Consolidated Financial Statements
For the year ended February 20, 2013

Nitori Holdings Co., Ltd.

Consolidated Balance Sheet
Nitori Holdings Co., Ltd. and consolidated subsidiaries
As at February 20, 2013ASSETS
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)
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
Tools, furniture and fixtures, net
Land (Note 17)
Leased assets, net (Note 10)
Construction in progress
Total property, plant and equipment
Intangible assets
Investments and other assets:
Investment securities (Notes 5, 11 and 12)Long-termo g te loans
oa s receivableece ab e
Guarantee deposits (Notes 5 and 11)
Lease deposits (Note 11)
Deferred tax assets (Note 16)
Other (Note 5)
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

Millions of Yen

Thousands of
U.S. Dollars(Note 2)

2012

2013

2013

¥18,768
8,783
24,099
164
1,253
4,082
10,769(7)
67,913¥17,612
10,24628,887
238
1,610
2,654
11,317(3)
72,562$188,026
109,388308,393
2,541
17,19328,335
120,818(34)
774,662

70,7632,548
3,032
65,372
3,348
1,920
146,985
6,544

79,1032,842
3,259
70,6993,341
1,223
160,470
6,731

844,486
30,351
34,795754,775
35,675
13,061
1,713,144
71,865825
333
19,56014,799
3,536
6,681
(27)
45,710199,240¥267,153

1,011
683
18,42815,044
2,389
6,992
(23)
44,526
211,728¥284,290

10,8027,301,30
196,738
160,607
25,506
74,645(250)
475,350
2,260,360$3,035,022

1

Consolidated Balance Sheet
Nitori Holdings Co., Ltd. and consolidated subsidiaries
As at February 20, 2013

Millions of Yen

Thousands of
U.S. Dollars(Note 2)

2012

2013

2013

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)
Income taxes payable (Note 11)
Provision for bonuses
Provision for point card certificates
Provision for special benefits to shareholders
Accounts payable-other (Note 11)
Deferred tax liabilities (Note 16)
Asset retirement obligations (Note 22)
Other
Total current liabilities¥11,690
25,923260
15,374
1,942
1,325
57
8,972
0
31
10,85376,433¥12,929
6,420
246
13,248
2,085
1,751
87
9,207
0
24
9,291
55,294$138,032
68,5482,635
141,436
22,266
18,697928
98,3003
260
99,199590,309

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

4,113
3,127
1
1,743
238
1,559
4,987
15,77092,204
9 , 0

7,155
3,091
1
1,864
237
1,770
5,110
19,231
74,525,5 576,38833,002
13
19,9092,536
18,90154,559205,310795,619
95,6 9NET ASSETS (Note 8)
Shareholders’ Equity:
Common stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity

13,37013,506
167,764(16,663)
177,978

13,37013,553
198,909(16,590)
209,242

142,743
144,695
2,123,509(177,120)
2,233,829

165
(131)
(3,485)(3,450)286
1,875(2,280)
(117)

3,061
20,023(24,342)(1,256)421－
174,949¥267,153603
36
209,764¥284,290

6,445
384
2,239,402$3,035,022

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

2

Consolidated Statement of Income
Nitori Holdings Co., Ltd. and consolidated subsidiaries
For the year ended February 20, 2013
Thousands of
U.S. Dollars(Note 2)Millions of Yen

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
Interest on refund
Other

2012
2013
2013
¥331,016 ¥348,789 $3,723,594
147,077 156,172 1,667,260
183,938 192,616 2,056,334
125,987 131,066 1,399,233
57,951
61,550657,100

Non-Operating Expenses:
Interest expenses
Foreign exchange losses
Other
Ordinary income
Special Gains:
Gain on sales of non-current assets (Note 6)
Gain on bad debts recovered
Gain on abolishment of retirement benefit plan
Other
Special Losses:
Loss on sales and disposal of non-current assets (Note 6)
Penalty for the scrap and build of outlets
Loss on valuation of investment securities (Note 12)
Impairment loss (Note 6)
Loss on disaster
Loss on adjustment for changes of accounting standard for asset retirement obligations
Loss on cancellation of lease contracts
Other
Income before income taxes and minority interests
Income Taxes (Note 16):
Current
Deferred

Net Income Before Minority Interests
Minority Interests in Income
Net Income

391
16
425
229
95
41
253
1,453

353
16
－
230
167
119
203
1,091

3,776
180
－
2,463
1,788
1,272
2,168
11,650250－
3253
59,151

189
242
14
446
62,195

2,020
2,590
157
4,768
663,981

3
58
104
3
170

895
－
－
28
923

9,560
－
－
300
9,861

104
464
56
－
1,432
700
3
92
2,852
56,469

95
172
－
55
－
－
40
18
382
62,736

1,022
1,838
－
596
－
－
429
197
4,085
669,757

23,046(125)
22,92025,625
1,263
26,888273,567
13,490287,057

33,548－¥33,548

35,847
36¥35,811382,699384$382,314

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, 2013

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

Millions of Yen

Thousands of
U.S. Dollars(Note 2)

2012
¥33,5482013¥35,8472013$382,699

51
587
(964)
(324)
¥33,223

121
2,006
1,205
3,333
¥39,180

1,293
21,423
12,86535,582$418,281¥33,223－¥39,14436$417,897
384

See Notes to Consolidated Financial Statements.

4Consolidated Statement of Changes in Net Assets
Nitori Holdings Co., Ltd. and consolidated subsidiarie
For the year ended February 20, 201
Millions of Yen
Shareholders’ Equity

Balance at February 21, 2011
Changes of items during the yea
Dividends from surplus
Net income
Purchase of treasury stock
Change of scope of consolidation
Net changes in items other than those inshareholders' equity
Total changes of items during the yea
Balance at February 20, 2012
Changes of items during the yea
Dividends from surplus
Net income
Purchase of treasury stock
Disposal of treasury stock
Net changes in items other than those inshareholders' equity
Total changes of items during the yea
Balance at February 20, 2013

Commonstock

CapitalsurplusRetainedearnings

Treasury
stock

Total
shareholders'equity¥13,370¥13,506¥138,677¥(16,662)¥148,892(4,384)33,548(0)(76)－¥13,370－¥13,506

29,087¥167,764

47－¥13,37047¥13,553

31,144¥198,909

Unrealized
holdinggain(loss) on
securities

Unrealizedgain(loss)
fromhedging
instruments

Foreigncurrencytranslation
adjustment

Total accumulated
othercomprehensive
incomeSubscription
rights tosharesMinority
interests

Total net
assets¥114¥(718)¥(2,521)¥(3,125)¥272－¥146,038(4,384)33,548
(0)
(76)

(0)
¥(16,663)

29,086¥177,978(1,020)
1,092(4,667)35,811(1,020)1,140

72¥(16,590)

31,264¥209,242(4,667)35,811

Accumulated Other Comprehensive Income(4,384)33,548
(0)
(76)
51
51
¥165

587
587
¥(131)(964)(964)¥(3,485)

(324)
(324)
¥(3,450)

149
149
¥421

－
－
－

(175)
28,910¥174,949(4,667)35,811(1,020)
1,140

121
121
¥286

2,006
2,006
¥1,8751,205
1,205¥(2,280)

3,333
3,333
¥(117)

182
182
¥603

36
36
¥36

3,551
34,815¥209,764

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

Balance at February 21, 2012
Changes of items during the yea
Dividends from surplus
Net income
Purchase of treasury stock
Disposal of treasury stock
Net changes in items other than those inshareholders' equity
Total changes of items during the yea
Balance at February 20, 2013

Commonstock

CapitalsurplusRetainedearnings

Treasury
stock

Total
shareholders'equity$142,743$144,191$1,791,020$(177,897)$1,900,057(10,889)
11,666(49,825)
382,314(10,889)
12,171

777$(177,120)

333,771$2,233,829(49,825)
382,314504－$142,743

504$144,695

332,489$2,123,509

Accumulated Other Comprehensive Income
Unrealized
holdinggain(loss) on
securities

Unrealizedgain(loss)
fromhedging
instruments

Foreigncurrencytranslation
adjustment

Total accumulated
othercomprehensive
incomeSubscription
rights tosharesMinority
interests

Total net
assets$1,768$(1,399)$(37,207)$(36,839)$4,498－$1,867,716(49,825)
382,314(10,889)
12,171

1,293
1,293$3,061

21,423
21,423$20,023

12,865
12,865$(24,342)

35,58235,582$(1,256)

1,947
1,947
$6,445

384
384
$384

37,914
371,685$2,239,402

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, 2013

Cash Flows from Operating Activities:
Income before income taxes and minority interests
Depreciation and amortization
Impairment loss
Amortization of goodwill
Loss on adjustment for changes of accounting standard for asset
retirement obligations
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for bonuses
Increase (decrease) in provision for retirement benefits
Increase (decrease) in provision for point card certificatesInterest and dividends income
Interest expenses
Loss (gain) on sales and disposal of non-current assets
Penalty for the scrap and build of outlets
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
Cash Flows from Investing Activities:
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of intangible assets
Payments for guarantee deposits
Proceeds from collection of guarantee deposits
Payments for lease deposits
Proceeds from collection of lease deposits
Proceeds from guarantee deposits received
Proceeds from lease deposits received
Purchase of long-term prepaid expenses
Proceeds from purchase of investments in subsidiaries resulting inchange in scope of consolidation
Payments of loans receivable
Proceeds from collection of loans receivable
Other payments
Other proceeds
Net cash used in investing activities

Millions of Yen

Thousands of
U.S. Dollars(Note 2)

2012

2013

2013

¥56,469
9,013
－
114

¥62,7369,185
55－$669,757
98,065
596
－

700
0
172
(889)
(561)
(407)
250
100
464
56
956
(1,191)
(922)
1,081
(888)
64,519
385
(251)
(32)
(20,739)26
43,908

－
(7)
128
122
425
(370)
189
(799)
172
－
(444)
(5,141)876(2,323)750
65,557
459
(184)
(34)
(27,796)
3,989
41,989

－
(82)
1,376
1,309
4,541
(3,956)2,020(8,537)
1,838－(4,742)(54,889)
9,361(24,801)8,017
699,874
4,901(1,974)(370)(296,749)
42,588448,270

(763)
2,594
(21,977)
7(516)(1,571)
214
(732)
79
605
279
(1,061)(952)
586(23,457)
2,901
(599)
(406)
113
(542)
362
204
403
(218)

(10,173)
6,263(250,430)
30,980(6,397)(4,343)
1,214(5,786)
3,869
2,186
4,302
(2,329)

28
(109)
－
(3)
－
(22,925)

－
(365)
33
(16)
14
(21,937)－(3,896)
357
(173)
159
(234,196)6

Consolidated Statement of Cash Flows
Nitori Holdings Co., Ltd. and consolidated subsidiaries
For the year ended February 20, 2013

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

Millions of Yen

Thousands of
U.S. Dollars(Note 2)

2012

2013

2013

(8,348)3,100(6,255)(213)(0)(4,380)－(16,099)
(422)
4,460
14,035(21,502)
11,025(5,983)(276)(1,020)(4,667)376(22,047)401(1,594)
18,410(229,559)
117,700(63,879)(2,948)(10,889)(49,824)
4,023(235,377)
4,282(17,021)
196,546(85)¥18,410－¥16,816－$179,525

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, 2013

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 ¥93.67 = U.S.$1, theexchange rate prevailing on February 20, 2013. The approximate rate of exchange prevailing at May 17, 2013was ¥102.29 = U.S.$1. This translation should not be construed as a representation that the amounts shown
could be converted into U.S. dollars at such rate.
Japanese yen amount less than a million yen are rounded down to the nearest million yen, except for per sharedata. U.S. dollar amount less than a thousand dollars are rounded down to the nearest thousand dollars, except
for per share data.

3. Principles of Consolidation
1) Scope of Consolidation
The consolidated financial statements include the accounts of the Company and its 18 significant subsidiaries.
Newly established company NITORI USA, INC. has been included in the scope of consolidation from the fiscal
year ended February 20, 2013.
2) Financial Statements of Consolidated Subsidiaries
The financial closing dates of consolidated subsidiaries below are different from the balance sheet date of theCompany.
P.T. NITORI FURNITURE INDONESIA ··············· November 20, 2012
NITORI FURNITURE CO., LTD. ························ December 20, 2012
NITORI FURNITURE VIETNAM EPE
NITORI (CHINA) CO., LTD.
NITORI PUBLIC CO., LTD.
SHANGHAI LIQIAO INDUSTRIAL CO., LTD.
NITORI TAIWAN CO., LTD.
DECO HOME CHINA CO., LTD.
NITORI USA, INC.
and other 4 subsidiaries ··································· December 31, 2012
HOME DECO CO., LTD. ·································· January 31, 2013
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.

8
FY2012 Nitori Holdings Co., Ltd.

4. Summary of Significant Accounting Policies
1) Investment Securities
The Group has available-for-sale securities. Available-for-sale securities with market quotations are valued at theprevailing market price as at the balance sheet date. Available-for-sale securities without market quotations arestated at cost, cost being determined by the gross average method. Net unrealized gains or losses onavailable-for-sale securities with market quotations are reported net of taxes as a separate component of “Net
Assets” and the cost of sales is determined by the gross average method.
2) Inventories
Inventories are stated at the lower of cost or market, cost being determined by the moving-average method.
3) Derivatives
Derivative financial instruments are stated at fair value.
4) Property, Plant and Equipment (except leased assets)
Depreciation of property, plant and equipment (except leased assets) is computed by the declining balance method, at
rates based on the estimated useful lives of the assets, except for buildings (excluding building facilities) acquired on
or after April 1, 1998, which are depreciated based on the straight-line method. Overseas subsidiaries apply thestraight-line method. The ranges of principal estimated useful lives are as follows:
Buildings and structures
8 to 47 years
Machinery, equipment and vehicles
2 to 12 years
Tools, furniture and fixtures
5 to 10 years
For buildings on fixed term leaseholds, the Company computes depreciation using the straight-line method, over its
lease term assuming no residual value. These lease terms are principally 20 years.
5) Intangible Assets (except leased assets)
Intangible assets are amortized using the straight-line method. Software for internal use is amortized using thestraight-line method over an estimated useful life of 5 years.
6) Leased Assets
Leased assets under finance lease transactions are depreciated to a residual value of zero by the straight-line
method using the contract term as the useful life.
Regarding finance lease transactions that do not transfer ownership to the lessee, commencing on or before
February 20, 2009, are accounted for as operating lease transactions.
7) Allowance for Doubtful Accounts
For receivables classified as “normal,” the allowance for doubtful accounts is provided based on historicalexperience. For receivables classified as “doubtful,” the allowance for doubtful accounts is provided based on an
individual assessment of the collectability of the account.
8) Provision for Bonuses
Provision for bonuses is provided at the estimated amounts, based on actual results during the fiscal year, toprovide for the payments to employees in the following fiscal year.
9) Provision for Retirement Benefits
Provision for employees’ retirement benefits as at the balance sheet date is determined based on the actuarial
valuation of projected benefit obligations and the fair value of the plan assets.
Actuarial differences are amortized using the straight-line basis mainly over 10 years, which are within the
average of the estimated remaining service period of employees, commencing in the following period.
(Additional Information)
In the previous fiscal year, the Company and certain consolidated subsidiaries changed their retirement benefit
plans and such changes were accounted for in accordance with the Accounting Standards Board of Japan(“ASBJ”) Guidance No.1 “Guidance on Accounting Standard for Transfer between Retirement Benefit Plans”.
Due to this change, projected benefit obligation decreased by ¥352 million and prior service gain from thistransition is being amortized over 10 years. Gains of ¥104 million due to transition to the defined contribution
pension plan were posted in “Gain on abolishment of retirement benefit plan” in Special Gain in the consolidated
statement of income for the year ended February 20, 2012.

9
FY2012 Nitori Holdings Co., Ltd.

10) Provision for Directors’ Retirement Benefits
Provision for directors’ and corporate auditors’ retirement benefits of the Company and certain of its consolidated
subsidiaries is provided based on their internal rules and is calculated at the estimated amount which would bepayable if all officers were to retire at the balance sheet date.
11) Provision for Point Card Certificates
The Group provides their customers with credit points (Nitori Members Card Points) when they make purchases
using the card. The Group provides a reserve for the estimated future costs of Nitori Members Card Points basedon the historical rate of point usage.
12) Provision for Special Benefit to Shareholders
Provision for special benefit to shareholders is provided against future utilization of granted benefits. The amountof provision is estimated based on the historical rate of use of shareholder benefits.
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 “Net Assets.”
14) Hedge Accounting
Hedging instruments are recorded at fair value and accounted for using the deferral hedge accounting, underwhich unrealized gain or loss is deferred as a separate component of net assets. With regard to some interest rate
swaps that meet certain criteria, the Group uses the special treatment.
Hedging instruments: Derivative transactions (interest rate swaps and foreign exchange contracts).
Hedged items: Liabilities exposed to interest and foreign exchange market fluctuation risks.
Hedging policy: Derivative transactions are used solely for hedging the risks arising from adverse fluctuation inforeign currency exchange rates and interest rates.
The Company assesses the hedge effectiveness every half year based on internal rules covering derivativetransactions. Derivative transactions are never entered into for the purpose of trading or speculation.
15) Cash and Cash Equivalents
Cash and cash equivalents in the consolidated statement of cash flows consist of cash on hand, bank deposits
payable on demand, and short-term investments with a maturity of three months or less, which are readily
convertible into cash and subject to minor risks of fluctuations in value.
16) Consumption Tax
Transactions subject to consumption taxes are recorded at amounts exclusive of consumption taxes.
17) Income Taxes
Deferred tax assets and liabilities have been recognized in the consolidated financial statements with respect tothe differences between the financial reporting and tax bases of the assets and liabilities, and were measured
using the enacted tax rates and laws which will be in effect when the differences are expected to reserve.
18) Application of Accounting Standard for Earnings Per Share
Effective from the fiscal year ended February 20, 2013, the Group has adopted the “Accounting Standard for
Earnings Per Share” (ASBJ Statement, No.2; June 30, 2010), and the “Guidance on Accounting Standard for
Earnings Per Share” (ASBJ Guideline No.4, June 30, 2010).
In the calculations for fully diluted net earnings per share, for stock options that vest after a specified service
period, the Company includes the portion of stock options’ fair value attributable to future service when calculating
the cash proceeds assumed to be receivable upon exercise of the stock options.
The effects of the change are presented in “Amounts per Share” (Note 20).

10FY2012 Nitori Holdings Co., Ltd.

19) Standards issued but not yet effective“The Accounting Standard for Retirement Benefits” (ASBJ Statement No. 26, May 17, 2012) and the“ Guidance on
Accounting Standard for Retirement Benefits” (ASBJ Guidance No. 25, May 17, 2012)(1) Overview
From the perspective of improving financial reporting and in light of global trends, the Accounting Standard andthe Guidance have been revised focusing on the accounting treatment for unrecognized actuarial gain/loss andunrecognized prior service costs, the calculation method for retirement benefit obligations and service costs, andthe enhancement of disclosure.
(2) Application schedule
The Accounting Standard and the Guidance are effective as of the end of the fiscal year beginning on or after
February 21, 2014.
(3) Effect of application of accounting standards
The effect of the application of these Accounting Standard and Guidance on the consolidated financial
statements is currently being evaluated.
20) Change in Method of Presentation(Consolidated Statement of Income)
1. In the previous fiscal year, “Gain on sales of goods” and “Interest on refund” were included in “Other” under“Non-Operating Income”. Effective from the fiscal year ended February 20, 2013, however, these items are now
presented separately because they account for more than 10% of total non-operating income. In order to reflect
the change in presentation method, modifications were made to the financial statements of the previous fiscal
year.
As a result, the amount of ¥391 million for “Other” under “Non-Operating Income” in the consolidated statementof income of the previous fiscal year was divided into “Gain on sales of goods” of ¥95 million, “Interest on refund”
of ¥41 million and “Other” of ¥253 million.
2. In the previous fiscal year, “Loss on cancellation of lease contracts” was included in “Other” under “Special
Losses”. Effective from the fiscal year ended February 20, 2013, however, the item is now presented separately
because it accounts for more than 10% of total special losses. In order to reflect the change in presentation
method, modifications were made to the financial statements of the previous fiscal year.
As a result, the amount of ¥95 million for “Other” under “Special Losses” in the consolidated statement of incomeof the previous fiscal year was divided into “Loss on cancellation of lease contracts” of ¥3 million and “Other” of¥92 million.
(Consolidated Statement of Cash Flows)
In the previous fiscal year, “Income taxes refund” was included in “Income taxes paid” under “Cash Flows fromOperating Activities”. Effective from the fiscal year ended February 20, 2013, however, this item is now
presented separately due to its materiality. In order to reflect the change in presentation method, modifications
were made to the financial statements of the previous fiscal year.
As a result, the amount of ¥(20,712) million for “Income taxes paid” under “Cash Flows from Operating Activities”
in the consolidated statement of cash flows of the previous fiscal year was divided into “Income taxes paid” of¥(20,739) million and “Income taxes refund” of ¥26 million.
21) Additional Information
Effective from the beginning of the fiscal year ended February 20, 2013, the Group has adopted the “AccountingStandard for Accounting Changes and Error Corrections” (ASBJ Statement No. 24 December4, 2009) and the“Guidance on Accounting Standard for Accounting Changes and Error Corrections” (ASBJ Guidance No. 24
December 4, 2009).

11
FY2012 Nitori Holdings Co., Ltd.

5. Notes to Consolidated Balance Sheet
1) 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

2012

2013

2013

¥361

¥338

$3,613

-

69

741

69

-

-

¥430

¥407

$4,355

Notes and accounts payable-trade

¥65

¥89

$954

Non-current liabilities (other)

286

272

2,906

Millions of Yen

Thousands of
U.S. Dollars

As at February 20

Pledged assets:
Buildings and structures
Guarantee deposits
Investments and other assets (other)
Total
Corresponding liabilities:

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

As at February 20

2012

2013

2013

Investment securities

¥15

¥15

$167

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

2012

2013

2013

Customer delivery expenses¥14,937¥16,003$170,854

Advertising

11,64012,409132,476

Salaries, allowances and bonuses

32,401

33,927362,202

Provision for bonuses

1,858

1,911

20,406

Provision for retirement benefits

534

518

5,538

Rents

20,62920,495

218,805

Depreciation and amortization

8,456

8,227

87,833

Outsourcing

6,046

6,223

66,443

Millions of Yen

Thousands of
U.S. Dollars

2012

2013

2013

Machinery, equipment and vehicles

¥3

¥0

$9

Tools, furniture and fixtures

0

0

2

Land

-

894

9,545

Intangible assets and others

-

0

2

¥3

¥895

$9,5602) Gains on sales of non-current assets are as follows:

For the years ended February 20

Total

12
FY2012 Nitori Holdings Co., Ltd.

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

For the years ended February 20

Millions of Yen

Thousands of
U.S. Dollars

2012

2013

2013

¥0

¥1

$12

¥10

¥45

$481

Loss on sales:
Tools, furniture and fixtures
Loss on disposal:
Buildings and structures
Machinery, equipment and vehicles

0

20

219

Tools, furniture and fixtures

2

1

21

Intangible assets and others

90

27

288

¥104

¥95

$1,022

Total4) Impairment loss for the following asset groups for the year ended February 20, 2013 is as follows:
LocationGroup

AssetsIzumi City, Osaka andotherStore assets

Buildings andstructures and
other

Other

Software and other

Idle assets

Millions of Yen

Thousands of
U.S. Dollars

¥46

$498

9

98

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

13
FY2012 Nitori Holdings Co., Ltd.

7. Notes to Consolidated Statement of Comprehensive Income
Millions of yen

Thousands of
U.S. Dollars

2013

2013

¥188

$2,009Reclassification adjustments--

Total before income tax effect

For the years ended February 20

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

188

2,009

Income tax effect

67

716

Sub-total

121

1,293

3,245

34,649Reclassification adjustments--

Total before income tax effect

3,245

34,649

Income tax effect

1,238

13,226Sub-total

2,006

21,423

1,205

12,865

1,205

12,865¥3,333$35,582

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

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

8. Notes to Consolidated Statement of Changes in Net Assets
1) Type and number of outstanding shares
For the year ended February 20, 2012

Number of shares (Thousands)
Balance at
beginning of year

Increase

Decrease

Balance at end ofyear

Issued stock:
Common stock

57,221--

57,221

Treasury stock:
Common stock

2,395

0

-

2,395

Type of shares

Notes: 1. The increase of treasury stock is due to the purchases of shares in quantities less than the minimum trading unit of shares.
2. At the board of directors meeting held on December 20, 2011, the Company resolved to introduce a “Stock Benefit Trust(J-ESOP)”. Under this scheme, Trust & Custody Services Bank, Ltd. has acquired 416 thousand shares of treasury stock on
January 20, 2012. The treasury stock balance at end of the fiscal year included 416 thousand shares of common stock held byTrust & Custody Services Bank, Ltd.
For the year ended February 20, 2013

Number of shares (Thousands)
Balance at
beginning of year

Increase

Decrease

Balance at end ofyear

Issued stock:
Common stock

57,221--

57,221

Treasury stock:
Common stock

2,395

150

157

2,388

Type of shares

Notes:1. The increase in 150 thousand shares of treasury stock is due to the purchases of shares based on the resolution by the board of
directors meeting.
2. The decrease in 157 thousand shares of treasury stock consists of decrease in 93 thousand shares by the exercise of “Stock
Benefit Trust (J-ESOP)” which was resolved on December 20, 2011, and decrease in 63 thousand shares by the exercise ofstock options.
3. The treasury stock balance at end of the fiscal year included 322 thousand shares of common stock held by Trust & Custody
Services Bank, Ltd.

14
FY2012 Nitori Holdings Co., Ltd.

2) Subscription rights to shares
Millions of Yen

Thousands of
U.S. Dollars

As at February 20

2012

2013

2013

Subscription rights to shares as stock options

¥421

¥603

$6,4453) Dividends(1) Dividends paid to shareholders
For the year ended February 20, 2012
Amount(Millions ofYen)Amount per
share (Yen)

Shareholders’
cut-off date

Effective dateCommonstock¥2,191¥40

February 20,
2011

April 27,
2011

Common
stock

2,193

40

August 20,
2011

November2, 2011Amount(Millions ofYen)Amount per
share (Yen)

Shareholders’
cut-off date

Effective date

Resolution approved byType ofsharesBoard of directors(April 4, 2011)
Board of directors(September 27, 2011)
For the year ended February 20, 2013

Resolution approved byType ofsharesBoard of directors(March 30, 2012)

Commonstock¥2,209¥40

February 20,
2012

April 24,
2012

Board of directors(September 26, 2012)

Common
stock

2,488

45

August 20,
2012

November2, 2012Amount(Thousandsof U.S.
Dollars)

Amount per
share (U.S.
Dollars)

Shareholders’
cut-off date

Effective date

For the year ended February 20, 2013

Resolution approved byType ofsharesBoard of directors(March 30, 2012)

Commonstock$23,590$0.42

February 20,
2012

April 24,
2012

Board of directors(September 26, 2012)

Commonstock

26,5670.48

August 20,
2012

November2, 2012(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, 2012
Type of
Resolution approved by shares

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

Shareholders’
cut-off date

Effectivedate

Board of directors(March 30, 2012)

Retainedearnings¥2,209¥40

February
20, 2012

April 24,2012

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 29, 2013)

Retainedearnings¥2,482$26,497

¥45

$0.48

February
20, 2013

April 26,
2013

Commonstock

For the year ended February 20, 2013

Commonstock4) 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.

15
FY2012 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:

As at February 20

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

Millions of Yen

Thousands of
U.S. Dollars

2012

2013

2013

¥18,768¥17,612$188,026

(358)

(796)

(8,501)¥18,410¥16,816$179,525

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 as follows:
Millions of Yen
Machinery,equipment andvehiclesTools, furnitureand fixtures

Intangible assets
and others

Acquisition costs¥150¥2,191¥10

Accumulated depreciation/amortization

124

1,725

6

Net book value

¥25

¥466

¥3

As at February 20, 2012

Millions of Yen

As at February 20, 2013

Acquisition costs

Machinery,equipment andvehiclesTools, furnitureand fixtures

¥111

¥937

Accumulated depreciation/amortization

92

828

Net book value

¥19

¥108

Thousands of U.S. Dollars
Machinery,equipment andvehiclesTools, furnitureand fixtures$1,192$10,006

Accumulated depreciation/amortization

984

8,845

Net book value$207$1,161As at February 20, 2013

Acquisition costs

Future minimum lease payments relating to finance leases accounted for as operating leases are as follows:
Millions of Yen

Thousands of
U.S. Dollars

As at February 20

2012

2013

2013

Due within one year

¥367

¥117

$1,259Due after one year

128

10

109

Total

¥496

¥128

$1,36916
FY2012 Nitori Holdings Co., Ltd.

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

Thousands of
U.S. Dollars

As at February 20

2012

2013

2013

Due within one year¥951

¥1,304$13,924

Due after one year

12,661

21,876

233,548

Total¥13,612¥23,180$247,472

Millions of Yen

Thousands of
U.S. Dollars

Lease payments and depreciation/amortization expenses are as follows:

For the years ended February 20

2012

2013

2013

Lease payments

¥898

¥353

$3,770Depreciation/amortization expenses

898

353

3,770

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

2012

2013

2013

Due within one year

¥104

¥104

$1,116

Due after one year

1,724

1,620

17,298

Total¥1,829¥1,724$18,414

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. The Group manages its
credit risk monitoring balances of customers to identify default risk of customers at an early stage.
Investment securities with market values are exposed to market risk, and which without market values are
exposed to impairment risk. The Group periodically reviews the fair values of such financial instruments.
Guarantee deposits and lease deposits, which are mostly related to rental of stores, are exposed to credit risk oflessors. The Group manages its credit risk monitoring balances of these deposits to identify the default risk oflessors at an early stage.
Most notes and accounts payable-trade and income taxes payable are due within three months.
Short-term loans payable are obtained mainly for short-term working capital, and long-term loans payable are forlong-term working capital. Certain long-term loans payable are exposed to interest rate fluctuation risk. However,
the interest rate fluctuation risk is hedged by interest rate swap transactions.
Regarding derivatives, the Group enters into forward foreign currency exchange transactions to hedge foreign
currency exchange rate fluctuation risk related to trade receivables and trade payables denominated in foreign
currencies. The Group also enters into interest rate swap transactions to hedge interest rate fluctuation risk
related to the loans. The Group believes that the credit risk under derivative transactions is fairly low because
counterparties of derivative transactions are limited to financial institutions with a high credit rating. The
execution and management of derivative transactions are performed by the finance department based on
in-house rules.

17
FY2012 Nitori Holdings Co., Ltd.

3) Supplementary explanation on fair value of financial instruments
The fair value of financial instruments is based on market value, or, when no market price is available, arationally estimated amount. Since various assumptions and factors are reflected in estimating the fair value,
different assumptions and factors could result in different fair value. The notional amounts of derivatives in thefollowing table are not necessarily indicative of the actual market risk involved in derivative transactions.
2. Estimated fair value of financial instruments
The carrying value of the financial statements on the consolidated balance sheet as at February 20, 2012 and2013, and estimated fair value are shown below. The following table does not include financial instruments forwhich it is extremely difficult to determine the fair value.
Millions of Yen
Carrying value

Estimated fairvalue

Difference¥18,768¥18,768

¥-

8,776

8,776

-

(3) Investment securities

533

533

-

(4) Guarantee deposits

19,56020,517956(5) Lease deposits

14,79912,696(2,103)(1) Notes and accounts payable-trade¥11,690¥11,690¥-(2) Short-term loans payable

22,263

22,263-(3) Accounts payable-other

8,972

8,972

-

(4) Income taxes payable

15,374

15,374-(5) Long-term loans payable, including current
portion of long-term loans payable

7,773

7,799

25

Derivative transactions(*)¥(322)¥(322)¥-

As at February 20, 2012

Assets(1) Cash and deposits(2) Notes and accounts receivable-trade

Liabilities

Millions of Yen
Carrying value

Estimated fairvalue

Difference(1) Cash and deposits¥17,612¥17,612¥-(2) Notes and accounts receivable-trade

10,243

10,243-(3) Investment securities

721

721

-

(4) Guarantee deposits

18,42819,5871,158(5) Lease deposits

15,044

13,326(1,717)¥12,929¥12,929¥-(2) Short-term loans payable

760

760

-

(3) Accounts payable-other

9,207

9,207

-

(4) Income taxes payable

13,24813,248-(5) Long-term loans payable, including current
portion of long-term loans payable

12,815

12,8238

Derivative transactions(*)¥3,012¥3,012¥-As at February 20, 2013

AssetsLiabilities(1) Notes and accounts payable-trade18
FY2012 Nitori Holdings Co., Ltd.

Thousands of U.S. Dollars
Carrying value

Estimated fairvalue

Difference(1) Cash and deposits$188,026$188,026$-(2) Notes and accounts receivable-trade109,353

109,353-(3) Investment securities

7,702

7,702

-

(4) Guarantee deposits

196,738

209,107

12,368(5) Lease deposits

160,607142,275(18,331)$138,032$138,032$-(2) Short-term loans payable

8,123

8,123

-

(3) Accounts payable-other

98,30098,300-(4) Income taxes payable

141,436

141,436-(5) Long-term loans payable, including current
portion of long-term loans payable

136,813

136,904

91

Derivative transactions(*)$32,155$32,155$-

As at February 20, 2013

AssetsLiabilities(1) Notes and accounts payable-trade(*)The value of assets and liabilities arising from derivatives is shown at net value, and with the amount in parentheses representing net
liability position.
Notes: 1. Methods to determine the estimated fair value of financial instruments[Assets](1) Cash and deposits, (2) Notes and accounts receivable-trade
The Company uses the carrying value because they will be settled in the short term, meaning that carrying value approximatesfair value.
(3) Investment securities
Fair value of stocks is based on quoted market prices. Additional information on securities classified by holding purpose ispresented in “Securities” (Note 12).
.
(4) Guarantee deposits
Fair value of guarantee deposits is based on the present value of the future cash flows, which are discounted at the rate
determined by reference to an appropriate index such as a government bond yield adjusted for the credit risk related to thematurity schedule(5) Lease deposits
Fair value of lease deposits is based on the present value of the future cash flows, which are discounted at the rate determinedby reference to an appropriate index such as a government bond yield adjusted with the credit risk related to the term remaining.
[Liabilities](1) Notes and accounts payable-trade, (2) Short-term loans payable, (3) Accounts payable-other, (4) Income taxes payable
The Company uses carrying value because they will be settled in the short term, meaning that carrying value approximate fairvalue.
(5) Long-term loans payable
Fair value of long-term loans payable is based on the present value of the total of principal and interest discounted by the rateapplicable to similar new borrowings.
For long-term loans payable with floating interest rates hedged by interest rate swaps subject to special treatment, the fair value isbased on the present value of the total of principal and interest discounted by the rate applicable to similar new borrowings.
(Derivative transactions)
Details of derivative transactions are described in “Derivatives” (Note 13).
2. Investment securities for which fair value is deemed extremely difficult to determine.
Millions of Yen

Thousands of
U.S. Dollars

As at February 20

2012

2013

2013

Unlisted stocks

¥291

¥290

$3,100Unlisted stocks are excluded from “(3) Investment securities” because they are not actively traded in a market and it is extremely
difficult to determine the fair value.

19
FY2012 Nitori Holdings Co., Ltd.

3. Redemption schedule for monetary assets
Millions of Yen
As at February 20, 2012

Due in 1 year or
less

Due after 1 year
through 5 years

Due after 5
years

Cash and deposits¥18,768

¥-

¥-

8,776

-

-

¥27,544¥-¥-

As at February 20, 2013

Due in 1 year or
less

Due after 1 year
through 5 years

Due after 5
years

Cash and deposits¥17,612¥-¥-

Notes and accounts receivable-trade

10,243

-

-

Total

¥27,855¥-¥-

As at February 20, 2013

Due in 1 year or
less

Due after 1 year
through 5 years

Due after 5
years

Cash and deposits$188,026$-$-

Notes and accounts receivable-trade109,353

-

-

Total

$297,379$-$-

Notes and accounts receivable-trade
Total

Millions of Yen

Thousands of U.S. Dollars

4. Redemption schedule for long-term loans payable and lease obligations
Refer to “Short-term and Long-term Loans Payable” (Note 21) in the Notes to Consolidated Financial Statements.

12. Securities
1) Available-for-sale securities (with market value)
Millions of Yen
As at February 20, 2012

Carrying value

Acquisition cost

Unrealized Gain
(Loss)

¥435

¥175

¥259

97

147

(49)

¥533

¥322

¥210

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

Note: Unlisted stocks (¥291 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, 2013

Carrying value

Acquisition cost

Unrealized Gain
(Loss)

¥721

¥275

¥445

-

-

-

¥721

¥275

¥445

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

20
FY2012 Nitori Holdings Co., Ltd.

Thousands of U.S. Dollars
As at February 20, 2013

Carrying value

Acquisition cost

Unrealized Gain
(Loss)$7,702$2,945$4,757---$7,702$2,945$4,757

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

Note: Unlisted stocks (¥290 million ($3,100 thousand) in the consolidated balance sheet) are not included in the above table because
determining their fair values is extremely difficult.

2) Impairment of available for sale securities
Millions of Yen

Thousands of
U.S. Dollars

For the years ended February 20

2012

2013

2013

Impairment loss on available-for-sale securities

¥56

¥-

$-

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

13. Derivatives
1. Derivative transactions to which hedge accounting is not applied
As at February 20, 2012

Millions of Yen

Notional
amountNotional
amountmaturing after
1 yearFair value

Unrealized
gain (loss)

¥372

¥104

¥(102)¥(102)

Notional
amountNotional
amountmaturing after
1 yearFair value

Unrealized
gain (loss)

¥104

¥-

¥(13)

¥(13)

Transaction type

Notional
amountNotional
amountmaturing after
1 yearFair Value

Unrealized
gain (loss)

Foreign exchange forward contract
Buying U.S. dollars$1,119$-$(146)$(146)

Transaction type

Foreign exchange forward contract
Buying U.S. dollars
As at February 20, 2013

Transaction type

Foreign exchange forward contract
Buying U.S. dollars

Millions of Yen

As at February 20, 2013

Thousands of U.S. Dollars

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

21
FY2012 Nitori Holdings Co., Ltd.

2. Derivative transactions to which hedge accounting is applied
1) Currency-related transactions
As at February 20, 2012

Millions of Yen

Hedging method

Transaction type

Main hedged item

Deferral method

Foreign exchange
forward contract

Accounts
payable-trade

Buying U.S. dollars

Notional
amountNotional
amountmaturing
over 1 year

Fair value¥20,852¥-¥(219)

Note: The fair value of derivative transactions is valued using prices quoted by counterparty financial institutions.
As at February 20, 2013

Millions of Yen

Hedging method

Transaction type

Main hedged item

Deferral method

Foreign exchange
forward contract

Accounts
payable-trade

Buying U.S. dollars

Notional
amountNotional
amountmaturing
over 1 year

Fair value¥17,600¥-¥3,025As at February 20, 2013

Thousands of U.S. Dollars

Hedging method

Transaction type

Main hedged item

Deferral method

Foreign exchange
forward contract

Accounts
payable-trade

Buying U.S. dollars

Notional
amountNotional
amountmaturing
over 1 year

Fair value$187,899$-$32,301

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

2) Interest-related transactions
As at February 20, 2012

Hedging method

Transaction typeMillions of Yen

Main hedged item

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

Notional
amountNotional
amountmaturing
over 1 year

Fair value¥2,740¥1,810(Note)

Notional
amountNotional
amountmaturing
over 1 year

Fair value¥3,710¥2,100(Note)

As at February 20, 2013

Hedging method

Transaction typeMillions of Yen

Main hedged item

Special treatment Interest rate swap Long-term loans
payabletransactionof interest rate
Pay fixed/
swaps
Receive floating
As at February 20, 2013

Thousands of U.S. Dollars

Hedging method

Notional
AmountNotional
amountmaturing
over 1 year

Fair value$39,607$22,419(Note)

Transaction type

Main hedged item

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

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

22
FY2012 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.
The Company and certain consolidated subsidiaries have transferred their tax qualified pension plan to a defined
benefit corporate pension plan and also have transferred a portion of their employees’ retirement lump-sum
benefit plan to a defined contribution pension plan after revisions to the employees’ retirement benefit plans on
April 1, 2011.
2) Projected Benefit Obligations
Millions of Yen

Thousands of
U.S. Dollars

2012

2013

2013

¥(3,273)¥(3,661)$(39,087)

Plan assets at fair value

1,579

1,845

19,703

Unfunded retirement benefit obligation(1,693)(1,815)(19,383)

Unrecognized actuarial loss

270

236

2,520

Unrecognized prior service cost

(320)

(285)

(3,047)

Provision for retirement benefits¥(1,743)¥(1,864)$(19,909)

Millions of Yen

Thousands of
U.S. Dollars

As at February 20

Retirement benefit obligations

3) Retirement Benefit Expenses for Employees

For the years ended February 20

2012

2013

2013

Service cost

¥502

¥487

$5,209Interest cost

54

56

607

Expected return on plan assets

(29)

(31)

(337)

Amortization of actuarial loss

37

40

435

Amortization of prior service cost

(31)

(35)

(375)

Contribution of defined contribution pension plan

218

219

2,339

Retirement benefit expenses for employees

¥753

¥738

$7,8784) Assumptions and Policies Used to Calculate Projected Benefit Obligations
2012

2013

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

Straight-line basis

Straight-line basis

Discount rate

2.0%

2.0%

Expected rates of return on plan assets

2.0%

2.0%

Amortization periods for prior service cost

10 years

10 years

Amortization periods for actuarial loss

10 years

10 years

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

23
FY2012 Nitori Holdings Co., Ltd.

15. Stock Options
For the years ended February 20, 2012 and 2013, the Group recognized expenses regarding stock options of¥149 million and ¥275 million ($2,938 thousand), respectively, which are included in selling, general andadministrative expenses.
For the years ended February 20, 2013, the Group recognized profits regarding lapse by un exercise of stock
options of ¥10 million ($110 thousand), which are included in special gains ”other”.
1) The stock options outstanding as of February 20, 2013

Grantees

Resolution approved by annual general
meeting of shareholders (May 16, 2008) andboard of directors (March 17, 2009)

Resolution approved by annual general
meeting of shareholders (May 12, 2011) andboard of directors (March 29, 2012)

Directors

9

Directors

4

Company auditors

2

Company auditors

2

Officers

9

Officers

16

1,966

Directors of subsidiaries

5

Directors and employeesof subsidiaries

94

Employees of subsidiaries

Quality/Technical advisers(External)

5

Employees

2,664

Type and number of shares

Common stock

Grant date

March 26, 2009

April 2､2012

Exercise conditions

None

None

Intended service period

From March 26, 2009 to March 17,
2012

From April 2, 2012 to March 29, 2015

Exercise period

From March 18, 2012 to March 17,
2014

From March 30, 2015 to March 29,
2017362,500

Common stock

694,550

2) A summary of stock option activity during the fiscal year ended February 20, 2013
Resolution approved by annual general meetingof shareholders (May 16, 2008) and board of
directors (March 17, 2009)

Resolution approved by annual general meetingof shareholders (May 12, 2011) and board of
directors (March 29, 2012)

Non-vested (Shares)
334,250--

694,550

3,550

16,550--330,700

678,000--

Vested330,700-

Exercised

63,750-Forfeited and expired

8,000

-

At the end of the year

258,950-

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

24
FY2012 Nitori Holdings Co., Ltd.

The unit price information is as follows:
Resolution approved by annual general
Resolution approved by annual general
meeting of shareholders (May 16, 2008) and meeting of shareholders (May 12, 2011) andboard of directors (March 29, 2012)
board of directors (March 17, 2009)

Exercise price – yen¥5,912¥7,917(U.S. dollars)($63.11)($84.52)¥7,172-($76.56)-¥1,294¥1,413($13.81)($15.08)

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

3) Method of estimating the fair value of stock options
The fair value of the stock options approved by annual general meeting of shareholders (May 12, 2011) and boardof directors (March 29, 2012) is estimated using the Black-Scholes model. The following assumptions were used
to determine the fair value.
Share price variability(Note 1)

28.7%

Projected remaining period(Note 2)

4 years

Projected dividend(Note 3)
Risk-free Interest rate(Note 4)¥80 per share
0.26%

Notes: 1. Calculated based on share price results over 4 years (form April 2008 to April 2012)
2. The projected remaining period is based on the assumption that stock acquisition rights are exercised in the middle of their
exercisable periods because it cannot be reasonably estimated due to the insufficient accumulated data.
3. The projected dividend is based on actual dividend for the year ended February 20, 2012.
4. Risk-free interest rate represents the comparable compound interest rate, as of April 2, 2012, of government bonds whose
remaining period approximates to the projected remaining periods of the stock options.

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

25
FY2012 Nitori Holdings Co., Ltd.

16. Income Taxes
1) As at February 20, 2012 and 2013, the significant components of deferred tax assets and liabilities are as
follows:
Millions of Yen

Thousands of
U.S. Dollars

2012

2013

2013

¥1,413¥1,181$12,611

Accrued real estate acquisition tax

77

153

1,639

Provision for bonuses

751

726

7,754

Provision for point card certificates

535

665

7,106

Unrealized gain on sales of inventories

176

147

1,569

Provision for retirement benefits

600

651

6,956

Depreciation and amortization

1,917

2,224

23,747

Provision for directors' retirement benefits

89

86

927

As at February 20

Deferred tax assets
Accrued enterprise tax, business office tax

Allowance for doubtful accounts

77

66

704

Impairment loss and penalty for the scrap andbuild of outlets

694

746

7,967

Asset retirement obligations

599

640

6,835

Other

2,718

2,646

28,250Sub total

9,646

9,935

106,072

Less: valuation allowance(1,456)(1,391)(14,854)

8,189

8,544

91,218-1,150

12,277

Unrealized holding gain on securities

91

158

1,695

Construction assistance fund receivables

180

757

8,086

Asset retirement cost related to asset retirement
obligation

296

321

3,431

Retained earnings of subsidiaries

-

1,113

11,884

Other

2

1

16

571

3,502

37,393¥7,618¥5,041$53,825

Total deferred tax assets
Deferred tax liabilities
Deferred gains on hedges

Total deferred tax liabilities
Net deferred tax assets

2) Reconciliation between the effective statutory tax rate and the actual effective tax rates reflected in theaccompanying consolidated statement of income for the years ended February 20, 2012 and 2013 is as follows:
2012

2013

-

40.7%

Retained earnings of subsidiaries

-

1.8%

Other – net

-

0.4%

Actual effective tax rates

-

42.9%

Effective statutory tax rate
(Reconciliation)

Note: The details for the fiscal year 2012 are omitted as the differences between the statutory tax rate and effective tax rates are 5% orless of the statutory tax rate.

26
FY2012 Nitori Holdings Co., Ltd.

3) Effect of the amount of deferred tax assets and liabilities due to the change in the corporate tax rate
(As at February 20, 2012)
The “Act for Partial Revision of the Income Tax Act etc. for the Purpose of Creating Taxation System Responding
to Changes in Economic and Social Structures” (Act No.114 of 2011) and the “Act for Special Measures for
Securing Financial Resources Necessary to Implement Measures for Reconstruction following the Great East
Japan Earthquake” (Act No.117 of 2011) were promulgated on December 2, 2011. The reduction of the corporate
tax rate and a special reconstruction corporate tax will apply to corporate taxes effective fiscal years beginning on
or after April 1, 2012. Therefore, the effective tax rate used to measure the Company's deferred tax assets andliabilities was changed from 40.69% to 38.01% for temporary differences expected to be utilized in fiscal years
beginning February 20, 2013 to February 20, 2016 and from 38.01% to 35.64% for temporary differences
expected to be utilized from fiscal years beginning February 21, 2016.
As a result of these changes in the tax rate, deferred tax assets (net of the amount of deferred tax liabilities)
decreased by ¥748 million, and deferred income taxes increased by ¥761 million as of and for the fiscal year
ended February 20, 2012.

27
FY2012 Nitori Holdings Co., Ltd.

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, 2012 and 2013, the carrying values, changes during the year, and fair values of
those properties are as follows:
Millionsof YenThousands of
U.S. Dollars

2012

2013

2013

Balance at beginning of year

¥1,967¥7,732$82,552

Increase (Decrease)

5,764

3,948

42,153

Balance at end of year

7,732

11,682

124,719

Fair value at end of year

7,751

10,120108,039¥12,878¥15,445$164,893

Increase (Decrease)

2,566

4,474

47,773

Balance at end of year

15,445

19,919212,652

Fair value at end of year

11,47813,533

144,476

For the years ended February 20

Rental property
Carrying value

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

Notes: 1. The carrying value is presented after deducting accumulated depreciation from acquisition cost.
2. Increase during the year ended February 20, 2012 was primarily attributable to newly acquired properties of ¥8,850 million
partially offset by depreciation expense of ¥564 million. Increase during the year ended February 20, 2013 was primarily
attributable to newly acquired properties of ¥10,943 million ($116,831 thousand) partially offset by sales of properties of ¥1,886
million ($20,137 thousand).
3. Fair values of the properties as of year end are calculated by the Company based on certain appraisal values and otherindicators reflecting the market value.

For the years ended February 20, 2012 and 2013, income from rental properties is as follows:
Millionsof YenThousands of
U.S. Dollars

2012

2013

2013

Income from rental properties¥1,857¥2,559$27,322

Cost of rental properties

1,062

1,446

15,445795

1,112

11,876

-

885

9,455

For the years ended February 20

Real estate including spaces used as rental properties

Gross profit from rental properties
Other (gain or loss on sales of properties)
Note:

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

28
FY2012 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, 2012

Sales to external customers

Home furnishingsand interior goods

Other

Total

¥326,559¥4,456¥331,016
Millions of Yen

For the year ended February 20, 2013

Sales to external customers

Home furnishingsand interior goods

Other

Total

¥343,501¥5,287¥348,789

Thousands of U.S. Dollars
For the year ended February 20, 2013

Sales to external customers

Home furnishingsand interior goods

Other

Total

$3,667,150$56,444$3,723,594

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.

29
FY2012 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, 2012
Category

Name

Close
relative of Nitori
directors Mitsuko

Capital or
Address Investment Relationship-(held byMother of
representative others)
Direct 0.40
director-

For the year ended February 20, 2013
Category Name

Nitori
Directors Akio
Close
relativeofNitoridirectors Mitsuko

Capital or
Address Investment Relationship--

Held (held by
Others)Amounts ofTransaction
Business
Nature ofRelationship Transaction
Building
lease

Balanceat the end of the year

Millions of Yen Account

Building
lease(Note 3)Lease
¥16 deposits

Amounts of Transaction

Held (held Business Nature of
by Others) Relationship Transaction

Millions of Thousands of
Yen U.S. Dollars Account--(held byothers)Mother of
representative Direct
0.12
director-

Exercise ofstock options(Note 2)

Building
Building lease
lease(Note 3)

¥295

¥16

$3,155¥28

Balanceat the end of the year

% of Voting
Rights(held byothers)Representative Direct
directors
13.12

Millions of Yen

Thousands ofMillions of Yen U.S. Dollars

-

-

Lease
$172 deposits

-

¥28

$305

Notes: 1. Amount of transaction does not include consumption taxes.
2. Exercise of stock option during the fiscal year ended February 20, 2013 approved by annual general meeting of shareholders on
May 16, 2008.
3. The terms and prices of building lease transactions are determined based on a similar transaction in a nearby area.

2. Related party transactions between the consolidated subsidiaries and related parties
Directors and major shareholders (individual shareholders only), etc., of the Company
For the year ended February 20, 2013
Category Name
Nitori
Directors Akio

Capital or
Address Investment Relationship--

Representative
directors% of Voting
RightsAmounts of Transaction

Held (held Business Nature of
by Others) Relationship Transaction

Millions of Thousands of
Yen U.S. Dollars Account--Goods sales(Note 2)

¥13

$144

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

-

-

-

Notes: 1. Amount of transaction does not include consumption taxes.
2. The terms and prices of goods sales transactions are determined in accordance with general transactions.

30
FY2012 Nitori Holdings Co., Ltd.

20. Amounts per ShareYen

U.S. Dollars

2012

2013

2013

¥3,183.28¥3,813.82$40.71

Basic net income per share of common stock

611.91651.67

6.95

Diluted net income per share of common stock611.20651.156.95

As at and for the years ended February 20

Net assets per share of common stock

Note:

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

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

2012

2013

2013

¥33,548¥35,811$382,314---

Net income attributable to ordinary shareholders

33,54835,811

382,314

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

54,82654,953For 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 not included in the number of shares for the
calculation of per share information.

2) Diluted net income per share
Millions of Yen

Thousands of
U.S. Dollars

For the years ended February 20

2012

2013

2013

Adjustment to net income

¥-

¥-

$-

Increase in the number of common stock
corresponding to share warrants (Thousand
shares)62433) Summary of shares not included in the calculation of diluted net income per share due to theiranti-dilutive effect
Stock options granted by the resolution of the annual general meeting of Shareholders on May 12, 2011 andboard of directors on March 29, 2012. (Stock acquisition rights: 13,560 units)
4) Application of Accounting Standard
Effective from the fiscal year ended February 20, 2013, the company has adopted the “Accounting Standard for
Earnings Per Share” (ASBJ Statement, No.2; June 30, 2010), and the “Guidance on Accounting Standard for
Earnings Per Share” (ASBJ Guideline No.4, June 30, 2010).
In the calculations for fully diluted net earnings per share, for stock options that vest after a specified service
period, the company includes the portion of stock options’ fair value attributable to future service when calculating
the cash proceeds assumed to be receivable upon exercise of the stock options.
If this new accounting policy is not applied retroactively, diluted net income per share of the previous fiscal year is¥611.19.

31
FY2012 Nitori Holdings Co., Ltd.

21. Short-term and Long-term Loans Payable
Balance atFebruary 20,
2013

Balance atFebruary 21,
2012
Millionsof YenMillionsof YenThousands of
U.S. Dollars

Averageinterest
rate (%)

Short-term loans payable¥22,263¥760$8,123

0.82–

Current portion of long-termloans payable

3,660

5,660

60,425

0.74

–

260

246

2,635

-

–

Long-term loans payable(Excluding current portion)

4,113

7,155

76,3880.61

2014–2017

Lease obligations(Excluding current portion)

3,127

3,091

33,002-

2014–2032¥33,425¥16,914$180,574

-

–

Item

Current portion of leaseobligations

Total

Repayment
term

Notes: 1. Average interest rates show weighted-average interest rate on the balance of these items at February 20, 2013.
2. The weighted-average rate of interest for finance lease obligations is not disclosed since related interest charges are included in
the amount of lease obligations amount in the consolidated balance sheet.
3. Maturities of long-term loans payable and lease obligations, excluding the current portion, due to be paid back within 5 years as
of February 20, 2013 are as follows:
Millions of Yen

Thousands of
U.S. Dollars

Over 1 year less than 2 years¥3,620$38,646

Over 2 years less than 3 years

2,400

25,622

Over 3 years less than 4 years

509

5,442

Over 4 years less than 5 years

625

6,677

Millions of Yen

Thousands of
U.S. Dollars

Over 1 year less than 2 years¥196$2,098Over 2 years less than 3 years

188

2,010

Over 3 years less than 4 years

188

2,010

Over 4 years less than 5 years

187

2,003

Long-term loans payable (excluding current portion)

Lease obligations (excluding current portion)

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

23. Subsequent Event
Not applicable.

32
FY2012 Nitori Holdings Co., Ltd.