Consolidated Financial Statements
For the year ended February 20, 2021

Nitori Holdings Co., Ltd.

Consolidated Balance Sheet
Nitori Holdings Co., Ltd. and consolidated subsidiaries
As of February 20, 2021

Millions of Yen

Thousands of
U.S. Dollars(Note 1)

2021

2020

2021

ASSETS
Current Assets:
Cash and cash equivalents (Note 16)
Short-term investments (Note 16)
Marketable securities (Notes 4 and 16)
Trade notes and accounts receivable (Note 16)
Allowance for doubtful accounts (Note 16)
Inventories (Note 5)
Other
Total current assets¥125,487
33,0897,791
37,806(5)
80,737
17,843
302,750¥140,791
18,398－27,880(4)
65,513
11,010263,589$1,186,865
312,965
73,691
357,578(51)
763,620
168,7622,863,431

Property, plant and equipment:
Land (Notes 6 and 7)
Buildings and structures (Notes 6 and 7)
Machinery, equipment and vehicles
Tools, furniture and fixtures
Lease assets (Note 15)
Right-of-use assets (Note 15)
Construction in progress
Total
Accumulated depreciation
Net property, plant and equipment

257,012353,576
13,811
24,554
4,384
6,015
9,762
669,117(209,083)
460,034

173,010
215,908
13,511
19,686
3,776
5,742
3,489
435,126(127,739)
307,3872,430,839
3,344,149
130,632
232,237
41,46456,892
92,332
6,328,548(1,977,519)
4,351,028

31,665
9,296
517
7,178
89
48,748－
11,391
5,984
7,160
64
24,599299,492
87,931
4,894
67,896850
461,065

25,727665
19,85828,94525,38914,999(72)
115,514¥927,048

25,535732
13,98723,756
13,246
10,429(18)
87,670¥683,247

243,333
6,297
187,825
273,765
240,136
141,868(681)
1,092,544$8,768,070

Intangible assets:
Goodwill (Note 3)
Software
Software in progress
Leasehold interests in land
Other
Total intangible assets
Investments and other assets:
Investment securities (Notes 4 and 16)
Long-term loans receivable
Guarantee deposits (Notes 7 and 16)
Leasehold deposits (Note 16)
Deferred tax assets (Note 12)
Other
Allowance for doubtful accounts
Total investments and other assets
Total assets

1

Consolidated Balance Sheet
Nitori Holdings Co., Ltd. and consolidated subsidiaries
As of February 20, 2021

Millions of Yen

Thousands of
U.S. Dollars(Note 1)

2021

2020

2021

LIABILITIES AND EQUITYCurrent Liabilities:
Short-term bank loans (Notes 7 and 16)
Lease obligations (Notes 7, 15 and 16)
Payables:Trade notes and accounts (Notes 7 and 16)
Other (Note 16)
Income taxes payable (Note 16)
Provision for bonuses
Provision for point card certificates
Provision for shareholder benefit program
Other (Notes 7 and 9)
Total current liabilities¥48,715
1,570¥2,7871,554$460,750
14,851

44,55433,51230,351
5,120
2,669
463
39,388206,345

19,77422,923
20,224
4,020
2,076
282
23,42097,063421,395
316,966
287,070
48,42525,2504,379
372,541
1,951,630

Long-term Liabilities:
Long-term debt (Notes 7 and 16)
Lease obligations (Notes 7, 15 and 16)
Provision for retirement benefits for directors and other officers
Liability for retirement benefits (Note 8)
Asset retirement obligations (Note 9)
Other (Note 7)

2,000
5,875
228
5,186
14,608
10,945

4,000
6,714
228
1,343
5,673
7,361

18,91655,5672,165
49,051138,168
103,525

38,84425,322

367,394

Equity (Note 10):
Common stock—authorized, 288,000,000 shares; issued,
114,443,496

13,37013,370126,461

Capital surplus
Stock acquisition rights
Retained earnings
shares in 2020

26,255－612,082(8,971)

25,074289
532,471(10,875)

248,330－
5,789,104(84,855)690(1,122)
(208)
(640)

750
161
(382)
529

6,530
(10,613)(1,973)(6,056)

39,760681,857¥927,048－
560,861¥683,247

376,060
6,449,045$8,768,070

Total long-term liabilities

Accumulated Other Comprehensive Income:Unrealized gain on available-for-sale securities (Note 4)
Foreign currency translation adjustments
Defined retirement benefit plans
Total accumulated other comprehensive income
Non-controlling interests
Total equity
Total liabilities and equity
See Notes to Consolidated Financial Statements.

2

Consolidated Statement of Income
Nitori Holdings Co., Ltd. and consolidated subsidiaries
For the year ended February 20, 2021

Net Sales
Cost of Sales
Gross profit
Selling, General and Administrative Expenses (Note 13)
Operating income
Other Income (Expenses):
Interest income
Dividend income
Share of profit of entities accounted for using equity method
Subsidy income
Vending machine income
Gain on sales of goods
Interest expenses
Commission expenses
Foreign exchange losses
Gain on sales of fixed assets (Note 14)
Gain on reversal of stock acquisition rights (Note 11)
Gain on cancellation of rental contracts
Reversal of provision for loss on cancellation
Penalty income
Loss on sales and retirement of fixed assets (Note 14)
Loss on impairment of long-lived assets (Note 14)
Loss on change in equity
Compensation for damage
Provision for loss on cancellation
Other—net
Other income (expenses)—net
Income before income taxes
Income Taxes (Note 12):Current
Deferred
Total income taxes
Net Income
Net Income Attributable to
Owners of the parent

Per Share of Common Stock (Note 19):
Basic net income
Diluted net income
Cash dividends applicable to the year

2021
¥716,900
305,109411,791
274,104
137,687

Millions of Yen
2020¥642,273
287,909354,364
246,886
107,478

Thousands of
U.S. Dollars(Note 1)2021
$6,780,481
2,885,738
3,894,743
2,592,491
1,302,251

501
38
566
212
253
187
(294)
(1,000)
(6)
5
12
397
352
－
(63)
(8,351)
(81)
－
－
279
(6,990)130,696

522
36
588
203
247
374
(283)
－
(24)
315
3
－
－
307
(99)
(4,090)
(172)
(85)
(630)
378
(2,408)105,069

4,745
361
5,359
2,005
2,395
1,777
(2,783)(9,458)
(58)
52
114
3,760
3,334
－
(602)
(78,990)
(772)
－
－
2,644
(66,115)
1,236,136

42,431(3,848)38,582
92,114

34,979(1,304)33,674
71,395

401,314(36,403)364,911871,225¥92,114¥71,395$871,225

Yen

U.S. Dollars¥635.42634.03108.00

$7.73
7.72
1.16

¥817.01
816.66123.00

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, 2021

Net Income
Other Comprehensive Income (Loss):
Unrealized gain (loss) on available-for-sale securities
Foreign currency translation adjustments
Defined retirement benefit plans
Total other comprehensive income (loss) (Note 17)
Comprehensive Income
Comprehensive Income Attributable to:
Owners of the parent

2021¥92,114

Millions of Yen
2020¥71,395

Thousands of
U.S. Dollars(Note 1)
2021
$871,225(60)(1,283)173(1,169)¥90,944

(197)
(740)
(14)
(951)
¥70,443(567)(12,138)
1,640(11,065)$860,159¥90,944¥70,443$860,159

See Notes to Consolidated Financial Statements.

4Consolidated Statement of Changes in Equity
Nitori Holdings Co., Ltd. and consolidated subsidiaries
For the year ended February 20, 2021
Thousands

Millions of Yen
Accumulated Other Comprehensive Income

Number of sharesof common stock
outstanding

Balance at February 21, 2019
Net income attributable to owners of the parent
Cash dividends, ¥104 per share
Purchase of treasury stock
Disposal of treasury stock
Net change in the year
Balance at February 20, 2020
Net income attributable to owners of the parent
Cash dividends, ¥111 per share
Purchase of treasury stock
Disposal of treasury stock
Net change in the year
Balance at February 20, 2021

112,221

Common stock Capital surplus¥13,370(290)
536
112,467¥470¥472,755
71,395(11,679)¥13,370¥25,074¥(7,727)

Defined retirement
benefit plans

Total

Non-controlling interests

¥947

¥901

¥(367)¥1,481

¥－

(197)
¥750

(740)
¥161

(14)
¥(382)

(951)
¥529

－
－

(60)
¥690

(1,283)¥(1,122)173¥(208)(1,169)¥(640)

39,760¥39,760(5,012)
1,865

5,232

(1)
357
112,824¥19,841

Stock acquisition
Unrealized gain on availableForeign currency
rightsRetained earnings Treasury stock
for-sale securities
translation adjustments

(180)
¥289

¥532,471
92,114(12,504)¥(10,875)

(21)
1,181
¥13,370¥26,255

1,924
(289)
¥－

¥612,082¥(8,971)

Total equity¥500,192
71,395(11,679)(5,012)
7,098(1,132)¥560,861
92,114(12,504)(21)
3,105
38,301¥681,857

Thousands of U.S. Dollars (Note 1)
Accumulated Other Comprehensive Income

Common stock Capital surplus

Balance at February 20, 2020
Net income attributable to owners of the parent
Cash dividends, $1.05 per share
Purchase of treasury stock
Disposal of treasury stock
Net change in the year
Balance at February 20, 2021

$126,461$237,158

Stock acquisition
Unrealized gain on availableForeign currency
rightsRetained earnings Treasury stock
for-sale securities
translation adjustments$2,741$5,036,145
871,225(118,265)$248,330

Total

Non-controlling interests$7,098$1,524$(3,613)$5,009$－(567)$6,530(12,138)$(10,613)

1,640$(1,973)(11,065)$(6,056)

376,060$376,060(199)
18,202

11,172$126,461$(102,857)

Defined retirement
benefit plans(2,741)$－$5,789,104$(84,855)

Total equity$5,304,658
871,225(118,265)(199)
29,374362,253$6,449,045

See Notes to Consolidated Financial Statements.

5Consolidated Statement of Cash Flows
Nitori Holdings Co., Ltd. and consolidated subsidiaries
For the year ended February 20, 2021

Operating Activities:
Income before income taxes
Adjustments for:
Income taxes paid
Income taxes refund
Depreciation and amortization
Loss on impairment of long-lived assets
Commission expenses
Share of loss (profit) of entities accounted for using equity method
Gain on cancellation of rental contracts
Penalty income
Provision for loss on cancellation
Reversal of provision for loss on cancellation
Loss (gain) on sales and retirement of fixed assets
Loss (gain) on change in equity
Changes in asses and labilities:
Decrease (increase) in trade receivables
Decrease (increase) in inventories
Increase (decrease) in trade payables
Increase (decrease) in accrued consumption taxes
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for bonuses
Increase (decrease) in provision for point card certificates
Increase (decrease) in liability for retirement benefits
Other—net
Total adjustments
Net cash provided by operating activities

Millions of Yen

Thousands of
U.S. Dollars(Note 1)

2021

2020

2021

¥130,696¥105,069$1,236,136(34,610)79
17,831
8,351
1,000
(566)
(397)
－
－
(352)
58
81

(34,112)
9,856
16,561
4,090
－
(588)
－
(307)
630
－
(216)
172

(327,350)
747
168,649
78,9909,458(5,359)(3,760)－－(3,334)
550
772

(991)
4,867
(99)
6,486
－
701
591
389
16,763
20,182150,879(3,664)(2,687)
219
1,011
21
(177)
63
(1,880)5,275(5,731)
99,337(9,381)
46,032(939)
61,348
－
6,637
5,594
3,682
158,547
190,886
1,427,022

6

Consolidated Statement of Cash Flows
Nitori Holdings Co., Ltd. and consolidated subsidiaries
For the year ended February 20, 2021

Millions of Yen

Thousands of
U.S. Dollars(Note 1)

2021

2020

2021

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
Proceeds from sales of short-term and long-term investment securities
Payments of guarantee deposits
Proceeds from refund of guarantee deposits
Purchase of shares of subsidiary resulting in change in scope of
consolidation (Note 18)
Payments of leasehold deposits
Proceeds from refund of leasehold deposits
Guarantee deposits received
Leasehold deposits received
Refund of leasehold deposits received
Purchase of long-term prepaid expenses
Loan advances
Collection of loans receivable
Other—net
Net cash used in investing activities(15,267)534(17,145)40(3,094)－(1,289)108(18,374)
2,285(17,482)517(9,550)5(1,032)
277(144,396)
5,056(162,165)
386(29,270)－(12,199)
1,027(158,304)(1,417)
421
40
66
(29)
(354)
(339)
45
－
(195,985)－(1,157)
346
41
154
(92)
(158)
(296)
36
(5)
(44,486)(1,497,254)(13,402)
3,985
378
629
(279)
(3,355)(3,214)431－(1,853,643)

Financing Activities:
Proceeds from short-term bank loans
Repayments of short-term bank loans
Repayments of long-term debt
Repayments of lease obligations
Purchase of treasury stock
Proceeds from sales of treasury stock
Dividends paid
Proceeds from exercise of employee stock options
Commission paid
Net cash provided by (used in) financing activities
Effect of Exchange Rate Change on Cash and Cash Equivalents
Net Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents, Beginning of Year
Cash and Cash Equivalents, End of Year (Note 18)

46,000(30)(2,000)(1,588)(21)－(12,497)
1,447(1,000)30,309(507)(15,304)
140,791¥125,48788(2)(2,009)(1,382)(4,907)
5,009(11,663)1,006－(13,862)(250)
40,737100,053¥140,791

435,070(290)(18,916)(15,020)(199)－(118,199)
13,686(9,458)286,672(4,800)(144,749)
1,331,614$1,186,865

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, 2021

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 prepared in accordance with the provisions set forth in the Japanese Financial Instruments and Exchange
Act and its related accounting regulations and in accordance with accounting principles generally accepted inJapan (“Japanese GAAP”).
Japanese yen amounts less than a million yen have been rounded down to the nearest million yen, except forper share data.
In preparing these consolidated financial statements, certain reclassifications and rearrangements have been
made to the consolidated financial statements issued domestically in order to present them in a form which ismore familiar to readers outside Japan. In addition, certain reclassifications have been made in the 2020
consolidated financial statements to conform to the classifications used in 2021.
The consolidated financial statements are stated in Japanese yen, the currency of the country in which theCompany is incorporated and operates. The translations of Japanese yen amounts into U.S. dollar amounts areincluded solely for the convenience of readers outside Japan and have been made at the rate of ¥105.73 to $1,
the approximate rate of exchange at February 20, 2021. Such translations should not be construed as
representations that the Japanese yen amounts could be converted into U.S. dollars at that or any other rate.
U.S. dollar amounts less than a thousand dollars have been rounded down to the nearest thousand dollars,
except for per share data.

2. Summary of Significant Accounting Policies
1) Scope of consolidation(1) As of February 20, 2021, the Company had 27 consolidated subsidiaries (25 consolidated subsidiaries as ofFebruary 20, 2020).
Names of major consolidated subsidiaries:
Nitori Co., Ltd.
Home Logistics Co., Ltd.
Shimachu 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 Public Co., Ltd.
HOME DECO Co., Ltd.
and 14 other subsidiaries
The Company acquired shares in Shimachu Co., Ltd. during the year ended February 20, 2021, and said
company was newly included in the scope of consolidation.
NITORI FURNITURE Ba Ria-Vung Tau Co., Ltd. dissolved since it was absorbed and merged into NITORIFURNITURE VIETNAM EPE, which is the surviving company, during the year ended February 20, 2021.
Furthermore, the Company passed a resolution at its board of directors meeting held on August 30, 2017 toliquidate P.T. NITORI FURNITURE INDONESIA, which is a consolidated subsidiary of the Company, andsaid company is currently in the process of liquidation.
(2) Names of major unconsolidated subsidiaries
The Company did not have any unconsolidated subsidiaries.

8
FY2020 Nitori Holdings Co., Ltd.

2) Application of equity method(1) As of February 20, 2021, the Company had one associate accounted for using the equity method (one as ofFebruary 20, 2020).
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.
Shimachu Co., Ltd. ······································· August 31, 2020
NITORI Furniture Co., Ltd. ······························· December 20, 2020
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 Public Co., Ltd.
and 9 other subsidiaries ·································· December 31, 2020
HOME DECO Co., Ltd.···································· January 31, 2021
As for the consolidated subsidiaries whose reporting dates are not more than three months different from thebalance sheet date of the Company, their financial statements as of their respective reporting dates have been
used, and as for the consolidated subsidiary whose reporting date is more than three months different from thebalance sheet date of the Company, financial information provisionally prepared based on its latest quarterly
financial statements has been used. Necessary adjustments have been made for consolidation purposes toreflect any significant transactions that occurred between the dates of respective subsidiaries and the date of theconsolidated financial statements.
4) 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.
5) Marketable and 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“equity,” and the cost of securities sold is determined by the gross average method. Available-for-sale securities
without market quotations are stated at cost determined by the gross average method.
As for investments in investment limited partnerships which are deemed as securities pursuant to Article 2,paragraph (2) of the Financial Instruments and Exchange Act of Japan, amounts equivalent to the Group’s share
are recognized on the basis of the latest financial statements of the partnerships available to the Groupdepending on the respective reporting dates set forth in the partnership agreements.
6) Inventories
Nitori business··············· at cost determined by the moving-average method
Shimachu business ········ at cost determined by the retail method
Inventories are stated at the lower of cost or market.

9
FY2020 Nitori Holdings Co., Ltd.

7) Property, plant and equipment (except lease assets)
Depreciation of property, plant and equipment (except lease 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 47 years
Machinery, equipment and vehicles
4 to 12 years
Tools, furniture and fixtures
2 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.
8) Intangible assets (except lease 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.
9) Lease assets
Lease 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.
10) 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.
11) Goodwill amortization and period
Goodwill is amortized over 10 years on a straight-line basis.
12) 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.
13) 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.
14) Provision for point card certificates
Customers earn loyalty points by presenting their member card at the time of purchase. Provision for point cardcertificates is recorded at the amount expected to be used by customers in the future.
15) 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.
16) 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.

10
FY2020 Nitori Holdings Co., Ltd.

17) 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 (mainly 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.
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) 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 equity excluding non-controllinginterests, which are translated at the historical rate. Differences arising from such translation are shown as“foreign currency translation adjustments” in the equity section. Revenue and expense accounts of consolidated
overseas subsidiaries are translated into Japanese yen at the average exchange rate.
20) Derivatives and hedge accounting
Derivative financial instruments are stated at fair value.
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 equity.
Hedging instruments: Derivative transactions (foreign exchange forward contracts)
Hedged items: Trade accounts payable 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.
21) Consumption taxes
Transactions subject to consumption taxes are recorded at amounts exclusive of consumption taxes.
22) Accounting standards issued but not yet effective(1) Accounting Standard for Disclosure of Accounting Estimates- “Accounting Standard for Disclosure of Accounting Estimates” (Accounting Standards Board of Japan (“ASBJ”)
Statement No. 31, March 31, 2020)(i) Overview
Requests were made to consider the “sources of estimation uncertainty,” which are required to be disclosed byparagraph 125 of International Accounting Standard ("IAS”) 1 “Presentation of Financial Statements” issued by
the International Accounting Standards Board (“IASB”) in 2003 (“IAS 1”), to be disclosed in a note pursuant toJapanese GAAP as well, as useful information for financial statement users, and the ASBJ developed and issued
the Accounting Standard for Disclosure of Accounting Estimates (the “Standard” in this subsection).
The ASBJ’s basic policy in developing the Standard is not to extend individual notes but to present the principle(disclosure purposes) in order for entities to determine specific disclosures in the light of the disclosure purposes.
The ASBJ referred to paragraph 125 of IAS 1 when developing the Standard.
(ii) Scheduled date of adoption
The Group expects to adopt the Standard at the end of the year ending February 20, 2022.

11
FY2020 Nitori Holdings Co., Ltd.

(2) Accounting Standard for Accounting Policy Disclosures, Accounting Changes and Error Corrections- “Accounting Standard for Accounting Policy Disclosures, Accounting Changes and Error Corrections” (ASBJ
Statement No. 24, revised on March 31, 2020)(i) Overview
Proposals were made to consider the enhancement of notes on “applied principles and procedures of accounting
when there are no specific provisions involved such as accounting standards,” so the ASBJ made required
revisions to issue as the revised Accounting Standard for Accounting Policy Disclosures, Accounting Changes
and Error Corrections.
Entities shall follow the provisions of Corporate Accounting Principles (Note 1-2) specifying that entities shalldisclose significant accounting policies when enhancing notes on the “applied principles and procedures ofaccounting when there are no specific provisions involved such as accounting standards” so that theenhancement does not affect previous practices that were implemented when there are specific provisions
involved such as accounting standards.
(ii) Scheduled date of adoption
The Group expects to adopt the standard at the end of the year ending February 20, 2022.
(3) Accounting Standard for Fair Value Measurement and related accounting standards and implementation
guidance- “Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30, July 4, 2019)- “Accounting Standard for Measurement of Inventories” (ASBJ Statement No. 9, July 4, 2019)- “Accounting Standard for Financial Instruments” (ASBJ Statement No. 10, revised on July 4, 2019)- “Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance No. 31, July4, 2019)- “Implementation Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No. 19,
revised on March 31, 2020)(i) Overview
The IASB and the Financial Accounting Standards Board (“FASB”) developed and have provided detailed
guidance for fair value measurement with approximately the same content (IFRS 13 “Fair Value Measurement”
as for IFRSs and Accounting Standards Codification Topic 820 “Fair Value Measurement” as for U.S. GAAP). In
the light of such situation, the ASBJ worked on aligning Japanese GAAP with such international accounting
standards mainly on guidance and disclosures about fair value of financial instruments, and then issued the“Accounting Standard for Fair Value Measurement” and other standards and guidance.
The ASBJ’s basic policy in developing the Accounting Standard for Fair Value Measurement is, in principle, toincorporate all provisions in IFRS 13 from the standpoint that the unified measurement approach improves thecomparability of financial statements between entities in and outside Japan. The ASBJ also considered
traditional accounting practices in Japan and defined the treatment specific to particular items to the extent thatsuch treatment may not significantly diminish the comparability of financial statements.
(ii) Scheduled date of adoption
The Group expects to adopt the standards and guidance at the beginning of the year ending February 20, 2023.
(iii) Impact of adopting the standards and implementation guidance
The Company is currently evaluating the impact of adopting the standards and guidance on its consolidated
financial statements.
(4) Accounting Standard for Revenue Recognition and implementation guidance thereon- “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, revised on March 31, 2020)- “Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance No. 30, revisedon March 31, 2020)(i) 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.

12
FY2020 Nitori Holdings Co., Ltd.

(ii) Scheduled date of adoption
The Group expects to adopt the standard and implementation guidance at the beginning of the year ending
February 20, 2023.
(iii) 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.

3. Business Combination
The board of directors of the Company resolved to acquire common shares of Shimachu Co., Ltd. (the “Target
Company” in this section) through a tender offer under the Financial Instruments and Exchange Act of Japan(Act No. 25 of 1948, as amended) (the “Tender Offer”) with a view to make the Target Company become awholly owned subsidiary of the Company at the board of directors meeting held on October 29, 2020.
Accordingly, the Company entered into a business integration agreement with the Target Company on
November 13, 2020 and commenced the Tender Offer on November 16, 2020, and the Tender Offer ended on
December 28, 2020.
As a result of the Tender Offer, on January 6, 2021 (settlement start date of the Tender Offer), the Company
acquired a majority of voting rights of the Target Company, and the Target Company became a consolidated
subsidiary of the Company.
1) Overview of business combination(1) Name and business description of acquiree
Name of acquiree:
Shimachu Co., Ltd.
Business description:
Retailing of furniture and home accessories (including curtains, carpets, and homeaccents) and home center goods (including household essentials, garden equipment
and supplies, pet supplies, timber, and hardware)(2) Primary reasons for business combination
The Company had been considering entering into the home center industry through mergers and acquisitions(the “M&A”). During the current coronavirus pandemic, customers’ attitude toward “home” and lifestyle havechanged, and it has become apparent that customers need “to have their life enriched.” Under thosecircumstances, the Company came to consider that, in addition to the sale of furniture and interior merchandise
the Group has been engaged in, carrying a wider variety of goods would enable the Group to further improvecustomers’ lives. Having the Target Company join the Group would (i) allow the Group to enter into a new
business area: the home center industry and (ii) allow the Target Company to utilize the Group’s experience andstrengths to its advantage since various areas in which the Target Company has been engaged are common towhat the Group has developed as a "Manufacturing, Logistics, IT and Retail Sales" business. The Company
believed these would greatly contribute to expanding and developing both the Group and the Target Company
and maximize their value.
The Company decided to conduct the Tender Offer since it believed that strong cooperation between the Groupand the Target Company, resulting from business integration through the Tender Offer and the Target Company
becoming a wholly-owned subsidiary of the Company, would enable both to achieve synergies and that it would
allow the Group to extend its business to the sale of home center and general merchandise in addition to theexisting furniture and interior merchandise, provide customers with comprehensive services related to home, anddevelop a business to accommodate a variety of lifestyles.
(3) Date of business combination
January 6, 2021 (share acquisition date)November 30, 2020 (deemed acquisition date)(4) Legal form of business combination
Share acquisition for cash consideration

13
FY2020 Nitori Holdings Co., Ltd.

(5) Name of company after combination
There is no change.
(6) Percentage of voting rights acquired
Percentage of voting rights owned immediately before date of business combination
Percentage of voting rights acquired on date of business combination
Percentage of voting rights after acquisition

0.00%
77.04%
77.04%(7) Grounds for determining acquirer
The Company acquired common shares of the Target Company through a tender offer.
2) Period of acquiree’s operating results included in consolidated financial statements
The consolidated financial statements for the year ended February 20, 2021 do not include the operating resultsof the acquiree since the Company only consolidated the acquiree’s balance sheet.
3) Acquisition cost of acquiree and its breakdown by type of consideration
Consideration for acquisition:
Cash and cash equivalents ¥165,054 million ($1,561,091 thousand)Acquisition cost:¥165,054 million ($1,561,091 thousand)4) Detail and amount of main acquisition-related costs
Advisory and other fees
¥1,634 million ($15,457 thousand)5) Amount of and cause for goodwill arising from business combination, and amortization method forand period of goodwill(1) Amount of goodwill arising from business combination¥31,665 million ($299,492 thousand)
The amount of goodwill was provisionally determined since the acquisition cost allocation had not been
completed as of February 20, 2021.
(2) Cause for goodwill arising from business combination
The goodwill mainly represents excess earning power expected for future business operations.
(3) Amortization method for and period of goodwill
Over ten years on a straight-line basis
6) Assets acquired and liabilities assumed on date of business combination and their breakdown
Current assets¥46,231 million ($437,262 thousand)Non-current assets¥177,845 million ($1,682,074 thousand)Total assets¥224,077 million ($2,119,336 thousand)Current liabilities¥35,630 million ($336,996 thousand)Long-term liabilities¥15,297 million ($144,681 thousand)Total liabilities¥50,927 million ($481,677 thousand)7) Estimated amounts of effects on the consolidated statement of income for the year ended February
20, 2021 as though the business combination had been completed as of the beginning of the current
fiscal year, and explanation on estimating the amounts
Net sales¥152,998 million ($1,447,070 thousand)Operating income¥6,425 million ($60,774 thousand)(Explanation on estimating amounts)
The Company determined the differences between net sales and profit and loss information that were estimatedas though the business combination had been completed as of the beginning of the current fiscal year and net
sales and profit and loss information on the acquiree’s statement of income as the estimated amounts of effects.
In addition, the Company determined the amount of amortization of goodwill as though the goodwill recognizedat the date of business combination had arisen as of the beginning of the current fiscal year.
The Company did not receive an audit certificate on the estimated amounts.

14
FY2020 Nitori Holdings Co., Ltd.

4. Marketable and investment Securities
1) Investment securities
Investments in associates are as follows:

As of February 20

Investment securities

Millions of Yen

Thousands of
U.S. Dollars

2021

2020

2021

¥22,001¥22,237$208,091

Acquisition cost

Unrealized gain
(loss)¥180¥1,3092) Available-for-sale securities (with market value)
Millions of Yen
As of February 20, 2021

Carrying value

Securities whose carrying values exceed their acquisition costs:
Stocks¥1,490

Securities whose acquisition costs exceed their carrying values:
Stocks

1,747

2,089

(341)

Other

7,791

8,471

(679)

¥11,029¥10,741

¥288

Total

Millions of Yen
As of February 20, 2020

Carrying value

Acquisition cost

Unrealized gain
(loss)¥147¥1,247

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

Securities whose acquisition costs exceed their carrying values:
Stocks
Total

1,618

1,778

(160)

¥3,014¥1,926¥1,087

Thousands of U.S. Dollars
As of February 20, 2021

Carrying value

Acquisition cost

Unrealized gain
(loss)$1,709$12,389

Securities whose carrying values exceed their acquisition costs:
Stocks$14,099

Securities whose acquisition costs exceed their carrying values:
Stocks

16,527

19,761(3,234)

Other

73,69180,121(6,430)$104,318$101,592$2,725

Total

Notes: 1. Unlisted stocks (¥312 million ($2,958 thousand) and ¥283 million in the consolidated balance sheet as of February 20, 2021
and 2020, respectively) are not included in the table above because no quoted market price is available and it is extremely
difficult to determine the fair value.
2. Investments in investment limited partnerships (¥175 million ($1,656 thousand) in the consolidated balance sheet as ofFebruary 20, 2021) are not included in the table above because no quoted market price is available and it is extremely difficult
to determine the fair value.

15
FY2020 Nitori Holdings Co., Ltd.

3) Sales of available-for-sale securities
The Group did not sell any available-for-sale securities during the year ended February 20, 2021.
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

¥–

4) 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, 2021 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.

5. Inventories
Inventories as of February 20, 2021 and 2020 consisted of the following:

As of February 20

Merchandise and finished goods
Work in process
Raw materials and supplies
Total

Millions of Yen

Thousands of U.S.
Dollars

2021

2020

2021

¥76,133¥61,203$720,076

200

182

1,895

4,403

4,127

41,647¥80,737¥65,513$763,620

16
FY2020 Nitori Holdings Co., Ltd.

6. 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:
2021

Millions of Yen
2020

Thousands of
U.S. Dollars
2021

Balance at beginning of year

¥37,579¥39,228$355,425

Increase (decrease)(1,021)(1,649)(9,657)

Balance at end of year

36,55837,579345,767

Fair value at end of year

¥38,279¥39,657$362,052

Balance at beginning of year

¥42,040¥39,773$397,622

Increase (decrease)

22,9652,267

217,208

Balance at end of year

65,00642,040614,831

Fair value at end of year

¥72,223¥50,332$683,097

For the years ended February 20

Rental properties:
Carrying value

Real estate including spaces used as rental
properties:
Carrying value

Notes: 1. The carrying value represents the acquisition cost less accumulated depreciation.
2. The decrease in rental properties during the year ended February 20, 2021 was primarily due to the reclassification of ¥2,764
million ($26,142 thousand) from idle properties to properties for business purposes for building a store in Hanaten, Osaka
Prefecture. The decrease in rental properties during the year ended February 20, 2020 was primarily due to the termination oflease of the property in Shime Town, Fukuoka Prefecture of ¥1,545 million for building a store.
3. The increase in real estate including spaces used as rental properties during the year ended February 20, 2021 was primarily
an increase of ¥24,793 million ($234,500 thousand) due to Shimachu Co., Ltd. becoming a consolidated subsidiary of theCompany, and the decrease was primarily due to a decrease in the carrying amount attributable to depreciation of ¥915 million($8,654 thousand). 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, and the decrease was primarily due to adecrease in the carrying amount attributable to depreciation of ¥916 million.
4. The fair value at the fiscal year-end is measured at the value based on certain appraisal values and other indicators reflecting
the market value.

Lease revenue and rental expenses on rental properties and real estate including spaces used as rental
properties are as follows:
2021

Millions of Yen
2020

Thousands of U.S.
Dollars
2021

Lease revenue¥1,059¥956$10,021

Rental expenses

690

382

6,528

Difference

369

574

3,493

For the years ended February 20

Rental properties:

Real estate including spaces used as rental
properties:
Lease revenue¥6,118¥6,422$57,873

Rental expenses

3,087

3,149

29,203Difference

3,031

3,273

28,669Note: 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.

17
FY2020 Nitori Holdings Co., Ltd.

7. Short-term Bank Loans and Long-term Debt
Balance atFebruary 20,
2020

Balance atFebruary 20,
2021

Item

Millionsof YenMillionsof YenThousands of
U.S. Dollars

Averageinterest
rate (%)

Short-term bank loans¥787¥46,715$441,834

0.3–

Current portion of long-term
debt

2,000

2,000

18,916

0.4–

Current portion of leaseobligations

1,554

1,570

14,851––Long-term debt (excluding
current portion)

4,000

2,000

18,9160.4

2022

Lease obligations(excluding current portion)

6,714

5,875

55,567–2022 – 2032

¥15,056¥58,160$550,085

–

–

Total

Repayment
term

Notes: 1. The average interest rate represents a weighted-average interest rate applicable to the loans balance at the fiscal year-end.
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 debt due within 5 years as of February 20, 2021 is as follows:
Millions of Yen

Thousands of
U.S. Dollars

Over 1 year less than 2 years¥2,000$18,916

Over 2 years less than 3 years––

Over 3 years less than 4 years––

Over 4 years less than 5 years––

Long-term debt (excluding current portion)

4. Maturities of lease obligations, excluding the current portion, due within 5 years as of February 20, 2021 are as follows:
Millions of Yen

Thousands of
U.S. Dollars

Over 1 year less than 2 years¥1,246$11,788

Over 2 years less than 3 years

1,123

10,623

Over 3 years less than 4 years

950

8,985

Over 4 years less than 5 years

830

7,850

Lease obligations (excluding current portion)

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

Thousands of
U.S. Dollars

2021

2020

2021

¥3,890¥1,699$36,798

Land

–

65

–

Guarantee deposits

42

29

398

¥3,932¥1,794$37,197

¥42

¥38

$398

Short-term bank loans

–

128

–

Other (current liabilities)

114

122

1,084

Other (long-term liabilities)

1,598

1,716

15,114

Total¥1,754¥2,006$16,598

As of February 20

Pledged assets:
Buildings and structures

Total
Corresponding liabilities:
Trade notes and accounts payable18
FY2020 Nitori Holdings Co., Ltd.

8. Retirement Benefits
1) Summary of employees’ retirement benefit plans
The Company and certain consolidated subsidiaries have defined benefit corporate pension plans, lump-sum
payment plans, 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 of service, 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

2021

2020

2021

Balance at beginning of year

¥7,645¥6,762$72,310Service cost

1,105

1,030

10,452

Interest cost

23

20

218

(132)

173

(1,250)Benefits paid

(443)

(341)

(4,195)

Increase due to business combination

4,230

–

40,011¥12,428¥7,645$117,546

For the years ended February 20

Actuarial loss (gain)

Balance at end of year

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

2021

2020

2021

¥6,301¥3,559$59,601

Expected return on plan assets

126

94

1,192

Actuarial gain (loss)

54

95

511

Employer contributions

420

404

3,973

–

2,300

–

Benefits paid

(185)

(152)

(1,758)

Increase due to business combination

925

–

8,751

Plan assets at fair value at end of year

¥7,641¥6,301$72,271

For the years ended February 20

Balance at beginning of year

Establishment of retirement benefit trust

19
FY2020 Nitori Holdings Co., Ltd.

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

Thousands of
U.S. Dollars

2021

2020

2021

Projected benefit obligations (funded plans)¥8,658¥7,276$81,892

Plan assets at fair value(7,641)(6,301)(72,271)

1,017

975

9,621

Projected benefit obligations (unfunded plans)

3,769

368

35,654

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

4,787

1,343

45,275

Liability for retirement benefits

5,186

1,343

49,051

Asset for retirement benefits

(399)

–

(3,775)¥4,787¥1,343$45,275

As of February 20

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

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

2021

2020

2021

Service cost

¥1,105¥1,030$10,452

Interest cost

23

20

218

(126)

(94)

(1,192)

Actuarial loss

98

92

935

Prior service cost

(35)

(35)

(333)

¥1,065¥1,014$10,081

For the years ended February 20

Expected return on plan assets
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 defined retirement 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

2021

2020

2021

Prior service cost

¥(35)

¥(35)

$(333)

Actuarial gain (loss)

285

14

2,696

Total

¥249

¥(20)

$2,363(6) The components of defined retirement benefit plans recognized in accumulated other comprehensive income(loss) before income tax effect are as follows:
Millions of Yen

Thousands of
U.S. Dollars

2021

2020

2021

¥3

¥38

$35

Unrecognized actuarial loss

(304)

(589)

(2,879)Total¥(300)¥(550)$(2,844)

As of February 20

Unrecognized prior service cost

20
FY2020 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

2021

2020

Life insurance company general accounts

29 %

27 %

Bonds

19

20

Stocks

45

52

Other

7

1

Total

100 %

100 %

Note: Total plan assets as of February 20, 2021 and 2020 include a retirement benefit trust established for a lump-sum payment plan of
31% and 37%, respectively.

(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

Discount rate
Expected long-term rate of return on plan assets
Expected rate of salary increase

2021

2020

Primarily 0.4 % Primarily 0.1 %

2.0

2.0

Primarily 4.5

Primarily 4.7

3) Defined contribution plan
Contributions made to the defined contribution plan for the years ended February 20, 2021 and 2020 were ¥451
million ($4,267 thousand) and ¥415 million, respectively.

9. Asset Retirement Obligations
1) Asset retirement obligations recognized in consolidated balance sheet(1) Overview of asset retirement obligations recognized in consolidated balance sheet
The asset retirement obligations mainly represent restoration obligations under real estate leases and fixed-term
land leases for stores.
(2) Method of measuring asset retirement obligations recognized in consolidated balance sheet
The Group mainly uses the real estate lease term and the fixed-term land lease term as the expected period of
use and discount rates of 0.0% to 1.7% to measure the amount of the asset retirement obligations.
(3) Changes in total asset retirement obligations recognized in consolidated balance sheet

For the years ended February 20

Balance at beginning of year
Increase due to purchase of property, plant andequipment

Millions of Yen

Thousands of U.S.
Dollars

2021

2020

2021

¥5,696¥5,365$53,877

309

342

2,928

46

45

435

Increase due to business combination

7,388

–

69,883

Decrease due to performance of asset retirement
obligations

(141)

(51)

(1,340)

Other increase (decrease)

1,325

(5)

12,536¥14,624¥5,696$138,321

Adjustments for passage of time

Balance at end of year

21
FY2020 Nitori Holdings Co., Ltd.

2) Asset retirement obligations not recognized in consolidated balance sheet
Under real estate leases other than real estate leases and fixed-term land leases for business purposes, theGroup may be under obligations to restore some premises used as stores when vacating them but has notrecognized related asset retirement obligations, since it is difficult to reasonably estimate the amount on the
grounds that the period of use for the lease assets is not definite, the possibility of incurring expenses is not
obvious, and the Group does not plan to vacate the premises.

10. Equity
1) Class and total number of issued shares and treasury shares
For the year ended February 20,
2021
Class of stock

Issued stock:
Common stock
Treasury stock:
Common stock (Notes 1, 2,
and 3)

Number of Shares (Thousands)
Balance at
beginning of year

Increase

Decrease

Balance at
end of year

114,443––

114,443

1,975

1

357

1,619

Notes: 1. The increase of 1 thousand shares in treasury represents an increase due to the purchase of shares less than one unit.
2. The decrease of 357 thousand shares in treasury consists of a decrease of 78 thousand shares due to the exercise of “Stock
Benefit Trust (J-ESOP)” and a decrease of 278 thousand shares due to the exercise of share options.
3. The number of treasury shares at the fiscal year-end includes 240 thousand shares held by Custody Bank of Japan, Ltd. (Trust
Account E), which is the trustee under the “Stock Benefit Trust (J-ESOP).”
For the year ended February 20,
2020
Class of stock

Issued stock:
Common stock
Treasury stock:
Common stock (Notes 1, 2,
and 3)

Number of Shares (Thousands)
Balance at
beginning of year

Increase

Decrease

Balance at
end of year

114,443––

114,443

2,221

290

536

1,975

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 Custody Bank of Japan, Ltd. (Trust
Account E), which is the trustee under the “Stock Benefit Trust (J-ESOP).”

2) Stock acquisition rights
The balance of stock acquisition rights as stock options of the Company as of February 20, 2021 and 2020 was
nil and ¥289 million, respectively.

22
FY2020 Nitori Holdings Co., Ltd.

3) Dividends(1) Dividends paid to shareholders
For the year ended February 20, 2021
Total amount of
Total amount ofdividends
dividends (Thousands of
U.S. Dollars)(Millions of Yen)

Amount ofdividends
per share(Yen)

Amount ofdividends
per share(U.S.
Dollars)

Resolution atClass ofstock

Board of directors meeting
held on April 6, 2020
(Note 1)

Commonstock¥6,090$57,604

¥54

$0.51

Board of directors meeting
held on October 2, 2020
(Note 2)

Common
stock

6,444

60,95457

0.54

Shareholders’
cut-off date Effective dateFebruary 20,
2020

April 23,
2020

August 20, October 20,
2020
2020

Notes: 1. The total amount of dividends includes dividends of ¥17 million ($163 thousand) on shares held by Custody Bank of Japan, Ltd.
(Trust Account E), which is the trustee under the “Stock Benefit Trust (J-ESOP).”
2. The total amount of dividends includes dividends of ¥13 million ($129 thousand) on shares held by Custody Bank of Japan, Ltd.
(Trust Account E), which is the trustee under the “Stock Benefit Trust (J-ESOP).”
For the year ended February 20, 2020
Total amount of dividends Amount of dividends per(Millions of Yen)
share (Yen)

Resolution atClass ofstock

Board of directors meeting
held on April 8, 2019
(Note 1)

Commonstock¥5,615¥50

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

Common
stock

6,069

54

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 on shares held by Custody Bank of Japan, Ltd. (Trust AccountE), which is the trustee under the “Stock Benefit Trust (J-ESOP).”
2. The total amount of dividends includes dividends of ¥1 million on shares held by Custody Bank of Japan, 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, 2021

Resolution atClass ofstock

Paid from

Board of directors
meeting held on April Common Retained
8, 2021earnings
stock

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

¥7,462$70,578

Amount ofdividends
per share(Yen)

Amount ofdividends
per share(U.S. Dollars)

Shareholders’
cut-off date

Effective date

¥66

$0.62

February 20,
2021

April 22,2021

Note: The total amount of dividends includes dividends of ¥15 million ($150 thousand) on shares held by Custody Bank of Japan, Ltd.
(Trust Account E), which is the trustee under the “Stock Benefit Trust (J-ESOP).”
For the year ended February 20, 2020
Resolution atClass ofstock

Paid from

Board of directors
meeting held on April Common Retained
6, 2020
earnings
stock

Total amount of dividends(Millions of Yen)

¥6,090

Amount of dividends
per share (Yen)

Shareholders’
cut-off date

Effective date

¥54 February 20,
2020

April 23,2020

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

4) Information specific to JapanThe Companies Act of Japan 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.

23
FY2020 Nitori Holdings Co., Ltd.

11. Stock Options
For the years ended February 20, 2021 and 2020, the Group recognized no expenses regarding stock options.
For the years ended February 20, 2021 and 2020, the Group recognized gains due to forfeited stock options of¥12 million ($114 thousand) and ¥3 million, respectively, which are presented in other income as “gain on
reversal of stock acquisition rights.”
1) Description of stock options as of February 20, 2021
The Sixth Stock Acquisition Rights

The Seventh Stock 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

Common stock (Shares)

904,100

Number of shares by class

Common stock (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

24
FY2020 Nitori Holdings Co., Ltd.

2) Summary of stock option activity during the year ended February 20, 2021
The Sixth Stock Acquisition Rights

The Seventh Stock Acquisition Rights

At beginning of year––

Granted––Forfeited––

Vested––At end of year

–

–

400

290,600

Vested––Exercised400

278,400

Forfeited–

12,200At end of year

–

–

Yen

U.S. Dollars

Non-vested (Shares):

Vested (Shares):
At beginning of year

The unit price information is as follows:
The Sixth Stock Acquisition Rights

Exercise price¥5,650$53.44

Average share price at exercise

17,392

164.49Fair value per share on grant date

1,022

9.67

The Seventh Stock Acquisition Rights
Yen

U.S. Dollars

Exercise price¥5,540$52.40

Average share price at exercise

16,869159.55

Fair value per share on grant date

996

9.42

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.

25
FY2020 Nitori Holdings Co., Ltd.

12. Income Taxes
The Company and its domestic subsidiaries are subject to Japanese national and local income taxes which, inthe aggregate, resulted in a normal effective statutory tax rate of approximately 31% for the years ended
February 20, 2021 and 2020.
1) Significant components of deferred tax assets and liabilities
Millions of Yen

Thousands of U.S.
Dollars

2021

2020

2021

¥1,995¥1,356$18,873

39

39

377

1,662

1,062

15,726

Provision for point card certificates

807

645

7,634

Unrealized gain on sales of inventories

302

335

2,861

Tax loss carryforwards (Note)

5,148

3,854

48,696

Liability for retirement benefits

2,289

1,109

21,651

Depreciation and amortization

As of February 20

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

9,231

5,148

87,311

Provision for retirement benefits for directors and otherofficers

70

70

663

Allowance for doubtful accounts

2

2

27

Loss on impairment of long-lived assets and penalty for the
scrapping and building of outlets

3,052

1,677

28,870Asset retirement obligations

4,604

1,850

43,551

Unrealized loss on consolidated subsidiary

3,756

–

35,525

Other

6,223

4,158

58,860Subtotal

39,186

21,310370,630

Valuation allowance for tax loss carryforwards (Note)(4,428)(3,854)(41,882)

Valuation allowance for deductible temporary differences(1,453)(1,239)(13,749)

Total valuation allowance(5,881)(5,093)(55,631)

33,304

16,217

314,998

(307)

(336)

(2,909)Construction assistance fund receivables(1,041)(986)(9,850)Asset retirement cost related to asset retirement obligations(2,361)(808)(22,336)

Unrealized gain on consolidated subsidiary(2,860)–(27,057)

Retained earnings of subsidiaries(1,112)(837)(10,521)

(231)

(1)

(2,186)

Total deferred tax liabilities(7,915)(2,970)(74,862)

Net deferred tax assets¥25,389¥13,246$240,136

Total deferred tax assets
Deferred tax liabilities:
Unrealized gain on available-for-sale securities

Other

26
FY2020 Nitori Holdings Co., Ltd.

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

As of February 20, 2021 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

Tax losscarryforwards *

¥27

¥366

¥438

¥261

¥397

¥2,935¥4,428Valuation allowance

(27)

(366)

(438)

(261)

(397)

(2,935)(4,428)Deferred tax assets

–

–

–

–

–

–

–

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

Millions of Yen

Tax losscarryforwards *

¥–

¥27

¥413

¥492

¥268

¥2,651¥3,854

Valuation allowance

–

(27)

(413)

(492)

(268)

(2,651)(3,854)

Deferred tax assets

–

–

–

–

–

–

–

As of February 20, 2021 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

Thousands of U.S. Dollars

Tax losscarryforwards *$261$3,469$4,144$2,477$3,761$27,767$41,882

Valuation allowance(261)(3,469)(4,144)(2,477)(3,761)(27,767)(41,882)

Deferred tax assets

–

–

–

–

–

–

–

*Tax 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, 2021 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.

13. Selling, General and Administrative Expenses
The major components of selling, general and administrative expenses are as follows:
Millions of Yen

Thousands of
U.S. Dollars

2021

2020

2021

Customer delivery expenses¥29,278¥27,991$276,914

Advertising expenses

17,182

16,888

162,513

Salaries, allowances and bonuses

71,184

68,493

673,270

Provision for bonuses

8,555

3,528

80,919Retirement benefit expenses

1,518

1,412

14,360Rent expenses

38,44437,261

363,607

Depreciation and amortization

16,024

14,575

151,556

Outsourcing expenses

21,24918,351200,975

For the years ended February 20

27
FY2020 Nitori Holdings Co., Ltd.

14. Other Income (Expenses)
1) The breakdown of gain on sales of“Property, plant and equipment” is as follows:
Millions of Yen

Thousands of U.S.
Dollars

2021

2020

2021

Buildings and structures

¥–

¥0

$–

Machinery, equipment and vehicles

2

2

20

Tools, furniture and fixtures

0

0

2

Land

3

311

28

Total

¥5

¥315

$52

For the years ended February 202) The breakdown of loss on sales and retirement of “Property, plant and equipment” and “Intangible
assets” is as follows:
Millions of Yen

Thousands of U.S.
Dollars

2021

2020

2021

¥17

¥34

$162

Machinery, equipment and vehicles

1

0

16

Tools, furniture and fixtures

19

5

185

Construction in progress

–

35

–

Other (intangible assets)

16

12

153

Machinery, equipment and vehicles

0

0

7

Tools, furniture and fixtures

–

9

–

Land

8

0

76

Total

¥63

¥99

$602

For the years ended February 20

Loss on retirement:
Buildings and structures

Loss on sales:

28
FY2020 Nitori Holdings Co., Ltd.

3) Loss on impairment of long-lived assets
For the year ended February 20, 2021
Millions of Yen

Thousands of
U.S. Dollars

Buildings andstructures, and
other

¥524

$4,957

Mission criticalsystemSoftware and other

6,760

63,941

Logistics system

Software and other

107

1,014

Store

Buildings andstructures, and
other

499

4,720

Right-of-use assets

454

4,294

6

61

Location

Use

Class

Japan

Store

People’s Republic of
China

The United States ofAmericaStore

Buildings andstructures, andother

The Group’s assets are grouped according to the type of business. Loss on impairment of long-lived assets wasrecognized for some stores, taking into account decisions on their closure or their decreased profitability.
Furthermore, loss on impairment of long-lived assets was recognized for a new global system that had been
designed and developed as a new mission critical system because of changes in the project policy.
When the recoverable amount was measured at the value in use, the Group assumed that the value in use was
zero.

29
FY2020 Nitori Holdings Co., Ltd.

For the year ended February 20, 2020
Location

Use

Class

Japan

Store

Buildings andstructures, and
other

¥78

Accommodation

Land, buildings
and structures, and
other

923

Logistics system

Machinery,equipment andvehicles

378

Store

Buildings andstructures, and
other

594

Right-of-use
assets1,791

People’s Republic of
China

Millions of Yen

Republic of ChinaStore

Buildings andstructures, and
other

29

The United States ofAmerica

Store andheadquarters

Buildings andstructures, and
other

225

Kingdom of Thailand

Plant facility

Buildings andstructures, and
other

71

The Group’s assets are grouped according to the type of business. Loss on impairment of long-lived assets wasrecognized for some stores, 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. 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

2021

2020

2021

Due within 1 year

¥9,279¥6,192$87,763

Due after 1 year

75,45730,145

713,680

Total¥84,736¥36,338$801,443

As Lessor:
Future minimum lease payments to be received under non-cancelable operating leases are as follows:
Millions of Yen
As of February 20

Thousands of
U.S. Dollars

2021

2020

2021

Due within 1 year

¥1,134¥1,030$10,731

Due after 1 year

6,229

7,111

58,918

Total¥7,364¥8,142$69,64930
FY2020 Nitori Holdings Co., Ltd.

16. Financial Instruments and Related Disclosures
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
Trade notes and accounts receivable are exposed to credit risk of customers, but the collection period is short,and the historical bad debt ratio is low. The Group manages the credit risk by monitoring due dates andoutstanding balances for each customer and makes efforts to promptly collect receivables from customers infinancial difficulties.
Marketable and investment securities with market quotations are exposed to market risk, and those withoutmarket quotations are exposed to impairment risk due to the relevant companies’ operating results. The Group
periodically reviews 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 the credit risk by monitoring due dates and outstanding balances for eachlessor and makes efforts to identify and decrease concerns about collecting deposits from lessors in financial
difficulties at an early stage.
Most trade notes and accounts payable, other payables, and income taxes payable are due within threemonths.
Short-term bank loans, long-term debt 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.
2) Estimated fair value of financial instruments
The carrying values of financial instruments on the consolidated balance sheet as of February 20, 2021 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).

31
FY2020 Nitori Holdings Co., Ltd.

Millions of Yen
As of February 20, 2021

Carrying value

Estimated fair value

Difference¥125,487¥125,487¥–(2) Short-term investments

33,08933,089–(3) Trade notes and accounts receivable

37,80637,806

–

(5)

(5)

–

37,80137,801–

Available-for-sale securities

11,02911,029–

Shares of associates

22,001

82,14060,139(5) Guarantee deposits

19,763

20,193430(6) Leasehold deposits

27,022

26,502(519)(1) Short-term bank loans¥46,715¥46,715¥–(2) Trade notes and accounts payable

44,55444,554–(3) Other payables

33,51233,512–(4) Income taxes payable

30,35130,351–(5) Long-term debt, including current portionof long-term debt

4,000

4,006

6

(6) Lease obligations, including current
portion of lease obligations

7,445

7,445

–

Carrying value

Estimated fair value

Difference¥140,791¥140,791¥–(2) Short-term investments

18,39818,398–(3) Trade notes and accounts receivable

27,88027,880

–

(4)

(4)

–

27,87627,876–

Available-for-sale securities

3,014

3,014

–

Shares of associates

22,23753,09030,853(5) Guarantee deposits

13,987

14,966

978(6) Leasehold deposits

23,75623,578(178)(1) Trade notes and accounts payable¥19,774¥19,774¥–(2) Other payables

22,92322,923–(3) Income taxes payable

20,224

20,224–(4) Long-term debt, including current portionof long-term debt

6,000

6,009

9

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

8,268

8,268

–

Assets:(1) Cash and cash equivalents

Allowance for doubtful accounts (*)(4) Marketable and investment securities:

Liabilities:

Millions of Yen
As of February 20, 2020

Assets:(1) Cash and cash equivalents

Allowance for doubtful accounts (*)(4) Investment securities:

Liabilities:

32
FY2020 Nitori Holdings Co., Ltd.

Thousands of U.S. Dollars
As of February 20, 2021

Carrying value

Estimated fair value

Difference$1,186,865$1,186,865$–(2) Short-term investments

312,965

312,965–(3) Trade notes and accounts receivable

357,578

357,578

–

(51)

(51)

–

357,527

357,527–

Available-for-sale securities

104,318

104,318–

Shares of associates

208,091

776,891

568,799(5) Guarantee deposits

186,922

190,992

4,070(6) Leasehold deposits

255,577

250,661(4,916)(1) Short-term bank loans$441,834$441,834$–(2) Trade notes and accounts payable

421,395

421,395–(3) Other payables

316,966

316,966–(4) Income taxes payable

287,070

287,070–(5) Long-term debt, including current portionof long-term debt

37,83237,89159(6) Lease obligations, including current
portion of lease obligations

70,41870,418–Assets:(1) Cash and cash equivalents

Allowance for doubtful accounts (*)(4) Marketable and investment securities:

Liabilities:(*) Deducted allowance for doubtful accounts related to trade notes and accounts receivable.
Notes: 1. Methods to determine the estimated fair values of financial instruments
Assets:(1) Cash and cash equivalents, (2) Short-term investments, and (3) Trade notes and accounts receivable
Since these items are settled in a short period of time, their carrying values approximate fair value.
(4) Marketable and investment securities (Investment securities as of February 20, 2020)
The fair value of stocks is based on quoted market prices, and the fair value of investment trusts is based on the net asset
value per unit, which is publicly available. For information on securities classified by holding purpose, please refer to Note 4.
Marketable and Investment Securities.
(5) Guarantee deposits
The fair value of guarantee deposits is based on the present value of the estimated future cash flows adjusted for credit risk inaccordance with the maturity schedule by applying the discount rate determined by reference to an appropriate index, such asa government bond yield.
(6) Leasehold deposits
The fair value of leasehold deposits is based on the present value of the estimated future cash flows adjusted for credit risk bycertain period of time by applying the discount rate determined by reference to an appropriate index, such as a government
bond yield.
Liabilities:(1) Short-term bank loans, (2) Trade notes and accounts payable, (3) Other payables, and (4) Income taxes payable
Since these items are settled in a short period of time, their carrying values approximate fair value.
(5) Long-term debt
The fair value of long-term debt is based on the present value of the total of principal and interest discounted by the interest rateapplicable to similar new debt.
(6) 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.

33
FY2020 Nitori Holdings Co., Ltd.

2. Financial instruments for which it is difficult to determine the fair value
Millions of Yen

Thousands of U.S.
Dollars

As of February 20

2021

2020

2021

Unlisted stocks (*1)

¥312

¥283

$2,958Investments in investment limited
partnerships (*2)

175

–

1,656

Guarantee deposits (*3)

95

–

903

Leasehold deposits (*3)

1,923

–

18,187(*1) Unlisted stocks are excluded from “Assets, (4) Marketable and investment securities (Investment securities as of February
20, 2020)” because no quoted market price is available and it is extremely difficult to determine the fair value.
(*2) Investments in investment limited partnerships are excluded from “Assets, (4) Marketable and investment securities”
because they are not marketable and the future cash flows cannot be estimated and it is extremely difficult to determine
the fair value.
(*3) Guarantee deposits and leasehold deposits on extendable lease contracts are excluded from “Assets, (5) Guarantee
deposits” and “Assets, (6) Leasehold deposits” because the future cash flows cannot be estimated and it is extremely
difficult to determine the fair value.
3. Redemption schedule for financial assets with maturities
Millions of Yen
Due in 1 year or
less

Due after 1 year
through 5 years

Due after 5 years¥125,487¥–¥–

Short-term investments

33,089––Trade notes and accounts receivable

37,806––¥196,383¥–¥–

Due in 1 year or
less

Due after 1 year
through 5 years

Due after 5 years¥140,791¥–¥–

Short-term investments

18,398––Trade notes and accounts receivable

27,880––¥187,070¥–¥–

Due in 1 year or
less

Due after 1 year
through 5 years

Due after 5 years$1,186,865$–$–

Short-term investments

312,965––

Trade notes and accounts receivable

357,578––$1,857,409$–$–

As of February 20, 2021

Cash and cash equivalents

Total

Millions of Yen
As of February 20, 2020

Cash and cash equivalents

Total

Thousands of U.S. Dollars
As of February 20, 2021

Cash and cash equivalents

Total

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

34
FY2020 Nitori Holdings Co., Ltd.

4. Repayment schedule for short-term bank loans and long-term debt 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

Short-term bankloans

¥46,715

¥–

¥–

¥–

¥–

¥–

Long-term debt

2,000

2,000

–

–

–

–

Lease obligations

1,570

1,246

1,123

950

830

1,725

¥50,285¥3,246¥1,123¥950¥830¥1,725

As of February 20, 2021

Total

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

Long-term debt

¥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, 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

Short-term bankloans

$441,834

$–

$–

$–

$–

$–

Long-term debt

18,916

18,916––––

Lease obligations

14,851

11,788

10,623

8,985

7,850

16,318$475,602$30,704$10,623$8,985$7,850$16,318

As of February 20, 2021

Total

35
FY2020 Nitori Holdings Co., Ltd.

17. Other Comprehensive Income (Loss)
Millions of Yen

Thousands of U.S.
Dollars

2021

2020

2021

Amounts arising during period¥(89)¥(268)$(844)

Reclassification adjustments

–

(1)

–

For the years ended February 20

Unrealized gain (loss) on available-for-salesecurities

Amount before income tax effect

(89)

(270)

(844)

Income tax effect

29

73

277

Subtotal

(60)

(197)

(567)

(1,283)(740)(12,138)(1,283)(740)(12,138)

186

(77)

1,761

Foreign currency translation adjustments
Amounts arising during period
Subtotal
Defined retirement benefit plans
Amounts arising during period
Reclassification adjustments

63

57

601

Amount before income tax effect

249

(20)

2,363

Income tax effect

(76)

6

(723)

Subtotal

173

(14)

1,640

¥(1,169)¥(951)$(11,065)

Total other comprehensive income (loss)

18. Supplementary Cash Flow Information
During the year ended February 20, 2021, the Company acquired shares in Shimachu Co., Ltd., and Shimachu
became a consolidated subsidiary of the Company. The following are a breakdown of assets and liabilities of
Shimachu at the time when the Company started to consolidate Shimachu and a reconciliation of the acquisition
cost of the shares with an expenditure for the acquisition on a net basis.
Millions of Yen

Thousands of
U.S. Dollars

Current assets¥46,231$437,262

Non-current assets

177,845

1,682,074

Goodwill

31,665

299,492

Current liabilities(35,630)(336,996)

Long-term liabilities(15,297)(144,681)

Non-controlling interests(39,760)(376,060)¥165,054$1,561,091(6,749)(63,836)¥158,304$1,497,254

Acquisition cost of shares
Cash and cash equivalents
Expenditure for acquisition36
FY2020 Nitori Holdings Co., Ltd.

19. Net Income per ShareYen

U.S. Dollars

2021

2020

2021

Basic net income per share¥817.01¥635.42$7.73

Diluted net income per share

816.66634.03

7.72

As of and for the years ended February 20

Note: The following are used to calculate the (1) basic net income per share and (2) diluted net income per share:(1) Basic net income per share
Millions of Yen

Thousands of
U.S. Dollars

2021

2020

2021

¥92,114¥71,395$871,225–––

Net income attributable to owners of the parent
related to common stock

92,114

71,395871,225

Average number of shares (Thousand shares)

112,745

112,358

For the years ended February 20

Net income attributable to owners of the parent
Net income not attributable to commonshareholders

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

Thousands of
U.S. Dollars

2021

2020

2021

Adjustment attributable to owners of the parent

¥–

¥–

$–

Increase in the number of common sharescorresponding to stock acquisition rights(Thousand shares)

48

247

For the years ended February 20

20. Subsequent Events
1) Adjustment to initial allocation of acquisition cost
The Company provisionally accounted for the business combination with Shimachu Co., Ltd. effected on January
6, 2021 in the year ended February 20, 2021. The Company has been continuing the provisional accounting as
at the date of disclosure of these consolidated financial statements and has partially reviewed the initial
allocation of the acquisition cost based on reasonable information available at that time. In addition, as
mentioned in “2) Transaction under common control” below, the Company has determined the amount of
goodwill arising from the additional share acquisition after the Company obtained control of Shimachu as if suchamount were recognized when the Company obtained control of Shimachu.
As a result, as at the date of disclosure of these consolidated financial statements, adjustments have been madeto buildings and structures (net amount), land, other payables and asset retirement obligations (long-term
liabilities) as of February 20, 2021 and their amounts have increased by ¥7,859 million ($74,334 thousand),¥14,601 million ($138,099 thousand), ¥49,181 million ($465,160 thousand) and ¥301 million ($2,852 thousand),
respectively, and as a result of making adjustments to goodwill, deferred tax assets and non-controlling interests
as of February 20, 2021, their amounts have decreased by ¥5,988 million ($56,642 thousand), ¥6,749 million($63,838 thousand) and ¥39,760 million ($376,060 thousand), respectively.
2) Transaction under common control (acquisition of additional shares of subsidiary)
On April 9, 2021, the Company entered into a share purchase agreement with Shimachu Co., Ltd., aconsolidated subsidiary of the Company, concerning the transfer of fractional shares arising from the shareconsolidation that Shimachu had effected on March 26, 2021, and acquired the fractional shares with thepermission of the court pursuant to the provision of Article 234, paragraph (2) of the Companies Act of Japan as
applied mutatis mutandis pursuant to Article 235, paragraph (2) of the said act. As a result, Shimachu became awholly-owned subsidiary of the Company.

37
FY2020 Nitori Holdings Co., Ltd.

(1) Overview of transaction(i) Name and business description of party in combination
Name of party in combination:
Shimachu Co., Ltd.
Business description:
Retailing of furniture and home accessories (including curtains, carpets, andhome accents) and home center goods (including household essentials,
garden equipment and supplies, pet supplies, timber, and hardware)(ii) Date of business combination
May 14, 2021 (share acquisition date)(iii) Legal form of business combination
Share acquisition for cash consideration(iv) Name of company after combination
There is no change.
(2) Summary of applied accounting treatment
The Company has accounted for such fractional share acquisition as a transaction with non-controllingshareholders, which is a type of transactions under common control, pursuant to the “Accounting Standard forBusiness Combinations” (ASBJ Statement No. 21, revised on January 16, 2019) and the “Implementation
Guidance on Accounting Standard for Business Combinations and Accounting Standard for Business
Divestitures” (ASBJ Guidance No. 10, revised on January 16, 2019).
The Company has treated such fractional share acquisition as an integral part of the share acquisition throughthe January 6, 2021 tender offer and has determined the amount of goodwill arising from the additional shareacquisition after the Company obtained control of Shimachu as if such amount were recognized when the
Company obtained control of Shimachu.
(3) Acquisition cost of acquiree and its breakdown by type of consideration
Consideration for acquisition:
Cash and cash equivalents ¥49,174 million ($465,099 thousand)Acquisition cost
¥49,174 million ($465,099 thousand)3) Large-sum bank loans
To refinance the short-term bank loans that the Company obtained to acquire the shares of Shimachu Co., Ltd.,the Company has entered into loan agreements in accordance with a resolution at its board of directors meeting
held on May 6, 2021 and has borrowed long-term funds as follows:(1) Lenders:Mizuho Bank, Ltd., MUFG Bank, Ltd., Sumitomo Mitsui Banking Corporation,
Sumitomo Mitsui Trust Bank, Limited, North Pacific Bank, Ltd., and Saitama
Resona Bank, Limited(2) Bank loan amount:¥100 billion ($945 million)(3) Drawdown date:June 30, 2021
(4) Final repayment date:
End of June 2024
(5) Interest rate:
Fixed rate ranged from 0.10% to 0.23%(6) Repayment method:
Equal repayment commencing the end of December 2021 and every six months
thereafter(7) Collateral or guarantee: None38
FY2020 Nitori Holdings Co., Ltd.

21. Segment Information
1) Overview of reportable segments(1) Determination of reportable segments
Reportable segments of the Group are components for which discrete financial information is available and thatthe board of directors regularly reviews to make decisions about resources to be allocated and assess theiroperating results.
The Group consists of the two segments on the basis of its core operating companies and identified the following
two businesses as its reportable segments: the “Nitori business” and the “Shimachu business.”(2) Types of products and services that belong to each reportable segment
The “Nitori business” primarily engages in the development, manufacture and sale of furniture and interior
merchandise.
The “Shimachu business” primarily engages in the sale of furniture, home accessories and home center goods.
(3) Change in reportable segments
The Group previously consisted of a single reportable segment of the “home furnishings and interior goods salebusiness.” In association with Shimachu Co., Ltd. becoming a consolidated subsidiary of the Company, theGroup reviewed the segmentation and decided to add an operating segment in the year ended February 20,
2021. As a result, the Group changed its reportable segment to the two reportable segments of the “Nitori
business” and the “Shimachu business.”
The segment information prepared on the new basis of segmentation for the year ended February 20, 2020 is
not disclosed, since the “Shimachu business” has been added in the year ended February 20, 2021.
2) Basis of measurement of net sales, profit, assets and other items by reportable segment
The accounting policies of the reportable segments are basically consistent with the description in “2. Summaryof Significant Accounting Policies.” The reportable segments’ profit corresponds to the Group’s operating income.

39
FY2020 Nitori Holdings Co., Ltd.

3) Information about net sales, profit, assets and other items by reportable segment
Millions of Yen
Reportable segments
Total

Net sales
Net sales to external customers¥716,900¥–¥716,900¥716,900¥716,900¥–¥716,900¥716,900

Segment profit¥137,687¥–¥137,687¥137,687

Segment assets¥671,305¥255,742¥927,048¥927,048

Depreciation and amortization¥17,831¥–¥17,831¥17,831

Investments in entities accounted forusing equity method

22,001–

22,001

22,001

Increase in property, plant andequipment and intangible assets

22,323–22,32322,323

Total

Shimachubusiness

Consolidated

As of and for the year ended February 20, 2021

Nitoribusiness

Other items

Thousands of U.S. Dollars
Reportable segments
As of and for the year ended February 20, 2021

Net sales
Net sales to external customers

Nitoribusiness

Shimachubusiness

Total

Consolidated$6,780,481$–$6,780,481$6,780,481$6,780,481$–$6,780,481$6,780,481

Segment profit$1,302,251$–$1,302,251$1,302,251

Segment assets$6,349,240$2,418,829$8,768,070$8,768,070

Depreciation and amortization$168,649$–$168,649$168,649

Investments in entities accounted forusing equity method

208,091–

208,091

208,091

Increase in property, plant andequipment and intangible assets

211,136–

211,136

211,136

Total

Other items

The information as of and for the year ended February 20, 2020 is omitted since the Group was comprised of asingle reportable segment.
4) 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, 2021

Nitori business

Shimachubusiness

Net sales to external customers¥716,900¥–

For the year ended February 20, 2020

Nitori business

Shimachubusiness

Total

Net sales to external customers¥642,273¥–¥642,273

For the year ended February 20, 2021

Nitori business

Shimachubusiness

Total

Net sales to external customers$6,780,481$–$6,780,481

Total¥716,900
Millions of Yen

Thousands of U.S. Dollars

40
FY2020 Nitori Holdings Co., Ltd.

(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, net
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.
5) Information about loss on impairment of long-lived assets by reportable segment
Millions of Yen
For the year ended February 20, 2021

Loss on impairment of long-lived assets

Nitori business

Shimachubusiness

Total¥8,351¥–¥8,351

Nitori business

Shimachubusiness

Total¥4,090¥–¥4,090Millions of Yen
For the year ended February 20, 2020

Loss on impairment of long-lived assets

Thousands of U.S. Dollars
For the year ended February 20, 2021

Loss on impairment of long-lived assets

Nitori business

Shimachubusiness

Total$78,990$–$78,990

6) Information about amortization and unamortized balance of goodwill by reportable segment
Millions of Yen
Nitori business

Shimachubusiness

Total

Amortization

¥–

¥–

¥–

Balance at end of year¥–

¥31,665¥31,665

As of and for the year ended February 20, 2021

Thousands of U.S. Dollars
Nitori business

Shimachubusiness

Total

Amortization

$–

$–

$–

Balance at end of year$–

$299,492$299,492

As of and for the year ended February 20, 2021

Not applicable as of and for the year ended February 20, 2020.
7) Information about gain on bargain purchase by reportable segment
Not applicable.

41
FY2020 Nitori Holdings Co., Ltd.

22. 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, 2021
Category

Officer ofsubsidiary

Close relativeof officer

Name

Shigehito
Matsukura

Mitsuko
NitoriCapital orHeld (held byAddress contribution Occupation
others)––Transaction amount
Businessrelationship

Details oftransaction–

Repre(held bysentative
director of others)
subsidiary Direct 0.04–

Loaning ofmoney (Note2)–

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

Building
lease

Building
lease(Note 3)

Millions of
Yen

Year-end balance

Thousands of
U.S. Dollars

Account

Millions of Thousands of
Yen
U.S. Dollars¥109

Shortterm
loans
receiv$1,031 able

¥109

$1,031

16

Leasehold153 deposits

28

270

Notes: 1. The transaction amount does not include consumption taxes.
2. The interest rate for the loaning of money was determined based on the market interest rate.
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
Name

Capital orHeld (held byAddress contribution Occupation
others)

Officer

Toshiyuki
Shirai–

Representative
director of (held byothers)theCompany Direct 0.04

Officer

FumihiroSudo–(held byDirectorothers)of theCompany Direct 0.01

Category

Officer ofsubsidiary

Close relativeof officer

Shigehito
Matsukura

Mitsuko
Nitori––––Transaction amountYear-end balance

Businessrelationship

Details oftransaction–

Exercise ofstock options(Note 2)

¥56

–

¥–

–

Exercise ofstock options(Note 2)

11

–

–

–

Repre(held bysentative
director of others)
subsidiary Direct 0.04–

Exercise ofstock options(Note 2)
Loaning ofmoney (Note3)

Shortterm
loans
receiv109 able

109–

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

Building
lease

Building
lease(Note 4)

Leasehold16 deposits

28

Millions of Yen

Account

Millions of Yen

83

Notes: 1. The transaction amount does not include consumption taxes.
2. This represents the exercise of stock 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.

42
FY2020 Nitori Holdings Co., Ltd.