Financial
Statements
2022
Benesse Holdings, Inc.
and Subsidiaries
Consolidated Financial Statements
for the Year Ended March 31, 2022,
and Independent Auditor’s ReportConsolidated Balance Sheet
Benesse Holdings, Inc. and Subsidiaries
March 31, 2022

Millions of Yen
2022
2021

ASSETS
CURRENT ASSETS:
Cash and deposits (Notes 5 and 6)
Marketable securities (Notes 5, 6 and 7)
Receivables:
Trade notes and accounts (Notes 6 and 16)
Other (Note 6)
Due from associated companies (Note 16)
Inventories (Note 8)
Other current assets
Allowance for doubtful receivables

Thousands of
U.S. Dollars(Note 1)2022

¥ 125,787
18,996¥ 151,013
5,951$ 1,031,041
155,705

25,621
57,99418
34,69911,881(337)

29,092
57,18317
31,534
12,321(1,417)210,008
475,361148
284,418
97,384(2,762)

Total current assets

274,659

285,6942,251,303

PROPERTY AND EQUIPMENT:Land
Buildings and leasehold improvements (Note 9)
Equipment, fixtures and other (Note 9)
Lease assets (Note 9)
Total
Accumulated depreciation

34,99088,51330,473
114,184
268,160(111,352)

35,08091,18434,726109,982
270,972(113,955)

286,803
725,516
249,779
935,934
2,198,032(912,721)

156,808

157,017

1,285,311

INVESTMENTS AND OTHER ASSETS:
Investment securities (Notes 6 and 7)
Investments in associated companies (Note 6)
Goodwill and other intangible assets (Note 11)
Software (Note 9)
Asset for retirement benefits (Note 13)
Deferred tax assets (Note 20)
Other assets

19,257
2,262
14,93024,653
6,627
10,251
31,152

14,4902,179
13,12025,071
5,033
5,174
34,204

157,844
18,541
122,377
202,074
54,32084,025
255,344

Total investments and other assets

109,132

99,271

894,525TOTAL
See notes to consolidated financial statements.

¥ 540,599¥ 541,982$ 4,431,139

Net property and equipment-1-Millions of Yen
2022
2021

LIABILITIES AND EQUITYCURRENT LIABILITIES:Current portion of long-term debt (Notes 6 and 12)
Payables:Trade notes and accounts
Other
Due to associated companies
Advances received (Note 16)
Income taxes payable
Other current liabilities¥

Total current liabilities
LONG-TERM LIABILITIES:Long-term debt, less current portion (Notes 6 and 12)
Lease obligations (Notes 6 and 10)
Guarantee deposits received from nursing home residents
Advances received from nursing home residents (Note 16)
Liability for retirement benefits (Note 13)
Deferred tax liabilities (Note 20)
Other long-term liabilities
Total long-term liabilities

5,075

¥

249

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

41,59816,12925,594896
109,269
2,282
20,933

13,961
26,515910
106,846
2,359
25,039132,205
209,7877,344
895,648
18,705
171,582

180,178

175,879

1,476,869

33,17598,24338,257
95,61137,470271,926805,270

57,727
5,957
596
8,560

8,156
681
10,891

473,172
48,828
4,885
70,164204,258

191,066

1,674,245

13,781
28,391
105
125,422

13,74029,632
105
151,435

112,959
232,713861
1,028,049(21,364)(21,362)(175,115)

408
200
2,428
149,371
6,792

1,166
(5,852)
1,016
169,880
5,157

3,344
1,639
19,902
1,224,352
55,673

156,163

175,037

1,280,025¥ 540,599¥ 541,982$ 4,431,139

COMMITMENTS AND CONTINGENT LIABILITIES(Note 10)
EQUITY (Notes 14, 16 and 21):
Common stock—authorized, 405,282,040 shares in 2022
and 2021; issued, 102,571,215 shares in 2022 and102,541,528 shares in 2021
Capital surplus
Stock acquisition rights
Retained earnings
Treasury stock—at cost—6,160,099 shares in 2022 and
6,158,118 shares in 2021
Accumulated other comprehensive income (loss):
Unrealized gain on available-for-sale securities
Foreign currency translation adjustments
Defined retirement benefit plans (Note 13)
Total
Noncontrolling interests
Total equity
TOTAL

-2-

Consolidated Statement of Income
Benesse Holdings, Inc. and Subsidiaries
Year Ended March 31, 2022

Millions of Yen
2022
2021
NET SALES (Notes 15 and 16)

Thousands of
U.S. Dollars(Note 1)2022

¥ 431,944¥ 427,532$ 3,540,525

COST OF SALES (Notes 13 and 18)

239,185

241,346

1,960,533

Gross profit

192,759

186,186

1,579,992

172,592

173,096

1,414,689

20,167

13,090165,303

178
343(5,818)
349
383
112
526
(200)

145
344
(5,445)
58
546
119
1,581
(530)

1,459
2,811
(47,689)
2,861
3,139
918
4,311
(1,639)SELLING, GENERAL AND ADMINISTRATIVE EXPENSES(Notes 13, 17 and 18)
Operating income
OTHER INCOME (EXPENSES):
Dividend income
Rent income
Interest expense—net (Note 12)
Foreign exchange gain
Gain on investments—net
Equity in net earnings of associated companies
Subsidy income
Loss on impairment of long-lived assets (Note 9)
Loss on sale of investments in a consolidated subsidiary(Note 23.b)
Restructuring expenses of a foreign consolidated subsidiary
Loss on temporary closure
Other—net(9,570)

INCOME BEFORE INCOME TAXESINCOME TAXES (Note 20):
Current
RefundDeferred
Total income taxes
NET INCOME
NET INCOME ATTRIBUTABLE TO NONCONTROLLINGINTERESTS
NET INCOME ATTRIBUTABLE TO OWNERS OF THE PARENT

¥

(749)
5,721

6,557

46,893

3,895

31,926

(226)

5,558
(1,267)(1,599)

3,669

2,692

30,073

2,052

3,865

16,820

988

742

8,099

1,064
2022

PER SHARE OF COMMON STOCK (Notes 2.t and 24):
Basic net income
Cash dividends applicable to the year
See notes to consolidated financial statements.

-3-(78,443)(1,554)(722)(1,075)¥ 11.04
50.00

¥
Yen

3,123
2021

¥ 32.40
50.00(6,138)(1,853)$

8,721

U.S. Dollars
2022
$

0.09
0.41

Consolidated Statement of Comprehensive Income
Benesse Holdings, Inc. and Subsidiaries
Year Ended March 31, 2022

Millions of Yen
2022
2021

Thousands of
U.S. Dollars(Note 1)2022

NET INCOME¥ 2,052¥ 3,865$ 16,820

OTHER COMPREHENSIVE INCOME (LOSS) (Note 22):
Unrealized (loss) gain on available-for-sale securities
Foreign currency translation adjustments
Defined retirement benefit plans
Share of other comprehensive income in associates

(761)
6,054
1,404
24

686
591
1,043
15

(6,238)49,623
11,508
197

6,721

2,335

55,090COMPREHENSIVE INCOME¥ 8,773¥ 6,200$ 71,910

TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO:
Owners of the parent
Noncontrolling interests
See notes to consolidated financial statements.

¥ 7,769
1,004¥ 5,478722$ 63,680
8,230

Total other comprehensive income-4-Consolidated Statement of Changes in Equity
Benesse Holdings, Inc. and Subsidiaries
Year Ended March 31, 2022
Thousands

Millions of Yen
Accumulated Other
Comprehensive Income (Loss)

Number of
Shares ofCommonStock
Outstanding
BALANCE, APRIL 1, 2020

96,355Issuance of new shares (Note 14)

Unrealized
Gain onForeignDefinedAvailable- Currency Retirement
Stock
Common Capital Acquisition Retained Treasury for-Sale Translation Benefit
Stock
Surplus
Rights Earnings Stock Securities Adjustments Plans¥ 13,700 ¥ 29,593

28

40¥ 105 ¥ 153,130 ¥ (21,362)¥ 467¥ (6,456)

Noncontrolling
Interests

Total

Total
Equity¥ (34) ¥ 169,143¥ 6,197 ¥ 175,340

80

80

40

Net income attributable to owners of theparent

3,123

3,123

3,123

Cash dividends, ¥50.0 per share(4,818)(4,818 )(4,818)

Capital increase of consolidated
subsidiaries

(1)

(1)

Net change in the year
BALANCE, MARCH 31, 2021

96,383

13,74029,632

105

151,435

13,74029,632

105

129,178

41

41

Cumulative effects of changes inaccounting policies(Note 3)

604

1,050

2,353

(1,040)1,313(21,362)

1,166(5,852)

1,016

169,880

5,157

175,037(21,362)

1,166(5,852)

1,016

147,623

5,157

152,780(22,257)

Restated balance
Issuance of new shares (Note 14)

30

(1)

699

(22,257 )(22,257)

82

82

Net income attributable to owners of theparent

1,064

1,064

1,064

Cash dividends, ¥50.0 per share(4,820)(4,820 )(4,820)(2)(2)(1,305 )(1,305)Purchase of treasury stock

(2)

(2)

Capital increase of a consolidated
subsidiary(1,305)

Change in the parent’s ownershipinterest due to transactions with
noncontrolling interests

23

23

Net change in the year
BALANCE, MARCH 31, 2022

96,411¥ 13,781 ¥ 28,391¥ 105 ¥ 125,422 ¥ (21,364)

(758)

6,052

¥ 408

¥ 200

1,412

6,706

¥ 2,428 ¥ 149,371

23
1,635

8,341

¥ 6,792 ¥ 156,163

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

CapitalSurplus

Stock
Acquisition
Rights$112,623 $242,885$861$1,241,270 $(175,098)

112,623

242,885861

1,058,836

336

336

CommonStock

BALANCE, MARCH 31, 2021

Retained
Earnings

Cumulative effects of changes inaccounting policies(Note 3)
Restated balance
Issuance of new shares (Note 14)

Unrealized
Gain onForeign
AvailableCurrency
Translation
Treasury for-Sale
Stock
Securities Adjustments

Total$(47,967)$8,328$1,392,459

9,557(47,967)

8,328

1,210,025(182,434)(175,098)

189

672

8,721

8,721

(39,508)(39,508)

(17)

(17)

(10,697)(10,697)

189

Net change in the year

$112,959 $232,713$861

1,252,295

8,721
(17)
(10,697)(182,434)
42,270(39,508)

Purchase of treasury stock

Change in the parent’s ownershipinterest due to transactions with
noncontrolling interests

Total
Equity$42,270 $1,434,729

672

Cash dividends, $0.41 per share
Capital increase of a consolidated
subsidiary

Noncontrolling
Interests$9,557(182,434)

Net income attributable to owners of theparentBALANCE, MARCH 31, 2022

DefinedRetirement
BenefitPlans$1,028,049 $(175,115)

See notes to consolidated financial statements.

-5-(6,213)49,606

11,57454,967$3,344$1,639$19,902$1,224,352

189
13,403

68,370$55,673 $1,280,025

Consolidated Statement of Cash Flows
Benesse Holdings, Inc. and Subsidiaries
Year Ended March 31, 2022

Millions of Yen
2022
2021

OPERATING ACTIVITIES:
Income before income taxes
Adjustments for:
Depreciation and amortization
Loss on impairment of long-lived assets
Loss on sale of investments in a consolidated subsidiary
Other noncash income and expenses—net
Changes in assets and liabilities, net of effects:(Decrease) increase in allowance for doubtful receivables
and other reserves(Increase) decrease in trade receivables
Increase in inventories
Increase (decrease) in trade payables
Increase in advances received
Increase in asset for retirement benefits
Other—net
Subtotal¥Interest and dividends received
Interest paid
Income taxes—paid
Net cash provided by operating activities
INVESTING ACTIVITIES:
Increase in time deposits—net
Purchases of marketable securities
Proceeds from sales of marketable securities
Purchases of property and equipment
Purchases of software
Purchases of investment securities
Proceeds from sales of investment securities
Purchase of additional interests in a consolidated subsidiary
Purchase of controlling interests in companies (a company in 2021)
Payment for sale of interests in a subsidiary previously consolidated
Other—net

5,721

¥

46,89319,025530
5,438

155,287
1,639
78,44352,893(60)(651)(3,039)2,724
2,230(1,594)(4,557)35,942688
958(1,463)(1,690)
11,155(1,796)
129
39,531(492)(5,336)(24,910)
22,32818,279(13,066)(37,351)
294,607713(6,345)(5,845)623(5,880)(8,430)5,844(52,008)(47,910)

24,46525,844

200,533(164)(16,999)
2,931(4,716)(9,612)(8,886)
1,483

(346)
(2,001)
2,905(5,374)(9,440)(813)
1,172(2,988)(1,181)(1,344)(139,336)
24,025(38,656)(78,787)(72,836)
12,156(47,360)

FINANCING ACTIVITIES:
Proceeds from long-term debt
Repayments of long-term debt
Proceeds from issuance of bonds
Dividends paid
Repayments of lease obligations
Other—net$

18,945
200
9,570
6,453

(2,819)(7,818)(760)

Net cash used in investing activities

6,557

Thousands of
U.S. Dollars(Note 1)2022

(1,632)(23,107)(64,082)(6,230)(19,698)(388,197)(4,820)(3,410)
(648)

8,000
(14,003)
10,000(4,821)(3,379)(542)(39,508)(27,951)(5,311)(9,127)(4,745)(74,811)

2,222

(247)

18,213NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS(29,800)

1,154(244,262)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR

144,035

142,881

1,180,615(249)

Net cash used in financing activities
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS
ON CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS, END OF YEAR (Note 5)¥-6-

114,235¥

144,035(2,041)$

936,353(Continued)

Consolidated Statement of Cash Flows
Benesse Holdings, Inc. and Subsidiaries
Year Ended March 31, 2022

ADDITIONAL CASH FLOW INFORMATION:
Purchase of controlling interests in companies:
Current assets
Long-term assets
Consolidation goodwill
Current liabilities
Long-term liabilities
Acquisition cost
Cash and cash equivalents of newly consolidated subsidiaries
Purchase of controlling interests in companies
Sale of interests in a subsidiary previously consolidated:
Current assets
Long-term assets
Current liabilities
Long-term liabilities
Unrealized loss on available-for-sale securities
Foreign currency translation adjustments
Defined retirement benefit plans
Transfer expenses
Loss on sale of investments in a consolidated subsidiary
Selling price
Other receivables
Other payables
Transfer expenses
Cash and cash equivalents of a subsidiary previously consolidated
Payment for sale of interests in a subsidiary previously consolidated
NONCASH INVESTING AND FINANCING ACTIVITIES:Assets and obligations from finance lease transactions
recognized in the consolidated balance sheet:
Lease assets
Lease obligations

Millions of Yen
2022
2021

Thousands of
U.S. Dollars(Note 1)
2022

¥

1,945
288
2,458
(410)
(31)
4,250
(1,431)$

15,943
2,361
20,148(3,361)(254)
34,837(11,730)

¥

2,819

$

23,107¥

13,782
6,950(12,507)(5,016)
(11)
5,929
726
266
(9,570)
549
(318)
55
(266)
(7,838)$112,967
56,967(102,516)(41,115)(90)
48,5995,951
2,180(78,443)
4,500(2,607)451(2,180)(64,246)¥(7,818)$(64,082)

¥

5,847
6,227

$

47,92651,041¥

11,481
12,583

See notes to consolidated financial statements.

-7-(Concluded)

Notes to Consolidated Financial Statements
Benesse Holdings, Inc. and Subsidiaries
Year Ended March 31, 2022
Note 1.

BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS

The accompanying consolidated financial statements of Benesse Holdings, Inc. (the “Company”) have been
prepared in accordance with the provisions set forth in the Japanese Financial Instruments and Exchange Act andits related accounting regulations, and in accordance with accounting principles generally accepted in Japan, which
are different in certain respects as to the application and disclosure requirements of International Financial
Reporting Standards (“IFRS”). The foreign subsidiaries prepare their financial statements in accordance with either
IFRS or accounting principles generally accepted in the United States of America (“U.S. GAAP”).
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 is morefamiliar 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 theCompany is incorporated and operates. The translations of Japanese yen amounts into U.S. dollar amounts areincluded solely for the convenience of readers outside Japan and have been made at the rate of ¥122 to $1, theapproximate rate of exchange at March 31, 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.
Note 2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa.
Consolidation—The consolidated financial statements include the accounts of the Company and its 38 (37in 2021) subsidiaries (collectively, the “Group”).
Under the control and influence concepts, those companies in which the Company, directly or indirectly, is able toexercise control over operations are fully consolidated, and those companies over which the Group has the ability to
exercise significant influence are accounted for by the equity method.
Investments in nine associated companies are accounted for by applying the equity method.
All significant intercompany balances and transactions have been eliminated in consolidation. All material
unrealized profits included in assets resulting from transactions within the Group are also eliminated.
b.
Business Combinations—Business combinations are accounted for using the purchase method.
Acquisition-related costs, such as advisory fees or professional fees, are accounted for as expenses in the periods
in which the costs are incurred. If the initial accounting for a business combination is incomplete by the end of thereporting period in which the business combination occurs, an acquirer shall report in its financial statements
provisional amounts for the items for which the accounting is incomplete. During the measurement period, whichshall not exceed one year from the acquisition, the acquirer shall retrospectively adjust the provisional amounts
recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed asof the acquisition date and that would have affected the measurement of the amounts recognized as of that date.
Such adjustments shall be recognized as if the accounting for the business combination had been completed at theacquisition date. The acquirer recognizes any bargain purchase gain in profit or loss immediately on the acquisition
date after reassessing and confirming that all of the assets acquired and all of the liabilities assumed have been
identified after a review of the procedures used in the purchase price allocation. A parent’s ownership interest in a
subsidiary might change if the parent purchases or sells ownership interests in its subsidiary. The carrying amountof noncontrolling interest is adjusted to reflect the change in the parent’s ownership interest in its subsidiary while
the parent retains its controlling interest in its subsidiary. Any difference between the fair value of the consideration
received or paid and the amount by which the noncontrolling interest is adjusted is accounted for as capital surplus
as long as the parent retains control over its subsidiary.
c.
Cash Equivalents—Cash equivalents in the consolidated statement of cash flows are defined as low-risk,
highly liquid, short-term (maturity within three months of acquisition date) investments that are readily convertible tocash.
d.
Inventories—Inventories are primarily stated at the lower of cost, determined by the average cost method, or
net selling value. Inventories of foreign subsidiaries are primarily stated at the lower of cost, determined by theaverage cost method, or market, or net selling value.
e.
Marketable and Investment Securities—Marketable and investment securities are classified and accounted
for, depending on management’s intent, as follows: (1) trading securities, which are held for the purpose of earning
capital gains in the near term, are reported at fair value, and the related unrealized gains and losses are included inearnings (costs of securities sold are calculated by the moving-average method); (2) held-to-maturity debt
securities, for which there is a positive intent and ability to hold to maturity are reported at amortized cost using thestraight-line method of amortization; and (3) available-for-sale securities, which are not classified as either of theaforementioned securities, are reported at fair value, with unrealized gains and losses, net of applicable taxes,-8-

reported in a separate component of equity (costs of securities sold are calculated by the moving-average method).
Nonmarketable available-for-sale equity securities are stated at cost determined by the moving-average method.
For other-than-temporary declines in fair value, investment securities are reduced to net realizable value by acharge to income. As for investments in investment limited partnerships and other similar partnerships, which are
deemed to be securities in accordance with Article 2, paragraph (2) of the Japanese Financial Instruments andExchange Act, the Group’s share of each partnership’s equity and net income or loss are recognized on a net basis
based on the partnership’s most recent financial statements that are available depending on the reporting dateprescribed in the relevant partnership agreement.
f.
Property and Equipment—Property and equipment are stated at cost. Depreciation of property andequipment of the Company and its domestic subsidiaries is computed by the declining-balance method over theestimated useful lives of the assets, while the straight-line method is applied to buildings acquired on or after April 1,
1998, building improvements and structures acquired on or after April 1, 2016, lease assets of the Company and its
domestic subsidiaries, and all property and equipment of foreign subsidiaries. The range of useful lives in the
Company and its domestic subsidiaries is principally from 2 to 50 years for buildings and leasehold improvements.
The useful lives for lease assets of the Company and its domestic subsidiaries are the terms of the respective
leases, and those of foreign subsidiaries are the terms of the respective leases or estimated useful lives of the leaseassets.
Under certain conditions such as exchanges of fixed assets of similar kinds and sales and purchases resulting
from expropriation, Japanese tax laws permit companies to defer the profit arising from such transactions by
reducing the cost of the assets acquired. As of March 31, 2022 and 2021, such deferred profit amounted to¥3,375 million ($27,664 thousand) and ¥2,617 million, respectively.
g.
Long-Lived Assets—The Group reviews its long-lived assets for impairment whenever events or changes incircumstance indicate the carrying amount of an asset or asset group may not be recoverable. An impairment loss isrecognized if the carrying amount of an asset or asset group exceeds the sum of the undiscounted future cash flows
expected to result from the continued use and eventual disposition of the asset or asset group. The impairment loss
would be measured as the amount by which the carrying amount of the asset exceeds its recoverable amount,which is the higher of the discounted cash flows from the continued use and eventual disposition of the asset or the
net selling price at disposition.
h.
Goodwill and Other Intangible Assets—The differences between the cost and net equity at acquisition(“consolidation goodwill”) and customer-related assets in domestic subsidiaries are amortized on a straight-line
basis over 10 to 20 years for goodwill and mainly over 20 years for customer-related assets. Immaterial
consolidation goodwill incurred during the period is charged to income.
i.
Software—Software used internally is amortized by the straight-line method over its estimated useful life
(primarily 5 years and 10 years for the Company and its domestic subsidiaries and primarily 5 years for foreignsubsidiaries).
j.
Leases—Finance lease transactions are capitalized to recognize lease assets and lease obligations in thebalance sheet by the Company and its domestic subsidiaries, and all other leases are accounted for as operatingleases.
On January 13, 2016, the International Accounting Standards Board (IASB) issued IFRS 16, “Leases,” requiring
the recognition of substantially all lease assets and lease liabilities on the balance sheet. Certain foreignsubsidiaries that apply IFRS applied this accounting standard effective April 1, 2019.
k.
Retirement and Pension Plans—The Company and certain domestic subsidiaries have severance
lump-sum payment plans and a contributory funded defined benefit pension plan for employees, and certain
domestic subsidiaries have lump-sum payment plans for directors, Audit & Supervisory Board members andCompany officers. The pension plans, which were established under the Japanese Employees’ Pension Insurance
Act, cover a substitutional portion of the governmental pension program by the Company on behalf of thegovernment and a corporate portion established at the discretion of the Company. The pension fund is administeredby a board of trustees composed of management and employee representatives as required by government
regulations.
Effective April 1, 2004, the Company and its certain domestic subsidiaries introduced a cash-balance plan as partof the former pension plan to reduce their future risk due to unexpected low returns from the pension fund.
In addition, certain subsidiaries have defined contribution plans.
Berlitz Corporation has a defined benefit plan, Supplemental Executive Retirement Plan (“SERP”), for the benefitof its Chairman of the Board, certain designated executives and their designated beneficiaries and accounts for it inaccordance with the U.S. GAAP. Berlitz was excluded from the consolidation scope as the Company transferred allof its shares in Berlitz on February 14, 2022.
The Group accounts for the liability for retirement benefits based on the projected benefit obligations and plan
assets at the balance sheet date. The projected benefit obligations of the Company and its domestic subsidiaries
are attributed to periods on a benefit formula basis. Actuarial gains and losses of the Company and its domestic
subsidiaries that are yet to be recognized in profit or loss are recognized within equity (accumulated othercomprehensive income) after adjusting for tax effects, and are recognized in profit or loss primarily over 8 years no-9-

longer than the expected average remaining service period of the employees, starting from the year following theyear in which they occur. Foreign subsidiaries only recognize actuarial gains and losses that are greater than 10%of the larger of the beginning balance of the projected benefit obligation or the market-related value (which may
equal fair value) of the plan assets, and they are amortized on a straight-line basis primarily over 13 years, which
are based on the average life expectancy of the eligible executives. Past service costs of the Company and its
domestic subsidiaries are amortized on a straight-line basis primarily over 8 years no longer than the expected
average remaining service period of the employees.
Retirement benefits to directors, Audit & Supervisory Board members and Company officers of certain domestic
subsidiaries are recorded as a liability at the amount that would be required if all directors, Audit & Supervisory
Board members and Company officers retired at each consolidated balance sheet date.
l.
Stock Options—Compensation expense for employee stock options is recognized based on the fair value atthe date of grant and over the vesting period as consideration for receiving goods or services in accordance withAccounting Standards Board of Japan (“ASBJ”) Statement No. 8, “Accounting Standard for Share-based Payment.”
Stock options granted to nonemployees are accounted for based on the fair value of either the stock option or the
goods or services received. In the consolidated balance sheet, stock options are presented as a stock acquisitionright as a separate component of equity until exercised.
m.

Research and Development Costs—Research and development costs are charged to income as incurred.

n.
Foreign Currency Transactions—All short-term and long-term monetary receivables and payables
denominated in foreign currencies are translated into Japanese yen at the exchange rates at the consolidatedbalance sheet date. The foreign exchange gains and losses from translation are recognized in the consolidated
statement of income to the extent that they are not hedged by foreign exchange forward contracts.
o.
Foreign Currency Financial Statements—The consolidated balance sheet accounts of the foreignsubsidiaries are translated into Japanese yen at the current exchange rate as of the consolidated balance sheet
date except for equity, which is translated at the historical rate. Differences arising from such translation are shown
as “Foreign currency translation adjustments” in a separate component of equity. Revenue and expense accounts offoreign subsidiaries are translated into yen at the average exchange rate.
p.
Derivative Financial Instruments and Hedge Activities—The Company uses derivative financial
instruments to manage its exposures to fluctuations in foreign currency exchange rates. Foreign exchange forward
contracts are utilized by the Company to reduce foreign exchange risk.
The Company measures foreign exchange forward contracts at fair value, and the unrealized gains/losses arerecognized in the consolidated statement of income.
q.
Bonuses to Directors and Company Officers—Bonuses to directors and Company officers are accrued at
the end of the year to which such bonuses are attributable.
r.
Basis for Recognizing Revenue and Expenses—The Group identifies a distinct good or service in acontract with a customer, and considering it as a transaction unit, identifies performance obligation(s). The
transaction price is determined as the amount of consideration to which the Group expects to be entitled in
exchange for transferring the promised good or service to the customer. Some contracts include more than one
performance obligation, and the transaction price is allocated to each performance obligation. When control of apromised good or service is transferred to a customer and a performance obligation of the Group is satisfied at apoint in time, revenue is recognized at the point in time. When control of a promised good or service is transferred toa customer and a performance obligation of the Group is satisfied over time, revenue is recognized over time bymeasuring the progress towards complete satisfaction of the performance obligation, depending on contract details.
For some good and product sales in Japan, the Company and its domestic subsidiaries recognize revenue upon
shipment when it takes a normal period of time from when an ordered good or product is shipped out to when thecustomer obtains control of such good or product, applying an alternative treatment in paragraph 98 of the ASBJ
Guidance No. 30, “Implementation Guidance on Accounting Standard for Revenue Recognition,” issued on March
26, 2021. The Group does not have significant financial components in contracts with customers.
The Group’s major businesses are the Education Business in Japan, the Kids & Family Business, the Nursing
Care and Childcare Business, and the Berlitz Business. Since the Company, on February 14, 2022, transferred allof its shares in Berlitz Corporation, which had been a consolidated subsidiary of the Company and had constituted
the Berlitz Business, the consolidated statement of income for the year ended March 31, 2022, includes revenue ofthe Berlitz Business up to the end of the third quarter.
(1) Education Business in Japan
In the Education Business in Japan, the Group engages in the correspondence course business targeting
primary school students to high school students, Shinkenzemi, the school and teacher support business, theprep school and classroom education business, and other businesses.
In the correspondence course business, Shinkenzemi, the Group provides more than one good and/or service
including the provision of course materials and services for correcting answers submitted by customers andtutoring. A contract associated with the business includes more than one performance obligation, and the stand-- 10 -

alone selling price is not directly observable. Accordingly, the Group allocates the transaction price to eachperformance obligation by estimating its costs of satisfying a performance obligation and then adding anappropriate margin for that good or service. The Group determines that a customer obtains control of a promised
good or service and a performance obligation of the Group is satisfied at the point in time when the customer
confirms that course materials conform to agreed specifications to recognize revenue from the provision ofcourse materials, and when the Group provides answers to the customer after correction to recognize revenue
on answer correction and tutoring.
In the school and teacher support business, the Group mainly offers simulated exams and support services for
ICT education, learning, and school affairs. In connection with simulated exams, the Group mainly provides
question booklets and answer booklets, grades the exams, and provides exam results to customers. The Groupconsiders these activities as one performance obligation since they are highly interrelated and determines that acustomer obtains control of a good or service and a performance obligation of the Group is satisfied mainly at
the point in time when the Group provides exam results to the customer to recognize revenue. For support
services for ICT education, learning, and school affairs, a customer obtains control of a service by receiving asoftware license and upgrading the version, or receiving ICT use support. Accordingly, the Group determinesthat its performance obligation is satisfied by measuring the progress in providing the service and recognizes
revenue over the contract term.
In the prep school and classroom education business, the Group primarily gives classes. A customer obtains
control of a service by taking classes. Accordingly, the Group determines that its performance obligation issatisfied by measuring the progress in giving lessons and recognizes revenue over the contract term.
(2) Kids & Family BusinessIn the Kids & Family Business, the Group provides the course materials of Kodomo Challenge in thecorrespondence course business in Japan, China, Taiwan and Indonesia, targeting mainly infants. The Groupalso engages in the mail-order business in Japan.
To recognize revenue for Kodomo Challenge in the correspondence course business, the Group determinesthat a customer obtains control of course materials and a performance obligation of the Group is satisfied at the
point in time when the Group provides the course materials to the customer.
To recognize revenue for the mail-order business, the Group determines that a customer obtains control ofgoods and a performance obligation of the Group is satisfied at the point in time when the Group provides the
goods to the customer. In a transaction where the Group is an agent in connection with the provision of goods toa customer, revenue is recognized in the net amount of consideration that the Group retains after paying a
supplier the consideration received from the customer in exchange for goods provided by the supplier.
(3) Nursing Care and Childcare BusinessIn the Nursing Care and Childcare Business, the Group engages primarily in the residential care services
business, and revenue of the business is comprised of facility usage/nursing care charges and payments fromnursing home residents.
For facility usage/nursing care charges, a customer obtains control of a service by receiving a nursing careservice. Accordingly, the Group determines that its performance obligation is satisfied by measuring the
progress in providing the service and recognizes revenue over the period of service.
For payments from nursing home residents, a customer obtains control of a service by using nursing homefacilities. Accordingly, the Group determines that its performance obligation is satisfied over the period of use
and recognizes revenue over such period after estimating the average occupancy term.
(4) Berlitz BusinessIn the Berlitz business, the Group engaged in the language education business and the study abroad support(ELS) business and primarily gave lessons.
For such businesses, a customer obtained control of a service by taking lessons. Accordingly, the Group
determined that its performance obligation was satisfied by measuring the progress in giving lessons andrecognized revenue over the contract term. Revenue of the Berlitz Business was accounted for in accordancewith U.S. GAAP.
s.
Income Taxes—The provision for income taxes is computed based on the pretax income included in the
consolidated statement of income. The asset and liability approach is used to recognize deferred tax assets andliabilities for the expected future tax consequences of temporary differences between the carrying amounts and thetax bases of assets and liabilities. Deferred taxes are measured by applying currently enacted income tax rates tothe temporary differences.
The Company and certain domestic subsidiaries file a tax return under the consolidated taxation system, whichallows companies to base tax payments on the combined profits or losses of the parent company and its wholly
owned domestic subsidiaries, and will start to apply the group tax sharing system instead of the consolidated
taxation system at the beginning of the year ending March 31, 2023.
With regard to differences under the group tax sharing system established by the “Act Partially Amending theIncome Tax Act” (Act No. 8, 2020) and differences under the non-consolidated taxation system reexamined together
with transition to the group tax sharing system, the Company calculates the amounts of deferred tax assets anddeferred tax liabilities based on the Income Tax Act before the revision, not applying the ASBJ Guidance No. 28,“Implementation Guidance on Tax Effect Accounting,” issued on February 16, 2018, as permitted by the Practical- 11 -

Issues Task Force (“PITF”) No. 39, “Practical Solution on the Treatment of Tax Effect Accounting for the Transition
from the Consolidated Taxation System to the Group Tax Sharing System,” issued on March 31, 2020.
The Company and certain domestic subsidiaries expect to apply the PITF No. 42, “Practical Solution on the
Accounting and Disclosure Under the Group Tax Sharing System,” issued on August 12, 2021, which prescribes
treatments of accounting and disclosure on the corporation tax and the local corporation tax as well as the tax effectaccounting under the group tax sharing system, for annual periods beginning on or after April 1, 2022.
t.
Per Share Information—Basic net income per share is computed by dividing net income attributable tocommon shareholders by the weighted-average number of common shares outstanding for the period.
Cash dividends per share presented in the accompanying consolidated statement of income are dividends
applicable to the respective fiscal years, including dividends to be paid after the end of the year.
u.
New Accounting Pronouncements
Implementation Guidance on Accounting Standard for Fair Value Measurement—The implementation
guidance prescribes the treatments of fair value measurement of investment trusts and the relevant disclosure aswell as disclosure on the fair value of investments in partnerships for which an amount equivalent to a company’s
share is recognized on a net basis in its balance sheet.
The Company and its domestic subsidiaries expect to apply the revised implementation guidance for annual
periods beginning on or after April 1, 2022, and are in the process of measuring the effects of applying the revised
implementation guidance in future applicable periods.
Note 3.
a.

ACCOUNTING CHANGE
Accounting Standard for Revenue Recognition

The Company and its domestic subsidiaries started to apply the “Accounting Standard for Revenue Recognition” atthe beginning of the year ended March 31, 2022, and recognize revenue in the amount expected to be received in
exchange for a promised good or service when the Company and its domestic subsidiaries transfer control of thegood or service to a customer.
The following are the main changes due to the application.
For Shinkenzemi, the correspondence course business in the Education Business in Japan, revenue wasrecognized in the month of course completion, and provision for answer correction fees was recognized in an
amount required based on the historical submission rate to provide for future expenditures on answer correction
fees. Under the standard, revenue from the provision of course materials is recognized when a customer confirmsthat course materials conform to agreed specifications, and revenue on answer correction and tutoring is recognizedwhen the Group provides corrected answers to the customer.
For the mail-order business in the Kids & Family Business, revenue was recognized in the gross amount ofconsideration that was expected to be received from a customer. Under the standard, in a transaction where theGroup is an agent in connection with the provision of goods to a customer, revenue is recognized in the net amountof consideration that the Group retains after paying a supplier the consideration received from the customer inexchange for goods provided by the supplier.
For book publication in the Kids & Family Business and the Education Business in Japan, provision for sales
returns was recognized in the amount of expected loss based on the historical product return rate in a given time
period for trade accounts receivable of the same business to provide for losses on publication returns. Under the
standard, for merchandise or finished products expected to be returned, revenue is not recognized upon sale inaccordance with the provisions on variable consideration, and refund liabilities are recognized in the amount ofconsideration received or receivable.
For the residential care services business in the Nursing Care and Childcare Business, portion of a payment froma nursing home resident was recognized as revenue in the month during which the resident starts to occupy thenursing home, and the rest of the payment was recognized as revenue over the contract term on a straight-line
basis. Under the standard, payments from nursing home residents are recognized as revenue over the averageoccupancy term on a straight-line basis. As a result of this change, while “guarantee deposits received from nursing
home residents” of ¥37,470 million, which was measured by using the previous method, is presented under longterm liabilities in the consolidated balance sheet as of March 31, 2021, contract liabilities measured by using the
new method are presented as “advances received from nursing home residents” of ¥57,727 million ($473,172
thousand) in the consolidated balance sheet as of March 31, 2022.
The Company and its domestic subsidiaries recognized the cumulative effect of retrospectively applying the new
accounting policies before the beginning of the year ended March 31, 2022, as an adjustment to the beginningbalance of retained earnings in the year ended March 31, 2022, and have applied the new accounting policies
thereafter in accordance with the transitional provision in the proviso of paragraph 84 of the standard.
As a result of the above, in the consolidated balance sheet as of March 31, 2022, in addition to the “advances
received from nursing home residents” as stated above, “deferred tax assets” under investments and other assets
and “advances received” under current liabilities increased by ¥4,595 million ($37,664 thousand) and ¥3,672 million($30,098 thousand), respectively.
In the consolidated statement of income for the year ended March 31, 2022, “net sales” decreased by ¥1,172
million ($9,607 thousand), both “operating income” and “income before income taxes” increased by ¥1,461 million- 12 -

($11,975 thousand), and “net income attributable to owners of the parent” increased by ¥1,053 million ($8,631
thousand).
Due to the adjustment to the beginning balance of equity in the year ended March 31, 2022, as stated above, thebeginning balance of “retained earnings” in the consolidated statement of changes in equity decreased by ¥22,257
million ($182,434 thousand).
For information about the effect on net income per share, please see Note 24. NET INCOME PER SHARE.
The Company did not reclassify the amounts in the consolidated financial statements for the year ended March 31,
2021, to conform to the new presentation in accordance with the transitional provision in paragraph 89-2 of thestandard. In addition, information about revenue recognition for the year ended March 31, 2021, is not disclosed inaccordance with the transitional provision in paragraph 89-3 of the standard.
b.

Accounting Standard for Fair Value Measurement

The Company and its domestic subsidiaries started to apply the ASBJ Statement No. 30, “Accounting Standard for
Fair Value Measurement,” issued on July 4, 2019 (the “Standard” in this section) and the related standards andguidance at the beginning of the year ended March 31, 2022, and prospectively applied the new accounting policies
prescribed by the Standard and the related standards and guidance as of the beginning of the year ended March
31, 2022, in accordance with paragraph 19 of the Standard and paragraph 44-2 of the ASBJ Statement No. 10,“Accounting Standard for Financial Instruments,” issued on July 4, 2019. As a result of the application, governmentand corporate bonds, which were carried at the prices obtained from financial institutions or at amortized cost, arecarried at fair value measured maximizing the use of relevant observable inputs for the fair value to be best
expressed.
Financial instruments categorized by fair value hierarchy and other information is disclosed in Note 6. FINANCIAL
INSTRUMENTS AND RELATED DISCLOSURES. Information for the year ended March 31, 2021, however, is notdisclosed in accordance with the transitional provision in paragraph 7-4 of the ASBJ Guidance No. 19,“Implementation Guidance on Disclosures about Fair Value of Financial Instruments,” issued on July 4, 2019.
Note 4.
a.

SIGNIFICANT ACCOUNTING ESTIMATES
Valuation of Goodwill(1) Amount recorded in the consolidated financial statements
Millions of Yen
2022
2021
¥ 12,122¥ 10,177

GoodwillThousands of
U.S. Dollars
2022$ 99,361(2) Information on the significant accounting estimates of identified item
The Group aims at proactively conducting M&A transactions after carefully selecting target companies in thebusiness areas where the Group can leverage its strengths and recognize goodwill measured as the excess of theacquisition cost over the net of the amounts of the identifiable assets and the liabilities of the acquired company
measured at fair value at the date of business combination as the acquired company’s excess earnings power in the
future that is expected from its business activities.
Goodwill is attributed to any Group company from which operating results are separately reported for managerial
purposes. At the end of each reporting period, each company assesses whether there is any indication that goodwill
may be impaired after taking into consideration a rapid change in the business environment where its subsidiaryacquired through a merger or acquisition operates. If there is an indication that goodwill may be impaired, an
impairment loss is recognized when the aggregate amount of estimated undiscounted future cash flows of the asset
group including goodwill is less than its carrying amount.
The undiscounted future cash flows are estimated based on the business plan approved by the management ofeach company, and such plan is developed on the basis of certain assumptions including the assumption ofrevenue forecast that is based on the market environment where the company operates (including the effect of the
COVID-19 pandemic).
If any business plan is required to be revised in connection with the assumptions used in the estimate due to thedeteriorating business environment caused by changes in customer and competitor trends and other factors, theGroup may recognize an impairment loss in the year ending March 31, 2023.
In the year ended March 31, 2021, the Group identified an indication of an impairment loss of goodwill and otherassets that arose from the share acquisition of EDUCOM Corporation. In the year ended March 31, 2022, however,the Group did not identify any indication of an impairment loss of such assets since operating results of EDUCOM
showed stable growth.

- 13 -

b.

Recoverability of deferred tax assets(1) Amount recorded in the consolidated financial statements
Millions of Yen
2022
2021
¥ 10,251¥ 5,174

Deferred tax assets

Thousands of
U.S. Dollars
2022$ 84,025(2) Information on the significant accounting estimates of identified item
The Group recognized deferred tax assets which were expected to be recoverable by using future taxable incomethat excludes tax deductions resulting from the reversal of deductible temporary differences based on future
profitability and tax planning in accordance with the schedule for reversal of taxable/deductible temporary
differences. Each Group company estimated future taxable income in periods during which deferred tax assets were
determined to be recoverable based on the business plan approved by the management of the company taking into
consideration the impact of business environment on the Group’s operating results. As a result, deferred tax assets
which were determined not to be recoverable in future were reversed as valuation allowance.
Future taxable income was estimated mainly based on assumptions including the cumulative total number ofenrollment and an increase in sales efficiency for Shinkenzemi and Kodomo Challenge, major businesses ofBenesse Corporation. For the residential care services business of Benesse Style Care Co., Ltd., future taxable
income was estimated mainly based on assumptions including the number of nursing homes and elderly homes,
which was premised on increasing needs for nursing care services due to the aging population.
If future taxable income is required to be revised in connection with the assumptions used in these estimates dueto the deteriorating business environment caused by changes in customer and competitor trends and other factors,
in the year ending March 31, 2023, the Company may further reverse deferred tax assets that are not expected tobe recoverable.

- 14 -

Note 5.

CASH AND CASH EQUIVALENTS
Cash and cash equivalents at March 31, 2022 and 2021, consisted of the following:
Millions of Yen
2022
2021
¥ 125,787¥ 151,013
18,996
5,951

Cash and deposits
Marketable securities
Time deposits and short-term investments
which mature or become due after morethan three months of acquisition date
Investment trusts and otherCash and cash equivalents
Note 6.

(30,539)(9)(12,920)(9)¥ 114,235¥ 144,035

Thousands of
U.S. Dollars
2022$ 1,031,041
155,705(250,319)(74)$

936,353

FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES(1)Group Policy for Financial Instruments
The Group manages its surplus funds focusing on liquidity and safety according to how and when they are to
be used during the year. Particularly, derivative transactions are utilized mainly to hedge various risks andefficiently manage funds. The Group considers derivative transactions with high leverage to be high-risk
transactions and does not enter into such transactions. In addition, the Group has set overdraft limits in order
to finance operating capital flexibly and stably in case of an unpredictable event.

(2)

Nature and Extent of Risks Arising from Financial Instruments
Trade notes and accounts receivable and other receivables are exposed to counterparty credit risk. Monetary
receivables in foreign currencies are exposed to the market risk of fluctuation in foreign currency exchange
rates. The Group uses foreign exchange forward contracts in order to manage exposure to market risk fromchanges in foreign currency exchange rates of loans receivable in foreign currencies and dividend income fromforeign subsidiaries, which are exposed to foreign exchange risk and counterparty credit risk. Marketable andinvestment securities mainly comprise commercial paper, equity securities, debt securities, investment
partnerships and stock investment trusts. The Group holds equity securities, investment partnerships and stock
investment trusts within certain limits. These are exposed to issuer credit risk, foreign exchange risk, interest
rate risk and market price risk.
Trade notes and accounts payable, other payables and income taxes payable are due within one year.
Long-term debt is primarily used for future business investments of the Company. Long-term debt with variableinterest is exposed to interest rate risk. Lease obligations under finance leases are mainly used for capital
investments.

(3)

Risk Management for Financial Instruments
Credit risk management
The Group manages its credit risk from trade notes and accounts receivable and other receivables inaccordance with the “Credit Management Regulations,” which include monitoring of counterparties, due dates,
amounts and balances by type by the general manager of each department of the Group to identify andmitigate the default risk of counterparties at an early stage and monitoring of the credit standing ofcounterparties by the Finance Department on a regular basis.
The Finance Department manages issuer credit risk by regularly monitoring the rating information and thecredit standing of issuers in accordance with the “Fund Management Regulations.” As for counterparty credit
risk in derivatives, the Group regards that counterparty default risk is extremely low because the counterpartiesare limited to creditworthy financial institutions.
Market risk management
For fluctuation risks of foreign currency exchange rates, interest rates and market prices relating to marketable
and investment securities, the Company’s Finance Department obtains and monitors the price information ofmarketable and investment securities from financial institutions on a steady basis for securities with market
prices, and on a periodic basis for those without market prices. With respect to securities transactions, theFinance Department executes transactions in accordance with the “Fund Management Regulations,” whichprescribe the authority and the limits, and monitors the status on a steady basis. The Finance Department
reports the status to the Representative Director and Chairman, CEO, and the Representative Director andPresident, COO, on a weekly basis, and in the event of a significant change in the status, the Finance
Department reports it to the Board of Directors.
Foreign exchange risk relating to monetary receivables in foreign currencies is hedged by foreign exchange
forward contracts. In addition, long-term debt, except some, is at fixed interest rates to control the interest raterisk of long-term debt.
The derivatives the Company uses are foreign exchange forward contracts, and as to foreign exchange risk,- 15 -

the authority and the limits for each transaction are prescribed in the “Derivative Transaction Regulations,” andthe Company’s Finance Department monitors unrealized gain/loss on foreign exchange forward contracts on asteady basis. The Finance Department reports it to the Representative Director and Chairman, CEO, and theRepresentative Director and President, COO, on a weekly basis, and to the Board of Directors on a quarterly
basis and in the event of a significant change in the status.
Liquidity risk management
Liquidity risk includes the risk that the Group cannot meet its contractual obligations in full on their maturity
dates. In order to manage liquidity risk, the Company’s Finance Department develops an annual financial plan
based on reports from departments, monitors bank account activity on a daily basis, and prepares and updates
a financial plan on a monthly basis. The Company’s subsidiaries manage their liquidity risk in the same way as
the Company does.
(4)

Fair Values of Financial Instruments
Since various assumptions and factors are reflected in estimating fair value, different assumptions and factors
could result in different fair value.
(a)Fair value of financial instruments

Millions of Yen

Carrying
AmountFair Value

Unrealized
Gain (Loss)

March 31, 2022
Marketable and investment securities:
Available-for-sale securities¥

34,845¥34,845

Total¥

34,845¥34,845Long-term debt
Lease obligations¥

38,250101,713¥

38,008101,151¥ (242)
(562)

Total

¥ 139,963¥ 139,159¥ (804 )March 31, 2021
Marketable and investment securities:
Available-for-sale securities¥

11,424¥

11,424

Total¥

11,424¥

11,424Long-term debt
Lease obligations¥

38,50698,756¥38,381
101,096¥ (125)
2,340

Total

¥ 137,262¥ 139,477¥ 2,215

Derivatives

¥

¥

(128)

Carrying
Amount(128)

Thousands of U.S. Dollars
Unrealized
Fair Value
Gain (Loss)

March 31, 2022
Marketable and investment securities:
Available-for-sale securities$

285,615$

285,615

Total$

285,615$

285,615

Long-term debt
Lease obligations$

313,524
833,713$

311,541
829,107

Total
Notes:$ (1,983)(4,606)$ 1,147,237$ 1,140,648$ (6,589 )1. Since “cash and deposits,” “trade notes and accounts receivable,” “other receivables,” “tradenotes and accounts payable,” “other payables,” and “income taxes payable” are cash or
settled in a short period of time, their carrying amount approximates fair value. Accordingly,
information about these items is not disclosed.
2. The carrying amount and the fair value of long-term debt and lease obligations include thecurrent portion of long-term debt and lease obligations.

- 16 -

(b) Carrying amount of investments in equity instruments that do not have a quoted market price in an active
marketThousands ofMillions of Yen
U.S. Dollars
2022
2021
2022
Investments in equity instruments that do nothave a quoted market price in an active market¥ 1,156¥ 6,821$ 9,475
Investments in partnerships
2,196
Investments in associated companies
2,262
2,179
18,541
Total¥ 3,418¥11,196$ 28,016
Information about investments in partnerships and other similar entities as of March 31, 2022, for which
an amount equivalent to the Group’s share is recognized on a net basis in the consolidated balance
sheet, is not disclosed. Such investments were carried at ¥2,252 million ($18,459 thousand) as of March
31, 2022.
(5)

Maturity Analysis for Financial Assets and Securities with Contractual Maturities

Due in1 Yearor Less

March 31, 2022
Deposits
Trade notes and accounts receivable
Other receivables
Marketable and investment securities—
Available-for-sale securities with fundinvestments and other:Government and corporate bonds
Trust fund investments and other

Millions of Yen
Due after
Due after
1 Year
5 Years
throughthrough
5 Years
10 Years

Due after
10 Years¥ 125,408
25,621
57,994

Total marketable and investment securities
March 31, 2021
Deposits
Trade notes and accounts receivable
Other receivables
Marketable and investment securities—
Available-for-sale securities with fundinvestments and other:Government and corporate bonds
Trust fund investments and other¥

19,047¥ 2,811
1,064¥ 3,400¥

19,047¥ 3,875¥ 3,400¥ 148,308
29,092
57,183

Total marketable and investment securities

¥

2,990
3,000

¥

735
1,037

¥ 100

¥

5,990

¥ 1,772¥ 100

Due in1 Yearor Less

March 31, 2022
Deposits
Trade notes and accounts receivable
Other receivables
Marketable and investment securities—
Available-for-sale securities with fundinvestments and other:Government and corporate bonds
Trust fund investments and otherThousands of U.S. Dollars
Due after
Due after
1 Year
5 Years
throughthrough
5 Years
10 Years$ 1,027,934
210,008
475,361

Total marketable and investment securities- 17 -$

156,123$ 23,041
8,721$ 27,869$

156,123$ 31,762$ 27,869

Due after
10 YearsPlease see Note 12. LONG-TERM DEBT for annual maturities of long-term debt and Note 10. LEASES for
obligations under finance leases.
(6)

Financial Instruments Categorized by Fair Value Hierarchy
The fair value of financial instruments is categorized into the following three levels, depending on theobservability and significance of the inputs used in making fair value measurements:
Level 1: Fair values measured by using quoted prices (unadjusted) in active markets for identical assets or
liabilities.
Level 2: Fair values measured by using inputs other than quoted prices included within Level 1 that are
observable for the assets or liabilities, either directly or indirectly.
Level 3: Fair values measured by using unobservable inputs for the assets or liabilities.
When using more than one input that is significant to fair value measurement, the Group categorizes the fairvalue on the basis of the lowest priority level input.
(a) Financial instruments measured at fair value in the consolidated balance sheet
Millions of Yen
Level 1
Level 2
Level 3
March 31, 2022
Marketable and investment securities—
Available-for-sale securities:
Equity securities¥
8,483
Government and corporate bonds¥ 25,147
Total

¥

8,483
Level 1March 31, 2022
Marketable and investment securities—
Available-for-sale securities:
Equity securities
Government and corporate bonds$

69,533¥25,147

Total

¥

8,483
25,147¥

33,630Thousands of U.S. Dollars
Level 2
Level 3

$ 206,123

Total

$

69,533
206,123

Total$ 69,533$ 206,123$ 275,656
The above table does not include the fair value of investment trusts which were carried at ¥1,215 million($ 9,959 thousand) at March 31, 2022.
(b) Financial instruments not measured at fair value in the consolidated balance sheet
Millions of Yen
Level 1
Level 2
Level 3
March 31, 2022
Long-term debt
¥ 38,008
Lease obligations
101,151
Total¥ 139,159
Level 1March 31, 2022
Long-term debt
Lease obligations
Total

Thousands of U.S. Dollars
Level 2
Level 3

Total¥

38,008101,151¥ 139,159
Total$ 311,541
829,107$ 311,541
829,107$1,140,648$1,140,648

Note: Valuation techniques used to measure fair value and inputs used in fair value measurement
Marketable and investment securities
Listed equity securities and government and corporate bonds are estimated based on quoted market prices.
Since listed equity securities are traded in active markets, the fair values are categorized within Level 1 Fair
Values. Meanwhile, government and corporate bonds held by the Company are less frequently traded inmarkets, and their quoted prices are not accepted as those in active markets. Accordingly, their fair values are
categorized within Level 2 Fair Values.
The fair values of bonds without quoted prices are estimated based on the prices obtained from financial
institutions and are categorized within Level 2 Fair Values.

- 18 -

Long-term debt and Lease obligations
The fair values of these items are measured by the Discounted Cash Flow Method using the total of principal
and interest, the remaining term of the obligation, and an interest rate for similar new transactions, and are
categorized within Level 2 Fair Values.
Note 7.

MARKETABLE AND INVESTMENT SECURITIESMarketable and investment securities as of March 31, 2022 and 2021, consisted of the following:Thousands of
U.S. Dollars
2022

Millions of Yen
2022
2021

Current:
Government and corporate bonds
Trust fund investments and other¥ 18,996

¥

2,951
3,000

$ 155,705

Total¥ 18,996¥

5,951$ 155,705

¥

¥

3,498

$

Non-current:
Marketable equity securities
Investments in equity instruments that do nothave a quoted market price in an active market
Investments in partnerships
Government and corporate bonds
Trust fund investments and other
Total

8,483

69,533

1,156
2,252
6,151
1,215

6,821
2,196
881
1,094

9,475
18,45950,4189,959¥ 19,257¥ 14,490$ 157,844

The costs and aggregate fair values of marketable and investment securities at March 31, 2022 and 2021, were as
follows:

Cost

March 31, 2022
Securities classified as:
Available-for-sale:
Equity securities
Government and corporate bonds
Trust fund investments and other¥

March 31, 2021
Securities classified as:
Available-for-sale:
Equity securities
Government and corporate bonds
Trust fund investments and other

March 31, 2022
Securities classified as:
Available-for-sale:
Equity securities
Government and corporate bonds
Trust fund investments and other

¥

¥

¥

567
95
62

¥ (165 )
(105)
(1)

Cost

Millions of Yen
Unrealized
Unrealized
Gains
Losses

2,456
3,778
4,055

¥ 1,04882
39

66,238206,205
9,459- 19 -

Fair
Value

8,081
25,157
1,154

Cost

$

Millions of Yen
Unrealized
Unrealized
Gains
Losses

¥

(6)
(28)

Thousands of U.S. Dollars
Unrealized
Unrealized
Gains
Losses

$

4,647
779
508

$ (1,352)
(861)
(8)

8,483
25,147
1,215

Fair
Value

¥

3,498
3,832
4,094

Fair
Value

$ 69,533
206,123
9,959

The proceeds and realized gains and losses of the available-for-sale securities that were sold during the years
ended March 31, 2022 and 2021, were as follows:
Thousands of
U.S. Dollars
2022$ 7,057

Proceeds from sales

Millions of Yen
2022
2021
¥ 861
¥ 621

Gross realized gains
Gross realized losses

¥ 230
(6)

¥ 323

$ 1,885(49)

Net realized gain (loss)

¥ 224

¥ 323

$ 1,836

The impairment losses on available-for-sale equity securities for the years ended March 31, 2022 and 2021, were
¥47 million ($385 thousand) and ¥27 million, respectively.
Note 8.

INVENTORIESInventories at March 31, 2022 and 2021, consisted of the following:

Finished products
Work in process
Raw materials and supplies

Millions of Yen
2022
2021
¥ 29,260¥ 26,066
3,445
3,592
1,994
1,876

Thousands of
U.S. Dollars
2022$ 239,836
28,23816,344

Total¥ 34,699$ 284,418- 20 -¥ 31,534

Note 9.

LONG-LIVED ASSETSThe Group reviewed their long-lived assets for impairment as of March 31, 2022 and 2021. As a result, the Group
recognized impairment losses as follows:
Millionsof YenThousandsof U.S.
Dollars

Recoverable Amount¥125$1,024

Zero

40

328

Zero

35

287

Zero

Total

¥200

$1,639Language education
business

Technology-related
assets―Other¥283

Business related touniversity entrance
examinations
English education business

Software and others127

Nil (The carrying amount was
reduced to zero inaccordance with U.S.
GAAP.)Zero

Buildings and leasehold
improvements, andothersBuildings and leasehold
improvements, andothersBuildings and leasehold
improvements, andothersBuildings and leasehold
improvements, andothers

91

Zero

14

Zero

9

Zero

6

Zero

Use

Type

Year ended March 31, 2022
Online English lesson
business (for schools andcram schools)
Residential care services
business
Cram and prep school
business

Software
Buildings and leasehold
improvements, leaseassets, and others
Buildings and leasehold
improvements,
software, and others

Year ended March 31, 2021

Cram school business
Cram and prep school
business
Residential care services
business

Total

¥530

- 21 -

Note 10.

LEASES

LesseeThe Company and a domestic subsidiary have lease contracts for certain land, buildings and other assets under
noncancelable operating leases. The Group leases land, buildings and other assets and software under financeleases.
Obligations under finance leases and future minimum payments under noncancelable operating leases were as
follows:

Due within one year
Due after one year

Millions of Yen
2022
Finance
Operating
LeasesLeases¥3,470¥ 10,038
98,24347,410Thousands of U.S. Dollars
2022
Finance
Operating
LeasesLeases$ 28,443$ 82,278
805,270
388,607

Total¥ 101,713$ 833,713

Note 11.

¥57,448$ 470,885

GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill and other intangible assets at March 31, 2022 and 2021, consisted of the following:
Millions of Yen
2022
2021
¥ 11,059¥ 9,865

Consolidation goodwill
Goodwill associated with domestic consolidated
subsidiaries
Others
Total
Note 12.

Thousands of
U.S. Dollars
2022$ 90,648

1,063
2,808

312
2,943

8,713
23,016¥ 14,930¥ 13,120$ 122,377

Millions of Yen
2022
2021

Thousands of
U.S. Dollars
2022

LONG-TERM DEBT

Long-term debt at March 31, 2022 and 2021, consisted of the following:

Bonds payable with interest rates
ranging from 0.16% to 0.42% in 2022 and 2021
Unsecured
Loans from banks with interest rates
ranging from 0.13% to 2.16% in 2022 and 2021:
Collateralized
Unsecured
Total
Less current portionLong-term debt, less current portion¥ 10,025¥ 10,032$

82,172

28,22538,250(5,075)147
28,32738,506(249)

231,352
313,524(41,598)¥ 33,175¥ 38,257$ 271,926

Annual maturities of long-term debt, excluding finances leases (see Note 10), at March 31, 2022, were as follows:Year Ending
Thousands ofMarch 31
Millions of Yen
U.S. Dollars
2023¥ 5,075$ 41,598
2024
5,067
41,533
2025
53
434
2026
5,042
41,3282027
10,01382,0742028 and thereafter
13,000106,557
Total¥ 38,250- 22 -$ 313,524

Note 13.

RETIREMENT AND PENSION PLANS

Under most circumstances, employees terminating their employment are entitled to retirement benefits determinedbased on the rate of pay at the time of termination, years of service and certain other factors. Such retirement
benefits are made in the form of a lump-sum severance payment from certain domestic subsidiaries and annuity
payments from a welfare annuity fund. Employees are entitled to larger payments if the termination is involuntary or
by retirement at the mandatory retirement age.
Liability for retirement benefits as of March 31, 2022 and 2021, excludes retirement benefits to directors, Audit &Supervisory Board members and company officers at certain domestic subsidiaries of ¥98 million ($803 thousand)and ¥84 million, respectively. Such retirement benefits are paid subject to the approval of the shareholders.
Defined benefit plans(1) The changes in defined benefit obligation for the years ended March 31, 2022 and 2021, were as follows:
Thousands ofMillions of Yen
U.S. Dollars
2022
2021
2022
Balance at beginning of year
¥ 22,968¥ 23,424$ 188,262
Current service cost
1,328
1,381
10,885Interest cost
158
118
1,295
Actuarial gains
(354)
(817)
(2,902)
Benefits paid
(871)
(962)
(7,139)Foreign currency translation difference
for a foreign subsidiary
118
(182)
968
Decrease resulting from exclusion ofsubsidiaries from consolidation(2,777)(22,762)
OthersBalance at end of year
(2)

(3)

11

6

90

¥ 20,581¥ 22,968$ 168,697

The changes in plan assets for the years ended March 31, 2022 and 2021, were as follows:

Balance at beginning of year
Expected return on plan assets
Actuarial gains
Contributions from the employer
Benefits paid
OthersMillions of Yen
2022
2021
¥ 19,758¥ 18,642
404
372
878
601
726
698
(430)
(569)
13
14

Balance at end of year

¥ 21,349¥ 19,758

Thousands of
U.S. Dollars
2022$ 161,951
3,311
7,197
5,951
(3,525)107$ 174,992

Reconciliation between the liability recorded in the consolidated balance sheet and the balances of defined
benefit obligation and plan assets was as follows:
Thousands ofMillions of Yen
U.S. Dollars
2022
2021
2022
Funded defined benefit obligation¥ 14,722¥ 14,725$ 120,672
Plan assets(21,349)(19,758)(174,992)
Total(6,627)(5,033)(54,320)
Unfunded defined benefit obligation
5,859
8,243
48,025
Net (asset) liability arising from defined benefit obligation¥(768 )¥

3,210

Millions of Yen
2022
2021
¥ 5,859¥ 8,243(6,627)(5,033)Liability for retirement benefits
Asset for retirement benefits$(6,295 )Thousands of
U.S. Dollars
2022$ 48,025(54,320)

Net (asset) liability arising from defined benefit obligation¥ (768 )¥ 3,210$ (6,295 )Berlitz Corporation has a SERP for the benefit of its Chairman of the Board, certain designated executives andtheir designated beneficiaries. The above liability for retirement benefits as of March 31, 2021, includes- 23 -¥171 million for SERP, which is disclosed in other current liabilities in the consolidated balance sheet.
(4)

The components of net periodic benefit costs for the years ended March 31, 2022 and 2021, were as follows:
Thousands ofMillions of Yen
U.S. Dollars
2022
2021
2022
Service cost
¥ 2,007¥ 2,038$ 16,451
Interest cost
158
118
1,295
Expected return on plan assets
(404)
(372)
(3,311)
Recognized actuarial (gains) losses(278)
34(2,279)Amortization of prior service cost
38
38
311
Net periodic benefit costs¥ 1,521¥ 1,856$ 12,467
Service cost includes ¥679 million ($5,566 thousand) and ¥657 million of estimated prepaid retirement
payments for employees in accordance with the prepaid retirement allowance plan of Benesse Corporation forthe years ended March 31, 2022 and 2021, respectively.
The Group also recognized additional retirement benefits to employees during the years ended March 31,
2022 and 2021. These payments are not included in net periodic benefit costs above but are included in loss
on restructuring of business included in other—net (¥12 million ($98 thousand)) and restructuring expenses ofa foreign consolidated subsidiary (¥831 million) for the years ended March 31, 2022 and 2021, respectively.

(5)

Amounts recognized in other comprehensive income (before income tax effect) in respect of defined retirement
benefit plans for the years ended March 31, 2022 and 2021, were as follows:
Millions of Yen
2022
2021

(6)

Prior service cost
Actuarial losses

¥

38
1,999

Total

¥ 2,037

¥

38
1,452

¥ 1,490b.

$

311
16,386$ 16,697

Amounts recognized in accumulated other comprehensive income (before income tax effect) in respect ofdefined retirement benefit plans as of March 31, 2022 and 2021, were as follows:
Millions of Yen
2022
2021

(7)
a.

Thousands of
U.S. Dollars
2022

Unrecognized prior service cost
Unrecognized actuarial gains¥ (110 )3,602¥(148 )
1,603

Total

¥3,492¥ 1,455

Thousands of
U.S. Dollars
2022$(902 )
29,525$ 28,623

Plan assets
Components of plan assets
Plan assets as of March 31, 2022 and 2021, consisted of the following:
Debt investments
Equity investments
General accountCash and cash equivalents
Others

2022
28%
11
16
9
36

2021
33%
11
18
4
34

Total

100 %

100 %

Method of determining the expected rate of return on plan assets
The expected rate of return on plan assets is determined considering the long-term rates of return which are
expected currently and in the future from the various components of the plan assets.

- 24 -

(8)Assumptions used for the years ended March 31, 2022 and 2021, were set forth as follows:
Discount rate

Expected rate of returnon plan assets
Expected rate of salary
increases

The Company and domestic
consolidated subsidiaries
Foreign consolidated
subsidiaries
The Company and domestic
consolidated subsidiaries
The Company and domestic
consolidated subsidiaries
Foreign consolidated
subsidiaries

2022
Primarily 0.6%2021
Primarily 0.4%
Primarily 1.9%

Primarily 2.0%

Primarily 2.0%

Primarily 5.6%

Primarily 5.6%
Primarily 2.0%

Defined contribution plans
Certain subsidiaries had ¥309 million ($2,533 thousand) and ¥330 million in defined contribution retirement benefit
costs for the years ended March 31, 2022 and 2021, respectively.
Note 14.

EQUITYJapanese 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 below:a.
Dividends
Under the Companies Act, companies can pay dividends at any time during the fiscal year in addition to theyear-end 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. 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 the amounts
available for dividends or the purchase of treasury stock. The limitation is defined as the amount available for
distribution to the shareholders, but the amount of net assets after dividends must be maintained at no less than
¥3 million.
b.
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 (acomponent of retained earnings) or as additional paid-in capital (a component of capital surplus) depending on theequity account charged upon the payment of such dividends until the aggregate amount of legal reserve andadditional paid-in capital equals 25% of the common stock. Under the Companies Act, the total amount of additional
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 be transferred among
the accounts within equity under certain conditions upon resolution of the shareholders.
In connection with the issuance of shares under the restricted stock compensation plan, common stock and capitalsurplus each increased by ¥41 million ($336 thousand) and ¥40 million during the year ended March 31, 2022 and
2021, respectively.
c.
Treasury Stock and Treasury Stock Acquisition Rights
The Companies Act also provides for companies to purchase treasury stock and dispose of such treasury stock byresolution of the Board of Directors. The amount of treasury stock purchased cannot exceed the amount available
for distribution to the shareholders which is determined by a specific formula. Under the Companies Act, stockacquisition rights are presented as a separate component of equity. The Companies Act also provides thatcompanies can purchase both treasury stock acquisition rights and treasury stock. Such treasury stock acquisitionrights are presented as a separate component of equity or deducted directly from stock acquisition rights.

- 25 -

Appropriations of Retained Earnings
The following appropriation of retained earnings at March 31, 2022, was approved at the Board of Directors held on
May 12, 2022:

Year-end cash dividends, ¥25 ($0.20) per share- 26 -

Millions of Yen

Thousands of
U.S. Dollars¥ 2,410$ 19,754

Note 15.

SEGMENT INFORMATION

Under ASBJ Statement No. 17, “Accounting Standard for Disclosures about Segments of an Enterprise and RelatedInformation,” and ASBJ Guidance No. 20, “Guidance on Accounting Standard for Disclosures about Segments of anEnterprise and Related Information,” an entity is required to report financial and descriptive information about its
reportable segments. Reportable segments are operating segments or aggregations of operating segments thatmeet specified criteria. Operating segments are components of an entity about which separate financial information
is available and for which such information is evaluated regularly by the chief operating decision maker in deciding
how to allocate resources and in assessing performance. Generally, segment information is required to be reported
on the same basis as is used internally for evaluating operating segment performance and deciding how to allocate
resources to operating segments.
(1)
Description of Reportable Segments
The Group’s reportable segments are those for which separate financial information is available and regular
evaluation by the Company’s Board of Directors is being performed in order to decide how resources are allocatedamong the Group and to assess operating results.
The Group was made up of segments grouped by product and/or service based on four businesses anddesignated the Education in Japan, the Kids & Family, the Nursing Care and Childcare, and the Berlitz as its
reportable segments. The Berlitz Business, however, was excluded from the reportable segments as of the
beginning of the three-month period ended March 31, 2022, since the Company, transferred all of its shares inBerlitz Corporation, which had been a consolidated subsidiary of the company and had constituted the Berlitz
Business, on February 14, 2022. Accordingly, the Group makes resource investments mostly in the threebusinesses of the Education in Japan, the Kids & Family, and the Nursing Care and Childcare to achievesustainable growth of the Group as a whole.
In the Education Business in Japan, the Group engages in the correspondence course business targeting primaryschool students to high school students, the school and teacher support business, the prep school and classroom
education business, and other businesses.
In the Kids & Family Business, the Group engages in the correspondence course business in Japan, China,
Taiwan and Indonesia, targeting mainly infants, the mail-order business, book publication, and other businesses.
During the year ended March 31, 2022, the Company made a decision that it would wind down the correspondence
course business targeting infants in Indonesia.
In the Nursing Care and Childcare Business, the Group engages in the residential care services business(operation of nursing homes and elderly homes) and the home care attendant services business, offers training
courses for nursing care personnel, and engages in recruitment and temporary staffing of nurses and caregivers,
the preschool and afterschool childcare operations business, and other businesses.
In the Berlitz business, the Group engaged in the language education business and the ELS business.
(Matters regarding Changes in Reportable Segments)
At the beginning of the year ended March 31, 2022, the Group changed its organizational structure to achieve its
new medium-term management plan. Accordingly, the name of the Global Kodomo Challenge Business waschanged to the Kids & Family Business, the kids & family business and the worldwide kids business of Benesse
Corporation were changed from Others to the Kids & Family Business and from the Education Business in Japan to
the Kids & Family Business, respectively.
Moreover, segment information for the year ended March 31, 2021, has been restated based on the newclassification after these changes.

- 27 -

(2)Methods of Measurement for the Amounts of Sales, Profit (Loss), Assets and Other Items for Each
Reportable Segment
The accounting policies of each reportable segment are consistent with those disclosed in Note 2. SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES. Segment profit corresponds to operating income. Intersegment sales andtransfers are recorded based on the prices used in transactions with third parties.
As stated in Note 3. ACCOUNTING CHANGE, the Company and its domestic subsidiaries started to apply the“Accounting Standard for Revenue Recognition” and the related guidance at the beginning of the year ended March
31, 2022, and changed their accounting treatments for revenue recognition. Accordingly, the methods ofmeasurement for the amounts of segment profit (loss) were changed in the same manner.
The following table presents the effects of the change on reportable segments in the year ended March 31, 2022.
Millions of Yen
2022

Increase (decrease) in sales
Increase (decrease) in segment
profitIncrease (decrease) in segment
assets

Education
Business
in Japan¥420

Reportable Segment
Nursing
Kids &
Care and Reportable
Segment
FamilyChildcareBusiness
BusinessTotal¥ (2,254) ¥663 ¥ (1,171)

Reconciliations¥
763

Consolidated¥ (1,172)

11

1,461

(13)

4,893

Reconciliations$
6,254

Consolidated$ (9,607)

90

11,975(106)

40,107

Reconciliations

Consolidated

Others
Total
Corporate¥(764) ¥ (1,935)

756

41

663

1,460

(10)

1,450

756

15

4,180

4,951

15

4,966

¥

(60)

Thousands of U.S. Dollars
2022

Increase (decrease) in sales
Increase (decrease) in segment
profitIncrease (decrease) in segment
assets

Education
Business
in Japan$ 3,443

Reportable Segment
Nursing
Kids &
Care and Reportable
Segment
FamilyChildcareBusiness
Business
Total$ (18,475) $ 5,434 $ (9,598)

Others
Total
Corporate$ (6,263) $ (15,861)

6,197

336

5,434

11,967(82)

11,885

6,197

123

34,26240,582

123

40,705$(492)(3) Information about Sales, Profit (Loss), Assets and Other Items

Education
Business
in Japan s

Reportable Segment
Nursing
Kids &
Care andBerlitz
FamilyChildcareBusiness
Business
Business

Sales:
Sales to external customers ¥ 212,129 ¥Intersegment sales ortransfers
33
Total

71,238 ¥ 127,397 ¥390Millions of Yen
2022
Reportable
Segment
Total

20,074 ¥ 430,838 ¥
509

581

OthersTotal

1,106 ¥ 431,944
16,902

17,483 ¥¥ 431,944(17,483)¥ 212,162 ¥

71,277 ¥ 127,397 ¥

20,583 ¥ 431,419 ¥

18,008 ¥ 449,427 ¥ (17,483 ) ¥ 431,944

Segment profit (loss)¥ 19,086 ¥Segment assets
202,947
Other items:
Increase in property andequipment and intangible
assets8,672
Depreciation
8,664
Amortization of goodwill
823
Loss on impairment oflong-lived assets
160
Goodwill at March 31, 2022
6,331
Investments inequity method entities
136

1,719 ¥
8,013 ¥
66,618
199,858(2,799 ) ¥26,019 ¥469,423(8 ) ¥ 26,011 ¥10,109479,532535
640

23,002
17,258
1,302

4,583
2,157
10

9,212
5,797
469

6
785

40
5,006

522
318

206
12,122452

588- 28 -

1,774

23,524
17,576
1,302(5,844) ¥ 20,167
61,067
540,599

39(28)

23,563
17,5481,302

206
12,122

206
12,122

2,362

2,362

Education
Business
in Japan

Reportable Segment
Nursing
Kids &
Care andBerlitz
FamilyChildcareBusiness
Business
Business

Sales:
Sales to external customers ¥ 204,403 ¥Intersegment sales ortransfers
43
Total

71,857 ¥ 123,808 ¥49

44Millions of Yen
2021
Reportable
Segment
Total

26,401Others¥ 426,469 ¥

625

761

¥ 204,446 ¥

71,906 ¥ 123,852 ¥

27,026¥ 427,230 ¥Segment profit (loss)¥ 11,918 ¥Segment assets
197,472
Other items:
Increase in property andequipment and intangible
assets12,500Depreciation
8,598
Amortization of goodwill
1,220
Loss on impairment oflong-lived assets
241
Goodwill at March 31, 2021
7,161
Investments inequity method entities
131

2,002 ¥ 10,394 ¥
59,089
192,063(6,715 ) ¥ 17,599 ¥
19,730468,354

1,853
1,940

13,864
5,373
337

820
1,110

29,037
17,021
1,557

6
3,016

283

530
10,177534

Reconciliations

Total

Consolidated

1,063 ¥ 427,532
18,903¥ 427,532

19,664 ¥ (19,664 )

19,966 ¥ 447,196 ¥ (19,664 ) ¥ 427,532
79 ¥ 17,678 ¥
10,388478,742

190
360

665

1,594

29,227
17,381
1,557(4,588 ) ¥ 13,090
63,240541,98217(52 )29,244
17,3291,557

530
10,177530
10,177

2,259

2,259

Thousands of U.S. Dollars
2022

Education
Business
in Japan

Reportable Segment
Nursing
Care
Kids &
andBerlitz
FamilyChildcareBusiness
Business
Business

Reportable
Segment
Total

Others

Total

Reconciliations

Consolidated

Sales:
Sales to externalcustomers
Intersegment sales ortransfers$ 1,738,762 $ 583,918 $ 1,044,238 $ 164,541 $ 3,531,459 $Total$ 1,739,032 $ 584,238 $ 1,044,238 $ 168,713 $ 3,536,221 $ 147,607 $ 3,683,828 $ (143,303) $ 3,540,525

270

320

0

4,172

Segment profit (loss)$ 156,443 $ 14,090 $ 65,680 $Segment assets
1,663,500
546,049 1,638,180
Other items:
Increase in property andequipment andintangible assets
71,082
37,56675,508Depreciation
71,017
17,68047,516
Amortization of goodwill
6,746
82
3,844
Loss on impairment oflong-lived assets
1,311
49
328
Goodwill at March 31, 2022
51,894
6,434
41,033
Investments in equity
method entities
1,115
3,705

4,762

(22,943) $213,270 $3,847,729

4,385
5,246

188,541
141,459
10,672- 29 -

9,066 $ 3,540,525
138,541

143,303 $ (143,303)(65) $ 213,205 $ (47,902) $ 165,303
82,861 3,930,590
500,549 4,431,139

4,279
2,607

1,688
99,3614,820$ 3,540,525

14,541

192,820
144,066
10,672

319(230)

193,139
143,836
10,672

1,688
99,361

1,688
99,361

19,361

19,361

Note: The details of reconciliations were as follows:
Thousands of
U.S. Dollars2022$ (143,303 )Sales
Intersegment eliminations

Millions of Yen
2022
2021
¥ (17,483 )¥ (19,664 )

Total¥ (17,483 )¥ (19,664 )$ (143,303 )Profit (Loss)
Intersegment eliminations
Corporate expenses

Millions of Yen
2022
2021
¥
(35 )
¥
303
(5,809)(4,891)Thousands of
U.S. Dollars
2022
$
(287)
(47,615)

Total
Note:

¥ (5,844 )¥ (4,588)$ (47,902)
Corporate expenses are mainly expenses of the Company that are not attributable to thereportable segments.
Millions of Yen
2022
2021
¥ (22,537)¥ (133,555)
83,604
196,795

AssetsIntersegment eliminations
Corporate assets
Total
Note:

Thousands of
U.S. Dollars2022$ (184,730)
685,279¥ 61,067¥ 63,240$ 500,549
Corporate assets consist mainly of marketable securities of the Company that are not attributable
to the reportable segments.

Increase in Property and Equipment andIntangible Assets
Intersegment eliminations
Capital investments by the Company
not attributable to reportable segments

Millions of Yen
2022
2021
¥ (298)¥ (330)

Total

¥

337
39

347
¥

17

Millions of Yen
2022
2021
¥ (332)¥ (291)

Depreciation
Intersegment eliminations
Depreciation by the Company
not attributable to reportable segments

304

Total

¥

- 30 -(28)

Thousands of
U.S. Dollars2022$ (2,443 )2,762$

Thousands of
U.S. Dollars2022$ (2,721 )

239
¥

(52)

319

2,491
$

(230 )

(4) Information about Geographical Areas
Sales

Japan
¥ 384,506

Millions of Yen
2022
Others¥ 47,438

Total¥ 431,944

Japan¥ 377,453

Millions of Yen
2021
Others¥ 50,079

Total¥ 427,532

Thousands of U.S. Dollars
2022
Japan
OthersTotal$ 3,151,689$ 388,836$ 3,540,525
Note: Sales are classified by country or region based on the location of customers.
Note 16.
(1)

REVENUE RECOGNITION
Disaggregated revenue from contracts with customers

Correspondence course
business
School and teacher support
business
Prep school and classroom
education business
Mail-order businessResidential care services
business
Language education business
ELS business
Others
Revenue from contracts
with customers

Correspondence course
business
School and teacher support
business
Prep school and classroom
education business
Mail-order businessResidential care services
business
Language education business
ELS business
Others
Revenue from contracts
with customers

Education
Business
in Japan¥ 102,477

Millions of Yen
2022
Reportable Segment
Nursing Care
Kids & Family and Childcare
Berlitz
Business
Business
Business¥

52,151

Reportable
Segment
Total¥

56,72645,615

4,176¥ 109,455

7,311¥ 212,129

Education
Business
in Japan$ 839,976¥

14,911

17,942

71,238¥ 127,397¥¥

18,757
1,317

20,074

154,628$ 427,467

59,926122,221147,066$ 1,738,762$ 583,918$ 1,044,238¥

154,628
56,72645,615
4,176

45,615
4,176

109,455
18,757
1,317
40,164¥

1,106

109,455
18,757
1,317
41,270430,838¥

1,106

Others¥431,944

Total$ 1,267,443$ 1,267,443

464,967

464,967

373,893
34,230373,893
34,230$ 153,746
10,795897,172
153,746
10,795329,213$

9,066

897,172
153,746
10,795338,279$ 164,541$ 3,531,459

$

9,066

$ 3,540,525

34,230$ 897,172

Total

56,726

Thousands of U.S. Dollars
2022
Reportable Segment
Nursing Care
Reportable
Kids & Family and Childcare
Berlitz
Segment
Business
Business
Business
Total

464,967
373,893¥

OthersOn February 14, 2022, the Company transferred all of its shares in Berlitz Corporation, which had constituted the- 31 -

Berlitz Business. Accordingly, Berlitz's revenue up to the end of the third quarter was included in the consolidated
statement of income for the year ended March 31, 2022.
(2)
Basic information to understand revenues from contracts with customers
Information to enable users to understand revenue from contracts with customers is as stated in Note 2. SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES, r. Basis for recognizing revenue and expenses.
(3)
Relationship between the satisfaction of performance obligations in contracts with customers andcash flows arising from the contracts as well as the amount and timing of revenue expected to berecognized in future periods from existing contracts with customers at March 31, 2022(a)
Contract balances
The following table presents the balances of receivables from contracts with customers and contract liabilities.
Millions of Yen
2022
Receivables fromContracts with Contract Liabilities
Customers

Thousands of U.S. Dollars
2022
Receivables fromContracts with Contract Liabilities
Customers

Balance at beginning of¥ 29,356¥ 172,095$ 240,623$ 1,410,615
year
Balance at end of year
25,634
166,995
210,115
1,368,811
Receivables from contracts with customers and contract liabilities are included in trade notes and accounts
receivable and receivables due from associated companies, and advances received and advances received fromnursing home residents, respectively, in the consolidated balance sheet. Contract liabilities are mainly associatedwith contracts for which the Group receives consideration from customers in advance and recognize revenue overtime.
Revenue recognized for the year ended March 31, 2022, that was included in the balance of contract liabilities atthe beginning of the year ended March 31, 2022, was ¥108,098 million ($886,049 thousand). Revenue recognized
for the year ended March 31, 2022, from performance obligations satisfied (or partially satisfied) in previous periods
was ¥2,756 million ($22,590 thousand).
(b)
Transaction prices allocated to remaining performance obligations
The aggregate amount of the transaction price allocated to the remaining performance obligations as of March 31,
2022, was ¥166,995 million ($1,368,811 thousand). Such remaining performance obligations were mainly
associated with Shinkenzemi and Kodomo Challenge in the correspondence course business and the residential
care services business in the nursing care and childcare business.
The transaction price allocated to the remaining performance obligations associated with Shinkenzemi and
Kodomo Challenge was ¥86,073 million ($705,516 thousand). Approximately 90% of the remaining performanceobligations is expected to be satisfied within one year, and the rest within a maximum of three years. The
transaction price allocated to the remaining performance obligations associated with the residential care services
business was ¥57,727 million ($473,172 thousand). Approximately 70% of the remaining performance obligations is
expected to be satisfied within three years, and the rest within a maximum of six years.
Note 17.

ADVERTISING COSTS

Advertising costs charged to income were ¥33,445 million ($274,139 thousand) and ¥33,212 million for the years
ended March 31, 2022 and 2021, respectively.
Note 18.

RESEARCH AND DEVELOPMENT COSTS

Research and development costs charged to income were ¥1,280 million ($10,492 thousand) and ¥1,610 million forthe years ended March 31, 2022 and 2021, respectively.

- 32 -

Note 19.

DERIVATIVES

Derivative Transactions to Which Hedge Accounting Is Not Applied

Foreign currency forward contracts—
Selling—U.S. dollars

Contract
AmountMillions of Yen
2021
Contract
Amount Due
Fair
after One Year
Value

¥12,348¥(128)- 33 -

Unrealized
Gain (Loss)¥(128)

Note 20.

INCOME TAXESThe Company and its domestic subsidiaries are subject to Japanese national and local income taxes which, in theaggregate, resulted in a normal effective statutory tax rate of approximately 30.6% for the years ended March 31,
2022 and 2021.
The tax effects of significant temporary differences and tax loss carryforwards which resulted in deferred tax
assets and liabilities at March 31, 2022 and 2021, are as follows:
Thousands ofMillions of Yen
U.S. Dollars
2022
2021
2022
Deferred tax assets:
Tax loss carryforwards¥ 22,462¥ 8,268$ 184,115
Depreciation
6,368
5,689
52,197
Advances received from nursing home residents
4,127
33,828Provision for employees’ bonuses
2,451
2,465
20,090Liability for retirement benefits
1,967
1,810
16,123
Trade accounts receivable
1,059
356
8,680
Long-term other payables
776
822
6,361
Leasehold and guarantee deposits
636
588
5,213
Loss on impairment of long-lived assets
609
628
4,992
Other payables
557
614
4,565
Deferred consumption taxes
522
522
4,279
Social insurance premium
369
375
3,024
Enterprise tax
319
291
2,615
Inventories
288
360
2,361
Unrealized profit on fixed assets
253
268
2,074
Loss on valuation of investment securities
142
699
1,164
Advances received
142
255
1,164
Prepaid expenses
81
299
664
Accrued expenses
1,933
Foreign tax credit carryforwards
600
Deferred revenue
331
Others
943
767
7,729
Total of tax loss carryforwards and temporary differences
44,071
27,940361,238
Less valuation allowance for tax loss carryforwards(20,854)(7,598)(170,934)
Less valuation allowance for temporary differences(9,049)(11,615)(74,172)
Total valuation allowance(29,903)(19,213)(245,106)
Total
14,168
8,727
116,132
Offset with deferred tax liabilities
3,917
3,553
32,107
Net deferred tax assets
Deferred tax liabilities:
Asset for retirement benefits
Intangible assets
Undistributed earnings of foreign subsidiaries
and associated companies
Unrealized gain on available-for-sale securities
Inventories
Other
Total
Offset with deferred tax assets¥ 10,251

¥

5,174

$

84,025

¥

¥

1,517
859

$

16,812
6,639

2,051
810
787
275
144
446
4,513
3,917

666
509
258
425
4,234
3,553

6,451
2,254
1,180
3,656
36,992
32,107

Net deferred tax liabilities
¥
596
¥
681
$
4,885
Valuation allowance increased by ¥10,690 million ($87,623 thousand) primarily due to an increase in valuation
allowance for tax loss carryforwards of the Company.

- 34 -

The expiration of tax loss carryforwards, the related valuation allowances and the resulting net deferred tax assets
as of March 31, 2022 and 2021, were as follows:
Millions of Yen
After
After
After
After
1 Year
2 Years
3 Years
4 Years
1 Yearthroughthroughthroughthrough
After
March 31, 2022
or Less
2 Years
3 Years
4 Years
5 Years
5 Years
Total
Deferred tax assets
relating to tax loss
carryforwards
¥ 50
¥ 911
¥ 137
¥ 668
¥ 217
¥ 20,479¥ 22,462
Less valuation
allowances for tax
loss carryforwards
45
900
117
130
208
19,45420,854
Net deferred tax assets
relating to tax loss
carryforwards
5
11
20
538
9
1,025
1,608

March 31, 2021
Deferred tax assets
relating to tax loss
carryforwards
Less valuation
allowances for tax
loss carryforwards
Net deferred tax assets
relating to tax loss
carryforwards

March 31, 2022
Deferred tax assets
relating to tax loss
carryforwards
Less valuation
allowances for tax
loss carryforwards
Net deferred tax assets
relating to tax loss
carryforwards

Millions of Yen
After
After
3 Years
4 Years
throughthrough
4 Years
5 Years

After
5 Years

¥942

¥ 275

966

¥ 5,875

941

257

500

5,695

7,598

1

18

466

180

670

1 Yearor LessAfter
1 Yearthrough
2 Years

Thousands of U.S. Dollars
After
After
After
2 Years
3 Years
4 Years
throughthroughthrough
3 Years
4 Years
5 Years

After
5 Years

Total

$

410

$ 7,467$1,123$ 5,475$ 1,779$167,861$ 184,115

369

7,377

959

1,065

1,705

159,459

170,934

41

90

164

4,410

74

8,402

13,181

1 Yearor LessAfter
1 Yearthrough
2 YearsAfter
2 Years
through
3 Years

¥146

¥ 64

141

64

5

¥

Total
¥

8,268

For the tax loss carryforwards of ¥22,462 million ($184,115 thousand) and ¥8,268 million (amount multiplied byeffective statutory tax rate), deferred tax assets of ¥1,608 million ($13,181 thousand) and ¥670 million wererecognized as of March 31, 2022 and 2021, respectively. Net deferred tax assets relating to tax loss carryforwards
were determined to be recoverable as future taxable income was anticipated, and therefore, valuation allowance
was not recognized.

- 35 -

A reconciliation between the normal effective statutory tax rate for the years ended March 31, 2022 and 2021, andthe actual effective tax rate reflected in the accompanying consolidated statement of income was as follows:
Normal effective statutory tax rate
Change in valuation allowance
Expenses not deductible for income tax purposes
Per capita inhabitants tax
Amortization of goodwill
Foreign withholdings tax
Difference from burden of income taxes of foreign consolidated
subsidiaries
Undistributed earnings of associated companies
Equity in net earnings of associated companies
Income not taxable for income tax purposes
Adjustment of loss on sale of investments in a consolidated subsidiary
Adjustment of bad debt expenses
Foreign tax credit
Income taxes—refund
OthersActual effective tax rate
Note 21.

2022
30.6%
155.7
14.6
8.3
6.7
3.3

2021
30.6 %
(5.5)
12.9
7.2
7.1
4.1

3.2
2.1
(0.6)
(3.5)
(62.6)(95.9)

10.0
(1.3)
(0.6)
(3.4)

2.2

(2.1)
(17.5)
(0.4)

64.1%

41.1 %STOCK OPTION PLAN

The stock options outstanding as of March 31, 2022, are as follows:
Stock
Option2015 Stock
Option2016 Stock
OptionPersons
Granted3 directors
17 selected
employees
3 directors

Numberof Options
Granted
1,477
1,873
975

Date of Grant
August 3, 2015
September 12,
2016

ExercisePrice¥ 3,513¥ 2,639

Exercise Period
From August 4, 2017
to August 3, 2022
From September 13, 2018
to September 12, 2023

The stock option activity is as follows:
2015 Stock2016 Stock
OptionOption(Number of Stock Options)Year Ended March 31, 2022
Non-vested
March 31, 2021—Outstanding
GrantedCanceled
VestedMarch 31, 2022—Outstanding
VestedMarch 31, 2021—Outstanding
VestedExercised
Canceled
March 31, 2022—Outstanding

2,079

975

2,079

975

Exercise price¥3,513($29 )¥2,639($22 )

¥377
($3 )

¥277
($2 )

Average stock price at exercise
Fair value price at grant date

- 36 -

Note 22.

OTHER COMPREHENSIVE INCOME (LOSS)

The components of other comprehensive income (loss) for the years ended March 31, 2022 and 2021, were as
follows:
Thousands of
U.S. Dollars
2022

Millions of Yen
2022
2021
Unrealized (loss) gain on available-for-sale securities:(Losses) gains arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effectTotal
Foreign currency translation adjustments:
Adjustments arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effect
Total
Defined retirement benefit plans:
Adjustments arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effect
Total
Share of other comprehensive income in associates:
Gains arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effectTotal
Total other comprehensive income
Note 23.
a.

¥

(566)
(443)
(1,009)248¥ 1,401
(508)
893
(207)

$

(4,640)(3,631)(8,271)
2,033

¥

(761)

¥

686

$

(6,238)

¥

182
5,859
6,041
13

¥

176
428
604
(13)

$

1,491
48,02549,516107¥ 6,054¥591$ 49,623¥ 1,317
720
2,037
(633)

¥ 1,425
65
1,490
(447)

$ 10,795
5,902
16,697(5,189)¥ 1,404¥ 1,043$ 11,508

¥

37
(8)
29
(5)

¥

28
(5)
23
(8)

$

304
(66)
238
(41)

¥

24

¥

15

$

197

¥ 6,721¥ 2,335$ 55,090

BUSINESS COMBINATIONSBusiness Combination by Acquisition

On June 1, 2021, the Company acquired all issued shares of Heart Medical Care Co., Ltd. (head office: Chiyoda-ku,
Tokyo). As a result, Heart Medical Care and its two subsidiaries became consolidated subsidiaries of the Company.
(1) Outline of the business combination(a) Name of the acquired company and its business outline
Name of the acquired company: Heart Medical Care Co., Ltd.
Business outline:
Recruitment and temporary staffing in the medical, nursing care, and welfare
fields and related businesses(b) Major reason for the business combination
Heart Medical Care operates “Heart Page,” one of the largest directory of nursing care service providers,“Kaigo Kyujin Navi,” a recruitment and outplacement website for nursing care, medical and welfare facilities
with the industry’s leading number of job postings, “Oasis Navi,” a search site for private nursing homes andcare homes, and “Nurse Agent,” a recruitment site for nurses. Heart Medical Care also provides temporary
placement services for caregivers and nurses, and rental services for nursing care equipment.
In November 2020, the Company announced a medium-term management plan titled “Evolve Core
Businesses and Expand into New Fields.” Under the plan, the Company positions expansion of its recruitment
business in the nursing care field as one of its important growth strategies in the nursing care business. By- 37 -

making Heart Medical Care a consolidated subsidiary, the Group will increase the speed of its expansion in
the nursing care field. As a leader in the field, the Group will play an even greater role in addressing the social
issue of supporting seniors to live by their own values.
(c) Date of business combination
June 30, 2021 (deemed date of acquisition)(d) Legal form of business combination
Share acquisition in exchange for cash(e) Name of the company after the combination
No change(f) Ratio of voting rights acquired
100%(g) Basis for determining the acquirer
The Company acquired 100% of voting rights of Heart Medical Care by cash.
(2) The period for which the operations of the acquired company are included in the consolidated financial
statements
Nine months from July 1, 2021 to March 31, 2022
(3) Acquisition cost of the acquired company and related details of each class of consideration
Millions of Yen

Thousands of
U.S. Dollars

Consideration for acquisition—Cash¥ 4,250$ 34,837

Acquisition cost

¥ 4,250$ 34,837

Millions of Yen

Thousands of
U.S. Dollars(4) Major acquisition-related costs

Advisory fees and others

¥

44

$

361

(5) Amount of goodwill incurred, reasons for the goodwill incurred, and the method and period of amortization(a) Amount of goodwill incurred¥2,458 million ($20,148 thousand)(b) Reasons for the goodwill incurred
Goodwill is mainly incurred from expected excess earnings power in the future arising from future businessdevelopment.
(c) Method and period of amortization
Goodwill is amortized on a straight-line basis over 14 years.
(6) The assets acquired and the liabilities assumed at the date of business combination are as follows:
Thousands ofMillions of Yen
U.S. Dollars
Current assets
Long-term assets

¥

1,945
288

$

15,943
2,361

Total assets

¥

2,233

$

18,304Current liabilities
Long-term liabilities

¥

(410)
(31)

$

(3,361)(254)

Total liabilities

¥

(441)

$

(3,615)- 38 -

(7) Pro forma information (unaudited)
If this business combination had been completed as of April 1, 2021, the beginning of the year ended March 31,
2022, the effects on the consolidated statement of income for the year ended March 31, 2022, would be as
follows:
Millions of Yen
Net sales
Operating income

¥

908
41

Thousands of
U.S. Dollars
$

7,443
336

Outline of the method of calculation for the effects above:
The Company determined the differences between net sales and profit and loss information that were
estimated as though the business combination had been completed as of the beginning of the year ended
March 31, 2022, and net sales and profit and loss information on the Company’s consolidated statement ofincome as the estimated amounts of effects. In addition, such differences include the amount equivalent togoodwill amortization during the period from the beginning of the year ended March 31, 2022, to the date of
the business combination.
The Company did not receive an audit certificate on the estimated amounts.
b.

Business Divestiture

On February 14, 2022, the Company transferred all of its shares in Berlitz Corporation (“Berlitz”), its consolidated
subsidiary, to Berlitz Holdings, Inc., which is a special purpose company owned by ILSC Holdings LP (“ILSC”).
(1) Outline of the business divestiture(a) Name of the acquirer
Berlitz Holdings, Inc. (“ILSC SPC”)(b) Divested business
Berlitz engages in the language education business and the ELS business.
(c) Major reason for the business divestiture
Berlitz was founded in 1878 and became a consolidated subsidiary of the Company in 1993 when it wasconsidered the world’s largest language education enterprise. Berlitz became a wholly owned subsidiary of
the Company in 2001. Through the implementation of its unique language learning method, the “Berlitz
Method,” it has operated a communications business centered on language education and has expanded its
business model that contributes to the developmental growth and globalization of individuals and businesses
around the world. In addition, ELS Language Centers, which is affiliated with Berlitz, is the largest college‐
prep English language school in the United States and has supported a multitude of international students
with their English language studies. ELS worked to grow its business by cooperating with the Benesse
Group’s ELS business. In order to remain competitive despite the rise of technologically savvy competitors
and the difficulties presented by the COVID‐19 pandemic, Berlitz enhanced its business management
frameworks, introduced new online education courses, bolstered its digital marketing capabilities, andimplemented other business reforms to strengthen its business position.
In November 2020, the Company formulated a medium‐term management plan for fiscal years 2021 to2025. While the Company will continue to be engaged in the pursuit of sustainable growth via initiatives of
evolving our core businesses of education and nursing care, and expanding into new fields, which focuses on
exploring new areas of growth potential, the Company is also continuing a policy of engaging in businessselection and concentration.
After deliberating on the role of Berlitz in the business portfolio of the Benesse Group, and after conducting
negotiations with multiple candidates, the Company reached the conclusion that synergies exist between
Berlitz and ILSC and accelerating Berlitz’s growth with ILSC’s support would bring Berlitz’s further
development. As such, the Company transferred all of its shares in Berlitz to ILSC SPC.
(d) Date of business divestiture
February 14, 2022
The operating results of Berlitz up to the end of the third quarter are included in the consolidated financial
statements for the year ended March 31, 2022.
(e) Other items of the transaction (including the legal form)
Legal form of business divestiture:
Share transfer only in exchange for assets such as cash
Other items of the transaction:
In an effort to improve the financial position of Berlitz, and as
agreed with ILSC per the terms of the share transfer, the Company
waived its outstanding loan and loan interest receivables in respect
to Berlitz. There were no effects on the consolidated financial
statements since bad debt expenses due to the debt waiver were

- 39 -

Number of shares transferred:eliminated in consolidation procedures.
9,546,536 shares (100% ownership interest)(2) Outline of accounting treatment applied(a) Amount of loss on the share transfer
Millions of Yen
Loss on sale of investments in a consolidated subsidiary

¥

9,570

Thousands of
U.S. Dollars$

78,443(b) Appropriate carrying amounts of assets and liabilities related to the transferred business and their major
components
Thousands ofMillions of Yen
U.S. Dollars
Current assets
Long-term assets¥ 13,782
6,950$ 112,967
56,967

Total assets¥ 20,732$ 169,934

Current liabilities
Long-term liabilities¥ (12,507)(5,016)$ (102,516)(41,115)

Total liabilities¥ (17,523)$ (143,631)(c) Accounting treatment
The difference between the carrying amount of the transferred shares in the consolidated balance sheet andits selling price was recognized as “loss on sale of investments in a consolidated subsidiary” under otherexpenses.
(3) Name of reportable segment that included the divested business
Berlitz Business(4) Amounts of net sales and operating loss on the divested business included in the consolidated statement ofincome for the year ended March 31, 2022
Thousands ofMillions of Yen
U.S. Dollars
Net sales
Operating lossc.

¥20,074
3,265$164,541
26,762

Transaction under Common Control and Others

On March 31, 2022, the Company acquired shares of Classi Corp. (head office: Shinjuku-ku, Tokyo), a consolidated
subsidiary of the Company, through a third-party allotment.
(1) Outline of the transaction(a) Name of the constituent company and its business outline
Name of the constituent company: Classi Corp.
Business outline:
Development and operation of educational platform(b) Date of business combination
March 31, 2022(c) Legal form of business combination
Acquisition of shares of the constituent company through a third-party allotment(d) Name of the company after the combination
No change(e) Outline and purpose of the transaction
The Company regarded Classi as a key component of the Benesse Group’s digital strategy for schools.
Accordingly, for the purpose of strengthening the relationship with Classi, the Company acquired the sharesof Classi through the third-party allotment.
The percentage of ownership interest after the capital increase is 67.3% (50.0% before the capitalincrease).

- 40 -

(2) Overview of accounting treatment applied
The share acquisition was accounted for as a transaction with noncontrolling interests under the classification oftransactions under common control in accordance with the “Accounting Standard for Business Combinations” andthe “Implementation Guidance on Accounting Standard for Business Combinations and Accounting Standard forBusiness Divestitures.”(3) Matters related to the acquisition of additional shares of the consolidated subsidiary
Acquisition cost of the acquired company and related details of each class of consideration
Millions of Yen

Thousands of
U.S. Dollars

Consideration for acquisition—Cash¥ 6,290$ 51,557

Acquisition cost

¥ 6,290$ 51,557(4) Change in the Company’s ownership interest due to the acquisition of additional shares of the consolidated
subsidiary(a) Cause for change in capital surplus
Acquisition of additional shares of the consolidated subsidiary(b) Decrease in capital surplus due to the acquisition of additional shares of the consolidated subsidiary¥1,305 million ($10,697 thousand)- 41 -

Note 24.

NET INCOME PER SHARE

The following table presents the bases for calculating basic net income per share (“EPS”) for the years ended March
31, 2022 and 2021. Diluted EPS for the years ended March 31, 2022 and 2021, is not disclosed because there wereno potentially dilutive shares outstanding. As stated in Note 3. ACCOUNTING CHANGE, the Company and its
domestic subsidiaries started to apply the “Accounting Standard for Revenue Recognition” at the beginning of theyear ended March 31, 2022. As a result of the application, basic EPS for the year ended March 31, 2022, increasedby ¥10.92 ($0.09).

Year Ended March 31, 2022
Basic EPS—Net income available tocommon shareholders
Year Ended March 31, 2021
Basic EPS—Net income available tocommon shareholders

Millionsof YenNet Income
Attributableto Owners of
the Parent

Thousandsof Shares

Yen

WeightedAverage
Shares

EPS

¥

1,064

96,401¥ 11.04¥

3,123

96,374¥ 32.40- 42 -

U.S. Dollars$ 0.09Independent Auditor’s Report

To the Board of Directors of Benesse Holdings, Inc.: