Consolidated Financial Statements
For the year ended February 20, 2022

Nitori Holdings Co., Ltd.

Consolidated Balance Sheet

Nitori Holdings Co., Ltd. and consolidated subsidiaries
As of February 20, 2022

2022

Millions of Yen

Thousands of
U.S. Dollars(Note 1)

2021

2022

ASSETS
Current Assets:
Cash and cash equivalents (Note 16)
Short-term investments (Note 16)
Marketable securities (Notes 4 and 16)
Trade notes and accounts receivable (Note 16)
Allowance for doubtful accounts (Note 16)
Inventories (Note 5)
Other
Total current assets¥127,076
3,359－
39,206(8)
85,93922,794
278,367¥125,487
33,0897,791
37,806(5)
80,737
17,843
302,750$1,105,394
29,220－341,043(73)
747,557
198,285
2,421,428

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

339,139389,745
18,371
26,613
4,420
6,741
13,527
798,561(238,079)
560,481271,613373,221
13,811
24,554
4,384
6,015
9,762
703,362(220,867)
482,494

2,950,066
3,390,272
159,811
231,50338,45358,643
117,674
6,946,426(2,070,977)
4,875,448

22,391
7,088
931
7,615
89
38,116

19,791
9,296
517
7,178
89
36,874

194,775
61,664
8,099
66,240780
331,560

26,585618
18,89028,987
17,495
14,369(72)
106,875¥983,840

25,727665
19,85828,945
18,63914,999(72)
108,765¥930,884

231,261
5,376
164,323
252,155
152,183
124,997(626)
929,671$8,558,110

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

1

Consolidated Balance Sheet

Nitori Holdings Co., Ltd. and consolidated subsidiaries
As of February 20, 2022

LIABILITIES AND EQUITYCurrent Liabilities:
Short-term bank loans (Notes 7 and 16)
Lease obligations (Notes 7, 15 and 16)
Payables:Trade notes and accounts (Notes 7 and 16)
Other (Note 16)
Income taxes payable (Note 16)
Provision for bonuses
Provision for point card certificates
Provision for shareholder benefit program
Other (Notes 7 and 9)
Total current liabilities
Long-term Liabilities:
Long-term debt (Notes 7 and 16)
Lease obligations (Notes 7, 15 and 16)
Provision for retirement benefits for directors and other officers
Liability for retirement benefits (Note 8)
Asset retirement obligations (Note 9)
Other (Note 7)
Total long-term liabilities
Equity (Note 10):
Common stock—authorized, 288,000,000 shares; issued,
114,443,496 shares in 2022 and 2021
Capital surplus
Retained earnings
Treasury stock—at cost, 1,521,865 shares in 2022 and 1,619,063
shares in 2021
Accumulated Other Comprehensive Income:Unrealized gain on available-for-sale securities (Note 4)
Foreign currency translation adjustments
Defined retirement benefit plans
Total accumulated other comprehensive income
Non-controlling interests
Total equity
Total liabilities and equity

Millions of Yen

Thousands of
U.S. Dollars(Note 1)¥35,068
1,663¥48,715
1,570$305,045
14,466

39,76528,594
20,330
4,482
3,113
428
29,735
163,181

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

345,904
248,737
176,849
38,991
27,085
3,723
258,661
1,419,465

50,398
5,605
228
5,741
15,256
10,614
87,845

2,000
5,875
228
5,186
14,91010,945
39,146438,395
48,761
1,991
49,941
132,714
92,334764,138

13,37026,814
692,768

13,37026,255612,082

116,308
233,252
6,026,166(7,771)(8,971)(67,602)

1,227
6,591
(187)
7,631

690
(1,122)
(208)
(640)

10,67557,336(1,631)
66,381－
732,813¥983,840

43,295685,392¥930,884－
6,374,505$8,558,110

2022

2021

2022

See Notes to Consolidated Financial Statements.

2

Consolidated Statement of Income

Nitori Holdings Co., Ltd. and consolidated subsidiaries
For the year ended February 20, 2022

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

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

2022
¥811,581
385,684
425,897
287,627
138,270

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

Thousands of
U.S. Dollars(Note 1)2022
$7,059,684
3,354,941
3,704,743
2,501,976
1,202,766

459
58
1,435
775
365
209
(387)
－
(77)
301
499
－
－
－
(238)
(579)
(49)
737
3,509
141,779

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

3,998
511
12,483
6,748
3,179
1,823
(3,370)
－
(672)
2,619
4,343
－
－
－
(2,078)(5,043)(433)
6,415
30,524
1,233,290

43,616
1,438
45,05496,72442,431(3,848)38,582
92,114379,404
12,514
391,918
841,372¥96,724¥92,114$841,372

Yen

U.S. Dollars¥817.01
816.66123.00

$7.45
－
1.22

¥856.71－140.00

See Notes to Consolidated Financial Statements.

3Consolidated Statement of Comprehensive Income

Nitori Holdings Co., Ltd. and consolidated subsidiaries
For the year ended February 20, 2022

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

2022¥96,724

Millions of Yen
2021¥92,114

Thousands of
U.S. Dollars(Note 1)
2022
$841,372

536
7,713
21
8,271
¥104,995(60)(1,283)173(1,169)¥90,944

4,669
67,098183
71,951$913,323¥104,995¥90,944$913,323

See Notes to Consolidated Financial Statements.

4Consolidated Statement of Changes in Equity

Nitori Holdings Co., Ltd. and consolidated subsidiaries
For the year ended February 20, 2022

Thousands
Number of sharesof common stock
outstanding

Balance at February 21, 2020
Net income attributable to owners of the parent
Cash dividends, ¥111 per share
Purchase of treasury stock
Disposal of treasury stock
Net change in the year
Balance at February 20, 2021
Net income attributable to owners of the parent
Cash dividends, ¥136 per share
Purchase of treasury stock
Disposal of treasury stock
Change in consolidated subsidiary’s
accounting period
Net change in the year
Balance at February 20, 2022

112,467

Millions of Yen

Common stock Capital surplus¥13,370(1)
357
112,824¥25,074

1,181¥13,370(0)97¥26,255

Stockacquisitionrights

¥289

(289)
¥－

Accumulated Other Comprehensive Income
Retained earnings Treasury stock¥532,471
92,114(12,504)¥(10,875)¥612,082
96,724(15,350)¥(8,971)

558

(21)
1,924

112,921¥13,370¥26,814¥692,768

Defined retirement
benefit plans

Non-controlling interests

Total

¥750

¥161

¥(382)

¥529

¥－

(60)
¥690

(1,283)¥(1,122)173¥(208)(1,169)¥(640)

43,295¥43,295

536¥1,227

7,713¥6,591

21¥(187)

8,271¥7,631(43,295)
¥－

(9)
1,209

(687)
－
¥－

Unrealized gain on availableForeign currency
for-sale securities
translation adjustments¥(7,771)

Total equity¥560,861
92,114(12,504)(21)
3,105
41,836¥685,392
96,724(15,350)
(9)
1,768
(687)
(35,024)¥732,813

Thousands of U.S. Dollars (Note 1)

Common stock Capital surplus

Balance at February 20, 2021
Net income attributable to owners of the parent
Cash dividends, $1.18 per share
Purchase of treasury stock
Disposal of treasury stock
Change in consolidated subsidiary’s
accounting period
Net change in the year
Balance at February 20, 2022

$116,308$228,392

Stockacquisitionrights

$－Accumulated Other Comprehensive Income
Retained earnings Treasury stock$5,324,304
841,372(133,532)

4,860$(78,042)$116,308$233,252$6,026,166

Defined retirement
benefit plans

Total

Non-controlling interests$6,006$(9,761)$(1,814)$(5,570)$376,617

4,669$10,675

67,098$57,336183$(1,631)

71,951$66,381(376,617)$－(80)
10,520(5,977)－$－

Unrealized gain on availableForeign currency
for-sale securities
translation adjustments$(67,602)

Total equity$5,962,009
841,372(133,532)(80)
15,380(5,977)(304,666)$6,374,505

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, 2022

Operating Activities:
Income before income taxes
Adjustments for:
Income taxes paid
Income taxes refund
Depreciation and amortization
Loss on impairment of long-lived assets
Amortization of goodwill
Commission expenses
Share of loss (profit) of entity accounted for using equity method
Gain on cancellation of rental contracts
Reversal of provision for loss on cancellation
Reversal of provision for business restructuring
Loss (gain) on sales and retirement of fixed assets
Loss (gain) on change in equity
Changes in asses and labilities:
Decrease (increase) in trade receivables
Decrease (increase) in inventories
Increase (decrease) in trade payables
Increase (decrease) in accrued consumption taxes
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for bonuses
Increase (decrease) in provision for point card certificates
Increase (decrease) in liability for retirement benefits
Other—net
Total adjustments
Net cash provided by operating activities
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
Purchase of short-term and long-term investment securities
Proceeds from sales of short-term and long-term investment securities
Payments of guarantee deposits
Proceeds from refund of guarantee deposits
Purchase of shares of subsidiary (Note 18)
Purchase of shares of subsidiary resulting in change in scope of
consolidation (Note 18)
Payments of leasehold deposits
Proceeds from refund of leasehold deposits
Guarantee deposits received
Refund of guarantee deposits received
Leasehold deposits received
Refund of leasehold deposits received
Purchase of long-term prepaid expenses
Loan advances
Collection of loans receivable
Net cash used in investing activities
Financing Activities:
Proceeds from short-term bank loans
Repayments of short-term bank loans
Repayments of long-term debt
Proceeds from long-term debt
Repayments of lease obligations
Purchase of treasury stock
Dividends paid
Proceeds from exercise of employee stock options
Commission paid
Net cash provided by financing activities
Effect of Exchange Rate Change on Cash and Cash Equivalents
Net Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents, Beginning of Year
Increase in Cash and Cash Equivalents Resulting from
Change in Consolidated Subsidiary’s Accounting Period
Cash and Cash Equivalents, End of Year

Millions of Yen

Thousands of
U.S. Dollars(Note 1)

¥141,779¥130,696$1,233,290(61,562)
1,899
23,785579
2,559－(1,435)
－
－
(499)
(62)
49

(34,610)79
17,831
8,351
－
1,000
(566)
(397)
(352)
－
58
81

(535,511)
16,522206,901
5,043
22,260－(12,483)－－(4,343)
(540)
433

2,294
(4,058)(9,185)(9,029)2(1,032)422
540(1,481)(56,213)85,565

(991)
4,867
(99)
6,486
－
701
591
389
16,763
20,182150,879

19,957(35,300)(79,903)(78,548)
21(8,981)
3,677
4,701(12,889)(488,982)
744,308(56)
30,185(101,520)
1,918(1,642)
(200)
1
(857)
1,620
(48,942)(15,267)534(17,145)40(3,094)－－(1,289)
108
－

(488)
262,575(883,090)
16,691(14,289)(1,741)
8(7,460)14,098(425,732)－(1,082)
599
－
(255)
322
(142)
(150)
－
220
(119,980)(158,304)(1,417)
421
40
－
66
(29)
(354)
(339)
45
(195,985)－(9,416)
5,216－(2,224)
2,805(1,236)(1,310)－1,920(1,043,674)

49,000(95,715)(18,534)
100,000(1,651)(9)(15,360)－－
17,7292,936(13,748)
125,487

46,000(30)(2,000)－(1,588)(21)(12,497)
1,447(1,000)30,309(507)(15,304)
140,791426,235(832,595)(161,221)869,867(14,368)(80)(133,614)－－
154,221
25,546(119,597)
1,091,573

15,337¥127,076－¥125,487

133,418$1,105,394

2022

2021

2022

See Notes to Consolidated Financial Statements.

6Notes to Consolidated Financial Statements
Nitori Holdings Co., Ltd. and consolidated subsidiaries
For the year ended February 20, 2022

1. Basis of Presentation of Consolidated Financial Statements

The accompanying consolidated financial statements have been prepared in accordance with the provisions set
forth in the Japanese Financial Instruments and Exchange Act and its related accounting regulations and inaccordance with accounting principles generally accepted in Japan (“Japanese GAAP”), which are different incertain respects as to the application and disclosure requirements of International Financial Reporting Standards.
In preparing these consolidated financial statements, certain reclassifications and rearrangements have been
made to the consolidated financial statements issued domestically in order to present them in a form which ismore familiar to readers outside Japan. In addition, certain reclassifications have been made in the 2021
consolidated financial statements to conform to the classifications used in 2022.
The consolidated financial statements are stated in Japanese yen, the currency of the country in which Nitori
Holdings Co., Ltd. (the “Company”) is incorporated and operates. The translations of Japanese yen amounts into
U.S. dollar amounts are included solely for the convenience of readers outside Japan and have been made at
the rate of ¥114.96 to $1, the approximate rate of exchange at February 20, 2022. Such translations should not
be construed as representations that the Japanese yen amounts could be converted into U.S. dollars at that or
any other rate.
Japanese yen amounts less than a million yen have been rounded down to the nearest million yen, except forper share data. U.S. dollar amounts less than a thousand dollars have been rounded down to the nearest
thousand dollars, except for per share data.

2. Summary of Significant Accounting Policies

1) Scope of consolidation(1) The consolidated financial statements as of February 20, 2022 include the accounts of the Company and its
28 (27 in 2021) consolidated subsidiaries (collectively, the “Group”).
Names of major consolidated subsidiaries:
Nitori Co., Ltd.
Shimachu Co., Ltd.
Home Logistics Co., Ltd.
NITORI Taiwan Co., Ltd.
NITORI (CHINA) HOLDINGS Co., Ltd.
Deco Home China Co., Ltd.
NITORI (SHANGHAI) HOME FURNISHING CO., LTD.
NITORI (SHANGHAI) HOME FURNISHINGS SALES CO., LTD.
NITORI (Taicang) Trading & Logistics Co., Ltd.
NITORI USA, Inc.
NITORI FURNITURE VIETNAM EPE
NITORI Public Co., Ltd.
HOME DECO Co., Ltd.
and 15 other subsidiaries
The Company passed a resolution at its board of directors meeting held on August 30, 2017 to liquidate P.T.
NITORI FURNITURE INDONESIA, which is a consolidated subsidiary of the Company, and said company iscurrently in the process of liquidation.
(2) Names of major unconsolidated subsidiaries
The Company did not have any unconsolidated subsidiaries.

FY2022 Nitori Holdings Co., Ltd.

7

2) Application of equity method(1) As of February 20, 2022, the Company had one (one in 2021) associate accounted for using the equity
method.
Name of associate accounted for using the equity method:
KATITAS Co., Ltd.
(2) Other specific information if deemed necessary about the application of equity method
As the associate’s reporting date is different from the balance sheet date, financial statements provisionallyprepared based on its latest quarterly financial statements have been used.
3) Financial statements of consolidated subsidiaries
The reporting dates of the following consolidated subsidiaries are different from the balance sheet date.
NITORI Furniture Co., Ltd. ······························· December 20, 2021
NITORI Taiwan Co., Ltd.
NITORI (CHINA) HOLDINGS Co., Ltd.
Deco Home China Co., Ltd.
NITORI (SHANGHAI) HOME FURNISHING CO., LTD.
NITORI (SHANGHAI) HOME FURNISHINGS SALES CO., LTD.
NITORI (Taicang) Trading & Logistics Co., Ltd.
NITORI USA, Inc.
NITORI FURNITURE VIETNAM EPE
NITORI Public Co., Ltd.
and 11 other subsidiaries ································· December 31, 2021
HOME DECO Co., Ltd.···································· January 31, 2022
Shimachu Co., Ltd. ······································· February 28, 2022
As for the consolidated subsidiaries whose reporting dates are not more than three months different from thebalance sheet date, their financial statements as of their respective reporting dates have been used forconsolidation. Necessary adjustments have been made for consolidation purposes to reflect any significant
transactions that occurred between the dates of respective subsidiaries and the balance sheet date. As for
Shimachu Co., Ltd., which became a consolidated subsidiary of the Company during the year ended February
20, 2021, its financial statements as of November 30, 2020, the deemed acquisition date, were used forconsolidation, and necessary adjustments were made for consolidation purposes to reflect any significant
transactions that had occurred between the deemed acquisition date and the balance sheet date. In order tomore appropriately disclose the consolidated financial statements, its financial statements as of the balance
sheet date that were prepared on a basis similar to that for the year-end closing have been used forconsolidation. As a result, for the year ended February 20, 2022, its financial statements have been consolidated
for 12 months from February 21, 2021 to February 20, 2022, and its income and expenses from December 1,
2020 to February 20, 2021 were recorded as an adjustment to retained earnings, a decrease in retained
earnings of ¥687 million ($5,977 thousand), for consolidation.
4) Cash and cash equivalents
Cash and cash equivalents in the consolidated statement of cash flows consist of cash on hand, bank deposits
payable on demand, and short-term investments with a maturity of three months or less, which are readily
convertible into cash and subject to insignificant risk of changes in value.
5) Marketable and investment securities
The Group has available-for-sale securities. Available-for-sale securities with market values are carried at fairvalue with changes in unrealized holding gains or losses, net of the applicable income taxes, included directly in“equity,” and the cost of securities sold is determined by the gross average method. Available-for-sale securities
without market values are stated at cost determined by the gross average method.
As for investments in investment limited partnerships which are deemed as securities pursuant to Article 2,paragraph (2) of the Financial Instruments and Exchange Act of Japan, amounts equivalent to the Group’s share
are recognized on the basis of the latest financial statements of the partnerships available to the Groupdepending on the respective reporting dates set forth in the partnership agreements.

FY2022 Nitori Holdings Co., Ltd.

8

6) Inventories
Nitori business··············· at cost determined by the moving-average method
Shimachu business ········ at cost determined by the retail method
Inventories are stated at the lower of cost or market.
7) Property, plant and equipment (except lease assets and right-of-use assets)
Depreciation of property, plant and equipment (except lease assets and right-of-use assets) of the Company and its
consolidated domestic subsidiaries is computed by the declining balance method based on the estimated useful livesof the assets, except for buildings (excluding facilities attached to buildings) acquired on or after April 1, 1998 andfacilities attached to buildings and structures acquired on or after April 1, 2016, which are depreciated by the straightline method. Consolidated overseas subsidiaries apply the straight-line method to their property, plant and equipment.
The ranges of estimated useful lives are as follows:
Buildings and structures
5 to 47 years
Machinery, equipment and vehicles
4 to 12 years
Tools, furniture and fixtures
2 to 10 years
For buildings on fixed term leaseholds, the Company and its consolidated domestic subsidiaries compute thedepreciation using the straight-line method over the lease term assuming no residual value. These lease terms are
principally 20 years.
8) Intangible assets (except lease assets)
Intangible assets are amortized using the straight-line method. Software for internal use is amortized using thestraight-line method over an estimated useful life of 5 years.
9) Lease assets
Lease assets under finance lease transactions are depreciated to a residual value of zero by the straight-line
method using the contract term as the useful life.
Finance lease transactions that do not transfer ownership to the lessee, commencing on or before February 20,
2009, are accounted for as operating leases, and related payments are charged to expense as incurred.
10) Right-of-use assets
Right-of-use assets are depreciated by the straight-line method over the lesser of the useful life of the asset or
the lease term.
11) Goodwill amortization and period
Goodwill is amortized over 10 years on a straight-line basis.
12) Allowance for doubtful accounts
The Company and certain consolidated subsidiaries record the allowance for doubtful accounts based on
historical experience for normal receivables and on an individual assessment of the collectability of the accountfor doubtful receivables.
13) Provision for bonuses
The Company and certain consolidated subsidiaries record the provision for bonuses at the amount expected tobe paid to their employees based on actual results during the fiscal year in order to cover the payments to theemployees in the following fiscal year.
14) Provision for point card certificates
Customers earn loyalty points by presenting their member card at the time of purchase. Provision for point cardcertificates is recorded at the amount expected to be used by customers in the future.
15) Provision for shareholder benefit program
Provision for shareholder benefit program is recognized for future utilization of granted shareholder benefits andrecorded at the amount expected to be used by shareholders in the future based on the historical rate of use ofshareholder benefits.
16) Provision for retirement benefits for directors and other officers
Provision for retirement benefits for directors and other officers is recorded at the amount required to be paid inaccordance with internal rules if all directors and corporate auditors were to retire at the balance sheet date. The

FY2022 Nitori Holdings Co., Ltd.

9

plans of the Company and its consolidated domestic subsidiaries were abolished in April 2004 and December
2005, respectively, and the recorded amount represents benefits incurred but not yet paid.
17) Accounting method for retirement benefits
Projected benefit obligations are attributed to periods on a benefit formula basis.
Actuarial gains and losses are amortized using the straight-line method over a specific period (mainly 10 years),
which is within the average remaining years of service of the employees at the time of occurrence, from the fiscal
year following the year in which each gain or loss occurs. Prior service costs are amortized using the straight-line
method over a specific period (10 years), which is within the average remaining years of service of theemployees at the time of occurrence.
18) Income taxes
Deferred tax assets and liabilities are recognized in the consolidated financial statements with respect to thedifferences between the financial reporting and tax bases of the assets and liabilities, and measured using theenacted tax rates and laws which will be in effect when the differences are expected to reverse.
19) Foreign currency translation
Monetary assets and liabilities denominated in foreign currencies are translated into Japanese yen at theexchange rate in effect at the balance sheet date, and the resulting exchange gains or losses are credited or
charged to income as incurred.
The balance sheet accounts of consolidated overseas subsidiaries are translated into Japanese yen at theexchange rate prevailing at the balance sheet date except for the components of equity excluding non-controllinginterests, which are translated at the historical rate. Differences arising from such translation are shown as“foreign currency translation adjustments” in the equity section. Revenue and expense accounts of consolidated
overseas subsidiaries are translated into Japanese yen at the average exchange rate.
20) Derivatives and hedge accounting
Derivative financial instruments are stated at fair value.
Hedging instruments are recorded at fair value and accounted for using deferral hedge accounting, under which
any unrealized gain or loss is deferred as a separate component of equity.
Hedging instruments: Derivative transactions (foreign exchange forward contracts)
Hedged items: Trade accounts payable denominated in foreign currencies
Hedging policy: The derivative transactions are used solely for hedging the risk arising from adverse
fluctuations in foreign currency exchange rates.
The Group assesses the hedge effectiveness every half year based on internal rules covering derivativetransactions. Derivative transactions are never entered into for the purpose of trading or speculation.
21) Consumption taxes
Transactions subject to consumption taxes are recorded at amounts exclusive of consumption taxes.
22) Significant accounting estimates
Valuation of property, plant and equipment, and intangible assets(1) Amounts recognized in consolidated financial statements
As of and for the year ended February 20

Property, plant and equipment
Intangible assets
Loss on impairment of long-lived assets

Millions of Yen

Thousands of U.S.
Dollars

2022

2022

¥560,481$4,875,448

38,116

331,560

579

5,043

(2) Information about details of significant accounting estimates of identified items
For property, plant and equipment, and intangible assets, the Group identifies an indication of impairment
when operating income of an asset group has been negative for two consecutive years and its earnings
show a decline and do not show recovery or when any other event indicates that the asset group may be
impaired. When the Group identifies an indication of impairment and if the aggregate amount of
undiscounted future cash flows from the asset group is less than the carrying amount, the Group reduces the
carrying amount to its recoverable amount and recognizes such reduction as an impairment loss.

FY2022 Nitori Holdings Co., Ltd.

10

The Group estimated undiscounted future cash flows based on its business plan, taking account of future
uncertainties. If any estimate is required to be revised due to a change in future uncertain economic
conditions, the amount of impairment loss to be recognized in the years ending on or after March 31, 2023
may be affected.
23) Accounting standards issued but not yet effective(1) Accounting Standard for Fair Value Measurement and related accounting standards and implementation
guidance- “Accounting Standard for Fair Value Measurement” (Accounting Standard Board of Japan (“ASBJ”) Statement
No. 30, July 4, 2019)- “Accounting Standard for Measurement of Inventories” (ASBJ Statement No. 9, revised on July 4, 2019)- “Accounting Standard for Financial Instruments” (ASBJ Statement No. 10, revised on July 4, 2019)- “Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance No. 31,
revised on June 17, 2021)- “Implementation Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No. 19,
revised on March 31, 2020)(i) Overview
The International Accounting Standards Board and the Financial Accounting Standards Board developed andhave provided detailed guidance for fair value measurement with approximately the same content (IFRS 13 “Fair
Value Measurement” as for IFRSs and Accounting Standards Codification Topic 820 “Fair Value Measurement”
as for U.S. GAAP). In the light of such situation, the ASBJ worked on aligning Japanese GAAP with suchinternational accounting standards mainly on guidance and disclosures about fair value of financial instruments,
and then issued the “Accounting Standard for Fair Value Measurement” and other standards and guidance.
The ASBJ’s basic policy in developing the Accounting Standard for Fair Value Measurement is, in principle, toincorporate all provisions in IFRS 13 from the standpoint that the unified measurement approach improves thecomparability of financial statements between entities in and outside Japan. The ASBJ also considered
traditional accounting practices in Japan and defined the treatment specific to particular items to the extent thatsuch treatment may not significantly diminish the comparability of financial statements.
(ii) Scheduled date of adoption
The Company and its consolidated domestic subsidiaries expect to adopt the standards and guidance at the
beginning of the year ending March 31, 2023.
(iii) Impact of adopting the standards and implementation guidance
The Company is currently evaluating the impact of adopting the standards and guidance on its consolidated
financial statements.
(2) Accounting Standard for Revenue Recognition and implementation guidance thereon- “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, revised on March 31, 2020)- “Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance No. 30, revisedon March 26, 2021)(i) Overview
The standard is a comprehensive accounting standard for revenue recognition. Revenue is recognized inaccordance with the following five-step approach.
Step 1: Identify a contract with a customer.
Step 2: Identify performance obligations in the contract.
Step 3: Determine the transaction price.
Step 4: Allocate the transaction price to each performance obligation in the contract.
Step 5: Recognize revenue when or as a performance obligation is satisfied.
(ii) Scheduled date of adoption
The Company and its consolidated domestic subsidiaries expect to adopt the standard and implementation
guidance at the beginning of the year ending March 31, 2023.
(iii) Impact of adopting the standard and implementation guidance
The Company is currently evaluating the impact of adopting the standard and implementation guidance on its
consolidated financial statements.

FY2022 Nitori Holdings Co., Ltd.

1124) Change in presentation
The Company and its consolidated domestic subsidiaries started to adopt the “Accounting Standard forDisclosure of Accounting Estimates” (ASBJ Statement No. 31, March 31, 2020) at the end of the year ended
February 20, 2022 and disclose a note on significant accounting estimates in the accompanying consolidated
financial statements.
In such note, however, information for the year ended February 20, 2021 is not disclosed in accordance with thetransitional provision in the proviso of paragraph 11 of the standard.

3. Business Combinations

1) Completion of accounting for business combination
In the year ended February 20, 2021, the Company provisionally accounted for the business combination with
Shimachu Co., Ltd. effected on January 6, 2021 and, in the year ended February 20, 2022, completed theaccounting. Due to the completion, significant adjustments to the initial allocation of the acquisition cost weremade in the comparative information included in the consolidated financial statements for the year ended
February 20, 2022.
As a result, buildings and structures (net amount), land, asset retirement obligations (long-term liabilities), andnon-controlling interests as of February 20, 2021 increased by ¥7,859 million, ¥14,601 million, ¥301 million, and¥3,535 million, respectively, and goodwill and deferred tax assets decreased by ¥11,874 million and ¥6,749
million, respectively.
2) Transaction under common control (acquisition of additional shares of subsidiary)
On April 9, 2021, the Company entered into a share purchase agreement with Shimachu Co., Ltd., aconsolidated subsidiary of the Company, concerning the transfer of fractional shares arising from the shareconsolidation that Shimachu had effected on March 26, 2021 and acquired the fractional shares with thepermission of the court pursuant to the provision of Article 234, paragraph (2) of the Companies Act of Japan as
applied mutatis mutandis pursuant to Article 235, paragraph (2) of the said act. As a result, Shimachu became awholly-owned subsidiary of the Company.
(1) Overview of transaction(i) Name and business description of party in combination
Name of party in combination:
Shimachu Co., Ltd.
Business description:
Retailing of furniture and home accessories (including curtains, carpets, andhome accents) and home center goods (including household essentials,
garden equipment and supplies, pet supplies, timber, and hardware)(ii) Date of business combination
May 14, 2021 (share acquisition date)(iii) Legal form of business combination
Share acquisition for cash consideration(iv) Name of company after combination
There was no change.
(2) Summary of applied accounting treatment
The Company accounted for such fractional share acquisition as a transaction with non-controlling interests,
which is a type of transactions under common control, pursuant to the “Accounting Standard for Business
Combinations” (ASBJ Statement No. 21, revised on January 16, 2019) and the “Implementation Guidance on
Accounting Standard for Business Combinations and Accounting Standard for Business Divestitures” (ASBJ
Guidance No. 10, revised on January 16, 2019).
The Company treated such fractional share acquisition as an integral part of the share acquisition through theJanuary 6, 2021 tender offer and determined the amount of goodwill arising from the additional share acquisition
after the Company had obtained control of Shimachu as if such amount had been recognized when the
Company had obtained control of Shimachu.
(3) Acquisition cost of acquiree and its breakdown by type of consideration
Consideration for acquisition:
Cash and cash equivalents ¥49,174 million ($427,757 thousand)Acquisition cost
¥49,174 million ($427,757 thousand)

FY2022 Nitori Holdings Co., Ltd.

12

4. Marketable and investment Securities
1) Investment securities
Investments in an associate were as follows:
As of February 20

Investment securities

Millions of Yen

Thousands of
U.S. Dollars

2022

2021

2022

¥22,531¥22,001$195,998

Acquisition cost

Unrealized gain
(loss)¥590¥1,308

1,401

1,680

(278)

¥3,299¥2,270¥1,029Acquisition cost

Unrealized gain
(loss)¥180¥1,3092) Available-for-sale securities (with market values)
Millions of Yen
As of February 20, 2022

Carrying value

Securities whose carrying values exceed their acquisition costs:
Stocks¥1,898

Securities whose acquisition costs exceed their carrying values:
Stocks
Total

Millions of Yen
As of February 20, 2021

Carrying value

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

Securities whose acquisition costs exceed their carrying values:
Stocks

1,747

2,089

(341)

Other

7,791

8,471

(679)

¥11,029¥10,741

¥288

Total

Thousands of U.S. Dollars
As of February 20, 2022

Acquisition cost

Unrealized gain
(loss)$5,132$11,378

12,18914,615(2,425)$28,701$19,748$8,953Carrying value

Securities whose carrying values exceed their acquisition costs:
Stocks$16,511

Securities whose acquisition costs exceed their carrying values:
Stocks
Total

Notes: 1. Unlisted stocks (¥312 million ($2,720 thousand) and ¥312 million in the consolidated balance sheet as of February 20, 2022
and 2021, respectively) are not included in the table above because no quoted market price is available and it is extremely
difficult to determine the fair value.
2. Investments in investment limited partnerships (¥442 million ($3,849 thousand) and ¥175 million in the consolidated balance
sheet as of February 20, 2022 and 2021, respectively) are not included in the table above because no quoted market price isavailable and it is extremely difficult to determine the fair value.

FY2022 Nitori Holdings Co., Ltd.

13

3) Sales of available-for-sale securities
Millions of Yen
Proceeds from
sales

Gain on sales

Loss on sales

Other¥7,837

¥–

¥–

Total

¥7,837¥–¥–For the year ended February 20, 2022

Thousands of U.S.
Dollars
Proceeds from
sales

Gain on sales

Loss on sales

Other$68,171

$–

$–

Total

$68,171$–$–

For the year ended February 20, 2022

Note: The available-for-sale securities sold above were marketable securities (investment trusts) and held by Shimachu Co., Ltd., whichbecame a consolidated subsidiary of the Company during the year ended February 20, 2021. The difference between theacquisition cost and the proceeds from sales was accounted for as an adjustment to retained earnings.

The Group did not sell any available-for-sale securities during the year ended February 20, 2021.
4) Impairment of available-for-sale securities
The Group did not recognize any impairment loss for available-for-sale securities for the years ended February
20, 2022 and 2021.
If the fair values of securities as of the fiscal year-end decline more than 50% compared with the acquisition cost,those securities are written down to the fair value, and the resulting losses are charged to the statement ofincome for the period. If the fair values of securities as of the fiscal year-end decline from 30% to 50% comparedwith the acquisition cost, those securities are written down to the amount determined taking into consideration
the materiality of such amount, recoverability, and other factors, and the resulting losses are charged to thestatement of income for the period.

5. Inventories
Inventories as of February 20, 2022 and 2021 consisted of the following:
Millions of Yen
As of February 20

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

FY2022 Nitori Holdings Co., Ltd.

Thousands of U.S.
Dollars

2022

2021

2022

¥78,917¥76,133$686,476

428

200

3,730

6,593

4,403

57,350¥85,939¥80,737$747,557

14

6. Investment Property

The Company and certain consolidated subsidiaries own commercial facilities and other properties (includingland) for lease in major cities throughout Japan. Certain rental properties are not recognized as rental properties
but as real estate including spaces used as rental properties since the Company and certain consolidated
subsidiaries use some of the floor space of these properties.
The carrying value in the consolidated balance sheet, net change during the year, and fair value of those
properties were as follows:
2022

Millions of Yen
2021

Thousands of
U.S. Dollars
2022

Balance at beginning of year

¥38,550¥37,579$335,335

Increase (decrease)

16,202971

140,936

Balance at end of year

54,75238,550476,271

Fair value at end of year

¥55,335¥40,914$481,346

Balance at beginning of year

¥67,121¥42,040$583,870

Increase (decrease)(7,566)25,081(65,817)

Balance at end of year

59,555

67,121

518,053

Fair value at end of year

¥70,311¥76,453$611,616

For the years ended February 20

Rental properties:
Carrying value

Real estate including spaces used as rental
properties:
Carrying value

Notes: 1. The carrying value represents the acquisition cost less accumulated depreciation.
2. The increase in rental properties during the year ended February 20, 2022 was mainly due to the acquisition of a property in
Takatsu-ku, Kawasaki, Kanagawa Prefecture of ¥9,558 million ($83,143 thousand) and the commencement of lease of aproperty in Takaido, Suginami-ku, Tokyo of ¥7,055 million ($61,374 thousand). The increase in rental properties during the year
ended February 20, 2021 was primarily an increase of ¥8,571 million due to Shimachu Co., Ltd. becoming a consolidated
subsidiary of the Company, and the decrease was primarily due to the reclassification of ¥2,764 million from idle properties toproperties for business purposes for building a store in Hanaten, Osaka Prefecture.
3. The decrease in real estate including spaces used as rental properties during the year ended February 20, 2022 was primarily
due to a decrease in the carrying amount attributable to depreciation of ¥2,976 million ($25,892 thousand). The increase in realestate including spaces used as rental properties during the year ended February 20, 2021 was primarily an increase of¥22,028 million due to Shimachu becoming a consolidated subsidiary of the Company, and the decrease was primarily due to adecrease in the carrying amount attributable to depreciation of ¥915 million.
4. The fair value at the fiscal year-end is measured at the value based on certain appraisal values and other indicators reflecting
the market value.
5. During the year ended February 20, 2022, the Company completed the accounting for the business combination that had beeneffected in the year ended February 20, 2021. The amounts as of and for the year ended February 20, 2021 were based on theadjusted acquisition cost allocation due to the completion of the accounting.

FY2022 Nitori Holdings Co., Ltd.

15

Lease revenue and rental expenses on rental properties and real estate including spaces used as rental
properties were as follows:
2022

Millions of Yen
2021

Thousands of U.S.
Dollars
2022

Lease revenue¥2,087¥1,059$18,162

Rental expenses

1,368

690

11,906

719

369

6,256

Lease revenue¥9,691¥6,118$84,301

Rental expenses

4,558

3,087

39,652Difference

5,132

3,031

44,649For the years ended February 20

Rental properties:

Difference
Real estate including spaces used as rental
properties:

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

7. Short-term Bank Loans and Long-term Debt
Balance atFebruary 20,
2021

Balance atFebruary 20,
2022

Millionsof YenMillionsof YenThousands of
U.S. Dollars

Averageinterest
rate (%)¥46,715

¥–

$–

–

–

Current portion of long-term
debt

2,000

35,068305,045

0.4–

Current portion of leaseobligations

1,570

1,663

14,466––Long-term debt (excluding
current portion)

2,000

50,398438,395

0.2

2023 – 2024

Lease obligations(excluding current portion)

5,875

5,605

48,761–2023 – 2033

¥58,160¥92,734$806,668

–

–

Item

Short-term bank loans

Total

Repayment
term

Notes: 1. The average interest rate represents a weighted-average interest rate applicable to the loans balance at the fiscal year-end.
2. The average interest rate applicable to lease obligations is not disclosed since related interest charges are included in theamount of lease obligations in the consolidated balance sheet.
3. The repayment schedule of long-term debt due within five years as of February 20, 2022 was as follows:
Millions of Yen

Thousands of
U.S. Dollars

Due after 1 year through 2 years¥33,068$287,647

Due after 2 years through 3 years

17,330150,748

Due after 3 years through 4 years––

Due after 4 years through 5 years––

Long-term debt (excluding current portion)

4. Maturities of lease obligations, excluding the current portion, due within 5 years as of February 20, 2022 were as follows:
Millions of Yen

Thousands of
U.S. Dollars

Due after 1 year through 2 years¥1,503$13,077

Due after 2 years through 3 years

1,219

10,609Due after 3 years through 4 years

984

8,561

Due after 4 years through 5 years

844

7,347

Lease obligations (excluding current portion)

FY2022 Nitori Holdings Co., Ltd.

16

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

Thousands of
U.S. Dollars

2022

2021

2022

¥3,667¥3,890$31,900

27

42

237

¥3,694¥3,932$32,137

Trade notes and accounts payable

¥33

¥42

$287

Other (current liabilities)

110

114

962

Other (long-term liabilities)

1,484

1,598

12,913

Total¥1,628¥1,754$14,163

As of February 20

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

8. Retirement and Pension Plans

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

Thousands of
U.S. Dollars

2022

2021

2022

¥12,428¥7,645$108,109

Service cost

1,546

1,105

13,454

Interest cost

40

23

348

Actuarial loss (gain)

123

(132)

1,074

Benefits paid

(763)

(443)

(6,637)

–

4,230

–

¥13,375¥12,428$116,349

For the years ended February 20

Balance at beginning of year

Increase due to business combination
Balance at end of year

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

FY2022 Nitori Holdings Co., Ltd.

17

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

Thousands of
U.S. Dollars

2022

2021

2022

¥7,641¥6,301$66,468

Expected return on plan assets

152

126

1,326

Actuarial gain (loss)

(104)

54

(906)

Employer contributions

496

420

4,323

Benefits paid

(231)

(185)

(2,009)

Increase due to business combination

–

925

–

Plan assets at fair value at end of year

¥7,955¥7,641$69,202

For the years ended February 20

Balance at beginning of year

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

Thousands of
U.S. Dollars

2022

2021

2022

Projected benefit obligations (funded plans)¥9,264¥8,658$80,586

Plan assets at fair value(7,955)(7,641)(69,202)

1,308

1,017

11,384

Projected benefit obligations (unfunded plans)

4,111

3,769

35,762

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

5,420

4,787

47,146

Liability for retirement benefits

5,741

5,186

49,941

Asset for retirement benefits

(321)

(399)

(2,794)¥5,420¥4,787$47,146

As of February 20

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

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

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

Thousands of
U.S. Dollars

2022

2021

2022

Service cost

¥1,546¥1,105$13,454

Interest cost

40

23

348

(152)

(126)

(1,326)

Actuarial loss

93

98

809

Prior service cost

(3)

(35)

(32)

¥1,523¥1,065$13,253

For the years ended February 20

Expected return on plan assets
Amortization and expenses:

Retirement benefit expenses on defined benefit
plans

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

FY2022 Nitori Holdings Co., Ltd.

18

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

Thousands of
U.S. Dollars

For the years ended February 20

2022

2021

2022

Prior service cost

¥(3)

¥(35)

$(32)

Actuarial loss

85

285

741

Total

¥81

¥249

$709

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

Thousands of
U.S. Dollars

2022

2021

2022

¥–

¥3

$–

Unrecognized actuarial loss

(219)

(304)

(1,906)

Total¥(219)¥(300)$(1,906)

As of February 20

Unrecognized prior service cost(7) The plan assets, by major category, as a percentage of total plan assets were as follows:(% of total
plan assets)
As of February 20

2022

2021

Life insurance company general accounts

31 %

29 %

Bonds

19

19

Stocks

44

45

Other

6

7

Total

100 %

100 %

Note: Total plan assets as of February 20, 2022 and 2021 include a retirement benefit trust established for a lump-sum payment plan of
29% and 31%, respectively.

(8) The expected long-term rate of return on plan assets was determined based on the current and expected
future allocation of plan assets and the current and expected future long-term rate of return on various assets ofwhich plan assets are composed.
(9) Assumptions used for the actuarial calculation were as follows:
As of February 20

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

2022

2021

Primarily 0.5 % Primarily 0.4 %

2.0

2.0

Primarily 4.5

Primarily 4.5

3) Defined contribution plan
Contributions required to be made to the defined contribution plan for the years ended February 20, 2022 and2021 were ¥553 million ($4,814 thousand) and ¥451 million, respectively.

9. Asset Retirement Obligations

1) Asset retirement obligations recognized in consolidated balance sheet(1) Overview of asset retirement obligations recognized in consolidated balance sheet
The asset retirement obligations mainly represent restoration obligations under real estate leases and fixed-term
land leases for stores.

FY2022 Nitori Holdings Co., Ltd.

19

(2) Method of measuring asset retirement obligations recognized in consolidated balance sheet
The Group mainly used the real estate lease term and the fixed-term land lease term as the expected period of
use and discount rates of 0.0% to 1.7% to measure the amount of the asset retirement obligations.
(3) Changes in total asset retirement obligations recognized in consolidated balance sheet
Millions of Yen

Thousands of U.S.
Dollars

2022

2021

2022

¥14,926¥5,696$129,839

Increase due to purchase of property, plant andequipment

842

309

7,332

Adjustments for passage of time

79

46

688

Increase due to business combination

–

7,690

–

(558)

(141)

(4,857)

39

1,325

346

¥15,329¥14,926$133,349

For the years ended February 20

Balance at beginning of year

Decrease due to performance of asset retirement
obligations
Other increase (decrease)
Balance at end of year

Note: During the year ended February 20, 2022, the Company completed the accounting for the business combination that had beeneffected in the year ended February 20, 2021. The amounts as of and for the year ended February 20, 2021 were based on theadjusted acquisition cost allocation due to the completion of the accounting.

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

10. Equity
Japanese companies are subject to the Companies Act of Japan (the “Companies Act”). The significant
provisions in the Companies Act that affect financial and accounting matters are summarized in 1) through 3).
1) Dividends
Under the Companies Act, companies can pay dividends at any time during the fiscal year in addition to the yearend dividend upon resolution at the shareholders’ meeting. Additionally, for companies that meet certain criteria
including (1) having a Board of Directors, (2) having independent auditors, (3) having an Audit & Supervisory
Board, and (4) the term of service of the directors being prescribed as one year rather than the normal two-year
term by its articles of incorporation, the Board of Directors may declare dividends (except for dividends-in-kind) at
any time during the fiscal year if the company has prescribed so in its articles of incorporation. With respect tothe third condition above, the Board of Directors of companies with (a) board committees (namely, appointmentcommittee, compensation committee and audit committee) or (b) an audit and supervisory committee (asimplemented under the Companies Act effective May 1, 2015) may also declare dividends at any time becausesuch companies, by nature, meet the criteria under the Companies Act. The Company is organized as acompany with an audit and supervisory committee, effective May 13, 2016. The Company meets all the above
criteria and, accordingly, the Board of Directors may declare dividends (except for dividends-in-kind) at any time
during the fiscal year.
Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if thearticles of incorporation of the company so stipulate. The Companies Act provides certain limitations on theamounts available for dividends or the purchase of treasury stock. The limitation is defined as the amountavailable for distribution to the shareholders, but the amount of net assets after dividends must be maintained at
no less than ¥3 million.

FY2022 Nitori Holdings Co., Ltd.

20

2) Increases/decreases and transfer of common stock, reserve and surplus
The Companies Act requires that an amount equal to 10% of dividends must be appropriated as a legal reserve(a component of retained earnings) or as additional paid-in capital (a component of capital surplus), dependingon the equity account charged upon the payment of such dividends, until the aggregate amount of legal reserve
and additional paid-in capital equals 25% of the common stock. Under the Companies Act, the total amount ofadditional paid-in capital and legal reserve may be reversed without limitation. The Companies Act also provides
that common stock, legal reserve, additional paid-in capital, other capital surplus and retained earnings can betransferred among the accounts within equity under certain conditions upon resolution of the shareholders.
3) Treasury stock and treasury stock acquisition rights
The Companies Act also provides for companies to purchase treasury stock and dispose of such treasury stockby resolution of the Board of Directors. The amount of treasury stock purchased cannot exceed the amountavailable for distribution to the shareholders which is determined by a specific formula. Under the Companies
Act, stock acquisition rights are presented as a separate component of equity. The Companies Act also provides
that companies can purchase both treasury stock acquisition rights and treasury stock. Such treasury stockacquisition rights are presented as a separate component of equity or deducted directly from stock acquisitionrights.
4) Class and total number of issued shares and treasury shares
For the year ended February 20,
2022
Class of stock

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

Number of Shares (Thousands)
Balance at
beginning of year

Increase

Decrease

Balance at
end of year

114,443––

114,443

1,619

0

97

1,521

Notes: 1. The increase of 0 thousand shares in treasury represents an increase due to the purchase of shares less than one unit.
2. The decrease of 97 thousand shares in treasury consists of a decrease of 63 thousand shares due to the exercise of “Stock
Benefit Trust (J-ESOP)” and the disposal of 34 thousand shares in treasury in accordance with the performance-based stockcompensation plan for the Company’s directors and the stock issuance plan for the employees of the Company and its
subsidiary.
3. The number of treasury shares at the fiscal year-end includes 177 thousand shares held by Custody Bank of Japan, Ltd. (Trust
Account E), which is the trustee under the “Stock Benefit Trust (J-ESOP).”
For the year ended February 20,
2021
Class of stock

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

Number of Shares (Thousands)
Balance at
beginning of year

Increase

Decrease

Balance at
end of year

114,443––

114,443

1,975

1

357

1,619

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

5) Stock acquisition rights
This section is not applicable for the year ended February 20, 2022. The balance of stock acquisition rights as
stock options of the Company as of February 20, 2021 was nil.

FY2022 Nitori Holdings Co., Ltd.

21

6) Dividends(1) Dividends paid to shareholders
For the year ended February 20, 2022
Total amount of
Total amount ofdividends
dividends (Thousands of(Millions of Yen)
U.S. Dollars)

Amount ofdividends
per share(Yen)

Amount ofdividends
per share(U.S.
Dollars)

Resolution atClass ofstock

Board of directors meeting
held on April 8, 2021
(Note 1)

Commonstock¥7,462$64,912

¥66

$0.57

Board of directors meeting
held on September 30, 2021 Common(Note 2)
stock

7,916

68,86770

0.61

Shareholders’
cut-off date Effective dateFebruary 20,
2021

April 22,2021

August 20, October 19,
2021
2021

Notes: 1. The total amount of dividends includes dividends of ¥15 million ($138 thousand) on the Company’s shares held by Custody
Bank of Japan, Ltd. (Trust Account E), which is the trustee under the “Stock Benefit Trust (J-ESOP).”
2. The total amount of dividends includes dividends of ¥12 million ($108 thousand) on the Company’s shares held by Custody Bank ofJapan, Ltd. (Trust Account E), which is the trustee under the “Stock Benefit Trust (J-ESOP).”
For the year ended February 20, 2021
Resolution atClass ofstock

Total amount of dividends Amount of dividends per(Millions of Yen)
share (Yen)

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

Commonstock¥6,090¥54

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

Common
stock

6,444

57

Shareholders’
cut-off date Effective dateFebruary 20,
2020

April 23,
2020

August 20, October 20,
2020
2020

Notes: 1. The total amount of dividends includes dividends of ¥17 million on the Company’s shares held by Custody Bank of Japan, Ltd.
(Trust Account E), which is the trustee under the “Stock Benefit Trust (J-ESOP).”
2. The total amount of dividends includes dividends of ¥13 million on the Company’s shares held by Custody Bank of Japan, Ltd.
(Trust Account E), which is the trustee under the “Stock Benefit Trust (J-ESOP).”(2) Dividends with a shareholders’ cut-off date during the current fiscal year but an effective date in the following
fiscal year
For the year ended February 20, 2022

Resolution atClass ofstock

Board of directors
meeting held on
March 31, 2022

Common Retainedstockearnings

Paid fromTotal amount
Total amount ofof dividends
dividends (Thousands of(Millions of Yen)
U.S. Dollars)¥7,916$68,867

Amount ofdividends
per share(Yen)

Amount ofdividends
per share(U.S. Dollars)

Shareholders’
cut-off date

Effective date

¥70

$0.61

February 20,
2022

April 28,2022

Note: The total amount of dividends includes dividends of ¥12 million ($108 thousand) on the Company’s shares held by Custody Bankof Japan, Ltd. (Trust Account E), which is the trustee under the “Stock Benefit Trust (J-ESOP).”
For the year ended February 20, 2021
Paid fromTotal amount of dividends(Millions of Yen)

Amount of dividends
per share (Yen)

Shareholders’
cut-off date

Effective date

Board of directors
meeting held on April Common Retained
8, 2021stock
earnings¥7,462¥66

February 20,
2021

April 22,2021

Resolution atClass ofstock

Note: The total amount of dividends includes dividends of ¥15 million on the Company’s shares held by Custody Bank of Japan, Ltd.
(Trust Account E), which is the trustee under the “Stock Benefit Trust (J-ESOP).”

11. Stock Options

This section is not applicable for the year ended February 20, 2022. For the year ended February 20, 2021, theGroup recognized gains due to forfeited stock options of ¥12 million, which are presented in other income as“gain on reversal of stock acquisition rights.”

FY2022 Nitori Holdings Co., Ltd.

22

12. Income Taxes

The Company and its domestic subsidiaries are subject to Japanese national and local income taxes which, inthe aggregate, resulted in a normal effective statutory tax rate of approximately 31% for the years ended
February 20, 2022 and 2021.
1) Significant components of deferred tax assets and liabilities
Millions of Yen

Thousands of U.S.
Dollars

2022

2021

2022

¥1,597¥1,995$13,894

189

39

1,645

1,196

1,662

10,410

Provision for point card certificates

936

807

8,143

Unrealized gain on sales of inventories

317

302

2,766

Tax loss carryforwards (Note 2)

5,442

5,148

47,343Liability for retirement benefits

2,366

2,289

20,583

Depreciation and amortization

As of February 20

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

9,563

9,231

83,186

Provision for retirement benefits for directors and otherofficers

70

70

609

Allowance for doubtful accounts

2

2

24

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

2,704

3,052

23,529Asset retirement obligations

4,747

4,604

41,299

–

4,802

–

Other

5,832

6,278

50,736

Subtotal

34,96740,287304,174

Valuation allowance for tax loss carryforwards (Note 2)(5,442)(4,428)(47,343)

Valuation allowance for deductible temporary differences(1,015)(1,453)(8,830)Total valuation allowance(6,457)(5,881)(56,173)

28,51034,405

248,000

(285)

(307)

(2,487)

Construction assistance fund receivables(1,089)(1,041)(9,474)

Asset retirement cost related to asset retirement obligations(2,288)(2,361)(19,907)

Unrealized gain on consolidated subsidiary(5,909)(51,401)(1,269)(10,711)(1,112)(11,043)

(172)

(231)

(1,501)

Total deferred tax liabilities(11,015)(15,765)(95,816)

Net deferred tax assets¥17,495¥18,639$152,183

Unrealized loss on consolidated subsidiary

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

Retained earnings of subsidiaries
Other

Notes: 1. During the year ended February 20, 2022, the Company completed the accounting for the business combination that had beeneffected in the year ended February 20, 2021. The amounts as of February 20, 2021 were based on the adjusted acquisition
cost allocation due to the completion of the accounting.

FY2022 Nitori Holdings Co., Ltd.

23

2. The amounts of tax loss carryforwards and related deferred tax assets disaggregated by period of expiration:
Millions of Yen
1 year or
less

After 1 year
through 2
years

After 2 years
through 3
years

After 3 years
through 4
years

After 4 years
through 5
years

After 5
years

Total

Tax losscarryforwards *

¥417

¥498

¥296

¥413

¥152

¥3,664¥5,442

Valuation allowance

(417)

(498)

(296)

(413)

(152)

(3,664)(5,442)

Deferred tax assets

–

–

–

–

–

–

–

As of February 20, 2022

Millions of Yen
1 year or
less

After 1 year
through 2
years

After 2 years
through 3
years

After 3 years
through 4
years

After 4 years
through 5
years

After 5
years

Total

Tax losscarryforwards *

¥27

¥366

¥438

¥261

¥397

¥3,656¥5,148Valuation allowance

(27)

(366)

(438)

(261)

(397)

(3,656)(5,148)Deferred tax assets

–

–

–

–

–

–

–

1 year or
less

After 1 year
through 2
years

After 2 years
through 3
years

After 3 years
through 4
years

After 4 years
through 5
years

After 5
years

Total

Tax losscarryforwards *$3,628$4,334$2,576$3,593$1,329$31,879$47,343

Valuation allowance(3,628)(4,334)(2,576)(3,593)(1,329)(31,879)(47,343)

Deferred tax assets

–

–

–

–

–

–

–

As of February 20, 2021

Thousands of U.S. Dollars

As of February 20, 2022

*Tax loss carryforwards represent the amounts computed by multiplying the normal effective statutory tax rate.

2) Reconciliation between the normal effective statutory tax rate and the actual effective tax rate
The details for the years ended February 20, 2022 and 2021 are omitted as differences between the normal
effective statutory tax rate and the actual effective tax rate are 5% or less of the normal effective statutory tax
rate.

13. Selling, General and Administrative Expenses

The major components of selling, general and administrative expenses were as follows:
Millions of Yen

Thousands of
U.S. Dollars

2022

2021

2022

Customer delivery expenses¥25,068¥29,278$218,066

Advertising expenses

16,551

17,182

143,976

Salaries, allowances and bonuses

82,706

71,184

719,438

Provision for bonuses

8,220

8,555

71,505Retirement benefit expenses

2,077

1,518

18,067

Rent expenses

46,47038,444404,229

Depreciation and amortization

20,407

16,024

177,518

Outsourcing expenses

18,122

21,249157,643

For the years ended February 20

FY2022 Nitori Holdings Co., Ltd.

24

14. Long-Lived Assets

Information about loss on impairment of long-lived assets for the year ended February 20, 2022 is not disclosed
because the amount was immaterial.
For the year ended February 20, 2021
Location

Use

Class

Japan

Store

Buildings andstructures, and
other

¥524

Mission criticalsystemSoftware and other

6,760

Logistics system

Software and other

107

Store

Buildings andstructures, and
other

499

Right-of-use assets

454

People’s Republic of
China

The United States ofAmericaStore

Millions of Yen

6

Buildings andstructures, andother

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

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

Thousands of
U.S. Dollars

2022

2021

2022

Due within 1 year

¥7,413¥9,279$64,489

Due after 1 year

71,29575,457620,177

Total¥78,709¥84,736$684,666

As of February 20

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

Thousands of
U.S. Dollars

2022

2021

2022

Due within 1 year

¥1,062¥1,134$9,245Due after 1 year

4,948

6,229

43,041

Total¥6,010¥7,364$52,287

As of February 20

FY2022 Nitori Holdings Co., Ltd.

25

16. Financial Instruments and Related Disclosures

1) Overview(1) Policy for financial instruments
The Group raises necessary funds based on capital investment plans and cash flow plans, mainly through loans
from banks. The Group utilizes derivative financial instruments only to manage risks described below and does notenter into such transactions for speculative trading purposes.
(2) Types of financial instruments, related risks, and risk management
Trade notes and accounts receivable are exposed to customer credit risk, but the collection period is short, andthe historical bad debt ratio is low. The Group manages the credit risk by monitoring due dates and outstandingbalances for each customer and makes efforts to promptly collect receivables from customers in financial
difficulties.
Marketable and investment securities with market values are exposed to market risk, and those without market
values are exposed to impairment risk due to the relevant companies’ operating results. The Group periodicallymonitors the fair values of such financial instruments.
Guarantee deposits and leasehold deposits, which are mostly related to leases on stores, are exposed to thecredit risk of lessors. The Group manages the credit risk by monitoring due dates and outstanding balances foreach lessor and makes efforts to identify and decrease concerns about collecting deposits from lessors infinancial difficulties at an early stage.
Most trade notes and accounts payable, other payables, and income taxes payable are due within threemonths.
Short-term bank loans, long-term debt and lease obligations are mainly intended to raise required funding for
capital investments and loans and investments.
Regarding derivatives, the Group enters into foreign exchange forward contracts to hedge foreign currency risk
related to payables denominated in foreign currencies. The Group believes that the credit risk under derivativetransactions is fairly low because counterparties of derivative transactions are limited to financial institutions
with high credit ratings. The finance department executes and manages derivative transactions upon approvalby person(s) with authority in accordance with internal rules stipulating the authority for each transaction.
(3) Supplementary explanation on estimated fair value of financial instruments
The fair values of financial instruments are based on their quoted market prices. When no quoted market priceis available, fair value is reasonably estimated. Since various assumptions and factors are reflected inestimating the fair value, different assumptions and factors could result in different fair value.
2) Estimated fair value of financial instruments
The carrying values of financial instruments on the consolidated balance sheet as of February 20, 2022 and2021 and estimated fair values are shown below. The following table does not include financial instruments forwhich it is extremely difficult to determine the fair value (please refer to Note 2 below).

FY2022 Nitori Holdings Co., Ltd.

26

Millions of Yen
As of February 20, 2022

Carrying value

Estimated fair value

Difference¥127,076¥127,076¥–(2) Short-term investments

3,359

3,359

–

(3) Trade notes and accounts receivable

39,206

39,206

–

(8)

(8)

–

39,19739,197–Available-for-sale securities

3,299

3,299

–

Shares of associate

22,53188,01765,485(5) Guarantee deposits

18,79818,658(139)(6) Leasehold deposits

27,27826,517(760)(1) Trade notes and accounts payable¥39,765¥39,765¥–(2) Other payables

28,59428,594–(3) Income taxes payable

20,33020,330–(4) Long-term debt, including current portionof long-term debt

85,46685,49024(5) Lease obligations, including current
portion of lease obligations

7,268

7,268

–

Carrying value

Estimated fair value

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

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

37,80637,806

–

(5)

(5)

–

37,80137,801–

Assets:(1) Cash and cash equivalents

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

Liabilities:

Millions of Yen
As of February 20, 2021

Assets:(1) Cash and cash equivalents

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

11,02911,029–

Shares of associate

22,001

82,14060,139(5) Guarantee deposits

19,763

20,193430(6) Leasehold deposits

27,022

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

44,55444,554–(3) Other payables

33,51233,512–(4) Income taxes payable

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

4,000

4,006

6

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

7,445

7,445

–

Liabilities:

FY2022 Nitori Holdings Co., Ltd.

27

Thousands of U.S. Dollars
As of February 20, 2022

Carrying value

Estimated fair value

Difference$1,105,394$1,105,394$–(2) Short-term investments

29,22029,220–(3) Trade notes and accounts receivable

341,043

341,043

–

(73)

(73)

–

340,970

340,970–

Available-for-sale securities

28,701

28,701–

Shares of associate

195,998

765,635

569,636(5) Guarantee deposits

163,520

162,303(1,216)(6) Leasehold deposits

237,283

230,668(6,614)(1) Trade notes and accounts payable$345,904$345,904$–(2) Other payables

248,737

248,737–(3) Income taxes payable

176,849

176,849–(4) Long-term debt, including current portionof long-term debt

743,441

743,652

210(5) Lease obligations, including current
portion of lease obligations

63,22763,227–

Assets:(1) Cash and cash equivalents

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

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

FY2022 Nitori Holdings Co., Ltd.

28

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

Thousands of U.S.
Dollars

As of February 20

2022

2021

2022

Unlisted stocks (*1)

¥312

¥312

$2,720Investments in investment limited
partnerships (*2)

442

175

3,849

Guarantee deposits (*3)

92

95

803

Leasehold deposits (*3)

1,709

1,923

14,872(*1) Unlisted stocks are excluded from “Assets, (4) Investment securities” because no quoted market price is available and it isextremely difficult to determine the fair value.
(*2) Investments in investment limited partnerships are excluded from “Assets, (4) Investment securities” because they are notmarketable and the future cash flows cannot be estimated and it is extremely difficult to determine the fair value.
(*3) Guarantee deposits and leasehold deposits on extendable lease contracts are excluded from “Assets, (5) Guarantee
deposits” and “Assets, (6) Leasehold deposits” because the future cash flows cannot be estimated and it is extremely
difficult to determine the fair value.
3. Redemption schedule for financial assets with maturities
Millions of Yen
Due in 1 year or
less

Due after 1 year
through 5 years

Due after 5 years¥127,076¥–¥–

Short-term investments

3,359

–

–

Trade notes and accounts receivable

39,206––¥169,641¥–¥–

Due in 1 year or
less

Due after 1 year
through 5 years

Due after 5 years¥125,487¥–¥–

Short-term investments

33,089––Trade notes and accounts receivable

37,806––¥196,383¥–¥–

As of February 20, 2022

Cash and cash equivalents

Total

Millions of Yen
As of February 20, 2021

Cash and cash equivalents

Total

Thousands of U.S. Dollars
Due in 1 year or
less

Due after 1 year
through 5 years

Due after 5 years$1,105,394$–$–

Short-term investments

29,220––Trade notes and accounts receivable

341,043––$1,475,658$–$–

As of February 20, 2022

Cash and cash equivalents

Total

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

FY2022 Nitori Holdings Co., Ltd.

29

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

Due after
1 yearthrough
2 years

Due after
2 years
through
3 years

Due after
3 years
through
4 years

Due after
4 years
through
5 years

Due after
5 years

Long-term debt

¥35,068¥33,068¥17,330–––

Lease obligations

1,663

1,503

1,219

984

844

1,053

¥36,731¥34,571¥18,549

¥984

¥844

¥1,053

Due in1 yearor less

Due after
1 yearthrough
2 years

Due after
2 years
through
3 years

Due after
3 years
through
4 years

Due after
4 years
through
5 years

Due after
5 years

Short-term bankloans

¥46,715

¥–

¥–

¥–

¥–

¥–

Long-term debt

2,000

2,000

–

–

–

–

Lease obligations

1,570

1,246

1,123

950

830

1,725

¥50,285¥3,246¥1,123¥950¥830¥1,725

As of February 20, 2022

Total

Millions of Yen

As of February 20, 2021

Total

Thousands of U.S. Dollars
Due in1 yearor less

Due after
1 yearthrough
2 years

Due after
2 years
through
3 years

Due after
3 years
through
4 years

Due after
4 years
through
5 years

Due after
5 years

Long-term debt

$305,045$287,647$150,748

$–

$–

$–

Lease obligations

14,466

13,077

10,609

8,561

7,347

9,164

$319,511$300,725$161,358$8,561$7,347$9,164As of February 20, 2022

Total

FY2022 Nitori Holdings Co., Ltd.

30

17. Other Comprehensive Income (Loss)
Millions of Yen

Thousands of U.S.
Dollars

2022

2021

2022

Amounts arising during period

¥821

¥(89)

$7,144

Reclassification adjustments

(54)

–

(470)

For the years ended February 20

Unrealized gain (loss) on available-for-salesecurities

767

(89)

6,673

Income tax effect

(230)

29

(2,003)

Subtotal

536

(60)

4,669

7,713

(1,283)67,098

7,713(1,283)67,098Amounts arising during period

(7)

186

(67)

Reclassification adjustments

89

63

776

Amount before income tax effect

81

249

709

Income tax effect

(60)

(76)

(525)

Subtotal

21

173

183

¥8,271¥(1,169)$71,951

Amount before income tax effectForeign currency translation adjustments
Amounts arising during period
Subtotal
Defined retirement benefit plans

Total other comprehensive income (loss)

18. Supplementary Cash Flow Information

Purchase of shares of subsidiary in the consolidated statement of cash flows for the year ended February 20, 2022
was a payment of other payables associated with the acquisition of shares of Shimachu Co., Ltd., which had
become a consolidated subsidiary of the Company during the year ended February 20, 2021.
During the year ended February 20, 2021, the Company acquired shares in Shimachu, and Shimachu became aconsolidated subsidiary of the Company. The following is a breakdown of assets and liabilities of Shimachu at thetime when the Company started to consolidate Shimachu and a reconciliation of the acquisition cost of the shareswith an expenditure for the acquisition on a net basis. The following amounts were adjusted due to the completionof the accounting for the business combination.
Millions of Yen

Current assets¥46,231

Non-current assets

193,556

Goodwill

19,791

Current liabilities(35,630)

Long-term liabilities(15,598)

Non-controlling interests(43,295)

Acquisition cost of shares
Cash and cash equivalents
Expenditure for acquisition

FY2022 Nitori Holdings Co., Ltd.

¥165,054(6,749)¥158,30431

19. Net Income per ShareYen

U.S. Dollars

2022

2021

2022

Basic net income per share¥856.71¥817.01$7.45

Diluted net income per share–

816.66–

As of and for the years ended February 20

Notes: 1. Diluted net income per share for the year ended February 20, 2022 is not disclosed because no dilutive shares of common
stock were issued or outstanding.
2. The following are used to calculate the (1) basic net income per share and (2) diluted net income per share:(1) Basic net income per share
Thousands ofMillions of Yen
U.S. Dollars
2022

2021

2022

¥96,724¥92,114$841,372–––

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

96,724

92,114

841,372

Average number of shares (Thousand shares)

112,901

112,745

For the years ended February 20

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

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

Thousands of
U.S. Dollars

2022

2021

2022

Adjustment attributable to owners of the parent

¥–

¥–

$–

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

48

For the years ended February 20

20. Subsequent Events

1) Change in accounting period“Partial Amendments to the Articles of Incorporation” were approved at the 50th Annual General Meeting of
Shareholders held on May 19, 2022, and the Company changed its accounting period (fiscal year-end) andamended some parts of its articles of incorporation.
(1) Reason for change in accounting period
The fiscal year of the Company was from February 21 every year until February 20 the following year. In order toefficiently execute operations for the management of the Group’s businesses and taking into account the monthly
comparability with other companies in the same industry, the Company changed its fiscal year-end to March 31(the fiscal year is from April 1 every year until March 31 the following year).
(2) Details of change in accounting period (fiscal year-end)
Before change: February 20 every year
After change: March 31 every year
The 51st fiscal year, which is a transition period for the new fiscal year-end, will be from February 21, 2022 toMarch 31, 2023, for a period of 13 months and 11 days.
2) Execution of capital and business alliance agreement
On April 27, 2022, the board of directors of the Company passed a resolution to acquire shares in EDION
Corporation (“EDION”) and form a capital and business alliance with EDION (the “Capital and Business
Alliance”).
(1) Purpose and reason for the Capital and Business Alliance
The Group comprises the Company, its 28 consolidated subsidiaries and one associate accounted for using theequity method and has two segments of the Nitori business and the Shimachu business. The Nitori business

FY2022 Nitori Holdings Co., Ltd.

32

engages in the sale, manufacture and import of furniture and interior merchandise and the leasing of real estateand offers advertising, logistics and other services. The Shimachu business engages in the sale of furniture,home accessories and home center goods and offers the related services.
The Group’s employees share the aim of “enriching homes around the world” as the source of conduct and havea principle guiding their business activities to make their endeavors to achieve the Group’s mid-long term vision“3,000 stores and ¥3 trillion in sales by 2032 / over 2 hundred million purchasing customers” by mobilizing thecapacities of the Group. In addition, the Group’s basic policy is to offer products with stable quality at affordable
prices to a greater number of customers around the world and to suggest the fun of creating a coordinated living
space by establishing a global chain store system.
EDION was founded as a holding company of DEODEO Corporation and EIDEN Co., Ltd. in 2002 and became acompany operating “Ishimaru” in Kanto region, “EIDEN” in Chubu, “Midori” in Kinki, and “DEODEO” in Chugoku,
Shikoku and Kyushu in October 2011 due to the consolidation of subsidiaries into EDION.
Due to the unification of shop names (change in the names of shops directly managed by home appliance shops“Ishimaru,” “EIDEN,” “Midori” and “DEODEO” into “EDION”) in October 2012, EDION became a group ofcompanies: EDION operating “EDION” that primarily engages in the sale of home appliances, 3Q Co., Ltd.
operating “Hyakuman Volt” that primarily engages in the sale of home appliances in Hokuriku and Hokkaido
regions, EDION HOUSE SYSTEM Corporation mainly engaging in the photovoltaic system business and othersubsidiaries.
Under such circumstances, the Company and EDION decided to form the “Capital and Business Alliance” for the
purposes of contributing to more comfortable lives of customers than ever before by utilizing mutual resourcesand of increasing the corporate value of both companies to meet the expectations of all sorts of stakeholders.
(2) Details of business alliance
The Company and EDION will mainly discuss and deliberate the following matters for the purpose of expanding
the businesses of both groups utilizing mutual resources and know-how.
(i) Cooperation for developing attractive stores(ii) Carrying of the other’s products each other and expansion of product lines(iii) Generation of synergy in the E-commerce business(iv) Mutual use of the other’s logistics network and installation service and after-sale service network(v) Generation of synergy in the renovation business and corporate business(3) Details of capital alliance
On April 27, 2022, the Company decided to acquire shares in EDION (the “Share Acquisition”) from LIXIL
Corporation, a shareholder of EDION, through an off-market negotiation.
(i) Number of shares of common stock of EDION acquired through the Share Acquisition: 8,961,000 shares(ownership interest in outstanding shares of common stock as of September 30, 2021: 8.60%)(ii) Aggregate amount of the Share Acquisition: ¥10,269 million ($89,329 thousand)(iii) Execution of the Share Acquisition: May 13, 2022
The Company expects to acquire 1,463,900 shares of common stock in EDION (ownership interest in
outstanding shares of common stock as of September 30, 2021: 1.40%) after the Share Acquisition through anoff-market negotiation or at market. If the acquisition of such additional shares is completed, the Company will bea major shareholder of EDION.
(4) Schedule(i) Resolution by the board of directors: April 27, 2022(ii) Execution of the capital and business alliance agreement: April 27, 2022(iii) Execution of share purchase agreement concerning the Share Acquisition: April 27, 2022(iv) Execution of the Share Acquisition (share delivery date): May 13, 2022
(5) Future prospects
The impact of the Capital and Business Alliance on the Group’s operating results is insignificant. If any matter
arises that requires disclosure, the Company will swiftly disclose it.

FY2022 Nitori Holdings Co., Ltd.

33

21. Segment Information

1) Overview of reportable segments(1) Determination of reportable segments
Reportable segments of the Group are components for which discrete financial information is available and thatthe board of directors regularly reviews to make decisions about resources to be allocated and assess theiroperating results.
The Group consists of the two segments on the basis of its core operating companies and identified the following
two businesses as its reportable segments: the “Nitori business” and the “Shimachu business.”(2) Types of products and services that belong to each reportable segment
The “Nitori business” primarily engages in the development, manufacture and sale of furniture and interior
merchandise.
The “Shimachu business” primarily engages in the sale of furniture, home accessories and home center goods.
2) Basis of measurement of net sales, profit, assets and other items by reportable segment
The accounting policies of the reportable segments are basically consistent with the description in “2. Summaryof Significant Accounting Policies.” The reportable segments’ profit corresponds to the Group’s operating income.
Intersegment sales and transfers are recorded based on the prices used in transactions with third parties.
3) Information about net sales, profit, assets and other items by reportable segment
Millions of Yen
Reportable segments

Reconciliations(Notes 1 and 3)

Consolidated(Note 2)¥811,581¥–¥811,581–

4,723(4,723)–¥679,252¥137,052¥816,305¥(4,723)¥811,581

Segment profit¥135,274¥3,032¥138,306¥(36)¥138,270

Segment assets¥724,192¥260,465¥984,658¥(817)¥983,840¥18,447¥5,337¥23,785¥–¥23,785

Shimachubusiness

Total

As of and for the year ended February 20, 2022

Nitoribusiness

Net sales:
Net sales to external customers¥674,528¥137,052

Intersegment sales or transfers

4,723

Total

Other items:
Depreciation and amortization

–

2,559

2,559

–

2,559

Investments in entity accounted for using
equity method

22,531–

22,531–

22,531

Increase in property, plant andequipment and intangible assets

100,522931

101,454–

101,454

Amortization of goodwill

FY2022 Nitori Holdings Co., Ltd.

34

Millions of Yen
Reportable segments
Total

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

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

Segment assets¥671,305¥259,579¥930,884¥930,884

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

Investments in entity accounted for using
equity method

22,001–

22,001

22,001

Increase in property, plant andequipment and intangible assets

22,323–22,32322,323

Total

Shimachubusiness

Consolidated

As of and for the year ended February 20, 2021

Nitoribusiness

Other items:

Thousands of U.S. Dollars
Reportable segments

Reconciliations(Notes 1 and 3)

Consolidated(Note 2)

$7,059,684$–$7,059,684–

41,092(41,092)–$5,908,597$1,192,179$7,100,776$(41,092)$7,059,684

Segment profit$1,176,710$26,377$1,203,087$(320)$1,202,766

Segment assets$6,299,520$2,265,704$8,565,225$(7,115)$8,558,110$160,469$46,432$206,901$–$206,901–

22,26022,260–22,260Investments in entity accounted for using
equity method

195,998–

195,998–

195,998

Increase in property, plant andequipment and intangible assets

874,416

8,100

882,517–882,517

Nitoribusiness

Shimachubusiness

Total

Net sales:
Net sales to external customers$5,867,505$1,192,179

Intersegment sales or transfers

41,092As of and for the year ended February 20, 2022

Total

Other items:
Depreciation and amortization
Amortization of goodwill

Notes: 1. The reconciliations of segment profit of ¥(36) million ($(320) thousand) were intersegment eliminations.
2. Segment profit was reconciled to operating income in the consolidated statement of income.
3. The reconciliations of segment assets of ¥(817) million ($(7,115) thousand) were intersegment eliminations.
4. Segment information for the year ended February 20, 2021 was based on the adjusted acquisition cost allocation due to thecompletion of the accounting for the business combination that had been effected in the year ended February 20, 2021. In theyear ended February 20, 2021, the Company only consolidated the balance sheet of Shimachu Co., Ltd. that constitutes the
Shimachu business.

FY2022 Nitori Holdings Co., Ltd.

35

4) Related information(1) Information about products and services
Information about products and services was as follows:
Millions of Yen
For the year ended February 20, 2022

Nitori business

Shimachubusiness

Total

Net sales to external customers¥674,528¥137,052¥811,581

For the year ended February 20, 2021

Nitori business

Shimachubusiness

Total

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

Millions of Yen

Thousands of U.S. Dollars
For the year ended February 20, 2022

Nitori business

Shimachubusiness

Total

Net sales to external customers$5,867,505$1,192,179$7,059,684(2) Information about geographic areasa) Net sales
Information about net sales is not disclosed because net sales to external customers in Japan constituted morethan 90% of net sales on the consolidated statement of income.
b) Property, plant and equipment, net
Information about property, plant and equipment is not disclosed because property, plant and equipment inJapan constituted more than 90% of property, plant and equipment on the consolidated balance sheet.
(3) Information about major customers
Information about major customers is not disclosed since no single customer accounts for 10% or more of net
sales on the consolidated statement of income.
5) Information about loss on impairment of long-lived assets by reportable segment
Millions of Yen
For the year ended February 20, 2022

Loss on impairment of long-lived assets

Nitori business

Shimachubusiness

Total

¥294

¥284

¥579

Nitori business

Shimachubusiness

Total¥8,351¥–¥8,351

Nitori business

Shimachubusiness

Total$2,565$2,478$5,043

Millions of Yen
For the year ended February 20, 2021

Loss on impairment of long-lived assets

Thousands of U.S. Dollars
For the year ended February 20, 2022

Loss on impairment of long-lived assets

FY2022 Nitori Holdings Co., Ltd.

36

6) Information about amortization and unamortized balance of goodwill by reportable segment

Millions of Yen

Nitori business

Shimachubusiness

Total

Amortization¥–¥2,559¥2,559Balance at end of year¥–

¥22,391¥22,391

Nitori business

Shimachubusiness

As of and for the year ended February 20, 2022

Millions of Yen
As of and for the year ended February 20, 2021

Total

Amortization

¥–

¥–

¥–

Balance at end of year¥–

¥19,791¥19,791

Thousands of U.S. Dollars
Nitori business

Shimachubusiness

Total

Amortization$–$22,260$22,260

Balance at end of year$–

$194,775$194,775

As of and for the year ended February 20, 2022

Note: 1. Goodwill of the Shimachu business increased by ¥5,799 million ($50,444 thousand) since during the year ended February 20,
2022, the Company acquired additional shares of Shimachu Co., Ltd., a consolidated subsidiary of the Company, andShimachu became a wholly-owned subsidiary of the Company. Goodwill amortization of ¥639 million ($5,565 thousand) during
the period from December 1, 2020 to February 20, 2021 associated with said business was accounted for as an adjustment toretained earnings.
2. During the year ended February 20, 2021, the Company provisionally accounted for the business combination with Shimachu,
and during the year ended February 20, 2022, the Company completed the accounting. As a result, goodwill as of February 20,
2021 decreased by ¥11,874 million, from ¥31,665 million to ¥19,791 million.

7) Information about gain on bargain purchase by reportable segment
Not applicable.

FY2022 Nitori Holdings Co., Ltd.

37

22. Related-Party Disclosures

1) Related-party transactions between the Company and related parties
Officers, major shareholders (individual shareholders only), etc., of the Company% of voting
rightsFor the year ended February 20, 2022
Category

Officer ofsubsidiary

Close relativeof officer

Name

Shigehito
Matsukura

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

Details oftransaction–

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

Loaning ofmoney (Note2)–

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

Building
lease

Building
lease(Note 3)

Millions of
Yen

Year-end balance

Thousands of
U.S. Dollars

Account

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

Shortterm
loans
receiv$– able

¥109

949

16

Leasehold140 deposits

28

248

Notes: 1. The transaction amount does not include consumption taxes.
2. The interest rate for the loaning of money was determined based on the market interest rate.
3. The terms and rent on the building lease transaction were determined based on similar transactions in a nearby area.
% of voting
rightsFor the year ended February 20, 2021
Category

Officer ofsubsidiary

Close relativeof officer

Name

Shigehito
Matsukura

Mitsuko
NitoriCapital orHeld (held byAddress contribution Occupation
others)–––Repre(held bysentative
director of others)
subsidiary Direct 0.04–

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

Transaction amount
Businessrelationship

Details oftransaction

Year-end balance

Millions of Yen

Account

Millions of Yen–

Loaning ofmoney (Note2)

Shortterm
loans
receiv109 able

109

Building
lease

Building
lease(Note 3)

Leasehold16 deposits

28

Notes: 1. The transaction amount does not include consumption taxes.
2. The interest rate for the loaning of money was determined based on the market interest rate.
3. The terms and rent on the building lease transaction were determined based on similar transactions in a nearby area.

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

FY2022 Nitori Holdings Co., Ltd.

38