Consolidated Financial Statements
For the year ended February 20, 2020

Nitori Holdings Co., Ltd.

Notes to Consolidated Financial Statements
Nitori Holdings Co., Ltd. and consolidated subsidiaries
For the year ended February 20, 2020

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 its consolidated subsidiaries (collectively the “Group”) in
accordance with accounting principles generally accepted in Japan, which are different in certain respects as tothe application and disclosure requirements of International Financial Reporting Standards (IFRSs), and havebeen compiled from the consolidated financial statements prepared by the Company as required by the Financial
Instruments and Exchange Act of Japan.
Japanese yen amounts less than a million yen have been rounded down to the nearest million yen, except forper share data.

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 ¥111.28 = U.S.$1, theexchange rate prevailing on February 20, 2020. This translation should not be construed as a representation thatthe amounts shown could be converted into U.S. dollars at such rate.
U.S. dollar amounts less than a thousand dollars have been rounded down to the nearest thousand dollars,
except for per share data.

3. Principles of Consolidation and Accounting for Investments in Associates
1) Scope of consolidation(1) As of February 20, 2020, the Company had 25 consolidated subsidiaries (24 consolidated subsidiaries as ofFebruary 20, 2019).
Names of major consolidated subsidiaries:
Nitori Co., Ltd.
Home Logistics Co., Ltd.
NITORI Taiwan Co., Ltd.
NITORI (CHINA) HOLDINGS Co., Ltd.
Deco Home China Co., Ltd.
NITORI (SHANGHAI) HOME FURNISHING CO., LTD.
NITORI (SHANGHAI) HOME FURNISHINGS SALES CO., LTD.
NITORI (Taicang) Trading & Logistics Co., Ltd.
NITORI USA, Inc.
NITORI FURNITURE VIETNAM EPE
NITORI FURNITURE Ba Ria-Vung Tau Co., Ltd.
NITORI Public Co., Ltd.
HOME DECO Co., Ltd.
and 12 other subsidiaries
A subsidiary incorporated during the year ended February 20, 2020 was newly included in the scope of
consolidation. Furthermore, the Company passed a resolution at its board of directors meeting held on
August 30, 2017 to liquidate P.T. NITORI FURNITURE INDONESIA, which is a consolidated subsidiary of
the Company, and said company is currently in the process of liquidation.
(2) Names of major unconsolidated subsidiaries
The Company did not have any unconsolidated subsidiaries.

8
FY2019 Nitori Holdings Co., Ltd.

2) Application of equity method(1) As of February 20, 2020, the Company had one associate accounted for using the equity method (one as ofFebruary 20, 2019).
Name of associate accounted for using equity method:
KATITAS Co., Ltd.
(2) Other specific information if deemed necessary about the application of equity method
As the associate’s reporting date is different from the balance sheet date of the Company, financial
statements provisionally prepared based on its latest quarterly financial statements have been used.
3) Financial statements of consolidated subsidiaries
The reporting dates of the following consolidated subsidiaries are different from the balance sheet date of theCompany.
NITORI Furniture Co., Ltd. ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ December 20, 2019
NITORI Taiwan Co., Ltd.
NITORI (CHINA) HOLDINGS Co., Ltd.
Deco Home China Co., Ltd.
NITORI (SHANGHAI) HOME FURNISHING CO., LTD.
NITORI (SHANGHAI) HOME FURNISHINGS SALES CO., LTD.
NITORI (Taicang) Trading & Logistics Co., Ltd.
NITORI USA, Inc.
NITORI FURNITURE VIETNAM EPE
NITORI FURNITURE Ba Ria-Vung Tau Co., Ltd.
NITORI Public Co., Ltd.
and 9 other subsidiaries ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ December 31, 2019
HOME DECO Co., Ltd. ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ January 31, 2020
The financial information of the above subsidiaries has been consolidated using their financial statements as of
their respective reporting dates, and necessary adjustments have been made for consolidation purposes toreflect any significant transactions that occurred between the reporting dates of respective subsidiaries and thedate of the consolidated financial statements.

4. Summary of Significant Accounting Policies
1) Investment securities
The Group has available-for-sale securities. Available-for-sale securities with market quotations are carried at fairvalue with changes in unrealized holding gains or losses, net of the applicable income taxes, included directly in“net assets,” and the cost of securities sold is determined by the gross average method. Available-for-salesecurities without market quotations are stated at cost determined by the gross average method.
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) of the Company and its consolidated domestic
subsidiaries is computed by the declining balance method based on the estimated useful lives of the assets, except
for buildings (excluding facilities attached to buildings) acquired on or after April 1, 1998 and facilities attached tobuildings and structures acquired on or after April 1, 2016, which are depreciated by the straight-line method.
Consolidated overseas subsidiaries apply the straight-line method to their property, plant and equipment. The rangesof estimated useful lives are as follows:
Buildings and structures
5 to 40 years
Machinery, equipment and vehicles
4 to 12 years
Tools, furniture and fixtures
5 to 10 years
For buildings on fixed term leaseholds, the Company and its consolidated domestic subsidiaries compute thedepreciation using the straight-line method over the lease term assuming no residual value. These lease terms are
principally 20 years.

9
FY2019 Nitori Holdings Co., Ltd.

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 to 7 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.
Finance lease transactions that do not transfer ownership to the lessee, commencing on or before February 20,
2009, are accounted for as operating leases, and related payments are charged to expense as incurred.
7) Right-of-use assets
Right-of-use assets are depreciated by the straight-line method over the lesser of the useful life of the asset or
the lease term.
8) Allowance for doubtful accounts
The Company and certain consolidated subsidiaries record the allowance for doubtful accounts based on
historical experience for normal receivables and on an individual assessment of the collectability of the accountfor doubtful receivables.
9) Provision for bonuses
The Company and certain consolidated subsidiaries record the provision for bonuses at the amount expected tobe paid to their employees based on actual results during the fiscal year in order to cover the payments to theemployees in the following fiscal year.
10) Provision for point card certificates
Customers earn loyalty points (Nitori Members Card Points) by presenting their member card at the time ofpurchase. Provision for point card certificates is recorded at the amount expected to be used by customers in the
future.
11) Provision for shareholder benefit program
Provision for shareholder benefit program is recognized for future utilization of granted shareholder benefits andrecorded at the amount expected to be used by shareholders in the future based on the historical rate of use ofshareholder benefits.
12) Provision for retirement benefits for directors and other officers
Provision for retirement benefits for directors and other officers is recorded at the amount required to be paid inaccordance with internal rules if all directors and corporate auditors were to retire at the balance sheet date. The
plans of the Company and its consolidated domestic subsidiaries were abolished in April 2004 and December
2005, respectively, and the recorded amount represents benefits incurred but not yet paid.
13) Accounting method for retirement benefits
Projected benefit obligations are attributed to periods on a benefit formula basis.
Actuarial gains and losses are amortized using the straight-line method over a specific period (10 years), which
is within the average remaining years of service of the employees at the time of occurrence, from the fiscal year
following the year in which each gain or loss occurs.
Prior service costs are amortized using the straight-line method over a specific period (10 years), which is within
the average remaining years of service of the employees at the time of occurrence.
14) 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 sheet accounts of consolidated overseas subsidiaries are translated into Japanese yen at theexchange rate prevailing at the balance sheet date except for the components of net assets, excluding noncontrolling interests which are translated at the historical rate. Differences arising from such translation are
shown as “foreign currency translation adjustment” in the net assets section. Revenue and expense accounts ofconsolidated overseas subsidiaries are translated into Japanese yen at the average exchange rate.

10FY2019 Nitori Holdings Co., Ltd.

15) Hedge accounting
Hedging instruments are recorded at fair value and accounted for using deferral hedge accounting, under which
any unrealized gain or loss is deferred as a separate component of net assets.
Hedging instruments: Derivative transactions (foreign exchange forward contracts)
Hedged items: Accounts payable - trade denominated in foreign currencies
Hedging policy: The derivative transactions are used solely for hedging the risk arising from adverse
fluctuations in foreign currency exchange 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.
16) 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 insignificant risk of changes in value.
17) Consumption taxes
Transactions subject to consumption taxes are recorded at amounts exclusive of consumption taxes.
18) Income taxes
Deferred tax assets and liabilities are recognized in the consolidated financial statements with respect to thedifferences between the financial reporting and tax bases of the assets and liabilities, and measured using theenacted tax rates and laws which will be in effect when the differences are expected to reverse.
19) Change in accounting policies
At the beginning of the year ended February 20, 2020, consolidated overseas subsidiaries that had adopted IFRSs
adopted IFRS 16 “Leases.” In accordance therewith, as a general rule, they, as lessees, recognize all assets andliabilities under lease contracts. They elected to adopt the standard in accordance with the option of recognizing the
cumulative effect of initially adopting the standard at the date of initial adoption, as permitted by the transitional
provisions thereof. For leases previously classified as operating leases applying IAS 17, they, as lessees, recognizedright-of-use assets and lease liabilities at the date of initial adoption.
As a result, in the consolidated balance sheet as of February 20, 2020, right-of-use assets increased by ¥4,529
million ($40,705 thousand), and lease obligations under current liabilities and non-current liabilities increased by¥1,360 million ($12,223 thousand) and ¥4,887 million ($43,924 thousand), respectively.
The impact of the change on the consolidated statement of income and per share information for the year ended
February 20, 2020 was immaterial. In the consolidated statement of cash flows for the year ended February 20, 2020,
cash flows from operating activities increased by ¥1,259 million ($11,321 thousand), and cash flows from financing
activities decreased by the same amount.
20) Accounting standards issued but not yet effective- “Accounting Standard for Revenue Recognition” (Accounting Standards Board of Japan (“ASBJ”) Statement
No. 29, March 30, 2018)- “Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance No. 30, March
30, 2018)(1) Overview
The standard is a comprehensive accounting standard for revenue recognition. Revenue is recognized inaccordance with the following five-step approach.
Step 1: Identify the contract with a customer.
Step 2: Identify performance obligations in the contract.
Step 3: Determine the transaction price.
Step 4: Allocate the transaction price to each performance obligation in the contract.
Step 5: Recognize revenue when or as a performance obligation is satisfied.
(2) Scheduled date of adoption
The Group expects to adopt the standard and implementation guidance at the beginning of the year ending
February 20, 2023.
(3) Impact of adopting the standard and implementation guidance
The Company is currently evaluating the impact of adopting the standard and implementation guidance on its
consolidated financial statements.

11
FY2019 Nitori Holdings Co., Ltd.

21) Change in presentation
Adoption of Partial Amendments to “Accounting Standard for Tax Effect Accounting”
The Company adopted the Partial Amendments to “Accounting Standard for Tax Effect Accounting” (ASBJ
Statement No. 28, February 16, 2018) at the beginning of the year ended February 20, 2020 and has presenteddeferred tax assets under investments and other assets.
As a result, ¥5,518 million of “deferred tax assets” presented under “current assets” in the consolidated balance
sheet as of February 20, 2019 has been included in ¥11,905 million of “deferred tax assets” under “investments
and other assets.”
Consolidated statement of cash flows“Penalty income” and “penalty received,” which were included in “income before income taxes” under “cash flows
from operating activities” in the consolidated statement of cash flows for the year ended February 20, 2019, havebeen set down separately in the consolidated statement of cash flows for the year ended February 20, 2020
since the significance of the amounts has increased. “Penalty received” has been accordingly set down
separately below the “subtotal” line under “cash flows from operating activities.” To reflect these changes inpresentation, the amount in the consolidated statement of cash flows for the year ended February 20, 2019 has
been reclassified.
As a result, ¥111,892 million of “subtotal” under “cash flows from operating activities” in the consolidated
statement of cash flows for the year ended February 20, 2019 has been reclassified to ¥(49) million of “penalty
income,” ¥49 million of “penalty received,” and ¥111,843 million of “subtotal.”

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

As of February 20

Accumulated depreciation

Millions of Yen

Thousands of
U.S. Dollars

2019

2020

2020

¥114,602¥127,739$1,147,907

12
FY2019 Nitori Holdings Co., Ltd.

2) Assets pledged as collateral
Assets pledged as collateral and collateralized liabilities are as follows:
Millions of Yen

Thousands of
U.S. Dollars

2019

2020

2020

¥1,808¥1,699$15,269

Land

–

65

589

Guarantee deposits

36

29

263

¥1,844¥1,794$16,123

¥45

¥38

$342

Short-term borrowings

–

128

1,158

Other (current liabilities)

112

122

1,100

Other (non-current liabilities)

1,837

1,716

15,427

Total¥1,995¥2,006$18,028

Millions of Yen

Thousands of
U.S. Dollars

2019

2020

2020

¥22,529¥22,237$199,836

As of February 20

Pledged assets:
Buildings and structures

Total
Corresponding liabilities:
Notes and accounts payable - trade3) Investment securities
Investments in associates are as follows:

As of February 20

Investment securities

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

2019

2020

2020

Customer delivery expenses¥26,257¥27,991$251,537

Advertising expenses

16,65816,888

151,763

Salaries, allowances and bonuses

65,30868,493

615,507

Provision for bonuses

3,652

3,528

31,710Retirement benefit expenses

1,393

1,412

12,688Rent expenses

36,56337,261

334,846

Depreciation and amortization

12,311

14,575130,976

Outsourcing expenses

16,532

18,351

164,916

Millions of Yen

Thousands of
U.S. Dollars

2019

2020

2020

Buildings and structures

¥2

¥0

$0

Machinery, equipment and vehicles

4

2

26

Tools, furniture and fixtures

0

0

8

Land

3

311

2,796

Total

¥10

¥315

$2,831

2) The breakdown of gain on sales of non-current assets is as follows:

For the years ended February 20

13FY2019 Nitori Holdings Co., Ltd.

3) The breakdown of loss on sales and retirement of non-current assets is as follows:
Millions of Yen

Thousands of
U.S. Dollars

2019

2020

2020

Buildings and structures

¥55

¥34

$306

Machinery, equipment and vehicles

14

0

0

Tools, furniture and fixtures

4

5

53

Construction in progress

–

35

316

Other (intangible assets)

13

12

115

Machinery, equipment and vehicles

1

0

8

Tools, furniture and fixtures

6

9

87

Land

–

0

0

Total

¥94

¥99

$890

For the years ended February 20

Loss on retirement:

Loss on sales:4) Impairment loss
For the year ended February 20, 2019
Location

Use

Class

Japan

Store

Buildings andstructures, and
other

¥243

People’s Republic of
China

Store

Buildings andstructures, and
other

410

Millions of Yen

The Group’s assets are grouped according to the type of business. Impairment loss was recognized for somestores, taking into account decisions on their closure or their decreased profitability.
When the recoverable amount was measured at the net selling price, it was computed based on the real estateappraisal value, assessed value for fixed asset tax, and other value. When the recoverable amount wasmeasured at the value in use, the Group assumed that the value in use was zero.

14
FY2019 Nitori Holdings Co., Ltd.

For the year ended February 20, 2020
Millions of Yen

Thousands of
U.S. Dollars

Buildings andstructures, and
other

¥78

$704

Accommodation

Land, buildings
and structures, and
other

923

8,292

Logistics system

Machinery,equipment andvehicles

378

3,400

Store

Buildings andstructures, and
other

594

5,337

Right-of-use
assets

1,791

16,095

Location

Use

Class

Japan

Store

People’s Republic of
China

Republic of ChinaStore

Buildings andstructures, and
other

29

260

The United States ofAmerica

Store andheadquarters

Buildings andstructures, and
other

225

2,022

Kingdom of Thailand

Plant facility

Buildings andstructures, and
other

71

641

The Group’s assets are grouped according to the type of business. Impairment loss was recognized for somestores, taking into account decisions on their closure or their decreased profitability.
When the recoverable amount was measured at the net selling price, it was computed based on the real estateappraisal value, assessed value for fixed asset tax, and other value. When the recoverable amount wasmeasured at the value in use, the Group assumed that the value in use was zero.

15
FY2019 Nitori Holdings Co., Ltd.

7. Note to Consolidated Statement of Comprehensive Income
Millions of Yen

Thousands of
U.S. Dollars

2019

2020

2020

Amounts arising during period¥273¥(268)$(2,413)

Reclassification adjustments

(53)

(1)

(17)

For the years ended February 20

Valuation difference on available-for-sale securities

Amount before income tax effect

219

(270)

(2,431)

Income tax effect

(69)

73

660

Subtotal

150

(197)

(1,770)

Amounts arising during period

1,018

–

–

Amount before income tax effect

1,018

–

–

Income tax effect

(314)

–

–

Subtotal

704

–

–

(2,204)(740)(6,654)(2,204)(740)(6,654)

Amounts arising during period

(183)

(77)

(697)

Reclassification adjustments

56

57

513

(127)

(20)

(183)

Deferred gains or losses on hedges

Foreign currency translation adjustment
Amounts arising during period
Subtotal
Remeasurements of defined benefit plans, net of tax

Amount before income tax effect
Income tax effect

38

6

56

Subtotal

(88)

(14)

(127)

¥(1,437)¥(951)$(8,552)

Total other comprehensive income (loss)

16
FY2019 Nitori Holdings Co., Ltd.

8. Notes to Consolidated Statement of Changes in Equity
1) Class and total number of issued shares and treasury shares
For the year ended February 20,
2019

Number of Shares (Thousands)
Balance at
beginning of period

Increase

Decrease

Balance at
end of period

Issued shares:
Ordinary shares

114,443––

114,443

Treasury shares:
Ordinary shares

2,485

0

263

2,221

Class of shares

Notes: 1. The increase of 0 thousand shares in treasury is due to the purchase of shares less than one unit.
2. The decrease of 263 thousand shares in treasury consists of a decrease of 67 thousand shares due to the exercise of “Stock
Benefit Trust (J-ESOP),” which was introduced by the resolution at the board of directors meeting held on December 20, 2011,
and a decrease of 196 thousand shares due to the exercise of share options.
3. The number of treasury shares at the fiscal year-end includes 96 thousand shares held by Trust & Custody Services Bank, Ltd.
(Trust Account E), which is the trustee under the “Stock Benefit Trust (J-ESOP).”
For the year ended February 20,
2020

Number of Shares (Thousands)
Balance at
beginning of period

Increase

Decrease

Balance at
end of period

Issued shares:
Ordinary shares

114,443––

114,443

Treasury shares:
Ordinary shares

2,221

290

536

1,975

Class of shares

Notes: 1. The increase of 290 thousand shares in treasury consists of an increase of 0 thousand shares due to the purchase of sharesless than one unit and an additional contribution to the “Stock Benefit Trust (J-ESOP)” for 290 thousand shares by the
resolution at the board of directors meeting held on January 8, 2020.
2. The decrease of 536 thousand shares in treasury consists of a decrease of 67 thousand shares due to the exercise of “Stock
Benefit Trust (J-ESOP),” which was introduced by the resolution at the board of directors meeting held on December 20, 2011,
a decrease of 177 thousand shares due to the exercise of share options, disposal of 1 thousand shares in treasury in the“performance-based share compensation” plan introduced by the resolution at the board of directors meeting held on April 10,
2019, and an additional contribution to the “Stock Benefit Trust (J-ESOP)” for 290 thousand shares by the resolution at theboard of directors meeting held on January 8, 2020.
3. The number of treasury shares at the fiscal year-end includes 319 thousand shares held by Trust & Custody Services Bank,
Ltd. (Trust Account E), which is the trustee under the “Stock Benefit Trust (J-ESOP).”

2) Share acquisition rights
Millions of Yen

Thousands of
U.S. Dollars

As of February 20

2019

2020

2020

Share acquisition rights as share options

¥470

¥289

$2,604

3) Dividends(1) Dividends paid to shareholders
For the year ended February 20, 2019
Resolution atClass ofsharesBoard of directors meeting
held on March 27, 2018
(Note 1)

OrdinarysharesBoard of directors meeting
held on September 26, 2018 Ordinary(Note 2)sharesTotal amount of dividends Amount of dividends per
share (Yen)(Millions of Yen)

Shareholders’
cut-off date Effective date

¥5,269¥47 February 20,
2018

5,276

47

April 26,2018

August 20, October 23,
2018
2018

Notes: 1. The total amount of dividends includes dividends of ¥7 million on shares held by Trust & Custody Services Bank, Ltd. (Trust
Account E), which is the trustee under the “Stock Benefit Trust (J-ESOP).”
2. The total amount of dividends includes dividends of ¥4 million on shares held by Trust & Custody Services Bank, Ltd. (Trust
Account E), which is the trustee under the “Stock Benefit Trust (J-ESOP).”17
FY2019 Nitori Holdings Co., Ltd.

For the year ended February 20, 2020
Total amount ofdividends
Total amount ofdividends (Thousands of
U.S. Dollars)(Millions of Yen)

Amount ofdividends
per share(Yen)

Amount ofdividends
per share(U.S.
Dollars)

Resolution atClass ofsharesBoard of directors meeting
held on April 8, 2019
(Note 1)

Ordinaryshares¥5,615$50,466

¥50

$0.45

Board of directors meeting
held on October 2, 2019
(Note 2)

Ordinaryshares

6,069

54,54454

0.49

Shareholders’
cut-off date Effective dateFebruary 20,
2019

April 25,
2019

August 20, October 23,
2019
2019

Notes: 1. The total amount of dividends includes dividends of ¥4 million ($43 thousand) on shares held by Trust & Custody Services
Bank, Ltd. (Trust Account E), which is the trustee under the “Stock Benefit Trust (J-ESOP).”
2. The total amount of dividends includes dividends of ¥1 million ($14 thousand) on shares held by Trust & Custody Services Bank,
Ltd. (Trust Account E), which is the trustee under the “Stock Benefit Trust (J-ESOP).”(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, 2019
Resolution atClass ofsharesPaid fromTotal amount of dividends(Millions of Yen)

Board of directors
meeting held on April Ordinary Retained
8, 2019
sharesearnings

Amount of dividends
per share (Yen)¥5,615

Shareholders’
cut-off date

Effective date

¥50 February 20,
2019

April 25,2019

Note: The total amount of dividends includes dividends of ¥4 million on shares held by Trust & Custody Services Bank, Ltd. (Trust
Account E), which is the trustee under the “Stock Benefit Trust (J-ESOP).”
For the year ended February 20, 2020

Resolution atClass ofsharesPaid from

Board of directors
meeting held on April Ordinary Retained
6, 2020
sharesearnings

Total amountof dividends
Total amount ofdividends (Thousands of
U.S. Dollars)(Millions of Yen)

¥6,090$54,731

Amount ofdividends
per share(Yen)

Amount ofdividends
per share(U.S. Dollars)

Shareholders’
cut-off date

Effective date

¥54

$0.49

February 20,
2020

April 23,2020

Note: The total amount of dividends includes dividends of ¥17 million ($155 thousand) on shares held by Trust & Custody Services Bank,
Ltd. (Trust Account E), which is the trustee under the “Stock Benefit Trust (J-ESOP).”

4) Shareholder’s equity
The Companies 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 capitalreserve and the legal reserve equals 25% of the stated capital. Such distributions can be made at any time byresolution at the shareholders’ meeting, or at the board of directors meeting if certain conditions are met, butneither the capital reserve nor the legal reserve is available for distributions.

18
FY2019 Nitori Holdings Co., Ltd.

9. Note to Consolidated Statement of Cash FlowsThe reconciliation between cash and deposits reported in the consolidated balance sheet and cash and cash
equivalents at the fiscal year-end in the consolidated statement of cash flows is as follows:

As of February 20

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

Millions of Yen

Thousands of
U.S. Dollars

2019

2020

2020

¥102,345¥159,190$1,430,537(2,292)(18,398)(165,335)¥100,053¥140,791$1,265,201

10. Leases
As Lessee:
The Group leases certain buildings for retail stores. Finance leases that do not transfer ownership to the lesseecommencing on or before February 20, 2009 are accounted for in a manner similar to the accounting treatment
for ordinary rental transactions. The information on these lease transactions is omitted because it is insignificant.
Future minimum lease payments under non-cancelable operating leases are as follows:
Millions of Yen
As of February 20

Thousands of
U.S. Dollars

2019

2020

2020

Due within 1 year

¥7,239¥6,192$55,648

Due after 1 year

38,38330,145

270,898

Total¥45,623¥36,338$326,546

Note: At the beginning of the year ended February 20, 2020, certain consolidated overseas subsidiaries adopted IFRS 16 “Leases.”
Accordingly, their leases previously classified as operating leases have been presented as “right-of-use assets” under “non-current
assets” in the consolidated balance sheet as of February 20, 2020.

As Lessor:
Future minimum lease payments to be received under non-cancelable operating leases are as follows:
Millions of Yen

Thousands of
U.S. Dollars

2019

2020

2020

Due within 1 year

¥1,104¥1,030$9,259Due after 1 year

8,541

7,111

63,907

Total¥9,646¥8,142$73,167

As of February 20

11. Financial Instruments
1) Overview(1) Policy for financial instruments
The Group raises necessary funds based on capital investment plans and cash flow plans, mainly through loans
from banks. The Group utilizes derivative financial instruments only to manage risks described below and does notenter into such transactions for speculative trading purposes.
(2) Types of financial instruments, related risks, and risk management
Notes and accounts receivable - trade are exposed to credit risk of customers, but the collection period is short,and the historical bad debt ratio is extremely low. The Group manages credit risk by monitoring due dates andoutstanding balances for each customer and makes efforts to promptly collect receivables from customers infinancial difficulties.
Investment securities with market quotations are exposed to market risk, and those without market quotations
are exposed to impairment risk due to the relevant companies’ operating results. The Group periodicallyreviews the fair values of such financial instruments.
Guarantee deposits and leasehold deposits, which are mostly related to leases on stores, are exposed to credit
risk of lessors. The Group manages credit risk by monitoring due dates and outstanding balances for each

19
FY2019 Nitori Holdings Co., Ltd.

lessor and makes efforts to identify and decrease concerns about collecting deposits from lessors in financial
difficulties at an early stage.
Most notes and accounts payable - trade, accounts payable - other, and income taxes payable are due within
three months.
Long-term borrowings and lease obligations are mainly intended to raise required funding for capital
investments and loans and investments.
Regarding derivatives, the Group enters into foreign exchange forward contracts to hedge foreign currency risk
related to payables denominated in foreign currencies. The Group believes that the credit risk under derivativetransactions is fairly low because counterparties of derivative transactions are limited to financial institutions
with high credit ratings. The finance department executes and manages derivative transactions upon approvalby person(s) with authority in accordance with internal rules stipulating authority of transactions.
(3) Supplementary explanation on estimated fair value of financial instruments
The fair values of financial instruments are based on their quoted market prices. When no quoted market priceis available, fair value is reasonably estimated. Since various assumptions and factors are reflected inestimating the fair value, different assumptions and factors could result in different fair values.
The notional amounts of derivatives in Note 13. Derivatives are not indicative of the actual market risk involved
in derivative transactions.
2) Estimated fair value of financial instruments
The carrying values of financial instruments on the consolidated balance sheet as of February 20, 2019 and2020 and estimated fair values are shown below. The following table does not include financial instruments forwhich it is extremely difficult to determine the fair value (please refer to Note 2 below).
Millions of Yen
As of February 20, 2019

Carrying value

Estimated fair value

Difference¥102,345¥102,345¥–

24,81824,818–Available-for-sale securities

3,290

3,290

–

Shares of associates

22,52949,351

26,821(4) Guarantee deposits

14,26815,3381,069(5) Leasehold deposits

22,90822,645(262)(1) Notes and accounts payable - trade¥20,956¥20,956¥–(2) Accounts payable - other

23,752

23,752–(3) Income taxes payable

19,472

19,472–(4) Long-term borrowings, including current
portion of long-term borrowings

8,028

8,041

12

(5) Lease obligations, including current portionof lease obligations (*2)

2,143

2,143

–

Assets:(1) Cash and deposits(2) Notes and accounts receivable - trade(3) Investment securities

Liabilities:

20
FY2019 Nitori Holdings Co., Ltd.

Millions of Yen
As of February 20, 2020

Carrying value

Estimated fair value

Difference¥159,190¥159,190¥–

27,88027,880

–

(4)

(4)

–

27,87627,876–

Available-for-sale securities

3,014

3,014

–

Shares of associates

22,23753,09030,853(4) Guarantee deposits

13,987

14,966

978(5) Leasehold deposits

23,75623,578(178)(1) Notes and accounts payable - trade¥19,774¥19,774¥–(2) Accounts payable - other

22,92322,923–(3) Income taxes payable

20,224

20,224–(4) Long-term borrowings, including current
portion of long-term borrowings

6,000

6,009

9

(5) Lease obligations, including current
portion of lease obligations (*2)

8,268

8,268

–

Carrying value

Estimated fair value

Difference$1,430,537$1,430,537$–

250,540

250,540

–

(36)

(36)

–

250,503

250,503–

Available-for-sale securities

27,08627,086–

Shares of associates

199,836

477,093277,256(4) Guarantee deposits

125,698

134,494

8,795(5) Leasehold deposits

213,488

211,888(1,599)(1) Notes and accounts payable - trade$177,697$177,697$–(2) Accounts payable - other

206,001

206,001–(3) Income taxes payable

181,739

181,739–(4) Long-term borrowings, including current
portion of long-term borrowings

53,91854,00284(5) Lease obligations, including current
portion of lease obligations (*2)

74,30674,306–

Assets:(1) Cash and deposits(2) Notes and accounts receivable - trade
Allowance for doubtful accounts (*1)

(3) Investment securities:

Liabilities:

Thousands of U.S. Dollars
As of February 20, 2020

Assets:(1) Cash and deposits(2) Notes and accounts receivable - trade
Allowance for doubtful accounts (*1)

(3) Investment securities:

Liabilities:(*1) Deducted allowance for doubtful accounts related to notes and accounts receivable - trade.
(*2) “Lease obligations” as of February 20, 2020 have been presented in the note since the significance of the amount has increased. To
reflect this change in presentation, lease obligations as of February 20, 2019 also have been presented.
Notes: 1. Methods to determine the estimated fair values of financial instruments
Assets:(1) Cash and deposits and (2) Notes and accounts receivable - trade
Since these items are settled in a short period of time, their carrying values approximate fair value.

21
FY2019 Nitori Holdings Co., Ltd.

(3) Investment securities
The fair value of stocks is based on quoted market prices. For information on securities classified by holding purpose, pleaserefer to Note 12. Securities.
(4) Guarantee deposits
The fair values of guarantee deposits are based on the present value of the estimated future cash flows adjusted for credit riskin accordance with the maturity schedule by applying the discount rate determined by reference to an appropriate index, suchas a government bond yield.
(5) Leasehold deposits
The fair values of leasehold deposits are based on the present value of the estimated future cash flows adjusted for credit risk
by certain period of time by applying the discount rate determined by reference to an appropriate index, such as a government
bond yield.
Liabilities:(1) Notes and accounts payable - trade, (2) Accounts payable - other, and (3) Income taxes payable
Since these items are settled in a short period of time, their carrying values approximate fair value.
(4) Long-term borrowings
The fair value of long-term borrowings is based on the present value of the total of principal and interest discounted by theinterest rate applicable to similar new borrowings.
(5) Lease obligations
The fair value of lease obligations is based on the present value of the total of principal and interest discounted by the interest
rate applicable to similar new leases.
Derivative transactions:
Please refer to Note 13. Derivatives.
2. Financial instruments for which it is extremely difficult to determine the fair value
Millions of Yen

Thousands of
U.S. Dollars

As of February 20

2019

2020

2020

Unlisted stocks

¥283

¥283

$2,550Unlisted stocks are excluded from “Assets, (3) Investment securities” because no quoted market price is available and it isextremely difficult to determine the fair value.
3. Redemption schedule for financial assets with maturities
Millions of Yen
As of February 20, 2019

Due in 1 year or
less

Due after 1 year
through 5 years

Due after 5 years

Cash and deposits¥102,345¥–¥–

24,818––¥127,164¥–¥–

As of February 20, 2020

Due in 1 year or
less

Due after 1 year
through 5 years

Due after 5 years

Cash and deposits¥159,190¥–¥–

27,880––¥187,070¥–¥–

As of February 20, 2020

Due in 1 year or
less

Due after 1 year
through 5 years

Due after 5 years

Cash and deposits$1,430,537$–$–

250,540––$1,681,077$–$–

Notes and accounts receivable - trade
Total

Millions of Yen

Notes and accounts receivable - trade
Total

Thousands of U.S. Dollars

Notes and accounts receivable - trade
Total

Guarantee deposits and leasehold deposits are not disclosed because it is difficult to determine the redemption schedule for all
the years presented.

22
FY2019 Nitori Holdings Co., Ltd.

4. Repayment schedule for long-term borrowings and lease obligations
Millions of Yen
Due in1 yearor less

Due after
1 yearthrough
2 years

Due after
2 years
through
3 years

Due after
3 years
through
4 years

Due after
4 years
through
5 years

Due after
5 years¥2,000¥2,026¥2,002¥2,000

¥–

¥–

187

187

187

187

187

1,208

¥2,187¥2,213¥2,189¥2,187¥187¥1,208Due in1 yearor less

Due after
1 yearthrough
2 years

Due after
2 years
through
3 years

Due after
3 years
through
4 years

Due after
4 years
through
5 years

Due after
5 years

Long-term
borrowings¥2,000¥2,000¥2,000¥–¥–¥–

Lease obligations

1,554

1,203

1,112

991

900

2,505

Total

¥3,554¥3,203¥3,112¥991¥900¥2,505

As of February 20, 2019

Long-term
borrowings
Lease obligations
Total

Millions of Yen

As of February 20, 2020

Thousands of U.S. Dollars
Due in1 yearor less

Due after
1 yearthrough
2 years

Due after
2 years
through
3 years

Due after
3 years
through
4 years

Due after
4 years
through
5 years

Due after
5 years

Long-term
borrowings$17,972$17,972$17,972

$–

$–

$–

Lease obligations

13,96910,819

9,999

8,911

8,087

22,518

Total$31,942$28,792$27,972$8,911$8,087$22,518

As of February 20, 2020

23
FY2019 Nitori Holdings Co., Ltd.

12. Securities
1) Available-for-sale securities (with market value)
Millions of Yen
As of February 20, 2019

Acquisition cost

Unrealized gain
(loss)¥254¥1,403

1,632

1,677

(45)

¥3,290¥1,932¥1,357

Carrying value

Securities whose carrying values exceed their acquisition costs:
Stocks¥1,657

Securities whose acquisition costs exceed their carrying values:
StocksTotal

Note: Unlisted stocks (¥283 million in the consolidated balance sheet) are not included in the table above because no quoted market
price is available and it is extremely difficult to determine the fair value.
Millions of Yen
As of February 20, 2020

Acquisition cost

Unrealized gain
(loss)¥147¥1,247

1,618

1,778

(160)

¥3,014¥1,926¥1,087

Carrying value

Securities whose carrying values exceed their acquisition costs:
Stocks¥1,395

Securities whose acquisition costs exceed their carrying values:
Stocks
Total

Thousands of U.S. Dollars
As of February 20, 2020

Acquisition cost

Unrealized gain
(loss)$1,328$11,212

14,544

15,986(1,441)$27,086$17,315$9,771

Carrying value

Securities whose carrying values exceed their acquisition costs:
Stocks$12,541

Securities whose acquisition costs exceed their carrying values:
StocksTotal

Note: Unlisted stocks (¥283 million ($2,551 thousand) in the consolidated balance sheet) are not included in the table above because noquoted market price is available and it is extremely difficult to determine the fair value.

2) Sales of available-for-sale securities
Millions of Yen
For the year ended February 20, 2019 Proceeds from sales

StocksTotal

Gain on sales

Loss on sales

¥91

¥53

¥–

¥91

¥53

¥–
Millions of Yen

For the year ended February 20,
2020

Stocks
Total

Proceeds from sales

Gain on sales

Loss on sales

¥7

¥1

¥–

¥7

¥1

¥–
Thousands of U.S.
Dollars

For the year ended February 20,
2020

Stocks
Total

Proceeds from sales

Gain on sales

Loss on sales

$66

$17

$–

$66

$17

$–

24
FY2019 Nitori Holdings Co., Ltd.

3) Impairment of available-for-sale securities
The Group did not recognize any impairment loss for available-for-sale securities for the years ended February
20, 2019 and 2020.
If the fair values of securities as of the fiscal year-end decline more than 50% compared with the acquisition cost,those securities are written down to the fair value, and the resulting losses are charged to the statement ofincome for the period. If the fair values of securities as of the fiscal year-end decline from 30% to 50% comparedwith the acquisition cost, those securities are written down to the amount determined taking into consideration
the materiality of such amount, recoverability, and other factors, and the resulting losses are charged to thestatement of income for the period.

13. Derivatives
1) Derivative transactions to which hedge accounting is not applied
As of February 20, 2019

Not applicable.
As of February 20, 2020

Not applicable.
2) Derivative transactions to which hedge accounting is applied
As of February 20, 2019

Not applicable.
As of February 20, 2020

Not applicable.

25
FY2019 Nitori Holdings Co., Ltd.

14. Retirement Benefits
1) Summary of employees’ retirement benefit plans
The Company and certain consolidated subsidiaries have a defined benefit corporate pension plan, a lump-sum
payment plan, and a defined contribution pension plan. The Company and certain consolidated subsidiaries may
provide to employees upon retirement extra retirement payments which are not included in the projected benefit
obligations based on actuarial calculation and are determined by reference to their current rate of pay, length ofservice, and conditions under which the termination occurs.
The Company established a retirement benefit trust for the lump-sum payment plan in August 2019.
2) Defined benefit plan
(1) The reconciliation from the beginning balance to the ending balance of projected benefit obligations is as follows:
Millions of Yen

Thousands of
U.S. Dollars

2019

2020

2020

Balance at beginning of period¥6,012¥6,762$60,766

Balance at beginning of period (as restated)

6,012

6,762

60,766

Service cost

977

1,030

9,261

Interest cost

27

20

185

Actuarial loss (gain)

112

173

1,556

(369)

(341)

(3,066)¥6,762¥7,645$68,704

For the years ended February 20

Benefits paid
Balance at end of period

Note: The table above includes amounts under plans in which the simplified method has been applied.

(2) The reconciliation from the beginning balance to the ending balance of plan assets at fair value is as follows:
Millions of Yen

Thousands of
U.S. Dollars

2019

2020

2020

¥3,299¥3,559$31,987

Expected return on plan assets

65

94

846

Actuarial gain (loss)

(70)

95

859

Employer contributions

421

404

3,636

–

2,300

20,668

(156)

(152)

(1,369)¥3,559¥6,301$56,628

For the years ended February 20

Balance at beginning of period

Establishment of retirement benefit trust
Benefits paid
Plan assets at fair value at end of period

26
FY2019 Nitori Holdings Co., Ltd.

(3) The reconciliation between projected benefit obligations and plan assets at the fiscal year-end and theamount recognized in the consolidated balance sheet is as follows:
Millions of Yen

Thousands of
U.S. Dollars

2019

2020

2020

Projected benefit obligations (funded plans)¥3,650¥7,276$65,391

Plan assets at fair value(3,559)(6,301)(56,628)

90

975

8,762

Projected benefit obligations (unfunded plans)

3,111

368

3,312

Net of asset and liability accounts recognized in the
consolidated balance sheet

3,202

1,343

12,075Retirement benefit liability

3,202

1,343

12,075

Net of asset and liability accounts recognized in the
consolidated balance sheet¥3,202¥1,343$12,075

As of February 20

Note: The table above includes amounts under plans in which the simplified method has been applied.

(4) The components of retirement benefit expenses are as follows:
Millions of Yen

Thousands of
U.S. Dollars

For the years ended February 20

2019

2020

2020

Service cost

¥977

¥1,030$9,261

Interest cost

27

20

185

Expected return on plan assets

(65)

(94)

(846)

Actuarial loss

91

92

830

Prior service cost

(35)

(35)

(316)

¥996

¥1,014$9,113

Amortization and expenses:

Retirement benefit expenses on defined benefit plan

Note: The table above includes amounts under plans in which the simplified method has been applied.

(5) The components of remeasurements of defined benefit plans recognized in other comprehensive income(loss) before income tax effect are as follows:
Millions of Yen

Thousands of
U.S. Dollars

For the years ended February 20

2019

2020

2020

Prior service cost

¥(35)

¥(35)

$(316)

Actuarial gain (loss)

(91)

14

132

¥(127)¥(20)$(183)Total(6) The components of remeasurements of defined benefit plans recognized in accumulated othercomprehensive income (loss) before income tax effect are as follows:
Millions of Yen

Thousands of
U.S. Dollars

As of February 20

2019

2020

2020

Unrecognized prior service cost

¥74

¥38

$350

Unrecognized actuarial loss

(604)

(589)

(5,298)Total¥(530)¥(550)$(4,948)27
FY2019 Nitori Holdings Co., Ltd.

(7) The plan assets, by major category, as a percentage of total plan assets are as follows:(% of total plan
assets)
As of February 20

2019

2020

Life insurance company general accounts

45 %

27 %

Bonds

29

20

Stocks

24

52

Other

2

1

Total

100 %

100 %

Note: Total plan assets as of February 20, 2020 include a retirement benefit trust established for a lump-sum payment plan of 37%.

(8) 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 on various assets of whichplan assets are composed.
(9) Assumptions used for the actuarial calculation are as follows:
As of February 20

2019

Discount rate

2020

Primarily 0.3 %Expected long-term rate of return on plan assets
Expected rate of salary increase

Primarily 0.1 %

2.0

2.0

Primarily 4.7

Primarily 4.7

3) Defined contribution plan
Contributions made to the defined contribution plan for the years ended February 20, 2019 and 2020 were ¥397
million and ¥415 million ($3,731 thousand), respectively.

15. Share Options
For the years ended February 20, 2019 and 2020, the Group recognized no expenses regarding share options.
For the years ended February 20, 2019 and 2020, the Group recognized gains due to forfeited share options of¥11 million and ¥3 million ($27 thousand), respectively, which are presented in extraordinary income as “gain on
reversal of share acquisition rights.”
1) Description of share options as of February 20, 2020
The Sixth Share Acquisition Rights

The Seventh Share Acquisition Rights

Resolution at annual general
meeting of shareholders heldon

May 9, 2014

May 9, 2014

Resolution at board of
directors meeting held on

June 27, 2014

June 27, 2014

Grantees

Directors

8

Officers

14

Company auditors

3

Directors of subsidiaries

4

Employees of subsidiaries

3,239

Ordinary shares (Shares)

904,100

Number of shares by class

Ordinary shares (Shares)

Grant dateJuly 14, 2014

June 30, 2014

Vesting conditions

None

None

Vesting 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

28
FY2019 Nitori Holdings Co., Ltd.

2) Summary of share option activity during the year ended February 20, 2020
The Sixth Share Acquisition Rights

The Seventh Share Acquisition Rights

At beginning of period––

Granted––Forfeited––

Vested––At end of period––

12,500459,300––

Exercised

12,100165,600

Forfeited

–

3,100

400

290,600

Yen

U.S. Dollars

Non-vested (Shares):

Vested (Shares):
At beginning of period
VestedAt end of period
The unit price information is as follows:
The Sixth Share Acquisition Rights

Exercise price¥5,650$50.77

Average share price at exercise

15,196136.56

Fair value per share on grant date

1,022

9.18

The Seventh Share Acquisition Rights
Yen

U.S. Dollars

Exercise price¥5,540$49.78Average share price at exercise

15,196136.56

Fair value per share on grant date

996

8.95

3) Method of estimating the number of vested options
The number of non-vested, forfeited options is estimated by reference to the historical forfeiture rate due toretirement.

29
FY2019 Nitori Holdings Co., Ltd.

16. Income Taxes
1) Significant components of deferred tax assets and liabilities
Millions of Yen

Thousands of
U.S. Dollars

2019

2020

2020

¥1,376¥1,356$12,191

54

39

354

1,094

1,062

9,549

Provision for point card certificates

611

645

5,803

Unrealized gain on sales of inventories

265

335

3,011

Net operating loss carryforwards (Note)

2,962

3,854

34,634

979

1,109

9,967

As of February 20

Deferred tax assets:
Accrued enterprise tax and business office taxes
Accrued real estate acquisition tax
Provision for bonuses

Retirement benefit liability
Depreciation and amortization

4,612

5,148

46,263

Provision for retirement benefits for directors and otherofficers

70

70

629

Allowance for doubtful accounts

3

2

25

Impairment loss and penalty for the scrapping and building ofoutlets

1,371

1,677

15,077

Asset retirement obligations

1,741

1,850

16,630

Other

3,470

4,158

37,365

Subtotal

18,61521,310191,504

Valuation allowance for net operating loss carryforwards(Note)–(3,854)(34,634)

Valuation allowance for deductible temporary differences–(1,239)(11,137)(3,860)(5,093)(45,772)

14,754

16,217

145,732

Valuation difference on available-for-sale securities

(410)

(336)

(3,026)

Construction assistance fund receivables

(926)

(986)

(8,867)

Asset retirement cost related to asset retirement obligations

(853)

(808)

(7,261)Retained earnings of subsidiaries

(653)

(837)

(7,528)

(5)

(1)

(9)

Total deferred tax liabilities(2,849)(2,970)(26,694)

Net deferred tax assets¥11,905¥13,246$119,037

Total valuation allowance
Total deferred tax assets
Deferred tax liabilities:

Other

Note: The amounts of net operating loss carryforwards and related deferred tax assets disaggregated by period of expiration:
Millions of Yen

As of February 20, 2020 Within 1 year

After 1 year
through 2
years

After 2 years
through 3
years

After 3 years
through 4
years

After 4 years
through 5
years

After 5
years

Total

Net operating loss
carryforwards *

¥–

¥27

¥413

¥492

¥268

¥2,651¥3,854

Valuation allowance

–

(27)

(413)

(492)

(268)

(2,651)(3,854)

Deferred tax assets

–

–

–

–

–

–

–

30
FY2019 Nitori Holdings Co., Ltd.

Thousands of U.S. Dollars

As of February 20, 2020 Within 1 year

After 1 year
through 2
years

After 2 years
through 3
years

After 3 years
through 4
years

After 4 years
through 5
years

After 5
years

Total

Net operating loss
carryforwards *

$–

$245

$3,713$4,429$2,416$23,830$34,634

Valuation allowance

–

(245)

(3,713)(4,429)(2,416)(23,830)(34,634)

Deferred tax assets

–

–

–

–

–

–

–

*Net operating loss carryforwards present the amounts computed by multiplying the effective statutory tax rate.

2) Reconciliation between the effective statutory tax rate and the actual effective tax rate
The details for the years ended February 20, 2019 and 2020 are omitted as differences between the effective
statutory tax rate and the actual effective tax rate are 5% or less of the effective statutory tax rate.

31
FY2019 Nitori Holdings Co., Ltd.

17. Investment and Rental Properties
The Company and certain consolidated subsidiaries own commercial facilities and other properties (includingland) for lease in major cities throughout Japan. Certain rental properties are not recognized as rental properties
but as real estate including spaces used as rental properties since the Company and certain consolidated
subsidiaries use some of the floor space of these properties.
The carrying value in the consolidated balance sheet, net change during the year, and fair value of those
properties are as follows:
2019

Millions of Yen
2020

Thousands of
U.S. Dollars
2020¥37,580¥39,228$352,522

Increase (decrease)

1,647(1,649)(14,823)

Balance at end of period

39,22837,579337,698

Fair value at end of period¥38,866¥39,657$356,372

Balance at beginning of period¥40,989¥39,773$357,414

Increase (decrease)(1,216)

2,267

20,376

Balance at end of period

39,77342,040377,791

Fair value at end of period¥45,609¥50,332$452,306

For the years ended February 20

Rental properties:
Carrying value
Balance at beginning of period

Real estate including spaces used as rental
properties:
Carrying value

Notes: 1. The carrying value represents the acquisition cost less accumulated depreciation.
2. The increase in rental properties during the year ended February 20, 2019 was primarily due to the acquisition of a property in
Shime Town, Fukuoka Prefecture of ¥1,545 million. The decrease in rental properties during the year ended February 20, 2020
was primarily due to the termination of lease of the property in Shime Town, Fukuoka Prefecture of ¥1,545 million ($13,888
thousand) for building a store.
3. The decrease in real estate including spaces used as rental properties during the year ended February 20, 2019 was primarily
due to a decrease in the carrying amount attributable to depreciation of ¥1,001 million. The increase in real estate including
spaces used as rental properties during the year ended February 20, 2020 was primarily due to the opening of a new building
for tenants of ¥3,281 million ($29,491 thousand), and the decrease was primarily due to a decrease in the carrying amountattributable to depreciation of ¥916 million ($8,240 thousand).
4. The fair value at fiscal year-end is measured at the value based on certain appraisal values and other indicators reflecting themarket value.

Lease revenue and rental expenses on rental properties and real estate including spaces used as rental
properties are as follows:
2019

Millions of Yen
2020

Thousands of
U.S. Dollars
2020

Lease revenue¥1,012¥956$8,593

Rental expenses

385

382

3,434

Difference

627

574

5,159

Lease revenue¥6,232¥6,422$57,717

Rental expenses

3,253

3,149

28,302Difference

2,978

3,273

29,414

For the years ended February 20

Rental properties:

Real estate including spaces used as rental
properties:

Note: Since real estate including spaces used as rental properties includes some of the floor space used by the Company and certain
consolidated subsidiaries for the purposes of providing services and management, the related lease revenue is not recognized.
Expenses related to the properties (depreciation, insurance, taxes, etc.) are included in rental expenses.

32
FY2019 Nitori Holdings Co., Ltd.

18. Segment Information
1) Segment information
The Group has been primarily engaged in a single segment of sales of home 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, 2019

Sales of homefurnishings andinterior goods

Other

Total

Net sales to external customers¥595,048¥13,082¥608,131
Millions of Yen

For the year ended February 20, 2020

Sales of homefurnishings andinterior goods

Other

Total

Net sales to external customers¥629,747¥12,526¥642,273

For the year ended February 20, 2020

Sales of homefurnishings andinterior goods

Other

Total

Net sales to external customers$5,659,122$112,569$5,771,692

Thousands of U.S. Dollars(2) Information about geographic areasa) Net sales
Information 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 inJapan 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 10% or more of net
sales on the consolidated statement of income.
3) Information about impairment loss on non-current 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.
4) Information about amortization and unamortized balances of goodwill by reportable segment
Not applicable.
5) Information about gain on bargain purchase by reportable segment
Not applicable.

33
FY2019 Nitori Holdings Co., Ltd.

19. Related-Party Transactions
1) Related-party transactions between the Company and related parties
Officers, major shareholders (individual shareholders only), etc., of the Company% of voting
rightsFor the year ended February 20, 2019

Category

Officer

Close relativeof officer

Name

Masanori
Ikeda

Mitsuko
NitoriSharecapital orHeld (held byAddress contribution Occupation
others)

–

–

–

–

Directorof theCompany(held byothers)Direct 0.04

Mother of
representative(held bydirector,others)Akio Nitori Direct 0.01

Transaction amountYear-end balance

Businessrelationship

Details oftransaction–

Exercise of
shareoptions(Note 2)

¥11

–

¥–

Building
lease

Building
lease(Note 3)

Leasehold16 deposits

28

Millions of Yen

Account

Millions of Yen

Notes: 1. The transaction amount does not include consumption taxes.
2. This represents the exercise of share options granted in accordance with a resolution at the annual general meeting ofshareholders on May 9, 2014 during the year ended February 20, 2019.
3. The terms and rent on the building lease transaction are determined based on similar transactions in a nearby area.
% of voting
rightsFor the year ended February 20, 2020

Category

Officer

Officer

Officer ofsubsidiary

Close relativeof officer

Name

Share
capital orHeld (held byAddress contribution Occupation
others)Toshiyuki
Shirai

Representative
director of (held byothers)theCompany Direct 0.04

Fumihiro
Sudo

Shigehito
Matsukura

Mitsuko
Nitori––––

Directorof theCompany

Representative
director ofsubsidiary––(held byothers)Direct 0.01–

(held byothers)Direct 0.04–

Mother of
representative(held bydirector,others)Akio Nitori Direct 0.01

Transaction amountYear-end balance

Businessrelationship

Details oftransaction

Millions ofYen

Thousands of
U.S. Dollars–

Exercise of
shareoptions(Note 2)

¥56

$507

–

¥–

$–

–

Exercise of
shareoptions(Note 2)

11

106

–

–

–

83

746

–

Exercise of
shareoptions(Note 2)
Loaning ofmoney (Note
3)

109

980

–

–

–

Building
lease

Building
lease(Note 4)

16

Leasehold145 deposits

28

257

Account

Millions of Thousands of
Yen
U.S. Dollars

Notes: 1. The transaction amount does not include consumption taxes.
2. This represents the exercise of share options granted in accordance with a resolution at the annual general meeting ofshareholders on May 9, 2014 during the year ended February 20, 2020.
3. The interest rate for the loaning of money was determined based on the market interest rate.
4. The terms and rent on the building lease transaction are determined based on similar transactions in a nearby area.

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

34
FY2019 Nitori Holdings Co., Ltd.

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

Net assets per share

Yen

U.S. Dollars

2019

2020

2020

¥4,452.99¥4,984.29$44.79Basic earnings per share

608.05635.42

5.71

Diluted earnings per share

606.03634.03

5.70

Notes: 1. Shares held by Trust & Custody Services Bank, Ltd. (Trust Account E), which have been accounted for as treasury shares in
the consolidated financial statements, are excluded from the number of shares at the fiscal year-end for the calculation of net
assets per share.
2. The following are used to calculate the (1) basic earnings per share and (2) diluted earnings per share:(1) Basic earnings per share
Thousands ofMillions of Yen
U.S. Dollars
For the years ended February 20

2019

2020

2020

¥68,180¥71,395$641,583–––

Net income attributable to owners of parent related
to ordinary shares

68,18071,395641,583

Average number of shares (Thousand shares)

112,128

112,358

Net income attributable to owners of parent
Net income not attributable to ordinary
shareholders

Note: Shares held by Trust & Custody Services Bank, Ltd. (Trust Account E), which have been accounted for as treasury
shares in the consolidated financial statements, are excluded from the average number of shares.
(2) Diluted earnings per share
Millions of Yen

Thousands of
U.S. Dollars

2019

2020

2020

Adjustment attributable to owners of parent

¥–

¥–

$–

Increase in the number of ordinary sharescorresponding to share acquisition rights(Thousand shares)

374

247

For the years ended February 20

35
FY2019 Nitori Holdings Co., Ltd.

21. Short-term and Long-term Borrowings
Balance atFebruary 21,
2019Balance atFebruary 20,
2020

Item

Millionsof YenMillionsof YenThousands of
U.S. Dollars

Averageinterest
rate (%)

Short-term borrowings

¥639

¥787

$7,075

3.8–

Current portion of long-termborrowings

2,000

2,000

17,972

0.4

–

187

1,554

13,969––Long-term borrowings(excluding current portion)

6,028

4,000

35,9450.42021 – 2022

Lease obligations(excluding current portion)

1,956

6,714

60,336–2021 – 2032

¥10,812¥15,056$135,299––

Current portion of leaseobligations

Total

Repayment
term

Notes: 1. The average interest rate represents a weighted-average interest rate applicable to the borrowings balance at the fiscal yearend.
2. The average interest rate applicable to lease obligations is not disclosed since related interest charges are included in theamount of lease obligations in the consolidated balance sheet.
3. The repayment schedule of long-term borrowings due within 5 years as of February 20, 2020 is as follows:
Millions of Yen

Thousands of
U.S. Dollars

Over 1 year less than 2 years¥2,000$17,972

Over 2 years less than 3 years

2,000

17,972

Over 3 years less than 4 years––

Over 4 years less than 5 years––

Long-term borrowings (excluding current portion)

4. Maturities of lease obligations, excluding the current portion, due within 5 years as of February 20, 2020 are as follows:
Millions of Yen

Thousands of
U.S. Dollars

Over 1 year less than 2 years¥1,203$10,819

Over 2 years less than 3 years

1,112

9,999

Over 3 years less than 4 years

991

8,911

Over 4 years less than 5 years

900

8,087

Lease obligations (excluding current portion)

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

23. Subsequent Event
Not applicable.

36
FY2019 Nitori Holdings Co., Ltd.