(Unaudited)

July 12, 2019
MORITO CO., LTD.
Financial Statement (Unaudited)
For the Second Quarter of the Fiscal Year ended November 30, 2019
(Translated from the Japanese original)
Corporate Information
Code：9837 Listings in First Section of the Tokyo Stock Exchange(URL http : www.morito.co.jp/english/index.html )Representative： Takaki Ichitsubo
Representative Director and President
Contact：
Makoto Tsuji
Managing Director of General Affairs Dept
Telephone: +81-6-6252-3551
July 12, 2019
August 9, 2019
Yes
Yes
(Amounts rounded down)
1. Consolidated Financial Results for the Second Quarter of the Fiscal Year 2019(December 1, 2018
through May 31, 2019)(1) Consolidated Financial Results(Percentages indicate year-on-year changes)
Net sales
Operating income
Ordinary income
Net income%%%%
Millions of yen
Millions of yen
Millions of yen
Millions of yen
2Q of FY 2019
22,402
7.1
757
762
0.4
522
△4.5
△6.9
2Q of FY 2018
20,922
4.3
793
20.2
759
12.8
561
△82.5
(Note) Comprehensive income : △250 million yen (-%)(2Q of FY2019) 40 million yen (△99.1％)(2Q of FY2018)
Scheduled date of filing of Quarterly Report:

Scheduled date of dividend payment:
Supplementary explanation material for quarterly financial results:
Presentation meeting for quarterly financial results:

2Q of FY 2019
2Q of FY 2018

Net income
Per share
Yen
19.05
20.42

Fully diluted net
Income per share
Yen
－
20.37

(2) Consolidated Financial Position
Total assets
Net assets
Equity ratio
Millions of yen
Millions of yen%
2Q of FY 201945,82432,22270.2
FY 2018
48,011
32,95968.5(Reference) Equity capital : 32,164 million yen (2Q of FY2019) 32,905 million yen (FY2018)(Note) We have started to adopt「Partial Amendments to 『Accounting Standard for Tax Effect Accounting』(ASBJ)
Statement No. 28, issued on February 16, 2018」at the beginning of the first quarter of FY2019.
Therefore, major management indices in the consolidated financial result for the fiscal year 2018 arerestated by using the consolidated financial results which adopted this amendment.
2. DividendsFirstquarter-end
Yen

Dividends per share
SecondThird
Fiscalquarter-end
quarter-end
year-end
Yen
Yen
Yen
12.50
12.50
13.00

FY 2018
FY 2019
FY 2019
13.00(Forecast)(Note) Revisions of dividend forecast to the latest announcement: None

1

Annual
Yen
25.00
26.00

(Unaudited)

3. Consolidated Forecast for FY 2019 (December 1, 2018 through November 30, 2019)(Percentages represent changes from corresponding period of previous year)
Net Sales
Millions ofyen

Ordinary profit

Operating income%

Millions ofyenMillions ofyen%Full year
47,000
7.0
1,900
10.1
1,900
(Note) Revision of performance forecast to the latest announcement: None%
6.1

Net income
per share

Net income
Millions of
yen

1,400

%
11.3

Yen
50.90

*Notes(1) Changes of important subsidiaries during the period : None (changes of specific subsidiaries in accordancewith changes in the scope of consolidation)
Newly included : None
Excluded : None
(2) Adoption of special accounting treatment for preparing quarterly consolidated financial statements: None
(3) Changes in accounting policies and changes or restatement of accounting estimates(i)
Changes in accounting policies caused by revision of accounting standards:(ii)
Changes in accounting policies other than (i):(iii)
Changes in accounting estimates:(iv)
Restatements:

None
None
None
None

(4) Number of outstanding shares (common shares）(i) Number of outstanding shares, including treasury shares at end of period:
30,800,000 shares(as of May 31, 2019)30,800,000 shares(as of November 30, 2018)(ii) Number of shares of treasury stock at end of period:
3,447,060 shares(as of May 31, 2019)
3,290,700 shares(as of November 30, 2018)(iii) Average outstanding number of shares during the period:
27,452,023 shares(the 2Q of FY2019)27,501,883 shares(the 2Q of FY2018)* This quarterly financial summary is not subject to quarterly review by certified public accauntants or an audit
firm.
* Disclosure and other special notes regarding performance forecasts.
The forecast in this cumulative quarterly statement is based on information available to Morito Group andcertain premises which are deemed to be rational, and numbers we actually get may greatly differ from those in
the forecasts due to various factors.
As for supporting premises to the performance forecasts or notes to be kept in mind for the usage of thisforecasts, refer to “1. Qualitative Information for the Period under Review (2) Forecasts of Consolidated BusinessResults and other Forward-looking Information” in the attached page 5.
In addition, we have introduced “Stock Granting Trust (J-ESOP)” and “Board Incentive Plan
(BIP)”.Consequently, the shares held by Trust and Custody Service Bank, Ltd. and the Master Trust Bank ofJapan, Ltd are included in the treasury stock.

2

(Unaudited)Index
1. Qualitative Information for the Period under Review ......................................................................................4(1) Overview of Business Performance .............................................................................................................4(2) Forecast of Consolidated Business Results and other Forward-looking Informantion ........................5
2. Quarterly Consolidated Financial Statements .................................................................................................6(1) Quarterly Consolidated Balance Sheets......................................................................................................6(2) Quarterly Consolidated Statements of Income and Consolidated Statements of Comprehensive
Income...................................................................................................................................................................8(3) Consolidated Cash Flows............................................................................................................................10(4) Notes regarding Quarterly Consolidated Financial Statements ............................................................. 11[Notes on assumption of going concern] ............................................................................................................. 11[Notes on a Significant Change in Shareholders’ Equity] ....................................................................................... 11[Additional Information] ............................................................................................................................................ 11[Segment Information] ............................................................................................................................................. 11[Business Combinations] .........................................................................................................................................12[Significant events occurred subsequent to the combination].................................................................................133

(Unaudited)

1. Qualitative Information for the Period under Review(1) Overview of Business Performance
In the consolidated cumulative second quarter (From December 1, 2018 through May 31, 2019), the Japanese
economy has continuously shown a gradual recovery with steady increases in domestic demands such as
consumer spending, capital investment, etc. However, the global economy has been changing in increasing
uncertainties from the US and China trade friction, Britain’s withdrawal from EU, etc.
In such circumstances, Morito Group who deals with apparel materials and consumer products has made atransition to a holding company system as of June 1, 2019 positioning FY 2019 as “The year of “Structural
Reform”. Furthermore, we have been pushing forward with our efforts for creating values to satisfy demands
from the eras putting weight on developing value-added Japanese items and expanding revenue bases throughcultivating global sales channels. We have also been accelerating our efforts for the growth by developing
untapped market as well as existing markets of ASEAN, China, US or Europe, under the corporate vision of『Create Morito’s existence value, Realize“New Morito Group”』.
As a result, we reached 22,402 million yen (increased by 7.1% from a year earlier) in Net sales, 757 million yen(decreased by 4.5% from a year earlier) in Operating income, 762 million yen (up by 0.4% from a year earlier) in
Ordinary income, and 522 million yen (decreased by 6.9% from a year earlier) in Net income.
The exchange rates used for the oversea subsidiaries’ consolidated cumulative second quarter financial
statements are as below.
As a result, in the current quarterly performance reaches net sales ¥11,145, million (increased by 10.5% froma year earlier), operating income ¥370 million (increased by 3.2% from a year earlier), ordinary income ¥347
million (increased by 11.4. % from a year earlier), net income ¥210 million (decreased by 10.5 % from a year
earlier).
The exchange rate used for the oversea subsidiaries’ consolidated financial statement of the current quarterend as below:
1Q

2Q

USD

112.91 (112.98)

110.23 (108.23)

EUR

128.82 (133.01)

125.16 (133.15)

RMB

16.32 (17.08)

16.33 (17.04)

HKD

14.42 (14.47)

14.05 (13.83)

TWD

3.66 (3.75)

3.58 (3.70)

VND

0.0048 (0.0050)

0.0047 (0.0048)

THB

3.44 (3.43)

3.49 (3.43)

MXN

5.70 (-)

5.74 (-)(Notes)1. ( ) is the exchange rate of the quarter of FY2018.
2. The results of MORITO SCOVILL MEXICO S.A.de C.V. were included in the consolidated subsidiary fromthe first quarter of FY 2019.
The exchange rates used to convert income and expense for consolidated financial results of thissubsidiary is Mexican Peso (MXN).
Segment information as below[Japan]As for the apparel division, sales of the accessories for uniforms and working wear increased.
In the consumer product division, sales of products for one dollar shops and automobile interior components
increased.
Furthermore, since the results of MANEUVERLINE INC. which we acquired in April were included in the
consolidated income statements from the third quarter of FY2018, sales from their businesses of importing4

(Unaudited)and selling marine leisure and snowboarding, etc. increased in consolidated cumulative second quarter
period.
As a result, net sales reached 16,427 million yen (increased by 11.0% from a year earlier).
[Asia]
As for the apparel division, sales of the accessories to Japanese apparel manufacturers in Shanghai and EU
and US/European manufacturers in Hong Kong decreased.
In the consumer product division, sales of the automobile interior components bound for Japanesemanufactures increased in Shanghai and Thailand. As a result, net sales reached 3,088 million yen(decreased by 0.2% from the previous year).
[Europe and the U.S.]
As for the apparel division, sales of the accessories to apparel manufacturers in the U.S. decreased.
In the consumer product division, sales of automobile interior components to Japanese auto manufacturers
increased in Europe/US.
As a result, net sales reached 2,886 million yen (decreased by 4.5% from the previous year).
(2) Forecast of Consolidated Business Results and other Forward-looking Informantion
Currently, there has no change in the consolidated forecast of FY2019 which was announced in 11th January,
2019.

5

(Unaudited)

2. Quarterly Consolidated Financial Statements(1) Quarterly Consolidated Balance Sheets
FY 2018(As of November 30, 2018)
Thousands of yen

FY 2019(As of May 31, 2019)
Thousands of yen

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable
Inventory
Other current assets
Allowance for doubtful accounts
Total current assets
Fixed assets
Tangible fixed assets

9,343,274
12,008,498
5,406,890
859,513△38,224
27,579,953

8,681,383
11,371,908
5,675,571
576,726△38,382
26,267,206

Land
Other tangible fixed assets
Total tangible fixed assets
Intangible fixed assets

4,332,821
5,813,996
10,146,818

4,331,408
5,881,118
10,212,527

Goodwill
Other Intangible fixed assets
Total intangible fixed assets
Investments and other fixed assets

3,196,351
1,156,215
4,352,566

3,020,831
1,236,801
4,257,633

Investment securities
Net defined benefit asset
Other fixed assets
Allowance for doubtful accountTotal investments and other fixed assets
Total fixed assets

4,727,033
237,765
1,033,134△75,148
5,922,784
20,422,170
9,802
48,011,926

3,922,403
234,619
997,092△75,052
5,079,063
19,549,223
7,702
45,824,132

Notes and accounts payable
Short-term loans payable
Current portion of bonds
Current portion of long-term debt
Accrued tax payable
Reserve for bonuses
Reserve for director’s bonuses
Other current liabilities
Total current liabilities
Fixed liabilities

4,500,593
200,000
400,000
749,146
128,612225,23156,9291,665,881
7,926,394

4,682,478
100,000
400,000
573,280
390,684
165,672
43,922
1,369,170
7,725,209

Bonds payable
Long-term debt
Provision for retirement benefit by stock
Provision for director’s retirement benefit
Provision for director's retirement benefit by stock
Provision for environmental measures
Net defined benefit liability
Other fixed liabilities
Total fixed liabilities
Total liabilities

600,000
3,667,331
26,501
48,58371,04020,367
894,881
1,797,615
7,126,319
15,052,714

400,000
2,991,246
34,65552,79945,532
19,907
883,6431,448,640
5,876,425
13,601,634

Deferred assets
Total assets
Liabilities
Current liabilities

6

(Unaudited)
FY 2018(As of November 30, 2018)
Thousands of yen

FY 2019(As of May 31, 2019)
Thousands of yen

Net Assets
Shareholders' equity
CapitalCapital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Difference in revaluation of land
Foreign currency translation adjustment
Remeasurement of defined benefit plans
Total other comprehensive income
Subscription rights to shares
Minority interests
Total net assets
Total liabilities and net assets

7

3,532,492
3,498,724
25,277,180△2,118,444
30,189,951

3,532,492
3,502,970
25,434,999△2,248,341
30,222,120

1,409,695
451
571,368
802,769△68,550
2,715,733
53,526－32,959,212
48,011,926

870,586259
571,368
555,844△55,902
1,942,155
58,222－32,222,498
45,824,132

(Unaudited)(2) Quarterly Consolidated Statements of Income and Consolidated Statements of Comprehensive
IncomeQuarterly Consolidated Statements of Income
The Second Quarter accounting period
FY 2018
FY 2019(December 1, 2017 through (December 1, 2018 throughMay 31, 2018)
May 31, 2019)
Thousands of yen
Thousands of yen
Net sales
Cost of sales
Gross profit

20,922,099
15,351,623
5,570,476

22,402,663
16,326,564
6,076,098

Total selling, general and administrative expense
Operating Income
Non-operating income

4,777,322
793,154

5,318,329
757,768

Interest received
Dividends received
Rent on real estate
Equity in earnings of affiliates
Other non-operating income
Total non-operating income
Non-operating expenses

12,91933,47921,04934,742
27,358
129,549

12,86232,431
24,267
33,11329,817
132,493

Interest paid
Cash discount on sales
Foreign Exchange Loss
Others non-operating expense
Total non-operating expense
Ordinary Income
Extra ordinary income

1,800
40,095
68,63552,569163,101
759,602

4,090
41,04329,67053,157
127,961
762,300

Gains on sales of fixed assets
Gains on sales of investment securities
Gain on reversal of subscription rights to shares
Total extra ordinary income
Extra ordinary loss

16,36829

5,419－
21,78881,849210
82,089Loss on sales of fixed assets
Loss on disposal of fixed assets
Loss on sales of investment securities
Loss of business restructuring
Total extra ordinary loss
Net income before taxes and other adjustment

273
3,818
－
4,970
9,063
772,327

－
3,867
415
2,948
7,231
837,158

332,172△121,503
210,668
561,658－

368,248△54,013314,234
522,923－561,658

522,923

Corporate, inhabitant and business taxes
Adjustments to corporate and other taxes
Total income taxes
Net income
Profit(Loss) attributable to non-controlling interests
Profit(Loss) attributable to owners of parent

8

(Unaudited)

Quarterly Consolidated Statements of Comprehensive Income
The Second Quarter accounting period

Net Income
Other comprehensive income
Unrealized gain(loss) on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Adjustments to retirement benefit
Share of other comprehensive income of associates accounted for using equity method
Total other comprehensive income
Comprehensive income(Breakdown)Comprehensive income attribute to the parent
Comprehensive income attribute to the minority shareholders

9

FY 2018(December 1, 2017 throughMay 31, 2018)
Thousands of yen
561,658

FY 2019(December 1, 2018 throughMay 31, 2019)
Thousands of yen
522,923△28,137
2,427△498,882
3,023△1△521,570
40,088△539,108△193△246,924
12,647
1△773,578△250,654

40,088－△250,654－

(Unaudited)(3) Consolidated Cash FlowsFY 2018(December 1, 2017
through
May 31, 2018)
Thousands of yen
Cash flows from operating activities
Income (loss) before income taxes
Depreciation of amortization
Depreciation of goodwill
Change in provision for bonus
Changes in net defined benefit asset
Changes net defined benefit liability
Change in reverse for retirement benefits for officers
Changes in reverse for employee stock ownership plan
Changes in board incentive plan
Change in allowance for doubtful accounts
Interest income and dividends income
Interest paid
Equity in net income of affiliates
Gain on reversal of subscription rights to shares
Gains from sale of fixed assets
Gains from sale of investment securities
Loss on retirement of noncurrent assets
Loss on disposal of fixed assets
Change in notes and accounts
Change in inventory
Change in account payable
OthersSubtotal
Proceed from interest and dividends income
Payment of interest
Payment of corporate tax
Net cash(used in)provided by operating activities
Cash flows from investing activities
Decrease in time deposit
Increase in time deposit
Purchase of investment securities
Increase of sale for investment securities
Purchase of tangible fixed assets
Proceeds from sale for tangible fixed assets
Purchase of intangible assets
Payments of loans receivable
Proceeds from loans receivable
Purchase of stocks of subsidiaries and affiliates
Purchase of investments in subsidiaries resulting in change in scope of consolidation
OthersNet cash provided by (used in) investing activities
Cash flows from financing avtivities
Changes in short-term debt
Proceeds from long-term loans payable
Repayments of lease obligations
Repayment of long-term loans
Redemption of bonds
Payments to acquire treasury stock
Proceeds from exercise of stock option
Payments of dividends
Net cash used in financing activities
Effects of exchange rate on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Increase in cash and cash equivalents from newly consolidated subsidiary
Cash and cash equivalents at fiscal year-end

10

FY 2019(December 1, 2018
through
May 31, 2019)
Thousands of yen

772,327
333,761
87,613△46,793△4,059△1,904
3,750
3,107
9,744
4,318
△46,398
1,800△34,742－△16,094△5,4193,818
4,970
60,576△353,868
129,582△10,227
895,864
48,508△1,820△468,382
474,169

837,158
415,195
121,327△56,857
14,128△3,9904,216
8,154△25,507750△45,294
4,090△33,113△210△29△81,434
3,867
2,948
600,306△307,784
196,3711071601,761,455
47,047△4,300△42,844
1,761,358△652,846
696,041△124,343
9,308△1,859,000
37,499△26,587－
53,472△57,596△2,152,461△10,529△4,087,044△22,558
4,798△14,135
106,888△637,249
1,013△184,699△3,00013,192－－△7,480△743,230－
2,600,000△45,599△176,497△200,000－－△392,843
1,785,059△95,471△1,923,286
10,776,583－
8,853,296△100,000－△30,080△851,951△200,000△151,148
12,368△350,753△1,671,564△49,298△702,735
8,525,759
32,021
7,855,044

(Unaudited)(4) Notes regarding Quarterly Consolidated Financial Statements[Notes on assumption of going concern]
Not applicable.
[Notes on a Significant Change in Shareholders’ Equity]
Not applicable[Additional Information](Adoption of “Partial Amendments to Accounting Standard for Tax Effect Accounting)
We have started to adopt “Partial Amendments to Accounting Standard for Tax Effect Accounting” (ASBJ
Statement No. 28 issued on February 16, 2018) at the beginning of the first quarter of FY2019. Therefore,
deferred tax assets are shown in the category of Investments and other fixed asses, and deferred tax liabilities
are shown in the category of Fixed liabilities.
[Segment Information]
I. The Second Quarter of FY 2018 (December 1, 2017 through May 31, 2018)
1. The information on net sales, income or loss by reportable segment(Thousands of yen)
Reportable Segment

Net Sales
Sales to externalcustomers
Inter segment sales
and transfer
Total
Segment income

Adjustment(Note 1)

Consolidated
Statement
Amount(Note 2)

Japan

Asia

EU and US

Total

14,804,879

3,093,753

3,023,467

20,922,099－

20,922,099

1,234,781

1,594,290

28,8702,857,943△2,857,943－

16,039,660
674,1034,688,043
199,292

3,052,338
80,20623,780,042
953,602△2,857,943△160,448

20,922,099
793,154(Notes)1. Adjustment of △160,448 thousand yen includes corporates expenses of △143,858 thousand yen that are notdistributed to each reportable segment and other△16,589 thousand yen.
2. The amount of segment income is subsequently adjusted with the amount of operating income on thequarterly consolidated profit and loss statements.

2. Impairment Loss on intangible assets or information on goodwill by reportable segment.
(Significant fluctuations in the amount of goodwill)
The amount of goodwill is reported in the segment of “Japan” due to the acquisition of MANEUVERLINE INC.
The increase in the amount of goodwill incurred from this event is 661,478 thousand yen in Consolidated
Cumulative Results of the Second Quarter of FY2019. Besides, the above amount is included results after an
important review on the originally allocated costs for the business combination was completed upon settling theprovisional account processing as written in “Notes (Business Combination-related)”11

(Unaudited)

II. The Second Quarter of FY2019 (December 1, 2018 through May 31, 2019.)
1. The information on net sales, income or loss by reportable segment(Thousands of yen)
Reportable Segment

Net Sales
Sales to externalcustomers
Inter segment sales
and transfer
Total
Segment income

Adjustment(Note 1)

Consolidated
Statement
Amount(Note 2)

Japan

Asia

EU and US

Total

16,427,985

3,088,046

2,886,631

22,402,663－

22,402,663

1,226,164

1,515,961

11,741

2,753,866△2,753,866－

17,654,149
709,308

4,604,007
225,300

2,898,372
14,77725,156,530
949,386△2,753,866△191,618

22,402,663
757,768(Notes)1. Adjustment of △191,618 thousand yen includes corporate expenses of △167,751 that are not distributed toeach reportable segment and other△23,867 thousand yen.
2. The amount of segment income is adjusted with operating profits on the consolidated quarterly profit and loss
statements.

[Business Combinations](Important review on the originally allocated costs for the business combination in comparative information)
We have made a provisional account processing in the previous consolidated second quarter for the businesscombination with MANEUVERLINE INC. taken place in April 2, 2018, which was settled in the previous
consolidated accounting year-end.
With the settlement of this provisional account processing, an important review on the originally allocatedcosts for the business combination is reflected in comparative information included in the quarterly
consolidated financial statements for the period of the current consolidated cumulative Second quarter, and theamount of goodwill has been changed from 1,218,724 thousand yen to 661,478 thousand yen.
There is no effect on the quarterly consolidated profit and loss statements for the previous Consolidated
Cumulative Second Quarterly period.

12

(Unaudited)[Significant events occurred subsequent to the combination](Transition to the Holding Company system with the Conclusion of an Absorption-type Company Split
Agreement)
Morito has determined to conclude an Absorption-type Company Split Agreement with Morito Japan
Co., Ltd (hereafter referred to as “Succession Company”) at the board meeting held on December 13,
2018, in order to transfer to a holding company system through splitting its businesses as a splitting
company to the Succession Company as of June 1, 2019. Along with this transition, Morito has transferred
to a Holding Company system as of June 1, 2019.
1. Outline of Corporate division(1) Business functions subject to the division
Manufacturing and selling accessories or parts for apparel products and automobile interior components,
etc.
(2) Date of business combination
June 1, 2019(3) Legal form of the business combination
Absorption-type Company Split through which Morito Co., Ltd, is a splitting company, and Morito Japan Co.,
Ltd., a succession company.
(4) Name of the entity after the business combination
A splitting company: Morito Co., Ltd.
A succession company: Morito Japan Co., Ltd.
(5) Purpose of the business combination
Business environment around Morito Group has been rapidly changing due to mid- to long-term shrinkageof the domestic demands resulted from the decreasing population, etc., global creation of new businessmodels beyond borders of industries, or emergence of new technologies such as IoT or Artificial Intelligence,etc. happing at a time.
In such circumstances, we have been putting efforts on creating values to satisfy demands from the eras andexpanding revenue bases through cultivating global channels, under the corporate vision of 『Create Morito’s existence value, Realize“New Morito Group”』. We have made a decision to make a transition to a Holding
Company system as it would seemingly be the optimal way for us to pursue further growth and revenue.
Our purposes for transferring to a Holding Company system are as follows;①Strengthening Group management strategic functions
The Holding Company is to be specialized for managing businesses for the entire Morito group, planningGroup management strategies to expand new businesses including M&A, and maximizing corporate values ofthe entire group by allocating management resources optimally and utilizing it effectively.
② Making decisions rapidly by clarifying authorities and responsibilities.
Separating organizations from group management to business promotion, and clarifying responsibilities
and authorities of both organizations for their prompt decision making, and promoting businesses in a flexible
manner to enhance our competitiveness.
③ Maximizing group synergy effects
Synergy effects among group companies are maximized in the utilization of management resources owned
by our group companies cross-functionally and effectively centering the Holding Company.
2. Brief information on the account processing conducted
Based on “Accounting standards pertaining to Business Combination” and “Guideline for Accounting Standards
for Business Combination and Corporate division”, the accounts are recoded and processed as transactions
under the control of common rules and regulations.

13