Creating Corporate Value Report 2013
Financial Section
Year ended March 31, 2013

Refreshing the Air

Management's Discussion and Analysis

Sales Overview

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

In the fiscal year under review, the year ended March 31, 2013, theWhile raw materials costs rose, we made efforts to lower

Japanese economy struggled through a harsh period of a persistent

manufacturing costs, make efficient marketing investments in thefinancial crisis in Europe, slackening growth in emerging nations, andselling, general and administrative expenses, and cut logistics costs.

a significantly strong yen, despite demands for restoration efforts after

As a result, the cost of sales increased 1.4% year on year, to ¥27,738

the Great East Japan earthquake. The regime change at the end of

million. Selling, general and administrative expenses increased 0.9%,

last year, however, triggered a depreciation of the yen, and consumer

to ¥17,406 million. Operating income increased 2.8% to ¥1,800 million.

activity is showing signs of recovery due to the people's expectations
Other Income (Expenses), Pretax, and Net Income

towards the new economic and financial policies.

In other income and expenses, we made slight progress from theWithin these circumstances, the S.T. CORPORATION Groupannounced the theme “3G (Growth, Global, Group),” and worked toprevious year due to an improvement in loss on equity of affiliates andestablish a high-yielding system, roll out the “S.T. Reformation”

decrease of loss on disposition of property, plant and equipment. As

program for management reform, and strengthen global capacity. The

a result, income before income taxes and minority interests increased

STR Center was also completed in March 15 of this year as the new

85.5%, to ¥1,105 million, and net income increased 647.4%, to ¥565

headquarters and a symbol for STR.

million.

As a result, net sales increased 1.3% year on year, to ¥46,944

Accordingly, net income per share rose to ¥26.01, a significant

million, due to a favorable growth in the core brands “Shoshu-Riki”

improvement from the previous fiscal year's ¥3.48. The net incomeand “Mushuda.” Regarding individual segments, in the Mothproofing

margin increased from 0.2% to 1.2%, and return on equity (ROE)and Hygiene-Related Products segment, sales in the Cloth Care

increased from 0.4% to 2.9%.

category increased 8.9%, sales in the Hand Care category increased
11.0%, and sales in the Thermal Care category fell 5.1%. In the

Financial Position

Household Environment-Related Products segment, sales in the Air

Total assets as of March 31, 2013, stood at ¥30,076 million, down

Care category increased 2.8%, sales in the Humidity Care category¥210 million compared with the previous year-end. Total current

fell 8.0%, and sales in the Home Care category fell 16.5%.

assets decreased by ¥1,408 million, to ¥15,533 million, due to adecrease in cash and time deposits. On the other hand, non-current

4.9

2.4

3.8

2.6

1.2

1.8
0.2

76

565

1,751

2,114

2,246

2,493

46,94446,354

43,58043,54644,8793.8

Net income margin (%)

786

5.2

Net income (millions of yen)

1,119

5.6

Operating income margin (%)

1,076

Operating income (millions of yen)

1,800

(millions of yen)

09

10

11
Net sales

1

12

13

09

10

11

12

Operating income /Operating income margin

13

09

10

11

12

Net income /Net income margin

13

assets increased by ¥1,198 million, to ¥14,544 million, due to a

¥1,137 million, primarily attributable to an increase in purchases ofincrease in buildings and structures.

property plant and equipment. Net cash used in financing activitieswas ¥557 million, mainly the result of a decrease in payments ofTotal liabilities decreased by ¥722 million, to ¥9,863 million

dividends.

compared to the previous year-end, largely due to a decrease in

As a result, cash and cash equivalents at end of year stood atnotes payables and trade payables. On the other hand, Total¥4,469 million, a year on year decrease of ¥1,452 million.

shareholder's equity increased by ¥107 million, to ¥20,008 million
compared to the previous year-end.

Dividends and Return to Shareholders

Total net assets increased by ¥512 million, to ¥20,213 million
compared to the previous year-end, primarily due to a rise unrealized

Taking into consideration such factors as net income and the need toholding gain on other securities.

realize shareholder returns, we have decided to distribute a fiscal

As a result of the above, total net assets per share increased fromyear-end dividend of ¥11.0 (¥22.0 for the full year, including the¥884.45 to ¥905.84. Equity ratio is a high 65.4%, from the 63.4% ofinterim dividend), on par with the previous fiscal year, making for a

the previous fiscal year, and we continued to maintain a soundconsolidated dividend payout ratio of 84.6%. The Company will

financial position with zero interest-bearing debt.

continue to 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

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

fiscal year's ¥1,007 million to ¥2,061 million. Depreciation andfinancial position, or stock prices include the following: (1) an

amortization decreased from ¥931 million to ¥830 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 ¥980 million, a year on(4) and the failure of initiatives to raise new businesses. Forward-

year decrease of ¥580 million. This was primarily due to a decrease inlooking statements in this annual report are based on certain

accounts payable and increase in accounts receivable. Net cash usedassumptions made by the Company as of the end of this fiscal year.

in investing activities was ¥1,924 million, a year on year increase of

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

ROA (%)

11

12

13

Capital expenditures /Depreciation and amortization

09

10

ROA / ROE

22.0

22.0

84.6

1.9

11

22.0

22.0

2.9

44.6

0.4

10

22.0

830

931

992

662

1,007

922

858
673

716

4.0
2.7

09

Payout ratio (%)

632.2
4.0

3.8

Dividends per share (yen)

5.9

2,061

5.8

ROE (%)

42.9

61.1

0.3

12

13

09

10

11

12

13

Dividends per share /Payout ratio2Consolidated Balance Sheets
S.T. CORPORATION and consolidated subsidiaries
March 31, 2013 and 2012

thousands of
U.S. dollars (Note 2)

millions of yen

Assets

2013

2012

2013

¥4,693¥6,121$49,926

85

23

908

Trade notes and accounts receivable (Note 6)

4,792

4,545

50,981

Merchandise and finished goods

4,632

4,919

49,277Work in process

165

142

1,752

Raw materials and supplies

396

360

4,210

Deferred tax assets (Note 12)

363

365

3,858

Other current assets

423

481

4,500

Less - allowance for doubtful accounts

(15)

(14)

(154)

15,533

16,941

165,257

Land (Note 9)

3,254

3,279

34,617

Buildings and structures

6,737

5,564

71,677

Machinery, equipment and vehicles

7,630

7,242

81,180Tools, furniture and fixtures

3,648

3,615

38,815Construction in progress

90

86

961

Leased assets (Note 18)

138

122

1,470

(13,973)(13,613)(148,668)

7,524

6,295

80,052

167

183

1,773

167

183

1,773

Investments in non-consolidated subsidiaries and affiliates

3,402

3,577

36,196

Investment securities (Notes 6 and 8)

1,802

1,560

19,169Long-term loans

49

59

526

Deferred tax assets other than unrealized revaluation loss on land (Note 12)

132

235

1,409

1,468

1,438

15,614

6,853

6,869

72,913¥30,076¥30,287$319,996

Current assets:
Cash and time deposits (Notes 6, 10 and 17)
Marketable securities (Notes 6 and 8)

Total current assets

Property, plant and equipment, at cost (Note 3)Less - accumulated depreciation
Property, plant and equipment, net

Intangible assets, net of accumulated amortization (Note 18)
Total intangible assets

Investments and other assets:

Other assets
Total investments and other assets
Total assets

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

millions of yen

Liabilities and net assets

2013

2012

2013

¥4,626¥5,918$49,218

32

33

344

Current liabilities:
Trade payables (Note 6)
Lease obligations

2,383

1,881

25,358

Accrued expenses

Other payables (Note 6)

506

569

5,387

Income taxes payable

283

184

3,012

Consumption taxes payable

49

12

520

Allowance for sales returns

106

108

1,130

Other current liabilities

72

74

762

8,058

8,778

85,730Total current liabilities

Long-term liabilities:
Lease obligations

80

90

855

1,266

1,267

13,467

Directors' retirement and severance benefits

138

117

1,466

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

321

333

3,418

Other long-term liabilities

—

1

—

1,805

1,807

19,206

Employees' retirement and severance benefits (Note 13)

Total long-term liabilities

Contingent liabilities (Note 11)

Net assets (Note 14):
Shareholders' equity:
Common stock:
Authorized - 96,817,000 shares in 2013 and 2012
7,066

7,066

75,173

Capital surplus

Issued and outstanding - 23,000,000 shares in 2013 and 2012

7,068

7,068

75,198Retained earnings

7,662

7,552

81,516

Treasury stock, at cost

(1,787)(1,785)(19,012)

Total shareholders' equity

20,00819,901

212,875

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

648

356

6,892

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

(524)

(502)

(5,577)

Translation adjustments

(461)

(546)

(4,901)

Total accumulated other comprehensive loss

(337)

(692)

(3,586)

Subscription rights

109

99

1,155

Minority interests in consolidated subsidiaries

434

394

4,615

Total net assets
Total liabilities and net assets

20,213

19,701215,059¥30,076¥30,287$319,996

See notes to consolidated financial statements.

4Consolidated Statements of Income
S.T. CORPORATION and consolidated subsidiaries
For the years ended March 31, 2013 and 2012

thousands of
U.S. dollars (Note 2)

millions of yen

Net sales
Cost of sales (Notes 16 and 21)
Gross profit before reversal of allowance for sales returns
Reversal of allowance for sales returns
Gross profit
Selling, general and administrative expenses (Note 16)
Operating income
Non-operating income (expenses):
Interest and dividends received
Interest expense
Purchase discounts
Sales discounts
Loss on equity of affiliates
Other, net
Total non-operating income (expenses)
Ordinary income
Special gains (losses), net:
Loss on disposition of property, plant and equipment, net
State subsidy
Loss on sales of investment securities, net
Loss on disaster
Total special gains (losses), net
Income before income taxes and minority interests
Income taxes (Note 12):Current
Deferred
Total income taxes
Income before minority interests
Minority interests
Net income

2013

2012

2013

¥46,944
27,74019,2042
19,206
17,4061,800¥46,354
27,36018,99512
19,007
17,2561,751$499,457
295,141
204,31622
204,338
185,192
19,147

44
(0)
186
(872)
(191)
176
(658)
1,141

78
(1)
188
(888)
(325)
37
(910)
841

465
(3)
1,984
(9,281)(2,036)1,870(7,002)
12,145

(31)
2
(7)
—
(36)
1,105

(223)
—
—
(22)
(246)
596

(335)
24
(75)
—
(386)
11,759

514
(4)
510
595
30
¥565

381
91
473
123
48
¥76

5,474
(45)
5,428
6,331
320
$6,011

See notes to consolidated financial statements.

Consolidated Statements of Comprehensive Income
S.T. CORPORATION and consolidated subsidiaries
For the years ended March 31, 2013 and 2012
thousands of
U.S.dollars (Note 2)

millions of yen

2012

2013
Income before minority interests

¥595

¥123

$6,331

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

203
—
118
110
431
¥1,026

149
48
(60)
42
178
¥301

2,157
—
1,260
1,168
4,585
$10,916

942
84

280
22

10,026889

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

5

2013

Consolidated Statements of Changes in Net Assets
S.T. CORPORATION and consolidated subsidiaries
For the years ended March 31, 2013 and 2012

millions of yen
Number of sharesof common stock(Thousands)

Balance at April 1, 2012
Cash dividends paid by distribution of retained earnings
Net income
Purchases of treasury stockReversal of unrealized revaluation loss on land, net of taxes
Net changes in items other than those in shareholders' equity
Balance at March 31, 2013

23,000CapitalsurplusRetainedearnings¥ 7,066¥ 7,068¥ 7,552(478)
565

Treasury stock,at cost¥ (1,785)(2)
22
23,000

Unrealized
Unrealized
holding gain on revaluation loss onother securities, land, net of taxes
net of taxes(Note 9)Balance at April 1, 2012
Cash dividends paid by distribution of retained earnings
Net income
Purchases of treasury stockReversal of unrealized revaluation loss on land, net of taxes
Net changes in items other than those in shareholders' equity
Balance at March 31, 2013

Commonstock¥ 7,066¥ 7,068¥ 7,662¥ (1,787)

Translation
adjustments

millions of yen
Total accumulated
othercomprehensive
loss

Subscription
rightsMinority
interests inconsolidated
subsidiaries

Total
shareholders'equity¥ 19,901
(478)
565
(2)
22
¥ 20,008

Total net
assets¥ 356¥ (502)¥ (546)¥ (692)

¥ 99

¥ 394

292
¥ 648

(22)
¥ (524)85¥ (461)355¥ (337)

10
¥ 109

40
¥ 434

¥ 19,701
(478)
565
(2)
22
405
¥ 20,213

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

23,000

Balance at April 1, 2011
Cash dividends paid by distribution of retained earnings
Net income
Purchases 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, 2012

23,000

Unrealized
Unrealized
holding gain on revaluation loss onother securities, land, net of taxes
net of taxes(Note 9)Balance at April 1, 2011
Cash dividends paid by distribution of retained earnings
Net income
Purchases 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, 2012

Commonstock

CapitalsurplusRetainedearnings¥ 7,066¥ 7,068¥ 7,956(479)
76¥ (1,722)

(0)
(62)

¥ 20,367
(479)
76
(0)
(62)
¥ 19,901¥ 7,066¥ 7,068¥ 7,552¥ (1,785)

Translation
adjustments

millions of yen
Total accumulated
othercomprehensive
loss

Subscription
rightsMinority
interests inconsolidated
subsidiaries

Total net
assets¥ 160¥ (550)¥ (506)¥ (896)

¥ 82

¥ 419

196
¥ 356

48
¥ (502)(40)¥ (546)204¥ (692)

17
¥ 99

(25)
¥ 394

¥ 19,972
(479)
76
(0)
(62)
195
¥ 19,701

Total
shareholders'equitythousands of U.S. dollars (Note 2)
Number of sharesof common stock(Thousands)

Balance at April 1, 2012
Cash dividends paid by distribution of retained earnings
Net income
Purchases of treasury stockReversal of unrealized revaluation loss on land, net of taxes
Net changes in items other than those in shareholders' equity
Balance at March 31, 2013

23,000CapitalsurplusRetainedearnings

Treasury stock,at cost$ 75,173$ 75,198$ 80,354(5,084)
6,011$ (18,990)

(22)
236
23,000

Unrealized
Unrealized
holding gain on revaluation loss onother securities, land, net of taxes
net of taxes(Note 9)Balance at April 1, 2012
Cash dividends paid by distribution of retained earnings
Net income
Purchases of treasury stockReversal of unrealized revaluation loss on land, net of taxes
Net changes in items other than those in shareholders' equity
Balance at March 31, 2013

Commonstock$ 75,173$ 75,198$ 81,516$ (19,012)

thousands of U.S. dollars (Note 2)
Total accumulated
otherTranslation
comprehensive
Subscription
adjustments
lossrightsMinority
interests inconsolidated
subsidiaries$ 3,785$ (5,341)$ (5,810)$ (7,366)$ 1,050$ 4,193

3,107$ 6,892(236)$ (5,577)909$ (4,901)

3,780$ (3,586)

104$ 1,155422$ 4,615$ 211,734(5,084)
6,011
(22)
236
$ 212,875

Total net
assets$ 209,612(5,084)
6,011
(22)
236
4,306
$ 215,059

See notes to consolidated financial statements.

6

Consolidated Statements of Cash Flows
S.T. CORPORATION and consolidated subsidiaries
For the years ended March 31, 2013 and 2012

thousands of
U.S. dollars (Note 2)

millions of yen

2012

2013
Cash flows from operating activities:
Income before income taxes and minority interests
Adjustments to reconcile income before income taxes and minority
interests to net cash provided by operating activities:
Depreciation and amortization
Loss on sales of property, plant and equipment
Loss on sales and valuation of investment securities
Increase (decrease) in allowance for doubtful receivables
Increase (decrease) in employees' retirement and severance benefits
Increase (decrease) in directors' retirement and severance benefits
Decrease in allowance for sales returns
Interest and dividends received
Interest expense
Foreign exchange loss (gain)
Loss on disaster
Equity in loss of affiliates
State subsidy
Changes in operating assets and liabilities:
Receivables
Inventories
Payables and accrued expenses
Other, net
SubtotalInterest and dividends received
Interest paid
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
Proceeds from state subsidy
Purchases of investment securities
Proceeds from sales of investment securities
Proceeds from liquidation of affiliate
Other investments, net
Net cash used in investing activities
Cash flows from financing activities:
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
Cash and cash equivalents at end of year (Note 17)
See notes to consolidated financial statements.

7

2013

¥1,105¥596$11,759

830
31
7
1
(7)
21
(2)
(44)
0
(98)
—
191
(2)

931
223
—
0
35
(8)
(12)
(78)
1
37
22
325
—

8,834
335
75
8
(71)
227
(22)
(465)
3
(1,043)
—
2,036
(24)

(225)
265
(1,305)
413
1,182
80
(0)
—
(282)
980

(112)
(636)
564
(57)
1,830
165
(1)
(66)
(368)
1,560

(2,392)
2,814(13,890)
4,389
12,573852(3)—(2,998)
10,424(0)—(1,945)
25
2
(29)
48
—
(26)
(1,924)

(0)
500
(997)
0
—
(386)
—
79
17
(787)

(0)
—
(20,692)
262
24
(309)
515
—
(272)
(20,473)

(2)
(478)
(44)
(33)
(557)

(0)
(479)
(47)
(22)
(549)

(22)
(5,084)(467)(352)(5,925)50(1,452)
5,921¥4,469

(34)
190
5,731
¥5,921528(15,446)
62,995$47,549

Notes to Consolidated Financial Statements
S.T. CORPORATION and Consolidated Subsidiaries
March 31, 2013

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). In accordance with PITF No. 18, the accompanying
consolidated financial statements for the years ended March 31, 2013
and 2012 have been prepared by using the accounts of foreign
consolidated subsidiaries prepared in accordance with either
International Financial Reporting Standards (IFRS) or accounting
principles generally accepted in the United States as adjusted for certain
items including those for goodwill, actuarial differences and capitalized
development costs.
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.
(b)	‌Principles of consolidation and accounting for investments inunconsolidated subsidiaries and affiliates
The accompanying consolidated financial statements include the accountsof the Company and any significant companies controlled directly or
indirectly by the Company. Companies over which the Company exercises
significant influence in terms of their operating and financial policies havebeen accounted for by the equity method. As of March 31, 2013, thenumber of consolidated subsidiaries and affiliates accounted for by theequity method were five and four (five and four in 2012), respectively.
Investments in subsidiaries and affiliates which are not consolidated or
accounted for by the equity method are carried at cost or less. Where
there has been a permanent decline in the value of such investments, theCompany has written down the investments.
Assets and liabilities of the consolidated subsidiaries acquired before
April 1, 1999 were initially valued at cost at the time of acquisition. It is theCompany's policy to value assets and liabilities of subsidiaries acquired on
or after April 1, 1999 at fair value when the Company obtains control oversuch subsidiaries; however, the 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)	‌Translation of foreign currency transactions andfinancial statements
Monetary assets and liabilities denominated in foreign currencies aretranslated into yen at the rates of exchange in effect at the balance sheet
date and the accounts of the overseas consolidated subsidiaries 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.
(e) 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, 2013 and 2012, the Company and its consolidated subsidiaries
did not have any trading securities.
(f) Inventories
Inventories are stated at the lower of cost or net selling value, cost being
determined by the average method.
(g)	‌Property, plant and equipment, except for leased assets,
and depreciation
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(h) Intangible assets and long-term prepaid expenses
Intangible assets and long-term prepaid expenses, except for leased
assets, are amortized by the straight-line method. Cost of softwarepurchased for internal use is amortized by the straight-line method over a
period of five years, the useful life applicable to commercially available
software.
(i) 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

8Notes to Consolidated Financial Statements

for as operating leases and related payments are charged to income as
incurred.
Finance leases entered into before April 1, 2008 of the Company and its
domestic subsidiaries are accounted for as operating leases, except for
those which transfer ownership of the leased assets to the lessee.
Leased assets accounted for as finance leases are depreciated on thestraight-line method over the lease periods with no residual value.
(j) 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.
(k) 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.
(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 thefair value of the pension plan assets as of balance sheet date, as adjusted
for unrecognized actuarial gain or loss and unrecognized prior service
cost.
Actuarial gain or loss is amortized in the year following the year in which

the gain or loss is recognized primarily by the straight-line method over a
period of five years which is shorter than the average remaining years ofservice of the employees.
Prior service cost is amortized as incurred by the straight-line method
over a period of five years which is shorter than the average remaining
years of service of the employees.
In addition, one overseas subsidiary provides an allowance for paymentsof employees' retirement and severance benefits at 100% of the voluntarytermination payments.
(m) Directors' retirement and severance benefits
The Company has accrued directors' retirement and severance benefits at
the amount which would be required to be paid if all directors resigned
from their positions and left the Company as of the balance sheet date inaccordance with its internal regulations.
(n) Consumption taxes
Transactions subject to consumption taxes are recorded at amounts
exclusive of consumption taxes.
(o) Cash and cash equivalents
Cash and cash equivalents in the accompanying consolidated 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 ¥93.99 = U.S.$1.00, the approximate exchange rate
prevailing on the Tokyo Foreign Exchange Market on March 31, 2013.

This translation should not be construed as a representation that all
amounts shown could have been, or could in the future be, converted into
U.S. dollars at that or any other rate.

3 Change in Accounting Policies
In accordance with the revision of the Corporation Tax Act, effective fromthe year ended March 31, 2013, the Company and its domestic
consolidated subsidiaries have changed the method of depreciation basedon the revised act and applied the new method to property, plant andequipment obtained on or after April 1, 2012.
As a result of this change, operating income, ordinary income andincome before income taxes and minority interests increased by ¥17
million (U.S.$180 thousand) for the year ended March 31, 2013.

4 Unapplied Accounting Standards, etc.
“Accounting Standard for Retirement Benefits” (ASBJ Statement No. 26,
May 17, 2012) and “Guidance on Accountings Standard for Retirement
Benefits” (ASBJ Guidance No. 25, May 17, 2012)
1. Overview(1) Treatment in the consolidated balance sheet
Under the new accounting standard, actuarial gains and losses and priorservice costs that have yet to be recognized in profit or loss would berecognized within the net assets section (accumulated other9comprehensive income), after adjusting for tax effects, and the deficit or
surplus would be recognized as a liability (or asset).
(2)	‌Treatment in the consolidated statements of income andcomprehensive income
Actuarial gains and losses and past service costs that arose in the current
year and have yet to be charged to expenses would be included in othercomprehensive income, and unrecognized actuarial gains and losses andunrecognized past service costs that were recognized as accumulated

other comprehensive income in prior periods and then charged to
expenses in the current year would be treated as reclassification
adjustments.
2. Scheduled date for adoption
The Company expects to adopt the accounting standard and guidance asof the end of the fiscal year commencing on April 1, 2013.
3. Effects of the adoption of the accounting standard and guidance
The effects of the adoption of the accounting standard and guidance on
the financial statements are currently being assessed.

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, 2013 and 2012 wereas follows:
thousands of
U.S. dollars

millions of yen

2012

2013
Unrealized holding gain on other securities, net of taxes
Amount recognized in the year

2013

¥301

¥208

$3,205

Before income tax effect adjustment
Amount of income tax effect

301
(98)

208
(59)

3,205
(1,047)

Unrealized holding gain on other securities, net of taxes

203

149

2,157

—

48

—

118

(60)

1,260

107

37

1,136

3

5

33

110

42

1,168

431

178

4,585

Unrealized revaluation loss on land, net of taxes
Amount of income tax effectTranslation adjustments
Amount recognized in the year
Other comprehensive income on equity method companies
Amount recognized in the year
Reclassification adjustments included in the statement of income
Other comprehensive income on equity method
Total other comprehensive income

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 forundertaking the manufacturing-and-selling businesses. If surplus funds
arise, the Group manages only financial assets with high degrees ofsafety.
(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.
Securities and investment securities, most of which are stocks ofother companies with which the Group has business relationships, areexposed to market price fluctuation risk.
Substantially all trade payables—notes and accounts payable-tradeand other payables—have payment due dates within one year. In

addition, payables denominated in foreign currencies are exposed toforeign 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 andmonitors due dates and outstanding balances regularly to identify andmitigate risks of bad 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.

10Notes to Consolidated Financial Statements

For marketable and investment securities, the Company periodicallyconfirms the market value of such financial instruments and reports tothe director in charge. The Company reviews the status of theseinvestments on a continuing 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.

(2) Estimated fair value of financial instruments
The carrying value of financial instruments recognized on the consolidated balance sheets as of March 31, 2013 and 2012, the estimated fair value of suchitems and the differences between them are shown below. Financial instruments for which fair value is extremely difficult to estimate are not included in thefollowing table.
millions of yen
Year ended March 31, 2013

Carrying value

Fair value

a Cash and time deposits
b Trade notes and accounts receivable¥4,693
4,792¥4,693
4,792——

c Marketable securities and investment securities

Difference

1,822

1,822

—

¥11,306¥11,306—

a Trade payables¥4,626¥4,626—b Other payables

2,383

2,383

—

¥7,009¥7,009—

AssetsLiabilities

millions of yen
Year ended March 31, 2012

Carrying value

Fair value

a Cash and time deposits
b Trade notes and accounts receivable¥6,1214,545¥6,1214,545——

c Marketable securities and investment securities

Difference

1,536

1,536

—

¥12,202¥12,202—a Trade payables¥5,918¥5,918—b Other payables

1,881

1,881

—

¥7,798¥7,798—

AssetsLiabilities

thousands of U.S dollars
Year ended March 31, 2013

Carrying value

Fair value

a Cash and time deposits
b Trade notes and accounts receivable$49,926
50,981$49,926
50,981c Marketable securities and investment securities

Difference——

19,383

19,383—$120,290$120,290—

a Trade payables$49,218$49,218—b Other payables

25,35825,358—$74,575$74,575—

AssetsLiabilities

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 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.

112. Financial instruments for which fair value is extremely difficult to determine
Carrying value
thousands of
U.S. dollars

millions of yen

2012

2013
Unlisted equity securities

2013

¥ 47

¥ 65

$ 693

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.
3. Redemption schedule for receivables and other securities with maturity dates at March 31, 2013 and 2012 are summarized as follows:
millions of yen
Year ended March 31, 2013

Time deposits
Trade notes and accounts receivable

One year or lessMore than 1 year andwithin 5 years

More than 5 years andwithin 10 years

More than 10 years¥4,691
4,792

¥—
—

—
—

—
—

Bond

—

100

—

—

Other

100

—

—

—

¥9,583

¥100

—

—

Marketable securities and investment securities

Total

millions of yen
Year ended March 31, 2012

Time deposits
Trade notes and accounts receivable

One year or lessMore than 1 year andwithin 5 years

More than 5 years andwithin 10 years

More than 10 years¥6,120
4,545

¥—
—

—
—

—
—

Bond

—

100

—

—

Other

—

100

—

—

¥10,665

¥200

—

—

Marketable securities and investment securities

Total

thousands of U.S. dollar
More than 1 year andwithin 5 years

More than 5 years andwithin 10 years

Year ended March 31, 2013

One year or lessTime deposits
Trade notes and accounts receivable$49,913
50,981

$—
—

—
—

—
—

Bond

—

1,064

—

—

Other

1,064

—

—

—

$101,958$1,064——More than 10 years

Marketable securities and investment securities

Total

7 Derivatives
The Company and its consolidated subsidiaries had no derivative instruments outstanding at March 31, 2013 and 2012.

12

Notes to Consolidated Financial Statements

8 Marketable Securities and Investment Securities
The acquisition cost and related carrying value of other securities with a determinable market value at March 31, 2013 and 2012 are summarized as follows:
thousands of
U.S. dollars

millions of yen

2013

2012

2013

¥1,0141,822¥1,029
1,536$10,787
19,383

Total unrealized gain

856

560

9,112

Total unrealized loss

48

54

516

Acquisition cost
Carrying value

At March 31, 2013 and 2012, unlisted stocks (whose carrying value was ¥65 million (U.S.$693 thousand) and ¥47 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.

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,
2013 and 2012 decreased by ¥610 million (U.S.$6,494 thousand) and¥574 million, respectively, after the revaluation.

10 Pledged Assets
Pledged assets for the years ended March 31, 2013 and 2012 are summarized as follows:
thousands of
U.S. dollars

millions of yen

2012

2013
Time deposits

¥ 27

¥ 26

2013
$ 284

Time deposits were pledged as collateral mainly for leased office space at March 31, 2013 and 2012.

11 Commitments and Contingent Liabilities
The Company had the following contingent liabilities as of March 31, 2013 and 2012.
thousands of
U.S. dollars

millions of yen

2013
Loan guarantees for:
Shaldan (Thailand) Co., Ltd.

¥0

2012
¥9

2013
$1

At March 31, 2013 and 2012, trade notes discounted with banks in the ordinary course of business amounted to ¥104 million (U.S.$1,105 thousand) and¥69 million, respectively.

1312 Income Taxes
At March 31, 2013 and 2012, 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

2012

2013
Current assets:
Accrued employees' bonuses

2013

¥147

¥163

$1,563

Allowance for sales returns

40

46

430

Accrued business taxes

33

16

347

Other

143

140

1,524

363

366

3,864

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

(1)

(0)

(7)

Other

—

(0)

—

Total current deferred tax liabilities
Net current deferred tax assets

(1)

(1)

(7)

¥363

¥365

$3,858

Non-current assets:
Allowance for employees' retirement and severance benefits

¥451

¥449

$4,795

Allowance for directors' retirement and severance benefits

48

41

513

Write-downs of securities

61

61

652

Impairment loss

8

14

87

Other

5

2

54

Gross non-current deferred tax assets

573

568

6,101

Valuation allowance

(122)

(112)

(1,293)

Total non-current deferred tax assets

452

456

4,808

Deferred gain on sales of property

(15)

(15)

(162)

Undistributed earnings of controlled foreign companies

(39)

(39)

(412)

Unrealized holding gain on other securities, net of taxes

(265)

(167)

(2,824)Non-current liabilities:

Total non-current deferred tax liabilities

(319)

(221)

(3,398)

Net non-current deferred tax assets

¥132

¥235

$1,409

A reconciliation of the statutory tax rate to the Company's effective tax rates for the years ended March 31, 2013 and 2012 is summarized as follows:
2012

2013
Japanese statutory tax rate
Permanent differences such as entertainment expenses, etc.

38.00%
2.94

40.00%
6.52

Permanent differences such as dividend income(0.50)

1.96

Tax credit(2.57)

0.08

Undistributed earnings of controlled foreign companies

0.01(0.32)

Equity in loss of affiliates

6.58

21.80

—

11.32

Downward adjustment of deferred tax assets at end of year due to tax rate change
Other

1.70

(2.06)

Effective tax rate

46.16%

79.30%

14

Notes to Consolidated Financial Statements

13 Employees' Retirement and Severance Benefits
The Company and its domestic subsidiaries have defined benefit planscovering substantially all of their employees which are partially fundedthrough a qualified funded pension plan. Under these plans, employees
are entitled to lump-sum or pension retirement or severance benefits
determined by points accumulated monthly based on the employees'
contributions, length of service and the conditions under which termination
occurs. In addition, the Company and its domestic subsidiaries pay

meritorious service awards to employees in excess of the prescribed
formula, which are charged to income as paid as it is not practicable tocompute the liability for such future payments since the amounts varydepending on the circumstances.
The following table summarizes the funded status and amounts
recognized in the accompanying consolidated balance sheets at March
31, 2013 and 2012:
thousands of
U.S. dollars

millions of Yen

2013

2012

2013

¥(3,736)
2,120¥(3,238)
1,909$(39,745)
22,551

Unfunded benefit obligation(1,616)(1,329)(17,194)

Unrecognized actuarial loss

351

63

3,733

(1)

(1)

(6)

¥(1,266)¥(1,267)$(13,467)

Retirement and severance benefit obligation
Plan assets

Unrecognized past service costAccrued benefit obligation

The following table summarizes the components of net retirement benefit expenses for the years ended March 31, 2013 and 2012:
thousands of
U.S. dollars

millions of yen

2012

2013
Service cost
Interest cost on benefit obligation

2013

¥159
64

¥158
61

$1,696
681

Expected return on plan assets

(38)

(36)

(406)

Amortization of actuarial loss

42

35

452

Amortization of past service cost

(1)

(1)

(6)

Extraordinary additional retirement payments

51

3

541

¥278

¥221

$2,957

Net retirement benefit expenses
The assumptions used in determining the pension benefit obligation are presented below:

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

2013

2012

Straight-line
method0.8%

Straight-line
method
2.0%

2.0%

2.0%

Note: ‌As a result of reviewing the appropriateness of the discount rate, it turned out that the movement of the discount rate has a significant impact on the projected benefit obligation. Therefore, the discount rate as at March 31, 2013 hasbeen changed to 0.8% while the discount rate as at April 1, 2012 was 2.0%.

14 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.

15

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, 2013, the legal reserve of theCompany included in retained earnings amounted to ¥550 million(U.S.$5,850 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.

15 Amounts per Share
Net assets per share as of March 31, 2013 and 2012 were ¥905.84(U.S.$9.64) and ¥884.45, respectively. Basic net income per share for theyears ended March 31, 2013 and 2012 was ¥26.01 (U.S.$0.28) and¥3.48, respectively.
Diluted net income per share for the year ended March 31, 2013 and2012 is not presented because latent shares with dilutive effect do notexist.
The basis for calculation of basic net income per share and diluted net
income per share for the years ended March 31, 2013 and 2012 was asfollows:
thousands of
U.S. dollars

millions of yen

2012

2013
Basic net income per share:
Net income

¥ 565

2013

¥ 76

$ 6,011Amount not attributable to shareholders of common stock:
—

—

—

—

Amount attributable to shareholders of common stock

565

76

6,011

22

22

—

1

1

—

Weighted-average number of shares outstanding(millions of shares)
Diluted net income per share:
Shares resulting in an anti-dilutive effect(millions of shares)
The basis for calculation of total net assets per share as of March 31, 2013 and 2012 was as follows:
thousands of
U.S. dollars

millions of yen

2013

2012

2013

¥ 20,213¥ 19,701$ 215,059

542

493

5,770

Subscription rights

109

99

1,155

Minority interests in consolidated subsidiaries

434

394

4,615

19,671

19,209209,28922

22—

Total net assets per share:
Total net assets
Deductions:

Amounts attributable to shareholders of common stock
Number of shares outstanding at year end(millions of shares)

16 Major Expenses
Major expenses included in selling, general and administrative expenses for the years ended March 31, 2013 and 2012 were as follows:
thousands of
U.S. dollars

millions of yen

2013

2012

2013

¥ 5,4122,917¥ 5,097
2,889$ 57,583
31,037

Salaries

1,973

2,007

20,995

Shipment and storage expenses

1,309

1,407

13,930

Provision for employees' retirement and severance benefits

234

179

2,492

Provision for directors' retirement and severance benefits

21

16

227

Sales promotion expenses
Advertising costs

Research and development expenses included in general and administrative expenses and cost of sales for the years ended March 31, 2013 and 2012amounted to ¥572 million (U.S.$6,088 thousand) and ¥659 million, respectively.

16

Notes to Consolidated Financial Statements

17 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, 2013 and 2012 is as follows:
thousands of
U.S. dollars

millions of yen

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

2013

2012

2013

¥4,693(223)¥6,121(223)$49,926(2,377)

Marketable securities with a maturity of three months or less from their respective dates of acquisition
Cash and cash equivalents

—

23

—

¥4,469¥5,921$47,549

18 Leases(Finance leases)
Leased assets included in property, plant and equipment are tools,
furniture and fixtures in the Mothproofing and Hygiene-Related Products
segment and the Household Environment-Related Products segment.
Leased assets included in intangible assets are software.

In accordance with the revised accounting standard effective the fiscal
year ended March 31, 2009, the Company and its domestic subsidiaries
account for finance leases as operating leases for those that were enteredinto before April 1, 2008 and if ownership of the leased property does nottransfer to the lessee. Information in relation to leased assets held underfinance leases but accounted for as operating leases is as follows:(1) A‌ summary of the proforma amounts (inclusive of the related interest) of acquisition cost, accumulated depreciation and net book value at March 31, 2013
and 2012, primarily relating to tools, furniture and fixtures is as follows:
thousands of
U.S. dollars

millions of yen

2012

2013

2013

Acquisition cost
Accumulated depreciation

¥36
35

¥43
35

$383
372

Net book value

¥1

¥8

$10

(2) Future minimum lease payments, inclusive of the related interest, subsequent to March 31, 2013 and 2012 are summarized as follows:
thousands of
U.S. dollars

millions of yen

2013

2012

2013

Payable in one year or less
Payable after one year

¥1
—

¥7
1

$10
—

Total

¥1

¥8

$10

(3) Lease‌
payments and proforma depreciation charges for the years ended March 31, 2013 and 2012 were ¥7 million (U.S.$76 thousand) and ¥14 million,
respectively.
(4) 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, 2013 and 2012.

17

19 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 category, Hand Care category and
Thermal Care category. The Household Environment-Related Products
segment includes the manufacture and sales of Air Care category,
Humidity Care category and Home Care category.

(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.
As explained in the section “Change in Accounting Policies”, inaccordance with the revision of the Corporation Tax Act, effective from theyear ended March 31, 2013, the Company and its domestic consolidated
subsidiaries have changed the method of depreciation and applied the
new method to property, plant and equipment obtained on or after April 1,
2012. As a result of this change, the segment profit of "Mothproofing andHygiene-Related Products" for the year ended March 31, 2013 increasedby ¥6 million (U.S.$65 thousand), and the segment profit of "Household
Environment-Related Products" increased by ¥11 million (U.S.$115
thousand).

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

HouseholdEnvironmentRelated Products

Total¥20,971¥25,973¥46,944———

20,971

25,973

46,944

¥932

¥868

¥1,800

Depreciation

¥354

¥457

¥810

Year ended March 31, 2012

Mothproofing andHygiene-Related
Products

HouseholdEnvironmentRelated Products

Total¥20,116¥26,238¥46,354———

20,116

26,23846,354¥685¥1,066¥1,751

Depreciation

¥373

¥538

¥911

Year ended March 31, 2013

Mothproofing andHygiene-Related
Products

HouseholdEnvironmentRelated Products

Total$223,123$276,333$499,457———

223,123

276,333

499,457$9,911$9,235$19,147$3,762$4,858$8,620

Year ended March 31, 2013

Sales
Sales to third parties
Intra-group sales and transfers
Net sales
Segment income
Other items

millions of yen

Sales
Sales to third parties
Intra-group sales and transfers
Net sales
Segment income
Other items

thousands of U.S. dollars

Sales
Sales to third parties
Intra-group sales and transfers
Net sales
Segment income
Other items
Depreciation

Notes: 1. The total of 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.

18

Notes to Consolidated Financial Statements(4) Related Information(a) Information by category and service
millions of yen
Year ended March 31, 2013

Cloth Care

Thermal Care

Air Care

Others

Total

Sales to third parties¥9,874¥6,866¥20,482¥9,721¥46,944

Year ended March 31, 2012

Cloth Care

Thermal Care

Air Care

Others

Total

Sales to third parties¥9,070¥7,234¥19,920¥10,130¥46,354

Year ended March 31, 2013

Cloth Care

Thermal Care

Air Care

Others

Total

Sales to third parties$105,055$73,053$217,920$103,428$ 499,457

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, 2013 and 2012.

(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, 2013 and 2012.

(c) Information by major customers
Sales

19

thousands of
U.S. dollars

millions of Yen

Customer's name

Related segment

2013

2012

2013

Paltac Corporation¥15,998¥15,026$170,207

Mothproofing and Hygiene-Related ProductsHousehold Environment-Related Products

ARATA CORPORATION¥9,615¥9,766$102,298

Mothproofing and Hygiene-Related ProductsHousehold Environment-Related Products

20 Related Party Transactions(1) Dealings with related parties
There are no significant transactions with related parties to be reported.
(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, 2013 and 2012, and for the year then ended is
as follows:
thousands of
U.S. dollars

millions of yen

2013

2012

2013

¥12,125
9,981¥14,541
6,719$129,007
106,195

Total deferred assets

1

5

7

Total current liabilities

11,834

13,631

125,904

Total long-term liabilities

3,101

679

32,995

Total net assets

7,172

6,954

76,310

Sales

Total current assets
Total non-current assets

14,965

15,678159,223

Income (loss) before income taxes

79(1,374)845

Net income (loss)

22(1,006)233

21 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 ¥807 million (U.S.$8,586 thousand) and¥550 million for the years ended March 31, 2013 and 2012.

20

Notes to Consolidated Financial Statements

22 Note to Consolidated Statements of Changes in Net Assets
Shares in issue and outstanding and treasury stock at March 31, 2013 and 2012 were as follows:(Year ended March 31, 2013)
Number of shares in issue and outstanding:Common stock
Number of shares held in treasury:
Common stock

23,000 thousand
1,284 thousand

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

2 thousand

Subscription rights at March 31, 2013 were as follows:
Subscription rights for stock options ¥109 million (U.S.$1,155 thousand)
Dividends paid from retained earnings for the year ended March 31,
2013 were as follows:
Total amount ofdividends(millions of yen)

Dividends
per share(yen)

Board of directors'
meeting held on
May 21, 2012

240

11

Board of directors'
meeting held on
October 30, 2012

240

11

Resolution

Resolution

Board of directors'
meeting held on
May 20, 2013

21

240

Source ofdividends

Retainedearnings

11

Subscription rights at March 31, 2012 were as follows:
Subscription rights for stock options¥99 million

Dividends paid from retained earnings for the year ended March 31,
2012 were as follows:
Total amount ofdividends(millions of yen)

Dividends
per share(yen)

Board of directors'
meeting held on
May 23, 2011

240

11

Board of directors'
meeting held on
October 31, 2011

240

11

Resolution

March 31,2012

June 1,
2012

Dividends
per share(yen)

1,281 thousand
0 thousand
67 thousand

Effective date

September 30, December 7,
2012
2012

23,000 thousand

Note: 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:

Record date

Dividends for which the record date was in the year ended March 31,
2013 and the effective date is in the year ending March 31, 2014 were as
follows:
Total amount ofdividends(millions of yen)

(Year ended March 31, 2012)
Number of shares in issue and outstanding:Common stock
Number of shares held in treasury:
Common stock

Record date

Effective date

March31,2011

June 3,2011

September 30, December 2,
2011
2011

Dividends for which the record date was in the year ended March 31,
2012 and the effective date was in the year ended March 31, 2013 wereas follows:

Record date

Effective date

Resolution

March 31,2013

May 31,
2013

Board of directors'
meeting held on
May 21, 2012

Total amount ofdividends(millions of yen)

240

Source ofdividends

Retainedearnings

Dividends
per share
(yen)

11

Record date

Effective date

March 31,2012

June 1,2012

23 Stock Option Plans
At March 31, 2013, 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 14, 2005
June 14, 2006

160,000
75,0003 officers and 23 employees
3 officers and 4 employees

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

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

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

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 2013 stock option plan amounting to ¥10 million (U.S.$104 thousand) were included in selling, general and administrative expenses.
Contents of stock options
2006

2007

2008

2009

2010

2011

2012

2013

Grantees

3 officers and23 employees

3 officers and4 employees

4 officers and
14 employees

3 officers and
12 employees

4 employees

4 officers and
17 employees

7 employees

3 officers and
8 employeesType of stock

Common stock

Common stock

Common stock

Common stock

Common stock

Common stock

Common stock

Common stock

Number ofsharesgranted160,000

75,000140,000

95,00020,000155,000

35,000130,000

Grant dateAugust 4, 2005

August 1, 2006

August 1, 2007

August 1, 2008

August 3, 2009

August 2, 2010

August 1, 2011

August 1, 2012

Conditionfor exercise

Working from
August 4, 2005
to June 30,
2007

Working from
August 1, 2006
to June 30,
2008

Working from
August 1, 2007
to July 31,
2009

Working from
August 1, 2008
to July 31,
2010

Working from
August 3, 2009
to August 3,
2011

Working from
August 2, 2010
to August 2,
2012

Working from
August 1, 2011
to August 1,
2013

Working from
August 1, 2012
to August 1,
2014

Working
periodAugust 4, 2005
to June 30,
2007

August 1, 2006
to June 30,
2008

August 1, 2007
to July 31,
2009

August 1, 2008
to July 31,
2010

August 3, 2009
to August 3,
2011

August 2, 2010
to August 2,
2012

August 1, 2011
to August 1,
2013

August 1, 2012
to August 1,
2014

Exercisable
periodWithin 5 years after
the vesting date(those retiring after
the vesting datecannot exercise
their stock options)

Within 5 years after
the vesting date(those retiring after
the vesting datecannot exercise
their stock options)

Within 5 years after
the vesting date(those retiring after
the vesting datecannot exercise
their stock options)

Within 5 years after
the vesting date(those retiring after
the vesting datecannot exercise
their stock options)

Within 5 years after
the vesting date(those retiring after
the vesting datecannot exercise
their stock options)

Within 5 years after
the vesting date(those retiring after
the vesting datecannot exercise
their stock options)

Within 5 years after
the vesting date(those retiring after
the vesting datecannot exercise
their stock options)

Within 5 years after
the vesting date(those retiring after
the vesting datecannot exercise
their stock options)22

Notes to Consolidated Financial Statements

Stock option activity during the year ended March 31, 2013 was as follows:
Number of shares
2006
Non-vested Outstanding at beginning of year

2007

—

2008

—

2009

—

2010

—

—

2011

2012

155,000

35,000—2013

Granted during the year

—

—

—

—

—

—

—

130,000

Forfeited during the year

—

—

—

—

—

—

—

60,000

Vested during the year

—

—

—

—

—

155,000——
70,000

Outstanding at end of year

—

—

—

—

—

—

35,000100,000

75,000140,000

95,00020,000———

Vested during the year

—

—

—

—

—

155,000——

Exercised during the year

—

—

—

—

—

—

—

—

Forfeited during the year

100,000

—

—

—

—

10,000———75,000140,000

95,00020,000145,000——

Vested Outstanding at beginning of year

Outstanding at end of year
Price of stock options

yen

Exercise price

U.S. dollars

2006

2007

2008

2009

2010

2011

2012

2013

2013

¥1,628¥1,727¥1,517¥1,264¥1,037¥1,049

¥976

¥946

Weighted-average market price

—

—

—

—

—

—

—

—

—

Fair value per option on grant date

—

¥292

¥191

¥220

¥197

¥178

¥194

¥153

$2

$10

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, 2013 was estimated based on the following assumptions:2013
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 2012 fiscal year.

23

29.6%
4 years and 6 months¥22 (U.S.$0.23)
0.16%
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.

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)

2013

2012

2011

2010

2009

2013
$499,457

For the Year:¥46,944¥46,354¥43,580¥43,546¥44,879

Cost of sales

Net sales

27,73827,34725,37025,151

26,280295,118

Selling, general and administrative expenses

17,406

17,256

16,097

16,14916,107

185,192

Operating income

1,800

1,751

2,114

2,246

2,493

19,147

Income before income taxes and minority interests

1,105

596

1,343

1,943

1,969

11,759

565

76

786

1,119

1,076

6,011

Net income
Capital expenditures

2,061

1,007

662

673

716

21,926

Depreciation and amortization

830

931

992

922

858

8,834

R&D expenses

572

659

610

612

499

6,088

Cash flows from operating activities

980

1,560

2,704

2,263

1,549

10,424

Cash flows from investing activities(1,924)(787)(3,601)

(126)

(604)

(20,473)

Free cash flow

(944)

773

(897)

2,137

945

(10,049)

Cash flows from financing activities

(557)

(549)

(521)

(499)

(530)

(5,925)At Year-End:¥15,533¥16,941¥16,523¥17,667¥16,118$165,257

Property, plant and equipment, net

7,524

6,295

6,312

6,561

6,766

80,052

Total current assets
Total assets

30,07630,28730,011

29,02927,617

319,996

Total current liabilities

8,058

8,778

8,286

7,313

6,881

85,730Total long-term liabilities

1,805

1,807

1,753

1,751

1,706

19,206

Total net assets

20,213

19,701

19,972

19,966

19,029215,059

Cash and cash equivalents

4,469

5,921

5,731

7,170

5,520

47,549Number of shares issued (thousand shares)

23,00023,00023,00029,50029,500Treasury stock (thousand shares)

1,284

1,282

1,214

7,648

7,669

663

647

630

611

619

Net income¥26.01¥3.48¥36.03¥51.25¥49.32$0.28Dividends

22.00

22.00

22.00

22.00

22.00

0.23

Net assets

905.84884.45893.74892.46853.81

9.64

Number of employees
Per Share (yen and U.S. dollars):

Ratios (%):
Operating income margin

3.83

3.78

4.85

5.16

5.55

Income before income taxes and minority interests/net sales

2.35

1.29

3.08

4.46

4.39

Net income margin

1.20

0.16

1.80

2.57

2.40

ROE

2.91

0.39

4.03

5.87

5.78

ROA

1.87

0.25

2.66

3.95

3.84

Equity ratio

65.40

63.42

64.88

67.18

67.49

Notes: 1. U.S. dollar amounts are translated from yen for convenience only, at the rate of ¥93.99 = U.S.$1.00, the approximate rate on the Tokyo Foreign Exchange Market on March 31, 2013.
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.

25

Investor Information
As of March 31, 2013

Group Companies

Corporate Data
Company name

S.T. CORPORATION

Headquarters

4-10, Shimo-ochiai 1-chome,

S.T. TRADING CO., LTD.
S.T. AUTO CO., LTD.

Shinjuku-ku, Tokyo 161-8540,
Japan

S.T. BUSINESS SUPPORT 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. (THAILAND)FAMILY GLOVE CO., LTD. (TAIWAN)

First Section

S.T. KOREA CORPORATION (SOUTH KOREA)

Shareholders

12,679Registered transfer agent

Mizuho Trust & Banking Co., Ltd.

Accounting auditors

Ernst & Young ShinNihon LLC

Annual shareholders’ meeting

Middle of June each year

Employees

663 (consolidated)
400 (non-consolidated)

Contact

Hirohide Shimada,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.

5,537

24.1

Nippon Life Insurance Company

1,671

7.3

S.T. CORPORATION

1,142

5.0

TCSB (Mizuho Bank)

884

3.8

Individuals, etc. ..........................41.0%

Takashi Suzuki

682

3.0

Other Japanese corporations .....35.2%

FUMAKILLA LIMITED

541

2.4

Financial institutions .................. 20.5%

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

524

2.3

Non-Japanese institutions ...........2.5%

Kanichi Suzuki

500

2.2

Securities fi rms ............................0.8%

Carenne433

1.9

Hiromu Fujii

401

1.7

Stock Chart
Stock price (yen)Nikkei 225 (yen)

1,500

15,0001,000

10,0005,000

500
Trading volume (shares)
1,000,000

010/6 78

9 10 11 12 11/1 2

3

4

5

6

7

8

9 10 11 12 12/1 2

3

4

5

6

7

8

9 10 11 12 13/1 2

3

4

5

6

0

26

4-10, Shimo-ochiai 1-chome, Shinjuku-ku, Tokyo 161-8540, Japan
http://www.st-c.co.jp/english/company/index.html
Published in Japan, July 2013