Annual Report 2011
Year ended March 31, 2011

負け

かGlobal Niche No. 1 =まるてたProfile / Growth Strategy

Global Niche No. 1 =Creativity
Since its founding, S.T. CORPORATION has
developed unparalleled products* in the areas of
mothproofing agents (introduced in 1946) anddeodorizers and air fresheners (in 1971), cultivating
niche markets to ensure business growth.
* Unparalleled products: New, innovative products

Deodorizers and
Air Fresheners

Mothproofing
AgentsHousehold
Gloves

1971
1946

1960

Refrigerator
Deodorizers

Disposable
Warmers

Dehumidifiers

2003
2000

1981

Contents
Profile / Growth Strategy

Inside CoverFinancial Highlights / Streamlining Strategy

2

President’s Message	4Interview with the President

6

At a Glance

10

Operational Review

12

Global Business Development	

15

Corporate Governance

16

CSR (Corporate Social Responsibility)

18

Financial Section

19

Investor Information	

42

Forward-Looking Statements: This annual report contains forward-looking statements regarding S.T. CORPORATION’s future plans, strategies and performance. Such forward-looking statements are based on
information available as of the issuance of this annual report. Please note that forward-looking statements may differ greatly from the Company’s actual performance due to the economic situation, businessenvironment, market demand and foreign currency exchange rate fluctuations in the future.
Note: Fiscal years in this annual report are based on S.T. CORPORATION’s fiscal year ending March 31.

1

Financial Highlights / Streamlining Strategy

Global Niche No. 1 = Creativity

Focus
Continuing to “select and focus” with regard to competitive product brands
that can capture the No. 1 and No. 2 market shares, S.T. CORPORATION willbuild a lean and speedy business structure.

Financial Higlights
S.T. CORPORATION and consolidated subsidiaries
Years ended March 31, 2011 and 2010

Millions of yen(except per share data)

Thousands of
U.S. dollars (Note)

2011

2010

2011

¥43,580¥43,546$524,118

2,114

2,246

25,428

786

1,119

9,456

Total assets

30,011

29,029360,924

Net assets

19,972

19,966240,192¥ 36.03¥ 51.25$   0.43

Cash dividends

22.00

22.00

0.26

Net assets

893.74892.46

10.75

For The Year:Net sales
Operating income
Net Income
At Year-end:

Per Share (yen and U.S.dollars):
Net income

Note: Figures have been translated into U.S. dollars at ¥83.15=U.S.$1.00, the approximate exchange rate prevailing on the Tokyo Foreign Exchange Market on March 31, 2011.

2

CLOTH Care

21.1

%

< Market Share >Mothproofing Agents: No.1

AIR Care43.1

HAND Care%

8.3< Market Share >Deodorizers and Air Fresheners: No.2
Refrigerator Deodorizers: No.1%

< Market Share >Household Gloves: No.2

THERMAL Care
HUMIDITY
Care

%

HOME
Care

6.1 6.2%< Market Share >Dehumidifiers: No.1

15.2

< Market Share >Disposable Warmers: No.2%

Net Sales and Market Shareby Category (FY 2011)3

President’s Message

負けてたまるか[makete-tamaruka]: A phrase oft used by men wholive in the Tokyo downtown (Edo) area to describe aspirit of rising optimism that cannot be beaten down.

In the fiscal year ended March 31, 2011 (fiscal 2011), S.T. CORPORATION’s
performance was affected by stagnant consumer demand and unusual
weather in the first half of the year. Although we achieved sales growth in
the second half of fiscal 2011, we recorded only a slight increase in sales anddecrease in profit for the full year on the back of continued high raw material expenses and the negative impact of the Great East Japan Earthquake.
During fiscal 2011, we strived to differentiate our products by following our“design × fragrance revolution” value-added strategy and, mid-year, ­initiated“S.T. Reformation,” a program of sales innovation that yielded results that
increased our confidence in the success of our management reforms.
In the fiscal year ending March 31, 2012 (fiscal 2012), facing theconsequences of the earthquake, we will make Companywide efforts toconfront various challenges with a “makete-tamaruka” spirit. We assume
that p­ eople’s values and lifestyles will be greatly changed. Given this,S.T. CORPORATION will continue to develop unparalleled products thatbring comfort to people’s lives, thereby invigorating Japan. We hope wecan live up to your expectations.
August 2011

President and Chief Executive Officer
Chairman of the Board

4

5

Interview with the President
Review of FY 2011 and Outlook

A New, Creative S.T.
Focusing on the key words “safety,” “peace of mind” and “ecology,”
S.T. CORPORATION will creatively pursue new customers.

Q.1
What is your assessment of
the Company’s fiscal 2011 results?
Despite a decline in profit due to unusual weather and the disaster,
we gained confidence in the effectiveness of our management reforms.
In this, the second year since I resumed the position of presi-

stick-type diffuser My Aroma Stick and Fragrant Mushuda

dent, S.T. CORPORATION has pursued three basic strate-

mothproofing agents, which offer a more refined scent.

gies, namely, “select and focus,” the “development of
unparalleled products” and “agile management,” with theOn the earnings front, operating income declined 5.9%
year on year to ¥2,114 million and net income fell 29.8%

aim of strengthening its

to ¥786 million, due mainly to ongoing high raw material

mainstay brands while imple-

expenses and the negative impact of the Great East Japan

menting strict cost reduc-

Earthquake, which struck on March 11, 2011.

tions. Furthermore,

We also initiated “S.T. Reformation,” a program of sales

to facilitate the switch

innovation, in mid-fiscal 2011. Driven by this, we saw sales

from price competition to

growth in the second half of fiscal 2011. Although the pro-value competition, we atgram was carried out only in the Tokyo branch office in fiscal

S.T. CORPORATION continued to pursue our “design ×2011, it’s success helped increase confidence in our man-­fragrance revolution” value-added strategy. Our consolidated

agement reforms.

results were affected by sluggish consumer demand andunseasonal weather, but net sales edged up 0.1% year on
year to ¥43,580 million thanks to strong demand for the new

New products offering added value(sophisticated scent): My Aroma Stickreed diffuser (left) and Fragrant Mushuda
mothproofing agent (above)6

Q.3

What was the extent of the damage
from the Great East Japan Earthquake
to S.T. CORPORATION?
We sustained only minor damage to our production facilities and were able to resume
operations after approximately one month.

Could you tell us what
your focus will be on with regard to
future business operations?
We will further enhance our development
and sales capabilities to differentiate
our products, while creating a new
S.T. CORPORATION inspired by
the “makete-tamaruka” spirit.

Although the damage to production facilities at the Fukushima

We will continue to pursue our “design × fragrance revolu-

Plant was minor, operations were suspended for approxi-tion” value-added strategy. To this end, we have added amately one month due to a delay in the restoration of the

new perfumer to our development staff to accelerate our fra-

local supply-chain infrastructure. To compensate for the

grance revolution and thus strengthen our mainstay brands.

Q.2

decrease in production, other plants located in other areas

To differentiate our sales capability, we will pursue

stepped up their operations. With regard to material and“S.T. Reformation” across the board. During fiscal 2011,

component procurement, some suppliers, for example,

we began holding monthly discussions at the Tokyo branchmolding makers, were temporarily affected by the electric

office regarding sales-related

power company’s rolling blackout. As a result, we recorded

issues. As a result, thean extraordinary loss on disaster of ¥117 million in fiscal 2011.

branch realized double-digit

In response to the crisis caused by the Great East Japansales growth in the second

Earthquake, S.T. CORPORATION immediately supplied such

half of the year. Extending

relief supplies as disposable warmers and household gloves

such innovations throughout

while making monetary donations.

the Company in fiscal 2012,

In fiscal 2012, we anticipate a decrease in the extraordi-

we will launch a cross-functional team—one that works

nary loss on disaster. However, we also project decrease inbeyond the divisional borders—to conduct business reform.

sales and profit due to the power shortage, higher raw mate-

In addition, since the earthquake, consumption trends haverial expenses and a hike in distribution costs. We will makechanged drastically throughout the nation. I, myself, wasevery effort to minimize the impact of increased costs.

greatly shocked by this earthquake and remembered what it
was like during my childhood in the post World War II years.
In fiscal 2012, S.T. CORPORATION embraced a new“makete-tamaruka” spirit. In this spirit and keeping the key
words “safety,” “peace of mind” and “ecology” in mind, we will
regenerate S.T. CORPORATION as the company that develops
unparalleled products that brighten up people’s lives.
7

Interview with the President

Q.5
Q.4
Please tell us about synergies yielded by thebusiness alliance with FUMAKILLA LIMITED.
During fiscal 2011, we jointly developed new
products with FUMAKILLA. We will focus on
the Indonesian market in fiscal 2012 as we work
to strengthen our global business foundations.

How do you picture S.T. CORPORATION
in the years to come,including future growth strategy?
I see S.T. CORPORATION becoming a company that can continually generate customers and sustain operations for the next 100
years, 200 years, or even 1,000 years.

During fiscal 2011, we developed an automatic electricallyEssentially, there will be no change in our basic strategy.

powered insect repeller and, in the Shoshu-Riki deodorizer
series, a new fruit fly repellent for household garbage containers jointly with FUMAKILLA while pursuing business effi-

Since its founding, S.T. CORPORATION has engaged in
the development of unparalleled products that create
Mothproofing Agents

growth. These efforts have yield-

ciencies through the sharing of sales branch offices.

ed Mushuda mothproofing

Benefiting from FUMAKILLA’s strength in overseas markets, we will undertake joint product development and theMushudaDehumidifiers

I wish S.T. CORPORATION to

At the same time, we will enhance collaborative marketing
DrypetRefrigerator Deodorizers

overseas sales ratio.

ers, products that have become
leaders in global niche markets.

plant is located and where high market growth is expected.
and sales activities in Asian countries in order to increase ouragents, Drypet dehumidifiers andDashu-Tan refrigerator deodoriz-

expansion of local production outsourced to FUMAKILLA in
Indonesia, where FUMAKILLA’s largest overseas production

demand that, in turn, drives

continue to do business for the
next 100 years, 200 years, oreven 1,000 years. We are generating not only “products” but also

Dashu-Tan“customers.” In order to realize

an everlasting business, we must spot problems, that is,maintain a hands-on policy. “S.T. Reformation,” our newest
program of sales innovation, was launched in fiscal 2011
and is the first initiative as we move forward with our handson policy. Pushing forward across-the-board management
reforms, we believe S.T. CORPORATION will gain much
New products developed jointly with
FUMAKILLA: Automatic electricallypowered insect repeller (left) andShoshu-Riki, fruit fly repellent forhousehold garbage containers (above)8

strength and speed in its business operations.

Q.6
Finally, do you have a message for yourshareholders and investors?
Through sustainable, profitable growth,
we will provide returns to shareholders.
We hope we can live up to your expectations
regarding our product development.
In June 2011, two female candidates were elected to the

S.T. CORPORATION considers it important to maintain highposition of director. The majority of our products target

returns to shareholders supported by solid corporate value

female users. Therefore, we need to change to ensure fur-achieved through sustainable, profitable growth. Our policy

ther demand growth in the Japanese market. It is essential

is to provide performance-based dividends while securing

to continue to develop products that impress female con-stable distribution. For fiscal 2011, we maintained the annual

sumers. For years, S.T. CORPORATION has been con-dividend at ¥22 per share (for a consolidated payout ratio of

sciously recruiting a broad variety of people capable of

61.1%), on par with that of the previous fiscal year.

enhancing corporate value. We began taking this approach

Also in fiscal 2011, we retired 6.5 million (22% of the total

well before a policy of diversity became widespread in Japan.

number of shares issued) of the approximately 7.65 million

Regarding medium- to long-term initiatives, our subsidiaryshares of treasury stock held at the beginning of the fiscal

Japan Aroma Laboratory Co., Ltd. is working on a projectyear. This retirement will increase net assets per share andentrusted to it by the Japan Science and Technology Agency

thus benefit shareholders. We will continue to consider ways(JST) that aims to commercialize essential oil-based detoxify-of optimizing shareholder return in the future.

ing agents that neutralize environmental pollutants. From fis-

Since the earthquake, people’s values and lifestyles havecal 2012, we will aggressively promote collaboration with

been undergoing drastic

other companies and institutions.

change. Developing unparalleled products,
S.T. CORPORATION will continue to strive to brighten up
and invigorate Japan. We sincerely ask for your continued
S.T. CORPORATION’s post-quake TV
commercial communicating sympathy and voicing encouragement to
the nation drew public attention.

understanding and support.

9At a Glance

Value-Added Strategy: Design

Fragrance

Japan has four distinctive seasons, and S.T. CORPORATION’s seasonal products are key domains.
Given the intense competition in this market, we differentiate our products by adding value.
Market Share & Rank
(Japan)Household Environment-Related Products

AIR Care

HUMIDITY Care

HOME Care

Effective year round, Air Care products include room deodorizers and air fresheners designed to eliminate odors as well
as refrigerator deodorizers. Accounting for 43% of net sales, the
Air Care business is S.T. CORPORATION’s mainstay business.
Serving a market valued at approximately ¥54 billion, the
Air Care business has strong growth potential.
Dehumidifiers are unique products developed for Japan’s
rainy climate. As the pioneer of the niche Humidity Caremarket, S.T. CORPORATION has taken a leading role since
1981.
Currently worth approximately ¥10 billion, this market isstable although competitive.

Deodorizers andRefrigerator

Air Fresheners

Deodorizers

27.9% 63.8%< Market Share : No.2>< Market Share : No.1>

Dehumidifiers

37.3%< Market Share : No.1>

In the Home Care category, we provide niche cleaning products and are nurturing a number of other new products wehope will become leading items.

Mothproofing and Hygiene-Related Products

CLOTH Care

HAND Care

THERMAL Care

10

In Japan, many people store their wardrobes seasonally due to
hot summers and cold winters, making mothproofing agents
key products to protect clothes while they are in storage.
Since our founding, the Cloth Care business has beena major source of revenue and, currently, serves a market
worth approximately ¥25 billion.
Household and industrial-use gloves protect hands while carrying out household chores (dishwashing, cleaning the kitchen, laundry, bath and toilet cleaning), car washing, DIY
projects and gardening.
The Hand Care category is our second oldest business,and serves a market worth approximately ¥10 million.
Disposable warmers for hands and feet sell best in winter.
This category helps maintain retail shelf space, counterbalancing mothproofing agents, which are mainly sold in
spring and autumn. The Thermal Care business operates inthis competitive ¥40 billion market, which is vulnerable tochanges in the weather, where differentiation is challenging.

Mothproofing
Agents46.5%< Market Share : No.1>

Household
Gloves23.4%< Market Share : No.2>

Disposable
Warmers

20.5%< Market Share : No.2>

Growth Strategy
Sales Results for FY 2011
(Year-on-year change)

¥

43.1%

18,767
millionof Net Sales

6.1%

-4.1%
¥

2,686
million

The new Shoshu-Riki for household garbage containers and Shoshu-Pot series
with a renewed design contributed tosales. Demand for existing products,
however, was sluggish.

Sales of the refill-type Drypet Compact
dehumidifiers were strong, while demandfor disposable dehumidifiers decreased.

of Net Sales

Expand Markets(Domestic)

Increase Share(Domestic)

Target Global
GrowthProposenew usages

Increaseshare to 40%

Allregions

Proposevalue-added products

Asia, USA

-8.3%
6.2%

¥

2,686
millionof Net Sales-11.6%

21.1%

¥

9,193
millionof Net Sales

-2.3%
¥

8.3%

millionof Net Sales

+9.5%
¥

15.2%
of Net Sales

3,625

6,624
million

Demand for new Ohisama series products and Kome-Touban positively affected sales in this category. However, due
to the absence of the surgical maskbusiness, which was terminated in fiscal
2010, overall sales declined.

Proposenew usages

No. 1 cleaner
in theniche market

During fiscal 2011, sales of FragrantMushuda were strong. However, due tounusual weather in spring and the negative impact of the Great East Japan
Earthquake on business, sales weresluggish in this segment.

Proposenew usages

Increaseshare to 50%

Sales in this category rose due to
stepped up sales promotion activities,
the introduction of new models in the
Family series of household gloves andincreased restoration associateddemand following the earthquake.
Sales in this category grew due toextremely cold winter weather andincreased demand related tothe earthquake.

Propose new features andstand-out products

Asia,
EuropeAllregions

New usages such as in
the medical field+25.5%
11

Operational Review

Household Environment-Related Products

The Air Care category encompasses unique product lineups, including the mega

AIR Carebrand Shoshu-Riki (Air Wash-Liquid overseas); Shoshu-Plug, which realizes high(Deodorizers and Air Fresheners)

deodorizing capability driven by electric power; Shoshu-Pot (Air Wash-Gel
overseas) and Dashu-Tan, a powerful refrigerator deodorizer that uses charcoal.

My Aroma
Stick

Shoshu-Pot

Shoshu-Plug
Autospray

Shoshu-Riki

Shoshu-Riki

‘09

‘ 10

18,767‘0 8

19,573

20,717‘07

15,00019,78920,462Net Sales (millions of yen)
20,00010,000

5,000

0

‘11

Dashu-Tan[Refrigerator
Deodorizer]

Overview:

Future Strategy:

We introduced new product applications
and quality fragrances to increase market
share. In addition, we launched a new
Shoshu-Riki product for household garbage containers, a new toilet tank type
Shoshu-Pot product and a redesigned
Shoshu-Pot model with the aim of invigorating the market. However, existingproducts sales decreased.

Continuing to focus on automatic electrically powered deodorizers and air fresheners, which have strong market growthpotential, we will introduce new productapplications and more refined scents inexisting core brands with the aim of cultivating new demand.

Mothproofing and Hygiene-Related Products

CLOTH Care

(Mothproofing Agents)

In this market, we boast a dominant share of the market for mothproofing agents
led by our flagship Mushuda and Neopara Ace brands, a market in which we are
known as a reliable, top maker.

Mushuda(for drawers)

Mushuda(for closets)

Mushuda(cover style)Fragrant Mushuda(for closets)

Neopara Ace

‘0 8

‘09

9,193

9,912

‘07

9,413

10,1138,000

10,189Net Sales (millions of yen)
10,000

‘ 10

‘11

6,000
4,000
2,000
0

12

Overview:

Future Strategy:

Based on our mainstay Mushuda (scentfree) mothproofing agents, we released a
new Fragrant Mushuda for the younger
generation, who tend not to use mothproofing agents and to prefer fragrant
products, with the aim of cultivating new
demand. However, unusual weather andthe earthquake resulted in weak sales.

We will continue to propose new ideas
for products for the younger generation,
who tend not to use mothproofing
agents, by serving new styles of storing
clothes and nurturing the market for fragrant mothproofing agents.

HUMIDITY Care
(Dehumidifiers)

Our extensive lineup in this business includes our top-brand Drypet dehumidifierand Bincho-Tan Drypet, which boasts deodorant effects on top of its dehumidifying
functions.

Drypet(for drawers)

Drypet(for closets)

Bincho-Tan Drypet(for boots)

Drypet Compact

Bincho-Tan Drypet

Net Sales (millions of yen)

‘09

‘ 10

2,686

‘0 8

2,930

‘07

2,000

2,950

2,597

2,500

2,683

3,000

1,500
1,000
500
0

‘11

Overview:

Future Strategy:

We improved the dehumidifying capability of our mainstay Drypet series, while
renewing its design, logo and overall
image to inject freshness into the storefront product lineup. As a result, sales ofrefill-type Drypet Compact dehumidifiersremained strong, although those of otherdehumidifiers declined. Overall sales inthis category were weak.

To better retain customers, we will continue to cultivate new demand by proposing new product applications while
continuing to focus on refill-type Drypet
Compact dehumidifiers and expand
the market.

We offer Family brand household gloves as well as industrial-use gloves with such

HAND Carevalue-added features as strengthened fingertips and impregnation with

(Gloves)skin-soothing agents.

Family Thin
PVC Gloves(fingertip-reinforced)

Net Sales (millions of yen)

3,311

‘09

‘ 10

3,625

3,209

3,548

3,000

3,257

4,000

2,000

1,000

0
‘07

‘0 8

Family Medium-Thick
PVC Gloves

Family Thick
PVC Gloves

Family Medium-Thick
Rubber Gloves
with Sleeves

Stylinglove
Medium-Thick
PVC Gloves

Overview:

Future Strategy:

We renewed the packaging of the Family
series household gloves to strengthen
the product brand as well as our sales
promotion activities.
Sales of household gloves increased
due to the demand associated with restoration after the earthquake.

We will continue to strive to strengthen
and develop product brands while cultivating and expanding new demand.

‘11

13

Operational Review

Household Environment-Related ProductsHome Care products encompass such unique, niche cleaning products as

HOME Care

Ultra-Powers Washing Tub Cleaner and the Ohisama series product lineup, as well

(Cleaners and Other Products)

Ultra-Powers
Washing Tub
Cleaner

Net Sales (millions of yen)

2,686

‘0 8

2,000

3,040

4,171

‘07

3,000

3,633

4,103

5,000
4,000

1,000
0
‘09

as Kome-Touban, which protects stored rice from insect infestation.

‘ 10

‘11

Kome-Touban

Ohisama no Sentaku(sunlight activatedshoe cleaner)

Ohisama no Shoshu(sunlight activatedspray for futons)

Shoshu-Pot(spray toilet
cleaner)

Automatic electrically powered
insect repeller

Overview:

Future Strategy:

In fiscal 2011, we released a shoe cleaning spray, a spray for futon bedding in
the new Ohisama series and a new cleaning spray in the Shoshu-Pot series, invigorating a stagnant market.
However, these efforts did not compensate for the termination of sales ofsurgical masks at the end of June 2009and sales in this category declined.

Aiming for future growth, we will makecontinuing efforts to proactively cultivate
new business areas.

Mothproofing and Hygiene-Related Products

THERMAL Care
(Disposable Warmers)

Since July 2003, we have been marketing products produced through alliances,such as disposable warmers sold under Mycoal Co., Ltd.’s Onpacks brand, taking
pride in the quality and lineup of our products, particularly those for warming
the feet.

Haru-Onpacks(adhesive type)

Onpacks(non-adhesive type)

Smart-Onpacks(adhesive type, flexible & thin)Haru-Onpacks(adhesive typefor socks)

Onpacks(non-adhesive
type for shoes)

Net Sales (millions of yen)
6,624

7,000

5,279

4,000

4,534

5,000

5,386

5,860

6,000

‘09

‘ 10

3,000
2,000
1,000
0
‘07

14

‘0 8

‘11

Overview:

Future Strategy:

We renewed the packaging of disposable warmers to unify the entire Onpacks
series’ product design and invigorate
the market.
Sales of disposable warmers grew due
to increased demand associated withrestoration after the earthquake.

We will continue to strive to strengthen
and develop product brands while cultivating and expanding new demand.

Global Business Development

Leveraging Alliance Synergies in Indonesia
Promoting “select and focus” in every aspect of operations, S.T. CORPORATION is establishinga global business foundation tailored to local markets.

Overseas Development and Future Strategies
In North America and Europe, S.T. CORPORATION pursues global businessexpansion through alliances. In Asia, backed by our mainstay products, we

1have been building a stronger presence in Asian markets. Through these
efforts, the Company is aiming for an overseas sales ratio of over 10%.
However, overseas sales edged down despite such efforts due to the slow
economic recovery from the international financial crisis.
In May 2010, the Company entered into a capital and business allianceagreement with FUMAKILLA LIMITED, in which it now holds a more than
25% share. Leveraging synergies from this alliance, during fiscal 2012,

2

S.T. CORPORATION will post staff to the growing market of Indonesia toestablish a business foundation rooted in that country, where FUMAKILLA
has its largest overseas production base.
Overseas Sales

3
(%)

1,500

4.4
4.0

1,000

3.8

1,645

3.9

5

1,763

2,000

6

1,750

2,500

5.5

1,997

3,000

2,593

(millions of yen)

500
0

4

5

4
3
2
1

‘0 7

Overseas Sales

‘ 08

‘09

‘10

‘11

0

Overseas Sales Ratio

Outline of FUMAKILLA LIMITED (Consolidated)

Overseas Bases

President

Kazuaki Oshimo

Company Name

Main Businesses

Location

Chiyoda-ku, Tokyo

1 AEKYUNG S.T. CO., LTD.

Sale of deodorizers andair fresheners/household goods

Paid-in capital¥3,699 million (as of March 31, 2011)

1 S.T. KOREA CORPORATION

Established

December 1950

Production of deodorizers andair fresheners/dehumidifiers

2 FAMILY GLOVE (TAIWAN) CO., LTD.1

Production and sale of gloves

End of fiscal year

March 31

3 SHALDAN (THAILAND) CO., LTD.

Production and sale of deodorizers andair fresheners

3 FAMILY GLOVE (THAILAND) CO., LTD.2

Production and sale of gloves

4 FAMILY GLOVE (VIETNAM) CO., LTD.

Production of gloves

5 SHALDAN (PHILIPPINES) INC.

Production and sale of mothproofing
agents/deodorizers and air fresheners

No. of employees 1,315 (as of March 31, 2011)
Net sales

Net income¥23,473 million(for fiscal year ended March 31, 2011)¥287 million(for fiscal year ended March 31, 2011)

Notes: 1. ISO14001/9001-certified plants
2. ISO9001-certified plants

15

Corporate GovernanceSound, Objective Committee-Based Governance
S.T. CORPORATION gives top priority to implementing corporate governance that achieves fair and stable organizational operations to increase shareholder value. Also, the Company considers it important to improve corporate value by enhancing management transparency and maintaining harmonious relations with various
stakeholders. To ensure the accurate implementation of these basic principles, the Company adopted theCompany-with-Committees system, thereby further improving management quality.

M Committee-Based Corporate Governance System

directors (one from outside the Company) elected to the Board

In 2004, S.T. CORPORATION shifted from the company with cor-at the June 2011 General Meeting of Shareholders, which

porate auditors system to the current committee-based system,

increased the number of female directors by one. The Board

establishing Nomination, Audit and Compensation Committees

holds regular meetings on a quarterly basis and extraordinary

within the Board of Directors, with outside directors comprising

meetings as necessary to decide on matters of managerial

the majority of each Committee. The Board of Directors nomi-

importance. Of the eight executive officers, four, including thenates executive officers to undertake business execution in line

president, are concurrently directors. In principle, Executive

with its policy decisions. The term of office for both directors andOfficer Meetings are held biweekly to expedite decision making

executive officers is one year, and directors are nominated at theand flexible business execution.

General Meeting of Shareholders every year. This system allows

S.T. CORPORATION’s directors monitor business execution

the Board of Directors to concentrate on decision-making andthrough Board of Directors’ meetings and Audit Committee

supervisory functions by delegating much business execution

activities. Outside directors constitute the majority of theauthority to executive officers. This ensures agile decision mak-Nomination and Compensation committees, which have five anding and flexible business execution.

three members, respectively. All three of the Audit Committee
members are outside directors as are the chairs of all three com-M A Governance System That Balances Decision-Making,Business Execution and Supervision

mittees. Outside directors are chosen for extensive knowledge
and experience in such fields as corporate management, market-

S.T. CORPORATION’s Board of Directors comprises four corpo-

ing, accounting and business science. They play an appropriate

rate directors and four outside directors, including two femalerole in strengthening monitoring and supervisory functions as

Corporate Governance Structure
Structure for Management Supervision and Business Execution
General Meeting of Shareholders
Election/Dismissal
Accounting Auditors• Accounting Audit

Election/Dismissal
Board of Directors

Audit Committee( Audit Committee Office)Nomination/Dismissal

Internal Audit Group

16

Nomination Committee

Chief Executive Officer

Compensation Committee

Executive Officer Meeting

Executive Officers in ChargeGroup Companies’ Representative Directors

Operating Divisions

Group Companies

well as in enhancing the objectivity, transparency and fairness ofcorporate management.

Directors and Executive Officers (As of June 17, 2011)

M Audit by Audit Committee, Internal Audit Group andBoard of Directors

Accounting Auditors
The Audit Committee conducts audits by receiving business execution reports from executive officers, examining financial
reports and other documents and directing investigations on a
project-by-project basis. To ensure audit effectiveness, the Audit
Committee members also visit operational sites in cooperation
with the Internal Audit Group and exchange timely opinions withthe chief executive officer and accounting auditors.
Under the direct control of the chief executive officer, theInternal Audit Group is responsible for internal audits, and plans
and implements annual internal audits. The Internal Audit Group

Takashi Suzuki
The Chairman of the Board of Directors

Osamu Mizorogi
Outside Director

Kanichi Suzuki
Outside Director

Naoto Onzo
Outside Director
Dean, School of Commerce, Waseda University

Yoshiko Shirata
Outside Director
Professor, Graduate School of Business Sciences, University of Tsukuba

also conducts special audits on demand for the Board ofKanzo Kobayashi

Directors, Audit Committee or the chief executive officer.

Director

Currently, S.T. CORPORATION’s accounting auditor is Ernst &Young ShinNihon LLC, a member firm of Ernst & Young Global
Limited, an independent auditor that conducts accounting audits
and internal control audits.
M Internal Control System
In accordance with requirements stipulated in Japan’s
Corporation Law and Financial Instruments and Exchange Law,
S.T. CORPORATION has worked on building effective internal

Hirohide Shimada
Director

Takako Suzuki
Director
Member of Nomination Committee
Member of Audit Committee
Member of Compensation Committee
Orange symbol indicates committee chair

Executive Officers

control systems for the entire Group that focus on complianceTakashi Suzuki

and risk management.

President and Chief Executive Officer
Representative Executive Officer

Regarding compliance, the Company has been striving toenhance the awareness and structure of all Group units regard-

Kanzo Kobayashi

ing compliance, establishing internal compliance regulations andSenior Executive Vice President
Executive Officer

the Compliance Committee, both covering the entire S.T.
CORPORATION Group. In risk management as well, theCompany maintains internal risk management regulations andthe Risk Management Committee, which covers the entire
Group, while addressing specific risks by assigning the Special
Committee as necessary.
In the area of an internal control over financial reporting, theCompany has worked to enhance the reliability of its financial
reporting, following the initial ground laying processes centeredon the preparation of numerous check sheets and other docu-

Hirohide Shimada
Managing Executive Officer
In charge of Corporate Staff Division and Investor Relations

Takahiko KatoManaging Executive Officer
General Manager of Sales Division

Kumiko Ishikawa
Executive Officer
In charge of Legal Department, Corporate Staff Division
and Customer Service Division

ments. As a result, in each fiscal year since the introduction of

Yo Kouzuki

the Internal Control Report system under the Financial

Executive Officer
In charge of Research and Development Division

Instruments and Exchange Law in fiscal 2009, the Company’s system of internal control over financial reporting has been evaluated as “effective.” In addition, in fiscal 2011, its general IT control
system was verified as “effective.” S.T. CORPORATION will continue to further improve the reliability of its financial reportingand management transparency.

Takako Suzuki
Executive Officer
In charge of Group business strategy and fragrance & design

Tsukasa Konda
Executive Officer
General Manager of Tokyo Office, Sales Division

17

CSR (Corporate Social Responsibility)

Helping to Invigorate Japan
In line with its credo of Service and Trust, S.T. CORPORATION strives to ensure sustainable, profitable growth byproviding comfort and excitement to people’s lives. The Company also places top management priority on
building harmonious relationship with its stakeholders, including shareholders, customers, business partners,
local communities and employees, thereby increasing its corporate value.

M Supporting Disaster-Struck Areas

M Corporate Philosophy
The mission statement of S.T. CORPORATION is “Sincerity.” All

To support survivors and restoration

our business activities enshrine the basic concepts of our man-activities in the areas affected by theagement philosophy. Based on these concepts, we are building

Great East Japan Earthquake, which

an optimum and fair business management system and enhanc-

struck on March 11, 2011,

ing our corporate governance.

S.T. CORPORATION immediately
sent such relief supplies as disposable warmers and household gloves in conjunction with thenational and municipal governments and various industrial organizations. In addition, S.T. CORPORATION made monetary

Sincerity
Management Philosophy
1. To fulfill its mission of serving society and earning society's trust,
S.T. CORPORATION constantly works to improve its products andto create unique products that our customers can trust absolutely.
2. To a c h i e v e t h e C o m p a n y ’s s u s t a i n e d p ro s p e r i t y, S . T.
CORPORATION ensures its workplaces provide an environment
where its employees can earnestly work with hope and pride.
3. Always valuing harmony and courtesy, S.T. CORPORATION strives
to be the best company as regards winning the absolute trust of
our customers, other concerned people and society at large.

donations to the Japan Red Cross and Iwaki City, Fukushima
Prefecture, where the Company’s Fukushima Plant is located.
M Campaign to Support Musicals
The Company proactively supports cultural activities, such as musicals andstage plays. Since 1998, the Company
has sponsored a campaign to stage
invitation-only productions of musicals.
In 2010, the cumulative total of guests
surpassed 190,000 people. In 2011, S.T. CORPORATION plans tocontinue presenting the musical Anne of Green Gables in eight
major cities nationwide in its “Heartbeat of 20,000 People Tour.”

M Reducing Environmental Burdens
In 2010, S.T. CORPORATION was

Eco-Ship MarkM Toward Sustainable Growth

reaccredited with the Eco-Ship MarkTo achieve sustained growth, theby the Maritime Bureau of Japan’sCompany considers it important toMinistry of Land, Infrastructure,

nurture the minds and bodies of per-Transport and Tourism. Aiming tosonnel. S.T. CORPORATION is imple-

raise public awareness of modal shift,menting various initiatives to improve

the Eco-Ship Mark System facilitates a modal shift to marine

workplace environments, thereby

transport by granting this certification to cargo owners and dis-enabling personnel to acquire the capabilities to both develop

tributors who have met or surpassed a required level of environ-groundbreaking ideas and also become the next generation ofment-friendly marine transport utilization. S.T. CORPORATION

managers. These initiatives include reassessing business practic-

first received this certification in 2008 and the latest commenda-

es to remove the need to work overtime, expanding the avail-tion underlines its position as a company that contributes toability of shortened working hours for childcare providers,environment preservation activities. Spurred by this achieve-

improving the rate of annual paid holiday usage, providing con-ment, S.T. CORPORATION will further promote modal shift, withtinued support for our round-the-world staff-training team andthe aim of reducing environmental burdens.

promoting the use of young managers.

18

Five-Year Financial Summary
S.T. CORPORATION and consolidated subsidiaries
Years ended March 31

Thousands of
U.S. dollars(except per sharedata and ratios)

Millions of yen(except per share data and ratios)

2011

2010

2009

2008

2007

2011

Net sales¥43,580¥43,546¥44,879¥47,006¥45,227$524,118

Cost of sales

25,37025,151

26,28026,88725,243

305,106

For The Year:

Selling, general and administrative expenses

16,097

16,14916,107

16,90016,642

193,585

Operating income

2,114

2,246

2,493

3,219

3,342

25,428

Income before income taxes and minority interests

1,343

1,943

1,969

2,458

3,039

16,148Net income

786

1,119

1,076

1,295

1,747

9,456

Capital expenditures

662

673

716

649

696

7,961

Depreciation and amortization

992

922

858

936

837

11,935R&D expenses

610

612

499

489

489

7,342

Cash flows from operating activities

2,704

2,263

1,549

2,784

2,636

32,523

Cash flows from investing activities(3,601)

(126)

(604)

871

2,220

(43,312)

Free cash flow

(897)

2,137

945

3,655

4,857

(10,790)

Cash flows from financing activities

(521)

(499)

(530)

(6,589)(5,561)(6,263)

At Year-end:¥16,523¥17,667¥16,118¥16,080¥20,289$198,716

Property, plant and equipment, net

6,312

6,561

6,766

7,070

7,371

75,917

Current assets
Total assets

30,011

29,02927,61728,393

33,830360,924

Current liabilities

8,286

7,313

6,881

7,581

7,494

99,653Long-term liabilities

1,753

1,751

1,706

1,667

1,687

21,079Net assets

19,972

19,966

19,02919,144

24,649240,192

Cash and cash equivalents

5,731

7,170

5,520

5,185

8,112

68,922

Number of shares issued (thousand shares)

23,00029,50029,50029,50029,500Treasury stock (thousand shares)

1,214

7,648

7,669

7,687

3,708

630

611

619

607

602

Number of employees
Per Share (yen and U.S. dollars):¥ 36.03¥ 51.25¥ 49.32¥ 54.08¥ 65.10$ 0.43

Cash dividends

22.00

22.00

22.00

22.00

22.00

0.26

Net assets

893.74892.46853.81

853.90935.19

10.75

4.85

5.16

5.55

6.85

7.39

Net income

Ratios (%):
Operating income margin Income before income taxes andminority interests/net sales

3.08

4.46

4.39

5.23

6.72

Net income margin

1.80

2.57

2.40

2.76

3.86

ROE

4.03

5.87

5.78

6.06

6.72

ROA

2.66

3.95

3.84

4.16

4.87

Equity ratio

64.88

67.18

67.49

65.60

71.30

Notes: 1. U.S. dollar amounts are translated from yen for convenience only, at the rate of ¥83.15 = U.S.$1.00, the approximate rate on the Tokyo Foreign Exchange Market on March 31, 2011.
2. ROE = Net income divided by average total equity (total net assets minus subscription rights less minority interests in consolidated subsidiaries) for the fiscal year.
3. ROA = Net income divided by average total assets for the fiscal year.

19Management’s Discussion and Analysis

M Sales Overview

grow 25.5%. In the Household Environment-Related Products,

From around autumn 2010, midway through the fiscal year

sales in the Air Care category were down 4.1% year on year,

ended March 31, 2011, the pace of recovery in the Japanesesales in the Humidity Care category fell 8.3% and sales in theeconomy slowed, reflecting decreased exports due to theHome Care category dropped 11.6%. (For details, please see

appreciation of the yen as well as sluggish personal consump-

the “At a Glance” and “Operational Review” sections on pages

tion. Nevertheless, signs of recovery again began to emerge

10 through 14 of this report.)

toward the end of 2010. However, the Great East Japan
Earthquake on March 11, 2011, caused wide disruption in the

M Cost of Sales, SG&A Expenses and Operating Income

country’s economic activities, resulting in a contraction in con-

Despite efforts to reduce manufacturing costs, the cost of sales

sumer spending and clouding the outlook for the Japanese

edged up 0.9% compared with the previous fiscal year to

economy.

¥25,370 million due to continued high raw material expenses.

The Company’s Fukushima Plant saw some damage to facili-

Selling, general and administrative expenses edged down 0.3%

ties, and the procurement of materials and components wasyear on year to ¥16,097 million, reflecting efforts to reducesomewhat affected by the disruption in the supply chain.

advertising and distribution costs. As a result, operating income

However, owing to the Company’s efforts to secure early recov-

declined 5.9% to ¥2,114 million and the operating income mar-ery while implementing alternate production at other plants,

gin was down from 5.2% to 4.9%.

the Fukushima Plant was able to resume production after
M Other Income & Expenses, Pretax and Net Income

approximately one month.
Under such circumstances, S.T. CORPORATION renewed its

Under other income and expenses, the Company recorded acommitment to its three basic strategies, namely, “select andnet increase in expenses due to the recording of a ¥117 million

focus,” the “development of unparalleled products” and “agile

extraordinary loss on disaster on top of a decrease in interest

management,” with the aim of strengthening its mainstay

and dividends received as well as the recording of an equity

brands and also implemented strict cost reductions. In addition,

loss in affiliates. As a result, income before income taxes andthe Company launched the fragrance revolution growth strate-

minority interests dropped 30.9% year on year to ¥1,343 mil-gy on top of its ongoing design revolution as part of its initia-

lion, and net income fell 29.8% to ¥786 million.
Basic net income per share stood at ¥36.03, down fromtive to switch focus from price competition to value¥51.25 in the previous fiscal year (diluted net income per sharecompetition, differentiating its products.
As a result, consolidated net sales edged up 0.1% year on

decreased to ¥36.03 from ¥51.24 in the previous fiscal year).

year to ¥43,580 million. By business segment, theThe net income margin declined from 2.6% in the previous fis-

Mothproofing and Hygiene-Related Products saw sales in thecal year to 1.8%, while ROE was also down, dropping from

Cloth Care category down 2.3% year on year, sales in the Hand

5.9% to 4.0%.

Care category rise 9.5% and sales in the Thermal Care category

1,000

10,000

‘08

‘09

‘10

‘11

0

‘07

‘ 08

Operating Income

20

6

1,500

4.85
2,114

2,000

2,246

5.16

20,000‘0 7(millions of yen)
3.86
2,000

‘ 09

‘ 10

‘11

4

1,000

2

500

0

0

Operating Income Margin

(%)
4

2.76
2.40

‘ 07

Net Income

‘ 08

‘ 09

3

2.57
1.80
786

5.55

2,493

3,219

3,342

43,58043,5463,000

30,00008
6.85

44,87947,00645,22740,000(%)

1,119(millions of yen)
7.39
4,000

50,000

1,076(millions of yen)

Net Income and
Net Income Margin

1,295

Operating Income andOperating Income Margin

1,747

Net Sales

‘ 10

‘11

Net Income Margin

2

1

0

M Financial Position

investment securities and property, plant and equipment. Net

Total assets as of March 31, 2011 stood at ¥30,011 million, up

cash used in financing activities grew ¥22 million to ¥521 million¥981 million compared with a year earlier. Current assets

due mainly to an increase in payments of dividends to minority

declined ¥1,143 million to ¥16,523 million, while non-current

shareholders. As a result, cash and cash equivalents at March 31,

assets grew ¥2,125 million to ¥13,488 million. The changes

2011 stood at ¥5,731 million, a net decrease of ¥1,439 million

were mainly attributable to a decrease in cash and time depos-

from the previous fiscal year-end.

its and an increase in investment securities.
M Dividends, Return to Shareholders

Total liabilities climbed ¥975 million to ¥10,039 million due
mainly to an increase in trade payables. The Company holds no

Taking into consideration such factors as net income and theinterest-bearing debt, maintaining a healthy financial standing.

need to realize shareholder returns, the Company has decided

Total net assets grew, increasing ¥6 million from the previous

to distribute a fiscal year-end dividend of ¥11 (¥22 for the full

fiscal year-end to ¥19,972 million. However, the Company

year, including the interim dividend), on par with the previous

retired 6.5 million treasury shares (¥9,371 million) during the fis-

fiscal year’s payment. The annual dividend payout ratio wascal year under review, which resulted in a decrease in treasury

thus 61.1% on a consolidated basis. From the viewpoint ofstock and retained earnings.

increasing shareholder returns by decreasing the number ofReflecting the foregoing, the equity ratio remained high atshares issued, the Company retired 6.5 million shares (22% of

64.9%, down slightly from the 67.2% of the previous fiscal year.

total shares issued) of a total of approximately 7.65 million

Net assets per share increased from ¥892.46 to ¥893.74.

shares of treasury stock held at the end of the previous fiscal
year. The Company will continue to place importance on

M Capital Expenditures and Depreciation andreturns to shareholders.

Amortization
Capital expenditures for the fiscal year under review contracted

M Business and Operational Risks

from ¥673 million in the previous fiscal year to ¥662 million.

Factors that could possibly impact the Group’s operating

Depreciation and amortization, including that related to intan-

results, financial position and stock prices include: an escalation

gible assets, rose from ¥922 million to ¥992 million.

in raw material prices; the impact on manufacturing operationsof natural disasters and changes in international political or

M Cash Flowsother conditions; sales fluctuations due to unseasonal weather;

Net cash provided by operating activities increased ¥441 mil-and the failure of initiatives to raise new businesses. Forward-

lion year on year to ¥2,704 million, due mainly to increases inlooking statements in this annual report are based on assump-trade payables and depreciation and amortization. Net cash

tions made by the Company as of March 31, 2011.

used in investing activities rose ¥3,475 million to ¥3,601 million.
This was primarily attributable to increases in purchases of

Total Assets and Net Assets

ROE and ROA

Dividends per Share andPayout Ratio(millions of yen)

(%)

(yen)

40,000

8

70
6.72
5.78

4.03
2.66

2

40

Total Assets

‘0 8

‘09

‘10

Net Assets

‘11

0

‘ 07

ROE

‘ 08

ROA

‘ 09

‘ 10

‘11

33.79

40

30

30

20

20

0

22.0

3.95

22.0

3.84

50
42.93

22.0

4.16
4

40.68

22.0

‘07

44.61

50

4.87

70
60

5.87

10
0

61.06

60

22.0

30,011

6

19,972

29,02919,966

19,02927,61728,393

33,83010,00019,14420,0006.06

24,64930,000

(%)

‘ 07

‘ 08

‘ 09

‘ 10

‘11

Dividends per Share

100

Payout Ratio

21

Consolidated Balance Sheets
S.T. CORPORATION and consolidated subsidiaries
March 31, 2011 and 2010

Thousands ofMillions of yen

ASSETS

U.S. dollars (Note 2)

2011

2010

2011

¥   6,399¥   8,036$   76,962

Current assets:
Cash and time deposits (Notes 7 and 19)

55

57

659

Trade notes and accounts receivable (Note 7)

4,442

4,200

53,419Merchandise and finished goods

4,242

4,401

51,011

110

101

1,318

Marketable securities (Notes 7 and 9)

Work in process
Raw materials and supplies

448

303

5,390

Deferred tax assets (Note 13)

402

338

4,838

Other current assets

439

246

5,281

(13)

(16)

(162)

16,523

17,667

198,716

Investments in non-consolidated subsidiaries and affiliates

3,707

441

44,587

Investment securities (Notes 7 and 9)

1,345

2,187

16,182

72

87

869

Less—allowance for doubtful accounts   Total current assets

Investments and other assets:Long-term loans
Deferred tax assets other than unrealized revaluation loss on land (Note 13)
Other assets    Total investments and other assets

349

274

4,193

1,419

1,407

17,063

6,893

4,396

82,893

Property, plant and equipment, at cost (Notes 10 and 11):
Land

3,284

3,288

39,497

Buildings and structures

6,185

6,173

74,381

Machinery, equipment and vehicles

7,092

7,002

85,286

Tools, furniture and fixtures

3,646

3,660

43,847

27

29

325

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

Intangible assets, net of accumulated amortization   Total assets
See notes to consolidated financial statements in the full report, available on line.

22

28

25

338

(13,949)(13,616)(167,756)

6,312

6,561

75,917

283

406

3,398

¥ 30,011¥ 29,029$ 360,924

Thousands ofMillions of yen

Liabilities and Net Assets

U.S. dollars (Note 2)

2011

2010

2011

¥ 5,369¥ 4,370$ 64,569

Current liabilities:
Trade payables (Note 7)
Lease obligations
Other payables (Note 7)

8

6

99

1,835

1,900

22,072

Accrued expenses

578

470

6,956

Income taxes payable (Note 13)

203

333

2,443

Consumption taxes payable

67

41

802

Allowance for sales returns

121

130

1,452

Provision for loss on disaster

39

—－

470

Other current liabilities   Total current liabilities

66

63

790

8,286

7,313

99,653Long-term liabilities:
Lease obligations
Employees' retirement and severance benefits (Note 14)

14

13

165

1,234

1,251

14,843

Directors' retirement and severance benefits

124

106

1,492

Deferred tax liabilities—unrealized revaluation profit on land (Note 10)

381

381

4,579

1,753

1,751

21,079  Common stock:    Authorized—96,817,000 shares in 2011 and 2010   Issued and outstanding—23,000,000 shares in 2011
and 29,500,000 shares in 2010

7,066

7,066

84,973  Capital surplus

7,068

7,068

85,001   Total long-term liabilities
Contingent liabilities (Note 12)
Net assets (Note 15):
Shareholders' equity:  Retained earnings

7,956

17,024

95,680   Treasury stock, at cost

(1,722)(11,026)(20,713)   Total shareholders' equity

20,367

20,132244,940

Accumulated other comprehensive loss   Unrealized holding gain on other securities, net of taxes

160

400

1,923

   Unrealized revaluation loss on land, net of taxes (Note 10)

(550)

(550)

(6,610)  Translation adjustments

(506)

(480)

(6,091)    Total accumulated other comprehensive loss

(896)

(629)

(10,778)

82

67

986

Subscription rights

419

396

5,044

   Total net assets

19,972

19,966240,192    Total liabilities and net assets¥30,011¥29,029$360,924

Minority interests in consolidated subsidiaries

23

Consolidated Statements of Income
S.T. CORPORATION and consolidated subsidiaries
For the years ended March 31, 2011 and 2010

Thousands ofMillions of yen

U.S. dollars (Note 2)

2011

2010

2011

Net sales¥43,580¥43,546$524,118

Cost of sales (Note 23)

25,37825,162305,212

18,202

18,384

218,906

9

11

106

18,211

18,394

219,012

16,097

16,149193,585

2,114

2,246

25,428Interest and dividends received

78

102

939

Interest expense

(1)

(0)

(16)

Purchase discounts

183

206

2,203

Sales discounts(9,834)Gross profit before reversal of allowance for sales returns
Reversal of allowance for sales returns
Gross profit
Selling, general and administrative expenses (Note 17)
Operating income
Other income (expenses):

(818)

(811)

Gain on sales of investment securities, net

0

3

1

Loss on valuation of investment securities

(14)

—

(165)

Loss on valuation of subsidiaries' stocks

(43)

—

(515)

Equity in profit (loss) of affiliates

(94)

55

(1,127)

Reversal of allowance for doubtful accounts
Loss on disaster (Note 18)

3

3

31

(117)

—

(1,403)

50

139

606

(772)

(302)

(9,280)

1,343

1,943

16,148Current

499

743

6,006

Deferred

(18)

9

(213)

Total income taxes

482

753

5,793

Income before minority interests

861—

10,355

Other, net    Total other income (expenses)
Income before income taxes and minority interests
Income taxes (Note 13):

Minority interests  Net income

75

72

899

¥   786¥ 1,119$  9,456

Millions of yen

U.S. dollars (Note 2)

See notes to consolidated financial statements in the full report, available on line.

Consolidated Statement of Comprehensive Income
S.T. CORPORATION and consolidated subsidiaries
For the year ended March 31, 2011

Thousands of

2011

2011

¥861

$10,355

Unrealized holding gain (loss) on other securities(119)(1,426)

Translation adjustments

(30)

(366)

Other comprehensive income on equity method companies

(42)

(504)

Total other comprehensive loss (Note 6)(191)(2,296)¥670$ 8,059   Shareholders of S.T. CORPORATION

610

7,333

   Minority interests in consolidated subsidiaries

60

726

Income before minority interests
Other comprehensive income:Comprehensive Income (Note 6)
Total comprehensive income attributable to:

See notes to consolidated financial statements in the full report, available on line.

24Consolidated Statements of Changes In Net Assets
S.T. CORPORATION and consolidated subsidiaries
For the years ended March 31, 2011 and 2010

Millions of yen

Balance at March 31, 2010
Cash dividends paid by distribution of retained earnings
Net income
Purchases of treasury stock
Disposition of treasury stock
Cancellation of treasury stock
Changes in treasury stock held by equity method companies
Net changes in items other than those in shareholders' equity
Balance at March 31, 2011

Number of sharesof common stock(Thousands)

Commonstock

CapitalsurplusRetainedearnings

Treasurystock

29,500¥ 7,066¥ 7,068¥ 17,024(480)
786¥ (11,026)(6,500)23,000¥7,066¥7,068

Total
shareholders’equity(3)(9,371)

(1)
9
9,371
(75)

¥ 20,132
(480)
786
(1)
5
—
(75)

¥ 7,956¥ (1,722)¥ 20,367

Total
net assets

Millions of yen
Unrealized
Unrealized
holding gain on
revaluation
other securities, loss on land, net
net of taxesof taxes (Note 10)

Balance at March 31, 2010
Cash dividends paid by distribution of retained earnings
Net income
Purchases of treasury stock
Disposition of treasury stock
Cancellation of treasury stock
Changes in treasury stock held by equity method companies
Net changes in items other than those in shareholders' equity
Balance at March 31, 2011

Translation
adjustments

Total accumulated
othercomprehensive
loss

Subscription
rightsMinority
interests inconsolidated
subsidiaries¥ 400¥ (550)¥ (480)¥ (629)

¥ 67

¥ 396

(241)
¥ 160

—
¥(550)(27)¥(506)(267)¥(896)

15
¥ 82

23
¥419

¥ 19,966
(480)
786
(1)
5
—
(75)
(229)
¥ 19,972

Number of sharesof common stock(Thousands)

Commonstock

CapitalsurplusRetainedearnings

Treasury
stock

Total
shareholders’equity29,500¥7,066¥7,068¥16,399
(480)
1,119

¥(11,056)

Millions of yen

Balance at March 31, 2009
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, 2010

29,500¥7,066¥7,068

(14)

(1)
32

¥19,476
(480)
1,119
(1)
17

¥17,024¥(11,026)¥20,132

Millions of yen
Unrealized
Unrealized
holding gain on
revaluation
other securities, loss on land, net
net of taxesof taxes (Note 10)

Balance at March 31, 2009
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, 2010

Translation
adjustments

Total accumulated
othercomprehensive
loss

Subscription
rightsMinority
interests inconsolidated
subsidiaries¥220¥(550)¥(507)¥(836)

¥51

¥339

180
¥400

—
¥(550)

27¥(480)

207¥(629)

16
¥67

58
¥396

Number of sharesof common stock(Thousands)

Commonstock

CapitalsurplusRetainedearnings

Treasurystock

29,500$ 84,973$ 85,001$ 204,736(5,774)9,456$ (132,599)

Total
net assets¥19,029
(480)
1,119
(1)
17
281
¥19,966

Thousands of U.S. dollars (Note 2)

Balance at March 31, 2010
Cash dividends paid by distribution of retained earnings
Net income
Purchases of treasury stock
Disposition of treasury stock
Cancellation of treasury stock
Changes in treasury stock held by equity method companies
Net changes in items other than those in shareholders' equity
Balance at March 31, 2011

(6,500)23,000$ 84,973$ 85,001

Total
shareholders’equity(41)(112,697)(11)
104
112,697(905)$ 242,111(5,774)
9,456
(11)
63
—
(905)

$ 95,680$ (20,713)$244,940

Total
net assets

Thousands of U.S. dollars (Note 2)
Unrealized
Unrealized
holding gain on
revaluation
other securities, loss on land, net
net of taxesof taxes (Note 10)

Balance at March 31, 2010
Cash dividends paid by distribution of retained earnings
Net income
Purchases of treasury stock
Disposition of treasury stock
Cancellation of treasury stock
Changes in treasury stock held by equity method companies
Net changes in items other than those in shareholders' equity
Balance at March 31, 2011

Translation
adjustments

Total accumulated
othercomprehensive
loss

Subscription
rightsMinority
interests inconsolidated
subsidiaries$ 4,815$ (6,610)$ (5,772)$ (7,567)$ 810$ 4,763(2,892)$ 1,923—$(6,610)(319)$(6,091)(3,212)$(10,778)

176
$986

280
$5,044$ 240,118(5,774)
9,456
(11)
63
—
(905)
(2,755)$240,192

See notes to consolidated financial statements in the full report, available on line.

25Consolidated Statements of Cash Flows
S.T. CORPORATION and consolidated subsidiaries
For the years ended March 31, 2011 and 2010

Thousands ofMillions of yen

U.S. dollars (Note 2)

2011

2010

2011

¥1,343¥1,943$16,148   Depreciation and amortization

992

922

11,935   Loss on sales of property, plant and equipment

34

10

410

   Loss (gain) on sales and valuation of investment securities

56

(3)

679

   Decrease in allowance for doubtful receivables

(3)

(13)

(31)

   Increase (decrease) in employees' retirement and severance benefits

(16)

38

(189)

   Increase in directors' retirement and severance benefits

18

10

218

   Decrease in allowance for sales returns

(9)

(11)

(106)

   Interest and dividends received(939)

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:

(78)

(102)

  Interest expense

1

0

16

   Foreign exchange loss (gain)

8

(34)

101

   Loss on disaster

117

—

1,403

   Equity in loss (gain) of affiliates

94

(55)

1,127
(2,937)   Changes in operating assets and liabilities:   Receivables

(244)

317

   Inventories

1

(535)

16

986

395

11,856    Payables and accrued expenses   Other, net

195

(6)

2,350

    Subtotal

3,497

2,878

42,056

Interest and dividends received

78

104

942

Interest paid

(1)

(0)

(16)

Payments for loss on disaster

(65)

—

(782)

Income taxes paid     Net cash provided by operating activities

(805)

(719)

(9,677)

2,704

2,263

32,523

Cash flows from investing activities:
(0)

(1)

(0)

Proceeds from withdrawal of time deposits (more than three months)

200

300

2,405

Purchases of property, plant and equipment

(773)

(509)

(9,302)

1

76

16

Payments into deposits (more than three months)

Proceeds from sales of property, plant and equipment(3,031)(43)(36,455)

Proceeds from sales of investment securities

1

106

13

Other investments, net

1

(56)

10

(3,601)(126)(43,312)Purchases of investment securities     Net cash used in investing activities
Cash flows from financing activities:
Purchases of treasury stock

(1)

(1)

(11)

Proceeds from sales of treasury stock

5

17

63

Payments of dividends

(481)

(480)

(5,782)

Payments of dividends to minority shareholders

(36)

(30)

(437)

Other finance, net

(8)

(6)

(96)

(521)

(499)

(6,263)     Net cash used in financing activities

(21)

11

(252)

Net increase (decrease) in cash and cash equivalents(1,439)1,649(17,305)

Cash and cash equivalents at beginning of year

7,170

5,520

86,227

Cash and cash equivalents at end of year (Note 19)¥5,731¥7,170$68,922

Effect of exchange rate changes on cash and cash equivalents

See notes to consolidated financial statements in the full report, available on line.

26

Notes to Consolidated Financial Statements
S.T. CORPORATION and Consolidated Subsidiaries
March 31, 20111.

the Company obtains control over such subsidiaries; however, theSummary 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
maintain their books of account in conformity with those of theircountries 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”

Company 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 are made on consolidation.

(d) T ranslation of foreign currency transactions
and financial statements(PITF No. 18 issued by the ASBJ on May 17, 2006). In accordance

Monetary assets and liabilities denominated in foreign currencies

with PITF No. 18, the accompanying consolidated financial state-

are translated into yen at the rates of exchange in effect at the bal-ments for the years ended March 31, 2011 and 2010 have been pre-ance sheet date and the accounts of the overseas consolidated sub-pared by using the accounts of foreign consolidated subsidiaries

sidiaries are translated into yen at the rates of exchange in effect at

prepared in accordance with either International Financial Reporting

the balance sheet date. Foreign exchange gains and losses areStandards (IFRS) or accounting principles generally accepted in thecredited or charged to income and translation adjustments are

United States as adjusted for certain items including those forincluded in net assets.

goodwill, actuarial differences and capitalized development costs.
See Note 3.

(e) Marketable securities and investment securities

The accompanying consolidated financial statements have been

Other securities with determinable market value are carried at mar-prepared in accordance with accounting principles generally accept-

ket value with any changes in unrealized holding gain or loss, net of

ed in Japan, which are different in certain respects as to the applica-

the related deferred income tax assets or liabilities, included in net

tion and disclosure requirements of IFRS, and are compiled from theassets. Other securities without determinable market value are stat-consolidated financial statements prepared by the Company as

ed at cost determined principally by the moving-average method

required by the Financial Instruments and Exchange Act of Japan.

and the cost of other securities sold is principally computed based

In preparing the accompanying consolidated financial statements,on the moving-average method. During the years ended March 31,

certain reclassifications have been made to the consolidated finan-

2011 and 2010, the Company and its consolidated subsidiaries did

cial statements issued domestically for readers outside Japan. The

not have any trading securities.

notes to the consolidated financial statements include information
which is not required under accounting principles generally accept-(f) Inventories

ed in Japan but is presented herein as additional information.

Inventories are stated at the lower of cost or net selling value, cost

Furthermore, certain amounts in the prior year’s financial statements

being determined by the average method.

have been reclassified to conform to the current year’s presentation.

(b) Principles of consolidation and accounting forinvestments in unconsolidated subsidiaries and affiliates(g) Property, plant and equipment, except for leased assets,
and depreciation
Property, plant and equipment are stated at cost. Depreciation of

The accompanying consolidated financial statements include theproperty, plant and equipment of the Company and its domestic

accounts of the Company and any significant companies controlledsubsidiaries, except for buildings (excluding structures attached todirectly or indirectly by the Company. Companies over which thethe buildings) acquired on or after April 1, 1998, is computed by theCompany exercises significant influence in terms of their operating

declining-balance method in conformity with the Corporation Tax

and financial policies have been accounted for by the equity meth-

Law of Japan. Depreciation of property and equipment of overseas

od. As of March 31, 2011, the number of consolidated subsidiaries

subsidiaries and buildings (excluding structures attached to theand affiliates accounted for by the equity method were 5 and 4 (5buildings) acquired on or after April 1, 1998 of the Company andand 3 in 2010), respectively. Effective the year ended March 31,

domestic subsidiaries is computed by the straight-line method.

2011, FUMAKILLA LIMITED was newly included in the scope of theequity method as a result of the purchase of shares.
Investments in subsidiaries and affiliates which are not consolidat-

The estimated useful lives of the major depreciable assets are as
follows:
Buildings and structures

3 to 56 years

ed or accounted for by the equity method are carried at cost or less.

Machinery, equipment and vehicles

2 to 17 years

Where there has been a permanent decline in the value of such

Tools, furniture and fixtures

2 to 20 years

investments, 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 ofacquisition. It is the Company’s policy to value assets and liabilities
of subsidiaries acquired on or after April 1, 1999 at fair value when27

(h) Intangible assets, and long-term prepaid expenses(m) Directors’ retirement and severance benefits

Intangible assets and long-term prepaid expenses, except for

The Company has accrued directors’ retirement and severance ben-leased assets, are amortized by the straight-line method. Cost ofefits at the amount which would be required to be paid if all direc-

software purchased for internal use is amortized by the straight-line

tors resigned from their positions and left the Company as of themethod over a period of 5 years, the useful life applicable to com-balance sheet date in accordance with its internal regulations.

mercially available software.

(n) Provision for loss on disaster(i) Leases

The provision for loss on disaster is provided for future costs relat-

Noncancelable lease transactions that transfer substantially all theing to repairs of assets damaged by the Great East Japanrisks and rewards associated with the ownership of the leased assets

Earthquake at the amount estimated.

are accounted for as finance leases. All other lease transactions areaccounted for as operating leases and related payments arecharged to income as incurred.
Finance leases entered into before April 1, 2008 of the Company(o) Consumption taxes
Transactions subject to consumption taxes are recorded at amounts
exclusive of consumption taxes.

and its domestic subsidiaries are accounted for as operating leases,
except for those which transfer ownership of the leased assets tothe lessee.
Leased assets accounted for as finance leases are depreciated on thestraight-line method over the lease periods with no residual value.

(p) Cash and cash equivalents
Cash and cash equivalents in the accompanying consolidated statements of cash flows consist of cash on hand, demand deposits andliquid short-term investments with a maturity of three months or lessfrom their respective dates of acquisition.

(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

Basis of Translation

The consolidated financial statements presented herein are
expressed in yen and, solely for the convenience of the reader, have

The allowance for sales returns is generally provided for losses on

been translated into U.S. dollars at ¥83.15 = U.S.$1.00, the approxi-

sales returns subsequent to the balance sheet date at an amount

mate exchange rate prevailing on the Tokyo Foreign Exchange

equivalent to that calculated based on sales in conformity with theMarket on March 31, 2011. This translation should not be construed

Corporation Tax Law of Japan.

as a representation that all amounts shown could have been, orThe 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 from 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.

28

2.

could in the future be, converted into U.S. dollars at that or any
other rate.

3.

Changes in Accounting Policies

Application of the “Accounting Standard for Equity Method of
Accounting for Investments” and “Practical Solution on Unificationof Accounting Policies Applied to Associates Accounting for Using
the Equity Method”
Effective the fiscal year ended March 31, 2011, the Company has
adopted the Accounting Standard for Equity Method of Accounting
for Investments (ASBJ Statement No. 16 issued on March 10, 2008)
and Practical Solution on Unification of Accounting Policies Applied
to Associates Accounted for Using the Equity Method (ASBJ
Practical Issue Task Force (PITF) No. 24 issued on March 10, 2008).
The impact on income before income taxes and minority interests
was nil.

Application of the “Accounting Standards for Asset Retirement
Obligations”
Effective the fiscal year ended March 31, 2011, the Company has
adopted the Accounting Standard for Asset Retirement Obligations(ASBJ Statement No. 18 issued on March 31, 2008) and the
Guidance on Accounting Standards for Asset Retirement
Obligations (ASBJ Guidance No. 21 issued on March 31, 2008).
The impact on operating income, and income before income
taxes and minority interests was nil.
Accounting Standards for Business Combinations and Related Matters
Effective the fiscal year ended March 31, 2011, the Company has
applied the following accounting standards. All of these accounting
standards, partial amendments to existing accounting standards,
and guidance were issued by ASBJ on December 26, 2008.
• “A ccounting Standard for Business Combinations” (ASBJ
Statement No. 21)• “Accounting Standard for Consolidated Financial Statements”(ASBJ Statement No. 22)• “Partial Amendments to the Accounting Standard for Researchand Development Costs” (ASBJ Statement No. 23)• “Revised Accounting Standard for Business Divestitures” (ASBJ
Statement No. 7)• “Revised Accounting Standard for Equity Method of Accounting
for Investments” (ASBJ Statement No. 16)• “R evised Guidance on Accounting Standard for Business
Combinations and Accounting Standard for Business
Divestitures” (ASBJ Guidance No. 10)

4.

Consolidated Statements ofComprehensive Income

Year ended March 31, 2011
(1) Consolidated comprehensive income for the preceding year
ended March 31, 2010
Millions of yen

Comprehensive income attributable to shareholders of
S.T. CORPORATION
Comprehensive income attributable to minority interests
in consolidated subsidiaries
Total¥1,32687¥1,414(2) Other consolidated comprehensive income for the preceding
year ended March 31, 2010
Millions of yen

Unrealized holding gain on other securities
Translation adjustments
Other comprehensive income on equity method companies
Total

7.

¥180
37
6
¥223

Financial Instruments(1) Current status of financial instruments(a) Policy in relation to financial instruments
The Company and its consolidated subsidiaries (collectively, the“Group”) raises necessary funds following capital investment

Changes in Presentation

Consolidated Statements of Income
Accompanying the application of revisions in certain rules for thepresentation of financial statements, as contained in a cabinet order(Cabinet Office Ordinance No. 5, issued on March 24, 2009), which
are based on the “Accounting Standard for Consolidated Financial
Statements” (ASBJ Statement No. 22, issued on December 26,2008), the Company has included the item “Income before minority
interests” in the consolidated financial statements of the fiscal year
ended March 31, 2011.

5.

6.

plans for undertaking the manufacturing-and-selling businesses.
If surplus funds arise, the Group manages only financial assets
with high degrees of safety.
(b) Details of financial instruments and related risk
Trade receivables—trade notes and accounts receivable—are
exposed to credit risk in relation to customers. In addition,
receivables denominated in foreign currencies are exposed toforeign currency exchange risk.
Securities and investment securities, most of them are stocksof other companies with which the Group has business relationships, are exposed to market price fluctuation risk.
Substantially all trade payables—notes and accounts payable-

Supplementary Information

Accounting Standard for Presentation of Comprehensive Income
Effective April, 2010, the “Accounting Standard for Presentationof Comprehensive Income (ASBJ Statement No. 25, issued onJune 30, 2010) was applied.

trade and other payables—have payment due dates within one
year. In addition, payables denominated in foreign currencies are
exposed to foreign currency exchange risk.
(c) Risk management system for financial instruments

Credit risk management—the risk that customers or counterparties may default
The Company holds its management policy and put it into effectwhereby the Company grasps trust conditions of its customers
and monitors due dates and outstanding balances regularly toidentify and mitigate risks of bad debts from customers who arehaving financial difficulties.
The consolidated subsidiaries perform equivalent management with the Company.

29Market risk management—the risk arising from fluctuations in
exchange rates and interest rates
The Company uses forward exchange contract transactions withthe aim of avoiding risk related to fluctuation in future foreignexchange.
For marketable and investment securities, the Company periodically confirms the market value of such financial instruments
and reports to the director in charge. The Company reviews thestatus of these investments on a continuing basis.
Liquidity risk management—the risk that the Group may not able
to meet its payment obligations on the schedule dates
The Company manages liquidity risk by means of preparing
monthly financial plans.
(d) Supplementary explanation of items relating to the fair value offinancial instruments
The fair value of financial instruments is based on their quoted
market prices if available. If there are no market prices available,
fair value is reasonably estimated. Because estimation of fair values incorporates variable factors, adopting different assumptions
can change the value.

Year ended March 31, 2011

Fair value

Differencea Cash and time deposits$ 76,962$ 76,962—b Trade notes and accounts
receivable

53,41953,419—c Marketable securities andinvestment securities

16,274

16,274—$146,654$146,654—

a Trade payables$ 64,569$ 64,569—b Other payables

22,072

22,072—$ 86,641$ 86,641—

AssetsLiabilities

Notes: 1.	Method of estimating the fair value of financial instruments and other matters relating to marketable and investment securities
			
Assets			 a. Cash and time deposits and b. Trade notes and accounts receivable				Because these items are settled over short terms, fair value and carrying
values are nearly equivalent. Therefore, relevant carrying value is used.
			 c. Marketable securities and investment securities				Stocks are valued at the exchange trading price. Bonds are valued at theexchange trading price or at the price provided by the financial institutions
making markets in these securities. For information on securities classified
by purpose of holding, please refer to the “Marketable Securities andInvestment Securities” section of the notes to the financial statements.
			Liabilities			 a. Trade payables and b. Other payables				Because these items are settled over short terms, fair value and carrying
value is nearly equivalent. Therefore, relevant carrying value is used.
		(2) Estimated fair value of financial instruments

Thousands of U.S. dollars
Carrying value

2. Financial instruments for which fair value is extremely difficult to determine
Carrying value

Carrying value of financial instruments recognized on the consolidated balance sheet as of March 31, 2011 and 2010, estimated fairvalue of such items, and the differences between them are shown
below. Financial instruments for which fair value is extremely difficult

Unlisted equity
securities

to estimate are not included in the following table.
Year ended March 31, 2011

Millions of yen
Carrying value

Fair value

Differencea Cash and time deposits¥ 6,399¥ 6,399—b Trade notes and accounts
receivable

4,442

4,442

—

c Marketable securities andinvestment securities

1,353

1,353

—

¥12,194¥12,194—a Trade payables¥ 5,369¥ 5,369—b Other payables

1,835

1,835

—

¥ 7,204¥ 7,204—

AssetsLiabilities

Year ended March 31, 2010

Thousands of
U.S. dollars

Millions of yen

2011

2010

2011

¥47

¥489

$567

			Because the fair value of these financial instruments is extremely difficult todetermine, given that no quoted market price is available, they are notincluded in the above table.
		

3.	Redemption schedule for receivables and other securities with maturity
dates at March 31, 2011 and 2010 are summarized as follows:Year ended March 31, 2011

Time deposits
Trade notes and accounts
receivable

Millions of yen

One yearor lessMore than
1 year andwithin5 years

More than
5 years andwithin
10 yearsMore than
10 years¥ 6,398

¥ —

—

—

4,442

—

—

—

—

Marketable securities andinvestment securities

Millions of yen
Carrying value

Fair value

Difference

Bond

—

100

—

a Cash and time deposits¥ 8,036¥ 8,036

—

Other

—

100

—

—

b Trade notes and accounts
receivable

4,200

4,200

—

  Total¥10,840

¥200

—

—

c Marketable securities andinvestment securities

2,196

2,196

—

¥14,431¥14,431—a Trade payables¥ 4,370¥ 4,370—b Other payables

1,900

1,900

—

One yearor lessMore than
1 year andwithin5 years

More than
5 years andwithin
10 years¥ 6,271¥ 6,271—¥ 8,035

¥ —

¥ —

—

4,200

—

—

—

AssetsLiabilities

Year ended March 31, 2010

Time deposits
Trade notes and accounts
receivable

Millions of yen

More than
10 yearsMarketable securities andinvestment securities

30

Bond

—

—

100

—

Other

—

100

—

—

  Total¥12,235

¥100

¥100

—

Year ended March 31, 2011

Time deposits
Trade notes and accounts
receivable

10.

Thousands of U.S. dollars Land Revaluation

One yearor lessMore than
1 year andwithin5 years

More than
5 years andwithin
10 yearsMore than
10 years$ 76,945

$   —

—

—

dated March 31, 1998), land used for business activities was reval-

53,419———ued at March 31, 2002. The revaluation difference, net of taxes, is

In accordance with the Land Revaluation Law (Proclamation No. 34

stated as “unrealized revaluation loss on land, net of taxes” in net

Marketable securities andinvestment securities

assets. Deferred tax liabilities arising from this revaluation difference

Bond

—

1,203

—

—

are presented separately from deferred tax liabilities for other tem-

Other

—

1,203

—

—

porary differences in the accompanying consolidated balance  Total$130,364$2,405——sheets. The market value of the land as of March 31, 2011 and 2010
decreased by ¥543 million (U.S.$6,531 thousand) and ¥390 million,

8.

respectively, after the revaluation.

Derivatives

The Company and its consolidated subsidiaries had no derivative
instruments outstanding at March 31, 2011 and 2010.

9.

11.

Pledged Assets

At March 31, 2011 and 2010, the following assets were pledged ascollateral for borrowing limits of ¥327 million (U.S.$3,940 thousand)and ¥399 million, respectively.

Marketable Securities and Investment
Securities

The acquisition cost and related carrying value of other securities

Buildings and structureswith a determinable market value at March 31, 2011 and 2010 areLandsummarized as follows:

Total
Thousands of
U.S. dollars

Millions of yen

Thousands of
U.S. dollars

Millions of yen

2011

2010

2011

Acquisition cost

¥1,054¥1,567$12,678

Carrying value

1,353

2,196

16,274

Total unrealized gain

339

647

4,072

Total unrealized loss

40

18

476

At March 31, 2011 and 2010, unlisted stocks (which carrying value

12.

For the year ended March 31, 2011, the Company recognized2011$  621

94

99

1,135

¥146

¥158

$1,756The Company had the following contingent liabilities as ofMarch 31, 2011 and 2010.
Millions of yen

are not included in the above table, because the fair value of themprice is available.

2010

¥ 59

Commitments and Contingent
Liabilitieswas ¥47 million (U.S.$567 thousand) and ¥48 million, respectively)
is extremely difficult to determine, given that no quoted market

2011

¥ 52

Thousands of
U.S. dollars

2011

2010

2011

¥1

¥1

$13

Loan guarantees for:
Shaldan (Thailand) Co., Ltd.

impairment losses of ¥57 million (U.S.$680 thousand) on securities

At March 31, 2011 and 2010, trade notes discounted with banks(other securities of ¥14 million (U.S.$165 thousand) and investmentsin the ordinary course of business amounted to ¥101 million

in affiliates of ¥43 million (U.S.$515 thousand)).

(U.S.$1,216 thousand) and ¥92 million, respectively.

Sales of other securities for the years ended March 31, 2011 and2010 are summarized as follows:
Thousands of
U.S. dollars

Millions of yen

Proceeds received

2011

2010

2011

¥1,201¥2,806$14,445

Aggregate gain

0

3

1

Aggregate loss

—

—

—

31

13.

A reconciliation of the statutory tax rate to the Company’s effective tax rates for the year ended March 31, 2011 is summarized as

Income Taxes

follows:
2011

At March 31, 2011 and 2010, the tax effect of the temporary differences which gave rise to a significant portion of the deferred tax

Japanese statutory tax rate

assets (excluding deferred taxes on unrealized revaluation loss on

Permanent differences such as entertainment expenses, etc.

2.70land) was as follows:

Permanent differences such as dividend income(0.19)Tax credit(1.66)

Undistributed earnings of controlled foreign companies

0.65

Equity in loss of affiliates

2.79

Cancellation of temporary difference related to investments
in affiliates accounted for by the equity method(7.96)

Thousands of
U.S. dollars

Millions of yen

2011

2010

2011

Current assets: Accrued employees’
bonuses

¥179

¥144

$2,158 Allowance for sales
returns

48

52

582

Other

(0.46)

Effective tax rate

35.87% Accrued business taxes

16

28

191

No reconciliation has been presented for the year ended Other

162

114

1,947

March 31, 2010 as the difference between the statutory tax rate

 Total current deferred tax
assets

406

339

4,878

and the effective tax rate was less than 5%.

 Deferred gain on sales ofproperty

(0)

(0)

(5)

 Other

(3)

—

(35)

 Total current deferred tax
liabilities

(3)

(0)

(40)

 
Net current deferred tax
assets¥402¥338$4,838Current liabilities:

Employees’ Retirement and Severance
Benefits

The Company and its domestic subsidiaries have defined benefit
plans covering substantially all of their employees which are partially
funded through a qualified funded pension plan. Under these plans,ance benefits determined by points accumulated monthly based on
the employees’ contributions, length of service and the conditions Allowance for employees’
retirement and severance
benefits¥485 Allowance for directors’
retirement and severance
benefits

50

42

597

 Write-downs of securities

70

72

842

 Impairment loss

42

68

504

 Other2230 Gross non-current
deferred tax assets

649

677

7,809

 Valuation allowance

(130)

(124)

(1,565) Total non-current deferred
tax assets

519

553

6,244

¥493

$5,837

under which termination occurs. In addition, the Company and its
domestic subsidiaries pay meritorious service awards to employees

(18)

(18)

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, 2011 and 2010:
Thousands of
U.S. dollars

Millions of yen

Retirement and severance
benefit obligation

2011

2010

2011

¥(3,114)¥(3,027)$(37,454)

Plan assets

1,789

1,739

21,515(1,325)(1,288)(15,939)(212)

Unrecognized actuarial loss

93

39

1,118

(542)

Unrecognized past service
cost

(2)

(2)

(22)

Accrued benefit obligation¥(1,234)¥(1,251)$(14,843) Undistributed earnings ofcontrolled foreigncompanies(45) Unrealized holding gainon other securities,
net of taxes

(108)

(229)

(1,296) Total non-current deferred
tax liabilities

(170)

(279)

(2,050) Net non-current deferred
tax assets

¥349

¥274

$4,193(32)

in excess of the prescribed formula, which are charged to income as

Unfunded benefit obligation

Non-current liabilities: Deferred gain on sales ofproperty

14.

employees are entitled to lump-sum or pension retirement or sever-Non-current assets:

32

40.00%

The following table summarizes the components of net retirement
benefit expenses for the years ended March 31, 2011 and 2010:
Thousands of
U.S. dollars

Millions of yen

Service cost

2011

2010

2011

¥156

¥153

$1,873

Interest cost on benefit
obligation

60

58

718

Expected return on plan
assets

(35)

(31)

(418)

Amortization of actuarial loss

3

46

34

Amortization of past service
cost

(1)

(0)

(7)

Extraordinary additional
retirement payments

21

7

252

 Net retirement benefit
expenses

¥204

¥231

$2,451

The assumptions used in determining the pension benefit obligation are presented below:
2011

2010

Straight-line
methodStraight-line
methodDiscount rate

2.0%

2.0%

Expected rate of return on plan assets

2.0%

2.0%

Method of periodic allocation of
estimated retirement benefits

The basis for calculation of basic net income per share and diluted net income per share for the years ended March 31, 2011 and2010 was as follows:
Thousands of
U.S. dollars

Millions of yen

2011

2010

2011

Basic net income per share:¥786¥1,119$9,456 Amount not attributable
to shareholders ofcommon stock

—

—

—

 Amount attributable toshareholders of common
stock

786

1,119

9,456

 Weighted-average
number of shares
outstanding(millions of shares)

22

22

—

 Increase in number ofshares outstanding

0

0

—

 Shares resulting in ananti-dilutive effect(millions of shares)

1

1

—

 Net income

Diluted net income per share:

The basis for calculation of total net assets per share as ofMarch 31, 2011 and 2010 was as follows:

15.

Thousands of
U.S. dollars

Millions of yen

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 be made at any time by resolution of the shareholders, or by
the Board of Directors if certain conditions are met.

2011

2010

2011

Total net assets per share:¥19,972¥19,966$240,192 Deductions:

501

463

6,030

  
Subscription rights

82

67

986

  Minority interests inconsolidated
subsidiaries

419

396

5,044

 Amounts attributable toshareholders of common
stock

19,471

19,502

234,162 Number of shares
outstanding at year end(millions of shares)

22

22

—

 Total net assets

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, 2011, thelegal reserve of the Company included in retained earnings amounted to ¥550 million (U.S.$6,610 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.

16.

17.

Major Expenses

Major expenses included in selling, general and administrative
expenses for the years ended March 31, 2011 and 2010 wereas follows:
Thousands of
U.S. dollars

Millions of yen

Amounts per Share

2011

2010

2011

Sales promotion expenses¥4,614¥4,431$55,487

Advertising costs

2,531

2,941

30,436

Net assets per share as of March 31, 2011 and 2010 were ¥893.74

Salaries

1,859

1,746

22,352(U.S.$10.75) and ¥892.46, respectively. Basic net income per share

Shipment and storage
expenses

1,403

1,488

16,878Provision for employees’
retirement and severance
benefits

172

192

2,064

Provision for directors’
retirement and severance
benefits

18

16

218

for the years ended March 31, 2011 and 2010 was ¥36.03(U.S.$0.43) and ¥51.25, respectively.
Diluted net income per share for the years ended March 31, 2011
and 2010 was ¥36.03 (U.S.$0.43) and ¥51.24, respectively.

33

Research and development expenses included in general and(1) A summary of the pro forma amounts (inclusive of the related

administrative expenses and cost of sales for the years ended Marchinterest) of acquisition cost, accumulated depreciation and net book31, 2011 and 2010 amounted to ¥610 million (U.S.$7,342 thousand)value at March 31, 2011 and 2010, primarily relating to tools, furni-and ¥612 million, respectively.

ture and fixtures is as follows:

18.

Loss on Disaster

Acquisition cost

The Company recorded a loss related to the Great East Japan
Earthquake during the year ended March 31, 2011. The components of the loss on disaster are as follows:

Millions of yen

2011

2011

¥ 60

$  726

Provision for loss on disaster

39

470

Other

17

207

Total

¥117

$1,4032011$1,211

76

144

919

¥ 24

¥ 46

$  292Thousands of
U.S. dollars

Millions of yen

Payable in one year or less
Payable after one year
Total

2011

2010

2011

¥16

¥22

$195

8

24

97

¥24

¥46

$292

(3) Lease payments and pro forma depreciation charges for the years
ended March 31, 2011 and 2010 were ¥22 million (U.S.$265 thousand) and ¥53 million, respectively.

Cash and Time Deposits(4) Depreciation is computed by the straight-line method over the

Deposits pledged as collateral mainly for leased office space at
March 31, 2011 and 2010 amounted to ¥26 million (U.S.$317 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
in the accompanying consolidated balance sheets at March 31,
2011 and 2010 is as follows:
Thousands of
U.S. dollars

Millions of yen

2011

2010

2011

¥6,399¥8,036$76,962

Time deposits with a maturity
in excess of three months

(723)

(923)

(8,699)Marketable securities with amaturity of three months orless from their respective
dates of acquisition

55

57

659

Cash and cash equivalents¥5,731¥7,170$68,922

Cash and time deposits

LeasesFinance 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. Informationin relation to leased assets held under finance leases but accounted
for as operating leases is as follows:34

Net book value

2010

¥190

subsequent to March 31, 2011 and 2010 are summarized as follows:
Thousands of
U.S. dollars

Fixed costs incurred during thesuspension of operations

20.

Accumulated depreciation

2011

¥101

(2) Future minimum lease payments, inclusive of the related interest,

Year ended March 31, 201119.

Thousands of
U.S. dollars

Millions of yen

respective lease terms assuming a nil residual value.

Operating leases
The Company and its consolidated subsidiaries have no significant
operating leases at March 31, 2011 and 2010.

21.

Segment Information

Year ended March 31, 2011
(1) Summary of Reporting Segments
The reportable segments of the Group are components for which
discrete financial information is available and whose operating
results are regularly reviewed by the Board of Directors of theCompany to make decisions about resource allocation and to assess
their performance.
The Company formulates comprehensive strategies for implementation in Japan and overseas in its head office, and conducts businessactivities. The Company has two reportable segments: theMothproofing and hygiene-related products and the Household environment-related products. The business segments are classified
according to the nature of the Company’s products and their markets.
The Mothproofing and hygiene-related products segment includes
the manufacture and sales of Cloth Care products, Hand Care products and Thermal Care products. The Household environment-related
products segment includes the manufacture and sales of Air Care
products, Humidity Care products and Home Care products.
(2) Calculation method of sales, profits or losses, and other items byreportable segment
The accounting method for the reportable segments is the same as
the principles and procedures set forth in Note 1.“Summary of
Significant Accounting Policies.” The segment income or losses are
based on operating income or loss.

(3) Information on the amounts of sales, income (loss), and other items by reportable segments
Year ended March 31, 2011
Millions of yen
Mothproofing andhygiene-related
products

Householdenvironmentrelated products

Total¥19,442¥24,139¥43,580———

Net sales

19,442

24,13943,580

Segment income¥ 1,126¥   989¥ 2,114¥   405¥   570¥   975

Sales
Sales to third parties
Intra-group sales and transfers

Other items
Depreciation

Year ended March 31, 2010
Millions of yen
Mothproofing andhygiene-related
products

Householdenvironmentrelated products

Total¥18,003¥25,543¥43,546———

Net sales

18,00325,54343,546

Segment income¥ 1,591¥   654¥ 2,246¥   350¥   572¥   922

Sales
Sales to third parties
Intra-group sales and transfers

Other items
Depreciation

Year ended March 31, 2011
Thousands of U.S. dollars
Mothproofing andhygiene-related
products

Householdenvironmentrelated products

Total$233,815$290,303$524,118———

Net sales

233,815290,303524,118

Segment income$ 13,537$ 11,891$ 25,428$  4,868$  6,860$ 11,727

Sales
Sales to third parties
Intra-group sales and transfers

Other items
Depreciation

Notes: 1. Total segment income is the same as operating income in the Consolidated Statements of Income.
		
2.	Assets and liabilities by reportable segment have not been described in the above tables because the Board of Directors of the Company does not regularly review them tomake decisions about resource allocation and to assess their performance.

(4) Related Information(a) Information by product and service
Year ended March 31, 2011
Millions of yen

Sales to third parties

Cloth Care

Thermal Care

Air Care

OthersTotal¥9,193¥6,624¥18,767¥8,997¥43,580

Cloth Care

Thermal Care

Air Care

OthersTotal$110,558$79,662$225,695$108,202$524,118

Year ended March 31, 2011
Thousands of U.S. dollars

Sales to third parties

35

(b) Information by geographical segment

Sales
Geographical segment information is not presented as overseas
sales were less than 10% of consolidated net sales for the year
ended March 31, 2011.

Property, plant and equipment
Geographical segment information is not presented as the amountof property, plant and equipment in Japan exceeded 90% of total ofproperty, plant and equipment at March 31, 2011.

(c) Information by major customer
Year ended March 31, 2011
Sales
Customer’s name(Millions of yen)(Thousands of
U.S. dollars)

Relating segment

Paltac Corporation¥13,906$167,235

Mothproofing and hygiene-related productsHousehold environment-related products

ARATA CORPORATION¥ 9,231$111,022

Mothproofing and hygiene-related productsHousehold environment-related products

Supplementary Information
Beginning with the fiscal year ended March 31, 2011, “Revised Accounting Standard for Disclosures about Segments of an Enterprise and RelatedInformation” (ASBJ Statement No. 17, issued by ASBJ on March 27, 2009) and the“Guidance on the Accounting Standard for Disclosures about
Segments of an Enterprise and Related Information” (ASBJ Guidance No. 20, issued by ASBJ on March 21, 2008) have been applied.
Year ended March 31, 2010
The Company and its consolidated subsidiaries operate in two business segments and business segment information for the year ended March 31,
2010 is summarized as follows:Year ended March 31, 2010
Millions of yen
Mothproofing andHygiene-Related
Products

HouseholdEnvironment-Related
Products

Total¥18,003¥25,543¥43,546

—

—

—

—

—

—

18,00325,54343,546—43,546

Eliminations or
corporate assets

Consolidated

1. Sales(1) Sales to third parties(2) Intra-group sales and transfers
Net sales¥43,546

2. Operating expenses

16,412

24,88841,300—41,300Operating income¥ 1,591¥   654¥ 2,246—¥ 2,246(1) Total assets¥ 8,555¥12,328¥20,883¥8,146¥29,029(2) Depreciation¥   350¥   572¥   922—¥   922(3) Capital expenditures¥   128¥   544¥   673—¥   673

3. Total assets, depreciation and capital expenditures:

The business segments are classified according to the nature of the Company’s products and their markets. Categories in the Mothproofing andhygiene-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.
Major items included in eliminations or corporate assets in the above table were cash and cash equivalent and short-term and long-term investments (investment securities) for the year ended March 31, 2010. Corporate assets as of March 31, 2010 were ¥8,146 million.
Geographical segment information and overseas sales are not presented as net sales and total assets in Japan exceeded 90% of the totals inboth segments and as overseas sales were less than 10% of consolidated net sales for the year ended March 31, 2010.

22.

Related Party Transactions

Year ended March 31, 2011
(1) Dealings with related party
There are no significant transactions with related parties to bereported.

36(2) Notes about a parent company and important affiliated companies
Financial information on important affiliated companies
The summary of financial information of FUMAKILLA Limited, an
important affiliated company, as of March 31, 2011 and for the year
then ended is as follows:Millions of yen

Thousands of
U.S. dollars¥14,743$177,303

5,339

64,206

Total deferred assets

9105

Total current liabilities

11,302

135,927

718

8,639

Total net assets

8,070

97,048

Sales

17,792

213,970

Income before income taxes

159

1,912

Net income

148

1,781

Total current assets
Total non-current assets

Total long-term liabilities

Year ended March 31, 2010
There are no significant transactions with related parties to bereported.

23.

Inventory Valuation Loss Included in
Cost of Sales

Inventory valuation loss write-downs below cost to net selling value
are included in cost of sales and amounted to ¥425 million(U.S.$5,107 thousand) and ¥385 million for the years ended
March 31, 2011 and 2010.

24.

Note to Consolidated Statements of
Changes in Net Assets

Shares in issue and outstanding and treasury stock at March 31,
2011 and 2010 were as follows:Year ended March 31, 2011
Number of shares in issue and outstanding:Common stock
Number of shares held in treasury:
Common stock

Dividends paid from retained earnings for the year ended
March 31, 2011 were as follows:
Total amount ofdividends
Dividends per(millions of yen) share (yen)Resolution

Board of directors’
meeting held on
May 24, 2010

240

11

Board of directors’
meeting held on
October 28, 2010

240

11

Record date

Effective date

March 31,2010

June 3,2010

September 30, December 3,
2010
2010

Dividends for which the record date was in the year ended
March 31, 2011 and the effective date is in the year ending
March 31, 2012 were as follows:

Resolution

Board ofdirectors’
meeting
held on May
23, 2011

Total amountof dividends(millionsof yen)Dividends
per share(yen)

Source ofdividends

Retainedearnings

240

11Year ended March 31, 2010
Number of shares in issue and outstanding:Common stock
Number of shares held in treasury:
Common stock

Recorddate

Effective
date

March 31,2011

June 3,
2011

29,500 thousand
7,647 thousand

Notes: 1. Detail of the increase is as follows:
Increase due to purchase of shares lessthan standard unit:
2. Detail of the decrease is as follows:
Decrease due to exercising sharesubscription rights:

0 thousand

22 thousand

Subscription rights at March 31, 2010 were as follows:
Subscription rights for stock options¥67 million

Dividends paid from retained earnings for the year ended
March 31, 2010 were as follows:
Total amount ofdividends
Dividends per(millions of yen) share (yen)23,000 thousand
Resolution

1,214 thousand

Board of directors’
meeting held on
May 20, 2009

240

11

0 thousand

Board of directors’
meeting held on
October 29, 2009

240

11

Notes: 1. Details of the increase are as follows:		 Increase due to purchase of shares less		 than standard unit:
		 Increase due to changes in treasury stock		 held by equity method companies:
2. Details of the decrease are as follows:		 Decrease due to cancellation of		 treasury stock:
		 Decrease due to exercising share		 subscription rights:

71 thousand

6,500 thousand
6 thousand

Effective date

March 31,2009

June 4,2009

September 30, December 4,
2009
2009

Dividends for which the record date was in the year ended
March 31, 2010 and the effective date was in the year ended March 31,
2011 were as follows:

Subscription rights at March 31, 2011 were as follows:
Subscription rights for stock options ¥82 million (U.S.$986 thousand)

Record date

Resolution

Board ofdirectors’
meeting heldon May 24,
2010

Total amountof dividends(millionsof yen)240

Source ofdividends

Retainedearnings

Dividends
per share
(yen)

11

Recorddate

Effective
date

March 31,2010

June 3,
2010

37

25.

Stock Option Plans

At March 31, 2011, the Company had stock option plans, which were approved at the annual general meetings of the shareholders and by the
Board of Directors. Details of these stock option plans are summarized as follows:
Date of approval

Number of shares granted

Eligible participants

Exercisable period

June 13, 2003

155,000

1 director and 25 employees

July 1, 2005−June 30, 2010

June 15, 2004

130,000

4 officers and 9 employees

July 1, 2006−June 30, 2011

June 14, 2005

160,000

3 officers and 23 employees

July 1, 2007−June 30, 2012
July 1, 2008−June 30, 2013

June 14, 2006

75,0003 officers and 4 employees

June 15, 2007

140,000

4 officers and 14 employees

Aug 1, 2009−July 31, 2014

June 18, 2008

95,0003 officers and 12 employees

Aug 1, 2010−July 31, 2015

June 18, 2009

20,0004 employees

Aug 4, 2011−Aug 3, 2016

June 18, 2010

155,000

4 officers and 17 employees

Aug 3, 2012−Aug 2, 2017

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 employees of the Company or its
subsidiaries.

Year ended March 31, 2011
Costs related to the 2011 stock option plan amounting to ¥15 million (U.S.$176 thousand) were included in selling, general and administrative
expenses.
Contents of stock options
2004

2005

2006

2007

2008

2009

2010

2011

Grantees

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

4 employees

4 officers and
17 employeesType of stock

Common stock

Common stock

Common stock

Common stock

Common stock

Common stock

Common stock

Common stock

Number ofshares granted

155,000

130,000

160,000

75,000140,000

95,00020,000155,000

Grant dateAugust 1, 2003

August 4, 2004

August 4, 2005

August 1, 2006

August 1, 2007

August 1, 2008

August 3, 2009

August 2, 2010

Conditionfor exercise

Working fromWorking fromWorking fromWorking fromWorking from
August 1, 2003 August 4, 2004 August 4, 2005 August 1, 2006 August 1, 2007
to June 30, 2005 to June 30, 2006 to June 30, 2007 to June 30, 2008 to July 31, 2009

Working fromWorking fromWorking from
August 1, 2008 August 3, 2009 August 2, 2010
to July 31, 2010 to August 3, 2011 to August 2, 2012

Working period

August 1, 2003 August 4, 2004 August 4, 2005 August 1, 2006 August 1, 2007
to June 30, 2005 to June 30, 2006 to June 30, 2007 to June 30, 2008 to July 31, 2009

August 1, 2008 August 3, 2009 August 2, 2010
to July 31, 2010 to August 3, 2011 to August 2, 2012

Exercisable
periodWithin 5 years
Within 5 years
Within 5 years
Within 5 years
Within 5 years
Within 5 years
Within 5 years Within 5 years
after the vesting after the vesting after the vesting after the vesting after the vesting after the vesting after the vesting after the vestingdate (thosedate (thosedate (thosedate (thosedate (thosedate (thosedate (thosedate (thoseretiring after
retiring after
retiring after
retiring after
retiring after
retiring after
retiring after
retiring after
the vesting date the vesting date the vesting date the vesting date the vesting date the vesting date the vesting date the vesting datecannot exercise cannot exercise cannot exercise cannot exercise cannot exercise cannot exercise cannot exercise cannot exercise
their stock
their stock
their stock
their stock
their stock
their stock
their stock
their stock
options)
options)
options)
options)
options)
options)
options)
options)

Stock option activity during the year ended March 31, 2011 was as follows:
Number of shares
2005

2009

2010

—

—

—

—

—

95,00020,000—Granted during the year

—

—

—

—

—

—

—

155,000

Forfeited during the year

—

—

—

—

—

—

—

—

Vested during the year

—

—

—

—

—

95,000——

Outstanding at end of year

—

—

—

—

—

—

20,000155,000

2007

2008

28,00098,000100,000

75,000140,000———

Vested during the year

—

—

—

—

—

95,000——Exercised during the year

6,000

—

—

—

—

—

—

—

Forfeited during the year

22,000

—

—

—

—

—

—

—

—

98,000100,000

75,000140,000

95,000——

Vested outstanding at beginning of year

Outstanding at end of year

38

2006

2011

2004

Non-vested outstanding at beginning of yearPrice of stock options
Yen

U.S. dollars

2004

2005

2006

2007

2008

2009

2010

2011

2011

Exercise price¥  867¥1,405¥1,628¥1,727¥1,517¥1,264¥1,037¥1,049$13

Weighted-average market price

1,033

—

—

—

—

—

—

—

—

Fair value per option on grant date

—

—

—

292

191

220

197

178

2

The fair value of each stock option grant was estimated at the

The option term was estimated under the assumption that the

grant date using the Black-Scholes option pricing model. The fair

options would be exercised in the middle of the exercisable period

value per option for options granted during the year ended March 31,

because of insufficient data.
Expected dividend (per share) was based on the dividend amount2011 was estimated based on the following assumptions:applicable to the 2010 fiscal year.

2011

Risk free interest rate was based on government bonds whose

28.2%

Volatility

terms corresponded with the terms of the above options.

4 years and 6 months

Option term

¥22 (U.S.$0.26)

Expected dividend (per share)

Method of estimating exercised stock options

0.30%

Risk free interest rate

The Company estimated the number of exercised stock options based

Volatility was determined based on the actual stock price over theon the actual number of forfeitures because it is difficult to estimate thepast 4 years and 6 months.

number of stock options which will be forfeited in the future.

Year ended March 31, 2010
Costs related to the 2010 stock option plan amounting to ¥16 million were included in selling, general and administrative expenses.
Contents of stock options
2003

2004

2005

2006

2007

2008

2009

2010

Grantees

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

4 employeesType of stock

Common stock

Common stock

Common stock

Common stock

Common stock

Common stock

Common stock

Common stock

Number ofshares granted

225,000

155,000

130,000

160,000

75,000140,000

95,00020,000Grant dateAugust 1, 2002

August 1, 2003

August 4, 2004

August 4, 2005

August 1, 2006

August 1, 2007

August 1, 2008

August 3, 2009

Conditionfor exercise

Working fromWorking fromWorking fromWorking fromWorking fromWorking from
August 1, 2002 August 1, 2003 August 4, 2004 August 4, 2005 August 1, 2006 August 1, 2007
to June 30, 2004 to June 30, 2005 to June 30, 2006 to June 30, 2007 to June 30, 2008 to July 31, 2009

Working fromWorking from
August 1, 2008 August 3, 2009
to July 31, 2010 to August 3, 2011

Working period

August 1, 2002 August 1, 2003 August 4, 2004 August 4, 2005 August 1, 2006 August 1, 2007
to June 30, 2004 to June 30, 2005 to June 30, 2006 to June 30, 2007 to June 30, 2008 to July 31, 2009

August 1, 2008 August 3, 2009
to July 31, 2010 to August 3, 2011

Exercisable
periodWithin 5 years
Within 5 years
Within 5 years
Within 5 years
Within 5 years
Within 5 years
Within 5 years
Within 5 years
after the vesting after the vesting after the vesting after the vesting after the vesting after the vesting after the vesting after the vestingdate (thosedate (thosedate (thosedate (thosedate (thosedate (thosedate (thosedate (thoseretiring after
retiring after
retiring after
retiring after
retiring after
retiring after
retiring after
retiring after
the vesting date the vesting date the vesting date the vesting date the vesting date the vesting date the vesting date the vesting datecannot exercise cannot exercise cannot exercise cannot exercise cannot exercise cannot exercise cannot exercise cannot exercise
their stock
their stock
their stock
their stock
their stock
their stock
their stock
their stock
options)
options)
options)
options)
options)
options)
options)
options)

Stock option activity during the year ended March 31, 2010 was as follows:
Number of shares
2003

2004

2007

2008

2009

Non-vested outstanding at beginning of year

—

—

2005

—

2006

—

—

140,000

95,0002010—

Granted during the year

—

—

—

—

—

—

—

20,000Forfeited during the year

—

—

—

—

—

—

—

—

Vested during the year

—

—

—

—

—

140,000——
20,000

Outstanding at end of year

—

—

—

—

—

—

95,0007,000

43,000105,000

115,000

75,000———

Vested during the year

—

—

—

—

—

140,000——

Vested outstanding at beginning of year
Exercised during the year

7,000

15,000

—

—

—

—

—

—

Forfeited during the year

—

—

7,000

15,000————

Outstanding at end of year—

28,00098,000100,000

75,000140,000——

39

Price of stock options
Yen
2003

2004

2005

2006

2007

2008

2009

2010

Exercise price

¥636

¥ 867

¥1,405¥1,628¥1,727¥1,517¥1,264¥1,037Weighted-average market price

943

1,027

—

—

—

—

—

—

Fair value per option on grant date

—

—

—

—

292

191

220

197

The fair value of each stock option grant was estimated at the

The option term was estimated under the assumption that the

grant date using the Black-Scholes option pricing model. The fair

options would be exercised in the middle of the exercisable period

value per option for options granted during the year ended March 31,

because of insufficient data.
Expected dividend (per share) was based on the dividend amount2010 was estimated based on the following assumptions:2010

Volatility

4 years and 6 months

Expected dividend (per share)¥22

Risk free interest rate

0.63%

Volatility was determined based on the actual stock price over the
past 4 years and 6 months.

terms 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 thenumber of stock options which will be forfeited in the future.

Subsequent Events

Year ended March 31, 2011
Not applicableYear ended March 31, 2010
As the meeting of executive officers held on May 13, 2010, theCompany signed an agreement to form a capital and business alliance with FUMAKILLA Limited (listed in the second section of Tokyo
Stock Exchange, exchange code 4998) , manufacturer of insecticides.
The Company also decided to take up the allocation of new shares toa third party offered by FUMAKILLA and paid on June 4, 2010.
The Company has worked to strengthen and expand the operation of air freshener, etc. FUMAKILLA has worked to strengthen andexpand the operation of insecticide, etc.
The Group has aimed at the further expansion in fields, such as
deodorizer and air fresheners, mothproofing, gloves, and dehumidifiers.
On the other hand, FUMAKILLA is aiming at business expansion in fields,such as insecticides, household articles, garden supplies, and businessuse articles. As a business partner, both companies have entrusted eachother for years with manufacturing or sales promotion activities.
Taking advantage of their business domains having a complementary relationship, this capital and business alliance is complementing
and cooperating mutually, strives for their businesses developments, enhancement of profitability and improvement of customer
satisfaction, and aims to strengthen the business activities expertiseand human resource at the further development of both companies.

•

Tie-up in supply business, such as cost-cutting by sharing produc-•

Tie-up in physical distribution, such as joint use of physical distri-tion facilities
bution infrastructure(2) Capital alliance
The Company obtained the FUMAKILLA’s new stocks by accepting
an allocation of new shares to a third party. In addition,
the Company is planning one director’s dispatch to FUMAKILLA.
Outline of FUMAKILLA Limited is as follows:
Name

FUMAKILLA Limited

Representative

Kazuaki Oshimo

Location

Chiyoda-ku, Tokyo

Paid-in capital¥2,889 million (as of March 31, 2010)

Established

December 1950

End of fiscal year

March 31

No. of employees

1,438 (as of March 31, 2010)

Net sales¥23,792 million (for fiscal year ended March 31, 2010)

Net income¥649 million (for fiscal year ended March 31, 2010)

Total assets¥20,664 million (as of March 31, 2010)

Total net assets¥6,918 million (as of March 31, 2010)

Details of the new stock allocation to a third party are as follows:
Number of share issued

3,580,000 shares (common stock)

Current total shares issued

29,400,000 shares

Total shares issued post
third-party allocation

32,980,000 shares

The business alliance includes the following corporative activities:

Number of shares
allocated to the Company

3,580,000 shares

Partnership in operations, such as strengthening of shop front support,

Allocation price¥451 per shareand mutual practical use of a sales channel in and outside the country

Total acquisition price¥1,615 million

Tie-up in business development, such as joint research and devel-

Payment day

June 4, 2010

opment in which strengths of both companies are harnessed, andCompany holding before
share allocation

1,400,000 shares (4.76%)

Company holding after
share allocation

4,980,000 shares (15.10%)

Details of the capital and business alliances are as follows:(1) Business alliance••cross-license of intellectual property

40

Risk free interest rate was based on government bonds whose

28.5%

Option term

26.

applicable to the 2009 fiscal year.

Report of Independent Auditors

41

Investor Information(As of March 31, 2011)

M Corporate Data
Company name
S.T. CORPORATION
Headquarters 	4-10, Shimo-ochiai 1-chome,
Shinjuku-ku, Tokyo 161-8540,
Japan
Establishment
August 31, 1948
¥7,065,500,000
Common stock
Fiscal year-end
March 31
Shares issued and outstanding 23,000,000
Listed stock exchange 	Tokyo Stock Exchange,
First Section
Shareholders
10,532
Registered transfer agent 	Mizuho Trust & Banking Co., Ltd.
Accounting auditor
Ernst & Young ShinNihon LLC
Annual shareholders’ meeting 	Middle of June each year
630 (Consolidated)
Employees
392 (Non-Consolidated)
Contact 	Hirohide Shimada,Public Relations Department
E-mailir@st-c.co.jp
Telephone+81-3-5906-0734
Facsimile+81-3-5906-0742

Consolidated subsidiaries
S.T. TRADING CO., LTD.
Sale of hand gloves and workplace supplies
S.T. AUTO CO., LTD.
Sale of chemical car care products
S.T. BUSINESS SUPPORT CO., LTD.
Contract work for S.T. GroupFAMILY GLOVE (THAILAND) CO., LTD.
Production and sale of gloves
FAMILY GLOVE (TAIWAN) CO., LTD.
Production and sale of gloves

Non-Japaneseinstitutions
2.0%

M Major Shareholders
Thousands of shares% of total

Shaldan Co., Ltd.

5,627

24.5

Nippon Life Insurance Company

1,671

7.3

S.T. CORPORATION

1,142

5.0

TCSB (Mizuho Bank)

884

3.8

Takashi Suzuki

822

3.6

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

681

3.0

Akio Suzuki

450

2.0

Carenne433

1.9Sompo Japan Insurance Inc.

416

1.8

Hiromu Fujii

401

1.7

Securities firms
0.4%

Financial
institutions
21.3%

Share
ownership
breakdown

Individuals, etc.
41.0%

Other Japanese
corporations
35.3%

M Stock Chart
Stock Price (yen)
1,500

Nikkei 225 (yen)15,0001,000

10,000500

5,000

Trading Volume (shares)
1,000,000

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

Printed in Japan, August 2011