(Unaudited)

October 11, 2019
MORITO CO., LTD.
Financial Statement (Unaudited)
For the Third 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
October 15, 2019
Yes
No
(Amounts rounded down)
1. Consolidated Financial Results for the Third Quarter of the Fiscal Year 2019(December 1, 2018 throughAugust 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
3Q of FY 201934,177
7.1
1,088
1,100
991
25.9
△4.5
△6.4
3Q of FY 2018
31,900
6.0
1,140
10.7
1,175
12.2
787
△76.7
(Note) Comprehensive income : △119 million yen (－％)(3Q of FY2019) 319 million yen △93.0％)(3Q 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:

Net income
Fully diluted net
Per share
Income per share
Yen
Yen
3Q of FY 201936.14－
3Q of FY 2018
28.63
28.56
(Note) Account processing pertaining to the business combination had been settled provisionally in the previous
Consolidated Fiscal Year, and thus provisional account processing settled was reflected on the numbers in eachaccount of the Third Quarter of FY2018.
(2) Consolidated Financial Position
Total assets
Net assets
Equity ratio
Millions of yen
Millions of yen%
3Q of FY 201945,94032,016
69.6
FY 2018
48,011
32,95968.5(Reference) Equity capital 31,958 million yen (3Q 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. Dividends
Dividends per share
SecondThird
Fiscalquarter-end
quarter-end
year-end
Yen
Yen
Yen
FY 2018
12.50
12.50
FY 2019
13.00
FY 2019 (Forecast)
13.00(Note) Revisions of dividend forecast to the latest announcement: NoneFirst
quarter-end
Yen

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 August 31, 2019)30,800,000 shares(as of November 30, 2018)(ii) Number of shares of treasury stock at end of period:
3,420,060 shares(as of August 31, 2019)
3,290,700 shares(as of November 30, 2018)(iii) Average outstanding number of shares during the period:
27,427,884 shares(the 3Q of FY2019)27,504,233 shares(the 3Q 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) Notes regarding Quarterly Consolidated Financial Statements .............................................................10[Notes on assumption of going concern] .............................................................................................................10[Notes on a Significant Change in Shareholders’ Equity] .......................................................................................10[Additional Information] ............................................................................................................................................10[Segment Information] .............................................................................................................................................10[Business Combinations] ......................................................................................................................................... 11[Transactions under common control] ..................................................................................................................... 113

(Unaudited)

1. Qualitative Information for the Period under Review(1) Overview of Business Performance
In the Third quarter (from December 1, 2018 through August 31, 2019) of the fiscal year ended November
30th, 2019, despite the fact that the Japanese economy has been on a gradual recovery trend due to thecontinued improvement in income environment and steadily increased consumer spending, uncertainties havebeen growing due to unclear global economy resulted from persistent US and China trade conflicts or the
Britain’s withdrawal from EU (Brexit) and so on.
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, in the current cumulative third quarterly performance, we reached 34,177 million yen (increasedby 7.1% from a year earlier) in Net sales, 1,088 million yen (decreased by 4.5% from a year earlier) in
Operating income, 1,100 million yen (decreased by 6.4% from a year earlier) in Ordinary income, and 991
million yen (increased by 25.9% from a year earlier) in quarterly net income.
Furthermore, account processing had been provisionally conducted for the business combination with
MANEUVERLINE INC. executed on April 2, 2018 in the previous consolidated third quarter accounting period.
However, since the account processing has been settled in the previous consolidated accounting year-end, forthe comparisons or analysis of numbers with those in the same quarter of the previous consolidated period,
numbers settled after reviewing on the provisional account processing are posted.
The exchange rate used for the oversea subsidiaries’ consolidated financial statement of the current quarterend as below:
1Q

2Q

3Q

USD

112.91 (112.98)

110.23 (108.23)

109.90( 109.10）

EUR

128.82 (133.01)

125.16 (133.15)

123.50 (130.03）

RMB

16.32 (17.08)

16.33 (17.04)

16.07 (17.13）

HKD

14.42 (14.47)

14.05 (13.83)

14.02 (13.90）

TWD

3.66 (3.75)

3.58 (3.70)

3.53 (3.67)

VND

0.0048 (0.0050)

0.0047 (0.0048)

0.0047 (0.0048)

THB

3.44 (3.43)

3.49 (3.43)

3.48 (3.42)

MXN

5.70 (-)

5.74 (-)

5.75 (-)(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 accessories for uniforms or working wear increased.
In the consumer product division, sales of products for one dollar shops, or automobile interior components
increased.
4

(Unaudited)

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 importingand selling marine leisure and snowboarding, etc. increased in consolidated cumulative third quarter period.
As a result, net sales reached 24,381 million yen (increased by 7.6% from a year earlier).
[Asia]
As for the apparel division, sales of the accessories to Japanese apparel manufacturers in Shanghai and toEuropean apparel manufacturers in Hong Kong decreased.
In the consumer product division, sales of the interior automobile components to Japanese auto
manufacturers in Shanghai and Thailand increased.
As a result, net sales reached 5,389 million yen (increased by 15.0% from a year earlier).
[Europe and the U.S.]
As for the apparel division, sales of accessories to apparel manufacturers in the US decreased.
In the consumer product division, sales of interior automobile components to Japanese auto manufacturers
in Europe increased.
As a result, net sales reached 445 million yen (decreased by 3.2% from a year earlier).
(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 August 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

10,123,347
10,653,508
5,574,164
465,560△35,085
26,781,495

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

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

4,074,789
5,790,483
9,865,272

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

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

2,894,385
1,174,600
4,068,986

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

3,947,045
223,110
1,122,791△75,287
5,217,659
19,151,917
6,652
45,940,065

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

4,838,663
50,000400,000
506,666
413,097
290,556
64,053
1,482,311
8,045,348

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
2,807,090
33,59555,02450,98019,322865,351
1,646,608
5,877,973
13,923,322

Deferred assets
Total assets
Liabilities
Current liabilities

6

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

FY 2019(As of August 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
3,503,243
25,660,860△2,222,696
30,473,898

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

876,603△226
451,115
206,970△49,579
1,484,884
57,960－32,016,743
45,940,065

(Unaudited)(2) Quarterly Consolidated Statements of Income and Consolidated Statements of Comprehensive
IncomeQuarterly Consolidated Statements of Income
The Third Quarter accounting period

FY 2018
FY 2019(December 1, 2017 through (December 1, 2018 throughAugust 31, 2018)
August 31, 2019)
Thousands of yen
Thousands of yen
Net sales
Cost of sales
Gross profit

31,900,857
23,411,326
8,489,531
7,349,298
1,140,233

34,177,031
25,021,525
9,155,505
8,066,893
1,088,612

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

19,60455,09633,31942,36649,282
199,669

20,82953,23250,50750,89846,684
222,152

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

3,708
62,354
24,37373,513
163,949
1,175,952

6,912
63,42244,087
96,213
210,635
1,100,129

16,387
9,405－
25,793

322,484
85,339367
408,191

273
9,101
－
39,416
48,791
1,152,954
454,435△88,812
365,623
787,331－
787,331

67
4,037
415
5,307
9,827
1,498,493
570,954△63,573507,380
991,112－991,112

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

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
Loss 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
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 Third 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 throughAugust 31, 2018)
Thousands of yen

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

787,331

991,112△233,120
2,739△242,035
4,534△7△467,888
319,442△533,091△677△595,798
18,971△0△1,110,597△119,484

319,442－△119,484－

(Unaudited)(3) 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 assets, and deferred tax
liabilities are shown in the category of Fixed Liabilities.
[Segment Information]
I. The Third Quarter of FY 2018 (December 1, 2017 through August 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

22,662,157

4,688,133

4,550,566

31,900,857－

31,900,857

1,895,887

2,474,549

40,6204,411,057△4,411,057－

24,558,044
915,809

7,162,682
318,745

4,591,187
171,878

36,311,915
1,406,43△4,411,057△266,199

31,900,857
1,140,233(Notes)1. Adjustment of △266,199 thousand yen includes corporates expenses of △211,445 thousand yen that are notdistributed to each reportable segment and other△54,753 thousand yen.
2. The income in reportable segments is subsequently adjusted with the amount of operating incomein the quarterly 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 Third 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)”10

(Unaudited)

II. The Third Quarter of FY2019 (December 1, 2018 through August 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

24,381,730

5,389,914

4,405,385

34,177,031－

34,177,031

1,825,944

1,914,478

13,3403,753,763△3,753,763－

26,207,675
1,118,025

7,304,393
385,196

4,418,726
147,667

37,930,795
1,650,889△3,753,763△562,277

34,177,031
1,088,612(Notes)1. Adjustment of △562,277 thousand yen includes corporate expenses of △434,647 that are not distributed toeach reportable segment and other△127,629 thousand yen.
2. The amount of segment income is subsequently adjusted with operating profits on the consolidated quarterly
profit and loss statements.

2. Changes in Reportable Segment t(Changes of calculation methods for profits or losses in Reportable segment)
Along with our transition to a Holding Company system since the Consolidated Cumulative Third Quarter, wehave changed the allocation basis of entity costs. Mainly, we have recorded group management costs incurredin Morito Co., Ltd, a holding company, in the account of entity costs instead of allocating it to each reportablesegment.
With that change, comparing with the conventional method, segment profits of “Japan” increased by 182,203
thousand yen and adjustment of the segment profits decreased by 182,203 thousand yen.

[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 third 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 third quarter, and theamount of goodwill has been changed from 861,478 thousand yen to 661,478 thousand yen.
As a result, the amount of Goodwill amortization decreased by 5,000 thousand yen in the previous
Consolidate Cumulative Third Quarter of the quarterly consolidated profit and loss statements, and operating
profit, ordinary profit and quarterly net income before tax increased by 5,000 thousand yen respectively.

[Transactions under common control]
Transition to the Holding Company through corporate division
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 which Morito is a splitting company who is going to transfer itself to a holding company, and ourbusinesses have been transferred to the Succession Company as of June 1, 2019. Along with thistransition, Morito has transferred itself to a Holding Company 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.

11

(Unaudited)(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;(i) Strengthening 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.
(ii) Making decisions rapidly by clarifying authorities and responsibilities.
Separating organizations from group management to business promotion, and clarifying responsibilities andauthorities of both organizations for their prompt decision making, and promoting businesses in a flexible
manner to enhance our competitiveness.
(iii) 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 AccountingStandards for Business Combination and Corporate division”, the accounts are recoded and processed astransactions under the control of common rules and regulations.

12