January 13, 2017
MORITO CO., LTD.
Financial Statement (Unaudited)
For the Fiscal Year ended November 30, 2016
(Translated from the Japanese original)
Corporate Information
Code：9837 Listings：First Section of the Tokyo Stock Exchange(URL : http://www.morito.co.jp/english/ir/)
Representative： Takaki Ichitsubo
Representative Director and President
Contact：
Kenji Kojima
Director, Executive Officer and General Manager of Control Division
Telephone: +81-6-6252-3551
Scheduled date of annual general meeting of shareholders:
Scheduled date of dividend payment:
Scheduled date of filling of Security Report:
Supplementary explanation material for financial results:
Presentation meeting for financial results:

February 23, 2017
February 24, 2017
February 24, 2017
Yes
Yes (for analyst and institution investors)(Amounts rounded down)
1. Consolidated Financial Results for Fiscal Year 2016 (December 1, 2015 through November 30, 2016)(1) Consolidated Financial Results(Percentages indicate year-on-year changes)

Net sales
Millions of yen

Operating income%

Millions of yen%

FY 2016
40,086
△7.4
1,767
2.7
FY 2015
43,293
20.7
1,721
20.4
(Note) Comprehensive income: △1,156 million yen (△153.7%) (FY 2016)

Ordinary income
Millions of yen%

Net income
Millions of yen

1,647
△12.0
1,181
1,871
8.2
1,432
2,152 million yen (△9.0%) (FY 2015)

Net income
Fully diluted net
ReturnPer share
Income per shareon equity
Yen
Yen%
FY 2016
41.48—
3.9
FY 2015
49.48—
4.7(Reference) Equity in earnings (losses) of affiliates: 38 million yen (FY 2016)

%

△17.5
12.7

Ratio ofRatio ofordinary income
operating income
to total assets
to net sales
%
%
3.7
4.4
4.0
4.0
23 million yen (FY 2015)(2) Consolidated Financial Position
Total assets
Net assets
Equity ratio
Millions of yen
Millions of yen%
FY 2016
40,85329,26071.6
FY 2015
47,331
31,113
65.7(Reference) Equity capital: 29,246 million yen (FY2016) 31,113 million yen (FY 2015)

Net assets per shareYen
1,027.96
1,081.23(3) Consolidated Cash Flows
Cash flows from
Cash flows from
Cash flows from
Cash and cash equivalents
operating activities
investing activities
financing activities
at the end of the period
Millions of yen
Millions of yen
Millions of yen
Millions of yen
FY 2016
1,391
2,728△4,3018,322
FY 2015
2,034
977△1,1138,858
2. Dividends
Dividends per share
Total dividends
Dividends
Ratio of(Annual)Payout ratio
dividends to
First
SecondThird
FiscalAnnual(Consolidated)
net assets
quarter- quarter- quarteryear(Consolidated)
end
end
end
end
Yen
Yen
Yen
Yen
Yen
Millions of yen%%
FY 2015
7.00
7.50
14.50
426
29.3
1.4
FY 2016
8.00
9.00
17.00
493
41.0
1.6
FY 2017
14.00
14.00
28.00
26.6
(Forecast)(Note) 1: Each 3 yen commemorative dividends are included in both of FY2017 Second quarter-end and FY2017 fiscal year end
dividends.
(Note) 2: Dividends payout ratio(consolidated) 26.6% is mentioned. But it is more than 50% based on net income excluded
specialextraordinary income.

3. Consolidated Forecast for FY 2017 (December 1, 2016 through November 30, 2017)(Percentages represent changes from corresponding period of previous year)
Net Sales
Operating income
Ordinary profit
Millions of yen%
Millions of yen%
Millions of yen%
Full year
43,000
7.3
1,800
1.8
1,700
3.2
Net income
Millions of yen
%
3,000
154.0

Net income per shareYen
105.44

Full year*Notes(1) Changes of important subsidiaries during the period (changes of specific subsidiaries in accordance with changes in thescope of consolidation): None
Newly included: None
Extended company: None
(2) 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:

Yes
None
None
None

(3) Number of outstanding shares (common shares）(i)
Number of outstanding shares, including treasury shares at end of period:
30,800,000 shares (as of November 30, 2016)
30,800,000 shares (as of November 30, 2015)(ii) Number of shares of treasury stock at end of period:
2,349,000 shares(as of November 30, 2016)
2,023,820 shares(as of November 30, 2015)(iii) Average outstanding number of shares during the period:
28,485,602 shares(FY 2016)
28,950,950 shares(FY 2015)(Reference) Summary of Non-Consolidated Financial Results
1. Non-Consolidated Financial Results for FY 2016 (December 1, 2015 through November 30, 2016)(1)Non-Consolidated Financial Results(Percentages represent changes from corresponding period of previous year)
Net Sales
Operating income
Ordinary profit
Net Income
Millions of yen%
Millions of yen%
Millions of yen%
Millions of Yen%
FY 2016
25,821
△1.2
702
4.5
1,003
△6.9
849
△32.4
FY 2015
26,124
△0.1
672
0.1
1,078
△11.2
1,256
22.0

FY 2016
FY 2015

Net income
per share
Yen
29.84
43.41

Fully diluted net
Income per shareYen-(2)Non-Consolidated Financial Position
Total assets
Net assets
Millions of yen
Millions of yen
FY 2016
35,442
26,694
FY 2015
39,84728,623(Note) (Reference) Equity capital: 26,680million yen (FY2016)

Equity ratio
%
75.3
67.3
26,823 million yen (FY 2015)

Net assets per shareYen
937.75932,13*Update on the Execution Status of Audit Procedures
As of the date on which this financial report was released, an audit of the financial statements, based on the Financial
Instruments and Exchange Law, had not been completed.

*Disclosure and other special notes regarding performance forecasts
The forecast above are based on information available to management as of the date on which these performance-related figures
were disclosed, and various factors may cause actual results to differ from these forecasts. For issues to keep in mind whenusing the forecasts and criteria conditioned upon the forecasts, please refer to “1. Operating results, (1) Analysis of operating
results” on page 3
We have also introduced “Stock Granting Trust (J-ESOP)” and “Board Incentive Plan (BIP)”. Consequently, the shares held byTrust and Custody Service Bank, ltd. is included in the treasury shares.

Index
1. Operating Results..................................................................................................................................................5(1) Analysis of Operating Results...............................................................................................................................5(2) Analysis of Financial Position ..............................................................................................................................6(3) Basic policy on Payment of Dividends and Dividends ............................................................................................6
2. Organization of the group ......................................................................................................................................8
3. Management Policy ............................................................................................................................................10(1)
Basic Management Policy ............................................................................................................................10(2)
Target Indicator ...........................................................................................................................................10(3)
Medium and Long-Term Management Strategy .............................................................................................10(4)
Issues to be Addressed .................................................................................................................................10(5)
Other Material Matters .................................................................................................................................10
4. Basic concept concerning the selection of accounting standards..............................................................................10
5. Consolidated Financial Statements ....................................................................................................................... 11(1)
Consolidated Balance Sheets ........................................................................................................................ 11(2)
Consolidated Statements of Income and Consolidated Statements of Comprehensive Income ............................13(3)
Consolidated Statements of Changes in Shareholders’ Equity..........................................................................15(4)
Consolidated of Cash Flows .........................................................................................................................17(5)
Notes regarding Consolidated Financial Statements........................................................................................19[Notes on assumption of going concern] ......................................................................................................................19[Changes in accounting principal]................................................................................................................................19[Additional Information] .............................................................................................................................................19[Segment Information]................................................................................................................................................21[Per share data] ..........................................................................................................................................................22[Significant subsequent events] ...................................................................................................................................23
5. Others....................................................................................................................................................................23(1)Changes in Senior Managements .........................................................................................................................23

1. Operating Results(1) Analysis of Operating Results

In the fiscal year ended November 30, 2016 (From December 1, 2015 to November 30, 2016), the Japanese economy
has shown signs of modest recovery by economy policy of government and monetary easing of bank of Japan. However,the uncertain economy situation maintains because of export and capital investment are still weak due to yen appreciationin the first half of this year.
In the global economy, the developed countries especially U.S. are leading slow recovery, but it is still uncertain because
emerging countries especially China are showing slowdown, and EU economy is also uncertain due to Brexit.
In such a situation, our group is moving forward a growth strategy by the development of high valued Japan made items,
expansion of a global sales channel under 7th mid-term management plan, and will promote the realization of value
creation which the era seeks, expand our business in not only existing market such ASEAN, china, western, but also in
untapped market to contribute our business.
As a result, in the current quarterly performance reach net sales 40,086million (decreased by 7.4% from a year earlier),
operating income ¥1,767 million (increased by 2.7% from a year earlier), ordinary income ¥1,647 million (decreased by
12.0% from a year earlier), net income ¥1,181 million (decreased by 17.5% from a year earlier).
The exchange rate used for the consolidated financial statement of the current fiscal year end as below:¥101.12 to the U.S. dollar, ¥113.29 to the euro, ¥15.15 to the Chinese yuan, ¥13.04 to the Hong Kong dollar,¥3.22 to the Taiwan dollar, ¥0.0045 to the Vietnamese dong, ¥2.91 to the Thai baht.
The exchange rate used for the consolidated financial statement of the year earlier fiscal year end as below:¥119.97 to the U.S. dollar, ¥134.94 to the euro, ¥18.97 to the Chinese yuan, ¥15.48 to the Hong Kong dollar,¥3.63 to the Taiwan dollar, ¥0.0053 to the Vietnamese dong, ¥3.30 to the Thai baht.

Segment information as below[Japan]As for the apparel division, sales of the accessories for domestic mass retailer and sports apparel manufacturer in Japan
are increased.
In the consumer product division, sales of accessories for camera is increased, but health-related items, magi tape®,
automobiles, and insole are decreased.
As a result, net sales were ¥28,089 million (decreased by 1.1% from a year earlier).
[Asia]
As for the apparel division, sales of the accessories for EU and U.S. infant’s wear in H.K., for Japanese apparel
manufacture in Shanghai, China are decreased.
In the consumer product division, sales of the automobile interior component for Japanese auto makers in Thailand isincreased, but sales of accessories for camera in Thailand, sales of the automobile interior component for Japanese automakers in Shanghai is decreased.
As a result, net sales were ¥6,522 million (increased by 19.9% from a year earlier).
[Europe and the U.S.]
As for the apparel division, sales of the accessories for working wear in EU is increased, but sales of accessories for U.S.
domestic apparel market.
In the consumer product division, sales of automobile interior article for Japanese automobile manufacture in EU. Salesof accessories for camera in EU is decreased, neither.
As a result, net sales were ¥5,474 million (decreased by 19.0% from a year earlier).

(ii) Outlook for the next fiscal year
Our group set and promote 『Create Morito’s existence value, Realize “New Morito Group”』 under 7th mid-term management
plan “Make it happn, We develop our future！！！” (December 1, 2015 through November 30, 2019). In the first year of thismid-term management plan FY2016, Morito considers development of Japan made high valued items and global expansion as
the core management plan, and Morito realizes to create Morito’s value which era needs. At the same time, we accelerate ourbusiness in not only existing markets such as Asia, China, U.S. and EU, but also in untapped markets.
The forecast for consolidated results for the full year of fiscal 2017 is net- sales ¥43,000 million yen, operating income ¥1,800
million, ordinary profit ¥1,700 million and net income ¥3,000 million (Exchange rate: US$1.00 = ¥106).

5

(2) Analysis of Financial Position(i) Assets, liability and net assets
Total assets stood at ¥40,853million, decreased by ¥6,477million from a year earlier.
Total current assets reached ¥25,127 million, decreased by ¥1,039 million from a year earlier. This change was primarily due todecrease in cash ¥568 million.
Total fixed assets came to ¥15,708 million, decreased by ¥5,456 million from a year earlier. This change was mainly due todecrease in land ¥2,701 million.
Total current liabilities reached ¥7,317 million, decreased by ¥4,981 million yen from a year earlier. This change was mainly
due to decrease in short-term loans ¥4,708 million.
Total fixed liabilities came to ¥4,275 million, increased by ¥357 million from a year earlier. This change was mainly due toincrease in bond ¥140 million.
Total net assets became ¥29,260 million, decreased by ¥1,852 million from a year earlier. Share holders’ equity ratio was 71.6%,
increased by 5.9% from a year earlier.
(ii) Cash Flows
The overall situation regarding cash flow during the fiscal year as follow:[Cash flows from operating activities]
Net cash provided by operating activities was ¥1,391 million (¥2,034 million provided in the same period of the previous fiscal
year). This change was mainly due to acquisition of net income before taxes.
[Cash flows from investing activities]
Net cash used in investing activities was ¥2,728 million (¥977 million provided in the same period of the previous fiscal year).
This change was principally due to tangible fixed assets.
[Cash flows from financing activities]
Net cash used by financing activities was ¥4,301 million yen (¥1,113 million used in the same period of the previous fiscal year).
This change was mainly due to return of short-term debt and dividends payout.
As a result of above, cash and cash equivalent was ¥8,322 million, decreased by ¥536 million from a year earlier.
The following table shows financial indicators associated with cash flows.

Equity ratio
Equity ratio (market value basis)
Interest-bearing debt / cashflow ratio
Interest coverage ratio

FY 201464.7%
52.0%
556.1%
77.5

FY 201565.7%
52.0%
288.7%
91.4

FY 2016
71.6%
55.7%
180.8%
78.3(Note)
Equity ratio = Equity capital / Total assets
Equity ratio (market value basis) = Market capitalization / Total Assets
Interest- bearing debt / cash flow ratio = Interest-bearing debt/net cash provided by operating activities
Interest coverage ratio = Operating cash flows / Interest paid
*Each indicator is calculated on a consolidated basis.
*Market capitalization is based on the year-end share price multiple by the number of shares issued and outstanding at year-end
not including treasury stocks.
*Operating cash flows refers to net cash provided by operating activities in the consolidated statement of cash flows.
*Interest-bearing debt includes short-term loans payable on the consolidated balance sheet.
*The interest payments use the interest paid as recorded in the consolidated statement of cash flows.
(3) Basic policy on Payment of Dividends and Dividends

The company’s basic dividend policy is to return the profit to our shareholders by reinforced financial ground andimproved profitability. In addition, we will use the internal reserve to invest, and M&A for the long-term growth in the
future.
Dividend was distributed in a manner that reflects the consolidated company result and financial standing.
・Continuous dividends payment
・Maintain DOE 1.5%
・Basic policy of dividend payout ratio more than 50%
The company will consider stock buy-back to enrich shareholder return promptly, based on the company’s financial
6situation and share price.
During this fiscal year, we scheduled to propose the general meeting of shareholders to payout ¥9 per share as dividend of
year-ended. As a result, dividends for the subject fiscal year amount to ¥17 per share including the interim dividends of ¥8
per share.
For next fiscal year, we plan each ¥14(¥11 for normal dividends and ¥3 for commemorative dividends) for both of FY2017
Second quarter-end and FY2017 fiscal year end dividends. Total dividends is ¥28 per share.

72.

Organization of the group

Our group consists of the parent company, 17 subsidiaries and 1 affiliate company. The group’s main business is sales andmanufacture of materials for daily-life: including apparel materials, parts for automotive, life style goods, and rental andcleaning of kitchen appliances etc.
◎:Consolidated subsidiaries: 16 companies○:Non-consolidated subsidiaries: 1 companies□:Affiliates: 1 company◎ MORITO INDUSTRIAL CO., (H.K.) LTD. : Selling of apparel and consumer products◎ MORITO (SHENZHEN) CO., LTD. : Subsidiaries of Morito Industrial Co., (H.K.) Ltd.(100% owned)
Manufacturing of component of apparel and consumer products◎ TAIWAN MORITO CO., LTD. : Selling and manufacturing of component of apparel and consumer products.
◎ KANE-M SHANGHAI CO., LTD. : Selling and manufacturing of component of apparel and consumer products.
◎ KANE-M INC. : Selling of component of apparel and consumer products.
◎ MORITO (EUROPE) B.V. : Selling of component of apparel and consumer products.
◎ KANE-M DANANG CO., LTD : Selling and manufacturing of component of apparel and consumer products,
operation of rental factories.
◎ KANE-M (THAILAND) CO., LTD. : Selling of component of electronic and automobile.
◎ MATEX SHANGHAI : Subsidiaries of MATEX INC. (100%). Manufacturing and selling of apparel parts, design andcopying to Chinese and overseas.
○
MATEX BANGKOK CO., LTD. : Subsidiaries of MATEX INC. (100%). Manufacturing and selling of apparel parts,
design and copying to Thailand and overseas.
◎ GSG FASTENERS, LLC. : Manufacturing and selling of component of apparel and consumer products.
◎ GSG FATENERS ASIA LIMITED : Subsidiaries of GSG FASTENERS, LLC. (100%). Selling of component of appareland consumer products.
◎ GSG FATENERS UK LIMITED : Subsidiaries of GSG FASTENERS, LLC. (100%). Selling of component of appareland consumer products◎ GSG FATENERS INDIA LIMITED : Subsidiaries of GSG FASTENERS, LLC. (100%). Selling of component ofapparel and consumer products◎ ACE INDUSTRIAL MACHINERY CO., LTD. : Rental service, selling and cleaning of kitchen appliance◎ THREE RUNNERS CO., LTD. : Selling and manufacturing of sports supporter.
◎ MATEX INC. : Manufacturing and designing apparel component, HP designing and producing and DTP printing.
□Kuraray Fastening Co., Ltd. : Selling and manufacturing of hook and loop fastener.
(Note 1)
IAKK SERVICE CO., LTD. was excluded from non-consolidated subsidiaries in September, 2016.

8

Business Flow Chart

KANE-M, INC.

ACE INDUSTRIAL
MACHINERY CO., LTD

MORITO(EUROP)B.V.
MORITO INDUSTRIAL
CO., (H.K.)LTD.
MORITO (SHENZHEN)

THREE RUNNERS

CO., LTD.

CO., LTD.

KANE-M SHANGHAIOVERSEASCUSTOMERS

CO., LTD.

MORITO
CO., LTD.

DOMESTICCUSTOMERSTAIWAN MORITOKURARAY FASTENING

CO., LTD.

CO., LTD.

KANE-M(THAILAND)
CO., LTD.
KANE-M DANANGMATEX INC

CO., LTD.

1 SUBSIDIARIESGSG FASTENERS LLC.

MATEX SHANGHAI

3 SUBSIDIARIES

93. Management Policy(1) Basic Management Policy
We manage business under the corporate principle of ‘DESIGN YOUR BRIGHT FUTURE WITH OUR VARIOUS PARTS’.
To enhance the sense of unity and centripetal force, we define and infiltrate our values which are existing in Morito’s employers
and employees as implicit knowledge as “MORITO Value”, to all of Morito’s staffs, and we realize new value creation which is
not caught in habit.
(2) Target Indicator
Our targets to be achieved at the FY 2019 under the 7 th mid-term management plan are as below:
Consolidated sales:
50 billion yen
Consolidated operating sales: 2.6 billion yen(3) Medium and Long-Term Management Strategy
We promote expansion and strengthening our group revenue, establish capital policy, strengthening internal control, under the
7th middle of mid-term management plan from FY2016 to FY2019 『Create Morito’s existence value, Realize “New Morito
Group”』.
(4) Issues to be Addressed
We treat following subjects as our business challenges under the process of the 7 th mid-term management plan to enhance ourcorporate values.
1, Expansion and strengthening our group revenue
Strengthening plan and development with domestic and global business partners, and industry-academic collaboration. At thesame time, establish global production, purchase, and stock based on sales strategy. At the beginning, strength domestic logistic tominimize logistic costs. And we actively invest to strength and expand of group revenue, enhance sales tool, capital investment,
new base.
2, Establish capital policy
The company changed “Basic policy on Payment of Dividends and Dividends” as mentioned in 1 (3). We will try to maintainproper share price based on PBR.
3, Strengthening internal control
We and corporate governance including strength business management control and compliance, and fulfill accountability to all of
stakeholders through IR activity. We promote activation of diversity of management to correspond low birthrate and longevity,
population decrease, and promote of female and foreign national employees. Furthermore, we speed up decision making ofmanagement and sales from timely catching of group information by the effective use of SAP.
(5) Other Material Matters
Nil
4. Basic concept concerning the selection of accounting standards
We keep adopting Japan standard financial report for easy comparison with other companies for certain moment. For IFRS, we
will consider to adopt it with various world and economic situation.

10

5. Consolidated Financial Statements(1) Consolidated Balance Sheets
FY 2015(As of November 30, 2015)
Thousands of yen

FY 2016(As of November 30, 2016)
Thousands of yen

AssetsCurrent assets
Cash and deposits

10,010,892

9,442,122

Notes and accounts receivable

10,755,928

10,583,460

Commercial goods and finished goods

3,835,339

3,574,856

Work in process

188,413

168,972

Raw materials and supplies

379,848

290,417

Deferred tax assets

272,235

216,002

Other current assets

762,878

881,175

Allowance for doubtful accounts－38,959－29,950

26,166,569

25,127,055

6,160,984

4,551,503

Accumulated depreciation－3,481,294－2,564,670

Building and structures (net)2,679,689

1,986,832

Machinery and delivery equipment

1,736,143

1,525,055－1,145,856－1,045,873

590,286

479,182

Tools, furniture and fixtures

2,488,395

2,375,325

Accumulated depreciation－2,040,161－1,989,123

448,233

386,201

5,926,237

3,224,579

426,970

355,106－159,761－128,903

207,208

226,202

91,99973,013

10,003,656

6,376,011

Goodwill

3,687,790

3,000,353

Lease assets

339,349

242,152

Other Intangible fixed assets

1,210,517

997,022

Total intangible fixed assets

5,237,657

4,239,528

4,634,984

4,055,364

Long-term loans

106,400

112,400

Deferred tax

60,53840,723Net defined benefit asset

400,076

221,830

Other fixed assets

801,628

737,505

Allowance for doubtful account－80,393－74,988

Total investments and other fixed assets

5,923,234

5,092,834

21,375,394

15,708,375

Total current assets
Fixed assets
Tangible fixed assets
Building and structures

Accumulated depreciation
Machinery and delivery equipment (net)

Tools, furniture and fixtures (net)Land
Lease assets
Accumulated depreciation
Lease assets (net)
Construction-in-process-in-process
Total tangible fixed assets
Intangible fixed assets

Investments and other fixed assets
Investment securities

Total fixed assets

11－18,20545,593,500

40,853,636

Notes and accounts payable

4,502,734

4,262,005

Short-term loans payable

4,960,000

180,000

Current portion of bond－

400,000

Current portion of long-term debt

375,396375,396

Accrued tax payable

616,237

379,220

Reserve for bonuses

164,592

175,722

Reserve for director’s bonuses

72,511

79,232Other current liabilities

1,607,517

1,465,489

Total current liabilities

12,298,989

7,317,066－

1,400,000

Long-term debt

536,477

161,081Deferred tax

1,129,115

1,001,179

758,339351,211

Provision for stock benefits

9,804

17,375

Provision for director’s retirement benefits

54,75830,433

Reserve for retirement allowance

20,64035,059Provision for environmental measures

23,813

18,133Net defined benefit liability

829,319

918,021

Other fixed liabilities

556,239343,212

Total fixed liabilities

3,918,507

4,275,706

16,217,496

11,592,772

Capital3,532,492

3,532,492

Capital surplus

3,498,724

3,498,724

Retained earnings

22,436,316

23,966,197

Treasury stock－956,696－1,230,960

Total shareholders’ equity

28,510,835

29,766,453

1,625,548

1,336,046

Deferred gains or losses on hedges－1,069861

Difference in revaluation of land

－514,664－1,280,438

Foreign currency translation adjustment

1,403,231－463,484

Remeasurements of defined benefit plans

89,739－112,982

2,602,786－519,998

Subscription rights to shares－

14,408

Minority interests－－

Total net assets

31,113,622

29,260,863

Total liabilities and net assets

47,331,118

40,853,636

Deferred assets
Total assets
Liabilities
Current liabilities

Fixed liabilities
Bond

Deferred tax assets for revaluation

Total liabilities
Net Assets
Shareholders' equity

Other comprehensive income
Valuation difference on available-for-sale securities

Total other comprehensive income12(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income
Consolidated statements of income
FY 2015
FY 2016(December 1, 2014 through(December 1, 2015 throughNovember 30, 2015)
November 30, 2016)
Thousands of yen
Thousands of yen
Net sales
43,293,935
40,086,554
Cost of sales
32,174,918
29,285,355
Gross profit

Selling, general and administrative expenses
SalaryBonus
Welfare expense
Retirement benefit
Provision of director’s bonus
Provision of directors’ retirement benefits
Provision for board incentive plan
Postage
Freightage and packing expense
Provision of allowance for doubtful accountCommission paid
Rental expense
Depreciation
Other selling, general and administrative expense

11,119,017

10,801,198

3,126,916

2,987,662

556,773

628,877

723,426

683,552

82,297

89,83359,74772,886

9,600

5,558

20,64016,262

140,170

132,425

1,174,406

1,184,867－8,734

274

763,732

689,491

412,594454,575

372,782

320,659

1,942,595

1,766,384

Total selling, general and administrative expense

9,398,007

9,033,310

Operating Income
Non-operating income
Interest received
Dividends received
Rent on real estate
Foreign exchange gains
Commission received
Equity in earnings of affiliates
Others

1,721,010

1,767,888

27,387

24,831

87,48280,425

76,11876,55948,264

－

3,647

1,271

23,01038,703

96,63532,496

Total non-operating income

362,545

254,287

22,131

16,44891,92686,658

11,112

8,297－

155,748

Others non-operating expense

86,933

107,977

Total non-operating expense

212,104

375,130

1,871,451

1,647,045

337,128

18,619699,121

124,284－

83,495Non-operating expenses
Interest paid
Cash discount on sales
Depreciation expense of assets lentForeign exchange losses

Ordinary Income
Extra ordinary income
Gains on sales of fixed assets
Gains on sales of securities
Gains on liquidation of subsidiaries and affiliates
13

Total Extra Ordinary Income

1,036,249

226,3993,992

11,774

11,704

2,221

21,022－

Loss on liquidation of affiliates

458,658－

Total extra ordinary loss

495,378

13,996

2,412,322

1,859,448

Corporate, inhabitant and business taxes
Adjustments to corporate and other taxes

883,924

798,953

95,995－121,096

Total income taxes

979,920

677,857

1,432,401

1,181,591－－

1,432,401

1,181,591

FY 2015(December 1, 2014 throughNovember 30, 2015)
Thousands of yen
1,432,401

FY 2016(December 1, 2015 throughNovember 30, 2016)
Thousands of yen
1,181,591－186,548－289,501

784

1,930

Land Revaluation

67,545

19,269Foreign currency translation adjustment

857,488－1,866,716

Adjustments to retirement benefit－18,853－202,722

Total other comprehensive income

720,416－2,337,740

2,152,818－1,156,149

2,152,818－1,156,149－－

Extra ordinary expenses
Losses on sales of fixed assets
Losses on retirement of fixed assets
Losses on revaluation of investments in securities

Net income before taxes and other adjustment

Income before minority interest
Profit (loss) attributable to non-controlling interests
Profit (loss) attributable to owners of parent
Consolidated statement of comprehensive income

Income before income taxes
Other comprehensive income
Unrealized gain(loss) on available-for-sale securities
Deferred gains or losses on hedges

Comprehensive income(Breakdown)Comprehensive income attribute to the parent
Comprehensive income attribute to the minority
shareholders

14

(3) Consolidated Statements of Changes in Shareholders’ Equity
FY 2015 (December 1, 2014 through November 30, 2015)(Thousands of yen)
Shareholders’ Equity
Capital stock

Balance at the beginningof current period

3,532,492

Capital surplus

3,395,115

Retainedearnings

Total
Shareholders’equity－680,993

27,610,816

21,364,202

Cumulative effects ofchanges in accounting
policies
Restated balance

Treasury stock

41,752
3,5532,492

3,395,115

21,405,955

41,752－680,993

27,652,569

Changes of items during
the period
Dividends from surplus－397,659－397,659

Profit(loss)
attributable to ownersof parent

1,432,401

1,432,401

Purchase of treasury
stock
Disposal of treasurystock

103,608－340,109－340,109

64,405

168,014

Increase (decrease) infrom change of scopeof consolidation
Reversal of revaluation
reserve for land

－4,381－4,381

Net changes of items
other
than
shareholders’ equity
Total changes of items
during the period－

103,608

1,030,361－275,703

858,266

Balance at the end ofcurrent period

3,532,492

3,498,724

22,436,316－956,696

28,510,835

Accumulated other comprehensive income

Balance at the beginningof current period

Valuationdifference on
available-for-s
ale securities

Deferred
gains orlosses onhedgesDifference inrevaluation ofland

Foreigncurrencytranslation
adjustment

Remeasurements ofdefinedbenefit
plans

Total
accumulated
othercomprehensiv
e income

1,812,097－1,853－586,591

545,742

108,593

1,877,988

Stockoption－Cumulative effects ofchanges in accounting
policies
Restated balance

Total net asset

29,488,805
41,752

1,812,097－1,853－586,591

545,742

108,593

1,877,988－

29,530,557

Changes of items during
the period
Dividends from surplus－397,659

Profit(loss)
attributable to ownersof parent

1,432,401

Purchase of treasurystock－340,109

Disposal of treasurystock

168,014

Increase (decrease) in－15

from change of scopeof consolidation
Reversal of revaluation
reserve for land

－4,381

Net changes of items
other
than
shareholders’ equity－186,548

784

71,926

857,488－18,853

724,797－724,797

Total changes of items
during the period－186,548

784

71,926

857,488－18,853

724,797－

1,583,064

Balance at the end ofcurrent period

1,625,548－1,069－514,664

1,403,231

89,7392,602,786－

31,113,622

FY 2016 (December 1, 2015 through November 30, 2016)(Thousands of yen)
Shareholders’ Equity
Capital stock

Balance at the beginningof current period

Capital surplus

Retainedearnings

Treasury stock

Total
Shareholders’equity3,532,492

3,498,724

22,436,316－956,696

28,510,835

3,5532,492

3,498,724

22,436,316－956,696

28,510,835

Cumulative effects ofchanges in accounting
policies
Restated balance
Changes of items during
the period
Dividends from surplus－452,184－452,184

Profit(loss)
attributable to ownersof parent

1,181,591

1,181,591

Purchase of treasurystock－276,965－276,965

Disposal of treasury
stock

2,702

2,702

Increase (decrease) infrom change of scopeof consolidation

15,431

15,431

Reversal of revaluation
reserve for land

785,043785,043

Net changes of items
other
than
shareholders’ equity
Total changes of items
during the period－－

1,529,880－274,263

1,255,617

Balance at the end ofcurrent period

3,532,492

3,498,724

23,966,197－1,230,960

29,766,453

Accumulated other comprehensive income

Balance at the beginningof current period

Valuationdifference on
available-for-s
ale securities

Deferred
gains orlosses onhedgesDifference inrevaluation ofland

Foreigncurrencytranslation
adjustment

Remeasurements ofdefinedbenefit
plans

Total
accumulated
othercomprehensiv
e income

1,625,548－1,069－514,664

1,403,231

89,7392,602,786－

31,113,622

1,,625,548－1,069－514,664

1,403,231

89,7392,602,786－

31,113,622

Stock
optionTotal net asset

Cumulative effects ofchanges in accounting
policies
Restated balance16Changes of items during
the period
Dividends from surplus－452,184

Profit(loss)
attributable to ownersof parent

1,181,591

Purchase of treasurystock－276,965

Disposal of treasury
stock

2,702

Increase (decrease) infrom change of scopeof consolidation

15,431

Reversal of revaluation
reserve for land

785,043

Net changes of items
other
than
shareholders’ equity－289,501

1,930－765,773－1,866,716－202,722－3,122,784

14,408－3,108,376

Total changes of items
during the period－289,501

1,930－765,773－1,866,716－202,722－3,122,784

14,408－1,852,758

Balance at the end ofcurrent period

1,336,046

861－1,280,438－463,484－112,982－519,998

14,40829,260,863(4) Consolidated of Cash Flows

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
Gains from sale of fixed assets
Gains from sale of investment securities
Loss on retirement of noncurrent assets
Profit from revaluation of investment securities
Reversal of foreign currency translation adjustment for
reducing the capital of controlled foreign subsidiaries
Change in notes and accounts
Change in inventory
Change in account payable
Others17

FY 2015(December 1, 2014 throughNovember 30, 2015)
Thousands of yen

FY 2016(December 1, 2015 throughNovember 30, 2016)
Thousands of yen

2,412,322

1,859,448

726,221617,115

237,208

212,195

25,083

21,882－161,918

178,246

76,75688,701－74,850－24,325

5,178

7.570

20,64014,419－47,053－24,366－114,869－105,256

22,131

16,448－23,010－38,703－333,135－6,845－699,121－124,284

11,704

2,221

21,022－458,658－83,495－108,627－353,153

333,308－13,196－276,601

32,34422,60345,067

Subtotal

2,533,654

2,322,036

119,604

103,852

Proceed from interest and dividends income
Payment of interest
Payment of corporate tax－22,251－17,781－596,218－1,016,211

Net cash(used in)provided by operating activities

2,034,248

1,391,896－104,040－224,457－

242,899－27,604－27,871865,498

209,288－261,500－－

87,723－549,070－386,153

1,049,020

2,944,419－11,459－32,590

45,02652,469－－105,750－28,755－31,090

977,1142,728,887－－4,810,300－168,635－168,756－375,396－375,396－

1,978,993－－200,000

168,0142,702－340,109－276,965－397,659－452,184－1,113,784－4,301,906

Effects of exchange rate on cash and cash equivalents

113,651－387,580

Net increase (decrease) in cash and cash equivalents

2,011,229－568,702

Cash and cash equivalents at beginning of year
Increase in cash and cash equivalents from newly
consolidated subsidiary
Decrease in cash and cash equivalents from newly
consolidated subsidiary
Cash and cash equivalents at fiscal year-end

6,847,667

8,858,896－

63,022－－30,5088,858,896

8,322,707

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 stocks of affiliates
Proceeds from liquidation of affiliates
Purchase of tangible fixed assets
Proceeds from sale for tangible fixed assets
Purchase of intangible assets
Proceeds from loans receivable
Payments of loans receivable
OthersNet cash provided by (used in) investing activities
Cash flows from financing activities
Changes in short-term debt
Repayments of lease obligations
Repayment of long-term loans
Proceeds from issuance of bonds
Redemption of bonds
Proceeds from sale from treasury stock
Payments to acquire treasury stock
Payments of dividends
Net cash used in financing activities18

(5) Notes regarding Consolidated Financial Statements[Notes on assumption of going concern]
Not applicable.
[Changes in accounting principal]

Changes in Accounting Policies
Standards such as the Accounting Standard for Business Combinations (ASBJ Statement No.21 of September 13, 2013), the
Accounting Standard for Consolidated Financial Statements (ASBJ Statement No. 22 of September 13, 2013), and the
Accounting Standard for Business Divestitures (ASBJ Statement No.7 of September 13, 2013) have been applied from thefirst quarter of the fiscal year under review. The purpose for applying these standards was to change the method forrecording the difference from changes in the Company’s equity in its subsidiaries that remain controlled by the Company ascapital surplus and as an expense in the consolidated fiscal year in which expenses related to acquisition are incurred. For
business combinations implemented after the beginning of this fiscal year under review, the method will be changed to one
that reflects the revision of distributed amounts of acquisition costs by determining provisional accounting treatment in the
yearly consolidated financial statements for the yearly consolidated accounting period to which the date of businesscombination belongs. In addition, the Company has changed the presentation of net profit and other items and thepresentation of minority interests to non-controlling interests. To reflect this change, the consolidated financial statements
for the fiscal year ended November 30, 2015 have been replaced.
The application of the Accounting Standard for Business Combinations and the other standards follows the transitional
treatment specified in Article 58-2 (4) of the Accounting Standard for Business Combinations, Article 44-5 (4) of the
Accounting Standard for Consolidated Financial Statement, and Article 57-4 (4) of the Accounting Standard for Business
Divestiture. The application of these standards has been under way since the beginning of the first quarter of the fiscal year
under review, and will continue to be applied going forward.
Under these revised accounting standard, company changed some tiles related consolidate cash flow.
Cash flow for related expenses of acquisition or disposal of consolidated subsidiary, expenses which happened byacquisition or disposal of non-consolidated subsidiary are listed in “cash flows from operating activities”.
This change never effect to operating profit, ordinary profit income before income taxes and minority interests, and pershare information.
(Practical Solution on a Change in the Depreciation Method)
Following the revision to the Corporation Tax Act, the Company adopted the “Practical Solution on a Change inDepreciation Method Due to Tax Reform 2016” (ASBJ PITF No. 32, June 17, 2016) effective from the third quarter of thisconsolidated accounting term. It also changed the depreciation method for facilities attached to buildings and structuresacquired on or after April 1, 2016, making the switch from the declining balance method to the straight line method.
The effect of the change on the Company’s operating profit, ordinary profit, and income before income taxes and minority
interests for this consolidated fiscal year is minimal.

[Additional Information](The transaction for employees through trust)(1) The overview of the transaction
We have introduced “Stock Granting Trust(J-Esop)” to motivate employees for share price and revenue.
This is the system that employee get Morito’s share based on certain requirement which determined by our stock benefit
regulations.
It imparts points in accordance with the individual contributions, to benefit the stock corresponding to the granted point when
acquiring the entitlement by certain conditions. For shares to be benefits to employees, including to get future than the amountwhich had been previously trust settings, and then shall be managed separately as trust property.
With the introduction of this system, in addition to interest in the motivation and stock of employees’ increases, it is expected that
contribute to secure excellent human resources.
(2) Treasury stock in the trust
The treasury shares in the trust, booked value in the trust, have been recorded as treasury shares in net assets.
The number of shares and booked value are 153,076 thousand yen, 392shares in FY2015, and 152,216 thousand yen, 389shares in
FY2016.

19

(The Transaction for the Board Incentive Plan Trust)
The Board Incentive Plan Trust was approved by the general shareholders meeting held on February 26, 2015. The main
objective of this scheme is to increase the board members’ motivation to make contributions to improve business performance andincrease enterprise value.
Trust transaction is accounted based on “Practical handling concerning the delivering of company outstanding shares to
employee through the trust” (ASBJ PITF No.30 of March 26, 2015).
(1) Summary of the Transaction
This system is a performance-based stock compensation which delivers treasury stock to directors by level of achievement
for sales and operating profit of each fiscal year. However, board member may receive the grant of the company shares at
the time of retirement.
(2) Remaining treasury stock in the trust
Remaining treasury stock in the trust is recorded in net assets as treasury stock by book value of the trust.
The book value of the treasury stock at the end of the FY2015 is ¥168,000 thousand, 175 thousand shares.
The number of the treasury stock at the end of the current fiscal year is ¥166,156 thousand, 173 thousand shares.

20

[Segment Information]
1. Fiscal Year 2015(December 1, 2014 through November 30, 2015)
The information on net sales, income or loss, assets and other items by reportable segment

Japan

Reportable Segment
Asia
EU and US

Total(Thousands of yen)
Adjustment Consolidated(Note 1,3)
Statement
Amount(Note 2)Japan
Asia EU and US
Total
Net Sales
Sales to external customers
28,397,032
8,138,317
6,758,585
43,293,935－
43,293,935
Inter segment sales and transfer
2,494,776
2,225,975
117,525
4,838,277 －4,838,277－
Total
30,891,809
10,364,293
6,876,110
48,132,213 －4,838,277
43,293,935
Segment income
1,176,332
468,718
468,136
2,113,188－392,178
1,721,010
Segment asset
31,399,836
7,011,055
7,743,139
46,154,030
1,177,087
47,331,118
Other
Depreciation
375,775
181,462
168,983
726,221,－726,221
Increase in tangible fixed
536,707
99,86998,179734,755－
734,755
assets(Notes)1. Adjustment of －392,178 thousand yen includes －326,820 thousand yen corporate expenses that are not distributed toeach reportable segment and other －65,357 thousand yen.
2. The amounts for income or losses in the reportable segments were subsequently adjusted with the amount of operating
income on the consolidated profit and loss statement.
3. The adjustment for segment asset includes elimination of intersegment transaction －9,867,282 thousand yen andcorporate asset 11,044,370 thousand yen that have not been distributed to reportable segment. Corporate assets consists
mainly of assets not belonging to specific segment (cash and cash equivalent and investments in securities) and assets
related to administrative operations.
Fiscal Year 2016(December 1, 2015 through November 30, 2016)
The information on net sales, income or loss, assets and other items by reportable segment

Japan

Reportable Segment
Asia
EU and US

Total(Thousands of yen)
Adjustment Consolidated(Note 1,3)
Statement
Amount(Note 2)Japan
Asia EU and US
Total
Net Sales
Sales to external customers
28,089,934
6,522,586
5,474,033
40,086,554－
40,086,554
Inter segment sales and transfer
2,396,899
2,376,064
49,156
4,822,120 －4,822,120－
Total
30,486,833
8,898,651
5,523,189
44,908,675 －4,822,120
40,086,554
Segment income
1,310,161
489,481
250,774
2,050,416－282,528
1,767,888
Segment asset
28,056,904
6,149,224
6,534,711
40,740,840
112,796
40,853,636
Other
Depreciation
336,824
149,928
130,362
617,115－
617,115
Increase in tangible fixed
293,901
94,66968,917457,488
－457,488
assets(Notes)1. Adjustment of －282,528 thousand yen includes －343,105 thousand yen corporate expenses that are not distributed toeach reportable segment and other －60,576 thousand yen.
2. The amounts for income or losses in the reportable segments were subsequently adjusted with the amount of operating
income on the consolidated profit and loss statement.
3. The adjustment for segment asset includes elimination of intersegment transaction －9,855,011 thousand yen andcorporate asset 9,967,807 thousand yen that have not been distributed to reportable segment. Corporate assets consists
mainly of assets not belonging to specific segment (cash and cash equivalent and investments in securities) and assets
related to administrative operations.

21[Per share data]

Item
Net assets per share
Net income per share
Diluted net income per share

FY2015(December 1, 2014 throughNovember 30, 2015)
1,081.23 yen
49.48 yen－

FY2016(December 1, 2015 throughNovember 30, 2016)
1,027.96 yen
41.48 yen－

(Notes)1. No statement is made of the amount of current net profit per share after adjusting for residual stocks because there were noresidual stocks that had a dilution effect.
2. The amount of treasury stock to calculate the net assets per share and the weighted-average number of common shares tocalculate net income per share and net income per share after adjustment for dilutive securities included the company’s shares
owned by Trust & Custody Services Bank, Ltd (for J-Esop, FY2016 389 thousand shares, FY2015 392thousand shares), andThe Master Trust Bank Of Japan, LTD ( for BIP, FY2016 173thousand shares, FY2015 175thousand shares).
(Notes)The basis for calculating
1. Net assets per share
FY2015(December 1, 2014 throughNovember 30, 2015)
31,113,622

FY2016(December 1, 2015 throughNovember 30, 2016)
29,260,863

Deducted amount from total net asset－

14,408Stock Option－－14,408

Non-controling interests－－

31,113,622

29,246,455

Number of issued stock (Thousand shares)

30,80030,800

Number of treasury stock (Thousand shares)

2,023

2,349

Number of common stock for calculating the net
assets per share

28,77628,451Item
The total net assets in the consolidated balance sheet(Thousand of yen)

The net assets associated with common stock(Thousand of yen )(Note)
The amount of treasury stock of common stock to calculate the net asset per share is included the stock of Trust & Custody
Services Bank, Ltd. and Master Trust Bank Of Japan, LTD owned.
2.

Net income per share and Diluted net income per share
Item

FY2015(December 1, 2014 throughNovember 30, 2015)

FY2016(December 1, 2015 throughNovember 30, 2016)

1,432,401

1,181,591－－

1,432,401

1,181,591

28,95028,485－－

Net income per share

Profit (loss) attributable to owners of parent(Thousand yen)
Share unallocated to common stock (Thousand
shares)Profit (loss) attributable to owners of parent
relating to common stock
Shares on the average during the fiscal year
(Thousand share)
Details of shares not included in calculation of
fully diluted net income per share due tonon-dilutive effect22

(Note)The weighted-average number of common shares to calculate the net income per share is included the stock of Trust &Custody Services Bank, Ltd. and Master Trust Bank Of Japan, LTD owned.
[Significant subsequent events]

As the followings, real estate selling was resolved in December 20, 2016.
1, schedule and transferee① The date of sales contract : December 21, 2016
② Transfer day : March 15, 2017 (plan)③ Transferee : Not-Open (There is no capital ties, business relations between transferee and us)2, Details of real estate
Asset Name and address
PrirceBook value
ProfitDetails
Yokobori Car Park
4-8-9,
MinamiChuo-ku, Osaka

Hommachi,

3,900
million yen

605 million
yen

3,290
million yen

car park

5. Others(1)Changes in Senior Managements(i) Changes in President
Not applicable.
(ii)Changes in other officers (Limited scheduled on February 23 rd, 2017)
1. Newly appointed director candidate
Director Motoo Matsuzawa
Unaffiliated Director Candidate which is set by Ordinance for Enforcement of the Companies Act 2.3.7.
2.

Retiring auditor
Not Applicable

3.

Newly appointed auditor
Not applicable

4.

Retiring auditor
Not applicable23