Consolidated Financial Statements
For the year ended February 20, 2017

Nitori Holdings Co., Ltd.

Consolidated Balance Sheet
Nitori Holdings Co., Ltd. and consolidated subsidiaries
As at February 20, 2017

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

FY2016 Nitori Holdings Co., Ltd.

Millions of Yen

Thousands of
U.S. Dollars(Note 2)

2016

2017

2017

¥42,327
15,25843,079
90
2,247
2,602
8,160
16,231(8)
129,989¥70,560
18,486
46,520
92
2,354
1,001
15,002
16,174(9)
170,182$625,097
163,771
412,122816
20,858
8,868
132,904
143,288(87)
1,507,639

88,225
3,515
4,424
115,504
2,715
10,477
224,863
11,209103,763
3,899
5,379
126,9232,514
5,615
248,094
13,732919,233
34,54347,659
1,124,407
22,27149,745
2,197,861
121,6552,763
540
15,36215 362
18,079
2,821
8,921
(9)
48,478284,551¥414,541

3,531
856
15,72015 72020,515
2,952
12,239(9)55,804
317,631¥487,814

31,282
7,583
139,263
139 263
181,743
26,155
108,431(87)
494,372
2,813,889$4,321,529

1Consolidated Balance Sheet
Nitori Holdings Co., Ltd. and consolidated subsidiaries
As at February 20, 2017

Millions of Yen

Thousands of
U.S. Dollars(Note 2)

2016

2017

2017

LIABILITIES AND NET ASSETS
Current Liabilities:
Notes and accounts payable-trade (Notes 5 and 11)
Short-term loans payable (Notes 11 and 21)
Lease obligations (Notes 10 and 21)
Accounts payable-other (Note 11)
Income taxes payable (Note 11)
Deferred tax liabilities (Note 16)
Provision for bonuses
Provision for point card certificates
Provision for special benefits to shareholders
Asset retirement obligations (Note 22)
Other
Total current liabilities¥15,356
1,504
188
16,195
14,929
－
3,024
1,031
191
－
15,176
67,597¥16,001
625
187
19,291
15,630
564
3,751
1,301
214
44
18,11275,724$141,757
5,536
1,662
170,901
138,473
4,996
33,234
11,531
1,895
397
160,455
670,844

Non-Current Liabilities:
Long-term loans payable (Notes 11 and 21)
Lease obligations (Notes10 and 21)
Deferred tax liabilities (Note 16)
Provision for directors' retirement benefits
Net defined benefit liability (Note 14)
Asset retirement obligations (Note 22)
Other (Note 5)
Total non-current liabilities
Total liabilities

625
2,518
1
228
2,279
3,902
6,418
15,974
83,572

－
2,330
3
228
2,634
4,565
7,548
17,31093,035－
20,64530
2,028
23,33740,44866,867
153,357
824,201

NET ASSETS (Note(N t 8)
Shareholders’ Equity:
Common stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity

13,37014,411
308,854(13,392)
323,244

13,37016,306361,103(10,188)
380,592

118,451
144,459
3,199,007(90,263)
3,371,654

289
4,165
2,301
(305)
6,450

884
10,3692,243(396)
13,1007,831
91,866
19,872(3,510)116,060

1,174
98
330,968¥414,541

940
144
394,778¥487,814

8,334
1,277
3,497,327$4,321,529

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

FY2016 Nitori Holdings Co., Ltd.

2

Consolidated Statement of Income
Nitori Holdings Co., Ltd. and consolidated subsidiaries
For the year ended February 20, 2017

Net Sales:
Cost of Sales:
Gross profit:
Selling, General and Administrative Expenses (Notes 6 and 15)
Operating income
Non-Operating Income:Interest income
Dividends income
Foreign exchange gains
Vending machine income
Gain on sales of goods
Construction revenue from tenants
Facility use revenue
Other
Non-Operating Expenses:
Interest expenses
Other
Ordinary income
Special Gains:
Gain on sales of non-current assets (Note 6)
Subsidy income
Penalty income
Gain on reversal of subscription rights to shares
Other
Special Losses:
Loss on sales and disposal of non-current assets (Note 6)
Loss on reduction of non-current assets
Penalty for the scrap and build of outlets
Impairment loss (Note 6)
Special retirement expenses
Cancellation penalty
Loss on valuation of investment securities (Note 12)
Other
Income before income taxes
Income Taxes (Note 16):
Current
Deferred

Net Income
Net Income attributable to non-controlling interests
Net Income attributable to owners of parent

2016¥458,140
214,597
243,543
170,503
73,039Millions of Yen
2017¥512,958
234,684
278,274
192,497
85,776

Thousands of
U.S. Dollars(Note 2)
2017
$4,544,281
2,079,058
2,465,223
1,705,329
759,893

450
31
681
227
282
21
351
2,046

433
34
102
246
300
147
174
425
1,865

3,844
304
911
2,184
2,660
1,305
1,549
3,767
16,52876
278
75,00759
19
78
87,563524
172
696
775,725

9
643
10
10
673

645
80
52
7
16
801

5,717
708
466
69
141
7,104

57
431
35
488
11
35
1,060
74,619

73
－
148
10
54
190
61
4
543
87,822

651
－
1,312
97
485
1,683
543
43
4,816
778,014

27,514
103
27,61828,565(787)
27,777253,057(6,977)246,080

47,001
32¥46,969

60,04445¥59,999

531,934403$531,531

See Notes to Consolidated Financial Statements.

FY2016 Nitori Holdings Co., Ltd.

3

Consolidated Statement of Comprehensive Income
Nitori Holdings Co., Ltd. and consolidated subsidiaries
For the year ended February 20, 2017

Net income
Other comprehensive income (loss)
Unrealized holding gain (loss) on securities
Unrealized gain (loss) from hedging instruments
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax
Total other comprehensive income (loss) (Note 7)
Comprehensive income
Total comprehensive income attributable to:
Owners of parent
Non-controlling interests

2016¥47,001

Millions of Yen
2017¥60,044

Thousands of
U.S. Dollars(Note 2)
2017
$531,934(296)(20,930)(1,044)(271)(22,542)¥24,458

594
6,204
(57)
(91)
6,649
¥66,694

5,264
54,967(512)(807)
58,911$590,846¥24,426
32¥66,64945$590,442
403

See Notes to Consolidated Financial Statements.

FY2016 Nitori Holdings Co., Ltd.

4

Consolidated Statement of Changes in Net Assets
Nitori Holdings Co., Ltd. and consolidated subsidiaries
For the year ended February 20, 2017
Millions of Yen
Shareholders’ Equity

Balance at February 21, 2015
Cumulative effect of changes in accounting policies
Balance at February 21, 2015 (as restated)
Changes of items during the year
Dividends from surplus
Net Income attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Net changes in items other than those inshareholders' equity
Total changes of items during the year
Balance at February 21, 2016
Changes of items during the year
Dividends from surplus
Net Income attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Net changes in items other than those inshareholders' equity
Total changes of items during the year
Balance at February 20, 2017

Total
Retainedshareholders'earnings Treasury stock
equityCommonstock

Capitalsurplus¥13,370¥13,725¥267,963¥13,725¥434¥268,398¥13,370－¥13,370686¥14,41140,455¥308,854¥280,419¥586¥25,095¥3,345¥(33)¥28,993¥1,050¥66¥310,531¥(14,639)¥434¥280,854¥586¥25,095¥3,345¥(33)¥28,993¥1,050¥66¥434¥310,965

(1)
1,248

(6,513)
46,969
(1)
1,935

1,247
¥(13,392)

42,389¥323,244

(4)
3,208

(7,749)59,999
(4)
5,102

3,203
¥(10,188)

57,348¥380,592(7,749)59,9991,894－¥13,370

1,894¥16,306

52,249¥361,103

Total net
assets¥(14,639)(6,513)
46,969686

Accumulated Other Comprehensive Income
Total
Unrealized Unrealized gain
accumulated
other Subscription
Nonholding gain
(loss) from Foreign currency Remeasurement(loss) on
hedgingtranslations of defined comprehensive
rights to controllingincomeshares interests
securities
instruments
adjustment
benefit plans(6,513)
46,969
(1)
1,935
(296)
(296)
¥289

(20,930)(20,930)¥4,165(1,044)(1,044)¥2,301(271)(271)¥(305)(22,542)(22,542)¥6,450123
123¥1,17432
32¥98(22,386)
20,002¥330,968(7,749)59,999
(4)
5,102

594
594
¥884

6,204
6,204
¥10,369(57)(57)¥2,243(91)(91)¥(396)

6,649
6,649¥13,100

(233)
(233)
¥940

45
45
¥144

6,461
63,809¥394,778

Thousands of U.S. Dollars (Note 2)
Shareholders’ Equity

Balance at February 21, 2016
Changes of items during the year
Dividends from surplus
Net Income attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Net changes in items other than those inshareholders' equity
Total changes of items during the year
Balance at February 20, 2017

Commonstock

Capitalsurplus$118,451$127,674

Total
Retainedshareholders'earnings Treasury stock
equity$2,736,127$(118,643) $2,863,610(68,651)
531,531(68,651)
531,531(40)
45,205(40)
28,42016,785－$118,451

16,785$144,459

462,879$3,199,007

28,379508,044$(90,263) $3,371,654

Accumulated Other Comprehensive Income
Total
Unrealized Unrealized gain
accumulated
holding gain
(loss) from Foreign currency Remeasurement
other Subscription
Non(loss) on
hedgingtranslations of defined comprehensive
rights to controllingincomeshares interests
securities
instruments
adjustment
benefit plans$2,567$36,898$20,384$(2,702)$57,148$10,406

Total net
assets$874 $2,932,040(68,651)
531,531(40)
45,2055,264
5,264$7,831

54,96754,967$91,866

(512)
(512)
$19,872

(807)
(807)
$(3,510)58,911
58,911$116,060(2,072)(2,072)$8,334403
57,242
403
565,287$1,277 $3,497,327

See Notes to Consolidated Financial Statements.

FY2016 Nitori Holdings Co., Ltd.

5

Consolidated Statement of Cash Flows
Nitori Holdings Co., Ltd. and consolidated subsidiaries
For the year ended February 20, 2017

Millions of Yen

Thousands of U.S.
Dollars(Note 2)

2016

2017

2017

Cash Flows from Operating Activities:
Income before income taxes
Depreciation and amortization
Impairment loss
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for bonuses
Increase (decrease) in net defined benefit liability
Increase (decrease) in provision for point card certificatesInterest and dividends income
Interest expenses
Loss (gain) on sales and disposal of non-current assets
Loss on reduction of non-current assets
Penalty for the scrap and build of outlets
Subsidy income
Loss (gain) on valuation of investment securities
Decrease (increase) in notes and accounts receivable-trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts payable-trade
Increase (decrease) in accrued consumption taxes
Other, net
SubtotalInterest and dividends income received
Interest expenses paid
Payment of penalty for the scrap and build of outlets
Income taxes paid
Income taxes refund
Net cash provided by operating activities¥74,619
10,799
488
3
662
356
1
(482)
76
48
431
35
(643)
－
(2,138)(1,157)(1,020)(2,363)(1,307)78,411
492
(79)
(17)
(26,692)
5,228
57,343¥87,822
12,312
10
1
733
266
270
(468)
59
(571)
－
148
(80)
61
(1,816)(3,742)
1,409
2,447
470
99,334
465
(56)
(15)
(29,311)7,512
77,930$778,014
109,074
97
12
6,493
2,364
2,396
(4,148)524(5,066)
－
1,312
(708)
543
(16,090)(33,152)
12,485
21,681
4,171
880,004
4,127
(500)
(139)
(259,665)
66,554690,381

Cash Flows from Investing Activities:
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of intangible assets
Proceeds from sales of intangible assets
Proceeds from government subsidy
Payments for guarantee deposits
Proceeds from collection of guarantee deposits
Payments for lease deposits
Proceeds from collection of lease deposits
Proceeds from guarantee deposits received
Proceeds from lease deposits received
Purchase of long-term prepaid expenses
Purchase of short-term and long-term investment securities
Proceeds from sales of short-term and long-term investment securities
Payments of loans receivable
Proceeds from collection of loans receivable
Other payments
Net cash used in investing activities(10,848)
5,870(28,021)8(1,656)
－
431
(30)
108
(1,101)
356
549
595
(464)
(1,677)
－
(40)
43
(23)
(35,899)(6,581)
7,361(34,966)
1,708(4,155)395
291(1,678)128(2,856)
56
387
1,145
(2,103)－17(1,191)18(26)(42,047)(58,307)65,216(309,766)
15,135(36,809)
3,507
2,580
(14,868)
1,141(25,305)497
3,431
10,145(18,633)－
155(10,554)167(232)(372,498)

FY2016 Nitori Holdings Co., Ltd.

6

Consolidated Statement of Cash Flows
Nitori Holdings Co., Ltd. and consolidated subsidiaries
For the year ended February 20, 2017

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

Millions of Yen

Thousands of U.S.
Dollars(Note 2)

2016

2017

2017

(4,392)(188)(1)(6,509)1,148(9,943)(419)
11,08025,713¥36,794(1,504)(188)(4)(7,753)
3,036(6,414)(227)
29,24036,794¥66,035(13,331)(1,668)(40)(68,687)
26,900(56,826)(2,014)
259,043
325,961$585,004

See Notes to Consolidated Financial Statements.

FY2016 Nitori Holdings Co., Ltd.

7

Notes to Consolidated Financial Statements
Nitori Holdings Co., Ltd. and consolidated subsidiaries
For the year ended February 20, 2017

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

2. Basis of Translation
The accompanying consolidated financial statements are expressed in Japanese yen, and solely for theconvenience of the reader, have been translated into United States dollars at the rate of ¥112.88 = U.S.$1, theexchange rate prevailing on February 20, 2017. This translation should not be construed as a representation thatthe amounts shown could be converted into U.S. dollars at such rate.
Japanese yen amount less than a million yen are rounded down to the nearest million yen, except for per sharedata. U.S. dollar amount less than a thousand dollars are rounded down to the nearest thousand dollars, except
for per share data.

3. Principles of Consolidation
1) Scope of Consolidation
The consolidated financial statements include the accounts of the Company and its 23 significant subsidiaries.
2) Financial Statements of Consolidated Subsidiaries
The financial closing dates of consolidated subsidiaries below are different from the balance sheet date of theCompany.
NITORI FURNITURE CO., LTD.························ December 20, 2016
P.T. NITORI FURNITURE INDONESIANITORI FURNITURE VIETNAM EPE
NITORI PUBLIC CO., LTD.
NITORI TAIWAN CO., LTD.
DECO HOME CHINA CO., LTD.
NITORI TAICANG TRADING & LOGISTICS CO., LTD
NITORI USA, INC.
and other 10 subsidiaries ································ December 31, 2016
HOME DECO CO., LTD. ································· January 31, 2017
The above subsidiaries are consolidated using their financial statements as of their respective fiscal year ends,
and necessary adjustments are made to their financial statements to reflect any significant transactions from theirrespective fiscal year ends to that of the Company.

4. Summary of Significant Accounting Policies
1) Investment Securities
The Group has available-for-sale securities. Available-for-sale securities with market quotations are valued at theprevailing market price as at the balance sheet date. Available-for-sale securities without market quotations arestated at cost, cost being determined by the gross average method. Available-for-sale securities with market
quotations are carried at fair value with changes in unrealized holding gain or loss, net of the applicable income
taxes, included directly in “Net Assets”, and the cost of sales is determined by the gross average method.
2) Inventories
Inventories are stated at the lower of cost or market, cost being determined by the moving-average method.
3) Derivatives
Derivative financial instruments are stated at fair value.

8
FY2016 Nitori Holdings Co., Ltd.

4) Property, Plant and Equipment (except leased assets)
Depreciation of property, plant and equipment (except leased assets) is computed by the declining balance method, at
rates based on the estimated useful lives of the assets, except for buildings (excluding building facilities) acquired on
or after April 1, 1998, and facilities attached to buildings and structures acquired on or after April 1, 2016, which are
depreciated based on the straight-line method. Overseas subsidiaries apply the straight-line method. The ranges ofprincipal estimated useful lives are as follows:
Buildings and structures
5 to 47 years
Machinery, equipment and vehicles
2 to 12 years
Tools, furniture and fixtures
5 to 10 years
For buildings on fixed term leaseholds, the Company computes depreciation using the straight-line method, over its
lease term assuming no residual value. These lease terms are principally 20 years.
5) Intangible Assets (except leased assets)
Intangible assets are amortized using the straight-line method. Software for internal use is amortized using thestraight-line method over an estimated useful life of 5 years.
6) Leased Assets
Leased assets under finance lease transactions are depreciated to a residual value of zero by the straight-line
method using the contract term as the useful life.
Regarding finance lease transactions that do not transfer ownership to the lessee, commencing on or before
February 20, 2009, are accounted for as operating leases and related payments are charged to profit as incurred.
7) Allowance for Doubtful Accounts
For receivables classified as “normal,” the allowance for doubtful accounts is provided based on historicalexperience. For receivables classified as “doubtful,” the allowance for doubtful accounts is provided based on an
individual assessment of the collectability of the account.
8) Provision for Bonuses
Provision for bonuses is provided at the estimated amounts, based on actual results during the fiscal year, toprovide for the payments to employees in the following fiscal year.
9) Provision for Point Card Certificates
The Group provides customers with credit points (Nitori Members Card Points) when they make purchases byusing the card. The Group provides a reserve for the estimated future costs of Nitori Members Card Points basedon the historical rate of point usage.
10) Provision for Special Benefit to Shareholders
Provision for special benefit to shareholders is provided for future utilization of granted shareholder benefits. The
amount of the provision is estimated based on the historical rate of use of shareholder benefits.
11) Provision for Directors’ Retirement Benefits
Provision for directors’ and corporate auditors’ retirement benefits of the Company and its certain domestic
consolidated subsidiaries had been recorded until 2004 April for the Company and in 2005 December for thesubsidiaries based on their internal rules at the estimated amount which would be payable if all officers were to
retire at the balance sheet date. The retirement benefits were terminated at that time and its carrying amounts forthe provision are unpaid portions.
12) Accounting Method for Retirement Benefits
Projected benefit obligations are attributed to each period by the benefit formula method over the estimated yearsof service of the eligible employees.
Actuarial gains and losses are amortized using the straight-line method over a specific period (ten years), which iswithin the average estimated remaining service period of employees at the time of recognition, from the following
fiscal year when the gain or loss was recognized.
Unrecognized prior service costs are amortized using the straight-line method over a specific period (ten years),
which is within the average estimated remaining service period of employees at the time of recognition.

9
FY2016 Nitori Holdings Co., Ltd.

13) Foreign Currency Translation
Monetary assets and liabilities denominated in foreign currencies are translated into Japanese yen at theexchange rate in effect at the balance sheet date and the resulting exchange gains or losses are credited or
charged to income as incurred.
The balance sheets of overseas subsidiaries are translated into Japanese yen at the exchange rates prevailing at
the balance sheet date except for the components of net assets excluding minority interests which are translated
at historical rates. Revenue and expense accounts of overseas subsidiaries are translated into Japanese yen at
the average exchange rate.
Differences arising from such translations are shown as “Foreign currency translation adjustment” in the net
assets section.
14) Hedge Accounting
Hedging instruments are recorded at fair value and accounted for using the deferral hedge accounting, underwhich unrealized gain or loss is deferred as a separate component of net assets.
Hedging instruments: Derivative transactions (foreign exchange contracts).
Hedged items: Liabilities exposed to foreign exchange market fluctuation risks.
Hedging policy: Derivative transactions are used solely for hedging the risks arising from adverse fluctuation inforeign 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.
15) Cash and Cash Equivalents
Cash and cash equivalents in the consolidated statement of cash flows consist of cash on hand, bank deposits
payable on demand, and short-term investments with a maturity of three months or less, which are readily
convertible into cash and subject to minor risks of fluctuations in value.
16) Consumption Tax
Transactions subject to consumption taxes are recorded at amounts exclusive of consumption taxes.
17) Income Taxes
Deferred tax assets and liabilities have been recognized in the consolidated financial statements with respect tothe differences between the financial reporting and tax bases of the assets and liabilities, and were measured
using the enacted tax rates and laws which will be in effect when the differences are expected to reverse.
18) Changes in Accounting Policy(Application of Accounting Standard for Business Combinations)
The Company has applied “Revised Accounting Standard for Business Combinations” (Accounting Standards
Board of Japan (ASBJ) Statement No.21, revised on September 13, 2013), “Revised Accounting Standard forConsolidated Financial Statements” (ASBJ Statement No.22, revised on September 13, 2013), “Revised
Accounting Standard for Business Divestitures” (ASBJ Statement No.7, revised on September 13, 2013), andother standards from the fiscal year ended February 20, 2017.
The Company changed its presentation of net income and related items, and renamed “minority interests” as“non-controlling interests.” The consolidated financial statements for the year ended February 20, 2016, havebeen reclassified to reflect this change.
(Application of Practical Solution on a Change in Depreciation Method Due to Tax Reform 2016)
Following revisions to the Corporation Tax Act of Japan, the Company applied the “Practical Solution on a Change
in Depreciation Method Due to Tax Reform 2016” (ASBJ Practical Issues Task Force No.32 issued on June 17,2016), and changed its depreciation method for facilities attached to buildings and structures acquired on or after
April 1, 2016, from the declining-balance method to the straight-line method.
The impact of this change on the consolidated financial statements for the fiscal year ended February 20, 2017,
was immaterial.

10
FY2016 Nitori Holdings Co., Ltd.

19) Accounting Standards Issued but Not Yet Effective“Implementation Guidance on Recoverability of Deferred Tax Assets” ASBJ Guidance No.26 revised on March 28,
2016)1) Overview
Regarding the treatment of the recoverability of deferred tax assets, a review was conducted following theframework of the Japanese Institute of Certified Public Accountants Audit Committee Report No.66 “Audit
Treatment on Determining the Recoverability of Deferred Tax Assets,” whereby companies are categorized into
five categories and deferred tax assets are calculated based on each of these categories.
① Treatment of companies that do not satisfy any of the category requirements for (Category 1)
Through (Category 5)② Category requirements for (Category 2) and (Category 3)③ Treatment related to future deductible temporary differences which cannot be scheduled in companies that
qualify as (Category 2)④ Treatment related to the reasonable estimable period of future pre-adjusted taxable income in companies that
qualify as (Category 3)⑤ Treatment in cases where companies that satisfy the category requirements for (Category 4) but qualify as(Category 2) or (Category 3)2) Scheduled date of adoption
The Company expects to adopt the revised implementation guidance from the beginning of the fiscal year ending
February 20, 2018.
3) Impact of adopting revised implementation guidance
The Company is currently evaluating the impact of adopting this revised implementation guidance on its
consolidated financial statements.
20) Changes in Method of Presentation(Consolidated Statement of Income)In the previous fiscal year, “Facility use revenue” was included in “Other” under “Operating income”. Effectivefrom the fiscal year ended February 20, 2017, the item is now presented separately because it has become
more significant. In order to reflect the change in presentation method, modifications were made to theconsolidated financial statements for the previous fiscal year.
As a result, “Other” of ¥21 million under “Non-operating income” in the consolidated statement of income for theprevious fiscal year was reclassified as “Facility use revenue”.
In the previous fiscal year, “Cancellation penalty” was included in “Other” under “Special losses”. Effective fromthe fiscal year ended February 20, 2017, the item is now presented separately because it has become moresignificant. In order to reflect the change in presentation method, modifications were made to the consolidated
financial statements for the previous fiscal year.
As a result, “Other” of ¥11 million under “Special losses” in the consolidated statement of income for the previous
fiscal year was reclassified as “Cancellation penalty”.

11
FY2016 Nitori Holdings Co., Ltd.

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

As at February 20

Accumulated depreciation

Millions of Yen

Thousands of
U.S. Dollars

2016

2017

2017

¥83,103¥92,379$818,385

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

Thousands of
U.S. Dollars

2016

2017

2017

¥2,169¥2,079$18,422

30

23

205

2,200

2,102

18,627

Notes and accounts payable-trade

30

¥23

$206

Current liabilities (other)

124

124

1,102

Non-current liabilities (other)

2,196

2,162

19,160

Total

2,352

¥2,310$20,470

Millions of Yen

Thousands of
U.S. Dollars

As at February 20

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

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

As at February 20

2016

2017

2017

Investment securities

¥15

¥‐

$‐

4) Amount of reduction entry
The accumulated reduction entry of non-current assets deducted from the acquisition cost of the tangible fixed
assets as a result of based on the funds from government subsidies, etc. is as follows:
Millions of Yen

Thousands of
U.S. Dollars

As at February 20

2016

2017

2017

Tools, furniture and fixtures

¥431

¥431

$3,82412FY2016 Nitori Holdings Co., Ltd.

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

Thousands of
U.S. Dollars

For the years ended February 20

2016

2017

2017

Customer delivery expenses¥21,890¥23,685$209,829

Advertising

13,32914,804

131,149

Salaries, allowances and bonuses

49,20055,198

488,999

Provision for bonuses

2,704

3,361

29,779

983

1,091

9,672

Rents

25,49728,027248,294

Depreciation and amortization

9,398

10,40692,194

Outsourcing

8,370

10,92596,791Millions of Yen

Thousands of
U.S. Dollars

2016

2017

2017

Buildings and structures

¥4

¥603

$5,344

Machinery, equipment and vehicles

4

37

329

Tools, furniture and fixtures

0

4

43

Total

¥9

¥645

$5,717

Millions of Yen

Thousands of
U.S. Dollars

2016

2017

2017

¥37

¥40

$356

Retirement benefit expenses

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

For the years ended February 20

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

For the years ended February 20

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

0

1

15

Tools, furniture and fixtures

9

12

108

Tangible fixed assets-other

－

12

112

Intangible assets-other

6

2

23

Machinery, equipment and vehicles

1

－

－

Tools, furniture and fixtures

3

3

34

Intangible assets-other

0

－

－

¥57

¥73

$651

Millions of Yen

Thousands of
U.S. Dollars

Loss on sales:

Total4) Impairment loss
For the year ended February 20, 2016
LocationGroup

AssetsKita-ku,
Tokyo and other

Systemdevelopment cost

Software¥121$1,075

California, USA

Store assets

Buildings andstructures and
other

366

3,247

13
FY2016 Nitori Holdings Co., Ltd.

The Company identifies groups of assets on a nature of business basis. Impairment loss was recognized for apart of system development cost because of the cancellation of the development project and for store assets witha significant decline in future collectibility.
The recoverable amount of store assets was measured at the net realizable value based on the publicly assessedvalue of fixed assets. System development cost was measured at the value in use and estimated to have norecoverable amount.
For the year ended February 20, 2017
Millions of Yen

Thousands of
U.S. Dollars

Buildings andstructures and
other

6

53

Land

4

44

LocationGroup

AssetsIwata City, Shizuoka

Store assets

Kamikawa, Hokkaido

Idle assets

The Company identifies groups of assets on a nature of business basis. Impairment loss was recognized for land
as a result of a market price decline.
The recoverable value of store assets was measured at the net realizable value based on the publicly assessedvalue of fixed assets. Idle assets were measured at the value in use and assumed to have no recoverable value.

7. Notes to Consolidated Statement of Comprehensive Income

For the years ended February 20

Millions of yen

Thousands of
U.S. Dollars

2016

2017

2017

(¥483)¥801$7,096

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

-

45

401

Total before income tax effect

(483)

846

7,498

Income tax effect

186

(252)

(2,233)Sub-total

(296)

594

5,264

(32,770)

8,776

77,747

Reclassification adjustments

-

‐

‐

Total before income tax effectUnrealized gain (loss) from hedging instruments
Amounts arising during the year

(32,770)

8,776

77,747

Income tax effect

11,839(2,571)(22,780)

Sub-total(20,930)

6,204

54,967(1,044)

(57)

(512)

(1,044)

(57)

(512)

(396)

(122)

(1,081)

Foreign currency translation adjustment
Amounts arising during the year
Sub-total
Remeasurements of defined benefit plans, net of tax
Amounts arising during the year
Reclassification adjustments

4

41

369

(392)

(80)

(711)

Income tax effect

121

(10)

(96)

Sub-total

(271)

(91)

(807)

(¥22,542)¥6,649$58,911

Total before income tax effectTotal other comprehensive income (loss)

14
FY2016 Nitori Holdings Co., Ltd.

8. Notes to Consolidated Statement of Changes in Net Assets
1) Type and number of outstanding shares
For the year ended February 20, 2016

Number of shares (Thousands)
Balance at
beginning of year

Increase

Decrease

Balance at end ofyear

Issued stock:
Common stock

114,443--

114,443

Treasury stock:
Common stock

4,213

0

359

3,854

Type of shares

Notes:1. The increase in 0 thousand shares of treasury stock consists of an increase due to the purchases of shares in quantities less thanthe minimum trading unit of shares.
2. The decrease in 359 thousand shares of treasury stock consists of a decrease in 69 thousand shares due to the exercise of“Stock Benefit Trust (J-ESOP)”, which was resolved on December 20, 2011, and a decrease in 290 thousand shares by theexercise of stock options.
3. The treasury stock balance at end of the fiscal year included 418 thousand shares of common stock held by Trust & Custody
Services Bank, Ltd.(The Trust Account E) which is the trustee under the Stock Benefit Trust(J-ESOP).
For the year ended February 20, 2017

Number of shares (Thousands)
Balance at
beginning of year

Increase

Decrease

Balance at end ofyear

Issued stock:
Common stock

114,443--

114,443

Treasury stock:
Common stock

3,854

0

923

2,931

Type of shares

Notes:1. The increase in 0 thousand shares of treasury stock consists of an increase due to the purchases of shares in quantities less thanthe minimum trading unit of shares.
2. The decrease in 923 thousand shares of treasury stock consists of a decrease in 156 thousand shares due to the exercise of“Stock Benefit Trust (J-ESOP)”, which was resolved on December 20, 2011, and a decrease in 767 thousand shares by theexercise of stock options.
3. The treasury stock balance at end of the fiscal year included 262 thousand shares of common stock held by Trust & Custody
Services Bank, Ltd.(The Trust Account E) which is the trustee under the Stock Benefit Trust(J-ESOP).

2) Subscription rights to shares

As at February 20

Subscription rights to shares as stock options

Millions of Yen

Thousands of
U.S. Dollars

2016

2017

2017

¥1,174¥940$8,334

3) Dividends(1) Dividends paid to shareholders
For the year ended February 20, 2016
Amount(Millions of
Yen)

Resolution approved byType ofsharesBoard of directors(March 30, 2015)

Commonstock¥3,210Common
stock

3,329

(Note 1)

Board of directors(September 28, 2015)(Note 2)

Amount per
share (Yen)

Shareholders’
cut-off date

Effective date¥29

February 20,
2015

April 20,
2015

30

August 20,
2015

October 27,
2015

Note:1.The amount includes the dividend of ¥14 million on shares, held by Trust & Custody Services Bank, Ltd.
(The Trust Account E) which is the trustee under the Stock Benefit Trust(J-ESOP).
2.The amount includes the dividend of ¥12 million on shares, held by Trust & Custody Services Bank, Ltd.
(The Trust Account E) which is the trustee under the Stock Benefit Trust(J-ESOP).

15
FY2016 Nitori Holdings Co., Ltd.

For the year ended February 20, 2017
Amount(Millions ofYen)Amount per
share (Yen)Commonstock¥3,885

Commonstock

Resolution approved byType ofsharesBoard of directors(March 28, 2016) (Note 1)
Board of directors(September 27, 2016)(Note 2)

Shareholders’
cut-off date

Effective date¥35

February 20,
2016

April 22,
2016

3,887

35

August 20,
2016

October 25,
2016

Amount(Thousandsof U.S.
Dollars)

Amount per
share (U.S.
Dollars)

Shareholders’
cut-off dateEffeｆctivedate

For the year ended February 20, 2017

Resolution approved byType ofsharesBoard of directors(March 28, 2016) (Note 1)

Commonstock$34,419$0.31

February 20,
2016

April 22,
2016

Board of directors(September 27, 2016)(Note 2)

Commonstock

34,4430.31

August 20,
2016

October 25,
2016

Note : 1.The amount includes the dividend of ¥14 million (U.S.$129 thousand) on shares, held by Trust & Custody Services Bank, Ltd.
(The Trust Account E) which is the trustee under the Stock Benefit Trust(J-ESOP).
2.The amount includes the dividend of ¥9 million (U.S.$81 thousand) on shares, held by Trust & Custody Services Bank, Ltd.
(The 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, 2016
Type of
Resolution approved by shares

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

Shareholders’
cut-off date

Effectivedate

Board of directors(March 28, 2016)

Retainedearnings¥3,885¥35

February
20, 2016

April 22,
2016

Commonstock

Note : 1.The amount includes the dividend of ¥14 million on shares, held by Trust & Custody Services Bank, Ltd.
(The Trust Account E) which is the trustee under the Stock Benefit Trust(J-ESOP).
For the year ended February 20, 2017
Type of
Resolution approved by shares

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

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

Shareholders’
cut-off date

Effectivedate

Board of directors(March 28, 2017)

Retainedearnings¥5,252$46,535

¥47

$0.41

February
20, 2017

April 21,2017

Commonstock

Note : 1.The amount includes the dividend of ¥12 million (U.S.$109 thousand) on shares, held by Trust & Custody Services Bank, Ltd.
(The Trust Account E) which is the trustee under the Stock Benefit Trust(J-ESOP).

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

16
FY2016 Nitori Holdings Co., Ltd.

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

Thousands of
U.S. Dollars

2016

2017

2017

Cash and deposits¥42,327¥70,560$625,097

Time deposits with maturities exceeding 3 months(5,533)(4,525)(40,092)

Cash and cash equivalents¥36,794¥66,035$585,004

As at February 20

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

Thousands of
U.S. Dollars

2016

2017

2017

Due within one year

¥2,511¥4,824$42,741

Due after one year

29,29635,438313,949

Total¥31,808¥40,263$356,690

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

Thousands of
U.S. Dollars

As at February 20

2016

2017

2017

Due within one year¥219

¥1,133$10,040

Due after one year

1,490

10,20190,378

Total¥1,709¥11,335$100,419

11. Financial Instruments
1. Overview
1) Policy for financial instruments
The Group raises necessary funds based on capital investment plans and fund management plans, mainly throughloans from banks. The Group utilizes derivative financial instruments only to manage risks described below anddoes not enter into such transactions for speculative trading purposes.
2) Types of financial instruments, risk and risk management
Trade notes and accounts receivable-trade are exposed to credit risk of customers, but term for cash collection
is relatively short and actual bad debt ratio is extremely low. The Group manages its credit risk by monitoringbalances for each customer to identify default risk of those customers at an early stage, which results indecrease of credit risk to the Group.
Investment securities with market values are exposed to market risk, and which without market values are
exposed to impairment risk. The Group periodically reviews the fair values of such financial instruments.
Guarantee deposits and lease deposits, which are mostly related to rental of stores, are exposed to credit risk oflessors. The Group manages its credit risk by monitoring balances of these deposits to identify the default risk oflessors at an early stage.

17
FY2016 Nitori Holdings Co., Ltd.

Most of notes and accounts payable-trade and income taxes payable are due within three months.
Long-term loans payable are for long-term working capital. Certain long-term loans payable are exposed tointerest rate fluctuation risk.
Regarding derivatives, the Group enters into forward foreign currency exchange transactions to hedge foreign
currency exchange rate fluctuation risk related to trade receivables and trade payables denominated in foreign
currencies. The Group believes that the credit risk under derivative transactions is fairly low because
counterparties of derivative transactions are limited to financial institutions with a high credit rating. The
execution and management of derivative transactions are performed by the finance department based on
in-house rules.
3) Supplementary explanation on fair value of financial instruments
The fair value of financial instruments is based on market value, or, when no market price is available, arationally estimated amount. Since various assumptions and factors are reflected in estimating the fair value,
different assumptions and factors could result in different fair value. The notional amounts of derivatives in thefollowing table are not necessarily indicative of the actual market risk involved in derivative transactions.
2. Estimated fair value of financial instruments
The carrying value of the financial instruments on the consolidated balance sheet as at February 20, 2016 and2017, and estimated fair value are shown below. The following table does not include financial instruments forwhich it is extremely difficult to determine the fair value.
Millions of Yen
As at February 20, 2016

Carrying value

Estimated fair value

Difference(1) Cash and deposits¥42,327¥42,327¥-(2) Notes and accounts receivable-trade

15,25015,250-(3) Investment securities

2,375

2,375

-

(4) Guarantee deposits

15,362

16,884

1,522(5) Lease deposits

18,07917,611(467)(1) Notes and accounts payable-trade¥15,356¥15,356¥-(2) Accounts payable-other

16,195

16,195-(3) Income taxes payable

14,92914,929-(4) Long-term loans payable, including current
portion of long-term loans payable

2,129

2,126

(3)

Derivative transactions(*)¥6,214¥6,214¥-

AssetsLiabilities

18
FY2016 Nitori Holdings Co., Ltd.

Millions of Yen
As at February 20, 2017

Carrying value

Estimated fair value

Difference(1) Cash and deposits¥70,560¥70,560¥-(2) Notes and accounts receivable-trade

18,476

18,476-(3) Investment securities

3,226

3,226

-

(4) Guarantee deposits

15,72017,061

1,341(5) Lease deposits

20,51520,054(461)(1) Notes and accounts payable-trade¥16,001¥16,001¥-(2) Accounts payable-other

19,291

19,291-(3) Income taxes payable

15,63015,630

-

625

624

(0)

¥14,998¥14,998¥-

Carrying value

Estimated fair value

Difference(1) Cash and deposits$625,097$625,097$-(2) Notes and accounts receivable-trade163,683

163,683-(3) Investment securities

28,58328,583-(4) Guarantee deposits

139,263

151,151

11,887(5) Lease deposits

181,743

177,658(4,084)(1) Notes and accounts payable-trade$141,757$141,757$-(2) Accounts payable-other170,901

170,901-(3) Income taxes payable

138,473

138,473

-

5,536

5,533

(3)

$132,870$132,870$-

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

Derivative transactions(*)

Thousands of U.S. Dollars
As at February 20, 2017

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

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

19
FY2016 Nitori Holdings Co., Ltd.

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

Thousands of
U.S. Dollars

As at February 20

2016

2017

2017

Unlisted stocks

¥388

¥304

$2,699Unlisted stocks are excluded from “Assets (3) Investment securities” because they are not actively traded in a market and it isextremely difficult to determine the fair value.
3. Redemption schedule for monetary assets
Millions of Yen
As at February 20, 2016

Due in 1 year or
less

Due after 1 year
through 5 years

Due after 5 years

Cash and deposits¥42,327¥-¥-

Notes and accounts receivable-trade

15,258

-

-

Total

¥57,586¥-¥-

Guarantee deposits and lease deposits are not disclosed because it is difficult to determine the redemption schedule.
Millions of Yen
As at February 20, 2017

Due in 1 year or
less

Due after 1 year
through 5 years

Due after 5 years

Cash and deposits¥70,560¥-¥-

Notes and accounts receivable-trade

18,486

-

-

Total

¥89,047¥-¥-

As at February 20, 2017

Due in 1 year or
less

Due after 1 year
through 5 years

Due after 5 years

Cash and deposits$625,097$-$-

Notes and accounts receivable-trade163,771

-

-

Total

$788,868$-$-

Thousands of U.S. Dollars

Guarantee deposits and lease deposits are not disclosed because it is difficult to determine the redemption schedule.
4. Redemption schedule for long-term loans payable
Millions of Yen
Due in 1
year or lessAs at February 20, 2016

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

Due after 4
years through5 years

Due after 5
years

Long-term loans
payable¥1,501

¥625

¥-

¥-

¥-

¥-

Total

¥1,501

¥625

¥-

¥-

¥-

¥-

20
FY2016 Nitori Holdings Co., Ltd.

Millions of Yen

As at February 20, 2017

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 loans
payable

¥625

¥-

¥-

¥-

¥-

¥-

Total

¥625

¥-

¥-

¥-

¥-

¥-

Thousands of U.S. Dollars

As at February 20, 2017

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 loans
payable$5,536

$-

$-

$-

$-

$-

Total

$5,536

$-

$-

$-

$-

$-

12. Securities
1) Available-for-sale securities (with market value)
Millions of Yen
As at February 20, 2016

Carrying value

Acquisition cost

Unrealized gain
(loss)¥1,105

¥180

¥924

1,269

1,773

(503)

¥2,375¥1,953¥421

Securities whose carrying value exceeds theiracquisition cost
StocksSecurities whose acquisition cost exceeds theircarrying value
StocksTotal

Note: Unlisted stocks (¥388 million in the consolidated balance sheet) are not included in the above table because determining their fairvalues is extremely difficult.
Millions of Yen
As at February 20, 2017

Carrying value

Acquisition cost

Unrealized gain
(loss)¥1,980¥274¥1,705¥1,246¥1,677(¥431)¥3,226¥1,952¥1,274

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

21
FY2016 Nitori Holdings Co., Ltd.

Thousands of U.S. Dollars
As at February 20, 2017

Carrying value

Acquisition cost

Unrealized gain
(loss)$17,541$2,430$15,110$11,042$14,865($3,822)$28,583$17,295$11,288

Securities whose carrying value exceeds theiracquisition costs
StocksSecurities whose acquisition cost exceeds theircarrying value
StocksTotal

Note: Unlisted stocks (¥304 million ($2,699 thousand) in the consolidated balance sheet) are not included in the above table because
determining their fair values is extremely difficult.

2) Sales of available-for-sale securities
As at February 20, 2016

Not applicable.

Millions of Yen
As at February 20, 2017

Proceeds from sales

Gain on sales

Loss on sales

¥17

¥16

¥-

¥17

¥16

¥-

Stocks
Total

Thousands of U.S.
Dollars
As at February 20, 2017

Proceeds from sales

Gain on sales

Loss on sales

$155

$141

$-

$155

$141

$-

StocksTotal3) Impairment of available-for-sale securities

For the years ended February 20

Loss on valuation of investment securities(unlisted stocks)

Millions of Yen

Thousands of
U.S. Dollars

2016

2017

2017

¥-

¥61

$543

If the market value of securities as of the fiscal year-end declines more than 50% compared with the acquisition
costs, the difference between fair value and the acquisition cost is recognized as loss on valuation in the period of
the decline. In addition, if the fair value of securities as of the fiscal year-end declines from 30% to 50% comparedwith the acquisition costs and if such decline is considered to be material and unrecoverable, the difference
between fair value and the acquisition cost is recognized as loss on valuation in the period of the decline.

22
FY2016 Nitori Holdings Co., Ltd.

13. Derivatives
1. Derivative transactions to which hedge accounting is not applied
Currency-related transactions

As at February 20, 2016

Category

Over-thecountertransactions

Millions of Yen

Transaction type

Notional
amountNotional
amountmaturing
over 1 year

Fair value

Unrealized
Gain (Loss)¥3,035

¥-

(¥7)

(¥7)

Notional
amountNotional
amountmaturing
over 1 year

Fair value

Unrealized
Gain (Loss)

¥546

¥-

¥3

¥3

Notional
amountNotional
amountmaturing
over 1 year

Fair value

Unrealized
Gain (Loss)$4,842

$-

$34

$34

Foreign exchange
forward contract
Selling U.S. dollars

As at February 20, 2017

Category

Over-thecountertransactions

Millions of Yen

Transaction type

Foreign exchange
forward contract
Selling U.S. dollars

As at February 20, 2017

Category

Over-thecountertransactions

Thousands of U.S. Dollars

Transaction type

Foreign exchange
forward contract
Selling U.S. dollars

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

23
FY2016 Nitori Holdings Co., Ltd.

2. Derivative transactions to which hedge accounting is applied
1) Currency-related transactions
As at February 20, 2016

Millions of Yen

Hedging method

Transaction type

Main hedged item

Deferral method

Foreign exchange
forward contract

Accounts
payable-trade

Buying U.S. dollars

Notional
amountNotional amountmaturing over
1 yearFair value¥157,546¥-¥6,222

Note: The fair value of derivative transactions is valued based on the prices quoted by counterparty financial institutions.
As at February 20, 2017

Millions of Yen

Hedging method

Transaction type

Main hedged item

Deferral method

Foreign exchange
forward contract

Accounts
payable-trade

Buying U.S. dollars

Notional
amountNotional amountmaturing over
1 yearFair value¥170,590-¥14,998

Notional
amountNotional amountmaturing over
1 yearFair value$1,511,257$-$132,869

As at February 20, 2017

Thousands of U.S. Dollars

Hedging method

Transaction type

Main hedged item

Deferral method

Foreign exchange
forward contract

Accounts
payable-trade

Buying U.S. dollars

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

2) Interest-related transactions
As at February 20, 2016

Not applicable.
As at February 20, 2017

Not applicable.

24
FY2016 Nitori Holdings Co., Ltd.

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

Thousands of
U.S. Dollars

2016

2017

2017

Balance at beginning of year (as previously reported)¥4,787¥4,836$42,846

Cumulative effect of changes in accounting policies

(675)

‐

‐

Balance at beginning of year (as restated)

For the years ended February 20

4,112

4,836

42,846

Service cost

691

764

6,770

Interest cost

33

47

419

Actuarial loss (gain)

294

176

1,563

Benefits paid

(296)

(253)

(2,248)¥4,836¥5,570$49,351

Balance at end of year

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

(b) Reconciliation of beginning and ending balances of plan assets at fair value is as follows:
Millions of Yen

Thousands of
U.S. Dollars

2016

2017

2017

¥2,442¥2,556$22,648

48

51

452

Actuarial gain (loss)

(101)

93

832

Employer contributions

289

322

2,855

Benefits paid

(122)

(87)

(775,103)¥2,556¥2,936$26,013

For the years ended February 20

Balance at beginning of year
Expected return on plan assets

Plan assets at fair value at end of year(c) Reconciliation of amounts recognized in the consolidated balance sheet is as follows:
Millions of Yen

Thousands of
U.S. Dollars

2016

2017

2017

Projected benefit obligations (funded plans)¥2,559¥2,929$25,948

Plan assets at fair value(2,556)(2,936)(26,013)

3

(7)

(65)

Projected benefit obligations (unfunded plans)

2,276

2,641

23,403Net defined benefit liability in the consolidatedbalance sheet

2,279

2,634

23,337Gross defined benefit liability

2,279

2,634

23,337

Net defined benefit liability in the consolidatedbalance sheet

2,279

2,634

23,337As at February 20

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

25
FY2016 Nitori Holdings Co., Ltd.

(d) The composition of net pension and severance costs is as follows:
Millions of Yen

Thousands of
U.S. Dollars

For the years ended February 20

2016

2017

2017

Service cost

¥691

¥764

$6,770Interest cost

33

47

419

Expected return on plan assets

(48)

(51)

(452)

Actuarial loss

39

39

354

Prior service cost

(35)

(35)

(311)

¥680

¥765

$6,778

Amortization and expenses:

Net pension and severance costs

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

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

Thousands of
U.S. Dollars

For the years ended February 20

2016

2017

2017

Prior service cost

(¥35)

(¥35)

($311)

Actuarial loss

(357)

(45)

(399)

(¥392)(¥80)($711)Total(f) The components of remeasurements of defined benefit plans recognized in accumulated other comprehensive
income (loss) before income tax effect are as follows:

As at February 20

Millions of Yen

Thousands of
U.S. Dollars

2017

2017

2016

Unrecognized prior service cost

¥179

¥144

$1,281

Unrecognized actuarial loss

(624)

(669)

(5,933)

Total(¥444)(¥525)($4,652)(g) The significant components of plan assets, by asset category, are as follows:(% of total plan
assets)
As at February 20

2016

2017

Life insurance company general accounts

46 %

45 %

Debt securities

28

27

Equity securities

24

26

Others

2

2

Total

100 %

100 %

(h) The expected long-term rate of return on plan assets is determined based on the current and expected future
allocation of plan assets and the current and expected future long-term rate of return of various assets of whichplan assets are composed.

26
FY2016 Nitori Holdings Co., Ltd.

(i) Assumptions used for the actuarial computation of the retirement benefit obligations
are as follows:
As at February 20

2016

2017

Primarily 0.8 %Discount rate
Expected long-term rate of return on plan assets
Expected rate of salary increase

Primarily 0.6 %

2.0

2.0

Primarily 4.6

Primarily 4.6

3) Defined contribution pension plans
The contribution to defined contribution pension plans of the Company was ¥329 ($2,919 thousand) for the year
ended February 20, 2017.

15. Stock Options
For the years ended February 20, 2016 and 2017, the Group recognized expenses regarding stock options of¥339 million and ¥315 million ($2,794 thousand), respectively, which are included in selling, general andadministrative expenses.
For the years ended February 20, 2016 and 2017, the Group recognized gains related to unexercised stock
options of ¥10 million and ¥7 million ($69 thousand), which are presented in special gains as “Gain on reversal ofsubscription rights to shares”.
1) The stock options outstanding as of February 20, 2017
The Fourth and Fifth Subscription Rights toSharesDate of annual general
meeting of shareholders

May 12, 2011

Date of meeting of directors

March 29, 2012

Grantees

Directors

4

Company auditors

2

Officers

16

Directors of subsidiaries

5

Employees of subsidiaries

2,664

Type and number of shares

Common stock

Grant date

April 2, 2012

Exercise conditions

None

Intended service period

From April 2, 2012 to March 29, 2015

Exercise period

From March 30, 2015 to March 29,
20171,389,10027
FY2016 Nitori Holdings Co., Ltd.

The Sixth Subscription Rights to Shares

The Seventh Subscription Rights to Shares

Date of annual general
meeting of shareholders

May 9, 2014

May 9, 2014

Date of meeting of directors

June 27, 2014

June 27, 2014

Grantees

Directors

8

Officers

14

Company auditors

3

Directors of subsidiaries

4

Employees of subsidiaries

3,239

Type and number of shares

Common stock

Grant dateJuly 14, 2014

June 30, 2014

Exercise conditions

None

None

Intended service period

From July 14, 2014 to July 14, 2017

From June 30, 2014 to June 30, 2017

Exercise period

From July 15, 2017 to July 14, 2020

From July 1, 2017 to June 30, 2020

121,000

Common stock

904,100

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

2) A summary of stock option activity during the fiscal year ended February 20, 2017
The Fourth and Fifth Subscription Rights toSharesNon-vested (Shares)
At the beginning of the year-

Granted-Forfeited and expired-

Vested-At the end of the year-

Vested (Shares)
At the beginning of the year

943,500-

VestedExercised

767,000

Forfeited and expired

11,100At the end of the year

165,400
The Sixth Subscription Rights to Shares

The Seventh Subscription Rights to Shares

Non-vested (Shares)
At the beginning of the year

121,000

853,500

-

-

2,000

26,100--119,000

827,400

At the beginning of the year--

Vested--Exercised--

Forfeited and expired--

At the end of the year--

GrantedForfeited and expired
VestedAt the end of the year
Vested (Shares)

Note: The Company conducted a stock split of common shares at a ratio of two for one effective February 21, 2014. The number of The
Fourth and Fifth Subscription Rights to Shares issued are retrospectively adjusted for the stock split.

28
FY2016 Nitori Holdings Co., Ltd.

The unit price information is as follows:
The Fourth and Fifth Subscription Rights to Shares
Yen

U.S. dollars

Exercise price¥3,959$35.07

Average stock price at exercise

11,564102.44

Fair value price on grant date

706

6.25

The Sixth Subscription Rights to Shares
Yen

Exercise price
Average stock price at exercise
Fair value price on grant date

¥5,650U.S. dollars$50.05¥1,022

9.05

The Seventh Subscription Rights to Shares
Yen

Exercise price

U.S. dollars¥5,540$49.08Average stock price at exercise--

Fair value price on grant date

996

8.82

Note: The Company conducted a stock split of common shares at a ratio of two for one effective February 21, 2014. The Exercise price of
The Fourth and Fifth Subscription Rights to Shares is adjusted retrospectively for the stock split.

3) Method of estimating the number of options vested expirations
Estimated number of options vested is determined based on expirations ratio of the actual termination.

29
FY2016 Nitori Holdings Co., Ltd.

16. Income Taxes
1) As at February 20, 2016 and 2017, the significant components of deferred tax assets and liabilities are as
follows:
Millions of Yen

Thousands of
U.S. Dollars

2016

2017

2017

¥1,288¥1,296$11,487

Accrued real estate acquisition tax

54

222

1,967

Provision for bonuses

905

1,012

8,972

Provision for point card certificates

340

405

3,591

Unrealized gain on sales of inventories

147

173

1,537

Deferred gains on hedges

639

‐

‐

Net defined benefit liability

718

765

6,781

As at February 20

Deferred tax assets
Accrued enterprise tax, business office tax

Depreciation and amortization

2,994

3,134

27,767

Provision for directors' retirement benefits

73

70

621

Allowance for doubtful accounts

31

22

195

Impairment loss and penalty for the scrap and build of outlets

417

271

2,409

Asset retirement obligations

1,373

1,474

13,059

Other

3,674

4,206

37,266

Sub total

12,66013,055

115,657

Less: valuation allowance(1,587)(1,634)(14,481)

11,073

11,420101,176

2,696

4,628

41,003

Unrealized holding gain on securities

138

390

3,456

Construction assistance fund receivables

760

798

7,078

Asset retirement cost related to asset retirement obligation

899

887

7,860

1,125

886

7,852

30

443

3,926

Total deferred tax liabilities

5,649

8,034

71,178Net deferred tax assets¥5,423¥3,386$29,997

Total deferred tax assets
Deferred tax liabilities
Deferred gains on hedges

Retained earnings of subsidiaries
Other

Note: Deferred tax assets and liabilities as of February 20, 2016 and 2017 are reflected in the following accounts
in the consolidated balance sheet:
Millions of Yen

Thousands of
U.S. Dollars

2016

2017

2017

Current assets – Deferred tax assets¥2,602¥1,001$8,868Investments and other assets – Deferred tax assets

2,821

2,952

26,155Current liabilities – Deferred tax liabilities

-

564

4,996

Non-Current liabilities – Deferred tax liabilities

1

3

30

As at February 20

2) Reconciliation between the effective statutory tax rate and the actual effective tax rates
The details for the years ended February 20, 2016 and 2017 are omitted as the differences between the statutory
tax rate and effective tax rates are 5% or less of the statutory tax rate.

30
FY2016 Nitori Holdings Co., Ltd.

3) Revision of amount of deferred tax assets and deferred tax liabilities due to change in corporate tax
rate.
Following the enactment by the Japanese Diet of the “Partial Revision of Income Tax Act, etc.” (Act No. 15 of
2016) and the “Partial Revision of Local Tax Act, etc.” (Act No. 13 of 2016) on March 29, 2016, and the “Act for
Partial Revision to the Partial Revision, etc. of Consumption Tax Act for the Drastic Reform of the Taxation
System for Ensuring Stable Financial Resources, etc. for Social Security” (Act No. 85 of 2016) and the “Act for
Partial Revision to the Partial Revision, etc. of Local Tax Act and Local Allocation Tax Act for the Drastic Reformof the Taxation System for Ensuring Stable Financial Resources, etc. for Social Security” (Act No. 86 of 2016) on
November 18, 2016, the statutory tax rate will be lowered from fiscal years beginning on or after April 1, 2016.
The effective statutory tax rate used to measure deferred tax assets and liabilities was changed from 32.3% to30.9% for temporary differences expected to be utilized in the fiscal years beginning on February 21, 2017 and to
30.6% for temporary differences expected to be utilized in the fiscal year beginning on February 21, 2019 and theafter.
As a result, deferred tax assets decreased by ¥174 million ($1,542 thousand), deferred tax liabilities decreased by¥25 million ($226 thousand), unrealized gain on hedging instruments increased by ¥209 million ($1,860 thousand)and income taxes-deferred increased by ¥373 million ($3,311 thousand).

17. Investment and Rental Properties
The Company and certain consolidated subsidiaries hold rental properties such as commercial facilities (includingland) in major cities throughout Japan. Certain rental properties are not recognized as rental properties but as realestate including spaces used as rental properties since the Company and certain consolidated subsidiaries use
some of the floor space of these properties.
For the years ended February 20, 2016 and 2017, the carrying values, changes during the year, and fair values of
those properties are as follows:
Millions of Yen

Thousands of
U.S. Dollars

2016

2017

2017

Balance at beginning of year

¥5,946¥29,577$262,029

Increase (decrease)

23,630(7,210)(63,874)

Balance at end of year

29,57722,367

198,155

Fair value at end of year

26,54022,004

194,937

Balance at beginning of year

¥43,635¥32,297$286,122

Increase (decrease)(11,337)

9,782

86,663

Balance at end of year

32,29742,080372,785

Fair value at end of year

26,53647,032416,658

For the years ended February 20

Rental property
Carrying value

Real estate including spaces used as rental properties
Carrying value

Notes: 1. The carrying value is presented after deducting accumulated depreciation from acquisition cost.
2. Increase of rental property during the year ended February 20, 2016 was primarily attributable to newly acquired properties of¥14,406 million and the transfer from real estate including spaces used as rental properties of ¥9,241 million. Increase during theyear ended February 20, 2017 was primarily attributable to newly acquired properties, Abeno-ku, Osaka-shi,（Previously Sharp
Corporation’s Headquarters）of ¥6,830 million ($60,510 thousand) and the transfer from real estate including spaces used asrental properties of ¥4,906 million ($43,469 thousand). Decrease of rental property during the year ended February 20, 2017 wasdue to the termination of the lease contract, Abeno-ku, Osaka-shi,（Previously Sharp Corporation’s Headquarters）of ¥6,589
million ($58,376 thousand) and the transfer from real estate including spaces used as rental properties of ¥11,082 million($98,176 thousand).
3. Decrease of rental estate including spaces used as rental properties during the year ended February 20, 2016 was primarily
attributable to the transfer to rental property of ¥9,241 million, and which was partially offset by depreciation expense of ¥847
million. Increase during the year ended February 20, 2017 was primarily attributable to the transfer to rental property of¥15,343million ($135,931 thousand). Decrease of rental property during the year ended February 20, 2017 was primarily
attributable to the transfer to rental property of ¥4,906million ($43,469 thousand).
4. Fair values of the properties as of year end are calculated by the Company based on certain appraisal values and other indicatorsreflecting the market value.

31
FY2016 Nitori Holdings Co., Ltd.

For the years ended February 20, 2016 and 2017, income from rental properties is as follows:
Millions of Yen

Thousands of
U.S. Dollars

2016

2017

2017

Income from rental properties¥547¥1,024$9,077

Cost of rental properties

284

654

5,798

Gross profit from rental properties

262

370

3,279

Income from rental properties¥3,854¥5,122$45,381

Cost of rental properties

1,963

2,841

25,171Gross profit from rental properties

1,891

2,281

20,209For the years ended February 20

Rental properties

Real estate including spaces used as rental properties

Notes: 1. Effective from the fiscal year ended February 20, 2017, income from rental properties is now presented separately because
it has become more significant. In order to reflect this change in presentation, modifications were made to theconsolidated financial statements for the previous fiscal year.
2.Since the Company and certain of its subsidiaries use certain real estate including spaces used as rental properties for the
purposes of providing services and management, the related rental income is not recognized. Expenses related to rental
property (depreciation, insurance, taxes, etc.) are included in cost of rental properties.

32
FY2016 Nitori Holdings Co., Ltd.

18. Segment Information
1. Segment Information
The Company and its consolidated subsidiaries have been primarily engaged in a single segment of sales ofhome furnishings and interior goods. Therefore, the disclosure of reportable segment information is omitted.
2. Related Information
1) Information about products and services
Information about products and services is as follows:
Millions of Yen
For the year ended February 20, 2016

Sales to external customers

Home furnishingsand interior goods

Other

Total

¥449,251¥8,889¥458,140
Millions of Yen

For the year ended February 20, 2017

Sales to external customers

Home furnishingsand interior goods

Other

Total

¥501,591¥11,367¥512,958

Thousands of U.S. Dollars
For the year ended February 20, 2017

Sales to external customers

Home furnishingsand interior goods

Other

Total

$4,443,577$100,703$4,544,281

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

33
FY2016 Nitori Holdings Co., Ltd.

19. Related Party Transactions
1. Related party transactions between the Company and related parties
Directors and major shareholders (individual shareholders only), etc., of the Company% of Voting
RightsFor the year ended February 20, 2016
Category

Name

Capital orHeld (held byAddress Investment Relationship Others)

Directors

Nitori
Akio-

Represen (held byothers)tativeDirect 3.08
director

Directors

ShiraiToshiyuki-

Represen (held byothers)tativeDirect 0.04
director

Directors

KomiyaShoshin-Director(held byothers)Direct 0.02-

Mother of
representat(held byive director
others)Nitori Akio Direct 0.01

Close relative of Nitori
directors
Mitsuko

-

-

-

-

Balanceat the end of the year

Amounts of Transaction
Business
Nature ofRelationship Transaction

Millions of Yen

¥633

-

Exercise ofstock options(Note 2)

23-

Exercise ofstock options(Note 2)

39-

Exercise ofstock options(Note 2)

Building
lease

Building
lease(Note 3)16

Account

Millions of Yen

-

-

-

-

-

-

Lease
deposits¥28

Notes: 1. Amount of transaction does not include consumption taxes.
2. Exercise of stock options during the fiscal year ended February 20, 2016 approved by annual general meeting of shareholders
on May 12, 2011.
3. The terms and prices of building lease transactions are determined based on a similar transaction in a nearby area.
% of Voting
RightsFor the year ended February 20, 2017
Category

Name

Directors

KomiyaShoshinDirectors

Ikeda
Masanori

Directors

Sudou
Fumihiro

Directors

Kubo
Takao

Matsukura
Directorsof subsidiaries Sigehito

Close relative of Nitori
directors
Mitsuko

Capital orHeld (held byAddress Investment Relationship Others)

-

-

-

-

-

-

-

-

-

-

-

-

Director(held byothers)Direct 0.03

Director(held byothers)Direct 0.03

Director(held byothers)Direct 0.01

Director(held byothers)Direct 0.02

Director(held byothers)Direct 0.04

Mother of
representat(held byive director,
others)Nitori Akio Direct 0.01

Balanceat the end of the year

Amounts of Transaction
Business
Nature ofRelationship Transaction

Millions of Thousands of
Yen U.S. Dollars

Account

Millions of Thousands of
Yen U.S. Dollars-

Exercise ofstock options(Note 2)

¥19

$175

-

-

-

-

Exercise ofstock options(Note 2)

15

140

-

-

-

-

Exercise ofstock options(Note 2)

19

175

-

-

-

-

Exercise ofstock options(Note 2)

15

140

-

-

-

79

701

-

-

-

79

701

-

-

-

79

701

-

-

-

16

Lease
143 deposits

¥28

$253

-

Building
lease

Exercise ofstock options(Note 2)
Loans
receivable(Note 3)
Collection ofloans
receivable(Note 3)
Building
lease(Note 4)

Notes: 1. Amount of transaction does not include consumption taxes.
2. Exercise of stock options during the fiscal year ended February 20, 2017 approved by annual general meeting of shareholders
on May 12, 2011.
3. Interest rates on loans are determined based on market interest rates.
4. The terms and prices of building lease transactions are determined based on a similar transaction in a nearby area.

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

34
FY2016 Nitori Holdings Co., Ltd.

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

Net assets per share of common stock

Yen

U.S. Dollars

2016

2017

2017

¥2,981.27¥3,530.51$31.28

Basic net income per share of common stock425.10540.93

4.79

Diluted net income per share of common stock

421.40536.23

4.75

Notes: Stocks held by Trust & Custody Services Bank, Ltd. on behalf of the J-ESOP are excluded in the number of shares for the
calculation of net assets per share of common stock information.

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

Thousands of
U.S. Dollars

2016

2017

2017

¥46,969¥59,999$531,531---

Net income attributable to ordinary shareholders

46,96959,999531,531

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

110,488

110,918

For the years ended February 20

Net income
Net income not attributable to ordinary
shareholders

Note:

Stocks held by Trust & Custody Services Bank, Ltd. on behalf of the J-ESOP are excluded in the number of shares for the
calculation of average number of shares issued and outstanding during the period.

2) Diluted net income per share
Millions of Yen

Thousands of
U.S. Dollars

For the years ended February 20

2016

2017

2017

Adjustment to net income

¥-

¥-

$-

970

972

Increase in the number of common stock
corresponding to share warrants (Thousand
shares)35
FY2016 Nitori Holdings Co., Ltd.

21. Short-term and Long-term Loans Payable
Balance atFebruary 21,
2016

Balance atFebruary 20,
2017

Millionsof YenMillionsof YenThousands of
U.S. Dollars

Averageinterest
rate (%)

¥-

¥-

$-

-

-

1,504

625

5,536

0.65

-

Current portion of leaseobligations

188

187

1,662

-

-

Long-term loans payable(Excluding current portion)

625

-

-

-

-

Lease obligations(Excluding current portion)

2,518

2,330

20,645-2018–2032

Total

4,836

¥3,143$27,844

-

-

Item

Short-term loans payable
Current portion of long-termloans payable

Repayment
term

Notes: 1. Average interest rates show weighted-average interest rate of loans payable balance at year end.
2. The weighted-average rate of interest for finance lease obligations is not disclosed since related interest charges are included in
the amount of lease obligations in the consolidated balance sheet.
3. Maturities of long-term loans payable and lease obligations, excluding the current portion, due within 5 years as of February 20,
2017 are as follows:
Millions of Yen

Thousands of
U.S. Dollars

Over 1 year less than 2 years¥187$1,657

Over 2 years less than 3 years

187

1,657

Over 3 years less than 4 years

187

1,657

Over 4 years less than 5 years

187

1,657

Lease obligations (excluding current portion)

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

23. Subsequent EventOn April 28, 2017, a share transfer agreement was concluded where by a certain number of shares of Katitas Co.,
Ltd. were transferred from Advantage Partners (located in Minato-ward, Tokyo; Representative partner, Taisuke
Sasanuma) to the Company. A summary of the transaction is as follows:
1. Reason for acquisition of shares
From a product marketing perspective, significant synergies can be expected by adding a new distribution
channel for the Company’s products to the Nitori group because Katitas sells “renovated houses”, about 4,400
houses per year in Japan, and “Challenging lifestyle from scratch” is Katitas corporate policy via providing goodquality houses at reasonable price.
From a remodeling perspective, the company can increase market share faster than before since entering theremodeling market in 2007, aiming to enhance market share in this business in the long run by using Katisas’s
strong network with over 600 excellent building contractors in mainly local areas.
Furthermore, this collaboration will create multiple benefits for both comanies and enhance corporate value.
Therefore, the Company has decided to acquire its shares, and Katitas is newly classified as an equity-method
affiliate.

36
FY2016 Nitori Holdings Co., Ltd.

2. Overview of Katitas
1) Name of the company: Katitas Co., Ltd.
2) Name and title of representative: Representative director, Mr. Katsutoshi Arai
3) Address: 4-2 Mihara, Kiryu City, Gunma Pref., Japan
4) Date of foundation: September 1, 1978
5) Business description: Remodeling of used homes and real estate leasing6) Fiscal year end: End of March
7) Number of employees: 600 (excluding 79 temporary staff)
8) Head office: 1-22-17 Shinkawa, Chuou-ward, Tokyo, Japan
9) Capital stock: ¥3,778 million
10) Total number of issued shares: 1,400,000
11) Principal shareholders and shareholder voting rights ratio
As at March 31, 2017
Names of shareholders
Advantage Partners Ⅳ (Note 1)
SMS AIV (Note 1)
Japan Ireland Investment Partners (Note 1)
Forty Three Limited (Note 1)
AP Cayman Partners Ⅱ, L.P. (Note1)

Number of voting rights

shareholder voting
rights ratio (%) (Note 2)

511,624333,008
310,281
34,11924,012

42.05
27.37
25.5
2.80
1.97

Notes: 1. Advantage Partners Ⅳ provides services to these investment funds.
2. Shareholder voting rights ratio includes potential voting rights and excludes treasury stock.

12) Consolidated financial results for the previons fiscal year
For the year ended March 31, 2016

Millions of Yen

Thousands of U.S. Dollars

Net sales
Gross profit
Operating income
Ordinary income
Net Income attributable to owners of parent
Total assets
Total shareholders’ equity¥39,337
10,133
3,801
3,340
1,996
33,577
9,429$348,488
89,77033,676
29,594
17,690297,466
83,539Yen

U.S. Dollars

Dividend per share¥3,297$29

3. Date of share transfer
End of May 2017
4. Number of shares, acquisition cost and shareholder voting rights ratio1) Number of shares held before acquisition
Number of voting rights
Shareholder voting rights ratio (%)*--

2) Number of shares acquired
Number of voting rights

Shareholder voting rights ratio (%)*

445,207

34.00

3) Acquisition cost
Millions of Yen

Thousands of U.S. Dollars

Total acquisition cost
¥23,300$206,413
4) Number of shares held after acquisition
Number of voting rights
Shareholder voting rights ratio (%)*
445,207

34.00* The shareholder voting rights ratio excludes treasury stock and includes potential voting rights.

5. Source of funds
Cash on hand
6. Other information
Not applicable37
FY2016 Nitori Holdings Co., Ltd.