
130
594
50
776
63,474

98

828

19
118
67,929166
995
570,359

2
6
9

27
64
91

231
539
771

37
183
21
9
252
63,231

120
119
122
86
6
456
67,565

1,013
1,007
1,025
728
56
3,830
567,299

25,515(738)
24,777

26,864(775)
26,088225,561(6,515)
219,045

38,45429¥38,425

41,477
26¥41,450

348,254219$348,034

See Notes to Consolidated Financial Statements.

3Consolidated Statement of Comprehensive Income
Nitori Holdings Co., Ltd. and consolidated subsidiaries
For the year ended February 20, 2015

Net Income Before Minority Interests
Other Comprehensive Income
Unrealized holding gain (loss) on securities
Unrealized gain (loss) from hedging instruments
Foreign currency translation adjustment
Total Other Comprehensive Income(Note 7)
Comprehensive Income
Total comprehensive income attributable to:Shareholders of Nitori Holdings Co., Ltd.
Minority interests

Millions of Yen

Thousands of
U.S. Dollars(Note 2)

2014
¥38,4542015¥41,4772015$348,254

22
749
2,943
3,715
¥42,169277
22,4702,682
25,430¥66,907

2,325
188,672
22,521
213,520$561,774¥42,140
29¥66,88126$561,554
219

See Notes to Consolidated Financial Statements.

4Consolidated Statement of Cash Flows
Nitori Holdings Co., Ltd. and consolidated subsidiaries
For the year ended February 20, 2015

Cash Flows from Operating Activities:
Income before income taxes and minority interests
Depreciation and amortization
Impairment loss
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for bonuses
Increase (decrease) in provision for retirement benefits
Increase (decrease) in net defined benefit liability
Increase (decrease) in provision for point card certificatesInterest and dividends income
Interest expenses
Loss (gain) on sales and disposal of non-current assets
Penalty for the scrap and build of outlets
Decrease (increase) in notes and accounts receivable-trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts payable-trade
Increase (decrease) in accrued consumption taxes
Other, net
SubtotalInterest and dividends income received
Interest expenses paid
Payment of penalty for the scrap and build of outlets
Income taxes paid
Income taxes refund
Net cash provided by operating activities
Cash Flows from Investing Activities:
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of intangible assets
Payments for guarantee deposits
Proceeds from collection of guarantee deposits
Payments for lease deposits
Proceeds from collection of lease deposits
Proceeds from guarantee deposits received
Proceeds from lease deposits received
Purchase of long-term prepaid expenses
Additional investments in affiliates
Purchase of short-term and long-term investment securities
Payments of loans receivable
Proceeds from collection of loans receivable
Other payments
Net cash used in investing activities

Millions of Yen

Thousands of
U.S. Dollars(Note 2)

2014

2015

2015

¥63,231
10,194
21
(15)
202
189

¥67,565
10,190122
419$567,299
85,563
1,025
34
161

239
(755)
(454)
98
93
119
(2,033)(6,941)
1,250
3,146
792
73,457
447
(100)
(31)
(25,584)
4,734
52,923

2,012(6,341)(3,818)
828
781
1,007
(17,072)(58,282)
10,49926,416
6,657
616,772
3,760
(841)
(261)
(214,818)
39,753444,364(601)
769(38,691)
82(1,540)(767)
170(1,278)6832
240(1,190)(5,051)
6,463(324,864)
694(12,932)(6,440)
1,435(10,734)
576
272
2,017
(9,996)

(91)
(213)
6
(20)
(43,023)(767)(1,791)54(171)(361,235)

33
(388)
130
34
183
(518)
(5,861)261
464
380
68,545
392
(139)
(77)
(26,147)
3,581
46,154(461)
619(26,773)116(3,312)(1,545)787(1,025)266
24
164(1,001)
(37)
(172)
2
(26)
(32,376)6

Consolidated Statement of Cash Flows
Nitori Holdings Co., Ltd. and consolidated subsidiaries
For the year ended February 20, 2015

Cash Flows from Financing Activities:
Net increase (decrease) in short-term loans payable
Proceeds from long-term loans payable
Repayment of long-term loans payable
Repayments of lease obligations
Purchase of treasury stock
Cash dividends paid
Proceeds from exercise of stock option
Net cash used in financing activities
Effect of Exchange Rate Changes on Cash and Cash Equivalents
Net Increase in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of the Year
Cash and Cash Equivalents at End of the Year (Note 9)

Millions of Yen

Thousands of
U.S. Dollars(Note 2)

2014

2015

2015

206
40
(6,166)(318)(3)(4,932)634(10,540)
1,125
4,363
16,816¥21,179

(967)
4,000
(4,166)(196)(12)(5,884)573(6,654)
1,288
4,534
21,179¥25,713(8,122)33,585(34,985)(1,650)(107)(49,408)
4,815(55,873)
10,81538,071
177,827$215,899

See Notes to Consolidated Financial Statements.

7

Notes to Consolidated Financial Statements
Nitori Holdings Co., Ltd. and consolidated subsidiaries
For the year ended February 20, 2015

1. Basis of Presentation of Consolidated Financial Statements
The accompanying consolidated financial statements have been prepared based on the accounts maintained by
Nitori Holdings Co., Ltd. (the “Company”) and consolidated subsidiaries (collectively the “Group”) in accordancewith accounting principles generally accepted in Japan, which are different in certain respects as to the applicationand disclosure requirements of International Financial Reporting Standards, and are compiled from theconsolidated financial statements prepared by the Company as required by the Financial Instruments andExchange Act of Japan.

2. Basis of Translation
The accompanying consolidated financial statements are expressed in Japanese yen, and solely for theconvenience of the reader, have been translated into United States dollars at the rate of ¥119.10 = U.S.$1, theexchange rate prevailing on February 20, 2015. This translation should not be construed as a representation thatthe amounts shown could be converted into U.S. dollars at such rate.
Japanese yen amount less than a million yen are rounded down to the nearest million yen, except for per sharedata. U.S. dollar amount less than a thousand dollars are rounded down to the nearest thousand dollars, except
for per share data.

3. Principles of Consolidation
1) Scope of Consolidation
The consolidated financial statements include the accounts of the Company and its 18 significant subsidiaries.
2) Financial Statements of Consolidated Subsidiaries
The financial closing dates of consolidated subsidiaries below are different from the balance sheet date of theCompany.
NITORI FURNITURE CO., LTD. ························ December 20, 2014
P.T. NITORI FURNITURE INDONESIANITORI FURNITURE VIETNAM EPE
NITORI (CHINA) CO., LTD.
NITORI PUBLIC CO., LTD.
SHANGHAI LIQIAO INDUSTRIAL CO., LTD.
NITORI TAIWAN CO., LTD.
DECO HOME CHINA CO., LTD.
NITORI USA, INC.
and other 4 subsidiaries ··································· December 31, 2014
HOME DECO CO., LTD. ·································· January 31, 2015
The above subsidiaries are consolidated using their financial statements as of their respective fiscal year ends,
and necessary adjustments are made to their financial statements to reflect any significant transactions from theirrespective fiscal year ends to that of the Company.
P.T. NITORI FURNITURE INDONESIA has changed its fiscal year end from November 20 to December 31. Since
the fiscal year end changed, the consolidated results included the results from November 21, 2013 to December
31, 2014.

4. Summary of Significant Accounting Policies
1) Investment Securities
The Group has available-for-sale securities. Available-for-sale securities with market quotations are valued at theprevailing market price as at the balance sheet date. Available-for-sale securities without market quotations arestated at cost, cost being determined by the gross average method. Net unrealized gains or losses onavailable-for-sale securities with market quotations are reported net of taxes as a separate component of “Net
Assets” and the cost of sales is determined by the gross average method.

8
FY2014 Nitori Holdings Co., Ltd.

2) Inventories
Inventories are stated at the lower of cost or market, cost being determined by the moving-average method.
3) Derivatives
Derivative financial instruments are stated at fair value.
4) Property, Plant and Equipment (except leased assets)
Depreciation of property, plant and equipment (except leased assets) is computed by the declining balance method, at
rates based on the estimated useful lives of the assets, except for buildings (excluding building facilities) acquired on
or after April 1, 1998, which are depreciated based on the straight-line method. Overseas subsidiaries apply thestraight-line method. The ranges of principal estimated useful lives are as follows:
Buildings and structures
8 to 47 years
Machinery, equipment and vehicles
2 to 12 years
Tools, furniture and fixtures
5 to 10 years
For buildings on fixed term leaseholds, the Company computes depreciation using the straight-line method, over its
lease term assuming no residual value. These lease terms are principally 20 years.
5) Intangible Assets (except leased assets)
Intangible assets are amortized using the straight-line method. Software for internal use is amortized using thestraight-line method over an estimated useful life of 5 years.
6) Leased Assets
Leased assets under finance lease transactions are depreciated to a residual value of zero by the straight-line
method using the contract term as the useful life.
Regarding finance lease transactions that do not transfer ownership to the lessee, commencing on or before
February 20, 2009, are accounted for as operating lease transactions.
7) Allowance for Doubtful Accounts
For receivables classified as “normal,” the allowance for doubtful accounts is provided based on historicalexperience. For receivables classified as “doubtful,” the allowance for doubtful accounts is provided based on an
individual assessment of the collectability of the account.
8) Provision for Bonuses
Provision for bonuses is provided at the estimated amounts, based on actual results during the fiscal year, toprovide for the payments to employees in the following fiscal year.
9) Provision for Point Card Certificates
The Group provides customers with credit points (Nitori Members Card Points) when they make purchases byusing the card. The Group provides a reserve for the estimated future costs of Nitori Members Card Points basedon the historical rate of point usage.
10) Provision for Special Benefit to Shareholders
Provision for special benefit to shareholders is provided for future utilization of granted shareholder benefits. The
amount of the provision is estimated based on the historical rate of use of shareholder benefits.
11) Accounting Method for Retirement Benefits
Projected benefit obligations are attributed to each period by the straight-line method over the estimated years ofservice of the eligible employees.
Actuarial gains and losses are amortized using the straight-line method over a specific period (ten years), which iswithin the average estimated remaining service period of employees at the time of recognition, from the following
fiscal year when the gain or loss was recognized.
Unrecognized prior service costs are amortized using the straight-line method over a specific period (ten years),
which is within the average estimated remaining service period of employees at the time of recognition.

9
FY2014 Nitori Holdings Co., Ltd.

12) Provision for Directors’ Retirement Benefits
Provision for directors’ and corporate auditors’ retirement benefits of the Company and certain of its consolidated
subsidiaries is provided based on their internal rules and is calculated at the estimated amount which would bepayable if all officers were to retire at the balance sheet date.
13) Foreign Currency Translation
Monetary assets and liabilities denominated in foreign currencies are translated into Japanese yen at theexchange rate in effect at the balance sheet date and the resulting exchange gains or losses are credited or
charged to income as incurred.
The balance sheets of overseas subsidiaries are translated into Japanese yen at the exchange rates prevailing at
the balance sheet date except for the components of net assets excluding minority interests which are translated
at historical rates. Revenue and expense accounts of overseas subsidiaries are translated into Japanese yen at
the average exchange rate.
Differences arising from such translations are shown as “Foreign currency translation adjustment” in “NETASSETS.”
14) Hedge Accounting
Hedging instruments are recorded at fair value and accounted for using the deferral hedge accounting, underwhich unrealized gain or loss is deferred as a separate component of net assets. With regard to some interest rate
swaps that meet certain criteria, the Group uses the special treatment.
Hedging instruments: Derivative transactions (interest rate swaps and foreign exchange contracts).
Hedged items: Liabilities exposed to interest and foreign exchange market fluctuation risks.
Hedging policy: Derivative transactions are used solely for hedging the risks arising from adverse fluctuation inforeign currency exchange rates and interest rates.
The Company assesses the hedge effectiveness every half year based on internal rules covering derivativetransactions. Derivative transactions are never entered into for the purpose of trading or speculation.
15) Cash and Cash Equivalents
Cash and cash equivalents in the consolidated statement of cash flows consist of cash on hand, bank deposits
payable on demand, and short-term investments with a maturity of three months or less, which are readily
convertible into cash and subject to minor risks of fluctuations in value.
16) Consumption Tax
Transactions subject to consumption taxes are recorded at amounts exclusive of consumption taxes.
17) Income Taxes
Deferred tax assets and liabilities have been recognized in the consolidated financial statements with respect tothe differences between the financial reporting and tax bases of the assets and liabilities, and were measured
using the enacted tax rates and laws which will be in effect when the differences are expected to reserve.
18) Accounting Change
Adoption of Accounting Standard for Retirement Benefits
Effective from the current fiscal year, the Company adopted the Accounting Standard for
Retirement Benefits (Accounting Standards Board of Japan (ASBJ) Statement No. 26 issued on May 17,2012), and its Guidance on Accounting Standard for Retirement Benefits (ASBJ Guidance No. 25 issued on
May 17, 2012). (Except for Article 35 of ASBJ Statement No. 26 and Article 67 of ASBJ Guidance No. 25).
Under the new Accounting Standard, pension assets are deducted from retirement benefit obligations andthe net amount is recognized as liability for retirement benefits, and unrecognized actuarial gains and losses
and unrecognized prior services costs are recorded as “Net defined benefit liability.”
With regard to the adoption of the Accounting Standard for Retirement Benefits, in accordance with transitional
accounting as stipulated in Article 37 of the Accounting Standard for Retirement Benefits, the effect of thechanges in accounting policies arising from initial application is recognized as “Remeasurements of defined
benefit plans” in “Accumulated other comprehensive income” as of February 20, 2015.
As a result, as of February 20, 2015, “Net defined benefit liability” on the consolidated balance sheet wasrecorded in the amount of ¥2,345 million ($19,694 thousand). In addition, “Accumulated other comprehensive
income” on the consolidated balance sheet has decreased by ¥33 million ($284 thousand), and “Net assets per
share of common stock” has decreased by ¥0.30($0.002).

10
FY2014 Nitori Holdings Co., Ltd.

19) Standards Issued but Not Yet Effective
The “Accounting Standard for Retirement Benefits” (ASBJ Statement No. 26, May 17, 2012) and the “Guidance on
Accounting Standard for Retirement Benefits” (ASBJ Guidance No. 25, March 26 , 2015)(1) Overview
The above accounting standard and guidance were revised aiming primarily at changing the accounting
method for unrecognized actuarial gains and losses and unrecognized prior service costs, revising the method
to calculate retirement benefit obligations and service costs and extending disclosure items, in terms ofimproving financial reporting in response to international accounting developments trends.
(2) Application schedule
The Company will adopt the above accounting standard and guidance from the fiscal year beginning February
21, 2015 with respect to revising the method to calculate the retirement benefit obligation and service costs. In
addition, because transitional treatment is prescribed in the above accounting standard, it will not be applied
retroactively.
(3) Effect of adoption of accounting standards
The effect of the adoption of the accounting standard and guidance on the consolidated financial statements iscurrently being evaluated.
20) Changes in Method of Presentation(Consolidated Balance Sheet)
In the previous fiscal year, “Forward exchange contracts” was included in “Other” under “Current Assets”.
Effective from the fiscal year ended February 20, 2015, the item is now presented separately because it has
become more significant. In order to reflect the change in presentation method, modifications were made to theconsolidated financial statements of the previous fiscal year.
As a result, “Other” of ¥15,225 million under “Current Assets” in the consolidated balance sheet of the previous
fiscal year was reclassified as “Forward exchange contracts” of ¥4,446 million and “Other” of ¥10,779 million.
(Consolidated Statement of Income)In the previous fiscal year, “Interest on refund” was presented separately. Effective from the fiscal year ended
February 20, 2015, however, the item is now included in “Other” under “Non-Operating Income” because it has
become less significant. In order to reflect the change in presentation method, modifications were made to theconsolidated financial statements of the previous fiscal year.
As a result, “Interest on refund” of ¥9 million and “Other” of ¥346 million under “Non-Operating Income” in the
consolidated statement of income of the previous fiscal year were reclassified as “Other” of ¥355 million.
In the previous fiscal year, “Loss on cancellation of lease contracts” was presented separately. Effective from thefiscal year ended February 20, 2015, however, the item is now included in “Other” under “Special Losses”
because it has become less significant. In order to reflect the change in presentation method, modifications weremade to the consolidated financial statements of the previous fiscal year.
As a result, “Loss on cancellation of lease contracts” of ¥6 million and “Other” of ¥3 million under “Special
Losses” in the consolidated statement of income of the previous fiscal year were reclassified as “Other” of ¥9million.

11
FY2014 Nitori Holdings Co., Ltd.

5. Notes to Consolidated Balance Sheet
1) Accumulated depreciation of property, plant and equipment

As at February 20

Accumulated depreciation

Millions of Yen

Thousands of
U.S. Dollars

2014

2015

2015

¥65,676¥73,998$621,316

2) Assets Pledged as Collateral
The following assets are pledged as collateral for certain debts and other liabilities:
Millions of Yen

Thousands of
U.S. Dollars

2014

2015

2015

¥315

¥292

$2,456

69

69

583

¥385

¥362

$3,040Notes and accounts payable-trade

¥50

¥75

$637

Non-current liabilities (other)

258

244

2,050

Total

¥308

¥320

$2,688Millions of Yen

Thousands of
U.S. Dollars

As at February 20

Pledged assets:
Buildings and structures
Guarantee deposits
Total
Corresponding liabilities:

3) Investment securities of non-consolidated subsidiaries
Investments in non-consolidated subsidiaries and affiliates are as follows:

As at February 20

2014

2015

2015

Investment securities

¥15

¥15

$131

6. Notes to Consolidated Statement of Income
1) The major components of “Selling, General and Administrative Expenses” are as follows:
Millions of Yen

Thousands of
U.S. Dollars

For the years ended February 20

2014

2015

2015

Customer delivery expenses¥17,745¥18,850$158,277

Advertising

11,184

12,676

106,435

Salaries, allowances and bonuses

38,144

42,587357,573

Provision for bonuses

2,134

1,997

16,772

Provision for retirement benefits

604

-

-

Retirement benefit expenses

-

912

7,661

Rents

21,10322,704

190,634

Depreciation and amortization

8,850

8,921

74,911

Outsourcing

5,979

7,287

61,19112FY2014 Nitori Holdings Co., Ltd.

2) Gains on sales of non-current assets are as follows:
Millions of Yen

Thousands of
U.S. Dollars

2014

2015

2015

¥2

¥18

$152

Tools, furniture and fixtures

0

0

0

Land

0

9

79

Total

¥2

¥27

$231

Millions of Yen

Thousands of
U.S. Dollars

2014

2015

2015

¥5

¥69

$584

-

0

0

Tools, furniture and fixtures

5

44

371

Intangible assets and others

8

4

39

¥11

¥-

$-

Machinery, equipment and vehicles

2

1

14

Tools, furniture and fixtures

0

0

0

Land

3

0

4

Total

¥37

¥120

$1,013For the years ended February 20

Machinery, equipment and vehicles

3) Losses on sales and disposal of non-current assets are as follows:

For the years ended February 20

Loss on disposal:
Buildings and structures
Machinery, equipment and vehicles

Loss on sales:
Buildings and structures4) Impairment loss
For the year ended February 20, 2014
LocationGroup

Fujimino City, Saitama
and other
Store assets

AssetsBuildings andstructures

Millions of Yen¥21

For the year ended February 20, 2015
AssetsMillions of Yen

Thousands of
U.S. Dollars

Numazu City, Shizuoka
and other
Idle assets

Land

¥97

$821

Kobe City, Hyogo and
otherStore assets

Buildings andstructures and
other

24

203

LocationGroup

The Company identifies groups of assets on a nature of business basis. Impairment loss was recognized for idle
assets for which there is no specific plan for future business usage and for store assets with a significant decline
in future profitability.
The recoverable value of store assets was measured at the net realizable value based on the publicity assessedvalue of fixed assets. Idle assets were measured at the use value and assumed to have no recoverable value.

13
FY2014 Nitori Holdings Co., Ltd.

7. Notes to Consolidated Statement of Comprehensive Income

For the years ended February 20

Millions of yen

Thousands of
U.S. Dollars

2014

2015

2015

$3,613

Unrealized holding gain(loss) on securities
Amounts arising during the year

¥35

¥430

Reclassification adjustments

-

-

-

Total before income tax effect

35

430

3,613

Income tax effect

(12)

(153)

(1,287)

Sub-total

22

277

2,325

Unrealized gain(loss) from hedging instruments
Amounts arising during the year

1,208

34,758291,842

Reclassification adjustments

-

-

-

Total before income tax effect

1,208

34,758291,842

Income tax effect(459)(12,287)(103,170)

Sub-total

749

22,470188,672

2,943

2,682

22,521

2,943

2,682

22,521¥3,715¥25,430$213,520

Foreign currency translation adjustment
Amounts arising during the year
Sub-total
Total other comprehensive income

8. Notes to Consolidated Statement of Changes in Net Assets
1) Type and number of outstanding shares
For the year ended February 20, 2014

Number of shares (Thousands)
Balance at
beginning of year

Increase

Decrease

Balance at end ofyear

Issued stock:
Common stock

57,221--

57,221

Treasury stock:
Common stock

2,388

0

107

2,281

Type of shares

Notes:1. The increase of treasury stock is due to the purchases of shares in quantities less than the minimum trading unit of shares.
2. The decrease of treasury stock is due to the exercise of stock options.
3. The treasury stock balance at end of the fiscal year included 322 thousand shares of common stock held by Trust & Custody
Services Bank, Ltd.
For the year ended February 20, 2015

Number of shares (Thousands)
Balance at
beginning of year

Increase

Decrease

Balance at end ofyear

Issued stock:
Common stock

57,221

57,221-

114,443

Treasury stock:
Common stock

2,281

2,283

351

4,213

Type of shares

Notes:1. The Company conducted a stock split of common shares at a ratio of two for one effective February 21, 2014.
2. The increase in 57,221 thousand shares of issued stock is due to the stock split.
3. The increase in 2,283 thousand shares of treasury stock consists of an increase in 2 thousand shares due to the purchases ofshares in quantities less than the minimum trading unit of shares, and an increase in 2,281 thousand shares due to the stock
split.
4. The decrease in 351 thousand shares of treasury stock consists of a decrease in 157 thousand shares due to the exercise of“Stock Benefit Trust (J-ESOP)”, which was resolved on December 20, 2011, and a decrease in 194 thousand shares by theexercise of stock options.
5. The treasury stock balance at end of the fiscal year included 487 thousand shares of common stock held by Trust & Custody
Services Bank, Ltd.

14
FY2014 Nitori Holdings Co., Ltd.

2) Subscription rights to shares
Millions of Yen

Thousands of
U.S. Dollars

As at February 20

2014

2015

2015

Subscription rights to shares as stock options¥757¥1,050$8,824

3) Dividends(1) Dividends paid to shareholders
For the year ended February 20, 2014
Amount(Millions ofYen)Amount per
share (Yen)Commonstock¥2,482

Common
stock

2,482

Resolution approved byType ofsharesBoard of directors(March 29, 2013)
Board of directors(September 27, 2013)

Shareholders’
cut-off date

Effective date¥45

February 20,
2013

April 26,
2013

45

August 20,
2013

November
5, 2013

Note: The amount includes the dividend of ¥29 million on shares, held by Trust & Custody Services Bank, Ltd (The Trust Account E).
For the year ended February 20, 2015
Amount(Millions of
Yen)

Resolution approved byType ofsharesBoard of directors(March 28, 2014)(Notes 1,3)

Commonstock¥3,038

Board of directors(September 25, 2014)(Notes
2,3)Commonstock

Amount per
share (Yen)

Shareholders’
cut-off date

Effective date¥55

February 20,
2014

April 21,
2014

2,878

26

August 20,
2014

November
5, 2014Amount(Thousandsof U.S.
Dollars)

Amount per
share (U.S.
Dollars)

Shareholders’
cut-off date

Effective date

April 21,2014
November
5, 2014

For the year ended February 20, 2015

Resolution approved byType ofsharesBoard of directors(March 28, 2014) (Notes 1,3)

Commonstock$25,509$0.46

February 20,
2014

Board of directors(September 25, 2014)(Notes
2,3)Commonstock

24,1700.21

August 20,
2014

Note:1.The amount includes the dividend of ¥17million (U.S.$149 thousand) on shares, held by Trust & Custody Services Bank, Ltd(The Trust Account E).
2.The amount includes the dividend of ¥12million (U.S.$106 thousand) on shares, held by Trust & Custody Services Bank, Ltd(The Trust Account E).
3. The Company conducted a stock split of common shares at a ratio of two for one effective February 21, 2014.

(2) Dividends with a shareholders’ cut-off date during the current fiscal year but an effective date in the following
fiscal year
For the year ended February 20, 2014
Type of
Resolution approved by shares

Paid fromAmount(Millions ofYen)Amount per
share (Yen)

Shareholders’
cut-off date

Effectivedate

Board of directors(March 28, 2014)

Retainedearnings¥3,038¥55

February
20, 2014

April 21,2014

Commonstock

Note:1.The amount includes the dividend of ¥17million on shares, held by Trust & Custody Services Bank, Ltd (The Trust Account E).
2. The Company conducted a stock split of common shares at a ratio of two for one effective February 21, 2014.The dividend has notreflected the stock split.
For the year ended February 20, 2015
Type of
Resolution approved by shares

Paid fromAmount(Millions ofYen)Amount(Thousands of
U.S. Dollars)

Amount per
share (Yen)Amount per
share (U.S.
Dollars)

Shareholders’
cut-off date

Effectivedate

Board of directors(March 30, 2015)

Retainedearnings¥3,210$26,958

¥29

$0.24

February
20, 2015

April 20,
2015

Commonstock

Note:1.The amount includes the dividend of ¥14million (U.S.$118 thousand) on shares, held by Trust & Custody Services Bank, Ltd(The Trust Account E).

15
FY2014 Nitori Holdings Co., Ltd.

4) Shareholder’s Equity
The Corporation Act of Japan (the “Act”) provides that an amount equal to 10% of the amount to be disbursed as
distributions of capital surplus (other than the capital reserve) and retained earnings (other than the legal reserve)
be transferred to the capital reserve and the legal reserve, respectively, until the sum of the capital reserve andthe legal reserve equals 25% of the common stock account. Such distributions can be made at any time byresolution of the shareholders, or by the board of directors if certain conditions are met, but neither the capitalreserve nor the legal reserve is available for distributions.

9. Note to Consolidated Statement of Cash FlowsThe reconciliation between cash and cash equivalents reported in the consolidated statement of cash flows andcash and deposits reported in the consolidated balance sheet is as follows:
Millions of Yen
As at February 20

Cash and deposits
Time deposits with maturities exceeding 3 months
Cash and cash equivalents

Thousands of
U.S. Dollars

2014

2015

2015

¥21,973¥26,409$221,740

(794)

(695)

(5,841)¥21,179¥25,713$215,899

10. Leases
As Lessee:
The Group leases certain buildings for retail stores. With finance leases for which ownership is not transferred to
the lessee commencing on or before February 20, 2009, the Company employs accounting methods normallyapplicable to operating lease transactions. The information on these lease transactions is omitted because it isinsignificant.
Future minimum lease payments relating to non-cancelable operating leases are as follows:
Millions of Yen
As at February 20

Thousands of
U.S. Dollars

2014

2015

2015

Due within one year

¥1,572¥2,122$17,818

Due after one year

24,43927,510230,984

Total¥26,012¥29,632$248,802

As Lessor:
Future minimum lease receivables relating to non-cancelable operating leases are as follows:
Millions of Yen

Thousands of
U.S. Dollars

As at February 20

2014

2015

2015

Due within one year

¥109

¥109

$918

Due after one year

1,537

1,428

11,992

Total¥1,647¥1,537$12,910

11. Financial Instruments
1. Overview
1) Policy for financial instruments
The Group raises necessary funds based on capital investment plans and fund management plans, mainly throughloans from banks. The Group utilizes derivative financial instruments only to manage risks described below anddoes not enter into such transactions for speculative trading purposes.

16
FY2014 Nitori Holdings Co., Ltd.

2) Types of financial instruments, risk and risk management
Trade notes and accounts receivable-trade are exposed to credit risk of customers. The Group manages its
credit risk monitoring balances of customers to identify default risk of customers at an early stage.
Investment securities with market values are exposed to market risk, and which without market values are
exposed to impairment risk. The Group periodically reviews the fair values of such financial instruments.
Guarantee deposits and lease deposits, which are mostly related to rental of stores, are exposed to credit risk oflessors. The Group manages its credit risk monitoring balances of these deposits to identify the default risk oflessors at an early stage.
Most notes and accounts payable-trade and income taxes payable are due within three months.
Short-term loans payable are obtained mainly for short-term working capital, and long-term loans payable are forlong-term working capital. Certain long-term loans payable are exposed to interest rate fluctuation risk. However,
the interest rate fluctuation risk is hedged by interest rate swap transactions.
Regarding derivatives, the Group enters into forward foreign currency exchange transactions to hedge foreign
currency exchange rate fluctuation risk related to trade receivables and trade payables denominated in foreign
currencies. The Group also enters into interest rate swap transactions to hedge interest rate fluctuation risk
related to the loans. The Group believes that the credit risk under derivative transactions is fairly low because
counterparties of derivative transactions are limited to financial institutions with a high credit rating. The
execution and management of derivative transactions are performed by the finance department based on
in-house rules.
3) Supplementary explanation on fair value of financial instruments
The fair value of financial instruments is based on market value, or, when no market price is available, arationally estimated amount. Since various assumptions and factors are reflected in estimating the fair value,
different assumptions and factors could result in different fair value. The notional amounts of derivatives in thefollowing table are not necessarily indicative of the actual market risk involved in derivative transactions.
2. Estimated fair value of financial instruments
The carrying value of the financial statements on the consolidated balance sheet as at February 20, 2014 and2015, and estimated fair value are shown below. The following table does not include financial instruments forwhich it is extremely difficult to determine the fair value.
Millions of Yen
Carrying value

Estimated fairvalue

Difference(1) Cash and deposits¥21,973¥21,973¥-(2) Notes and accounts receivable-trade

11,923

11,923-As at February 20, 2014

Assets(3) Investment securities

757

757

-

(4) Guarantee deposits

17,778

19,114

1,336(5) Lease deposits

15,767

14,384(1,383)¥13,412¥13,412¥-

Liabilities(1) Notes and accounts payable-trade(2) Short-term loans payable

967

967

-

(3) Accounts payable-other

11,654

11,654-(4) Income taxes payable

12,635

12,635-(5) Long-term loans payable, including current
portion of long-term loans payable

6,688

6,691

2

Derivative transactions(*)¥4,234¥4,234¥-17
FY2014 Nitori Holdings Co., Ltd.

Millions of Yen
Carrying value

Estimated fairvalue

Difference(1) Cash and deposits¥26,409¥26,409¥-(2) Notes and accounts receivable-trade

13,057

13,057-As at February 20, 2015

Assets(3) Investment securities

1,248

1,248

-

(4) Guarantee deposits

17,042

18,462

1,419(5) Lease deposits

17,05016,014(1,036)(1) Notes and accounts payable-trade¥16,473¥16,473¥-(2) Accounts payable-other

18,031

18,031-(3) Income taxes payable

13,961

13,961-(4) Long-term loans payable, including current
portion of long-term loans payable

6,521

6,512

(9)

¥38,992¥38,992¥-

Carrying value

Estimated fairvalue

Difference(1) Cash and deposits$221,740$221,740$-(2) Notes and accounts receivable-trade109,634

109,634-(3) Investment securities

10,485

10,485-(4) Guarantee deposits

143,097

155,015

11,918(5) Lease deposits

143,161

134,461(8,699)Liabilities

Derivative transactions(*)

Thousands of U.S. Dollars
As at February 20, 2015

AssetsLiabilities(1) Notes and accounts payable-trade$138,314$138,314$-(2) Accounts payable-other

151,402

151,402-(3) Income taxes payable

117,227

117,227-(4) Long-term loans payable, including current
portion of long-term loans payable

54,75954,676(82)$327,395$327,395$-

Derivative transactions(*)(*)The value of assets and liabilities arising from derivatives is shown at net value, and with the amount in parentheses representing net
liability position.
Notes: 1. Methods to determine the estimated fair value of financial instruments[Assets](1) Cash and deposits, (2) Notes and accounts receivable-trade
The Company uses the carrying value because they will be settled in the short term, meaning that carrying value approximatesfair value.
(3) Investment securities
Fair value of stocks is based on quoted market prices. Additional information on securities classified by holding purpose ispresented in “Securities” (Note 12).
.
(4) Guarantee deposits
Fair value of guarantee deposits is based on the present value of the future cash flows, which are discounted at the rate
determined by reference to an appropriate index such as a government bond yield adjusted for the credit risk related to thematurity schedule(5) Lease deposits
Fair value of lease deposits is based on the present value of the future cash flows, which are discounted at the rate determinedby reference to an appropriate index such as a government bond yield adjusted with the credit risk related to the term remaining.

18
FY2014 Nitori Holdings Co., Ltd.

[Liabilities](1) Notes and accounts payable-trade, (2) Accounts payable-other (3) Income taxes payable
The Company uses carrying value because they will be settled in the short term, meaning that carrying value approximate fair value.
(4) Long-term loans payable
Fair value of long-term loans payable is based on the present value of the total of principal and interest discounted by the rateapplicable to similar new borrowings.
For long-term loans payable with floating interest rates hedged by interest rate swaps subject to special treatment, the fair value isbased on the present value of the total of principal and interest discounted by the rate applicable to similar new borrowings.
(Derivative transactions)
Details of derivative transactions are described in “Derivatives” (Note 13).
2. Investment securities for which fair value is deemed extremely difficult to determine.
Millions of Yen

Thousands of
U.S. Dollars

As at February 20

2014

2015

2015

Unlisted stocks

¥290

¥320

$2,690Unlisted stocks are excluded from “(3) Investment securities” because they are not actively traded in a market and it is extremely
difficult to determine the fair value.
3. Redemption schedule for monetary assets
Millions of Yen
As at February 20, 2014

Due in 1 year or
less

Due after 1 year
through 5 years

Due after 5
years

Cash and deposits¥21,973¥-¥-

Notes and accounts receivable-trade

11,924

-

-

Total

¥33,898¥-¥-

Guarantee deposits and Lease deposits are not disclosed because it is difficult to determine the redemption schedule.
Millions of Yen
As at February 20, 2015

Due in 1 year or
less

Due after 1 year
through 5 years

Due after 5
years

Cash and deposits¥26,409¥-¥-

Notes and accounts receivable-trade

13,063

-

-

Total

¥39,472¥-¥-

As at February 20, 2015

Due in 1 year or
less

Due after 1 year
through 5 years

Due after 5
years

Cash and deposits$221,740$-$-

Notes and accounts receivable-trade109,681

-

-

Total

$331,422$-$-

Thousands of U.S. Dollars

Guarantee deposits and Lease deposits are not disclosed because it is difficult to determine the redemption schedule.
4. Redemption schedule for short-term loans payable and long-term loans payable
Millions of Yen
Due in 1
year or lessAs at February 20, 2014

Due after 1
Due after 2
Due after 3
year through years through years through2 years
3 years
4 years

Due after 4
years through5 years

Due after 5
years

Short-term loans
payable

¥967

¥-

¥-

¥-

¥-

¥-

Long-term loans
payable

3,128

2,408

517

633

1

-

Total

¥4,095¥2,408

¥517

¥633

¥1

¥-

19
FY2014 Nitori Holdings Co., Ltd.

Millions of Yen
Due in 1
year or lessAs at February 20, 2015

Due after 1
Due after 2
Due after 3
year through years through years through2 years
3 years
4 years

Due after 4
years through5 years

Due after 5
years

Long-term loans
payable

4,395

1,501

625

-

-

-

Total

¥4,395¥1,501

¥625

¥-

¥-

¥-

Thousands of U.S. Dollars
Due in 1
year or lessAs at February 20, 2015

Due after 1
Due after 2
Due after 3
year through years through years through2 years
3 years
4 years

Due after 4
years through5 years

Due after 5
years

Long-term loans
payable36,904

12,606

5,247

-

-

-

Total

$36,904$12,606$5,247$-$-$-

12. Securities
1) Available-for-sale securities (with market value)
Millions of Yen
As at February 20, 2014

Carrying value

Acquisition cost

Unrealized Gain
(Loss)

¥757

¥275

¥481

Securities whose carrying value exceeds theiracquisition cost
StocksSecurities whose acquisition cost exceeds theircarrying value
Stocks
Total

-

-

-

¥757

¥275

¥481

Note: Unlisted stocks (¥290 million in the consolidated balance sheet) are not included in the above table because determining their fairvalues is extremely difficult.
Millions of Yen
As at February 20, 2015

Carrying value

Acquisition cost

Unrealized Gain
(Loss)¥1,248¥337¥911

Securities whose carrying value exceeds theiracquisition cost
StocksSecurities whose acquisition cost exceeds theircarrying value
Stocks
Total

-

-

-

¥1,248

¥337

¥911

20
FY2014 Nitori Holdings Co., Ltd.

Thousands of U.S. Dollars
As at February 20, 2015

Carrying value

Acquisition cost

Unrealized Gain
(Loss)$10,485$2,831$7,653

Securities whose carrying value exceeds theiracquisition costs
StocksSecurities whose acquisition cost exceeds theircarrying value
Stocks
Total

-

-

-

$10,485$2,831$7,653

Note: Unlisted stocks (¥320 million ($2,690 thousand) in the consolidated balance sheet) are not included in the above table because
determining their fair values is extremely difficult.

2) Impairment of available for sale securities
Not applicable.
If the market value of securities as of the fiscal year-end declines more than 50% compared with the acquisition
costs, the difference between fair market value and the acquisition cost is recognized as loss on valuation in the
period of the decline. In addition, if the market value of securities as of the fiscal year-end declines from 30% to
50% compared with the acquisition costs and if such decline is considered to be material and unrecoverable, thedifference between fair market value and the acquisition cost is recognized as loss on valuation in the period of
the decline.

13. Derivatives
1. Derivative transactions to which hedge accounting is applied
1) Currency-related transactions
As at February 20, 2014

Millions of Yen

Hedging method

Transaction type

Main hedged item

Deferral method

Foreign exchange
forward contract

Accounts
payable-trade

Buying U.S. dollars

Notional
amountNotional
amountmaturing
over 1 year

Fair value¥168,086¥-¥4,234

Note: The fair value of derivative transactions is valued using prices quoted by counterparty financial institutions.
As at February 20, 2015

Millions of Yen

Hedging method

Transaction type

Main hedged item

Deferral method

Foreign exchange
forward contract

Accounts
payable-trade

Buying U.S. dollars

Notional
amountNotional amountmaturing over 1
year

Fair value¥307,422¥157,546¥38,992

As at February 20, 2015

Thousands of U.S. Dollars

Hedging method

Transaction type

Main hedged item

Deferral method

Foreign exchange
forward contract

Accounts
payable-trade

Buying U.S. dollars

Notional
amountNotional
amountmaturing over
1 yearFair value$2,581,212$1,322,805$327,395

Note: The fair value of derivative transactions is valued using prices quoted by counterparty financial institutions.

21
FY2014 Nitori Holdings Co., Ltd.

2) Interest-related transactions
As at February 20, 2014

Hedging method

Transaction typeMillions of Yen

Main hedged item

Special treatment Interest rate swap Long-term loans
payabletransactionof interest rate
Pay fixed/
swaps
Receive floating

Notional
amountNotional
amountmaturing
over 1 year

Fair value¥2,100¥1,300(Note)

Notional
amountNotional
amountmaturing
over 1 year

Fair value¥1,300¥-(Note)

As at February 20, 2015

Hedging method

Transaction typeMillions of Yen

Main hedged item

Special treatment Interest rate swap Long-term loans
payabletransactionof interest rate
Pay fixed/
swaps
Receive floating

As at February 20, 2015

Thousands of U.S. Dollars

Hedging method

Notional
AmountNotional
amountmaturing
over 1 year

Fair value$10,915$-(Note)

Transaction type

Main hedged item

Special treatment Interest rate swap Long-term loans
transaction
payableof interest rate
Pay fixed/
swaps
Receive floating

Note: Since accounting for interest rate swaps subject to special treatment are combined with the hedged long-term loans payable, theirmarket values have been included in those of the corresponding long-term loans payable.

14. Retirement Benefits(The fiscal year ended February 20, 2014)
1) Summary of Employees’ Retirement Benefit Plans
The Company and certain consolidated subsidiaries have a defined benefit corporate pension plan, an
employees’ retirement lump-sum benefit plan and a defined contribution pension plan. The Company and certain
consolidated subsidiaries provide for lump-sum payments, which are not included in the calculation of projected
benefit obligations, to employees upon retirement determined by reference to their current rate of pay, length ofservice and the conditions under which termination occurs.
The Company and certain consolidated subsidiaries have transferred their tax qualified pension plan to a defined
benefit corporate pension plan and also have transferred a portion of their employees’ retirement lump-sum
benefit plan to a defined contribution pension plan after revisions to the employees’ retirement benefit plans on
April 1, 2011.
2) Projected Benefit Obligations
Millions of Yen
As at February 20, 2014

Retirement benefit obligations

2014¥(4,368)

Plan assets at fair value

2,128

Unfunded retirement benefit obligation(2,240)

Unrecognized actuarial loss

436

Unrecognized prior service cost

(249)

Provision for retirement benefits¥(2,053)22
FY2014 Nitori Holdings Co., Ltd.

3) Retirement Benefit Expenses for Employees
Millions of Yen
For the year ended February 20, 2014

2014

Service cost

¥614

Interest cost

76

Expected return on plan assets(36)

Amortization of actuarial loss

41

Amortization of prior service cost

(35)

Contribution of defined contribution pension plan

236

Retirement benefit expenses for employees¥8964) Assumptions and Policies Used to Calculate Projected Benefit Obligations
2014

Method of allocation of the projected benefit
obligations to periods of service

Straight-line basis

Discount rate

1.5%

Expected rates of return on plan assets

2.0%

Amortization periods for prior service cost

10 years

Amortization periods for actuarial loss

10 years

Notes: 1.Unrecognized prior service costs are amortized using the straight-line basis over the specific period, which is within the averageof the estimated remaining service periods of employees.
2. Actuarial losses are amortized using the straight-line basis over the specific period, which is within the average of the estimatedremaining service periods. Amortization cost of the actuarial loss is recognized in the following year when incurred.

(The fiscal year ended February 20, 2015)
1) Summary of Employees’ Retirement Benefit Plans
The Company and certain consolidated subsidiaries have a defined benefit corporate pension plan, an
employees’ retirement lump-sum benefit plan and a defined contribution pension plan. The Company and certain
consolidated subsidiaries provide for lump-sum payments, which are not included in the calculation of projected
benefit obligations, to employees upon retirement determined by reference to their current rate of pay, length ofservice and the conditions under which termination occurs.
2) Defined benefit pension plans(a) Reconciliation of beginning and ending balances of the projected benefit obligations for the year ended
February 20, 2015 was as follows:
Millions of Yen

Thousands of
U.S. Dollars¥4,355$36,571

Service cost

647

5,434

Interest cost

55

463

Actuarial loss(gain)

38

321

Projected benefit obligations at beginning of year

Benefits paid
Projected benefit obligations at end of year(308)

(2,588)¥4,787$40,20123
FY2014 Nitori Holdings Co., Ltd.

(b) Reconciliation of beginning and ending balances of plan assets at fair value for the year ended February 20,
2015 was as follows:
Millions of Yen

Thousands of
U.S. Dollars¥2,128$17,869

Expected return on plan assets

42

357

Actuarial gain(loss)

142

1,198

Employer contributions

269

2,264

Benefits paid

(140)

(1,183)¥2,442$20,506

Plan assets at fair value at beginning of year

Plan assets at fair value at end of year(c) Reconciliation of amounts recognized in the consolidated balance sheet as of February 20, 2015 was asfollows:
Millions of Yen

Thousands of
U.S. Dollars

Projected benefit obligations (funded plans)¥2,547$21,389

Plan assets at fair value(2,442)(20,506)

105

883

Projected benefit obligations (unfunded plans)

2,240

18,811

Net defined benefit liability in the consolidatedbalance sheet¥2,345$19,694

Gross defined benefit liability¥2,345$19,694

Net defined benefit liability in the consolidatedbalance sheet¥2,345$19,694

Note: Includes those under the plan in which a simplified method is applied.

(d) The composition of net pension and severance costs for the year ended February 20, 2015 was as follows:
Millions of Yen

Thousands of
U.S. Dollars

Service cost

¥647

$5,434

Interest cost

55

463

Expected return on plan assets

(42)

(357)

52

438

Amortization and expenses:
Actuarial loss
Prior service cost
Net pension and severance costs

(35)

(295)

¥676

$5,682

Note: Includes those under the plan in which a simplified method is applied.

(e) The amounts recognized in accumulated other comprehensive income (loss) before the effect of income taxes
as of February 20, 2015 was as follows:
Millions of Yen

Thousands of
U.S. Dollars

Unrecognized prior service cost

¥215

$1,805

Unrecognized actuarial loss

(267)

(2,247)

Total

(¥52)

($441)

24
FY2014 Nitori Holdings Co., Ltd.

(f) The significant components of plan assets as of February 20, 2015, by asset category, was as follows:
Debt securities

23 %Equity securities

30

Life insurance company general accounts

44

Others

2

Total

100 %

(g) The expected long-term rate of return on plan assets is determined based on the current and expected future
allocation of plan assets and the current and expected future long-term rate of return of various assets of whichplan assets are composed.
(h) Assumptions used for the actuarial computation of the retirement benefit obligations
for the year ended February 20, 2015 were primarily as follows:
Discount rate 1.5%
Expected long-term rate of return on plan assets 2.0%
3) Defined contribution pension plans
The contribution to defined contribution pension plans of the Company was ¥235 million ($1,978 thousand) for theyear ended February 20, 2015.

15. Stock Options
For the years ended February 20, 2014 and 2015, the Group recognized expenses regarding stock options of¥299 million and ¥482 million ($4,053 thousand), respectively, which are included in selling, general andadministrative expenses.
For the years ended February 20, 2014 and 2015, the Group recognized profits regarding lapse by non-exerciseof stock options of ¥6 million and ¥64 million ($539 thousand), which are presented to special gains ”Gain on
reversal of subscription rights to shares”.
1) The stock options outstanding as of February 20, 2015
The Fourth and Fifth Subscription Rights toSharesThe Second Subscription Rights to Shares

Date of annual general
May 16.2008
meeting of shareholders

May 12.2011

Date of meeting of directors

March 17.2009

Grantees

Directors

9

Directors

Company auditors

2

Company auditors

2

Officers

9

Officers

16

1,966

Directors of subsidiaries

5

Directors and employeesof subsidiaries

94

Employees of subsidiaries

Quality/Technical advisers(External)

5

Employees

March 29.2012
4

2,664

Type and number of shares

Common stock

Grant date

March 26, 2009

April 2, 2012

Exercise conditions

None

None

Intended service period

From March 26, 2009 to March 17,
2012

From April 2, 2012 to March 29, 2015

Exercise period

From March 18, 2012 to March 17,
2014

From March 30, 2015 to March 29,
2017725,000

Common stock

1,389,10025
FY2014 Nitori Holdings Co., Ltd.

The Sixth Subscription Rights to Shares

The Seventh Subscription Rights to Shares

Date of annual general May 9.2014
meeting of shareholders

May 9.2014

Date of meeting of directors

June 27.2014

Grantees

June 27.2014
Directors

8

Officers

14

Company auditors

3

Directors of subsidiaries

4

Employees of subsidiaries

3,239

Type and number of shares

Common stock

Grant dateJuly 14, 2014

June 30, 2014

Exercise conditions

None

None

Intended service period

From July 14, 2014 to July 14, 2017

From June 30, 2014 to June 30, 2017

Exercise period

From July 15, 2017 to July 14, 2020

From July 1, 2017 to June 30, 2020

121,000

Common stock

904,100

Note: The Company conducted a stock split of common shares at a ratio of two for one effective February 21, 2014. Type and number ofshares are retroactively adjusted for the stock split.

2) A summary of stock option activity during the fiscal year ended February 20, 2015
The Second Subscription Rights to Shares

The Fourth and Fifth Subscription Rights toSharesAt the beginning of the year-

1,315,500

Granted--Forfeited and expired-

63,900

Vested--At the end of the year-

1,251,600

293,406---

Exercised

194,006-

Forfeited and expired

99,400-At the end of the year--

Non-vested (Shares)

Vested (Shares)
At the beginning of the year
VestedThe Sixth Subscription Rights to Shares

The Seventh Subscription Rights to Shares

Non-vested (Shares)--

121,000

904,100

Forfeited and expired-

18,700

Vested--121,000

885,400

At the beginning of the year--

Vested--Exercised--

Forfeited and expired--

At the end of the year--

At the beginning of the year
GrantedAt the end of the year
Vested (Shares)

Note: The Company conducted a stock split of common shares at a ratio of two for one effective February 21, 2014. Number of sharesissued are calculated under the assumption that the stock split had been conducted at the time each stock were issued.

26
FY2014 Nitori Holdings Co., Ltd.

The unit price information is as follows:
The Second Subscription Rights to Shares

The Fourth and Fifth Subscription Rights toSharesExercise price – yen¥2,956¥3,959(U.S. dollars)($24.81)($33.24)¥4,597-($38.59)-

Average stock price at exercise – yen(U.S. dollars)
Fair value price on grant date – yen(U.S. dollars)

¥647

¥706

($5.43)($5.92)The Sixth Subscription Rights to Shares

The Seventh Subscription Rights to Shares

Exercise price – yen¥5,650¥5,540(U.S. dollars)($47.43)($46.51)--

Average stock price at exercise – yen(U.S. dollars)
Fair value price on grant date – yen(U.S. dollars)--¥1,022¥996($8.58)($8.36)

Note: The Company conducted a stock split of common shares at a ratio of two for one effective February 21, 2014. The Exercise price iscalculated under the assumption that the stock split had been conducted at the time each stock were issued.

3) Method of estimating fair value
The Sixth Subscription Rights to Shares

Pricing Model
Volatility of stock price (Note 1)

The Seventh Subscription Rights to SharesBlack Scholes
Option Pricing Model

Black Scholes
Option Pricing Model

24.2%

24.1%

Estimated remaining outstanding
period (Note 2)

4.5 years

4.5 years

Estimated dividend per share (Note 3)¥52 ($0.43)¥52 ($0.43)

0.13%

0.14%

Risk-free interest rate (Note 4)

Notes:1. Calculated based on the actual stock prices corresponding to the expected number of years to expiration.
2. Based on the assumption that stock acquisition rights are exercised in the middle of their exercisable periods because it
cannot be reasonably estimated due to the insufficient accumulated data.
3. Based on the forecast for dividends as of the date of estimating the fair value.
4. Risk-free interest rate is Japanese government bond yield corresponding to the expected number of years to expiration.

4) Method of reflecting expirations
Estimated number of options vested is determined by estimating expirations by reference to the actual termination
ratio of employees.

27
FY2014 Nitori Holdings Co., Ltd.

16. Income Taxes
1) As at February 20, 2014 and 2015, the significant components of deferred tax assets and liabilities are as
follows:

As at February 20

Millions of Yen

Thousands of
U.S. Dollars

2014

2015

2015

¥1,264¥1,222$10,264

Deferred tax assets
Accrued enterprise tax, business office tax
Accrued real estate acquisition tax

132

65

546

Provision for bonuses

809

753

6,325

Provision for point card certificates

678

366

3,081

Unrealized gain on sales of inventories

102

159

1,340

Provision for retirement benefits

712

-

-

Net defined benefit liability

-

813

6,833

2,545

2,854

23,966

Provision for directors' retirement benefits

81

81

685

Allowance for doubtful accounts

57

45

380

Impairment loss and penalty for the scrap andbuild of outlets

416

352

2,961

Depreciation and amortization

Asset retirement obligations

758

882

7,409

Other

2,889

4,109

34,502Sub total

10,45011,707

98,298Less: valuation allowance
Total deferred tax assets(906)(1,236)(10,379)

9,543

10,471

87,918Deferred tax liabilities
1,689

13,897

116,683

Unrealized holding gain on securities

Deferred gains on hedges

171

324

2,727

Construction assistance fund receivables

860

789

6,630

Asset retirement cost related to asset retirement
obligation

374

427

3,585

1,081

1,326

11,141Retained earnings of subsidiaries

17

31

261

Total deferred tax liabilities

Other

4,195

16,796141,031

Net deferred tax asset(liabilities)¥5,348(¥6,325)($53,112)2) Reconciliation between the effective statutory tax rate and the actual effective tax rates
The details for the years ended February 20, 2014 and 2015 are omitted as the differences between the statutory
tax rate and effective tax rates are 5% or less of the statutory tax rate.
3) Revision of amount of deferred tax assets and deferred tax liabilities due to change in rate of corporate
tax rate.
The “Act for Partial Amendment of the Income Tax Act etc.” (Act No.10 of 2014) was promulgated on March 31,
2014. The special reconstruction corporate tax will not be imposed on corporate taxes effective fiscal year
beginning on or after April 1, 2014. Therefore, the effective tax rate used to measure the Company's deferred tax
assets and liabilities was changed from 38.0% to 35.6% for temporary differences expected to be utilized fromfiscal year beginning February 21, 2015.
As a result, deferred tax assets decreased by ¥39 million ($328 thousand) and deferred tax liabilities decreasedby ¥345 million ($2,898 thousand). Income taxes-deferred increased by ¥307 million ($2,578 thousand).

28
FY2014 Nitori Holdings Co., Ltd.

4) Change in rate of corporate and other income taxes after financial closing date
The "Act for Partial Amendment of the Income Tax Act etc." (Act No. 9 of 2015) and "Act for Partial Amendment of
the Local Tax Act, etc." (Act No. 2 of 2015) were promulgated on March 31, 2015. The effective statutory tax
rate used to measure deferred tax assets and liabilities was changed from 35.6% to 33.1% for temporary
differences expected to be utilized in the fiscal year beginning on February 21, 2016 and to 32.3% for temporary
differences expected to be utilized in and after the fiscal year beginning on February 21, 2017.
As a result, deferred tax assets decreased by ¥420 million ($3,533 thousand) and deferred tax liabilities
decreased by ¥264 million ($2,217 thousand). Income taxes-deferred increased by ¥590 million ($4,956
thousand).

17. Investment and Rental Properties
The Company and certain consolidated subsidiaries hold rental properties such as commercial facilities(includingland) in major cities throughout Japan. Certain rental properties are not recognized as rental properties but as realestate including spaces used as rental properties since the Company and certain consolidated subsidiaries use
some of the floor space of these properties.
For the years ended February 20, 2014 and 2015, the carrying values, changes during the year, and fair values of
those properties are as follows:
Millionsof YenThousands of
U.S. Dollars

2014

2015

2015

Balance at beginning of year

¥11,682¥5,228$43,903

Increase (Decrease)(6,453)

718

6,029

Balance at end of year

5,228

5,946

49,932

Fair value at end of year

5,142

5,593

46,961For the years ended February 20

Rental property
Carrying value

Real estate including spaces used as rental properties
Carrying value
Balance at beginning of year

¥19,919¥35,143$295,072

Increase (Decrease)

15,223

8,492

71,301

Balance at end of year

35,143

43,635366,374

Fair value at end of year

28,33538,276321,376

Notes: 1. The carrying value is presented after deducting accumulated depreciation from acquisition cost.
2. Decrease of rental property during the year ended February 20, 2014 was primarily attributable to transfer to real estate including
spaces used as rental properties of ¥6,453 million. Increase during the year ended February 20, 2015 was primarily attributable
to transfer to real estate including spaces used as rental properties of ¥784 million ($6,587 thousand).
3. Increase of rental estate including spaces used as rental properties during the year ended February 20, 2014 was primarily
attributable to newly acquired properties of ¥9,526 million partially offset by depreciation expense of ¥745 million. Increaseduring the year ended February 20, 2015 was primarily attributable to newly acquired properties of ¥10,278 million ($86,299
thousand).
4. Fair values of the properties as of year end are calculated by the Company based on certain appraisal values and otherindicators reflecting the market value.

29
FY2014 Nitori Holdings Co., Ltd.

For the years ended February 20, 2014 and 2015, income from rental properties is as follows:
Millionsof YenThousands of
U.S. Dollars

2014

2015

2015

Income from rental properties¥3,148¥3,755$31,534

Cost of rental properties

1,639

1,950

16,374Gross profit from rental properties

1,509

1,805

15,160---For the years ended February 20

Real estate including spaces used as rental properties

Other (gain or loss on sales of properties)
Note:

Since the Company and certain of its subsidiaries use certain real estate including spaces used as rental properties for the
purposes of providing services and management, the related rental income is not reported. Expenses related to rental property(depreciation, insurance, taxes, etc.) are included in cost of rental properties.

18. Segment Information
1. Segment Information
The Company and its consolidated subsidiaries have been primarily engaged in a single segment of sales ofhome furnishings and interior goods. Therefore, the disclosure of reportable segment information is omitted.
2. Related Information
1) Information about products and services
Information about products and services is as follows:
Millions of Yen
For the year ended February 20, 2014

Sales to external customers

Home furnishingsand interior goods

Other

Total

¥381,158¥6,446¥387,605
Millions of Yen

For the year ended February 20, 2015

Sales to external customers

Home furnishingsand interior goods

Other

Total

¥409,947¥7,338¥417,285

Thousands of U.S. Dollars
For the year ended February 20, 2015

Sales to external customers

Home furnishingsand interior goods

Other

Total

$3,442,042$61,613$3,503,656

2) Information about geographic areasa) SalesInformation about geographic areas is not disclosed because sales to external customers in Japan constituted
more than 90% of net sales on the consolidated statement of income.
b) Property, plant and equipment
Information about property, plant and equipment is not disclosed because property, plant and equipment in Japan
constituted more than 90% of property, plant and equipment on the consolidated balance sheet.
3) Information about major customers
Information about major customers is not disclosed since no single customer accounts for more than 10% ofconsolidated net sales.
3. Information about Impairment Loss on Fixed Assets by Reportable Segment
The Group has been primarily engaged in a single segment of sales of home furnishings and interior goods.
Therefore, this information is omitted.

30
FY2014 Nitori Holdings Co., Ltd.

4. Information about Amortization and Unamortized Balances of Goodwill by Reportable Segment
Not applicable.
5. Information about Gain on Negative Goodwill by Reportable Segment
Not applicable.

19. Related Party Transactions
1. Related party transactions between the Company and related parties
Directors and major shareholders (individual shareholders only), etc., of the Company

Category

Capital or
Address Investment Relationship

Name

Shirai
Directors Toshiyuki-

Kubo
Directors Takao

-

-

Close
relative of Nitori
directors Mitsuko-

Amounts ofTransaction% of Voting
RightsFor the year ended February 20, 2014

Directors

Held (held by
Others)(held by others)
Direct 0.03

(held by others)
Direct 0.03-

Auditors-

Mother of
representative (held by others)
Direct 0.02
director

Business
Nature ofRelationship Transaction

Balanceat the end of the year

Millions of Yen AccountMillions of Yen-

Exercise ofstock options(Note 2)

¥11

-

-

-

Exercise ofstock options(Note 2)

¥11

-

-

Building
lease(Note 3)Lease
¥16 deposits

Building
lease

¥28

Notes: 1. Amount of transaction does not include consumption taxes.
2. Exercise of stock option during the fiscal year ended February 20, 2014 approved by annual general meeting of shareholders on
May 16, 2008.
3. The terms and prices of building lease transactions are determined based on a similar transaction in a nearby area.

For the year ended February 20, 2015
Category Name
Close
relativeofNitoridirectors Mitsuko

Capital or
Address Investment Relationship--% of Voting
RightsAmounts of Transaction

Held (held Business Nature of
by Others) Relationship Transaction

Millions of Thousands of
Yen U.S. Dollars Account(held byMother ofothers)representative Direct
director
0.02

Building
Building lease
lease(Note 2)

¥16

Lease
$136 deposits

Balanceat the end of the year
Thousands ofMillions of Yen U.S. Dollars

¥28

$240

Notes: 1. Amount of transaction does not include consumption taxes.
2. The terms and prices of building lease transactions are determined based on a similar transaction in a nearby area.

2. Related party transactions between the consolidated subsidiaries and related parties
Not applicable.

31
FY2014 Nitori Holdings Co., Ltd.

20. Amounts per Share
As at and for the years ended February 20

Net assets per share of common stock

Yen

U.S. Dollars

2014

2015

2015

¥2,248.80¥2,806.99$23.56

Basic net income per share of common stock

350.27376.14

3.15

Diluted net income per share of common stock349.74374.73

3.14

Notes: 1. Stocks held by Trust & Custody Services Bank, Ltd. on behalf of the J-ESOP are not included in the number of shares for the
calculation of per share information.
2. The Company conducted a stock split of common shares at a ratio of two for one effective February 21, 2014. Accordingly for the
purpose of calculating net assets per share, basic net income per share and diluted net income per share, it is assumed that thestock split was implemented at the beginning of the previous fiscal year.

1. Basis of net income per share of common stock and diluted net income per share of common stock1) Basic net income per share

For the years ended February 20

Net income
Net income not attributable to ordinary
shareholders

Millions of Yen

Thousands of
U.S. Dollars

2014

2015

2015

¥38,425¥41,450$348,034---

Net income attributable to ordinary shareholders

38,42541,450348,034

Average number of shares issued and outstanding
during the period (Thousand shares)

109,702110,202

Note:

Stocks held by Trust & Custody Services Bank, Ltd. on behalf of the J-ESOP are not included in the number of shares for the
calculation of per share information.

2) Diluted net income per share
Millions of Yen

Thousands of
U.S. Dollars

For the years ended February 20

2014

2015

2015

Adjustment to net income

¥-

¥-

$-

166

414

Increase in the number of common stock
corresponding to share warrants (Thousand
shares)3) Summary of shares not included in the calculation of diluted net income per share due to theiranti-dilutive effect
The Sixth Subscription Rights to Shares (Stock acquisition rights: 1,210 units).

32
FY2014 Nitori Holdings Co., Ltd.

21. Short-term and Long-term Loans Payable
Balance atFebruary 21,
2014

Balance atFebruary 20,
2015

Item

Millionsof YenMillionsof YenThousands of
U.S. Dollars

Averageinterest
rate (%)

Short-term loans payable

¥967

¥-

$-

-

–

Current portion of long-termloans payable

3,128

4,392

36,876

0.54––

Current portion of leaseobligations

Repayment
term

197

188

1,581

-

Long-term loans payable(Excluding current portion)

3,560

2,129

17,8820.57

2016–2017

Lease obligations(Excluding current portion)

2,893

2,706

22,724-

2016–2032¥10,747¥9,416$79,064

-

–

Total

Notes: 1. Average interest rates show weighted-average interest rate on the balance of these items at February 20, 2015.
2. The weighted-average rate of interest for finance lease obligations is not disclosed since related interest charges are included in
the amount of lease obligations amount in the consolidated balance sheet.
3. Maturities of long-term loans payable and lease obligations, excluding the current portion, due to be paid back within 5 years as
of February 20, 2015 are as follows:
Millions of Yen

Thousands of
U.S. Dollars

Over 1 year less than 2 years¥1,504$12,634

Over 2 years less than 3 years

625

5,247

Over 3 years less than 4 years--

Over 4 years less than 5 years--

Millions of Yen

Thousands of
U.S. Dollars

Over 1 year less than 2 years¥188$1,581

Over 2 years less than 3 years

187

1,575

Over 3 years less than 4 years

187

1,570

Over 4 years less than 5 years

187

1,570

Long-term loans payable (excluding current portion)

Lease obligations (excluding current portion)

22. Asset Retirement Obligations
Asset retirement obligations are not disclosed because asset retirement obligations constituted less than 1% of
total liabilities and net assets on the consolidated balance sheet.

23. Subsequent Event
Not applicable.

33
FY2014 Nitori Holdings Co., Ltd.