Creating Corporate Value Report 2015
Financial Section
Year ended March 31, 2015

Refreshing the Air

Management’s Discussion and Analysis

Group Outline

2.7% year on year, to ¥48,263 million. Regarding individual segments,

The S.T. CORPORATION Group is composed of S.T.

in the Mothproofing and Hygiene-Related Products, sales in the ClothCORPORATION, six consolidated subsidiaries, three equity method

Care category increased 0.8%, sales in the Hand Care category
increased 16.9%, and sales in the Thermal Care category increased

affiliated companies and other affiliated companies.

1.4%. In the Household Environment-Related Products, sales in the Air
Sales Overview

Care category decreased 0.7%, sales in the Humidity Care increased

In the fiscal year ended March 31, 2015, the Japanese economy was

17.0%, and sales in the Home Care category increased 2.8%.

in moderate recovery including recovery in corporate performance due
to government economic policies and monetary easing by the Bank of

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

Japan. At the same time, our economic concerns remained with the

While raw materials costs rose, we continued to make efforts to lower

sluggish recovery of consumer spending after the consumption tax

manufacturing costs, and as a result the cost of sales increased 4.7%

hike and increased raw materials prices resulting from a rapid

year on year, to ¥28,235 million. By making efficient marketing

depreciation of the yen. While the global economy, led by the U.S., isinvestments and cutting other costs, SG&A expenses increased 1.9%

gradually recovering, there are still uncertain factors, such as theto ¥18,216 million. As a result, operating income decreased 14.9% tofuture of the economies of China and other developing countries.

¥1,813 million.

Within these circumstances, the S.T. CORPORATION Group followed
our basic policies; narrowing down and concentrating on targets,

Other Income (Expenses), Pretax and Net Income

developing unprecedented products, and managing businesses swiftly,

In other income and expenses, due to receipt of the insurance from theand worked to create customers, establish a high-yielding system, andsnow damage to the factories, decreased posting gain on sales ofactivate our organization. We also continued to develop the “S.T.

investment securities, and increased loss on retirement of non-current

Reformation” program throughout our group companies.

assets, income before income taxes and minority interests decreased
6.2% to ¥1,536 million and net income decreased 27.7% to ¥892 million.

As a result, although consolidated net sales were sluggish initially due

Accordingly, net income per share decreased to ¥40.83 (¥56.74 forto decreased sales of Air Care category after the consumption tax hike,other categories like the Cloth Care category and the Humidity Carethe previous fiscal year.) The net income margin decreased from 2.6%

category increased their sales, and net sales of the fiscal year increased

to 1.8%, and return on equity (ROE) decreased from 6.1% to 4.2%.

Operating income /Operating income margin

Net sales

Operating income (millions of yen)

4.9

3.8

3.8

1.8

1.8
1.2
1,234
76

565

786

892

1,813

1,800

1,751

0.2
2,114

48,263

46,993

46,94446,354

43,580Net income margin (%)

2.6

4.5
3.8

Net income (millions of yen)

Operating income margin (%)

2,131(millions of yen)

Net income /Net income margin

11

1

12

13

14

15

11

12

13

14

15

11

12

13

14

15

Financial Positionwas ¥1,768 million. (In the same period of the previous fiscal year, net

Total assets as of March 31, 2015 stood at ¥33,785 million, up ¥1,415

cash provided by investing activities was ¥514 million.) This was

million from the end of the previous year. Total current assets increased

primarily due to increased time deposits. Net cash used in financing

by ¥1,265 million, to ¥20,221 million, due to an increase in cash andactivities was ¥614 million, a year on year increase of ¥148 million,

deposits. On the other hand, non-current assets increased by ¥149

primarily due to payment of dividends to shareholders.
As a result, cash and cash equivalents at the end of the year stood

million, to ¥13,564 million, due to an increase in investment securities.

at ¥6,585 million, a year on year decrease of ¥143 million.

Total liabilities decreased by ¥99 million, to ¥11,185 million, fromthe end of the previous year, largely due to an increase in notes
payables and trade payables. On the other hand, total net assets

Dividends and Return to Shareholders

increased by ¥1,514 million, to ¥22,600 million from the end of theTaking into consideration such factors as net income and the need toprevious year, primarily due to an increase in retained earnings.

realize shareholder returns, we decided to distribute a term-end
dividend of ¥11.0 (¥22.0 for the full year, including the interim

As a result of the above, total net assets per share increased from¥936.06 at the end of the previous fiscal year to ¥1,001.84. Equity

dividend), on a par with the previous fiscal year, making for aratio is as high as 64.8%, near the same level as 63.2% of the previous

consolidated payout ratio of 53.9%. The company will continue tofiscal year, and we continued to maintain a sound financial position.

place importance on returns to shareholders.

Capital Expenditures and Depreciation and Amortization

Business and Operational Risks

Capital expenditures of this fiscal year increased from the previous fiscal

Factors that could possibly impact the Group’s operating results,

year’s ¥942 million to ¥1,486 million. Depreciation and amortization

financial position or stock prices include the following: (1) an

decreased from ¥894 million of the previous fiscal year to ¥844 million.

escalation in raw materials prices; (2) the impact on manufacturing
operations from natural disasters and changes in international politicalCash Flowsor other conditions; (3) sales fluctuations due to unseasonal weather;

Net cash provided by operating activities was ¥2,137 million, a year(4) and the failure of initiatives to raise new businesses. Forward-

on year increase of ¥27 million. This was primarily due to a decrease

looking statements in this annual report are based on certain

in inventory. On the other hand, net cash used in investing activities

assumptions made by the Group as of the end of this fiscal year.

Capital expenditures /Depreciation and amortization

Dividends per share /Payout ratio

ROA / ROEROA (%)

2,061

Capital expenditures (millions of yen)
Depreciation and amortization (millions of yen)

Payout ratio (%)

844

830

13

14

15

2.9
2.7

11

2.7

1.9

22.0

22.0

22.0

22.0

4.2

22.0

4.0

4.0

894

942

1,486

632.2

931

992
662

1,007

12

Dividends per share (yen)

6.1

84.6
61.1

53.9
38.8

0.4

11

ROE (%)

0.3

12

13

14

15

11

12

13

14

15

2

Consolidated Balance Sheets
S.T.CORPORATION and consolidated subsidiaries
March 31, 2015 and 2014

thousands of
U.S. dollars (Note 2)

millions of yen

Assets

2015

2014

2015

¥7,629¥6,765$63,429

109

—

908

Trade notes and accounts receivable (Note 6)

5,867

5,150

48,783Merchandise and finished goods

4,866

5,086

40,458Work in process

269

219

2,237

Raw materials and supplies

638

648

5,305

Deferred tax assets (Note 11)

371

386

3,083

Other current assets

478

717

3,974

(5)

(16)

(42)

20,221

18,956

168,134

Land (Note 9)

3,189

3,289

26,515

Buildings and structures

6,659

6,702

55,368

Machinery, equipment and vehicles

6,509

7,628

54,117

Tools, furniture and fixtures

3,871

3,557

32,184

Construction in progress

375

14

3,116

Leased assets (Note 17)

794

381

6,598

(13,286)(14,016)(110,470)

Property, plant and equipment, net

8,110

7,555

67,428Intangible assets, net of accumulated amortization

219

192

1,824

219

192

1,824

469

751

3,902

3,757

3,008

31,238Long-term loans

31

38

254

Deferred tax assets other than unrealized revaluation loss on land (Note 11)

4

412

35

974

1,458

8,095

5,235

5,667

43,525¥33,785¥32,370$280,910

Current assets:
Cash and time deposits (Notes 6, 10 and 16)
Marketable securities (Notes 6 and 8)

Less - allowance for doubtful accounts
Total current assets

Property, plant and equipment, at cost:Less - accumulated depreciation

Total intangible assets

Investments and other assets:
Investments in non-consolidated subsidiaries and affiliates
Investment securities (Notes 6 and 8)

Other assets
Total investments and other assets
Total assets

3thousands of
U.S. dollars (Note 2)

millions of yen

Liabilities and net assets

2015

2014

2015

¥1,974¥2,050$16,413

2,922

3,384

24,292Current liabilities:
Trade payables (Note 6)
Electronically recorded obligations-operating
Short-term loans payable

62

38

519

Lease obligations

138

75

1,149

2,384

2,316

19,825

Accrued expenses

Other payables (Note 6)

614

590

5,105

Electronically recorded obligations-non-operating

89

43

738

Income taxes payable

315

196

2,619

Consumption taxes payable

267

88

2,221

Allowance for sales returns

158

117

1,317

Other current liabilities

85

67

705

9,008

8,966

74,901

Total current liabilities
Long-term liabilities:
Lease obligations

559

275

4,644

Directors’ retirement and severance benefits

122

156

1,015

Net defined benefit liability (Notes 1, 4 and 12)

9,895

1,190

1,565

Deferred tax liabilities (Note 11)

34

—

284

Deferred tax liabilities - unrealized revaluation profit on land (Note 9)

271

321

2,250

Other liabilities-not current liabilities
Total long-term liabilities

1

1

8

2,176

2,318

18,095

7,066

7,066

58,747

7,068

7,068

58,766

Net assets (Note 13):
Shareholders’ equity:
Common stock:
Authorized - 96,817,000 shares in 2015 and 2014
Issued and outstanding - 23,000,000 shares in 2015 and 2014
Capital surplus
Retained earnings

9,394

8,837

78,109Treasury stock, at cost

(1,654)(1,652)(13,750)

Total shareholders’ equity

21,874

21,319

181,872

Unrealized holding gain on other securities, net of taxes

743

145

6,181

Unrealized revaluation loss on land, net of taxes (Note 9)

(546)

(524)

(4,537)

Translation adjustments

(202)

(335)

(1,679)

21

(149)

176

17

(864)

141

81

95

671

Accumulated other comprehensive income (loss):

Remeasurements of defined benefit plans
Total accumulated other comprehensive income (loss)
Subscription rights
Minority interests in consolidated subsidiaries
Total net assets
Total liabilities and net assets

629

536

5,229

22,60021,087

187,913¥33,785¥32,370$280,910

See notes to consolidated financial statements.

4Consolidated Statements of Income
S.T.CORPORATION and consolidated subsidiaries
For the years ended March 31, 2015 and 2014

thousands of
U.S. dollars (Note 2)

millions of yen

Net sales
Cost of sales (Notes 15 and 20)
Gross profit before reversal of allowance for sales returns
Reversal of allowance for sales returns
Gross profit
Selling, general and administrative expenses (Note 15)
Operating income
Non-operating income (expenses):
Interest and dividends received
Interest expense
Purchase discounts
Sales discounts
Loss on equity of affiliates
Insurance income
Other, net
Total non-operating income (expenses)
Ordinary income
Special gains (losses), net:
Loss on disposition of property, plant and equipment, net
Gain on reversal of subscription rights to shares
Loss on valuation of investment securities
Gain (loss) on sales of investment securities, net
Loss on sales of stocks of subsidiaries and affiliates
Loss on valuation of stocks of subsidiaries and affiliates
Gain on extinguishment of tie-in shares, net
Loss on disaster
Total special gains (losses), net
Income before income taxes and minority interests
Income taxes (Note 11):
Current
Deferred
Total income taxes
Income before minority interests
Minority interests
Net income

2015

2014

2015

¥48,263
28,19420,070(42)
20,02818,2161,813¥46,993
26,97020,023(11)
20,013
17,8812,131$401,293
234,421
166,872(345)
166,527
151,455
15,072

79
(2)
171
(863)
(90)
154
335
(215)
1,598

49
(1)
172
(857)
(110)
0
113
(634)
1,497

657
(14)
1,426
(7,178)
(744)
1,284
2,782
(1,787)
13,285

(111)
29
(10)
(0)
—
—
30
—
(62)
1,536

(25)
25
(5)
265
(29)
(31)
—
(60)
140
1,637

(920)
241
(83)
(1)
—
—
249
—
(514)
12,770

532
25
557
979
87
¥892

370
(6)
364
1,273
39
¥1,234

4,420
209
4,629
8,141
723
$7,418

See notes to consolidated financial statements.

Consolidated Statements of Comprehensive Income
S.T.CORPORATION and consolidated subsidiaries
For the years ended March 31, 2015 and 2014
thousands of
U.S. dollars (Note 2)

millions of yen

2015

2015

Income before minority interests¥979¥1,273$8,141

Other comprehensive income (loss) (Note 5)
Unrealized holding gain (loss) on other securities, net of taxes
Unrealized revaluation loss on land, net of taxes
Translation adjustments
Remeasurements of defined benefit plans, net of tax
Other comprehensive income (loss) on equity method companies
Total other comprehensive income (loss)
Comprehensive income

598
25
166
170
19
980
¥1,959

(399)
—
177
—
(83)
(305)
¥969

4,974
211
1,384
1,416
160
8,145
$16,287

1,820
139

857
112

15,129
1,158

Total comprehensive income attributable to:Shareholders of S.T. CORPORATION
Minority interests in consolidated subsidiaries
See notes to consolidated financial statements.

5

2014

Consolidated Statements of Changes in Net Assets
S.T.CORPORATION and consolidated subsidiaries
For the years ended March 31, 2015 and 2014

millions of yen
Number of sharesof common stock(Thousands)

Balance at April 1, 2014
Cumulative effects of changes in accounting policies
Restated balance at April 1, 2014
Cash dividends paid by distribution of retained earnings
Net income
Purchases of treasury stock
Change of scope of consolidation
Reversal of unrealized revaluation loss on land, net of taxes
Net changes in items other than those in shareholders’ equity
Balance at March 31, 2015

CapitalsurplusRetainedearnings¥8,837¥94¥8,931(481)
892

23,000¥ 7,066¥ 7,068

23,000¥ 7,066¥ 7,068

Treasury stock,at cost¥ (1,652)¥ (1,652)
(2)

5
47

Unrealized
Unrealized
holding gain on revaluation loss onother securities, land, net of taxes
net of taxes(Note 9)Balance at April 1, 2014
Cumulative effects of changes in accounting policies
Restated balance at April 1, 2014
Cash dividends paid by distribution of retained earnings
Net income
Purchases of treasury stock
Change of scope of consolidation
Reversal of unrealized revaluation loss on land, net of taxes
Net changes in items other than those in shareholders’ equity
Balance at March 31, 2015

Commonstock

23,000¥ 7,066

Translation
adjustments

millions of yen
Remeasurements Total accumulatedof
other
defined benefit
comprehensive
plans
loss

¥ 7,068¥9,394¥ (1,654)

Subscription
rightsMinority
interests inconsolidated
subsidiaries

Total
shareholders’equity¥21,319¥94¥21,412
(481)
892
(2)
5
47
¥21,874

Total net
assets¥ 145¥ (524)¥ (335)¥(149)¥(864)

¥ 95

¥ 536

¥ 145

¥ (524)¥ (335)¥(149)¥(864)

¥ 95

¥ 536

598
¥ 743

(21)
¥ (546)134¥ (202)

170
¥ 21

881
¥ 17

(14)
¥ 81

93
¥ 629

¥21,087¥
94¥21,180
(481)
892
(2)
5
47
959
¥22,600

Treasury stock,at costTotal
shareholders’equitymillions of yen
Number of sharesof common stock(Thousands)

Balance at April 1, 2013
Cumulative effects of changes in accounting policies
Restated balance at April 1, 2013
Cash dividends paid by distribution of retained earnings
Net income
Purchases of treasury stock
Change of scope of consolidation
Change of scope of equity method
Net changes in items other than those in shareholders’ equity
Balance at March 31, 2014
Unrealized
Unrealized
holding gain on revaluation loss onother securities, land, net of taxes
net of taxes(Note 9)Balance at April 1, 2013
Cumulative effects of changes in accounting policies
Restated balance at April 1, 2013
Cash dividends paid by distribution of retained earnings
Net income
Purchases of treasury stock
Change of scope of consolidation
Change of scope of equity method
Net changes in items other than those in shareholders’ equity
Balance at March 31, 2014

Commonstock

CapitalsurplusRetainedearnings

23,000¥ 7,066¥ 7,068¥ 7,662¥ (1,787)¥ 20,008

23,000¥ 7,066¥ 7,068¥ 7,662
(478)
1,234

¥ (1,787)

23,000¥ 7,066

Translation
adjustments

millions of yen
Remeasurements Total accumulatedof
other
defined benefit
comprehensive
plans
loss

¥ 7,068

49
371

138

¥ 20,008
(478)
1,234
(2)
49
508

¥ 8,837¥ (1,652)¥ 21,319

Subscription
rightsMinority
interests inconsolidated
subsidiaries(2)

Total net
assets¥ 648¥ (524)¥ (461)—¥ (337)

¥109

¥ 434

¥ 20,213¥ 648¥ (524)¥ (461)—¥ (337)

¥109

¥ 434

(503)
¥ 145

—
¥ (524)125¥ (335)(149)¥ (149)(527)¥ (864)

(13)
¥95

102
¥ 536

¥ 20,213
(478)
1,234
(2)
49
508
(438)
¥ 21,087
Total
shareholders’equitythousands of U.S. dollars (Note 2)
Number of sharesof common stock(Thousands)

Balance at April 1, 2014
Cumulative effects of changes in accounting policies
Restated balance at April 1, 2014
Cash dividends paid by distribution of retained earnings
Net income
Purchases of treasury stock
Change of scope of consolidation
Reversal of unrealized revaluation loss on land, net of taxes
Net changes in items other than those in shareholders’ equity
Balance at March 31, 2015

CapitalsurplusRetainedearnings

Treasury stock,at cost23,000$ 58,747$ 58,766$ (13,733)

23,000$ 58,747$ 58,766$73,478$778$74,256(3,997)
7,418
42
390

Unrealized
Unrealized
holding gain on revaluation loss onother securities, land, net of taxes
net of taxes(Note 9)Balance at April 1, 2014
Cumulative effects of changes in accounting policies
Restated balance at April 1, 2014
Cash dividends paid by distribution of retained earnings
Net income
Purchases of treasury stock
Change of scope of consolidation
Reversal of unrealized revaluation loss on land, net of taxes
Net changes in items other than those in shareholders’ equity
Balance at March 31, 2015

Commonstock

23,000$ 58,747

Translation
adjustments

thousands of U.S. dollars (Note 2)
Remeasurements Total accumulatedof
other
defined benefit
comprehensive
plans
loss

$ 58,766$ (13,733)(17)$78,109$ (13,750)

Subscription
rightsMinority
interests inconsolidated
subsidiaries$ 1,207$ (4,358)$ (2,789)$(1,240)$(7,180)$ 791$ 4,458$ 1,207$ (4,358)$ (2,789)$(1,240)$(7,180)$ 791$ 4,458

4,973$ 6,181(179)$ (4,537)

1,110$ (1,679)

1,416
$176

7,321
$141

(120)
$ 671

771
$ 5,229$177,258$778$178,036(3,997)
7,418
(17)
42
390
$181,872

Total net
assets$175,327$778$176,104(3,997)
7,418
(17)
42
390
7,973
$187,913

See notes to consolidated financial statements.

6

Consolidated Statements of Cash Flows
S.T.CORPORATION and consolidated subsidiaries
For the years ended March 31, 2015 and 2014

thousands of
U.S. dollars (Note 2)

millions of yen

2015
Cash flows from operating activities:
Income before income taxes and minority interests
Adjustments to reconcile income before income taxes and minority
interests to net cash provided by operating activities:
Depreciation and amortization
Gain on reversal of subscription rights to shares
Gain on extinguishment of tie-in shares
Loss on sales of property, plant and equipment
Loss (gain) on sales and valuation of investment securities
Loss on sales of stocks of subsidiaries and affiliates
Loss on valuation of stocks of subsidiaries and affiliates
Increase (decrease) in allowance for doubtful receivables
Increase (decrease) in employees' retirement and severance benefits
Increase (decrease) in net defined benefit liability
Increase (decrease) in directors' retirement and severance benefits
Increase (decrease) in allowance for sales returns
Interest and dividends received
Insurance income
Interest expense
Foreign exchange loss (gain)
Loss on disaster
Equity in loss of affiliates
Changes in operating assets and liabilities:
Receivables
Inventories
Payables and accrued expenses
Other, net
SubtotalInterest and dividends received
Interest paid
Proceeds from insurance income
Payments for loss on disaster
Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities:
Payments into deposits (more than three months)
Proceeds from withdrawal of time deposits (more than three months)
Purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchases of investment securities
Proceeds from sales of investment securities
Purchase of investments in subsidiaries
Proceeds from sales of stocks of subsidiaries and affiliates
Other investments, net
Net cash provided by investing activities
Cash flows from financing activities:
Net increase (decrease) in short-term loans payable
Proceeds from stock issuance to minority shareholders
Purchases of treasury stock
Payments of dividends
Payments of dividends to minority shareholders
Other finance, net
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Increase in cash and cash equivalents from newly consolidated subsidiary
Increase in cash and cash equivalents resulting from merger withunconsolidated subsidiaries
Cash and cash equivalents at end of year (Note 16)
See notes to consolidated financial statements.

7

2014

2015

¥1,536¥1,637$12,771

844
(29)
(30)
111
10
—
—
(11)
—
(232)
(34)
42
(79)
(154)
2
(235)
—
90

894
(25)
—
25
(260)
29
31
1
(1,270)
1,565
18
11
(49)
(0)
1
(58)
60
110

7,019
(241)
(249)
920
84
—
—
(95)
—
(1,933)
(282)
345
(657)
(1,284)14(1,955)
—
744

(656)
322
(481)
1,048
2,061
89
(2)
154
(28)
(138)
2,137

(260)
(669)
519
133
2,443
101
(1)
0
(1)
(432)
2,110

(5,457)
2,679(4,002)
8,715
17,137
740
(14)
1,284
(233)
(1,147)
17,768(1,005)
—
(840)
123
(8)
3
—
—
(42)
(1,768)

(0)
220
(903)
2
(667)
465
(36)
1,509
(76)
514

(8,353)—(6,980)
1,021
(65)
24
—
—
(346)
(14,699)

18
—
(2)
(481)
(48)
(101)
(614)

38
47
(2)
(478)
(23)
(48)
(465)

153
—
(17)
(3,997)(399)(841)(5,102)

32
(212)
6,728
31

74
2,233
4,469
26

267
(1,766)55,939262

38¥6,585—¥6,728314$54,750

Notes to Consolidated Financial Statements
S.T.CORPORATION and Consolidated Subsidiaries
March 31, 2015

1 Summary of Significant Accounting Policies(a) Basis of presentation
S.T. CORPORATION (the “Company”) and its domestic subsidiaries
maintain their books of account in conformity with accounting principles
generally accepted in Japan, and its overseas subsidiaries maintain theirbooks of account in conformity with those of their countries of domicile.
Effective April 1, 2008, the Company adopted the “Practical Solution on
Unification of Accounting Policies Applied to Foreign Subsidiaries for
Consolidated Financial Statements” (PITF No. 18, issued by the ASBJ on
May 17, 2006).
The accompanying consolidated financial statements have been
prepared in accordance with accounting principles generally accepted inJapan, which are different in certain respects as to the application anddisclosure requirements of IFRS, and are compiled from the consolidated
financial statements prepared by the Company as required by the Financial
Instruments and Exchange Act of Japan.
In preparing the accompanying consolidated financial statements,
certain reclassifications have been made to the consolidated financial
statements issued domestically for readers outside Japan. The notes tothe consolidated financial statements include information which is not
required under accounting principles generally accepted in Japan but ispresented herein as additional information. Furthermore, certain amounts
in the prior year’s financial statements have been reclassified to conform tothe current year’s presentation.
As permitted by Financial Instruments and Exchange Law, amounts ofrounded off one million yen have been omitted. Consequently, the totals
shown in the accompanying consolidated financial statements (both in yen
and U.S. dollars) do not necessarily agree with the sum of the individual
amounts.
(b) Scope of consolidation(1) Number of consolidated subsidiaries:
6 companies(2) Names of consolidated subsidiaries:
S.T. TRADING CO., LTD, S.T. BUSINESS SUPPORT CO., LTD, S.T.
(THAILAND) CO., LTD, FAMILY GLOVE CO., LTD. (TAIWAN), S.T.
KOREA CORPORATION (SOUTH KOREA), SHALDAN (THAILAND)
CO., LTDDue to increased significance, SHALDAN (THAILAND) CO., LTD has
been included in the scope of consolidation.
S.T. AUTO CO., LTD has been excluded from the scope of
consolidation due to a merger.
(3) Names of major non-consolidated subsidiaries:
JAPAN CORPORATION CO., LTD, JAPAN AROMA LABORATORY
CO., LTD, S.T. GLOVE CO., LTD
Number of non-consolidated subsidiaries was reduced by 2
companies because ECOCO CO., LTD has been extinguished by amerger, and due to increased significance, SHALDAN (THAILAND)
CO., LTD has been included in the scope of consolidation.
(Reasons for exclusion from scope of consolidation)
Non-consolidated subsidiaries have been excluded from the scope of
consolidation because the total amounts of their total assets, net
sales, net income or loss (amount equivalent to equity interests),
retained earnings (amount equivalent to equity interests) and otherfigures are limited, and the effect on the consolidated financial
statements as a whole is not significant.
(c) Scope of application of equity-method accounting(1) Number of affiliated companies accounted for by the equity method:
3 companies(2) Names of major companies:
SHALDAN (PHILIPPINES), INC, AEKYUNG S.T. CO., LTD, NS FAFA
JAPAN CO., LTD(3)	‌Name of non-consolidated subsidiaries for which equity method is notappliedThe non-consolidated subsidiaries to which the equity method does
not apply (JAPAN CORPORATION CO., LTD, JAPAN AROMALABORATORY CO., LTD, S.T. GLOVE CO., LTD) use the cost method
rather than the equity method because the total amounts of their net
income or loss (amount equivalent to equity interests), retained
earnings (amount equivalent to equity interests) and other figures arelimited, and the effect on the consolidated financial statements as awhole is not significant.
(d) Accounting period
The accounting period of the Company begins on April 1 and ends on
March 31 of the following year. The four 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.
(e)	‌Translation of foreign currency transactions and financial
statements
Monetary assets and liabilities denominated in foreign currencies aretranslated into yen at the rates of exchange in effect at the balance sheet
date and the accounts of the overseas consolidated subsidiaries aretranslated into yen at the rates of exchange in effect at the balance sheet
date. Foreign exchange gains and losses are credited or charged toincome and translation adjustments are included in net assets.
(f) Marketable securities and investment securities
Other securities with determinable market value are carried at market value
with any changes in unrealized holding gain or loss, net of the related
deferred income tax assets or liabilities, included in net assets. Other
securities without determinable market value are stated at cost determinedby the moving-average method and the cost of other securities sold iscomputed based on the moving-average method. During the years ended
March 31, 2015 and 2014, the Company and its consolidated subsidiaries
did not have any trading securities.
(g) Inventories
Inventories are stated at the lower of cost or net selling value, cost being
determined by the average method.
(h)	‌Property, plant and equipment, except for leased assets, anddepreciation
Property, plant and equipment are stated at cost. Depreciation of property,
plant and equipment of the Company and its domestic subsidiaries,
except for buildings (excluding structures attached to the buildings)
acquired on or after April 1, 1998, is computed by the declining-balancemethod in conformity with the Corporation Tax Law of Japan. Depreciationof property and equipment of overseas subsidiaries and buildings(excluding structures attached to the buildings) acquired on or after April 1,
1998 of the Company and domestic subsidiaries is computed by thestraight-line method.
The estimated useful lives of the major depreciable assets are as follows:
Buildings and structures
3 to 50 years
Machinery, equipment and vehicles
2 to 17 years
Tools, furniture and fixtures
2 to 20 years(i) Intangible assets
Intangible assets, except for leased assets, are amortized by the straightline method. Cost of software purchased for internal use is amortized by
the straight-line method over a period of mainly 5 years, the useful life
applicable to commercially available software.
( j) Leases
Non-cancelable lease transactions that transfer substantially all the risks
and rewards associated with the ownership of the leased assets areaccounted for as finance leases. All other lease transactions are accounted
for as operating leases and related payments are charged to income as
incurred.

8Notes to Consolidated Financial Statements

Depreciation is computed by the straight-line method over therespective lease terms assuming a nil residual value.
(k) Allowance for doubtful receivables
The allowance for doubtful receivables is provided based on pastexperience for normal receivables and on an estimate of the collectabilityof receivables from companies in financial difficulty.
(l) Allowance for sales returns
The allowance for sales returns is provided for losses on sales returns
subsequent to the balance sheet date at an amount equivalent to that
calculated based on the actual percentage of returns in prior years.
(m) Employees’ retirement and severance benefits(1) Method of attributing expected benefit payments to the period
In a calculation retirement benefit obligation, a method of attributing
expected benefit payments to the period is based on the benefit
formula.
(2) Method of expenses for actuarial gains/losses
Actuarial gain or loss is amortized in the year following the year inwhich the gain or loss is recognized by the straight-line method over a
period of a certain number of years (5 years) which is shorter than the
average remaining years of service of the employees.

(3) Adoption of a simplified method in some consolidated subsidiaries
Some consolidated subsidiaries adopt the simplified method whichassumes retirement benefit obligation to be equal to the benefits
payable if all eligible employees voluntarily terminated their employment
at fiscal year end for the calculation of net defined benefit liability andretirement benefit expenses.
(n) Directors’ retirement and severance benefits
The Company has accrued directors’ retirement and severance benefits at
the amount which would be required to be paid if all directors resigned
from their positions and left the Company as of the balance sheet date inaccordance with its internal regulations.
(o) Consumption taxes
Transactions subject to consumption taxes are recorded at amounts
exclusive of consumption taxes.
(p) Cash and cash equivalents
Cash and cash equivalents in the accompanying consolidated statementsof cash flows consist of cash on hand, demand deposits and liquid
short-term investments with a maturity of three months or less from theirrespective dates of acquisition.

2 Basis of Translation
The consolidated financial statements presented herein are expressed inyen and, solely for the convenience of the reader, have been translated
into U.S. dollars at ¥120.27 = U.S.$1.00, the approximate exchange rate
prevailing on the Tokyo Foreign Exchange Market on March 31, 2015. Thistranslation should not be construed as a representation that all amounts
shown could have been, or could in the future be, converted into U.S.
dollars at that or any other rate.

3 Changes in Presentation(Consolidated Statements of Income)“Insurance income” included in “Other non-operating income” in theprevious fiscal year exceeds 10% of total non-operating income and istherefore presented separately from the current fiscal year. In order toreflect the change in presentation, the consolidated statement of income in
the previous fiscal year has been reclassified.
As a result of this change, ¥113 million presented as “Other nonoperating income” in the previous fiscal year is reclassified as ¥0 million for“Insurance income” and ¥113 million for “Other non-operating income,”
respectively.

(Consolidated Statements of Cash Flows)“Insurance income” included in “Income before income taxes and minority
interests” of net cash provided by operating activities in the previous fiscal
year is presented separately due to the increase in the monetarysignificance. In order to reflect the change in presentation, “Proceeds frominsurance income” beneath the subtotal of net cash provided by operating
activities” is presented separately.
As a result of this change, ¥ (0) million of “Insurance income” and ¥0
million of “proceeds from insurance income” in the previous fiscal year are
reclassified to reflect the change in presentation.

4 Change in Accounting Policies
The Company has adopted Section 35 of “Accounting Standard for
Retirement Benefits” (ASBJ Statement No. 26, May 17, 2012) and themain clause of Section 67 of “Guidance on Accountings Standard for
Retirement Benefits” (ASBJ Guidance No. 25, March 26, 2015) effectivefrom April 1, 2014 of the end of current fiscal year. As a result, themethods for calculating the retirement benefit obligation and service costhave been revised in the following respects: the method for attributing
projected benefits to each period has been changed from the straight-line
method to the benefit formula method, and the method for determining thediscount rate has been changed to use a single weighted-average
discount rate reflecting the expected timing and amount of benefit
payments.

9

The cumulative effect of changing the method for calculating theretirement benefit obligation and service cost was recognized by adjustingretained earnings at April 1, 2014, in accordance with the transitional
treatment provided in Paragraph 37 of Accounting Standard for Retirement
Benefits.
As a result, at the beginning of the year ended March 31, 2015,“liabilities for retirement benefits” decreased by ¥144 million (U.S.$1,197
thousand), and “retained earnings” increased by ¥94 million (U.S.$778
thousand). Also the effects on operating income, ordinary income andincome before income taxes and minority interests for the year ended
March 31, 2015 are minor.
In addition, the effects on per share information are minor.

5 Consolidated Statements of Comprehensive Income
The amount of recycling and amount of income tax effect associated with other comprehensive income for the years ended March 31, 2015 and 2014 wereas follows:
thousands of
U.S. dollars

millions of yen

2014

2015
Unrealized holding gain (loss) on other securities, net of taxes
Amount recognized in the year

2015

¥864

¥(354)

0

(260)

1

Before income tax effect adjustment
Amount of income tax effect

864
(266)

(613)
215

7,182
(2,208)

Unrealized holding gain (loss) on other securities, net of taxes

598

(399)

4,974

25

—

211

166

177

1,384

Amount recognized in the year

206

—

1,711

Reclassification adjustments included in the statement of income

55

—

456

Before income tax effect adjustment
Amount of income tax effect

261
(90)

—
—

2,167
(751)

Remeasurements of defined benefit plans, net of tax

170

—

1,416

Amount recognized in the year

26

(82)

217

Reclassification adjustments included in the statement of income

(7)

(1)

(57)

19

(83)

160

980

(305)

8,145

Reclassification adjustments included in the statement of income$7,181

Unrealized revaluation loss on land, net of taxes
Amount of income tax effectTranslation adjustments
Amount recognized in the year
Remeasurements of defined benefit plans, net of tax

Other comprehensive income (loss) on equity method companies

Other comprehensive income (loss) on equity method companies
Total other comprehensive income (loss)

6 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 plans for undertaking
the manufacturing-and-selling businesses. If surplus funds arise, theGroup 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 to foreign currency
exchange risk.
Marketable securities and Investment securities, most of which arestocks of other companies with which the Group has business
relationships, are exposed to market price fluctuation risk.
Substantially all trade payables—notes and accounts payable-trade,electronically recorded obligations-operating and other payables—havepayment due dates within one year. In addition, payables denominatedin 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 effect whereby
the Company grasps trust conditions of its customers and monitors due

dates and outstanding balances regularly to identify and mitigate risks ofbad debts from customers who are having financial difficulties.
The consolidated subsidiaries perform equivalent management with
the Company.
(Market risk management—the risk arising from fluctuations in
exchange rates and interest rates)
The Company uses forward exchange contract transactions with theaim of avoiding risk related to fluctuation in future foreign exchange.
For investment securities, the Company periodically confirms themarket value of such financial instruments and reports to the director
in charge. The Company reviews the status of these investments on acontinuing basis.
(Liquidity risk management—the risk that the Group may not able tomeet 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 of financial
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 isreasonably estimated. Because estimation of fair values incorporates
variable factors, adopting different assumptions can change the value.

10Notes to Consolidated Financial Statements(2) Estimated fair value of financial instruments
The carrying value of financial instruments recognized on the consolidated balance sheets as of March 31, 2015 and 2014, the estimated fair value of such items
and the differences between them are shown below. Financial instruments for which fair value is extremely difficult to estimate are not included in the following table.
millions of yen
Year ended March 31, 2015

Carrying value

Fair value

a Cash and time deposits
b Trade notes and accounts receivablec Marketable securities and investment securities
Assets¥7,629
5,867
3,811¥17,307¥7,629
5,867
3,811¥17,307————a Trade payables
b Electronically recorded obligations-operatingc Other payables
Liabilities¥1,974
2,922
2,384¥7,280¥1,974
2,922
2,384¥7,280————

Year ended March 31, 2014

Carrying value

Fair value

a Cash and time deposits
b Trade notes and accounts receivablec Investment securities
Assets¥6,765
5,150
2,943¥14,859¥6,765
5,150
2,943¥14,859————

a Trade payables
b Electronically recorded obligations-operatingc Other payables
Liabilities¥2,0503,384
2,316¥7,751¥2,0503,384
2,316¥7,751————

Year ended March 31, 2015

Carrying value

Fair value

a Cash and time deposits
b Trade notes and accounts receivablec Marketable securities and investment securities
Assets$63,429
48,78331,688$143,899$63,429
48,78331,688$143,899————

a Trade payables
b Electronically recorded obligations-operatingc Other payables
Liabilities$16,413
24,292
19,825$60,529$16,413
24,292
19,825$60,529————

Difference

millions of yen
Difference

thousands of U.S. dollars
Difference

Notes: 1. Method of estimating the fair value of financial instruments and other matters relating to marketable and investment securities
Assetsa. 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 the exchange trading price or at the price provided by the financial institutions offering these securities. For information on securities classified by purpose ofholding, please refer to the “Marketable Securities and Investment Securities” section of the notes to the financial statements.
Liabilities
a. Trade payables, b. Electronically recorded obligations-operating and c. 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. Financial instruments for which fair value is extremely difficult to determine
Carrying value
thousands of
U.S. dollars

millions of yen

Unlisted equity securities

2015
¥ 55

Because the fair value of these financial instruments is extremely difficult to determine, given that no quoted market price is available, they are not included in the above table.

11

2014
¥ 65

2015
$ 459

3. Redemption schedule for receivables and other securities with maturity dates at March 31, 2015 and 2014 are summarized as follows:Year ended March 31, 2015

Time deposits
Trade notes and accounts receivable
Marketable securities and investment securities
Bond
Other
Total

Year ended March 31, 2014

Time deposits
Trade notes and accounts receivable
Investment securities
Bond
Other
Total

One year or lessmillions of yen
More than 1 year andMore than 5 years andwithin 5 years
within 10 years

More than 10 years¥7,627
5,867

¥—
—

—
—

—
—

100
—
¥13,594

—
100
¥100

—
—
—

—
—
—

One year or lessmillions of yen
More than 1 year andMore than 5 years andwithin 5 years
within 10 years

More than 10 years¥6,764
5,150

¥—
—

—
—

—
—

—
—
¥11,915

100
100
¥200

—
—
—

—
—
—

thousands of U.S. dollars
More than 1 year andMore than 5 years andwithin 5 years
within 10 years

Year ended March 31, 2015

One year or lessTime deposits
Trade notes and accounts receivable
Marketable securities and investment securities
Bond
Other
Total

$63,417
48,783

$—
—

—
—

—
—

831
—
$113,031

—
831
$831

—
—
—

—
—
—

More than 10 years

7 Derivatives
The Company and its consolidated subsidiaries had no derivative instruments outstanding at March 31, 2015 and 2014.

8 Marketable Securities and Investment Securities(1) Other securities
The acquisition cost and related carrying value of other securities with a determinable market value at March 31, 2015 and 2014 are summarized as follows:
thousands of
U.S. dollars

millions of yen

Acquisition cost
Carrying value
Total unrealized gain
Total unrealized loss2015
¥2,753
3,811
1,077
19

2014
¥2,748
2,943
709
514

2015
$22,888
31,6888,958
158

At March 31, 2015 and 2014, unlisted stocks (whose carrying value was ¥55 million (U.S.$459 thousand) and ¥65 million, respectively) are not included in
the above table because their fair value is extremely difficult to determine, given that no quoted market price is available.

12Notes to Consolidated Financial Statements(2) Sales of other securities(Year ended March 31, 2015)
millions of yen
Proceeds from sales

Gain on sales

Loss on sales

¥3

—

¥0

(1) Stocks(2) Bonds
1. Government bonds

—

—

—

2. Corporate bonds

—

—

—

3. Others———(3) Other securities

—

—

—

¥3

—

¥0

Total
(Year ended March 31, 2014)

millions of yen(1) Stocks(2) Bonds

Proceeds from sales

Gain on sales

Loss on sales

¥465

¥265

—

1. Government bonds

—

—

—

2. Corporate bonds

—

—

—

3. Others———(3) Other securities

—

—

—

¥465

¥265

—

Total
(Year ended March 31, 2015)

thousands of U.S. dollars(1) Stocks(2) Bonds

Proceeds from sales

Gain on sales

Loss on sales

$24

—

$1

1. Government bonds

—

—

—

2. Corporate bonds

—

—

—

3. Others———(3) Other securities

—

—

—

$24

—

$1

Total

(3) Impairment of investment securities
The Company recognized impairment loss on investment securities of ¥10 million (U.S.$83 thousand) for the years ended March 31, 2015.
The Company recognized impairment loss on investment securities of ¥36 million for the years ended March 31, 2014.

9 Land Revaluation
In accordance with the Land Revaluation Law (Proclamation No. 34 dated
March 31, 1998), land used for business activities was revalued at March
31, 2002. The revaluation difference, net of taxes, is stated as “unrealized
revaluation loss on land, net of taxes” in net assets. Deferred tax liabilities
arising from this revaluation difference are presented separately fromdeferred tax liabilities for other temporary differences in the accompanying
consolidated balance sheets. The market value of the land as of March 31,
2015 and 2014 decreased by ¥584 million (U.S.$4,859 thousand) and¥579 million, respectively, after the revaluation.

10 Pledged Assets
Pledged assets for the years ended March 31, 2015 and 2014 are summarized as follows:
thousands of
U.S. dollars

millions of yen

2015Time deposits

13Time deposits were pledged as collateral mainly for leased office space at March 31, 2015 and 2014.

¥5

2014
¥1

2015
$ 40

11 Income Taxes
At March 31, 2015 and 2014, the tax effect of the temporary differences which gave rise to a significant portion of the deferred tax assets (excluding deferredtaxes on unrealized revaluation loss on land) was as follows:
thousands of
U.S. dollars

millions of yen

2014

2015
Current assets:
Accrued employees’ bonuses

2015

¥136

¥ 154$1,127

Allowance for sales returns

52

41

435

Accrued business taxes

28

14

234

Other

157

186

1,303

373

395

3,099

(2)

(5)

(13)

371

390

3,086

Gross current deferred tax assets
Valuation allowance
Total current deferred tax assets
Current liabilities:
Deferred gain on sales of property

(0)

(1)

(4)

Enterprise tax receivable

—

(3)

—

Total current deferred tax liabilities
Net current deferred tax assets

(0)

(4)

(4)

¥371

¥ 386$3,083

Non-current assets:¥4¥ 543$35

Directors’ retirement and severance benefits

—

55

—

Write-downs of securities

—

63

—

Impairment loss

—

8

—

Other

—

2

—

Gross non-current deferred tax assets

4

671

35

Valuation allowance

—

(126)

—

Total non-current deferred tax assets

4

545

35

Deferred gain on sales of property

—

(15)

—

Undistributed earnings of controlled foreign companies

—

(68)

—

Unrealized holding gain on other securities, net of taxes

—

(51)

—

—

(133)

—

¥4

¥ 412$35

Net defined benefit liability

Non-current liabilities:

Total non-current deferred tax liabilities
Net non-current deferred tax assets
Non-current assets:

¥375

¥ —

$3,117

Directors’ retirement and severance benefits

39

—

325

Write-downs of securities

61

—

506

Impairment loss

7

—

62

Other

8

—

70
4,081

Net defined benefit liability

Gross non-current deferred tax assets

491—

Valuation allowance

(107)

—

(893)

Total non-current deferred tax assets

383

—

3,187

Non-current liabilities:
Deferred gain on sales of property

(13)

—

(108)

Undistributed earnings of controlled foreign companies

(88)

—

(734)

Unrealized holding gain on other securities, net of taxes
Total non-current deferred tax liabilities
Net non-current deferred tax liabilities

(316)

—

(2,629)(417)¥(34)—¥ —(3,471)$(284)14

Notes to Consolidated Financial Statements

A reconciliation of the statutory tax rate to the Company’s effective tax rates for the years ended March 31, 2015 and 2014 is summarized as follows:
2015
Japanese statutory tax rate
Permanent differences such as entertainment expenses, etc.
Permanent differences such as dividend income
Tax credit
Undistributed earnings of controlled foreign companies
Equity in loss of affiliates
Downward adjustment of deferred tax assets at end of year due to tax rate change
Cancellation of temporary difference related to investments in affiliates accounted for by the equity method
Other
Effective tax rate
(Adjustment of deferred tax assets and liabilities pursuant to the change inthe corporate tax rates)
The “Act for Partial Amendment of the Income Tax Act, etc.” (Act No.9 of2015) and the “Act for Partial Amendment of the Local Tax Act, etc.” (ActNo.2 of 2015) were promulgated on March 31, 2015. As a result, theeffective statutory tax rate used to measure the Company’s deferred tax
assets and liabilities was changed from 35% to 33% and 32% for the
temporary differences expected to be realized or settled in the year
beginning April 1, 2015 and for the temporary differences expected to be

35.00%
1.69(0.71)(3.10)
1.32
2.04
3.46
—
(3.45)
36.25%

2014
38.00%
2.10(11.97)(0.29)
1.79
2.55
2.24
(12.65)0.46
22.23%

realized or settled from April 1, 2016, respectively.
As a result of this change, deferred tax assets (net of deferred tax
liabilities) decreased by ¥24 million (U.S.$196 thousand), and income
taxes-deferred, unrealized holding gain on other securities increased by¥53 million (U.S.$442 thousand), and by ¥30 million (U.S.$247 thousand),
respectively. Also deferred tax liabilities - unrealized revaluation profit on
land decreased by ¥25 million (U.S.$211 thousand) and unrealized
revaluation loss on land, net of taxes increased by same amount for theyear ended March 31, 2015.

12 Employees’ Retirement and Severance Benefits
The Company and its consolidated subsidiaries have either funded or
unfunded defined benefit plans for payments of employees’ retirement.
The Group pays a pension or lump sum based on length of service andsalary in the defined benefit corporate pension plan.
In unfunded retirement benefit plans, the Company pays a lump sum
based on length of service and salary as a retirement benefit.

Some consolidated subsidiaries adopt the simplified method whichassumes retirement benefit obligation to be equal to the benefits payable if
all eligible employees voluntarily terminated their employment at fiscal year
end for the calculation of net defined benefit liability and retirement benefit
expenses.

Defined benefit plans
Adjustments of beginning and ending balance of retirement benefit obligations
thousands of
U.S. dollars

millions of yen

Balance at the beginning of the year
Cumulative effect of change in accounting principle
Restated balance at the beginning of the year
Service cost
Interest cost
Actuarial loss
Payment of retirement benefits
Other
Balance at the end of the year

2015

2014

2015

¥3,931
(144)
3,787
229
30
1
(240)
2
¥3,810¥3,736
—
3,736
185
30
74
(97)
4
¥3,931$32,686(1,197)31,4891,904
250
11(1,993)15$31,677

Adjustments of beginning and ending balance of plan assets
thousands of
U.S. dollars

millions of yen

Balance at the beginning of the year
Expected return on plan assets
Actuarial loss
Employer’s contributions
Payment of retirement benefits
Balance at the end of the year

15

2015

2014

2015

¥2,367
47
207
161
(162)
¥2,620¥2,120
42
120
156
(72)
¥2,367$19,677
394
1,722
1,338
(1,348)$21,782

Adjustments of ending balance of retirement benefit obligations and plan assets, and net defined benefit asset and liability on consolidated balance sheet
thousands of
U.S. dollars

millions of yen

Funded retirement benefit obligations
Plan assets
Unfunded retirement benefit obligations
Net defined benefit asset and liability on consolidated balance sheet
Net defined benefit liability
Net defined benefit asset and liability on consolidated balance sheet

2015

2014

2015

¥2,701(2,620)
81
1,109
1,190
1,190
¥1,190¥2,784(2,367)
417
1,147
1,565
1,565
¥1,565$22,458(21,782)
675
9,219
9,895
9,895
$9,895

The following table summarizes the components of net retirement benefit expenses:
thousands of
U.S. dollars

millions of yen

2014

2015
Service cost
Interest cost on benefit obligation
Expected return on plan assets
Amortization of actuarial loss
Amortization of past service cost
Extraordinary additional retirement payments
Net retirement benefit expenses¥ 229
30
(47)
55
—
28
¥ 295

2015

¥185
30
(42)
75
(1)
20
¥267

$1,904
250
(394)
456
—
235
$2,452

Remeasurements of defined benefit plans, before tax
thousands of
U.S. dollars

millions of yen

2014

2015
Actuarial gain (loss)

¥261

2015

¥—

$2,167

Remeasurements of defined benefit plans
thousands of
U.S. dollars

millions of yen

2015
Unrecognized actuarial gain (loss)¥ (31)

2014

2015

¥ 230$ (259)

2015

2014

Plan assets(1) Plan assets
The fair value of plan assets, by major category, as a percentage of total plan assets is as follows:

Domestic bonds
Domestic equity
Foreign bonds
Foreign equity
General account
Other
Total

12.8%
20.6
5.5
14.4
44.3
2.4
100.0%

14.1%
15.8
6.2
12.2
49.0
2.7
100.0%(2) Calculation method of expected long-term rate of return on plan assets
The expected return on assets has been estimated based on the anticipated allocation to each asset class and the expected long-term returns on assets
held in each category.
The assumptions used in the actuarial calculation
Mainly the assumptions used in the actuarial calculation (presented as a weighted average) are as follows:
2015
Discount rate
Expected rate of return on plan assets

0.8%
2.0%

2014
0.8%
2.0%

16

Notes to Consolidated Financial Statements

13 Net Assets
The Corporation Law of Japan (the “Law”), which superseded most of theprovisions of the Commercial Code of Japan, went into effect on May 1,
2006. The Law provides that an amount equal to 10% of the amount to be
disbursed as distributions of capital surplus (other than the capital reserve)
and retained earnings (other than the legal reserve) be transferred to thecapital reserve and the legal reserve, respectively, until the sum of thecapital reserve and the legal reserve equals 25% of the capital stock
account. Such distributions can be made at any time by resolution of theshareholders or by the Board of Directors if certain conditions are met.

Capital surplus and the legal reserve are not available for the distributionof dividends but may be used to reduce or eliminate a deficit or may betransferred to stated capital. At March 31, 2015, the legal reserve of theCompany included in retained earnings amounted to ¥550 million(U.S.$4,572 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.

14 Amounts per Share
Net assets per share as of March 31, 2015 and 2014 were ¥1,001.84(U.S.$8.33) and ¥936.06, respectively. Basic net income per share for theyears ended March 31, 2015 and 2014 were ¥40.83 (U.S.$0.34) and¥56.74, respectively.
Diluted net income per share for the year ended March 31, 2015 and2014 were ¥40.82 (U.S.$0.34) and ¥56.73, respectively.

The basis for calculation of basic net income per share and diluted net income per share for the years ended March 31, 2015 and 2014 was as follows:
thousands of
U.S. dollars

millions of yen

2014

2015

¥ 892
—
892

¥ 1,234—
1,234$ 7,418
—
7,418

22

22

—

—

—

—

0
(0)

0
(0)

—
—

1

1

—

2015
Basic net income per share:
Net income
Amount not attributable to shareholders of common stock
Amount attributable to shareholders of common stock
Weighted-average number of shares outstanding(millions of shares)
Diluted net income per share:
Adjustments to net income
Increase in number of shares outstanding(millions of shares)(Subscription rights to shares)
Shares resulting in an anti-dilutive effect(millions of shares)
The basis for calculation of total net assets per share as of March 31, 2015 and 2014 was as follows:

thousands of
U.S. dollars

millions of yen

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

17

2015

2014

2015

¥ 22,600
710
81
629
21,891¥ 21,087
631
95
536
20,455$ 187,913
5,901
671
5,229
182,0132222—

15 Major Expenses
Major expenses included in selling, general and administrative expenses for the years ended March 31, 2015 and 2014 were as follows:
thousands of
U.S. dollars

millions of yen

2015¥ 5,861
2,857
2,067
1,357
267
20

Sales promotion expenses
Advertising costs
Salaries
Shipment and storage expenses
Provision for employees’ retirement and severance benefits
Provision for directors’ retirement and severance benefits2014¥ 6,133
2,678
1,986
1,284
219
22

2015
$ 48,734
23,751
17,186
11,2792,221
163

Research and development expenses included in general and administrative expenses and cost of sales for the years ended March 31, 2015 and 2014
amounted to ¥512 million (U.S.$4,263 thousand) and ¥563 million, respectively.

16 Cash and Time Deposits
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, 2015 and 2014 is as follows:
thousands of
U.S. dollars

millions of yen

2015¥7,629(1,044)¥6,585

Cash and time deposits
Time deposits with a maturity in excess of three months
Cash and cash equivalents

2014¥6,765(38)¥6,7282015$63,429(8,679)$54,750

17 Leases(Finance leases)
Leased assets included in property, plant and equipment are machinery,equipment and vehicles, tools, furniture and fixtures in the mothproofing

and hygiene-related products segment and the household environmentrelated products segment. Leased assets included in intangible assets aresoftware.

(1) ‌Lease payments and proforma depreciation charges for the years ended March 31, 2014 was ¥1 million.
(2) Depreciation is computed by the straight-line method over the respective lease terms assuming a nil residual value.
(Operating leases)
The Company and its consolidated subsidiaries had no significant operating leases at March 31, 2015 and 2014.

18

Notes to Consolidated Financial Statements

18 Segment Information(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 the Company to make decisions
about resource allocation and to assess their performance.
The Company formulates comprehensive strategies for implementationin Japan and overseas of its head office and conducts business activities.
The Company has two reportable segments: Mothproofing and HygieneRelated Products and Household Environment-Related Products. The
business segments are classified according to the nature of theCompany’s products and their markets.
The Mothproofing and Hygiene-Related Products segment includes the
manufacture and sales of Cloth Care products, Hand Care products andThermal 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 theprinciples and procedures set forth in Note 1, “Summary of Significant
Accounting Policies.” The segment income or losses are based on
operating income or loss.
(Application of the Accounting Standard for Retirement Benefits, etc.)
As stated in Changes in Accounting Policies, the method of calculating
retirement benefit liabilities and service costs was revised in consolidated
accounting year. Accordingly, the method of calculating retirement benefit
liabilities and service costs of business segments was revised similarly.
The effects on each reportable segments are minor.

(3) Information on the amounts of sales, income, and other items by reportable segments
millions of yen
Mothproofing andHygiene-Related
Products

HouseholdEnvironmentRelated Products

Total¥21,568¥26,696¥48,263———

21,56826,69648,263

Segment income¥1,102¥711¥1,813

Other items
Depreciation

¥356

¥467

¥823

Year ended March 31, 2015

Sales
Sales to third parties
Intra-group sales and transfers
Net sales

millions of yen
Mothproofing andHygiene-Related
Products

HouseholdEnvironmentRelated Products

Total¥20,668¥26,325¥46,993———

20,66826,325

46,993

Segment income¥822¥1,309¥2,131

Other items
Depreciation

¥399

¥471

¥870

Year ended March 31, 2014

Sales
Sales to third parties
Intra-group sales and transfers
Net sales

thousands of U.S. dollars
Year ended March 31, 2015

Mothproofing andHygiene-Related
Products

HouseholdEnvironmentRelated Products

Total

Sales
Sales to third parties$179,328$221,964$401,293———

179,328

221,964

401,293

Segment income$9,159$5,913$15,072

Other items
Depreciation$2,961$3,881$6,842

Intra-group sales and transfers
Net sales

Notes: 1. The total for segment income is the same as the 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 to make decisions about resource allocation and to assess
their performance.

19(4) Related Information(a) Information by product and service
millions of yen
Year ended March 31, 2015

Cloth Care

Thermal Care

Air Care

Others

Total

Sales to third parties¥10,405¥6,093¥20,319¥11,447¥48,263

Year ended March 31, 2014

Cloth Care

Thermal Care

Air Care

Others

Total

Sales to third parties¥10,321¥6,011¥20,469¥10,192¥46,993

Year ended March 31, 2015

Cloth Care

Thermal Care

Air Care

Others

Total

Sales to third parties$86,511$50,662$168,944$95,175$401,293

millions of yen

thousands of U.S. dollars(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 years ended
March 31, 2015 and 2014.

(Property, plant and equipment)
Geographical segment information is not presented as the amount ofproperty, plant and equipment in Japan exceeded 90% of the total ofproperty, plant and equipment at March 31, 2015 and 2014.

(c) Information by major customers
Sales
thousands of
U.S. dollars

millions of yen

Customer’s name

2015

2014

2015

PALTAC CORPORATION¥16,064¥15,543$133,564

ARATA CORPORATION¥9,964¥9,965$82,850

Related segment

Mothproofing and hygiene-related productsHousehold environment-related products
Mothproofing and hygiene-related productsHousehold environment-related products

19 Related Party Transactions(Year ended March 31, 2015)
Not applicable(Year ended March 31, 2014)(1) Dealings with related parties
FUMAKILLA, Ltd. carried out a takeover bid. The Company applied the takeover bid and sold stocks of FUMAKILLA, Ltd. The proceeds from sale was ¥1,509
million (U.S.$14,661 thousand), the loss on sales was ¥29 million (U.S.$278 thousand).

20

Notes to Consolidated Financial Statements

20 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 ¥593 million (U.S.$4,928 thousand) and¥394 million for the years ended March 31, 2015 and 2014.

21 Note to Consolidated Statements of Changes in Net Assets
Shares in issue and outstanding and treasury stock at March 31, 2015 and 2014 were as follows:(Year ended March 31, 2015)
Number of shares in issue and outstanding:Common stock
Number of shares held in treasury:
Common stock

23,000 thousand
1,149 thousand

Note: Detail of the increase/decrease is as follows:
Increase due to purchase of shares less than standard unit:

2 thousand

Subscription rights at March 31, 2015 were as follows:
Subscription rights for stock options¥80 million (U.S.$671 thousand)
Dividends paid from retained earnings for the year ended March 31,
2015 were as follows:
Total amount ofdividends(millions of yen)

Dividends
per share(yen)

Board of directors’
meeting held on
May 19, 2014

240

11

Board of directors’
meeting held on
October 30, 2014

240

11

Resolution

Board of directors’
meeting held on
May 18, 201521

Total amount ofdividends(millions of yen)

240

Source ofdividends

Retainedearnings

11

Subscription rights at March 31, 2014 were as follows:
Subscription rights for stock options¥95 million

Dividends paid from retained earnings for the year ended March 31,
2014 were as follows:
Total amount ofdividends(millions of yen)

Dividends
per share(yen)

Effective date

Resolution

June 2,
2014

Board of directors’
meeting held on
May 20, 2013

240

11

Board of directors’
meeting held on
October 30, 2013

240

11

Dividends
per share(yen)

1,147 thousand
2 thousand
138 thousand

Record date

September 30, December 5,
2014
2014

23,000 thousand

Note: Details of the increase are as follows:
Increase due to purchase of shares less than standard unit:
Decrease due to changes in treasury stock held by equity method companies:

March 31,2014

Dividends for which the record date was in the year ended March 31,
2015 and the effective date is in the year ending March 31, 2016 were as
follows:
Resolution(Year ended March 31, 2014)
Number of shares in issue and outstanding:Common stock
Number of shares held in treasury:
Common stock

Record date

Effective date

March 31,2013

May 31,2013

September 30, December 6,
2013
2013

Dividends for which the record date was in the year ended March 31,
2014 and the effective date was in the year ended March 31, 2015 wereas follows:

Record date

Effective date

Resolution

March 31,2015

June 1,
2015

Board of directors’
meeting held on
May 19, 2014

Total amount ofdividends(millions of yen)

240

Source ofdividends

Retainedearnings

Dividends
per share
(yen)

11

Record date

Effective date

March 31,2014

June 2,2014

22 Stock Option Plans
At March 31, 2015, 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 15, 2007
June 18, 2008

140,000
95,000

4 officers and 14 employees
3 officers and 12 employees

July 1, 2009 – June 30, 2014
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

June 17, 2011

35,0007 employees

Aug 2, 2013 – Aug 1, 2018

June 15, 2012

130,000

3 officers and 8 employees

Aug 2, 2014 – Aug 1, 2019

June 14, 2013

130,000

2 officers and 10 employees

Aug 2, 2015 – Aug 1, 2020

June 17, 2014

175,000

6 officers and 11 employees

Aug 2, 2016 – Aug 1, 2021

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.
Cost related to the 2015 stock option plan amounting to ¥15 million (U.S.$121 thousand) were included in selling, general and administrative expenses.
Contents of stock options

GranteesType of stock
Number ofstock options
granted(*)
Grant dateConditionfor exercise
Working
periodExercisable
period2008
4 officers and
14 employees
Common stock
140,0002009
3 officers and
12 employees
Common stock
95,000August 1, 2007
Working from
August 1, 2007
to July 31,
2009
August 1, 2007
to June 31,
2009Within 5 years after
the vesting date(those retiring after
the vesting datecannot exercise
their stock options)2010
4 employees
Common stock
20,0002011
4 officers and
17 employees
Common stock
155,000

August 1, 2008

August 3, 2009

Working from
August 1, 2008
to July 31,
2010
August 1, 2008
to July 31,
2010
Within 5 years after
the vesting date(those retiring after
the vesting datecannot exercise
their stock options)

Working from
August 3, 2009
to August 3,
2011
August 3, 2009
to August 3,
2011
Within 5 years after
the vesting date(those retiring after
the vesting datecannot exercise
their stock options)2012
7 employees
Common stock
35,0002013
3 officers and
8 employees
Common stock
130,0002014
2 officers and
10 employees
Common stock
130,0002015
6 officers and
11 employees
Common stock
175,000

August 2, 2010

August 1, 2011

August 1, 2012

August 1, 2013

August 1, 2014

Working from
August 2, 2010
to August 2,
2012
August 2, 2010
to August 2,
2012
Within 5 years after
the vesting date(those retiring after
the vesting datecannot exercise
their stock options)

Working from
August 1, 2011
to August 1,
2013
August 1, 2011
to August 1,
2013
Within 5 years after
the vesting date(those retiring after
the vesting datecannot exercise
their stock options)

Working from
August 1, 2012
to August 1,
2014
August 1, 2012
to August 1,
2014
Within 5 years after
the vesting date(those retiring after
the vesting datecannot exercise
their stock options)

Working from
August 1, 2013
to August 1,
2015
August 1, 2013
to August 1,
2015
Within 5 years after
the vesting date(those retiring after
the vesting datecannot exercise
their stock options)

Working from
August 1, 2014
to August 1,
2016
August 1, 2014
to August 1,
2016
Within 5 years after
the vesting date(those retiring after
the vesting datecannot exercise
their stock options)(*) Number of stock options in the column “Number of stock options granted” has been converted into equivalent numbers of shares.

22Notes to Consolidated Financial Statements

Stock option activity during the year ended March 31, 2015 was as follows:
Number of shares

Non-vested Outstanding at beginning of year
Granted during the year
Forfeited during the year
Vested during the year
Outstanding at end of year
Vested Outstanding at beginning of year
Vested during the year
Exercised during the year
Forfeited during the year
Outstanding at end of year

2008
—
—
—
—
—
140,000——
140,000
—

2009
—
—
—
—
—
85,000——10,00075,000

2010
—
—
—
—
—
20,000———20,0002009¥1,264
—
¥220

2010
¥1,037
—
¥197

2011
¥1,049
—
¥178

2011
—
—
—
—
—
140,000———
140,000

2012
—
—
—
—
—
35,000———35,0002013
70,000——70,000——70,000——70,0002014
130,000—
5,000—
125,000
—
—
—
—
—

2012
¥976
—
¥194

2013
¥946
—
¥153

2014
¥1,066
—
¥117

2015
¥1,059
—
¥97

2015
—
175,000——
175,000—————

Price of stock options
yen

Exercise price
Weighted-average market price
Fair value per option on grant date2008
¥1,517—¥191

U.S. dollars

2015
$9
—
$1

The fair value of each stock option grant was estimated at the grant date using the Black-Scholes option pricing model. The fair value per option for options
granted during the year ended March 31, 2015 was estimated based on the following assumptions:

Volatility
Option term
Expected dividend (per share)
Risk-free interest rate
Volatility was determined based on the actual stock price over the past
4 years and 6 months.
The option term was estimated under the assumption that the options
would be exercised in the middle of the exercisable period because of
insufficient data.
Expected dividend (per share) was based on the dividend amountapplicable to the 2014 fiscal year.

2015
19.5%
4 years and 6 months¥22 (U.S.$0.18)
0.13%
Risk-free interest rate was based on government bonds whose terms
corresponded with the terms of the above options.
Method of estimating exercised stock options
The Company estimated the number of exercised stock options based on
the actual number of forfeitures because it is difficult to estimate thenumber of stock options which will be forfeited in the future.

23 Business Combinations
Common control transaction(Merger with consolidated subsidiary)
On December 1, 2014, the Company merged with a consolidated
subsidiary, S.T. AUTO CO., LTD in order to improve efficiency of theGroup’s management and strengthen the Car Care products business.
The Company was the surviving company.

23

The merger was accounted for as a transaction under common control
in accordance with ASBJ Statement No.21, “Accounting Standard forBusiness Combinations” and ASBJ Guidance No.10, “Guidance on
Accounting Standard for Business Combinations and AccountingStandard for Business Divestitures,” issued on December 26, 2008.

Report of Independent Auditors24

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)

2015

2014

2013

2012

2011

2015
$401,293

For the Year:¥48,263¥46,993¥46,944¥46,354¥43,580

Cost of sales

Net sales

28,23526,98027,73827,34725,370234,766

Selling, general and administrative expenses

18,216

17,881

17,406

17,256

16,097

151,455

Operating income

1,813

2,131

1,800

1,751

2,114

15,072

Income before income taxes and minority interests

1,536

1,637

1,105

596

1,343

12,771

892

1,234

565

76

786

7,418

Net income
Capital expenditures

1,486

942

2,061

1,007

662

12,354

Depreciation and amortization

844

894

830

931

992

7,019

R&D expenses

513

564

572

659

610

4,263

Cash flows from operating activities

2,137

2,110

980

1,560

2,704

17,768Cash flows from investing activities(1,768)514(1,924)(787)(3,601)(14,699)

Free cash flow

369

2,624

(944)

773

(897)

3,069

Cash flows from financing activities

(614)

(465)

(557)

(549)

(521)

(5,102)

At Year-End:¥20,221¥18,956¥15,533¥16,941¥16,523$168,134

Property, plant and equipment, net

8,110

7,555

7,524

6,295

6,312

67,428

Total current assets
Total assets

33,78532,37030,07630,28730,011

280,910

Total current liabilities

9,008

8,966

8,058

8,778

8,286

74,901

Total long-term liabilities

2,176

2,318

1,805

1,807

1,753

18,095

Total net assets

22,60021,087

20,213

19,701

19,972

187,913

Cash and cash equivalents

6,585

6,728

4,469

5,921

5,731

54,750

Number of shares issued (thousand shares)

23,00023,00023,00023,00023,000Treasury stock (thousand shares)

1,149

1,147

1,284

1,282

1,214

859

760

663

647

630

Net income¥40.83¥56.74¥26.01¥3.48¥36.03$0.34

Dividends

22.00

22.00

22.00

22.00

22.00

0.18

Net assets

1,001.84

936.06905.84884.45893.74

8.33

1,021

999

988

1,025

916

8.49

Operating income margin

3.8

4.5

3.8

3.8

4.9

Number of employees
Per Share (yen and U.S. dollars):Common stock price
Ratios (%):
Income before income taxes and minority interests/net sales

3.2

3.5

2.4

1.3

3.1

Net income margin

1.8

2.6

1.2

0.2

1.8

ROA

2.7

4.0

1.9

0.3

2.7

ROE

4.2

6.1

2.9

0.4

4.0

Equity ratio

64.8

63.2

65.4

63.4

64.9

Notes: 1. U.S. dollar amounts are translated from yen for convenience only, at the rate of ¥120.27 = U.S.$1.00, the approximate rate on the Tokyo Foreign Exchange Market on March 31, 2015.
2. The common stock prices listed are as of the end of the fiscal year ended in March.
3. ROA = Net income divided by average total assets for the fiscal year.
4. ROE = Net income divided by average total equity (total net assets minus subscription rights less minority interests in consolidated subsidiaries) for the fiscal year.

25

Investor Information
As of March 31, 2015

Group Companies

Corporate Data
Company name

S.T. CORPORATION

Headquarters

4-10, Shimo-ochiai 1-chome,

S.T. TRADING CO., LTD.

Shinjuku-ku, Tokyo 161-8540,

S.T. BUSINESS SUPPORT CO., LTD.

Japan
S.T. (THAILAND) CO., LTD.

Establishment

August 31, 1948

Common stock¥7,065,500,000

Fiscal year-end

March 31

Shares issued and outstanding

23,000,000

Listed stock exchangeTokyo Stock Exchange,

FAMILY GLOVE CO., LTD. (TAIWAN)
S.T. KOREA CORPORATION (SOUTH KOREA)First Section
Shareholders

15,994

Registered transfer agent

Mizuho Trust & Banking Co., Ltd.

Accounting auditors

Ernst & Young ShinNihon LLC

Annual shareholders’ meeting

Middle of June each year

Employees

859 (consolidated)
402 (non-consolidated)

Contact

Kouichi Yoshizawa,
Public Relations Department

E-mailir@st-c.co.jp

Telephone+81-3-3367-6115

Facsimile+81-3-3367-6320

Major Shareholders
Thousands of shares% of total

Shaldan Co., Ltd.

5,587

25.6

Nippon Life Insurance Company

1,336

6.1

TCSB (Mizuho Bank)

884

4.0

Takashi Suzuki

682

3.1

FUMAKILLA LIMITED

541

2.5

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

524

2.4

Kanichi Suzuki

500

2.3

Hiromu Fujii

441

2.0

Suzuki Kanichi Shouten

433

2.0

Takako Suzuki

424

1.9

Individuals, etc. ..........................41.6%
Other Japanese corporations .....34.9%
Financial institutions .................. 19.7%
Non-Japanese institutions ...........3.0%
Securities fi rms ............................0.8%

Note: ‌The Company holds treasury stock of 1,149 thousand shares as of March 31, 2015; however, it is
excluded from the list of major shareholders shown above.

Stock Chart
Stock price (yen)Nikkei 225 (yen)2,500

25,0002,000

20,0001,500

15,0001,000

10,000500

Trading volume (shares) 5,000
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/english/company/ index.html
Printed in Japan, October 2015