S.T. CORPORATIONANNUAL REPORT

R

2009

ng the Air
i
h
s
e
r
f
e

“Refreshing the Air”
Since its founding in 1946, S.T. Corporation has achieved growthby creating new markets in two business domains: businesses
associated with the household environment such as deodorizers
and air fresheners, and businesses associated with mothproofing
agents and dehumidifiers.
Looking ahead, we will continue to accept the challenge as acompany that creates new value of providing “comfort andexcitement” in our customers’ lifestyles through innovative andcreative products and services.

contenTs
FINANCIAL HIGHLIGHTS

1

PRESIDENT’S MESSAGE

2

BASIC STRATEGY

6AT A GLANCE

10CSR (Corporate Social Responsibility)

14

CORPORATE GOVERNANCE

15

MANAGEMENT'S DISCUSSION AND ANALYSIS

16

FINANCIAL SECTION

18

CORPORATE INFORMATION38

INVESTOR INFORMATION

39

financial highlights

Millions of yen except per share data and financial ratios
2005
2006
2007
2008

Years ended March 31

Net sales

2009

Thousands of
U.S. dollars(Note 3)
2009

¥44,109¥46,134¥45,227¥47,006¥44,879$456,882

Operating income

3,748

3,133

3,342

3,219

2,493

25,378Net income

1,823

988

1,747

1,295

1,076

10,957

Capital expenditures

806

826

696

649

716

7,292

R&D expenses

423

480

489

489

499

5,080

Depreciation and amortization

845

873

837

936

858

8,730

Net income per share (¥)¥ 63.43¥ 34.35¥ 65.10¥ 54.08¥ 49.32

Net assets per share (¥)

957.45966.43935.19853.90853.81

8.69

Cash dividends per share (¥)

22.00

22.00

22.00

22.00

22.00

0.22

ROE (%, Note 1)

6.74

3.57

6.72

6.06

5.78

ROA (%, Note 2)

4.98

2.64

4.87

4.16

3.84

$

0.50

Notes: 1. ROE = Net income / Average total shareholders’ equity
2. ROA = Net income / Average total assets
3. Figures have been translated into U.S. dollars at ¥98.23 = $1.00, the approximate exchange rate prevailing on the Tokyo Foreign Exchange Market on March 31, 2009.

Total Assets
Total Net Assets*

Net Sales

Operating Income

Net Income(millions of yen)(millions of yen)(millions of yen)(millions of yen)

1,823

36,95944,10946,134 45,227 47,006

44,879

3,748
3,342
3,133

37,905

1,747

33,8303,219

28,39327,449 27,861

1,295

2,493

27,617

24,649
1,076

988

05

06

07

08

09

05

06

07

08

09

05

06

19,144 19,029

07

08

09

05

06

Total assets

07

08

09

Total net assets**The data previously presented as “Total shareholders’ equity” are shown as “Total net assets” based on a new accounting standard from the fiscal year ended March 31, 2007.

S.T. CORPORATION

1President’s Message

We aim to achieve sustainable, profitable
growth by means of management basedon powerful and agile leadership.

2

S.T. CORPORATION

Accelerate management through top-down leadership to take advantage
of a once-in-a-century opportunity
It is my pleasure to introduce S.T. Corporation’s Annual Report.

managing director and supports me by taking responsibility for

My name is Takashi Suzuki, and in April 2009 I returned to theGroup business strategies, overseas business strategies and impor-position of president at this company. Thank you very much fortant managerial matters.

your continued support.

This is the third time that I have taken on the role of company

I would like to take this opportunity to explain why I havepresident. The first time was in 1992 when, as president of a U.S.

returned as president, and report on our recent business situation

subsidiary which was experiencing a business slump, I liquidated

and future direction.

the company through asset sales. Although I was the only Japanese person in a company with one hundred Americans, I was● Background to my becoming president again

able to withdraw from the business successfully. The second time

Last year brought an unforeseeable economic crisis and business

was in 1998 when I became the president of S.T. Corporation.

slowdown of a scale witnessed only once in a century. As a result,

I implemented various management reforms under the banner ofS.T. Corporation fell into an unprecedented crisis with a decline increating a compact though muscular company. Now, having

sales and a sharp drop in profits in the Air Care (deodorizers andtaken up the position of president for the third time, I intend to

air fresheners) category, the segment on which we are focusing

utilize my past experience in resolving management crises in

the most.

Japan and the United States to make S.T. Corporation into a

I think there would have been no problem with following paststrong and agile company through top-down management. In

policies if circumstances had remained as usual. However, now

short, I would like to transform today’s economic crisis into athat it is clear the business environment will continue to be very

once-in-a-century opportunity.

challenging, I think the Company’s situation will deteriorate further After returning as president and following the decisions taken since

if we do nothing.

my appointment was approved at the March 2, 2009 meeting of the S.T. Corporation adopted a committee-based corporate gover-

Board of Directors, my first initiative as returning president has been tonance system in June 2004, and became a company in which

visit the Company’s domestic bases nationwide and hold Q&A meetingsoutside directors exercise a dominant influence because six of thewith workplace personnel. I believe that bottom-up input from employ-nine members of the Board of Directors are outside directors. I

ees in our workplaces is indispensable for top-down management.

discussed the possibility of my returning as president with the pre-Moreover, when the president visits operating bases and engages all

vious president, Mr. Kanzo Kobayashi, and at a meeting of thepersonnel in discussions, this brings top management and frontline

Board of Directors held on March 2, 2009 this course of action was

employees closer. We will work to speed up management processes by

unanimously approved. Currently, Mr. Kobayashi is a seniorfusing of top-down leadership and bottom-up management.

Achievements as president up to now

Achievements as president during period 1998–2007(millions of yen)

1992-1994 As president of U.S. subsidiaryFirstappointment

Appointed as president of U.S. subsidiary experiencing abusiness slump.
Liquidated the company through asset sales and withdrew
from the market successfully.

45,082 44,109 46,134 45,227
37,89635,44144,8791,747

1,431 1,451
1,295
1,076

988

Appointed as president of S.T. Corporation amid sluggish
business results.
Calling for a “compact though muscular company,” anda “selection and focus” policy, implemented various
management reforms: significantly reduced personnel,
integrated 3 domestic plants and 5 domestic bases into 3
combined operating bases, and reduced the number of
product classes.

1,823

38,066

26,5501998-2007 As president of S.T. Corporation

Secondappointment

36,92147,006

750
509
247

275

99

00

Net sales01

Net income

02

03

04

05

06

07

08

09

Fiscal years (ended March 31)

The fiscal year-end up to 1999 was June. The fiscal year-end from 2000 was March.
The fiscal period ended March 2000 was a 9-month accounting period.

S.T. CORPORATION

3Becoming a strong and agile company that can lead the world in Air Care
● Looking back on the fiscal year ended March 31, 2009

same time, the “focus” aspect of the policy called for us to create a

In the fiscal year ended March 31, 2009, unfortunately, consolidated“leading global niche company.” We have been nurturing andnet sales declined 4.5% year on year and net income decreased

growing our market-dominating brand by developing unparalleled

16.9% from the previous year. The first main contributing factor

products for such niche markets as mothproofing agents, deodor-

was steep rises in raw material prices. The second was the sales

ants, dehumidifiers and air fresheners. By continuing to develop

slump resulting from the downturn in consumption and the impact

such unique products, we can create new markets. To this end, weof the weather. Lower sales of disposable warmers due to the warm

will first strengthen already-strong products, focusing on thewinter in particular had a negative effect. The third factor was thatenhancement of existing core brands centered on the mainstay Air

our overseas sales decreased, as in other companies. However, amid

Care category.

such circumstances we were able to increase our sales in the U.S.

In more detail, the basic overall strategy of S.T. Corporation consists

market and in new markets for our company, such as Russia andof three strategies: (1) selection and focus, (2) development of unpar-

Latin America. Sales of new products were also favorable. In the Air

alleled products, and (3) agile management. To realize these strate-

Care (deodorizers and air fresheners) category, the segment on

gies, the first point is “workplace reform.” We are endeavoring towhich we are focusing the most, Shoshu-Plug Autospray, which

speed up management processes by fusing of top-down leadershipdeodorizes automatically with batteries, became a hit product.

and bottom-up management. The second point is “design reform.”
Design is the largest untapped segment for our company, and we will

● Future policies

focus our efforts on it. The third point is “changing the rules about

There will be no change to our existing management policy of

how we compete.” We will not compete on price but on the basis of“selection and focus.” On the contrary, we will pursue it with even

S.T. Corporation’s strength—the development of unparalleled prod-

greater vigor. The “selection” aspect of the policy called for theucts. The fourth point is to be a “humane company.” Sponsored bycreation of a “compact though muscular company,” and we haveus as part of our CSR activities, the musical Anne of Green Gables issignificantly reduced personnel, integrated our three domestic

performed every year in major cities nationwide, and we have invited

plants and five domestic bases into three combined operating bases,

a total of 150,000 people to see it over the past eleven years. S.T.

and reduced the number of product classes from around 800 when

Corporation will become a strong and agile company by implement-

I became president to the current figure of approximately 300.

ing these points, moving toward our future goal of leading the world

Going forward, we will review all business activities company-wide,in Air Care.

and reduce the number of product classes further to a carefully
selected number of products, thereby improving efficiency. At theOverview of Management Policies

For more details about our basic strategy, please refer to pages
6-9 of this Annual Report.

Policy: Selection (Number of Product Classes)(Number of items)

Strong and agile company

862
708

Basic Strategy
1. Selection and focus
2. Development of unparalleled products
3. Agile management

Goal of leading the world in Air Care

484
403

98

99

00

380

01

297

282

297

02

03

04

05

364

06

298

295

292

07

08

09

Fiscal years (ended March 31)

4

S.T. CORPORATION

Where shareholder returns are concerned, we will continue totake positive action. While maintaining the basic policy of
paying stable dividends, we intend to implement a dividend
policy linked to business performance. For the fiscal year
ended March 31, 2009, taking into account both the Company’s depressed business results and our stable-dividend
policy, we have set the year-end dividend at ¥11 per share (anannual dividend of ¥22 per share), the same as the initial forecast. As regards acquisition of treasury stock, we will move
forward with the goal of increasing shareholder value andstreamlining assets.
 S.T. Corporation accumulates adequate retained earnings toenhance its growth and earnings capabilities and to strengthen
its corporate framework. The main uses of the retained earnings
the Company accumulates are product development, effective
sales promotions and advertising, enhancement of production,
sales, distribution and IT systems, and strategic investments for
future growth.
We see the toiletries industry as a market with potentially explosive

August 2009

growth, depending on what new ideas emerge. Until now, S.T.
Corporation has increased corporate value by creating nichemarkets through the introduction of unparalleled products.
Taking today’s economic crisis as an opportunity, we will move
forward with all employees working together to make S.T. Corporation into a strong and agile company. We hope for further

President and Chief Executive Officer
Chairman of the Board

support and understanding from all of our stakeholders.

Policy: Focus (Net Sales of Air Care category)

Dividends(millions of yen)

(yen)

17,36018,506

19,457

20,357 20,462 20,717 19,789
22.00 22.00 22.00 22.00 22.00

15,861
17.00

13,916
11,410
8,288

10.00
8.00

8.00

8.00

01

02

6.00

99

00

01

02

03

04

05

06

07

08

09

The fiscal year-end up to 1999 was June.
Fiscal years (ended March 31)
The fiscal year-end from 2000 was March.
The fiscal period ended March 2000 was a 9-month accounting period.

99

00

03

04

05

06

07

08

09

The fiscal year-end up to 1999 was June.
Fiscal years (ended March 31)
The fiscal year-end from 2000 was March.
The fiscal period ended March 2000 was a 9-month accounting period.

S.T. CORPORATION

5

Basic Strategy

Aiming to take this once-in-a-century opportunity
to make S.T. Corporation into a strong, agile company
In April 2009, S.T. Corporation shifted to a new management structure and started to aim at
becoming a strong, agile company. Amid abrupt changes in the business environment including
economic conditions and consumption trends, there are calls for strong and agile leadershipmanagement in order to achieve sustainable, profitable growth. In this section, we touch onsome of the efforts being made to make the company strong and agile.

Basic Strategy
1. Selection and focus
Future Policies
	Reducing the number of productclasses and the number of products
	Concentrating on our core brands
	Cross-organizational cost reduction
efforts
	Review of operationsof unparalleled
2. Development
products

3. Agile management

Future Policies

Future Policies
strong leadership
Fusion of leadership andbottom-up management

Design revolution
	Changing the rule on how wecompete	Shifting from price competition to
non-price competition
Moving toward battery-powered
Air Care competition

A strong, agile company
Further strengthening S.T. Corporation as a compact though muscular company
in order to achieve sustainable, profitable growth
6

S.T. CORPORATION

Basic Strategy
While championing being a “strong, agile company,” we will strive for profitable growth by focusing on
our mainstay Air Care products, with a basic strategy of “selection and focus,” “development of unparalleled products,” and “agile management.”
S.T. Corporation sees the current economic crisis as therevolution,” we see design as S.T. Corporation’s largest

perfectmanagement

untapped segment and will concentrate on it. Specifi-

improvements aimed at making the company evencally, by employing the services of well-known designers,

more compact and muscular. While championing a

we will carry out a major reform of the designs of all core“strong, agile company” as our preferred vision, we

products. As for “changing the rules on how we com-will get through this economic crisis by means ofpete,” rather than competing on price, we will pursue

strong leadership and speed.

non-price competition based on providing unparalleledopportunity

to

carry

out

We tout the following three points as our basic strategy.

1. Selection and focus

products in the world. In addition, we have been developing the market for automatic, battery-powered Air
Care products, and we will strive to cultivate it further as
the second pillar of our Air Care business.

2. Development of unparalleled products

Finally, in our “agile management” strategy, we will
endeavor to accelerate management by fusing—as a

3. Agile management

workplace reform—leadership and bottom-up management.

First, in the “selection and focus” strategy, we

Air Care (deodorizers and air fresheners) market as awill continue to reduce the number of product classes

growth market. To begin with, we will try to expand new

and the number of products, try to improve businessareas of the domestic Air Care market. In this way, we

efficiency, and make efforts to increase the value ofwill achieve profitable growth. With regard to our global

our core brands.

business expansion, we will actively expand businessWith respect to future goals, S.T Corporation sees the

Next, in the “development of unparalleled products”
strategy, we will focus on “design revolution” and “chang-

centering on the Asian region. Our overriding goal is tobecome the “Air Care company of the world.”

ing the rules on how we compete.” Regarding “design

1. Selection and focus
While further strengthening the “compact though muscular company” of the past, we will revise thenumber of products and review operations to increase the value of core brands, thereby expanding sales
and profits.
Since 1998, S.T. Corporation has raised the topic of aovertime work through revisions of operations. As for“compact though muscular company” and continually

reducing the number of product classes, we succeeded inpursued a “selection and focus” strategy. In the future we

reducing the number to 292 at the end of March 2009,

will even more firmly promote reductions in productdown from 862 at the end of March 1998. From the cur-classes and numbers, and by concentrating our invest-

rent fiscal term, the reduction goal will be to reduce thement of management resources on core brands, we will

number of products in the past number of product classes

strive to increase the value of our brands as we makeeven more minutely, and by continuing to concentrate on

efforts to expand sales and profits. Moreover, besides

our core brands, we will make every effort to improvecross-organizational cost reduction efforts, we will makeefficiency further.

an effort to expand profits further by striving to reduce

S.T. CORPORATION

72. Development of unparalleled products
We consider the “development of unparalleled products” strategy to be an important strategy for achieving profitable growth. As our future policies, we will concentrate on “design” and “quality” and strive tocultivate our “power brands.”

Design revolution“Design” is the largest untapped segment for S.T. Corporation.
We will try to acquire potential users in this new field and to
expand the Air Care market.
We see “design” as the largest untapped segment for S.T.

announced

Corporation. S.T. Corporation will bring about a “design

series “White & Black.”

revolution” as a new growth strategy in this new,This design series suc-untapped area. Specifically, we will revise the total

ceededdesigns of products including usability as we strive

increasing sales while thefirst to expand the Air Care (deodorizers and air fresh-

whole Air Care (deodorizers

eners) market.

and air fresheners) market

In the automobile and the electrical equipment

in

the

designsubstantially
Shoshu-Riki design series, increasing
sales since its release in the fiscal year
ended March 31, 2009

was at a standstill.

industries, elegant designs (premised on technical capa-

This time, S.T. Corporation will, as a “design revolu-

bilities) play a very big role as motivation of consumers’tion,” first carry out a major design reform for all ourpurchase behavior. On the other hand, in comparison, in

core products from the Air Care market. For a designer,

our market for daily necessities, it appears that much

we employed the services of a world-renowned Japa-

potential for improvement still remains.

nese designer. In the future, products based on new

In the fiscal year ended March 31, 2009, from S.T.
Corporation’s leading Air Care brand, Shoshu-Riki, we

designs will be announced one after another, so pleaselook forward to them.

Oki Sato
Born in Toronto, Canada, in 1977. Graduated at the head of his class with a B.A. degree fromWaseda University, Faculty of Science and Engineering, Department of Architecture in 2000.
Graduated with an M.A. degree from Waseda University Graduate School, and establishednendo LLC, in 2002. Established the Milan office in 2005. Selected as one of “The 100 Most
Respected Japanese” in Newsweek magazine in 2006. The monograph “nendo” was publishedby daab (Germany), and “cabbage chair” was selected for collections by MoMA (NY) and byMusee des Arts Decoratifs (Paris) in 2008. (Official Web site: www.nendo.jp)

Changing the rules on how we compete
One aspect is to “make the strong even stronger” by completely changing the models of
our existing core products. Another is to focus on Air Care products that run automaticallyon batteries, and to cultivate the second pillar of our Air Care business.
● ”Making the strong even stronger,” completely changing the models of existing core products
We will change the rules on how we compete fromon the market in 2000, achieved the top market share“price competition” to “non-price competition.” Rather

one and a half years after its release. After starting withthan viewing consumers as unwilling to buy expensive

zero share of the deodorizer market, Dashu-Tan’s shareproducts, S.T. Corporation sees them as not buying suchhas now, after eight years, grown to 65%. And the

products because the ones they want do not yet exist.

product’s share continues to grow.

Our Dashu-Tan deodorizer product, which appeared

8

S.T. CORPORATION As a measure for making the change from “pricecompetition” to “non-price competition,” we will “makeFuture core brandLeading Air Care brand

Shoshu-Plug

Shoshu-Riki

Unrivalled No.1 share

Unrivalled No.1 share

MushudaDryPetthe strong even stronger” by changing the models of all
core products. We will review all factors such as packaging,quality, usability, and cost. We plan to emphasize morestrongly the design of our ¥10 billion leading Air Care brand
Shoshu-Riki. It is said that changing models is very risky anddifficult to judge. We will, however, press forward by meansof fusing strong leadership and bottom-up management.

● Concentrating on Air Care products that run automatically on batteries tocultivate the “second pillar of our Air Care business”
Of the leading Air Care products, S.T. Corporation regards

In other industries it is said that demand increases

those that run automatically on batteries as being an espe-

rapidly once the share of the market exceeds 10%. S.T.

cially promising growth segment, and we have cultivatedCorporation will strive to expand the market for our auto-that segment for the past eight years.

matic, battery-powered Air Care products by expanding

These Air Care products that run automatically on

demand in this segment. We will expand demand bybatteries have a very high share—approximately 50%—ofdeveloping unparalleled products in the U.S., and by

the European and North American Air Care markets. In

means of unparalleled communication. In the domestic

comparison, foreign companies entered the Japanese

Air Care market, we will shift away from “price competi-

market only last year, and their share of the domestic Airtion” to concentrate on a new “competition in Air Care

Care market has gradually grown to 10%.

products that run automatically on batteries,” to cultivate
the “second pillar of our Air Care business.”
Effective advertising: Selected 20th out of the top 50 companies in acquisition efficiency
for CM popularity ratings. (Source: CM DATABANK, FY2008 White Paper on CM Popularity Ratings/Japan’s Best Advertisers) “Unparalleled communication” By employing the services of Special
Advertising Department General Manager Takadano Toriba, we are conducting consistent communication promotion activities in areas including CM, WEB, PR, campaigns, and sales promotion. By using Takadano Toriba for TV commercials, appearances on television and radio
programs, and publication of books, we are striving to create and broaden topics of conversation, and by linking these with communication and promotion activities for the Shoshu-Plugseries, we are bringing forth synergistic effects.

Two commercials for Shoshu-Plug Autospray

3. Agile management
With the aim of responding to the bewildering changes in recent economic conditions and consumption
trends, we will work to speed up management by fusing leadership and bottom-up management.
We believe that what is necessary upon abrupt changes inmanagement reforms on the basis of rapid decision-

the business environment is great speed. In the recent

making enabled by the new management structure, andonce-in-a-century economic crisis, factors such as eco-on the basis of strong leadership.

nomic conditions and consumption trends changed at an Additionally, in order to bring top management andunprecedented speed. Furthermore, even in the key Air

workplace personnel closer and to increase management

Care (deodorizers and air fresheners) market, we are expe-

efficiency and speed, weriencing a sense of crisis with the growth of the market

will make efforts for the

coming to a standstill on factors such as a consumers’

fusion of leadership andgrowing desire to protect their standards of living by tight-

bottom-up management

ening their purse strings and their diversification of needs.

as a workplace reform.

In order to respond to these sudden changes in the businessenvironment,

S.T.

Corporation

will

promoteQ&A meeting for bringing top management and workplace personnel closer.

S.T. CORPORATION

9

at a glance
Business Overview
S.T. Corporation has been developing two groups of businesses:

mothproofing agents have enjoyed a stable market since thebusinesses related to household environments in our three cate-foundation of S.T. Corporation.

gories of Air Care, Humidity Care and Home Care, and businesses

In the fiscal year ended March 31, 2009, the financial crisis

related to mothproofing and hygiene in our three categories ofcaused a worsening of the economic climate and consumer

Cloth Care, Hand Care and Thermal Care. As a market leader,spending. In these circumstances, S.T. Corporation worked to

we aim to achieve dominant shares of the niche markets for

expand its market share and increase sales by developing products

each of these categories. Our two core categories are Air Care,

offered by no other companies in the world. Nevertheless, con-which is our mainstay business with a growing market for deo-solidated net sales for the fiscal year decreased 4.5% year on year

dorizers and air fresheners, and Cloth Care, in which ourto ¥44,879 million.

Composition of net sales by business segment(Year ended March 31, 2009)

Household EnvironmentRelated Products

Mothproofing andHygiene-related Products

44.1%

22.1%

Air Care

Cloth Care

(Mothproofing Agents)(Deodorizers and Air Fresheners)

The Air Care Group, with such products
as Air-Wash and Shoshu-Riki,is a core business.

6.6%
Humidity Care
(Dehumidifiers)

Our broad lineup of DryPet
dehumidifiers has continuously
led the market.

8.1%
Home Care(Cleaners and Other Products)

S.T. Corporation offers a wide varietyof unique products, including
the Powers lineup of cleaners.

10

S.T. CORPORATIONThe Cloth Care Group, with suchproducts as Mushuda and Neopara Ace,is one of S.T. Corporation’s
core businesses.

58.8%

41.2%

7.1%
Hand Care(Gloves)The Hand Care Group markets
the Family series of household
gloves that moisturize the hands.

12.0%
Thermal Care

(Disposable Warmers)

The Thermal Care Groupmarkets the Onpacks brand of
disposable warmers.

H

Environment-R
hold
elate
e
s
d Productsou

Air Care (Deodorizers and Air Fresheners)

net sales(millions of yen)

Shoshu-Riki

Shoshu-Pot

Shoshu-Plug
Autospray

Air-Wash

Shoshu-Plug

19,457

20,357 20,462 20,717 19,789

05

06

Dashu-Tan

The Air Care category is S.T. Corporation’s mainstay business and the market is expected to growin the future. Our unique, innovative products include our largest mega brand, Shoshu-Riki;
Shoshu-Plug, which uses electric power to deodorize even large, spacious rooms; Air-Wash,
designed around the concept of “washing the air;” and Shoshu-Pot with its refined aroma. In the

07

08

09

fiscal year ended March 31, 2009, sales increased of our core brand Shoshu-Riki, Dashu-Tan for
Fiscal years (ended March 31)

refrigerators and Shoshu-Plug Autospray, a new product which deodorizes automatically withbatteries at intervals under review, but sales of other existing products were weak. As a result,segment sales decreased 4.5% year on year to ¥19,789 million.

Cloth Care (Mothproofing Agents)

net sales(millions of yen)Mushuda(for drawers)

Mushuda(for walk-in closets)

Mushuda(cover style)

Bikoda(for drawers)

9,862

10,270 10,189 10,113

9,912

05

06

09

Neopara Ace

S.T. Corporation has conducted business in the Cloth Care category since its foundation, and thiscategory now stands alongside the Air Care category as one of the Company’s core business segments. Mushuda and Neopara Ace are top brands that enjoy predominant customer loyalty. Bikoda
for Drawers and Clothes Storage Cases, a mothproofing agent to which deodorizer and air freshener07

08

features have been added, Mushuda for Walk-in Closets for large storage spaces and other products
have been developed to offer new storage styles with mothproofing agents. In the fiscal year ended

Fiscal years (ended March 31)

March 31, 2009, sales increased in the core brand Mushuda for products for both drawers and closets, but sales of other products were sluggish. Segment sales edged down 2.0% to ¥9,912 million.

Mng and Hygie
ne-R
roofi
p
h
elated Products
ot
S.T. CORPORATION

11

H

Environment-R
hold
elate
e
s
d Productsou

Humidity Care (Dehumidifiers)

net sales(millions of yen)

2,950
Drypet(for wardrobes)

Bincho-Tan Drypet(for drawers)

Drypet(for closets)

Drypet Compact

2,592

2,583

2,683

2,597

05

06

07

08

Bincho-Tan Drypet

Since launching the Drypet dehumidifier in 1981, the Humidity Care category has continued tobe the leader in the dehumidifier agent market. S.T. Corporation offers an extensive range of
products meeting a variety of dehumidifying needs, including stand-type products, sheet-type
products and hanging-type for closets. Our extensive lineup also includes the high-performance09

dehumidifier agent Bincho-Tan Drypet that boasts deodorant effects on top of its dehumidifing
Fiscal years (ended March 31)

functions. We also offer products for use with shoes, futon bedding, and shoe lockers. In thefiscal year ended March 31, 2009, Drypet Skit and other products performed well despite theharsh business environment due to an increased number of stores handling the products. Net
sales in the segment rose 13.6% to ¥2,950 million.

Hand Care (Gloves)

net sales(millions of yen)

Family PVC
Disposable Gloves

Family Squalene

Family Thin PVC Gloves(fingertip-reinforced)

Family Thick PVC Gloves(fingertip-reinforced)

3,166

3,174

3,257

05

06

07

3,548
3,209

Family Thin PVC Gloves(for scrubbing and washing)

In the Hand Care category, the Family series of household gloves offers high-value-added products that not only protect the hands, but also soothe the skin. We meet the needs of our customers with a diverse lineup of products, including a series of regular type gloves with strengthened
fingertips, and gloves impregnated with Squalene. In the fiscal year ended March 31, 2009, sales

08

09

increased steadily for the mainstay products of thin rubber gloves and ultra-thin vinyl gloves andfor disposable polythene gloves, but sales of industrial-use nitrile rubber gloves slumped due to

Fiscal years (ended March 31)

worsening corporate earnings. Segment sales declined 9.6% year on year to ¥3,209 million.

12

M
S.T. CORPORATIONng and Hygie
ne-R
roofi
p
h
elated ProductsotH

Environment-R
hold
elate
e
s
d ProductsouHome Care (Cleaners and Other Products)

net sales(millions of yen)

4,160
Fresh-Up

Ultra-Powers
Washing Tub Cleaner

Powers Baking Soda
Scrubber

Kome-Touban

3,999

4,103

06

07

4,171
3,633

SCOTCHGARD

The Home Care category provides a range of unique products, including niche cleaning products
such as Ultra-Powers Washing Tub Cleaner; scrubbing cleaners such as Powers Citric Acid Scrubber and Powers Baking Soda Scrubber that contain citric acid and baking soda; and Kome-Touban,
which protects uncooked rice from insects. In the fiscal year ended March 31, 2009, sales

05

08

09

increased for such products as Nexcare Mask Pro Shiyo and Kome-Touban, but the decrease in
Fiscal years (ended March 31)

sales of automatic dishwashing-machine detergents for which outsourced sales contracts expiredin the previous fiscal year could not be covered by the increased sales of Fresh-Up, the detergent
launched in the previous year. Segment sales declined 12.9% to ¥3,633 million.

Thermal Care (Disposable Warmers)

net sales(millions of yen)

5,860

5,752
4,871
Haru-Onpacks

Haranai-Onpacks

Haru-Onpacks(for socks)

Onpacks(for shoes)

5,386

4,534

Thermo Thera

Since July 2003, the Thermal Care Group has been marketing disposable warmers under the
Onpacks brand manufactured by Mycoal Co., Ltd. Our wide-ranging lineup also includes chemical warmers with self-adhesive patches for attachment to clothing and for the soles of socks. We
also steadily expanded our presence in the self-medication market with our Thermo Thera gel

05

06

07

08

09

sheets that are mild to the skin and help ease back pain and stiff shoulders. Partly due to thewarm winter, sales for the fiscal year ended March 31, 2009 fell 8.1% from the previous year to

Fiscal years (ended March 31)¥5,386 million.

Mng and Hygie
ne-R
roofi
p
h
elated Products
ot
S.T. CORPORATION

13

CSR (Corporate Social Responsibility)
S.T. Corporation strives for growth with sustainable long-term earnings, achieved by providing
comfort and excitement to homes through its products and services. The Company also places top
management priority in satisfying all stakeholders, including shareholders, customers, business
partners, local communities and employees, while increasing its corporate value.
● Corporate Philosophy

the benefit of local residents and donated part of

The mission statement of S.T. Corporation is “Sincerity.”

the proceeds to the social welfare councils in the

At the same time, all our business activities enshrine thethree cities.

basic concepts of our management philosophy. Basedon these concepts, we are building an optimum and fair

● Campaign to Support Musicals

business management system together with enhancing

The Company pro-our corporate governance.

actively supports cultural activities, suchas musicals and stage
plays. Since 1998,

Sincerity

the Company has
sponsored a campaign to stage musicals and invite
people to them rather than sell tickets. Last year weManagement Philosophy

succeeded in reaching a cumulative total of over

1. To fulfill our mission of serving society and earning
society’s trust, S.T. constantly works to improve its
products, and to create unique products that ourcustomers can trust absolutely.

160,000 invited people. In 2009, S.T. Corporation plans

2. To achieve the company’s sustained prosperity, S.T.
ensures its workplaces provide an environment
where its employees can earnestly work with hopeand pride.
3. Always valuing harmony and courtesy, S.T. strives tobe the best company as regards winning the absolute trust of our customers, other concerned people
and society at large.

to present the musical, Anne of Green Gables, in eight
major cities nationwide in its “Heartbeat of 20,000
People Tour.”● Toward Sustained Growth
To achieve sustained
growth, the Company considers it
important to nurture the minds andbodies of personnel.

● Living Together With Local Communities

S.T. Corporation isWith the aim of “Using

implementing vari-resourcesandefficiently

communicatingwith and contributing
to

local

communi-ties,” the S.T. Corpora-

14

S.T. CORPORATION

Meeting of the round-the-world teamous initiatives to improve workplace environments,
thereby enabling personnel to acquire the capabilities
to both develop groundbreaking ideas and also become
the next generation of managers. These initiatives
include reassessing business practices to remove theneed to work overtime and enable childcare leave to betion plants at Honjo in Saitama Prefecture, Iwaki inextended until the child becomes aged three, continu-

Fukushima Prefecture and Kita-Kyushu in Fukuoka

ing our round-the-world team, and promoting the use

Prefecture, held bargain sales of outlet products forof “young managers.”

Corporate Governance
S.T. Corporation gives top priority to implementing corporate governance that achieves fair and stable organizational operations to increase shareholder value. Meanwhile, to improve corporate value, the Company
has established Nomination, Audit and Compensation committees with outside directors as a majority,
thereby reinforcing management supervisory functions and increasing management transparency.

S.T. Corporation gives top priority to implementing cor-

● Structure for business execution andmanagement supervision

porate governance that achieves fair and stable organi-

Under the Company’s committee-based corporate gov-

zational operations to increase shareholder value. At

ernance system, the Board of Directors focuses on

the same time, the Company considers it important todeciding important matters of management and on

improve corporate value by strengthening corporate

management supervisory functions. The executive offi-

governance in order to increase management transpar-

cers, having been delegated authority to conduct busi-

ency and ensure good relations with all the S.T. Group’s

ness execution, act to speed up decision-making andstakeholders, including customers, shareholders, busi-

ensure business is executed flexibly. The Nomination,ness partners, local communities and employees.

Audit and Compensation committees, which have been

● Corporate governance

In June 2004, S.T. Corporation converted itself into aestablished as internal organs of the Board of Directors

company with a committee-based corporate gover-with outside directors as majority members, work tonance system, with the aim of further reinforcing cor-fulfill their respective functions and thereby achieve an

porate governance. Adopting a committee-based

effective management supervision structure.

corporate governance system means that the functionsof management supervision and business execution● The internal control systemhave been separated, and a large part of the responsi-

There are five divisions under the control of the chief execu-

bility for business execution has been transferred totive officer: Corporate Staff, Marketing, Sales, Manufactur-

executive officers. This has created an environment

ing and International Business. Each division has a chief

enabling steady improvement in management quality,

operating officer responsible for operations who delegates

rapid decision-making and flexible business execution

authority so that he or she can make responsible decisions.

at the Company. In addition, the Company believes

At the same time, each division conducts mutual supervi-that the establishment of Nomination, Audit and Com-

sion through the Executive Officer Meeting and the in-pensation committees with outside directors as major-

house approval system. In addition to this, the Legal Affairs

ity members is reinforcing management supervisory

Department properly supervises each division’s compliancefunctions and improving management transparency

activities. Furthermore, the Company established a compli-

and fairness. Six of the nine members of the Board ofance committee in which every domestic subsidiary partici-

Directors were outside directors as of June 18, 2009.

pates, putting a Group-wide compliance structure in place.

FRAMEWORK FOR BUSINESS EXECUTION AND SUPERVISIONCOMPOSITION AND ROLES OF ORGANIZATIONAL UNITS■ Outside directors

Board of Directors (9 persons)■ Corporate directors● Executive officers

Nomination
Committee(5 persons)

Audit
Committee(5 persons)Compensation
Committee(3 persons)Decisions on
nomination anddismissal of
directors

Audits of executionof duties bydirectors andexecutive officers

Decisions oncompensation ofindividual corporate
directors andexecutive officers

Directors double as executive officers

Executive officers (8 persons)Representative
executive officer(1 person)

Appointment

Executive officers (7 persons)S.T. CORPORATION

15

Management’s Discussion and Analysis
Net Sales

Operating Income

In the fiscal year ended March 31, 2009, consolidated net

Operating income dropped 22.6% year on year to ¥2,493

sales decreased ¥2,127 million, or 4.5%, year on year to

million. The Company continued the previous fiscal year’s¥44,879 million.

efforts to reduce costs, especially in its manufacturing activities,

In the fiscal year ended March 31, 2009, the financial crisisand to curtail marketing expenses and other selling, generaltriggered by the failure of a major U.S. securities firm spread

and administrative expenses. However, escalating raw material

worldwide, resulting in a rapid economic slowdown sinceprices, the impact of the mix of products sold and other factors,

autumn 2008. Furthermore, conditions related to employment

along with the effects of changes in accounting standards, all

and income became increasingly harsh and individual consump-contributed to bring operating income down.

tion slumped. In these circumstances, S.T. Corporation worked
to expand its market share and increase sales by launching

Net Income

innovative new products on the market and conducting sales

Net income declined ¥219 million, or 16.9%, to ¥1,076 million.

promotion activities through an efficient combination of advertising and in-store presentations.
 As a result, the Humidity Care (dehumidifiers) category performed robustly, and sales were up ¥353 million, or 13.6%, to¥2,950 million. The main reason was an increase in the numberof stores handling Humidity Care products. However, consumers were very cautious about spending due to worsening
employment and income levels. In the mainstay Air Care category, a new product, Shoshu-Plug Autospray, contributed tosales but performance in existing products was lackluster,
resulting in a 4.5% year on year drop in sales. Moreover, Cloth
Care sales were down 2.0% year on year, Hand Care sales
were down 9.6% and Home Care sales were down 12.9%.
Thermal Care sales, which had been strong in the previous
fiscal year, were impacted by the warm winter and dropped
8.1% year on year. Overall, revenues were down in all categories other than the Humidity Care category.

Cost of Sales
The cost of sales ratio edged up 1.4 percentage points compared with the previous fiscal year.

16

S.T. CORPORATION

Financial Position
Total assets as of March 31, 2009 stood at ¥27,617 million, adecrease of ¥776 million compared with the previous fiscal
year-end. This was mainly the result of decreases of ¥360 million
in inventories and ¥603 million in investment securities.
 Liabilities came to ¥8,587 million, down ¥661 million compared with the previous fiscal year-end, reflecting a ¥513 million
decline in trade payables.
 As a result, net assets as of March 31, 2009 stood at¥19,029 million, a ¥115 million decrease compared with theprevious fiscal year-end. This reflected the net result of a ¥322
million decline in unrealized holding gain on other securities,a ¥257 million drop in translation adjustments, and a ¥151
million decrease in minority interests in consolidated subsidiaries, which together outweighed a ¥566 million increase inretained earnings. As a result, shareholders’ equity amounted
to ¥19,476 million and the shareholders’ equity ratio increased
1.9 percentage points year on year to 67.5%.

Capital Expenditures

Dividends

Capital expenditures increased 10.3% year on year to ¥716 million.

Taking into consideration net income and the realization of

Investment in the Household Environment-Related Products Busi-share profit, the Company has declared a fiscal year-end divi-

ness, a growth-driver for the Company, made up 82.5% of thisdend of ¥11.0 per share. Combined with the interim dividend

total, 6.2 percentage points higher than a year earlier.

paid, the annual dividend is ¥22.0 per share, in line with

Cash Flows

estimates at the beginning of the period. Accordingly, thedividend payout ratio is 44.6% on a consolidated basis.

Net cash provided by operating activities decreased ¥1,235
million compared with the previous fiscal year, to ¥1,549 million.

Financial Indicators

Cash inflow was provided primarily by income before income

Where the company’s key financial indicators are concerned,

taxes and minority interests totaling ¥1,969 million, depre-

ROE contracted 0.3 of a percentage point year on year, tociation and amortization of ¥858 million, and decrease in

5.8%. ROA also contracted, by 0.3 percentage points to 3.8%.

inventories of ¥272 million. Cash outflows took the form of a

Net assets per share of common stock edged down slightly¥510 million decrease in payables and accrued expenses, andfrom ¥853.90 to ¥853.81. The shareholders’ equity ratio¥886 million in income taxes paid. Net cash used in investing

increased from 65.6% to 67.5%, while the interest coverage

activities was ¥604 million. Cash inflow was provided primarily

ratio was 185.9 times, down from 725.0 times in the previousby proceeds from sales of marketable and investment securities

fiscal year.

of ¥501 million, while cash outflow was due to a ¥400 million
increase in time deposits and ¥545 million spent on purchasesof property, plant and equipment. The resulting free cash flow
amounted to ¥945 million for the fiscal year under review. Net
cash used in financing activities totaled ¥530 million. Payments of dividends amounting to ¥480 million were theprimary contributor.
Accounting for the aforementioned factors, cash and cash
equivalents as of March 31, 2009 stood at ¥5,520 million, a¥335 million increase compared with the end of the previous
fiscal year.

S.T. CORPORATION

17

Consolidated Balance Sheets
S.T. CORPORATION and consolidated subsidiaries
March 31, 2009 and 2008

Thousands of
U.S. dollars(Note 2)Millions of yen

ASSETS

2009

2008

2009

¥ 6,144¥ 6,008$ 62,545

CURRENT ASSETS:
Cash and time deposits (Note 12)
Marketable securities (Note 4)
Trade notes and accounts receivable
Less—allowance for doubtful accounts
Merchandise and finished goods

599

493

6,102

4,502

4,297

45,831

(19)

(19)

(194)

3,790

4,021

38,579Work in process

116

166

1,185

Raw materials and supplies

355

433

3,612

Deferred tax assets (Note 7)

332

362

3,383

Other current assets

298

317

3,037

    Total current assets

16,11816,080

164,081INVESTMENTS AND OTHER ASSETS:
Investments in non-consolidated subsidiaries and affiliates
Investment securities (Note 4)

377

507

3,833

2,009

2,482

20,454Long-term loans

104

121

1,062

Deferred tax assets other than unrealized revaluation loss on land (Note 7)

384

291

3,910

1,396

1,426

14,217

Less—allowance for doubtful accounts

(10)

(41)

(99)

    Total investments and other assets

4,261

4,785

43,377

Land

3,320

3,392

33,797

Buildings and structures

6,135

6,191

62,456

Machinery, equipment and vehicles

6,989

7,186

71,146

Tools, furniture and fixtures

3,397

3,582

34,581

Construction in progress

21

20

218

Other assets

PROPERTY, PLANT AND EQUIPMENT, AT COST (Notes 5 and 6):

Leased assets
Less—accumulated depreciation    Property, plant and equipment, net

INTANGIBLE ASSETS, NET OF ACCUMULATED AMORTIZATION    Total assets
See notes to consolidated financial statements.

18

S.T. CORPORATION

20

—

207

(13,117)(13,301)(133,530)

6,766

7,070

68,874

473

457

4,810

¥ 27,617¥28,393$ 281,142

Thousands of
U.S. dollars(Note 2)Millions of yen

LIABILITIES AND NET ASSETS

2009

2008

2009

¥ 4,017¥ 4,530$ 40,890

CURRENT LIABILITIES:
Trade payables
Lease obligations
Other payables

4

—

45

1,817

1,866

18,496

Income taxes payable (Note 7)

298

391

3,030

Consumption taxes payable

49

30

502

Accrued expenses

481

529

4,900

Allowance for sales returns

140

155

1,425

Other current liabilities

75

80

764

    Total current liabilities

6,881

7,581

70,052

LONG-TERM LIABILITIES:
Lease obligations
Employees’ retirement and severance benefits (Note 8)

14

—

145

1,212

1,202

12,339Directors’ retirement and severance benefits

96

85

976

Deferred tax liabilities—unrealized revaluation profit on land (Note 5)

381

381

3,876

3

1

31

1,706

1,667

17,367    Authorized—96,817,000 shares in 2009 and 2008    Issued and outstanding—29,500,000 shares in 2009 and 2008

7,066

7,066

71,928   Capital surplus

7,068

7,068

71,952   Retained earnings

16,39915,833

166,946   Treasury stock, at cost

(11,056)(11,083)(112,556)    Total shareholders’ equity

19,476

18,884

198,270   Unrealized holding gain on other securities, net of taxes

220

542

2,241

   Unrealized revaluation loss on land, net of taxes (Note 5)

(550)

(549)

(5,595)   Translation adjustments

(507)

(250)

(5,161)    Total valuation, translation adjustments and other

(836)

(257)

(8,514)

51

28

521

Other long-term liabilities    Total long-term liabilities
CONTINGENT LIABILITIES (Note 14)
NET ASSETS (Note 9):
Shareholders’ equity:   Common stock:

Valuation, translation adjustments and other:

Subscription rights
Minority interests in consolidated subsidiaries    Total net assets    Total liabilities and net assets

339

490

3,447

19,02919,144

193,723¥27,617¥28,393$281,142

See notes to consolidated financial statements.

S.T. CORPORATION

19

Consolidated Statements of Income
S.T. CORPORATION and consolidated subsidiaries
For the years ended March 31, 2009 and 2008

Thousands of
U.S. dollars(Note 2)Millions of yen
2009

2008

2009

NET SALES¥44,879¥47,006$456,882

COST OF SALES (Note 17)

26,295

26,900267,689

18,584

20,106

189,193

15

13

156

18,60020,119189,349

16,107

16,900163,970

2,493

3,219

25,378Interest and dividends received

86

76

875

Interest expense

(8)

(4)

(85)

Gross profit before reversal of allowance for sales returns
Reversal of (allowance for) sales returns
Gross profit
Selling, general and administrative expenses (Note 11)
Operating income
OTHER INCOME (EXPENSES):

Cash purchase discounts

198

213

2,018

Cash sales discounts

(821)

(864)

(8,362)5054Equity in loss of affiliates

(37)

(30)

(378)

Expenses for change of the Company’s name

—

(277)

—

Reversal of allowance for doubtful accounts

3

—

34

Gain on sales of securities, net

Other, net
Income before income taxes and minority interests

50

125

507

(524)

(761)

(5,336)

1,969

2,458

20,042

786

1,014

7,999

INCOME TAXES (Note 7):   Current   Deferred

MINORITY INTERESTS
Net income
See notes to consolidated financial statements.

20

S.T. CORPORATION

83

96

844

869

1,110

8,843

24

53

242

¥ 1,076¥ 1,295$ 10,957

Consolidated Statements of Changes in Net Assets
S.T. CORPORATION and consolidated subsidiaries
For the years ended March 31, 2009 and 2008

Number ofshares ofcommonstock(Thousands)

Balance at March 31, 2008
Cash dividends paid by distribution of retained earnings
Net income
Purchases of treasury stock
Disposition of treasury stock
Change in scope of consolidation
Reversal of unrealized revaluation loss on land, net of taxes
Net changes in items other than those in shareholders’ equity
Balance at March 31, 2009

Balance at March 31, 2008
Cash dividends paid by distribution of retained earnings
Net income
Purchases of treasury stock
Disposition of treasury stock
Change in scope of consolidation
Reversal of unrealized revaluation loss on land, net of taxes
Net changes in items other than those in shareholders’ equity
Balance at March 31, 2009

29,50029,500¥7,066

Capitalsurplus¥7,068Retainedearnings¥15,833
(480)
1,076

Treasurystock¥(11,083)(3)29¥7,066¥7,068¥16,399¥(11,056)

Unrealized
revaluation
loss on land,
net of taxes(Note 5)

Translation
adjustments

Totalvaluationstranslation
adjustments
and other

Subscription
rightsMinority
interests inconsolidated
subsidiaries

(322)
¥220

(1)
¥(550)(257)¥(507)(579)¥(836)

23
¥51

(151)
¥339

¥542

¥(549)

Number ofshares ofcommonstock(Thousands)

29,500¥(250)¥(257)¥28¥18,884
(480)
1,076
(3)
13
(15)
1
¥19,476

¥490

Total
net assets¥19,144
(480)
1,076
(3)
13
(15)
1
(707)
¥19,029

Thousands of U.S. dollars (Note 2)
Commonstock$71,928

Capitalsurplus$71,952

Retainedearnings$161,184(4,887)
10,957
(160)
(155)
7

29,500Total
shareholders’equityMillions of yen

Unrealized
holding gainon othersecurities,
net of taxes$71,928$71,952$166,946

Treasurystock$(112,824)

(26)
294

Total
shareholders’equity$192,241(4,887)
10,957
(26)
134
(155)
7

$(112,556)$198,270

Total
net assets

Thousands of U.S. dollars (Note 2)

Unrealized
holding gainon othersecurities,
net of taxes

Unrealized
revaluation
loss on land,
net of taxes(Note 5)

Translation
adjustments

Totalvaluationstranslation
adjustments
and other

Subscription
rightsMinority
interests inconsolidated
subsidiaries(3,274)$2,241(7)$(5,595)(2,614)$(5,161)(5,895)$(8,514)236$521(1,540)$3,447$194,893(4,887)
10,957
(26)
134
(155)
7
(7,199)$193,723

Treasury
stock

Total
shareholders’equity$5,516$(5,588)

Number ofshares ofcommonstock(Thousands)

Balance at March 31, 2007
Cash dividends paid by distribution of retained earnings
Net income
Purchases of treasury stock
Disposition of treasury stock
Net changes in items other than those in shareholders’ equity
Balance at March 31, 2008

Balance at March 31, 2007
Cash dividends paid by distribution of retained earnings
Net income
Purchases of treasury stock
Disposition of treasury stock
Net changes in items other than those in shareholders’ equity
Balance at March 31, 2008

Common
stock

(16)
(15)
1

Balance at March 31, 2008
Cash dividends paid by distribution of retained earnings
Net income
Purchases of treasury stock
Disposition of treasury stock
Change in scope of consolidation
Reversal of unrealized revaluation loss on land, net of taxes
Net changes in items other than those in shareholders’ equity
Balance at March 31, 2009

Balance at March 31, 2008
Cash dividends paid by distribution of retained earnings
Net income
Purchases of treasury stock
Disposition of treasury stock
Change in scope of consolidation
Reversal of unrealized revaluation loss on land, net of taxes
Net changes in items other than those in shareholders’ equity
Balance at March 31, 2009

Millions of yen

29,50029,500$(2,547)$(2,619)

Commonstock¥7,066¥7,066

Capitalsurplus¥7,068¥7,068Retainedearnings¥15,120
(567)
1,295

¥ (5,153)(15)(5,963)
33¥24,101(567)
1,295(5,963)18¥15,833¥(11,083)¥18,884

Subscription
rightsMinority
interests inconsolidated
subsidiaries

20
¥28

(31)
¥490

Millions of yen

Unrealized
revaluation
loss on land,
net of taxes(Note 5)

Translation
adjustments

Totalvaluationstranslation
adjustments
and other

(269)
¥542

—
¥(549)(7)¥(250)(277)¥(257)¥(549)$4,987

Millions of yen

Unrealized
holding gainon othersecurities,
net of taxes

¥811

$285

¥(243)

¥ 20

¥ 8

¥521

Total
net assets¥24,649(567)
1,295(5,963)18(287)¥19,144

See notes to consolidated financial statements.

S.T. CORPORATION

21

Consolidated Statements of Cash Flows
S.T. CORPORATION and consolidated subsidiaries
For the years ended March 31, 2009 and 2008

Thousands of
U.S. dollars(Note 2)Millions of yen
2009

2008

2009

¥1,969¥2,458$20,042

858
22
2
(31)
20
11
(15)
(86)
8
124
37

936
7
2
26
(3)
(13)
(13)
(76)
4
9
30

8,730
228
15
(319)
200
115
(156)
(875)
85
1,262
378

(201)
272
(510)
(125)
2,354
89
(8)
(886)
1,549

129
34
564
(82)
4,012
93
(4)
(1,317)2,784(2,045)2,767(5,189)(1,277)23,962904(85)(9,017)
15,764

CASH FLOWS FROM INVESTING ACTIVITIES:Payments into deposits (more than three months)
Proceeds from withdrawal of time deposits (more than three months)
Purchases of marketable securities
Proceeds from sales of marketable securities
Purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchases of investment securities
Proceeds from sales of investment securities
Other investments, net     Net cash (used in) provided by investing activities

(700)
300
—
400
(545)
2
(57)
101
(105)
(604)

(300)
—
(457)
2,074
(481)
0
(262)
375
(78)
871

(7,126)
3,054
—
4,072
(5,544)
22
(578)
1,023
(1,068)(6,144)

CASH FLOWS FROM FINANCING ACTIVITIES:
Purchases of treasury stock
Proceeds from sales of treasury stock
Payments of dividends
Payments of dividends to minority shareholders     Net cash used in financing activities

(3)
13
(480)
(61)
(530)

(5,963)
18
(567)
(76)
(6,589)(26)
134(4,887)(616)(5,396)

(79)
336
5,185
¥5,520

6(2,927)
8,112¥5,185(807)
3,418
52,782$56,199

CASH FLOWS FROM OPERATING ACTIVITIES:
Income before income taxes and minority interests
Adjustments to reconcile income before income taxes and minority interests to   net cash provided by operating activities:   Depreciation and amortization   Loss on sales of property, plant and equipment   Gain on sales and valuation of investment securities   (Decrease) increase in allowance for doubtful receivables   Increase (decrease) in employees’ retirement and severance benefits   Increase (decrease) in directors’ retirement and severance benefits   Decrease in allowance for sales returns   Interest and dividends received   Interest expense   Foreign exchange gain   Equity in loss of affiliates   Changes in operating assets and liabilities:    Receivables    Inventories    Payables and accrued expenses    Other, net     Subtotal
Interest and dividends received
Interest paid
Income taxes paid     Net cash provided by operating activities

Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year (Note 12)
See notes to consolidated financial statements.

22

S.T. CORPORATION

Notes to Consolidated Financial Statements
S.T. CORPORATION and Consolidated Subsidiaries
March 31, 2009

1. Summary of Significant
Accounting Policies(a) Basis of presentation
S.T.CORPORATION (the “Company”) and its domestic subsidiaries
maintain their books of account in conformity with accounting principles generally accepted in Japan, and its overseas subsidiaries maintaintheir books of account in conformity with those of their countries of
domicile. Effective April 1, 2008, the Company adopted the “Practical
Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements” (PITF No. 18 issued by
the ASBJ on May 17, 2006). In accordance with PITF No. 18, theaccompanying consolidated financial statements for the year ended
March 31, 2009 have been prepared by using the accounts of foreign
consolidated subsidiaries prepared in accordance with either International Financial Reporting Standards (IFRS) or accounting principles
generally accepted in the United States as adjusted for certain items
including those for goodwill, actuarial differences and capitalized
development costs. Until March 31, 2008, the consolidated financial
statements had been prepared by using the accounts of foreign consolidated subsidiaries in accordance with accounting principles generally
accepted in their countries of domicile. See Note 3.
The accompanying consolidated financial statements have been
prepared in accordance with accounting principles generally acceptedin Japan, which are different in certain respects as to the applicationand disclosure requirements of IFRS, and are compiled from the consolidated financial statements prepared by the Company as requiredby the Financial Instruments and Exchange Act of Japan.
In preparing the accompanying consolidated financial statements,
certain reclassifications have been made to the consolidated financial statements issued domestically for readers outside Japan. The
notes to the consolidated financial statements include information
which is not required under accounting principles generally acceptedin Japan but is presented herein as additional information. Furthermore, certain amounts in the prior year’s financial statements havebeen reclassified to conform to the current year’s presentation.
(b) P rinciples of consolidation and accounting for investments
in unconsolidated subsidiaries and affiliates

The accompanying consolidated financial statements include theaccounts of the Company and any significant companies controlled
directly or indirectly by the Company. Companies over which theCompany exercises significant influence in terms of their operating
and financial policies have been accounted for by the equity method.
As of March 31, 2009, the number of consolidated subsidiaries andaffiliates accounted for by the equity method were 6 and 3 (6 and 4
in 2008), respectively. All significant inter-company balances andtransactions have been eliminated in consolidation.
Investments in subsidiaries and affiliates which are not consolidated or accounted for by the equity method are carried at cost or
less. Where there has been a permanent decline in the value of suchinvestments, the Company has written down the investments.

Assets and liabilities of the consolidated subsidiaries acquired
before April 1, 1999 were initially valued at cost at the time of acquisition. It is the Company’s policy to value assets and liabilities ofsubsidiaries acquired on or after April 1, 1999 at fair value when the
Company obtains control over such subsidiaries; however, theCompany has not acquired any subsidiaries since April 1, 1999.
(c) Accounting period
The accounting period of the Company begins on April 1 and ends
on March 31 of the following year. The two overseas subsidiaries
have fiscal years ending on December 31. The necessary adjustments
for significant transactions, if any, during the intervening period aremade on consolidation.
(d) Translation of foreign currency transactions andfinancial statements

Monetary assets and liabilities denominated in foreign currencies aretranslated into yen at the rates of exchange in effect at the balance
sheet date and the accounts of the overseas consolidated subsidiaries
are translated into yen at the rates of exchange in effect at the balance
sheet date. Foreign exchange gains and losses are credited or charged
to income and translation adjustments are included in net assets.
(e) Marketable securities and investment securities
Other securities with determinable market value are carried atmarket value with any changes in unrealized holding gain or loss,
net of the related deferred income tax assets or liabilities, included
in net assets. Other securities without determinable market value
are stated at cost determined principally by the moving-averagemethod and the cost of other securities sold is principally computed
based on the moving-average method. During the years ended
March 31, 2009 and 2008, the Company and its consolidated subsidiaries did not have any trading securities.
(f) Inventories
Until March 31, 2008, inventories of the Company and its domestic
consolidated subsidiaries were stated at cost. Effective the fiscal year
ended March 31, 2009, the Company and its domestic consolidated
subsidiaries have changed the measurement method to the lower ofcost or net selling value. Cost is determined by the average method.
See Note 3.
Inventories of overseas consolidated subsidiaries are stated at
the lower of cost or market, cost being determined by the average
cost method.

S.T. CORPORATION

23

(g) P roperty, plant and equipment, except for leased assets,
and depreciation

Property, plant and equipment are stated at cost. Depreciation ofproperty, plant and equipment of the Company and its domestic
subsidiaries, except for buildings (excluding structures attached tothe buildings) acquired on or after April 1, 1998, is computed by
the declining-balance method in conformity with the Corporation
Tax Law of Japan. Depreciation of property and equipment of overseas subsidiaries and buildings (excluding structures attached tothe buildings) acquired on or after April 1, 1998 of the Company
and domestic subsidiaries is computed by the straight-line method.
The estimated useful lives of the major depreciable assets are
as follows:
Buildings and structures		
3 to 56 years
Machinery, equipment and vehicles
2 to 17 years
Tools, furniture and fixtures		
2 to 20 years(Additional information)
Effective the fiscal year ended March 31, 2009, the Company andits domestic consolidated subsidiaries have changed the depreciable
life of certain machinery and equipment according to the Corporation
Tax Law as amended.
As a result of the adoption of the new depreciable life, operating
income and income before income taxes and minority interests forthe year ended March 31, 2009 decreased by ¥16 million (U.S.$162
thousand) and ¥17 million (U.S.$173 thousand), respectively. The
effect on the business segment information was immaterial.
Effective the fiscal year ended March 31, 2008, the residual
value of the tangible fixed assets acquired on or before March 31,
2007 that have been fully depreciated up to 5 percent of theacquisition cost based on the prior Corporation Tax Law is to be
depreciated to nominal book value using the straight-line method
over a period of 5 years in accordance with the Corporation Tax
Law as amended.
As a result of the additional depreciation, operating income, income
before income taxes and minority interests and net income for theyear ended March 31, 2008 increased by ¥46 million, ¥48 million and¥28 million, respectively. The effect on the business segment information is described in Note 16, Segment Information.
(h) Intangible assets, and long-term prepaid expenses
Intangible assets and long-term prepaid expenses, except forleased assets, are amortized by the straight-line method. Cost of
software purchased for internal use is amortized by the straightline method over a period of 5 years, the useful life applicable tocommercially available software.

24

S.T. CORPORATION(i) Leases
Noncancelable lease transactions that transfer substantially all therisks and rewards associated with the ownership of the leased
assets are accounted for as finance leases. All other lease transactions are accounted for as operating leases and related payments
are charged to income as incurred.
Finance leases entered into before April 1, 2008 of the Company and its domestic subsidiaries are accounted for as operatingleases, except for those which transfer ownership of the leased
assets to the lessee.
Leased assets accounted for as finance leases are depreciatedon the straight-line method over the lease periods with noresidual value.
(j) Allowance for doubtful receivables
The allowance for doubtful receivable is provided based on pastexperience for normal receivables and on an estimate of the collectability of receivables from companies in financial difficulty.
(k) Allowance for sales returns
The allowance for sales returns is generally provided for losses onsales returns subsequent to the balance sheet date at an amountequivalent to that calculated based on sales in conformity with the
Corporation Tax Law of Japan.
The allowance for sales returns of certain products is estimatedbased on the actual percentage of returns in prior years.
(l) Employees’ retirement and severance benefits
Accrued retirement and severance benefits have been recorded
mainly at the amount calculated based on the retirement benefit
obligation and the fair value of the pension plan assets as of balance sheet date, as adjusted for unrecognized actuarial gain or loss
and unrecognized prior service cost.
Actuarial gain or loss is amortized in the year following the year
in which the gain or loss is recognized primarily by the straight-line
method over a period of 5 years which is shorter than the averageremaining years of service of the employees.
Prior service cost is amortized as incurred by the straight-line
method over a period of 5 years which is shorter than the averageremaining years of service of the employees.
In addition, one overseas subsidiary provides an allowance forpayments of employees’ retirement and severance benefits at
100% of the voluntary termination payments.
(m) Directors’ retirement and severance benefits
The Company has accrued directors’ retirement and severance
benefits at the amount which would be required to be paid if all
directors resigned from their positions and left the Company as of
the balance sheet date in accordance with its internal regulations.

(n) Consumption taxes
Transactions subject to consumption taxes are recorded at amounts
exclusive of consumption taxes.
(o) Cash and cash equivalents
Cash and cash equivalents in the accompanying consolidated
statements of cash flows consist of cash on hand, demand deposits and liquid short-term investments with a maturity of threemonths or less from their respective dates of acquisition.

2. Basis of Translation
The consolidated financial statements presented herein are
expressed in yen and, solely for the convenience of the reader,have been translated into U.S. dollars at ¥98.23 = U.S.$1.00, theapproximate exchange rate prevailing on the Tokyo Foreign
Exchange Market on March 31, 2009. This translation should not
be construed as a representation that all amounts shown could
have been, or could in the future be, converted into U.S. dollars atthat or any other rate.

3. Changes in Accounting Policies(Application of accounting standard for measurement of inventories)
Until March 31, 2008, inventories of the Company and its domestic
consolidated subsidiaries were stated at cost. Effective the fiscal year
ended March 31, 2009, the Company and domestic consolidated
subsidiaries have adopted the “Accounting Standard for Measurement of Inventories” (ASBJ Statement No. 9). This standard requiresthat inventories held for sale in the ordinary course of business bemeasured at the lower of cost or net selling value, which is definedas the selling price less additional estimated manufacturing costs
and estimated direct selling expenses. The replacement cost may be
used in place of the net selling value, if appropriate.
As a result of the adoption of the new standard, operating
income and income before income taxes and minority interests forthe year ended March 31, 2009 decreased by ¥167 million(U.S.$1,698 thousand) and ¥27 million (U.S.$279 thousand),
respectively. The effect on the business segment information is
described in Note 16, Segment Information.

(Application of accounting standard for leases)
Until March 31, 2008, noncancelable leases of the Company andits domestic consolidated subsidiaries were accounted for as operating leases (whether such leases were classified as operating or
finance leases) except that lease agreements which stipulated thetransfer of ownership of the leased assets to the lessee were
accounted for as finance leases. Effective the fiscal year ended
March 31, 2009, the Company and its domestic consolidated subsidiaries adopted a revised accounting standard for leases andrelated implementation guidance, the “Accounting Standard forLease Transactions” (ASBJ Statement No. 13) and the “Guidanceon Accounting Standard for Lease Transactions” (ASBJ GuidanceNo. 16). In accordance with the revised standard, lease transactions which have been entered into on and after April 1, 2008
have been accounted for as either finance or operating leases.
The effect of this change was immaterial to the consolidated
financial statements for the year ended March 31, 2009.
(Application of practical solution on unification of accounting
policies applied to foreign subsidiaries)
Effective the fiscal year ended March 31, 2009, the Company
has applied PITF No. 18 for the preparation of consolidated
financial statements.
The impact on operating income and income before income
taxes and minority interests was nil.
(Change in depreciation method of tangible fixed assets)
Effective the fiscal year ended March 31, 2008, the Company and its
domestic consolidated subsidiaries have changed their depreciation
method in terms of the tangible fixed assets acquired after April 1,
2007 in accordance with the Corporation Tax Law as amended.
As a result of the adoption of the new method, operating
income, income before income taxes and minority interests andnet income for the year ended March 31, 2008 increased by¥47 million, ¥47 million and ¥28 million, respectively. The effecton the business segment information is described in Note 16,
Segment Information.

S.T. CORPORATION25

4. Marketable Securities andInvestment Securities

The redemption schedule of other securities with maturity dates at
March 31, 2009 and 2008 is summarized as follows:

The cost and related aggregate market value of other securities witha determinable market value at March 31, 2009 and 2008 are summarized as follows:
Thousands of
U.S. dollars

Millions of yen

CostMarket value
Total unrealized gain
Total unrealized loss

2009

2008

2009

¥1,607
1,961
416
62

¥2,103
2,927
852
27

$16,360
19,9644,238
634

The Company recognized impairment losses on securities at the difference between market value and book value if the market value had
declined by 30% or more from the book value. Impairment losses on
securities for the years ended March 31, 2009 and 2008 were ¥7 million(U.S.$69 thousand) and ¥2 million, respectively.
Securities at March 31, 2009 and 2008 excluded from the abovetable are summarized at their respective book value as follows:
Thousands of
U.S. dollars

Millions of yen

Other securities:
CP
Unlisted stocks

2009

2008

2009

¥599
48

—
¥48

$6,102
490

Thousands of
U.S. dollars

Millions of yen

26

S.T. CORPORATION

One year or lessMore than 1 year andwithin 5 years
More than 5 years andwithin 10 years
More than 10 years

2009

2008

2009

¥599

¥493

$6,102

84

—

858

99
—

100
—

1,009
—

5. Land Revaluation
In accordance with the Land Revaluation Law (Proclamation No. 34
dated March 31, 1998), land used for business activities was revalued
at March 31, 2002. The revaluation difference, net of taxes, is statedas “unrealized revaluation loss on land, net of taxes” in net assets.
Deferred tax liabilities arising from this revaluation difference are presented separately from deferred tax liabilities for other temporary
differences in the accompanying consolidated balance sheets. The
market value of the land as of March 31, 2009 and 2008 decreasedby ¥217 million (U.S.$2,210 thousand) and ¥400 million, respectively,
after the revaluation.

6. Pledged Assets

The Company recognized impairment losses on non-marketablesecurities if the net book value declined by 50% or more from thebook value or if the issuers of the non-marketable securities wentbankrupt or were substantially bankrupt.
Sales of other securities for the years ended March 31, 2009 and2008 are summarized as follows:

Proceeds received
Aggregate gain
Aggregate loss

Thousands of
U.S. dollars

Millions of yen

2009

2008

2009

¥3,3095—¥3,8507
7$33,682
54—

At March 31, 2009 and 2008, the following assets were pledged ascollateral for borrowing limits of ¥386 million (U.S.$3,934 thousand)and ¥621 million, respectively.
Thousands of
U.S. dollars

Millions of yen

Buildings and structures
Land
Total

2009

2008

2009

¥ 62
95
¥158

¥ 84
119
¥204

$ 635971$1,607

7. Income Taxes
At March 31, 2009 and 2008, the tax effect of the temporary differences which gave rise to a significant portion of the deferred tax assets(excluding deferred taxes on unrealized revaluation loss on land) was as follows:
Thousands of
U.S. dollars

Millions of yen

CURRENT ASSETS:
Accrued employees’ bonuses
Allowance for sales returns
Accrued business taxes
Unrealized holding loss on other securities, net of taxes
Other
Total current deferred tax assets
CURRENT LIABILITIES:Deferred gain on sales of property
Other
Total current deferred tax liabilities
Net current deferred tax assets
NON-CURRENT ASSETS:
Allowance for employees’ retirement and severance benefits
Allowance for directors’ retirement and severance benefits
Write-downs of securities
Impairment loss
Other
Gross non-current deferred tax assets
Valuation allowance
Total non-current deferred tax assets
NON-CURRENT LIABILITIES:Deferred gain on sales of property
Undistributed earnings of controlled foreign companies
Unrealized holding gain on other securities, net of taxes
Total non-current deferred tax liabilities
Net non-current deferred tax assets

2009

2008

2009

¥144
56
28
—
105
333

¥146
62
30
3
124
365

$1,469
571
283
—
1,064
3,387

(0)
—
(0)
¥332

(0)
(2)
(2)
¥362

(5)
—
(5)
$3,383

¥479
38
72
155
4
749
(175)
574

¥474
34
70
181
10
769
(173)
596

$4,880
390
733
1,581
41
7,626
(1,782)
5,844

(19)
(38)
(134)
(190)
¥384

(19)
—
(285)
(304)
¥291

(189)
(383)
(1,363)(1,934)$3,910

S.T. CORPORATION27

A reconciliation of the statutory tax rate to the Company’s effective
tax rates for the years ended March 31, 2009 and 2008 is summarized
as follows:

Japanese statutory tax rate
Permanent differences such asentertainment expenses, etc.
Permanent differences such as
dividend income
Inhabitants’ per capita taxes, etc.
Valuation allowance
Undistributed earnings ofcontrolled foreign companies
Other
Effective tax rate

2009

2008

40.00%

40.00%

2.48

2.41(0.87)
0.30­—(0.29)
0.86
1.56

1.91
0.30
44.12%—
0.61
45.15%

8. Employees’ Retirement andSeverance Benefits
The Company and its domestic subsidiaries have defined benefit planscovering substantially all of their employees which are partially fundedthrough a qualified funded pension plan. Under these plans, employees are entitled to lump-sum or pension retirement or severance benefits determined by points accumulated monthly based on theemployees’ contributions, length of service and the conditions underwhich termination occurs. In addition, the Company and its domestic
subsidiaries pay meritorious service awards to employees in excess ofthe prescribed formula, which are charged to income as paid as it is
not practicable to compute the liability for such future payments since
the amounts vary depending on the circumstances.
The following table summarizes the funded status and amounts
recognized in the accompanying consolidated balance sheets at
March 31, 2009 and 2008:

Millions of yen

Retirement and severance
benefit obligation
Plan assets
Unfunded benefit obligation
Unrecognized actuarial loss
Unrecognized past
service costAccrued benefit obligation

28

S.T. CORPORATION

Thousands of
U.S. dollars

2009

2008

2009

¥(2,927)
1,562(1,366)156¥(3,008)
1,679(1,330)126$(29,801)
15,899(13,903)
1,591(3)¥(1,212)2¥(1,202)27$(12,339)

The following table summarizes the components of net retirement
benefit expenses for the years ended March 31, 2009 and 2008:
Thousands of
U.S. dollars

Millions of yen

Service cost
Interest cost on benefit
obligation
Expected return onplan assets
Amortization of
actuarial loss
Amortization of
past service cost
Extraordinary additional
retirement payments
Net retirement benefit
expenses

2009

2008

2009

¥156

¥157

$1,588

59

57

602

(34)

(34)

(342)

25

17

255

1

1

14

14

17

147

¥222

¥215

$2,265The assumptions used in determining the pension benefit obligation are presented below:

Method of periodic allocation of
estimated retirement benefits
Discount rate
Expected rate of return onplan assets

2009

2008

Straight-line
method2.0%

Straight-line
method
2.0%

2.0%

2.0%

9. Net assets
The Corporation Law of Japan (the “Law”), which superseded mostof the provisions of the Commercial Code of Japan, went into effecton May 1, 2006. The Law provides that an amount equal to 10% of
the amount to be disbursed as distributions of capital surplus (otherthan the capital reserve) and retained earnings (other than the legal
reserve) be transferred to the capital reserve and the legal reserve,
respectively, until the sum of the capital reserve and the legal reserve
equals 25% of the capital stock account. Such distributions can bemade at any time by resolution of the shareholders, or by the Boardof Directors if certain conditions are met.
Capital surplus and the legal reserve are not available for the distribution of dividends but may be used to reduce or eliminate a deficit or
may be transferred to stated capital. At March 31, 2009, the legal
reserve of the Company included in retained earnings amounted to¥550 million (U.S.$5,597 thousand).
The maximum amount which the Company can distribute as dividends
is calculated based on the non-consolidated financial statements of theCompany and in accordance with the Corporation Law of Japan.

10. Amounts per share

11. Major Expenses

Net assets per share as of March 31, 2009 and 2008 were ¥853.81(U.S.$8.69) and ¥853.90, respectively. Basic net income per share forthe years ended March 31, 2009 and 2008 was ¥49.32 (U.S.$0.50)
and ¥54.08, respectively.
Diluted net income per share for the years ended March 31, 2009
and 2008 was ¥49.28 (U.S.$0.50) and ¥53.99, respectively.
The basis for calculation of basic net income per share and diluted
net income per share for the years ended March 31, 2009 and 2008
was as follows:

Major expenses included in selling, general and administrative expenses
for the years ended March 31, 2009 and 2008 were as follows:

Thousands of
U.S. dollars

Millions of yen

Basic net income per share:
Net income
Amount not attributable   to shareholders of   common stock:—
Amount attributable to   shareholders of   common stock
Weighted-average   number of shares   outstanding   (millions of shares)
Diluted net income per share:
Increase in number of   shares outstanding
Shares resulting in an   anti-dilutive effect   (millions of shares)

2009

2008

2009

¥1,076¥1,295$10,957

—

—
1,295

10,957

22

24

—

0

0

0

—

—

—

The basis for calculation of total net assets per share as of March
31, 2009 and 2008 was as follows:

Total net assets per share:
Total net assets
Deductions:   Subscription rights   Minority interests in    consolidated    subsidiaries
Amounts attributable   to shareholders of   common stock
Number of shares   outstanding at year end   (millions of shares)

Sales promotion expenses
Advertising costs
Salaries
Shipment andstorage expenses
Provision for
employees’ retirement andseverance benefits
Provision for
directors’ retirement andseverance benefits
Provision for
doubtful accounts

2009

2008

2009

¥4,2752,806
1,737¥4,2083,111
1,753$43,523
28,565
17,684

1,554

1,647

15,819

187

174

1,906

15

14

156

—

26

—

—

1,076

Research and development expenses included in general andadministrative expenses and cost of sales for the years ended March
31, 2009 and 2008 amounted to ¥499 million (U.S.$5,080 thousand)and ¥489 million, respectively.

12. Cash and Time Deposits
Deposits pledged as collateral mainly for leased office space at March
31, 2009 and 2008 amounted to ¥23 million (U.S.$231 thousand)and ¥23 million, respectively.
A reconciliation of cash and cash equivalents in the accompanying
consolidated statements of cash flows to cash and time deposits inthe accompanying consolidated balance sheets at March 31, 2009
and 2008 is as follows:

Millions of yen

Thousands of
U.S. dollars

Millions of yen

Thousands of
U.S. dollars

Millions of yen

2009

2008

2009

¥19,029390
51¥19,144518
28$193,723
3,967
521

339

490

3,447

18,64018,627

189,756

22

22—

Cash and time deposits
Time deposits with amaturity in excess of
three months
Marketable securities witha maturity of
three months orless from their respective
dates of acquisition
Cash and cash equivalents

Thousands of
U.S. dollars

2009

2008

2009

¥6,144¥6,008$62,545(1,223)(823)(12,448)599¥5,520—¥5,185

6,102$56,199

S.T. CORPORATION

29

13. Leases(Finance leases)
Leased assets included in property, plant and equipment are tools,
furniture and fixtures in the mothproofing and hygiene-related products segment and the household environment-related products segment. Leased assets included in intangible assets are software.
In accordance with the revised accounting standard effective thefiscal year ended March 31, 2009, the Company and its domestic
subsidiaries account for finance leases as operating leases for thosethat were entered into before April 1, 2008 and if ownership of theleased property does not transfer to the lessee. Information in relation
to leased assets held under finance leases but accounted for as operating leases is below:(1) A summary of the pro forma amounts (inclusive of the related
interest) of acquisition cost, accumulated depreciation and net bookvalue at March 31, 2009 and 2008, primarily relating to tools, furniture and fixtures is as follows:

Millions of yen

Acquisition cost
Accumulated depreciation
Net book value

Thousands of
U.S. dollars

2009

2008

2009

¥252
153
¥ 99

¥277
114
¥163

$2,5681,557$1,011(2) Future minimum lease payments, inclusive of the related interest,
subsequent to March 31, 2009 and 2008 are summarized as follows:

Millions of yen

Payable in one year or less
Payable after one year
Total

30

S.T. CORPORATION

Thousands of
U.S. dollars

2009

2008

2009

¥53
46
¥99

¥ 64
99
¥163

$ 539472$1,011(3) Lease payments and pro forma depreciation charges for the years
ended March 31, 2009 and 2008 were ¥64 million (U.S.$646 thousand)and ¥61 million, respectively.
(4) Depreciation is computed by the straight-line method over therespective lease terms assuming a nil residual value.
(Operating leases)
The Company and its consolidated subsidiaries have no significant
operating leases at March 31, 2009 and 2008.

14. Commitments and Contingent
Liabilities
At March 31, 2009 and 2008, trade notes discounted with banks inthe ordinary course of business amounted to ¥91 million (U.S.$927
thousand) and ¥91 million, respectively.

15. Derivatives
The Company has entered into forward foreign exchange contracts to
reduce its exposure to the risk of future adverse fluctuation in foreignexchange rates related to its trade receivables and payables and loans
denominated in foreign currencies. It is the Company’s policy not toenter into any speculative derivatives transactions and its subsidiaries
and associated companies do not enter into any forward foreignexchange contracts.
Unrealized gain or loss on a hedging instrument is deferred until
the Company recognizes gain or loss on the underlying hedged item.
Assets or liabilities hedged by forward foreign exchange contracts aretranslated at the forward exchange contract rates.
As the Company enters into such contracts only with domestic
banks with high credit ratings, the Company does not anticipate any
risk of non-performance by these counter parties.
In addition, the execution of, and control over, derivatives transactions are carried out by the Administrative Division in accordance withinternal control regulations which limit the nature of the transactions
and individuals authorized to be in charge of such transactions.

16. Segment Information
The Company and its consolidated subsidiaries operate in two business segments and business segment information for the years ended March
31, 2009 and 2008 is summarized as follows:Year ended March 31, 2009
Millions of yen

1.Sales(1) Sales to third parties(2) Intra-group sales and transfers
Net sales
2.Operating expenses
Operating income
3.Total assets, depreciation and capital expenditures:(1) Total assets(2) Depreciation(3) Capital expenditures

Mothproofing
andhygiene-related
products

Householdenvironmentrelated
products¥18,507—18,507
16,787¥ 1,720

Total

Eliminations
or corporate
assetsConsolidated¥26,373—
26,37325,600¥ 773¥44,879—
44,87942,387¥ 2,493

—
—
—
—
—

¥44,879—
44,87942,387¥ 2,493¥ 8,511¥ 330¥ 125¥12,082¥ 528¥ 591¥20,593¥ 858¥ 716¥7,024——¥27,617¥ 858¥ 716

Mothproofing
andhygiene-related
products

Householdenvironmentrelated
products

Total

Eliminations
or corporate
assetsConsolidated¥19,521—
19,521
17,668¥ 1,853¥27,485—
27,485
26,119¥ 1,366¥47,006—
47,00643,787¥ 3,219

—
—
—
—
—

¥47,006—
47,00643,787¥ 3,219¥ 8,909¥ 373¥ 154¥12,079¥ 563¥ 495¥20,988¥ 936¥ 649¥7,405——¥28,393¥ 936¥ 649Thousands of U.S. dollars
HouseholdenvironmentEliminations
relatedor corporate
products
Total
assetsConsolidated

Year ended March 31, 2008
Millions of yen

1.Sales(1) Sales to third parties(2) Intra—group sales and transfers
Net sales
2.Operating expenses
Operating income
3.Total assets, depreciation and capital expenditures:(1) Total assets(2) Depreciation(3) Capital expenditures

Year ended March 31, 2009
Mothproofing
andhygiene-related
products

1.Sales(1) Sales to third parties(2) Intra-group sales and transfers
Net sales
2.Operating expenses
Operating income
3.Total assets, depreciation and capital expenditures:(1) Total assets(2) Depreciation(3) Capital expenditures$188,402—
188,402
170,890$ 17,512$268,480—
268,480
260,614$ 7,866$456,882—
456,882
431,503$ 25,378

—
—
—
—
—

$456,882—
456,882
431,503$ 25,378$ 86,646$ 3,360$ 1,273$122,993$ 5,370$ 6,019$209,639$ 8,730$ 7,292$71,503——$281,142$ 8,730$ 7,292

S.T. CORPORATION

31

The business segments are classified according to the nature of theCompany’s products and their markets. Major products in the mothproofing and hygiene-related products segment are Cloth Care, Hand
Care and Thermal Care and those in the household environment-related
products segment are Air Care, Humidity Care and Home Care.

17. Inventory Valuation Loss Included
in Cost of Sales(Year ended March 31, 2009)
Change in accounting policies
Effective the fiscal year ended March 31, 2009, the Company anddomestic consolidated subsidiaries have adopted “Accounting Standard for Measurement of Inventories” (ASBJ Statement No. 9).
As a result of the adoption of the new standard, operating expensesof the mothproofing and hygiene-related products segment and thehousehold environment-related products segment increased by ¥12
million (U.S.$119 thousand) and ¥155 million (U.S.$1,579 thousand),
respectively. Operating income decreased by the same amounts in themothproofing and hygiene-related products segment and the household environment-related products segment.
Geographical segment information and overseas sales are not presented as net sales and total assets in Japan exceeded 90% of thetotals in both segments and as overseas sales were less than 10% ofconsolidated net sales for the years ended March 31, 2009 and 2008.

18. Note to Consolidated Statementsof Changes in Net Assets(Year ended March 31, 2008)
Change in accounting policies
Effective the fiscal year ended March 31, 2008, the Company anddomestic consolidated subsidiaries have changed their depreciation
method in terms of the tangible fixed assets acquired after April 1,
2007 in accordance with the Corporation Tax Law as amended.
As a result of the adoption of the new method, operating expensesof the mothproofing and hygiene-related products segment and thehousehold environment-related products segment increased by ¥3
million and ¥44 million, respectively. Operating income decreased by
the same amounts in the mothproofing and hygiene-related products
segment and the household environment-related products segment.
Additional information
Effective the fiscal year ended March 31, 2008, the residual value of thetangible fixed assets acquired on or before March 31, 2007 that havebeen fully depreciated up to 5 percent of the acquisition cost based on
the prior Corporation Tax Law is to be depreciated to nominal bookvalue using a straight-line method over a period of 5 years and bookedin accordance with the Corporation Tax Law as amended.
As a result of the additional depreciation, operating expenses of
mothproofing and hygiene-related products segment and household
environment-related products segment increased by ¥19 million and¥26 million, respectively. Operating income decreased by the sameamounts in mothproofing and hygiene-related products segment andthe household environment-related products segment.

32

S.T. CORPORATION

Inventory valuation loss write-downs below cost to net selling value
are included in cost of sales and amounted to ¥525 million (U.S.$5,343
thousand) for the year ended March 31, 2009.

Shares in issue and outstanding and treasury stock at March 31, 2009
and 2008 were as follows:(Year ended March 31, 2009)
Number of shares in issue and outstanding:   Common stock
29,500 thousand
Number of shares held in treasury:   Common stock
7,668 thousand
Subscription rights at March 31, 2009 were as follows:
Subscription rights for stock options¥51 million(U.S.$521 thousand)
Dividends paid from retained earnings for the year ended March 31,
2009 were as follows:

Resolution

Board ofdirectors’
meeting held on
May 21, 2008
Board ofdirectors’
meeting held on
October 30, 2008

Total Dividend
amount ofperdividends
share(Millions of yen)
(Yen)

Record date

Effective
date

240

11

March 31,2008

June 4,
2008

240

11

September 30,
2008

December 5,
2008

Dividends for which the record date was in the year ended March
31, 2009 and the effective date is in the year ending March 31, 2010
were as follows:

Scheduledresolution

Board ofdirectors’
meeting held on
May 20, 2009

Total
amount ofdividends(millions of yen)

240

Source ofdividends

Retainedearnings

Dividend
per
share
(Yen)

Recorddate

Effectivedate

11 March 31,
2009

June 4,2009

19. Stock Option Plans(Year ended March 31, 2008)
Number of shares in issue and outstanding:   Common stock
29,500 thousand
Number of shares held in treasury:   Common stock
7,686 thousand

At March 31, 2009, the Company had stock option plans, which wereapproved at the annual general meetings of the shareholders andby the Board of Directors. Details of these stock option plans are
summarized as follows:

Subscription rights at March 31, 2008 were as follows:
Subscription rights for stock options¥28 million
Dividends paid from retained earnings for the year ended March
31, 2008 were as follows:

Resolution

Board ofdirectors’
meeting held on
May 14, 2007
Board ofdirectors’
meeting held on
October 30, 2007

Total Dividend
amount ofperdividends
share(Millions of yen)
(Yen)

Record date

Effective
date

284

11

March 31,2007

June 18,
2007

284

11

September 30,
2007

December 7,
2007

Dividends for which the record date was in the year ended March
31, 2008 and the effective date was in the year ended March 31,
2009, were as follows:

Scheduledresolution

Board ofdirectors’
meeting held on
May 21, 2008

Total
amount ofdividends(millions of yen)

240

Dividendper
Source ofshare
dividends(Yen)

Record date

Effective
date

Retainedearnings

March 31,2008

June 4,
2008

11

Date of approval

Number ofsharesgrantedJune 15, 2001

140,000

June 14, 2002

225,000

June 13, 2003

155,000

June 15, 2004

130,000

June 14, 2005

160,000

June 14, 2006

75,000June 15, 2007

140,000

June 18, 2008

95,000Eligible participants

Exercisable period

1 director and23 employees(including 1
executive officer)
1 director and
43 employees
1 director and
25 employees
4 officers and
9 employees
3 officers and23 employees
3 officers and4 employees
4 officers and
14 employees
3 officers and
12 employees

July 1, 2003–
June 30, 2008
July 1, 2004–
June 30, 2009
July 1, 2005–
June 30, 2010
July 1, 2006–
June 30, 2011
July 1, 2007–
June 30, 2012
July 1, 2008–
June 30, 2013
Aug 1, 2009–
July 31, 2014
Aug 1, 2010–
July 31, 2015

The option price per share was determined on the date the options
were granted based on an established formula for determining
option prices. The options are exercisable during the above periods
provided that the recipients are still directors, officers or employeesof the Company or its subsidiaries.

S.T. CORPORATION

33

(Year ended March 31, 2009)
Costs related to the 2009 stock option plan amounting to ¥23 million (U.S.$236 thousand) were included in selling, general and administrative expenses.
Contents of stock options
2002

GranteesType of stock
Number ofshares granted
Grant dateCondition forexercise

Working period

Exercisable
period

2003

2004

2005

2006

2007

2008

2009

1 director and 1 director and 1 director and 4 directors and 3 directors and 3 directors and 4 directors and 3 directors and23 employees 43 employees 25 employees
9 employees 23 employees
4 employees 14 employees 12 employees(including 1
executive
officer)
CommonCommonCommonCommonCommonCommonCommonCommon
stock
stock
stock
stock
stock
stock
stock
stock
140,000
225,000
155,000
130,000
160,000
75,000140,000
95,000
October 11,
August 1,
August 1,
August 4,
August 4,
August 1,
August 1,
August 1,
2001
2002
2003
2004
2005
2006
2007
2008
Working from Working from Working from Working from Working from Working from Working from Working from
August 1,
August 1,
August 1,
August 4,
August 4,
August 1,
August 1,
October 11,
2008 to2007 to2006 to2005 to2004 to2003 to2002 to2001 toJuly 31,
July 31,
June 30,
June 30,
June 30,
June 30,
June 30,
June 30,
2010
2009
2008
2007
2006
2005
2004
2003
August 1,
August 1,
August 1,
August 4,
August 4,
August 1,
August 1,
October 11,
2008 to2007 to2006 to2005 to2004 to2003 to2002 to2001 toJuly 31,
July 31,
June 30,
June 30,
June 30,
June 30,
June 30,
June 30,
2010
2009
2008
2007
2006
2005
2004
2003
Within 5 Within 5 years
Within 5
Within 5
Within 5
Within 5
Within 5
Within 5
after theyears after
years after
years after
years after
years after
years after
years after
vesting datethe vesting
the vesting
the vesting
the vesting
the vesting
the vesting
the vestingdate (those (those retiring
date (thosedate (thosedate (thosedate (thosedate (thosedate (thoseafter theretiring after retiring after retiring after retiring after retiring after retiring after retiring after
vesting datethe vesting
the vesting
the vesting
the vesting
the vesting
the vesting
the vesting
cannotdate cannot
date cannot
date cannot
date cannot
date cannot
date cannot
date cannot
exercise
exercise their exercise their exercise their exercise their exercise their exercise their exercise their
their stock
stock
stock
stock
stock
stock
stock
stock
options)
options)
options)
options)
options)
options)
options)
options)

Stock option activity during the year ended March 31, 2009 was as follows:
Number of shares
Non-vested Outstanding at beginning of year
Granted during the year
Forfeited during the year
Vested during the year
Outstanding at end of year
Vested Outstanding at beginning of year
Vested during the year
Exercised during the year
Forfeited during the year
Outstanding at end of year

34

S.T. CORPORATION

2002

2003

2004

2005

2006

2007

2008

2009

—
—
—
—
—
5,000
—
5,000
—
—

—
—
—
—
—
21,000—14,000
—
7,000

—
—
—
—
—
44,000—1,000—
43,000—————105,000———
105,000—————
115,000———
115,000

75,000——75,000——75,000——75,000140,000———
140,000
—
—
—
—
—

—
95,000——95,000—————Price of stock options
U.S.
dollars

Yen

Exercise price
Weighted-average market price
Fair value per option on grant date

2002

2003

2004

2005

2006

2007

2008

2009

2009

¥ 669¥1,192—¥ 636¥1,123—¥ 867¥1,311—¥1,405——¥1,628——¥1,727—¥ 292¥1,517—¥ 191¥1,264—¥ 220$13—$ 2

The fair value of each stock option grant was estimated at the grant
date using the Black-Scholes option pricing model. The fair value per
option for options granted during the year ended March 31, 2009
was estimated based on the following assumptions:
2009
23.9%
4 years and 6 months¥22 (U.S.$0.22)
1.07%

Volatility
Option term
Expected dividend (per share)
Risk free interest rate

Volatility was determined based on the actual stock price over the
past 4 years and 6 months.
The option term was estimated under the assumption that theoptions would be exercised in the middle of the exercisable period
because of insufficient data.
Expected dividend (per share) was based on the dividend amountapplicable to the 2008 fiscal year.
Risk-free interest rate was based on government bonds whoseterms corresponded with the terms of the above options.

Method of estimating exercised stock options
The Company estimated the number of exercised stock options based on the actual number of forfeitures because it is difficult to estimate thenumber of stock options which will be forfeited in the future.
(Year ended March 31, 2008)
Costs related to the 2008 stock option plan amounting to ¥20 million were included in selling, general and administrative expenses.
Contents of stock options
GranteesType of stock
Number of shares granted
Grant dateCondition for exercise

Working period

Exercisable period

2002

2003

1 director and23 employees(including 1
executive
officer)
Commonstock
140,000
October 11,
2001
Working from
October 11,
2001 toJune 30,
2003
October 11,
2001 toJune 30,
2003
Within 5 years
after thevesting date(those retiring
after thevesting datecannot exercise
their stock
options)

1 director and
43 employees

1 director and 4 directors and 3 directors and 3 directors and 4 directors and
25 employees
9 employees 23 employees
4 employees 14 employees

2004

2005

Commonstock
225,000
August 1,
2002
Working from
August 1,
2002 toJune 30,
2004
August 1,
2002 toJune 30,
2004
Within 5 years
after thevesting date(those retiring
after thevesting datecannot exercise their stock
options)

Commonstock
155,000
August 1,
2003
Working from
August 1,
2003 toJune 30,
2005
August 1,
2003 toJune 30,
2005
Within 5 years
after thevesting date(those retiring
after thevesting datecannot exercise their stock
options)

Commonstock
130,000
August 4,
2004
Working from
August 4,
2004 toJune 30,
2006
August 4,
2004 toJune 30,
2006
Within 5 years
after thevesting date(those retiring
after thevesting datecannot exercise their stock
options)

2006

Commonstock
160,000
August 4,
2005
Working from
August 4,2005 toJune 30,
2007
August 4,2005 toJune 30,
2007
Within 5 years
after thevesting date(those retiring
after thevesting datecannot exercise their stock
options)

2007

Commonstock
75,000August 1,
2006
Working from
August 1,
2006 toJune 30,
2008
August 1,
2006 toJune 30,
2008
Within 5 years
after thevesting date(those retiring
after thevesting datecannot exercise their stock
options)

2008

Commonstock
140,000
August 1,
2007
Working from
August 1,
2007 toJuly 31,2009
August 1,
2007 toJuly 31,2009
Within 5 years
after thevesting date(those retiring
after thevesting datecannot exercise their stock
options)

S.T. CORPORATION

35

Stock option activity during the year ended March 31, 2008 was as follows:
Number of shares
Non-vested outstanding at beginning of year
Granted during the year
Forfeited during the year
Vested during the year
Outstanding at end of year
Vested outstanding at beginning of year
Vested during the year
Exercised during the year
Forfeited during the year
Outstanding at end of year

2002

2003

2004

2005

2006

2007

2008

—
—
—
—
—
5,000
—
—
—
5,000

—
—
—
—
—
31,000—10,000—21,000—————57,000—13,000—44,000—————110,000——
5,000
105,000

160,000—
40,000120,000——
120,000—
5,000
115,000

75,000———75,000——————140,000——
140,000—————

Price of stock options
Yen

Exercise price
Weighted-average market price
Fair value per option on grant date

2002

2003

2004

2005

2006

2007

2008

¥669
—
—

¥ 636¥1,440—¥ 867¥1,440—¥1,405——¥1,628——¥1,727—¥ 292¥1,517—¥ 191

The fair value of each stock option grant was estimated at the grant
date using the Black-Scholes option pricing model. The fair value per
option for options granted during the year ended March 31, 2008
was estimated based on the following assumptions:2008

Volatility
Option term
Expected dividend (per stock)Risk-free interest rate

21.6%
4 years and 6 months
¥22
1.35%

Volatility was determined based on the actual stock price over the
past 4 years and 6 months.
The option term was estimated under the assumption that theoptions would be exercised in the middle of the exercisable period
because of insufficient data.
Expected dividend (per stock) was based on the dividend amountapplicable to the 2007 fiscal year.
Risk-free interest rate was based on government bonds whoseterms corresponded with the terms of the above options.
Method of estimating exercised stock options
The Company estimated the number of exercised stock options basedon the actual number of forfeitures because it is difficult to estimate
the number of stock options which will be forfeited in the future.

36

S.T. CORPORATION

Report of Independent Auditors

S.T. CORPORATION

37

Corporate information(June 18, 2009)

Board of Directors
Takashi Suzuki

Osamu Mizorogi

The chairman of the board, member of nomination committee

Outside director, member of audit committee

Yasushi Kajiwara

Kanichi Suzuki

Outside director, member of nomination, audit and compensation committees

Outside director, member of audit committee

Masanori Noro

Kanzo Kobayashi

Outside director, member of nomination and compensation committees

Director, member of nomination committee

Teruyuki Maehara

Hirohide Shimada

Outside director, member of nomination and audit committees

Director, member of compensation committee

Mitsuko Miyagawa
Outside director, member of audit committee

Executive Officers
Takashi Suzuki

Takahiko Kato

Representative Executive Officer
President, Chief Executive Officer

Executive Officer
Senior general manager of Sales Division

Kanzo Kobayashi

Masakazu Kinoto

Managing Executive Officer
In charge of Group business strategy and overseas business strategy

Executive Officer
Deputy general manager of Sales Division
Osaka branch general manager

Noriaki Kageura
Managing Executive Officer
In charge of Manufacturing Division

Masami Kitahara

Hirohide Shimada

Executive Officer
In charge of affiliated companies
President of S.T. Trading Co., Ltd.

Managing Executive Officer
In charge of Corporate Staff Division

Keiichi Hayasaka
Executive Officer
In charge of International Business DivisionCorporate Data

Group Companies(March 31, 2009)

Company name

S.T. CORPORATION

Consolidated Subsidiaries

Headquarters

4-10, Shimo-ochiai, 1-chome, Shinjuku-ku,

S.T. Trading Co., Ltd.

Tokyo 161-8540, Japan

Sales of hand gloves and workplace supplies

Establishment

August 31, 1948

S.T. Auto Co., Ltd.

Paid-in capital¥7,065,500,000

Employees

619 (Consolidated)
377 (Non-Consolidated)

Contact

Hirohide Shimada,Public Relations Department

38

E-mailir@st-c.co.jp

Tel+81-3-5906-0734

Fax+81-3-5906-0742

S.T. CORPORATION

Sales of car chemical care products

S.T. Business Support Co., Ltd.
Temporary staffing and contract work for S.T. Group

Family Glove (Thailand) Co., Ltd.
Manufacture and sales of hand gloves

Family Glove (Taiwan) Co., Ltd.
Manufacture and sales of hand gloves

investor information(March 31, 2009)

Fiscal year-end

March 31

Shares issued and outstanding 29,500,000
Listed exchangeTokyo Stock Exchange, First Section

Shareholders

8,341

Primary Shareholders

Non-Japaneseinstitutions(Thousands of shares)(% of total)

S.T. Corporation

7,668

26.0

Shaldan Co., Ltd.

5,727

19.4

Financial
institutions

Nippon Life Insurance Company

1,671

5.7

17.4%

TCSB (Mizuho Bank)

884

3.0

Takashi Suzuki

812

2.8

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

681

2.3

Japan Trustee Services Bank, Ltd. (Trust Account 4G)

632

2.1

Akio Suzuki

470

1.6

Caleine433

1.5

Sompo Japan Insurance Inc.

416

1.4

Seiichi Suzuki Store Ltd.

416

1.4

Registered transfer agent

Mizuho Trust & Banking Co., Ltd.

AuditorErnst & Young ShinNihon LLC

Financial instruments
business operator
0.6%

1.0%

Individuals
52.8%

Other Japaneseinstitutions
28.2%

Annual shareholders’ meeting Middle of June each year (June 18, 2009)

STOCK CHART
Stock Price (Yen)
2,000

Nikkei 225 (Yen)
20,0001,500

15,0001,000

10,000500

5,000
Trading Volume (Shares)
1,000,000

0

0
06/6

7

8

9

10

11

12 07/1

2

3

4

5

6

7

8

9

10

11

12 08/1

2

3

4

5

6

7

8

9

10

11

12 09/1

2

3

4

5

6

S.T. CORPORATION

39

4-10, Shimo-ochiai, 1-chome, Shinjuku-ku, Tokyo 161-8540, Japan
http://www.st-c.co.jp/

Printed in Japan