TAKUMA- PathfindersAn investment research platform
to support a Japanese Economic Renaissance

December 5, 2012

DOSHISHA CORPORATION

7483
TSE 1stSectionSummary of Financial Results
for the Second Quarter of the Fiscal Year ending March 31, 2013

On November 14, DOSHISHA CORPORATION (hereinafter DOSHISHA or the Company) held its
Business Results Meeting for Q2 FY3/13. The following is a summary of the meeting.

Consolidated Financial Results for 1H FY3/13
As seen in 【Table 1】, consolidated net sales and incomes in 1H FY3/13 fell short of 1H FY3/12 results.
The decrease in net sales was mainly caused by sales of TVs and brand-name watches falling short of
expectation. As for expenses, in addition to the increase in performance-fluctuated salaries resulting
from the strong earnings of last term, the initial cost for switching transport company caused a temporary
increase in SG&A expenses. However, business results were second highest following the last term
which posted the record-high sales.
As for to the consolidated balance sheets, merchandise and finished goods increased by ¥1,546 million
compared to FY3/12. This is mainly due to the increased inventory of TVs and brand-name watches,
which is expected to be adjusted after the year-end holiday sales season in Q3.

【Table 1】】 1H FY3/13 Consolidated Business Results Summary
Consolidated

FY3/12 1H（\ million））

ActualRatio toNet Sales

FY3/13 1H
May 10
Forecast

ActualRatio toNet Sales

YoY Chg

100.0%-7.8%
50,000 46,984 100.0%
53.8%
49.8%
-14.6%
25,30023,411Wholesale Model
44.0%
47.6%
-0.1%
23,60022,368Others
2.2%
2.6%
8.2%
1,100
1,204
Gross Proft
24.5%
25.1%
-5.5%
12,60011,780
SG&A Expenses
16.3%
18.2%
2.9%
8,200
8,532
Operating Income
8.2%
6.9%
-22.1%
4,400
3,247
Ordinary Income
8.2%
7.2%
-19.1%
4,400
3,370
Net Income
4.8%
4.4%
-15.7%
2,600
2,043
Note: All tables prepared by Trias Corp. with the data disclosed by DOSHISHA CORPORATIONNet Sales

Product Development Model

50,94027,42822,3991,112
12,461
8,293
4,167
4,167
2,424

This Memo is for reference purposes only and is not intended as a solicitation for investment. The contents contained herein areprepared based on reliable
information that already exists in the public domain. The Company, however, does not guarantee complete accuracy. Any pinionrinformation contatined in the
Memo is relevant as of the day of the Information Meeting and/or Company Visit, although the views and/or facts may be altered without prior notification.
Final investment decisions shall be made by investors themselves based solely on their own judgment and responsivility.
Copyright © 2012

Trias Corporation

All rights reserved.

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December 5, 2012

Trends by Segment and 1H Strategic Plan
Product Development Model Business:¥23,411 million (14.6% down YoY)

The main contributing factor to the decreased incomes was contraction in TV sales, caused by the
backlash of special demands in transition to digital TV broadcasting. As for the business environment,
despite the backlash of Tohoku Earthquake reconstruction demands and the effect of bad weather
during the first half of summer sales season, the business developed campaign-oriented anddifferentiated products in all areas of clothing, foods and housing, and succeeded in implementing
measures for risk diversification and profit recovery.
Among the major campaigns, a sportswear sale was launched through a collaboration campaign
between the Japanese idol group AKB48’s Minami Takahashi and Kaepa, a U.S. sports goods brand.
Promotions including TV commercials were conducted through the campaign, leading to sales
expansion of Kaepa brands. In the health & beauty business, highly-functional cosmetics such as BB
Cream and All-in-one gel which have been promoted through TV commercials by other companies, andare popular although generally expensive, were offered at an inexpensive price of 500 yen, successfully
making them more accessible to a wider range of consumers.
In home appliance business, an electronic fan with energy conservation and extremely silent features
named “kamomefan (seagull fan)” was developed in a joint development project with a ship propeller
maker Nakashima Propeller Co., Ltd. “kamomefan” was introduced in multiple media during the summer
and sold out immediately. As for LED lights which foresees continuously high demands, ceiling lights andcommercial sales were strong.
In wine sales, the business launched various campaigns to heighten sales appeal in stores including
an FC Barcelona campaign, charity campaigns involving celebrities, and wine selections supervisedby chief sommelier of three-star restaurants, and succeeded in reaching out to a new customer base.
Wholesale Model Business:¥22,368 million (0.1% down YoY)

Famous brand products sales declined by 9.8% YoY due to poor sales of brand-name watches. However,brand-name bag sales were strong with the contribution of new brand-name contracts such as Furla andTommy Hilfiger. As for midyear gift sales, gifts including somen (Japanese noodle) and beverages werestrong in addition to the top-selling variety gifts, and overall Wholesale Model business sales were
almost flat YoY.

Net Sales Trend by Sales Channel
Due to the LCD TV sales decline, there was a large adjustment with channels which posted strong sales

This Memo is for reference purposes only and is not intended as a solicitation for investment. The contents contained herein areprepared based on reliable
information that already exists in the public domain. The Company, however, does not guarantee complete accuracy. Any pinionrinformation contatined in the
Memo is relevant as of the day of the Information Meeting and/or Company Visit, although the views and/or facts may be altered without prior notification.
Final investment decisions shall be made by investors themselves based solely on their own judgment and responsivility.
Copyright © 2012

Trias Corporation

All rights reserved.

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TAKUMA- PathfindersAn investment research platform
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December 5, 2012

in the previous term, with sales to home centers and electronics retail stores decreasing 15.0% and27.6% YoY respectively.
Sales to GMS increased by 2.5% YoY as a result of strong sales in gifts, home appliances and LED
lights. However, sales to discount stores decreased by 8.5% YoY despite strong sales in beauty products
and gifts. As for 100 yen products, despite strong sales in summer goods, stationary, and storage goods,
overall sales decreased by 2.8% YoY.

FY3/13 Financial Forecasts
FY3/13 financial forecast in 【table 2】 shows downward revisions for forecasts in net sales and incomes
as a result of 1H business results falling short of initial forecasts.
As for consumer spending outlook in the 2H, the Company foresees a harsh business environment
including strong uncertainty over the economy, large downturn in consumer confidence and change in
consumer behavior itself. In such situations, however, the Company can exert its superiority above
competitors with its strength in creating and executing business from a new angle. As a result of all
departments revising their plans under this premise, the Company expects to achieve its initial 2H
forecasts although they made changes in details.

【Table 2】】 FY3/13 Financial Forecasts
Consolidated

FY3/12 (Actual)（\ million））
Net Sales
Product Development Model

1H

2H

FY

1H
(Actual)50,94027,42822,3991,112
12,461
8,293
4,167
4,167
2,424

51,67927,17423,1981,307
12,893
8,194
4,699
4,750
2,577

102,61954,60245,5972,419
25,354
16,487
8,866
8,917
5,001

46,984
23,411
22,368
1,204
11,780
8,532
3,247
3,370
2,043

Wholesale Model
OthersGross Profit
SG&A Expenses
Operating Income
Ordinary Income
Net Income
Note: FY3/13 forecasts announced on Oct 31, 2012

FY3/132H
FY(Fcst)(Fcst)

55,015 102,000 -0.6%
28,38851,800 -5.1%
25,23147,600 4.4%
1,395
2,600 7.5%
13,61925,400 0.2%
8,667
17,200 4.3%
4,952
8,200 -7.5%
4,929
8,300 -6.9%
3,056
5,100 2.0%

YoY
Chg

DOSHISHA’s growth strategy consists of launching unique products which are niche and difficult for
major makers and retailers to produce, and adopting a WIN-WIN approach for both purchasers andsuppliers by procuring mass production supplies from suppliers, while selling small lot productions topurchasers. At the same time, the Company’s growth strategy is based on new market creation, in what
is called the “strategy of selling watches to grocery stores”, not confining to preconceptions, andcombining existing product plans with creation of new sales floors.

This Memo is for reference purposes only and is not intended as a solicitation for investment. The contents contained herein areprepared based on reliable
information that already exists in the public domain. The Company, however, does not guarantee complete accuracy. Any pinionrinformation contatined in the
Memo is relevant as of the day of the Information Meeting and/or Company Visit, although the views and/or facts may be altered without prior notification.
Final investment decisions shall be made by investors themselves based solely on their own judgment and responsivility.
Copyright © 2012

Trias Corporation

All rights reserved.

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December 5, 2012

The focal strategies for 2H include promoting OEM product implementation, lowering prices ofhigh-priced products, adding value through brands, designs, and plans, expanding sales floor andenhancing store sales through increased cooperation with customers, developing “reassuring and safe”
quality, and risk-hedging production functions.

Examples of Strategic Projects by Segment
Development Model BusinessIn stylish home electronics, new products are developed consistently, while steering away from risks,
based on market analysis and information obtained from client bases. By developing valuable products
which capture demands, or are not produced or cannot be produced by other companies, the businessavoids involvement in price competition. In the 2H, the business will take part in a new collaboration
campaign between Disney, a popular comic called “Hana no Zubora-Meshi (“Hana’s Sloppy Meal”), andan audio device maker “SANSUI”.
To be more precise, the Company will sell character humidifiers in collaboration with Disney this winter.
In addition, it will develop a collaboration project with the popular comic “Hana no Zubora-Meshi” which
has a circulation of over 500,000 copies, for “ever cook” sales, a high-quality frying pan which uses a
special coating of alumite and has a one-year guarantee. The business focused on the commonalities
between “Oteire Raku-raku Frying Pan (Easy-to-clean Frying Pan)” and “Tegaru ni Raku-raku Tsukureru
Zubora-Meshi (Easy-to-make Sloppy Meal)”. The frying pan is used in the TV drama, recipes from
“Zubora-meshi” are bundled with the product, and the comic is used for store sales promotion. In the
Smartphone department which expects growth within the home appliances field, a Smartphonecompatible speaker will be launched under the SANSUI brand, a brand which dominated the audio field
as one of the top three makers during the 1980s. In the foods business, the import volume of Beaujolais
Nouveau for this season’s release is at fourth place and surpasses that of major beverage
manufacturers.
LED light sales shifted towards profitability in the previous term and have become highly contributing to
the income. In order to enhance commercial sales, the Company will launch LED lights with built-in
motion sensors and lamp shaped ones which are in high demand. In addition, the Company will focus on
expanding sales for roller bags which have become high in demand for non-traveling purposes, andhighly-functional cosmetics which posted strong sales in response to 1H demands.
Wholesale Model Business
Sales have continued to record double-digit gains YoY in the gift department. In addition to the
top-selling “Assorted Gift”, the Company will launch a “Selection Gift”. Additionally, the business plans toThis Memo is for reference purposes only and is not intended as a solicitation for investment. The contents contained herein areprepared based on reliable
information that already exists in the public domain. The Company, however, does not guarantee complete accuracy. Any pinionrinformation contatined in the
Memo is relevant as of the day of the Information Meeting and/or Company Visit, although the views and/or facts may be altered without prior notification.
Final investment decisions shall be made by investors themselves based solely on their own judgment and responsivility.
Copyright © 2012

Trias Corporation

All rights reserved.

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TAKUMA- PathfindersAn investment research platform
to support a Japanese Economic Renaissance

December 5, 2012

further expand sales floors by amplifying sales of year-round gifts. As for brand bags within the famousbrand business, the business will continue to enhance sales and promotion since strong sales wereposted in new casual brands. Furthermore, as a new campaign, ITOCHU Corporation has signed off an
exclusive importing and selling right for “Havaianas”, which is a world-famous sandal brand, and it has
been determined that products will be sold through them starting in spring of 2013.

Q&A Session
Q1: Why did 1H business results fall short of the initial plan, regardless of the fact that sales
decline resulting from adjustment of special demands from digital TV broadcasting transition
were foreseen at the beginning of the term?
A1: The decline in TV sales was much larger than initially expected. The unexpected and sharp declineof brand-name watches was another miscalculation. No faults are acknowledged in any otherdepartments.
Q2: What caused contraction in sales of brand-name watches?
A2: We believe that market needs are shifting from high-price watches costing over 100,000 yen tocasual watches costing less than 30,000 yen. As brand-name watch sales fluctuate with business trends,
we will continue to sell the products. We will also continue our efforts from the previous term of reachingout to casual watch suppliers.
Q3: What departments recorded 1H business results which exceeded forecasts?
A3: Examples are gifts and brand bag businesses.
Q4: What is the company’s perspective on the current situation and future of wine business?
A4: We believe that the wine category has been gaining popularity among beverages. Although we do
not have a definite prospect of how the wine business will grow, it is definitely expected to dominate alarge share in beverages. Although wine has gained popularity, the criterion for selecting wine is still not
pervasive. Therefore, we think that it is important to launch campaigns which encourage customers totake wines into their hands at shops.
Q5. What changes were made to the initial 2H plan?
A5. The sales prospects for TV and watches which encountered harsh situations in 1H have beenrevised down. On the other hand, there were many departments which performed well and with regards
to LED lights and the foods business including wine, we revised the 2H plan, taking into consideration
the campaigns we will implement and enhance.

This Memo is for reference purposes only and is not intended as a solicitation for investment. The contents contained herein areprepared based on reliable
information that already exists in the public domain. The Company, however, does not guarantee complete accuracy. Any pinionrinformation contatined in the
Memo is relevant as of the day of the Information Meeting and/or Company Visit, although the views and/or facts may be altered without prior notification.
Final investment decisions shall be made by investors themselves based solely on their own judgment and responsivility.
Copyright © 2012

Trias Corporation

All rights reserved.

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TAKUMA- PathfindersAn investment research platform
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December 5, 2012

Q6. Although you mentioned that 1H SG&A expenses increased due to temporary reasons, 2H
forecasts are not reduced. Why is this?
A6. The forecasts are based on conservative estimates. We believe that SG&A expenses can be
minimized in the 2H beyond the estimated value since both the initial investment for switching delivery
companies and performance-fluctuated salaries generated in the 1H are expected to settle down.

This Memo is for reference purposes only and is not intended as a solicitation for investment. The contents contained herein areprepared based on reliable
information that already exists in the public domain. The Company, however, does not guarantee complete accuracy. Any pinionrinformation contatined in the
Memo is relevant as of the day of the Information Meeting and/or Company Visit, although the views and/or facts may be altered without prior notification.
Final investment decisions shall be made by investors themselves based solely on their own judgment and responsivility.
Copyright © 2012

Trias Corporation

All rights reserved.

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TAKUMA- PathfindersAn investment research platform
to support a Japanese Economic Renaissance

December 5, 2012

Key Stock Indicators and Financial Data
No. of Shares Issued
No. of Treasury Stock
Market Value (\million)
BPS (\)ROE (%)ROA (%)PER (times）
PCFR(times)
PBR (times)
Share Price (\)
Unit Share (shares)
A verage Daily Volume (shares)

Sep. 2012
Sep. 2012
Dec. 4, 2012
Mar. 2012
Mar. 2012
Mar. 2012
FY3/13 fcst.
Mar. 2012
Mar. 2012
Dec. 4, 2012
Dec. 4, 2012
Dec. 4, 2012

18,687,818
42,11741,412
2,454.52
11.7
9.0
8.1
7.2
0.9
2,216
100
66,272

Total Assets (\million)
Mar. 2012
Shareholders' Equity (\million)
Sep. 2012
Interest-Bearing Debt (\million)
Sep. 2012
Equity Ratio (%)
Sep. 2012
Ratio of Interest-Bearing Debt (%) Sep. 2012
Free Cash Flows (\million)
Sep. 2012

58,09546,899
2,714
78.8
5.8
-543

ROE=Current Net Income÷Averaged Shareholders' Equity
of beginning of term and term end
ROA=Current Net Income÷Averaged Total Assets
of beginning of term and term end
PCFR=Maket Value÷(Current Net Income+Depreciation)
Average Daily Volume=Ave. Daily Volume for the last 12 months
Ratio=Interest-Bearing Debts÷Shareholders' Equity
Free Cash Flows=Operating CF+Investment CF

Consolidated(\million）
FY3/09FY3/10FY3/11
FY3/12
1H FY3/13
FY3/13 fcst.

Net Sales
80,89886,62993,494
102,619
46,984
102,000

Operating
Income
5,014
7,701
7,698
8,866
3,247
8,200

Ordinary
Net Income
Income
5,131
2,558
7,593
4,293
7,614
4,395
8,917
5,001
3,370
2,043
8,300
5,100

EPS (\)
140.94236.54242.20274.91109.98274.42

DPS (\)
45.00
55.00
55.00
60.00
30.00
60.00

Note: FY3/13 forecasts announced on Oct. 31, 2012

Share Price Charts and RSI
(Yen)

3,000

300
Close share price

1 month moving average

3 month moving average

RSI [days] (Right)

2,500

250

2,000

200

1,500

150

1,000

100
RSI

500

70
50
30

0

0

Source: Prepared by Trias Corp. with Bloomberg data.
Note: RSI, Relative Strength Index, is the index representing the ratio of overbought or oversold share prices.
In general, over 70 in RSI shows overbought share price range, while below 30 shows oversold share price range.
RSI=averaged share price appreciation for N days÷(averaged share price appreciation for N days
+averaged share price decline for N days) x100

This Memo is for reference purposes only and is not intended as a solicitation for investment. The contents contained herein areprepared based on reliable
information that already exists in the public domain. The Company, however, does not guarantee complete accuracy. Any pinionrinformation contatined in the
Memo is relevant as of the day of the Information Meeting and/or Company Visit, although the views and/or facts may be altered without prior notification.
Final investment decisions shall be made by investors themselves based solely on their own judgment and responsivility.
Copyright © 2012

Trias Corporation

All rights reserved.

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